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MUTUAL FUNDS

INTRODUCTION A Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciation realized by the scheme is shared by its unit holders in proportion to the number of units owned by the (pro rata). 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 portfolio at a relatively low cost. Anybody with an invest able surplus of as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy. A mutual fund is the ideal investment vehicle for today's complex and modern financial scenario. Markets for equity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have become mature and information driven. Price changes in these assets are driven by global events occurring in faraway places. A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc A mutual fund is answer to all these situations. It appoints professionally qualified and experienced staff that manages each of these functions on a full time basis. The large pool of money collected in the fund allows it to hire such staff at a very low cost to each investor. In effect, the mutual fund vehicle exploits economies of scale in all three areas research, investments and transaction processing. While the concept of individuals coming together to invest money collectively is not new, the mutual fund in its present form is a 20th century phenomenon. In fact, mutual fund gained popularity only after the Second World War. Globally, there are thousands of firms offering tens of thousands of mutual funds with different investment objectives. Today, mutual funds collectively manage almost as much as or more money as compared to banks Mutual Funds now represent perhaps the most appropriate investment opportunity for most investors. As financial markets become more sophisticated and complex, investors need a financial intermediary who provides the required knowledge and professional expertise on successful investing. As a result, in the birthplace of

2 mutual funds - the U.S.A. - the fund industry has overtaken the banking industry: more funds are under mutual fund management than deposited with banks. In India with more person getting interested to earn more from their saving to minimize the effect of growing inflation mutual funds are becoming one the best way to achieve the required solution. Despite the fact that mutual funds are still a new financial intermediary in India, they have started opening up many exciting investment opportunities for the Indian investor. A mutual fund is a professionally-managed firm of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. In other words we can say that A Mutual Fund is a trust registered with the Securities and Exchange Board of India (SEBI), which pools up the money from individual / corporate investors and invests the same on behalf of the investors /unit holders, in equity shares, Government securities, Bonds, Call money markets etc., and distributes the profits. 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 Number of shares currently issued and outstanding

ADVANTAGES OF MUTUAL FUNDS

Professional Management The primary advantage of funds (at least theoretically) is the professional management of your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolios. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investments. Diversification By owning shares in a mutual fund instead of owning individual stocks or bonds, your risk is spread out. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds you own, the less any one of them can hurt you (think about Enron). Large mutual funds typically own hundreds of different stocks in many different industries. It wouldn't be possible for an investor to build this kind of a portfolio with a small amount of money. Economies of scale Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than what an individual would pay for securities transactions. Liquidity Just like an individual stock, a mutual fund allows you to request that your shares be converted into cash at any time.

DRAWBACKS OF MUTUAL FUNDS

No guarantee No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio is. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money. Fees and commission All funds charges administrative fees to cover their day to day expenses. Some funds also charge sales commission or loads to compensate brokers, financial consultants or financial planners. Even if you do not use a broker or other financial adviser, you will pay a sales commission if you buy shares in a load fund. Taxes During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 % of the securities in their portfolios, if your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made. Management risk When you invest in a mutual fund, you depend on the fund manager to make the right decisions regarding the funds portfolio. If the manager does not freeform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index funds, you forego management risk because these funds do not employ managers.

RISK ASSOCIATED WITH THE INVESTMENT IN THEMUTUAL FUNDS

Savings are invested in various investment opportunities for earning better returns. The returns of the investment depend upon the risk of such investment. All investments involve some risk. The objective of any investor is to minimize the risk and maximize returns. The value of financial assets depends on their return and risk patterns. Risk can be defined as the chance factor in trading in which expected or perspective advantage, gain, profit or return may not materialize The actual outcome of investment may be less than the expected outcome. The greater is the variability in the possible outcome, the greater is the risk. Generally, the variance and the standard deviation of return are used as the alternative statistical measures of the risk of the financial asset. Similarly, covariance measured the risk of the assets, relative to other assets in a portfolio. Some risks can be controlled by the investors. Others cannot be controlled, and they are to be borne by the investor compulsorily.

DIFFERENT TYPES OF RISK IN MUTUAL FUNDS

Risk is an inherent aspect of every form of investment. For mutual fund investments, risks would include variability, or period-by-period fluctuations in total return. The value of the schemes investment may be affected by factors affecting capital markets such as price and volume, volatility in the stock markets, interest rates, currency exchange rates, foreign investment, changes in government policy, political, economic or other development Market Risk At times the prices or yields of all the securities in a particular market rise or fall due to broad outside influences. When this happens, the stock prices of both an outstanding, highly profitable company and a fledgling corporation may be affected. This change in price is due to market risk. Inflation Risk Sometimes it is referred to as loss of purchasing power. Whenever the rate of inflation exceeds the earnings on your investment, you run the risk that you will actually be able to buy less, not more. Credit Risk In short, how stable is the company or entity to which you lend your money when you invest? How certain are you that it will be able to pay the interest you are promised, or repay your principal when the investment matures? Interest Rate Risk

Changing interest rates affect both equities and bonds in many ways. Bond prices are influenced by movements in the interest rates in the financial system. Generally, when interest rates rise, prices of the securities fall and when interest rates drop, the prices increase. Interest rate movements in the Indian debt markets can be volatile leading to the possibility of large price movements up or down in debt and money market securities and thereby to possibly large movements in the NAV. Investment Risk In the sectored fund schemes, investments will be predominantly in equities of selected companies in the particular sectors. Accordingly, the NAV of the schemes are linked to the equity performance of such companies and may be more volatile than a more diversified portfolio of equities. liquidity Risk Thinly traded securities carry the danger of not being easily saleable at or near their real values. The fund manager may therefore be unable to quickly sell an illiquid bond and this might affect the price of the fund unfavorably. Liquidity risk is characteristic of the Indian fixed income market. Changes in the Government Policy Changes in government policy especially in regard to the tax benefits may impact the business prospects of the companies leading to an impact on the investments made by the fund.

PERFORMANCE OF MUTUAL FUND IN INDIA

Let us start the discussion of the performance of mutual funds in India from 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. And their idea of this investment was good. 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 were accustomed with guaranteed high returns by the beginning 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 preparedness 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 choices 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 scandals, the losses by disinvestments and of course the lack of transparent rules in the where about 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 competitive 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.

ORGANISATION OF MUTUAL FUND

9 ORGANISATION OF MUTUAL FUND A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. AMC approved by SEBI manages the fund by making investments in various types of securities. A custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI regulations by the mutual fund. Sponsor Mutual Fund as Trust Asset Management Company Other Fund Constituents

1. Sponsor Any person acting alone or in concert with another body corporate comparable to a promoter of a company as he gets fund registered with SEBI. For person to qualify as sponsor at least 40% of the initial Net worth of AMC should be contributed by him should be in the financial services business for a period of not less than five years should possess sound financial track record of over five years & should have positive net worth in all the immediately preceding five years form a trust and appoint Board of Trustees appoint AMC directly or in concert with Trustees.

2. Mutual Fund as Trust Constituted as Trust under Indian Trust Act, 1882 (and registered under Indian Registration Act, 1908). Sponsor acts as Settler of trust contributes initial trustee to hold the investors assets in trust. Trust deed to be executed by the sponsor in favor of trustees.

3. Trustees Eligibility of Board of Trustees or a Trustee Company Not guilty of moral turpitude Not convicted (economic offence and securities laws) Not part of AMC (director, employee or officer of AMC) Appointment approved by SEBI More than one trusteeship (in mutual fund industry; approved by SEBI)

10 At least two third should be independent Meaning of Independence Rights of Trustees Appoint AMC with SEBI approval Approve schemes floated by AMC Right to necessary information Remedial action to ensure that business is conducted as per SEBI regulation right to dismiss AMC with approval from SEBI and in accordance with regulations Ensure based on quarterly review that any shortfall in NW of AMC is made up. Obligations of Trustee Investment Management Agreement between trustee and AMC with approval from SEBI (4th schedule) Monitoring of AMC by trustees right to information Right to dismiss the AMC with approval SEBI Must ensure transactions are in accordance with trust deed Ensure AMC has proper systems and procedures Due diligence in appointment of brokers Ensure AMC is managing funds independent of other activities Half yearly report of fund activities and certificate that AMC has been managing funds independent of other activities 4. Other Fund Constituents i. Custodian and Depositories For safekeeping of securities and participating in clearing system through approved depository companies. Entity independent of the sponsors direction and responsibility of the Trustees. Bankers Bankers are dealing with money for buy and sale of units, paying and receiving funds for investments, discharging obligations for operational expenses. Transfer Agent Transfer agents are used for used for issuing and redeeming units, preparation of transfer documents, updating investor records, in-house or external agency. Distributors Distributor enable fund to sell units over a wide bas of investors, brokers, banks, individual agents.

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HOW TO INVEST IN MUTUAL FUND

1. 2. 3. 4. Reading a Prospectus Objective Statement Performance Fees and Expenses THE PROCESS TO PURCHASE AND REDEEM UNITS

The most common method to invest in a fund once you are in it is to simply fill out investment forms and write a check to the mutual fund family. This is probably the easiest but it often takes a few days or even a week to have the funds credited to your account. Another method that is common is automatic withdrawals. These allow you to have a certain amount, which you choose to be deducted from your bank account each month. These are excellent for getting into the habit of investing on a regular basis. The fund will also provide information on how you can redeem your shares. One common way is to request redemption by filling out a form or writing a letter to the mutual fund family. This is the most common method but it isnt the only one. Now that you understand the basics of a prospectus, you are one step closer to getting started in mutual funds. So when you finally receive the information you requested on a mutual fund, look it over carefully and make an educated decision if it is right for you.

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PROCESS OF INVESTING IN MUTUAL FUND

Identify Your Investment Needs Your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, and level of income and expenses among many other factors. Therefore, the first step is to assess your needs. You can begin by defining your investment objectives and needs, which could be regular income, buying a home or finance a wedding or educate your children or a combination of all these needs, the quantum of risk you are willing to take and your cash flow requirements.

Choose the Right Mutual Fund The important thing is to choose the right mutual fund scheme, which suits your requirements. 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.

Select the Ideal Mix of Schemes Investing in just one Mutual Fund scheme may not meet all your investment needs. Your may consider investing in a combination of schemes to achieve your specific goals.

Invest Regularly The best approach is to invest a fixed amount at specific intervals, say every month. By investing a fixed sum each month, you buy fewer units when the price is higher and more units when the price is low, thus bringing down your average cost per unit. This is called rupee cost averaging and do investors all over the world follow a disciplined investment strategy.

Start Early It is desirable to start investing early and stick to a regular investment plan. If you start now, you will make more than if you wait and invest later. The power of compounding lets you earn income on income and your money multiplies at a compounded rate of return. The Final Step All your need to do now is to for online application forms of various mutual fund schemes and start investing. You may reap the rewards in the years to come.

13 THE COST ASSOCIATED WITH MUTUAL FUND Costs are the biggest problem with mutual funds. These costs eat into your return, and they are the main reason why the majority of funds end up with sub-par performance. What's even more disturbing is the way the fund industry hides costs through a layer of financial complexity and jargon. Some critics of the industry say that mutual fund companies get away with the fees they charge only because the average investor does not understand what he/she is paying for. Fees can be broken down into two categories: 1. ongoing yearly fees to keep you invested in the fund. 2. Transaction fees paid when you buy or sell shares in a fund. The Expense Ratio The ongoing expenses of a mutual fund are represented by the expense ratio. This is sometimes also referred to as the management expense ratio (MER). The expense ratio is composed of the following: 1. The Cost Of Hiring The Fund Manager(S) Also known as the management fee, this cost is between 0.5% and 1% of assets on average. While it sounds small, this fee ensures that mutual fund managers remain in the country's top echelon of earners. Think about it for a second: 1% of 250 million (a small mutual fund) is $2.5 million - fund managers are definitely not going hungry! It's true that paying managers is a necessary fee, but don't think that a high fee assures superior performance.

2. Administrative Costs These include necessities such as postage, record keeping, customer service, cappuccino machines, etc. Some funds are excellent at minimizing these costs while others (the ones with the cappuccino machines in the office) are not. On the whole, expense ratios range from as low as 0.2% (usually for index funds) to as high as 2%. The average equity mutual fund charges around 1.3%1.5%. You'll generally pay more for specialty or international funds, which require more expertise from managers. Loads are just fees that a fund uses to compensate brokers or other salespeople for selling you the mutual fund. All you really need to know about loads is this: don't buy funds withloads.

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Here is how certain loads work 3. Front-end loads These are the simplest type of load: you pay the fee when you purchase the fund. If you invest $1,000 in a mutual fund with a 5%, $50 will pay for the sales charge, and $950 will be invested in the fund. 4. Back-end loads (also known as deferred sales charges) These are a bit more complicated. In such a fund you pay the back end load. If you sell a fund within a certain time frame. A typical example is a 6% backend load that decreases to 0% in the seventh year. The load is 6% if you sell in the first year, 5% in the second year, etc. If you don't sell the mutual fund until the seventh year, you don't have to pay them.

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CATEGORIES OF MUTUAL FUND

Mutual funds can be classified as follow:

Based on their structure

Open-ended funds: Investors can buy and sell the units from the fund, at any point of time. Close-ended funds: These funds raise money from investors only once. Therefore, after the offer period, fresh investments cannot be made into the fund. If the fund is listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be made during specified intervals. Therefore, such funds have relatively low liquidity.

Based on their investment objective i. Equity Funds These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance, even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as: Index funds In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their portfolio mirrors the benchmark index both in terms of composition and individual stock weight ages. Equity diversified funds 100% of the capital is invested in equities spreading across different sectors and stocks. Dividend yield funds It is similar to the equity diversified funds except that they invest in companies offering high dividend yields. Thematic funds

16 Invest 100% of the assets in sectors which are related through some theme. e.g. -An infrastructure fund invests in power, construction, cements sectors etc. Sector funds Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will invest in banking stocks. ELSS- Equity Linked Saving Scheme provides tax benefit to the investors. Balanced fund Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes: Debt-oriented funds -Investment below 65% in equities. Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

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DEBT FUND They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs. Liquid funds- These funds invest 100% in money market instruments, a large portion being invested in call money market. Gilt funds ST- They invest 100% of their portfolio in government securities of and T-bills. Floating rate funds - Invest in short-term debt papers. Floaters invest in debt instruments which have variable coupon rate. Arbitrage fund- They generate income through arbitrage opportunities due to mispricing between cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities. Gilt funds LT- They invest 100% of their portfolio in long-term government securities. Income funds LT- Typically; such funds invest a major portion of the portfolio in long-term debt papers.

17 MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities.

RISK VS RETURN

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MEASURING AND EVALUATING MUTUAL FUND PERFORMANCE

Every investor investing in the mutual funds is driven by the motto of either wealth creation or wealth increment or both. Therefore its very necessary to continuously evaluate the funds performance with the help of factsheets and newsletters, websites, newspapers and professional advisors like BIRLA mutual fund services. If the investors ignore the evaluation of funds performance then he can lose hold of it any time. In this ever-changing industry, he can face any of the following problems: Variation in the funds performance due to change in its management/ objective. The funds performance can slip in comparison to similar funds. There may be an increase in the various costs associated with the fund. Beta, a technical measure of the risk associated may also surge. The funds ratings may go down in the various lists published by independent rating agencies. 6. It can merge into another fund or could be acquired by another fund house. 1. 2. 3. 4. 5. Performance measures Equity funds The performance of equity funds can be measured on the basis of: NAV Growth, Total Return; Total Return with Reinvestment at NAV, Annualized Returns and Distributions, Computing Total Return (Per Share Income and Expenses, Per Share Capital Changes, Ratios, Shares Outstanding), the Expense Ratio, Portfolio Turnover Rate, Fund Size, Transaction Costs, Cash Flow, Leverage. Debt fund Likewise the performance of debt funds can be measured on the basis of: Peer Group Comparisons, The Income Ratio, Industry Exposures and Concentrations, NPAs, besides NAV Growth, Total Return and Expense Ratio. Liquid funds

The performance of the highly volatile liquid funds can be measured on the basis of: Fund Yield, besides NAV Growth, Total Return and Expense Ratio To measure the funds performance, the comparisons are usually done with 1. With a market index. 2. Funds from the same peer group. 3. Other similar products in which investors invest their fu

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COMPANY PROFILE

BIRLA SUNLIFE MUTUAL FUND

Birla Sun life Mutual Fund is a joint venture between Sun Life Assurance Company, the Canada-based financial service organization and the Indian industrial house of Aditya Birla, this AMC was launched in the mid-90s. Both the partners are well known in all areas that they operate in. While Aditya Birla is a household name in India and has renowned brands in businesses spread across industries as wide ranging as Aluminum (Hindalco), Textiles (Grasim), Fertilizers (Indo-Gulf), Finance (Birla Global Finance Ltd.) and Rayon (India Rayon), Sun Life is a leading financial service organization in North America. Sun Life provides services related to risk management, money management and wealth management across globe. Having established itself at Toronto in 1871, it has now spread its wings across Asia Pacific, U.S.A. and U.K. It also has a significant presence through MFS Investment Management in U.S. and Spectrum United Mutual Funds in Canada. 34The major strengths of the group are its expertise drawn from managing assets over the globe, a big agent network and an ability to cater to the need of people. Drawing on the expertise of a worldwide staff of over 10,000 people and a network of more than 65,000 agents and distributors, Sun Life is committed to providing not just products and services, but solutions for clients financial and risk management needs. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment, which is based on identifying companies that have good creditworthiness and are fundamentally strong. It places a lot of emphasis on quality of management and risk control. This is done through extensive analysis that includes factory visits and field research. It has one of the largest team of research analysts in the industry. The company is one of India's leading private mutual funds with a large customer base. Birla Mutual Fund has been constituted as a trust under the provisions of the Indian Trusts Act, 1882 and registered with SEBI. The objective of Mutual Fund is to offer to the public and other eligible investors units in one or more schemes in the Mutual Fund for making group or collective investments primary in Indian Securities in accordance with and as permitted under the directions and guidelines issued from time to time by SEBI. The Sponsors of Birla Mutual Fund are Birla Global Finance Ltd. and Sun Life (India) AMC Investments Inc., which is wholly owned subsidiary of Sun Life Financial Services Company of Canada. Birla Sun Life Trustee Company Private Ltd. (BSLTC) is a company incorporated with limited liability under the Companies Act, 1956. Birla Sun Life Asset Management Company Ltd. (BSLAMC) is the investment manager of Birla Mutual Fund.

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Sun Life Financial

Sun Life Financial is a leading international financial services organization providing a diverse range of wealth accumulation and protection products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Since its inception in 1994, Birla Sun Life Mutual fund has emerged as one of India's leading Mutual Funds managing assets of a large investor base. The fund offers a range of investment options, which include diversified and sector specific equity schemes, fund of fund schemes, hybrid and monthly income funds, a wide range of debt and treasury products and offshore funds. Birla Sun Life Asset Management Company Ltd. (BSLAMC), the investment managers of Birla Sun Life Mutual Fund, is a joint venture between the Aditya Birla Group and the Sun Life Financial Services Inc. of Canada. The joint venture brings together the Aditya Birla Group s experience in the Indian market and Sun Life s global experience.

No. of schemes No. of schemes including options Equity Schemes Debt Schemes Short term debt Schemes Equity & Debt Money Market Gilt Fund

71 218 63 106 17 10 0 16

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Vision
To be the most trusted name in investment and wealth management, to be the preferred employer in the industry and to be a catalyst for growth and excellence of the asset management business in India.

Mission
To consistently pursue investor's wealth optimization by Achieving superior and consistent investment results Creating a conductive environment to hone and retain talent Providing customer delight Institutionalizing system-approach in all aspects of functioning Upholding highest standards of ethical values at all times

The Aditya Birla Group is one of India's largest business houses. Global in vision, rooted in Indian values, the Group is driven by a performance ethic pegged on value creation for its multiple stakeholders. The Group's operations span 66 state of the art, straddling India Thailand, Malaysia, Indonesia, Egypt, Philippines, Canada, Australia and China. A US $28 billion corporation with a market cap. Of US $31.5 billion and in the League of Fortune 500, the Aditya Birla Group is anchored by an extraordinary force of 100,000 employees, belonging to 25 different nationalities. Over 50 per cent of its revenues flow from its operations across the world. The Aditya Birla Group is a dominant player in all its areas of operations viz; Aluminium, Copper, Cement, Viscose Staple Fibber, Carbon Black, Viscose Filament Yarn, Fertilizers, Insulators, Sponge Iron, Chemicals, Branded Apparels, Insurance, Mutual Funds, Software and Telecom. The Group has strategic joint ventures with global majors such as Sun Life (Canada), AT&T (USA), the Tata Group and NGK Insulators (Japan), and has ventured into the BPO sector with the acquisition of Trans Works, a leading ITES/BPO company.

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BIRLA SUN LIFE MUTUAL FUNDs DIFFERENT SCHEMES

EQUITY SCHEMES
Birla Sun Life Advantage Fund Birla Sun Life Dividend Yield Plus Birla Sun Life Tax Plan Birla Sun Life Index Fund Birla Sun Life India Gen Nect Fund Birla Sun Life India Opportunities Fund Birla Sun Life Midcap Fund Birla Sun Life MNC Fund Birla Sun Life Basic Industries fund

DEBT SCHEMES
Birla Sun Life Short Term Opportunities Fund Birla Sun Life Dynamic Bond fund Birla Sun Life Gilt Plus- liquid Plan Birla Sun Life Gilt Plus-PF Plan Birla Sun Life Gilt Plus- Regular Plan Birla Sun Life Income Plus Birla Sun Life Govt. Securities(Long Term) Birla Sun Life Govt. Securities(Short Term) Birla Sun Life Income Fund- Half Yearly Dividend Birla Sun Life Income Fund- Quarterly Dividend Birla Sun Life Liquid Plus-Institutional Monthly Dividend Birla Sun Life Liquid Plus-Retail Monthly Dividend Birla Sun Life Short Term Fund- Monthly Dividend

Birla Sun Life Buy India Fund

Birla Sun Life Equity Fund

Birla Sun Life Frontline Equity Fund

Birla Sun Life New Millennium fund Birla Sun Life Tax Relief96 Birla Sun Life Top 100 fund

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MARKETING DEPARTMENT

Marketing is a comprehensive term & it includes all resources & set of activities necessary to direct & facilitate the flow of goods & services from producer to consumer in the process of distribution. Marketing is the human activity directed at satisfying needs & wants through exchange process. Marketing is the process of planning, pricing, distribution of goods, ideas; services create exchanges that satisfy individual & organizational goals.

PRODUCT PLANNING
A product planning is a company plan for marketing its products. Product planning means planning for the product that is to decide what type of products to be produced or what needs or requirements the product should satisfy. In Birla Sun Life Mutual Fund, product planning is done very carefully. They first contact Advisors & ask, for the what type of product customers want means Debt based, Equity Based or Low risk Product etc then they prepare few samples & give to Advisors. As per the suggestions & Response of customers they prepare the new Schemes.

STRATEGIES RELATED PRODUCT

In developing a marketing strategy of individual products, the seller has to comfort many decision. There are four elements related to the products. The brief study of these elements will complete the concept. These four elements are: Branding Packing & labeling Promotion After sales service First one is Brand. Branding is the art and corner stone of marketing. A brand identifies the seller or marketing. It can a name, trademark, logo or other symbol under trademark law, the seller is granted exclusive right to the use of brand name Second element is packing and labeling. Many marketers are of view that packing is a fifth Plan along with price, product, place and promotion. Packing includes the activities of designing and producing the container or wrapper for product while the label identifies the product. Birla Sun Life Mutual Fund also gives much important to the packing and labeling. Next is Promotion. Today promotion is one of the most important tools for stay in competition. Birla give full attention on this segment because Mutual Fund

24 Industry is totally service based company and required high promotion to attract the investors. BIRLA prepare and distribute its new schemes regularly with some exclusive paper advertisement. Because in this industry the past performance is only measure of performance of company and it only show through paper Advertisement. It also distributes Seasonal Gifts to their Advisor for promoting their product and motivates them. Example: Give free Umbrella in Monsoon under Monsoon Dhamaka Schemes to attract the advisor for promote BIRLAs products. In this business the actual work of company start after sales of product i.e. After Sales Services. After Sales Services include how company response to their Clint. BIRLA is known for their After Sales Services.

Birla send monthly valuation report of their Clint through currier. Birla solved any Query within 48 hours. Birla also continues suggest good schemes to their current Clint. Birla give Statement of their (Clint) investment free of costs.

PERSONNEL (HR) DEPARTMENT

Personnel management is the most important area of any business organization. The main aim of personnel management is to manage the personnel at work. It is concern with employees both as individual as well as group. The aim being to get better results with their collaboration and activity involvement in the organization activity. Personnel management means quite simply the task of dealing with human relationship within an organization. Personnel management is that phase of management which deals with the effective control and use of manpower as distinguished from other sources of power

ORGANISATION STRUCTURE
Organization is a group of people working together co-operating under authority, towards achieving benefit the participants and the organization. Every organization has goals and objectives. In Birla Sun Life Mutual Fund, there is a separate personnel department for achievement of goals. Personnel management is a most important part in an organization. All the functions related with personnel department. Personnel manager has got higher status in the organization.

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RECRUITMENT
Recruitment is the process of selection for prospective employees simulating them to apply for job in the organization. In other words it is linking activity bearing to gather with jobs, selection jobs. Recruitment makes it possible to acquire the number and type of people necessary to ensure the continued operation of the organization. Recruitment is a process of searching for prospective employee and stimulating encouraging them to apply for jobs in an organization. There are two sources of requirement: 1. Internal Sources Promotion Transfer Demotion 2. External Sources Advertisement Employment On Campus Requirement Employee Recommendation In Birla Sun Life Mutual Fund they are using internal sources as well as external sources. Their policy for external sources is such that first they give advertisement in the newspaper and they have also contact with employment exchange through these source first of all collect application, separated and then after appropriate candidates are called for the interview. SELECTION After creating if application of required number of employees secured through different sources of recruitment the selection process begins. The main purpose of selection process of selection process is it find the right man for each job. The efficiency and profitability of the concern depends mainly on proper selection of the personnel. Company select employees through commercial made of three numbers. One is the work manager, second is of manager and the third is the head department in which company exists.

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WHY SHOULD INVESTORS CHOOSE BIRLA?

Excellence is next to nothing.and here at Birla everybody tries their best to offer excellent services to its clientele through its offerings maintaining the Birla culture which includes: Controlled and low cost service culture Birla is there to serve its client at the minimum possible cost. it controls cost by its various cost- cutting techniques and minimization of avoidable costs. Large volume processing capability Being the largest financial service provider in the country, it has the unique distinction of operating its activities on a large scale which benefits all the parties cordially. Adherence to strict time schedule Birla knows that time is money and tries it best to finish the task within the stipulated time schedule. Expertise in coordinating multi-location responses Birla has got a wide network and hence one can find its branches at most of the places in India. Thus it enjoys its presence everywhere and coordinates among itself in solving the queries and in responding to any situation. Expertise in managing independent entities such as banks, post-office etc. The work culture of Birla and the ethics followed inside Birla makes its workforce compatible with everybody. Pooling of group resources Birla group consists of eight subsidiaries, so it can easily pool up its resources for accomplishment of its goals, whenever needed. The groups can help each other whenever there are peaks and lows, and even in the case when they have huge targets just as we saw few years back, Tata group pooling its resources to acquire Corus.

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How Birla achieved it?

The core competency of Birla lies in the following points due to which it enjoys a1 competitive edge over its competitors. The following culture adopted by Birla makes it all time favorite among its clientele: 1. Professionally managed by qualified and trained manpower. 2. Uniquely structured in-house software and hardware department 3. Query handling within 48 hrs. 4. Strong secretarial, accounting and audit systems. 5. Unique work culture of working 7 days a week in 3 shifts. 6. Unmatched network spreading all over India.

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OBJECTIVES
To study various investment alternatives and in particular investors preference towards mutual funds. To study the preference of investors in scenario of less risk and more return. To study whether the investors are considering Birla Sun Life a better option or not.

RESEARCH METHODOLOGY

29 Research as a care full investigation or enquiry especially through search for new facts in any branch of knowledge

Secondary Data

Primary Data
Questionnaire
Companys Annual Reports

Respondents
Journals and Publications of Birla sun life mutual funds

Website

Primary Data Collection: The primary data was collected by means of questionnaire and analysis was done on the basis of response received from the customers. Secondary Data Collection: The Secondary data refer to those data which are gathered for some other purpose and are already available in the internal records and commercial, trade, or government publications.

Research Design
. The following sample design has been used in the research study.

Descriptive research
Descriptive research does not fit neatly into the definition of either quantitative or qualitative research methodologies, but instead it can utilize elements of both, often within the same study. The term descriptive research refers to the type of research question, design, and data analysis that will be applied to a given topic

Sample size: The sample size was so selected that it could be adequate enough to represent
the whole Population. The sample was taken from the Punjab state Jalandhar city, from that person who does investment through reading.

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Size of the sample is 100 people Sampling technique

Convenience Sampling

A convenience sample is a matter of taking what you can get. It is an accidental sample. Although selection may be unguided, it probably is not random, using the correct definition of everyone in the population having an equal chance of being selected. This sampling is also known as non-probability

Analysis and Interpretation

After the data collection, it was compiled, classified and tabulated manually and with help of computer. Then the task of drawing inferences was accomplished with the help of percentage and graphic method. Different suggestions given by me to the Company after analyzing the views of every respondent are also given in the report.

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1. AGE WISE CLASSIFICATION OF RESPONDENTS

Age Below 20 20-29 30-39 40-49 50-59 Above 60 Total No. of Respondents Nil 34 6 17 18 25 100 Percentage Nil 34 6 17 18 25 100

0% 25% 34%
Below 20 20-29 30-39 40-49 50-59 Above 60

18% 6% 17%

Interpretation:
According to the survey the respondents were of different age group. The investors of age below 20 are in no number. The investors of age 20-29 are 34 in number with 34%. The investors of age 30-39 are 6 with 6%, 40-49 there are 17 investors with 17% and in between 50-59 there are 18 investors with 18% and above 60 there are 25 investors with 25%.

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2. GENDER OF THE RESPONDENTS

Gender Male Female Total No. Of respondents 80 20 100 Percentage 80 20 100

20% Male Female

80%

Interpretation:
In the survey numbers of male respondents are more in number that is about 80 % & the next position has been occupied by female respondents they are about 20% of the sample so, mainly men prefer to go for investments

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3. ANNUAL INCOME OF THE RESPONDENT Annual < 100,000 1-2 lakh 2-3 lakh Above 3 lakh Total No. Of respondents 28 40 24 8 100 Percentage 28 40 24 8 100

8% 28% 24%
< 100,000 1-2 lakh 2-3 lakh above 3 lakh

40%

Interpretation:
According to the survey, the respondents of the income group of less than 1 lakh are of 28%. They were about 40% of the respondents are of the income group between 1-2 Lakh. 24% of the respondents were of the income group 2-3 lakhs. 8% respondents were of the income group more than 3 lakhs.

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4. DO YOU INVEST IN MUTUAL FUNDS?

Options Yes No Total

No. of respondents 80 20 100

Percentage 80 20 100

10%
YES

NO

90%

Interpretation:
Under this survey 80% of the respondents say they invest in mutual funds and 20% of respondents say they dont invest in mutual funds.

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5. AWARENESS OF MUTUAL FUNDS IS THROUGH

Options Advertisement Friends Financial advisors Relatives Total

No. of respondents 25 13 35 7 80

Percentage 31 17 43 9 100

9% 31%

Advertisement Friends financial advisors

43% 17%

Interpretation:
According to the survey, the respondents are more aware of mutual funds through Financial Advisors who occupy 43%, followed by Advertisement 31% , Friends 17% & Relatives 9% .

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6. RESPONDENTS PREFFERING BIRLA SUN LIFE AS A DISTRIBUTOR OF MUTUAL FUNDS

Options Birla sun life Others Total

No. of respondents 60 20 80

Percentage 75 25 100

25%
Birla sun life

Others

75%

Interpretation:
According to the survey, 75% of the respondents are aware of Birla sun life as a distributor of mutual funds & these 75% of the investors would like to invest in Birla sun life mutual fund option. The rest 25% of the respondents would like to prefer others.

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7. PREFERENCE OF INVESTING IN STOCK MARKET

Preference Of Investing High return and high risk Tax benefits Short term gain from investment Total

No.of respondents 35 20 25

Percentage 44 25 31

80

100

High return and high risk 25% 35% Tax benefits

Short term gain from investment

20%

Interpretation:
The study shows that most of the people prefer to invest in stock market because of high risk and high return whereas some other try to capture the short term gain from investment. But a very few section of people invest because of the benefits they gain in tax.

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8. TYPE OF FUNDS RESPONDENTS PREFER TO

Options Debt Fund Equity Fund Hybrid Fund Total

No. Of respondents 16 38 6 60

Percentage 26 64 10 100

10% 26%
Debt fund Equity fund Hybrid fund

64%

Interpretation:
From the survey conducted the respondents prefer Equity funds more in number they occupy 64%, followed by Debt funds with 26% and a very few respondents prefer to hybrid funds with 10%.

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9. TYPE OF SCHEME PREFFERRED BY RESPONDENT IN DEBT FUNDS

Options Liquid Fund Gilt Fund Dynamic bond fund Income plus Bond index fund Total No. of respondents 1 2 6 4 3 16 Percentage 6 13 37 25 19 100

6% 19% 13% Liquid Fund Gilt Fund Dynamic bond fund Income plus 25% 37% Bond index fund

Interpretation: Based on the survey, it is found that the respondents prefer dynamic bond fund which occupies 37%, then follows is the bond Index Fund with 19%, thirdly Income Plus is seen with more percentage with 25, followed by Gilt Fund & Liquid Fund with 13%, & 6%.

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10.TYPE OF SCHEME PREFFERED IN EQUITY FUNDS

Options Advantage fund Mid cap Equity plan Mnc fund Index fund Dividend yield plus Total

No. of respondents 8 5 4 3 2 16 38

Percentage 21 13 11 8 5 42 100

21%

Advantage fund Mid cap

42%

Equity plan Mnc fund 13% Index fund Dividend yield plus

11% 5% 8%

Interpretation:
Based on the survey, that out of 38 sample size, most of the investors choose dividend yield plus which occupies 42%, followed by Advantage Fund with 21%, then mid cap with 13%, Equity plan 11%, then mnc fund with 8% & index fund with 5%.

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11.TYPE OF SCHEME PREFERRED IN HYBRID FUND

Options MIP I MIP II Balanced fund Total

No. of respondents 0 2 4 6

Percentage 0 33 67 100

0%

MIP II

33%
Balanced fund

50%

Interpretation:
Based on the survey, it is found that the respondents prefer to choose balanced fund with 67% of sample, followed by MIP I & MIP II schemes in the Hybrid Fund Type with 0% & 33 %.

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12.RESPONDENTS PREFFERING OTHER BRANDS OF MUTUAL FUNDS

Options HDFC UTI KOTAK MAHINDRA TOTAL No. of respondents 5 8 7 20 Percentage 25 40 35 100

25% 35%
HDFC UTI KOTAK MAHINDRA

40%

Interpretation:
Based on the survey, it is found that the respondents would definitely prefer other brands of Mutual Funds with HDFC 25%, UTI with 40%, Kodak Mahindra with 35%.

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13. OPINION ABOUT BIRLA SUN LIFE MUTUAL FUND

Options Better option Not a better option Cant say Total No. of respondents 38 12 10 60 Percentage 63 20 17 100

17%

Better option

20%

Not a better option Cant say

63%

Interpretation:
According to the survey, the respondents are mostly of the opinion that investing in Birla sun life Mutual funds is a Better option as it occupies 63%, a few respondents are of no opinion with 17% & the rest feel that it is not a better option with only20 % of the total.

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FINDINGS
1. The majority of respondents were of the age group below 29 & above 60. 2. Male occupy most of the sample size. 3. Annual income of the respondents between 1-2 lakhs prefers more of investments. 4. From the Survey conducted it is clear that 63% of the respondents feel that Mutual Fund is a good investment option. 5. 43% of the respondent got awareness of mutual funds through financial advisors 6. People prefer to invest in mutual funds because of high risk and high return whereas some other tries to capture the short term gain from investment. 7. 79% of the respondents are aware of Birla Sun Life as a distributor for Mutual Funds. 8. Out of total respondents, major of them prefer to mutual fund because of investment Strategy. 9. From the survey it is clear that most of the respondents feel Birla Sun Life as a better option for mutual fund.

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SUGGESTIONS
1. Birla Sun Life has to review their portfolio frequently to maximize the Wealth of the investors. 2. Birla Sun Life has to invest in firms, which are having good offers & high growth opportunities. 3. The awareness of mutual fund & its various schemes should be increased among the people by proper advertising, promotion and conduct in investors meets. 4. The fund manager has to be aggressive in portfolio decisions especially MIP I & MIP II fund.

LIMITATIONS
There are some limitations of my study, those are as Following:1. The study was restricted to Birla sun life mutual funds Limited to only in jalandhar city. 2. The study is conducted with the data available and the analysis was made accordingly. 3. It was tough to get all relevant facts from the personnel and employees. 4. Time factor was a limitation as only a stipulated period had been ascertained to me while the personnel had little time to my queries due to their daily busy schedule. 5. It is not feasible to compare all the products of various brokerage firms. 6. Many investors think mutual funds and shares are the one and same 7. In survey, most of the respondents were male who could not take the perceptions of the female investors.

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CONCLUSION
Birla sun life mutual funds are a better than other mutual funds brand.. . Mostly people invest their money in high risk and high return. Birla sun life mutual funds are having good return on investment. At last all cons are concluded by that Birla sun life mutual fund is still growing industry in India.

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BIBLIOGRAPHY
Books Financial Services & MarketingE. Gordon, Himalaya Publishing House, Mumbai. H. Sadhak, Response Books, New Delhi.

Mutual Funds in India -

Websites Visited: www.amfiindia.com www.mutual funds india.com www.birla sun life.com