LIC Mutual Fund

PREFACE
As we know that B.B.A program is more concern

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

and to gather the information related to those areas like general
information, personnel department, marketing department and finance
department. Being a mutual fund firm has somewhat different working.
And so as per the working areas of company we have covered this
information.
So whatever information we have covered is as per our

knowledge and experience with the mutual fund. It had given added
advantage to us by making us aware this new immerging concept of the
investment. During project we have gone through this concept in glance.
DECLARATION
I hereby declare that the project

entitled “LIC NOMURA MUTUAL FUND” is an
independent analysis work carried out by me as a
part of BBA curriculum, University of barkatullah
under the guidance of prof. AJAY MISHRA &
prof. DEVKANAYA.
This report has not been submitted for any award of

any degree of this or any other University.
Date:30-06-11 SHIKHA PRADHAN

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

NO. NO.
PROJECT REPORT
PREFACE
DECLARATION
CERTIFICATE
ACKNOWLEDGEMENT
CONTENTS
SUMMARY OF THE PROJECT
RESEARCH DESIGN
RATIONAL OF PROJECT
OBJECT OF STUDY
I RESEACRH METHODOLOGY
✔ SAMPLING METHOD
✔ SAMPLING AREA
✔ TOOLS USED
LIMITATIONS
INTRODUCTION TO THE TOPIC

II PROFILE OF THE
ORGANISATION
DATA REPRESENTATION
III ANALYSIS &

INTERPRETATION
IV MAJOR FINDINGS
SUGGESTIONS
CONCLUSION
BIBLIOGRAPHY
ANNEXURE
V
SUMMARY OF THE PROJECT

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

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

INVESTMENT PLAN . It is helpful to know about the mutual funds. This
study was conducted by the researcher in bhopal because of constraints of
time and money study could not be extended to other cities. As Bhopal
being a popular and among the good cities of India is a good market of
financial products & also here customers of different classes like business
segment, service segment, and professional segment are in excess. Since
there port aims at finding the potential for financial products at bhopal
itself taking into consideration certain limits and problems, the area was
chosen on the basis of coverage of product no. of respondents.
OBJECT OF STUDY
Decision-Making requires relevant and correct
information for collecting the data which can be used for decision-
making. Objective of data collection should be very clear, objective guide
us to collect the right data from right source. The main objective of the
study listed as follow:
• To study the concept of Mutual Fund, Various type of

Mutual Fund schemes and when a particular scheme is
ideal for investors.
• To study of various open-ended schemes of LICMF with

primary objective of those scheme and prepare summary
of those schemes.
• To study of the fundamental concepts of performance

measures to understand the concept of risk adjusted rate
of return for investment decision.
• To find out the Preferences of the investors for Asset
Management Company.
• To know the Preferences for the portfolios.
• To know why one has invested or not invested in
LIC Mutual fund
• To find out the most preferred channel.

• To find out what should do to boost Mutual Fund
Industry.
RESEARCH
METHODOLOGY
This report is based on primary as well secondary data,
however primary data collection was given more importance since it is
overhearing factor in attitude studies. One of the most important users of
research methodology is that it helps in identifying the problem,
collecting, analyzing the required information data and providing an
alternative solution to the problem .It also helps in collecting the vital
information that is required by the top management to assist them for the
better decision making both day to day decision and critical ones.
A.SAMPLING METHOD
Research is totally based on primary data. Secondary data can
be used only for the reference. Research has been done by
primary data collection, and primary data has been collected
by interacting with various people. The secondary data has
been collected through various journals and websites.
B.SAMPLING AREA
The sample was selected of them who are the
customers/visitors of LIC NOMURA mutual fund, Bairagarh
Branch, irrespective of them being investors or not or availing
the services or not. It was also collected through personal
visits to persons, by formal and informal talks and through
filling up the questionnaire prepared.
C.TOOLS USED
The data has been analyzed by using mathematical/Statistical
tool.
Sample size:
The sample size of my project is limited to 200 people only.
Out of which only 120 people had invested in Mutual Fund.
Other 80 people did not have invested in Mutual Fund.
Sample design:
Data has been presented with the help of bar graph, pie
charts, line graphs etc.
D.AREA COVERED
THE AREA COVERED IN MY PROJECT IS
“BAIRAGARH & BHOPAL”.

LIMITATIONS
 The time constraint also put pressure for data collection and the
analysis for data.
 The report includes Fundamental analysis but doesn’t include deep

technical analysis. Hence study is limited by considering only
fundamental factors.
 Some of the persons were not so responsive.
 Possibility of error in data collection because many of
investors may have not given actual answers of my
questionnaire.
 Sample size is limited to 200 visitors of LIC NOMURA
MUTUAL FUND , Bairagarh Branch, out of these only 120
had invested in Mutual Fund.
 The sample size may not adequately represent the whole
market.
 Some respondents were reluctant to divulge personal
information which can affect the validity of all responses.

 The research is confined to a certain part of bairagarh/Bhopal.
INTRODUCTION TO THE
TOPIC
WHAT IS A MUTUAL FUND?
A mutual fund is a pool of money that is managed on behalf of investors

by a Professional Money Manager. The manager uses the money to buy
stocks, bonds or other securities according to specific investment
objectives that have been established for the fund. In return for putting
money into the fund, you’ll receive either units or shares that represent
your proportionate share of the pool of fund assets. In return for
administering the fund and managing its investment portfolio, the fund
manager charges fees based on the value of the fund’s assets.
Simply, A Mutual Fund is a trust that pools the savings of a number of

investors who share a common financial goal. Anybody with an investible
surplus of as little as a few thousand rupees can invest in Mutual Funds.
These investors buy units of a particular Mutual Fund scheme that has a
defined investment objective and strategy.
The money thus collected is then invested by the fund manager in

different types of securities. These could range from shares to debentures
to money market instruments, depending upon the scheme's stated
objectives. The income earned through these investments and the capital
appreciation realised by the scheme are shared by its unit holders in
proportion to the number of units owned by them. Thus a Mutual Fund is
the most suitable investment for the common man as it offers an
opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low
cost.
Mutual funds are ‘open-ended’ investment funds, meaning that new

investors can contribute money to the fund at any time, and existing
investors can return their units or shares to the fund for redemption at any
time. When you redeem your units or shares of a mutual fund you will
receive a cheque based on the current market value of the fund’s portfolio.
NAV (NET ASSET VALUE)
The value of each unit of the mutual fund, known as the net asset value
(NAV), is mostly calculated daily based on the total value of the fund
divided by the number of shares currently issued and outstanding. The
value of all the securities in the portfolio in calculated daily. From this, all
expenses are deducted and the resultant value divided by the number of
units in the fund is the fund’s NAV.
NAV = Total value of the fund……………….

No. of shares currently issued and outstanding
INVESTORS TRACK CAN THE NAV

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

Sale /Repurchase prices will be Calculated as per the prevailing load
structure as follows:
SALE PRICE = NAV1 ENTRY LOAD

REPURCHASE PRICE = NAV1 ENTRY LOAD
ENTRY/EXIT LOAD
There are various administrative and other costs associated with the
issue /redemption of units by an investor.These costs are charged to the
scheme in the form of entry / exit load respectively. The funds collected
as Load would be credited to a separate account in the Scheme accounts
and would be utilised to meet such expenses as permitted under the SEBI
regulations.
The Trustees reserve the right to review the sale, repurchase / redemption
load from time to time and fix it subject to condition that the repurchase
price shall not be lower than 93 % of the NAV and the sale price shall not
be higher than 107% of the NAV and the difference between the
repurchase price and sale price shall not exceed 7% of the sale price as
prescribed by SEBI.
Concept of Mutual
Fund
The flow chart below describes broadly the working of a mutual fund:
A Mutual Fund is a trust that pools the savings of a number of investors who share
common financial goal, investments may be in shares, debt securities, money market
securities or a combination of these. Those securities are professionally managed on
behalf of the unit-holders, and each investor holds a pro-rata share of the portfolio i.e.
entitled to any profits when the securities are sold, but subject to any losses in value as
well.
The income earned through these investments and the capital appreciation realized are
shared by its unit holders in proportion to the number of units owned by them. Thus a
Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a
relatively low cost.
HOW DOES A MUTUAL FUND WORK?

MUTUAL FUND
CONSTITUENTS
An understanding of a fund's constituents and their respective roles help
you in developing realistic expectations from your fund, choosing
between funds and evaluating options in case of problems with your
investment.
A mutual fund pools and invests the savings of a number of investors
sharing a common financial goal in its schemes. These schemes invest in
various debt and equity instruments, depending on their objectives and the
prevailing regulatory environment.
Indian mutual funds are governed by two different structures. The Unit
Trust of India follows one defined by the UTI Act, 1963, and its
subsequent amendments. All other mutual funds follow the Securities and
Exchange Board of India's (Mutual Funds) Regulations, 1996, which are
more rigorous from the viewpoint of disclosure and accountability.
Despite the differences, all mutual funds comprise four constituents --
sponsors, trustees, asset management companies (AMCs) and custodians.
A Mutual Fund comprises of the following entities:
1.Fund Sponsor: The sponsor initiates the idea to set up a mutual fund.
It could be a registered company, scheduled bank or financial institution.
For Birla Mutual Fund, the sponsor is Birla Growth Funds. In a joint
venture like Sun F&C Mutual Fund, Foreign & Colonial Emerging
Markets is the sponsor and SUN Securities (India) Ltd, the co-sponsor.
A sponsor has to satisfy certain conditions, such as on capital,
track record (at least five years' operation in financial services), default-
free dealings and a general reputation of fairness.The sponsor appoints the
trustees, AMC and custodian. Once the AMC is formed, the sponsor is
just a stakeholder. However, sponsors do play a key role in bailing out an
AMC during a crisis (Canara Bank's rescue of Canbank Mutual Fund).
2. Trustees: Trustees hold a fiduciary responsibility towards
unitholders by protecting their interests. Sometimes, as with Canara
Bank, the trustee and the sponsor are the same. For others, like SBI
Funds Management, State Bank of India is the sponsor and SBI
Capital Markets the trustee.
Trustees float and market schemes, and secure necessary approvals. They
check if the AMC's investments are within defined limits, whether the
fund's assets are protected, and also ensure that unitholders get their due
returns.
Trustees also review any due diligence done by the AMC. For major
decisions concerning the fund, they have to take unitholders' consent.
They submit reports every six months to Sebi; investors get an annual
report. Trustees are paid annually out of the fund's assets -- 0.05 per cent
of the weekly average net asset value.
3. Fund Managers/ Asset Management Company: They are
the ones who manage your money. An AMC takes investment
decisions, compensates investors through dividends, maintains proper
accounting and information for pricing of units, calculates the NAV,
and provides information on listed schemes and secondary market
unit transactions.
It also exercises due diligence on investments, and submits quarterly
reports to the trustees. A fund's AMC can neither act for any other fund
nor undertake any business other than asset management. Its net worth
should not fall below Rs 10 crore. And, its fee should not exceed 1.25 per
cent if collections are below Rs 100 crore and 1 per cent if collections are
above Rs 100 crore. Sebi can pull up an AMC if it deviates from its
prescribed role.
4. Custodian : Often an independent organisation, it takes
custody of securities and other assets of a mutual fund.
Among public sector mutual funds, the sponsor or trustee
generally also acts as the custodian.
A custodian's responsibilities include receipt and delivery of
securities, collecting income, distributing dividends, safekeeping
of units and segregating assets and settlements between schemes.
Their charges range between 0.15-0.2 per cent of the net value of
the holding. Custodians can service more than one fund.
Sebi's regulations specify each constituent's role clearly. How
well they act in concert determines the quality of the investor's
experience with the mutual fund.
5. Registrar and Transfer Agent: They are responsible for
investor servicing functions like maintaining the records of investors
in mutual funds, processing applications, issuing and redeeming unit-
holders, etc. They are appointed by the Mutual Fund sponsor. Many
Mutual Funds carry out this task themselves.
6. Distributors: They look after the function of selling various

mutual funds and providing financial advisory services; for which
they earn commission from the mutual fund. We at BSDL perform
this function for all mutual funds and also have a further huge
network of associates/sub-brokers.
Advantages of UTI
• The Unit Trust of India claims a distinct legal identity, which places
it at an advantage over other mutual funds.
• Amendments to the UTI Act allow UTI to undertake activities like
lease finance, housing and construction finance, portfolio
management services, and bill discounting. Other funds are
restricted to capital and money market instruments.
• The role of trustees is different. UTI’s executive trustee manages
operations, business development, marketing and investments,
along with top trust officials.
• UTI has no share capital and operates on a ‘no profit, no loss’
principle. So it doesn’t collect AMC fees like the others, but
charges loads on some schemes.
• UTI’s loads aren’t subject to the maximum spread of 7 per cent
between unit repurchase and sale prices.
• Earlier, it did not have to adhere to Sebi guidelines such as those on
portfolio disclosure or frequent NAV declaration. It has since relented
slightly; it now discloses portfolios in annual reports, though not all its
investors get to see one.
Mutual Fund Industry in India
(HISTORY)
The Evolution
The formation of Unit Trust of India marked the evolution of the Indian
mutual fund industry in the year 1963. The primary objective at that time
was to attract the small investors and it was made possible through the
collective efforts of the Government of India and the Reserve Bank of
India. The history of mutual fund industry in India can be better
understood divided into following phases:
Phase 1. Establishment and Growth of Unit Trust of India -

1964-87
Unit Trust of India enjoyed complete monopoly when it was established

in the year 1963 by an act of Parliament. UTI was set up by the Reserve
Bank of India and it continued to operate under the regulatory control of
the RBI until the two were de-linked in 1978 and the entire control was
tranferred in the hands of Industrial Development Bank of India (IDBI).
UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-
64), which attracted the largest number of investors in any single
investment scheme over the years.
UTI launched more innovative schemes in 1970s and 80s to suit the needs
of different investors. It launched ULIP in 1971, six more schemes
between 1981-84, Children's Gift Growth Fund and India Fund (India's
first offshore fund) in 1986, Mastershare (Inida's first equity diversified
scheme) in 1987 and Monthly Income Schemes (offering assured returns)
during 1990s. By the end of 1987, UTI's assets under management grew
ten times to Rs 6700 crores.
Phase II. Entry of Public Sector Funds - 1987-1993
The Indian mutual fund industry witnessed a number of public sector

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

1992-93
Mobilised Management gross Domestic Savings
UTI 11,057 38,247 5.2%
Public Sector 1,964 8,757 0.9%
Total 13,021 47,004 6.1%
Phase III. Emergence of Private Secor Funds - 1993-96
The permission given to private sector funds including foreign fund

management companies (most of them entering through joint ventures
with Indian promoters) to enter the mutal fund industry in 1993, provided
a wide range of choice to investors and more competition in the industry.
Private funds introduced innovative products, investment techniques and
investor-servicing technology. By 1994-95, about 11 private sector funds
had launched their schemes.
Phase IV. Growth and SEBI Regulation - 1996-2004
The mutual fund industry witnessed robust growth and stricter regulation
from the SEBI after the year 1996. The mobilisation of funds and the
number of players operating in the industry reached new heights as
investors started showing more interest in mutual funds.
Invetors' interests were safeguarded by SEBI and the Government offered

tax benefits to the investors in order to encourage them. SEBI (Mutual
Funds) Regulations, 1996 was introduced by SEBI that set uniform
standards for all mutual funds in India. The Union Budget in 1999
exempted all dividend incomes in the hands of investors from income tax.
Various Investor Awareness Programmes were launched during this
phase, both by SEBI and AMFI, with an objective to educate investors
and make them informed about the mutual fund industry.
In February 2003, the UTI Act was repealed and UTI was stripped of its
Special legal status as a trust formed by an Act of Parliament. The
primary objective behind this was to bring all mutal fund players on the
same level. UTI was re-organised into two parts: 1. The Specified
Undertaking, 2. The UTI Mutual Fund
Presently Unit Trust of India operates under the name of UTI Mutual
Fund and its past schemes (like US-64, Assured Return Schemes) are
being gradually wound up. However, UTI Mutual Fund is still the largest
player in the industry. In 1999, there was a significant growth in
mobilisation of funds from investors and assets under management which
is supported by the following data:
GROSS FUND MOBILISATION (RS. CRORES)

PUBLIC PRIVATE
FROM TO UTI TOTAL
SECTOR SECTOR
01-April-98 31-March-99 11,679 1,732 7,966 21,377
01-April-99 31-March-00 13,536 4,039 42,173 59,748
01-April-00 31-March-01 12,413 6,192 74,352 92,957
01-April-01 31-March-02 4,643 13,613 1,46,267 1,64,523
01-April-02 31-Jan-03 5,505 22,923 2,20,551 2,48,979
01-Feb.-03 31-March-03 * 7,259* 58,435 65,694
01-April-03 31-March-04 - 68,558 5,21,632 5,90,190
01-April-04 31-March-05 - 1,03,246 7,36,416 8,39,662
01-April-05 31-March-06 - 1,83,446 9,14,712 10,98,158
ASSETS UNDER MANAGEMENT (RS. CRORES)
AS ON UTI PUBLIC SECTOR PRIVATE SECTOR TOTAL
31-March-99 53,320 8,292 6,860 68,472
Phase V. Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and acquisitions recently,
examples of which are acquisition of schemes of Alliance Mutual Fund by
Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by
Principal Mutual Fund. Simultaneously, more international mutal fund
players have entered India like Fidelity, Franklin Templeton Mutual Fund
etc. There were 29 funds as at the end of March 2006. This is a continuing
phase of growth of the industry through consolidation and entry of new
international and private sector players.
Regulations
Mutual Funds in India are governed by the SEBI (Mutual Fund)
Regulations 1996 as amended from time to time.
Securities and Exchange Board of India (Mutual Funds)
Regulations 1996
Date Details
Securities and Exchange Board Of India (Mutual Funds)
29-Jul- (Amendment) Regulations, 2010
2010

05-Jun- (Second Amendment) Regulations, 2009
2009

08-Apr- (Amendment) Regulations, 2009
2009

29-Sep- (Third Amendment) Regulations, 2008
2008

22-May- (Second Amendment) Regulations, 2008
2008

16-Apr- (Amendment) Regulations, 2008
2008
Notification under sub-regulation (1) of regulation 2 of the
(Second Amendment) Regulations, 2007 and regulation 2 of
08-Apr- the Securities and Exchange Board of India (Foreign
2008 Institutional Investors) (Second Amendment) Regulations,
2007
31-Mar-
SEBI (Payment of Fees) (Amendment) Regulations, 2008
2008
Securities And Exchange Board Of India (Mutual Funds)
31-Oct- (Second Amendment) Regulations, 2007
2007

29-May- (Amendment) Regulations, 2007
2007

03-Aug- (Third Amendment) Regulations, 2006
2006

09-Dec- Regulations, 1996 -(as amended upto June 29, 2010")
1996
For further details please visit the SEBI website http://www.sebi.gov.in

TYPES OF MUTUAL FUNDS
General Classification of Mutual Funds
Open-end Funds | Closed-end Funds
Open-end Funds
Funds that can sell and purchase units at any point in time are classified as
Open-end Funds. The fund size (corpus) of an open-end fund is variable
(keeps changing) because of continuous selling (to investors) and repurchases
(from the investors) by the fund. An open-end fund is not required to keep
selling new units to the investors at all times but is required to always
repurchase, when an investor wants to sell his units. The NAV of an open-end
fund is calculated every day.
Closed-end Funds
Funds that can sell a fixed number of units only during the New Fund Offer
(NFO) period are known as Closed-end Funds. The corpus of a Closed-end
Fund remains unchanged at all times. After the closure of the offer, buying
and redemption of units by the investors directly from the Funds is not
allowed. However, to protect the interests of the investors, SEBI provides
investors with two avenues to liquidate their positions:
1. Closed-end Funds are listed on the stock exchanges where investors
can buy/sell units from/to each other. The trading is generally done at a
discount to the NAV of the scheme. The NAV of a closed-end fund is
computed on a weekly basis (updated every Thursday)..
2. Closed-end Funds may also offer "buy-back of units" to the unit
holders. In this case, the corpus of the Fund and its outstanding units
do get changed.
Load Funds | No-load Funds
Load Funds
Mutual Funds incur various expenses on marketing, distribution, advertising,
portfolio churning, fund manager's salary etc. Many funds recover these
expenses from the investors in the form of load. These funds are known as
Load Funds. A load fund may impose following types of loads on the
investors:
1. Entry Load - Also known as Front-end load, it refers to the load
charged to an investor at the time of his entry into a scheme. Entry load
is deducted from the investor's contribution amount to the fund.
2. Exit Load - Also known as Back-end load, these charges are imposed
on an investor when he redeems his units (exits from the scheme). Exit
load is deducted from the redemption proceeds to an outgoing investor.
3. Deferred Load - Deferred load is charged to the scheme over a period
of time.
4. Contingent Deferred Sales Charge (CDSC) - In some schemes, the
percentage of exit load reduces as the investor stays longer with the
fund. This type of load is known as Contingent Deferred Sales Charge.
No-load Funds
All those funds that do not charge any of the above mentioned loads are
known as No-load Funds.
Tax-exempt Funds | Non-Tax-exempt Funds
Tax-exempt Funds
Tax (tax for distributing income to investors). Long term capital gains and
dividend income in the hands Funds that invest in securities free from tax are
known as Tax-exempt Funds. All open-end equity oriented funds are exempt
from distribution of investors are tax-free.
Non-Tax-exempt Funds
Funds that invest in taxable securities are known as Non-Tax-exempt Funds.
In India, all funds, except open-end equity oriented funds are liable to pay tax
on distribution income. Profits arising out of sale of units by an investor
within 12 months of purchase are categorized as short-term capital gains,
which are taxable. Sale of units of an equity oriented fund is subject to
Securities Transaction Tax (STT). STT is deducted from the redemption
proceeds to an investor.
BROAD MUTUAL FUND
TYPES
1. Equity Funds
Equity funds are considered to be the more risky funds as compared
to other fund types, but they also provide higher returns than other
funds. It is advisable that an investor looking to invest in an equity
fund should invest for long term i.e. for 3 years or more. There are
different types of equity funds each falling into different risk
bracket. In the order of decreasing risk level, there are following
types of equity funds:
a. Aggressive Growth Funds - In Aggressive Growth Funds, fund
managers aspire for maximum capital appreciation and invest in
less researched shares of speculative nature. Because of these
speculative investments Aggressive Growth Funds become more
volatile and thus, are prone to higher risk than other equity funds.
b. Growth Funds - Growth Funds also invest for capital appreciation
(with time horizon of 3 to 5 years) but they are different from
Aggressive Growth Funds in the sense that they invest in
companies that are expected to outperform the market in the future.
Without entirely adopting speculative strategies, Growth Funds
invest in those companies that are expected to post above average
earnings in the future.
c. Speciality Funds - Speciality Funds have stated criteria for
investments and their portfolio comprises of only those companies
that meet their criteria. Criteria for some speciality funds could be
to invest/not to invest in particular regions/companies. Speciality
funds are concentrated and thus, are comparatively riskier than
diversified funds.. There are following types of speciality funds:
i. Sector Funds: Speciality Funds have stated criteria for
investments and their portfolio comprises of only those
companies that meet their criteria. Criteria for some
speciality funds could be to invest/not to invest in particular
regions/companies. Speciality funds are concentrated and
thus, are comparatively riskier than diversified funds.. There
are following types of speciality funds:
ii. Foreign Securities Funds: Foreign Securities Equity Funds
have the option to invest in one or more foreign companies.
Foreign securities funds achieve international diversification
and hence they are less risky than sector funds. However,
foreign securities funds are exposed to foreign exchange rate
risk and country risk.
iii. Mid-Cap or Small-Cap Funds: Funds that invest in
companies having lower market capitalization than large
capitalization companies are called Mid-Cap or Small-Cap
Funds. Market capitalization of Mid-Cap companies is less
than that of big, blue chip companies (less than Rs. 2500
crores but more than Rs. 500 crores) and Small-Cap
companies have market capitalization of less than Rs. 500
crores. Market Capitalization of a company can be calculated
by multiplying the market price of the company's share by
the total number of its outstanding shares in the market. The
shares of Mid-Cap or Small-Cap Companies are not as liquid
as of Large-Cap Companies which gives rise to volatility in
share prices of these companies and consequently,
investment gets risky.
iv. Option Income Funds*: While not yet available in India,
Option Income Funds write options on a large fraction of
their portfolio. Proper use of options can help to reduce
volatility, which is otherwise considered as a risky
instrument. These funds invest in big, high dividend yielding
companies, and then sell options against their stock positions,
which generate stable income for investors.
d. Diversified Equity Funds - Except for a small portion of
investment in liquid money market, diversified equity funds invest
mainly in equities without any concentration on a particular
sector(s). These funds are well diversified and reduce sector-
specific or company-specific risk. However, like all other funds
diversified equity funds too are exposed to equity market risk. One
prominent type of diversified equity fund in India is Equity Linked
Savings Schemes (ELSS). As per the mandate, a minimum of 90%
of investments by ELSS should be in equities at all times. ELSS
investors are eligible to claim deduction from taxable income (up to
Rs 1 lakh) at the time of filing the income tax return. ELSS usually
has a lock-in period and in case of any redemption by the investor
before the expiry of the lock-in period makes him liable to pay
income tax on such income(s) for which he may have received any
tax exemption(s) in the past.
e. Equity Index Funds - Equity Index Funds have the objective to
match the performance of a specific stock market index. The
portfolio of these funds comprises of the same companies that form
the index and is constituted in the same proportion as the index.
Equity index funds that follow broad indices (like S&P CNX Nifty,
Sensex) are less risky than equity index funds that follow narrow
sectoral indices (like BSEBANKEX or CNX Bank Index etc).
Narrow indices are less diversified and therefore, are more risky.
f. Value Funds - Value Funds invest in those companies that have
sound fundamentals and whose share prices are currently under-
valued. The portfolio of these funds comprises of shares that are
trading at a low Price to Earning Ratio (Market Price per Share /
Earning per Share) and a low Market to Book Value (Fundamental
Value) Ratio. Value Funds may select companies from diversified
sectors and are exposed to lower risk level as compared to growth
funds or speciality funds. Value stocks are generally from cyclical
industries (such as cement, steel, sugar etc.) which make them
volatile in the short-term. Therefore, it is advisable to invest in
Value funds with a long-term time horizon as risk in the long term,
to a large extent, is reduced.
g. Equity Income or Dividend Yield Funds - The objective of
Equity Income or Dividend Yield Equity Funds is to generate high
recurring income and steady capital appreciation for investors by
investing in those companies which issue high dividends (such as
Power or Utility companies whose share prices fluctuate
comparatively lesser than other companies' share prices). Equity
Income or Dividend Yield Equity Funds are generally exposed to
the lowest risk level as compared to other equity funds.
• Debt / Income Funds
Funds that invest in medium to long-term debt instruments issued by
private companies, banks, financial institutions, governments and other
entities belonging to various sectors (like infrastructure companies etc.)
are known as Debt / Income Funds. Debt funds are low risk profile funds
that seek to generate fixed current income (and not capital appreciation) to
investors. In order to ensure regular income to investors, debt (or income)
funds distribute large fraction of their surplus to investors. Although debt
securities are generally less risky than equities, they are subject to credit
risk (risk of default) by the issuer at the time of interest or principal
payment. To minimize the risk of default, debt funds usually invest in
securities from issuers who are rated by credit rating agencies and are
considered to be of "Investment Grade". Debt funds that target high
returns are more risky. Based on different investment objectives, there can
be following types of debt funds:
a. Diversified Debt Funds - Debt funds that invest in all securities
issued by entities belonging to all sectors of the market are known
as diversified debt funds. The best feature of diversified debt funds
is that investments are properly diversified into all sectors which
results in risk reduction. Any loss incurred, on account of default by
a debt issuer, is shared by all investors which further reduces risk
for an individual investor.
b. Focused Debt Funds* - Debt funds that invest in all securities
issued by entities belonging to all sectors of the market are known
as diversified debt funds. The best feature of diversified debt funds
is that investments are properly diversified into all sectors which
results in risk reduction. Any loss incurred, on account of default by
a debt issuer, is shared by all investors which further reduces risk
for an individual investor.
c. High Yield Debt funds - As we now understand that risk of default
is present in all debt funds, and therefore, debt funds generally try
to minimize the risk of default by investing in securities issued by
only those borrowers who are considered to be of "investment
grade". But, High Yield Debt Funds adopt a different strategy and
prefer securities issued by those issuers who are considered to be of
"below investment grade". The motive behind adopting this sort of
risky strategy is to earn higher interest returns from these issuers.
These funds are more volatile and bear higher default risk, although
they may earn at times higher returns for investors.
d. Assured Return Funds - Although it is not necessary that a fund
will meet its objectives or provide assured returns to investors, but
there can be funds that come with a lock-in period and offer
assurance of annual returns to investors during the lock-in period.
Any shortfall in returns is suffered by the sponsors or the Asset
Management Companies (AMCs). These funds are generally debt
funds and provide investors with a low-risk investment opportunity.
However, the security of investments depends upon the net worth of
the guarantor (whose name is specified in advance on the offer
document). To safeguard the interests of investors, SEBI permits
only those funds to offer assured return schemes whose sponsors
have adequate net-worth to guarantee returns in the future. In the
past, UTI had offered assured return schemes (i.e. Monthly Income
Plans of UTI) that assured specified returns to investors in the
future. UTI was not able to fulfill its promises and faced large
shortfalls in returns. Eventually, government had to intervene and
took over UTI's payment obligations on itself. Currently, no AMC
in India offers assured return schemes to investors, though possible.
e. Fixed Term Plan Series - Fixed Term Plan Series usually are
closed-end schemes having short term maturity period (of less than
one year) that offer a series of plans and issue units to investors at
regular intervals. Unlike closed-end funds, fixed term plans are not
listed on the exchanges. Fixed term plan series usually invest in
debt / income schemes and target short-term investors. The
objective of fixed term plan schemes is to gratify investors by
generating some expected returns in a short period.
• Gilt Funds
Also known as Government Securities in India, Gilt Funds invest in
government papers (named dated securities) having medium to long term
maturity period. Issued by the Government of India, these investments
have little credit risk (risk of default) and provide safety of principal to the
investors. However, like all debt funds, gilt funds too are exposed to
interest rate risk. Interest rates and prices of debt securities are inversely
related and any change in the interest rates results in a change in the NAV
of debt/gilt funds in an opposite direction.
4. Money Market / Liquid Funds
Money market / liquid funds invest in short-term (maturing within one

year) interest bearing debt instruments. These securities are highly liquid
and provide safety of investment, thus making money market / liquid
funds the safest investment option when compared with other mutual fund
types. However, even money market / liquid funds are exposed to the
interest rate risk. The typical investment options for liquid funds include
Treasury Bills (issued by governments), Commercial papers (issued by
companies) and Certificates of Deposit (issued by banks).
5. Hybrid Funds
As the name suggests, hybrid funds are those funds whose portfolio
includes a blend of equities, debts and money market securities. Hybrid
funds have an equal proportion of debt and equity in their portfolio. There
are following types of hybrid funds in India:
a. Balanced Funds - The portfolio of balanced funds include assets
like debt securities, convertible securities, and equity and
preference shares held in a relatively equal proportion. The
objectives of balanced funds are to reward investors with a regular
income, moderate capital appreciation and at the same time
minimizing the risk of capital erosion. Balanced funds are
appropriate for conservative investors having a long term
investment horizon.
b. Growth-and-Income Funds - Funds that combine features of
growth funds and income funds are known as Growth-and-Income
Funds. These funds invest in companies having potential for capital
appreciation and those known for issuing high dividends. The level
of risks involved in these funds is lower than growth funds and
higher than income funds.
c. Asset Allocation Funds - Mutual funds may invest in financial
assets like equity, debt, money market or non-financial (physical)
assets like real estate, commodities etc.. Asset allocation funds
adopt a variable asset allocation strategy that allows fund managers
to switch over from one asset class to another at any time
depending upon their outlook for specific markets. In other words,
fund managers may switch over to equity if they expect equity
market to provide good returns and switch over to debt if they
expect debt market to provide better returns. It should be noted that
switching over from one asset class to another is a decision taken
by the fund manager on the basis of his own judgment and
understanding of specific markets, and therefore, the success of
these funds depends upon the skill of a fund manager in anticipating
market trends.
6. Commodity Funds
Those funds that focus on investing in different commodities (like metals,
food grains, crude oil etc.) or commodity companies or commodity
futures contracts are termed as Commodity Funds. A commodity fund that
invests in a single commodity or a group of commodities is a specialized
commodity fund and a commodity fund that invests in all available
commodities is a diversified commodity fund and bears less risk than a
specialized commodity fund. "Precious Metals Fund" and Gold Funds
(that invest in gold, gold futures or shares of gold mines) are common
examples of commodity funds.
7. Real Estate Funds
Funds that invest directly in real estate or lend to real estate developers or
invest in shares/securitized assets of housing finance companies, are
known as Specialized Real Estate Funds. The objective of these funds
may be to generate regular income for investors or capital appreciation.
8. Exchange Traded Funds (ETF)
Exchange Traded Funds provide investors with combined benefits of a

closed-end and an open-end mutual fund. Exchange Traded Funds follow
stock market indices and are traded on stock exchanges like a single stock
at index linked prices. The biggest advantage offered by these funds is
that they offer diversification, flexibility of holding a single share
(tradable at index linked prices) at the same time. Recently introduced in
India, these funds are quite popular abroad.
9. Fund of Funds
Mutual funds that do not invest in financial or physical assets, but do
invest in other mutual fund schemes offered by different AMCs, are
known as Fund of Funds. Fund of Funds maintain a portfolio comprising
of units of other mutual fund schemes, just like conventional mutual funds
maintain a portfolio comprising of equity/debt/money market instruments
or non financial assets. Fund of Funds provide investors with an added
advantage of diversifying into different mutual fund schemes with even a
small amount of investment, which further helps in diversification of
risks. However, the expenses of Fund of Funds are quite high on account
of compounding expenses of investments into different mutual fund
schemes.
* Funds not yet available in India
Risk Heirarchy of Different Mutual Funds

Thus, different mutual fund schemes are exposed to different levels of risk
and investors should know the level of risks associated with these
schemes before investing. The graphical representation hereunder
provides a clearer picture of the relationship between mutual funds and
levels of risk associated with these funds:
ADVANTAGES OF MUTUAL
FUND :-
S.
Advantage Particulars
No.
Mutual Funds invest in a well-diversified portfolio of
Portfolio securities which enables investor to hold a diversified
1.
Diversification investment portfolio (whether the amount of investment
is big or small).
Fund manager undergoes through various research
Professional works and has better investment management skills
2.
Management which ensure higher returns to the investor than what he
can manage on his own.
Investors acquire a diversified portfolio of securities
even with a small investment in a Mutual Fund. The risk
3. Less Risk
in a diversified portfolio is lesser than investing in
merely 2 or 3 securities.
Low Due to the economies of scale (benefits of larger
4. Transaction volumes), mutual funds pay lesser transaction costs.
Costs These benefits are passed on to the investors.
An investor may not be able to sell some of the shares
5. Liquidity held by him very easily and quickly, whereas units of a
mutual fund are far more liquid.
>Mutual funds provide investors with various schemes
with different investment objectives. Investors have the
Choice of option of investing in a scheme having a correlation
6.
Schemes between its investment objectives and their own
financial goals. These schemes further have different
plans/options
Funds provide investors with updated information
pertaining to the markets and the schemes. All material
7. Transparency
facts are disclosed to investors as required by the
regulator.
Investors also benefit from the convenience and
flexibility offered by Mutual Funds. Investors can
switch their holdings from a debt scheme to an equity
8. Flexibility
scheme and vice-versa. Option of systematic (at regular
intervals) investment and withdrawal is also offered to
the investors in most open-end schemes.
Mutual Fund industry is part of a well-regulated
investment environment where the interests of the
9. Safety investors are protected by the regulator. All funds are
registered with SEBI and complete transparency is
forced.
DISADVANTAGES OF MUTUAL FUND
S.
Disadvantage Particulars
No.
Costs ControlInvestor has to pay investment management fees and
Not in the fund distribution costs as a percentage of the value of his
1.
Hands of an investments (as long as he holds the units), irrespective
Investor of the performance of the fund.
The portfolio of securities in which a fund invests is a
No decision taken by the fund manager. Investors have no
2. Customized right to interfere in the decision making process of a
Portfolios fund manager, which some investors find as a constraint
in achieving their financial objectives.
Many investors find it difficult to select one option from
Difficulty in
the plethora of funds/schemes/plans available. For this,
Selecting a
3. they may have to take advice from financial planners in
Suitable
order to invest in the right fund to achieve their
Fund Scheme
objectives.
PERFORMANCE OF
MUTUAL FUNDS IN INDIA
The performance of mutual funds in India from the day the concept of
mutual fund took birth in India. The year was 1963. Unit Trust of India
invited investors or rather to those who believed in savings, to park their
money in UTI Mutual Fund.
For 30 years it goaled without a single second player. Though the 1988
year saw some new mutual fund companies, but UTI remained in a
monopoly position.
The performance of mutual funds in India in the initial phase was not even
closer to satisfactory level. People rarely understood, and of course
investing was out of question. But yes, some 24 million shareholders was
accustomed with guaranteed high returns by the begining of liberalization
of the industry in 1992. This good record of UTI became marketing tool
for new entrants. The expectations of investors touched the sky in
profitability factor. However, people were miles away from the
praparedness of risks factor after the liberalization.
The Assets Under Management of UTI was Rs. 67bn. by the end of 1987.
Let me concentrate about the performance of mutual funds in India
through figures. From Rs. 67bn. the Assets Under Management rose to
Rs. 470 bn. in March 1993 and the figure had a three times higher
performance by April 2004. It rose as high as Rs. 1,540bn.
The net asset value (NAV) of mutual funds in India declined when stock
prices started falling in the year 1992. Those days, the market regulations
did not allow portfolio shifts into alternative investments. There were
rather no choice apart from holding the cash or to further continue
investing in shares. One more thing to be noted, since only closed-end
funds were floated in the market, the investors disinvested by selling at a
loss in the secondary market.
The performance of mutual funds in India suffered qualitatively. The 1992

stock market scandal, the losses by disinvestments and of course the lack
of transparent rules in the whereabout rocked confidence among the
investors. Partly owing to a relatively weak stock market performance,
mutual funds have not yet recovered, with funds trading at an average
discount of 1020 percent of their net asset value.
The supervisory authority adopted a set of measures to create a

transparent and competitve environment in mutual funds. Some of them
were like relaxing investment restrictions into the market, introduction of
open-ended funds, and paving the gateway for mutual funds to launch
pension schemes.
The measure was taken to make mutual funds the key instrument for long-
term saving. The more the variety offered, the quantitative will be
investors.
At last to mention, as long as mutual fund companies are performing with

lower risks and higher profitability within a short span of time, more and
more people will be inclined to invest until and unless they are fully
educated with the dos and donts of mutual funds.
ASSOCIATION OF
MUTUAL FUNDS IN INDIA
(AMFI)
With the increase in mutual fund players in India, a need for mutual fund
association in India was generated to function as a non-profit organisation.
Association of Mutual Funds in India (AMFI) was incorporated on 22nd
August, 1995.
AMFI is an apex body of all Asset Management Companies (AMC)

which has been registered with SEBI. Till date all the AMCs are that have
launched mutual fund schemes are its members. It functions under the
supervision and guidelines of its Board of Directors.
Association of Mutual Funds India has brought down the Indian Mutual
Fund Industry to a professional and healthy market with ethical lines
enhancing and maintaining standards. It follows the principle of both
protecting and promoting the interests of mutual funds as well as their unit
holders.
The objectives of Association of Mutual Funds in India
The Association of Mutual Funds of India works with 30 registered

AMCs of the country. It has certain defined objectives which juxtaposes
the guidelines of its Board of Directors. The objectives are as follows:
• This mutual fund association of India maintains a high professional
and ethical standards in all areas of operation of the industry.
• It also recommends and promotes the top class business practices
and code of conduct which is followed by members and related
people engaged in the activities of mutual fund and asset
management. The agencies who are by any means connected or
involved in the field of capital markets and financial services also
involved in this code of conduct of the association.
• AMFI interacts with SEBI and works according to SEBIs
guidelines in the mutual fund industry.
• Association of Mutual Fund of India do represent the Government
of India, the Reserve Bank of India and other related bodies on
matters relating to the Mutual Fund Industry.
• It develops a team of well qualified and trained Agent distributors.
It implements a programme of training and certification for all
intermediaries and other engaged in the mutual fund industry.
• AMFI undertakes all India awarness programme for investors
inorder to promote proper understanding of the concept and
working of mutual funds.
• At last but not the least association of mutual fund of India also
disseminate informations on Mutual Fund Industry and undertakes
studies and research either directly or in association with other
bodies.
The sponsorers of Association of Mutual Funds in India
Bank Sponsored
• SBI Fund Management Ltd.
• BOB Asset Management Co. Ltd.
• Canbank Investment Management Services Ltd.
• UTI Asset Management Company Pvt. Ltd.
Institutions
• GIC Asset Management Co. Ltd.
• Jeevan Bima Sahayog Asset Management Co. Ltd.
Private Sector
Indian:-
• BenchMark Asset Management Co. Pvt. Ltd.
• Cholamandalam Asset Management Co. Ltd.
• Credit Capital Asset Management Co. Ltd.
• Escorts Asset Management Ltd.
• JM Financial Mutual Fund
• Kotak Mahindra Asset Management Co. Ltd.
• Reliance Capital Asset Management Ltd.
• Sahara Asset Management Co. Pvt. Ltd
• Sundaram Asset Management Company Ltd.
• Tata Asset Management Private Ltd.
Predominantly India Joint Ventures:-
• Birla Sun Life Asset Management Co. Ltd.
• DSP Merrill Lynch Fund Managers Limited
• HDFC Asset Management Company Ltd.
Predominantly Foreign Joint Ventures:-
• ABN AMRO Asset Management (I) Ltd.
• Alliance Capital Asset Management (India) Pvt. Ltd.
• Deutsche Asset Management (India) Pvt. Ltd.
• Fidelity Fund Management Private Limited
• Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.
• HSBC Asset Management (India) Private Ltd.
• ING Investment Management (India) Pvt. Ltd.
• Morgan Stanley Investment Management Pvt. Ltd.
• Principal Asset Management Co. Pvt. Ltd.
• Prudential ICICI Asset Management Co. Ltd.
• Standard Chartered Asset Mgmt Co. Pvt. Ltd.
Association of Mutual Funds in India Publications
AMFI publices mainly two types of bulletin. One is on the monthly basis
and the other is quarterly. These publications are of great support for the
investors to get intimation of the knowhow of their parked money.
The mailing address of Association of Mutual Funds in India
Association of Mutual Funds in India

106, Free Press House,
Free Press Journal Marg,
Nariman Point,
Mumbai - 400 021,
India.
Telephone : 91-22-5637 39 07 / 5637 39 08
Fax : 91-22-5637 3909
To choose the right
Mutual Fund scheme
Once you are comfortable with the basics, the next step is to understand
your investment choices, and draw up your investment plan relevant to
your requirements.
Before investing in Mutual Funds, the following steps must be given due
weightage to decide on the right type of scheme:
1. Identifying your Investment Objective
2. Selecting the right Scheme Category
3. Selecting the right Mutual Fund
4. Evaluating the Portfolio
A) Identifying your Investment Objective

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

factors. You need to ask yourself as to till what extent you are willing to
bear losses in case of market losses in order to get higher returns.
Cash flow requirements

For example, you may require:
A regular Cash Flow like a monthly income
 A lump sum after a fixed period of time for some specific need in the
future
 No need, but want to earn better returns on cash lying with you or in
the bank.
A) Selecting the scheme category
Investment
Investment Objective Ideal Instruments
horizon
Short-term Investment 1- 6 months Liquid/Short-term plans
Long term Capital Over 3 years or Diversified Equity/ Balanced

Appreciation more Funds
Monthly Income Plans / Income

Regular Income Flexible
Funds
Equity-Linked Saving Schemes

Tax Saving 3 yrs lock-in
(ELSS)
B) Selecting the right Mutual fund:

Once you have a clear strategy in mind, you now have to choose
which Mutual fund and scheme you want to invest in. The offer document
of the scheme tells you its objectives and provides supplementary details
like the track record of other schemes managed by the same Fund
Manager. Some important factors to evaluate before choosing a particular
Mutual Fund are:
• The track record of performance over that last few years in relation
to the appropriate yardstick and similar funds in the same category.
Do a scheme comparison available on our website to get a better
idea about the returns.
• How well the Mutual Fund is organized to provide efficient, prompt
and personalized service. Though this role is played more by the
distributor/financial advisor and with BSDL you need not worry
and can be assured of the best services
• The degree of transparency as reflected in frequency and quality of
their communications.
A) Evaluation of portfolio:
The NAV or the net Assets Under Management (AUM) alone
cannot give a correct picture of the MF. There are many other statistics
that one needs to go into. Evaluation of equity fund involves analysis of:
1. Risk
2. Returns
3. NAV
4. AUM
5. Volatility
6. Expense ratio
7. Portfolio diversification
8. Fund manager's experience.
Good equity fund should provide consistent returns over a period of
time. Also expense ratio should be within the prescribed limits. These
days fund house charge around 2.50% as management fees.
Evaluation of bond funds involve it's assets allocation analysis, return's
consistency, it's rating profile, maturity profile, and it's performance over
a period of time. The bond fund with ideal mix of corporate debt and gilt
fund should be selected.
THE RISKS INVOLVED

Investment in Mutual Fund is subject to standard and specific risk
factors.For scheme specific risk factors please refer to the full offer
documents of the respective scheme.
STANDARD RISK FACTORS:
• Mutual funds and securities are subject to market risks and there is
no assurance and no guarantee that the objectives of the mutual
fund will be achieved.
• The NAV of the units issued under the scheme may go up or down
depending on the factors and forces affecting capital markets.
• Past performance of the Sponsor/AMC/Mutual fund does not
indicate the future performance of the schemes of the Mutual Fund.
• LIC Nomura MF LIQUID FUND is the name of the scheme and
does not in any manner indicate either the quality of the scheme or
its future prospects and returns.
• The sponsor is not liable for any loss resulting from the operation of
the scheme beyond the initial contribution made by it for an amount
of rupees 2 Crores towards setting up of the Mutual Fund.
• Investors in the scheme are not being offered any assured
/guaranteed returns.
RISK VS. RETURN
Points to Remember:
• Do not speculate: Always evaluate risk-taking capacity.
• Do not chase returns: Because what goes up must come down.
• Do not put all eggs in one basket: Diversification reduces the risk.
• Do not stop working on Mutual Funds: Continuous evaluation of
funds is a must.
• Do not time the market: Every time is good for investments.
• Mutual Funds are subject to market risks and there is no assurance
that the fund objective will be achieved.
• NAVs fluctuate depending on forces affecting the Capital market.
• Past performance may or may not be sustained in the future.
• Returns are neither guaranteed nor assured.
• Think long-term while identifying stocks.
• In case of a correction in the markets never get into panic mode and
sell. Always hold your investments if you are sure that the long-
term potential of the company is the same.
EQUITY SCHEMES OTHER SCHEMES DIVID DIVIDEND

END DISTRIBUTION TAX
SCHE
MES
SHOR SHOR OTHER
LONG LONG
T T EQUIT SCHEMES
TERM TERM ALL
TERM TERM Y LIQUID
CAPIT TDS CAPIT TDS SCHE
CAPIT CAPIT SCHE SCHEMES
AL AL MES
AL AL MES
GAINS GAINS
GAINS GAINS
28.325% 14.1625%
10% (25% (12.5%+10%
RESIDEN
AS (20% +10% SURCHARGE
T TAX
11.33% NIL NIL PER with NIL NIL SURCRGE +3% EDUCATION
INDIVISU FREE
SLAB indexizat + 3% CESS)
AL/ HUF
ion) EDUCATI
ON CESS)
28.325% 22.66%
(25% (20% + 10%
10%
+10% SURCHARGE +
PARTNER (20%
TAX SURCHAR 3% EDUCATION
SHIP 11.33% NIL NIL 33.99% with NIL NIL
FREE GE+ CESS)
FIRMS indexizat
3%EDUCA
ion)
TION
CESS)
28.325% 22.66%
10% (25% +10% (20% + 10%
AS (20% SURCHAR SURCHARGE +
TAX
AOP/BOI 11.33% NIL NIL PER with NIL NIL GE+ 3% EDUCATION
FREE
SLAB indexizat 3%EDUCA CESS)
ion) TION
CESS)
28.325% 22.66%
10% (25% +10% (20% + 10%
DOMESTI
(20% SURCHAR SURCHARGE +
C TAX
11.33% NIL NIL 33.99% with NIL NIL GE+ 3% EDUCATION
COMPANI FREE
indexizat 3%EDUCA CESS)
ES
ion) TION
CESS)
STCG- 14.1625% (12.5% +

30% 28.325% 10%
10% LTCG- (25% +10% SURCHARGE
STCG
AS (20% 20% SURCHAR +3%
11.33% TAX
NRIs 11.33% NIL PER with (After NIL GE+ EDUCATION
LTCG- FREE
SLAB indexizat providi 3%EDUCA CESS)
NIL
ion) ng for TION
indexati CESS)
on)
Note:
1. STCG in equity and other schemes include 10% surcharge and 3% education cess.
2. Securities Transaction Tax is deducted @ 0.25% on redemption.
3. Mutual Fund investments are not liable to wealth tax.
4. Income-Tax benefits under Sec 80C are subject to a ceiling of Rs. 1, 00,000 of
investment.
5. Service tax applicable on the AMC fees is charged @ 12.36%.
6. These figures are based on the latest finance bill and are only for Resident Indians.
7. Mutual Fund schemes do not attract any gift tax.
8. For tax-rates applicable to NRIs check the NRI investment section.
SET UP OF THE FUND:-
Life Insurance Corporation of India set up LIC Mutual Fund on 19th June
1989 and contributed Rs. 2 Crores towards the corpus of the Fund. LIC
Mutual Fund was constituted as a Trust in accordance with the provisions
of the Indian Trust Act, 1882. The settlor is not responsible for the
management of the Trust. The settlor is also not responsible or liable for
any loss or shortfall resulting in any of the schemes of LIC Mutual Fund.
The Trustees of the LIC Mutual Fund have exclusive ownership of Trust
Fund and are vested with general power of superintendence,discretion and
management of the affairs of the Trust. LIC Mutual Fund Asset
Management Company Ltd. was formed on 20th April 1994 in
compliance with the Securities and Exchange Board of India (Mutual
Funds) Regulations,1993. The Company commenced business on 29th
April 1994. The Trustees of LIC Mutual Fund have appointed LIC Mutual
Fund Asset Management Company Ltd. as the Investment Managers for
LIC Mutual Fund.
The Trustees are responsible for appointing a Custodian. The Trustees

should also ensure that the activities of the Trust and the Asset
Management Company are in accordance with the Trust Deed and the
SEBI Mutual Fund Regulations as amended from time to time. The
Trustees have also to report periodically to SEBI on the functioning of the
Fund.
The investors under the schemes can obtain a copy of the Trust Deed, the
text of the concerned Scheme as also a copy of the Annual Report,on a
written request made to the LIC Mutual Fund Asset Management
Company Ltd. at a nominal price of Rs. 10/-.
INFORMATION ABOUT THE
SPONSOR:-
Life Insurance Corporation of India (LIC), the sponsor of LIC Mutual
Fund is one amongst the largest insurance companies in the world, serving
over 32 crore policy holders and managing a Fund of over Rs. 560806.33
crore. There are very few organizations in India, which manage funds of
this size. However beyond the initial contribution of Rs. 2 crore towards
setting up of the corpus LIC is not responsible or liable for any loss or
shortfall resulting from the operations of any scheme of the Mutual Fund.
INFORMATION ABOUT LIC

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

The basic objective of LIC Mutual Fund is to mobilize savings from
investors who are spread in various parts of the country and have no easy
access to the capital market, with a view to providing them a vehicle for
investment of their funds to ensure safety, security, easy liquidity and
reasonably good returns.
B) The Trustee Fees:-
In accordance with the Trust Deed constituting the Mutual Fund, and the
Deed of Modification the Trustee Co. is entitled to receive in addition to
the reimbursement of all costs, charges and expenses a fee not exceeding
0.01% of the weekly / daily average net assets or a sum of 25 lakh per
annum whichever is higher subject to regulations.
C) Certificate of Registration:-
In accordance with the Regulation 9 of the Securities & Exchange Board

of India Regulations, the LIC Mutual Fund has obtained a Certificate of
Registration from SEBI on 9/5/94 vide Registration Code
No.MF/012/94/5.
HOW DOES LIC Nomura Mutual Fund WORK ?
In accordance with the Securities & Exchange Borad of India (Mutual
Fund) LIC Nomura Mutual Fund was set up as a separate Trust by the
Life Insurance Corporation of India (who is the Sponsor). LIC has made
an initial contribution of Rs.2 crores towards Trust Fund and has
appointed a Board of Trustees to supervise the activities of the Fund. The
Board of Trustees have entrusted the work of management of the Fund to
Jeevan Bima Sahayog Asset Management Company Ltd., which is a
company promoted by Life Insurance Corporation of India with an
authorised capital of Rs.25 crores. JBS AMC is responsible for promoting
different schemes on behalf of LIC Nomura Mutual Fund and also to
manage them. The day to day operations of the AMC are looked after by
experienced and qualified professionals, consisting of senior officials on
deputation from Life Insurance Corporation of India as well as directly
recruited officials of the AMC.
LIC Nomura Mutual Fund has appointed Stock Holding Corporation of
India as the custodian for the scheme to take delivery of all properties
belonging to the Mutual Fund schemes and hold them in custody and
separately from the assets of the custodian and their other clients.
LIC MF TO BE RENAMED AS
LIC NOMURA MF
Life Insurance Corporation of India (LIC), being the sponsor of LIC
Mutual Fund (Fund), has agreed to enter into a joint venture with Nomura
Asset Management Strategic Investments Pte. Ltd. (Nomura), pursuant to
which LIC Mutual Fund Asset Management Company Limited (LIC MF
AMC) along with the current shareholders of LIC MF AMC (i.e., LIC,
LIC Housing Finance Limited and GIC Housing Finance Limited) and the
LIC Mutual Fund Trustee Company Private Limited (Trustee Company)
along with the current shareholders of the Trustee Company (i.e.,
LIC, LIC Housing Finance Limited, LICHFL Care Homes Limited and
GIC Housing Finance Limited), have entered into agreements with
Nomura (the Joint Venture). Nomura is a wholly owned subsidiary of
Nomura Asset Management Co., Ltd.
In terms of the agreements, Nomura will invest through purchase and
subscription to the extent of 35% of the total paid-up equity share capital
of the LIC MF AMC and acquire 35% of the total paid-up equity share
capital of the Trustee Company, subject to completion of necessary
statutory and regulatory requirements in this regard. The balance 65% of
the paid-up equity share capital of LIC MF AMC and the Trustee
Company, will continue to be held by LIC and LIC Housing Finance
Limited. On the completion of Nomura’s investment in LIC MF AMC
and the Trustee Company, LIC will continue to be the sole sponsor of the
Fund and the Fund will be renamed as ‘LIC NOMURA Mutual Fund’.
LIC MF AMC will be renamed as ‘LIC NOMURA Mutual Fund Asset
Management Company Limited’ and the Trustee Company will be
renamed as ‘LIC NOMURA Mutual Fund Trustee Company Private
Limited’. Further, the names of each of the schemes of the fund which
currently are prefixed with LICMF will be prefixed with LIC NOMURA
MF.
Nomura is a company incorporated on 22 June 2009 and registered under
the laws of Singapore.The unit holders who wish to redeem their
investments with the Fund, the option to exit without any exit load can be
exercised within the time period at the relevant applicable Net Asset
Value.Further, the exit option is not available to the unit holders who have
invested in any scheme of LIC MF AMC under the statutory lock-in
period under Section 80 C of the Income Tax Act, 1961, namely, LICMF
Tax Plan and LICMF Unit Linked Insurance Scheme.
INFORMATION ABOUT THE

ASSET
MANAGEMENT COMPANY
(AMC):-
In terms of Securities & Exchange Board of India (Mutual Fund)
Regulations, an Asset Management Company called the LIC Mutual Fund
Asset Management Company Ltd. With an authorized capital of Rs. 25
crore has been appointed, as approved by the Securities & Exchange
Board of India, to manage the affairs of LIC Mutual Fund and operate the
schemes of the Fund. Promoted by LIC, LICMFAMC was incorporated in
April 1994 and has since been managing the schemes of LICMF.
A) AMC Fees-
In accordance with the Investment Management Agreement and the SEBI
regulations the AMC is entitled to receive investment management and
advisory fee at the rate of 1.25%, per annum of the weekly average net
assets outstanding in an accounting year, for net assets upto Rs. 100 crore,
and at the rate of 1% per annum of the weekly average net assets
outstanding in an accounting year, for net assets above Rs. 100 crore.
B) CUSTODIANS:-
LIC Mutual Fund has appointed Stock Holding Corporation of India

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

Custodians:-
The custodian is required to take delivery of all properties belonging to

the Mutual Fund schemes and hold them in custody separately from the
assets of the custodian and their other clients. The custodian will make
efforts to have the properties of the Fund registered in the name of the
Fund and will deliver them only as per the instructions of the AMC and
on receipt of the consideration. The custodian shall collect, receive and
deposit in the account or accounts of the Fund with the bank, income,
dividends, interest,
rights and other payments of whatever kind with respect to the securities
and other assets and items of a like nature of the Fund held by or to the
order of the custodian and shall execute such ownership and other
confirmations as are necessary. LIC Mutual Fund shall have the right to
change the Custodians if at any point of time it is observed that the service
of the appointed Custodians is not upto the mark.
C) REGISTRARS AND TRANSFER

AGENTS:-
All the activities such as processing of applications, issuance of statement
of account / unit certificate and other such activities are proposed to be
carried out by our Registrar and Transfer agents Registrars M/s. Karvy
Mutual Fund Services (A division of Karvy Computershare Pvt. Ltd.)
The address of the Registrar is-
“Karvy Plaza", H.No.8-2-596, Avenue 4, Street No.1,

Banjara Hills, Hyderabad – 500 034
The AMC shall have the right to change the Registrars and Transfer agent
later. The Board of Trustees and the Board of AMC have ensured that the
registrar and transfer agent M/s Karvy Computershare Pvt. Ltd. Has
adequate capacity to discharge responsibilities with regard to processing
of applications and dispatching unit certificates to unitholders within the
time limit prescribed in the Regulations and also has sufficient capacity to
handle investor complaints.
D) AUDITOR:-
M/s. Shah Gupta & Co.,

Chartered Accountants,
38, Bombay Mutual Building,
Fort, Mumbai – 400 001
LIC Mutual Fund shall review the appointment of Auditors after every
three years or at such time as may be deemed fit in the opinion of the
Board.
E) BANKERS:-
Presently HDFC Bank Ltd., Corporation Bank, Kotak Mahindra Bank,

ABN Amro Bank, Standard Chartered Bank, Union Bank of India and
AXIS Bank are the Bankers to the schemes. The AMC reserves the right
to change the Banker or introduce additional banker/s to the scheme at a
later date.
OVERVIEW OF ECONOMY :
The Indian economy grew by 7.4 per cent in FY2009-10, above the
expected growth of 7.2 per cent. On global economic slowdown, the GDP
had moderated to 6.7 per cent in 2008-09 after recording a growth rate of
9 per cent in the three preceding years. The economic growth in FY10
was backed mainly by the manufacturing output that grew 16.3 percent y-
o-y and the surprised farm output of 0.7% though the service sector
growth slowed down.
In 2009-10, fourteen out of seventeen industries achieved higher growth

than in the previous year 2008-09. Only three sectors namely the food
products, beverages, tobacco & related products and jute textiles have
continued to suffer from discernibly low growth in output. Core sectors
grew at a satisfactory rate of 5.5 percent in 2009-10 as compared to 3.3
percent growth in the previous fiscal. The growth was mainly on account
of the cement sector followed by coal and power sectors.
Inflation had been the main area of concern to the government and the
Reserve Bank of India. The average annual inflation based on the
wholesale price index (WPI) in fiscal 2009-10 was lower at 3.7 per cent,as
compared with a 14-year high of 8.4 per cent recorded in 2008-09. In the
last quarter of the FY10, the WPI inflation crossed the nine per cent mark.
The upward pressure on prices of food articles and fuel commodities
pushed up the aggregate price level of the economy.
Indian industry recovered substantially in the later half of 2009-10. The

Index of Industrial Production (IIP) figures available for the entire fiscal
shows industrial production register growth of 10.4 percent as against 2.8
percent during the same period of 2008-09. At the disaggregated level, all
three sectors, i.e. mining, electricity and manufacturing witnessed a
perceptible growth during the year 2009-10. The manufacturing sector, in
particular, contributed significantly to this overall strong performance
with a comprehensive growth of 10.9 percent during the period. As per
use’, based classification, capital goods industry led the frontier attaining
growth of 19.2 percent during 2009-10. The consumer goods sector
secured a robust growth of 7.4 percent on account of consumer durables
segment.
The RBI has raised key rate twice since March 19, 2010 by a total 50
basis points citing inflationary pressures and an improving economy.
Indian merchandise trade managed to recover from the severe impact of

global turmoil. Though the Indian exports showed a growth of 54% in
March 2010 against –33% in March 2009, for the financial year 2009-10
Indian exports contracted by ( -) 4.7 percent while the growth figure was
positive 3.4 percent during 2008-09.
Capital flows continued to remain buoyant throughout the year 2009-

10.During the year 2009-10 total foreign investments amounted to be
USD 66.5 billion as against USD 21.3 billion recorded during the same
period
last year. Due to this India’s foreign exchange reserves increased by US$
27.1 billion during 2009-10 to reach US$ 279.1 billion at the end of
March 2010.
The INR closed at Rs 44.80 per US $ as on 31st March’10 as against Rs

50.73 per US $ as on 31st March 2009 –appreciating 12.86%. This was
mainly due to the weakening of dollar due to weak US economy and
huge inflow of foreign funds into the Capital market, speculating
importers increasing their purchases of foreign currency to make
payments.
The price of Brent Crude closed at US $ 77.88 a barrel at the end of 31st
March 2010, up by 67% from 31st March 2009, the price then being
US$46.63 a barrel.
PERFORMANCE OF THE FUND

LIC Mutual Fund Asset Management Company Ltd. (LICMF AMC Ltd.)
maintained its out- performance in 2009-10 on the back of a superlative
performance in 2008-09.
The Average Asset Under Management (AAUM) of the Fund grew by

83% to Rs.42304 crore during 2009-10 as against the growth rate of
51.5% registered by the Mutual Fund Industry. LICMF AMC Ltd.
Improved its market share of AAUM by over 1% to 5.66% as at March
2010. LICMF AMC Ltd. stood at number 6 among 38 mutual funds in the
industry on AAUM basis.
Out of the 26 ongoing schemes, continuous sale and repurchase is

available under 18 open-ended schemes. In the financial year ended 31st
March 2010, LICMF made a gross mobilisation of Rs.990716.03 crores as
against Rs.364925.61 crores in the previous year showing a growth rate of
171.48%. The total number of investors during the year stood at 474629.
The distribution network of LICMF has also grown in strength through

new addition of Chief Agents, Marketing Associates and Businesss
Associates as at 31/03/2010. During the year LICMF AMC Ltd. Opened
four new Area Offices at Pune, Lucknow, Dehradun and Madurai – taking
the total number of Area Offices to 26, besides increasing the number of
Businesss centres to 102 for further penetration into the untapped
semiurban and retail market.
During the year dividends were distributed under debt and debt oriented
schemes. Dividends declared under various schemes during the year
2009-10 have been shown in Annexure ‘A’.
AWARDS :
For the 12 months period ending October 2009, Mr. Ashish Kumar, Fund
Manager of Debt schemes of the Fund was chosen as the ‘Fund Manager
of the Year – Debt’ by the Businesss Standard Newspaper.
The Fund also maintained its track record of winning accolades in the
annual ICRA Mutual Fund Awards with :
• LICMF Floating Rate Fund winning two SEVEN STAR GOLD
AWARDS and LICMF Saving Plus Fund winning 1 SEVEN STAR
GOLD AWARD;
• LICMF Income Plus Fund and LICMF Liquid Fund won a FIVE
STAR FUND AWARD each, in the Award function held on 9th
February 2010.
FIVE STAR AWARDS are given to Funds whose performance exceeds

the category average by 2 standard deviations. Not more than 2 or 3 funds
qualify for such awards in each Fund Product category. SEVEN STAR
AWARDS, the highest awards by ICRA, are given to the Best performing
funds from amongst the 5-STAR category.
The stellar performance of the individual debt schemes of LIC Mutual
Fund was crowned by the Fund being awarded the ‘STAR FUND
HOUSE OF THE YEAR – DEBT’ in the ICRA Mutual Fund Awards
2010.
RATINGS UPGRADE
The rating of LICMF Liquid Fund which is amongst the top performing
Liquid Funds in the Mutual Fund Industry was upgraded by two notches
by Fitch Ratings from AA to AAA MMF (Ind) on 19th March, 2010. The
Fund already had a rating of MFA1+ from ICRA and with the rating
upgrade by Fitch, the fund has the highest rating from two independent
rating agencies.
ON-GOING SCHEMES
The salient features of live schemes are detailed in Annexure ‘B’.
Performance Review of on going schemes is given in Annexure ‘C’.
FUTURE OUTLOOK OF THE FUND

LICMF has performed impressively over the last 5 years. In the year gone
by the operating environment has become more challenging with
increasing competition and tougher regulatory oversight. The Fund has
drawn up ambitious growth plans and it is hoped that with the
operationalisation of the proposed joint venture with Nomura Asset
Management Strategic Investments Plc. Ltd., a wholy owned
subsidiary of Nomura Asset Management Co. Ltd., the respected global
giant from Japan, will successfully execute its growth plans.
FUNCTIONS AND RESPONSIBILITIES OF

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

Following are the various Open-Ended LIC MF schemes / Plans which we
will study one by one:-
OPEN ENDED SCHEMES
1. LICMF UNIT LINKED INSURANCE SCHEME

• Launched on 19th June 1989 as open-ended Insurance Linked Tax
saving scheme named as Dhanraksha ‘ 89.
• Renamed as LICMF UNIT LINKED INSURANCE SCHEME.
• The investment objective of the scheme is to generate long- term

capital appreciation and offer tax benefit as well as additional
benefits of a life insurance cover and free accident insurance cover.
• The basis and policy of investment underlying the scheme is to

invest in a mix of fixed income securities, equity & equity related
instruments and money market instruments.
• Two options available – (a) Single Premium – 5 /10 years (b)

Regular Contribution – 10/15 years. Both the options are under
Dividend Reinvestment Plan.
• Tax rebate u/s 80 C and capital gains tax benefits u/s 48 and 112 of
the IT act of 1961.
• Entry load – Nil
• Exit load – Nil
• Minimum Target Amount - (a) Single Premium : Rs.10000/-

(b) Regular Premium : Rs.10000/- under 10-year term, Rs.15000/-
under 15-year term, Rs.12000/- under monthly SIP 10-year term,
Rs.18000/- under monthly SIP 15-year term.
• Minimum Investment Amount - Regular Premium : Monthly

Rs.100/- , Half Yearly Rs.500/- and Yearly Rs.1000/- Single
Premium:Rs.10000/-
• Initial lock in of 3 years and thereafter redemption available on any

Businesss day
• Maturity Bonus will be paid subject to payment of all renewal
contributions in time.
• Single Premium Plan : 5% of target amount for 5-year term plan

10% of target amount for 10-year term
plan.
• Regular Premium Plan : 10% of target amount for 10-year term

plan
15% of target amount for 15-year term
plan.
• Calculation and declaration of NAV, Sale and Repurchase price on

a daily basis at the end of each Business day.
• Nomination facility available.
• Additional benefits of Systematic Investment Plan (SIP),) and

Systematic Transfer Plan (STP)
Performance(%) Date : 27-Jun-11
1 Week 1 Month 3 Month 6 Month 1 Year 3 Year 5 Year Since INC
[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 1.10 1.06 -0.10 -5.37 0.58 4.69 7.12 10.82
Category Avg 0.34 1.22 1.88 -4.12 3.98 11.47 11.66 12.28
Category Best 1.71 3.16 7.65 4.55 17.78 22.39 19.04 23.61
Category Worst -1.65 -0.40 -2.30 -9.35 -4.21 0.69 3.13 -1.80
Asset Allocation
1.LICMF BALANCED FUND
• Launched on 1st January 1991 as an open ended scheme named as

Dhanasahayog.
• Renamed as LICMF BALANCED FUND.

• The investment objective of the scheme is to provide regular returns
and capital appreciation as per the selection of plan by investing in
equities and debt.
• Options Available – (i) Dividend Option (payout and reinvestment)

(ii) Growth Option.

invest in a mix of fixed income securities, equity & equity related
instruments and money market instruments.
• Exit load – 1% if exit within 1 year from the date of allotment of

units.
• Minimum investment of Rs.1000/- and thereafter in the multiple of

Re 1/-.

• Additional benefits of Systematic Investment Plan (SIP),

Systematic
• Withdrawal Plan (SWP), Systematic Transfer Plan (STP) and

Automatic Withdrawal of Capital Appreciation (AWOCA).

[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 1.18 1.45 1.70 -6.86 4.07 5.54 8.02 7.37
Category Avg 0.34 1.22 1.88 -4.12 3.98 11.47 11.66 12.28
Category Best 1.71 3.16 7.65 4.55 17.78 22.39 19.04 23.61
Category Worst -1.65 -0.40 -2.30 -9.35 -4.21 0.69 3.13 -1.80
Asset Allocation
1.LICMF EQUITY FUND
• Launched on 11th January 1993, named DHANVIKAS (1) as a five

year close ended and Pure Growth Oriented Scheme.
• Made open-ended from 16th April 1998.
• The Scheme has two options: i. Dividend option, and, ii. Growth
option. Under Dividend option investor can choose either dividend
payout or dividend reinvestment.
• The investment objective of the scheme is to distribute dividend out
of the distributable surplus and generate capital appreciation as per
the selection of the plan.

invest in equity & equity-related instruments and a small portion in
debt and money market instruments.

units.
• Minimum investment of Rs.2000/-.
• Calculation and declaration of NAV, Sale and Repurchase Prices on

• Additional benefits of Systematic Investment Plan (SIP),Systematic

Withdrawal Plan (SWP), Systematic Transfer Plan (STP) and
Automatic Withdrawal of Capital Appreciation (AWOCA).
[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 1.70 1.37 -1.15 -10.41 1.38 7.99 9.74 9.06
Category Avg 0.21 1.20 1.65 -8.29 1.38 10.95 12.39 12.62
Category Best 2.18 5.79 10.12 4.07 15.50 25.85 25.93 47.53
Category Worst -3.17 -2.16 -4.51 -23.24 -29.00 -23.59 -7.86 -24.84
Asset Allocation
1.LICMF GROWTH FUND
• Launched on 21st July 1994, as a five-year close ended and Pure
• Growth Oriented Scheme with the name as Dhanasamriddhi.
• Made an Open-ended scheme from 1st September 1999.
• Renamed as LICMF GROWTH FUND.

• The Scheme has two options: i. Dividend option, and, ii. Growth
option. Under Dividend option investor can choose either dividend
payout or dividend re-investment.

the selection of the plan.

invest in equity & equity-related instruments and a small portion in
debt and money market instruments.

units.
• Minimum investment of Rs.2000/- and thereafter in multiples of

Re1/-.
• Calculation and declaration of NAV, Sale and Repurchase Prices on


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

[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 1.66 0.82 -1.68 -10.70 1.41 10.87 NA -1.77
Category Avg 0.21 1.20 1.65 -8.29 1.38 10.95 12.39 12.62
Category Best 2.18 5.79 10.12 4.07 15.50 25.85 25.93 47.53
Category Worst -3.17 -2.16 -4.51 -23.24 -29.00 -23.59 -7.86 -24.84
Asset Allocation
1.LICMF TAX PLAN
• Launched on 1st January 1997 as a 10-year close-ended Equity

Linked Savings Scheme named Dhan Tax Saver 1997.
• The scheme was made open-ended w.e.f. 17th April 2000 under a
new name LICMF TAX PLAN.
• The Scheme has two options: i. Dividend option (payout and

reinvestment), and, ii. Growth option.
• The investment objective of the scheme is to declare dividend and
provide long-term capital growth along with tax rebates u/s 80C of
the Income Tax Act 1961.

invest in equity and equity related Instruments, and a small portion
in Debentures and Money Market instruments.
• Exit load – Nil
• Minimum investment of Rs.500/- and further investments in

multiples of Rs. 100/- thereafter.
• Initial lock in of 3 year and thereafter redemption available on any

Business day.


(AWOCA).

[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 1.53 1.38 -1.18 -9.39 2.48 6.59 6.00 9.74
Category Avg 0.63 1.41 1.11 -8.45 1.51 9.90 11.18 16.36
Category Best 1.80 3.56 7.67 1.21 9.80 20.61 18.25 46.04
Category Worst -1.81 -0.15 -3.29 -14.19 -12.14 -7.28 5.33 -12.25
Asset Allocation
1.LICMF MONTHLY INCOME PLAN
• Launched on 1st April 1998 as a 5-year close-ended Income cum

Growth Scheme as Dhanvarsha (12).
• Made open-ended with effect from 1st June 2003 and renamed as
LICMF Monthly Income Plan.
• Investment under four options: (i). Monthly Dividend option,

(ii) Quarterly Dividend option,
(iii). Yearly Dividend option,
(iv). Growth option.
Dividend option will have dividend payout and dividend re-investment
facilities.
• The investment objective of the scheme is to provide regular
income by investing mainly in quality debt and money market
instruments. It also seeks to generate long-term capital appreciation
by investing in equity and equity related instruments.

invest in quality debt instruments, equity and equity related in
struments and money market instruments.

units.
• Minimum investment- Rs.5000/- and thereafter in multiples of

Re.1/-.
• Calculation of NAV and Repurchase price on a daily basis at the

end of each Business day.

(AWOCA).

[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 0.13 0.56 1.82 3.73 6.91 NA NA 6.26
Category Avg 0.16 0.73 2.12 4.09 7.07 6.16 6.71 49.11
Category Best 0.20 0.92 2.58 4.70 8.19 7.69 7.78 979.95
Category Worst 0.09 0.52 -6.03 -4.99 -2.36 -2.73 1.16 0.55
Statistical Ratios
\
Asset Allocation
1.LICMF BOND FUND
• Launched as an open-ended debt fund on 26th March 1999, closed

for initial subscription on 8th May 1999.
• The Scheme reopened for subscription on 23rd June 1999. Further

sale and repurchases are available on all Business days, except
during book closure if any.
• The Scheme has two options viz., Dividend (payout and

reinvestment) and Growth options.
• The primary investment objective of the scheme is to generate

reasonable returns through investments mainly in fixed income
securities.

invest in a wide range of quality debt instruments including money
market instruments.

units.
• Minimum investment of Rs 5000/-. Further investments in

multiples of Rs.500/- thereafter.

a daily basis at the end of each business day.

Systematic Withdrawal Plan (SWP), and Automatic Withdrawal of
Capital Appreciation (AWOCA).
• Under Dividend option, dividend to be declared out of the

distributable surplus if any on quarterly basis i.e. as on 30th June,
30th September,31st December and 26th March.

[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 0.14 0.67 1.47 2.72 4.71 6.56 5.12 7.06
Category Avg 0.18 0.76 1.84 3.43 5.45 5.91 6.16 6.53
Category Best 0.59 1.36 3.21 5.12 14.73 14.70 10.38 68.61
Category Worst -0.38 -2.84 -8.55 -6.62 -8.29 -20.01 -9.50 -4.43
Asset Allocation
1.LICMF GOVT. SECURITIES FUND
• Launched as open-ended dedicated Government Securities (Gilt)

Scheme on 15th November 1999, closed for initial subscription on
29th November 1999.
• The scheme reopened for subscription on 10th December 1999.

Further sale and repurchases are available on all Business days,
except during book closure if any.
• The primary investment objective of the scheme is to generate

credit risk free and reasonable return through investments in
sovereign securities.

invest in securities issued by the Central and / or State Government
or securities unconditionally guaranteed by Central and / or State
Government for repayment of Principal and interest and also in
money market instruments.
• The scheme has two plans viz., Regular Plan and PF Plan. Under
both the plans, two options i.e. Dividend option (payout and
reinvestment) and Growth option are available.

units.
• Minimum investment- I) Regular Plan - Rs. 5000/-

II) PF Plan - Rs.10000/-

a daily basis at the end of each business day.
• Under Dividend Option, dividend to be declared out of the

distributable surplus if any on quarterly basis i.e. as on 30th June,
30th September, 31st December and 26th March.

(AWOCA).
REGULAR PLAN
[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 0.14 0.71 1.39 3.38 5.35 3.88 4.29 6.76
Category Avg 0.18 0.96 1.07 2.51 4.42 6.65 6.41 6.14
Category Best 0.47 1.82 2.39 4.15 9.91 14.97 12.23 10.81
Category Worst -0.14 0.16 -0.47 -0.41 0.09 -3.66 0.79 -1.41
Asset Allocation
PF PLAN
[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 0.15 0.72 1.39 3.39 5.33 3.38 3.99 3.22
Category Avg 0.18 0.96 1.07 2.51 4.42 6.65 6.41 6.14
Category Best 0.47 1.82 2.39 4.15 9.91 14.97 12.23 10.81
Category Worst -0.14 0.16 -0.47 -0.41 0.09 -3.66 0.79 -1.41
Asset Allocation
1.LICMF CHILDREN’S FUND
• An open-ended debt scheme for children launched on 26th

September 2001.
• The investment objective of the scheme is to provide long-

term capital appreciation.
• A free personal accident cover to unit holders equal to 10

times the amount invested subject to a maximum of Rs.3 lac.
• The basis and policy of investment underlying the scheme is

to invest in a mix of quality debt, equity and money market
instruments.
• Beneficiary – Child less than 18 years of age.
• Exit load – 1% if exit within 1 year from the date of

allotment of units.
• Option: Growth
• Minimum investment of Rs.5000/- and thereafter in multiples

of Rs.500/-
• Calculation and declaration of NAV, Sale and Repurchase

Prices on a daily basis at the end of each business day.

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

[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 0.44 -0.96 -2.95 -9.47 -6.19 -5.37 -5.82 -0.10
Category Avg 0.10 0.68 1.18 -0.51 5.39 8.72 8.07 8.84
Category Best 0.60 1.48 4.07 4.56 23.09 13.23 11.72 15.05
Category Worst -0.88 -0.96 -5.82 -9.47 -6.19 -5.37 -5.82 -0.10
Asset Allocation
1.LICMF LIQUID FUND
• Open ended Liquid Scheme launched on 11th March 2002.
• The investment objective of the scheme is to generate reasonable

returns with low risk and high liquidity.

invest
in a mix of money market instruments and quality debt instruments.
• No exit/entry load.
• The scheme has two options: i. Dividend option (payout and

reinvestment), ii. Growth option
• Minimum investment of Rs.25,000/-.
• Calculation and declaration of NAV, Sale and Repurchase Prices

on a daily basis including holidays.
• Additional benefits of Systematic Transfer Plan (STP).
DIVIDEND OPTION
[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 0.13 0.60 1.99 3.90 7.06 6.75 7.16 6.49
Category Avg 0.16 0.70 2.07 4.01 7.09 6.14 6.72 33.79
Category Best 0.20 0.86 2.50 4.95 8.94 7.86 7.93 756.93
Category Worst 0.12 0.52 1.43 2.79 3.17 0.93 1.64 -98.93
ASSET ALLOCATION
GROWTH OPTION
[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 0.15 0.66 2.03 3.96 7.19 6.77 7.28 6.70
Category Avg 0.16 0.70 2.07 4.01 7.09 6.14 6.72 33.79
Category Best 0.20 0.86 2.50 4.95 8.94 7.86 7.93 756.93
Category Worst 0.12 0.52 1.43 2.79 3.17 0.93 1.64 -98.93
ASSET ALLOCATION
1.LICMF INDEX FUND
• Open-ended index linked equity scheme launched on 14th

November 2002.
• Choice of plans : Sensex Plan, Nifty Plan and Sensex Advantage

Plan.
• Each Plan has two options: i. Dividend option (payout and

reinvestment),
ii. Growth option.

the selection of the plan by investing in index stocks.

invest in the respective index stocks

units.
• Minimum investment of Rs.2000/- and thereafter in multiples of

Re.1/-
• Calculation and declaration of NAV, Sale and Repurchase Priceson

a daily basis at the end of each Businesss day.

(AWOCA).
DIVIDEND FUND
[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 2.12 1.62 -0.29 -8.91 3.28 7.56 9.40 12.53
Category Avg 1.79 1.61 -0.33 -8.81 2.87 7.62 9.99 11.08
Category Best 2.14 2.27 1.40 -6.24 5.67 14.18 15.20 31.85
Category Worst -0.45 0.31 -1.33 -9.72 0.11 -18.15 -11.32 -13.90
ASSET ALLOCATION
GROWTH FUND
[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 2.12 1.62 -0.28 -8.93 3.26 7.56 9.42 16.74
Category Avg 1.79 1.61 -0.33 -8.81 2.87 7.62 9.99 11.08
Category Best 2.14 2.27 1.40 -6.24 5.67 14.18 15.20 31.85
Category Worst -0.45 0.31 -1.33 -9.72 0.11 -18.15 -11.32 -13.90
ASSET ALLOCATION
1.LICMF SAVINGS PLUS FUND
• Open ended Debt Fund launched on 9th May 2003 as SHORT

TERM PLAN
• Renamed as LICMF SAVINGS PLUS FUND.
• The scheme has four options: (i). Daily Dividend option,

(ii).Weekly Dividend Option, (iii). Monthly Dividend Option and,
(iv).Growth option. In Dividend option investor can choose for
dividend payout or dividend re-investment.
• The investment objective of the scheme is to generate reasonable

returns.

invest in quality short-term debt instruments.
• Entry load - Nil.
• Exit load - Nil.

• Under Dividend Option the investor can opt for payout or
reinvestment.
• Minimum investment of Rs 5,000/- and thereafter in multiples of

Re.1/-
• Calculation and declaration of NAV, Sale and Repurchase Prices
on a daily basis at the end of each Businesss day.

(AWOCA).
DAILY DIVIDEND OPTION

[%] [%] [%] [%] [%] [%] [%] [%]
Category Avg 0.16 0.73 2.12 4.09 7.07 6.16 6.71 49.11
Category Best 0.20 0.92 2.58 4.70 8.19 7.69 7.78 979.95
Category Worst 0.09 0.52 -6.03 -4.99 -2.36 -2.73 1.16 0.55
ASSET ALLOCATION
WEEKLY DIVIDEND OPTION

[%] [%] [%] [%] [%] [%] [%] [%]
Category Avg 0.16 0.73 2.12 4.09 7.07 6.16 6.71 49.11
Category Best 0.20 0.92 2.58 4.70 8.19 7.69 7.78 979.95
Category Worst 0.09 0.52 -6.03 -4.99 -2.36 -2.73 1.16 0.55
ASSET ALLOCATION OPTION
MONTHLY DIVIDEND OPTION

[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 0.14 0.61 1.88 3.84 6.74 7.28 6.85 5.94
Category Avg 0.16 0.73 2.12 4.09 7.07 6.16 6.71 49.11
Category Best 0.20 0.92 2.58 4.70 8.19 7.69 7.78 979.95
Category Worst 0.09 0.52 -6.03 -4.99 -2.36 -2.73 1.16 0.55
ASSET ALLOCATION OPTION
GROWTH DIVIDEND OPTION

[%] [%] [%] [%] [%] [%] [%] [%]
Scheme Return 0.14 0.61 1.88 3.82 6.75 6.50 6.55 5.85
Category Avg 0.16 0.73 2.12 4.09 7.07 6.16 6.71 49.11
Category Best 0.20 0.92 2.58 4.70 8.19 7.69 7.78 979.95
Category Worst 0.09 0.52 -6.03 -4.99 -2.36 -2.73 1.16 0.55
ASSET ALLOCATION
DATA REPRESENTATION
 Have you ever invested/ interested to invest in mutual funds?
YES 135
NO 65
 .what is the most important reason for not investing in

mutual funds? (only for above 65 participants)
Lack of knowledge about mutual 25

funds
Enjoys investing in other options 10
Its benefits are not enough to 18

drive you for investment
No trust over the fund managers 12

 .where do you find yourself as a mutual fund investor?
Totally ignorant 28
Partial knowledge of MFs 37
Aware of only scheme in which 46
invested
Good knowledge of MFs 24
 .where from you purchases mutual funds?
Directly from the AMCs 33

Brokers only ( large 28
intermediaries)
Broker/ sub-brokers 59
Other sources 15
ANALYSIS & INTERPRETATION OF

THE DATA
1. (a) Age distribution of the Investors of
BHOPAL
Age Group <= 30 31-35 36-40 41-45 46-50 >50
No. of 12 18 30 24 20 16
Investors
Interpretation:
According to this chart out of 120 Mutual Fund investors of
bhopal the most are in the age group of 36-40 yrs. i.e. 25%,
the second most investors are in the age group of 41-45yrs
i.e. 20% and the least investors are in the age group of below
30 yrs.
(b). Educational Qualification of investors

of bhopal
Educational Number of
Qualification Investors
Graduate/ Post Graduate 88
Under Graduate 25
Others 7
Total 120
Interpretation:
Out of 120 Mutual Fund investors 71% of the investors in
bhopal are Graduate/Post Graduate, 23% are Under Graduate
and 6% are others (under HSC).
c). Occupation of the investors of bhopal

Occupation No. of
Investors
Govt. Service 30
Pvt. Service 45
Business 35
Agriculture 4
Others 6
Interpretation:
In Occupation group out of 120 investors, 38% are Pvt.
Employees, 25% are Businessman, 29% are Govt.
Employees, 3% are in Agriculture and 5% are in others.
(d). Monthly Family Income of the Investors
of bhopal.
Income Group No. of

Investors
<=10,000 5
10,001-15,000 12
15,001-20,000 28
20,001-30,000 43
>30,000 32
Interpretation:
In the Income Group of the investors of bhopal, out of
120 investors, 36% investors that is the maximum
investors are in the monthly income group Rs. 20,001
to Rs. 30,000, Second one i.e. 27% investors are in the
monthly income group of more than Rs. 30,000 and
the minimum investors i.e. 4% are in the monthly
income group of below Rs. 10,000
(2) Investors invested in different kind of
investments.
Kind of Investments No. of

Respondents
Saving A/C 195
Fixed deposits 148
Insurance 152
Mutual Fund 120
Post office 75
(NSC)
Shares/Debentu 50
res
Gold/Silver 30
Real Estate 65
Interpretation: From the above graph it can be inferred
that out of 200 people, 97.5% people have invested in Saving

A/c, 76% in Insurance, 74% in Fixed Deposits, 60% in Mutual
Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15%
in Gold/Silver and 32.5% in Real Estate.
3. Preference of factors while investing
Factors (a) (b) Low (c) High (d)
Liquidity Risk Return Trust
No. of 40 60 64 36
Respondents
Interpretation:
Out of 200 People, 32% People prefer to invest where there is
High Return, 30% prefer to invest where there is Low Risk,
20% prefer easy Liquidity and 18% prefer Trust
4. Awareness about Mutual Fund and its
Response Yes No
No. of Respondents 135 65
Operations
Interpretation:
From the above chart it is inferred that 67% People are aware
of Mutual Fund and its operations and 33% are not aware of
Mutual Fund and its operations.
5. Source of information for customers
about Mutual Fund
Source of information No. of Respondents
Advertisement 18
Peer Group 25
Bank 30
Financial Advisors 62
Interpretation:
From the above chart it can be inferred that the Financial
Advisor is the most important source of information about
Mutual Fund. Out of 135 Respondents, 46% know about
Mutual fund Through Financial Advisor, 22% through Bank,
19% through Peer Group and 13% through Advertisement.
6. Investors invested in Mutual Fund
Response No. of
Respondents
YES 120
NO 80
Total 200
Interpretation:
Out of 200 People, 60% have invested in Mutual Fund and
40% do not have invested in Mutual Fund.
7. Reason for not invested in Mutual Fund
Reason No. of
Respondents
Not Aware 65
Higher Risk 5
Not any Specific 10
Reason
Interpretation:
Out of 80 people, who have not invested in Mutual Fund, 81%
are not aware of Mutual Fund, 13% said there is likely to be
higher risk and 6% do not have any specific reason.

8. Investors invested in different Assets
Management Co. (AMC)
Name of AMC No. of Investors

LICMF 55
UTI 75
HDFC 30
Reliance 75
ICICI Prudential 56
Kotak 45
Others 70
Interpretation:
In bhopal most of the Investors preferred UTI and Reliance
Mutual Fund. Out of 120 Investors 62.5% have invested in
each of them, only 46% have invested in SBIMF, 47% in ICICI
Prudential, 37.5% in Kotak and 25% in HDFC.
9. Reason for invested in SBIMF
Reason No. of
Respondents
Associated with SBI 35
Better Return 5
Agents Advice 15
Interpretation:
Out of 55 investors of SBIMF 64% have invested because of its
association with Brand SBI, 27% invested on Agent’s Advice,
9% invested because of better return.
10. Reason for not invested in SBIMF
Reason No. of
Respondents
Not Aware 25
Less Return 18
Agent’s Advice 22
Interpretation:
Out of 65 people who have not invested in SBIMF, 38% were
not aware with SBIMF, 28% do not have invested due to less
return and 34% due to Agent’s Advice.
11. Preference of Investors for future
investment in Mutual Fund

Name of AMC No. of Investors
SBIMF 76
UTI 45
HDFC 35
Reliance 82
ICICI Prudential 80
Kotak 60
Others 75
Interpretation:
Out of 120 investors, 68% prefer to invest in Reliance, 67% in
ICICI Prudential, 63% in LICMF, 62.5% in Others, 50% in Kotak,
37.5% in UTI and 29% in HDFC Mutual Fund.
12. Channel Preferred by the Investors for
Mutual Fund Investment
Channel Financial Bank AMC
Advisor
No. of 72 18 30
Respondents
Interpretation:
Out of 120 Investors 60% preferred to invest through Financial
Advisors, 25% through AMC and 15% through Bank.

13. Mode of Investment Preferred by the
Investors
Mode of One time Systematic Investment
Investment Investment Plan (SIP)
No. of 78 42
Respondents
Interpretation:
Out of 120 Investors 65% preferred One time Investment and
35 % Preferred through Systematic Investment Plan.
14. Preferred Portfolios by the Investors
Portfolio No. of Investors

Equity 56
Debt 20
Balanced 44
Interpretation:
From the above graph 46% preferred Equity Portfolio, 37%
preferred Balance and 17% preferred Debt portfolio
15. Option for getting Return Preferred by
the Investors
Option Dividend Payout Dividend Growth
Reinvestment
No. of 25 10 85
Respondents
Interpretation:
From the above graph 71% preferred Growth Option, 21%
preferred Dividend Payout and 8% preferred Dividend
Reinvestment Option.
16. Preference of Investors whether to
invest in Sectoral Funds
Response No. of
Respondents
Yes 25
No 95
Interpretation:
Out of 120 investors, 79% investors do not prefer to invest in
Sectoral Fund because there is maximum risk and 21% prefer
to invest in Sectoral Fund.

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

➢ In family Income group, between Rs. 20,001-
30,000 were more in numbers, the second
most were in the Income group of more than
Rs.30,000 and the least were in the group of
below Rs. 10,000.
➢ About all the Respondents had a Saving A/c
in Bank, 76% Invested in Fixed Deposits,
Only 60% Respondents invested in Mutual
fund.
➢ Mostly Respondents preferred High Return
while investment, the second most preferred
Low Risk then liquidity and the least
preferred Trust.
➢ Only 67% Respondents were aware about
Mutual fund and its operations and 33%
were not.
➢ Among 200 Respondents only 60% had
invested in Mutual Fund and 40% did not
have invested in Mutual fund.
➢ Out of 80 Respondents 81% were not aware
of Mutual Fund, 13% told there is not any

specific reason for not invested in Mutual
Fund and 6% told there is likely to be higher
risk in Mutual Fund.
➢ Most of the Investors had invested in
Reliance or UTI Mutual Fund, ICICI Prudential
has also good Brand Position among
investors, LICMF places after ICICI Prudential
according to the Respondents.
➢ Out of 55 investors of LICMF 64% have
invested due to its association with the
Brand LIC, 27% Invested because of
Advisor’s Advice and 9% due to better
return.
➢ Most of the investors who did not invested in
LICMF due to not Aware of LICMF, the second
most due to Agent’s advice and rest due to
Less Return.
➢ For Future investment the maximum
Respondents preferred Reliance Mutual
Fund, the second most preferred ICICI

Prudential, LICMF has been preferred after
them.
➢ 60% Investors preferred to Invest through
Financial Advisors, 25% through AMC
(means Direct Investment) and 15% through
Bank.
➢ 65% preferred One Time Investment and
35% preferred SIP out of both type of Mode
of Investment.
➢ The most preferred Portfolio was Equity, the
second most was Balance (mixture of both
equity and debt), and the least preferred
Portfolio was Debt portfolio.
➢ Maximum Number of Investors Preferred
Growth Option for returns, the second most
preferred Dividend Payout and then
Dividend Reinvestment.
➢ Most of the Investors did not want to invest
in Sectoral Fund, only 21% wanted to invest
in Sectoral Fund.
Suggestions
➢ The most vital problem spotted is of
ignorance. Investors should be made aware
of the benefits. Nobody will invest until and
unless he is fully convinced. Investors
should be made to realize that ignorance is
no longer bliss and what they are losing by
not investing.
➢ Mutual funds offer a lot of benefit which no
other single option could offer. But most of
the people are not even aware of what
actually a mutual fund is? They only see it
as just another investment option. So the
advisors should try to change their
mindsets. The advisors should target for
more and more young investors. Young
investors as well as persons at the height

of their career would like to go for advisors
due to lack of expertise and time.
➢ Mutual Fund Company needs to give the
training of the Individual Financial Advisors
about the Fund/Scheme and its objective,
because they are the main source to
influence the investors.
➢ Before making any investment Financial
Advisors should first enquire about the risk
tolerance of the investors/customers, their
need and time (how long they want to
invest). By considering these three things
they can take the customers into
consideration.
➢ Younger people aged under 35 will be a
key new customer group into the future, so
making greater efforts with younger
customers who show some interest in
investing should pay off.

➢ Customers with graduate level education
are easier to sell to and there is a large
untapped market there. To succeed
however, advisors must provide sound
advice and high quality.
➢ Systematic Investment Plan (SIP) is one
the innovative products launched by Assets
Management companies very recently in
the industry. SIP is easy for monthly
salaried person as it provides the facility of
do the investment in EMI. Though most of
the prospects and potential investors are
not aware about the SIP. There is a large
scope for the companies to tap the salaried
persons.
Conclusion
Running a successful Mutual Fund requires
complete understanding of the peculiarities of
the Indian Stock Market and also the psyche of
the small investors. This study has made an
attempt to understand the financial behavior of

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

Management is larger than others whose Brand
name are not well known like Principle,
Sunderam, etc.
Distribution channels are also important for the
investment in mutual fund. Financial Advisors
are the most preferred channel for the
investment in mutual fund. They can change
investors’ mind from one investment option to
others. Many of investors directly invest their
money through AMC because they do not have
to pay entry load. Only those people invest
directly who know well about mutual fund and its
operations and those have time.

BIBLIOGRAPHY
• NEWS PAPERS
• OUTLOOK MONEY
• TELEVISION CHANNEL (CNBC AAWAJ)
• MUTUAL FUND HAND BOOK
• FACT SHEET AND STATEMENT
• WWW.LICMF.COM
• WWW.MONEYCONTROL.COM
• WWW.AMFIINDIA.COM
• WWW.ONLINERESEARCHONLINE.COM
• WWW. MUTUALFUNDSINDIA.COM
• WWW.SCRIBD,COM
ANNEXURE
QUESTIONNAIRE
A study of preferences of the investors for
investment in mutual funds.
1. Personal Details:
(a). Name:-
(b). Add: - Phone:-
(c). Age:-
(d). Qualification:-
Graduation/PG Under Graduate Others
(e). Occupation. Pl tick (√)
Govt. Ser Pvt. Ser Business Agriculture Others
(g). What is your monthly family income approximately? Pl tick (√).
Up to Rs. 10,001 to Rs. 15,001 to Rs. 20,001 to Rs. 30,001

Rs.10,000 15000 20,000 30,000 and above
2. What kind of investments you have made so far? Pl tick (√). All
applicable.
a. Saving account b. Fixed deposits c. Insurance d. Mutual Fund
e. Post Office-NSC, f. g. Gold/ Silver h. Real Estate

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

Return
4. Are you aware about Mutual Funds and their operations? Pl tick (√).
Yes No
5. If yes, how did you know about Mutual Fund?
a. b. Peer c. Banks d. Financial

Advertisement Group Advisors
6. Have you ever invested in Mutual Fund? Pl tick (√). Yes

No
7. If not invested in Mutual Fund then why?
(a) Not aware of MF (b) Higher risk (c) Not any specific reason
8. If yes, in which Mutual Fund you have invested? Pl. tick (√). All
applicable.
a. LICMF b. UTI c. d. e. Kotak f. Other. specify

HDFC Reliance
9. If invested in LICMF, you do so because (Pl. tick (√), all applicable).
a. LICMF is associated with LIFE INSURANCE INDIA.
b. They have a record of giving good returns year after year.
c. Agent’ Advice
10. If NOT invested in LICMF, you do so because (Pl. tick (√) all
applicable).
a. You are not aware of LICMF.
b. LICMF gives less return compared to the others.
c. Agent’ Advice
11. When you plan to invest your money in asset management co. which
AMC will you prefer?
Assets Management Co.
a. LICMF
b. UTI
c. Reliance
d. HDFC
e. Kotak
f. ICICI
12. Which Channel will you prefer while investing in Mutual Fund?
(a) Financial Advisor (b) Bank (c) AMC
13. When you invest in Mutual Funds which mode of investment will you
prefer? Pl. tick (√).
a. One Time Investment b. Systematic Investment Plan (SIP)
14. When you want to invest which type of funds would you choose?
a. Having only debt b. Having debt & equity c. Only equity portfolio.
portfolio portfolio.
15. How would you like to receive the returns every year? Pl. tick (√).
a. Dividend payout b. Dividend re- c. Growth in NAV

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

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PREFACE

As we know that B.B.A program is more concern

In our curriculum we have to cover four area of the company

So whatever information we have covered is as per our

I hereby declare that the project

This report has not been submitted for any award of

Date:30-06-11 SHIKHA PRADHAN

to Manager LIC MUTUAL FUND and other staffs for their

support and guidance in the Project work.. I am extremely

grateful to my guides, for their valuable guidance and timely

suggestions. I would like to thank all faculty members of

SANT HIRDARAM GIRLS COLLEGE for the valuable

guidance & support.

I would also like to extend my thanks to my

members and friends for their support specially and lastly, I

would like to express my gratefulness to the parent’s for

seeing me through it all.

CHAPTER PARTICULARS PAGE REMARKS

INTRODUCTION TO THE TOPIC

III ANALYSIS &

SUMMARY OF THE PROJECT

Indian Industry. As information and awareness is rising more and more

the number who decide to invest in mutual funds increases to as many as

of mutual funds to a new Mutual Fund customer is to understand which of

right arguments in the sales process that customers will accept as

important and relevant to their decision.

same time it gave me enough scope to implement my analytical ability.

The analysis and advice presented in this Project Report is based on

market research on the saving and investment practices of the investors

and preferences of the investors for investment in Mutual Funds. This

means Are they prefer any particular Asset Management Company

(AMC), Which type of Product they prefer, Which Option (Growth or

Dividend) they prefer or Which Investment Strategy they follow

(Systematic Investment Plan or One time Plan). This Project as a whole

can be divided into two parts.

various aspects, the Company Profile, Objectives of the study, Research

basics through the Project.

The second part of the Project consists of data and its

of Primary data I made a questionnaire and surveyed of 200 people. I also

Branch where I done my Project. I visited other AMCs in BHOPAL to get

some knowledge related to my topic. I studied about the products and

strategies of other AMCs in BHOPAL to know why people prefer to

This study is analysis of THE MUTUAL FUND IS BETTER

• To study the concept of Mutual Fund, Various type of

• To study of various open-ended schemes of LICMF with

• To study of the fundamental concepts of performance

• To know the Preferences for the portfolios.

• To know why one has invested or not invested in

LIC Mutual fund

• To find out the most preferred channel.

however primary data collection was given more importance since it is

overhearing factor in attitude studies. One of the most important users of

research methodology is that it helps in identifying the problem,

collecting, analyzing the required information data and providing an

Research is totally based on primary data. Secondary data can

be used only for the reference. Research has been done by

primary data collection, and primary data has been collected

by interacting with various people. The secondary data has

been collected through various journals and websites.