Birla Sun Life Distribution Company Limited

BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED
Executive Summary
Birla Sun Life Distribution Company is one of the biggest distribution companies in India. It is having only 6 years of history. Birla Sun Life Distribution Company is a part of joint venture between The Aditya Birla Group and the Sun Life Financial Services Limited Canada. The synergy of these two accomplished conglomerates bring the global financial know- how and local market insight. The head office of BSDL is at MUMBAI and is having 16 branches in 13 different cities of the country. BSDL provides a wide spectrum of financial services which include Research based advice, Fund Updates on weekly and monthly basis, Literature to update knowledge, handling various types of queries and providing web based services. BSDL also deals in Birla Sun Life Insurance, IPOs and Bonds. The objective of the study is to know satisfaction level of channel partners of Pune and rest of the Maharashtra other than Mumbai and what their service expectations from BSDL are. For the research I have collected both Primary data and Secondary data. The primary data by questionnaire through survey and telephonic interview of the 100 channel partners of Birla Sun Life Distribution Company, and Secondary Data through various magazines, websites, companys internal data and Books. The following report gives the detail study of Mutual Fund Industry, history of mutual fund and also Mutual Fund history in India, its growth in India, different terminologies used in MF. It gives the idea about the different types of Mutual Funds and different types of options. The later part of the report covers the detail study of channel partners about their satisfaction level and their expectations from BSDL. It envelops the suggestion for co. for improving their services.
Kousali Institute Of Management Studies, Dharwad
LEGENDS
SEBI: Security Exchange Board Of India NSE: National Stock Exchange MCX: Multi Commodity Exchange RBI: Reserve Bank Of India HDFC: Housing Development Finance Corporation India ICICI: Industrial Credit Investment Corporation Of India AMFI: Association Of Mutual Fund in India AUM: Asset Under Management UTI: Unit Trust Of India US-64: UNIT SCHEME OF 1964 ULIP: Unit Linked Insurance Plan NAV: Net Asset Value AMC: Asset Management Company CAMS: Computer Age Management Service ELSS: Equity Linked Saving Schemes T-BILL: Treasury Bill G-SEC: Government Securities MMMFs: Money Market Mutual Funds MIPs: Monthly Investment Plans OTCEI: Over The Trade Exchange Of India CRIL: Credit Resources International Limited BSDL: Birla Sun Life Distribution Company Limited MFs: Mutual Funds
Introduction to Mutual Fund

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by them (pro rata). Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy. A mutual fund is the ideal investment vehicle for todays complex and modern financial scenario. Markets for equity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have become mature and information driven. Price changes in these assets are driven by global events occurring in far away places. A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc.
STUDY TOPIC
The topic selected for the research is study on SATISFACTION LIMITED. This project is an attempt to know about a real picture that what are the services channel partners want from Birla Sun Life Distribution Co. Ltd. and what is the satisfaction level of channel partners towards the service provided by BSDL. No doubt that channel partners have tremendous amount of choices, as there are many Mutual Fund distribution companies in the market, which provide financial services. The satisfaction level and expectations of the channel partners may be regarded as what additional things or factors they want. This also helps the company to know what all additions they can make in their services. OF CHANNEL PARTNERS TOWARDS THE SERVICES PROVIDED BY BIRLA SUN LIFE DISTRIBUTION COMPANY
OBJECTIVES OF THE STUDY
To know the satisfaction level of the channel partners towards the services provided by Birla Sun Life Distribution Co. Ltd. To know expectations of channel partners from Birla Sun Life Distribution Co. Ltd. To know how much Birla Brand Name helps channel partners in their business. To suggest the measures for improvement of business.
Research Methodology:
Conclusive Research:
For the study on Satisfaction of Channel Partners towards the services provided by Birla Sun Life Distribution Co. Ltd. the CONCLUSIVE RESEARCH is applicable. Here the aim of the research is to verify insights and to aid decision makers in selecting a specific course of action The conclusive research has the following features: Components Data needs Data source Sample Clear Well defined Relatively large Feature Research on channel partners of BSDL Satisfaction level of channel partner of BSDL Channel partner of BSDL Sample size selected is 100 out of total 180 channel Data collection from Structured partner Structured questionnaires is used for survey
In conclusive research the applicable research is descriptive research:
Descriptive research:
The aim of the research is to describe something specifically it is intended to generate data describing the composition and characteristics of relevant groups of units such as customer salespeople organization and market areas. In my research the data is collected from the channel partners i.e. from sub brokers of BSDL.
Measurement Technique
In this project report questionnaire is used as a measurement technique to collect data.
Sampling Process:
Population: Element Extent Time Sampling Frame: All BSDL channel Partners who are doing their job full time as well as part time. Sampling method: Non- probability method, the investors were selected on the basis of convenience. Sample size: The total sample size 100 Channel Partners of Birla Sun Life Distribution Co. Ltd. : All Channel Partners of BSDL : All over Maharashtra except Mumbai : June 15 to July5, 2006
DATA COLLECTION METHOD

Primary Data:
Initially I took the permission from the branch manager and also from channel partner executive for the study. Then I got the data about the channel partners of Maharashtra state other than Mumbai. Totally there are 180 channel partners in the whole Maharashtra state other than Mumbai. Out of 180 channel partners 60 resides in Pune. The sample size was 100 out of which 60 are Pune channel partners. The data is collected through structured questionnaire by doing survey and telephonic interview. Survey: The survey is conducted for 60 Pune channel partners. Telephonic interview: The telephonic interview is conducted for 40 channel partners who are in other cities.
Secondary Data:
I collected secondary data through Internet: o www.amfi.com o www.mutualfundsindia.com o www.valueresearchonline.com o www.indiainfoline.com o www.birlasunlife.com Magazines: o INVESTIME: Published by Birla Sun Life Distribution Co. Ltd. o AMFI Work book News Paper: o The Economic times o The Business Line Internal Source of the Company
LIMITATIONS OF THE STUDY

Sample selected was restricted to Birla Sun Life Distribution Company Limited
Channel Partners only. The samples satisfaction does not constitute the satisfaction of whole population. Answers given by respondents are qualitative in nature and conclusions have been
drawn based on that. The responses are collected through the questionnaire by survey and by
telephonic interview, so the response given by the respondents may differ and it may be biased.
Mutual Fund Industry-A Profile

Origin of Mutual Funds
The Mutual Fund industry traces its roots to England in the mid 1800s. The enactment of two British laws, the joint stock companies Acts of 1862 and 1867, permitted investors, for the first time to share in the profits of an investments enterprise, and limited investor liability to the amount of investment capital devoted to the enterprise. Shortly thereafter, in 1868, the Foreign and Colonial Government Trust formed in London. This trust resembled a mutual fund in basic structure, providing the investor of moderate means the same advantage as the large capitalists by spreading the investment over a number of different stocks.
This concept of offering the investment potential of financial markets to all individuals spawned additional investment companies in Britain and Scotland and among other things helped finance the development of the post-civil was US economy. Most of the early British investment companies or trusts resembled todays closed-end funds by issuing a fixed number of shares to groups of investors whose pooled assets were invested in various companies. The Scottish American Investment Trust, formed on February 1, 1873 by fund pioneer Robert Fleming, was significant because it invested in the economic potential of the United States Chiefly through American railroad bonds. Many other trusts followed that not only target investment in America, but more importantly led to the introduction of investment fund concept on U. S shares in the late 1800s and early 1900s.
The First Mutual Fund: The first Mutual Fund or Open-ended Fund in which new shares are issued as new money is invested would not emerge until 1924 in Boston. The Massachusetts Investors Trust, considered by most accounts to be the first mutual fund, was introduced in March of that year. Formed as a common law trust, this fund introduced important innovations to the investment company concept by establishing a simplified capital structure, continuous offering of shares, the ability to redeem shares rather than hold them until dissolution of the fund and a set of clear investment restrictions and policies.
While a handful of mutual funds were formed during the 1920s, funds managed only $140 million by year-end 1929. The stock market crash of 1929 and the Great Depression that followed greatly hampered industry growth until a succession of landmark securities laws, beginning with the securities act of 1933 and concluding with the investment company. Act of 1940, re-invigorated investor confidence in funds. Renewed investor confidence led to relatively steady growth in industry assets for the remainder of the century, and saw fund assets and shareholder accounts grow, respectively, from $ 448 million and 296 thousand in 1940 to $7.4 billion and 261 million by year-end 2003.
Concept of a mutual fund

A mutual fund is a common pool of money into which investors place their contributions that are to be invested with a stated objective. The ownership of the fund is thus joint or mutual and the fund belongs to all investors. A single investors ownership of the fund is in the same ratio as the amount of contribution made by him or bears to the total amount of the fund.
Meaning of Mutual Funds

Mutual Funds are investment products that operate on the principles of Strength in Numbers. They collect money from a large group of investors, pool it together, and invest it in various securities in line with their objective. They are an alternative to investing directly. A more convenient alternative yet no less rewarding. Take stocks, trading into the market by yourself would mean knowing at the very least, how to analyze and track companies, the way of the market and the intermediaries who will help you buy and sell shares. A mutual fund that invests in stocks relieves you of all such hassles, while giving you the same investment option for individuals handicapped by a lack of investing acumen or time, or generally disciplined to take charge of their personal finances. Mutual funds are not magic investment vehicles that do it all youll have to come to terms with the fact that they assure neither returns nor the value of yours original investment. Youll have to accept the reality that even they, who are supposedly experts in investments matter, can go wrong. These are inherent risks, but these can be managed. Mutual funds offer several advantages that make them a powerful and convenient wealth creation vehicle worthy of yours consideration.
Types of Mutual Funds

Open-End Funds:
An open-ended fund is one that has units available foe sale and repurchase at all times. An investor can buy or redeem units from the fund itself at a price based on the Net Asset Value (NAV) per unit. NAV per unit is obtained by dividing the amount of the market value of the funds assets by the number of units outstanding. The number of outstanding goes up or down every time the fund issues new units or repurchase existing units.
Closed-End Funds:
Unlike an open-end fund, the unit capital of a closed-ended fund is fixed, as it makes a one-time sale of a fixed number of units. Closed-ended funds do not allow investors but or redeem units directly from the funds. However, to provide the muchneeded liquidity to investors, any closed-end funds get themselves listed on stock exchanges. Trading through a stock exchange enables investors to buy or sell units of a closed-end mutual fund from each other.
Load and No-Load Funds:

A Load Fund is one that charges a commission for entry or exit. That is, each time investor buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2.5%. It could be worth paying the load, if the fund has a good performance history. A No-Load Fund is one that does not charge a commission for entry or exit. That
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work. Marketing of a new mutual fund scheme involves initial expenses. These expenses may be recovered from the investors in different ways at different times. Three usual ways in which a fund's sales expenses may recovered from the investors are: 1. At the time of investor's entry into the fund/scheme, by deducting a specific amount from his Initial contribution, or 2. By charging the fund/scheme with a fixed amount each year, during the stated number of years, or 3. At the time of the investor's exit from the fund/scheme, by deducting a specified amount from the redemption proceeds payable to the investor. These charges made by the fund managers to the investors to cover
distribution/sales/marketing expenses often called "loads". The load charged to the investor at the time of his entry into a scheme is called front-end or entry load". The load amount charged to the scheme over period of time is called a deferred load. The load that the investor pays at the time his exit is called a "back-end or exit load". Some funds may also charge different amounts of loads to the investors, depending upon how many years the investor is stayed with the fund; the longer the investor stays with the fund, less the amount of exit load" he charged. This is called contingent deferred sales charge". Funds that charge front-end, back-end or deferred loads are called load funds. Funds that make no such charges or loads for sales expenses are called no-load funds. A load fund's declared NAV does not include the loads. Hence, a new investor must add any front-end load amount per unit the NAV per unit to calculate his purchase price. An outgoing investor needs to deduct the amount of any back-end load per unit from his sale price per unit to get to know the net sale proceeds he would receive.
Tax Exempt and Non-Tax Exempt Funds:

Generally, when a fund invests in tax-exempt securities, it is called a tax-exempt fund. In the U.S.A, For example, municipal bonds pay interest that is tax-free, while interest on corporate and other bonds is taxable. In India, after the 1999 Union Government Budget, all of the dividend income received from many of the Mutual funds is tax-free in the hands of the investor. However, funds other than Equity Funds have to pay a distribution tax, before distributing income to investors. In other words, equity mutual fund schemes are taxexempt investment avenues, while other funds are taxable for distributable income. While Indian Mutual funds currently offer tax-free income, any capital gains arising out of sale of fund units are taxable. All these tax considerations are important in the decision on where to invest as the tax exemptions or concessions alter returns obtained from these investments. Hence, classification Of Mutual funds from the taxability perspective has great significance for investors.
Broad Fund types by Nature of Investments:

Mutual funds may invest in equities, bonds or other fixed income securities, or short-term money market securities. So we have Equity, Bond and Money Market Funds. All of them invest in financial assets. But there are funds that invest in physical assets. For example, we may have Gold or other Precious Metals Funds, or Real Estate Funds.
Broad Fund Types by Investment Objective:

Investors and hence the mutual funds pursue different objectives while investing. Thus, Growth Funds invest for medium to long-term capital appreciation. Income Funds invest to generate regular income, and less for capital appreciation. Value Funds invest in equities that are considered under-valued today, whose value will be unlocked in the future. Kousali Institute Of Management Studies, Dharwad
Broad Fund Types by Risk Profile:

The nature of a fund's portfolio and its investment objective imply different levels of risk undertaken. Funds are therefore often grouped in order of risk. Thus, Equity funds have a greater risk of capital loss than a Debt Fund that seeks to protect the capital while looking for income. Money Market Funds are exposed to less risk than even the Bond Funds,' since they invest in short-term fixed income securities, as compared to longerterm portfolios of Bond Funds.
Money Market Funds:

Often considered the lowest rung order of risk level, Money Market Funds invest in securities of a short-term nature, which generally means securities of less than one-year maturity. The typical, short-term interest-bearing instruments these funds invest in include Treasury Bills issued by governments. Certificates of Deposit issued by banks and Commercial Paper issued by companies. In India Money market Mutual funds also invest in the inter-bank call money market. The major strengths of money market funds are the liquidity and safety or principal that investors can normally expect from short-term investments.
Gilt Funds:
Gilts are government securities with medium to long-term maturities, typically of over one year (under one-year instruments being money market securities). In India we have now seen the emergence of Government Securities or Gilt Funds that invest in government paper called dated securities (unlike Treasury Bills that mature less These funds have little risk of default and hence offer better protection of principal. However, investors have to recognize the potential changes in values of debt securities held by the funds that are caused 'by changes in the market price of debt securities quoted on the stock exchanges (Just like the equities).Debt securities' prices
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED fall when interest rate levels increase (and vice versa).
Debt Funds (or Income Funds):

Next in the order of risk level, we have the general category Debt Funds. Debt funds invest in debt instruments issued not only by governments, but also by private companies, banks and financial institutions and other entities such as infrastructure companies/utilities. By investing in debt, these funds target low risk and stable income for the investor as their key objectives. However, as compared to the money market funds, they do have a higher price fluctuation risk, since they invest longer-term securities. Similarly compared to Gilt Funds, general debt funds do have a higher risk of default by their borrowers. Debt Funds are largely considered as Income Funds as they do not target capital appreciation, look for high current income, and therefore distribute a substantial part of their surplus to investors. Income funds that target returns substantially above market levels can face more risks. The Income Funds fall largely in the category of Debt Funds as they invest primarily in fixed income generating debt instruments. Again, different investment objectives set by the fund managers would result in different risk profiles.
Diversified Debt Funds:

A debt fund that invests in all available types of debt securities, issued by entities across all industries and sectors is a properly diversified debt fund. While debt funds offer high income and less risk than equity funds, investors need to recognize that debt securities are subject to risk of default by the issuer on payment of interest or principal. A diversified debt fund has the benefit of risk reduction through diversification and sharing of any default-related losses by a large number of investors. Hence a diversified
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED debt fund is less risky than a narrow-focus fund that invests in debt securities of a particular sector or industry.
Focused Debt Funds:

Some debt funds have a narrower focus, with less diversification in its investments. Examples include sector, specialized and offshore debt funds. These funds are similar to the funds described later in the equity category except that debt funds have a substantial part of their portfolio invested in debt instruments and are therefore more income oriented and inherently less risky than equity funds. However 'the Indian financial markets have demonstrated that debt funds should not be automatically considered to be less risky than equity funds, as there have been relatively large default by issuers of debt and many funds have non-performing assets in their debt portfolios. It should also be recognized that market values of debt securities will also fluctuate more as Indian debt markets witness more trading and interest rate volatility in the future.
High Yield Debt Funds:

Usually, Debt Funds control the borrower default risk by investing in securities issued by borrowers who are rated by credit rating agencies and are considered to be of "investment grade". There are High Yield Debt Fund that seek to obtain higher returns by investing in debt instruments that are considered "below investment grade. Clearly, these funds are exposed to higher risk. In U.S.A., funds that invest in debt instruments that are not backed by tangible assets and rated below investment grade (popularly known as junk bonds) are called Junk Bond Funds. These funds tend to be more volatile than other debt funds, although they may earn higher returns as a result of the higher risks taken.
Assured Return Funds:

Fundamentally, mutual funds hold assets in trust for investors. All returns and risks are for account of the investor. The role of the fund Manager is to provide the professional management service and to ensure the highest possible return consistent with the investment objective of the fund. Assured return debt fund certainly reduce the risk level.
Fixed Term Plans:

Fixed Term Plans are closed-end, but usually for shorter term-less than a year. Being of short duration, they are not listed on a stock exchange. As investors move from Debt Fund category to Equity Funds they face increased risk level. However, there is a large variety of Equity Funds and all of them are not equally risk-prone. Investors and their advisors need to sort out and select the right equity fund that suits their risk appetite Equity funds invest a major portion of their corpus in equity shares issued by companies, acquired directly in initial public offerings or through the secondary market. Equity funds would be exposed to the equity price fluctuation risk at the market level at the industry or sector level and at the company-specific level. Equity Funds Net Asset Values fluctuate with all these price movements. These prices are caused by all kinds of external factors, political and social as well as economic. Hence, Equity Funds are generally considered at the higher end of the risk spectrum among all funds available in the market. Equity funds adopt different investment strategic resulting in different levels of risk. Hence, they are generally separated into different types in terms of their investment styles. Some of the major types of equity funds, arranged in order of higher to lower risk level.
Aggressive Growth Funds:

There are many types of stocks/shares available in the market; Blue Chips that are recognized market leaders, less researched stocks that are considered to have future growth potential, and even some speculative stocks of somewhat unknown or unproven issuers. Fund managers seek out and invest in different types of stocks in line with their own perception of potential returns and appetite for risk. Aggressive growth funds target maximum capital appreciation, invest in less researched or speculative shares and may adopt speculative investment strategies to attain their objective of high returns for the investor. Consequently, they tend to be more volatile and riskier than other funds.
Growth Funds:
These funds invest in companies whose earnings are expected to rise at an above average rate. These companies may be operating in sectors like technology considered having a growth potential, but not entirely unproven and speculative. The primary objective of Growth Funds is capital appreciation over a three to five year span. Growth funds are therefore less volatile than funds that target aggressive growth.
Specialty Funds:
These funds have a narrow portfolio orientation and invest in only companies that meet pre-defined criteria. For example, at the height of the South African apartheid regime, many funds in the U.S. offered plans that promised not to invest in South African companies. Some funds may build portfolios that will exclude Tobacco companies. Funds that invest in particular regions such as the Middle East or the ASEAN countries are also an example of specialty funds. Within the Specialty Funds category, some funds may be broad-based in terms of the types of investments in the portfolio. However, most specialty funds tend to be concentrated funds, since diversification is limited to one type of investment. Clearly, concentrated specialty funds tend to be more volatile than diversified funds.
Sector Funds:
Sector funds' portfolios consist of investments in only one industry or sector of the market such as Information on Technology, Pharmaceuticals or Fast Moving Consumer Goods that have recently been launched in India. Since sector funds do not diversify into multiple se Offshore Funds.
Offshore Funds:
These funds invest in equities in one or more foreign countries thereby achieving diversification across the country's borders. However they also have additional risks such as the foreign exchange rate risk - and their performance depends on the economic conditions of the countries they invest in. Offshore Equity Funds may invest in a single country (hence riskier) or many countries (hence more diversified).
Small Cap Equity Funds:

These funds invest in shares of companies with relatively lower market capitalization than that of big, blue chip companies. They may thus be more volatile than other funds, as smaller companies' shares are not very liquid in the markets. In terms of risk characteristics, small company funds may be aggressive-growth or just growth type.
Option Income Funds:

Option Income Funds write options on a significant part of their portfolio. While options are viewed as risky instruments, they may actually help to control volatility, if properly used. Conservative option funds invest in large, dividend paying companies, and then sell options against their stock positions. This ensures a stable Income stream in the form of premium income through selling options and dividends.
Diversified Equity Funds:

A fund that seeks to invest only in equities except for a very small portion in liquid money market securities, but is not focused on any one or few sectors or shares, may be termed a diversified equity funds seek to reduce the sector or stock specific risks through diversification. They have mainly market risk exposure. Diversified funds arc clearly at the lower risk level than growth funds
Equity Linked Saving Schemes: An Indian Variant:

In India, the investors have been given tax concessions to encourage them to invest in equity markets through these special schemes. Investment in these schemes entitles the investor to claim an income tax rebate, but usually has a lock-in period before the end of which funds cannot be withdrawn. These funds are subject to the general SEBI investment guidelines for all equity funds, and would be in the Diversified Equity Fund category. However, as there are no specific restrictions on which sectors these funds ought to invest in, investors should clearly look for where the Fund Management Company proposes to invest and accordingly judge the level of risk involved.
Equity Index Funds:

An index fund tracks the performance of a specific stock market index. The objective is to match the performance of the stock market by tracking an index that represents the overall market. The fund invests in shares that constitute the index and in the same proportion as the index. Since they generally invest in a diversified market index portfolio, these funds take only the overall market risk, while reducing the sector and stock specific risks through diversification.
Value Funds:
Value Funds try to seek out fundamentally sound companies whose shares arc currently under-priced in the market. Value Funds will add only those shares to their portfolios that are selling at low price-earnings ratios, low market to book value ratios and are undervalued by other yardsticks. Value funds have the equity market price fluctuation risks, but stand often at a lower end of the risk spectrum in comparison with the Growth Funds. Value Stocks may be from a large number of sectors and therefore diversified.
Equity Income funds:

Usually income funds are in the Debt Funds category, as they target fixed income investments. However, there are equity funds that can be designed to give the investor a high level of current income along with some steady capital appreciation, investing mainly in shares of companies' with high dividend yields.
Hybrid Funds Quasi Equity/Quasi Debt:

Money market holdings will constitute a lower proportion in the overall portfolios of debt or equity funds. There are funds that, however, seek to hold a relatively balanced holding of debt and equity securities in their portfolio. Such funds are termed "hybrid funds" as they have a dual equity/bond focus.
Balanced Fund:
A balanced fund is one that has a portfolio comprising debt instruments, convertible securities, and Preference equity shares. Their assets are generally held in more or less equal proportions between debt/money market securities and equities. By investing in a mix of this nature, balanced funds seek to attain the objectives of income, moderate capital appreciation and preservation of capital, and are ideal for investors with a conservative and long-term orientation.
Growth-and-Income Funds:
Unlike income-focused or growth-focused funds, these funds seek to strike a balance between capital appreciation and income for the investor. Their portfolios are a mix between companies with good dividend paying records and those with potential for capital appreciation. These funds would be less risky than pure growth funds, though more risky than income fund.
Commodity Funds:
Commodity funds specialize in investing in different commodities directly or through shares of commodity companies or through commodity future contracts. Specialized funds may invest in a single commodity or a commodity group such as edible oils or grains, while diversified commodity funds will spread their assets over many commodities.
Real Estate Funds:

Specialized Real Estate Funds would invest in Real Estate directly, or may fund real estate developers, or lend to them, or buy shares of housing finance companies or may even buy their securities assets. The funds may have a growth orientation or seek to give investors regular income. There has recently been an initiative to offer such an income fund by the HDFC.
Types Of Mutual Fund:

MUTUALFUND WHO TYPE SHOULD INVEST Diversified Moderate equity funds and aggressive investors Sector fund Aggressive investors Index fund Moderate investors Objective High growth High growth To generate returns which are similar to the returns of the respective index Long-term growth with tax saving Growth and regular income Investment portfolio Equity shares Risk High Ideal investment 1-3years
Equity shares Portfolio like BSE. Sensex, Nifty, etc
Very high
1-3years
Returns of 1-3years NAV, very with index performance
Equity linked saving scheme(ELSS) Balance fund
Moderate and aggressive investors Moderate and aggressive investors
Equity shares
High
1-3years
Bond funds
Salaried and Regular conservative income investors
Gilt fund Short-term funds
Salaried and conservative investors Investors with surplus short-term fund
Security and income Liquidity and moderate income
Balance ratio of equity and debt fund to ensure higher returns at lower risk Predominantly debenture government securities, corporate bonds Government securities Call money commercial papers, treasury bill short-term G-secs
Capital market risk and interest rate risk Credit risk and interest rate risk
Over 2 years
Over 912months
Interest rate risk Linked interest rate risk
Over 12 months 3weeks 3months
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Liquidity funds Investors who park their fund in current account or short term bank fixed deposits Liquidity +moderate income preservation of capital Treasury bills, certificate of deposits , commercial papers, securities call money Negligible Risk 2days 3weeks
Characteristics of a Mutual Fund

A Mutual fund actually belongs to the investors who have pooled their funds. The ownership of the mutual funds is in the hands of the investors. In case of mutual fund the contributors and the beneficiaries of the funds are the same class of people namely the investors. Investment professionals manage a mutual fund and other service providers, who earn a fee for their services provided, from the fund. The pool of funds is invested in a portfolio of marketable investments. The value of the portfolio is updated every day. The investors share in the fund is denominated by UNITS. The value of the units changes with the change in the portfolios value, everyday. The value of one unit of investment is called as the net asset value or NAV.
Benefits of Mutual Fund investment

Professional Management:
Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of 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. Investor achieves this diversification through a Mutual Fund with far less money than investor can do on his own.
Convenient Administration:
Investing in a Mutual Fund reduces paperwork and helps investor avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save investors 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-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund.
Transparency:
Investor get regular information on the value of their investment in addition to disclosure on the specific investments made by the 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, one can systematically invest or withdraw funds according to their needs and convenience.
Affordability:
Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy.
Choice of Schemes:
Mutual Funds offer a family of schemes to suit investors varying needs over a lifetime.
Well Regulated:
All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.
HISTORY OF MUTUAL FUNDS IN INDIA

The Mutual Fund Industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of Reserve Bank of India and the Government of India. The ride through these 43 years is not been smooth. UTI commenced its operations from July 1964. the impetus for establishing a formal institution came from the desire to increase the propensity of the middle and lower groups to save and to invest. UTI came into existence during a period marked by great political and economic uncertainty in India. With a war on the borders and economic turmoil that depressed the financial market, entrepreneurs were hesitant to enter the capital market. The already existing companies found it difficult to raise fresh capital, as investors did not respond adequately to new issues. Earnest efforts were required to canalize savings of the community into productive uses in order to speed up the process of industrial growth. The then Finance Minister, T.T. Krishnamachari set up the idea of a unit trust that would be "open to any person or institution to purchase the units offered by the trust. However, this institution as we see it, is intended to cater to the needs of individual investors, and even among them as far as possible, to those whose means are small." Since then the history of Mutual fund in India can broadly classified into three phases.
First Phase 1964-87 ( UNIT TRUST OF INDIA):

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 Canbank 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.
(Sources: AMFI workbook)
1992-93 Amount mobilized Asset Under Management (Rs crores) UTI Public Sector Total 11057 1964 13021 38247 8575 47004 (Rs 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 Kousali Institute Of Management Studies, Dharwad
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds.
Fourth Phase since February 2003:

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.
GROWTH IN ASSETS UNDER MANAGEMENT:
Series1 250000 200000 Rs in crores 150000 100000 79464 50000 0 47000 4564 25 M ar-65 M ar-87 M ar-93 Mar-03 Mar-04 M ar-05 M ar-06 Ye a rs 139616 149554
231862
LIST OF MUTUAL FUNDS IN INDIA Mutual Fund

Bank sponsored BOB Asset Management Co. Ltd Can Bank Investment Management Services Ltd., S.B.I. Funds Management Ltd., UTI Asset Management Co., Pvt. Ltd.,
Sponsors
Year of Entry
Bank of Baroda Canara Bank State Bank of India SBI, PNB, BOB, LIC
1992 1987 1987 1963
Institutions
G.I.C. Asset Management Co. Ltd., General Insurance Corporation & other 4 Jeevan Bhima Sahyoga Asset Management Co. Ltd., Private Sectors Benchmark Asset Management Co. NICHE Financial Pvt. Ltd., Chola Mandalam Asset Management Co. Ltd., Escorts Asset Management Ltd., J. M. Capital Management Pvt. Services Chola Mandalam Investments Escorts Finance J.M. Shares and Stock 2001 1997 1996 1994 1998 1995 1996 1996 PSU GIC LIC 1989 1990
Ltd., Brokers Kotak Mahindra Asset Management Kotak Mahindra Bank Co. Ltd., Reliance Capital Asset Management Co. Ltd., Sahara Asset Management Co. Pvt. Ltd., Sundaram Asset Management Co. Reliance Capital Sahara India Finance Sunadaram Finance
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Ltd., Tata Asset Management Pvt. Ltd., Tata Sons Joint Ventures Predominantly Indian Birla Sun Life Asset Management Birla Global Finance Pvt. Ltd., D.S.P. Merrill Lynch Fund Manager Ltd., HDFC Asset Management Co. Ltd., D.S.P. Merrill Lynch HDFC & Std Life Investment
1995 1994 1996 2000
Joint Ventures Predominantly Foreign

Alliance Capital Asset Management Alliance Capital Pvt. Ltd., Deutsche Asset Management Pvt. Ltd., Franklin Templeton Asset Management Pvt. Ltd., HSBC Asset Manageent Pvt. Ltd., ING Inveatment Management Pvt. Ltd., Morgan Stanley Investment Management Pvt. Ltd., Prudential ICICI Asset Management Pvt. Ltd., Principal Asset Management Co. Pvt. Ltd., Standard Charted Asset Management Ltd.,
( Source: Outlook Money : Laymens guide to MUTUAL FUND )
1994 2002 1996 2002 1999 1993 1993 1994 2000
Management Deutsche Asset Management Franklin Templeton Investments HSBC Security ING Group Morgan Stanley Prudential ICICI Principal Financial Service Standard Charted Bank
Procedure for registering a mutual fund with SEBI

An applicant proposing to sponsor a mutual fund in India must submit an application in Form A along with a fee of Rs.25,000. The application is examined and once the sponsor satisfies certain conditions such as being in the financial services business and possessing positive net worth for the last five years, having net profit in three out of the last five years and possessing the general reputation of fairness and integrity in all business transactions, it is required to complete the remaining formalities Kousali Institute Of Management Studies, Dharwad
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED for setting up a mutual fund. These include inter alia, executing the trust deed and investment management agreement, setting up a trustee company/board of trustees comprising two- thirds independent trustees, incorporating the asset management company (AMC), contributing to at least 40% of the net worth of the AMC and appointing a custodian. Upon satisfying these conditions, the registration certificate is issued subject to the payment of registration fees of Rs.25.00 lakhs.
Growth of Mutual Fund Industry in India

The mutual fund industry has seen various phases in India and has evolved over the last 10 years in a big way. It started in India in 1963 with the setting up of Unit Trust of India. Its total Assets under Management (AUM) reached a level of Rs 67 billion by the end of 1988. In 1987 some Public Sector Banks and Insurance Companies started their own mutual funds and kicked off the second phase in the mutual fund industry. SBI Mutual Fund, LIC Mutual Fund etc. were few among them. The mutual fund industry registered a major milestone in 1993 with the beginning of first private sector mutual fund. The erstwhile Kothari Pioneer Mutual Fund (now merged with Franklin Templeton Mutual Fund) was the first private sector mutual fund
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED registered in July 1993. After that several mutual funds have started in India, including many international players. The industry has also seen a spate of mergers and acquisitions, most recently being the acquisition of the schemes of Alliance Mutual by Birla Sun Life and Sun F&C by Principal Mutual. The latest phase in the evolution of the industry started when Unit Trust of India (UTI) was bifurcated into two separate entities. The first one is the specified undertaking of UTI and covers mainly the AUM of US-64 (the first mutual fund scheme in India) and other assured return schemes. The second is the UTI Mutual Fund, which manages about 40 schemes and AUM worth Rs 209.76 billion as of December 2004.
SECURITIES AND EXCHANGE BOARD OF INDIA INVESTMENT MANAGEMENT DEPARTMENT Trends in Transactions on Stock Exchanges by Mutual Funds (since January 2000) Equity (Rs in Crores) Debt (Rs in Crores) Net Net Gross Gross Purchase/ Gross Gross Purchase/ Purchase Sales Sales Purchase Sales Sales 11070.54 11492.19 -421.65 2764.72 1864.29 900.43 17375.78 20142.76 -2766.98 13512.17 8488.68 5023.49 12098.11 15893.99 -3795.88 33583.64 22624.42 10959.22 14520.89 16587.59 -2066.70 46663.83 34059.41 12604.42 36663.58 35355.67 1307.91 63169.93 40469.18 22700.75 45045.25 44597.23 448.02 62186.46 45199.17 16987.29 100389.30 86083.64 14305.66 109622.51 73003.67 36618.84 12752.47 9631.91 3120.56 11227.96 6800.08 4427.88 11837.29 7406.65 4430.64 9746.45 4110.53 5635.92 24589.76 17038.56 7551.20 20974.41 10910.61 10063.80
Jan 2000-March 2000. April 2000 -March 2001. April 2001-March 2002. April 2002-March 2003 April 2003-March 2004 April 2004-March 2005 April 2005-March 2006 April 2006. May 2006 (upto 19th) Total (April - May '06)
Trends in Transactions on Stock Exchanges by Mutual Funds (Provisional and subject to revision) May 2006 Equity (Rs in crores) Transaction Date 02.05.06 03.05.06 04.05.06 05.05.06 08.05.06 09.05.06 10.05.06 11.05.06 12.05.06 15.05.06 16.05.06 17.05.06 18.05.06 19.05.06 Total Gross Purchases 543.63 722.59 855.53 761.83 401.00 726.92 981.53 456.65 778.21 1274.82 1103.60 707.24 1244.54 1279.20 11837.29 Gross Sales 494.80 580.21 580.62 527.42 571.78 575.41 453.30 524.58 422.04 489.46 760.39 513.94 481.85 430.85 7406.65 Net Purchases / Sales 48.83 142.38 274.91 234.41 -170.78 151.51 528.23 -67.93 356.17 785.36 343.21 193.30 762.69 848.35 4430.64 Debt (Rs in crores) Gross Purchases 389.58 555.27 285.41 409.98 537.41 564.28 813.02 1475.45 619.55 748.34 925.49 1325.27 738.64 358.76 9746.45 Gross Sales 324.42 229.88 119.01 152.30 204.32 234.27 397.06 246.91 365.87 344.06 271.92 636.61 360.11 223.79 4110.53 Net Purchases/ Sales 65.16 325.39 166.40 257.68 333.09 330.01 415.96 1228.54 253.68 404.28 653.57 688.66 378.53 134.97 5635.92
Structure of Mutual Funds in India

BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Like other countries, India has a legal framework within which mutual funds be constituted. Unlike in the UK, where two distinct trust and corporate structures are followed with separate regulations, in India open-end and closed end funds operate under the same regulatory structure and are constituted along one unique structure as unit trusts. A mutual fund in India is allowed to issue open-end and closed-end schemes under a common legal structure. Therefore, a mutual fund may have several different schemes (open-end and closed-end) under it. That is under one unit trust, at any point of time. The structure is required to be followed by mutual funds in India is laid down under SEBI (mutual fund) regulations, 1996. In the following paragraphs, we look at the structure of each of the fund constituents.
SEBI TRUSTEE OPERATIONS AMC SPONSOR
FUND MANAGER
MARKET / SALES
MUTUAL FUND SCHEMES

DIST.CO./ SUB BROKERS
INVESTOR
Sponsor:
What a promoter is to a company, a sponsor is to a mutual fund. The sponsor initiates the idea to set up a mutual fund. It could be a financial services company, a bank or a financial institution. It could be Indian of foreign. It could do it alone or through a joint venture. In order to run a mutual fund in India, the sponsor has to obtain a license from SEBI. For this, it has to satisfy certain conditions, such as a capital and profits, back records (at least five years in financial services), default free dealings and a general reputation for fairness.
Asset Management Company (AMC):

An AMC is the legal entity formed by the sponsor to run a mutual fund. Its the AMC that employs fund managers and analyst, and other personnel. Its the AMC that handles all operational matters of a mutual fund from launching schemes to managing them to interacting with investors. The people in the AMC who should matter the most to you are those who take investment decisions. There is the head of the fund house, generally referred to as the chief executive officer (CEO). Under him comes the chief investment officer (CIO), who shapes the funds investment philosophy and fund managers who manage its schemes. A team of analysts, who track markets, sectors and companies, assists them.
Trustees:
Trustees are like internal regulations in a mutual fund, and their job is to protect the interests of unit holders. Trustees are appointed or corporate bodies. In order to ensure they are impartial and fair, SEBI rules mandate that at least two thirds of the trustees be independent that is, not have any association with the sponsor.
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Trustees appoint the AMC, subsequently seeks their approval for the work it does and reports periodically to them on how the business is being run. Trustees float and market schemes and secure necessary approvals. They check if the AMC investments are within defined limits and whether the funds accountable for financial irregularities in the mutual fund.
Custodian:
A custodian handles the investment back office of a mutual fund. Its responsibilities include receipt and delivery of securities, collection of income, and distribution of dividends and segregation of assets between schemes. The sponsor of a mutual fund cannot act as a custodian to the fund. This condition, formulated in the interest of investors, ensures that the assets of a mutual fund are not in the hands of its sponsor. For example Deutsche Bank is a custodian but it cannot service Deutsche Mutual Fund, its mutual fund arm.
Registrar:
Registrars also known as transfer agents, handles all investor related services. This includes issuing and red reaming units. Sending fact sheet and annual reports. Some fund houses handle such functions in house. Others outsource it to registrars; Karvy and CAMS are the more popular ones. It doesnt really matter which model your mutual fund opts for, as long as it is prompt and efficient in servicing you. Most mutual funds in addition to registrars also have investor service centers of their own in some cities.
Frequently Used Terminologies

Corpus:
Investing in a scheme is a simple process. Juts walk into any office of the mutual fund or that of its representatives. Fill up a short and simple form, and hand over a cheque. Yours money gets added to the pool already with the scheme, given to it by numerous other investors like you. The total money available with a scheme at any point in time is referred to as the Corpus or Asset under management the mutual fund, on your and other investors behalf invests this corpus in various securities in line with its sated objectives
Units:
Mutual fund issues you units against your investment. A unit is the currency of a fund. What a share is to company, a unit is to a fund.
Net asset value (NAV): NAV:

(Net asset of the scheme /number of units o/s) (Number of units outstanding as at the NAV) You are allotted units on the basis of a scientific mechanism. This price, measured per unit, is called the Net Asset Value (NAN) of the unit. Just as share or land is bought and sold at its NAV. if for example, you were to invest Rs 10000 in scheme when its NAV Is Rs 10. You will be allotted 1000 units (10000/10) roughly the fund charges a nominal processing fee. The NAV of any scheme tells how much each units of its is worth at any point in time, and is therefore the simplest measure of how it is performing. Schemes NAV is its net assets (Market value of the securities its own minus it owes) divided by the number of units it has issued.
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED A scheme NAV is dynamic figure. The market value of a schemes portfolio, changes from day to day, as prices of shares and bonds move up or down. The number of units outstanding also changes as new investors come into the scheme and told ones leave. If the NAV of your scheme rises from Rs 10 to Rs, 11 over a period of time, your scheme is said to have generated a return of 10%. Similarly, if its NAV falls from Rs 10 to Rs 9, it is said to have lost 10% Fund house have to calculate and disclose the NAVs of their schemes daily fund NAVs can be easily looked up. While dailies give a random listing of schemes the financial papers are more exhaustive in their coverage. NAV information is also available on website, of the mutual fund concerned and of independent data providers. When invested in a scheme, its NAV is the figure to track as it qualifies your returns and your purchase price and sale price will be based on it.
Load:
Although the NAV represents scheme current market value it is not the exact price at which an investor enters or exits the scheme. Fund houses levy a nominal charge, on most of their schemes, to meet their processing costs and to discourage investors from lacking. This charge is referred to as load and it is price you pay over and above the fund NAV when you buy or cell units. You pay an entry load at the time buying units and an exit load while selling. Loads are always expressed as percentage of the NAV, and have the effect of reducing your returns. An entry load increases your NAV, which places fewer units in your hands. An exit load decrease youre NAV of Rs 10 and it levies an entry and exit load of 1% (10 paisa) each. So when you buy units youll pay Rs 10.1 (10+0.10)per unit, not Rs 10. Similarly if you sell youll get Rs 9.90(10-0.10) per unit, not Rs 10. Under SEBI rules, the sum of entry and exit loads charged by a scheme cannot exceed 7%
Cost of investment in mutual fund:

Another entry that eats into your return is expenses this is what your fund charges you for managing your only. Fund managers have to be paid a fee, as do the other constraints involved in managing your money. All this entails costs, which your scheme recovers from you, within limits. Every year, a fund charges same amount to your schemes NAV reducing your returns by that amount. SEBI rules allow equity schemes to charge a maximum of 2.5%of corpus as expenses every year, the corresponding figure for debt schemes is 2.25% SEBI also decides what kind of expenses a fund can charge its unit holders and what it cannot. For e.g.: the cost of running a campaign about a fund having won an award cannot be charged to investors.
Disclosures:
From time to time, your fund house will share with you information relating to your scheme. It does this in various ways, in various degrees. Under SEBI rules, fund houses have to send to all unit holders annual reports disclosing the complete portfolio of all units holders annul reports disclosing the complete portfolio of all units holders annul reports disclosing the compete portfolio of all their schemes and publish half-yearly results in newspapers. These document shade light on your schemes performing over various time periods, and how it stands up, given market conditions. Some fund house goes beyond such mandatory information sharing. Whatever information is relevant to your investment they send it to you on a quarterly basis, through fax and newsletters. Most fund houses update their scheme portfolio on their website even quicker, the norm being on a monthly basis. This information you can use to make an investment in the schemes
Redemption:
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Whenever you want, you can sell your units, partly or fully back to your fund. Although its sale from your point of view in mutual fund parlance it is called repurchase or redemption youll have to fill up another short and simple from your Mutual fund will pay you the schemes NAV prevailing on that date minus the exit load, Mail you a cheque within three to five days.
Portfolio:
Combined holdings of many kinds of financial securities like shares, debentures and bonds. The objective is risk diversification and maximization of gain of group of assets.
Expense Ratio:
Expanse ratio is defined as the ratio of total expenses to the net assets of the fund. It is the annual percentage of the funds assets that is paid out in expenses. An expense includes management fees and all the fees associated with the funds daily operations. The ratio is listed in a funds Offer Document. The expenses allowed for a fund is a percentage of the weekly average net assets outstanding: Equity Scheme Up to 2.5% Debt Fund Up to 2.25%
Options in the schemes

Dividend Option Growth Option Re investment Option
Dividend Option:
Investors who chose a dividend option on their investments will receive dividends from the mutual fund, as and when such dividends are declared. Dividends are paid in the form of warrants, or are directly credited to the investors bank accounts. There are further choices in the distribution of dividends. In a normal dividend plan, periodicity of dividends is left to the fund managers, who may pay annual and / or an interim dividend. Though investors know that they would earn a dividend income from their investment, the timing of the pay out is decided by fund managers. The variances to the normal dividend plan are pre-specified distribution schedule. Mutual funds provide investors the option of the receiving dividends at predetermined frequencies, which can very from daily, weekly, monthly, quarterly, half yearly and annually. Investors can choose the frequency of dividend distribution that suits their requirements. Not all mutual funds provide all of these frequencies as choices, though. As per the Regulations, the fund shall dispatch to the unit holders, the dividend warrants within 30 days of declaration of dividend. Dividend will be payable to those unit holders whose name appear in the Register of unit holders on the Record Date. The cheque / warrants will be drawn in the name of the sole/first holder and will posted/mailed to the address as indicated in the application form. As per SEBI guidelines and in the interest of the investors to safeguard from loss or theft of dividend cheques/warrants, investors are requested provide the name of the bank, branch and account number in the application form. Such information would be incorporated in the cheques/warrants.
Effect of Dividend:
When dividends are paid, the NAV will stand reduced by the amount of Dividend and distribution tax, if any applicable. To the extent net income and realized gains are not distributed, the same will remain invested in the schemes and be reflected in the NAV. Since dividends are declared under dividend option only, the NAV of growth option will not be affected by the payment of such dividend.
Growth option:
Investors who dont require periodic income distribution can choose the growth option, where the income earned are retained in the investment profile, and allowed to grow, rather than being distributed to the investors. Investors with long term investment horizons, and limited requirements for income, choose this option. The return to the investor who chooses a growth option is the rate at which his initial investment has grown over the period for which he was invested in the fund. The NAV of the investor choosing this option will very with the value of the investment portfolio, while the number of units held will remains constant.
Reinvestment option:
Investors re-invest the dividends that are declared by the mutual fund, back into itself, at NAV that is prevalent at the time of reinvestment. In this option, the number of units held by the investor will change with every reinvestment. The value of the units will be similar to that under the dividend option. The choice of income options depends not only on the investors requirements for income and growth, but also on his tax status. The deferential tax treatment of dividends and capital gains will also impact the choice made by the investor.
Recent Trends in Mutual Fund Industry

The most important trend in the mutual fund industry is the aggressive expansion of the Foreign owned mutual fund companies and the decline of the companies floated by Nationalized Banks and smaller Private Sector players. Many Nationalized banks got into the mutual fund business in the early nineties and got off to a good start due to the stock market boom prevailing then. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity. Few hired specialized staff and generally chose to transfer staff from the parent organization. The performance of the schemes floated by these funds was not good. Some schemes offered guaranteed returns and their parent organization had to bail out these AMCs by paying large amounts of money as the difference between the guaranteed and actual returns. The service levels were also very bad. Most of these AMCs have not been able to retain staff, float new schemes etc. and it is doubtful whether, barring a few exceptions they have serious plans of continuing the activity in a major way. The experience of some of the AMCs floated by private sector Indian companies was also very similar. They quickly realized that the AMC business, which makes money in the long term and requires deep-pocketed support in the intermediate years. Some have sold out to Foreign owned companies, some have merged with others and there is general restructuring going on. The Foreign owned companies have deep pockets and come in here with the expectation of a long haul. They can be credited with introducing many new practices such as new product innovation, sharp improvement in service standards and disclosure, usage of technology, broker education and support etc. In fact they have forced the industry to upgrade itself and service levels of organizations like UTI have improved dramatically in the last few years in response to the competition provided by these companies.
Future Scenario:
The asset base will continue to grow at an annual rate of about 30 to 35% over the next few years as investors shift their assets from banks and other traditional avenues. Some of the older and private sector players will either close shop or be taken over. In the coming years the market will witness a flurry of new players entering the arena. There will be a large number of offers from various AMCs in the time to come most major players already have presence here and hence these big names would hardly like to get left behind. The mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge its risk and this in turn would be reflected in its NAV. SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives. Importantly, many market players have called on the regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade derivatives.
Global Scenario
Some basic facts
The money market mutual fund segment has a total corpus of $ 1.48 trillion in the U.S. against a corpus of $ 100 million in India. Out of the top 10 mutual funds worldwide, eight are bank- sponsored. Only Fidelity and Capital are non-bank mutual funds in this group. In the U.S. the total number of schemes is higher than that of the listed companies while in India we have just 277 schemes Internationally, mutual funds are allowed to go short. In India fund managers do not have such leeway. Kousali Institute Of Management Studies, Dharwad
In the U.S. about 9.7 million households will manage their assets on-line by the year 2003, such a facility is not yet of avail in India. On- line trading is a great idea to reduce management expenses from the current 2 % of total assets to about 0.75 % of the total assets. 85% of the core customer bases of mutual funds in the top 50-broking firms in the U.S. are expected to trade on-line by 2003. Internationally, on- line investing continues its meteoric rise. Many have debated about the success of e- commerce and its breakthroughs, but it is true that this aspect of technology could and will change the way financial sectors function. However, mutual funds cannot be left far behind. They have realized the potential of the Internet and are equipping themselves to perform better. In fact in advanced countries like the U.S.A, mutual funds buy- sell transactions have already begun on the Net, while in India the Net is used as a source of Information. Such changes could facilitate easy access, lower intermediation costs and better services for all. A research agency that specializes in Internet technology estimates that over the next four years Mutual Fund Assets traded on- line will grow ten folds from $ 128 billion to $ 1,227 billion; whereas equity assets traded on-line will increase during the period from $ 246 billion to $ 1,561 billion. This will increase the share of mutual funds from 34% to 40% during the period. Such increases in volumes are expected to bring about large changes in the way Mutual Funds conduct their business.
Here are some of the basic changes that have taken place since the advent of the Net.
Lower Costs:
Distribution of funds will fall in the online trading regime by 2003. Mutual funds
could bring down their administrative costs to 0.75% if trading is done on- line. As per SEBI regulations, bond funds can charge a maximum of 2.25% and equity funds can charge 2.5% as administrative fees. Therefore if the administrative costs are low, the benefits are passed down and hence Mutual Funds are able to attract mire investors and increase their asset base.
Better advice
Mutual funds could provide better advice to their investors through the Net rather than through the traditional investment routes where there is an additional channel to deal with the Brokers. Direct dealing with the fund could help the investor with their financial planning. In India, brokers could get more Net savvy than investors and could help
the investors with the knowledge through get from the Net New investors would prefer online
Mutual funds can target investors who are young individuals and who are Net savvy, since servicing them would be easier on the Net. India has around 1.6 million net users who are prime target for these funds and this could just be the beginning. The Internet users are going to increase dramatically and mutual funds are going to be the best beneficiary. With smaller administrative costs more funds would be mobilized .A fund manager must be ready to tackle the volatility and will have to maintain sufficient amount of investments which are high liquidity and low yielding investments to honor redemption.
Net-based advertisements
There will be more sites involved in ads and promotion of mutual funds. In the U.S. sites like AOL offer detailed research and financial details about the functioning of different funds and their performance statistics. a is witnessing a genesis in this area . There are many sites such as indiainfoline.com and indiafn.com that are doing something similar and providing advice to investors regarding their investments.
In the U.S. most mutual funds concentrate only on financial funds like equity and debt. Some like real estate funds and commodity funds also take an exposure to physical assets. The latter type of funds are preferred by corporate who want to hedge their exposure to the commodities they deal with. For instance, a cable manufacturer who needs 100 tons of Copper in the month of January could buy an equivalent amount of copper by investing in a copper fund. For Example, Permanent Portfolio Fund, a conservative U.S. based fund invests a fixed percentage of its corpus in Gold, Silver, Swiss francs, specific stocks on various bourses around the world, short term and long-term U.S. treasuries etc. In U.S.A. apart from bullion funds there are copper funds, precious metal funds and real estate funds (investing in real estate and other related assets as well.). In India, the Canada based Dundee mutual fund is planning to launch a gold and a real estate fund before the year-end. In developed countries like the U.S.A there are funds to satisfy everybodys requirement, but in India only the tip of the iceberg has been explored. In the near future India too will concentrate on financial as well as physical funds.
DISTRIBUTION COMPANIES:
A distribution company has several agents and distributors working for it, and is the organisational interface with the mutual fund. It is an institutional agent for a mutual fund, and earns commissions on funds mobilized. Distribution companies are very popular channel with mutual funds today.
Role of Distribution Channels

Mutual funds have been only recently emerging as a big financial intermediary in India. In a vast country like India, taking the message of investing through mutual funds is a big marketing challenge. Investors need to be educated into the benefits and intricacies of mutual fund investing. This challenge can only be taken up by a large number of intermediaries or agents working throughout the country. These fund distributors are clearly the most important link between the fund management industry and investors.
Types of Distribution Channels
Individual Agents:
Use of agents has been the most widely prevalent practice for distribution of funds over
the year. By definition, an agent acts on behalf of a principal in this case, the mutual fund. An agent is essentially a broker between a fund and the investor. In India, we also have the unique system where by a broker has a number of sub brokers working under him. The vast sub brokers working under him. The vast sub broker network ensures a large geographic coverage than otherwise. According to AMFI, there are nearly 100000 agents selling mutual funds and other financial products.
The mutual fund agents are not exclusive but usually sell other financial products as well. The system has the advantage that distributor has a broader knowledge of financial services available, and is there fore potentially in a position to as investment advisors. Investors expect the right kind of recommendations form the agents. From November 2001 SEBI has made it mandatory for newly recruited distributors to pass the AMFI certification test and has recommended the test for existing distributors. As financial market investment options and the variety of mutual fund get
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED more sophisticated, distributors need more and more sophisticated, distributors need more and more information, knowledge and skills.
Distribution Companies:
Availing of the services of established distribution companies is a practice
accepted by mutual funds internationally. This practice evolved with a view to circumvent the huge administrative mechanism required to support a large agent force. Instead of having to deal with several agents, a fund can interact with a distribution company, which has several employees or sub broker under it. A distribution company usually manages distribution for several funds simultaneously and receives a commission for its services. Many private funds have preferred to adopt this practice because of its sophisticated nature and because they benefit from the specialist knowledge and established client contacts of these marketing firms. In India there are about 10 major distribution companies in addition to few hundred smaller ones.
Banks and NBFCS

In developed countries, banks are an important marketing vehicle for mutual funds, given that banks themselves have large depositor base of their own. We can see the opening up of this new channel in India now. Several banks, particularly private and foreign banks are involved in funds distribution by providing services similar to those of distribution companies, on a commission basis. Some NBFCS are also providing such services. All funds do not yet use this channel, nor all banks have yet taken up the funds distribution role, but increasing use of bank networks for mutual fund distribution is almost a certain development.
Direct Marketing
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Direct Marketing means that the mutual funds sell their own products without the use of any intermediaries. Usually, this takes the form of the sale officers and employees of the AMC who approach the investors and accept their contributions directly. However, in India, independent agents may really be treated as a direct marketing channel, in the sense that they do not form a well knit, independent and organized single entity and act more like fund employees. Other channels like the distribution companies or banks or even stockbrokers are clearly distinct and independent intermediaries.
Direct marketing by the funds themselves accounts for a very small percentage of mutual fund sales. In the case of UTI, only 5-6% of total sales come through registered brokers and they do not accept direct subscription from investors.
Mutual funds often use their employees to mobilize funds from high net worth individual and institutional investors.
Sales Practices in the Indian Mutual Fund Market

Agent commissions:
Agents are compensated by the funds through commissions, commission rates. In India there are no rules prescribed for governing the minimum r maximum commissions payable by a fund to its agents. Each fund has discretion to decide the commission structure for its agents. Thus sundaram pays commission to its agents as a basic rates plus an incentive that depends on the volume of business. In recent times funds have been paying commissions in the range of 1.5-2 % on equity oriented funds and 0.4-0.8 % on debt based funds. Higher commissions are generally paid in case of investments that are made with the purpose of taking tax benefits, since investors are required to lock in their funds for a longer period. Kousali Institute Of Management Studies, Dharwad
SEBI Regulations:
Although SEBI does not prescribe the minimum or maximum amount of commission payable by a fund to agents under SEBI (MF) Regulations, 1996, all initial expenses including Brokerage paid to agents are limited to 6 % of resources raised under the schemes. In additions, SEBI regulated open-end funds are authorized to charge the investors are entry & exit loads to cover the fund distribution expenses. These loads should not exceed the percentage specified in the schemes offer document. In case the agents commissions paid by the fund result in over all distribution expenses are to be borne by AMC i.e. the excess cannot be passed on to the unit holders. A no load, charging no entry or exit loads is authorized to charge the schemes with the commissions paid to agents as part of the regular management & marketing expenses allowed by SEBI. SEBI puts a cap on the total expenses (including commissions) that can be charged to a scheme each year. Any excess over allowable expenses is required to be borne by the AMC.
Marker Practice:
Some funds pay the entire commission up- fronts to the agents (i.e. at the time of sale of units), while others pay apart of it up-front and the balance in phases. The latter practice is known as trail commission. Some funds follow the practice of non-paying the balance to the agent if the investor exits the scheme before a specified period or stop paying the commission after the investor exits whenever he does. On the issue of commissions, is that of rebating by the agent to the investor of a part of the commission received from the fund on the sale to that investor. Although agent commissions in the in the mutual industry are not at the same levels as in insurance, investors have come to expect such rebates from agents of all financial products. It is possible in future such rebates might reduce in future & may even disappear. He Kousali Institute Of Management Studies, Dharwad
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED distributors themselves will tend to realize that they provide useful processing and advisory services to investors, & have to incur costs in the process that need to be covered from their well deserve commissions received from the funds
Agents Obligation:
Commission/other arrangements are between the fund and agent/broker. Subbrokers serve as agents of the principle agent and the fund is not answerable for their activities. Clearly, given the need for and widespread existence of a sub-broker network in India their role cannot be washed away. But the distributors need to make the investors aware of whom they are dealing with, whom the commission rebate is received from, & whom should they contact in case of any problems. Agents are well advised to practice honesty & transparency in explaining the commission structure & the timing of any rebate payment to the investors, whose trust will build a long-term relationship.
The AMFI Code of Ethics:

One of the objects of the Association of Mutual Funds in India (AMFI) is to promote the investors interest by defining and maintaining high ethical and professional standards in the mutual fund industry. In pursuance of this objective, AMFI had constituted a Committee under the Chairmanship of Shri A. P. Pradhan with Shri S. V. Joshi, Shri C. G. Parekh and Shri M. Laxman Kumar as members. This Committee, working in close co-operation with Price WaterhouseLLP under the FIRE Project of USAID, has drafted the Code, which has been approved and recommended by the Board of AMFI for implementation by its members. I take opportunity to thank all of them for their efforts. The AMFI Code of Ethics, The ACE for short, sets out the standards of good practices to be followed by the Asset Management Companies in their operations and in their dealings with investors, intermediaries and the public. SEBI (Mutual Funds) Regulation 1996 requires all Asset Management Companies and Trustees to abide by the
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Code of conduct as specified in the Fifth Schedule to the Regulation. The AMFI Code has been drawn up to supplement that schedule, to encourage standards higher than those prescribed by the Regulations for the benefit of investors in the mutual fund industry. This is the first edition of the Code and it may be supplemented further as may be necessary. I hope members of AMFI would implement the code and ensure that their employees are made fully aware of the Code. 1.0 1.1
INTEGRITY:
Members and their key personnel, in the conduct of their business shall observe high standards of integrity and fairness in all dealings with investors, issuers, market intermediaries, other members and regulatory and other government authorities.
1.2
Mutual Fund Schemes shall be organized, operated, managed and their portfolios of securities selected, in the interest of all classes of unit holders and not in the interest of Sponsors Directors of Members Members of Board of Trustees or directors of the Trustee company Brokers and other market intermediaries Associates of the Members A special class selected from out of unit holders
2.0 2.1
Due Diligence:
Members in the conduct of there Asset Management business shall at all time. Render high standards of service. Exercise due diligence. Exercise independent professional judgement.
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED 2.2 Members shall have and employ effectively adequate resources and procedures, which are needed for the conduct of Asset Management activities. 3.0
3.1
Disclosures:
Members shall ensure timely dissemination to all unit holders of adequate, accurate, and explicit information presented in a simple language about the investment objectives, investment policies, financial position and general affairs of the scheme.
3.2
Members shall disclose to unit holders investment pattern, portfolio details, ratios of expenses to net assets and total income and portfolio turnover wherever applicable in respect of schemes on annual basis.
3.3
Members shall in respect of transactions of purchase and sale of securities entered into with any of their associates or any significant unit holder. Submit to the Board of Trustees details of such transactions, justifying its fairness to the scheme. Disclose to the unit holders details of the transaction in brief through annual and half yearly reports.
3.4
All transactions of purchase and sale of securities by key personnel who are directly involved in investment operations shall be disclosed to the compliance officer of the member at least on half yearly basis and subsequently reported to the Board of Trustees if found having conflict of interest with the transactions of the fund.
4.0
4.1
Professional Selling Practices:

Members shall not use any unethical means to sell, market or induce any investor to buy their products and schemes Members shall not make any exaggerated statement regarding performance of any product or scheme. Members shall endeavor to ensure that at all times
4.2 4.3
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Investors are provided with true and adequate information without any misleading or exaggerated claims to investors about their capability to render certain services or their achievements in regard to services rendered to other clients, Investors are made aware of attendant risks in members schemes before the investors make any investment decision, Copies of prospectus, memoranda and related literature is made available to investors on request, Adequate steps are taken for fair allotment of mutual fund units and refund of application moneys without delay and within the prescribed time limits and, Complaints from investors are fairly and expeditiously dealt with. 4.4 Members in all their communications to investors and selling agents shall Not present a mutual fund scheme as if it were a new share issue Not create unrealistic expectations Not guarantee returns except as stated in the Offer Document of the scheme approved by SEBI, and in such case, the Members shall ensure that adequate resources will be made available and maintained to meet the guaranteed returns. Convey in clear terms the market risk and the investment risks of any scheme being offered by the Members. Not induce investors by offering benefits, which are extraneous to the scheme. Not misrepresent either by stating information in a manner calculated to mislead or by omitting to state information which is material to making an informed investment decision.
5.0 5.1
Investment Practice:
Members shall manage all the schemes in accordance with the fundamental investment objectives and investment policies stated in the offer documents and take investment decisions solely in the interest of the unit holders.
5.2
Members shall not knowingly buy or sell securities for any of their schemes from or to
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Any director, officer, or employee of the member Any trustee or any director, officer, or employee of the Trustee Company
6.0
6.1
Operations:
Members shall avoid conflicts of interest in managing the affairs of the schemes and shall keep the interest of all unit holders paramount in all matters relating to the scheme.
6.2
Members or any of their directors, officers or employees shall not indulge in front running (buying or selling of any securities ahead of transaction of the fund, with access to information regarding the transaction which is not public and which is material to making an investment decision, so as to derive unfair advantage).
6.3
Members or any of their directors, officers or employees shall not indulge in selfdealing (using their position to engage in transactions with the fund by which they benefit unfairly at the expense of the fund and the unit holders).
6.4
Members shall not engage in any act, practice or course of business in connection with the purchase or sale, directly or indirectly, of any security held or to be acquired by any scheme managed by the members, and in purchase, sale and redemption of units of schemes managed by the members, which is fraudulent, deceptive or manipulative.
6.5
Members shall not, in respect of any securities, be party to Creating a false market, Price rigging or manipulation Passing of price sensitive information to brokers, Members of stock exchanges and other players in the capital markets or take action, which is unethical or unfair to investors.
6.6
Employees, officers and directors of the Members shall not work as agents/ brokers for selling of the schemes of the Members, except in their capacity as employees of the Member or the Trustee Company.
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED 6.7 Members shall not make any change in the fundamental attributes of a scheme, without the prior approval of unit holders except when such change is consequent on changes in the regulations. 6.8 Members shall avoid excessive concentration of business with any broking firm, and excessive holding of units in a scheme by few persons or entities.
7.0
7.1
Reporting Practices:
Members shall follow comparable and standardized valuation policies in with the SEBI Mutual Fund Regulations.
7.2 Accordance Members shall follow uniform performance reporting on the basis of total return. 7.3 Members shall ensure scheme wise segregation of cash and securities accounts. 8.0
Unfair Competition:
Members shall not make any statement or become privy to any act, practice or competition, which is likely to be harmful to the interests of other Members or is likely to place other. Members in a disadvantageous position in relation to a market player or investors, while competing for investible funds.
9.O
Observance of Statutes, Rules and Regulations:

Members shall abide by the letter and spirit of the provisions of the Statutes, rules and regulations, which may be applicable, and relevant to the activities carried on by the members.
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED 10.0
Enforcement: Members shall
Widely disseminate the AMFI Code to all persons and entities covered by it Make observance of the Code a condition of employment Make violation of the provisions of the code, a ground for revocation of contractual arrangement without redress and a cause for disciplinary action Require that each officer and employee of the Member sign a statement that he/she has received and read a copy of the Code Establish internal controls and compliance mechanisms, including assigning supervisory responsibility Designate one person with primary responsibility for exercising compliance with power to fully investigate all possible violations and report to competent authority File regular reports to the Trustees on a half yearly and annual basis regarding observance of the Code and special reports as circumstances require Maintain records of all activities and transactions for at least three years, which records shall be subject to review by the Trustees Dedicate adequate resources to carrying out the provisions of the Code
Role of Brokers in a mutual fund:

Brokers support the investment management functions of the mutual fund, by enabling the investment managers to buy and sell securities. Brokers are registered members of stock exchanges. They charge commission for their services. In many cases, brokers also provide investment managers with research reports on the performance of various companies and industrial sector and investment recommendations. Brokers also are important source of information to fund managers.
Role of selling and distributing agents:

Mutual funds are reached to investors across the country through selling agents distributors. Selling agents are usually individuals who bring the investors fund for a commission. Distributors are the institutions that appoint agents and other mechanisms to mobilize funds from investors. Banks which function as distributors for example tend to offer mutual fund products to their chosen customers. Some agencies are direct marketing agents to sell mutual fund products. Some agencies cross sell mutual funds to clients, to whom they are already offering other financial products. Most agents and distributors are paid commissions on the funds they mobilize from investors. These commissions are split into initial commission which is paid on mobilization of funds and trail commission which is paid depending on the length of the investor in the mutual fund.
COMPANY PROFILE
BIRLA SUN LIFE FINANCIAL SERVICES LTD.
VISION: To be the most trusted name in investment and wealth management, to be the preferred employer in the industry and to be a catalyst for growth and excellence of the asset management business in India. MISSION: To consistently pursue investor's wealth optimization by:

Achieving superior and consistent investment results. Creating a conducive environment to hone and retain talent. Providing customer delight. Institutionalizing system-approach in all aspects of functioning. Upholding highest standards of ethical values at all times.
Birla Sun Life Financial Services offers a range of financial services for resident Indians and Non Residents Indians. Birla Sun Life Distribution Co. Ltd. a part of the Joint Venture between The Aditya Birla Group and Sun Life Financial of Canada. The synergy of these two accomplished conglomerates brings the global financial know-how and local market insight. It is the aim of the company to offer diverse and top quality financial services to customers. The Mutual Fund and Insurance companies provide wealth management and protection products to customers while the Distribution and
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Securities companies provide brokerage and trading services for investment in equities, debt securities, fixed deposits, etc. It is said that: "To acquire wealth is difficult, to preserve it more difficult, but to nourish it wisely, the most difficult of all." The companys commitment to excellence along with a roots up approach to research and analysis, coupled with technology driven processes has enabled them to excel at this challenging task and in a span of four years emerge as one of the leading distribution houses of the country.
"Knowledge is a treasure but practice is the key to it" The company believes that the desire for knowledge increases with the acquisition of it. At Birla Sun Life Distribution they make the best use of intellect and expertise putting knowledge to good practice. As and when and where investors need it. For company the concept of perfect service is contently expanding. This along with transparent business ethics, inspired and innovative solutions is what their investors have come to expect from them. A fact, which has been reaffirmed by recognition and awards, conferred on them by the leading names of the India Financial Services Industry.
Birla Sun Life Financial Services
Birla Sun Life Mutual Fund
Birla Sun Life Insurance
Birla Sun Life Distribution
Birla Sun Life Asset Management Company Limited:

Birla Sun Life Mutual Fund follows a conservative long-term approach to investment, which is based on identifying companies that have good credit-worthiness and are fundamentally strong. It places a lot of emphasis on quality of management and risk control. This is done through extensive analysis that includes factory visits and field research. It has one of the largest team of research analysts in the industry. The company is one of India's leading, private mutual funds with a large customer base. It has been recognised nationally with coveted awards.
Birla Sun Life Insurance Company Limited:

Insurance is not about something going wrong. It's often about things going right. One of the wonders of human nature is that we never believe anything can actually go wrong. Surely, life has its share of ifs. At Birla Sun Life however, company believe it has its equally pleasant share of buts as well. Birla Sun Life stand committed to helping people realize those happy moments which make a life. Be it living the same lifestyle in their post retirement days or providing a secure future for their loved ones, in case something happens to them.
Birla Sun Life Distribution Company Limited:
VISION: To be the first performance of our customers as a integrated provider of complete financial services through superior value creation and technology.
At Birla Sun Life Distribution, they put knowledge, expertise and experience to good use to preserve, nurture and nourish your wealth. For customers today and tomorrow. Key Strengths: Research based advice from the special research team. Literature for the update of knowledge, this is the unique feature of company where no other company provides literature. Provides the fund updates on the weekly and monthly basis. The company has become one of the biggest distribution company in the shortest period of time i.e 6 years. Country wide net work. Provide wide range of services.
Achievements of BSDL: Leading Distribution House in the Country. Over 1,50,000 customers countrywide. Kousali Institute Of Management Studies, Dharwad
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED 5000 plus business associates. Business across all important segments: Institutional, Private Clients Group, Retail and channel partners. National presence in 13 cities. Leading corporate agent of Birla Sun Life Insurance.
Age Group of Channel Partner
Age Group Up to 30 31 to 40 41 to 50 Above 50
No. of Respondance 27 46 21 6
A g e G r o u p O f C h a n n e l P a r tn e r s
60 40 20 0 U p to 3 0 3 1 to 4 0 4 1 to 5 0 A ge gr oup A bove 50 27 46 21 6 N o. of R es pondanc e
Conclusion: It is clear from the above table that 46% of the subbrokers are belonging to age group of 31 years to 40 years, 27% of channel partners are belonging to the age group of
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Up to 30 Years, and only 6% of the channel partners are belonging to the age group of Above 50 years.
Number of years being Channel Partner with Birla Sun Life Distribution Ltd.
No. of Years being Channel Partner Less than 1 Year 1 Year to 2 Years 2 Years to 3 Years Above 3 Years
No. of Channel Partners 26 42 19 13
No. of ye ars be ing Channe l Partne r
1 3% 19%
26% Less than 1 Y ear 1 Y ear to 2 Y ears 2 Y ears to 3 Y ears A bove 3 Y ears 42%
Conclusion: From the above graph it is clear that 42% of the channel partners joined BSDL from last 2 years and 26% of the channel partners joined BSDL since last one year, and only 13% of the channel partners are with BSDL since above 3 years.
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Most of the channel partners are with BSDL from last two years, as BSDL has recently came into being.
Whether the Job full time or part time

Type of job Full time Part time No. of Channel Partners 74 26
Type of job of Channel Partners
26%
Full tim e P tim art e 74%
Conclusion:
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED From the above graph it is clear that 74% of the channel partners are doing full time job and only 26% are doing as a part time. The part time channel partners are mainly working people and professionals. Most of channel partners of BSDL are full time workers.
The Number of hours spend by Channel Partners every day on this Job
Hours spend a day in Business 1 Hour per Day 2 Hour per Day 3 Hour per Day 4 Hour per Day 5 Hour per Day 6 Hour per Day TOTAL No. of Channel Partners 12 24 30 22 10 2 100
H o u r s s p e n d e v e r y d a y in b u s in e s s
40 30 20 10 0 H o u r s spe n d a da y 1hr/ day 2 h r / da y
3 hrs / day 4 hrs /day 5 hrs / day 6 hrs / day
Conclusion: From the above graph it is clear that 12 channel partners spend 1 hour a day, 24 channel partners spend 2 hours a day, 30 channel partners spend 3 hours a day, 22 channel partners spend 4 hours a day, 10 channel partners spend 5 hours a day and only 2 channel partners spend 6 hours a day.
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Considering overall average the channel partners spend 3 hours a day with mutual funds of Birla Sun Life Distribution Limited.
Frequency of Business by Channel Partners to BSDL

Frequency of Business Once in Quarter Once in Month Once in Week Regularly i.e once in 2-3 days TOTAL No. of Channel Partners 24 20 35 21 100
Frequency of giving businees to BSDL
Once in 2-3 days Frequency Once in Week Once in Month Once in Quarter 0 5 10 15 No. of 20 CP 25 30 35
Conclusion: From the above graph it is clear that 24% despondence give business to BSDL once in quarter, 20% of cannel partners give business once in month, 35% of channel partners give business once in week and 21% of channel partners give business regularly i.e once in 2 to 3 days.
Main Clients of Channel Partners

No. of Channel Partners 25 34 23 12 6 Their Main Clients Working People Business People Professionals Retired People Other People
Main Clients of Channel Partners

6%
12%
25%
23% 34%
W orking People Retired People
Business People Professionals Other People
Conclusion: From the above table it is clear that according to 25% of channel partners their main clients are working people, of 34% channel partners main clients are business people. According to 23% of channel partners their main clients are professionals, and of 12%channel partners main clients are retired people and of 6% channel partners main clients are other people.
Monthly Business of Channel Partners in Equity Funds and Debt Funds
Amount Up to 1 Lakh 1Lakh- 2 Lakhs 2Lakhs 5 Lakhs Above 5 Lakhs TOTAL
Number of Channel Partners Equity Fund Debt Fund 55 58 20 18 14 14 11 10 100 100
Monthly Business of Channel Partners

60 50 No. of 40 Channe l 30 Partne rs 20 10 0
Up to 1 1Lakh- 2 2Lakhs Above 5 Lakh Lakhs 5 Lakhs Lakhs Amount
Number of Channel Partners Equity Fund Number of Channel Partners Debt Fund
Conclusion: Kousali Institute Of Management Studies, Dharwad
For Equity Fund: 55% of channel partners give worth up to Rs. 1 Lakh business per month in equity fund, 20% channel partners give 1 lakh to 2 lakhs, 14% of channel partners give 2 lakhs to 5 lakhs and 11% of channel partners give business above 5 lakhs in equity fund.
For Debt Fund: 58% of channel partners give business up to 1 lakh per month in debt fund, 18% of channel partners give 1 lakh to 2 lakhs per month, 14% of channel partners give 2 lakhs to 5 lakhs per month and 10% of channel partners give business above 5 lakhs per month in debt funds.
From above it is clear that the channel partners do business in almost same quantum in both equity fund and debt fund.
Opinion of Channel Partners Regarding Investment Through BSDL

Better To Invest Through BSDL Yes No No. of Channel Partners 65 35
Be tte r to inv e st through BSDL
No, 35%
Y es, 65%
Y es
No
Conclusion: According to 65% of channel partners it is better to invest in Mutual Funds through Birla Sun Life Distribution Ltd, this is mainly because they will enjoy the benefits of services offered by BSDL such as Regular monthly updates, Research based advice, Literature to update the knowledge, etc. And only 35% of channel partners think that there is no difference investing directly or investing through BSDL.
Ranking of Services of BSDL by the Channel Partners

Services of BSDL Research Based Advice Monthly Fund Updates Literature to Update Knowledge Brokerage commission Handling Service Queries 1 Rank 54 20 11 3 12
st
2 16 31 35 3 15
nd
No. of Channel Partners Rank 3rd Rank 4th rank 19 10 32 7 24 22 7 28 18 34
5th Rank 1 10 8 59 21
Ranking of BSDL Services

No. of Respondance 70 60 50 40 30 20 10 0 1st Rank 2nd Rank 3rd Rank 4th rank 5th Rank Research Based Advice Monthly Fund Updates Literature to Update Knowledge Brokerage commission Handling Service Queries
No. of Channel Partners Ranks
Conclusion: From the above table it is clear that 54% of channel partners given 1st rank to research based advice as they prefer it as important than other services. 20% of channel partners given 1st rank to monthly fund updates as they consider it as an important service and only 3% of channel partners are given 1st rank to brokerage commission. 59% of the channel partners are given 5th rank to brokerage commission as most of the channel partners are dissatisfied with the commission given by the BSDL.
Satisfaction Level of Channel Partners Towards the Services Provided by BSDL
Parameters A B C D E
Fully Satisfied 48 30 3 1 21
Satisfied 20 40 41 5 42
Neutral 18 8 45 12 25
Not Satisfied 8 7 6 51 8
Fully Dissatisfied 6 5 5 31 4
S a tisfa ctio n L e v el o f S erv ic es o f B S D L

60 50 48 40 N O . of C P 30 20 10 0 A 20 18 86 87 B 5 3 C P arame te rs Fully S atis fied S atis fied Neutral Not S atis fied Fully D is s atis fied 65 1 40 30 12 5 D E 45 41 51 42 31 21 25 8 4
Conclusion: The above table and graph can be explained as follows:
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Research Based Advice: Out of 100, 48 channel partners are fully satisfied with the research based advice of BSDL and 20 channel partners are satisfied and only 6 channel partners are not at all satisfied with the research based advice. Thus the research based advice provided by the BSDL is useful to most of the channel partners. Monthly Fund Updates: 30% of channel partners are fully satisfied with fund updates, 40% of channel partners are satisfied and 5% are fully dissatisfied and 7% are not satisfied with the monthly updates service provided by BSDL. Here most of the channel partners are satisfied with this service which helps them to update customers knowledge. Literature to Update Knowledge: 41% of channel partners are satisfied and 45% of channel partners are neutral towards the literature to update knowledge, 3% of channel partners are fully satisfied and only 5% of them are filly dissatisfied. Here most of the channel partners are satisfied or neutral towards this service. Brokerage Commission: 51% of channel partners are not satisfied and 31% of channel partners fully dissatisfied with the brokerage commission, 12% of them given the neutral opinion, 5% of them are satisfied and only 1% of them are fully satisfied with brokerage commission of BSDL. Here most of the channel partners are not satisfied or fully dissatisfied with the brokerage commission of BSDL, which means the channel partners expect higher brokerage from BSDL. Handling Service issues like a/c statements, etc.: 42% of channel partners are satisfied, 21% of them are fully satisfied and 25% of them are given the neutral opinion towards the handling service issues and only 4% channel partners are fully dissatisfied with this service. Here most of the channel partners are satisfied with this service provided by BSDL which proves to be useful.
Overall Satisfaction Level of Channel Partners
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Rank given by Channel Partners Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Rank 6 Rank 7 Rank 8 Rank 9 Rank 10 No. of Channel Partners 5 8 24 38 10 5 7 3 -
Oversll Satisfaction of Services of BSDL

40 35 30 25 20 15 10 5 0 38 24 Series1 5 8 10 5 7 3
No. of CP
Conclusion: Here Rank 1 represents fully satisfied and Rank 10 represents fully dissatisfied. 38% of channel partners ranked BSDL as 4 and 24% of channel partners as Rank 3. 5% of them ranked 1 and none of them Ranked 9 and 10. This shows that most of the channel partners are satisfied with overall service provided by BSDL.
Influence of BSDL Brand Name in getting Business
Ra nk 1 Ra nk 2 Ra nk 3 Ra nk 4 Ra nk 5 Ra nk 6 Ra nk 7 Ra nk 8 Ra nk 9 Ra nk 10
Ranks
Ranks given by Channel Partners Rank1 Rank2 Rank3 Rank4 Rank5
No. of Channel Partners 4 14 55 20 7
Influence of BSDL in business of CP
7% 20%
4%
14%
55%
Rank1
Rank2
Rank3
Rank4
Rank5
Conclusion: Here Rank1 represents Not at all Helpful and Rank 5 Represents Very Much Helpful. 55% of the channel partners have given Rank 3 and 20% of channel partners ranked 4 and 7% of them ranked 5. This shows that BSDL Brand Name helps to few channel partners in their business. Most of the channel partners are given neutral response regarding the Brand Name of BSDL.
Rating of BSDL in comparison with Other Service Providers

Type of Service Much Worse No. of Channel Partners 4
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Worse About the Same Better Much Better 5 45 39 12
Rating of BSDL Comparing with Others

45
50 40 No. of C P 30 20 10 0
39
12 4 5
Ranks given by CP Much Worse Worse About the Sam e Better Much Better
Conclusion: Here 40% of channel partners say that the service is same as others, 39% of channel partners said that the service is better, 12% of them said that service is much better and only 4% of them said that service is Much Worse provided by BSDL when compared to other service providers. This shows that most of the channel partners consider that service of BSDL is same or better as that of other service providers
Need of Improvements in Services of BSDL

Need of Improvements Yes No No. of Channel Partners 91 9
Need for Improvements
Yes No
91
Conclusion: Only 9% of channel partners say that improvements are not required and 91% of the channel partners say that there is need of improvements in the services provided by BSDL. It is clear that most of the channel partners need improvements in the services of the BSDL.
List of Improvements Needed

Improvements Needed Timely Payment of Commission Faster Resolution of Queries Relating to Commission Better Commission No. of Channel Partners 28 12 42 Percentage 30% 14% 46%
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Better Web Based Services Collection of Applications from Home TOTAL 8 1 91 9% 1% 100%
N e e d o f Im p ro ve m e n ts in S e rvice s o f B S D L
Home Serv ic es , 1% Better W eb Serv ic es , 9% Timely Pay ment of Comm., 30%
Better Commn., 46%
Fas ter Soln of Queries , 14%
Conclusion: Form the above table it is clear that: 40% of the channel partners need improvements in brokerage commission structure of BSDL. 35% of channel partners need timely payment of commission from BSDL. 15% of channel partners need faster solution for their various queries. 10% channel partners need better web based services from BSDL.
Findings
After having met 100 channel partners and interacting with them regarding the services provided by Birla Sun Life Distribution Co. Ltd. the opinion expressed by these channel partners have been very significant. Based on the views expressed by these respondents and the analysis the findings of the project were as follows. Kousali Institute Of Management Studies, Dharwad
46% of channel partners are belonging to the age group of 31 years to 40 years. Channel partners do business in almost same quantum in both equity fund and debt fund. Channel partner consider research based advice, monthly fund update &handling service issues like A/C statement, etc as the major/important service provided by BSDL.
Channel partners are fully satisfied with research based advice. Channel partners are satisfied with monthly fund update and handling service quarries like a/c statements. Channel partners are neither satisfied not dissatisfied with literature to update knowledge. Channel partners are dissatisfied with brokerage commission of BSDL. Channel partners need improvement in the service of BSDL.
Recommendations
As almost all channel partners want the brokerage commission to be improved thus the company has to improve the brokerage commission.
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Most of the channel partners are expecting earlier payment of commission to them so the company has to make the payment of commission at the beginning of the month rather than later part of the month as they are doing now. The company has to make faster resolution of quarries regarding commission, A/C statements, etc. As the channel partners need improvement in the web based service, hence the company should improve the web based services. The information provided by the web should be reliable and up to date. As most of the channel partners are not aware about the importance literature to update knowledge, the company should increase the awareness about the literature among the channel partners. Some channel partners are not aware of the service such as Insurance, IPO, and Bonds, provided by BSDL. So the company should increase the awareness about the service.
QUESTIONNAIRE
Dear Sir / Madam, I am the student of Kousali Institute of Management Studies, Dharwad. I am conducting survey on SATISFCTION OF CHANNEL PARTNERS TOWARDS THE SERVEICES PROVIDED BY BIRLA SUN LIFE DISTRIBUTION CO.
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED LTD. Please find some time to fill this questionnaire. I assure you that the information collected will be kept confidential and will be used only for academic purpose. 1) Name & Address _________________________________________ _________________________________________ 2) Phone no. 3) Age: (R) ____________________ Up to 30 31- 40 Years Mob __________________
41- 50 Years above 50 Years
4) For how many years you are being channel partner with BSDL Less than 1 year 1 year 2 years 5) Are you doing this job full time? Yes No If No what is your main occupation ________________________ 6) How many hours a day you spend in this business ____________ 7) How often do you give business to BSDL? Once in Quarter Once in Month Once in Week Regularly (Every 2 - 3 days) 2 years 3 years above 3 years
8) Who are your main clients? Working People Business People Professionals Retired People
Others (Specify) ____________________ 9) What is your monthly business in EQUITY SCHEME?
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Up to 1 Lakh 1 Lakh 2 Lakhs 2 Lakhs 5 Lakhs Above 5 Lakhs
10) What is your monthly business in DEBT SCHEME? Up to 1 Lakh 1 Lakh 2 Lakhs 2 Lakhs 5 Lakhs Above 5 Lakhs
11) Do you consider investing through Birla Sun Life Distribution is better? Yes No
12) Rank the following services of BSDL according to your preference a) Research based advice b) Monthly fund Updates c) Literature to update your knowledge d) Brokerage Commission e) Handling service issues like A/C statements etc. 13) Tick your satisfaction level of the following services provided by BSDL Fully Satisfied Dissatisfied a) Research advice ______ b) Mtly Fund Updates ______ c) Literature ______ d) Brokerage e) Handling issues ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ ______ Satisfied Neutral Not Fully Satisfied
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED 14) Tick overall satisfaction level of services provided by the BSDL Fully Satisfied 1 2 3 4 5 6 7 8 9 Fully Dissatisfied 10
15)
How much does the Birla Sun Life Distribution Ltd Brand name helps you in your business Not at all Helpful 1 2 3 4 Very Much Helpful 5
16) What is overall rating of BSDL in comparison with other service providers Much Worse Worse About the Same Better Much Better
17) Do you want any improvements in the services of BSDL? Yes No
18) List out the improvements you need a) ________________________________ b) ________________________________ c) ________________________________
BIBLIOGRAPHY
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED Books Work on Mutual Funds by AMFI Invest India Mutual Fund Handbook by Uma Shashikant. Marketing Research by Donald Tull and Hawkins Statistics for Management by Richard I Levin and David. S. Rubin. Financial Management by M.Y. Khan and P.K.Jain. Web sites www.amfi.com www.mutualfundindia.com www. valueresearchonline.com www.indiainfoonline.com www.sundarammutual.com
www.birlasunlife.com
DECODING SHEET
1) AGE 1- Up to 30 Years 2- 30 - 40 Years 3- 40 50 Years 4- Above 50 Years 2) NO. OF YEARS OF BEING CHANNEL PARTNER 1- Up to 1 Year 2- 1 2 Years 3- 2 3 Years 4- Above 3 Years
3) FULL TIME JOB 1- Yes 0- No
4) OFTEN OF GIVING BUSINESS TO BSDL 1- Once in a Quarter 2- Once in a month 3- Once in a week 4- Regularly
5) MAIN CLIENTS A- Working People B- Business People C- Professionals D- Retired People E- Others
6) MONTHLY BUSINESS IN EQUITY 1- Up to 1 Lakh 2- 1- 2 Lakhs 3- 2 -5 Lakhs 4- Above 5 Lakhs
7) MONTHLY BUSINESS IN DEBT 1- Up to 1 Lakh 2- 1- 2 Lakhs 3- 2 -5 Lakhs 4- Above 5 Lakhs
8) INVESTING THROUGH BSDL 1- Yes 2- No
9) BSDL SERVICE PREFERENCE
BIRLA SUN LIFE DISTRIBUTION COMPANY LIMITED A- Research based advice B- Monthly fund Updates C- Literature to update your knowledge D- Brokerage Commission E- Handling service issues like A/C statements etc
10) SATISFACTION OF SERVICES OF BSDL A- Research advice B- Monthly fund Updates C- Literature D- Brokerage E- Handling service 1- Fully Satisfied 2- Satisfied 3- Neutral 4- Not satisfied 5- Fully Dissatisfied
11) RATING OF BSDL COMPARING OTHERS 1- Much Worse 2- Worse 3- About the same 4- Better 5- Much Better 12) ANY IMPROVEMENTS 1- Yes 2- No

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Kousali Institute Of Management Studies, Dharwad