Mutual Funds Project Report : This Project Report on "Mutual Funds, Structure of Mutual Fund in India - Finance Project

Report". Finance is one of the major elements, which activates the overall growth of economy. " OR "Perception PROJECT REPORT ON MUTUAL FUNDS, STRUCTURE OF MUTUAL FUND IN INDIA AND PERCEPTION LEVEL OF INVESTOR TOWARDS HDFC MUTUAL FUNDS Level of Investor towards HDFC Mutual Funds Finance is the lifeblood of economic activities. The study of business finance is concerned with the provision, flow and use of finance within a business organization and with demand for, and supply of, funds for business within the economy as a whole. Funds for a business are obtained from a variety of sources and it may be classified in two major categories namely internal and external. Internal funds are obtained by retention of a portion of the company's own revenue stream. External financing, on the other hand, represents a transfer of capital funds to the business from other business units or individuals or institutions in the form of loans or additional ownership capital. Importance of the Study This Project Report provides Future of Mutual Funds industry information as well as awareness level amongst people for Mutual Funds. Also this project report of Mutual Funds gives an outlook to management as to how the mutual funds are performing in the current market situation as a result what may be the future of this industry. This project report on mutual funds is informative the students who want to understand and undertake assignments in the industry. This study also facilitates the general people who can understand the importance and explore the new option for investment in Mutual Funds. Different financial institutions provide services that are both

complementary to and competitive with each other. A well built financial system directly contributes to the growth of the country. Performance of Financial Institutions : An efficient financial system calls for effective performance of financial institutions, financial instruments, and financial markets. This would enable the country to have supply of funds to the industry and agriculture continuously. Economics problems of the nation can be solved comfortably, - through which self - sufficiency can be attained. Role of Financial System in Economy : Thus the financial system plays a significant role in the building up the economy. Every enterprise, whether big, medium or small needs finance to carry on its operations to achieve its targets. Hence, finance is so indispensable today that it is rightly said it is lifeblood of an enterprise. Without adequate finance, no enterprise can possibly accomplish its objectives. Functions of Finance : The function of finance has been traditionally classified into two type's namely private finance and public finance deals with the requirements, receipts and disbursement of funds in government institutions like state, local, self-government. Private finance is concerned with the requirement, receipts and disbursement of funds in case of an individual, a profit seeking business organization and a non-profit organization. During the pre-independence period, financial constraints have hampered the rapid development of industry in the country. After the independence, the government built up a network of specialized financial institutions with a fairly big capital base to provide financial assistance to all types of types of industrial includes small-scale industries. A growing economy needs the support of financial structure, which is responsive to the needs of development. In India, in the process of

financial deepening, commercial banks have shoulder special responsibilities for meeting the financial needs of diverse sectors of economy, at various modes and instruments of financing, fashioned various organizational innovations, moved away from traditional commercial banking and evolved into development banks responsive to socio-economic needs. This paves the way for the establishing efficient banking system viz., namely commercial banking and development banking. Objectives of Project Report on Mutual Funds : The specific objectives of the project report on mutual funds are as follows: - To study the structure of Mutual Funds in India and perception level of investor towards HDFC Mutual Funds. - To study the Mutual funds schemas of HDFC. - To study the performance of Mutual Funds in India. - To study a wide spectrum of investment options. - To examine how customers in a specific segment rate the investment in mutual fund as an investment option. Table of Contents of Project Report: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Introduction to Finance Financial Management-Meaning Objectives of Financial Management Introduction to Project Report Structure of Indian Financial system Reserve Bank of India Role and Function of RBI SEBI Constitutions and Organizations Objectives and Regulatory Approach Financial Institutions

12. Financial Markets 13. Investments 14. Objectives of Investments 15. Success in Investments 16. Investment Alternatives 17. NonMarketable Financial Assets 18. Equity Shares 19. Bonds 20. Money Market Instruments 21. Mutual Funds 22. Life Insurance 23. Real Estate 24. Precious Objects 25. Financial Derivatives 26. Mutual Funds {Detail} 27. Scope of Mutual Funds 28. Types of Mutual Funds 29. Statement of Problem 30. Scope of Study 31. Objectives of Study 32. Operational Definitions of the concepts 33. Company Profile 34. Overview and Background 35. HDFC Mutual funds and Standard Life Ltd. 36. Business Objectives and Vision 37. Organizational goal 38. Capital Structure 39. HDFC Rating 40. Corporate Governance Rating 41. HDFC Mutual Fund Products 42. Bibliography Project Description : Title : Project Report on Mutual Funds, Structure of Mutual Fund in India and Perception Level of Investor towards HDFC Mutual Funds - 55 Pages

: Project Report on Mutual Funds, Structure of Mutual Fund in India and Perception Level of Investor towards HDFC Mutual Fu Every mutual fund has a goal - either growing its assets (capital gains) and/or generating income (dividends) for its investors. Distributions in the form of capital gains (short-term and long-term) and dividends may be passed on (paid) to shareholders as income or reinvested to purchase more shares. For tax purposes, keep track of your distributions and cost basis of purchased/reinvested shares. Like any business, mutual funds have risks and costs associated with returns. As a shareholder, the risks of a fund and the expenses associated with fund's operation directly impact your return. Returns As an investor, you want to know the fund's return-its track record over a specified period of time. So what exactly is "return?" A mutual fund's return is the rate of increase or decrease in its value over a specific period of time usually expressed in the following increments: one, three, five, and ten year, year to date, and since the inception of the fund. Since return is a common measure of performance, you can use it to evaluate and compare mutual funds within the same fund category. Generally expressed as an annualized percentage rate, return is calculated assuming that all distributions from the fund are reinvested. Since average returns can sometimes "hide" short-term highs and lows, you should evaluate returns for a time period of several yearsnot just one year or less. A fund that has a high return in one year may have experienced losses in other years-these fluctuations may not be apparent in its average return. While a fund's return shows its track record, keep in mind that past performance is no guarantee of future results.

When using returns to compare funds, always use net returns. Net returns are the true returns of both load and no-load funds after deducting all costs and expenses. Nds Risk 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. How do the professionals manage risk? click here 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 fluctuationsand 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 redeemor callits 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.

Advantages What are the key advantages of mutual fund investing? 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. Click here to see an example on constructing a diversified portfolio. 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 per month if you agree to dollarcost average, or invest a certain dollar amount each month or quarter.

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. Defining Mutual Fund costs All mutual funds have costs, but some funds are more expensive to own than others. Be conscious of the effect of seemingly minor cost differences which can significantly affect the growth of your investment assets, especially over longer periods of time. Mutual fund costs fall into two main categories: One-time fees and

ongoing annual expenses. Not all funds charge one-time fees, but all funds charge ongoing annual fees of some sort. One-Time Fees Loads Loads come in three forms:

Front-End Load o Charged when you purchase fund shares-usually class A shares, effectively reducing your purchase amount. o May be charged on reinvested distributions. o Can be as high as 8.5%. Back-End Load o Charged when you sell fund shares. o Usually assessed based on the length of time you have held your shares, and declines over time. o Maximum allowed is 8.5%, but this is rarely seen. According to Lipper Inc., back-end loads can be as high as 6% if you sell shares within one year. Level Load o Deducted annually from fund assets as marketing and distribution costs. o Used to pay commissions to brokers and the fund's financial adviser, and is generally reported as part of a fund's operating expenses. o Can be as high as 0.75% per year, according to Lipper Inc.

How to Reduce a front-end load on class A shares

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Rights of Accumulation (ROI): Your current aggregate investment determines the initial sales load you pay. You may qualify for reduced sales charges when the current market value of holdings (shares at current offering price), plus new

2.

3.

purchases, reaches a specific break point determined by the individual fund. Statement or Letter of Intention (SOI or LOI): You may obtain a reduced sales charge by means of a written SOI/LOI which expresses your non-binding commitment to invest an amount in the aggregate over a break point within a given period of time specified by the fund. Break Points: Sales charges are reduced when the amount of purchase exceeds a specified dollar figure. The more money that is invested, the lower the sales charge will be. Consult the individual fund's prospectus to determine a fund's break points.

Funds that have no sales charges are known as "no-load," while funds that charge loads of 1% to 3% are called "low-load." Keep in mind, funds that have lower loads or no-loads tend to have higher operating expenses. Again, read each fund's prospectus and compare "net" returns. Ongoing Annual Expenses

Management Fees Distribution and Service Fees Other Expenses Underlying Fund Expenses

Other fees In addition to sales loads, fund companies and brokerages may charge other fees when you buy or sell fund shares. A transaction fee is charged by some brokerage firms for purchasing or selling shares. Transaction fees are sometimes referred to as commissions but are extra costs not normally paid if you were to purchase your fund directly with the fund family.

Some fund companies and brokerages may charge a redemption fee if the fund is held for less than a certain period of time, generally between 90 and 180 days. These charges are intended to discourage short-term trading that can raise a fund's administrative costs. To find out more about fees read the fund's prospectus and consult your broker. Not all funds assess these "extra" fees. In fact, funds and brokerages may not charge a sales load, transaction fees or redemption fees. When buying mutual funds, find out about all of the fees that might be involved and when they are charged. Taxes and Fund Ownership Since your goal as an investor is to keep as much as possible of what you earn from your mutual fund investments, you can't overlook the inescapable reality that taxes take a big bite out of bottom-line returns. One way to shelter yourself from taxes is to purchase your funds in a retirement account. As a fund shareholder, you can be taxed on:

Distributions (dividends & capital gains) maid by the fund while you own its shares. Profits you make when you sell fund shares.

Taxes on Fund Distributions A fund passes on to shareholders all the income or profits it earns from its investments. Shareholders, in turn, are liable for any taxes due. The distributions made by a fund to shareholders take two forms:

Income Dividends. The interest and dividends generated by a fund's investments.

Capital Gains. The profit a fund makes when it sells securities at a higher price than it paid for them. The fund subtracts its capital losses from its capital gains to determine its net capital gains, which it distributes to shareholders. (Net capital losses are not passed through to shareholders; the fund retains those to offset future capital gains.)

Generally, all income dividend and capital gains distributions are subject to federal income tax (and state and local taxes if applicable). Exceptions are:

Distributions received in tax-deferred accounts, such as 401(k) and 403(b)(7) plans, individual retirement accounts, or variable annuities. Only withdrawals from such accounts are subject to tax. (Withdrawals from a Roth IRA are exempt from taxes under certain conditions.) Income dividend distributions from municipal money market funds and municipal bond funds. These distributions are exempt from federal and, in some cases, state taxes. (Capital gains distributions from municipal bond funds are taxable, however.)

Apart from the exceptions noted above, you must pay taxes on distributions whether you receive them in cash or reinvest them in additional shares. Distributions of income dividends and short-term capital gains (gains on securities held by the fund for one year or less) are taxed as ordinary income at your marginal tax rate, which can range from 15% to 39.6% currently but can change. Distributions of long-term capital gains (gains on securities held by the fund for more than one year) are taxed at a maximum rate of 20% (10% for taxpayers in the lowest tax bracket) currently but can change. For higher-income taxpayers, effective marginal tax rates may be

higher because of limits on tax deductions and a "phase out" of personal exemptions. State and local taxes also increase effective marginal tax rates. Please remember that IRS tax rules can change. You should consult a tax adviser for guidance on your specific tax situation. Taxes on Profits From Shares You Sell When you sell fund shares, the tax rate on any capital gains is determined by how long you held the shares. Short-term gains are taxed as ordinary income at your marginal tax rate, while long-term gains are taxed at a maximum rate of 20% (10% for taxpayers in the lowest tax bracket). Keep in mind that:

All capital gains from the sale of fund shares are taxable, even those from the sale of shares of a tax-exempt fund. Exchanging shares between funds is considered a sale, which may lead to capital gains. (An exchange involves selling shares of one fund to buy shares in another.) Writing a check against an investment in a fund with a fluctuating share price (generally all funds except money market funds) also triggers a sale of shares and may expose you to tax on any resulting capital gains.

The impact of expenses on return over time is why you should consider expenses when you invest in mutual funds. Even though published return data is always reported net of expenses, higher expenses will reduce your investment return Mutual fund categories

Mutual funds fall into the following categories: money market funds, bonds funds, stocks funds, balanced funds, and asset allocation funds. Stock funds As the name implies, stock mutual funds invest mainly in common stocks. These stocks may be sold on the New York Stock Exchange, the NASDAQ or other exchanges. The objective of a stock fund is long-term capital appreciation versus generating income (dividends) more common with bond funds. However, stock funds may generate modest dividends from the stocks in the portfolio and from short-term cash investments. These stock tend to be larger capitalized stocks versus smaller growth stocks. There are four basic types of stock funds. Stock Fund Types
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3.

Large Cap: Primarily invests in "Blue-chip" companies large, well-known industrials, utilities, technology, and financial services companies with large market capitalization. Large cap stocks are perceived to be less risky than smaller capitalized companies. Mid Cap: Primarily invests in companies whose market capitalization is smaller than large caps but larger than small caps. Mid caps are generally considered more risky than large cap stocks but have a higher return expectation. Small Cap: Primarily invests in emerging companies, thought to have potential for future growth and profit. Small caps are generally considered the riskiest stocks compared to larger capitalized firms but carry the expectation of higher returns. Small cap funds are subject to greater volatility than those in other asset categories.

4.

5.

International: Primarily invests in stocks traded on foreign exchanges but purchased in the United States by U.S. fund companies. International funds are subject to additional risks such as currency fluctuation, political instability and the potential for illiquid markets. Sector: Primarily invests in specific industry sectors such as technology, financials, health, or energy. Since sector funds focus their investments on companies involved in a specific industry sector, the funds may involve a greater degree of risk that an investment in other mutual funds with greater diversification.

Many investors buy stock mutual funds because, historically, stocks have outperformed other types of investments over the long term. However, the value of the stocks in the fund's portfolio may go up or down as the market rises or declines. Remember, past performance is no guarantee of future results. Bond funds Bond funds1 invest in various types of bonds - issued by corporations, municipalities, and the U.S. government. Bond mutual funds are designed mostly to provide investors with a steady stream of income2 versus capital gains. Bond Funds: 1. Invest in bonds, which are debt securities, or IOUs, issued by corporations or governments in exchange for money loaned to them. Generally, the issuer agrees to repay the loan by a specific date and to make regular interest payments to the lender until then. 2. Are a basket of bonds with different durations, yields, credit quality, and values. Because of this, bond funds never mature as would be the case with buying an individual bond.

3. Share value and dividends will fluctuate as interest rates fluctuate and new bonds are purchased or others are sold or mature. 4. Produce profits that consist primarily of dividend distributions. 5. May generate modest capital gains. 6. Fluctuate in value, so it is possible to sell shares at a higher or lower price than you paid for them. Bond Fund Types:

Government: Primarily invest in bonds issued by the U.S. Department of Treasury as well as various federal agencies. Government bonds are generally taxable. Municipal: Primarily invest in municipal bonds issued by state and local governments and their agencies to fund projects such as schools, streets, highways, hospitals, bridges, and airports. Municipal bonds can be insured or non-insured securities. Income generated from municipal bonds may be tax free at both the federal and state level (consult the funds prospectus). Corporate: Primarily invest in bonds issued by corporations to help fund business activities. Income from corporate bonds is taxable.

Bond fund shares are not guaranteed and will fluctuate with market conditions and interest rates and include a greater risk to principal than Certificates of Deposit. Shares, when redeemed, may be worth more or less than their original cost.
2

Income may be subject to the Alternative Minimum Tax (AMT) and capital appreciation from discounted bonds may be subject to state and local taxes. Money market funds

Money market funds invest in short-term securities such as Treasury bills. Most money market funds offer a higher rate of interest than bank savings accounts, and some are free of federal or state taxes. But unlike bank savings accounts, money market funds are not FDIC insured. Money market mutual funds are designed to be more stable than stock or bond funds. Money market funds are designed to provide steady dividend income on the investment amount, although the yield may fluctuate daily. Taxable: Invest in short-term obligations from corporations. Tax-free: Invest in short-term obligations from government entities. Balanced Funds:

Invest in stocks, bonds, and cash investments, in varying proportions. Produce dividend and capital gain distributions and share price appreciation in proportion to their allocation among the three major asset classes.

Asset Allocation Funds: In an asset allocation fund, the manager will diversify the assets among each category: cash, bonds, and stocks and weight them according to the portfolio strategy. The manager will redistribute the weightings according to market conditions. Portfolio strategies generally differ according to risk tolerance:

Aggressive Growth Strategy Portfolio Growth Strategy Portfolio Growth and Income Strategy Portfolio Income Strategy Portfolio

Asset allocation funds are usually made up of a combination of other mutual funds within the same fund family. As market conditions change, the manager has the discretion to reduce exposure in one fund and increase it in another. Just about all mutual fund families allow you to switch between funds in the same family and class (A, B, or C shares) without incurring any costs. Fund Management Actively managed funds: Mutual Fund managers are professionals. They are considered professionals because of their knowledge and experience. Managers are hired to actively manage mutual fund portfolios. Instead of seeking to track market performance, active fund management tries to beat it. To do this, fund managers "actively" buy and sell individual securities. For an actively managed fund, the corresponding index can be used as a performance benchmark. Is an active fund a better investment because it is trying to outperform the market? Not necessarily. While there is the potential for higher returns with active funds, they are more unpredictable and more risky. From 1990 through 1999, on average, 76% of large cap actively managed stock funds actually under performed the S&P 500. (Source - Schwab Center for Investment Research) Actively managed fund styles: Some active fund managers follow an investing "style" to try and maximize fund performance while meeting the investment objectives of the fund. Fund styles usually fall with in the following three categories. Fund Styles:

Value: The manager invests in stocks believed to be currently undervalued by the market.

Growth: The manager selects stocks they believe have a strong potential for beating the market. Blend: The manager looks for a combination of both growth and value stocks.

To determine the style of a mutual fund, consult the prospectus as well as other sources that review mutual funds. Don't be surprised if the information conflicts. Although a prospectus may state a specific fund style, the style may change. Value stocks held in the portfolio over a period of time may become growth stocks and vice versa. Other research may give a more current and accurate account of the style of the fund.

You make money from your mutual fund investment when:

The fund earns income on its investments, and distributes it to you in the form of dividends. The fund produces capital gains by selling securities at a profit, and distributes those gains to you. You sell your shares of the fund at a higher price than you paid for them.

Section 6. Investment Company Act of 1940. The Public Utility Holding Company Act of 1935 required Congress to direct the SEC to study the activities of investment companies and investment advisers. The study results were sent to Congress in a series of reports filed in 1938,1939, and 1940, causing the creation of the Investment Advisers Act of 1940 and the Investment Company Act of 1940. The legislation was supported by both the Commission and the industry. Activities of companies engaged primarily in investing, reinvesting, and trading in securities, and whose own securities are offered to the

investing public, are subject to certain statutory prohibitions and to Commission regulation under this act. Also, public offerings of investment company securities must be registered under the Securities Act of 1933. Investors must understand, however, that the Commission does not supervise the investment activities of these companies and that regulation by the Commission does not imply safety of investment. In addition to the registration requirement for such companies, the law requires they disclose their financial condition and investment policies to provide investors complete information about their activities. This act also:

Prohibits such companies from substantially changing the nature of their business or investment policies without stockholder approval; Bars persons guilty of securities fraud from serving as officers and directors; Prevents underwriters, investment bankers, or brokers from constituting more than a minority of the directors of such companies; Requires that management contracts (and any material changes) be submitted to security holders for their approval; Prohibits transactions between such companies and their directors, officers, or affiliated companies or persons, except when approved by the SEC; Forbids such companies to issue senior securities except under specified conditions and upon specified terms; and Prohibits pyramiding of such companies and cross-ownership of their securities.

Other provisions of this act involve advisory fees, not conforming to an adviser's fiduciary duty, sales and repurchases of securities issued by investment companies, exchange offers, and other activities of

investment companies, including special provisions for periodic payment plans and face-amount certificate companies. Regarding reorganization plans of investment companies, the Commission is authorized to institute court proceedings to prohibit plans that do not appear to be fair and equitable to security holders. The Commission may also institute court action to remove management officials who have engaged in personal misconduct constitution a breach of fiduciary duty.

Where to Purchase Mutual Funds Here are a few questions one should ask before opening an account to purchase a mutual fund: 1. Is a wide selection of both load and no-load funds available? More option are always better than less options. 2. When purchasing a fund, whether load or no-load, will there be any other fees charged? Many mutual fund providers will charge a fee for purchasing both load and no-load fund from another mutual fund family and some will not allow the purchase at all. 3. Will a financial planner be assigned to the account? A financial planner can assists you in many ways whether it's to assist in setting up a diversified portfolio, researching funds and providing information, or dealing with problems in your account. This less time, knowledge, and resources you have the more beneficial a full-service representative can be. Financial planners take a proactive approach based on knowledge, experience, and foresight. The less knowledge, experience, and foresight an individual has the more likely their financial decisions will be reactive. Reactive planning can be an expensive way to learn.

4. If a full-service representative is available, is there a fee? Seldom will a mutual fund providers provide a full-service representative. Firms that do offer this service may impose an extra fee such as a "wrap fee" common with larger broker/dealers. A common wrap fee is usually 1% to 3% annually on the assets being managed. Mutual fund providers that are not full-service may provide the assistance of some type of financial advisor on a fee basis. Consult each provider to determine the cost for representation. 5. Does the mutual fund provider have its own proprietary funds? Mutual fund providers will benefit financially if you invest in their funds compared to another fund family. Because of this financial benefit, the provider may be biased towards there funds when making recommendations. If your investing with a specific mutual fund family compared to a provider of mutual funds, it is highly unlikely a fund family will ever recommend a fund from another mutual fund family. Currently firms like Charles Schwab and Fidelity may charge a transaction fee when purchasing no-load funds of other mutual fund families. The goal of financial planning is to allocate an individual's limited resources more efficiently to optimize current wants and needs while providing for future goals and objectives. The purpose of a Certified Financial Planner or CFP is to assist in the financial planning process by providing a level of knowledge, experience, and foresight beyond that of the individuals they represent with the objective of making better proactive decisions versus potentially costly reactive decisions. If you are searching for a financial planner or want to test the knowledge of your current advisor, click here for a printable list of financial topics you can address to assess their level of knowledge. If the person you are interviewing is not a CFP, have him or her

sign the bottom of each page attesting to their ability and what they are licensed to legally discuss with you. A certified financial planner looks at each area of financial planning collectively. Here are a few areas that should minimally be covered:

Retirement Planning - develop a written plan based on your goals and objectives to increase the probability of success. Tax Planning* - tax strategies that reduce current and future income tax, capital gains tax, estate tax, gift tax, and other taxes. Insurance Planning - ensure you have proper and adequate insurance coverage for disability, life, health, long-term care, homeowner's, auto, E&O, and property and casualty insurance. Budgeting - analyze spending and saving habits and create a plan that differentiates and prioritizes needs and wants. Debt Planning - develop strategies that manage and reduce debt. Business Planning - structure, benefits, and succession. Investment Planning - create an investment strategy based on current and future goals with the objective of reducing risk through strategic diversification while achieving desired returns. Special Needs Planning - custom-designed plans that incorporates unique goals and objectives such as children's education, purchasing investment property, family care, etc. Estate Planning* - develop a written plan with the objective of reducing estate and gift taxes, protecting wealth, and transferring wealth. Employee Benefits - help clients understand, analyze, and utilize their company benefits.

* Always consult your personal tax advisor before implementing tax strategies as well as an estate planning attorney for estate planning.

Essentially, a CFP is the team captain collaborating with tax advisors, attorneys, investment advisors, insurance advisors, loan officers, employer's benefits personnel, etc. in an effort to develop a plan that identifies inefficiencies, reduces risk, increases and protects wealth while enhancing the client's quality of life. Anyone can call themselves a financial planner, but only a CFP has met specific educational and testing requirements giving them a distinct advantage over other financial advisors due to their comprehensive approach to the financial planning process. For more information on financial planning, visit www.cfp.net. Visit the Financial Planning Association to find a Certified Financial Planner. The goal of financial planning is to allocate an individual's limited resources more efficiently to optimize current wants and needs while providing for future goals and objectives. The purpose of a Certified Financial Planner or CFP is to assist in the financial planning process by providing a level of knowledge, experience, and foresight beyond that of the individuals they represent with the objective of making better proactive decisions versus potentially costly reactive decisions. If you are searching for a financial planner or want to test the knowledge of your current advisor, click here for a printable list of financial topics you can address to assess their level of knowledge. If the person you are interviewing is not a CFP, have him or her sign the bottom of each page attesting to their ability and what they are licensed to legally discuss with you. A certified financial planner looks at each area of financial planning collectively. Here are a few areas that should minimally be covered:

Retirement Planning - develop a written plan based on your goals and objectives to increase the probability of success. Tax Planning* - tax strategies that reduce current and future income tax, capital gains tax, estate tax, gift tax, and other taxes. Insurance Planning - ensure you have proper and adequate insurance coverage for disability, life, health, long-term care, homeowner's, auto, E&O, and property and casualty insurance. Budgeting - analyze spending and saving habits and create a plan that differentiates and prioritizes needs and wants. Debt Planning - develop strategies that manage and reduce debt. Business Planning - structure, benefits, and succession. Investment Planning - create an investment strategy based on current and future goals with the objective of reducing risk through strategic diversification while achieving desired returns. Special Needs Planning - custom-designed plans that incorporates unique goals and objectives such as children's education, purchasing investment property, family care, etc. Estate Planning* - develop a written plan with the objective of reducing estate and gift taxes, protecting wealth, and transferring wealth. Employee Benefits - help clients understand, analyze, and utilize their company benefits.

* Always consult your personal tax advisor before implementing tax strategies as well as an estate planning attorney for estate planning. Essentially, a CFP is the team captain collaborating with tax advisors, attorneys, investment advisors, insurance advisors, loan officers, employer's benefits personnel, etc. in an effort to develop a plan that identifies inefficiencies, reduces risk, increases and protects wealth while enhancing the client's quality of life.

Anyone can call themselves a financial planner, but only a CFP has met specific educational and testing requirements giving them a distinct advantage over other financial advisors due to their comprehensive approach to the financial planning process. For more information on financial planning, visit www.cfp.net. Visit the Financial Planning Association to find a Certified Financial Planner.
What is an Asset Management Company and What are Its Functions?
An asset management company (AMC) is a legal entity that conducts a professional activity on the management of assets of collective investment institutions (CII) based on the license issued by the Securities and Stock Market State (National) Commission of Ukraine. An asset management company: establishes CII; issues and places CII securities; engages agents that place securities among the investors; exercises management of CII assets; after the money has been transferred to the CIIs account, the AMC directs them to the purchase of assets with the aim to create the portfolio with the structure of the given CII specified in its Investment Declaration; analyzes the markets of securities, real estate and other assets - the instruments which constitute a CIIs assets; conducts research of potential objects for investments; performs daily revaluation of assets, draws up contracts on purchase and sale of assets, compiles reports for government bodies that supervise and regulate the activities of AMC; carries out routine activities of CII.

Mobile No : +91-9566210956 E-Mail: aishwaryagurunathan@yahoo.co.in

Project Title: A comparative study on Birla infrastructure fund wise other infrastructure funds in the mutual fund industry