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DISSERTATION REPORT ON PERFORMANCE OF MUTUAL FUNDS IN INDIA

IN THE PARTIAL FULFILLMENT OF THE POST GRADUATE DIPLOMA IN MANAGEMENT (2006-2008)

FACULTY GUIDE: Prof Anubha Gupta ITS, Ghaziabad

STUDENT NAME Gauri Shanker Tripathi PGDM IV Sem

ACKNOWLEDGEMENT
I take this opportunity to express my heartfelt thanks to INSTITUTE OF TECHNOLOGY AND SCIENCE for grooming me for the past one year and making me feel confident for taking up such assignment and coming up with efficient and effective results. I am extremely thankful for all the support that I got from Mr. Anubha Gupta my mentor who gave me the vision insight and knowledge base, with there active involvement and assistance at all stages despite there busy schedules. Last but not least I would like to give my thanks to all my colleagues who helped me during my research project.

Gauri Shanker Tripathi PGDM IV Sem.

Certificate

Certified that Gauri Shanker Tripathi has carried out the Dissertation work presented in this thesis entitled Performance of Mutual Funds in India for the award of PGDM from Institute of Technology and Science under my supervision. The Dissertation embodies result of original work and studies carried out by Student himself and the contents of the thesis do not form the basis for the award of any other degree to the candidate or to anybody else.

(Prof Anubha Gupta) Designation: Date:

TABLE OF CONTENT 1. 2. Acknowledgement Abstract

3. Introduction 4. About The Project Objective of the project Scope of research Research Methodology Limitation of study 5. Mutual Fund In India Origin of Mutual Fund History of Mutual Fund In India Mutual Fund Types of Mutual Fund Special Legal Structure of Mutual Fund Advantage and Disadvantage of Mutual Fund 6. Legal and Regulatory Environment Legal and Regulatory Environment of Mutual Fund How invest in mutual fund Measuring and Evaluating Mutual Fund Performance 7. Different Companies Profile About ICICI Prudential ICICI Prudential Guiding Principle About Unit Trust Of India Products of companies 8. Comparison of ICICI Prudential And UTI with Other AMCS ON Different Parameter 9. Current Scenario Of Mutual Fund In India 10. Recommendation

11. Conclusion 12. Bibliography

ABSTRACT

The mutual fund industry in India began with the setting up of the Unit Trust In India (UTI) in 1964 by the Government of India. During the last 36 years, UTI has grown to be a dominant player in the industry with assets of over Rs. 76,547 Crores as of March 31, 2003. The UTI is governed by a special legislation, the Unit Trust of India Act, 1963. In 1987 public sector banks and insurance companies were permitted to set up mutual funds and accordingly since 1987, 6 public sector banks have set up mutual funds. Also the two Insurance companies LIC and GIC established mutual funds. Securities Exchange Board of India (SEBI) formulated the Mutual Fund (Regulation) 1993, which for the first time established a comprehensive regulatory framework for the mutual fund industry. Since then several mutual funds have been set up by the private and joint sectors..

INTRODUCTION . Indian econonmy is hogging up. There is increasing evidence that the recent phase of higher economic growth is not so much a cyclical phenomenon as the consequence of structural change in the economy.We are now moving from Hindu rate of growth to sardar rate of growth. Indias economic growth is now second only to china. India is at 9.4% GDP growth in 2006-2007 and an Average of 8.7% in the last four years. Gross domestic savings and gross domestic investment to GDP numbers at 33.4% and 33.8% are a quant- um jump from 23.5% and 22.9%in 2001-2002. Add to that increase in F.D.I.More important, the trend of FDI trailing FII has reversed.The past three years have thus seen dramatic increase in Inflow from US$ 4.3 billion in 2003-2004 to US$ 19 billion. More importantly, all sub sectors shared in the acceleration. While manufacturing grew 12.3%, growth in mining and electricity generation was also higher at 5.1% and 7.4% respectively. Thus even as services continue to grow fast. It has also been predicted for India to be fifth largest consuming economy by year 2025. The Indian capital market and financial market has been increasing tremendously during last few years.The spread of banking system has been a major factor in promoting financial intermediation in the economy and in financial savings. The market looks healthy, trading in the range of 12500-13000 plus levels as recovery continues. In recent times share market is the barometer of economy. India's stock markets are on a roll. During the past year, Indian companies raised more than $6 billion in capital on the Bombay Stock Exchange, the National Stock Exchange and other regional stock exchanges. By some measures, stock price have gone up by nearly 50% in recent months.Consistent with this evolution of the financial sector,Indian economy the mutual fund industry has also come to occupy an important place.Mutual fund as an investment option, have become very attractive for retail investors who are interested in the financial markets but do not have the time, expertise and experience in good stock picking. The problem faced by small investors in share market have been offset by the emergence of mutual funds. Indian mutual fund industry is as old as four decades but its growth and awareness has reached the present level only since the last five years. It is the most suitable investment for the comman man who invests his savings at regular intervals. It is an investment tool where return on investment is high compared with the other investments which are available in the market.It is mature,well developed, regulated investment vehicle.

However ,like any other investment this, too carries a certain level of risk. An investor therefore has to take care of his/her risk taking capability, tax issues, investment period etc SEBI, as a regulator, issued the first set of regulations, governing the transparency operations and disclosures standard of mutual fund industry in 1993. They were revised in 1996. Though the industry has been operational for so long, it still suffers from shortcomings like lack of systematic evaluation of investor's requirements, designing products to suit their specific needs, lack of depth in the market, lack of proper process and lack of better services. Consolidation in this industry has gained momentum today but still challenges are ahead. Indian mutual fund industry is still in its very early stages of growth. Today with only 100$billion of AUMs ,the industry still is very minuscule in the context of the domestic savings in the country and the global scale. According to a economic times survey in India still prefer to do their savings in physical assets so The main challenges of this industry lie in attracting more number of retail investors and manage their interests well. Net mobilization of funds, and educating investors about different funds are the other key challenges it faces. The industry has to be innovative and competitive and the members of this industry have to strive for its development and growth and its continuous increase in numbers. The industry has also realized that managing the investor's money is risky and that it has to be very cautious in its operations. .

OBJECTIVE OF THE PROJECT

To know the performance of the mutual funds To know various types of the mutual funds To know the various advantages and disadvantages of the mutual funds To evaluate the performance of the mutual funds comparative study of various funds

RESEARCH METHODOLOGY Research methodology comprises defining and redefining the problem, formulating hypothesis or suggestion solutions, collecting, organizing and evaluating the data, making deductions and reaching to conclusions and at last carefully testing the conclusions and determine whether the formulated hypothesis is right or wrong.

METHODOLOGY USED Descriptive analytical research was used for the project. In this type of research, the researcher has to use the facts and information already available and analyze these to make critical evaluation of the market. The facts or the information required to analyze the data was available in the manual published by the by company. This was the main source of the information for the project.

SOURCE OF DATA Secondary data

SECONDARY SOURCE Economic Times www. Valueresearchonline.com www.amfiindia.com Money Today Sites of different asset management companies www.google.com

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Limitation of study:
The study might not be all perfect because of certain limitations. The problem of time scarcity was an important want for within a short span of time , the project had to be completed, hence many informations could not be gathered nor evaluated. Apart from time scarcity among the respondents is also faced which forced me to use short questionnaire , but I have tried my best to present an unbiased report. In spite of all carefulness there may be chance of error in it as nobody is perfct. Though every possible care was taken to remove any bias or distortion creeping in the survey itself has quite a few practical constraints. 1. The difficulty of incomplete and biased response from the Customers was always there to be faced and in few of the Instances customer /respondents refused to cooperate. 2. The difficulty of money was also there as I had to go to the Respondents in the city with my scooter. 3. Sometimes the non-response from the respondents was very distractive. 4. Not every customer was willing to reveal the real information and their feelings. 5. Validity of information related to some questions can not be considered doubtless.

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ORIGIN OF MUTUALFUND Mutual funds goes back to the times of the Egyptians and Phonenicians when they sold shares in caravans and vessels to spread the risk of these ventures. The foreign and colonial government Trust of London of 1868 is considered to be the fore-runner of the modern concept of mutual funds. The USA is, however, considered to be the mecca of modern mutual funds. By the early - 1930s quite a large number of close - ended mutual funds were in operation in the U.S.A.

HISTROY OF MUTUAL FUNDS IN INDIA The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Reserve Bank and the Government of India. The objective was to attract small investors and introduce them to market investments. Since the, the history of mutual fund in India can be broadly divided into three distinct phases. Phase 1- 1964-1987 (Unit Trust of India) An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964,followed by ULIP in 1971,CGGA 1986 Mastershare 1987. UTI was the only player in the market enjoying the monopoly. At the end of 1988 UTI had Rs.6,700 crores of assets under management.It was huge mobilization on funds.

1987-1988 Amount mobilized (Rs.crores) UTI Total 2,175 2,175

Asset under Management (Rs. Crores) 6700 6700

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Phase 2- 1987-1993(entry of public sector) 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 Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.In phase 2 also UTI was the undisputed leader. At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores.It was the time when mindset of the consumer changed to some extent. 1992-1993 Amount mobilized (Rs.crores) UTI Public sector Total 11,057 1,964 13,021

Asset under Management (Rs. Crores) 38,247 8,757 47,004

Phase 3- 1993-1996(emergence of private 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.

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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. Indian mutual fund industry also saw many joint venture of foreign fund management companies with Indian promoters. Competition increased the investor servicing technique. Investor started becoming selective. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. Phase 4-1996(SEBI regulation for mutual funds) 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. 1999 marks the beginning of a new phase in the history of the mutual fund industry in India, a phase of significant in terms of both amounts mobilized from investor and asset under management. Consider the growth in asset as seen in the figures below: Gross amount Mobilized (Rs. Crores) 1998-99 1999-2000 UTI Public sector Private sector Total 11,679 1,732 7,966 21,377 13,536 4,039 42,173 59,748 Asset under management (Rs. Crores) 1998-99 1999-2000 53,320 (77.87%) 8,292 (12.11%) 6,860 (10.02%) 68,472 76,547 (67.75%) 11,412 (10.09%) 25,046 (22.16%) 113,005

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The size of the industry is growing rapidly, as seen by the figure of asset under management that has gone from over Rs. 113,005 crores, a growth of nearly 60%in just one year. Within the growing industry, by March 2000, the relative market shares of different players in terms of amount mobilized and assets management having undergone a change.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. As at the end of June 2007 there are 33 players in the mutual fund industry MUTUAL FUND The concept of Mutual Fund

A Mutual fund is a trust that pools the money from a number of investors and invests it in different type of securities to earn returns. The money held in the trust is divided into shares of equal value called units. Investors become unit- holder and are allotted units based on amount of their investment. The trustees of the mutual fund trust appoint an asset management company (AMC) to manage the investment. They also appoints registrars, auditors , custodians and other service providers to support the smooth functioning of the fund The decision on how in the Invest the money in the trust are taken by AMC which is paid an investment management fee

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About mutual fund

A Mutual Fund units are investment vehicles that provides a means of participation in the stock market for people who have neither the time, nor the money, nor perhaps the expertise to undertake direct investment in equities success fully. On another level they also provide routs in to specialists markets where direct investment often demands often more time and more knowledge than an investor or his financial adviser may posess.The basic idea is simple a mutual fund is a body corporate that pools the savings of a number of investors and invests the same in a variety of different units are financial instruments, or securities. 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. the price of the unit in any mutual fund is governed by the underlying securities. The price will there fore will fluctuate with movement of the market sector in which fund is invested The value of a investor holding in a unit can there fore, like an investment in shares, go down as well as up. Mutual funds can thus be considered as financial intermediaries in the investment business that collect funds from the public and invest on behalf of the investors. The losses and gains accrue to the investors only. The advantage is that the investor is taking much less of a risk than a direct equity investor, because increase in the number of stocks held obviously reduces the effect that any stock

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can have on over all performance of the equity portfolio .Professional management has two benefits: It provides specialist investment expertise which should ensure greater success than an inexperienced can achieve on and it reduces the administrative burden of investment The Investment objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The investment objectives specify the class of securities a Mutual Fund can invest in. Mutual Funds invest in various asset classes like equity, bonds, debentures, commercial paper and government securities

Special legal structure of mutual funds Mutual funds have a unique structure not shared with other entities such as companies of firms. It is important for the employees and agents to be aware of the special nature of this structure, because it determine the right and responsibilities of the funds constituents viz. sponsors, trustees, custodians, transfer agent and of course, the fund and the asset management company(AMC). The legal structure also derives the inter-relationship between these constituents. The structure mutual funds in India: India has a legal framework within which mutual fund is being constituted. In India, open and close-end funds operate under the same regulatory structure, and are constituted alone one unique structure- as unit trusts. A mutual fund in India is allowed to issue open-end and closed-end schemes under a common legal structure. Therefore, a mutual fund may have several different schemes (open and closed-end) under it i.e. under one unit trust, at any point of time. The structure which is required to be followed by mutual fund in India is lead down under SEBI (Mutual Fund) regulation, 1996. In the following paragraphs, we take brief look at the structure of each fund constituents.

The fund sponsor: Sponsor is defined under SEBI regulation as any person who acting alone or in combination with another body corporate establishes a mutual fund. The sponsor of a fund is akin to the promoter of a company as he gets the fund registered with SEBI. The sponsor will form a trust and appoint a board of trustees. The sponsor will also generally appoint an asset management company as fund managers. The sponsors, either other

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directly or acting through trustees, will also appoint a custodian to hold the fund assets. All these appointments are made in accordance with SEBI regulation. As per the existing SEBI regulation, for a person to qualify as sponsor, he must contribute at least 40% of the net worth of the AMC and posses a sound financial track record over five year prior to registration. The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund.

Mutual fund as trust: A mutual fund in India is constituted in form of the public trust created under the Indian trust act 1882.The trust deed is registered under the Indian registration act 1908.The fund sponsor acts as the settler of the trust, contributing to its initial capital and appoints a trustee to hold the asset of the trust of the benefits of the unit holders, who are the beneficiaries of the trust. The fund then invites investors to contribute their money in the pool, by subscribing to units issued by various schemes established by the trust, units being evidence of their beneficial interest in the fund. It should be understood that a mutual fund is just a pass-trough vehicle. Under the India trust act, the trust or the fund has no independent legal capacity itself, rather it is the trustee or trustees who have the legal capacity and all acts in relation to the trust are take on its behalf by the trustees. The trustees hold the unit holders money in a fiduciary capacity i.e. the money belongs to the unit holders and is entrusted to the fund for the purpose of investment in legal parlance, the investors or the unit holders are the beneficial owners of the investments held by the trust, even as these investments held in the name of the trustees on a day to day basis. Being public trust, mutual funds can invited any number of investor as beneficial owners in there investment schemes.

Trustees: A board of trustees a body of individuals, or trust company a corporate body, may manage the trust- the mutual fund-. Boards of trustees manage most of the fund in India.The main responsibility of the trusteeis to safeguard the interest of the unit holders inter alia ensure that the Amc function in the interest of the investors and in accordance with securities board of exchange in Indias(mutual fund) regulations,1996, the provisions of the trust deeds and offer documents of the respective schemes. While the board of trustees is governed by the provisions of the Indian trust acts. it would also be

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required to comply with the provision of the companies act, 1956.the board of the company, as an independent body, acts as protector of the unit-holders interests. The trustees do not directly manage the portfolio of securities of this specialist functions, they appoint an asset management company. They ensure that the fund is managed by the AMC as per the defined objective and in accordance with the trust deed and SEBI regulations. The trust is created trough a document call the trust deed i.e. executed by the fund sponsor in favor of the trustees. The trust deed is required to be stamped as registered under the provisions of the Indian registration act and registered with SEBI. Rights of trustees: The trustees appoint the AMC with the prior approval of SEBI. They also approve each of the schemes floated by the AMC. They have the right to request any necessary information from the AMC concerning the operation of the various schemes managed by the AMC. Trustees may take remedial action if they belief that the conduct of the funds business is not in accordance with SEBI regulations. The Asset Management Company:

The role of an AMC is to act as the investment manager of the trust. The sponsors, or the trustees, if so authorized by the trust deed, appoint the AMC. The AMC so appointed is required to be approved by SEBI. Once approved, the AMCfunctions under the supervision of its own board of director, and also under the direction of the trustees and SEBI. The trustees are empowered to terminate the appointment of the AMC by majority and appoint a new AMC with the prior approval of SEBI and unit-holders.The AMC would, in the name of the trust, float and then manage the different investment schemes as per SEBI regulations and as per the investment management agreement it signs with the trustees. The AMC of a mutual fund must have a net worth of at least Rs. 10 crores at all times .At least 50%of the director of the AMC are independeny directors who are not associated with sponsor in any manner. Directors of the AMC, both independent and non-independent, should have adequate professional experience in financial services and should be individuals of high moral standing, a condition also applicable to other key personnel of the AMC. The AMC cannot act as a trustee of any other mutual fund. Besides its role as the fund manager, it may under take specific activities such as advisory services and financial consulting, provided these activities and run independently of one another and the AMCs resources (such as personnel, system, etc.) are properly segregated by activity. The AMC must

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always act in the interest of the unit-holders and report to the trustees with respect to its activities.

Obligations of the AMC and its directors The AMC and its directors must ensure that Investment of funds is in accordance with SEBI regulations and the trust deed. They take responsibility for the acts of its employees and others whose services it has procured. They are answerable to the trustees and must submit quarterly reports to them on AMC activities and compliance with SEBI regulations They do not undertake any other activity conflicting with managing the fund. They will float schemes only after obtaining the prior approval of the trustees and SEBI They will make the required disclosures to the investors in areas such as calculation of NAV and repurchase price. Independent directors and trustees: SEBI places certain obligations on independent directors on boards of the trust and the AMC. They must pay specific attention to the investment agreement and the compensation paid under it, any service contracts with affiliates to ensure higher than markets-level fees have not been charged by the AMC to the fund, any securities transactions with affiliates if permitted, principal underwriting contracts, and any service contracts with the associates of the AMC. The board purpose of these obligations is to ensure the reasonability of all fees paid to sponsors, AMC and their associates for services provided. The independent directors/trustees must also design a code of ethics for the AMC and the trust personnel for any personal securities transactions. They must also oversee the selection of other independent directors appointments

Registrar and Transfer agent The AMC if so authorized by the trust deed appoints the registrar and transfer agent to the mutual fund. The registrar processes the application form, redemption reqest, dispatches the account statement to the unit holders. The registrar and transfer agent also handles communications with investors and updates investors records.

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Custodian Appointed by board of trustees for safe keeping of securities asindependent entity of sponsor. Distributors Are appointed by AMC and may act on behalf of different funds In merger of two AMCs, SEBI approval and consent of 75% unit holders arerequired Independent individuals are appointed as agent

AMC takeover by another sponsor If another sponsor takeover another AMC it is necessary to take SEBI approval.It is also mandatory to inform unit holder.

Scheme takeover SEBI approval require Investors should be given option to redeem units incase they do not consent for it Mutual Funds incur various expenses on marketing, distribution, advertising, portfolio churning, fund manager's salary etc. Many funds recover these expenses from the investors in the form of load. These funds are known as Load Funds. A load fund may impose following types of loads on the investors:

SECTION THREE TYPES OF FUNDS There are wide variety of mutual fund schemes that cater to your needs.whatever your age, financial position,risk tolerance and return expectations whether as foundation of your investment programme or as supplement of your scheme.However, these different types of funds can be grouped into certain classifications. Under each broad classification, we may the distinguish between several types of mutual funds on the basis of the nature of their portfolios, meaning whether they invest in equities or fixed income securities or some other combination of both. Every type of fund has a unique riskprofile that is determined by its portfolio, for which reason funds are often separated into

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more or less risk- bearing. We first look at the fund classifications and then understand the various types of funds under them

(I) Closed-end or Open-end Open-end Fund 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 (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity. CRISIL's composite performance ranking (CPR) measures the performance for each of the open-ended scheme of Mutual Fund. There are four parameters considered to measure the performance of a mutual fund such as Risk-adjusted returns of the scheme's NAV, Diversification of Portfolio, Liquidity and Asset Size

Close-end Fund A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. 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 or 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 give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices.One of the characteristics of the close-ended schemes is that they are generally traded at a discount to NAV; but the discount narrows as maturity nears. SEBI Regulations stipulate that 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

Interval Schemes

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These funds combine the features of both openended and close-ended funds wherein the fund is close-ended for the first couple of years and open-ended thereafter. Some funds allow fresh subscriptions and redemption at fixed times every year (say every six months) in order to reduce the administrative aspects of daily entry or exit, yet providing reasonable liquidity Load Funds No Load Funds LoadFunds Mutual Funds incur various expenses on marketing, distribution, advertising, portfolio churning, fund manager's salary etc. Many funds recover these expenses from the investors in the form of load. These funds are known as Load Funds. A load fund may impose following types of loads on the investors:

Entry Load - Also known as Front-end load, it refers to the load charged to an investor at the time of his entry into a scheme. Entry load is deducted from the investor's contribution amount to the fund. Exit Load - Also known as Back-end load, these charges are imposed on an investor when he redeems his units (exits from the scheme). Exit load is deducted from the redemption proceeds to an outgoing investor. Deferred Load - Deferred load is charged to the scheme over a period of time.

Contingent Deferred Sales Charge (CDSS) - In some schemes, the percentage of exit load reduces as the investor stays longer with the fund. This type of load is known as Contingent Deferred Sales Charge. In India,SEBI has defined a load as the one-time fee payable by the investor to allow the fund to meet initial issue expenses including brokers/agents/distributors commissions, advertising and marketing expenses. A load funds declared NAV does not include load charges No-loadFunds All those funds that do not charge any of the above mentioned loads are known as Noload Funds. Tax-exemptFunds Funds that invest in securities free from tax are known as Tax-exempt Funds. In India, after the 1999 Union Government Budget, all of the dividend income received from any of the mutual funds is tax-free in the hands of the investors. All open-end equity oriented

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funds are exempt from distribution tax (tax for distributing income to investors). Long term capital gains and dividend income in the hands of investors are tax-free.These funds offer tax benefits to investors under the Income Tax Act. Opportunities provided under this scheme are in the form of tax rebates U/s 80C as well saving in Capital Gains U/s 54EA and 54EB. Tax benefits on investment of up to 1 lakh ten thousand in specified instruments U/s 80C. Further, there are no internal caps specified for individual instruments under sec 80 C (except the 70,000 limit for PPF investments). They are best suited for investors seeking tax concessions Non-Tax-exemptFunds Funds that invest in taxable securities are known as Non-Tax- exempt Funds. In India, all funds, except open-end equity oriented funds are liable to pay tax on distribution income. Profits arising out of sale of units by an investor within 12 months of purchase are categorized as short-term capital gains, which are taxable. Sale of

Schemes according to Investment Objective: A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows: Equity Funds Equity funds are considered to be the more risky funds as compared to other fund types, but they also provide higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest for long term i.e. for 3 years or more. There are different types of equity funds each falling into different risk bracket. In the order of decreasing risk level, there are following types of equity fund units of an equity oriented fund is subject to Securities Transaction Tax (STT). STT is deducted from the redemption proceeds to an investor

a. Aggressive

Growth Funds - In Aggressive Growth Funds, fund managers aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive

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Growth Funds become more volatile and thus, are prone to higher risk than other equity funds.

b. Growth Funds - Growth Funds also invest for capital appreciation (with time
horizon of 3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are expected to outperform the market in the future. Without entirely adopting speculative strategies, Growth Funds invest in those companies that are expected to post above average earnings in the future

C.specialty Funds - Specialty Funds have stated criteria for investments and their
portfolio comprises of only those companies that meet their criteria. Criteria for some specialty funds could be to invest/not to invest in particular regions/companies. Specialty funds are concentrated and thus, are comparatively riskier than diversified funds.. There are following types of specialty funds:
i.

ii.

iii.

Sector Funds: Equity funds that invest in a particular sector/industry of the market are known as Sector Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer Goods) which is why they are more risky than equity funds that invest in multiple sectors. Foreign Securities Funds: Foreign Securities Equity Funds have the option to invest in one or more foreign companies. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk. Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower market capitalization than large capitalization companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap companies is less than that of big, blue chip companies (less than Rs. 2500 crores but more than Rs. 500 crores) and Small-Cap companies have market capitalization of less than Rs. 500 crores. Market Capitalization of a company can be calculated by multiplying the market price of the company's share by the total number of its outstanding shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of Large-Cap Companies which gives rise to volatility in shareprices of these companies and consequently investment gets risky .

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iv.

Option Income Funds*: While not yet available in India, Option Income Funds write options on a large fraction of their portfolio. Proper use of options can help to reduce volatility, which is otherwise considered as a risky instrument. These funds invest in big, high dividend yielding companies, and then sell options against their stock positions, which generate stable income for investors.

d.Diversified Equity Funds - Except for a small portion of investment in liquid

money market, diversified equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well diversified and reduce sector-specific or company-specific risk. However, like all other funds diversified equity funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity Linked Savings Schemes (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which he may have received any tax exemption(s) in the past. Equity Index Funds - Equity Index Funds have the objective to match the performance of a specific stock market index. The portfolio of these funds comprises of the same companies that form the index and is constituted in the same proportion as the index. Equity index funds that follow broad indices (like S&P CNX Nifty, Sensex) are less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX Bank Index etc). Narrow indices are less diversified and therefore, are more risky Index fund schemes are ideal for investors who are satisfied with a return approximately equal to that of an index.

e.Value Funds. Value Funds invest in those companies that have sound
fundamentals fundamentals and whose share prices are currently under-valued. The portfolio of these funds comprises of shares that are trading at a low Price to Earning Ratio (Market Price per Share / Earning per Share) and a low Market to Book Value (Fundamental Value) Ratio. Value Funds may select companies from diversified sectors and are exposed to lower risk level as compared to growth funds or specialty funds. Value stocks are generally from cyclical industries (such as

26

cement, steel, sugar etc.) which make them volatile in the short-term. Therefore, it is advisable to invest in Value funds with a long-term time horizon as risk in the long term, to a large extent, is reduced

f.Equity Income or Dividend Yield Funds

The objective of Equity Income or Dividend Yield Equity Funds is to generate high recurring income and steady capital appreciation for investors by investing in those companies which issue high dividends (such as Power or Utility companies whose share prices fluctuate comparatively lesser than other companies' share prices). Equity Income or Dividend Yield Equity Funds are generally exposed to the lowest risk level as compared to other equity funds.

27

2. Debt / Income Funds Funds that invest in medium to long-term debt instruments issued by private companies, banks, financial institutions, governments and other entities belonging to various sectors (like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors. In order to ensure regular income to investors, debt (or income) funds distribute large fraction of their surplus to investors. Although debt securities are generally less risky than equities, they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment. To minimize the risk of default, debt funds usually invest in securities from issuers who are rated by credit rating agencies and are considered to be of "Investment Grade". Debt funds that target high returns are more risky. Based on different investment objectives, there can be following types of debt funds

a. Diversified Debt Funds - Debt funds that invest in all securities issued by entities
belonging to all sectors of the market are known as diversified debt funds. The best feature of diversified debt funds is that investments are properly diversified into all sectors which results in risk reduction. Any loss incurred, on account of default by a debt issuer, is shared by all investors which further reduces risk for an individual investor.

B Focused Debt Funds* - Unlike diversified debt funds, focused debt funds are narrow
focus funds that are confined to investments in selective debt securities, issued by companies of a specific sector or industry or origin. Some examples of focused debt funds are sector, specialized and offshore debt funds, funds that invest only in Tax Free Infrastructure or Municipal Bonds. Because of their narrow orientation, focused debt funds are more risky as compared to diversified debt funds. Although not yet available in India these funds are conceivable and may be offered to investors very soon.

C High Yield Debt funds - As we now understand that risk of default is present in
all debt funds, and therefore, debt funds generally try to minimize the risk of default by investing in securities issued by only those borrowers who are considered to be of "investment grade". But, High Yield Debt Funds adopt a different strategy and prefer securities issued by those issuers who are considered to be of "below investment grade". The motive behind adopting this sort of risky strategy is to earn higher interest returns from these issuers. These funds are more volatile and bear higher default risk, although they may earn at times higher returns for investors.

28

D Assured Return Funds - Although it is not necessary that a fund will meet its
objectives or provide assured returns to investors, but there can be funds that come with a lock-in period and offer assurance of annual returns to investors during the lock-in period. Any shortfall in returns is suffered by the sponsors or the Asset Management Companies (AMCs). These funds are generally debt funds and provide investors with a low-risk investment opportunity. However, the security of investments depends upon the net worth of the guarantor (whose name is specified in advance on the offer document). To safeguard the interests of investors, SEBI permits only those funds to offer assured return schemes whose sponsors have adequate net-worth to guarantee returns in the future. In the past, UTI had offered assured return schemes (i.e. Monthly Income Plans of UTI) that assured specified returns to investors in the future. UTI was not able to fulfill its promises and faced large shortfalls in returns. Eventually, government had to intervene and took over UTI's payment obligations on itself. Currently, no AMC in India offers assured return schemes to investors, though possible.

E Fixed Term Plan Series - Fixed Term Plan Series usually are closed-end schemes
having short term maturity period (of less than one year) that offer a series of plans and issue units to investors at regular intervals. Unlike closed-end funds, fixed term plans are not listed on the exchanges. Fixed term plan series usually invest in debt / income schemes and target short-term investors. The objective of fixed term plan schemes is to gratify investors by generating some expected returns in a short period

t3.GiltFunds Also known as Government Securities in India, Gilt Funds invest in government papers (named dated securities) having medium to long term maturity period. Issued by the Government of India, these investments have little credit risk (risk of default) and provide safety of principal to the investors. However, like all debt funds, gilt funds too are exposed to interest rate risk. Interest rates and prices of debt securities are inversely related and any change in the interest rates results in a change in the NAV of debt/gilt fundIn an opposite direction

4. MoneyMarkeLiquidFunds Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt instruments. These securities are highly liquid and provide safety of

29

investment, thus making money market / liquid funds the safest investment option when compared with other mutual fund types. However, even money market / liquid funds are exposed to the interest rate risk. The typical investment options for liquid funds include Treasury Bills (issued by governments), Commercial papers (issued by companies) and Certificates of Deposit (issued by banks period. 5. HybridFunds As the name suggests, hybrid funds are those funds whose portfolio includes a blend of equities, debts and money market securities. Hybrid funds have an equal proportion of debt and equity in their portfolio. There are following types of hybrid funds in India

Balanced Funds The portfolio of balanced funds include assets like debt securities, convertible securities, and equity and preference shares held in a relatively equal proportion. The objectives of balanced funds are to reward investors with a regular income, moderate capital appreciation and at the same time minimizing the risk of capital erosion. Balanced funds are appropriate for conservative investors having a long term investment horizon.
(a)

Growth-and-Income Funds

Funds that combine features of growth funds and income funds are known asGrowth-and-Income Funds. These funds invest in companies having potential for capital appreciation and those known for issuing high dividends. The level of risks involved in these funds is lower than growth funds and higher than income funds. Asset Allocation Funds Mutual funds may invest in financial assets like equity, debt, money market or nonfinancial (physical) assets like real estate, commodities etc.. Asset allocation funds adopt a variable asset allocation strategy that allows fund managers to switch over from one asset class to another at any time depending upon their outlook for specific markets. In other words, fund managers may switch over to equity if they expect equity market to provide good returns and switch over to debt if they expect debt market to provide better returns. It should be noted that switching over from one asset class to another is a decision taken by the fund manager on the basis of his own judgment and understanding of specific markets, and therefore, the success of these funds depends upon the skill of a fund manager in anticipating market trends
(b)

30

6. Commodity Funds Those funds that focus on investing in different commodities (like metals, food grains, crude oil etc.) or commodity companies or commodity futures contracts are termed as Commodity Funds. A commodity fund that invests in a single commodity or a group of commodities is a specialized commodity fund and a commodity fund that invests in all available commodities is a diversified commodity fund and bears less risk than a specialized commodity fund. "Precious Metals Fund" and Gold Funds (that invest in gold, gold futures or shares of gold mines) are common examples of commodity funds.

7. RealestateFund Funds that invest directly in real estate or lend to real estate developers or invest in shares/securitized assets of housing finance companies, are known as Specialized Real Estate Funds. The objective of these funds may be to generate regular income for investors or capital appreciation.

8. Exchange Traded Funds (ETF) Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-end mutual fund. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock at index linked prices. The biggest advantage offered by these funds is that they offer diversification, flexibility of holding a single share(tradaleat index linked prices)at the sametimeRecently introduced India,these funds are quite popular abroad. 9.FundofFunds Mutual funds that do not invest in financial or physical assets, but do invest in other mutual fund schemes offered by different AMCs, are known as Fund of Funds. Fund of Funds maintain a portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market

31

instruments or non financial assets. Fund of Funds provide investors with an added advantage of diversifying into different mutual fund schemes with even a small amount of investment, which further helps in diversification of risks. However, the expenses of Fund of Funds are quite high on account of compounding expenses of investments into different mutual fund scheme Different plans that mutual funds offer Growth plan and dividend plan A growth is a plan under a scheme where in the returns from investments are reinvested and very few income distributions, if any, are made. The investor thus only realizes capital appreciation on the investment. This plan appeals to investor in high income bracket. Under the dividend plan, income is distributed time to time. This plan is ideal to those investors requiring regular income Dividend reinvestment plan Dividend plans of schemes carry an additional option for reinvestment of income distribution. This referred to as the dividend reinvestment plan. Under this plan, dividends declared by a find are reinvested on behalf of the investor, thus increasing the number of units held by investors. Automatic investment plan Under the automatic investment plan (AIP) also called systematic investment plan (SIP), the investor is given the option for investing in a specific frequency of months in a specified schemeofthe Mutual Fund for a constant sum of investment. Automatic investment plan allows the investor to plan their there savings through a structured regular monthly saving plan. When market is volatile systematic investment plan is a right option to invest money. Market fluctuations becomes an opportunity to maximize your wealth. That plan attract those investor who invest their money bin a recurring deposit.

Automatic withdrawal plan Under the automatic withdrawal plan (AWP) also called systematic withdrawal plan (SWP), a facility is provided to the investor to withdraw a pre-determined amount from his fund at a pre-determined interval. Players in the mutual fund Industry

32

(A) Bank Sponsored

1.

Joint Ventures - Predominantly Indian

a.

SBI Funds Management Private Limited

2. Others BOB Asset Management Company Limited b. Canbank Investment Management Services Ltd. c. UTI Asset Management Company (Pvt.) Ltd
a.

(B)Institutions
a.

LIC Mutual Fund Asset Management Company Limited

(C )Private Sector 1. Indian

a. b. c. d. e. f. g. h. i. j.

Benchmark Asset Management Company Pvt. Ltd. DBS Cholamandalam Asset Management Ltd. Escorts Asset Management Limited JM Financial Asset Management Private Limited Kotak Mahindra Asset Management Limited(KMAMCL) Quantum Asset Management Co. Private Ltd. Reliance Capital Asset Management Ltd. Sahara Asset Management Company Private Limited Tata Asset Management Limited Taurus Asset Management Company Limited

Company

33

2.
a.

Foreign AIG Global Asset Management Company (India) Pvt. Ltd. b. Franklin Templeton Asset Management (India) Private Limited

3.
a.

Joint Ventures - Predominantly Indian Birla Sun Life Asset Management Company Limited b. DSP Merrill Lynch Fund Managers Limited HDFC Asset Management Company Limited ICICI Prudential Asset Mgmt.Company Limited d. Sundaram BNP Paribas Asset Management Company Limited
c.

4.
a. b. c. d. e. f. g. h. i. j.

Joint Ventures - Predominantly Foreign ABN AMRO Asset Management (India) Ltd. Deutsche Asset Management (India) Pvt. Ltd. Fidelity Fund Management Private Limited HSBC Asset Management (India) Private Ltd. ING Investment Management (India) Pvt. Ltd. JPMorgan Asset Management India Pvt. Ltd. Lotus India Asset Management Co. Private Ltd. Morgan Stanley Investment Management Pvt.Ltd. Principal Pnb Asset Management Co. Pvt. Ltd. Standard Chartered Asset Management Company Private Limited

34

Advantage Of Mutual Fund

Portfolio 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 all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.. Professional You avail of the services of experienced and skilled Management professionals who are backed by a dedicated investment research team which analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme Less Risk Investors acquire a diversified portfolio of securities even with a small investment in a Mutual Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities. Low Transaction Due to the economies of scale (benefits of larger volumes), Costs mutual funds pay lesser transaction costs. These benefits are passed on to the investors. Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. Liquidity An investor may not be able to sell some of the shares held by him very easily and quickly, whereas units of a mutual fund are far more liquid. In open-ended schemes, you can get your 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 repurchase at NAV related prices which some close-ended and interval schemes offer you periodically. ' Choice of Mutual funds provide investors with various schemes with Schemes different investment objectives. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own financial goals. These schemes further have different plans/options

35

Transparency

You get regular information on thevalue of your investment in addition to disclosureon the specific investments made by your scheme,the proportion invested in each class of assets andthe fund manager's investment strategy and outlook. Investors also benefit from the convenience and flexibility offered by Mutual Funds. Investors can switch their holdings from a debt scheme to an equity scheme and vice-versa. Option of systematic (at regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes Mutual Fund industry is part of a well-regulated investment environment where the interests of the investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and unnecessary follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient. Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities DISADVANTAGE OF MUTUALFUND

Flexibility

1 0

Safety

1 1

Convenient Administration

1 2

Return Potential

Costs Control Not Investor has to pay investment management fees and fund in the Hands of distribution costs as a percentage of the value of his investments an Investor (as long as he holds the units), irrespective of the performance of the fund No Customized The portfolio of securities in which a fund invests is a decision Portfolios taken by the fund manager. Investors have no right to interfere in the decision making process of a fund manager, which some investors find as a constraint in achieving their financial objectives. Difficulty in Many investors find it difficult to select one option from the Selecting a plethora of funds/schemes/plans available. For this, they may Suitable Fund have to take advice from financial planners in order to invest in Scheme the right fund to achieve their objectives LEGAL AND REGULATORY ENVIRONMENT SECTION A : REGULATORS IN INDIA

36

SEBI - The capital markets regulators also regulates the mutual funds inIndia. SEBI requires all mutual funds to be registered with them. SEBI issues guidelines for all mutual funds operations - investment, accounts, expenses etc. RBI as supervisor of banks owned mutual funds - As banks in India came under the regulatory jurisdiction of RBI, bank owned funds to be under supervision of RBI and SEBI. RBI as supervisor of Money Market Mutual Funds - RBI has supervisory responsibility over all entities that operate in the money markets. Hence in the past Money Market Mutual Funds scheme of Mutual funds had to be abide by policies laid down by RBI. Recently, it has been decided that Money Market Mutual Funds of registered mutual funds will be regulated by SEBI through SEBI (Mutual Fund) Regulations 1996. Ministry of Finance - (MoF) ultimately supervises both the RBI & the SEBI and plays the role of apex authority for any major disputes over SEBI guidelines. Company Law Board - Dept of Company Affairs - Registrar of companies AMCs of Mutual funds are companies registered under the companies Act1956 and therefore answerable to regulatory authorities empowered by the Companies Act. Stock Exchanges Stock Exchanges are self-regulatory organizations supervised by SEBI. Many of closed ended funds of AMCs are listed as stock exchanges and are traded like shares Office of the Public Trustee Mutual fund being public trust are governed by the Indian Trust Act 1882.The Board of trustees or the Trustee Company is accountable to the office of the public trustee, which in turn reports to the Charity commissioner

Unit Trust of IndiaUnit Trust of India formed under UTI Act 1963.The Management of the Trustis under a Board of trustees, which has names of RBI, IDBI, LIC, SBI with thechairman appointed by the Government of India in consultation with theIDB

37

Self-Regulatory organizations? A Self Regulatory organization (SRO) is an association representing a groupof market participants, which is empowered by the apex regulatory authority exercise pre-defined authority over regulation of their members. For example stock exchanges. . However everybody representing a groupof market participants does notautomatically become a SRO. Association of Mutual funds of India (AMFI ) AMFI is not a SRO. It has been formed in 1995 with the objective ofrepresenting the Mutual fund industry collectively with a view - To promote the interests of Mutual Funds and Unit holders. - To set ethical, commercial and professional standards in the industry. - To increase public awareness of Mutual funds in the country

INVESTORS RIGHT AND OBLIGATIONS Right of Proportionate Beneficial Ownership Right of timely services Unit holders entitled to receive dividend warrants within 30 days of date of declaration Unit holders have right to payment of interest at 15% p.a. in the event of failure on the part of Mutual fund to dispatch redemption proceeds within ten working days. The Unit holders can claim unclaimed redemption proceeds or dividends due within a period of 3 years of the due date at the prevailing NAV. After 3years he/she will be paid at NAV applicable at the end of the third year. For initial offers unit holders have right to expect allotment of units within 30 days from the closure of mutual offer period. Right to information Right to approve changes in fundamental attributes of the scheme. Right to wind up a scheme if 75% of investors pass a resolution to that effect. Right to terminate AMC if 75% of the unit holders decides so, of course with the prior approval of the SEBI

Legal Limitation to Investors Rights

38

Unit Holders are not distinct from the Trust and there fore can not sue the Trust. Sponsors of a Mutual fund do not have any legal obligation to meet the shortfall in case the assured return is not achieved. But if the offer document has specifically provided such guarantee by a named sponsor, the investors will have the right to sue the sponsors to make good any shortfall from his returns. A Prospective investors does not enjoy any right with respect to the fund AMC or any other constituent Investor Complaints Redressal Mechanism. SEBI entertains receipt of complaints against Mutual Funds and intervenes with Fund Management to help investor resolve his complaints. SEBI help the investors in the new scheme by requiring the sponsor to appoint acompliance officer who certified that all relevant SEBI and other regulations have been complied with by the fund manager and sponsors. Investors are neither shareholders in the AMC nor depositors. Hence their investments cannot be protected by any of these companies act regulators

OFFER DOCUMENT (OD) Offer document describes a product, and is the most important source of information for prospective investors. AMC or the sponsor issues it. This (OD) is the primary vehicle for the investment decision. It is a legal document that protects and governs the right of an investor. Key information memorandum (KIM) is the abridged version of offer document. Application forms are issued along with the KIM. SEBI has designed standard format for issue of OD and KIM. Offer document and the KIM is valid for two years. ODs are to be updated, revised and printed once in every two years. Changes made in between these two years are circulated among investors inform of addendum or some other source of communication to investors.

39

Changes made in the OD has to be filed with SEBI and should be made available at service centers and in the offices of distributors/brokers. Offer documents should contain - Summary information at the cover page containing name, type of the scheme, name of AMC and the mutual fund, opening and closing date of the offer, price of units, highlights of the scheme and most importantly disclaimer clause by SEBI. - A glossary of defined terms used in the offer document. - Risk factors standard and scheme specific - Due diligence certificate to be signed by CompliancOfficer/ CEO/ManagingDirector/Whole Time Director The above points should be in the same sequence. Offer document contains fundamental attributes of the scheme - Type of the scheme - Investment objective a) Investment pattern b) Investment policies - Load and expenses Offer related information all practical information needed by investor and agents to make the entrustment in the proposed scheme. Condensed financial information for scheme launched during three fiscal years. Constitution of the mutual fund. About objective of the fund. Activities of the sponsor. Name and addresses of the Board of Trustees/Directors Management of the fund Associate Transactions and borrowing policies - In case, scheme has invested more than 25% of its net assets in group companies. a) Business given to associate brokers should be in the limit of 5% of sale and purchase made. NAV determination, valuation and accounting policies. Procedure for repurchases. Tax treatment of investments made in the scheme. Investors rights and services under the scheme. - Access to information on NAV computation and unit price. -

40

Investors friendly services provided by the scheme and documents available for inspection by the investors. Brief description of investor complaint history for the last three years of existing schemes and their redressal mechanism Any penalties pending litigation or proceedings should be mentioned in the OD to alert the investors. MEASURING AND EVALUATING MUTUAL FUND PERFORMANCE NET ASSET VALUE The most important financial indicator in case of mutual funds is net asset value (NAV). A mutual fund has assets consisting of various securities & it is easy to find the market value of all the securities held by the mutual fund at the end of each business day. The number of shares held by the mutual fund multiplies the closing price of the shares at the end of the day. After adding up there figures, the liabilities are subtracted. The resultant figures are divided by the outstanding units of the mutual fund.

In simple words NAV or Net Asset Value of the fund is the cumulative market value of the asset of the fund net of its liabilities. NAV per unit is simply the net value of assets divided by the number units outstanding. Buying and selling into funds is done on the basis of NAV- related prices. The NAV of a Mutual of mutual fund is basically the per unit at any given moment of time &is calculated as follow. NAV= Market value of the funds investments + receivables + Accrued income-liabilities -Accrued Expenses /Number of Outstanding Units DECLARATION OF NAV The NAV of a scheme has to be declared at least once a week. However many Mutual Fund declare NAV for their scheme on a daily basis. As per SEBI Regulation, the NAV of the scheme shall be calculated and published at least in two daily newspapers at intervals not exceeding one week. However, NAV of a close-ended scheme targeted to a specific segment of any monthly income scheme (which is not mandatory required to be listed on stock exchange) may be published at monthly or quarterly intervals.

41

Different performance measures: Change in NAV = NAV at the end of the period NAV at the beginning of the period - Very simple method. - However does not give the correct picture, in case the fund has distributed dividend. Total Return = (Dividend distributions + change in NAV *) 100 Beginning NAV

- Corrects the shortcoming of the first method by taking into account the dividend distributed. - Suitable for all types of funds. Performance must be interpreted in the light of market conditions and investment objective. - However, it ignores the fact that distributed dividend also get reinvested. ROI = (Units held+( Div )/End NAV)-beginning NAV) Ex div NAV Beginning NAV - Most suitable method. - Overcomes the limitation of second method by considering the reinvestment of dividend. Expense Ratio - Total expense/average net assets of the fund. - is an indicator of the funds efficiency and cost effectiveness. Income Ratio Net Investment Income Net Assets

42

Portfolio Turnover Ratio - It measures the amount of buying and selling done by a fund. It gives an idea of how fast the fund manager is churning his portfolio. - High turnover ratio also indicates high transaction costs.30 - Transaction Costs include all expenses related to trading such as brokerage commission paid, stamp duty on transfer registrar fees andcustodians fees. It has significant bearing an fund performance. Fund Size Small funds - Easy to manage - Achieve objective in focused manner with limited holding. Large Funds - Economics of scale - Lower Expense Ratio Cash Holdings - Enables meeting redemption needs - A cushion against decline in market prices of shares/bonds - May reduce the return on the portfolio Borrowing by mutual funds - In India, fund cannot borrow to increase fund size - As per SEBI regulation, Mutual Funds can borrow only to meet temporary liquidity Cannot borrow for a period more than 6 months Can borrow upto 20 % of its NET ASSETS. Section B: EVALUATING FUND PERFORMANCE Basis of choosing an Appropriate Performance Benchmark: - The asset class if invests in, - An equity fund should be judged against another equity fund & equity benchmark (Indices). - The funds stated objective Equity Funds Index Fund An Index fund invests in the stock comprising of the index in the same ratio. For example, Market Index Fund - BSE Sensex Nifty Index Fund - NIFTY

43

This is a passive management style. The difference between the return of this fund, and its index benchmark can be explained by TRACKING ERROR. Active Equity Funds : The fund manager actively manages this fund. To evaluate performance in such case we have to select an appropriate benchmark. Large diversified equity fund - BSE 100 Sector fund - Sectoral Indices Debt Funds : Debt fund can also be judged against a debt market index e.g. I-BEX Close ended debt funds can be measured against bank fixed deposits of comparable maturity. Money Market : : Money market have portfolio of short term instruments. The general practiceis to benchmark it against short term bank deposits. Criteria for peer group comparisons to be considered The investment objectives and risk profiles Expense ratio Even when two funds with similar characteristics are otherwise comparable, their returns must be calculated on a comparable basis. Hence, 1. Compare returns of two funds over the same periods only; 2. Similarly, only average annualized compound returns are comparable 3. Only after-tax returns of two different schemes should be compared

44

HOW TO INVEST IN MUTUAL FUNDS? Step One - Identify your investment needs. Your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, level of income and expenses among many other factors. Therefore, the first step is to assess your needs. Begin by asking yourself these questions: 1. What are my investment objectives and needs? Probable Answers: I need regular income or need to buy a home or finance a wedding or educate my children or a combination of all these needs. 2. How much risk I am willing to take? Probable Answers: I can only take a minimum amount of risk or I am willing to accept the fact that my investment value may fluctuate or that there may be a short-term loss in order to achieve a long-term potential gain. 3. What are my cash flow requirements? Probable Answers: I need a regular cash flow or I need a lumpsum amount to meet a specific need after a certain period or I don't require a current cash flow but I want to build my assets for the future. By going through such an exercise, you will know what you want out of your investment and can set the foundation for a sound Mutual Fund investment strategy. Step Two - Choose the right Mutual Fund.

Once you have a clear strategy in mind, you have to choose which Mutual Fund and scheme you want to invest in. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed by the same Fund Manager. Some factors to evaluate before choosing a particular Mutual Fund are: The track record of performance over the last few years in relation to the appropriate yardstick and similar funds in the same category. How well the Mutual Fund is organised to provide efficient, prompt and personalised service.

Degree of transparency as reflected in frequency and quality of their communications.

45

Step Three - Select the ideal mix of Schemes. . Investing in just one Mutual Fund scheme may not meet all your investment needs. You may consider investing in a combination of schemes to achieve your specific goals. The following tables could prove useful in selecting a combination of schemes that satisfy your needs. AGGRESSIVE PLAN Money Market Schemes Income Schemes Balanced Schemes Growth Schemes MODERATE PLAN Money Market Schemes Income Schemes Balanced Schemes Growth Schemes CONSERVATIVE PLAN Money Market Schemes Income Schemes Balanced Schemes Growth Schemes 10 % 50-60 % 20-30 % 10 % 10 % 20 % 40-50 % 30-40 % 5% 10-15% 10-20 % 60-70 %

Selecting the right mutual fund (Bogle approach) o 1 step: classify all equity schemes (growth, value equity income) o 2 step: choose one of two strategies. Select mainstream growth or value funds, providing broad diversification, or select either a differentiated growth or value fund or a specialty fund whose risks and returns will vary from the overall market 3 step: Evaluate past returns of available funds (see past returns history) o 4 step: Review the salient features of a scheme (see Fund size, Fund age, portfolio managers experience in managing these type of funds, cost of investments like load (entry/exit). Also see cash position in the fund, portfolio concentration/Diversification, market capital of fund, portfolio turnover, If beta of 1 means then fund value will fluctuate exactly with index value.

46

With less than 1 beta means less return in rising market but less loss in falling market & more than 1 beta means fund is giving more return in rising market & giving more loss in declining market. Selecting Debt/Bond/Income Fund: Step 1: Narrow down the choice keeping the various debt instruments in mind Step 2: Know your investor objective as per investors age Profile/income/mindset towards risk etc. Step 3: See fund size, its age, relative yield, expense ratio, credit ratings,composition, Average maturity, Tax implications, past return history, Selecting money market fund: Following points should be considered o cost of the fund (go for lower expense ratio) o quality of portfolio, (look at the credit quality of the instruments) o yields (net) Selecting a balanced mutual fund: Following points should be considered o portfolio balance (exact weightage) o debt portfolio character (quality) o cost of fund o returns o other portfolio statistics.

Step Four - Invest regularly For most of us, the approach that works best is to invest a fixed amount at specific intervals, say every month. By investing a fixed sum every month, you buy fewer units when the price is higher and more units when the price is low, thus bringing down your average cost per unit. This is called rupee cost averaging and is a disciplined investment strategy followed by investors all over the world. With many open-ended schemes offering systematic investment plans, this regular investing habit is made easy for you.

Step Five - Keep your taxes in mind

47

If you are in a high tax bracket and have utilised fully the exemptions under section 80L of the Income Tax Act, investing in growth funds that do not pay dividends might be more tax efficient and improve your post-tax return. If you are in a low tax bracket and have not utilised fully the exemptions available under Section 80L of the Income Tax Act, selecting funds paying regular income could be more tax efficient. Further, there are other benefits available for investment in Mutual Funds under the provisions of the prevailing tax laws. You may therefore, consult your tax advisor or Chartered Accountant for specific advice. Step Six - Start early It is desirable to start investing early and stick to a regular investment plan. If you start now, you will make more than if you wait and invest later. The power of compounding lets you earn income on income and your money multiplies at the compounded rate of return. of acquisition

Step Seven - The final step All you need to do now is to get a touch with a Mutual Fund or your agent/broker and start investing. Reap the rewards in the years to come. Mutual Funds are suitable for every kind of investor - whether starting a career or retiring, conservative or risk-taking, growth-oriented or income seeking The table below compares the investment options under the broad heads viz. return, safety, volatility, liquidity and convenience

Return convenience

Safety

Volatility

Liquidity

48

Equity

High Moderate

Low

High

High

FI Bonds Moderate High Corporate Debentures Moderate Low Company Fixed Deposits Moderate Moderate Fixed deposits Low High PPF Moderate High Life Insurance Low Moderate Gold Moderate Low Real estate High low Mutual Funds High High

High Moderate Moderate Moderate Moderate Low Low Low Low High High High High Moderate High Low Low Low moderate High Moderate High Moderate Low Moderate Low High

DIFFERENT COMPANY PROFILE ABOUT ICICI PRUDENTIAL

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Prudential ICICI Asset Management Company is the joint venture between Prudential Plc, UK's leading insurance company and ICICI Bank Ltd, India's premier financial institution. Its the venture in the ratio of 55%: 45%. The joint venture was formed with the key objective of providing the Indian investor mutual fund products to suit a variety of investment needs. The AMC has already launched a range of products to suit different risk and maturity profiles. Prudential ICICI Asset Management Company Limited has a net worth of about Rs. 80.14 crore (1 crore = 10 million) as of March 31, 2004. Both Prudential and ICICI Bank Ltd have a strategic long-term commitment to the rapidly expanding financial services sector in India. KEY INDICATORS As on may 1998 Asset under management Number of funds managed Rs. 160 crore 2 As on 31May,2006 59,143 crore 22

ICICI PRUDENTIAL GUIDING PRINCIPAL

ICICI Prudential will conduct its business with

Honesty and trustworthiness in all interactions. A pioneering spirit and excellence in action. Collaboration and teamwork. An understanding of customer needs and the desire to satisfy them. The highest service standards. Consistently above average performance ICICI Prudential Mutual Fund

Name of the Mutual Fund

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Date of setup of Mutual Fund Names of Sponser Name of TrusteeCompany Name of Trustee

October 13, 1993 Prudential Plc and ICICI BankLimited ICICI Prudential Trust Ltd Mr.E.B.Desai-Chairman Mr. Keki Bombi Dadiseth-Director Mr.M.S.Parthasarthy-Director Ms.Vishakha Mulye-Director ICICI Prudential Asset Management Company Limited June 22, 1993 Dr. (Mrs.) Swati A Piramal Mr. Ajay Srinivasan Mr. B. R. Gupta Mr. Dadi Engineer Mr. K. S. Mehta Mr. K. V. Kamath Mr. Pankaj Razdan Mr. Vijay Thacker Ms. Kalpana Morparia Mr. Vikram B. Trivedi Ms. Shikha Sharma

Name of Asset Management Company Date of Incorporation of AMC Name(s) of Director

Name of Chairman Name of Chief Executive Officer

Mr. K. V. Kamath Mr. Pankaj Razdan

Name of Chief Investment Officer Name(s) of Fund Manager

Mr. Nilesh Shah Mr. Chaitanya Pande Mr. Deven Sangoi Mr. Pankaj Kaji

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Mr. Rahul Goswami Mr. S Naren Mr. Yogesh Bhatt

Name of Compliance Officer Name of Investor Service Officer Name(s) of Auditors Name(s) of Custodian Name(s) of Registrar and Transfer Agent

Mr. Ranganath Athreya Ms. Molly Kapoor M/s N. M. Raiji & Company HDFC Bank Limited Computer Age Management Services Pvt. Ltd

SPONSOR Prudential Plc is a leading international financial services group providing retail financial products and services and fund management to many millions of customers worldwide. As a group Prudential plc has, as of December 31, 2004, over GBP187 billion of funds under management, more than 16 million customers and over 22,500 employees worldwide. Prudential PLC was founded in 1848. Since than it has grown to become the largest provider in the UK providing the wide range of savings products for the individual including life insurance, pensions, annuities, unit trusts and personal banking. It has a presence in over 15 countries, and caters to 10 million customers. Prudential is one of the largest UK insurers with operations in 15 countries in Asia. Asia has always been an important region for prudential and it has had a presence in Asia for 25 years. Infact prudential first overseas operation was in India, way back in 1923 to establish life and general branch agencies. In the US, prudential owns Jackson National Life, one of the leading life insurance companies. Prudential is focused on the integrated generation and is one of the first financial services organization to use the Internet on a fully integrated basis. In October 1998, prudential launched a branch less bank based on the internet usually titled as egg:|-

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www.egg.com. the bank has in a short span of its existence become a leading banking service provider in the UK. Infact in the first six month of its existence it garnered over US $ 8 billion in deposits from over 5 lakhs customers. Development of superior products and services that offer value for money and securities while producing superior financial returns enables prudential to maximize the value of its shareholders investment and to establish lasting relationship with customer and policyholders. Securities and Exchange Board of India, vide its letter no. MFD/PM/567/02 dated June 4, 2002, has accorded its approval in recognizing ICICI Bank Ltd. as a co-sponsor consequent to the merger of ICICI Ltd. with ICICI Bank Ltd. ICICI Bank is India's second-largest bank with total assets of about Rs.146,214 crore at December 31, 2004 and profit after tax of Rs. 1,391 crore in the nine months ended December 31, 2004 (Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 530 branches and extension counters and over 1,880 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross-border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom and Canada, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates, Bangladesh and South Africa. ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly owned subsidiary.

ABOUT UNIT TRUST OF INDIA

Unit trust of india (UTI) is India's largest mutual fund organization. UTI manages funds over RS. 75159 Crore as on 30/06/2003 and over 43 million investor accounts. The faith

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and confidence of investors stems from UTIs commitment, as reflected in its long track record of overthree decades, to ensure its investors safety, liquidity and attractive yield on their investments.

UTI was set up in 1964 by an act of parliament. UTI presently occupies a special position in Indian capital market. With a servicing and distribution network of 54 branch offices, 295 Chief Representatives and about 75,000 agents, UTI provides the complete range of services to its investors.

UTI has set up associates in the fields of banking, securities trading, investor servicing, investment advice and training, towards creating a diversified financial conglomerate and meeting investors varying needs under a common umbrella.

PRODUCTS OF THE ICICI PRUDENTIAL COMPANY: The Company provides three types of funds: 1. Equity Funds

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2. Balanced Funds 3. Debt Funds EQUITY FUNDS:

ICICI Prudential Growth Plan Type Investment Pattern Open-ended Equity Fund Equity & Equity related 95% & Debt, Money Market and Cash 5%. To seek to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related securities Suitable for investors who seek to invest in equity securities.

Fund Objective

Investment horizon

ICICI Prudential Tax Plan Type Investment Pattern Open-ended Equity Linked Saving Scheme Equity & Equity related 90% & Debt, Money Market and Cash 10%.

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Fund Objective

To seek to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related securities Suitable for investors seeking to benefit from Medium term investment of funds with tax benefits for capital appreciation.

Investment horizon

ICICI Prudential Fmcg Plan Type Investment Pattern Open-ended FMCG Sectoral Fund Equity & Equity related in FMCG Companies 90% in & Debt, Money Market and Cash 10%. To seek to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related securities of FMCG Companies. Sectoral fund, suitable for investors seeking an exposure to the FMCG Sector.

Fund Objective

Investment horizon

ICICI Prudential Technology Plan Type Investment Pattern Fund Objective Open-ended Equity Fund Equity and Equity related 90-95% & Debt, Money Market and Cash 5-10%. To generate long-term capital appreciation

56

by investing in equity and equity related securities of technology intensive companies. Investment horizon Suitable for investors who seek an exposure to IT, Telecom, Life Sciences and Media sectors

ICICI Prudential Power Plan Type Open-ended Growth Fund Equity and Equity related securities including non convertible portion of convertible debentures - Up to 95% and at least 5% in Debt and Money Market securities. To generate capital appreciation by actively investing in equity/ equity related securities. For defensive considerations, the Scheme may invest in debt, money market instruments, to the extent permitted under the Regulations. The AMC will have the discretion to completely or partially invest in any of the type of securities stated above so as to maximize the returns. Suitable for investors seeking long-term capital appreciation through investments in equity and equity related securities. ICICI Prudential Index Fund Type Investment Pattern Open-ended Index Linked Growth Scheme Equity stocks drawn from the components of the S&P CNX Nifty and the exchange

Investment Pattern

Fund Objective

Investment horizon

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traded derivatives on the S&P CNX Nifty upto 100%. Money Market instruments upto 10%. The Nifty Plan of the Index Fund seeks to track the returns of the S&P CNX Nifty through investments in a basket of stocks drawn from the constituents of the above index Suitable for investors who seek to invest in equity securities

Fund Objective

Investment horizon

ICICI Prudential Dynamic Plan Type Investment Pattern Open-ended equity fund 0 - 100% = Equity & Equity related securities. 0 - 100% = Debt & Money Market Instruments To generate capital appreciation by actively investing in equity / equity related securities. For defensive considerations, the Scheme may invest in debt, money market instruments, to the extent permitted under the Regulations. The AMC will have the discretion to completely or partially invest in any of the type of securities stated above so as to maximize the returns. Suitable for investors with an investment horizon of 2 3 years

Fund Objective

Investment horizon

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ICICI Prudential Discovery Fund Investment horizon Suitable for investors who seek to invest in equity securities. Open-ended Equity Fund Equity & Equity related securities 80% to 100%, Cash & Money Market instrument 20%. To generate returns through a combination of dividend income and capital appreciation by investing primarily in a well-diversified portfolio of value stocks. Value stocks are those, which have attractive valuations in relation to earnings or book value or current and/or future dividends. Suitable for investors who seek to invest in equity securities.

Type Investment Pattern

Fund Objective

Investment horizon

ICICI Prudentil Emerging Star Fund Type Investment Pattern Open-ended Equity Fund Equity & Equity related securities 90% to 100%, Cash & Money Market instruments 0% to 10%. To generate capital appreciation by actively investing in diversified mid cap stocks. The Scheme will invest primarily in companies that have a market capitalization between Rs. 100 crores to Rs. 2000 crores.

Fund Objective

ICICI Prudential Infrastructure Fund

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Type

Open-ended equity Fund Equity and Equity related 70 - 100% & Debt, Money Market Instruments and Call money (Including securitised debt of upto 20% of the assets) 0 30%. To generate capital appreciation and income distribution to unit holders by investing predominantly in equity/equity related securities of the companies belonging to the infrastructure industries and balance in debt securities and money market instruments including call money. Suitable for investors seeking long-term capital appreciation through investments in equity and equity related securities.

Investment Pattern

Fund Objective

Investment horizon

ICICI Prudential Services Industries Fund

Type

Open-ended equity Fund Equity and Equity related 70 - 100% & Debt, Money Market Instruments and Call money (Including securitised debt of up to 20% of the assets, Including derivatives istruments to the extent of 50% of the net assets.) 0 - 30% The Scheme is an open-ended equity Scheme seeking to provide capital appreciation and income distribution to unit

Investment Pattern

Fund Objective

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holders by investing predominantly in equity/equity related securities of the companies belonging to the service industries and the balance in debt securities and money market instruments including call money. Investment horizon Suitable for investors seeking long-term capital appreciation through investments in equity and equity related securities.

ICICI Prudential Equity And Derivative Fund

ICICI Prudential Equity and Derivatives Income Optimiser Plan Type Open-ended equity Fund Investment Pattern 65% to 80% in Equity and Equity Derivatives( Equity un hedged exposure limited to 5%)20% to 35% in debt

ICICI Prudential Equity and Derivatives Wealth Optimiser Plan Open-ended equity Fund 65% to 100%in Equity and Equity Derivatives( Equity un hedged exposure limited to 80%)0% to 35% in debt

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Fund Objective

instruments To seek to generate low volatility returns by using arbitrage and other derivatives strategies in equity market and investments in short term debt port folio

instruments To seek to provide capital appreciation and income distribution to the investors by using equity derivatives strategies, arbitrage opportunities and pure equity investments

BALANCED FUNDS ICICI Prudential Balanced Fund Type Investment Pattern Open ended Balanced Fund Under normal circumstances Equity and Equity related instruments up to 60% & Debt, Money Market and Cash up to 40%. To seek to generate long-term capital appreciation and current income from a portfolio that is invested in equity and equity related securities as well as in fixed income securities. Suitable for investors seeking long term capital appreciation and current income.

Fund Objective

Investment horizon

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ICICI Prudential Child Care Plan- Study Plan Type Open ended fund ( Study Plan) Equity and Equity related securities 0-15%, Debt Securities, Money Market Instruments, Securitised Debt and Cash (including money at call) 85-100%. To generate current income by creating a portfolio that is invested in debt, money market instruments and equity and equity related securities. Ideal for investors seeking current income and long term capital appreciation over low to medium term horizon.

Investment Pattern

Fund Objective

Investment horizon

ICICI Prudential Child Care Plan Gift Plan Type Open ended fund ( Gift Plan) Equity & Equity related securities 51-60%, Debt Securities, Money Market Instruments, Securitised Debt & Cash (including money at call) 40-49%. To generate capital appreciation by creating a portfolio that is invested in equity and equity related securities and debt and money market instruments. Ideal for investors seeking current income and long term capital appreciation over low to medium term horizon.

Investment Pattern

Fund Objective

Investment horizon

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DEBT FUNDS ICICI Prudential Liquid Plan - Growth Option Type Investment Pattern Open-ended Liquid Income Fund Money Market 80% & Debt Instruments 20% To generate reasonable returns from low risk investments which provide high level of liquidity.

Fund Objective

ICICI Prudential Liquid Plan- Dividend Option Type Investment Pattern Open-ended Liquid Income Fund Money Market 80% & Debt Instruments 20% To generate reasonable returns from low risk investments which provide high level of liquidity. Suitable for investors looking for short-term investment at relatively low risk.

Fund Objective

Investment horizon

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ICICI Prudential Income Plan Type Investment Pattern Open-ended Debt Fund Debt Securities up to 75% & Money Market & Cash up to 25% To generate income through investments in a basket of debt instruments of various maturities with a view to maximise income while maintaining the optimum balance of yield,safety and liquidity. Suitable for investors looking for steady returns at relatively low risk across a medium to long term horizon.

Fund Objective

Investment horizon

ICICI Prudential Gilt Fund- Investment Plan Type Investment Pattern Open-ended medium-term Gilt Fund Gilt Securities (incl. Treasury Bills). Average Maturity normally not to exceed 8 years. To generate income through investment in Gilts of various maturities. Suitable for investors looking for steady returns at relatively low risk across a medium to long term horizon

Fund Objective

Investment horizon

ICICI Prudential Gilt Fund Treasury Plan

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Type Investment Pattern

Open-ended short-term Gilt Fund Gilt Securities (incl. Treasury Bills). Average Maturity normally not to exceed 3 years. To generate income through investment in Gilts of various maturities. Suitable for investors looking for steady returns at relatively low risk across a short to medium term horizon.

Fund Objective

Investment horizon

ICICI Prudential Monthly Income Fund Open-ended Income Fund with no assured returns Debt Securities, money market instruments,securitised debt and Cash up to 85%, Equity and equity related securities 15%. To generate regular income through investments in fixed income securities and also to generate long term capital appreciation by investing a portion in equity and equity related instruments. Suitable for investors seek regular returns and for the medium to long term investor.

Type

Investment Pattern

Fund Objective

Investment horizon

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ICICI Prudential Fixed Maturity Plan Type Investment Pattern Open-ended debt fund 100% in Debt Securities, Money Market, Securitised Debt & Cash (including money at call). To generate regular returns from a basket of Debt Securities especially for investors who have a fixed time horizon. Suitable for investors looking for steady returns at relatively low risk across a medium to long term horizon.

Fund Objective

Investment horizon

ICICI Prudential Short Term Plan Type Investment Pattern Open Ended Income Fund Debt Securities up to 100%,Money Market Instruments and Cash up to 50%. To generate income through investment in basket of debt securities and money market instruments. Suitable for investors looking for steady returns at relatively low risk across a short to medium term horizon.

Fund Objective

Investment horizon

ICICI Prudential Long Term Plan

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Type Investment Pattern

Open Ended Income Fund Debt Securities up to 100% & Money Market and Cash up to 10% To generate income through investments in a basket of debt and money market instruments of various maturities with a view to maximise income while maintaining the optimum balance of yield,safety and liquidity. Suitable for investors looking for steady returns at relatively low risk across a medium to long term horizon. ICICI Prudential Flexible Income Plan

Fund Objective

Investment horizon

Type

Open-ended Income Fund 10 - 100% = Money market and Debentures with residual maturity of less than 1 year. 0 90% = Debt instruments with maturity more than 1 year. To generate income through investments in a range of debt instruments and money market instruments of various maturities with a view to maximizing income while maintaining the optimum balance of yield, safety and liquidity. Suitable for investors looking at avenues to invest surplus funds in medium to long-term horizon

Investment Pattern

Fund Objective

Investment horizon

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ICICI Prudential Sweep Plan Type Investment Pattern Open-ended Liquid Fund Money Market instruments including money at call -Up to 100%. Debt SecuritiesUp to 40% To seek to provide reasonable returns, commensurate with low risk while providing a high level of liquidity, through investments made primarily in money market and debt securities. The aim is to optimize returns while providing liquidity. Suitable for investors looking for short-term investment at relatively low risk. ICICI Prudential Floating Rate Plan Type Investment Pattern Open-ended Income Fund 65 - 100% = Floating Rate Debt Instruments. 0-35% = Fixed rate debt instruments with maturity less than 1 year. To generate income consistent with the prudent risk from a portfolio comprising substantially of floating rate debt instruments, fixed rate debt instruments swapped for floating rate return and also fixed rate instruments and money market instruments. Suitable for investors looking at avenues to invest surplus funds in medium term horizon

Fund Objective

Investment horizon

Fund Objective

Investment horizon

ICICI PrudentialDeposit Plus NRI Series

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Type

Open-ended Debt Fund Money Market instruments & Cash (including- money at call) Up to 100 %, Short term and medium term debt securities/ debt instruments and Securities debt Up to 100 %. To seek to generate regular returns from a basket of Debt Securities especially for investors who have a fixed time horizon. Suitable for investors looking for steady returns at relatively low risk across a medium to long-term horizon.

Investment Pattern

Fund Objective

Investment horizon

ICICI PrudentialGilt Investment- PF Type Open-ended Gilt Fund(Investment - PF) The Plan aims at generating returns commensurate with zero credit risk by investing in securities created and issued by the Central Government and /or a State Government and/or repos/reverse repos in such government securities as may be permitted by RBI. The Plan may also invest a portion of the corpus in the call money market or in an alternative investment for the call money market as may be provided by RBI to meet the liquidity requirements. The Fund will seek to underwrite issuance of Government Securities subject to the prevailing rules and regulations as may be specified by SEBI/ RBI in this respect and may also participate in the auction of Government securities from time to time.

Investment Pattern

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Fund Objective

The primary investment objective of the Plan is to generate income through investments in Gilts of various maturities. However, there can be no assurance that the investment objective of the Plan will be realized. Suitable for investors looking for steady returns at relatively low risk across a medium to long term

Investment horizon

ICICIPrudential Gilt Treasury- PF Type Open-ended Gilt Fund(Treasury - PF) The Plan aims at generating returns commensurate with zero credit risk by investing in securities created and issued by the Central Government and /or a State Government and/or repost/reverse repost in such government securities as may be permitted by RBI. The Plan may also invest a portion of the corpus in the call money market or in an alternative investment for the call money market as may be provided by RBI to meet the liquidity requirements. The Fund will seek to underwrite issuance of Government Securities subject to the prevailing rules and regulations as may be specified by SEBI/ RBI in this respect and may also participate in the auction of Government securities from time to time. The primary investment objective of the Plan is to generate income through investments in Gilts of various maturities. However, there can be no assurance that the

Investment Pattern

Fund Objective

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investment objective of the Plan will be realized. Investment horizon Suitable for investors looking for steady returns at relatively low risk across a medium to long term horizon

ICICI Prudential Income Multiplier Fund Type Investment Pattern Open-ended Debt Fund Equity & Equity Related securities 0-30%, Debt Instruments 65-100%, Cash & Money Market Instruments 0-5%. To generate long-term capital appreciation from a portfolio that is invested predominantly in debt and money market securities and the balance in equity and equity related securities. Suitable for investors those who have conventionally been opting for fixed income instruments and are now looking at taking advantage of the potential of equity

Fund Objective

Investment horizon

ICICI Prudential Long Term Floating Rate Plan Open-ended Debt Floating Rate Plan) Fund (Long Term

Type

Investment Pattern Fund Objective

65 - 100% = Floating Rate Debt Instruments. 0-35% = Fixed rate debt instruments. To generate income through investments in a range of debt and money market instruments of various maturities with a

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view to maximizing income while maintaining the optimum balance to yield, safety and liquidity. Investment horizon Suitable for investors looking at avenues to invest surplus funds in medium term horizon.

Distrbution : ICICI Prudential AMC ICICI Prudential have multiple channels.The focus is on growing bankig and agency channels to drive retail penetration Currently it has30,000 points of sales to access retail institutional and HNWI customers ICICI Prudential have following distribution channel Branches Securities Banks Agency Others

ICICI Prudential AMC : CustomersGrowth and demographics Aggressive growth in retail customers; Equity, Non- Metro and Agency keydrivers Growth in Focus Areas Equity Asset (FuM) 97% growth (3 Yr CAGR) Contributes over 32% of FuM Geography (Customers) More than 60% growth in non metro customers over 3 yrs Channel (Customers) More than 50% growth of customers in agency channel

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Our Customer Focus Retail MF

PERFORMANCE ANALYSIS OF UTI MUTUAL FUND

Every year, millions of Indians entrust their savings to Unit Trust of India to build up a financially secure future. This faith and confidence of investors stem from UTI's commitment, as reflected in its long track record to ensure its investors, safety, liquidity and attractive yield on their investments. Set up in 1964, by an Act of Parliament, UTI Act 1963, UTI has grown into one of the biggest player and carved out a special position in the Indian capital market. Today, UTI manages an aggregate portfolio of Rs. 72,698 Crore as on 31/12/1999 and services 45 million investor accounts under 90 saving schemes catering to varying needs of different classes of investors. UTI has a servicing and distribution network of 53 branch offices, 320 District Representatives and about 87,000 agents. It provides a complete range of services to its investors at a low gross cost of less than 1.01 percent of investible funds and does not charge any asset management fee.

Management Chairman Shri M Damodaran Executive Directors Shri K G Vassal Shri A K Thakur Shri M M Kapur Shri S K Basu

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Shri B G Daga Shri B S Pandi Shri D S R Murthy

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AMC, FUND MANAGEMENT TEAM AND SCHEME

Savings Plans and Funds UTI is a symbol of trust and confidence among Indian investors. In the last seven years, the number of schemes managed by UTI increased from 35 to 92, while the number of unitholding accounts jumped sevenfold, from 65 lakhs to over 450 lakhs. UTI's expanding product range cover a broad spectrum of investment goals and includes open end and closed-end income and capital accumulation funds. Among the most popular are Unit Scheme 1964 and Master series equity schemes such as Master-share, Master-plus, Master Equity Plans, etc. UTI also manages schemes aimed at meeting specific needs like

Low cost insurance cover (ULIP) Monthly income needs of retired persons and women. Income and liquidity needs of religious and charitable institutions and trusts. Building up funds to meet cost of higher education and career plans for children. Future wealth and income needs of girl child and women. Building savings to cover medical insurance at old age. Wealth accumulation to meet income needs after retirement.

Reaching Investors Individual household investors account for 99% of UTI's investor accounts and about 65% of unit capital of UTI schemes. Products are distributed through a marketing force of about 87,000 commission-based canvassing agents trained to explain the products and provide related service support to investors.

Today, these agents are supervised by 320 Chief Representatives who guide the investors, organize, train and motivate the agents in their respective areas of operation (specified districts).

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Investors under various schemes of UTI are now serviced through 53 UTI branches, 213 collection centers and offices of 6 Registrar and Transfer Agencies appointed by UTI. Besides there are 52 franchises offices, which accept applications and distribute certificates to unit holders. UTI has set up its own associate company, UTI-Investor Services Limited (UTIISL), to meet the growing needs of unit holder servicing. UTI is also currently implementing a technology upgradation program, involving networking of on-line computer systems at UTI's offices, and offices of Registrars and Transfer Agencies. This would enable UTI to improve service quality significantly. UTI publishes weekly/daily NAVs for all its listed schemes and offers a prospectus for every scheme. It also publishes half yearly results for all schemes and releases information on portfolio as also largest shareholding for growth schemes and Unit Scheme 1964. UTI adheres to disclosure requirements specified by SEBI. Fund Deployment Equity Investing : More than fifty percent of total funds of UTI Schemes are invested in equity. UTI is the largest operator in the Indian equity market with total investments worth Rs 35,007.83 crores at book value. Its various funds collectively hold stocks in more than 1500 Indian companies and account for over 8 percent of the market capitalization of all listed scrips on the Mumbai Stock Exchange. Corporate debt: UTI is one of the main providers of debt finance to the corporate sector. Investment in corporate debt instruments account for 38 percent of the total investible funds. Credit market operations cover a range of instruments including publicly issued and privately placed debentures, bonds and medium term notes. UTI's debt portfolio quality is represented by 98 percent performing assets. UTI is also one of the largest investors, among non-banking institutions in the money market. About 11 percent of the total investible funds is accounted for by government paper and call deposits.

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Investment Guidelines Consistent with the UTI Act, UTI's investment decisions are guided by investors' interests. UTI's operations are guided by UTI Act, 1963 and UTI's investments are subject to prudential exposure norms and limits laid down by UTI regulations. It cannot invest more than 10 percent of a particular schemes corpus in the equity of any one company. UTI's investment decisions are backed by inputs from independent groups setup for equity research, investment appraisal and credit rating. A Conglomerate with a vision As a distinctive financial institution, UTI manages funds raised through common investible vehicles and at the same time provides companies financial services, including underwriting. To create a diversified financial conglomerate and to meet investor's varying needs under a common umbrella, UTI has set up a number of associate companies in the field of banking, securities trading, investor servicing, investment advice and training. UTI Bank Ltd (1994)--the first private sector bank to be set up under RBI guidelines. UTI Securities Exchange Ltd (1994)--the first institutionally sponsored corporate stock-broking firm. UTI Investor Services Ltd (1993)--the first institutionally sponsored Registrar and Transfer agency. UTI Institute of Capital Markets (1989)--the first such institute in Asia, excluding Japan. UTI Investment Advisory Services Ltd (1988)--the first Indian Investment Advisor registered with SEC, US. Consistent with financial sector deregulation, UTI has plans to enter insurance, pension fund and credit rating businesses.

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Global Links UTI pioneered the off-shore fund investment in Indian securities. The India Fund launched in 1986 as a closed-end fund, became a multi-class open-ended fund in 1994. Thereafter, in 1988 UTI floated the India Growth Fund which is listed on the New York Stock Exchange. Both India Fund and India Growth Fund have increased their corpus through rights issues. Besides the Columbus India Fund, launched in 1994, UTI launched the India Access Fund, an Indian Index Fund (tracking the NSE 50 index) in 1996. UTI International Limited is a 100% subsidiary of Unit Trust of India, registered in the island of Guernsey. This company was set up with the primary objective of administration and marketing of various offshore funds managed by UTI as also to act as the management company for these funds as required by the Guernsey Law. UTI International Ltd has an office in London to market UTI's offshore funds to institutional clients in UK, Europe and USA. It is also responsible for developing new products as well as new business opportunities of UTI. This office also looks after ongoing investor relations with foreign investors and has succeeded in greatly improving communication between UTI and its clients and distributors abroad. UTI International Ltd has played an important role in launching three new offshore funds of UTI - the India IT Fund Ltd, the India Debt Fund Ltd and the India Public sector Fund Ltd. To cater to various needs of NRI investors based in the Gulf region, UTI has a Representative office at Dubai. The representative office covers all the six GCC countries viz. UAE, Oman, Kuwait, Saudi Arabia, Qatar and Bahrain. The Dubai office of UTI acts as a liaison office between our NRI investors in the Gulf and UTI offices all over India. Besides providing information on current and new schemes of UTI, it also co-ordinates with UTI offices in India for all after-sale requests of unitholders/agents. In the recent past, UTI has extended its support to the development of Unit Trusts in other developing countries, like Sri Lanka and Egypt. Besides providing technical advise, UTI also participated in the equity capital of the Unit Trust Management Company of Sri Lanka.

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Research strength UTI has its own research set-up to deal with different areas. The areas of research analysis cover macro economy, capital markets, financial sector and mutual funds. Industry and corporate performance are also covered by Equity Research and Credit rating groups. UTI Institute of Capital Markets conducts training programmes for the financial community and helps develop modern and scientific approach towards investment management. It also serves as a forum to discuss ideas and issues relevant to the capital market besides publishing research papers relating to capital market.

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Institution Building UTI has played a significant role in institution-building. It has helped promote/copromote many institutions that would aid the healthy development of the financial sector, and the economy in general. These institutions include

Infrastructure Leasing & Financial Services (ILFS). Credit Rating and Information Services Ltd (CRISIL). Stock Holding Corporation of India (SHCIL). Technology Development Corporation of India Ltd. (TDICI). Over-the Counter Exchange of India Limited (OTCEI). National Securities Depository Ltd (NSDL). North Eastern Development Finance Corporation Ltd (NEDFCL).

Into the future

With the likely improvement in stock markets over the future, UTI plans to introduce more index funds, money market mutual funds, sector specific funds, capital gains fund and infrastructure fund. UTI also plans to provide fund management services to pension funds. UTI contemplates significant organisational strengthening, consistent with the anticipated fast growth in its various activities, in the emerging economic environment. Once the regulatory guidelines are laid down, UTI intends to offer benefits of investing in offshore markets to its investors.

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UTI ASSOCIATES
UTI's associate companies operate in the fields of banking, securities trading, investor servicing, investment advice and training.

UTI Institute of Capital Market (UTI-ICM)

UTI Institute of Capital Market is a specialised training and research facility established with the objective of promoting professional development of capital market participants. It was set up as a non-profit educational society by the Unit Trust of India. It provides specialised professional development programmes for the varied constituents of the capital markets and is engaged in focused research and consultancy activities. Training programmes are conducted throughout the year in four main thrust areas: Investment Analysis and Management, Investment Banking, Corporate Finance and Risk Management. The Institute has excellent library and residential facilities.

UTI Securities Exchange Ltd. (UTI-SEL)

UTI SECURITIES EXCHANGE LTD., (UTISEL), incorporated on June 28, 1994 with a paid-up capital of Rs.300 million is wholly-owned by Unit Trust of India. UTI promoted UTISEL is an independent professional entity providing secondary market trading facilities as well as investment banking and other related services. All acitivities of the company are regulated by the Securities and Exchange Board of India. Over a period of time the company has built up a reputation for transparent and fair execution of orders of clients. All the staff at UTISEL strive to provide high quality services to the clients. It currently has significant market shares in the institutional broking and merchant banking segments. The company has memberships in National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Over The Counter Exchange of India (OTCEI) and Ahmedabad Stock Exchange (ASE). It is also a member of the National Securities Depository Limited (NSDL).

UTI Investment Advisory Services Ltd.

UTI Investment Advisory Services Ltd (UTI IAS) is an US SEC-registered investment advisor to the India Growth Fund, the NYSE listed fund, under the US Investment

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Advisers Act of 1940. UTI IAS manages the portfolio of India Growth Fund. UTI IAS also provides investment research and back-office support to other offshore funds of UTI, namely, India Fund, India Access Fund, India Debt Fund, India Information Technology Fund and India Public Sector Fund. The net asset value of all offshore funds as on 30th June 1999 was Rs.17,110 million.

UTI Investor Services Ltd. (UTI-ISL)

UTI Investor Services Ltd. helps UTI in rendering prompt and efficient services to the investors. UTI-ISL has the latest information technology tools to achieve this. UTI-ISL is Registrar and Transfer Agent for 32 UTI schemes viz. DIP-95, MIP-95, MIP95(II), MIP-95(III), MIP-96, MIP-96(II), MIP-96(III), MIP-97, MIP-97(II), MIP-97(III), MIP-97(V), MIP 98(II), MIP-98(IV), MIP-99, GCGIP-94, EOF-96, MEP-97, UTI NRI FUND, UTI-GSF, UTI G-SEC, CGGF(new), CGGF(old), RUP(new), CRTS, GUP, PEF, RBUP, CCCF,SCUP, UTI Bond Fund, Master Index Fund and Equity Tax Savings Plan.

UTI Bank Ltd.

UTI Bank incorporated in 1994, was the first private sector bank to be set up under RBI guidelines announced in 1993. UTI holds 61.5% of the bank's equity. The Bank has a network of 38 branches spread across the country. All branches are fully computerized. The Bank offers a wide range of retail, corporate and forex services. For the retail segment, the Bank has introduced an ATM card styled "TRUST24", for transactions on ATM available 24 hours at any of the 50 ATMs installed across the country. All branches accept subscriptions for UTI schemes. Specialised service counters are also available at some centres. For UTI's Money Market Fund, UTI Bank is the sole Bank authorised to accept subscriptions under the scheme.

UTI International Ltd.

UTI International Limited (formerly known as UTI (Gurnsey) Ltd.) is a 100% subsidiary of Unit Trust of India, registered in the island of Guernsey, Channel islands. This company was set up with the primary objective of administration and marketing of various offshore funds managed by UTI as also to act as the management company for

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these funds as required by the Guernsey Law. UTI International Ltd has an office in London to market UTI's offshore funds to institutional clients in UK, Europe and USA. It is also responsible for developing new products as well as new business opportunities of UTI. This office also looks after ongoing investor relations with foreign investors and has succeeded in greatly improving communication between UTI and its clients and distributors abroad. UTI International Ltd has played an important role in launching three new offshore funds of UTI - the India IT Fund Ltd, the India Debt Fund Ltd and the India Public sector Fund Ltd. SCHEMES OF UNIT TRUST OF INDIA Sr. No. Name of scheme 1 2 3 4 5 6 7 8 9 10 11 12 13 Unit Scheme 1964 (US 64)* Unit Linked Insurance Plan (ULIP) Charitable Religious Trust Societies (CRTS 81) Childrens Career Plan (earlier CCCF 93) Rajlakshmi Unit Plan (II) 1994 (RUP-II 94) Grihalakshmi Unit Plan 1994 (GUP 94) Retirement Benefit Plan 1994 (RBUP 94) Unit Scheme 1995 (US 95) Monthly Income Plan 1995 (MIP 95) Monthly Income Plan 1996 (MIP 96) Monthly Income Plan 1996 (II) (MIP 96 II) Monthly Income Plan 1996 (III) (MIP 96 III) Deferred Income Plan 1991 (DIP 91)

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14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

Institutional Investors' Special Fund Unit Scheme 1996 (IISFUS 96) Monthly Income Plan 1996 (IV) (MIP 96 IV) Monthly Income Plan 1997 (MIP 97) Monthly Income Plan 1997 (II) (MIP 97 II) Institutional Investors' Special Fund Unit Scheme 1997 (IISFUS 97) Monthly Income Plan 1997 (III) (MIP 97 III) Monthly Income Plan 1997 (IV) (MIP 97 IV) Monthly Income Plan 1997 (V) (MIP 97 V) Institutional Investors' Special Fund Unit Scheme 1997 (II) (IISFUS 97 II) Monthly Income Plan 1998 (MIP 98) Institutional Investors' Special Fund Unit Scheme 1998 (IISFUS 98) UTI NRI Fund 1998 UTI Bond Fund 1998 (UBF 98) Monthly Income Plan 1998 (II) (MIP 98 II) UTI Small Investors Fund 1998 Monthly Income Plan 1998 (III) (MIP 98 III) Monthly Income Plan 1998 (IV) (MIP 98 IV) Institutional Investors' Special Fund Unit Scheme 1998 (II) (IISFUS 98 II) Monthly Income Plan 1998 (V) (MIP 98 V) Childrens Gift Growth Fund 1999 (CGGF 99) Rajlakshmi Unit Plan 1999 (RUP 99)

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35 36 37 38 39 40 41

Monthly Income Plan 1999 (MIP 99) UTI G-Sec Fund 1999 Monthly Income Plan 1999 (II) (MIP 99 II) Monthly Income Plan 2003 (MIP 2003) Monthly Income Plan 2003 (Second) (MIP 2003 Second) Monthly Income Plan 2003 (Third) (MIP 2003 Third) UTI Money Market Fund 1997 (MMF)

COMPARISION OF ICICI PRUDENTIAL AND UTI WITH OTHER AMCS ON DIFFERENT PARAMETERS

Asset Under Management of different Asset Management Companies Asset Under Management in Rs crore
Mutual Fund Reliance Capital Mutual Fund ICICI Prudential Mutual Fund UTI Mutual Fund HDFC Mutual Fund Franklin Templeton Mutual Fund Birla Sun Life Mutual Fund SBI Mutual Fund Kotak Mahindra Mutual Fund Standard Chartered Mutual Fund April -07 48,828 46,268 35,517 31,485 24,510 18,616 18,339 13,082 13,976 May-07 59,143 50,703 40,070 36,147 26,276 23,719 19,661 16,723 16,170 Change 10,315 8,435 4,553 4,662 1,766 5,104 1,322 3,641 2,194 % Change 21.13 19.96 12.82 14.81 7.21 27.42 7.21 27.83 15.70

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HSBC Mutual Fund Tata Mutual Fund Principal Mutual Fund DSP Merrill Mutual Fund Sundaram Mutual Fund LIC Mutual Fund Fidelity Mutual Fund Deutsche Mutual Fund ABN Amro Mutual Fund Bench Mark Mutual Fund ING Vysya Mutual Fund JM Financial Mutual Fund Lotous India Mutual Fund Morgan Stanely Mutual Fund Canbank Mutual Fund DBS CholaMutual Fund

11,867 12,591 9,541 11,854 7,975 9,039 6,534 6,410 6,046 4,526 3,169 3,599 2,087 3,039 2,369 2,109

14,586 14,082 13,149 11,853 10,145 9,904 8,813 7,284 6,874 6,418 5,435 3,773 3,623 3,181 2,910 2,473

2,719 1,491 3,608 0 2,170 866 2,280 874 828 1,891 2,266 173 1,536 142 541 364

22.91 11.84 37.81 0.00 27.21 9.58 34.89 13.64 13.70 41.79 71.50 4.81 73.62 4.68 22.84 17.27

Taurus Mutual Fund Sahara MUTUAL fund Escort Mutual Fund BOB Mutual Fund Quantum Mutual Fund

302 178 123 92 57

305 176 132 92 57

3 -2 132 98 61

1.20 -.68 7.38 6.00 6.39

Above table shows the asset under Management of different Asset Management Companies. If we analyse thae table we find that private sector has grown significantly.Reliance Mutual fund is on First slot showing a growth of 21.23%since month of april.RELIANCEmutual fund asset has grownat a faster pace 127% in 2007.ICICI Prudential is on second slot showing a growth of 19.94%.ICICI Prudential asset has grown with 66% in year 2007. Public sector Mutual fundUTI has slipped to third position.It has lost the supremacy in asset manage ment game something which it had done from decades.Money inflow in Fixed Maturity Plan and liquid plan from corporate has helped the asset management companies to grow their assets under management Profit of different Asset Management Companies

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UTI MF ahead on profit street even as AUM slips But Reliance MF ,HDFC AMC clock faster profit growth UTI mutual fund has lost the supremacy in asset management game.But UTI mutual fund continues to hold a trump card in absolute terms, IT is the most profitable mutual fund UTI has reported a profit after tax of little less than Rs 150 Crore for financial year 2007.Even last year .UTI was the only Mutual fund with a net profit of Rs 100 crore. However ,the growth in profits has slowed down to 12%in 2007, as compared to 30 % in 2006 .UTI mutual fund should take it as a alarm. other wise it will lost the supremacy in profit game also.Because private sector mutual funds too have been growing in a brisk pace.HDFC AMC has reported a profit after tax if Rs 67.5 crore in 2007,up 47% year on year While reliance mutual funds profit after tax was Rs 50.7 crore up 74%over the

previous year. While HDFC continued to grow at last year,s levels, Reliance mutual fund bottam line has more than doubled. There is a high probability of a suffle in in the top three positions in terms of absolute profits

Following Table shows that how much money in percentage is invested in which plan

Growth Income Fund of Fund Gilt Liquid(Money Market) Balanced ELSS Asset:Fund Category Equity Diversified Equity Midcap Equity Contra

34.52% 36.32 0.67 0.69 21.92 2.77 3.11 AUM ON APRIL 2007 97923.00 1421.30 2861.46

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Equity : Tax planing EQUITY sectoral Hybrid MIPS Det medium term Debt- short term Debt speciality Cash Gilt long term Gilt short term

11055.74 700.21 19530.33 6193.10 7162.61 1291.24 89744.46 95613.32 1516.78 630.80

Following Table shows the percentage of debt and equity in assets under management of different asset manage ment companies Mutual Fund Name HDFC Mutual Fund ICICI Prudential Mutual Fund Reliance Mutual Fund SBI Mutual Fund Tata Mutual Fund UTI Mutual Fund EQUITY% 48.24 34.16 37.40 71.83 35.14 57.01 Debt% 51.76 65.84 62.60 28.17 64.86 42.99

If we analyse that table we find that ICICI Prudential has less percentage of equity assets in his asset under management compare to other top asset management companies.I t is an alarming situation for I CICI Prudential. It has the adverse effect on profit because major part of growth has taken place in debt assets in Icici Prudential which yield lower fees to mutual funds. In ICICI Prudential fixed maturity plan is on the rage in the past six to eight months.It is noy very profitable proposition as these products earn management fees in the range of O.O4% TO 0.07%.

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1Year Return And Ranking of VariousOpen Ended Mutual Funds Category Debt(Floating RateLT) Scheme Name Principal Floating Rate Maturity ABN AMRO Money Plus Reg Birla Floating Rate LT Templeton Floating Rate LT Tata Floating LT Kotak Floating Rate LT ING Vysa Floating Rate HSBC Floating Rate LT Regular ICICI Floating Rate LT A Grindlays Floating Rate LT A Launch Flexible Sep 8 2004 Oct 19 2005 Jun 4 2003 Feb2 2002 Sep 05 2005 Aug 6 2004 Oct 7 2004 Nov 8 2004 Sep4 2004 Jul 30 2004 Return year 8.13 8.05 7.84 7.84 7.67 7.65 7.56 7.38 7.17 7.01 1 Rank1 year 1 2 3 4 5 6 7 8 9 10

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Category(Debt Floating Rate LT Inst) Scheme Name Launch SUNDARAM BNP Paribas FLRT INST Templeton Floating Rate LT INST Principal Floating Rate Flexible Maturity inst ABN AMRO Money Plus INST HSBC Floating Rate LT INST ICICI Floating Rate ICICI LT Floating Rate B Grindlays Floating Rate LT B Magnum Floating Rate LT INST JM Liquid Plus Premium Dec24 2004

Return Year 24.89

1 Rank 1 year 1

Sep06 2005 Sep08 2004

8.26 8.18

2 3

Oct19 2005 Nov082004 Sep 04 2004

8.18 7.62 7.60

4 5 6

Jul 30 2004 Jul14 2004 0ct12 2004

7.39 6.66 6.34

7 8 9

Category(Debt: Floating Rate ST Scheme Name Launch LIC MF Floating Mar 29 2004 Rate ST DBS Chola Aug 8 2005 Floating Rate ST Reliance Floating Aug 27 2004 Rate Can Floating Rate Feb24 2005 ST

Return 1 Year 8.22 8.07 8.06 7.99

Rank 1 year 1 2 3 4

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Principal Floating RateShortMaturity Tata Floating Rate ST Templeton Floating Rate ST Magnum Insta Cas Liquid Floater HDFC Floating Rate ST Birla Floating Rate ST

Sep 82004 Dec222003 Feb 02 2002 Aug 11 2005 Jan 08 2003 Jun 042003

7.94 7.70 7.68 7.68 7.64 7.5

5 6 7 8 9 10

Category ( Debt: Medium Term ) Scheme Name Birla Sun Life Income

Launch

Mar 1997 ABN AMRO Flexi Debt Regular Sep 03 2004 ICICI Prudential Flexible Income Sep 02 2002 SAHARA Income Feb 14 2002 Kotak Flexi Debt Nov 29 2004 Grindlays Dynamic Bond Jun 25 2005 ICICI prudential Advisor Very Nov 28 2003 cautious ICICI Prudential Long Term Mar28 2002 Taurus Libra Bond Aug 18 2001 Tata Dynamic Bond A Sep02 2003 Grindlays SSI Medium Term Jun 27 2003

Return Year 03 9.33 92 7.99 7.98 7.96 7.86 7.57 7.56 7.40 7.17 7.13

1 Rank year 1 2 3 4 5 6 7 8 9 10 11

Category (Debt Medium term inst) Scheme Name Principal Income inst

Launch May 2003

Return Year 13 7.12

1 Rank year 1

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Tata Dynamic Bond B HSBC Income Inv Inst ICICI Prudential Income inst

Sep 2 2003 Sep 15 2003 May 17 2003 Sundaram BNP Paribas bond saver Aug 18 2003 inst ING vysya Incom inst Mar 10 2003

7.07 6.15 5.86 5.63 5.63

2 3 4 5 6

Category Debt short term Scheme Name Birla Sun Life Short Term

Launch

April 2002 Tata Short Term Bond Aug 08 2002 ING Vysya Income short Term Aug 16 2002 Reliance Short Term Dec 17 2002 HDFC HI Short Term Feb 06 2002 ICICI Prudential Short Term Oct 19 2001 DBS Chola Freedom Inc Short Term Mar 8 2002 Sundaram BNP Paribas SD Aug 19 2002 shortTerm Kotak Bond Short Term April 25 2002 JM SHORT TERM Jun 24 2002

Return Year 19 8.70 8.35 8.18 8.17 7.80 7.77 7.74 7.69 7.69 7.64

1 Rank year 1 2 3 4 5 6 7 8 9 10

Category Debt short term inst Scheme Name

Return Year ICICI Prudential Short Term inst Feb 24 2003 8.09 Grindlays SSI Short Term Plan C April 01 7.84 2004 Templeton India Short term Sep 06 2005 7.72 Income Inst DBS Chola Freedom Inc Short- term April 10 7.71 inst 2003 Birla Sun Life Liquid Plus Inst April 16 7.54

Launch

1 Rank Year 1 2 3 4 5

One

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Principal Income Short Term Inst DSPML Short- Term Grindlays SSI short- term inst

2003 May13 2003 Sep04 2002 Feb25 2003

6.89 5.25 -3.75

6 7 8

Category debt: speciality Scheme Name ICICI Prudential Blended Plan A

Launch

May 2005 Kotak Equity Arbitrage Sep 25 2005 Bench Mark Derivative Dec 14 2004 ICICI Prudential Blended Plan B May 18 2005 Standard Chartered All Seasons Bond Aug 27 2004 A JM Equity and Derivative Feb 21 2005 Sundaram BNP Paribas Income Plus Jul 19 2002 ING vysya Sselect Debt Aug 27 2004 Franklin India International Dec20 2002

Return 1Year 18 8.56 7.98 7.81 7.13 6.98 6.68 5.84 4.17 -6.68

Rank1year 1 2 3 4 5 6 7 8 9

Category Debt Ultra short term Scheme Name ICICI Prudential Liquid Inst DWS Money Plus Templeton India MMA LICMF Liquid HDFC Cash Mgmt Saving Plus Retail ICICI Prudential Sweep Cash HDFC Cash Mgint Saving TATA liquidity Managemant ICICI Prudential Sweep Plan HDFC Cash Mgint Call

Launch Mar27 2006 Mar09 2006 Mar17 1997 Mar13 2002 Nov18 1999 Mar08 2006 Nov18 1999 Mar01 2006 Feb28 2002 Feb06 2002

Return 1Year 8.05 8.02 7.96 7.88 7.87 7.84 7.77 7.72 7.70 7.70

Rank1year 1 2 3 4 5 6 7 8 9 10

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Category ultra short term Inst Scheme Name ICICI Prudential Liquid Super Inst Relince Liquidity ICICI Prudential Liquid Inst Plus Birla Cash Plush Inst Premium Birla Sun Life Cash Manager Inst ICICI Prudential Liquid Inst Templeton India TMA Super Inst Tata Liquid Super HI HDFC Liquid Premium Plus ING Vysya Liquid Super Inst

Launch Nov17 2005 Jun16 2005 Sep29 2003 Mar29 2004 Apr16 2003 Feb24 2003 Sep02 2005 May20 2003 Feb24 2003 Aug02 2005

Return 1Year 7.97 7.93 7.80 7.78 7.75 7.74 7.73 7.72 7.72 7.72

Rank1year 1 2 3 4 5 6 7 8 9 10

Category(Equity: Diversified) Scheme Name ICICI Prudential Services Industries JM Basic Standard Charterd Priemer Equity DBS Chola Oppurtunities ICICI Prudential Infrastructure ABN Amro Oppourtunities Taurus Star Share Fidelity Equity DSPML T.I.G.E.R.Reg ICICI Prudential Emerging Star Inst ICICI Prudential Emerging Star ICICI Prudential Dynamic

Launch Nov 18 ,2005 Jun 22,2005 Sep26,2005 Dec 11 ,2003 Aug 16, 2005 Mar 30, 2005 Jan29 ,2004 April 19,2005 May 25,2005 March 27,2006 Oct5 ,2004 Oct 18 ,2002

Return 1Year 72.21 71.42 67.75 62.00 60.73 59.23 58.27 57.88 57.74 53.93 52.34 49.22

Rank1year 1 2 3 4 5 6 7 8 9 15 21 36

Category(Equity Auto Scheme Name JM Aut0 Sector UTI Auto Sector Launch Jun9 ,2004 April 7 ,2004 Return 1Year 23.73 -0.29 Rank1year 1 2

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Category(Equity Banking Scheme Name Reliance Banking UTI Banking Sector

Launch May 22,2003 April 7,2004

Return 1Year 72.18 71.48

Rank1year 1 2

Category Equity FMCG Scheme Name Launch ICICI Prudential March 30;1999 FMCG Franklin FMCG March 31;1999 Magnum FMCG June 03;1999

Return 1Year 24.95 9.14 2.08

Rank1year 1 2 3

Category Equity: Index Scheme Name Banking BeES Nifty Junior BeES Nifty Benchmark ETS UTI Sunder ICICI Prudencial Index UTI Nifty Index Franklin India Index NSE Nifty ICICI Prudencial SPIcE UTI Master Index HDFC Index Nifty

Launch May 26; 2004 Feb 14; 2003 Dec 18;2001 Jul 11; 2003 Feb 25; 2002 Mar04;2000 Jul 17; 2000 Jan 09; 2003 Jun 30; 1998 Jul 10; 2002

Return 1Year 72.49 58.27 44.20 43.60 43.46 43.08 42.56 41.52 41.21 39.80

Rank1year 1 2 3 4 5 6 7 8 9 10

Category (Equity: Other Specality) Scheme Name Reliance Media And Entertainment Reliance Diversified Power Sector UTI Petro Principal Global Oppourtunities

Launch Sep 27,2004 April 15, 2004 June 26,1999 March 19,2004

Return 1Year 77.31 75.83 30.96 27.93

Rank1year 1 2 3 4

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Category (Equity: Pharma) Scheme Name Launch Reliance Farma May 26, 2004 JM Healthcare Sector Jun 09, 2004 Franklin Pharma March 31, 1999 UTI Pharma Sector Jun 26, 1999 Magnum Pharma Jul 03, 1999

Return 1Year 59.38 33.67 30.81 25.05 19.81

Rank1year 1 2 3 4 5

Category Equity Tax Plan Scheme Name Principal Tax Savings Principal Personal Tax Saver Birla Sun Life Tax Relief 96 Kotak Tax Saver Fidelity Tax Advantage Canequity- Tax Saver Magnum Taxgain Birla Equity Plan ING Vysya Tax Savings ICICI Prudencial Tax Plan

Launch Mar 31, 1996 Mar 31, 1996 Mar 29, 1996 Oct 28, 2005 Jan 31, 2006 Mar 31, 1993 Mar 31, 1993 Feb 13, 1999 Mar 12 ,2004 Aug 09, 1999

Return 1Year 55.26 54.96 53.86 53.56 52.00 48.28 47.70 46.93 45.40 22.67

Rank1year 1 2 3 4 5 6 7 8 9 24

Category( Equity :Technology Scheme Name Launch DSPML Apr10, 2000 Tecnology.com ICICI Prudential Jan 28, 2000 Tecnology Magnum IT Jul 03, 1999 Birla Sun Life New Jan 15, 2000 Mellennium UTI Software Jun 26, 1999 Kotak Tech Mar 21, 2000

Return 1Year 94.57 72.36 67.80 61.19 52.68 41.46

Rank1year 1 2 3 4 5 6

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Category Gilt Medium and Long Term Scheme Name ICICI Prudential Gilt Investment ICICI Prudential Gilt Investment PF RelianceGilt LongTerm RelianceGilt LongTerm PF BirlaGiltPlusRegular DBS Chola Gilt Investment Grindlays GSF PF Regular Grindlays GSF PF Inst Grindlays GSF Investment Magnum Gilt Long Term PF Launch Aug 09, 1999 Nov 14,2003 Jul 04,2003 Mar 10,2004 Oct 11,1999 Return 1Year 8.63 8.53 7.48 7.48 7.39 7.09 7.08 6.99 6.97 6.80 Rank1year 1 2 3 4 5 6 7 8 9 10

Mar 17, 2004 Mar 17, 2004 Mar 01,2002 Nov 28,2003

Category Gilt Short Term Scheme Name Launch Birla Sun Life GSF Oct 28, 1999 Short-term Birla Sun Life GSF Oct 11, 1999 Short-term Magnu Gilt Short- Dec 22, 2000 term TataGSF Short Apr 08, 2003 Maturity

Return 1Year 7.05 6.81

Rank1year 1 2

6.73 6.72

3 4

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Principal GSF Saving UTI G-Sec Shortterm ICICI Prudential Gilt Treasury PF DSPML GSF Shorter Duration ICICI Prudential Gilt Treasury Kotak Gilt Saving

Dec 09, 2003 Jan 31, 2004 Sep 23, 1999 Aug 09, 1999 Feb 11, 2002 Dec 21, 1998

6.29 6.04 5.97 5.92 5.72 5.65

5 6 7 8 9 10

Category( Hybrid :Asset Allocation) Scheme Name DWS InvestmentOpportunity Launch Return Year 29, 44.84 31, 26.80 13, 17.35 22, 12.66 1 Rank 1Year 1 2 3 4

Jan 2004 FT India Dynamic PE Ratio Oct FoF 2003 Magnum NRI Inv Flexi Asset Jan 2004 UTI Variable Investment Nov 2002

Category Hybrid Debt Oriented Scheme Name Tata Young Citizens Canbalance Templeton India Pension Cancigo BirlaAssetAllocationConservative ICICIPrudentialAdvisorCautious LICMF- Childrens Unit Linked Insurance Plan 71 Escorts Opportunities

Launch Oct 13, 1995 Feb 01, 1998 Mar 31, 1997 Apr 01, 2001 Jan 23, 2004 Nov 28, 2003 Oct 16 , 2001 Oct 01, 1997 Feb 26, 2001

Return 1Year 21.99 21.03 20.91 19.73 15.94 15.87 15.20 15.09 14.95

Rank1year 1 2 3 4 5 6 7 8 9

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ICICI Prudencial Child Care- Aug 06, 2001 Study

14.68

10

Category Hybrid Equity Oriented Scheme Name Launch Principal Child Aug 01, 2001 Benefit Birla Sun Life 95 Feb 10, 1995 DSPML Balanced May 14, 1999 HDFC Prudence Jan 29, 1994 Tata Balanced Oct 07, 1995 FT India Balanced Dec 10, 1999 Templeton India Sep 09, 2005 CAP Gift Plan ICICI Prudencial Nov 28 2003 AdvisorAggressive LICMF ULIS Nov 10, 2003 JM Balanced Dec 22, 1994

Return 1 Year 46.80 39.94 38.95 38.43 37.69 37.65 34.86 33.51

Rank 1 Year 1 2 3 4 5 6 7 8

32.22 32.02

9 10

Category Hybrid Monthly Income Scheme Name Launch Return Rank1year

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HSBC MIP Savings DSPML Savings Plus Aggressive ABN AMRO MIP HDFC MIP Long Term LICMF Floater MIP Plan A ICICI Prudencial Income Multiplier Reg UTI MIS Advantage Plan Birla Sun Life MIP FT India MIP LICMF MIP

1Year Feb13,2004 15.54 May25,2004 15.17 Sep03,2004 14.71 Dec08,2003 14.49 Oct08,2004 13.85 Mar05,2004 13.62 Dec16,2003 13.34 Jul 14,1999 12.67 Sep28,2000 12.46 May15,1998 12.34C

1 2 3 4 5 6 7 8 9 10

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CLOSE ENDED

CATEGORY-Debt Medium Term Scheme Name Kotak Twin AdvantageSeries 2 Launch Return 1Year May 4.43 12,2006 Rank1year 1

Category Debt :Speciality Scheme Name BirlaFMPQSeries 2 Tata FHF Series 318 Month Plan G FranklinTempleton FTF Series V- 13M Tata FHF Series 318 Month Plan F UTI Fixed Term Series I P18 Q4 HSBC Fixed Term Series 6 Birla FMP Annual Series 3 HDFC FMP 13M June 2006 Retail HDFC FMP 13M June 2006 Inst. Grindlays Fixed Maturity 7th Plan A

Launch Aug 31, 2004 Mar 23, 2006 Mar 16, 2006 Feb 10, 2006 Feb 28, 2006 Feb 17, 2006 Nov 22, 2004 Jun 12, 2006 Jun 12, 2006 Feb 01, 2005

Return 8.97 8.76 8.28 8.00 7.96 7.86 7.83 7.69 7.69 7.68

Rank1year 1 2 3 4 5 6 7 8 9

Category Equity Diversified Scheme Name ICICIPrudencial Fusion Inst 1 ICICIPrudencial Fusion Morgan Stanley Growth FranklinIndiaSmallar Companies

Launch Feb 27 2006 Feb 27 2006 Jan 09 1994 Dec 2005

Return 1 Year 49.58 47.52 40.6 34.31

Rank 1 Year 1 2 3 4

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HDFC Long Term Equity Jan 27 2006 Standerd Chareterd May 16 2006 Enterprise Equity Category (Hybrid Debt Scheme Name FranklinTempletonFT F Series 2- 60M FranklinTempletonFT F Series 1- 60M Grindlays Fixed Maturity Plus 2 Plan A Franklin Templeton FTF Series 4- 60M Franklin Templeton FTF Series 3- 36M Standerd Charterd Tristar Series 1 Plan A Oriented ) Launch Sep 8 2005 May 6 2005 Feb 10 2006 Feb 10 2006 Dec 8 2005 Dec19 2005

29.41 23.76

5 6

Return 1 Year 15.11 14.68 12.86 12.63 11. 83 11.18

Rank 1 year 1 2 3 4 5 6

Category(Hybrid Equity Oriented) Scheme Name Launch Benchmark Split Jul 14, 2005 Capital A Benchmark Split Jul 19, 2005 Capital B

Retun 1 Year 26.11 19.43

Rank 1 Year 1 2

Categort(Hybrid Debt Debt Oriented) Scheme Name Kotak Flexi FOF Kotak Dynamic FOF Kotak Flexi FOF Series 1

Launch Oct 07, 2005 Mar 22, 2005 Mar 22,2006

Return 1 year 28.32 18.07 11.39

Rank 1 year 1 2 3

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ABN AMRO Multi Manager Regular Apr 15, 2006 11.37 Category ( Equity: Tax Planning Scheme Name Launch

Franklin India Taxshield 98 UTI MEPUS Birla Tax Plan 98 Franklin India Taxshield 99 Sunderum BNP Paribas Taxsaver 98

Mar 31, 1998 Mar 31, 2003 Mar 31, 1998 Mar 31 , 1999 Mar 31, 1998

Return 1 Year Rank 1 Year 44.15 1 40.94 2 39.70 3 36.47 4 30.65 5

THE TOP 50 SERVICE BRANDS THIS YEAR Reliance Mutual Fund 28 SBI Mutual Fund 33 UTI Mutual Fund 39 Tata Mutual Fund 40 HDFC Mutual Fund 43 ICICI Prudential Mutual Fund 46

A survey has been conducted by Economic Times in that survey ICICI Prudential has got the 46th position . In that ranking competitor of ICICI Prudential Ranked high. Reliance Mutual Fund is on the top .Funds of ICICI Prudential is doing very well in all category by improving after sale service it can become a market Leader in the mutual fund Industry.To take the benefit of generating good return it will have to improve after sale service.

INDIAs MOST TRUSTED BRANDS 2007 Reliance Mutual Fund SBI Mutual Fund UTI Mutual Fund Tata Mutual Fund HDFC Mutual Fund ICICI Prudential Mutual Fund Kotak Mahindra Mutual Fund

1 2 3 4 5 6 7

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Birla Sunlife Mutual Fund STANDARD Chartered AMC Franklin Templeton Mutual Fund

8 9 10

In the survey conducted by Economic Times Reliance Mutual fund is the most trusted brand.ICICI Prudential got the sixth rank.ICICI Prudential will have to improve his services to win the trust of the people.It should work on customer relationship management strategy. It should try to differentiate his product with competitor to position himself as a most trusted brand.

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MARKET RANKING OF ICICI AND UTI

Reliance ICICI Pru UTI HDFC Templeton Birla SBI Standard Charterd Kotak Bank Tata HSBC DSPML PRINCIPAL LIC SUNDARAM

13.85% 12.00% 10.07% 7.04% 7.04% 5.28% 5.20% 3.97% 3.86% 3.57% 3.31% 3.36% 2.71% 2.56% 2.26%

In terms of market share also reliance is on top position.ICICI Prudential is on second position.There is a need of sincere effort to improve the market share.

No.1 Brand Awareness and Preference amongst MFs (TNS Brand Tracker) Source: TNS Brand Tracker for the period March 05- Feb 07 and TNS Brand Tracker Attribute Preference study for March 05 Feb 07

Current scenario of mutual funds in india

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The funds industry has never had it better: Assets under management is on the rise. Asset owned by Indias mutual fund reached the Rs 4 trillion mark first time.The total assets under management of the mutual fund industry fetched at Rs 4,02035.88 crore, a growth of14.7% from the last monthsAUM of Rs3,50279.39 crore. the number of players looks set to, jump, products are being rolled out by the dozen At least a couple of them are expected to get going soon, now that they have secured the regulator's approval It is also true that several other players intend to start operations here.The new products like Real estate funds, gold exchange traded funds and capital protected scheme provide interesting investment opportunities. .The Indian market obviously looks good to these companies, some of which are indeed big names internationally. In the backdrop are a host of small issues that the industry is now growing accustomed to. At least one such issue stems from the fact that retail investors are taking to funds in a bigger way ,the Indian investors, who all along opted to put their savings in bank deposits rather than in shares, are at last becoming less risk averse.The increase in asset under management is partly a reflection of the rise in sensex, but there is no denying that MF inflows have also increased significantly. True, corporate inflows have contributed substantially as corporates, flush with funds, have turned MFs as a convenient avenue to park their short term surpluses.But households too have participated. The share of household savings going to MFs has increased from 1.2% in 2003-2004to 3.6%in 2005-2006, a trend that is likely to have continued in 20062007. There has been some revolutionary action has been taken by government for mutualfund industry. Blue chip Public sector companies like ONGC ,IOC Bhel SAIL siting on huge cash reserves will now have a new investment option . They will now be able to invest in mutual fund . Mutual fund industry also concurs with this view. They feel that move will boost the industry by bringing increased cash flows. The government is also set to libralise norms for mutual funds investing in overseas debt and equity instruments The individual cap of 200$ million for fund house for investment abroad is likely to be hiked. Another thing in grass root level is that awareness about various products is increasing amongst investors. This will provide enough business oppourtunities to asset management companies.

Changing Trends

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WE have seen the rapid growth in mutual fund industry due to increasing mutual fund aware ness, Private sector has grown significantly Private sector has grown with 47%against negative growth of 29%.Reliance mutual fund reported a21% growth in its AUM during may is on first position ICICI Prudential is on second position while uti is on third position.

Challenges For Mutual Fund Industry Indian Mutual fund Industry is growing but it is still in its early stages of growth. Today with only 100 billion$ of AUMs, the industry still is minuscule in the context of the domestic savings,the us mutualfund industry is 100 times larger than that, of india , while the us GDP is only 13 times that of India.Also Brazils mutual fund industry is about four to five times that of Indian mutual fund industry, which reflects huge under penetration in India If we see the house hold financial assets 12% investment goes to Life insurance , 16%PF and pension,52%in cash deposits 16% in others investment avenue onle 3% belong to retail mutual fund. According a survey by economic times people still prefer to do their savings in physical assets. The Mutual fund industry still appears heavily reliant on on short term investments from corporates. At the end of May 2005,the industry- wide assets under management(AuM) were Rs. 1.68 lakh crore with 26% in growth schemes and 38% in liquid/ money market schemes . By May 2007 the AuM had grown to Rs 4.14lakh crore with the share of growth funds at 30% and liquid funds at 28% . However, a part of this relative gain in the share of growth schemes is clearly attributable to the rise in stock prices- over this period the sensex had gone up from 6,715 to 14,544 . Over this 24- month period the total AuM of growth schemes increased from Rs43,236crore to Rs 122,800 crore, but of this increase about Rs 50 ,000 crore came through fresh investments . If one were to adjust for the sharp appreciation in stock prices, the share of growth schemes is unlikely to have changed over this period. Interestingly the bulk of the inflow into growth schemes has come through new schemes . This exposes the industry s inability to sell mutual funds as a concept to retail investors. It appears to have relied more upon investor ignorance. MFs have been sold and purchased as products analogous to equity offerings of companies. The Point is not that corporate money is bad or that liquid schemes should not be encouraged. The point is that only a small percentage of house hold savings goes into equities and

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Debentures- 0.8 %of GDP and 4.9% of gross financial savings At the end of March 2006.If this share is to increase, to channel house hold savings in to capital market in order to distribute the gains of wealth creation more widely , then MFs would have to play a great role.In the US ,for instance 48% of house holds have exposures to MFs against about 5% of India . consequently,while 23.2% of house holds financial assetsare held in investment companies In India only 4%of financial assets in such investments,though up sharply from 0.4% in the previous year.

RECOMMENDATION

1. ICICI PRUDENTIAL should try and bring awareness in the people about mutual funds, this can be done through regular Canopys in places where people are in mass . 2. ICICI PRUDENTIAL should try to convince broker and consumer that Mutual Funds are governed by SEBI . There is no difference between private sector mutual fund and public sector mutual fund.Their rigts will be equally protected. 3. Company should organize training programmes to train sales people properly so that they deliver full and complete information about the product to the customer.EXAMPLE:Product like fixed maturityplan-Sales people do not know that how it is better than bank deposits 4. .Customer relationship management should be strengthened.There is a need to improve after sale service 5. An honest approach should be adopted to those customers who comes directly without any distrbution channel.Proper guidance should be given regarding redemption and switching 6. Systematic investment plans minimum amount should be reduced to attract recurring deposit customer. It will also increase peneteration. 7. CONCLUSION

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A long road is ahead for Mutual Fund Industry.The industry is still minuscule in the context of domestic saving and in comparison of global standard.There is huge under penetration in India .but it is not a matter of disheartening for Mutual Fund Industry enough growth opportunities are available in the market.People are not very mutch satisfied with available conventional investment instrument.They have shown the keen interest in securities market. What is needed is that design the product according to need and want of the people.sales people showed lack of knowledge about the product.therefore Asset Management companies should build a competent workforce.Asset Management Companies should also try to organize training programme time to time to keep them update about product after sale service play a very important role in expanding the mutual fund market.Sales people should try to sell Mutual Fund as aconcept.if I talk by customer perspective long term approach should be adopted.If I talk By the perspective of Asset Management companies they should not follow shortcut path to increase market share and asset under management.More Funds are coming through fixed maturiry plan and liquid plan. Asset Management Companies should try to attract more retail investor in equity related fund it will generate more management fee by that profit will accrue .if companies are able to generate more profit they will be able to launch innovative product.They can spend that surplus on improving after sale service and hiring competent workfore.One thing is very good about mutual fund industry is that security board exchange of India having a bird eye view on mutual fund industry it will be helpful in expanding the mutual fund market.

BIBLIOGRAPHY

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Economic Times www.amfiindia.com www.valueresearchonline.com Money Today Outlook Money www.sebigov.in Sites of various Asset Management companies www.indiainfoline.com www.google.co.in ICICI Prudential Factsheet