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CERTIFICATE

This is to certify that the project entitled performance evaluation of equity linked Saving scheme in India is a bonafide record of work done by Amandeep Singh, a student Of M.F.C. This work has never been submitted to any education institution as per good of My knowledge.

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ACKNOWLEDGEMENT

Often words are too inadequate to serve as a mode expression of ones inner feelings, Especially the sense of indebt ness and gratitude to all those who help in Accomplishing the goal one has set before oneself. I shall be failing in my duty if I Dont acknowledge my sincerest gratitude to all those who assisted and guided me in Completing this project report. I acknowledge my indebt ness to my erudite learned and revert guide Mrs. Gourav Bhatia For her valuable guidance, suggestions, constructive criticism and thought provoking Discussions for completion of the risk. It would not have been possible for me to Complete the work without her encouragement and unfailing help. I also want to thank all my respondent who took time for showing a great interest In the subject and extending invaluable help.

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CONTENTS 1. INTRODUCTION MUTUAL FUND Introduction Definition

MUTUAL FUNDS : INTRODUCTION

Mutual Funds are investment institutions set up to manage money pooled in from the public. The advantages of investing in Mutual Funds are the professional expertise they employ coupled with the variations offered on the basis of asset classification and the diversification of the chosen portfolio aimed at optimizing the risk for the required return. The benefits that can be accrued from Mutual Funds are The schemes could be added to the portfolio with online updates for monitoring the performance of your investments in Mutual Funds. The comprehensive search, which gets you the fund matching your criteria. The comparison of various schemes of different Mutual Funds based on the critical and most sought after investment criteria. The analysis of different schemes and the outlook for the same. List of new launches in the market provided continuously.

Basically, Mutual funds are trusts that are formed to mobilize the savings from the people and pool them together to invest within the securities markets. The main advantage of mutual funds is that it is professionally managed. And the general idea is for investors to contribute small amounts into units in the various schemes, which in turn is deployed in the various markets. This way, any investor who is not in a position to directly invest in the markets can take advantage of this route. UTI is the oldest of Indian mutual funds, having entered the arena with the launch of the Unit Scheme - 64 in 1964, hence the alphanumeric name. It was only in 1998 that other public sector banks were allowed to enter into the segment which was followed by a whole range of Asset Management companies including almost all the leading international portfolio managers including Merrill Lynch, Templeton, and Prudential among others.

Like most developed and developing countries the mutual fund cult has been catching on in India. The important reasons for this interesting occurrence are: Mutual funds make it easy and less costly for investors to satisfy their need for capital growth, income and/or income preservation. Mutual fund brings the benefits of diversification and money management to the individual investor, providing an opportunity for financial success that was once available only to a select few.

Understanding Mutual funds is easy as it's such a straightforward concept. A mutual fund is a company that pools the money of many investors, its shareholders to invest in a variety of different securities. Investments may be in stocks, bonds, money market securities or some combination of these. Those securities are professionally & efficiently managed on behalf of the shareholders, and each investor holds a pro rata share of the portfolio -entitled to any profits when the securities are sold, but subject to any losses in value as well. For the individual investor, mutual funds propose the benefit of having someone else manage your investments and diversify your money over many different securities that may not be available or affordable to you otherwise. Today, minimum investment requirements on many funds are low enough that even the smallest investor can get started in mutual funds. A mutual fund, by its very nature, is diversified -- its assets are invested in many

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Different securities. Beyond that, there are many different types of mutual funds with different objectives and levels of growth potential, furthering your odds to diversify.

What is a mutual fund?

A mutual fund is a professionally managed investment company that combines the money of many individuals and invests this pooled money in a wide variety of different securities. It is by pooling the money of many individuals that mutual funds are able to provide the diversification and money management (along with many other advantages) that were once reserved only for the wealthy. Professional money managers take this pool of money and invest it in a wide variety of stocks, bonds, or other securities depending on the investment objective, or goal, of the particular fund. It is the investment objective of the fund that guides the manager in selecting the various securities for the fund. It is the investment objective of the fund that also guides the investor on which funds to invest in. Since different investors have different objectives, there are a number of different kinds of mutual funds, i.e., some funds may provide monthly income while others seek long-term capital appreciation. Mutual funds can be classified according to their investment objective. Some of the classifications include money market funds, growth funds, balanced funds, income funds, and many others. We will discuss the many different types of funds and their characteristics in a later chapter. (See Categories of Mutual Funds.) When you invest in a fund you hope that the value will rise and you can eventually sell your shares for a profit. This is one of the ways you can profit with mutual funds. Another way is through capital gains. When a fund sells a security for a higher price than it originally paid for it, it is known as a capital gain. Most funds distribute their capital gains to shareholders at least annually, some more often. The last way to profit with mutual funds is with dividends or interest. If the fund has invested in bonds or dividend-paying stocks, it must pass the dividends or interest earned on to its shareholders. Like capital gains, this is done at least annually.

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When you invest your money in a mutual fund, you buy shares in that fund. To determine the price of those shares, each day the fund adds up the total value of the securities held in its portfolio. This total is divided by the number of shares outstanding. The resulting figure is known as the Net Asset Value or NAV. To find out the value of your holdings, you simply multiply the number of shares you own by the net asset value. The NAV of most funds is listed in most daily newspapers. The NAV will change daily depending on how well the underlying securities of the fund perform. If the securities held by the fund go up in value so will the value of your shares. As stated above, mutual funds are generally classified according to the investment objective of the fund. They are also classified according to how they are bought and sold. There are open- or closed-end funds and there is load or no-load funds. An open-end fund is a mutual fund that continuously issues new shares as needed and buys them back when investors wish to sell. There is no limit to how many shares an open-end fund can sell. The buy and sell price is based on the net asset value of the fund. The majorities of mutual funds on the market today are open-end funds and are the type we are concerned with in this tutorial. The characteristics of a closed-end fund more closely resemble that of an individual stock. A closed-end fund is a mutual fund that issues a fixed number of shares which are then traded (bought and sold) on a stock exchange or over the counter. Although the underlying value of the securities in a closed-end fund may be, for example, $10.00 per share, they may sell for more or less depending on investors outlook for the future value of the securities. Load funds are simply mutual funds with a sales charge, or load. Load funds are generally sold by stockbrokers, financial planners, or other financial salespeople who charge you a commission every time you buy new shares. Under rules set by the National Association of Securities Dealers (NASD), the maximum charge or load allowed is 8.5% which is deducted from the amount of your investment. On a $1,000 investment, for example, you are really beginning with just $915.00. The difference goes to the salesperson who sold you the shares. This is known as a front-end load. There may also be a fee charged when you redeem, or sell, your shares. This fee, known as a backend load, may be the only charge or it may be in addition to the front-end load. No-load funds are mutual funds with no sales charge. They are generally bought directly from the fund. 100% of your money is invested in shares of the particular fund. Similar to no-load funds are funds known as low-load funds. These are funds with a load of between 1% and 3% and are bought either directly from the fund or through financial salespeople. One other fee to be aware of is the so-called 12b-1 fee (named after the SEC regulation that authorized it). This regulation allows mutual funds to charge up to 1.25% of their net asset value to pay for such things as advertising and marketing expenses. If a fund charges 12b-1 fees (about 40% do) it must be stated in the prospectus. In this tutorial we are only concerned with open-end mutual funds. This author further suggests learning all you can about mutual funds and sticking with no-load or low-load mutual funds. There is no evidence that load funds perform better than no-load funds. Unless you need help in selecting a fund, go with a no-load fund and save the sales charge. Over time that small fee can mean many thousands of dollars to you. Lets look at an example: Lets assume you invest $10,000 in each of two funds, one a no-load fund and the other a load fund with an 8.5% load. Lets further assume both funds earn an identical 15% average annual return. After 5 years, the no-load fund would outperform the load fund by $1,710; after 10 years, $3,439; and after 20 years the no-load fund would outperform the load fund by $13,911 - more than your original total investment! $10,000 invested: 15% average annual total return:

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5 Years 10 Years 20 Years

Load

Difference
1,710 3,439 13,911

20,114 18,404 40,456 37,017 163,665 149,754

You've undoubtedly heard about these investment vehicles called mutual funds, but what exactly are they? Simply stated, mutual funds are like an insurance policy. They are a conglomeration or collection of many different types of securities. When investors come together and want to buy securities as a group, you have a mutual fund. Each investor has a proportional stake in the securities based upon how much money he/she contributed. Mutual funds are a cheap and an easy way for the average person to own several hundred stocks. They've been around for quite a while, too. The first mutual fund was established in Boston well over seventy years ago. Today, there are over 2000 mutual funds. Mutual funds can also be the investment companies that buy and sell securities

DEFINATIONS OF MUTUAL FUND:Mutual Fund Definition: A mutual fund is made up of money that is pooled together by a large number of investors who give their money to a fund manager to invest in a large portfolio of stocks and / or bonds Mutual fund is a kind of trust that manages the pool of money collected from various investors and it is managed by a team of professional fund managers (usually called an Asset Management Company) for a small fee. The investments by the Mutual Funds are made in equities, bonds, debentures, call money etc., depending on the terms of each scheme floated by the Fund. The current value of such investments is now a day is calculated almost on daily basis and the same is reflected in the Net Asset Value (NAV) declared by the funds from time to time. This NAV keeps on changing with the changes in the equity and bond market. Therefore, the investments in Mutual Funds is not risk free, but a good managed Fund can give you regular and higher returns than when you can get from fixed deposits of a bank etc.

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Mutual Funds Definition refers to the meaning of Mutual Fund, which is a fund, managed by an investment company with the financial objective of generating high Rate of Returns. These asset management or investment management companies collects money from the investors and invests those money in different Stocks, Bonds and other financial securities in a diversified manner. Before investing they carry out thorough research and detailed analysis on the market conditions and market trends of stock and bond prices. These things help the fund mangers to speculate properly in the right direction. The investors, who invest their money in the Mutual fund of any Investment Management Company, receive an Equity Position in that particular mutual fund. When after certain period of time, whether long term or short term, the investors sell the Shares of the Mutual Fund, they receive the return according to the market conditions. The investment companies receive profit by allocating people's money in different stocks and bonds according to their Speculation about the Market Trend. Other than some specific mutual funds which carry certain Maturity Term, Investors can generally sell the shares of their mutual funds at any time they want. But, the return will vary according to market value of the stocks and bonds in which that particular mutual fund made investment. But, generally the share holders of mutual fund sell their share when the prices are up and Capital Gain is sure to happen. To get more detailed information on Mutual Funds one is advised to browse through the following links:

CONCEPT OF MUTUAL FUNDS:A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

Mutual Fund Operation Flow Chart

HISTORY OF MUTUAL FUND IN INDIA:

Unit Trust of India (UTI) was the first mutual fund set up in India in the year 1963. In early 1990s, Government
allowed public sector banks and institutions to set up mutual funds. UTI has an extensive marketing network of over 40,000 agents all over the country.

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In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI are to protect the interest of investors in securities and to promote the development of and to regulate the securities market. In 1995, the RBI permitted private sector institutions to set up Money Market Mutual Funds (MMMFs). They can invest in treasury bills, call and notice money, commercial paper, commercial bills accepted/co-accepted by banks, certificates of deposit and dated government securities having unexpired maturity up to one year. As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type

SCOPE OF MUTUAL FUNDS:-

Mutual Funds have grown enormously over the years. In the first age of mutual funds, when the investment management companies started to offer mutual funds, choices were few. Even though people invested their money in mutual funds as these funds offered them diversified investment option for the first time. By investing in these funds they were able to diversify their investment in common stocks, preferred stocks, bonds and other financial securities. At the same time they also enjoyed the advantage of liquidity. With Mutual Funds, they got the scope of easy access to their invested funds on requirement. But, in todays world, Scope of Mutual Funds has become so wide, that people sometimes take long time to decide the mutual fund type, they are going to invest in. Several Investment Management Companies have emerged over the years who offer various types of Mutual Funds, each type carrying unique characteristics and different beneficial features. To understand the broad scope of Mutual Funds we need to discuss the main types of Mutual Funds that are normally offered by the Mutual Companies. The wide choices in Mutual Funds go as the following:

Equity Funds or Stock Funds These types of Mutual Funds generally invest in stocks which are publicly traded. Amount of risk, involved with these funds vary according to different types of Equity Funds. Types of Equity Funds are;

1. Growth Funds-These funds invest in the stocks, which are under valued compared to their worth. As these 2. 3.
stock prices tend to rise in future and carry good growth potential, Growth Funds go for these kinds of stocks. Value Funds-These funds go for long term investment and aims at increase of value over the years. International Equity Funds-These funds invest in the stocks of foreign companies.

4. Global Equity Funds-These funds invest in stocks of both the domestic market and the foreign markets.

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commodities like Gold. Index Funds-These funds reflect the performance of stock market indexes. Bond Funds These funds invest in government bonds and corporate bonds. These Bond Funds offer a steady source of income and in many times these incomes get the advantage of Tax Exemption. Money Market Funds These funds invest in the money market. These funds involve low level of risk and promises comparatively low rate of return. Balanced Fund These funds invest both in Stocks and Bonds and thus offer a well diversified investment portfolio. HISTORY OF MUTUAL FUNDS:History of Mutual Funds has evolved over the years and it is sure to appear as something very interesting for all the investors of the world. In present world, mutual funds have become a main form of investment because of its diversified and liquid features. Not only in the developed world, but in the developing countries also different types of mutual funds are gaining popularity very fast in a tremendous way. But, there was a time when the concepts of Mutual Funds were not present in the economy. There is an ambiguity about the fact that when and where the Mutual Fund Concept was introduced for the first time. According to some historians, the mutual funds were first introduced in Netherlands in 1822. But according to some other belief, the idea of Mutual Fund first came from a Dutch Merchant ling back in 1774. In 1822, that idea was further developed. In 1822, the concept of Investment Diversification was properly incorporated in the mutual funds. In fact, the Investment Diversification is the main attraction of mutual funds as the small investors are also able to allocate their little Funds in a diversified way to lower Risks. After 1822 in Netherlands, the Mutual Funds Concept came in Switzerland in 1849 and thereafter in Scotland in the 1880s. After being popular in Great Britain and France, Mutual fund concept traveled to U.S.A in the 1890s. In 1920s and 1930s, the Mutual Fund popularity reached a new high. There was record investment done in mutual funds. But, before 1920s, the mutual funds were not like the modern day mutual funds. The modern day mutual funds came into existence in 1924, in Boston. Massachusetts Investors Trust introduced the Modern Mutual Funds and the funds were available from 1928. At present this Massachusetts Investors Trust is known as MFS Investment Management Company. After the glorious year of 1928, Mutual fund ideas expanded to different levels and different regulations came for well functioning of the funds. Still today, the funds are evolving and improving in order to offer people much wider choices and better advantages for fulfillment of their various investment needs and financial objectives.

MUTUAL FUND 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 dramatic improvements, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470 bn in March 1993 and till April 2004; it reached the height of 1,540 bn.

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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 Can bank 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

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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.

The major players in the Indian Mutual Fund Industry are: GROWTH IN ASSETS UNDER MANAGEMENT

PERFORMANCE OF MUTUAL FUND 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.

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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 course the lack of transparent rules in the whereabouts 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 donts of mutual funds.

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, Can bank 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 ABN Mutual AMRO Fund Companies Mutual in India 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.

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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 consorters 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 sponsor, 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.

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Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The consorters 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 Limiters 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 sponsor of UTI Mutual Fund is 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, Franklin 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

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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 Escorts 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 sponsored 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. Can bank Mutual Fund

Can bank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Can bank 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.

17

FUTURE OF MUTUAL FUND 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: Aggregate deposits of Scheduled Com Banks in India (Rs.Crore) Month/Y ear Deposits Change in % over last yr Source - RBI Mutual Fund AUMs Growth Month/Ye ar MF AUM's Change in % over last yr Source Mar-98 68984 Mar-00 93717 Mar-01 83131 Mar-02 94017 Mar-03 75306 Mar-04 137626 Sep-04 151141 4-Dec 149300 Mar-98 605410 Mar-00 851593 Mar-01 989141 Mar-02 1131188 Mar-03 1280853 Mar-04 Sep-04 1567251 4-Dec 1622579

15

14

13

12

18

26

13 -

12

25

45 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 que 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.

18
'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.

ORGNISATION OF MUTUAL FUND IN INDIA.

There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:

Organization of a Mutual Fund

GROWTH OF MUTUAL FUNDS:Growth of Mutual Funds has been gradual and it took really long years to evolve the modern day mutual funds. Mutual Funds emerged for the first time in Netherlands in the 18th century. Then it got introduced to Switzerland, then Scotland and then to United States in the 19th century. The very idea of mutual funds came from the urge to deliver a form of Diversified Investment Solution. Over the years the idea developed and people received more and more choices of Diversified Investment Portfolio through the mutual funds. When in 1924, Massachusetts Investors Trust first introduced mutual funds in U.S; they found it difficult to gain the trust of the investors. It was very natural that the people took time to adapt to a new investment idea. There emerged some confusion regarding the Taxation of Investment Income from mutual funds as there was no Regulation or legislation. Laws started to came in existence from 1940s. The the result was not immediate. The Mutual Fund Concept

19
achieved warm reception only in the middle of 1950s. By the end of fifties and in first half of 1960s mutual fund investment triggered up tremendously. Monetary Funds benefited a lot from the mutual funds. Earlier investors was used to invest directly in the stock market and many times suffered from loss due to wrong Speculation. But, with the mutual funds which were handled by efficient Fund Managers, Investment Risks was lowered by a great extent. The diversified investment structure of mutual funds also diversified risk and this contributed tremendously in the Growth of Mutual Funds. Over the years not only the new types of mutual funds emerged, the way, in which mutual funds were sold also changed. But, the Growth of Mutual Funds has not stopped. It is continuing to evolve to a better future, where investors will get newer opportunities.

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

Transparency: Funds provide investors with updated information pertaining to the markets and the schemes. All material facts are disclosed to investors as required by the regulator.

20 Flexibility: Investors also benefit from the convenience and flexibility offered by Mutual Funds. Investors can switch their holdings from a debt scheme to an equity scheme and vice-versa. Option of systematic (at regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes. Choice of schemes: Mutual funds provide investors with various schemes with different investment objectives. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own financial goals. These schemes further have different plans/options.

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

BENEFITS OF MUTUAL FUNDS:You get expert guidance.

A mutual fund, like your SBI mutual fund, has professionals whose constant job is to study the financial market for you. They research and analyze market trends and prospects of various sectors and company something that is difficult for you to do alone. So, when it comes to making the right investment decision, you can be sure that your money is being invested by experts.

Reduced Risk, optimum Returns.

By nature, a mutual fund is multiple investment opportunities bundled into one. Normally on investment from a single security depend on how well or how poorly the company fares. But with mutual funds your money is

21
invested across different companies or sectors. By doing this your investment return get averaged. This means, even it two investments go bad other investments may average your returns.

You can have money when you want it.

If you invest in an open-ended mutual fund, you can claim your money at net asset value (NAV) related prices from the mutual fund itself on any business day. On the other hand, if you invest in a close-ended scheme, you can sell your units at the prevailing market rate on the stock exchange if it is listed. But if the scheme is not listed, in order to provide and exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices.

It is affordable investment option

Since you invest with several other invertors, you bear your lesser inverting costs then you would to if you did it alone. So, as compared to investing directly in the capital market, mutual funds cost less.

The complete process is transparent.

Unlike some investments like property, you get to know the value of your investment on a daily basis in addition to it, you can also know the investment that have been made by your scheme, the proportion allocate to different assets and the fund managers investment strategy on a periodic basis.

Returns from mutual funds are tax-free

Currently, earnings from equity mutual funds in the form of dividends are tax-free. Also income generated from investments in an equity scheme for more than a year is tax-free (that is no long term capital gain)

It is regulated by SEBI
All mutual funds are registered with securities exchange board of India (SEBI) and function within the provisions and regulations that interests of invertors. SEBI not only regulates the working of stock exchange and their intermediaries but also prohibits fraudulent and unfair trade practices relating to securities markets and insider trading in securities, with the imposition of monetary penalties on erring market intermediaries.

MUTUAL FUNDS INVESTMENT:Mutual Funds Investment has become a subject of great importance in the present context, especially when all the investors are keen to diversify their investment to maintain a balance between Investment Return and Investment Risk. Mutual Funds Investment not only provides the customers with their much desired diversified investment portfolio, but also offers the benefit of high liquidity. Investors are free to sell their mutual fund shares any time to get the back the amount that was invested in the mutual funds. It is another issue that any time sell of mutual fund shares may result in poor rate of return. For gaining the Diversified Investment Solution and the liquidity advantage, any person needs to invest in Mutual Funds. But, before investing their hard earned money one needs to carry out sincere research on the performance of those mutual funds, he is considering to invest in. The things that one needs to consider before deciding on any particular mutual fund are the following: Performance of the Fund and the Rate of Returns

22
It is perhaps needless to say that one requires to be well informed about the Fund Performance before investing. Excellent Performance not only means high Rate of Return, it also needs the consistency. The funds which have been proved of being able to generate satisfactory rate of return consistently over a period can be considered for investing.

Investment Psychology of the Mutual Fund

Before taking final investment decision one needs to to know about the Investment Psychology of the mutual fund. The investment psychology of the fund has to match with the Financial Objective of the customer. A track record of excellent performance and high rate of returns cannot be the only yard stick to judge whether that fund is suitable for the particular investor or not. Risk Adjustment It is also very important to check that how the funds adjusted with risk over the years. Fund Management Management of funds is the ultimate thing and it in many ways depend on the efficiency of the Fund Mangers who actually allocates asset by making Speculation based on the market research and market analysis. Mutual Fund Fees Investors should be well prepared about the fees and charges associated with Mutual Funds. There are Loaded Funds and No Load Funds. Loaded Funds are those mutual funds which involve Sales Charges and other fees and No Load Funds are those which carry no charges.

OPPORTUNITIES OF MUTUAL FUNDS:Opportunities of Mutual Funds are tremendous especially when investment is concerned. For any individual who intends to allocate his assets into proper forms of investment and want to diversify his Investment Portfolio as well as the risks, Mutual Funds can be proved as the biggest opportunity. Investor gets a lot of advantages with the Mutual Fund Investment. Firstly, they are not required to carry on intensive research and detailed analysis on Stock Market and Bond Market. This work is done by the Fund Mangers of the Investment Management Company on behalf of the investors. In fact, the professional Fund Managers who handle the mutual funds of any particular company are able to speculate the market trend more correctly than any common individual. Good Speculation about the trends of stock prices and bond prices leads to right allocation of funds in the right stocks and bonds resulting in good Rate of Returns. Investors also get the advantage of high Liquidity of the mutual funds. This means the investors can enjoy easy access to the funds invested in the mutual funds whenever they require the money. When the investors invest in any mutual fund, they are given some equity position in that fund. The investors can any time sell their mutual fund shares to get back the money invested in mutual funds. The only thing is that the Rate of Return that they will get may not be favorable as the return depends on the present market condition. The greatest opportunity that the mutual funds offer is the opportunity of diversifying their investments. Investment Diversification actually diversifies the Risk associated with investment. This is because, if at a time, if prices of some stocks are declining, deceasing the Value of Investment, prices of some other stocks and bonds may tend to rise and in this way the loss of the mutual fund is offset by the strength of the stocks whose prices are rising. As all the mutual funds diversify their investments in various common stocks, preferred stocks and different bonds, the risk

23
to be borne by the investors are well diversified and in other terms lowered.

CHALLENGES OF MUTUAL FUNDS:There are many Challenges Facing Mutual Funds which is of prime concern to the people who have an investment spree. People find mutual fund investment so much interesting because they think they can gain high rate of return by diversifying their investment and risk. But, in reality this scope of high rate of returns is just one side of the coin. On the other side, there is the harsh reality of highly Fluctuating Rate of Returns. Though there are other disadvantages also, this concern of fluctuating returns is most possibly the greatest challenge faced by the mutual fund. The Issue of Fluctuating Returns In spite of being a diversified investment solution, mutual funds investment in no way guarantees any return. If the market prices of major shares and bonds fall, then the value of mutual fund shares are sure to go down, no matter how diversified the mutual fund portfolio be. It can be said that mutual fund investment is somewhat lower risky than Direct Investment in stocks. But, every time a person invests in mutual fund, he unavoidably carries the risk of losing money.

The Other Challenges

Diversification or Over Diversification- In order to diversify the investment, many times the mutual fund companies get involved in Over Diversification. The risk of holding a single financial security is removed by diversification. But, in case of over diversification, investors diversify so much that many time they end up with investing in funds that are highly related and thus the benefit of risk diversification is ruled out. Taxes-Every year, most of the mutual funds sell substantial amount of their holdings. If they earn profit by this sell, then the investors receive the Profit Income. For most of the mutual funds, the investors are bound to pay taxes on these incomes, even if they reinvest the income. Costs- Most of the mutual funds charge Shareholder Fees and Fund Operating Fees from the investors. In the year, in which mutual fund fails to make profit and the investors get no return, these fees only blow up the losses.

MUTUAL FUND VS INDIVIDUAL STOCK:

Mutual Funds Vs Individual Stocks has always been a debatable issue. While some like to play safe with mutual fund investment, some others prefer investment in individual stocks. When any investor invests in any mutual fund all that he is required to do is pay the Shareholder Fees and Fund Operating Fees. The whole work of managing funds, starting from Market Research and analysis of stock and bond price and recent market trends up to final Allocation of Funds or assets in various stocks and bonds is completely done by the Professional Fund Managers employed by the Investment Management Company. In this case, the fund management

24
remains in the hands of the fund managers of the mutual fund company. But, in case of Direct Investment in individual stocks, the total control remains in the hands of the individual investors. But, most of the people agree about the fact, that mutual funds hold some important benefits over and above Individual Stocks. So, to get the actual depiction of Mutual Funds Vs Individual Stocks, we will discuss the advantages put forwarded by Mutual Funds. Diversification The greatest advantage the mutual funds hold over individual stocks is the characteristic of Diversification. The core concept of mutual funds is to Diversify Investment in order to lower the risk of investing. As the mutual funds allocate their funds into stocks of different companies and in different bonds, the risk is diversified. If at a time, market price of some particular stocks fall, the loss of the mutual fund may be offset by the rise in price of some other stocks held by that particular mutual fund. But, individual stocks do not hold this advantage of diversification. If the prices of the stocks go down in the market, the investor is sure to lose money. Professional Management and Efficiency As mutual funds are managed by the professional fund managers who are specialized in their field, they carry out the research and analysis work much more efficiently and naturally speculate more correctly about the market trends of stock prices and bond prices. In the other case, Individual Stock investment is done directly by the investors who are in most cases common men who don't have much knowledge about the stock and bond markets. Other than this as the mutual funds get a lot of money from people to invest in, they can reap the benefit of Economies of Scale with the large sum of invested money.

AVERAGE ANNUAL RETURN:

Average Annual Return refers to the return of a mutual fund which is measured as an average after deducting the mutual fund's operating Expense Ratio. These expenses do not contain the Sales Charges of the mutual fund. In many cases of Mutual Fund Investment, the investors are required to pay Transaction Brokerage Commissions for their Investment Portfolio. But, these commissions are not counted for at the time calculating the Average Annual Return. This Average Annual Return is actually a figure which is represented in percentage and is used to reveal a particular mutual fund's historical return. Generally, Average Annual Return of a mutual fund shows the average returns of the fund over last three years or five years or ten years. A fund can also calculate the Average Annual Return on the basis of its returns for the whole life of the fund. It is a clear fact that Average Annual Return is not a compounded rate of return. Annual Returns of a fixed number of years is added and divided by the number of years, to get the figure of Average Annual Return and when the returns are considered, the Expense Ratios are subtracted to get the net value of returns. This Average Annual Return calculation is necessary to get a clear idea about the Reinvested Dividend. Capital Gain Distribution is also related with Average Annual Return. The figure of Average Annual Return is not only important for the mutual Fund Managers and the investment company but also for the individual and institutional investors. The investors can get an idea about the performance of a particular mutual fund in the long term, by studying the Average Annual Return figures of the mutual fund over different periods. It can be mentioned here

25
that though the Average Annual Return figure is really important, the investors should also check out the annual returns of the mutual fund that they are considering to invest in. This is because; an impressive Average Annual Return does not necessarily imply consistency of good annual returns.

AUTOMATIC INVESTMENT PLAN:

Automatic investment plan is an investment mechanism through which investors will be able to invest a small amount of money at regular intervals. It can alternatively called as systematic investment plan. Normally funds are automatically invested in a retirement or mutual fund account. This is done by way of deduction from the savings or checking account. Automatic investment plan also enables the investors to transfer a set of their amount electronically to another account at an assigned number of occurrences. Automatic investment plan can be regarded as an effective systematic mechanism as because these investments are of manageable size and investors will be able to save their money as well. Some examples of automatic investment plan Examples of automatic investment plan can be mutual fund contribution, stock, automatic withdrawal plan etc. Some effective guidelines as recommended by economists It is recommended that the investors should invest at a regular interval and this will protect their accounts from any sort of market fluctuations. Investors should purchase maximum shares when they observe that the prices are going low and they should purchase the minimum shares if it goes high. But the best way is to purchase shares when investors think them most capable. Investors should analyze a lot before going for any investment and should opt for those, which have a uniform track record and benchmarks. This way investors will be able to instill a method of practice to save their investments. The truth It has been observed that inflation increases the prices of commodities and reduce the value of money. That is why investors should choose the best investment type to avoid the effect of inflation. In the long run the average price per unit can be lesser than the average market price of the fund and this will enable the investors to buy a higher amount of units at an average market price. This will improve the volatility.

AUTOMATIC REINVESTMENT PLAN:

AUTO Automatic reinvestment plan is a mechanism normally used by mutual funds that enable investors to buy additional shares using their dividends or distribution out of their capital gains. Automatic reinvestment plan also enable the one to electronically transfer his amount from one account to another. It can alternatively be defined as an agreement through which dividends from mutual fund or capital gains are utilized to buy additional fund shares. Working principle

26
Individual can mechanically deposit his amount into his checking account through this automatic reinvestment plan mechanism. In this systematic plan, the fund manager reinvest the amount earned by the investor into his mutual fund account. Investors can get the added advantage by adopting this mechanism, as this will enable him to acquire more shares and at the same time they can avoid excess taxes. In automatic reinvestment plan mechanism, the capital gains produced by the fund can be utilized to mechanically buy more fund shares rather than dispensing these to the investors in form of cash. Advantage from investors point of view This automatic reinvestment plan enables the investors to acquire more investment gains, as after some period of time; the extra value produced by this automatic reinvestment can produce a significant amount. Advantage from company's point of view This automatic reinvestment plan can make a smaller company to a larger one, as through this mechanism, any capital and dividends made from the initial investments can enable the company to buy more shares in the fund and it is a continuing process. Advice by experts Investors should at first look at the prospectus and go through that section where there are matters about automatic reinvestment plan. Secondly, they should confirm the matter that their mutual fund is utilizing this automatic reinvestment facility. They can consult with the fund manager for further clarification. Investors should also discuss with the fund manager about tax liabilities etc.

ASSETS UNDER MANAGEMENT:

What Does Assets Under Management - AUM Mean? The market value of assets that an investment company manages on behalf of investors. Assets under management (AUM) are looked at as a measure of success against the competition and consist of growth/decline due to both capital appreciation/losses and new money inflow/outflow.

Investopedia explains Assets under Management - AUM There are widely differing views on what "assets under management" refers to. Some financial institutions include bank deposits, mutual funds and institutional money in their calculations; others limit it to funds under discretionary management, where the client delegates responsibility to the company.

What It Is: Assets under management (AUM) refers to the total market value of investments managed by a mutual fund, money management firm, hedge fund, portfolio manager, or other financial services company.

27

How It Works/Example: AUM generally changes according to the flow of money into and out of a particular fund or company. It also fluctuates based on changes in the value of a fund or company's underlying investments. Why It Matters: The CFA Institute, formerly known as the Association for Investment Management Research, has established ethical standards that asset management companies should comply with when disclosing AUM and related information. These standards, called the Global Investment Performance Standards (GIPS), require management companies to, among other things, include the following in their AUM calculation: -- Discretionary and nondiscretionary portfolios -- Investments controlled by a third party on behalf of the asset management company The SEC also provides guidance, defining AUM as the sum value of securities portfolios that receive "continuous and regular supervisory or management services." However, these guidelines still leave room for interpretation on what may be included in AUM, and there are at least two important reasons why investors should be sure to understand an asset manager's method. First, investors are entitled to fair and transparent disclosure of an asset manager's true performance over time. Because many asset management companies compare the size of their AUM with competitors as a measure of success, accurate disclosure is especially important for accurately evaluating the money brought in by an asset manager. Second, many asset management companies charge management fees that are equal to a fixed percentage of AUM. This arrangement often leads to improved financial performance when AUM levels are rising, and also motivates the asset management company to maximize AUM.

IN OTHER TERMS AUM:

Assets under management or AUM are a type of financial service which is used to estimate and approximate the money involved in an investment. Most of the financial services establishments utilize this technique to measure their success rate. Financial establishments normally use this assets under management service to judge their the amount of money they are managing through investment management, money management and mutual funds. Financial companies compare their success rate with other financial establishments and while doing this they use assets under management instead of revenue.

28
Factors behind asset under management The prime factors responsible behind this policy of assets under management are foreign exchange movements, structural effects of the company, market performance gains / losses, Net New Assets (NNA) etc. Out of these factors, the most effective one is NNA or Net New Asset. NNA is the amount of money come from any new investment by a client. Investors prefer to use this NNA for its user effectiveness. Investors sometime prefer to calculate the NNA growth, which is a demonstration showing the relationship of NNA with the previous AUM balance. NNA growth is alternatively defined as organic growth. Normally the analyst uses these assets under management philosophy to ascertain investment ratings. Market performance gains or losses are determined by measuring the performance level in accordance with the improvement or declination of stock in a market. Alternative definition of asset under management Asset under management can alternatively be defined as the overall value of the assets as ascertained by the manager of hedge fund, mutual fund or any portfolio manager. In general it can be said that assets under management is the market value of assets which are managed by any financial establishment on behalf of investors. Assets under management can be interpreted differently by some financial establishments. They sometimes use mutual funds or bank deposits while measuring the value of the assets. Some other organizations use this philosophy of assets under management, when their clients assigns this responsibilities to them.

TYPES OF MUTUAL FUNDS:

Structural based scheme Objective based scheme 1. Structure based scheme.

Mutual funds can be broadly classified into three categories namely, Open-ended Funds and Close-ended Funds and interval. Open-ended Funds The concept of these funds is that the investors are free to enter and exit the scheme at any point of time during the fund period. The investor can purchase/ sell units of mutual funds from/ through the mutual fund trust. The price at which the units are purchased/ sold depends on the Net Asset Value (NAV) of the fund at that point of time as specified by the funds. The NAV of the fund is the current market value of their investments. Besides the Net Asset Value, certain funds take an additional charge from the investors in the form of entry/ exit loads. Some examples of open-ended funds are
Alliance'95 (D)

29
Birla Advantage Fund GIC Growth Plus II

Close-Ended Funds In the case of Close-Ended Funds, the investors have to lock their funds with the trust for a particular period of time as specified by the terms of the offer. The main problem for the investor is that they cannot move in/out of the fund freely. In the case of Close-Ended schemes the prices of the units are calculated in the same manner as in the case of open-ended Schemes. However these schemes do not charge an entry/ exit load as in the case of openended schemes. Interval funds
Interval scheme are a combination of open-ended and close-ended scheme. These schemes remain open for sale and repurchase only during a specified period.

2 Objective based schemes

I. II. III. IV. V. VI. VII. VIII. Growth scheme Income scheme Balanced scheme Liquid scheme Gilt fund Taw saving scheme Index funds Sector specific funds

Growth scheme
Growth scheme are designed to provide optimum return through appreciation over medium to long term. A major part of their funds are invested in equities, so, though there could be a decline in their value in the short-term these schemes deliver results in the long run. It is deal for those in their prime earning years. SBI mutual funds magnum equity fund is a growth scheme.

Income schemes
If you looking for regular and safety returns go for income schemes. These schemes generally invest in foxed income securities such as bonds and corporate debentures. Their returns may not be as attractive as growth schemes but they are steady and les risky as compared to equity schemes. If you have retired or need capital stability and income to supplement your current earning opt for an income scheme. SBI mutual fund has the magnum income fund.

Balanced schemes
Balanced funds give you the best of growth and income schemes. A balanced fund invests both of equity and fixed income securities. Their returns are generally less volatile as compared to pure equity funds. SBI mutual funds magnum balanced fund gives investors a combination of regular income with moderate growth.

30 Liquid schemes
Liquid schemes are known as money market schemes. These schemes generally invest in safer short-term instruments such as treasury bills, certificate of deposits, commercial paper and government securities. It is a good idea to invest your surplus funds for short period in liquid schemes. SBI mutual funds magnum Instacash fund is a liquid scheme.

Gilt funds
It you are among the safe players, invest in a gilt fund. These funds invest exclusively in government securities which have zero credit risk. The NAV of these schemes are determined by changes in interest rates and other economic factors as is the case with income or debt oriented schemes. SBI mutual fund has the magnum gilt fund.

Tax saving schemes

If you are investing because you want to save tax, go for these schemes. They offer deduction from gross total income to the invertors, at present, under 80c of the income tax act. The investment made to any equity linked saving scheme ( ELSS) are eligible for deduction up to 1,00,000 every financial year. Tax saving schemes is growth oriented and invests predominantly in equities. For investors in saving tax SBI fund has the magnum tax gain fund.

Index funds
Index funds replicate the portfolio of a particular index such as the BSE sensitive index, S&P NSE 50 index (NIFTY), etc. these schemes invest in the securities in the same weightage comprising of an index, SBI mutual fund has the magnum index fund which replicates the portfolio of S&P NSE index (NIFTY)

Sector specific funds

Sector specific funds take advantage of the boom or expected upturn in a particular industry or sector by investing in them. So if software or pharmaceuticals is expected to do well, you have funds that invest in the stocks of only these sectors. The returns in these funds are dependent on the performance of the respective sectors or industry. While these funds may give optimized returns, they are riskier as compared to diversified equity funds that invest across different sectors, SBI mutual fund has several sector specific funds under are magnum sector funds umbrella.

CLASSIFICATION OF MUTUAL FUNDS:Mutual Funds can be segregated based on their functions. They are classified as.
Equity Funds. Bond Funds.

31
Balanced Funds. Gilt Funds. Money-Market Funds. Tax Saving funds. Equity Linked Savings Schemes (ELSS), etc.

The implication is that these schemes will operate based on their specific classification. A pure equity fund will invest a majority of their funds in the equity market. Similarly a pure Bond Fund will invest the majority of their funds in the Bond Market. Hence it is important for the investor to identify his requirements and then select a mutual fund that best suits their preferences. For instance, an individual with a reasonably high net worth will be more interested in investments which will help reduce his tax burden. Hence he may opt for the tax-saving schemes. However these schemes may generate comparatively lesser returns. If the person is a risk-taker and at the same time he wants to save on taxes, in such a situation he can invest in ELSS schemes.

TOTAL RETURN:
How can you tell if a mutual fund is a good mutual fund? One of the best indicators is to check its total return. Obviously, if mutual fund is giving you a good total return, it is one that has proved itself to be valuable to you. Total return includes everything--dividends, capital gains, interest, etc. It is expressed as a percentage of the original net asset value. Assuming that you have re-invested your distributions (see Distributions), then figuring out yield is not that complicated. (Year-end # of shares * Year-end Net asset value) - (# of shares you owned at the beginning of the year * Beginning Net asset value) * 100 divided by (beginning # of shares * Beginning Net asset value)

EVALUATION OF MUTUAL FUND INDUSRTY:

Basically four evaluation of mutual fund in India. First evaluation: In this paper the performance evaluation of Indian mutual funds in a bear market is carried out through relative performance index, risk-return analysis, Treynor's ratio, Sharp's ratio, Sharp's measure, Jensen's measure, and Fama's measure. The data used is monthly closing NAVs. The source of data is website of Association of Mutual Funds in India (AMFI). Study period is September 98-April 02 (bear period). We started with a sample of 269 open ended schemes (out of total schemes of 433) for computing relative performance index. Then after excluding the funds whose returns are less than risk-free returns, 58 schemes were used for further analysis. Mean monthly (logarithmic) return and risk of the sample mutual fund schemes during the period were 0.59% and 7.10%, respectively, compared to similar statistics of 0.14% and 8.57% for market portfolio. The results of performance measures suggest that most of the mutual fund schemes in the sample of 58 were able to satisfy investor's expectations by giving excess returns over expected returns based on both premium for systematic risk and total risk

32

Second evaluation: The study used sample of public-sector sponsored & private-sector sponsored mutual funds of varied net assets to investigate the differences in characteristics of assets held, portfolio diversification, and variable effects of diversification on investment performance for the period May, 2002 to May, 2005. The study found that public-sector sponsored funds do not differ significantly from private-sector sponsored funds in terms of mean returns%. However, there is a significant difference between public-sector sponsored mutual funds and privatesector sponsored mutual funds in terms of average standard deviation, average variance and average coefficient of variation (COV). The study also found that there is a statistical difference between sponsorship classes in terms of e SDAR (excess standard deviation adjusted returns) as a performance measure. When residual variance (RV) is used as the measure of mutual fund portfolio diversification characteristic, there is a statistical difference between public-sector sponsored mutual funds and private-sector sponsored mutual funds for the study period. The model built on testing the impact of diversification on fund performance and found a statistical difference among sponsorship classes when residual variance is used as a measure of portfolio diversification and excess standard deviation adjusted returns as a performance measure. RV, however, has a direct impact on Sharpe fund performance measure. Third evaluation: The assets managed by India's mutual funds have shown impressive growth, and had totaled 3.3 trillion rupees (Rs 3.3 trillion) as of the end of March 2007. India's middle class, who are prospective investors in mutual funds, has been growing, and we expect to see further growth in the mutual fund market moving forward. In this paper, we first provide an overview of the assets managed within India's mutual fund market, both now and in the past, and of the legal framework for mutual funds, and then discuss the current situation and recent trends in financial products, distribution channels and asset management companies

Fourth evaluation: December 18, 2006. In this paper, an attempt has been made to examine the components and sources of investment performance in order to attribute it to specific activities of Indian fund managers. It also attempts to identify a part of observed return which is due to the ability to pick up the best securities at given level of risk. For this purpose, Fama's methodology is adopted here. The study covers the period between April 1999 and March 2003 and evaluates the performance of mutual funds based on 113 selected schemes having exposure more than 90% of corpus to equity stocks of 25 fund houses. The empirical results reported here reveal the fact that the mutual funds were not able to compensate the investors for the additional risk that they have taken by investing in the mutual funds. The study concludes that the influence of market factor was more severe during negative performance of the funds while the impact selectivity skills of fund managers was more than the other factors on the fund performance in times of generating positive return by the funds. It can also be observed from the study that selectivity, expected market risk and market return factors have shown closer correlation with the fund return.

SBI MUTUAL FUNDS IN INDIA:SBI Mutual Funds in India has offered a direction to the investment of Indians by piloting it judiciously. SBI Mutual has been instrumental in offering various investment schemes and options to investors in India and thus multiplying their investments. Mutual Funds in India have been responsible to bring forth good development index in Investment Banking. The State Bank of India has pioneered Mutual Funds Investing in India by offering Asset Management Funds, IPO Mutual Funds, Principal Mutual Funds and other Growth Funds. When an attempt is made to recognize the top 10 Mutual Funds in India, SBI Mutual Funds possess a commendable position. Experts claim that with the Indian economy growing at an unprecedented rate, it is a very opportune time to invest in Mutual Funds in India. SBI Mutual Fund is a way of collective or Mutual Investment in by collecting money from various Investors to invest money in the securities like, Bonds, Stock or other Sector Bonds. The reason why the SBI Mutual Funds India is considered the Best Mutual Funds in India is its NAV-Net Asset

33
Value. SBI Mutual Fund NAV- Net Asset Value implies the current value in market terms of the present invested Fund, that is calculates at the end of the transacting period. However, the concept of Turnover implies the percentage of net asset value of the SBI Mutual Funds at the end of the year. Financial analysts claim that the SBI Mutual Funds Index has been very encouraging and investors with ambitious Mutual Funds Portfolio have been highly benefited in the end. Indiahousing.com offers an exhaustive database on the State Bank of India Mutual Fund as it is one of the Best Mutual Funds Companies in India. However, it has to be noted that in Mutual Funds and Growth Funds, speculation plays a very vital role thus making it vulnerable to market risks. Moreover, it is always advisable to have a clear understanding about the Mutual Funds Definition, SBI Systematic Investment Plan (SIP) and performance at a given point of time. Below is the link of SBI Mutual Funds India that can be accessed to gain SBI Mutual Funds information. SBI MUTUAL FUND is India's largest bank sponsored mutual fund with an investor base of over 3 million. SBI Mutual Fund is a joint venture between the State Bank of India, India's largest banking enterprise and Society General Asset Management of France, one of the world's leading fund management companies. 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. Presently, SBI Mutual Fund manages over Rs. 17000 crores of assets. The fund has a network of 100 collection branches, 26 investor service centers, 28 investor service desks and 40 district organizers.

Here is a list of Mutual Funds of SBI which includes Equity Funds, Debt Funds and Balanced Funds. Latest NAV Scheme Name
SBI Magnum Income Fund-Bonus SBI Magnum Income Fund-Dividend SBI Magnum Income Fund-Growth SBI Magnum Income Plus Fund - Investment Plan (D) SBI Magnum Income Plus Fund - Investment Plan (G) SBI Magnum Income Plus Fund - Savings Plan (D) SBI Magnum Income Plus Fund - Savings Plan (G) SBI Magnum Monthly Income Plan-Dividend-Annually SBI Magnum Monthly Income Plan-Dividend-Monthly SBI Magnum Monthly Income Plan-Dividend-Quaterly SBI Magnum Monthly Income Plan - Growth Magnum Equity Fund -Dividend Magnum Equity Fund- Growth

NAV (Net Asset Value)

Date

13.2038 24-Jul-2009 10.4741 24-Jul-2009 21.7984 24-Jul-2009 10.8299 24-Jul-2009 14.8622 24-Jul-2009 10.2087 24-Jul-2009 10.5512 24-Jul-2009 10.9762 24-Jul-2009 10.5256 24-Jul-2009 10.2073 24-Jul-2009 18.1453 24-Jul-2009 29.40 24-Jul-2009 33.29 24-Jul-2009

34
SBI Arbitrage Opportunities Fund - Div SBI Arbitrage Opportunities Fund - Gr SBI BLUE CHIP FUND-DIVIDEND SBI BLUE CHIP FUND-GROWTH SBI Magnum Children Benefit Plan- Holding Held for <= 1 Year SBI Magnum COMMA Fund - Dividend SBI Magnum COMMA Fund - Growth SBI Magnum Index Fund - Dividend SBI Magnum Index Fund - Growth SBI Magnum MIDCAP FUND - DIVIDEND SBI Magnum MIDCAP FUND - GROWTH SBI Magnum Multicap Fund - Dividend Option SBI Magnum Multicap Fund - Growth Option SBI Magnum Multiplier Plus Scheme - 93 -Dividend SBI Magnum Multiplier Plus Scheme - 93 -Growth SBI MAGNUM NRI FLEXIASSET PLAN-DIVIDEND SBI MAGNUM NRI FLEXIASSET PLAN-GROWTH SBI MAGNUM GLOBAL FUND 94 - DIVIDEND SBI MAGNUM GLOBAL FUND 94 - GROWTH SBI MSFU CONTRA-DIVIDEND SBI MSFU CONTRA-GROWTH SBI MSFU EMERGING BUSINESSES FUND - DIVIDEND SBI MSFU EMERGING BUSINESSES FUND - GROWTH SBI MSFU FMCG SBI MSFU IT SBI MSFU PHARMA - DIVIDEND SBI MSFU PHARMA - GROWTH SBI Magnum Balanced Fund - Dividend SBI Magnum Balanced Fund - Growth MAGNUM INSTA CASH FUND - DAILY DIVIDEND SBI Magnum Institutional Income Fund - Savings - Dividend(Up to 22/03/07) Renamed as SBI Premier Liquid Fund SBI Magnum Institutional Income Fund - Savings - Growth(Up to 22/03/07) Renamed as SBI Premier Liquid Fund SBI MGST-DIVIDEND SBI MGST-GROWTH SBI MAGNUM TAXGAIN SCHEME 1993 - DIVIDEND SBI MAGNUM TAXGAIN SCHEME 1993 - GROWTH 10.9580 24-Jul-2009 12.3216 24-Jul-2009 10.72 24-Jul-2009 12.30 24-Jul-2009 19.4001 24-Jul-2009 15.36 24-Jul-2009 19.16 24-Jul-2009 20.0268 24-Jul-2009 39.0550 24-Jul-2009 14.15 24-Jul-2009 18.45 24-Jul-2009 11.37 24-Jul-2009 14.96 24-Jul-2009 50.49 24-Jul-2009 62.28 24-Jul-2009 24.5916 24-Jul-2009 24.4445 24-Jul-2009 25.47 24-Jul-2009 38.56 24-Jul-2009 21.67 24-Jul-2009 47.23 24-Jul-2009 13.91 24-Jul-2009 25.75 24-Jul-2009 17.04 24-Jul-2009 14.53 24-Jul-2009 23.02 24-Jul-2009 27.90 24-Jul-2009 27.04 24-Jul-2009 41.82 24-Jul-2009 16.7503 26-Jul-2009 10.0325 22-Mar2007

N.A. 25-Jul-2007 10.9038 24-Jul-2009 18.1559 24-Jul-2009 36.41 24-Jul-2009 48.42 24-Jul-2009

35

SBI Magnum Contra fund declares 50% dividend SBI Mutual Fund have declared dividend of 50% for Magnum Sector Funds Umbrella Contra Fund under the Dividend Option plan. The Record date has been fixed at Friday, July 17, 2009.

Open Ended

Close Ended

SBI Mutual Fund

Open Ended SBI Arbitrage Opportunities Fund SBI Magnum Balanced Fund SBI Magnum Blue Chip Fund SBI Magnum Children's Benefit Plan SBI Magnum COMMA Fund SBI Magnum Contra Fund SBI Magnum Emerging Businesses Fund SBI Magnum Equity Fund SBI Magnum FMCG Fund SBI Magnum Gilt Fund Long Term Plan SBI Magnum Gilt Fund Short Term Plan SBI Magnum Global Fund SBI Magnum Income Fund SBI Magnum Income Plus Fund Investment Plan SBI Magnum Income Plus Fund Saving Plan SBI Magnum Index Fund SBI Magnum Insta Cash Fund SBI Magnum InstaCash Fund - Liquid Floater Plan SBI Magnum Institutional Income Fund SBI Magnum IT Fund SBI Magnum Midcap Fund

36
SBI Magnum Monthly Income Plan SBI Magnum Monthly Income Plan Floater SBI Magnum Multicap Fund SBI Magnum Multiplier Plus SBI Magnum NRI Investment Fund SBI Magnum NRI Investment Fund FlexiAsset Plan SBI Magnum Pharma Fund SBI Magnum Tax Gain Scheme 1993 SBI Premier Liquid Fund

Close Ended
SBI ONE India Fund

SBI ARBITRAGE OPPORTUNITIES FUND;Objective : To provide capital appreciation and regular income for unitholders by identifying profitable
arbitrage opportunities between the spot and derivative market segments as also through investment of surplus cash in debt and money market instruments. Structure Inception Plans Growth Face Minimum Rs. Entry Value and & Date Options Dividend (Rs/Unit): Rs. Open-ended September under Option 10 Investment 25000 Load Nil. Equity 15, Plan Fund 2006

Exit Load: For investments below Rs 50 lacks and redemption before 6 months, Exit Load is 0.25 %. For
investments of Rs 50 lacks and above - Nil

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
10.9553 10.9279 10.9553

Date

SBI Arbitrage Opportunities Fund - Div

17-Jul-2009

37
SBI Arbitrage Opportunities Fund - Gr 12.3186 12.2878 12.3186 17-Jul-2009

SBI MAGNUM BALANCED FUND:Objective: To provide investors long term capital appreciation along with the liquidity of an open-ended scheme by investing in a mix of debt and equity. The scheme will invest in a diversified portfolio of equities of high growth companies and balance the risk through investing the rest in a relatively safe portfolio of debt. Structure: Inception Plans Growth Face Minimum Rs. and & Value Open-ended Date: Options Dividend (Rs/Unit): Rs. Equity May under Option 10 Investment: 1000 the & 01, Plan: Debt Fund 1996

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is Nil.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
26.25 40.60 25.99 40.19 26.84 41.51

Date

SBI Magnum Balanced Fund - Dividend SBI Magnum Balanced Fund - Growth

17-Jul-2009 17-Jul-2009

38

SBI MAGMUM BLUE CHIP FUND:Objective: The objective of the scheme would be to provide investors with opportunities for long-term growth
in capital through an active management of investments in a diversified basket of equity stocks of companies whose market capitalization a tleast equal is to or more than the least market capitalized stock of BSE 100 Index. Structure: Inception Plans Growth Face Minimum Rs. and & Value Date: Options Dividend (Rs/Unit): Rs Open-ended December under Option 10 Investment: 5000 the Equity 23, Plan: Scheme 2005

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crore, Exit load is Nil.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
10.38 11.92 10.28 11.80 10.61 12.19

Date

SBI BLUE CHIP FUND-DIVIDEND SBI BLUE CHIP FUND-GROWTH

17-Jul-2009 17-Jul-2009

39

SBI MAGNUM CHILDRENS BENEFIT PLAN:Objective: To provide attractive returns by means of capital appreciation through an actively managed portfolio of debt, equity and money market instruments. Income generated through the receipt of coupon payments, the amortization of the discount on the debt instruments, receipt of dividends or purchase and sale of securities in the underlying portfolio, will be reinvested. Structure: Inception Face Minimum Rs. Entry Value 1500/Open-ended Date: (Rs/Unit): only and Rs. January 10 Investment: in multiples Load: of Rs. 100/-. 1.5%. Income 02, Scheme 2002

Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is 0%.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
19.2384 0.0000 19.5270

Date

SBI Magnum Children Benefit Plan- Holding Held for <= 1 Year

17-Jul-2009

40

SBI MAGNUM COMMA FUND:Objective : To generate opportunities for growth along with possibility of consistent returns by investing
predominantly in a portfolio of stocks of companies engaged in the commodity business within the following sectors - Oil& Gas, Metals, Materials & Agriculture and in debt & money market instruments. Structure: Inception Plans Growth Face Minimum Rs.5000. and & Value Open-ended Date: Options Dividend (Rs/Unit): Rs. August under Option 10 Investment: the Equity 17, Plan: Scheme 2005

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is 0%.

Latest NAV
Scheme Name SBI Magnum COMMA Fund - Dividend SBI Magnum COMMA Fund - Growth NAV (Net Asset Value) 14.50 18.08 Repurchase Price 14.36 17.90 Sale Price 14.83 18.49 Date 17-Jul-2009 17-Jul-2009

41

SBI MAGNUM CONTRA FUND:Objective: To provide the investors maximum growth opportunity through equity investments in Contrarian Stocks (investment in stocks currently out of favor). Structure: Inception Plans Growth Face Minimum Rs. and & Value Open-ended Date: Options Dividend (Rs/Unit): Investment: 2000/Rs. July under Option 10 the Equity 14, Plan: Scheme 1999

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is 0%.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
25.06 44.04 24.81 43.60 25.62 45.03

Date

SBI MSFU CONTRA-DIVIDEND SBI MSFU CONTRA-GROWTH

16-Jul-2009 16-Jul-2009

42

SBI MAGNUM EMERGING BUSINESSES FUND:Objective : To participate in the growth potential presented by various companies that are considered emergent and have export orientation/outsourcing opportunities or are globally competitive by investing in the stocks representing such companies. The fund may also evaluate emerging businesses with growth potential and domestic focus. Structure: Inception Plans Growth Face Minimum Rs. and & Value 2000/Open-ended Date: Options Dividend (Rs/Unit): Rs. October under Option 10 : of Rs. 500/the Equity 11, Plan Scheme 2004

Investment and multiples

Entry Load : For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is 0%.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
13.48 24.95 13.35 24.70 13.78 25.51

Date

SBI MSFU EMERGING BUSINESSES FUND DIVIDEND SBI MSFU EMERGING BUSINESSES FUND GROWTH

17-Jul-2009 17-Jul-2009

43

SBI MAGNUM EQUITY FUND:Objective: To provide the investor Long-term capital appreciation by investing in high growth companies along with the liquidity of an open-ended scheme through investments primarily in equities and the balance in debt and money market instruments. Structure: Inception Plans Growth Face Minimum Rs.1000 and & Value Open-ended Date: Options Dividend (Rs/Unit): Rs. Diversified January under Option 10 Investment: the Equity 02, Plan: Fund 1991

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is Nil.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
28.31 32.06 28.03 31.74 28.95 32.78

Date

Magnum Equity Fund -Dividend Magnum Equity Fund- Growth

17-Jul-2009 17-Jul-2009

SBI MAGNUM FMCG FUND:-

44
Objective: To provide the investors maximum growth opportunity through equity investment in stocks of FMCG sector. Structure: Inception Face Minimum Rs. 5000 Value and Open-ended Date: (Rs/Unit): Investment: Multiples of Rs. Rs July 10 1000. Equity 14, Scheme 1999

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is Nil.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
16.39 16.23 16.76

Date

SBI MSFU FMCG

17-Jul-2009

SBI MAGNUM GILT FUND LONG TERM PLAN:-

45

Objective: To provide the investors with returns generated through investments in government securities issued by the Central Government and / or a State Government. Structure: Inception Plans Quarterly Face and Dividend Value Date: Options option (Rs/Unit): Open-ended January under and the Growth Rs. Gilt 01, Plan: option 10 Scheme 2003

Minimum Investment: Rs. 25000/- and in multiples of Rs. 5000/- thereafter for the Growth option. Rs. 1, 00,000/- and in multiples of Rs. 5000/thereafter for dividend option. Entry Load: Nil.

Exit Load : 0.25% for exit within 90 days from date of investment.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
10.0471 10.1879 10.0295 10.1532 12.0069 11.8933 11.7248 12.2005 10.0921 19.0494 9.9969 10.1166 9.9392 10.1532 11.9469 11.8100 11.6193 12.2005 10.0921 19.0494 10.0471 10.1879 10.0295 10.1532 12.0069 11.8933 11.7248 12.2005 10.0921 19.0494

Date

SBI MGLT- DIVIDEND - PF (Fixed Period 1 Yr) Option SBI MGLT- DIVIDEND - PF (Fixed Period 2 Yrs) Option SBI MGLT- DIVIDEND - PF (Fixed Period 3 Yrs) Option SBI MGLT- DIVIDEND - PF (Regular) Option SBI MGLT- GROWTH - PF (Fixed Period - 1 Yr) Option SBI MGLT- GROWTH - PF (Fixed Period - 2 Yrs) Option SBI MGLT- GROWTH - PF (Fixed Period - 3 Yrs) Option SBI MGLT- GROWTH - PF (Regular) Option SBI MGLT-DIVIDEND SBI MGLT-GROWTH

17-Jul-2009 17-Jul-2009 17-Jul-2009 17-Jul-2009 17-Jul-2009 17-Jul-2009 17-Jul-2009 17-Jul-2009 17-Jul-2009 17-Jul-2009

SBI MAGNUM GILT FUND SHORT TERM PLAN:-

46
Objective: To provide the investors with returns generated through investments in government securities issued by the Central Government and / or a State Government. Structure: Inception Plans Monthly Face Date: and Dividend Value Options option Rs. 10 Open-ended January under and the Growth Gilt 01, Plan: option Scheme 2003

(Rs/Unit):

Minimum Investment: Rs. 25000/- and in multiples of Rs. 5000/- thereafter for the Growth option. Rs. 1,00,000/- and in multiples of Rs. 5000/thereafter for dividend option. Entry Load: Nil.

Exit Load : Regular Plan (Short Term)-CDSC of 0.15% for exit within 15 days from date of investment PF (Fixed Period) Plan; 1 year: 0.25% within 1 year from the date of investment; 2 year 0.7% within 1 year, 0.35% between 1 and 2 year, 3 year 0.90% within 1 year

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
10.9121 18.1696 10.9121 18.1696 10.9121 18.1696

Date

SBI MGST-DIVIDEND SBI MGST-GROWTH

17-Jul-2009 17-Jul-2009

SBI MAGNUM GLOBAL FUND:-

47
Objective: To provide the investors maximum growth opportunity through well researched investments in Indian equities, PCDs and FCDs from selected industries with high growth potential and Bonds. Structure: Inception Plans Growth Face Minimum Rs.2000 and Value Date: Options & (Rs/Unit): Rs. Open-ended September under Dividend 10 Investment: the Equity 30, Plan: Option Scheme 1994

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is 0%.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
24.45 37.02 24.21 36.65 25.00 37.85

Date

SBI MAGNUM GLOBAL FUND 94 DIVIDEND SBI MAGNUM GLOBAL FUND 94 - GROWTH

17-Jul-2009 17-Jul-2009

SBI MAGNUM INCOME FUND:-

48
Objective: To provide the investors an opportunity to earn, in accordance with their requirements, through capital gains or through regular dividends, returns that would be higher than the returns offered by comparable investment avenues through investment in debt & money market securities. Structure Inception : Date : Open-ended January Debt 12, Scheme 1998

Plans and Options under the Plan : (A) Growth Plan (B) Dividend Plan (C) Bonus Plan (D) Floating Rate Plan Options available under Floating Rate Plan Short Term (Growth, Dividend & Weekly Dividend)Long Term (Regular (Dividend & Growth) Long Term (Institutional (Dividend & Growth) Face Minimum Rs.2000. Entry Value Investment Load: (Rs/Unit): : Nil. Rs. 10

Exit Load: Investment Up Rs. 50 lacs : 0.5%; for exit within 6 months from date of investment. Investments above Rs. 50 lacs: Nil

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
13.2059 10.4757 21.8017 13.0738 10.3709 21.5837 13.2059 10.4757 21.8017

Date

SBI Magnum Income Fund-Bonus SBI Magnum Income Fund-Dividend SBI Magnum Income Fund-Growth

17-Jul-2009 17-Jul-2009 17-Jul-2009

SBI MAGNUM INCOME FUND PLUS INVESMENE PLAN:-

49
Objective: To provide attractive returns either through periodic dividends or through capital appreciation through an actively managed portfolio of debt, equity and money market instruments. Income may be generated through the receipt of coupon payments, the amortization of the discount on the debt instruments, receipt of dividends or purchase and sale of securities in the underlying portfolio. Structure: Inception Plans Growth Face Minimum Rs.25000 Entry and Options & Value Open-ended Date: under the Dividend January Plan: Option (Rs/Unit): Investment: Load: Nil. Rs. 10 Income 11, Scheme 2003

Exit Load: 1% of exit load within 6 months and 0.5% of exit load within 1 year.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
10.7385 14.7368 10.6311 14.5894 10.7385 14.7368

Date

SBI Magnum Income Plus Fund Investment Plan (D) SBI Magnum Income Plus Fund Investment Plan (G)

17-Jul-2009 17-Jul-2009

SBI MAGNUM INCOME FUND PLUS SAVING PLAN:-

50
Objective: To provide attractive returns either through periodic dividends or through capital appreciation through an actively managed portfolio of debt, equity and money market instruments. Income may be generated through the receipt of coupon payments, the amortization of the discount on the debt instruments, receipt of dividends or purchase and sale of securities in the underlying portfolio. Structure: Inception Plans Growth Face Minimum Rs.25000 Entry and Options & Value Open-ended Date: under the Dividend January Plan: Option (Rs/Unit): Investment: Load: Nil. Rs. 10 Income 11, Scheme 2003

Exit Load: 1% of exit load within 6 months and 0.5% of exit load within 1 year.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
10.2060 10.5484 10.1039 10.4429 10.2060 10.5484

Date

SBI Magnum Income Plus Fund - Savings Plan (D) SBI Magnum Income Plus Fund - Savings Plan (G)

17-Jul-2009 17-Jul-2009

SBI MAGNUM INDEX FUND:-

51
Objective: The scheme will adopt a passive investment strategy. The scheme will invest in stocks comprising the S&P CNX Nifty index in the same proportion as in the index with the objective of achieving returns equivalent to the Total Returns Index of S&P CNX Nifty index by minimizing the performance difference between the benchmark index and the scheme. The Total Returns Index is an index that reflects the returns on the index from index gain/loss plus dividend payments by the constituent stocks. Structure: Inception Plans Growth Face Minimum Rs. and Options & Value Date: under the Dividend Open-ended February Plan: Option (Rs/Unit): Investment: 5000 Rs. 10 Index 04, Fund 2002

Entry Load: For investments below Rs. 50 Lakhs, Entry load is 1.25%. For Investments of Rs. 50 Lakhs and above, Entry Load is Nil. Exit Load: Nil.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
19.1805 37.4050 19.1805 37.4050 19.2764 37.5920

Date

SBI Magnum Index Fund - Dividend SBI Magnum Index Fund - Growth

17-Jul-2009 17-Jul-2009

SBI MAGNUM INSTA CASH FUND:-

52
Objective: To provide the investors an opportunity to earn returns through investment in debt & money market securities, while having the benefit of a very high degree of liquidity to meet unexpected needs have cash. Structure: Inception Plans Daily Dividend Face Minimum Rs.10000 Entry Exit Load: Nil. and Plan, Open-ended Date: Dividend Options Plan & Cash Rs. Liquid January under Plan 10 Investment: Load: Nil. the Income 05, Plan: Fund 1999

Value

(Rs/Unit):

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
16.7503 16.7503 16.7503

Date

MAGNUM INSTA CASH FUND - DAILY DIVIDEND

18-Jul-2009

SBI MAGNUM INSTA CASH FUND-LIQUID FLOATER PLAN:-

53
Objective: To mitigate interest rate risk and generate opportunities for regular income through a portfolio investing predominantly in floating rate securities and money market instruments. Structure: Inception Plans Dividend Face Minimum Rs.10000 Entry and Option Value Open-ended Date: & Options Growth Rs. Liquid October under Option 10 Investment: Load: Nil. the Income 01, Plan: Fund 2002

(Rs/Unit):

Exit Load : 0.15% for exit within 10 days from the date of investment

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
10.3119 15.4409 10.3119 15.4409 10.3119 15.4409

Date

SBI Magnum Insta Cash Fund - Liquid Floater Plan - Dividend SBI Magnum Insta Cash Fund - Liquid Floater Plan - Growth

18-Jul-2009 18-Jul-2009

SBI MAGNUM INSTITUTIONAL INCOME FUND:-

54
Objective: To provide attractive returns to the Magnum holders either through periodic dividends or through capital appreciation through an actively managed portfolio of debt and money market instruments. Income may be generated through the receipt of coupon payments, the amortization of the discount on the debt instruments, receipt of dividends or purchase and sale of securities in the underlying portfolio. Structure: Inception Plans and Daily Dividend Minimum Rs 50 Entry Exit Load: Nil. Date: Options under the Plan, Dividend Plan & lakes and in Open-ended January Plan: Cash Plan Investment: multiples Load: of Rs. 10 lakhs. Nil. Debt 11, Fund 2003

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
10.0325 10.0325 10.0325

Date

SBI Magnum Institutional Income Fund Savings - Dividend(Up to 22/03/07) Renamed as SBI Premier Liquid Fund SBI Magnum Institutional Income Fund Savings - Growth(Up to 22/03/07) Renamed as SBI Premier Liquid Fund

22-Mar-2007

N.A.

N.A.

N.A.

25-Jul-2007

MAGNUM IT FUND:-

55
Objective: To provide the investors maximum growth opportunity through equity investment in stocks of IT sector. Structure: Inception Face Minimum Rs. Value Open-ended Date: (Rs/Unit): Investment: 2000 Rs. July 10 Equity 14, Scheme 1999

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is Nil.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
13.68 13.54 13.99

Date

SBI MSFU IT

17-Jul-2009

SBI MAGNUM MIDCAP FUND:Objective: To provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme by investing predominantly in a well diversified basket of equity stocks of companies whose market capitalization is between Rs. 200 crores to Rs.2000 crores and in debt and money market instruments. Structure: Inception Plans Growth Face Minimum Rs. and & Value Open-ended Date: Options Dividend (Rs/Unit): Rs. April under Option 10 Investment: 5000 the Growth 15, Plan: Scheme 2005

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is Nil.

56 Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
13.14 17.13 13.01 16.96 13.44 17.52

Date

SBI Magnum MIDCAP FUND - DIVIDEND SBI Magnum MIDCAP FUND - GROWTH

17-Jul-2009 17-Jul-2009

SBI MAGNUM MONTHLY INCOME PLAN:Objective: To provide regular income, liquidity and attractive returns to the investors through an actively managed portfolio of debt, equity and money market instruments. Income may be generated through the receipt of coupon payments, the amortization of the discount on the debt instruments, receipt of dividends or purchase and sale of securities in the underlying portfolio. Structure: Inception Plans Growth Face Minimum Rs.10, Entry and Options Option & Value Date: Open-ended January Debt 04, Scheme 2001

under the Plan: Dividend Option (Rs/Unit): Rs. 10 Investment: 000 Load: Nil.

Exit Load: Investment Up Rs. 50 lacs: 0.5%; for exit within 6 months from date of investment . Investments above Rs. 50 lacs : Nil

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
10.9149 10.4667 10.1502 10.8603 10.4144 10.0994 10.9149 10.4667 10.1502

Date

SBI Magnum Monthly Income PlanDividend-Annually SBI Magnum Monthly Income PlanDividend-Monthly SBI Magnum Monthly Income PlanDividend-Quarterly

17-Jul-2009 17-Jul-2009 17-Jul-2009

57
SBI Magnum Monthly Income Plan Growth

18.0438

17.9536

18.0438

17-Jul-2009

SBI MAGNUM MULTICAP FUND:Objective : To provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme through an active management of investments in a diversified basket of equity stocks spanning the entire market capitalization spectrum, debt and money market instruments. Structure: Inception Plans Growth Face Minimum Rs. and & Value Open-ended Date: Options Dividend (Rs/Unit): Rs. August under Option 10 Investment: 5000 the Equity 22, Plan: Scheme 2005

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is 0%.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
10.94 14.40 10.83 14.26 11.19 14.72

Date

SBI Magnum Multicap Fund - Dividend Option SBI Magnum Multicap Fund - Growth Option

17-Jul-2009 17-Jul-2009

SBI MAGNUM MULTIPLIER PLUS:-

58
Objective: To provide investors long term capital appreciation along with the liquidity of an open-ended scheme. The scheme will invest in a diversified portfolio of equities of high growth companies. Structure Inception Plans Growth Face Minimum Rs. and : Date Options & under the Dividend Open-ended : Plan : Option Rs. : 1000 10 Diversified February Equity 28, Fund 1993

Value Investment

(Rs/Unit):

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is Nil.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
48.75 60.13 48.26 59.53 49.85 61.48

Date

SBI Magnum Multiplier Plus Scheme - 93 -Dividend SBI Magnum Multiplier Plus Scheme - 93 -Growth

17-Jul-2009 17-Jul-2009

SBI MAGNUM NRI INVESTMENT FUND:-

59
Objective: To provide attractive returns to investors either through periodic dividends or through capital appreciation through an actively managed portfolio of debt, equity and money market instruments. Income may be generated through the receipt of coupon payments, the amortization of the discount on the debt instruments, receipt of dividends or purchase and sale of securities in the underlying portfolio. Structure: Inception Plans and Options Short Term Bond Plan Face Minimum Rs.50, Entry Date: & under Long the Term Open-ended January Plan: Bond Plan (Rs/Unit): Investment: 000 Load: Nil. Rs. 10 Debt 02, Scheme 2004

Value

Exit Load : Short Term Bond Plan Nil, Long Term Bond Plan : Within 6 months : 0.50%.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
10.6326 10.9299 9.9972 10.5841 10.6326 10.9299 9.9472 10.5312 10.6326 10.9299 9.9972 10.5841

Date

SBI MAGNUM NRI - SHORT TERM BOND PLAN-DIVIDEND SBI MAGNUM NRI - SHORT TERM BOND PLAN-GROWTH SBI MAGNUM NRI LONG TERM BOND PLAN-DIVIDEND SBI MAGNUM NRI LONG TERM BOND PLAN-GROWTH

17-Jul-2009 17-Jul-2009 17-Jul-2009 17-Jul-2009

SBI MAGNUM NRI INVESTMENT FUND FLEXIASSET PLAN:Objective: To provide attractive returns to investors either through periodic dividends or through capital appreciation through an actively managed portfolio of debt, equity and money market instruments. Income may be generated through the receipt of coupon payments, the amortization of the discount on the debt instruments, receipt of dividends or purchase and sale of securities in the underlying portfolio.

60
Structure: Inception Plans Growth Face Minimum Rs.50, and Value Open-ended Date: Options & (Rs/Unit): Investment: 000 Rs. Equity January under Dividend 10 the & Debt 02, Plan: Option Scheme 2004

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is Nil.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
23.7395 23.5976 23.5021 23.3616 24.2736 24.1285

Date

SBI MAGNUM NRI FLEXIASSET PLANDIVIDEND SBI MAGNUM NRI FLEXIASSET PLANGROWTH

17-Jul-2009 17-Jul-2009

SBI MAGNUM FHARMA FUND:Objective: The scheme aims to provide the investors maximum growth opportunity through equity investment in stocks of Pharma Sector. Structure: Inception Plans Growth Face Minimum Rs. and Value Open-ended Date: Options & July under Dividend (Rs/Unit): Investment: 2000 Rs. the Equity 14, Plan: Option 10 Scheme 1999

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil.

61
Exit Load: If redeemed before 6 Months; and Amount less than 5 crores, Exit load is 1%. For Amount greater than 5 crores, Exit load is 0%.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
22.03 26.70 21.81 26.43 22.53 27.30

Date

SBI MSFU PHARMA - DIVIDEND SBI MSFU PHARMA - GROWTH

17-Jul-2009 17-Jul-2009

SBI MAGNUM TAX GAIN SCHEME 1993:-

62
Objective: The prime objective of scheme is to deliver the benefit of investment in a portfolio of equity shares, while offering tax rebate on such investments made in the scheme under section 80 C of the Income-tax Act, 1961. It also seeks to distribute income periodically depending on distributable surplus. Structure: Inception Plans Growth Face Minimum Rs. and & Value Open-ended Date: Options Dividend (Rs/Unit): Rs. March under Option 10 Investment: 500 the Equity 31, Plan: Scheme 1993

Entry Load: For investments below Rs. 5 crores, Entry load is 2.25%. For Investments of Rs. 5 crores and above, Entry Load is Nil. Exit Load: Nil.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
35.03 46.59 35.03 46.59 35.82 47.64

Date

SBI MAGNUM TAXGAIN SCHEME 1993 DIVIDEND SBI MAGNUM TAXGAIN SCHEME 1993 GROWTH

17-Jul-2009 17-Jul-2009

SBI PREMIER LIQUID PLAN:Objective: To provide attractive returns to investors either through periodic dividends or through capital appreciation through an actively managed portfolio of debt and money market instruments. Income may be generated through the receipt of coupon payments, the amortization of the discount on the debt instruments, receipt of dividends or purchase and sale of securities in the underlying portfolio. Structure: Inception Plans Institutional Face and Plan Value Open-ended Date: Options and Short March under Super (Rs/Unit): the Institutional Rs. Term Debt 23, Plan: Plan 10 Scheme 2007

Minimum Investment: For Institutional Plan - Rs 50 lacs and multiples of Rs 1 lack. For Super Institutional Plan - Rs 5 crores and

63
multiples Entry Exit Load: Nil. of Rs Load: 1 lack. Nil.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
10.1493 10.6035 10.0325 14.2456 N.A. 10.1493 10.6035 10.0325 14.2456 N.A. 10.1493 10.6035 10.0325 14.2456 N.A.

Date

SBI Premier Liquid Fund - Institutional Fortnightly Dividend SBI Premier Liquid Fund - Institutional Weekly Dividend SBI Premier Liquid Fund - Institutional Daily Dividend SBI Premier Liquid Fund - Institutional Growth SBI Premier Liquid Fund - Super Institutional - Fortnightly Dividend

18-Jul-2009 18-Jul-2009 18-Jul-2009 18-Jul-2009 18-Jul-2009

64
SBI Premier Liquid Fund - Super Institutional - Weekly Dividend SBI Premier Liquid Fund - Super Institutional - Daily Dividend SBI Premier Liquid Fund - Super Institutional - Growth

N.A. 10.0325 14.0884

N.A. 10.0325 14.0884

N.A. 10.0325 14.0884

18-Jul-2009 18-Jul-2009 18-Jul-2009

SBI ONE INDIA FUND:Objective : To provide investors with opportunities for long term growth in capital through an active management of investments in a diversified basket of equity stocks focusing on all four regions of India and in debt and money market instruments. Structure: Inception Plans Growth Face Minimum Rs. Entry and & Value Date: Options Dividend (Rs/Unit): Rs. Close-ended November under Option 10 Investment: 5000 Load: Nil. the Equity 24, Plan: Scheme 2006

Exit Load : Nil, For exit during the close ended tenure of the scheme unamortized initial issue expenses outstanding will be charged in the form of Repurchase NAV.

Latest NAV Scheme Name NAV (Net Repurchase Sale Price Asset Price Value)
8.38 8.38 8.30 8.30 8.30 8.30 8.30 8.30 N.A. N.A. N.A. N.A.

Date

SBI ONE INDIA FUND - DIVIDEND SBI ONE INDIA FUND - GROWTH SBI ONE INDIA FUND - REPURCHASE NAVDIVIDEND SBI ONE INDIA FUND - REPURCHASE NAVGROWTH

17-Jul-2009 17-Jul-2009 17-Jul-2009 17-Jul-2009

65

What is Equity Linked Saving Scheme (ELSS)? ELSS is a great way to save tax, boost your portfolio, and invest for the longer term.
What is an ELSS?
An ELSS is similar to a diversified equity-oriented scheme, with the additional benefit of saving tax under section 80C. Structured as an open-ended equity fund with a lock in period of three years, an investor can invest at any time during the year. The maximum investment in ELSS that can avail of a benefit under section 80C is Rs. 1 lakh. Accordingly, the maximum tax that one can save through these schemes is Rs. 33,990.

Equity linked Savings schemes are equity funds floated by mutual funds. They offer a 20 per cent tax rebate on investments up to Rs 10,000 in a given financial year. There is a three year lock-in on investments and there is no assurance on returns. The ELSS funds have to invest more than 80 per cent of their money in equity and related instruments. Returns form ELSS funds tend to fluctuate widely, in line with the performance of the stock markets. Young people should definitely invest in the ELSS funds as they have the ability to take on higher risk. Ideally one should invest in them when the markets are down. These funds are now open all the year round. Therefore, investors can time their investment. The other way of investing in these funds could be a systematic investment, which essentially means investing a small sum regularly (monthly or quarterly).

Advantages:
The three-year lock-in period works in favour of the investor as ELSS tend to have a more stable corpus. This means lower volatility for the ELSS as compared to a diversified equity fund. Depending upon their style of management, fund managers would be able to take long term investment calls without worrying about redemption pressures and can opt to remain fully invested.

Features:

Individuals, Hindu Undivided Families (HUFs) and companies. The units can be easily transferred by filling out a transfer form. A maximum investment of Rs 10,000 to claim an income tax rebate of 20 per cent. Nomination facility is available with ELSS. Open-ended mutual funds have no maturity period. However, to claim tax rebate under Section 88, the minimum lock-in period is three years. In the case of open-ended schemes, the units can be sold anytime after the initial lockin period of three years. In the case of closed-end schemes, the units can be sold only on the due date specified.

Comparative Analysis of ELSS and Other Tax Saving instruments

66 Unit-linked insurance plans

3 May differ from plan to plan Rs.100000 Medium-high Market linked N.A

Particulars Lock-in Period

PPF
15

NSC
6

ELSS
3

Min Investment Rs.500 Rs.100 Rs.500 Max Investment qualifying u/s 80C Rs.70000 Rs.100000 Rs.100000 Risk Level Returns Taxability of Interest/Dividend
Low 8%* Tax free Low 8%** Taxable # MediumHigh Market linked Tax free

* Compounded annually ** Compounded half yearly. # Taxable but accrued interest available for 80C benefits until 5 years Compared to all other tax planning schemes available today, ELSS has the shortest lock-in period. It also has the potential to give you superior returns over other tax saving instruments.

Suitable for long term goal planning

Though lump sum investments can be made, one can invest through the SIP route as well. Investments of as low as Rs. 500 per month are also possible. As equities are market-linked, investors have the opportunity to benefit from rupee cost-averaging. This, in turn, allows them to lower the average cost of purchase significantly and eventually enables them to reap benefits over the medium to long term.

In conclusion, if youd like to save tax while giving your portfolio an extra edge while investing for the longer term, ELSS schemes are the way to go for you.

Tax benefits:
Dividends from mutual funds are fully exempt from income tax under Section 10(33). Equity funds (schemes that invest 50 per cent of their funds in equity) are also exempt from dividend tax. ELSSs offer under section 88 tax rebate on investments up to Rs 10,000 in a financial year. The difference between the selling price and the cost price is taxable as capital gains in the year of sale, at 10 per cent or 20 per cent, depending on whether or not you claim indexation benefits.

Pluses
Possibility of high returns Lock-in period of only three years Easy transfer

67
Low tax incidence (10 per cent) on redemption Efficient service, especially in the case of private mutual funds

Minuses
High risk Difficult to choose the right fund (But not if you use the services of the Matchmaker!)

How to start?
Its a pity that you can only invest up to Rs 10,000 to claim the maximum tax rebate under Section 88. However, stay away from ELSSs if you cannot stomach the risk. You can also consider withdrawing from the PPF scheme and investing your money in tax-saving mutual fund schemes. Of course, you cannot reinvest the money that you withdraw. But you can channel this money towards other financial obligations and invest in ELSSs using your taxable income for the year. The beginning of a new year always reminds us to complete our ritual- the annual tax planning exercise- within March 31. And we are always left to decide where to invest to optimize returns under Section 80C. There are numerous asset classes available with different lock-in periods in the market. Fixed return instruments like National Savings Certificate (NSC), Public Provident Fund (PPF) and Bank Deposits provide guaranteed positive return With minimum five years of lock-in. Equity Linked Savings Scheme (ELSS) is another option which does not provide any Assurance of returns, but has a lower lock-in of three years. As an investment option, the equity market is now in doldrums and may not revive any time soon. But we tend to forget that Investing in equity is never a short-term phenomenon. To reap the benefit of an equity investment, one should have the Patience to stay invested for at least three years. Historically, over a long period, equity as an asset class has always outperformed other investment options. If one looks for ELSS category over the past five years, it has delivered more than 12% annualized return, higher than other instruments, Under Section 80C. Further, currently the market after a huge correction is trading at an attractive price for long-term investors. If one sells his Units after three years, given the market is favorable, he enjoys a long-term capital gains tax exemption. Even his Dividend income from the ELSS scheme is tax-free. These make ELSS attractive than other asset classes available under Section 80C. To arrive at the best tax savings scheme, a detailed comparative analysis of five schemes from different fund houses was Carried out. The five funds were selected from 35 schemes available in the market based on their asset size, asset Allocation and fund's historical return in comparison with benchmark. The selected funds are SBI Magnum Tax Gain Scheme Growth (SBI), Reliance Tax Saver Growth (Reliance), HDFC Tax Saver Growth (HDFC), Sundaram BNP Paribas Tax Saver (Sundaram) and Franklin India Tax Shield Growth (Franklin). Henceforth, we refer to the funds with their first name only. The beginning of a new year always reminds us to complete our ritual- the annual tax planning exercise- within March 31. And we are always left to decide where to invest to optimize returns under Section 80C. There are numerous asset classes available with different lock-in periods in the market. Fixed return instruments like

68
National Savings Certificate (NSC), Public Provident Fund (PPF) and Bank Deposits provide guaranteed positive return With minimum five years of lock-in. Equity Linked Savings Scheme (ELSS) is another option which does not provide any Assurance of returns, but has a lower lock-in of three years. As an investment option, the equity market is now in doldrums and may not revive any time soon. But we tend to forget that Investing in equity is never a short-term phenomenon. To reap the benefit of an equity investment, one should have the Patience to stay invested for at least three years. Historically, over a long period, equity as an asset class has always outperformed other investment options. If one looks for ELSS category over the past five years, it has delivered more than 12% annualized return, higher than other instruments, Under Section 80C. Further, currently the market after a huge correction is trading at an attractive price for long-term investors. If one sells his Units after three years, given the market is favorable, he enjoys a long-term capital gains tax exemption. Even his Dividend income from the ELSS scheme is tax-free. These make ELSS attractive than other asset classes available under Section 80C. To arrive at the best tax savings scheme, a detailed comparative analysis of five schemes from different fund houses was Carried out. The five funds were selected from 35 schemes available in the market based on their asset size, asset Allocation and fund's historical return in comparison with benchmark. The selected funds are SBI Magnum Tax Gain Scheme Growth (SBI), Reliance Tax Saver Growth (Reliance), HDFC Tax Saver Growth (HDFC), Sundaram BNP Paribas Tax Saver (Sundaram) and Franklin India Tax Shield Growth (Franklin).

EQUITY LINKED SAVING SCHEME (ELSS) IN INDIA:

February 1, 2009 With March just around the corner, people have started worrying about saving Income tax. Usually people throng investment options during February and March and try to save as much tax as possible. As per our Indian IT laws every tax payer is eligible for savings under section 80C for amounts up to Rs. 1,00,000/- To know about the various options that we have to save tax under section 80C pls. This article is about Equity Linked Savings Scheme (ELSS). ELSS schemes are one the best tax saving instruments that have been offering great returns for our investor public over the years. What are Equity Linked Savings Schemes? An ELSS is a kind of Mutual Fund and is similar to any diversified equity mutual fund in many ways. An ELSS gives a tax benefit and comes with a lock in period of 3 years. Investment avenues of an ELSS are a mix of various asset classes such as equity, debt, gold and real estate. Some advantages of ELSS are * the 3 year lock in period prevents withdrawals and thus allows your money to grow over a period of

69 time. Long term investment in equities gives better returns than any other investment instrument. * It gives tax benefits (Up to 30% for people in the highest tax slab) * Gives the flexibility to invest small amounts through a Systematic Investment Plan (SIP) As an ELSS investor, your interests will be safeguarded by two separate market bodies. The Association of Mutual Funds in India (AMFI) and the Securities and Exchange Board of India (SEBI) Let me explain the returns on an ELSS with an example: Lets assume you invest Rs. 1 lakh this year in an ELSS scheme and you are in the highest tax bracket. Invested Amount = Rs. 1,00,000/Income Tax saved = Rs. 30,000 (30% tax slab) Net amount Invested = Rs. 70,000/- (I have deducted the 30,000 because you get it back up front after your investment as income tax benefit and you effectively invested only Rs. 70,000) Let us assume your equity investment grows at the rate of 15% per annum. Investment value at the end of the First year = 1,15,000/Investment value at the end of the Second year = 1,32,250/Investment value at the end of the Third year = 1,52,087/Assuming you encased your investment at the end of the 3rd year you will get Rs. 1,52,087/Profit you realized = Rs. 82,087/- (You invested only Rs. 70000 effectively remember the tax saved) Profit percentage = 117% (For 3 years together) A Returns of 39% per annum is something we cannot expect in any other form of investment. Thus ELSS schemes make one of Returns % per year = 39% the best investment options. How is your ELSS Money Invested? This is a very common question that people have. The asset allocation is pre-determined and is in accordance with SEBI guidelines. Between 60% to 100% is invested in equities, cumulative convertible preference shares and fully convertible debentures and bonds of companies. Money market instruments account for anything between 0% to 20% the asset allocation shows a tilt towards equities which has the scope for providing good returns for us. The choice of industries and allocation to mid-cap and largecap companies depends on the individual scheme & its fund manager. As an investor, we must first understand the objectives of the fund and also go through the offer document before investing. FEATURE: EQUITY LINKED SAVING SCHEME;
An equity-linked saving scheme (ELSS) is a great investment option that offers the twin benefits of tax saving and capital gains. Earlier, investors had to spread their investments across different instruments such as PPF, ELSS, NSC and infrastructure bonds. But now, its possible to invest the entire limit of Rs 100,000 available under Sec 80C in ELSS. According to the new Income Tax Act, Sec 80C investments in ELSS are allowed as deduction from the total income, up to maximum Rs100, 000 in a financial year. ELSS schemes have a three-year lock-in period, which works to the investors benefit as the fund manager can have a portfolio of stocks that can out-perform over a period of time. Why should one invest ELSS? Lock-in for three years helps in staying invested over a long period Investments in equity over a long-term delivers better returns

70
Tax savings and high returns Through SIPs, one can invest small amount of Rs 500 in ELSS every month.

SIP Systematic Investment Plan route for ELSS One of the best ways to invest in ELSS is to save and invest on a regular basis. A Systematic Investment Plan (SIP) in ELSS gives the best combination of investments available to investors. The minimum investment in an ELSS through the SIP route can be as small as Rs 500. SIP helps an investor take advantage of the fluctuations in the stock markets by rupee cost averaging. Rupee cost averaging can be explained with the help of the following example. If Rs 1,000 is invested a month at a price of Rs 20 a unit, the investor will have bought 50 units (1,000/20). But at a price of Rs 10 per unit, he will have bought 100 units (1000/10). Investing a fixed sum regularly means averaging out the cost, as the investor gets fewer units when the price goes up and more when the price goes down. An SIP ensures that an investor buys more when the markets are falling and less when it's peaking. But if an investor backs out when the markets are falling, he won't be buying and this will not get him to average his price, the primary reason behind the success of investing through the SIP route. When markets are falling, it's psychologically difficult for an investor to enter. On the other hand, when the market is at a peak, a lot of investors enter the market. Due to this, the investor ends up buying high and selling low. So, it's very important to continue with the SIP even when the markets are falling. In the current volatile market, starting an SIP would be beneficial to an investor as he can take the benefit of highs as well as the lows and can average out his purchases. The returns of a few top performing ELSS through SIP, recommended by ICICIdirect are given in the table below.

Rs 1000 invested every month for 3 years Scheme SBI Magnum Tax Gain Scheme 1993 HDFC Tax Saver Fund Prudential ICICI Tax Plan Sundaram BNP Paribas Taxsaver HDFC Long Term Advantage Fund Birla Equity Plan Principal Tax Saving Fund Franklin Taxshield Fund Franklin India Index Tax Fund Tata Tax Saving Fund Units Accumulated 815.30 620.74 897.55 1536.58 840.35 783.45 776.41 566.41 2247.09 480.29 Capital Appreciation Returns (%) ( 31-Aug-06 ) (Rs) (Rs) 110.58 125.08 85.41 44.52 80.08 83.17 83.18 111.29 26.65 122.78 90153.81 77642.36 76659.70 68401.56 67298.22 65157.88 64578.95 63035.71 59894.96 58971.22 150.43 115.67 112.94 90.00 86.94 80.99 79.39 75.10 66.37 63.81 NAV

71

MORE FEATURES: Fixed Maturity Plans (FMPs) Gold exchange-traded funds Systematic Investment Plan (SIP) Monthly Income Plans FIXED MATURITY PLANS (FMPs):
Rising interest rates not only mean rising EMIs but also offer an opportunity to earn higher returns. Debt schemes are now offering attractive returns with short-term rates in the region of 8-10%. Call money rates have been moving higher to about 7.5-8% due to tight liquidity conditions. With the RBI deciding to raise the cash reserve ratio (CRR), liquidity conditions have worsened. Tightness in the money markets is expected to continue till the end of the current financial year and investors can consider investing in short term options like FMPs or floating rate schemes.

What are FMPs? Fixed maturity plans, or FMPs as they are popularly called, are close-ended funds with a fixed tenure and invest in a portfolio of debt products whose maturity coincides with the maturity of the product. The primary objective of a FMP is to generate income while protecting the capital by investing in a portfolio of debt and money market securities. The tenure can be of different maturities, ranging from one month to five years. FMPs can be compared to fixed deposits of a bank. While a fixed deposit offers a 'guaranteed' return, returns in FMPs are only 'indicative'. Typically, the fund house fixes a 'target amount' for a scheme, which it ties up informally with borrowers before the scheme opens. That way it knows the interest rate it will earn on its investments, providing the 'indicative return' to investors. Benefits of FMPs FMPs offer many benefits like tax efficiency, fixed tenure and low sensitivity to interest rates. The minimum investment amount is usually Rs 5,000, which a retail investor can easily invest. Capital protection: FMPs have less risk of capital loss than equity funds due to their investment in debt and money market instruments. Low interest rate sensitivity: As the securities are held till maturity, FMPs are not affected by interest rate volatility. The actual returns are more or less close to the indicative returns declared at the scheme's launch Lower cost: FMPs involve minimum expenditure on fund management, as there is no requirement for a time-totime review by fund managers to buy/sell the instruments constituting the fund. Since these instruments are held till maturity, there is a cost saving in respect of buying and selling of instruments Tax benefits: FMPs score over fixed deposits because of their tax efficiencies both in the short-term as well in the long-term. Short-term tax advantage Dividend option Mutual fund dividends are tax-free in the hands of the investor (subject to a dividend distribution tax @14.03% for retail investors and 22.44% for corporate investments), whereas the interest on a bank deposit (except where special 80C approved) is added to the income of the investor and taxed as per his/her slab.

72
The table below provides an illustration of the tax advantage offered by an FMP Dividend plan. The illustration is based on a 90-day plan and assumes a 90-day FD yielding 8%, compared with an FMP yielding 8% for an individual investor in the highest tax bracket. Bank FD Net yield before tax Tax DDT Net yield 8.00% 33.66% 5.30% FMP dividend option 8.00% 14.03% 6.87% 5.30% FMP growth option 8.00% 33.66%

Long-term tax advantage Growth option: Long-term capital gains (investment of more than a year) enjoy indexation benefit. So if the investment is for more than a year, in the growth option one has to pay long-term capital gains tax of 20% with indexation, or 10% without indexation on debt products. Further, with the help of FMPs investors can get 'double indexation' benefit, which is not available in case of fixed deposits and bonds. This advantage can be availed by investing in an FMP just prior to the end of a financial year and withdrawing it after the end of the next financial year. An investor can invest in an FMP before March 31 and withdraw it after April 1 the next year. Thus, the amount remains invested for a period slightly greater than a year. This ensures the applicability of indexation benefits for inflationary changes in two years, which can help investors, reduce the tax. Double indexation, in some cases, can even lead to a net loss figure, even though there is a profit, and thus expunges the tax obligation of the investors. The taxable amount is calculated using the following formula: Taxable Gains = Amount Returned (Amount Invested x Inflation Index for Redemption Year/ Inflation Index for Investment Year) The following example explains this concept: We take an example of a 400-day FMP, which, if launched on March 1, 2007, will mature on April 4, 2008. It will pass through two financial years and thus has the benefit of double-cost indexation for the purpose of calculating post-tax yield. Note: Cost inflation index (CII) for FY06-07 is 519. The assumption is that the CII for FY07-08 is 545 and for FY0809 are 572, at an inflation of 5% annually. Tax rate includes a surcharge of 10% and cess of 2%. The workings are indicative only and are based on current taxation laws.

Bank FD 10,000

FMP Growth Option With Indexation 10,000 Without Indexation 10,000

FMP Dividend Option 10,000

Amount of Investment (Rs.)

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Post Expenses Indicative Yield (annualized) Tenor (in days) Maturity Amount (Rs) Dividend (Rs) Gain (Rs) Indexed Cost (Rs) Indexed Long Term Capital Gain (Rs) Tax Rate Tax (Rs) Post Tax Gain (Rs) Post Tax Annualised Return 1,041 NA NA 33.66% 350.43 690.66 6.30% 1,041 11,021 19.9 22.44% 4.47 1036.63 9.46% 1,041 NIL NA 11.22% 116.81 924.28 8.43%

9.50% 400 11,041

9.50% 400 11,041

9.50% 400 11,041

9.50% 400 10,000 1,041 1,041 NIL NA 14.03% 146.05 894.95 8.17%

GOLD EXCHANGE-TRADED FUND:

What are exchange-traded funds? Exchange-traded funds (ETFs) are mutual fund schemes that are listed and traded on exchanges like stocks. ETFs trading value is based on the net asset value (NAV) of the assets it represents. Generally, ETFs invest in a basket of stocks and try to replicate a stock market index such as the S&P CNX Nifty or BSE Sensex, a market sector such as energy or technology, or a commodity such as gold or petroleum. Recently, the Securities and Exchange Board of India (Sebi) amended its regulations and allowed mutual funds launch gold exchange-traded funds (GETFs) in India. Two mutual funds, UTI mutual fund and Benchmark Mutual Fund are set to launch GETEs in a few days. These funds would be listed on the National Stock Exchange (NSE). What are gold exchange-traded funds? A gold-exchange traded fund unit is like a mutual fund unit backed by gold as the underlying asset and would be held mostly in demat form. An investor would get a securities certificate issued by the mutual fund running the GoldETF defining the ownership of a particular amount of gold. GETFs are designed to offer investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell through trading of a security on a stock exchange. With gold being one of the important asset classes, GETFs will provide a better, simpler and affordable method of investing as compared to other investment methods like bullion, gold coins, gold futures, or jewellery. Advantages of GETFs

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No risk of holding physical stock: As GETFs are issued in demat form, the risk associated with holding physical gold is reduced considerably. Affordable: GETFs are ideal for small retain investors as they can buy a just one unit from the exchange. The minimum amount of investment during the NFO period for Cash is Rs 10,000 and in multiples of Rs 1,000 thereafter. One unit of the fund will represent one gram of gold. High Liquidity: GETFs can be easily bought / sold like any other stock on the exchange during market hours at real-time prices as opposed to end of day prices. Lower cost: GETFs enjoy the benefits of lower cost and higher transparency. As they are listed on the exchange, costs of distribution are much lower. Further, exchange traded mechanism helps reduce minimal collection, disbursement and other processing charges. Gold futures include the cost of carry that will be absent on a GETF. Low tracking error: Tracking Error of GETFs is likely to be low as compared to a normal fund. Due to the creation / redemption of units only through in-kind mechanism the fund can keep lesser funds in cash. Also, time lag between buying / selling units and the underlying physical gold is much lower.

Conclusion India is the world's biggest consumer of gold, consuming 700-800 tones annually, the majority of which is used for jewellery. Gold ETFs are expected to be popular as investment-led buying for gold has pushed aside some of the demand for gold jewellery. Buying jewellery as an investment in gold can be expensive as charges in the form of making, storage and other services tend to increase the cost, while gold-ETFs can be an effective invest tool to help one build significant wealth over time.

SYSTEMATIC INVESMENT PLAN (SIP)

An SIP is a method of investing a fixed sum, on a regular basis, in a mutual fund scheme. It is similar to regular saving schemes like a recurring deposit. An SIP allows one to buy units on a given date each month, so that one can implement a saving plan for themselves. A SIP can be started with as small as Rs 500 per month in ELSS schemes to Rs 1,000 per month in diversified equity schemes. Buy low sell high, just four words sum up a winning strategy for the stock markets. But timing the market is not easy for everyone. In timing the markets one can miss the larger rally and may stay out while the markets were doing well. Therefore, rather than timing the market, investing month after month will ensure that one is invested at the high and the low, and make the best out of an opportunity that could be tough to predict in advance. Why SIP? Mutual Fund investments are managed by qualified and experienced professionals who have the expertise of investment techniques, backed by dedicated investment research team You can purchase scheme units at a lesser cost as most of the Asset Management Companies (AMCs) charge less entry load (for some scheme even NIL) for SIP investments, as compared to normal purchases in the scheme. SIPs make the volatility in the market work in your favour. Since a fixed amount is invested more units are purchased when a scheme NAV is low and fewer units when the NAV is high. As a result, over a period of time these market fluctuations are generally averaged. Thus the average cost of your investment is often reduced.

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since you invest regularly, it makes you disciplined in your savings, which leads to wealth accumulation.

The SIP reduces the average purchase cost, even in volatile markets with relative ease. When you invest a fixed amount every month, the number of mutual fund units you actually buy depends on their market price. Therefore, with the money you invest each month, you can buy less units when the market moves up and more units when the market moves down. This means you are averaging out your cost. If you invest Rs 1000 a month at a price of Rs 20 a unit, you will have bought 50 units (1000/20). But at a price of Rs 10 per unit, you will have bought 100 units (1000/10). Investing a fixed sum regularly means averaging out the cost, as you get fewer units when the price goes up and more when the price goes down.

Returns of Equity Diversified Schemes recommended By ICICIdirect

Rs 1000 invested every month for three year, total amounting to Rs 36000 NAV on Returns Capital Units 31-July-06 Appreciation Accumulated (Rs) (Rs) (%) 576.55 115.67 66689.96 85.25 769.49 86.36 66452.04 84.59 1228.79 53.37 65575.41 82.15 749.55 87.44 65541.16 82.06 1043.23 62.63 65337.24 81.49 466.90 138.35 64828.52 80.08 1359.65 46.66 63441.19 76.23 612.35 102.94 63035.75 75.10 852.88 73.84 62976.35 74.93

Scheme HDFC Equity Fund DSP Merrill Lynch Equity Fund Kotak 30 HDFC Top 200 Fund Prudential ICICI Power Reliance Vision Fund Sundaram Select Focus Franklin India Prima Plus Prudential ICICI Growth Plan

MONTHELY INCOME PLAN:

Monthly income plans, or MIPs, as they are more popularly known, are a category of mutual funds that invest mainly in debt instruments. Only about 10-20% of the assets are allocated to equity stocks. But the very name monthly income plan is a misnomer, as these funds do not guarantee a monthly income. Like any other fund, the returns are market-driven. Though many fund houses strive to declare a monthly dividend, they have no such obligation. MIPs are launched with the objective of giving a monthly income to investors, but the periodicity depends upon the option chosen by the investor. These are generally monthly, quarterly, half-yearly and annual options. A growth option is also available, where the investors do not receive regular dividends, but gains in the form of capital appreciation. Suitability MIPs are suitable for conservative investors who want to earn marginally better returns than a debt-only portfolio. Conservative investors generally remain invested in fixed income instruments, but sometimes they need returns that are above the inflation by a few points. Obviously, equity exposure is the best way to provide this meaningful return over the inflation. A MIP typically invests bulk of its assets in debt, while a small equity exposure is maintained to earn something extra.

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The Way Ahead The market is close to its all-time high of May 2006 after which it witnessed a sharp correction. It is likely to remain volatile and could also witness some profit-booking. Investors need to re-look and re-balance their investment portfolios. At these times, investors should reconcile with the fact that days for making easy money without compromising stability are over. MIPs can be a good option considering their exposure to debt instruments. These will help investors to maintain a low-risk portfolio and generate regular and stable returns. Stability, rather than flashy returns should be the priority for a typical MIP investor. And the MIPs, which have shun aggression, cut equity exposure and stick to quality large-caps, are likely to achieve that objective. The performance of some MIPs with their exposure to equity in presented in the table below. The schemes cannot be compared only on the basis of their returns as each have a different level of equity in their portfolio. Investors need to choose a scheme with a level of equity they are comfortable with and balances their individual portfolios.

Scheme

Fund Equity Returns % (Absolute) Size exposure ( 04(% of (Rs No. of 1 3 6 1 Oct-06 Net Cr.) Scrips Mts Mts Mts Year ) Assets) NAV
11.33 19.97 12.58 11.92 11.73 12.71 18.3 13.31 16.37 12.42 0.72 64.7 38.54 5.61 0.62 11.75 55.08 39.25 14.18 5.23 3.50 19.59 13.97 13.61 12.98 11.92 14.35 18.82 11.46 14.28 6 28 19 15 25 29 28 8 21 19 0.99 1.14 0.21 0.52 1.19 0.59 0.97 0.93 0.47 0.42 2.52 5.09 2.75 3.12 3.92 1.77 3.58 5.43 2.87 2.51 3.47 3.09 0.59 3.42 0.44 1 5.81 7.74 4.93 7.07 6.22 7.64

Birla MIP II - Savings 5 Plan FT India Monthly Income Plan HDFC Monthly Income Plan STP HSBC MIP - Regular ING Vysya MIP Fund - Plan B Kotak Income Plus Prudential ICICI MIP Plan Reliance Monthly Income Plan SBI Magnum Monthly Income Plan Sundaram BNP Paribas Monthly Income Plan

2.99 10.29 4.45 12.31 2.93 0.49 7.51 6.99