Final report

Introduction

A mutual fund is a professionally-managed form of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. In a mutual fund, the fund manager, who is also known as the portfolio manager, trades the fund's underlying securities, realizing capital gains or losses, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the net asset value per share (NAV) is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding.

Legally known as an "open-end company" under the Investment Company Act of 1940(the primary regulatory statute governing investment companies), a mutual fund is one of three basic types of investment companies available in the United States. Outside of the United States (with the exception of Canada, which follows the U.S. model), mutual fund may be used as a generic term for various types of collective investment vehicle. In the United Kingdom and Western Europe (including offshore jurisdictions), other forms of collective investment vehicle are prevalent, including unit trusts, open-ended investment companies (OEICs), SICAVs and unitized insurance funds. In Australia and New Zealand the term "mutual fund" is generally not used; the name "managed fund" is used instead.

What is a Mutual Fund?

Mutual funds belong to the class of firms known as investment companies. While companies may offer a "family" of funds under a single umbrella name and common administration - for example, the

Vanguard Group, Fidelity Investments, or Strong Funds - each fund offered is a separately incorporated investment company. These are entities that pool investor money to buy the securities that make up the fund’s portfolio. The idea behind this pooling of investor money is to give each investor the benefits that come from the ownership of a diversified portfolio of securities chosen and monitored daily by experience, professional advisers.The funds create and sell new shares on demand. Investors` shares represent a portion of the fund’s portfolio and income proportional to the number of shares they purchase. Individual shareholders of the mutual funds have voting rights in the operation of the fund, just as most holders of common stocks in corporations have the right to vote on certain issues involving the running of the company. The key attribute of a mutual fund, regardless of how it is structured, is that the investor is entitled to receive on demand, or within a specified period after demand, an amount computed by reference to the value of the investor’s proportionate interest in the net assets of the mutual fund. This means that the owner of mutual fund shares can "cash in," or redeem his or her shares at any time.

Mutual funds, therefore, are considered a liquid investment. The investor’s selling (redemption) price may be higher or lower than the purchase price. It all depends on the performance of the fund’s portfolio. The fund has an adviser who charges a fee for managing the portfolio. The adviser decides when and what securities to buy and sell, and is responsible for providing or causing to be provided all services required by the mutual fund in carrying on its day-to-day activities. All fund investors get this built-in portfolio management whether they

own 50 shares or 10,000.The adviser generally purchases many different securities for the portfolio, since investment theory holds that diversification reduces risk. It is this diminished risk that is one of the attractions of mutual funds. The fund also has a custodian, usually a financial institution such as a bank, which holds all cash and securities for the fund.

Investment in portfolio can take different forms .An investor can either invest directly in securities or can invest through an investment company. Where an investment company is a financial intermediary that collects money from investors and invests in various securities on

their behalf. The returns from these investments are passed on to the investment company charges fees for its service, referred to as management fees.

Hence, a mutual fund can be defined as a trust that pools the saving of many investors who have a common investment ideology. The money thus collected is then invested by the fund manager on behalf of the investors in different types of securities. The income earned through these investments and the capital appreciated realized by the scheme are shared by its unit holder in proportion to the number of units owned by them.

Leaving formal definition to experts, A mutual fund simply put is a collection of stocks and/or bonds.

We can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.

ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:

Asset management company:-

The role of an asset management company is highly significant in the mutual fund operations. They are the fund manager i.e., they invest the investors’ money in various securities after proper research and analysis. They also look after the administrative functions of a mutual fund for which they charge management fee.

HISTORY OF MUTUAL FUND INDUSTRY IN INDIA

The Evolution:-The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the year 1963. The primary objective at that

time was to attract the small investors and it was made possible through the collective efforts of the Government of India and the Reserve Bank of India. The history of mutual fund industry in India can be better understood divided into following phases:

Phase 1. Establishment and Growth of Unit Trust of India - 1964-87Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate under the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was transferred in the hands of Industrial Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the largest number of investors in any single investment scheme over the years.

UTI launched more innovative schemes in 1970s and 80s to suit the needs of different investors. It launched ULIP in 1971, six more schemes between 1981-84, Children's Gift Growth Fund and India Fund (India's first offshore fund) in 1986, Master share (India’s first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By the end of 1987, UTI's assets under management grew ten times to Rs 6700 crores.Phase II. Entry of Public Sector Funds - 1987-1993The Indian mutual fund industry witnessed a number of public sector players entering the market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India became the first non-UTI mutual fund in India. SBI Mutual Fund was later followed by Can bank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under management of the industry increased seven times to Rs. 47,004 crores. However, UTI remained to be the leader with about 80% market share.

1992-93

Amount Mobilis

ed

Assets Under

Management

Mobilisation as % of

gross Domestic Savings

UTI 11,057 38,247 5.2%

Public Sector

1,964 8,757 0.9%

Total 13,021 47,004 6.1%

Phase III. Emergence of Private Sector Funds - 1993-96The permission given to private sector funds including foreign fund management companies (most of them entering through joint ventures with Indian promoters) to enter the mutual fund industry in 1993, provided a wide range of choice to investors and more competition in the industry. Private funds introduced innovative products, investment techniques and investor-servicing technology. By 1994-95, about 11 private sector funds had launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the year 1996. The mobilization of funds and the number of players operating in the industry reached new heights as investors started showing more interest in mutual funds.

Investors’' interests were safeguarded by SEBI and the Government offered tax benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands of investors from

income tax. Various Investor Awareness Programmers were launched during this phase, both by SEBI and AMFI, with an objective to educate investors and make them informed about the mutual fund industry.

In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a trust formed by an Act of Parliament. The primary objective behind this was to bring all mutal fund players on the same level. UTI was re-organized into two parts: 1. The Specified Undertaking 2. The UTI Mutual Fund

Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes (like US-64, Assured Return Schemes) are being gradually wound up. However, UTI Mutual Fund is still the largest player in the industry. In 1999, there was a significant growth in mobilization of funds from investors and assets under management

Phase V. Growth and Consolidation - 2004 OnwardsThe industry has also witnessed several mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players.

HISTORY OF MUTUAL FUND INDUSTRY IN INDIA

The Evolution:-The formation of Unit Trust of India marked the evolution of the Indian

mutual fund industry in the year 1963. The primary objective at that time was to attract the small investors and it was made possible through the collective efforts of the Government of India and the Reserve Bank of India. The history of mutual fund industry in India can be better understood divided into following phases:

Phase 1. Establishment and Growth of Unit Trust of India - 1964-87Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate under the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was transferred in the hands of Industrial Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the largest number of investors in any single investment scheme over the years.

UTI launched more innovative schemes in 1970s and 80s to suit the needs of different investors. It launched ULIP in 1971, six more schemes between 1981-84, Children's Gift Growth Fund and India Fund (India's first offshore fund) in 1986, Master share (India’s first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By the end of 1987, UTI's assets under management grew ten times to Rs 6700 crores.Phase II. Entry of Public Sector Funds - 1987-1993The Indian mutual fund industry witnessed a number of public sector players entering the market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India became the first non-UTI mutual fund in India. SBI Mutual Fund was later followed by Can bank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under management of the industry increased seven times to Rs. 47,004 crores. However, UTI remained to be the leader with about 80% market share.

1992-93

Amount Mobilis

ed

Assets Under

Management

Mobilisation as % of

gross Domestic Savings

UTI 11,057 38,247 5.2%

Public Sector

1,964 8,757 0.9%

Total 13,021 47,004 6.1%

Phase III. Emergence of Private Sector Funds - 1993-96The permission given to private sector funds including foreign fund management companies (most of them entering through joint ventures with Indian promoters) to enter the mutual fund industry in 1993, provided a wide range of choice to investors and more competition in the industry. Private funds introduced innovative products, investment techniques and investor-servicing technology. By 1994-95, about 11 private sector funds had launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the year 1996. The mobilization of funds and the number of players operating in the industry reached new heights as investors started showing more interest in mutual funds.

Investors’' interests were safeguarded by SEBI and the Government offered tax benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands of investors from

income tax. Various Investor Awareness Programmers were launched during this phase, both by SEBI and AMFI, with an objective to educate investors and make them informed about the mutual fund industry.

In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a trust formed by an Act of Parliament. The primary objective behind this was to bring all mutal fund players on the same level. UTI was re-organized into two parts: 1. The Specified Undertaking 2. The UTI Mutual Fund

Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes (like US-64, Assured Return Schemes) are being gradually wound up. However, UTI Mutual Fund is still the largest player in the industry. In 1999, there was a significant growth in mobilization of funds from investors and assets under management

Phase V. Growth and Consolidation - 2004 OnwardsThe industry has also witnessed several mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players.

HISTORY OF MUTUAL FUND INDUSTRY IN INDIA

The Evolution:-The formation of Unit Trust of India marked the evolution of the Indian

mutual fund industry in the year 1963. The primary objective at that time was to attract the small investors and it was made possible through the collective efforts of the Government of India and the Reserve Bank of India. The history of mutual fund industry in India can be better understood divided into following phases:

Phase 1. Establishment and Growth of Unit Trust of India - 1964-87Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate under the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was transferred in the hands of Industrial Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the largest number of investors in any single investment scheme over the years.

UTI launched more innovative schemes in 1970s and 80s to suit the needs of different investors. It launched ULIP in 1971, six more schemes between 1981-84, Children's Gift Growth Fund and India Fund (India's first offshore fund) in 1986, Master share (India’s first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By the end of 1987, UTI's assets under management grew ten times to Rs 6700 crores.Phase II. Entry of Public Sector Funds - 1987-1993The Indian mutual fund industry witnessed a number of public sector players entering the market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India became the first non-UTI mutual fund in India. SBI Mutual Fund was later followed by Can bank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under management of the industry increased seven times to Rs. 47,004 crores. However, UTI remained to be the leader with about 80% market share.

1992-93

Amount Mobilis

ed

Assets Under

Management

Mobilisation as % of

gross Domestic Savings

UTI 11,057 38,247 5.2%

Public Sector

1,964 8,757 0.9%

Total 13,021 47,004 6.1%

Phase III. Emergence of Private Sector Funds - 1993-96The permission given to private sector funds including foreign fund management companies (most of them entering through joint ventures with Indian promoters) to enter the mutual fund industry in 1993, provided a wide range of choice to investors and more competition in the industry. Private funds introduced innovative products, investment techniques and investor-servicing technology. By 1994-95, about 11 private sector funds had launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the year 1996. The mobilization of funds and the number of players operating in the industry reached new heights as investors started showing more interest in mutual funds.

Investors’' interests were safeguarded by SEBI and the Government offered tax benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands of investors from

income tax. Various Investor Awareness Programmers were launched during this phase, both by SEBI and AMFI, with an objective to educate investors and make them informed about the mutual fund industry.

In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a trust formed by an Act of Parliament. The primary objective behind this was to bring all mutal fund players on the same level. UTI was re-organized into two parts: 1. The Specified Undertaking 2. The UTI Mutual Fund

Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes (like US-64, Assured Return Schemes) are being gradually wound up. However, UTI Mutual Fund is still the largest player in the industry. In 1999, there was a significant growth in mobilization of funds from investors and assets under management

Phase V. Growth and Consolidation - 2004 OnwardsThe industry has also witnessed several mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players.

TYPES OF FUNDS

Like human beings, Mutual funds also come in various sizes and shapes.

There are about dozen fund classes but all of them are derivatives of three basic fund types:

Equity: They provide Long term growth.

These funds invest in equities.

Their risk level is high so is the return.

Debt : This type of funds provides regular income.

Invest in debt instruments like bonds etc.,

Their risk / return levels are medium

Liquid: Provide Liquidity

Invest in Money market instruments

Most volatile but safer and give lower returns.

Also known as Cash or Money market funds

TYPES OF MUTUAL FUND SCHEMES

There are a wide variety of Mutual Fund schemes that cater to our needs, whatever your age, financial position, risk tolerance and return expectations. Whether as the foundation of your investment programmed or as a supplement, Mutual Fund schemes can help you meet your financial goals?

(A) By Structure Open-Ended Fund:-

An open ended remains open for issue and redemption of its share throughout its unlimited duration.Example:-IDFC Premier Equity fund, IDFC Imperial Equity fund etc.

Close-Ended Fund:-

A close ended fund have fixed duration where we can issue share at the beginning only and cannot be redeem till the end of their fixed investment duration.For example:- IDFC Capital Protection Oriented fund etc.

(B) By Investment Objective

Growth Fund:-

Aim to provide capital appreciation over the medium to long term. These schemes normally invest a majority of their funds in equities and are willing to bear short term decline in value for possible future

appreciation. These schemes are not for investors seeking regular income or needing their money back in the short term.

Ideal for: (1) Investors in their prime earning years.

(2) Investors seeking growth over the long term.

For example:-Alliance basic industries, Reliance growth etc.

Income Fund:-

Aim to provide regular and steady income to investors. These schemes generally invest in fixed income securities such as bonds and corporate debentures. Capital appreciation in such schemes may be limited.

Ideal for:

(1) Retired people and others with a need for capital stability and regular income.

(2) Investors who need some income to supplement their earnings.

For example:- Birla Income Plus-D, HDFC Income etc.

Balanced Fund:-

Aim to provide both growth and income by periodically distributing a part of the income and capital gains they earn. They invest in both shares and fixed income securities in the proportion indicated in their offer documents.

Ideal for:

(1) Investors looking for a combination of income and moderate growth.

For example:-, Balanced-G, HDFC Balanced-G etc.

Money market/ Liquid Fund:- Aim to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer, short term instruments such as treasury bills, certificates of deposit, commercial paper and interbank call money.

Returns on these schemes may fluctuate, depending upon the interest rates prevailing in the market.

Ideal for:

(1) Corporate and individual investors as a means to park their surplus funds for short periods or awaiting a more favorable investment alternative.

For example:-Reliance liquid plan, UTI Money Market Fund etc.

GILT FUND:-

Invest in different types of long and medium term govt. securities. Gilt fund is low risk debt govt. securities.For example:- Templeton India govt. securities, DSP-ML govt. securities etc.

REAL ESTATE FUND:-

Real estate funds primarily invest in real estate ventures. These funds are of close ended type because of long term investment in real estates.

CLASSIFICATION BASED ON LOAD OR NO-LOAD FUND

A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs.10. If the entry as well as exit load charged is 1%, then the investors who buy would be required to pay Rs.10.10 and those who offer their units for repurchase to the mutual fund will get only Rs.9.90 per unit. The investors should take the loads into consideration while making investment as these affect their yields/returns. However, the investors should also consider the performance track record and service standards of the mutual fund which are more important. Efficient funds may give higher returns in spite of loads. A no-load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.

The advantages of investing in a Mutual Fundare:-

(1) Professional Management:- We avail of the services of experienced and skilled professionals who are backed by a dedicated investment research team which analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme.

(2) Diversification:- Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion.

(3) Convenient Administration:- Investing in a Mutual Fund reduces paperwork and helps to avoid many problems such as bad deliveries, delayed payments and unnecessary follow up with brokers and companies. Mutual Funds save our time and make investing easy and convenient.

(4) Return Potential:- Over a medium to long term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.(5) Low cost:-

Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.

(6) Liquidity:- In open-ended schemes, you can get your money back promptly at Net Asset Value related prices from the Mutual Fund itself. With close-ended schemes, we can sell your units on a stock exchange at the prevailing market price.(7) Transparency:- We get regular information on the value of our investment in addition to disclosure on the specific investments made by our scheme, the proportion invested in each class of assets and the fund manager’s investment strategy and outlook.(8) Flexibility:- Through features such as Systematic Investment Plans (SIP), Systematic Withdrawal Plans (SWP) and Dividend reinvestment plans, we can systematically invest or withdraw funds according to our needs and convenience.(9) Choice of Schemes:- Mutual Funds offer a variety of schemes to suit our Varying needs over a lifetime.(10) Well Regulated:- All Mutual Funds are registered with SEBI and them Function within the provisions of strict regulations Designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.

Disadvantage of Investing Through Mutual Funds

1) Costs Control Not in the Hands of an Investor:-Investor has to pay investment management fees and fund distribution costs as a percentage of the value of his investments (as long as he holds the units), irrespective of the performance of the fund.

2) No Customized Portfolios:- The portfolio of securities in which a fund invests is a decision taken by the fund manager. Investors have no right to interfere in the decision making process of a fund manager, which some investors find as a constraint in achieving their financial objectives.

3) Difficulty in Selecting a Suitable Fund Scheme:-Many investors find it difficult to select one option from the plethora of funds/schemes/plans available. For this, they may have to take advice from financial planners in order to invest in the right fund to achieve their objectives.

Mutual Fund Investment Strategies

Systematic Investment Plan (SIPs): These are best suited for young people who have started their careers and need to build their wealth. SIPs entail an investor to invest a fixed sum of money at regular intervals in mutual fund scheme the investor has chosen. For instance an investor opting for SIP in xyz mutual fund scheme will need to invest a certain sum of money every month / quarter /half year in the scheme.

Systematic Withdrawal Plan (SWPs):

These plans are best suited for people nearing retirement. In these plans an investor invests in a mutual fund scheme and is allowed to withdraw a fixed sum of money at regular intervals to take care of expenses.

Systematic Transfer Plan (STPs) :

They allow the investors to transfer on a periodic basis a specified amount from one scheme to another within the same fund family meaning two schemes belonging to the same mutual fund. A transfer will be treated as redemption of units from the scheme from which the transfer is made .Such redemption or investment will be at the applicable NAV. This service allows the investor to manage his investment actively to achieve his objectives. Many funds do not even charge even any transaction feed for this service an added advantage for the active investor.

Performance Evaluation

PARAMETERS OF MUTUAL FUND EVALUATION:

Risk Returns Liquidity Expense Ratio Composition of Portfolio

Risks Associated With Mutual Funds

Investing in mutual funds as with any security, does not come without risk. One of the most basic economic principles is that risk and reward are directly correlated. In other words, the greater the potential risk, the greater the potential return. The types of risk commonly associated with mutual funds are:

Market Risk: Market risk relate to the market value of a security in the future. Market prices fluctuate and are susceptible to economic and financial trends, supply and demand, and many other factors that cannot be precisely predicted or controlled.

Political Risk:

Changes in the tax laws, trade regulations, administered prices etc. is some of the many political factors that create market risk. Although collectively, as citizens, we have indirect control through the power of our vote, individually as investors, we have virtually no control.

Inflation Risk:

Inflation or purchasing power risk, relates to the uncertainty of the future purchasing power of the invested rupees. The risk is the increase in cost of the goods and services, as measured by the Consumer Price Index.

Interest Rate Risk:

Interest Rate risk relates to the future changes in interest rates. For instance, if an investor invests in a long term debt mutual fund scheme and interest rate increase, the NAV of the scheme will fall because the scheme will be end up holding debt offering lowest interest rates.

Business Risk:

Business Risk is the uncertainty concerning the future existence, stability and profitability of the issuer of the security. Business Risk is inherent in all business ventures. The future financial stability of a company can not be predicted or guaranteed, nor can the price of its securities. Adverse changes in business circumstances will reduce the market price of the company’s equity resulting in proportionate fall in the NAV of mutual fund scheme, which has invested in the equity of such a company.

Risk in money market fund:

Since money market mutual funds, invest in secured central government securities, high rated commercial paper and corporate debt, the risk of loosing interest and capital is minimum when compared to other investment. However, the risk is in the form of fluctuations in interest rate, as yield on money market funds with the change in NAV, which changes due to changes in the prices of money market instruments due to volatility in interest rate.

Risk in Bond funds:

Bond funds are also expected to interest rate risk. Further, the composition of bond portfolio exposes an investor to a risk, which is due to presence of junk bonds in the portfolio composition. The risk of capital erosion is less as compared to stock funds.

Risk in stock funds:

Stock funds are more risky when compared to the money market funds and bond funds. The risk in stock funds is in the nature of the price volatility of stocks in a port folio. Stock funds consisting of equity prone to high price fluctuation or dealing in speculation, will lead to excessive gains or losses by way of increased or decreased NAV.

Economic Risk :

Economic Risk involves uncertainty in the economy, which, in turn can have an adverse effect on a company’s business. For instance, if monsoons fall in a year, equity stocks of agriculture bases companies will fall and NAVs of mutual funds, which have invested in such stocks, will fall proportionately.There are 3 different methods with the help of which we can measure the risk.

Measurement of risk

1) Beta Coefficient Measure Of Risk :

Beta relates a fund’s return with a market index. It basically measures the sensitivity of funds return to changes in market index.If Beta = 1Fund moves with the market i.e. Passive fundIf Beta < 1Fund is less volatile than the market i. e Defensive FundIf Beta > 1Funds will give higher returns when market rises & higher losses when market falls i.e. Aggressive Fund

2) Ex –Marks or R-squared Measure Of Risk :

Ex –Marks represents co relation with markets. Higher the Ex-marks lower the risk of the fund because a fund with higher Ex-marks is better diversified than a fund with lower Ex-marks.

3) Standard Deviation Measure Of Risk :

It is a statistical concept, which measures volatility. It measures the fluctuations of fund’s returns around a mean level. Basically it gives you an idea of how volatile your earnings are. It is broader concept than BETA. It also helps in measuring total risk and not just the market risk of the portfolio.

How to Calculate the Value of a Mutual Fund:

The investors’ funds are deployed in a portfolio of securities by the fund manager. The value of these investments keeps changing as the market price of the securities change. Since investors are free to enter and exit the fund at any time, it is essential that the market value of their investments is used to determine the price at which such entry and exit will take place. The net assets represent the market value of assets, which belong to the investors, on a given date. Net Asset Value or NAV of a mutual fund is the value of one unit of investment in the fund, in net asset terms.

NAV = Net Assets of the scheme / Number of Units Outstanding

Where Net Assets are calculated as:-

(Market value of investments + current assets and other assets + Accrued income – current liabilities and other liabilities – less accrued expenses) / No. of Units Outstanding as at the NAV date

NAV of all schemes must be calculated and published at least weekly for closed-end schemes and daily for open-end schemes.The major factors affecting the NAV of a fund are:

Sale and purchase of securities Sale and repurchase of units Valuation of assets Accrual of income and expenses

SEBI requires that the fund must ensure that repurchase price is not lower than 93% of NAV (95% in the case of a closed-fund). On the other side, a fund may sell new units at a price that is different from the NAV, but the sale price cannot be higher than 107 % of NAV. Also the difference between the repurchase price and the sale price of the unit is not permitted to exceed 7% of the sale price.

Measuring Mutual Fund Performance:We can measure mutual fund’s performance by different method:

Absolute Return Method:

Percentage change in NAV is an absolute measure of return, which finds the NAV appreciation between two points of time, as a percentage. e .g: If NAV of one fund changes from Rs.20 to Rs.22 in 12 months then Absolute return = (22 – 20)/20 X 100 =10%

Simple Annual Return Method :

Converting a return value for a period other than one year, into a value for one year, is called as annualisation. In order to annualize a rate, we find out what the return would be for a year, if the return behaved for a year, in the same manner it did, for any other fractional period.E .g: If NAV of one fund changes from Rs.20 to Rs.22 in 6 months thenAnnual Return = (22 – 20) /20 X 12/6 X 100 = 20%

Total Return Method:

The total return method takes into account the dividends distributed by the mutual fund, and adds it to the NAV appreciation, to arrive at returns.Total Return = (Dividend distributed + Change in NAV)/ NAV at the start X 100 e .g: If NAV of one fund changes from Rs.20 to Rs.22 in 6 months if in between dividend of Rs. 4 has been distributed thenTotal Return = {4 + (22 – 20)}/20 X 100 = 30%

Total Return when dividend is reinvested:

This method is also called the return on investment (ROI) method. In this method, the dividends are reinvested into the scheme as soon as they are received at the then prevailing NAV (ex-dividend NAV).= ((Value of holdings at the end of the period/ value of the holdings at the beginning) – 1)*100E.g. An investor buys 100 units of a fund at Rs. 10.5 on January 1, 2007. On June 30, 2007 he receives dividends at the rate of 10%. The ex-dividend NAV was Rs. 10.25. On December 31, 2007, the fund’s NAV was Rs. 12.25. Value of holdings at the beginning period= 10.5*100= 1050 Number of units re-invested = 100/10.25 = 9.756

End period value of investment = 109.756*12.25 = 1344.51 Rs. Return on Investment = ((1344.51/1050)-1)*100

= 28.05%

Compounded Average Annual Return Method:

This method is basically used for calculating the return for more than 1 year. In this method return is calculated with the following formula: A = P X (1 + R / 100) N

Where P = Principal invested A = maturity value N = period of investment in years R = Annualized compounded interest rate in %R = {(Nth root of A / P) – 1} X 100E. g: If amount invested is Rs. 100 & in the end we get return of Rs. 200 & period of investment is 10 years then annualized compounded return is 200 = 100 (1 + R / 100) 10 Rate = 7.2 %

RETURNS:

Returns have to be studied along with the risk. A fund could have earned higher return than the benchmark. But such higher return may be accompanied by high risk. Therefore, we have to compare funds with the benchmarks, on a risk adjusted basis. William Sharpe created a metric for fund performance, which enables the ranking of funds on a risk adjusted basis.

Sharpe Ratio = Risk Premium Funds Standard Deviation Treynor Ratio = Risk Premium Funds BetaRisk Premium = Difference between the Fund’s Average return and Risk free return on government security or treasury bill over a given period .

LIQUIDITY:

Most of the funds being sold today are open-ended. That is, investors can sell their existing units, or buy new units, at any point of time, at prices that are related to the NAV of the fund on the date of the transaction. Since investors continuously enter and exit funds, funds are actually able to provide liquidity to investors, even if the underlying markets, in which the portfolio is invested, may not have the liquidity that the investor seeks.

EXPENSE RATIO:

Expense ratio is defined as the ratio of total expenses of the fund to the average net assets of the fund. Expense ratio can actually understate the total expenses, because brokerage paid on transactions of a fund are not included in the expenses. According to the current SEBI norms, brokerage commissions are capitalized and included in the cost of the transactions.

Expense ratio = Total Expenses Average Net Assets

COMPOSITION OF THE PORTFOLIO:

Credit quality of the portfolio is measured by looking at the credit ratings of the investments in the portfolio. Mutual Fund fact sheets show the composition of the portfolio and the investments in various asset classes over time. Portfolio turnover rate is the ratio of lesser of asset purchased or sold by funds in the market to the net assets of the fund.If Portfolio ratio is 100% means portfolio has been changed fully. When Portfolio ratio is high means expense ratio is high.

Portfolio Ratio = Total Sales & Purchase Net Assets of fund

In order to meaningfully compare funds some level of similarity in the following factors has to be ensured:

Size of the funds Investment objective Risk profile Portfolio composition Expense ratios

Fund evaluation against benchmark:

Funds can be evaluated against some performance indicators which are known as benchmarks. There are 3 types of benchmarks:

Relative to market as whole Relative to other comparable financial products Relative to other mutual funds

Relative to market as whole:

There are different ways to measure the performance of fund w.r.t market asEquity Funds Index Fund – An Index fund invests in the stock comprising of the index

in the same ratio. This is a passive management style.For example,

Market Index Fund - BSE Sensex

Nifty Index Fund - NIFTY

The difference between the return of this fund and its index benchmark can be explained by “TRACKING ERROR”.

Active Equity Funds: The fund manager actively manages this fund. To evaluate performance in such case we have to select an appropriate benchmark.

Large diversified equity fund - BSE 100

Sector fund - Sectoral Indices

Debt Funds: Debt fund can also be judged against a debt market index e.g. I-BEX

Relative to other comparable financial products:

Schemes Return Convenience

Safety Volatility Liquidity

Equity High Moderate

Low High High

FI Bonds Moderate High

High Moderate Moderate

Corporate Debentures

Moderate Low

Moderate Moderate Low

Company Fixed Moderate Low Low Low

Deposits Moderate

Bank Deposits Low High

High Low High

PPF Moderate High

High Low Moderate

Life Insurance Low Moderate

High Low Low

Gold Moderate Low

High Moderate Moderate

Real Estate High Low

Moderate High Low

Mutual Funds High High

High Moderate High

Schemes Investment Objective

RiskTolerance

Investment Horizon

Equity Term Capital AppreciationHigh Long

FI Bonds Income Low Medium to Long term

Corporate Debentures

Income High Moderate Medium to Long term

Company Fixed Deposits

Income Moderate Low Medium

Bank Deposits Income Generally Flexible all terms

PPF Income Low Long

Life Insurance Risk Cover Low Long

Gold Inflation Hedge Low Long

Real Estate Inflation Hedge Low Long

TAX TREATMENT FOR THE INVESTORS (UNITHOLDERS):-

Tax benefits of investing in the Mutual Fund

As per the taxation laws in force as at the date of the Offer Document, some broad income tax implications of investing in the units of the Scheme are stated below. The information so stated is based on the Mutual Fund's understanding of the tax laws in force as of the date of the Offer Document, which have been confirmed by its auditors. The information stated below is only for the purposes of providing general information to the investors and is neither designed nor intended tobe a substitute for professional tax advice. As the tax consequences are specific to each investor and in view of the changing tax laws, each investor is advised to consult his or her or its own tax consultant with

respect to the specific tax implications arising out of his or her or its participation in the Scheme.

Implications of the Income-tax Act, 1961 as amended by the Finance Act, 2006

To the Unit holders

(a.) Tax on Income

In accordance with the provisions of section 10(35)(a) of the Act, income received by all categories of unit holders in respect of units of the Fund will be exempt from income-tax in their hands.Exemption from income tax under section 10(35) of the Act would, however, not apply to any income arising from the transfer of these units.

(b.) Tax on capital gains:

As per the provisions of section 2(42A) of the Act, a unit of a Mutual Fund, held by the investor as a capital asset, is considered to be a short-term capital asset, if it is held for 12 months or less from the date of its acquisition by the unit holder. Accordingly, if the unit is held for a period of more than 12 months, it is treated as a long-term capital asset.

Computation of capital gain

Capital gains on transfer of units will be computed after taking into account the cost of their acquisition. While calculating long-term capital gains, such cost will be indexed by using the cost inflation index notified by the Government of India. Individuals and HUFs, are granted a deduction from total income, under section 80C of the Act upto Rs. 100,000, in respect of specified investments made during the year (please also refer paragraph d).

Long-term capital gains As per Section 10(38) of the Act, long-term capital gains arising from the sale of unit of an equity oriented fund entered into in a recognized stock exchange or sale of such unit of an equity oriented fund to the mutual fund would be exempt from income-tax, provided such transaction of sale is chargeable to securities transaction tax. Pursuant to an amendment made in the Finance Act, 2006, effective 1 April 2006, companies would be required to include such long term capital gains in computing the book profits and minimum alternated tax liability under section 115JB of the Act.

Short -term capital gains As per Section 111A of the Act, short-term capital gains from the sale of unit of an equity oriented fund entered into in a recognized stock exchange or sale of such unit of an equity oriented fund to the mutual fund would be taxed at 10 per cent, provided such transaction of sale is chargeable to securities transaction tax.

The said tax rate would be increased by a surcharge of:- 10 per cent in case of non-corporate Unit holders, where the total income exceeds Rs.1,000,000,- 10 per cent in case of resident corporate Unit holders, and

- 2.5 per cent in case of non-resident corporate unit holders irrespective of the amount of taxable income. Further, an additional surcharge of 2 per cent by way of education cess would be charged on amount of tax inclusive of surcharge. In case of resident individual, if the income from short term capital gains is less than the maximum amount not chargeable to tax, then there will be no tax payable.

Further, in case of individuals/ HUFs, being residents, where the total income excluding short-term capital gains is below the maximum amount not chargeable to tax1, then the difference between the current maximum amount not chargeable to tax and total income excluding short-term capital gains, shall be adjusted from short-term capital gains. Therefore only the balance short term capital gains will be liable to income tax at the rate of 10 percent plus surcharge, if applicable and education cess.

Non-residentsIn case of non-resident unit holder who is a resident of a country with which India has signed a Double Taxation Avoidance Agreement (which is in force) income tax is payable at the rates provided in the Act, as discussed above, or the rates provided in the such agreement, if any, whichever is more beneficial to such non-resident unit holder.

Investment by MinorsWhere sale / repurchase is made during the minority of the child, tax will be levied on either of the parents, whose income is greater, where the said income is not covered by the exception in the proviso to section 64(1A) of the Act. When the child attains majority, such tax liability will be on the child.

Losses arising from sale of units

- As per the provisions of section 94(7) of the Act, loss arising on transfer of units, which are acquired within a period of three months prior to the record date (date fixed by the Fund for the purposes of entitlement of the unit holder to receive the income from units) and sold within a period of nine months after the record date, shall not be allowed to the extent of income distributed by the Fund in respect of such units.

- As per the provisions of section 94(8) of the Act, where any units ("original units") are acquired within a period of three months prior to the record date (date fixed by the Fund for the purposes of entitlement of the unit holder to receive bonus units) and any bonus units are allotted (free of cost) based on the holding of the original units, the loss, if any, on sale of the original units within a period of nine months after the record date, shall be ignored in the computation of the unit holder's taxable income. Such loss will however, be deemed to be the cost of acquisition of the bonus units.

--Each Unit holder is advised to consult his / her or its own professional tax advisor before claiming set off of long-term capital loss arising on sale / repurchase of units of an equity oriented fund referred to above, against long-term capital gains arising on sale of other assets.

- Short-term capital loss suffered on sale / repurchase of units shall be available for set off against both long-term and

short-term capital gains arising on sale of other assets and balance short-term capital loss shall be carried forward for set off against capital gains in subsequent years.

- Carry forward of losses is admissible maximum upto eight assessment years.

(c.) Tax withholding on capital gains

Capital gains arising to a unit holder on repurchase of units by the Fund should attract tax withholding as under:

- No tax needs to be withheld from capital gains arising to a FII on the basis of the provisions of section 196D of the Act.

- In case of non-resident unit holder who is a resident of a country with which India has signed a double taxation avoidance agreement (which is in force) the tax should be deducted at source under section 195 of the Act at the rate provided in the Finance Act of the relevant year or the rate provided in the said agreement, whichever is beneficial to such non-resident unit holder. However, such a nonresident unit holder will be required to provide appropriate documents to the Fund, to be entitled to the beneficial rate provided under such agreement.

- No tax needs to be withheld from capital gains arising to a resident unit holder on the basis of the Circular no. 715 dated 8 August 1995 issued by the CBDT.

Subject to the above, the provisions relating to tax withholding in respect of gains arising from the sale of units of the various schemes of the fund are as under:

- No tax is required is to be withheld from long term capital gains arising from sale of units in equity oriented fund schemes, that are subject to securities transaction tax.

- In respect of short-term capital gains arising to foreign companies (including Overseas Corporate Bodies), the Fund is required to deduct tax at source at the rate of 10.46 per cent (10 per cent tax plus 2.5 per cent surcharge thereon plus additional surcharge of 2 per cent by way of education cess on the tax plus surcharge). In respect of short-term capital gains arising to non-resident individual unit holders, the Fund is required to deduct tax at source at the rate of 11.22 per cent (10 per cent tax plus 10 per cent surcharge thereon2 plus additional surcharge of 2 per cent by way of education cess on the tax plus surcharge).

(d.) Wealth Tax

Units held under the Schemes of the Fund are not treated as assets within the meaning of section 2(ea) of the Wealth Tax Act, 1957 and therefore, not liable to wealth-tax.

(e.) Securities Transaction Tax

Nature of Transaction Current tax rate Tax rate effective (%) 1 June 2006 (%) Delivery based purchase transaction in equity shares or units of equity oriented fund entered in a recognized stock exchange 0.1 0.125 Delivery based sale transaction in equity shares or units of equity oriented fund entered in a recognized stock exchange 0.1 0.125 Non-delivery based sale transaction in equity shares or units of equity oriented fund entered in a recognized stock exchange. 0.02 0.025 Sale of units of an equity oriented fund to the mutual fund 0.2

0.25 Value of taxable securities transaction in case of units shall be the price at which such units are purchased or sold. A deduction in respect of securities transaction tax paid is not permitted for the purpose of computation of business income or capital gains. However, if the total income of an assessee includes any business income arising from taxable securities transactions, he shall be entitled to a rebate3 from income-tax of an amount equal to the securities transaction tax paid by him in respect of the taxable securities transactions entered during the course of his business.

The maximum amounts of total income, not chargeable to tax are as under:Type of person Maximum amount of income not chargeable to tax

Women Rs. 135,000Senior citizens Rs. 185,000Other individuals and HUFs Rs. 100,000

How is a mutual fund set up?

A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset management company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management

Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.

SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme.

Association of Mutual Funds in India (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organization. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August, 1995.AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors.

Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders.

The objectives of Association of Mutual Funds in India:---

The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has certain defined objectives which juxtaposes the guidelines of its Board of Directors. The objectives are as follows:-

This mutual fund association of India maintains a high professional and ethical standards in all areas of operation of the industry.

It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies who are by any means connected or involved in the field of capital markets and financial services also involved in this code of conduct of the association.

AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry.

Association of Mutual Fund of India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry.

It develops a team of well qualified and trained Agent distributors. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry.

AMFI undertakes all India awareness programme for investors in order to promote proper understanding of the concept and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate information on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.

The sponsorers of Association of Mutual Funds in India:---

- Bank Sponsored - SBI Fund Management Ltd. - BOB Asset Management Co. Ltd. - Canbank Investment Management Services Ltd. - UTI Asset Management Company Pvt. Ltd.

Institutions -

- GIC Asset Management Co. Ltd. - Jeevan Bima Sahayog Asset Management Co. Ltd.

Private Sector: -

Indian -

- BenchMark Asset Management Co. Pvt. Ltd. - Cholamandalam Asset Management Co. Ltd. - Credit Capital Asset Management Co. Ltd. - Escorts Asset Management Ltd. - JM Financial Mutual Fund - Kotak Mahindra Asset Management Co. Ltd. - Reliance Capital Asset Management Ltd.

- Sahara Asset Management Co. Pvt. Ltd - Sundaram Asset Management Company Ltd. - Tata Asset Management Private Ltd. - Predominantly India Joint Ventures:- - Birla Sun Life Asset Management Co. Ltd. - DSP Merrill Lynch Fund Managers Limited - HDFC Asset Management Company Ltd.

Predominantly Foreign Joint Ventures:-

- ABN AMRO Asset Management (I) Ltd. - Alliance Capital Asset Management (India) Pvt. Ltd. - Deutsche Asset Management (India) Pvt. Ltd. - Fidelity Fund Management Private Limited - Franklin Templeton Asset Mgmt. (India) Pvt. Ltd. - HSBC Asset Management (India) Private Ltd. - ING Investment Management (India) Pvt. Ltd. - Morgan Stanley Investment Management Pvt. Ltd. - Principal Asset Management Co. Pvt. Ltd. - Prudential ICICI Asset Management Co. Ltd. - Standard Chartered Asset Mgmt Co. Pvt. Ltd.

Tips on buying mutual funds:-

1. Determine your financial objectives and how much money you have to invest. Make sure the fund’s objectives coincide with your own.

Don’t change your objectives or exceed the amount set aside for investment unless you have good reason.

2. Always obtain all available information before you invest. Request the prospectus, the Statement of Additional Information and the latest shareholder report from each fund you are considering.

3. Never invest in periodic payment plans unless you are virtually certain that you will not have to redeem early. If you redeem early or do not complete the plan, you may have to pay sales charges of up to 51% of your investment.

4. Be on the alert for incorporation by reference. You will have "no excuse" for not knowing this information, if a problem arises. You may be legally presumed to know materials incorporated by reference in a prospectus or other documents.

5. Always determine all sales charges, fees and expenses before you invest. Fees such as 12b-1 fees can cost you dearly and charges for reinvestment of dividends and capital gains distributions can substantially add to your costs. Shop around among the many funds offered and compare the various fees and costs connected with funds that appeal to you.

6. Learn the costs of redemption. Sometimes investors are surprised to learn that they have to pay to get out of funds through back-end loads or redemption fees. Find out the redemption costs before you invest so you won’t be unpleasantly surprised when you redeem your shares.

7. Never treat the risks of investment in a fund lightly. Weigh the risks

of the funds you want to buy against your ability to tolerate the ups and downs of the market and your investment goals. Be extra cautious when considering investing in funds with high yield/high risk portfolios. Junk bond problems, for example, invariably affect the fund’s performance.

8. Don’t be misled by the name of a fund. Some funds have been given names denoting safety, stability and low risk, despite the fact that the underlying investments in the portfolio are volatile and highly risky.

AUM

Average Assets under Management (AAUM) for the month of JUN-2010 (Rs in Lakhs)

Sr No

Mutual Fund Name Average AUM For The Month

Excluding Fund ofFunds - Domestic

but

Fund Of Funds -Domestic

including Fund ofFunds - Overseas

1 AEGON Mutual Fund N/A N/A

2AIG Global Investment Group Mutual Fund

101465.80 0

3 Axis Mutual Fund 299918.79 0

4 Baroda Pioneer Mutual Fund 307519.77 0

5 Benchmark Mutual Fund 225037.45 0

6 Bharti AXA Mutual Fund 69274.04 0

7 Birla Sun Life Mutual Fund 6311155.02 2778.89

8 Canara Robeco Mutual Fund 853344.16 0

9 Deutsche Mutual Fund 901687.08 0

10 DSP BlackRock Mutual Fund 2141574.99 0

11 Edelweiss Mutual Fund 28276.18 0

12 Escorts Mutual Fund 19549.63 0

13 Fidelity Mutual Fund 787887.07 12158.10

14 Fortis Mutual Fund 516239.14 0

15 Franklin Templeton Mutual Fund 3456392.05 91748.29

16 Goldman Sachs Mutual Fund N/A N/A

17 HDFC Mutual Fund 8664809.74 0

18 HSBC Mutual Fund 535318.99 0

19 ICICI Prudential Mutual Fund 7379542.94 2701.94

20 IDBI Mutual Fund 2817.64 0

21 IDFC Mutual Fund 2096575.54 51700.27

22 ING Mutual Fund 149546.56 4889.23

23 JM Financial Mutual Fund 565798.86 0

24 JPMorgan Mutual Fund 403079.40 0

25 Kotak Mahindra Mutual Fund 2854087.32 9599.00

26 L&T Mutual Fund 369341.59 0

27 LIC Mutual Fund 3004938.17 0

28 Mirae Asset Mutual Fund 25213.30 0

29 Morgan Stanley Mutual Fund 225679.68 0

30 Motilal Oswal Mutual Fund N/A N/A

31 Peerless Mutual Fund 92125.86 0

32 Pramerica Mutual Fund N/A N/A

33 PRINCIPAL Mutual Fund 682797.00 0

34 Quantum Mutual Fund 10103.50 139.68

35 Reliance Mutual Fund 10132015.43 0

36 Religare Mutual Fund 1091847.47 0

37 Sahara Mutual Fund 74161.96 0

38 SBI Mutual Fund 3373338.68 0

39 Shinsei Mutual Fund 27308.41 0

40 Sundaram BNP Paribas Mutual Fund 1271748.61 0

41 Tata Mutual Fund 1846409.72 0

42 Taurus Mutual Fund 243865.13 0

43 UTI Mutual Fund 6444564.61 0

Grand Total 67586357.28 175715.4

COMPANY PROFILE

Standard Chartered Mutual Fund is based in India. As of May 30, 2008, Standard Chartered Mutual Fund operates as a subsidiary of Infrastructure Development Finance Co. Ltd

About Standard Chartered Mutual Fund

Standard Chartered Mutual Fund is well-established fund house and is sponsored by the Standard Chartered Group. At Standard Chartered Mutual Fund we strive to launch not just innovative products, but products that truly add value to our investors. We were among the first to launch an active management debt fund-the Dynamic Bond Fund - that had the capability to mimic a cash fund or an income fund depending on market situations. The Short term and Medium term funds that were uniquely positioned at various points along the interest rate curve with the sole objective of maximizing value to investors with different investment time horizons.

Lately this innovation was again brought to the fore with the launch of the Standard Chartered Enterprise Equity Fund , a close-ended fund

that sought to invest a portion in Equity IPOs. The fund also launched the Standard Chartered Premier Equity fund an equity fund that seeks to generate wealth by investing in relatively smaller companies. We manage our schemes through well-researched and thoroughly tested processes like the 3 D Factor (For debt funds and helps us in predicting interest rate movements) and the Equity Circle process. SCMF also pioneered several service initiatives that helped increase transactional ease. It was the first mutual fund to initiate

Across the counter redemptions for all classes of investors in liquid funds,

Toll Free No accessible in 976 cities Phone transact service wherein investors can redeem without

having any Personal Identification Number

Schemes ManagedScheme NameGrindlays Cash Fund (G)Grindlays CF - Inst Plan (G)Grindlays Dynamic Bond (G)Grindlays FRF - LTP Inst (G)Grindlays Floating Rate (G)Grindlays FRF- Inst Plan (G)Grindlays FRF - LTP (RP) (G)Grindlays GSec - Inv Plan (G)Grindlays GSec Fund - PF (G)Grindlays GSec - STP (G)Grindlays SSIF - MTP A (G)Grindlays SSIF STP - Inst (G)GSSIF STP - MF Plan C (G)

GSSIF STP - Super Inst C (G)Grindlays SSIF (G)Grindlays SSIF - STP (G)SC All Seasons Bond - RP (G)StanChart Arbitrage - Inst (G)StanChart Arbitrage Fund (G)StanChart Classic Equity (G)StanChart Enterprise Equity(G)StanChart Imperial Equity (G)StanChart Imperial Equity (G)StanChart Liquidity Manager –GStanChart Liq. Manager Plus-GStanChart Premier Equity (G)StanChart Small&Midcap Eqty –GStanChart Tax Saver Fund (G)

Key developments for IDFC Asset Management Company Private Limited1) IDFC May Reportedly Divest 26% Stake In IDFC Asset

Management:Infrastructure Development Finance Co. Ltd. (IDFC) plans to rope in a global fund manager as a strategic partner in IDFC Asset Management Company Private Limited. IDFC's Executive Director, Vikram Limaye told Economic Times (ET) that the firm is looking at a strategic partnership “to either manage the fund or advise foreign flow of funds into the Indian equity market.” He declined to give details. But one investment banker, requesting anonymity, said IDFC could divest a 26% stake to an

overseas fund manager as part of this exercise. IDFC acquired IDFC Asset Management in March 2008 from Standard Chartered Bank for $205 million. IDFC has already started discussions with a leading global investment bank to run the process of roping in the strategic partner, said another investment banker.

2) IDFC Asset Seeking Overseas Partner; May Lead To Stake Sale:IDFC Asset Management Company Private Limited a unit of Infrastructure Development Finance Co. Ltd. (IDFC) is seeking an overseas partner that will give it access to an overseas distribution network, the Mint newspaper reported on May 21, 2010. Discussions are underway with several potential overseas partners for IDFC Asset Management, Vikram Limaye, Executive Director told the paper in a telephonic interview. “I don't know in what shape and form the partnership will evolve, and there could be an arrangement of the partner taking a minority stake in the company,” he said. IDFC wants a foreign partner that will help it tap a share of the capital that flows into the Indian market, boosting its fee income and improving margins

About IDFC company profile

1