A

SUMMER PROJECT REPORT

ON
MUTUAL FUND AN IDEAL PRODUCT FOR WEALTH CREATION

PRESENTED BY
MANISH KUMAR
B.L.S INSTITUTE OF MANAGEMENT
GHAZIABAD
2008-10
SUBMITTED TO ;
MUNISH KATARIA
ASSISTANT MANAGER
N.J FUND’S NETWORK
 ACKNOWLEDGEMENT

I sincerely express my gratitude to the people who helped in making this project
successful. The process was enriching and a good learning experience.

I would like to thank my industry guide and facilitator Mr. Munish Kataria who
was instrumental in directing me during the entire project and guided me to
approach the project in a structured manner and also for parting with me his
valuable time when ever required.

I would like to express my sincere gratitude to all team of Nj India Invest Pvt.Ltd,
for giving me the opportunity to work and learn in this organization. The
knowledge and experience I have gained, is truly invaluable.
 CONTENT’S
 INTRODUCTION
MUTUAL FUND’S
 HISTORY
 STRUCTURE
 OPERATION
 TYPE’S
 COMPARISON
 ADVANTAGE’S
 DISADVANTAGE’S
 RISK INVOLVED
 NET ASSET VALUE
 BASIC CONCEPT’S OF LOAD’S
 FACTOR’S AFFECTING

COMPANY’S PROFILE
 HISTORY
 VISSION AND MISSION
 PHILOSOPHY
 MANAGEMENT
 SERVICE STANDARD
 PRODUCT’S

RESEARCH METHODOLOGY

LIMITATION OF THE STUDY

FINDINGS AND RECOMMENDATIONS

QUESTIONNAIRE

BIBLIOGRAPHY
(A) MUTUAL FUND
1. 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
appreciations realized by the scheme are shared by its unit holders
in proportion to the number of units owned by them (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
inventible surplus of as little 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 zindividual also
finds it difficult to keep track of ownership of his assets,
investments, brokerage dues and bank transactions etc.
 A draft offer document is to be prepared at the time of
launching the fund. Typically, it pre specifies the investment
objectives of the fund, the risk associated, the costs involved in the
process and the broad rules for entry into and exit from the fund and
other areas of operation. In India, as in most countries, these
sponsors need approval from a regulator, SEBI (Securities exchange
Board of India) in our case. SEBI looks at track records of the
sponsor and its financial strength in granting approval to the fund
for commencing operations.

A sponsor then hires an asset management company to invest the

funds according to the investment objective. It also hires another
entity to be the custodian of the assets of the fund and perhaps a
third one to handle registry work for the unit holders (subscribers)
of the fund.

In the Indian context, the sponsors promote the Asset

Management Company also, in which it holds a majority stake. In
many cases a sponsor can hold a 100% stake in the Asset
Management Company (AMC). E.g. Birla Global Finance is the
sponsor of the Birla Sun Life Asset Management Company Ltd.,
which has floated different mutual funds schemes and also acts as an
asset manager for the funds collected under the schemes.

Characteristics:
 A mutual fund actually belongs to the investors who have
pooled their funds.
 A mutual fund is managed by investment professionals and
other service providers, who earn a fee for their services, from
the fund.
  The pool of funds is invested in a portfolio of marketable
investments. The value of the portfolio is updated every day.
 The investor’s share in the fund is denominated by ‘units’. The
value of the units changes with change in the portfolio’s value,
every day. The value of one unit of investment is called the Net
Asset Value or NAV.

2. HISTORY OF THE INDIAN MUTUAL FUND

INDUSTRY:

The mutual fund industry in India started in 1963 with the formation
of Unit Trust of India, at the initiative of the Government of India and
Reserve Bank the. The history of mutual funds in India can be broadly
divided into four distinct phases.

First Phase: 1964-1987

An Act of Parliament established Unit Trust of India (UTI) on 1963. It
was set up by the Reserve Bank of India and functioned under the
Regulatory and administrative control of the RBI. 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. At the
end of 1988 UTI had Rs.6,700 crores of AUM.
Second Phase: 1987-1993 (Entry of Public Sector Funds)
In 1987 marked the entry of non- UTI, public sector mutual funds set
up by public sector banks and Life Insurance Corporation of India
(LIC) and General Insurance Corporation of India (GIC). SBI Mutual
Fund was the first non- UTI Mutual Fund established in June 1987.

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 industry now
functions under the SEBI (Mutual Fund) Regulations 1996.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

In February 2003, following the repeal of the Unit Trust of India Act
1963 UTI was bifurcated into two separate entities. One is the
Specified Undertaking of the Unit Trust of India with assets under
management of Rs.29, 835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and
certain other schemes.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.
The graph indicates the growth of assets over the years.

GROWTH IN ASSETS UNDER MANAGEMENT

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.
3. MUTUAL FUND STRUCTURE

The Structure Consists

The structure of mutual funds in India is governed by the SEBI

Regulations, 1996. These regulations make it mandatory for mutual
funds to have a 3-tier structure of Sponsors-Trustee-AMC (Asset
Management Company). The Sponsor is the promoter of mutual fund,
and appoints the Trustee. The Trustees are responsible to the investors
in the mutual funds, and appoint the AMC for managing the
investment portfolio. The AMC is the business face of the mutual
funds, as it manages all the affairs of mutual funds. The mutual funds
and AMC have to be registered by the SEBI.
Sponsor
Sponsor is the person who acting alone or in combination with
another body corporate establishes a mutual fund. Sponsor must
contribute at least 40% of the net worth of the Investment Managed
and meet the eligibility criteria prescribed under the Securities and
Exchange Board of India (Mutual Funds) Regulations, 1996.The
Sponsor is not responsible or liable for any loss or shortfall resulting
from the operation of the Schemes beyond the initial contribution
made by it towards setting up of the Mutual Fund

Trust
The Mutual Fund is constituted as a trust in accordance with the
provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust
deed is registered under the Indian Registration Act, 1908.

Trustee
Trustee is usually a company (corporate body) or a Board of Trustees
(body of individuals). The main responsibility of the Trustee is to
safeguard the interest of the unit holders and inter-alia ensure that the
AMC functions in the interest of investors and in accordance with the
Securities and Exchange Board of India (Mutual Funds) Regulations,
1996, the provisions of the Trust Deed and the Offer Documents of the
respective Schemes. At least 2/3rd directors of the Trustee are
independent directors who are not associated with the Sponsor in any
manner.
Asset Management Company (AMC)
The AMC is appointed by the Trustee as the Investment Manager of
the Mutual Fund. The AMC is required to be approved by the
Securities and Exchange Board of India (SEBI) to act as an asset
management company of the Mutual Fund. At least 50% of the
directors of the AMC are independent directors who are not associated
with the Sponsor in any manner. The AMC must have a net worth of
at least 10 crores at all times.

Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar
and Transfer Agent to the Mutual Fund. The Registrar processes the
application form, redemption requests and dispatches account
statements to the unit holders.

Custodian
A custodian handles the investment back office of a mutual fund. Its
responsibilities include receipt and delivery of securities, collection of
income, distribution of dividends, and segregation of assets between
schemes. The sponsor of a mutual fund cannot act as a custodian to
the fund. For example, Deutsche Bank is a custodian, but it cannot
service Deutsche Mutual Fund, its mutual fund arm.

Depository
Indian capital markets are moving away from having physical
certificates for securities, to ownership of these securities in
‘dematerialized’ form with a Depository.
4.MUTUAL FUND OPERATION

Mutual Fund Operation Flow Chart

Fund managers

investors

Invest in

Pass to
Investor

stock &securities

Generate return
5.TYPES OF MUTUAL FUND
Diagram

A Mutual Fund may float several schemes, which may be classified on

the basis of its structure, its investment objectives and other
objectives.

Open – Ended Schemes

As the name implies the size of the scheme (fund) is open – i.e. not
specified or pre-determined. Entry to the fund is always open, the
investor who can subscribe at anytime. Such fund stands ready to
buy or sell its securities at anytime. The key feature of Open-ended
schemes is Liquidity. It implies that the capitalization of the fund is
constantly changing as investors sell or buy their shares. Further, the
shares or units are normally not traded on the stock exchange but are
repurchased by the funds at announced rates. Open-ended schemes
have comparatively better liquidity despite the fact that these are not
listed. The reason is that investors can any time approach mutual
fund for sale of such units. No intermediaries are required. Moreover,
the realizable amount is certain since repurchase is at a price based
on declared net asset value (NAV). The portfolio mix of such
schemes has to be investments, which are actively traded in the
market. Otherwise it will not be possible to calculate NAV. This is
the reason that generally open-ended schemes are equity based. In
Open-ended schemes, the option of dividend reinvestment is
available.

Close-Ended Schemes
A Close – ended schemes have a definite period after which their
shares/units are redeemed. The scheme is open for subscription only
during a specified period at the time of launch of a scheme. Investors
can invest in the scheme at the time of the initial public issue and
thereafter they can buy or sell the units of the scheme on the stock
exchanges where the units are listed. In order to provide an exit route
to the investors, some close-ended funds give an option of selling
back the units to the mutual fund through periodic repurchase at
NAV related prices. In these types of schemes, the size of the fund
kept to be constant. SEBI regulations stipulate that at least one of the
two exit routes is provided to the investor i.e. either repurchase
facility or through listing on stock exchanges. These mutual funds
schemes disclose NAV generally on weekly basis.
Interval schemes
Interval Schemes combine the features of both open-ended and close-
ended schemes. They are open for sale or redemption during pre-
determined intervals at NAV based prices.

Mutual Fund schemes by Investment Objectives:

EQUITY FUNDS
These funds invest a major part of their corpus in equities. The
composition of the fund may vary from scheme to scheme and the
fund manager’s outlook on various scrip’s.
The Equity Funds are sub-classified depending upon their investment
objective, as follows:

1. Growth Fund: Aim to provide capital appreciations over the

medium to long term. These schemes normally invest a majority
of their funds in equities and are willing to bear short term
decline in value for possible future appreciation. These schemes
are not for investors seeking regular income or needing their
money back in the short-term

2. Diversified Equity Fund: Diversified equity funds are the most

popular among investors. They invest in many stocks across
many sectors, and because they have the freedom to chop and
 churn their portfolios as they like, diversified equity funds are a
good proxy to the stock market. If a general exposure to equities
is what you want, they are a good option. They can invest in all
listed stocks, and even in unlisted stocks. They can invest in
which ever sector they like, in what ever ratio they like.
3. Equity – Linked Savings Schemes (ELSS): Equity – linked
savings schemes (ELSS) are diversified equity funds that
additionally offer income tax benefits to individuals. ELSS is
one of the many section 80c instruments, along with the more
popular debt options like the PPF, NSC and infrastructure bonds.
In this Section 80c grouping. ELSS is unique. Being the only
instrument to offer a total equity exposure.

4. Index Fund: An index fund is a diversified equity fund; with a

difference- a fund manager has absolutely no say in stock
selection. At all times, the portfolio of an index fund mirrors an
index, both in its choice of stocks and their percentage holding.
As of March 2004, equity index funds tracked either the Sensex
or the Nifty. So, an index fund that mirrors the Sensex will
invest only in the 30 Sensex stocks, which too in the same
proportion as their weight age in the index.

5. Sector Fund: Sector funds invest in stocks from only one

sector, or a handful of sectors. The objective is to capitalize on
the story in the sectors, and offer investors a window to profit
from such opportunities. It’s a very narrow focus, because of
which sector funds are considered the riskiest among all equity
funds.
 6. Mid – Cap Fund: These are diversified funds that target
companies on the fast – growth trajectory. In the long run, share
prices are driven by growth in a company’s turnover and profits.
Market players refer to them as ‘mid-sized companies’ and
‘mid-cap stocks’ with size in this context being benchmarked to
a company’s market value. So, while a typical large cap stock
would have a market capitalization of over Rs 1,000 crores, a
mid-cap stock would have a market value of Rs 250-2,000
crores.

DEBT FUNDS
These Funds invest a major portion of their corpus in debt papers.
Government authorities, private companies, banks and financial
institutions are some of the major issuers of debt papers. By investing
in debt instruments, these funds ensure low risk and provide stable
income to the investors.
Debt funds are further classified as:

1. Gilt Funds: Invest their corpus in securities issued by

Government, popularly known as GOI debt papers. These
Funds carry zero Default risk but are associated with Interest
Rate risk. These schemes are safer as they invest in papers
backed by Government.

2. Income Funds: Income funds aim to maximize debt returns for

the medium to longer term. Invest a major portion into various
debt instruments such as bonds, corporate debentures and
Government securities.
3. MIPs: Invests around 80% of their total corpus in debt
instruments while the rest of the portion is invested in equities.
It gets benefit of both equity and debt market. These scheme
ranks slightly high on the risk-return matrix when compared
with other debt schemes.

4. Short Term Plans (STPs): Meant for investors with an

investment horizon of 3-6 months. These funds primarily invest
in short term papers like Certificate of Deposits (CDs) and
Commercial Papers (CPs). Some portion of the corpus is also
invested in corporate debentures.

5. Liquid Funds: Also known as Money Market Schemes, These

funds are meant to provide easy liquidity and preservation of
capital. These schemes invest in short-term instruments like
Treasury Bills, inter-bank call money market etc. These funds
are meant for short-term cash management of corporate houses
and are meant for an investment horizon of 1day to 3 months.
These schemes rank low on risk-return matrix and are
considered to be the safest amongst all categories of mutual
funds.

6. Floating Rate Funds: These income funds are more insulated

from interest rate than their conventional peers. In other words,
interest rate changes, which cause the NAV of a conventional
 debt fund to go up or down, have little, or no, impact on NAVs
of floating rate funds.

BALANCED FUNDS

These funds, as the name suggests, are a mix of both equity and debt
funds. They invest in both equities and fixed income securities, which
are in line with pre-defined investment objective of the scheme. These
schemes aim to provide investors with the best of both the worlds.
Equity part provides growth and the debt part provides stability in
returns.
Each category of funds is backed by an investment philosophy, which
is pre-defined in the objectives of the fund. The investor can align his
own investment needs with the funds objective and invest accordingly.

HYBRID FUNDS:-
1. Growth and Income Fund: Strike a balance capital
appreciation and income for the investors. In these funds
portfolio is a mix between companies with good dividend
paying record and those with potential capital appreciation.
These funds are less risky than growth funds bit more than
income funds.

2. Asset Allocation Fund: These funds follow variable asset

allocation policy. These move in an out of an asset class (equity,
debt, money market or even non-financial assets). Asset
allocation funds are those, which follow more stable .
6. COMPARISON OF MUTUAL FUND
 Invest
Mutual Investment Who Should ment
Risk
Fund Objective Portfolio Invest Horiz
on
3
Equity Long-term Capital Aggressive investors
High Risk Stocks & Shares years +
Funds Appreciation Long term Inv.

Capital Balanced ratio of

Balanced Growth & Regular Market Risk equity and debt funds 2
Moderate & Aggressive
Funds Income and Interest to ensure higher years +
Risk returns at lower risk
To generate returns
that are NAV varies
Portfolio indices like 3
Index Funds commensurate with with index Aggressive investors.
BSE, NIFTY etc years +
returns of performance
respective indices
12
Interest Rate Government Salaried & conservative
Gilt Funds Security & Income months
Risk securities investors
+
Credit Risk & Debentures, 12
Salaried & conservative
Bond Funds Regular Income Interest Rate Govt securities, months
investors
Risk Corporate Bonds +
Treasury Bills,
Liquidity +
Certificate of Park funds in current 2 days
Money Moderate Income +
Negligible Deposits, A/cs or short-term - 3
Market Reservation of
Commercial Papers, Bank Dep. weeks
Capital
Call Money
Short-term
Call Money,
Funds 3 weeks
CommPapers,
(Floating - Liquidity + Little Interest Those with surplus -
Treasury Bills, CDs,
short-term) Moderate Income Rate short-term funds 3
Short-term Govt.
months
securities.
7.ADVANTAGES OF MUTUAL FUND
Diagram 6

Affordability Diversification

Variety
Regulations

Professional
Tax Benefits
Mgmt

Mutual Funds offer several benefits to an investor that are unmatched

by the other investment options. Last six years have been the most
turbulent as well as exiting ones for the industry. New players have
come in, while others have decided to close shop by either selling off
or merging with others. Product innovation is now passé with the
game shifting to performance delivery in fund management as well as
service. Those directly associated with the fund management industry
like distributors, registrars and transfer agents, and even the regulators
have become more mature and responsible.

1. Affordability : Small investors with low investment fund

are unable to invest in high-grade or blue chip stocks. An

investor through Mutual Funds can be benefited from a
portfolio including of high priced stock.
2. Diversification : Investors investment is spread across

different securities (stocks, bonds, money market, real

 estate, fixed deposits etc.) and different sectors (auto, textile,
IT etc.). This kind of a diversification add to the stability of
returns, reduces the risk for example during one period of
time equities might under perform but bonds and money
market instruments might do well do well and may protect
principal investment as well as help to meet return
objectives.
3. Variety : Mutual funds offer a tremendous variety of

schemes. This variety is beneficial in two ways: first, it

offers different types of schemes to investors
4. Professional Management: Mutual Funds employ the

services of experienced and skilled professionals and

dedicated investment research team. The whole team
analyses the performance and balance sheet of companies
and selects them to achieve the objectives of the scheme.
5. Tax Benefits: Depending on the scheme of mutual funds,

tax shelter is also available. As per the Union Budget-99,

income earned through dividends from mutual funds is
100% tax free. Under ELSS of open-ended equity-oriented
funds an exemption is provided up to Rs. 100,000/- under
section 80C.
6. Regulation: All Mutual Funds are registered with SEBI and

they function within the provisions of strict regulations

designed to protect the interests of investors. The operations
of Mutual Funds are regularly monitored by SEBI.

8. DISADVANTAGES OF MUTUAL FUND:

The following are the disadvantages of investing through mutual fund:
 No control over cost: Since investors do not directly monitor
the fund’s operations, they cannot control the costs effectively.
Regulators therefore usually limit the expenses of mutual funds.
 No tailor-made portfolio: Mutual fund portfolios are created
and marketed by AMCs, into which investors invest. They
cannot made tailor made portfolio.
 Managing a portfolio of funds: As the number of funds
increase, in order to tailor a portfolio for himself, an investor
may be holding portfolio funds, with the costs of monitoring
them and using hem, being incurred by him.
 Delay in Redemption: The redemption of the funds though has
liquidity in 24-hours to 3 days takes formal application as well
as needs time for redemption. This becomes cumbersome for
the investors.
 Non-availability of loans: Mutual funds are not accepted as
security against loan. The investor cannot deposit the mutual
funds against taking any kind of bank loans though they may be
his assets.

9. RISK INVOLVED IN MUTUAL FUND :

THE RISK-RETURN TRADE-OFF
The most important relationship to understand is the risk-return trade-
off. Higher the risk greater the returns/loss and lower the risk lesser
the returns/loss.
Hence it is up to you, the investor to decide how much risk you are
willing to take. In order to do this you must first be aware of the
different types of risks involved with your investment decision.

MARKET RISK:
Sometimes prices and yields of all securities rise and fall. Broad
outside influences affecting the market in general lead to this. This is
true, may it be big corporations or smaller mid-sized companies. This
is known as Market Risk. A Systematic Investment Plan (“SIP”) that
works on the concept of Rupee Cost Averaging (“RCA”) might help
mitigate this risk.

CREDIT RISK:
The debt servicing ability (may it be interest payments or repayment
of principal) of a company through its cash flows determines the
Credit Risk faced by you. This credit risk is measured by independent
rating agencies like CRISIL who rate companies and their paper. An
‘AAA’ rating is considered the safest whereas a ‘D’ rating is
considered poor credit quality. A well-diversified portfolio might help
mitigate this risk.

INFLATION RISK:
Things you hear people talk about: “Rs. 100 today is worth more than
Rs. 100 tomorrow.” “Remember the time when a bus ride costed 50
paisa?”
“Mehangai Ka Jamana Hai.”
The root cause, Inflation. Inflation is the loss of purchasing power
over time. A lot of times people make conservative investment
decisions to protect their capital but end up with a sum of money that
can buy less than what the principal could at the time of the
investment. This happens when inflation grows faster than the return
on your investment. A well-diversified portfolio with some investment
in equities might help mitigate this risk.

INTEREST RATE RISK:

In a free market economy interest rates are difficult if not impossible
to predict. Changes in interest rates affect the prices of bonds as well
as equities. If interest rates raise the prices of bonds fall and vice
versa. Equity might be negatively affected as well in a rising interest
rate environment. A well-diversified portfolio might help mitigate this
risk.
POLITICAL/GOVERNMENT POLICY RISK:
Changes in government policy and political decision can change the
investment environment. They can create a favorable environment for
investment or vice versa.

LIQUIDITY RISK:
Liquidity risk arises when it becomes difficult to sell the securities
that one has purchased. Liquidity Risk can be partly mitigated by
diversification, staggering of maturities as well as internal risk
controls that lean towards purchase of liquid securities.

10.NET ASSET VALUE

Net Asset Value (NAV)

The net asset value of the fund is the cumulative market value of the
assets fund net of its liabilities. In other words, if the fund is
dissolved or liquidated, by selling off all the assets in the fund, this
is the amount that the shareholders would collectively own. This
gives rise to the concept of net asset value per unit, which is the
value, represented by the ownership of one unit in the fund. It is
calculated simply by dividing the net asset value of the fund by the
number of units. However, most people refer loosely to the NAV per
 unit as NAV, ignoring the "per unit". We also abide by the same
convention.

Definition of NAV

Net Asset Value, or NAV, is the sum total of the market value of all
the shares held in the portfolio including cash, less the liabilities,
divided by the total number of units outstanding. Thus, NAV of a
mutual fund unit is nothing but the 'book value.'

Calculation of NAV

The most important part of the calculation is the valuation of the

assets owned by the fund. Once it is calculated, the NAV is simply
the net value of assets divided by the number of units outstanding.
The detailed methodology for the calculation of the asset value is
given below.

Asset value is equal to

Sum of market value of shares/debentures

+ Liquid assets/cash held, if any

+ Dividends/interest accrued

Amount due on unpaid assets

Expenses accrued but not paid

Other liabilities
NAV per unit =
------------------------------------------------------------------
No. of units outstanding of the scheme

Details on the above items

For liquid shares/debentures, valuation is done on the basis of the

last or closing market price on the principal exchange where the
security is traded

For illiquid and unlisted and/or thinly traded shares/debentures, the

value has to be estimated. For shares, this could be the book value
per share or an estimated market price if suitable benchmarks are
available. For debentures and bonds, value is estimated on the basis
of yields of comparable liquid securities after adjusting for
illiquidity. The value of fixed interest bearing securities moves in a
direction opposite to interest rate changes Valuation of debentures
and bonds is a big problem since most of them are unlisted and
thinly traded. This gives considerable leeway to the AMCs on
valuation and some of the AMCs are believed to take advantage of
this and adopt flexible valuation policies depending on the situation.

Interest is payable on debentures/bonds on a periodic basis say every

6 months. But, with every passing day, interest is said to be accrued,
at the daily interest rate, which is calculated by dividing the periodic
interest payment with the number of days in each Period. Thus,
accrued interest on a particular day is equal to the daily interest rate
multiplied by the number of days since the last interest payment date.

Usually, dividends are proposed at the time of the Annual General

meeting and become due on the record date. There is a gap between
the dates on which it becomes due and the actual payment date. In the
intermediate period, it is deemed to be "accrued".

Expenses including management fees, custody charges etc. are

calculated on a daily basis.

NAV and its impact on the returns

We feel that a MF with lower NAV will give better returns. This again
is due to the wrong perception about NAV. An example will make it
clear that returns are independent of the NAV.

Say, you have Rs 10,000 to invest. You have two options, wherein the
funds are same as far as the portfolio is concerned. But say one Fund
X has an NAV of Rs 10 and another Fund Y has NAV of Rs 50. You
will get 1000 units of Fund X or 200 units of Fund Y.

After one year, both funds would have grown equally as their
portfolio is same, say by 25%. Then NAV after one year would be Rs
12.50 for Fund X and Rs 62.50 for Fund Y. The value of your
investment would be 1000*12.50 = Rs 12,500 for Fund X and
200*62.5 = Rs 12,500 for Fund Y. Thus your returns would be same
irrespective of the NAV.

It is quality of fund, which would make a difference to your returns. In

fact for equity shares also broadly this logic would apply.

Misconception about NAV

This situation arises from the perception that a fund at Rs 10 is

cheaper than say Rs 15 or Rs 100. However, this perception is totally
wrong and investors would be much better off once they appreciate
this fact.

Two funds with same portfolio are same, no matter what their NAV is.
NAV is immaterial.

Why people carry this perception is because they assume that the
NAV of a MF is similar to the market price of an equity share. This,
however, is not true.

11. BASIC CONCEPTS OF LOADS :

1. Entry Load: The load charged at the time of investment is

known as entry load. It’s meant to cover the cost that the AMC
spends in the process of acquiring subscriber’s commission
payable to brokers, advertisements, register expenses etc. The
load is recovered by way of charging a sale price higher than
the prevailing NAV.
2. Exist Load: Some AMC do not charge an entry load but they
charged an exist load i.e., they deduct a load before paying out
the redemption proceeds. Psychologically, investors are much
more willing to pay exist loads as compared to entry loads.
3. Unit: Units mean the investment of the unit holders in a
scheme. Each unit represents one undivided share in the assets
of a scheme. The value of each unit changes, depending on the
performance of the fund.

12.FACTORS AFFECTING MUTUAL FUND

1. Governmental Influences
Mutual fund business is a highly regulated business throughout the

world as it seeks to ensure that quality and fairly priced schemes are

available. Governmental intervention thus in mutual fund market

usually is most needed to ensure that insurers are reliable. And in the

developing countries the additional goal may be promotion of

domestic mutual fund industry and ensuring the national mutual fund

industry contributes to overall economic development. In a non

technical sense mutual fund is purchased in a good faith so the duty of

government intervention in mutual fund industry is to ensure that this

principle of mutual fund is never defeated.

The ideology of government plays an important role in mutual fund

industry also. For example in the past during 1991, the P .V Narsimha
Rao government strongly believed in liberalization also liberalized the
mutual fund sector which helped to allow private players in the
industry from 1993 and enhancing joint ventures with foreign
companies.

The present government with more focuses on foreign direct

investments has declared to favor the rise FDI in mutual fund to 49%
which further enhances competition in the industry.

2. Taxation Policy
Social equity being one of the motives behind tax collections,
government give certain exemptions from such levying. One such
exemption is deduction incurred by taxpayers towards investment in
mutual fund coverage. Similarly, capital invested in infrastructure
bonds etc is offered with certain concession under tax laws. The
central idea behind such
exemptions is that the capitals so allocated by individuals reduce the
ultimate burden on the public infrastructure or helps in creating such
infrastructural facilities.
The income tax rules related to the mutual fund transactions can be
classified under:
[A] Exemptions available to companies or businesses
[B] Exemptions available to insured individuals
[A] Exemptions available to companies
 Expenses deductible from commission earned by distributor,
banker, national distributor.
 Tax concessions under risk management practices of an
enterprise
 In growth option equity schemes there no long term capital gain
by company.
 In dividend option equity schemes there no tax.
 Return received by charitable trust is total exempted from tax.
 Else schemes give to advantage of tax saving, growth potential
and return.

[B] Tax rules governing investment by individuals

Deduction in respect of ELSS schemes (sec 80C):
Investment in this fund would enable you to avail the benefits under
clause (xiii) of a section 80C of the Income Tax Act investment made
in the schemes up to 1 lakh by the eligible investor for deduction
under this section of the Act.
Since it will be an income deduction an investment of Rs 1 lakh in this
fund can save off Rs. 33600 from your tax payable liability (assuming
you are in the highest tax bracket)
Investor will receive tax free dividend in above case.
Investor will also receive tax free dividend by investing equity
schemes in dividend option
Investors also receive tax free return by investing equity schemes in
growth option for long term capital gain.

C Tax plannings
An individual can think of health ELSS schemes purchase as a tool of
tax planning exercise. For example people who are marginally
affected by tax liability can be as well
purchase a ELSS fund get benefits of Rs. 33600 from tax. In this way
tax burden is become less by purchasing ELSS fund.
Thus tax law offer benefit to individuals/companies by way of
exemptions/deductions of expenditure incurred towards purchase of
mutual fund various schemes coverage from total taxable income.

3. Foreign Trade Regulations

With the vast potential for mutual fund in India due its large

population in the country many foreign companies are ready to enter

into the Indian market. But companies can be permitted in India

through joint ventures with an Indian partner as well as come

separately and the foreign equity shall be restricted to only 25%.

Another statement also tells that Indian subsidiaries of foreign

companies shall not be allowed to participate in banking sector unless

they entered in to joint ventures with the Indian partners.

But at present the mutual fund regulator is in favor of hike in FDI cap
from 25% to 49%, and is finalizing a report that will be submitted to
the government for a comprehensive legislation for the industry. The
security exchange board of India and association of mutual fund India
have been advocating a hike in FDI limit for mutual fund companies
so that the foreign partners can infuse additional funds in these
companies to sustain their growth.
The government will need to amend the separate mutual fund Act for
FDI capital as well as domestic company as this is the statutory
provision unlike sectors like civil aviation and telecom, which have
come through notification.

4. National Income
The relative importance of the mutual fund Market within a country
will also be dependent upon economic development. With greater
rates of economic growth, consumption of investment should increase
as a result of increased income, and an increased stock of assets
requiring mutual fund. Furthermore, the development of mutual fund
is likely to facilitate greater economic growth, implying that economic
growth may be endogenous. Consistent with these arguments, studies
find that the level of financial development and economic
development are positively related to the level of mutual fund across
emerging markets.

5. Consumptions and Savings

The gross capital formation of any country is important for indication
of its growth in the future years. It is quite necessary to set up the rate
of capital formation so that a large stock of machines, tools and
equipments are accumulated in a country. Experience of development
in other countries suggests that a high rate of capital formation was
achieved to trigger rapid rate of economic growth. With the hike in
foreign capital coming to India the rate of capital formation is
becoming boom to insurers, which has given them opportunities. It is
heartening to them to note that latest savings rate of 28% is highest till
now and with the growth rate near to 8% is bringing a pool of buyer’s
purchasing power. This directly influences the demand for mutual
fund products.

6. Employment
The effect of employment on mutual fund industry is as direct as that
on economic development of any country. With the rising levels of
employment the effect on mutual fund industry is positive because
employment adds to the insured properties and assets from every
prospective be it due to organized or unorganized.

7. Inflation
The midterm policy review the strong macroeconomic indicators and
RBI has revised its GDP growth estimates to the upper limit of the
earlier projection range 8% inflation (WPI) has been steadily moving
up in recent times and RBI has highlighted that primary articles prices
have been on of the key contributors. However one needs to keep in
mind that recent increase in global oil prices.

8. Money supply
The central banks has indicated that credit growth and money supply

number are likely to be above its prosecution for the current fiscal

year, the statement “to consider promptly all possible measures as

appropriate to the evolving global and domestics situation “is

indicative of phased increase in FII limits for gilt investment could

help in depending the securities market and is part of the road map

towards fuller convertibility.

9. Interest
Interest is major factor for investment when a person find less return
from investment tool than people move towards the higher returns tool
of investment.\

10. Risk factor

All investments in Mutual Fund and securities are subject to market
risks and the NAV of the fund may go up or down depending on the
factors and forces affecting the security market. There can be no
assurance that the fund’s objective will be achieved. Past performance
of the sponsors/Mutual fund/schemes/AMC is not necessarily
indicative of the future results. The name of the schemes does not in
any manner indicate their quality, their future prospects or returns.
The specific risk would be credit, market, illiquidity, judgmental error,

interest rate, swaps and forward rates.

11. Demographic environment

The demographic environment significantly affects the demand for the
mutual fund industry. Factors like the average age of the population,
levels of education, household structures income distribution, life
style and the extent of industrialization as well as urbanization terribly
influences the demand of mutual fund schemes
In India the average age of the population is at an increasing trend
following the improved medical technology and better awareness of
health care requirements. As a result, the risk of investment death is
decreasing while connectivity is increasing. Simultaneously the
demand for pension funds and income fund is expected to grow. For
example at the time of independence the average age of dying for
Indians was 45. Presently it has increased to 65 following better
healthcare, improvements in medical science and more health
consciousness among the common man. By 2010 it is expected to rise
to 75. Hence risk profile is also changing. Earlier people are thanking
about safely but at present people thinking about capital growth.
12. Social Factors
The social environment covers the customs, habits, level of education,
tastes and standard of living of people in the society. Today’s social
environment is greatly influenced to a major extent by the changes in
technological aspects. With the rapid progress in technology and
economic liberalization, the physical boundaries are gradually
vanishing. As a result, the social life of the people and their views
towards risk and uncertainty of life and health are gradually changing.
These factors of social life are affecting human motivations and
emotions related to the physical and mental incapacities, loss of health
and death. In general there are extremes apprehensions of one’s death,
though it is certain. The perception of an individual toward risk and
capital growth depends on the social culture and religious belief. In
the urbanized area people does think about investment and capital
growth. These beliefs ultimately influence the buying behavior of a
consumer.

13. Education
Education is major factor of demand for mutual fund product. if the
education levels is higher than the people know the benefits of mutual
fund the use mutual fund as investment tool and also take rise capital
growth.

MUTUAL FUND PLAYERS

The Indian mutual fund industry is mainly divided into three
kinds of categories. These categories include public sector
players, nationalized banks and private sector and foreign
players.
UTI Mutual Fund was one of the leading Mutual Fund companies in
India till May 2006 with a corpus of more than Rs.31, 000 Crore and
it is the public sector mutual fund.
Bank of Baroda, Punjab National Bank, Can Bank and SBI are the
major nationalized banks mutual fund.
At present mutual fund industry is mainly dominated by private and
foreign sector players which include major players like Prudential
ICICI Mutual Fund, HDFC Mutual Fund, Reliance Mutual Fund etc.
are private sector mutual funds players while Franklin Templeton etc.
are major foreign mutual fund players. At present there are more than
33 players operating in Indian. The brief introduction of major players
is given as follows.

ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN
AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC,
ABN AMRO Asset Management (India) Ltd. was incorporated on
November 4, 2003. Deutsche Bank A G is the custodian of ABN
AMRO Mutual Fund.

Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group
and Sun Life Financial. Sun Life Financial is a global organization
evolved in 1871 and is being represented in Canada, the US, the
Philippines, Japan, Indonesia and Bermuda apart from India. Birla
Sun Life Mutual Fund follows a conservative long-term approach to
investment. Recently it crossed AUM of Rs. 10,000 Crore.

Bank of Baroda Mutual Fund

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on

October 30, 1992 under the sponsorship of Bank of Baroda. BOB
Asset Management Company Limited is the

AMC of BOB Mutual Fund and was incorporated on November 5,

1992. Deutsche Bank AG is the custodian.

HDFC Mutual Fund

HDFC Mutual Fund was setup on June 30, 2000 with two sponsors
namely Housing Development Finance Corporation Limited and
Standard Life Investments Limited.

HSBC Mutual Fund

HSBC Mutual Fund was setup on May 27, 2002 with HSBC
Securities and Capital Markets (India) Private Limited as the sponsor.
Board of Trustees, HSBC Mutual Fund acts as the Trustee Company
of HSBC Mutual Fund.

ING Vysya Mutual Fund

ING Vysya Mutual Fund was setup on February 11, 1999 with the
same named Trustee Company. It is a joint venture of Vysya and ING.
The AMC, ING Investment Management (India) Pvt. Ltd. was
incorporated on April 6, 1998.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential PLC of
America; one of the largest life insurance companies in the US of A.
Prudential ICICI Mutual Fund was setup on 13th of October 1993
with two sponsors, Prudential PLC. and ICICI Ltd. The Trustee
Company formed is Prudential ICICI Trust Ltd. and the AMC is
Prudential ICICI Asset Management Company Limited incorporated
on 22nd of June 1993.

Sahara Mutual Fund

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India
Financial Corporation Ltd. as the sponsor. Sahara Asset Management
Company Private Limited incorporated on August 31, 1995 works as
the AMC of Sahara Mutual Fund. The paid-up capital of the AMC
stands at Rs 25.8 crore.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual
Fund to launch offshore fund, the India Magnum Fund with a corpus
of Rs. 225 cr. approximately. Today it is the largest Bank sponsored
Mutual Fund in India. They have already launched 35 Schemes out of
which 15 have already yielded handsome returns to investors. State
Bank of India Mutual Fund has more than Rs. 5,500 Crore as AUM.
Now it has an investor base of over 8 Lakhs spread over 18 schemes.

Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882.
The sponsor for Tata Mutual Fund is Tata Sons Ltd., and Tata
Investment Corporation Ltd. The investment manager is Tata Asset
Management Limited and its Tata Trustee Company Pvt. Limited. Tata
Asset Management Limited's is one of the fastest in the country with
more than Rs. 7,703 Crore (as on April 30, 2005) of AUM.

Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a

subsidiary of KMBL. It is presently having more than 1,99,818
investors in its various schemes. KMAMC started its operations in
December 1998. Kotak Mahindra Mutual Fund offers schemes
catering to investors with varying risk - return profiles. It was the first
company to launch dedicated gilt scheme investing only in
government securities.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian

Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited
and Reliance Capital Trustee Co. Limited is the Trustee. It was
registered on June 30, 1995 as Reliance Capital Mutual Fund, which
was changed on March 11, 2004. Reliance Mutual Fund was formed
for launching of various schemes under which units are issued to the
Public with a view to contribute to the capital market and to provide
investors the opportunities to make investments in diversified
securities.

Standard Chartered Mutual Fund

Standard Chartered Mutual Fund was set up on March 13, 2000

sponsored by Standard Chartered Bank. The Trustee is Standard
Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset
Management Company Pvt. Ltd. is the AMC which was incorporated
with SEBI on December 20,1999.

Franklin Templeton India Mutual Fund

The group, Franklin Templeton Investments is a California (USA)

based company with a global AUM of US$ 409.2 bn. (as of April 30,
2005). It is one of the largest financial services groups in the world.
Investors can buy or sell the Mutual Fund through their financial
advisor or through mail or through their website. They have Open end
Diversified Equity schemes, Open end Sector Equity schemes, Open
end Hybrid schemes, Open end Tax Saving schemes, Open end
Income and Liquid schemes, Closed end Income schemes and Open
end Fund of Funds schemes to offer.

Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and it’s

leading in the market in securities, investment management and credit
services. Morgan Stanley Investment Management (MISM) was
established in the year 1975. It provides customized asset
management services and products to governments, corporations,
pension funds and non-profit organizations. Its services are also
extended to high net worth individuals and retail investors. In India it
is known as Morgan Stanley Investment Management Private Limited
(MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF).
This is the first close end diversified equity scheme serving the needs
of Indian retail investors focusing on a long-term capital appreciation.

Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Escorts
Finance Limited as its sponsor. The Trustee Company is Escorts
Investment Trust Limited. Its AMC was incorporated on December 1,
1995 with the name Escorts Asset Management Limited.

Benchmark Mutual Fund

Benchmark Mutual Fund was setup on June 12, 2001 with Niche
Financial Services Pvt. Ltd. as the sponsor and Benchmark Trustee
Company Pvt. Ltd. as the Trustee Company. Incorporated on October
16, 2000 and headquartered in Mumbai, Benchmark Asset
Management Company Pvt. Ltd. is the AMC.

Can bank Mutual Fund

Can bank Mutual Fund was setup on December 19, 1987 with Canara
Bank acting as the sponsor. Can bank Investment Management
Services Ltd. incorporated on March 2, 1993 is the AMC. The
Corporate Office of the AMC is in Mumbai.

Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam

Investment & Finance Company Ltd. was setup on January 3, 1997.
Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is
Cholamandalam AMC Limited.

LIC Mutual Fund

Life Insurance Corporation of India set up LIC Mutual Fund on 19th

June 1989. It contributed Rs. 2 Crore towards the corpus of the Fund.
LIC Mutual Fund was constituted as a Trust in accordance with the
provisions of the Indian Trust Act, 1882. . The Company started its
business on 29th April 1994. The Trustees of LIC Mutual Fund have
appointed Jeevan Bima Sahayog Asset Management Company Ltd as
the Investment Managers for LIC Mutual Fund.

GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of

India (GIC), a Government of India undertaking and the four Public
Sector General Insurance Companies, viz. National Insurance Co. Ltd
(NIC), The New India Assurance Co. Ltd. (NIA), The Oriental
Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII)
and is constituted as a Trust in accordance with the provisions of the
Indian Trusts Act, 1882.
(B) COMPANY INFORMATION
1. HISTORY

NJ IndiaInvest Pvt. Ltd. is one of the leading advisors and

distributors of financial products and services in India. Established in
year 1994, NJ has over a decade of rich exposure in financial
investments space and portfolio advisory services. From a humble
beginning, NJ over the years has evolved out to be a professionally
managed, quality conscious and customer focussed financial /
investment advisory & distribution firm.

NJ prides in being a professionally managed, quality focused

and customer centric organisation. The strength of NJ lies in the
strong domain knowledge in investment consultancy and the delivery
of sustainable value to clients with support from cutting-edge
technology platform, developed in-house by NJ.

At NJ we believe in …

 having single window, multiple solutions that are integrated for

simplicity and sapience
 making innovations, accessions, value-additions, a constant
process
 providing customers with solutions for tomorrow which will
keep them above the curve, today

NJ has over INR 30 billion* of mutual fund assets under advice

with a wide presence in over 60 locations* in 15 states* in India.
The numbers are reflections of the trust, commitment and value that
NJ shares with its clients.

NJ Wealth Advisors, a division of NJ, focuses on providing

financial planning and portfolio advisory services to premium clients
of high net-worth. At NJ Wealth Advisors, we have developed
processes that focus on providing the best in terms of the advice and
the ongoing management of your portfolio and financial plans.

At NJ, our experience, knowledge and understanding enables

us to provide you with the expected value, in an enhanced way. As a
leading player in the industry, we continue to successfully meet the
expectations of our clients, through meaningful and comprehensive
solutions offered by NJ Wealth Advisors

2.VISION & MISSION OF NJ India invest

 Vision

To be the leader in our field of business through,

 Total Customer Satisfaction

 Commitment to Excellence
 Determination to Succeed with strict adherence to
compliance
 Successful Wealth Creation of our Customers

 Mission

Ensure creation of the desired value for our customers,

employees and associates, through constant improvement, innovation
and commitment to service & quality. To provide solutions which
meet expectations and maintain high professional & ethical standards
along with the adherence to the service commitments

3.PHILOSOPHY

At NJ our Service and Investing philosophy inspire and shape the

thoughts, beliefs, attitude, actions and decisions of our employees. If
NJ would resemble a body, our philosophy would be our spirit which
drives our body.

Service Philosophy:
Our primary measure of success is customer satisfaction …

We are committed to provide our customers with continuous,

long-term improvements and value-additions to meet the needs in an
exceptional way. In our efforts to consistently deliver the best service
possible to our customers, all employees of NJ will make every effort
to:
  think of the customer first, take responsibility, and make prompt
service to the customer a priority
 deliver upon the commitments & promises made on time
 anticipate, visualize, understand, meet, exceed our customer’s
needs
 bring energy, passion & excellence in everything we do
 be honest and ethical, in action & attitude, and keep the
customer’s interest supreme
 strengthen customer relationships by providing service in a
thoughtful & proactive manner and meet the expectations,
effectively


Investing Philosophy:
We aim to provide Need-based solutions for long-term wealth
creation

We aim to provide all customers of NJ, directly or indirectly,

with true, unbiased, need-based solutions and advice that best meets
their stated & un-stated needs. In our efforts to provide quality
financial & investment advice, we believe that

 Clients want need-based solutions, which fits them

 Long-term wealth creation is simple and straight
 Asset-Allocation is the ideal & the best way for long-term
wealth creation
 Educating and disclosing all the important facets which the
customer needs to be aware of, is important
 The solutions must be unbiased, feasible, practical, executable,
measurable and flexible
 Constant monitoring and proper after-sales service is critical to
complete the on-going process

At NJ our aim is to earn the trust and respect of the

employees, customers, partners, regulators, industry members
and the community at large by following our service and investing
philosophy with commitment and without exceptions.

4.MANAGEMENT

The management at NJ brings together a team of people with wide

experience and knowledge in the financial services domain. The
management provides direction and guidance to the whole
organisation. The management has strong visions for NJ as a globally
respected company providing comprehensive services in financial
sector.

The ‘Customer First’ philosophy in deeply ingrained in the

management at NJ. The aim of the management is to bring the best to
the customers in terms of

 Range of products and services offered

 Quality Customer Service

All the key members of the organisation put in great focus on the
processes & systems under the diverse functions of business. The
management also focuses on utilizing technology as the key enabler
for all the activities and to leverage the technology for enhancing
overall customer experience.

The key members of the management are:

Mr. Neeraj Choksi Jt. Managing Director

Mr. Jignesh Desai Jt. Managing Director

Sales Team:
Mr. Misbah Baxamusa National Head
Mr. Naveen Rathod V.P.

Executive Team:
Mr. Shirish Patel Information Technology
Mr. Vinayak Rajput Finance & Operations
Mr. Abhishek Dubey Marketing & Development
Mr. Viral Shah Research
Mr. Dhaval Desai Human Resources

5.SERVICE STANDARDS

Service in words, service in action

Service is the key to unlocking customer satisfaction, which again is

key for sustainability of any business. At NJ we understand this very
well. NJ has set strict processes in place to deliver quality services to
customers. At NJ strict quality service standards are set and a well-
defined process is established and followed religiously by our quality
customer service teams. Performance is evaluated on a frequent basis
and glitches are ironed out.

But quality service also involves quality people in addition to

processes. NJ gives significant focus to the proper training and
development of the people involved in the service delivery chain.

Further we,

 Have well-defined "Privacy Policy" to keep clients’ information

confidential & internal audits done on the same at regular
intervals
 Receive various statistics which are analyzed on an ongoing
basis to improve the service standards

We are committed to improve and enhance our services and undertake

new service initiatives. Such and other services differentiate us with
other service providers in the industry.

Our Service Commitments …

The service commitments are to guide the actions of the people

at NJ. Clearly stated, customers can freely communicate any such
actions/events wherein they feel that any of the following
commitments have been breached / compromised. At NJ we desire to
honour our commitments at all points of time and to all our customers
without any bias.

 To provide customer-focussed need-based valued services

 To provide reliable, accurate and timely information
 To maintain all records in privacy
 To optimize services/benefits at least justifiable cost
 To develop and grow the customers’ business
 To provide constructive after sales service
 To honour our service commitments

6.PRODUCTS

 Life Vista
Life is counted not in years, but in moments. Moments of truth, joy,
achievement and satisfaction. Of peace, tranquility, and freedom. At
NJ, we bring such moments to life.

Connecting Goals

Life Vista is for individuals who are looking for goal oriented
planning. The client would typically have a family, with multiple
goals directed at meeting the obligations/goals in life. Meeting
obligations like education and marriage of children, meeting basic
needs like purchase of property, or business assets, would ideally be
on agenda for such clients. Retirement planning would also be an
important goal in life along with securing the future for those
dependent.

Process of Connecting Goals

With Life Vista we take the onus to help you achieve your goals
in life. Our team would undertake a detailed financial planning
exercise for you. An ideal personalised, financial plan would then be
recommended after detailed study. The team would then constantly
monitor the progress of your plan. Any changes in the environment
that may happen during the interim period would be incorporated into
your plan. At Life Vista our objective is to connect you with your
goals and your dreams with reality.
How we can help you

We will do a detailed study of your goals and objectives in life and

would help you by devising a comprehensive plan to help you achieve
them. We would also regularly monitor your plans to make sure that
you are always on track to achieve your goals.

 Asset Vista

Wealth is not an end. Neither is it a beginning. Wealth is a process, a

journey.
A journey of power, achievement and responsibility .
At NJ we ensure that this journey continues and grows.

Creating Wealth

Asset Vista is ideal for individuals or corporates looking for

portfolio management services. Typically, the client would have
sizeable investments made into multiple assets and/or products. The
need for Asset Vista may arise due to time constraints, the size of the
investments, or the need for professional advice. The objective may be
to have effective management of portfolio aimed at capital creation
with capital protection at the backdrop.

Process of Wealth Creation

 Asset Vista sees your portfolio as a reflection of your profile
aimed to fulfill the identified objectives. Asset Vista would include a
detailed risk assessment and recommendation of an ideal asset
allocation for you. Post asset allocation, a portfolio would be prepared
and dynamically managed on an ongoing basis. Asset Vista would
ensure that your portfolio is logical, strategic, and in tune with the
changing environment and always on track to achieve the defined
objectives.

How we can help you

We will seek to manage and monitor your portfolio as per your

objectives and your risk profile. We would manage your portfolio the
Asset Allocation way which is the most effective & ideal way to
manage investments. You would also have access to consolidated
portfolio reports that enable you to see all your investments into
multiple avenues at a single place.

7.SERVICES PROVIDED TO CLIENT

As NJ Wealth Advisor’s Global Private Client, you get

comprehensive set of services that ensure you stay informed,
insightful, in command, of your investments at all times.
  Comprehensive Financial Planning

We all have many responsibilities and goals in our lives. We

have dreams and aspirations for a better future. But quite often we are
not sure as to how we will fulfill these goals and aspirations. Life
changes over time. We may never be sure what today holds for us
tomorrow. What if something goes wrong? How do we make sure that
we get what we wish?

A comprehensive Financial Plan is what you need. At NJ

Wealth Advisors we offer you with Comprehensive Financial
Planning solutions which would involve …

 A detailed study of your goals

 Preparation of a comprehensive Financial Plan
 Monitoring of the Financial Plan on an on-going basis
 At NJ Wealth Advisors we offer you with
comprehensive Financial Planning Services under the
product – Life Vista.

 Quality Portfolio Advisory

Making money is easy. Managing money is difficult. And

managing money in today’s complex financial markets with multiple
products on an ongoing basis becomes even more difficult.

As investors we often may feel the lack of time and energy to

undertake monitoring and managing of our investments in multiple
avenues. This requires both dedicated efforts and skills in portfolio
management.

At NJ Wealth Advisors we realise the need for quality, unbiased

portfolio advisory services. At NJ we would aim to manage your
portfolio with a superior, time tested and much effective way of Asset
Allocation keeping in mind your risk profile.

At NJ Wealth Advisors we offer you with quality Portfolio

Advisory Services under the product – Asset Vista.

 Consolidated Reporting

Quality online Wealth Account:

As a premium client you would have access to one of the best

online investment accounts that offer comprehensive reports, many of
which are unique in nature and give valuable insights on our
investments

Our online Wealth Account covers almost all the investment

avenues that you may have:

 Mutual Funds – All AMCs, All Schemes

 Direct Equity
 Life Insurance
 Physical Assets – Gold and Property
 Private Equity – Business
 Debt Products
 o Bank Deposits and Company Deposits
o RBI / Infrastructure Bonds
o Postal Savings – KVP, MIS, NSC
o Debentures
o Small Savings – PPF, NSS

You would have access to Consolidated Net Asset Reports which

would give you a single view of all your investments into different
avenues as given above.

Further, within each of the Asset class we have many more reports and
utilities. Some of the reports covered are …

Consolidated:
Consolidated Asset Allocation, Consolidated Net Asset, Interest
Income, Profit & Loss

Mutual Funds:
Valuation, Transaction, Profit & Loss, Performance, Portfolio reports
like - AMC / Sector / Equity / Credit / Debt Exposure, Weighted
Average Maturity, Dividend history, etc

Direct Equity:
Demat accounts, Transaction, Valuation, Profit & Loss

Life Insurance:
Policy Report, Premium Reminder, Cash Flow

Debt:
Transaction, Interest Income, Maturity reports for different Asse

8. 360° – ADVISORY PLATFORM

NJ believes in “360° – Advisory Platform” philosophy …

With this philosophy, we try to offer all possible products, services
and support which an Advisor would need in his business.

The support functions are generally in the following areas …

 Business Planning and Strategy

 Training and Development – Self and of employees
 Products and Service Offerings
 Business Branding
 Marketing
 Sales and Development
 Technology
 Advisors Resources - Tools, Calculators, etc..
 Research
 Communications

With this comprehensive supporting platform, the NJ Fundz Partners

stays ahead of the curve in each respect compared to other
Advisors/competitors in the market.
(C) RESEARCH METHODOLOGY

1. RESEARCH PROBLEM:

To know investor’s behavior regarding mutual fund as an investment

avenue.

2. RESEARCH OBJECTIVES (PRIMARY) :

To know investor’s behavior regarding mutual fund as an

investment avenue.

RESEARCH OBJECTIVES (SECONDARY)

· To identify the objectives of the investors for investing in a mutual
fund.
· To identify the investment patterns of investors.
· To find out which scheme is better according to investors.
· To study investors’ perceptions about level of satisfaction while
investing in mutual funds.

3. RESEARCH PLAN :

· DATA SOURCE

We have used primary data source to collect the data regarding

investors’ behavior for mutual fund as an investment avenue. The
survey was conducted across Ahmedabad.

· RESEARCH APPROACH

Survey approach was under taken to know the behavior of investor

regarding mutual fund as an investment avenue.

· RESEARCH INSTRUMENT
 Questionnaire was the instrument of collecting data

SAMPLING PLAN

Sample unit:

All the investors who are occasionally or regularly investing in

financial assets and non-financial assets

Sample size:

Survey population comprises of the total reputed businessman,

Professionals, and individual investor was approx 100.

Sampling method:

In this study as suggested by the company a sample of reputed

Businessman, Professionals, and individual investor’s was selected
and it was selected through non-probability, convenience sampling
method. Because all the Businessman, Professionals, and individual
investor’s could not be interviewed as per our requirement but
according to their availability and accessibility we meet them.

Contact method

The total sample size for survey was 100 investors by personal
interview

4. SURVEY ANALYSIS AND INTERPRETATION :

Gender
There are 16 females and 84 males as respondents

male 84
female 16

Gender of respondents(% )
16%

males

females

84%

Q1 what is your age?

AGE
PARTICULARS NO.
20-30 46
30-40 16
40-50 13
50-60 14
60-ABOVE 11
TOTAL 100
 Age of the Respondents(%)
11%

14% 20-30
30-40
46%
40-50
50-60
13%
60-ABOVE

16%

From the above table we can say that awareness for investment
in youngster has been increased & that’s why out of 100, 46%
are youngster who do investment and they come in the age
group of 20-30, then comes age group of 30-40 from which
16% people do investment and other age group are 40-50 where
they do investment of 13%, 14%belongs to age group of 50-60
they do the investment, and 11%belongs to the age group of60-
above they do their investment. We can say that youngsters are
more careful for their investment.
Q2 what is your profession?

PROFESSION
PARTICULARS NO.
BUSINESS 10
JOB IN PRIVATE SECTOR 45
JOB IN PUBLIC SECTOR 22
OTHERS 23
TOTAL 100

Profession of rspondents(% )

10%
23% BUSINESS

JOB IN PRIVATE
SECTOR

JOB IN PUBLIC
SECTOR

45% OTHERS
22%

Now 100 people doing investment out of which 45% people are from
private sector, 22% are from public sector, 10% are having their
business and 23% are others which include retired people, housewives
and student. Reason for investment by all people was to secure the
future and reason given by people doing the job in private was their
higher salary and unsecured job.
Q3 Do you invest in mutual fund ?

PARTICULARS
YES 80
NO 20
TOTAL 100

investment in MF(%)
20%

YES

NO

80%

From 100 people 80% of them are doing investment in mutual fund
and 20% of them are not investing in mutual fund but they do
investment in other sectors for which information is given in the next
question.

Q4 If you are not investing in mutual fund then where do you

invest (in proportion)?
 INVESTMENT PROPORTION
EXCEPT MF?
PARTICULARS NO
INSURANCE 32.96
EQUIYTY MARKET 43.57
GOVT. SCHEME 15.63
REAL ESTATE 5.94
COMMODITIES 1.9
TOTAL 100.00

People who were not investing in mutual fund they do invest in

sectors like insurance, equity market, government schemes (includes
banks, bonds &other scheme ), real estate, commodities even people
those who do invest in mutual fund they also invest in different
sectors. Out of 100%, 43% people do invest in equity market, 33%
invest in insurance, 16% in government scheme, 6% do invest in real
estate and 2% do invest in commodities. People do invest in equity
market due to higher returns available in it.

Q5 Rank the company according to your preference from top (1)

to bottom (11)?

RANK THE MF FROM TOP 1 TO BOTTOM 11?

PARTICULARS NO
RELIANCE 38
BIRLA 5
TATA 9
LOTUS 2
SBI 3
HDFC 10
ICICI 5
FRANKLIN TEMP. 3
SUNDARAM 2
UTI 2
BENCHMARK 1
NOT INVESTED 20
TOTAL 100

40 38
35
30
25 20
20
15 10
9
10 5 5
5 2 3 3 2 2 1
0

ED
TE I

NO HM TI
E

M
FC

IC

VE K
TA

ND P.
SB
NC

RL

TU

U
AR
RA
M
IC

ST
TA

HD
BI

LO
A

A
LI

IN
RE

NC

IN
SU
KL

BE

T
AN
FR

People who were investing in mutual fund had given the rank to
different mutual fund companies on the basis of what they think about
that particular company and had given ranks to different companies.
Here in this data 38% people had given reliance as 1 st rank and the
second highest is hdfc where 10% people has given it as 1st rank and
the reasons behind giving 1st rank were their return, good credit in
market and tax saving benefit.
Q7 If you are investing in mutual fund then you invest in?

INVEST IN MF SCHEME WISE

PARTICULARS NO
OPEN ENDED SCHEME 42
CLOSE ENDED SCHEME 27
BOTH 11
NOT INVESTED 20
TOTAL 100

Investment in mutual fund scheme

NOT INVESTED 20

BOTH 11

CLOSE ENDED SCHEME 27

OPEN ENDED SCHEME 42

0 10 20 30 40 50

There are two scheme in mutual fund 1 is open ended and another is
close ended scheme, in open ended scheme after some time an
investor can withdraw money at any time, while in close ended
scheme the investor can withdraw after a fixed period of time. Here
42% people invest in open ended scheme while 22% people invest in
close ended scheme and 11% do invest in both open ended and close
ended scheme.
Q8 Do you take any reference while investing in mutual fund
schemes if yes then from whom?

FINANCIAL ADVISOR
PARTICULARS
EXT. IMPORTANT 60
IMPORTANT 5
NEUTRAL 1
UNIMPORTANT 0
EXT.UNIMPORTANT 1
NOT. RESPONDED 33
TOTAL 100

Guidance of financial advisor

EXT. IMPORTANT

33% IMPORTANT

NEUTRAL

UNIMPORTANT

0% 60% EXT.UNIMPORTAN
T

1% NOT. RESPONDED

1%
5%

In this question it was asked that do you take any reference before
investing or during make any changes in your investment, then 1 st
option was that how important is for you to take reference from
financial advisor then 60% says that it is ext important to take
reference from financial advisor, 5% says it’s important to take advice
from the financial advisor. People take reference from the financial
advisor because he had studied different schemes and he knows where
to invest and not to invest.
 BROKER
PARTICULARS
EXT. IMPORTANT 19
IMPORTANT 22
NEUTRAL 5
UNIMPORTANT 0
EXT.UNIMPORTANT 1
NOT. RESPONDED 53
TOTAL 100

Guidance from broker

EXT. IMPORTANT
19%
IMPORTANT

NEUTRAL

UNIMPORTANT

EXT.UNIMPORTA
53%
NT
22% NOT.
RESPONDED

5%
1% 0%

19% people says its ext important to take advice from a broker
because he knows about all the scheme which are there in the
market,22% says that it’s important to take advice from the broker,
5% are neutral about it.
 RELATIVES OR FRIEND
PARTICULARS
EXT. IMPORTANT 28
IMPORTANT 16
NEUTRAL 6
UNIMPORTANT 1
EXT.UNIMPORTANT 4
NOT. RESPONDED 45
TOTAL 100

Guidance from relatives

EXT. IMPORTANT

IMPORTANT
28%
NEUTRAL

UNIMPORTANT
45%
EXT.UNIMPORTA
NT
NOT.
RESPONDED
16%
4%
6%
1%

Some people do take reference from their friends and relatives there
are 28% people who say its ext important to take reference from your
friends and relatives, 16% thinks it’s important to take reference and
6% are neutral and 1% says unimportant and 5% says ext unimportant
to take any reference.
 NEWSPAPER & MAGAZINE
PARTICULARS
EXT. IMPORTANT 28
IMPORTANT 13
NEUTRAL 7
UNIMPORTANT 1
EXT.UNIMPORTANT 4
NOT. RESPONDED 47
TOTAL 100

Guidance from Newspaper &

MAGAZINE

EXT. IMPORTANT
28%
IMPORTANT

NEUTRAL
47% UNIMPORTANT

EXT.UNIMPORTA
NT
NOT.
13%
RESPONDED
4% 7%
1%

There are many people who take reference from news paper and
magazines while investing in mutual fund 28% people who take
reference from newspaper and magazines and consider it ext
important, while 13% says it’s important to take reference, while 7%
are neutral and 1% and 5% are people who says its unimportant and
ext unimportant respectively to take reference.
 CO. WEBSITE
PARTICULARS
EXT. IMPORTANT 3
IMPORTANT 10
NEUTRAL 4
UNIMPORTANT 5
EXT.UNIMPORTANT 12
NOT. RESPONDED 66
TOTAL 100

Guidance from Co.Website

4%
3%
10%
EXT. IMPORTANT
5% IMPORTANT

NEUTRAL

UNIMPORTANT

EXT.UNIMPORTA
NT
66% 12%
NOT.
RESPONDED

Here 3% people says they take the reference of respective co’s

website while investing in mutual fund and consider it as ext
important and 10% say it’s important to take reference from co’
website and 66% people are not responding to it.
5. LIMITATION OF THE STUDY:
Every research has its own limitation and present research work is no
exception to this general rule the inherent limitation of the study are
as under:

· Interview method, which was followed in the present research work,

is relatively more
time consuming.
In addition to this it is very expensive method, especially when
spread geographic
sample is taken.
· Questionnaire method can be used only when respondents are
literate and co-operative.
· Sample size was 100 that are not enough to study the awareness of
Independent
individuals.
· As sampling techniques is convenient sampling so it may result in
personal bias. Even
respondent give bias answers. Time is main constraint of the research
as we have been
given project as well as study simultaneously.
6.FINDINGS AND RECOMMENDATIONS :
From the above analysis, I found that even though certainly not the
best or deepest of markets in the world, it has ignited the growth rate
in mutual fund industry to provide reasonable options for an ordinary
man to invest his savings.

With the help of –

 Give more importance to safety and return attributes because

Independent Financial Advisors are more concern about safety
and of giving more benefit of the investments to their clients.
 Independent Financial Advisors who are not suggesting their
clients to invest in mutual funds due to their lack of knowledge
of mutual funds. So, NJ India Invest should arrange mutual
fund awareness Program of their and other independent
Financial Advisors on regular basis.

 By providing better service NJ India Invest should try to attract

the Independent Financial Advisors to join with them.

 NJ India Invest should arrange special mutual fund

awareness program for general public. So they can directly
work with NJ India Invest as direct client.

 Majority of the Government employees take into consideration

tax benefits before making any investment. So NJ India Invest
should highlight tax benefits in mutual funds.

 NJ India Invest should launch its brand awareness campaign to

be successful in Mutual fund advisory service provider

o NJ India invest should also concentrate on youngster who are

interested in savings so make them aware about different
schemes for investment and arrange seminars for college going
students, by this company gets more customers connected for
long period.

o Put hoardings outside the colleges making NJ INDIA known to

them and try to attract them.
Key Findings: -

 Around 50% of the investors invest to maximize

their returns and they are ready to take moderate risks in their
investment portfolio.
 Most of the investors give importance to the fact
that their investment should grow in value over a
period of time.
 Growth scheme is the most preferred for
investment
 Knowledge about mutual funds and their various
schemes is moderate among investors.
 It is necessary to make Mutual Fund more popular
in the eyes of investors as well as distributors and also cater trust
which has been lost due to US-64.
 Most of the investors give importance to return,
tax saving etc.
 Objectives of the investor are to get something in
return for their investment and the risk they are taking.
 Here the objective of the investor between the age
of 20-30 is to earn the higher return.
 While the age group above 30years concentrates
on safety and tax saving and they even take care of the liquidity.
 ANNEXURE

Questionnaire

Q1 what is your age?

1) 20-30
2) 30-40
3) 40-50
4) 50-60
5) 60-above

Q2 what is your profession?

1) Business ()
2) job in private sector ()
3) job in public sector ()
4) others ()

Q3 Do you invest in mutual fund?

1) Yes() 2) no()

Q4 If you are not investing in mutual fund then where do you invest (in
proportion)?

1) Insurance ( )
2) Equity market ( )
3) Government schemes ( )
4) Real estate ( )
5) Commodities ( )

100
Q5 Rank the company according to your preference from top (1) to bottom
(11)?

1) Reliance ( )
2) Birla ( )
3) Tata ( )
4) Lotus ( )
5) Sbi ( )
6) Hdfc ( )
7) Icici ( )
8) Franklin Templeton ( )
9) Sundaram ( )
10) Uti ( )
11) Benchmark ( )

Q6 If you give 1st rank to the co then why?

Q7 If you are investing in mutual fund then you invest in

1) Open ended scheme()

2) Close ended scheme()

Q8 Do you take any reference while investing in mutual fund schemes if yes
then from whom?

Scale Extremely Important important neutral unimportant

extremely unimportant
1) Financial advisor
2) Broker
3) Relatives or friends
4) News paper &
Magazines
5) Co’s websites
6) Amfi website

Q9 Do you compare the returns or other benefits of mf schemes before

investing?

1) Yes() 2)No()

Q10 which factors do you consider while investing in mutual fund?

Scale Extremely Important important neutral unimportant
extremely unimportant
1) Safety
2) Tax saving
3) Return earning
4) Liquidity

Q11 How do you monitor the following,

Scale Monthly quarterly half yearly
yearly never
1) Nav
2) Risk factor
3) Portfolio of securities
4) Profile of fund manager

Q12 Are the following information relevant to analyze the performance of

your investment.
Scale extremely
extremely
Relevant relevant neutral
irrelevant irrelevant
1) Monthly results
2) Quarterly results
3) Half yearly results
4) Annual reports
5) News paper
6) Amfi websites
7) Websites of respective MF

Q13 Do you check out the annual reports of your scheme to evaluate the performance of your scheme?

1) Yes() 2) No()

Q14 Objectives for investment in mutual fund schemes (rank them from
1most preferred to 4 least preferred),
Rank
Return/Dividend -
Appreciation -
Tax -
Liquidity -

Q15 In which mf scheme are you interested to invest?

1 large cap shares ()

2 mid cap shares ()
3 small cap shares ()
4 sectorial funds scheme ()
5 balance fund ()
6 bond funds scheme ()
7 income fund scheme ()
8 gilt scheme ()
9 elss ()
10 etf (gold) ()
11 Asian equity funds ()
Name: - Mobile No:-
Address:-
 BIBLIOGRAPHY

Books referred

 Ch 9 and Ch 10 from David J. Luck & Ronald S. Rubin, 2003, Marketing

Research, Prentice Hall of India Pvt. Ltd, New Delhi
 chap-3 from Mutual Fund in INDIA by Nalini Prava Tripathy, pg no37-84
publication house Excel books.
 NJ India Invest monthly fact file.
 ICFAI magazine edition jan2008 pg 51-56 emerging issue in the Indian mf
industry, mar2007 pg 27- 31 present and future scenario of mf industry in
India.

Web Sites

www.amfi.com
www.indiainfoline.com
www.njindiainvest.com
www.mutualfundsearchonline.com