EXECUTIVE SUMMARY

The Banking Sector is one of the fastest growing sectors in India today. The upcoming sectors which are really showing the graph towards upwards are - Telecom, Banking Insurance. These sectors really have a lot of responsibility towards the economy Mutual fund industry has seen a lot of changes in past few years with multinational companies coming into the country, bringing in their professional expertise in managing funds worldwide. In the past few months there has been a consolidation phase going on in the mutual fund industry in India. Now investors have a wide range of Schemes to choose from depending on their individual profiles. This is an internship report regarding the diverse services provided by SBI IN Mutual fund. It starts with an introduction about the industry followed by the history and profile of SBI.It gives a briefing about all the services rendered by the company. The report shows an internal architecture of the Mutual fund. It gives a detail about the mutual fund and what is the risk involved in that and how much returns they are providing to investors. Also it discusses the vision, mission and policies of the organization along with their competitors at national level. There are also some suggestions/recommendations for the business. what I learnt and imbibed in my day-to-day affairs by doing the research in mutual fund .

INDUSTRY PROFILE
The mutual fund industry is a lot like the film star of the finance business.Though it is perhaps the smallest segment of the industry, it is also the most glamorous ± in that it is a young industry where there are changes in the rules of the game everyday, and there are constant shifts and upheavals.The mutual fund is structured around a fairly simple concept, the mitigation of risk through the spreading of investments across multiple entities, which is achieved by the pooling of a number of small investments into a large bucket.Yet it has been the subject of perhaps the most elaborate and prolonged regulatory effort in the history of the country. A little history: The mutual fund industry started in India in a small way with the UTI Act creating what was effectively a small savings division within the RBI. Over a period of 25 years this grew fairly successfully and gave investors a good return, and therefore in 1989, as the next logical step, public sector banks and financial institutions were allowed to float mutual funds and their success emboldened the government to allow the private sector to foray into this area.The initial years of the industry also saw the emerging years of the Indian equity market, when a number of mistakes were made and hence the mutual fund schemes, which invested in lesser-known stocks and at very high levels,became loss leaders for retail investors. From those days to today the retail investor, for whom the mutual fund is actually intended, has not yet returned to the industry in a big way. But to be fair, the industry too has focused on brining in the large investor, so that it can create a significant base corpus,which can make the retail investor feel more secure. The Indian MF industry has Rs 5.67 lakh crore of assets under management. As per data released by Association of Mutual Funds in India,the asset base of all mutual fund combined has risen by 7.32% in April, the first month of the current fiscal. As of now, there are 33 fund houses in the country including 16 joint ventures and 3 whollyowned foreign asset managers.

it is at par with fund houses in developed economies. in the same time frame.004 crores Third Phase ± 1993-2003 (Entry of Private Sector Funds) .while the number was 12 bps in UK.6.At the end of 1993.According to a recent McKinsey report. The history of mutual funds in India can be broadly divided into four distinct phases First Phase ± 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. SBI Mutual Fund was the first non. Bank of India (Jun 90). 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. Operating profits for AMCs in India. at the initiative of the Government of India and Reserve Bank the.700 crores of assets under management. were at 32 basis points in 2006-07.UTI. While the revenue and profit (PAT) pools of Indian AMCs are pegged at $542 million and $220 million respectively. public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). The first scheme launched by UTI was Unit Scheme 1964. Punjab National Bank Mutual Fund (Aug 89). the total AUM of the Indian mutual fund industry could grow to $350-440 billion by 2012. The mutual fund industry in India started in 1963 with the formation of Unit Trust of India.UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87). the mutual fund industry had assets under management of Rs. 17 bps in Germany and 18 bps in the US. Bank of Baroda Mutual Fund (Oct 92). expanding 33% annually. LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.47. Indian Bank Mutual Fund (Nov 89). At the end of 1988 UTI had Rs. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. Second Phase ± 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non. as a percentage of average assets under management.

2003.The second is the UTI Mutual Fund Ltd. under which all mutual funds. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. sponsored by SBI. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.126726 crores under 386 schemes . It is registered with SEBI and functions under the Mutual Fund Regulations.541 crores of assets under management was way ahead of other mutual funds. and with recent mergers taking place among different private sector funds. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996.76. giving the Indian investors a wider choice of fund families. 1993 was the year in which the first Mutual Fund Regulations came into being. PNB. there were 33 mutual funds with total assets of Rs. representing broadly.21. conforming to the SEBI Mutual Fund Regulations. there were 31 funds. the assets of US 64 scheme. the mutual fund industry has entered its current phase of consolidation and growth. As at the end of October 31. 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.With the entry of private sector funds in 1993. The number of mutual fund houses went on increasing. Fourth Phase ± since February 2003 In February 2003. with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. assured return and certain other schemes. The Specified Undertaking of Unit Trust of India. except UTI were to be registered and governed. which manage assets of Rs.835 crores as at the end of January 2003. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.000 crores of assets under management and with the setting up of a UTI Mutual Fund. following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. As at the end of January 2003. BOB and LIC.29. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs. The Unit Trust of India with Rs. Also.44. a new era started in the Indian mutual fund industry. 1.805 crores.

STRUCTURE OF MUTUAL FUND .

which had a total asset of Rs.Growth of Mutual fund in India The Indian Mutual Fund has passed through three phases. 13. 1. As on august end 2000.Currently there are 34 Mutual Fund organizations in India managing 1.028 crores at the end of 1994 and the number of schemes was 167. there were 33 Funds with 391 schemes and assets under management with Rs 1. 02.005 crores as total assets under management. 6. The second phase is between 1987 and 1993 during which period 8 Funds were established (6 by banks and one each by LIC and GIC). Kothari Pioneer Mutual Fund was the first Fund to be established by the private sector in association with a foreign Fund. Several private sectors Mutual Funds were launched in 1993 and 1994.700 crores at the end of 1988. Major players in Indian mutual fund industry and their AUM SBI Mutual Fund ABN AMRO M F Birla Mutual Fund Deutsche Mutual Fund Fidelity Mutual Fund HDFC Mutual Fund HSBC Mutual Fund LIC Mutual Fund .02. The first phase was between 1964 and 1987 and the only player was the Unit Trust of India.000 crores. The third phase began with the entry of private and foreign sectors in the Mutual Fund industry in 1993. The total assets under management had grown to 61. The share of the private players has risen rapidly since then. As at the end of financial year 2000(31st march) 32 Funds were functioning with Rs. The securities and Exchange Board of India (SEBI) came out with comprehensive regulation in 1993 which defined the structure of Mutual Fund and Asset Management Companies for the first time.849 crores.

SBI Mutual Fund (SBI MF) is one of the largest mutual funds in the country with an investor base of over 5. SBI MF brings forward its expertise in consistently delivering value to its investors.COMPANYPROFILE The State Bank of India. the bank acquired its present name that is SBI. is one of the leading banks in India.8 million. 40000 crores of assets and has a diverse profile of members with investments across 38 active schemes. With over 20 years of rich experience in fund management. The State Bank of India is India's largest commercial bank. SBI Mutual Fund manages over Rs. it was merged with the Imperial Bank. The bank traces its origin to the first decade of the 19th century. SBI MF draws its strength from India's Largest Bank State Bank of India and Société Générale Asset Management. Later on. SBI Mutual Fund has launched 38 schemes and successfully redeemed fifteen of them. the Government of India nationalized the Imperial Bank along with the Reserve Bank of India. popularly known as SBI. France. Ever since that time. In the year 1955. During the 20 years since inception. SBI Mutual Fund has an excellent track record in creating wealth for its members. The State Bank of India (SBI) is India¶s largest bank and SBI Mutual Fund is sponsored by the bank. one of the world¶s leading fund management companies that manages over US$ 500 Billion internationally. Interestingly SBI Mutual Fund is a joint venture between the State Bank of India and Société Générale Asset Management. The bank has been striving sincerely to adhere to the efforts of providing utmost customer satisfaction to the best possible extent. . Today.

SBI Mutual Fund is a joint venture between the State Bank of India. The SBI Mutual Fund operates under State Bank of India and Société Générale Asset Management of France. SBI Mutual Fund manages over Rs. Presently. 28 investor service desks and 40 district organisers.SBI Mutual Fund operates under State Bank of India and Société Générale Asset Management of France and has asset management experience of more than 25 years. SBI Mutual Funds offer innovative mutual fund products to its wide pool of customers and its products are available across India. one of the world's leading fund management companies. SBI Mutual Fund offers different kinds of products like growth based products. income based products and balanced funds. the company has grown immensely since its establishment. With over twenty years of experience in asset management. Since its inception SBI Mutual Fund has launched thirty-two schemes and successfully redeemed fifteen of them. SBI Mutual Fund schemes have consistently outperformed benchmark indices. SBI Mutual is the first bank-sponsored fund to launch an offshore fund .Resurgent India Opportunities Fund. The fund has a network of 100 collection branches. . It has a wide portfolio of products that meet the requirements of different types of investors. Managing Director of the company. 17000 crores of assets. SBI Mutual Fund is India's largest bank sponsored mutual fund with an investor base of over 3 million. 26 investor service centres. India's largest banking enterprise and Societe Generale Asset Management of France. The SBI Mutual Fund is headed by Mr Syed Shahabuddin.

Performance: State Bank of India Mutual Funds had Total Income of ` 12602.88 crore for the financial year 2006 -07. . State Bank of India Mutual Funds Corporate Office is located at: NEW SCHEMES BY RBI RBI has introduced a method of payment which promises you an option to collect your periodic interest/ dividend/ repurchase directly through your bank account. In this system. 26 investor service centers .Activities: State Bank of India Mutual Funds offers investment opportunities in both. SBI Mutual is the first bank-sponsored fund to launch an offshore fund ± Resurgent India Opportunities Fund. SBI Mutual Fund have consistently met investor's expectations and have emerged as the preferred investment for millions of investors and HNI¶s.38 crore for the financial year 2006 -07. Organization: State Bank of India Mutual Funds is headed by Mr. With 18 years of operational experience the achievements of State Bank of India Mutual Funds are The fund has launched 32 schemes and successfully redeemed them with handsome returns. State Bank of India Mutual Funds has a network of 100 collection branches. SBI Mutual Fund manages over Rs. 28 investor service desks and 52 district organizers. The fund has investor base of over 3. Equity and Debt funds. Managing Director.5 million. payment instructions would be issued electronically through our banker to the clearing authority and the . Syed Shahabuddin.16500 crores of assets and has a diverse portfolio of 30 active schemes. State Bank of India Mutual Funds has posted Net Profit of Rs 1081.

clearing authority would supply credit reports to the bank with which you maintain the specified amount. This facility would only be an additional mode of payment and would be optional. The facility would be available for indivudual transactions upto Rs. You can withdraw from the service with a six weeks notice to the Registrars.(Interest Dividend). This facility will help you in avoiding cases of pilferage.00. fraudulent encashments etc. The branch will credit your account directly and an ECS entry will appear in your passbook. 3. Centres where ECS (Credit Clearing) is being offered by State Bank of India y y y y y y y y y y y y y y Agra Allahabad Amritsar Baroda Bhopal Cochin Coimbatore Dehradun Durgapur Faridabad Ghaziabad Hubli Jamshedpur Lucknow y y y y y y y y y y y y y Ludhiana Madurai Mangalore Nashik Panaji Rajkot Shimla Surat Trichy Trichur Vijayawada Visakhapatnam Varanasi .000/. A payment advice will also be sent to you.

in equity shares.. and distributes the profits. In other words. Call money markets etc. Government securities. that pools up the money from individual / corporate investors and invests the same on behalf of the investors /unit holders. a mutual fund allows an investor to indirectly take a position in a basket of assets .General Introduction TITLE OF THE STUDY Mutual fund risk and return A Mutual Fund is a body corporate registered with the Securities and Exchange Board of India (SEBI). Bonds.

 Interval schemes. Other schemes:  Tax saving schemes.  Sector specific schemes.TYPES OF MUTUAL FUND SCHEME: Mutual fund schemes may be classified on the basis of its structure and its investment objective. By investment objectives:  Growth schemes.  Money market schemes. .  Close ended.  Balanced schemes. By structure:  Open ended.  Income schemes.  Special schemes  Index schemes.

It has been proved that returns from stocks. Growth schemes are ideal for investors having a long term outlook seeking growth over a period of time. In order to provide an exit route to the investors. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor.By Structure 1) Open-end Funds 2) An open-end fund is one that is available for subscription all through the year. 3) Interval Funds Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices. Such schemes normally invest a majority of their corpus in equities. have outperformed most other kind of investments held over the long term. The key feature of open-end schemes is liquidity. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. By Investment Objective 1) Growth Funds The aim of growth funds is to provide capital appreciation over the medium to long term. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. 2) Closed-end Funds A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. . some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. These do not have a fixed maturity.

commercial paper and inter-bank call money. OTHER SCHEMES 1) Tax Saving Schemes 2) These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. 2) Special Schemes a) Industry Specific Schemes . certificates of deposit. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. preservation of capital and moderate income. Income Funds are ideal for capital stability and regular income. corporate debentures and Government securities. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. 1961. or fall equally when the market falls. the NAV of these schemes may not normally keep pace. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act. 4) Money Market Funds The aim of money market funds is to provide easy liquidity. These schemes generally invest in safer short-term instruments such as treasury bills. Such schemes generally invest in fixed income securities such as bonds. In a rising stock market. 3) Balanced Funds The aim of balanced funds is to provide both growth and regular income. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods.2) Income Funds The aim of income funds is to provide regular and steady income to investors. These are ideal for investors looking for a combination of income and moderate growth.

c) Sectoral Schemes Sectoral Funds are those which invest exclusively in a specified sector.Industry Specific Schemes invest only in the industries specified in the offer document. b) Index Schemes Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50. The investment of these funds is limited to specific industries like InfoTech. and Pharmaceuticals etc. This could be an industry or a group of industries or various segments such as 'A' Group shares or initial public offerings . FMCG.

Of course. However. Even if you don't use a broker or other financial adviser. 3) Taxes: During a typical year. If your fund makes a profit on its sales. anyone who invests through a mutual fund runs the risk of losing money. or financial planners. Some funds also charge sales commissions or "loads" to compensate brokers. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. If the manager does not perform as well as you had hoped. no matter how balanced the portfolio. the value of mutual fund shares will go down as well. financial consultants. you forego management risk. 2) Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses. you depend on the fund's manager to make the right decisions regarding the fund's portfolio. most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If the entire stock market declines in value. 4) Management risk: When you invest in a mutual fund. you will pay taxes on the income you receive. even if you reinvest the money you made. you will pay a sales commission if you buy shares in a Load Fund. because these funds do not employ managers .DRAWBACKS OF MUTUAL FUND: Mutual funds have their drawbacks and may not be for everyone 1) No Guarantees: No investment is risk free. if you invest in Index Funds. you might not make as much money on your investment as you expected.

This variety is beneficial in two ways: first. real estate. bonds. For example. This kind of a diversification may add to the stability of your returns. for example during one period of time equities might under perform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets. i. which would otherwise be extremely expensive. secondly. which are unmatched by most other investment avenues. . The benefits have been broadly split into universal benefits.ADVANTAGE OF MUTUAL FUNDS There are numerous benefits of investing in mutual funds and one of the key reasons for its phenomenal success in the developed markets like US and UK is the range of benefits they offer. Universal Benefits Affordability: A mutual fund invests in a portfolio of assets. applicable to all schemes. and benefits applicable specifically to open-ended schemes. shares. it offers different types of schemes to investors with different needs and risk appetites. etc.500/-. information technology etc.) and different sectors (auto. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs. depending upon the investment objective of the scheme. It simply means that you must spread your investment across different securities (stocks. We have explained the key benefits in this section. an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt scheme) depending on his risk appetite and thus create a balanced portfolio easily or simply just buy a Balanced Scheme. both debt and equity. it offers an opportunity to an investor to invest sums across a variety of schemes. This amount today would get you less than quarter of an Infosys share! Thus it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directly in the stock market. Diversification The nuclear weapon in your arsenal for your fight against Risk. Similarly the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect your principal investment as well as help you meet your return objectives. fixed deposits etc. Variety Mutual funds offer a tremendous variety of schemes.). textile. bonds. money market instruments.e. An investor can buy in to a portfolio of equities.

and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio. However.Professional Management: Qualified investment professionals who seek to maximize returns and minimize risk monitor investor's money. as a measure of concession to Unit holders of open-ended equity-oriented funds. Units of the schemes are not subject to Wealth-Tax and Gift-Tax.5%. In case of Individuals and Hindu Undivided Families a deduction upto Rs.000 from the Total Income will be admissible in respect of income from investments specified in Section 80L. It is managed by a team of investment professionals and other service providers. you are handing your money to an investment professional who has experience in making investment decisions. Tax Benefits: Any income distributed after March 31. Such a high level of regulation seeks to protect the interest of investors CHARACTERISTICS OF MUTUAL FUNDS The ownership is in the hands of the investors who have pooled in their funds. Regulations: Securities Exchange Board of India (³SEBI´). which govern mutual funds. 2002 will be subject to tax in the assessment of all Unit holders. These rules relate to the formation. given the fund's stated investment objectives. the mutual funds regulator has clearly defined rules. 2003. 9. income distributions for the year ending March 31. will be taxed at a concessional rate of 10. as and when required. administration and management of mutual funds and also prescribe disclosure and accounting requirements. When you buy in to a mutual fund. It is the Fund Manager's job to (a) find the best securities for the fund. The pool of funds is invested in a portfolio of marketable investments The investors share is denominated by µunits¶ whose value is called as Net Asset Value (NAV) which changes everyday The investment portfolio is created according to the stated investment objectives of the fund . including income from Units of the Mutual Fund.

growth and future prospects. NEED FOR THE STUDY The main purpose of doing this project was to know about mutual fund and its functioning. Secondary . Research methodology carried for this study can be one types 1. exit load. entry load. RESEARCH METHODOLOGY To achieve the objective of studying the stock market data has been collected. The project study was done to ascertain the asset allocation. This helps to know in details about mutual fund industry right from its inception stage. associated with the mutual funds. income. It also helps in understanding different schemes of mutual funds. Because my study depends upon prominent funds in India and their schemes like equity. balance as well as the returns associated with those schemes.OBJECTIVES OF THE STUDY To find the risk and return relationship To analyze the risk and return of SBI To calculate the return of SBI Mutual fund To give a brief idea about the benefits available from Mutual Fund investment Explore the recent developments in the mutual funds in India SCOPE OF THE STUDY In my project the scope is limited to some prominent mutual funds in the mutual fund industry analyzed the funds by calculating the different ratios from SBI mutual balance sheet. Ultimately this would help in understanding the benefits of mutual funds to investors.

etc. . journals. The secondary information is mostly taken from websites. which has being collected for the first time and it is the original data. books.SECONDARY: The data.

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