For the period ending Dec 31, 2010

SHOW RANKINGS FOR THE PERIOD

Mutual Funds – Overview 2010 Dec 31, 2010
The Indian mutual fund industry witnessed a decline in the AAUM size by 15.1 per cent
to Rs 674,400 crore in CY10 after a significant increase of 88.7 per cent in CY09. The
BEST PERFORMER - 1 YEAR..
top 10 AMCs constitute around 80 per cent of the total industry AAUM size. The
restriction on entry loads, reduction in the commissions of distributors, rising cost » Score Card
pressures have led the AMCs to revisit their business models to sustain profitability. • Balanced Schemes
With stiff competition among the players, product development, innovation and • Debt Schemes - Long Term
performance, increasing the penetration levels through distribution channels, investor • Debt Schemes - Short Term
education, right-selling and efficient customer service remain the prime focus areas for a • Diversified Equity Schemes - Aggressive
mutual fund profitability. • Diversified Equity Schemes - Defensive
• Equity Linked Saving Schemes
Average AUMs of Top 10 AMCs
• Equity Sector - Financial Services
Asset Management Company Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 YoY (%)
• Floater Schemes
Reliance Mutual Fund 119982 110413 101320 107749 102066 -14.9%
HDFC Mutual Fund 97184 88780 86648 93106 87883 -9.6% • Gilt Schemes
ICICI Prudential Mutual Fund 82432 80989 73795 69728 65841 -20.1% • Index Schemes
UTI Mutual Fund 78203 80218 64446 67618 65387 -16.4% • Liquid - IP Schemes
Birla Sun Life Mutual Fund 68066 62343 63112 67421 57689 -15.2% • Liquid Schemes
SBI Mutual Fund 37900 37417 33733 42100 41498 9.5% • Marginal Equity Schemes
Franklin Templeton Mutual 31962 33290 34564 42142 39443 23.4% • Ultra Short Term - Debt
Fund • Ultra Short Term - Debt - IP Schemes
DSP Blackrock Mutual Fund 20183 21491 21416 26674 27668 37.1%
Kotak Mahindra Mutual Fund 41402 34681 28541 28430 26589 -35.8% BEST PERFORMER - 3 YEARS..
Tata Mutual Fund 23779 21935 18464 21964 20855 -12.3% » Score Card
Industry Total AAUM 794486 747525 675864 713281 674400 -15.1% • Balanced Schemes
Top 10 MF Share in Total 75.66% 76.46% 77.83% 79.48% 79.32% • Debt Schemes - Long Term
AAUM • Debt Schemes - Short Term
Source: MFI Explorer • Diversified Equity Schemes - Aggressive
• Diversified Equity Schemes - Defensive
• Equity Linked Saving Schemes
AAUM decline was primarily due to huge net outflows to the tune of Rs 83,470 crore
from income fund category, which resulted in a 31.6 per cent decline in its AAUM. Within • Equity Sector - Financial Services
this category, Ultra short term fund accounts for around 41 per cent AAUM, which • Floater Schemes
declined by 64.4 per cent during CY2010. In spite of redemptions in the equity category, • Gilt Schemes
asset size grew by 5.5 per cent during CY2010 mainly on account of rising markets. • Index Schemes
• Liquid - IP Schemes
• Liquid Schemes
Trend of Net Fund Product Market Share
• Marginal Equity Schemes
Flows
AAUM Share of Total • Ultra Short Term - Debt
Category CY2009 CY 2010 Dec- Dec- Cha De Dec-10 • Ultra Short Term - Debt - IP Schemes
09 10 nge c-
09 Top of Form
Income 146712 (83470) 4775 3264 - 60. 48.41%
Bottom of Form
64 75 31.6 11
4% %
Equity (81) (16179) 2002 2112 5.47 25. 31.32%
38 00 % 20
%
Balanced (879) 1345 77161103 43.0 0.9 1.64%
7 4% 7%
Liquid/Money (302) 6218 8817 1023 16.0 11. 15.17%
Market 7 39 6% 10
%
Gilt (2315) 1081 36734210 14.6 0.4 0.62%
2% 6%
Others 639 283 1711 1914 11.8 2.1 2.84%
8 0 1% 5%
Total 143774 (90722) 7944 6744 -
86 00 15.1
1%
Source: MFI Explorer , AMFI monthly update

Debt Category Performance

During the year, surging inflation and liquidity crunch were the major concerns for the
debt markets. Short term funds continue to outperform long term funds due to higher
interest rate environment. Liquidity crunch, which has been prevailing in the banking
system over a year, pushed up the short term rates to the peak level of 8% and more.
Short term instruments like 3 months CD, CP and T Bills traded at about 7% to 9%
levels in recent periods. The yield on 10-Yr benchmark bond rose by 25 bps over the
year.

Category - Debt 1 Yr Return %

Debt MIP 6.38
Debt Floating Rate Fund 5.27
Debt Ultra Short Term 5.20
Debt Short Term 4.91
Debt Income 4.58
Gilt Long term 4.49
Gilt Short term 4.20
Source: MFI Explorer

Equity Category Performance

Strong economic growth and FII inflows of $ 29 billion have led the Indian equity
markets to post a return of 17.9 per cent for S&P Nifty Index and 17.4 per cent for BSE
Sensex Index. However, sectoral funds have outperformed Nifty and Sensex by a wide
margin. Banking sector performed extremely well in 2010 on the back of strong pick up
in deposits and credit growth. Equity Banking category registered a return of 35.20 per
cent against BSE Bankex of 33.4 per cent during the year. Equity Pharma followed the
second category by registering a return of 33.8 per cent in 2010. Diversified funds,
constituting around 72.5 per cent of the total equity AAUM, have posted a return of 18.0
per cent in 2010.

Category – Equity 1 Yr Return (%)

Equity Banking 35.20
Equity Pharma 33.85
Equity FMCG 28.45
Equity IT 25.47
ETF 21.74
ELSS 18.78
Equity Diversified Fund 18.00
Index Funds 17.64
Balance 14.71
Equity Global 12.46
Equity Arbitrage fund 6.36
Equity Infra 6.29
Source: MFI Explorer
 The ranks assigned by ICRA/ICRA Online are based on an objective analysis of information obtained from the entities concerned as also other
sources considered reliable by ICRA/ICRA Online. However, the ranks must be construed solely as statements of opinion and ICRA/ICRA Online
shall not be liable for any losses incurred by any user from any use of the ranks. Also, the ranks are neither a certificate of any statutory
compliance nor any guarantee on the future performance of the ranked entities/schemes.

An entity wishing to use the ICRA Online Mutual Funds Rankings for any publicity or in its prospectus / offer document / promotional literature /
advertisement or wishing to re-disseminate these rankings may do so only after obtaining the written permission of ICRA / ICRA Online.

Basics of mutual funds

The article mentioned below, is for the investors who have not yet started investing in mutual funds, but willing to
explore the opportunity and also for those who want to clear their basics for what is mutual fund and how best it
can serve as an investment tool.

Getting Started
Before we move to explain what is mutual fund, it’s very important to know the area in which mutual funds works,
the basic understanding of stocks and bonds.

Stocks
Stocks represent shares of ownership in a public company. Examples of public companies include Reliance,
ONGC and Infosys. Stocks are considered to be the most common owned investment traded on the market.

Bonds
Bonds are basically the money which you lend to the government or a company, and in return you can receive
interest on your invested amount, which is back over predetermined amounts of time. Bonds are considered to
be the most common lending investment traded on the market.
There are many other types of investments other than stocks and bonds (including annuities, real estate, and
precious metals), but the majority of mutual funds invest in stocks and/or bonds.

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Working of Mutual Fund

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Regulatory Authorities

To protect the interest of the investors, SEBI formulates policies and regulates the mutual funds. It notified
regulations in 1993 (fully revised in 1996) and issues guidelines from time to time. MF either promoted by public
or by private sector entities including one promoted by foreign entities is governed by these Regulations.

SEBI approved Asset Management Company (AMC) manages the funds by making investments in various types
of securities. Custodian, registered with SEBI, holds the securities of various schemes of the fund in its custody.

According to SEBI Regulations, two thirds of the directors of Trustee Company or board of trustees must be
independent.
The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual funds that the mutual
funds function within the strict regulatory framework. Its objective is to increase public awareness of the mutual
fund industry.

AMFI also is engaged in upgrading professional standards and in promoting best industry practices in diverse
areas such as valuation, disclosure, transparency etc.
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What is a Mutual Fund?

A mutual fund is just the connecting bridge or a financial intermediary that allows a group of investors to pool
their money together with a predetermined investment objective. The mutual fund will have a fund manager who
is responsible for investing the gathered money into specific securities (stocks or bonds). When you invest in a
mutual fund, you are buying units or portions of the mutual fund and thus on investing becomes a shareholder or
unit holder of the fund.

Mutual funds are considered as one of the best available investments as compare to others they are very cost
efficient and also easy to invest in, thus by pooling money together in a mutual fund, investors can purchase
stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage
to mutual funds is diversification, by minimizing risk & maximizing returns.

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Diversification

Diversification is nothing but spreading out your money across available or different types of investments. By
choosing to diversify respective investment holdings reduces risk tremendously up to certain extent.

The most basic level of diversification is to buy multiple stocks rather than just one stock. Mutual funds are set
up to buy many stocks. Beyond that, you can diversify even more by purchasing different kinds of stocks, then
adding bonds, then international, and so on. It could take you weeks to buy all these investments, but if you
purchased a few mutual funds you could be done in a few hours because mutual funds automatically diversify in
a predetermined category of investments (i.e. - growth companies, emerging or mid size companies, low-grade
corporate bonds, etc).

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Types of Mutual Funds Schemes in India

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and
return expectations etc. thus mutual funds has Variety of flavors, Being a collection of many stocks, an investors
can go for picking a mutual fund might be easy. There are over hundreds of mutual funds scheme to choose
from. It is easier to think of mutual funds in categories, mentioned below.

Overview of existing schemes existed in mutual fund category: BY STRUCTURE

1. Open - Ended Schemes:

An open-end fund is one that is available for subscription all through the year. These do not have a fixed
maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key
feature of open-end schemes is liquidity.

2. Close - Ended Schemes:

These schemes have a pre-specified maturity period. One can invest directly in the scheme at the time of the
initial issue. Depending on the structure of the scheme there are two exit options available to an investor after
the initial offer period closes. Investors can transact (buy or sell) the units of the scheme on the stock exchanges
where they are listed. The market price at the stock exchanges could vary from the net asset value (NAV) of the
scheme on account of demand and supply situation, expectations of unitholder and other market factors.
Alternatively some close-ended schemes provide an additional option of selling the units directly to the Mutual
Fund through periodic repurchase at the schemes NAV; however one cannot buy units and can only sell units
during the liquidity window. SEBI Regulations ensure that at least one of the two exit routes is provided to the
investor.

3. Interval Schemes:

Interval Schemes are that scheme, which combines the features of open-ended and close-ended schemes. The
units may be traded on the stock exchange or may be open for sale or redemption during pre-determined
intervals at NAV related prices.

The risk return trade-off indicates that if investor is willing to take higher risk then correspondingly he can expect
higher returns and vise versa if he pertains to lower risk instruments, which would be satisfied by lower returns.
For example, if an investors opt for bank FD, which provide moderate return with minimal risk. But as he moves
ahead to invest in capital protected funds and the profit-bonds that give out more return which is slightly higher
as compared to the bank deposits but the risk involved also increases in the same proportion.

Thus investors choose mutual funds as their primary means of investing, as Mutual funds provide professional
management, diversification, convenience and liquidity. That doesn’t mean mutual fund investments risk free.
This is because the money that is pooled in are not invested only in debts funds which are less riskier but are
also invested in the stock markets which involves a higher risk but can expect higher returns. Hedge fund
involves a very high risk since it is mostly traded in the derivatives market which is considered very volatile.

Overview of existing schemes existed in mutual fund category: BY NATURE

1. Equity fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of the fund may vary
different for different schemes and the fund manager’s outlook on different stocks. The Equity Funds are sub-
classified depending upon their investment objective, as follows:

• Diversified Equity Funds

• Mid-Cap Funds

• Sector Specific Funds

• Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-return matrix.

2. Debt funds:

The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and
financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds
ensure low risk and provide stable income to the investors. Debt funds are further classified as:

• Gilt Funds: Invest their corpus in securities issued by Government, popularly known as Government of
India debt papers. These Funds carry zero Default risk but are associated with Interest Rate risk. These
schemes are safer as they invest in papers backed by Government.

• Income Funds: Invest a major portion into various debt instruments such as bonds, corporate
debentures and Government securities.

• MIPs: Invests maximum of their total corpus in debt instruments while they take minimum exposure in
equities. It gets benefit of both equity and debt market. These scheme ranks slightly high on the risk-
return matrix when compared with other debt schemes.

• Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds primarily
invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some
portion of the corpus is also invested in corporate debentures.

• Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity and
preservation of capital. These schemes invest in short-term instruments like Treasury Bills, inter-bank
call money market, CPs and CDs. These funds are meant for short-term cash management of
corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes rank
low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds.

3. Balanced funds:

As the name suggest they, are a mix of both equity and debt funds. They invest in both equities and fixed
income securities, which are in line with pre-defined investment objective of the scheme. These schemes aim to
provide investors with the best of both the worlds. Equity part provides growth and the debt part provides stability
in returns.
Further the mutual funds can be broadly classified on the basis of investment parameter viz,
Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives of the fund.
The investor can align his own investment needs with the funds objective and invest accordingly.

By investment objective:

• Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these schemes is
to provide capital appreciation over medium to long term. These schemes normally invest a major part
of their fund in equities and are willing to bear short-term decline in value for possible future
appreciation.

• Income Schemes:Income Schemes are also known as debt schemes. The aim of these schemes is 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.

• Balanced Schemes: Balanced Schemes aim to provide both growth and income by periodically
distributing a part of the income and capital gains they earn. These schemes invest in both shares and
fixed income securities, in the proportion indicated in their offer documents (normally 50:50).

• Money Market Schemes: Money Market Schemes 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 inter-bank call money.

Other schemes

• Tax Saving Schemes:

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to time.
Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme (ELSS)
are eligible for rebate.

• Index Schemes:

Index schemes attempt to replicate the performance of a particular index such as the BSE Sensex or the
NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the index. The
percentage of each stock to the total holding will be identical to the stocks index weightage. And hence,
the returns from such schemes would be more or less equivalent to those of the Index.

• Sector Specific Schemes:

These are the funds/schemes which invest in the securities of only those sectors or industries as
specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods
(FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the
respective sectors/industries. While these funds may give higher returns, they are more risky compared
to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and
must exit at an appropriate time.
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Types of returns

There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:

• Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all income it
receives over the year to fund owners in the form of a distribution.

• If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also
pass on these gains to investors in a distribution.

• If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in
price. You can then sell your mutual fund shares for a profit. Funds will also usually give you a choice
either to receive a check for distributions or to reinvest the earnings and get more shares.

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Pros & cons of investing in mutual funds:

For investments in mutual fund, one must keep in mind about the Pros and cons of investments in mutual fund.

Advantages of Investing Mutual Funds:

1. Professional Management - The basic advantage of funds is that, they are professional managed, by well
qualified professional. Investors purchase funds because they do not have the time or the expertise to manage
their own portfolio. A mutual fund is considered to be relatively less expensive way to make and monitor their
investments.

2. Diversification - Purchasing units in a mutual fund instead of buying individual stocks or bonds, the investors
risk is spread out and minimized up to certain extent. The idea behind diversification is to invest in a large
number of assets so that a loss in any particular investment is minimized by gains in others.

3. Economies of Scale - Mutual fund buy and sell large amounts of securities at a time, thus help to reducing
transaction costs, and help to bring down the average cost of the unit for their investors.

4. Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate their holdings as and
when they want.

5. Simplicity - Investments in mutual fund is considered to be easy, compare to other available instruments in
the market, and the minimum investment is small. Most AMC also have automatic purchase plans whereby as
little as Rs. 2000, where SIP start with just Rs.50 per month basis.

Disadvantages of Investing Mutual Funds:

1. Professional Management- Some funds doesn’t perform in neither the market, as their management is not
dynamic enough to explore the available opportunity in the market, thus many investors debate over whether or
not the so-called professionals are any better than mutual fund or investor him self, for picking up stocks.

2. Costs – The biggest source of AMC income, is generally from the entry & exit load which they charge from an
investors, at the time of purchase. The mutual fund industries are thus charging extra cost under layers of
jargon.

3. Dilution - Because funds have small holdings across 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.

4. 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-gain 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.

Investments in Mutual Fund

Mutual Funds over the years have gained immensely in their popularity. Apart from the many advantages that
investing in mutual funds provide like diversification, professional management, the ease of investment process
has proved to be a major enabling factor. However, with the introduction of innovative products, the world of
mutual funds nowadays has a lot to offer to its investors. With the introduction of diverse options, investors
needs to choose a mutual fund that meets his risk acceptance and his risk capacity levels and has similar
investment objectives as the investor.

With the plethora of schemes available in the Indian markets, an investors needs to evaluate and consider
various factors before making an investment decision. Since not everyone has the time or inclination to invest
and do the analysis himself, the job is best left to a professional. Since Indian economy is no more a closed
market, and has started integrating with the world markets, external factors which are complex in nature affect us
too. Factors such as an increase in short-term US interest rates, the hike in crude prices, or any major
happening in Asian market have a deep impact on the Indian stock market. Although it is not possible for an
individual investor to understand Indian companies and investing in such an environment, the process can
become fairly time consuming. Mutual funds (whose fund managers are paid to understand these issues and
whose Asset Management Company invests in research) provide an option of investing without getting lost in the
complexities.

Most importantly, mutual funds provide risk diversification: diversification of a portfolio is amongst the primary
tenets of portfolio structuring, and a necessary one to reduce the level of risk assumed by the portfolio holder.
Most of us are not necessarily well qualified to apply the theories of portfolio structuring to our holdings and
hence would be better off leaving that to a professional. Mutual funds represent one such option.
Lastly, Evaluate past performance, look for stability and although past performance is no guarantee of future
performance, it is a useful way to assess how well or badly a fund has performed in comparison to its stated
objectives and peer group. A good way to do this would be to identify the five best performing funds (within your
selected investment objectives) over various periods, say 3 months, 6 months, one year, two years and three
 years. Shortlist funds that appear in the top 5 in each of these time horizons as they would have thus
demonstrated their ability to be not only good but also, consistent performers.

An investor can choose the fund on various criteria according to his investment objective, to
name a few:

• Thorough analysis of fund performance of schemes over the last few years managed by the fund house
and its consistent return in the volatile market.

• The fund house should be professional, with efficient management and administration.

• The corpus the fund is holding in its scheme over the period of time.

• Proper adequacies of disclosures have to seen and also make a note of any hidden charges carried by
them.

• The price at which you can enter/exit (i.e. entry load / exit load) the scheme and its impact on overall
return.

NRI MONEY IN MUTUAL FUNDS RISING

It's not just that Indians are only relying on India growth story; even others do, like our foreign partners so called
NRI, FII, etc. As per latest data form central bank, foreigners, major chunk of investments has seen good amount
of rising trend in the Indian mutual funds industry, since 2003. They hold around Rs 1,028 crore worth of units of
Indian mutual funds in 2003. The figure has increased sharply to Rs 2,663 crore in 2004 and Rs 4,966 crore in
2005, as per central bank data. It is not clear which country contributed the most to the MF industry as most
funds doesn’t disclosed country wise list, As a result, unspecified countries account for over 70%.

NRIs - reason to invest

The ever growing economy, with robust growth & well diversified industry, India seems to be a desired
destination for NRI’s. It’s assumed that Indian external sector performance will continue to be good, thus one
needs to look at the outsourcing revolutions that is taking place across the globe, in not only the services but
also the manufacturing and research sectors. On the investment side, moderate rules and better and well
regulated markets, with looking at investors sentiments which are drawing in capital to fund India's growth.
1. Dynamic policy by government
It has been close to 2 decades since the reforms process has started, with the main push coming with the
twin devaluations in 1991. During this period numerous developments have taken places that have
contributed to the flexibility of the Indian economy. Key amongst these are the opening up of the Indian
economy to foreign investment, strengthening of the domestic financial system, liberalization of imports,
rationalization of interest and exchange rates, a more conducive environment for investing in industry, and
of course, the people-intensive services sector.

This resilience is clearly reflected in the fact that average economic growth rates have moved up and India
has emerged as one of the fastest growing economies in the world.

2. Priority focusing agriculture, infrastructure

In recent times there has been a renewed vision on two key but long ignored segments of the Indian
economy – agriculture and infrastructure. The focus on agriculture and related activities, which supports
approximately 65% of the Indian population, should provide a new thrust area for economic growth.

3. The global outsourcing boom

Indian had become a major hub for business process outsourcing companies, but there is much more to this
outsourcing boom than is commonly understood. Fortunately, India stands to benefit from it in a great
measure.

4. Well equipped & regulated capital markets

The Indian stock and debt markets, including banks and mutual funds are well regulated by the Securities
and Exchange Board of India and the RBI, various measures are taken to protect investors’ sentiments &
interest. In terms of infrastructure the Indian institutional framework is improving rapidly, backed by a strong
financial system.

Terms Description
It is the document issued by the mutual fund, giving details of
Account Statement various transactions and holdings of an investor in schemes of
the fund.

The Net Asset Value of a unit adjusting for all changes caused
Adjusted NAV (Total
Return) due to dividend declaration, bonus etc. assuming reinvestment
of distributions made to the investors at the prevailing NAV.
Age of Fund The time elapsed since the inception of the fund.

Defined by Jenson in his portfolio evaluation model, it is the

excess return of the fund above risk adjusted market return,
given its level of risk as measured by beta. An investment with
Alpha Coefficient
a positive alpha indicates that the fund has performed better
than expected and a negative alpha indicates that the fund
has under performed, for the level of risk taken by it.
 It is the yearly record of a Mutual Fund's performance in an
Annual Report year. Under SEBI's guidelines, it is distributed to investors
and/or shareholders.

The percentage change in net asset value of any fund over a

Annual Return horizon of one year, assuming reinvestment of distribution
such as dividend payment and bonuses.

It is the absolute return over a period either greater or less

Annualized Returns
than a year aggregated to a period of one year.

The applicable NAV, if the application is received before that

cut-off time on a day as set by the fund. All investments or
Applicable NAV
redemptions are processed at that particular NAV. A different
NAV holds if received thereafter.

It is a means of diversifying the risk associated with a fund and

refers to the distribution of total funds available with the fund
Asset Allocation
into instruments of various types such as stocks, bonds etc.
based on the funds investmetn objective.

It is the investment manager for the mutual fund. It is a

company set up primarily for managing the investment of
Asset Management
Company (AMC) mutual funds and makes investment decisions in accordance
with the scheme objectives, deed of Trust and other provisions
of the Investment Management Agreement.

A plan introduced in mutual funds that enables the investor to

give the mandate of allotting fresh units at specified intervals
Automatic Investment (monthly, quarterly) against which the investor provides post-
Plan
dated cheques. On the specified dates, the cheques are
realized by the mutual fund and on realization, additional units
are allotted to the investor at the prevailing NAV.

An investment option available to mutual fund unitholders in

Automatic reinvestment
plan which the proceeds from either the fund's dividends, bonus
etc. are automatically used to buy more units of the fund.

It is the method of finding out the cost per unit by adding up all
Average cost method the costs involved in purchasing all the units of investment and
then dividing the sum by the total number of units.

A measure of the creditworthiness of the debt securities held

by a debt fund. It is the weighted average of the credit ratings
of the securities given their relative weights in the portfolio. For
Average Credit Quality these calculations, Government of India securities, cash and
call money instruments are taken as AAA credit quality and
non-rated debt instruments are taken as having BBB credit
quality.
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Terms Description
Balance Maturity Tenure Of A It is defined In the case of close-ended schemes as the balance period till the
Scheme
redemption of the scheme.

A class of mutual fund that aims at allocating the total assets with it in the portfolio
Balanced Funds
mix of debt as well as equity instruments.

It is a period in market when investors are on a selling spree and the share prices
Bear Market
are going down.

It is the platform or the parameter with which a scheme can be compared. For
Benchmark example, the performance of an index fund can be benchmarked against the
appropriate index specified by it.

It is the measure of the relative sensitivity of a stock or mutual fund to the market.
The market is assigned a beta of 1. The higher the beta, the more sensitive the
Beta stock or fund is considered to be relative to the market as a whole. In other words,
funds with beta more than 1 will react more to any fluctuaitons (whether upward or
downward) in market than funds with beta less than 1.

Usually a high priced scrip of a major corporation with a long, fairly stable record
Blue Chip Stock
of earnings and dividend payments and with good expected future growth..

An interest-bearing promise to pay a specified sum of money due on a specific

Bond
date in the future (maturity date).

Bonus is allocation of additional units to the investors on the basis of their existing
Bonus holdings. Basically, there is a split of existing units into more than one unit
resulting in the reduction of the NAV per unit.

A broker is an intermediary who guides the investors on one or more investment

Broker
avenues available to an investor and facilitates the process of investment.

It is the fee payable to a broker for acting as an intermediary in a transaction

Brokerage (normally a buy transaction). For example, brokerage is paid by a fund to a broker
for getting fresh investments from investors.

A index reflecting the stock prices of 30 companies listed on the Bombay Stock
Exchange (BSE) which is taken to be representative of the stock market
BSE Index
movement. It is usually considered as the benchmark forperformance evaluation
of equity funds.

Period during which the prices of stocks in the stock market keep continuously
Bull Market rising for a significant period of time on the back of sustained demand for the
stocks.
 Terms Description
The profit realizations on sale of securities and certain other
capital assets (including units of mutual funds) are called
capital gains. The gains can be classified into long-term or
Capital Gains short-term depending on the period of holding of the asset and
are charged to tax at different rates. Gains on mutual fund
units held for a period of 12 months or more are long-term
gains.

Certificate of Deposit (CD) is issued by scheduled commercial

banks excluding regional rural banks. These are unsecured
Certificates of Deposit
(CD) negotiable promissory notes. Bank CDs have maturity of 91
days to one year, while those issued by DFIs have maturities
between one and three years.

These schemes have a pre-specified maturity period. One can

invest directly in the scheme at the time of the initial issue.
Depending on the structure of the scheme there are two exit
options available to an investor after the initial offer period
closes. Investors can transact (buy or sell) the units of the
scheme on the stock exchanges where they are listed. The
market price at the stock exchanges could vary from the net
Close-Ended Schemes asset value (NAV) of the scheme on account of demand and
supply situation, expectations of unitholder and other market
factors. Alternatively some close-ended schemes provide an
additional option of selling the units directly to the Mutual Fund
through periodic repurchase at the schemes NAV; however
one cannot buy units and can only sell units during the liquidity
window. SEBI Regulations ensure that at least one of the two
exit routes is provided to the investor.

Commercial paper (CP) is a short term, unsecured instrument

issued by corporate bodies (public & private) to meet short-
Commercial Paper term requirements of working capital. Maturity varies between
3 months to 1 year. CP is issued at a discount. These can be
issued to any

He is the officer appointed by the AMC to comply with various

Compliance Officer regulatory requirement and to redress investor grieviences
associated with the funds.
Contingent Deferred
It is the sales load charged by funds in the event of
Sales Charge (CDSC)
redemptions made within a pre-specified period of purchase.
 This charge is linked to the period of unit-holding and
generally has an inverse relation with the holding period.

The total amount of money invested by all the investors in a

Corpus
scheme.

It refers to the costs associated with the churning (or changes

made to the holdings) of the portfolio. Portfolio changes have
Cost Of
Churning/Turnover cost associated costs of brokerage, custody fees, transaction fees
and registration fees, which lower the returns. The quantum
depends on the managementstyle of teh fund manager.

The annual rate of interest payable on a debt security,

Coupon Rate
expressed as a percentage of the face value of the instrument.

It refers to the load structure applicable currently on any fund.

Current Load
Funds keep revising the load structures from time to time.

The ratio of interest to the actual market price of the bond

Current Yield expressed as a percentage: annual interest/ current market
value = current yield
Custodian The keeper of a fund's securities and other assets.

In respect of all mutual funds regulated by SEBI, fresh

subscriptions and redemptions are processed at a particular
NAV. Every fund specifies a cut-off time in respect of fresh
Cut off Time
subscriptions and redemption of units. All requests received
before the cut-off times are processed at that day's NAV and
thereafter at the next day's NAV.

Terms Description
Funds that invest in income bearing instruments such as corporate debentures,
PSU bonds, gilts, treasury bills, certificates of deposit and commercial papers.
Debt /Income Funds
These funds are the least risky and are generally preferred by risk-averse
investors.

When the market price of a listed scheme is less than the actual NAV of the units,
Discount
then it is said to be tradiing at a discount.

Spreading the risk; Mutual funds spread investments among a number of different
Diversification
securities to reduce the risk inherent in investing.

A tax payable by a debt oriented mutual fund (a mutual fund that invests more
than 50% of its portfolio in the debt market) before dividend is distributed to the
Dividend Distribution Tax
unit holders. The current Dividend Distribution Tax is 10% plus the 10%
surcharge. There is no such tax applicable on open-end equity schemes.
 The periodicity of dividend payout of a scheme. This is especially valid in the case
Dividend Frequency of an income/debt schemes like monthly income plans that normally have a
regularity in such distributions.
Dividend History The track record of dividends declared by a fund till date.

Total amount of dividend declared by a fund for a scheme divided by total number
Dividend Per Unit
of units issued to all the investors.

In a dividend plan, the fund pays dividend from time to time as and when the
Dividend Plan
dividend is declared.

In a dividend reinvestment plan, the dividend is reinvested in the scheme itself

Dividend Reinvestment and is not paid out to the investors. That is, instead of receiving dividend in cash,
the unit holders receive units allotted to them at the Ex-dividend NAV.

It is an instrument issued by companies/ mutual funds to an investor for the

Dividend Warrant
purpose of payment of dividends.

It refers to the dividend earned per unit of a scheme at the prevailing per unit
Dividend Yield
price.

Mutual fund dividends are paid out of income from the scheme's investments and
can be announced out of the realized gains only. While dividends in the hands of
Dividends
the investor are free from tax, mutual funds are now required to pay a "distribution
tax" for dividends declared from debt-oriented schemes.

It is an American index similar to the BSE Index. Here the basket comprises 30
Dow Jones Index blue chip American stocks whose prices are indicative of the health of the
economy.

Terms Description
It is the load charged by the fund when one invests into the fund. It increases the
Entry Load
price of the units to more than the NAV and is expressed as a percentage of NAV.

A special product offered by mutual funds. These schemes invest in equity i.e
shares and generally have a lock-in period of three years. The primary advantage
Equity Linked Savings Scheme
to investors is the rebate under Section 80 c of the IT act, whereby a maximum of
Rs 1 lakh invested in ELSS funds is not taxable.

Schemes where more than 50% of the investments are done in equity shares of
Equity Schemes
various companies.
Ex-Bonus NAV The NAV declared post record date in case of a bonus issue is the ex-bonus NAV.

It is the effective date of a dividend distribution. When the dividend is paid, the
Ex-Dividend Date
NAV of the fund drops by the amount of the dividend.
Ex-Dividend NAV The NAV declared post record date is the ex-dividend NAV.
Exit Load
It is the load charged by the fund when oneredeems the units from the fund. It
 reduces the price of the units to less than the NAV and is expressed as a
percentage of NAV.

The Expenses of a mutual fund include management fees and all the fees
Expense Ratio associated with the fund's daily operations. Expense Ratio refers to the annual
percentage of fund's assets that is paid out in expenses.

Terms Description
These are short to medium term interest bearing instruments issued by financial
intermediaries and corporates. These bonds are issued for minimum amount of
Floating Rate Bonds
Rs. 10,000 and in multiples of Rs. 10,000 only. The typical maturity of these
bonds is 3 to 5 years.

A term used when mutual fund investors who have purchased load funds switch
Free Loading from one fund family to another family of funds without having to pay another
sales charge. Not all funds families have freeloading procedures.
Face Value The original issue price of one unit of a scheme

A commonly used mechanism for the taxation purpose of redeemed mutual fund
First-In, First-Out (FIFO) shares, it is an accounting method which assumes that the units purchased first
are the units sold first.

Classification of a scheme depending on the type of assets in which the mutual

Fund Category fund company invests the corpus. It could be a growth, debt, balanced, gilt or
liquid scheme
Fund Family All the schemes, which are managed by one mutual fund.
Fund Management Costs The charge levied by an AMC on a mutual fund for managing their funds.

Appointed by the AMC, he is the person who makes all the final decisions
Fund Manager
regarding investments of a scheme.

Terms Description
Securities created and issued by the Central Government and/or a State
Gilts/Government Securities Government, and may include securities unconditionally guaranteed by the
Government
Global Funds Mutual funds that invest in stocks of companies from all over the world

These are medium to long term obligations issued by RBI on behalf of

Government of India and various state governments. The RBI decides the cut-off
Government Securities
coupon on the basis of the bids received. These securities are issued by auction
process. On certain issues
Gilt funds
Funds that invest only in government securities of different maturities. They offer
lower returns as the credit risk is virtually absent and there are no chances of
 government defaulting on its payment obligaitons. This effectiviely reduces the
yield on them.

A scheme where investments are made in equity and convertible debentures.

Growth scheme
They normally aim to provide capital appreciation over a period of time.

The return assured by the mutual funds as a minimum return in certain income
Guaranteed Returns plans. The launch of plans offering guaranteed returns is now subject to certain
restrictions imposed by the SEBI.

Terms Description
They are mutual funds that invest primarily in fixed income
Income / Debt Funds securities and aim to provide reasonable returns with low
degree of risks.

A type of mutual fund in which the portfolios are constructed to

mirror a specific market index. Index funds are expected to
Index Funds provide a rate of return over time that will approximate or
match, but not exceed, that of the market which they are
mirroring.

The central government specifies an index linked to the

wholesale price index. The indices of two years (year of
purchase and the year of sale) are used for the purpose of
computing capital gains tax. The purchase price is multiplied
by the index of the year of sale and the product is divided by
Indexation
the index of the year of purchase. This benefit is available only
if the security has been held for more than 12 months. On sale
of equity-oriented mutual fund schemes, one can opt for
paying tax at the rate of a flat 10% or go in for paying 20%
after taking the benefit of indexation.

Defined as the fall in the value of a currency, it results in the

Inflation
rise in prices of goods and services over a period of time.

The chance that the value of assets or income will be

Inflation Risk
diminished as inflation shrinks the value of a currency.

Funds investing in assets or bonds/shares of companies from

emerging economies. These are not permissible in India due
International Funds /
Emerging Market Funds to regulations against investing abroad. Most of the schemes
of Foreign Institutional Investors (FII's) investing in India are
funds of this type.

Investment analysis and execution of investment plans in

Investment Management
keeping with certain objectives.
Investment objective The declared purpose of investment of a mutual fund scheme
 The internal guidelines that a fund follows in investing the
Investment strategy
money received from the investors

a kind of sales charge that is paid before any amount gets

Initial Load
invested into the mutual fund during its Initial Offer.

iSEC Bond Index (I- An index created by ICICI Securities as a benchmark for
BEX)
returns from debt instruments in the market.

Terms Description
Launch Date The date on which a scheme is first made open to the public for subscription
Funds investing only in short-term money market instruments including treasury
Liquid Funds /Money Market bills, commercial paper and certificates of deposit. The objective is to provide
Funds
liquidity and preserve the capital. Due to the low degree of risks available, they
generally provide lower returns than other avenues.
The cash and cash equivalent assets available with a fund to meet expenses and
Liquidity immediate redemption requirements of the investors. It refers to the ability to buy or
sell an asset quickly or the ability to convert to cash quickly.
A charge that may be levied as a percentage of NAV at the time of entry into the
Load
Schemes or at the time of exiting from the Schemes.
The period after investment in fresh units during which the investor cannot redeem
Lock In Period
the units. It is normally a key feature of Tax schemes.

Terms Description
The ratio of management expenses to the total funds under management. It is
Management Expense Ratio usually specified in the offer document as a percentage of teh assets under
manaegment of the fund.

The charge made to a mutual fund for supervision of its portfolio, usually
Management Fee/Expense
expressed as percentage of assets.

It refers to the risk posed by the market in itself i.e. the risk that the price of a
Market Risk security will rise or fall due to changing economic, political, or market conditions,
or due to a company's individual situation.

The date upon which the principal of a security becomes due and payable to the
Maturity or Maturity Date
security holder.

The minimum amount, which an existing investor should invest for purchasing
Minimum Additional Investment
fresh units.

It is the minimum amount specified by a fund that should remain invested in a

Minimum Balance
scheme after any redemption.

It refers to the minimum amount required to be invested to purchase units of a

Minimum Subscription
scheme of a mutual fund.
 The smallest sum that an investor can withdraw (get redeemed) from the fund at
Minimum Withdrawal
one time.

It refers to a market for very short-term securities. Money market instruments are
forms of debt that mature in less than a year and are very liquid in nature.
Money Market
Securities such as Treasury Bills and Call Money make up the bulk of trading in
the money markets.

This is one of the special conditions where a minimum quantity is specified for an
Minimum Fill (MF) order. The quantity of the trade involving an order with a MF attribute should at
least be this minimum quantity specified.

Refers to Commercial Papers, Treasury Bills, GOI Securities etc. with an

Money Market Instruments unexpired maturity less than or up to one year, Call MSoney, Certificates of
Deposit and any other instrument specified by the Reserve Bank of India.

An investment company that pools money from its unitholders and invests that
money into a variety of securities, including stocks, bonds, and money-market
Mutual Funds instruments. This represents a way of investing money into a professionally
managed and diversified pool of securities that hopefully will provide a good return
on unitholders' money.

Terms Description
The value of fund's portfolio at market value less current liabilities divided by the
Net asset value (NAV) number of units outstanding. Net asset value is normally computed daily or weekly
and can be found in the financial section of the daily newspaper.
Nifty An index of prices of a group of fifty stocks listed on the NSE.
No-Load Mutual Fund or No-
Load Scheme It refers to the fund that does not charge any load for buying or selling its units.

The person(s) to whom the assets should be distributed upon the death of the
Nominee
account holder.

Part of the portfolio investment of a debt fund which is not making interest
Non Performing Investments payment or principal amount repayments in time. SEBI has now evolved a
valuation mechanism for assessing them.

Terms Description
The purpose statement consisting of the goal and the avenues of investment
Objective Of Investment
released by the fund.

It is the official document issued by mutual funds prior to the launch of a fund
describing the characteristics of the proposed fund to all its prospective investors.
Offer Document or Prospectus
It contains information required by SEBI pertaining to issues such as investment
objective and policies, services, and fees.
 The period during which the initial offer to subscribe for the units of a scheme is
Offering period
open.

Funds that do not have any fixed maturity and are continuosly open for
Open-Ended Fund subscription and redemption. The key features is liquidity. One can conveniently
buy and sell the units held at the NAV related price.
Opening NAV The NAV disclosed by the fund for the first time after the closure of an NFO.

The funds set up abroad to channelise foreign investments in the Indian capital
Offshore Funds
markets.

A time period in the trading day for the different markets that the exchange deals
Open in. Order entry, matching, inquiries and other functions at the workstation will be
allowed during this period.

Scheme of a mutual fund where purchase or sale of units is allowed on a

Open-End Scheme
continued basis.

Payments (distributions) are from either income or capital gains. The unitholder of
Optional Distribution
the fund may choose to take both, either, or none, in cash or additional units.

The risk that a better opportunity may present itself after you have already
Opportunity Risk
committed your money elsewhere.

Terms Description
Pay-out day is the designated day on which securities and funds are paid out to
Pay-out
the members by the clearing house of the Exchange.

When the market price of a unit is more than the NAV it is said to be trading at a
Premium
premium.

Public Sector Undertakings
(PSU) bonds
PSU Bonds are medium and long term obligations issued by public sector
companies where the government share-holding is generally greater than 51% or
more. Some of the PSU bonds carry tax exemptions also. Minimum maturity is 5
years for taxable bonds and 7

The price at which a mutual fund's units can be purchased. The asked or offering
Purchase Price or Offering Price
price means the current net asset value per unit plus sales charge, if any.

Performance of an investment indicates the returns from an investment. The

Performance returns can come by way of income distributions as well as appreciation in the
value of the investment.
Portfolio It refers to the total investment holdings of the fund.

Portfolio Churning
Portfolio Managers
It refers to the changes made to the portfolio keeping in view the market
conditions. It includes both buying and selling of holdings and is aimed at giving a
better yield to the investor.
Also known as the Fund Managers, they are the specialists employed by Mutual
 Fund/AMC to invest the pool of money in accordance with the fund's investment
objectives.

An offer document by which a mutual fund invites the public for subscribing to the
Prospectus units of a scheme. This document contains information about the scheme and the
AMC so as to enable a prospective investor make an informed decision.

Terms Description
Reserve Bank of India, established under the Reserve Bank of India Act, 1934, is
RBI/ Reserve Bank of India
the Central Bank in India.

The rating is a symbolic indicator of the current opinion of the relative capability
and timely servicing of debts and obligations. Ratings are based on an objective
Rating analysis of the information. The rating could be done in respect of the
creditworthiness of debt instruments, risk of loss in an investment or the
performance of an investment.

The date by which mutual fund holders are registered as unit owners to receive
Record Date
any future dividend or capital gains distribution.

Buying back/cancellation of the units by a fund on an on-going basis or on

Redemption Of Units maturity of a scheme. The investor is paid a consideration linked to the NAV of the
scheme.

The institution that maintains a registry of unitholders of a fund and their unit
Registrar or Transfer Agent ownership. Normally the registrar also distributes dividends and provides periodic
statements to unitholders.

Buying back/ cancellation of the units by a fund on an ongoing basis or for a

Repurchase specified period or on maturity of a scheme. The investor is paid a consideration
linked to the NAV of the scheme

In the case of close-ended schemes, the specified date on which or period during
Repurchase Date /Period which the investor can redeem units held by him in the scheme before the
maturity of the scheme.

The price of a unit (net of exit load) that the fund offers the investor to redeem his
Repurchase price
investment.

Right provided to the unitholder of reduced sales charge on the units purchased if
Right of Accumulation the total number of the units bought over a period of time exceeds a certain pre-
determined amount.

An arrangement provided by the fund management whereby regular purchases of

small or large numbers of units may be allowed. The plan sometimes also
Recurring Investment Facility
provides for automatic reinvestment of income dividends and capital gains
distribution.
Recurring Withdrawal Facility
The arrangement that the fund provides whereby shareholders can receive
 periodic payments in a specified amount. These amounts may be more or less
than the income of the fund.

A kind of sales charge, also referred to as a back-end load, imposed when an

Redemption fee
investor redeems, or sells back units of the fund.

The price at which open-ended schemes repurchase their units and close-ended
Redemption Price
schems redeem their units on maturity. Such prices are NAV related.
Registrar or Transfer Agent Firm responsible for maintaining register of unit holders or shareholders.

Absence of credit risk in a security. Usually Government or Government

Risk-Free
guaranteed securities are only considered to be risk free.

The expected returns from an investment depend upon the risk involved in the
investment. For the purpose of comparing returns from investments involving
Risk Adjusted Returns varying levels of risk, the returns are adjusted for the level of risk before
comparison. Such returns (reduced for the level of risk involved) are called risk-
adjusted returns.
Terms Description

The price at which a fund offers to sell one unit of its scheme to investors. This
Sale price
NAV is grossed up with the entry load applicable, if any.

The purpose statement consisting of the goal and the avenues of investment
Scheme Objective
released by the fund.

It refers to the portion of assets of a fund which is invested in a particular well-

Sector Allocation defined segment of the economy, like Information Technology, pharmaceuticals,
utilities, media, telecommunications, etc.

Sector Funds are mutual funds that are established to focus and invest in the
stocks of specific sectors of the economy, such as pharmaceuticals, chemicals, or
Sector Funds
information technology. This is normally specified in the offer document of the
funds.

Generally, an instrument evidencing debt of or equity in a corporation in which a

Security person invests. The term includes notes, stocks, bonds, debentures or other
forms of negotiable and non-negotiable evidences of indebtedness or ownership.

The Sharpe ratio measures the risk-adjusted return of a fund. Simply put, the ratio
measures the variability of ' excess returns' (defined by returns of the fund over
Sharpe Ratio the 'risk less' 91 day T-bill). Mathematically, the formula takes a fund's return in
excess of a risk-free investment and divides this by the standard deviation of the
returns. The higher the Sharpe ratio, the better the fund

A sponsor is the person who, acting alone or in combination with another body or
corporate, establishes a mutual fund and applies to SEBI for its registration. The
Sponsors
sponsor is also closely associated with the AMC. As per SEBI regulations, the
sponsor has to contribute a minimum of 40% of the net worth of the AMC.

Systematic Investment Plan
(SIP)/ Recurring invest
A program that allows an investor to provide post-dated cheques to the mutual
fund to allot fresh units at specified intervals (usually monthly or quarterly). On the
specified dates, the cheques are realized by the mutual fund and additional units
at the prevailing NAV are allotted to the investor. This enables him to invest as
little as Rs 1000 a month and take advantage of rupee cost averaging.

Systematic Transfer Program A plan that allows the investor to give a mandate to the fund to periodically and
(STP)
systematically transfer a certain amount from one scheme to another.

Systematic Withdrawal Plan
(SWP)/Recurring withdra
A plan offered with some schemes under which post-dated cheques for fixed
amounts (as may be fixed by the fund) are issued to the investors for monthly, bi-
monthly or quarterly withdrawals. The withdrawals are as per the requirements of
the investor specified by him/ her at the time of investment.

Terms Description
Total Assets Under Management The market value of the total investments of a fund as on a particular date

Return on an investment, taking into account capital appreciation, dividends or

Total Return interest, and individual tax considerations adjusted for present value and
expressed on an annualised basis.

A legal arrangement under which property and assets may be held and managed
Trust for the benefit of another person. Mutual funds in India are registered under the
Trusts Act.

A person or a group of persons having an overall supervisory authority over the

Trustee fund managers. They ensure that the managers keep to the trust deed, that the
unit prices are calculated correctly and the assets of the funds are held safely.

The extent to which the fund's portfolio is turned over during the course of a year.
Turnover High turnover results in greater investment expenses and therefore in an erosion
of the value of share assets.

A measure of the fund's trading activity calculated by dividing total purchases or

Turnover Rate sales of portfolio securities (whichever is lower) by the fund's net assets over a
period of time.

Terms Description
Unit A Unit represents one undivided share in the assets of the Schemes.

A special type of fund, usually a bond fund, that has a fixed portfolio, shares or
Unit Trust "units" are sold when the fund is formed, and the portfolio remains fixed until the
maturity of the underlying securities.
Unitholder A person who holds Unit(s) under a Mutual Fund.
 Terms Description
Stocks that are considered to be undervalued based upon such ratios as price-
to-book or price-to-earnings (P/E). These stocks generally have lower price-to-
Value Stocks
book and price-earnings ratios, higher dividend yields and lower forecasted
growth rates than growth stocks.

Terms Description
Distributions form investment income, usually expressed as a percentage of net
asset value or market price. Unlike total return, yield has the single component of
Yield
investment income and does not include capital gains distributions or capital
appreciation of underlying shares.

The Yield Curve gives the relationship at a given point in time between yields on a
group of fixed-income securities with varying maturities viz. treasury bills, notes,
Yield Curve
and bonds. The curve typically slopes upward since longer maturities normally
have higher yields, although it can be flat or even inverted.

Used to determine the rate of return an investor will receive if a long-term,

interest-bearing investment, such as a bond is held to its maturity date. It takes
Yield To Maturity
into account purchase price, redemption value, time to maturity, coupon yield and
the time between interest payments.

Terms Description
A bond where no periodic interest payments are made. The investor purchases
the bond at a discounted price and receives one payment at maturity. The
maturity value an investor receives is equal to the principal invested plus interest
Zero-Coupon Bond
earned compounded semi-annually at the original rate to maturity. Interest income
from zero-coupon bonds is subject to taxes annually even though no payments
will be made.
Mutual Fund Companies in India
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The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987 marked the
existance of only one mutual fund company in India with Rs. 67bn assets under management (AUM), by the end of its
monopoly era, the Unit Trust of India (UTI). By the end of the 80s decade, few other mutual fund companies in India
took their position in mutual fund market.

The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual Fund, Punjab National
Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund.

The succeeding decade showed a new horizon in indian mutual fund industry. By the end of 1993, the total AUM of
the industry was Rs. 470.04 bn. The private sector funds started penetrating the fund families. In the same year the
first Mutual Fund Regulations came into existance with re-registering all mutual funds except UTI. The regulations
were further given a revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in India which has now merged with Franklin
Templeton. Just after ten years with private sector players penetration, the total assets rose up to Rs. 1218.05 bn.
Today there are 33 mutual fund companies in India.

Major Mutual Fund Companies in India

ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee
Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003. Deutsche
Bank A G is the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a
golbal organisation evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia
and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment.
Recently it crossed AUM of Rs. 10,000 crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund)

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of
Baroda. BOB Asset Management Company Limited is the AMC of BOB Mutual Fund and was incorporated on
November 5, 1992. Deutsche Bank AG is the custodian.

HDFC Mutual Fund

HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers nemely Housing Development Finance
Corporation Limited and Standard Life Investments Limited.

HSBC Mutual Fund

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India) Private Limited as
the sponsor. Board of Trustees, HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund

ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture
of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest life insurance companies
in the US of A. Prudential ICICI Mutual Fund was setup on 13th of October, 1993 with two sponsorers, Prudential Plc.
and ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset
Management Company Limited incorporated on 22nd of June, 1993.

Sahara Mutual Fund

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd. as the sponsor.
Sahara Asset Management Company Private Limited incorporated on August 31, 1995 works as the AMC of Sahara
Mutual Fund. The paid-up capital of the AMC stands at Rs 25.8 crore.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshor fund, the India Magnum
Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest Bank sponsored Mutual Fund in India. They
have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. State Bank
of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread
over 18 schemes.

Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsorers for Tata Mutual Fund are Tata
Sons Ltd., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited and its
Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's is one of the fastest in the country with more
than Rs. 7,703 crores (as on April 30, 2005) of AUM.

Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is presently having more than
1,99,818 investors in its various schemes. KMAMC started its operations in December 1998. Kotak Mahindra Mutual
Fund offers schemes catering to investors with varying risk - return profiles. It was the first company to launch
dedicated gilt scheme investing only in government securities.

Unit Trust of India Mutual Fund

UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI Mutual Fund with
the support of UTI Trustee Company Privete Limited. UTI Asset Management Company presently manages a corpus
of over Rs.20000 Crore. The sponsorers of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank
(PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are
Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds and Balance Funds.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The sponsor of RMF is
Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995
as Reliance Capital Mutual Fund which was changed on March 11, 2004. Reliance Mutual Fund was formed for
launching of various schemes under which units are issued to the Public with a view to contribute to the capital
market and to provide investors the opportunities to make investments in diversified securities.

Standard Chartered Mutual Fund

Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The
Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt.
Ltd. is the AMC which was incorporated with SEBI on December 20,1999.

Franklin Templeton India Mutual Fund

The group, Frnaklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409.2
bn. (as of April 30, 2005). It is one of the largest financial services groups in the world. Investors can buy or sell the
Mutual Fund through their financial advisor or through mail or through their website. They have Open end Diversified
Equity schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes,
Open end Income and Liquid schemes, Closed end Income schemes and Open end Fund of Funds schemes to offer.

Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and its leading in the market in securities, investmenty
management and credit services. Morgan Stanley Investment Management (MISM) was established in the year 1975.
It provides customized asset management services and products to governments, corporations, pension funds and
non-profit organisations. Its services are also extended to high net worth individuals and retail investors. In India it is
known as Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley
Mutual Fund (MSMF). This is the first close end diversified equity scheme serving the needs of Indian retail investors
focussing on a long-term capital appreciation.
Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance Limited as its sponsor. The Trustee Company
is Escorts Investment Trust Limited. Its AMC was incorporated on December 1, 1995 with the name Escorts Asset
Management Limited.

Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital Management Corp. of Delaware
(USA) as sponsorer. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset
Management India (Pvt) Ltd. with the corporate office in Mumbai.

Benchmark Mutual Fund

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsorer and
Benchmark Trustee Company Pvt. Ltd. as the Trustee Company. Incorporated on October 16, 2000 and
headquartered in Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.

Canbank Mutual Fund

Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Canbank
Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC
is in Mumbai.

Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on
January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC
Limited.

LIC Mutual Fund

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed Rs. 2 Crores towards
the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian
Trust Act, 1882. . The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund have
appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual
Fund.

GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government of India undertaking
and the four Public Sector General Insurance Companies, viz. National Insurance Co. Ltd (NIC), The New India
Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is
constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882.