Introduction

Introduction

To get a high-quality return from Funds investors generally baffle in taking decision for choosing the optimum funds. We here trying to get out from this problem by comparing two funds.

I am emphasising to establish a analytical comparison between diversified Equity- Growth funds and Sectorial Funds..

Diversified funds hold low risk than Sectorial funds because sectorial funds concentrate only a particular sector of economy. Since we know that profit is in proportion to risk so it make a point to study that return from sectorial funds should be higher than diversified funds. Comparing mutual funds is fairly simple when you have a good understanding of the key statistics and know how to employ them effectively. The key statistics listed below should serve you well in comparing mutual funds.

Mutual Fund Returns Average Return Risk-Adjusted Return

Mutual Fund Risk Standard Deviation Beta

Risk-to-Return

 Sharpe Ratio Coefficient of Variation Treynor Ratio

NAV

About Mutual Funds A mutual fund share represents a proportionate ownership of all the underlying securities in the fund, allowing investors to spread their money over many more securities than one person could typically put together in a portfolio. A mutual fund is a more diversified than a typical individual's portfolio, thereby reducing your comparative risk and, consequently increasing your comparative return. The amount of capital needed to obtain this diversification is too large for the average individual investor.

Besides, mutual funds can achieve economies of scale in trading and transaction costs, economies unavailable to the typical individual investor. Also, professional money managers should be able to earn above average returns through successful securities analysis. Moreover, mutual funds allow

individuals to earn a certain return without needing to constantly monitor the market.

Diversification Successful investors know that diversifying their investments can help reduce the adverse impact of a single investment. Mutual funds introduce diversification to your investment portfolio automatically by holding a wide variety of securities. Moreover, since you pool your assets with those of other investors, a mutual fund allows you to obtain a more diversified portfolio than you would probably beable to comfortably manage on your ownand at a fraction of the cost. In short, funds allow you the opportunity to invest in many markets and sectors. Thats the key benefit of diversification.

Types of mutual funds: Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.

1. Schemes according to Maturity Period: Open - Ended Schemes Close - Ended Schemes Interval Schemes

2. Fund according to Investment Objective: Growth Schemes Income Schemes Balanced Schemes Money Market Schemes

3. Other Schemes Tax Saving Schemes Special Schemes Index Schemes Sector Specific Schemes

1. Schemes according to Maturity Period:

(A). An open ended mutual fund A mutual fund that continually creates new shares on demand. Mutual fund shareholders buy the funds at net asset value and may redeem them at any time at the prevailing Net Asset Value.

(B). An close ended mutual fund A mutual fund that closes after the initial offering, and has fixed duration open for subscription only during a specified period. Listing in a recognized stock exchange is a basic feature of a closed-ended mutual fund. Existing investors/new investors can exit from or invest in these funds at the quoted market prices subject to a specified bid/offer spread.

2. Fund according to Investment Objective:

(A). Growth / Equity Oriented Scheme The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in

equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

(B). Income / Debt Oriented Scheme The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

(C). Balanced Fund The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.

(D). Money Market or Liquid Fund These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.

3. Other Funds

(A). Sectorial funds Sectorial funds are those funds that restrict their investments to a particular segment or sector of the economy. These funds concentrate on one industry such as Infrastructure, Power , Auto , Heath care, Media , Pharmaceuticals etc. The idea is to allow investors to place bets on specific industries or sectors, which have strong growth potential. These funds tend to be more volatile than funds holding a diversified portfolio of securities in many industries. Such concentrated portfolios can produce tremendous gains or losses, depending on whether the chosen sector is in or out of flavor.

(B). Index Funds An index fund is a type of mutual fund that builds its portfolio by buying stock in all the companies of a particular index and thereby reproducing the performance of an entire section of the market. Investing in an index fund is a form of passive investing. Passive investing has two big advantages over active investing. First, a passive stock market mutual fund is much cheaper to run than an active fund. Second, a majority of mutual funds fail to beat broad indexes such as the S&P 500.

(C).Tax saving funds or Equity Linked Svings Scheme (ELSS) : These funds have a lock-in period of three years. Much better when compared to the lock-in periods of four and 15 years of NSC and PPF respectively. The dividends earned will be tax free. When you sell the units of these funds, you can avail of the long-term capital gain for which there is no tax. View the three year lock-in period as a benefit. Because when you invest in equity, you must take a long-term view. The real potential of equities starts to show only after a few years. This allows you to ignore the short-term slumps and stay invested for the long haul. Also, the lock-in gives fund managers the freedom to take sector and stock bets, which they are not able to do in the regular equity schemes. Before we go on to that, we would like to explain a term: market cap. You will come across it quite often as we talk of fund managers investing in large cap, small cap and mid cap. Market capitalisation = Market price of the share x The number of shares in a company Large cap = Companies with a market cap of over Rs 1,500 crore (Rs 15 billion) Mid cap = Those between Rs 25 crore (Rs 250 million) and Rs 1,500 crore (Rs 15 billion) Small cap = Those less than Rs 25 crore (Rs 250 million

PRINCIPAL INVESTMENT STRATEGIES At least 80% of the Diversified Equity Funds net assets (including borrowings for investment purposes) consists of common stocks of large-capitalization U.S. companies that are diversified among various industries and market sectors. For this purpose, City National Asset

Management, Inc. (CNAM), the Funds investment adviser, considers a largecapitalization company to be a company with a market capitalization satisfying Standard & Poors eligibility criteria for inclusion in the S&P 500 Index at the time of investment (currently $4 billion or greater). This investment strategy may be changed at any time, with 60 days prior notice to shareholders. CNAM manages a portion of the Diversified Equity Funds assets by replicating the holdings of the S&P 500 Index other than tobaccorelated companies. The investments of the remainder of the Fund are typically equity securities that a sub-adviser believes have one or more of the following characteristics: a price significantly below the intrinsic value of the issuer; favorable prospects for earnings growth; above average return on equity and dividend yield; and sound overall financial condition of the issuer. Up to 20% of the Diversified Equity Funds net assets may consist of equity securities, consisting primarily of common stock, of midcapitalization companies. For this purpose, CNAM considers a mid-capitalization company to be a company with a market capitalization satisfying Standard & Poors eligibility criteria for inclusion in the S&P Midcap 400 Index at the time of investment (currently $1 billion to

$4.4 billion). In addition to investing in U.S. corporations, the Fund invests in U.S. dollar denominated sponsored American Depositary Receipts of foreign corporations. The Funds sub-advisers may buy and sell securities in the Funds portfolio frequently, which may result in higher transaction costs and produce capital gains and losses. The Funds sub-advisers may determine to sell a security when its target value is realized, its earnings deteriorate, changing circumstances affect the original reasons for the securitys purchase, or more attractive investment alternatives are identified. PRINCIPAL RISKS OF INVESTING IN THE FUND As with any mutual fund, there are risks to investing. None of the Diversified Equity Fund, CNAM and the Funds sub-advisers can guarantee that the Fund will meet its investment goal. The Fund will expose you to risks that could cause you to lose money. Here are the principal risks to consider: Market Risk of Equity Securities By investing in common stocks, the Fund may expose you to a sudden decline in the share price of a particular portfolio holding or to an overall decline in the stock market. In addition, the Funds principal market segment may underperform

other segments or the market as a whole. The value of your investment in the Fund will fluctuate daily and cyclically based on movements in the stock market and the activities of individual companies in the Funds portfolio. Index Risk The performance of the portion of the Fund designed to replicate the S&P 500 Index may not exactly match the performance of the Index. That portion of the Fund does not hold every stock contained in the Index and the performance of the stocks held in the Fund may not track exactly the performance of the stocks held in the Index. Furthermore, unlike the Index, the Fund incurs management fees, 12b-1 fees (for Class N shares only), administrative expenses and transaction costs in trading stocks. Medium Capitalization (Mid-Cap) Companies Investments in mid-cap companies may involve greater risks than investments in larger, more established companies, such as limited product lines, markets and financial or managerial resources. In addition, the securities of midcap companies may have greater price volatility and less liquidity than the securities of larger capitalized companies. Foreign Investments (American Depositary Receipts) Foreign investments tend to be more volatile than domestic securities, and are

subject to risks that are not typically associated with domestic securities (e.g., unfavorable political and economic developments and the possibility of seizure or nationalization of companies, or the imposition of withholding taxes on income). The Fund invests in U.S. dollar denominated American Depositary Receipts of foreign companies (ADRs) which are sponsored by the foreign issuers. ADRs are subject to the risks of changes in currency or exchange rates (which affect the value of the issuer even though ADRs are denominated in U.S. dollars) and the risks of investing in foreign securities. Sub-Adviser Allocation The Funds performance is affected by CNAMs decisions concerning how much of the Funds portfolio to allocate for management by each of the Funds sub-advisers or to retain for management by CNAM. Management The Funds performance depends on the portfolio managers skill in making appropriate investments. As a result, the Fund may underperform the equity market or similar funds. Defensive Investments During unusual economic or market conditions, or for temporary defensive or liquidity purposes, the Fund may invest 100% of its assets in cash or cash equivalents that would not ordinarily be consistent with the Funds investment goals.CNI CHARTER FUNDS

PERFORMANCE The bar chart and the performance table that follow illustrate some of the risks and volatility of an investment in the Diversified Equity Fund by showing changes in the Funds performance from year to year and by showing the Funds average annual total returns for 1, 5 and

10 years and since inception. Of course, the Funds past performance (before and after taxes) does not necessarily indicate how the Fund will perform in the future. Call (888) 889-0799 or visit www.cnicharterfunds.com to obtain updated performance information. This bar chart shows the performance of the Diversified Equity Funds Institutional Class shares based on a calendar year. 29.18% 13.53%7.35% 14.72% 0.63% 28.46% 12.51% 13.36% (38.08)% (6.96)% -60% -40% -20% 0% 20% 40%

60% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Best Quarter 16.06% Q2 2003 Worst Quarter (23.29)% Q4 2008 This table shows the average annual total returns of each class of the Diversified Equity Fund for the periods ended December 31, 2012. The table also shows how the Funds performance compares with the returns of an index comprised of companies similar to those held by the Fund. Average Annual Total Returns(1) (for the periods ended December 31, 2012) One Year Five Years Ten Years Since Inception Institutional Class Return Before Taxes 13.36% (1.15)% 5.55% 8.75% Return After Taxes on Distributions 13.21% (1.26)% 4.87% 6.33%

Return After Taxes on Distributions and Sale of Fund Shares 8.88% (0.99)% 4.73% 6.34% Class N Return Before Taxes 13.02% (1.40)% 5.27% 8.63% S&P 500 Index (Reflects no deduction for fees, expenses or taxes) 16.00% 1.66% 7.10% 9.37% (1) Performance for Since Inception for all classes is shown for periods beginning October 20, 1988, which is the date the predecessor to the Diversified Equity Fund (the Predecessor Fund) commenced operations. On September 30, 2005, the Predecessor Fund reorganized into the Fund. The performance results for Institutional Class shares of the Fund before September 30, 2005, reflect the performance of the Predecessor Funds Class I shares. Class A shares of the Predecessor Fund, the predecessor to the Class N shares of the Fund, commenced operations on December 30, 2002. The performance results for Class N shares of the Fund for the period of December 30, 2002, to September 29, 2005, reflect the performance of the Predecessor Funds Class

A shares. The performance results for Class N shares of the Fund for the period of October 20, 1988 to December 30, 2002, reflect the performance of the Predecessor Funds Class I shares. The performance of the Predecessor Funds Class I Shares has not been adjusted to reflect the higher Rule 12b-1 fees and expenses applicable to the Funds Class N shares. If it had, the performance of the Funds Class N shares would have been lower than that shown. For the index shown the measurement period used in computing the returns of the index for the Since Inception period begins on October 31, 1988. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investors tax situation and may differ from those shown. The performance of Institutional Class shares does not reflect Class N shares Rule 12b-1 fees and expenses. After-tax returns for Class N shares will vary from the after-tax returns shown above for Institutional Class shares. The after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.CNI CHARTER FUNDS | PAGE 5

CNI-SM-016-0500 INVESTMENT MANAGER City National Asset Management, Inc. SUB-ADVISERS SKBA Capital Management, LLC (SKBA) Turner Investments, L.P. (Turner) PORTFOLIO MANAGERS Thomas Kuo and Dimitry Kirstman are primarily responsible for the day-to-day management of the portion of the Funds assets managed by CNAM and have served as portfolio managers of the Fund since March 2012. Andrew W. Bischel, Kenneth J. Kaplan, Joshua J. Roth and Shelley H. Mann are responsible for the day-to-day management of the portion of the Funds assets managed by SKBA and have served as portfolio managers for the Fund since 2006. Robert E. Turner is responsible for the day-to-day management of the portion of the Funds assets managed by Turner and has served as portfolio manager for the Fund since 2008.

PURCHASE AND SALE OF FUND SHARES The minimum initial investment for Institutional Class shares is $1,000,000. The minimum initial investment for Class N shares is $1,000. There is no minimum for subsequent investments in Institutional Class shares or Class N shares. The Fund reserves the right to change the

minimum amount required to open an account or to add to an existing account without prior notice. The Fund may accept investments of smaller amounts at its discretion; however, your financial institution or financial professional may establish higher minimum investment requirements than the Fund and may also independently charge you transaction fees and additional amounts in return for its services. The shares of the Diversified Equity Fund are redeemable. You may redeem some or all of your shares on any day the NYSE is open for regular session trading. The Fund ordinarily pays redemption proceeds on the business day following the redemption of your shares. However, the Fund reserves the right to make payment within seven days of the redemption request. Redemption proceeds will be sent to you via check to your address of record or will be wired to your bank via the instructions on your account.

TAX INFORMATION The Diversified Equity Fund intends to make distributions that may be taxed as ordinary income or capital gains. PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase the Diversified Equity Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediarys web site for more information.

Literature Review

Literature Review

Empirically, most papers have concentrated on the issue whether managed funds are able to outperform some relevant benchmark portfolios. Typically, the conclusion of these papers has been that, on average, funds did not significantly

earn more than the passive benchmark performance on a risk-adjusted basis after deduction of expenses and commissions. Some authors even find that riskadjusted fund returns are significantly negative. However, some individual funds were found to outperform the benchmarks significantly

Factors affecting mutual funds Risk Risk can be a great ally when trying to estimate the reward potential of a stock investment. The greater the stock volatility, or risk, the greater also is the reward. There are several new risk measurements that give guidance for selecting mutual stocks.

Time Horizon The time horizon of an individual will also influence the performance measures he/she will look at more closely. If you are investing for less than four years, you need a fund with consistent performance, so all your money will be there when you need it. You also do not have time to earn back a large commission

charge

on

the

front

end.

Conversely, if you plan to invest your money for 30 years, neither consistency nor load is very important: you have plenty of time for the market to recover. With a long-term horizon, your biggest enemies are poor performance and high annual expenses, both of which can erode that all-important compounding.

Index funds Vs. activety managed equity funds Deciding between mutual and index funds is not a matter of attempting to assess which is better, but simply a matter of selecting one's own personal investment style. Index funds are specially attractive to more passive investors, who do not believe in constant outThe major attractiveness of index funds lies in their low cost for the investor. Low fees and low turnover holds down transaction costs and minimizes capitalgains taxes.

Index funds are steady performers that have been trouncing the average mutual fund for along time. They are great core holdings, particularly for beginning investors and anyone They are managed so that their returns will match, as exactly as possible, the

returns of a broad market index. If the overall market goes up, the index fund will go up almost exactly as far. The most popular and well-known index funds track the Standard & Poor's 500, which is basically a group of the largest bluechip stocks on the market.

Index funds are often criticized for chasing mediocrity; their returns will always be slightly behind the market as a whole, by the margin of the (generally very low) expenses. However, over the last 3-,5-,and 10-year periods, the indexes (and index funds) have outperformed almost three-quarters of all portfolio managers. There are certainly managers who have consistently beaten the indexes. But some investors are more comfortable knowing that they will get whatever the market gives out, and they are not subject to the whims of a portfolio manager who may or may not live up to his or her track record.

Growth Funds : Growth Fund, mainly mutual funds that is, or made up of shares in companies in order to better yield dividends. They do resubmit the potential for higher growths but then this is a bit risky. In general, investors prefer to invest in the

fund for general fund revenue growth, because they offer a better return potentials. Besides their main objective is to strive for both dividend income and capital as they invest in companies that have a reputation for dividends and capital gains.

They also called as equity funds as the goal is to achieve long-term growth of capital, and then stable income. It is always prudent to invest in diversified growth fund that not only covers a group of companies, but also various sectors, as well as investments it allows the investor bifurcate its resources, thus opening them up to a wide range of options. For example, if you invest in Growth Fund, which has five stock options it IT, cement, steel, pharmaceutical and FMCG (Fast Moving Consumer Goods). Now say two or three of those five stocks are not doing well enough, and you losses on investments, still you will have several more units left to look forward too.

Growth funds, mainly fall into two categories: 1) Aggressive, 2) Conservatives. Aggressive Growth Fund mutual fund, which is trying to achieve high income from capital gains. Investments held in these funds are companies that show high growth potential. People invest in this kind of growth funds should be prepared to accept the high risk of compromise to return. They also referred to

as "capital appreciation fund" or "maximum capital gains fund". For example: the possibility of US Franklin funds. Now the Conservative part. Conservative Growth Fund is just opposite the aggressive growth fund. This investment is mainly targeted at people who are willing to earn the section on a regular basis, then a high capital gains. He is safe and secured and non-risky investments.

Basically, most investors prefer to invest in specific sectors such as IT (information and technology) and FMCG (Fast Moving Consumer Goods). To meet their needs, sector specific scheme launched to enable investors to decide how aggressive or conservative they want to be. As of today the most popular forms of industry funds, although a number of other funds also exist. Some examples of Birla IT Fund, the Union of the new millennium, and prudential ICICI FMCG fund. These funds basically invest in various sectors, mainly focusing on the order of the activities of many domestic companies. This makes his specialty, rather than fund industry. However, they are contrary to greater risk than large diversified investment funds, but you can expect longer term, and returns.

Benefits of Growth funds Growth Fund, mainly mutual funds that is, or made up of shares in companies in order to better yield dividends. They do resubmit the potential for higher growths but then this is a bit risky. In general, investors prefer to invest in the fund for general fund revenue growth, because they offer a better return potentials. Besides their main objective is to strive for both dividend income and capital as they invest in companies that have a reputation for dividends and capital gains.

They also called as equity funds as the goal is to achieve long-term growth of capital, and then stable income. It is always prudent to invest in diversified growth fund that not only covers a group of companies, but also various sectors, as well as investments it allows the investor bifurcate its resources, thus opening them up to a wide range of options. For example, if you invest in Growth Fund, which has five stock options it IT, cement, steel, pharmaceutical and FMCG (Fast Moving Consumer Goods). Now say two or three of those five stocks are not doing well enough, and you losses on investments, still you will have several more units left to look forward too.

Growth funds, mainly fall into two categories: 1) Aggressive, 2) Conservatives. Aggressive Growth Fund mutual fund, which is trying to achieve high income from capital gains. Investments held in these funds are companies that show high growth potential. People invest in this kind of growth funds should be prepared to accept the high risk of compromise to return. They also referred to as "capital appreciation fund" or "maximum capital gains fund". For example: the possibility of US Franklin funds. Now the Conservative part. Conservative Growth Fund is just opposite the aggressive growth fund. This investment is mainly targeted at people who are willing to earn the section on a regular basis, then a high capital gains. He is safe and secured and non-risky investments.

Basically, most investors prefer to invest in specific sectors such as IT (information and technology) and FMCG (Fast Moving Consumer Goods). To meet their needs, sector specific scheme launched to enable investors to decide how aggressive or conservative they want to be. As of today the most popular forms of industry funds, although a number of other funds also exist. Some examples of Birla IT Fund, the Union of the new millennium, and prudential ICICI FMCG fund. These funds basically invest in various sectors, mainly focusing on the order of the activities of many domestic companies. This makes his specialty, rather than fund industry.

However, they are contrary to greater risk than large diversified investment funds, but you can expect longer term, and returns.

NAV The Term Net Asset Value (NAV) is used by investment companies to measure net assets. It is calculated by subtracting liabilities from the value of a fund's securities and other items of value and dividing this by the number of outstanding shares. Net asset value is popularly used in newspaper mutual fund tables to designate the price per share for the fund.

The value of a collective investment fund based on the market price of securities held in its portfolio. Units in open ended funds are valued using this measure. Closed ended investment trusts have a net asset value but have a separate market value. NAV per share is calculated by dividing this figure by the number of ordinary shares. Investments trusts can trade at net asset value or their price can be at a premium or discount to NAV.

Value or purchase price of a share of stock in a mutual fund. NAV is calculated each day by taking the closing market value of all securities owned plus all other assets such as cash, subtracting all liabilities, then dividing the result (total net assets) by the total number of shares outstanding.

Calculating NAVs - Calculating mutual fund net asset values is easy. Simply take the current market value of the fund's net assets (securities held by the fund minus any liabilities) and divide by the number of shares outstanding. So if a fund had net assets of Rs.50 lakh and there are one lakh shares of the fund, then the price per share (or NAV) is Rs.50.00.

Mutual Fund Industry

The mutual fund industry is a lot like the film star of the finance business.Though it is perhaps the smallest segment of the industry, it is also the most glamorous in that it is a young industry where there are changes in the rulesof the game everyday, and there are constant shifts and upheavals. The mutual fund is structured around a fairly simple concept, the mitigation of risk through the spreading of investments across multiple entities, which is achieved by the pooling of a number of small investments into a large bucket.Yet it has been the subject of perhaps the most elaborate and prolonged regulatory effort in the history of the country.

As on September 30, 2006, the domestic mutual fund industry held assets under management of over Rs 290,000 crore (Rs 2,900 billion); a growth of nearly 46% over the last 12 months. Other statistics reveal that a higher portion of investors' savings is now invested in market-linked avenues like mutual funds as compared to earlier times. Media reports suggest that a number of new fund houses will commence operations in the near future.

Hence investors will have an even wider range of products to choose from. Meanwhile the existing ones are keeping investors occupied by regularly launching new fund offers (NFOs). In effect, one would be tempted to conclude that the domestic mutual fund industry has finally "come of age". However, we at Personal have a slightly different view on the state of affairs. Sure, the industry has grown in terms of asset size and Rs 300,000 crore (Rs 3,000 billion) could well be the next landmark. But that's hardly a reason to celebrate. More fund houses or funds don't make the industry, existence of the right ones does. We believe that the mutual fund industry has only grown in terms of size or choices available, but is still a long distance from being regarded as a mature one. For example, for all the NFOs being launched incessantly, there are very few that can truly claim to be unique or have the ability to add value to investors' portfolios. In fact, the industry's functioning style could well classify as a classic example of herd mentality at work. Products like monthly income plans (MIPs), mid cap funds, flexi cap funds and derivatives-based funds have found favor with various industry players at the same time.

Is it a case of all fund houses thinking alike? Similarly, the launch of NFOs has largely coincided with conducive market sentiments (read upswing in markets) and investor euphoria.

In the recent past, close-ended funds have emerged as the season's flavour. Fund houses have been quoted as saying that the close-ended nature promotes long-term investing and enables the fund manger to make investment decisions with a long-term perspective. While we don't dispute this argument, the timing of launch of close-ended funds does make us curious. It coincides with a regulation issued by the markets regulator, the Securities and Exchange Board of India (Sebi), that only closeended NFOs will be permitted to charge initial issue expenses. Conversely, open-ended NFOs will be required to meet sales, marketing and other related expenses from the entry load and not through initial issue expenses. Weren't long-term investing and the other virtues of close-ended funds relevant earlier?

Another initiative which is conspicuous by its absence is investor education. It would be safe to say that most fund houses have done precious little to further the cause of investor education.

Mutual fund distributors who help fund houses garner monies continue to rule the roost. They have been lavished with attractive brokerage structures, regular NFO launches (read opportunity to make "big bucks") and other incentives. In turn, these distributors have on numerous occasions been guilty of misselling and acting in their own interest, rather than the investor's. Despite this, the investor, who should be at the very core of every fund house's activity, has been left to fend for himself. In recent times, Sebi has been forced (at an alarming frequency) to step in to aid the investor. For issues like lack of uniqueness in NFOs, method of declaring dividends, issue expenses on NFOs among others, when it seemed like the investor's interests are being compromised with, the regulator introduced measures to safeguard the investor. This doesn't reflect too well on the mutual fund industry. Instead of playing "follow the regulator", one would expect the mutual fund industry to proactively take steps and act in the investor's interests. Don't get us wrong, we aren't suggesting that every fund house is guilty of transgression, but most of them have erred on one front or the other. Sure some fund houses have been responsible and acted in a forthright manner; sadly, they are in a minority.

An asset size of Rs 300,000 crore shouldn't be seen as a milestone or even a reason to celebrate. Instead, fund houses should get their act in place and work towards revamping the mutual fund industry into a better and "mature" investment destination.

Mutual funds are a versatile investment avenue and hold the potential to emerge as preferred investment avenues for retail investors. Few would dispute the fact that a large section of the investing community remains untapped as far as mutual funds are concerned. Should this potential be tapped, fund houses (along with investors) stand to emerge as the biggest beneficiaries. However, for this to happen, the mutual fund industry must finally come of age. And the onus for achieving this rests with the fund houses.

History of Mutual Funds in World

The advent of mutual funds in 1774 heralded a significant development in the democratization of investing, allowing the average person to participate in the markets through a reasonably priced, pooled product diversified to manage risk. That one small fund saw the beginnings of a new financial services industry that has now grown to US$22.72 trillion in assets around the world.

The history of the mutual fund is more than two centuries old with the creation in 1774 of whats believed to be the first (closed-end) mutual fund by Dutch merchant Adriaan Van Ketwich. Subscription to the fund, which Van Ketwich called Eendragt Maakt Magt (unity creates strength), was available to the public until all 2,000 units were purchased. After that, participation in the fund was available only by buying shares from existing shareholders in the open market. The funds prospectus required an annual accounting, which investors could view if they requested. Two subsequent funds set up in the Netherlands increased the emphasis on diversification to reduce risk, escalating its appeal to smaller investors with minimal capital.

These early mutual funds then took root in England and France before heading to the United States in the 1890s. Most of the first mutual funds were of the closed-end variety, issuing a fixed number of shares. What is hailed as the first

modern-day mutual fund, Massachusetts Investors Trust, was created on March 21, 1924. It was the first mutual fund with an open-end capitalization, allowing for the continuous issue and redemption of shares by the investment company. After just one year, the fund grew to $392,000 in assets from $50,000. The fund went public in 1928 and eventually became known as MFS Investment Management. The first Canadian fund, Canadian Investment Fund Ltd. (CIF), was established in 1932, with assets of $51 million in 1951. It changed its name to Spectrum United Canadian Investment Fund in Nov 1996 and this fund changed name at the end of August 2002 to CI Canadian Investment Fund. Ordinary investors save

The growth of mutual funds and their impact on investing in general was nothing short of revolutionary. For the first time, ordinary investors with minimal capital could pool their resources into a professionally managed, diversified basket of investments, rather than going the more expensive route of buying individual stocks of varying risks. This was considered a giant step in the democratization of investments for the average person.

The first major sign of growth and popularity of mutual funds in Canada took place in the early 1960s when total assets doubled from $540 million in 1960

to more than $1 billion by the end of 1963. But the largest influx into mutual funds in Canada came during the 1990s when double-digit interest rates that had lured Canadian savers into GICs tumbled and investors moved into investments with the potential for higher returns. Growth of mutual funds in Canada.

Interest rates and mutual fund sales had a direct correlation in the 1990s. In May 1990, the Bank of Canada rate on which financial institutions base their interest rates stood at one of its highest levels ever -- 14.05 per cent. The Bank rate steadily declined and by January 1993, was sliced in half at 6.81 per cent and by the end of December 1993 it was down again to 4.11 per cent. Mutual fund sales surged 140 per cent from the end of 1992 to the end of 1993 and strong markets sent assets up to almost $114.6 billion. The Bank rate dropped to 3.25 per cent in January 1997 before slowly climbing to five per cent in January 2000.

At the same time, mutual funds continued their climb and became the fastestgrowing segment of the Canadian financial services sector during the 1990s, with assets under management increasing from $25 billion in December 1990 to $426 billion by December 2001, an increase of 1,700 per cent. These assets

were managed in about 1,800 different mutual funds held in more than 50 million unit holder accounts.

Mutual funds offer Canadians a superior means of accumulating wealth through access to a broad range of personalized investment solutions based on sound investing principles.

Mutual funds include: Professional portfolio management Streamlined and convenient administration Risk management through diversification Innovative solutions that meet a wide range of investment objectives and evolving investor needs Opportunities for foreign and domestic investment that may not otherwise be directly accessible to investors Liquidity, enabling investors to respond to changes in their personal circumstances Access to investing for all types of people, including those who prefer to invest small amounts at regular intervals

 Choice of purchase methods and fee structures, including full service, fee-for-service and do-it-yourself Accountability and fairness to investors through industry regulation and transparency Foreign Property Rule

The Foreign Property Rule (FPR) was introduced in Canada in 1971 to ensure that a substantial proportion of tax-deferred retirement savings flowed to Canadian companies and provided support for the development of Canadas capital markets. The FPR applied mainly to those in tax-deferred savings plans such as RRSPs, and it was up to the mutual fund industry to come up with a compromise.

The Canadian mutual fund industry responded with great innovation in 1999, creating clone global funds that qualified as Canadian content and were therefore 100 per cent eligible for personal RRSPs. These clone funds used sophisticated derivative products to mirror the performance of an underlying international fund -- while retaining their eligibility as domestic content. To get this global exposure, MERs were slightly higher than for stand-alone, domestic funds.

In 2000, the federal government increased the restriction on foreign property content in personal RRSP accounts to 30 per cent from 25 per cent, following comments by many financial observers that investors who bought strictly Canadian funds were only availing themselves of three per cent of the worlds investment opportunities as well as international diversification.

Then in July 2005, the federal budget changes went into effect, removing the 30% restriction on foreign content and clone funds were dismantled. Since then international and global funds have taken a significantly larger share in the mutual fund portfolios of many Canadian investors.

As of the end of August 2007, mutual fund assets in Canada stood at more than $695.9 billion and foreign sales have gained a larger part of mutual fund assets. For the latest statistics compiled by IFIC, the industry association representing mutual fund managers and dealers, please visit www.ific.ca. The growth of the industry

To meet the growing regulatory and trade needs of the mutual fund industry, the Canadian Mutual Funds Association was established in 1963. Original members

of the CMFA were individual mutual funds themselves, and not fund management companies, as is the case currently. In 1963, the CMFA published a Code of Ethics and Regulation for its members. Ten years later, it formally incorporated with a mandate to engage in and support activities conducive to high ethical standards and efficiency of administration and operations within the Canadian mutual fund industry. In 1976, the CMFA changed its name to The Investment Funds Institute of Canada (IFIC).

Since then, IFIC has taken an integral role in the regulatory development of the mutual fund industry in Canada, proactively influencing and advancing industry issues within the regulatory framework, while increasing our members efficiencies, knowledge and proficiency. IFIC provides a consistently high level of service to enable dealer and manager members to work together in a cooperative forum to enhance the integrity and growth of the industry and strengthen investor confidence.

Specifically, IFIC: Created its Recommendations for a Code of Sales Practices for the Mutual Fund Industry, which was published in 1996. It was adopted two years later by

securities regulators and incorporated by securities regulators into an enforceable rule. Published its Privacy Code in 2000 Developed a guide in 2002 to assist members in complying with their obligations regarding Canadas Proceeds of Crime (Money Laundering) and Terrorist Financing Act and regulations Produced in 2004 a comprehensive toolbox of measures for IFIC members to detect and deter short-term abusive trading, which has since become part of the OSCs latest recommendations on the subject Was vocal in the federal government removing foreign content limits on taxdeferred savings plans Has always been supportive of raising RRSP contribution limits and encouraging government to find ways in which Canadians can better save for their retirement In 2006-2007, created a charter framework and readiness checklist to provide assistance to fund managers and legal counsel charged with drafting or reviewing an IRC charter Introduced a new statistics reporting method in 2007 to show both where the money is managed and where clients are making their purchases

Works with the Canadian Investment Funds Standards Committee to achieve a single set of industry-wide categories for Canadian investment funds on an ongoing basis In 2006, created the Investor Education Award presented during the Canadian Investment Awards.

History of Mutual Fund in India

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases

First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. 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 delinked 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) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund

(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.

At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores.

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 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. 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 assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth.

Assets Management Company (AMC)

List of major AMC of world

This is a list of wolds leading corporations that provide financial asset management Acadian Asset Management AllianceBernstein Allianz Global Investors Ameriprise Financial, Inc. Barclays Global Investors Bear Stearns BlackRock Columbia Management Group Covestor Citigroup Asset Management (now merged into the subsidiaries of Legg Mason) Credit Suisse Deutsche Asset Management F&C Asset Management Fidelity Investments Global Investment House The Hartford Financial Services Group Henderson Group

 ING Investment Management Invesco Perpetual Kenneth L. Fisher (Fisher Investments) Legal & General Legg Mason Lord Abbett & Co. Mekong Capital Morgan Keegan & Company - Morgan Asset Management M&G New Star Asset Management Northern Trust PTI Securities & Futures Putnam Investments Prudential Financial Schroders Smith Breeden ThinkEquity Partners, LLC T. Rowe Price Global Alliance Realty

Major AMC of India List of Indias leading Asset Management Companies Deutsche Bank has compiled a shortlist of top-performing funds from Indias leading fund houses. These have been chosen through a rigorous selection procedure and constantly undergo a comprehensive review. They cover all the fund categories and cater to varied investor needs and risk profile. Choose from the following fund houses:

ABN Amro Asset Management Pvt Ltd AIG GIG Asset Management Pvt Ltd Benchmark Asset Management Pvt Ltd Birla Sun Life Asset Management Pvt Ltd Deutsche Asset Management Pvt Ltd DSP Merrill Lynch Asset Management Pvt Ltd Fidelity Asset Management Pvt Ltd Franklin Templeton Asset Management Pvt Ltd HDFC Asset Management Pvt Ltd HSBC Asset Management Pvt Ltd ICICI Prudential Asset Management Pvt Ltd

 ING Asset Management Pvt Ltd JP Morgan Asset Management Pvt Ltd Kotak Mahindra Asset Management Pvt Ltd Optimix Asset Management Pvt Ltd Principal PNB Asset Management Pvt Ltd Reliance Asset Management Pvt Ltd SBI Asset Management Pvt Ltd Standard Chartered Asset Management Pvt Ltd Sundaram BNP Paribas Asset Management Pvt Ltd Tata Asset Management Pvt Ltd UTI Asset Management Pvt Ltd

Major AMC of India

AIG

AIG offers asset management services through AIG Investments, a group of international companies which provide investment advice and market asset management products and services to clients around the world. AIG Investments was formed in 1996 by consolidating the investment divisions of various AIG subsidiaries worldwide. In its short history, it has grown both organically and by acquisition.

AIG Investments is headquartered in New York and has a total of 46 investment offices operating in regional centers in North America, Europe, South America, Africa and Asia and employing over 2,100 persons as of 30 September 2008. Additionally, the extensive network and resources of AIG, which operates in 130 countries and jurisdictions, complement AIG Investments network.

AIG Investments offers the widest range of investment capabilities divided into five major groups Equity, Fixed Income, Real Estate, Private Equity, Hedge funds and Other Alternate asset classes. It is also one of the largest asset management firms in the world with nearly US $676 billion in assets as of 30 September 2008.

Our strengths lie in our globally integrated operations and investment teams, our disciplined and established investment processes, and the knowledge and expertise of our diverse group of employees.

With AIG as our parent company, we also enjoy the benefits of a premier insurance and financial services organization with a distinguished history, renowned financial leadership and extensive resources.

AIG major funds in India areGrowth : AIG Global Investment Group Mutual Fund AIG India Equity Fund- Institutional Plan- Dividend Option AIG India Equity Fund- Institutional Plan- Growth Option AIG India Equity Fund- Regular Plan- Dividend Option AIG India Equity Fund- Regular Plan- Growth Option AIG Infrastructure and Economic Reform Fund - Institutional PlanDividend AIG Infrastructure and Economic Reform Fund - Institutional PlanGrowth

 AIG Infrastructure and Economic Reform Fund - Regular Plan-Dividend

AIG Infrastructure and Economic Reform Fund - Regular Plan-Growth

Income AIG India Treasury Fund-Institutional Plan-Daily Dividend Option AIG India Treasury Fund-Institutional Plan-Growth Option India Treasury Fund-Institutional Plan-Monthly Dividend Option AIG India Treasury Fund-Institutional Plan-Weekly Dividend Option 1 AIG India Treasury Fund-Retail Plan-Bonus Option AIG India Treasury Fund-Retail Plan-Daily Dividend Option AIG India Treasury Fund-Retail Plan-Growth Option AIG India Treasury Fund-Retail Plan-Monthly Dividend Option AIG India Treasury Fund-Retail Plan-Quarterly Dividend Option AIG India Treasury Fund-Retail Plan-Weekly Dividend Option AIG India Treasury Fund-Super Institutional Plan-Daily Dividend Option AIG India Treasury Fund-Super Institutional Plan-Growth Option AIG India Treasury Fund-Super Institutional Plan-Monthly Dividend Option

 AIG India Treasury Fund-Super Institutional Plan-Weekly Dividend Option AIG Short Term Fund-Institutional Plan-Growth Option AIG Short Term Fund-Institutional Plan-Monthly Dividend Option AIG Short Term Fund-Institutional Plan-Weekly Dividend Option AIG Short Term Fund-Retail Plan-Bonus Option AIG Short Term Fund-Retail Plan-Growth Option AIG Short Term Fund-Retail Plan-Monthly Dividend Option AIG Short Term Fund-Retail Plan-Weekly Dividend Option

Liquid AIG India Liquid Fund-Institutional Plan-Daily Dividend Option AIG India Liquid Fund-Institutional Plan-Growth Option AIG India Liquid Fund-Institutional Plan-Weekly Dividend Option AIG India Liquid Fund-Retail Plan-DailyDividend Option AIG India Liquid Fund-Retail Plan-Growth Option AIG India Liquid Fund-Retail Plan-Monthly Dividend Option AIG India Liquid Fund-Retail Plan-Quarterly Dividend Option AIG India Liquid Fund-Retail Plan-Weekly Dividend Option AIG India Liquid Fund-Super Institutional Plan-Daily Dividend Option

 AIG India Liquid Fund-Super Institutional Plan-Growth Option AIG India Liquid Fund-Super Institutional Plan-Weekly Dividend Option

HDFC Asset Management Company Limited (AMC)

HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000.

The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020.

In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is Rs. 25.161 crore.

The present equity shareholding pattern of the AMC is as follows : Particulars % of the paid up equity capital Housing Development Finance Corporation Limited Standard Life Investments Limited 40 60

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a review of its overall strategy, had decided to divest its Asset

Management business in India. The AMC had entered into an agreement with ZIC to acquire the said business, subject to necessary regulatory approvals.

The AMC is managing 24 open-ended schemes of the Mutual Fund viz. HDFC Growth Fund (HGF) HDFC Balanced Fund (HBF) HDFC Income Fund (HIF) HDFC Liquid Fund (HLF) HDFC Long Term Advantage Fund (HLTAF) HDFC Children's Gift Fund (HDFC CGF) HDFC Gilt Fund (HGILT) HDFC Short Term Plan (HSTP) HDFC Index Fund, HDFC Floating Rate Income Fund (HFRIF) HDFC Equity Fund (HEF) HDFC Top 200 Fund (HT200) HDFC Capital Builder Fund (HCBF) HDFC TaxSaver (HTS) HDFC Prudence Fund (HPF) HDFC High Interest Fund (HHIF) HDFC Cash Management Fund (HCMF)

 HDFC MF Monthly Income Plan (HMIP) HDFC Core & Satellite Fund (HCSF) HDFC Multiple Yield Fund (HMYF) HDFC Premier Multi-Cap Fund (HPMCF) HDFC Multiple Yield Fund . Plan 2005 (HMYF-Plan 2005) HDFC Quarterly Interval Fund (HQIF) HDFC Arbitrage Fund (HAF).

The AMC is also managing 11 closed ended Schemes of the HDFC Mutual Fund

HDFC Long Term Equity Fund HDFC Mid-Cap Opportunities Fund HDFC Infrastructure Fund, HDFC Fixed Maturity Plans HDFC Fixed Maturity Plans - Series II, HDFC Fixed Maturity Plans Series III HDFC Fixed Maturity Plans - Series IV HDFC Fixed Maturity Plans - Series V HDFC Fixed Maturity Plans - Series VI HFDC Fixed Maturity Plans - Series VII

 HFDC Fixed Maturity Plans - Series VIII.

The AMC is also providing portfolio management / advisory services and such activities are not in conflict with the activities of the Mutual Fund. The AMC has renewed its registration from SEBI vide Registration No. - PM / INP000000506 dated December 8, 2006 to act as a Portfolio Manager under the SEBI (Portfolio Managers) Regulations, 1993. The Certificate of Registration is valid from January 1, 2007 to December 31, 2009.

HSBC Asset Management Pvt Ltd

HSBC Mutual Fund is one of the premier asset management companies in India. We aim to offer you with optimum investment performance (with an institutionalised investment management process), efficient service, and a flexible product range to create wealth in the long term. Our diverse range of products across the risk spectrum range from liquid / cash funds, fixed income funds, balanced funds to equity funds suited for both individual as well as institutional investors. Through our product range, we aim to be true to our

reputation in India of being a provider of international quality investment products and services. Click here to visit our Mutual Fund website for more details.

Portfolio Management Services : With HSBC Portfolio management services, we aim to provide long-term wealth creation to high net-worth individuals through active portfolio management. We believe that it takes a committed perfectionist to bring out the very best in an investment. Our portfolio management team aims to be just that - perfectionists - who will analyse your risk profile and accordingly custom design an investment portfolio for you. With their local knowledge of capital markets coupled with the global markets coupled with the global strength and capabilities of HSBC Group, you can expect nothing short of a rewarding experience. Click here to visit our Portfolio Management Services website for more details.

Welcome to HSBC Global Asset Management India, the core global investment platform of the HSBC Group.

World class investment solutions backed by the strength of HSBC Group.: HSBC Global Asset Management has an outstanding track record and a longstanding presence globally. With approximately $299 billion (as on 31 October 2008) assets under management worldwide and presence in about 20 countries, it is one of the premier fund management organisations in the world.

HSBC Global Asset Management in India provides a comprehensive range of investment management solutions to a diverse client base and committed to delivering consistent investment performance, world class service and a broad range of solutions for all types of investors. Our range of offerings in India come under 2 broad categories

Mutual Fund and Portfolio Management Services. HSBC major funds in India are-

Growth Schemes Balanced Schemes Income Schemes Money Market Schemes

Open-ended schemes These funds do not have a fixed maturity and one can invest in such funds on any working day, during business hours. Investors can buy or sell units of openended schemes directly from the fund house at NAV related prices.

Close-ended schemes Such funds have a fixed maturity period and are open for subscription only for a specified period. After the expiry of this period, investors can buy or sell the units on the stock exchanges where such funds are listed. Some funds also have the option of periodic repurchase, whereby investors can sell back their units to the fund at NAV related prices.

Interval schemes Interval schemes are a combination of both open and close-ended schemes. Investors can purchase or redeem their shares from the fund house at predetermined intervals at NAV related prices

Growth schemes Such funds are aimed at capital appreciation over the medium to long term. Usually, such funds invest a major portion of the portfolio in equities.

Balanced schemes Such funds have a balanced portfolio and invest in equity and preference shares in addition to fixed income securities. The aim of such funds is to provide both income and capital appreciation over a long-term.

Income schemes These schemes invest primarily in fixed income instruments issued by the government, banks, financial institutions and private companies. The main objective of income schemes is preservation of capital and to provide fixed income over the medium to long term.

Money market schemes Money market schemes invest in short-term debt instruments, which earn interest and have high liquidity. Though these are considered to be the safest investment option, such funds are subject to fluctuations in the rates of interest.

Tax saving schemes Such schemes are aimed at offering tax rebates to investors under specific provisions of the Income Tax Act, 1961. For instance, investors of Equity Linked Savings Schemes (ELSS) and Pension Schemes are applicable for deduction u/s 88 of the Income Tax Act, 1961.

Index schemes Such funds strive to mirror the performance of specific market indices, such as the BSE SENSEX, CNX Nifty, etc which are called the base index. Investments in such funds are made in the same stocks as the base index and in similar proportion.

Sector-specific schemes Such funds invest in a specific industry or sector. The investments could be in a particular industry (Banking, Pharmaceuticals, Infrastructure, etc) or a group of industries, or various segments (like A Group shares).

Exchange-traded funds Such funds are listed and traded on the stock exchange in a similar manner as stocks. Such funds invest in a basket of stocks and aim at replicating an index (S&P CNX Nifty, BSE Sensex) or a particular industry (banking, information technology) or commodity (gold, crude oil, petroleum).

Capital protection funds These funds are designed to safeguard the capital invested therein, by investing in suitable securities.

 JP Morgan Asset Management Pvt Ltd

JPMorgan Asset Management is one of the six largest active investment managers in the world on the basis of assets under management (Source: Pensions & Investments, December 2005). As of 30 June 2007, assets under management stand at US$1,108.6 billion - a reflection of the high regard in which we are held by investors across the world.

We are a truly global investment manager, with over 5,700 employees in 40 cities around the world. We employ over 670 investment professionals (portfolio managers, analysts, investment team heads etc) who are based in investment centres across Europe, Asia, Japan and the Americas, connected by four investment hubs in London, New York, Tokyo and Hong Kong.

We manage assets on behalf of a broad range of private and institutional investors. Private investors primarily access our expertise through pooled funds, including a range of Luxembourg-domiciled SICAVs, UK-domiciled OEICs and investment trusts and our Hong Kong-registered JF funds.

Institutional investors can choose to invest through pooled funds or segregated portfolios, and the same highly-regarded investment teams are used in both cases. Institutional clients include pension funds, charities & foundations, corporates and central banks. It is our aim to be the worlds best investment manager by delivering to each and every investor: Excellence and continuity in investment management A comprehensive and competitive range of products The highest quality of client service Global coverage with local delivery

JP Morgan Mutual Fund The Mutual Fund was established as a trust under the Indian Trusts Act, 1882, in terms of the Trust Deed dated December 4, 2006 and is registered under the Indian Registration Act, 1908. The fund has been registered with SEBI vide Registration No.MF/053/07/01

JPMorgan Mutual Fund India Private Limited JPMorgan Mutual Fund Private Limited, a company incorporated under the Companies Act, 1956, acts as the trustee company of the Fund.

Board of Directors Mr. Jagadish Salunkhe Mr. P. G. R. Prasad Dr. Dharmendra Bhandari Mr. M. G. Bhide

JPMorgan Asset Management India Private Limited In conformity with the Regulations, JPMorgan Asset Management India Private Limited, a company registered under the Companies Act, 1956 and having its registered office at Mafatlal Centre, 9th Floor, Nariman Point, Mumbai 400 021, has been appointed as the investment manager to the Fund.

JPMorgan Asset Management India Private Limited ("AMC") was approved by SEBI to act as the asset management company for the Fund vide letter no. IMD/MS/86193/07 dated February 12, 2007. The AMC manages the Scheme / options of the Fund in accordance with the provisions of the Investment Management Agreement, the Trust Deed, the Regulations and the objectives of each Scheme / option.

 Kotak Mahindra Asset Management Pvt Ltd

Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporates.

The group has a net worth of around Rs.5,997 crore and employs around 20,000 employees across its various businesses servicing around 5 million customer accounts through a distribution network of branches, franchisees, representative offices and satellite offices across 370 cities and towns in India and offices in New York, London, Dubai, Mauritius and Singapore.

Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary of KMBL, is the Asset Manager for Kotak Mahindra Mutual Fund (KMMF). KMAMC started operations in December 1998 and has over 10 Lac investors in various schemes. KMMF offers schemes catering to investors with varying risk - return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities.

OBJECTIVE OF THE STUDY

OBJECTIVE OF THE STUDY

Objective of my study can be defined with the help of following points. To analyze the two major types of Mutual Funds. To understand the return of funds on historic return of 3 Years. To suggest the retail investors where they can earn more return in proportion to risk To find out that Sectorial funds are really provide higher return as they have higher risk.

Research Methodology

Research Methodology
According to Clifford Woody-research comprises defining and redefining problems, formulating hypothesis, or suggested solutions; collecting, organizing and evaluating data, making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis. The purpose of research is gaining knowledge, which will be used for solving problems (applied research) or for satisfying ones thirst for knowledge (pure research).

Objective of the study-

All progress is born of inquiry. Doubt is often better than over confidence, for it leads to inquiry and inquiry leads to invention. Research is a systematic method to gain new knowledge. The purpose of research is to discover answers to questions through the application of scientific procedure. The main aim of research is to find out the truth that is hidden and has not been discovered yet. Research is thus an original contribution to the existing stock of knowledge making for its advancement.

Research methodology used for the study is as follows: -

Type of Research Descriptive & Analytical Research Descriptive research includes surveys and fact findings enquiries of

different kinds. The major purpose of describes research is description of the state of affairs as it exists at present. In social science and business research we quite often use the term Ex post facto research for descriptive research studies. The main characteristic of this method is that the researcher has no control over the variable, he can only report what has happened or what is happening. The methods of research utilized in descriptive research are survey methods of all kinds, including comparative and correlational methods.

Analytical research, on the other hand, the researcher has to use facts or information already available, and analyze these to make a critical evaluation of the material.

Research Design Descriptive Design:- It enables researchers to describe or present a picture of phenomena under investigation. The objective of this study is to answer the who, when, where & how of the subject.

Data Type Secondary Data: Secondary data means data that are already available i.e., they refers to the data which have already been collected and analyzed by someone else. When the researcher utilizes secondary data, then he has to look into various sources from where he can obtain them.

Data Sourse Books websites magazines

Duration-

Findings and Analysis

Findings and Analysis

Table.1 : Top 10 Equity (Diversified Funds

Ran k

Scheme Name

NAV Return Since As on Mar in 3 Inceptio 2609 Years% n 6.75 8.02

Reliance Regular Savings Fund - Equity 13.44 Growth

DSP BlackRock Top 100 Equity Fund 52.31 Growth

3.66

31.46

3 4 5

Sahara Growth Fund Growth IDFC Imperial Equity Fund Growth

46.58 11.11

3.64 2.38 2.19

26.32 3.55 24.4

Birla Sun Life Frontline Equity Fund 42.02 Growth

6 7 8 9 10

IDFC Premier Equity Fund Growth DWS Alpha Equity Fund Growth UTI Dividend Yield Fund Growth HSBC Equity Fund Growth

12.71 44.31 15.19 60.97

1.9 1.65 1.42 1.16 1.14

7.11 27.23 11.45 33.26 14.63

DWS Investment Opportunity Fund 20.23

Growth

Table.2 :Top 10 Equity (Sectorial Funds)

Rank

NAV As on Mar 2609 Reliance Diversified Power Sector Fund 40.51 Growth

Scheme Name

Return Since in 3 Inception Years% 10.7 33.16

ICICI Prudential Infrastructure Fund 17.56 Growth

6.84

17.08

3 4

Reliance Banking Fund Growth

36.39

5.01 1.85

24.76 21.27

UTI Thematic Banking Sector Fund 16.98 Growth

5 6 7

Reliance Pharma Fund Growth UTI Infrastructure Fund Growth Tata Infrastructure Fund Growth

21.27 17.92 18.26

-1.95 -2 -2.51

17.39 12.89 14.68

8 9 10

Franklin FMCG Fund Growth ICICI Prudential FMCG Growth

11.05 30.57

-5.09 -5.45 -6.5

3.06 11.83 11.95

Canara Robeco Infrastructure Fund 30.89 Growth

Conclusion

Conclusion

While studying the performance measurement of mutual funds, one particular area caught my attention. As we are comparing two special funds Diversified Equity and Sectorial Equity funds. We took top 10 AMCs funds in both segment on the basis of return. Based on the analysis of two tables following conclusions can be draw-

There is high variation in return of sectorial funds compare to diversified funds.

Return of top 3 schemes in both funds have a difference that diversified funds are giving less return.

NAV is in proportion to return in case of sectorial funds whereas in sectorial funds though return is high but NAV is not high.

Another conclusion that we can draw from our results is that size does not matter. The size of a fund does not affect the performance of a fund.

Recommendations and suggestions

Recommendations and suggestions

While studying the performance measurement of mutual funds I will like to give suggestion to investors and AMC both. To avoid unsystematic risk Investors invest in Mutual funds where they can in bunches of equity shares. So it a kind of relief to balance negative return by positive return in portfolio.

For Investors-

By investing through divesrsified equity fund an investor invest in equity funds of various company of various sector whereas in investing sectorial funds investor look only in companies of a particular sector. After analysing the top 10 schemes of both funds I would like to recommend to investor that-

Due to lots of ups and down in economy investors should switch there portfolio accordingly, we can see that in current market situation where there is global slow down India is facing problem in its all time premium sector i.e Information Technology so in top 10 funds we are not having any I.T scheme. So the investors of IT funds earned highest positive

return in good time are facing highest negative return which means that in diversified equity funds these heavy losses from IT sectors companies are covered with other sectors companies..

Hence we have Power sector scheme on top position which is performing with 10.7 % in last three year it reflect that since power is extreme need of human being and due to heavy demand of power even in market slowdown this scheme is resulting better so we can not find such advantage with diversified funds.

This comparison of both funds also suggest that equity fund is giving a moderate return and not touching negative return while major sectorial funds schemes are performing in negative return so it because of high risk associated with sectorial funds.

If we talk about inception point of scheme we will find that as the scheme is get older NAV grow up. We can view in table of diversified fund HSBC equity growth fund is giving highest return with 33 % return but on ranking in 7th , whereas in sectorial funds Reliance power sector fund is showing highest return from its inception point and also it is on rank 1

in respect of list, it means that we are seeing a constant performance by sectorial funds which is lacking in diversified funds.

For AMC-

Limitations

Limitations

Although its good to go through this type of study during the MBA programme but during my project I have faced the following limitations :

Role of SEBI become a point of argument because performance of companies under various funds are loosing reliability after scandal of SATYAM

Results of comparison is not certified by the AMC though it was a total transpartent procedure of comparison.

Due to high pace fluctuation every interpretation on a day results unfair in next day.

Lack of time duration is flaw for this study.

Bibliography

Bibliography

1. Business Today 2. Economics Times 3. Financial Express 4. Kothari.C.R; RESEARCH METHODOLOGY; Second Edition; 2002; wishwa Prakashan, New Delhi.

Webliography www.amfiindia.org www.mutualfundsindia.com