Temporal Analysis of Pharma Fund

A REPORT
ON
TEMPORAL ANALYSIS OF PHARMACEUTICAL FUND
By
ANURAG MEHTA
08BS0000494
IBS Gurgaon
MAHINDRA FINANCE
Jay Plaza, 2nd Floor, Old DLF Colony, Gurgaon
M AHINDRA FINANCE
A REPORT
ON
TEMPORAL ANALYSIS OF PHARMACEUTICAL FUND
By
ANURAG MEHTA
08BS0000494
IBS Gurgaon
MAHINDRA FINANCE
Jay Plaza, 2nd Floor, Old DLF Colony, Gurgaon
DATE OF SUBMISSION: 16TH MAY

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AUTHORIZATION
I ANURAG MEHTA hereby state that this final evaluation report of Summer Internship Program
(SIP) has been submitted to ICFAI Business School as partial fulfillment of the requirements of
MBA Program of IBS Class of 2010.
The empirical information of this report is based on my experience in SIP. Any part of this
project has not been reported or copied from any report of the university and others.
ANURAG MEHTA
08BS0000494
IBS GURGAON
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ACKNOWLEDGEMENT
Apart from the efforts of me, the success of any project depends largely on the
encouragement and guidelines of many others. I take this opportunity to express my gratitude to
the people who have been instrumental in the successful completion of this project.
I would like to show my greatest appreciation to Prof. Manisha Singh and my company
guide Mr. Ashutosh Kumar Pankaj. I can’t say thank you enough for their tremendous support
and help. I feel motivated and encouraged every time I had a conversation with them. Without
them encouragement and guidance this project would not have materialized.
The guidance and support received from all the members who contributed and who are
contributing to this project, was vital for the success of the project. I am grateful for their
constant support and help.
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TABLE OF CONTENTS
Authorization---------------------------------------------------------------------------- iii
Acknowledgement---------------------------------------------------------------------- iv
Executive Summary-------------------------------------------------------------------- vii
Abstract---------------------------------------------------------------------------------- viii
1. Project Introduction 1-3
• Objective------------------------------------------------------------------- 1
• Proposed Methodology--------------------------------------------------- 2
• Limitations----------------------------------------------------------------- 3
2. About Mahindra Group------------------------------------------------------------ 4
3. About Mahindra Finance 5 – 10
• History---------------------------------------------------------------------- 5
• Company Profile---------------------------------------------------------- 7
• Investment Advisory Services------------------------------------------- 8
4. Mutual Funds 11– 32
• Introduction--------------------------------------------------------------- 11
• History Of Mutual Fund----------------------------------------------- 12
• Types of Mutual Fund--------------------------------------------------- 15
• Benefits of Mutual Funds----------------------------------------------- 17
• Limitations of Mutual Funds------------------------------------------- 18
• Rights and Obligation of MF Investor-------------------------------- 19
• Risks Involved while Investing In MF-------------------------------- 20
• Do’ and Don’ts While Selecting Mutual Fund---------------------- 22
• Purchasing And Selling of MF----------------------------------------- 24
• Mutual Fund Expenses-------------------------------------------------- 25
• Capital Gain Taxation--------------------------------------------------- 28
• Fundamental Terms------------------------------------------------------ 30
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5. Overview and Analysis of Different Pharma Fund 33 - 44

• Reliance Pharma Fund--------------------------------------------------- 33
• UTI Pharma Fund-------------------------------------------------------- 39
• Franklin Pharma Fund--------------------------------------------------- 45
• SBI Pharma Fund-------------------------------------------------------- 51
6. End Point Bias Analysis---------------------------------------------------------55 - 59
7. Comparative Analysis 60 – 71
• Basis of Past Year Returns----------------------------------------------- 60
• Asset Allocation----------------------------------------------------------- 61
• Asset Size------------------------------------------------------------------ 63
• Volatility Measures------------------------------------------------------ 64
• Conclusion of Mutual Fund Analysis--------------------------------- 71
8. Investor Survey Findings 72 – 82
• Graphical Analysis------------------------------------------------------- 56
• Conclusion---------------------------------------------------------------- 82
9. Work At Mahindra Finance-------------------------------------------------- 83 – 89
10. Annexure------------------------------------------------------------------------ 90 - 93
11. References------------------------------------------------------------------------- 94
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Executive Summary
The project titled “Temporal Analysis of Sectoral Mutual Fund (Pharma)” being
carried out for MAHINDRA FINANCE. Today an investor is interested in tracking the value of
his investments, whether he invests directly in the market or indirectly through Mutual Funds.
This dynamic change has taken place because of a number of reasons. With globalization and the
growing competition in the investments opportunity available he would have to make guided and
rational decisions on whether he gets an acceptable return on his investments in the funds
selected by him, or if he needs to switch to another fund.
In order to achieve such an end the investor has to understand the basis of appropriate
preference measurement for the fund, and acquire the basic knowledge of the different measures
of evaluating the performance of the fund. Only then would he be in a position to judge correctly
whether his fund is performing well or not, and make the right decision. This project is
undertaken to help the investors in tracking the performance of their investments in Sectoral
Mutual Funds (particularly Pharma Fund) and has been carried out with the objective of giving
performance analysis of Sectoral Mutual Fund (Pharma Fund).
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ABSTRACT
Generally, peoples are not aware of all the investment plans available in the market.
Mutual fund is one of them. Awareness about Mutual Fund is also at a low level and its utility as
an investment option is increases day by day. Mutual funds constantly come out with different
schemes. A lot has been known about growth fund, income fund, etc, but not much is known
about sector funds and about their risk and return associated with it.
While sectoral funds invest in particular sectors like, say, pharmaceutical, information
technology, power, metals, oil and gas, etc, thematic funds invests in themes like infrastructure,
consumption-led categories like the retail industry and outsourcing companies. But nowadays
most of the experts consider thematic funds to be as the sectoral funds.
Pharmaceutical funds are considered as undervalued sector for a long time. But now many
new funds have been launched in this category in the last couple of years.
These funds include:
1. SBI Pharma Fund
2. Reliance Pharma Fund
3. UTI Pharma Fund
4. Franklin Pharma Fund
The analysis would include measurement of Standard deviation, Beta Calculation, R square,
Sharpe Ratio, Portfolio turnover and the expense ratio for the individual funds. Standard
Deviation, Alpha, Beta etc are statistical measurements which help investors determine the return
profile of a mutual fund.
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LIST OF TABLES
1. Capital Gain Taxation Table---------------------------------------------------------- 28
2. Reliance Pharma Fund Analysis Tables
• Portfolio Style Breakup of Reliance Pharma Fund----------------------- 34
• Sector Breakup---------------------------------------------------------------- 34
• Absolute returns--------------------------------------------------------------- 35
• Year wise returns-------------------------------------------------------------- 35
• Returns and Risk Aggregates------------------------------------------------ 36
• Current Stats------------------------------------------------------------------- 37
3. UTI Pharma Fund Analysis Tables

• Sector Breakup---------------------------------------------------------------- 40
• Current Stats------------------------------------------------------------------- 43
4. Franklin Templeton Pharma Fund Analysis Tables

• Sector Breakup---------------------------------------------------------------- 46
• Current Stats------------------------------------------------------------------- 49
5. SBI Pharma Fund Analysis Tables

• Sector Breakup---------------------------------------------------------------- 52
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6. Comparative Analysis Tables
• Basis of Past Year Returns----------------------------------------------- 60

• Asset Allocation----------------------------------------------------------- 61
• Asset Size------------------------------------------------------------------ 63
• Volatility Measures------------------------------------------------------ 64
7. Investor Survey Tables----------------------------------------------------------- 72 to 81

8. Work at Mahindra Tables
• Analysis of a portfolio
o History of Investment of Investor----------------------------- 83
o Present Status----------------------------------------------------- 84
o If invested in UTI, then His History and Present Status---- 84
o If invested in UTI, then His History and Present Status---- 85
o Comparision of Present status of all funds------------------- 85
o ICICI Infra and Benchmark return comparision------------ 86
o Comparison with peers---------------------------------------- 86
o Volatility measures of ICICI Infra-------------------------- 87
o 52 Week High Low-------------------------------------------- 88
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LIST OF GRAPHS AND CHART
1. Asset Growth of Mutual Fund Industry in Every Phase----------------------------- 14
2. Risk-Return Trade-off-------------------------------------------------------------------- 21
3. Risk Hierarchy of Investment options-------------------------------------------------- 21
4. Reliance Pharma Fund Analysis Graphs and Charts

o Investment Style ------------------------------------------------------------ 34
o Comparison with benchmark value------------------------------------- 37
o Asset Under Management-------------------------------------------------- 38
o
5. UTI Pharma Fund Analysis Graphs and Charts
6. Franklin Templeton Pharma Fund Analysis Graphs and Charts

7. SBI Pharma Fund Analysis Graphs and Charts

8. Comparative Analysis
• Past Year Returns--------------------------------------------------------------------- 60

• Asset Allocation(Acc. To Debt and Equity)--------------------------------------- 61
• Asset Allocation(Acc. To Debt and Equity)--------------------------------------- 62
• Asset Size------------------------------------------------------------------------------ 63
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• Volatility Measures
a. R-Squared ----------------------------------------------------------- 64
b. Beta------------------------------------------------------------------- 65
c. Sharpe Ratio--------------------------------------------------------- 66
d. Alpha----------------------------------------------------------------- 67
e. Standard Deviation------------------------------------------------- 68
f. Turnover------------------------------------------------------------- 69
g. Expense Ratio------------------------------------------------------ 70
9. Investor Survey Graphs--------------------------------------------------------72 to 81

10. Work at Mahindra
o Return Comparison with Benchmark------------------------------- 86
o Comparison with its peers-------------------------------------------- 86
o Volatility Graphs------------------------------------------------------ 87
o 52 week High Low NAV-------------------------------------------- 88
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INTRODUCTION
OBJECTIVE
To study the risk and return analysis of one of the undervalued sector in market on
temporal basis. The project describes the performance of the fund over a period of time.
Studying the affect of market volatility on this sector. Last year was a year of tremendous fall of
stock market. Almost all the funds give negative returns. Study will help ascertain how dynamics
and accurate were the predictions of the fund managers as to future outlook and growth prospects
of the company. Also, how does portfolio determine the overall performance and which
company of sector is emerging as clear favorite for fund manager based on past returns?
As we are also exposed to the field, i.e. market survey about the investment habits of the
customer, this would serve as a secondary purpose for the project. The objective of this survey is
to
• To create awareness about the advantage of Mutual Fund as an investment option and
about Mahindra Finance as a distributor of these products.
• To study the customer perception towards Mutual Fund classifying it into different
parameter example age, income range etc.
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METHODOLOGY
The process to be followed to draw out some meaningful conclusion out of this project
and the methodology developed can be briefed out in the following points
1. Analyzing the risk and return associated with the portfolio of pharma sector fund over a
period of time via trend analysis and other statistical tools.
2. A time based study of pharma sector mutual fund to find out what major changes have
been made overtime to the portfolio of these schemes with regards to the sector
allocation, company allocation and so on. Also knowing the criteria involved in a
analyzing a fund and the factors that make the valuation of a company in the market. Eg.
Return on Net Assets, Future Drivers for the growth, P/E Ratio, dividend declared,
competitive advantage etc.
3. Also will try to compare the performance of pharma sector funds amongst its peers to
bring out a comparative study.
FOR CONSUMER SURVEY

1. Data is collected on the basis of the field survey as guided by Mahindra Financial
Services. Field survey was done for 15 days in Gurgaon area only.
2. A questionnaire was also floated on the group ID of my previous college (Engineering
College), where I am getting a positive feedback from my seniors, and only those
candidates will be taken into consideration who are either employed or pursuing MBA.
3. At last a sample size of 200 will be considered and the final conclusion is given by the
help of graphs and charts showing the responses of the sample on different parameters. .
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LIMITATIONS OF THE STUDY

As the research Study has just begun, all the flaws and limitations in the work are not yet
known exactly, however some of the limitations known as of now are:
1. Mutual Fund is totally dependent on the stock market and as stock markets is known for
their uncertainty. There is nothing which can be said about them with entire certainty.
They are driven by the psychology of the investors and we all know that human behavior
is unpredictable so as the stock market.
2. Due to lack of necessary resource such as money and time, the research could not be
conducted as thoroughly as one would like.
3. Study will be totally based on the top 10 holdings of the pharma sector. Assuming that
small holdings will not going to affect results too much.
4. There are some of the confidential data which the company cannot leak or share with
anybody, this further limits study.
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ABOUT MAHINDRA GROUP

The US $6 billion Mahindra Group is among the top 10 industrial houses in India.
Mahindra & Mahindra is the only Indian company among the top tractor brands in the world.
Mahindra’s Farm Equipment Sector has recently won the Japan Quality Medal, the only tractor
company worldwide to be bestowed this honor. It also holds the distinction of being the only
tractor company worldwide to win the Deming Prize. Mahindra is the market leader in multi-
utility vehicles in India. It made a milestone entry into the passenger car segment with the Logan.
The Group has a leading presence in key sectors of the Indian economy, including the
financial services, trade and logistics, automotive components, information technology, and
infrastructure development.
With over 62 years of manufacturing experience, the Mahindra Group has built a strong
base in technology, engineering, marketing and distribution which are key to its evolution as a
customer-centric organization. The Group employs over 50,000 people and has several state-of-
the-art facilities in India and overseas.
The Mahindra Group has ambitious global aspirations and has a presence on five
continents. Mahindra products are today available on every continent except Antarctica. M&M
has one tractor manufacturing plant in China, three assembly plants in the United States and one
at Brisbane, Australia. It has made strategic acquisitions across the globe including Stokes
Forgings (UK), Jeco Holding AG (Germany) and Schoneweiss & Co GmbH (Germany). Its
global subsidiaries include Mahindra Europe Srl. based in Italy, Mahindra USA Inc. and
Mahindra South Africa.
M&M has entered into partnerships with international companies like Renault SA,
France, and International Truck and Engine Corporation, USA. Forbes has ranked the Mahindra
Group in its Top 200 list of the World’s Most Reputable Companies and in the Top 10 list of
Most Reputable Indian companies. Mahindra has recently been honored with the Bombay
Chamber Good Corporate Citizen Award for 2006-07.
ABOUT MAHINDRA FINANCE

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A subsidiary of Mahindra & Mahindra Limited, it is one of India’s leading non-banking

finance companies. Focused on the rural and semi-urban sector, it provides finance for utility
vehicles, tractors and cars and has the largest network of branches covering these areas. Their
goal is to be the preferred provider of retail financing services
in the rural and semi-urban areas of India, while their strategy
is to provide a range of financial products and services to
their customers through their nationwide distribution network.
HISTORY
We were incorporated on January 1, 1991 as Maxi Motors Financial Services Limited
and received certificate of commencement of business on February 19, 1991. Our name was
changed to Mahindra & Mahindra Financial Services Limited on November 3, 1992. We are
registered with the RBI as an NBFC with effect from September 4, 1998 under Section 45IA of
the Reserve Bank of India Act 1934.
1993 Commenced financing of M&M UVs
1995 Opened our first branch outside Mumbai, at Jaipur
1996 Commenced financing M&M dealers for purchase of tractors
1998 Launched pilot project for retail tractor financing
1999 Commenced tractor retail financing in rural and semi-urban areas
2001 Total Assets crossed Rs. 10 billion
2002 Commenced financing of non-M&M vehicles
Received Tier II debt from International Finance Corporation
Made our first securitization transaction of Rs. 434.8 million
2004 Received a long-term credit rating of AA+/Stable
Opened a branch in Port Blair
Listing of non convertible debentures on BSE on the wholesale debt market
segment
Securitization of tractor assets of Rs. 256.6 million
2005 Tied up with HPCL
Made MIBL our wholly owned subsidiary
2006 Issued our IPO
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Tied up with Maruti

Launched our marketing campaign
Reached a new benchmark with 400 branches
COMPANY PROFILE
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Mahindra & Mahindra Financial Services Limited, a subsidiary of Mahindra &

Mahindra Limited, was established in the year 1991 with a vision to become the number one
semi-urban and rural Finance Company. In a short span of 18 years, it has become one of the
India'
s leading non-banking finance company providing finance for acquisition of utility
vehicles, tractors and cars. It has more than 450 branches covering the entire India and services
over 6, 00,000 customer contracts.
Mahindra Group has a leading presence in key sectors of the Indian economy, including
trade and financial services (Mahindra Intertrade, Mahindra & Mahindra Financial Services
Ltd.), automotive components, information technology & telecom (Tech Mahindra, Bristlecone),
and infrastructure development (Mahindra GESCO, Mahindra Holidays & Resorts India Ltd.,
Mahindra World City). With around 60 years of manufacturing experience, the Mahindra Group
has built a strong base in technology, engineering, marketing and distribution. The Group
employs around 30,000 people and has eight state-of-the-art manufacturing facilities in India
spread over 500,000 square meters.
GROUP STRUCTURE
Mahindra Finance is a company with a strong foundation and a shining legacy, growing
every day to create a legacy of their own. Our leading promoter Mahindra & Mahindra holds the
majority of their Equity Shares and is also a leading tractor and UV manufacturer with over 60
years’ experience in the Indian market. As a supplement to their business, in May 2004, they
started an insurance broking business through our wholly owned subsidiary, Mahindra Insurance
Brokers Limited.
PRODUCT PORTFOLIO
Mahindra Finance has a wide range of products and services, with something to suit
everyone’s needs. Right from finance for two wheelers, tractors, farm equipment, cars and utility
vehicles to commercial vehicles and construction equipment, they also have a group of experts
providing investment advice, surveying available market products and choosing the most suitable
to our customers’ needs.
INVESTMENT ADVISORY SERVICES

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Mahindra Finance is all-encompassing of clients’ needs. So while they believe in making

assets easily available, they also believe in catering to those who want to create wealth from
these assets. Their Investment Advisory Services act as an avenue to help create and multiply
wealth.
MUTUAL FUND DISTRIBUTION
Recently they have received the necessary permission from Reserve Bank of India (RBI)
to start the distribution of Mutual Fund products through their network. Hitherto they were only
participating in the liability requirements of their customers but with a mutual fund distribution
business, they can also participate in the customer’s asset allocation.
When it comes to investing, everyone has unique needs based on their own objectives
and risk profile. While many investment avenues such as fixed deposits, bonds etc. exist, it is
usually seen that equities typically outperform these investments, over a longer period of time.
Hence they are of the opinion that, systematic investment in equity allows one to create
substantial wealth.
However, investing in equity is not as simple as investing in bonds or bank deposits,
because only proper allocation of portfolio gives maximum returns with moderate risk, and this
requires expertise and time.
Their Investment Advisory Services helps one to invest his money in equity through
different Mutual Fund Schemes. They ensure the best for their clients by identifying products
best suited to individual needs.
OFFERS AVAILABLE
PERSONALIZED SERVICE: They believe in providing personalized service and individual

attention to each client to ensure that they understand their investment goals and help them
achieve it.
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PROFESSIONAL ADVICE: Offer expert advice on equity and debt portfolios with an objective to
provide consistent long-term return while taking calculated market risks. Their approach helps
their clients build a proper mix of products, and not concentrate on just one individual product.
Hence, serving their long-term objectives in the best way.
LONG-TERM RELATIONSHIP: They believe that long-term vision is the only means to steady
wealth creation. However to achieve this, one also needs to take advantage of short-term market
opportunities while not losing sight of long-term objectives. Hence they partner all their clients
in realizing their long-term vision.
ACCESS TO RESEARCH REPORTS: They provide their clients with access to the expert opinion of
economists and analysts from CRISIL, one of the leading financial research and rating
companies of India. This is because they believe that unbiased research is the key to providing
sound advice in making informed investment decisions.
TRANSPARENCY AND CONFIDENTIALITY: Their clients receive regular portfolio statements, via
email. They can also view the detailed performance of their investment portfolio on the web, the
access to which is restricted to the client only. Moreover, their monitoring system enables them
to detect any unauthorized access to the portfolio.
FLEXIBILITY: To facilitate smooth dealing and consistent attention, all their clients are serviced
by their individual Relationship Executives. Relationship Executives provide them with
completely hassle-free, customized services taking care of all the administrative aspects of their
investments. This includes submission of application forms to fund houses and a monthly report
on the overall performance of their investment portfolio.
HASSLE-FREE INVESTMENT: They ensure that the process of investing remains hassle-free. They
also want to offer complete customized service to their clients. It is for these reasons that their
Relationship Executives take care of all the administrative aspects of investments like helping
them to submit the application forms to fund houses and other such formalities like monthly
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reports on the overall state of investments of the clients and performance of portfolios. Their
clients also enjoy
• Information updates on a daily basis through email
• Ease of viewing their portfolio on the internet
• Investment advice at their convenience
• Weekly, fortnightly and monthly reports sent to them via email, on request
• The freedom to contact us, anywhere in India
• Access to the multiple products offered by Mahindra Finance through their

Relationship Executive.
MUTUAL FUNDS
INTRODUCTION
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Mutual fund is a pool of money that is professionally managed for the benefit of all
shareholders. As an investor in a mutual fund, one owns a portion of the fund, sharing in any
increase or decrease in the value of the fund. A mutual fund may focus on stocks, bonds, cash, or
a combination of these asset classes.
The income earned through these investments
and its unit holders in proportion to the number of
units owned by them (pro rata) shares the capital
appreciation realized by the scheme. Thus, a Mutual
Fund is the most suitable investment for the common
person as it offers an opportunity to invest in a diversified, professionally managed portfolio at a
relatively low cost. Anybody with an investible surplus of as little as a few thousand rupees can
invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and
strategy. In effect, the mutual fund vehicle exploits economies of scale in all three areas -
research, investments and transaction processing.
Like most developed and developing countries the mutual fund cult has been catching on
in India. The important reasons for this interesting occurrence are:
• Mutual funds make it easy and less costly for investors to satisfy their need for capital
growth, income and/or income preservation.
• Mutual fund brings the benefits of diversification and money management to the
individual investor, providing an opportunity for financial success that was once available
only to a select few.
A mutual fund, by its very nature, is diversified -- its assets are invested in many different
securities. Beyond that, there are many different types of mutual funds with different objectives
and levels of growth potential, furthering your odds to diversify.
THE SECURITY AND EXCHANGE BOARD OF INDIA (Mutual Funds)
REGULATIONS,1996 defines a mutual fund as a " a fund establishment in the form of a trust
to raise money through the sale of units to the public or a section of the public under one or
more schemes for investing in securities, including money market instruments."
HISTORY OF MUTUAL FUNDS

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The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank them. The history of mutual
funds in India can be broadly divided into four distinct phases.
FIRST PHASE - ESTABLISHMENT & GROWTH OF UNIT TRUST OF INDIA- 1964-87:
• Unit Trust of India (UTI) established on 1963 by an Act of Parliament.

• Set up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the RBI.
• In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of
India (IDBI) took over the regulatory and administrative control in place of RBI.
• The first scheme launched by UTI was Unit Scheme 1964.
• At the end of 1988 UTI had Rs.6, 700 crores of assets under management.
SECOND PHASE - ENTRY OF PUBLIC SECTOR FUNDS – 1987-1993:
• 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC).
• SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987
followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund
(Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of
Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while
GIC had set up its mutual fund in December 1990.
• At the end of 1993, the mutual fund industry had assets under management of Rs.47,
004 crores.
THIRD PHASE – ENTRY OF PRIVATE SECTOR FUNDS - 1993-2003:

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• Entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families.
• Also, 1993 was the year in which the first Mutual Fund Regulations came into being,
under which all mutual funds, except UTI were to be registered and governed.
• The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first
private sector mutual fund registered in July 1993.
• The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the
SEBI (Mutual Fund) Regulations 1996.
• At the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805
crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was
way ahead of other mutual funds.
PHASE IV - GROWTH AND CONSOLIDATION - 2004 ONWARDS
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India
with assets under management of Rs.29, 835 crores as at the end of January 2003, representing
broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified
Undertaking of Unit Trust of India, functioning under an administrator and under the rules
framed by Government of India and does not come under the purview of the Mutual Fund
Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of
the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and growth. As at the end of
March, 2006, there were 29 funds.
The industry also witnessed several mergers and acquisitions recently, examples of
which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual
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Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international
mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc.
There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the
industry through consolidation and entry of new international and private sector players.
FUTURE SCENARIO
The asset base will continue to grow at an annual rate of about 30 to 35 % over the next
few years as investor’s shift their assets from banks and other traditional avenues. Some of the
older public and private sector players will either close shop or be taken over
SEBI is working out the norms for enabling the existing mutual fund schemes to trade in
derivatives. Importantly, many market players have called on the Regulator to initiate the process
immediately, so that the mutual funds can implement the changes that are required to trade in
Derivatives. The graph below shows Asset Growth in every Phase
SOURCE: WWW.MUTUALFUNDINDIA.COM
TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis of its structure and its investment objective.
BY STRUCTURE
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OPEN-ENDED FUNDS: - An open-end fund is one that is available for subscription all through the
year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net
Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity.
CLOSED-ENDED FUNDS: - A closed-end fund has a stipulated maturity period which generally
ranging from 3 to 15 years. The fund is open for subscription only during a specified period.
INTERVAL FUNDS: - Interval funds combine the features of open-ended and close-ended
schemes. They are open for sale or redemption during pre-determined intervals at NAV related
prices.
BY INVESTMENT OBJECTIVE
GROWTH FUNDS: -The aim of growth funds is to provide capital appreciation over the medium
to long- term. Such schemes normally invest a majority of their corpus in equities
INCOME FUNDS: - The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds, corporate debentures
and Government securities. Income Funds are ideal for capital stability and regular income.
BALANCED FUNDS: - The aim of balanced funds is to provide both growth and regular income.
Such schemes periodically distribute a part of their earning and invest both in equities and fixed
income securities in the proportion indicated in their offer documents. In a rising stock market,
MONEY MARKET FUNDS: - The aim of money market funds is to provide easy liquidity,
preservation of capital and moderate income. These schemes generally invest in safer short-term
instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call
money
LOAD FUNDS: - A Load Fund is one that charges a commission for entry or exit. That is, each
time you buy or sell units in the fund, a commission will be payable. Typically entry and exit
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loads range from 1% to 2%. It could be worth paying the load, if the fund has a good
performance history.
SPECIAL SCHEMES
INDUSTRY SPECIFIC SCHEMES: - Industry Specific Schemes invest only in the industries
specified in the offer document. The investment of these funds is limited to specific industries
like InfoTech, FMCG, and Pharmaceuticals etc.
INDEX SCHEMES: - Index Funds attempt to replicate the performance of a particular index such
as the BSE Sensex or the NSE 50
SECTORAL SCHEMES: - Sectoral Funds are those, which invest exclusively in a specified
industry or a group of industries or various segments such as '
A'Group shares or initial public
offerings.
BENEFITS OF MUTUAL FUND INVESTMENT

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One can invest in stocks, in bonds, Treasury bills, or real estate, but in the end the
resources will limit him to one or maybe two securities which increase the risk to about the level
of going to the local casino or buying a lottery ticket. The reason Mutual Funds are so popular is
because they decrease the risk and increase the probability of enjoying high returns. Following
are the top five big benefits of investing in Mutual Funds.
PROFESSIONAL MANAGEMENT: - Mutual Funds provide the services of experienced and skilled
professionals, backed by a dedicated investment research team that analyses the performance and
prospects of companies and selects suitable investments to achieve the objectives of the scheme.
CONVENIENT ADMINISTRATION: - Investing in a Mutual Fund reduces paperwork and helps you
avoid many problems such as bad deliveries, delayed payments and follow up with brokers and
companies. Mutual Funds save your time and make investing easy and convenient
RETURN POTENTIAL: - 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.
LOW COSTS: - Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage, custodial and other
fees translate into lower costs for investors.
LIQUIDITY: - In open-end schemes, the investor gets the money back promptly at net asset value
related prices from the Mutual Fund
FLEXIBILITY: -Through features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans, one can systematically invest or withdraw funds according to your
needs and convenience.
LIMITATION OF MUTUAL FUND

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NO CONTROL OVER COST: - An Investor in mutual fund has no control over the overall costs of
investing. He pays an investment management fee (which is a percentage of his investments) as
long as he remains invested in fund, whether the fund value is rising or declining. He also has to
pay fund distribution costs, which he would not incur in direct investing.
NO TAILOR-MADE PORTFOLIOS: - Investing through mutual funds means delegation of the

decision of portfolio composition to the fund managers. The very high net worth individuals or
large corporate investors may find this to be a constraint in achieving their objectives.
MANAGING A PORTFOLIO OF FUNDS: - Availability of large no. of funds can actually mean too
much choice for the investors. He may again need advice on how to select a fund to achieve his
objectives.
TAXES: - During a typical year, most actively managed mutual funds sell anywhere from 20 to
70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will
pay taxes on the income you receive, even if you reinvest the money you made.
COST OF CHURN: - The portfolio of fund does not remain constant. The extent to which the
portfolio changes is a function of the style of the individual fund manager i.e. whether he is a buy
and hold type of manager or one who aggressively churns the fund
RIGHTS AND OBLIGATIONS OF MUTUAL FUND INVESTORS

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• Investors are mutual, beneficial and proportional owners of the scheme’s assets. The
investments are held by the trust in fiduciary capacity (The fiduciary duty is a legal
relationship of confidence or trust between two or more parties).
• In case of dividend declaration, investors have a right to receive the dividend within 30
days of declaration.
• On redemption request by investors, the AMC must dispatch the redemption proceeds
within 10 working days of the request. In case the AMC fails to do so, it has to pay an
interest @ 15%. This rate may change from time to time subject to regulations.
• In case the investor fails to claim the redemption proceeds immediately, then the
applicable NAV depends upon when the investor claims the redemption proceeds.
• Investors can obtain relevant information from the trustees and inspect documents like
trust deed, investment management agreement, annual reports, offer documents, etc.
They must receive audited annual reports within 6 months from the financial year end.
• Investors can wind up a scheme or even terminate the AMC if unit holders representing
75% of scheme’s assets pass a resolution to that respect.
• Investors have a right to be informed about changes in the fundamental attributes of a
scheme. Fundamental attributes include type of scheme, investment objectives and
policies and terms of issue.
• Lastly, investors can approach the investor relations officer for grievance redressal. In
case the investor does not get appropriate solution, he can approach the investor
grievance cell of SEBI. The investor can also sue the trustees.
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RISKS INVOLVED WHILE INVESTING IN MUTUAL FUNDS
• Call Risk. The possibility that falling interest rates will cause a bond issuer to redeem—
or call—its high-yielding bond before the bond'
s maturity date.
• Country Risk. The possibility that political events (a war, national elections), financial
problems (rising inflation, government default), or natural disasters (an earthquake, a
poor harvest) will weaken a country'
s economy and cause investments in that country to
decline.
• Credit Risk. The possibility that a bond issuer will fail to repay interest and principal in
a timely manner. Also called default risk.
• Currency Risk. The possibility that returns could be reduced for Americans investing in
foreign securities because of a rise in the value of the U.S. dollar against foreign
currencies. Also called exchange-rate risk.
• Income Risk. The possibility that a fixed-income fund'
s dividends will decline as a result
of falling overall interest rates.
• Industry Risk. The possibility that a group of stocks in a single industry will decline in
price due to developments in that industry.
• Inflation Risk. The possibility that increases in the cost of living will reduce or eliminate
a fund'
s real inflation-adjusted returns.
• Interest Rate Risk. The possibility that a bond fund will decline in value because of an
increase in interest rates.
• Manager Risk. The possibility that an actively managed mutual fund'
s investment
adviser will fail to execute the fund'
s investment strategy effectively resulting in the
failure of stated objectives.
• Market Risk. The possibility that stock fund or bond fund prices overall will decline
over short or even extended periods. Stock and bond markets tend to move in cycles, with
periods when prices rise and other periods when prices fall.
• Principal Risk. The possibility that an investment will go down in value, or "lose
money," from the original or invested amount.
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TRADE OFF BETWEEN RISK AND RETURN
The risk-return tradeoff is the balance an investor must decide on between the desires for
the lowest possible risk for the highest possible returns. It’s a fact that low levels of uncertainty
(low risk) are associated with low potential returns and high levels of uncertainty (high risk) are
associated with high potential returns. The following chart shows an example of the risk/return
tradeoff for investing. A higher standard deviation means a higher risk:
Source: www.investopedia.com
RISK HIERARCHY OF INVESTMENT OPTIONS

RISK HIERARCHY OF MUTUAL FUNDS
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DO’S AND DON’TS WHILE SELECTING A MUTUAL FUND

Selecting best mutual funds mean a lot more than deciding by indices and their past
performances. However, you need to remember one thing that there is no quick gratification in
investments of any kind. These points should serve as guidelines for making decision on
whether your pick is among the best in the industry or not.
DOS IN SELECTING THE BEST MUTUAL FUND
1. Draw down your investment objective. There are various schemes suitable for different
needs. For example retirement plan, capital growth etc. Also get clear about your time
frame for investment and returns. Equity funds are not advisable for short term because
of their long term nature. You can consider money market and floating rate funds for
short term gains. This equals asking - What kind of mutual fund is right for me?
2. Once you have decided on a plan or a couple of them, collect as much information as
possible on them from different sources offering them. Funds'prospectus and advisors
may help you in this.
3. Pick out companies consistently performing above average. Mutual funds industry
indices are helpful in comparing different funds as well as different plans offered by
them. Some of the industry standard fund indices are Nasdaq 100, Russel 2000, S&P
fund index and DSI index with the latter rating the Socially Responsible Funds only. Also
best mutual funds draw good results despite market volatility.
4. Get a clear picture of fees & associated cost, taxes (for non-tax free funds) for all your
short listed funds and how they affect your returns. Best mutual funds have lower cost out
go.
5. Best mutual funds maximize returns and minimize risks. A number called as Sharpe
Ratio explains whether a fund is risk free based on its expected returns compared against
a risk free money market fund.
6. Some funds have the advantage of low minimum initial investments. You can start
investing even with $250 a month. This is advisable for building asset bases over a long
period with small regular investments.
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DON'TS IN SELECTING BEST MUTUAL FUNDS

Like there are pit falls in every investment sphere you must be careful about even while
investing in mutual funds. Here is a list of don'
ts you must consider for selecting best performing
mutual funds
• Don'
t go by the past performance alone. For, an average of performance over a period
will not tell you whether the performance is growing or at least maintained in the recent
years.
• Don'
t go by hearsay about the reputations of a fund. There are various rating agencies
which index the mutual funds regularly based on multiple factors. It forms your first step
in finding the best performing mutual funds.
• Don'
t invest huge sums of money in a single fund or all the money in one go. Spread out
your investments rationally. For example: Index funds for high returns, bond funds for
lower risks, 401 (k) retirement plans and so on.
• Don'
t ignore absolute returns. NAVs and percentage growths don'
t factor-in the taxes and
charges. Higher loads can diminish you in absolute returns. Some of the funds load you at
both buying as well as selling. Even no load funds have fees such as Rule 12-b fees.
• Don'
t chase a mutual fund because it is performing great in a bull run in the stock market.
Once the market stagnates or the trend reverses these funds will follow suit.
• Don'
t compare a mutual fund across the category. This means a diversified fund should
not be compared with index fund. While choosing a best one compare funds from the
same category regardless of the promoting companies.
It is definitely not easy to pick a few best mutual funds from those in the market. It is like
searching for the proverbial needle in the stack of hay. However, a best mutual fund is one that
charges low fees, that sticks to principles and investment styles that puts your interest on top of
everything else. The most important character of best mutual funds is they don't just know how to
ride a bull run but also a bear market.
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PURCHASING MUTUAL FUNDS

PURCHASING DURING IPO:
Like companies, even mutual funds offer initial public offering. It is when they launch
the scheme for the first time. You can buy units at par on this occasion. However, it is not always
advantageous to buy a mutual fund during IPO. You can always wait and see the performance
before investing in it.
PURCHASING EXISTING MUTUAL FUND UNITS:

You can buy units of an open-end scheme anytime at NAV-related price. Most mutual
funds charge an entry load of up to 2%. That means you have to pay an additional 2% of the
NAV to get into the scheme. You can buy the plan directly from the mutual fund or brokerage.
You can even buy them via the Internet.
SELLING MUTUAL FUND

You can sell or redeem units very easily. As per SEBI guidelines, a mutual fund unit
holder has the right to receive redemption or repurchase proceeds within 10 days of the
redemption or repurchase. Most funds do not charge an exit load these days.
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MUTUAL FUND EXPENSES
EXPENSES
Because mutual funds are professionally managed investments, there are management
fees and operating expenses associated with investing in a fund. These fees and expenses
charged by the fund are passed onto shareholders and deducted from the fund'
s return.
These expenses are typically expressed as the expense ratio - the percent of fund assets
spent (annually) on day-to-day operations. Expense ratios can vary widely among funds.
Expense ratios for mutual funds commonly range from 0.2% to 2.0%, depending on the fund.
DEFINING MUTUAL FUND COSTS
All mutual funds have costs, but some funds are more expensive to own than others. Be
conscious of the effect of seemingly minor cost differences which can significantly affect the
growth of your investment assets, especially over longer periods of time.
Mutual fund costs fall into two main categories: One-time fees and ongoing annual
expenses. Not all funds charge one-time fees, but all funds charge ongoing annual fees of some
sort.
ONE-TIME FEES
LOADS:-Loads come in three forms:
• FRONT-END LOAD
o Charged when you purchase fund shares-usually class A shares, effectively

reducing your purchase amount.
o May be charged on reinvested distributions.
o Can be as high as 8.5%.
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• BACK-END LOAD
o Charged when you sell fund shares.

o Usually assessed based on the length of time you have held your shares, and
declines over time.
o Maximum allowed is 8.5%, but this is rarely seen. According to Lipper Inc.,
back-end loads can be as high as 6% if you sell shares within one year.
• LEVEL LOAD
o Deducted annually from fund assets as marketing and distribution costs.
o Used to pay commissions to brokers and the fund'
s financial adviser, and is
generally reported as part of a fund'
s operating expenses.
o Can be as high as 0.75% per year, according to Lipper Inc.
Funds that have no sales charges are known as "no-load," while funds that charge loads of 1% to
3% are called "low-load." Keep in mind; funds that have lower loads or no-loads tend to have
higher operating expenses. Again, read each fund'
s prospectus and compare "net" returns.
ONGOING ANNUAL EXPENSES
• Management Fees
• Distribution and Service Fees
• Other Expenses
• Underlying Fund Expenses
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OTHER FEES
In addition to sales loads, fund companies and brokerages may charge other fees when
you buy or sell fund shares.
A transaction fee is charged by some brokerage firms for purchasing or selling shares.
Transaction fees are sometimes referred to as commissions but are extra costs not normally paid
if you were to purchase your fund directly with the fund family.
Some fund companies and brokerages may charge a redemption fee if the fund is held for
less than a certain period of time, generally between 90 and 180 days. These charges are
intended to discourage short-term trading that can raise a fund'
s administrative costs.
Not all funds assess these "extra" fees. In fact, funds and brokerages may not charge a
sales load, transaction fees or redemption fees.
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CAPITAL GAINS TAXATION
• As per SEBI Regulations, any scheme which has minimum 65% of its average weekly
net assets invested in Indian equities, is an equity scheme. An investor in such a scheme
will not have to pay any tax on the capital gains which he makes, provided he holds the
scheme’s units for a period of more than 12 months. While exiting the scheme, the
investor will have to bear a Securities Transaction Tax (STT) @ 0.25% of the value of
selling price.
• However, if the investor makes a profit by selling his units at a higher NAV (capital
gains), within 12 months, then such a capital gain is treated as being short-term in nature,
and hence taxed @ 15% of the profits. Investors in all other schemes have to pay capital
gains tax, either short term or long term.
• In case a scheme invests 100% in foreign equities, then such a scheme is not considered
to be an equity scheme from taxation angle and the investor has to pay tax even on the
long term capital gains made from such a scheme.
• In case investors make capital gains within 12 months, for non-equity schemes, the
capital gains are added to their income and then the total income is taxed as per their tax
slab. This is known as taxation at the marginal rate.
• For long-term capital gains made by investors in non-equity schemes, they have to pay
tax either @ 10% or @ 20%, depending upon whether investors opt for indexation
benefit or not
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INDEXATION BENEFIT
Indexation is a procedure by which the investor can get benefit from the fact that inflation
has eroded his returns.
Indexation works on the simple concept that if an investor buys a unit @ Rs. 10 and sells
it @ Rs. 30 after 5 years, then his profit of Rs. 20 per unit needs to be adjusted for the inflation
increase during the same time period. This is because inflation reduces purchasing power. What
Rs. 100 could have bought when he bought the unit @ Rs.10, would now have increased in price
due to inflation? Thus he can now buy less for the same Rs. 100.
If during the same time, inflation has increased by 12%, then the adjusted cost of the unit
purchased (at today’s price) would be Rs. 10 * (1 + 12%) = Rs. 11.2.
So his profit would not be Rs. 20, but Rs. 30 – Rs. 11.2 = Rs. 18.8.
Thus, by adjusting his buying price for inflation, he has effectively negated the impact of
inflation – thereby reducing his profits. Obviously, his tax liability would reduce by doing so.
M AHINDRA FINANCE
FUNDAMENTAL TERMS RELATED WITH MUTUAL FUNDS
1. NAV: NAV is the market value of the assets of the scheme minus its liabilities. The per
unit NAV is the net asset value of the scheme divided by the number of units.
The Net Asset Value - NAV mainly determines the value of each holdings of the
mutual fund. It is expressed as per-share amount. In a majority of the mutual fund
holdings, the Net Asset Value is calculated on a daily basis after the trading closes in
some specified financial exchange. However in some of the mutual funds, the net asset
value is calculated many times in a day during the trading period.
2. SALE PRICE: The price you pay when you invest in a scheme. It is also called offer
price.
3. REPURCHASE PRICE: The price at which a close-ended scheme repurchases its units.
It is also called bid price.
4. REDEMPTION PRICE: The price at which open-ended schemes repurchase their units
and close-ended schemes redeem their units on maturity. This price is NAV related.
5. ASSET UNDER MANAGEMENT: Assets Under Management (AUM) represents the

money which is managed by a mutual fund in a scheme. Adding AUMs for all schemes
of a fund house gives the AUM of that fund house and the figure arrived at by adding
AUMs of all fund houses represents the industry AUM.
AUM is calculated by multiplying the Net Asset Value (NAV – explained in
detail later) of a scheme by the number of units issued by that scheme. A change in AUM
can happen either because of fall in NAV or redemptions. In case of sharp market falls,
the NAVs move down, because of which the AUM may reduce.
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ENTRY LOAD: Investors have to bear expenses for availing of the services (professional
management) of the mutual fund. The first expense that an investor has to incur is by way
of Entry Load. This is charged to meet the selling and distribution expenses of the
scheme. A major portion of the Entry Load is used for paying commissions to the
distributor.
Loads are charged to a scheme to meet its selling, marketing and distribution
expenses. Loads can be charged at the time of entry, at the time of exit, as a fixed amount
every year or in a staggered manner depending upon the time for which the investor is
invested. Loads are charged as a percent of the NAV. Entry Load is charged when the
investor enters the scheme. This is also known as front end load. Entry load can have an
impact on the number of units being allotted to an investor.
For Example:
Without Entry Load With Entry Load
Scheme NAV (Rs.) 10 10
Entry Load 0% 2.25%
Buying Price (Rs.) 10 + 10 * 0% = 10 10 + 10*2.25%= 10.225
Investment (Rs.) 25,000 25,000
Units Allotted 25,000/ 10 = 2500 25,000/ 10.225 = 2444.98
Annual Returns = 12%. NAV of the scheme will rise to 10 + 10 * 12% = 11.2
Profit/ Unit 11.2 – 10 = Rs. 1.2 11.2 – 10.225 = Rs. 0.975

Total Profit 1.2 * 2500 = 3000 0.975 * 2444.98 = 2583.86
Return on Investment 3000/ 25,000 = 12% 2583.86/ 25,000 = 9.54%
As can be seen from the above illustration, in case the investor has to bear an entry load, his
cost of buying increases which translates into lesser number of units being allocated. When the
NAV appreciates, his profit is reduced due to higher buying cost, which results in less Return on
Investment (RoI).
M AHINDRA FINANCE
7. EXIT LOAD: As there are Entry Loads, there exist Exit Loads as well. As Entry Loads
increase the cost of buying, similarly Exit Loads reduce the amount received by the
investor. Not all schemes have an Exit Load, and not all schemes have similar exit loads
as well. Some schemes have Contingent Deferred Sales Charge (CDSC). This is
nothing but a modified form of Exit Load, wherein the investor has to pay different Exit
Loads depending upon his investment period.
If the investor exits early, he will have to bear more Exit Load and if he remains
invested for a longer period of time, his Exit Load will reduce. Thus the longer the
investor remains invested, lesser is the Exit Load. After some time the Exit Load reduces
to nil; i.e. if the investor exits after a specified time period, he will not have to bear any
Exit Load.
M AHINDRA FINANCE
OVERVIEW & ANALYSIS OF DIFFERENT PHARMA FUNDS

RELIANCE PHARMA FUND
INVESTMENT OBJECTIVE: - The primary investment objective of the scheme is to seek to
generate continuous returns by investing in equity and equity related or fixed-income securities
of Pharma and other associated companies.
Fund Category Equity: Pharma
Type Open End
Launch Date May 2004
Risk Grade Not Rated
Return Grade Not Rated
Net Assets (Cr) 79.16 (31/03/09)
Benchmark BSE HC
INVESTMENT BASICS
Min Investment (Rs) 2000
Subsequent Investment --
Min Withdrawal (Rs) 1000
Min Balance (Rs) 2000
Purchase Cut-off Time (hrs) 15
Redemption Cut-off Time (hrs) 15
Redemption Time (days) 3
Lock-in --
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Investment Style: Fund manger basically invests a lot in Small cap funds, and this is the
reason of such turmoil of the fund in difficult time too, as Mid Cap funds are more vulnerable to
market condition.
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Fund Manager invests basically in Small Cap Sector, which contributes around 55.33%
of total asset allocation. Although there is a large cap firm involved, but it is only 10%. And
share of Mid cap firms is about one-third of total asset. So, on the whole about 90% asset is
under small and mid cap segment.
SECTOR ALLOCATION
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Apart from investing totally in pharma sector firms, fund manager also tries to enjoy the benefit
of evergreen FMCG sector. And diversifies its risk to a more extent.
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ABSOLUTE RETURNS
Looking at the returns over past few years with ranking among the category, it can be seen that,
the fund outperform all its peers when we consider the last 1,2,3 year performance, as shown by
the category rank. But it is the recent performance that had made a set back to the fund and all its
peers leaves Reliance way behind.
Absolute
Returns
As of Fund Return Category Return S&P CNX BSE HC
15 May 2009 Nifty
Year-to-Date 6.07 8.63 24.08 6.57
1-Week 1.24 0.40 1.41 1.23
1-Month 2.75 3.69 5.38 2.02
3-Month 16.54 15.74 24.53 16.58
1-Year -12.55 -19.40 -28.22 -26.24
2-Year -1.13 -9.03 -5.60 -7.74
3-Year 1.08 -7.40 1.58 -6.85
5-Year -- 7.55 18.33 6.22
Comparing it with the similar category fund we find that sometimes it gave lesser returns like
past 1-month or nearly the same returns like 1-week and 3-months as that of category fund. Bur
when compared for a longer period it outperforms the category return by a computable margin.
As where the fund has given a return of 6.07% the similar category funds have given only 8.63%
of return. Its comparison with its benchmark is also somewhat like that of the category fund.
Year Wise Returns
2008 2007 2006 2005 2004
Fund Return -34.00 49.80 16.73 29.40 --
Rank In Category 3/5 1/5 1/5 2/5 --
Category Average -34.74 20.09 13.81 25.16 34.64
S&P CNX Nifty -51.79 54.77 39.83 36.34 10.68
BSE HC -32.87 16.52 21.74 1.84 22.64
Also looking at the year wise returns of the fund, its benchmark, S & P CNX Nifty and category
returns, we see that Fund outperform its benchmark BSE HC in almost every year but it in 2008
it moves with benchmark and thus gives worst returns (as both are negative).Fund outperforms
Nifty in 2008(less negative) and for rest of the year it was very near to it, which shows a good
returns.
M AHINDRA FINANCE
Returns and Risk Aggregates

Rating & Risk Modern Portfolio Volatility Measures
Stat
Fund Rating Not Rated R-Squared 0.79 Mean 4.50
Fund Risk -- Alpha 8.44 Standard 34.01
Grade Deviation
Fund Return -- Beta 1.04 Sharpe Ratio -0.02
Grade
STANDARD DEVIATION:
According to the table we see that the standard deviation of the fund is very high i.e. 34.01 this
fund is therefore too risky because it fluctuates widely between negative and positive returns
within a short period.
BETA:
Here we see that the beta of fund is 1.04 in relation to the BSE Health Care, i.e. the fund’s
performance is closely matches the benchmark. It is more volatile than the market risk. The fund
moves 4% more than the index. . Therefore, if the BSE HC increased 15%, the fund would be
expected to increase 15.60%.
R-SQUARE:
From the table we see that the R- Square of the fund is 0.79 i.e. 91 which is closer to 100 hence
the beta of the fund can be trusted, but not much, as it has been measured against an appropriate
benchmark.
ALPHA
The alpha of the fund is 8.44 which state that the fund outperformed the benchmark by 8.44%.
SHARPE RATIO
Since the Sharpe ratio here of the fund is only -0.02 hence we see that the returns are due to
excess risk undertaken and not due to astute investment decision.
M AHINDRA FINANCE
COMPARISON WITH BENCHMARK VALUE
SOURCE: WWW.MONEYCONTROL.COM
The above graph shows the comparison with BSE healthcare for last 3 years. It can be
seen that although the firm does not outperform its bench mark to a great extent but also it never
go below the benchmark. It either above or equal to the benchmark. So, on this basis we can say
that its one of the safest choice to invest. .
Current Stats & Profile
Latest NAV 21.328 (15/05/09)
52-Week High 24.7797 (04/09/08)
52-Week Low 16.567 (27/10/08)
Type Open End
Launch Date May 2004
Net Assets (Cr) 90.58 (30/04/09)
Benchmark BSE HC
As from the current statistics we see that the latest NAV of the fund has been much more
inclined towards the 52- week High i.e. it has increased only 5 points from the lowest NAV
which was 16.567 and only 3 points behind its 52-week high, so the fund has low prospects and
in the near future may show an increase in NAV, but magnitude is not very high, resulting into
the investor a profit of 3 Rs on each unit.
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ASSET UNDER MANAGEMENT
Source: www.moneycontrol.com
The above graph shows the variation in the assent management of the fund.
M AHINDRA FINANCE
UTI PHARMA FUND

INVESTMENT OBJECTIVE: - Aim to invest in companies engaged in the research,
manufacture or marketing of OTC products, bulk drugs and formulations
Type Open End
Launch Date June 1999
Net Assets (Cr) 41.93 (31/03/09)
Benchmark S&P CNX Pharma
INVESTMENT BASICS
Subsequent Investment (Rs) 1000
Min Withdrawal (Rs) --
Lock-in --
M AHINDRA FINANCE
INVESTMENT STYLE: Fund manger basically invests a lot in Mid cap funds and a big amount
in Large cap too. This is the reason of such a solid state of the fund.
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Fund Manager invests basically in Mid Cap Sector, which contributes around 53.97% of total
asset allocation. There is a large cap firm involved, and its share is also high at 35.82%. And
share of Small cap firms is about 10% of total asset.
SECTOR ALLOCATION
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Apart from investing totally in pharma sector firms, fund manager also invest in the Chemical
and FMCG sector. And diversifies its risk to a greater extent.
M AHINDRA FINANCE
ABSOLUTE RETURNS
Looking at the returns over past 3-5 years with ranking among the category, it can be
seen that, the fund perform decent among its peers. When we consider the last 1, 2, 3 or 5 year
performance, it can be seen that it is in the middle of the entire pharma fund in the market. But it
is the recent performance that had deteriorate the fund image and all its peers leaves UTI way
behind, it comes down to the last spot.
As of Fund Return Category Return S&P CNX Nifty BSE HC
15 May 2009
Year-to-Date 6.84 8.63 24.08 6.57
1-Week -0.05 0.40 1.41 1.23
1-Month 1.86 3.69 5.38 2.02
3-Month 12.40 15.74 24.53 16.58
1-Year -16.37 -19.40 -28.22 -26.24
2-Year -6.00 -9.03 -5.60 -7.74
3-Year -6.36 -7.40 1.58 -6.85
5-Year 7.93 7.55 18.33 6.22
Comparing it with the similar category fund we find that it has always given either lesser returns
or nearly the same returns as that of category fund. As where the fund has given a return of
6.84% the similar category funds have given only 8.63% of return. Its comparison with its
benchmark is also like that of the category fund.
Year wise Returns

2008 2007 2006 2005 2004
Fund Return -25.95 12.08 8.25 16.02 25.35
Rank In Category 1/5 2/5 5/5 5/5 3/3
S&P CNX Nifty -51.79 54.77 39.83 36.34 10.68
BSE HC -32.87 16.52 21.74 1.84 22.64
returns, we see that Fund outperform its benchmark BSE HC in year 2008(less negative),
2005(leaves benchmark way behind) and 2004.Fund outperforms Nifty in 2008(less negative)
and 2004(by a good margin).But out performs category average only in recent 2008 year.
M AHINDRA FINANCE
Returns and Risk Aggregates

Rating & Risk Modern Portfolio Volatility Measures
Stat
Fund Rating Not Rated R-Squared 0.91 Mean -2.98
Fund Risk -- Alpha - Standard 26.76
Grade 0.43 Deviation
Fund Return -- Beta 0.88 Sharpe Ratio -0.31
Grade
STANDARD DEVIATION:
According to the table we see that the standard deviation of the fund is high i.e. 26.76. This fund
is therefore more risky because it fluctuates widely between negative and positive returns within
a short period.
BETA:
performance is closely matches the benchmark. It is somewhat less volatile than the market risk.
The fund is moving 12% less than the index. . Therefore, if the BSE HC increased 15%, the fund
would be expected to increase 16.80%.
R-SQUARE:
From the table we see that the R- Square of the fund is 0.91 i.e. 91 which is much closer to 100
hence the beta of the fund should be trusted as it has been measured against an appropriate
benchmark.
ALPHA
The alpha of the fund is -0.43 which state that the fund underperformed the benchmark by
0.40%.
SHARPE RATIO
M AHINDRA FINANCE
COMPARISON WITH BENCHMARK
The above graph shows the comparison with S & P CNX Pharma for last years. It can
be seen that the firm does not outperform its bench mark at any point of time. So, on this basis
we can say that its one of the worst choice to invest.
Latest NAV 19.67 (15/05/09)
52-Week High 25.06 (17/06/08)
52-Week Low 16.68 (03/03/09)
Type Open End
Launch Date June 1999
Net Assets (Cr) 46.01 (30/04/09)
As from the current statistics we see that the latest NAV of the fund has been much more
inclined towards the 52- week Low i.e. it has increased only 3 points from the lowest NAV
which was 16.68 so the fund has greater prospects and in the near future may show an increase in
NAV resulting into the investor a profit of 6 Rs on each unit.
M AHINDRA FINANCE
The above graph shows the variation in the asset under management.
M AHINDRA FINANCE
FRANKLIN PHARMA FUND

INVESTMENT OBJECTIVE: - The Scheme aims to achieve long term capital appreciation
through exclusively investing in Pharmaceutical/Life Sciences sector.
Type Open End
Launch Date March 1999
Net Assets (Cr) 33.41 (31/03/09)
Benchmark BSE Health Care
INVESTMENT BASICS
Subsequent Investment (Rs) 1000
Min Balance --
Lock-in --
M AHINDRA FINANCE
INVESTMENT STYLE: Fund manger basically invest a lot in Mid cap funds, and a considerable
and almost equal amounts also invested in Large cap and small cap too. This is the reason of
such a solid state of the fund.
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asset allocation. There is a large cap firm involved, and its share is also high at 18.19%. And
share of Small cap firms is about 24% of total asset.
SECTOR ALLOCATION
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Apart from investing totally in pharma sector firms, fund manager also invest in the Chemical
and FMCG sector. And diversifies its risk to a greater extent.
M AHINDRA FINANCE
ABSOLUTE RETURNS
Looking at the returns over past 3-5 years with ranking among the category, it can be
seen that, the fund outperform all its peers. Whatever time period we consider it can be seen that
it is amongst the top performers of the pharma fund in the market.
As of Fund Return Category Return S&P CNX Nifty BSE HC
15 May 2009
Year-to-Date 16.22 8.63 24.08 6.57
1-Week 0.67 0.40 1.41 1.23
1-Month 6.14 3.69 5.38 2.02
3-Month 19.75 15.74 24.53 16.58
1-Year -11.67 -19.40 -28.22 -26.24
2-Year -5.40 -9.03 -5.60 -7.74
3-Year -4.34 -7.40 1.58 -6.85
5-Year 8.82 7.55 18.33 6.22
Comparing it with the similar category fund we find that it has always given better returns as
compared to them. As where the fund has given a return of 16.22% the similar category funds
have given only 8.63% of return. It also outperforms its benchmark index BSE HC for every
time horizon considered above.
YEAR WISE RETURNS
2008 2007 2006 2005 2004

Fund Return -27.59 5.75 13.86 17.36 27.66
Rank In Category 2/5 5/5 3/5 3/5 2/3
S&P CNX Nifty -51.79 54.77 39.83 36.34 10.68
BSE HC -32.87 16.52 21.74 1.84 22.64
returns, we see that Fund outperform its benchmark BSE HC in year 2008(less negative),
2005(leaves benchmark way behind) and 2004.Outperforms Nifty in 2008(less negative) and
2004(by a good margin).But out performs category average only in recent 2008 year.
M AHINDRA FINANCE
RETURNS AND RISK AGGREGATES

RATING & RISK MODERN PORTFOLIO VOLATILITY MEASURES
STAT
FUND RATING NOT RATED R-SQUARED 0.83 MEAN -2.46
FUND RISK -- ALPHA - STANDARD 26.29
GRADE 0.40 DEVIATION
FUND RETURN -- BETA 0.83 SHARPE RATIO -0.29
GRADE
STANDARD DEVIATION:
According to the table we see that the standard deviation of the fund is high i.e. 26.29. This fund
is therefore more risky because it fluctuates widely between negative and positive returns within
a short period.
BETA:
performance is closely matches the benchmark. It is somewhat less volatile than the market risk.
The fund is moving 17% less than the index. . Therefore, if the BSE HC increased 15%, the fund
would be expected to increase 17.55%.
R-SQUARE:
From the table we see that the R- Square of the fund is 0.83 i.e. 83 which is much closer to 100
hence the beta of the fund should be trusted as it has been measured against an appropriate
benchmark.
ALPHA
The alpha of the fund is -0.40 which state that the fund underperformed the benchmark by
0.40%.
SHARPE RATIO
M AHINDRA FINANCE

Latest NAV 25.9576 (15/05/09)
52-Week High 30.3382 (17/06/08)
52-Week Low 20.394 (25/11/08)
Type Open End
Launch Date March 1999
Net Assets (Cr) 37.92 (30/04/09)
As from the current statistics we see that the latest NAV of the funds been in the mid way of 52-
week Low i.e. it has increased only 5 points from the lowest NAV which was 20.394 so the fund
has good prospects and in the near future may show an increase in NAV resulting into the
investor a profit of approx. 5 Rs on each unit.
COMPARISON WITH BENCHMARK VALUE
The above graph shows the comparison with BSE healthcare for last 5 years. It can be seen that
the firm does not outperform its bench mark to a great extent, and it goes below the benchmark
returns in recent time. This trend is continuing, so looking at the benchmark comparison and
recent trend it is not advisable to invest in it. Rather as seen above it ranks either 1 or 2 in its
category, so this contradicts the above advice. .
M AHINDRA FINANCE
The above graph shows the variation in asset of the fund over a period of 3 years.
M AHINDRA FINANCE
SBI MAGNUM PHARMA FUND

INVESTMENT OBJECTIVE! 1 The scheme aims to provide the investors maximum growth
opportunity through equity investment in stocks of Pharma Sector.
Type Open End
Launch Date July 1999
Net Assets (Cr) 18.15 (31/03/09)
Benchmark BSE HC
INVESTMENT BASICS
Subsequent Investment --
Lock-in --
M AHINDRA FINANCE
Investment Style: Fund manger basically invest a lot in Mid cap funds, and this is the reason
of such a turmoil of the fund in difficult time too, as Mid Cap funds are more vulnerable to
market condition.
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asset allocation. There is no large cap firm involved. And share of small cap firms is about one
fourth of total asset.
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Portfolio Sector Allocation

Sector Net Asset Asset
(%) Value(Rs.)
Health Care 78.11 7,556.05
Chemicals 13.62 1,317.76
Engineering 8.27 799.79
Total 100 9,673.60
The fund manager does not totally rely on the pharma firms stock, but diversifies its risk
by investing a small amount to other sectors also like Chemicals and engineering.
M AHINDRA FINANCE
ABSOLUTE RETURNS
Looking at the returns over past years with ranking among the category, it can be seen
that, the fund has a mixed reaction among its peers. It never outperforms all its pears for a longer
duration. It is amongst the worst fund in its category. But it is the recent performance that had
made a good come back to the category rank and all its peers are way behind.
The above graph shows the variation in the asset of the fund over a period of 3 years.
M AHINDRA FINANCE
COMPARISON WITH BENCHMARK INDEX
The above graph shows the comparison with BSE healthcare for last 5 years. It can be
seen that the firm outperform its bench mark to a great extent, and it goes below the benchmark
returns in recent time. This trend is continuing, so looking at the benchmark comparison and
recent trend it is not advisable to invest in it. But over a longer period I perform consistently and
outperform the benchmark, so this will looks like as if it is a good option to invest. .
M AHINDRA FINANCE
END POINT BIAS: A BROKEN CLOCK SYNDROME
The other common mistake made in performance analysis is called “end point bias.”
Most of the funds recommended by various financial publications are ones that recently
performed well. When looking at cumulative statistics, recent performance above the benchmark
creates the illusion that the fund has consistently outperformed. Cumulative statistics are
calculated through the most recent time period. Annualized return for one, three, five, and seven
years, for example, is often used to evaluate mutual funds. Notice that the most recent year is
included in all of these periods. Due to the nature of these statistics, recent performance often
“hides” past performance.
We could also call it the broken clock syndrome (a broken clock will be right twice a
day). Because, if a manager has been managing fund for a longer period, even with no skill, there
is likely to be several years of good performance. If your end point (the date on which your
analysis ends) is particularly good, cumulative statistics may create the illusion of consistently
good performance.
M AHINDRA FINANCE
RELIANCE PHARMA FUND
In Figure 1 the long term annualized returns for this fund look quite good.
Because this fund outperformed its benchmark (BSE Health Care) for1, 2, 3 year periods, one
would think that the fund is a consistently good performer.
• Last 1 and 2 year performance, it outperforms its benchmark return to a big level,
although both are in negative, but funds magnitude in negative is less.
• Last 3 year performance show even better situation, as fund return is positive and
benchmark return is negative.
• But when we see the funds return w.r.t. to benchmark in last 1week, 1 month or 3 month,
we will see that it performs almost equivalent to that of benchmark, no extraordinary
returns are there.
It has only been the very good performance in the last 1, 2 and 3 year periods that gives it the
high annualized rates of return. This is what we mean by an “end point bias.” Because one might
suggest to invest in the fund on the basis of past year returns.
M AHINDRA FINANCE
But this is an illusion, explained as………
When we see the second graph showing the variation in value of fund and benchmark, it
becomes clear that the fund basically outperforms the benchmark in 2007-08 period only, and
performance was such that it made high annualized returns in past 1, 2 and 3 years compared
with benchmark which is not true. The performance of fund in 2007-08 improved the
performance of the fund for a period which includes this time period like last 2, 3 years.
M AHINDRA FINANCE
SBI Magnum Pharma Fund
Because this fund outperformed its benchmark (BSE Health Care) for1, 5 year periods, one
• Last 3 months, 1 year and 5 year performance, it outperforms its benchmark return to a
big level, although both are in negative, but funds magnitude in negative is less.
It has only been the very good performance in the above specified periods that give it the
But illusion here is………
becomes clear that the fund basically outperforms the benchmark in almost every period only,
The performance of fund in May 2006 to May 2007 improved the performance of the fund for
the whole duration.
M AHINDRA FINANCE
FRANKLIN TEMPLETON PHARMA FUND
Because this fund outperformed its benchmark (BSE Health Care) for almost every period, one
• Last 1 week, 1 month, 3 months, 1 year, 2 year, 3 year and 5 year performance, it
outperforms its benchmark return to a big extent sometimes and sometimes only a bit.
It has only been the very good performance in the above specified periods that give it the
But illusion here is………
becomes clear that the fund basically outperforms the benchmark value only to a small extent
and that too in some periods. The initial performance of fund in May 2004 to May 2006 or to be
more precise May 2005 to May 2006, which improved the performance of the fund for the
whole duration. In the next one year i.e. in 2006 to Dec 2007, when the market was at its peak it
only vary near about benchmark index.
M AHINDRA FINANCE
COMPARATIVE ANALYSIS OF PHARMA FUND

ON THE BASIS OF PAST YEAR RETURNS
Equity – Pharma Abs. Returns in % (as on Apr 13, 09)
3mth 6mth 1yr 3yr 5yr
Reliance Pharma Fund (G) 6.5 -2.9 -16.6 -3 --
UTI Pharma & Health (G) 3.5 -10.1 -15.3 -21 37.8
Franklin Pharma Fund (G) 8 -5.5 -14.4 -20.2 40.2
SBI Magnum Pharma Fund (G) 0.5 -23.2 -38.4 -50.1 25.7
As it can be inferred from the graph that: -

• SBI is showing the negative returns from past 3years, and the magnitude is also highest
among its peers. This makes SBI’s Pharma fund as the worst choice to invest.
• After SBI comes the UTI and Franklin Pharma funds, UTI fund has shown more negative
returns in the last 3months and 6months duration. But if we compare the longer duration
of 3years and 5 years, then we will notice that Franklin is having a very minute edge over
UTI.
• Then finally comes the King, Reliance, as can be seen that it is behind only in last 3
months period while is way ahead of its peers for other duration.
But whatever inference written here is from a laymen’s perspective to graphs only. But the
actual scenario at present might not be same. Detailed analysis with example via “end point
basis” will be done later on.
M AHINDRA FINANCE
ASSET ALLOCATION (EQUITY, DEBT, CASH; LARGE CAP, MID CAP, SMALL CAP)
Reliance UTI SBI Franklin
Large 9.64 44.24 6.4 18.11
Mid 42.14 46.4 68.5 57.79
Small 48.22 9.36 25.1 24.1
Asset allocation is an important factor that can affect the performance of a mutual fund.
Fund managers should maintain a reasonably balanced approach between large, mid and small
caps depending on the prevailing market condition. As midcap stocks suffered a steep fall last
year, lower exposures helped fund managers to minimize the downside. Again, higher exposures
in large cap stock will help a fund to earn good returns in coming days, as large cap scrips are
likely to recover first when the market rebounds.
Assets allocation in Reliance and SBI is not so balanced due to its low exposures in large
cap and higher exposures in mid cap stocks in comparison with its peers. SBI being the most
unbalanced with respect to this point UTI has a high exposure in equity, maintaining good
balance between large and midcap stocks, which may give a good return in long term. Again,
Franklin has good exposures in equity but holds a large number of mid cap stocks, which may
affect its returns in short to medium term. Considering all these factors, UTI and Reliance
maintain a balanced approach towards assets allocation.
M AHINDRA FINANCE
UTI SBI Reliance Franklin

Equity 83.84% 87.89% 94.01% 90.16%
Debt 5.15% 0% 0% 0%
cash and others 11.01% 12.11% 5.99% 9.84%
Another important factor is allocation of assets between different asset classes (viz.
equity, debt and cash) to maximize the returns with minimum downside risk. Fund managers
maintain sufficient cash balances to grab the opportunity for easy picking up of stocks at bottom
and also to satisfy any investor requests for redemption.
In case of open ended schemes, like ours pharma fund, early redemption is very much
possible as there is no lock-in period. Therefore, a large amount of cash reserve has to be
maintained by fund manager, lower cash reserves may lead to redemption grievances of
investors.
Considering these factors, SBI and UTI has utilized funds the best, maintaining a good
balance between equity and cash balances. Both UTI and SBI hold a large amount in cash, which
is considered as a good sign as explained above. Interestingly, large cash reserve may help the
fund manager in short term to maintain a higher NAV in a falling market, but is not beneficial
for long term investors as these funds have lock-in period of three years.
M AHINDRA FINANCE
ASSET SIZE: -
UTI SBI Reliance Franklin

Asset Size(Rs 44.84 19.79 88.02 35.86
Crores)
Among the selected funds, Reliance has the largest asset size of Rs 8.028 crore, while
SBI remained the smallest with an asset size of Rs 19.79 crore.
As assets become larger, a mutual fund manager needs to spread its assets over a larger
number of stocks because investing large amounts in one particular stock can affect the share
price during buy or sell. Thus, the fund tends to give returns like an index fund and is difficult to
actively manage such a large portfolio. An investor ends up receiving returns similar to the
benchmark index paying more (entry load) to “actively” manage that fund. This is true for
Reliance which has a large number of stocks in their portfolio.
M AHINDRA FINANCE
VOLATILITY MEASURES
Fund Name Expense Turnover Standard Sharpe Beta Alpha R-Squared
Ratio (%) Deviation Ratio
Franklin 2.50 25.68 25.6 -0.45 0.81 -2.41 0.82

Magnum 2.50 124 33.03 -0.69 1.05 -10.87 0.82
Reliance 2.47 46 34.01 -0.02 1.06 11.26 0.79
UTI Pharma 2.50 17.38 26.55 -0.38 0.89 0.04 0.91
R-SQUARED AND BETA: -A statistical measure that represents the percentage of a fund or
security'
s movements that can be explained by movements in a benchmark index.
R-squared values range from 0 to 100. An R-squared of 100 means that all movements of
a security are completely explained by movements in the index. A high R-squared (between 85
and 100) indicates the fund'
s performance patterns have been in line with the index. A fund with
a low R-squared (70 or less) doesn’t act much like the index
M AHINDRA FINANCE
A higher R-squared value will indicate a more useful beta figure. For example, if a fund
has an R-squared value of close to 100 but has a beta below 1, it is most likely offering higher
risk-adjusted returns. A low R-squared means you should ignore the beta. This is the situation of
the Franklin and UTI.
Almost all the funds is 80% explained by their benchmark return, except the UTI, which
is 90% explained.
M AHINDRA FINANCE
SHARPE RATIO:-The Sharpe ratio or Sharpe index or Sharpe measure or reward-to-

variability ratio is a measure of the excess return (or Risk Premium) per unit of risk in an
investment asset or a trading strategy, named after William Forsyth Sharpe. Since its revision
made by the original author in 1994, it is defined as:
Where,
R is the asset return,
Rf is the return on a benchmark asset, such as the risk free rate of return,
E[R − Rf] is the expected value of the excess of the asset return over the benchmark return, and
is the standard deviation of the asset excess return.
When
comparing two assets each with the expected return E[R], the asset with the higher Sharpe ratio
gives more return for the same risk. Investors are often advised to pick investments with high
Sharpe ratios.
Therefore, according to the above figures, one would say that reliance is the most
beneficial. Although all the funds has shown negative Sharpe ratio.
M AHINDRA FINANCE
ALPHA: - A measure of performance on a risk-adjusted basis. Alpha takes the volatility (price
risk) of a mutual fund and compares its risk-adjusted performance to a benchmark index. The
excess return of the fund relative to the return of the benchmark index is a fund'
s alpha.
A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%.
Correspondingly, a similar negative alpha would indicate an underperformance of 1%.
If a CAPM analysis estimates that a portfolio should earn 10% based on the risk of the
portfolio but the portfolio actually earns 15%, the portfolio'
s alpha would be 5%. This 5% is the
excess return over what was predicted in the CAPM model.
According to above definition and facts, Reliance is the best fund as it has the most
positive alpha. And apart from this only Franklin maintain a positive beta, which is too low,
almost zero. And the rest two are way beyond their benchmark returns.
M AHINDRA FINANCE
STANDARD DEVIATION: - A measure of the dispersion of a set of data from its mean. The
more spread apart the data, the higher the deviation. Standard deviation is calculated as the
square root of variance.
In finance, standard deviation is applied to the annual rate of return of an investment to

measure the investment'
s volatility. Standard deviation is also known as historical volatility and
is used by investors as a gauge for the amount of expected volatility.
Standard deviation is a statistical measurement that sheds light on historical volatility.

For example, a volatile stock will have a high standard deviation while the deviation of a stable
blue chip stock will be lower. A large dispersion tells us how much the return on the fund is
deviating from the expected normal returns.
Almost all the funds are deviating from its expected normal rate of returns by 25%.
M AHINDRA FINANCE
PORTFOLIO TURNOVER AND EXPENSE RATIO: - Another two parameters important for
fund management are portfolio turnover ratio and expense ratio. Portfolio turnover is calculated
by taking either the total amount of new securities purchased or the amount of securities sold,
whichever is less during a year divided by the total net asset value (NAV) of the fund. A ratio of
100% means that fund changes its portfolio once over the year.
A firm with a high portfolio turnover rate will incur more transaction costs than a fund
with a lower rate. Unless the superior asset selection renders benefits that offset the added
transaction costs they cause,
A less active trading posture may generate higher fund returns.
Again, an expense ratio is determined considering a fund'
s annual operating expenses
divided by the average value of its assets under management. Though expense ratio does not
reflect the fund'
s trading expenses, still it is important since operating expenses are taken out of a
fund'
s assets and lower the return to investors.
M AHINDRA FINANCE
Here, SBI scores despite having a high portfolio turnover ratio OF 124; it maintains the
expense ratio almost equal to its peers, the reason being that of its superior asset allocation,
which provides more returns than its cost involved in portfolio churning. Reliance'
s transactions
cost is also high but remains attractive for its low expense ratio. UTI and Franklin, on the other
hand, have a high expense ratio despite their low portfolio turnover ratio.
M AHINDRA FINANCE
CONCLUSION AND RECOMMENDATIONS

FRANKLIN AND RELIANCE - FUNDS FOR ALL SEASONS: - Both the funds have
capitalized the right opportunities by frequently churning the portfolio, be it in stocks or sectors.
This in turn helped the fund to protect its downside in short term as well as providing higher
return in long term. The fund also maintained a balanced approach in its asset allocation among
different sectors. So, with a multi cap strategy, good diversified portfolio and long performance
record, the fund becomes worthy for all kinds of investors.
UTI – FUND WITH CONSERVATIVE APPROACH AND CONSISTENT RETURNS: - Its

sector allocation is different from other funds and invested more in large cap stocks. This
different approach helped the fund to contain the downside and provide a consistent return over
various time periods despite its low portfolio turnover ratio. Although the large amount of cash
holding and investment in debt helped the fund to protect the downside and thus the fund
remained stable and safer over long periods.
SBI MAGNUM TAX GAIN SCHEME GROWTH - OLDEST & MATURED PLAYER: - The
fund manager mostly focused on mid cap segment and maintained the buy and sell strategy,
which is clear from its highest portfolio turnover ratio. But selling and buying a large number of
stocks in portfolio, impacted its performance negatively. Although the large amount of cash
holding helped the fund to protect the downside and thus the fund remained stable and safer over
long periods. So, the fund is worthy for conservative investors.
M AHINDRA FINANCE
INVESTOR SURVEY FINDINGS – SECONDARY PROJECT

Q. What is the age of respondents, and sector in which they are employed?
20-30 30-40 40-50 50-60 more
than 60
49 76 43 22 10
Private Govt.
163 37
Of the people surveyed, most of the peoples are of younger group say 20-40, so the result
will be basically driven by the young generation thinking.24% are the age group of 20-30years,
38% are of 30-40years.While age group of 40-50 and 50-60 comprises of only 22% and 11%
respectively.
Most or we can say all most all the people surveyed are working in some private firm. As
the area we choose for the survey in Gurgaon is Udyog Vihar, where we basically had private
firms.
M AHINDRA FINANCE
Q. What is the annual income of the respondents?

up to 1.5 lacs 1.5 lacs to 3 lacs 3 lacs to 5 lacs 5 lacs and above
32 82 54 32
The income group of people surveyed lies mostly up to 3 lacs. This is the middle class or
average earner income group. So, the result of the survey is basically to deal with the middle
class people or income class people. About 16% people earn less than 1.5 lacs, and this is going
to affect the result of the survey as these people does not has money to invest anywhere, so had
little or no knowledge of MF’s or any investment option. Major portion of population (41%) lies
in average earning group of 1.5lacs to 3 lacs
M AHINDRA FINANCE
Q.Which types of instrument you preferred for investment?

Insurance Mutual Fund Gold or PPF or Post Stock Market
Office
26 65 72 25
This graph shows that still many people prefer the safest mode of investment to some
extent. While insurance remain one of the leading sector but due to presence of same investment
plan as of insurance with additional benefit, its demand is decreasing. And only a few people are
interested in stock market. Where a bunch of people is in Mutual Fund and the main reason for
this is to save tax.
M AHINDRA FINANCE
Q. How much did the respondent save monthly?

1% to 5% 5% to 10% 10% to 15% 15% to 20% 20% and
above
63 84 20 13 20
As already stated above that the people surveyed consists of mainly service class people,
so the result here is, as chance of saving money is far too less for these income class people. As
their income is almost goes in the basic necessities of life. Around 70% of people save only up to
10%.
M AHINDRA FINANCE
Q. How much rate of return you get from investment?

0% to 5% 5% to 10% 10% to 15% 15% and above
12 121 47 20
As already we have seen that, still the most preferred mode of investment is Post
office Deposits, Fixed deposits etc. So the return they get from their investment should be around
8-10%, so here it is, most of the peoples has the return of about 10 % only.
While people investing in share market and mutual fund gets a return of 10-15% and even more
that 15% return.
M AHINDRA FINANCE
Q. Do you have a complete exposure of Mutual Funds?

Yes No
126 74
Mutual funds are gaining importance as an investment option in India. It is still in

its growth period. Around 2/3rd of the people are fully aware of the Mutual Fund as an
Investment option.
Q. Are you aware of different types of Mutual Funds available?

Close/Open Load/No Load ELSS
58 45 97
Still the knowledge of the Mutual fund to the investor is not up to the mark. It
needs to be conveyed. But a major part of people are aware of traditional ELSS investment
option. As this is mainly for the tax saving.
M AHINDRA FINANCE
Q. Did you know about SIP and Lump sum type of investment options?
SIP Lump sum
123 190
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Almost all the people are aware of the concept of SIP and Lump sum investment. Out of
200 peoples 123 people knows the logic of SIP and as Lump sum is the traditional kind of
investment so almost everybody was aware of it. So, there is a need of a little effort for SIP.
M AHINDRA FINANCE
Q. How much risk can you take while investing?

0% to 10% 10% to 20% 20% to 30% 30% and above
87 55 37 21
As already stated that the people surveyed consists of service class people, so is the risk appetite
of the people is. 43% people says that they can take a risk up to 10% of their hard earn money.
Whereas for 10% to 20% only 23 % agrees and this figures come down as the risk increases. The
people who agree to take risk more than 20% are those who have salary up to 10 lakhs.
M AHINDRA FINANCE
Q. How would or rate advantage of mutual Fund regarding the Risk reduction?
Least No effect Most
43 67 90
When asked about the risk class of Mutual fund, 45% people says that it reduces the risk
of investment whereas 34% says they did not feel any risk reduction theme in Mutual Fund
whereas 21 % says it does not reduces the risk. From the above question it is clear that some of
the peoples who said earlier that they had knowledge of Mutual funds are fake, because if that
were the case then the result of this might be somewhat different.
M AHINDRA FINANCE
Q. Did you ever hear the name of Mahindra finance pvt? Ltd as a Mutual Fund
Distributor?
Yes No
32 168
Most of the people have not heard the name of the Mahindra finance as a Mutual Fund
Distributor. So the Mahindra Finance has to work hard in this regard.
M AHINDRA FINANCE
CONCLUSION OF SURVEY
1. First and foremost thing is the reason why the Mahindra Finance conducted this survey
was to create awareness about Mahindra Finance as a Financial Institute, and it was find
out by the survey that Mahindra finance needs to put more efforts in this regards.
2. Peoples are still having a lot of faith in traditional Deposits like Bank Deposits, Post
Office Deposits.
i.e. the investor is not ready to take risk, and the person who are taking risk are
generally taking a high level risk and invests directly in the share market.
So a program must be started stating about the benefits of Mutual Funds
3. The awareness about the Mutual Fund is also not proper among the investors. They even
do not know about the risk diversification of Mutual Fund, as results contradict.
4. The only thing they know about Mutual Fund is as tax saving instrument, but this is not
the actual thing, Mutual Fund in itself is a broad term.
M AHINDRA FINANCE
WORK DONE AT MAHINDRA: - WEEKLY ASSIGNMENTS
WEEK 1 TO WEEK 4 (I.E. FROM 24TH FEBRUARY TO 15TH MARCH): - In the starting of
four weeks we were went to the field for creating awareness about the Mahindra Finance as a
Mutual Fund Distributor and general awareness about the Mutual Fund and other investment
funds.
And we were also asked to source the applications from the potential customers.
WEEK 5(16TH MARCH TO 22MARCH): -In the next week we were given 3 customers of
whose portfolio is supposed to be analyzed. I got around 10 portfolio (of 2 customers only-max.
among my peers). Apart from this we were given a set of questions related to MF to be submitted
on the same date.
I am attaching a sample of analysis, the way how I done it.
Analysis of Portfolio
Investor Name: Abhay Pandey Folio No: 3978130/05
Fund Name: ICICI Prudential Infrastructure Fund-Growth
Investment Objective: To provide capital appreciation and income distribution to unit holders
by investing predominantly in equity/equity related securities of the companies belonging to
infrastructure development and the balance in debt securities and money market instruments
including call money.
Plan and Options: Growth and Bonus Options Benchmark index: S & P CNX Nifty
Type of Investment: Systematic Investment Plan (Amount – Rs. 1,000)
Table 1.i a): History of Investment of Investor
Transaction Date Rate Units Amount (Rs.) Latest NAV Date Balance Units
7/28/2008 24.93 40.112 1000 17-Mar-09 40.112
8/25/2008 25.34 39.463 1000 17-Mar-09 79.576
9/25/2008 23.89 41.859 1000 17-Mar-09 121.434
10/27/2008 14.43 69.300 1000 17-Mar-09 190.734
11/25/2008 14.95 66.890 1000 17-Mar-09 257.624
12/26/2008 17.02 58.754 1000 17-Mar-09 316.378
2/20/2009 16.54 120.919 2000 17-Mar-09 437.297
Balance 437.297
M AHINDRA FINANCE
Table 1.i b) Present Status

Latest Present Value Not. P/L (Rs.) Age Abs. Return (%) Sim. Ann. Return (%)
16.08 645.01 -355 232 -35.50 -55.85
16.08 1279.58 -365 204 -36.54 -65.38
16.08 1952.66 -327 173 -32.69 -68.97
16.08 3067.01 114 141 11.43 29.60
16.08 4142.59 76 112 7.56 24.63
16.08 5087.36 -55 81 -5.52 -24.89
16.08 7031.74 -56 25 -2.78 -40.60
Balance -968 124 -19.61 -57.72
From the above table, it is clear that the person is suffering a loss of Rs. 968.
But if would have invested in UTI Infrastructure Fund, Then the case will be as follows
Table 1.ii a) If he had invested in UTI then his holding history will be as follows
7/28/2008 30.56 32.723 1000 17-Mar-09 32.723
8/25/2008 30.58 32.701 1000 17-Mar-09 65.424
9/25/2008 28.46 35.137 1000 17-Mar-09 100.561
10/27/2008 19.35 51.680 1000 17-Mar-09 152.240
11/25/2008 19.72 50.710 1000 17-Mar-09 202.950
12/26/2008 20.88 47.893 1000 17-Mar-09 250.843
2/20/2009 20.16 99.206 2000 17-Mar-09 350.049
Table 1.ii b) If invested in UTI then his present status would be as follows
Latest Present Value Not. P/L (Rs.) Age Abs. Return (%) Sim. Ann. Return (%)
19.98 653.80 -346 232 -34.62 -54.47
19.98 1307.16 -347 204 -34.66 -62.02
19.98 2009.20 -298 173 -29.80 -62.86
19.98 3041.76 33 141 3.26 8.43
19.98 4054.94 13 112 1.32 4.30
19.98 5011.84 -43 81 -4.31 -19.42
19.98 6993.98 -18 25 -0.89 -13.04
Balance -1006
M AHINDRA FINANCE
But if would have invested in TATA Infrastructure Fund, Then the case will be as follows
Table 1.iii a) If he had invested in TATA then his holding history will be as follows
7/28/2008 9.4175 106.185 1000 17-Mar-09 106.185
8/25/2008 9.2472 108.141 1000 17-Mar-09 214.326
9/25/2008 8.6257 115.933 1000 17-Mar-09 330.259
10/27/2008 6.3879 156.546 1000 17-Mar-09 486.805
11/25/2008 5.9977 166.731 1000 17-Mar-09 653.535
12/26/2008 6.4406 155.265 1000 17-Mar-09 808.800
2/20/2009 6.1279 326.376 2000 17-Mar-09 1135.176
1135.176
Table 1.iii b) If invested in TATA then his present status would be as follows
Latest NAV Present Value Not. P/L Age Abs. Return Sim. Ann.
6.2366 662.24 -338 232 -33.78 -53.14
6.2366 1336.67 -326 204 -32.56 -58.25
6.2366 2059.69 -277 173 -27.70 -58.44
6.2366 3036.01 -24 141 -2.37 -6.13
6.2366 4075.84 40 112 3.98 12.98
6.2366 5044.16 -32 81 -3.17 -14.27
6.2366 7079.64 35 25 1.77 25.90
-920 124
Comparison of different Infrastructure Funds w.r.t. Mr. Pandey, summary
Table 1.iv)
Total Investment Present Value Profit/Loss
ICICI Infrastructure 8000 7031.74 -968.26
UTI Infrastructure 8000 6993.98 1006.02
TATA 8000 7079.64 921.36
So, it can be seen that Mr. Pandey has suffered a minimum loss, if he invested in TATA
Infrastructure.
M AHINDRA FINANCE
Table 1.v) Return Comparison with Bench Mark

last 6 months Last 1 year Last 3 year Since inception
Infra -33.97% -46.90% 7.39% 15.12%
S & P CNX Nifty -35.57% -47.54% -3.41% 4.40%
It can be seen that ICICI Infrastructure has outperformed its benchmark S & P CNX Nifty.
Comparison with its peers

Table 1.vi)
14 days 1 month 3 months 1 year 3 yrs* Inception*
TATA Infrastructure 10.25 19.87 14.82 -26.51 - -25.99
UTI Infrastructure 11.54 21.28 17.35 -32.26 -0.17 19.74
ICICI Infrastructure 10.85 23.64 20.97 -28.14 9.24 20.42
M AHINDRA FINANCE
As we have already seen that in case of Mr. Pandey, TATA Infrastructure yields minimum
return. But it was only a time horizon of 8 months i.e. from July 2008 to February 2008. As we
can see in the above table, it will be clear that ICICI had not only outperformed its benchmark
index but is also best and yields highest returns among its peers.
Table 1.vii) Volatility Measures

Beta R Squared Sharpe Ratio Portfolio Turnover
Jun 0.9 0.67 0.11 1.4
Jul 1.12 0.92 0.24 2.36
Aug 1.12 0.92 0.24 2.67
Sep 0.68 0.92 0.02 1.92
Oct 1.1 0.95 0.13 1.53
Nov 1.11 0.94 0.34 1.56
Dec 0.73 0.94 -0.17 0.71
Jan 1.13 0.94 0.31 1.47
Feb 1.11 0.91 0.4 1.43
Sharpe Ratio: -Ratio is almost maintained between 0.1 and 0.2 (except after Nov.) which is
good sign, means the returns that fund gets is perfectly matched with the kind of risk taken or in
other words, better risk-adjusted returns.
Value in Nov. yields much more risk adjusted resulted, deviating from the trend.
M AHINDRA FINANCE
But in Dec. it becomes negative, which means there might be an asset which performs way
beyond its risk level.
Again in Jan the portfolio is risk adjusted to previous level.
Portfolio Turnover: -The high portfolio turnover represents that the fund manager churns its
portfolio.
R Squared: - Except in Jun. the entire portfolio almost moved with the movement of the
benchmark index.ie. Neither giving too much loss/gain as compared to benchmark. this means
the fund is less risk averse and the asset allocation is in phase with benchmark index.
Beta: - This might be a riskier fund w.r.t. to market risk. As the beta value is almost greater than
1 in almost every month.
Table 1.v) 52-week High Low

High Low
NAV 29.49 14.11
Average price at which Mr. Pandey bought 437.297 units is = (8000/437.297)=Rs18.2942

And the 52-week low is Rs 14.11 and the present price (17th March) is 16.08
So, he has still a chance to minimize its average price of buying the units. So, we will
recommend that he should top up his account.
M AHINDRA FINANCE
WEEK 6TH AND 7TH (23RD MARCH TO 5TH APRIL): - In the subsequent 2 weeks we were
given Two + One funds to sell in the market. This we have to done by the database that we have
collected in the first four weeks of field work. At that time we were asked to make a separate list
of potential customers, who shows interest. Or we can also target the business class or high
profile persons, if we have contacts.
So, I personally choose the second way to target, i.e. I targeted high profile persons. I had
contacts in various big firms like GMR constructions (Both at International and Domestic
Airport), Larsen And Turbo New Delhi, Finnacle Solution Noida, Custom Excise Department At
Bhiwadi (Rajasthan) (50 Kms from Gurgaon).
In the 6th week we were told to have at least 2 applications, and I am the only trainee
from entire DELHI region to achieve the target (Delhi region consist of about 100 trainees). In
the next week of One application I was again succeeded in completing the task.
WEEK 8TH AND 9TH (6TH APRIL TO 19TH APRIL): - In this we were asked to prepare the list
of the colleges, and were to asked to go these colleges and represent the Mahindra Finance, and
recruit students for the training purposes. This time we prepare the list and our company mentor
allotted the colleges to us.
WEEK 10TH (19TH APRIL TO 26TH APRIL):- In this week we were asked to generate the
application for the NFO of SBI Gold ETF. This time again my method was same but this time I
failed to do this.
REST OF THE WEEKS: In this week we were asked to take out application for the business of
Mahindra Finance itself, i.e. to get applications for Mahindra Finance FD. And in the last 2
weeks we were set free for our project completion with an assignment to get FD’s for Mahindra
Finance. And this time I got 2 applications, again maximum amongst my peers.
M AHINDRA FINANCE
ANNEXURE
QUESTIONNAIRE (AWARENESS REGARDING MUTUAL FUND)
Sir/Ma’am,
This questionnaire is meant for educational purposes only.
I request you to respond to the questions frankly and honestly.
Your responses will be kept strictly confidential and the names or the completed questionnaire
will not be made available to anyone.
1. Name*
2. Address
3. Age Group you belong *
20-30
30-40
40-50
50-60
60 and above
4. Gender *
Male
Female
M AHINDRA FINANCE
5. Occupation *
Govt. Sector
Private Sector
6. .Income per annum *
Up to 1.5lacs
1.5 lacs to 3.0 lacs
3.0 lacs to 5.0 lacs
5.0 lacs and above
7. Contact Number ---------------------------------------
8. At least, how much amount of money do you save from your income monthly? *
1% to 5%
5% to 10%
10% to 15%
15% to 20%
20% and above
9. Where do you invest money? *
Stock Market
Mutual Fund
Insurance
Gold or PPF or Post office

M AHINDRA FINANCE
10. What is the rate of return you are getting in your current investment option? *
0% to 5%
5% to 10%
10% to 15%
15% and above
11. Are you aware about different types of mutual funds available? *
Close/Open Ended
Load/No Load Funds
ELSS
12. Do you know about SIP & Lump Sum plan equity mutual fund (Yes/ No) *
Yes
No
13. How would you rate the advantages of equity mutual fund regarding Reduction in
Risk
1 2 3 4 5 6 7
least Most
14. How would you rate the advantages of equity mutual fund regarding Portfolio
Diversification
1 2 3 4 5 6 7
Least Most
M AHINDRA FINANCE
15. On the basis of risk-return concept how much do you think you can take risk *
0-10%
10%- 20%
20%-30%
30% and above
16. If you have an opportunity to invest money in which mode would you invest? *
Systematic Investment
Lump sum
17. Did you know SIP (Systematic Investment Plan) reduces risk? *
Yes
No
18. Are you aware about Mahindra Finance as a Mutual Fund distributor *
Yes
No
M AHINDRA FINANCE
REFERENCES
1. For studying the subtle nuances of Mutual Funds: NCFM Mutual Funds Beginners
Module, Mutual Fund by ICMR
2. For basic of Portfolio Management and Analysis: Portfolio Management by ICMR
3. For fact sheets of various funds and schemes: Websites of respective AMC’s
4. www.moneycontrol.com
5. www.valueresearchonline.com
6. www.bse.com
7. www.nse.com
8. www.mutualfundindia.com

Temporal Analysis of Pharma Fund

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Temporal Analysis of Pharma Fund

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A REPORT

TEMPORAL ANALYSIS OF PHARMACEUTICAL FUND

TEMPORAL ANALYSIS OF PHARMACEUTICAL FUND

DATE OF SUBMISSION: 16TH MAY

5. Overview and Analysis of Different Pharma Fund 33 - 44

3. UTI Pharma Fund Analysis Tables

4. Franklin Templeton Pharma Fund Analysis Tables

5. SBI Pharma Fund Analysis Tables

6. Comparative Analysis Tables

• Basis of Past Year Returns----------------------------------------------- 60

7. Investor Survey Tables----------------------------------------------------------- 72 to 81

LIST OF GRAPHS AND CHART

1. Asset Growth of Mutual Fund Industry in Every Phase----------------------------- 14

3. Risk Hierarchy of Investment options-------------------------------------------------- 21

4. Reliance Pharma Fund Analysis Graphs and Charts

6. Franklin Templeton Pharma Fund Analysis Graphs and Charts

7. SBI Pharma Fund Analysis Graphs and Charts

• Past Year Returns--------------------------------------------------------------------- 60

9. Investor Survey Graphs--------------------------------------------------------72 to 81

FOR CONSUMER SURVEY

LIMITATIONS OF THE STUDY

ABOUT MAHINDRA GROUP

ABOUT MAHINDRA FINANCE

A subsidiary of Mahindra & Mahindra Limited, it is one of India’s leading non-banking

Tied up with Maruti

Mahindra & Mahindra Financial Services Limited, a subsidiary of Mahindra &

INVESTMENT ADVISORY SERVICES

Mahindra Finance is all-encompassing of clients’ needs. So while they believe in making

MUTUAL FUND DISTRIBUTION

PERSONALIZED SERVICE: They believe in providing personalized service and individual

• Ease of viewing their portfolio on the internet

• Investment advice at their convenience

• The freedom to contact us, anywhere in India

• Access to the multiple products offered by Mahindra Finance through their

HISTORY OF MUTUAL FUNDS

FIRST PHASE - ESTABLISHMENT & GROWTH OF UNIT TRUST OF INDIA- 1964-87:

• Unit Trust of India (UTI) established on 1963 by an Act of Parliament.

SECOND PHASE - ENTRY OF PUBLIC SECTOR FUNDS – 1987-1993:

THIRD PHASE – ENTRY OF PRIVATE SECTOR FUNDS - 1993-2003:

PHASE IV - GROWTH AND CONSOLIDATION - 2004 ONWARDS

TYPES OF MUTUAL FUNDS

BENEFITS OF MUTUAL FUND INVESTMENT

LIMITATION OF MUTUAL FUND

NO TAILOR-MADE PORTFOLIOS: - Investing through mutual funds means delegation of the

RIGHTS AND OBLIGATIONS OF MUTUAL FUND INVESTORS

RISKS INVOLVED WHILE INVESTING IN MUTUAL FUNDS

TRADE OFF BETWEEN RISK AND RETURN

RISK HIERARCHY OF INVESTMENT OPTIONS

!" " " # $% & & #

DO’S AND DON’TS WHILE SELECTING A MUTUAL FUND

DOS IN SELECTING THE BEST MUTUAL FUND

DON'TS IN SELECTING BEST MUTUAL FUNDS

PURCHASING MUTUAL FUNDS

PURCHASING EXISTING MUTUAL FUND UNITS:

SELLING MUTUAL FUND

MUTUAL FUND EXPENSES

DEFINING MUTUAL FUND COSTS

LOADS:-Loads come in three forms:

o Charged when you purchase fund shares-usually class A shares, effectively

o Charged when you sell fund shares.

ONGOING ANNUAL EXPENSES

CAPITAL GAINS TAXATION

FUNDAMENTAL TERMS RELATED WITH MUTUAL FUNDS