Mutual%20Funds[1]

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INTRODUCTION OF MUTUAL FUND

Different investment avenues are available to investors.

Mutual funds also offer good investment opportunities to the

investors. Like all investments, they also carry certain risks.

The investors should compare the risks and expected yields after

adjustment of tax on various instruments while taking

investment decisions. The investors may seek advice from

experts and consultants including agents and distributors of

mutual funds schemes while making investment decisions.

With an objective to make the investors aware of

functioning of mutual funds, an attempt has been made to

provide information in question-answer format, which may help

the investors in taking investment decisions.

What is mutual fund

A vehicle for investing in stocks and bonds.

A mutual fund is not a alternative investment option to

stocks and bonds, rather it pools the money of several investors

and invests this in stocks, bonds, money market instruments and

other types of securities.

Buying a mutual fund is like buying a small slice of a big

pizza. The owner of a mutual fund unit gets a proportional

share of the funds gains, losses, income and expenses. Since

small investors generally do not have adequate time knowledge,

experience and resources for directly accessing the capital

market. They have to rely on an intermediary, which undertakes

informed investment decisions and provides consequential

benefits of professional expertise. The underlying principle of1


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mutual funds is their ability to bring down the transaction costs.

The advantage for the investors is the reduction in risk, expert

professional management, diversified portfolios, and liquidity of

investment and tax benefits. By pooling their assets through

mutual funds, investors achieve economies of scale. The

interests of the investors are protected by the SEBI, which acts

as watchdog. Mutual funds are governed by the SEBI (Mutual

Funds) Regulation 1993.

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BASICS OF MUTUAL FUNDS

All mutual funds comprise of four constituents

Sponsors, Trustees, Asset Management Company and

Custodians.

SPONSORS

The sponsors initiate the idea to set up a mutual fund. It

could be registered company, scheduled bank or financial

institution. A sponsor has to satisfy certain conditions such as

capital, record (atleast five years operation in financial

services), default free dealing and general reputation of fairness.

The sponsor appoints the Trustee, AMC and Custodian. Once

the AMC is formed, the sponsor is just a stakeholder.

TRUST/BOARD OF TRUSTEES

Trustees hold a fiduciary responsibility towards unit holders by

protecting their interests. Trustees float and market schemes, and

secure necessary approvals. They check if the AMCs investments

are within well-defined limits, whether the funds assets are

protected, and also ensure that unit holders get their due returns.

They also review any due diligence by the AMC. For major

decisions concerning the funds, they have to take the unit holdersconsent. They submit reports every six months to SEBI, investors get

an annual report. Trustees are paid annually out of the funds assets

0.5% of the weekly net asset value.

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CUSTODIAN

Often an independent organization, it takes custody of

securities and other assets of mutual fund. Its responsibilities include

receipt and delivery of securities, collecting income distributingdividends, safe keeping of units and segregating assets and

settlements between schemes. Their charges range between 0.15

0.20% of the net value of the holding. Custodians can service more

than one fund.

The value of all the securities in the portfolio in

calculated daily. From this, all expenses are deducted and theresultant value divided by the number of units in the fund is the

funds NAV.

ASSET MANAGEMENT COMPANY (AMC)

The company that put together a mutual fund is called an

AMC. They are the ones who manage money of the investors.

An AMC takes decisions, compensates investors through

dividends, maintains proper accounting and information for

pricing of units, calculates the NAV and provides information

on listed schemes. It also exercises due diligence on

investments, and submits quarterly reports to the trustees. A

Funds AMC can neither act for any other fund nor undertake

any business other than Asset Management. Its Net Worth

should not fall below Rs. 10 crore. And, its fee should not

exceed 1.25% if collection are below Rs. 100 crore and 1% if

collections are above Rs.100 crore. SEBI can pull up An AMC

if it deviates from prescribed role. An AMC may have several

mutual fund schemes with similar or varied investment

objectives.

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Essentials of an AMCs

The AMC hires a professional money manager, who buys

and sells securities in line with the funds stated objective.

All AMCs Regulated by SEBI, Funds governed by Board

of Directors. The Securities and Exchange Board of India

(SEBI) mutual fund regulations required that the funds

objectives are clearly spelt out in the prospectus.

In addition, every mutual fund has a board of directors

that is supposed to represent the shareholders interests, rather

than the AMCs. Each mutual fund has a specific stated

objective.

The funds objective is laid out in the funds prospectus,

which is the legal document that contains information about the

fund, its history, its officers and its performance.

Some popular objectives of a mutual fund are -

Fund Objective: What the fund will invest in

Equity (Growth): Only in stocks

Debt (Income): Only in fixed-income securities

Money Market (including Gilt): In short-term money market

instruments (including government securities).

Balanced: Partly in stocks and partly in fixed-income

securities, in order to maintain a balance in returns and risk.

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Expense Ratio

AMCs charge an annual fee, or expense ratio that covers

administrative expenses, salaries, advertising expenses,

brokerage fee, etc. A 1.5% expense ratio means the AMCcharges Rs. 1.50 for every Rs. 100 in assets under management.

A funds expense ratio is typically to the size of the funds

under management and not to the returns earned. Normally, the

costs of running a fund grow slower than the growth in the fund

size so, the more assets in the fund, the lower should be its

expense ratio.

Load

Some AMCs have sales charges, or loads, on their funds (entry

load and/or exit load) to compensate for distribution costs.

Funds that can be purchased without a sales charge are called

no-load funds.

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CLASSIFICATION OF FUNDS

SCHEMES ACCORDING TO MATURITY PERIOD:

A mutual fund schemes can be classified into open-ended

schemes or close-ended scheme depending on its maturity

period.

OPEN-ENDED FUND/SCHEME

An open-ended fund or scheme is one that is available for

subscription and repurchase on a continuous basis. These

schemes do not have a fixed maturity period. Investors can

conveniently buy and sell units at Net Asset Value (NAV)

related prices, which are declared on a daily basis. The key

feature of open-end schemes is liquidity.

CLOSE-ENDED FUND/SCHEME

A close-ended fund or scheme has a stipulated maturity

period e.g. 5-7 years. The fund is open for subscription only

during a specified period at the time of launch of the scheme.

Investors can invest in the scheme at the time of the initial

public issue and thereafter they can buy or sell the units of the

scheme on the stock exchanges where the units are listed. In

order to provide an exit route to the investors, some close-ended

funds give an option of selling back the units to the mutual fundthrough periodic repurchase at NAV related prices. SEBI

Regulations stipulate that at least one of the two exit routes is

provided to the investor i.e. either repurchase facility or through

listing on stock exchanges. These mutual funds schemes

disclose NAV generally on weekly basis.

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SCHEMES ACCORDING TO INVESTMENT OBJECTIVE:

A scheme can also be classified as growth scheme, income

scheme, or balanced scheme considering its investment

objective. Such schemes may be open-ended or close-ended

schemes as described earlier. Such schemes may be classified

mainly as follows:

GROWTH/EQUITY ORIENTED SCHEME

The aim of growth funds is to provide capital appreciation

over the medium to long-term. Such schemes normally invest amajor part of their corpus in equities. Such funds have

comparatively high risks. These schemes provide different

options to the investors like dividend option, capital

appreciation, etc. and the investors may choose an option

depending on their preferences. The investors must indicate the

option in the application form. The mutual funds also allow theinvestors to change the options at a later date Growth schemes

are good for investors having a long-term outlook seeking

appreciation over a period of time.

INCOME / DEBT ORIENTED SCHEME

The aim of income funds is to provide regular and steady

income to investors. Such schemes generally invest in fixed

income securities such as bonds, corporate debentures.

Government securities and money market instruments. Such

funds are less risky compared to equity schemes. These funds

are not affected because of fluctuations in equity markets.

However, opportunities of capital appreciation are also limited

in such funds. The NAVs of such funds are likely to increase in

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the short run and vice versa. However, long term investors may

not bother about these fluctuations.

BALANCED FUND

The aim of balanced funds is to provide both growth and regular

income as such schemes invest both in equities and fixed

income securities in the proportion indicated in their offer

documents. These are appropriate for investors looking for

moderate growth. They generally invest 40-60% in equity and

debt instruments. These fund are also affected because of

fluctuations in share prices in the stock markets. However,

NAVs of such funds are likely to be less volatile compared to

pure equity funds.

MONEY MARKET OR LIQUID FUND

These funds are also income funds and their aim is to

provide easy liquidity, preservation of capital and moderateincome. These schemes invest exclusively in safer short-term

instruments such as treasury bills, certificates of deposit,

commercial paper and inter-bank call money, government

securities, etc. Returns on these schemes fluctuate much less

compared to other funds. These funds are appropriate for

corporate and individual investors as a means to park their

surplus funds for short periods.

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GILT FUND

These funds invest exclusively in government securities.

Government securities have no default risk. NAVs of these

schemes also fluctuate due to change in interest rates and other

economic factors as is the case with income or debt oriented

schemes.

INDEX FUNDS

Index funds replicate the portfolio of a particular index

such as the BSE Sensitive index, S&P NSE 50 index (Nifty),

etc. These schemes invest in the securities in the same weight

age comprising of an index. NAVs of such schemes would rise

or fall in accordance with the rise or fall in the index, though

not exactly by the same percentage due to some factors known

as tracking error in technical terms. Necessary disclosures in

this regard are made in the offer document of the mutual fund

scheme.

There are also exchange traded index funds launched by

the mutual funds, which are traded on the stock exchanges.

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IMPORTANT DOCUMENTS

Two key documents that highlight the funds strategy and

performance are 1) the prospectus (legal document) and the

shareholder reports (normally quarterly).

BENEFITS IN INVESTING THROUGH MUTUAL

FUNDS

PROFESSIONAL MONEY MANAGEMENT

Fund managers are responsible of implementing a

consistent investment strategy that reflects the goals of the

fund. Fund managers monitor market and economic trends and

analyze securities in order to make informed investment

decisions.

DIVERSIFICATION

Diversification is one of the best ways to reduce risk (to

understand why, read The need to Diversify). Mutual funds

offer investors an opportunity to diversify across assets

depending on their investment needs.

LIQUIDITY

Investors can sell their mutual fund units on any businessday and receive the current market value on their investments

within a short time period (normally three to five- days).

AFFORDABILITY

The minimum initial investment for a mutual fund is fairly

low for most funds (as low as Rs.500 for some schemes).

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CONVENIENCE

Most private sector funds provide you the convenience of

periodic purchase plans, automatic withdrawal plans and the

automatic reinvestment of interest and dividends.

Mutual funds also provide you with detailed reports and

statements that make record-keeping simple. You can easily

monitor the performance of your mutual funds simply by

reviewing the business pages of most newspapers or by using

our Mutual Funds section in Investors Mall.

FLEXIBILITY AND VARIETY

You can pick from conservative, bluechip stock funds,

sectoral funds, funds that aim to provide income with modest

growth or those that take big risks in the search for returns. You

can even buy balanced funds, or those that combine stocks and

bonds in the same fund.

Tax benefits on Investment in Mutual Funds

1) 100% Income Tax exemption on all Mutual Fund

dividends

2) Capital Gains Tax to be lower of

10% on the capital gains without factoring indication

benefit and 20% on the capital gains after factoring

indication benefit.

3) Open-end funds with equity exposure of more than 50%

are exempt from the payment of dividend tax for a period

of 3 years from 1999-2000.

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ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram belowillustrates the organizational set up of a mutual fund:

ORGANISATION OF A MUTUAL FUND

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UNIT HOLDERS

TRUSTEES

MUTUAL FUND TRANSFERAGENT

AMC

CUSTODIAN

SEBI

SPONSORS


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The flow chart below describes broadly the working of amutual fund:

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PASSED BACKPOOL THEIR

MONEY WITH

INVEST INGENERATES

INVESTORS

RETURNS FUND MANAGER

SECURITIES


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MUTUAL FUND STRUCTURE

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SEBI

TRUSTEE SPONSOR

OPERATIONS AMC

FUND MANAGERMKT./SALES

MUTUAL FUND

SCHEMES

MKT./SALES

INVESTOR

DISTRIBUTOR


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What are the steps one should keep in mind before investing in amutual fund? (How should I invest in a Mutual Fund?)

Objective

Type ofScheme

InvestorInvestment

Horizon

Risk Profileof

Investments

Typical InvestmentPattern

Open CloseEquity

(%)Debt(%)

MoneyMarketInst./

Others(%)

Money

Market

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

Income-HighLiquidity

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

Income Yes YesMedium-

Long TermLow to

Medium0

80-100

0-20

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

Balanced/Income &Growth

Yes Yes Long-TermMedium to

High0-60 0-40 0-20

Tax-Saving/

ELSSScheme

No Yes Long Term High 80-100 80-100 0-20

SectorOriented

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

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PRINCIPAL FINANCIAL GROUP :

AN OVERVIEW

VISION

To be the most preferred Mutual Fund.

MISSION STATEMENT

To offer customer-oriented, innovative products by

leveraging technology to provide superior returns, achieve the

highest service standards and attain sustained growth levels

through principled human resources striving in focused,

transparent ethical manner to exceed investor expectations and

to encourage equal opportunities for minority and women-

owned companies, creating relationships that enhance the

competitive advantage of the Principal Financial Group with

growing businesses.

INTRODUCTION

The Principal Financial Group is a leader in offering

business, individuals and institutional clients a wide range of

financial products and services, including retirements and

investment services, life and health insurance and mortgage

banking through its diverse family of financial services

companies. More employers choose the Principal Financial

Group for their 401 (k) plan than any other bank, mutual fund or

insurance company in the United States. A member of the

fortune 500, the principal financial Group has $134.8 billion in

asset under management and serves some 14.9 million17


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customers worldwide from offices in 12 countries throughout

Asia, Australia, Europe, Latin American and the United States.

The principal Financial Group, Incorporated is traded on the

New York Stock Exchange under the ticker symbol PFG.

Working with the right people gets the job done right.

At the Principal Financial Group, theyre always on the

lookout for the right people and the right relationships to best

serve their 1,55,000-plus business customers and more than 11

million consumer customers.

Through their Partner & Alliances network, they offer

clients increased convenience and a multitude of value-added

resources.

COMPANY GOALS

Promote purchasing opportunities and increase the number

of minority and women-owned businesses that are recipients of

purchase orders and contracts from the companies of the

Principal Financial Group. Expand the market opportunities of

the companies of the Principal Financial Group by economically

strengthening minority businesses and forming business

relationships. Ensure prime suppliers have initiated or

expanded their 2nd Tier Minority purchasing Programs.

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PURPOSE OF PROGRAM

The main purpose of the Supplier Diversity Program is to

promote increased partnerships between minority and women-

owned business enterprises (MWBE) and the Principal FinancialGroup. They want to ensure these businesses are given the

maximum opportunity to participate in their procurement

activities.

The Supplier Diversity Program does not provide minority

and women-owned businesses with an unfair advantage. It

provides these businesses an opportunity to compete and

participate on an equal basis with all other suppliers and

contractors who want the chance to do business with the

company. Having a program dedicated to this effort can help

break down some of the barriers that smaller businesses

sometimes run into, which can limit their accessibility. It also

takes a more pro-active approach to doing business with

suppliers whose history has shown to be underutilized.

There is no guarantee that a purchase order or contract

will be issued. All our program policies are based on standard

business practices and all suppliers must be able to meet the

companys standards for quality, timing, and capacity.

They expect all suppliers doing business with the Principal

Financial Group to meet the same standards:

One time delivery of quality products and services

Competitive prices

Proactive support for their products and services

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A message from Barry Griswell, Chairman and CEO of the

Principal Financial Group:

The Principal Financial Group has a unique ability to provide

employee benefit and business services to growing businesses.

In todays environment minorities and women own many of

these businesses. Since these same business owners comprise a

large part of our client base, it only makes sense that we do our

best to create opportunities to support minority and women

owned businesses.

The Principal understands that strengthening minority and

women owned businesses contributes to the overall economic

growth in the communities we serve and the expansion of our

markets. Our goal is to have a supplier base that reflects our

customers and our employees.

To achieve this goal, The Principal developed a Supplier

Diversity Program. This program focuses on identifying and

encouraging equal opportunities for qualified minority and

women owned businesses to compete for a share of our

corporate purchases. Our Supplier Diversity Program maintains

a database of minority and women owned companies and

encourages employees throughout the organization to consider

these suppliers when purchasing products or services whenever

possible.

The growth and success the Principal Financial Group has

experienced over the years is dynamic and diversity has

played a major role. We believe that in developing diversity we

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strengthen the Principal Financial Group and positively impact

the economic health of communities worldwide.

The Principal, is a global leader in helping businesses,

individuals and institutional clients achieve financial security

and success and is committed to broadening its partnership with

minority and women owned firms. These partnerships are

mutually beneficial and contribute to economic progress for

everyone.

FINANCIAL DATA

Total assets under management $134.8 billion

Total GAAP revenues $7.0 billion

Net Incomes $574.2 million

Operating earnings $632.7 million

Operating return on average equity, excluding other

comprehensive income (ROE) 13.1 percent.

ASSOCIATES COMPANIES

Operating Companies of the Principal Financial Group

After scrolling through their list of companies, we found that

they are a family of financial service companies working closely

together to better respond to customer changing needs. More

importantly, they offer an exclusive blend of experience,

stability and financial strength few competitors can match.

U.S. Asset Management & Accumulation

Principal Bank

Principal Global Investors, LLC

Principal Commercial Acceptance, LLC21


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Principal Commercial Funding, LLC

Principal Development Investors, LLC

Principal Enterprise Capital, LLC

Principal Financial Advisors, Inc.

Principal Life Insurance Company

Principal Management Corporation

Principal Net Lease Investors, LLC

Principal Real Estate Investors, LLC

Princor Financial Services Corporation

Professional Pensions, Inc.

Spectrum Asset Management, Inc.

Trustar Retirement Services

International Asset Management & Accumulation

AUSTRALIA

Principal Global Investors (Australia) Limited

BRAZIL

BrasilPrev Seguros e Previdencia S.A.

CHILE

Principal Compania de Seguros de Vida Chile, S.A.

Principal Creditors Hipotecarios, S.A.

Principal Tanner Administrator General de Fondos, S.A.

EUROPE

Principal Global Investors (Europe) Limited

HONG KONG

Principal Asset Management Company (Asia) Limited

Principal Insurance Company (Hong Kong) Limited

Principal Trust Company (Asia) Limited

Principal Global Investors (Asia) LimitedINDIA

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Principal Asset Management

Principal Trustee Company Limited

Principal Asset Management Company Pvt. Ltd.

IRELANDPrincipal Global Investors (Ireland) Limited

JAPAN

ING-Principal Pensions Company Limited

MEXICO

Principal Mexico Compania de Seguros S.A. de C.V.

Principal Pensiones S.A. de C.V.Principal Afore S.A. de C.V.

Siefore Principal S.A. de C.V.

SINGAPORE

Principal Global Investors (Singapore) Limited

Life & Health Insurance

Principal Life Insurance Company

Employers Dental Services, Inc.

Executive Benefit Services, Inc.

HealthRisk Resource Group, Inc.

Preferred Product Network

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AWARDS & RECOGNITION

FORTUNE 500

2004

FORTUNE magazine

Ranked 211th on 2004 FORTUNE 500 list

Ranked 6th out of 20 Life and Health (stockcompanies)

2003

FORTUNE magazine Ranked 210th on 2003 FORTUNE 500 list

Ranked 6th out of 21 Life and Health (Stock companies)

Best Places to Work

2005

FORTUNE magazine

Recognized as one of Americas Most Admired

Companies

FORTUNE magazine

Ranked 61st on 2005 FORTUNE 100 Best Places to Work

AARP

Recognized as one of the Best Companies for olderworkers

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2004

FORTUNE magazine

Ranked 95th on 2004 FORTUNE 100 Best Places to Work

Computer world magazineRanked 33rd out of 100 Best places to work in IT

National Association of Female Executives

Ranked one of the Top 30 Companies for ExecutiveWomen (3rd consecutive year)

AARP

Recognized as one of the Best Companies for older

workers

Essence magazine

Recognized among 30 Great Places to Work

INTRODUCING THE FUTURE GOALS - ASSET

ALLOCATION PROGRAM

Principal Mutual Fund brings to you a unique concept of life-

stage investment solutions through its Future Goals - Asset Allocation

Program. Future Goals Series introduces you to the concept of asset

allocation, which determines where you channel your investments to

achieve the desired returns.

The Future Goals - Asset Allocation Program helps you assess

what proportion of shares, bonds and other investments will work

together most efficiently to realize the highest possible return at a

level of risk acceptable to you. And that's not all! The most

interesting aspect of this program is that you can continue to modify

your investments as the times and circumstances change.

Simply put, it is a flexible investment program that takes into

account the highly dynamic nature of life. So while at 30 years of age,

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investments that promise you a high return, you would certainly not

want to expose yourself to that level of risk when you are nearing

retirement. At that age you would much rather ease up on your equity

investments and start making more room for fixed instruments, which

assure you of a certain level of returns. The Future Goals-Asset

Allocation Program ensures that you always have an ideal investment

mix at any stage of your life.

What is Asset Allocation?

Asset Allocation provides you inputs to choose a portfolio of

funds designed to match your investment goals. It also allows you to

monitor your investment distribution patterns, check the progress of

your portfolio regularly and assists you to stay on track with your

future financial goals.

Additionally, it gives you the opportunity to invest in a

combination of different asset classes, each of which serves a definite

purpose. This process will help you arrive at a balanced investment

portfolio. Following are the various asset classes that you can invest

in:

Cash and Cash-equivalents: These are safe, short-term

investments that are highly liquid in nature and thus available

whenever you need liquid cash. Government treasury bills are

included in this asset class.

Fixed Income Investments: These provide a regular income

with limited risks. Bonds and debentures form part of this asset

class.

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Equity Investments: These are riskier than the above two asset

classes, since they are more volatile. However, they offer

greater potential for long-term growth, since returns can be

much higher. Shares of a company are classified as equity

investments.

HOW DOES THE FUTURE GOALS - ASSET ALLOCATION

PROGRAM WORK ?

To understand the Future Goals process, follow the three steps

outlined below. Identify the portfolio that matches your risk appetite

and plan your investment accordingly.

Step I - Life Stage Investment Advisor Questionnaire

We at Principal Mutual Fund have designed a Life Stage

Investment Advisor Questionnaire to help you evaluate your

requirements at a particular point in time and gauge your attitude

toward financial risk. This will, in turn, aid us in suggesting the Funds

that best match your objectives and risk tolerance. Thus, the

questionnaire serves as a tool to help you identify your 'investment

nature' better. The Principal Mutual Fund Life Stage Investment

Advisor Questionnaire indicates a break-up of investments,

translating your needs into distinct investment objectives.

Step 2: Fund Selection

Next, select from the following range of Funds of Principal

Mutual Fund will best suit your investment objectives:

Principal Balanced Fund

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Principal Cash Management Fund

Principal Government Securities

Principal Growth Fund

Principal Income Fund

Principal Income Fund Short-term Plan

Principal Index Fund

Step 3: Rebalancing the portfolio

Over time, your actual portfolio may vary from the initialportfolio that was suggested to you by the Future Goals program. This

is normal because each fund in your portfolio will achieve different

investment results, while the initial portfolio had fixed percentages.

However, it is important to maintain consistency between your actual

portfolio and the initial one, as it assures that your risk / return mix is

within your comfort zone.

But when your actual portfolio start differentiating from

the initial portfolio, you should consider re-balancing. This entails

reorganizing your holding between the different funds so that

your asset allocation again matches your initial portfolio.

Re-balancing will also help you to align your portfolio to your

investment objectives in a systematic manner. Future Goals offers

you an automatic six-monthly re-balancing option.

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SELLING AND MARKETING OF MUTUAL FUND

Any industry can exist and develop only through strategic

marketing of its product, same is true for the mutual find

industry also. A companys product performance depends upon

two things: first, its quality, second and most important one its

awareness/popularity among the public. Such awareness and

popularity is possible only through extensive marketing of the

product and is the key to success of that product. Thus,

companies spend a lot on marketing and advertising of the

product. As far as the marketing of mutual fund is concern, it

has to be customer oriented and so, it follows different

strategies for different category of people, which are described

as under:

MARKETING STRATEGIES ADOPTED BY THE

MUTUAL FUNDS

The present marketing strategies of mutual funds can be divided

into three main headings:

Direct Marketing.

Selling through intermediaries

Joint Calls

Direct Marketing

This constitutes 20% of the total sales of mutual funds.

Some of the important tools used in this type of selling are :

Personal Selling: In this case the customer support

officer of the fund at a particular branch takes appointment from

the potential prospect. Once the appointment is fixed, the

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branch officer also called Business Development Associate

(BDA) in some funds then meets the prospect and gives him all

details about the various schemes being offered by his fund.

The conversion rate in this mode of selling is in between 30%-

40%.

Telemarketing: In this case the emphasis is to inform the

people about the fund. The names and phone numbers of the

people are picked at random from telephone directory.

Sometimes people belonging to a particular profession are also

contacted through phone and are then informed about the fund.

Generally the conversion rate in this form of marketing is 15%-

20%.

Direct Mail: This is one of the most common methods

followed by mutual funds. Addresses of people are picked at

random from telephone directory. The Customer Support

Officer (CSO) then mails the literature of the schemes offered

by the fund. The follow up starts after 3-4 days of mailing the

literature. The CSO calls on the people to whom the literature

was mailed. Answers their queries and is generally successful

in taking appointments with those people. It is then the job of

BDA to try his best to convert that prospect into a customer.

Advertisements in newspapers and magazines: The

funds regularly advertise in business newspapers and magazines

besides in leading national dailies. The purpose is to keep

investors aware about the schemes offered by the mutual fund

and their performance in recent past.

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Hoarding and Banners: In this case the hoarding and

banners of the fund are put at important locations of the city

where the movement of the people is very high. Generally such

hoarding are put near UTI offices/ Banks in order to tap people

who are at present investing in UTI schemes. The hoarding and

banner generally contains information either about one

particular scheme of brief information about all schemes of

fund.

Selling through intermediaries

Intermediaries contribute towards 80% of the total sales of

mutual funds. These are the distributors/agents who are in

direct touch with the investors. They perform an important role

in attracting new customers. Most of these intermediaries are

also involved in selling Shares. RBI Bonds, Insurance, Post

Office schemes and other investment instruments. They do a

commendable job in convincing investors to invest in mutual

funds. A lot depends on the after sale services offered by the

intermediary to the customer. Customers prefer to work with

those intermediaries who give them right information about the

fund and keep them abreast with the latest changes taking place

in the market especially if they have any bearing on the fund in

which they have invested.

Regular Meetings with Distributors: Most of the funds

conduct monthly/ BI-monthly meetings with their distributors.

The objective is to hear their complaints regarding service

aspects from funds side and other queries related to the market

situation. Sometimes, special training programs are alsoconducted for the new agents/distributors. Training involves

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giving details about the products of the fund, their present

performance in the market, what the competitors are doing and

what they can do to increase the sales of the fund.

Joint Calls

This is generally done when the prospect seems to be a

High Net Worth investor. The BDA and the agent (who is

located close to the HNIs residence or area of operation)

together visit the prospect and brief him about the fund. The

conversion rate is very high in this situation, generally, around

60%. Both the fund and the agent provide even after sale

services in this particular case.

Meetings With HNI'S: This is a special feature of all the

funds. Whenever a top official visits a particular branch office,

he devotes atleast one to two hours in meeting with the HNIs of

that particular area. This generally develops a faith between theHNIs towards the fund.

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MARKETING OF FUNDS : CHALLENGES AND

OPPORTUNITIES

When we consider marketing, we have to see the issues in

totality, because we cannot judge an elephant by its trunk or by

its tail but we have to see it in its totality. When we say

marketing of mutual funds, it means, includes and encompasses

the following aspects:

Assessing of investors needs and market research

Responding to investors needs

Product designing

Studying the macro environment

Timing of the launch of the project

Choosing the distribution network

Finalizing strategies for advertisement and publicity

Preparing offer document and other literature

Getting feedback about sales

Studying performance indicators about fund performance

like NAV

Sending certificates in time and other after sales services

Honoring the commitments made for redemption and

repurchase.

Paying dividends and other entitlements

Creating positive image about the fund and changing the

nature of the market itself.

The above are the aspects of marketing of mutual fund, in

totality. Even if there is a single weak link among the

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factors, which are mentioned above no mutual fund can

successfully market its funds.

Widening, Broadening and Deepening The Market

There are certain issues that are directly linked with the

marketing of the mutual funds the first of which is Widening,

Broadening and Deepening of the market for the mutual fund

products. Consider the geographical spread of the investors in

Mutual Fund industry. Almost 80% of the funds are mobilized

from less than 10 centers in the country. Infect there are only

35 centers in the country, which account for 95% of the fund

mobilized. Considering the vast nature of this industry, the first

priority is that the geographical spread has to be widened and

the market has to be deepened. Secondly, he mutual fund

industry must try to spread their wings not only within the

country, but also outside the country.

A. Market in Rural and Semi-Urban Areas

There exists a large investor base in rural and semi urban

areas, having a population of about one lakh, which normally

has access to only post office savings and bank deposits. This

is the single largest untapped market for mutual funds in India.

Rural marketing, unlike the marketing of Mutual Funds in

the metros and urban areas, would require a completely

different strategy, and different means of communication to the

target customers. Typically, investors in the rural and semi

urban areas are not well educated and are inadequately exposed

to the capital market mechanism. Therefore more emphasis has

to be given to the electronic media and other forms of publicity

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such as wall paintings, hoarding and educational films. It is

also important to utilize the services of local intermediaries like

gram sevaks, postmasters, schoolteachers, agricultural co-

operative societies and rural banks. It would therefore be more

expensive to market mutual funds in such markets than

marketing in the cities.

The Mutual Fund industry can collectively undertake this

job of creating the awareness among the rural population about

the Mutual Funds as a new form of savings, translate that

awareness into increased mobilization of funds. The retail

distribution network, comprising of the district representatives

and collection centers be best utilized to create such awareness

and expand the market. Simplification of literature in local

languages, group meetings in these semi urban and rural areas,

visits by mobile vans with Some audio visual aids and the like,

should help develop these markets. In other words the untappedmarkets in the country should ideally be the first thing that the

mutual funds in India should endeavor to tap, not entirely

relying upon the investors in the 35 odd cities of the country.

By concentrating on these areas the investor base will get

broader based. Once the semi urban population gets acquainted

with the concept of mutual funds, it will naturally give the

much-needed stability to the market.

B. Overseas Markets

The second aspect with respect to the widening and

depending the market is expanding the overseas investor base.

A target group with large potential, which can be tapped, is

Non-resident Indians. If offered after sales services of

international standard reasonable return and easy access to35


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Information, NRIs are willing to invest in Indian Mutual Funds.

The expansion of the distribution network and quick

dissemination of information, coupled with prompt and timely

service, efficient collection and remittance mechanism, will

play an important role in mobilizing and retaining these funds.

NRIs will also require continuous presence in their market,

because that generates trust and confidence, which translates

into sustained mobilization of funds.

PRODUCT INNOVATION AND VARIETY

A. Investor Preferences

The challenge for the mutual funds is in the tailoring the

right products that will help mobilizing savings by targeting

investors needs. It is necessary that the common investor

understands very clearly and loudly the salient features of

funds, and distinguishes one fund from another. The funds thatare being launched today are more or less look-alike, or plain

vanilla funds, and not necessarily designed to take into account

the investors varying needs.

The Indian investor is essentially risk averse and is more

passive than active. He is not interested in frequently changing

his portfolio, but is satisfied with safety and reasonable returns.

Importantly, he understands more by emotions and sentiments

rather than a quantitative comparison of funds performance

with respect to an index. Mere growth prospects, in an

uncertain market, are not attractive to him. He prefers one bird

in the hand to two in bush, and is happy if assured a rate of

reasonable return that he will get on his investment. The

expectations of a typical investor, in order of preference are:36


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The safety of funds

Reasonable return

And Liquidity.

B. Product Innovations

With the debt market now getting developed, mutual funds

are tapping the investors who require steady income with safety,

by floating funds that are designed to primarily have debt

instruments in their portfolio. The other area where mutual

funds are concentrating is the money market mutual funds,

sectoral funds, index funds, gift funds besides equity funds.

The industry can also design separate funds to attract

semi-urban and rural investors, keeping their seasonal

requirements in mind.

Birla Dividend Yield Plus and Birla Floating Rate Fund

are a result of customer requirements of dividend income and

hedging mechanism for protection of interest respectively.

These products were designed after extensive market research.

DISTRIBUTION NET WORK

Among the competitors to the mutual fund industry, Life

Insurance Corporation with its dedicated sales force is offering

insurance products, banks with their friendly neighborhood

presence offer the advantage of extensive network, finance

companies with their hefty upfront incentives offer higher

returns, shares (provided the market is moving up) also attract

direct investments from retail investors. It is against this

background that the merits and demerits of the alternative

methods of distribution have to be studied.

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RETAILING THROUGH AGENTS

The alternative distribution channels that are available are

selling, or using lead managers and brokers along with sub-

brokers, for selling units. If necessary motivation and incentive

is provided to the retailer agents, they are likely to be more

successful than the lead managers. This is because, there is a

sense of loyalty amongst agents, in anticipation of getting

continuous business throughout the year, and the trust and

credibility that has been generated or will be generated by being

loyal to one institution. Statistics reveal that the wastage ratio

of application forms in the leas manager concept is much higher

than in the retail agency system. Saving in advertisements and

publicity expenses is also affected, as the target of

communication is restricted to a few group of individuals, since

the agent will act as a facilitator, informer and educator. The

reduced cost benefits will ultimately accrue to the investor in

the form of higher returns.

In such a system, one achieves brand loyalty through

continuous interaction between agents and investors. Building a

team of agents and other distribution network such as

distribution and collecting agents and franchise offices will

provide the investor the opportunity of having continuous

interaction and contact with the mutual fund. Therefore retail

distribution through agents is a preferred alternative for

distributing mutual fund products.

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ADVERTISING AND SALES PROMOTION

By their very nature, mutual funds require higher

advertisement and sales promotion expenses than any consumer

product offering measurable performance. Different kinds ofadvertising and sales promotion exercises are required to serve

the needs of different classes of investors. For instance, an

aggressive push marketing strategy is required for retail

markets, where investors are not adequately aware of the

product and do not have specialized skill in financial market, in

contrast with pull marketing strategies for the wholesale

market.

There are certain issue with reference to advertisement,

publicity literature and offer documents, which deserve

attention. Most of the mutual fund advertisements look similar,

focusing on scheme features, returns and incentives. An

investor exposed to the increasing number of mutual fundproducts funds that all the available brands are rather identical,

and cannot appreciate any distinction.

The present form of application, brochures and other

literature is generally lengthy, cumbersome and at times

complicated leading to higher emphasis on advertisement. One

of the limiting factors is the regulatory framework governing

advertisements of mutual fund products. For instance, in the

offer documents, mutual funds are required to mention the fund

objectives in clear terms. Immediately thereafter, the first risk

factor that has to be mentioned is that there is no certainty

whether the objectives of the fund will be achieved or not.

Some more relaxations in these may facilitate bringing more

novelty in advertisements, within a broad framework, without39


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luring investors through false promises, and will certainly

improve the situation.

Another hurdle is the statutory disclaimer required to be

carried along with every advertisement. Mutual funds have to

provide risk factors.

Under the present mutual fund regulations, a prior

approval by SEBI is a must before a mutual fund can launch its

fund. In the regulation itself, a period of one month has been

provided. But in a months time, perhaps the situation may sochange, that the timing of launch gets affected. The requirement

for getting approval, which normally takes about 2 months

time, defeats the purpose for which the fund was designed also.

QUALITY OF SERVICE

The industry primarily sells quality of services, given that

the performance cannot be promised. It is with this attribute

along with procedural simplicity, that the fund gradually builds

its brands and its class of loyal investors. The quality of

services are broadly categorized as:

Timely services after the sale of the units, and

Continuous reporting of the investment performance.

Mutual Fund managers must give the due attention and

evaluate their performance on each front. They may also

consider an option of conducting a service audit for controllingimproving the quality of service

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MARKET SEGMENTATION

Different segments of the market have different risk-

return criteria, on the basis of which they take investmentdecisions. Not only that, in a particular segment also there

could be different sub-segments asking for yet different risk-

return attributes, and differential preference for various

investment attributes of financial product. Different investment

attributes an investor expects in a financial product are:

Liquidity

Capital appreciation

Safety of principal

Tax treatment

Dividend or interest income

Regulatory restrictions

Time period for investment etc.

One the basis of these attributes the mutual fund market may

be broadly segmented into five main segments as under :

1). RETAIL SEGMENT

This segment characterizes large number of

participants but low individual volumes. It consists of

individuals, Hindu Undivided Families and firms. It may

be further sub-divided into:

i. Salaried class people

ii. Retired people

iii. Businessmen and firms having occasional surpluses

iv. HUFs for long-term investment purpose.

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These may be further classified on the basis of their

income levels. It has been observed that prospects in different

classes of income levels have different patterns of preferences

of investment. Similarly, the investment preferences for urban

and rural prospects would differ and therefore the strategies for

tapping this segment would differ on the basis of differential

life style, value and ethics, social environment, media habits,

and nature of work. Broadly, this class requires security of the

principal, liquidity, and regular income more than capital

appreciation. It lacks specialized investment skills in financial

markets and highly susceptible to mob behavior.

Marketing Strategy:

The marketing strategy involving indirect selling through

agency network and creating awareness through appropriate media

would be more effective in this segment.

2) INSTITUTIONAL SEGMENT

This segment characterizes less number of participants

and large individual volumes. It consists of banks, public sector

units, financial institutions, foreign institutional investors, and

insurance corporations, provident and pensions funds. This

class normally looks for more specialized professional

investment skills of the fund managers and expects a structured

product than a readymade product. The tax features and

regulatory restrictions are the vital considerations in their

investment decisions. Each class of participants, such as banks,

provides a niche to the fund managers in this segment.

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Marketing Strategy

It requires more of a personalized and direct marketing to

sustain and increase volumes.

3) TRUSTS

This is a highly regulated, high volume segment. It

consists of various kinds of trusts, namely charitable trusts,

religious trust, educational trust, social trust etc. each with

different objectives. Its basic investment need would be safety

of the principal, regular income and hedge against inflation

rather than liquidity and capital appreciation.

Marketing Strategy

This class offers vast potential to the fund managers, if

the regulators relax guidelines and allow the trust to invest

freely in mutual funds.

4) NRI'S

This segment consists of very risk sensitive participants,

at times referred as fair weather friends. They need the

highest cover against political and exchange risk. They usually

prefer easy exit with repatriation of return and principal. They

also hold a strategic importance as they bring in crucial foreign

exchange a crucial input for developing countries like ours.

Marketing Strategy

Marketing to this segment requires special kinds of

products for group of foreign countries depending upon the

provisions of tax treaties. The ranges of suitable products are

required to design to divert the funds flowing into bank

accounts.

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5) CORPORATES

Generally, the investment need of this segment is to park

their occasional surplus funds that earns returns more than what

they have to pay on account of holding them. Alternatively they

also get surplus fund due to the seasonality of the business,

which typically become due for the payment within a year or

quarter or even a month. They need short term parking place

for their funds. This segment offers a vast potential to

specialized money market managers. Given the relaxation in

the regulatory guidelines, fund managers are expected to design

the product for this segment.

Thus, each segment and sub segment has there own risk

return preferences forming niches in the market.

Marketing Strategies

Mutual Fund managers have to analysis in detail the intrinsic

needs of the prospects and design a variety of suitable products for

them. Not only those, products are also required to be marketed

through appropriately different marketing strategies.

ROLE OF ADVERTISEMENT IN PROMOTION OF

MUTUAL FUND

Increasing sales have given the mutual fund promoters the

budget to spend more on advertising, which has further boosted sales

Mutual Funds, private sector ones in particular, who had

written off advertising as the ultimate waste of money have nearly

tripled their press media spend from Rs. 12.20 crores in the period

January to April 1998 to Rs.31.6 crores in January to April 1999,

according to date supplied by Prudential ICICI AMC (PIAMC) and

sourced from ORGMARG.44


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Whats interesting is that in this period the share of the

private sector mutual funds in the categorys total media

spending has surged from 20 percent to 50 percent. This can be

attributed to private sector funds seeing an increase share of net

inflows relative to the bank-sponsored counterparts in the public

sector.

Clearly advertising types have something to cheer about.

But what has caused this sudden attitudinal shift towards

advertising? According to experts, intermediaries like banks

who are reluctant to sell a product whose name is unfamiliar to

investor are pushing funds into advertising more. Besides, since

more open-ended schemes are now available, some form of

ongoing support to keep sales booming has been deemed

necessary by the funds.

In the words of Mr. Rajiv Vij, vice president marketing,

Templeton Asset Management (India) Pvt. Ltd., The industry

has discovered that advertising in the changed climate today,

when investors are most receptive to mutual funds, can perk up

sales by anywhere between 20-40% . MD, Prudential ICICI

AMC Ajay Srinivasan gives his rationale for stepping up

marketing spends; we believe that the brand is an important

part of the consumers decision to invest in a category that is

not yet clearly understood by people. According to the mutual

fund marketers, advertising helps bring recall when consumers

are looking at investment opportunities. Srinivasan says that

tactical advertising has taised PIAMCs brand awareness from

5% in June 1993 to 34% now, as per a recent IMRB survey.

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Advertising backed by an integrated marketing and

communication campaign designed to attract investors with long

term prospective has helped the fund post a redemption-to-sales

ratio of just about 5% as compared to 20-30% for the industry

on an average.

But what mode of advertising do these funds choose?

To sell the category, mass media is more effective because

one needs to target a large segment of the population. Mutual Fund

marketers feel that since the category is information-centric, press

is the best medium to get across ones message. Within the print

media, most marketers feel that a combination of leading mainline

and financial newspapers complemented by finance/business

magazines, with relevant thematic appeal and editorial content are

the perfect mix.

Direct mail is another medium, which some funds have

successfully used. But rather than sending out mailers to all and

sundry, there is a need for appropriate targeting.

Educational seminars are the final leg in the marketing and

communication process. In these, investors conditioned by

advertising and hooked by an interesting mailer can have lingering

doubts clarified.

Another very successful media niche, which has been

exploited to the hilt by funds, is intermediary magazines and

newsletters. Besides the low costs of advertising in these

newsletters, these publications circulate to those who are looking for

investment opportunities and thus represent an extremely lucrative

target segment.

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Advertising content by most of the funds too has undergone a

marked change from concept-selling ads dispelling myths, to selling

specific schemes that meet defined objectives/goals.

RESEARCH METHODOLOGY

Research is common parlance to refer to a search for

knowledge. We can also define research AS S "scientific ad

systematic search for pertinent information on a specific topic".

Research is careful investigation or inquiries for new facts in

any branch of knowledge. Researches are basically systematicinquiry, with customer's critical examination with objectives to

search new facts or interpret know facts in new light.

R - Rational way of thinkingE - Expert and exhaustive treatmentS - Search for SolutionE - Exactness

A - Analytical a analysis of adequate dataR - Relationship of factC - a) Careful recording

b) Critical observationc) Constructive attituded) Condensed & Compactly stated

generalizationH - Honesty and hard work

The various step in the whole process of research

methodologies are as follows:

1. Research Design2. Research Objectives3. Sampling Design4. Data Collection5. Data analysis & Interpretation6. Conclusion

7. Report Writing

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1. RESEARCH DESIGN

Research design is the specification of the method and

procedure of acquiring the information to solve the

problem. It is the overall operational pattern or framework

of the project, which stipulates, what information is to be

collected from which source, by which procedure; how it

is to be processed, analyzed, interpreted and reported.

2. RESEARCH OBJECTIVES

Defining the research objectives basically knows whatactually is to be done. Generally the objectives are:

To know the existing level of Mutual fund market in

Udaipur City.

To Study the awareness level of customer about

mutual fund in Udaipur City.

To assess the marketing strategies adopted by the

Mutual Fund in Udaipur City.

3. SAMPLING TOOLS

Sample is the part of entire universe within which the

research is to be conducted and which give complete

knowledge about the entire population. Sampling design is

consist of three major steps.

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a. Sample Size

Customers - 70

For the primary objective the researcher has

surveyed 70 those customer who have invested in

Mutual Fund.

b. Sampling Tool

In this project sampling tool used is "Survey" of

respondent through questionnaire filling the

questionnaire is consist of 17 questionnaire filling

the questionnaire is consist of 17 question, well

thought as well as directly related to the topic. The

question of questionnaire is mostly closed ended

along with few open-ended questions.

C. Sampling Method

Researcher has used survey technique. Random

sampling and convenience sampling technique has

been used for data collection.

4. DATA COLLECTION

There are two types of data required for this project

Primary Data

Secondary Data

PRIMARY DATA

The primary data has been collected by survey method

using the questionnaire. The questionnaire is consisting of

17 questions, well thought as well as directly related to

the topic. The question of questionnaire is mostly closed

ended along with few open-ended questions. This is the49


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most economical, efficient & effective way of collecting

primary data. It yields a wide range of information on

various characters like attitude, opinion, motive &

behaviour.

SECONDARY DATA

1. Fact sheets of Mutual Fund Companies

2. Magazines

3. Internet

5. ANALYSIS & INTERPRETATION

The data is finally collected, analyzed and interpreted to

reach to some conclusion.

6. CONCLUSION & SUGGESTION

On the basis of analysis & interpretation of data collected

some of the conclusion is drawn.

7. REPORT WRITING

The terminating step of research methodology is report

writing, which is presentation of whole work done in the

project in written form.

RATIONALE OF THE STUDY

Worldwide, the mutual fund, unit trust as it is called in

same parts of the world, has a long and successful history. The

popularity of the Mutual Fund has increased manifold. In

developed financial markets, like the United States, Mutual

Fund has almost overtaken bank deposits and total assets of

insurance funds. As of date in the US alone there are over 5000

Mutual Fund with total assets of over US$ 3 trillion (Rs. 100

Lakh Crores). 50


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In India, the Mutual Fund industry started with the setting

up of Unit Trust of India in 1964, Public sector banks and

financial institutions began to establish Mutual Fund in 1987.

The private sector and foreign institution were allowed to setup

Mutual Fund in 1993. Today there are 36 Mutual Fund and over

200 Schemes with total assets of approximately Rs. 81000

Crores.

LIMITATIONS OF STUDY

a. The research area was restricted only with in Udaipur

City.

b. Limitations of time, means & resources.

c. It is a human tendency or it is a state of mind that

whenever they are being observed or interviewed by

unknown person they behave artificially as they hesitate

to disclosing the facts. This is one of the problems

observed with few of the respondents during the survey.

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DATA ANALYSIS & INTERPRETATION

Q.1 Age:

S.No. AgeNo. of

PersonsPercentage

1 15 25 15 21.4%

2 25 35 48 68.5%

3 35 45 30 4.2%

4 above45 04 5.7%

Interpretation:-

It is interpreted from this information that people in

the age group of 25-35 years are whole interested to avail

the schemes of mutual fund and hence the percentage is

more which reached up to 69%.

52

Age of Insured

15 25

25 35

35 45

above45


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Q.2 Which profession you belong to:

S.No. ProfessionNo. of

PersonsPercentage

1. Business 12 17.14%

2. Service

(i) Private 22 31.40%

(ii) Government 30 42.80%

3. Students 02 02.8%

4. Housewife 04 05.7%

Interpretation:-

Hence we can interpret that the people of service

group prefer more to invest in M.F. as compared to others as

the percentage of people taking M.F. in service group is

74% more than the persons from business class. In this

again people who are in govt. job prefer to invest more in

M.F. ie. 42% as compare to people in private sector i.e.

32%.

53

Profession

Business

Service

(i) Private

(ii) Government

Students

Housewife


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Q.3 In which of the following category your monthly

earning fall:

S.No. Monthly Earning

No. of

Persons Percentage1. Below 10000 20 28.57%

2. 10000 20000 14 20.00%

3. 20000 30000 19 27.14%

4. 30000 40000 08 11.40%

5. Above 40000 09 12.80%

Interpretation:-

From above data it is interpreted that person having

gross income below 10000 have more percentage of

investment in mutual fund as compare to other person to

have more income.

54

Monthly Earning

Below 10000

10000 20000

20000 30000

30000 40000

Above 40000


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Q.4 After you have made an investment, how do you

usually feel?

(a) Very worried

(b) Some what worried(c) Some what satisfied

(d) Very satisfied

S.No. OptionNo. of

PersonsPercentage

1. A 18 25.70%

2. B 14 20.00%3. C 25 35.70%

4. D 13 18.57%

Interpretation

As per the data availability more than 50% of

customers (Who have chosen a, b or c) remain confused in

order to make an investment decision.

55

Risk Analysis

A

B

C

D


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Q.5 When you invest your money. What thoughts comes

to your mind first?

(a) I should not loose my money

(b) This should not turn out to be a bad investment.(c) This should turn out to be a good investment

(d) I know this is good decision.

S.No. OptionNo. of

PersonsPercentage

1. A 39 55.71%

2. B 11 15.70%

3. C 13 18.57%

4. D 07 10.00%

Interpretation:-

As per the data availability, more than 50% of sample

population invests their money, keeping eye on the risk

factor rather than return factor.

56

Perception Analysis

A

B

C

D


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Q.6 If you looked at the portfolio of the investment that

you have already made. how would you

characterize them?

(a) Only assured return investment(b) Limited investment in risk product

(c) Divided between risky & safe product

(d) Mostly risky product

S.No. OptionNo. of

PersonsPercentage

1. A 34 48.57%2. B 19 27.10%

3. C 11 15.70%

4. D 06 08.57%

Interpretation:-

Hence we can interpret the major part of the sample

population concentrate on assured return investment (who

chosen option a or b), which either entirely risk free, or

having less risk element.

57

Investment Trend

A

B

C

D


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Q.7 Have you ever invested in mutual fund?

(a) Yes (b) No

S.no. OptionNo. of

Persons

Percentage

1. A 46 65.71%

2. B 24 34.28%

Interpretation:-

As per the research planning 66% customers has been

taken who have invested in mutual funds earlier for

fulfilling primary objectives & another 34% customers who

has not made any investment in mutual funds yet.

58

Awarness Level

A

B


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Q.8 How do you come to know about mutual fund?

(a) Through magazine (b) news papers(c) T.V. advertisements (d) friends(e) Brokers (f)Your C.A./Tax advisor/Financial advisor

(g) Direct Sales person of the company.

S.No. OptionNo. of

PersonsPercentage

1. A 13 18.57%

2. B 07 10.00%

3. C 17 24.28%

4. D 07 10.00%

5. E 11 15.71%6. F 08 11.42%

7. G 07 10.00%

Interpretation:-

As per the data availability, it can be inferred that all

of above media have their influence on the mind of the

investor which emphasizes multiple marketing Strategies

should be adopted for tapping new customer.

Q.9 What do you normally associate with risk?59

Media Effectiveness

A

B

C

D

E

F

G


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(a) Danger (b) Uncertainty(c) Opportunity (d) Thrill(e) Can't say

S.no. Option

No. Of

persons Percentage1. A 07 10.00%

2. B 26 37.14%

3. C 21 30.00%

4. D 04 05.71%

5. E 12 17.14%

Interpretation:-

As per the data indicates that 38% of sample

population associate risk with uncertainty and 10% were not

able to provide any answer, while 30% take it as an

opportunity which shows that as far as risk is concern

customer get confused.

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Perception Analysis

A

B

C

D

E


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Q.10 Do you know which schemes are offering into the

market by different companies?

(a) Yes (b) No

S.No. Option No. Ofpersons

Percentage

1. A 16 22.85%

2. B 54 77.14%

Interpretation:-

As above data indicates that most of the sample

population is not fully aware of the market condition of the

industry & they are more dependent on their respectiveadvisors.

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Market Knowledge

A

B


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Q.11 If No, would you like to know?

(a) Yes (b) No

S.no. OptionNo. of

PersonsPercentage

1. A 37 67.00%

2. B 17 33.00%

Interpretation:-

As per the data shows, 67% of the sample population

who are unaware about the present market condition of the

industry would like to know about the present scenario

which indicates the level of interest of investor.

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Interest Level

A

B


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Q.12 In which schemes do you prefer to invest?

(a) Equity (b) Debt(c) Balance (d) Others

S.no. Option No. Ofpersons Percentage

1. A 18 25.71%

2. B 29 41.42%

3. C 12 17.14%

4. D 12 17.14%

Interpretation:-

As above data shows that 41% of sample population is

interested in investing in to debt funds while 25% are

interested in equity funds which gives a fair idea to

strategist that what type of product is to be served in the

market.

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Scheme Preference

A

B

C

D


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Q. 13 Have you heard abot the ELSS (Equity linked

saving schemes)?

(a) Yes (b) No

S.no. Option No. Ofpersons

Percentage

1. A 30 42.85%

2. B 40 57.14%

Interpretation:-

As per the data shows, major part of sample

population 58% are not aware about ELSS and they mostly

invest their money into IDBI & ICICI Tax saving bonds for

Tax saving purpose.

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Tax Saving Schemes

A

B


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Q.14 In which of the following companies you have made

your investment?

(a) Principal mutual fund (b) UTI(c) Pru. ICICI (d) Standard Charted

(e) Franklin temptation (f) If any other .............

S.No. OptionNo. of

PersonsPercentage

1. A 14 20.00%

2. B 16 22.85%

3. C 12 17.14%

4. D 07 10.00%

5. E 14 20.00%6. F 07 10.00%

Interpretation:-

As per the above data out of 70 investors, who have

invested in M.F., 14 has made in principal mutual fund,& 16

along with UTI. as far as market share is concern UTI has

acquired top Position.

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Market Share

A

B

C

D

E

F


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Q.15 How do you feel about the services of the AMC

(Asset Management companies) offered to you.

(a) Fully satisfied (b) Average(c) Poor

S.No. OptionNo. of

PersonsPercentage

1. A 17 24.28%

2. B 44 62.85%

3. C 09 12.80%

Interpretation:-

Above data indicates that most of the investor are not

aware about the services offered by the different companies

because of unavailability of any AMC in this area & there

for investor response lie dominantly between option b & a.

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Satisfication Level

A

B

C


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FINDINGS

Though this project I tried to identify the various

marketing strategies adopted by the different mutual fund

companies for promoting the sales and its effectiveness

(investor's view) As well as I tried to identify potential areas

where process of business development could be undertaken. On

one to one basis in different parts of the state, I had mixed

experiences i.e. somewhere response was very good while

somewhere it was very frustrating.

* As per the data analysis, it can be inferred that all of

above media have their influence on the mind of investor,

which emphasizes multiple marketing strategies, should

be adopted for tapping new customer.

* 67% of the sample population who are unaware about the

present market condition of the industry would like to

know about the present scenario, which indicates the level

of interest of investor.

* Major part of the sample population concentrate on

assured return investment, which either entirely risks free,or having less risk element.

* 40% of sample population associate risk with uncertain

and 20% were not able to provide any answer, while 15%

take it as an opportunity, which shows that as far as risk is

concern, customers get confused.

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* 55% of the sample population is not able to take

investment decision independently and they required

further guidance from somebody.

* Most of the investor is not aware about the services

offered by the different companies because of

unavailability of any AMC in this area.

* Major part of sample population (58%) is not aware about

the ELSS (Equity Linked Saving Schemes) and they

mostly invest their money into IDBI and ICICI Tax saving

bonds for tax saving purpose.

* More than 50% of sample population invests their money,

keeping eye on the risk factor rather than return factor.

* Major part of sample population (67%) who have invested

in mutual funds are well aware about the scheme objective

which indicates the objective awareness level of investor.

* Most of the sample population is not fully aware of the

market condition of the industry and they are more

dependent on their respective advisors.

* More than half of the sample population dependents upon

their brokers, chartered accountant and their close friends

in order to make an investment decision.

* Major part of the sample population knows about thecharacteristics of mutual funds which shows that 67% of

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sample population are ready to bear risk as market

perceives because mutual fund returns are subject to

market risk.

* 41% of sample population is interested in investing into

debt funds while 25% are interested in equity funds which

gives a fair idea to strategist that what type of product is

to be served in this market.

* Major part of sample population wants to get an

improvement in product but when the question what kind

of product improvement do you like to have asked, major

part of population were not able to provide any specific

guideline to be adopted however they were intended

towards the better return prospective and emphasis on

minimization of expenses ratio.

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CONCLUSION

From the analysis of data I can say that the awarness level

regarding mutual funds was very low in Udaipur. Investors lot

of money in UTI, different Co-Operative Banks, and lot other

fraudulent Insurance and Finance companies. The confidence

level of investors in the financial products was very low due to

all the above given reasons.

Investors in this part of the world are very conservative

and they don't prefer taking any risks they like to play safe.

They firstly look for the safety of their capital and are mentally

very rigid.

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SUGGESTION & RECOMMENDATIONS:

After meeting with different types of persons and

scanning the environment we suggest that following action

should be taken for better results:

Arrange for presentations in Schools, Colleges,

Corporate offices, and public places.

Provide training to distributors/agents regularly for

above purpose.

Arrange for educational seminar regularly.

Provide healthy incentives/remuneration to

distributors/agents.

Regular advertisement of schemes of respective

Mutual Fund company in Television, newspaper,

and other business magazines to create awareness.

Increasing the advertising budget so as to make it

competitive in comparison to other players in the

industry.

Arrange for Road shows, demonstrations and

presentations regularly. Try to find out the actual

needs of the investors through research/Survey and

offer the products, which suit them.

Aggressive marketing approach is required in

remote areas.

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Try to find out the new markets by extensive

research Generate confidence among the potential

investors.

Provide prompt services to

investors/distributors/agents.

Concentrate more on the retail market apart from the

HNI segment.

Give some prestigious awards to the employees

based on their performance

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QUESTIONNAIRE

1. Name .........................................................................................

2. Age:(a) 15 25 (b) 25 35(c) 35 45 (d) Above 45

3. Which Profession you belong to?

(a) Business (b) Student(c) Service (d) Housewife

(i) Private (e) Others -----------

(ii) Government

4. In which of the following category your monthly earning fall?

(a) Upto 10000 (b) 10000 20000(c) 20000 30000 (d) 30000 40000(e) Above 40000

5. After you have made an investment, how do you usually feel?(a) Very worried (b) Some what worried

(c) Some what satisfied (d) Very Satisfied

6. When you invest your money, what thoughts come to your

mind first.

(a) I should not loose my money(b) This should not turn out to be a bad investment.(c) This should turn out to be a good investment(d) I know this is good decision.

7. If you looked at the portfolio of the investment that you havealready made, how would you characterize them?

(a) Only assured return investment.(b) United investment in risk product.(c) Divided between risky & safe products.(d) Mostly risky product.

8. Have you ever invested in mutual funds.

(a) Yes (b) No

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9. How do you come to know about Mutual Fund

(a) Through Magazine.(b) News Papers(c) T.V./Advertisements(d) Friends

(e) Brokers(f) Your C.A./Tax advisor/Financial advisor(g) Direct Sales person of the company(h) Other..................

10. What do you normally associate with risk

(a) Danger (b) Uncertainty(C) Opportunities (d) Thrill(e) Cannot Say

11. Do you know which schemes are offering in to the market bydifferent companies?

(a) Yes (b) No

12. If no, would you like to know.

(a) Yes (b) No

13. In which schemes do you prefer to invest

(a) Equity (b) Debt(c) Balance (d) Others

14. Have you heard about the ELSS (Equity Linked Saving

Scheme)

(a) Yes (b) No

15. In which of the following companies you have made your

investment.

(a) Principal mutual fund(b) UTI(c) PRU. ICICI 74


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(d) Standard Charted(e) Franklin Templeton(f) If any other (Plz Specify)......................

16. How do you feel about the services of the AMC (Asset

management companies) offered to you.

(a) Fully satisfied(b) Average(c) Poor

17. If you need any further improvement either service or productconcern, what kind of features would you like to have in your

product or services are concern.

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BIBLIOGRAPHY

Handbook for writers and editors (by S.S. Rao)

www.nseindia.com.

www.amfiindia.com

www.moneycontrol.com.

www.sebi.gov.in

Principles of marketing management (Philip kotlor).

Marketing management (Philip kotlor, Swew MengLeong).

Strategic marketing.

www.capitalmarket.com

www.indiainfoline.com

Marketing management (Dr. P.K.Shrivastava)

Business today.

Business India.

Business World.

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