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    A STUDY ON AWARENESS OF MUTUAL FUNDS.

    SUBMITTED BY:-

    name

    MBA IIIrd SEM.

    Under the Supervision of

    Mr. Vinay Prakash Srivasatava

    (Regional Head)

    In Partial Fulfillment of Award of Master of Business Administration

    SUBMITTED TO:-

    MR.

    (HOD OF MBA)

    Declaration

    I , a Student of MBA 2nd Year,

    hereby declare that the project on A study on AwarenessOf Mutual

    Funds. is my original work and that it has not previously formed the basis

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    for the award of any other Degree, Diploma, Fellowship or other similar

    titles.

    CERTIFICATE

    This is to certify that Gautam Kumar Sharma a bonafied student of

    College (Sonipat) is undergoing his training and prepared his Interim Report

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    under my supervision and guidance and this is a piece of original work and

    is true to best of my knowledge.

    Acknowledgement

    I would like to thank my Regional Head, Mr. Vinay Prakash Srivastava,

    for accepting to be my guide. No words are enough to express my gratitude

    to his for taking out time from his hectic schedule for being my guide.

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    I took training in Awereness on Mutual Funds.It was my fortune

    to get training in a very healthy atmosphere. I got ample opportunity to view

    the overall working of the stock exchange.

    CONTENTS

    Declaration

    Certificate

    Acknowledgement

    Preface

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    Company Profile

    Introduction

    Objective of the study

    Research methodology

    Findings

    Conclusions

    Bibliography

    ABOUT KARVY:

    Building a heritage of Confidence.

    Since its inception in 1982, Karvy has demonstrated a dedication coupled

    with dynamism that has inspired trust from various segments, corporate,

    government bodies and individuals. Karvy has since been performing a

    pivotal role as the interface between these players.

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    Our ability to mass customize and offer a diverse range of products for a

    diverse range of customers has helped corporate to uniquely position

    themselves in the market place. These diverse range of services cut across

    multiple delivery channels, service centers, web, mobile phones, call center

    and has brought home the benefits of technology to customers, middle men

    and corporate.

    Going forward, we will create new products and services, which would

    address the needs of the end customer. Our single minded focus in delivering

    products for customers has given us the distinguished position of being the

    preferred provider of financial services in the country.

    Commodities market, contrary to the beliefs of many people, has been in

    existence in India through the ages. However the recent attempt by the

    Government to permit Multi-commodity National levels exchanges hasndeed

    given it, a shot in the arm. As a result two exchanges Multi Commodity

    Exchange

    (MCX) and National Commodity and derivatives Exchange (NCDEX) have

    come

    into being. These exchanges, by virtue of their high profile promoters and

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    stakeholders, bundle in themselves, online trading facilities, robust

    surveillance

    measures and a hassle-free settlement system. The futures contracts

    available

    on a wide spectrum of commodities like Gold, Silver, Cotton, Steel, Soya

    oil,

    Soya beans, Wheat, Sugar, Chana etc., provide excellent opportunities for

    hedging the risks of the farmers, importers, exporters, traders and large scale

    consumers. They also make open an avenue for quality investments in

    precious

    metals. The commodities market, as it is not affected by the movements of

    the

    stock market or debt market provides tremendous opportunities for better

    diversification of risk. Realizing this fact, even mutual funds are

    contemplating of

    entering into this market

    .

    Karvy Comtrade Limited is another venture of the prestigious Karvy group.

    With our well established presence in the multifarious facets of the modern

    Financial services industry from stock broking to registry services, it is

    indeed a pleasure for us to make foray into the commodities derivatives

    market which opens yet another door for us to deliver our service to our

    beloved customers and the investor public at large.

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    With the high quality infrastructure already in place and a committed

    Government providing continuous impetus, it is the responsibility of us, the

    intermediaries to deliver these benefits at the door-steps of our esteemed

    customers. With our

    expertise in financial services, existence across the lengths and breadths of

    the country and an enviable technological edge, we are all set to bring to

    you, the pleasure of investing in this burgeoning market, which can touch

    upon the lives of a vast majority of the population from the farmer to the

    corporate alike. We are confident that the commodity futures can be a good

    value addition to your portfolio.

    The company provides investment, advisory and brokerage services in

    Indian Commodities Markets. And most importantly, we offer a wide reach

    through our branch network of over 225 branches located across 180 cities.

    To open a commodities trading account, click here else contact the nearest

    Karvy branch.

    Registered Office:

    Karvy Comtrade Limited.

    46, Avenue 4, Street No. 1,

    Banjara Hills, Hyderabad 500 034.

    Andhra Pradesh, India.

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    Mail : [email protected]

    Telephone : +91-4023431569/23388708/32946279/32946313

    Fax : +91-040-

    About KARVY Insurance Broking Ltd. (KIBL):

    Introduction :

    At KIBL we provide both life and non-life insurance products to retail

    individuals, high net-worth clients and corporate. With the opening up of the

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    insurance sector, we are in a position to provide holistic and tailor made

    policies for different segments of customers. With Indian markets seeing a

    sea change, both in terms of investment pattern and attitude of investors,

    insurance is no more seen as only a tax saving product but also as a product

    which provides a financial solution for the customer. Our wide national

    network, spanning the length and breadth of India, further supports these

    initiatives. Our strengths include personalized service provided by a

    dedicated team committed in giving hassle-free service to the clients.

    Welcome to Karvy Investor Services Limited

    Deepening of the Financial Markets and an ever-increasing sophistication in

    corporate transactions, has made the role of Investment Bankers

    indispensable to organizations seeking professional expertise and

    counseling, in raising financial resources through capital market apart from

    Capital and Corporate Restructuring, Mergers & Acquisitions, Project

    Advisory and the entire gamut of Financial Market activities.

    Karvy Investor Services Limited (KISL), a SEBI registered Merchant

    Banker has emerged as a leading Investment Banking entity in the country

    with over a decade of experience. KISL has built its reputation by

    capitalizing on its qualified.

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    Professionals, who have successfully executed a large number of complex

    and unique transactions.

    Our quality professional team and our work-oriented dedication have

    propelled us to offer value-added corporate financial services and act as a

    professional navigator for long term growth of our clients, who include

    leading corporate, State Governments, Foreign Institutional Investors, public

    and private sector companies and banks, in Indian and global markets.

    We have also emerged as a trailblazer in the arena of relationships, both at

    the customer and trade levels because of our unshakable integrity, seamless

    service and innovative solutions that are tuned to meet varied needs. Our

    team of committed industry specialists, having extensive experience in

    capital markets, further nurtures this relationship.

    KARVY REALTY (INDIA) LIMITED

    Karvy Realty (India) Limited (KRIL) is promoted by the Karvy Group,

    Indias largest financial services group. The group carries forward its legacy

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    of trust and excellence in investor and customer services delivered with

    passion and the highest level of quality that align with global standards.

    Karvy Realty (India) Limited is engaged in the business of real estate and

    property services offering:

    Buying/ selling/ renting of properties

    Identifying valuable investments opportunities in the real estate sector

    Facilitating financial support for real estate and investments in properties

    Real estate portfolio advisory services.

    KRIL is your personal real estate advisor guiding and hand holding you

    through real estate transactions and offering valuable investment

    opportunities.

    Building on the KARVY brand as a leading industry benchmark for world

    class customer servicing and quality standards, KRIL brings to investors a

    reputation of reliability, dependability and honesty. Our understanding of the

    needs and preferences of ourClients and our teams of qualified realty

    professionals help us to establish fruitful relationships with buyers and

    sellers of properties alike.

    INTRODUCTION

    As we all know financial sector is growing very fast. One aspect every

    financial company is emphasizing is that its different offers should reach to

    its targeted customer within time. For fulfillment of this purpose the term of

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    financial marketing was introduced. Financial marketing basically deals

    with marketing of various financial instrument like bonds, securities, mutual

    funds and all other services provided by various NBFCs. Todays as per

    capital income is growing up people are getting into investment business.

    The factors that investors should considers while deciding any

    investment is the track records of company liability side of company.

    MUTUAL FUNDS:

    A mutual fund is a trust that pools together the saving of a number of

    investors who share a common financial goal. All such investor buy units of

    a fund that best suits their needs be its capital growth regular returns or

    safety of capital. The fund manager then invests this pool of money in

    securities coming from shares to debentures to money market instrument

    depending on the objective of the scheme.

    The money thus collected is then invested by the fund manager in different

    of

    Securities. These could ranges from shares to debentures to money market

    Instrument depending upon the scheme started objective. The income earned

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    Through this investment andthe capital appreciation realized by the scheme

    are shared by its unit holder in proportion to the numbers of unit owned by

    them.

    Mutual funds are a pool of investments. In simple words a collection

    of money from small investors and then in returns giving them a portfolio

    i.e. a variety of investment. it is not wise for an investor to put all his

    investment in a single security. For ex. You are investing all your money in

    a share of single company in any time of slowdown you may incur losses. If

    you hav invested money in different companies loss from one get

    compensated from profit of others. This is what a mutual fund does. These

    dates buying hundred shares of infosys will cost you more than a four lack

    rupees. Thats a fortune? But if you zeals to be the proud owner of these

    pricey stocks is bit extinguished by the astronomical price tag. What do you

    do? The simplest thing to do is of course to walk up to your father in law for

    the ransom or you could sell the dreams to colleges who pool in money to

    jointly buy the hundred stocks. Or you can invest in mutual fund that holds

    infosys stocks.

    While we leave it on you to decide whether the first two option are

    safe and risk free, let us tell you that crores of Indian have found mutual

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    funds a great way to invest when they dont have enough money to buy

    more than a few stocks.

    Mutual funds have many benefits. They offer an easy and inexpensive

    way for an individual to get returns from stocks and bonds without:

    Incurring the risk involved in buying them directly .

    Needing the capital to buy quality stocks.

    Having the expert knowledge to buy or sell stocks.

    Type of mutual funds:

    There are wide variety of mutual fund schemes that cater to investors needs,

    whatever the age financial position, risk tolerance and return exceptations.

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    MUTUAL FUND

    DEBT EQUITY BALANCE

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    How to sell Mutual Funds

    The essence of professional selling toda is building and maintaining of

    high quality relationship, based on establishing a high level of trust and

    credibility with customer indefinitely. You keep your customer by

    continually investing in the quality of your relationship. You should

    approach your customer as a consultant not as a vendor and help them

    achieve their financial goal. The following chart explain the selling process

    of mutual funds.

    Know your product

    Know your client

    Prioritize your client

    Understand your clients need

    Help them choose their investments

    Encourage regular investments

    Commit them to invest

    Provide personalized after sales service

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    Type of clients

    Young and accumulating under 40 seeking capital appreciation. They

    are willing to take high returns.

    Middle aged with family commitments. Aged between 40-60 and

    looking at stable investment and lower risk.

    Retired persons, which are aged above 60. Seeking income to meet

    institution and high net worth individuals. Include corporate, banks, trust

    and wealthy investors who seek an appropriate combination of tax efficient

    growth and income depending upon their returns expectations.

    MUTUAL FUND INDUSTRY:

    An overview:

    The mutual fund industry in India began with the setting of the Unit Trust of

    India (UTI) in 1964 by the Government of India. During the last 36 years.

    UTI has grown to be a dominant player in the industry with assets of over

    Rs. 76,547 crores as on March 31, 2000. The UTI is governed by a special

    legislation, the Unit Trust of India Act, 1963. In 1987 public sector banks

    and insurance companies were permitted to set up mutual funds andaccordingly since 1987, 6 public sector banks have set up mutual funds.

    Also the two Insurance companies LIC and GIC established mutual funds.

    Securities Exchange Board of India (SEBI) formulated the mutual fund

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    (Regulation) 1993. Which for the first time established a comprehensive

    regulatory framework for the mutual fund industry.

    Since then several mutual funds have been set up by the private and joint

    sectors.

    Special Schemes:

    The category include index schemes that attempt o replicate the performance

    of a particular index such as the BSE Sensex of the NSE 50, or industry

    specific schemes which invest in specific industries or sectoral schemes

    which invest exclusively in segments such as A group shares or initial

    public offering.

    Index fund schemes are ideal for investors who are satisfied with a return

    approximately equal to that of an index.Sectoral fund schemes are ideal for investors who have already decided to

    invest in a particular sector or segment.

    Distribution of Income earned on Mutual Fund:

    The income by the investment of the scheme, net of recurring expenses

    subject to a maximum ceiling of 2.5% in equity schemes and 2.25% in debt

    schemes, is already by way of dividends or capital gains by the unit holders

    of the scheme proportionately. These recurring expenses include asset

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    management fees, not exceeding 1.25% in case of equity funds and lower

    than 1% in case of debt funds.

    Features of Mutual Funds:

    Mutual Funds offer a wide variety of schemes. Many of these schemes,

    which only invest in debt instruments like company debentures, government

    securities and money market instruments. Such schemes do not invest at all

    in equity markets and offer safe investment alternative for your hard-earned

    money. Infact both internationally and in India, mutual funds manage more

    money in debt schemes than in equity schemes.

    TYPES OF MUTUAL FUNDS:

    Debt Funds/Bonds Funds:

    It invest only in debt instrument, government securities and money market

    instruments, completely avoiding any investment in the stock markets.

    Hence they are safer than equity funds. At the same time the expected

    returns from debt funds would be lower.

    Gift Funds

    It is debt fund, which invest only in government securities and hence have

    zero credit risk.

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    Liquid Funds:

    They are debt funds, which invest in short term paper, with maturities

    usually not exceeding 180 days and hence are safe from interest rate risk.

    Balanced Funds:

    It invest in a mix of equity and debt investments. Hence they are less risk

    than equity funds, but at the same time provide commensurately lower

    returns. They provide a good investment opportunity to investor who do not

    wish to be completely exposed to equity markets, but are looking for higher

    returns than those provided by debt funds.

    Equity Funds:

    Invest entirely in the stock markets and attempt to provide investors theopportunity to benefit from the higher returns, which stock markets can

    provide. However they are also exposed to the volatility and attendant risks

    of stock market investment and hence should be chosen by investors who

    have risk taking capabilities. Sectoral funds also specialized equity funds,

    which restrict their in vestment only to shares of a particular sector and

    hence, are riskier than diversified equity funds.

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    Detailed Analysis of Mutual Funds:

    The Mutual Fund market in India is still in its early stages. Investors regard

    mutual fund as safe and ideal investment instruments which helps them meet

    their varied investment.

    Mutual Funds are still considered a good invest but the investor should

    achieve his financial goals.

    Today many investor have started to see mutual funds as the best way to

    invest their savings. They see mutual funds as safer bet as compared to bank

    fixed deposits.

    1. Mutual Funds are more transparent than any other form if

    investment.

    2. The investor is aware where his money is used.

    3. Mutual funds are less risky than direct investment I equities.

    4. There no need to maintain paper work for transfer of instrument.

    Dividend warrants and redemption dated.

    5. The best bargain in mutual fund is that one can enter the fund

    with an investment of only 1000 whereas an individual would

    need much higher amount to invest in a share or bond.

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    DEBT/INCOME FUNDS:

    A class of debt funds that invest in corporate debt with the expectation of

    safety of principal and steady income generation.

    To service to Investment objective most income funds invest a bulk of their

    corpus in debt paper of financially strong companies.

    Fund managers look beyond safe debt paper at securities issued by less

    credit worthy companies.

    Such companies offer higher returns. Its a high return strategy which has

    backfired money a time in India market.

    The debt performing income funds are those which has struck to safe debt

    those that ventured into risk debt are mostly languishing near the bottom of

    the pile.

    Advantage:

    For the purpose of computing NAV debt securities are valued differently

    from equities. Funds equity holdings are valued on the basis of their market

    price. Since debt securities are not traded actively or not traded at all the

    market price do not always accurately reflect their true worth. Therefore

    mutual funds value debt securities held by them on the basis of yields

    specified in the handful of approved valuation models, revised weekly.

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    Default Risk:

    Many issuers do default increases as one goes down the rating scale. In

    credit rating parlance dept paper rated BBB and above is considered to be

    investment grade from BB to B speculative grade.

    Although the issuer is servicing the debt, his financial position is precarious

    and C & D default grade, the issuer is defaulting AA is widely considered to

    be the safety floor.

    Liquidity Risk:

    The other problem with low rated paper is poor liquidity. On an average

    corporate debt worth just Rs. 150 crore is traded in a day. Of this AAA paper

    accounts for 90% and AA another 5%. There is partially no liquidity in low

    rated paper and a fund often has no option but to hold the paper through the

    companys journey.

    SHORT TERM GILT FUNDS:

    As an investor one has a little longer investment horizon than few months to

    a year and we also want to pay it safe and moreover the investor seeks

    current income also. The short term gilt funds could just be well suited.

    Credit Risk : These funds invest primarily in govt. bonds and treasurybills, so do not carry any credit risk, By owing short maturity gilts, these

    funds are less Susceptible, too big saving in value. Hence much less risky

    than other investments besides being highly liquid.

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    Features:

    1. Investors friendliness

    2. Higher returns

    3. Lower risk

    4. Differ in portfolio maturity.

    Example: The average life of a sovereign bond term gilt fund was 8.16 on

    March 31, 2002. On the other hand it was little over two year under short

    term gilt funds.

    5. Lower average maturity

    6. Interest rate sensitivity is lower

    7. Low on volatility

    While this category so low on volatility it surely does not mean that the

    investors investment are absolutely insulated here from the vagaries of

    the market. This category did witness a fail in net asset value when

    interest rates hardened in July, 2000.

    8. Conservative Investment:

    Due to this the funds carry lower risk but also offer lower returns for the

    financial year 2001-02 while long term gilt funds cover up to 25.49%

    These gained an average of 11.59%.Risk They could be a little more volatile than the liquid funds as measured

    by standard deviation of returns.

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    Comparative Advantage:

    Investment is default free sovereign bonds-these bonds offer better credit

    quality than medium term debt funds.

    Parking a large part of assets in corporate bonds of varying qualities

    Mandate to stretch portfolio maturity up to 3-4 year.

    Can beat debt funds in softening interest rates, since gilts can be actively

    traded.

    Sectoral Funds:

    The mutual fund industry is expending to cover all the ends of the general

    investor. The launch of sector funds is one step in this direction. With sector

    funds, the MF sector has expanded its products range, and helped fund

    managers widen their products designs. Sector finds are more focused as

    their instruments are aimed at a particular industry so that maximum benefit

    can be achieved from the market cycles. However they work well when the

    market timing is perfect, caution experts.

    1. since sector funds comprise instruments of a particular sector.

    2. The investment is at a greater risk. That is, the effect of any

    movement in the sector.

    Upward or downward is clearly.

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    3. The diversified funds have some protection against markets odds

    since the instruments are spread across various sectors. Sliding

    show in one can be countered with the other super hit sector.

    4. In sector funds, is the gains will be stupendous, the losses too may be

    high. It is therefore suggested that sector funds should constitute very

    small proportion of investors portfolio.

    Balanced Funds:

    This fund is suitable for anyone who can put away money for the medium-

    term (upwards of 3 years). It suits the busy saver who would like to adapt a

    sensible approach to investing with a well-balanced portfolio of stock and

    bonds but does not have the time and expertise to constantly keep re-

    balancing his portfolio to stay on the sensible path.

    While there is a tendency for many to classify 9 stocks as risk and bonds

    as safe research shows many interesting facts. If the investor takes time to

    look up the section he can get a better understanding of various investment

    options and their performance over varying time periods

    SYSTEMATIC WITHDRAWAL PLAN:

    Systematic withdrawal Plan is an option from mutual funds by which the

    investors can get regular by steadily redeeming small amount of their

    holding month,

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    where as their investment remains same. This can help in recording a far

    lower taxable income, but same as dividend payout, thus resulting in lower

    tax outgo and higher post tax value of investment.

    Key Features:

    1. Option of receiving month/quarterly income as specified by the

    investor based on his needs and investment goals.

    2. Withdrawal can be fixed amount or fixed number of units.

    3. Withdrawal is normally processed on the 30of each month and

    cheques couriered on the first of the month.

    4. Additionally facility to receive payouts directly into his bank

    account through the Electronic Clearing Service

    5. TDS deduction on SWP on growth option

    6. No entry or exit load

    In case of normal divided payout the dividend amount is distributed which

    the investor receives as income and the units that he has bought are left

    intact.

    When one withdraws some amount under SWP there is a simultaneous

    reduction in the number of units being held by the investor? But the real

    benefit would be on the tax aspect.

    As the dividend become taxable in this budget @ 31% to investor would befar better off using the withdrawal route.

    Time of purchase is Rs. 10 which means a total of Rs. 10000 units are

    allotted to the investor. Under the dividend plan, dividend is distributed @

    7.5% there is payment of Rs.750 each month for a period of 12 months

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    amounting to Rs. 9000 over a period. As per the budget the entire amount

    will be taxable in the hands of the investor.

    In the second option the investor opts for growth option of the income fund

    and Redeems units allotted to him by an amount equivalent to Rs. 750 each

    month. The NAV of the fund if assumed to increase by 10 paisa every month

    and at the end of the every month redemption takes place at the prevailing

    NAV. According to this calculation the NAV at the end of the month is Rs.

    10.70. When redemption occurs at this stage a amount of Rs.750 is paid out

    just Rs. 5.58 becomes his taxable income.

    Reason

    The reason behind this is that every withdrawal results in short term capital

    gain, which is the difference between the withdrawal amount ad the

    respective cost of acquisition ad taxed as per respective slab applicable to

    the investor. The same process continues every month.

    Now the capital gain is taxable @ 10% which is lower than the dividend tax.

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    Entities Involved in Mutual Fund

    The following diagram illustrates various entities involved in the organizational

    structure of Mutual Fund

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    Parties involved in Mutual Fund:Name of the parties involved Role and function

    Sponcer * Established MF along with any individual

    corporate

    * Liability limited to his contribution

    * Contribution by the sponsor must be

    maximum 40% of network of AMC (only

    who qualify the criteria permitted by setup

    MF

    Trustee * Board of trusty holding property of the

    benefit of the unit holders.

    AMC (Asset Managing Company) * Company registered under the

    company Act,

    (Investment Manager of the Fund) 1956 and approved by SEBI

    * Entrusted with the task of managing

    scheme and operations.

    * Minimum network of Rs. 5 crore at least

    50% of Board of AMC are independent

    director i.e. not connected with the spacing

    organization.

    *Cannot act as an AMC/Trusty to any

    Mutual Fund

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    * No person can be a Director of more than

    AMC or Director of Trust Company open

    by same AMC.

    Custodian * Person holding a certificate to carry on

    ness of custodian of securities under

    (Custodian

    SEBI) (Custodian of security regulations

    to hold fund assets and details from the

    AMC.

    31.10.0Entry Lad and Exit Load: A load is a sales fee charged by the fund.

    Entry Load Charged at the time of entering into the scheme. The entry

    load percentage is added NAV at the time of allotment of

    units.

    For example, if an open-end funds per unit is Rs. 11 with

    frontload of 2%. The funds which an investor can buy a

    unit is Rs. 11.22.

    In other works, Rs. 100 would buy units=(100-

    2)=98/11=8.9 units.

    Exit Load Charged at the time of receeming transfer betweenschemes. The exit load percentage deducted from the NAV

    at the time of redemption or transfer between schemes.

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    For example, if the redemption price is Rs. 10.70, with a

    back end load of 2% of exit charged by the fund amounts to

    Re. 0.21 so the net sale proceed will be (10.70-0.21)=1049.

    In other words , sale of 50 units would not fetch50x10.70=Rs. 535 but only 50x10.49=524.5

    ENTRY LOAD AND EXIT LOAD

    Return of Investment

    The investor can receive returns in one of two ways.

    Capital Appreciation Profit earned on sale of units at a higher NAV

    than the original cost.

    Income distribution When a fund makes a profit on its investments,

    this

    (dividend) profit will give to investors as a dividend which

    can be re-invested in the fund or retail the form of

    cash.

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    INVESTMENT IN MUTUAL FUND

    How to invest in a scheme of a mutual fund:

    Mutual funds normally come out with an advertisement in news

    papers publishing the date of launch of the new schemes. Investors can also

    contact the agents and distributors of mutual funds eho are spread all over

    the country for necessary information and application forms. Forms can be

    deposited with mutual funds through the agents and distributors eho provide

    such service. Now a days, the post office and banks also distribute the units

    of mutual funds. However, the investors may please not that the mutual

    funds schemes being marketed by banks and post offices should not be taken

    as their own schemes and no assurance of returns is given by them. The only

    role of banks and post offices is to help in distribution of mutual funds

    schemes to the investors.

    Investors should not be carried away by commission/gifts given by

    agents/distributors for investing in a particular scheme. On the other hand

    they must consider the track record of the mutual fund and should take

    objective decision.

    Risk management and Mutual funds:

    The basic objective of mutual fund is to provide a diversified portfolios so as

    to reduce the risk in investment at lower cost. The mutual fund industries

    worldwide is based on this primes. Investor take up the mutual funds root for

    the investment believe that their risk is minimized at lower cost, and they get

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    the optimum portfolio of securities that match their risk appetite. They are

    ignorant about the divers technique and hedging product that can be used for

    minimizing volatility and hence take the help of fund managers. It is very

    daunting to note that the drop in the NAV of some of the schemes is higher

    than the erosion of value in some of the ICE stocks. The recent survey

    conducted by PricewaterhouseCoopers (PWC) on risk management by

    mutual funds has posted interesting as well as worrying results. According to

    the survey, as many as 50% of the respondent mutual funds are not

    managing risk properly. If this not

    all, 50%of the respondent did not even have documented risk procedures or

    dedicated risk manager. the respondent included among other, some of the

    heavy weights of the Indians MF industries viz Templeton , alliance,

    prudential and IDBI Principal MF. Worrisome news it is , for the investor

    who still believes MFs are the route manage ones money in a better and

    safe manner. The recent wild movement in the NAVs of several equity funds

    have belied all expectation of a diversified portfolio from the fund managers

    when the basic tenet behind portfolio is risk management. Mr.Shyam Bhat,

    Fund Manger-Tata asset management Ltd. said Indian Mutual Fund industry

    is not using statistical techniques of risk management but is using

    diversification effectively within market limitations. As far as use of

    derivatives is concerned, they are not

    presently used because of the low volumes, low liquidity and absence of

    sufficient hedging products in market .

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    Aggression has been the key words followed by AMCs when it comes to

    taking position in stocks. With investment in volatile ICE sectors being the

    driver of growth last season, almost everybody has taken big exposure to

    them. Birla MF maintained it exposures in infosys to almost 25% in all of its

    equity schemes throughout last year. The same true for ING Saving Trust

    that has Rs.60 crores invested in Wipro and Infosys out of the total fund size

    of 135 crores in its growths funds. The result of these exposure is that the

    fund witnessed a movement of almost 9%in single day on market saw an

    appreciation of around 4.36%. in their quest for growth ,many funds have

    seen

    very volatile movements in NAVs. The investor confidence may not be lost

    but such volatility sure dents it. The point is not whether AMCs should be

    chastised or not but just to investor considers mutual funds as the expert in

    investment decisions and so naturally expects the decision of investing in

    mutual funds to bear fruits. However AMCs often leave a lot to be desired as

    they falter on important from like NAV and portfolio disclosure beside

    posting high fluctuation and poor returns. The Beta of some of the favorites

    stock is shown below. The Table contains the Beta of some of the ICE

    scrips that constitute the top 10 holding across various equity funds.

    DSQ Software 2.09 Taurus Libra

    Leap(5.68%)

    DSP ML Tech (6.06%)

    Satyam Computer service Ltd 2.00 ING Growth Port

    (11.2%)

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    Alliance Equity Fund

    (9.7%)

    Chola Freedom (11.51%)

    SSI Ltd 1.98 Dhanasamridhi (9.18%)

    Wipro Ltd 1.87

    ING

    growth(23.8%),Magnum

    Sector Fund-

    infotech(15%)

    Alliance new Millennium

    Himachal Futuristic 1.82 UTI Sector-

    Service (9.48%)

    Communication Ltd Taurus Discovery

    Stock(10.4%

    Global Tele-System Ltd 1.81 UTI US 92 (7.02%), ING

    Zee Telefilms Ltd 1.70 UTI Sector Service

    (7.21%)

    ING Growth

    Portfolio(10.06

    Infosys technologies Ltd 1.54 ING Growth Portfolio

    (20.5

    As can be seen, some of the stocks are too volatile and cause wild movement

    in the NAVs of fund that have taken exposures in them. The standard

    deviation of the returns in some of these fund point to it. While Alliance

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    Equity fund has a standard Deviation of 2.53, Birla Advantage has its

    Standard Deviation at 2.57 ING Growth has a standard deviation of 3.3

    which is relatively high due to its exposure to two volatile ICE scrips. Birla

    Advantage has reduced its exposure to infosys drastically in the two months

    and taken step to contain volatity. Similar

    steps are being planned by SBI mutual fund that is recasting its equity

    portfolio to reduce risks as they can scare investors.

    It is unfortunate that the fund managers are not taking due care for

    Minimizing the risk and are in a race to post higher returns during the phase

    of

    Bull-run. They should understand that the investor forget the high returns

    posted

    in any specific period very soon but they take hell lot of time to forget the

    burns

    they get during period of losses. Hence for marinating the confidence of the

    retail

    Investor it is very important of control wild fluctuation in the NAVs. the

    basic

    Technique of portfolio management thrust on diversification, whichpreaches

    Inclusion of negative beta, stocks in the portfolio so as to minimize the

    impact of

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    Objective of study

    To know about the mutual funds.

    Customer satisfaction by the organization

    To create awareness about mutual funds providing by karvy

    To know about the corporate worlds working environment and to

    enhance our potential.

    To convert our theoretical knowledge into practical knowledge.

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    RESEARCH METHODOLOGY

    The basic task of research is to generate accurate

    information for use in decision making. Research can be defined as the

    systematic and objective process of gathering, recording and analyzing data

    for aid in making business decisions.

    There are basically two techniques adopted for obtaining information:

    Primary Data.

    Secondary Data.

    Primary Data is gathered specifically for the project at hand through

    personal interviews with the accounts officers.

    Secondary data is previously collected and assembled for some

    project other than the one at hand. It is gathered and recorded by someone

    else prior to current needs of the researcher. It is less expensive than the

    primary data.

    SECONDARY DATA

    Secondary data was collected from Internet and journal etc.

    Data Collection:

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    Data is collected from secondary sources.

    Sources of data collection are:

    1) www.google.com

    2) www.nseindia.com

    3) www.bseindia.com

    4) www.on-linetrading.com

    For the successful research the manipulation of certain things, concepts, and

    symbols for the purpose of generalization is inevitable. Research is

    simply the pursuit of truth with the help of the study.

    HDFHCHDF

    C TAXSAVER - GROWTH TAXSAVER - GROW

    FINDING

    44

    http://www.on-linetrading.com/http://www.on-linetrading.com/
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    1. HDFC TAX SAVER PLAN-Growth

    The fund plans to provide tax benefits along with capital appreciation

    Last Divdend

    Declared210 % as on Apr 4, 2000

    MinimumInvestment (Rs)

    38053

    Purchase

    RedemptionsDaily

    NAV

    CalculationDaily

    45

    Type ofScheme Open Ended

    Nature Equity

    Option Growth

    Inception

    DateJun 13, 1996

    Face Value

    (Rs/Unit)10

    Fund Size in

    Rs. Cr.

    1572.57 as on

    Jun 30, 2009

    Fund Manager AnandLaddha .

    SIP

    STP

    SWP

    Expense

    ratio(%)2.06

    PortfolioTurnover

    Ratio(%)

    54.96

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    Entry Load

    Amount Bet. 0 to 49999999 then Entry load is

    2.25%. and Amount greater than 50000000 then

    Entry load is 0%.

    Exit Load Exit Load is 0%.

    Increase/Decrease in Fund Size since

    May 29, 2009 (Rs. in crores) 21.46

    Mutual Fund HDFC Mutual Fund

    Ramon House, 3rd Floor,

    H.T. Parekh Marg

    169, Backbay Reclamation,

    Churchgate

    Mumbai

    Tel.-22029111 ,56316333

    Asset Management Company HDFC Asset ManagementCompany Limited

    Ramon House, 3rd Floor,

    H.T. Parekh Marg

    169, Backbay Reclamation,

    Churchgate

    Mumbai - 400020 Tel.-

    66316333 ,

    Registrar

    Computer Age Management

    Services Private LimitedA&B, Lakshmi Bhavan

    609, Anna Salai

    Chennai

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    NAV

    Latest NAV

    139.18 as on Jul

    13, 2009

    Benchmark

    Index - CNX500

    3,198.50 as on

    Jul 13, 2009

    52 - Week High149.82 as on

    Jul 3, 2009

    52 - Week Low83.66 as on

    Mar 9, 2009

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    Divis Laboratories

    Limited

    Dishman

    Pharmaceuticals &

    Chemicals

    HDFC Bank Ltd

    Kotak Mahindra Bank

    Ltd.

    Auto & Auto

    ancilliaries

    4.00

    Banks 18.58

    Chemicals 0.73

    Computers -

    Software &

    Education

    9.32

    Consumer

    Durables

    0.99

    Stock Sector P/E

    Percentage

    of Net

    Assets

    Qty Value

    Percentage

    of Change

    with last

    month

    ICICI BANKLTD.

    Banks 21.39 6.63 1,390,000 102.88 54.45

    State Bank of

    IndiaBanks 12.13 5.76 477,675 89.27 46.16

    Crompton

    Greaves Ltd

    Electricals &

    Electrical

    Equipments

    26.97 4.08 2,412,985 63.35 63.93

    Bharti Airtel

    LtdTelecom 19.66 3.97 750,000 61.57 70.40

    Dr ReddysLaboratories

    Ltd

    Pharmaceuticals 22.93 3.52 842,829 54.57 18.85

    Mphasis BFL

    Ltd.

    Computers -

    Software &

    Education

    13.74 3.11 1,433,000 48.28 50.17

    Rural

    Electrification

    Corporation

    Electricals &

    Electrical

    Equipments

    11.01 2.94 3,115,000 45.63 42.08

    Reliance

    Industries

    Ltd.

    Oil & Gas,Petroleum &

    Refinery

    20.35 2.93 200,000 45.44 25.79

    UnitedFertilizers