PROJECT REPORT

ON

GROWTH OF MUTUAL FUNDS IN INDIA

AT

RELIANCE MUTAUL FUND

DEHRADUN

(2007-2008)

BY

NIDHI BISHT

INTERNAL GUIDE EXTERNAL GUIDE

MR. KUKRETI MR. SHARAD SHARMA
FACULTY OF FINANCE RELATIONSHIP MANAGER
 ACKNOWLEDGEMENT

I am immensely thankful to God who provides me the health ability to withstand the
problem coming in my way.

I am thankful to Mr. Kukreti Faculty of BBA Deptt, SGRRITS, Dehradun for his
encouragement and providing other assistances whenever required.

Thanks are also due to various employees for their co-operation during research.

In the end I am beholder to my parents and my friends for their inspiration and
cooperation.

NIDHI BISHT
 CERTIFICATE

This is to certify that Miss. Nidhi Bisht student of BBA (Finance) 2007 – 2008 batch,
SGRRITS, Dehradun has successfully completed his project titled “Growth of Mutual
Funds in India” under my guidance and supervision.

I wish him good luck for future.

Date: MR. KUKRETI

(Faculty of BBA)
 DECLARATION

I hereby declare that Project Report entitled, “GROWTH OF MUTUAL FUNDS IN

INDIA”, written and submitted by me, under guidance of MR. KUKRETIis my original
work.

The empirical finding in the report are based on the data collected by myself. While
preparing the report, I’ve not copied anything from any source or other projects submitted
for similar purpose.

NIDHI BISHT
BBA V SEM.
 CONTENT

COMPANY PROFILE

INTRODUCTION

HISTORY OF MUTUAL FUND

RESEARCH METHODOLOGY

MUTUAL FUND PRODUCTS

MUTUAL FUND STRUCTURE

ASSOCIATION OF MUTUAL FUNDS (AMFI)

INVESTMENT OPTION WITH DIFFERENT RISK PROFILES

MAJOR PLAYERS IN MUTUAL FUND INDUSTRY

FUTURE OF MUTUAL FUND INDUSTRY

CONCLUSION

SUGGESTIONS

BIBLIOGRAPHY
 COMPANY PROFILE

Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Assets Under
Management (AUM) of Rs. 48,828 crore (AUM as on 30th Apr 2007) and an investor
base of over 3.1 million.

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 Mutual Fund constantly endeavors to launch innovative products and customer
service initiatives to increase value to investors.

Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management
Ltd., a wholly owned subsidiary of Reliance Capital Ltd.

Reliance Capital Ltd. is one of India’s leading and fastest growing private sector financial
services companies, and ranks among the top 3 private sector financial services and
banking companies, in terms of net worth
.

Reliance Capital Ltd. has interests in asset management, life and general insurance,
private equity and proprietary investments, stock broking and other financial services.

Source : www.amfiindia.com

Statutory Details :
Sponsor : Reliance Capital Limited.
Trustee : Reliance Capital Trustee Co. Limited.
Investment Manager : Reliance Capital Asset Management Limited. The Sponsor, the
Trustee and the Investment Manager are incorporated under the Companies Act 1956.

General Risk Factors : Mutual Funds and securities investments are subject to market
risks and there is no assurance or guarantee that the objectives of the Scheme will be
achieved. As with any investment in securities, the NAV of the Units issued under the
Scheme can go up or down depending on the factors and forces affecting the capital
markets. Past performance of the Sponsor/AMC/Mutual Fund is not indicative of the
future performance of the Scheme. The Sponsor is not responsible or liable for any loss
resulting from the operation of the Scheme beyond their initial contribution of Rs.1 lakh
towards the setting up of the Mutual Fund and such other accretions and additions to the
corpus. The Mutual Fund is not guaranteeing or assuring any dividend/ bonus. The
Mutual Fund is also not assuring that it will make periodical dividend/bonus
distributions, though it has every intention of doing so. All dividend/bonus distributions
are subject to the availability of the distributable surplus in the Scheme. For details of
scheme features apart from those mentioned above and scheme specific risk factors,
please refer to the provisions of the offer document. Offer Document and KIM is
available at all the DISCs/ Distributors of RMF.
 RELIANCE MUTUAL FUND

Reliance mutual fund, promoted by the Anil Dhirubhai Ambani (ADAG) group, is one of
the fastest growing mutual funds in India having doubled its assets over the last one year.
In March, 2006, the Reliance mutual fund emerged as the largest private sector fund
house in the country, overtaking Prudential ICICI which has been holding that position
for many years.

The sponsor of the fund is Reliance Capital Limited, the financial services arm of ADAG.
Reliance Capital Asset Management Limited, a wholly owned subsidiary of Reliance
Capital Limited, acts as the AMC to the fund. Directors of the company include Amitabh
Jhunjhunwala, a senior executive of ADAG. Amitabh Chaturvedi is the managing
director of the AMC.

As of end August 2006, Reliance mutual fund has Rs 28,753 crore of assets under
management. Reliance Equity Fund, launched by Reliance MF in early 2006, is the
largest mutual find scheme in the country with a fund size of over Rs 5,500 crore.
Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act,
1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor and Reliance Capital
Trustee Co. Limited (RCTCL), as the Trustee.

RMF has been registered with the Securities & Exchange Board of India (SEBI) vide
registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital
Mutual Fund has been changed to Reliance Mutual Fund effective 11th. March 2004 vide
SEBI's letter no. IMD/PSP/4958/2004 date 11th. March 2004. Reliance Mutual Fund was
formed to launch various schemes under which units are issued to the Public with a view
to contribute to the capital market and to provide investors the opportunities to make
investments in diversified securities.
The main objectives of the Trust are :

To carry on the activity of a Mutual Fund as may be permitted at law and formulate
and devise various collective Schemes of savings and investments for people in
India and abroad and also ensure liquidity of investments for the Unit holders;

To deploy Funds thus raised so as to help the Unit holders earn reasonable returns
on their savings and

To take such steps as may be necessary from time to time to realise the effects
without any limitation.
Here is a list of mutual funds of Reliance:

Debt/Income Funds
Reliance Income Fund
Reliance Monthly Income Plan
Reliance Fixed Term Scheme
Reliance Gilt Securities Fund
Reliance Liquid Fund
Reliance Medium Term Fund
Reliance Short Term Fund
Reliance Floating Rate Fund
Reliance NRI Income Fund
Reliance Fixed Maturity Fund Series - I
Reliance Fixed Maturity Fund Series - II
Reliance Liquidity Fund
Reliance Regular Savings Fund
Reliance Fixed Tenor Fund
Reliance Fixed Tenor Fund Plan B
Reliance Fixed Horizon Fund Plan A & B

Equity Funds
Reliance Growth Fund
Reliance Vision Fund
NRI Equity Fund
Reliance Index Fund
Reliance Equity Opportunities Fund
Reliance Tax Saver (ELSS) Fund
Reliance Equity Fund

Sector Specific Funds

Reliance Banking Fund
Reliance Diversified Power Sector Fund
Reliance Pharma Fund
Reliance Media & Entertainment Fund
 OUR CORPORATE GOVERNANCE POLICY

Reliance Capital Asset Management Ltd. has a vision of being a leading player in the
Mutual Fund business and has achieved significant success and visibility in the market.

However, an imperative part of growth and visibility is adherence to Good Conduct in the
marketplace. At Reliance Capital Asset Management Ltd., the implementation and
observance of ethical processes and policies has helped us in standing up to the scrutiny
of our domestic and international investors.

Management :
The management at Reliance Capital Asset Management Ltd. is committed to good
Corporate Governance, which includes transparency and timely dissemination of
information to its investors and unitholders. The Reliance Capital Asset Management
Limited Board is a professional body, including well-experienced and knowledgeable
Independent Directors. Regular Audit Committee meetings are conducted to review the
operations and performance of the company.

Employees :
Reliance Capital Asset Management Ltd. has a preset code of conduct for all its officers.
It has a clearly defined prohibition on insider trading policy and regulations. The
management believes in the principles of propriety and utmost care is taken while
handling public money, making proper and adequate disclosures.

All personnel at Reliance Capital Asset Management Ltd. are made aware of the dos and
donts as part of the Dealing policy laid down by the Securities and Exchange Board of
India (SEBI). They are taken through a well-designed HR program, conducted to impart
work ethics, the Code of Conduct, information security, Internet and e-mail usage and a
host of other issues.
One of the core objectives of Reliance Capital Asset Management Ltd. is to identify
issues considered sensitive by global corporate standards, and implement
policies/guidelines in conformity with the best practices as an ongoing process.

Reliance Capital Asset Management Ltd. gives top priority to compliance in true letter
and spirit, fully understanding its fiduciary responsibilities.
 RELIANCE CAPITAL LIMITED

Corporate & Registered Office :

Reliance Capital Ltd. H Block, 1st Floor, Dhirubhai Ambani Knowledge City,
Koparkhairne, Navi Mumbai - 400 710.Tel. 022 – 30327000, Fax. 022 - 30327202

Reliance Capital Asset Management Ltd. is a wholly owned subsidiary of Reliance

Capital Limited, the sponsor. The entire paid-up capital (100%) of Reliance Capital Asset
Management Ltd is held by Reliance Capital Ltd.

Reliance Mutual Fund (RMF) has been sponsored by Reliance Capital Ltd (RCL).
Reliance Capital is India’s fastest growing private sector financial services company.
Ranking among the top 3 private sector banking and finance companies in India, with a
shareholder base of over 1.3 million. Reliance Capital has interests in asset management
and mutual funds, life and general insurance, private equity and proprietary investments,
stock broking and other financial services with a net worth in excess of Rs. 5,262 crore
(as of March 31, 2007)

Particulars 2005-06 2004-05 2003-04 2002-03

(Rs.in crores)
Total Income 652.02 295.69 356.79 458.78
Profit Before Tax 550.61 111.21 105.79 102.63
Profit After Tax 537.61 105.81 105.79 102.63
Reserves & Surplus 3849.58 1310.08 1271.84 1208.5
Net Worth 4122.46 1437.92 1399.81 1336.33
Earnings per Share 29.74 8.31 8.31 8.06
(Rs.) (Basic + (Basic + (Basic + (Basic +
Diluted) Diluted) Diluted) Diluted)
Book Value per Share 112.95 112.95 109.96 104.54
(Rs.)
Dividend (%) 30% 30% 29% 29%
Paid up Equity Capital 223.40 127.84 127.84 127.83

Reliance Capital Ltd. has contributed Rupees One Lac as the initial contribution to the
corpus for the setting up of the Mutual Fund. Reliance Capital Ltd. is responsible for
discharging its functions and responsibilities towards the Fund in accordance with the
Securities and Exchange Board of India (SEBI) Regulations.

The Sponsor is not responsible or liable for any loss resulting from the operation of the
Scheme beyond the contribution of an amount of Rupees one Lac made by them towards
the initial corpus for setting up the Fund and such other accretions and additions to the
corpus.
About Reliance Capital Asset Management Ltd.

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 sponsor. The entire paid-up capital (100%) of Reliance Capital Asset
Management Limited is held by Reliance Capital Limited.

Reliance Capital Asset Management Limited 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 authorised
to act as Investment Manager of Reliance Mutual Fund. The networth of the Asset
Management Company including preference shares as on March 31, 2005 is Rs.30.13
crores. Reliance Mutual Fund has launched twenty five Schemes till date, namely:
Reliance Vision Fund (September 1995), Reliance Growth Fund (September 1995)
Reliance Income Fund (December 1997), Reliance Liquid Fund (March 1998), Reliance
Medium Term Fund (August 2000), Reliance Short Term Fund (December 2002),
Reliance Fixed Term Scheme (March 2003), Reliance Banking Fund (May 2003),
Reliance Gilt Securities Fund (July 2003), Reliance Monthly Income Plan (December
2003), Reliance Diversified Power Sector Fund (March 2004) Reliance Pharma Fund
( May 2004), Reliance Floating Rate Fund (August 2004), Reliance Media &
Entertainment Fund (September 2004), Reliance NRI Equity Fund (October 2004),
Reliance NRI Income Fund (October 2004), Reliance Index Fund (January 2005),
Reliance Equity Opportunities Fund (February 2005), Reliance Fixed Maturity Fund -
Series I (March 2005), Reliance Fixed Maturity Fund - Series II (April 2005), Reliance
Regular Saving Fund (May 2005), Reliance Liquidity Fund (June 2005), Reliance Tax
Saver (ELSS) Fund (July 2005), Reliance Fixed Tenor Fund (November 2005) and
Reliance Equity Fund (Feb 2006).
 RCAM has been registered as a portfolio manager vide SEBI Registration No.
INP000000423 and renewed effective 1st August, 2003. RCAM has commenced these
activities. It has been ensured that key personnel of the AMC, the systems, back office,
bank and securities accounts are segregated activity wise and there exists systems to
prohibit access to inside information of various activities. As per SEBI Regulations, it
will further ensure that AMC meets the capital adequacy requirements, if any, separately
for each such activity.

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 but this activity is yet to commence.

Name and Address Other Directorships

Mr. Amitabh Chaturvedi *
Raheja Empress,
Flat No. 1201/1202,
12th Floor, Veer Savarkar Marg,
Opp. Siddhi Vinayak Temple,
Prabhadevi, Mumbai - 400 025.
Director :
Reliance Asset Management (Singapore) Pte
Limited,
Reliance Asset Management (Mauritius) Limited,
Reliance Infoinvestments Limited.
Financial Planning Standards Board of India

Senior Corporate Executive

Mr. Kanu Doshi Chairman :

102, Shivala, Khatau Road,
Cuffe Parade, Mumbai - 400 005.
Chartered Accountant
Matrix Advisors (India) Private Limited
Director :
BOB Capital Markets Limited,
Peoples Financial Services Limited
Alphaplus Investment Management Private

Mr. Manu Chadha
C-35, Malcha Marg,
Chankyapuri,
New Delhi - 110 021.
Chartered Accountant
Mr. Sushil C. Tripathi, I.A.S.
(Retd.)
27, Sector 15A,
NOIDA - 201 301(UP)
(Former Secretary to
Government of India,
Ministry of Petroleum &
Natural Gas /
Ministry of Education)
Limited.
Director :
TRC Financial Services Limited, Himalayan Crest
Power Limited, GIC Housing Finance Limited, Kotla
Hydro Power Limited,
Ispat Industries Limited,
TRC Corporate Consulting (P) Limited
Brady Air Limited.
Partner :
M/s T.R. Chadha & Co., Chartered Accountants
Director :
IL&FS Infrastructure Development Corporation
Limited
 INTRODUCTION

A mutual fund is created when investors put their money together in a particular fund
which is providing them maximum investment opportunities. The fund thus collected
through particular mutual fund scheme is managed by expertise having great knowledge
of investment & market.

TYPES OF MUTUAL FUNDS

Mutual Funds are classified by structure into:

Open – Ended Schemes

Close – Ended Schemes.
Interval Schemes

By objective into:

Equity (Growth) Schemes

Income Schemes
Money Market Schemes
Tax Saving Schemes
Balanced Schemes
Offshore funds
Special Schemes like index schemes etc.

RETURN OPTION IN MUTUAL FUNDS

Dividend Option
Growth Option
Reinvestment Option

THE ADVANTAGES OF INVESTING IN A MUTUAL FUND ARE:

Diversifications
Professional Management
Regulatory oversight
Liquidity
Convenience
Low Cost
Open – Ended Schemes

In an open- ended fund an investor can buy and sell units of the fund at NAV related
prices, at any time, directly from the fund. This is called as open- ended fund because,
the pool of funds is open for additional sales and purchases. The price at which the
investors buy or sell units is linked to the NAV.

Open Ended Funds are offered for sale at a per-specified price, say Rs.10, in the
initial offer period. After a per-specified period, say 30 days, this is declared open for
sale further sales and repurchases. These transactions happen at the computed NAV
related prices.
CLOSED ENDED FUNDS

A closed ended fund is open for sale to investors for a specific period, after which further
sales are closed. Any further transaction for buying the units or repurchasing them,
happen in the secondary markets, where closed funds are lists. Therefore new investors
bye from the existing investors, and they can liquidate their units by selling them to other
willing buyers.

The price at which the units can be sold redeemed depends on the market prices, which
are fundamentally linked to the NAV. Investors in closed funds receive either certificates
of depository receipts, for their holding in closed ended mutual fund.

INTERVAL SCHEMES

Interval Schemes are those that combine the features of open-ended and close
ended schemes. The units may be traded on the stock exchange or may be open
for sale or redemption during pre-determined intervals at NAV related prices.

GROWTH SCHEMES

Growth Schemes are also known as equity schemes. The aim of these schemes is
to provide capital appreciation over medium.

These schemes normally invest a major part of their fund in equities and are
willing to bear short-them decline in value for possible future appreciation.

INCOME SCHEMES

Income Schemes are also known as debt schemes. The aim of these schemes is to
provide regular and steady income to investors. Theses schemes generally invest
in fixed income securities such as bonds and corporate debentures. Capital
appreciation in such schemes may be limited.

TAX SAVING SCHEMES

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed
from time to time. Under Sec. 88 of the Income Tax Act, contributions made to
any Equity Linked Savings Scheme (ELSS) are eligible for rebate & 20% for a
maximum investment on Rs 10,000 per financial year.

MONEY MARKET SCHEMES

Money Market Schemes aim to provide easy liquidity, preservation of capital

and moderate income. These schemes generally invest in safer, short-term
 instruments, such as treasury bills, certificates of deposit, commercial paper
and inter-bank call money.

BALANCED SCHEMES

Balanced Schemes aim to provide both growth and income by periodically

distributing a part of the income and capital gains they earn. These schemes
invest in both shares and fixed income securities, in the proportion indicated
in their offer documents (normally 50:50).

RETURN OPTION IN MUTUAL FUNDS

DIVIDEND OPTION

Investors who choose a dividend option as there investment, will receive dividends from
the mutual funds ,as and when such dividends are declared There are further choices in
the distribution of dividend .in a normal divided plan, periodicity of dividends is left to
the fund manager, who may pay annual dividend. The timing of payouts decided by the
fund manager which can vary form daily, weekly, quarterly, half yearly and annually.
Investor choosing this option having affix number of units invested in the fund and earn
income on this investment the NAV of these investors holdings will vary with the value
of portfolio.

GROWTH OPTION

Investors who do not require periodic income distribution can choose the growth option
where income earned are retained in the investment portfolio and are allowed to grow
rather being distributed to the investors. The return to the investors is the rate at which his
initial investment has grown over the period for which he has invested in the fund. The
NAV of investors will vary with value of the investment while the number of units
remains constant

REINVESTMENT OPTION

Investors reinvest the dividends that are declared by the mutual funds back into the fund
itself at NAV that prevalent at the time of reinvestment .In this option the numbers of unit
held by the invests will change with every reinvestment .The value f the units will be
similar to that under the dividend options
 Why should you invest in Mutual Funds?

1) Reduce your risks - Mutual Funds diversify your portfolio by investing in various
securities & minimise the risk.

2) Maximise your opportunities - The fund managers with the strong research take

3) Liquidity: Quick access to your money - Mutual Funds can be bought and sold on
any dealing day

4) Affordability - Of course you don’t need to be millionaire to invest in mutual fund as

the minimum investment in mutual fund starts from Rs.500/-. A Mutual Fund because of
its large corpus allows even a small investor to take the benefit of its investment strategy.

5) Low Costs - Mutual Funds are a relatively less expensive way to invest compared to
directly investing in the capital markets because the benefits of scale in brokerage,
custodial and other fees translate into lower costs for investors.

6) Tax Benefits - The tax benefits that Mutual Funds investors enjoy at the moment is the
treatment of long-term capital gains.

Investors have two options as regards long-term capital gains:

Tax @ 10% on capital gains without indexation (plus surcharge)

Tax @ 20% on capital gains after indexation (plus surcharge)

7) Transparency - The investor gets regular information on the value of his investment
in addition to disclosure on the specific investments made by the fund, the invested in
each class of assets and the fund manager's investment strategy and outlook.

8) Regulated for investor protection - All Mutual Funds in India are registered with
the regulator of the Indian securities industry - the Securities and Exchange
Board of India (SEBI). The funds function within the framework of regulations
designed by SEBI and these regulations are intended to protect the interests of
investors. The operations of the mutual funds are also regularly monitored by
SEBI.
THE ADVANTAGES OF INVESTING IN A MUTUAL FUND ARE:

Diversifications: 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 in 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
 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 improvements, both
quality 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.47,004 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

:
.
 TYPES OF PRODUCTS OFFERED BY MUTUAL FUNDS

EQUITY FUNDS-

Equity funds are those that invest pre-dominantly in equity shares of companies.
There are variety of ways in which an equity portfolio can be created for
investors.

CHOICES FOR EQUITY FUND INVESTORS:

SIMPLE EQUITY FUNDS-

These funds invest a predominant portion of-the funds mobilized in equity related
products. In most cases about 80-90% of their investments are in equity shares.
These funds have the freedom to invest both in primary and secondary markets
for equity. One variation of simple fund is the ELLS {Equity Linked Saving
Schemes). It invests at least 90% of its funds in equity and equity linked
investments in eligible for tax-rebate up to a maximum investment of Rs. 10000
under section 88 of the Income Tax Act and the minimum lock-in period in 3
years, in order to avail the tax rebate.

PRIMARY MARKET FUNDS-

The primary market funds invest in equity shares, but do so only when a primary
market offering is available. The focus is on capturing the opportunity to buy
those companies which issue their equity in primary markets.

SECTORAL FUNDS-

Sectoral funds choose to invest in one or more chosen sectors of the equity
markets. These vary depending on the investor preferences and the return risk
attributes of the sector. For Example during the technology boom in stock
markets, when prices of IT companies was rising sharply, investors who wanted
to participate in this sector could do so, by investing in sectoral funds whose
investment objective was to invest in few choosen sectors such as information
technology, media and telecommunication.

DEBT FUNDS-
 Debt are those that pre-dominantly invest in debt securities. These investors are
also known as Income Funds. The universe of the debt securities is comprises of
long term investments such as bond issues by central and state governments,.
Public sector organizations, public financial institutions and private sector
companies; and short-term instruments such as call money lending; commercial
papers, certificates of deposits; and treasury bills.

SIMPLE DEBT FUNDS-

These funds invests in a portfolio of debt securities chosen from the universe of
debt securities .. The fund manager has the freedom to choose from the universe
of debt securities,Govt. securities and others, as well as long and short term.

LIQUID FUNDS AND MONEY MARKET FUNDS-

These debt funds invest only in instruments with maturities less than a year. The
investment portfolio is very liquid, and enables investors to hold very short
horizons of a day or more. The fund is pre-dominantly invests in money market
instruments and provides investors the returns that returns that are available on
these instruments. In some cases, the funds also provides investors with cheque
writing facility, as an additional facility for liquidity.

GILT FUNDS

A Gilt fund invests only in securities that are issued by the government, and
therefore does not carry any credit risk. These funds invest in short term and long
term securities issued by the government. These funds are preferred by
institutional investors who have to invest only in government paper. Hence the
investor usually does not have to worry about credit risk since Government Debt
is generally credit risk free. HDFC Gilt Fund is an example of such a scheme..

SECTORAL DEBT FUNDS-

These funds invest in a pre-specified subset of the debt markets. For example,
there are debt funds that would invest only in AAA rated debt securities issued by
the corporate sector.

BALANCED FUND-

Fund that invest both in debt and equity markets are called balanced funds. A
typical balanced fund would be almost equally interested in both the markets. The
benefits of diversification get further enhanced, as equity and debt markets have
different risks and return profiles. These funds seek to enhance the income
 potential of their equity component, by bringing in debt. HDFC Balanced Fund
and HDFC Children’s Gift Fund are examples of hybrid schemes.

THE STRUCTURE CONSISTS OF

Sponsor

Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net
worth of the Investment Managed and meet the eligibility criteria prescribed under
the Securities and Exchange Board of India {Mutual Funds} Regulations, 1996. The
Sponsor is not responsible or liable for any loss or shortfall resulting from the
operation of the Schemes beyond the initial contribution made by it towards setting
up of the Mutual Fund.

The Mutual Fund is constituted as a trust in accordance with the provisions of the
Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian
Registration Act, 1908.

Trustee

Trustee is usually a company {corporate body } or Board of Trustees {body of

individuals}. The main responsibility of the Trustee is to safeguard the interest of the
unit holders and inter-alia ensure that the AMC functions in the interest of investors
and in accordance with the Securities and Exchange Board of India {Mutual Funds}
Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the
respective Schemes. At least 2/3 rd directors of the Trustee are independent directors
who are not associated with the Sponsor in any manner.

Asset Management Company {AMC}

The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund.
The AMC is required to be approved by the Securities and Exchange Board of India
{SEBI} to act as an asset management company of the Mutual Fund. At lest 50% of
the directors of the AMC are independent directors who are not associated with the
Sponsor in any manner. The AMC must have a net worth of at least 10 crore at all
times.

Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer
Agent to the Mutual Fund. The Registrar processes the application form, redemption
requests and dispatches account statements to the unit holders. The Registrar and
Transfer agent also handles communications with investors and updates investor
records.
 MAJOR PLAYERS IN MUTUAL FUNDS IUNDUSTY

PRUDENTIAL ICICI MUTUAL FUND

Net worth – as on Mar 31st , 2002 of Rs 69..89 crores.

No. of schemes
Objective- To provide Indian investor mutual fund products 66 to suit a variety of
investment needs and to suit different
No. of schemes including option risks and maturity profiles.
121
Equity Schemes 15
Debt Schemes 59
Short term debt Schemes 17
Equity & Debt 4
Gilt Fund 6
KEY INDICATORS:

As of May 1998 As on June 30,2004

Assets under Management Rs. 160 Crore Rs.16,246,91 Crore
Number of Funds Managed 2 17

SCHEMES-

Equity Funds-

Prudential ICICI-
Growth Plan
Tax Plan
FMCG Plan
Technology Plan
Power Plan
Index Plan
Dynamic Plan
Debt Funds-
Prudential ICICI-
Liquid Plan
Income Plan
Gilt Plan
Monthly Income Fund
Sweep Plan
Gilt Investment-PF
Fixed Maturity Plan
Short term Plan
Flexible Rate Plan
Deposit plus NRI series
Income Multiplier Fund
Funds Balanced-

Prudential ICICI Balanced Fund

Prudential ICICI Child Care Plan

Birla Sun Life AMC

It places a lot of emphasis on quality of management and risk control. This is done
through extensive analysis that includes factory visit and field research. It has largest
team of research analyst in the industry

SCHEMES-

Equity Schemes
Birla Advantage Fund
Birla Divident Fund
Birla Equity Plan
Birla Index Plan
Birla India Opportunities Fund
Birla Midcap Fund
Birla MNC Fund
Birla Tax Plan 98

Debt Schemes
Birla Bond Exchange
Birla Bond Index Fund
Birla Floating Rate Fund
Institutional Plan for BCP
Birla MIP
Birla Cash Plus
Institutional Plan for BBP
Institutional Plan for BIP
Birla FMP

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 Privete Limited. UTI
Asset Management Company presently manages a corpus of over Rs.20000 Crore. The
sponsorers 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.
 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 organisation. 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.

Objectives of ( AMFI)

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 a 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 prog
ramme 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 informations
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.

 FUTURE OF MUTUAL FUND INDUSTRY

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:

Aggregate deposits of Scheduled Com Banks in India (Rs.Crore)

Mar-
Month/Year Mar-98 Mar-00 Mar-01 Mar-02 Mar-03 Sep-04 4-Dec
04
60541 85159 98914 113118 128085 156725
Deposits - 1622579
0 3 1 8 3 1
Change in %
15 14 13 12 - 18 3
over last yr
Source - RBI

Mutual Fund AUM’s Growth

Mar- Mar- Mar- Mar- Mar-
Month/Year Mar-04 Sep-04 4-Dec
98 00 01 02 03
13762 15114
MF AUM's 68984 93717 83131 94017 75306 149300
6 1
Change in % over
26 13 12 25 45 9 1
last yr
Source - AMFI

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.
In India there are only 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 rural 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.
 Investment options available with different risk profiles

Equity Diversified Funds -

Diversification - Mutual Funds reduces the risk by investing in all the sectors. Instead of
putting all your money in one sector or company it's better to invest in various good
performing sectors as you reduces the risk of getting involved in a particular
sector/company which may perform or may not.

Who should invest - This is an ideal category for those who want to participate in stock
market & knows the risk involved in stock market but have few rupees to invest in blue-
chip stocks.

How they performed - Though the short term out look is volatile in long-term equity
diversified funds have outperformed other categories & stock markets will lesser amount
of risk than stock markets. The average returns of equity-diversified funds are 102%.

Performance as on March 25, 2004

Absolute Simple Annualized
Scheme Name NAV 3 Months 1 Year 3 Years Since Inception
HSBC Equity 26.27 2.34 156.87 - 124.24
India Advantage 89.57 5.58 150.63 49.44 104.25
Reliance Growth 71.84 (6.29) 147.24 88.48 73.00
Average - (3.93) 102.19 40.17 33.96
S&P Nifty 1704.45 (5.76) 68.35 15.55 -
BSE Sensex 5414.44 (4.03) 72.21 16.27 -

Category Rating ****

Index Funds -

Follow the index - These are the index-based funds, which move with the likes of Sensex
& Nifty. These fund charges NIL or very low entry/exit loads.

Who should invest - As you have seen in last few months Nifty & Sensex have almost
come down 17% from their tops, it is a good time to invest in Index funds with the
principal of "Investing at the lower levels".

How they performed - Though the short term out look is volatile in long-term Sensex &
Nifty could do well with improving economic conditions. It has been seen that these
Index funds have outperformed the indices making them more attractive.
 Performance as on March 25, 2004
Absolute Simple Annualized
Scheme Name NAV 3 Months 1 Year 3 Years Since Inception
Junior BeES 31.87 (1.59) 154.25 - (65.83)
HDFC Index - Sensex Plus 56.60 (3.50) 74.82 - 44.45
SENSEX Prud ICICI Exchange
54.55 (4.06) 73.77 - -
Traded
Average - (5.19) 70.70 16.62 27.80
S&P Nifty 1704.45 (5.76) 68.35 15.55 -
BSE Sensex 5414.44 (4.03) 72.21 16.27 -

Category Rating - *** -

SECTOR FUND:

Who should invest - You have to be selective while investing in these funds, as you need
to select particular sector, which will perform better in the future. Investing in these funds
carries some amount of risk but also give you more returns.

How they performed - Sector funds have given average returns of 73% for 1 year
period. Auto, Steel, Cement have done well the year '03 & the trend will continue in year
'04 but IT, FMCG sectors are experiencing downward trend due to $ depreciation, price
war in FMCG respectively. Though short-term trend for pharma sector looks down in
long term we look forward to lot more action in the sector, as there exists a long-term,
strong fundamental story backed by immense growth potential for the Indian
pharmaceutical companies.

Performance as on March 25, 2004

Absolute Simple Annualized
Scheme Name NAV 3 Months 1 Year 3 Years Since Inception
Alliance Basic Industries 27.82 1.20 135.99 83.23 42.48
UTI Growth Sector - Petro 18.37 3.77 120.55 76.94 82.88
SBI Magnum Sector – Pharma 15.82 (9.24) 111.78 32.15 15.58
Average - (7.98) 72.60 23.57 16.36
S&P Nifty 1704.45 (5.76) 68.35 15.55 -
BSE Sensex 5414.44 (4.03) 72.21 16.27 -

Category rating - **
Balanced Funds -

Balanced Act - Balanced funds gives you the stability with the potential to grow with the
equity help of equity investments. These funds invest in both Equity & Debt markets.

Who should invest - The balanced funds are for those, who want to enjoy the
appreciation effects of equity market but at the same time like to play safe with less
volatile debt market. In this volatile market it is good to invest in balanced funds as they
carries less risk compare to equity funds.

How they performed - In the last 12 months balanced funds have given descent returns
with the up trend in the equity markets. Balanced funds average returns are 60% for 1-
year period.

Returns as on March 25, 2004

Absolute Simple Annualized
Scheme Name NAV 3 Months 1 Year 3 Years Since Incep.
HDFC Prudence 44.09 (1.63) 81.68 51.24 46.59
SBI Magnum Balanced 12.88 2.07 80.44 21.88 23.21
Franklin India Vista 8.39 (1.06) 77.54 16.83 (3.75)
Average (2.05) 60.54 27.54 18.15
S&P Nifty 1704.45 (5.76) 68.35 15.55 -
Crisil Balanced Index 1409.12 (1.07) 45.22 - -

Category rating - ***

Equity Linked Tax Savings Schemes (ELSS) -

Enjoy tax benefits - These schemes are becoming more popular as traditional ways of
tax saving becoming less interesting with declining interest rates.

Who should invest - Equity Linked Savings Schemes (ELSS) is an ideal way to save on
tax as well as staying invested in equity mutual funds How they performed - In last 1
year these funds have given above average returns to keep you more & more interested in
saving tax as well as counting returns on your investment. The average returns for this
category are 98%.
 Performance as on March 25, 2004
Absolute Simple Annualized
Scheme Name NAV 3 Months 1 Year 3 Years Since Inception
Birla Equity 26.90 (6.11) 137.32 53.56 46.87
Magnum Tax Gain 93 23.03 (3.43) 136.95 26.61 16.66
Tata Tax Saving 23.35 (2.73) 133.08 50.26 60.09
Average - (5.48) 98.30 37.17 51.73
S&P Nifty 1704.45 (5.76) 68.35 15.55 -
BSE Sensex 5414.44 (4.03) 72.21 16.27 -

Category rating - ****

Debt Funds -

Banking on Debt Markets - Debt funds invest in the government securities, Corporate
Bonds, Treasury Bills, etc.

Who should invest - The conservative investors like to go for capital safety.

How they performed - From Last 12 months in the declining interest rate scenario debt
funds remained flat. In 3 years debt funds have given average returns of 12%. As equity
market is looking volatile its better to invest part of your money in these funds.

Performance as on March 25, 2004

Absolute Simple Annualized
Scheme Name NAV 6 Months 1 Year 3 Years Since Inception
Deutsche Premier Bond –
11.17 3.31 13.65 - 9.93
Institutional
Sundaram Select Debt - D A P 12.11 2.83 12.17 - 13.43
HSBC Institutional Income – Invest 11.39 3.04 11.88 - 10.61
Average - 2.33 9.07 13.98 10.79
S&P Nifty 1704.45 25.59 68.35 15.55 -
NSE G Sec Composite Index 247.17 2.64 12.61 16.80 -

Category rating - ***

Gilt Funds -

Government Sec. - Gilt funds invest in government securities.

Who should invest - The investors who like to avail the benefits of capital safety with
government security.

How they performed - From Last 6-12 months Gilt funds have given average returns.
As equity market is looking volatile its better to invest part of your money in these funds
as they provide adequate security to your investments. The average returns for 1-year
period are 10.41% compare to the NSE G Sec Composite Index has given 12.60%
returns.

Performance as on March 25, 2004

Simple
Absolute
Annualized
Since
Scheme Name NAV 6 Months 1 Year 3 Years
Inception
FT India Gilt Investment Plan –
14.88 5.63 19.64 - 21.22
Growth
Chola Gilt Investment – Growth 17.96 6.58 16.98 19.83 19.93
Tata Gilt Securities Fund – Growth 22.25 3.33 15.46 25.46 26.36
Average - 2.56 10.41 16.19 9.58
Crisil Composite Bond Fund Index 1203.29 2.23 9.03 - -
NSE G Sec Composite Index 247.17 2.64 12.61 16.80 -

Category rating - ***

MIP -

Monthly Income - These schemes gives you monthly income.

Who should invest - Those who seek monthly income. In the current scenario where
debt market is very volatile it's better to invest in hybrid funds like MIP with suitable
time horizon for capital appreciation.

How they performed - In Last 6-12 months MIP's have given descent returns compare
to debt funds. The average returns of MIP's stands at 15.68%, which looks good,
compared to income funds.
 Performance as on March 25, 2004
Absolute Simple Annualized
Scheme Name NAV 6 Months 1 Year 3 Years Since Inception
Alliance MIP 19.98 8.48 20.64 17.03 21.22
FT India MIP - Plan A 15.77 7.90 19.20 16.13 16.54
SBI Magnum MIP 13.65 7.40 15.22 - 12.12
Average - 6.19 15.68 14.76 7.31
S&P Nifty 1704.45 25.59 68.35 15.55 -
Crisil MIP Blended Index 1255.07 6.15 17.34 - -

Category rating - ****

STP -

Short-term Plans - These schemes provides short-term saving option with more liquidity
than FD's to park your investments.

with more liquidity than Bank fixed deposit.

How they performed - While savings accounts would give you 3.5% per annum, bank
FD's annually return up to 6.5%, Liquid funds would typically give you more than 5%
and short-term plans 6 to 6.5% per annum. In Last 6-12 months STP's have given descent
returns.

Performance as on March 25, 2004

Absolute Simple Annualized
Scheme Name NAV 6 Months 1 Year 3 Years Since Inception
First India Short Term 11.15 2.77 7.90 - 7.50
Reliance Short Term 10.89 2.81 7.30 - 7.02
Deutsche Short Maturity 10.76 2.64 7.03 - 6.47
Average - 2.41 6.33 9.27 6.42
CRISIL Composite Bond Index 1203.29 2.23 9.03 - -
CRISIL short-term Bond Index 1138.91 2.19 5.68 - -

(***** Out performer **** Good Performer *** Average Performer ** Ok Performer *
Bad Performer)
 AMFI MONTHLY

Mutual Fund Data Of January 2004

(Rs. in Crores)

Table 1:-
Assets Under
Category Sales-All Schemes Redemption
Management
Total
From Total Cumulative Cumulative
From new For As on 31st
Existing For the Apr'03 to Apr'03 to
schemes the Jan 2004
schemes Month Jan'04 Jan'04
Month
No. Amount Amount
A) Bank
1 41 6364 6405 35008 5053 31934 27313
Sponsored (5)
B) Institutions
- - 2804 2804 17802 2061 14620 7499
(3)
C) Private Sector
1 Indian (8) 2 616 10853 11469 115775 10597 104818 21168
2 Foreign (1) - - 2376 2376 16548 2072 14703 3656
3 Joint
Ventures :
- - 12513 12513 114296 10741 100158 34464
Predominantly
Indian(5)
4 Joint
Ventures :
- - 18498 18498 177006 17648 157994 51272
Predominantly
Foreign (9)
Total (1+2+3+4) 2 616 44240 44856 423625 41058 377673 110560
Grand Total
3 657 53408 54065 476435 48172 424227 145372
(A+B+C)
*35370 *248979 *34177 *232367 *121805
Released on 25th February 2004

SALES DURING THE MONTH - January 2004 - TYPE AND CATEGORY WISE
 NEW SCHEMES LAUNCHED (Rs. in Crores)

Table 2:- Open End Close End Assured Returns Total

No. Of No. Of No. Of No. Of
2.1 Amount Amount Amount Amount
Schemes Schemes Schemes Schemes
Income 2 296 - - - - 2 296
Growth 1 361 - - - - 1 361
Balanced - - - - - - - -
Liquid/Money
- - - - - - - -
Market
Gilt - - - - - - - -
ELSS - - - - - - - -
Total 3 657 - - - - 3 657

EXISTING SCHEMES (Rs.in Crores)

Open End Close End Assured Returns Total

2.2 No Of No Of No Of No Of
Amount Amount Amount Amount
Schemes Schemes Schemes Schemes
Income 115 11720 11 ^54 3 - 129 11774
Growth 120 3894 3 - - - 123 3894
Balanced 36 240 2 - - - 38 240
Liquid /
Money 33 36827 - - - - 33 36827
Market
Gilt 31 664 - - - - 31 664
ELSS 19 9 24 - - - 43 9
Total 354 53354 40 54 3 - 397 53408

^Amount mobilized by new plans launched under existing schemes

 TOTAL OF ALL SCHEMES (Rs. in Crores)

Open End Close End Assured Returns Total

2.3 No. Of No. Of No. Of No. Of
Amount Amount Amount Amount
Schemes Schemes Schemes Schemes
Income 117 12016 11 54 3 - 131 12070
Growth 121 4255 3 - - - 124 4255
Balanced 36 240 2 - - - 38 240
Liquid/Money
33 36827 - - - - 33 36827
Market
Gilt 31 664 - - - - 31 664
ELSS 19 9 24 - - - 43 9
Total 357 54011 40 54 3 - 400 54065
Note: The change in number of schemes is because of the maturity and reclassification of
existing schemes by some of the funds.

*New Schemes:
Open End Income: SBI Magnum NRI Investment Fund.

Open End Growth: Kotak Mahindra Global India Scheme & Sundaram Monthly Income Plan.

REDEMPTION / REPURCHASE DURING THE MONTH JANUARY, 2004

Table 3:- Open End Close End Assured return Total

Income 15183 132 - 15315
Growth 2553 3 - 2556
Balanced 222 1 - 223
Liquid / Money
29133 - - 29133
Market
Gilt 899 - - 899
ELSS 18 28 - 46
Total 48008 164 - 48172
 ASSETS UNDER MANAGEMENT AS ON 31st JANUARY, 2004

Table 4:- Open End Close End Assured return Total

Income 68973 242 105 69320
Growth 21651 1492 - 23143
Balanced 3605 799 - 4404
Liquid/Money
40112 - - 40112
Market
Gilt 6617 - - 6617
ELSS 541 1235 - 1776
Total 141499 3768 105 145373

DATA ON FUND OF FUNDS

No of AUM as on 31st Jan
Table 5:- Sales Redemptions
Schemes 2004
Fund of Funds 3 197 119 721

*Note: Fund of Funds is a scheme wherein the assets are invested in the existing schemes of
mutual funds and hence, the figures indicated herein are included in the tables 1 to 4 and 6.
Data on fund of funds is given for information only.

ASSETS UNDER MANAGEMENT AS ON 31st January, 2004

Table6 :-
 Asset Under Management
Sr. No. Name of the Asset Management Company
(Rs. in Crores)
A BANK SPONSORED
BOB Asset Management Co. Ltd. 346
Canbank Investment Management Services Ltd. 1814
PNB Asset Management Co. Ltd. 138
SBI Funds Management Ltd. 5354
UTI Asset Management Company Pvt. Ltd. 19661
Total A 27313

B INSTITUTIONS
GIC Asset Management Co. Ltd. 265
IL & FS Asset Management Co. Ltd. 2580
Jeevan Bima Sahayog Asset Management Co.
4654
Ltd.
Total B 7499

C1 PRIVATE SECTOR
(i) INDIAN
Benchmark Asset Management Co. Pvt. Ltd. 63
Cholamandalam Asset Management Co. Ltd. 1169
Escorts Asset Management Ltd. 123
First India Asset Management Pvt. Ltd. 407
J.M.Capital Management Pvt. Ltd. 4387
Kotak Mahindra Asset Management Co. Ltd. 5173
Reliance Capital Asset Management Ltd. 7028
Sundaram Asset Management Company Ltd. 2818
Total C(i) 21168

C2 (ii) FOREIGN
Principal Asset Management Co. Pvt. Ltd. 3656
Total C(ii) 3656

(iii) JOINT VENTURES-

C3
PREDOMINANTLY INDIAN
Birla Sun Life Asset Management Co. Ltd. 9641
 Credit Capital Asset Management Co. Ltd. 155
DSP Merrill Lynch Fund Managers Ltd. 5475
HDFC Asset Management Co. Ltd. 15320
Tata TD Asset Management Private Ltd. 3873
Total C(iii) 34464

JOINT VENTURES - PREDOMINANTLY

C4
FOREIGN
Alliance Capital Asset Management (India) Pvt.
2306
Ltd.
Deutsche Asset Management (India) Pvt. Ltd. 2476
HSBC Asset Management (India) Private Ltd. 3945
ING Investment Management (India) Pvt. Ltd. 1283
Morgan Stanley Investment Management Pvt.
1352
Ltd.
Prudential ICICI Asset Management Co. Ltd. 15673
Standard Chartered Asset Mgmt Co. Pvt. Ltd. 8021
Sun F & C Asset Management (India) Pvt. Ltd. 222
Templeton Asset Management (India) Pvt. Ltd. 15994
Total C4(iv) 51272
Total C (i + ii +iii+iv) 110560
Total (A + B + C) 145372
 RESEARCH METHODOLOGY

Research Objective

To study about various mutual fund schemes & their utility to investors

To study the reasons behind the success of Mutual funds in India.

To study about the structure & regulatory body of mutual fund in India.

Research Design

Descriptive research design is used in order to find out which product is giving maximum
investment advantage to investors.

Data Collection design

For the purpose of data collection secondary sources like books, Journal, Magazines,
newspapers & data from company record has been used.

Analysis

Mutual fund products are market driven and for a market driven product its designing,
pricing, distribution & promotion assume critical importance. The most important
determinant of the success of any financial product is consumer satisfaction mutual fund
needs to optimize consume satisfaction along with cost minimization in the deregulated
competitive market.
 CONCLUSION

In the past decade Indian Mutual fund industry had seen dramatic improvement both
quality wise as well as quantity-wise. The private sector entry to the fund family raised
the asset under management to Rs. 420 billion in March 1993 and till April 2004 it
reached the height of 1540 billion. It is estimated that by 2010 March end the total assets
of mutual funds will be doubled.

Following are the main reasons behind the growth of mutual funds in India:

No. of foreign Asset Management Companies are in queue to enter the Indian Market like
fidelity investment US based with over $1 trillion assets under management worldwide.

Our saving rate is 23% highest in the world. Only channelizing the savings in mutual
funds sector is required.

As compared to US there are less mutual funds companies in India, therefore, chances of
expansion are more.
 SUGGESTION

There are a few things that I would advise any investor and they are:

You should know what you are buying. For example you cannot buy an equity fund and
especially a tech fund and expect that there would be very little volatility.

You should be clear about the time frame and purpose that you are buying for.

Most importantly, there is a tendency among investors to buy high and sell low. You
cannot be driven by sentiments Importance of systematic investing. Always invest in
smaller lots over a period of time. An initial investor has lost about 45% since inception.
But someone who has invested over a period of time would have averaged well
 BIBLIOGRAPHY

Books

Kothari C.R-1995, “Research Methodology”, 2nd ed. wishwa prakashan

Kumar Ranjit-1995, “Research Methodology”, 2nd ed. sage publication

Pandian Punithavathy- “Security Analysis and Portfolio Management”

Chandra Prasana, 2002 “Investment Analysis and portfolio Management”, 4th ed.

Newspaper

Times of India

Economic Times

Websites

www.nseindia.com

www.reliancemutual.com

www.indiainfoline.com