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A

Project Report on
AWARENESS OF DIFFERENT FINANCIAL PRODUCTS SPECIAL
REFERENCE TO MUTUAL FUNDS AMONG FINANCIAL ADVISORS
IN
NJ INDIA INVEST PVT LTD., VIJAYAWADA
A
Submitted to the
VR SIDDHARTHA ENGINEERING COLLEGE
in partial fulfillment of the award of the degree of
MASTER OF BUSINESS ADMINISTRATION

Submitted by

K.MAHESH REDDY
Under the Guidance of
Mr.NARENDAR MBA (Company Guide)
CERTIFICATE

This is to certify that the project work entitled “AWARENESS OF DIFFERENT


FINANCIAL PRODUCTS SPECIAL REFERENCE TO MUTUAL FUNDS
AMONG FINANCIAL ADVISORS” is a bona fide work carried out by K.MAHESH
REDDY, Enrollment:Y9BU72014 student of Master of Business Administration, VR
SIDDHARTHA ENGINEERING COLLEGE during the year 2009-10 in fulfillment
of the award of the degree of Master of Business Administration and that the project has
not been formed for the basis for the award and previously of any Degree, Diploma,
Associate ship or any other similar title under my guidance.

Place:VIJAYAWADA
Company letter head/emblem required

CERTIFICATE

This is to certify that Mr.K.MAHESH REDDY has successfully completed the


project work entitled “AWARENESS OF DIFFERENT FINANCIAL PRODUCTS
SPECIAL REFERENCE TO MUTUAL FUNDS AMONG FINANCIAL
ADVISORS” in this organization from 2009 to 2009.

The project was completed to our satisfaction and he showed keen interest and
dedicated to the project during the above period. We place our appreciation to her best
efforts.

BRANCH
MANAGER
DECLARATION

I, K.MAHESH REDDY hereby declare that the project work entitled “AWARENESS
OF DIFFERENT FINANCIAL PRODUCTS SPECIAL REFERENCE TO
MUTUAL FUNDS AMONG FINANCIAL ADVISORS” has been successfully and
this project report submitted towards the partial fulfillment of the requirement of the
award of “MASTER OF BUSINESS ADMINISTRATION”. This project report has
not been submitted to any other university or institution for the award of degree.

Place: VIJAYAWADA

Date:

Signature

(K.MAHESH REDDY)
ACKNOWLEDGEMENT

I take this opportunity to express my gratitude to the management of NJ INDIA


INVEST PVT LTD., VIJAYAWADA who allowed me to work in this project.
I am indebted to Mr. Narendra, Branch Manager and all the staff members of the
organization for extending their cooperation and support.

K.MAHESH REDDY
ENROLLMENT NO:Y9BU72014
CONTENTS

I. INTRODUCTION

1.1. Meaning of Mutual Funds


1.2. History & Growth of Mutual Funds
1.3. Components of Mutual Funds
1.4. Types of Mutual Funds
1.5. Risk in Mutual Funds
1.6. Different Mutual funds companies in the market

II. OBJECTIVE AND METHODOLOGY


2.1. Objectives
2.2. Research Methodology
2.3. Scope and limitations of Mutual funds

III. ORGANISATION PROFILE


3.1. Profile of the company
3.2. Growth of the company
3.3. Objectives of the Company
3.4. Organization Structure
3.5 Products of the Company
3.6. Strengths of the company

IV. ANALYSIS OF DATA


4.1. Data Collection
4.2. Analysis of data
4.3. Trend analysis and diagrams
V. FINDINGS, CONCLUSIONS AND SUGGESTIONS
5.1. Findings
5.2. Conclusions
A
PROJECT REPORT
ON
AWARENESS OF DIFFERENT FINANCIAL PRODUCTS SPECIAL
REFERENCE TO MUTUAL FUNDS AMONG FINANCIAL ADVISORS
IN
NJ INDIA INVEST PVT LTD., VIJAYAWADA

PROJECT PROPOSALS (SYNOPSYS)

CHAPTER I INTRODUCTION TO THE CONCEPT

CHAPTER 2 OBJECTIVE AND METHODOLOGY

CHAPTER 3 ORGANISATION PROFILE

CHAPTER 4 ANALYSIS OF DATA

CHAPTER 5 FINDINGS, CONCLUSIONS AND SUGGESTIONS

BIBILOGRAPHY:
CHAPTER 1
INTRODUCTION TO MUTUAL FUNDS

1.1. MEANING OF MUTUAL FUNDS

“Mutual fund is a common pool of money collected from investors and invested

behalf of investors in marketable securities. Thus, generated returns would be passed

back to investors”.

Mutual fund companies raise money from investors to invest in stocks, bonds and

other securities. It is a package made up of several individual investments. When those

investments gain or lose value, the investor gain or lose as well. When they pay

dividends, investors get income. Mutual funds also offer professional management and

diversification.

Mutual funds may be open-end or closed-end funds. The term "mutual funds" is used

most often to mean open-end funds. Open-end funds issue new shares continuously as

investors buy them. Investors redeem their shares directly from the fund. Closed-end

funds issue a fixed number of shares that the fund may redeem only upon termination of

the fund's trust.

Shareholders in a close-end fund may, however, sell their shares through a broker on

the secondary market to other investors.


1.2 history and growth of mutual funds

The origin of mutual fund industry in India is with the introduction of the concept

of mutual fund by UTI in the year 1963. Though the growth was slow, it accelerated from

the year 1987 when non-UTI players entered the industry. In the past decade, Indian

mutual fund industry had seen dramatic improvements, both quality wise as well as

quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets

under Management (AUM) were Rs. 67bn. The private sector entry into the fund family

raised the AUM to Rs. 470 bn in March 1993 and then to Rs1, 540 bn in 2004.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is

less than the deposits of SBI alone which constitute less than 11% of the total deposits

held by the Indian banking industry. The main reason of its poor growth is that the

mutual fund industry in India is new in the country. Large sections of Indian investors are

yet to be new with the concept. Hence, it is the prime responsibility of all mutual fund

companies, to market the product effectively and efficiently.

The mutual fund industry can be broadly divided into four phases according to the

development of the sector. Each phase is briefly described here under.

First Phase 1964-87:

Unit Trust of India (UTI) was established in 1963 by an Act of Parliament. It was set up

by the Reserve Bank of India. 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 AUM and with the setting up of 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.1,53,108 crores under 421 schemes. Ed 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):

This period witnessed the entry of non-UTI mutual funds. SBI Mutual Fund was the first

followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug

89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual

Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as

assets under management.

Third Phase - 1993-2003 (Entry of Private Sector Funds):

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund

industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the

year in which the first Mutual Fund Regulations came into being, under which all mutual

funds, except UTI were to be registered and governed.


The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first

private sector mutual fund registered in July 1993. The 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 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 AUM and with the setting up of 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.1,53,108 crores under 421 schemes. Rs.44,541

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

Fourth Phase - since February 2003:

This phase had bitter experience for UTI. It was bifurcated into two separate entities. One

is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29, 835 crores
(as on January 2003). The Specified Undertaking of Unit Trust of India, functions under

an administrator 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

AUM and with the 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

AUM and with the setting up of 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.1, 53,

108 crores under 421 schemes. Setting up of 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.1, 53, 108 crores under 421 schemes.


Types OF Mutualfunds:

Open-end fund:

The term mutual fund is the common name for what is classified as an open-end

investment company by the SEC. Being open-ended means that, at the end of every day,

the fund issues new shares to investors and buys back shares from investors wishing to

leave the fund.

Mutual funds must be structured as corporations or trusts, such as business trusts, and any

corporation or trust will be classified by the SEC as an investment company if it issues

securities and primarily invests in non-government securities.

An investment company will be classified by the SEC as an open-end investment

company if they do not issue undivided interests in specified securities (the defining

characteristic of unit investment trusts or UITs) and if they issue redeemable securities.
Registered investment companies that are not UITs or open-end investment companies

are closed-end funds. Neither UITs nor closed-end funds are mutual funds (as that term is

used in the US).

Exchange-traded funds:

A relatively recent innovation, the exchange-traded fund or ETF, is often

structured as an open-end investment company. ETFs combine characteristics of both

mutual funds and closed-end funds. ETFs are traded throughout the day on a stock

exchange, just like closed-end funds, but at prices generally approximating the ETF's net

asset value.

Most ETFs are index funds and track stock market indexes. Shares are issued or

redeemed by institutional investors in large blocks (typically of 50,000). Most investors

purchase and sell shares through brokers in market transactions. Because the institutional

investors normally purchase and redeem in in kind transactions, ETFs are more efficient

than traditional mutual funds (which are continuously issuing and redeeming securities

and, to effect such transactions, continually buying and selling securities and maintaining

liquidity positions) and therefore tend to have lower expenses.

Exchange-traded funds are also valuable for foreign investors who are often able to buy

and sell securities traded on a stock market, but who, for regulatory reasons, are limited

in their ability to participate in traditional U.S. mutual funds.

Equity funds:

Equity funds which consist mainly of stock investments, are the most common

type of mutual fund. Equity funds hold 50 percent of all amounts invested in mutual
funds in the United States. Often equity funds focus investments on particular strategies

and certain types of issuers.

Growth vs. value:

Another distinction is made between growth funds, which invest in stocks of

companies that have the potential for large capital gains, and value funds, which

concentrate on stocks that are undervalued. Value stocks have historically produced

higher returns; however, financial theory states this is compensation for their greater risk.

Growth funds tend not to pay regular dividends.

Income funds tend to be more conservative investments, with a focus on stocks

that pay dividends. A balanced fund may use a combination of strategies, typically

including some level of investment in bonds, to stay more conservative when it comes to

risk, yet aim for some growth.

Index funds versus active management:

An index fund maintains investments in companies that are part of major stock (or

bond) indices, such as the S&P 500, while an actively managed fund attempts to

outperform a relevant index through superior stock-picking techniques.

The assets of an index fund are managed to closely approximate the performance of a

particular published index. Since the composition of an index changes infrequently, an

index fund manager makes fewer trades, on average, than does an active fund manager.

For this reason, index funds generally have lower trading expenses than actively

managed funds, and typically incur fewer short-term capital gains which must be passed

on to shareholders. Additionally, index funds do not incur expenses to pay for selection
of individual stocks (proprietary selection techniques, research, etc.) and deciding when

to buy, hold or sell individual holdings. Instead, a fairly simple computer model can

identify whatever changes are needed to bring the fund back into agreement with its

target index.

Certain empirical evidence seems to illustrate that mutual funds do not beat the

market and actively managed mutual funds under-perform other broad-based portfolios

with similar characteristics. One study found that nearly 1,500 U.S. mutual funds under-

performed the market in approximately half of the years between 1962 and

1992Moreover,funds that performed well in the past are not able to beat the market again

in the future (shown by Jensen, 1968; Grimblatt and Sheridan Titman, 1989).

I.1.1. Bond funds:

Bond funds account for 18% of mutual fund assets. Types of bond funds include

term funds, which have a fixed set of time (short-, medium-, or long-term) before they

mature. Municipal bond funds generally have lower returns, but have tax advantages and

lower risk. High-yield bond funds invest in corporate bonds, including high-yield or junk

bonds. With the potential for high yield, these bonds also come with greater risk.

Money market funds:

Money market funds hold 26% of mutual fund assets in the United States. Money market

funds entail the least risk, as well as lower rates of return. Unlike certificates of deposit

(CDs), money market shares are liquid and redeemable at any time.
Funds of funds:

Funds of funds (FoF) are mutual funds which invest in other underlying mutual

funds (i.e., they are funds comprised of other funds). The funds at the underlying level

are typically funds which an investor can invest in individually.

A fund of funds will typically charge a management fee which is smaller than that of a

normal fund because it is considered a fee charged for asset allocation services.

The fees charged at the underlying fund level do not pass through the statement of

operations, but are usually disclosed in the fund's annual report, prospectus, or statement

of additional information. The fund should be evaluated on the combination of the fund-

level expenses and underlying fund expenses, as these both reduce the return to the

investor.

Most FoFs invest in affiliated funds (i.e., mutual funds managed by the same

advisor), although some invest in funds managed by other (unaffiliated) advisors.

The cost associated with investing in an unaffiliated underlying fund is most often higher

than investing in an affiliated underlying because of the investment management research

involved in investing in fund advised by a different adviser.

Recently, FoFs have been classified into those that are actively managed (in which the

investment advisor reallocates frequently among the underlying funds in order to adjust

to changing market conditions) and those that are passively managed (the investment

advisor allocates assets on the basis of on an allocation model which is rebalanced on a

regular basis).
The design of FoFs is structured in such a way as to provide a ready mix of

mutual funds for investors who are unable to or unwilling to determine their own asset

allocation model. Fund companies such as TIAA-CREF, American Century Investments,

Vanguard, and Fidelity have also entered this market to provide investors with these

options and take the "guess work" out of selecting funds. The allocation mixes usually

vary by the time the investor would like to retire: 2020, 2030, 2050, etc. The more distant

the target retirement date, the more aggressive the asset mix.

Hedge funds

Hedge funds in the United States are pooled investment funds with loose SEC

regulation and should not be confused with mutual funds. Some hedge fund managers are

required to register with SEC as investment advisers under the Investment Advisers Act.

The Act does not require an adviser to follow or avoid any particular investment

strategies, nor does it require or prohibit specific investments. Hedge funds typically

charge a management fee of 1% or more, plus”performance fee” of 20% of the hedge

fund’s profits. There may be a "lock-up" period, during which an investor cannot cash in

shares. A variation of the hedge strategy is the 130-30 fund for individual investors.

WHY MUTUAL FUNDS?

What are the benefits of investing through the mutual funds?


Professional investment:

A mutual fund is an entity that pools the money of many investors -- its unit-holders -- to

invest in different securities. Investments may be in shares, debt securities, money market

securities or a combination of these. Those securities are professionally managed on

behalf of the unit-holders, and each investor holds a pro-rata share of the portfolio i.e.

entitled to any profits when the securities are sold, but subject to any losses in value as

well.

Mutual funds hire full-time, high-level investment professionals. Funds can afford to do

so as they manage large pools of money. The managers have real-time access to crucial

market information and are able to execute trades on the largest and most cost-effective

scale.

Diversification:

Mutual funds invest in a broad range of securities. This limits investment risk by

reducing the effect of a possible decline in the value of any one security. Mutual fund

unit-holders can benefit from diversification techniques usually available only to

investors wealthy enough to buy significant positions in a wide variety of securities.

Low Cost:

A mutual fund let's you participate in a diversified portfolio for as little as Rs.5,000/-, and

sometimes less. And with a no-load fund, you pay little or no sales charges to own them.

Convenience and Flexibility:


You own just one security rather than many, yet enjoy the benefits of a diversified

portfolio and a wide range of services. Fund managers decide what securities to trade,

collect the interest payments and see that your dividends on portfolio securities are

received and your rights exercised. It also uses the services of a high quality custodian

and registrar in order to make sure that your convenience remains at the top of our mind.

Personal Service:

One call puts you in touch with a specialist who can provide you with information you

can use to make your own investment choices. They will provide you personal assistance

in buying and selling your fund units, provide fund information and answer questions

about your account status. Our Customer service centers are at your service and our

Marketing team would be eager to hear your comments on our schemes.

Liquidity:

In open-ended schemes, you can get your money back promptly at net asset value related

prices from the mutual fund itself.

Transparency :

You get regular information on the value of your investment in addition to disclosure on

the specific investments made by the mutual fund scheme.

MUTUAL FUND STRUCTURE:

The SEBI (Mutual Funds) Regulations 1993 define a mutual fund (MF) as a fund

established in the form of a trust by a sponsor to raise monies by the Trustees through the
sale of units to the public under one or more schemes for investing in securities in

accordance with these regulations.

These regulations have since been replaced by the SEBI (Mutual Funds) Regulations,

1996. The structure indicated by the new regulations is indicated as under.

A mutual fund comprises four separate entities, namely sponsor, mutual fund trust, AMC

and custodian. The sponsor establishes the mutual fund and gets it registered with SEBI.

The mutual fund needs to be constituted in the form of a trust and the instrument of the

trust should be in the form of a deed registered under the provisions of the Indian

Registration Act, 1908.

The sponsor is required to contribute at least 40% of the minimum net worth (Rs. 10

crore) of the asset management company. The board of trustees manages the MF and the

sponsor executes the trust deeds in favour of the trustees. It is the job of the MF trustees

to see that schemes floated and managed by the AMC appointed by the trustees are in

accordance with the trust deed and SEBI guidelines.


MUTUAL FUNDS STRECTURE

Mutual Funds in India


Are you confused about how mutual funds work? Looking to invest in them but don't
know how to go about it? Find out answers to these questions and more! Look up our
ready reckoner to Mutual funds. Like all investments, mutual funds also carry certain
risks. Potential investors must compare the risks and expected yields after adjustment of
tax on various instruments before taking investment decisions.
Mutual Fund – basics
A mutual fund is a mechanism whereby a financial institution or company pools funds
from individuals and invests the pooled amounts in stocks, bonds and other securities. In
other words, you and some other investors come together, pool your funds and entrust it
to a company for profit gaining investments.
The company in turn invests the collected money in stocks, bonds and other securities.
The combined holdings of a mutual fund are its portfolio. Each individual investor is
issued units in proportion to the shares owned. Mutual fund investors are known as unit
holders. Mutual funds spread the risk of investment by investing in diverse industries. It
accommodates investors who can't spend a lot of money for investing individually.
Returns Depending on the nature of investment and objective, your returns from mutual

funds can be bonds ea- Dividends on stocks and interest on rned

from mutual fund

Depending on the nature of investment and objective, your returns from mutual funds can

be

- Dividends on stocks and interest on bonds earned

1.4 Risks in mutual funds

Every type of investment, including mutual funds, involves risk. Risk refers to the

possibility that you will lose money (both principal and any earnings) or fail to make

money on an investment. A fund's investment objective and its holdings are influential

factors in determining how risky a fund is.

Reading the prospectus will help you to understand the risk associated with that

particular fund.

Generally speaking, risk and potential return are related. This is the risk/return

trade-off. Higher risks are usually taken with the expectation of higher returns at the cost

of increased volatility. While a fund with higher risk has the potential for higher return, it

also has the greater potential for losses or negative returns.

The school of thought when investing in mutual funds suggests that the longer your

investment time horizon is the less affected you should be by short-term volatility.
Therefore, the shorter your investment time horizon, the more concerned you

should be with short-term volatility and higher risk.

Defining Mutual fund risk

Different mutual fund categories as previously defined have inherently different risk

characteristics and should not be compared side by side.

A bond fund with below-average risk, for example, should not be compared to a stock

fund with below average risk. Even though both funds have low risk for their respective

categories, stock funds overall have a higher risk/return potential than bond funds.

Of all the asset classes, cash investments (i.e. money markets) offer the greatest

price stability but have yielded the lowest long-term returns.

Bonds typically experience more short-term price swings, and in turn have

generated higher long-term returns. However, stocks historically have been subject to the

greatest short-term price fluctuations—and have provided the highest long-term returns.

Investors looking for a fund which incorporates all asset classes may consider a

balanced or hybrid mutual fund. These funds can be very conservative or very aggressive.

Asset allocation portfolios are mutual funds that invest in other mutual funds with

different asset classes. At the discretion of the manager(s), securities are bought, sold,

and shifted between funds with different asset classes according to market conditions.
Mutual funds face risks based on the investments they hold. For example, a bond

fund faces interest rate risk and income risk. Bond values are inversely related to interest

rates. If interest rates go up, bond values will go down and vice versa.

Bond income is also affected by the change in interest rates. Bond yields are

directly related to interest rates falling as interest rates fall and rising as interest rise.

Income risk is greater for a short-term bond fund than for a long-term bond fund.

Similarly, a sector stock fund (which invests in a single industry, such as

telecommunications) is at risk that its price will decline due to developments in its

industry.

A stock fund that invests across many industries is more sheltered from this risk

defined as industry risk.

Following is a glossary of some risks to consider when investing in mutual funds.

• Call Risk. The possibility that falling interest rates will cause a bond issuer to

redeem—or call—its high-yielding bond before the bond's maturity date.

• Country Risk. The possibility that political events (a war, national elections),

financial problems (rising inflation, government default), or natural disasters (an

earthquake, a poor harvest) will weaken a country's economy and cause

investments in that country to decline.

• Credit Risk. The possibility that a bond issuer will fail to repay interest and

principal in a timely manner. Also called default risk.


• Currency Risk. The possibility that returns could be reduced for Americans

investing in foreign securities because of a rise in the value of the U.S. dollar

against foreign currencies. Also called exchange-rate risk.

• Income Risk. The possibility that a fixed-income fund's dividends will decline as

a result of falling overall interest rates.

• Industry Risk. The possibility that a group of stocks in a single industry will

decline in price due to developments in that industry.

• Inflation Risk. The possibility that increases in the cost of living will reduce or

eliminate a fund's real inflation-adjusted returns.

• Interest Rate Risk. The possibility that a bond fund will decline in value because

of an increase in interest rates.

• Manager Risk. The possibility that an actively managed mutual fund's

investment adviser will fail to execute the fund's investment strategy effectively

resulting in the failure of stated objectives.

• Market Risk. The possibility that stock fund or bond fund prices overall will

decline over short or even extended periods. Stock and bond markets tend to move

in cycles, with periods when prices rise and other periods when prices fall.

• Principal Risk. The possibility that an investment will go down in value, or "lose

money," from the original or invested amount.


.
i) Professional investment management
A mutual fund is an entity that pools the money of many investors -- its unit-holders -- to invest in
different securities. Investments may be in shares, debt securities, money market securities or a
combination of these. Those securities are professionally managed on behalf of the unit-holders,
and each investor holds a pro-rata share of the portfolio i.e. entitled to any profits when the
securities are sold, but subject to any losses in value as well.

Mutual funds hire full-time, high-level investment professionals. Funds can afford to do so as they
manage large pools of money. The managers have real-time access to crucial market information
and are able to execute trades on the largest and most cost-effective scale.

ii) Diversification

Mutual funds invest in a broad range of securities. This limits investment risk by reducing the effect
of a possible decline in the value of any one security. Mutual fund unit-holders can benefit from
diversification techniques usually available only to investors wealthy enough to buy significant
positions in a wide variety of securities.

iii) Low Cost

A mutual fund let's you participate in a diversified portfolio for as little as Rs.5,000/-, and
sometimes less. And with a no-load fund, you pay little or no sales charges to own them.

iv) Convenience and Flexibility

You own just one security rather than many, yet enjoy the benefits of a diversified portfolio and a
wide range of services. Fund managers decide what securities to trade, collect the interest
payments and see that your dividends on portfolio securities are received and your rights exercised.
It also uses the services of a high quality custodian and registrar in order to make sure that your
convenience remains at the top of our mind.

v) Personal Service

One call puts you in touch with a specialist who can provide you with information you can use to
make your own investment choices. They will provide you personal assistance in buying and selling
your fund units, provide fund information and answer questions about your account status. Our
Customer service centers are at your service and our Marketing team would be eager to hear your
comments on our schemes.

vi) Liquidity

In open-ended schemes, you can get your money back promptly at net asset value related prices
from the mutual fund itself.

vii) Transparency

You get regular information on the value of your investment in addition to disclosure on the specific
investments made by the mutual fund scheme.
(Mutual Funds) Regulations 1993 define a mutual fund (MF) as
The SEBI
a fund established in the form of a trust by a sponsor to raise monies
by the Trustees through the sale of units to the public under one or
more schemes for investing in securities in accordance with these
regulations.

These regulations have since been replaced by the SEBI (Mutual Funds) Regulations, 1996. The
structure indicated by the new regulations is indicated as under.

A mutual fund comprises four separate entities, namely sponsor, mutual fund trust, AMC and
custodian. The sponsor establishes the mutual fund and gets it registered with SEBI.

The mutual fund needs to be constituted in the form of a trust and the instrument of the trust
should be in the form of a deed registered under the provisions of the Indian Registration Act, 1908.

The sponsor is required to contribute at least 40% of the minimum net worth (Rs. 10 crore) of the
asset management company. The board of trustees manages the MF and the sponsor executes the
trust deeds in favour of the trustees. It is the job of the MF trustees to see that schemes floated and
managed by the AMC appointed by the trustees are in accordance with the trust deed and SEBI
guidelines.

MUTUAL FUNDS STRECTURE


1.5 different mutual fund companies in market

ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO

Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset
Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is

the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund:

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun

Life Financial. Sun Life Financial is a global organization evolved in 1871 and is being

represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from

India. Birla Sun Life Mutual Fund follows a conservative long-term approach to

investment. Recently it crossed AUM of Rs. 10,000 crores.

Bank of Baroda Mutual Fund or BOB Mutual Fund

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under

the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the

AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank

AG is the custodian.

HDFC Mutual Fund

HDFC Mutual Fund was setup in 2000 with two sponsors namely Housing

Development Finance Corporation Limited and Standard Life Investments Limited.

HSBC Mutual Fund

HSBC Mutual Fund was setup in 2002 with HSBC Securities and Capital Markets

(India) Private Limited as the sponsor. HSBC Mutual Fund acts as the Trustee Company

of HSBC Mutual Fund.

ING Vysya Mutual Fund


ING Vysya Mutual Fund was setup in 1999 with the same named Trustee

Company. It is a joint venture of Vysya and ING. The AMC, ING Investment

Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one

of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was

setup on 13th of October, 1993 with two sponsorers, Prudential Plc. and ICICI Ltd. The

Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI

Asset Management Company Limited incorporated on 22nd of June, 1993.

Sahara Mutual Fund

Sahara Mutual Fund was set up in 1996 with Sahara India Financial Corporation

Ltd. as the sponsor. Sahara Asset Management Company Private Limited incorporated on

August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the

AMC stands at Rs 25.8 crore.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to

launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr.

approximately. Today it is the largest Bank sponsored Mutual Fund in India. They have

already launched 35 Schemes out of which 15 have already yielded handsome returns to

investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM.

Now it has an investor base of over 8 Lakhs spread over 18 schemes.


Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsorers for

Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The

investment manager is Tata Asset Management Limited and Tata Trustee Company Pvt.

Limited. Tata Asset Management Limited is one of the fastest growing in the country

with more than Rs. 7,703 crores (as on April 30, 2005) of AUM.

Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is

presently having more than 1, 99,818 investors in its various schemes. KMAMC started

its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering

to investors with varying risk - return profiles. It was the first company to launch

dedicated gilt scheme investing only in government securities.

Unit Trust of India Mutual Fund

UTI Asset Management Company Private Limited, established in 2003, manages the UTI

Mutual Fund with the support of UTI Trustee Company Private Limited. UTI Asset

Management Company presently manages a corpus of over Rs.20000 Crore. The

sponsorers of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank

(PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The
schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management

Funds, Index Funds, Equity Funds and Balance Funds.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The

sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is

the Trustee. It was registered in 1995 as Reliance Capital Mutual Fund which was

changed in 2004.

Reliance Mutual Fund was formed for launching of various schemes under which units

are issued to the Public with a view to contribute to the capital market and also to provide

investors the opportunities to make investments in diversified securities.

Standard Chartered Mutual Fund

Standard Chartered Mutual Fund was set up in 2000 sponsored by Standard Chartered

Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered

Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI in

1999.

Franklin Templeton India Mutual Fund

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

global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial
services group in the world. Investors can buy or sell the Mutual Fund through their

financial advisors or through mail or through their website.

They have Open end diversified equity schemes, Open end Sector equity schemes, Open

end hybrid schemes, Open end tax Saving schemes, Open end income and liquid

schemes, Closed end income schemes and Open end fund of funds schemes to offer.

Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and it’s leading in the market

in securities, investment management and credit services. Morgan Stanley Investment

Management (MISM) was established in 1975.

It provides customized asset management services and products to governments,

corporations, pension funds and non-profit organizations. Its services are also extended to

high net worth individuals and retail investors.

In India it is known as Morgan Stanley Investment Management Private Limited (MSIM

India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end

diversified equity scheme serving the needs of Indian retail investors focusing on a long-

term capital appreciation.

Escorts Mutual Fund

Escorts Mutual Fund was setup in 1996 with Escorts Finance Limited as its sponsor. The
Trustee Company is Escorts Investment Trust Limited. Its AMC was incorporated in

1995 with the name Escorts Asset Management Limited.

Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup in 1994 with Alliance Capital Management

Corp. of Delaware (USA) as sponsored. The Trustee is ACAM Trust Company Pvt. Ltd.

AMC, the Alliance Capital Asset Management India (Pvt) Ltd. with its corporate office

in Mumbai.

Benchmark Mutual Fund

Benchmark Mutual Fund was setup in 2001 with Niche Financial Services Pvt. Ltd. as

the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company.

Incorporated in 2000 and headquartered in Mumbai, Benchmark Asset Management

Company Pvt. Ltd. is the AMC.

Can bank Mutual Fund

Canbank Mutual Fund was setup in 1987 with Canara Bank acting as the sponsor.

Canbank Investment Management Services Ltd. incorporated in 1993 is the AMC. The

Corporate Office of the AMC is located in Mumbai.

Chola Mutual Fund


Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance

Company Ltd. was setup in 1997. Cholamandalam Trustee Co. Ltd. is the Trustee

Company and AMC is Cholamandalam AMC Limited.

LIC Mutual Fund

Life Insurance Corporation of India set up LIC Mutual Fund in 1989. It contributed Rs. 2

Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in

accordance with the provisions of the Indian Trust Act, 1882. . The Company started its

business in 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima

Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual

Fund.

GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a

Government of India undertaking and the four Public Sector General Insurance

Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd.

(NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII)

and it is constituted as a Trust in accordance with the provisions of the Indian Trusts Act,

1882.
CHAPTER 2

I.1.2. 2.1. Objective:

I.1.3. The company where am working is a mutual fund

distribution company. Since its base is in Gujarat most of the

Vijayawada people don’t have awareness about company & the

opportunities provided by the company. Hence bringing the

prospective clients to the company by bringing awareness among

financial advisors will be a value addition to the organization.

Diversification

Using mutual funds can help an investor diversify their portfolio with a minimum

investment. When investing in a single fund, an investor is actually investing in

numerous securities.

Spreading your investment across a range of securities can help to reduce risk.

A stock mutual fund, for example, invests in many stocks - hundreds or even thousands.

This minimizes the risk attributed to a concentrated position.


If a few securities in the mutual fund lose value or become worthless, the loss maybe

offset by other securities that appreciate in value. Further diversification can be achieved

by investing in multiple funds which invest in different sectors or categories. This helps

to reduce the risk associated with a specific industry or category.

Diversification may help to reduce risk but will never completely eliminate it. It is

possible to lose all or part of your investment.

Professional Management:

Mutual funds are managed and supervised by investment professionals. As per the stated

objectives set forth in the prospectus, along with prevailing market conditions and other

factors, the mutual fund manager will decide when to buy or sell securities.

This eliminates the investor of the difficult task of trying to time the market.

Furthermore, mutual funds can eliminate the cost an investor would incur when proper

due diligence is given to researching securities.

This cost of managing numerous securities is dispersed among all the investors according

to the amount of shares they own with a fraction of each dollar invested used to cover the

expenses of the fund. What does this mean? Fund managers have more money to

research more securities more in depth than the average investor.

Convenience:

With most mutual funds, buying and selling shares, changing distribution options, and

obtaining information can be accomplished conveniently by telephone, by mail, or online.


Although a fund's shareholder is relieved of the day-to-day tasks involved in researching,

buying, and selling securities, an investor will still need to evaluate a mutual fund based

on investment goals and risk tolerance before making a purchase decision.

Investors should always read the prospectus carefully before investing in any mutual

fund.

Liquidity:

Mutual fund shares are liquid and orders to buy or sell are placed during market hours.

However, orders are not executed until the close of business when the NAV (Net

Average Value) of the fund can be determined.

Fees or commissions may or may not be applicable. Fees and commissions are

determined by the specific fund and the institution that executes the order.

Minimum Initial Investment:

Most funds have a minimum initial purchase of 2,500 but some are as low as 1,000. If

you purchase a mutual fund in an IRA, the minimum initial purchase requirement tends

to be lower. You can buy some funds for as little as 50 .

2.3 research methodology


Mutual funds are extremely popular. There must be a reason, right? But, like any other

form of investment, mutual fund investing requires some information and resources.

Easy access to investing information and the availability of on line trading has made life

easier for do-it-yourself investors.

The Internet has brought the "trading" desk to millions of households and it is now

possible to buy and sell shares, options, warrants, interest rate securities and managed

funds from your own home. In addition, you can do your own research on a particular

company or fund manager as well as finding out what some stock brokers are

recommending to their clients.

Much of this information is free or available at a reasonable cost and you can save

yourself hundreds, or even thousands of dollars in fees and commissions every year .

Rather than go through a full service stockbroker or investment adviser, why not give it a

try?

When building your own stock or mutual fund portfolio, here are some pitfalls you need

to avoid!

While you can find a plethora of good information on mutual funds and stocks, you can

also find very poor information. Each website claims to have the latest hot picks or the
"top ten" stock buys and often they contradict each other. Who do you believe and what

about the scams?

You will undoubtedly come across websites and chat rooms that give investment advice

or tips about investments, but many of these are not qualified to do so. The information

may be wrong or misleading and some websites even repeat incorrect rumors.

There is overwhelming evidence that you will not become rich by listening to the advice

of others. As an investor you need raw information, not recommendations. You would

not buy a car just by looking at it...nor should you buy a company's stock or a certain

mutual fund without doing significant research.

There is no point trying to take control of your finances if you are going to rely solely on

a "tip" from a newspaper or a broker . It is true that someone may know more about a

particular company or stock than you, but they could easily be wrong - so do your own

homework!

You need to be certain that you have sound reasons for investing in a particular company

or mutual fund. Do they have an instantly recognizable name? Do you understand what

they do? Do the products or services of the company stand a good chance of being in

high demand in a 10, 20 or 30 year time frame?

Does it have a management team that moves with the times and is innovative, yet keeps

a firm grip on the company's finances? Most of this information is available in a


company's Annual Report, but make sure that you read it with a degree of

skepticism...most reports are written to promote the company.

Keep in-mind that the historical and present prices of a stock or mutual fund may hold

some clues to the future price. In practice, most analysts use fundamental analysis for

short and long term buy/sell decisions and use technical analysis to confirm the decision.

Internet websites are a great place to collect information about companies. Naturally, a

company owned website will attempt to portray the company in the most sympathetic

light. Depending on how serious you want to be about investing, it is advisable to either

visit or subscribe to investment research websites.

Research websites are valuable tools for any investor and provide company reviews, give

general investing information, market updates, stock pickers, stock ratings, watch-lists,

portfolio managers, charts, share indexes, newsletters, alerts and model portfolios.

So, how can you structure a stock portfolio to maximize your wealth, ensure your peace

of mind, give you total control of your investments, be easy to manage and give

satisfaction?

Here is a recommended strategy that has worked well for many do-it-yourself investors:
1. Subscribe to a well respected investment research website dedicated to analyzing

financial information for investors. They are independent from companies they list, do

not receive commissions or brokerage and rely solely on investor subscriptions for

income. They have to give their subscribers quality information to maintain subscriber

confidence.

2. Look for the model portfolios they have developed and study the methodology they

have used to create and maintain each portfolio.

3. Read the research reports supplied for each stock and study the graphs supplied for

price movements and trading volumes. Get a good feel for both the long term and the

short term trends of the stock.

4. Test each portfolio within a designated test period i.e., one month, one quarter,

one year etc. Depending on the website, you can set up each of the model

portfolios in a free portfolio manager provided on the website with unlimited

stocks.

Set a starting date for a test period where you "buy" stocks listed in the model portfolio

at the closing price for that day. Make sure you include brokerage as it is part of the cost

base for the stock. The website should either maintain up-to-date or 20 minute delayed

stock prices, so a running balance can be maintained for the profit/loss for each stock

over the designated period.


5. Compare each portfolio's published results with the results that you have achieved in

the portfolio manager. They should agree with each other when the same stocks are

compared over the same time period. Your testing should develop a level of confidence

in the model portfolio.

6. Determine the best model portfolio for you to use. You can do this using the last the

last three months of stock price history or perform a trial evaluation for the next three

months of future prices. You can use one of the existing model portfolios or create your

own from the stocks selected.

7. Subscribe to an online share broker website and begin trading.

8. Monitor stocks daily and review the performance of your actual portfolio against the

model quarterly.

You should take care to evaluate the methodology used by the research website to

develop the model portfolios. These portfolios are designed by research firms to provide

sensible medium-term portfolios that make it easy for investors and financial planners to

replicate. You need to understand the research methodology and develop a level of

confidence in it rather than just blindly accepting the published results of each portfolio.

You do not need to become an expert in methodologies.


Building a share portfolio that meets your investment objectives will substantially build

your wealth over a period of time. You can also save money in commissions and fees,

have peace of mind, total control over your investment and gain a real sense of

satisfaction. A good recource for information to consider when you begin to have success

at investing .

Finally, be carefull with your mutual fund investments. No fund will make

guarantees so good research and a steady hand are critical. Good luck comes to

those that are prepared.

2.4 scope and limitations of mutual funds.

Scope of Mutual Funds has grown enormously over the years. In the first age of mutual

funds,when the investment management companies started to offer mutual funds, choices

were few. Even though people invested their money in mutual funds as these funds

offered them diversified investment option for the first time.

By investing in these funds they were able to diversify their investment in common

stocks, preferred stocks, bonds and other financial securities. At the same time they also

enjoyed the advantage of liquidity. With Mutual Funds, they got the scope of easy access

to their invested funds on requirement.


But, in todays world, Scope of Mutual Funds has become so wide, that people sometimes

take long time to decide the mutual fund type, they are going to invest in. Several

Investment Management Companies have emerged over the years who offer various

types of Mutual Funds, each type carrying unique characteristics and different beneficial

features.

Disadvantages

Risks and Costs:

Changing market conditions can create fluctuations in the value of a mutual fund

investment.

There are fees and expenses associated with investing in mutual funds that do not usually

occur when purchasing individual securities directly.

As with any type of investment, there are drawbacks associated with mutual funds.

• No Guarantees. The value of your mutual fund investment, unlike a bank

deposit, could fall and be worth less than the principle initially invested. And,

while a money market fund seeks a stable share price, its yield fluctuates, unlike a

certificate of deposit. In addition, mutual funds are not insured or guaranteed by

an agency of the U.S. government. Bond funds, unlike purchasing a bond directly,

will not re-pay the principle at a set point in time.

• The Diversification "Penalty." Diversification can help to reduce your risk of

loss from holding a single security, but it limits your potential for a "home run" if
a single security increases dramatically in value. Remember, too, that

diversification does not protect you from an overall decline in the market.

• Costs. In some cases, the efficiencies of fund ownership are offset by a

combination of sales commissions, 12b-1 fees, redemption fees, and operating

expenses. If the fund is purchased in a taxable account, taxes may have to be paid

on capital gains. Keep track of the cost basis of your initial purchase and new

shares that are acquired by reinvesting distributions. It's important to compare the

costs of funds you are considering.

• Always look at "net" returns when comparing fund performances. Net

return is the bottom line; an investment's true return after all costs are

deducted.

Prospectuses will not contain all the costs that affect the net return on your investment.

This is why it is important to compare net returns whether or not the fund in a no-load or

load fund.

Expenses

Because mutual funds are professionally managed investments, there are management

fees and operating expenses associated with investing in a fund. These fees and expenses

charged by the fund are passed onto shareholders and deducted from the fund's return.

These expenses are typically expressed as the expense ratio - the percent of fund assets

spent (annually) on day-to-day operations. Expense ratios can vary widely among funds.

Expense ratios for mutual funds commonly range from 0.2% to 2.0%, depending on the

fund. Consult the fund's prospectus to determine the expense ratio for a specific fund.
Make yourself aware of all fees and expenses that impact the fund's return by

reducing gains and increasing losses.

Chapter 3

organisation profile

3.1COMPANY PROFILE (BRIEF)

1st in India to offer Complete Business Platform to financial advisors / firms to manage,

monitor and grow their advisory practice Integrated, comprehensive, convergent &

practical business solutions

Understands what is needed to grow & manage a financial advisory practice

A division of NJ India Invest Pvt. Ltd., one of the leading advisors & distributors of

financial products & services in India. NJ, established in 1994, has rich experience in the

concerned domain Current Strength ( As on 31st May2009) 13,000 associated financial

advisors / advisory firms and 6,500+ Rs. crores of MF assets under advice

800+ Employees 120 locations in 21 States across India

Growth of the company

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

products and services in India. Established in year 1994, NJ has over a decade of rich

exposure in financial investments space and portfolio advisory services.


From a humble beginning, NJ over the years has evolved out to be a professionally

managed, quality conscious and customer focussed financial / investment advisory &

distribution firm.

NJ prides in being a professionally managed, quality focused and customer centric

organisation. The strength of NJ lies in the strong domain knowledge in investment

consultancy and the delivery of sustainable value to clients with support from cutting-

edge technology platform, developed in-house by NJ.

At NJ we believe in …

 having single window, multiple solutions that are integrated for simplicity and

sapience

 making innovations, accessions, value-additions, a constant process

 providing customers with solutions for tomorrow which will keep them above the

curve, today

NJ Fundz Network was established in year 2003 as a dedicated platform offering

comprehensive services and support to the independent financial advisors. The services

offered by NJ Fundz Network are increasingly recognized as the best and most

comprehensive in nature.

The scope, depth, and quality of the services and support is unmatched in the industry. NJ

Fundz Network is proud to be the pioneers in India in providing the 360° Advisory

platform to independent advisors. With this NJ has managed to successfully transform the

business of many independent financial advisers, bringing them on equal footing or even

better than the strongest competitors in the industry.


NJ has over 8,600* NJ Fundz Network Partners and over 4,500* normal advisors

associated with us. NJ presently has over Rs. 5,050* Crores of assets under advice. NJ

has over 130* PSCs (Partner Service Centers) in 22* states spread across India. The

numbers are reflections of the trust, commitment and value that NJ shares with its clients.

At NJ, our experience, knowledge and understanding enables us to provide you

with the expected value, in an enhanced way. As a leading player in the industry, we

continue to successfully meet the expectations of our clients, through meaningful and

comprehensive solutions offered by NJ Fundz Network.

OBJECTIVES OF THE COMPANY

To be the leader in our field of business through,

 Total Customer Satisfaction

 Commitment to Excellence

 Determination to Succeed with strict adherence to compliance

 Successful Wealth Creation of our Customers

3.4 organisation structure

Structure of NJ India invest

NJ Fundz Network, started in 2003, is a dedicated channel for providing independent

financial advisors or IFA's with a complete business platform for the strengthening and

development of their advisory practice. NJ offers advisors under its network will all the

products; support and services that enables them add considerable value to their business,
emerge as a 'new age professional financial advisor' and compete confidently in the

industry.

NJ Fundz Network is a unique, first time in India concept that offers such comprehensive

business platform to independent financial advisors

Established as a distinct entity, NJ Wealth Advisors Pvt. Ltd. seeks to offer

comprehensive financial planning and portfolio advisory services to premium clients.

With NJ Wealth Advisors, NJ seeks to leverage the strong financial advisory and

portfolio management skills gained in over a decade of experience in the industry. NJ

Wealth Advisors offers its clients with quality, unbiased, need-based advisory services &

investment solutions.

This sporadic growth in terms of need of performers in financial advisory services has

lead to the crunch of available performers. Though lots of youngsters are getting into
financial advisory services, but the greatest challenge is of RIGHT SELLING, for which

adequate Training is a prerequisite. Advisory function demands updated knowledge,

backed up by honed skills to fetch effective business. Building long term relationship

with clients depends upon possessing clear edge over others in the field. Hence

continuous people development has an important role in building this fraternity.

Technology:

Technology has traditionally been NJ's key strength. Our offering on the technological

front is unmatched, vibrant, and comprehensive in nature. Our focus & commitment on

technology can be gauged from the fact that we have set-up distinct entity with a very

strong, talented work-force for the sole purpose of providing the best to NJ in terms of

technology and support. Finlogic Technologies (India) Pvt. Ltd. does all the development

& support work in-house on a continuous basis. It has successfully developed &

implemented a powerful support system for the mutual fund distribution business at NJ

with a provision for integrating the same with other investment products as well as the

financial accounting system.

3.5 products of the company

NJ offers advisory and distribution services on the following products.

1. Mutual funds – covering all AMCs & all schemes,

2. Life insurance – Prudential ICICI

3. Fixed deposits of companies,

4. Government/RBI bonds,

5. Infrastructure Bonds,

6. Approved securities for charitable trusts, etc


NJ’s main focus is though on mutual funds advisory and distribution. At NJ, we believe

that mutual funds, as an asset class, can be looked at for almost all of the financial needs.

3.6 strengths of company

1. Provide customer-focussed need-based valued services.

2. Provide reliable, accurate and timely information.

3. Maintain all records in privacy.

4. Optimise services/benefits at least justifiable cost.

5. Develop and grow the customers ’ business.

6. Provide constructive after sales service.

7. Honour our service commitments.


CHAPTER 4

analysis of data

4.1 data collection

The collection of data can be done by two ways, they are;

PRIMARY DATA:

In historical scholarship, a primary source is a document, or other source of information

that was created at or near the time being studied, by an authoritative source, usually one

with direct personal knowledge of the events being described. In this sense primary does

not mean superior.

It refers to creation by the primary players, and is distinguished from a secondary source,

which is a historical work, like a scholarly book or article, built up from primary sources.

SECONDARY DATA:

A secondary source is a study written by a scholar about a topic, and using primary

sources and other secondary sources. Secondary sources are often peer reviewed, and

produced by institutions where methodological accuracy is important to the author's and

publishing house's, or research institute's, reputation.

Historians subject both primary and secondary sources to a high level of scrutiny.
Mutualfund companies
Mutual Funds Total :35

1. AIG Global Investment Group Mutual Fund

2. Baroda Pioneer Mutual Fund

3. Benchmark Asset Management

4. Bharti AXA Investment Managers

5. Birla Sun Life Mutual Fund

6. Canara Robeco Mutual Fund

7. DBS Chola Mutual Fund

8. DSP BlackRock Mutual Fund

9. DWS Investments (Deutsche Bank Group)

10 Edelweiss Mutual Fund

.
11 Escorts Asset Management

.
12 Fidelity Mutual Fund

.
13 Fortis Mutual Fund

.
14 Franklin Templeton Investments

.
15 HDFC Mutual Fund

.
16 HSBC Investments

.
17 ICICI Prudential Mutual Fund

.
18 IDFC Mutual Fund

.
19 ING Investment Management

.
20 JM Financial Mutual Fund

.
21 JP Morgan Asset Management

.
22 Kotak Mutual Fund

.
23 LIC Mutual Fund

.
24 Mirae Asset Global Investments (India)

.
25 Morgan Stanley Mutual Fund

.
26 Principal Pnb Asset Management

.
27 Quantum Mutual Fund

.
28 Reliance Mutual Fund

.
29 Religare Mutual Fund

.
30 Sahara Mutual Fund

.
31 SBI Mutual Fund

.
32 Sundaram BNP Paribas Mutual

.
33 Tata Mutual Fund

.
34 Taurus Mutual Fund

.
35 UTI Mutual Fund

Assets Under
Management
(AUM) as at
the end of
MAY-2009
(Rs in Lakhs)
Sr No Mutual Fund Name Average AUM For
The Month
Excluding Fund Fund Of Funds
of -
Funds - Domestic
but
including Fund of Domestic
Funds - Overseas
AIG Global Investment Group
1 137694.56 0
Mutual Fund
2 Baroda Pioneer Mutual Fund 113201.06 0
3 Benchmark Mutual Fund 106856.68 0
4 Bharti AXA Mutual Fund 19651.85 0
5 Birla Sun Life Mutual Fund 4709622.86 1478.04
6 Canara Robeco Mutual Fund 474388.13 0
7 DBS Chola Mutual Fund 102349.02 0
8 Deutsche Mutual Fund 935510.47 0
9 DSP BlackRock Mutual Fund 1441273.29 0
10 Edelweiss Mutual Fund 2228.34 0
11 Escorts Mutual Fund 18152.64 0
12 Fidelity Mutual Fund 617290.87 2822.87
13 Fortis Mutual Fund 581105.21 10648.00
14 Franklin Templeton Mutual Fund 1920529.86 16000.64
15 Goldman Sachs Mutual Fund N/A N/A
16 HDFC Mutual Fund 5795644.71 0
17 HSBC Mutual Fund 957519.09 0
18 ICICI Prudential Mutual Fund 5143250.24 2360.94
19 IDFC Mutual Fund 1436219.88 1441.08
20 ING Mutual Fund 252874.88 18485.84
21 JM Financial Mutual Fund 478756.21 0
22 JPMorgan Mutual Fund 245352.91 0
23 Kotak Mahindra Mutual Fund 1820404.34 16592.36
24 LIC Mutual Fund 2309237.33 0
25 Mirae Asset Mutual Fund 16208.46 0
26 Morgan Stanley Mutual Fund 134585.41 0
27 PRINCIPAL Mutual Fund 675687.05 0
28 Quantum Mutual Fund 5675.51 0
29 Reliance Mutual Fund 8096293.55 0
30 Religare AEGON Mutual Fund N/A N/A
31 Religare Mutual Fund 602283.90 0
32 Sahara Mutual Fund 14592.57 0
33 SBI Mutual Fund 2638268.15 0
34 Shinsei Mutual Fund N/A N/A
35 Sundaram BNP Paribas Mutual Fund 926706.92 0
36 Tata Mutual Fund 1702987.17 0
37 Taurus Mutual Fund 20836.41 0
38 UTI Mutual Fund 4875417.00 0
Grand Total 49328656.53 69829.77

coverage and number of top three ranking positions. It is also one of the largest and most
successful fund managers in Asia with more top five market rankings In Asia, Prudential
is the leading Europe-based life insurer in terms of market than any other regional player.
Today, Prudential has life insurance and fund management operations spanning 13
diverse markets in Asia.

Prudential plc is incorporated and with its principal place of business in the United
Kingdom. It is not affiliated in any manner with Prudential Financial, Inc., a company
whose principal place of business is in the United States.

Analysis of data
AMOUNT OF
INVESTMENT PERCENTAGE
RS 5,000_RS10,000 19
RS 10,000_RS20,000 28
RS 20,000_RS30,000 32
ABOVE 30,000 21

35 32

30 28
RS
25 5,000_RS10,000
21
19 RS
20 10,000_RS20,000
15 RS
20,000_RS30,000
10 ABOVE 30,000

0
PERCENTAGE

2)
S.NO Age group No.of respondents Percentage
1 20-30yrs 35 23
2 30-40yrs 55 37
3 40-50yrs 40 27
4 50 yrs above 20 13
total 150 100
20-30 years
30-40 years
40-50 years
50 years above

Interpretation:
The above table shows that about 37%of respondents are between 30-40 years age
group, 27% of respondents are between 40-50 years 23% of respondents between 20-30-
yrs group and 40-50 yrs age group .it can be represented with the help of pie chart.

3)
s.no INVESTMENT NO.OF %
AVENUE RESPONDENTS
1 Insurance 30 20
2 Shares 35 24
3 Fixed deposits 20 14
4 Mutual funds 35 23
5 Postal savings 10 7
6 Real estate 15 10
7 Others 5 3
total 150 100
3%
10% 20%
insurance
7%
shares
fixed deposit
mutual funds
coastal savings
real estate
23% 23% others

14%

Interpretation:

From the above table it is clear that 24% of the respondents preferred for investing in
shares, 23% for mutual funds 20% got insurance, 14% for fixed deposits ,10% for real
estate 7% for postal savings. So majority of the respondents showed preference to invest
in mutual funds , shares insurance and fixed deposits.

4)
s.no MARKET TYPE NO.OF.RESPONDENTS %
1 Equity type 95 63
2 Debt type 47 31
3 Money market type 8 6
total 150 100
6%

31% Equity type


debt type
money market type
63%

Interpretation:

From the above it de clear that 63% of respondents preferred for equity type, 31% for
debt type, and 6% for money market type. Majority of the respondents preferred
investing in equity type of investments as high returns are expected from it, even though
some risk is involved in it when compared to other types of investments. debt type of
investments are also preferred by some respondents, expecting some fixed returns from it
even it is low when compared to equity type of investments.

5)
Investing option %
Growth option 66
Dividend option 34
70%
60%
50%
40%
percentage
30%
20%
10%
0%
Grow th option dividend optiion

Interpretation:

From the above table,


66% of the sample opted growth option while investing in mutual funds
34% of the sample opted dividend option while investing in mutual funds

6)

s.no Reasons to prefer No. of respondents %


mutual funds
1 Professional mgt of 20 13
funds
2 Investment options 45 30
3 High returns 65 44
4 liquidity 20 13
total 150 100
13% 13%

professional mgmt of funds


investment options
high returns
30% liqudity

44%

Interpretation:
From the above table it is clear that 44% of the respondents preferred mutual funds
because of high returns from it 30% for the investment options in it 13% for the
professional management of funds, 13% for liquidity. Majority of respondents have
shown reason for investing in Mf as high returns and the investment options in it, because
that is the main advantage in MF when compared to other investment avenues, and the
company should also concentrate in trying to give high returns by rapidly diversifying its
portfolio in different sectors through efficient fund mangers, and also making the
consumer aware of the switching option available in mutual funds
It can be represented with the help of pie chart as follows.

7)
S.no Type of scheme No of Respondents Percentage
1 Open ended 95 63
2 Close ended 51 33
3 Interval scheme 6 4
Total 150 100
70%
60%
50%
40%
30% percentage

20%
10%
0%
open ended close ended interval scheme

Interpretation
From the above table it is clear that 63% of respondents preferred open ended schemes,
33% preferred for closed ended schemes 4% preferred for interval schemes. Open ended
schemes are most preferred for by the respondents mainly because of the any time entry
on the time exit option. Closed ended schemes are less preferred because of its lock in
period option. So the company should diversify its risk in open ended schemes by
investing in different growing sectors as there are the most preferred schemes.
8)
Reason for choosing open ended %
Flexibility 32
Liquidity 68
70%
60%
50%
40%
30% percentage
20%
10%
0%
Flexibility liquidity

INTERPRETATION
68% of the samples have chosen open ended schemes because of liquidity .
32% of the samples have chosen open ended schemes because of flexibility.
9)

Reason for choosing open ended %


High returns 70%
Tax benefits 30%

INTERPRETATION
70% of the samples have chosen open ended schemes because of high returns.
30% of the samples have chosen open ended schemes because of Tax benefits.

70%
60%
50%
40%
30% percentage
20%
10%
0%
High returns Tax benefits

Others

Table 10

Customer opinion percentage

Yes 91

No 9
100

80

60
Yes
40 No
20

0
percentage

FINDINGS:
 From the entire analysis of this survey on Mutual Funds, it has been found that
investors awareness is moderate i.e., most of the respondents were aware of
Mutual Funds are at least having a vague idea of Mutual Funds when compared to
past period. 46% of the respondents were not aware of Mutual funds, 36% were
aware of Mutual fund, and 17% have vague idea.

 Majority of the respondents are male in the conducted survey i.e., 67% of the
respondents are male.

 Major portion of the respondents surveyed are employees and business people i.e.,
60% of respondents are employees and 30% of the respondents are Business
people.

 Major portion the respondents surveyed are from 30-40 years i.e., 40% and nextly
most of the respondents from 20-30 years i.e., 27% were know about Mutual
Funds.

 Based on Income level it is clear that most of the respondents earning Income
between 10000 -20000 are invested in investing Mutual Funds.

 From the analysis it is clear that major source of public awareness for Mutual
Funds were through Company’s executives & agents i.e., 40% and through Media
it is 30%.
 From the analysis it is clear that most of the respondents showed preference to
invest in insurance, shares, fixed deposits and mutual funds, i.e., 23% of the
respondents preferred for investing in Insurance, 20% for shares, 17% for fixed
deposits and 13% are interested in Mutual Funds.

QUESTIONAIRE:
Note: - Please put a tick mark ( ) wherever necessary
Please specify the aspects as required, if the given
Choices do not constitute.
1. Qualification:

______________________________________________________

2. Which Company’s products you are dealing?

3. Do you aware about Mutual Funds?


Yes ( )
No ( )
4. Do you know how to become a mutual fund advisor?
Yes ( )
No ( )
5. Are you interested to become a mutual fund advisor?
Yes ( )
No ( )
6. Do you hear about the NJ India Invest Pvt Ltd.,?
Yes ( )
No ( )

REFERENCES:
 www.njfundz.com
 www.njindiainvest.com
 www.amfiindia.com