CONTENTS

TOPICS

Page No
Acknowledgement Executive summary PART II Introduction of utual !und utual !und "-1" 1"-2$ 21 PART III -om+arison of .e&t !und -om+arison of /i0uid !und PART I2 *3%T A)A/4*I* %! T5E -% PA)4 RE-% E).ATI%) 11 16 18 1:-62 22-"1 "2-1" PART I 1 2-4

Introduction of #irla

%&'ectives()eed(*co+e of t,e +ro'ect

#I#/I%7RAP54 7/%**AR4 9*E.

ACKNOWLEDGEMENT

3ould like to avail t,is o++ortunity of ex+ress my sincere and ,eartfelt gratitude to all t,ose w,o ,ave lended me a ,el+ing ,and; directly of indirectly in t,e com+letion of my summer +ro'ect<

!irstly I want to +ay my regards to ----------------- ,ead of #irla utual !und; .el,i %ffice; w,o allowed me to do my summer +ro'ect in #irla utual fund and ,el+ed me in my +ro'ect<

*econd; I want to give my sincere t,anks to all t,e em+loyee of #irla utual !und and s< Tammnna of BSDL for t,eir valua&le

su++ort in +re+aring t,is +ro'ect< T,ird; I want to t,anks Ms. Rajul Kothari w,o leaded me ,er ,el+ing ,and at every ste+ during my +ro'ect< /ast &ut not t,e least my s+ecial and sincere t,anks to my faculty guide Mr. Subrama iam w,o ,as ,el+ed me wit, ,is valua&le advises and guided me in all t,at was needed for t,e com+letion of my +ro'ect< 3it, due acknowledgement to all my friends and will wis,es; w,ose countdown &e a 5erculean task to +resent ,ere ,ave &een a constant source of ins+iration and encouragement<

E!EC"TI#E S"MMER$ O% T&E PRO'ECT T,e +ro'ect was done on .el,i< #irla field of utual funds in #irla utual !und; )ew

utual fund is one of t,e first com+any to enter in t,e

utual !unds< It is a 'oint venture &etween t,e Aditya #irla

7rou+=; one of t,e foremost Industrial 5ouses and *un life Assurance -om+any of -anada; a leading financial service

organisation<

T,e tern mutual fund itself gives its meaning< It means t,e fund; w,ic, is collected and invested mutually or collectively< It acts as investment conduit; w,ic, +ools t,e savings of t,e community and invests large funds in a fairly large and well-diversified +ortfolio of sound investments< In India +resently >1 mutual funds are working< It includes +u&lic; +rivate and foreign com+anies< Trusts Asset management com+any -ustodian *+onsor utual funds can &e classified on t,e +arameter of investment o&'ective in four main cetegories< T,ese categories are E0uity funds .e&t(Income funds #alanced funs /i0uid funds( PRO'ECT COMPARISION DEBT AND LI("ID %"NDS ON T&E BASIS O% RISK AND RET"RN) oney market funds

T,e com+arison was done among all t,e +arameters undertaken of very mutual fund individually as well as toget,er< MET&ODOLOG$ "SED) T,e met,odology used for t,e com+arison was calculation of a&solute rolling return ?)ew )A2-%ld )A2(%ld )A2@A1$$ -alculation of average maturity -alculation of t,e average *um total(total num&er GRAP&S "SED /ine gra+, 2-axis line column gra+, I)-% E !9).B T,e analysis of t,e result s,ows t,at ,ig,er t,e +ercentage investment in government security ,ig,er is t,e average maturity< T,e only exce+tion among t,ese mutual funds is Alliance w,ose +ercentage investment in 7-*ec is on an average 26<:2C and t,e average maturity is 1<81 years< It mig,t &e &ecause of t,e investment in s,ort term 7-sec<

GENERAL SCENARIO W&IC& A%%ECTED T&E M"T"AL %"ND IND"STR$) T,e &udget of ::-$$ came as a &lessing and infused fres, lease of life in de&t(income fund< In Duly 2$$$ t,e interest rates saw a rising trend &ecause of t,e following factorsB Tig,t money +olicy followed &y t,e R#I to +re-em+t t,e s+eculative attack on t,e ru+ee< -oncern over slowly &ut steadily rising inflation< Im+act of rising oil +rices on trade deficit; oil +ool account deficit and fiscal deficit< *low down in &ank de+osit growt, and +ick u+ in +rivate sector credit creating +ressure on li0uidity in t,e &anking system< .elay in divestment< +rivatiEation of P*9s resulting in a ,ig,er &orrowing +rogram &y t,e government < T,e +eriod of *e+tem&er saw t,e lowering of international oil +rices and significantly ,ig,er tax collection in t,e first ,alf of 2$$$-2$$1< !rom t,is +eriod utual fund saw a rise in t,e +ercentage

investment in t,e 7$*ec and increase in t,e average +ortfolio maturity< T,e increase in t,e maturity +rofile ,el+ed in im+roving t,e +erformance of t,e utual funds< T,e union &udget 2$$1 also utual !und industry< It decreased t,e

gave tax +rovisions for t,e

dividend distri&ution tax to 1$<2C from 22<4C for interest rate was

decreased &y 1<"C t,us t,e reduced interest rate and low levels of taxation on utualF fund dividends for t,e mix t,at ,as made de&t

sc,emes more attractive on a relative &asis to ot,er saving instruments< T,e com+arison &etween +ercentage investment in 7-*ec :$ days a&solute rolling return s,ows t,at even of #irla utual fund

investing less +ercentage in 7-sec; its +erformance is &etter t,an many ot,er utual funds< !or ex< Guric, utual fund invested

a++roximately :2C more in 7-*ec &ut its returns are $<"C less t,an t,e #irla mutual fund< It s,ows t,at t,e #irla &etter managed t,an ot,er Tem+leton etc< LI("ID %"ND) T,e duration of com+arison was ,alf yearly i<e< from )ov 2$$$-A+r 2$$1< T,ese funds were com+ared on t,e +arameters as suc, >$ days a&solute rolling returns< Average maturity *iEe of t,e fund< /i0uid funds are on of t,e +refered avenues of t,e invstors< T,ey are ,ig,ly li0uid; s,ort term income funds t,at invests in money market instruments w,ic, offer a ,ig, degree of safety as well as 0uick maturity< T,ere is also no T.* for cas, funds at source< As well as cas, funds do not c,ange any exit load w,en one redeems ones funds< oreover cas, fund announces weekly dividends; w,ic, utual fund is a,indra<

utual !unds like Hotak

mean t,at one does not loose out w,en on wit,draws in +art or in full<

T,e average maturity if /i0uid funds is usually low &ecause of investment in cas, and call money< T,is is t,e reason for very low average maturity of .*P /< 5owever t,e +ercentage investment in cas, and call money of #irla cas, +lus is 0uite low< As suc, its average maturity is t,e ,ig,est among all t,e mutual funds com+ared< INTROD"CTION M"T"AL %"ND CONCEPT) A mutual fund is a s+ecial ty+e of investment w,ic, acts as investment conduit< It collects or +ools t,e savings of t,e community and invests large funds in a fairly mutual fund signifies t,at ,t &enfits of investments< T,e word mutual in a mutual fund signifies t,at t,e &enefits of investment accure +rorate to all t,e investors in +re+aration to t,eir investment< It em+loys

+rofessionally 0ualified and well ex+erienced investment consultants and fund managers wit, t,e o&'ect of market +roviding t,e &enefits of diversified +ortfolios and ex+ert fund management to large num&er of +ersons<; +articularly small investors< T,e a&ove

investment institutions are known as unit or investment trusts in t,e 9<H and as A utual fund in t,e 9<*<A<

utual fund is a trust t,at +ools t,e savings of a num&er of

investors w,o s,are a common financial goal< T,e money t,us

collected in ca+ital market instruments suc, as s,ares; de&entures and ot,er securities< T,e income earned t,roug, t,ese investments and t,e ca+ital a++reciation realised are s,ared &y its unit ,olders in +re+aration to t,e num&er of units owned &y t,em< T,us a utual fund is t,e most suita&le investment for t,e common man as it offers as o++ortunity to invest in a diversified; +rofessionally managed &asket of securities at a relatively low cost< ORGANISATION STR"CT"RE O% M"T"AL %"NDS T,e organisation structure of entitiesB utual fund involves t,e following

Investors

Income (.ividend( a++reciation

utual !und !low -,art

Professional anager

*tock arket &istor* o+ " it a , Mutual %u , i

I ,ia)

!inancial association of India and c,ina was t,e !irst Investment trust formed in India in 1:1:< 5owever t,e growt, of Investment trust &usiness started only after 1:>$< T,e need for t,e

esta&lis,ment of 9nit trust ty+e of institution was felt in 1:>1 &y

t,e Indian -entral &anking In0uiry -ommittee< T,e committee o&served in its re+ort; t,at; I*ince an immeasura&le &enefit to India is &ound to grow from t,e esta&lis,ment and in t,e working of 9nit Trust and t,e assistance w,ic, t,ey will give to t,e investor in t,e creation of intermediate securities w,ic, to do not exist; now in +roviding a c,annel for

investment in industrial and ot,er field; w,ere t,e +rimary investor would &e too scared or too ignorant<J As o+ined &y t,e committee; 9nit trust ,ave not &een formed; &ut t,e investment trust ,ave &een esta&lis,ed< In 1:>> Industrial investment trust was esta&lis,ed +rem -,and Royc,and at #om&ay< .uring world war II and afterwards; t,e growt, of investment trusts of com+anies gained momentum< T,ese trusts were formed under t,e -om+anies act< T,ese organisation +rovided as o++ortunity for greater diversification of investment and t,e risk was minimiEed &ecause of vigilance of t,e savings and savings of small investors< T,e committee on !inance for +rivate sector in India ?1:"4@ +o+ularly called *,roff -ommittee; reiterated t,e desira&ility of introducing 9nit trusts in t,e Indian ca+ital market< !or mo&iliEation of small savings; it felt; unit trust are suita&le< T,erefore; t,e committee suggested introduction of 9nit Trust in &ot, +u&lic and +rivate sectors<

T,e recommendation of *,roff committee and t,e criticism on Investment trusts &y R#I stressed t,e need for alternative to Investment trusts< In 1:1>; t,e t,en finance minister *,ri< T< T< Hris,nanac,ary ,ad moved a &ill on t,e 9TI< 9TI was formed according to 9TI act 1:1>; and launc,ed its I o+en$ended sc,eme IInit *c,eme14J in Dune 1:14< !rom 1:14 to 1:81; 9TI ,ad launc,ed 8 o+en ended and II closed ended sc,emes< In 1:8"-81 t,e Indian stock market witnessed a &oom w,ic, attracted a large num&er of small

investors< 5owever; t,is &oom +roved to &e s,ort-lived; and many com+anies w,ic, mo&iliEed ,uge resources from t,e small investor disa++eared from t,e marketF t,is made t,e investors to feel disgruntled; and &oug,t in fore t,e lack of +rotection to t,em in t,e stock market< T,e o&serves of t,e ca+ital market felt t,at t,ere was a need for an institution w,ic, mo&iliEes savings from t,e ,ouse ,old sector and invest mainly in stock markets and +rovide t,e &enefits of diversification to t,e investors< To fill t,is ga+ in 1:81; t,e t,en finance minister s,ri 2is,wanat, Prata+ *ing,; ,as o+ined t,at 9TI s,ould float a utual !und

sc,eme to +rovide a c,annel for t,e small investors to +artici+ate in t,e growt, of ca+ital market< In *e+tem&er 1:81; 9TI ,ad launc,ed t,e nations I close K ended utual fund sc,eme L aster *,areM

w,ic, em+,asiEed more on investment in e0uity s,ares; in Dune 1:86; t,e 7overnment of India issued a notification +ermitting

commercial &anks to do

utual fund &usiness; and in Duly 1:86; R#I utual !und<

worked out t,e modalities for t,e esta&lis,ment of GROWT& O% M"T"AL %"ND T,e Indian

utual fund ,as +assed t,roug, t,ree +,ases< T,e first

+,ase was &etween 1:14 and 1:86 and t,e only +layer was t,e 9nit trust of India; w,ic, ,ad a total asset of Rs< 1;6$$(- crores at t,e end of 1:88< T,e second +,ase is &etween 1:86 and 1::> during w,ic, +eriod 8 funds were esta&lis,ed ?1 &y &anks and one eac, &y /I- and 7I-@< T,e total assets under management ,ad grown to Rs< 11<$28(- crores at t,e end of 1::4 and t,e num&er of sc,emes were 116< T,e t,ird +,ase &egan wit, t,e entry of +rivate and foreign sectors in t,e Pioneer utual fund industry in 1::>< Hot,ari

utual fund was t,e first fund to &e< As at t,e end of arc,@ >12 funds were functioning wit, wit, >:1 sc,emes and assets under

financial year 2$$ ?>1st t,ere were >> funds

management wit, Rs< 1;$2;84: crores< T,e *ecurities and Exc,ange #oard of India ?*E#I@ came out wit, com+re,ensive regulation in 1::> w,ic, defined t,e structure of utual fund and Asset *everal +rivate sectors anagement -om+anies for t,e first time< utual funds were launc,ed in 1::> and

1::4< T,e s,are of t,e +rivate +layers ,as risen ra+idly since t,en< -urrently t,ee are >1 utual !und organisation in India managing

over Rs< 1;$2;$$$(- crores<

ORGANISATIONAL STR"CT"RE O% M"T"AL %"ND) All t,e utual fund; &ot, in t,e +u&lic and +rivate sector; are utual

regulated &y *E#I< *E#I ,as issued a set of regulations for

!und in 1::>< 9TI w,ic, was esta&lis,ed according to 9TI act 1:1>; continues to en'oy a se+arate status< 5owever; since Duly 1::4; 9TI is also &roug,t under t,e +urview of *E#I< *ince According to t,e regulations every utual !und s,ould &e constituted and

esta&lis,ed as followsB TR"STS) utual fund s,all &e esta&lis,ed as a trust under t,e Indian Trust Act 1882; y an agreement &etween t,e s+onsoring institution ?called t,e settler@ and t,e Trustees of t,e utual !und< T,e

agreement is called trust deed w,ic, is duly registered under t,e +rovisions of t,e Indian Registration Act 1:$8< Trustees,i+ can &e in any one of t,e following formsB A cor+orate entity Existing de&enture trustee; &anker; financial institution #oard of trustees<

ASSET MANAGEMENT COMPAN$

*+onsor or if so aut,oriEed &y t,e trust deed; trustee s,all a++oint an A - as investment manager to t,e utual !und< T,e &asic

function of t,e investment manager is to formulate t,e sc,emes; to mo&iliEe t,e amount from investors; and to manage t,e sc,emes< A - s,ould &e a cor+orate entity wit, a minimum net wort, of Rs< " crore< *E#I regulations insist t,at no less t,an "$C of t,e A directors are inde+endent and remaining &elong to t,e s+onsor< T,e trust enters into an investment management agreement wit, A -; w,ic, em+owers A - to do investment management &usiness for t,e A utual !und< *E#I regulations 24 s+ecifies t,e o&ligations of and sc,edule I2 covers t,e contents of Investment

management agreement< C"STODIAN) E2ER4 utual !und s,all ,ave a custodian w,o is not in any way

associated wit, t,e A -< T,e custodian carries t,e activity of safe kee+ing of t,e securities or +artici+ate in any clearing system on &e,alf of t,e REGISTRAR) Every utual fund ,as a registrar w,ic, looks after t,e office work utual !und to effect deliveries of t,e securities<

suc, as dis+atc, of t,e account statements; redem+tion sli+s; c,e0ues; etc< T,e utual fund is managed &y t,e &oard of trustees and t,e

s+onsor executes t,e trusts deeds in favour of t,e trustees< T,e

utual !und raises money t,roug, sale of units under one or more sc,emes for investing in securities in accordance wit, *E#I guidelines< It is t,e 'o& of t,e utual !und trustees to see t,at t,e

sc,emes floated and managed wit, t,e trust deeds and *E#I guidelines< It is also t,e res+onsi&ility of t,e trustee to control t,e ca+ital +ro+erty of utual fund sc,emes

M"T"AL %"ND) RELATIONS&IP AMONGSTT&E ENTITIES IN#OL#ED

SPONSOR

REGISTRAR

TRUSTEE COMPANY

SETS UP

MAINTIAN RECORDS OF AND SERVICES OF

APPOINTS

ACT AS TRUSTEE TO THE UNITHOLDERS OF

MUTUAL FUND (AS A TRUST)

SUBSCRIBE THE UNITS OF

INVESTORS

ASSET MANAFEMENT COMPANY

MANGES THE INVESTMENT OF

SAFE KEEPS THE ASSETS OF

CUSTODIAN

SEBI G"IDELINES %OR M"T"AL %"IND)

T,e *E#I issued a set of regulations and code of conduct of 2$ Danuary< 1::> for t,e smoot, conduct and regulation of fund< T,e silent features of t,ese guidelines are a s followsB utual !und cannot deal in %+tion trading; s,ort selling or carrying forward transactions in securities< utual fund s,ould &e formed as trusts and managed &y A Restriction to ensure t,ose investments under all sc,emes do not exceed 1"C of t,e funds in t,e s,ares and de&entures of a single com+any< *E#I will grant registration to only t,ose utual !und w,ic, can utual

+rove an efficient and orderly conduct of &usiness< T,e utual fund s,ould ,ave a custodian; not associated in any

way wit, t,e A - and registered wit, t,e &oard< T,e minimum amount to &e raised wit, eac, closed ended sc,eme s,ould &e Rs< 2$ crore and for t,e o+en-ended sc,eme Rs< "$ crore< T,e utual !und are o&liged to maintain &ooks of account<

T,e minimum net wort, of A - is Rs< " crore of w,ic, t,e minimum contri&ution of t,e s+onsor s,ould &e 4$C<

T,e

utual !und s,ould ensure ade0uate disclosures to t,e

investors

*E#I can im+ose sus+ension of registration in case of violation of t,e +rovision of t,e *E#I act 1::2; to t,e regulations<

Restrictions to ensure t,e investments under an individual sc,eme do not exceed "C of t,e cor+us of any com+anies s,ares and investments under all sc,emes do not exceed 1$C of t,e funds in t,e s,ares; de&entures or securities of a single com+any<

&OW M"T"AL %"ND COLLECTS %"NDSutual !und offer units or s,ares to t,e +u&lic &y issuing an offer document or +ros+ectus< T,e offer document containsB T,e face value of eac, unit in terms of ru+eesF %&'ective of t,e sc,emeF 5ow t,e funds collected will &e invested and in w,at securities or in w,at money market instrumentsF inimum amount of su&scri+tion +er a++licationF .uration of launc,ing t,e sc,eme and t,e data u+ to w,ic, a++lications will &e receivedF and Re+urc,ase facility

T,e funds give wide +u&licity a&out t,eir sc,emes and make arrangements for collecting t,e a++lication money in im+ortant centers in one or more &anks< After t,e last date for receiving t,e

a++lication is over;

utual fund collect all t,e a++lication; scrutiniEe

t,em and allot units to t,e a++licants and issue t,em unit certificates; w,ic, are t,e evidence for owing t,e units< CATEGORIES O% M"T"AL %"ND) T,ere are so fund are F 1< Pu&lic *ector utual fund utual !und utual funds in India< T,e t,ree categories of utual

2< .omestic Private sector >< !oreign utual !und

utual !unds ,ave emerged as dynamic financial intermediaries and are very im+ortant institutional investors in India< In t,e saving market; t,ey are utual fund com+lete wit, &anks and in t,e ca+ital market t,e most influential +layers to influence market

movements< A. " it Trust o+ I ,ia B. Ba / s0o sor1, a@ #%# Asset &@ #%I Asset anagement -o</td anagement -o</td anagement *ervices /td<

c@ -an&ank Investment d@ P)# Asset

anagement -o</td

e@ *#I funds f@ Indfund

anagement /td< anagement /td<

C. I stitutio s a@ 7I- Asset anagement -o< /td anagement -o< /td

&@ I.#I Princi+al Asset c@ I/ N !* Asset

anagement -o< /td anagement -o< /td

d@ Deavan #ima *a,ayog Asset D. Pri2at1 S13tor 4. I ,ia a@ #enc, ark Asset &@ Hotak

anagement -o< /td anagement -o< /td

a,indra Asset

c@ *,riram Asset

anagement -o< /td anagement /td<

d@ Reliance -a+ital Asset e@ D<

-a+ital management /td< anagement /td< anagement com+any /td<

f@ Escorts Asset g@ 5.!- Asset

5. 'oi t #1 tur1s 6 Pr1,omi a tl* I ,ia a@ #irla *un /ife Asset anagement Pvt< /td

&@ -,olamandalam -asanova Asset c@ .*P errill /ync, Investment

anagement -o</td<

anagers ?India@ /td<

d@ !irst India Asset management +rivate ltd< e@ *undaram )ewton Asset f@ Hot,ari Pioneer A - /td< g@ Tata Asset anagement /td< anagement -om+any

,@ -redit ca+ital Asset management -o< /td< 7. 'oi t #1 tur1s 6 Pr1,omi a tl* %or1i8 a@ alliance -a+ital Asset management ?India@ Pvt< /td< &@ A)G 7rindlays Asset c@ .undee Investment d@ I)7 Investment e@ D! Asset f@ gmt Pvt< /td< anagement N researc, ?Pvt<@ /td<

anagement ?India@ Pvt< /td<

anagement ?India@ Pvt< /td< anagement India Pvt< /td<

organ *tanley Asset

g@ Prudential I-I-I ,@ *un ! N - Asset i@ Tem+leton Asset '@ Guric, India Asset

anagement -o< /td< anagement ?I@ Pvt< /td< anagement ?India@ Pvt< /td< anagement -or+< /td<

T$PES O% M"T"AL %"ND SC&EMES) I) India utual fund +rovides a variety of sc,eme to t,e investors<

T,ese sc,emes can &e classified on t,e &asis ofB 1< !unctional classification 2< Portfolio com+osition >< 7eogra+,ical classification %"NCTIONAL CLASSI%ICATION utual fund can &e classified as o+en-ended and closed-ended sc,emes< OPEN9ENDED SC&EME) ,ere t,e units are offered t,oug, +u&lic issue o+ened for a maximum +eriod of 4" days and after t,e date of closure; entry to t,e investor s,all &e closed for a few weeks< T,ere after units are offered for sale and su&scri+tion is always o+en exce+t in t,e &ook closure +eriod< CLOSED9ENDED SC&EME) T,e units are offered to t,e

investors t,roug, t,e +u&lic issue; and after t,e date of closure; t,e entry to t,e investor will &e closed< T,e sc,eme s,all ,ave a fixed redem+tion +eriod; usually &etween " to 1$ yeas and t,e mutual fund will +ay &ack t,e unit ca+ital to t,e investors toget,er wit, some ca+ital a++reciation< PORT%OPLIO COMPOSITION)

INCOME SC&EME) A ,ig, +ro+ortion of funds is invested in fixed income securities and t,e remaining in e0uity s,ares<

INCOME AND GROWT& SC&EME) !unds w,ic, offer regular dividends over t,e life of t,e sc,eme and t,e ca+ital a++reciation at t,e time of redem+tion<

GROWT& SC&EME) Investment in &lue c,i+ s,ares< T,e investment in e0uity s,ares would &e normally 8$C-:$C of t,e total cor+s of t,e sc,eme<

TA! SA#ING SC&EME) T,ese sc,emes are designed on t,e &asis of tax +olicy wit, s+ecial tax incentives to tax +aying investors<

IND"STR$ SPECI%IC SC&EMES) T,e funds are invested in t,e securities of a single industry or a +articular market s,are<

MONE$ MARKET %"NDS) T,e funds are w,olly invested in t,e money market instruments; suc, as treasury &ills; certificates of de+osit; commercial +a+ers and &ills discounting<

SPECIAL SC&EMES) It meet t,e s+ecific needs of t,e various investors; utual !und also launc,ed different sc,emes wit, a

variety of &enefits<

GEOGRAP&ICAL CLASSI%ICATION)

%n t,e &asis of geogra+,ical limits; classified as .omestic

utual !und sc,emes can &e utual !und<

utual !und and %ff s,ore

O%% S&ORE %"NDS) T,ese are launc,ed wit, a view to mo&iliEing t,e savings of a foreign country of t,e +ur+ose of t,e investment in t,e Indian securities< T,e amount s,all &e mo&ilised in foreign currencies< BANK #s M"T"AL %"ND

CRITERION Return Administrative ex+enses Risk Investment o+tions )etwork /i0uidity Ouality of assets Interest calculation

BANK /ow 5ig, /ow /ess 5ig, +enetration At a cost )ot trans+arent inimum &alance &etween 1 1$t, N >$t,

M"T"AL %"ND #etter /ow /ow ore /ow &ut im+roving #etter Trans+arent Everyday

7uarantee

of every mont, )one

)one

M"T"AL %"NDS #s INDI#ID"AL *lowly mutual fund emerged as an ideal re+lacement for individual investors ?investing directly in e0uity ( de&t interment@ !ollowing is t,e &rief com+arison< CRITERION M"T"AL %"ND INDI#ID"AL

PR%!E**I%)A/ A)A7E E)T

*ervice of ex+erienced and skilled +rofessional &acked &y a dedicated investment researc, team w,ic, analysis t,e +erformance

!or a common investor it not +ossi&le< T,e investment researc, is a full tim 'o&<

.I2ER*I!I-ATI%)

and +ros+ect of com+anies Investment is in a num&er of com+anies across a &road cross-section of industries and sectors; t,us reducing t,e risk &ecause seldom do all stocks decline at t,e same time and in t,e same +ro+ortion< #y even a least investment of one unit an individual investor can ,ave t,is muc, of

Re+lacing t,is muc, of diversification on oneMs own will need a +ortfolio of several lacs<

/%3 -%*T A. I)I*TRATI%)

diversification #enefits of sale in &rokerage; custodial and ot,er fees translate into

)ot availa&le

-%)2E)IE)T A. I)I*TRATI%)

lower costs< Reduced +a+er work; avoid +ro&lem suc, as ,ad deliveries; delayed

)ot availa&le

RET9R) P%TE)TIA/

+ayments and unnecessary 5ig,er as investment is in a )ot so ,ig,

diversified &asket of selected securities; due to t,eir &ulk investor status; mutual funds usually get +reference allotment; /IO9I.IT4 discount also< Total is case of o+en ended sc,emes< TRA)*PERA)-4 Regular information on t,e value of investment< .isclosure of +ro+ortion invested in eac, class of assets; and s+ecific investments made &y t,e sc,eme< 7enerally medium to low de+end on su++ly< .emanscenario Regular information value of t,e investment< .isclosure of +ro+ortion invested in eac, class of assets; and s+ecific investments mad &y t,e sc,eme<

AD#ANTAGES O% M"T"AL %"NDS T,e advantages of investing in a Professional .iversification -onvenient Administration Return Potential anagement utual !und areB

/ow -osts /i0uidity Trans+arency !lexi&ility -,oice of sc,emes Tax &enefits

3ell regulated

ANN"AL DATA ON M"T"AL %"ND %ROM APR 5:::9Mar 5::4 Total sales during t,e year A+r2$$- ar2$$1< %+en End )o< of Amount I)-% E 7R%3T5 #A/A)-E. /IO9I.( % )E4 ARHET 7I/T E/** T%TA/ 16 18 24$ 411$ 214 :$:$" 2 12 118 14>8 >" 114 *c,emes 1$ :1 28 21 24181 16:41 61:2 >1212 -lose End Assured Return )o; of Amount )o; of Amount sc,emes >1 1: 4 1>6: "$ : sc,emes >" 114 -

Total redem+tion during t,e year A+r2$$$-mar2$$1 %+en End -lose End Assured Return I)-% E 7R%3T5 #A/A)-E. /IO9I.( %)E4 ARHET 7I/T E/** T%TA/ 4462 46 66>16 1$: 48$$ 1112 4462 1"1 8>82: 1864$ 11>"6 41$> >>148 14>> 1:42 811 1112 218>" 182:: 4:1: >>148 Total

BIRLA S"NLI%E ASSET MANAGEMENT CO. LTD. It is t,e second +rivate com+any after kot,ari +ioneer to offer mutual fund facility to t,e general +u&lic< #irla mutual fund ,as &een constituted as a trust under t,e +revisions of t,e Indian trust act; 1882 ?2 of 1882@ and registered wit, *E#I &earing registration no< !($2$(:4(8 dated .ecem&er 2>; 1::4

T,e o&'ective of t,e mutual fund is to offer to t,e +u&lic and ot,er eligi&le investors units in one or more sc,emes in t,e mutual fund for making grou+ or collective investments +rimarily in Indian

securities in accordance wit, and as +ermitted under t,e directions and guidelines issued from time to time &y *E#I< BEGINNING O% AN ERA #irla utual fund is a 'oint venture &etween t,e Aditya #irla grou+;

one of t,e foremost Industrial ,ouses and *un /ife Assurance -om+any of -anada; a leading financial services organisation< T,e com+any in t,e investment manager for t,e &irla mutual fund< T&E ADIT$A BIRLA GRPO"P It is a multi national grou+ wit, a formida&le +resence in India; c,aracteriEed &y its lineage and integrity< T,e manufacturing o+erations of t,e grou+ extend across India; T,ailand; Indonesia; alaysia P,ili++ines and Egy+t< It consists of IndiaMs &est-known com+anies; w,ic, are a+art of key sectors like textile ?grasim@; rayon ?India rayon@; Aluminum ?5ind Also@; Petroleum ? angalore Refinery and Petroc,emicals ltd<@; financial ?#irla 7lo&al !inance /td<@; fertiliEers ?indo-gulf@ &usiness +,iloso+,y< T,e management at t,e Aditya #irla grou+ ,as &een crystalliEed a well-articulated &usiness +,iloso+,y; w,ic, ,el+s t,e com+any to remain in sync wit, t,e c,anging environment< T,e +,iloso+,y is founded on four +illars; w,ic, areB 1@ -9*T% ER KI*E 2@ PE%P/E KI*E

>@ I)*TIT9TI%)A/ K IE 4@ *TRATE7 K I*E Index like t,is ,el+ to identify and res+ond to c,anges t,at ,el+s to grow t,e com+any and an organisation< S"NLI%E ASS"RANCE CO. O% CANADA) T,e com+anyB A leading financial services organisation +roviding a diversified range of risk management; wealt, management and money management +roducts for individual and cor+orations worldwide< 5ead0uartered in Teronto; sun life commenced &usiness in -anada in 1861 and ,as ma'or o+erations in -anada; 9*; 9H; and P,ili++ines and 5ongkong< It is +oised to enter into a 'oint venture in t,e +eo+le re+u&lic of c,ina< *un life ,as consistently earned ratings t,at rank among t,e &est in t,e )ort, American financial services sector and is also active in t,e unit trust &usiness in t,e 9H< It ,as a ma'or +resence in t,e growing mutual fund investment management in t,e 9*< B"SINESS P&ILOSOP&$) *un life growt, strategies include +ursing geogra+,ic and &usiness diversity &uilding a +resence in ,ig, growt, &usinesses taking advantage of o++ortunities for ac0uisitions and strategic alliances and maintaining leaders,i+ in tec,nology< It works on t,e ex+ertise

of a worldwide staff of over 1$; $$$ +eo+le and a network of more t,an 1";$$$ agents and distri&utors; sun life is committed to +roviding nor 'ust +roducts and services &ut solutions for clients financial and risk management needs< BIRLA M"T"AL %"ND PROD"CT PRO%ILE #irla utual !und offers a multi &asket of sc,emes< !our in e0uity

funds; four in de&t fund and one in &alance fund< All t,ese sc,emes are o+en ended< EO9IT4 *-5E EBBirla Birla Birla +u , Birla m 3 a,2a ta8 1;uit* +u , 1 +u , +u , To ac,ieve To ac,ieve To ac,ieve To ac,ieve long term long term su+erior growt, ca+ital of growt, at ca+ital long long term of at

S3h1m1 obj13ti21

of term of ca+ital growt, t,roug, ca+ital in relatively

relatively moderate levels risk

along wit, investment income

&usiness related moderate or levels of risk &y making

of tax for

relief directly

indirectly to IT

t,roug, a investmen diversified researc, &ased investmen t<

investments in of multinational com+anies securities

t a++roac,

t,roug, researc, &ased investment

A**ET

At

a++roac,< least At least 8$ 9+ to 1$$C in 9+ to 1$$C in C in e0uity; u+ to 2$ in e0uity; u+ in de&t to de&t instruments< 2$C in

APPR%A-5 6$C

e0uities N e0uity; e0uity related instrumen +reference s,ares; de&enture

instruments<

ts N u+ to s N &onds< >$C de&t instrumen t N money market instrumen %PTI%)* ts< Pla A) .ividends +ay out< Pla dividends +ayout A) Pla dividends div< +ayout .iv< A) in

.ividend +lan div

+ayout div reinvestm ent Pla

Reinvestment Pla +lan<

Reinvestmen Pla B)

B) growt, t

7rowt, +lan

B) 7rowt, +lan

TAP #E)E!IT*

.ividends s,all 1$$C

div<

s,all .ividend 1$$C &e 1$$C till

s,all .ividend tax s,all fiscal 1$$C &e tax

&e &e

till tax free till free

fiscal year fiscal year year 2$$12$$2< 2$$12$$2< 2$$2<

2$$1- free till fiscal eligi&le year 2$$1-

for indication N 2$$2< for N

Eligi&le for Re&ate u(s ca+ital gains tax Eligi&le indication N 88 Q2$C &enefits< indication

ca+ital on tax investmen t u+ to Rs< 1$;$$$(Eligi&le for indication and ca+ital gains tax

ca+ital gains tax &enefits

gains

&enefits<

&enefits<

.E#T *5E EB BIRLA INCOME PL"S SC&EMES To generate To generate To generate To +rovide BIRLA G"ILT BIRLA MIP PL"S BIRLA PL"S CA&S

income

N regular

reasona&le

OB'ECTI#E

-onsistent income t,roug,

ca+ital a++reciation t,roug,

income t,roug, investments in in income

returns ,ig, safety

at

a of N

level

su+erior yields investments units exclusively

fixed li0uidity t,roug,

investments at 7ovt< relatively moderate levels of risk a securities<

securities so 'udicious as to make investment mont,ly +ayment distri&ution to ,ig, in

0uality

or de&t N money market

t,roug, diversified

unit investments

researc, &ased investment a++roac,<

,olders wit, t,e secondary o&'ective &eing growt, of ca+ital

t,roug, investment in e0uity< OPTIONS PLAN A) .iv< PLAN A) li0uid PLAN Plans .iv< Pay PLAN out .iv< investment PLAN B) mont,ly division C) out reinvestment A) .ivision reinvestment +ay 7rowt,

Reinvestment PLAN

B) /ong-term

7rowt, +lan

eac, +lan ,as PLAN two o+tions mont,ly

B)

div< Pay out; +ayment .iv Reinvestment N growt, instant .eferred PLAN growt, ASSET 1$$C in de&t 1$$C in 7ovt< 9+ to 1$$C 9+ many securities< de&t 1"C e0uity< 9+ to >$C C)

ALLOCATION and markets<

to money marker< in At least 1$C in de&t etc< cor+orate &onds

TA! BENE%ITS

.iv<

s,all

&e .iv<

s,all

&e .iv< s,all &e .iv< tax 1$$C 5ow free<

s,all

&e

1$$C tax free< 1$$C 5ow ever; fund free< will

tax 1$$C tax free< 5ow 5ow ever; fund fund will +ay

+ay ever; fund will ever; dividend will Q

dividend tax Q +ay 2$C surc,arge a++lica&le< Eligi&le indexation ca+ital +lus tax

+ay dividend tax Q +lus as

2$C dividend tax 2$C

as +lus surc,arge Q 2$C +lus surc,arge as a++lica&le< surc,arge as a++lica&le< for a++lica&le< N Eligi&le Eligi&le

for Eligi&le N indexation

for N

for indexation

gains ca+ital

gains indexation N ca+ital

gains

tax &enefits<

tax &enefits<

ca+ital gains tax &enefits<

tax &enefits<

BALANCE SC&EMES #irla #alance To &alance income re0uirement wit, growt, of ca+ital t,roug, &alanced mix of investment in e0uity and de&t at relatively moderate level of risk t,roug, a diversified researc, &ased investment A**ET A//%-ATI%) %PTI%)* a++roac,< A&ove "$C 9+to 6"C in e0uity At least 2"C to &elow "$C in de&t P/A) AB dividend +lan dividend +ayout dividend reinvestment TAP #E)E!IT P/A) #B 7rowt, +lan .ividend s,all &e 1$$C tax free till !inancial 4ear 2$$1-2$$2< Eligi&le for indexation and ca+ital gains tax &enefit<

*-5E E %#DE-TI2E

OB'ECTI#ES) To find cut t,e +osition of #irla funds< To find out t,e relations,i+ &etween Average rolling returns; Average +ortfolio maturity; Percentage investment in 7-sec and *iEe of t,e fund< To com+are #irla utual !und wit, ot,er utual !unds< utual !und in de&t and li0uid

To find out t,e reason of any ,a+,aEard movement I t,e !unds during t,e +eriod taken under study< NEED O% T&E PRO'ECT)

utual

T,e +ro'ect was done in #irla

utual fund; )ew .el,i< T,e title of

t,e +ro'ect was L -om+arison of .e&t and /i0uid fund on RiskReturn +arameterM< T,e +ro'ect was done to com+are to utual

funds on different +arameter individually as well as toget,er< Every com+any is curious to know a&out its +osition in t,e market as com+ared to its com+etitions< #irla utual fund was also interest in

knowing t,e same< T,us t,is +ro'ect was needed to fulfill t,e same desire of t,e #irla utual !und< T,is +ro'ect ,el+ed #irla utual

!und in finding its +lace under .e&t and /i0uid sc,eme in t,e market for +ast one year ? ay$$-A+r$1@ and 5alf year ?)ov$$A+r$1@ res+ectively< T,is +ro'ect will also ,el+ #irla strengt,ening its market s,are< SCOPE O% T&E PRO'ECT E!TENT<LIMITATIONS T,e extent of t,e +ro'ect I did in #irla utual !unds SBI LIW"I BOND INCOME %"ND =MA$5:::9AORIL5::4. utual !und was limited to : utual !und in

A&solute rolling Return ?:$days@ in C

Average

7overnment

aturity year

in *ecurity in C

A4-$$ D9)-$$ D9/-$$ A97-$$ *EP-$$ %-T-$$ )%2-$$ .E--$$ DA)-$1 !E#-$1 AR-$1 APR-$1

2<$88$1: 1<81$244 -$<18:68 2<1411:> 1<28884 2<1:"881 ><1"812: $<16"": 4<2"$"22 4<">$1>8 ><4>>864

><41 ><1 2<:1 2<1 1<6> 1<61" 1<6 2<16 ><1 2<16 ><1 2<1"

4$<1 >"<$1 >2<: 18<82 :<18 :<:8" 1$<6: 16<66 24<62 22<8" 26<"1 1"<:2

T,e average of a&solute rolling return of *#I Income +lan for an year is 2<>$841C< t,e average maturity comes out to &e 2<"6: year and t,e average investment in government security is 22<1>>8C<

SBI LIQUID INCOME BOND FUND Absolute rolling

6 4 2 0 -2 60 40 20 NovJul11M S 0
Return (90days) in Average Maturity in year !overn"ent Se#urity in

SBI LI("ID BOND INCOME %"ND) T,e increase in t,e &ank rate and t,e cas, reserve ratio in DulyM$$ ,ave dam+ened t,e returns in t,e long term &ut market risk are

controlled &y t,e *#I &y investing in s,ort term +a+ers to avoid any erosion of +ortfolio values< *#I continued to favour cor+orate &onds of s,orter maturity even in *e+tM$$ to &enefit from ,ig,er s,ort term rates and to avoid erosion in values due to larger +rice de+reciation in t,e longer end< T,e average maturity continued to &e low u+till )ovM$$ &ecause of investment in t,e s,orter maturities due to t,e risk in ,ig,er interest rates mainly due to t,e inflation and 7overnment &orrowings< Average maturity increased in .ocM$$ &ecause of favora&le comments from t,e R#I< T,e c,ange of !und manager from Pi'us, .as to *ervana Humar in !e& led to t,e addition of 0uality cor+orate +a+ers like 5indalco; 7rasim; Tata Power; Reliance Petroleum; #,arat *anc,ar )igam /td< It +ossi&ly increased t,e rolling returns of *#I< T,roug, t,e average maturity increased in DanF$1 &y increased +ercentage in t,e 7-*ec &ut returns reduced< It mig,t &e &ecause of fall in t,e oney at -all and

&ank &alances from )ovM$$ to .ecF$$ and DanM$$ from 16<$1C to "<6C and 1<11C<

KOTAK MA&INDRA =K9BOND. =MA$5:::9APRIL5::4.

A&solute rolling Return?:$ A4-$$ D9)-$$ D9/-$$ A97-$$ *EP-$$ %-T-$$ )%2-$$ .E--$$ DA)-$1 !E#-$1 AR-$1 APR-$1 days@ in C 1<$>8 $<4:: $<82: -$<>:1 $<>>2 ><262 ><81: 4<811 4<"$1 "<4:4 ><4>1 2<261

Average aturity in year 2<:: 2<81 > 2<$> 2<68 2<4" ><62 4<1> 4<"" "<"6 2<82 "<24

7overnment *ecurity in C >4<2 >$<:: 21<6" >$<$1 16<>2 >2<14 >4<28 >><$6 26<" 44<>: 1><16 >"<:1

T,e average a&solute rolling return for an year is 2<4:6116C< T,e average of maturity for an year of Hotak a,indra H-#ond is ><>">>

year and t,e average of investment in government security is >$<$"C K9BOND

T,e average +ortfolio maturity of H-&ond reduced entail in view of t,e volatility in t,e foreign exc,ange market and conse0uent

K-BOND
6 4 2 0
ay -0 Ju 0 lSe 00 $0 No 0 v-0 0 1Ja 1- n M ar

-2

&0 40 %0 20 10 0

Absolute rolling Return(90 days) in Average Maturity in year !overn"ent Se#urity in

interest rate likes &y t,e R#I< T,e increase in t,e interest rates in Duly adversely affected t,e &ond market< 5owever t,e market

recovered in *e+tem&er 2$$$ &y an overnig,t cut in t,e interest rates< In %cto&er 2$$$ t,e s+reads of t,e cor+orate &onds over t,e government securities ,ave started narrowing< H-&ond continued to invest in a mix of g-sec and good 0uality cor+orate &onds< As suc, t,e average maturity started increasing from )ovem&er 2$$$< T,e average maturity reduced in marc, &y investing in g-seg at t,e medium end of t,e yield curve< 5owever t,e average maturity in A+ril 2$$1 increase wit, t,e market sentiments< T,e rolling returns reduced in t,e mont, of Duly; August and *e+tem&er 2$$$ due to t,e increase in interest rates ,owever rolling returns increased after t,at< T,e siEe of H-&ond fund is t,e lowest among all t,e ot,er funds< 5owever it started increasing from %cto&er 2$$$ may &e &ecause of t,e fall in exit load from $<"C ?exit wit,in 1 mt,s<@ to $<2"C ?exit wit,in > mt,s<@

KOT&ARI PIONEER INCOME B"ILDER ACCO"NT =MA$5:::9APRIL5::4.

A&solute rolling< Return ay-$$ Dun-$$ Dul-$$ Aug-$$ *e+-$$ %ct-$$ )ov-$$ .ec-$$ Dan-$1 !e&-$1 ar-$1 A+r-$1 ?:$

Average aturity year ><"4 ><4 2<"1 2<14 2<$1 2<"" 2<44 ><28 ><61 ><8 ><8: ><46

7overnment in *ecurity in C 4$<26 >1<61 18<:> 1"<1: 11<14 2><6" 1"<8> 2"<42 41<18 >1<6: >><21 >6<"4

days@ in C 4<4":2211: 2<12:8$12 1<"811161 -$<2118114 $<6$1$:6> 1<48"$411 ><$1:11:: ><":>6624 4<>26:16" 4<"62"6"> 4<4686:12 ><:"11>>1

KOTHARI PIONEER INCOME BUILDER Absolute ACCOUNT 6 4 2 0

ay -0 Ju 0 l S -00 e$ N 00 ov -0 1- 0 Ja 1- n M ar

-2

&0 40 %0 20 10 0

rolling' Return (90 days) in Average Maturity in year !overn"e nt Se#urity in

T,e average a&solute rolling return for Hot,ari Pioneer Income #uilder Account for an year is 2<84$2C< T,e average of maturity is ><1"8> year and of government security is 28<$84C<

Kothari Pio 11r 6 I 3om1 buil,1r a33ou t In may2$$$ Hot,ari reduced its investment in long-term cor+orate &onds from ""<1$C to 44<:1C and invested in s,ort-term &onds to save itself from t,e volatile !orex market< 5e fund reduced t,e average maturity in Dune 2$$$< 5owever t,e year2$$$ &egan wit, t,e R#I cutting &ank rate &y 1C w,ic, lead to a s,ar+ rally in t,e &ond +rices< T,e concern on ,ig, fiscal deficit and inflationary +ressured affected t,e market sentiment< T,e R#I resorted to t,e s,ort-term tig,tening in t,e money market due to +ressure on India w,ic, lead to t,e selling +ressure in &onds in t,e mont, of t,e sc,eme< 5owever maturity ay and Dune< It lead increasing in to a set&ack in t,e &ond +rices w,ic, lowered t,e returns of started %cto&er2$$$ to ease li0uidity and relatively comforta&le !orex environment< T,e increase in t,e +rofile ,el+ed in im+roving ,e +erformance< 5owever after t,e negative returns in August2$$$ t,e returns started increasing< G9RI-5 I).IA 5I75 I)TERE*T !9). ? A42$$$-APRI/2$$1@ A&solute rolling Average 7overnment Return aturity in *ecurity in C ?:$days@ in C year ay-$$ 2<"44$22 1<68 8 Dun-$$ 2<>616:: 2<:1 21<6 Dul-$$ 1<8$1::1 2<1> 2$<8 Aug-$$ $<2::121 2<4 26<4 *e+-$$ $<"8461" 2<>6 >2<6 %ct-$$ 1<14$81: 2<>4 >8 )ov-$$ 2<44$124 ><$> 41<4 .ec-$$ ><21$12" ><:2 46<8 Dan-$1 4<$:$$1: 4<>1 48<$6 !e&-$1 4<188112 4<4 "4<$> ar-$1 4<6$"211 ><11 >:<4 A+r-$1 ><6$442 ><"> >:<4 T,e average of a&solute rolling return of Guric, India ,ig, Interest fund for an year is 2<1>1$1C< T,e average of maturity comes out

to &e ><1$116 year and t,e average of investment in government security is >"<>$8>C<

ZIRICH HIGH INTEREST FUND

& 4 % 2 1 0
ay -0 Ju 0 lS 00 e$ -0 N 0 ov -0 0 1Ja 1- n M ar

60 &0 40 %0 20 10 0

Absolute rolling Return (90days) in Average Maturity in year !overn"ent Se#urity in

>"RIC& &IG& INTEREST %"ND) T,e reason for its low rolling returns from t,e mont, of DulyM$$ is t,e increase in t,e interest rates &y t,e R#I< 5owever; t,e returns started increasing after *e+tM$$< &D%C INCOME %"ND =SEPTEMBER5::: 6 APRIL5::4. A&solute rolling Average Return ?:$ aturity days@ in C year $<">>>> $<6" 2<"1 ><$>2 2<8: ><181 ><4" 4<$2" ><84 4<$86 ><44 ><$4: 4<6 7overnment in *ecurity in C 16<>: 1:<28 22<26 21<26 24<8> >1<:2 24<$1 >"<$"

*e+-$$ %ct-$$ )ov-$$ .ec-$$ Dan-$1 !e&-$1 ar-$1 A+r-$1

T,e average of a&solute rolling return of 5.!- Income fund is 1<48:"C< T,e average of maturity +eriod is 1<8"11 year and of investment in government *ecurity &y t,e utual !und in Income !und is 11<>>"C<

HDFC INCOME FUND

& 4 % 2 1 0 Se$-00 (#t-00 Nov-00 )e#-00 Jan-01 *eb-01 Mar-01 A$r-01 40 %0 20 10 0
Absolute rolling Return (90 days) in Average Maturity in year !overn"ent Se#urity in

&D%C) T,e +ercentage investment of 5.!- in all money in t,e mont, of *e+tem&er2$$$ was 41<62C as suc, average maturity was 'ust 6 mont,s< 5owever t,e +ercentage in call money reduced to 1$<:2C in )ovem&er w,ic, increased t,e average maturity to 2<"1C< 5owever t,e +ercentage increased from *e+tem&er< *ince t,e ince+tion date of 5.!- income fund was *e+tem&er 2$$$ its returns were increasing from decem&er2$$$< ALLIANCE LI("ID INCOME =MA$ 5:::9 APRIL5::4. A&solute rolling Return?:$days@ in C "<>1:1 2<4>18 1<>$11 $<$1:1 $<8184 1<4681 2<661 ><1118 Average aturity year 1<1 1<1 1<1 1<1 1<1 1<: 1<8 2<: 7overnment in *ecurity in C >2<1 >2<1 >2<1 >2<1 >2<1 >:<6 >1<: 4"<6

ay-$$ Dun-$$ Dul-$$ Aug-$$ *e+-$$ %ct-$$ )ov-$$ .ec-$$

Dan-$1 !e&-$1 ar-$1 A+r-$1 T,e average of

><8$> 4<18$" 4<18:1 ><>4>2 :$ days a&solute

2<: 2<: ><1 4<1 rolling return of

44<6 4:<4 >6<28 48<8 Alliance income

fundMs is 2<64$2C< t,e average of maturity is 1<8$8>> year and t,e average of investment done in 7overnment *ecurities &y t,e Alliance utual !und is 26:2>>C<

A++,AN-. +,/0,) ,N-(M. *0N) 6 & 4 % 2 1 0

M ay 00 Ju lSe 00 $0 No 0 v00 1Ja n 1M ar

60 &0 40 %0 20 10 0

Absolute rolling Return(90da ys) in Average Maturity in year !overn"ent Se#urity in

ALLIANCE LI("ID INCOME %"ND) T,oug, t,e +ercentage investment of alliance /i0uid Income fund in t,e 7overnment securities is 0uite ,ig, i<e< on an average 26<:2>C; &ut t,en also its average maturity is 'ust 1<8$8 year< It mig,t &e &ecause of t,e investment in t,e s,ort term 7overnment securities< T,e ta&le sows t,e a&solute and t,e average value of fund siEe of all t,e utual !und taken under study<

I)-% E !9). *IGE I) -R%RE

Birla

Te !le" O#

Pr$%e#"ial ICICI

SBI

Ko"a& Ma'i#%ra

Ko"'ari Pio#eer

($ri)'

HDFC

Allia#)e

Ma*+,, 7$#+,, 7$l+,, A$g+,, Se!+,, O)"+,, No8+,, De)+,, 7a#+,1 Fe9+,1 Mar+,1 A!r+,1 TOTAL AVERAGE RANK

1310/1 1310/1 1310/1 134,/. 13.5/3 136./5 1.,-/2115/1 215,/1 1..4/5 10005 1000/5 2

-.,/00 1,20/33 1,56/5-40/05 -25/.4 -01/01 1,0,/60 124-/24 1305/1 131./40 1464/3 134-/5. 15026/3 1223/-0 6

1.02/00 1-3,/52 2,12/51.56/-5 1032/-4 1006/3 1.11/25 2,.6/.4 2203/.4 266,/.6 2,0./1. 2251/25 25,5./63 2,,5/,6 1

033 033 033 024 04, 060/,5 025/15 021/35 3-./25 0,./11 05. 063/62 ..53/4 060/21 4

165/2.3/13 11,/224 -./01 12./63 116/464 142/66. 1-1/5 1-1/15 12,4/.1,,/5-1 -

425/65 461/63 463/46 640/,616/10 614/.5 666/,2 51-/5. 4.5/14,5/21 4,6/.5. 4452/66 531/.31 0

51, 62./.0 65-/06 66./0626/-4 6,-/11 6,0/0 615/31 662/-411/53 553/421/65 5454/4 60./0.

55-/2 414/0 22/5 3.3/0 .34/-6-/. .14/-2/4.26/4 5.4/6 3

.4,/..4,/..4,/..4,/..4,/..,3/0 0../5-../6 12-1/,1 110./4 1,4./1,-2/1154-/2 -45/-6. 5

T,e ta&le s,ows t,e a&solute an t,e average of :$ days a&solute rolling return offered &y all t,e 2$$1< I)-% E !9). :$ .A4* A#*%/9TE R%//I)7 RET9R) I) C
# ir l a 2 < " 4 2 < 2 6 1 < 4 > $ < 1 4 $ < 8 1 < " 1 2 < Tem+let on 4<1>"6" 1 2<1:"1 Prudential I-I-I 262$"81 *#I Hotak a,indra 1<$>8 Hot,ari +ioneer 4<4":22 11: 2<12:8$ 12 1<"8111 61 $<21811 4 $<6$1$: 6> 1<48"$4 11 ><$1:11 :: Guric, 5.!Alliance

utual !unds from

ay 2$$$ to A+ril

ay K$$

2<$86

2<"44$

"<>1:

Dun-$$

2<>2$611

1<81$2 4 1<218> 1 $<18:8 2<1411 : 1<2888 4 2<1:"8 8

$<4::

2<>618

2<4>1

Dul-$$

$<1811

1<166161

$<82:

1<8$2

1<>$1

Aug-$$

$<2":>

-$<$1"1

-$<>:1

$<2::1

$<$1:

*e+-$$ %ct-$$

$<"482 1<6>8>

$<6644>: 1<44$184

$<>>2 ><262

$<"848 1<14$8

$<818 1<468

)ov-$$

2<4"28

2<84>424

><81:

2<44$1

2<66

.ec-$$

Dan-$1 !e&-$1

ar-$1

A+r-$1

T%TA/

A2ERA7E

Rank

6 4 > < 2 8 2 < > 4 < 2 " 4 < 2 > 1 < > > > 1 < 8 2 < 1 " 2 >

><$1:"

><"1488:

><1"81 > $<16"" : 4<2"$" 2 4<">$1 4 ><4>>8 6 26<6$1 1 2<>$8"

4<811

><":>66 24 4<>26:1 6" 4<"62"6 "> 4<4686: 12 ><:"11> >1 >4<$882 :2 2<84$1:

><21$1

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4<211$$1 4<4182:"

4<"$1 "<4:4

4<$:$2 4<1886

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4<$:22

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2:<:11

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16<86

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2<4:611 6

2<1>1$

1<48:

2<64$

"

I)-% E !9). A))9A/I*E. R%//I)7 RET9R) # ir l a 1 $ < > $ : < 2 $ 1 " < 6 : : $ < Tem+let on 1"<2": Prudential I-I-I 11<$>>4 *#I Hotak a,indra 4<2$:11 111 Hot,ari Pioneer 18<$841> Guric, 5.!Alliance

ay-$$

8<4182

1$<>1 6

24<$6"

Dun-$$

8<:$44

:<411:6

6<"44>

2<$2>62 222

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Dan-$1

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A2ERA7E

RA)H

" 1 6 > < 2 4 4 1 < 1 2 > 1 1 < 1 1 1 > < > $ : < > 2 6 1 6 < 2 > 1 6 < 1 " 2 " < 1 6 1 2 : < $ 1 $ < 6 " >

22 2<22>21 ><14$68 1$<611 1<>4144 444 2<84>>>: 2<>61 " ><"218

6<$4:68

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16<:181

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"

COMPARISION O% M"T"AL %"NDS ON T&E BASIS O% A#ERAGE MAT"RIT$ AND ?: DA$S ABSOL"TE ROLLING RET"RN =MA$::9APR:4. T,e first com+arision done among all t,e utual !unds is &ased on Average maturity and :$ days A&solute rolling return< A2ERA7E AT9RIT4 ?4EAR*@ #irla Tem+leton Prudential I-I-I *#I Hotak a,indra Hot,ari Pioneer Guric, 5.!A//IA)-E ><114116 ><612" ><$">>> 2<"6:"8> ><"">> ><$1"8> ><1$16 1<8"111 1<8$8>>> :$ .A4* A2ERA7E R%//I)7 RET9R) ?C@ 2<1"1116 2<":6828 2<":1$2$"8> 2<>$8414 2<4:6111116 2<84$1:$::1 2<1>1$12 1<48:" 2<64$26 :$ .A4* A))9A/I*E. R%//I)7 RET9R) 1$<6">:828> 1$<">"1>"68 1$<"28>$"6 :<>121$4 1$<126>:81" 11<"2$"8$1> 1$<1:$4:>11 1<$4$6" 11<11>>1622

COMPARISION O% M"T"AL %"NDS ON T&E BASIS O% A#ERAGE MAT"RIT$ AND ANN"ALISED ROLLING RET"RNS =MA$::9APR:4. A2ERA7E AT9RIT4 ?4EAR*@ #irla Tem+leton Prudential I-I-I *#I Hotak a,indra Hot,ari Pioneer Guric, 5.!A//IA)-E ><114116 ><612" ><$">>> 2<"6:"8> ><"">> ><$1"8> ><1$16 1<8"111 1<8$8>>> :$ .A4* A2ERA7E A))9A/I*E. R%//I)7 RET9R) ?C@ 1$<6">:828> 1$<">"1>"68 1$<"28>$"6 :<>121$4 1$<126>:81" 11<"2$"8$1> 1$<1:$4:>11 1<$4$6" 11<11>>1622 :$ .A4* A2ERA7E R%//I)7 RET9R) ?C@ 2<1"1116 2<":6828 2<":1$2$"8> 2<>$8414 2<4:6111116 2<84$1:$::1 2<1>1$12 1<48:" 2<64$26

COMPARISION O% M"T"AL %"NDS ON T&E BASIS O% ABSOL"TE ROLLING RET"RN AND G9SEC =MA$::9APR:4. 7%2ER) E)T *E-9RIT4 ?C@ #irla Tem+leton Prudential I-I-I *#I Hotak a,indra Hot,ari Pioneer Guric, 5.!A//IA)-E 18<12" 26<"" 24<6416 22<1>>6" >$<$" 28<$8416 >"<>$8>> 11<>>" 26<:2>>> :$ .A4* A#*%/9TE R%//I)7 RET9R) ?C@ 2<1"1116 2<":6828 2<":1$2$"8> 2<>$8414 2<4:6111116 2<84$1:$::1 2<1>1$12 1<48:" 2<64$26

COMPARISION OF INCOME FUND

PERCENTAGE 40 %& %0 2& 20 1& 10 & 0 % 2'& 2 1'& 1 0'& 0 PERCENTAGE

!(7.RNM.N8 S.-0R,89 ( )

ru de 1ir la nt ia 3 l, ot a4 ,, M a5 i'' ' 6u ri# A 5 ++ ,A N .

90 )A9S A1S(+08. R(++,N! R.80RN ( )

MUTUAL FUNDS

COMPARISION O% M"T"AL %"ND ON T&E BASIS O% SI>E O% T&E %"ND AND ABSOL"TE ROLLING RET"RN =MA$::9APR:4. *iEe of t,e !und and :$ days A&solute rolling returns of all t,e taken toget,er for com+arision< *IGE %! T5E !9). ?cr<@ #irla Tem+leton Prudential I-I-I *#I Hotak a,indra Hot,ari Pioneer Guric, 5.!A//IA)-E 1666<44" 1221<:11 2$$4<$> 6>6<2$6" 1$$<4:14"8> 411<81$16 >68<686" 48"<2:>6 :"4<:>6" :$ .A4* A#*%/9TE R%//I)7 RET9R) ?C@ 2<1"1116 2<":6828 2<":1$2$"8> 2<>$8414 2<4:6111116 2<84$1:$::1 2<1>1$12 1<48:" 2<64$26 utual !unds are

COMPARISION O% M"T"AL %"NDS ON T&E BASIS MAT"RIT$ AND GO#ERNMENT SEC"RIT$ =MA$::9APR:4. A2ERA7E AT9RIT4 ?4EAR*@ ><114116 ><612" ><$">>> 2<"6:"8> ><"">> ><$1"8> ><1$16 1<8"111 1<8$8>>> 7%2ER) E)T *E-9RIT4 ?C@ 18<12" 26<"" 24<6416 22<1>>6" >$<$" 28<$8416 >"<>$8>> 11<>>" 26<:2>>>

O%

A#ERAGE

#irla Tem+leton Prudential I-I-I *#I Hotak a,indra Hot,ari Pioneer Guric, 5.!A//IA)-E

COMPARISION OF INCOME FUND

4 %'& % 2'& 2 1'& 1 0'& 0
A8 0 8e R,8 " ''' $le to n ,,3o , 3o ta4 t5 a A+ 6ur ri +,A i#5 N.

40 %& %0 2& 20 1& 10 & 0

CRORE

YEARS

A7.RA!.

MUTUAL FUNDS

COMPARISION O% M"T"AL %"ND ON T&E BASIS O% A#ERAGE MAT"RIT$ AND SI>E O% T&E %"ND =MA$::9APR:4. A2ERA7E AT9RIT4?4EAR*@ ><114116 ><612" ><$">>> 2<"6:"8> ><"">> ><$1"8> ><1$16 1<8"111 1<8$8>>> *IGE %! T5E !9). ?cr<<@ 1666<44" 1221<:11 2$$4<$> 6>6<2$6" 1$$<4:14"8> 411<81$16 >68<686" 48"<2:>6 :"4<:>6"

#irla Tem+leton Prudential I-I-I *#I Hotak a,indra Hot,ari Pioneer Guric, 5.!A//IA)-E

COMPARISION OF INCOME FUND

4 %'& % 2'& 2 1'& 1 0'& 0
ru de 1 nt irla 3 ia ot a4 l ,,M a5 , in dr a 6u r A ++ i#5 ,A N .

2&00 2000 1&00 1000 &00 0

CRORE

YEARS

A7.RA!. MA80R,89(9.ARS)

S,6. (* 8:. *0N) (#r'')

MUTUAL FUNDS

COMPARISION O% M"T"AL %"NDS ON T&E BASIS O% G9SEC AND ANN"ALISED ROLLING RET"RNS =MA$::9APR:4. 7%2ER) E)T *E-9RIT4 ?C@ #irla Tem+leton I-I-I *#I Hotak a,indra Hot,ari Pioneer Guric, 5.!A//IA)-E 18<12" 26<"" 24<6416 22<1>>6" >$<$" 28<$8416 >"<>$8>> 11<>>" 26<:2>>> :$ .A4* A))9A/I*E. R%//I)7 RET9R) ?C@ 1$<6">:828> 1$<">"1>"68 1$<"28>$"6 :<>121$4 1$<126>:81" 11<"2$"8$1> 1$<1:$4:>11 1<$4$6" 11<11>>1622

COMPARISION OF MUTUAL FUNDS

40 %& %0 2& 20 1& 10 & 0
,, M -, a5 in dr a 6u ri# A 5 ++ ,A N . 1 irl a

14 12 10 ; 6 4 2 0

PERCENTAGE

PERCENTAGE

!(7.RNM.N 8 S.-0R,89 ( ) 90 )A9S ANN0A+,S.) R(++,N! R.80RN ( )

ot a4

MUTUAL FUNDS

COMPARISION O% M"T"AL %"ND ON T&E BASIS O% SI>E O% T&E %"ND AND ABSOL"TE ROLLING RET"RN =MA$ ::9APR :4. *iEe of t,e !und and :$ days A&solute rolling returns of all t,e taken toget,er for com+arision< *IGE %! T5E !9). ?cr<@ #irla Tem+leton Prudential I-I-I *#I Hotak a,indra Hot,ari Pioneer Guric, 5.!A//IA)-E 1666<44" 1221<:11 2$$4<$> 6>6<26$6" 1$$<4:14"8> 411<81$16 >68<686" 48"<2:>6 :"4<:>6" :$ .A4* A#*%/9TE R%//I)7 RET9R) ?C@ 2<1"1116 2<":6828 2<":1$2$"8> 2<>$8414 2<4:6111116 2<84$1:$::1 2<1>1$12 1<48:" 2<64$26 utual !unds are

COMPARISION OF INCOME FUND

2&00 CRORE 2000 1&00 1000 &00 0
2r 1i ud rla en t ia 3o l, t5 -, a4 -, M a5 in dr a 3o t5 ar i 6u ri# A+ 5 +, A N.

% 2'& 2 1'& 1 0'& 0

S,6. (* 8:. *0N) (#r')

90 )A9S A1S(+08. R(++,N! R.80RN ( )

MUTUAL FUNDS

COMPARISION O% M"T"AL %"ND ON T&E BASIS O% A#ERAGE MAT"RIT$ AND GO#ERNMENT SEC"RIT$ =MA$ :: 6 APR :4.

#irla Tem+leton Prudential I-I-I *#I Hotak a,indra Hot,ari Pioneer Guric, 5.!A//IA)-E

A2ERA7E AT9RIT4 ?4EAR*@ ><114116 ><612" ><$">>> 2<"6:"8> ><"">> ><$1"8> ><1$16 1<8"111 1<8$8>>>

7%2ER) E)T *E-9RIT4 ?C@ 18<12" 26<"" 24<6416 22<1>>6" >$<$" 28<$8416 >"<>$8>> 11<>>" 26<:2>>>

COMPARISION OF MUTUAL FUNDS

40 %& %0 2& 20 1& 10 & 0
2r 1i ud rla en t ia l, 3o -, ta -, 4 M a5 in dr a 5 A+ +, AN -. 6u ri#

1'2 1 0'; 0'6 0'4 0'2 0

PERCENTAGE

A7.RA!. MA80R,89 (9.ARS) !(7.RNM.N8 S.-0R,89 ( )

MUTUAL FUNDS

COMPARISION O% M"T"AL %"ND ON T&E BASIS O% A#ERAGE MAT"RIT$ AND SI>E O% T&E %"ND =MA$:: 6 APR:4.

#irla Tem+leton Prudential I-I-I *#I Hotak a,indra Hot,ari Pioneer Guric, 5.!A//IA)-E

A2ERA7E AT9RIT4 ?4EAR*@ ><114116 ><612" ><$">>> 2<"6:"8> ><"">> ><$1"8> ><1$16 1<8"111 1<8$8>>>

*IGE %! T5E !9). ?cr<@ 1666<44" 1221<:11 2$$4<$> 6>6<2$6" 1$$<4:14"8> 411<81$16 >68<686" 48"<2:>6 :"4<:>6"

COMPARISION OF INCOME FUND

4 % 2 1 0
rl 2r a u' '' 3o t'' 6u ri# 5 A+ ' '' 1i

2&00 2000 1&00 1000 &00 0

CRORE

A7.RA!. MA80R,89 (9.ARS) S,6. (* 8:. *0N) (#r')

MUTUAL FUNDS

COMPARISION O% M"T"TAL %"ND ON T&E BASIS O% SI>E O% T&E %"ND AND GO#ERNMENT SEC"RIT$ =MA$::9APR:4. *IGE %! T5E !9). ?cr<@ 1666<44" 1221<:11 2$$4<$> 6>6<2$6" 1$$<4:14"8> 411<81$16 >68<686" 48"<2:>6 :"4<:>6" 7%2ER) E)T *E-9RIT4 ?C@ 18<12" 26<"" 24<6416 22<1>>6" >$<$" 28<$8416 >"<>$8>> 11<>>" 26<:2>>>

#irla Tem+leton Prudential I-I-I *#I Hotak a,indra Hot,ari Pioneer Guric, 5.!A//IA)-E

COMPARISION OF INCOME FUND

2500 2000 1500 1000 500 0 Birla SBI Zurich 40 30 20 10 0

CRORE

S,6. (* 8:. *0N) (#r') !(7.RNM.N8 S.-0R,89 ( )

MUTUAL FUNDS

INTERPRETATION I)-% E !9).

*tarting from 1::8 t,e de&t funds were facing a very toug, time< T,e &udget of 1:::-2$$$ came as a &lessing and infused fres, lease of life in t,em< T,e utual !und got tax exem+tion on income from unit of utual fund into t,e ,ands of t,e investors and on dividend distri&uted &y e0uity oriented funds ?funds wit, more t,an "$C ex+osure to e0uities@< 5owever; wit, t,e sensex ,itting t,e roof and crossing t,e 1$$$ mark in t,e same year t,e e0uity and &alanced sc,emes out+erformed t,e sensex &y a wide margin< T,e e0uity sc,emes witnessed on all time ,ig,; toug, t,e de&t sc,emes took a &eating< T,e mont, of ay 2$$$ saw t,e ru+ee vacillating +recariously and di+ to all time low of 44<"6 on ay >1; 2$$$< T,e &unc,ing of outflows +ut initial +ressure on t,e ru+ee< A furt,er slowdown in +ortfolio flows and resistance from ex+orters to &ring in dollors +us,ed t,e ru+ee to an all time low< T,is +eriod also saw rising inflation 9*. interest rates< T,e rising inflation wit, front +age ,eadlines of water scarcity and droug,t created uncertainity a&out t,e long term trend in inflation< T,e lack of volumes and widening s+reads in long dated cor+orate &ond stress t,e need for maintaining li0uidity in t,e +ortfolio< 5owever t,e arrival of monsoon in Herala on time s,owed t,e signs of recovery in Duly 2$$$ t,e interest rate saw a rising trend &ecause of t,e following factorsB Tig,t money +olicy followed &y t,e R#I to +reem+t t,e s+eculative attack on t,e ru+ee< -oncern over slowly &ut steadily rising inflation< Im+act of rising oil +rices on trade deficit; oil +ool account deficit and fiscal deficit< *low down in &ank de+osit growt, and +ick u+ in +rivate sector credit creating +ressure on li0uidity in t,e &anking system< .elay in disinvestment(+rivatisation of P*9s resulting in a ,ig,er &orrowing +rogramme &y t,e government< T,e de&t market clocked lower volumes wit, a strong &ias towards lower maturities< T,ere was a decline in trading volumes in longer dated &onds &y t,e utual !unds< As suc, t,e average maturity of all t,e funds reduced from Duly< T,e de&t market witnessed extreme volatility in t,e &eginning of t,e year 2$$$< Interest rates came down s,ar+ly at t,e &eginning on t,e &ack of easy li0uidity +rovided &y t,e R#I to tackle 42H +ro&lem< T,e R#I reduced t,e

&ank rate &y 1$$ &asis +oint i<e from 8C to 6C in t,e mont, of A+rilM$$< 5owever; t,e ru+ee remained weak in t,e mont, of Dune due to ,ig,er trade deficit and negative +ortfolio flows< In order to su++ort t,e ru+ee t,e R#I increased t,e &ank rate &y 1$$ &asis +oint i<e from 6C to 8C on Duly 21; 2$$1< T,e R#I simultaneously raised cas, reserve ratio &y "$ &asis +oint i<e from 8C to 8<"C at t,is +oint of time in order to save its +ortfolio from t,e adverse affects of rising interest rates all t,e utual !und reduced t,eir average +ortfolio maturity &y investing in s,ort maturity instruments< T,e de&t market t,roug,out t,e mont, of August 2$$$ was trying to recover from t,e increase in t,e &ank rate< 5owever in t,e end of AugustM$$ market started to &e normal< onsoon ,as &een and t,e ru+ee started sta&ilising< Excellent results were also re+orted from software com+anies< At t,is +oint of time utual !unds increased t,eir average +ortfolio maturity &y a small margin to get good investment o++ortunities< T,e +eriod of *e+tM$$ saw t,e lowering of international oil +rices and significantly ,ig,er tax collection in t,e Ist ,alf of 2$$$-2$$$1< !rom t,is +oint utual !und saw a rise in t,e +ercentage investment in t,e 7-sec and increase in t,e average +ortfolio maturity< T,e increase in maturity +rofile ,el+ed in im+roving t,e +erformance of utual !unds< T,e year 2$$1 was su++osed to &e t,e year of growt, funds &ut wit, t,e market going into a tails+in and t,e tec, sector witnessing a meltdown; growt, funds ,ave &een a far cry from offering any +ositive returns to t,e investors es+ecially in t,e last 0uarter of 2$$$-2$$1< Rat,er t,e growt, if at all it came from de&t funds< T,atMs &ecause in a falling market; w,en com+any fundamentals often take a &ack seat to market sentiments; de&t funds emerge as t,e &est &et since t,ey are less +rone to systematic risks< T,e tragic eart,0uake in 7u'rat is t,oug,t to ,ave a negative im+act &y t,e introduction of additional taxex as well as assistance from local and international agencies to meet t,e economic cost< 5owever; t,e union &udget 2$$1-2$$2 sur+rised t,e &ond market +ositively< T,e &udget tried to deal wit, t,e long term structural +ro&lem and avoid taking u+ fiscal stimulus route to c,eck u+ slowing economic growt,< T,e administered rates on +rovident funds and small savings ,ave &een lowered &y 1"$ &asis +oint< *econdly t,e net and gross market &orrowings ,ave &een &udgeted close to t,e figure of 2$$1-2$$2< T,e &udget reduced t,e dividend tax from 22<4C ?inclusive of surc,arge@ to 1$<2C wit, effect from Dune 1; 2$$1< 5owever; t,ere are ot,er +rovisions in t,e &udget w,ic, also affected t,e utual !und industry +ositively< -ut in small savings interest rates &y 1C-1<"C

 Reduction in deduction availa&le for interest income under section 8$/ to Rs :$$$(- from Rs 1";$$$( T.* limit for interest income reduced to Rs 2;"$$ from Rs ";$$$ for all t,e categories of de+osits ?including de+osits made wit, financial institutions@ T,us t,e reduced interest rates and reduced utual !und dividends form t,e mix t,at ,as more attractive on a relative &asis to ot,er 5owever; t,ere are a num&er of reasons t,at t,is factB level of taxation on made de&t sc,emes saving instruments< can &e attri&uted to

T,e fall in t,e e0uity market ,ammered t,e value of most of t,e e0uity funds< After t,e fall of t,e stock markets investors realised t,e im+ortance of +laying safe< T,e &udget 2$$1-2$$2 ,as &oug,t in measures t,at ,ave significantly im+roved t,e tax efficiency of t,e de&t oriented utual !und over direct investing in fixed income investment o+tions; suc, as fixed de+osits; &onds; &anks term de+osits and small savings sc,emes< /ower interest rate ,as im+roved t,e returns of t,e de&t funds and a furt,er cut in t,e interest rates increase t,e +ro&a&ility of furt,er im+rovement in t,e return< T,e may,em in t,e stock market on t,e &ack of massive +rice erosion in information tec,nology stocks ,as taken its toll on t,e utual !und industry< A fear +syc,osis gri++ed t,e Indian retail investor< T,is is clearly evident from t,e s,rinkage in t,e total assets under management of utual !und in arc,M$1< T,e total assets under management of utual !unds eroded 11C in 'ust a s+an of >$ days; from Rs 1$24<4&n in !e&RM1 to Rs :$"<:&n on arc,RM1< T,e erosion in t,e total net assets under management can &e attri&uted to t,e drastic fall in t,e )A2 of funds following t,e stock market cras, cou+led wit, ,ig, redem+tion +ressures witnessed &y income and growt, funds during t,e mont, of !e&M$1< !or income; fund utual !und assets were down &y "C to Rs 488<1&n from Rs"16<>&n< in arc,M$1< Income fund saw net outflows of Rs4<6&n wit, sales of Rs>:<6&n and redem+tion of Rs 44<4 &n< T,is was a 164C fall against net inflows of Rs 1<>&n in Income !und in !e&M$1< In marc,M$1 R#I reduced &ank rate &y "$ &asis +oint to 6C from 6<"C t,e Income !und saw a rise in t,e average maturity and t,e returns from t,e last 0uarter of t,e year 2$$$< In t,e 0uarter ended arM$1 t,e Income !und saw a net aggregate inflows of Rs 1:<8&n< income fund were among t,e most

+o+ular fund category in t,e .ecR$$ ended 0uarter too; getting t,e ,ig,est net inflows of Rs :<4&n in t,at +eriod< As against total net inflows of Rs 18<18&n into Income !und in DanM$1; arM$1 witnessed net outflows of Rs4<6&n<

LI("ID SC&EME

T,e com+arision was down on ,alf-yearly ?)ov2$$$-A+r2$$1@ &asis< T,e data collected from different 2$$$ to ay 2$$1< utual !unds was from %ct

T,e

utual funds used for t,e com+arision wereB

#IR/A -A*5 P/9* TE P/ET%) I).IA /IO9I. !9). PR9.E)TIA/ I-I-I /IO9I. P/A) H%TAH A5I).RA H-/IO9I. A//IA)-E -A*5 A)A7ER .*P / /IO9I. !9). T,e data collected for t,e com+arision of -as, Plus *c,eme of t,e utual funds wasB ont,ly !act s,eet from %ct2$$$ to )A2 of t,e sc,eme since ince+tion< T,e utual !unds were com+ared on t,e following &asisB ay 2$$1<

>$ days a&solute rolling return Average maturity *iEe of t,e fund

LI("ID %"ND

T,e com+arative c,art &elow s,ows t,e features of t,e -as, *c,eme of all t,e utual !unds<

!9). A)A7ER #IR/A TE P/ET%) PR9.E)TIA/ I-I-I H%TAH A5I).RA H%T5ARI PI%)EER A//IA)-E .*P ERI// /4)-5 *#I G9RI-5 I).IA /IO9I.IT4 !9).

I)I 9 I)2E*T E)T ?Rs<@ #5ARAT *5A5 1$;$$$()I/E*5 *5A5 2";$$$(*A)DA4 1";$$$(7AR%.IA *A).E*5 HIRHIRE R )ARA4A) 2I)EET 9.E*5IE .5A3A/ .A/A/ PID9*5 .A* *A)T%*5 HA AT5 ";$$;$$$(1;$$;$$$(1;$$;$$$(2";$$$(-

EPIT /%A. )I/ )I/ )I/ 2"C I! EPIT 3IT5I) " .A4* )I/ )I/ )I/ <2"C I! RE.EE E. 3IT5I) 4 #9*I)E** .A4* )I/ *A2I)7B )I/ I)2E*T E)TB < 2"C 3IT5 I) 1 %)T5

4EAR/4 RET9R) :<442C :<:141C :<611:C :<12C 1$<$$""C :<>::2C 8<1>66C

1$;$$$(1;$$;$$$(-

8<64C 1$<22$4C

MET&ODOLOG$ "SED
T,e met,odology used for t,e com+arision of -as, Plus sc,emes of t,e utual !unds areF

-alculation of a&solute rolling return S ?)ew )A2->$ days old )A2@(>$days old )A2@A1$$ -alculation of t,e Average S ?*um Total(Total )um&er@ 9se of Pictorial diagram /ine gra+,s 2 Axis /ine K -olumn gra+,s are used to re+resent t,e com+arision among all t,e utual funds<

#IR/A -A*5 P/9* ?)%22$$$-APR2$$1@ A2ERA7E AT9RIT4 ?.A4*@ )ov-$$ .ec-$$ Dan-$1 !e&-$1 ar-$1 A+r-$1 86 86 86 111 86 6$ *IGE %! T5E !9). ?-R%RE@ "61<" ":2<6: >6$<1: 2:6<4 4>1<46 >::<"1 >$ .A4* A#*%/9TE R%//I)7 RET9R) ?C@ $<64: $<61> $<614 $<6"8 $<11: $<116

#irla -as, PlusB T,e average maturity of #irla -as, Plus is 8: days< It is com+aratively ,ig,er t,an ot,er utual funds< T,e +lausi&le reasons for t,is ,ig, average +ortfolio in cas, and call money<

TEMPLETON INDIA LI("ID %"ND =NO#5:::9APR5::4. A2ERA7E AT9RIT4 ?.A4*@ )ov-$$ .ec-$$ Dan-$1 !e&-$1 ar-$1 A+r-$1 62 62 1$1 61 11 48 *IGE %! T5E !9). ?-R%RE@ >"4<:" >6><4" 282<1: 482<1> >$$<>8 4:$<$: >$ .A4* A#*%/9TE R%//I)7 RET9R) ?C@ $<14 $<1 $<6> $<6> $<1" $<6

T EM PL ET ON I N D I A L I QUI D FUN D
600 500 400 300 200 100 0
v De -00 c0 1- 0 Ja 1- n Fe 1- b M a 1- r A r

0!" 0!4 0!2 0 PERCENTAGE 0!6

DAYS

A#$%A&$ MA'(%I') *DA)S+ SIZ$ ,F '-$ F(ND *.%,%$+ 30 DA)S ABS,/('$ %,//IN& %$'(%N *0+

No

M O NTHS
Tem+leton India /i0uid !undB

T,e average maturity of Tem+leton is on average 61<16 days< T,e +ossi&le reason ,ig, maturity is t,e increased investment of Tem+leton in commercial +a+ers< Its average investment in commercial +a+ers is 1$<26C< t,e increase of average maturity is 1$1 days from 62 days in t,e mont, of Danuary; mig,t &e &ecause of fall in t,e +ercentage investment in cas, and call from >"<"C in .ecem&er to 11<1C in Danuary< T,e a&solute rolling return of Tem+leton is low t,an ot,er utual !unds in t,e mont, of

)ovem&er and .ecem&er< It mig,t &e t,e reason t,at t,e siEe of Tem+leton reduced in .ecem&et and Danuary and after t,at w,en its returns increased its siEe also started increasing< PR"DENTIAL ICICI LI("ID PLAN =NO#5:::9APRIL5::4. A2ERA7E AT9RIT4 ?.A4*@ )ov-$$ .ec-$$ Dan-$1 !e&-$1 ar-$1 A+r-$1 6> "$ "" 46 "4 "1 *IGE %! T5E !9). ?-R%RE@ 1$12<16 1112<48 12"1<2" 1>:$<22 :"1<81 :41<66 >$ .A4* A#*%/9TE R%//I)7 RET9R) ?C@ $<6661> $<66111> $<6646": $<6114"1 $<61:2$4 $<61"61

PR U D EN T I A L I C I C I L I Q U I D PL A N
1 6 00 1 4 00 1 2 00 1 0 00 "0 0 60 0 40 0 20 0 0 0!" 0!1" 0!16 0!14 0!12 0!1 Nov-00 Dec-00 1-Feb 1-Mar 1-A r 1-Jan 0!6" 30 DA)S ABS,/('$ %,//IN& %$'(%N *0+ A#$%A&$ MA'(%I') *DA )S+ SIZ$ ,F '-$ F(ND *.%,%$+

M O NTHS

PERCENTAGE

DAYS

KOTAK MA&INDRA K9LI("ID =NO#5:::9APRIL5::4. A2ERA7E AT9RIT4 ?.A4*@ )ov-$$ .ec-$$ Dan-$1 !e&-$1 ar-$1 A+r-$1 "1<1 1:<>" 1$<22" 1><:" "8<4 1:<" *IGE %! T5E !9). ?-R%RE@ 11><61 1"><1" 1"8<4"" 114<$>6" 11:<12 1::<" >$ .A4* A#*%/9TE R%//I)7 RET9R) ?C@ $<6:68"1 $<6"6:4" $<8>"8": $<6::621 $<66:488 $<62>>:2

Hotak

a,indra ?H-/i0uid@B

T,e initial investment in H-/i0uid is Rs ";$$;$$$(- as suc, t,e small ,ouse ,old savings cannot &e mo&ilised in H-/i0uid< .ue to a ,ig, initial investment only cor+orates can invest in H-li0uid< As suc, its fund siEe is also low i<e on an average 118<$86 crore<

ALLIANCE CAS& MANAGER =NO#5:::9APR5::4. A2ERA7E AT9RIT4 ?.A4*@ )ov-$$ .ec-$$ Dan-$1 !e&-$1 ar-$1 A+r-$1 8<> >6 >" 2><6 >"<1 46<" *IGE %! T5E !9). ?-R%RE@ 6$2<>8 416<" >>2<8: >8$<68 >"4<$> >26<28 >$ .A4* A#*%/9TE R%//I)7 RET9R) ?C@ $<612 $<16> $<6>" $<641 $<1": $<614

AL L I AN CE CASH M AN AG ER
"00 100 600 500 400 300 200 100 0
ov D 00 ec -0 1- 0 Ja 1- n Fe 1- b M a 1- r A r

0!16 0!14 0!12 0!1 0!6" 0!66 0!64 0!62 0!6

PERCENTAGE

A#$%A&$ MA'(%I') *DA)S+ SIZ$ ,F '-$ F(ND *.%,%$+

DAYS

M O NT HS

30 DA)S ABS,/('$ %,//IN& %$'(%N *0+

Alliance -as,

anagerB

T,e average maturity of Alliance -as, anager is on an average >1<18> days< In )ovem&er 2$$$ its maturity was 8<> days w,ic, increased to >6 days in t,e next mont,< T,e +ossi&le reason is t,e fall in t,e investment in cas, and call money from 1<1C to 11<1C< t,e reason for t,e fall again in maturity from Danuary to !e&ruary 2$$1 from >" days to 21<6 days is also t,e same as t,e +ercentage investment in cas, and call increase from :<>C to 21<6C< also from !e&M$1 t,e minimum initial investment in t,e growt, fund increased from Rs ";$$$(- to Rs "$;$$$(DSPML LI("IDIT$ %"ND =NO#5:::9APR5::4. A2ERA7E AT9RIT4 ?.A4*@ )ov-$$ .ec-$$ Dan-$1 !e&-$1 ar-$1 A+r-$1 1" 6 1<2 1<1 1 1" *IGE %! T5E !9). ?-R%RE@ >1<28 41<$4 4:<1> >2<48 >"<"4 >"<:2 >$ .A4* A#*%/9TE R%//I)7 RET9R) ?C@ $<6$2286 $<1411$2 $<622>4> $<6$>161 $<"82>$1 $<"8:461

D SPM L L I Q UI D FUN D
10 60 50 40 30 20 10 0
ov D -00 ec -0 1- 0 Ja 1- n Fe 1- b M 1- ar A r

0!" 0!6 0!4 0!2 0 PERCENTAGE

DAYS

A7.RA!. MA80R,89 ()A9S) S,6. (* 8:. *0N) (-R(R.) %0 )A9S A1S(+08. R(++,N! R.80RN ( )

M O NT HS

.*P / /i0uid !undB T,e average maturity of .*P / is very low< T,e +ossi&le reason is t,e investment of ,ig, +ercentage in -as, and -all< 5owever t,e average maturity increased in A+rilM$1 to 1" days from 1 day due to fall in +ercentage investment from 81<6>C to 28<">C< from !e&M$1 to arc,M$1 t,oug, t,e returns of all t,e utual !unds decreased &ut of .*P / decreased faster t,an ot,er utual !unds decreased &y around 16<1:C< one +ossi&le reason ot,er t,an t,e stock market cras, can &e t,e c,ange in t,e +ortfolio manager from R *reesankar to .,awal .alal< SI>E O% T&E %"ND IN CRORE #IR/A )ov-$$ .ec-$$ Dan-$1 !e&-$1 ar-$1 A+r-$1 T%TA/ A2ERA7E RA)H "61<" ":2<6: >6$<1: 2:6<4 4>1<46 >::<"1 2112<:1 44><818>>> 2 A2ERA7E TE P/ET %) >"4<:" >6><4" 282<1: 482<1> >$$<>8 4:$<$: 228><1: >8$<11" 4 AT9RIT4 I) .A4* PR9.E)TIA/ I-I-I 1$12<16 1112<48 12"1<2" 1>:$<22 :"1<22 :41<66 161"<2" 111:<2$8>> > 1 H%TAH A5I).RA 11><61 1"><1" 1"8<4"" 114<$>6" 11:<12 1::<" 1$$8<"22" 118<$86$8> > " A//IA)-E .*P / 6$2<>8 >1<2 416<" 41<$ >>2<8: 4:<1 >8$<68 >2<4 >"4<$> >"<" >26<28 >"<: 2"14<81 2>$<$ 41:<14>>> >8<>:1 > 1

#IR/A )ov-$$ .ec-$$ Dan-$1 !e&-$1 ar-$1 A+r-$1 T%TA/ A2ERA7E RA)H 86 86 86 111 86 6$ ">4 8: 1

TE P/ET%) 62 62 1$1 61 11 48 4>$ 61<11111116 "

PR9.E)TIA/ I-I-I 6> "$ "" 46 "4 "1 >>" ""<8>>>>>>> >

H%TAH A5I).RA "1<1 1:<>" 1$<22" 1><:" "8<4 1:<" >62<"2" 12<$86" 4

A//IA)-E

.*P / 8<> 1" >6 6 >" 1<2 2><6 1<1 >"<1 1 46<" 1" 186<1 :$<> >1<18>>>> 1"<$" 2 1

7: DA$S ABSOL"TE ROLLING RET"RN IN @ #IR/A )ov-$$ .ec-$$ Dan-$1 !e&-$1 ar-$1 A+r-$1 T%TA/ A2ERA7E RA)H $<64: $<61> $<614 $<6"8 $<11: $<116 4<>2$ $<62 > TE P/ET%) $<14 $<1 $<6> $<6> $<1" $<6 4<$" $<16" " PR9.E)TI A/ I-I-I $<6661> $<66111> $<6646": $<6114"1 $<61:2$4 $<61"61 4<"2::22 $<6"4:86 2 H%TAH A5I).RA $<6:68"1 $<6"6:4" $<8>"8": $<6::621 $<66:488 $<62>>:2 4<1:4211 $<682>6611 6 1 A//IA)-E $<612 $<16> $<6>" $<641 $<1": $<614 4<2>: <6$1" 4 .*P /

$<6$228 6 $<1411$ 2 $<622>4 > $<6$>16 1 $<"82>$ 1 $<"8:46 1 ><:4118 " $<1"61: 8 1

COMPARISION O% M"T"AL %"NDS =CAS& SC&EME. ON T&E BASIS O% A#ERAGE MAT"RIT$ AND 7: DA$S ASBOL"TE ROLLING RET"RN
A2ERA7E ?.A4*@ 8: 61<1>6 "8<8>> 12<$86" >1<18>> 1"<$" AT9RIT4 >$ .A4* A#*%/9TE R%//I)7 RET9R) ?C@ $<62 $<16" $<6"4:86 $<682>8 $<6$1" $<1"61:8

BIRLA TE P/ET%) PR9.E)TIA/ I-I-I H%TAH A5I).RA A//IA)-E .*P ERI// /4)-5

100 90 ;0 <0 60 &0 40 %0 20 10 0

COMPARISION OF CASH FUND

0'; 0'<; 0'<6 0'<4 0'<2 0'< 0'6; 0'66 0'64 0'62 0'6 0'&; PERCENTAGE

DAYS

A7.RA!. MA80R,89 ()A9S) %0 )A9S A1S(+08. R(++,N! R.80RN ( )

A N ,-, RA . -: + R 8( ,- ) N- N 1, +. A+ ,N ,A +9 2 8, A: ++ ++ M A , N M R 8. ). 3 . A M 0 8 2 2R 3 ( )S MUTUAL FUNDS

COMPARISION O% M"T"AL %"NDS =CAS& SC&EME. ON T&E BASIS O% SI>E O% T&E M"T"AL %"ND SC&EME AND T&E 7: DA$S ABSOL"TE ROLLING RET"RN

BIRLA TE P/ET%) PR9.E)TIA/ I-I-I $<6"4:86 H%TAH A5I).RA A//IA)-E .*P ERI// /4)-5

*IGE %! T5E !9). ?-R%RE@ 44><818> >8$<11" 111:<2$8> 118<$86 41:<14>> >8<>:8>>

>$ .A4* A#*%/9TE R%//I)7 RET9R) ?C@ $<62 $<16"

$<682>8 $<6$1" $<1"61:8

COMPARISION O% M"T"AL %"NDS =CAS& SC&EME. ON T&E BASIS O% A#ERAGE MAT"RIT$ AND SI>E O% T&E %"ND
A2ERA7E ?.A4*@ 8: 61<116 "8<8>> 12<$86" >1<18>> 1"<$" AT9RIT4 *IGE %! T5E !9). ?-R%RE@ 44><818> >8$<11" 111:<2$8> 118<$86 41:<14>> >8<>:8>>

BIRLA TE P/ET%) PR9.E)TIA/ I-I-I H%TAH A5I).RA A//IA)-E .*P ERI// /4)-5

LI("ID %"NDS)
/i0uid funds are one of t,e +referred avenues of t,e investors in t,e current year 2$$1< T,ey are ,ig,ly li0uid; s,ort term funds t,at invest in t,e money market instrument w,ic, offer a ,ig, degree of safety as-well-as 0uick maturity< -as, funds are wooing investors &y lowering t,e minimum investment< It ,a++ened &ecause of t,e fall in t,e interest rate< As suc, t,e returns from t,e cas, funds were ,ig,er t,an from t,e &ank de+osits< Also t,ere is no T.* for cas, funds at source< As-well-as cas, funds does not c,arge any exit load w,en one redeems ones funds< oreover a cas, fund announces weekly dividends; w,ic, mean t,at one doesnot loose out w,en one wit,draws in +art or in full after a mont, or so< 5owever li0uid(cas, fund also saw a downtrend &ecause of t,e stock market cras, w,ic, ,a++ened &ecause of &ust in tec,nology fund< As a result cas, fund got down &y 18C to Rs< 41<>&n in trend in t,e returns of all t,e mutual funds< Relation &etween average maturity is ,ig, t,e average returns also tend to &e ,ig, and viceversa< T,e reason for t,is relations,i+ is t,at t,e ,ig, average maturity means ,ig, risk taken &y t,e investors as suc, t,ey get ,ig, returns< 3,en a fund invest a large +ercentage of its +ortfolio in cas, and call its average maturity decreases as suc, t,e returns also fall< !or eg< .*P / w,ose maturity is t,e least i<e< 1"<$" days &ecause of ,ig, investment in cas, and call ?on an average 6$<16C@ ,as its returns 'ust $<1"8C i<e< lest among all ot,er utual funds< In t,e 0uarter ended arM$1; for investors &arring 7rowt, and /i0uid; all t,e ot,er fund categories witnessed net inflows< 7rowt, and /i0uid !und saw net aggregate outflows of Rs $<$:&n and Rs 1<44&n res+ectively I t,is +eriod< /i0uid fund witnessed net outflows of Rs 4<"&n in .ecM$$ ended 0uarter< T,e siEe of Prudential I-I-I is t,e largest in all t,e utual !unds and second comes to &e #irla -as, Plus< It mig,t &e &ecause of low initial investment i<e 1";$$$(- and 1$;$$$(- res+ectively< It ,el+ to mo&ilise t,e small ,ouse ,old savings<

SWOT ANAL$SIS O% BIRLA S"N LI%E ASSET MANAGEMENT CO. 3,en I worked wit, #*/A - during my summer +ro'ect in .el,i; I came across a num&er of +eo+le connected wit, t,e &usiness< .uring t,is +eriod I came to know a lot a&out +eo+leMs +erce+tion a&out mutual fund and &irla mutual fund in +articular< #ased on my ex+eriences I ,ave done a swot analysis of t,e com+anyB SWOT ANAL$SIS)9 STRENGT&)9 #rand name of &irla grou+< Past +erformance of &irla mutual fund< /arge cor+us of # !< 3ide distri&ution network< uti &asket of sc,emes< Efficient fund manager< Trans+arency< !ait, of investors< WEAKNESSES)9 /ack of +u&licity< /ack of marketing interaction and market su++ort< /ack of consistency in returns ?es+ecially e0uity sc,eme@< /ack of +ro+er services< )ot very a++ealing &rokerage structure< Inade0uate num&er of +ersonnel in &ranc, office< OPPOR"TNITIES)9 #irla utual !und can increase its market s,are t,roug, aggressive arketing; +romotion and advertising< # ! can win over t,e &roken trust of t,e investor &y giving excellent results; year after year< #an on #anda *ystem &y *E#I<

T&REATS)9

Rising com+etition for Indian as well as multinational com+any< #etter &rokerage structures and incentives &y com+etitors< #elow ex+ectation results of #irla Advantage !und<

RECOMMENDATIONS 1< 2< >< 4< "< 1< 6< #irla #irla #irla #irla #irla #irla #irla utual !und s,ould undergo aggressive +u&licity< utual !und s,ould c,ange its advertisement strategy &y utual !und s,ould communicate t,roug, t,eir utual !und s,ould em+loy more +eo+le in .el,i office utual !und s,ould motivate t,eir em+loyees t,roug, utual !und s,ould im+rove its service standards to t,e utual !und s,ould em+loy a grou+ of +eo+le as t,eir

making it close to common +eo+les life< advertisement< w,o can take care of t,e intermediaries< different sc,emes< intermediaries< fund managers &ecause it is not +ossi&le for one +erson to make +ortfolio for &ot, e0uity as well as de&t sc,eme< 8< #irla utual !und s,ould avoid mistakes like it did in case of #irla advantage fund< T,e time w,en I<T< sector was going down #irla advantage fund was investing ,eavily into it<

BIBLIOGRAP&$)

#%%H*B 7uide to utual !und investing I).IA I)!%/I)E .A2I. .A*E4

An introduction to e0uity markets A7AGI)EB utual Advantage Analyst 3E#*ITE* www<&irlasunlifeamc<com www<kotakma,indra<com www<kot,ari+ioneerindia<com www<+ruicici<com www<ds+ml<com www<allianceca+italindia<com www<amfindia<com www<valueresearc,india<com www<indiainfoline<com www<economictimes<com

GLOSSAR$

A*H(%!!ER PRI-EB T,e +rice at w,ic, a utual !unds s,ares can &e +urc,ased< T,e asked or t,e offering +rice means t,e current net asset value ?)A2@ +er s,are +lus sales c,arge; if any< If a no load fund; t,e asked +rice is t,e same as t,e )A2< #A/A)-E. !9).B A utual !und t,at maintains a &alanced +ortfolio; generally 1$C &onds or +referred stocks and 4$C common stocks< #I.(*E// PRI-EB T,e +rice at w,ic, a utual !unds s,ares are redeemed ?&oug,t &ack@ &y t,e fund< T,e &id or redem+tion +rice means t,e current net asset value +er s,are less any redem+tion fee or &ack-end load< #%). PRI-EB It is t,e +resent value of its future cas,-flows< -APITA/ ARHETB

It deals wit, transactions related to long-tern instruments ?wit, a +eriod of maturity of a&ove one year like cor+orate de&entures; government &onds; etc@ and stock ?e0uit,y and +reference s,ares@< -%)TI)7E)T .E!ERRE. *A/E* -5AR7E ?-.*-@B A fee ?or &ack-end load@ im+osed &y certain funds on s,ares redeemed wit,in a s+ecific +eriod following t,eir +urc,ase< T,ese c,arges are usually assessed on a sliding scale; suc, as four +ercent

to one +ercent of t,e amounts redeemed; wit, t,e fee reduced eac, year t,e units are ,eld< 7%2ER) E)T *E-9RITIE*B It encom+asses all &onds and treasury &ills issued &y t,e central government; state government; and ot,er entities like cor+orations; munici+al aut,orities and com+anies w,olly owned &y t,e government for t,e +ur+ose of raising funds from t,e +u&lic< 7R%3T5 !9).B A mutual fund w,ose +rimary investment o&'ective is long-term growt, of ca+ital< It invests +rinci+ally in common stocks wit, significant growt, +otential< I)-% E !9).B A mutual fund t,at +rimarily seeks current income rat,er t,an growt, of ca+ital< It will tend to invest in stocks and &onds t,at normally +ay ,ig, dividends and interest< I).EP !9).B A mutual fund t,at seeks to mirror general stock-market +erformance &y matc,ing its +ortfolio t a &road-&ased index; most often t,e *NP -)P )ifty index< I)2E*T E)T -% PA)4B A cor+oration; +artners,i+ or trust t,at invest t,e +ooled monies of many investors< It +rovides greater +rofessional management and diversification of investment t,an most investors can o&tain inde+endently< utual funds; or Io+en-endJ investment com+anies; are t,e most +o+ular form of Investment -om+any<

/%A.B A *ales c,arge or commission assessed &y certain mutual funds ?Iload fundsJ@ to cover t,eir selling costs< T,e commission is generally stated as a +ortion of t,e fundMs offering +rice; usually on a sliding from one to 8<"C< %)E4 ARHETF

It deals wit, all transactions is s,ort-term instruments :wit, a +eriod of maturity of one year or less like treasury &ills; &ills of exc,ange etc@< %)E4 A ARHET 9T9A/ !9).B

utual !und t,at aims to +ay money market interest rates< T,is

is accom+lis,ed &y investing in sage; ,ig,ly li0uid securities; including &ank certificates of de+osit; commercial +a+er; government securities and re+urc,ase agreements< seeking immediate and ,ig, investment safety< )ET A**ET 2A/9EB T,e current market wort, of a mutual fund s,are< -alculated daily taking t,e funds total assets securities; cas, and any accrued earnings deducting lia&ilities; and dividing t,e remainder &y t,e num&er of s,ares outstanding< It is an indicator of t,e ca+ital a++reciation of t,e funds under t,e sc,eme as on t,e date of t,e )A2 )A2 S ? T%@-/ 2 S market value of securities or investment made %S ot,er assets oney market funds make t,ese ,ig, interest securities availa&le to t,e average

/S total lia&ilities 2S num&er of units outstanding P%RT!%/I%B It refers to t,e grou+ of assets t,at is owned &y t,e investor< PROSPECT"S) An official document t,at eac, investment com+any must +u&lis,; descri&ing t,e mutual fund and offering its s,ares for sale< It contains information re0uired &y t,e *ecurities and exc,ange commission< RECORD DATE) T,e date t,e fund determines w,o its s,are,olders areF

Is,are,olders of recordJ w,o will receive t,e fundMs income divided and(or net ca+ital gain distri&ution< !re0uently t,e &usiness immediately +rior to t,e Ex-.ividend date< REDEMPTION %EE) A mutual fund t,at concentrates its investments wit,in a s+ecific geogra+,ic area; usually t,e fundMs local region< T,e o&'ective is to take advantage growt, +otential &efore t,e national investment community does< REIN#ESTMENT DATE =PA$ABLE DATE. T,e date on w,ic, a s,areMs dividend and( or ca+ital gains will reinvested ?if re0uested@ in additional fund s,ares<

S&ORT SELLING) T,e sale of a security; w,ic, is not owned &y t,e seller< T,e Is,ort sellerJ &orrows stock delivery to t,e &uyer; and must eventually +urc,ase t,e security for return to t,e lender< SPREAD) It is e0ual to %ffer Price-#id Price< S$STEMATIC WIT&DRAWAL PALN) any mutual funds offer wit,drawal +rograms w,ere&y

s,are,olders receive +ayments from t,eir investments< T,ese +ayments are usually drawn from fundMs dividend income gain distri&utions; if any; and from +rinci+al only necessary< $EILD) It is t,e amount of interest +aid on a &ond dividend &y t,e +rice; a measure of income generated &y t,e &ond< $IELD C"R#E) It is a gra+,ic line c,art t,at s,ows interest rates at a s+ecific +oint for all securities ,aving e0ual risk &ut different maturity dates< !or &onds it ty+ically com+ares t,e 2 or " year treasury wit, t,e >$ year< $IELD TO MA"TRIT$) It is t,e interest rate t,at makes t,e +resent value of t,e future cou+on +ayments e0ual to t,e current &ond +rice; i<e< for a known +rice Po; t,e yield is t,e solution LyM to t,e e0uation<

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