Mutual Funds Dummy Project Hse

MUTUAL FUNDS IN INDIA
INTRODUCTION
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 invested by the fund
manager in different types of securities depending upon the objective of the scheme.
These could range from shares to debentures to money market instruments. The
income earned through these investments and the capital appreciations realized by the
scheme are shared by its unit holders in proportion to the number of units owned by
them (prorate). 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
portfolio at a relatively low cost. Anybody with an investable surplus of as little as a
few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a
defined investment objective and strategy.
A mutual fund is the ideal investment vehicle for todays complex and modern
financial scenario. Market for equity shares, bonds and other fixed income
instruments, real estate, derivatives and other assets have become mature and
information driven. Price changes in these assets are driven by global events
occurring in faraway place. A typical individual is unlikely to have the knowledge,
skills, inclination and time to keep track of events, understand their implications and
act speedily. An individual also funds it difficult to keep track of ownership of his
assets, investments, brokerage dues and bank transactions etc.
A mutual fund is the answer to all these situations. It appoints professionally

qualified and experienced staff that manages each of these functions on a full time
basis. The large pool of money collected in the fund allows it to hire such staff at a
very low cost to each investor. In effect, the mutual fund vehicle exploits economics
of scale in all three areas research, investments and transaction processing. While
the concept of individuals coming together to invest money collectively is not new,
the mutual fund in
its present form is a 20th century phenomenon. In fact, mutual funds gained popularity
only after the Second World War. Globally, there are thousands of firms offering tens
of thousands of mutual funds with different investment objectives. Today, mutual
funds collectively manage almost as much as or more money as compared to banks.
A draft offer document is to be prepared at the time of launching the fund.

Typically, it pre specifies the investment objectives of the fund, the risk associated,
the costs involved in the process and the broad rules for entry into and exit from the
fund and other areas of operation. In India, as in most countries, these sponsors need
approval from a regulator, SEBI (Securities exchange Board of India) in our case.
SEBI looks at track records of the sponsor and its financial strength in granting
approval to the fund for commencing operations.
OBJECTIVES OF THE STUDY

To get a thorough knowledge about mutual fund industry & concept of mutual
funds.
To spread awareness of mutual funds by explaining to customers the
advantage of investing in mutual funds.
To analyze the performance of the mutual funds under various schemes of
selected of mutual fund companies.
To give valuable suggestions in relating mutual funds investment to the
investors.
IMPORTANCE OF THE STUDY

1. The study enables a fresh investor to understand easily the various benefits
offered by mutual funds and their working in the market.
2. This study provides a clear idea on growth of mutual funds from past to the
present scenario and its scope in the future.
3. The study gives a brief idea on the open ended balanced growth schemes of three
major organizations.
NEED OF THE STUDY
The basic purpose of the study is to give broad idea on mutual funds and analyze
various schemes to highlight the diversified investment that mutual funds offers to its
investors through this study one can understand how to invest in mutual funds.
SCOPE OF THE STUDY

.1 .The study covers the basic meaning, concepts, structure and the organization of
mutual funds.
2. The study is restricted to explain only the returns provided by the mutual funds
from various schemes.
3. Under this study investments relating to open ended balanced growth fund of
mutual funds are taken into account.
4. The study is made to the investor with the information which will enable them to
choose the type of scheme depending upon their investing objective and respective
risk return.
.
METHODOLOGY OF THE STUDY

The information for the study has been collected from various sources. The data
gathered can be categorized into primary and secondary data.
Primary Data: . The data has been gathered through interaction and discussing with
the executives working in the division.
Secondary Data: Data that have been collected by someone else and which have
already been passed through statistical process. The study is entirely based on the
secondary data.
LIMITATIONS OF THE STUDY

Mutual Fund Industry is a vast subject. It can be studied at any length of time. As
there are more than 500 Mutual Funds are existing in India today, a separate full-
fledged research work can be taken up on the subject. Due to paucity of time and
space, the study has been limited to one Mutual Fund in HSE. Since one fund only has
been selected it has been studied to its entirety. In a general study the specific points
may not be brought out, as it is not pinpoint to any single objective.
HYPOTHESIS
Ho: The better evaluated mutual fund companys schemes maximize the returns by
reducing the risk of investor.
H1: The better evaluated mutual fund companys schemes will not maximize the
returns by reducing the risk of investor.
INTRODUCTION TO MUTUAL FUNDS
CONCEPT OF MUTUAL FUNDS:

Mutual Funds are defined as a trust that pools the savings of number of investors,
who have the common financial goal as that of that of the Mutual Funds. In the form
of units of a particular scheme of the fund that has a defined investments objective
and strategy. Money thus collected in a particular scheme is invested in shares
debentures and money market instruments depending upon the objective and
investment strategy of the scheme. Actually a Mutual Fund comprises of two entities.
One is a trust
The other is an Assets Management Company(AMC)
Mutual Funds are a medium for pooling together the savings or investment of a large
number of investors to participate in professionally managed portfolios of securities.
Mutual Funds is a mechanism for pooling the resources by issuing the units to the
investors and investing funds in securities in accordance with objectives as disclosed
in offer document.
Investments in securities are spread across wide cross-section of industries and
sectors and thus the risk is reduced. Diversification reduces the risk because all sticks
may not move in the same direction in the same proportion at the same time. Mutual
Fund issues units to the investors in accordance with quantum of money invested by
them. Investors of mutual funds are known as unit holders.
The investors in proportion to their investments share the profits/ losses. The
Mutual Funds normally come out with a number of schemes with different investment
objective, which are launched from time to time. A mutual fund is required to be
registered with securities and exchange board of India. Which regulates securities
market before it can collect funds from the public
INVESTORS MUTUAL FUNDS
SHARES DEBENTURE MONEY MARKETS

S
ORGANISATIONS OF MUTUAL FUNDS
A mutual fund is setup in the form of a trust, which has Sponsor, Trustee. Asset
Management company and Custodian. Sponsor who are like promoter of the benefit
of the unit holders. The AMC managers the funds by various schemes of the fund in
the custody. The trustees are vested with the general poser of superintendent and
direction over the MC. They monitor the performance and compliance of the SEBI
Regulations by the Mutual Fund.
SEBI regulations require that at least two third of the directors of trustee
company or board of trustees must be independent i.e. they should not be associated
with the sponsors. Also 50% of the directors of AMC must be launching any scheme.
However, Unit trust of India (UTI) is not registered with SEBI (as on January 15,
2002)
Diagram of the Organizational Setup of a Mutual Fund.
UNIT
HOLDERS
SPONSORS
TRUSTEE ASSET MANAGEMENT

COMAPNY
THE MUTUAL FUND TRANSFER AGENT
CUSTODIAN
SEBI
UNIT HOLDER: The individual, who invest money in the mutual funds with n aim
of getting returns. The mutual fund allows him number of units based on his
investment and the value of the units.
SPONSOR: A sponsor means anybody corporate. Who acting alone or in

combination with another body corporate, established with a mutual fund after
completing the formalities prescribed in SEBIs Mutual Funds Regulations. The
sponsor should have a sound track and general of fairness and integrity in all his
business transactions.
TRUSTEE: trustee means the Board of Trustees or the Trustee Company who hold
the property of the Mutual Fund in trust for the benefit of the unit holders.
ASSET MANAGEMENT COMPANY: A company formed and registered under

the Companies Act, 1956 and which has obtained the approval of SEBI to functions as
an Asset Management Company may be appointed by the sponsor of the Mutual Fund
as such:
Custodian and depositories: Custodian is a person appointed for safe keeping of the
securities. Mutual funds deal in buying and selling of large number of securities and
for participating in clearing system on its behalf. In case of dematerialized securities,
holding will be held by depository through a depository participant.
Transfer agents: He is responsible for issuing and redeeming units of mutual funds.
He prepares transfer documents and update investor records.
SEBI:
Securities and Exchange Board of India is the regulator, which is responsible for
regulating the working of different bodies or individual dealing in securities market
and protecting the interest of investors.
Mutual Fund
A Mutual fund is a pool of Money contributed by individuals who has similar
financial goals. The money collected is then invested in various securities such as
equities. Debentures/bonds and /or money market instruments.
Fund house/family
A group of funds managed under one umbrella. The most basic fund family would
include a stock bond and money market-portfolio, although many funds have variants
like sector funds, balanced funds.
Net Asset Value (NAV) of a scheme

The performance of a particular scheme of a mutual fund is denoted by Net Asset
value (NAV).
Mutual funds invest the money collected from the investors in securities markets. In
simple word, Net Asset Value of securities changes every day, NAV of a scheme also
varies on day-to-day basis. The NAV per unit is the market value of securities of
scheme divided by the total number of units of the scheme on any particular date.
NAV is requiring to be disclosed by the mutual funds on a regular basis- daily or
weekly depending on the types of scheme.
Load
It is charge collected by a mutual fund when it sells units. It can be either front-end
load (i.e., the charge is collected when an investor buys the units). Some schemes do
not change any load and are called No Load Schemes.
Contingent deferred sales charge (CDSC)

A back-end load imposed on an investor if he exits from the fund before a
predetermined period (say 3 months). The charges decline the longer an investor stays
invested with a fund.
Funds net assets

The total value of a funds cash and securities less its liabilities or obligations.
Portfolio
A portfolio comprises of investments in a variety of securities and asset classes this
diversification reduces the overall risk. The portfolio risk depends on the nature of
each investment in the portfolio and the overall impact (favorable or unfavorable) of
the various risk factors on each security. A mutual fund scheme states the kind of
portfolio it seeks to construct as well as the risks involved under each asset class.
Custodian
The Custodian, an independent organization, has the physical possession of all
securities purchased by the mutual fund, and undertakes responsibility for its handling
and safekeeping. For instance, the Stock Holding Corporation of India Ltd (SCHIL) is
the custodian for most fund houses in the country
Registrar
A Registrar holds and maintains the details of the transactions carried out by each unit
holder in a Mutual Fund scheme. He is appointed by the AMC to serve the
Unit holder for the purchases, sales or switching of Units that he may carry
out. The dividend distributions, recordings of nominations or transfers are
some other services rendered by the Registrar. He may also have investor
service Centers in various cities, where an investor can get over-the-counter
service.
Assets Management Company (AMC)

A highly regulated organization that pools money from many people into a portfolio
structured to achieve certain objective. Hence it is termed as an Asset Management
Company. Typically an AMC manages several funds open end /closed end
across several catteries growth, income, balanced every mutual fund has an AMC
associated with it.
Ex-dividend date
Normally one business day after the record date investors purchasing unit on or after
the ex-dividend date are not entitled to collect dividends or bonus units. The NAV
falls by the amount of the dividend distributed and/or bonus issued. The terms ex-
bonus and ex- dividend often are used synonymously.
For instance, if the record dates for dividend is 20 January, then investors who dont
have their names in the list of unit holders as on that day, will not receive dividend.
The works every similar to dividend and bonus declarations in the case of stocks.
Calculate the expense ratio for a fund

The expense ratio for a fund is the annual expenses of a fund (at the end of the
financial year), including to management fee, administrative costs, divided by the
number of units on that day.
Daily dividend fund

A fund (money market or bond) that calculates dividends daily, paying out or
reinvesting the same.
Initial public offering (IPO)

The sale of a companys shares of a fund houses mutual fund to investors for the first
times.
Assets management fee

The fee charged by the asset management company (AMC) for portfolio management.
The fee charged on an annual basis is calculated as percentage of net assets under
management.
Mutual Funds invest

Mutual Funds invest basically in three types of asset classes. These include:
Stocks: Stock represents owner ship or equity in a company. This asset class has
historically outperforms all other asset classes over the long-term but tends to be more
volatile in the short-terms
Debt instruments: This represents debt papers of corporate a government agencies.

They provide income in the form of interest payments and principal if held till
maturity. There can be price volatility due to interest rte movements as well as
economic and political instability.
Money Market instruments: These are inter-bank call Money, Commercial paper.
Treasury Bills, certificates of Deposit (CDs), Bill Rediscounting and short- terms
bonds. The bonds. They pay interest and are the least volatile of all the asset classes.
BENEFITS OF MUTAL FUNDS:

1. Professional Management:
Your client can avail of the services of experienced and skilled professionals who are
backed b the dedicated investment research team, which analyses the performance and
prospects of companies and selects suitable investments to achieve the objectives of
the Mutual funds scheme.
2, Diversification:
Mutual funds invest in a number of companies across a broad cross- section of
industries and sectors. This diversification reduces the risk because seldom do al
sticks decline at the same time and in the same proportion. Our clients can achieve
this diversification through a Mutual Fund with far less money that they can do their
own.
3. Convenient Administration:
Investing in a mutual fund reduces paperwork and helps to avoid many problems such
as bad deliveries, delayed payments and unnecessary follow up with brokers and
companies. Mutual fund saves time and makes investing easy and convenient.
4. Return Potential:
Over a medium to long-terms mutual fund have the potential to provide a higher
returns as they invest in a diversified basket of selected securities.
5. Low Costs:
Mutual funds are a relatively less expensive way invests compared to directly
investing in the capital markets because their benefits if scale in brokerage custodial
and other fees translates into lower costs for investors.
6. Liquidity:
In open-ended schemes, your clients can get their money back promptly at net asset
value related prices from the mutual fund itself. With close-ended schemes you can
sell your units on a stock exchange at the prevailing market price or avail of the
facility of direct of direct repurchase which some close-ended and interval schemes
offer periodically
7. Transparency:
yours clients get regular information on the value of their investment in addition to
disclose on the specific investments made by the scheme ,the proportion invested in
each type if security and the fund managers invested strategy and outlook .
8. Flexibility:
Through features such as regular investment plans, regular withdrawal plans and
divided reinvestment plans, your investors can systematically invest or withdraw fund
according to their needs and convenience.
9. Choice of Schemes:
Mutual fund offers a variety of schemes to enable investors to take advantage of
opportunities not only in the equity, debt and money markets but also in specific
industries and sectors.
10. Government Regulations:

All mutual funds are registered with SEBI, and they function within the provisions of
strict regulations designed to protest the interests of investors. The operations of
mutual funds are regularly monitored by SEBI.
DEVELOPMENTS OF MUTUAL FUNDS

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 popularity 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 up
the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1987, 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 corers
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 under
established in June 1987 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) 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 Rs47, 004 Corers.
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 investor a wide choice of fund families. Also, 1993
was the year in which the first Mutual Fund Regulation came in to being, under which
all mutual funds, except UTI were to be registered and governed. The erstwhile
Komari 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. 2, 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 corers 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 Truest 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, PND, BOB and LIC. It is registered with SEBI
and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UIT which had in March 2000 more than Rs. 76,000 corers of assets under
management and with eh setting up of a UTI Mutual Fund, conforming to the SEBI
Mutual Fund Regulations, and with recent mergers taking place among different
private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. As at the end of September 2004, there were 29 funds,
which mange assets of Rs. 153108 crores under 421 schemes.
PRESENT STRUCTURE IN INDIA
For many years, UTI was the sole player in the industry. Starting with the public
sector banks. Other players have come into the industry. Today the main players could
be divided into the following groups.
Today Indian Mutual funds Comprises of: Unit Trust of India.

Mutual funds floated by Commercial banks such as SBI. Canara Bank, Bank
of Baroda. Bank of India, Punjab National Bank and India Bank.
Mutual Funds floated by public Sector insurance companies such as LIC of
India and GIC.
Mutual Funds floated by development financial institutions such as IDBI.
Mutual Funds floated by Indian Private Groups such as TATAs, Reliance,
Kotak Mahindra and Escorts.
Mutual Funds floated by Joint Ventures between Indian and Foreign groups
such as Biral Sun Life of Canada, DSP-Merrill Lynch and ICICI- Prudential.
Mutual Funds either fully controlled or dominated by foreign groups such as

Morgan Stanley, Templeton, Alliance Capital, Zurich Financial services and
ING Group.
The UTI remains easily the biggest mutual funds controlling a corpus of about Rs.
70,000 corers. The second biggest group consists of mutual funds floated by public
sector commercial banks and insurance companies. They control a corpus of about Rs.
15,000 corers. The third group consists of mutual funds floated by the Indian private
sector and foreign groups. These mutual funds control a corpus of about Rs. 10,000
corers.
TYPES OF MUTUAL FUNDS
BY STRUCTURE
1. Open ended schemes:
An open-ended fund or scheme is one that is available for subscription and
repurchase on a continuous basis. These schemes do not have a fixed maturity
period. Investors can conveniently buy and sell units at Net Asset Value related
prices that are declared on a daily basis. They key feature of open-ended schemes
is liquidity.
2. Close ended schemes:

A close- ended fund or scheme has a stipulated maturity periods e.g. 5-7 year. The
fund is open for subscription only during a specified period at the time of launch
of the scheme. Investors can invest in the scheme at the time of the initial public
issue and thereafter they can buy and sell the units of the scheme on the stock
exchanges where the units are listed. In order to provide an exit route to the
investors, some close-ended funds are giving an option of selling back the units to
the mutual fund through periodic repurchase at NAV related prices. SEBI
Regulations stipulate the at least one of the two exit routes is provided to the
investor i.e. either repurchase facility or through listing on stock exchanges. These
mutual funds schemes disclose NAV generally on Weekly basis.
3. Interval funds:
Interval funds combine the features of open-ended and close-ended schemes. They
are open for sale or redemption during predetermined intervals at NAV related
prices.
SCHEMES ACCORDING TO INVESTMENT OBJECTIVES:
1. GROWTH/EQUITY ORIENTED SCHEME: The aim of growth funds is to

provide capital over the median 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 their
preferences. The investors must indicate the option in the application form. The
mutual funds also allow the investors to change the options at later date. Growth
schemes are good for investors having a long-term outlook seeking appreciation
over a period.
2. INCOME/DEBT ORIENTED SCHEME: The aim of income funds is to

provide regular and study 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 verse. However, long-term investors may not bother these
fluctuations.
3. BALANCED FUND: The aim of balanced funds in 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 fluctuation I share
prices in the stock markets. However, NAVs of such funds are likely to be less
volatile compared to pure equity funds.
4. MONEY MARKET OR LIQUIDITY 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 bill, certificates of deposits, commercial papers and
inter-bank call money, government securities, etc. returns on these schemes
fluctuations are 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.
5. GILT FUND: These funds invest exclusively in government securities.

Government securities have no default risk. NAVs of these schemes also fluctuate
due to change in interest rates and other economic factors as it is the case with
income or debt oriented schemes.
6. LOAD FUND: A load funds is one that charges a commission for entry or exit
i.e., each time you bur or sell units in the funds, a commission will be payable.
Typically, entry and exit loads range from 1% to 2%. It could be worth paying
load, if the fund has a good performance history.
7. NO-LOAD FUND: A non- loaded Fund is one that does not charge a
commission for entry or exit i.e., no commission is payable on purchase or sale of
units in the fund. The advantage of a non-load fund is that he entire corpus is put
to work.
OTHER SCHEMES:
1.TAX SAVING SCHEMES: These schemes offer tax rebates to the investors under
specific provisions of the Indian income Tax Act. As the Government offers tax
incentives for investment in specified avenues. Investments made in equity linked
savings schemes and pensions schemes are allowed as deduction u/s 88of the IT Act
1961. The Act also provides opportunities to investors to save Capital Gains u/s 54
EB by investing in Mutual Funds, provided the Capital Asset has been sold prior to
April 1, 2000 and the amount is invested before September 30, 2000.
2. SPECIAL SCHEMES:
INDUSTRY SPECIFIC SCHEMES: Industry specific schemes invest in the

industries specified in the offer document. The investment of these funds is limited to
specific industries like InfoTech, FMCG, and Pharmaceuticals etc.
INDEX FUNDS: Index Funds attempt to replicate theperformance of a particular

index such as the BSE Sensex or NSE 50. These schemes invest in the securities in
the same weight age comprising of an index. NAV of such schemes would rise of fall
in accordance with the rise or fall in the index, through not exactly by the same
percentage due to come factors known as tracking error in technical terms.
Necessary disclosures in this regard are made in the offer document of the mutual
funds schemes.
SECTOR SPECIFIC SCHEMES: Sect oral Funds are those which are invested
exclusively in a specific industry or a group of industries of various segments such as
A Group shares or initial offering.
CONCEPT OF NAV
NAV refers to Net Asset Value of a Mutual fund. The terms used by Mutual Funds,
master shares and other investment trust to indicate the net tangible assets value of
each share on a particular date. It can also means the total market price of all the
shares held by a mutual funds-less any liabilities dividend by the NAV of mutual
funds shares with every change in share price, the NAV of mutual funds shares
changes.
It is computed by the formulae given below:
NAV= (Asset Liabilities)/ No. of Units Outstanding.
More specifically it will be
[Value of investment + Receivable = Accrued incomes + other

Current Assets] [Liability + Accrued Expenses]
NAV=
No. of Units Outstanding
Simply stated, NAV represents the fair value of units in a mutual fund. Usually the
fund units at the time of application are sold at public offering price (POP).
Public offering Price (POP): It is the price at which the units are offered to the
public for subscription by the Mutual Fund scheme. It is by consideration the NAV
and applicable sales charges.
The difference between NAV and POP is the sales chares recovered by the Asset
Management Company from the scheme to cover cost of raising funds on a continues
basis. The POP is generally calculated as follows:
POP= NAV/ [1 Sale Charge]

STOCK EXCHANGE STANDS FOR:
The term Stock Exchange implies is evident for the following features of an
exchange.
S - Securities provider for investor
T - Tax benefits, planning and examples
O - Optimum return of investments
C - Caution approach
K - Knowledge of market
E - Eligibility of accruals
X - Exchange of securities transacted
C - Cyclopedia of listed companies
H - High yield.
A - Authentic information.
N - New entrepreneurs encouraged.
G - Guidance to investors and companies .
E - Equity cult.
STOCK EXCHANGE AND ITS REGULATION

Stock exchange is a market in which securities are bought and sold and it is an
essential component of a developed capital market. According to the securities
contracts (Regulation) Act 1959, Stock exchange means anyb9ody of individuals,
whether incorporated or not, constituted for the purpose of assisting, regulating or
controlling the business of buying, selling or dealing in securities.
According to this Act, securities include:
Shares, scripts, stocks, bonds debentures stock or other marketable securities
of a like nature or of any incorporated company or body corporate;
Government securities; such other instruments as may be declared by the
central government to be securities; and right or interest in securities.
Stock exchange is regarded as an essential concomitant of the capitalistic system

of the economy. It is indispensable for he proper functioning of corporate enterprise.
It brings together large amount of capital and the pivot of money market. It provides
necessary mobility capital and directs the flow of capital into profitable and successful
enterprises. It is a barometer of general economic progress in a country and exerts and
powerful and significant influence as a depressant or a stimulant of business activity.
It may be defined as the place or market where securities of joint stock companies and
or government or semi government bodies are dealt in.
OBJECTIVES AND ROLE OF STOCK EXCHANGE

The objectives and the role of the Bombay stock exchange, which have
remained the same as enunciated by founding to fathers and given as a mandate in
1887 through the charter, highlight the functions and objectives of the stock exchange.
These objectives are:
To safeguard the interest of investing public having dealings on the exchange

and members.
To establish and promote honorable and just practices in securities transactions.
To promote, develop and maintain a well-regulated market for dealing in securities.
To promote industrial developments in the country through efficient resource

mobilization by way of investing in corporate securities.
The exchange while providing an efficient market uphold the interest of
investors and also ensures redressal of their grievances, whether against the
companies or its own member-broker, it also strives to educate and enlighten the
investors by making available necessary informative inputs.
REGULATION OF STOCK EXCHANGES

The securities contract (Regulation) Act is the basis for operation of the stock
exchanges in India. No exchange can operate legally without the government
permission or recognition. Stock exchanges are given monopoly in certain areas under
section 19 of the above Act to ensure that the control and regulation are facilitated.
Recognition can be granted to a stock exchange provided certain conditions are
satisfied and the necessary information is supplied to the government. Recognition
can also be withdrawn if necessary, where there are no stock exchanges, the
government can license some of the brokers (licensed dealers) to perform the function
of stock exchange in its absence.
Recognition by Government
As referred to earlier, a stock exchange is recognized only after Govt. is
satisfied that its rules and by lose conform to the condition prescribe for ensuring fair
dealing and protection to investors. Govt. as also to be satisfied that it would be in the
interest of trade and public interest of the trade and public interest to grant such
Recognition. Govt. authorities extend much further to make or amend any rules or by
loss of recognized stock exchange, if it is so considers desirable in the interest of trade
and in public interest. The act empowered the govt. with even more drastic powers the
power to make enquiries in to the affairs of recognized stock exchange and its
members, to supersede the governing body and take over property of a recognized
exchange, to suspend its business. And lastly to with draw the recognition granted to
an exchange.
Securities contract (Regulation) rules1957:
Under the act, Government as has promulgated the securities contracts
(regulation) rules, 1957 for carrying in to effects the objects of the legislation. These
rules provide, for the procedure to be followed for Recognition of stock exchanges
enquire into the affairs of recognized stock exchange and their members.
THE INDIAN STOCK MARKET
HISTORY OF STOCK EXCHANGES
The only stock exchanges operating in 19th century where those of Mumbai setup in
1875, Ahmadabad set up in 1984. These where organized as voluntary non-profit
making associations of brokers to regulate and protect their interests. Before the
control on securities trading became a central subject under the constitution in 1950, it
was a state subject and the Bombay securities contracts (control) act of 1925, used to
regulate trading in securities. Under this act the Bombay stock exchange was
recognized in 1927, and Ahmadabad in 1937. During the war boom, a number of
stock exchanges where organized even in Mumbai, Ahmadabad and other centers, but
they where not recognized. Soon after it became the central subject, central legislation
was proposed and a committee headed by A.D.Gorwala went into bill for securities
regulation. On the basis committees recommendation and public discussion, the
securities contracts (regulation) act becomes law in 1956.
The stock market activities in India were relatively on a low key during the
beginning of the decade of 80s mainly because of the allies regime till 1947. This
strength has changed mid 80s with liberalization of govt. policies and grater freedom
given to private sector. This policy of progressively deregulating the economy let to
the emergence of stock market as major instrument of finance for industry and trade.
Present scenario
The decade of 80s witnessed the emergence of stock market as a major
source of finance for industry and trade. The process of liberalization and the
regulation has led to a pace of growth almost unparalleled in the history of any nation.
Average annual capital mobilization from the market, which used to be
about Rs.647.3 crores. The number of listed companies rose from 2265 in 1980 to
over 6800 at the end of 1998; the daily turnover accordingly shot up from 25 crores to
about Rs.360 crores in 1999-2000 the number of share holders increased from 10 lakh
in 1988 to 1.8 crores in 2000.
The number of share holders an investors in mutual funds has also risen
sharply from about 2 million to over 40 million during this period, rendering this
nation to the position of having the second largest investor population in the world
next to USA.
At present there are 23 stock exchanges recognized by the securities
contracts (regulation) Act, 1956. These recognized stock exchanges mobilize and
direct the flow of savings of the general public into productive channels of
investment. The Hyderabad stock exchange is the 6th largest stock exchange in India
terms of turnover.
STOCK EXCHANGES IN INDIA:

At present in India 24 stock exchanges duly recognized are given below in the
order or year of their establishment.
Bombay Stock Exchange (1875)
Ahmadabad Stock Exchange Association Limited (1957)
Calcutta Stock Exchange Association Limited (1957)
Delhi Stock Exchange (1957)
Madras Stock Exchange (1957)
Indore Stock Brokers Association (1958)
Bangalore Stock Exchange (1963)
Hyderabad Stock Exchange (1963)
Ccochin Stock Exchange (1978)
Pune Stock Exchange Limited (1982)
U.P Stock Exchange Association Limited (1982)
Ludhiana Stock Exchange Association Limited (1983)
Jaipur Stock Exchange Association Limited (1983)
Gauhati Stock Exchange Association Limited (1984)
Mangalore Stock Exchange Limited (1985)
Magad Stock Exchange Limited (1986)
Bhaunaneshwar Stock Exchange Association Limited (1989)
Over The Counter Exchange of India, Bombay (1989)
Suvastra Kutch Stock Exchange Limited (1990)
Vadodara Stock Exchange Limited (1991)
Combarore Stock Exchange Limited (1991)
The Merut Stock Exchange Limited (1991)
National Stock Exchange Limited (1994)
Integrated Stock Exchange (1999)
HYDERABAD STOCK EXCHANGE

Rapid growth in the erstwhile Hyderabad state saw efforts at starting the stock
exchange. In November, 1941 some leading bankers and brokers formed the Share
and Stock Brokers Association. In 1942, Mr.Gulab Mohammed, the Finance Minister
a formed a committee for the purpose of constituting rules and regulations of the stock
exchange. Sri purushothamdas Thakur das, president and founder and member of the
Hyderabad Stock Exchange performed the opening ceremony of the exchange on
14\11\1943 under Hyderabad Companies Act; MR Kamal Yar Jung Bahadur was the
first President of Exchange. The HSE started furvctioning under Hyderabad Securities
contact Act of No 21 of 1352 under H.E.H. Nizams Government as a company limited
by guarantee. It was the Sixth Stock Exchange recognized under Securities Contract
Act, after the premier Stock Exchanges, Ahmedabad, Bombay, Calcutta, Madras and
Bangalore Stock Exchange.
The Securities Contracts {Regulation} Act, 1956 was enacted by the parliament
passed into law and the rules were also framed in 1957. The act and rules brought in
force form 20th Feb 1957 by the Indian Government.
The HSE (Hyderabad Stock Exchange) was first recognized by the Government of
India on 29th September 1958 as Securities Regulation Act was made applicable to
twin cities of Hyderabad and Secundrabad from the date. In view of substantial
growth in trading activities, and for the Yeoman services rendered by the Exchange,
the Exchange was bestowed with permanent recognition with effect from 29 th Sep
1983. The Exchange has a significant share in achievements of erstwhile state of
Andhra Pradesh to its present state in the matter of Industrial Development.
OBJECTIVES
The Exchange was established on 18th October with the main objective to create,
protect and develop a healthy capital market in the state of Andhra Pradesh to
effectively serve the public and investors interests, The property, capital and income
of the Exchange, as per the Memorandum and Articles of Association of the
Exchange, shall have to applied soley towards the promotion of the objectives of the
Exchange. Even in case of dissolution, the surplus funds shall have to be devoted to
any activity having the same objects, as Exchange or be distributed in charity, as may
be determined by tie Exchange or the High Court of judicature. Thus, in short it is a

charitable institution.
GROWTH
The Hyderabad Stock Exchange Ltd, established in 1943 as a non-profit making
organization, catering to the needs of investing population started its operations in a
small way in a rented building in koti area. It had shifted to into Alyangar Plaza, Bank
Street in 1987. In September 1989, the then vice President of India, Honble Dr.
Shankar Dayal Sharma had inaugurated the own building of the Stock Exchange at
Himayatnagar, Hyderabad. Later in order to bring all the trading members under one
roof, the Exchange acquired still a larger premises situated at Somajiguda, Hyderabad
82, with a six storied building and a constructed area of about 4,86,842 sft (including
cellar of 70,857 sft). Considerably, there has been a tremendous perceptible growth
which could be observed from the statistics.
COMPUTERIZATION
The Stock Exchange business operation is equipped with modern communication

systems. On line computerization for simultaneously carrying out the trading
transactions, monitoring functions have been introduced at this Exchange since 1988
and the Settlement and Delivery System has become Simple and easy to the Exchange
members.
The HSE on-line Securities Trading System was built around the most Sophisticated
state of the art computers, communication system and the proven VECTOR
SOFTWARE from CMC and was on of the most powerful 9.6 KBPS 2 wire Leased
Lines from the offices of the members to the office of the Stock Exchange at
Somajiguda, where the Central System CHALLENGE-L DESK SIDE SERVER made
of Silicon Graphic (SGI Model No. D- 95602-S2) was located and connected all the
members who were provided with COMPAQ DESKPRO 2000/ DESKTOP 5120
Computers connected through MOTOROLA 3265 V.34 MANAGEABLE STAND
ALONE MODEMS (28.8 Kbps) for carrying out business from computer terminals
located in the offices of the members. HSE is the only Exchange in the country which
has provided infrastructure to its members for trading through WAN and Leased Lines
from the day one. The Host System enabled the Exchange not only to expand its
operations later to other prime trading centers outside the twin cities of Hyderabad
and Secundrabad but also to link itself into the Inter Connected Market System
(ICMS) proposed by the Federation of Indian Stock Exchange (FISE) to inter connect
various regional Stock Exchange in various state.
In the age of electronic trading, On-line information on rates from other major
markets was an essential input for efficiency. HSE provided online rates from BSE
and NSE which not only enhanced the ability of HOST terminals to attract investors
but also enabled the members to avail arbitraging opportunities between Exchanges.
CLEARING HOUSE
The Exchange set-up a Clearing House to collect the securities from all the
members and distribute to each member, all the securities due in respect of every
settlement. The whole of the operation of the Clearing House were also
computerized.
INTER-CONNECTED MARKET SYSTEM (ICMS)
The HSE was the convener of a committee constituted by the Federation of Indian
stock Exchanges for implementing an Inter- Connected Market System ICMS) in
which the Screen Based Trading system of various Stock Exchange were inter-
connected to created a large National Market. SEBI dommed the creation of
ICMS. The HOST provided the members of the HSE and their investors, access to
a large national network of Stock Exchanges. The Inter connected Stock Exchange
is a National Exchange and all HSE members could have trading terminals with
access to the National Market without any fee, which was a boon to the members
of an Exchange\ Exchanges to have tie trading rights on National Exchange
(NSE), with out any fee or expenditure.
NO.OF LISTED PAID-UP

YEAR TURNOVER
TRANSACTIONS COMPANIES CAPITAL
94-95 515.949 587.75 236 2740.56
95-96 421.985 676.00 274 10228.48
96-97 603.635 984.46 372 13156.15
97-98 860.642 1160.48 668 18588.71
98-99 720.521 1107.30 727 20159.31
99-00 240.64 479.98 851 22050.69
00-01 427.83 1860.86 852 18705.10
01-02 513.168 1269.51 856 18753.93
02-03 513.440 1236.51 869 19128.95
03-04 427.205 977.83 934 14717.08
04-05 34326 41.26 932 13616.12
05-06 4203 4.58 928
06-07 4.277 2.73 856 22126.65
07-08 4.401 14.13 820 14456.95
08-09 4.682 16.23 844 15486.32
09-10 4.8 18.33

ANALYSIS OF MUTUAL FUNDS SCHEMES

To study the currently available schemes. I have taken the fact sheet available with the
AMCs. The fact sheet provides the historical data about the various schemes offered
by the AMC, investment pattern, dividend history, rating given, Funds Managers
Credentials, etc.
I have analyzed the following schemes in open-ended category.
1. Equity or Growth Schemes
2. Income of Debt Schemes
3. Balanced schemes
I have studied the schemes of the following Asset Management Companys (AMCs)
1. SBI Mutual Fund

2. Principal Mutual Fund
3. Franklin Templeton India Mutual Fund
4. Kotak Mutual Fund
Basic for Analysis:

Net Asset Value (NAV) is the best parameter on which the performance of a mutual
fund can be studied. We have studied the performance of the NAV based on the
compounded annual return of the scheme in terms of appreciation of NAV, dividend
and bonus issues. We have compared the annual returns of various schemes to get an
idea about their relative standing.
SBI MUTUAL FUND
Scheme Magnum income Fund

Type Open Ended Income Scheme
Inception Date 30-Nov-98
Fund Size in Crores Rs. 903.73
Minimum Investment Rs. 2000
Entry Load Nil
Exit Load Up to Rs. 50 lakhs 0.5% up to 6 months
Ablut Rs. 50 lakhs nil
Investment Objective Investment 100% in debt instruments to
Generate guaranteed income
Annual Returns in (%)
1 Year 3 year 5 year Since Inception

7.14 11.69 11.77 12.06
SBI Magnum Income Fund is performing very well right from the inception with
generous payment of dividends has bee assigned AAAF rating by CEISIL. The fund
invest about 90% in AAA rated securities and more than 60% of its bonus in Jan 2003
1:2 and September 1:10 however, it under perform vis-a- vis CRISIL Composite Bond
Fund Index by 014
SBI MUTUAL FUND
Scheme Magnum Equity Fund

Type Open Ended Income Scheme
Inception Date January 98
Assets Allocation 100% Equity
Entry Load Investment
up to Rs.25 lakhs 1.75% Investment
above Rs.25 lakhs - Nill
Investment up to Rs.25
Exit Load
1 Year 3 year 5 year Since Inception
133.22 24.09 15.48 13.93
SBI Magnum Equity Fund is very well managed and has outperformed the BSE
Sensex right from inception on an annualized basis. During the past 52 weeks, periods
it has outperformed the SEE Sensex by 42.49% with annualize return of 122.2%. The
investments are highly diversified. Its main investments are in IT consulting and Auto
Sector.
SBI MUTUAL FUND
Scheme Magnum Balanced Fund

Type Open- Ended Balanced Scheme
Inception date October 9, 1995
Fund Size in Corers Rs. 64.96
Asset allocation Min 70% in Equity, Max of 30% in Debt,
Warrants and others.
Entry Load Investment up to Rs. 25 lakhs 1.75%
Investment above 25 laksh nil
Exit Load Nil
Investment Objective Capital Appreciation though investing in equity
And generate income through debt.
1 Year 3Year 5Year since Inception

102.70 23.65 10.46 14.46
SBI Magnum Balanced Fund has not been given any rating by CRISIL but it as
been performing well. The investments of the fund are well diversified in both Equity
and Debt. The total Equity holdings as on April 20th stands at 67.77% of the total
assets. It has out preformed CRISIL Balanced Fund Index by 45.38% for the 52
weeks periods.
KOTAK MUTUAL FUND
Scheme Kotak 30 Fund

Type Open- Ended Equity Scheme
Inception date December 1998
Fund Size in Corers Rs. 173.60
Asset Allocation prominently in Equity and Equality related
instruments.
Minimum investment Rs.5000
Entry Load 2% for less than 2 corers
Exit Load Nil
Investment Objective to generate Capital appreciation from a portfolio of

predominantly Equity and Equity related securities with investments in generally not
more than 30 stocks
1Year 3Year 5 Year since Inception
116.92 29.90 22.06 25.90
Kotak 30 Fund has invested about 90% in Equity. Books and pharmaceuticals have
been its major investors. The fund has outperformed the sensex and nifty right from
inception on a compounded annual growth rate basis and has come up with dividends
regularly.
KOTAK MUTUAL FUND
Scheme Kotak Liquid

Type Open- Ended Debt Scheme
Inception Date October 5th 2000
Asset allocation 100% Debt
Entry Load Nil
Exit Load Nil
Investment Objective To provide reasonable returns and high level of
Liquidity by investing in debt and money market
instruments of different, maturities. Ss as to
spread the risk across different kind of issuers in
debt markets.
1Year 3 Year since Inception
4.65 6.55 6.95
Kotak Liquid has invested about close to 25% in corporate Debt, 10% in public
sector undertakings, about 25% in money market instruments. It has also invested
40% in terms deposits. The average maturity of portfolio is 2.3 years. Almost all the
instruments are well rated implying they are safe instruments also their investments
are highly diversified.
KOTAK MUTUAL FUND
Scheme Balanced Fund

Type Open-Ended Balanced Scheme
Inception Date December 1998
Fund Size in Crores Rs.45
Asset Allocation About 70% in Equity and 30% in Debt
Minimum Investment Rs.5000
Entry Load 2% for less than @ Corers
Exit Load Nil
Investment Objective To achieved growth by investing in equity and
Equity related instruments, balanced with
income generation by investing in debt and
money in debt and money market instrument.

1Year 3 Year 5 Year Since Inception
71.80 25.97 21.08 15.52
Kotak Balanced Fund has close to 70% in equity and about 30% in debt instruments
and short deposits. The fund has a well-diversified portfolio of equity with prime
investments in BHEL, Simens EID parry, Balrampur Chini and SBI. In the debt
instruments, it has invested in Railway Bonds and w003 maturing Government Stock.
PRINCIPAL MUTUAL FUND
Scheme Principal Growth fund

Type Open-Ended Equity Scheme
Inception Date October 25th, 2000
Fund Size in Crores Rs.78.46
Asset Allocation 100% Equity
Minimum Investment New investor 5000
Existing Investor 500
Entry Load 1.90% - Less than Rs.50 lakhs
0.50%- Rs. 50 lakhs and above up to Rs.1 Crore
0.25%- Rs. 1Crores and above
Exit Load Nil
For subscription above Ra.10lakhs Nil
Investment Objective The objective is to achieve long-term capital
Appreciation
1Year 3Year 5Years Since Inception
94.39 37.83 28.22 20.36
Principal Income Fund has ranked CP3 by CRISAL, which means average in the
open ended equity category and rank within the top 70%of the 35 schemes in the
category. The invested primarily in construction, chemicals, banks and Automobiles
apart from diversifying in other sectors. It has outperformed the NIFTY right from the
inception.
Scheme principal Income Fund

Type Open-Ended Income Scheme
Inception Date October 25th, 2000
Asset Allocation 100% Debt
Minimum Investment New Investor- 5000Existing Investor-500
Entry Load Nil
Exit Load For subscription above Rs10 lakhs 0.5% if redeemed on or
before 180 days for subscription above Rs.10 lakhs Nil
Investment Objective The objective is to generate regular income and capital
Appreciating through investment in Debt and related
securities.
1Year 3Year 5Year since Inception
9.61 11.09 13.10 13.71
Principal Income Fund has ranked CP3 by CRISAL, which means average in the
open-ended debt category and ranks within the top 70% of the 21 schemes in the
category. The investment has average maturity of 7/3 years with more than 50%
investments having a maturity of above 7 years. It has investment close to 50% in
Government Securities, above 40% in NCD/Deep Discount Bonds.
Scheme Principal Balanced Fund

Type Open Ended Ban lanced Scheme
Inception Date October 25th 2000
Asset Allocation Up to 70% in Equity, Min30% of Debt.
Minimum Investment New Investor-5000
Existing Investors 500
Entry Load: 2%
Exit Load Nil
Investment Objective The objective is to provide periodical returns and capital
Appreciating through a judicious mix of equity and
debt instruments, while simultaneously aiming to
minimize capital erosion.
61.00 28.20 20.42 14.59
Principal Balanced Fund has ranked CP3 by CRISAL, which means average in the
open-ended balanced fund category and ranks within the top 70% of the 19 schemes
in the category. It has invested 67%in Equity and about 16% in Government
Securities. In Equity it invested primarily in Pharmaceuticals, Construction Materials,
Automobiles and banks.
FRANKLIN TEMPLETON INVESTMENTS
Scheme Franklin Templeton India Growth Fund

Types Open-Ended Equity Scheme
Inception Date September 10th, 1996
Asset Allocation Min 90% in Equity
Entry Load 2.25%
Exit Load Nil
Investment Objec Seeks to provide long-terms capital growth
through value investing
134.88 37.06 35.85 17.04
Franklin Templeton Indian Growth Fund has a equity exposure between 90% to
95% of the total assets. It has recently participated in the IPO datamatics (automatics
technologies. It invested maximum of its funds in Bank sectors Oil and Gas, Auto Arts
and Equipments and IT Consultant Services. It invests only in the prominent
companies in each of the various sectors.
Scheme Franklin Templeton India Income Fund

Type Open-Ended Income Scheme
Inception Date March 5th 1997
Asset allocation
Entry Load For up to 10 Lakhs 0.5% if redeemed within 6months
For
Above Rs.10 lakhs 0.25% if redeemed within 3 months
Exit Load Nil
Investment Objective seeks to generate a steady stream of income through
Investments in fixed income securities.
1Year 3Year 5Years since Inception
7.71 12.07 12.49 12.92
Franklin Templeton Income Fund has most of the investments in low risk AAA and
sovereign securities. Above 45% of the investments are in Gilt, 25% PUS/PFI bonds
and 24%in corporate debts. The average maturity of its schemes is at 4.87 years. The
performance of the fund is in line with CRISIL Composite Bond Fund
Scheme Franklin Templeton India Balanced Fund

Type Open- Ended Balanced Fund
Inception Date December 10th, 1999
Asset Allocation About 70% in Equity and 30% in debt.
Entry Load 1.5%
Exit Load Nil
Investment Objective Seek to provide long-term growth of capital and
Current income
1Year 3Year since Inception
85.51 28.99 12.89
Franklin Templeton Indian Balanced Fund has invested about 70% of its assets in
Equity and 75%indebts. The recent addition to its portfolio is Reliance industries,
Asian Paints, and BPCL. It invests primarily in IT Consulting. Auto Parts Equipment,
Banks, Tele Electrical Industrial conglomerates. It invested mainly in the AAA rated
Debts.
EQUITY FUNDS
Name of Fund Since 5 Years 3Years 1Year

inception
SBI Mutual Fund 13.93 15.48 24.09 133.22
Kotak Mutual Fund 6.95 6.55 4.65
FranklinTempleton Investments 17.04 35.85 37.06 134.88
Principal Mutual Fund 20.36 28.22 37.83 94.39
Comparative Performance of Equity Scheme

Comparative Performance of Equity Scheme
134.88
133.22
145
140
Name135 of the SBI Mutual Kotak Mutual Franklin Principal
130 134.88
133.22
125
Fund120 Fund 145
Fund Templeton Mutual
115 140
110 135
94.39
105 Investments Fund

Annualised Retursn in (%)
100 130
Since 95
Inception 13.93 125
6.95 17.04 20.36
90 120
5 Years
85 15.48 115 35.85 28.22 94.39
80 110
3Years75 24.09 6.55
105 37.06 37.83
Annualised Returns in (%)
70 100
1 Year65 133.22 4.65
95
134.88 94.39
60
55 90 Annual Returns in (%)
37.06
50 85
37.83
35.85
45 80
28.22
40 75
35
24.09
20.36
70
17.04
30
25 65
15.48
13.93
20 60
15 55
37.83
37.06
10 50
38.6
35.85
5 45
0
28.22
40
24.09
Sinception 3 Year 1 year

5 Year 35
20.36
17.04
30Years
13.93
15.48
25
20
6.55
4.65
6.95
SBI MUTUAL FUND 15

10
KOTAK MUTUAL FUND 5
0
SBI Mutual Fund Kotak Mutual Franklin Principal Mutual
PRINCIPAL MUTUAL FUND Tem pleton Fund
Investm ents
AMC' s
Since inception 5 Years 3 Year 1 Year

COMPARATIVE PERFORMANCE OF EQITY FUNDS
Last 1 Year Performance: The annualized returns on the equity schemes how the
funds have outperformed each other in different investments horizons. The one-year
returns of SBI Magnum Equity Fund and Franklin Templeton India Growth Fund are
similar and are better than the other two funds and they have yielded very handsome
rate of returns exceeding 100%Principal Mutual Fund also has performed well
yielding about 94% return. However, KOTAK Mutual Fund performed very badly
returning only about 4,56%. The returns of the equity has rocked to three digit
percentages in the last year due to the success of IPOs like Maruthi, Bioco, etc. Feel
Good Factor has also played role in the market boom.
Last 3 years: The annualized returns of last year shows a very clean picture that
principal Mutual Funds and Franklin Templeton Mutual funds have outperformed and
are better than the other two funds. They have ARs of 37.83%and
37.06%respectiverly. Third in the list is SBI with AR of 24.09%. With an AR OF
6.55%, Kotak Mutual Funds has not performed so creditably.
Last 5 Year: From the returns of last 5 Years, it can see that AR of Kotak Mutual
Funds is missing because it has not evolved by that time. This fund can be ignored
because it has under-performed in last 3 years and 1 year. ARs when compared to
other funds. Here also Franklin Templeton Mutual Fund is leading in the front with an
AR of 35.85%, followed by principal Mutual fund with an AR of 28.22% and SBI
Mutual Fund AR comes next.
Since Inception: Finally, when we compare the annualized returns of the four funds
since inception, we find the trend to be completely different it., Principal Mutual fund
has the highest AR which returns of 20.36%and Franklin Templeton Mutual fund
which has out performed the other for the last 5year has slipped down to second place,
with returns of 17.04% SBI Mutual Fund occupies the third place. Here also Kotak
Mutual Funds has remained in the last position with AR of only 6.95%.
CONCLUSION:
Based on the above information as well as fact sheet, it can be concluded that Franklin
Templeton mutual fund scheme of Equity has performed excellently compared to
other. But next to it neck-to-neck competitor is SBI Mutual Funds with an AR of
133.22%.
Based on the annualized returns for different periods, the above schemes can be
ranked as follows.
Year Since 5 Year 3 Year 1Year Overall

Inception Ranking
SBI Mutual 3 3 3 2 3
Fund
Kotak 4 - 4 4 4
Mutual Fund
Franklin 2 1 2 1 2
Templeton
Investments
Principal 1 2 1 3 1
Mutual Fund
INCOME FUND
Name of Fund Since 5 Years 3Years 1Year

inception
SBI Mutual Fund 12.06 11.77 11.69 7.14
Kotak Mutual Fund 25.9 22.06 29.9 116.92
FranklinTempleton Investments 12.92 12.49 12.07 7.71
Principal Mutual Fund 13.71 13.1 11.09 9.61
Franklin Principal
Name of the SBI Mutual Kotak Mutual Templeton Mutual
Fund Fund Fund Investments Fund
Since Inception 12.06 11.77 11.69 7.14
5 Years 25.9 22.06 29.9 116.92
3Years 12.92 12.49 12.07 7.71
1 Year 13.71 13.1 11.09 9.61
Comparative Performance of Income Scheme
145
140
116.92
135
130
125
120
115
110
Annualised Returns in(%)
105
100
95
90
85
80
75
70
65
60
55
50
45
29.9
25.9
22.06
40
35
13.71
12.92
12.49
30
12.06
13.1
11.69
25 12.07
11.09
9.61
11.77
7.14
7.71
20
15
10
5
0
SBI Mutual Fund Kotak Mutual Fund Frankline Principal Mutual
Tem pleton Fund
Investm ents
AMC's
Since inception 5 Year 3 Year 1 Year
COMPARATIVE PERFORMANCE OF INCOME FUNDS
Last 1 Year Performance:

When the annualized returns on NAV re studied and compared, it was found that
KOTAK Income Funds has been performing well of the four funs taken for the study
and is ranked first. Franklin Templeton India Income Funds is ranked second. The
one-year returns of Franklin Templeton Income Fund and SBI magnum Income Funds
are almost liquidity objective coming in ways of investing in long term securities.
Kotak Liquid Fund has primarily invested in Money market Instruments.
There has been increasing yields of this category of mutual fund schemes, as the
interest rates have come down drastically on government securities and corporate
following suit. However, Assets under management in this category of funds have
grown satisfactorily during the year, mainly because of corporate investing their idle
cash in debt funds. The corporate and high net worth investors people refers these
funds.
Last 3 Years:
During the last 3years, also Kotak Income Fund has out performed, with annualized
returns of 29.9%, which is the highest among the others. All these have emerged
because of good period for all the investments in the portfolio of Kotak Income Fund.
Other funds like Franklin Income Fund is second place with an annualized return of
12.07% followed by SBI and Principal Income Funds with ARs of 11.69%and
11.09%respectiverly.
This trend has remained the same for the other year to i.e., last 5years as well as since
inception.
CONCLUSION:
Templeton Mutual Fund Scheme of equity has performed excellently compared to the.
But next to it neck-to-neck competitor is SBI Mutual Funds with an AR OF 133.22%.
Based on the annualized returns for different periods, the above schemes can be
ranked as follows.

Inception Ranking
Fund
Kotak 4 - 4 4 4
Mutual Fund
Franklin 2 1 2 1 2
Templeton
Investments
Principal 1 2 1 3 2
Mutual Fund
BALANCED FUNDS
Name of the Fund Since Inception 5Years 3Years 1 Year

SBI Mutual Fund 14.46 19.46 23.65 102.7
Kotak Mutual Fund 15.52 21.08 25.97 71.8
Franklin Templeton 12.89 28.99 85.51
Investments
Principal Mutual 14.59 20.42 28.2 61
Fund
SBI Mutual Kotak Mutual Franklin Principal

Name of the Fund Fund Templeton Mutual
Fund Investments Fund
Since Inception 14.46 15.52 12.89 14.59
5 Years 19.46 21.08 20.42
3Years 23.65 25.97 28.99 28.2
1 Year 102.7 71.8 85.51 61
COMPARATIVE PERFORMANCE OF BALANCED FUNDS
Last 1 year Performance: out of the four schemes SBI Magnum Balanced Fund has
outperformed the other three in the last one-year. From the graph depicting the
annualized returns of the four different balanced fund schemes, it can be observed that
fund have done well in the past one-year in the context of the stock market boom. The
NAVs have appreciated highly on equity investments.
Franklin Templeton Balanced Funds come next, followed by Kotak Balanced
and finally Principal Balanced Fund. However, taking into consideration the returns
over the long-term, almost all funds have fared the same.
Last 3 Years: In the last 3 years, if we compare we cab see that a rapid change in
figures as well as the performance. Almost all the Balanced Fund schemes al all the
companies among relatively same and are having high competition among
themselves. There was little boom in the stock exchanges, so the performance was
also not so outstanding.
Last 5 Years: In the last 5 years, it cab be viewed the Franklin Templeton Mutual
Funds was not there because it has recently evolved in the year 1999 rest of the
Balanced Funds have stared prior to that. So, Franklin Templeton Mutual Fund cannot
be considered for analyzing purpose. The performance of the other funds have
remained more or less the same ARs i.e,SBI, Kotak and Principal Mutual Funds with
returns of 19.46%, 21.08%and 20.42% respectively.
Since inception Finally, the comparative performance is on the inception date. More
or less the ABI, KOTAK, principal and Franklin Templeton Mutual were on the same
stand. There is a minute change in annualized returns values. The difference is hardly
2% to #% but it plays a vital role too. According to that, the top performance is
achieved by Kotak Mutual Fund with an AR of 15.52%, next to this are Principal as
well as SBI Mutual Fund and the last but not the least in Franklin Templeton Mutual
Fund with ARs of 14.59%, 14.46%and 12.89% respectively.
CONLUSION:
Templeton Mutual Fund scheme of Balanced has performed excellently compared to
others.
Based on the annualized returns for different period. The above schemes can be
ranked as follows.

Inception Ranking
Fund
Kotak 1 1 3 3 2
Mutual Fund
Franklin 4 - 1 2 1
Templeton
Investments
Principal 3 2 2 4 4
Mutual Fund
FINDINGS:
The performance of various categories of funds since their inception is found as
detailed below:
1. INCOME FUNDS:
Principal Mutual Fund Annualized Returns is 13.71% and Fund Size is Rs.463.47
Crores and for Franklin Templeton, annualized return is 12.92% and Fund Size is Rs.
12 95.75 Crores, for SBI annualized returns is 12.06% and Fund Size is Rs. 903.75
crores and for KOTAK the annualized returns is 25.90% and fund size is Rs.173.60
crores in order of performance since inception.
2. GROWTH FUNDS:
Principal Mutual Fund annualized returns is 20.36% and Fund Size is Rs. 78.46
Crores, for Franklin Templeton annualized returns is 17.04% and Fund Size is
Rs.431.13 Crores, for SBI annualized returns is 13.93% and Fund Size is Rs. 150.10
Crores and for KOTAK the annualized returns is 6.95% and Fund Size is Rs.2708.27
crores in order of performance since inception.
3. BALANCED FUNDS:
Principal Mutual fund Annualized Returns is 14.59% and Fund Size is Rs. 40.52
crores, for Franklin Templeton Annualized Returns is 12.89% and Fund Size is
Rs.116.008 Crores, for SBI Annualized Returns is 14.46% and Fund Size is Rs. 64.96
crores and for KOTAK the Annualized Returns is 15.52% and Fund Size is Rs.45
Crores in order of performance since inception.
In all the three types of funds the schemes with lower fund size have
performed well since inception.
Among the three types of funds under study growth funds have yielded more
annualized returns followed by Balanced Funds and Income funds
Out of the 4 AMCs (Asset Management Companies) chosen for study,
Principal Mutual Funds has comparatively performed better than the other
three.
As far as the Income Funds are concerned, the performance of Principal
Mutual Funds, Franklin Templeton and SBI is more or less of the same order
with performance of one being marginally better then the other in that order.
Kotak Mutual Funds have out performed all the other funds by posting almost
double the annualized return than the other three. This may be due to larger
size of Kotak Funds.
As the schemes are launched in different years in each category, the schemes
started in the same years are also compared.
In case of Growth Funds, Principal Mutual Funds and KOTAK Mutual Funds
were stated in 2000. Principal Mutual Funds (AR=25.9%) performance is
better than the KOTAK Mutual Funds (AR=6.95%)
In case of Income Funds in SBI and KOTAK Mutual Funds started in 1998,
KOTAK Mutual Funds (AR=25.90%) is better than SBI Mutual Funds.
(AR=12.06%)
In case of Balanced Fund in KOTAK Mutual Funds and Franklin Templeton
Mutual Funds were stared in 1999. Performance of KOTAK Mutual Funds
performance of KOTAK Mutual Funds performance is better than Franklin
Templeton Mutual Funds.
Among all the four AMCs, Franklin Templeton Mutual Funds, Principal
Mutual Funds, are MNC Asset management Companies, where as KOTAK
Mutual Funds is a Private Sector fund and SBI is Public Sector Bank
Sponsored.
Performance of the funds in these lines of sectorization is in the following
order with the first one being the highest performing sectorized fund and the
last one being the lowest performing sectorized fund.
MNC-Principal Mutual Funds.

Private sector KOTAK Mutual Funds, and
Public sector Bank Sponsored SBI
SUGGESTIONS:
1. If the MNCs maintains a reasonable funds size, then they can monitor
portfolio with ease and can achieve more annualized returns.
2. MNCs and Private sectors Funds should decrease the minimum investment
so that the small investors can avail the benefits.
3. Divide the spectrum of Mutual Funds depending on major asset classes
invested. Presently there are two types i.e.
a) Equity Funds investing in Stock and
b) Debt Funds investing in interest paying securities issued by

government, semi-government bodies, public sector units and
corporate.
A) Categorizing the Equities:
1) Diversified- invest in large capitalize stock belonging to multiple
sectors.
2) Sectoral- Invest in specific sector like technology, FMGC, Parma, etc.
B) Categorizing the Debts:
Gilt- invests only in government securities, long maturity securities with
average of 9 of to 13 years, very sensitive to interest rate movements.
Medium Term Debt (income Funds) - Invest in corporate debt, government securities
and PSU Bonds. Average maturity is 5 to 7 years
Short Term Debt- Average Maturity is 1 year. Interest rate sensitivity is very low with
steady returns.
Liquid- Invest in money market, other short term papers, and cash Highly liquid
Average maturity in three months.
Specific Schemes Selection:
Ranking are based on criteria including past performance, risk and resilience
in inferable conditions, stability and investment style of funds management,
cost and service levels. Some recommended schemes are a follow:
Diversified Equity Zurich Equity Franklin India Bluchip, Sundaram
Growth. These funds show good resilience giving positive results.
Guilt Funds DSP Merrill Lynch, TATA GSF, and Sand HDFC Guilt have done well
Income Funds- HDFC, Alliance, Escorts, and Zurich are top performers.
Short Term Funds Prudential ICICI, Franklin Templeton are
recommended.
Within the Debt Class- Presently are more allocated towards short-terms
funds, because of low prevailing interest rates.
BIBLIOGRAPHY
BOOKS
1. FINANCIAL SERVICES YM KHAN

2. MASTER IN MUTUAL FUNDS C.M.KULSHRESHTHA
3. PERSONAL FINANCE ASHU DUTT
4. INVESTMENT MANAGEMENT AVDHANI
5. SECURITY ANALYSIS &
PORTFOLIO MANAGEMENT AVDHANI
WEBSITES
1. www.google.com
2. www.mutualfundsindia.com
3. www.amfiindia.com
4. www.hseindia.com
5. www.bseindia.com
6. www.nseindia.com
NEWSPAPERS & MAGZINES
1. ECONOMIC TIMES
2. BUSINESS WORLD
3. INDIA TODAY

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MUTUAL FUNDS IN INDIA

MUTUAL FUNDS IN INDIA

A mutual fund is the answer to all these situations. It appoints professionally

A draft offer document is to be prepared at the time of launching the fund.

OBJECTIVES OF THE STUDY

IMPORTANCE OF THE STUDY

NEED OF THE STUDY

SCOPE OF THE STUDY

METHODOLOGY OF THE STUDY

LIMITATIONS OF THE STUDY

INTRODUCTION TO MUTUAL FUNDS

CONCEPT OF MUTUAL FUNDS:

INVESTORS MUTUAL FUNDS

SHARES DEBENTURE MONEY MARKETS

ORGANISATIONS OF MUTUAL FUNDS

Diagram of the Organizational Setup of a Mutual Fund.

TRUSTEE ASSET MANAGEMENT

THE MUTUAL FUND TRANSFER AGENT

SPONSOR: A sponsor means anybody corporate. Who acting alone or in

ASSET MANAGEMENT COMPANY: A company formed and registered under

Net Asset Value (NAV) of a scheme

Contingent deferred sales charge (CDSC)

Funds net assets

Assets Management Company (AMC)

Calculate the expense ratio for a fund

Daily dividend fund

Initial public offering (IPO)

Assets management fee

Mutual Funds invest

Debt instruments: This represents debt papers of corporate a government agencies.

BENEFITS OF MUTAL FUNDS:

10. Government Regulations:

DEVELOPMENTS OF MUTUAL FUNDS

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

PRESENT STRUCTURE IN INDIA

Today Indian Mutual funds Comprises of: Unit Trust of India.

Mutual Funds either fully controlled or dominated by foreign groups such as

TYPES OF MUTUAL FUNDS

2. Close ended schemes:

SCHEMES ACCORDING TO INVESTMENT OBJECTIVES:

1. GROWTH/EQUITY ORIENTED SCHEME: The aim of growth funds is to

2. INCOME/DEBT ORIENTED SCHEME: The aim of income funds is to

4. MONEY MARKET OR LIQUIDITY FUND: These funds are also income

5. GILT FUND: These funds invest exclusively in government securities.

INDUSTRY SPECIFIC SCHEMES: Industry specific schemes invest in the

INDEX FUNDS: Index Funds attempt to replicate theperformance of a particular

[Value of investment + Receivable = Accrued incomes + other

POP= NAV/ [1 Sale Charge]

STOCK EXCHANGE STANDS FOR:

STOCK EXCHANGE AND ITS REGULATION

Stock exchange is regarded as an essential concomitant of the capitalistic system

OBJECTIVES AND ROLE OF STOCK EXCHANGE

To safeguard the interest of investing public having dealings on the exchange

To promote industrial developments in the country through efficient resource

REGULATION OF STOCK EXCHANGES

THE INDIAN STOCK MARKET

HISTORY OF STOCK EXCHANGES

STOCK EXCHANGES IN INDIA:

Integrated Stock Exchange (1999)

HYDERABAD STOCK EXCHANGE

be determined by tie Exchange or the High Court of judicature. Thus, in short it is a

The Stock Exchange business operation is equipped with modern communication

NO.OF LISTED PAID-UP

94-95 515.949 587.75 236 2740.56