I, the under signed Hussain.A.Namakwala, hereby declare and confirm that work done by me is original and true to the best of my knowledge and belief. It is the result of my efforts and dedication. Moreover it has been approved by the management of BIRLA SUN LIFE MUTUAL FUND BHARUCH BRANCH and does not contain any material objectionable to them. This project is just a part of my college curriculum and will not be used elsewhere.

Date: (

Signature )


This is




Hussain.A.Namakwala the student of MBA has

carried out the project work as per the syllabus of Punjab Technical University. He prepared this Grand Project Report on “Performance Measurement” at Birla Sun Life Mutual Fund Bharuch Branch under my guidance and his contribution in making this report during the academic year 2010 -2011 is highly appreciated.

To the best of my knowledge the details presented by him are original in nature and have not been copied from any other source. Also this report has not been submitted earlier for the award of any degree or Diploma in Punjab University or any other University.

Date: Place: Bharuch (

Signature )


“Meeting together is the beginning, Keeping together is progress, Thinking together is unity, & Working together is fulfillment.” At the outset, I would like to mention that my project is the result of valuable support & Co-operation I have received from college & company right from beginning to its completion. My heartiest thanks to our director general Dr.George Judah , our Coordinator Ms. Sunetra Gaitonde my project guide Prof.Maneesha Dhavraay & all faculties of MBA for guiding & giving me such opportunity.

It has been an honour and great opportunity for me to associate myself with Birla Sun Life Mutual Fund at Bharuch Branch for my Grand Project. I am very much thankful to Mr. Maulik Patel (Branch Manager of Birla SunLife Mutual Fund Bharuch Branch) my project guide who guided me a lot and from whom I learnt about the field of Mutual Fund. And at last I would like to thankful to each & every person who directly & indirectly helped me in my training & project.



Mutual Funds: An overview

Emergence of Mutual Funds

Mutual Funds now represent perhaps the most appropriate investment opportunity for most small investors. As financial markets become more sophisticated and complex, investors need a financial intermediary who provides the required knowledge and professional expertise on successful investing. It is no wonder then that in the birthplace of mutual funds- the U.S.A – the fund industry has already overtaken the banking industry, with more money under mutual fund management than deposited with banks. The Indian mutual fund industry has already opened up many exciting investment opportunities to Indian investors. We have started witnessing the phenomenon of more savings now being entrusted to the funds. Despite the expected continuing growth in the industry, mutual fund is still a new financial intermediary in India.

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. There are different entities involved in the Mutual Fund, like Sponsor, Asset Management Company, Trustee, Custodian, Registrar, Bankers, Transfer Agent Unit Holder & SEBI. Mutual Fund simply pool the saving from investors, invest them in different securities, Generate good return and finally pass it in the hands of investors. So there is one chain, which we can see below.

Structure of Mutual Funds in India.
Like other countries, India has a legal framework within which Mutual Funds must be constituted. India has unique structure – as Unit Trusts, all the funds open end or closed end, are governed by the same regulation and the regulatory body, the SEBI. The structure that is required to be followed by mutual funds in India is laid down under SEBI (Mutual Fund) Regulations, 1996.

Organisation of Mutual Fund

Unit-Holder Unit holder are the beneficiaries, who invest their money in the different schemes of Mutual Fund, as per their own investment objectives. Mutual Fund in India are open for investment by; a) Residents including  Resident Indian individuals, including high net worth individuals and the retail or small investors  Indian Companies  Indian Trust/ Charitable Institutions  Banks  Non-Banking Finance Companies.  Insurance Companies  Provident Funds

b) Non-Residents, including  Non-Resident Indians  Other Corporate Bodies c) Foreign Entities Namely Foreign institutional Investors (FIIs) registered with SEBI. Sponsor Sponsor is defined under SEBI regulations, as any person who, acting alone or in combination with another body corporate, establishes a mutual fund. The sponsor of a fund is akin a promoter of a company as he gets the fund registered with SEBI. The sponsor will form a Trust and appoint a Board of Trustees. The sponsor genrally appoint Asset Management Company as fund manages. The sponsor, either directly or acting through the Trustees, will also appoint a Custodian to hold the fund assets. All these appointments are made in accordance with SEBI Regulations. As per the existing SEBI regulations, for a person to qualify as a sponsor, he must contribute at least 40% of the net worth of the AMC and possess a sound financial track record over five years prior to registration. Mutual Funds as Trusts A mutual fund in India is constituted in the form of a Public Trust created under the Indian Trusts Act, 1882.the fund sponsor acts as the settler of the Trust, contributing to its initial capital, and appoints a Trustee to hold the assets of the trust for the benefit of the unit-holders, who are the beneficiaries of the Trust. The fund then invites investors to contribute their money in the common pool, by subscribing to “units” issued by various schemes established by the trust, units being the evidence of their beneficial interest in the fund. The Trust – the mutual fund – may be managed by a Board of Trustees- a body of individuals or a Trust Company- a corporate body. Most of the funds in India

are managed by Board of Trustees. While the Board of Trustees are governed by the provision of Indian Trust Act, where the trustee is the corporate body, it would also required to comply with the provisions of companies Act 1956. The Board or the Trustee company, as an independent body act as protector of the unitholders’ interest. The Trustees do not directly manage the portfolio of securities. For this specialist function, they appoint an Asset management Company. They ensure that the fund is managed by the AMC as per the defined objectives and in accordance with the Trust Deed and SEBI Regulations. The trust is created through the document called Trust Deed that is executed by the fund sponsor in the favour of the Trustees. The Trust deed is required to be stamped as registered under the provisions of the Indian Registration Act and registered with SEBI. The Trustees being the primary guardians of unit-holders’ funds & assets, a Trustee has to be a person of high repute & integrity. Trustees must ensure that thee investors’ interests are safeguarded and that the AMC’s operations are along professional lines. SEBI mandates a minimum of 2/3 independent directors on the Board of the Trustee company. The Asset Management Company The role of an AMC is to act as the Investment Manager of the Trust. The sponsors, or the trustees, if so authorized by the Trust Deed, appoint the AMC. The AMC so appointed is required to be approved by SEBI. Once approved, the AMC functions under the supervision of its own Board of Directors and also undes the direction of the Trustees & SEBI. The AMC would, in the name of the Trust, float & then manage the different investment “schemes” as per SEBI Regulations and as per the Investment Management Agreement it signs with the Trustees. The AMC of a mutual fund must have a net worth of at least Rs. 10 Crores at all times. Directors of the

AMC, both independent & non-independent, should have adequate professional experience in financial service and should be individuals of high moral standing, a condition also applicable to other key personnel of the AMC. The AMC con not act as a trustee of any other Mutual Fund. Besides its role as the fund manager, it may undertake specified activities such as advisory services and financial consulting, provided these activities are run independently of one another and the AMC’s resources (such as personnel, systems, etc.)are properly segregated by activity. The AMC must always act in the interest of the unit-holders and report to the trustees with respect to its activities. To ensure the independence of the asset management company, SEBI mandates that a minimum of 50% of the directors of the board of the asset management company should be independent directors. Custodian and Depositories Mutual funds are in the business of buying and selling of securities in large volumes. Handling these securities in terms of physical delivery and eventual safekeeping is therefore a specialized activity. The custodian is appointed by the Board of Trustees for safekeeping of physical securities or participating in any clearing system through approved depository companies on behalf of the mutual fund in case of dematerialized securities. A custodian must fulfill its responsibilities in accordance with its agreement with the mutual fund. The custodian should be an entity independent of the sponsors and is required to be registered with SEBI. (Please refer to Chapter IV of SEBI (MF) Regulations, 1996). Note that the Indian capital markets have moved away from having physical certificates for securities, to ownership of these securities in “dematerialized” from with a depository. Thus, a mutual fund’s dematerialized securities holdings are held by a custodian. Thus, deliveries of a fund’s securities are given or received by a custodian or a depository participant, at the instruction of the AMC, although under the overall direction and responsibility of the Trustees.

Bankers A fund’s activities involve dealing with money on a continuous basis primarily with respect to buying and selling units, paying for investments made, receiving the proceeds on sale of investments and discharging its obligations towards operating expenses. A fund’s bankers, therefore, play a crucial role with respect to its financial dealings by holding its bank accounts and providing it with remittance services. Registrars and Transfer Agents Registrars and Transfer Agents are responsible for issuing and redeeming units of the mutual fund and providing other related services such as preparation of transfer documents and updating investor records. A fund may choose to carry out this activity in –house and charge the scheme for the service at a competitive market rate. Where an outside Transfer Agent is used, the fund investor will find the transfer agent to be an important interface to deal with, since all of the investor services that a fund provides (besides the investment management) are going to be dependent on the transfer agent. Such services include buying/repurchase of units, switching from one scheme to another, systematic investment/withdrawals, recording of nomination & bank details. Distributors Mutual funds operate as collective investment vehicles, on the principle of accumulating funds from a large number of investors and then investing on a big scale. For a fund to sell units across a wide retail base of individual investors, an established network of distribution is essential.

SEBI The Government of India constituted Security Exchange Board of India (SEBI), by Act of Parliament in 1992, as the apex regulator of all entities that either raise

funds in the capital markets or invest in capital market securities such as shares & debentures listed on Stock Exchanges. Mutual Funds have emerged as an important Institutional Investor in capital market securities. Hence they come under the purview of SEBI. SEBI requires all mutual funds to be registered with them. It issues guidelines for all mutual fund operations including where they can invest, what investment limits & restrictions must be complied with, how they should account for income & expenses, how they should make disclosures of information to the investors and generally act in the interest of investor protection.

Merits of Mutual Fund investment
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. 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 investment:
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 ie 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 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 weightages of the shares of a particular company in the index changes if it acquires a large company not a part of the index.


World mutual fund industry was pegged at $26.2 trillion at the end of 2007 with USA having largest share at $13.5 trillion at the end of December 2008. With India’s mutual fund size of $108 billion as of end of 2007, we remain a drop in the ocean in terms of size of global mutual fund industry.
Worldwide Mutual Fund Assets ( In Trillion US Dollar)
M utual Fund Assets ( In Trillion US Dollar) 30 25 20 15 10 5 0 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 17.77 16.15 16.37 17.28 19.11 19.41 20.22 21.82 22.91 26.2 24.52 25.79

On a global scale, equity funds account for major chunk of total assets under management unlike India where debt segment dominate the share. At the end of 4th quarter of 2007, 48% of worldwide mutual fund assets were in equity funds. Total share of bond funds was only 16% and money market products accounted for only 19% of total pie.
Worldwide MFAssets B Type of F y unds-2007 Q4 7% 10% Equity 16% 48% M oney M arket Bond Balanced/M ixed Others 19%

The size of mutual fund industry in Asia stands at $3678 bn at the end of 2007 out of which India accounted for only $108bn translating into miniscule share of 2.93%. so not only in terms of world but also in Asia Pacific region Indian mutual fund industry is at teenage stage. The second most populous country in the world after china & third largest economy in Asia accounts for only 2.9% share in region’s mutual fund industry. India is a nation of saver. As a nation we save $450 bn (Rs. 22.7 lacs Cr) per annum & mutual fund industry account for only 7 to 8% of household savings. Reasons for the low penetration of mutual fund industry. Concentration of mutual fund business in metro and Tier I cities. Low level of awareness among investors about mutual fund as an investment product. Lower number of distributors. According to AMFI, in India there are less than 60000 mutual fund distributors compared to over 2 million life insurance agents. Lower distribution network restricts the reach of mutual fund industry. Conceptual misunderstanding about mutual fund investing among investors. Mutual fund is widely viewed as an investing option to invest in equity. Investors are not aware about the wide variety of options available under the mutual fund umbrella. Higher concentration on corporate/institutional money in race to increase AUM. Indian mutual fund industry has grown at rapid pace of 43% year on year for a period from 2003-2007. this growth has outpaced other nations. The US witnessed industry growth of 13%, UK 29% and Brazil 44% during the same period. However Russia and China Outpaced India with AUM growth of 97% and 67% respectively.

Indian mutual fund industry is dominated by institutional investors specially banks and corporate. Put together they account for more than 55% share of total industry. Compared to mutual fund industry worldwide the size of Indian mutual fund industry is just 0.41%. the size of Indian mutual fund industry is smaller than countries like Belgium and Italy where population base is much smaller than India. Country USA Brazil Europe Belgium France Germany UK Asia Australia Italy Hong Kong India Japan South Africa World 2004 8106 220 5640 118 1370 295 492 1677 635 511 343 32 399 54 16164 2005 8904 302 6002 115 1362 296 547 1939 700 450 460 40 470 65 17771 2006 10412 418 7803 137 1769 340 755 2456 864 452 631 58 578 78 21823 2007 12021 615 8983 149 1989 372 944 3678 1192 419 818 108 713 95 26199

This offer great opportunity for mutual fund distributors in India. Retail segment in India is expected to witness phenomenal growth in coming years. This segment is expected to grow at 35% to 40% in next five years. In next five years, mutual fund industry in India will witness addition of 90 lacs first time retail investors. Even after growth rate of over 35% in coming five years, we will witness additional 90 lacs investor only. This still leaves huge untapped investing community.

The US mutual fund industry has witnessed huge outflow especially from stock funds (outflow of $20.3 billion), balanced funds (outflow of $2 billion) and bond funds (outflow of 6.77 bn) during month of December 2008 alone. Despite this redemptions US fund industry stands at over $9 trillion compared to India’s industry size of $86 bn. In India, currently wee have total AUM of Rs. 4.21 lacs Cr. (Around $86 bn as of Dec 31st 2008 ) against this in USA, total AUM increased by $256.4 bn in month of December 2008 alone taking total industry AUM to 9.60 trillion in December. So whatever parameter you take Indian mutual fund industry is at nascent stage. We have just taken baby steps as far as mutual fund industry is concerned. Thia offers great opportunity to explore huge untapped investing community.

Mutual Funds Industry in India
Investment in India India among the European investors is considered to be a good investment despite the political uncertainty, bureaucracy troubles, shortage of power and infrastructural inefficiencies. India is a potential market for overseas investment and is actively welcoming the foreign investors in the market. It will emerge as one of the top three emerging economies. While calculating the potential and correct estimation and possibilities, one needs to consider such factors as the inherent hurdles and uncertainties of functioning in the Indian system. Once you enter India's marketplace, you will have a well-designed plan that should be supported by a serious thought and careful research. Those who look at India as a long-term growth will reap more profits rather than those who will see only short-term profit making opportunities. India is the fifth largest economy in the world and it ranks above France, Italy, the United Kingdom, and Russia. It has the third largest GDP in Asia. It is the second largest of the emerging nations. India is also one of the few markets in the world which offer high prospects of growth and earning potential in all sectors of business. However, despite the numerous advantages on its side, India has failed to generate the same kind of curiosity and attention that China has gathered for itself. Indian Mutual Funds The origin of the mutual funds industry goes back to the time when mutual fund was introduced by UTI in the year 1963. though the growth has been relatively slow, it accelerated since 1987 when there were players outside the UTI, who entered the industry. In the past decade, Indian mutual find industry had seen a

remarkable improvement both quality wise and quantity wise. Before the end of the monopoly in market, the Assets Under Management (AUM) was Rs.67 bn.

History of Mutual Fund in India
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Reserve Bank & Government of India. The objective then was to attract the small investors and introduce them to market investments. Since then, the history of mutual fund in India can be broadly divided in to six distinct phases. Phase 1 – 1964- 1987: Growth of Unit Trust of India In 1963, UTI was established by an Act of Parliament. As it was the only entity offering mutual funds in India, it was monopoly. Operationally, UTI was set up by the Reserve Bank of India, but was later de-linked from the RBI. The first scheme and for long one of the largest number of investors in any single investment scheme. It was also at least partially the first open end scheme in the country. Later in 1970s and 80s,UTI started innovating and different schemes to suit the needs of different classes of investors. Unit Linked Insurance Plan (ULIP) was launched in1971. Six new schemes were introduced between 1981 & 1984. during 1981-84, new scheme such as Children’s Gift Growth Fund (1986) & Mastershare (1987) were launched. Mastershare could be termed as the first diversified equity investment scheme in India. The first Indian offshore fund, India fund, was launched in August 1986. During 1990s, UTI catered to the demand for income oriented schemes by launching monthly income Schemes, a somewhat unusual mutual fund product offering “ assured returns”.

In absolute terms, the investible funds corpus of UTI was about Rs. 600 Crores in 1984. By 1987-88 assets under management of UTI had grown ten times to Rs 6700 cr.

Phase-2 – 1987- 1993: Entry of Public Sector Funds 1987 marked the entry of public sector mutual funds. With the opening of the economy, many public sector banks financial institutions were allowed to establish mutual fund. State Bank of India established the first non-UTI mutual. Fund- SBI mutual fund –in Nov 1987. this was followed by canbank Mutaul fund , LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund & PNB Mutual Fund. These funds helped in enlarging the investor community & investible funds. From 1987-88 to 199293, the assets under management increased from Rs. 6700 cr. To Rs. 47004 Cr. nearly seven times. During this period, investor showed a marked interest in mutual funds, allocating a larger part of their savings to investment in the funds. UTI was still the largest segment of the industry, with about 80% market share. Phase 3 -1993-96: Emergence of Private Funds A new era in the mutual fund industry began in 1993 with the permission granted for the entry of private sector funds. This gave the Indian investors a broader choice of ‘fund families’ and increasing competition to the existing public sector funds. Quite significantly, foreign fund management companies were also allowed to operate mutual funds, most of them coming into India through their joint ventures with Indian promoters. These private funds have brought in with them the latest product innovations, investment management

techniques and investor-servicing technology that make the Indian mutual fund industry today a vibrant and growing financial intermediary. During the year 1993-94, five private sector mutual funds launched their schemes followed by six others in 1994-95. initially, mobilization of funds by the private mutual funds was slow. But, this segment of the fund industry began to witness much greater investor confidence in due course. One influencing factor was the development of SEBI’s regulatory framework for the Indian mutual fund industry. Yet another important factor has been the steadily improving performance of several fund houses. Investors in India now clearly saw the benefits of investing through mutual funds and became discerning and selective. Phase-4 1996-99: Growth and SEBI Regulation Since 1996, the mutual fund industry in India saw tighter regulation and higher growth. It scaled new heights in terms of mobilization of funds & no. of players. Deregulation & liberalization of Indian economy had introduce competition provide impetus to the growth of the industry. Finally most investors small or large started showing interest in mutual funds. Measures were taken both by SEBI to protect the investor, & by the government to enhance investors’ returhs through tax benefits. A comprehensive set of regulation for all mutual funds operating in India was introduced with SEBI (Mutual Fund) Regulations 1996. these regulations set uniform standard for all the funds. The erstwhile UTI voluntary adopted SEBI guidelines for its new schemes. Similarly the budget of union Government in 1999 took a big step in exempting all mutual fund dividends from income tax in the hands of investors. Both the 1996 Regulation & the 1999 Budget must be considered of historic importance, given their far reaching impact on the fund industry. Phase 5 -1999-2004: Emergence of Large & Uniform Industry

The major development in the fund industry has been the creation of a level playing field for all mutual fund operating in India. This happened in February 2003, when the UTI Act was repealed. UTI has no longer legal status as a trust established by Act of Parliament. Instead, it has also adopted the same structure as any other fund in India- a Trust and an Asset Management Company. UTI Mutual Fund is present name of the erstwhile Unit trust of India. While UTI functioned under separate law of Indian Parliament earlier, UTI Mutual Fund is now under the SEBI’s Regulation, 1996 like all other Mutual Funds in India. UTI Mutual Fund is still the largest player in the Indian fund industry. All SEBI compliant schemes of the erstwhile UTI are under its charge. All new schemes offered by UTI Mutual Fund are SEBI approved. Other schemes of erstwhile UTI have been paced with a special undertaking administered by the Government of India. These schemes are being gradually wound up. The emergence of a uniform industry with the same structure, operations & regulation makes it easier for distributors & investors to deal with any fund house in India.1999 marked the beginning of a new phase in history of mutual fund Industry in India, phase of significant growth in terms of both amounts mobilized from investors and assets under management. Between 1999 to 2005, the size of the industry has doubled in terms of AUM which have gone from about Rs. 68000 cr to over Rs. 150000 cr. Within the growing industry the relative market share of different players in terms of amount mobilized and AUM have also undergone changes. Phase 6 -From 2004 Onwards: Consolidation & Growth The industry has lately witnessed a spate of mergers & acquisitions, most recent ones being the acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund by Principal & PNB Mutual Fund by Principal. At the same time, more international players continue to enter India, Including

Filedity, one of the largest fund in world. The stage is set now for growth through consolidation and entry of new international and private sector players. At the end of March 2006, there were 29 Funds.

Performance of Mutual Fund Industry From 1965 To 2008

Mutual Fund Companies in India

The number of Indians putting their money on mutual fund investments is steadily increasing. More and more people are being lured by the prospect of handsome profits that investments in mutual funds carry for the investors. In recent years, many mutual fund companies have sprung up in India. Now the investors have lots of mutual fund companies in India to choose from. Currently there are 30 mutual fund companies operating in India. They are as follow;
NO. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Mutual Fund Company AIG Global Investment Group Mutual Fund Baroda Pioneer Mutual Fund Benchmark Mutual Fund Bharti AXA Mutual Fund Birla Sun Life Mutual Fund Canara Robeco Mutual Fund DBS Chola Mutual Fund Deutsche Mutual Fund DSP BlackRock Mutual Fund Edelweiss Mutual Fund Escorts Mutual Fund Fidelity Mutual Fund Fortis Mutual Fund Franklin Templaton Mutual Fund HDFC Mutual Fund HSBC Mutual Fund ICICI Prudential Mutual Fund IDFC Mutual Fund ING Mutual Fund JM Financial Mutual Fund JPMorgan Mutual Fund Kotak Mahindra Mutual Fund LIC Mutual Fund Lotus India Mutual Fund Mirae Asset Mutual Fund Morgan Stanley Mutual Fund Principal Mutual Fund Quantum Mutual Fund Reliance Mutual Fund Sahara Mutual Fund SBI Mutual Fund Sundaram BNP Paribas Mutual Fund Tata Mutual Fund Taurus Mutual Fund UTI Mutual Fund

Aditya Birla Nuvo Ltd

Introduction We are the flagship Company of the Aditya Birla Group, which is currently one of the largest business groups in India in terms of market capitalisation. Aditya Birla Nuvo Limited (formerly known as Indian Rayon and Industries Limited) is the Aditya Birla Group's most diversified conglomerate, with a consolidated net turnover of Rs. 4830.34 crores for fiscal 2006. We were incorporated in 1956 and are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. We believe we are one of India’s leading players in our key business segments, such as viscose filament yarn (“VFY”), carbon black, branded garments, fertilizers, textiles and domestic marketing of insulators. Through our subsidiaries and joint ventures we are also engaged in other business segment, such as life insurance, telecommunication, information technology services, business process outsourcing (BPO), asset management, manufacture of insulator and other financial services. It enjoys a leadership position in all the sectors in which it operates. With over 75 business units, spanning the South East Asian belt, Africa, Canada and the UK among others, it is reckoned as India's first multinational corporation. The group is anchored by 72,000 employees and has seven lakh shareholders, with an asset base of over Rs.23,000 crore. .

The following chart illustrates our value business and high growth business.








Telecom JV

Carbon Black

Fertilizer Mutual Fund Life Insurance

Financial Service JV IT




Financial Service Group of Aditya Birla Nuvo Ltd

Financial Service Group of Aditya Birla Nuvo Ltd offer following Financial services: • • • • • Asset Management Company Life Insurance Distribution & Wealth Management. Insurance Advisory & Broking Services Capital Market & Corporate Finance.

General Information About Birla Sun Life Mutual Fund
Birla Sun Life Mutual Fund – Asset Management Company Birla Sun Life Mutual Fund was setup on December 24, 1994. The sponsorers of Birla Mutual Fund are Birla Global Finance Limited and Sun Life (India) AMC Investments Inc. Sun Life Financial Group of Companies is a financial services organization headquartered in Toronto, Canada. .

The AMC of Birla Sun Life Mutual Fund is Birla Sun Life Asset Management Company Limited which was incorporated on September 5, 1994. Recently Birla Mutual Fund crossed AUM of Rs. 10,000 crores. .

Since its inception in 1994, Birla Sun Life Mutual fund has emerged as one of India's leading mutual funds managing assets of a large investor base. The fund offers a range of investment options, which include diversified and sector specific equity schemes, fund of fund schemes, hybrid and monthly income funds, a wide range of debt and treasury products and offshore funds. .

BSLAMC follows a long-term, fundamental research based approach to investment. The approach is to identify companies, which have excellent growth prospects and strong fundamentals. The fundamentals include the quality of the company’s management, sustainability of its business model and its competitive position, amongst other factors. Birla Sun Life Asset Management Company has one of the largest team of research analysts in the industry, dedicated to tracking down the best companies to invest in. BSLAMC strives to provide transparent, ethical and research-based investments and wealth management services.

The Joint Venture of Birla & Sun Life.
About Sun Life Financial Inc . Sun Life Financial Inc. is a leading international financial services organization providing a diverse range of wealth accumulation and protection products and services to individuals and corporate customers. Tracing its roots back to 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of 31 December 2004, the Sun Life Financial group of companies had total assets under management of USD 299 billion. Philippine (PSE) stock exchanges under ticker symbol "SLF". On the other side it is Birla group of companies which is known for its diversified business and India ‘s largest business group. Birla Sun Life Mutual fund is joint venture of Birla & Sun Life Financial Inc. . Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and

VISION To be the most trusted name in investment and wealth management, to be the preferred employer in the industry and to be a catalyst for growth and excellence of the asset management business in India. MISSION: To consistently pursue investor's wealth optimisation by: • • • • • Achieving superior and consistent investment results. Creating a conducive environment to hone and retain talent. Providing customer delight. Institutionalising system-approach in all aspects of functioning. Upholding highest standards of ethical values at all times.

VALUE • • • • • Integrity Commitment Passion Seamlessness Speed

The diversified schemes are as follows:
• • • • • •

Debt Schemes Balanced Schemes Offshore Schemes Investment Plans Readicheque Gift Certificates

Organization Structure of Birla Sun Life Mutual Fund

Anil Kumar CEO

A Balasubramanian CIO

Ashok Suvama COO

Abhay Palnitkar CFO

Navin Tiwari Co-Head Retail Sales North & East

Kalpen Parekh Co-Head Retail Sales West & South

Sarb Preet Singh VP Sales Institutional

Chandrasekhar Chavan Head-HR & Admin

Raghvendranath Head-Strategy Marketing

Rajiv Joshi Head-Legal & compliance

Laxmikant Gupta Head Risk Management

Molly Kapoor Head Customer Service

Krishna Kumar Head-PAS

Directors of Birla Sun Life Trustee Company private limited Mr. Suresh Talwar Mr. B. N. Puranmalka Mr. Gurcharan Das Dr. V. Arunachalam Mr. Prafull Anubhai *Director(s) is/are associated with the sponsor or its associates Directors of Birla Sun Life Asset Management Company Limited Mr. Kumar Mangalam Birla Mr. Donald Stewart Mr. Ajay Srinivasan Mr. Stephan Rajotte Mr. Ashok Goenka Mr. S. S. Raman Mr. N. N. Jambusaria Mr. N. C. Singhal Mr. Venkatesh Mysore (Alternate Director) *Director(s) is/are associated with the sponsor or its associates.

Investment Team

Anil Kumar CEO

A Balasubramanian CIO

Ajay Argal VP-Investment

Mahesh Patil VP-Investment

Satyabrata Mohanty AVP-Investment

Maneesh Dangi AVP-Investment

Doraell Rodrigues Assistant Manager-Investment

Awards Of Birla Sun Life Mutual Fund

India Advantage Fund

The award for standing first place in the Standard & Poor's Micropal one year offshore Territories Equity India sector out of 36 funds. 1999

Business Standard Motilal Oswal institute of wealth Creation Pioneers in Investor's

Presented to MR.BHARAT SHAH Fund Manager of Year 1999

Education. Presented to BIRLA ADVANTAGE FUND The Award for The Best Equity Mutual Fund Scheme 1999.

R J Bhatt Awards 1999 Presented to BIRLA SUN LIFE MUTUAL FUND The Best Mutual Fund the IRIS Mutual Fund Award in memory of R J Bhatt. BIRLA ADVANTAGE FUND The Best Performing Scheme In the category of Growth Funds the IRIS Mutual Fund Award in memory of R J Bhatt. BIRLA INCOME PLUS The Best Performing Scheme In the category of Income Funds the IRIS Mutual Fund Award in memory of R J Bhatt. 2000

BANCO Emerging Markets Awards 2000

Presented to Birla Sun life Asset Management Company Limited For having secured the first place for its risk-adjusted performance over three years with the India Advantage Fund in the Standard & Poor's fund Services, Asia excl. Japan Equity Sector.

Mr R J BHATT Mutual Funds Awards 2000

Presented to Birla Sun life Asset Management Company Limited In recognition of BIRLA ADVANTAGE FUND The BEST GROWTH SCHEME Based on three years performance between August 1 ,1997-July 31,2000. BIRLA INCOME PLUS The Best Scheme Income Scheme Based on three years performance between August 1 ,1997-July 31,2000 2002

Business Barons, Best Brand Award 2002,

Presented to BIRLA SUN LIFE MUTUAL FUND Birla Income Plus - Open- end Debt/Income Fund-. Birla MIP - Open- end Monthly Income Plan. Standard & Poor's Fund Awards, 2002 Offshore, India Advantage

Fund Presented to BIRLA SUN LIFE MUTUAL FUND 1st place in the standard & Poor's Five Years (Dec 1996-Dec 2001). 2003

CRISIL Best Fund Awards 2003 Presented toBirla Bond Plus: Best performing Open-end Income-Short Term Fund

Wealth Creator Award 2003

Presented to BIRLA SUN LIFE MUTUAL FUND for the Best Mutual Fund.


CNBC - TV 18 - BNP PARIBAS Mutual Fund of the Year Award

2004 Presented to Birla Equity Plan: Best Performing Open-Ended Equity Tax Saving (ELSS) (one year) Birla MIP (Gr): Best Performing Open-Ended Monthly Income Plan Fund (three years) Birla Gilt Plus (Regular Plan) (Gr): Best Performing Open-Ended Gift Fund (three years)

Standard & Poor's Fund Awards, 2004 Offshore,

India Advantage Fund Presented to Awarded 1st Place in the Standard & Poor's Five Years Offshore Funds Equity India Sector.

ICRA Online Mutual Fund Awards 2004

Presented to Birla Gilt Plus - Liquid Plan: Ranked MFR 1 in open-ended gilt schemes - short term category (three years) Birla India Opportunities Fund: Ranked MFR 1 in open-ended sectoral schemes - technology category (three years) Birla Gilt Plus - Liquid Plan: Ranked MFR 1 in open-ended gilt schemes - short term category (one year) Birla India Opportunities Fund: Ranked MFR 1 in open-ended sectoral schemes - technology category (one year) Birla Gilt Plus - Regular Plan: Ranked MFR 1 in open-ended gilt schemes - long term category (one year) Birla Income Plus: Ranked MFR 1 in open-ended debt schemes - long term category (one year)

Birla Equity Plan: Ranked MFR 1 in open-ended equity linked savings schemes category (one year) 2005 ICRA Awards Birla India Opportunities Fund ICRA-MFR 1 Open Ended Sectoral Schemes - Technology (3 Year) Birla Income Plus ICRA-MFR 1 Open Ended Debt Scheme - Long Term (3 Year) Birla Gilt Plus - Liquid Plan ICRA-MFR 1 Open Ended Gilt Scheme - Short Term - 1 Year Birla Gilt Plus - Liquid Plan ICRA-MFR 1 Open Ended Gilt Scheme - Short Term - 3 Year 2007

LIPPER Awards Birla Sun Life '95 Fund Best Fund - Mixed Asset INR Aggressive 10 - Year Performance ended December 31, 2006 Total Schemes in Category = 5 Birla Gilt Plus - Regular Plan Best Fund - Bond Indian Rupee Government 5 - Year Performance ended December 31, 2006 Total Schemes in Category = 28 ICRA Awards GOLD AWARD Birla Sun Life Equity Fund: ICRA MFR~1 Open Ended Diversified Equity – Defensive 3 year period ended 31st December 2006 GOLD AWARD Birla Gilt Plus – Liquid Plan: ICRA MFR~1 Open Ended Gilt - Short Term 3 year period ended 31st December 2006

GOLD AWARD Birla Cash Plus - Institutional Plan: ICRA MFR~1 Open Ended Liquid - Institutional Plan 3 year period ended 31st December 2006


ICRA STAR GOLD Awards Birla Income Plus 7-Star Gold Award – Debt: Long Term 1 yr ended 31 Dec, ‘07 Total Schemes in Category = 18 Birla Sun Life Short Term Fund 7-Star Gold Award – Liquid Plus 1 yr ended 31 Dec, ‘07 Total Schemes in Category = 26 Birla Sun Life Income Fund-Growth Best Fund - Bond INR General 3 yrs & 10 yrs performance ended 31 Dec, ‘07 Total Schemes in Category = 100 and 10 respectively Birla Sun Life Income Fund Category: Income Funds 1 yr performance ended 31 Dec, ‘07 Total Schemes in Category = 17 Birla Sun Life Monthly Income Category: Monthly Income Plans – Conservative 1 yr performance ended 31 Dec, ’07 total Schemes in category = 9 Birla Sun Life Short Term Fund Category: Income – Short Term Funds 1 yr performance ended 31 Dec, ‘07 Total Schemes in Category = 12 Emerging Equity Fund of the Year Birla Infrastructure Fund – Growth 1 yr performance ended 31 Dec, ’07 Total Schemes in Category = 14 Birla Sun Life Frontline Equity Fund Category: Large Cap oriented Equity Fund 1 yr performance ended 31 Dec, ‘07 Total Schemes in Category = 22 Mutual Fund of the Year Birla Sun Life Mutual Fund Total Fund Houses = 26 1 yr performance ended 31, Dec 2007 STAR RATING

5 STAR RATING Birla Sun Life Liquid Plus - Institutional Plan
Total Open Ended Liquid Plus – Institutional Plan schemes considered – 34

Based on 1 yr performance ended 31 Dec, ’08 5 STAR RATING Birla Sun Life Income Plus Total Open Ended Debt Long-Term schemes considered – 21 Based on 3 yr performance ended 31 Dec, ’08 5 STAR RATING Birla Sun Life Dividend Yield Plus Fund
Total Open Ended Diversified Equity Aggressive schemes considered – 51

Based on 1 yr performance ended 31 Dec, ’08 5 STAR RATING Birla Sun Life MNC Fund
Total Open Ended Diversified Equity Aggressive schemes considered – 51

Based on 1 yr performance ended 31 Dec, ’08 5 STAR RATING Birla Sun Life Gilt Plus Regular Plan Total Open Ended Gilt schemes considered - 22 Schemes Based on 3 yr performance ended 31 Dec, ‘08 5 STAR RATING Birla Sun Life Frontline Equity Fund
Total Open Ended Diversified Equity Defensive schemes considered -62 & 55

Based on 1 and 3 yr performance ended 31 Dec, ’08 respectively. Star Fund House of the year – Debt Total Fund Houses eligible – 24 Based on 1 yr performance ended 31 Dec, ‘08 7 STAR RATING Birla Sun Life Dynamic Bond Fund

Total Open Ended Debt - Short Term considered - 17 Schemes Based on 1 yr performance ended 31 Dec, ‘08

Type of Communication Channel:






 Downward Communication The head communicates at the bottom level with the modes of rules and regulation files, circulars, orders, politics. Up ward Communication The communication moves from bottom to top with the modes of fies and application, suggestion or complaints. Horizontal Communication The communication moves from one department to other at the same level with the modes of files. Diagonal Communication The subordinate of one department communicates directly to the superior of other department with the modes of files or suggestion.


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Key Highlights of Market Share of Birla Sun Life Mutual fund.

Scaling up infrastructure to support growth

• • •

Distribution network more than doubled in last one year to reach 78 branches and 18K financial advisors Investor folios grew by 65% during the year to 1.9 million Multi Channel non-polarized distribution network

Superior fund performance – 69% of AUM is in top quartile of performance, based on one year returns Recognized and awarded “Mutual Fund House of the Year” by CNBC TV18-Crisil
 

Branches (Nos.) Financial Advisors (‘000) Investor Folios (Mn)

5th largest in India with 6.8% share in average domestic AUM in Mar’08 up from 5.8% share in end of period (EOP) AUM in Mar’07

• • •

Achieved 89% growth in last one year 2nd highest AUM growth amongst top 7 players Only AMC to show positive month on month growth in average AUM in Mar’08

Total AUM (EOP) grew 4 times in 3 years to Rs. 45,247 Cr. in Apr’08 • •

Includes offshore equity AUM of Rs. 2,543 Cr. in Apr’08 Equity AUM grew 5 times in 3 years to Rs. 10,838 Cr. in Apr’08 Offering 92 Mutual Fund schemes including 2 offshore funds Product portfolio strengthened through launch of new funds 4 equity NFOs launched collecting Rs. 2,700 Cr. Focus on high margin fixed income funds

• • •

Track Record

With a proven track record of over 14 years, Birla Sun Life Mutual Fund has been a catalyst towards the growth of the private sector asset management business Innovation Birla Sun Life Mutual Fund was the first to launch: • • • Birla Sun Life Cash Plus, a liquid fund. Birla Sun Life Dividend Yield Plus which is a dividend yield fund. Birla Bond Index Fund (a debt index fund) which replicates the Crisil Composite Bond Fund Index, has been assigned AAAF rating by Crisil. Investment Philosophy Birla Sun Life Mutual Fund follows a long-term, fundamental research based approach to investment. The approach is to identify companies, which have excellent credit-worthiness and strong fundamentals. The fundamentals include the quality of the company's management, sustainability of its business model and its competitive position, amongst other factors. Birla Sun Life Asset Management Company (BSLAMC) has one of the largest team of research analysts in the industry, dedicated to tracking down the best companies to invest in. BSLAMC will always strive to provide transparent, ethical and research-based investments and wealth management services. Geographical Reach Today, BSLAMC is present in 111 locations, including 74 branches Employees Serving In Birla Sun Life Mutual Fund. There are around 800 employees serving in company.

Constituents/Entities of The Birla Sun Life Mutual Fund

a) Promoters The Aditya Birla Group : The Aditya Birla Group is a multinational group of companies, comprising some of the best-known companies in India. The manufacturing operations of the group extend across India, Thailand, Indonesia, Malaysia, the Philippines and Egypt. In India, the group companies have attained a leading position in a range of key core sector areas and rank among the country’s largest, most profitable and fastest growing companies with an excellent track record of returns to investors. Some of the major companies in the Group are: Grasim Industries Ltd.: The flagship company of the Aditya Birla Group, it is India’s leading producer of viscose staple fiber. The diversified business lines of the company include cement, sponge iron, textiles, software and the export of agro products. Hindalco Industries Ltd.: The company is the largest integrated private sector aluminum producer in India, accounting for about 40 percent of the country’s total aluminum production (Source CMIE). The company is also self-sufficient in terms ofits power needs. Indian Rayon and Industries Ltd: The company manufactures viscose filament yarn, textiles, gray and white cement, carbon black, insulators and caustic soda. It has a strong market position in all of its product lines. Indo-Gulf Fertilisers and Chemicals Corporation Ltd: The company established the first gas-based fertiliser plant in the private sector. It is the largest urea producer in the private sector in India (Source CMIE). The company has recently implemented a 1,00,000 tonnes per annum copper smelting project. Mangalore Refinery and Petrochemicals Ltd: The company is a joint venture

promoted by the group and the public sector Hindustan Petroleum Corporation Ltd. The company has set up a petroleum refinery with a capacity to process three million tonnes of crude oil per annum to produce liquefied petroleum gas, naphtha, motor spirit, kerosene, diesel and asphalt. Plans are under way to expand its capacity to 9 million tonnes per annum. Sun Life Financial Servics of Canada Inc. Sun Life Financial Servics of Canada Inc. is the new holding company for Sun Life Assurance Company of Canada. Sun Life Financial is the new brand of a select group of companies providing individuals and corporations with a diversified range of producs and services, meeting their needs for wealth management as well as protection. As a global enterprise, the Sun Life Financial group of companies operates in key markets around the world. Major operating activities are handled by noational offices in Canada, the United States, the United Kingdom, the Philipines and Hong Kong. It is poised to enter into a joint venture in the Peoples Republic of China. b) The Fund Birla Mutual Fund has been constituted as a trust under the provisions of the Indian Trusts Act, 1882 (2 of 1882) and registered with SEBI bearing registration no. MF/ ** Returns of Plan B of scheme may be taken as indicative return for Plan A ^ Simple Annualised*** Adjusted for dividends and compounded ann 020/94/8 dated December 23, 1994. The objective of the Mutual Fund is to offer to the public and other eligible investors units in one or more schemes in the Mutual Fund for making group or collective investments primarily in Indian Securities in accordance with and as permitted under the directions and guidelines issued from time to time by SEBI. The Corporate Office of the Mutual Fund is at Ahura Centre, Tower A, 2nd Floor,

96 A/D Mahakali Caves Road, Andheri (East), Mumbai - 400 093. c) The Sponsors The sponsor of Birla Mutual Fund is Birla Global Finance Ltd. The Birla Global Finance Ltd. was responsible for setting up and establishing the Mutual Fund to be called Birla Mutual Fund. In order to do so, the Sponsor acted as Settlor to the Deed of Trust between themselves and the Board of Trustees. The Settlor entrusted a sum of Rs.1 lakh to the Trustees as the initial contribution towards the corpus of the Mutual Fund. The Trustee at the request of the settlor agreed to act as the Trustees of the Mutual Fund in accordance with the terms and conditions represented in the Deed of Trust. Sun Life (India) AMC Investments Inc. is the deemed sponsor as per the SEBI regulations. d) The Trustee Company Birla Sun Life Trustee Company Ltd. (BSLTC) is a company incorporated with limited liability under the Companies Act, 1956. Under the Trust Deed dated December 16, 1994 BSLTC has been appointed as the trustee for BMF with Birla Global Finance Ltd. as the Settlor. Trustee Meetings The Trustees have met five times in the year 1999-2000. The performance of all the schemes are placed before the Trustees at such meetings. The reports on statutory compliance and investor servicing are also regularly placed at such meetings by AMC. The quarterly compliance test report in respect of the Fund adopted by the Trustees is filed with SEBI. Audit committee of the Trustees has been constituted to review the internal audit systems and the recommendations of the internal and statutory audit reports and to ensure that the rectification as suggested by internal and external auditors are acted upon. An independent Trustee chairs the Committee.

Trusteeship Fees The Trustee Company, BSLTC shall be entitled to a fee of Rs. 5 lakhs per annum apportioned over all the schemes of BMF. e) The Investment Manager Birla Sun Life Asset Management Company Ltd. (BSLAMC), the Investment Manager of Birla Mutual Fund, is a joint venture between the Aditya Birla Group and the Sun Life Assurance Company of Canada. Both the joint venture partners hold 50% of the equity capital of BSLAMC. BSLAMC is acting as the Investment Managers for the schemes of BMF vide the Investment Management Agreement dated December 16, 1994, as supplemented by the Investment Management Agreement dated October 22, 1999. f) The Custodian IIT Corporate Services Ltd., located at IIT House, Off M. Vasanji Road, Opp. Vazir Glass, Near J.B. Nagar, Andheri (East), Mumbai 400 059, has been appointed as the custodian of the securities that are bought and sold under the Schemes. The custodian is registered with SEBI under registration number IN/CUS/007. The salient features of the custodial agreement and the responsibilities of the custodian include: – Keeping in safe custody all the securities and such other instruments belonging to the Scheme. – Ensuring the smooth inflow / outflow of securities and such other instruments as and when necessary in the best interests of the investors. – Ensuring that the benefits due to the holdings are recovered. – Responsibility for loss or damage to the securities due to negligence on its part or on the part of its approved agents.

g) The Registrar BSLAMC has appointed Karvy Consultants Ltd. to act as Registrar and Transfer

Agents (“The Registrar”) to the Schemes. The Registrar is registered with SEBI under registration number INR000000221. BSLAMC and the Trustee have satisfied themselves, after undertaking appropriate due diligence measures, that the Registrar is able to provide the services required and has adequate facilities, including systems facilities and back up, to process applications and despatch Account Statements/Unit certificates to Unit holders within the time limits prescribed in the Regulations and also sufficient capacity to handle investor complaints. h) Auditors Lodha & Company Karim Chambers, 48 Ambalal Doshi Marg, Fort, Mumbai - 400 023.


Diversified Fund 1) Birla Sun Life Pure Value Fund As savvy consumers, all of us look at great value deals in our everyday life. In the world of equity investments, investing in stocks with great value has been a timeless principle. Value investing, is a classical approach that looks at investing in quality stocks that may be available at bargain prices. The underlying rationale being that once the factors influencing the stock prices change, these stocks may get closer to their true or intrinsic value. Birla Sun Life Pure Value Fund is a fund that seeks to generate consistent long-term capital appreciation by investing predominantly in equity and equity related securities by following value investing strategy. 2) Birla Sun Life Equity Fund Birla Sun Life Equity Fund is a diversified equity fund enabling investors to capitalize on the immense growth opportunities provided by the stock market while at the same time minimizing the risk. Launched in August 1998 (as Alliance Equity Fund and subsequently taken over by Birla Mutual Fund on Sep 24, 2005), the fund is an open-ended growth scheme with a Multicap theme. It dynamically shifts weightages between largecap and mid-cap stocks depending on the market outlook. Significant portion of the scheme is invested in sectors with high growth prospects. Additional focus is kept in identifying sunrise industries / concept stocks. The large in-house research team is especially helpful in identifying such stocks. The fund also takes medium-term bets on certain sectoral trends to ride on the growth momentum. The Fund invests in a wide cross-section of sectors thereby offering adequate diversification to investors. 3) BSL Frontier Equity

Birla Sun Life Frontline Equity Fund is an open-ended diversified equity fund, which invests in handpicked frontline stocks (i.e. stocks which have the potential of providing superior growth opportunities) such that it is representative of all leading sectors of its chosen benchmark. The scheme targets the same sectoral weights (+/- 5%) within its portfolio as the benchmark, the BSE 200. However, the choice of stocks is not limited to the benchmark, thus providing a wider universe of investible stocks. . Investing across sectors ensures diversification and at the same time investing in frontline stocks provides for a possibility of higher returns. Birla Sun Life Frontline Equity Fund is ideal for investors looking at investing in quality stocks across the leading sectors of the economy. 4) BSL Mid cap Fund Birla Sun Life Midcap Fund is an open ended growth fund which focuses on investing in the Midcap segment of the market with a disciplined investment approach. More than 65% of the portfolio at any point of time comprises of Midcap stocks. Diversification and superior risk control form an integral part of the fund management strategy to keep portfolio volatility at lower levels vis-aversa the benchmark CNX Mid-cap Index. The key portfolio strategy is summarized as follows:

Strong process driven investment philosophy matched with a disciplined risk management strategy.

Identifying stocks that can demonstrate strong growth over 3-5 years horizon.  Avoid market timing and cash calls.
  

Avoid concentrated & aggressive calls. Focus on identifying scaleable businesses with objective of identifying tomorrows large-cap.

Sharpe-eye on valuations.

The fund seeks to achieve long-term growth of capital at controlled level of risk by primarily investing in Mid Cap Stocks. The Midcap segment comprises mostly of companies that have been able to sustain themselves in the initial phases of growth. Since many companies out of this segment would show higher growth in future and move towards the large cap segment, this segment offers very high potential. With over 250 stocks in the Midcap segment, there exists a large variety of business to choose from. Further, this segment is relatively under researched and hence offers an excellent opportunity for bottom-up focus thus enabling the spotting of winners ahead of the market. 5) BSL Special Situation Fund Birla Sun Life Special Situations Fund endeavors to generate long-term growth by identifying stocks that may have the potential for special situation. Stocks that are undergoing or have undergone such a situation are also potential picks. Most special situations often result in incremental value addition to a stock/business. This may get reflected in the price within a short period or gradually depending on the special situation that the company is in. The objective of the scheme is to generate long-term growth of capital by investing in a portfolio of equity and equity related securities. The scheme would follow an investment strategy that would take advantage of special situations and contrarian investment style. 6) BSL Top 100 Fund Birla Sun Life Top 100 Fund is an open ended growth scheme which will focus on investing predominantly in a diversified portfolio of Large Cap stocks. It is specifically designed for those investors who seek exposure to a broader large market capitalization stocks and growth cum value style of investing. The Fund shall invest at least 65% of its corpus in equity and equity related securities of the top 100 Indian companies as measured by market capitalization and listed on stock exchanges. The remaining portion of the portfolio can be invested in equity

and equity related securities of companies other than the top 100 companies which in the opinion of the Fund Manager have attractive growth prospects and potential to outperform the broad market indices. 7) BSL Life Advantage Fund Birla Sun Life Advantage Fund (BSLAF) is an open-ended, diversified equity fund, which aims to deliver an above average long-term performance on a sustained basis. The fund has a superior track record of more than 10 years. 8) BSL Long Term Advantage Fund Birla Sun Life Long Term Advantage Fund Series I, is a 3-year closed ended equity fund. The objective of the fund is to generate consistent long-term capital appreciation by investing predominantly in equity and equity related securities of companies considered to be small and mid cap. The fund would invest in a portfolio of attractively priced small & mid cap stocks that are expected to post attractive growth in the next few years. Birla Sun Life Long Term Advantage Fund Series I, through active management seeks to construct a portfolio of high growth stocks with an endeavor to out perform its benchmark index i.e BSE 500 9) BSL Dividend Yield Fund Birla Sun Life Dividend Yield Plus has a portfolio that seeks to provide a combination of: • • • High dividend yield Substantial capital protection Strong possibility of capital gains

Historically, stocks of high dividend yielding companies provide a high degree of protection even in a scenario when equity markets are volatile.

Add to this protection, a good possibility of stock prices appreciating, as and when the equity markets revive. When a high dividend yield investment is made in conjunction with other parameters like: a. Low price to book value ratio (price-to-book) and b. Low market capitalization to sales ratio (market cap-to-sales) The possibility of upward re-rating of the stock increases. 10) Birla Sun Life Tax Plan (BSLTP) Birla Sun Life Tax Plan (BSLTP) aims at achieving long term growth of capital along with Income Tax benefits for investors. It follows a bottom-up approach to investing, where the emphasis is on identifying companies in quality businesses with a strong competitive position and run by quality management. Essentially the focus is on long term fundamentally driven values. The fund offers superior growth opportunities. Since investments are planned for a 3 year period it helps the Fund Manager to take a long term view while selecting stocks and not remain constrained by short term liquidity pressures. Tax Benefit su/s 80c Investments in this fund would enable you to avail benefits under Section 80C of the Income Tax Act, 1961. Investments upto Rs. 1 lakh by eligible investors in the scheme may qualify for deductions. Investors are requested to consult their tax advisor in this regard. Opportunity for wealth creation: Equities inherently offer a potential for better returns as compared to Debt instruments, which are fixed or restrictive in nature. Most of the other options under Section 80C like PPF, NSC, Bonds, etc. represent fixed returns with higher lock-in periods. However, BEP offers a lock-in of only 3 years and the potential of higher returns. 11) BSL Index Fund . .

Birla Sun Life Index Fund is an open ended Index Linked Growth Scheme with an objective to generate returns that are commensurate with the performance of the Nifty. This is the fund that benchmarks the S & P CNX Nifty and aims at delivering competitive returns through a broadly diversified portfolio. Investments in Birla Index Fund gives you access to an entire basket of Blue Chip stocks. Theme Based Fund 12) BSL Commodity Equities Fund The new Birla Sun Life Commodity Equities Fund (BSL CEF) is your chance to reduce risk and strengthen your portfolio by diversifying across countries, industries and commodity based companies. Diversification is, basically, reducing risk by not putting all your eggs into one basket. The more you diversify, the more you reduce the chance of any single loss (in a component of your portfolio) seriously damaging the portfolio as a whole. 13) BSL India GenNext Fund The basic theme of the Birla Sun Life India GenNext Fund is to target growth of capital by investing in companies that are expected to benefit from the changing consumption patterns in India. The consumption boom in the country is fuelled by high disposable incomes of the young generation (Generation Next). Typical GenNext companies are: • • • Companies that seek growth in revenues arising out of products demanded by the consumers, particularly Gen Next. Companies providing products or rendering of services that go directly to the consumer. The products and services having distinct brand identity, thereby enabling choice. The Birla Sun Life India GenNext portfolio is positioned to capture the long-term potential of the Indian Consumption Boom story. The portfolio takes strategic

exposure to key brands that create strong value proposition for customers. The underlining rationale is that in the long run it is the Brands and value added products that create value and wealth for customers and investors as well. 14) Birla Sun Life India Opportunities Fund (BSLIOF) Birla Sun Life India Opportunities Fund (BSLIOF) is an open-ended scheme that invests in foreign exchange earning companies. BSLIOF aims to identify companies that seek to utilize India's low cost and high quality resources to service the needs of global customers. The scheme, thus, allows investors to participate in India's emerging global outsourcing theme and seeks innovative ways of investing in only certain types of companies and sectors that have years of consistent growth ahead of them. 15) Birla Sun Life MNC Fund Birla Sun Life MNC Fund seeks to provide investors a well-diversified portfolio of MNCs in growth driven sectors like FMCG, Pharmaceuticals, Auto and Ancillaries, etc. The fund invests exclusively in securities of multinational companies in order to achieve long-term growth of capital with relatively moderate levels of risk. Multinational companies (MNCs) generally have strong parentage and global experience & technology, backed by professional management. Such synergies translate strengths into superior products and services, making these companies an ideal choice for long-term investment. 16) BSL Basic Industry Fund With the Indian economy expected to grow at attractive rates, investments in funds focusing on the economically sensitive sectors (core sectors) are an attractive investment avenue. Birla Sun Life Basic Industries Fund is an openended equity fund investing in basic and core sector industries like Banks, Capital goods and Automobiles. Since the fund invests in the core sectors, the performance of the fund is directly linked to the economy's growth. Launched in

January 2000 (as Alliance Basic Industries Fund and subsequently taken over by Birla Sun Life Mutual Fund on Sep 24, 2005), the fund is a multi-sector equity scheme investing primarily in economy related cyclical stocks. This fund invests in a wide range of industries which includes automobiles, cement, construction, metals, capital goods, petrochemicals, steel, paper etc. 17) BSL Infrastructure Fund Infrastructure is the backbone of any nation. Economists say that a country can grow at an additional rate of 2-3% if it has proper infrastructure in place. Infrastructure also needs to keep pace with country's development. This is something that Indian infrastructure has lacked. The country has seen large scale development in the past on various fronts like - roads, bridges, ports, metro, urban housing etc. However, the extent of development has not been able to fulfill the requirements. 18) BSL Buy India Fund The objective of Birla Sun Life Buy India Fund is to attain long term growth of capital through a portfolio with a target allocation of 100% in equity, focusing on investing in businesses that are driven by India's large population and inherent consumption patterns. Birla Sun Life Buy India Fund is an equity fund aiming to capitalize on the growth opportunities provided by companies that are driven by India's large population and consumption patterns. The prime focus of the scheme is in consumer and healthcare sectors. .

The Indian economy has witnessed attractive rates of growth in the past. The large population of the country and their inherent consumption patterns resulting in a surge in demand is one of the major drivers for the attractive growth in the Indian Economy. .

Launched in January 2000 (as Alliance Buy India Fund and subsequently taken

over by Birla Sun Life Mutual Fund on Sep 24, 2005), the fund is an open-ended multi-sector equity fund with majority of the investments in the FMCG and healthcare sectors 19) Birla Sun Life New Millenium Fund Birla Sun Life New Millenium Fund is a multi-sector open-ended growth scheme with the focus of investing in Technology, Software, Hardware, Media, Telecom, Internet and ecommerce and other technology enabled companies. India has successfully emerged as the hub for providing IT and ITES services to global customers, leveraging on its vast pool of skilled talent. The offshore model is gaining momentum and is on the radar of every CIO of global companies looking to outsource. Besides IT and ITES, Media and Telecom Services segments are also expected to do well driven by the domestic consumption story. The idea is to identify and invest in companies, which are at early growth stage and available at attractive valuations using bottom-up approach. Debt Schemes


Long Term Fund 1) Birla Sun Life Income Plus Birla Sun Life Income Plus is an open-ended debt scheme with the objective to generate consistent income through superior yields on its investments at moderate levels of risk through a diversified investment approach. 2) Birla Sun Life Income Fund Birla Sun Life Income Fund (Formerly: Alliance Income Fund) is an open-ended income scheme with the objective of generating income and capital appreciation by investing 100% of the corpus in a diversified portfolio of debt and money market securities.

3) Birla Sun Life Dynamic Bond Fund Birla Sun Life Dynamic Bond Fund is a scheme with an investment objective to generate optimal returns with high liquidity through active management of the portfolio by investing in high quality Debt and Money Market Instruments. In the world of Fixed Income Investing, one needs a fund that can accurately track the interest rate movements. A fund that can make flexible asset allocation across various maturity profiles and debt asset classes. Thereby, taking your investments high up the ladder, ensuring optimum returns. Birla Sun Life Dynamic Bond Fund seeks to do just that by taking the sting out of Fixed Income Investing.

Gilt Fund 1) Birla Sun Life Gilt Fund Birla Sun Life Gilt Plus is an investment option that is safer than AAA rated instruments, provides good liquidity at competitive returns and offers tax benefits. Birla Sun Life Gilt Plus invests exclusively in Central Government Securities with an objective of generating income and capital appreciation for the investors. Government Securities (also called "Gilts" or "G-Secs") constitute a large portion of the debt market and are highly liquid too. Moreover, Gilts are backed by a sovereign guarantee, which means that there can be no default on the repayment of the principal and the interest. For retail investors, one of the easier ways to invest in Government Securities is through Mutual Funds. BGP enables you to invest with low minimum investment amount (Rs. 5000 only), while taking away the procedural difficulties of direct investment in G-Secs.

To accommodate varying investment horizons, there are three plan options Liduid Plan (upto 1 year), PF Plan (1 to 3 years) and regular plan (above 3 years). 2) BSL Govt Security Fund

Short Term Fund 1) BSL Savings Fund Birla Sun Life Savings Fund is a 100% debt fund. It is positioned between the money-market fund category and the income fund category, and generally has average maturity between 6-18 months. It is ideal for investors with an investment horizon of anywhere between one month to twelve months. 2) BSL Short Term Fund Birla Sun Life Short Term Fund aims to generate income and capital appreciation by investing 100% of the corpus in a diversified portfolio of debt and money market securities with relatively low levels of interest rate risk.

Floating Rate Fund 1) BSL Floating Rate Fund Birla Sun Life Floating Rate Fund is an open-ended income fund that primarily invests in floating rate debt instruments (65%-100%). The schemes aims to provide a regular stream of income while minimizing risks arising from interest rate fluctuations / movement. Birla Floating Rate Fund is a product created to help investors reduce interest rate related risks of the debt market. The primary objective of the Scheme is to generate regular income through

investment in a portfolio comprising substantially of floating rate debt/money market instruments. The scheme may invest a portion of its net assets in fixed rate debt securities and money market instruments. The scheme will endeavour to minimize interest rate risk and act as a hedge against increase in interest rates. The fund is expected to generate superior returns in an increasing interest rate environment. Birla Sun Life Floating Rate Fund offers two unique Plans - Short Term Plan and Long Term Plan.

Cash Fund

1) BSL Cash Plus Birla Sun Life Cash Plus (BSLCP) is a highly liquid income scheme with a focus on prevention of capital erosion. Money is invested in safe instruments like Repo, Treasury Bills, Commercial Paper, Certificates of Deposit and Non-Convertible Debentures, giving you a broad based "parking" alternative, which can yield better returns on money that would otherwise lie idle in a bank account. It makes Money Management easy. .

Each instrument - whether it is high quality debt or a Money Market instrument is picked only after painstaking research with view to minimise risk. The first scheme of its kind (launched in June 1997), the fund has since proven to be immensely popular with money managers and individuals alike. .

Birla Sun Life Cash Plus is designed for higher short-term earnings, and gives the convenience of a bank account. You get an Account Statement, similar to a passbook, which records subscriptions and redemptions. You can, at any time, add to your investment or withdraw all or part of it. You can even maintain a 'zero balance' for a certain period of time.

2) BSL Cash Manager Launched in 1998, Birla Sun Life Cash Manager aims to provide current income, which is consistent with a portfolio that offers superior liquidity by investing 100% in a diversified portfolio of debt (fixed income) & money market securities

Fixed Maturity Plan

1) BSL Fixed Maturity Fund – Annual Yearly Series 3 The market often witnesses high volatility. This increases the price risk, especially for short-term investors. Birla Sun Life Fixed Maturity Plan is specifically designed to control price risk. It is a close-ended 100% debt fund. It is ideal for risk averse investors seeking stable returns over a fixed period similar to bank fixed deposits. However, investors have the advantage of getting returns which are tax efficient as compared to bank deposits.
 

Fixed Term Fund Interval Income Fund Hybrid Schemes

Balanced Fund 1) BSL Balanced Birla Sun Life Balance strikes a balance between the growth that equity offers and the safety that debt provides, thus seeking to maximize returns on your investments at moderate levels of risk. . Equity investments are best for the long-term growth of capital. However, it is still volatile in the short term. Debt investments on the other hand are generally more stable.

2) BSL 95 Fund Birla Sun Life '95 Fund strikes a balance between the growth that equity offers and the safety that debt provides, and thereby helps you achieve the best of both worlds. Thus fund seeks to maximize returns on your investment at moderate levels of risk. . Launched in January 1995 (as Alliance '95 and subsequently taken over by Birla Mutual Fund on Sep 24, 2005), the fund is an open-ended balanced scheme investing across equity and debt classes with a target allocation of 60% in equity and the remaining in debt and money market securities. Being a balanced fund, it is geared towards providing a mixture of capital appreciation, safety and income. The fund is ideal for investors seeking growth from equity investments but with a cushion of debt. 3) Birla Sun Life MIP- I Birla Sun Life MIP is an open-ended income scheme which seeks to generate regular income through investments in fixed income securities so as to make monthly payment or distribution to Unit-holders with the secondary objective being growth of capital through investments in equity. Birla Sun Life MIP is primarily a debt oriented fund that seeks to ensure an uninterrupted flow to unit holders with an additional objective of capital growth. 4) BSL MIP- II The concept of Monthly Income Plan (MIP) originates from the requirement of providing higher returns to conservative investors. In a scenario where debt returns have come down because of historic low interest rates, the MIP product relies on small dosages of equities in a predominantly debt portfolio to provide the return kicker. The concept of a debt portfolio with equity boosters has been very successful in the past. With little alterations to this formula, it can be made

suitable to a much broader investor mass with varying risk profiles.

The Savings 5 variant of Birla Sun Life MIP II addresses the needs of investors with a conservative risk profile. The Wealth 25 variant of Birla Sun Life MIP II addresses the needs of investors with a moderate risk profile. 5) BSL Monthly Income

Birla Sun Life Monthly Income is an open-end regular income scheme with the primary objective to generate regular income so as to make monthly and quarterly distributions to Unit-holders and the secondary objective being growth of capital.

Fund Of Funds

1) Birla Sun Life Asset Allocation Fund Birla Sun Life Asset Allocation Fund is an open ended Fund of Fund Scheme. The Conservative Plan is ideally suited for an investor having a Conservative risk profile. It provides a convenient and inexpensive way of creating a basket of funds for the investor, which is rebalanced monthly. The scheme has the option of investing upto 30% of its assets in schemes managed by other Mutual Funds. The concept of asset allocation :Asset allocation strategy is based on the concept of risk diversification. Investments in financial instruments are recommended based on the risk appetite of the investor. Through asset allocation, investors can decide on the best mix of debt and equity, which is commensurate with their risk profile.

Birla Sun Life Asset Allocation Fund is an open ended Fund of Fund Scheme. The Moderate Plan is ideally suited for an investor having a Moderate risk profile. It provides a convenient and inexpensive way of creating a basket of funds for the investor, which is rebalanced monthly. The scheme has the option of investing upto 30% of its assets in schemes managed by other Mutual Funds. Birla Sun Life Asset Allocation Fund is an open ended Fund of Fund Scheme. The Aggressive Plan is ideally suited for an Aggressive Investor. It provides a convenient and inexpensive way of creating a basket of funds for the investor, which is rebalanced monthly. The scheme has the option of investing upto 30% of its assets in schemes managed by other Mutual Funds.
 

Capital Protected Fund India Advantage Fund

A Fund designed to seek long-term capital appreciation through investment primarily in equity related securities of companies in India that are run by efficient management, have a sustainable and robust business model and are available at reasonable valuations. in Mauritius which has been investing in India since 1996.


India Advantage Fund Ltd. is an open-ended Investment Company incorporated

BSL Excel India Fund Excel India Fund is an open-ended unit trust created under the laws of Ontario, Canada pursuant to a declaration of trust dated November 17, 1997. Excel Funds Management Inc. is the manager, trustee and promoter of the Fund. The principal office of Excel and the Fund is located at 2000 Argentia Road, Plaza Four, Suite # 290, Mississauga, Ontario, L5V 1W1. The Fund is open for

subscription to the Residents of Canada.

Excel India Fund invests most of its assets in India Excel (Mauritius) Fund (the "Mauritius Sub-fund") which is an open-ended investment trust organized under the laws of Mauritius. The Mauritius Sub-fund in turn invests most of its assets in India Excel (Offshore) Fund (the "India Sub-fund') established as a dedicated Sub-fund of Birla Mutual Fund. India Excel (Offshore) Fund is managed by Birla Sun Life Asset Management Company Limited. India Excel (Offshore) Fund invests in a diversified portfolio of well researched, globally competitive Indian companies with sound growth potential. .

For complete details on Excel India Fund visit the official website of Excel Funds Management Inc.

Bharuch Branch
Organization Structure of Bharuch Branch

Branch Manager/Head (Maulik Patel)

Client Relationship & Operation Management (Roshni Dave)

Function of Branch Manager:  Branch Administration: • • • • • Attendance of office boy & house keeper. Cash payment for required purchases & account billing. Branch maintenance Filling & Audit Reporting Maintaining & updating database.  Handling Main Three Channels Distribution • • • Other Important Functions. • • share of company. • • • • • To make strategic planning. To build a healthy & long term To solve queries on regular basis. To be updated with competitors To appoint, provide the training & Updated about the market scenario. To increase sales volume & market National Distributors – like NJ, Karvi, Prudent. Bank both Public & Private. IFA- Individual Financial Advisor.

relationship with distributors & customers.

strategy location as well as distributor wise. develop Individual Financial Advisors.

Basic Function of Client Relationship & Operation Management: • • • • Solve the query of customer. Checking the the filled application form & processing them & Reporting for operation.

forwarding them to CAMS.

Preparing ex pence report of the branch.

RESEARCH METHODOLOGY Research Problem Definition: 1. The measurement & analysis of performance of different Equity schemes that is Equity, Mid Cap, Equity Linked Saving Scheme, Index Fund & Close End Equity, of four selected companies i.e. Birla Sun Life Mutual Fund, HSBC Mutual Fund, ICICI Prudential Mutual Fund & Reliance Mutual Fund through comparative study by using statistical tools & techniques. About The Study • This study is all about measurement & analysis of performance of different Mutual Funds, and this has been done by comparative study between them. • There are around 35 mutual funds in India, among them only 4 companies taken for study purpose. And again they are among top 5 mutual funds in terms of market share in India. They are Birla Sun Life M.F., Reliance Mutual Fund, ICICI Prudential Mutual Fund & HDFC Mutual Fund. • This study is done for the month of February 2009. • There are no. of schemes offered by different mutual funds like Equity, Debt, Balanced, International schemes & fund of funds etc. but among them, only Equity Schemes chosen for research Study. • Again among equity schemes only those schemes have been chosen which are common for all mutual fund selected for study. Those Equity Schemes are Large Cap Schemes, Mid Cap Schemes, Blend Equity Schemes, Equity Linked Saving Schemes & Index Fund. • The performance measurement of schemes done by using 9 parameters. They are; 1. 2. 3. 4. Return Asset Under Management Portfolio Turnover Rate Standard Deviation

5. 6. 7. 8. 9. •

beta Cash Holding Expense Ratio R-Squared Sharpe Ratio

As Return is main measure among 9 parameters, the hypothesis is set & Test is applied on it. And whatever result come out from the calculation will decide whether the performance of Birla Sun Life Mutual Fund is Effective or Ineffective. Apart from the Return all other parameters are very crucial one is suppose to make investment decision about which Mutual Fund to select for investment as specially in Equity Schemes. So all this parameters are taken as Standard Deviation & Beta- Shows the Risk Profile E

Objectives of Study Primary Objectives: • • • • • To know how to measure & analyse the performance of Equity Schemes of different Mutual Fund Company. To get understand the Statistical tools & other important parameters use to make comparison of performance of different Mutual Fund Companies. To study what is the performance of Birla Sun Life Mutual Fund. To find which company perform well among selected four companies.

Secondary Objectives • • To increase my knowledge regarding what are the parameters which seems very important before making investment decision particularly in mutual fund & in that for equity schemes. To share my knowledge/experience of study with others.

UTILITY OF RESEARCH STUDY  Useful to Investor: The investor naturally would be interested in tracking the value of his investment, whether he invests directly in the markets or indirectly through mutual funds. He would have to make intelligent decisions on whether he gets an acceptable return on his investments in the funds selected by him, or if he needs to switch to another fund.

He therefore needs to understand the basis of appropriate performance measurement for the fund, & acquire the basic knowledge of the different measures of evaluating the performance of a fund. Only then would he be in position to judge correctly whether his fund is performing well or not and make the right decisions.  Useful to advisor: If person is an intermediary recommending a mutual fund to a potential investor, he would expect advisor to give him proper advice on which fund have a good performance track record. If advisor want to be an effective investment advisor, then he too have to know how to measure and evaluate the performance of the different funds that are available to the investor. The need to compare different funds’ performance requires the advisor to have the knowledge of the correct and appropriate measures of evaluating the fund performance.  Useful to company The performance of any company become meaningful when it is compared with other companies for same period so this comparative study is definitely useful as this study provide very important data to company & can adopt competitive strategy for improvement or increase the performance & thereby its sales & market share in industry. Scope of the study • • • There are only four Mutual Fund companies included in the study they are Birla Sun Life Mutual Fund, HSBC Mutual Fund, ICICI Prudential Mutual Fund & Reliance Mutual Fund. Among all schemes of all companies only Equity Schemes- Equity Fund, Mid Cap Schemes, ELSS, Close End Equity Fund & Index Fund have been taken for the study. There are 8 parameters taken for measurement purpose. They are Return, Asset Under Management, Portfolio Turnover Rate, Standard Deviation, Beta, Cash Holding, Expense Ratio & R-Squared.

DATA COLLECTION data used in the comparative study is secondary data. In other word comparative study is based on secondary data. Data is collected from “Factsheet” other required information through internet. Factsheet:

It is the monthly report of all schemes of Mutual Fund Company. It involves data like Investment Performance, Portfolio & Asset Allocation, Investment Objectives, Entry & Exit Load, AUM and many important information. LITERATURE REVIEW Return : This is the main & popularly used tool for performance measurement of any scheme. Formula: [(Distributions + Change in NAV)/ NAV at the beginning of the period] *100. Return can be a cumulative aggregate return or it can be a average annualized return. For comparison average annualized return is more effective. The fund/ scheme which gives high return is perform well but performance must be interpreted in the light of market conditions & investment objective of the fund. Asset Under Management Meaning : It stands for Asset Under Management. It states the total amount invested in different avenues like Share, Debenture, Bonds, Money Market instrument, real Estate, Insurance etc. Fund size can affect performance. Small funds are easier to maneuver and can achieve their objectives in a focused manner with limited holdings. Large funds benefit from economies of scale with lower expense ratios and superior fund management skills. They also gain through greater risk bearing and management capacity. But still if AUM is higher then it means scheme/fund is successful & people are interested to invest in it. Portfolio Turnover Rate. Meaning : it means how frequently the fund’s portfolio is turned over by selling & buying the securities of fund.

Formula : portfolio Turnover Rate measures the amount of buying & selling of securities done by a fund. It is defined as the lesser of assets purchased or sold divided by the fund’s net assets. Purpose : the ratio measures how many times the fund manager turns over his portfolio by buying or selling of securities in the market. A 100% turnover implies that the manager replaced his entire portfolio during the period in question. Interpretation : This percentage is a good indicator of the extent to which the fund is active in terms of its dealing on the market. However, high turnover ratio also indicates high transaction costs charged to the fund. The net return to the investor can be lower with high transaction costs. Standard Deviation Risk is defined as volatility, is measurable by the statistical concept of Standard Deviation. Standard Deviation measures the fluctuations of the fund’s returns around a mean level. Use monthly results of an equity fund. Tabulate the returns. Calculate mean (average) returns. Calculate the variance of each month’s return from the mean. Square these numbers. Sum up. Divide by the number of periods of observations. Compute the overall variance or the Standard Deviation. Standard Deviation basically gives you an idea of how volatile the earning are. Standard Deviation can be computed for both equity and debt funds. Standard Deviations of different funds can be compared with each other, or with Standard Deviation of a market index or even that of another category. S.D = √∑(R – R) 2/n Beta Another measures of risk is its beta coefficient. Beta relates a fund’s return with market index and measures the sensitivity of the fund’s returns to changes in the market index. A Beta of 1 means the funds moves with market. A Beta of less than 1 means the fund will be less volatile than the market, typically in case of conservative portfolios. Higher beta portfolios gives greater returns in rising markets & are riskier in falling markets. A good measure of fund risk level. Cash Holding Meaning: mutual funds allocate their assets among equity share, debt securities and cash /bank deposits. The percentage of a fund’s portfolio held in cash equivalent can be an important element in its successful performance. Interpretation: a large cash holding allows the fund to strengthen its position in preferred securities without liquidating its other portfolios. Cash also allows the fund a cushion against decline in the market prices of shares or bonds. The fund

must also guard against large, consistent net redemptions, because these not only indicate dissatisfaction on the part of investors, but also force the fund to maintain large cash reserves lowering the return on the portfolio. It becomes difficult for the fund to attain its objectives in such a situation.

Expense Ratio Meaning : Its shows the total expense in relation to average net asset of the fund. Formula : it is defined as the ratio of total expenses to average net assets of the fund. Total Expense/ Net Assets Purpose: The expense ratio is an indicator of the fund’s efficiency and cost effectiveness. This expense ratio must be evaluated in light of fund size, average account size and portfolio composition – equity or fixed income. For example fund with small corpus size will have a higher expense ratio affecting investor returns than a large corpus fund. R-Squared R-Squared measures how much of a fund’s fluctuations is attributable to movements in the overall market, from 0 to 100 percent. To be meaningful, the fund being evaluated should have some correlation with the market. This term coined by Bogle, it explains the fund’s performance in relation to a benchmark like a market index. Simply put, a high proportion of an equity fund’s Total Return is generally explained by the return on the index or the performance of the overall market. Only 10 to 20% of a fund’s return may come from the fund’s strategy. If ExMark is lower than 80%, the fund’s performance relative to the market is less predicable.


• •

First and foremost limitation is that the study is based on the secondary data. So secondary data may or may not reliable. There are only four Mutual Fund companies included in the study they are Birla Sun Life Mutual Fund, HSBC Mutual Fund, ICICI Prudential Mutual Fund & Reliance Mutual Fund. The number of companies taken for study is less so

Large Cap Schemes 180 Days Birla Sun Life Equity Fund HDFC Top 200 ICICI Prudential Growth Fund Reliance Vision Fund -33.94 -29.49 -27.21 -29.71 1year -49.38 -38.75 -37.2 -44.66 Return 3 year -2.74 1.8 -0.25 -0.95 5 year 16.5 16.61 12.34 14.89

Performance of Large Cap Schemes of Mutual Funds in Terms of Return
20 Return (%) 0 -20 -40 -60 Period (Year) Birla Sun Life Equity Fund ICICI Prudential Growth Fund HDFC Top 200 Reliance Vision Fund 180 Days 1year 3 year 5 year

Mid Cap Schemes
Mid Cap Schemes 180 Days Birla Sun Life Mid Cap HDFC Capital Builder ICICI Prudential Emerging Star Reliance Equity Opportunity. -37.09 -33.89 -48.11 -35.13 Return 1 Year -51.43 -46.81 -61.82 -46.81 3 Year -4.47 -5.19 -15.24 -5.62

Performance of Mid Cap Schemes of Mutual Funds in Terms of Return
0 Return (%) -20 -40 -60 -80 Period (Year) Birla Sun Life Mid Cap ICICI Prudential Emerging Star HDFC Capital Builder Reliance Equity Opportunity. 180 Days 1 Year 3 Year

Blend Equity Schemes
Blend Equity Schemes Birla Sun Life Basic India Fund HDFC Growth Fund ICICI Dynamic Fund Reliance Growth 180 Days -35.77 -33.2 -30.69 -36.13 Return 1 Year 3 Year -51.44 -5.66 -42.4 2.81 -36.34 2.53 -44.79 -0.11 5 Year 9.3 15.64 17.95 21.7

Performance of Blend Equity Schemes of Mutual Funds in Terms of Return
40 Return (%) 20 0 -20 -40 -60 Period (Year) Birla Sun Life Basic India Fund ICICI Dynamic Fund HDFC Growth Fund Reliance Growth 180 Days 1 Year 3 Year 5 Year

Equity Linked Saving Schemes Birla Sun Life Tax Relief 96 HDFC Tax Saver ICICI Tax Plan Reliance Tax Saver

Return 180 Days -37.73 -31.72 -39.16 -27.08 1 Year -54.81 -43.82 -46.08 -40.71 3 Year -5.51 -5.93 -11.02 -6.67 5 Year 7.08 18.69 14.56 19.4

Performance of Equity Linked Saving Schemes Of Mutual Funds in Terms of Return
40 Return % 20 0 -20 -40 -60 Return For Periods Birla Sun Life Tax Relief 96 ICICI Tax Plan HDFC Tax Saver Reliance Tax Saver 180 Days 1 Year 3 Year 5 Year

Index Funds 180 Days -33.41 -32.58 -32.67 -30.91

Return 1 Year -44.24 -43.08 -41.87 -42.75 2 Year -15.6 -17.75 -12.87 -16.42 3 Year -1.52 -3.82 0.96 2.42

Birla Sun Life Index Fund HDFC Index Fund ICICI Index Fund Reliance Quant Plus Fund

Performance of Index Funds of Mutual Funds in Terms of Return
20 Returrn (%) 0 -20 -40 -60 Period (Year) Birla Sun Life Index Fund ICICI Index Fund HDFC Index Fund Reliance Quant Plus Fund 180 Days 1 Year 2 Year 3 Year

Large Cap Schemes

Large Cap Schemes of Mutual Funds Measures/ Parameters
Birla Sun Life Equity Fund AUM Rank Portfolio Turnover Rate Rank S.D Rank Beta Rank Cash Holding Rank Expense Ratio Rank R-Squared Rank Sharpe Ratio Rank 699.07 3 4.33 2 32.23 4 0.93 4 29.67 1 2.02 3 0.95 2 -0.32 4 HDFC Top 200 1931.84 2 6.26 1 8.4 2 0.89 2 8.14 3 2 2 0.89 4 -0.02 1 ICICI Prudential Growth Plan 234.97 4 0.88 4 27.69 3 0.91 3 9.05 2 2.36 4 0.97 1 -0.1 3 Reliance Vision Fund 2280.86 1 2.02 3 4.29 1 0.88 1 6.05 4 1.86 1 0.90 3 -0.0015 2

Performance of Birla Sun Life Mutual Fund in terms of AUM is Good but not effective as like Reliance & HDFC. Their AUM is higher by 3.26 and 2.76 times respectively & BSLMF got 3rd rank. So there is scope of improvement in AUM.

Performance in case of Portfolio Turnover Rate of BSLMF is Effective and got 2nd rank. High portfolio Turnover Rate shows that company manages the portfolio actively.  Standard Deviation shows the variability in Return. So performance of BSLMF in terms of Standard Deviation is Poor as it got 4th Rank, and S.D of BSLMF is as high as 7.51 & 3.84 times than Reliance & HDFC respectively. S.D should low.  Performance of BSLMF in terms of Beta also, Poorer as compare to all the three Mutual Funds as it got 4th rank. It indicates that funds performance is more sensitive to the market movements.  In cash Holding BSLMF got 1st rank so Fund’s performance is Excellent. Cash Holding in portfolio shows required Liquidity. And in today’s falling market its really a good sing to have proper & enough liquidity.  Expense Ratio shows the total expense to total Asset. So performance of BSLMF is Good but not Effective just like Reliance & HDFC. And it got 3rd rank.  R-Squared refers to fund’s Performance (in terms of return) prediction as per the performance of market. So higher the R-Squared, more the performance of fund is predictable from market performance. So with 2nd rank it can be said that BSLMF performance is more like market performance.  Sharpe Ratio:

Birla Sun Life Mid Cap Fund

Mid Cap Schemes Of Mutual Fund
HDFC Capital Builder Fund ICICI Prudential Emerging Star Fund 223.91 4 0.33 4 37.46 4 0.91 3 7.25 2 2.36 4 Reliance Equity Opportunity Fund 966.29 1 0.98 3 4.44 1 0.89 2 3.94 4 1.95 1

AUM Rank Portfolio Turnover Rate Rank S.D Rank Beta Rank Cash Holding Rank Expense Ratio Rank

317.47 3 1.09 2 34 3 0.87 1 17.47 1 2.22 3

350.47 2 4.42 1 9.1 2 0.93 4 6.88 3 2.21 2

R-Squared Rank Sharpe Ratio Rank

0.87 2 -0.33 3

0.83 4 -0.06 2

0.88 1 -0.41 4

0.86 3 -0.0165 1

Mid Cap Schemes
Measures/Parameters Birla Sun Life Basic India Fund AUM Rank Portfolio Turnover Rate Rank S.D Rank Beta Rank Cash Holding Rank Expense Ratio Rank 69.8 4 2.3 2 33.7 4 0.97 3 35.26 1 2.46 4 Blend Equity Schemes Of Mutual Funds HDFC Growth Fund ICICI Prudential Dynamic Fund 990.02 2 1.6 4 29.61 3 0.93 2 8.56 4 2.05 2 Reliance Equity Fund

744.44 3 6.54 1 8.7 2 1 4 19.87 2 2.06 3

1570.11 1 2.01 3 3.6 1 0.74 1 19.85 3 1.84 1

R-Squared Rank Sharpe Ratio Rank

0.88 3 -0.39 4

0.83 4 -0.01 2

0.89 2 0 1

0.92 1 -0.028 3

Equity Linked Saving Schemes (ELSS)


Equity Linked Saving Schemes Of Mutual Fund

Birla Sun Life Tax Relief 96 AUM Rank Portfolio Turnover Rate Rank S.D Rank 438.15 4 0.85 4 36.13 4

HDFC Tax Saver 936.06 2 4.43 1 9 2

ICICI Tax Plan

Reliance Tax Saver 1216.94 1 2.13 3 4.41 1

463.63 3 2.19 2 34.95 3

Beta Rank Cash Holding Rank Expense Ratio Rank R-Squared Rank Sharpe Ratio Rank

1.03 3 16.06 1 2.21 3 0.84 1 -0.36 4

0.92 2 4.84 3 1.98 2 0.81 2 -0.07 2

1.03 3 2.4 4 2.27 4 0.78 4 0.35 3

0.84 1 5.17 2 1.93 1 0.79 3 -0.0321 1

Index Funds
Measures/ Parameters Index Fund of Mutual Funds

Birla Sun Life Index Fund AUM Rank Portfolio Turnover Rate Rank S.D Rank Beta Rank Cash Holding Rank Expense Ratio 28.22 3 3.25 2 31.67 4 0.99 3 20.25 1 1.5

HDFC Index Fund 25.22 4 15.43 1 9.51 2 0.92 2 8.68 2 1.24

ICICI Index Fund 36.32 1 1.83 4 29.82 3 0.99 3 0.35 4 1.25

Reliance Quant Plus 34.34 2 2.38 3 4.99 1 0.86 1 4.1 3 2.5

Rank R-Squared Rank Sharpe Ratio Rank

3 0.94 3 -0.28 4

1 0.92 4 0.08 2

2 1 1 0.07 1

4 0.97 2 -0.19 3

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