A STUDY ON COMPARATIVE ANALYSIS ON VARIOUS MUTUAFUNDS WITH REFERENCE TO

ICICI PRUDENTIAL MUTUAL FUND

Project report submitted in partial fulfillment for the award of degree in POST GRADUATE DIPLOMA IN MANAGEMENT By T.SUDHEER Regd no: 010-012-030 PGDM 2010-2012 Under the esteemed guidance of
Mr. SUHEI SHAIK ASST MANAGER-SALES

Industry Guide & Dr. B. Ratan Reddy Professor & Faculty Guide RATAN GLOBAL BUSINESS SCHOOL, HYDERABAD Approved by AICTE, Ministry of HRD, Govt of India, New Delhi

DECLARATION
I declare that project report entitled A STUDY ON COMPARATIVE ANALYSIS OF VARIOUS MUTUAL FUNDS IN ICICI PRUDENTIALS, HYDERABAD is original and has not been submitted in part or in full for the award of any other degree or Diploma.

Place: Date:

T.SUDHEER

ACKNOWLEDGEMENT
I am very thankful to Mr. SUHEL SHAIK, Asst Manager, Sales for giving permission to do project in their organization and extending his valuable guidance throughout the study.

I am also thankful to Mr. Ravi Shekhar, Regional manager and Mr.P.V.V SYAM SUNDAR, Relationship manager for providing me the valuable information and had spent their time in completing my project.

At last express my gratitude to all those who have helped me directly or indirectly in completing this project successfully.

T.SUDHEER

ABSTRACT

The present project work A Comparative Analysis of Various Mutual Funds With Reference To Nifty is categorized in to seven chapters

Chapter: - 1 Deals with the introduction this chapter sets the objective of the study and also gives the need,
scope, Research methodology and the limitations of the study

Chapter: - 2 Deals with the introduction to the Industry profile Chapter: - 3 Deals with the Review of literature and company profile. Chapter: - 4 Deals with the analysis of the data & Interpretation Chapter: -5 Deals with findings of the study that are arrived at after making the data analysis

Chapter:-6 Deals with the suggestions of the study. Chapter:-7 Deals with the conclusions of the study.

CONTENT CHAPTER NO TITLE

1 INTRODUCTION TO TOPIC OBJECTIVES NEED AND SCOPE OF STUDY LIMITATIONS RESEARCH METHODOLOGY 3 4 5 6-18 19-38 39-44 4 DATA ANALYSIS & 5 6 7 INTERPRETATION FINDINGS SUGGESTIONS CONCLUSSION 45-75 76 77 78 2

PAGE.NO
1

2 3

INDUSTRY PROFILE LITERATURE REVIEW COMPANY PROFILE

ANNEXURE:BIBLIOGRAPHY

LIST OF TABLES
5

TABLENO
1 2

TABLE NAME
Icici prudential gilt fund - investment plan - pf option Icici prudential gilt fund - investment plan

PAGE NO
45-46 47-48

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Icici prudential income plan institutional Reliance liquid fund - treasury plan - institutional plan Reliance liquidity fund Reliance monthly income plan growth Jm nifty plus fund Jm g-sec fund - regular plan growth Jm g-sec fund - regular plan dividend Escorts gilt fund Escorts income plan Escorts liquid plan Nifty average returns Comparative average returns of funds Comparative risk of funds Comparative study on fund returns to nifty returns Comparative study on fund risk to nifty risk Comparative study on fund average returns to fund risk Ranks according to average returns Ranks according to risk

49-50 51-52 53-54 55-56 57-58 59-60 61-62 63-64 65-66 67-68 69 70 71 72 73 74 75 75

CHAPTER - I

INTRODUCTION
Investment in a portfolio can take different forms. An investor can either invest securities, or can invest through an investment company, also referred to as mutual fund. Mutual fund are financial intermediaries, which collect the savings of investors and invest them in a large and well-diversified portfolio of securities such as money market instruments, corporate and government bonds and equity shares of joint stock companies. A mutual fund is a pool of commingles funds invested by different investors, who have no contact with each other. Mutual funds pools money from a cross section of investors by issuing units, construct a diversified portfolio of stocks, bonds and other investment instruments and invest the same in capital market. Mutual funds are conceived as instructions for providing small investors with avenues of investments in the capital market. Since small investors generally do not have adequate time, knowledge, experience and resources for directly accessing the capital market, them have to rely on and intermediaries, which undertakes informed investment decisions and provides consequential benefits of professional expertise. Except the union trust of India, all mutual funds in India are organized and set up under the Indian Trust Act as Trust. The primary objective of all mutual funds is to provide better returns to investors by minimizing the risk associated with capital market instruments. All the mutual funds aim at achieving one or more of the following. Providing a steady flow of income. Providing high capital appreciation. Providing capital appreciaton with income.
Providing income or capital appreciation with tax benefits.

OBJECTIVES

To study performance of a selected mutual funds To compare the fund performance with respect to Nifty To make suggestions to investors based on performance anal

NEED OF THE STUDY

Many small investors are tempted to invest in the markets these days. But they do not have the knowledge and expertise to take decisions. More over them have limited funds and time. Therefore mutual funds are a good option for them. This study shows the performance of a few funds and compares it with nifty .

SCOPE OF THE STUDY

The historical performance of the fund is compared with performance of the market (Nifty). Both the historical data of the fund and the market is used for analysis. The internal factors contributing for the performance of this specific fund is not include in the scope of the study. The scope of the study is confined to the performance of this specific fund in comparison to the prevailing market conditions. The market being a major factor affecting the mutual funds performance, the market plays a critical role despite the precautions 9

taken by the fund managers. The care taken by the fund mangers does not fall in the scope of the study. The scope of the study is limited to the performance of the fund in the existing market conditions.

LIMITATIONS
The present project work has been studied to analysis to study on A Comparative Study of Selected Mutual Funds With Reference To Nifty. The following limitation has been founded during the study of project 1. The study is limited only to the analysis of different schemes and its suitability to different investors according to their risk taking ability. 2. The study is based on secondary data available fact sheets, websites and other books as primary data was not accessible. 3. Data pertaining to 2008-2009 was considered for analysis 4. The sample size chosen for the project study is not sufficient enough to give suggestions to investors.

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RESEARCH METHODOLOGY Sources of data:

For the project study the data has been collected from the secondary sources like websites, fact sheets e.t.c,

Research design:
The project has been done by following 12 different funds Between 01-04-2008 to 31-03-2009 (icici prudential gilt fund - investment plan - pf option , icici prudential gilt fund - investment plan , icici prudential income plan institutional , reliance liquid fund - treasury plan - institutional plan, reliance liquidity fund , reliance monthly income plan growth , jm nifty plus fund , jm g-sec fund - regular plan growth, jm gsec fund - regular plan dividend , escorts gilt fund , escorts income plan , escorts liquid plan) The risk and return for the above prescribed funds are Calculated and compared with risk and returns of nifty index

Data analysis:
The present project work has been analyzed using time series analysis with The formulas applied in the calculations are as follows Closing price opening price RETURNS = Opening price graphical presentation.

*100

Standard deviation =

11

CHAPTER II

12

INDUTSTRY PROFILEMUTUAL FUNDS INDUSTRY IN INDIA

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had seen a dramatic imporvements, both qualitywise as well as quantitywise. Before, the monopoly of the market had seen an ending phase, the Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling.

13

The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under.

FIRST PHASE - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

SECOND PHASE - 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by 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 in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under management.

THIRD PHASE - 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS)

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there 14

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 fund.

FOURTH PHASE - SINCE FEBRUARY 2003

This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

The major players in the Indian Mutual Fund Industry are:

TYPES OF MUTUAL FUNDS

General Classification of Mutual Funds Open-end Funds / Closed-end Funds Open-end Funds:
Funds that can sell and purchase units at any point in time are classified as Open-end Funds. The fund size (corpus) of an open-end fund is variable (keeps changing) because of continuous selling (to investors) and repurchases (from the investors) by the fund. An open-end fund is not required to keep selling new units to the investors at all times but is required to always repurchase, when an investor wants to sell his units. The NAV of an open-end fund is calculated every day.

15

Closed-end Funds:
Funds that can sell a fixed number of units only during the New Fund Offer (NFO) period are known as Closedend Funds. The corpus of a Closed-end Fund remains unchanged at all times. After the closure of the offer, buying and redemption of units by the investors directly from the Funds is not allowed. However, to protect the interests of the investors, SEBI provides investors with two avenues to liquidate their positions: 1. Closed-end Funds are listed on the stock exchanges where investors can buy/sell units from/to each other. The trading is generally done at a discount to the NAV of the scheme. The NAV of a closed-end fund is computed on a weekly basis (updated every Thursday). 2. Closed-end Funds may also offer "buy-back of units" to the unit holders. In this case, the corpus of the Fund and its outstanding units do get changed.

Load Funds/no-load funds

Load Funds:
Mutual Funds incur various expenses on marketing, distribution, advertising, portfolio churning, fund managers salary etc. Many funds recover these expenses from the investors in the form of load. These funds are known as Load Funds. A load fund may impose following types of loads on the investors:

Entry Load Also known as Front-end load, it refers to the load charged to an investor at the time of
his entry into a scheme. Entry load is deducted from the investors contribution amount to the fund.

Exit Load Also known as Back-end load, these charges are imposed on an investor when he
redeems his units (exits from the scheme). Exit load is deducted from the redemption proceeds to an outgoing investor.

Deferred Load Deferred load is charged to the scheme over a period of time. Contingent Deferred Sales Charge (CDSS) In some schemes, the percentage of exit load
reduces as the investor stays longer with the fund. This type of load is known as Contingent Deferred Sales Charge.

No-Load Fund:
All those funds that do not charge any of the above mentioned loads are known as No-load Funds.

Tax-exempt Funds/ Non-Tax-exempt Funds

16

Tax-exempt Funds:
Funds that invest in securities free from tax are known as Tax-exempt Funds. All open-end equity oriented funds are exempt from distribution tax (tax for distributing income to investors). Long term capital gains and dividend income in the hands of investors are tax-free.

Non-Tax-exempt Funds:
Funds that invest in taxable securities are known as Non-Tax-exempt Funds. In India, all funds, except open-end equity oriented funds are liable to pay tax on distribution income. Profits arising out of sale of units by an investor within 12 months of purchase are categorized as short-term capital gains, which are taxable. Sale of units of an equity oriented fund is subject to Securities Transaction Tax (STT). STT is deducted from the redemption proceeds to an investor

BROAD MUTUAL FUND TYPES

17

1. Equity Funds:
Equity funds are considered to be the more risky funds as compared to other fund types, but they also provide higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest for long term i.e. for 3 years or more. There are different types of equity funds each falling into different risk bracket. In the order of decreasing risk level, there are following types of equity funds: a. Aggressive Growth Funds: In Aggressive Growth Funds, fund managers aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive Growth Funds become more volatile and thus, are prone to higher risk than other equity funds. b. Growth Funds: Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are 18

expected to outperform the market in the future. Without entirely adopting speculative strategies, Growth Funds invest in those companies that are expected to post above average earnings in the future. c.

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

1. Sector Funds: Equity funds that invest in a particular sector/industry of the market are known as Sector
Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer Goods) which is why they are more risky than equity funds that invest in multiple sectors.

2. Foreign Securities Funds: Foreign Securities Equity Funds have the option to invest in one or more
foreign companies. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk.

3. Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower market capitalization
than large capitalization companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap companies is less than that of big, blue chip companies (less than Rs. 2500 crores but more than Rs. 500 crores) and Small-Cap companies have market capitalization of less than Rs. 500 crores. Market Capitalization of a company can be calculated by multiplying the market price of the company's share by the total number of its outstanding shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of LargeCap Companies which gives rise to volatility in share prices of these companies and consequently, investment gets risky.

4. Diversified Equity Funds: Except for a small portion of investment in liquid money market, diversified
equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well diversified and reduce sector-specific or company-specific risk. However, like all other funds diversified equity funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity Linked Savings Schemes (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption by the

19

investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which he may have received any tax exemption(s) in the past. d. Equity Index Funds: Equity Index Funds have the objective to match the performance of a specific stock market index. The portfolio of these funds comprises of the same companies that form the index and is constituted in the same proportion as the index. Equity index funds that follow broad indices (like S&P CNX Nifty, Sensex) are e. Less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX Bank Index etc). Narrow indices are less diversified and therefore, are more risky.

2.Debt/IncomeFunds:
Funds that invest in medium to long-term debt instruments issued by private companies, banks, financial institutions, governments and other entities belonging to various sectors (like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors. In order to ensure regular income to investors, debt (or income) funds distribute large fraction of their surplus to investors. Although debt securities are generally less risky than equities, they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment. To minimize the risk of default, debt funds usually invest in securities from issuers who are rated by credit rating agencies and are considered to be of "Investment Grade". Debt funds that target high returns are more risky. Based on different investment objectives, there can be following types of debt funds: a. Diversified Debt Funds: Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. The best feature of diversified debt funds is that investments are properly diversified into all sectors which results in risk reduction. Any loss incurred, on account of default by a debt issuer, is shared by all investors which further reduces risk for an individual investor. b. Focused Debt Funds: Unlike diversified debt funds, focused debt funds are narrow focus funds that are confined to investments in selective debt securities, issued by companies of a specific sector or industry or origin. Some examples of focused debt funds are sector, specialized and offshore debt funds, funds that invest only in Tax Free Infrastructure or Municipal Bonds. Because of their narrow orientation, focused debt funds are more risky as compared to diversified debt funds. Although not yet available in India, these funds are conceivable and may be offered to investors very soon.

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c. Assured Return Funds: Although it is not necessary that a fund will meet its objectives or provide assured returns to investors, but there can be funds that come with a lock-in period and offer assurance of annual returns to investors during the lock-in period. Any shortfall in returns is suffered by the sponsors or the Asset Management Companies (AMCs). These funds are generally debt funds and provide investors with a low-risk investment opportunity. However, the security of investments depends upon the net worth of the guarantor (whose name is specified in advance on the offer document). To safeguard the interests of investors, SEBI permits only those funds to offer assured return schemes whose sponsors have adequate net-worth to guarantee returns in the future. In the past, UTI had offered assured return schemes (i.e. Monthly Income Plans of UTI) that assured specified returns to investors in the future. UTI was not able to fulfill its promises and faced large shortfalls in returns. Eventually, government had to intervene and took over UTI's payment obligations on itself. Currently, no AMC in India offers assured return schemes to investors, though possible. d. Fixed Term Plan Series: Fixed Term Plan Series usually are closed-end schemes having short term maturity period (of less than one year) that offer a series of plans and issue units to investors at regular intervals. Unlike closed-end funds, fixed term plans are not listed on the exchanges. Fixed term plan series usually invest in debt / income schemes and target short-term investors. The objective of fixed term plan schemes is to e. Gratify investors by generating some expected returns in a short period. f. 1.Open-end 2.Closed-end 3.GiltFunds Also known as Government Securities in India, Gilt Funds invest in government papers (named dated securities) having medium to long term maturity period. Issued by the Government of India, these investments have little credit risk (risk of default) and provide safety of principal to the investors. However, like all debt funds, gilt funds too are exposed to interest rate risk. Interest rates and prices of debt securities are inversely related and any change in the interest rates results in a change in the NAV of debt/gilt funds in an opposite direction.

4. Money Market/Liquid Funds:

Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt instruments. These securities are highly liquid and provide safety of investment, thus making money market / liquid funds the safest investment option when compared with other mutual fund types. However, even money market / liquid funds are exposed to the interest rate risk. The typical investment options for liquid funds include Treasury Bills (issued by governments), Commercial papers (issued by companies) and Certificates of Deposit (issued by banks). 21

5. Hybrid Funds:
As the name suggests, hybrid funds are those funds whose portfolio includes a blend of equities, debts and money market securities. Hybrid funds have an equal proportion of debt and equity in their portfolio. There are following types of hybrid funds in India: a. Balanced Funds The portfolio of balanced funds include assets like debt securities, convertible securities, and equity and preference shares held in a relatively equal proportion. The objectives of balanced funds are to reward investors with a regular income, moderate capital appreciation and at the same time minimizing the risk of capital erosion. Balanced funds are appropriate for conservative investors having a long term investment horizon. b. Growth-and-Income Funds Funds that combine features of growth funds and income funds are known as Growth-and-Income Funds. These funds invest in companies having potential for capital appreciation and those known for issuing high dividends. The level of risks involved in these funds is lower than growth funds and higher than income funds.

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

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

8.ExchangeTradedFunds(ETF):
Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-end mutual fund. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock at index linked prices. The biggest advantage offered by these funds is that they offer diversification, flexibility of holding a single share (tradable at index linked prices) at the same time. Recently introduced in India, these funds are quite popular abroad. 22

9. Fund of Funds:
Mutual funds that do not invest in financial or physical assets, but do invest in other mutual fund schemes offered by different AMCs, are known as Fund of Funds. Fund of Funds maintain a portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market instruments or non financial assets. Fund of Funds provide investors with an added advantage of diversifying into different mutual fund schemes with even a small amount of investment, which further helps in diversification of risks. However, the expenses of Fund of Funds are quite high on account of compounding expenses of investments into different mutual fund schemes.

Risk Hierarchy of Different Mutual Funds:

Thus, different mutual fund schemes are exposed to different levels of risk and investors should know the level of risks associated with these schemes before investing. The graphical representation hereunder provides a clearer picture of the relationship between mutual funds and levels of risk associated with these funds:

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The National Stock Exchange of India Limited

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The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges. It recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operationsinDerivativessegmentcommencedinJune2000. The following years witnessed rapid development of Indian capital market with introduction of internet trading, Exchange traded funds (ETF), stock derivatives and the first volatility index - IndiaVIXinApril2008,byNSE. August 2008 saw introduction of Currency derivatives in India with the launch of Currency Futures in USD INR by NSE. Interest Rate Futures was introduced for the first time in India by NSE on 31st August 2009, exactly after one year of the launch of Currency Futures.

With this, now both the retail and institutional investors can participate in equities, equity derivatives, currency and interest rate derivatives, giving them wide range of products to take care of their evolving needs.

Group

25

NSCCL

NCCL

NSETECH

DotEx Intl. Ltd. IISL NSE.IT

NSE Milestones

26

November 1992

Incorporation

27

April 1993 May 1993 June 1994 November 1994 March 1995 April 1995 June 1995 July 1995 October 1995 April 1996 April 1996 June 1996 November 1996 November 1996 December 1996 December 1996 December 1996 February 1997 November 1997 May 1998 May 1998 July 1998 August 1998 February 1999 April 1999 October 1999 January 2000 February 2000 June 2000 September 2000

Recognition as a stock exchange Formulation of business plan Wholesale Debt Market segment goes live Capital Market (Equities) segment goes live Establishment of Investor Grievance Cell Establishment of NSCCL, the first Clearing Corporation Introduction of centralized insurance cover for all trading members Establishment of Investor Protection Fund Became largest stock exchange in the country Commencement of clearing and settlement by NSCCL Launch of S&P CNX Nifty Establishment of Settlement Guarantee Fund Setting up of National Securities Depository Limited, first depository in India, co-promoted by NSE Best IT Usage award by Computer Society of India Commencement of trading/settlement in dematerialised securities Dataquest award for Top IT User Launch of CNX Nifty Junior Regional clearing facility goes live Best IT Usage award by Computer Society of India Promotion of joint venture, India Index Services & Products Limited (IISL) Launch of NSE's Web-site: www.nse.co.in Launch of NSE's Certification Programme in Financial Market CYBER CORPORATE OF THE YEAR 1998 award Launch of Automated Lending and Borrowing Mechanism CHIP Web Award by CHIP magazine Setting up of NSE.IT Mr. subhash kumar Launch of NSE Research Initiative Commencement of Internet Trading Commencement of Derivatives Trading (Index Futures) Launch of 'Zero Coupon Yield Curve' 28

November 2000 December 2000 June 2001 July 2001 November 2001 December 2001 January 2002 May 2002 October 2002 January 2003 June 2003 August 2003 June 2004 August 2004 March 2005 June 2005 December 2006 January 2007 March 2007 June 2007 October 2007 January 2008 March 2008 April 2008 April 2008 August 2008 August 2009 November 2009 December 2009

Launch of Broker Plaza by Dotex International, a joint venture between NSE.IT Ltd. and iflex Solutions Ltd. Commencement of WAP trading Commencement of trading in Index Options Commencement of trading in Options on Individual Securities Commencement of trading in Futures on Individual Securities Launch of NSE VaR for Government Securities Launch of Exchange Traded Funds (ETFs) NSE wins the Wharton-Infosys Business Transformation Award in the Organization-wide Transformation category Launch of NSE Government Securities Index Commencement of trading in Retail Debt Market Launch of Interest Rate Futures Launch of Futures & options in CNXIT Index Launch of STP Interoperability Launch of NSEs electronic interface for listed companies India Innovation Award by EMPI Business School, New Delhi Launch of Futures & options in BANK Nifty Index 'Derivative Exchange of the Year', by Asia Risk magazine Launch of NSE CNBC TV 18 media centre NSE, CRISIL announce launch of IndiaBondWatch.com NSE launches derivatives on Nifty Junior & CNX 100 NSE launches derivatives on Nifty Midcap 50 Introduction of Mini Nifty derivative contracts on 1st January 2008 Introduction of long term option contracts on S&P CNX Nifty Index Launch of India VIX Launch of Securities Lending & Borrowing Scheme Launch of Currency Derivatives Launch of Interest Rate Futures Launch of Mutual Fund Service System Commencement of settlement of corporate bonds 29

February 2010

Launch of Currency Futures on additional currency pairs

Technology
Across the globe, developments in information, communication and network technologies have created paradigm shifts in the securities market operations. Technology has enabled organizations to build new sources of competitive advantage, bring about innovations in products and services, and to provide for new business opportunities. Stock exchanges all over the world have realized the potential of IT and have moved over to electronic trading systems, which are cheaper, have wider reach and provide a better mechanism for trade and post trade execution.

NSE believes that technology will continue to provide the necessary impetus for the organization to retain its competitive edge and ensure timeliness and satisfaction in customer service. In recognition of the fact that technology will continue to redefine the shape of the securities industry, NSE stresses on innovation and sustained investment in technology to remain ahead of competition. NSE's IT set-up is the largest by any company in India. It uses satellite communication technology to energies participation from around 200 cities spread all over the country. In the recent past, capacity enhancement measures were taken up in regard to the trading systems so as to effectively meet the requirements of increased users and associated trading loads. With up gradation of trading hardware, NSE today can handle up to 15 million trades per day in Capital Market segment. In order to capitalize on in-house expertise in technology, NSE set up a separate company, NSE Technology Services Ltd. which is expected to provide a platform for taking up all IT related assignments of NSE. NEAT is a state-of-the-art client server based application. At the server end, all trading information is stored in an in-memory database to achieve minimum response time and maximum system availability for users. The trading server software runs on a fault tolerant STRATUS main frame computer while the client software runs under Windows on PCs.

30

The telecommunications network which was using X.25 protocol and is the backbone of the automated trading system is being upgraded to use the more popular and modern IP Protocol. This is a major project involving use of X.25 and IP in parallel and ensuring smooth transition to IP. Each trading member trades on the NSE with other members through a PC located in the trading member's office, anywhere in India. The trading members on the various market segments such as CM / F&O, WDM are linked to the central computer at the NSE through dedicated leased lines and VSAT terminals. The Exchange uses powerful RISC -based UNIX servers, procured from HP for the back office processing. The latest software platforms like ORACLE 10g RDBMS, SQL/ORACLE FORMS Front - Ends, etc. have been used for the Exchange applications. The Exchange currently manages its data centre operations, system and database administration, design and development of in-house systems and design and implementationoftelecommunicationsolutions.

NSE is one of the largest interactive VSAT based stock exchanges in the world. Today it supports more than 2000 VSATs and 3000 leased lines across the country. The NSE- network is the largest private wide area network in the country and the first extended C- Band VSAT network in the world. Currently more than 9000 users are trading on the real time-online NSE application. There are over 15 large computer systems which include non-stop fault-tolerant computers and high end UNIX servers, operational under one roof to support the NSE applications. This coupled with the nation wide VSAT network makes NSE the country's largest InformationTechnologyuser. In an ongoing effort to improve NSE's infrastructure, a corporate network has been implemented, connecting all the offices at Mumbai, Delhi, Calcutta and Chennai. This corporate network enables speedy interoffice communications and data and voice connectivity between offices.

In keeping with the current trend, NSE has gone online on the Internet. Apart from having multiple internet links and our own domain for internal browsing and e-mail purposes, we have also set up our own Web site. Currently, NSE is displaying its live stock quotes on the web site(www.nseindia.com)whichareupdatedonline. NSE today allows members to provide internet trading facility to their clients through the use of NOW (NSE on web), a shared web infrastructure.

31

Indices
NSE also set up as index services firm known as India Index Services & Products Limited (IISL) and has launched several stock indices, including

S&P CNX Nifty(Standard & Poor's CRISIL NSE Index) CNX Nifty Junior CNX 100 (= S&P CNX Nifty + CNX Nifty Junior) S&P CNX 500 (= CNX 100 + 400 major players across 72 industries) CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)

CHAPTER III

32

LITERATURE SURVEY
33

INTRODUCTION TO MUTUAL FUND

Mutual fund is a trust that pools money from a group of investors (sharing common financial goals) and invest the money thus collected into asset classes that match the stated investment objectives of the scheme. Since the stated investment objective of a mutual fund scheme generally forms the basis for an investor's decision to contribute money to the pool, a mutual fund can not deviate from its stated objectives at any point of time. Every Mutual Fund is managed by a fund manager, who using his investment management skills and necessary research works ensures much better return than what an investor can manage on his own. The capital appreciation and other incomes earned from these investments are passed on to the investors (also known as unit holders) in proportion of the number of units they own.

34

When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors.

For example:
A. If the market value of the assets of a fund is Rs. 100,000 B. The total number of units issued to the investors is equal to 10,000. C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00 D. Now if an investor 'X' owns 5 units of this scheme 35

E. Then his total contribution to the fund is Rs. 50 (i.e. Number of units held multiplied by the NAV of the scheme)

ADVANTAGES OF MUTUAL FUND 1. Portfolio Diversification: Mutual Funds invest in a well-diversified portfolio of securities which
enables investor to hold a diversified investment portfolio (whether the amount of investment is big or small).

2. Professional Management: Fund manager undergoes through various research works and has better
investment management skills which ensure higher returns to the investor than what he can manage on his own.

3. Less Risk: Investors acquire a diversified portfolio of securities even with a small investment in a Mutual
Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities.

4. Low Transaction Costs: Due to the economies of scale (benefits of larger volumes), mutual funds pay
lesser transaction costs. These benefits are passed on to the investors.

5. Liquidity: An investor may not be able to sell some of the shares held by him very easily and quickly,
whereas units of a mutual fund are far more liquid. 6. Choice of Schemes: Mutual funds provide investors with various schemes with different investment objectives. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own financial goals. These schemes further have different plans/options

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

8. Flexibility: Investors also benefit from the convenience and flexibility offered by Mutual Funds. Investors
can switch their holdings from a debt scheme to an equity scheme and vice-versa. Option of systematic (at regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes.

9. Safety: Mutual Fund industry is part of a well-regulated investment environment where the interests of the
investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced.

Disadvantages of Mutual Funds:

Professional Management - Did you notice how we qualified the advantage of professional management
with the word "theoretically"? Many investors debate whether or not the so-called professionals are any better than you or I at picking stocks. Management is by no means infallible, and, even if the fund loses money, the manager still takes his/her cut. We'll talk about this in detail in a later section. 36

 Costs - Mutual funds don't exist solely to make your life easier - all funds are in it for a profit. The mutual
fund industry is masterful at burying costs under layers of jargon. These costs are so complicated that in this tutorial we have devoted an entire section to the subject.

Dilution - It's possible to have too much diversification. Because funds have small holdings in so many
different companies, high returns from a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money.

Taxes - When making decisions about your money, fund managers don't consider your personal tax situation.
For example, when a fund manager sells a security, a capital-gains tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability.

MUTUAL FUND STRUCTURE

The SEBI (Mutual Funds) Regulations 1993 define a mutual fund (MF) as a fund established in the form of a trust by a sponsor to raise monies by the Trustees through the sale of units to the public under one or more schemes for in vesting in securities in accordance with these regulations. These regulations have since been replaced by the SEBI (Mutual Funds) Regulations, 1996. The structure indicated by the new regulations is indicated as under. A mutual fund comprises four separate entitles, namely sponsor, mutual fund trust, AMC and custodian. The sponsor establishes the mutual fund and gets its registered with SEBI. 37

The mutual fund needs to be constituted in the form of a trust and the instrument of the trust should be in the form of a deed registered under the provisions of the Indian Registration Act, 1908. The sponsor is required to contribute at lease 40% of the minimum net worth (Rs.10 core) of the asset management company. The board of trustees manages the MF and the sponsor executes the trust deeds in favor of the trustees. It is the job of the MF trustees to see that schemes floated and managed by the AMC appointed by the trustees are in accordance with the trust deed and SEBI guidelines

CHOOSING A FUND
Following steps are involved in choosing a fund

IdentifyingGoalsandRiskTolerance
Before acquiring shares in any fund, an investor must first identify his or her goals and desires for the money being invested. Are long-term capital gains desired, or is a current income preferred? Will the money be used to pay for college expenses, or to supplement a retirement that is decades away? Identifying a goal is important because it will enable you to dramatically whittle down the list of the more than 8,000 mutual funds in the public domain. In addition, investors must also consider the issue of risk tolerance. Is the investor able to afford and mentally accept dramatic swings in portfolio value? Or, is a more conservative investment warranted? Identifying risk tolerance is as important as identifying a goal. After all, what good is an investment if the investor has trouble sleeping at night? (For more insight, see Determining Risk and the Risk Pyramid and A Guide To Portfolio Construction.) 38

Finally, the issue of time horizon must be addressed. Investors must think about how long they can afford to tie up their money, or if they anticipate any liquidity concerns in the near future. This is because mutual funds have sales charges that can take a big bite out of an investor's return over short periods of time. Ideally, mutual fund holders should have an investment horizon with at least five years or more. (For related reading, see Disadvantages Of Mutual Funds.)

StyleandFundType
If the investor intends to use the money in the fund for a longer term need and is willing to assume a fair amount of risk and volatility, then the style/objective he or she may be suited for is a long-term capital appreciation fund. These types of funds typically hold a high percentage of their assets in common stocks, and are therefore considered to be volatile in nature. They also carrythepotentialforalargerewardovertime. Conversely, if the investor is in need of current income, he or she should acquire shares in an income fund. Government and corporate debt are the two of the more common holdings in an incomefund. Of course, there are times when an investor has a longer term need, but is unwilling or unable to assume substantial risk. In this case, a balanced fund, which invests in both stocks and bonds, maybethebestalternative.

ChargesandFees
Mutual funds make their money by charging fees to the investor. It is important to gain an understanding of the different types of fees that you may face when purchasing an investment. Some funds charge a sales fee known as a load fee, which will either be charged upon initial investment or upon sale of the investment. A front-end load/fee is paid out of the initial investment made by the investor while a back-end load/fee is charged when an investor sells his or her investment, usually prior to a set time period, such as seven years from purchase. Both front- and back-end loaded funds typically charge 3-6% of the total amount invested or distributed, but this number can be as much as 8.5% by law. Its purpose is to discourage turnover and to cover any administrative charges associated with the investment. Depending on the mutual fund, the fees may go to a broker for selling the mutual fund or to the fund itself, which mayresultinloweradministrationfeeslateron.

39

To avoid these sales fees, look for no-load funds, which don't charge a front- or back-end load/fee. However, be aware of the other fees in a no-load fund, such as the management expense ratio and other administration fees, as they may be very high. Still other funds charge 12b-1 fees, which are baked into the share price and are used by the fund for promotions, sales and other activities related to the distribution of fund shares. These fees come right off of the reported share price at a predetermined point in time. As a result, investors may not be aware of the fee at all. 12b-1 fees can, by law, be as much as 0.75% of a fund's averageassetsperyear. One final tip when perusing mutual fund sales literature: The investor should look for the management expense ratio. In fact, that one number can help clear up any and all confusion as it relates to sales charges. The ratio is simply the total percentage of fund assets that are being charged to cover fund expenses. The higher the ratio, the lower the investor's return will be at the endoftheyear.

EvaluatingManagers/PastResults
As with all investments, investors should research a fund's past results. To that end, the following is a list of questions that perspective investors should ask themselves when reviewing the historical record:

Did the fund manager deliver results that were consistent with general market returns? Was the fund more volatile than the big indexes (meaning did its returns vary dramatically throughout the year)? Was there an unusually high turnover (which can result in larger tax liabilities for the investor)?

This information is important because it will give the investor insight into how the portfolio manager performs under certain conditions, as well as what historically has been the trend in termsofturnoverandreturn. With that in mind, past performance is no guarantee of future results. For this reason, prior to buying into a fund, it makes sense to review the investment company's literature to look for information about anticipated trends in the market in the years ahead. In most cases, a candid fund manager will give the investor some sense of the prospects for the fund and/or its holdings in the year(s) ahead as well as discuss general industry trends which may be helpful. (For more insight,seeDiggingDeeper:TheMutualFundProspectus.)

SizeoftheFund
40

Typically, the size of a fund does not hinder its ability to meet its investment objectives. However, there are times when a fund can get too big. A perfect example is Fidelity's Magellan Fund. Back in 1999 the fund topped $100 billion in assets, and for the first time, it was forced to change its investment process to accommodate the large daily (money) inflows. Instead of being nimble and buying small and mid cap stocks, it shifted its focus primarily toward larger capitalization growth stocks. As a result, its performance has suffered. (To learn more, check out DoesSizeReallyMatter?)

So how big is too big? There are no benchmarks that are set in stone, but that $100 billion mark certainly makes it difficult for a fund manager to acquire a position in a stock and dispose of it without running up the stock dramatically on the way up, and depressing it on the way down. It also makes the process of buying and selling stocks with any kind of anonymity almost impossible.

BottomLine
Selecting a mutual fund may seem like a daunting task, but knowing your objectives and risk tolerance is half the battle. If you follow this bit of due diligence before selecting a fund, you will increase your chances of success.

The Ground rules of Mutual Fund Investing:

Moses gave to his followers 10 commandments that were to be followed till eternity. The world of investments too has several ground rules meant for investors who are novices in their own right and wish to enter the myriad world of investments. These come in handy for there is every possibility of losing what one has if due care is not taken. 1.

Assess yourself: Self-assessment of one's needs; expectations and risk profile is of prime importance

failing which; one will make more mistakes in putting money in right places than otherwise. One should identify the degree of risk bearing capacity one has and also clearly state the expectations from the investments. Irrational expectations will only bring pain. 2.

Try to understand where the money is going: It is important to identify the nature of

investment and to know if one is compatible with the investment. One can lose substantially if one picks the wrong kind of mutual fund. In order to avoid any confusion it is better to go through the literature such as offer document and fact sheets that mutual fund companies provide on their funds. 3.

Don't rush in picking funds, think first: one first has to decide what he wants the money for
41

and it is this investment goal that should be the guiding light for all investments done. It is thus important to

know the risks associated with the fund and align it with the quantum of risk one is willing to take. One should take a look at the portfolio of the funds for the purpose. Excessive exposure to any specific sector should be avoided, as it will only add to the risk of the entire portfolio. Mutual funds invest with a certain ideology such as the "Value Principle" or "Growth Philosophy". Both have their share of critics but both philosophies work for investors of different kinds. Identifying the proposed investment philosophy of the fund will give an insight into the kind of risks that it shall be taking in future. 4.

Invest. Don't speculate: A common investor is limited in the degree of risk that he is willing to

take. It is thus of key importance that there is thought given to the process of investment and to the time horizon of the intended investment. One should abstain from speculating which in' other words would mean getting out of one fund and investing in another with the intention of making quick money. One would do well to remember that nobody can perfectly time the market so staying invested is the best option unless there are compelling reasons to exit. 5.

Don't put all the eggs in one basket: This old age adage is of utmost importance. No matter what

the risk profile of a person is, it is always advisable to diversify the risks associated. So putting one's money in different asset classes is generally the best option as it averages the risks in each category. Thus, even investors of equity should be judicious and invest some portion of the investment in debt. Diversification even in money in the hands of several fund managers. This might reduce the maximum return possible, but will also reduce the risks. 6.

Be regular: Investing should be a habit and not an exercise undertaken at one's wishes, if one has to

really benefit from them. As we said earlier, since it is extremely difficult to know when to enter or exit the market. It is important to beat the market by being systematic. The basic philosophy of Rupee cost averaging would suggest that if one invests regularly through the ups and downs of the market, he would stand a better chance of generating more returns than the market for the entire duration. The SIPs (Systematic Investment Plans) offered by all funds helps in being systematic.

Performance Measures of Mutual Funds

Mutual Fund industry today, with about 34 players and more than five hundred schemes, is one of the most preferred investment avenues in India. However with a plethora of schemes to choose from the retail investor faces problems in selecting funds. Factors such as investment strategy and management style are qualitative, but the funds record is an important indicator too. Though past performance alone cannot be indicative of future performance, it is, frankly, the only quantitative way to judge how good a fund is at present. Therefore, there is a need to correctly assess the past performance of different mutual funds. Worldwide, good Mutual fund companies over are known by their AMCs and this fame is directly linked 42

to their superior stock selection skills. For mutual funds to grow, AMCs must be held accountable for their selection of stocks. In other words, there must be some performance indicator that will reveal the quality of stock selection of various AMCs. Return alone should not be considered as the basis of measurement of the performance of a mutual fund scheme. It should also include the risk taken by the fund manager because different funds will have different levels of risk attached to them. Risk associated with a fund, in a general, can be defined as variability or fluctuations in the returns generated by it. The higher the t1uctuations in the returns of a fund during a given period, higher will be the risk associated with it. These fluctuations in the returns generated by a fund are resultant of two guiding forces. First, general market fluctuations, which affect all the securities present in the market, called market risk or systematic risk and second, t1uctuations due to specific securities present in the portfolio of the fund, called unsystematic risk. The Total Risk of a given fund is sum of these t\VO and is measured in terms of standard deviation of returns of the fund. Systematic risk. On the other hand is measured in terms of Beta, which represents t1uctuations in the NA V of the fund vis--vis market. The more responsive the NA V of a mutual fund is to the changes in the market; higher will be its beta. Beta is calculated by relating the returns on a mutual fund with the returns in the market. While unsystematic risk can be diversified through investments in a number of instruments, systematic risk can not. By using the risk return relationship, we try to assess the competitive strength of the mutual funds vis--vis one another in a better way: In order to determine the risk-adjusted returns of investment portfolios, several eminent authors have worked since 1960s to develop composite performance indices to evaluate a portfolio by comparing alternative portfolios within a particular risk class.

Benefits of investing in stock market

The stock market is a big auction house for pieces of company ownership, called stocks. Despite the risks and volatility of the stock market, there are considerable advantages in investing money in stocks.

Outperforms Other Investments

Historically, the returns on investments in the market are higher than those on investments held in other markets and assets. This means that, over time, money will grow more if it is invested in the stock market. The historical average for stock market investments is approximately eight percent per year. 43

Easy Access
Another advantage of stock market investments is the ease of access (and exit) in the stock market. Thanks to new Internet technology, an investor can easily take a position in a company and leave that position in a matter of seconds.

Asset Diversity
The diversity of options is one more advantage of investing in the stock market. Companies that have their stocks listed in the market cover a range of industries and services. This offers the investor a chance to diversify his portfolio and make money in a variety of economic conditions.

Dividends
Investing in stocks that earn dividends is a unique advantage of the stock market. Stocks release a portion of the profits in the form of dividends to their stock holders. Meanwhile, the stock still has the ability to increase in price, creating two ways for the stock to earn money for the investor.

Transparency
While critics often point out the examples of companies that release fraudulent earnings statements as a way to taint the entire market, the vast majority of the companies release accurate information about the money they spend and earn. This adds a layer of transparency in the investment.

Easy Review and Research

It's not difficult to research a company's financial statement. It's also easy to monitor the stock's share price. This information is available in newspapers and magazines, as well as online. 44

COMPANY PROFILE
45

ICICI GROUP COMPANIES

As one of the largest and oldest financial sector conglomerates in India, ICICI Group believes that its own long-term growth and profitability is linked to the balanced and sustainable growth of the Indian economy. In line with its commitment to fuelling equitable growth in all segments of society, ICICI Group of Companies' (www.icicigroupcompanies.com) CSR activities aim to more effectively direct human and financial resources towards the civil sector. ICICI Foundation for Inclusive Growth (ICICI Foundation) was founded by the ICICI Group in early 2008 to give focus to its efforts to promote inclusive growth amongst low-income Indian households. We believe our fundamental challenge is to create a just society one where everyone has equal opportunity to develop and grow. Towards this end, ICICI Foundation is committed to making Indias economic growth more inclusive, allowing every individual to participate in and benefit from the growth process.

46

We hold a set of core beliefs and values that defines our pathway towards inclusive growth and guides our five strategic partnerships.

Vision
our vision is a world free of poverty in which every individual has the freedom and power to create and sustain a just society in which to live.

Mission
Our mission is to empower the poor to participate in and benefit from the Indian growth process through active collaboration with government and independent organisations.

Core beliefs:
ICICI Foundations pathway towards inclusive growth and our five strategic partnerships are guided by several core beliefs:

Good health and basic education are fundamental prerequisites to achieving inclusive growth. While healthy and educated individuals have the capacity to transform their lives, their ability to do so depends on the quality of their access to transformative tools such as finance. For the Indian growth process to be truly inclusive, health, education and access to complete financial markets are necessary but not sufficient.

Our Approach
Rather than build departments within a large, monolithic foundation, we have chosen to collaborate with and foster independent, responsive organizations, each with deep expertise in one of the five areas that we believe provide essential elements for inclusive growth: primary health, elementary education, comprehensive access to financial services, strong civil society and environmental sustainability. 47

The Foundation provides active support and mentorship to each of these strategic partners a strategy we believe will build knowledge and specialization in each field and ensure long-term impact.

Partners
Through ICICI Child Health in Pune, we support children in the poorest communities across India to develop to their full potential in the critical first three years of life. Through ICICI Elementary Education in Pune, we support children in government-run preschools and elementary schools across India to become engaged citizens. Through IFMR Finance Foundation in Chennai, we seek to ensure that every individual and every enterprise in India has complete access to financial services. Through CSO Partners in Chennai, we support civil society organizations (CSOs) across India to be more effective by enabling them to tap into new resources and networks of support. Through the Environmentally Sustainable Finance Group at the Centre for Development Finance in Chennai, we support scalable private and community interventions as well as policies to make India's economy more environmentally sustainable from the bottom up. OVERVIEW ICICI Group offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised group companies, subsidiaries and affiliates in the areas of personal banking, investment banking, life and general insurance, venture capital and asset management. With a strong customer focus, the ICICI Group Companies have maintained and enhanced their leadership position in their respective sectors. ICICI Bank is India's second-largest bank with total assets of Rs. 3,793.01 billion (US$ 75 billion) at March 31, 2009 and profit after tax Rs. 37.58 billion for the year ended March 31, 2009. The Bank has a network of 1,451 branches and about 4,721 ATMs in India and presence in 18countries.

ICICI Prudential Life Insurance Company is a 74:26 joint venture with Prudential plc (UK). It is the largest private sector life insurance company offering a comprehensive suite of life, health and pensions products. It is also the pioneer in launching innovative health care products like Diabetes Care Active and health Saver. The company operates on a multi-channel platform and has a distribution strength of over 2,76,000 financial advisors operating from more than 2000 branches spread across 1800 locations across the country. In addition to 48

the agency force, it also has tie-ups with various banks, corporate agents and brokers. In fiscal 2009, ICICI Prudential attained a market share of 10.9% based on retail weighted premium and garnered a total premium of Rs 153.56 billion registering a growth of 13% and held assets of Rs. 327.88 billion as on March 31, 2009. ICICI Lombard General Insurance Company, a joint venture with the Canada based Fairfax Financial Holdings, is the largest private sector general insurance company. It has a comprehensive product portfolio catering to all corporate and retail insurance needs and is present in over 300 locations across the country. ICICI Lombard General Insurance has achieved a market share of 27.2% among private sector general insurance companies and an overall market share of 11.2% during fiscal 2009. The gross return premium grew by 2.2% from Rs. 33.45 billion in fiscal 2008 to 34.20 billion in fiscal 2009. ICICI Securities Ltd is the largest equity house in the country providing end-to-end solutions (including webbased services) through the largest non-banking distribution channel so as to fulfill all the diverse needs of retail and corporate customers. ICICI Securities (I-Sec) has a dominant position in its core segments of its operations Corporate Finance including Equity Capital Markets Advisory Services, Institutional Equities, Retail and Financial Product Distribution.

ICICI Securities Primary Dealership Limited is the largest Primary Dealer in Government Securities. It is an acknowledged leader in the Indian fixed income and money markets, with a strong franchise across the spectrum of interest rate products and services - institutional sales and trading, resource mobilization, portfolio management services and research. One of the first entities to be granted Primary Dealership license by RBI, ISec PD has made pioneering contributions since inception to debt market development in India. I-Sec PD is also credited with pioneering debt market research in India. I-Sec PD has been recognized as the 'Best Domestic Bond House in India' by Asia money every year from 2002 to 2007 and selected as 'Best Bond House' by Financeasia.com for the years - 2001, 2004 to 2007 and 2009." ICICI Prudential Asset Management is the third largest mutual fund with average asset under management of Rs. 514.33 billion and a market share of 10.43% as on March 31, 2009. The Company manages a comprehensive range of mutual fund schemes and portfolio management services to meet the varying investment needs of its investors through162 branches and 185 CAMS official point of transaction acceptance spread across the country.

ICICI Venture is one of the largest and most successful private equity firms in India with funds under 49

management in excess of USD 2 billion. ICICI Venture, over the years has built an enviable portfolio of companies across sectors including Life Sciences, Information Technology, Media, Manufacturing, Retail, Financial Services, and Real Estate thereby building sustainable value. It has several firsts to its credit in the Indian Private Equity industry. Amongst them are Indias first leveraged buyout (Infomedia), the first real estate investment (Cyber Gateway), the first mezzanine financing for a acquisition (Arch Pharmalabs), the first royalty-based structured deal in Pharma Research & Development (Dr Reddys Laboratories - JV) and the first fund level secondary transaction (Coller Capital).

ICICI PRUDENTIAL ASSET MANAGEMENT

ICICI Prudential Asset Management Company Ltd. is a joint venture between ICICI Bank, Indias second largest commercial bank & a well-known and trusted name in the financial services in India, & Prudential Plc, one of the United Kingdoms largest players in the financial services sectors. In a span of just over 12 years, the company has forged a position of preeminence as one of the largest Asset Management Companys in the country, contributing significantly towards the growth of the Indian mutual fund industry. Our Average Assets under Management (AAUM) as on September 2010 month-end in Mutual Fund Schemes stood at Rs. 69,754.78 Crores. This is in addition to our Portfolio Management Services, inclusive of EPFO*, and International Advisory Mandates for clients across international markets in asset classes like Debt, Equity and Real Estate with primary focus on risk adjusted returns. As an Asset Management Company, we have over 15 years of experience and are currently managing a comprehensive range of schemes of more than 46 Mutual funds and a wide range of PMS Products for our 50

investors, spread across the country. We service this investor base with our own branch network of over 160 branches and a distribution reach of over 42,000 channel partners. SPONSERS ICICI Bank

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at 31st March, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended 31st March, 2010. The Bank has a network of 2016 branches and about 5219 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

Prudential Plc (formerly known as Prudential Corporation plc)

Prudential plc of the United Kingdom is not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America. Prudential plc is an international financial services group with significant operations in Asia, the US and the UK. They serve approximately, 25 million customers and have 290 billion in assets under management. They are among the leading capitalized insurers in the world with an Insurance Groups Directive (IGD) capital surplus estimated at 3.4 billion (as at 31 December 2009). 51

The Group is structured around four main business units:

Prudential Corporation Asia (PCA)

PCA is a leading life insurer in Asia with presence in 12 markets and a top three position in seven key locations: Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, and Vietnam. PCA provides a comprehensive range of savings, protection and investment products that are specifically designed to meet the needs of customers in each of its local markets. PCAs asset management business in Asia has retail operations in 10 markets and it independently manages assets on behalf of a wide range of retail and institutional investors across the region.

Jackson National Life Insurance Company

Jackson is one of the largest life insurance companies in the US, providing retirement savings and income solutions to more than 2.8 million customers. It is also one of the top five providers of variable and fixed index annuities in the US. Founded nearly 50 years ago, Jackson has a long and successful record of providing effective retirement solutions for their clients.

Prudential UK & Europe (PUE)

PUE is a leading life and pensions provider to approximately 7 million customers in the UK.It has a number of major competitive advantages including significant longevity experience, multi-asset investment capabilities, a strong investment track record, a highly respected brand and financial strength. PUE continues to focus on its core strengths including its annuities, pensions and investment products where it can maximize the advantage it has in offering with-profits and other multi-asset investment funds.

Mutual Fund ICICI Prudential Mutual Fund offers a wide range of retail and corporate investment solutions across different asset classes like Equity, Fixed Income, Real Estate and Gold. 52

It has been voted as the Most Trusted Mutual Fund Brand in by Brand Equity (in their 2009 Most Trusted Brand Survey (Conducted by The Economic Times Intelligence Group and The Nielsen Company). Year after year, the Fund has been consistently winning many awards in the industry at the Fund House and Scheme Levels, the most recent ones being:

India Debt Fund House for 2009 by Morningstar The CNBC TV18 - CRISIL Mutual Fund of the Year Award 2009 in the Category Debt Mutual

Fund House of the Year

The organization today is an ideal mix of investment expertise, resource bandwidth & process orientation and endeavors is to bridge the gap between savings & investments, to help create long term wealth and value for investors through innovation, consistency and sustained risk adjusted performance. Advisory Services The International Advisory Business Division of ICICI Prudential Asset Management Company Ltd. advises offshore funds in jurisdictions spanning Japan, Middle East, Taiwan & Singapore. As on 30th June, 2010, we are advising a cumulative asset size of close to $2 Billion spanning Equity, Debt & Real Estate. Through the onshore presence and legacy of our parent company in India, we present the following benefits to offshore investors:

Excellent Onshore Investment Insights and Information. Extensive on the ground research capabilities. Deep knowledge of the reputation, vision and execution capabilities of promoter-run companies. An innate understanding of governance structures of corporate entities.

As one of the largest Asset Management Companies in India, we have had a successful track record in serving domestic clients across the Institutional and Retail Investor space. We are very confident in our ability to 53

enable International Investors to participate in the long-standing India growth story and generate alpha over a medium to long term horizon.

Awards and Recognition

ICICI Prudential Mutual Fund has constantly been on the forefront of innovation and has introduced products aligned to meet customer needs leading to a well-diversified product portfolio. As acknowledgment of our efforts, we have received valued recognition from various organizations of international repute.

Some of the prominent awards and recognition are: Lipper Fund Awards 2010 India

ICICI Prudential Dynamic Plan - Growth; has won the Best Fund Award over 3 & 5 Years in the 'Mixed Asset INR Flexible' classification. ICICI Prudential Gilt Fund Investment Plan - PF Option - Growth; has won the Best Fund Award over 3 & 5 Years in the 'Bond Indian Rupee - Government' classification.

54

ICRA Mutual Fund Awards 2010 ICICI Prudential Discovery Fund - Seven Star Funds - Gold Open Ended Equity Diversified Defensive - 1 year performance till December 31, 2009. ICICI Prudential Tax Plan - Seven Star Funds - Gold Open Ended Equity (Tax Planning) - 1 year performance till December 31, 2009. ICICI Prudential Gilt Fund Treasury Plan Fund - Seven Star Fund Gold Open Ended Gilt - 3 years performance till December 31, 2009. CNBC-TV18 - CRISIL Mutual Fund Awards 2009 ICICI Prudential Mutual Fund - Debt Mutual Fund House of the Year ICICI Prudential Target Returns Fund (There is no guarantee or assurance of returns) - Most Innovative Fund of the Year ICICI Prudential Gilt Fund - Investment - PF Option - Gilt Fund of the Year ICICI Prudential Liquid Plan - Liquid Fund of the Year Morning Star Mutual Fund Awards - 2009 India Debt Fund House Award - 2009 ICICI Prudential Tax Plan - Runner Up Award in the ELSS Category for a 1 yr period ending Dec 2009. Thomson Reuters Extel Asia Survey 2009 ICICI Prudential Mutual Fund has received the prestigious recognition of being amongst the Best Overall fund Management Firm-Asia (ICICI Prudential Mutual Fund is the only Indian Asset 55

Management company to feature in the list of 25 Fund Management firms in Asia, gaining the 20th position in the Survey.) Brand Equity Most Trusted Brands Survey - 2009 ICICI Prudential Mutual Fund voted Most Trusted Mutual Fund Brand ICICI Prudential Mutual Fund also featured highest amongst the mutual fund industry peers in the Top Service Brands in India category.

CHAPTER IV
56

DATA ANALYSIS & INTERPRETATION

Company 1 Fund 1:- ICICI Prudential Gilt Fund - Investment Plan - PF Option Objective:
The Scheme seeks to generate regular returns through investments made in Gilts

ICICI Prudential Gilt Fund - Investment Plan - PF Option returns 1 week 1 month 57 -1.08 0.28

6 month 9 month 1 year

13.39 38.11 41.57

Risk = 18.211
=

IC IC I Prudential Gilt Fund - Investment Plan - PF Option returns

50 40 returns 30 20 10 0 -10 1 week 1 m onth 6 m onth pe riod 9 m onth 1 year returns

Interpretation:

58

The above table shows the returns of ICICI Prudential Gilt Fund - Investment Plan - PF Option. It has highest returns of 41.57 for one year and lowest return -1.08 for 1week ,And average return of this fund is 18.454 .The risk in this fund is 18.21.

Company 1
Fund 2 :- ICICI Prudential Gilt Fund - Investment Plan

Objective:
To generate steady and consistent returns from a basket of government securities across various maturities through proactive fund management aimed at controlling interest rate risk ICICI Prudential Gilt Fund - Investment Plan Year 1 week 1 month 6 month 9 month 1 year 59 = returns -0.96 -0.06 10.14 29.37 30.78

Risk =
13.8136

ICICI Prudential Gilt Fund - Investment Plan returns

35 30 25 20 15 10 5 0 -5

returns

returns

1 week

1 month

6 month period

9 month

1 year

Interpretation:
60

The above table shows the returns of ICICI Prudential Gilt Fund - Investment Plan. It has a highest returns of 30.78for one year and lowest return -0.06for 1 month, And average return of this fund is 13.854. The risk in this fund is 13.8136.

Company 1
Fund 3:- ICICI Prudential Income Plan Institutional Objective:
Aims at maximizing income while maintaining optimum balance of yield, safety and liquidity.

ICICI Prudential Income Plan - Institutional year 1 week 1 month 6 month 9 month 1 year
61

returns -0.91 -1.05 14.11 22.48 23.12

Risk = 10.7135
=

IC IC I Pru de n tia l In co m e P la n - In stitution a l retu rn s

25 20 15 10 returns 5 0 -5 1 week 1 month 6 m onth perio d 9 m onth 1 year returns

62

Interpretation:
The above table shows the returns of ICICI Prudential Income Plan Institutional. It has a highest returns of 23.12for one year and lowest return -1.05for 1 month and average return of this fund is 11.55. The risk in this fund is 10.7135.

Company 2
Fund 1:- Reliance Liquid Fund - Treasury Plan - Institutional Plan Objective :Aims to generate optimal returns consistent with moderate risk and high liquidity.

Reliance Liquid Fund - Treasury Plan - Institutional Plan = year 1 week 1 month 6 month 9 month 1 year returns 0.08 0.43 3.58 5.95 35.41

Risk =
13.3352

63

R e lia n c e L iq u id F u n d - T re a s u ry P la n - In s t it u t io n a l P la n re t u rn s 40 35 30 25 20 15 10 5 0 1 w e e 1 m o n 6h m o n 9h m o n t1 y e a r k t t h p e rio d

R e lia n c e L iq u id F u n d T re a s u ry P la n In s t it u t io n a l P la n re t u rn s

Interpretation:
The above table shows the returns of Reliance Liquid Fund - Treasury Plan - Institutional Plan. It has a highest returns of 35.41for one year and lowest return 0.08for 1 week and average return of this fund is 9. 09. The risk in this fund is 13.3352.

Company 2
64

returns

Fund 2:- Reliance Liquidity Fund

Objective: The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments.

Reliance Liquidity Fund year 1 week 1 month 6 month 9 month 1 year

returns 0.07 0.44 4 24.38 24.38

Risk = 11.291

65

R elianc e Liquidity F und returns 30 25 20 returns 15 10 5 0 1 w eek 1 6 9 1 y ear m onth m onth m onth p e rio d R elianc e Liquidity F und returns

Interpretation:
The above table shows the returns of Reliance Reliance Liquidity Fund. It has highest returns of 24.38 for one year and lowest return 0.07for 1 week and average return of this fund is10.654. The risk in this fund is 11.291.

66

Company 2
Fund 3:- Reliance Monthly Income Plan - Growth Objective:The primary investment objective of the scheme is to generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital.

Reliance Monthly Income Plan - Growth year 1 week 1 month 6 month 9 month 1 year

returns 0.51 1.1 21.14 20.65 21.21

Risk = 9.8971

67

Relianc e M onthly Inc om e P lan - G rowth returns 25 20 returns 15 10 5 0 1 week 1 m onth6 m onth m onth 1 y ear 9 p e rio d Relianc e M onthly Inc om e P lan - G rowth returns

Interpretation:
The above table shows the returns of Reliance Monthly Income Plan - Growth. It has a highest returns of 21.21for one year and lowest return 0.51for 1 week and average return of this fund is 12.922. The risk in this fund is 9.8971.

Company 3
Fund 1:- JM Nifty Plus Fund Objective:-

68

The primary investment objective of the scheme is to generate income through arbitrage opportunities emerging out of miss-pricing between the cash market and the derivatives market & through deployment of surplus cash in fixed income instruments. However, there can be no assurance that the investment objective of the scheme will be realized. The scheme does not guarantee/indicate any returns.

JM Nifty Plus Fund year 1 week 1 month 6 month 9 month 1 year = returns -2.01 20.31 38.96 38.91 37.62

Risk =
16.0232

69

JM Nifty Plus Fund returns 50 40 30 returns 20 10 0 -10 1 week 1 month 6 month 9 month 1 year period

JM Nifty Plus Fu returns

Interpretation:
The above table shows the returns of JM Nifty plus Fund. It has a highest returns of 38.96for 6 month and lowest return -2.01for 1 week and average return of this fund is 26.758. The risk in this fund is 16.0232.

70

Company 3
Fund 2:- JM G-Sec Fund - Regular Plan Growth Objective:
The Scheme aims to provide ultimate level of safety to its unit holders through investments exclusively in sovereign securities issued by the central and state government.

JM G-Sec Fund - Regular Plan - Growth year 1 week 1 month 6 month 9 month 1 year returns -0.22 -1.18 10.34 25.77 31.19

Risk = 13.2416

71

JM G -S ec F und - R egular P lan - G row th returns 35 30 25 20 returns 15 10 5 0 6 9 -5 1 w eek1 m onth m onth m onth1 y ear p e rio d JM G -S ec F und R egular P lan - G row th returns

Interpretation:
The above table shows the returns of JM G-Sec Fund - Regular Plan - Growth. It has a highest returns of 31.19for 1 year and lowest return -1.18for 1 month and average return of this fund is 13.18. The risk in this fund is 13.2416.

72

Company 3
Fund 3:- JM G-Sec Fund - Regular Plan - Dividend Objective :The scheme aims to provide ultimate level of safety to its unit holders through investments exclusively in sovereign securities issued by the central and state government.

JM G-Sec Fund - Regular Plan - Dividend year 1 week 1 month 6 month 9 month 1 year returns -0.32 -1.12 10.22 25.81 31.3

Risk = 13.2917

73

JM G -S e c F u n d - R e g u la r P la n - D ivid e n d re t u rn s 35 30 25 20 returns 15 10 5 0 -5 1 w e e k 1 6 9 1 y ear m o n t h m o n t h m o n th p e r io d JM G -S e c F u n d R e g u la r P la n - D ivid e n d re t u rn s

Interpretation:
The above table shows the returns of JM G-Sec Fund - Regular Plan - Dividend. It has a highest returns of 31.3for 1 year and lowest return -1.12for 1 month and average return of this fund is 13.178. The risk in this fund is 13.291.

74

Company 4
Fund 1:- Escorts Gilt Fund Objective:The fund aims at providing income and capital appreciation by investing in government securities

Escorts Gilt Fund year 1 week 1 month 6 month 9 month 1 year returns -0.37 -0.79 14.53 22.16 31.9

Risk = 12.7373

75

E s c o rt s G ilt F u n d re tu rn s 35 30 25 20 returns 15 10 5 0 -5 1 w e e k 1 m o n th6 m o n th9 m o n t h1 y e a r p e rio d E s c o rts G ilt F u n d re t u rn s

Interpretation:
The above table shows the returns of Escorts Gilt Fund. It has a highest returns of 31.9for 1 year and lowest return -0.79for 1 month and average return of this fund is 13.486. The risk in this fund is 12.7373

Company 4 Fund 2:- Escorts Income Plan

76

Objective:Aims to generate current income by investing predominantly in a well diversified portfolio of fixed income securities and money market instruments with moderate risk levels

Escorts Income Plan year 1 week 1 month 6 month 9 month 1 year

returns -0.65 -0.95 8.14 10.72 12.64

Risk = 5.71788

77

Escorts Income Plan returns 14 12 10 returns 8 6 4 2 0 -2 1 week 1 month 6 month 9 month 1 year period Escorts Income Plan returns

Interpretation:
The above table shows the returns of Escorts Income Plan. It has a highest returns of 12.64for 1 year and lowest return -0.95for 1 month and average return of this fund is 5.98. The risk in this fund is 5.71788.

Company 4 Fund 3 :- Escorts Liquid Plan

78

Objective:The primary investment objective of the scheme is to provide income and liquidity consistent with the prudent risk from a portfolio comprising of money market and debt instruments. This income may be complemented by possible capital appreciation. The aim is to optimize returns while providing liquidity.

Escorts Liquid Plan year 1 week 1 month 6 month 9 month 1 year

returns 0.15 0.79 4.81 7.32 9.96

Risk = 3.75474

79

E sc orts Liquid P lan returns 12 10 8 returns 6 4 2 0 1 week 1 m onth 6 m onth9 m onth 1 y ear pe riod E s c orts Liquid P lan returns

Interpretation:
The above table shows the returns Escorts Liquid Plan. It has a highest returns of 9.96for 1 year and lowest return 0.15for 1 week and average return of this fund is 4.606. The risk in this fund is 5.71788

80

NIFTY AVERAGE RETURNS

NIFTY RETURNS
Nifty

Returns 0.0824 9.0853 -14.678 -17.198 -36.208

1 week 1 month 6 month 9 month 1 year

COMPARATIVE AVERAGE RETURNS OF FUNDS

81

AVERAGE RETURNS Companies ICICI Prudential Gilt Fund - Investment Plan - PF Option ICICI Prudential Gilt Fund - Investment Plan ICICI Prudential Income Plan - Institutional Reliance Liquid Fund - Treasury Plan - Institutional Plan Reliance Liquidity Fund Reliance Monthly Income Plan - Growth JM Nifty Plus Fund JM G-Sec Fund - Regular Plan - Growth JM G-Sec Fund - Regular Plan - Dividend Escorts Gilt Fund Escorts Income Plan Escorts Liquid Plan

Average returns 18.454 13.854 11.55 9.09 10.654 12.922 26.758 13.18 13.178 13.486 5.98 4.606

c o m p e r a t iv e a v e r a g e r e t u r n s
30 25 20 15 10 5 0 ICICI Prudential Income Reliance Liquidity Fund ICICI Prudential Gilt Fund JM Nifty Plus Fund JM G-Sec Fund Regular Escorts Income Plan

average returns

a ve ra g e re tu rn s

c o m p a n ie s

COMPARATIVE RISK OF FUNDS

COMPANIES ICICI Prudential Gilt Fund - Investment Plan - PF Option ICICI Prudential Gilt Fund - Investment Plan ICICI Prudential Income Plan - Institutional Reliance Liquid Fund - Treasury Plan - Institutional Plan 82 RISK 18.21111375 13.81364195 10.71349616 13.33520004

Reliance Liquidity Fund Reliance Monthly Income Plan - Growth JM Nifty Plus Fund JM G-Sec Fund - Regular Plan - Growth JM G-Sec Fund - Regular Plan - Dividend Escorts Gilt Fund Escorts Income Plan Escorts Liquid Plan

11.29095851 9.897129685 16.0232174 13.24162679 13.29174842 12.73731934 5.717877228 3.754744199

comparative risk
20 15 risk 10 5 0 JM Nifty Plus Fund JM G-Sec Fund Reliance Liquidity ICICI Prudential ICICI Prudential Escorts Income risk

Companies

COMPARATIVE STUDY ON FUND RETURNS TO NIFTY RETURNS

Comparative study on fund returns to nifty returns average companies ICICI Prudential Gilt Fund - Investment Plan - PF Option ICICI Prudential Gilt Fund - Investment Plan ICICI Prudential Income Plan - Institutional Reliance Liquid Fund - Treasury Plan - Institutional Plan Reliance Liquidity Fund Reliance Monthly Income Plan - Growth JM Nifty Plus Fund JM G-Sec Fund - Regular Plan - Growth JM G-Sec Fund - Regular Plan - Dividend Escorts Gilt Fund 83 average returns of -11.78338 -11.78338 -11.78338 -11.78338 -11.78338 -11.78338 -11.78338 -11.78338 -11.78338 -11.78338 returns nifty 18.454 13.854 11.55 9.09 10.654 12.922 26.758 13.18 13.178 13.486

Escorts Income Plan Escorts Liquid Plan

5.98 4.606

-11.78338 -11.78338

comparative study on company returns to nifty returns

30 average returns 20 10 0 ICICI ICICI JM Nifty JM G-Sec Reliance -10 -20 Escorts average returns average returns of nifty

companies

COMPARATIVE STUDY ON FUND RISK TO NIFTY RISK comparative study on fund risk to nifty risk companies ICICI Prudential Gilt Fund - Investment Plan - PF Option ICICI Prudential Gilt Fund - Investment Plan ICICI Prudential Income Plan - Institutional Reliance Liquid Fund - Treasury Plan - Institutional Plan Reliance Liquidity Fund Reliance Monthly Income Plan - Growth JM Nifty Plus Fund JM G-Sec Fund - Regular Plan - Growth JM G-Sec Fund - Regular Plan - Dividend Escorts Gilt Fund Escorts Income Plan Escorts Liquid Plan risk risk of nifty 18.21111375 15.560052 13.81364195 15.560052 10.71349616 15.560052 13.33520004 15.560052 11.29095851 15.560052 9.897129685 15.560052 16.0232174 15.560052 13.24162679 15.560052 13.29174842 15.560052 12.73731934 15.560052 5.717877228 15.560052 3.754744199 15.560052

84

comparative study on company risk to nifty risk

20 15 risk 10 5 0 Reliance Liquidity JM Nifty Plus Fund JM G-Sec Fund ICICI Prudential ICICI Prudential Escorts Income risk risk of nifty

companie s

COMPARATIVE STUDY ON FUND AVERAGE RETURNS TO FUND RISK

average FUNDS ICICI Prudential Gilt Fund - Investment Plan - PF Option ICICI Prudential Gilt Fund - Investment Plan ICICI Prudential Income Plan - Institutional Reliance Liquid Fund - Treasury Plan - Institutional Plan Reliance Liquidity Fund Reliance Monthly Income Plan - Growth JM Nifty Plus Fund JM G-Sec Fund - Regular Plan - Growth JM G-Sec Fund - Regular Plan - Dividend Escorts Gilt Fund Escorts Income Plan Escorts Liquid Plan returns 18.454 13.854 11.55 9.09 10.654 12.922 26.758 13.18 13.178 13.486 5.98 4.606 risk 18.211 13.813 10.713 13.335 11.290 9.897 16.023 13.241 13.291 12.737 5.717 3.754

85

average returns & risk 30 25 20 15 10 5 0 ICICI Prudential ICICI Prudential Reliance Liquidity JM Nifty Plus Fund JM G-Sec Fund Escorts Income

companies

comparative study on companies average returns to companies risk

86

risk

average returns

RANKS ACCORDING TO AVERAGE RETURNS

AVERAGE COMPANIES JM Nifty Plus Fund ICICI Prudential Gilt Fund - Investment Plan - PF Option ICICI Prudential Gilt Fund - Investment Plan Escorts Gilt Fund JM G-Sec Fund - Regular Plan - Growth JM G-Sec Fund - Regular Plan - Dividend Reliance Monthly Income Plan Growth ICICI Prudential Income Plan Institutional Reliance Liquidity Fund Reliance Liquid Fund - Treasury Plan - Institutional Plan Escorts Income Plan Escorts Liquid Plan RETURNS 26.758 18.454 13.854 13.486 13.18 13.178 12.922 11.55 10.654 9.09 5.98 4.606 RANK 1 2 3 4 5 6 7 8 9 10 11 12

RANKS ACCORDING TO RISK

COMPANIES Escorts Liquid Plan Escorts Income Plan Reliance Monthly Income Plan - Growth ICICI Prudential Income Plan - Institutional Reliance Liquidity Fund Escorts Gilt Fund JM G-Sec Fund - Regular Plan Growth JM G-Sec Fund - Regular Plan Dividend Reliance Liquid Fund - Treasury Plan - Institutional Plan ICICI Prudential Gilt Fund - Investment Plan JM Nifty Plus Fund ICICI Prudential Gilt Fund - Investment Plan - PF Option RISK 3.754744199 5.717877228 9.897129685 10.71349616 11.29095851 12.73731934 13.24162679 13.29174842 13.33520004 13.81364195 16.0232174 18.21111375 RANK 1 2 3 4 5 6 7 8 9 10 11 12

87

CHAPTER V

FINDINGS
The present project work has been undertaken to analyze the buying and selling strategies of MUTUAL FUNDS. During the project the following facts have been identified.

The following funds have higher returns than returns of Nifty:

Jm nifty plus fund has average return of 26.758 which nifty has average return of -11.78338 88

ICICI Prudential Gilt Fund - Investment Plan - PF Option has average return 18.454 which nifty has average return of -11.78338 ICICI Prudential Gilt Fund - Investment Plan has average return 13.854 which nifty has average return of -11.78338 Escorts Gilt Fund and average return has average return of 13.486 which nifty has average return of -11.78338

The following funds have lesser risk than Nifty:

Escorts Liquid Plan has less risk when compared to nifty risk. Standard deviation of the fund is 3.754 and standard deviation of nifty is 15.560. Escorts Income Plan has second low risk when compared to nifty risk. . Standard deviation of the fund is 5.717 and standard deviation of nifty is 15.560 Reliance Monthly Income Plan - Growth has third low risk when compared to nifty risk. Standard deviation of the fund is 9.897 and standard deviation of nifty is 15.560.

Good performers:

JM nifty plus fund has first highest return .The return of that fund is 26.758 and risk of that fund is 16.02322 Reliance Monthly Income Plan Growth has second highest return. The return of that fund is 12.922 and risk of that fund is 9.89713. Escorts Liquid Plan has third highest return. The return of that fund is 4.606 and risk of that fund is 3.754744

89

CHAPTER VI

90

SUGGESTIONS
After doing analysis and interpretations, the above findings have been identified. On this basis of findings, the following suggestions can be made according to investors profiles.

The investors who can take risk and want more returns can invest is the following funds:
JM Nifty plus Fund ICICI Prudential Gilt Fund - Investment Plan - PF Option ICICI Prudential Gilt Fund - Investment Plan Escorts Gilt Fund

The investors who can not take risk and satisfy with less return. They can invest in the following funds:
Escorts Liquid Plan Escorts Income Plan Reliance Monthly Income Plan Growth

The investors who can take less risk but require more returns have to invest in these funds:
JM nifty plus fund Reliance Monthly Income Plan Growth Escorts Liquid Plan

91

CHAPTER VII

CONCLUSION
92

The project studied a few mutual fund schemes. Their performance was compared with nifty index performance during the same period. The performance of mutual fund was better than that of nifty. It reaffirmed that Mutual Funds are appropriate vehicles of Investment for small investors whether actively managed or passively managed Mutual Funds reflects on better Market performance.

Awareness in marketing of Mutual Funds (With reference to ICICI Mutual Funds)

93

QUESTIONNAIRE

NAME OCCUPATION

: :

COMPANY NAME : DESIGNATION ADDRESS TEL. NO. MOB. NO. E-MAIL : : : : :

1.Do you know about Mutual Funds?

Yes

No

2. If Yes, than from which source News Paper T.V. Magazines Friends and Relatives Financial Advisor Others (please specify)

3. The name, which comes to your mind when it comes to mutual funds

4. Do you have any investment in mutual funds 94

Yes

No

If yes, company & fund name.

I. II. III.

5. Please tell why you prefer mutual funds (please mention in the order of preference) I. Tax Benefit II. High return III. Liquidity IV. Transparency V. Flexibility

6.What is the most preferred period of investment in the mutual fund. I. Below 1 Year II. 1-3 Year III. 3-5 Year IV. Above 5 year

7. Do you have any future plan for investing in mutual funds?

Yes

No

8. Have you ever invested in UTI mutual funds?

Yes

No

95

9. If yes, in which fund

Equity

Balanced

Debt

10. How do you rate UTI mutual fund against other mutual funds

Excellent

Good

Average

Poor

11. What is your opinion regarding marketing, sales and after sales services of UTI mutual funds.

Excellent

Good

Average

Poor

12. Give your suggestions regarding ICICIMutual funds as a Port Folio Manager

ICICI Mutual Funds. Signature

96

BIBLIOGRAPHY

BOOK NAME
1. 1. Security analysis and portfolio management 2. 2. Investment Management 3. Dalal street (December 2009)

AUTHOR
Punithavati Pandian V.K. Bhalla

WEB SITES
1. www.nse-india.com 2. www.mutualfundsindia.com 3. www.amfi.com 4. www.valueresearchindia.com 5. www.moneycontrol.com

FACT SHEETS
1. ICICI Prudential Gilt Fund - Investment Plan - PF Option 2. ICICI Prudential Gilt Fund - Investment Plan 3. ICICI Prudential Income Plan - Institutional 4. Reliance Liquid Fund - Treasury Plan - Institutional Plan 5. Reliance Liquidity Fund 6. Reliance Monthly Income Plan - Growth 7. JM Nifty Plus Fund 8. JM G-Sec Fund - Regular Plan - Growth 9. JM G-Sec Fund - Regular Plan - Dividend 10. Escorts Gilt Fund 11. Escorts Income Plan 12. Escorts Liquid Plan

97