INTRODUCTION I.I INTRODUCTION TO MUTUAL FUND: A mutual fund is a trust that pools the savings of a number of investors who sharea common financial goal. The money thus collected is then invested in capital marketinstruments such as shares, debentures and other securities. The income earned thoughthese investments and the capital appreciation realized are shared by its unit holders inproportion to the number of units owned by them. Thus a mutual fund is the most suitableinvestment forthecommonmanasitoffersanopportunitytoinvestinadiversified,professionally managed basket of securities at a relatively low cost.MUTUAL FUND OPERATION FLOW CHART: The investment company is responsible for the management of the fund, and it sells shares in the fund to individual investors. When you invest in a mutual fund, you become a part owner of a large investment portfolio, along with all the other shareholders of the fund.When you purchase shares, the fund manger invests your funds, along with the money contributed by the other shareholders. Every day, the fund manger counts up the value of al the funds holdings, figures our how many shares have been purchased by shareholders, and then calculates the net asset value !A"# of the mutual fund, the price of a single share of the fund on the day.$f you want to buy shares, you %ust send the manger your money, and they will issue new shares for you at the most recent price.Thisroutine is repeated every day on a never&ending basis, which is why mutual funds are 'sometime known as (open&end funds). $f the fund manager is doing a good %ob, the !A" of the fund will usually get bigger&your shares will be worth more. *ut e+actly how does a mutual funds !A" increase, There are a couple of ways that a mutual fund can make money in its portfolio. A mutual fund can receive dividends from the stocks that it owns.-ividends areshare of corporate profits paid to the stockholders of public companies.The fundmight havemoneyinthebankthat earnsinterest, orit might receiveinterestpayment from bounds that it owns.These are all sources of income for the fund. .utual funds are re/uired to hand out or (distribute)# this income toshareholders. 0sually they do this twice a year1 in a move thats called an incomedistribution. At the end of the year, a fund makes another kind of distribution, this time fromtheprofitstheymight makebysellingstocksorbondsthat havegoneuice. These profits are known as capital gains, and the act of passing them out is calleda capital gains distribution. -espite the differences, all mutual funds comprise four constituents2 3ponsors, Trustees,Asset .anagement 4ompanies .acs# and custodians. Sponsor: The sponsor initiates the idea to set up a mutual fund. $t could be a registeredcompany, scheduled bank or financial institution. Asponsor has to satisfy certainconditions, suchasoncapital, trackrecordat least fiveyears operationinfinancialservices#, default&free dealings and a general reputation of fairness, has to be ascertained.5The sponsor appoints the trustees, A.4 and custodian. 6nce the A.4 is formed,thesponsor is %ust a stakeholder. Trust / Board o Trust!!s: Trustees hold a fiduciary responsibility towards unit holders by protecting theirinterests.3ometimes, as with 4anara bank, the trustee and the sponsor are the same. 7orother, like 3*$ 7unds .anagement, 3tate *ank of $ndia is the sponsor and 3*$ capitalmarket the trustee.Trusteesfloat andmarket schemes1 andalsotheysecurenecessaryapprovals. They check whether the investments of the A.4 are within defined limits, whether thefunds assets are protected, and also whether the unit holders get their due returns Fund "ana#!rs / AMC: Theyaretheoneswhomanagetheinvestorsmoney. A.4takesinvestmentdecisions, compensates investorsthroughdividends, maintains proper accountingandinformation for pricing of units, calculates the !A", and provides information on listedschemes andsecondarymarket unit transactions. $t alsoe+ercises duediligenceoninvestments, and submits /uarterly reports to the trustees. 8Custod$an: $tisoftenanindependent organization, andittakescustodyofsecuritiesandother assets of a mutual fund.Among public sector mutual funds, the sponsor or trusteegenerally also acts as the custodian. 0nfortunately, funds dont always make money. $fthe fund managers made some investments that didnt work out, selling some investmentfor less than the original purchases price, the fund manger may have some capital losses.Everyone hates to have losses, and funds are no different. The good news is that theselossesaresubtractedfromthefundscapital gainsbeforethemoneyisdistributedtoshareholders. $f losses e+ceed gains, a fund manager can even pile up these losses and usethemtooffsetfuturegainsintheportfolio. Thatmeansthatthefundwontpassoutcapital gains to shareholders until the fund had at least earned more in profits than it hadlost. C%ara&t!r$st$&s o Mutua' Funds A mutual fund actually belongs to the investors who have pooled their funds. Theownership of the mutual fund is in the hands of the investors. Amutual fund is managed by investment professionals and others servicesproviders, who earn a fee their services, from the fund. The pool of the funds is invested in a portfolio of marketable investments. Thevalue of the portfolio is updated every day. The investors share in the fund is denominated by (units). The value of the unitschanges with the change in the portfolios value, everyday. The value of one unitof the investment is called as the !et Asset "alue or !A" 9HISTOR( OF THE INDIAN MUTUAL FUND INDUSTR(: The mutual fund industry in $ndia started in ':;8 with the formation of 0nit Trust of$ndia, at theinitiativeofthegovernment of$ndiaand 0T$ was de&linked from the 0T$ had = followed by 4an bank .utual 7und -ec >=#, Cun%ab !ational*ank .utual 7und Aug >:#, $ndian *ank .utual 7und !ov >:#, *ank of $ndia Bune:?#. @$4 established its mutual fund in Bune ':>: while A$4 had set up its mutual fund in-ecember '::?. At the end of '::8, the mutual fund industry had assets undermanagement of bn, last year. !ew businesses like investmentbanking, asset management and fund based activities have contributed to this growth.$n# Through.otilal 6swal 4ommodities*rokerC#@tdourfullyownedsubsidiary1 weprovidecommoditytradingfacilitiesandrelatedproductsandserviceson.4Oand!4-EO. *esides access to the best of research in the form of -aily 7undamentals ITechnical ?. 5??D Asiamoney*rokersColl 5??Drates.otilal 6swal 3ecurities&*est @ocal*rokerage,.63t $ndependent !t)Funds: The aim of money market funds is to provide easy li/uidity, preservation of capitalandmoderateincome. Theseschemesgenerallyinvest insafershort&terminstruments98suchas treasurybills, certificates of deposit, commercial paper andinter&bankcallmoney. $ts seems strange to compare mutual funds to stocks since mutual funds are primarilycomposed of stocks, but it is important to distinguish the two because there are somenotable advantages to using mutual funds. Pro!ss$ona')Mana#!"!nt: .utual funds provide the services of e+perienced and skilled professionals, backed byadedicatedinvestment researchteamthat analysestheperformanceandprospectsofcompanied and selects suitable investments to achieve the ob%ectives of the scheme. D$!t R$s>At times the prices or yields of all the securities in a particular market rise or fall due tobroadoutsideinfluence. Whenthis happen, thestockprices of bothanoutstanding,highly profitable company and a fledgling corporation may be affected. This change inprice is due to (market risk). D9In'at$on R$s>: 3ometimes referredtoas(loss of purchasingpower). Whenever inflationsprintsforward faster than earnings on your investment, you run the risk that youll actual beable to buy less, not more. $nflation risk also occurs when prices rise faster than yourreturns.Cr!d$t R$s>: $n short, how stable is the company or entity to which you lend your money when youinvest. Jow certain are you that it will able to pay the interest you are promised, or repayyour principal when the investment matures,Int!r!st R$s>:4hanging interest rates affect both e/uities and bonds in many ways.$nvestors arereminded that (predicting) which way rates wick go is rarely successful. A diversifiedportfolio can help in offsetting these changes. NET ASSETS 5ALE 1NA52: The net assets value of the 7und is the cumulative market value of the assets fund netof its liabilities. The 7und is dissolved or li/uidated, by selling off all the assets in thefund1 thisistheamount shareholderswouldcollectivelyown. Thisgivesrisetotheconcept of the net assets value per unit, which is the value, represented by the ownershipDDof one unit in the fund. $t is calculated simply by dividing the net assets value fund by thenumber of units. Jowever, most peoplerefer looselytothe!A"per unit as !A",ignoring the (per unit). We also abide by the same convention Ca'&u'at$on o NA5The important part of the calculation is the valuation of the assets owned by the fund.6nce it is calculated, the !A" is simply the net value of assets divided by the number ofunits outstanding. The detailed methodology for the calculation of the asset value is givenbelow Asset value is e/ual to3um of market value of sharesPdebenturesM@i/uid assetsPcash held, if anyM-ividendsPinterest accruedAmount due on unpaid assetsE+penses accrued but not paid-etails on the above items 7or li/uid sharesPdebentures, valuation is done on the basis of the last or closing marketprice on the principal e+change where the security is traded D;7or illi/uidandunlistedandPor thinlytradedsharesPdebentures, thevaluehas tobeestimated .7or shares this could be the book value per share or an estimated market priceif suitable benchmarks are available. 7or debenture and bonds, value is estimated on thebasis of yields of comparable li/uid securities after ad%usting for li/uidity. The value offi+edinterest bearingsecuritiesmovesinadirectionoppositetointerest ratechangesvauation of debentures and bonds is a big problem since most of them are unlisted andthinly traded. This gives considerable leeway to the A.4s on valuation and some of theA.4s are believedtotake advantage of this andadopt fle+ible valuation policiesdepending on the situation.$nterest is payable on debenturesPbonds on a periodic basis say every ; months. *ut, witheverypassingday, interest issaidtobeaccrued, at thedailyinterest rate, whichiscalculatedbydividingtheperiodicinterestpayment withthenumberofdaysineachperiods. Thus, accruedinterest onaparticular dayise/ual tothedailyinterest ratemultiplied by the number of days since the last interest payment date.0sually, dividends are proposed at the time of the Annual Aeneral V.eeting and becomedue on the record date. There is a gap between the dates on which it becomes due and theactual payment date. $n the intermediate period, it is deemed to be) accrued). E+pensesincluding management fees, custody charges etc. are calculated on daily basis. !et asset value per shareD=A .utual 7unds net asset value per share !A"# is e/ual to the total market value of allthe mutual funds holdings minus liabilities divided bythe funds total number ofoutstanding shares on a particular day Assets &@iabilities.!A" W&&&&&&&&&&&&&&&&&&&&&& !umber of shares ;!8 &on&!pts:N!t ass!t >. The second phase is between ':>= and '::8 duringwhich period > funds were established ; by banks and one each by @$4 and A$4#. Thetotal assets under management had grown to >.'9Eaveri seed company @td *ank 8;95.;5moser baer $ndia limited .iscellaneous 5D=>.?9Boythy laboratories limited Jardware ''D:.9?Aries agro limited 7mcy '::5.5D4onsumer -urablesother'?'>.5?.ibor linked bond 5?>?.88.oney marketinstrument5:5.=84orporate -ebentures ;5=>.594ash e/uivalent 8==.':!et current asset total >9=.>D ;=TABLE)3NA5 Ana'8s$s o MOTILAL OSWAL MUTUAL FUNDS -ATE !ETA33ET "A@0E D: 59.958855&''&5?'8 55.;;9; 55.;;9; 58.'=9;5:&''&5?'8 58.?::? 58.?::; 58.;':8DP'5P5?'8 59.=?5' 59.=?5' 5D.5D=:'5P'5P5?'8 5D.=88= 5D.=88= 5;.8'5=':&'5&5?'8 5D.8D:9 5D.8D:9 5D.:8??5;&'5&5?'8 5;.;:9> 5;.;:9> 5=.9;:98P'P5?'9 5>.'>>? 5>.'>>? 5>.>555'?P'P5?'9 5=.D?5= 5=.D?5= 5>.'5'D'=&?'&5?'9 5>.'5=D 5>.'5=D 5>.=;?959&?'&5?'9 58.D8;5 58.D8;5 59.?;D>8'&?'&5?'9 58.=9=9 58.=9=9 59.5>'==P5P5?'9 58.==;; 58.==;; 59.8'';'9&?5&5?'9 55.9:>D 55.9:>D 58.??9= ;>MOTILAL OSWAL PREMIER EDUIT( FUNDCHART)3 INTERPRETATION.6T$@A@ 63WA@premier E/uity 7und has portfolio of 59 scrips, the performance ofthis fund was consistent during the period, the fund has show constant decrease in its!A" from 58.>>D: on 'D&''&5?'8 to 55.9:>Don '9&?5&5?'9 with a slip of '.8>=9on anaverage it can be said that down trend hasthe last /uarter. We can conclude from the above that standard chartered premier E/uity 7und is anaverage performer since the returns are flat and dividends paid are also in constant overthe years ;: 3. HOUSIN7 DE5ELOPMENT FINANCIAL CORPORATION1HDFC2:65 9?.=D D5.'8 59.::4JA.8; 558.5=8':&'5&5?'8 5?:.>98 5?:.>98 5'9.D;95;&'5&5?'8 5'=.;>5 5'=.;>5 555.D>8P'P5?'9 55D.?98 55D.?98 58?.'?;'?P'P5?'9 55?.?'8 55?.?'8 559.:;8'=&?'&5?'9 5'=.??8 5'=.??8 55'.>>;=>59&?'&5?'9 ':8.;>D ':8.;>D ':>.?988'&?'&5?'9 '>>.95 '>>.95 ':5.;D:=P5P5?'9 '>D.':9 '>D.':9 '>:.8;''9&?5&5?'9 '>;.?D; '>;.?D; ':?.595 CHART)- J-74 E/uity 7und INTERPRETATION J-74 E/uity 7und has portfolio of 59 scrips, the performance of this fund wasconsistent during the period, the fund has show constant decrease in its !A" from 5'?.=>=:on 'D&''&5?'8 to '>;.?D; on '9&?5&5?'9 with a slip of 59.=59, on an average it can besaid that down trend has the last /uarter. We can conclude from the above that J-74 E/uity 7und is an average performersince the returns are flat and dividends paid are also in constant over the years 0. ICICI PRUDENTIAL MUTUAL FUND:.utual 7und $4$4$ Crudential .utual 7und3cheme !ame $4$4$ Crudential E/uity I-erivatives 7und&Wealth6ptimiser Clan 3cheme Type 6pen Ended3cheme 4ategory Arowth@aunch -ate >&!ov&?;$ndicate @oad3eparatelyEntry @oad25.5DG of the applicable !A",E+it @oad27or!76 Ceriod2'G of applicable !A" if redeemed within ;months from date of allotment Cost !762 !il.inimum3ubscriptionAmount.9:G >'CHART)F '?.:5 '?.:>55&''&5?'8 '?.:= '?.:' '?.:=5:&''&5?'8 '?.:= '?.:' '?.:=DP'5P5?'8 ''.?' '?.:D ''.?''5P'5P5?'8 ''.?9 '?.:> ''.?9':&'5&5?'8 ''.?D '?.:: ''.?D5;&'5&5?'8 ''.?= ''.?' ''.?=5P'P5?'9 ''.?: ''.?9 ''.?::P'P5?'9 ''.'9 ''.?> ''.'9';&?'&5?'9 ''.'8 ''.?= ''.'858&?'&5?'9 ''.58 ''.'> ''.588?&?'&5?'9 ''.5 ''.'D ''.5;P5P5?'9 ''.58 ''.'= ''.58'8&?5&5?'9 ''.5; ''.5' ''.5; CHART),>8

$4$4$ Crudential E/uity 7und INTERPRETATION $4$4$Crudential E/uityfundtheperformanceofthisfundwasconstantlyincreasingduringthe period, the value of the fundhadbetter increased, !A"hasincreasedfrom'?.:>on'D&''&5?'8to''.5;on'8&?5&5?'9withaslip?.5>, onanaverage it can be assessed that the fund is doing well. With the fluctuations in the marketthis fund is volatile. 7rom the above findings we can conclude that $4$4$ Crudential e/uity fund is betteraverage performer where the returns are highly fluctuating and !A" is up trend RELIANCE EDUIT( FUND:.utual 7und ''.?' '=.?> 59.=?5''5P'5P5?'8 5'>.8; ''.?9 '=.D' 5D.=88=':&'5&5?'8 5?:.>9 ''.?D ';.>= 5D.8D:95;&'5&5?'8 5'=.;> ''.?= '=.;8 5;.;:9>5P'P5?'9 55D.?9 ''.?: '>.'8 5>.'>>?:P'P5?'9 55?.?' ''.'9 '>.'9 5=.D?5=';&?'&5?'9 5'= ''.'8 '=.D 5>.'5=D58&?'&5?'9 ':8.;: ''.58 'D.;D 58.D8;58?&?'&5?'9 '>>.95 ''.5 'D.D8 58.=9=9;P5P5?'9 '>D.': ''.58 'D.;5 58.==;;'8&?5&5?'9 '>;.?; ''.5; '9.55 55.9:>D >:CHART)+4omparison of !A"s of various 70!- 3chemes INTERPRETATION The analysis of !A"reveals that 3TA!-E.9:G 59.::G :'4JA