Summer Project Prj

8/2/2019 Summer Project Prj

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SUMMER PROJECT

ON

MUTUAL FUND AS INVESTMENT OPTION

AT

PRUDENTIAL ICICI ASSET MANAGEMENT COMPANYSubmitted in partial fulfillment of the requirement for the award of degree of

Master of business administration of Rajasthan technical university, Kota

SUPERVISED BY: SUBMITTED BY:

MR. MANOJ JOSHI PUNEET

MAHENDRA

FACULTY SUPERVISOR:

Mr. Vikas shrotriya

SWAMI KESHVANAND INSTITUTE OF TECHNOLOGY,

MANAGEMENT & GRAMOTHAN, JAIPUR

2010-2012


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PRUDENTIAL ICICI ASSET MANAGEMENTPRUDENTIAL ICICI ASSET MANAGEMENTCOMPANYCOMPANY


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ACKNOWLEDGEMENT

I would like to thank Prudential ICICI Asset Management Company for giving methe opportunity to pursue my summer project in their respected organization.

Preparing a project is always teamwork so I realized the shortcomings of notworking in a team. I would like to thank my faculty guide - Mr. Vikas shrotriyabecause without her guidance and valuable recommendations it would not havebeen possible to reach this destination.

Now, I take the opportunity to thank my project guide Mr. Mohit Bhagat (Area

Manager, Rajasthan) for lending his valuable time and suggestions.

I also thank all the candidates whom I interviewed. They lend a part of theirvaluable time, gave some precious suggestions and exchange their experience.

Nothing is perfect in this world and so is this project. Instead of all the precautionsand applying all the skills that I have, there are some loopholes left.


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PREFACE

Summer projects are an integral part of MBA curriculum. Main objective behindthese projects is to link the theoretical inputs and their practical applications, whichare essential to keep pace with the dynamic environment.

To survive, thrive and beat the competition in todays brutally competitive world,one has to manage the future. Managing the future means managing your savings.One can manage his/her savings by investing them in Mutual Fund Companies,Banks and other Financial Institutions.

The project undertaken provides an overview of the complexities of todays financialmarket. It also showed my errors, which were not discovered until I worked on thisproject. The project enriched my knowledge regarding Mutual Funds. It also helpsme to analyze the mindset of the customers, while he/she is planning to invest theirsavings.

Instead of the efforts there might be many mistakes left in the project.


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CONTENTS

PAGE NO.

1. ACKNOWLEDGEMENT 3

2. PREFACE 4

3. EXECUTIVE SUMARY 6 -7

4. INTRODUCTION 8-18

5. OBJECTIVE OF THE PROJECT 19

6. CONCEPTUAL FRAMEWORK 20

7. FINDINGS AND ANALYSIS 56-63

8. RECOMMENDATIONS 64

9. LIMITATIONS 65

10. SWOT ANALYSIS 66-67

11. CONCLUSION 68

12. BIBLIOGRAPHY 69

13. ANNEXURE


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EXECUTIVE SUMMARY

Purpose

The project aims at imparting education about Mutual Funds, as there is apotentially large market for mutual fund industry left. As I interviewed the Chartered

Accountants, Company Secretaries, Investment Consultant, Tax Consultants, etc, Ivisualize the importance of this project because many of them lack adequateknowledge about mutual funds.

The purpose was to answer their questions, like:

What is a Mutual Fund?

Why should they invest in a mutual fund? What are the benefits? What are the additional benefits they will get by owning a Mutual Fund

agency? What are the myths and the facts about mutual funds? Why are we targeting them as our customers? What are the various options to invest in a mutual fund?

and many more

Objective

Prudential ICICI AMC conducted an AMFI Examination in association withAssociation of Mutual Funds in India (AMFI). The objective was to educate thecandidates about Pru Chairman for which these candidates have to pass AMFIExam and have to become an agent of the company. Pru Chairman is a namegiven to an award. The agent who achieves the specified targets becomes PruChairman. The award has trips to Bangkok, Singapore and Australia, all atdifferent scores.

The main objective was to expand the market for Prudential ICICI and henceAgency Expansion.

Findings

The initial stage of the project was not very exploring, but as the project progressedmany facts came in front. The main findings are:

The population that was targeted was of well-educated professionals. Forexample, Chartered Accountants are considered as financial doctors. Theyare known for their perfect advice. It is considered that they know thefinances best. Instead of all these facts, there is a lot of misconception


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regarding Mutual Funds in Chartered Accountants. The same thing followswith other professional candidates.

Those candidates who were already in Insurance sector were interested toknow the concept, its benefits, limitations and risks of Mutual Fund.

The candidates, up to the age group of 35-40 were risk averse as comparedto candidates of above age group. They were keen to know the concept.

The candidates above the age group 35-40 were resistant. They weresatisfied with what they are currently doing.

It is found that there is a lack of knowledge regarding the benefits ofinvesting in a Mutual Fund. Most candidates reacted negatively when Iintroduce myself as a representative of a Mutual Fund Company. But after Iexplained the concept to them, they show some positive signs and entertainwell.

ConclusionThe project enlightened many facts, which were not known before. It also

enlightened, where the company is lagging behind.

Todays investors are of a mixed breed, some of them are risk averse and someare risk taking. Mutual Fund companies are offering schemes for each kind of

investor to fulfill the need of each candidate.

There is a potentially large number of prospects but they lacks knowledgeregarding the benefits of investing in a mutual fund.

Recommendations Adequate knowledge to be given to the agents regarding the latest events

taking place in the AMC.

The promotional campaign must be sound enough, as there is a lack ofknowledge regarding this concept.


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The company should conduct AMFI Examination frequently as there is avast number of candidates who are not AMFI certified.


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ABOUT PRUDENTIAL ICICI ASSET MANAGEMENTCOMPANY

Prudential ICICI Asset Management Company, (55%: 45%) is a joint venture

between Prudential Plc, UK's leading insurance company and ICICI Bank Ltd,India's premier financial institution.

The joint venture was formed with the key objective of providing the Indian investormutual fund products to suit a variety of investment needs. The AMC has alreadylaunched a range of products to suit different risk and maturity profiles. Click here tolearn more about the products.

Prudential ICICI Asset Management Company Limited has a networth of about Rs.69.89 crore (1 crore = 10 million) as of March 31, 2002. Both Prudential and ICICIBank Ltd have a strategic long-term commitment to the rapidly expanding financialservices sector in India.


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PRU ICICI AMC HIERARCHY

PARTNERS


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CUSTODIAN

HDFC Bank Limited,Sandoz House,Dr. Annie Besant Road,Worli, Mumbai 400 018

Role

HDFC Bank Limited, provides the following services to PruICICI

Post-trading and custodial services to the Mutual Fund.

Ensure that the benefits due on the holdings are received on time.

Detailed management information and other reports as required by theAMC.

Maintain confidentiality of the transactions.

Be responsible for the loss or damage to the assets belonging to theScheme.due to negligence on its part or on the part of its approved agents andsegregate assets of each Scheme.

REGISTRAR

Computer Age Management Services (P) Limited (CAMS),A & B Lakshmi Bhawan,609,Anna Salai,Chennai 600 006.IndiaTel No: (091) (44) 4342121/22/23

Role

As Registrar to the Scheme, CAMS handles communications with investors,performs data entry services, maintains investor data and dispatches AccountStatements reflecting the holding and transactions of the investors.

ICICI Infotech Services Limited(ICICI Infotech)International Infotech Park,3rd Floor, Tower No 5,Vashi Railway Station Complex,Navi Mumbai 400 705.India.Tel No:(091) (22)7912040


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Role

As registrar and transfer agent to the ICICI Premier, ICICI Infotech handles alltransfer related work, communications with investors, maintains investor data andprocesses all unit transactions.

DISTRIBUTORS

The distributors are the networks through which the various schemes ofPruICICI reach the investors. The distributors sell the schemes to theinvestors for which they are paid an incentive in the form of commission.

Who can become a Distributor?

PruICICI has distributors who have a national presence as well as as those thathave a strong local presence.

The distributors could be:

Distributors Examples

Banks- Foreign- Private

Citibank NA

HDFC Bank

National distributors

Kotak Securities

DSP Merrill Lynch Ltd.

Bajaj Capital Ltd.

J P Morgan Stanley

Local distributors

Blue Chip Corporate Investment Centre Ltd.

Eastern Financiers Ltd.

Sivan Securities Ltd.

NSE/BSE Brokers

Financial AdvisorsChartered Accountants

Tax Consultants


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The distributors are given weightage on the following counts:

Client Base: How stable are the investors, the nature and number ofinvestors.

Sales Force: Educational qualifications, strength of sales force.

Services Offered: Advisory, Collection.

The communication and payments to the distributor are made on the basis of acode. In case the distributor does not have one, it can be alloted to him byPruICICI. To be alloted a code, a form needs to be filled. On the basis of this formand a face-to-face meeting with the zonal head and sales team, a code is alloted tothe distributor after obtaining approval from the zonal head.

How to become a distributor?

Three simple steps to become a PruICICI distributor:

STEP I Approach the sales person at any of the offices (Offices).

STEP IIObtain approval from the zonal head by arranging a meeting withthe help of the sales person.

STEP IIIAfter approval from zonal head is obtained, a code is allotted (ifnot already allotted) by filling a form.

BANKERS

ICICI Bank Limited

Zenith House,Keshavrao Khade Marg,Gate No.5, Opp.Race Course,Mahalaxmi, Mumbai 400 034

LEGAL ADVISOR

Crawford Bayley & CompanyState Bank Building,N.G.N. Vaidya Marg,Fort, Mumbai 400 023


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MAJOR COMPETITORS/ PLAYERS


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ABOUT COMPETITORS/ PLAYERS

FRANKLIN TEMPLETON INVESTMENTS (MUTUAL FUNDS)

Franklin Templeton Investments is one of the largest financial services groupsin the world based at San Mateo, California USA. The group has US$ 345.0 billionin assets under management globally (as of May 31, 2004) in mutual funds andother investment vehicles for individuals, institutions, pension plans, trusts,partnerships and other clients. Franklin Templeton offers over 240 investmentproducts, available under the Franklin, Templeton and Mutual Series brand names,serviced and supported by 6,400 employees in more than 28 countries. With over50 years of experience in international investment management and offices in over28 countries it services more than 10 million unit holders. Franklin Templeton hasachieved the "Dalbar Service Award" in the US six times in the past ten years forsuperior customer service and back office support.

Franklin Templeton in India

As part of Franklin Templeton's thrust in expanding business in key internationalmarkets, Franklin Templeton has set-up offices in 33 locations nationwide andmanages Rs. 17342.25 crores in assets and an investor base of 9 lacs as of June30, 2004.

HDFC Asset Management Company Limited (AMC)

VisionTo be a dominant player in the Indian mutual fund space, recognized for its highlevels of ethical and professional conduct and a commitment towards enhancinginvestor interests.

HDFC Asset Management Company Ltd (AMC)was incorporated under theCompanies Act, 1956, on December 10, 1999, and was approved to act as an

Asset Management Company for the Mutual Fund by SEBI on June 30, 2000. Asper the terms of the Investment Management Agreement, the AMC will conduct theoperations of the Mutual Fund and manage assets of the schemes, including theschemes launched from time to time.


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UTI Mutual Funds

Vision

To be the most preferred Mutual Fund

Mission

To offer customer-oriented, innovative products by leveraging technology to providesuperior returns, achieve the highest service standards and attain sustained growthlevels through principled human resources striving in a focused, transparent ethicalmanner to exceed investor expectations.

UTI Mutual Fund is managed by UTI Asset Management Company Private Limited(Estb: Jan 14, 2003) who has been appointed by the UTI Trustee Company PrivateLimited for managing the schemes of UTI Mutual Fund and the schemes

transferred / migrated from IL&FS Mutual Fund.

The UTI Asset Management Company has its registered office at : UTI Tower, GnBlock, Bandra - Kurla Complex, Bandra (East), Mumbai - 400 051 will provideprofessionally managed back office support for all business services of UTI MutualFund (excluding fund management) in accordance with the provisions of theInvestment Management Agreement, the Trust Deed, the SEBI (Mutual Funds)Regulations and the objectives of the schemes. State-of-the-art systems andcommunications are in place to ensure a seamless flow across the various activitiesundertaken by UTI AMC.

UTI AMC is a registered portfolio manager under the SEBI (Portfolio Managers)Regulations, 1993 on February 3 2004, for undertaking portfolio managementservices and also acts as the manager and marketer to offshore funds through its100 % subsidiary, UTI International Limited, registered in Guernsey, ChannelIslands.

Kotak Mutual Funds

Kotak Mahindra Mutual Fund (KMMF) is managed by Kotak Mahindra AssetManagement Company Ltd., a wholly owned subsidiary of Kotak Mahindra Bank

Ltd. Kotak Mahindra Mutual Fund launched its schemes in December 1998 andtoday manages assets over Rs.5, 000 cr. contributed by over 1,50,000 investors invarious schemes. KMMF has to its credit the launching of innovative schemes andplans like Kotak Gilt and Free Life Insurance with Kotak Bond Deposit Plan.


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ABOUT THE SPONSORS

Prudential plc is a leading international financial services group providing retailfinancial products and services and fund management to many millions ofcustomers worldwide. As a group Prudential plc has, as of 31 December 2002, overGBP155 billion of funds under management, more than 12 million customers andover 15,000 employees, worldwide.

Prudential is focused on the Internet generation and is one of the first financial

services organisations to use the Internet on a fully integrated basis. In October1998, Prudential launched a "branchless" bank based on the internet. Unusuallytitled as " egg:|" - www.egg.com. The bank has in a short span of its existencebecome a leading banking service provider in the UK. Infact in the first six monthsof its existence it garnered over 5 billion (US$ 8 billion) in deposits from over500,000 customers. Development of superior products and services that offer valuefor money and security while producing superior financial returns enablesPrudential to maximize the value of its shareholder's investment and to establishlasting relationships with customers and policy holders.

Other Sponsors are:

Jackson National Life

Prudential Corporation Asia

UK-Prudential Retail Financial Services

UK Retail IFA - Scottish Amicable

UK-egg:| and Prudential Banking

Fund Management - PPM

Fund Management - M&G


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ICICI Ltd (Since Merged into ICICI Bank Ltd) was established in 1955 by the WorldBank, the Government of India and the Indian Industry, to promote industrialdevelopment of India by providing project and corporate finance to Indian industry.

More information regarding merger of ICICI:

Since inception ICICI has grown from a development bank to a financial

conglomerate and has become one of the largest public financial institutions inIndia. ICICI Bank is Indias second largest bank with an asset base of Rs.106,812crore. ICICI Bank provides a broad spectrum of financial services to individuals andcompanies. This includes mortgages, car and personal loans, credit and debitcards, corporate and agricultural finance. The Bank services a growing customerbase of more than 7 million customers and 6 million bondholder accounts through amulti-channel access network. This includes about 450 branches and extensioncounters, 1675 ATMs, call centers and Internet banking ICICI Bank posted a netprofit of Rs.1, 206 crore for the year ended March 31, 2003. ICICI Bank is the onlyIndian company to be rated above the country rating by the international ratingagency Moodys and the only Indian company to be awarded an investment gradeinternational credit rating. The Bank enjoys the highest AAA (or equivalent) rating

from all leading Indian rating agencies. ICICI Bank was originally promoted in 1994by ICICI Limited, an Indian financial institution, and was its wholly-ownedsubsidiary.


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OVERVIEW

ICICI Bank is India's second-largest bank with total assets of about Rs.125,229crore and a network of over 450 branches and offices and about 1790 ATMs. ICICIBank offers a wide range of banking products and financial services to corporateand retail customers through a variety of delivery channels and through itsspecialized subsidiaries and affiliates in the areas of investment banking, life andnon-life insurance, venture capital and asset management. ICICI Bank's equityshares are listed in India on stock exchanges at Kolkata and Vadodara, the StockExchange, Mumbai and the National Stock Exchange of India Limited and its

American Depositary Receipts (ADRs) are listed on the New York Stock Exchange(NYSE).

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial

institution, and was its wholly owned subsidiary. ICICI's shareholding in ICICI Bankwas reduced to 46% through a public offering of shares in India in fiscal 1998, anequity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank'sacquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001,and secondary market sales by ICICI to institutional investors in fiscal 2001 andfiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, theGovernment of India and representatives of Indian industry. The principal objectivewas to create a development financial institution for providing medium-term andlong-term project financing to Indian businesses. In the 1990s, ICICI transformed itsbusiness from a development financial institution offering only project finance to adiversified financial services group offering a wide variety of products and services,both directly and through a number of subsidiaries and affiliates like ICICI Bank. In

1999, ICICI become the first Indian company and the first bank or financialinstitution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of theemerging competitive scenario in the Indian banking industry, and the movetowards universal banking, the managements of ICICI and ICICI Bank formed theview that the merger of ICICI with ICICI Bank would be the optimal strategicalternative for both entities, and would create the optimal legal structure for theICICI group's universal banking strategy. The merger would enhance value forICICI shareholders through the merged entity's access to low-cost deposits, greateropportunities for earning fee-based income and the ability to participate in thepayments system and provide transaction-banking services. The merger would

enhance value for ICICI Bank shareholders through a large capital base and scaleof operations, seamless access to ICICI's strong corporate relationships built upover five decades, entry into new business segments, higher market share invarious business segments, particularly fee-based services, and access to the vasttalent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors ofICICI and ICICI Bank approved the merger of ICICI and two of its wholly-ownedretail finance subsidiaries, ICICI Personal Financial Services Limited and ICICICapital Services Limited, with ICICI Bank. The merger was approved byshareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat


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at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai andthe Reserve Bank of India in April 2002. Consequent to the merger, the ICICIgroup's financing and banking operations, both wholesale and retail, have beenintegrated in a single entity.


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OBJECTIVE

Prudential ICICI ASSET MANAGEMENT COMPANY, under which I pursue mysummer training, conducted an AMFI Examination in association with Association

of Mutual Funds in India (AMFI). The objective was to educate the candidatesabout mutual funds. The main target was Pru Chairman for which thesecandidates have to pass AMFI Exam and have to become an agent of thecompany. Pru Chairman is a name given to an award. The agent who achievesthe specified targets becomes Pru Chairman. The award has trips to Bangkok,Singapore and Australia, all at different scores.

The training was given to only those candidates who were giving the AMFIExamination.In the initial stage of the project, I met around 100 prospects, who all were financialprofessionals like Chartered Accountants, Company Secretaries, InvestmentConsultants, Tax Consultants and Employees working in Financial Institutions.

The purpose was to provide them with the information regarding AMFI Examinationand Mutual Funds and to solve queries like:

What is AMFI? Why is it important to have AMFI Certificate? What are the benefits of an AMFI Certificate? What are the plans (schemes) provided by Pru ICICI Mutual Funds? What is the difference between a Mutual Fund Investment and other

Investments? What are the risks, in Mutual Funds investment?

The main objective was to expand the market for Prudential ICICI and henceAgency Expansion and that would be possible only if the candidates are known tothe concept and benefits.


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CONCEPTUAL FRAMEWORK

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

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

------------------------------------------------------------------------------------------------------------First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was

set up by the Reserve Bank of India and functioned under the Regulatory andadministrative control of the Reserve Bank of India. In 1978 UTI was de-linked fromthe RBI and the Industrial Development Bank of India (IDBI) took over theregulatory and administrative control in place of RBI. The first scheme launched byUTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assetsunder management (AUM).

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

1987 marked the entry of non- UTI, public sector mutual funds set up by publicsector banks and Life Insurance Corporation of India (LIC) and General Insurance

Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fundestablished in June 1987 followed by Canbank Mutual Fund (Dec 87), PunjabNational Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank ofIndia (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutualfund in June 1989 while GIC had set up its mutual fund in December 1990.

At the end of 1993, the mutual fund industry had assets under management ofRs.47,004 crores.

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

With the entry of private sector funds in 1993, a new era started in the Indian

mutual fund industry, giving the Indian investors a wider choice of fund families.Also, 1993 was the year in which the first Mutual Fund Regulations came intobeing, under which all mutual funds, except UTI were to be registered andgoverned. The erstwhile Kothari Pioneer (now merged with Franklin Templeton)was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a morecomprehensive and revised Mutual Fund Regulations in 1996. The industry nowfunctions under the SEBI (Mutual Fund) Regulations 1996.


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The number of mutual fund houses went on increasing, with many foreign mutualfunds setting up funds in India and also the industry has witnessed several mergersand acquisitions. As at the end of January 2003, there were 33 mutual funds withtotal assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores ofassets under management was way ahead of other mutual funds.

Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI wasbifurcated into two separate entities. One is the Specified Undertaking of the UnitTrust of India with assets under management of Rs.29,835 crores as at the end ofJanuary 2003, representing broadly, the assets of US 64 scheme, assured returnand certain other schemes. The Specified Undertaking of Unit Trust of India,functioning under an administrator and under the rules framed by Government ofIndia and does not come under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It isregistered with SEBI and functions under the Mutual Fund Regulations. With thebifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000crores of assets under management and with the setting up of a UTI Mutual Fund,conforming to the SEBI Mutual Fund Regulations, and with recent mergers takingplace among different private sector funds, the mutual fund industry has entered itscurrent phase of consolidation and growth. As at the end of October 31, 2003, therewere 31 funds, which manage assets of Rs. 1,26,726 crores under 386 schemes.

The graph indicates the growth of assets over the years.

GROWTH IN ASSETS UNDER MANAGEMENT

Note:Erstwhile UTI was bifurcated into UTI Mutual Fund and the SpecifiedUndertaking of the Unit Trust of India effective from February 2003. The Assets


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under management of the Specified Undertaking of the Unit Trust of India has

therefore been excluded from the total assets of the industry as a whole from February2003 onwards.


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CONCEPT OF MUTUAL FUNDS

A Mutual Fund is a trust that pools the savings of a number of investors who sharea common financial goal. The money thus collected is then invested in capitalmarket instruments such as shares, debentures and other securities. The incomeearned through these investments and the capital appreciation realized are sharedby its unit holders in proportion to the number of units owned by them. Thus aMutual Fund is the most suitable investment for the common man as it offers anopportunity to invest in a diversified, professionally managed basket of securities ata relatively low cost.

The diagram below describes broadly the working of a mutual fund:


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There are many entities involved and the diagram below illustrates theorganizational set up of a mutual fund:

ADVANTAGES OF MUTUAL FUNDS:

Professional Management Diversification Convenient Administration Return Potential Low Costs Liquidity Transparency Flexibility Choice of schemes Tax benefits Well regulated


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HOW, WHEN AND WHERE INVESTORS INVESTS?

A mutual fund is a common pool of money in to which investors with commoninvestment objective place their contributions that are to be invested in accordancewith the stated investment objective of the scheme. The investment manager wouldinvest the money collected from the investor in to assets that are defined/ permittedby the stated objective of the scheme. For example, an equity fund would investequity and equity related instruments and a debt fund would invest in bonds,debentures, gilts etc.

The whole cycle goes like this: - Investor invests money in the mutual fundcompany. The Fund Manager of the Company invests in a number of stocks andbonds in the market. There is profit/loss to the mutual fund company from themarket. Then the profit/loss from the market is passed to the investor from themutual fund company. The company distributes its profits in the form of dividends tothe investors.


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TYPES OF MUTUAL FUND SCHEMES

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financialposition, risk tolerance and return expectations etc.

The table below gives an overview into the existing types of schemes in theIndustry.

By Structure By InvestmentObjective

OtherSchemes

Open-ended Schemes

Close-ended Schemes

Interval Schemes

Growth Schemes

Income Schemes

Balanced Schemes

Money MarketSchemes

Tax SavingSchemes

SpecialSchemes

IndexSchemes

SectorSpecificSchemes


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FREQUENTLY USED TERMS

Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the schememinus its liabilities. The per unit NAV is the net asset value of thescheme divided by the number of units outstanding on theValuation Date.

Sale PriceIs the price you pay when you invest in a scheme. Also calledOffer Price. It may include a sales load.

Repurchase Price Is the price at which a close-ended schemerepurchases its units and it may include a back-end load. This isalso called Bid Price.

Redemption Price Is the price at which open-ended schemesrepurchase their units and close-ended schemes redeem theirunits on maturity. Such prices are NAV related.

Sales Load Is a charge collected by a scheme when it sells theunits. Also called, Front-end load. Schemes that do not charge a

load are called No Load schemes.

Repurchase or Back-end LoadIs a charge collected by a scheme when it buys back the unitsfrom the unit holders.


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PORTFOLIO MANAGEMENT

Portfolio Management with a difference

As Portfolio Managers, we endeavor that every portfolio created must reflect thevalues on which Prudential ICICI has been built. A commitment towardstransparency and service. Add to that, a strong research driven investmentprocess.

Since the aim is to create a portfolio that suits investors requirements, managerswill first try and understand the needs and investment objectives and on that basisoffer portfolios that best suit the objectives of the investors.

Information and accessibility is the key

By providing the information that is updated on a daily basis and unmatched

interactivity, a whole new era in portfolio management has now been ushered in.The investors can now have the power to slice, dice and review the portfolio inalmost every way imaginable. A first in the industry. Via a password protectedwebsite, you will have access to :

A portfolio disclosure statement where the entire portfolio will be disclosed. A financial summary comprising the Income Statement and Balance Sheet. A detailed client account statement that allows you to track your inflows and

outflows. A transaction statement listing all the transactions made. Calculations of

capital gains Comprehensive performance tracking

Besides, all the financial statements will be audited and provided to the investorssemi-annually and annually. They will also receive the details required to assist inthe preparation of your tax returns.

Convenience and customization through our services

One more advantage of being with Prudential ICICI AMC is that the investor willhave a team to support him/her. Initially, he/she will interface with a CustomerRelationship Manager - the one point contact, and a personal Portfolio Manager -the portfolio investment guide, to discuss in depth and understand your investmentobjectives, risk-return appetite and establish required service levels. On the basis ofthis, managers shall evolve a portfolio that is best suited for them.

Thereafter, Customer Relationship Manager will periodically interact with investorfor any other clarifications and services that he/she may require.

They may review their portfolio with their personal Portfolio Manager and CustomerRelationship Manager at least once every quarter. The managers will always beaccessible to them to answer any queries that they may have.


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Our Product Range

PruICICI10

This is an aggressive growth oriented portfolio focusing on absolute returns andideal for investors with a higher appetite for risk. The portfolio will comprise around10 carefully evaluated stocks, which we believe have the greatest potential. Therewill be no sector or stock limits in the portfolio.

PruICICIValue

Value stocks are those stocks that are trading below their intrinsic value asmeasured by parameters like PE ratio, price to book value and dividend yield. Sinceover time stocks tend to move towards their underlying value, this portfolio is idealfor investors with a medium to long-term horizon.

Creating a portfolio is all about understanding customers needs and then bringingthe expertise to create a portfolio that is best suited for him/her. Companysdedicated team of portfolio managers is geared to help the customer meet theirinvestment needs.


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Why Equity Fund?

Equity funds seek to provide maximum growth of capital with secondary emphasison dividend or interest income. They invest in common stocks with a high potential

for rapid growth and capital appreciation. An equity fund gives an exposure to thestock market. The fund would have long-term growth potential but provide lowcurrent income. They are not suitable for investors who are risk averse and arefocused on maximizing current income or conserving principal.

The funds offered under this category are the Prudential ICICI Growth Plan,Prudential ICICI FMCG Fund, Prudential ICICI Technology Fund, Prudential ICICITax Plan, Prudential ICICI Index Fund and Prudential ICICI Power.

The Investment Philosophy.The overriding objective of the AMC in managing its investments is to produce a

consistently above average long-term performance.

The AMC believes in a bottom-up approach to stock picking. This means that thefocus is on the fundamental quality of companies as opposed to a focus on favoredsectors and market movements.

The AMC will follow a structured investment process in order to identify the beststocks for inclusion in the portfolio. This would involve consistently examining allstocks under an internally developed research framework. A stock would beconsidered or inclusion in the portfolio when the valuation does not adequatelycapture its underlying fundamental value in the AMC's opinion based on the abovefactors.

The AMC's portfolio management style is conducive to a low portfolio turnover rate.However, the AMC will take advantage of the opportunities that present themselvesfrom time to time because of inefficiencies of the securities markets. The AMC willendeavor to balance the increased cost on account of higher portfolio turnover withthe benefits derived there from.

Why Balanced Fund?

Balanced funds are more evenly invested in equities and income securities.Balanced and equity-income funds are suitable for conservative investors who wanthigh current yield with some growth. If you seek to generate long-term capital

appreciation and current income, an investment in the balanced fund would beideal. It gives you an exposure to the stock market without the entire risk of thestock market. The funds offered under this category are the Prudential ICICIBalanced Fund and Prudential ICICI Child Care Plan.


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The Investment Philosophy?

The AMC proposes to invest in a mix of equities and fixed income securities withthe aim of generating capital appreciation, while at the same time minimizing thevolatility inherent in pure equity schemes. With this aim, the AMC would allocate the

assets between equity and fixed income instruments within the limits laid down foreach scheme.

Why Debt Fund?

The goal of fixed income funds is to provide high current income consistent with thepreservation of capital. Growth of capital is of secondary importance. These fundsinvest in corporate bonds or government securities that have a fixed rate of return.The funds are suitable for investors who want to maximize current income and whodo not wish to assume a high degree of capital risk in order to do so. Since bondprices fluctuate with changing interest rates, there is some principal risk involveddespite the fund's conservative nature.

The funds offered under this category are the Prudential ICICI Income Plan, thePrudential ICICI Gilt-Treasury Fund, Prudential ICICI Gilt-Investment Fund,Prudential ICICI Liquid plan, Prudential ICICI Fixed Maturity Plan, Prudential ICICIShort Term Plan, Prudential ICICI Long Term Plan and Prudential ICICI SweepPlan

Investment Philosophy?

The AMC aims to identify securities, which offer superior levels of yield at lowerlevels of risks. With the aim of controlling risks, rigorous in-depth credit evaluationof the securities proposed to be invested in, will be carried out by the investment

team of the AMC. The credit evaluation includes a study of the operatingenvironment of the company, the past track record as well as the future prospectsof the issuer, the short as well as longer-term financial health of the issuer. Rateddebt instruments in which the Scheme invests will be of investment grade as ratedby a credit rating agency. In case a debt instrument is not rated, specific approval ofthe Board of the AMC will be obtained for such an investment.

In addition, the investment team of the AMC studies the macro economicconditions, including the politico-economic environment and factors affectingliquidity and interest rates. The AMC would use this analysis to attempt to predictthe likely direction of interest rates and position the portfolio appropriately to takeadvantage of the same.


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have created the SIP (Systematic Investment Plan) in two variations -the monthlyoption and the quarterly option.

To start investing in SIP you need an initial investment of just Rs. 1,000 followed by8 postdated cheques of a minimum of Rs. 500 each for monthly investments. If youwish to make quarterly investments, then you need to make 4 post-dated chequesof a minimum of Rs. 1,000 each. All postdated cheques need to be dated 7th or10th of each month.


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The Prudential ICICI TAX PLAN

CIONilesh Shah

Those who are looking at planning taxes efficiently the company suggestTax Plan. Not only does it save tax under Section 88 of the Income Tax Act,1961; it also has the potential of long-term returns through the stock market.

All other options under Section 88 (PPF, NSC, Bonds etc.) represent fixedreturn investments and hence, there is a ceiling on the returns that can beearned. Only, an investment like our Tax Plan offers the potential for higherreturns because it invests in the stock market. What's more, our Tax Planhas a short lock-in period of just 3 years compared to the much longer lock-in periods of some other tax saving options like PPF & NSC.

How the managers invest money?The managers invest money in shares of companies that are fundamentallystrong, have been performing well, are in a strong competitive position andhave great potential for growth. 90% is invested in Equity and Equity relatedsecurities and the other 10% in Cash.

Invest and withdraw when you want after 3 years?

When you enter, you have to pay an entry load of 2.25% for investment less thanRs. 5 Crores and if your investment is Rs. 5 Crores and above entry load isnil, After 3 years of investment you can withdraw your money anytime youwant.

The options you enjoy. You have a choice between the Growth, Dividend Payout

or Dividend Reinvestment option.

Reinvestment option:

Growth Option is a cumulative option where the value of the units keeps gettingupdated depending on the capital markets.Dividend Payout Option through which the dividends that may be declared by thefund are paid out to you.Dividend Reinvestment Option through which the dividends that fund maydeclare are reinvested to buy more units.

What is the minimum amount to start investing?

Rs. 500 is all you need to start investing. However, you can avail of the 20%Income Tax rebate on an amount upto Rs. 10, 000 per annum.

What is the minimum amount that you can withdraw?The minimum amount you can withdraw is Rs. 500.

The Systematic Investment PlanTo start investing on a monthly basis, you need an initial investment of a minimum


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of Rs. 500 followed by 9 post-dated cheques of a minimum of Rs. 500 each. Allpost-dated cheques need to be dated 7th or 10th of each month.


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The Prudential ICICI FMCG PLAN

CIONilesh Shah

Investments in leading FMCG (Fast Moving Consumer Goods) companies arenow within your reach. All with a minimum amount of Rs. 5,000. Ideal if you'reseeking returns from the stock market in the long run and want an exposureto the FMCG sector which has some quality companies like Hindustan Lever,Britannia, Nestle and so on.

Picking the best from the fast moving goods sectorsFMCGs are products that are typically products purchased andused/consumed on a regular basis or at frequent intervals. Like soaps,detergents, tooth-pastes, shampoos, rice, chocolates, etc. The marketpotential of fast moving consumer goods is large given that India has thesecond largest population in the world and most of these products are dailynecessities.

How the managers invest money?We invest your money in carefully chosen scrips of the FMCG sector companies

which are fundamentally strong, have established brands that have the potential togrow and well-entrenched distribution networks. 90% is invested in Equities ofFMCG sector and 10% in debt, Money Market and Cash.

Invest and withdraw when you want?Being an open ended equity fund, you can enter or withdraw from the fundwhenever you want. When you enter, you have to pay an entry load of 2.25% forinvestment less than Rs. 5 Crores and if your investment is Rs. 5 Crores and aboveentry load is nil, but you can exit from our fund at anytime without any exit load.

The options you enjoy. You have a choice between the Growth, Dividend Payoutor Dividend Reinvestment option:

Growth Option is a cumulative option where the value of the units keeps gettingupdated depending on the capital markets.Dividend Payout Option through which the dividends that may be declared by thefund are paid out to you.Dividend Reinvestment Option through which the dividends that fund maydeclare are reinvested to buy more units.What is the minimum amount to start investing?The minimum application amount is Rs. 5,000 and Rs. 500 is the minimum

additional investment.

What Is the minimum amount that you can withdraw?The minimum amount you can withdraw is Rs. 500.

The Systematic Investment Plan: We have created the SIP (SystematicInvestment Plan) in two variations: the monthly option and the quarterly option.


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The Systematic Investment Plan We have created the SIP (SystematicInvestment Plan) in two variations: the monthly option and the quarterlyoption.

To start investing in SIP you need an initial investment of just Rs. 1,000 followed by8 post-dated cheques of a minimum of Rs. 500 each for monthly investments. If youwish to make quarterly investments, then you need to make 4 post-dated chequesof a minimum of Rs. 1,000 each. All post-dated cheques need to be dated 7th or10th of each month.The Prudential ICICI POWER

Fund ManagerNilesh Shah

Type: Open-ended Growth Fund

Investment Pattern: Equity and Equity related securities including non convertibleportion of convertible debentures - Up to 95% and at least 5% in Debt and MoneyMarket securities.

Fund Objective: To generate capital appreciation by actively investing in equity/equity related securities. For defensive considerations, the Scheme may invest indebt, money market instruments, to the extent permitted under the Regulations.The AMC will have the discretion to completely or partially invest in any of the typeof securities stated above so as to maximize the returns.

Investment horizon: Suitable for investors seeking long-term capital appreciationthrough investments in equity and equity related securities.

Net Asset Value (NAV): Calculated & Declared on every Business Day.

Option: Cumulative & Dividend

Application Amount: Rs. 5,000/- (plus in multiples of Re. 1)

Min. Additional Investment: Rs.500/- and in multiples thereof

Entry Load (i) For investments of less than Rs. 5 Crores: Entry load at 2.25% ofapplicable NAV. (ii) For investments of Rs. 5 crores and Above: Nil

Exit Load: Nil

Redemption Cheques Issued: Generally Within 2 business day for Specified RBIlocations and additional 3 Business Days for Non-RBI locations

Minimum Redemption Amt. Rs.500/-

Systematic Investment Plan: Monthly: Minimum Rs. 1,000 + 8 post-datedcheques for Rs. 500 each.Quarterly: Minimum Rs. 1,000 + 4 post-dated chequesfor Rs. 1000 each.


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Systematic Withdrawal Plan: Minimum of Rs.500/- and Multiples thereof.


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The Prudential ICICI INDEX FUND


Type Open-ended Index Linked Growth SchemeInvestment Pattern: Equity stocks drawn from the components of the S&P CNXNifty and the exchange traded derivatives on the S&P CNX Nifty upto 100%.Money Market instruments upto 10%Fund Objective: The Nifty Plan of the Index Fund seeks to track the returns of theS&P CNX Nifty through investments in a basket of stocks drawn from theconstituents of the above indexInvestment horizon: Suitable for investors who seek to invest in equity securitiesOption Nifty Plan. Cumulative OptionApplication Amount: Rs.5,000 (plus multiples of Rs 1000)Min. Additional Investment: Rs.1000/-Entry Load: NilExit Load: 0.50% -for purchase transaction upto Rs.5 lac if the investment isredeemed before 1 years and Nil -for all purchase transaction over Rs. 5 lacRedemption Cheques Issued: Within 5 Business DaysMinimum Redemption Amt.: Rs.1000/-Systematic Investment Plan Monthly: Minimum Rs.5000/- + 6 post datedcheques of Rs 1,000/- Quarterly: Minimum Rs.5000 + 4 post dated cheques of Rs1,500Systematic Withdrawal Plan: Minimum of Rs.1000 and multiples thereof.


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The Prudential ICICI DYNAMIC PLAN


Type: Open-ended equity fundInvestment Pattern: 0 - 100% = Equity & Equity related securities. 0 - 100% =Debt & Money Market InstrumentsFund Objective: To generate capital appreciation by actively investing in equity /equity related securities. For defensive considerations, the Scheme may invest indebt, money market instruments, to the extent permitted under the Regulations.The AMC will have the discretion to completely or partially invest in any of the typeof securities stated above so as to maximize the returns.

Investment horizon: Suitable for investors with an investment horizon of 2 - 3yearsOption: Growth & DividendApplication Amount: Rs.5,000/- (plus in multiples of Re. 1)Min. Additional Investment: Rs.500/- and in multiples thereofEntry Load: (i) For investments of less than Rs. 5 Crores : Entry load at 2.25% ofapplicable NAV.(ii)For investments of Rs. 5 crores and Above : NilExit Load: NilRedemption Cheques Issued: Generally Within 2 business day for Specified RBI

locations and additional 3 Business Days for Non-RBI locationsMinimum Redemption: Amt. Rs. 500/-Systematic Investment Plan Monthly: Rs. 1000 + 8 post-dated cheques for aminimum of Rs.500 Quarterly: Rs. 1000 + 4 post-dated cheques for a minimum ofRs. 1000Systematic Withdrawal Plan: Minimum of Rs.500/- and Multiples thereof.


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BALANCED FUND

The Prudential ICICI BALANCED FUND

You want your money to earn stable returns, and at the same time, you are

attracted by the returns of the share market. If you're looking for the idealmix of the two, we suggest you consider our Balanced Fund.

60% Equity, 40% Debt, 100% Ideal.Our Balanced Fund invests in the share market, debt securities and moneymarket instruments and seeks to provide you a mix of long-term returns andregular income.

How the managers invest money?The managers invest your money in a carefully chosen mix of equity anddebt instruments. The equity scrips are chosen for their fundamentalstrength, good and consistent performance and potential for growth. High

quality debt instruments like Debentures, Government Securities areselected to give stable returns. To give you a balance between steadyreturns and capital appreciation, 60% is invested in equity and equity relatedsecurities and 40% in debt, money market instruments and cash.

Invest and withdraw when you want: When you enter, you have to pay an entryload of 2.25% for investment less than Rs. 5 Crores and if your investment is Rs. 5Crores and above entry load is nil, but you can exit from our fund at anytime withoutany exit load.

The options you enjoy: You have a choice between the Growth, Dividend Payoutor Dividend Reinvestment option.

Growth Option is a cumulative option where the value of the units keeps gettingupdated depending on the capital markets.Dividend Payout Option through which the dividends that may be declared by thefund are paid out to you in cash.Dividend Reinvestment Option through which the dividends that fund maydeclare are reinvested to buy more units.What is the minimum amount to start investing?The minimum application amount is Rs. 5,000 and Rs. 500 is the minimumadditional investment.

What is the minimum amount that you can withdraw?The minimum amount you can withdraw is Rs. 500.

The Systematic Investment Plan: We have created the SIP (SystematicInvestment Plan) in two variations: the monthly option and the quarterly option.To start investing in SIP you need an initial investment of just Rs. 1,000 followed by8 post-dated cheques of a minimum of Rs. 500 each for monthly investments. If youwish to make quarterly investments, then you need to make 4 post-dated cheques


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of a minimum of Rs. 1,000 each. All post-dated cheques need to be dated 7th or10th of each month.


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The Prudential ICICI CHILD CARE PLAN

CIONilesh Shah

Your child, your bundle of joy. He's small but dreams big. Why shouldn't he?After all, the future belongs to him. Invest in our Child Care Plan and makehis dreams come true.

You always want to give your child the best in life. Depending on the age ofyour child, your needs may vary, for which we have two offerings to choosefrom:

Gift Plan: is ideal if your child is in the age group of 1-13 years and youlooking to save over a long-term horizon.Study Plan: is ideal if your child is between 13-17 years and on thethreshold of higher studies, for it will help you meet those large expenseslooming ahead.

How the manager invest money?The manager invests your money in a carefully chosen mix of equity and debtinstruments.Gift Plan: Between 51-60% in equity and equity related securities and 40-49% indebt instruments.Study Plan: Between 85-100% in debt instruments and 0-15% in equity and equityrelated securities.

Invest and withdraw when you want:When you enter the Child Care Plan you have to pay a charge of 1.50%. Shouldyou decide to exit from the Child Care Plan you have to pay a charge of 1.00% ifthe investment is redeemed within 3 years. Nil if investment is redeemed after 3

years but before the Beneficiary Child attains the age of 18.

The options you enjoy:Growth Option is a cumulative option where the value of the units keeps gettingupdated depending on the capital markets.

What is the minimum amount to start investing?The minimum application amount is Rs. 5,000 and the additional investment can bemade in multiples of Re. 1.

What Is the minimum amount that you can withdraw?

The minimum amount you can withdraw is Rs. 1,000.

Special Features:Scholarship scheme: Meritorious children will be eligible for financial assistance ofup to Rs. 1,00,000 to pursue further studies subject to the terms to be announcedby the Board of Trustees to the scholarship scheme.


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Personal Accident Insurance cover: Till your child attains 18 years of age, theparent/legal guardian will be eligible for Personal Accident cover, equivalent to 10times the value of the Units (valued at purchase price) subject to a maximum limitof Rs. 3 lakhs.

The Systematic Investment Plan: The big things in life are always built bit by bit.So also with investments, where a small amount invested regularly can amount to alot. It is precisely for this that we have created the SIP (Systematic InvestmentPlan) in two variations: the monthly option and the quarterly option.

To start investing on a monthly basis, you need an initial investment of Rs. 3,000and 6 post-dated cheques of a minimum of Rs. 1,000 each. If you wish to invest ona quarterly basis, you need an initial investment of Rs. 3,000 and 4 post-datedcheques of a minimum of Rs. 1,500 each. The cheques should be dated 7th or the10th of each month.


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DEBT SCHEMES

The Prudential ICICI LIQUID PLAN

CIO

Nilesh Shah

Very often you tend to leave large sums of money in your savings bankaccount indefinitely. Every day that your money lies 'idle', you are actuallymissing out the opportunity to earn better returns. Our Liquid Plan is an idealinvestment for short periods of time ranging from 7 to 90 days.

Our Liquid Plan offers you the potential returns of the money markets (whichhave usually been better than the savings bank rate) and your money back in

just one business day, should you need it.

How the manager invests your money?

The manager invest your money in a basket of high quality short-term debtinstruments like Money Market instruments, Commercial Paper, Call Money,Debentures and Bonds to ensure that you enjoy safety, liquidity and goodreturns on your investment.

Invest and withdraw when you want?Our Liquid Plan is an open-ended liquid debt fund. This means that you can startinvesting in our fund any time or withdraw your money anytime you want. You canenter or exit our fund without any charges on any Business Day.

The options you enjoy: You have the choice of either the Growth or DividendReinvestment options.

Growth Option is a cumulative option where the value of the units keeps gettingupdated depending on the capital markets.Dividend Reinvestment Option through which the dividends that fund maydeclare are reinvested to buy more units.What is the minimum amount to start investing?

Growth option: The minimum application amount is Rs. 15,000 and Rs. 5,000 isthe minimum additional investment.Dividend Reinvestment Option: The minimum application amount is Rs. 1,00,000and Rs. 5,000 is the minimum additional investment.

What is the minimum amount that you can withdraw?Under the Growth option, the minimum amount you can withdraw is Rs. 5000 andin the Dividend Reinvestment option, you can withdraw a minimum amount of Rs.5,000.


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The Prudential ICICI INCOME PLAN

CIONilesh Shah

Calm, Cool and Relaxed as your investments are well looked after.

It's amazing how you feel when you know your money is well looked after.Calm, comfortable and tension free. Exactly the same sentiments when youinvest in our Income Plan. Our Income Plan aims at creating an ideal balancebetween maximising your returns and yet minimising risk.The Plan invests only in debt securities so you don't have to worry about thevolatility of the stock markets, thus ensuring your peace of mind.

How the manager invests your money?We invest your money in a basket of high quality Bonds and Government

Securities with over 80% of it in AAA rated or equivalent instruments.

Invest and withdraw when you want?When you invest in our fund you do not have to pay any charges.If you investabove Rs. 10 lakhs exit load is Nil. If you invest Rs. 10 lakhs or less and redeemyour investment within 6 months, then you have to pay a charge of 0.50%.

The options you enjoy. You have the choice of either the Growth, DividendPayout or Dividend Reinvestment option.

Growth Option is a cumulative option where the value of the units keeps gettingupdated depending on the capital markets.Dividend Payout Option through which the dividends that may be declared by thefund are paid out to you.Dividend Reinvestment Option through which the dividends that fund maydeclare are reinvested to buy more units.What is the minimum amount to start investing?The minimum application amount is Rs. 5,000 and Rs. 500 is the minimumadditional investment.

What is the minimum amount that you can withdraw?The minimum amount that you can withdraw is Rs. 500.


To start investing in SIP you need an initial investment of just Rs. 1,000 followed by8 post-dated cheques of a minimum of Rs. 500 each for monthly investments. If youwish to make quarterly investments, then you need to make 4 post-dated chequesof a minimum of Rs. 1,000 each. All post-dated cheques need to be dated 7th or10th of each month.


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The Prudential ICICI GILT FUND

CIONilesh ShahCalm, Cool and Relaxed as your investments are well looked after.It's amazing how you feel when you know your money is well looked after.Calm, comfortable and tension free. Exactly the same sentiments when youinvest in our Income Plan. Our Income Plan aims at creating an idealbalance between maximising your returns and yet minimising risk.

The Plan invests only in debt securities so you don't have to worry about thevolatility of the stock markets, thus ensuring your peace of mind.

How we invest your money?We invest your money in a basket of high quality Bonds and GovernmentSecurities with over 80% of it in AAA rated or equivalent instruments.

Invest and withdraw when you want?

Our Gilt Fund is an open ended debt fund. This means that you can startinvesting in our fund any time or withdraw your money anytime you want.You can enter or exit our fund without any charges on any Business Day.

The options you enjoy. You have the choice of either the Growth, DividendPayout or Dividend Reinvestment option.

Growth Option is a cumulative option where the value of the units keeps gettingupdated depending on the capital markets.Dividend Payout Option through which the dividends that may be declared by thefund are paid out to you.Dividend Reinvestment Option through which the dividends that fund may

declare are reinvested to buy more units.

What is the minimum amount to start investing?The minimum application amount is Rs. 25,000 and Rs. 5000 is the minimumadditional investment.


The Systematic Investment Plan: Not Available

The Systematic Withdrawal Plan: Not Available


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The Prudential ICICI MONTHLY INCOME PLAN

CIONilesh Shah

Regular income month after monthSo what if your monthly salary stops after retirement? Your lifestyle need notchange. Because now you can keep the cheque coming in month after monthby investing in our Monthly Income Plan.Our Monthly Income Plan seeks to generate regular income and long-termcapital appreciation for you by investing in Debt and equity related securities.It is ideal if your investment horizon is from the medium to the long-term.

How the manager invests your money?The manager invests your money in a judicious mix of high quality fixedincome securities (Bonds, Debentures, Government Securities and MoneyMarket Instruments) and a small portion in shares. The investments, upto85%, in fixed income securities enable us to make monthly/quarterly/half-yearly dividend distribution to you if you are seeking the Dividend option.Long-term capital appreciation is achieved by investing a portion, about 15%,in the share market.

Invest and withdraw when you want?When you invest in our fund you do not have to pay any charges. If you invest

above Rs. 10 lakhs exit load is Nil. If you invest Rs. 10 lakhs or less and redeemyour investment within 6 months, then you have to pay a charge of 0.50%

The options you enjoy. You have a choice between Growth, Dividend Payout(monthly, quarterly, half-yearly) or Dividend Reinvestment option.

Growth Option is a cumulative option where the value of the units keeps gettingupdated depending on the capital markets.Dividend Payout Option through which the dividends that may be declared by thefund are paid out to you.Dividend Reinvestment Option through which the dividends that fund maydeclare are reinvested to buy more units.The unique Automatic Encashment Plan: Our Monthly Income Plan offers theunique Automatic Encashment Plan (AEP). Through AEP you can opt forautomatic redemption and payment facilities on a monthly, quarterly, half-yearlybasis depending on your cash flow requirements. To enjoy this redemption, a partof your investment will be periodically redeemed by us. The amount that will be

redeemed will be equivalent to the amount of dividend (and dividend tax) that wewill be paying out. Since the redemption of units are not in the nature of dividendpayments, the fund is not required to pay the dividend distribution tax of 12.185%,and for some this may be a more tax efficient option than the dividend option.

What is the minimum amount to start investing?The minimum application amount for MIP-Dividend Option is Rs. 25,000 and forMIP-Cumulative option is Rs. 5,000. However for investors having application


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money less than Rs. 25,000 will not be allowed to opt for Automatic EncashmentPlan until their investment exceeds the limit of Rs. 25,000. Rs. 500 is the minimumadditional investment.



To start investing in SIP for the MIP-Dividend Option (with AEP) you need an intialinvestment of a minimum of Rs. 10,000 followed by 6 post-dated cheques of aminimum of Rs. 2,500 each for monthly investments. If you wish to make quarterlyinvestments, then you need to make 4 post-dated cheques of a minimum of Rs.3,750 each. And for MIP-Cumulative Option (without AEP) the initial investment of aminimum of Rs. 1,000 followed by 8 post-dated cheques of a minimum of Rs. 500each for monthly investments and Rs. 1,000 as an initial investment for quarterlyinvestment followed by 4 post-dated cheques of a minimum of Rs. 1,000 each. Allpost-dated cheques need to be dated 7th or 10th of each month.


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The Prudential ICICI SHORT TERM PLAN


Type: Open Ended Income FundInvestment Pattern: Debt Securities upto 100%,Money Market Instruments andCash upto 50%Fund Objective: To generate income through investment in basket of debtsecurities and money market instruments.Investment horizon: Suitable for investors looking for steady returns at relativelylow risk across a short to medium term horizon.Option: Cumulative Option and Dividend Reinvestment Option (Fortnightly &Monthly)Application Amount: Rs. 5000/- (plus multiples of Re 1)Min. Additional Investment: Rs.500/- and in multiples thereofEntry Load: NilExit Load: NilRedemption Cheques Issued: Generally Within 1 business day for Specified RBIlocations and additional 3 Business Days for Non-RBI locationsMinimum Redemption Amt: Rs. 500/-

Systematic Investment Plan: Not AvailableSystematic Withdrawal Plan: Not Available


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The Prudential ICICI LONG TERM PLAN


Type: Open Ended Income FundInvestment Pattern: Debt Securities upto 100% & Money Market and Cash upto10%Fund Objective: To generate income through investments in a basket of debt andmoney market instruments of various maturities with a view to maximise incomewhile maintaining the optimum balance of yield,safety and liquidity.Investment horizon: Suitable for investors looking for steady returns at relativelylow risk across a medium to long term horizon.Option: Cumulative Option , Dividend and Dividend Reinvestment Option.Application Amount: Rs 5000/- (plus multiples of Re 1)Min. Additional Investment: Rs.500/-Entry Load: NilExit Load: 0.75% of Applicable Net Asset Value (NAV) in case the amount soughtto be redeemedRedemption Cheques Issued: Within 1 Business DayMinimum Redemption Amt: Rs. 500/-

Systematic Investment Plan:Monthly: Minimum Rs. 1000 + 6 post-dated cheques for a minimum of Rs. 750each. Quarterly: Minimum Rs. 1000 + 4 post-dated cheques for a minimum of Rs.1,000 each.Systematic Withdrawal Plan: Not Available


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The Prudential ICICI FLEXIBLE INCOME PLAN


Type: Open-ended Income FundInvestment Pattern: 10 100% = Money market and Debentures with residualmaturity of less than 1 year. 0 90% = Debt instruments with maturity more than 1year.Fund Objective: To generate income through investments in a range of debtinstruments and money market instruments of various maturities with a view tomaximizing income while maintaining the optimum balance of yield, safety andliquidity.

Investment horizon: Suitable for investors looking at avenues to invest surplusfunds in medium to long-term horizonOption: Cumulative and Dividend Option(Quarterly & Half Yearly)Application Amount: Rs 5000/- (plus in multiples of Re 1)Min. Additional Investment: Rs.500/- and in multiples thereofEntry Load: NilExit Load: NilRedemption Cheques Issued: Generally Within 1 business day for Specified RBIlocations and additional 3 Business Days for Non-RBI locations

Minimum Redemption Amt: Rs. 500/-Systematic Investment Plan:Monthly: Rs. 1000 + 8 post-dated cheques for a minimum of Rs.500Quarterly: Minimum Rs. 1000 + 4 post-dated cheques for a minimum of Rs. 1000Systematic Withdrawal Plan: Minimum of Rs.500/- and Multiples thereof


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The Prudential ICICI SWEEP PLAN


Type: Open-ended Liquid FundInvestment Pattern: Money Market instruments including money at call -Up to100% Debt Securities- Up to 40%Fund Objective: To seek to provide reasonable returns, commensurate with lowrisk while providing a high level of liquidity, through investments made primarily inmoney market and debt securities. The aim is to optimize returns while providingliquidity.Investment horizon: Suitable for investors looking for short-term investment atrelatively low risk.Option: Cumulative OptionApplication Amount: Rs.5,000Min. Additional Investment:As agreed with the Designated Bank(s) from time totime.Entry Load: NilExit Load: NilRedemption Cheques Issued: Not ApplicableMinimum Redemption Amt: Minimum of Re.1Systematic Investment Plan: Not AvailableSystematic Withdrawal Plan: Not Available


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The Prudential ICICI FLOATING RATE PLAN


Type: Open-ended Income FundInvestment Pattern: 65 100% = Floating Rate Dedt Instruments. 0-35% = Fixedrate debt instruments with maturity less than 1 year.Fund Objective: To generate income consistent with the prudent risk from aportfolio comprising substantially of floating rate debt instruments, fixed rate debtinstruments swapped for floating rate return and also fixed rate instruments andmoney market instruments.Investment horizon: Suitable for investors looking at avenues to invest surplusfunds in medium term horizonOption: Cumulative and Dividend Option and Dividend ReinvestmentApplication Amount:Option A: Rs 10000/- (plus in multiples of Re 1),Option B: Rs 1000000/- (plus in multiples of Re 1), Option C: Rs 50,000,000/- (plusin multiples of Re 1)Min. Additional Investment: Rs 1000/- and in multiples thereofEntry Load: NilExit Load: Option A: For Investment of Less than Rs.10 Lakhs @0.50% ofapplicable NAV in case of the amount sought to be is not being invested under the

option for a minimum period of 12 Months. Option B: Nil, Option C: NilRedemption Cheques Issued: Generally Within 1 business day for Specified RBIlocations and additional 3 Business Days for Non-RBI locationsMinimum Redemption Amt: Rs. 500/- and multiples thereofSystematic Investment Plan: Not AvailableSystematic Withdrawal Plan: Not Available


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The Prudential ICICI GILT FUND (INVESTMENT)

Fund ManagerNilesh shah

Type: Open-ended Gilt Fund (Investment - PF)Investment Pattern: The Plan aims at generating returns commensurate with zerocredit risk by investing in securities created and issued by the Central Governmentand /or a State Government and/or repos/reverse repos in such governmentsecurities as may be permitted by RBI. The Plan may also invest a portion of thecorpus in the call money market or in an alternative investment for the call moneymarket as may be provided by RBI to meet the liquidity requirements. The Fund willseek to underwrite issuance of Government Securities subject to the prevailingrules and regulations as may be specified by SEBI/ RBI in this respect and mayalso participate in the auction of Government securities from time to time.Fund Objective: The primary investment objective of the Plan is to generateincome through investments in Gilts of various maturities. However, there can beno assurance that the investment objective of the Plan will be realized.Investment horizon: Suitable for investors looking for steady returns at relativelylow risk across a medium to long term horizonOption: The Plan offers a Cumulative Option and an Automatic AppreciationPayout Plan with Monthly, Quarterly, Half Yearly and Yearly Options.Application Amount: Rs.25,000/- (plus in multiples of Re. 1)Min. Additional Investment: Rs.5000/- and in multiples thereofEntry Load: NilExit Load: Exit load at 0.60% of applicable Net Asset Value (NAV) in case theamount sought to be redeemed is not being invested under the Plan for a minimumperiod of 365 days.Redemption Cheques Issued: The Fund will, under normal circumstances,endeavor to dispatch the redemption cheques within 1 Business Day from the dateof acceptance of the redemption request at any of the Customer Service Centers.This service standard will apply only at the centers where RBI handles clearingdirectly and is able to transfer funds from Mumbai on the same-day-value basis. Inrespect of all non-RBI centers, for redemption payments, AMC will take additional

day(s) not exceeding 3 Business Days- that would essentially be linked to thetime taken by banks to clear funds at such Non-RBI centers.Minimum Redemption Amt: Rs. 5,000/-Systematic Investment Plan: Not AvailableSystematic Withdrawal Plan: Not Available


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The Prudential ICICI GILT FUND (TREASURY)


Type: Open-ended Gilt Fund (Treasury - PF)Investment Pattern: The Plan aims at generating returns commensurate with zerocredit risk by investing in securities created and issued by the Central Governmentand /or a State Government and/or repost/reverse repost in such governmentsecurities as may be permitted by RBI. The Plan may also invest a portion of thecorpus in the call money market or in an alternative investment for the call moneymarket as may be provided by RBI to meet the liquidity requirements. The Fund willseek to underwrite issuance of Government Securities subject to the prevailingrules and regulations as may be specified by SEBI/ RBI in this respect and mayalso participate in the auction of Government securities from time to time.Fund Objective: The primary investment objective of the Plan is to generateincome through investments in Gilts of various maturities. However, there can beno assurance that the investment objective of the Plan will be realized.Investment horizon: Suitable for investors looking for steady returns at relativelylow risk across a medium to long term horizonOption: The Plan offers a Cumulative Option and an Automatic AppreciationPayout Plan with Monthly, Quarterly, Half Yearly and Yearly Options.Application Amount: Rs.25,000/- (plus in multiples of Re. 1)Min. Additional Investment: Rs.5000/- and in multiples thereofEntry Load: NilExit Load: Exit load at 0.80% of applicable Net Asset Value (NAV) in case theamount sought to be redeemed is not being invested under the Plan for a minimumperiod of 365 days. Exit Load Nil if the amount is invested for more than 365 days.Redemption Cheques Issued: The Fund will, under normal circumstances,endeavor to dispatch the redemption cheques within 1 Business Day from the dateof acceptance of the redemption request at any of the Customer Service Centers.This service standard will apply only at the centers where RBI handles clearingdirectly and is able to transfer funds from Mumbai on the same-day-value basis. Inrespect of all non-RBI centers, for redemption payments, AMC will take additional

day(s) not exceeding 3 Business Days- that would essentially be linked to thetime taken by banks to clear funds at such Non-RBI centers.Minimum Redemption Amt: Rs. 5,000/-Systematic Investment Plan: Not AvailableSystematic Withdrawal Plan: Not Available


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The Prudential ICICI INCOME MULTIPLIER FUND


Type: Open-ended Debt FundInvestment Pattern: Equity & Equity Related securities 0-30%, Debt Instruments65-100%, Cash & Money Market Instruments 0-5%.Fund Objective: To generate long-term capital appreciation from a portfolio that isinvested predominantly in debt and money market securities and the balance inequity and equity related securities.Investment horizon: Suitable for investors those who have conventionally beenopting for fixed income instruments and are now looking at taking advantage of thepotential of equity.Option: Cumulative, Dividend and Dividend Reinvestment Option.Application Amount: Rs.5,000/- (plus in multiples of Re. 1)Min. Additional Investment: Rs.500/- and in multiples thereofEntry Load: (i) For investments of less than Rs. 10 Lakhs : Nil.(ii) For Investmentsof Rs. 10 Lakhs and above but less than Rs. 5 Crores: Entry load at 0.50 % ofapplicable NAV. (iii)For investments of Rs. 5 crores and Above : Nil

Exit Load: Any purchase transaction less than - 1.0% if exit within 12 months ; Anypurchase transaction of Rs. 10 lakhs and Above but less than Rs.5 Crores : 0.5% ifexit within 12 months ; Any purchase transaction of above Rs. 5 Crores : Nil.

Redemption Cheques Issued: Generally Within 1 business day for Specified RBIlocations and additional 1 Business Days for Non-RBI locations.Minimum Redemption Amt: Rs. 500/-Systematic Investment Plan:Monthly: Minimum Rs. 1000 + 8 post-dated cheques for a minimum of Rs. 500each. Quarterly: Minimum Rs. 1000 + 4 post-dated cheques for a minimum of Rs.1,000 each.Systematic Withdrawal Plan: Minimum of Rs.500/- and Multiples thereof


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FINDINGS AND ANALYSIS

The initial stage of the project was not very exploring, but as the project progressedmany facts came in front. The main findings are:

The population that was targeted was of well-educated professionals. Forexample, Chartered Accountants are considered as financial doctors. Theyare known for their perfect advice. It is considered that they know thefinances best. Instead of all these facts, there is a lot of misconceptionregarding Mutual Funds in many Chartered Accountants. The same thingfollows with other professional candidates also.

Those candidates who were already in Insurance sector were interested toknow the concept, its benefits, limitations and risks of Mutual Fund.

The candidates, up to the age group of 35-45 were risk averse as comparedto candidates of above age group. They were keener to know the concept.

The candidates above the age group 35-40 were resistant. They weresatisfied with what they are currently doing.

It is found that there is a lack of knowledge regarding the benefits ofinvesting in a Mutual Fund. Most candidates reacted negatively when Iintroduce myself as a representative of a Mutual Fund Company. But after Iexplained the concept to them, they show some positive signs and entertainwell.

There were many candidates, which in spite of approaching 2-3 times totheir offices were not able to meet personally. The candidates of thesecategories can be expected to be good prospects.


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Graphically the FINDINGS can be better understood:

Age Group

6%12%

8%

36%

22%

14%

0%

2%

20-25

25-30

30-35

35-40

40-45

45-5050-55

55-60

GRAPH 1

Graph 1 shows a sample from the population of all those candidates who wereinterested in giving AMFI Examination. It can be seen that the majority ofcandidates were under the 35-40 Age group. It indicates that professionals underthe age group 35-40 are interested to know more about mutual funds. The

candidates under age group of 40-45 are also good prospects. It surprised me a lotbecause young professionals (Age Group 30-35 and below) are expected to be lessrisk averse than the experienced professionals.

The answer to the question can be given as: Professionals of age groups 35-40 arewell experienced and understand the market more. As compared to it, a freshprofessional has lack of experience and until he/she is quite familiar to the field(mutual funds), will not enter into a new field immediately, of which he/she is notaware.

It is found that many professionals are satisfied with their current earnings so theydont want to enter into a new field. Their perception is that their current business is

giving them enough money, so why should they jump in a new field.

Candidates of the age group 20-25 are very less because the main target of theproject was Financial Professionals who must be of the age group 25-30 andabove.

The maximum candidates were of age group 35-40 (36%). On the second place isage group 40-45 (22%) and the third place is age group 45-50 (14%).


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The next sep was to answer a question:

Are the candidates potential enough to increase the business of thecompany?

The candidates are marked according to four types of criteria: Curiosity, Motivation,Interest and the Overall response got from them. The maximum marks a candidatecan obtain are 20 (5 marks each category). The total marks comes to 250 eachcategory in a sample size of 50.

The details of each category is given under:

Curiosity: It is calculated on the basis of curiosity shown by the candidate whenthe concept of mutual fund is told to them.

Motivation: It is calculated on the basis of the motivational skills of a candidate.How much motivated is he/she towards the concept. It also depends on the skills ofthe candidates; different candidates have different level of motivation.

Interest: It is calculated on the basis of two different criteria: attention orconcentration and awareness of the candidate.

Attention/ Concentration: How much attention is he/she paying when he istold the concept?

Awareness: How much aware is the candidate about mutual fund andPrudential ICICI and the schemes provided by the company.

Overall Response: What is the overall response from interviewing the candidates.How much marks can be allotted to him/her from above three points.


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Graphically the above question can be better answered.

Attributes (Points)

193

184

201

190

175

180

185

190

195

200

205

Curiosity Motivation Interest Overall

Response

GRAPH 2Graph 2 shows the points obtained by the candidates in each category.

In the first category (that is Curiosity), the candidates got 193 pts out of 250 pts. It isnot a good score. The reasons behind this are:

The concept is quite new to the many candidates and so they didnt showedmuch curiosity.

All the professionals I met are well established in their current professions,so they dont have enough time to devote towards Mutual Funds.

A major part of candidates were Chartered Accountants and were busy intheir audit schedules.

In the second category (that is Motivation), the candidates got 184 pts out of 250pts. Its a very low score. The reasons behind this are:

Many candidates were satisfied with their current earnings. They were notready to enter a new field.

The past performance of the schemes of the company was a big barrier intheir motivation.


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In the third category (that is Interest), the candidates got 201 pts out of 250 pts. It isa good score as compared to previous two. The reasons behind this are:

There is a lot of misconception among the candidates, which has to becleared. Once their doubts and misconception is cleared, they showed a lotof Interest. At the first sight it seems as if they are not going to entertain butas the interview proceeds they showed interest and entertain well (Exceptsome exceptions).

Some candidates have only heard about Mutual Fund, but were not knownto the whole concept and functioning. When facts were shown to them theyshowed a lot of interest.

In the fourth category (that is Overall Response), the candidates got 190 pts out of250 pts. The overall response of the candidates can be considered as satisfactory.This criterion is based on all the above responses got while interviewing thecandidates.

Attributes (%)

77.2

73.6

80.4

76

70727476788082

Curiosity Motivation Interest Overall

Response

GRAPH 3

Graph 3 shows the percentage of points that each category obtained. Thecandidates were very interested to know the concept of Mutual Funds. There aremany cases when the candidates were not interested in the concept at initial stage,but when they were approached 2-3 times to solve their queries then they showedinterest and appeared for the AMFI Exam.


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Different grades were allotted to the candidates interviewed. Grades werecategorized in five types, namely: Diamond, Gold, Silver, Bronze and Iron.

Diamond:

Those candidates who will appear in AMFI Exam.

Those candidates who were interested in Mutual Funds and are goodprospects for the agency expansion.

They can become good agents for the future.

Already deals in a field related to Mutual Funds.

Can provide good clients to the company through their strong network.

Gold:

Are curios to know more about mutual funds.

Can become active agents of the company.

Are quite sure about appearing in AMFI Exam.

Silver:

Look like good prospects but will not give AMFI Exam.

Have investments in mutual fund.

Are LIC Agents.

Bronze:

Will not give AMFI Exam.

Have some reason for lack of interest in Mutual Funds.

Iron:

Are not at all interested in Mutual Funds.

Will not give AMFI Exam.

Have suffered loss in Mutual Funds before and has no interest and trust left.


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Graph 4 shows the grade of the candidates. In a sample size of 50 how many of thecandidates are of each category.

Grade Categorisation

1817

65

4

0

5

10

15

20

Diamond Gold Silver Bronze Iron

GRAPH 4

As it can be seen in Graph 4 that majority of candidates are in the Diamond (18 outof a sample of 50) and Gold (17 out of a sample of 50). Silver, Bronze and Ironcategories have 6, 5 and 4 candidates respectively.


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By dividing the percentage of candidates of each category,

Grade Categorisation (%)

3634

1210

8

0

510

15

20

25

30

35

40

Diamond Gold Silver Bronze Iron

GRAPH 5

Graph 5 shows the percentage of candidates in each category.

36% candidates are in the Diamond category. All these candidates are

interested in appearing in AMFI Exam. They have a good network andcan expand the business of the company. These candidates are goodprospects.

34% candidates are in the Gold category. These candidates are alsointerested in appearing in AMFI Exam but they have some queries,which are to be solved ou

Documents

Summer Project Prj