SUMMER INTERNSHIP

ON

MUTUAL FUND :
AN ALTERNATIVE INVESTMENT
AT
KARVY
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE MASTERS DEGREE IN BUSINESS ADMINISTRATION
OF

UTTARANCHAL UNIVERSITY
SUPERVISED BY :

SUBMITTED BY:

MR. SAGAR CHANDER

ASSISTANT PROFESER

KUNAL GHAI
MBA IIIrd SEM

UTTARANCHAL UNIVERSITY
PREMNAGAR, DEHRADUN (U.K.)

CERTIFICATE
I have the pleasure in certifying that Kunal Ghai is a bonafide student of 2 nd year(3rd
Semester) of the Masters Degree in Business Administration (Batch 2013-2015), of
Uttaranchal University Premnagar Dehradun Uttarakhand.

He has completed his dissertation report entitled

MUTUAL FUND: AN

ALTERNATIVE INVESTMENT at my guidance.

I certify that this is his original effort & has not been copied from any other source. This
project has also not been submitted in any other University for the purpose of award of
any Degree.

This project fulfils the requirement of the curriculum prescribed by this Institute for the
said course. I recommend this project work for evaluation & consideration for the award
of Degree to the student.

Signature

Name of the Guide

Designation
Date

:
:

ACKNOWLEDGEMENT
Every study requires a guidance of someone who is working in that field. Firstly I would
like to thank Director Sir Dr. Pradeep Suri for providing an opportunity of preparing a
Project Report and allowing to use the resources of the institution during this project.
I am extremely thankful to my Project Guide Mr. Sagar Chander, for his precious
guidance regarding the preparation of the dissertation. His guidance has proved to be
useful and without him, the preparation of this report might not have been possible.
I am also thankful to the other faculty members of UU for extending their valuable
support for this project.
I also extend my sincere thanks to the Respondents, who helped me during the course of
project and for their gracious attitude.
I would like to take this opportunity to extend my warm thoughts to those who helped me
in making this project a wonderful experience.

PREFACE

This project report has been prepared towards the partial fulfillment of the degree of
MBA (Master of Business Administration) from UTTARANCHAL UNIVERSITY,
Dehradun. I have done my study on Mutual Funds An investment Alternative under
KARVY Consultants ltd. Dehradun.

Mutual Funds are fast becoming a preferred investment option for the investors. Mutual
Funds offer several features that make them a powerful and convenient wealth creation
vehicle worthy of consideration. An investor can invest his money in different ways in
mutual funds such as diversified portfolio, liquidity, tax savings etc.

The Indian Mutual Fund industry has started opening many of the exciting opportunities
to the investors. Investors are now looking towards equity linked investment options.
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.

LIST OF CONTENTS
1. Objective
2. Mutual Funds
Introduction of Mutual Funds
History of Mutual Funds
Organization of Mutual Funds
Types of Mutual Funds
Advantages and Disadvantages of Mutual Fund
Major Mutual Fund companies in India
3. Company Profile
4. Research Methodology
5. Findings & Suggestions
6. Comparison of various financial investment avenues
7. Top performing funds
8. Conclusion
9. Recommendation
10. Bibliography &Glossary

INTRODUCTION

CONSUMER BUYING BEHVIOUR

The main aim of marketing is meet and satisfy target customers need and
wants buyer behaviour refers to the peoples or organization conduct
activities and together with the impact of various influence on them towards
making decision on purchase of product and service in market. The field of
consumer behaviour studies how individuals, groups and organization select,
buy, use and dispose of goods, service, ideas, or experience to satisfy their
needs and desires understanding consumer behaviour and knowing customer
are never simple. The wealth of products and service produced in a country
make our economy strong. The behaviour of human being during the
purchase is being termed as Buyer Behaviour. Customer says one thing
but do another. They may not be in touch with their deeper motivations.
They are responding to influences that change their mind at the last minute.
A buyer makes take a decision whether saver spend the money.
Buyer Behaviour:
Buyer behaviour is all psychological, Social and physical behaviours of
potential
customers as they become aware of evaluate, purchase, consume and tell
others about product &service.

Consumer Buying Decision Process

There are following five stages in consumer buying decision process.

1. Problem identification:
The buying process starts when the buyer recognizes a problem or need. The
need can be triggered by internal or external stimuli. Marketers need to
identify the circumstances that trigger a particular need. By gathering
information from a number of consumers, Marketers can identify the most

frequent stimuli that spark an interest in a product category. They can then
develop marketing strategies that trigger consumer interest.
2. Information Search:
The

consumer

tries

to

collect

information

regarding

various

products/service. Through gathering information, the consumer learns about

completing brands and their features. Information may be collected form
magazines, catalogues, retailers, friends, family members, business
association, commercial, chamber of commerce, telephone directory, trade
fair etc.
Marketers should find out the source of information and their relative degree
of importance the consumes.
Personal Sources: Family, friends, neighbour, as quittances.
Commercial Source: Advertising, sales persons, dealers, packaging,
displays.
Public sources: mass media, consumer, rating organizations.
Experimental sources : Handling. Examine, using the product.

3. Evaluation of alternative:
There is no single process used by all consumers by one consumer in all
buying situations. There is several First, the consumer processes, some basic
concepts are:
First, the consumer is trying to satisfy need. Second, the consumer is looking
for certain benefits from the product solutions. The marketer must know
which criteria the consumer will use in the purchase decision.

4. Purchase:
From among the purchase of alternatives the consumer makes the solution. It
may be to buy or not to buy. If the decision is to buy. The other additional
decisions are:
Which types of bike he must buy? From whom to buy a bike
How the payment to be made? And so on. The marketer up to this stage has
tried every means to influence the purchase behaviour, but the choice is
properly consumers. In the evaluation stage the consumer forms preferences
among the brands in the choice set. The consumer may also form an
intention to but the most preferred brand.

5. Post Purchase Evaluation:

After purchase the product, the consumer will experience the same level of
product. The Marketers job not end when the product is buying must
monitor post-purchase satisfaction, post purchase action, post-purchase use
and disposal.
Characteristic of Buyer Behaviours

The chief characteristics of the buyers behaviours are as follow:(1) It consists of mental and physical activities which consumers undertake
to get goods and services and obtain satisfaction from them.
(2) It includes both observable activities such as walking through the market
to examine merchandise and making a purchase and mental activities-such
as forming attitudes, perceiving advertising material, and learning to prefer
particular brands.
(3) Consumer behaviours are very complex and dynamic to constantly
changing. And therefore, management needs to adjust with the change
otherwise market may be lot.
(4) The individuals specific behaviours in the market place is affected by
internal factor, such as need , motives, perception, and attitudes, as well as
by external of environmental influences such as the family social groups,
culture, economics and business influences

OBJECTIVE

The main objectives of the project undertaken were:

a) To know about the concept of mutual funds, their functioning, advantages and
disadvantages, and organization of mutual funds.
b) To analyze different equity, debt and balanced schemes being offered by different
mutual fund companies.
c) To compare mutual funds as an investment alternative with other investment
avenues available.
d) To know about the top performing funds under different schemes such as Equity,
Debt and Balanced schemes.
e) To create awareness about Mutual Funds and to know the preference pattern of
the investors.
f) To draw conclusions and to find out the attractiveness of mutual funds.

INTRODUCTION
World today has become a small village with the borders no longer dividing the nations in
the true sense as people can now move freely between various countries and invest their
money anywhere they want in the world.
Today the investment solution providers have a complete range of financial products and
suggest the various products after analyzing the need of the investors. With the busy
schedule of the people it is not practically possible to keep the track of the investments on
a daily basis and hence the need for a professional service arises.
Mutual funds are one such avenue for investments where there is a lot of flexibility
available with the professional services of the experts who work in the capacity of the
fund managers. In todays dynamic scenario where the interest rates on the small savings
are reducing and the market linked instruments have become the main theme of any
investment vehicle, mutual funds serve the most of the investors needs. Globally mutual
funds have been preferred route of investments in the capital markets. The ordinary
investor does not have time or the required knowledge about the daily movements of the
markets.
Mutual funds are one of the best investments ever created because they are very cost
efficient and very easy to invest in.
Mutual funds are investment vehicles, and you can use them to invest in asset classes
such as equities or fixed income. The investor should compare the risks and expected
yields after adjustments of tax on various investments while taking decisions. The
investors may seek advice from experts and consultants including agents and distributors
of mutual funds schemes while making investment decisions.

What is a Mutual Fund?

A mutual fund is simply a financial intermediary that allows a group of investors to

pool their money together with a predetermined investment objective. The mutual
fund will have a fund manager who is responsible for investing the pooled money
into specific securities (usually stocks or bonds). When you invest in a mutual fund,
you are buying shares (or portions) of the mutual fund and become a shareholder of
the fund.

Thus it is a mechanism for pooling the resources by issuing units to the investors
and investing funds in securities (such as share, debentures etc.) in accordance with
objectives as disclosed in offer document.

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

sectors and thus the risk is reduced. Diversification reduces the risk because all
stocks may not move in the same proportion at the same time. Mutual Fund issues
Units to the investors in accordance with quantum of money invested by them.
Investors of mutual funds are known as unit holders.
The profit or losses are shared by the investors in proportion to their investments.

The mutual funds normally come out with a number of schemes with different
investment objectives which are launched from time to time. A mutual fund is
required to be registered with Securities and Exchange Board of India (SEBI) which
regulates before it can collect funds from the public.

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

Flow chart depicting working of a mutual fund

Source:www.amfiindia.com

HISTORY OF MUTUAL FUNDS IN INDIA

The origin of mutual fund industry in India is with the introduction of the concept of
mutual fund by UTI in the year 1963.The objective then was to attract the small
investors and introduce them to market investment. Though the growth was slow, but
it accelerated from the year 1987 when non-UTI players entered the industry
In the past decade, Indian mutual fund industry had seen dramatic improvements,
both quality wise as well as quantity wise. Before, the monopoly of the market had
seen an ending phase,: the Assets under Management (AUM) were Rs. 67bn. The
private sector entry to the fund family raised the AUM to Rs. 470 bn in March 1993
and till April 2004; it reached the height of 1,540 bn. Putting the AUM of the Indian
Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI
alone, constitute less than 11% of the total deposits held by the Indian banking
industry.
The main reason of its poor growth is that the mutual fund industry in India is new in
the country. Large sections of Indian investors are yet to be intellectuated with the
concept. Hence, it is the prime responsibility of all mutual fund companies, to market
the product correctly abreast of selling.
The mutual fund industry can be broadly put into four phases according to the
development of the sector. Each phase is briefly described as under,

First Phase - 1964-87(Unit Trust of India)

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was
setup by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from
the RBI and the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. The first scheme launched by
UTI was Unit Scheme 1964. Over the years, US-64 attracted, and probably still has,
the largest number of investors in any single investment scheme. Later in 1970 and
80s, UTI started innovating and offering different schemes to suit the needs of
different classes of investors. Until 1980s, UTIs operations in these stock market
often determined the direction of market movements. At the end of 1988 UTI had
Rs.6,700 crores of assets under management.

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

1987 marked the entry of non-UTI, Public Sector mutual funds, bringing in competition.
With the opening up of the economy, many public sector banks and financial
institutions were allowed to establish mutual funds. SBI Mutual Fund was the first
followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund
(Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of
Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. These mutual funds
helped enlarge the investor community and the investible fund. The end of 1993
marked Rs. 47,004 as assets under management.

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

With the entry of private sector funds in 1993; a new era started in the Indian
mutual fund industry; giving the Indian investors a wider choice of fund families.
Also; 1993 was the year in which the first Mutual Fund Regulations came into
being; under which all mutual funds, except UTI were to be registered and
governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton)
was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing; with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds with
total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores
of assets under management was way ahead of other mutual funds.

Fourth Phase - since February 2003

This phase had bitter experience for UTI. It was bifurcated into two separate
entities. One is the Specified Undertaking of the Unit Trust of India with AUM of
Rs.29, 835 crores (as on January 2003). The Specified Undertaking of Unit Trust of
India, Functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund
Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB; BOB and LIC. It
is registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000
crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the
SEBI Mutual Fund Regulations, and with recent mergers taking place among
different private sector funds, the mutual fund industry has entered its current phase
of consolidation and growth. As .at the end of September, 2004, there were 29
funds, which manage assets of Rs.153108 crores under 421 schemes

GROWTH IN ASSETS UNDER MANAGEMENT

The graph indicates the growth of assets over the years.

Note:
Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of
the Unit Trust of India effective from February 2003. The Assets under management of
the Specified Undertaking of the Unit Trust of India has therefore been excluded from the
total assets of the industry as a whole from February 2003 onwards.

Source: amfiindia.com

FUNDS SRUCTURE AND ITS CONSTITUENTS

LEGAL STRUCTURE OF MUTUAL FUNDS

Mutual funds have a unique structure not shared with other entities such as companies or
firms. It is important for the employees and agents to be aware of the special nature of
this structure, because it determines the rights and responsibilities of the funds
constituents i.e. sponsors , trustees, custodians, transfer agents and of course, the fund
and asset management company(AMC). It also drives the inter-relationship between
these constituents.
MUTUAL FUNDS STRUCTURE IN INDIA
India has a legal framework within which mutual funds must6 be constituted. In India
open and close ended funds operate under the same regulatory structure, and are
constituted along one unique structure as UNIT TRUSTS.
A mutual fund in India is allowed to issue open and close ended schemes under a
common legal structure. Mutual funds in India are laid down under SEBI regulations,
1996.

There are many entities involved and the diagram below illustrates the organizational set
up of a mutual fund:

Organization of Mutual Fund

Source: amfiindia.com

1. SPONSOR
Sponsor of the mutual fund is just like the entrepreneur who takes the risk of starting the
business. Sponsor can be an individual, company or another form of organization. There
are three criteria for the sponsors, which are as follows:
a) Three years profitability in the business which they are doing.
b) Five years track record of the business.
c) 40 % of the net worth of the mutual funds should come from the sponsor.
2. Asset Management Company(AMC)
The Asset Management Company is the core part of the mutual fund as the Chief
Investment Officer of the AMC will make all the investment decisions. The net worth
of the AMC at all the times should be Rs.10 crores. The success or failure of the fund
in generating returns for the investors depend to a very large extent on the skills and
knowledge of the fund manager.
3. Trustee:
Trustees are those individuals who are appointed by the sponsor and have a credit
worthiness in the market. The trustees of the mutual fund hold its property for the
benefit of the unit holders, they do not directly manage the portfolio of securities. For
this they appoint the AMC with the prior approval of SEBI. They see to it that the
interest of the mutual fund investors are protected and that the working of the mutual
fund is done in lines with the rules and regulations of the mutual fund industry.

Rights of Trustees:
1. The trustees appoint the AMC with the prior approval of SEBI.

2. They also approve each of the schemes floated by the AMC.

3. They have the right to request any necessary information from the AMC
concerning the operations of various schemes managed by AMC to ensure that the
AMC is in compliance with the trust deed and the regulation.
4. The trustees may take remedial action if they believe that the funds are not being
conducted in accordance with SEBI regulations.

4. Custodian and Depositories:

Mutual funds are in the business of buying and selling of securities in large volumes.
Handling these securities in terms of physical delivery and eventual safekeeping is
therefore a specialized activity. The custodian is appointed by the Board of Trustees
for safekeeping of physical securities or participating in any clearing system through
approved depository companies on behalf of mutual fund in case of dematerialized
securities. A custodian must fulfill its responsibilities in accordance with its
agreement with the mutual fund. The custodian should be an entity independent of the
sponsors and is required to be registered with SEBI.
Now the Indian capital market are moving away from having physical certificates for
securities, to ownership of these securities in dematerialized form with a depository.
Thus, a Mutual fund s dematerialized securities holdings will be held by a depository
through a depository participant. A funds physical securities will continue to be held
by the custodian. Thus deliveries of a funds securities are given or received by a
custodian or a depository participant, at the instruction of the AMC, although under
the overall direction and responsibility of the trustees.

5. Transfer Agents:
Transfer agents are responsible for issuing and redeeming units of the mutual fund
and provide other related services such as preparation of transfer documents and
updating investor records. A fund may choose to carry out this activity in-house and
charge the scheme for the service at a competitive market rate. Where an outside
transfer agent is used, the fund investor will find the agent to be an important
interface to deal with, since all of the investor services that a fund provides are going
to be dependant on the transfer agent.

6. Distributors:
For a fund to sell units across a wide retail base of individual investors, an established
network of distribution agents is essential. AMC usually appoint Distributors or
agents or brokers, who sell units on behalf of the fund.

Types of Mutual Funds Schemes in India

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial
position, risk tolerance and return expectations etc. The table below gives an
overview into the existing types of schemes in the Industry.

By Structure
Open - Ended Schemes
Close - Ended Schemes
Interval Schemes

By Investment Objective

Growth Schemes
Income Schemes
Balanced Schemes
Money Market Schemes

Other Schemes

Tax Saving Schemes

Special Schemes
Index Schemes
Sector Specific Schemes

Types of Mutual Funds

A mutual fund scheme can be classified into open-ended or closed-ended scheme
depending on its maturity period.
1.Open-ended Fund/Scheme :
The units offered by these schemes are available for sale and repurchase on any
business day at NAV based prices. Hence, the unit capital of the schemes keeps
changing each day. Such schemes thus offer very high liquidity to investors and are
becoming increasingly popular in India.

2.Close-ended Fund/Scheme:

The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed
number of units. These schemes are launched with an initial public offer (IPO) with
stated maturity period after which the units are fully redeemed at NAV linked prices.
In the interim, investors can buy or sell units on the stock exchanges where they are
listed. Unlike open-ended schemes, the unit capital in closed-ended schemes usually
remains unchanged. After an initial closed period, the scheme may offer direct
repurchase facility to the investors. Closed-ended schemes are usually more illiquid
as compared to open-ended schemes and hence trade at a discount to the NAV. This
discount tends towards the NAV closer to the maturity date of the scheme.

Schemes according to Investment objective:

A scheme can also be classified as growth scheme, income scheme, or balanced
scheme considering its investment objective. Such schemes may be open-ended or
close-ended schemes as described earlier. Such schemes may be classified as follows:
1.Growth Oriented Schemes :
The aim of growth funds is to provide capital appreciation over the medium to longterm .such schemes normally invest a major part of their corpus in equities. Such
funds have comparatively high risks. These schemes provide different options to the
investors like dividend option, capital appreciation, etc. and the investors may choose
an option depending on their preferences.
The investors must indicate the option in the application form. The mutual funds also
allow the investors to change the option at a later date. Growth schemes are good for
investors having a long term outlook seeking appreciation over a period of time.

2. Income/Debt oriented Scheme :

The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate debentures,
government securities and money market instruments. Such funds are less risky
compared to equity schemes. These funds are not affected because of fluctuations in
equity markets. However, opportunities of capital appreciation are also limited in such
funds. The NAVs of such funds are affected because of change in interest rates in the
country. If the interest rates fall , NAVs of such fundsare likely to increase in the short run
and vice-versa. However, long term investors may not bother about these fluctuations.

3. Balanced Fund:
The aim of balanced funds is to provide both growth and regular income as such schemes
invest both in equities and fixed income securities in the proportion indicated in their
offer documents. These are appropriate for investors looking for moderate growth. They
generally invest 40-60% in equity and debt instruments. These funds are also affected
because of fluctuations in share prices in the stock markets. However, NAVs of such
funds are likely to be less volatile compared to pure equity funds.
4.Money Market or Liquid Fund:
These funds are also income funds and their aim is to provide easy liquidity, preservation
of capital and moderate income. These schemes invest exclusively in safer short-term
instruments such as treasury bills, certificates of deposit, commercial paper and interbank call money , government securities, etc. Returns on these schemes fluctuate much
less compared to other funds. These funds are appropriate for corporate and individual
investors as a means to park their surplus funds for short periods.

Other Schemes:
1. Tax Saving Fund:

These schemes offer tax rebates to the investors under specific provisions of the Income
Tax Act, 1961 as the government offers tax incentives for investment in specified
avenues. Eg. Equity linked savings schemes(ELSS). Pension schemes launched by the
mutual funds also offer tax benefits. These schemes are growth oriented and invest predominantly in equities. Their growth opportunities and risks associated are like any
equity-oriented scheme.

2.Special schemes:
a. Index funds:
Index funds replicate the portfolio of a particular index such as the BSE sensitive index,
S&P NSE 50 index(Nifty), etc. These schemes invest in the securities in the same weight
age comprising of an index. NAVs of such schemes would rise or fall in accordance with
the rise or fall in the index, though not exactly by the same percentage due to some
factors known as tracking error in technical terms. Necessary disclosures in this regard
are made in the offer document of the mutual fund scheme.
b. Sector Specific Schemes:
These are the funds/schemes which invest in the securities of only those sectors or
industries as specified in the offer documents. Eg :pharmaceuticals, software, FMCG,
petroleum stocks, etc. The returns in these funds are dependent on the performance of the
respective sectors/industries. While these funds may give higher returns, they are more
risky compared to diversified funds. Investors need to keep a watch on the performance
of those sectors/industries and must exit at an appropriate time. They may also seek
advice of an expert.

Advantages of Mutual Funds

The advantages of investing in a Mutual Fund are:

Diversification
The best mutual funds design their portfolios so individual investments will react
differently to the same economic conditions. For example, economic conditions like
a rise in interest rates may cause certain securities in a diversified portfolio to
decrease in value. Other securities in the portfolio will respond to the same economic
conditions by increasing in value. When a portfolio is balanced in this way, the value
of the overall portfolio should gradually increase over time, even if some securities
lose value.

Professional Management
Most mutual funds pay topflight professionals to manage their investments. These
managers decide what securities the fund will buy and sell.

Regulatory oversight
Mutual funds are subject to many government regulations that protect investors
from fraud.

Liquidity
It's easy to get your money out of a mutual fund. Write a check, make a call, and
you1ve got the cash.

Convenience
You can usually buy mutual fund shares by mail, phone; or over the Internet.

Low Cost
Mutual fund expenses are often no more than 15 percent of your investment.
Expenses for Index Funds are less than that, because index funds are not actively
managed. Instead, they automatically buy stock in companies that are listed on a
specific index.

Drawbacks of Mutual Funds

Mutual funds have their drawbacks and may not be for everyone:

No Guarantees
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.
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 commissions

All funds charge administrative fees to cover their day-to-day expenses. Some
funds also charge sales commissions or "loads" to compensate brokers, financial
consultants, or financial planners. Even if you don't use a broker or other financial
adviser, you will pay a sales commission if you buy shares in a Load Fund.

Management risk
When you invest in a mutual fund, you depend on the fund's manager to make the
right decisions regarding the fund's portfolio. If the manager does not perform
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. Pan cards and
mutual funds to go hand in hand

What is NAV?
A mutual fund is a common investment vehicle where the assets of the fund belong
directly to the investors. Investors subscriptions are accounted for/by the fund not as
liabilities or deposits but as Unit capital. On the other hand, the investments made on the
behalf of the investors are reflected on the assets side and are the main constituents of the
balance sheet. The funds Net Assets are therefore defined as the assets minus liabilities.
As there are many investors in a fund, it is common practice for mutual funds to compute
the share of each investor on the basis of the value of Net Assets per share / unit,
commonly known as the Net Asset Value (NAV).
Calculation of NAV according to SEBI:
NAV=Net Assets of the scheme/Number of units Outstanding i.e
NAV=Market Value of investments + Receivables + other Accrued Income +Other Assets
Accrued Expenses- Other payables Other Liabilities / No. of Units Outstanding as at
the NAV date.

How to know the performance of a mutual fund scheme?

The performance of a scheme is reflected in its net asset value (NAV) which is disclosed
on daily basis in newspapers and websites of mutual funds.
The mutual funds are also required to publish their performance in the form of half yearly
results which also include their returns/yields over a period of time i.e. last six months, 1
year, 3years, 5years and since inception of the scheme.
Apart from these, many research agencies also publish research reports on performance
of mutual funds including the ranking of various schemes in terms of their performance.

Investors should study these reports and keep themselves informed about the
performance of various schemes of different mutual funds. They can also compare the
performance of equity oriented schemes with the benchmarks like BSE Index, S&P CNX
Nifty, etc. on the basis of performance of the mutual funds, the investors should decide
when to enter or exit from a mutual fund scheme.

LOAD OR NO LOAD FUND

A load fund is one that charges a percentage of NAV for entry or exit. That is, each time
one buys or sells units in the fund, a charge will be payable. This charge is used by the
mutual fund for marketing and distribution expenses. Suppose the NAV per ynit is Rs.10.
if the entry as well as exit load charged is 1%, then the investors who buy would be
required to pay Rs.10.10 and those who offer their units for repurchase to the mutual fund
ill get only Rs.9.90 per unit. The investor should take the loads into consideration while
making investment as these affect their yields/returns. However, the investor should also
consider the performance track record and service standards of the mutual fund which are
more important. Efficient funds may give higher returns in spite of loads.
A no-load fund is one that does not charge for entry or exit. It means the investors can
enter the fund/scheme at NAV and no additional charges are payable on purchase or sale
of units.

How to invest in a scheme of mutual fund?

Mutual funds normally come out with an advertisement in newspapers publishing the
date of launch of the new schemes. Investors can also contact the agents and distributors
of mutual funds who are spread all over the country for necessary information and
application forms. Forms can be deposited with mutual funds through the agents and
distributors who provide such services.

Investors should not be carried away by commission or gifts given by agents or

distributors for investing in a particular scheme. On the other hand they must consider the
track record of mutual fund and shouldbtake right decisions.

How is a mutual fund set up?

A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset
management Company 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. Asset management Company approved by
SEBI manages the funds by making investments in various types of securities. Custodian,
who is registered with SEBI, holds the securities of various schemes of the funds 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 funds.

Future of Mutual Funds in India

By December 2004, Indian mutual fund industry reached Rs 1, 50,537 crore. It is

estimated that by 2010 March-end, the total assets of all scheduled commercial
banks should be Rs 40, 90,000 crore.
The annual composite rate of growth is expected 13.4% during the rest of the
decade. In the last 5 years we have seen annual growth rate of 9%. According to the
current growth rate, by year 2010, mutual fund assets will be double.

Let us discuss with the following table:

Aggregate deposits of Scheduled Com Banks in India(Rs. Crore)

Month/Year Mar-98 Mar-00 Mar-01 Mar-02 Mar-03 Mar- SepDec-04
04
04
Deposits
605410 851593 989141 1131188 1280853 1567251 1622579
Change in
15
14
13
12
18
3
% over last
Year
Source-RBI

Month/Year
MF AUMs
Change in
% over last
Year

Mar98
68984
-

Mutual Fund AUMs Growth

MarMarMarMarMar-04
00
01
02
03
93717 83131 94017 75306 137626
26
13
12
25
45

Sep04
151141
9

Dec-04
149300
1

Some facts for the growth of mutual funds in India

100% growth in the last 6 years.
Number of foreign AMC's is in the queue to enter the Indian markets like
Fidelity Investments, US based, with over US$1trillion assets under
management worldwide.
Our saving rate is over 23%, highest in the world. Only channelizing these
savings in mutual funds sector is required.
We have approximately 29 mutual funds which are much less than US having
more than 800. There is a big scope for expansion.
B and C class cities are growing rapidly. Today most of the mutual funds
are concentrating on theAclass cities. Soon they will find scope in the
growing cities.
Mutual fund can penetrate rural like the Indian insurance industry with
simple and limited products.
SEBI allowing the MFs to launch commodity mutual funds .

Emphasis on better corporate governance.

Trying to curb the late trading practices.

Pan cards and mutual funds to go hand in hand

The pan card and the NFO application go together now with fund houses selling them
together.
This month, SEBI made a pan card, or application proof, mandatory for mutual fund
investments.
Since then, retail investments have fallen 40-50 per cent. Fund houses like Reliance, SBI,
JM Financial and others, have begun to provide customers with pan card application
forms along with mutual fund forms.
They have also tied up with Karvy, UTI Securities and Bajaj Capital to speed up the
process.
The AMCs have taken the initiative to partner with us to facilitate many investors to
come to our branches wherever they are facing a query of pan card. We offer them the
entire service of filling up the applications, providing the form 49 A, the appropriate
ticket which is to be filed with the form and depositing with the concerned authority for
processing, said Senior Vice President, Bajaj Capital, Surajit Mishra.
Reliance, HDFC, SBI, ICICI Prudential, assisting investors, Reliance Mutual Funds,
India's largest fund house, had retail investments fall by half since July 2 when SEBI
issued the ruling.
It's now hiring photographers and pan card agents at no cost to the customer.
Fund houses like SBI, ICICI Prudential and HDFC have also started educating customers
on the importance of the pan card.
Meanwhile, JM Financial, which launched JM contra fund on Monday, is also helping
customers to acquire pan cards.
We are tying up with intermediaries or companies, which are allowed to either, facilitate
or allot pan. To a great extent for this NFO we will even fund it because the cost of
applying for pan is Rs 73-74, said Head of Sales and Marketing, JM Financial AMC,
Bhanu Katoch.
Even as fund houses set up shops for pan cards, fund houses see high expenditure on the
cards hurting their expansion plans.

TAX BENEFITS OF MUTUAL FUNDS:

1) 100% Income Tax exemption on all Mutual Fund dividends
2) Capital Gains Tax to be lower of 10% on the capital gains without factoring indexation benefit and
20% on the capital gains after factoring indexation benefit.
3) Open-end funds with equity exposure of more than 50% are exempt from the payment
of dividend tax for a period of 3 years from 1999-2000.

Over View
KARVY is a premier; integrated Financial Services Organization ranked amongst the top
five in the country in all its business segments, over 18 million individual investors in
various capacities and provides services at over 400 corporate.
In 1982, a group of Hyderabad-based practicing Chartered Accountants started KARVY
Consultants Limited with a capital of Rs.l,50,000 offering auditing and taxation services
initially. Later, it forayed into the Registrar and Share Transfer activities and subsequently
into financial services. All along, KARVY's strong work ethic and professional
background leveraged with Information Technology enabled it to deliver quality to the
individual
A decade of commitment, professional integrity and vision helped KARVY achieve a
leadership position in its field when it handled the largest number of issues ever handled
in the history of the Indian stock market in a year. Thereafter, KARVY made inroads into
a host of capital-market services, - corporate and retail-, which proved to be a sound
business synergy.
Today, KARVY has access to millions of Indian shareholders besides, companies, banks,
financial institutions and regulatory agencies. Over the past one and half decades,
KARVY has evolved as a veritable link between industry, finance and people. In January
1998, KARVY became the first Depository Participant in Andhra Pradesh. An ISO 90019002 company, KARVY's commitment to quality and retail reach has made it an
integrated financial services company.

KARVY offers all financial products under one roof:

Depository Services

On-line facilities related to depository services (NSDL & CDSL) including Demat
Account opening, Dematerialisation of physical shares, DIS execution, holding /
transaction statement, Pledge, Demat etc are available at a very attractive tariff.

Stock Broking
You can avail online trading facility (on our terminals) for all segments, be it NSECASH, NSE- Derivatives (F&O), BSE and Retail Debt Market (RDM), at all our
branches. We offer services that are beyond just a medium for buying and selling stocks
and shares. Instead we provide services, which are multidimensional and multi- focused
in their scope. There, are several advantages in utilizing our Stock Broking services,
which are the reasons why we are one of the best & the largest in the country. We also
offer Web-trading.

Distribution
You have access to every

financial/investment product

available in the market, at

our

Funds, Public issues /

Book-building offers, Fixed

Deposits, RBI / Capital

Gains & Tax Saving Bonds

offices

viz.

Mutual

etc.

Commodities Broking
We are offering, through MCX & NCDEX, spectacular growth Opportunities and
advantages to large cross-section of market

participants including Producers /

Processors, Traders, Corporate, Regional Trading Centers, Importers, Exporters,

Cooperatives, Investors, Industry Associations to trade in various commodities, be it
Bullion, Food-grains, Oils, other agricultural products, etc.

Home Loans
Do you have an existing home loan at a high interest rate? Do you require a new home
loan? We are here to serve you. And provide the best deal on Home loans. We can also
help you in getting the best deal in getting the home of your dreams.

TIN Facilitation Centre

We are authorized by NSDL to accept and process your application for PAN Card / TAN

number and for filing of e-TDS returns.

Advisory Services
At KARVY, we provide Research based Financial Advisory Services to our clients to suit
their investment needs / requirements. We have a strong financial and technical backing
of PCG group of Hong Kong. We also have a highly qualified and professional team. At
KARVY, we believe in Customer Delight rather than Customer Satisfaction.

KARVY- Early Days

The birth of Karvy was on a modest scale in 1981. It began with the vision and enterprise
of a small group of practicing Chartered Accountants who founded the flagship company
Karvy Consultants Limited. We started with consulting and financial accounting

automation, and carved inroads into the field of registry and share accounting by 1985.
Since then, we have utilized our experience and superlative expertise to go from strength
to strengthto better our services, to provide new ones, to innovate, diversify and in the
process, evolved Karvy as one of Indias premier integrated financial service enterprise.
Thus over the last 20 years Karvy has traveled the success route, towards building a
reputation as an integrated financial services provider, offering a wide spectrum of
services. And we have made this journey by taking the route of quality service, path
breaking innovations in service, versatility in service and finallytotality in service.
Our highly qualified manpower, cutting-edge technology, comprehensive infrastructure
and total customer-focus has secured for us the position of an emerging financial services
giant enjoying the confidence and support of an enviable clientele across diverse fields in
the financial world.
Our values and vision of attaining total competence in our servicing has served as the
building block for creating a great financial enterprise, which stands solid on our
fortresses of financial strength - our various companies.
With the experience of years of holistic financial servicing behind us and years of
complete expertise in the industry to look forward to, we have now emerged as a premier
integrated financial services provider.
And today, we can look with pride at the fruits of our mastery and experience
comprehensive financial services that are competently segregated to service and manage
a diverse range of customer requirements.

The Karvy Credo

Our Clients. Our Focus
Clients are the reason for our being.
Personalized service, professional care; pro-activeness are the values that help us nurture enduring
relationships with our clients.

Respect for the individual

Each and every individual is an essential building block of our organization.
We are the kiln that hones individuals to perfection. Be they our employees, shareholders or investors. We
do so by upholding their dignity & pride, inculcating trust and achieving a sensitive balance of their
professional and personal lives.
Teamwork
None of us is more important than all of us.
Each team member is the face of Karvy. Together we offer diverse services with speed, accuracy and quality
to deliver only one product: excellence. Transparency, co-operation, invaluable individual contributions for a
collective goal, and respecting individual uniqueness within a corporate whole, is how we deliver again and
again.
Responsible Citizenship
A social balance sheet is as rewarding as a business one.
As a responsible corporate citizen, our duty is to foster a better environment in the society where we live and
work. Abiding by its norms, and behaving responsibly towards the environment, are some of our growing
initiatives towards realizing it.
Integrity
Everything else is secondary.
Professional and personal ethics are our bedrock. We take pride in an environment that encourages honesty
and the opportunity to learn from failures than camouflage them. We insist on consistency between works
and actions.

MILESTONES

WORKING NETWORK OF KARVY

As the flagship company of the Karvy Group, Karvy Consultants Limited has always
remained at the helm of organizational affairs, pioneering business policies, work ethic
and channels of progress.
Having emerged as a leader in the registry business, the first of the businesses that we
ventured into, we have now transferred this business into a joint venture with
Computershare Limited of Australia, the worlds largest registrar. With the advent of
depositories in the Indian capital market and the relationships that we have created in the
registry business, we believe that we were best positioned to venture into this activity as a
Depository Participant. We were one of the early entrants registered as Depository
Participant with NSDL (National Securities Depository Limited), the first Depository in
the country and then with CDSL (Central Depository Services Limited). Today, we
service over 6 lakhs customer accounts in this business spread across over 250
cities/towns in India and are ranked amongst the largest Depository Participants in the
country. With a growing secondary market presence, we have transferred this business to
Karvy Stock Broking Limited (KSBL), our associate and a member of NSE, BSE and
HSE.

Member - National Stock Exchange (NSE), The Bombay Stock Exchange (BSE), and
The Hyderabad Stock Exchange (HSE).
Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice, flows freely
towards attaining diverse goals of the customer through varied services. Creating a
plethora of opportunities for the customer by opening up investment vistas backed by
research-based advisory services. Here, growth knows no limits and success recognizes
no boundaries. Helping the customer create waves in his portfolio and empowering the
investor completely is the ultimate goal.

Distribution of Financial Products

The paradigm shift from pure selling to knowledge based selling drives the business
today. With our wide portfolio offerings, we occupy all segments in the retail financial
services industry.
A 1600 team of highly qualified and dedicated professionals drawn from the best of
academic and professional backgrounds are committed to maintaining high levels of
client service delivery. This has propelled us to a position among the top distributors for
equity and debt issues with an estimated market share of 15% in terms of applications
mobilized, besides being established as the leading procurer in all public issues.
To further tap the immense growth potential in the capital markets we enhanced the scope
of our retail brand, Karvy the Finapolis , thereby providing planning and advisory
services to the mass affluent. Here we understand the customer needs and lifestyle in the
context of present earnings and provide adequate advisory services that will necessarily
help in creating wealth. Judicious planning that is customized to meet the future needs of

the customer deliver a service that is exemplary. The market-savvy and the ignorant
investors, both find this service very satisfactory. The edge that we have over competition
is our portfolio of offerings and our professional expertise. The investment planning for
each customer is done with an unbiased attitude so that the service is truly customized.
Our monthly magazine, Finapolis, provides up-dated market information on market
trends, investment options, opinions etc. Thus empowering the investor to base every
financial move on rational thought and prudent analysis and embark on the path to wealth
creation.

Advisory Services
Under our retail brand Karvy the Finapolis', we deliver advisory services to a crosssection of customers. The service is backed by a team of dedicated and expert
professionals with varied experience and background in handling investment portfolios.
They are continually engaged in designing the right investment portfolio for each
customer according to individual needs and budget considerations with a comprehensive
support system that focuses on trading customers' portfolios and providing valuable
inputs, monitoring and managing the portfolio through varied technological initiatives.
This is made possible by the expertise we have gained in the business over the years.
Another venture towards being investor-friendly is the circulation of a monthly magazine
called Karvy - the Finapolis'. Covering the latest of market news, trends, investment
schemes and research-based opinions from experts in various financial fields.

KARVY INVESTOR SERVICES LIMITED

Merchant Banking

Recognized as a leading merchant banker in the country, we are registered with SEBI as a
Category I merchant banker. This reputation was built by capitalizing on opportunities in
corporate consolidations, mergers and acquisitions and corporate restructuring, which
have earned us the reputation of a merchant banker. Raising resources for corporate or
Government Undertaking successfully over the past two decades have given us the
confidence to renew our focus in this sector.
Our quality professional team and our work-oriented dedication have propelled us to
offer value-added corporate financial services and act as a professional navigator for long
term growth of our clients, who include leading corporates, State Governments, foreign
institutional investors, public and private sector companies and banks, in Indian and
global markets.
We have also emerged as a trailblazer in the arena of relationships, both at the customer
and trade levels because of our unshakable integrity, seamless service and innovative
solutions that are tuned to meet varied needs. Our team of committed industry specialists,
having extensive experience in capital markets, further nurtures this relationship.
Our financial advice and assistance in restructuring, divestitures, acquisitions, demergers, spin-offs, joint ventures, privatization and takeover defense mechanisms have
elevated our relationship with the client to based on unshakable trust and confidence.

RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. In the

research methodology we study the various steps that are generally adopted by a
researcher in studying his research problem along with the logic behind them.

Nature Of the Study:

The study is exploratory in nature. The primary aim of this study is to know about the
concept of mutual funds, an analysis of the investors toward different avenues and to
throw some light on the performance of mutual funds under different schemes.
DATA SOURCES:
PRIMARY DATA: To be collected by conducting a survey of the sample size mentioned
below as well as that of the existing clients.
SECONDARY DATA: To be collected from the prospectus and various websites, the list
of which is given in the succeeding pages. The companies database has also been used for
collecting references about the existing clients.
Study has been conducted in the following manner:
Sampling method

: Judgement Sampling

Sample Size

: 200

Sample Unit

: Service class& Businessman

Geographical Location : Dehradun

LIMITATIONS OF THE PROJECT:

1. The study is limited to the city limits of Dehradun only.
2. The study is time bound for a period of two months only.
3. The limited amount of outlay for the project is also a major constraint.
4. Manpower constraint in the sense that I will be the sole person working on
the project may also be deemed as a constraint.

DATA ANALYSIS AND INTERPRETATION

1. Occupation

45% people are salaried employees, 11% people are retired, 33% people are selfemployed and 11% are professional.
2. What is the main objective with which you make investment?

40% people had the objective of savings, 25% of returns, 15% of safety and 20% had the
objective of availing tax benefits
3. Where would you like to invest?

Findings reveal that 40% people would like to invest in mutual fund,10% in real estate,
30% in insurance and 20% in share market.

4. Are you aware of mutual fund?

65% people were aware of mutual fund and 35% were not aware
5. Have you invested in mutual fund?

75% people had invested in mutual fund while 25% had not invested in mutual fund.
6. In which fund would you like to invest?

65% people showed interest in Equity fund, 15% in Debt fund, 20% in Balanced fund
7. In which scheme would you like to invest?

45% people showed interest in blue chip fund, 15% in sectoral fund, 30% in tax gain fund
and 10% in debt fund.
8. How would you rate the importance of Entry and Exit load as a factor while

Investing in Mutual Funds?

Answering to this question, most (60%) of the respondents said that it is a very important
factor, while 25% respondents said that it is an important factor and 15% did not
considered it as an important factor.

9. Have you ever availed the services of KARVY?

55% people were aware of karvy while 45% were not aware.
10. Are you satisfied by the services provided by the KARVY?

75% of the respondents were found to be satisfied by the services provided by KARVY
while 25% were unsatisfied.

SUGGESTIONS

Increasing Awareness about Mutual Funds

The organization should lay emphasis towards increasing knowledge about
Mutual Funds among people by adopting appropriate measures and actions.

Better services
KARVY should make efforts to provide better and improved services to the
investors. Any information regarding changes in Mutual Fund investment should
be properly and promptly communicated to the investors.

Promotional Activities
KARVY should undertake planned promotional program on a wide scale to reach
the potential investor and to induce them to invest in Mutual Fund. It would help
the organization in attracting more investments.

Investor friendly environment

KARVY should create an investor friendly environment in its various branches. It
should help the investors in selecting the right type of scheme which would suit
their need and pocket.

Ensuring attractive return through continuous search for low risk and better
investment avenues
The organization should ensure attractive return to its investors through
continuous search for low risk and better investment avenues.

Company should be able to build the investors faith by identifying their investment
needs and serving them accordingly

Comparison of various financial investment avenues

There are various investment avenues available in the market which have different risk
and return parameters. Every investor has his own objective accordingly to which he
makes the investment. The investment options can be broadly compared on the following
aspects:

Instruments

Risk

Returns

Liquidity Taxation

Safety

Equity

High

High

High

No LTCG

Low

Financial institution

High

Moderate

Low

Taxable

Moderate

bonds
Bank deposits

Low

Low

Low

Taxable

High

PPF

Low

Moderate

Low

Tax free

High

NSC

Low

Moderate

Low

Tax free

High

KVP

Low

Moderate

Low

Tax free

High

Mutual funds

Low

High

High

No tax

High

Analysis :

The table clearly shows that the mutual funds have more benefits of investments as
compared to other instruments in all the five parameters which are considered ideal for
making any investments. Risk which is the prime concern before making any investment
is low and the returns which are the prime motive for investments are high, at the same
time there is no taxation and liquidity which means when the investors wants he can
have his money back is also there and there is safety of capital which is also a prime
concern as all the mutual funds are SEBI registered and under its direct control.

Comparison of returns given by various financial instruments:

Returns is the prime factor that motivates any investor to make the investments. Ultimate
objective of any investment is to generate high returns for the future so that better
standard of living can be attained. In todays world where modernization has changed the
life style of people and standard of living has also gone up very sharply, there is need for
those instruments which generate higher returns with low risk.
Instruments
Financial institutions bonds

Returns (%)approximate
And annualized
5.5%

Corporate debentures

6%

Bank deposits

8% to 9%

PPF

8%

NSC

8%

KVP

8%

Equity

No assured returns

Mutual funds

No assured returns

TOP PERFORMING FUNDS CLASSIFIED ON THE BASIS OF THE

NATURE OF THE SCHEME

Top Funds ranked on the basis of performance as on Aug 24,2007 (On

365 days)
Debt funds
Scheme Name
Templeton India Children Asset
Gift Plan - Growth
Templeton India Children Asset
Gift Plan - Dividend
Sundaram BNP Paribas FRF LTIP - Growth
LIC MF Unit Linked Insurance
scheme
LIC Childrens Fund

365 Days
25.0953

182-days
7.7836

25.0953

7.7836

25.0285

3.2179

22.1615

12.8412

13.6067

4.7071

Performance in %
Inception Date
14.3465
Aug 24,
2007
14.3465
Aug 24,
2007
12.2772
Aug 24,
2007
9.6179
Aug 24,
2007
8.3094
Aug 24,
2007

BALANCED FUNDS
Performance in %
Scheme Name
PRINCIPAL Child Benefit - Career

365 Days

182-days

Inception

Date

45.7331

12.7282

21.2937

Aug 24, 2007

45.6887

12.7202

21.126

Aug 24, 2007

JM Balanced - Dividend

33.1821

16.2639

10.2291

Aug 24, 2007

JM Balanced - Growth

33.1545

16.2534

12.2806

Aug 24, 2007

Birla SunLife 95 - Growth

33.056

12.3482

26.9729

Aug 24, 2007

Builder Plan
PRINCIPAL Child Benefit - Future
Guard Plan

TOP EQUITY DIVERSIFIED FUNDS

Performance in %

Scheme Name

365 Days

Standard Chartered Premier Equity Fund Dividend

Standard Chartered Premier Equity Fund Growth
ICICI Prudential Service Industries Fund Growth
ICICI Prudential Service Industries Fund Dividend
Taurus Starshare

182days

Inception

52.4522

21.32

29.4873

52.4522

21.32

29.4873

49.5014

5.9088

33.4909

49.4704

5.8869

33.257

47.2538

19.0962

17.9507

Date
Aug

24,

2007
Aug

24,

2007
Aug

24,

2007
Aug

24,

2007
Aug

24,

2007

TOP SECTOR FUNDS

Performance in %
Scheme Name

365 Days

Reliance Diversified Power Fund - Bonus

70.3922

182-

Inception

Date

30.825

59.1653

Aug24,2007

70.3922

30.825

59.1653

Aug24,2007

70.3802

30.817

54.1178

Aug24,2007

JM Basic Fund - Dividend

65.0501

32.9974 9.6555

Aug24,2007

JM Basic Fund - Growth

65.0501

32.9974 18.7786

Aug24,2007

Reliance

Diversified

Power

Fund

Growth
Reliance

Diversified

Power

Fund

Dividend

days

Returns generated by Mutual Funds

The returns generated by the various categories of mutual funds have exceeded the
returns given by other instruments. The mutual funds do not assure any return on
investment but over the years mutual funds have given returns more than any other
instrument. Direct investing in equity and investing through the mutual funds have

always competed with each other. Direct investing involves lot of risk while investing
through the mutual funds reduces the risk as there is benefit of diversification.

CONCLUSION
Mutual Funds as an investment avenue have emerged as one of the fascinating investment
instrument. The investors have the benefit of low risk, high returns, liquidity, no taxation
and the professional expertise of the fund manager. Even the investors have received

more return than the market index especially in the bull run which helps those investors
who do not have the required expertise to decide which stock to go for. The returns given
by the various mutual funds over a period of say three years has been very high.
Thus, as an investment avenue mutual funds are very much suited for those investors who
want higher returns with low risk and who do not want to have direct exposure to the
stock market.

RECOMMENDATION
There should be comprehensive legislation to control the operation of the mutual
funds including the UTI. At present, mutual funds are subject to guidelines laid
down by the RBI, govt. of India and the SEBI. Further the guidelines governing the
UTI are not same. It is therefore necessary that the govt. should come out with single

set of comprehensive legislation which will uniformly be applicable to public sector

and private sector mutual funds and the UTI.
So far mutual funds in India confide themselves to urban areas; leaving vast
saving potentials in rural hinterlands. By penetrating in rural areas and
introducing saving schemes tailored to the diverse preference of rural
community and by education them about the benefits of the schemes, mutual
fund can raise burgeoning resources which can be gainful employed for the
national development.
Investors confidence in mutual fund can be restored by rendering their
operation more transparent and providing better service.
While it is fine to advertise good performance of a particular schemes by a
fund in order to attract more investment the times are fast approaching when
an honest view based approach would compel a mutual fund to advice
investor on "sell" or "switch" between schemes as emphatically as it would
advise on the purchase .so {as to attract investor, it is therefore, advisable to
mutual fund to offer this sort of counseling which will certainly make a
mutual fund different from other institutions.

BIBLIOGRAPHY

BOOKS:
KOTHARI C.R., Research Methodology

 Information Memorandum & Fact sheets of Mutual Funds

Security analysis and portfolio management, by P.Pandian

WEBSITES;
www.amfiindia.com
www.google.com
www.mutalfundsindia.com

MAGAZINES:
Business World
Dalal Street
The Economic Times

Questionnaire
Name of the customer/investor

________________________

Address

________________________

City

________________________

Telephone No

________________________

1. Occupation:
a) Salaried
b) Retired
c) Self-employed
d) Professional
2. What is the main objective with which you make investment?
a) Savings
b) Return
c) Safety
d) Tax benefit
3. Where would you like to invest?
a) Mutual fund
b) Real estate
c) Insurance
d) Share market
4. Are you aware of mutual fund?
a) Yes
b) No
5. Have you invested in mutual fund?
a) Yes
b) No
6. In which fund would you like to invest?
a) Equity Fund

b) Debt Fund
c) Balanced Fund(debt + equity)
7. In which scheme would you like to invest?
a) Blue chip fund
b) Sectoral fund
c) Tax gain fund
d) Debt fund
8. How would you rate the importance of Entry and Exit load as a factor while
Investing in Mutual Funds?
a) Very Important
b) Important
c) Somewhat Important
d) Not Important
9. Have you ever availed the services of KARVY?
b) Yes
c) No
10. Are you satisfied by the services provided by the KARVY?
a) Yes
b) No. If No, give suggestions for improvement, if any

GLOSSARY
A
Asset allocation: distribution of funds corpus in percentage terms across various
assets.

Asset Management Company: legal entity set up by a mutual fund to handle its
operations.
Average Maturity Period: average of the stated maturity dates of the securities in a
debt funds portfolio.
C
Closed-ended fund: scheme with a fixed tenure.
Corpus: amount of money available with a scheme for investing.
D
Debt funds: the class of schemes that invest only in debt securities with the objective
of generating a steady income while preserving capital.
Dividends: payments made by a mutual fund to its unit holdrs from the income
generated by it.
Dividend plan: an investment plan that periodically distributes as dividends the gains
made by it.
Dividend reinvestment plan: an investment plan in which dividends are declared but
not paid instead they are reinvested in the scheme.
E
Entry load: load which is levied at the time of buying units.
Exit load: load levied by a scheme on its unit holders when they sell their units.
Equity funds: a class of scheme that invest in stock.

F
Fixed maturity plans: short term debt funds with fixed dates of maturity.
Fund Manager: the person responsible for managing a schemes money.
G

Government securities: debt securities of tenures of over one year issued by the
government.
Growth plans: one of the investment plans offered by mutual funds wherein all gains
are reinvested.
I
Income fund: a debt fund that invests mostly in bond issued by companies and
government securities.
L
Net asset value: the simplest measure of how a scheme is performing. It shows how
much each unit of it is worth at any point of time.
O
Open ended fund: a scheme in which investors can enter or exit at any point of time,
as it is then prevailing NAV.
P
Portfolio: the list of securities held by a scheme on a given day.
Prospectus: a wordy document that contains information pertaining to a scheme,
intended to help you to make an informed decision on whether you want to invest in it
or not.
Pin: Personal identification number .An identification number given by a mutual
fund to its unit holders.
R
Redemption: when a unit holder sells his units back to mutual fund.
Returns: the gain from an investment in percentage terms.
S
SEBI: Security and Exchange Board of India.

Systematic investment plan: this plan allows an investor to invest a pre-fixed

amount in a scheme at set intervals, and drive the benefits of changing share prices
and NAV.
T
Trustee: internal regulators in a mutual fund whose job is to ensure that the fund
house is safeguarding the interest of its unit holders.
U
Unit holder: a person, or entity, who holds unit in a scheme.