SUMMER TRAINING PROJECT REPORT

IN

PRINCIPAL PNB MUTUAL FUND

JAIPUR

In Partial Fulfillment For The Award Of P. G. Degree Of

Master Of Business Administration

SUBMITTED TO:
RAJASTHAN TECHNICAL UNIVERSITY, KOTA

SUBMITTED BY:
ANJU ARJANI, M.B.A. – PART II

MANSAROVAR, JAIPUR

1
 ACKNOWLEDGEMENT

This is to acknowledge with respect to summer training project

report I have undertaken in the financial services organization
PRINCIPAL PNB mutual fund which is a part of our curriculum in
our management course pursued.

Therefore, indeed it is significant to pay gratitude and acknowledge

the vital personalities upon whose contribution and valuable
guidance made me possible to complete the project report with grace
and significant.

Primarily, I would like to acknowledge and pay my sincere thanks to

Mr. SANJEEV MEHTA, State Head, Principal PNB, who supervise
our work and provided timely and significant suggestions during the
tenure of the summer training and led us to accomplish our objective
“TRAINING & DEVELOPMENT” and inculcate in us the desired
professional skills and knowledge which is strived by a management
candidate.

Secondly, I would like to thanks all my colleagues and supportive

staff for all the cooperation provided to me in fulfilling my training
successfully.

I would also like to thanks to my Faculty incharge for the guidance

made to us in preparation and submission of the summer training
project report.

ANJU ARJANI

MBA - II

2
 PREFACE

Training is a practical orientation of the theoretical knowledge being

taught and studied under a management course that forms a part of
the entire profession. It is always essential for a management trainee
to undergo a summer training under a firm or organization where
he/she able to learn the corporate environment and culture of the
people working over there.

As per norms and stipulations with respect to RAJASTHAN

UNIVERSITY, I had undergone a practical training in Principal
PNB, Jaipur. It was a good exposure for me to undergo training in
such a company to get the knowledge and experience regarding
training and development of various mutual fund advisors as well as
executives consisting Assistant sales managers, Sales managers etc. I
was able to get familiarized with the field component that will help
me in the future.

Thus I would say that this training was beneficial educative & good

exposure to me, which will certainly help in my near future. This

project was designed with respect to Principal PNB. The project

made me to get the enhanced knowledge regarding investments and

how well the organization has performed in the past and trends in the

near future.

Table of Contents
S.No. Particulars Pages

3
 Acknowledge
Preface
1. Objective 1
2. INTRODUCTION TO MUTUAL FUNDS 2
3. CORPORATE PROFILE 13
4. PRINCIPAL PNB – PRODUCTS 23
5. TRAINING & DEVELOPMENT 29
6. ROLE OF TRAINING & DEVELOPMENT 37
7. KNOWLEDGE MANAGEMENT 43
8. RESEARCH METHODOLOGY 50
9. DATA ANALYSIS & INTERPRETATION 54
10. FINDINGS 60
11. SWOT ANALYSIS 63
12. LIMITATIONS 66
13. RECOMMENDATIONS 70
14. CONCLUSION 73
15. BIBLIOGRAPHY 76
16. QUESTIONNAIRE 79
17. GLOSSARY 83 – 91

Objective

The main of the present study of is accomplish the following

objective.

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 Proper understanding and analysis of life insurance advisors.

 To know about life insurance advisors, their performance and working

era as well as their perception towards the life insurance industry.

 Conduct a general survey on a sample selected from the entire

population of life insurance advisors and derived opinion on that

research.

 To determine the potential, stability as well as scope of life insurance

advisors in the near future via effective Evaluation of their

performance in our city.

 And base on analysis of the result thus obtained make a report on that

research.

 Training aims at recruiting maximum number of Life Advisors and to

Sell the maximum policies for the company and bring the business for

the company which ever is going at the particular point of time.

5
INTRODUCTION TO MUTUAL FUNDS

6
 Introduction

Mutual Fund

A Mutual Fund is a trust registered with the Securities and Exchange

Board of India (SEBI), which pools up the money from individual /

corporate investors and invests the same on behalf of the investors

/unit holders, in equity shares, Government securities, Bonds, Call

money markets etc., and distributes the profits. The income earned

through these investments and the capital appreciation realised are

shared by its unit holders in proportion to the number of units owned

by them.

This pooled income is professionally managed on behalf of the unit-

holders, and each investor holds a proportion of the portfolio i.e.

entitled not only to profits when the securities are sold, but also

subject to any losses in value as well.

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 Why Mutual Funds:

Why should one choose to Invest in Mutual Fund?

For retail investor who does not have the time and expertise to

analyze and invest in stocks and bonds, mutual funds offer a viable

investment alternative. This is because:

 Mutual Funds provide the benefit of cheap access to expensive

stocks.

 Mutual funds diversify the risk of the investor by investing in

a basket of assets.

 A team of professional fund managers manages them with in-

depth research inputs from investment analysts.

 Being institutions with good bargaining power in markets,

mutual funds have access to crucial corporate information which

individual investors cannot access.

Concept of Mutual Fund

How Mutual Fund operates

The following chart gives us operational flow of a Mutual Fund

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Organisational Structure of MF :

There are many entities involved and the diagram below illustrates

the organisational set up of a mutual fund:

9
Types of Mutual Funds

Open-ended and close-ended mutual funds schemes:

In an open-ended mutual fund there are no limits on the total size of

the corpus. Investors are permitted to enter and exit the open-ended

scheme at any point of time at a price that is linked to the net asset

value (NAV). In case of close-ended funds, the total size of the

corpus is limited by the size of the initial offer.

Do both open-ended and close-ended funds come out with an

initial offering?

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 Yes. But the only difference is that in case of open-ended funds, a

month after the initial offer closes the continuous offer period starts

when the investor can enter and exit the fund at a price linked to the

NAV

Advantages of Mutual Fund

1. Affordability

2. Professional Management

3. Diversification

4. Variety of Investment according to Financial status of the Investor

5. Return potential

6. Flexibility

7. Transparency

8. Tax Benefits

9. Liquidity

10. Clear – Cut regulations [SEBI]

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 Limitations of Mutual funds

1. Investors cannot contain costs so long as SEBI specified limits

are complied with.

2. Investors pay management fees so long as they remain

invested in the fund.

3. No tailor made portfolios

4. Investors end up delegating investment decisions to fund

managers and have no say/control on their decisions

5. The availability of a large number of mutual fund schemes

means that, except for the empowered investor , others require advice

when selecting a fund which best meets their investment objectives

History of Mutual Funds

1. Unit Trust of India is the first Mutual Fund set up under a

separate act, UTI Act in 1963, and started its operations in 1964 with the

issue of units under the scheme US-64

2. In the year 1987 Public Sector banks like State Bank of India,

Punjab National Bank, Indian Bank, Bank of India, and Bank of Baroda

have set up mutual funds.

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3. Apart from these above mentioned banks Life Insurance

Corporation [LIC] and General Insurance Corporation [GIC] too have

set up mutual funds

4. With the entry of Private Sector Funds a new era has started in

Mutual Fund Industry [e.g:- Principal Mutual Fund]

Institutions that have floated Mutual Funds in India:

Currently sector banks like:

State Bank of India, Canara Bank, Bank of Baroda, Oriental Bank,

Private sector banks like:

ICICI, HDFC, Kotak, Foreign Institutions like Principal, Morgan

Stanley, Templeton, Fidelity and Private financial companies like

Kotak,DSP Merrill Lynch, Sundaram etc. have floated their own

mutual funds

Mutual Funds in India currently:

Presently there are 33 Mutual Funds in India and close to 700 mutual

fund schemes.

Why has the concept of mutual funds taken so long to pick up in

India?

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Even in the US the concept of mutual funds has started picking up

only in the last decade. This whole process of investor education and

investor awareness takes a lot of time. But Indian investors are now

beginning to understand the benefits of investing through the mutual

funds route and hence the collections are beginning to pick up

Regulatory Body of Mutual Fund

What is the Regulatory Body for Mutual Funds?

Securities Exchange Board of India (SEBI) is the regulatory body for

all the mutual funds mentioned above. All the mutual funds must get

registered with SEBI. The only exception is the UTI, since it is a

corporation formed under a separate Act of Parliament.

Risk Management

How do mutual funds diversify their risks?

Financial theory states that an investor can reduce his total risk by

holding a portfolio of assets instead of only one asset. This is

because by holding all your money in just one asset, the entire

fortune of your portfolio depends on this one asset. By creating a

portfolio of a variety of assets, this risk is substantially reduced.

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Can mutual funds be viewed as risk-free investments?

No. Mutual fund investments are not totally risk free. In fact,

investing in mutual funds contains the same risk as investing in the

markets, the only difference being that due to professional

management of funds the controllable risks are substantially reduced.

What are the risks involved in investing in mutual funds?

A very important risk involved in mutual fund investments is the

market risk. When the markets experience a downturn, most funds

will reflect this decline in their NAVs. However,the company

specific risks are largely eliminated due to professional fund

management.

Miscellaneous

How much return can I expect by investing in mutual funds?

Investors need to be clear that mutual funds are essentially medium

to long term investments. Hence, short-term abnormal profits will

not be sustainable in the long run. But in the medium to long run the

mutual funds tend to outperform most other avenues of investments

at the same time avoiding the risk of direct investment accompanied

with professional fund management

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What is the difference between mutual funds and portfolio

management schemes?

While the concept remains the same of collecting money from

investors, pooling them and investing the funds, the target investors

are different. In the case of portfolio management the target investors

are high networth investors while in case of mutual funds the target

investors are the retail investors

Association of Mutual Funds in India (AMFI)

The Association of Mutual Funds in India (AMFI) is dedicated to

developing the Indian Mutual Fund Industry on professional, healthy

and ethical lines and to enhance and maintain standards in all areas

with a view to protect and promot the interests of mutual funds and

their unit holders.

16
CORPORATE PROFILE

17
 Corporate profile

About Principal PNB Mutual Fund

Our corporate mission and philosophy is to help business and people

meet their financial goals by providing quality investment and

retirement solutions. Principal Mutual Fund (formerly known as

IDBI-PRINCIPAL Mutual Fund) has been constituted as a Trust in

accordance with the provisions of the Indian Trusts Act, 1882 (2 of

1882).

The Mutual Fund is registered with SEBI under Registration No.

MF/019/94/0, dated December 13, 1994. The underlying objective of

Principal Mutual Fund is to mobilize savings from the public,

provide investment expertise to achieve optimal returns on their

investments.

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The Fund was initially set up by Industrial Development Bank of

India (IDBI) in 1994 by execution of a Trust Deed dated November

25, 1994, under which IDBI was the sole Settlor, Subsequently, on

March 31, 2000, Principal Financial Services Inc. USA became the

deemed sponsor (along with the IDBI) by acquiring 50% stake in

IDBI-PRINCIPAL Asset Management Company Limited.

In June 2003, Principal Financial Services Inc. USA became the sole

sponsor by acquiring 100% stake in IDBI-PRINCIPAL Asset

Management Company Limited, through its wholly owned

subsidiary Principal Financial Group (Mauritius) Limited (Principal

Mauritius). Principal Mauritius has become the sole settlor of the

Fund. Name of the Asset Management Company was changed to

Principal Asset Management Company Private Limited, to reflect the

change in ownership.

In May 2004, Principal admitted two Public Sector Banks - Punjab

National Bank and Vijaya Bank into the venture. Accordingly,

Principal Mauritius, Punjab National Bank and Vijaya Bank have

19
65%, 30% and 5% respectively of all the rights, title, interest and

obligations as co-settlors to Principal Mutual Fund.

Our Investment Philosophy

Having thoroughly understood the needs of our investors, we at

Principal Mutual Fund provide investors with a disciplined

investment approach that takes acceptable risks, whilst attempting to

minimize volatility in the portfolio.

Equity Funds create wealth for our investors by investing in well-

managed companies that are attractively valued, to generate

sustainable cash flows in the future. We add value by maintaining a

strong focus on credit research and every company is added to the

portfolio after it undergoes a thorough credit analysis.

We proactively manage our Debt and Liquid Funds by continuously

monitoring the macroeconomic environment and undertaking

fundamental research of the fiscal and the monetary position. Both

our corporate and individual clients get to choose from a variety of

structured, diversified investment options that meet their investment

needs at all stages in their life.

20
 SPONSERS:

Principal Financial Services Inc., USA (Holding Company of

Principal Financial Group (Maritius) Limited / a member of the

Principal Financial Group Inc., USA)

The Principal Financial Group

1. Delivers -quality retirement, mutual funds, life insurance and

asset-management services with $304.2 billion in assets under

management¹.

2. Manages assets for 11 of the 25 largest pension funds in the

United States².

3. Is the 38th largest institutional asset manager in the world³

4. Is a publicly traded company on the New York Stock Exchange

(NYSE ticker symbol: PFG)

5. Provides financial services to more than 18.8 million customers

worldwide from offices in Asia, Australia, Europe, Latin America and

the United States.

21
Principal Financial Group's, comprehensive knowledge of retirement

services and asset management gives it a true edge in the

marketplace. This knowledge and experience has helped The

Principal* become a global leader in delivering high-quality

financial services to clients around the world through its diverse

family of companies.

As the 401(k) leader in the U.S.A4, and a member of the FORTUNE

500 and the S&P 500, The Principal has become a trusted source for

clients since 1879. Diversity of strengths and skills has increased its

ability to deliver innovative solutions to millions of individuals and

businesses around the world.

Having built a strong reputation in United States, the Principal has

steadily entered markets around the globe. We pride ourselves on our

long record of providing value through our expertise in investments,

administration, system design, distribution management, education

and client service.

FINANCIAL STRENGTH RATINGS 5

A+ (Superior) - A.M. Best Company, as of January 2008. Second

highest of 16 rating levels.

22
Aa2 (Excellent) - Moody's Investors Service, as of March 2008. Third

highest of 21 rating levels.

AA (Very strong) - Standard & Poor's Rating Group, as of March 2008.

Third highest of 21 rating levels.

AA (Very strong) Fitch, as of July 2007. Third highest of 24 rating

levels.

1. As of March 31, 2008

2. Derived from the PENSIONS & INVESTMENTS "P&I 1,000"

report on the largest pension plans dated Jan. 21, 2008, compared to

its internal records as of March 31, 2008. Principal Global Investors,

LLC.

3. Out of 784 managers profiled, Managers ranked by total

worldwide institutional assets under management, as of Dec. 31,

2006. "2007 Money Managers Directory". PENSIONS &

INVESTMENTS, May 28, 2007.

4. The Principal ranks number one in total plan for all asset sizes

among fully bundled 401(k) provider-2006 Spectrum Group analysis

of fully-bundled 401(k) provider (companies that provide by

administrative and investment services).

23
5. Financial strength ratings are assigned to the largest operating

subsidiary Principal Life Insurance Company. A high rating by a

particular firm does not constitute and endorsement of the rated issue

by the ratings firm.

Punjab National Bank:

With its presence virtually in all the important centres of the country,

Punjab National Bank offers a wide variety of banking services

which include corporate and personal banking, industrial finance,

agricultural finance, financing of trade and international banking.

Among the clients of the Bank are Indian conglomerates, medium

and small industrial units, exporters, non-resident Indians and

multinational companies. The large presence and vast resource base

have helped the Bank to build strong links with trade and industry.

Vijaya Bank:

Vijaya Bank established in 1931, has built a network of about 1000

branches spread across the country. In recent years, the bank has

opened 43 branches offering specialized banking for industrial

finance, small scale industries, agricultural (hi-tech) finance, capital

24
market, commercial and personal banking, asset recovery

management, overseas banking, corporate banking, and funds

transfer. The Bank has introduced several customer friendly deposit

schemes and has launched several retail lending schemes to cater to

its vast client base.

TRUSTEE COMPANY:

Principal Trustee Company Private Limited

Principal Trustee Company Private Limited (formerly IDBI-

PRINCIPAL Trustee Company Limited), a company incorporated

under the Companies Act, 1956 is the Trustee to the Fund with effect

from October 2002. Prior to October 2002 Board of Trustees

discharged the Trusteeship function of the Fund. In June 2003,

Principal Financial Services Inc. USA acquired 100% stake in IDBI-

PRINCIPAL Trustee Company Limited, through its wholly owned

subsidiary Principal Financial Group (Mauritius) Limited.

Name of the Trustee Company was changed to Principal Trustee

Company Private Limited, to reflect the change in ownership.

25
In May 2004, Punjab National Bank and Vijaya Bank became equity

shareholders of the Trustee Company and post this, Principal

Financial Group (Mauritius) Limited, Punjab National Bank and

Vijaya Bank hold 65%, 30% and 5% respectively of the paid up

equity capital of the Trustee Company.

Directors of the Trustee company as on April 15, 2008 are:

Mr. B. G. Deshmukh; Chairman (Independent Director)

Mr. H.M.Singh; Independent Director

Mr. V.S. Mathur; Independent Director

Mr. Pramod Lele; Independent Director

Mr. Ned Burmeister; Associate Director

Mr. Ranjan Dhawan; Associate Director

26
PRINCIPAL PNB - PRODUCTS

27
 Products

ELSS (Tax Benefit) Schemes Principal Personal Tax Saver Fund

Principal Tax Savings Fund Equity Linked Saving Schemes (ELSS)

are those that invest pre-dominantly in equity shares of companies

The objective of ELSS is to provide long-term capital gains to the

investors through capital appreciation along with tax saving benefits.

These schemes have a three year lock-in period. Equity / Growth

Schemes Principal Dividend Yield Fund Principal Emerging

Bluechip Fund Principal Growth Fund

Principal Index Fund Principal Junior Cap Fund Principal Large Cap

Fund Principal PNB Long Term Equity Fund 3 Year Plan - Series I

Principal PNB Long Term Equity Fund 3 Year Plan - Series II

Principal Resurgent India Equity Fund

Principal Services Industries Fund

28
Equity schemes are those that invest pre-dominantly in equity shares

of companies The objective of an equity fund is long-term growth

through capital appreciation, although dividends and interest are also

sources of revenue. Equity funds may be a mutual fund or exchange-

traded fund. Equity funds provide a high level of return, but have a

high level of risk too. Equity investments can be sold at any time,

with prices based on the current market value.

Fund of Funds Schemes Principal Global Opportunities Fund: Fund

of Funds schemes are those schemes that invests primarily in other

schemes of the same mutual fund or other mutual funds. The

objective of such schemes is to provide long term capital

appreciation by predominantly investing in mutual fund schemes and

a certain portion of its corpus in Money Market / Liquid Securities.

Debt/Income Schemes Principal Fixed Duration Fund 3 Year Plan

Series I Principal Floating Rate Fund – Flexible Maturity Plan

Principal FMP 30 Days Series I Principal FMP 540 Days Series I

Principal Government Securities Fund - Investment Plan Principal

Government Securities Fund - Savings Plan Principal Income Fund

Principal Income Fund - Short Term Plan Principal Liquid Plus Fund

Principal Pnb Fixed Maturity Plan 385 Days - Series V Principal Pnb

29
Fixed Maturity Plan 385 DAYS - Series VII Principal Pnb Fixed

Maturity Plan 385 Days-Series VIII Principal Pnb Fixed

Maturity Plan 385 Days-SeriesIX Principal Pnb Fixed Maturity Plan

540 Days - Series II Principal Pnb Fixed Maturity

Plan 91 Days - Series XVI Principal Pnb Fixed Maturity Plan 91

Days - SeriesXV Principal Pnb Fixed Maturity Plan 91

Days - SeriesXVII Principal Pnb Fixed Maturity Plan 91 Days -

SeriesXVIII Principal Pnb Fixed Maturity Plan 91 Days – Series

XIV Principal Pnb Fixed Maturity Plan(FMP-54)30 Days-SeriesII

Principal Pnb FMP 385 Days - SeriesVI

Principal Pnb FMP 460 Days - Series IV Principal Pnb FMP 91

Days - Series XIII

Debt schemes are those that pre-dominantly invest in debt securities.

Since most debt securities pay periodic interest to investors, these

funds are also known as income funds. However, it must be

remembered that funds investing in debt products can also offer a

growth option to their investors. Debt funds have the advantage of

being much less risky than equities. If steady, predictable returns are

what you expect, a debt fund will deliver precisely that. Debt funds

30
tend to create a variety of options for investors by choosing one or

more of these segments of the debt markets in their investment

portfolio.

Liquid Schemes Principal Cash Management Fund Principal

Floating Rate Fund - Short Maturity Plan Principal Money

Manager Fund

Liquid schemes are those that pre-dominantly invest only in short-

term money market instruments including treasury bills, commercial

paper and certificates of deposit. The objective is to provide liquidity

and preserve the capital.

The period of investment could be as short as a day. They provide

easy liquidity. They have emerged as an alternative for savings and

short-term fixed deposit accounts with comparatively higher returns.

These funds are ideal for Corporate, institutional investors and

business houses who invest their funds for very short periods.

Balanced Schemes Principal Balanced Fund Principal Child Benefit

Fund Balanced schemes are also called hybrid schemes. Balanced

schemes are those that invest in a combination of common stock,

31
preferred stock bonds, and short term bonds to provide income and

capital appreciation while avoiding excessive risks.

32
 Balanced funds invest in equity (shares) and debt (fixed income

instruments). Usually, they put around 50% of their total investments

in debt and 50% in equity.

MIP Schemes Principal Monthly Income Plan Principal Monthly

Income Plan - MIP Plus MIP schemes are those that invest, typically

a large portion (80-100%) of the fund is invested in debt and money

market instruments and the rest (0-20% approximately) in equity.

MIP scheme are best for a risk-averse investor who wishes to better

the returns offered by conventional fixed income instruments and yet

retain liquidity.

33
TRAINING & DEVELOPMENT

34
 About Training & Development

TRAINING: Training refers to the acquisition of knowledge, skills,

and competencies as a result of the teaching of vocational or

practical skills and knowledge that relates to specific useful skills. It

forms the core of apprenticeships and provides the backbone of

content at technical colleges and polytechnics. Today it is often

referred to as professional development.

Physical training is more mechanistic: planned suites of regimes

develop specific skills or muscles with a view to peaking at a

particular time. A field of training often used in sports is autogenic

training. Another type of training is fartlek training which is a

flexible training type which can be adapted to suit almost any

athlete. Many early American astronauts trained extensively in

Iceland's central highlands due to its similarity to an extraterrestrial

planet.Training & Development is the field concerned with

workplace learning to improve performance.

35
Such training can be generally categorized as on-the-job or off-the-

job. On-the-job describes training that is given in a normal working

situation, using the actual tools, equipment, documents or materials

that they will use when fully trained. On-the-job training is usually

most effective for vocational work. Off-the-job training takes place

away from normal work situation which means that the employee is

not regarded as productive worker when training is taking place.

An advantage of off-the-job training is that it allows people to get

away from work and totally concentrate on the training being given.

This is most effective for training concepts and ideas. In military use,

training means gaining the physical ability to perform and survive in

combat, and learning the many skills needed in a time of war.

These include how to use a variety of weapons, outdoor survival

skills, and how to survive capture by the enemy, among others. See

military education and training. In religious and spiritual use,

training means purifying mind, heart, understanding and actions to

obtain a variety of spiritual goals such as closeness to God or

freedom from suffering. Typical of institutionalized spiritual

trainings is the Buddhist Threefold Training. Training differs from

36
 exercise in that exercise may be a one of occasional activity for fun.

Training is specific and done to improve one's capability, capacity,

and performance.

Need for Training:

a. Employment for inexperienced and new labour requires detailed

instructions for effective performance on the job.

b. With the help of training, supervision during work period can be

reduced, cost may go down, waste and spoilage may be prevented and

production of qualitative goods and services can be produced.

c. Increasing use of fast challenging techniques in production and

other operations demands training to be provided for the induction and

get acquainted with the latest term of the process of work.

d. Old employees need refresher training for keeping them abreast

of changing techniques and the use of the sophisticated tools and

equipments.

e. It is essential when a person has to move from the one job to

another because of transfer, promotion or demotion.

37
 Benefits: A well planned and executed training results in:

a. Improvement in the quality of products with the reduction of

spoilage, wastes etc.

b. Reduce supervision and learning time

c. Improvement in the method of working, morale and productivity

of employees with reduced grievances.

d. Increased financial incentives, opportunity for internal promotion

and rising pay scales.

e. Reduction in breakages and maintenance cost leading effective

performance and contribution towards the goals of the employees.

f. Better Corporate image, fosters authencity and trust.

g. Improvement in skills, experience and knowledge that aids in

organizational development.

h. Improves the morale of the workforce, aids in understanding and

carrying out organizational policies.

i. Avoids management conflicts and Improves the organizational

communication.

38
j. Develop a sense of responsibility to the organization for being

competent and knowledge.

DEVELOPMENT: Development (in general) - it is a dynamic

process of improvement, which implies a change, an evolution,

growth and advancement. Development as a phenomenon suggests

that people are able to control their future and can improve their

condition in the world (living conditions, capacity to feed, education

level, life length, etc.) through process towards something better.

Thus the development refers broadly to the nature and direction of

change induced in employees, particularly managerial personnel,

through the process of training and educative process.

National Industrial conference Board:

“Management Development is all those activities and programs

when recognized and controlled, have substantial influence in

changing the capacity of the individual to perform his assignment

better and in doing so are likely to increase his potential for future

assignments.”

39
 Thus the Management Development is not merely training or a

combination of various training programs though some kind of

training is necessary; it is the overall development of the competency

of managerial personnel in the light of the present requirements as

well as future requirements

Assumptions of the Management Development:

a. Management Development is a continuous process as there is no

time limit for learning to occur. It is not one – shot program but

continuous throughout the career of a manager. There may be one shot

programs but they are just the elementary input to the consideration for

the Development process.

b. Management Development is based on the assumption that there’s

always exist a gap between individual’s performance and his potential

for the performance. The untapped potential can be transformed in to the

actual performance through the process of development.

40
c. Management Development seldom takes place in the peaceful and

relaxed atmosphere, as it involves stress and strains. It s a challenging

job. It may be accomplished by errors and failures.

d. Management Development requires clear setting of goals which

one wants to achieve through development process.

e. Management Development requires conducive environment which

should – be encouraging and stimulating with continuous feedback about

the Degree of development. The development should be such that

learned behavior is appropriately applied to achieve the desired

objective. Both training and development are necessary for any

organization to build its effective human resource for optimum

utilization of the resources in order to achieve the overall desired

objectives of the company.

41
ROLE OF TRAINING & DEVELOPMENT

42
 Role of Training & Development

There is always a pressure by the working corporate environment for

viable solution and efficient performance level, which can only be

achieved through the process of systematic training and development

that may yields, expected results with growth factors to sustain in

future. Where training imparts skills, efficiency and inculcate a

desire to mark unachieved milestones development frames out the

necessary production of the will to work as well as a constant

motivational factors that keep reminding a person to perform at a

certain level suitable for the organization as well as to him for the

future prospective ness.

What necessitates training are technological advancement,

organizational complexity and the relations sustain and made by

humans. All these factors are related to each other.

Thus the role of the training can be summarized herein as follows: -

43
1. Training plays an active role in building efficiency of employees

by making them do a specific task with more specific operations and

learning them the latest means of performance and technological

advancement.

2. Training inculcates an increase in morale of employees which can

be evidenced by inspiring enthusiasm, voluntary confrontation with

regulation and willing ness to work and cooperate. This is done by

relating the skills with the job requirements making the jobs more

meaningful and sustainable.

3. Training attempts to increase the quality of human relations in an

organization. Growing complexity of organizations has led to

various human problems like alienation, inter-personal and inter-

group problems. Suitable human relations training can overcome

many of these problems. Technical training has been emerged for

resolving these problems of social and psychological nature.

4. Trained employees require less supervision since their working

morale is high for the desired performance level and therefore with

the given autonomy and power their fulfill the objectives with more

advancement and quality efficiency.

44
This may results into less number of intermediate levels as well as lesser

interruption from senior management to indulge in the sound working of

the personnel.

5. Training is necessary to maintain violability and flexibility

necessary for an organization to sustain in the environment of

uncertainty despite the loss of its key personnel. Therefore there are

no greater assets than the trained staff enough motivated to turn

assets into productivity and growth of the firm.

45
 Policy on Training & Development

The objective of the policy is to articulate the organizational therapy

on employee training and development and provide a framework for

initiatives in this area. The organization is committed to the

development of its human resources through various interventions

one of the most important is Training and Development.

It believes that the employee must exhibit ownership of his/her

individual development with all possible inputs provided by the

company. All interventions in training and development will seek to

align individual needs with business needs or objectives. Equal

opportunity will be made available to every single employee

irrespective of level or function. What Training and Development

program does when an employee undergoes in PRINCIPAL PNB

MUTUAL FUND?

Human resources improve employee and management effectiveness

by providing programs and services to all. Training is often used to

promote employee development and to keep employees informed of

new procedures and technology. The training offered is diverse and

reflect the variety of jobs and training needs which exists in a large

46
Telecom service provider. Starting with Basic Telecom Awareness

which has 4 modules – it offers varied training which promote the

development of professional, quality customer service skills.

Several modules are available which assist the employees in

developing a customer – conscious focus and skills which add value

to their customer’s experience. Training and Development programs

are advertised in regular in regular employee mailings, inter-

departmental memo’s or on the notice board. Employees are required

to consult their supervisors about their department’s requirements

regarding training programs.

47
KNOWLEDGE MANAGEMENT

48
 Knowledge Management

Knowledge Management refers to a range of practices used by

organisations to identify, create, represent, and distribute knowledge

for reuse, awareness and learning across the organisation.

Knowledge Management programs are typically tied to

organisational objectives and are intended to lead to the achievement

of specific outcomes such as shared intelligence, improved

performance, competitive advantage, or higher levels of innovation.

Knowledge transfer (one aspect of Knowledge Management) has

always existed in one form or another, for example through on-the-

job peer discussions, formal apprenticeship, corporate libraries,

professional training, and mentoring programs. However, since the

late twentieth century — additional technology has been applied to

this task, such as knowledge bases, expert systems, and knowledge

repositories. Knowledge Management programs attempt to manage

the process of creation or identification, accumulation, and

application of knowledge or intellectual capital across an

organisation.

49
 Knowledge Management, therefore, attempts to bring under one set

of practices various strands of thought and practice relating to:

a. Intellectual capital and the knowledge worker in the knowledge

economy

b. The idea of the learning organization;

c. Various enabling organizational practices such as Communities of

Practice and corporate Yellow Page directories for accessing key

personnel and expertise;

d. Various enabling technologies such as knowledge bases and

expert systems, help desks, corporate intranets and extranets, Content

Management, wikis, and Document Management.

While Knowledge Management programs are closely related to

Organizational Learning initiatives, Knowledge Management may be

distinguished from Organizational Learning by its greater focus on

the management of specific knowledge assets and development and

cultivation of the channels through which knowledge flows.

50
The emergence of knowledge management has generated new

organisational roles and responsibilities an early example of which

was the Chief Knowledge Officer. In recent years, Personal

knowledge management (PKM) practice has arisen in which

individuals apply KM practice to themselves, their role in the

organisation and their career development.

While it has been applied to all industrial sectors, and increasingly to

Government, Knowledge Management is a continually evolving

discipline, with a wide range of contributions and a wide range of

views on what represents good practice in Knowledge Management.

Approaches to knowledge management

There is a broad range of thought on knowledge management with

no agreed definition current or likely. The approaches vary by author

and school. For example, knowledge management may be viewed

from each of the following perspectives:

1. Techno-centric: Focus on technologies, ideally those that

enhance knowledge sharing / growth, frequently any technology that

does fancy stuff with information.

51
2. Organisational: How does the organization need to be designed

to facilitate knowledge processes? Which organisations work best

with what processes?

3. Ecological: seeing the interaction of people, identity, knowledge

and environmental factors as a complex adaptive system.

4. Combinatory: Combining more than one of the above approaches

where possible without contradiction. In addition as the discipline is

maturing we see an increasing presence of academic debates within

epistemology emerging in both the theory and practice of knowledge

management.

Knowledge capture stages

Knowledge may be accessed, or captured, at three stages: before,

during, or after knowledge-related activities. For example,

individuals undertaking a new project for an organization might

access information resources to learn best practices and lessons

learned for similar projects undertaken previously, access relevant

information again during the project implementation to seek advice

on issues encountered, and access relevant information afterwards

for advice on after-project actions and review activities.

52
Knowledge management practitioners offer systems, repositories,

and corporate processes to encourage and formalize these activities.

Similarly, knowledge may be captured and recorded before the

project implementation, for example as the project team learns

lessons during the initial project analysis. Similarly, lessons learned

during the project operation may be recorded, and after-action

reviews may lead to further insights and lessons being recorded for

future access.

Ad hoc knowledge access

One alternative strategy to encoding knowledge into and retrieving

knowledge from a knowledge repository such as a database, is for

individuals to access experts on an ad hoc basis, as needed, with

their knowledge requests. A key benefit of this strategy is that the

response from the expert individual is rich in content and

contextualised to the particular problem being addressed and

personalized to the particular person or people addressing it.

53
The downside is, of course, that it is tied to the availability and

memories of specific individuals in the organisation. It does not

capture their insights and experience for future use should they leave

or become unavailable, and also does not help in the case when the

experts' memories of particular technical issues or problems

previously faced change with time.

The emergence of narrative approaches to knowledge management

attempts to provide a bridge between the formal and the ad hoc, by

allowing knowledge to be held in the form of stories.

54
RESEARCH METHODOLOGY

55
 Research Methodology

Research:

Research always starts with a question or a problem. Its purpose is to

question through the application of the scientific method. It is a

systematic and intensive study directed towards a more complete

knowledge of the subject studied.

Research specifies the information required to address these issues,

designs, and the method for collecting information, manage and

implemented the data collection process, analyses the results and

communicate the findings and their implication.

I have prepared our project as descriptive type, as the objective of

the study demands the answers of the question related to the

performance Evaluation and management of life insurance advisors

in Jaipur:

56
The Research Process

As Research is a systemic and formalized process, it follows a

certain sequence of research action. The marketing process has the

following steps:

 Formulating the problems

 Developing objectives of the research

 Designing an effective research plan

 Data collection techniques

 Evaluating the data and preparing a research report

There are two types of data collection method use in my project report.

Primary data and Secondary data.

For my project, I decided on primary data collection method for

observing the life insurance advisors in and outside the company and

approaching customers directly in the field, tele-calling, cold calling,

campaigning and through references to know their interest in

business with company in my project and also make questionnaire

for creating database of people is Jaipur.

57
I decided on Secondary data collection method was used by

referring to various websites, books, magazines, journals and daily

newspapers for collecting information regarding project under study.

Sampling techniques: - there are usually teo techniques of

sampling being taken – Random sampling and systematic sampling.

I have adopted random sampling for the conduct of the survey.

Sample Size: The sample size was 35 mutual fund advisors and

executives from varied fields of working.

58
DATA ANALYSIS & INTERPRETATION

59
 Data Analysis & Interpretation

Q.1 Are you a?

Analysis: - It was inferred from the internal survey to the organization that
out of 35 Mutual funds advisors as well as executives as a whole; Freshers
were 6, Working for over an year were 20 and Well Experienced were 9

17%
26%

57%

Fresher Working for over an year Well Experienced

Q.2 Are you available with necessary training & development?

9%
31% for existing products
26% for customer relationship & sales
New product updation
34% No

Analysis: - It was depicted that life insurance advisors are providing with
necessary training & development pertaining to existing products/policies by
11 advisors, Pertaining to customer relationship & selling policies: 12,
pertaining to new product updation: 9 and No by 3 surveyed advisors.

60
Q.3 How frequently times have you been provided with training
sessions?

30 25
7 > 20
20
3 >10
10
< 10
0
> 20 >10 < 10

Analysis: Further it was also analyzed that the respondents have been
provided with training sessions in regular sessions although not in much
frequency but adequately to update their skills and knowledge pertaining to
task and area of work as categorized as follows: More than 20 times by 3,
More than 10 times by 7 and Less than 10 by 25 advisors and executives. .
Q.4 Are you satisfied with the way of training & development being
imparted to you for updating with present issues?
20 19 10
6
Yes
15
No
10

5 To some extent
0
Yes No To some extent

Analysis: it was found that respondents were highly satisfied with the
training & development pattern that is being imparted in the organization as
well as with the way of behaviour and conduct of senior level management
with the advisors analyzed as follows: Yes by 19 majority of advisors &
executives, No by 10 and To some extent by 6 mutual fund advisors.

61
Q.5 What satisfy you most?

14% Company Reputation

20%
11% Higher Commission
Training sessions
Rewards
14% 24% Environment & Ambience
17% Freedome to work

Analysis: Most derivable Satisfaction factors for life insurance advisors as

been depicted below:
Reputation of the company: 7 Higher Commission: 8
Good training sessions 6 Rewards & Recognitions: 5
Environment and Ambience: 4 Freedom to work: 5

Q.6 What dissatisfy you most during training & development?

11%
Negative attitude of customers
14% Private - Public myth
46%
9%
Non supportive staff
No permanency
20%
No fixed salary

Analysis: Most derivable dissatisfaction factors for life insurance advisors

as been depicted below:
Negative attitude of customers: 16 Private – Public myth: 7
Non-supportive colleagues & staff: 3 No permanency:5
No fixed salary: 4

Q.7 Do you agree that cordial nature of management as well as infusion

of new skills and strategies being imparted through training &

62
development process time to time will lead to augmentation of efficient
performance?
30 27
25 Yes
20
No
15
10 6
2 To some extent
5
0
Yes No To some extent

Analysis: - It was agreed by 27 wide majority of mutual fund advisors that

that cordial nature of management as well as infusion of new skills and
strategies being imparted time to time will lead to augmentation of efficient
performance where mere 2 said no and 6 favored to some extent

Q.8 How many calls do you make every day for fetching appointments?
20 19

15 > 10
9
10 7 < 10
5
<5
0
> 10 < 10 <5

Analysis: - Calls made by mutual funds efficiently after being undertaken

training effectively by every day for fetching appointments were More than
10 (9), Less than 10 (19) and Less than 5 (7).

63
Q.9 Your monthly average number of appointments with the
customers/clients?
20
17
> 20
15
10 < 20
10 6
< 10
5 2
<5
0
> 20 < 20 < 10 <5

Analysis: - Monthly average number of appointments with the

customers/clients was More than 20 by 2, less than 20 by 6 respondets, Less
than 10 by 17 respondets and Less than 5 by 10 respondets surveyed for the
purpose of their performance Evaluation.

Q.10 How many appointments turned into sales of policies if you were
being provided adequate and proper training & development?
25 21
20 <5
15 <10
9
10 <15
5 3 2
<20
0
<5 <10 <15 <20

Analysis: - Respondents agreed that if there wee being provided sufficient

and on time the necessary training & development then taking averaging as
20, appointments turned into sales of policies can be depicted as Less than 5
out of 20 by 21, Less than 10 out of 20 by 9, Less than 15 out of 20 by 3 and
More than 15 and less than 20 by remaining 2 respondents.

64
FINDINGS

65
 FINDINGS

Following are the suggestions conducive to the upliftment and

performance of Principal PNB Mutual Fund, as perceived by me:

1. the mutual fund industry offering its best services and

opportunities in every sphere,

2. the employees working in, are satisfied with their jobs as well as

treatment of the superior organizational members and regular training &

development are being imparted to them to make alive to present

circumstances.

3. employees are loyal towards the organization resulting enriched

and considerable working experience.

4. despite being simply graduated, by maintaining their healthier

working experience many of them have been promoted by their hard

work and creative expertise.

66
5. the management control over the lower management and

supervisory section is medium and not high because of the fact

employees are enough to handle their tasks and responsibilities fairly

and honestly.

6. the Daily reporting to the Superior by the corresponding

subordinate employee os maintained so as to judge the comparative

performance of the particular day

67
SWOT ANALYSIS

68
 SWOT Analysis

STRENGTHS: -

1) A Strong brand name of PRINCIPAL PNB.

2) An Excellent corporate working environment

3) Highly trained professionals with good teamwork and

leadership.

4) Latest means of technical know how.

5) Company best norms and incentives measures.

6) Performance level achievement system of promotion.

WEAKNESSES: -

1) Over power in senior management.

2) Seldom delay in payments and reimbursements.

69
OPPORTUNITIES: -

1) Need to keep motivated the supervisory level and keep

informative about the policies so that they may be well versed in

advanced with outcomes.

2) Sound promotional and technical improvements and amenities

should be provided to the employees at large.

THREAT: -

1) Advisors may be reluctant to work if they are not provided

adequate training & development for updating their skills and

knowledge and this may prove to be a dent on the overall progress of

the company.

2) Skilled personnel may leave the company to other favourable

atmosphere with better perks and facilities in the absence of desired

training & development. .

70
LIMITATIONS

71
 LIMITATIONS

Some of the difficulties and limitations faced by me during my training

are as follows:

 Lack of awareness among the people – This is the biggest

limitation found in this sector. Most of the people are not aware about

the importance and the necessity of the insurance in their life. They

are not aware how useful life insurance can be for their family

members if something happens to them.

 Perception of the people towards Mutual Fund sector –

People still are not much aware about mutual fund and consider it as a

share and securities type of investment which is highly volatile and

risky. Therefore it makes it difficult for advisors to satisfy them

completely and make their potential investment.

 Insurance does not give good returns – Still today people

think that Insurance does not give good returns. They are not aware of

the modern Unit Linked Insurance Plans which are offered by most of

the

72
Private sector players. They are still under the perception that if they

take Insurance they will get only 5-6% returns which is not true

nowadays.

 Nowadays most of the modern Unit Linked Insurance Plans

gives returns which are many times more than that of bank Fixed

deposits, National saving certificate, Post office deposits and Public

provident fund.

 Lack of awareness about the earning opportunity in the

Insurance sector – People still today are not aware about the earning

opportunity that the Insurance sector gives. After the privatization of

the insurance sector many private giants have entered the insurance

sector. These private companies in order to beat the competition and

to increase their Insurance Advisors to increase their reach to the

customers are giving very high commission rates but people are not

aware of that.

 Increased competition – Today the competition in the

Insurance sector has became very stiff. Currently there are 14 Life

Insurance companies working in India including the LIC (life

insurance Corporation of India).

73
Today each and every company is trying to increase their Insurance

Advisors so that they can increase their reach in the market. This

situation has created a scenario in which to recruit Life insurance

Advisors and to sell life Insurance Policy has became very very

difficult.

74
RECOMMEDATIONS

75
 Recommendations

Based on the analysis of data collection through the performance

analysis and appraisal forms and individual training needs

identification forms some, following are the recommendations

hereby been suggested for the benefit of the company: -

a) Training should be conducted on regular basis at frequent

intervals so that the MF advisors as well as management employees may

beable to adapt the present product information and furnish themselves

with latest news and affairs to deal with the queries of customers.

b) For the overall effective achievement of goals and objectives

of the organization systematic development areas should be outlined and

projected so that training may be imparted and assessment of their

capabilities with the operational requirements may be ascertain.

76
c) Appraisal assessment of the performance together with the

development processes which have been carried out till yet have to be

analyzed and ascertain so as to gain importance and distinguish between

the efficient and inefficient employees.

d) Since PRINCIPAL PNB MUTUAL FUND is a growing

financial services company and is becoming a big giant in India and

therefore it is essential to keep an eye on all the human resource

activities carried out in the company at large.

e) Advanced study materials and modules should be provided for

the background knowledge enhancement besides quality training.

f) Training should be adhered to the working situation and should

be projected to increase the work level and performance efficiency so

that company labour turnover may go down with respect to achieving

growth scenario.

77
CONCLUSION

78
 Conclusion

In the course of summer training project conducted in PRINCIPAL

PNB MUTUAL FUND was concluded that the survey was made on

to the mutual fund advisors and management employees with respect

to training and development of human resources, the problem

suffered by them as well as the alternatives solution suggested. Our

results was depicted that mostly employed of the prestigious

organization are satisfied and regular in their working and

performing for their company with full efforts. All these activities

related to human resource and personnel were conducted.

A Brief summary: -

a) Weekly arrangement and meeting with all employees were

scheduled and their problems were heard one by one.

79
b) Recording and undertaking of interpretation of the problems

pertaining to the training and development of different

employees.

c) Provision of the due solution favourable in all condition to

them and conduces with maintaining healthier relation with

company in respect of efficient ways and duration of training to

the required personnel and development for the future course of

action in order to achieve organizational goals.

80
BIBLIOGRAPHY

81
 Bibliography

Following sources have been referred in the completion of Summer

training:

BOOKS:

Human Resource & Personnel Management, Aswathappa, K

Basics of Management, Pandey S.N.

Research Methodology & Management, Kothari C.R.

Personnel Management & Industrial Relations, Tripathi

Organizational Behaviour, Fred Luthans

NEWSPAPER

News Paper: - Economic Times

The Financial Express

MAGAZINES:

India Today

Businedd World

82
WEBSITES: -

www.principalpnb.com

www.mutualfundindia.com

www.businessworld.in

www.invesedia.com

www.tradeindia.com

83
 Annexure: Questionnaire

NAME OF THE EMPLOYEE: ________________________________

DESIGNATION: ___________________________________________

JOB ASSIGNMENT: ________________________________________

Q.1 Are you a:

 Fresher

 Experienced

Q.2 Are you available with necessary training & development?

 for existing products

 for customer relationship & sales

 New product updation

 No

84
 Q.3 How frequently times have you been provided with training

sessions?

 More than 20

 More than 10

 Less than 10

Q.4 Are you satisfied with the way of training & development

being imparted to you for updating with present issues?

 Yes

 No

 To some extent

Q.5 What satisfy you most?

 Reputation of the company:

 Higher Commission:

 Good training sessions

 Rewards & Recognitions:

 Environment and Ambience:

 Freedom to work:

85
 Q.6 What dissatisfy you most during training & development?

 Negative attitude of customers

 Private – Public myth

 Non-supportive colleagues & staff

 No permanency

 No fixed salary

Q.7 Do you agree that cordial nature of management as well as

infusion of new skills and strategies being imparted through

training & development process time to time will lead to

augmentation of efficient performance?

 Yes

 No

 To some extent

Q.8 How many calls do you make every day for fetching

appointments?

 More than 10

 Less than 10

86
 Less than 5

Q.9 Your monthly average number of appointments with the

customers/clients?

 More than 20

 Less than 20

 Less than 10

 Less than 5

Q.10 How many appointments turned into sales of policies if you

were being provided adequate and proper training &

development?

 Less than 5

 Less than 10

 Less than 15

 Less than 20

Other associated comments:

1. ________________________________________________
2. ________________________________________________
3. ________________________________________________

87
ANJU ARJANI

88
GLOSSARY: -
ACCOUNT STATEMENT A document issued by the mutual fund, giving details of
transactions and holdings of an investor.
ADJUSTED NAV (TOTAL RETURN) The net asset value of a unit assuming
reinvestment of distributions made to the investors in any form.
ADVISOR Your financial consultant who gives professional advice on the fund's
investments and who supervise the management of its assets.
AGE OF FUND The time elapsed since the launch of the fund.
nterest is higher than that of principal. This relationship is reversed at the end of the loan.
ANNUAL RETURN The percentage of change in net asset value over a year's time,
assuming reinvestment of distribution such as dividend payment and bonuses.
APPRECIATION When an investment increases in value, it appreciates. For example, a
equity share whose price goes from Rs. 20/- to Rs. 25/- has appreciated by Rs. 5/-.
ASSET Property and resources, such as cash and investments, comprise a person's assets;
i.e., anything that has value and can be traded. Examples include stocks, bonds, real
estate, bank accounts, and jewellery.
ASSET ALLOCATION When you divide your money among various types of
investments, such as stocks, bonds, and short-term investments (also known as
"instruments"), you are allocating your assets. The way in which your money is divided is
called your asset allocation.
ASSET MANAGEMENT COMPANY / AMC It is the investment manager for the
mutual fund. It is a company set up primarily for managing the investment of mutual
funds and makes investment decisions in accordance with the scheme objectives, deed of
Trust and other provisions of the Investment Management Agreement.
ASKED OR OFFERING PRICE
The price at which a mutual fund's shares can be purchased. The asked or offering price
means the current net asset value (NAV) per share plus sales charge, if any. For a no-load
fund, the asked price is the same as the NAV.
ASSET ALLOCATION FUND
A fund that spreads its portfolio among a wide variety of investments, including domestic
and foreign stocks and bonds, government securities, gold bullion and real estate stocks.
This gives small investors far more diversification than they could get allocating money
on their own. Some of these funds keep the proportions allocated between different
sectors relatively constant, while others alter the mix as market conditions change.
ANNUALISED RETURN
This is the hypothetical rate of return, if the fund achieved it over a year's time, would
produce the same cumulative total return if the fund performed consistently over the
entire period. A total return is expressed in a percentage and tells you how much money
BACK END LOAD The difference between the NAV of the units of a scheme and the
price at which they are redeemed. The difference is charged by the fund.
BALANCE SHEET A financial statement showing the nature and amount of a company's
assets, liabilities and shareholders' equity.
BALANCED FUND A mutual fund that maintains a balanced portfolio, generally 40%
bonds and 60% equity.
BEAR MARKET Period during which investors are on a selling spree and the share
prices are going down.

89
BENCHMARK A parameter with which a scheme can be compared. For example, the
performance of a scheme can be benchmarked against an appropriate index.
BLUE CHIP A share in a large, safe, prestigious company, of the highest class among
stock market investments. A blue-chip company would be called thus by being well-
known, having a large paid-up capital, a good track record of dividend payments and
skilled management.
BOND An interest-bearing promise to pay a specified sum of money -- the principal
amount -- due on a specific date.
BOND FUNDS Registered investment companies whose assets are invested in
diversified portfolios of bonds primarily fixed income securities.
BROKER One who guides the investors on one or more investments and facilitates the
process of investment. A broker is a member of a recognized stock exchange who buys
and sells or otherwise deals in securities.
BROKERAGE The fee payable to a broker for acting as an intermediary in a transaction.
For example, brokerage is payable by a fund for getting fresh investments from investors.
BSE INDEX A index reflecting the stock prices of 30 companies listed on the Bombay
Stock Exchange (BSE) which is taken to be representative of the stock market movement.
BULL MARKET Period during which the prices of stocks in the stock market keep
continuously rising for a significant period of time on the back of sustained demand for
the stocks.
CAPITAL This is the amount of money you have invested. When your investing
objective is capital preservation, your priority is trying not to lose any money. When your
investing objective is capital growth, your priority is trying to make your initial
investment grow in value.
CAPITAL GAINS The difference between an asset's purchased price and selling price,
when the difference is positive. A capital loss would be when the difference between an
asset's purchase price and selling price is negative.
CAPITAL MARKET The market where capital funds, debt (bonds) and equity ( stocks)
are traded.
CERTIFICATE OF DEPOSIT Interest-bearing, short-term debt instrument mainly issued
by Financial institutions.
CLOSED-ENDED MUTUAL FUND A mutual fund that offers a limited number of
shares. They are traded in the securities markets. Price is determined by supply and
demand. Unlike open-ended mutual funds, closed-ended funds do not redeem their
shares.
COLLATERAL SECURITY This is extra security provided by a borrower to back up
his/her intention to repay a loan.
COMMON STOCKS Stocks represent a share in the ownership of a particular company.
If the company does well, the value of each share generally goes up. Although common
stocks have a history of long-term growth, their prices fluctuate based on changes in a
company's financial condition and on overall market and economic conditions.
COMMERCIAL PAPER Short-term, unsecured promissory notes with maturities shorter
than 3 months. They are issued by corporations to fund short-term credit needs.
COMMISSION The broker's or agent's fee for buying or selling securities for a client.
The fee is usually based on a percentage of the transaction's market value.

90
COMPOUNDING When you deposit money in a bank, it earns interest. When that
interest also begins to earn interest, the result is compound interest. Compounding occurs
if bond income or dividends from stocks or mutual funds are reinvested. Because of
compounding, money has the potential to grow much faster.
CONSIDERATION The 'consideration' is the total purchase or sale amount associated
with a transaction. The amount you 'pay' or 'receive'. It may also be the basis for working
out the commission, taxes and any other charges you are asked to pay.
COUPON The term is used colloquially to refer to a security's interest rate.
COUPON RATE The annual rate of interest payable on a debt security expressed as a
percentage of the principal amount.
CURRENCY FLUCTUATION Changes in the value of a currency in relationship to
other major currencies. Currency fluctuations can have a significant effect on the value of
international mutual funds.
CURRENCY RISK The risk that shifts in foreign exchange rates may undermine the
dollar or any other foreign currency value of overseas investments.
CURRENT INCOME Monies paid during the period an investment is held. Examples
include bond interest and stock dividends.
CURRENT LOAD Load structure applicable currently. Funds keep revising the load
structures from time to time.
CURRENT MARKET VALUE The amount a willing buyer will pay for a bond today,
which may be at a premium (above face value) or a discount (below face value).
CURRENT YIELD The ration of interest to the actual market price of the bond stated as
a percentage
Annual interest
---------------------------- = Current yield
Current market value
DATE OF REDEMPTION The date specified for the redemption of a scheme. No such
date is specified for an open-ended scheme.
DEBT /INCOME FUNDS Funds that invest in income bearing instruments such as
corporate debentures, PSU bonds, gilts, treasury bills, certificates of deposit and
commercial papers. Although these funds are less volatile, the underlying investments
carry a credit risk. Comparatively, these funds are the least risky and are preferred by
risk-averse investors.
DEFICIT The shortfall between government revenues and budgetary spending in any
given year. A surplus occurs when annual revenues exceed expenditures.
DERIVATIVE An investment contract based on an underlying investment called an
"instrument." The most common type of derivative is an option contract, which involves
the right to buy or sell the underlying instrument at an agreed price. Futures contracts are
also derivatives.
DIVIDEND Income distributed by the Scheme on the Units
DIVIDEND FREQUENCY The periodicity of dividend payout of a scheme. This is
especially valid in the case of an income/debt scheme.
DIVIDEND HISTORY The track record of dividends declared by a fund till date.
DIVIDEND PER UNIT Total amount of dividend declared by a fund for a scheme
divided by total number of units issued to all the investors.
DIVIDEND PERIOD The period for which the dividend is declared

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DIVIDEND PLAN In a dividend plan, the fund pays dividend from time to time as and
when the dividend is declared.
DIVIDEND WARRANT An instrument issued by companies/ mutual funds to an
investor for the purpose of payment of dividends
DIVIDEND YIELD The dividend earned per unit of a scheme at the prevailing per unit
price.
DURATION Duration estimates how much a bond's price fluctuates with changes in
comparable interest rates.
ENTRY LOAD Load on purchases/ switch-out of units.
EQUITY SCHEMES Schemes where more than 50% of the investments are done in
equity shares of various companies. The objective is to provide capital appreciation over
a period of time.
EXCHANGE PRIVILEDGE The right to transfer investments from one fund into
another, generally within the same fund group, at nominal cost.
EXCHANGE RATE The price at which one currency trades for another
EXPENSE RATIO Annual percentage of fund's assets that is paid out in expenses.
Expenses include management fees and all the fees associated with the fund's daily
operations.
EXIT LOAD Load on redemptions Dividend switch-out of units
FACE VALUE The face value is the term used to describe the value of a bond in terms of
what the company which issued the bond will actually repay when the loan matures. It's
sometimes described as nominal or par value.
FII Foreign Institutional Investors, registered with SEBI under the Securities and
Exchange Board of India (Foreign Institutional Investors) Regulations, 1995.
FUND CATEGORY Classification of a scheme depending on the type of assets in which
the mutual fund company invests the corpus. It could be a growth, debt, balanced, gilt or
liquid scheme
FUND MANAGER The person who makes all the final decisions regarding investments
of a scheme
GILT FUNDS Funds, which invest only in government securities of different maturities.
With virtually no default risk, they are very secure. While returns are steady and secure,
they are lower than those from other debt funds
GROWTH FUND A mutual fund whose primary investment objective is long-term
growth of capital. It invests principally in common stocks with significant growth
potential. Growth Stocks of companies that have shown or are expected to show rapid
earnings and revenue growth. Growth stocks have relatively more risk than other
conventional forms of investment.
INCOME FUND A mutual fund that primarily seeks current income rather than growth
of capital. It will tend to invest in stocks and bonds that normally pay high dividends and
interest.
INDEX FUND A passively managed, limited-expense (advisor fee no higher than 0.50%)
fund designed to replicate the performance of an unmanaged stock index on a reinvested
basis.
INITIAL PUBLIC OFFERING (IPO)/ INITIAL ISSUE The first sale of stock by a
private company to the public. IPO’s are often issued by smaller, younger companies

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seeking capital to expand, but can also be done by large privately-owned companies
looking to become publicly traded.
In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it
determine what type of security to issue (common or preferred), best offering price and
time to bring it to market. Also referred to as a "public offering".
INITIAL OFFER PRICE The price at which units of a scheme are offered in its Initial
Public Offer (IPO).
INITIAL OFFER PERIOD The dates on or the period during which the initial
subscription to units of the Scheme can be made.
INSTITUTUONAL INVESTOR An institutional investor is a professional money
manager whose job it is to put money into shares and other assets on behalf of private
investors who entrust them with money via their pension and life insurance funds.
INTEREST The amount paid by a borrower as compensation for the use of borrowed
money. This amount is generally expressed as an annual percentage of the principal
amount.
INVESTMENT OBJECTIVE
The identification of attributes associated with an investment or investment strategy,
designed to isolate and compare risks, define acceptable levels of risk, and match
investments with personal goals.
ISSUE DATE The date on which a security is deemed to be issued or originated.
ISSUED SHARE CAPITAL
This is the total number of shares a company has made publicly available multiplied by
the total nominal value of the shares. A company may have 10 million shares in issue,
each with a nominal value of Re. 1. So the issued share capital is Rs. 10 million.
LAUNCH DATE The date on which a scheme is first made open to the public for
subscription
LIQUIDITY: The ability to buy or sell an asset quickly or the ability to convert to cash quickly
LIQUID FUNDS /MONEY MARKET FUNDS
Funds investing only in short-term money market instruments including treasury bills,
commercial paper and certificates of deposit. The objective is to provide liquidity and
preserve the capital
LOAD A charge that may be levied as a percentage of NAV at the time of entry into the
Scheme/Plans or at the time of exiting from the Scheme/Plans.
LOCK IN PERIOD The period after investment in fresh units during which the investor
cannot redeem the units.
MANAGEMENT FEE Money paid by a mutual fund to its investment manager or
advisor for overseeing the portfolio. A management fee is usually between one-half and
one percent of the fund's net asset value.
MARKET A public place where the buying and selling of all types of bonds, stocks and
other securities takes place. A stock exchange is a market.
MARKET PRICE: The price at which the units of a scheme are quoted on a stock exchange.
MARKET RISK
The risk that the price of a security will rise or fall due to changing economic, political,
or market conditions, or due to a company's individual situation.
MATURITY: The date upon which the principal of a security becomes due and payable
to the security holder.

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MATURITY VALUE The amount (other than periodic interest payment) that will be
received at the time a security is redeemed at its maturity. On most securities the maturity
value equals the par value.
MINIMUM ADDITIONAL INVESTMENT: The minimum amount, which an existing
investor should invest for purchasing fresh units.
MINIMUM BALANCE Minimum amount specified by a fund that should remain
invested in a scheme after any redemption.
MINIMUM SUBSCRIPTION: The minimum amount required to be invested to purchase
units of a scheme of a mutual fund.
MINIMUM WITHDRAWAL: The smallest sum that an investor can withdraw (get
redeemed) from the fund at one time.
MONEY MARKET INSTRUMENTS Commercial paper, treasury bills, GOI securities
with an unexpired maturity up to one year, call money, certificates of deposit and any
other instrument specified by the Reserve Bank of India.
MORTGAGE A legal instrument given by a borrower to the lender entitling the lender to
take over pledged property if conditions of the loan are not met.
MOVING AVERAGES The average price of a mutual fund calculated periodically over
some designated period of time and plotted on a chart against actual price. The effect of a
moving average is to minimize short-term price fluctuations and highlight long-term
price fluctuations.
MUTUAL FUND An investment that pools shareholders money and invests it toward a
specified goal. The funds are invested by a professional investment manager usually
called the AMC ( Asset Management Company).
MUTUAL FUND REGULATIONS Securities and Exchange Board of India (Mutual
Funds) Regulations, 1996 as amended up to date and such other Regulations, as may be
in force from time to time, to regulate the activities of the Mutual Fund.
NO-LOAD SCHEME: A Scheme where there is no initial Entry or Exit Load.
NAV: Net Asset Value of the Units in each plan of the Scheme is calculated in the
manner provided in this Offer Document or as may be prescribed by Regulations from
time to time.
NAV Change The difference between today's closing net asset value (NAV) and the
previous day's closing net asset value (NAV).
NAV Change % The percentage change between today's closing net asset value (NAV)
and the previous day's closing net asset value (NAV)
NET WORTH: A person's net worth is equal to the total value of all possessions, such as
a house, stocks, bonds, and other securities, minus all outstanding debts, such as
mortgage and revolving credit lines.
NET YIELD: Rate of return on a security net of out-of-pocket costs associated with its
purchase, such as commissions or markups.
NON PERFORMING INVESTMENTS Part of the portfolio investment of a debt fund
which is not making interest payment or principal amount repayments in time.
NIFTY An index of prices of a group of fifty stocks listed on the NSE.
OFFER DOCUMENT OR PROSPECTUS The official document issued by mutual funds
prior to the launch of a fund describing the characteristics of the proposed fund to all its
prospective investors. It contains information required by the Securities and Exchange

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Board of India, such as investment objective and policies, services, and fees. Individual
investors are encouraged to read and understand the fund's prospectus.
OFFERING PERIOD The period during which the initial offer to subscribe for the units
of a scheme is open.
OFFER PRICE The lowest price that a seller is willing to accept from a prospective
buyer. In the case of a mutual fund with a sales charge, this price is the net asset value
(NAV) plus the sales charge. In the case of no-load funds, it is the NAV.
OFFERING DATE The date on which a distribution of stocks or bonds will first be
available to the public.
OPEN-ENDED SCHEMES/ FUNDS A fund whose units are redeemable at any time at
asset value, Except for funds that no longer accept new unitholder, new units are offered
continuously.
OPENING NAV The NAV disclosed by the fund for the first time after the closure of an
IPO.
OPPORTUNITY RISK The risk that a better opportunity may present itself after you
have already committed your money elsewhere.
PLANS The Scheme offers five Plans, Growth Plan and four Dividend Plans viz.
Monthly, quarterly, Half Yearly and Annual Dividend Plans.
PORTFOLIO The list of securities owned by the mutual fund. This list may be long, for
example, Fidelity Magellan, with over 2000 stocks, or relatively short, for example,
Sequoia, with only 16 stocks.
PREMIUM The amount by which a bond/ or a stock (in case of a IPO) sells above its par
(face) value.
PRICE OF UNITS Price offered by a mutual fund for repurchase or sale of a unit on a
daily basis. Price/Earnings Ratio This is the price of a stock divided by its earnings per
share. This ratio gives an investor an idea of how much they are paying for a particular
company's earning power. A trailing P/E refers to a ratio that is based on earnings from
the latest year, while a forward P/E uses an analyst's forecast of next year's earnings.
PRIMARY MARKET(NEW ISSUE MARKET) The market on which newly issued
securities are sold, including government security auctions and underwriting purchases of
blocks of new issues, which are then resold.
PROSPECTUS An official document that each investment company must publish,
describing the mutual fund and offering its shares for sale. It contains information that
has been mandatorily required by SEBI.
PURCHASE PRICE Purchase Price to the investor of Units of any of the plans computed
in the manner indicated in this Offer Document.
RATE OF RETURN The total proceeds derived from the investment per rupee initially
invested. Proceeds must be defined broadly to include both cash distributions and capital
gains. The rate of return is expressed as a percentage.
RATINGS Designations given by credit rating agencies indicating relative credit quality
as compared to other funds.
REDEMPTION The paying off or buying back of units of a mutual fund / bond by the
issuer.
REDEMPTION FEE A fee charged by a limited number of funds for redeeming, or
buying back, fund units.

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REDEMPTION PRICE The price at which a mutual fund's units are redeemed (bought
back) by the fund. The redemption price is usually equal to the current NAV per unit.
REFUND The act of returning money to an investor by the fund. This could be on
account of rejection of an application to subscribe units or in response to an application
made by the investor to the fund to redeem units held by him.
RETURNS The dividend and capital appreciation accruing to the investor on the
investment held by him.
REVERSE REPO Purchase of securities with simultaneous agreement to sell them at a
later date.
RISK ADJUSTED RETURNS Generally, the expected returns from an investment are
dependent on the risk involved in the investment. For the purpose of comparing returns
from investments involving varying levels of risk, the returns are adjusted for the level of
risk before comparison. Such returns (reduced for the level of risk involved) are called
risk-adjusted returns.
SAPs Special Purpose Vehicles approved by the appropriate authority or the Government
of India.
SALE PRICE The price at which a fund offers to sell one unit of its scheme to investors.
This NAV is grossed up with the entry load applicable, if any.
SALES CHARGE Fee on the purchase of new shares of a mutual fund. A sales charge is
similar to paying a premium for a security in that the customer must pay a higher offering
price. Sometimes called a load.
SCHEME: A mutual fund can launch more than one scheme. With different schemes, in
spite of there being a common trust, the assets contributed by the unit holders of a
particular scheme are maintained and managed separately from other schemes and any
profit/loss from the assets accrue only to the unit holders of that scheme
SEBI: The Securities and Exchange Board of India.
SECONDARY MARKET: The market where the securities are traded i.e purchased or
sold after they have been initially offered to the public through a public offer in the
primary market.
SECURITY: Generally, an instrument evidencing debt of or equity in a common
enterprise in which a person invests on the expectation of financial gain. The term
includes notes, stocks, bonds, debentures or other forms of negotiable and non-negotiable
evidences of indebtedness or ownership.
SHARE HOLDER
The owner of one or more shares of stock in a corporation. Shareholder rights can vary
according to the articles of incorporation of the by-laws of a particular company.
SYSTEMATIC INVESTMENT PLAN: Many mutual funds offer investment programs
whereby unitholders can invest. The Unitholders of the scheme can benefit by investing
specific Rupee amounts periodically, for a continuous period. The SIP allows the
investors to invest a fixed amount of Rupees every month or quarter for purchasing
additional units of the scheme at NAV based prices.
SYSTEMATIC WITHDRAWAL PLANS: Many mutual funds offer withdrawal
programs whereby unitholders receive payments from their investments. These payments
are usually drawn from the fund's dividend income and capital gain distributions, if any,
and from principal only when necessary.

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SYSTEMATIC TRANSFER PROGRAM (STP): A plan that allows the investor to give a
mandate to the fund to periodically and systematically transfer a certain amount from one
scheme to another.
TAKEOVER: A change in the controlling interest of a corporation. A takeover may be a
friendly acquisition or a hostile bid. A hostile takeover is usually attempted through a
public tender offer.
TAXABLE EQUIVALENT YIELD: The interest rate return which must be received on a
taxable security to provide the holder the same after-tax return as that earned on a tax-
exempt security.
TERM: The time during which interest payments will be made on a bond or certificate of
deposit.
TOTAL RETURN: Return on an investment, taking into account capital appreciation,
dividends or interest, and individual tax considerations adjusted for present value and
expressed on an annual basis.
TRADE DATE: The actual date on which your shares were purchased or sold. The
transaction price is determined by the closing Net Asset Value on that date.
TRANSACTION DAY: A Transaction day ( Day 'T' commences after the previous
working day's cut off time to the following working day's cut off time. Presently 'T' day
commences after 2 p.m. of the previous working day and ends at Z p.m. of the following
working day.
TURNOVER: The extent to which the fund's portfolio is turned over during the course of
a year. High turnover results in greater investment expenses and therefore in an erosion
of the value of share assets.
TURNOVER RATE: A measure of the fund's trading activity calculated by dividing total
purchases or sales of portfolio securities (whichever is lower) by the fund's net assets
over a period of time.
UNDERWRITER: The organisation that acts as the distributor of an initial offer share to
broker/dealers and investors and undertakes to subscribe to any under-subscription of the
offer.
UNIT: The interest of the investors in any of the plans of the Scheme which consists of
each Unit representing a share in the assets of the corresponding plan of the Scheme.
UNIT HOLDER: A person who holds Unit(s) under any plan of the Scheme.
UNIT HOLDER OF RECORD: Unitholders whose names appear on the unitholders
register of the concerned plan/ (s) on the date of determination of dividend, subject to
realisation of the proceeds towards subscription
VALUATION: Calculation of the market value of the assets of a mutual fund scheme at
any point of time.
VALUE DATE: The date on which a foreign exchange transaction or a cash movement
takes place. Can be used interchangeably with settlement date.
VALUE STOCKS: Stocks that are considered to be undervalued based upon such ratios
as price-to-book or price-to-earnings (P/E). These stocks generally have lower price-to-
book and price-earnings ratios, higher dividend yields and lower forecasted growth rates
than growth stocks.
VOLATILITY: In investing, volatility refers to the ups and downs of the price of an
investment. The greater the ups and downs, the more volatile the investment.

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