Summer Training Report

On

PERFORMANCE AND ANALYTICAL STUDY OF VARIOUS MUTUAL FUNDS AT KARVY CONSULTANT LTD.
SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MBA)
To

MAHARSHI DAYANAND UNIVERSITY, ROHTAK

Submitted by:Name Institute Roll No. Semester: Varun Bhatia 2552 MBA (3rd Sem)

AMITY BUSINESS SCHOOL, MANESAR AUGUST, 2006

SESSION 2005-07

DECLARATION
I, Varun Bhatia, Roll No.2552, M.B.A 3rd Semester of the Amity Business School, Manesar, Gurgaon hereby declare that the Summer Training Report entitled Performance & Analytical Study of Various Mutual Funds is an original work and the same has not been submitted to any other institute for the award of any other degree. A Seminar Presentation of the training report was made on suggestions as approved by the faculty were duly incorporated. and the

Presentation In charge (Faculty)

Signature of the candidate

Countersigned Director of the Institute

ACKNOWLEDGEMENT
I hereby, express a sincere and deep gratitude to our Prof. (Dr.) R.C. Sharma,ABS Manesar who has always been a guiding force in all that we do.

I express my special gratitude to Mr. Umesh, who not only helped me throughout my project but also encouraged at every step and gave an insight to the real and practical business problems. All the employees at. Karvy Consultant Ltd. especially Mr. Karandeep who supported and co-operated with me during the training. Further, I would feel honored and privileged to express my feelings of gratitude towards my Internal Guide, Mrs. Shalini ,Faculty Amity Business School for her constant guidance, cooperation & support during the course of my training. Indeed I shall remain ever grateful to her. I am extremely grateful to Mr. R.K. Yadav, Head Amity Corporate Resources Center for his constant encouragement, guidance & wise counsel. In the end I would like to thank all those people who helped me during the course of my Summer Training.

(Varun Bhatia )

Preface
Practical knowledge constitutes an integral part of management studies. The Training Gives an opportunity to the students to expose themselves to the Individual environment, which is quite different from classroom teaching .Classroom Lecture make fundamental concept of management clear and facilitates the learning Process but their applications practical. The training also enables the managements students to the themselves see the work condition under which they have to work In future. To acquaint the students of M.B.A with the realities of business, a 6 to 8 week Training program is carried out. It provides proper integration of formal teaching With actual practice. In fact, frequent field training has been made a part and Parcel of present program.

The present descriptive report is an endeavor to highlight various aspects of Performance & Analytical Study of various Mutual Funds. Done at Karvy Consultants Ltd.

The whole report is divided in various parts containing introduction about the Company, insurance sector, the methodology used in the search and analysis & Interpretation of the study. Findings and suggestions are also given on the basis of Analysis and interpretation. In the following pages a comprehensive attempt has been made to present the details about the whole working.

TABLE OF CONTENTS

PARTICULARS
1. DECLARATION 2. ACKNOWLEDGEMENT 3. CERTIFICATE 4. PREFACE 5. TABLE OF CONTENTS 6. COMPANYS PROFILE Background Quality policy Achievements

PAGE #

7. PRODUCT AND SERVICES Stock Broking Depository participant Insurance Mutual fund Personal Finance Advisory Registrar and Transfer Agent Merchant Banking Commodity

8. CONCEPTUALIZATION 9. RESEARCH METHODOLOGY

10. OBJECTIVE OF THE STUDY 11. SCOPE OF THE STUDY 12. DATA ANALYSIS AND INTERPRETATION 13. FINDINGS 14. RECOMMENDATIONS 15. CONCLUSION 16. LIMITATIONS 17. BIBLIOGRAPHY 18. APPENDIX

COMPANY PROFILE

KARVY, is a premier integrated financial services provider, and ranked among the top five in the country in all its business segments, services over 16 million individual investors in various capacities, and provides investor services to over 300 corporate, comprising the who is who of Corporate India. KARVY covers the entire spectrum of financial services such as Stock broking, Depository Participants, Distribution of financial products - mutual funds, bonds, fixed deposit, equities, Insurance Broking, Commodities Broking, Personal Finance Advisory Services, Merchant Banking & Corporate Finance, placement of equity, IPOs, among others. KARVY has a professional management team and ranks among the best in technology, operations and research of various industrial segments.

KARVY EARLY DAYS

The birth of KARVY was on a modest scale in 1981. It began with the vision and enterprise of a small group of practicing Chartered Accountants who founded the flagship company KARVY Consultants Limited. It started with consulting and financial accounting automation, and carved inroads into the field of registry and share accounting by 1985. Since then, we have utilized our experience and superlative expertise to go from strength to strengthto better our services, to provide new ones, to innovate, diversify and in the process, evolved KARVY as one of Indias premier integrated financial service enterprise. Thus over the last 20 years KARVY has traveled the success route, towards building a reputation as an integrated financial services provider, offering a wide spectrum of services. And we have made this journey by taking the route of quality service, path breaking innovations in service, versatility in service and finallytotality in service. Their highly qualified manpower, cutting-edge technology, comprehensive infrastructure and total customer-focus has secured for us the position of an emerging financial services

giant enjoying the confidence and support of an enviable clientele across diverse fields in the financial world. Their values and vision of attaining total competence in our servicing has served as the building block for creating a great financial enterprise, which stands solid on our fortresses of financial strength - our various companies. With the experience of years of holistic financial servicing behind them and years of complete expertise in the industry to look forward to, they have now emerged as a premier integrated financial services provider. And today, they can look with pride at the fruits of our mastery and experience comprehensive financial services that are competently segregated to service and manage a diverse range of customer requirements.

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

IT enabled services
Our Technology Services division forms the ideal platform to unleash our technology initiatives and make our presence felt on the Internet. Our past achievements include many 10

quality websites designed, developed and deployed by us. We also possess our own web hosting facilities with dedicated bandwidth and a state-of-the-art server farm (data center) with services functioning on a variety of operating platforms such as Windows, Solaris, and Linux and UNIX. The corporate website of the company, www.KARVY.com, gives access to in-depth information on financial matters including Mutual Funds, IPOs, Fixed Income Schemes, Insurance, Stock Market and much more. A link called Resource Center, devoted solely to research conducted by our team of experts on various financial aspects like Sector Research, deals exclusively with in-depth analysis of the key sectors of the Indian economy. Besides, a host of other links like My Portfolio which acts as a personalized and customized financial measure, makes this site extremely informative about investment options, market trends, news as also about our company and each of the services offered here.

BACKGROUND

In 1982, a group of Hyderabad based practicing Chartered Accountants started KARVY Consultants Limited with a capital of Rs.1, 50,000 offering auditing and taxation services 11

initially. Later, it forward into the Registrar and Share Transfer activities and subsequently into the financial services. All along, KARVYs strong work ethic and professional background leveraged with Information Technology enabled it to deliver quality to the individual.

A decade of commitment, professional integrity and vision helped KARVY achieve a leadership position in its field when it handled the largest number of issues ever handled in the history of the Indian stock Market in a year. Thereafter, KARVY made inroads into a host of capital-market services, corporate and retail, which proved to be a sound business synergy.

Today, KARVY ahs access to millions of Indians shareholders, besides companies, banks, financial institutions and regulatory agencies. Over the past one and half decades, KARVY has evolved as veritable link between industry, finance and people. In January 1998, KARVYs commitment to quality and retail reach has made it an integrated financial services company.

QUALITY POLICY

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To achieve and retain leadership, KARVY shall aim for complete customer satisfaction, by combining its human and technological resources, to provide superior quality financial services. In the process, KARVY will strive to exceed Customer's expectations.

Quality Objectives
As per the Quality Policy, KARVY will:

Build in-house processes that will ensure transparent and harmonious relationships with its clients and investors to provide high quality of services.

Establish a partner relationship with its investor service agents and vendors that will help in keeping up its commitments to the customers.

Provide high quality of work life for all its employees and equip them with adequate knowledge & skills so as to respond to customer's needs.

Continue to uphold the values of honesty & integrity and strive to establish unparalleled standards in business ethics.

Use state-of-the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients.

Strive to be a reliable source of value-added financial products and services and constantly guide the individuals and institutions in making a judicious choice of same.

ACHIEVEMENTS
Among the top 5 stock brokers in India (4% of NSE volumes)

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India's No. 1 Registrar & Securities Transfer Agents Among the to top 3 Depository Participants Largest Network of Branches & Business Associates ISO 9002 certified operations by DNV Among top 10 Investment bankers Largest Distributor of Financial Products Adjudged as one of the top 50 IT uses in India by MIS Asia Full Fledged IT driven operations

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PRODUCTS AND SERVICES

Stock Broking

Mutual fund

Depository Participant

Personal Financial Advisory

Registrar and Transfer Agent

Merchant Banking

Insurance

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

Stock Broking Services

It is an undisputed fact that the stock market is unpredictable and yet enjoys a high success rate as a wealth management and wealth accumulation option. The difference between unpredictability and a safety anchor in the market is provided by in-depth knowledge of market functioning and changing trends, planning with foresight and choosing one & rescues options with care. This is what we provide in our Stock Broking services. We offer services that are beyond just a medium for buying and selling stocks and shares. Instead we provide services which are multi dimensional and multi-focused in their scope. There are several advantages in utilizing our Stock Broking services, which are the reasons why it is one of the best in the country. We offer trading on a vast platform; National Stock Exchange, Bombay Stock Exchange and Hyderabad Stock Exchange. More importantly, we make trading safe to the maximum possible extent, by accounting for several risk factors and planning accordingly. We are assisted in this task by our in-depth research, constant feedback and sound advisory

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facilities. Our highly skilled research team, comprising of technical analysts as well as fundamental specialists, secure result-oriented information on market trends, market analysis and market predictions. This crucial information is given as a constant feedback to our customers, through daily reports delivered thrice daily; The Pre-session Report, where market scenario for the day is predicted, The Mid-session Report, timed to arrive during lunch break, where the market forecast for the rest of the day is given and The Post-session Report, the final report for the day, where the market and the report itself is reviewed. To add to this repository of information, we publish a monthly magazine “ KARVY; The Finapolis & rdquo;, which analyzes the latest stock market trends and takes a close look at the various investment options, and products available in the market, while a weekly report, called “ KARVY Bazaar Baatein & rdquo;, keeps you more informed on the immediate trends in the stock market. In addition, our specific industry reports give comprehensive information on various industries. Besides this, we also offer special portfolio analysis packages that provide daily technical advice on scrips for successful portfolio management and provide customized advisory services to help you make the right financial moves that are specifically suited to your portfolio. Our Stock Broking services are widely networked across India, with the number of our trading terminals providing retail stock broking facilities. Our services have increasingly offered customer oriented convenience, which we provide to a spectrum of investors, highnet worth or otherwise, with equal dedication and competence. But true to our spirit, this success is not our final destination, but just a platform to launch further enhanced quality services to provide you the latest in convenient, customer-friendly stock management.

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Over the years we have ensured that the trust of our customers is our biggest returns. Factors such as our success in the Electronic custody business has helped build on our tradition of trust even more. Consequentially our retail client base expanded very fast. To empower the investor further we have made serious efforts to ensure that our research calls are disseminated systematically to all our stock broking clients through various delivery channels like email, chat, SMS, phone calls etc. Our foray into commodities broking has been path breaking and we are in the process of converting existing traders in commodities into the more organized mainstream of trading in commodity futures, both as a trading and risk hedging mechanism. In the future, our focus will be on the emerging businesses and to meet this objective, we have enhanced our manpower and revitalized our knowledge base with enhances focus on Futures and Options as well as the commodities business.

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Depository Participants
The onset of the technology revolution in financial services Industry saw the emergence of KARVY as an electronic custodian registered with National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CSDL) in 1998. KARVY set standards enabling further comfort to the investor by promoting paperless trading across the country and emerged as the top 3 Depository Participants in the country in terms of customer serviced. Offering a wide trading platform with a dual membership at both NSDL and CDSL, we are a powerful medium for trading and settlement of dematerialized shares. We have established live DPMs, Internet access to accounts and an easier transaction process in order to offer more convenience to individual and corporate investors. A team of professional and the latest technological expertise allocated exclusively to our demat division including technological enhancements like SPEED-e; make our response time quick and our delivery impeccable. A wide national network makes our efficiencies accessible to all.

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Distribution of Financial Products

The paradigm shift from pure selling to knowledge based selling drives the business today. With our wide portfolio offerings, we occupy all segments in the retail financial services industry. A 1600 team of highly qualified and dedicated professionals drawn from the best of academic and professional backgrounds are committed to maintaining high levels of client service delivery. This has propelled us to a position among the top distributors for equity and debt issues with an estimated market share of 15% in terms of applications mobilized, besides being established as the leading procurer in all public issues. To further tap the immense growth potential in the capital markets we enhanced the scope of our retail brand, KARVY the Finapolis, thereby providing planning and advisory services to the mass affluent. Here we understand the customer needs and lifestyle in the context of present earnings and provide adequate advisory services that will necessarily help in creating wealth. Judicious planning that is customized to meet the future needs of the customer deliver a service that is exemplary. The market-savvy and the ignorant investors, both find this service very satisfactory. The edge that we have over competition is our portfolio of offerings and our professional expertise. The investment planning for each customer is done with an unbiased attitude so that the service is truly customized. Our monthly magazine, Finapolis, provides up-dated market information on market trends, investment options, opinions etc. Thus empowering the investor to base every financial move on rational thought and prudent analysis and embark on the path to wealth creation.

Advisory Services

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

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MERCHANT BANKING Recognized as a leading merchant banker in the country, we are registered with SEBI as a Category I merchant banker. This reputation was built by capitalizing on opportunities in corporate consolidations, mergers and acquisitions and corporate restructuring, which have earned us the reputation of a merchant banker. Raising resources for corporate or Government Undertaking successfully over the past two decades have given us the confidence to renew our focus in this sector. Our quality professional team and our work-oriented dedication have propelled us to offer value-added corporate financial services and act as a professional navigator for long term growth of our clients, who include leading corporates, State Governments, foreign institutional investors, public and private sector companies and banks, in Indian and global markets.

We have also emerged as a trailblazer in the arena of relationships, both at the customer and trade levels because of our unshakable integrity, seamless service and innovative solutions that are tuned to meet varied needs. Our team of committed industry specialists, having extensive experience in capital markets, further nurtures this relationship. Our financial advice and assistance in restructuring, divestitures, acquisitions, de-mergers, spin-offs, joint ventures, privatization and takeover defense mechanisms have elevated our relationship with the client to one based on unshakable trust and confidence.

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We have traversed wide spaces to tie up with the worlds largest transfer agent, the leading Australian company, Computershare Limited. The company that services more than 75 million shareholders across 7000 corporate clients and makes its presence felt in over 12 countries across 5 continents has entered into a 50-50 joint venture with us. With our management team completely transferred to this new entity, we will aim to enrich the financial services industry than before. The future holds new arenas of client servicing and contemporary and relevant technologies as we are geared to deliver better value and foster bigger investments in the business. The worldwide network of Computer share will hold us in good stead as we expect to adopt international standards in addition to leveraging the best of technologies from around the world. Excellence has to be the order of the day when two companies with such similar ideologies of growth, vision and competence, get together.

MUTUAL FUNDS SERVICES

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We have attained a position of immense strength as a provider of across-the-board transfer agency services to AMCs, Distributors and Investors. Nearly 40% of the top-notch AMCs including prestigious clients like Deutsche AMC and UTI swear by the quality and range of services that we offer. Besides providing the entire back office processing, we provide the link between various Mutual Funds and the investor, including services to the distributor, the prime channel in this operation. Carrying the limitless' ideology forward, we have explored new dimensions in every aspect of Mutual Fund servicing right from volume management, cost effective pricing, delivery in the least turnaround time, efficient back-office and front-office operations to customized service. We have been with the AMCs every step of the way, helping them serve their investors better by offering them a diverse and customized range of services. The first to market' approach that is our anthem has earned us the reputation of an innovative service provider with a visionary bent of mind. Our service enhancements such as KARVY Converz', a full-fledged call center, a top-line website (www.KARVYmfs.com), the m-investor' and many more, creating a galaxy of customer advantages.

ISSUE REGISTRY
In our voyage towards becoming the largest transaction-processing house in the Indian Corporate segment, we have mobilized funds for numerous corporate, KARVY has

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emerged as the largest transaction-processing house for the Indian Corporate sector. With an experience of handling over 700 issues, KARVY today, has the ability to execute voluminous transactions and hard-core expertise in technology applications have gained us the No.1 slot in the business. KARVY is the first Registry Company to receive ISO 9002 certification in India that stands testimony to its stature KARVY has the backing of skilled human resources complemented by requisite technological packages to ensure a faster processing capability. KARVY has the benefit of a good synergy between depositories and registry that enables faster resolution to related customer queries. Apart from its unique investor servicing presence in all the phases of a public Issue, it is actively coordinating with both the main depositories to develop special models to enable the customer to access depository (NSDL, CDSL) services during an IPO.

The specialist Business Process Outsourcing unit of the KARVY Group. The legacy of expertise and experience in financial services of the KARVY Group serves us well as we enter the global arena with the confidence of being able to deliver and deliver well.

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Here we offer several delivery models on the understanding that business needs are unique and therefore only a customized service could possibly fit the bill. Our service matrix has permutations and combinations that create several options to choose from. Be it in re-engineering and managing processes or delivering new efficiencies, our service meets up to the most stringent of international standards. Our outsourcing models are designed for the global customer and are backed by sound corporate and operations philosophies, and domain expertise. Providing productivity improvements, operational cost control, cost savings, improved accountability and a whole gamut of other advantages. We operate in the core market segments that have emerging requirements for specialized services. Our wide vertical market coverage includes Banking, Financial and Insurance Services (BFIS), Retail and Merchandising, Leisure and Entertainment, Energy and Utility and Healthcare.

At KARVY Commodities, we are focused on taking commodities trading to new dimensions of reliability and profitability. We have made commodities trading, an essentially age-old practice, into a sophisticated and scientific investment option. Here we enable trade in all goods and products of agricultural and mineral origin that include lucrative commodities like gold and silver and popular items like oil, pulses and cotton through a well-systematized trading platform.

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Our technological and infrastructural strengths and especially our street-smart skills make us an ideal broker. Our service matrix is holistic with a gamut of advantages, the first and foremost being our legacy of human resources, technology and infrastructure that comes from being part of the KARVY Group.

Our wide national network, spanning the length and breadth of India, further supports these advantages. Regular trading workshops and seminars are conducted to hone trading strategies to perfection. Every move made is a calculated one, based on reliable research that is converted into valuable information through daily, weekly and monthly newsletters, calls and intraday alerts. Further, personalized service is provided here by a dedicated team committed to giving hassle-free service while the brokerage rates offered are extremely competitive.

Our commitment to excel in this sector stems from the immense importance those commodities broking has to a cross-section of investors & ndash; farmers, exporters, importers, manufacturers and the Government of India itself.

At KARVY Insurance Broking Pvt. Ltd., we provide both life and non-life insurance products to retail individuals, high net-worth clients and corporates. With the opening up of the insurance sector and with a large number of private players in the business, we are in a position to provide tailor made policies for different segments of customers. In our journey

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to emerge as a personal finance advisor, we will be better positioned to leverage our relationships with the product providers and place the requirements of our customers appropriately with the product providers. With Indian markets seeing a sea change, both in terms of investment pattern and attitude of investors, insurance is no more seen as only a tax saving product but also as an investment product. By setting up a separate entity, we would be positioned to provide the best of the products available in this business to our customers.

Our wide national network, spanning the length and breadth of India, further supports these advantages. Further, personalized service is provided here by a dedicated team committed in giving hassle-free service to the clients.

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OBJECTIVES OF THE STUDY

The main objective is to analyze the Mutual Funds distributed by KARVY Consultant Ltd. To achieve the Overall objectives various sub objectives have been established which are:

1. To study the features of various Mutual Funds distributed by KARVY Consultant Ltd. 2. To study the sale of these products in NCR Region 3. To give new suggestions for the improvement of servicing system, so that it could be implemented effectively with minimum cost and time. 4. To make the people aware of the upcoming services of the KARVY Consultant Ltd. 5. To see the response of the customer toward the services provided by KARVY Consultant ltd. 6. To know the factors which influence the people while investing in Mutual funds. 7. To study how much returns are expected by people from Mutual Funds.

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Scope of the Study

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1. To know the brief introduction of various Mutual funds provided by different companies. 2. To know the growth of Mutual fund sector. 3. To check the awareness of different Mutual Funds. 4. To know about how many Mutual Funds were issued by KARVY.

5. To know the various plans of Mutual Funds offered by different companies.

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Mutual Fund

35

A fund, in the form of an investment company, in which investors combine their money to invest in a variety of stocks, bonds, and money-market investments such as Treasury bills and bank certificates of deposit. CONCEPT A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is 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. The flow chart below describes broadly the working of a mutual fund.

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Mutual funds provide a form of investment that is both relatively safe and relatively lucrative. Mutual funds offer investors the advantages of professional management of invested money and diversification of that investment. Mutual fund managers assume the responsibility of investigating and researching financial markets and selecting the combination of stocks, bonds, and other investment vehicles to be bought and sold. Thus, consumers purchase shares in a mutual fund and rely on the expertise of the mutual fund manager, whose job is to provide them with the highest possible return on their investments. Investing in a mutual fund is not as safe as investing in a bank or a savings and loan association... This is not true of other investment vehicles such as stocks and bonds, which by their nature rise and fall in value and offers no guarantees. But investing in a mutual fund usually is considered to be safer than investing in individual stocks and bonds. Mutual fund managers observe the financial markets and take advantage of trends that affect the fund by buying and selling various components of the fund. And because a mutual fund is diversecomprised perhaps of a hundred or more different kinds of stocks, bonds, or other investmentseven the complete failure of one stock will make a relatively small impact on the fund's overall success.

History of the Indian Mutual Fund Industry

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

First Phase 1964-87

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Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management. Second Phase 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990 At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores

Third Phase 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993.

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The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996 The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual fund

Fourth Phase since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29, 835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes The graph indicates the growth of assets over t

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Types of Mutual Fund

There are two general types of mutual funds. An investor in an open-end fund may request at any time that the fund buy back, or redeem, that investor's shares. The price of shares in an open-end fund is based on the market value of the fund's portfolio of investments. Investors in open-end funds may be charged additional fees known as loads. Front-end loads are charged when the investor purchases shares in a mutual fund; back-end loads are subtracted from the redemption price. Open-end funds are sold by securities dealers and brokers and financial planners, or they are sold directly to the investor by the fund's sales staff. Closed-end funds are traded on stock exchanges or the over-the-counter market. Unlike open-end funds, closed-end funds usually have a fixed number of shares, which are purchased and redeemed at their market price plus a commission.

Objectives of Mutual Fund

Mutual funds are broadly classified according to three types of investment objectives: growth of capital, stability of capital, or current income. Most funds are geared toward one or two of these objectives. For example, money-market funds invest in instruments like U.S. Treasury bills, which are relatively safe and generally stable. Therefore many investors view money-market funds as a good alternative to a bank account. Other funds seek stability of capital by investing in blue-chip stocks and high-quality bonds. Some funds are potentially more lucrative, but far riskier. Growth funds are somewhat aggressive, investing in speculative securities that show promise over time for slow but steady longterm return. Income funds also tend to be speculative, often investing in high-risk, highyield securities with the goal of greater short-term return.

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Within the three broad categories of mutual funds are numerous subcategories. Funds that seek both growth and income are known as balanced funds. Sector funds invest in certain types of businesses, such as the computer industry. Some funds strive to fulfill a political agenda, such as investing in environmentally responsible companies or companies that actively promote women and minorities. Precious metals funds, municipal bond funds, and international stock funds are other examples of mutual fund categories. Other funds are far less specialized and allow the fund manager free reign to compile and alter the fund's portfolio. Mutual fund shareholders receive periodic investment income, or dividends, which comes from dividends and interest earned by the various securities that make up the fund's portfolio. Shareholders often elect to have these dividends reinvested into the mutual fund. Investors in mutual funds may choose to make monthly payments into the fund or have a specified amount automatically withdrawn from a bank account or savings and loan association account each month. Some companies offer a variety of open-end mutual funds with different investment objectives and allow investors a simple way to switch their money from one fund to another as their savings goals change.

Usage
Mutual funds can invest in many different kinds of securities. The most common are cash, stock, and bonds, but there are hundreds of sub-categories. Stock funds, for instance, can invest primarily in the shares of a particular industry, such as technology or utilities. These are known as sector funds. Bond funds can vary according to risk (high yield or junk bonds, investment-grade corporate bonds), type of issuers (government agencies, corporations, or municipalities), or maturity of the bonds (short or long term). Both stock and bond funds can invest primarily in INDIAN securities (domestic funds), both INDIAN and foreign securities (global funds), or primarily foreign securities (international funds). By law,

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mutual funds cannot invest in commodities and their derivatives or in real estate. (However, there do exist real estate investment trusts, or REITs, which invest solely in real estate or mortgages, and mutual funds, are allowed to hold shares in REITs. Likewise hedge funds, another type of funds that are limited to the wealthy, are allowed to invest in real estate and may exercise certain other practices that are not extended to mutual fund.) A mutual fund may restrict itself in other ways. These restrictions, permissions, and policies are found in the prospectus, which every open-end mutual fund must make available to a potential investor before accepting his or her money. Most mutual funds' investment portfolios are continually adjusted under the supervision of a professional manager, who forecasts the future performance of investments appropriate for the fund and chooses the ones which he or she believes will most closely match the fund's stated investment objective. This is called active management, in contrast to indexing, in which a fund's assets are managed to closely approximate the performance of a particular published index. Because the composition of an index changes less frequently than the condition of the market, an index fund manager makes fewer trades, on average, than does an active fund manager. For this reason, index funds generally have lower expenses than actively-managed funds, and typically incur fewer capital gains which must be passed on to shareholders. The majority of actively managed funds outperform an index fund before costs; however, many can then underperforms the index funds after costs are considered. For this reason, some fee-only advisers strongly suggest index funds. (If the advisor is not fee only but instead is compensated by commissions, the advisor may have a conflict of interest in selling high commission load funds.) Mutual funds are subject to a special set of regulatory, accounting, and tax rules. Unlike most other types of business entities, they are not taxed on their income as long as they

42

distribute substantially all of it to their shareholders. Also, the type of income they earn is often unchanged as it passes through to the shareholders. Mutual fund distributions of taxfree municipal bond income are also tax-free to the shareholder. Taxable distributions can either be ordinary income or capital gains, depending on how the fund earned it.

Structure
ORGANISATION OF A MUTUAL FUND

43

There

are

many

entities

involved

and

the

diagram

below

illustrates

the

organizational set up of a mutual fund:

44

HDFC EQUITY GROWTH FUND HSBC EQUITY GROWTH FUND SBI MAGNUM EQUITY FUND RELIANCE EQUITY OPPORTUNITIES FUND(G) KOTAK OPPORTUNITIES FUND

HDFC MUTUAL FUND

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Incorporated Ownership Ownership Sponsor Pattern

30 June 2000 Private Foreign Domestic-100 Housing Development Finance Corporation Ltd. 22,538.67 as on 4/30/2006 11 5 11 6 7 0%,

Total Assets (Rs Cr) Equity Funds (Open End) Debt Funds (Open End) Short-term Debt (Open End) Hybrid Funds (Open End) Closed-end Funds

HSBC MUTUAL FUND

46

Incorporated Ownership Ownership Pattern Sponsor

7 Feb. 2002 Private ----HSBC Securities and Capital Markets (India) Private Ltd.

Total Assets (Rs Cr) Equity Funds (Open End) Debt Funds (Open End) Short-term Debt (Open End) Hybrid Funds (Open End) Closed-end Funds

10,078.72 as on 4/30/2006 4 4 11 none 9

SBI MUTUAL FUND

47

Incorporated Ownership Ownership Pattern

29 JUNE 1987 Public Foreign - 37%, Domestic-63% State Bank of India, Society General Asset Management 14,242.55 as on 4/30/2006 14 11 8 3 3

Sponsor Total Assets (Rs Cr) Equity Funds (Open End) Debt Funds (Open End) Short-term Debt (Open End) Hybrid Funds (Open End) Closed-end Funds

RELIANCE MUTUAL FUND

48

Incorporated Ownership Ownership Pattern

30 June 1995 Private Foreign - 0%, Domestic-100% Reliance Capital Ltd 26,148.37 as on 4/30/2006 13 7 7 1 9

Sponsor Total Assets (Rs Cr) Equity Funds (Open End) Debt Funds (Open End) Short-term Debt (Open End) Hybrid Funds (Open End) Closed-end Funds

KOTAK MAHINDRA MUTUAL FUND

49

Incorporated Ownership Ownership Pattern

23 June 1998 Private Foreign - 0%, Domestic-100% Kotak Mahindra Finance Ltd 11,809.01 as on 4/30/2006 10 7 8 1 14

Sponsor Total Assets (Rs Cr) Equity Funds (Open End) Debt Funds (Open End) Short-term Debt (Open End) Hybrid Funds (Open End) Closed-end Funds

Kotak Opportunities is a diversified equity scheme, with a flexible investing style. It will invest in sectors, which our Fund Manager believes would outperform others in the short to medium-term. Kotak Opportunities specialty lies in giving the Fund Manager flexibility to act based on his views on the market; and in allowing him to invest higher concentrations in sectors he believes will outperform others.

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Research Methodology
Research is an art of scientific investigation. It refers to a search for knowledge. The advance Learners Dictionary English lays down the meaning of research as, A careful

51

investigation or inquiry specially through search for new facts in any branch of knowledge.

Research Methodology is a way to systematically solve the research problem. The research begins its formation when the problem or objective of the research is identified for which a research report is conducted. The main objective for which this report is carried out is to make an analytical study of various mutual funds

(1) Research design:There are various methods of research design like Exploratory Research Design, Descriptive Research Design, Diagnostic Research Design, and Design & Hypothesis Testing Research Design.

In this report, Descriptive Research has been used.

The Descriptive Research Design is used to describe the major role of mutual funds in financial services.

(2) Source of data:-

Basically two types of data are available to the researcher namely:-

52

1. Primary data

2. Secondary data

In the present study, secondary data as well as Primary data has been used

In this report secondary data has been collected from the different books and the websites of mutual funds.

(3) Sample Selection and Size:-

In most of the research design it becomes almost impossible to examine the entire universe. So the only alternative is to report to sampling. This is true for the present study as well. Basic principles to be followed in sampling are that the sample chosen must be representative of entire universe to be studied. In this research study the sample size of the 100 respondents has taken to make predictions on report. In this report the convenience sampling method is used to collect the data

(4)Data Collection Method:Some of the methods of data collection are enumerated as follows:-

1. Questionnaire method 53

2. Observation method

3. Survey method

4. Experimentation method

In the present study, Questionnaire method has been used.

(5)Analysis & Interpretation of data

Data collection through Questionnaire resulted in availability of the desired information but these were useless until these were analyzed. Various steps required for this purpose were editing, coding and tabulating. Tabulating refers to bringing together similar data and compiling them in an accurate and meaningful manner. The data collected by questionnaire was analyzed, interpreted with the help of table, bar, pie chart.

Summary of methodology used

Following is the summary of methodology used for research:-

Research Design

- Descriptive

Data Source

- Secondary and Primary

54

Data collection Method

- Questionnaire

55

Where do you invest as of today?

Investment Bank Deposit Shares Bonds Mutual Funds Insurance Real Estate Others TOTAL

Number Of Respondents 24 6 2 40 14 12 2 100

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12% 2% 14%

B ank Depos it 24% S hares B onds 6% 2% M utual F unds Ins uranc e Real E s tate O thers

40%

Interpretation
Out of 100 respondents 40% of the people prefer to invest in mutual funds , 24% in Banks & only 2% percent people invest in bonds .

Have you ever invested in mutual funds?

Investment In Mutual Funds YES NO Number Of Respondents 40 60

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YES 40% NO 60%

YES NO

Interpretation
On the survey of 100 people only 40 % of people have invested in mutual funds. And remaining 60 percent invest in other sources like banks, shares , insurance etc .

IF YES (People who have invested in mutual funds)

Do you require expertise to manage your funds on your behalf?

Need Of Expertise To Manage Funds YES NO 58

Number Of Respondents 26 14

30 25 20 15 10 5 0 YES NO No. Of Respondents

Interpretation
According to survey of 40 respondents 65% people need expertise help to manage their funds & remaining 35% people says that they dont need help of expertise.

What is your average time horizon for investment?

Average Time Horizon For Investment 6 Months To 1 Year 1 Year To 3 Year 3 Year To 5 Year 5 Year Or Above Number Of Respondents 14 16 10 0

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20 15 10 5 0

14

16 10 0 No. Of Respondents

6 Months To 1 Y ear

1Y ear To 3 Y ear

3Y ear To 5 Y ear

5Y ear Or Above

Interpretation
40% of people like to invest for one year to three year to get returns. & 35% people prefer to invest for short term (less than one year)

While investing in mutual funds which factors influence you the most?
Factors Influencing While Investing In Mutual Funds High Return Liquidity Security Number Of Respondents 16 8 6

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Tax Benefit

10

25% 40% 15% 20%

High Return Liquidity Security Tax Benefit

Interpretation
40% of the people want to get high returns on their investment and 25% people to get tax benefits while investing in mutual funds

What range of return is expected from mutual funds?

Expected Return From Mutual Funds 10% to 20% Number Of Respondents 0

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20% to 40% 40% to 60% 60% or above

20 12 8

25 20 15 10 5 0 Series1 0 10% to 20% 0

20 12 8

20% to 40% 20

40% to 60% 12

60% or above 8

Interpretation
According to survey , most of the people(20 out of 40) expect returns ranging from 20 40 % on their investment in mutual funds .Only 20 % people (8 out of 40) expect returns more than 60 %

Which consultant service provider is managing your funds ?

Services Providing consultant 62 Users In No.

HDFC DIMENTION SECURITY KARVY NOT MENTION TOTAL

10 6 12 12 40

NOT MENTION 30%

HDFC 25%

KARVY 30%

DIMENTION SECURITY 15%

Interpretation
According to survey 30% of the mutual fund investor are engaged with KARVY & 25% with HDFC .

What Attributes that investor looks while joining any consultant services for his investments?

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Attributes For Choosing services Provider Better Services Reliability Proper Guidance Multi Services Under Single Roof

Number Of Respondents 14 12 10 4

10% 35% 25%

Better Services Reliability Proper Guidence Multi Services Under Single Roof

30%

Interpretation
According to survey 35% of the people want better services & 30% people want reliability while joining any consultant services for inventing in mutual funds

IF NOT (People who dont invest in mutual funds)

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Why dont you invest in mutual funds?

Reasons For Not Investing In Mutual Funds Risk Shortage Of Money Lack Of Awareness Market Fluctuation TOTAL Response Of Respondents 29 8 17 6 60

35 30 25 20 15 10 5 0 R isk Sh ortage O f M ey on Lack O f Aw aren ess M arket Flu ation ctu 8 6 17 29

Interpretation
Out of 60 respondents 29 says there is risk in investing in mutual funds, 17 dont have awareness about mutual funds, 8 dont invest due to shortage in money and remaining 6 people says due to market fluctuation they dont want to invest

Are you aware that investing in mutual funds gives you security, liquidity, safety and growth?

65

M.F provides Security, Liquidity, Safety etc Consumer Aware Not Aware TOTAL

Response of Respondents 27 33 60

45% 55%

Consumer Aware Not Aware

Interpretation
55 % of people are not aware about the mutual fund concept that it provides security, liquidity , safety & growth .

Would you start investing in mutual funds if proper guidance is provided to you that assure you good returns?

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People Would Like To Invest In M.F If Proper Guidance Is Provided Yes Not TOTAL

Number Of Respondents 36 24 60

40% 60%

Yes Not

Interpretation
According to survey around 60% percent people would like to invest in mutual funds if they get proper guidance for investing in mutual funds.

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FINDINGS
1. Most of the people like to invest in mutual funds

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2. Most of the people like to invest their money for one to three year to get returns on their investment.

3. People invest in mutual funds to get higher returns and tax benefits .

4. Most of the mutual fund investor are engaged with KARVY & with HDFC

5. KARVY has a good reputation in market and people are aware about the products offered by KARVY .

6. HDFC is one of the major competitor for KARVY

7. Some people dont want to invest in mutual funds because of risk factor and their lack of awareness

8. People would like to invest in mutual funds if they get proper knowledge of mutual funds with their relative benefits to them.

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CONCLUSION
Most of the people like to invest in mutual funds And. like to invest their money for one to three year to get returns on their investment .People invest in mutual funds to get higher returns and tax benefits . Most of the mutual fund investor are engaged with KARVY &

70

with HDFC . People are aware about the products offered by KARVY. HDFC is one of the major competitor for KARVY .Some people dont want to invest in mutual funds because of risk factor and their lack of awareness and finally people would like to invest in mutual funds if they get proper knowledge of mutual funds with their relative benefits to them.

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LIMITATIONS OF THE STUDY

Time constraint is the major hindrance to the project.

72

The geographical area was very much limited to Gurgaon & so

the results are not a very reflection of the current market behavior Responses from the respondent may differ from actual views.

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RECOMMENDATIONS
1. Complete information should be given to the customers as inadequate information may create some misunderstandings in the mind of investor, as they are not well informed about various schemes and their different features

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2. People are not aware about mutual funds schemes so an awareness program should be conducted by company to aware the benefits of mutual funds 3. KARVY should conduct road show so as to attract more and more people. 4. Online services must be provided. 5. As far as media print is concerned, the major trust should be given to the regional newspaper

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Bibliography
(A) BOOKS:1. Kothari, C.R.,Research Methodology, New Delhi: New Age International Publishers, 2005.

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2. Kotler, Philip, Marketing Management, Delhi: Pearson Education (Singapore) Pte. Ltd., 2005.

(B) WEBSITES:1. www.amfiindia.com 2. www.investopedia.com 3. www.karvy.com 4. www.myiris.com 5. www.nseindia.com

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78

QUESTIONNAIRE

NAME ADDRESS PHONE NO.

: : :

1. Where do you invest as of today? a) Bank deposit c) Bonds b) shares d) Mutual fund f) Real estate

e) Insurance
g) Other 2. Have you ever invested in mutual funds? a) Yes b) No

IF YES (People have already invested in mutual funds) 3. Do you require expertise to manage your funds on your behalf? a) Yes b) No 4. What is your average time horizon for investment? a) 6 months to 1 year c) 3 year to 5 year b) 1 year to 3 year d) 5 year or more

5. While investing in mutual funds, which factors influence you the most? a) High return c) Security 6. What range of returns is expected from mutual funds? b) Liquidity d) Tax benefits

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a) 10% to 20% c) 40% to 60%

b) 20% to 40% d) 60% or more

7. Which consultant service provider is managing your funds? a) HDFC c) Karvy b) Dimension security d) not mention

8. Attributes that investor looks while joining any consultant services for his investments. a) Better services c) Proper guidance roof 9. Are you aware that Karvy provides services like Tax information network, Depository? Participant, stock broking, Registrar, Insurance? a) Yes b) No IF NOT (People who dont invest in mutual fund) 10. Why dont you invest in mutual funds? a) Risk c) Lack of awareness b) Shortage of money d) Market fluctuation b) Reliability d) Multi services under single

11. Are you aware that investing in mutual funds gives you Security, Liquidity, safety, & Growth? a) Yes b) No

12. Would you start investing in mutual funds if proper guidance is provided to you that assure you good returns? a) Yes b) No

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