JIET SCHOOL OF MANAGEMENT FOR GIRLS,

MOGRA, JODHPUR.

AS

PROJECT REPORT
ON
CONSUMER AWARENESS FOR MUTUAL
FUND SCHEMES.
(Submitted in Partial fulfillment of M.B.A. Degree)

GUIDED BY: SUBMITTED

TO:
Jyoti Saxena

ICICI Bank Ltd. H.O.D.

BDM - MF & FES (JIETSOMG)

Investment & Services

E- Rajasthan.

SUBMITTED BY:
ARTI SHARMA
 CONTENTS:

serial Page

no Topic no.

1 Certificate by organization 4

2 Certificate by faculty guide 5

3 Acknowledgement 6

4 Executive summary 7

5 Company overview 8—17

6 ICICI at western zone 17—20

7 Mutual funds basics 21--31

8 Concept of benchmarking 31

9 Financial planning for investors 32

10 How investors choose between funds? 34-36

11 Most popular stocks among fund managers 37

12 Most lucrative sectors among fund managers 38-39

13 Systematic Investment Plan (in details) 39-41

14 Portfolio analysis tools 44-49

15 Research report 50

2
3
 DECLARATION

I, Ms. Arti Sharma do hereby declare that the project report titled
“CONSUMER AWARENESS FOR MUTUAL FUND
SCHEMES” is a genuine research work undertaken by me and it has not
been published anywhere earlier.

Date:__________

Place: Jodhpur

Arti Sharma

JIETSOMG, Jodhpur.

4
Mr. Jyoti Saxena
BDM-MF & FES

Investment & Services

E-Rajasthan.

Certificate by the organization:

This is to certify that Ms. Arti Sharma, pursuing M.B.A. at JIET

School of Management for Girls, Jodhpur has worked under my
supervision and guidance on her dissertation entitled
“Consumer awareness for Mutual Fund
Schemes” at ICICI Bank Limited, Jodhpur from July
04, 2008 to September 4th 2008. To the best of my knowledge this
is an original piece of work.

5
 EXECUTIVE SUMMARY

As a part of curriculum every management students is required to

undergo practical training in an organization where he/she gets
acquainted about the management concepts take their shape to be
finally implemented as policies and programs. The student is
therefore introduced to the practical aspects of the text he has
learned and gets a better understanding of the concept.

I was assigned a summer project on behalf of HSBC – JODHPUR. I

had to analyse the COMPARISON BETWEEN SAVINGS
ACCOUNT OF HSBC AND OTHER BANKS OF JODHPUR.

HSBC has tremendous goodwill in global market and known for its
philanthropic approach to grow and please its employees by best
product & service.

But as the competition intensifies the difference between features of

Savings Account makes it narrowing down the cost, product features
and offers. A customer not only opens his account in any bank due
to its BRAND VALUE but also because of its CUSTOMER
SERVICES which exists as a CORE COMPETENCY OF HSBC.

Hence, the customer satisfaction and market share holding is a very

sensitive issue. Due to cut-throat competition with other banks,

6
especially Foreign Banks as CITIBANK, STANDARD CHARTERED
there is a need to regular check in all the parameters of BANKING.

EXECUTIVE SUMMARY

As a part of curriculum every management students is required to

undergo practical training in an organization where he/she gets
acquainted about the management concepts take their shape to be
finally implemented as policies and programs. The student is
therefore introduced to the practical aspects of the text he has
learned and gets a better understanding of the concept.

I was assigned a summer project on behalf of HSBC – JODHPUR. I

had to analyse the COMPARISON BETWEEN SAVINGS
ACCOUNT OF HSBC AND OTHER BANKS OF JODHPUR.

HSBC has tremendous goodwill in global market and known for its
philanthropic approach to grow and please its employees by best
product & service.

But as the competition intensifies the difference between features of

Savings Account makes it narrowing down the cost, product features
and offers. A customer not only opens his account in any bank due
to its BRAND VALUE but also because of its CUSTOMER
SERVICES which exists as a CORE COMPETENCY OF HSBC.

7
Hence, the customer satisfaction and market share holding is a very
sensitive issue. Due to cut-throat competition with other banks,
especially Foreign Banks as CITIBANK, STANDARD CHARTERED
there is a need to regular check in all the parameters of BANKING.

Acknowledgement

Sometimes words fall short to show gratitude, the same happened with me during this
project. The immense help and support received from ICICI Bank limited overwhelmed
me during the project.

My sincere gratitude to Mr.Mayank Panwar (Branch Manager, ICICI Bank Ltd.) and
Prof.( Dr.) H.K. Bedi (Director, JIETSOMG, Jodhpur), for providing me with an
opportunity to work with ICICI Bank limited.

I am highly indebted to Mr. Jyoti Saxena , BDM-MF-FES , Investment & Services, E-

Rajasthan, ICICI Bank Ltd. and company project guide, who has provided me with the
necessary information and his valuable suggestion and comments on bringing out this
report in the best possible way.

I also thank Dr. L.R. Paliwal, faculty guide, JIETSOMG, Jodhpur who has sincerely
supported me with the valuable insights into the completion of this project.

8
I am grateful to Mr. Ashish Lodha (branch Manager, ICICI Prudentials AMC Ltd.,
Jdpr) and all of the members of ICICI Bank Ltd, JalJog Circle branch, who have helped
me in the successful completion of this project, special mention of Mr. Prahlad
Kumawat , Ms. Pragya , Mr. Ashish Mehta and Ms. Ritu .

Last but not the least; my heartfelt love for my parents, whose constant support and
blessings helped me throughout this project.

Executive summary:

This project has been a great learning experience for me; at the same time it gave me
enough scope to implement my analytical ability. This project as a whole can be divided
into two parts:

 The first part gives an insight about the mutual funds and its various aspects. It is
purely based on whatever I learned at ICICI. One can have a brief knowledge
about mutual funds and all its basics through the project. Other than that the real
servings come when one moves ahead. Some of the most interesting questions
regarding mutual funds have been covered. Some of them are: why has it become
one of the largest financial intermediaries? How investors do chose between
funds? Most popular stocks among fund managers, most lucrative sectors for

9
 fund managers, a special report on Systematic Investment Plan, does fund
performance persists and the topping of all the servings in the form of portfolio
analysis tool and its application.

All the topics have been covered in a very systematic way. The language has
been kept simple so that even a layman could understand. All the datas have
been well analyzed with the help of charts and graphs.

 The second part consists of datas and their analysis, collected through a survey
done on 200 people. It covers the topic “Consumer Awareness for Mutual
Funds”. The data collected has been well organized and presented. Hope the
research findings and conclusions will be of use. It has also covered why people
don’t want to go for financial advisors? The advisors can take further steps to
approach more and more people and indulge them for taking their advices.

10
Organization overview

Introduction:

“Success is a journey, not a destination.” If we look for

examples to prove this quote then we can find many but there is none like that of ICICI. Back in
the year 1955, The World Bank, the Government of India and representatives of Indian industry
created history by establishing ICICI Limited as a development finance institution to provide
medium-term and long-term project financing to Indian businesses which is today known as
ICICI Bank Ltd. , the largest banking & financial service provider of India.

Success sutras of ICICI:

11
The success story of ICICI is driven by 8 success sutras adopted by it namely trust,

integrity, dedication, commitment, enterprise, hard

work and team play, learning and innovation,
empathy and humility. These are the values that bind success with ICICI.

Vision of ICICI:

To be a leading provider of financial services in India and a major global

bank.
Mission statement:

“ We will leverage our people, technology, speed and financial capital

to:

• be the banker of first choice for our customers by delivering high

quality, world- class products and services.
• expand the frontiers of our businesses globally.
• play a proactive role in the full realisation of India's potential.
• maintain a healthy financial profile and diversify our earnings
across businesses and geographies.
• maintain high standards of governance and ethics.
• contribute positively to the various countries and markets in
which we operate.
• create value for our stake-holders”

The success ladder:

12
 Company overview:

ICICI was established as Developmental financial Institution by The World Bank, the
Government of India and representatives of Indian industry in the year 1955, and then its
work was confined to provide medium-term and long-term project financing to Indian
businesses only. Later on ICICI established Banking Corporation as a banking
subsidiary.formerly Industrial Credit and Investment Corporation of India. Later, ICICI Banking
Corporation was renamed as 'ICICI Bank Limited'. ICICI founded a separate legal entity, ICICI
Bank, to undertake normal banking operations - taking deposits, credit cards, car loans etc in
the year 1994.

Evolution of ICICI:

It is well said that success is a journey not a destination and we can see it being proved
by ICICI. Under this section we will see that how this “ICICI Bank Ltd.” of 1955
became “ICICI” of 2008. The glorious journey of ICICI Bank is summed as follows:

1955 : The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated at the initiative
of the World Bank, the Government of India and representatives of Indian industry, with the objective
of creating a development financial institution for providing medium-term and long-term project
financing to Indian businesses. Mr.A.Ramaswami Mudaliar elected as the first Chairman of ICICI
Limited.
ICICI emerges as the major source of foreign currency loans to Indian industry. Besides funding from
the World Bank and other multi-lateral agencies, ICICI was also among the first Indian companies to
raise funds from international markets.

1956 : ICICI declared its first dividend of 3.5%.

1958 : Mr.G.L.Mehta appointed the second Chairman of ICICI Ltd.

13
1960 : ICICI building at 163, Backbay Reclamation, inaugurated.

1961 : The first West German loan of DM 5 million from Kredianstalt obtained.

1967 : ICICI made its first debenture issue for Rs.6 crore, which was oversubscribed.

1969 : The first two regional offices in Calcutta and Madras set up.

1972 : The second entity in India to set up merchant banking services.

Mr. H. T. Parekh appointed the third Chairman of ICICI.

1977 : ICICI sponsored the formation of Housing Development Finance Corporation. Managed its first
equity public issue

1978 : Mr. James Raj appointed the fourth Chairman of ICICI.

1979 : Mr.Siddharth Mehta appointed the fifth Chairman of ICICI.

1982 : 1982 : ICICI became the first ever Indian borrower to raise European Currency Units.

ICICI commences leasing business.

1984 : Mr. S. Nadkarni appointed the sixth Chairman of ICICI.

1985 : Mr. N.Vaghul appointed the seventh Chairman and Managing Director of ICICI.

1986 : ICICI became the first Indian institution to receive ADB Loans.

ICICI, along with UTI, set up Credit Rating Information Services of India Limited, India's first
professional credit rating agency.

ICICI promotes Shipping Credit and Investment Company of India Limited.

The Corporation made a public issue of Swiss Franc 75 million in Switzerland, the first public issue
by any Indian entity in the Swiss Capital Market.

1987 : ICICI signed a loan agreement for Sterling Pound 10 million with Commonwealth Development
Corporation (CDC), the first loan by CDC for financing projects in India.

1988 : Promoted TDICI - India's first venture capital company.

1993 : ICICI Securities and Finance Company Limited in joint venture with J. P. Morgan set up.

ICICI Asset Management Company set up.

1994 : ICICI Bank set up.

1996 : ICICI Ltd became the first company in the Indian financial sector to raise GDR.

SCICI merged with ICICI Ltd.

Mr. K.V.Kamath appointed the Managing Director and CEO of ICICI Ltd

14
1997 : ICICI Ltd was the first intermediary to move away from single prime rate to three-tier prime rates
structure and introduced yield-curve based pricing.

The name The Industrial Credit and Investment Corporation of India Ltd changed to ICICI Ltd.

ICICI Ltd announced the takeover of ITC Classic Finance.

1998 : Introduced the new logo symbolizing a common corporate identity for the ICICI Group.

ICICI announced takeover of Anagram Finance.

1999 : ICICI launched retail finance - car loans, house loans and loans for consumer durables.

ICICI becomes the first Indian Company to list on the NYSE through an issue of American
Depositary Shares.

2000 : ICICI Bank became the first commercial bank from India to list its stock on NYSE.

ICICI Bank announces merger with Bank of Madura.

2001 : The Boards of ICICI Ltd and ICICI Bank approved the merger of ICICI with ICICI Bank.

2002 : ICICI Ltd merged with ICICI Bank Ltd to create India’s secondlargest bank in terms of assets.

ICICI assigned higher than sovereign rating by Moody’s.

ICICI Bank launched India’s first CDO (Collateralised Debt Obligation) Fund named Indian Corporate
Collateralised Debt Obligation Fund (ICCDO Fund).

"E Lobby", a self-service banking centre inaugurated in Pune. It was the first of its kind in India.

ICICI Bank launched Private Banking.

1100-seat Call Centre set up in Hyderabad

ICICI Bank Home Shoppe, the first-ever permanent aggregation and display of housing projects in
the county, launched in Pune,

ATM-on-Wheels, India’s first mobile ATM, launched in Mumbai.

2003 : The first Integrated Currency Management Centre launched in Pune.

ICICI Bank announced the setting up of its first ever offshore branch in Singapore.

The first offshore banking unit (OBU) at Seepz Special Economic Zone, Mumbai, launched.

ICICI Bank’s representative office inaugurated in Dubai.

Representative office set up in China. : ICICI Bank’s UK subsidiary launched.

India’s first ever "Visa Mini Credit Card", a 43% smaller credit card in dimensions launched.

15
 ICICI Bank subsidiary set up in Canada.

Temasek Holdings acquired 5.2% stake in ICICI Bank.

ICICI Bank became the market leader in retail credit in India.

2004 : Max Money, a home loan product that offers the dual benefit of higher eligibility and affordability to a
customer, introduced.

Mobile banking service in India launched in association with Reliance Infocomm.

India’s first multi-branded credit card with HPCL and Airtel launched.

Kisan Loan Card and innovative, low-cost ATMs in rural India launched.

ICICI Bank and CNBC TV 18 announced India’s first ever awards recognizing the achievements of
SMEs, a pioneering initiative to encourage the contribution of Small and Medium Enterprises to the
growth of Indian economy.

ICICI Bank opened its 500th branch in India.

ICICI Bank introduced partnership model wherein ICICI Bank would forge an alliance with existing
micro finance institutions (MFIs). The MFI would undertake the promotional role of identifying,
training and promoting the micro-finance clients and ICICI Bank would finance the clients directly on
the recommendation of the MFI.

ICICI Bank introduced 8-8 Banking wherein all the branches of the Bank would remain open from
8a.m. to 8 p.m. from Monday to Saturday.

ICICI Bank introduced the concept of floating rate for home loans in India.

2005 : First rural branch and ATM launched in Uttar Pradesh at Delpandarwa, Hardoi.

"Free for Life" credit cards launched wherein annual fees of all ICICI Bank Credit Cards were waived
off.

ICICI Bank and Visa jointly launched mChq – a revolutionary credit card on the mobile phone.

Private Banking Masters 2005, a nationwide Golf tournament for high networth clients of the private
banking division launched. This event is the largest domestic invitation amateur golf event conducted
in India.

First Indian company to make a simultaneous equity offering of $1.8 billion in India, the United States
and Japan.

Acquired IvestitsionnoKreditny Bank of Russia.

ICICI Bank became the largest bank in India in terms of its market capitalization.

ICICI Bank became the first private entity in India to offer a discount to retail investors for its follow-
up offer.

16
2006 : ICICI Bank became the first Indian bank to issue hybrid Tier-1 perpetual debt in the international
markets.

ICICI Bank subsidiary set up in Russia.

Introduced a new product - ‘NRI smart save Deposits’ – a unique fixed deposit scheme for
nonresident Indians.

Representative offices opened in Thailand, Indonesia and Malaysia.

ICICI Bank became the largest retail player in the market to introduce a biometric enabled smart card
that allow banking transactions to be conducted on the field. A low-cost solution, this became an
effective delivery option for ICICI Bank’s micro finance institution partners.

Financial counseling centre Disha launched. Disha provides free credit counseling, financial planning
and debt management services.

Bhoomi puja conducted for a regional hub in Hyderabad, Andhra Pradesh.

2007 : ICICI Bank‘s USD 2 billion 3-tranche international bond offering was the largest bond offering by an
Indian bank.

Sangli Bank amalgamated with ICICI Bank.

\ ICICI Bank raised Rs 20,000 crore (approx $5 billion) from both domestic and international markets
through a follow-on public offer.

ICICI Bank’s GBP 350 million international bond offering marked the inaugural deal in the sterling
market from an Indian issuer and also the largest deal in the sterling market from Asia.

Launched India’s first ever jewellery card in association with jewelry major Gitanjali Group.

ICICI Bank became the first bank in India to launch a premium credit card -- The Visa Signature
Credit Card.

Foundation stone laid for a regional hub in Gandhinagar, Gujarat.

Introduced SME Toolkit, an online resource centre, to help small and medium enterprises start,
finance and grow their business.

ICICI Bank signed a multi-tranche dual currency US$ 1.5 billion syndication loan agreement in
Singapore.

ICICI Bank became the first private bank in India to offer both floating and fixed rate on car loans,
commercial vehicles loans, construction equipment loans and professional equipment loans.

In a first of its kind, nation wide initiative to attract bright graduate students to pursue a career in
banking, ICICI Bank launched the "Probationary Officer Programme".

Launched Bank@home services for all savings and current a/c customers residing in India

ICICI Bank Eurasia LLC inaugurated its first branch at St Petersburg, Russia.

17
2008 : ICICI Bank enters US, launches its first branch in New York

ICICI Bank enters Germany, opens its first branch in Frankfurt

ICICI Bank launched iMobile, a breakthrough innovation in banking where practically all internet
banking transactions can now be simply done on mobile phones.

ICICI Bank concluded India's largest ever securitization transaction of a pool of retail loan assets
aggregating to Rs. 48.96 billion (equivalent of USD 1.21 billion) in a multi-tranche issue backed by
four different asset categories. It is also the largest deal in Asia (ex-Japan) in 2008 till date and the
second largest deal in Asia (ex-Japan & Australia) since the beginning of 2007.

ICICI Bank launches ICICIACTIVE - Banking Interactive Service - along with DISHTV, which will
allow viewers to see information about the Bank's products and services and contact details on their
DISHTV screens.

ICICI Bank and British Airways launch co-branded credit card, which is designed to earn accelerated
reward points to the card holders with every British Airways flight or by spending on everyday
purchases

Now ICICI group consists of 7 highly renowned entities which are as follow:

1. : ICICI Bank is India's second-largest bank with total assets of Rs.

3,997.95 billion (US$ 100 billion) at March 31, 2008. It is second amongst all the
companies listed on the Indian stock exchanges in terms of free float market
capitalisation*.

The Bank has a network of about 1,308 branches and 3,950 ATMs in India and
presence in

18 countries. It offers a wide range of banking products and financial services to

corporate and retail customers through a variety of delivery channels and through its
specialized subsidiaries and affiliates in the areas of investment banking, life and non-
life insurance, venture capital and asset management.

2. : ICICI Prudential Life Insurance Company is a joint venture between

ICICI Bank-one of India's foremost financial services companies-and Prudential plc- a leading
international financial services group headquartered in the United Kingdom. Total capital

18
infusion stands at Rs. 20.60 billion, with ICICI Bank holding a stake of 74% and Prudential plc
holding 26%.

3. : ICICI Securities Ltd is the largest equity house in the country

providing

end-to-end solutions (including web-based services) through the largest non-banking

distribution channel so as to fulfil all the diverse needs of retail and corporate customers.

ICICI Securities (I-Sec) has a dominant position in its core segments of its operations –

Corporate Finance including Equity Capital Markets Advisory Services, Institutional

Equities, Retail and Financial Product Distribution. Headquartered in Mumbai, I-Sec

operates

out of several locations in India.

4. : ICICI Securities Primary Dealership Limited is

an acknowledged leader in the Indian fixed income and money markets, with a strong
franchise across the spectrum of interest rate products and services – institutional sales
and trading, resource mobilization and research. One of the first entities to be granted
Primary Dealership license by RBI, I-Sec PD has made pioneering contributions since
inception to debt market development in India.

The I-Sec PD desks trade actively in government securities, swaps and corporate bonds
markets. In each of these markets, it enjoys dominant position, accounting for a
significant share of trading turnover.

19
5. : ICICI Lombard General Insurance Company Limited is a 74:26
joint venture between ICICI Bank Limited and the Canada based $ 26 billion Fairfax
Financial Holdings Limited. ICICI Bank is India's second largest bank, while Fairfax
Financial Holdings is a diversified financial corporate engaged in general insurance,
reinsurance, insurance claims management and investment management.

Lombard Canada Ltd, a group company of Fairfax Financial Holdings Limited, is one of
Canada's oldest property and casualty insurers. ICICI Lombard General Insurance
Company received regulatory approvals to commence general insurance business in
August 2001.

6. : ICICI Prudential Asset Management Company (AMC) is a child of

two of

the strongest names in the world finance market - Prudential PLC of UK and ICICI
Bank

India. Incepted in 1998, ICICI AMC Ltd is already a pre-eminent name in investment
sector

of India. With just 2 funds under management in 1998, ICICI Prudential mutual fund
count

has grown to 35 in the past decade.

7. : ICICI Venture is one of the largest and most successful private

equity firms in India with funds under management in excess of USD 2 billion. ICICI
Venture, over the years has built an enviable portfolio of companies across sectors
including pharmaceuticals, Information Technology, media, manufacturing, logistics,
textiles, real estate etc thereby building sustainable value.

20
Organization structure of ICICI:

Talking about the organization structure of ICICI, we have the board of directors as the supreme
governing body , the chairman being Mr. Narayanan Vaghul, Mr. K. V. Kamath as the
managing directo & CEO & Ms. Chanda Kochhar, as joint managing director along with
Ms Madhabi Puri Buch,Mr. Sonjoy Chatterjee & V. Vaidyanathan as executive
directors.

The board of diretors head the ICICI group,ICICI Bank, ICICI Prudentials Life Insurance,
ICICI Securities, ICICI Securities Primary dealership Ltd. , ICICI Prudentials AMC Ltd. , ICICI
Lombard general insurance Ltd and ICICI Venture.

ICICI group being the flagship company looks after the functional departments such as corporate
affairs, group human resources, finance & accounting, training & development, technology
services and corporate quality.

ICICI Prudentials AMC Ltd facilitates mutual fund services, share registry and issue registry
whereas

Insurance is looked after by ICICIPrudentials Life Insurance Ltd (For Life & Health insurances)
&

ICICI Lombard General insurances. ICICI Securities cater to Corporate Finance including
Equity

Capital Markets Advisory Services, Institutional Equities, Retail and Financial Product
Distribution.

The services offered by ICICI Bank are categorised into three major heads as: Personal Banking,
NRI Banking & Business Banking. Summarizing it in a diagram, it can be presented as:

21
Why should investors choose for ICICI?

Excellence is next to nothing….and here at ICICI everybody tries their best to offer excellent
services to its clientele through its offerings maintaining the ICICI culture which includes:

1. Controlled and low cost service culture: ICICI is there to serve its client at the minimum
possible cost. it controls cost by its various cost- cutting techniques and minimization of
avoidable costs.

2. Large volume processing capability: being the largest financial service provider in the
country, it has the unique distinction of operating its activities on a large scale which benefits all
the parties cordially.

3. Adherence to strict time schedule: ICICI knows that time is money and tries it best to finish
the task within the stipulated time schedule.

4. Expertise in coordinating multi-location responses: ICICI has got a wide network and hence
one can find its branches at most of the places in India. Thus it enjoys its presence everywhere
and coordinates among itself in solving the queries and in responding to any situation.

5.Expertise in managing independent entities such as banks, post-office etc.: the work culture of
ICICI and the ethics followed inside ICICI makes its workforce compatible with everybody, so
the ICICI people establishes good coordination with independent entities too.

6. Pooling of group resources: ICICI group consists of seven subsidiaries, so it can easily pool
up its resources for accomplishment of its goals, whenever needed. The groups can help each
22
other whenever there are peaks and lows, and even in the case when they have huge targets just
as we saw few years back.

How ICICI achieved it?

The core competency of ICICI lies in the following points due to which it enjoys a competitive
edge over its competitors. The following culture adopted by ICICI makes it all time favorite
among its clientele:

1. Professionally managed by qualified and trained manpower.

2. Uniquely structured in-house software and hardware department

3. Query handling within 48 hrs.

4. Strong secretarial, accounting and audit systems.

5. Unique work culture of working

6. Unmatched network spreading all over India.

How Achievements sounds synonymous to ICICI:

The landmarks achieved by ICICI very well define its success story. In the previous
pages, we learnt how a company started in 1955, named as Industrial Credit and
Investment Corporation of India Limited (ICICI) turned into today’s ICICI group, the
largest financial service provider of India. But success didn’t came to ICICI at a flow,
the hard work and dedication of its workforce made it what it is today…gradually it
achieved the following landmarks and now it has became what we call the ICICI group,
now it is:

1. Largest private sector bank in market capitalization.

2. Second largest overall in terms of assets.

3. Has total assets of about USD 100 Billion (end-Mar 2008).

4. a network of over 1308 branches and offices, about 3954 ATMs, and 24 million customers (as
of end July 2007).

5. Largest issuer of credit cards in India.

6. Presence in 18 countries currently has subsidiaries in the United Kingdom, Russia and
Canada, branches in Unites States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai
International Finance Centre and representative offices in United Arab Emirates, China, South
23
Africa, Bangladesh, Thailand, Malaysia and Indonesia. UK subsidiary has established branches
in Belgium and Germany

7. Equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange
of India Limited and its American Depositary Receipts (ADRs) are listed on the New York
Stock Exchange (NYSE).

Clientele of ICICI:

ICICI’s culture has helped ICICI in achieving such a distinct position in the market where it can
boast of its huge client base. Be it a retail investor investing Rs. 500 in a SIP in Reliance mutual
fund or be it the largest corporate house of the country: Reliance industries- everybody is
heading towards ICICI for their wealth maximization.According to the datas published in
year 2007, ICICI operates in a wide range of banking products and financial services to
corporate and retail customers through a variety of delivery channels and through its
specialized subsidiaries and affiliates in the areas of investment banking, life and non-
life insurance, venture capital and asset management, having 24 million

Now, as the project was carried on in Jodhpur,

Rajasthan, so there is a special reference to working
of ICICI at Jodhpur and mutual funds in particular.

ICICI at Jodhpur:
ICICI Bank Ltd was started 6 yrs ago i.e.; during the year 2002 at Residency road which was
later on established as the regional head office & shifted to Jaljog Circle. Presently Mr. Mayank
Panwar is heading the branch. Talking about the zonal offices, ICICI has zonal offices at
Mandor mandi & Basni. Each zonal office has got its own zonal heads.

Hierarchical Structure in diagram:

24
 The above diagram shows the hierarchy of ICICI stock broking ltd. It can be easily depicted
from the diagram that the regional head (presently Mr.XXXXXXXXXXXXXXXX) is the
supreme in the western region, under whom the various zonal heads operate and under these
zonal heads, the branch heads operate. Between each level of the hierarchy, there exists a
coordinator, who acts as the facilitator between the different heads.

Structure according to the Products offered by ICICI:

REGIONAL
HEADS

PRODUCT
HEADS
25
HEA
Insura Genera Deposi Debt
Merch
Mutua nce comm l tory divisio
ant &
l funds Realty
brokin odities Insura partici ninv.ba
PMS
g nce pant nking
KA

ICICI Mutual Fund Services:

Mutual funds have servings for everybody. Whichever type of investor you are, you will
surely get a mutual fund meeting your requirements. But investing in mutual funds is no
child’s play therefore ICICI Prudential mutual fund advisory services is there to guide
in each and every step of investment in mutual funds so that the dream of wealth
creation doesn’t turns into nightmares. Its offerings includes: existing funds as well as
NFOs, customized mutual fund portfolios designed for individual as well as institutional
customers, it not only design the portfolios rather it offers continuous portfolio revision
too depending on changing market outlook and evolving trends, it further gives access to
its online consolidated portfolio statement. Thus ICICI with its various offerings makes
the investor feel safe in this dynamic environment of the Indian financial market.

It can be said that ICICI is dedicated towards providing quality service to all these three facets
of the investment process.

ICICI operates through its sub- brokers, associates and its excellent pool of own direct
employees. The employees are offered salary by ICICI whereas the sub- brokers and associates
get certain commission..

The main source of earning for ICICI is the brokerage offered by the various AMCs known as
pay-in. The amount offered may vary from AMC to AMC. ICICI also pay a certain amount to
the sub brokers and associates known as pay-out. The payout is decided according to the
procurement done by them.

Recruitment:

26
ICICI has an enviable pool of dynamic employees. Its people power has a great contribution in
making it the No. 1 financial intermediary. All the employees of ICICI dealing in mutual funds
have to go through AMFI test. The recruitment process is at par with the industry standards, it is
mostly done through campus recruitment from reputed B- schools. Other than that, it also
recruits through direct interviews and GDs as per their requirement.

ICICI never compromises with quality that’s the reason it is excelling by providing quality
services to all the investors, clients, AMCs etc. associated with it.

27
Mutual funds

28
It’s all about mutual funds:
Mutual funds: A mutual fund is a professionally-managed firm of collective investments that
pools money from many investors and invests it in stocks, bonds, short-term money market
instruments, and/or other securities. in other words we can say that “A Mutual Fund is a trust
registered with the Securities and Exchange Board of India (SEBI), which pools up the money
from individual / corporate investors and invests the same on behalf of the investors /unit
holders, in equity shares, Government securities, Bonds, Call money markets etc., and
distributes the profits.”

The value of each unit of the mutual fund, known as the net asset value (NAV), is mostly
calculated daily based on the total value of the fund divided by the number of shares currently
issued and outstanding. The value of all the securities in the portfolio in calculated daily. From
this, all expenses are deducted and the resultant value divided by the number of units in the fund
is the fund’s NAV.

NAV = Total value of the fund……………….

No. of shares currently issued and outstanding
OR

NAV = Market/Fair value of the fund+Current Assets - Current liabilities &

provisions
No. of shares currently issued and outstanding

Advantages of a MF

– Mutual Funds provide the benefit of cheap access to expensive stocks

– Mutual funds diversify the risk of the investor by investing in a basket of assets

– A team of professional fund managers manages them with in-depth research

inputs from investment analysts.

– Being institutions with good bargaining power in markets, mutual funds have
access to crucial corporate information, which individual investors cannot
access.

History of the Indian mutual fund industry:

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at
the initiative of the Government of India and Reserve Bank. The history of mutual funds in India
can be broadly divided into four distinct phases.

First Phase – 1964-87

29
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank
of India and functioned under the Regulatory and administrative control of the Reserve Bank of
India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India
(IDBI) took over the regulatory and administrative control in place of RBI. The first scheme
launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets
under management.

Second Phase – 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and
Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).
SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by
Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank
Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in December
1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47,004
crores.

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

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. As at the end of January 2003, there were 33 mutual funds with total
assets of Rs. 1,21,805 crores.

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated
into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets
under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the
assets of US 64 scheme, assured return and certain other schemes

30
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. consolidation and growth. As at
the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores
under 421 schemes.

WHY MUTUAL FUNDS?

Benefits of investing through Mutual Funds:

i) Professional investment management

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 us to 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

We 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 our dividends on portfolio securities are
received and our rights exercised. It also uses the services of a high quality custodian
and registrar in order to make sure that our convenience remains at the top of their
mind.

v) Personal Service

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

31
vi) Liquidity

In open-ended schemes, one can get his/her money back promptly at net asset value
related prices from the mutual fund itself.

vii) Transparency

One can get regular information on the value of your investment in addition to
disclosure on the specific investments made by the mutual fund scheme.

Categories of mutual funds:

Mutual funds can be classified as follow:

 Based on their structure:

• Open-ended funds: Investors can buy and sell the units from the fund, at any point of
time.

• Close-ended funds: These funds raise money from investors only once. Therefore, after
the offer period, fresh investments can not be made into the fund. If the fund is listed on
a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth

32
 Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity
window on a periodic basis such as monthly or weekly. Redemption of units can be
made during specified intervals. Therefore, such funds have relatively low liquidity.

 Based on their investment objective:

Equity funds: These funds invest in equities and equity related instruments. With
fluctuating share prices, such funds show volatile performance, even losses. However,
short term fluctuations in the market, generally smoothens out in the long term, thereby
offering higher returns at relatively lower volatility. At the same time, such funds can
yield great capital appreciation as, historically, equities have outperformed all asset
classes in the long term. Hence, investment in equity funds should be considered for a
period of at least 3-5 years. It can be further classified as:

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked.
Their portfolio mirrors the benchmark index both in terms of composition and individual stock
weightages.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading across different
sectors and stocks.

iii|) Dividend yield funds- it is similar to the equity diversified funds except that they invest in
companies offering high dividend yields.

iv) Thematic funds- Invest 100% of the assets in sectors which are related through some theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will
invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

Balanced fund: Their investment portfolio includes both debt and equity. As a result, on the
risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual
funds vehicle for investors who prefer spreading their risk across various instruments. Following
are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

33
Debt fund: They invest only in debt instruments, and are a good option for investors averse to
idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income
instruments like bonds, debentures, Government of India securities; and money market
instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put
your money into any of these debt funds depending on your investment horizon and needs.

i) Liquid funds- These funds invest 100% in money market instruments, a large portion being
invested in call money market.

ii)Gilt funds ST- They invest 100% of their portfolio in government securities of and T-bills.

iii)Floating rate funds - Invest in short-term debt papers. Floaters invest in debt instruments
which have variable coupon rate.

iv)Arbitrage fund- They generate income through arbitrage opportunities due to mis-pricing
between cash market and derivatives market. Funds are allocated to equities, derivatives and
money markets. Higher proportion (around 75%) is put in money markets, in the absence of
arbitrage opportunities.

v)Gilt funds LT- They invest 100% of their portfolio in long-term government securities.

vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in long-term
debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of
10%-30% to equities.

viii) FMPs- Fixed monthly plans invest in debt papers whose maturity is in line with that of the
fund.

SCHEMES & FUNDS OF ICICI PRUDENTIALS MUTUAL FUNDS

There are wide varieties of Mutual Fund schemes that cater to investor needs, whatever the age,
financial position, risk tolerance and return expectations. The mutual fund schemes can be
classified according to both their investment objective (like income, growth, tax saving) as well
as the number of units (if these are unlimited then the fund is an open-ended one while if there
are limited units then the fund is close-ended).

34
 Open-ended schemes

These funds are sold at the NAV based prices, generally calculated on every business day. These
schemes have unlimited capitalization, open-ended schemes do not have a fixed maturity - i.e.
there is no cap on the amount you can buy from the fund and the unit capital can keep growing.
These funds are not generally listed on any exchange.

Open-ended funds are bringing in a revival of the mutual fund industry owing to increased
liquidity, transparency and performance in the new open-ended funds promoted by the private
sector and foreign players. Open-ended funds score over close-ended ones on several counts.
Some of these are listed below:

a) Any time exit option: The issuing company directly takes the responsibility of providing an
entry and an exit. This provides ready liquidity to the investors and avoids reliance on transfer
deeds, signature verifications and bad deliveries.

b) Tax advantage: Though Budget 2004 proposals envisage a tax rate of 20.91 %(Corporate
investors) and 13.06875%(Non-Corporate investors) on dividend distribution made by the Debt
funds, the funds continue to remain attractive investment vehicles. In equity plans there is no
distribution tax.

c) Any time entry option: An open-ended fund allows one to enter the fund at any time and even
to invest at regular intervals (a systematic investment plan).

35
The open ended funds offered by ICICI Prudential Mutual Fund are Liquid Plan, Income Plan,
Gilt-Treasury, Gilt-Investment, Balanced Fund, Growth Fund, Tax Plan, FMCG Fund,
Technology Fund, Monthly Income Plan, Child Care Plan, Power and Short Term Plan

Close ended schemes

Schemes that have a stipulated maturity period, limited capitalization and the units are listed on
the stock exchange are called close-ended schemes.

These schemes have historically seen a lot of subscription. This popularity is estimated to be on
account of firstly, public sector MFs having floated a lot of close-ended income schemes with
guaranteed returns and secondly easy liquidity on account of listing on the stock exchanges. The
closed-ended fund managed by ICICI Prudential Mutual Fund is ICICI Premier.

Classification according to investment objectives

Objectives

Mutual funds have specific investment objectives such as growth of capital, safety of principal,
current income or tax-exempt income. In general mutual funds fall into three general categories:

Equity Funds invest in shares or equity of companies.

Fixed-Income funds invest in government or corporate securities that offer fixed rates of return.

Balanced Funds invest in a combination of both stocks and bonds.

i) Growth Funds

These funds seek to provide growth of capital with secondary emphasis on dividend. They invest
in shares with a potential for growth and capital appreciation. Because they invest in well-
established companies where the company itself and the industry in which it operates are
thought to have good long-term growth potential, growth funds provide low current income.
Growth funds generally incur higher risks than income funds in an effort to secure more
pronounced growth.

These funds may invest in a broad range of industries or concentrate on one or more industry
sectors. Growth funds are suitable for investors who can afford to assume the risk of potential
loss in value of their investment in the hope of achieving substantial and rapid gains.

They are not suitable for investors who must conserve their principal or who must maximize
current income.

ii) Growth and Income Funds

Growth and income funds seek long-term growth of capital as well as current income. The
investment strategies used to reach these goals vary among funds. Some invest in a dual
portfolio consisting of growth stocks and income stocks, or a combination of growth stocks,
stocks paying high dividends, preferred stocks, convertible securities or fixed-income securities
such as corporate bonds and money market instruments. Others may invest in growth stocks and
earn current income by selling covered call options on their portfolio stocks.
36
Growth and income funds have low to moderate stability of principal and moderate potential for
current income and growth. They are suitable for investors who can assume some risk to achieve
growth of capital but who also want to maintain a moderate level of current income.

iii) Fixed-Income Funds

The goal of fixed income funds is to provide current income consistent with the preservation of
capital.

These funds invest in corporate bonds or government-backed mortgage securities that have a
fixed rate of return. Within the fixed-income category, funds vary greatly in their stability of
principal and in their dividend yields. High-yield funds, which seek to maximize yield by
investing in lower-rated bonds of longer maturities, entail less stability of principal than fixed-
income funds that invest in higher-rated but lower-yielding securities.

Some fixed-income funds seek to minimize risk by investing exclusively in securities whose
timely payment of interest and principal is backed by the full faith and credit of the Indian
Government. Fixed-income funds are suitable for investors who want to maximize current
income and who can assume a degree of capital risk in order to do so.

iv) Balanced

The Balanced fund aims to provide both growth and income. These funds invest in both shares
and fixed income securities in the proportion indicated in their offer documents. Ideal for
investors who are looking for a combination of income and moderate growth.

v) Money Market Funds/Liquid Funds

For the cautious investor, these funds provide a very high stability of principal while seeking a
moderate to high current income. They invest in highly liquid, virtually risk-free, short-term debt
securities of agencies of the Indian Government, banks and corporations and Treasury Bills.
Because of their short-term investments, money market mutual funds are able to keep a virtually
constant unit price; only the yield fluctuates.

Therefore, they are an attractive alternative to bank accounts. With yields that are generally
competitive with - and usually higher than -- yields on bank savings account, they offer several
advantages. Money can be withdrawn any time without penalty. Although not insured, money
market funds invest only in highly liquid, short-term, top-rated money market instruments.

Money market funds are suitable for investors who want high stability of principal and current
income with immediate liquidity.

vi) Specialty/Sector Funds

These funds invest in securities of a specific industry or sector of the economy such as health
care, technology, leisure, utilities or precious metals. The funds enable investors to diversify
holdings among many companies within an industry, a more conservative approach than
investing directly in one particular company.

37
Sector funds offer the opportunity for sharp capital gains in cases where the fund's industry is "in
favor" but also entail the risk of capital losses when the industry is out of favor. While sector
funds restrict holdings to a particular industry, other specialty funds such as index funds give
investors a broadly diversified portfolio and attempt to mirror the performance of various market
averages.

Index funds generally buy shares in all the companies composing the BSE Sensex or NSE Nifty
or other broad stock market indices. They are not suitable for investors who must conserve their
principal or maximize current income.

A summary is presented in the table below of the various funds and their investment objectives.

Scheme type Time Risk Typical Investment Pattern

Horizon Profile

Objective Open Close Equity Debt (%) Money Market

(%) Inst./Others (%)

Money Market Yes No Short-Term Low 0 0-20 80-100

Income Yes Yes Medium Low to 0 80-100 0-20

-Long Term Medium

Growth Yes Yes Long Term High 80-100 0-20 0-20

Balanced Yes Yes Long term Medium 0-60 0-40 0-20

to high

Tax Saving Yes Yes Long term High 80-100 80-100 0-20

RISK TOLERANCE

The discussion on investment objectives would not be complete without a discussion on the risks
that investing in a mutual fund entails. At the cornerstone of investing is the basic principle that
the greater the risk you take, the greater the potential reward. Remember that the value of all
financial investments will fluctuate.

Typically, risk is defined as short-term price variability. But on a long-term basis, risk is the
possibility that your accumulated real capital will be insufficient to meet your financial goals.
And if you want to reach your financial goals, you must start with an honest appraisal of your
own personal comfort zone with regard to risk. Individual tolerance for risk varies, creating a
distinct "investment personality" for each investor. Some investors can accept short-term
volatility with ease, others with near panic. So whether you consider your investment
temperament to be conservative, moderate or aggressive, you need to focus on how comfortable
or uncomfortable you will be as the value of your investment moves up or down.

Recognizing the type of investor you are will go a long way towards helping you build a
meaningful portfolio of investments that you can live with. Take the test "Tolerance
Questionnaire" to determine where your preferences lie.

38
Mutual funds offer incredible flexibility in managing investment risk. Diversification and
Automatic Investing (SIP) are two key techniques you can use to reduce your investment risk
considerably and reach your long-term financial goals.

(A) Diversification

When you invest in one mutual fund, you instantly spread your risk over a number of different
companies. You can also diversify over several different kinds of securities by investing in
different mutual funds, further reducing your potential risk. Diversification is a basic risk
management tool that you will want to use throughout your lifetime as you rebalance your
portfolio to meet your changing needs and goals. Investors, who are willing to maintain a mix of
equity shares, bonds and money market securities, have a greater chance of earning significantly
higher returns over time than those who invest in only the most conservative investments.
Additionally, a diversified approach to investing -- combining the growth potential of equities

39
with the higher income of bonds and the stability of money markets -- helps moderate your risk
and enhance your potential return.

(B) Systematic Investment Plan (SIP)

The Unit holders of the Scheme can benefit by investing specific Rupee amounts periodically,
for a continuous period. Mutual fund SIP allows the investors to invest a fixed amount of Rupees
every month or quarter for purchasing additional units of the Scheme at NAV based prices.

All investments involve some form of risk. Even an insured bank account is subject to the
possibility that inflation will rise faster than your earnings, leaving you with less real purchasing
power than when you started (Rs. 1000 gets you less than it got your father when he was your
age). Consider these common types of risk and evaluate them against potential rewards when
you select an investment.

At times the prices or yields of all the securities in a particular market rise or fall due to broad
outside influences. When this happens, the stock prices of both an outstanding, highly profitable
company and a fledgling corporation may be affected. This change in price is due to "market
risk".

Sometimes referred to as "loss of purchasing power." Whenever inflation sprints forward faster
than the earnings on your investment, you run the risk that you'll actually be able to buy less, not
more. Inflation risk also occurs when prices rise faster than your returns.

In short, how stable is the company or entity to which you lend your money when you invest?
How certain are you that it will be able to pay the interest you are promised, or repay your
principal when the investment matures?

Changing interest rates affect both equities and bonds in many ways. Investors are reminded that
"predicting" which way rates will go is rarely successful. A diversified portfolio can help in
offsetting these changes.

An industries' key asset is often the personnel who run the business i.e. intellectual properties of
the key employees of the respective companies. Given the ever-changing complexion of few
industries and the high obsolescence levels, availability of qualified, trained and motivated

40
personnel is very critical for the success of industries in few sectors. It is, therefore, necessary to
attract key personnel and also to retain them to meet the changing environment and challenges
the sector offers.

Failure or inability to attract/retain such qualified key personnel may impact the prospects of the
companies in the particular sector in which the fund invests.

A number of companies generate revenues in foreign currencies and may have investments or
expenses also denominated in foreign currencies. Changes in exchange rates may, therefore,
have a positive or negative impact on companies which in turn would have an effect on the
investment of the fund.

The sectoral fund schemes, investments will be predominantly in equities of select companies in
the particular sectors. Accordingly, the NAV of the schemes are linked to the equity
performance of such companies and may be more volatile than a more diversified portfolio of
equities.

Changes in Government policy especially in regard to the tax benefits may impact the business
prospects of the companies leading to an impact on the investments made by the fund.

Risk v/s. return:

Investment strategies:

41
1. Systematic Investment Plan: Under this a fixed sum is invested each month on a fixed date
of a month. Payment is made through post dated cheques or direct debit facilities. The investor
gets fewer units when the NAV is high and more units when the NAV is low. This is called as
the benefit of Rupee Cost Averaging (RCA)

2. Systematic Transfer Plan: Under this an investor invest in debt oriented fund and give
instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual
fund.

3. Systematic Withdrawal Plan: If someone wishes to withdraw from a mutual fund then he
can withdraw a fixed amount each month.

Working of a Mutual fund:

The entire mutual fund industry operates in a very organized way. The investors, known as unit
holders, handover their savings to the AMC s under various schemes. The objective of the
investment should match with the objective of the fund to best suit the investors’ needs.

The AMC s further invest the funds into various securities according to the investment
objective. The return generated from the investments is passed on to the investors or reinvested
as mentioned in the offer document.

42
Regulatory Authorities:

43
To protect the interest of the investors, SEBI formulates policies and regulates the mutual funds. It
notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to time.

SEBI approved Asset Management Company (AMC) manages the funds by making investments in
various types of securities. Custodian, registered with SEBI, holds the securities of various schemes of
the fund in its custody.
According to SEBI Regulations, two thirds of the directors of Trustee Company or board of trustees
must be independent.
The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual funds that
the mutual funds function within the strict regulatory framework. Its objective is to increase public
awareness of the mutual fund industry. AMFI also is engaged in upgrading professional standards and
in promoting best industry practices in diverse areas such as valuation, disclosure, transparency etc.

Documents required (PAN mandatory):

Proof of identity :1.photo PAN card
2. In case of non-photo PAN card in addition to copy of PAN card any one of the following: driving
license/passport copy/ voter id/ bank photo pass book.
Proof of address (any of the following): latest telephone bill, latest electricity bill, Passport, latest bank
passbook/bank account statement, latest Demat account statement, voter id, driving license, ration card,
rent agreement.
Offer document: An offer document is issued when the AMCs make New Fund Offer(NFO). It’s
advisable to every investor to ask for the offer document and read it before investing. An offer
document consists of the following:
Standard Offer Document for Mutual Funds (SEBI Format)
Summary Information
Glossary of Defined Terms
Risk Disclosures
Legal and Regulatory Compliance
Expenses
Condensed Financial Information of Schemes
Constitution of the Mutual Fund
Investment Objectives and Policies
Management of the Fund
Offer Related Information.

44
  Which feature of the mutual funds allure you most?

Diversification 42
Professional management 29
Reduction in risk and transaction cost 34
Helps in achieving long term goal 30

 According to you which is the most suitable stage to invest in mutual funds?

Young unmarried stage 55

Young Married with children stage 32
Married with older children stage 21
Pre retirement stage 27

45
  Are you availing the services of personal financial advisors?

Yes 87
No 48

 Which expertise of the personal financial advisor is demanded most?

Portfolio review & investment 43

recommendation

46
Planning to achieve specific financial goals 35
Managing assets in retirement 30
Access to specialists in areas such as tax 27
planning

 What is the major reason for using financial advisors?

Want help with asset allocation 42

Don’t have enough time to make own 23
decision
To explain various investment options 37
Want to have surety about financial goals 33

47
  What is the major reason for not using financial advisor?

Have access to all resources needed 18

Believe advisors are too expensive 53
Unsure how to find a trustworthy advisor 21
Want to be in control of own investments 43

48
Research findings and conclusions:
 At the survey conducted upon 200 people, 135 are already mutual fund investors or are
interested to invest in future and the remaining 65 are not interested in it. So there is
enough scope for the advisors to convert those 65 participants into investors through
their convincing power and great communication skills.

 Now, when those 65 people were asked about the reason of not investing in mutual
funds, then most of the people held their ignorance responsible for that. They lacked
knowledge and information about the mutual funds. Whereas just 10 people enjoyed
investing in other option. For 18 people, the benefits arousing from these investments
were not enough to drive them for investment in MFs and 12 people expressed no trust
over the fund managers’ decision. Again the financial advisors can tap upon these
people by educating them about mutual funds.

 Out of the 135 persons who already have invested in mutual funds/ are interested to
invest, only 18% have sound knowledge of MFs, 34% people are aware of only the
schemes in which they have invested. 27% possess partial knowledge whereas 21%
stands nowhere in knowledge about MFs.

 33 participants buy forms directly from the AMCs, 28 from brokers only, 55 from
brokers and sub-brokers even then 15 people buy from other sources. The brokers and
sub brokers have the maximum reach so they should try to make those investors aware f
the happenings, even the AMCs should follow it.

 When asked about the most alluring feature of MFs, most of them opted for
diversification, followed by reduction in risk, helps in achieving long term goals and
helps in achieving long term goals respectively.

 Most of the investor preferred to invest at a young unmarried stage. Even 32 persons
were ready to invest at a stage of young married with children but person with older
children avoid investing due to increased expenses. But again the number rose to 27 at
pre-retirement stage.

49
  Out of them 87 were already availing the services of financial advisors whereas 48
didn’t. When asked about the expertise of financial advisors which they liked most? 43
of them favored portfolio review and investment recommendation, followed by planning
to achieve long term goals, managing assets in retirement and access to specialists in
area such as tax planning.

 42 participants regarded asset allocation as the major reason for going for financial
advisors. 37 of them needed them to explain them the various investment options
available.33 of them wanted to make sure that they were saving enough to meet their
financial goals. While just 23 gave the reason- lack of time.

 When asked about one reason for not availing the services of financial advisors, about
53 of them pointed the advisors as expensive. 43 of them wished to be in control of their
own assets.21 of them said that they find it difficult to get trustworthy advisors. Whereas
18 of them said they have access to all the necessary resources required.

Recommendations:

The most vital problem spotted is of ignorance. Investors should be made aware of the benefits.
Nobody will invest until and unless he is fully convinced. Investors should be made to realize
that ignorance is no longer bliss and what they are losing by not investing.

Mutual funds offer a lot of benefit which no other single option could offer. But most of the
people are not even aware of what actually a mutual fund is? They only see it as just another
investment option. So the advisors should try to change their mindsets. The advisors should
target for more and more young investors. Young investors as well as persons at the height of
their career would like to go for advisors due to lack of expertise and time.

The advisors may try to highlight some of the value added benefits of MFs such as tax benefit,
rupee cost averaging, and systematic transfer plan, rebalancing etc. these benefits are not offered
by other options singlehandedly. So these are enough to drive the investors towards mutual
funds. Investors could also try to increase the spectrum of services offered.

Now the most important reason for not availing the services of advisors was spotted was being
expensive. The advisors should try to charge a nominal fee at the beginning. But if not possible
then they could go for offering more services and benefits at the existing rate. They should also
50
maintain their decency and follow the code of ethics so that the investors could trust upon them.
Thus the advisors should try to attract more and more persons and turn them into investors and
finally their clients.

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Exhibit 1

Questionnaire:

 Have you invested /are you interested to invest in mutual funds?

Yes [ ] No [ ] (If No, plz. attempt the

next question)

 What is the most important reason for not investing in mutual

funds?

(a) Lack of knowledge about mutual funds [ ]

(b) Enjoys investing in other options [ ]

(c)Its benefits are not enough to drive you for investment [ ]

(d) No trust over the fund managers [ ]

 Where do you find yourself as a mutual fund investor?

(a) Totally ignorant

[ ]

(b)Partial knowledge of mutual funds

[ ]

(c)Aware only of any specific scheme in which you invested [ ]

(d) Fully aware

[ ]

 From where you purchase mutual funds?

(a) Directly from the AMCs

[ ]

(b) Brokers only

[ ]

(c)Brokers/ sub-brokers
[ ]

52
 (d) Other sources
[ ]

 Which feature of the mutual funds allure you most?

(a) Diversification
[ ]

(b) Professional management

[ ]

(c) Reduction in risk and transaction cost

[ ]

(d) Helps in achieving long term goals

[ ]

 According to you what is the most suitable stage to invest in

mutual funds?

(a) Young unmarried stage

[ ]

(b) Young Married with children stage

[ ]

(c) Married with older children stage

[ ]

(d) Pre-retirement stage

[ ]

 Are you availing the services of personal financial advisors?

YES [ ] NO [ ]

 What expertise of the personal financial advisor is demanded

most?

53
 (a) Portfolio review & investment recommendation
[ ]

(b) Planning to achieve specific financial goals

[ ]

(c) Managing assets in retirement

[ ]

(d) Access to specialist in areas such as tax planning

[ ]

 What is the major reason for using financial advisors?

(a) Want help with asset allocation

[ ]

(b) Don’t have time to make my own investment decision

[ ]

(c) To explain various investment options

[ ]

(d) To be sure I am investing enough to meet my financial goals

[ ]

 What is the major reason for not using financial advisor?

(a) Have access to all resources needed to invest on own

[ ]

(b) Believe advisors are too expensive

[ ]

(c) Unsure how to find a trustworthy advisor

[ ]

(d) Want to be in control of own investment

[ ]

54
 Bibliography
Websites:
www.the-finapolis.com

www.ICICI.com

www.mutualfundsindia.com

www.valueresearchonline.com

55
www.moneycontrol.com

www.morningstar.com

www.yahoofinance.com

www.theeconomictimes.com

www.rediffmoney.com

www.bseindia.com

www.nseindia.com
www.investopedia.com

Journals & other references:

ICICI –the finapolis

ICICI- business associates manual

The Economic Times

Business Standard

Business India

Fact sheet and statements of various fund houses.

56