Research Report of Mutual Fund

SELECTED MUTUAL FUND TARUN B PATEL MO:-
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1.1 INTRODUCTION OF MUTUAL FUND
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A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is invested by the fund manager in different
types of securities depending upon the objective of the scheme. These could range from shares to
debentures to money market instruments. The income earned through these investments and the
capital appreciations realized by the scheme are shared by its unit holders in proportion to the
number of units owned by them (pro rata). Thus a Mutual Fund is the most suitable investment
for the common man as it offers an opportunity to invest in a diversified, professionally managed
portfolio at a relatively low cost. Anybody with an investible surplus of as little as a few
thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined
investment objective and strategy.
A mutual fund is the ideal investment vehicle for today’s complex and modern financial
scenario. Markets for equity shares, bonds and other fixed income instruments, real estate,
derivatives and other assets have become mature and information driven. Price changes in these
assets are driven by global events occurring in faraway places. A typical individual is unlikely to
have the knowledge, skills, inclination and time to keep track of events, understand their
implications and act speedily. An individual also finds it difficult to keep track of ownership of
his assets, investments, brokerage dues and bank transactions etc.
A mutual fund is the answer to all these situations. It appoints professionally qualified
and experienced staff that manages each of these functions on a full time basis. The large pool of
money collected in the fund allows it to hire such staff at a very low cost to each investor. In
effect, the mutual fund vehicle exploits economies of scale in all three areas - research,
investments and transaction processing. While the concept of individuals coming together to
invest money collectively is not new, the mutual fund in its present form is a 20th century
phenomenon. In fact, mutual funds gained popularity only after the Second World War.
Globally, there are thousands of firms offering tens of thousands of mutual funds with different
investment objectives. Today, mutual funds collectively manage almost as much as or more
money as compared to banks.
A draft offer document is to be prepared at the time of launching the fund. Typically, it
pre specifies the investment objectives of the fund, the risk associated, the costs involved in the
process and the broad rules for entry into and exit from the fund and other areas of operation. In
India, as in most countries, these sponsors need approval from a regulator, SEBI (Securities
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exchange Board of India) in our case. SEBI looks at track records of the sponsor and its financial
strength in granting approval to the fund for commencing operations.
A sponsor then hires an asset management company to invest the funds according to the
investment objective. It also hires another entity to be the custodian of the assets of the fund and
perhaps a third one to handle registry work for the unit holders (subscribers) of the fund.
In the Indian context, the sponsors promote the Asset Management Company also, in
which it holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset
Management Company (AMC). E.g. Birla Global Finance is the sponsor of the Birla Sun Life
Asset Management Company Ltd., which has floated different mutual funds schemes and also
acts as an asset manager for the funds collected under the schemes.
1.2 HISTORY OF MUTUAL FUNDS IN INDIA
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The end of millennium marks 36 years of existence of mutual funds in this country. The
ride through these 36 years is not been smooth. Investor opinion is still divided. While some are
for mutual funds others are against it.
The mutual fund industry in India started in 1963 with the formation of the Unit Trust Of
India, at the initiative of the government of India and Reserve Bank. The history of mutual funds
in India can be broadly divided into four distinct phases, which are as follows:
Phase I (Monopoly of UTI) 1964-87:

This period was marked by the operational of a single institution, UTI, which prepared
ground for the future mutual fund industry.The first and still most popular, product launched by
UTI was unit64. Due to the immense popularity of unit64, UTI launched was unit64. Another
popular scheme, Unit Linked Insurance Plan (ULIP), was launched in 1971. By the end of June
1974 there were 6-lakh unit holder with UTI.
An act of parliament established Unit Trust of India (UTI) in 1963. It was set up by the
Reserve Bank of India and functioned under the regulatory and administrative control of the
Reserve Bank of India. In1978 UTI was delinked from the RBI and the Industrial Development
Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The
first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs 6700
crores of assets management.
Phase II (Public Sector Competition) 1987-1992

This period was marked by the entry of non-UTI public Sector mutual funds in the
market, bringing in competition. With the opening up of the economy many public sector
financial institutions established mutual funds in India. However, the mutual funds industry
remained the exclusive domain of public sector in this period.
1987 marked the entry of non-UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance corporation of India
(GIC). SBI mutual fund was the first non-UTI mutual fund established in June 1987 followed by
Can bank Mutual fund (Dec 87), Punjab National Bank Mutual Fund (Aug89),Indian Bank
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Mutual Fund (Nov 89), Bank of India (Jan 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in December
1990. At the end of 1993, the mutual fund industry had assets under management of Rs 4700
crores.
Phase III (Entry of Private Sector Fund) 1993-2003:

A new era in the mutual fund industry began with entry of private sector funds in 1993,
posing a serious competition to the existing public sector funds. The first private sector mutual
fund to launch a scheme was the Madras based Kothari pioneer Mutual fund. It launched the
open-ended prima fund in November 1993.
With the entry of private 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 into being, under which all mutual funds, except
UTI were to be registered and governed. The erstwhile Kothari pioneer (now merged with
Franklin Templeton) was the private sector mutual fund registered in July 1993. The 1993 SEBI
(mutual Fund) Regulations were substituted by a more comprehensive and revised mutual fund
regulations in 1996. The industry now functions under the SEBI (Mutual Fund) regulations
1996. The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry was witnessed several mergers and acquisitions.
As at the end of January 2003, there were 33 mutual funds with total asset of Rs 1, 21,805
crores.
Phase IV (Since February 2003):

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the specified undertaking of the Unit Trust of India
with assets under management of Rs 29,835 crores as at the end of January 2003.
The second is the UTI mutual fund LTD, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the mutual fund regulations. At the end of October
31,2003, there were 31 funds, which manage asset of Rs 126726 crores under 386 schemes.
Mutual funds have been a significant source of investment in both government and
corporate securities. It has been for decades the monopoly of the state with UTI being the key
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player, with invested funds exceeding Rs.300bn. (US$ 10bn.). The state-owned insurance
companies also hold a portfolio of stocks. Presently, numerous mutual funds exist, including
private and foreign companies. Banks--- mainly state-owned too have established Mutual Funds
(MFs). Foreign participation in mutual funds and asset management companies is permitted on a
case by case basis.
UTI, the largest mutual fund in the country was set up by the government in 1964, to
encourage small investors in the equity market. UTI has an extensive marketing network of over
35, 000 agents spread over the country. The UTI scrip’s have performed relatively well in the
market, as compared to the Sensex trend. However, the same cannot be said of all mutual funds.
All MFs are allowed to apply for firm allotment in public issues. SEBI regulates the
functioning of mutual funds, and it requires that all MFs should be established as trusts under the
Indian Trusts Act. The actual fund management activity shall be conducted from a separate asset
management company (AMC). The minimum net worth of an AMC or its affiliate must be Rs.
50 million to act as a manager in any other fund. MFs can be penalized for defaults including
non-registration and failure to observe rules set by their AMCs. MFs dealing exclusively with
money market instruments have to be registered with RBI. All other schemes floated by MFs are
required to be registered with SEBI.
In 1995, the RBI permitted private sector institutions to set up Money Market Mutual
Funds (MMMFs). They can invest in treasury bills, call and notice money, commercial paper,
commercial bills accepted/co accepted by banks, certificates of deposit and dated government
securities having unexpired maturity up to one year.
Before investing in a Mutual Fund an investor must identify his needs and preferences. While
selecting a Mutual Fund's schemes he should consider the effect of inflation rate, diversification
of investment, the time period of investment and the risk factors. There are various type of risk
factors as:
· Market Risk
· Credit Risk
· Interest Rate Risk
· Inflation Risk
· Political Environment
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CRISIL's composite performance ranking (CPR) measures the performance for each of
the open-ended scheme of Mutual Fund. There are four parameters considered to measure the
performance of a mutual fund such as Risk-adjusted returns of the scheme's NAV,
Diversification of Portfolio, Liquidity and Asset Size.
By December 2004, Indian mutual fund industry reached Rs 1, 50,537crore. It is
estimated that by 2010 March-end, the total assets of all scheduled commercial banks should be
Rs 40, 90,000 crores.
The annual composite rate of growth is expected 13.4% during the rest of the decade. In
the last 5 years we have seen annual growth rate of 9%. According to the current growth rate, by
year 2010, mutual fund assets will be double.
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1.3 THE DEFINITION OF MUTUAL FUND
A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of
a mutual fund as a company that brings together a group of people and invests their money in
stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the
holdings of the fund.
You can make money from a mutual fund in three ways:
1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all
income it receives over the year to fund owners in the form of a distribution.
2) If the fund sells securities that have increased in price, the fund has a capital gain. Most funds
also pass on these gains to investors in a distribution.
3) If fund holdings increase in price but are not sold by the fund manager, the fund's shares
increase in price. You can then sell your mutual fund shares for a profit. Funds will also usually
give you a choice either to receive a check for distributions or to reinvest the earnings and get
more shares.
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1.4 FLOW CHART OF MUTUAL FUND
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A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market instruments
such as shares, debentures and other securities. The income earned through these investments
and the capital appreciations realized are shared by its unit holders in proportion to the number
of units owned by them. Thus a Mutual Fund is the most suitable investment for the common
man as it offers an opportunity to invest in a diversified, professionally managed basket of
securities at a relatively low cost. The flow chart below describes broadly the working of a
mutual fund
The company that puts together a mutual fund is called an AMC. An AMC may have
several mutual fund schemes with similar or varied investment objectives. The AMC hires a
professional money manager, who buys and sells securities in line with the fund’s stated
objective. All AMCs regulated by SEBI, funds governed by board of directors
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1.5 ORGANISATION STRUCTURE OF MUTUAL FUND
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The securities and exchange Board of India (SEBI) mutual fund regulations require that
the fund’s objectives are clearly spelt out in the prospectus. In addition, every mutual fund has a
board of directors that is supposed to represent the shareholder’s interest, rather than the AMC’s
A mutual fund is a company that combines, or pools, investors' money and, generally, purchases
stocks or bonds. Ideally, a fund's size and resultant efficiency, combined with experienced
management, provide advantages for investors that include diversification, expert stock and bond
selection, low cost, and convenience. In terms of legal structure, a mutual fund is a corporation
that receives preferential tax treatment under the U.S. Internal Revenue Code. The assets of a
mutual fund consist almost entirely of the securities it holds in its portfolio. The most common
type of mutual fund, called an open end fund, allows investors to buy and sell stock in it on an
ongoing basis
1.6 STRUCTURE OF INDIAN MUTUAL FUND INDUSTRY
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1.7 TYPES OF SCHEMES
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Mutual fund schemes may be classified on the basis of its structure and its investment
objective.
By Structure:
Open-ended Funds
An open-end fund is one that is available for subscription all through the year. These do not have
a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV")
related prices. The key feature of open-end schemes is liquidity.
Closed-ended Funds
A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years.
The fund is open for subscription only during a specified period. Investors can invest in the
scheme at the time of the initial public issue and thereafter they can buy or sell the units of the
scheme on the stock exchanges where they are listed. In order to provide an exit route to the
investors, some close-ended funds give an option of selling back the units to the Mutual Fund
through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one
of the two exit routes is provided to the investor.
Interval Funds
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Interval funds combine the features of open-ended and close-ended schemes. They are open for
sale or redemption during pre-determined intervals at NAV related prices.
By Investment Objective:
Growth Funds
The aim of growth funds is to provide capital appreciation over the medium to long- term. Such
schemes normally invest a majority of their corpus in equities. It has been proven that returns
from stocks, have outperformed most other kind of investments held over the long term. Growth
schemes are ideal for investors having a long-term outlook seeking growth over a period of time.
Income Funds
The aim of income funds is to provide regular and steady income to investors. Such schemes
generally invest in fixed income securities such as bonds, corporate debentures and Government
securities. Income Funds are ideal for capital stability and regular income.
Balanced Funds
The aim of balanced funds is to provide both growth and regular income. Such schemes
periodically distribute a part of their earning and invest both in equities and fixed income
securities in the proportion indicated in their offer documents. In a rising stock market, the NAV
of these schemes may not normally keep pace, or fall equally when the market falls. These are
ideal for investors looking for a combination of income and moderate growth.
Money Market Funds
The aim of money market funds is to provide easy liquidity, preservation of capital and moderate
income. These schemes generally invest in safer short-term instruments such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes
may fluctuate depending upon the interest rates prevailing in the market. These are ideal for
Corporate and individual investors as a means to park their surplus funds for short periods.
Load Funds
A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or
sell units in the fund, a commission will be payable. Typically entry and exit loads range from
1% to 2%. It could be worth paying the load, if the fund has a good performance history.
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No-Load Funds
A No-Load Fund is one that does not charge a commission for entry or exit. That is, no
commission is payable on purchase or sale of units in the fund. The advantage of a no load fund
is that the entire corpus is put to work.
Other Schemes:
Tax Saving Schemes
These schemes offer tax rebates to the investors under specific provisions of the Indian Income
Tax laws as the Government offers tax incentives for investment in specified avenues.
Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed
as deduction under Income Tax Act, 1961.
Special Schemes
• Industry Specific Schemes
Industry Specific Schemes invest only in the industries specified in the offer document. The
investment of these funds is limited to specific industries like InfoTech, FMCG, Pharmaceuticals
etc.
• Index Schemes
Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex
or the NSE 50.
• Sectoral Schemes
Sectoral Funds are those, which invest exclusively in a specified industry or a group of industries
or various segments such as 'A' Group shares or initial public offerings.
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1.8 MERITS & DEMERITS OF MUTUAL FUNDS
Merits of Mutual Fund
Professional Management
Mutual Funds provide the services of experienced and skilled professionals, backed by a
dedicated investment research team that analyses the performance and prospects of companies
and selects suitable investments to achieve the objectives of the scheme.
Diversification
Mutual Funds invest in a number of companies across a broad cross-section of industries
and sectors. This diversification reduces the risk because seldom do all stocks decline at the
same time and in the same proportion. You achieve this diversification through a Mutual Fund
with far less money than you can do on your own.
Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such
as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds
save your time and make investing easy and convenient.
Return Potential
Over a medium to long-term, Mutual Funds have the potential to provide a higher return
as they invest in a diversified basket of selected securities.
Low Costs
Mutual Funds are a relatively less expensive way to invest compared to directly investing
in the capital markets because the benefits of scale in brokerage, custodial and other fees
translate into lower costs for investors.
Liquidity
In open-end schemes, the investor gets the money back promptly at net asset value
related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock
exchange at the prevailing market price or the investor can avail of the facility of direct
repurchase at NAV related prices by the Mutual Fund.
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Transparency
One can get regular information on the value of his investment in addition to disclosure on the
specific investments made by his scheme, the proportion invested in each class of assets and the
fund manager's investment strategy and outlook.
Flexibility
Through features such as regular investment plans, regular withdrawal plans and dividend
reinvestment plans, you can systematically invest or withdraw funds according to your needs and
convenience.
Affordability
Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund
because of its large corpus allows even a small investor to take the benefit of its investment
strategy. Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
Well Regulated
All Mutual Funds are registered with SEBI and they function within the provisions of strict
regulations designed to protect the interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.
Demerits of Mutual Fund
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Professional Management
Many investors debate over whether or not the so-called professionals are any better than you or
I at picking stocks. Management is by no means infallible, and, even if the fund loses money, the
manager still takes his/her cut.
Dilution
It's possible to have too much diversification. Because funds have small holdings in so many
different companies, high returns from a few investments often don't make much difference on
the overall return. Dilution is also the result of a successful fund getting too big. When money
pours into funds that have had strong success, the manager often has trouble finding a good
investment for all the new money.
Entry and exit costs
Mutual funds are a victim of their own success. When a large body like a fund invests in shares,
the concentrated buying or selling often results in adverse price movements i.e. at the time of
buying, the fund ends up paying a higher price and while selling it realizes a lower price. This
problem is especially severe in emerging markets like India, where, excluding a few stocks, even
the stocks in the Sensex are not liquid, let alone stocks in the NSE 50 or the CRISIL 500. So,
there is simply no way that a fund can beat the Sensex or any other index, if it blindly invests in
the same stocks as those in the Sensex and in the same proportion. For obvious reasons, this
problem is even more severe for funds investing in small capitalization stocks. However, given
the large size of the debt market, excluding UTI, most debt funds do not face this problem.
Wait time before investment
It takes time for a mutual fund to invest money. Unfortunately, most mutual funds receive
money when markets are in a boom phase and investors are willing to try out mutual funds.
Since it is difficult to invest all funds in one day, there is some money waiting to be invested.
Further, there may be a time lag before investment opportunities are identified. This ensures that
the fund underperforms the index. For open-ended funds, there is the added problem of
perpetually keeping some money in liquid assets to meet redemptions. The problem of
impracticability of quick investments is likely to be reduced to some extent with the introduction
of index futures.
Fund management costs
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The costs of the fund management process are deducted from the fund. This includes marketing
and initial costs deducted at the time of entry itself, called "load". Then there is the annual asset
management fee and expenses, together called the expense ratio. Usually, the former is not
counted while measuring performance, while the latter is. A standard 2% expense ratio means
that, everything else being equal, the fund manager underperforms the benchmark index by an
equal amount.
Cost of churn
The portfolio of a fund does not remain constant. The extent to which the portfolio changes is a
function of the style of the individual fund manager i.e. whether he is a buy and hold type of
manager or one who aggressively churns the fund. It is also dependent on the volatility of the
fund size i.e. whether the fund constantly receives fresh subscriptions and redemptions. Such
portfolio changes have associated costs of brokerage, custody fees, registration fees etc. which
lowers the portfolio return commensurately.
Change of index composition
World over, the indices keep changing to reflect changing market conditions. There is an
inherent survivorship bias in this process, with the bad stocks weeded out and replaced by
emerging blue chips. This is a severe problem in India with the Sensex having been changed
twice in the last 5 years, with each change being quite substantial. Another reason for change
index composition is Mergers & Acquisitions. The weight ages of the shares of a particular
company in the index changes if it acquires a large company not a part of the index.
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1.9 MUTUAL FUND SCHEME BY INVESTMENT OBJECTIVES
Growth Funds
The objective of Growth Fund scheme is to provide capital appreciation over the medium
to long term. This type of scheme is an ideal scheme for the investors seeking capital
appreciation for a long period.
Income Funds:
The Income Fund schemes objective is to provide regular and steady income to investors.
Balanced Funds:
The objective of Balanced Fund schemes is to provide both growth and regular income to
investors.
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Money Market Funds
The objective of Money market funds is to provide easy liquidity, regular income and
preservation of income. Money market funds also come in two varieties, taxable and tax-free.
Taxable funds buy the best-yielding short-term corporate, agency, or government issues
available, while tax-free funds are limited to buying primarily municipal debt. Taxable funds
pay slightly higher income than tax-free funds, but you must pay tax on any distributions they
make. In either case, the rate a fund pays is roughly the same as bank money market accounts or
CDs.
Load Funds
A load fund is one that charges a commission for entry or exit. That is, each time you
buy or sell units in the fund, a commission is payable. Typically entry and exit loads range from
1% to 2%. It could be worth paying the load, if the fund has a good performance history.
No Load Funds
A No Load Fund is one that does not charge a commission for the entry or exit. That is,
no commission is payable on purchase or sale of units in the fund. The advantage of a no load
fund is that the entire corpus is put to work.
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OTHER FUNDS
Tax Saving Schemes

The objective of Tax Saving schemes is to offer tax rebates to the investors under
specific provisions of the Indian Income Tax Laws. Investment made under some
schemes is allowed as deduction u/s 88 of the Income Tax Act.
Industry specific Schemes
Industry specific schemes invest only in the industries specified in the offer document of
the schemes
Sectorial Schemes
The schemes invest particularly in a specified industries or initial public offering.
Index schemes
Such schemes link with the performance of BSE Sensex or NSE
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1.10 REGULATORY ASPECTS OF MUTUAL FUNDS
Schemes of a Mutual Fund

• The asset management company shall launch no scheme unless the trustees approve such
scheme and a copy of the offer document has been filed with the Board.
• Every mutual fund shall along with the offer document of each scheme pay filing fees.
• The offer document shall contain disclosures which are adequate in order to enable the
investors to make informed investment decision including the disclosure on maximum
investments proposed to be made by the scheme in the listed securities of the group
companies of the sponsor A close-ended scheme shall be fully redeemed at the end of the
maturity period. "Unless a majority of the unit holders otherwise decide for its rollover
by passing a resolution".
• The mutual fund and asset management company shall be liable to refund the application
money to the applicants,-
(i) If the mutual fund fails to receive the minimum subscription amount referred
to in clause (a) of sub-regulation (1);
(ii) If the moneys received from the applicants for units are in excess of
subscription as referred to in clause (b) of sub-regulation (1).
• The asset management company shall issue to the applicant whose application has been
accepted, unit certificates or a statement of accounts specifying the number of units
allotted to the applicant as soon as possible but not later than six weeks from the date of
closure of the initial subscription list and or from the date of receipt of the request from
the unit holders in any open ended scheme.
Rules Regarding Advertisement:
• The offer document and advertisement materials shall not be misleading or contain any
statement or opinion, which are incorrect or false.
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Investment Objectives and Valuation Policies:

• The price at which the units may be subscribed or sold and the price at which such units
may at any time be repurchased by the mutual fund shall be made available to the
investors.
General Obligations:
• Every asset management company for each scheme shall keep and maintain proper books
of accounts, records and documents, for each scheme so as to explain its transactions and
to disclose at any point of time the financial position of each scheme and in particular
give a true and fair view of the state of affairs of the fund and intimate to the Board the
place where such books of accounts, records and documents are maintained.
• The financial year for all the schemes shall end as of March 31 of each year. Every
mutual fund or the asset management company shall prepare in respect of each financial
year an annual report and annual statement of accounts of the schemes and the fund as
specified in Eleventh Schedule.
• Every mutual fund shall have the annual statement of accounts audited by an auditor who
is not in any way associated with the auditor of the asset management company.
Procedure for Action In Case Of Default:
• On and from the date of the suspension of the certificate or the approval, as the case may
be, the mutual fund, trustees or asset management company, shall cease to carry on any
activity as a mutual fund, trustee or asset management company, during the period of
suspension, and shall be subject to the directions of the Board with regard to any records,
documents, or securities that may be in its custody or control, relating to its activities as
mutual fund, trustees or asset management company.
Restrictions on Investments:
• A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments
issued by a single issuer, which are rated not below investment grade by a credit rating
agency authorized to carry out such activity under the Act. Such investment limit may be
extended to 20% of the NAV of the scheme with the prior approval of the Board of
Trustees and the Board of asset Management Company.
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• A mutual fund scheme shall not invest more than 10% of its NAV in unrated debt
instruments issued by a single issuer and the total investment in such instruments shall
not exceed 25% of the NAV of the scheme. All such investments shall be made with the
prior approval of the Board of Trustees and the Board of asset Management Company.
• No mutual fund under all its schemes should own more than ten per cent of any
company's paid up capital carrying voting rights.
• Such transfers are done at the prevailing market price for quoted instruments on spot
basis. The securities so transferred shall be in conformity with the investment objective
of the scheme to which such transfer has been made.
• A scheme may invest in another scheme under the same asset management company or
any other mutual fund without charging any fees, provided that aggregate interscheme
investment made by all schemes under the same management or in schemes under the
management of any other asset management company shall not exceed 5% of the net
asset value of the mutual fund.
• The initial issue expenses in respect of any scheme may not exceed six per cent of the
funds raised under that scheme.
• Every mutual fund shall buy and sell securities on the basis of deliveries and shall in all
cases of purchases, take delivery of relative securities and in all cases of sale, deliver the
securities and shall in no case put itself in a position whereby it has to make short sale or
carry forward transaction or engage in badla finance.
• Every mutual fund shall, get the securities purchased or transferred in the name of the
mutual fund on account of the concerned scheme, wherever investments are intended to
be of long-term nature.
• Pending deployment of funds of a scheme in securities in terms of investment objectives
of the scheme a mutual fund can invest the funds of the scheme in short term deposits of
scheduled commercial banks.
• No mutual fund scheme shall make any investment in;
i. Any unlisted security of an associate or group company of the
sponsor,or
ii. Any security issued by way of private placement by an associate or
group company of the sponsor; or The listed securities of group companies of the
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sponsor which is in excess of 30% of the net assets [of all the schemes of a
mutual fund]
• No mutual fund scheme shall invest more than 10 per cent of its NAV in the equity
shares or equity related instruments of any company. Provided that, the limit of 10 per
cent shall not be applicable for investments in index fund or sector or industry specific
scheme.
A mutual fund scheme shall not invest more than 5% of its NAV in the equity shares or
equity related investments in case of open-ended scheme and 10% of its NAV in case of close-
ended scheme.
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1.11 COMPARISONS OF MUTUAL FUND WITH OTHER

DEPOSITS
BANKS V/S MUTUAL FUNDS
Banks v/s Mutual Funds

BANKS MUTUAL FUNDS
Returns Low Better
Administrative High Low
exp.
Risk Low Moderate
Investment Less More
Options
Network High Penetration Low put improving
Liquidity At a cost Better
Quality of Not Transparent Transparent
Assets
Interest Min. bal. between 10th & 30th Everyday
Calculation of every month
Guarantee Max. Rs. 1Lakh on deposit None
SHARES V/S MUTUAL FUNDS

SHARES MUTUAL FUNDS
Know-how is needed Superficial know. Is sufficient
High cost involved Low Cost
Time needed one can sleep over
Professional Management.
INSURANCE VS MUTUAL FUNDS
Both these instruments are designed to serve different purposes and are not comparable.
A unit-linked plan from an insurance company is an insurance policy designed to pay a lump
sum on maturity or on death if earlier. Premium paid under these plans is eligible for tax
deduction under Section 88 of the Income Tax Act. On the other hand, mutual funds are
investment avenues to participate in the growth of financial markets and do not provide any tax
deduction (except ELSS
and pension funds).
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For a unit-linked insurance plan, providing life cover is the most important function;
returns are just an added benefit, which gets magnified, given the tax rebates. Though unit-linked
plans offer transparency in returns in terms of net asset value and flexibility in investment
options in debt, equity or mixes of both, these advantages remain secondary, whereas for a
mutual fund, the main objective is to provide returns.
Moreover, unit-linked plans are not as liquid as mutual funds. There is a lock-in of three
years. Even if one redeems after three years, you would be at a loss because of higher initial
administrative charges. For example, the upfront charges for the first two premium amounts are
as high as 20-27 per cent. Then there is an annual management fee of 0.8- 1.25 per cent and a
flat fee of Rs 15-20 per month. Finally, there is a deduction for risk cover. This goes towards
contribution to the sum assured or the life insurance cover, which is based on mortality rates as
calculated by actuaries. Though mutual funds too have entry and exit loads (maximum 2 per
cent) and expenses (maximum 2.5 per cent), these costs are lower than unit-linked plans.
COMPARISON AMONG DIFFERENT INVESTMENT AVENUES
INVESTMENT Real Busine Asset MF Shares RBI PPF NSC Post

AVENUES Estat ss Bonds Office
e
RETURNS V V DEP V V 8% 9.50 8% 8%
%
POST TAX V V - V V 5.60% 6- 5.60 5.60%
YIELD 6.5% %
INFLATION - - - - - - - - -
RRR V V - V V 0.40% 0.65 0.40 0.40%
% %
Pos RRR Pos Pos - Pos Pos - - - -
LIQUIDITY LOW LOW - HI HIG LOW LO LOW LOW
G H W
H
POST OFFICE SCHEMES

Just like banks, post offices in India have a wide network. Spread across the nation, they
offer financial assistance as well as serving the basic requirements of communication. Among all
saving options, Post office schemes have been offering the highest rates. Added to it is the fact
that the investments are safe with the department being a Government of India entity. So the two
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basic and most sought for features, those of return safety and quantum of returns were being
handsomely taken care of. Though certainly not the most efficient systems in terms of service
standards and liquidity, these have still managed to attract the attention of small, retail investors.
However, with the government announcing its intention of reducing the interest rates in small
savings options, this avenue is expected to lose some of the investors. Public Provident Funds act
as options to save for the post retirement period for most people and have been considered good
option largely due to the fact that returns were higher than most other options and also helped
people gain from tax benefits under various sections. This option too is likely to lose some of its
sheen on account of reduction in the rates offered. Post office savings consists of
National Savings Certificates: National Savings Certificates (NSC) is an assured return
scheme, armed with powerful tax rebates under Section 88 of the Income Tax Act, 1961. Interest
is payable at 8 per cent, compounded half-yearly for a duration of 6 years.
• National Savings Scheme: National Savings Scheme (NSS) offers an assured return and
tax rebates under Section 88 of the Income Tax Act, 1961. The rate of interest is 7.5 per
cent per annum, compounded annually.
• Kisan Vikas Patra: Kisan Vikas Patra (KVP) doubles your money in 8 years and 7
months with the advantage of premature withdrawal. KVP is sold through all Head Post
Offices and other authorized post offices throughout India. The rate of return is 8.41 per
cent, compounded annually.
• Monthly Income Scheme: The post-office monthly income scheme (MIS) provides for
monthly payment of interest income to investors. It is meant for investors who want to
invest a lump-sum amount initially and earn interest on a monthly basis for their
livelihood. The scheme is, therefore, a boon for retired persons. The post-office MIS
gives a return of 8 per cent plus a bonus of 10 per cent on maturity. However, this 10 per
cent bonus is not available in case of premature withdrawals.
• Recurring Deposit: A Post-Office Recurring Deposit Account (RDA) is akin to a

Recurring Deposit in a bank, where you invest a fixed amount on a monthly basis. The
deposit has a fixed tenure, and the scheme is a powerful tool for regular savings. As the
name says, the RDA is a systematic way of saving money. The scheme is meant for
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investors who want to deposit a fixed amount regularly, in order to get a tidy sum after
five years. If you invest Rs 10 every month, you will get back Rs 728.90 after 5 years.
Time Deposit: A Time Deposit is an investment option that pays annual interest rates
between 6.25 and 7.5 per cent, compounded quarterly, and is available through post-offices
across the country
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1.12 GROWTH IN MUTUAL FUNDS SECTOR
“Mutual funds are shuddering at the prospect of an economic recovery. But they have
enough time to consolidate their client base.”
The Smart Investor Team
Normally a recovery means good news for all, consumers, manufacturers and service
providers. But hold on. Mutual funds aren't very enthusiastic, though. Why? Because, the biggest
investors in the domestic mutual fund industry today are large corporate and banks.
These investors have put in more than 50 per cent of total assets of the industry. And, a
recovery means that corporates may pull out their money to invest in their core activities.
Similarly, a revival in credit demand on the back of a recovery means that banks may need to
pull out their investments from mutual funds to meet the demand.
That's perhaps why mutual funds are pulling such long faces at the prospect of a
recovery. What if the economy recovers and corporates go on a spending spree? Capacity
expansions, merger and acquisition activity and better credit demand would require corporate
and banks to cash their existing investments to plough back in their core business.
Obviously, there is a strong possibility of large scale redemptions. While fund companies
see this issue as a matter of concern, they are optimistic about guarding their current assets. Says
Ved Prakash Chaturvedi, chief executive officer
Tata TDW Mutual Fund, "Despite an economic recovery, the fund industry should be
able to retain and in fact, grow its assets."
Is an economic recovery underway? The outlook on the economy is pretty much positive
and economists are predicting a wide-ranging recovery led by an increase in domestic consumer
demand
According to the latest data released by the Central Statistical Organization (CSO), the
Indian economy grew 4.3 per cent in 2002-03. With the manufacturing and services sectors
growing at 6.0 per cent and 7.1 per cent respectively, the poor performance of the agriculture
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sector dragged down the overall growth. Growth in the agricultural sector declined 3.2 per cent
last fiscal. The growth in manufacturing industry was led by buoyant exports and a boost to
construction activity.
This year, again, the manufacturing sector is expected to grow at a faster clip. The overall
manufacturing outsourcing story should mean more business for Indian manufacturing
companies too. Construction is again going to be a key driver. So sectors like steel and cement
have already seen a quantum jump in demand and many loss making companies such as I spat,
Essar, and the Jindal group have turned profitable. Similarly, many other sectors such as
consumer durables and textiles are seeing demand-led growth. Many of these corporate houses
are thus focusing on the longer-term targets. Some sectors like steel are already talking of
capacity expansion and green field projects. Others like cement have been seeing consolidation.
However, as Sanjeev Bafna, senior vice-president
Corporate finance, Grasim Industries says "It will take 1-2 years for the Indian industry to start
committing funds into expansions."
But whenever it happens, will corporates queue up for redemptions? And secondly, will
banks and financial institutions, which have invested their surplus funds in mutual funds on the
back of poor credit off take in the last couple of years, divert their money into lending?
The latter, of course, is a definite possibility. Last year, lending behemoth IDBI was
among the biggest investors in mutual funds. Others such as ICICI bank and HDFC also figured
in the list of biggest investors.
While Reliance Industries was one of the largest investors in mutual funds, mutual fund sources
say that some of the other big investors are from the banking industry. For instance, both IDBI
and SIDBI are said to have a considerable exposure in rolling over surplus funds in mutual
funds. Other big players in the sector include the Finolex Group, ICICI Bank, Bank of India,
Central bank and LIC Housing Finance.
Clearly, a lot depends on the outlook for the economy. Any revival will result in an
increase in credit off take and thus, funds will have to be redirected from the market to industry.
But the probability of that happening in the near-term is bleak: there is a huge amount of
liquidity in the banking sector, and further rate cuts will only add to it.
But corporate money pulling out may not be that big a threat. Here is why. Companies
typically park their surplus cash in treasury instruments (liquid fund schemes). And, they deploy
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money considered surplus in a slightly longer horizon into medium term funds. Industry experts
feel that the economic recovery will have no impact on the flows into liquid funds.
As a matter of fact, improved cash flow for corporates will only increase the popularity
of liquid funds. Even more, they say that today financially healthy corporates will find it less
prudent to pull out money from investments like mutual funds to fund expansions because
borrowed funds are so cheap.
Also, capital expenditure is never lumped together but is spread over a period of time and
prudence requires a judicious mix of debt and equity depending on the project size, horizon of
returns, gestation period etc. Hence there will not be any sudden withdrawal of funds from the
market. Such expenditure is planned in advance and as result, a company cannot take the risk of
a sudden withdrawal of its investment.
Opportunity cost of money
To get a feel of this, look at the opportunity cost of money. Currently, companies have
witnessed around a 500-600 basis points reduction in interest costs on long-term debt from about
16 per cent-plus in 1998-99 to about 10 per cent now, and even lesser for top rated corporates,
which can raise money at around 5.5-6.0 per cent per annum. As a result, it is much more
attractive to fund investments by taking on additional debt while continuing to earning a higher
return from deploying internal cash into market instruments such as mutual funds.
Arbitrage between debt vs. funds
But the main reason that the companies prefer raising debt is two-fold. Firstly, debt is
available at historically low costs and secondly, tax considerations favor debt. These include a
tax benefit on the interest costs, a dividend distribution tax on dividend income and capital gains
tax on long-term capital gains. As a result, while effective cost of debt is less than 4 per cent, the
effective tax-adjusted return on mutual fund investment is around 5-6 per cent.
Grasim's Bafna says "the biggest factor that will determine an outflow of funds is the any
change in the tax status of dividends and capital gains tax on long-term capital gains". Currently,
dividends from mutual funds are tax-free in the hands of the investors except for a dividend
Distribution tax of 12.81 per cent. Long-term capital gains are taxed at 10.25 per cent with
indexation benefits, and at 20.5 per cent without indexation benefits.
The banking sector, with the considerable amount of liquidity in the system, has also been a
significant investor in mutual funds.
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For instance, as on March 31, 2003, HDFC had investments of around Rs 1500 crore in liquid
funds. According to MA Ravi Kumar, Regional Head-Global Markets, Stanch art Grind lays
"The corporate sector accounts for a reasonable chunk of the investments in mutual funds While
there may be some withdrawal of funds, an increase in economic activity will also increase the
surplus funds. Therefore, over a period of time, the cash surpluses will find their way back into
the market"
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2.1 HDFC GROWTH MUTUAL FUND
HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (HDFC)

HDFC was incorporated in 1977 as the first specialized Mortgage Company in India.
HDFC provides financial assistance to individuals, corporates and developers for the purchase or
construction of residential housing. It also provides property related services (e.g. property
identification, sales services and valuation), training and consultancy. Of these activities,
housing finance remains the dominant activity. HDFC has a client base of over 10 lac borrowers,
10 lac depositors, over 123,000 shareholders and 25,000 deposit agents, as at September 30,
2009.
HDFC had raised funds from international agencies such as the World Bank, IFC
(Washington), USAID, DEG, ADB and KfW, international syndicated loans, domestic term
loans from banks and insurance companies, bonds and deposits. HDFC has received the highest
rating for its bonds and deposits program for the fifteenth year in succession.
HDFC Asset Management Company Limited (AMC)
HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies
Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company
for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000. The registered office of
the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169, Backbay Reclamation,
Churchgate, Mumbai - 400 020. In terms of the Investment Management Agreement, the Trustee
has appointed the HDFC Asset Management Company Limited to manage the Mutual Fund. The
paid up capital of the AMC is Rs. 25.161 crore.
The present equity shareholding pattern of the AMC is as follows :
Particulars % of the paid up equity

capital
Housing Development Finance Corporation Limited 60
Standard Life Investments Limited 40
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Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a
review of its overall strategy, had decided to divest its Asset Management business in India. The
AMC had entered into an agreement with ZIC to acquire the said business, subject to necessary
regulatory approvals.
On obtaining the regulatory approvals, the following Schemes of Zurich India Mutual Fund have
migrated to HDFC Mutual Fund on June 19, 2003. These Schemes have been renamed as
follows:
Former Name New Name
Zurich India Equity Fund HDFC Equity Fund
Zurich India Prudence Fund HDFC Prudence Fund
Zurich India Capital Builder Fund HDFC Capital Builder Fund
Zurich India TaxSaver Fund HDFC TaxSaver
Zurich India Top 200 Fund HDFC Top 200 Fund
Zurich India High Interest Fund HDFC High Interest Fund
Zurich India Liquidity Fund HDFC Cash Management Fund
Zurich India Sovereign Gilt Fund HDFC Sovereign Gilt Fund*
*HDFC Sovereign Gilt Fund has been wound up in March 2006
The AMC is also managing 10 closed ended Schemes of the HDFC Mutual Fund viz.
HDFC Long Term Equity Fund, HDFC Mid-Cap Opportunities Fund, HDFC Infrastructure
Fund, HDFC Fixed Maturity Plans - Series V, HDFC Fixed Maturity Plans - Series VII, HDFC
Fixed Maturity Plans - Series VIII, HDFC Fixed Maturity Plans - Series IX, HDFC Fixed
Maturity Plans - Series X, HDFC Fixed Maturity Plans - Series XI and HDFC Fixed Maturity
Plans - Series XII.
The AMC is also providing portfolio management / advisory services and such activities are not
in conflict with the activities of the Mutual Fund. The AMC has renewed its registration from
SEBI vide Registration No. - PM / INP000000506 dated December 21, 2009 to act as a Portfolio
Manager under the SEBI (Portfolio Managers) Regulations, 1993. The Certificate of Registration
is valid from January 1, 2010 to December 31, 2012
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2.2 TATA GROWTH MUTUAL FUND
Backed by one of the most trusted and valued brands in India, Tata Mutual Fund has
earned the trust of lakhs of investors with its consistent performance and world-class service.
Tata Mutual Fund manages around Rs. 22,620.00 crores (average AUM for the month) as
on February 28, 2010 worth of assets across its varied offerings. Tata Mutual Fund offers an
investment option for everyone, whether you are a businessman or salaried professional, a retired
person or housewife, an aggressive investor or a conservative capital builder.
The Tata Asset Management philosophy is centred on seeking consistent, long-term
results. Tata Asset Management aims at overall excellence, within the framework of transparent
and rigorous risk controls.
We constantly benchmark our efforts against these tenets of performance:
Consistency : We strive to deliver consistent results through our value-based investing
methodology, keeping alive the credo of the late doyen of the Tata Group, Mr. J.R.D. Tata, that
money received from the people should go back to them several times over.
Flexibility : Tata Mutual Fund offers investors a broad range of managed investment products in
various asset classes and risk parameters, with operational flexibility to suit their varied
investment needs.
Stability: Our commitment to the highest quality of service and integrity is the foundation upon
which we build trust with our clients.
Service: We offer a wide range of services to assist investors have a fulfilling and rewarding
financial planning experience with us. We have designed our services keeping in mind the needs
of our investors, giving them a smooth and hassle-free financial planning process.
A Proud Pedigree
Tata Asset Management Ltd is a part of the Tata group, one of India's largest and most
respected industrial groups, renowned for its adherence to business ethics.
The Group has always believed in returning wealth to the society that it serves. Thus, nearly
two-thirds of the equity of Tata Sons, the Group's promoter company, is held by philanthropic
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trusts, which have created a host of national institutions in the natural sciences, medical care,
energy and the arts. The trusts also give substantial annual grants and endowments to deserving
individuals and institutions in the areas of education, healthcare and social uplift.
By combining ethical values with business acumen, globalisation with national interests and core
businesses with emerging ones, the Tata Group aims to be the largest and most respected global
brand from India. This way, it fulfills its long-standing commitment to improving the quality of
life of its stakeholders.
Leadership With Trust
Our purpose at the Tata Group is to improve the quality of life of the communities we
serve. We do this by attaining leadership positions in sectors of national economic significance,
to which the Group brings a unique set of capabilities. This requires us to grow aggressively in
focused areas of business.
Our heritage of returning to society what we earn evokes trust among consumers,
employees, shareholders and the community. It is an ongoing process, continuously enriched by
the formalisation of the high standards of behaviour that we expect from employees and
companies.
The Tata name is a unique asset, representing leadership with trust. Leveraging this asset to
enhance Group synergy and becoming globally competitive is the route to sustained growth and
long-term success.
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2.3 RELIANCE GROWTH MUTUAL FUND
Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Average
Assets Under Management (AAUM) of Rs. 1,15,753 Crores and an investor count of over 75
Lakh folios. (AAUM and investor count as of February 2010) AAUM
Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of
the fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio
of products to meet varying investor requirements and has presence in 159 cities across the
country. Reliance Mutual Fund constantly endeavors to launch innovative products and customer
service initiatives to increase value to investors. "Reliance Mutual Fund schemes are managed
by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital Limited,
which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being held by
minority shareholders."
Reliance Capital Ltd. is one of India’s leading and fastest growing private sector
financial services companies, and ranks among the top 3 private sector financial services and
banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset
management, life and general insurance, private equity and proprietary investments, stock
broking and other financial services.
About Reliance Mutual Fund
Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act,
1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor and Reliance Capital Trustee
Co. Limited (RCTCL), as the Trustee.
RMF has been registered with the Securities & Exchange Board of India (SEBI) vide
registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual
Fund has been changed to Reliance Mutual Fund effective 11th March 2004 vide SEBI's letter
no. IMD/PSP/4958/2004 date 11th March 2004. Reliance Mutual Fund was formed to launch
various schemes under which units are issued to the Public with a view to contribute to the
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capital market and to provide investors the opportunities to make investments in diversified
securities.
The main objectives of the Trust are :

To carry on the activity of a Mutual Fund as may be permitted at law and formulate and
devise various collective Schemes of savings and investments for people in India and abroad and
also ensure liquidity of investments for the Unit holders;
To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on
their savings and
To take such steps as may be necessary from time to time to realise the effects without
any limitation.
Reliance Mutual Fund – At a Glance

Reliance Mutual Fund is one of India’s leading Mutual Funds, with Average Assets
Under Management (AAUM) of Rs. Rs. 1,15,753 Crores (AAUM as of February 2010) (source:
www.amfiindia.com) and an investor count of over 75 Lakh folios.
*(75 lakh investor folios is calculated on the basis of live folios as on January 31, 2010
and includes investors across all the schemes of Reliance Mutual Fund and Presence in over 400
locations includes the Designated Investor Service Centres (DISCs) of RCAM and Registrar &
Transfer Agents , Offices and Resident Representatives of RCAM as on December 31, 2009)
Reliance Mutual Fund has over 14 years of extensive market experience, 35 schemes (as
on January 31, 2010) combined with a strong performance track record.
Vision & Mission Statement
Vision Statement
To be a globally respected wealth creator with an emphasis on customer care and a
culture of good corporate governance.
Mission Statement
To create and nurture a world-class, high performance environment aimed at delighting
our customers.
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2.4 SAHARA GROWTH MUTUAL FUND
The Mutual Fund Industry is one of the fastest growing sectors in India with an average
CAGR of 20% over the past five years. In this scenario, Sahara Mutual Funds is all set to
revolutionize the India AMC industry, with a mission to give every class of investors a profitable
and prudent investment option with a perfect balance of returns, safety and liquidity.
Investment options are:
Debt: Sahara Income Fund, Sahara Gilt Fund, Sahara Liquid Fund, And Sahara Short Term Plan.
Equity: Sahara Growth Fund, Sahara Tax Gain Fund.
Sahara India Pariwar’s success story began in 1978. Starting on a modest scale with a
capital of only Rs. 2000 (USD 43), the company has traversed a long way to become a
frontrunner in Indian entrepreneurship.
Today, Sahara India Pariwar is a major entity on the corporate scene having an asset base
of over Rs. 50,000 crores (USD 10.87 billion) and diversified business interests that include:
Public Deposit Mobilization, Infrastructure & Housing, Media & Entertainment, Aviation,
Consumer Products, Information Technology, Sundarbans Project, Sahara Hospital, Araria Jute
Project, Life Insurance, Mutual Funds, Housing Finance, Power Project, Computer
Manufacturing, Hotel and Caring Scheme.
SAHARA’S CORE COMMITMENTS – OUR STRENGTH
Emotion
Emotion is in Performance of genuine duties towards the loved ones primarily in their
benefit, from their point of view. EMOTION is THE KEY that generates the required energy and
enthusiasm for desired quality performance.
Discipline
The enthusiastic obedience of laws and orders, which are given by the rightful authority.
Duty
The enthusiastic obedience of laws and orders, which are given by our CONSCIENCE.
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No Discrimination
Never should we discriminate in any of our actions, reactions, attitudes, decisions,
conclusions, in any of our expressions while caring for the six health’s of other human beings,
namely physical, material, mental, emotional, social and professional health.
Quality
Results from honoring Rules, Regulations, Commitments, Values, Fairness, Performance
of Duties by honestly balancing one's own and others' reasonable point of view in the matters of
Material & Emotional aspects.
Quality is our essence and we, at Sahara India Pariwar, have always stressed on the
Qualitative aspect. Consequently in this run for quality, quantity has always pursued us. We look
forward to reaching the zenith and reaffirm our commitment to the process of sound nation-
building.
“We chase Quality,
Quantity chases us”
Give Respect
To definitely make others feel important and respected by giving sincere regard to others'
feelings, reasonable wishes & thoughts with an open and receptive mind and warmth.
Self-respect
To develop a sense of respect for oneself in others' mind, i.e. to generate genuine &
warm feelings for oneself among others on a continuous basis.
Truth
Means total transparency in action, reaction, attitude and all other expressions and the
conviction to follow the right course.
Collective Materialism
Means to progress and prosper together for collective sharing and caring and not
individually or for a select group.
Religion
There is a religion higher than religion itself - it is NATIONALITY. We may practice
our religions in the confines of our homes, but outside, we should be Indians and only Indians.
'Bharatiyata' or Nationalism thus becomes our supreme religion.
Absolute Honesty
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We firmly believe that our mind inside knows the truth and we should be absolutely honest to
our mind inside and accordingly our actions, reactions, directions, decisions and all our
expressions should be present in all human dealings.
2.5 ICICI PRUDENTIAL GROWTH MUTUAL FUND
ICICI PRUDENTIAL Asset Management Company enjoys the strong parentage of

Prudential plc, one of UK's largest players in the insurance & fund management sectors and
ICICI Bank, a well-known and trusted name in financial services in India. ICICI Prudential
Asset Management Company, in a span of just over eight years, has forged a position of
pre-eminence in the Indian Mutual Fund industry as one of the largest asset management
companies in the country with average assets under management of Rs. 80,555.07 Crore (as of
Feb 28, 2010). The Company manages a comprehensive range of schemes to meet the varying
investment needs of its investors spread across 230 cities in the country.
The SEBI (Mutual Funds) Regulations 1993 define a mutual fund (MF) as a fund
established in the form of a trust by a sponsor to raise monies by the Trustees through the sale of
units to the public under one or more schemes for investing in securities in accordance with
these regulations.
These regulations have since been replaced by the SEBI (Mutual Funds) Regulations,
1996. The structure indicated by the new regulations is indicated as under.
A mutual fund comprises four separate entities, namely sponsor, mutual fund trust, AMC
and custodian. The sponsor establishes the mutual fund and gets it registered with SEBI.
The mutual fund needs to be constituted in the form of a trust and the instrument of the
trust should be in the form of a deed registered under the provisions of the Indian Registration
Act, 1908.
The sponsor is required to contribute at least 40% of the minimum net worth (Rs. 10
crore) of the asset management company. The board of trustees manages the MF and the sponsor
executes the trust deeds in favour of the trustees. It is the job of the MF trustees to see that
schemes floated and managed by the AMC appointed by the trustees are in accordance with the
trust deed and SEBI guidelines.
Diversification
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Mutual funds invest in a broad range of securities. This limits investment risk by
reducing the effect of a possible decline in the value of any one security. Mutual fund unit-
holders can benefit from diversification techniques usually available only to investors wealthy
enough to buy significant positions in a wide variety of securities.
Low Cost
A mutual fund let's you participate in a diversified portfolio for as little as Rs.5,000/-, and
sometimes less. And with a no-load fund, you pay little or no sales charges to own them.
Convenience and Flexibility
You own just one security rather than many, yet enjoy the benefits of a diversified
portfolio and a wide range of services. Fund managers decide what securities to trade, collect the
interest payments and see that your dividends on portfolio securities are received and your rights
exercised. It also uses the services of a high quality custodian and registrar in order to make sure
that your convenience remains at the top of our mind.
Personal Service
One call puts you in touch with a specialist who can provide you with information you
can use to make your own investment choices. They will provide you personal assistance in
buying and selling your fund units, provide fund information and answer questions about your
account status. Our Customer service centers are at your service and our Marketing team would
be eager to hear your comments on our schemes.
Liquidity
In open-ended schemes, you can get your money back promptly at net asset value related prices
from the mutual fund itself.
Transparency
You get regular information on the value of your investment in addition to disclosure on the
specific investments made by the mutual fund scheme.
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3.1 RESEARCH OBJECTIVE

The present study has been undertaken with the object of examining, analyzing and
inferring the performance of the mutual funds, which addresses the following issues:
 To understand what type of mutual fund is most preferred by the existing customer
because performance of these funds is the criteria for customer selection.
 Which mutual fund is the best in its category?
 To understand the best way to attract customer investing in mutual fund by understanding
the factors responsible for making a mutual fund successful.
 To find out the reasons behind not investing in mutual fund and to find out the most
important attributes so as to keep the existing customer & to attract new customers.
 To understand which factors govern their choice of investment?
 Mutual funds scope and acceptance of mutual fund as means of investment as compared
to other investment.
3.2 RESEARCH DESIGN
• In Research Design collection of the data through Internet websites of the that related
Mutual Fund. Data collection also some of the collect through old project report of the
comparison of mutual fund
• Collection Of the Data different growth mutual fund schemes of the company and also
year wise collection as of the year 2005 to 2009
• Then after collection data of selected company wise and also year wise was calculation
of the growth Mutual fund’s NAV return of the percentage.
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• I needed Industry average return of NAV percentage for the comparison with Company
NAV return Average
3.3 RESEARCH LIMITATION

1) Time limit of the study is a one type of limitation of the study. Because I have taken
only five years time period from the year 2005 to 2009. This gives result of only five
year. So it is not make the clear picture. The trend of last five year may or may not
reflect the real position of the company.
2) This project has completed with the some data it just constitutes one part of
secondary data collection. There were limitations for primary data collection
because of confidentiality.
3) Also it was difficult to collect the data regarding the competitors and their
financial information. Industry figures were also difficult to get.
4) The Performance of Mutual Funds Invest are Subject to Market risk So no can give
guarantee of return
5) Return of Equity Mutual fund are depends upon equity market & there are so many
reason effect equity market.
3.4 RESEARCH SCOPE OF STUDY

In the Mutual fund is the most of the consideration to related Investors and distribution of
investing money into different stock market
In Different Mutual Fund company of different mutual fund schemes in the growth
mutual fund schemes to investors given opportunities for the invest in the growth sector.
And for that study’s related scope are:
 Different year wise comparison of NAV percentage of Company return
 Company return average comparisons with Industry return Average
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For Company Average return I used various Companies NAV return. I have taken also
the Industry average of the whole growth mutual fund average return. From that data I have
taken different company and year wise comparison NAV percentage of return.
3.5 PERFORMANCE EVALUATION PARAMETERS
An investor is always interested whether the fund in which he/she has invested is
performing well , competitively and has a bright prospect. For this he will always check the past
performance of the funds and then only invest his money. He is thus interested in the
management of the fund as a whole, but for academics purpose we go in-depth and instead of
just seeing the returns question as to whether the fund manager has done right through selective
buying and selling securities or was randomly picking a large chunk of securities and holding
them throughout the year would have been better.
A. NAV
One of the most popular ways of measuring managements performance is by comparing
the yields of the managed portfolio with that of the market or with a random portfolio.
NAVt + Dt --1
NAVt-1
Where:
NAVt : per share net asset value at the end of year t
Dt : the total of all distributions-both income and capital gains-per share during year
t
NAVt-1: per share net asset value at eh end of the previous year
Interpretation:
Return alone should not be considered as the basis of measurement of the performance of
a mutual fund scheme, it should also include the risk taken by the fund manager because
different funds will have different levels of risk attached to them.
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B. AVERAGE RETURN
Average return is obtained by taking the simple mean of the monthly stream of returns
generated which is then multiplied by 12 to express it on annual basis and is expressed in
percentage which reflects rate and direction of change in the investment during the given period
Rx = Rx1+Rx2+……….+Rxn * 12/no. of months

n
Understanding Volatility Measurements of Mutual Funds

When considering a fund's volatility, an investor may find it difficult to decide which
fund will provide the optimal risk-reward combination. Many websites provide various volatility
measures for mutual funds free of charge; however, it can be hard to know not only what the
figures mean but also how to read them. Furthermore, the relationship between these figures is
not always obvious. These are the four most common volatility measures applied in the type of
risk analysis based on modern portfolio theory.
C. STANDARD DEVIATION
A fund that has a consistent five-year return for example, would have a mean, or average
The fund will also exhibit a high standard deviation because each year the return of the fund
differs from the mean return. This fund is therefore more risky because it fluctuates widely
between negative and positive returns within a short period. A note to remember is that, because
volatility is only one indicator of the risk affecting a security, a stable past performance of a fund
is not necessarily a guarantee of future stability. Since unforeseen market factors can influence
volatility, a fund that this year has a standard deviation close or equal to zero may behave
differently in the following year. To determine how well a fund is maximizing the return
received for its volatility, you can compare the fund to another with a similar investment strategy
and similar returns. The fund with the lower standard deviation would be more optimal because
it is maximizing the return received for the amount of risk acquired. Consider the graph given on
the previous page. With the S&P 500 Fund B, the investor would be acquiring a larger amount
of volatility risk than necessary to achieve the same returns as Fund A. Fund A would provide
the investor with the optimal risk/return relationship.
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D. BETA
While standard deviation determines the volatility of a fund according to the disparity of
its returns over a period of time, beta, another useful statistical measure, determines the
volatility, or risk, of a fund in comparison to that of its index or benchmark. A fund with a beta
very close to 1 means the fund's performance closely matches the index or benchmark--a beta
greater than 1 indicates greater volatility than the overall market, and a beta less than 1 indicates
less volatility than the benchmark. If, for example, a fund has a beta of 1.05 in relation to the
S&P 500, the fund has been moving 5% more than the index. Therefore, if the S&P 500
increased 15%, the fund would be expected to increase 15.75%. On the other hand, a fund with a
beta of 2.4 would be expected to move 2.4 times more than its corresponding index. If the S&P
500 moved 10%, the fund would be expected to rise 24%, and, if the S&P 500 declined 10%, the
fund would be expected to lose 24%.Investors expecting the market to be bullish may choose
funds exhibiting high betas, which increase investors' chances of beating the market. If an
investor expects the market to be bearish in the near future, the funds that have betas less than 1
are a good choice because they would be expected to decline less in value than the index. For
example, if a fund had a beta of 0.5 and the S&P 500 declined 6%, the fund would be expected
to decline only 3%. Be aware of the fact that beta by itself is limited and can be skewed due to
factors of other than the market risk affecting the fund's volatility.
E. R-Squared (R2)
Formula:- (n∑Rxi Ryi - ∑Rxi ∑Ryi)2
[n∑(Rxi)2 – (∑Rxi)2 ][n∑(Ryi)2 – (∑Ryi)2]
R2 = R- Squared
n = Number of Observation
Rxi = Market excess Return
Ryi = Portfolio’s excess Return
The R-squared of a fund advises investors if the beta of a mutual fund is measured
against an appropriate benchmark. Measuring the correlation of a fund's movements to that of an
index, R-squared describes the level of association between the fund's volatility and market risk,
or more specifically, the degree to which a fund's volatility is a result of the day-to-day
fluctuations experienced by the overall market.
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R-squared values range between 0 and 100, where 0 represents the least correlation and 100
represents full correlation. If a fund's beta has an R-squared value that is close to 100, the beta of
the fund should be trusted. On the other hand, an R-squared value that is close to 0 indicates that
the beta is not particularly useful because the fund is being compared against an inappropriate
benchmark.
If, for example, a bond fund was judged against the S&P CNX Nifty, the R-squared value would
be very low. A bond index such as the Crisil Composite Bond Index would be a much more
appropriate benchmark for a bond fund, so the resulting R-squared value would be higher.
Obviously the risks apparent in the stock market are different than the risks associated with the
bond market. Therefore, if the beta for a bond were calculated using a stock index, the beta
would not be trustworthy.
An inappropriate benchmark will skew more than just beta. Alpha is calculated using beta, so if
the R-squared value of a fund is low, it is also wise not to trust the figure given for alpha. We'll
go through an example in the next section.
F. Alpha
Formula:- [(Sum of Y) – ((b) (Sum of X)] / n
n = Number of objectives
b = Beta
X = Rate of Return for the Market
Y = Rate of return for the fund
Up to this point, we have examined figures that measure risk posed by volatility, but how
do we measure the extra return rewarded to you for taking on risk posed by factors other than
market volatility? Enter alpha, which measures how much if any of this extra risk helped the
fund outperform its corresponding benchmark. Using beta, alpha's computation compares the
fund's performance to that of the benchmark's risk-adjusted returns and establishes if the fund's
returns outperformed the market's, given the same amount of risk.
For example, if a fund has an alpha of 1, it means that the fund outperformed the benchmark by
1%. Negative alphas are bad in that they indicate that the fund underperformed for the amount of
extra, fund-specific risk that the fund's investors undertook.
G. Sharpe Ratio
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In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is a
ratio of returns generated by the fund over and above risk free rate of return and the total risk
associated with it. According to Sharpe, it is the total risk of the fund that the investors are
concerned about. So, the model evaluates funds on the basis of reward per unit of total risk.
Sharpe Index = (Si)= (Ri-Rf) / Si

Ri= Average return an portfolio i
Rf= Risk free rate of return
Si = Standard deviation (Risk)of return of portfolio i
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4.1 HDFC GROWTH MUTUAL FUND
Current Stats & Profile

Latest NAV 72.964 (05/03/10)
52-Week High 75.101 (14/01/10)
52-Week Low 33.771 (09/03/09)
Fund Category Equity: Diversified
Type Open End
Launch Date August 2000
Risk Grade Below Average
Return Grade Above Average
Net Assets (Cr) 1,269.81 (28/02/10)
Benchmark Sensex
Trailing Returns
As on 05 Mar 2010 Fund Category
Year to Date -0.05 -0.65
1-Month 5.12 6.10
3-Month 0.83 1.37
1-Year 113.67 114.80
3-Year 19.79 13.05
5-Year 23.29 20.25
Return Since Launch 23.07 --
Returns upto 1 year are absolute and over 1 year are annualized
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Relative Performance (Fund Vs Category Average)
Returns and Risk Aggregates

Rating & Risk Modern Portfolio Stat Volatility Measures
Fund Rating R-Squared 0.94 Mean 20.07
Fund Risk Below Alpha 5.82 Standard 32.61
Grade Average Deviation
Fund Return Above Beta 0.89 Sharpe Ratio 0.42
Grade Average
Best and Worst Performance

Best (Period) Worst (Period
Month 30.48 (28/04/2009 - 28/05/2009) -30.77 (26/09/2008 - 27/10/2008)
Quarter 75.71 (09/03/2009 - 10/06/2009) -35.54 (02/09/2008 - 02/12/2008)
Year 144.95 (23/04/2003 - 22/04/2004) -51.22 (14/01/2008 - 13/01/2009)
Trailing Returns
As of Fund Return Category S&P CNX Nifty Sensex
05 Mar 2010 Return
Year-to-Date -0.05 -0.65 -2.16 -2.69
1-Week 3.85 4.00 3.38 3.44
1-Month 5.12 6.10 7.84 7.62
3-Month 0.83 1.37 -0.40 -0.63
1-Year 113.67 114.80 97.49 107.30
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2-Year 6.38 2.57 1.69 1.36
3-Year 19.79 13.05 12.47 11.03
5-Year 23.29 20.25 18.83 19.93
Return less than 1-year are absolute and over 1 year are annualized
Annual Returns
2009 2008 2007 2006 2005
Fund Return 75.26 -48.31 66.43 44.14 39.71
Rank In Category 148/214 33/193 50/162 37/145 75/100
Category Average 84.36 -55.27 59.56 34.93 46.83
S&P CNX Nifty 75.76 -51.79 54.77 39.83 36.34
Sensex 81.03 -52.45 47.15 46.70 42.33
Quarterly Returns
Q1 Q2 Q3 Q4
2009 -7.02 47.74 19.66 6.61
2008 -22.87 -13.96 1.99 -23.63
2007 -6.10 20.31 16.68 26.26
2006 22.77 -12.62 20.57 11.43
2005 0.53 5.50 23.07 7.03
2004 -5.42 -9.17 17.51 24.46
2003 -6.11 33.03 28.90 37.09
2002 18.27 1.08 -7.04 8.71
2001 -20.54 -4.42 -10.95 12.97
2000 -- -- -- -3.41
Fund Style
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Portfolio Characteristics As on 31/01/10

Average Mkt Cap (Rs Cr) 18,452.99
Market Capitalization % of Portfolio
Giant 35.46
Large 17.48
Mid 37.03
Small 9.52
Tiny --
Investment Valuation Stock Portfolio
Portfolio P/B Ratio 4.19
Portfolio P/E Ratio 20.40
Asset Allocation
As on 31/01/10 % Net Assets
Equity 98.39
Debt 0.76
Others 0.85
Sector Weightings
Financial 18.56
Energy 17.41
Engineering 11.85
Health Care 11.48
Services 9.52
FMCG 7.88
Chemicals 6.38
Construction 6.28
Technology 5.35
Automobile 1.58
Communication 1.11
Metals 0.99
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4.2 RELIANCE GROWTH MUTUAL FUND

Latest NAV 431.8443 (05/03/10)
52-Week High 442.8952 (18/01/10)
52-Week Low 183.3798 (09/03/09)
Type Open End
Launch Date October 1995
Risk Grade Average
Return Grade Above Average
Net Assets (Cr) 6,733.41 (28/02/10)
Benchmark BSE 100
Trailing Returns
Year to Date 1.05 -0.65
1-Month 6.60 6.10
3-Month 4.11 1.37
1-Year 133.78 114.80
3-Year 20.10 13.05
5-Year 28.20 20.25
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Returns upto 1 year are absolute and over 1 year are annualised.

Fund Risk Average Alpha 6.56 Standard 37.05
Grade Deviation
Fund Return Above Average Beta 1.01 Sharpe Ratio 0.46
Grade

Best (Period) Worst (Period)
Month 50.82 (03/12/1999 - 04/01/2000) -32.65 (24/09/2008 - 24/10/2008)
Quarter 86.37 (05/10/1999 - 04/01/2000) -44.99 (22/02/2000 - 23/05/2000)
Year 229.36 (04/01/1999 - 04/01/2000) -56.73 (13/03/2000 - 13/03/2001)
Trailing Returns
05 Mar 2010 Return
Year-to-Date 1.05 -0.65 -2.16 -2.69
1-Week 4.48 4.00 3.38 3.44
1-Month 6.60 6.10 7.84 7.62
3-Month 4.11 1.37 -0.40 -0.63
1-Year 133.78 114.80 97.49 107.30
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2-Year 9.98 2.57 1.69 1.36
3-Year 20.10 13.05 12.47 11.03
5-Year 28.20 20.25 18.83 19.93
Annual Returns
2009 2008 2007 2006 2005
Fund Return 97.40 -54.11 76.85 41.00 68.73
Rank In Category 51/214 87/193 25/162 53/145 6/100
S&P CNX Nifty 75.76 -51.79 54.77 39.83 36.34
Sensex 81.03 -52.45 47.15 46.70 42.33
Quarterly Returns
Q1 Q2 Q3 Q4
2009 -4.33 57.25 20.77 8.65
2008 -29.25 -9.60 -6.85 -22.97
2007 -2.70 18.46 13.13 35.62
2006 21.45 -13.16 17.68 13.60
2005 6.57 12.66 29.46 8.55
2004 -4.11 -7.61 27.21 26.50
2003 -8.06 36.56 39.98 45.47
2002 22.08 25.92 -9.75 12.26
2001 -19.67 1.65 -13.97 16.18
2000 -1.08 -27.35 -13.81 -1.87
1999 43.34 -5.27 35.72 61.70
1998 0.23 -8.25 10.64 -0.37
1997 9.81 14.39 4.19 4.03
1996 2.77 2.14 -12.18 0.21
Fund Style
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Giant 22.62
Large 16.83
Mid 44.35
Small 16.19
Tiny --
Asset Allocation
Equity 87.97
Debt 0.00
Others 12.03
Sector Weightings
Financial 12.05
Diversified 7.97
Energy 7.95
Health Care 7.83
Technology 6.35
Metals 5.80
Services 5.23
Chemicals 4.66
FMCG 4.45
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Engineering 3.17
Automobile 2.96
Textiles 1.76
Communication 1.08
4.3 TATA GROWTH MUTUAL FUND

Latest NAV 38.9901 (05/03/10)
52-Week High 41.3569 (14/01/10)
52-Week Low 16.8947 (09/03/09)
Type Open End
Launch Date June 1994
Risk Grade Above Average
Return Grade Below Average
Net Assets (Cr) 57.04 (28/02/10)
Benchmark Sensex
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Trailing Returns
1-Month 3.51 6.10
3-Month 0.33 1.37
1-Year 128.43 114.80
3-Year 9.98 13.05
5-Year 14.96 20.25

Fund Risk Grade Above Alpha -2.18 Standard 38.04
Average Deviation
Fund Return Grade Below Average Beta 1.01 Sharpe Ratio 0.22

Month 40.27 (11/05/2009 - 10/06/2009) -35.40 (24/09/2008 - 24/10/2008)
Quarter 88.84 (09/03/2009 - 10/06/2009) -44.49 (02/09/2008 - 02/12/2008)
Year 128.43 (05/03/2009 - 05/03/2010) -62.51 (14/01/2008 - 13/01/2009)
Trailing Returns
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05 Mar 2010 Return
Year-to-Date -1.11 -0.65 -2.16 -2.69
1-Week 4.66 4.00 3.38 3.44
1-Month 3.51 6.10 7.84 7.62
3-Month 0.33 1.37 -0.40 -0.63
1-Year 128.43 114.80 97.49 107.30
2-Year -1.06 2.57 1.69 1.36
3-Year 9.98 13.05 12.47 11.03
5-Year 14.96 20.25 18.83 19.93
Annual Returns
2009 2008 2007 2006 2005
Fund Return 91.65 -60.23 65.02 27.00 42.33
Rank In Category 71/214 156/193 53/162 106/145 59/100
S&P CNX Nifty 75.76 -51.79 54.77 39.83 36.34
Sensex 81.03 -52.45 47.15 46.70 42.33
Quarterly Returns
Q1 Q2 Q3 Q4
2009 -6.75 61.34 19.74 6.37
2008 -27.37 -14.19 -13.19 -26.49
2007 -1.87 18.95 9.00 29.70
2006 17.52 -16.11 11.41 15.62
2005 5.96 5.18 24.84 2.30
2004 -6.89 -11.35 29.99 20.82
2003 -1.35 16.43 27.59 43.73
2002 14.65 -1.44 -7.49 8.13
2001 -5.81 -5.31 -5.42 7.45
2000 19.49 0.33 -0.98 1.81
1999 9.52 1.28 13.64 14.00
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1998 4.26 -12.93 -1.30 -5.80
1997 2.23 1.31 2.80 -11.32
1996 -0.48 -3.50 -22.94 -4.07
Fund Style

Giant --
Large 15.87
Small 26.27
Tiny --
Asset Allocation
Equity 94.43
Debt 0.00
Others 5.57
Sector Weightings
Energy 16.01
Services 13.08
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Engineering 10.25
Technology 9.46
Health Care 8.39
Financial 6.80
Metals 6.59
FMCG 6.51
Diversified 6.24
Communication 5.66
Automobile 2.31
Chemicals 2.22
Construction 0.91
4.4 SAHARA GROWTH MUTUAL FUND

Latest NAV 75.2804 (05/03/10)
52-Week High 80.0759 (18/01/10)
52-Week Low 41.541 (09/03/09)
Type Open End
Launch Date August 2002
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Return Grade Average
Net Assets (Cr) 5.82 (28/02/10)
Benchmark S&P CNX Nifty
Trailing Returns
1-Month 4.28 6.10
3-Month -1.48 1.37
1-Year 79.56 114.80
3-Year 18.27 13.05
5-Year 23.23 20.25

Fund Risk Grade Below Alpha 5.07 Standard 31.07
Average Deviation
Fund Return Grade Average Beta 0.86 Sharpe Ratio 0.46

Month 29.44 (11/05/2009 - 10/06/2009) -27.16 (24/09/2008 - 24/10/2008)
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Quarte 65.43 (09/03/2009 - 10/06/2009) -30.25 (28/07/2008 - 27/10/2008)
r
Year 125.42 (23/04/2003 - 22/04/2004) -46.35 (14/01/2008 - 13/01/2009)
Trailing Returns
05 Mar 2010 Return
Year-to-Date -3.45 -0.65 -2.16 -2.69
1-Week 2.67 4.00 3.38 3.44
1-Month 4.28 6.10 7.84 7.62
3-Month -1.48 1.37 -0.40 -0.63
1-Year 79.56 114.80 97.49 107.30
2-Year 7.40 2.57 1.69 1.36
3-Year 18.27 13.05 12.47 11.03
5-Year 23.23 20.25 18.83 19.93
Annual Returns
2009 2008 2007 2006 2005
Fund Return 69.71 -43.15 60.32 42.32 39.06
Rank In Category 174/214 6/193 76/162 49/145 78/100
S&P CNX Nifty 75.76 -51.79 54.77 39.83 36.34
Sensex 81.03 -52.45 47.15 46.70 42.33
Quarterly Returns
Q1 Q2 Q3 Q4
2009 1.38 37.35 19.68 1.84
2008 -22.47 -14.59 3.30 -16.90
2007 -4.77 14.07 15.53 27.74
2006 21.20 -9.39 14.59 13.10
2005 -3.22 2.80 27.86 9.32
2004 -7.50 -9.08 17.40 21.75
2003 -6.06 16.43 31.95 39.04
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2002 -- -- -- 10.69
Fund Style

Giant 61.48
Large 23.60
Mid 7.32
Small 7.60
Tiny --
Asset Allocation
Equity 83.71
Debt 0.00
Others 16.29
Sector Weightings
Energy 21.28
Financial 19.71
Engineering 11.74
FMCG 8.02
Technology 5.65
Metals 4.37
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Services 3.16
Automobile 3.10
Health Care 2.45
Construction 2.37
Diversified 1.87
4.5 ICICI PRUDENTIAL GROWTH MUTUAL FUND

Latest NAV 121.16 (08/03/10)
52-Week High 123.89 (06/01/10)
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52-Week Low 63.32 (09/03/09)
Type Open End
Launch Date June 1998
Return Grade Average
Net Assets (Cr) 358.24 (28/02/10)
Benchmark S&P CNX Nifty
Trailing Returns
1-Month 5.90 4.67
3-Month 0.49 1.49
1-Year 88.20 116.72
3-Year 11.55 12.40
5-Year 20.87 20.28

Fund Risk Grade Below Average Alpha 0.48 Standard Deviation 29.72
Fund Return Grade Average Beta 0.83 Sharpe Ratio 0.31
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Month 41.90 (03/12/1999 - 04/01/2000) -33.75 (24/09/2008 - 24/10/2008)
Quarte 81.57 (19/11/1999 - 18/02/2000) -49.00 (22/02/2000 - 23/05/2000)
r
Year 231.74 (22/02/1999 - 22/02/2000) -52.88 (26/10/2007 - 27/10/2008)
Trailing Returns
08 Mar 2010 Return
Year-to-Date -1.50 -0.53 -1.91 -2.36
1-Week 3.59 2.45 1.68 1.67
1-Month 5.90 4.67 6.44 6.30
3-Month 0.49 1.49 -0.21 -0.42
1-Year 88.20 116.72 98.26 108.97
2-Year 7.59 4.38 3.40 3.32
3-Year 11.55 12.40 11.12 9.79
5-Year 20.87 20.28 18.75 19.86
Annual Returns
2009 2008 2007 2006 2005
Fund Return 74.61 -47.74 44.40 42.77 49.53
Rank In Category 151/214 24/193 141/162 44/145 40/100
S&P CNX Nifty 75.76 -51.79 54.77 39.83 36.34
Sensex 81.03 -52.45 47.15 46.70 42.33
Quarterly Returns
Q1 Q2 Q3 Q4
2009 3.53 34.92 18.27 5.69
2008 -23.43 -12.25 -2.14 -20.52
2007 -4.48 12.07 16.14 16.15
2006 23.78 -9.76 15.72 10.46
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2005 1.23 7.12 24.08 11.13
2004 -6.40 -15.43 16.40 23.01
2003 -9.08 23.81 26.98 36.18
2002 13.27 -3.10 -11.83 16.11
2001 -13.38 1.87 -16.72 17.68
2000 6.53 -25.38 -10.02 -6.89
1999 37.06 -3.43 44.85 50.29
1998 -- -- -- 1.72
Fund style

Giant 86.95
Large 13.05
Mid --
Small --
Tiny --
Asset Allocation
Equity 89.25
Debt 0.00
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Others 10.75
Sector Weightings
Energy 22.47
Financial 21.63
Technology 10.22
FMCG 6.99
Communication 5.99
Metals 5.73
Engineering 4.72
Health Care 4.12
Diversified 3.52
Automobile 3.07
Construction 0.80
4.6 Comparisons with Company Avg & Industry Avg Year 2009
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2009
Company Name Company Avg Industry Avg
HDFC 72.29 77.38
TATA 86.92 77.38
RELIANCE 93.49 77.38
SAHARA 67.26 77.38
ICICI PRU 70.82 77.38
Interpretation
In Year 2009 Company average compare to Industry average Return of the percentage of
the shown in the diagram which company had given higher return percentage and which is the
lower percentage of the company and calculation of the return of the NAV
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Industry Average is Shown of the return percentage is 77.38 as per the compare the
shown company average is the higher level of the return percentage of the company are the
Reliance Mutual Fund And Tata mutual Fund are the greater than the industry average of the
NAV return as the respectively 93.49 and 86.92
Lower return of the compare to the Industry average are that provided lower return of the
company average as the most lower return got is Sahara mutual Fund
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2008
HDFC -48.75 -53.61
TATA -60.97 -53.61
RELIANCE -54.6 -53.61
SAHARA -48.81 -53.61
ICICI PRU -45.71 -53.61
Interpretation
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In Year 2008 most global crisis so the show of the Industry average in the minus
category return level that time of Company Average also shown minus percentage of return in
year 2008 most negative point of return shown of the company are Tata Mutual Fund And
Reliance Mutual Fund as point shown are -60.97 and -54.6 and other company average better
performance compare to Industry Average as are HDFC Mutual Fund, Sahara Mutual Fund and
ICICI Prudential Mutual Fund as per respectively -48.75,-48.81 and -45.71
ICICI Prudential Mutual Fund is better performance compare to other Industry average
of percentage of return
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2007
HDFC 66.43 60.31
TATA 65.02 60.31
SAHARA 60.34 60.31
ICICI PRU 44.4 60.31
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Interpretation
In Year 2008 As per the graph It interpreted that Company average compare to Industry
Average than Reliance show the greatest performance compare to Industry average. Other two
company like HDFC and TATA also have good performance. Sahara shows the equal
performance compare to Industry average. Only ICICI Pru shows Negative performance.
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2006
HDFC 44.16 35.2
TATA 27.02 35.2
RELIANCE 41 35.2
SAHARA 42.33 35.2
ICICI PRU 42.77 35.2
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Interpretation
If we take consideration of year 2006 than the result is like that, four
company shows the higher performance compare to Industry average. Only TATA
mutual Fund is Less than the Industry Average. From the company which shows
the higher performance, HDFC mutual fund is the greater than the remain three.
Return of HDFC is 28% higher than Industry average, which is first one. second is
ICICI Pru which give 22% higher than industry average
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2005
HDFC 39.68 42.39
TATA 42.33 42.39
SAHARA 39.03 42.39
ICICI PRU 49.53 42.39
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Interpretation
Reliance is the great one in the year 2005 because only Reliance shows the 64% higher
return than the Industry average. The ICICI Pru is also the higher than Industry Average. while
other three are not satisfactorial performance.
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4.11 ALPHA RATIO

ALPHA RATIO
Company Name Alpha Ratio
HDFC 5.82
TATA -2.18
RELIANCE 6.56
SAHARA 5.07
ICICI PRU 0.48
Alpha Ratio = [(Sum of Y) – ((b) (Sum of X)] / n
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Interpretation
Alpha's computation compares the fund's performance to that of the benchmark's risk-
adjusted returns and establishes if the fund's returns outperformed the markets, given the same
amount of risk.
If a fund has an alpha of 1, it means that the fund outperformed the benchmark by 1%.
Negative alpha are bad in that they indicate that the fund underperformed for the amount of
extra, fund-specific risk that the fund's investors undertook.
As the Graph performance denoted of the out of perform is the higher Alpha ratio by the
Reliance Growth mutual fund is 6.56 And to the compare the Tata mutual fund shows negatives
performance is -2.18
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4.12 BETA RATIO
Company Name Beta Ratio

HDFC 0.89
TATA 1.01
RELIANCE 1.01
SAHARA 0.86
ICICI PRU 0.83
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Interpretation
A fund with a beta very close to 1 means the fund's performance closely matches the
index or benchmark--a beta greater than 1 indicates greater volatility than the overall market, and
a beta less than 1 indicates less volatility than the benchmark.
As per the graph performance the Beta greater than 1indicates of TATA mutual fund and
Reliance mutual fund greater than 1 as shown value is 1.01 and other company lower than 1
indicates in most of the lower value of ICICI Pru mutual Fund shown value is 0.83.
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4.13 R- SQUARED RATIO
Company Name R-Squared Ratio

HDFC 0.94
TATA 0.88
RELIANCE 0.93
SAHARA 0.97
ICICI PRU 0.99
R2 = (n∑ Rxi Ryi - ∑ Rxi ∑Ryi)2

[n∑(Rxi)2 – (∑Rxi)2][n∑(Ryi)2 – (∑Ryi)2]
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Interpretation
The R-squared of a fund advises investors if the beta of a mutual fund is measured
against an appropriate benchmark. Measuring the correlation of a fund's movements to that of an
index, R-squared describes the level of association between the fund's volatility and market risk,
or more specifically, the degree to which a fund's volatility is a result of the day-to-day
fluctuations experienced by the overall market.
As per the diagram performance shown of R- Squared Ratio is the indicates the ICICI
mutual fund higher ratio point indicates as a 0.99 compare the lower R –Squared Ratio is Tata
mutual fund is as 0.88.
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4.14 SHARPE RATIO
SHARPE RATIO
Company Name Sharpe
Ratio
HDFC 0.42
TATA 0.22
RELIANCE 0.46
SAHARA 0.46
ICICI PRU 0.31
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Sharpe Ratio = (Ri- Rf) / Si
Interpretation
The Sharpe Ratio of the fund exhibiting the highest Sharpe ratio will also attain the
highest average return when combined with a risk free asset for any level of risk In latest year of
period during the Sharpe ratio of the high level denoted by two company is that Reliance mutual
fund and Sahara mutual fund is that 0.46 and that period of the time less level of the Sharpe
Ratio by the company is shown that 0.22 point Sharpe Ratio
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P/B RATIO
Company Name P/B Ratio
HDFC 4.19
TATA 3.74
RELIANCE 3.78
SAHARA 4.71
ICICI PRU 4.54
4.15 P/B RATIO
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P/B Ratio = ROE(1+g) (Payout ratio)

k-g
Interpretation
In the current year the price-to-book-value ratio indicates that the market value and book
value are identical; a ratio of greater than one would mean that the firm has added value, and
vice versa for a smaller-than-one ratio.
All of the company more that the P/B Ratio as the shown of the graph level highest level
indicate P/B Ratio is by Sahara Mutual fund And second of the ICICI Pru mutual fund.
The Lowest P/B ratio by the indicates Tata mutual fund so that is the market value less
compare to other Industry
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P/E RATIO
Company Name P/E Ratio
HDFC 20.4
TATA 17.08
RELIANCE 24.22
SAHARA 24.43
ICICI PRU 26.05
4.16 P/E RATIO
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P/E Ratio = (1+g)(Payout Ratio)

k-g
Interpretation
In this model, the PE ratio for a high growth firm is a function of growth, risk and
payout, exactly the same variables that it was a function of for the stable growth firm. In the P/E
Ratio the higher than high growth firm ,higher risk firm has lower reinvestment compare lower
P/E ratio lower growth firm, lower risk firm and high reinvestment on the firm needed
ICICI Pru high P/E ratio indicates compare to other company second highest P/E ratio
company Sahara mutual fund and Reliance mutual fund also higher to other company lower P/E
Ratio by the company Tata mutual fund.
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ANOVA ANALYSIS
HYPOTHESIS
Ho (Null Hypothesis)
There is not any significant difference in percentage of return value.
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H1 (Alternate Hypothesis)
There is a significant difference in percentage of return value.
HDFC TATA RELIANCE SAHARA ICICI PRU

2009 72.29 86.92 93.49 67.26 70.82
2008 -48.75 -60.97 -54.6 -43.81 -45.71
2007 66.43 65.02 76.85 60.34 44.4
2006 44.16 27.02 41.00 42.33 42.77
2005 39.68 42.33 68.73 39.03 49.53
ANOVA TABLE
Source of Sum of Degrees of Mean squares F value Table value

variation squares freedom F (4,20)
Between 601.682/4
601.682 (5-1) = 4
samples =150.420
52310.98/20 0.05751 2.87
Within samples 52310.98 (25-5) =20
=2615.54
Total 52912.67 (25-1) = 24
Interpretation
Here the calculated value is lower than table value of ‘F’ at 5% levels of significance. It
means the null hypothesis is accepted and alternate hypothesis is rejected. It means that there is
not significance difference in percentage return of the during period of study.
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FINDINGS
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 Comparison Among the different company like HDFC Mutual fund, Reliance Mutual
Fund, TATA Mutual Fund, Sahara Mutual Fund, ICICI Prudential Mutual Fund. I found
that no single company can perform well. All are perform averagely in different area.
 If we take comparison of different companies return with Industry average return than
Reliance mutual fund perform well as compare to other companies. Reliance mutual fund
is greater than Industry average return in all year while other companies have fluctuated
trend.
 During year 2008 all the company was shows negative performance. Because of
economic crises. Globally investors was making in cash crisis so the stock market highly
decreases
 By creating the Anova test I found that there is no any significant difference in Return of
selected company.
 You will not get fabulous returns overnight from equity funds or even income funds.
Both require time to fetch decent returns, and you need to be patient.
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CONCLUSION
 After the overall research of my project I would like to conclude that mutual fund is the
best alternative to investing the money, rather than investing in a particular stock.
 Generally investing in mutual fund is the safe way of investment because it give a better
result during the time period of 2005-2009 which is the my sample time period
 Investing in Mutual Funds in particularly growth Schemes mutual fund invest investor’s
fund in different types of growth sectors
 To sum up, mutual funds offer you a large menu of choices. Pick a fund based on how
much risk you can digest and how long you can wait for returns
 Mutual funds are a method for investors to diversify risk and to benefit from professional
money management. The fund manager operates within those boundaries and is a critical
to achieving strong results within those boundaries.
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BIBLIOGRAPHY
Books:-
 C.R. Kothari ,“Research Methodology” –2nd Edition published by NEW AGE
INTERNATIONAL PUBLISHERS, 2004
 Ajai S. Gaur & Sanjaya S. Gaur, “Statistical Methods for Practice and Research”,
published by TEJESHWAR SINGH FOR RESPONSE BOOKS,2009
Websites
 www.amfiindia.com
 www.yahoofinance.com
 www.mutualfundindia.com
 www.valueresearchonline.com
 www.njindia.com
 www.capitalmarket.com
 www.bseindia.com
 www.hdfcmutualfund.com
 www.tatamutualfund.com
 www.reliancemf.com
 www.saharamutualfund.com
 www.ICICIprumutualfund.com
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SELECTED MUTUAL FUND TARUN B PATEL MO:-

1.1 INTRODUCTION OF MUTUAL FUND

1.2 HISTORY OF MUTUAL FUNDS IN INDIA

Phase I (Monopoly of UTI) 1964-87:

Phase II (Public Sector Competition) 1987-1992

Phase III (Entry of Private Sector Fund) 1993-2003:

Phase IV (Since February 2003):

1.3 THE DEFINITION OF MUTUAL FUND

1.4 FLOW CHART OF MUTUAL FUND

1.5 ORGANISATION STRUCTURE OF MUTUAL FUND

1.6 STRUCTURE OF INDIAN MUTUAL FUND INDUSTRY

1.7 TYPES OF SCHEMES

1.8 MERITS & DEMERITS OF MUTUAL FUNDS

Merits of Mutual Fund

Demerits of Mutual Fund

1.9 MUTUAL FUND SCHEME BY INVESTMENT OBJECTIVES

Tax Saving Schemes

1.10 REGULATORY ASPECTS OF MUTUAL FUNDS

Schemes of a Mutual Fund

Investment Objectives and Valuation Policies:

1.11 COMPARISONS OF MUTUAL FUND WITH OTHER

BANKS V/S MUTUAL FUNDS

Banks v/s Mutual Funds

SHARES V/S MUTUAL FUNDS

INSURANCE VS MUTUAL FUNDS

COMPARISON AMONG DIFFERENT INVESTMENT AVENUES

INVESTMENT Real Busine Asset MF Shares RBI PPF NSC Post

POST OFFICE SCHEMES

• Recurring Deposit: A Post-Office Recurring Deposit Account (RDA) is akin to a

1.12 GROWTH IN MUTUAL FUNDS SECTOR

2.1 HDFC GROWTH MUTUAL FUND

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (HDFC)

Particulars % of the paid up equity

2.2 TATA GROWTH MUTUAL FUND

2.3 RELIANCE GROWTH MUTUAL FUND

The main objectives of the Trust are :

Reliance Mutual Fund – At a Glance

2.4 SAHARA GROWTH MUTUAL FUND

2.5 ICICI PRUDENTIAL GROWTH MUTUAL FUND

ICICI PRUDENTIAL Asset Management Company enjoys the strong parentage of

3.1 RESEARCH OBJECTIVE

3.2 RESEARCH DESIGN

3.3 RESEARCH LIMITATION

3.4 RESEARCH SCOPE OF STUDY

3.5 PERFORMANCE EVALUATION PARAMETERS

Rx = Rx1+Rx2+……….+Rxn * 12/no. of months

Understanding Volatility Measurements of Mutual Funds

Sharpe Index = (Si)= (Ri-Rf) / Si

4.1 HDFC GROWTH MUTUAL FUND

Current Stats & Profile

Returns and Risk Aggregates

Best and Worst Performance

Portfolio Characteristics As on 31/01/10

4.2 RELIANCE GROWTH MUTUAL FUND

Current Stats & Profile

Relative Performance (Fund Vs Category Average)

Returns and Risk Aggregates

Best and Worst Performance

Portfolio Characteristics As on 31/01/10

4.3 TATA GROWTH MUTUAL FUND

Current Stats & Profile

Relative Performance (Fund Vs Category Average)

Returns and Risk Aggregates

Best and Worst Performance