Performance Analysis of Equity Funds

A DISSERTATION REPORT
ON
"PERFORMANCE ANALYSIS OF EQUITY FUNDS AND THEIR IMPACT
ON INVESTORS CHOICE OF FUND".
Submitted in partial fulfillment of the requirement for

M.B.A. Degree Course of BANGALORE UNIVERSITY
Submitted by
Veerangouda
(06XQCM6118)
20006-2008
Under the guidance of

Prof. Santhanam.
MPBIM,Bangalore
43, Race Course Road, Bangalore-560001

DECLARATION
This is to state that the project titled "Performance Analysis of Equity Funds and Their
Impact on Investors Choice of Fund" is based on the original work carried out by me
under the guidance and supervision of Prof. Santanam, faculty guide.
This is submitted in partial fulfillment of the requirements of the MBA course in

Bangalore University. This has not been submitted in part or full towards any other
degree or diploma.
Place: Bangalore Veerangouda

Date: (06XQCN6118)
Principal Certificate
This to certify that this report entitled. "PERFORMANCE ANALYSIS OF

EQUITY FUNDS AND THEIR IMPACT ON INVESTORS CHOICE OF
FUND".has been prepared by Mr.Veerangouda Reg. No.06XQCM6118 of M P Birla
Institute ofManagement in partialfulfillment of the award of the degree, Master of
Business Administration at Bangalore University, under the guidance and supervision
of Prof. Santhanam MPBIM, Bangalore. This report or a similar report on this topic has
not been submitted for another examination and does not form a part of any other course
undergone by Veerangouda
Place: Bangalore Dr. N S Malavalli
Date: 12-06-2006 (Principal)

Guide Certificate
This is to certify that the project titled “Performance Analysis of Equity

Funds and Their Impact on Investors Choice of Fund” is based on the original
work carried out by Mr.Veerangouda under my guidance and supervision.
The work has been satisfactory and is recommended for consideration

towards the partial fulfillment of the requirements of the MBA degree under
Bangalore University.
Place: Bangalore Signature of Guide

Date: (Prof.Santhanam)
Acknowledgement
The satisfaction and the happiness that accompanies the successful completion of
only task would be incomplete with out expression of appreciation and gratitude to the
people who made it possible.
Indeed I consider it as a pleasant duty, though equally difficult to acknowledge

the motivating efforts of several people who have helped me in bringing this dissertation
report to find its delight.
I express my deep love and thanks to almighty. My sincere thanks to

Prof.Santhanam Coordinator Academics, MBA Department Prof. Sumitra., Faculty guide
and mentor and all the staff members who have guided me in undertaking this
Disserstation.
Finally, I owe my gratitude my beloved parents and my dear most friends who
have always stood by me and have been my moral support with sheer zeal and
enthusiasm at the worry and I dedicate my work to them
Lastly I also thanks all the instructors those helped directly or indirectly for
completion my project.
Date:
Bangalore Veerangouda
(06XQCM6118)
(i) Declaration by student i
(ii) Certificate by Guide ii
(iii) Acknowledgement Iii
(iv) Contents iv
CONTENTS
Executive Summary 1
Chapter -
One (1)Industry Profile
(1.1) Mutual Funds Industry in India 2
(1.2) Performance of Mutual Funds in India 4
(1.3) Mutual Fund Companies in India 5
(1.4) Future of Mutual Funds in India 9
(1.5) Some facts for the growth of mutual funds in India 10
(1.6) Types of Mutual Funds Schemes in India 11
(1.7) Mutual Funds - Organization 11
(1.8) Association of Mutual Funds in India (AMFI) 12
(1.9) Advantages of Mutual Funds 14
Chapter-
Two (2) Profile Of asset Management Companies Profile
(2.1)DSP Merrill Lynch India Tiger Fund – Growth 16
• About The AMC (Asset Management Company) 16
• About Fund 17
• Fact Sheet Of The Fund 18
• Portfolio Of The Scheme 18
(2.2)HDFC Tax Saver – Growth

• About Fund 19
(2.4)Reliance Diversified Power Sector Fund – Growth

• About Fund 22
(2.3)ICICI Prudential Dynamic Plan – Growth

• About Fund 24
(2.5) Taurus Starshare

• About Fund 26
Chapter-
Three (3) Design of the Study
(3.1) About the study: 29
(3.2) Statement of the problem: 29
(3.3) Title of the study: 29
(3.4) Objective of the study: 29
(3.5) Data Collection and Sampling: 29
(3.5) Mutual Fund schemes for this study: 30
(3.6) Research Tools 30
(3.7) How study will proceed? 30
(3.8) Limitation of the study: 30
Chapter-four (4) Performance Measures Of Mutual Fund:

(4.1) Return: 32
(4.2) Standard Deviation: 32
(4.3) Correlation: 33
(4.4) Beta coefficient 33
(4.5) The Sharpe Performance Index 34
(4.6) Treynor Index: 35
Chapter-Five (5) Analysis And Interpretation

(A) Performance Analysis Of Mutual Fund 37
(B) And Their Impact On Investors Choice Of Fund. 47
(C) Testing Hypothesis 70
Chapter-Six (6) Findings And Recommendations. 77

Chapter-
Seven (7) Conclusion 80
Chapter- (8) Bibliography 81
Eight
Chapter-
Nine (9) Appendix
LIST OF TABLES.
Serial. Page
No. Table Title No.
1 Indicates Aggregate deposits of Scheduled Com Banks in India. 10
2 Indicates Mutual Fund AUM’s Growth. 10
3 Indicates asset allocation of DSP Merrill Lynch India T.I.G.E.R. Fund. 16
4 Indicates summary of DSP Merrill Lynch India T.I.G.E.R. Fund. 17
5 Indicates fund future of DSP Merrill Lynch India T.I.G.E.R. Fund. 17
6 Indicates fund facts DSP Merrill Lynch India T.I.G.E.R. Fund. 18
7 Indicates Portfolios of DSP Merrill Lynch India T.I.G.E.R. Fund. 18
8 Indicates Fund Future of HDFC Taxsaver – Growth fund. 20
9 Indicates Portfolios of HDFC Taxsaver – Growth fund. 21
10 Indicates Fund Future of Reliance Diversified Power Sector Fund – Growth Fund. 22
11 Indicates Fund Facts of Reliance Diversified Power Sector Fund – Growth Fund. 23
12 Indicates Portfolios Reliance Diversified Power Sector Fund – Growth Fund. 23
13 Indicates Fund Future of ICICI Prudential Dynamic Plan – Growth Fund. 25
14 Indicates Fund Facts of ICICI Prudential Dynamic Plan – Growth Fund. 25
15 Indicates Portfolios of ICICI Prudential Dynamic Plan – Growth Fund. 25
16 Indicates Fund Future of Taurus Starshare Fund. 27
17 Indicates Fund Facts Taurus Starshare Fund. 27
18 Indicates Portfolio of Taurus Starshare Fund. 28
Indicates various performance measures of DSP Merrill Lynch India Tiger Fund –
19 Growth Fund. 37
20 Indicates various performance measures of HDFC Tax Saver – Growth Fund. 39
Indicates various performance measures of ICICI Prudential Dynamic Plan –
21 Growth Fund. 41
Indicates various performance measures of Reliance Diversified Power Sector
22 Fund – Growth Fund. 43
23 Indicates various performance measures of Taurus Star Growth Fund. 45
24 Indicates Age profile of respondent in the survey. 47
25 Indicates Income Group of respondent in the survey. 48
26 Indicates sex profile of respondent in the survey. 49
27 Indicates Profession Group of respondent in the survey. 50
28 Indicates Family Group of respondent in the survey. 51
29 Indicates stableness of Income of respondent in the survey. 52
30 Indicates various Investment of respondent in the survey. 53
31 Indicates Investment Period of respondent in the survey. 54
32 Indicates Investment Experience of respondent in the survey. 55
33 Indicates ranking investment factor of respondent in the survey. 56
34 Indicates Investment of Money of respondent in the survey. 58
35 Indicates Holding Period of respondent in the survey. 59
36 Indicates Ranking of the Investment of respondent in the survey. 60
37 Indicates Investment Objective of respondent in the survey. 62
38 Indicates Choosing investment of respondent in the survey. 63
39 Indicates opinion about the performance of the fund of respondent in the survey. 64
Indicates opinion about the relevant information of the fund of respondent in the
40 survey. 65
41 Indicates reaction about portfolio of respondent in the survey. 67
Indicates knowledge about terms used in investment in Mutual Fund of
42 respondent in the survey. 68
Indicates choosing the investment of Mutual Fund based Beta of respondent in the
43 survey. 69
Indicates factors affecting while investing in Mutual Fund of respondent in the
44 survey. 70
LIST OF GRAPHS
Serial Page
No Graph Title No
1 Depicts Return of NAV & Nifty of DSP Merrill Lynch India Tiger Fund – Growth Fund. 37
Depicts Standard Deviation, Correlation, Sharpe’s Ratio, and Treynor’s Ratio of DSP Merrill Lynch India
2 Tiger Fund – Growth Fund. 38
3 Depicts Return of NAV & Nifty of HDFC Tax Saver – Growth Fund. 39
Depicts Standard Deviation, Correlation, Sharpe’s Ratio, and Treynor’s Ratio of HDFC Tax Saver –
4 Growth Fund. 40
5 Depicts Return of NAV & Nifty of ICICI Prudential Dynamic Plan – Growth Fund. 41
Depicts Standard Deviation, Correlation, Sharpe’s Ratio, and Treynor’s Ratio of ICICI Prudential Dynamic
6 Plan – Growth Fund. 42
7 Depicts Return of NAV & Nifty of Reliance Diversified Power Sector Fund – Growth Fund. 43
Depicts Standard Deviation, Correlation, Sharpe’s Ratio, and Treynor’s Ratio of Reliance Diversified
8 Power Sector Fund – Growth Fund. 44
9 Depicts Return of NAV & Nifty of Taurus Star Growth Fund. 45
10 Depicts Standard Deviation, Correlation, Sharpe’s Ratio, and Treynor’s Ratio of Taurus Star Growth Fund. 46
11 Depicts Age profile of respondent in the survey. 47
12 Depicts Income Group of respondent in the survey. 48
13 Depicts sex profile of respondent in the survey. 49
14 Depicts Profession Group of respondent in the survey. 50
15 Depicts Family Group of respondent in the survey. 51
16 Depicts stableness of Income of respondent in the survey. 52
17 Depicts various Investment of respondent in the survey. 53
18 Depicts Investment Period of respondent in the survey. 54
19 Depicts Investment Experience of respondent in the survey. 55
20 Depicts ranking investment factor of respondent in the survey. 56
21 Depicts Investment of Money of respondent in the survey. 58
22 Depicts Holding Period of respondent in the survey. 59
23 Depicts Ranking of the Investment of respondent in the survey. 61
24 Depicts Investment Objective of respondent in the survey. 62
25 Depicts Choosing investment of respondent in the survey. 63
26 Depicts opinion about the performance of the fund of respondent in the survey. 64
27 Depicts opinion about the relevant information of the fund of respondent in the survey. 65
28 Depicts reaction about portfolio of respondent in the survey. 67
29 Depicts knowledge about terms used in investment in Mutual Fund of respondent in the survey. 68
30 Depicts choosing the investment of Mutual Fund based Beta of respondent in the survey. 69
31 Depicts factors affecting while investing in Mutual Fund of respondent in the survey. 70
Chapter 1
INDUSTRY PROFILE
Chapter 2
PROFILE OFASSET MANAGEMENT

COMPANIES PROFILE
Chapter 3
DESIGN OF THE STUDY

Chapter 4
PERFORMANCE MEASURES OF
MUTUAL FUND
Chapter 5
ANALYSIS AND INTERPRETATION

Chapter 6
FINDINGS AND
RECOMMENDATIONS
Chapter 7
CONCLUSION
Chapter 8
BIBLIOGRAPHY
Chapter 9
APPENDIX
Questioner
EXECUTIVE SUMMARY
Mutual Funds have taken many turns and now the profile of this financial institution is
assuming new shape. The Mutual Fund industry, in the present context is characterized
by an increasing number of players, competition between the public and private funds,
and the rising popularity of the mutual fund schemes among the retail as well as
corporate investors in the Indian financial market. The structural change in UTI
operations is another major development in the history of mutual funds in India.
The collection of information of the funds shows a trend of phenomenal growth for the
last three years. The most important trend in the mutual fund industry in India is the
aggressive expansion of the foreign owned mutual fund companies. The mutual funds
have been introducing most innovative scheme in Indian market to cater the various
needs of the investors with the object of capturing greater market shares. Product
innovation, focus, service and above all performance will determine the winners in
future.
An analysis of the best performing mutual fund schemes, based on their three year
annualized returns, is done. The analysis starts with the calculation of the Sharpe ratio,
Treynor’s ratio, three year annualized returns, measure of Standard Deviation,
Correlation, slope and the Information ratio for all the ten selected funds. The results thus
obtained for each measure are ranked in the order of the funds performance.
Then a survey conducted to know what the investors prospective towards these funds
are? Then, from non-parametric measures like Chi-Square, ANOVA, Correlation are
conducted to test the hypothesis.
The study concludes that all the funds are performing much better than the index with
different risk exposures. DSP Merrill Lynch India Tiger Fund – Growth, HDFC Tax
Saver – Growth ICICI Prudential Dynamic Plan – Growth, Reliance Diversified Power
Sector Fund – Growth Taurus Star share having less Standard Deviation as compared to
Index.
(1)INDUSTRY PROFILE
(1.1) Mutual Funds Industry in India
The origin of mutual fund industry in India is with the introduction of the concept of
mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated
from the year 1987 when non-UTI players entered the industry.
In the past decade, Indian mutual fund industry had seen a dramatic improvement, both
qualities wise as well as quantity wise. Before, the monopoly of the market had seen an
ending phase; the Assets Under Management (AUM) was Rs. 67bn. The private sector
entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it
reached the height of 1,540 bn.
Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is
less than the deposits of SBI alone, constitute less than 11% of the total deposits held by
the Indian banking industry.
The main reason of its poor growth is that the mutual fund industry in India is new in the
country. Large sections of Indian investors are yet to be intellectuated with the concept.
Hence, it is the prime responsibility of all mutual fund companies, to market the product
correctly abreast of selling.
The mutual fund industry can be broadly put into four phases according to the
development of the sector. Each phase is briefly described as under.
First Phase - 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up
by the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took over the regulatory and administrative
control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the
end of 1988 UTI had Rs.6, 700 crores of assets under management.
Second Phase - 1987-1993 (Entry of Public Sector Funds)
Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank
Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank
Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92).
LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47004 as assets under
management.
Third Phase - 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the
year in which the first Mutual Fund Regulations came into being, under which all mutual
funds, except
UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged
with Franklin Templeton) was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the
SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets
of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under
management was way ahead of other mutual funds.
Fourth Phase - since February 2003
This phase had bitter experience for UTI. It was bifurcated into two separate entities. One
is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as
on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India and does not come
under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of
AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector
funds, the mutual fund industry has entered its current phase of consolidation and growth.
As at the end of September, 2004, there were 29 funds, which manage assets of
Rs.153108 crores under 421 schemes.
GROWTH IN ASSETS UNDER MANAGEMENT
Note:
Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of
the Unit Trust of India effective from February 2003. The Assets under management of
the Specified Undertaking of the Unit Trust of India has therefore been excluded from the
total assets of the industry as a whole from February 2003 onwards.
(1.2) Performance of Mutual Funds in India
Let us start the discussion of the performance of mutual funds in India from the day the
concept of mutual fund took birth in India. The year was 1963. Unit Trust of India invited
investors or rather to those who believed in savings, to park their money in UTI Mutual
Fund.
For 30 years it goaled without a single second player. Though the 1988 year saw some
new mutual fund companies, but UTI remained in a monopoly position.
The performance of mutual funds in India in the initial phase was not even closer to
satisfactory level. People rarely understood, and of course investing was out of question.
But yes, some 24 million shareholders was accustomed with guaranteed high returns by
the beginning of liberalization of the industry in 1992. This good record of UTI became
marketing tool for new entrants. The expectations of investors touched the sky in
profitability factor. However, people were miles away from the preparedness of risks
factor after the liberalization.
The Assets Under Management of UTI was Rs. 67bn. by the end of 1987. Let me
concentrate about the performance of mutual funds in India through figures. From Rs.
67bn. the Assets Under Management rose to Rs. 470 bn. in March 1993 and the figure
had a three times higher performance by April 2004. It rose as high as Rs. 1,540bn.
The net asset value (NAV) of mutual funds in India declined when stock prices started
falling in the year 1992. Those days, the market regulations did not allow portfolio shifts
into alternative investments. There was rather no choice apart from holding the cash or to
further continue investing in shares. One more thing to be noted, since only closed-end
funds were floated in the market, the investors disinvested by selling at a loss in the
secondary market.
The performance of mutual funds in India suffered qualitatively. The 1992 stock market
scandal, the losses by disinvestments and of courses the lack of transparent rules in the
where about rocked confidence among the investors. Partly owing to a relatively weak
stock market performance, mutual funds have not yet recovered, with funds trading at an
average discount of 1020 percent of their net asset value.
The supervisory authority adopted a set of measures to create a transparent and

competitive environment in mutual funds. Some of them were like relaxing investment
restrictions into the market, introduction of open-ended funds, and paving the gateway for
mutual funds to launch pension schemes.
The measure was taken to make mutual funds the key instrument for long-term saving.
The more the variety offered, the quantitative will be investors.
At last to mention, as long as mutual fund companies are performing with lower risks and
higher profitability within a short span of time, more and more people will be inclined to
invest until and unless they are fully educated with the dos and do not’s of mutual funds.
(1.3) Mutual Fund Companies in India

The concept of mutual funds in India dates back to the year 1963. The era between 1963
and 1987 marked the existence of only one mutual fund company in India with Rs. 67bn
assets under management (AUM), by the end of its monopoly era, the Unit Trust of India
(UTI). By the end of the 80s decade, few other mutual fund companies in India took their
position in mutual fund market.
The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank
Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of
India Mutual Fund.
The succeeding decade showed a new horizon in Indian mutual fund industry. By the end
of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds
started penetrating the fund families. In the same year the first Mutual Fund Regulations
came into existence with re-registering all mutual funds except UTI. The regulations
were further given a revised shape in 1996.
Kothari Pioneer was the first private sector mutual fund company in India which has now
merged with Franklin Templeton. Just after ten years with private sector players’
penetration, the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund
companies in India.
Major Mutual Fund Companies in India
ABN AMRO Mutual Fund
ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee
(India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management
(India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian
of ABN AMRO Mutual Fund.
Birla Sun Life Mutual Fund
Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life
Financial. Sun Life Financial is a global organization evolved in 1871 and is being
represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from
India. Birla Sun Life Mutual Fund follows a conservative long-term approach to
investment. Recently it crossed AUM of Rs. 10,000 crores.
Bank of Baroda Mutual Fund (BOB Mutual Fund)
Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under
the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the
AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank
AG is the custodian.
HDFC Mutual Fund
HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely Housing
Development Finance Corporation Limited and Standard Life Investments Limited.
HSBC Mutual Fund
HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital
Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund
acts as the Trustee Company of HSBC Mutual Fund.
ING Vysya Mutual Fund
ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee
Company. It is a joint venture of Vysya and ING. The AMC, ING Investment
Management (India) Pvt. Ltd. was incorporated on April 6, 1998.
Prudential ICICI Mutual Fund
The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the
largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup
on 13th of October, 1993 with two sponsors, Prudential Plc. and ICICI Ltd. The Trustee
Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset
Management Company Limited incorporated on 22nd of June, 1993.
Sahara Mutual Fund
Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation
Ltd. as the sponsor. Sahara Asset Management Company Private Limited incorporated on
August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the
AMC stands at Rs 25.8 crore.
State Bank of India Mutual Fund
State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch
offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today
it is the largest Bank sponsored Mutual Fund in India. They have already launched 35
Schemes out of which 15 have already yielded handsome returns to investors. State Bank
of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor
base of over 8 Lakhs spread over 18 schemes.
Tata Mutual Fund
Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsors for
Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The
investment manager is Tata Asset Management Limited and its Tata Trustee Company
Pvt. Limited. Tata Asset Management Limited's is one of the fastest in the country with
more than Rs. 7,703 crores (as on April 30, 2005) of AUM.
Kotak Mahindra Mutual Fund
Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is

presently having more than 1,99,818 investors in its various schemes. KMAMC started
its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering
to investors with varying risk - return profiles. It was the first company to launch
dedicated gilt scheme investing only in government securities.
Unit Trust of India Mutual Fund
UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages
the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. UTI
Asset Management Company presently manages a corpus of over Rs.20000 Crore. The
sponsors of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB),
State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of
UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index
Funds, Equity Funds and Balance Funds.
Reliance Mutual Fund
Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The
sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is
the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which
was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of
various schemes under which units are issued to the Public with a view to contribute to
the capital market and to provide investors the opportunities to make investments in
diversified securities.
Standard Chartered Mutual Fund
Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard
Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard
Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated
with SEBI on December 20,1999.
Franklin Templeton India Mutual Fund
The group, Frnaklin Templeton Investments is a California (USA) based company with a
global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial
services groups in the world. Investors can buy or sell the Mutual Fund through their
financial advisor or through mail or through their website. They have Open end
Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid
schemes, Open end Tax Saving schemes, Open end Income and Liquid schemes, Closed
end Income schemes and Open end Fund of Funds schemes to offer.
Morgan Stanley Mutual Fund India
Morgan Stanley is a worldwide financial services company and its leading in the market
in securities, investment management and credit services. Morgan Stanley Investment
Management (MISM) was established in the year 1975. It provides customized asset
management services and products to governments, corporations, pension funds and non-
profit organizations. Its services are also extended to high net worth individuals and retail
investors. In India it is known as Morgan Stanley Investment Management Private
Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the
first close end diversified equity scheme serving the needs of Indian retail investors
focusing on a long-term capital appreciation.
Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance Limited as its
sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was
incorporated on December 1, 1995 with the name Escorts Asset Management Limited.
Alliance Capital Mutual Fund
Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital
Management Corp. of Delaware (USA) as sponsored. The Trustee is ACAM Trust
Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd.
with the corporate office in Mumbai.
Benchmark Mutual Fund
Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt.
Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd. as the Trustee
Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark
Asset Management Company Pvt. Ltd. is the AMC.
Canbank Mutual Fund
Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the
sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993
is the AMC. The Corporate Office of the AMC is in Mumbai.
Chola Mutual Fund
Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance
Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the
Trustee Company and AMC is Cholamandalam AMC Limited.
LIC Mutual Fund
Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It
contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was
constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. .
The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund
have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the
Investment Managers for LIC Mutual Fund.
GIC Mutual Fund
GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a

Government of India undertaking and the four Public Sector General Insurance
Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd.
(NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII)
and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act,
1882.
(1.4) Future of Mutual Funds in India
By December 2004, Indian mutual fund industry reached Rs 1,50,537 crore. It is

estimated that by 2010 March-end, the total assets of all scheduled commercial banks
should be Rs 40,90,000 crore.
The annual composite rate of growth is expected 13.4% during the rest of the decade. In
the last 5 years we have seen annual growth rate of 9%. According to the current growth
rate, by year 2010, mutual fund assets will be double.
Let us discuss with the following table:

Table 1.1: Indicates Aggregate deposits of Scheduled Com Banks in India.
Aggregate deposits of Scheduled Com Banks in India (Rs.Crore)
Month/Year Mar-98 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Sep-04 4-Dec
Deposits 605410 851593 989141 1131188 1280853 - 1567251 1622579

Change in % over last yr 15 14 13 12 - 18 3
Source – RBI
Table 1.1: Indicates Mutual Fund AUM’s Growth.
Mutual Fund AUM’s Growth
Mar- Mar- Mar- Mar- Mar-
Month/Year Mar-04 Sep-04 4-Dec
98 00 01 02 03
MF AUM's 68984 93717 83131 94017 75306 137626 151141 149300
Change in % over
26 13 12 25 45 9 1
last yr
Source - AMFI
(1.5) Some facts for the growth of mutual funds in India

• 100% growth in the last 6 years.
• Number of foreign AMC's are in the queue to enter the Indian markets like
Fidelity Investments, US based, with over US$1trillion assets under management
worldwide.
• Our saving rate is over 23%, highest in the world. Only channelizing these
savings in mutual funds sector is required.
• We have approximately 29 mutual funds which is much less than US having more
than 800. There is a big scope for expansion.
• 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are
concentrating on the 'A' class cities. Soon they will find scope in the growing
cities.
• Mutual fund can penetrate rurals like the Indian insurance industry with simple
and limited products.
• SEBI allowing the MF's to launch commodity mutual funds.
• Emphasis on better corporate governance.
• Trying to curb the late trading practices.
• Introduction of Financial Planners who can provide need based advice.
(1.6) Types of Mutual Funds Schemes in India
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial
position, risk tolerance and return expectations etc. The table below gives an overview
into the existing types of schemes in the Industry.
TYPES OF MUTUAL FUND SCHEMES
• By Structure
o Open - Ended Schemes
o Close - Ended Schemes
o Interval Schemes
• By Investment Objective
o Growth Schemes
o Income Schemes
o Balanced Schemes
o Money Market Schemes
• Other Schemes
o Tax Saving Schemes
o Special Schemes
Index Schemes
Sector Specific Schemes
(1.7) Mutual Funds - Organization
• There are many entities involved and the diagram below illustrates the
organizational set up of a mutual fund:
•
Organization of a Mutual Fund
(1.8) Association of Mutual Funds in India (AMFI)
With the increase in mutual fund players in India, a need for mutual fund association in
India was generated to function as a non-profit organization. Association of Mutual
Funds in India (AMFI) was incorporated on 22nd August, 1995.
AMFI is an apex body of all Asset Management Companies (AMC) which has been
registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes
are its members. It functions under the supervision and guidelines of its Board of
Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to
a professional and healthy market with ethical lines enhancing and maintaining standards.
It follows the principle of both protecting and promoting the interests of mutual funds as
well as their unit holders.
The objectives of Association of Mutual Funds in India
The Association of Mutual Funds of India works with 30 registered AMCs of the
country. It has certain defined objectives which juxtaposes the guidelines of its Board of
Directors. The objectives are as follows:
• This mutual fund association of India maintains high professional and ethical
standards in all areas of operation of the industry.
• It also recommends and promotes the top class business practices and code of
conduct which is followed by members and related people engaged in the
activities of mutual fund and asset management. The agencies who are by any
means connected or involved in the field of capital markets and financial services
also involved in this code of conduct of the association.
• AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual
fund industry.
• Association of Mutual Fund of India do represent the Government of India, the
Reserve Bank of India and other related bodies on matters relating to the Mutual
Fund Industry.
• It develops a team of well qualified and trained Agent distributors. It implements
a programme of training and certification for all intermediaries and other engaged
in the mutual fund industry.
• AMFI undertakes all India awareness programme for investors in order to
promote proper understanding of the concept and working of mutual funds.
• At last but not the least association of mutual fund of India also disseminate
information’s on Mutual Fund Industry and undertakes studies and research either
directly or in association with other bodies.
The sponsorers of Association of Mutual Funds in India
Bank Sponsored
• SBI Fund Management Ltd.
• BOB Asset Management Co. Ltd.
• Canbank Investment Management Services Ltd.
• UTI Asset Management Company Pvt. Ltd.
Institutions
• GIC Asset Management Co. Ltd.
• Jeevan Bima Sahayog Asset Management Co. Ltd.
Private Sector
Indian:-
• BenchMark Asset Management Co. Pvt. Ltd.
• Cholamandalam Asset Management Co. Ltd.
• Credit Capital Asset Management Co. Ltd.
• Escorts Asset Management Ltd.
• JM Financial Mutual Fund
• Kotak Mahindra Asset Management Co. Ltd.
• Reliance Capital Asset Management Ltd.
• Sahara Asset Management Co. Pvt. Ltd
• Sundaram Asset Management Company Ltd.
• Tata Asset Management Private Ltd.
Predominantly India Joint Ventures:-
• Birla Sun Life Asset Management Co. Ltd.
• DSP Merrill Lynch Fund Managers Limited
• HDFC Asset Management Company Ltd.
Predominantly Foreign Joint Ventures:-
• ABN AMRO Asset Management (I) Ltd.
• Alliance Capital Asset Management (India) Pvt. Ltd.
• Deutsche Asset Management (India) Pvt. Ltd.
• Fidelity Fund Management Private Limited
• Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.
• HSBC Asset Management (India) Private Ltd.
• ING Investment Management (India) Pvt. Ltd.
• Morgan Stanley Investment Management Pvt. Ltd.
• Principal Asset Management Co. Pvt. Ltd.
• Prudential ICICI Asset Management Co. Ltd.
• Standard Chartered Asset Mgmt Co. Pvt. Ltd.
Association of Mutual Funds in India Publications
AMFI publics mainly two types of bulletin. One is on the monthly basis and the other is
quarterly. These publications are of great support for the investors to get intimation of the
knowhow of their parked money.
The mailing address of Association of Mutual Funds in India
Association of Mutual Funds in India

106, Free Press House,
Free Press Journal Marg,
Nariman Point,
Mumbai - 400 021,
India.
Telephone: 91-22-5637 39 07 / 5637 39 08
Fax: 91-22-5637 3909
Website
http://www.amfiindia.com/
(1.9) Advantages of Mutual Funds
The advantages of investing in a Mutual Fund are:

• Diversification: The best mutual funds design their portfolios so individual
investments will react differently to the same economic conditions. For example,
economic conditions like a rise in interest rates may cause certain securities in a
diversified portfolio to decrease in value. Other securities in the portfolio will
respond to the same economic conditions by increasing in value. When a portfolio
is balanced in this way, the value of the overall portfolio should gradually
increase over time, even if some securities lose value.
• Professional Management: Most mutual funds pay topflight professionals to
manage their investments. These managers decide what securities the fund will
buy and sell.
• Regulatory oversight: Mutual funds are subject to many government regulations
that protect investors from fraud.
• Liquidity: It's easy to get your money out of a mutual fund. Write a check, make
a call, and you've got the cash.
• Convenience: You can usually buy mutual fund shares by mail, phone, or over
the Internet.
• Low cost: Mutual fund expenses are often no more than 1.5 percent of your
investment. Expenses for Index Funds are less than that, because index funds are
not actively managed. Instead, they automatically buy stock in companies that are
listed on a specific index
• Transparency
• Flexibility
• Choice of schemes
• Tax benefits
• Well regulated
(2) PROFILE OF ASSET MANAGEMENT COMPANIES PROFILE
(2.1)DSP Merrill Lynch Ltd. (DSPML)

(A) About Asset Management Company:
DSPML is a premier financial services provider and Merrill
Lynch (ML) holds 90% stake in DSPML. DSPML offers a unique example of a fully
integrated joint venture, which has been successful in providing seamless service and
significant advantage for clients. Clients benefit from the international expertise and
technical knowledge of Merrill Lynch backed by the sound experience and expert market
advice of DSPML.
Merrill Lynch is one of the world's leading wealth management, capital markets and
advisory companies with offices in 37 countries and territories and total client assets of
approximately $1.5 trillion. As an investment bank, it is a leading global trader and
underwriter of securities and derivatives across a broad range of asset classes and serves
as a strategic advisor to corporations, governments, institutions and individuals
worldwide. Merrill Lynch owns just under half of Black Rock, one of the world's largest
publicly traded investment management companies with approximately $1 trillion in
assets under management.
DSPML is the leading underwriter and broker for debt and equity securities, a strategic
M&A advisor to corporations, governments, and institutions, as well as an investment
advisor to high net worth clients in India. DSPML also reaches out to the domestic retail
market via an extensive network of over 2,500 distributors across the country.
Headquartered in Mumbai, DSPML also has offices in New Delhi, Kolkata, Chennai and
Bangalore.
(B) About Fund:
DSP Merrill Lynch India T.I.G.E.R. Fund
An open ended diversified equity Scheme, seeking to generate capital
appreciation, from a portfolio that is substantially constituted of equity securities and
equity related securities of corporate, which could benefit from structural changes
brought about by continuing liberalization in economic policies by the Government
and/or from continuing investments in infrastructure, both by the public and private
sector.
Indicative Asset Allocation

Under normal circumstances, it is anticipated that the asset allocation shall be as follows:
Table 2.1: Indicates asset allocation of DSP Merrill Lynch India T.I.G.E.R. Fund.
Instrument Indicative Allocation (% of Risk Profile
Corpus)
Equity and equity related securities 90% - 100% Medium to High
Debt, Securitized Debt and money market 0% - 10% Low to Medium
securities
ADR, GDR and foreign securities 0% - 25% Medium to High
Table 2.2: Indicates summary of DSP Merrill Lynch India T.I.G.E.R. Fund.
Plans Minimum Investment
• Regular • Regular – Rs 5000
• Institutional • Institutional – Rs. 5 crore
• SIP – Rs. 1000 (Minimum 12 installments)
Options Minimum Additional Purchase
• Growth • Regular – Rs.1000
• Dividend – Payout • Institutional – Rs. 5 lakh
Reinvest
Entry Load Exit Load
Plan % Investment Plan % Load Holding Period
Load
Regular 2.25% < Rs. 5 crores Regular 1% < 6 months
Nil >= Rs. 5 crores 0.50% >= 6 months < 12
months
Nil >=12 months
Institutional Nil Institutional Nil
SIP 1% SIP 1.25% if redeemed before
2 yrs
(C) Fact Sheet:

DSP Merrill Lynch India Tiger Fund – Growth
Objective:
To generate capital appreciation, from a portfolio that is substantially constituted of
equity securities and equity related securities of corporates, which could benefit from
structural changes brought about by continuing liberalization in economic policies by the
government and/or continuing investments in infrastructure, both by the public and
private sector.
Fund Future:
Table 2.3: Indicates fund future of DSP Merrill Lynch India T.I.G.E.R. Fund.
Type of Scheme Open Ended Fund Manager NA
Nature Equity SIP √
Option Growth STP √
Inception Date May 25, 2004 SWP √
Face Value 10 Expense ratio (%) 1.91
(Rs/Unit)
Fund Size in Rs. Cr. 4600.19 as on Jan 31, Portfolio Turnover Ratio 0.9763
2008 (%)
.
Last Dividend Declared NA
Minimum Investment (Rs) 5000
Purchase Redemptions Daily
NAV Calculation Daily
Entry Load Amount Bet. 0 to 49999999 then Entry load is 2.25%. and
Amount greater than 50000000 then Entry load is 0%.
Exit Load Exit Load is 0%.
Fund Facts:
Table 2.4: Indicates fund facts DSP Merrill Lynch India T.I.G.E.R. Fund.
Increase/Decrease since Dec 31, 2007 (Rs. in crores) -159.62
Mutual Fund DSP Merrill Lynch Mutual Fund Tulsiani
Chambers, West Wing, 11th Floor, Nariman
Point Mumbai Tel.-56578000
Asset Management Company DSP Merrill Lynch Fund Managers Tulsiani
Chambers, West Wing, 11th Floor, Nariman
Point Mumbai - 400021 Tel.- 66578000
Registrar Computer Age Management Services Private
Limited A&B, Lakshmi Bhavan 609, Anna
Salai Chennai
(D) Portfolios:
TOP 10 HOLDING AS ON DEC 31, 2007

Table 2.5: Indicates Portfolios of DSP Merrill Lynch India T.I.G.E.R. Fund.
DEBT
No. of Market Value Percentage of Net
Company Name Instrument Shares (Rs. in crores) Assets
8 Astrazeneca Pharma India Ltd. NCD - 0.43 0.01
EQUITY
Company Name Instrument No. of Market Percentage
Shares Value of Net
(Rs. in Assets
crores)
Reliance Industries Ltd Equity 1219270 302.24 6.57
JaiPrakash Associates Ltd. Equity 4593823 166.43 3.62
State Bank of India Equity 751075 162.78 3.54
Bharat Heavy Electricals Ltd Equity 766415 157.90 3.43
ICICI BANK LTD. Equity 1143537 131.16 2.85
Infrastructure Development Finance Equity 6114926 121.60 2.64
company
Reliance Energy Ltd Equity 613470 121.35 2.64
Welspun Gujarat Stahl Rohren Ltd Equity 2465594 116.54 2.53
Suzlon Energy Ltd. Equity 3474335 107.32 2.33
Larsen & Toubro Limited Equity 289912 105.73 2.3
* No. of shares shown above may have been calculated on the basis of percentage of net
assets and market values taking NSE closing prices and not necessarily declared by fund
house.
(2.2)HDFC Tax saver – Growth

HDFC Trustee Company Limited:
A company incorporated under the Companies Act, 1956 is the Trustee to the Mutual
Fund vide the Trust deed dated June 8, 2000, as amended from time to time. HDFC
Trustee Company Limited is a wholly owned subsidiary of HDFC Limited.
HDFC Asset Management Company Limited (AMC):

Was incorporated under the Companies Act, 1956, on December 10, 1999, and was
approved to act as an Asset Management Company for the Mutual Fund by SEBI on July
3, 2000. The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T.
Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020. In terms of the
Investment Management Agreement, the Trustee has appointed HDFC Asset
Management Company Limited to manage the Mutual Fund. The paid up capital of the
AMC is Rs. 45.161 crore.
(B) About Fund:
Fact Sheet:
Objective:
The fund plans to provide tax benefits along with capital appreciation.
Fund Future:
Table 2.6: Indicates Fund Future of HDFC Taxsaver – Growth fund.
Type of Scheme Open Ended Fund Manager Vinay R Kulkarni
Inception Date Mar 31, 1996 SWP √
Face Value (Rs/Unit) 10 Expense ratio (%) 2.14
1325.49 as on Sep 30, Portfolio Turnover Ratio
Fund Size in Rs. Cr. 2007 (%) 16.22
Last Dividend Declared 210 % as on Apr 4, 2000

Entry Load Amount Bet. 0 to 49999999 then Entry load is 2.25%. and Amount
greater than 50000000 then Entry load is 0%.
Fund Facts:
Table 2.7: Indicates Fund Facts of HDFC Taxsaver – Growth fund.
Increase/Decrease since Dec 31, 2007 (Rs. in 124.67
crores)
Mutual Fund HDFC Mutual Fund Ramon House, 3rd Floor, H.T.
Parekh Marg 169, Backbay Reclamation,
Churchgate Mumbai Tel.-22029111 ,56316333
Asset Management Company HDFC Mutual Fund Ramon House, 3rd Floor, H.T.
Parekh Marg 169, Backbay Reclamation,
Churchgate Mumbai Tel.-22029111.
Salai Chennai.
(C) Portfolios:
HDFC Taxsaver - Growth
Table 2.8: Indicates Portfolios of HDFC Taxsaver – Growth fund.
Fund Size as on 30-Sep-07

Fund Size ( Rs. in crores) 1325.49
Asset Allocation as on 30-Sep-07
Equity 95.03%
Debt 2.27%
Others 2.70%

Debt
Company Name Instrument Rating No. of Market Value Percentage of
Debentures (Rs. in crores) Net Assets
Reliance Capital PPD A1+ 30 30.00 2.26
Ltd
Equity
Company Name Instrument No. of Market Value Percentage of
Shares (Rs. in crores) Net Assets
Crompton Greaves Ltd Equity 2412985 80.75 6.09
Thermax Limited Equity 935795 70.14 5.29
Larsen & Toubro Limited Equity 240000 67.39 5.08
State Bank of India Equity 309994 60.32 4.55
Bharti Airtel Ltd Equity 626129 58.85 4.44
Bharat Heavy Electricals Ltd Equity 260000 52.96 4
United Phosphorus Limited Equity 1244495 49.44 3.73
(New)
Siemens Ltd Equity 342930 46.34 3.5
ITC Ltd Equity 2400000 45.55 3.44
house.
(2.3) Reliance Mutual Fund (RMF)

Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Assets Under
Management (AUM) of Rs. 70,440 crores (AUM as on 30th Sept 07) and an investor
base of over 39.52 Lakhs
Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of
the fastest growing mutual funds in the country. RMF offers investors a well-rounded
portfolio of products to meet varying investor requirements and has presence in 115 cities
across the country.
Reliance Capital Asset Management Limited (RCAM), a company registered under the
Companies Act, 1956 was appointed to act as the Investment Manager of Reliance
Mutual Fund.
Reliance Capital Asset Management Limited is a wholly owned subsidiary of Reliance

Capital Limited. The entire paid-up capital (100%) of Reliance Capital Asset
Management Limited is held by Reliance Capital Limited.
Reliance Capital Asset Management Limited (RCAM) was approved as the Asset
Management Company for the Mutual Fund by SEBI vide their letter no
IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment
Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on
August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this
IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The
net worth of the Asset Management Company including preference shares as on March
31, 2005 is Rs.113.59 crores.
RCAM has been appointed as the Investment Manager of "Reliance India Power Fund", a
Venture Capital Fund registered with SEBI vide Registration no.IN/VCF/05-06/062 dated
June 16, 2005 and has commenced these activities.
About Fund:
(B) Fact Sheet:

RELIANCE DIVERSIFIED POWER SECTOR FUND – GROWTH:
Objective:
The primary investment objective of the Scheme is to generate consistent returns by
investing in equity / equity related or fixed income securities of power and other
companies associated with the power sector.
Fund Future:
Table 2.9: Indicates Fund Future of Reliance Diversified Power Sector Fund – Growth
Fund.
Type of Scheme Open Ended Fund Manager Sunil Singhania
Inception Date Apr 15, 2004 SWP √
Fund Size in Rs. Cr. 6141.58 as on Jan 31, 2008 Portfolio Turnover Ratio (%) 0.3

Minimum Investment
(Rs) 5000
Amount Bet. 0 to 19999999 then Entry load is 2.25%. And Amount Bet. 20000000 to
Entry Load 49999999 then Entry load is 1.25%. And Amount greater than 50000000 then Entry load
is 0%.
Fund Facts:
Table 2.10: Indicates Fund Facts of Reliance Diversified Power Sector Fund – Growth
Fund.
Increase/Decrease since Dec 31, 2007 (Rs. in 184.84
crores)
Mutual Fund Reliance Mutual Fund Kamala Mills Compound, Trade World, B
- Wing 7th Floor, Senapati Bapat Marg, Lower parel (West)
Mumbai Tel.-30414800
Asset Management Company Reliance Capital Asset Management Ltd. Kamala Mills
Compound, Trade World, B - Wing 7th Floor, Senapati bapat
marg, Lower parel (West) Mumbai - 400013 Tel.- 30414800
Registrar Karvy Computershare Pvt. Ltd. 21, Avenue 4, Street No 1, Banjara

Hills Hyderbad
(C) Portfolios:
RELIANCE DIVERSIFIED POWER SECTOR FUND – GROWTH
Table 2.11: Indicates Portfolios Reliance Diversified Power Sector Fund – Growth Fund.
Fund Size as on Jan 31, 2008

Asset Allocation as on 31-Jan-08
Equity 70.98%
Debt 0%
Others 29.02%
No. of Market Value Percentage of Net

Company Name Instrument Shares (Rs. in crores) Assets
Reliance Energy Ltd Equity 1700111 363.05 6.09
Tata Power Company Ltd Equity 2361383 347.14 5.83
Oil & Natural Gas Corpn Ltd Equity 2516707 311.3 5.23
Jindal Steel and Power Ltd. Equity 200000 307.91 5.17
JaiPrakash Associates Ltd. Equity 6914084 295.34 4.96
Torrent Power Ltd Equity 12595216 239.62 4.02
Other Equities Equity 224.26 3.76
Punj Lloyd Ltd. Equity 4017000 223.08 3.75
house.
(2.4) ICICI Prudential:

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank - one of
India's foremost financial services companies-and Prudential plc - a leading international
financial services group headquartered in the United Kingdom. Total capital infusion
stands at Rs. 2602 crore, with ICICI Bank holding a stake of 74% and Prudential plc
holding 26%.
We began our operations in December 2000 after receiving approval from Insurance
Regulatory Development Authority (IRDA). Today, our nation-wide team comprises of
over 680 offices, over 235,000 advisors; and 23 banc assurance partners.
ICICI Prudential was the first life insurer in India to receive a National Insurer Financial
Strength rating of AAA (Ind) from Fitch ratings. For three years in a row, ICICI
Prudential has been voted as India's Most Trusted Private Life Insurer, by The Economic
Times - AC Nielsen ORG Marg survey of 'Most Trusted Brands'. As we grow our
distribution, product range and customer base, we continue to tirelessly uphold our
commitment to deliver world-class financial solutions to customers all over India.
(B)About Fund:
Fact Sheet:
Object: Seeks to generate capital appreciation by actively investing in equity and equity
related securities. For defensive considerations, the Scheme may invest in debt, money
market instruments and derivatives.
Fund Future:
Table 2.12: Indicates Fund Future of ICICI Prudential Dynamic Plan – Growth Fund.
Type of Scheme Open Ended Fund Manager S Naren
Inception Date Oct 18, 2002 SWP √
Fund Size in Rs. Cr. 2353.99 as on Sep 28, 2007 Portfolio Turnover Ratio (%) 230

Entry Load Amount Bet. 0 to 49999999 then Entry load is 2.25%. And Amount greater
than 50000000 then Entry load is 0%.
Exit Load If redeemed bet. 0 Months to 6 Months; Exit load is 0.5%.
Fund Facts:
Table 2.13: Indicates Fund Facts of ICICI Prudential Dynamic Plan – Growth Fund.
Increase/Decrease since Aug 31, 2007 (Rs. in -70.68
crores)
Mutual Fund ICICI Prudential Mutual Fund 8th Floor, Peninsula
Tower, Ganpatrao Kadam Marg, Off Senapati Bapat
Marg, Mumbai Lower Parel Tel.-24997000 ,24999777
Asset Management Company ICICI Prudential Asset Management Company Ltd.8th

Floor, Peninsula Tower Ganpatrao Kadam Marg, Lower
Parel Mumbai - 400013 Tel.- 24997000
Salai Chennai
Portfolios:
ICICI Prudential Dynamic Plan – Growth:
Table 2.14: Indicates Portfolios of ICICI Prudential Dynamic Plan – Growth Fund.
Fund Size as on 28-Sep-07

Asset Allocation as on 28-Sep-07
Equity 89.60%
Debt 0%
Others 10.40%
Top 10 Holding as on Sep 28, 2007

Market Value Percentage of
Company Name Instrument No. of Shares (Rs. in crores) Net Assets
NTPC Limited. Equity 8934999 173.29 7.36
Tata Consultancy Services Ltd. Equity 1000000 106.02 4.5
Deccan Chronicle Holdings Ltd Equity 5000000 101.25 4.3
Zee Entertainment Enterprises
Ltd Equity 2528700 86.44 3.67
Mahindra & Mahindra Ltd Equity 1100000 82.72 3.51
Federal Bank Ltd Equity 2101251 78.25 3.32
Bharati Tele - Ventures Equity 800000 75.19 3.19
Oil & Natural Gas Corpn Ltd Equity 625950 59.97 2.55
house.
(2.5) Taurus Asset Management Company Limited:

Taurus Mutual Funds are handled by Taurus Asset Management Company Limited,
which was incorporated in 1994 under Companies Act 1956 and authorized by SEBI to
act as Asset Management Company. Initially, IFC Washington, Edinburgh Fund
Managers (EFM) London and Lazard India Limited were the major shareholders of the
company. Over a period of time, some changes have taken place. The paid up capital of
the Company is Rs.12.55 crores. Presently, the majority shareholders in the Company are
HB Portfolio Limited, RRB Securities Ltd., and HB Stockholdings Ltd. The main sources
of income of the company are: management fees charged from various schemes, and
return on deployment of net worth
TAURUS Asset Management Company Limited was incorporated in 1994 under
Companies Act 1956 and authorized by SEBI to act as Asset Management Company for
Taurus Mutual Fund. Initially, IFC Washington, Edinburgh Fund Managers (EFM)
London and Lazard India Limited were the major shareholders of the company. Over a
period of time, some changes have taken place.
(B) About Fund:

Taurus Starshare is a fund which has frequently featured in various weekly and monthly
top performers' lists. At Personal, we have also received queries from investors wanting
to know more about the fund and its prospects.
For starters, the fund is called "Taurus The Starshare", and is an open-ended diversified
equity fund from Taurus Mutual Fund (launched by Credit Capital Asset Management
Company). The fund is benchmarked against the BSE 200 and has been in existence in its
open-ended avatar since January 1999.
Fact Sheet:
Objective:
Aims to achieve long term capital gain by investing predominantly in equity oriented
securities.
Fund Future:
Table 2.15: Indicates Fund Future of Taurus Starshare Fund.
Type of Scheme Open Ended Fund Manager RK
Gupta
Nature Equity SIP
Option Growth STP
Inception Date 31-Dec-94 SWP
Face Value 10 Expense ratio (%) 1.56
(Rs/Unit)
Fund Size in Rs. Cr. 252.74 as on Jan 31, Portfolio Turnover Ratio 0.24
2008 (%)

Entry Load Entry Load is 2.25%.
Fund Facts:
Table 2.16: Indicates Fund Facts Taurus Starshare Fund.
Increase/Decrease since Dec 31, 2007 (Rs. in
crores) -42.1
Mutual Fund Taurus Mutual Fund 3rd Floor, DCM
Building, 16 , Barakhamba Road New Delhi Tel.-
Mutual Fund 23717593 ,23321756
Asset Management Company Taurus Asset Management

Company Ltd. 3rd Floor , DCM Building 16 ,
Asset Management Company Barakhamba Road New Delhi - 110008 Tel.- 23717593
Karvy Computershare Pvt. Ltd. 21, Avenue 4, Street No
Registrar 1, Banjara Hills Hyderbad
Portfolio:
Table 2.17: Indicates Portfolio of Taurus Starshare Fund.
Fund Size as on Jan 31, 2008
Asset Allocation as on 31-Jan-08
Equity 95.58%
Debt 0.89%
Others 3.53%
TAURUS STARSHARE
Table 2.18: Indicates Portfolio of Taurus Starshare Fund.
DEBT
Company Name Instrument Rating No. of Market Value Percentage
Debentures (Rs. in crores) of Net Assets
11.03 GOI 2012 Securities Sovereign 0.56 0.19
9.85 GOI 2015 Equity Sovereign 0.56 0.19
Kotak Mahindra Bank Ltd. Bond 0.49 0.17
6 Industrial Development Bank of Bond 0.48 0.16
India Ltd 2009
10 Housing & Urban NCD 0.15 0.05
Development Corporation Ltd
2012
EQUITY
Company Name Instrument No. of Market Value (Rs. in Percentage of Net
Shares crores) Assets
JaiPrakash Associates Equity 2321087 99.15 33.63
Ltd.
Crompton Greaves Ltd Equity 1273580 50.1 16.99
Aditya Birla Nuvo Equity 80049 16.08 5.45
Limited.
New Delhi Television Equity 231397 10.71 3.63
Larsen & Toubro Equity 21397 8.92 3.02
Limited
Tata Steel Ltd. Equity 76820 7.19 2.44
CEAT Ltd Equity 7.03 2.39
JSW Steel Limited. Equity 37206 4.91 1.67
Alps Industries Ltd Equity 449311 3.25 1.1
house.
(3) Design of the Study

(3.1) About the study:
In today’s competitive world savings play important role. It will help in meeting
some feature uncertainties. Investment will ensure the effective working of savings.
Mutual Funds are among one of the investment tool which help the investor to meet some
uncertainties.
Country like India which is having a high population, with 200-300 million people who
fall in the lower middle and middle class bracket. Investment tools like Mutual Fund will
offer a better way of saving of the money. Because Mutual Fund having less risk as
compared to equity market. Hence Mutual Fund ensures a proper return on investment.
So, this study is going to evaluate the performance of Equity funds of top Five Mutual
Funds which are ranked by www.mutualfundindia.com for three consecutive years.
And to study what are the preferred funds according to investors. On the basis of schemes
performance. Hence this study may going to know comparison of the performance of the
scheme and investor choice of fund.
(3.2) Statement of the problem:

Null Hypothesis or Ho: The investors choice of fund is depend upon the
performance of the fund.
H1: The investor’s choice of fund does not depend upon the
performance of the fund.
(3.3) Title of the study:

"Performance Analysis of Equity Funds and Their Impact on Investors Choice of
Fund"
(3.4) Objective of the study:

1. To know the performance of various mutual funds schemes.
2. To compare Mutual Fund Average Return with NIFTY Average Return.
3. To know what are the factors are going to affect to investor in selecting Mutual
Fund.
(3.5) Data Collection and Sampling:

The required data for the research are collected from the secondary source.
The data relating to NAV of the scheme are collected from the web sites such as
www.amfiindia.com , www.nseindia.com , www.mutualfundindia.com .
This study adopts convenience-sampling method with a stipulation that complete data are
available for the three-year period for the schemes.
(3.6) Mutual Fund schemes for this study:

• DSP Merrill Lynch India Tiger Fund – Growth
• HDFC Tax Saver – Growth
• ICICI Prudential Dynamic Plan – Growth
• Reliance Diversified Power Sector Fund – Growth
• Taurus Starshare
(3.7) Research Tools

The research has been done by using the following statistical and financial techniques
Statistical tools used are:
• Return
• Standard Deviation
• Correlation
• Beta
• Sharpe Ratio
• Treynor,s Index
(3.8) How study will proceed?

The study is consist of two phases
First one to evaluate the performance of schemes based on the above mention calculation.
Plan of Analysis
• Three year annualized returns are calculated based on the daily returns
• NSE Nifty is considered as the benchmark index and the risk free return is
calculated using the 3 year Government bond treasury bill index
• All the above mentioned Statistical measures are calculated and used in the
financial techniques to get the results
Second phase to know whether performance of particular scheme will going to influence
investor choice of fund based on survey.
Survey consists of questioners and face to face interaction with investors.
(3.9) Limitation of the study:

• This study is taken in Bangalore city so it will face lack of depth study.
• Feedback from investors is limited 100 persons that is sample size is 100.
• Unless the respondent co-operation and true information of the study only
give a clear picture.
(4) PERFORMANCE MEASURES OF MUTUAL FUND:

A portfolio is a collection of investments held by an institution or a private individual.
Holding a portfolio is part of an investment and risk-limiting strategy called
diversification. By owning several assets, certain types of risk (in particular specific risk)
can be reduced. The assets in the portfolio could include stocks, bonds, options, warrants,
gold certificates, real estate, futures contracts, production facilities, or any other item that
is expected to retain its value.
Management
Portfolio management involves deciding what assets to include in the portfolio, given the
goals of the portfolio owner and changing economic conditions. Selection involves
deciding what assets to purchase, how many to purchase, when to purchase them, and
what assets to divest. These decisions always involve some sort of performance
measurement, most typically expected return on the portfolio, and the risk associated with
this return (i.e. the standard deviation of the return). Typically the expected return from
portfolios comprised of different asset bundles are compared. Mutual funds have
developed particular techniques to optimize their portfolio holdings.
Models
Some of the financial models used in the process of Valuation, stock selection, and
management of portfolios include:
• Maximizing return, given an acceptable level of risk.
• Modern portfolio theory - a model proposed by Harry Markowitz among others.
• Capital asset pricing model.
• Arbitrage pricing theory.
• The Jensen Index.
• The Treynor Index.
• The Sharpe Diagonal (or Index) model.
The market index used is Nifty for equity funds.
Following are the some of Performance measure tools used to measure the performance
level of selected Mutual Fund.
(4.1) Return:
A return is a measurement of how much an investment has increased or decreased in
value over any given time period. In particular, an annual return is the percentage by
which it increased or decreased over any twelve-month period. Suppose you invest
$1,000 today and twelve months later your investment is worth $1,070. The annual return
on your original investment of $1,000 is 7%, or $70. The real return, however -- the
annual return less the rate of inflation over the investment period -- will be lower.
It is calculated by using following formula:
Return = Today’s closing value of NAV-Previous closing value of NAV X 100
Today’s closing value of NAV
(4.2) Standard Deviation:

Standard Deviation the risk measures -- one with a distinct advantage over beta. While
beta compares a fund's returns with a benchmark, standard deviation measures how far a
fund's recent numbers stray from its long-term average. For example, if Fund X has a
10% average rate of return and a standard deviation of 5%, most of the time, its return
will range from 5% to 15%. A large standard deviation supposedly shows a more risky
fund than a smaller one. But here, again, what's problematic is your reference point. The
number alone doesn't tell you much. You have to compare one standard deviation with
the others among a fund's peers. But a more glaring problem is that the standard deviation
system rewards consistency above all else. A fund is considered stable based on the
uniformity of its own monthly returns. So if it loses money but does so very consistently
it can have a very low standard deviation -- down 3% each and every month wins a
standard deviation of zero. And likewise, a fund that gains 10% one month and 15% the
next would be penalized by a high standard deviation -- a reminder that volatility,
although perhaps a cousin to risk, itself isn't necessarily a bad thing.
A measure of the dispersion of a set of data from its mean. The more spread apart the
data, the higher the deviation. Standard deviation is calculated as the square root of
variance.
In finance, standard deviation is applied to the annual rate of return of an investment to

measure the investment's volatility. Standard deviation is also known as historical
volatility and is used by investors as a gauge for the amount of expected volatility.
"Standard Deviation is a measurement of dispersion about an average, which, for a

mutual fund depicts how widely the returns varied over a certain period of time. When a
fund has a high standard deviation, the predicted range of performance is wide, implying
greater volatility." Standard Deviation is appropriate for measuring risk if it is for a fund
that is the investors only holding.
It is calculated as follows:
(4.3) Correlation:
Correlation is a bivariate measure of association (strength) of the relationship between
two variables. It varies from 0 (random relationship) to 1 (perfect linear relationship) or -
1 (perfect negative linear relationship). It is usually reported in terms of its square (r2),
interpreted as percent of variance explained. For instance, if r2 is .25, then the
independent variable is said to explain 25% of the variance in the dependent variable.
The Correlation ρX, Y between two random variables X and Y with expected values μX and
μY and standard deviations σX and σY is defined as:
(4.4) Beta coefficient

The Beta coefficient, or financial elasticity (sensitivity of the asset returns to market
returns, relative volatility), is a key parameter in the Capital asset pricing model (CAPM).
Beta can also be defined as the risk of the Mutual Fund to a diversified portfolio.
Therefore the beta of a Mutual Fund will be much lower than its (the fund's) standard
deviation.
The β coefficient measures the asset's non-diversifiable risk, also called systematic risk or
market risk, rm measures the rate of return of the market and ra measures the rate of return
of the asset. On an individual asset level, measuring beta can give clues to volatility and
liquidity in the marketplace. On a portfolio level, measuring beta is thought to separate a
manager's skill from his willingness to take risk.
The beta movement should be distinguished from the actual returns of the stocks. For
example a sector may be performing well and may have good prospects but the fact that
its movement does not correlate well with the broader market index may decrease its
beta. It however should not be taken as a reflection on the overall attractiveness or the
loss of it for the sector or stock as the case may be. Beta is a measure of risk and not be
confused with the attractiveness of investment.
The beta coefficient was actually borne out of regression analysis. It is linked to a
regression analysis of the return of the stock index (x-axis) in a specific year versus the
return of the market (y-axis) in a specific year. The regression line is then called the
Security Characteristic Line (SCL).
For example, in a year where the broad market or benchmark index returns 25%, suppose
two managers gain 50%. Since this is theoretically possible merely by choosing a
portfolio whose beta is exactly 2.0, we would expect a skilled portfolio manager to have
built the portfolio with a beta somewhat less than 2, such that the excess return not
explained by the beta is positive. If one of the managers has an average beta of 3.0 in his
portfolio, and the other's is only 1.5, then the CAPM simply states that we are not being
adequately compensated for the first manager's risk, whereas the second manager has
done more than expected of him and appears capable of generating superior returns.
Calculation of Beta
To calculate Beta, one needs a list of (e.g., daily closing) prices for the asset and prices
for the index, hopefully corrected for dividends. The first step is to calculate ri, the return
for each period, for the asset and for the index. Next, a plot should be made, with the
index returns on the x-axis and the asset returns on the y-axis, in order to check that there
are no serious violations of the linear regression model assumptions.
It is calculated as follows:
Beta= N∑XY-∑X∑Y
N∑X2-(∑X) 2
(4.5) The Sharpe’s Performance Index
The Sharpe Index is a measure with which you may measure the performance of your
portfolio over a given period of time. The important aspect of the Sharpe Index is that
this performance indicator takes into consideration the risk of the portfolio.
In order to use the Sharpe Index, you must know three things; the portfolio return, the
risk-free rate of return, and the Standard Deviation of the portfolio. For the risk-free rate
of return, you may use the average return (over the period of time) of some government
bond or note. The Standard Deviation of the portfolio is a measure of the systematic risk
of the portfolio. Using the Standard Deviation, rather than the beta (as in the Treynor
Index), you are assuming that the portfolio is NOT a diversified portfolio.
If you are looking at the return of a mutual fund, this figure is typically available from the
fund company itself (this and other measures are also available from the American
Association of Individual Investors' Guide to Mutual Funds).
Formula for the index;
Sharpe = (Portfolio Return - Risk-Free Return) / Standard Deviation
Let's use the same example information. A portfolio manager achieved a return of 15.0%,
his portfolio had a standard deviation of 0.3 and the market achieved a return of 14.6%
vs. a risk free rate of return of 7%. To calculate the Sharpe Index:
Index = (.15 - .07) / .3 = 0.267
To compare, another portfolio manager achieved a return of 13.5% with a standard

deviation of .25. The Sharpe index for this portfolio manager is:
Index = (.135 - .07) / .25 = 0.26
This means that the 1st portfolio manager out performed the second portfolio
manager on a risk-adjusted basis.
Sharpe index
Is one of the indices used by analysts to measure investment performance relative to
the risks associated with the performance. It measures the ratio of the portfolio excess
return above the risk-free rate to the standard deviation of portfolio returns. A Sharpe
index number greater than 1 indicates a good performance in relation to the level of risk
taken while a number below 0.1 indicates the opposite.
(4.6) Treynor Index:

A measure of a portfolio's excess return per unit of risk, equal to the portfolio's rate of
return minus the risk-free rate of return, divided by the portfolio's beta. This is a similar
ratio to the Sharpe ratio, except that the
Portfolio’s beta is considered the measure of risk as opposed to the variance of portfolio
returns. This is useful for assessing the excess return from each unit of systematic risk,
enabling investors to evaluate how structuring the portfolio to different levels of
systematic risk will affect returns.
Treynor’s Index = (Return On Fund- Risk Free Rate of Return) / Beta

The "Beta" of a stock is determined by figuring out how much the stock's return has
varied in relation to the market over a specified time.
The risk-free rate is what we could get by buying a risk-free government bond of the
same investment time horizon as our proposed stock investment. So if we're looking at a
three-year holding period, we would look at the returns on Government Bonds which is
currently about 8%.
The market risk premium is what we as investors can reasonably expect to get by
investing in the market. A related concept is called the Treynor Index, which measures
the risk-adjusted return of a stock:
Treynor Index = (Expected Return - Risk-Free Rate) ÷ Beta
A high Treynor Index indicates that we're getting a good deal in terms of the return-to-
risk ratio.
(5) ANALYSIS AND INTERPRETATION
(A) PERFORMANCE ANALYSIS OF MUTUAL FUND
(5.1)DSP Merrill Lynch India Tiger Fund – Growth.

Table 5.1: Indicates various performance measures of DSP Merrill Lynch India Tiger
Fund – Growth Fund.
Performance measures/ Year 2004/05 2005/06 2006/07
NAV 51.67% 33.36% 27.49%
Return
Nifty 36.93% 46.15% 31.82%
NAV 1.98 3.29 3.95
Standard Deviation
Nifty 196.44 341.56 304.36
Correlation 0.9703 0.98 0.981
Beta 0.89 0.93 0.96
Shorpe’s Ratio 0.22 0.08 0.1
Treynor's Ratio 0.49 0.27 0.4
Graph 5.1: Depicts Table 5.1

Analysis:
From the above graph it can be interpreted that the fund has been performing better than
the index in the past two years. But in 2006/07 as time passed the returns came in line
with the index and even went below it. It declined compared to Index. It means that the
fund manager is well versed with the tricks of the trade and knows the market very well,
as he has been outperforming the market over the three year period.
From the above table it can be inferred that the fund was performing much better than the
index as its three year annualized returns was 51.67%, 33.36%, and 27.49% %,
approximately more than the index returns. Also, the average annual return of the fund
(43.72%) was much higher than the index (32.07%). When standard deviation is
compared, as the risk measure, the fund was lower than the index in three consecutive
years.
The Beta of the fund was just 3.07 which very low compared to Index and the fund was
correlated to the index to the extent of 0.98 which means that the entire fund is
determined by the index returns and it proves the efficiency of the fund manager.
The Sharpe ratio of the fund is 0.22, 0.08 and 0.1 which means that the fund has not
performed up to mark in the given time period, the fund has a Treynor ratio of 0.4 which
is satisfactory, but as this ratio is based on Beta and the funds Beta has very low
relevance with its performance as only 0.96 of the returns can be explained by the
market. This means that the fund manager has performed exceptionally well.
Overall, the fund has performed very well based on all the above parameters.
(5.2) HDFC Tax Saver – Growth.

Table 5.2: Indicates various performance measures of HDFC Tax Saver – Growth Fund.
Performance measures/
2004/05 2005/06 2006/07
Year
NAV 57.29% 23.19% 26.78%
Return
Nifty 36.93% 27.49% 31.82%
NAV 14.67 13.1 10.66
Standard Deviation
Nifty 196.44 341.56 304.36
Correlation 0.93 0.96 0.95
Beta 0.07 0.88 1.06

Analysis:
In the above graph it can be noticed that initially the returns of the fund was much higher
than the index, but in the year 2006/07 it recorded low return than Index. This tells that
performance is low as compared to Index. And three average annual return of the fund is
35.75% which is very close to Index return where it is 32.07%.

Standard deviation is much lower than the Index. We can say that investing HDFC Tax
Saver – Growth is less risky than investing in Index. The fund was correlated to the index
to the extent of 0.93, 0.96 and 0.95 which means that the entire fund is determined by the
index returns and it proves the efficiency of the fund manager.
The Sharpe ratio is increasing in last three years which is a sign of good performance and
a Treynor ratio as high as 7.04 in 2003/04 which is because of very low Beta.
Hence we can say that
Overall, the fund is performing pretty well.
(5.3) ICICI Prudential Dynamic Plan – Growth.

Table 5.3: Indicates various performance measures of ICICI Prudential Dynamic Plan –
Growth Fund.
Performance measures/
2004/05 2005/06 2006/07
Year
NAV 52.10% 31.60% 31.60%
Return
Nifty 36.93 27.02 31.82
NAV 4.7911 6.6369 4.93
Standard Deviation
Nifty 196.44 341.56 304.36
Beta 0.09 0.92 1.18

Analysis:
ICICI Prudential Dynamic Plan – Growth Fund has performed better in 1st year by giving
returns up to 52.10%. But in later year its returns was declined 31.60% in 2006/07. And
three year average annual return of the fund is low (27.96%) as compared to index
return (32.07%).

Standard Deviation of the Fund is much lower than Index. So it shows that this fund is
less risky than Index. Correlation 0.96, 0.99, and 0.96 which tells that performance of the
fund very related with Index. We can say entire fund is determined by the index returns.
Sharpe’s ratio was very low i.e. 0.9, 0.5 and 0.4 which is decreasing year by year. Hence
its shows low performance. Treynor’s ratio 5.79 (2003/04) and 0.26 (2004/05) initial it’s
very high because of relatively low Beta. But it decreased to 0.2 as beta increased to 1.18.
Overall, the fund is good as the risk measure is comparatively less and the fund is able to
generate higher returns in future.
(5.4) Reliance Diversified Power Sector Fund – Growth.

Table 5.4: Indicates various performance measures of Reliance Diversified Power Sector
Fund – Growth Fund.
NAV 62.19% 32.40% 60.85%
Return
Nifty 36.77% 27.51% 31.82%
NAV 2.79036 3.5159 6.2886
Standard Deviation
Nifty 196.44 341.56 304.36
Slope 63.66 92.52 45.73
Beta 0.59 0.83 0.82

Analysis:
From the above graph it can be pictured that the fund was performing better than
the index at several points. As it is seen that the returns of the fund do not have much
variations with respect to the index, it can be said that the fund is not much riskier than
the index. Three year annual average return of the fund is 51.81% whish is high return as
compared to return of the Index which is 32.07%.
Graph 5.8.1 Depicts Table 5.4

Standard deviation of the fund is very low as compared to Index i.e.2.7, 3.5 and 6.2
where as the risk measure of the fund is almost similar. This fund also very correlated
with Index its correlations are 0.93, 0.95, and 0.94 hence we can say that performance of
the fund very related with Index.
The Shape’s ratio (0.59, .07 and 0.08) and Treynor’s Ratio 0.92, 029 and 0.64 which
shows good performance of the fund.
Overall, the fund has performed well with the similar amount of risk measure.
(5.5) Taurus Star.

Table 5.5: Indicates various performance measures of Taurus Star Growth Fund.

NAV 58.74% 7.44% 27.49%
Return
Nifty 36.93% 43.48% 31.83%
NAV 3.4243 4.2132 5.008
Standard Deviation
Nifty 196.44 341.56 304.36
Slope 54.35 72.40 58.63
Beta 0.46 0.14 0.66
Shorpe’s Ratio 0.15 -0.001 0.07
Treynor's Ratio 1.1 -0.01 0.54

Analysis:
It can be noticed in the above graph that initially returns were better than the index for a
certain period of time. But later its returns are declined year by year and giving less
return as Compared to Index. And three year annual average return of the fund is 36.55%
which is almost equal to the three year annual average return of the Index which is
32.07%.
Standard Deviation is much lower than the Index but slightly high than other funds. The
fund’s performance very related with Index as the correlation was 0.95, 0.89 and 0.96
which shows very close relation with moment of the Index.
Due decline in the return of the fund The Sharpe’s Ratio and Trynor’s Ratio are low some
times its negative. Lower beta also accounted for this performance.
Overall the fund is riskier and the investors should study the fund properly before
investing.
(B) AND THEIR IMPACT ON INVESTORS CHOICE OF FUND.

(1)
Table 5.6: Indicates Age profile of respondent in the survey.
Age No of Respondents Percentage

30 and under 40 40.00%
31 to 40 37 37.00%
41 to 55 18 18.00%
56 to 65 5 5.00%
Over 65 0 0.00%
Total 100 100.00%
Graph 5.11: Depicts Table 5.6.

Analysis:
Among the respondents 40% are aged under 30, 37% of the respondents are aged
between 31 to 40 years, 18% of the respondents are aged between 41 to 55 years, 5% of
respondents are 56 to 65 years and there is no respondent over 65 age.
(2)
Table 5.7: Indicates Income Group of respondent in the survey.
Income Group No of Respondents Percentage

Under Rs.100000. 21 21.00%
Rs.100001 to Rs.300, 000. 43 43.00%
Rs.300, 001 to Rs.600, 000. 27 27.00%
Rs.600, 001 to Rs.1000, 000 9 9.00%
Over Rs.1000, 000. 0 0.00%
Total 100 100.00%

Analysis:
Majority respondent are i.e. 43% having income between Rs. 100001 to
Rs.300,000, 27% of the respondents having income level between Rs.300,001 to
Rs.600,000, 21% of the respondents are having income of Under Rs.100000, and rest of
the respondents i.e. 9% are having income between Rs.600, 001 to Rs.1000,000.
(3)
Table 5.8: Indicates sex profile of respondent in the survey.
Sex Group No of Respondents Percentage

Male 83 83.00%
Female 17 17.00%
Total 100 100.00%
Graph 5.13 Depicts Table 5.8.

Analysis:
Majority respondents i.e.83% are male and rest of 17% of respondents are female.
(4)
Table 5.9: Indicates Profession Group of respondent in the survey.
Profession Group No of Respondents Percentage

Student 20 20.00%
Business Person 26 26.00%
Executive 29 29.00%
Professional 18 18.00%
Others 7 7.00%
Total 100 100.00%
Analysis:
From the above table we can see that most of the respondents (29%) are Executives, 26%
of the respondents are Business Men, 20% are Students, 18% of the respondents are
Professionals and rest of the respondents i.e. 7% are others.
(5)
Table 5.10: Indicates Family Group of respondent in the survey.
Family Group No of Respondents Percentage

Single 31 31.00%
Young family 41 41.00%
Mature Family 28 28.00%
Nearer to retiring 0.00%
Total 100 100.00%

Analysis:
From the analysis it can be revealed that 41% of the respondents are having young
family, 31% respondents are single, and 28% of the respondents are mature family.
(6)
Table 5.11: Indicates stableness of Income of respondent in the survey.
Income Group No of Respondents Percentage

Very unstable 10 10.00%
Moderately unstable 14 14.00%
Moderately stable 40 40.00%
Very Stable 36 36.00%
Total 100 100.00%

Analysis:
From the above table it is proved that most of the respondents (40%) are having
moderately stable income, 36% of the respondent are having Very Stable income, 14% of
the respondent are having Moderately unstable income and rest of the respondents i.e.
10% are having very unstable income.
Hence we can conclude that most respondents having stable income.
(7)
Table 5.12: Indicates various Investment of respondent in the survey.
Investment No of Respondents Percentage

Fixed Deposit 43 43.00%
Current A/C 39 39.00%
Mutual Fund 74 74.00%
Equity/Preference 70 70.00%
Real Estate 10 10.00%
Insurance 44 44.00%
Post Office 11 11.00%
Total 291 291.00%
Analysis:
Out of the total sample size of 100 respondents 74% respondents said they have invested
in Mutual Fund, 70 % told that they have invested in Equity/Preference, 44% respondents
have told that they are have invested in Insurance, 43 % of the respondent have said that
they have invested in Savings A/C, 39% respondents are holding there investment in
Current A/C, very few people i.e. 10% and 11% of the respondents have told that they
have invested their money in Real estate and Post Office.
Most of the respondent are invested in Mutual Fund and Equity/Preference because of
there higher return even though they having higher risk. And investment in the post office
is ignored many of the respondents.
(8)
Table 5.13: Indicates Investment Period of respondent in the survey.
Time of Investment No of Respondents Percentage

1 year 43 43.00%
2 to 3 years 41 41.00%
4 to 6 years 12 12.00%
6 to 10 years 4 4.00%
Total 100 100.00%

Analysis:
It is depicted from the table and chart that Majority of the respondent (43%) said that they
want to invest their money for one year, 41% of the respondents said that want to invest
their money for two to three years, 12% of the respondents have told that they want to
invest for four to six years and rest of the respondents i.e. 4% told that they want to invest
money for six to ten years.
Because of fear in the market many of the respondents will invest for one year. So of the
other respondent they want invest for two to three years they are ready to accept the
market risk.
(9)
Table 5.14: Indicates Investment Experience of respondent in the survey.
Investment Experience No of Percentage

Respondents
I do not have good knowledge 11 11.00%
some knowledge 48 48.00%
have good knowledge 23 23.00%
Some knowledge but not depth 18 18.00%
starting to learn 0 0.00%
Total 100 100.00%
Analysis:
In survey among hundred respondents it is found that most of the respondents (48%)
having some knowledge about investment, 23% of the respondent told that they are
having good knowledge about investment, 19% of the respondent told that they are
having some knowledge but not depth and rest 11% of the respondent agreed that they
do not have good knowledge.
Most of the respondent having the knowledge in investment but some do not have depth
knowledge in investment. It seems they are depending on other factor for investment
advice.
(10)
Table 5.15: Indicates ranking investment factor of respondent in the survey.
Rank
Total
1 2 3 4 5
Investment No of No of No of No of No of No of
Respo Respon Respo Resp Respo Respon
% % % % % %
ndents dents ndents onden ndents dents
ts
Safety 50 50 29 29 19 19 2 2% 0 0% 100 100
% % % %
Returns 22 22 54 54 18 18 4 4% 2 2% 100 100
% % % %
Tax 14 14 8 8% 29 29 22 22% 27 27% 100 100
Benefits % % %
Liquidity 11 11 6 6% 26 26 38 38% 19 19% 100 100
% % %
Convince 6 6% 5 5% 6 6% 33 33% 50 50% 100 100
%
Graph 5.20: Depicts Table 3.1.1
Analysis:
First Rank:
Majority of the respondents (50%) rated Security as first rank, 29% of the respondent
given first rank to the Return, 14% of the respondents given first rank to the Tax Benefits,
11% of the respondent given first rank to the Liquidity, and 6% of the respondent given
first rank to the Convince.
Second Rank:
Most of the respondents (54%) rated return as second rank, 29% of the respondent given
second rank to the security, 8% of the respondents given second rank to the tax benefits,
6% of the respondent given second rank to the Liquidity, and 5% of the respondent given
second rank to the Convince.
Third Rank:
It is depicted from the chart that Majority of the respondent (29%) rated Tax Benefit as
third rank , 26% of the respondent given third rank to the liquidity, 18% of the
respondents given third rank to the returns, 19% of the respondent given third rank to the
Safety, and 6% of the respondent given third rank to the Convince.
Fourth Rank:
Most of the respondent (38%) given fourth rank to the Liquidity, 33% of the respondent
given fourth rank to the Convince, 22% of the respondents given fourth rank to the Tax
Benefits, 4% of the respondent given fourth rank to the Return, and 2% of the respondent
given fourth rank to the Safety.
Fifth Rank:
Most of the respondent (50%) given fifth rank to the Connivance, 27% of the respondent
given fifth rank to the Tax Benefits, 19% of the respondents given fifth rank to the
Liquidity, 2% of the respondent given fifth rank to the Return, 0% of the respondent
given fifth rank to the Safety.
Most of the respondents are ranked Security is first considerable factor for investing in
mutual fund so respondents more conscious about their money. Some other respondents
worried about return and tax benefit.
(11)
Table 5.16: Indicates Investment of Money of respondent in the survey.
Investment of Money No of Respondents Percentage

Less then 25% 67 67.00%
Between 25% to 50% 29 29.00%
More then 50% 4 4.00%
Total 100 100.00%

Analysis:
As it can be observed from the table and the chart that most of the respondents (67%) are
intended to invest less then 25% of their income, 29% of the respondents told that they
want to invest between 25% to 50% of their income and only few respondents (4%) are
willing to invest more than 50% of their income.
Most of the respondents are willing to invest very small amount of money because other
commitment in family.
(12)
Table 5.17: Indicates Holding Period of respondent in the survey.
Holding Period No of Respondents Percentage

1 to 2 years 55 55.00%
3 to 4 years 31 31.00%
5 to 6 years 9 9.00%
7 to 8 years 3 3.00%
More than 8 years 2 2.00%
Total 100 100.00%
Analysis:
From the survey it is found that most of the respondents (43%) are willing to hold their
investment for 1 or 2 years, 31% of the respondents have told that they will hold their
investment for 3 to 4 years,9% of the respondents have told that they are ready to hold
their investment for 5 to 6 years, only 3% of the respondents are ready to hold their
investment for 7 to 8 years and only few respondents (2%) are willing to hold their
investment for more than 8 years.
Again most of the respondents worried market fluctuations hence they do not want hold
their investment for long period.
(13)
Table 5.18: Indicates Ranking of the Investment of respondent in the survey.
Rank
Total
1 2 3 4 5
6 7
Investme No % No % No % No % No % No % No % No %
nt Tools of of of of of of of of
Res Res Res Re Res Res Res Res
s
Fixed 7 7% 9 9% 14 14% 12 12 35 35% 15 15 8 8% 100 100
Deposit % % %
Current 16 16 7 7% 6 6% 7 7% 8 8% 24 24 32 32 100 100

A/C % % % %
Mutual 12 12 47 47% 22 22% 11 11 8 8% 0 0% 0 0% 100 100
Fund % % %
Equity/Pr 54 54 20 20% 11 11% 6 6% 4 4% 1 1% 4 4% 100 100
eference % %
Real 3 3% 8 8% 15 15% 18 18 20 20% 21 21 15 15 100 100

Estate % % % %
Insurance 3 3% 4 4% 23 23% 36 36 16 16% 13 13 5 5% 100 100
% % %
Post 3 3% 9 9% 9 9% 10 10 11 11% 22 22 36 36 100 100
Office % % % %

Analysis:
From the above table and graph we can see that majority i.e.54% of the respondents have
ranked Equity/Preference as first, 47% of the respondents feel that Mutual Fund is
second preference, both Mutual Fund and insurance got third rank from the respondents
with 22% and 23%, 35% of the respondents have told that Fixed Deposit is fourth rank,
both Real Estate and post Office investment got sixth rank by the 21% and 22% of the
respondents, 36% of the respondents have given Seventh rank to the Post Office
investment.
Again Mutual Fund and Equity preferred by most of the respondents because of there
return.
(14)
Table 5.19: Indicates Investment Objective of respondent in the survey.
Investment Objective No of Respondents Percentage

Preservation of Principal 6 6.00%
Current Income 22 22.00%
Growth and Income 49 49.00%
Conservative Growth 4 4.00%
Aggressive Growth 19 19.00%
Total 100 100.00%
Analysis:
It is depicted from the table and chart that nearly half of the respondents have told that
Growth and Income is their investment objective, out of remaining respondents 22%
respondents have said that Current Income is their investment objective, 19% of the
respondents have told that Aggressive Growth is their investment objective and 6%
remaining respondents have told that Preservation of Principal is their investment
objective, very few respondents (4%) have said that Conservative Growth is their
investment fund.
Many respondents want to grow their investment and generate permanent income.
(15)
Table 5.20: Indicates Choosing investment of respondent in the survey.
Choosing investment No of Respondents Percentage

Plan A 12 12.00%
Plan B 20 20.00%
Plan C 21 21.00%
Plan D 32 32.00%
Plan E 15 15.00%
Total 100 100.00%
Analysis:
From the analysis it can be revealed that 32% respondents are willing to invest in Plan D
(Reliance Diversified Power Sector Fund – Growth) which is having annual return of
60.85% , 21% of the respondents are ready to invest in Plan C (ICICI Prudential
Dynamic Plan – Growth) which is having annual return of 31.60%, 20% of the
respondents are willing to invest in Plan B (HDFC Tax Saver – Growth) which is having
annual rate of return 26.78%, 15% of the respondents are willing to invest in Plan E
(Taurus Star share) again this Mutual Fund scheme having annual return of 43.48%,
remaining 12% are willing to invest in Plan A (DSP Merrill Lynch India Tiger Fund –
Growth) where its having annual return of 46.15%.
In this case many respondents are willing to invest in plan which is having better return.
(16)
Table 5.21: Indicates opinion about the performance of the fund of respondent in the
survey.
Performance No of Respondents Percentage

Yes 94 94.00%
No 6 6.00%
Total 100 100.00%
Graph 5.26.: Depicts Table 5.21.
Analysis:
From the above data which is represented in table and graph shows that majority of the
respondents i.e. 94% have agreed that their investment in Mutual Fund is depending on
the performance of the fund and rest of 6% of the respondents have not agreed for this.
(17)
Table 5.22: Indicates opinion about the relevant information of the fund of respondent in
the survey.
Extremely Extremely
Information relevant Relevant Neutral Irrelevant Irrelevant Total
No of No of No of No of No of No of
Respo Resp Respo Respo Respo Respo
ndent onde ndents ndent ndents ndents
s % nts % % s % % %
57 26 100
Monthly updates 11 11% 57 % 26 % 4 4% 2 2% 100 %
53 29 100
Quarterly Results 9 9% 53 % 29 % 9 9% 0 0% 100 %
Half yearly 46 32 100
Reports 14 14% 46 % 32 % 8 8% 0 0% 100 %
59 11 100
Annual Reports 30 30% 59 % 11 % 0 0% 0 0% 100 %
49 16 100
Newspapers 35 35% 49 % 16 % 0 0% 0 0% 100 %
44 12 100
AMFI website 42 42% 44 % 12 % 2 2% 0 0% 100 %
Websites of
respective 35 100
mutual funds 60 60% 35 % 3 3% 2 2% 0 0% 100 %
Analysis:
As it can be seen from the table and chart that 57% of the respondent have agreed that
monthly updates are relevant for analyzing the performance of the fund, 26% of the
respondent are Neutral about this option, 11% of the respondent have said that this will
be extremely relevant, 4% of the respondent have said that its irrelevant and remaining
respondent agree that its extremely relevant factor to analyze the performance of the
fund.
Majority of respondent (53%) have agreed that Quarterly results are relevant factor to
measure performance of the fund, 29% of the respondent are Neutral about this factor,
9% of the respondents have told that its extremely relevant and same percentage of
respondent have agreed that its irrelevant factor for analyzing the performance of the
fund.
As shown in the table and graph more than half of (59%) the respondents have agreed
that Half Yearly Reports are relevant factor for measuring the performance of the fund,
30% of them agree that its relevant factor and remaining 11% the respondents are Neutral
on this issue.
From the above table we see that nearly half (49%) of the sample size of the survey agree
that News Papers are relevant factor for measuring performance of the fund, 35% of them
told that its Extremely Relevant factor, remaining 16% of the respondent are Neutral on
this issue.
It is depicted from the table and chart that, 44% of the respondent of the survey agree that
AMFI Website is relevant factor for measuring performance of the fund, 42% of the
respondent have agreed on this issue, and 12% of the sample size Neutral on this factor,
and few remaining respondent have told that its irrelevant factor.
From the survey its found that majority of respondents are agreeing that Website of
respective Mutual Fund are extremely relevant factor for knowing the performance of the
fund, 35% of them have said that its relevant fator,3% of the respondents are Neutral on
this issue, remaining 2% of the respondents told that its irrelevant factor.
Most of the respondents are want aware about the fund hence they are looking for
information source.
(18)
Table 5.23: Indicates reaction about portfolio of respondent in the survey.
Reaction No of Respondents Percentage

I would not change my portfolio 21 21.00%
Would wait at least a year longer before changing to 19 19.00%
more conservative options.
I would wait at least 3 months before changing to 33 33.00%
more conservative options.
I would immediately change to more conservative 27 27.00%
options.
Total 100 100.00%
Analysis:
From the survey it is found that 33% of the respondent tell that they will wait at least
3months before changing to more conservative options if their 10 year portfolio declined
by 20%, 27% of the respondents have agreed that they will change their portfolio
immediately, 21% of the respondents have told that they will not change their current
portfolio even though their portfolio declined by 10%, and remaining 19% of the sample
size have told they will wait at least one year before changing their current portfolio.
Most of the respondents are ready to wait for any changes in the market which will
reestablish the lost portfolio.
(19)
Table 5.24: Indicates knowledge about terms used in investment in Mutual Fund of
respondent in the survey.
Terms No of Respondents Percentage

Return 93 93.00%
Standard Deviation 37 37.00%
Slope 8 8.00%
Correlation 18 18.00%
Sharpes Ratio 1 1.00%
Treynors Index 0 0.00%
Beta 20 20.00%
Do Not Know any one 3 3.00%
Analysis:
It is depicted from the table and chart that out of 100 respondent 93 respondent said that
they know about the Return, 37% of the respondent have agreed that they know about
Standard Deviation, 18% of the respondent are knowing about Correlation, 20% of the
respondent are knowing about Beta, from the survey it come to known that 8% of the
respondent know the term Slope, and its also found that nobody does not know about the
term Treynors Index and 3% of the respondents agree that they do not know about these
terminology which are using in measuring the performance of investment tools.
Most of the respondent are do not know many terminology which are used in investment.
(20)
Table 5.25: Indicates choosing the investment of Mutual Fund based Beta of respondent
in the survey.
Choosing the Investment No of Respondents Percentage

Plan A 33 33.00%
Plan B 24 24.00%
Plan C 19 19.00%
Plan D 11 11.00%
Plan E 13 13.00%
Total 100 100.00%
Analysis:
From the analysis it can be revealed that 33% respondents are willing invest Plan A (DSP
Merrill Lynch India Tiger Fund – Growth) which is having Beat of 0.89,0.93,and 0.96 in
three consecutive year from 2004 to 2007, 24% of the respondents are ready to invest in
Plan B (HDFC Tax Saver – Growth) which is having annual Beta of 0.07,0.88 and 1.06,
19% of the respondents are willing to invest in Plan C (ICICI Prudential Dynamic Plan –
Growth) which is having annual Beta of 0.09, 0.88 and 1.18, 11% of the respondents are
willing to invest in Plan D (Reliance Diversified Power Sector Fund – Growth) again this
Mutual Fund scheme having annual Beta of 0.59, .083 and 0.82, remaining 13% are told
they will invest in Plan E (Taurus Star share) which scheme having annual Beta of 0.46,
0.14 and 0.66.
(21)
Table 5.26: Indicates factors affecting while investing in Mutual Fund of respondent in
the survey.
Measuring No of Respondents Percentage

Performance
Rate of Return 40 40.00%
Brand Name 19 19.00%
Minimal Risk 18 18.00%
Entry/Exit Load 7 7.00%
Time of Maturity 16 16.00%
Total 100 100.00%
Analysis:
From the survey its found that 40% of the respondents have agreed that Rate of Return is
important factor they will consider while investing in Mutual Fund, 19% of the
respondents told that they will consider Brand Name of the Mutual Fund, 18% of the
respondents have agreed that they will see the Minimal Risk, and 16% of the respondents
agree that Time of Maturity will be considerable factor, and rest 7% of the respondent are
agree that Entry/Exit Load will be the considerable factor for investing in the Mutual
Fund.
Most respondents are worried about the return which a Mutual Fund earns.
(C) TESTING HYPOTHESIS
Correlation Analysis:
1. Degree of stabilized income correlates with amount of money investing (Q 6 &
Q 11)
stabilized income amount of money investing
stabilized income 1
amount of money investing 0.099110459 1
Interpretation:
There is low correlation between stabilized income and amount of money investing. This
suggest that amount of investing is not depend on the stabilized income.
2. Degree of performance of the of the fund and choice of the fund (Q 15 & Q 16)
choice of the
performance of the of the fund fund
performance of the of the fund 1
choice of the fund 0.003321123 1
Interpretation:
There is low correlation between dependency of the performance and choice of the fund.
This suggest that choice of the fund depend on the performance is very low.
ANOVA Analysis
3. There is significant difference between Profession and knowledge about
investment (Q 4 & Q 9)
Independent Variable: Profession

Dependent Variable: Knowledge about investment
Ho: {There is no significant difference between Profession and Knowledge about
investment}
H1: {There is significant difference between Profession and Knowledge about
investment}
ANOVA: Single Factor
SUMMARY
Groups Count Sum Average Variance
Profession 100 266 2.66 1.418586
Konwledge about
investment 100 248 2.48 0.83798
ANOVA
Source of Variation SS df MS F P-value F crit
Between Groups 1.62 1 1.62 1.43581 0.232251 3.888853
Within Groups 223.4 198 1.128283
Total 225.02 199
Interpretation:
The F value (1.43581) is less than F Crict (3.888853) value. So we reject the null
hypothesis and accept the alternative hypothesis and conclude that there is significant
difference between Profession and Knowledge about investment
4. There is significant difference between performance of the fund and choice of the
fund(Q 15 & Q 16)
Independent Variable: performance of the fund
Dependent Variable: choice of the fund
Ho: {There is no significant difference between performance of the fund and choice of
the fund}
H1: {There is significant difference between performance of the fund and choice of the
fund}
ANOVA: Single Factor
SUMMARY
Groups Count Sum Average Variance
dependency of the
performance 100 274 2.74 2.032727
choice of the fund 100 130 1.3 0.939394
ANOVA
P-
Source of Variation SS df MS F value F crit
1.15E-
Between Groups 103.68 1 103.68 9.76835 14 3.8888
Within Groups 294.24 198 1.486061
Interpretation:
The F value (9.76835) is greater than F Crict (3.888853) value. So we accept the null
hypothesis and reject the alternative hypothesis by concluding there is no significant
difference between performance of the fund and choice of the fund.
Correlation Analysis
5. There is dependency between Profession and investment in mutual fund based on

return ( 4 & 15)
Independent Variable: Profession
Dependent Variable: Investment in fund
Ho: {there is no significant level of dependency between profession and investment}
H1: {there is significant level of dependency between profession and investment}
TABLE Question A
Student Business Person Executive Professional Others
Plan
A 2 5 3 0 2 12
Plan
B 3 5 7 4 1 20
Plan
Question B
C 5 4 6 4 2 21
Plan
D 7 7 9 8 1 32
Plan
E 3 5 4 2 1 15
20 26 29 18 7 100
(O-
O E O-E (O-E)sq E)sq/E
2 2.40 -0.40 0.16 0.07
5 3.12 1.88 3.53 1.13
3 3.48 -0.48 0.23 0.07
0 2.16 -2.16 4.67 2.16
2 0.84 1.16 1.35 1.60
3 4.00 -1.00 1.00 0.25
5 5.20 -0.20 0.04 0.01
7 5.80 1.20 1.44 0.25
4 3.60 0.40 0.16 0.04
1 1.40 -0.40 0.16 0.11
5 5.00 0.00 0.00 0.00
4 5.46 -1.46 2.13 0.39
6 6.09 -0.09 0.01 0.00
4 3.78 0.22 0.05 0.01
2 1.47 0.53 0.28 0.19
7 6.40 0.60 0.36 0.06
7 8.32 -1.32 1.74 0.21
9 9.28 -0.28 0.08 0.01
8 5.76 2.24 5.02 0.87
1 2.24 -1.24 1.54 0.69
3 3.00 0.00 0.00 0.00
5 3.90 1.10 1.21 0.31
4 4.35 -0.35 0.12 0.03
2 2.70 -0.70 0.49 0.18
1 1.05 -0.05 0.00 0.00
Chi Square value 8.64186
Interpretation:
The observed value of Chi-square (8.64186) is less than the critical Value (26.296) at 16
degrees of freedom and 5% level of significance. Therefore we accept the null hypotheses
by saying there is no significant level of dependency between profession and investment.
There is dependency between performance of the fund and choice of the fund (Q 15 & Q
16)
Independent Variable: performance of the fund.
Dependent Variable: choice of the fund.
Ho: {there is no significant level of dependency between performance of the fund and
choice of the fund}
H1: {there is significant level of dependency between performance of the fund and choice
of the fund}
TABLE Question A
Plan A Plan B Plan C Plan D Plan E Total

Question B Yes 10 20 21 29 14 94
No 2 0 0 3 1 6
Total 12 20 21 32 15 100
O E O-E (O-E)sq (O-E)sq/E

10 11.28 -1.28 1.64 0.15
20 18.80 1.20 1.44 0.08
21 19.74 1.26 1.59 0.08
29 30.08 -1.08 1.17 0.04
14 14.10 -0.10 0.01 0.00
0 0.00 0.00 0.00 0.00
0 0.00 0.00 0.00 0.00
2 0.72 1.28 1.64 2.28
0 1.20 -1.20 1.44 1.20
0 1.26 -1.26 1.59 1.26
3 1.92 1.08 1.17 0.61
1 0.90 0.10 0.01 0.01
0 5 -5 25 5
Chi-Square Value 10.70
Interpretation:
The observed value of Chi-square (10.70) is more than the critical Value (9.249) at 4
degrees of freedom and 5% level of significance. Therefore we reject the null hypotheses
and accept alternative hypothesis by saying there is significant level of dependency
between performance of the fund and choice of the fund.
(6) FINDINGS AND RECOMMENDATIONS.
(A) FINDINGS.
• DSP Merrill Lynch India Tiger Fund – Growth its return decreasing year by year
and Standard Deviation is increasing. Shorpe’s ratio is increasing year by which is
good sign.
• Return of HDFC Tax Saver – Growth fund is also decreasing year by year and
Standard Deviation is also decreasing so we can say its low risk and low return
fund. Shorpe’s ratio is increasing year by which is good sign.
• Return of the ICICI Prudential Dynamic Plan – Growth is high in 2003/04 and it
declined to 31.60% to next year and it constant in the next year. Standard
Deviation of the fund also decreased to 4.93 in the year 2006/07. Shorpe’s ratio is
decreasing year by year it’s because of low Beta.
• Reliance Diversified Power Sector Fund – Growth having high return at the end
of 2006/07 with standard deviation of 6.288 much efficient than the index and the
Sharpe’s ratio measures at 0.08 its low because of low Beat.
• Taurus Star is recovered from its decrease in lost year and grew to 27.49%.
Standard Deviation of the fund is also increasing year by year so risk of the fund
is increasing. Sharpe’s ratio is low some times its negative hence performance the
fund is low.
• Most of the respondents are Male.
• 40% of the respondents having stable income.
• Most of the respondent are invested in Mutual Fund and Equity/Preference

because of there higher return even though they having higher risk. And
investment in the post office is ignored many of the respondents.
• Because of fear in the market many of the respondents will invest for one year.
• Most of the respondent having the knowledge in investment but some do not have
depth knowledge in investment. It seems they are depending on other factor for
investment advice.
• Most of the respondents are ranked Security is first considerable factor for
investing in mutual fund so respondents more conscious about their money. Some
other respondents worried about return and tax benefit.
• Most of the respondents are willing to invest very small amount of money.
• Majority of the respondents worried market fluctuations hence they do not want
hold their investment for long period.
• Many respondents want to grow their investment and generate permanent income.
• Majority of the respondents have agreed that that their investment in Mutual Fund
is depending on the performance of the fund.
• Most of the respondents are want aware about the fund hence they are looking for
information source.
• Most of the respondent are do not know many terminology which are used in
investment.
• From testing of hypothesis its come to know that investment in Mutual Fund is
depend upon performance of that fund.
(B) RECOMMENDATIONS.
• Investors can invest in Reliance Diversified Power Sector Fund – Growth as it has
generated the highest returns and at a lower risk than the market so investors can
invest in this fund for higher return.
• Return of DSP Merrill Lynch India Tiger Fund – Growth is decreasing year by
year so investor take major steps while investing in this fund.
• Taurus Starshare is again a fund which has a high risk measure and generates
comparatively lower returns, so investors can avoid it.
• HDFC Tax Saver fund having low return at the same time having low risk
investors who are not willing to take risk can invest in this fund.
• Study the funds performance and about its related facts before investing in Mutual
Find and equity.
• Most of the respondents are does not know terminologies which are using in
investment hence investors should brush up fundamentals of investment.
• While conducting survey its found that many respondents does not know about
Beta hence investors should know what risk factors involved in investment before
they are going invest in that fund or equity.
• Investors should know the basic fund of the investment i.e. “High Risk High
Return and Low Risk Low Return”.
• Investors should also know that long term investment will yield high than short
term because many respondents are willing invests for one year only.
(7) CONCLUSION
Every investor wants to maximize his returns at the lowest possible risk or he tries to
minimize his risk keeping his returns equivalent, both gives him higher profits.
In evaluating mutual funds, investors usually consider only the past returns generated by
the fund without considering the risk associated with it.
The research can be extended to many other funds, i.e. those investing in the foreign
markets, other investment vehicles, etc…
The growth level of the Indian mutual fund industry, when compared to US is very slow.
As India has a very few number of mutual fund companies and the contribution of these
companies to the global mutual fund industry is negligible.
Indian mutual fund industry has a long way to go; a lot of new developments can be
witnessed as many foreign companies are entering in the scenario, mutual funds are
trying to tap the savings of the general public in form of investments, creating awareness
about their services, getting into the rural markets trailing the insurance industry and
tapping resources.
The major challenge that mutual funds have to face is the transition path for investor
funds away from Government-sponsored, risk free products to market related
instruments.
Hence, the road ahead goes on…

(8) BIBLIOGRAPHY
Books:
• Work Book of AMFI Mutual Fund.

• S.Anand and Dr. V. Murugaiah, Mutual Funds In India, JIMS 8M, September
2004
Journal:
• Investors India – September 2007
Websites:
• http://www.indiamart.com
• http://www.investopedia.com
• http://www.dspmlmutualfund.com/
• http://www.icicipruamc.com
• http://www.hdfcfund.com/
• http://www.taurusmutualfund.com/taurushome.asp
• http://www.reliancemutual.com/
• http://www.amfiindia.com
• http://www.mutualfundsindia.com/
• http://finance.indiamart.com/markets/mutual_funds
• http://www.nseindia.com
• http://www.theglobeandmail.com/generated/InsiderEdition/latestNews.html
• http://en.wikipedia.org
M.P.Birla Institute of Management, Bangalore.
Dear Sir/Madam,
I am the student of M.P.Birla Institute of Management undertaking a research on
"Performance Analysis of Equity Funds and Their Impact on Investors Choice of
Fund". All information collected will be kept confident and used for academic purpose
only.
Thank You.
(1) Your age is:

30 and under 31 to 40 41 to 55 56 to 65 Over 65
(2) Your average household tax annual income from all sources (e.g., employment,
investments, etc) is:
Under Rs.100000. Rs.100001 to Rs.300, 000. Rs.300, 001
to Rs.600, 000.
Rs.600, 001 to Rs.1000, 000 Over Rs.1000, 000.
(3) Sex: Male Female
(4) Profession:
Student Business Person Executive Professional

Others (Specify)…………………..
(5) Your current profile is described as follows.

Single Young family Mature Family Nearer to retiring
(6) How stable is your current income source?

Very unstable Moderately unstable Moderately stable Very Stable
(7) What are the types of investment you have?
Fixed Deposit Current A/C Mutual Fund Equity/Preference

Real Estate Insurance Post Office
(8) How long do you want to invest?
1 year 2 to 3 years 4 to 6 years 6 to 10 years
(9) Your investment experience is best described as follows.
I do not have good knowledge some knowledge have good knowledge
Some knowledge but not depth starting to learn
(10) Rank the order of your preference when it comes to investing (1 being highest and 5
being lowest)
(a) Safety 1 2 3 4 5
(b) Returns 1 2 3 4 5
(c) Tax Benefits 1 2 3 4 5
(d) Liquidity 1 2 3 4 5
(e) Convince 1 2 3 4 5
(f) Other (Specify) …………………………………………………………………
(11) Out of your total money how much would you want to invest now?
Less then 25% Between 25% to 50% More then 50%
(12) When making a long-term investment, I plan to hold the investment for...
1 to 2 years 3 to 4 years 5 to 6 years 7 to 8 years more than 8 years
(13) Rate the following investment in order of your preference from 1-7 (1 being lowest
7 being the highest)
Current A/C Fixed Deposit Mutual Fund
Equity/Preference Real Estate Insurance Post Office
(14) What is your primary objective for your investment?
Preservation of Principal Current Income Growth and Income
Conservative Growth Aggressive Growth
(15) The chart below shows the NAV, Return. You would invest in.
Scheme name NAV Return (%) Plan
2006/07
DSP Merrill Lynch India Tiger Fund – 46.88 46.15 A
Growth
HDFC Tax Saver – Growth 179.21 26.78 B
ICICI Prudential Dynamic Plan – Growth 79.17 31.60 C
Reliance Diversified Power Sector Fund – 57.03 60.85 D
Growth
Taurus Star share 57.15 43.48 E
Plan A Plan B Plan C Plan D Plan E

(16) Is your investment depending upon performance of the fund?
Yes No
17) Do you find following source of information relevant to analyze the performance of
your investment: (Please tick appropriate column)
Extremely Extremely
Relevant Neutral Irrelevant
relevant Irrelevant
• Monthly updates
• Quarterly Results
• Half yearly Reports
• Annual Reports
• Newspapers
• AMFI website
• Websites of respective
mutual funds
(18) Assume that over the past year the value of your well-diversified portfolio declined
by 20%, despite 10 years of strong performance. How would you react?
I would not change my portfolio
Would wait at least a year longer before changing to more conservative options.
I would wait at least 3 months before changing to more conservative options.
I would immediately change to more conservative options.
(19) Which are following Parameters you know which are used in Mutual funds?
Return Standard Deviation Slope Correlation
Sharpes Ratio Treynors Index Beta Do Not
Know any one

(20) Last 3 Years following fund had following Beta*, According to you, which fund you
going to choose?
Year/Fund 2004/05 2005/06 2006/07 Plan
DSP 0.89 0.93 0.96 A
HDFC 0.07 0.88 1.06 B
ICICI 0.09 0.92 1.18 C
Reliance 0.59 0.83 0.82 D
Turus 0.46 0.14 0.66 E
(*Beta is a measurement of volatility or risk of a Mutual Fund.

Beta of 0= No risky, Beta 0 – 1= less volatile or Less risky, Beta >1= more volatile than the
stock market.)
Plan A Plan B Plan C Plan D Plan E
(21) When you come to Mutual Fund, What are important parameters you consider to
measure the performance of Mutual Fund?
Rate of Return Brand Name Minimal Risk
Entry/Exit Load Time of Maturity
***
ℵℵℵℵℵ
***

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A DISSERTATION REPORT

Submitted in partial fulfillment of the requirement for

Under the guidance of

43, Race Course Road, Bangalore-560001

This is submitted in partial fulfillment of the requirements of the MBA course in

Place: Bangalore Veerangouda

This to certify that this report entitled. "PERFORMANCE ANALYSIS OF

Place: Bangalore Dr. N S Malavalli

Date: 12-06-2006 (Principal)

This is to certify that the project titled “Performance Analysis of Equity

The work has been satisfactory and is recommended for consideration

Place: Bangalore Signature of Guide

Indeed I consider it as a pleasant duty, though equally difficult to acknowledge

I express my deep love and thanks to almighty. My sincere thanks to

(2.2)HDFC Tax Saver – Growth

(2.4)Reliance Diversified Power Sector Fund – Growth

(2.3)ICICI Prudential Dynamic Plan – Growth

(2.5) Taurus Starshare

Chapter-four (4) Performance Measures Of Mutual Fund:

Chapter-Five (5) Analysis And Interpretation

Chapter-Six (6) Findings And Recommendations. 77

PROFILE OFASSET MANAGEMENT

DESIGN OF THE STUDY

ANALYSIS AND INTERPRETATION

First Phase - 1964-87

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

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

Fourth Phase - since February 2003

(1.2) Performance of Mutual Funds in India

The supervisory authority adopted a set of measures to create a transparent and

(1.3) Mutual Fund Companies in India

Major Mutual Fund Companies in India

ABN AMRO Mutual Fund

Birla Sun Life Mutual Fund

Bank of Baroda Mutual Fund (BOB Mutual Fund)

HSBC Mutual Fund

ING Vysya Mutual Fund

Sahara Mutual Fund

State Bank of India Mutual Fund

Tata Mutual Fund

Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is

Unit Trust of India Mutual Fund

Reliance Mutual Fund

Standard Chartered Mutual Fund

Franklin Templeton India Mutual Fund

Morgan Stanley Mutual Fund India

Escorts Mutual Fund

Alliance Capital Mutual Fund

Benchmark Mutual Fund

Canbank Mutual Fund

Chola Mutual Fund

LIC Mutual Fund

GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a

(1.4) Future of Mutual Funds in India

By December 2004, Indian mutual fund industry reached Rs 1,50,537 crore. It is

Let us discuss with the following table:

Month/Year Mar-98 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Sep-04 4-Dec

Deposits 605410 851593 989141 1131188 1280853 - 1567251 1622579

(1.5) Some facts for the growth of mutual funds in India

(1.6) Types of Mutual Funds Schemes in India

(1.8) Association of Mutual Funds in India (AMFI)

The objectives of Association of Mutual Funds in India