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Topic

Mutual Fund Is A Tool OfWealth Creation

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1. INTRODUCTION TO NJ FUNDZ NETWORK

1.1 Introduction To NJ FUNDZ NETWORK

1.2 Vision

1.3 Mission

1.4 Product

1.5 People & Culture

1.6 Services

1.7 Helps To Become A Mutual Fund Advisors

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1.1 INTRODUCTION TO NJ FUNDZ NETWORK :

NJ FUNDZ NETWORK has been playing a pioneering role inINDIA in providing independent advisors. / advisory firms withintegrated, comprehensive and practical business solutions forensuring continued growth of business. It provides the financialadvisors and the institutions that serve them with insights , strategiesand tools to help them significantly grow their businesses.

NJ FUNDZ NETWORK is a division of NJ Indiainvest Pvt. Ltd. ,one of the leading advisors and distributors of financial product andservices in INDIA. NJ Indiainvest. established in year , 1994 , has richexperience in wealth management & marketing / distribution offinancial products. NJ Indiainvest evolved out as a client focused

need based investment advisory firm. regards Mutual Fund as one ofthe best investment revenue available to satisfy any kind ofinvestment need. NJ has gained expertise in analyzing MF schemes,and an in - debt study on various parameters is came out on a regularbasis.

NJ FUNDZ NETWORKhas a very wide network of over 12,000independent advisors across INDIA .

72 location in 18 states across INDIA

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1.2 VISION ;-

To be the leader in our field of business through :-

Total Customer Satisfaction . Commitment to Excellence.

Determination to Succeed with strict adherence to Comoliance .

Successful wealth creation of our Customer .

1.3 MISSION :-

Ensure Creation of the desired value for our Customer,Employees and associates through constant improvement, innovationand commitment to service & quality. To provides solutions whichmeet expectations and maintain high professional & ethical standardsalong with adherence to the service commitments.

1.4 PRODUCTS :--

NJ offers advisory and distribution services on the followingproducts.

Mutual Funds Governing all AMCs & all schemes .

Life Insurance Prudential ICICI. Fixed Deposited of Companies.

Government / RBI bonds.

Infrastructure Bonds.

Approved Securities for Charitable Trusts etc.

NJ main focus is through on Mutual Funds advisory anddistribution. At NJ , it is believed that Mutual Funds as aninvestment , can be looked at for almost all of the financial needs

5 People & Culture -

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PEOPLE :-

Enthusiasm , Enterprise , Education and Ethics from the fourpillars atNJ one can withness the vibrant energy , enthusiasm andalso experience the creativity , one- to one responsiveness ,collaborative approach and passion for delivering value .

At NJ people evolve to be more effective , efficient andresult and oriented . Knowledge is inherent due to the educationcentric approach and the experience in handing different clientsgroups across diverse product profiles .

NJ understands that the people are the most important assets of

the company and it is not the company that grows but the people .NJ hence undertakes rigorous training and educational activitiesfor enhancing the entire team at NJ . NJ also believes in theLearning Through Responsibilities Concepts for its Employees .

For people at NJ success is not a new word , but is aregular stepping stone to realizing the one vision that everyoneshares .

CULTURE :

NJ believes in transforming the lives of their Customers. NJ existto create a different a change towards a better life . The cultureat NJ reflects this responsibilities , this deams of transforminglives , and people at NJ are always excited and enthused in oingso .They believe in keeping You First ,providing you with products

and services that meet your stated and unstated needs . Clientsatisfaction and client services is the MANTRA they constantlyrecite . This services oriented philosophy runs throughout theorganization , from top to bottom

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Employees are given Example freedom in their work . Theobjective is to keep an open , healthy entertainment with amplescope for enterprise ,improvement , innovations and out of the boxsolutions .

1.6SERVICES :

Transform your business with 360* Advisory Platform that puts youahead of your competition from day one .

With the philosophy , NJ try to offer all possible product , servicesand support which an advisory would need in his business .

The support functions are generally in the followingareas

Business planning & strategy .

Training & Development self and Employees .

Product & service offering .

Business Brand.

Marketing

Sales & Development Technology

Research

Communication

Advisory Resources Tools , Calculator etc.

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1.6.1 MARKETING & SALES SUPPORT :-

The marketing and sales team at NJ help advisors with the followingmarketing support

Branded flyers and one pagers for product , new launches /NFOs , services etc.

Business orgnizor , performance , review , hand books etc.

Communication support NJ knowledge and NJ I Gurukulseries .

Letters , direct mails pieces .

Email communication for products new launches NFOs .

Branded Presentation .

NJ aims to supports the NJ fundz Partners in marketingindirectly by contributing through written articles advertisement invarious , magazines , newspapers etc .

1.6.1 SALES SUPPORT :

Joint calls to your clientPresentation at your client meet .Organizing sales meets , Fairs and Workshop .Business sales planning and helping you achieve your

personal business targets .

1.6.2 HR CONSULTANCY :

HR Nest : Solutions for Recruitment of Employees / Staff

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Online Management / Tracking of Employee or Branchbusiness

Consulting services for --- (RRAPP)

1. Recruitment / Sourcing2. Retention3. Appraisals4. Policy & Procedures5. Payment Management

1.6.3 TECHNOLOGY :

Make online Transactions in Mutual Funds.

Online Nest : Facility to your clients to make Transactions onlineunder you ----

Purchase Redemption Switch

1. Mutual Fund Nest :

1. Access to all AMCs , products & services of NJ FundzNetwork.

2. Online investment account to client

3. Online NJ advisors Desk4. Automatic Capturing & daily updation of all mutual fundtransactions

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5. Wealth Nest :

Premium offering for HNI & Corporate clients

Complete consolidation of all investments assets & products

3. Web Nest :

Your own branded website with attractive contents / data ,updated daily

Direct login to your clients to their online investment account

4.Financial Planning Nest :

Complete online creation , recording & monitoring ofcomprehensive and multiple financial plans

1.6.4 TRAINING & DEVELOPMENT :

Making people benefit from the growing economy is possible byattracting them to participate in Equity for long term, to make

their money work for themselves and create wealth. For this tohappen, a huge force of effective Financial Advisors is needed.

Formation of fraternity of effective financial advisors is possibleby spreading awareness and enabling people qualify requisiteexamination and develop skills to function as qualified FinancialAdvisor.

This sporadic growth in terms of need of performers in financialadvisory services has lead to the crunch of availableperformers. Though lots of youngsters are getting into financialadvisory services, but the greatest challenge is of RIGHTSELLING, for which adequate Training is a prerequisite.

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Advisory function demands updated knowledge, backed up byhoned skills to fetch effective business. Building long termrelationship with clients depends upon possessing clear edgeover others in the field. Hence continuous people development

has an important role in building this fraternity.Though there is a mushroom growth of bodies offering training, thedeficiency of training centers and effective trainers is very muchthere. In addition to the organizations craving for right trainingfacilities, a whole lot of un-taped junior population needs to beoriented towards basics of investment, significance of financialplanning for wealth creation, right at the inception of their careers tobe better off.

1 RESEARCH DESK

The Research Team follows a set of Process & Methodology .The fund houses and their schemes are evaluated on multipleparameters like :

AMC due diligence

Soundness of the trustee

Information sharing &Compliance Adherence to Philosophy

NJ believes that ideally good schemes should form a part ofclients portfolio . The Research Team regularly communicatessuch analysis results to the employees ,and associates .TheTeam analysis and study the markets , investment things thatare important point of views

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2 CUSTOMER CARE

NJ Customer Care ----------- Freedom from QueryHandling

Single Contact Point for All Queries available to ALLAdvisors in India

Trained Executives for Time Bound solving of Queries

All India Toll Free Number -- 1800 233 0155

Facilities to submit Queries and track latest status Onlin

1.7 HELPS TO BECOME A MUTUAL FUND ADVISOR

NJ Fundz Network can help you to become a Mutual Fund Advisor.They provide the requisite training and eductional material forsuccessfully appearing for the exams. This training, given by

professional/experts working in the industry, would also be of usewhen you start your business. They can also help you to register andappear for the exams.

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2.INTODUCTION TO MUTUAL FUNDS

2.1 Evolution of Mutual Funds in INDIA

2.2 Meaning and concept of Mutual Fund

2.3TheDefinition

2.4 Mutual Fund is a Pool of Money

2.5 Diversification

2.6 You can make money from a mutual fund in three ways

2.7 Advantages of Mutual Fund

2.8 Disadvantages of Mutual Fund

2.9 Mutual Funds: Different Types Of Funds

2.10 Classification of MFs

2.11 Investment Plans in Mutual Funds

2.12 Buying mutual fund units? Do it your way

2.13 Structure of Mutual Fund OR

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How Does a Mutual Fund work ?

Mutual Funds

2.1 Evolution of Mutual Funds in INDIA :

The history of MFs in INDIA can be broadly divided intodifferent phases. The MFs industry in INDIA stated in 1963with the formation of Unit Trust of India (UTI) at theinitiative of Reserve Bank and government of India.

Phase 1 Growth of UTI (1964 87) :The first scheme and for long are of the largest , launchedby UTI was unit scheem 1964.Later in 1970s and 80s ,

UTI started innovating nd offering different schemes tosuit the different classes of investors. ULIP was launchedin 1971 Six new schemes were introduced between 1981and 1984.The new schemes such as Childrens gift growthfund and Master share were launched between 1984-87 .

Phase -2 Entry of public sector fund (1987 -93) :1987 marked the entry of other public sector mutualfunds , with the opening up of the economy , many public

sector banks and financial instrument were allowed toestablished MF.

Phase - 3 Emergence of Private Funds (1993 96) :During the year 1993-94, five private sectors of MFlaunched their schemes allowed by six order in 1994-95.

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Phase -4 Growth and SEBI Regulation (1996 99) :SEBI regulation protect both Government and investorsinterest.. A comprehensive set of regulation wasintroduced with SEBI (MF) Regulation/1996.

Phase -5 Emergence of a large and uniform industry(1999 2004) :

In the year 1999 new phase in the industry of MF inINDIA , a phase in the term of both amount of mobilizedfrom investors and assets under management.

Phase - 6 Consolidation and Growth From 2004onwards .

2.2 Meaning and concept of Mutual Fund

A mutual fund is simply a financial intermediary that allowsa group of investors to pool their money together with apredetermined investment objective. The mutual fund willhave a fund manager who is responsible for investing the

pooled money into specific securities (usually stocks orbonds). When you invest in a mutual fund, you are buyingshares (or portions) of the mutual fund and become ashareholder of the fund.

Mutual funds are one of the best investments ever createdbecause they are very cost efficient and very easy to investin (you don't have to figure out which stocks or bonds tobuy).

By pooling money together in a mutual fund, investors canpurchase stocks or bonds with much lower trading coststhan if they tried to do it on their own. But the biggestadvantage to mutual funds is diversification.

Mutual Funds are the most popular investment for thecommon man. They represent his path to success. The

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reason that MFs are so popular is that they offer the abilityto easily invest in increasingly more complicated financialmarkets. A large part of the success of MFs is also theadvantages they offers in terms of diversification,

professional management and liquidity. A study highlightsthat MFs will be one of the major instruments of wealthcreation and wealth saving in the years to come, giving theresult.

2.3TheDefinitionA mutual fund is nothing more than a collection of stocksand/or bonds. You can think of a mutual fund as a companythat brings together a group of people and invests theirmoney in stocks, bonds, and other securities. Each investorowns shares, which represent a portion of the holdings of

the fund.

Mutual funds are one of the best investments ever createdbecause they are very cost efficient and very easy to investin (you don't have to figure out which stocks or bonds tobuy).

2.4 Mutual Fund is a Pool of Money

A Mutual Fund is a company that pools money frommany investors and invest the money in stocks, short-

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term money markets instruments, others securities orassets or some combination of these instruments. Thecombined holdings the MFs ones are known as itsportfolio. Each share represents on investors

proportionate ownership of the funds holding and theincome those holdings generate..

A MF uses the money collected from investors to buythose assets which are specifically permitted by statedinvestment objectives.

2.5 Diversification

Diversification is the idea of spreading out your moneyacross many different types of investments. When oneinvestment is down another might be up. Choosing todiversify your investment holdings reduces your risk

RRTURN INVESTOR

FUND MANAGERSECURITIES INVEST IN

G

E

N

E

R

A

T

E

Pool

Their

Money

PASS BACK TO

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tremendously.

The most basic level of diversification is to buy multiplestocks rather than just one stock. Mutual funds are set up tobuy many stocks (even hundreds or thousands). Beyond

that, you can diversify even more by purchasing differentkinds of stocks, then adding bonds, then international, andso on. It could take you weeks to buy all these investments,but if you purchased a few mutual funds you could be donein a few hours because mutual funds automatically diversifyin a predetermined category of investments (i.e. - growthcompanies, low-grade corporate bonds, international smallcompanies). On the next page, I clearly explain howdiversification works using a "Wheel of Fortune" concept.

2.6You can make money from a mutual fund inthree ways:1) Income is earned from dividends on stocks and intereston bonds. A fund pays out nearly all of the income itreceives over the year to fund owners in the form of a

distribution.2) If the fund sells securities that have increased in price,the fund has a capital gain. Most funds also pass on thesegains to investors in a distribution.3) If fund holdings increase in price but are not sold by thefund manager, the fund's shares increase in price. You canthen sell your mutual fund shares for a profit.

2.7 ADVANTAGES OF MUTUAL FUNDS

Professional Management - The primary advantage offunds (at least theoretically) is the professional management

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of your money. Investors purchase funds because they donot have the time or the expertise to manage their ownportfolios. A mutual fund is a relatively inexpensive way fora small investor to get a full-time manager to make and

monitor investments.

Diversification - By owning shares in a mutual fund insteadof owning individual stocks or bonds, your risk is spread out.The idea behind diversification is to invest in a large numberof assets so that a loss in any particular investment isminimized by gains in others. In other words, the morestocks and bonds you own, the less any one of them canhurt you (think about Enron). Large mutual funds typically

own hundreds of different stocks in many differentindustries. It wouldn't be possible for an investor to buildthis kind of a portfolio with a small amount of money.

Economies of Scale - Because a mutual fund buys and sellslarge amounts of securities at a time, its transaction costsare lower than what an individual would pay for securitiestransactions.

Liquidity - Just like an individual stock, a mutual fundallows you to request that your shares be converted intocash at any time.

Simplicity - Buying a mutual fund is easy! Pretty well anybank has its own line of mutual funds, and the minimuminvestment is small. Most companies also have automaticpurchase plans whereby as little as $100 can be invested ona monthly basis.

Reduction of Risk Diversification reduces the risk ofloss,as compared to investing directly one or two share,or debenture or other instruments.When a investor investdirectly, all the risk of potential loss in his own, whileinvesting in pool of funds with others investors, any loss

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on one or two securities is also shared with otherinvestors.

Safety MFs industry is well regulated, all funds are

registered with SEBI which lays own rules to protect theinvestors

2.8 DISADVANTAGES

Professional Management - Did you notice how we

qualified the advantage of professional management withthe word "theoretically"? Many investors debate whether ornot the so-called professionals are any better than you or Iat picking stocks. Management is by no means infallible,and, even if the fund loses money, the manager still takeshis/her cut. We'll talk about this in detail in a later section.

Costs - Mutual funds don't exist solely to make your lifeeasier - all funds are in it for a profit. The mutual fund

industry is masterful at burying costs under layers of jargon.These costs are so complicated that in this tutorial we havedevoted an entire section to the subject. Dilution - It's possible to have too much diversification.Because funds have small holdings in so many differentcompanies, high returns from a few investments often don'tmake much difference on the overall return. Dilution is alsothe result of a successful fund getting too big. When money

pours into funds that have had strong success, the manageroften has trouble finding a good investment for all the newmoney. Taxes - When making decisions about your money, fundmanagers don't consider your personal tax situation. For

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example, when a fund manager sells a security, a capital-gains tax is triggered, which affects how profitable theindividual is from the sale. It might have been moreadvantageous for the individual to defer the capital gains

liability.

2.9 Mutual Funds: Different Types Of Funds

Each fund has a predetermined investment objective thattailors the fund's assets, regions of investments andinvestment strategies. At the fundamental level, there arethree varieties of mutual funds.

1. MoneyMarketFundsThe money market consists of short-term debtinstruments, mostly Treasury bills. This is a safeplace to park your money. You won't get greatreturns, but you won't have to worry about losingyour principal. A typical return is twice the amountyou would earn in a regular checking/savings

account and a little less than the average certificateof deposit (CD).

2. EquityFundsFunds that invest in stocks represent the largestcategory of mutual funds. Generally, the investmentobjective of this class of funds is long-term capitalgrowth with some income. There are, however,

many different types of equity funds because thereare many different types of equities. A great way tounderstand the universe of equity funds is to use astyle box, an example of which is below.

3. BalancedFundsThe objective of these funds is to provide a balanced

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mixture of safety, income and capital appreciation.The strategy of balanced funds is to invest in acombination of fixed income and equities. A typicalbalanced fund might have a weighting of 60% equity

and 40% fixed income. The weighting might also berestricted to a specified maximum or minimum foreach asset class.A similar type of fund is known as an asset allocationfund. Objectives are similar to those of a balancedfund, but these kinds of funds typically do not haveto hold a specified percentage of any asset class. Theportfolio manager is therefore given freedom toswitch the ratio of asset classes as the economy

moves through the business cycle.

Others :

4. IncomeFundsIncome funds are named appropriately: theirpurpose is to provide current income on a steadybasis. When referring to mutual funds, the terms"fixed-income," "bond," and "income" are

synonymous. These terms denote funds that investprimarily in government and corporate debt. Whilefund holdings may appreciate in value, the primaryobjective of these funds is to provide a steadycashflow to investors. As such, the audience forthese funds consists of conservative investors andretirees.

5. Gift Funds

These funds invest exclusively in governmentsecurities with medium to long term maturities,typically over one year, government securities haveto default risk NAVs of these securities also fluctuatedue to change in interest rates and other economicfactors as is the case with income or debt oriented

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schemes .

2.10 Classification of MFs :

There are two main categories of MFsOpen-ended : In this scheme is one that is available forsubscribe and repurchase on a continuous basis. Thesescheme do not have a fixed maturity period. Investor canbuy and sell units at NAV.The key feature is that liquidity.

Close-ended : In this schemes has a fixed maturity period.The fund is organizing for subscription only at the time of

launch of the scheme. The fund is redeemed at NAV on thedue date.

2.11 INVESTMENT PLANS IN MUTUAL FUNDS :

There are few investment plans which offer by the MFs inINDIA.

1. AUTOMATIC REINVESTMENT PLANS (ARP) : TheARP allows the investors to reinvest the amount ofdividends or other distributions made by the funds inthe same fund and receive additional units ,instead ofreceiving them in cash. Reinvestment take place at theex-dividend NAV. ARP ensure that the investor reapsthe benefits of compounding in his investment.

2. SYSTEMATIC INVESTMENT PLANS (SIP) : Underthis plan the investor invest a fixed sum periodically , athere by letting the investor sore in a disciplined andphased manner.When you opt for SIP you automaticallyparticipate in the market swings.

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EXAMPLE : What will be the value of investment if aperson invested Rs.10,000/-each month through SIP ?

Rate ofreturn 8% 12% 15%

5yrs 7,49,667 8,34,863 9,06,819

10yrs 18,51,657 23,33,391 27,96,573

15yrs 34,93,451 50,55,760 67,78,631

20yrs 59,39,472 1,00,01,429 1,51,69,550

Some instructions for SIP :

PAN details of all holders are mandatory for SIPinvestments.

SIP facility is available only on specific dates of themonth viz.. 1st/7th/14th/21st.

Minimum investment amount for each SIP is Rs.2000/-in all schemes.

You can opt for an SIP on MONTHLY / QUARTERLY andfor the same amount..

You can choose to discontinue this facility by giving a15 days notice to the registrar in written.

3.SYSTEMATIC WITHDRAWAL PLANA (SWP) : Theseplans allows the investors to make systematic withdrawal

from his fund investment account on a periodic basis,thereby providing the same benefit as regular income.

Some instruction for SWP :

Please allow upto 7 days for SWP to be registered andthe first SWP transaction to happen.

SWP is available only on specific dates of the month

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viz.. 1st/7th/14th/21st.

Your withdrawal request should not be below Rs.1000/-.

Existing investors are required to submit only this formindicating the existing Account Number and withdrawaldetails in the SWP section.

You can choose to discontinue this facility by giving a15 days notice to the registrar in written.

4.SYSTEMATIC WITHDRAWAL PLANA (STP) : Theseplans allows the investor to transfer on a periodic basis aspecified amount from one scheem to another within thesame fund family.

Some instructions for STP :

Please allow upto 7 days for STP to be registered andthe first STP transaction to happen.

STP is available only on specific dates of the monthviz.. 1st/7th/14th/21st.

Your withdrawal request should not be below Rs.1000/-.

Existing investors are required to submit only this formindicating the existing Account Number and withdrawaldetails in the STP section.

You can choose to discontinue this facility by giving a15 days notice to the registrar in written.

2.12 Buying mutual fund units? Do it your way

One of our acquaintances was recently shocked to see BajajAllianz charging a 70 per cent cost on his policy. He alongwith around 30 more employees of a renowned hospital in

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Mumbai was shocked to see why only 28 per cent of themoney was invested.

The best part is that the private bank that sold it to thembelonged to the same management as the hospital and

hence people are reluctant to take an open stance. Calls toBajaj Allianz yielded the response 'It is not ourresponsibility. It is the bank's responsibility'.

This is a very common case where insurance companiesoften wash their hands off after such bouts of misselling andoften look for scapegoats.

At the same time, insurance companies dangle the carrots ofpaid foreign trips & more money and ensure that the

interests of policy buyers are not aligned with the interest ofpolicy sellers. Unless this happens, such stories are bound tobe common.

2.13 Structure of Mutual Fund OR

How Does a Mutual Fund work ?

UnitHold

ers Trust Investment

ReturnsUnits

AMC

Savings

Registrar

Trust

Custodian AMC

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SEBI

Unit Holder : Unit Holder are those person who get

units in the form of Returns regarding the moneyinvested in different securities in stock market

through distributors / agents / avisors .Unit holderare also called investors.

Trust : Trust is that institute where group of person

are present such as distributors / agents / advisors .They invest the investors money in differentsecurities by the order of AMC.

AMC : AMC is that institute who tell the right securities

to the distributors for invest the investors money .

Custodian : Keep the physical record of each facts andfigures .

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SEBI : Set the rules and regulations for the purpose

of invest the investors money in the stock market bythe agents / advisors / distributors .

OBJECTIVES OF PROJECT

To understand Indian mutual funds industry and to analyze that how it can

help in creating wealth. In this project we find out that how Mutual Fundscreate wealth for an advisor, a Financial advisor, sponsors, AMC, trustee and

economy.

During this project we wil find out the answers to the following

questions:

What type of portfolio should one hold to create wealth?

How do you pick a specify fund?

What are the factors to considered to pick a debt-equity fund? How much should you invest initially?

How much should you expect to get in return?

Choice of mutual funds on the basis of age, income, marital,status,etc.

Study of various Mutual Funds companies, their products & compare

them. Also to study their merits and demerits, to find out opportunities

to create wealth through them.

Also to compare other investment instruments (like bank FDs,POMIS, PPF, etc) with mutual funds.

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LIMITATIONS

Some respondents were reluctant to divulge personal informationwhich can affect the validity of all responses.

In a rapidly changing industry, analysis on one day in one segment

can change very quickly.

Time constraint and limited sample size makes the result

insufficient.

The data collected is through questionnaire and is subject to

response errors.

The data collected is primary and secondary and have chances of

discrepancy.

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1. Who among the following has influenced your choice for

investment in mutual fund?

Consultant 60%

Friends 10%

Individual 30%

0%

10%

20%

30%

40%

50%

60%

Consultan

Friends

Individual

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2. Which factor do you consider before investing in mutual fund?

Option PercentageSafety of principle 7%

Low risk 35%

High return 58%

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0%

20%

40%

60%

80%

100%

Percentage

High retur

Low risk

Safety of

principle

3. Imagine that stock market drops immediately after you invest in it then what will you

do?

Option percentageWithdraw your money 15%

Wait and watch 57%

Investment more in it

28%

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0%

20%

40%

60%

80%

100%

percentage

Investment

more in it

Wait and

watch

Withdraw you

money

4. What Percentage of your income do you invest annually?

Annual Income Total

Below 1,50.000 1,50,0002,50,000

2,50,0004,00,000

Above4,00,00

0

% Of

income

1 12 8 8 1 29

2 9 18 16 5 48

3 3 10 9 1 23

Total 24 36 33 7 100

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0

2

4

6

8

10

12

14

16

18

Anualincome

below150000

150000