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INTRODUCTION

About Mutual Funds

Mutual Fund is a trust that pools the savings of a number of

investors who share a common financial goal. Each scheme of a mutual fund can
have different character and objectives. Mutual funds issue units to the investors,
which represent an equitable right in the assets of the mutual fund. 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.

DEFINITION & SETUP OF MUTUAL FUND:

In “Mutual Fund Book”, published by Investment company of U.S.., “A

Mutual Fund is a financial service organization that receives money from

shareholders, invest it, earns returns on it, attempts to make it grows and aggress to

pay the share holders cash on demand for the current value of his “investment”. The

investment managers of the funds manage these savings in such a way that the risk is

minimized and steady return is ensured.

Securities and Exchange Board of India (Mutual Funds) Regulations, 1996

define ‘Mutual Fund’ as , “a fund established in the form of a trust to raise monies

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through the sale of units to the public or a section of the public under one or more

schemes for investing in securities, including, money market instrument”.

Mutual fund structure:

The structure consists of:

Sponsor:

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 Sponsor is the person who acting alone or in combination with another body

corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net

worth of the Investment Managed and meet the eligibility criteria prescribed under the

Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The

Sponsor is not responsible or liable for any loss or shortfall resulting from the

operation of the Schemes beyond the initial contribution made by it towards setting up

of the Mutual Fund.

Trust:

The Mutual Fund is constituted as a trust in accordance with the provisions of

the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the

Indian Registration Act, 1908

Trustee:

Trustee is usually a company (corporate body) or a Board of Trustees (body of

individuals). The main responsibility of the Trustee is to safeguard the interest of the

unit holders and inter alia ensure that the AMC functions in the interest of investors

and in accordance with the Securities and Exchange Board of India (Mutual Funds)

Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the

respective Schemes. At least 2/3rd directors of the Trustee are independent directors

who are not associated with the Sponsor in any manner

Asset Management Company:

The Trustee as the Investment Manager of the Mutual Fund appoints the

AMC. The AMC is required to be approved by the Securities and Exchange Board of

India (SEBI) to act as an asset management company of the Mutual Fund. At least

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50% of the directors of the AMC are independent directors who are not associated

with the Sponsor in any manner. The AMC must have a net worth of at least 10 core

at all times.

Registrar or Transfer agent:

The AMC if so authorized by the Trust Deed appoints the Registrar and

Transfer Agent to the Mutual Fund. The Registrar processes the application form;

redemption requests and dispatches account statements to the unit holders. The

Registrar and Transfer agent also handles communications with investors and updates

investor records

Types of Mutual Funds:

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 OBJECTIVES

 To understand various types of mutual funds. offered by the BhartiAxa

Investment Managers

 To understand the risks factors associated with mutual funds.

 To Study the performance of funds.

 To compare the returns of a particular mutual fund with the market returns.

 To Study the best tax saving funds.

 To Rank the best fund.

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  To analyses and evaluate the performance of Diversified Equity Funds and
balanced funds of various mutual funds based on past data.

 Benchmarking the performance of the schemes NAV against relevant market

indices.

DESIGN OF THE STUDY

The main focus is on various investment avenues for investors with particular
to funds of BhartiAxa Pvt Ltd.

AIM OF THE STUDY

The main objective behind this study is to learn about the industry to conduct
an extensive study of different schemes and portfolios managed by Asset
Management Companies (AMC’s)

 Scope of the study

The study is basically made to analyze the various schemes to highlight the

diversity of investment that mutual fund offer. Through the study one would

understand how common man could fruitfully convert pittance into great

penney by wisely investing into the right scheme according to his risk

abilities.

RESEARCH METHODOLOGY

Data collection methods:

The study is based on both primary and secondary data and examines the
trading mechanism in stock market. The results are drawn mainly from secondary
data collected.

Primary data: Primary data has been collected in the form of questionnaire
collected from the companies. Questionnaire consists of both open ended and close-
ended questions.

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Secondary data: Secondary data has been collected from various sources such as:

• Publications of the company

• Business magazines
• Journals, text books
• Websites
• Annual reports

In order to gain information on current practices and problems, the area chosen for
study are the emerging and competitive companies in and around Hyderabad City.

LIMITATIONS OF THE STUDY

• Largely depending on secondary data i.e. gather the data from various books
and websites.
• Short period of time.

• As the study is based on three years data only entire findings cannot be

generalized.

• The study does not give the exact investment profile in a particular company.

• The study does not give the proportion of investment of the portfolio.

• The financial data of the company is not completely available.

• Coverage area was only limited to Hyderabad city

The sample size collected may not represent the whole population

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COMPANY PROFILE:

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BHARTIAXA INVESTMENT MANAGERS LIMITED:

BhartiAxa Investment Managers Private Limited is a joint venture between AXA

group comprising of AXA Investment Managers, AXA APH (through NMIPL) and
Bharti Ventures Limited. We have a proposed presence in more than 30 locations
across the country during launch and plan to establish branches in over 50 locations
by the end of 2008. This will ensure that Bharti AXA Investment Managers (BAIM)
becomes one of the Asset Management Companies with a large presence in the
country at the time of launch.

Global shared resources

Combining robust investment processes and a focus on innovation, Bharti AXA

Investment Managers is connected to nearly 500 investment management
professionals worldwide and an overwhelming pool of research. With risk
management being an integral part of product development, our investment teams are
empowered to take necessary decisions and are made accountable for every
investment process.

Understanding the Indian market

Constantly on the move to seek promising ideas, our experienced Fund Managers are
keenly tuned to the intricacies of the Indian economy, as also the global markets and
its complexities. This mix of foresight, reach and unimpeachable local understanding
will give Bharti AXA Investment Managers an exceptional capability to mark the
future of asset management on ever competitive Indian soils.

Bharti AXA Investment Managers Private Limited (BAIM) was incorporated on 13th
August 2007 and is headquartered in Mumbai, the commercial hub of India. With a
proposed presence in more than 30 locations across the country during launch and
plans of having branches in over 50 locations by end of 2008, BAIM would be able to
boast one of the largest footprints for any AMC in the country during launch. This
indicates the retail focus of the AMC. With best practices brought in from world
leaders in financial protection, BAIM aims to be an aggressive player in the Indian
Asset Management Industry.

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Joint Venture partners

AXA Investment Managers is a multi-expert investment manager backed by the AXA

Group, a world leader in financial protection.

Established in 1994 as a standalone, wholly-owned subsidiary, AXA IM manages

both AXA Group and third party assets. Its 'Assets Under Management' as on
December 31, 2007 stood at US$808 billion. With nearly 600 fund managers and
research analysts, AXA IM manages over 800 funds offering expertises across all
major asset classes and alpha strategies, and has three global ranges: AXA World
Funds, AXA Rosenberg Equity Alpha Trust & Easy ETF. AXA IM is ranked 14th
best asset manager in the world.

Its multi-expert business model combines the strength of a large global organization
with the reactivity and entrepreneurial mindset of small empowered teams of experts.
This combination enables it to offer its clients superior and innovative investment
solutions across all asset classes, from Fixed Income and Equity through to Real
Estate, Structured Finance, Private Equity and Funds of Hedge Funds. Its strong
global coverage, with offices in 21 countries staffed with people of more than 80
nationalities, enables it to manage investment products with a worldwide focus while
staying close to its clients to deliver an optimal service, wherever their location.
Finally, AXA Investment Managers priority is to attract, motivate and retain the best
talents in the industry.

Outstanding Performance

AXA IM received the Best French

Asset Manager award by Talents de la Gestion and the European Asset Manager of
the Year by Funds Europe in 2007.*

Over 50% of AXA Investment

Managers’ funds are in the first two quartiles over 3 years.**

One of the Key competitive advantages lies in AXA Investment Managers multi -
expert organization which combines the strength of global shared resources with the
reactivity and entrepreneurial mindset of small empowered team of experts.

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12
Bharti Ventures Limited is part of the Bharti Group, one of India’s most respected
business houses. It is a dynamic conglomerate with business interests in diverse fields
including Telecom Services, Software, Insurance and Retail. Bharti Airtel Limited.,
the group’s flagship company is among the top 5 listed entities in market
capitalization in India, boasting of over 57 million customers and an annualized
revenue of US$ 7 billion(As on December 31, 2007)

Bharti Group is headed by its founder, Sunil Bharti Mittal – an entrepreneur par
excellence – who was named Business Leader of the Year 2007 by NDTV Profit,
CEO of the Year 2006 by Frost & Sullivan and Ernst & Young Entrepreneur of the
Year, 2004.

Bharti Airtel Accolades

 Ranked 3rd on shareholder returns

in the Business Week IT 100 List,
2007

 Featured among the Forbes

Global 2000 Leading Companies,
2006

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  Awarded ’Company of the Year
2007’ for corporate excellence by
The Economic Times

AXA Asia Pacific Holdings (through NMIPL)

AXA Asia Pacific Holdings (AXA APH) is part of the Global AXA Group, with its
head office in Melbourne and operations spanning Australia, New Zealand, Hong
Kong, Singapore, Thailand, Indonesia, Philippines, China, India and Malaysia. AXA
APH has around $97.65 billion of funds under management and 4,200 employees.
They are the main provider and distributor of financial products, wealth management
and services across numerous brands like AXA, Bharti AXA Life, PT AXA Life
Indonesia, Phillipine AXA Life etc. National Mutual International Pty. Limited
(NMIPL) is a wholly owned subsidiary of AXA APH.

OPERATIONS REVIEW AND OUTLOOK

During the year under review,

 AXA Investment Managers settled a trust called Bharti

AXA Mutual Fund (the Fund).Under a Deed of Trust dated November 16,
2007,

 It appointed the Bharti AXA Trustee Services Private Limited (BATS) as the
Trustee of the Fund. During the current financial year 2008-09 (‘current
year’), the Company received approval from the Securities & Exchange Board
of India (‘SEBI’) to act as asset manager for Bharti AXA Mutual Fund. The
Fund was registered as a mutual fund with SEBI vide registration certificate
dated March 31, 2008.

Business Plan

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  The Company has formulated a 5 year Business Plan, with the thrust being to
achieve top quartile ranking in 5 years and be a full service asset manager.
With a view to enable business launch by July 2008, all the necessary
preparations in terms of hiring of staff, setting up offices, putting in place IT
infrastructure and appointment of various service providers is in advanced
stage of completion.

TEAM PROFILE OF BHARTIAXA INVESTMENT MANAGERS LTD .

BOARD OF DIRECTORS

Mr. Anthony Fasso, Chairman

Mr. Badri Agarwal

Mr. Emmanuel Vercoustre

Mr. Sanjay Saxena

Mr. S K Mitra

Mr. Anil Harish

Mr. Sudhir Chand

Mr. Sanjay Gupta

CHIEF EXECUTIVE OFFICER&MANAGER

During the current year, Mr. Sandeep Dasgupta was appointed as Manager of the
Company, within the meaning of Section 2(24) of the Companies Act, 1956

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 COMPANY SECRETARY

Mr. Manish Ghiya

PRODUCTS OF THE COMPANY

1. Equity Funds:

BhartiAxa Tax Advantage Fund

BhartiAxa Equity D-SIP

2. Debt Funds:
• BhartiAxa AXA Treasury Plus
• BhartiAXA Liquid Fund
• BhartiAXA Short Term Income Fund

3. Hybrid Funds:
• BhartiAXA Regular Return Fund

Equity Funds:
The aim of growth funds is to provide capital appreciation over the medium to long-
term. Such schemes normally invest a major part of their corpus in equities.

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 BhartiAxa AXA Equity fund:

The BhartiAxa Equity fund is a diversified equity scheme with the objective of
generating long-term capital appreciation from a diversified portfolio of
predominantly equity and equity-related securities including equity derivatives.

Scheme Details:

Category An open-ended income scheme

Investment Objective To generate income and long-term
capital appreciation through a
diversified portfolio of
predominantly equity and equity-
related securities including equity
derivatives across all market
capitalization. The scheme is in the
nature of diversified multi-cap
fund. The Scheme is not providing
any assured or guaranteed returns.
There can be no assurance that the
investment objectives of the
Scheme will be realized.

Benchmark Index S&P CNX Nifty Index

Fund Manager Prateek Agrawal

Investment Plans / Options: Regular, Eco & Institutional Plans. Under

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 each of the Plans,
following Options are available:
• Growth Option
• Bonus Option
• Regular Dividend Option and Quarterly
Dividend Option offering
Dividend Re-investment and Dividend Pay-
out facilities

Minimum Investment/ Redemption:

Regular Plan - Rs.5, 000/-
Eco Plan - Rs.5,000/-
Institutional Plan - Rs.5 crore. Multiples of
Re1 thereafter.
Minimum Redemption: The minimum
amount of redemption
shall be Rs 1,000 or equivalent Unit value,
or entire account balance whichever is
lower.

Daily SIP/STP(Available for all Business Days

only) Daily and Monthly SIP / STP available for a
minimum of
6months.
Minimum installment for Daily SIP/STP :
Rs.300 and in
multiples of Rs. 100/- thereafter. Monthly
SIP/STP is Rs.1,000
& in multiples of Rs.100/- thereafter.

Load Structure:

Category An open-ended income Eco Plan Purchases made Institutional

scheme under SIP / STP Plan
Entry • For investments < Rs. 2 2.50% 2.50% Nil
Load Cr - 2.5%

• For investments ≥ Rs. 2

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 Cr - Nil
By a FOF (irrespective
of the amount of
Purchase) - Nil
As a result of Dividend
Re-investment - Nil
Exit Load • Below Rs.2Cr.: 1% if 1% if redeemed 1% if redeemed Nil
redeemed within 6 within 6 months within 6 months
months
• Rs2Cr. and upto
Rs.5Cr: 0.25% if
redeemed with 3
months

• Above Rs.5Cr. - Nil

Competitive and tax efficient returns compared to Bank Foxed Deposits:

Bank FD Bharti AXA Regular Return Fund Bharti AXA

Growth Option Regular Return
Fund Dividend
With Double Without Option
Double
Indexation Indexation

Amount pf Investment 10000 10000 10000 10000

(Rs)
Assumed 9.50% 9.50% 9.50% 9.50%
Returns(annualized)
Tenure (in days) 400 400 400 400
Maturity Amount(Rs) 11041 11041 11041 11041
Growth Dividend(Rs) 1041
Gross Gain (Rs ) 1041 1041 1041 1041

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 Indexed Cost (Rs ) NA 11214 NIL NIL
Indexed Long term NA -173 NA NA
Capital Gain (Rs )

Tax Rate 33.99% 22.66% 11.33% 14.1625%

Tax (Rs) 354 NIL 118 129

Post Tax Gain (Rs) 687 1041 923 912

Post Tax Annualized

Return 6.27% 9.50% 8.42% 8.32%

BhartiAxa Tax Advantage Fund:

BhartiAxa Investment Managers brings you a fund that can help you save up to
Rs.33,990/-* with benefits under 80C of the Income Tax Act and earn returns.

Fund Details:

Category: Open-ended equity-linked savings scheme

Fund Manager: Prateek Agrawal

NFO Opens: December 12, 2008

NFO Closing: February 12, 2009

NFO Re-opens: February 27, 2009

Investment Objective: The Scheme seeks to generate long-term capital growth from a
diversified portfolio of predominantly equity and equity-
related securities across all market capitalizations. The Scheme
is in the nature of diversified multi-cap fund. The Scheme is
not providing any assured or guaranteed returns.(There can be
no assurance that the investment objectives of the Scheme will
be realized.)
NFO Issue Price: Rs. 10/- per unit for cash

Benchmark Index: S&P CNX Nifty Index

Minimum Application Rs. 500/- and in multiples of

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Amount: Rs. 500/- for purchases including purchases through
Systematic Investment Plan (SIP) or Systematic Transfer Plan
(STP) and additional purchases.

Minimum Redemption Rs. 500/- (or equivalent Unit value) or account balance,
Amount: whichever is lower

Mode of sale and NAV will be declared and published on all Business Days. The
redemption of Units: Unit holders may tender the units for redemption on all
business days at the Applicable NAV plus exit load, if
applicable.

Entry Load: Regular Plan – Where the purchase amount is less than Rs. 2
crores: 2.25% of the Applicable NAV, Where the purchase
amount is
Rs. 2 crores or above: Nil;
Eco Plan – 2.25% of the Applicable NAV; Investments
through SIP/ STP – 2.25% of the Applicable NAV

Exit Load: Nil

Special Facilities: Monthly SIP

Monthly STP
SWP (Subject to lock in period of 3 years)

Plans Available: The Scheme offers following Plans:

1. Eco Plan
2. Regular Plan

Eco Plan: Eco Plan is available for purchase

transactions (including switch, SIP etc) of upto Rs. 2
lakhs only. This Plan cannot be chosen if the value of
any purchase transaction exceeds Rs. 2 lakhs.

For investors opting for this Plan, all investor

communications including account statements, annual
reports, portfolio statements, and other statutory
information shall be communicated/ sent to them
exclusively in electronic format to their registered e-
mail address. Dividend and redemption payments will
be made only by way of direct credit/ ECS/ RTGS/
NEFT to their registered bank mandate. For investors
choosing the Eco Plan, a lower annual recurring

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 expense ratio as described under the Para B titled
“Annual Scheme Recurring Expenses” under Section
V “Fees and Expenses” of the Scheme Information
Document will apply.

Where the value of any purchase transaction is greater

than Rs. 2 lakhs, then such investments can be placed
only in Regular Plan. If the investor/ Unit holder has
erroneously chosen Eco Plan, the entire amount will
be automatically placed in Regular Plan. In such
cases, unless the Investor specifies distinct Options/
preferences, the Options and preferences as chosen
under Eco Plan folio, if any, will automatically apply.
All communications to a Unit holder having Eco Plan
folio would continue to be sent in electronic format
(e-mail, sms, etc).

Options Available: Each of the Plans have following Options:

• Growth Option for capital appreciation
• Dividend Option offering Dividend Re-investment and
Dividend Pay-out facilities

Normal Allocation Risk Profile

Instruments
(% of Net Assets) (High/ Medium/ Low)

Equity and equity related

80% to 100% High
securities*

Debt & Money market 0% to 20% Low to Medium

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 securities/ instruments**

Bharti AXA Equity D-SIP

Bharti AXA Investment Managers' new D-SIP lowers the average purchase cost by
entering the markets everyday, with a small investment amount. Available in three
convenient daily investment installment amounts and durations, you can start your D-
SIP in Bharti AXA Equity Fund with as less as Rs.300/- everyday (every Business
Day only. Units at Applicable NAV) through an easy auto debit available with six
major banks only.(HDFC Bank, IDBI Bank, Kotak Mahindra Bank, Axis Bank,
Indusind Bank & Bank of Baroda (Core banking branches only) AMC may notify
other banks from time to time.)

Scheme Details:

Scheme Name :
Bharti AXA Equity Fund
Category :
An open-ended Equity Growth fund
Fund Manager :
Prateek Agrawal
Date of Allotment :
October 21, 2008
Investment :
To generate income and long-term capital appreciation through a
objective diversified portfolio of predominantly equity and equity-related
securities including equity derivatives, across all market
capitalizations. The Scheme is in the nature of diversified multi-
cap fund. The Scheme is not providing any assured or guaranteed
returns. However, there can be no assurance that the investment
objectives of the Scheme will be realized.
Benchmark Index : S&P CNX Nifty Index

Load Structure:

D-SIP is available with Bharti AXA Equity Fund in the Regular Plan (Default) and Eco
Plan, with compulsory Growth Option.
Entry Load : Nil
Exit Load : 3.5%, if redeemed within 1 year from date of allotment
2.5%, if redeemed after 1 year but within 3 years from date of
allotment.
Nil, if redeemed after 3 years from date of allotment.

Benefits of D-SIP:

1) Lower Average Cost

Even the best of experts would find timing the market to be a huge challenge. They
would buy into the market in a structured way over a period of time and achieve the
best average cost. While SIP investments were being made on a regular basis, there

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was still a possibility that the market may be up on the chosen day. D-SIP eliminates
this by participating in the markets on a daily basis.

2) Convenience

- Small ticket size

- Short investment commitment period
- One set of instructions.

3) Systematic and Disciplined Investing

- Rupee Cost Averaging on a Daily Basis - Benefit from market

Volatility in the short term by spreading your investment.

- Power of Compounding - By remaining invested for a long term, let

the power of compounding work to your advantage.

- Available across major banks - HDFC Bank, IDBI Bank, Kotak

Mahindra Bank, Axis Bank, Indusind Bank and Bank of Baroda.

Debt Funds:

BhartiAxa Treasury Plus

Bharti AXA Treasury Plus is a scheme that is focused on providing high liquidity
while seeking to deliver reasonable market related returns.

The fund aims to minimize risk by investing a portfolio of debt and money market
instruments. The scheme will invest primarily in the shorter end of the yield curve
with the flexibility to also invest in medium duration securities to enhance
performance.

Scheme Details:

Category An open-ended income scheme

Investment The Scheme seeks to deliver reasonable market related returns with

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Objective lower risk and higher liquidity through a portfolio of debt and money
market instruments.

The Scheme is not providing any assured or guaranteed returns.

Further, there is also no assurance that the investment objective of the
Scheme will be achieved.
Benchmark Index CRISIL Liquid Fund Index
Fund Manager Sujoy Kumar Das
Unit offer price Rs.1,000/- per unit
Entry load Nil
Exit load 0.25% if redeemed before 7 days
Investment Plans / Retail Plan - Growth & Dividend Reinvestment (weekly frequency)
Options Institutional Plan - Growth, Dividend Reinvestment (daily, weekly &
monthly frequency) & Dividend Payout (monthly frequency)
Minimum Retail Plan - Rs.5,000/-
Investment Institutional Plan - Rs.1 crore
Minimum Retail Plan - Rs.1,000/-
Additional Institutional Plan - Rs.1 lakh
Investment

Bharti AXA Liquid Fund

Bharti AXA Liquid Fund is a scheme that is focused on providing high liquidity while
seeking to deliver reasonable market related returns.

The fund aims to minimize credit risk by investing in a portfolio of debt and money
market instruments.

Scheme Details:

Category An open-ended liquid scheme

Investment The Scheme seeks to deliver reasonable market related returns with lower
Objective risk and higher liquidity through a portfolio of high quality debt and
money market instruments. The Scheme is not providing any assured or
guaranteed returns. Further, there is also no assurance that the investment
objective of the Scheme will be achieved.
Benchmark CRISIL Liquid Fund Index
Index
Fund Manager Sujoy Kumar Das
Unit offer price Rs.1, 000/- per unit during NFO.
Entry load Nil
Exit load Nil
Investment Retail Plan - Growth & Dividend Reinvestment (weekly frequency)

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Plans / Options Institutional Plan - Growth, Dividend Reinvestment (daily, weekly &
monthly frequency) & Dividend Payout (monthly frequency)
Minimum Retail Plan - Rs.5,000/-
Investment Institutional Plan - Rs.1 crore
Super - Institutional Plan - Rs.25 crores
Minimum Retail Plan - Rs.1,000/-
Additional Institutional Plan - Rs.1 lakh
Investment Super - Institutional Plan - Rs.1 lakh

Bharti AXA Short Term Income Fund

Bharti AXA Short Term Income Fund is an open-ended income scheme which seeks
to generate income and capital appreciation by investing in a diversified portfolio of
debt and money market securities.

Category: Open-ended income Scheme

Fund Manager: Sujoy Kumar Das
NFO Opening: December 3, 2008
NFO Closing: December 10, 2008
Investment Objective:
The Scheme seeks to generate income and capital appreciation by investing in a
diversified portfolio of debt and money market securities.
However, there can be no assurance that the income will be generated (regular or
otherwise) or the investment objectives of the Scheme will be realized.
Benchmark Index: CRISIL Short Term Bond Fund Index NFO Issue Price: Rs.
10/- per unit for cash Plans Available: Regular and Institutional

Options Available:

Regular Plan

• Growth Option for capital appreciation

• Dividend Re-investment Option for regular income (with monthly and quarterly
frequency of dividend
re-investment)
• Dividend Pay-out Option for regular income (with monthly and quarterly frequency
of dividend pay-out).

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Institutional Plan

• Growth Option for capital appreciation

• Dividend Re-investment Option for regular income (with weekly, monthly and
quarterly frequency of dividend re-investment)
• Dividend Pay-out Option for regular income (with monthly and quarterly frequency
of dividend pay-out).

Minimum Application:

• Regular Plan – Rs. 5,000

• Institutional Plan
– Rs. 25 lakhs (in multiples of Re. 1 thereafter for both plans).
Minimum Additional Investment:

• Regular Plan – Rs. 1,000

• Institutional Plan
– Rs. 1, 00,000 (In multiples of Re. 1 thereafter for both plans).

Minimum Redemption Amount: Rs. 1,000/- (or equivalent Unit value) or account
balance, whichever is lower.
Mode of sale and redemption of Units: NAV will be declared and published on all
Business Days. The Unit holders may tender the units for redemption on all business
days at the Applicable NAV plus exit load, if applicable.

Entry Load:
(Applicable during New Fund Offer and Ongoing Offer Period) Nil Exit Load:
(Applicable during New Fund Offer and Ongoing Offer Period) 0.25% if
redeemed within 30 days of date of allotment.

Special Facilities:

• Monthly SIP
• Monthly SWP (Fixed
& Appreciation option)
• Monthly STP (from any schemes of the Fund into this Scheme or from this Scheme
to any other scheme, subject to the terms of the respective schemes).

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 Indicative allocation
Instruments (% of total assets) Risk Profile
(Minimum - Maximum)
Money market securities and
debt securities including
government securities,
corporate debt, securitized
debt* and other debt
30% to 100% Low to Medium
instruments with average
maturity less than or equal to
370 days or have put options
within a period not
exceeding 370 days
Debt instruments including
government securities,
corporate debt, securitized
debt* and other debt 0% to 70% Medium
instruments with average
maturity greater than 370
days

Hybrid Fund:

Which would provide you with regular returns. Bharti AXA Regular Return Fund is
your first step in that direction. Go ahead! Make the most of this opportunity.
The scheme provides for Dividend options (with monthly,
quarterly and annual frequency). Declaration of dividend is subject to availability of
distributable surplus and approvals of Trustee. Under dividend option, where dividend
payout is less than Rs. 500/-, it will be compulsorily re-invested.

Fund Manager: Fixed Income investments – Mr. Sujoy Kumar Das

Equity investments – Mr. Prateek Agrawal

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NFO Open Date: January 28, 2009
NFO Close Date: February 24, 2009
NFO Re-open Date: March 16, 2009
Investment Objective:
The Scheme seeks to generate regular income through
investments in fixed income securities and also to generate
long term capital appreciation by investing a portion in
equity and equity related instruments.
However, there can be no assurance that the income can be
generated, regular or otherwise, or the investment
objectives of the Scheme will be realized.
Benchmark Index: CRISIL MIP Blended Index
NFO Price: Rs. 10/- per unit for cash
Investment Plans / Regular & Eco Plans. Under each of the plans, following
Options: options are available.
- Growth Option for capital appreciation
- Dividend Re-investment Option (with Monthly, Quarterly
and Annual frequency of dividend
re-investment)
- Dividend Pay-out Option for regular income (with
Monthly, Quarterly and Annual frequency)
Minimum Application Applications under the Scheme for Purchases and
Amount: Additional Purchases shall be made for minimum amount
of and in multiples of:
Multiples Minimum
Minimum
Plan of, Additional
investment
thereafter investment
Eco Plan Rs. 10,000 Re. 1 Rs. 1,000
Regular
Rs. 10,000 Re. 1 Rs. 1,000
Plan
Minimum The minimum amount for redemption shall be Rs. 1,000/-
Redemption or equivalent Unit value or entire account balance
Amount: whichever is lower.
Load Structure: Entry Load : Nil
Exit Load : 1% if redeemed before 12 months from date of
allotment
Special Products / Monthly SIP
Facilities available: Monthly & Quarterly SWP (Fixed and Appreciation
option)
Monthly STP (From any Schemes of the Fund into this
Scheme or from this Scheme to any other Scheme, subject
to terms of that other Scheme)

29
 INDUSTRY PROFILE:

MUTUAL FUNDS IN INDIAN SCENARIO

THE HISTORY OF MUTAL FUNDS:

When three Boston Securities executives pooled their money together in 1924
to create the first mutual fund, they had no idea how popular mutual funds would
become.

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

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

30
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 Canara 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.

31
 The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in 1996. The industry now

functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign

mutual funds setting up funds in India and also the industry has witnessed several

mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds

with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44,541 crores

of assets under management was way ahead of other mutual funds.

Fourth Phase – since February 2003

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

32
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.

33
 REVIEW OF LITERATURE

Key Differences between close and open ended schemes

S.No Feature Open end Close end

1 Capitalization Unlimited Limited
2 Any time entry Yes No
3 Any time exit Yes No
4 Tax advantages Yes No
5 Listed on exchange Generally no Yes
6 Available for a No Yes

fixed mutual fund

34
Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or

balanced scheme considering its investment objective. Such schemes may be open-

ended or close-ended schemes as described earlier. Such schemes may be classified

mainly as follows:

Growth / Equity Oriented Scheme:

The aim of growth funds is to provide capital appreciation over the medium to

long- term. Such schemes normally invest a major part of their corpus in equities.

Such funds have comparatively high risks. These schemes provide different options to

the investors like dividend option, capital appreciation, etc. and the investors may

choose an option depending on their preferences. The investors must indicate the

option in the application form. The mutual funds also allow the investors to change

the options at a later date. Growth schemes are good for investors having a long-term

outlook seeking appreciation over a period of time.

Income / Debt Oriented Scheme:

The aim of income funds is to provide regular and steady income to investors.

Such schemes generally invest in fixed income securities such as bonds, corporate

debentures, Government securities and money market instruments. Such funds are

less risky compared to equity schemes. These funds are not affected because of

fluctuations in equity markets. However, opportunities of capital appreciation are also

35
limited in such funds. The NAVs of such funds are affected because of change in

interest rates in the country. If the interest rates fall, NAVs of such funds are likely to

increase in the short run and vice versa. However, long-term investors may not bother

about these fluctuations.

Balanced Fund:

The aim of balanced funds is to provide both growth and regular income as

such schemes invest both in equities and fixed income securities in the proportion

indicated in their offer documents. These are appropriate for investors looking for

moderate growth. They generally invest 40-60% in equity and debt instruments.

These funds are also affected because of fluctuations in share prices in the stock

markets. However, NAVs of such funds are likely to be less volatile compared to pure

equity funds.

Money Market or Liquid Fund:

These funds are also income funds and their aim is to provide easy liquidity,

preservation of capital and moderate income. These schemes invest exclusively in

safer short-term instruments such as treasury bills, certificates of deposit, commercial

paper and inter-bank call money, government securities, etc. Returns on these

schemes fluctuate much less compared to other funds. These funds are appropriate for

36
corporate and individual investors as a means to park their surplus funds for short

periods.

Gilt Fund:

These funds invest exclusively in government securities. Government

securities have no default risk. NAVs of these schemes also fluctuate due to change in

interest rates and other economic factors as are the case with income or debt oriented

schemes.

Index Funds :

Index Funds replicate the portfolio of a particular index such as the BSE

Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the

securities in the same weight age comprising of an index. NAVs of such schemes

would rise or fall in accordance with the rise or fall in the index, though not exactly

by the same percentage due to some factors known as "tracking error" in technical

terms. Necessary disclosures in this regard are made in the offer document of the

mutual fund scheme.

There are also exchange traded index funds launched by the mutual funds,

which are traded on the stock exchanges.

Sector specific funds/schemes:

37
 These are the funds/schemes, which invest in the securities of only those

sectors or industries as specified in the offer documents. e.g. Pharmaceuticals,

Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns

in these funds are dependent on the performance of the respective sectors/industries.

While these funds may give higher returns, they are more risky compared to

diversified funds. Investors need to keep a watch on the performance of those

sectors/industries and must exit at an appropriate time. They may also seek advice of

an expert.

Tax Saving Schemes:

These schemes offer tax rebates to the investors under specific provisions of

the Income Tax Act, 1961 as the Government offers tax incentives for investment in

specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes

launched by the mutual funds also offer tax benefits. These schemes are growth

oriented and invest pre-dominantly in equities. Their growth opportunities and risks

associated are like any equity-oriented scheme.

Fund of Funds (FoF) scheme:

A scheme that invests primarily in other schemes of the same mutual fund or

other mutual funds is known as a FoF scheme. A FoF scheme enables the investors to

achieve greater diversification through one scheme. It spreads risks across a greater

universe.

Load or no-load fund:

38
 A Load Fund is one that charges a percentage of NAV for entry or exit. That

is, each time one buys or sells units in the fund, a charge will be payable. This charge

is used by the mutual fund for marketing and distribution expenses. Suppose the NAV

per unit is Rs.10. If the entry as well as exit load charged is 1%, then the investors

who buy would be required to pay Rs.10.10 and those who offer their units for

repurchase to the mutual fund will get only Rs.9.90 per unit. The investors should

take the loads into consideration while making investment as these affect their

yields/returns. However, the investors should also consider the performance track

record and service standards of the mutual fund, which are more important. Efficient

funds may give higher returns in spite of loads.

A no-load fund is one that does not charge for entry or exit. It means the

investors can enter the fund/scheme at NAV and no additional charges are payable on

purchase or sale of units.

Mutual funds cannot increase the load beyond the level mentioned in the offer

document. Any change in the load will be applicable only to prospective investments

and not to the original investments. In case of imposition of fresh loads or increase in

existing loads, the mutual funds are required to amend their offer documents so that

the new investors are aware of loads at the time of investments.

Assured return scheme:

39
 Assured return schemes are those schemes that assure a specific return to the

unit holders irrespective of performance of the scheme.

A scheme cannot promise returns unless such returns are fully guaranteed by

the sponsor or AMC and this is required to be disclosed in the offer document.

Investors should carefully read the offer document whether return is assured

for the entire period of the scheme or only for a certain period. Some schemes assure

returns one year at a time and they review and change it at the beginning of the next

year.

Asset allocation funds:

These funds invest in various asset classes including, but not limited to,

equities, fixed income securities, and money market instruments. They seek high total

return by maintaining precise weightings in asset classes. Global asset allocation

funds invest in a mix of equity & debt securities issued worldwide

Flexible portfolio fund:

These funds invest in common stocks, bonds, other debt securities, and money

market securities to provide high total return. These funds may invest up to100

percent in any one type of security and may easily change weightings depending upon

market conditions

40
High yield funds:

These funds invest two-thirds or more of their in lower rated U.S. corporate

bonds .World bond funds invest in debt securities offered by foreign companies and

governments. They seek the highest level of current income available worldwide

NET ASSET VALUE (NAV):

A unit is a basic measure of investment in a mutual fund. Each scheme or plan

will have different market values depending on the market value of the underlying

asset it has invested in. This value is called net asset value. Similarly market value of

underlying asset changes everyday, net asset value also varies on day-to-day basis.

NAV is computed using a formula: (Total assets – liabilities) / No. Of assets

Suppose investing 1000 rupees in a plan X that has NAV of 10 rupees, then the units

would be 100.

Risk – Return profile

An investor normally prioritizes his investment needs before undertaking an

investment. So different goals will be allocated different proportions of the total
disposable amount. Investments for specific goals normally find their way into the
debt market as risk reduction is of prime importance. This is the area for the risk-
averse investors and here; mutual funds are generally the best option. The reasons are
not difficult to see.

One can avail of the benefits of better returns with added benefits of anytime
liquidity by investing in open-ended debt funds at lower risk. Many people have burnt
their fingers by investing in fixed deposits of companies who were assuring high
returns but have gone bust in course of time leading to distraught investors as well as
pending cases in the Company Law Board.

41
 This risk of default by any company that one has chosen to invest in can be
minimized by investing in mutual funds as the fund managers analyze the companies’
financials more minutely than an individual can do as they have the expertise to do so.
They can manage the maturity of their portfolio by investing in instruments of varied
maturity profiles. Since there is no penalty on pre-mature withdrawal, as in the cases
of fixed deposits, debt funds provide enough liquidity. Moreover, mutual funds are
better placed to absorb the fluctuations in the prices of the securities as a result of
interest rate variation and one can benefits from any such price movement.

Apart form liquidity, these funds have also provided very good post-tax
returns on year-to-year basis. Even historically, we find that some of the debt funds
have generated superior returns at relatively low level of risks. On an average debt
funds have posted returns over 10 percent over one-year horizon.

Risk Focus Suitable Benefits

Tolerance/R products offered by MFs
eturn
Expected
Low Debt Bank/ Liquidity, Better
Company FD, Post-Tax returns
Debt based
Funds
Medium Partially Balanced Liquidity, Better
Debt, Funds, Some Post-Tax
Partially Diversified returns, Better
Equity Equity Funds Management,
and some debt diversification
Funds, Mix of
shares and
Fixed Deposits
High Equity Capital Market, Diversification,
Equity Funds Expertise in
(Diversified as stock picking ,
well as Sector) Liquidity, Tax
free dividends

Optimal Portfolio Theory and Mutual Funds:

42
 One examination of the relationship between portfolio returns and risk is the

efficient frontier, a curve that is a part of the modern portfolio theory. The curve

forms from a graph plotting return and risk indicated by volatility, which is

represented by standard deviation. According to the modern portfolio theory, funds

lying on the curve are yielding the maximum return possible given the amount of

volatility.

Standard Deviation:
The standard deviation essentially reports a fund’s volatility, which indicates

the tendency of the returns to rise or fall drastically in a short period of time. A

security that is volatile is also considered higher risk because its performance may

change quickly in either direction at any moment. The standard deviation of a fund

measures this risk by measuring the degree to which the fund fluctuates in relation to

its mean return, the average return of a fund over a period of time.

Beta:

While standard deviation determines the volatility of a fund according to the

disparity of its return over a period of time, beta, another useful statistical measure,

determines the volatility, or risk, of a fund in comparison to that of its index or

benchmark. A fund with a beta very close to 1 means the fund’s performance closely

matches the index or benchmark—a beta greater than 1 indicates greater volatility

than the overall market, and beta less than 1 indicates less volatility than the

benchmark.

Investors expecting the market to be bullish may choose funds

exhibiting high betas, which increases investors’ chances of bearing the market. If an

43
investor expects the market to be bearish in the near future, the funds that have betas

less than 1 are a good choice because they would be expected to decline less in value

than the index.

R-Squared (R2):

The R-squared of a fund advises investors if the beta of a mutual fund is

measured against an appropriate benchmark. Measuring the correlation of a fund’s

movements to that of an index, R-squared describe the level of association between

the fund’s volatility and market risk, or more specifically, the degree to which a

fund’s volatility is a result of the day-to-day fluctuations experienced by the overall

market.

R-squared values range between 0 and 1, where 0 represents the least

correlation and 1 represents full correlation. If a fund’s beta has an R-squared value

that is close to 1, the beta of the fund should be trusted. On the other hand, an R-

squared value that is close to 0 indicates that the beta is not particularly useful

because the fund is being compared against an appropriate benchmark.

An inappropriate benchmark will skew more than just beta. Alpha is

calculated using beta, so if the R-squared value of a fund is low, it is also wise not to

trust the figure given for alpha.

Alpha:
Up to this point, we have learned how to examine figures that measure risk

posed by volatility, but how do we measure the extra return rewarded to you for

44
taking on risk posed by factors other than market volatility? Enter alpha, which

measure how much if any of this extra risk

Helped the fund outperform its corresponding benchmark. Using beta, alpha’s

computation compares the fund’s performance to that of the benchmark’s risk-

adjusted returns and establishes if the fund’s returns outperformed the market’s given

the same amount of risk. For example, if a fund has an alpha of 1, it means the fund

outperformed the benchmark by 1%. Negative alphas are bad in that they indicate that

the fund under performed for the amount of extra, fund-specific risk that the fund’s

investors undertook.

Conclusion:

This explanation of these four statistical measure provide with the basic

knowledge on using them apply the premises of the optimal portfolio theory, which

uses volatility to establish risk and states a guideline for determining how much of a

fund’s volatility carries a higher potential for return.

Organization of a Mutual Fund

45
Advantages of mutual fund investments

 Professional management: You avail of the services of experienced

and skilled professionals who are backed by a dedicated investment research
team, which analyses the performance and prospects of companies and selects
suitable investments to achieve the objectives or the scheme.
 Diversification: Mutual Funds invest in a number of companies across
a broad cross-section of industries and sectors. This diversification reduces the
risk because seldom do all stocks decline at the same time and in the same
proportion.
You achieve this diversification through a Mutual Fund with far less money than
you can do on your own.
 Convenient Administration: Investing in a Mutual Fund reduces
paperwork and helps you avoid many problems such as bad deliveries, delayed
payments and unnecessary follow-up with brokers and companies. Mutual
Funds save your time and make investing easy and convenient.
 Return Potential: Over a medium to long term, Mutual Funds have
the potential to provide a higher return as they invest in a diversified basket of
selected securities.
 Low Costs: Mutual Funds are a relatively less expensive way to invest
compared to directly investing in the capital markets because the benefits of
scale in brokerage, custodial and other fees translate into lower costs for
investors.
 Liquidity: In open-ended schemes, you can get your money back
promptly at net asset value related prices from the Mutual Fund itself. With
close-ended schemes, you can sell your units on a stock exchange at the
prevailing market price or avail of the facility of direct repurchase at NAV

46
 related prices, which some close-ended, and interval schemes offer you
periodically.
 Transparency: You get regular information on the value of your
investment in addition to disclosure on the specific investment made by your
scheme, the proportion invested in each class of assets and the fund manager’s
investment strategy and outlook.
 Flexibility: Through features such as regular investment plans, regular
withdrawal plans and dividend reinvestment plans, you can systematically
invest or withdraw funds according to your needs and convenience.
 Choice of Schemes: Mutual Fund offers a family of schemes to suit
your varying needs over a lifetime.
 Well Regulated: All Mutual Funds are registered with SEBI and they
function within the provision of strict regulations designed to protect the
interests of investors. The operations of Mutual Funds are regularly monitored
by SEBI.

Disadvantages of mutual fund investments

1. Mutual funds are restricted to Equity- diversified schemes only.

2. Mutual funds are restricted to Growth plan only.

Performance evaluation is done to five mutual funds by taking first day of the month
Net Asset Values for two years only.

MEASURING MUTUAL FUND PERFORMANCE

The investor would be interested in tracking the value of his investments,

whether investing directly in the markets or indirectly through mutual funds The

investor would have to make intelligent decisions whether to get an acceptable return

on the investments in the funds selected or to switch to another fund. The investor

47
therefore needs to understand the basis of performance measurement for the fund and

acquire the basic knowledge of the different measures of evaluating the performance

of a fund. Only then investor would be in a position to judge correctly whether the

fund is performing well or not, and make right decisions.

RETURN ON INVESTMENT OR TOTAL RETURN WITH DIVIDENDS

REINVESTED AT NAV:

a) The Most Suitable measure

Purpose: The shortcoming of the simple total return is overcome by computing the

total return with reinvestment of dividends in the fund itself at the NAV on the date of

distribution (ex-dividend date). The appropriate measure of the growth of an

investor’s mutual fund holdings is, therefore the return on investment on accumulative

basis over a certain time period. Total return with reinvestment is such a measure of

cumulative wealth accumulation, and the same as ROI.

Formula: Total return on investment:

[{(Units held + div/ex-divNAV)*endNAV} – begin NAV] /begin NAV * 100

Suitability: Total return with distributions reinvested at NAV is a measure accepted

by mutual fund tracking agencies such as Credence in Mumbai and Value

research in New Delhi. It is appropriate for measuring performance of accumulation

plans, monthly/quarterly income schemes and debt funds that distribute interim

dividends.

Cumulative aggregate vs. Average annualized returns:

Purpose: While deploying any of the measures described above, it must be

remembered that absolute NAVs do not give a complete picture and that consistent

48
performance with respect to total return and compounded annual return is of

paramount importance.

Many mutual fund schemes, notably from Unit Trust of India, are based on

cumulative returns over a long time period, e.g. Children’s Gift Growth Fund or

Rajalaxmi Fund. When an investor receives a cumulative figure at the end of a long

period, care should be taken to compute an annualized average compounded rate of

return from the cumulative. Many mutual funds present schemes with cumulative

growth option or with dividend option. Comparison between two such schemes is

possible only after the cumulative returns are into average annualized returns.

Formula: To convert cumulative return to average annualized return:

The maturity value of an original investment will be:

A=P*(1+R/100), P = principal A = maturity value of investment, N = period of

investment in years, R = annualized compounded rate in %

The growth in maturity value can be converted to average annualized return as

follows:

R = [(Nth root of A/P}]* 100

Entry/Exit Load

Load is the fee charged to an investor while buying or selling units, as a

percentage of the schemes NAV. The amount charged by a fund house on
purchase of a scheme is known as entry load. Similarly, an exit load is the
charge paid to the fund house if an investor chooses to exit the scheme within
the specific period. Entry/Exit load is changed as per and in circumstances
specified in respective offer documents.

No Load Fund

A no load fund is one that doesnt charge a processing fee either at the time of
entry or exit.

49
NAV

EVALUATING FUND PERFORMANCE

Importance of Benchmarking in Evaluating Performance

The measures described earlier are absolute, meaning that none of the

measures should be used to evaluate the fund performance in isolation. A fund’s

performance can only be judged in relation to investor’s expectations. However, it is

important for the investor to define his expectations in relation to certain “guide

posts” on what is possible to achieve, or moderate his expectations with realistic

investment alternatives available to him in the financial markets. These guide posts or

indicators of performance can be thought of as benchmarks against which a fund’s

performance ought to be judged. For example, an investor’s expectations of returns

from an equity fund should be judged against how the overall stock market

performed, in other words how much the stock market index itself moved up or down,

and whether the fund gave a return that was better or worse than the index movement.

In this example, we can use a market index like S&P CNX Nifty or BSE SENSEX as

“benchmarks” to evaluate our investor’s mutual fund performance.

50
 Historically in India, investors’ only options were UTI schemes or bank

deposits. UTI itself tended to “benchmark” its returns against what interest rates were

available on bank deposits of 3/5-year maturity. Thus, for long period, US 64 scheme

dividends were compared to bank interest rate and investors would be happy if the

dividend yield on US 64 units was greater than comparable deposit interest rate. Thus,

investors in Indian mutual funds tend to routinely compare bank interest rates with

returns on mutual fund schemes. However, with increasing investment options in the

market, bank interest rates should not be used to judge a mutual funds performance in

all cases. Let us therefore take a look at how to choose the correct benchmarks of

mutual fund performance.

Basis of choosing an appropriate performance benchmark:

Appropriate benchmark for any fund has to be selected by reference to:

1. The asset class it invests in thus, an equity fund has to be judged by an

appropriate benchmark from the equity markets, a debt fund performance

against a debt market benchmark and so on; and

2. The fund’s stated investment objective. For example, if a fund invests in long-

term growth stocks, its performance ought to be evaluated against a

benchmark that captures growth stocks performance.

Players in the market

• ANZ • JM
Grindlays
• Benchmark • Kotak Mahindra
• Birla • LIC

51
 Sun Life
• BOB • PNB
• Can bank • PRINCIPAL

• Cholamandalam • ICICI Prudential

• Deutsche • Reliance Capital
• DSP Merrill Lynch • SBI
• Escorts • Standard Chartered
• First India • SUN F&C
• Franklin Templeton • Sundaram
• GIC • Tata
• HDFC • Taurus
• HSBC • UTI
• IL&FS • Zurich India

Banks Vs Mutual Funds

India is at the first stage of a revolution that has already peaked in the U.S. he
U.S.boasts of an Asset base that is much higher than its bank deposits. In India,
mutual fund assets are not even 10% of the bank deposits, but this trend is beginning
to change. This is forcing a large number of banks to adopt the concept of narrow
banking wherein the deposits are kept in Gilts and some other assets, which improves
liquidity and reduces risk.

Banks Mutual Funds

52
 Returns Low Better
Administrative High Low
Risk Low Moderate
Investment options Less More
Network High penetration Low but improving
Liquidity At a cost Better
Quality of assets Not transparent Transparent
Interest calculation Minimum balance between Everyday
10th & 30th of every month

Guarantee Maximum Rs. 1 lakh on None

deposits

Mutual Funds and SEBI

For the smooth conduct and regulation of the mutual fund several guidelines
have been issued by the SEBI regarding the investment, disclosure, accountability
distribution of its profits to its members and the investment companies. SEBI has
issued regulation and code of conduct in 1993, which provided a basic legal
framework for the functioning of the mutual fund. The Mutual Fund regulation act
1996, has provided a sound floating and considerable leeway to fund management.

AMFI

The Association of Mutual Funds in India (AMFI) is dedicated to developing the

Indian Mutual Fund Industry on professional, healthy and ethical lines and to enhance

53
and maintain standards in all areas with a view to protecting and promoting the
interests of mutual funds and their unit holders.

AMFI Objectives:

• To define and maintain high professional and ethical standards in all areas of
operation of mutual fund industry
• To recommend and promote best business practices and code of conduct to be
followed by members and others engaged in the activities of mutual fund and
asset management including agencies connected or involved in the field of
capital markets and financial services.
• To interact with the Securities and Exchange Board of India (SEBI) and to
represent to SEBI on all matters concerning the mutual fund industry.
• To represent to the Government, Reserve Bank of India and other bodies on all
matters relating to the Mutual Fund Industry.
• To develop a cadre of well trained agent distributors and to implement a
programme of training and certification for all intermediaries and other
engaged in the industry.
• To undertake nation wide investor awareness programme so as to promote
proper understanding of the concept and working of mutual funds.

To disseminate information on Mutual Fund Industry and to undertake studies and

research directly and/or in association with other bodies.

SEBI

In 1988 the Securities and Exchange Board of India (SEBI) was established by the
Government of India through an executive resolution, and was subsequently upgraded

54
as a fully autonomous body (a statutory Board) in the year 1992 with the passing of
the Securities and Exchange Board of India Act (SEBI Act) on 30th January 1992. In
place of Government Control, a statutory and autonomous regulatory board with
defined responsibilities, to cover both development & regulation of the market, and
independent powers have been set up. Paradoxically this is a positive outcome of the
Securities Scam of 1990-91.

The basic objectives of the Board were identified as:

• To protect the interests of investors in securities.

• To promote the development of Securities Market.
• To regulate the securities market and for matters connected therewith or
incidental thereto.

Since its inception SEBI has been working at targeting the securities and is attending
to the fulfillment of its objectives with commendable zeal and dexterity. The
improvements in the securities markets like capitalization requirements, margining,
establishment of clearing corporations etc., reduced the risk of credit and also reduced
the market.

SEBI has introduced comprehensive regulatory measures, prescribed registration

norms, eligibility criteria, the code of obligations and the code of conduct for different
intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers,
registrars, portfolio managers, credit rating agencies, underwriters and others. It has
framed by-laws, risk identification and risk management systems for Clearing houses
of stock exchanges, surveillance systems, etc. which has made dealing in securities
both safe and transparent for the end investor.

Another significant event is the approval of trading in stock indices (like S&P CNX
Nifty & Sensex) in 2000. A market Index is a convenient and effective product
because of the following reasons:

• It acts as a barometer for market behavior.

• It is used to benchmark portfolio performance.
• It is used in derivative instruments like index futures and index options.
• It can be used for passive fund management as in case of Index Funds.

55
ANALYSIS & INTERPRETATION

56
 To summarize findings of any project study the data collected needs analysis
of the raw data can be made meaningful simple and appropriate. Presentations of
such interpretations help to draw conclusion from the analyzed data. This analysis is
based on the data collected from the companies belonging to the sectors namely,

• Manufacturing
• IT(software development)
• Marketing(software marketing)
• Medical transcription
• Publications
• Training and Development
• Exports
• Construction

Companies are grouped depending on the staff size and infrastructure of the company
as follows:

• Small
• Small to medium
• Medium
• Medium to Large
• Large

Latest NAV:

57
 NAV History on 19th Feb, 2009

DEBT FUND
Bharti AXA Short Term Income Fund
Institutional Plan -
19/02/2009 10.0928 10.0922 0.0006 0.01
Growth
Institutional Plan -
19/02/2009 9.8737 9.8731 0.0006 0.01
Monthly Dividend
Institutional Plan -
19/02/2009 10.0006 10.0000 0.0006 0.01
Quarterly Dividend
Institutional Plan -
19/02/2009 9.8138 9.8132 0.0006 0.01
Weekly Dividend
Regular Plan - Growth 19/02/2009 10.0882 10.0876 0.0006 0.01
Regular Plan - Monthly
19/02/2009 9.8703 9.8698 0.0005 0.01
Dividend
Regular Plan - Quarterly
19/02/2009 10.0882 10.0876 0.0006 0.01
Dividend

Bharti AXA Equity Fund

Eco Plan - Bonus 19/02/2009 9.2300 9.2000 0.0300 0.33
Eco Plan - Growth 19/02/2009 9.2300 9.2000 0.0300 0.33
Eco Plan - Quarterly
19/02/2009 9.2300 9.2000 0.0300 0.33
Dividend
Eco Plan - Regular
19/02/2009 9.2300 9.2000 0.0300 0.33
Dividend
Regular Plan - Bonus 19/02/2009 9.2200 9.1900 0.0300 0.33
Regular Plan - Growth 19/02/2009 9.2200 9.1900 0.0300 0.33
Regular Plan - Quarterly
19/02/2009 9.2200 9.1900 0.0300 0.33
Dividend
Regular Plan - Regular
19/02/2009 9.2200 9.1900 0.0300 0.33
Dividend
Institutional Plan - Daily
19/02/2009 1000.0000 1000.0000 0.0000 0.00
Dividend
Institutional Plan -
19/02/2009 1055.6602 1055.4766 0.1836 0.02
Growth
Institutional Plan -
19/02/2009 1003.6219 1003.4474 0.1745 0.02
Monthly Dividend

58
Institutional Plan -
19/02/2009 1000.9537 1000.7796 0.1741 0.02
Weekly Dividend
Regular Plan - Growth 19/02/2009 1052.2299 1052.0598 0.1701 0.02
Regular Plan - Weekly
19/02/2009 1000.8728 1000.7110 0.1618 0.02
Dividend

Bharti AXA Liquid Fund

Institutional
19/02/200 1000.000 1000.00 0.000 0.0
Plan - Daily
9 0 00 0 0
Dividend
Institutional
19/02/200 1053.721 1053.54 0.174 0.0
Plan -
9 8 76 2 2
Growth
Regular
19/02/200 1050.309 1050.14 0.168 0.0
Plan -
9 7 17 0 2
Growth
Regular
Plan - 19/02/200 1000.448 1000.29 0.153 0.0
Weekly 9 7 55 2 2
Dividend
Super
Institutional 19/02/200 1000.000 1000.00 0.000 0.0
Plan - Daily 9 0 00 0 0
Dividend
Super
Institutional 19/02/200 1054.805 1054.62 0.177 0.0
Plan - 9 9 86 3 2
Growth

59
 Last 1 Year Last 2 Years Last 3 Years Last 5 Years

Holding Period Jan 2007 to Dec 2007 Jan 2006 to Dec 2007 Jan 2005 to Dec 2007 Jan 2003 to Dec 2007

Monthly SIP Daily SIP Monthly SIP Daily SIP Monthly SIP Daily SIP Monthly SIP Daily SIP

Total Investment 12000 12000 24000 24000 36000 36000 60000 60000

Spread over 12months First12days 24months First24days 36months 60months

First36days First60days

Average per unit 15053 13857 12851 9588 10197 6435 6685 6529
cost
Total no. of units 0.80 0.87 1.87 2.50 3.53 5.59 8.98 9.19

Final Value 16172 17569 37888 50781 71621 113490 182.086 186.429

CAGR 34.8% 46.4% 25.6% 45.5% 25.8% 46.6% 24.9% 25.5%

Note: Investments in the BSE Sensex has been considered in the above illustration.
This is only an illustrate for the purpose of explaining the feature. Actual returns may
vary substantially.

PE (Private equity) investment in India to fall by a third in 2009

Private equity investment in India

In 2009 is expected to tumble by more than a third to $5 billion to $7 billion, similar
to the fall in

2008, as investor aversion rises and asset owners stick to high price expectations,
industry players said.

PE firms will also be busy tending to Indian portfolios battered in the stock market
meltdown, speakers at a private equity conference in Mumbai said on Thursday.

"The sustainable private equity deal volumes in this market would be just about 50

60
percent of the last couple of years," Puneet Bhatia, managing director at PE firm TPG,
said at the conference.

"The price of being prudent and diversified has just not delivered," he said, referring
to the sharper fall in developing market indices than in major industrial markets.

India's benchmark stock index <.BSESN> fell 52.4 percent in 2008, its worst year
ever, ending a five-year bull run that saw the market rise six-fold. It is down 6.3
percent so far in 2009.

Private equity investments in India fell 38.1 percent to just over $10.7 billion in 2008,
in line with the drop across the Asia-Pacific region, according to Asian Venture
Capital Journal research.

Almost three-quarters of the private equity investment in India over the last two years
was in listed entities that have dropped sharply and these are weighing on PE firms'
ability to invest, said Nitin Deshmukh, CEO of private equity
at Kotak Investment Advisors.

The best opportunities in 2009 would come from buying non-core assets or distressed
units of large conglomerates and picking up stakes in non-cyclical sectors, said
Parvinder Singh, principal at Bain Capital.

ANNUAL REPORT OF

BHARTIAXA INVESTMENT MANAGERS PVT LTD

(2007-08)

FINANCIAL RESULTS

Particulars Period ended March

31, 2008
Income:
Interest Income 8,153
Total 8,153

Expenses 88,092
Employee Costs 60,498
Administrative and Other Expenses 4,163
Depreciation/Amortization 10,100
Preliminary Expenses written off 162,853
Total

61
 Loss before Tax 154,700
Provision for Tax (FBT and Wealth Tax) 602
Loss after Tax 155,302

FRANKLIN TEMPLETON GROWTH FUND:

S&P
MONTH X- Y-
CNX ROR(X) NAV ROR(Y) X*X Y*Y X*Y R^2 T^2
/ YEAR Avg(X) AVG(Y)
NIFTY
Jul-06 1134.15 0.0543 11.47 0.0968 0.0029 0.0094 0.0053 0.0244 0.0476 0.0006 0.0023
Aug-06 1195.75 0.1507 12.58 0.6367 0.0227 0.4054 0.0960 0.1208 0.5875 0.0146 0.3452
Sep-06 1375.95 0.0326 20.59 0.0534 0.0011 0.0029 0.0017 0.0027 0.0042 0.0000 0.0000
Oct-06 1420.85 0.1272 21.69 0.1406 0.0162 0.0198 0.0179 0.0973 0.0914 0.0095 0.0084
Nov-06 1601.65 0.0350 24.74 0.0833 0.0012 0.0069 0.0029 0.0051 0.0341 0.0000 0.0012
Dec-06 1657.65 0.1536 26.80 0.1735 0.0236 0.0301 0.0266 0.1237 0.1243 0.0153 0.0155
Jan-07 1912.25 -0.0749 31.45 -0.0684 0.0056 0.0047 0.0051 -0.1048 -0.1176 0.0110 0.0138
Feb-07 1769.00 0.0473 29.30 0.0276 0.0022 0.0008 0.0013 0.0174 -0.0216 0.0003 0.0005
Mar-07 1852.70 -0.0178 30.11 -0.0050 0.0003 0.0000 0.0001 -0.0477 -0.0542 0.0023 0.0029
Apr-07 1819.65 -0.0291 29.96 -0.0227 0.0008 0.0005 0.0007 -0.0590 -0.0719 0.0035 0.0052
May-07 1766.70 -0.1465 29.28 -0.1161 0.0215 0.0135 0.0170 -0.1764 -0.1653 0.0311 0.0273
Jun-07 1507.90 0.0194 25.88 0.0301 0.0004 0.0009 0.0006 -0.0105 -0.0191 0.0001 0.0004
Jul-07 1537.20 0.0663 26.66 0.0439 0.0044 0.0019 0.0029 0.0364 -0.0053 0.0013 0.0000
Aug-07 1639.05 -0.0022 27.83 0.0248 0.0000 0.0006 -0.0001 -0.0321 -0.0244 0.0010 0.0006
Sep-07 1635.45 0.0854 28.52 0.0813 0.0073 0.0066 0.0069 0.0555 0.0321 0.0031 0.0010
Oct-07 1775.15 0.0127 30.84 -0.0101 0.0002 0.0001 -0.0001 -0.0172 -0.0593 0.0003 0.0035
Nov-07 1797.75 0.0914 30.53 0.0891 0.0084 0.0079 0.0081 0.0615 0.0399 0.0038 0.0016
Dec-07 1962.05 0.0780 33.25 0.1320 0.0061 0.0174 0.0103 0.0481 0.0828 0.0023 0.0069

62
Jan-08 2115.00 -0.0261 37.64 -0.0308 0.0007 0.0009 0.0008 -0.0560 -0.0800 0.0031 0.0064
Feb-08 2059.85 0.0119 36.48 0.0230 0.0001 0.0005 0.0003 -0.0180 -0.0262 0.0003 0.0007
Mar-08 2084.40 -0.0080 37.32 -0.0255 0.0001 0.0006 0.0002 -0.0379 -0.0747 0.0014 0.0056
Apr-08 2067.65 -0.0730 36.37 -0.0377 0.0053 0.0014 0.0027 -0.1029 -0.0869 0.0106 0.0075
May-08 1916.75 0.0891 35.00 0.0566 0.0079 0.0032 0.0050 0.0592 0.0074 0.0035 0.0001
Jun-08 2087.55 0.0596 36.98 0.0416 0.0035 0.0017 0.0025 0.0297 -0.0076 0.0009 0.0001
Jul-08 2211.90 0.0480 38.52 0.0584 0.0023 0.0034 0.0028 0.0181 0.0092 0.0003 0.0001
May-08 2318.05 0.0378 40.77 0.0549 0.0014 0.0030 0.0021 0.0079 0.0057 0.0001 0.0000
Jun-08 2405.75 0.0932 43.01 0.0937 0.0087 0.0088 0.0087 0.0633 0.0445 0.0040 0.0020
Jul-08 2630.05 -0.0925 47.04 -0.0812 0.0086 0.0066 0.0075 -0.1224 -0.1304 0.0150 0.0170
Aug-08 2386.75 0.1308 43.22 0.0937 0.0171 0.0088 0.0123 0.1009 0.0445 0.0102 0.0020
Sep-08 2698.95 0.0508 47.27 0.0594 0.0026 0.0035 0.0030 0.0209 0.0102 0.0004 0.0001
Oct-08 2835.95 0.0478 50.08 0.0176 0.0023 0.0003 0.0008 0.0179 -0.0316 0.0003 0.0010
Jan-09 2971.55 0.0510 50.96 0.0565 0.0026 0.0032 0.0029 0.0211 0.0073 0.0004 0.0001
Feb-09 3123.10 0.1121 53.84 0.1209 0.0126 0.0146 0.0136 0.0822 0.0717 0.0068 0.0051
SUM 1.0756 1.7707 0.2340 0.6266 0.3031 0.2009 0.5371
AVG 0.0299 0.0492 0.0056 0.0149

FRANKLIN TEMPLETON

CALUCTIONS :

TREYNOR's Measure

63
Formula for T(m) (Avg ROR - RFR) / Beta
Here Avg ROR = 0.0299
RFR = 3 %'
Beta = (n*sum(x*y)-sum(x)sum(y))/(n*sum(x^2))-sum(x^2)
= 1.0147
T(m) = 0.0009

Formula for T(i) (Avg ROR - RFR) / Beta

Here Avg ROR = 0.0492
RFR = 3 %'
Beta = (n*sum(x*y)-sum(x)sum(y))/(n*sum(x^2))-sum(x^2)
= 1.0147
T(i) = 0.0015

SHARPE's Measure
(Avg ROR - RFR) /

Formula for S(m) (Avg ROR - RFR) / S.D Formula for S(i) S.D
Here Avg ROR = 0.0299 Here Avg ROR = 0.0492
RFR = 3 %' RFR = 3 %'
S.D = 0.0769 S.D = 0.1257
S(m) = -0.3604 S(i) = 0.1527

The responses collected from each and every respondent through the questionnaire are
tabulated and presented as follows:

Table no. 1: What is your annual income?

Annual Income No of response Response in %

50000 to 100000 40 40
100001 to 200000 50 50
200001 to 500000 10 10

64
 500001 & above -- --

Graph no. 1:

Annual Income

200001- 500001-
500000 Above
50000-
100000 50000-100000
100001-200000
200001-500000
100001- 500001-Above
200000

Interpretation:

From the above table of 100 investors showing the details of income or
salary class to which they belong to. 50% of investors belong to the income class
below 10001 to 15000 per month, 10% of investors belong 15001 to 30000 of income
class, 40% of investors belong 8000 to10000 of income class .

Table no. 2: How much amount you are ready to invest per month?

Investment No. of investors %

Less than 25000 20 20
25000 to 50000 40 40
50000 to 100000 40 40
100000 & above 0 0

65
Graph no. 2:

0%
20%

< 25000
40%
25000-50000
50000-100000
>100000

40%

Interpretation:

From the above table of 100 investors showing the details of investment to
which they belong to 20% of investors belong less than 25000 p.m, 40% of investors
belong 25000 to 50000 of income class, 40% of investors belong 50000 to 100000 of
income class, and no investor above 100000 and above income category.

Table no. 3: Which Factor influenced you to invest?

Factors influenced No. of respondents %

Retirement 20 20
Tax benefits 40 40
Children’s 40 40

66
 Others 0 0

Graph no. 3:

Factors Influencing to Invest

No. of Respondents

50
40 40
40
30
20
20
10
0
0
Retirements Tax Benefits Children's Others
Factors

Interpretation:

Shows the factors influencing to invest, 20% of investors are purpose of

retirement, 40 % of investors are purpose of tax benefits and 40 % of investors are
purpose of children’s and remaining are others.

Table no. 4: Ranking of investment of your income

67
Mutual Funds 1 6 1 5 6 2 6 1 1 2 31
Fixed Deposits 2 4 2 6 1 6 4 2 4 6 37
Share &6 5 6 1 2 5 5 5 1 2 38
Securities
Bonds 5 1 5 3 3 4 1 3 2 4 31
Post Office 3 3 4 2 5 3 3 4 5 4 36
Real estate 4 2 3 4 4 1 2 6 1 6 33

Graph no.4:
types of bonds

Rankingtoinvesttheincome
Mutual Funds
7
6 FixedDeposits
5
4 Share&
3 Securities
2 Bonds
1
0 Post Office
1 2 3 4 5 6 7 8 9
ranks Real estate

Interpretation:
Shows the ranks which has given by the investors. Few
respondents were given a best rank to Mutual funds. Then they gave the next rank to
fixed deposits, after that most of the investors were given the next rank to Shares and
securities.

68
Table No. 5: Have you ever invested in any mutual fund?

Ever invested in any No. of respondents %

mutual fund
Yes 80 80
No 20 20

Graph no. 5:

NO. of Respondents invested in

Mutual Funds
No
20%

Yes
55 No

Yes
80%

Interpretation:
From the (table no 9 & graph no 9) we find that 20 respondents are not
invested in any mutual fund and 80 of investors are invested in mutual funds.

69
Table No. 6: In which mutual fund you are invested?

Invested in which No. of respondents %

mutual fund
ICICI 60 40
ABN 30 18
CHOLA 10 6
BIRLA 40 24
TATA 10 6
F TEMPLETON 10 6
OTHERS 0 0

Graph no. 6:

Type o f Mutual Funds

No. of Respondents

50 46
40
26 28 28
30
18
20 10 8
10
0
ICICI HDFC HSBC CITI AMEX SCB SBI
Banks

Interpretation

From table no 6, we find that 46% are invested in ICICI, 26% are invested in
HCFC, 18% are invested in HSBC, 28% are invested in CITI, 10% are invested in
AMEX, 28% are invested in SCB, 8% are invested in SBI.

70
Table No. 7: Period of investment?

Investment time %
Less than 1 year 20
1 year to 2 years 80
2 years to 3 years 0
3 years & more 0

Graph no. 7:

Period of Investment in Years

0%
20%
< 1 Year
2 Years
3 Years
> 3 Years

80%

Interpretation:

From table no 7 we found that 20% are less than one-year period and 80% are
more than one-year period.

71
Table No. 8: Have you heard about BhartiAxa Mutual fund?

About BharthiAxa No. of respondents %

Yes 80 80
No 20 20

Graph no. 8:

Respondents Known about BhartiAxa

Mutual Funds
No
20%

Yes
No

Yes
80%

Interpretation:

From table no 8 the number of respondents heard about BhartiAxa mutual

funds are 80% and 20% does not know about BhartiAxa mutual funds.

72
Table No. 9: How did you know about BhartiAxa mutual funds?

Know about it No. of respondents %

Adds 40 22
Friends 60 33
Magazines 30 17
News papers 50 28

Graph no. 9:

Introduction to BhartiAxa Mutual Funds

News Papers
Introduction
Type of

Magazines

Friends

Adds

0 20 40 60 80
No. of Customers

Interpretation:

73
 From table no 9 we found that 50% through newspapers, 30% through
magazines, 60% through friends, 40% through adds and will know from different
types.

74
Table No. 10: How you are feeling to Investment in mutual fund?

Mutual fund expressed No. of respondents %

Very good 10 10
Good 40 40
Average 50 50
Poor 0 0

Graph no. 10:

Mutual Funds Expressed by

Respondents

60 50
Respondents

50 40
40
No. of

30
20 10
10 0
0
V.Good Good Average Poor
Responses

Interpretation:

From the table no 10 finding that mutual fund are expressed in different types.
10% says very good, 40% says good and 50% says average.

75
Table No. 11: Your most important investment goal?

1. Looking at low risk investment options

2. Taking a risk market fluctuates
3. My main concern is long term wealth maximization

Investment goal No. of respondents %

1 10 10
2 50 50
3 40 40

Graph no. 11:

Important Invester Goal in Investing

1
17% 2
3

50%
33%

Interpretation:

People are not bothered about the investment. They are interested in investing
in mutual funds. They are looking towards them as a long term investments rather
than a short term investment plans.

76
77
 SUMMARY OF FINDINGS

1. BhartiAxa Equity Fund (An Open-ended Equity Growth Fund) is better to invest.

Because in this fund the company is presenting Quarterly Dividend and many other

benefits are there.

2. And at the same time the company is presenting Daily SIP, starting at Rs.300.

3. BhartiAxa is presenting Zero balance Folio to the investors. This will help the

company to attract the investors.

4. As per my Knowledge a fund with a better diversification of funds and opting for

changes based upon the market fluctuation. Under the eyes of efficient fund manger

can produce a high return with a low risk under any circumstances.

5. Investor education has been one of the issues. During the study researcher found
that many of the customers are not completely aware of mutual funds and the
industry. So people will prefer bank deposits as the best investment avenue, which
will serve their investment needs and the safer one.

6. People who are aware of mutual funds find mutual funds as on of the good
investment option that will give better returns with moderate risk.

7. Over 40% of the investors fall in the annual income below 1 lakh
Over 40% of the investors have a monthly savings of 25000 – 50000 & 40% of the
investors have a monthly savings of 50000-100000
Friends & relatives act as the major influences in formulating investment portfolios.

8. Knowledge about mutual fund & their various schemes is moderate among
investors.

78
9. More than 80% of the investors are ready to park their money for a period of 1 – 2
years.

10. Over fifty percent of the investors believe that mutual funds taking a risk market
fluctuates.

11. More than 60% of the investors are interested to have quarterly portfolio review.

CONCLUSION

1. Investment goals vary from person to person. While somebody wants security,
others might give more weight age to returns alone. With objectives defining any
range, it is obvious that the products required will vary as well.

2. The mutual fund industry is still in its infancy stage as compared to the developed
markets in US, where the banking industry and the mutual fund industry rival each
other as investment vehicles but in India to reach that stage will require lot of efforts
on the part of the fund houses.

3. Investor education has been one of the issues. The investor did not focus upon the
issues such as, why a person wanted to invest or whether a particular product suited
him or not. While educating the customer might not have been on the cards earlier, the
things are beginning to change now.

4. Mutual funds assume greater importance in a scenario of increasing inflation. With

inflation hovering around 5 % to 6 %, poised for greater heights, investing in avenues,

which just offer breakeven returns, exposes the investment portfolio to inflation risk.

Investment in equity either directly or through the mutual fund route provides an

79
effective hedge mechanism against such a potent threat. So, investing in mutual funds

is a better option for investors depending upon their objective and requirements.

80
 RECOMMENDATIONS & SUGGESTIONS

• It can be said that, falling interest rates and recent developments in the
investment climate in the country, have led to investment avenues dwindling
drastically. But Mutual Funds are any day a safe bet for investors of different
are groups, motives and other preferences. Since Asset Management
companies offer a range of Funds respective Investment philosophies, an
investor can benefit only by investing in appropriate fund, which shall meet
his requirements.
• In India most of the people are income middle level they cannot invest
heavy amount. So mutual fund is right investment for such people.
• The mutual fund company should concentrate on cash rich companies
like the Trusts, cash rich private companies, etc to generate, more funds for the
investment.
• A through market research is to be done by the Mutual Fund
companies before they launch any schemes. They should understand the need
of the customers (i.e., investment plan and the purpose) and Taylor
accordingly.
• It is important to select the fund carefully. The most important factor
while selecting a fund is the suitability. A fund may be best available in the
market if it doesn’t match the requirement, skip the fund. The performance of
the mutual fund over a long time horizon should be taken into consideration.

81
 • The company should come up in the future with some more schemes in
such a way that should give returns, safe and liquidity so that the investors
should get better confidence & believe it.
• In the share market lot of fluctuations will be present so in mutual fund
they have average better returns, so that the investors will be safe.
• In the present scenario customer needs good returns and the investment
should be safe, liquidity. These three terms should be present.
• BhartiAxa Equity Fund (An Open-ended Equity Growth Fund) is
better to invest. Because in this fund the company is presenting Quarterly
Dividend and many other benefits are there.

10 steps before investing in mutual funds

1) Mutual Fund

You are not going to get very far in mutual fund investing if you don't understand
what a mutual fund is.

2) Annual Return
The first thing you are going to see mutual fund companies doing, is touting their
returns. There are a few ways to measure a fund's return - be sure you know the
differences.

3) Expense Ratio
Expense ratios are probably the most important ratio when it comes to mutual fund
investing. Don't buy a mutual fund until you understand what an expense ratio is.

4) Net Asset Value

Mutual fund prices are measured by Net Asset Value or NAV. NAVs are calculated
and published every day. They are easy to understand, but come with their own
suppress.

5) Fund Style
"Styles" mean a lot of different things in the investing world. Find out why style is an
important factor in fund investing.

82
6) Index Fund
Index funds should be a part of every portfolio. Learn what they are and what makes
them such a great investment.

7) Turnover Ratio
Depending on your situation, this ratio may be a key piece of data in the mutual fund
selection process. This ratio is especially important in taxable accounts.

8) Fund Prospectus
By law, all mutual fund companies are required to provide you with a prospectus
before you invest. Learn what a prospectus is and what you should do with it.

9) Load
Loads are something to watch out for. They come in many shapes and forms (back-
end, front-end). Be sure to learn what a load is before you invest in a mutual fund.

10) Money Market Funds

Looking for a safe place to stash your cash? Money market funds are a great place.
Find out why.

BIBLIOGRAPHY

The readings listed here had proved to be helpful in learning and completion
of my Project.

Magazines:

Business world – The Mutual Fund Industry

Referred Books:

 Making mutual funds work for you – The investors concise guide
AMFI(D.R.Mehta SEBI Chairman, 2000)
 Security Analysis(Dogulas Hamilton Bellemore,2007)

 Mutual Funds in India by Sadak

83
  AMFI work

Visited Websites:

 http://www.mutualfundindia.com
 http://www.pruicici.com
 http://www.valueresearchonline.com
 http://www.amfiindia.com
 http://www.cholamutual.com
 http://www.nseindia.com
 http://www.google.com

84