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A STUDY ON COMPARATIVE ANALYSIS ON VARIOUS MUTUAFUNDS

WITH REFERENCE TO

ICICI PRUDENTIAL MUTUAL FUND

Project report submitted in partial fulfillment for the award of degree in

POST GRADUATE DIPLOMA IN MANAGEMENT

ByT.SUDHEER

Regd no: 010-012-030

PGDM 2010-2012

Under the esteemed guidance of

Mr. SUHEI SHAIK

ASST MANAGER-SALES

Industry Guide&

Dr. B. Ratan Reddy

Professor & Faculty Guide

RATAN GLOBAL BUSINESS SCHOOL, HYDERABADApproved by AICTE, Ministry of HRD, Govt of India, New Delhi

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DECLARATION

I declare that project report entitled A STUDY ON COMPARATIVE ANALYSIS OF

VARIOUS MUTUAL FUNDS IN ICICI PRUDENTIALS, HYDERABAD is original and has

not been submitted in part or in full for the award of any other degree or Diploma.

Place:

Date:

T.SUDHEER

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ACKNOWLEDGEMENT

I am very thankful to Mr. SUHEL SHAIK, Asst Manager, Sales for giving

permission to do project in their organization and extending his valuable guidance throughou

the study.

I am also thankful to Mr. Ravi Shekhar, Regional manager and

Mr.P.V.V SYAM SUNDAR, Relationship manager for providing me the valuable information

and had spent their time in completing my project.

At last express my gratitude to all those who have helped me directly or

indirectly in completing this project successfully.

T.SUDHEER

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ABSTRACT

The present project work A Comparative Analysis of Various Mutual Funds With Reference To Nifty is

categorized in to seven chapters

Chapter: - 1 Deals with the introduction this chapter sets the objective of the study and also gives the need

scope, Research methodology and the limitations of the study

Chapter: - 2 Deals with the introduction to the Industry profile

Chapter: - 3 Deals with the Review of literature and company profile.

Chapter: - 4 Deals with the analysis of the data & Interpretation

Chapter: -5 Deals with findings of the study that are arrived at after making the data analysis

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

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

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CONTENT

CHAPTER NO TITLE PAGE.NO

1 INTRODUCTION TO TOPIC

OBJECTIVES

NEED AND SCOPE OF STUDY

LIMITATIONS

RESEARCH METHODOLOGY

1

2

3

4

52 INDUSTRY PROFILE 6-18

3 LITERATURE REVIEW

COMPANY PROFILE

19-38

39-44

4 DATA ANALYSIS

&

INTERPRETATION

45-75

5 FINDINGS 76

6 SUGGESTIONS 77

7 CONCLUSSION 78

ANNEXURE:-

BIBLIOGRAPHY

LIST OF TABLES

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ABLENO TABLE NAME PAGE

Icici prudential gilt fund - investment plan - pf option 45-4

Icici prudential gilt fund - investment plan 47-4

Icici prudential income plan institutional 49-5

Reliance liquid fund - treasury plan - institutional plan 51-5

Reliance liquidity fund 53-5

Reliance monthly income plan growth 55-5

Jm nifty plus fund 57-5

Jm g-sec fund - regular plan growth 59-6

Jm g-sec fund - regular plan dividend 61-6

Escorts gilt fund 63-6

Escorts income plan 65-6

Escorts liquid plan 67-6

Nifty average returns 69

Comparative average returns of funds 70

Comparative risk of funds 71

Comparative study on fund returns to nifty returns 72

Comparative study on fund risk to nifty risk 73

Comparative study on fund average returns to fund risk 74

Ranks according to average returns 75

Ranks according to risk 75

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CHAPTER - I

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INTRODUCTION

Investment in a portfolio can take different forms. An investor can either invest securities, or can invest

through an investment company, also referred to as mutual fund. Mutual fund are financial intermediaries

which collect the savings of investors and invest them in a large and well-diversified portfolio of securities such

as money market instruments, corporate and government bonds and equity shares of joint stock companies.

A mutual fund is a pool of commingles funds invested by different investors, who have no contact with

each other. Mutual funds pools money from a cross section of investors by issuing units, construct a diversified

portfolio of stocks, bonds and other investment instruments and invest the same in capital market. Mutual funds

are conceived as instructions for providing small investors with avenues of investments in the capital market

Since small investors generally do not have adequate time, knowledge, experience and resources for directly

accessing the capital market, them have to rely on and intermediaries, which undertakes informed investmen

decisions and provides consequential benefits of professional expertise. Except the union trust of India, all

mutual funds in India are organized and set up under the Indian Trust Act as Trust.

The primary objective of all mutual funds is to provide better returns to investors by minimizing the risk

associated with capital market instruments.

All the mutual funds aim at achieving one or more of the following.

Providing a steady flow of income.

Providing high capital appreciation.

Providing capital appreciaton with income.

Providing income or capital appreciation with tax benefits.

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OBJECTIVES

To study performance of a selected mutual funds

To compare the fund performance with respect to Nifty

To make suggestions to investors based on performance anal

NEED OF THE STUDY

Many small investors are tempted to invest in the markets these days. But they do not have the knowledge and

expertise to take decisions. More over them have limited funds and time. Therefore mutual funds are a good

option for them. This study shows the performance of a few funds and compares it with nifty

.

SCOPE OF THE STUDY

The historical performance of the fund is compared with performance of the market (Nifty). Both the

historical data of the fund and the market is used for analysis. The internal factors contributing for the

performance of this specific fund is not include in the scope of the study. The scope of the study is confined to

the performance of this specific fund in comparison to the prevailing market conditions. The market being a

major factor affecting the mutual funds performance, the market plays a critical role despite the precautions

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taken by the fund managers. The care taken by the fund mangers does not fall in the scope of the study. The

scope of the study is limited to the performance of the fund in the existing market conditions.

LIMITATIONS

The present project work has been studied to analysis to study on A Comparative Study of Selected Mutual

Funds With Reference To Nifty. The following limitation has been founded during the study of project

1. The study is limited only to the analysis of different schemes and its suitability to different investors

according to their risk taking ability.

2. The study is based on secondary data available fact sheets, websites and other books as primary data was

not accessible.

3. Data pertaining to 2008-2009 was considered for analysis

4. The sample size chosen for the project study is not sufficient enough to give suggestions to investors.

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RESEARCH METHODOLOGY

Sources of data:

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

Research design:

The project has been done by following 12 different funds

Between 01-04-2008 to 31-03-2009

(icici prudential gilt fund - investment plan - pf option , icici prudential gilt fund - investment plan , icic

prudential income plan institutional , reliance liquid fund - treasury plan - institutional plan, reliance liquidity

fund , reliance monthly income plan growth , jm nifty plus fund , jm g-sec fund - regular plan growth, jm g-

sec fund - regular plan dividend , escorts gilt fund , escorts income plan , escorts liquid plan)

The risk and return for the above prescribed funds are

Calculated and compared with risk and returns of nifty index

Data analysis:

The present project work has been analyzed using time series analysis with graphical presentation.

The formulas applied in the calculations are as follows

Closing price opening price

RETURNS =

Opening price

Standard deviation =

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CHAPTER II

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INDUTSTRY PROFILEMUTUAL FUNDS INDUSTRY IN INDIA

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the

year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered

the industry.

In the past decade, Indian mutual fund industry had seen a dramatic imporvements, both qualitywise as well as

quantitywise. Before, the monopoly of the market had seen an ending phase, the Assets Under Management

(AUM) was Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993

and till April 2004, it reached the height of 1,540 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of

SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry.

The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large

sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of

all mutual fund companies, to market the product correctly abreast of selling.

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The mutual fund industry can be broadly put into four phases according to the development of the sector. Each

phase is briefly described as under.

FIRST PHASE - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of

India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI

was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and

administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of

1988 UTI had Rs.6,700 crores of assets under management.

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

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank Mutual Fund (Dec 87),

Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank

of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets

under management.

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

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the

Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund

Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The

erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund

registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund

Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in

India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there

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were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores o

assets under management was way ahead of other mutual fund.

FOURTH PHASE - SINCE FEBRUARY 2003

This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified

Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). The Specified

Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by

Government of India and does not come under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and

functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March

2000 more than Rs.76,000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the

SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the

mutual fund industry has entered its current phase of consolidation and growth. As at the end of September,

2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

The major players in the Indian Mutual Fund Industry are:

TYPES OF MUTUAL FUNDS

General Classification of Mutual Funds

Open-end Funds / Closed-end Funds

Open-end Funds:

Funds that can sell and purchase units at any point in time are classified as Open-end Funds. The fund size

(corpus) of an open-end fund is variable (keeps changing) because of continuous selling (to investors) and

repurchases (from the investors) by the fund. An open-end fund is not required to keep selling new units to the

investors at all times but is required to always repurchase, when an investor wants to sell his units. The NAV of

an open-end fund is calculated every day.

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Closed-end Funds:

Funds that can sell a fixed number of units only during the New Fund Offer (NFO) period are known as Closed-

end Funds. The corpus of aClosed-end Fund remains unchanged at all times. After the closure of the offer,

buying and redemption of units by the investors directly from the Funds is not allowed. However, to protect the

interests of the investors, SEBI provides investors with two avenues to liquidate their positions:

1. Closed-end Funds are listed on the stock exchanges where investors can buy/sell units from/to each

other. The trading is generally done at a discount to the NAV of the scheme. The NAV of a closed-end

fund is computed on a weekly basis (updated every Thursday).

2. Closed-end Funds may also offer "buy-back of units" to the unit holders. In this case, the corpus of the

Fund and its outstanding units do get changed.

Load Funds/no-load funds

Load Funds:

Mutual Funds incur various expenses on marketing, distribution, advertising, portfolio churning, fund

managers salary etc. Many funds recover these expenses from the investors in the form of load. These funds are

known as Load Funds. A load fund may impose following types of loads on the investors:

Entry Load Also known as Front-end load, it refers to the load charged to an investor at the time of

his entry into a scheme. Entry load is deducted from the investors contribution amount to the fund.

Exit Load Also known as Back-end load, these charges are imposed on an investor when he

redeems his units (exits from the scheme). Exit load is deducted from the redemption proceeds to an

outgoing investor.

Deferred Load Deferred load is charged to the scheme over a period of time.

Contingent Deferred Sales Charge (CDSS) In some schemes, the percentage of exit load

reduces as the investor stays longer with the fund. This type of load is known as Contingent Deferred

Sales Charge.

No-Load Fund:

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

Tax-exempt Funds/ Non-Tax-exempt Funds

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Tax-exempt Funds:

Funds that invest in securities free from tax are known as Tax-exempt Funds. All open-end equity oriented

funds are exempt from distribution tax (tax for distributing income to investors). Long term capital gains and

dividend income in the hands of investors are tax-free.

Non-Tax-exempt Funds:

Funds that invest in taxable securities are known as Non-Tax-exempt Funds. In India, all funds, except open-end

equity oriented funds are liable to pay tax on distribution income. Profits arising out of sale of units by an

investor within 12 months of purchase are categorized as short-term capital gains, which are taxable. Sale of

units of an equity oriented fund is subject to Securities Transaction Tax (STT). STT is deducted from the

redemption proceeds to an investor

BROAD MUTUAL FUND TYPES

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1. Equity Funds:

Equity funds are considered to be the more risky funds as compared to other fund types, but they also provide

higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest

for long term i.e. for 3 years or more. There are different types of equity funds each falling into different risk

bracket. In the order of decreasing risk level, there are following types of equity funds:

a. Aggressive Growth Funds: In Aggressive Growth Funds, fund managers aspire for maximum

capital appreciation and invest in less researched shares of speculative nature. Because of these

speculative investments Aggressive Growth Funds become more volatile and thus, are prone to higher

risk than other equity funds.

b. Growth Funds: Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years)

but they are different from Aggressive Growth Funds in the sense that they invest in companies that are

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expected to outperform the market in the future. Without entirely adopting speculative strategies,

Growth Funds invest in those companies that are expected to post above average earnings in the future.

c. Speciality Funds: Speciality Funds have stated criteria for investments and their portfolio

comprises of only those companies that meet their criteria. Criteria for some speciality funds could be to

invest/not to invest in particular regions/companies. Speciality funds are concentrated and thus, are

comparatively riskier than diversified funds. There are following types of speciality funds:

1. Sector Funds: Equity funds that invest in a particular sector/industry of the market are known as Sector

Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto,

Banking, Pharmaceuticals or Fast Moving Consumer Goods) which is why they are more risky than equity

funds that invest in multiple sectors.

2. Foreign Securities Funds: Foreign Securities Equity Funds have the option to invest in one or more

foreign companies. Foreign securities funds achieve international diversification and hence they are less risky

than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk.

3. Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower market capitalization

than large capitalization companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap

companies is less than that of big, blue chip companies (less than Rs. 2500 crores but more than Rs. 500 crores)

and Small-Cap companies have market capitalization of less than Rs. 500 crores. Market Capitalization of a

company can be calculated by multiplying the market price of the company's share by the total number of its

outstanding shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of Large-

Cap Companies which gives rise to volatility in share prices of these companies and consequently, investment

gets risky.

4. Diversified Equity Funds: Except for a small portion of investment in liquid money market, diversified

equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well

diversified and reduce sector-specific or company-specific risk. However, like all other funds diversified equity

funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity

Linked Savings Schemes (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in

equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the

time of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption by the

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investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which

he may have received any tax exemption(s) in the past.

d. Equity Index Funds: Equity Index Funds have the objective to match the performance of a specific

stock market index. The portfolio of these funds comprises of the same companies that form the index

and is constituted in the same proportion as the index. Equity index funds that follow broad indices (like

S&P CNX Nifty, Sensex) are

e. Less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX Bank

Index etc). Narrow indices are less diversified and therefore, are more risky.

2.Debt/IncomeFunds:

Funds that invest in medium to long-term debt instruments issued by private companies, banks, financial

institutions, governments and other entities belonging to various sectors (like infrastructure companies etc.) are

known as Debt / Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income

(and not capital appreciation) to investors. In order to ensure regular income to investors, debt (or income) funds

distribute large fraction of their surplus to investors. Although debt securities are generally less risky than

equities, they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment.

To minimize the risk of default, debt funds usually invest in securities from issuers who are rated by credit

rating agencies and are considered to be of "Investment Grade". Debt funds that target high returns are more

risky. Based on different investment objectives, there can be following types of debt funds:

a. Diversified Debt Funds: Debt funds that invest in all securities issued by entities belonging to all

sectors of the market are known as diversified debt funds. The best feature of diversified debtfunds is that

investments are properly diversified into all sectors which results in risk reduction. Any loss incurred, on

account of default by a debt issuer, is shared by all investors which further reduces risk for an individual

investor.

b. Focused Debt Funds: Unlike diversified debt funds, focused debt funds are narrow focus funds that

are confined to investments in selective debt securities, issued by companies of a specific sector orindustry or origin. Some examples of focused debt funds are sector, specialized and offshore debt funds,

funds that invest only in Tax Free Infrastructure or Municipal Bonds. Because of their narrow orientation,

focused debt funds are more risky as compared to diversified debt funds. Although not yet available in

India, these funds are conceivable and may be offered to investors very soon.

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c. Assured Return Funds: Although it is not necessary that a fund will meet its objectives or provide

assured returns to investors, but there can be funds that come with a lock-in period and offer assurance of

annual returns to investors during the lock-in period. Any shortfall in returns is suffered by the sponsors or

the Asset Management Companies (AMCs). These funds are generally debt funds and provide investors

with a low-risk investment opportunity. However, the security of investments depends upon the net worth

of the guarantor (whose name is specified in advance on the offer document). To safeguard the interests of

investors, SEBI permits only those funds to offer assured return schemes whose sponsors have adequate

net-worth to guarantee returns in the future. In the past, UTI had offered assured return schemes (i.e.

Monthly Income Plans of UTI) that assured specified returns to investors in the future. UTI was not able to

fulfill its promises and faced large shortfalls in returns. Eventually, government had to intervene and took

over UTI's payment obligations on itself. Currently, no AMC in India offers assured return schemes to

investors, though possible.

d. Fixed Term Plan Series: Fixed Term Plan Series usually are closed-end schemes having short term

maturity period (of less than one year) that offer a series of plans and issue units to investors at regular

intervals. Unlike closed-end funds, fixed term plans are not listed on the exchanges. Fixed term plan series

usually invest in debt / income schemes and target short-term investors. The objective of fixed term plan

schemes is to

e. Gratify investors by generating some expected returns in a short period.

f. 1.Open-end2.Closed-end 3.GiltFunds

Also known as Government Securities in India, Gilt Funds invest in government papers (named datedsecurities) having medium to long term maturity period. Issued by the Government of India, these

investments have little credit risk (risk of default) and provide safety of principal to the investors.

However, like all debt funds, gilt funds too are exposed to interest rate risk. Interest rates and prices of

debt securities are inversely related and any change in the interest rates results in a change in the NAV of

debt/gilt funds in an opposite direction.

4. Money Market/Liquid Funds:

Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt instruments.

These securities are highly liquid and provide safety of investment, thus making money market / liquid funds

the safest investment option when compared with other mutual fund types. However, even money market /

liquid funds are exposed to the interest rate risk. The typical investment options for liquid funds include

Treasury Bills (issued by governments), Commercial papers (issued by companies) and Certificates of Deposit

(issued by banks).

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5. Hybrid Funds:

As the name suggests, hybrid funds are those funds whose portfolio includes a blend of equities, debts and

money market securities. Hybrid funds have an equal proportion of debt and equity in their portfolio. There are

following types of hybrid funds in India:

a. Balanced Funds The portfolio of balanced funds include assets like debt securities, convertible

securities, and equity and preference shares held in a relatively equal proportion. The objectives of

balanced funds are to reward investors with a regular income, moderate capital appreciation and at the

same time minimizing the risk of capital erosion. Balanced funds are appropriate for conservative

investors having a long term investment horizon.

b. Growth-and-Income Funds Funds that combine features of growth funds and income funds are

known as Growth-and-Income Funds. These funds invest in companies having potential for capital

appreciation and those known for issuing high dividends. The level of risks involved in these funds is

lower than growth funds and higher than income funds.

6. Commodity Funds:

Those funds that focus on investing in different commodities (like metals, food grains, crude oil etc.) or

commodity companies or commodity futures contracts are termed as Commodity Funds. A commodity fund that

invests in a single commodity or a group of commodities is a specialized commodity fund and a commodity

fund that invests in all available commodities is a diversified commodity fund and bears less risk than a

specialized commodity fund. Precious Metals Fund and Gold Funds (that invest in gold, gold futures or shares

of gold mines) are common examples of commodity funds.

7. RealEstate Funds:

Funds that invest directly in real estate or lend to real estate developers or invest in shares/securitized assets of

housing finance companies, are known as Specialized Real Estate Funds. The objective of these funds may be to

generate regular income for investors or capital appreciation.

8.ExchangeTradedFunds(ETF)

Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-end mutual

fund. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock

at index linked prices. The biggest advantage offered by these funds is that they offer diversification, flexibility

of holding a single share (tradable at index linked prices) at the same time. Recently introduced in India, these

funds are quite popular abroad.

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The National Stock Exchange of India Limited

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The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on

Establishment of New Stock Exchanges. It recommended promotion of a National Stock Exchange by financial

institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the

recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India

and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993

NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market

(Equities) segment commenced operations in November 1994 and

operationsinDerivativessegmentcommencedinJune2000.

The following years witnessed rapid development of Indian capital market with introduction of internet trading,

Exchange traded funds (ETF), stock derivatives and the first volatility index - IndiaVIXinApril2008,byNSE

August 2008 saw introduction of Currency derivatives in India with the launch of Currency Futures in USD INR

by NSE. Interest Rate Futures was introduced for the first time in India by NSE on 31st August 2009, exactly

after one year of the launch of Currency Futures

With this, now both the retail and institutional investors can participate in equities, equity derivatives, currency

and interest rate derivatives, giving them wide range of products to take care of their evolving needs.

Group

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NSCCL

NCCL NSETECH

IISL

DotEx Intl. Ltd.

NSE.IT

NSE Milestones

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http://www.nse-india.com/content/us/us_nseit.htmhttp://www.nse-india.com/content/us/us_dotex.htmhttp://www.nse-india.com/content/us/us_iisl.htmhttp://www.nse-india.com/content/us/us_nsetech.htmhttp://www.nse-india.com/content/us/us_nccl.htmhttp://www.nse-india.com/content/us/us_nsccl.htmhttp://www.nse-india.com/content/us/us_organisation.htm


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April 1993 Recognition as a stock exchange

May 1993 Formulation of business plan

June 1994 Wholesale Debt Market segment goes live

November 1994 Capital Market (Equities) segment goes live

March 1995 Establishment of Investor Grievance Cell

April 1995 Establishment of NSCCL, the first Clearing Corporation

June 1995 Introduction of centralized insurance cover for all trading members

July 1995 Establishment of Investor Protection Fund

October 1995 Became largest stock exchange in the country

April 1996 Commencement of clearing and settlement by NSCCL

April 1996 Launch of S&P CNX Nifty

June 1996 Establishment of Settlement Guarantee Fund

November 1996Setting up ofNational Securities Depository Limited, first depository in India, co-promoted

by NSE

November 1996 Best IT Usage award by Computer Society of India

December 1996 Commencement of trading/settlement in dematerialised securities

December 1996 Dataquest award for Top IT User

December 1996 Launch ofCNX Nifty Junior

February 1997 Regional clearing facility goes live

November 1997 Best IT Usage award by Computer Society of India

May 1998 Promotion of joint venture, India Index Services & Products Limited (IISL)

May 1998 Launch of NSE's Web-site: www.nse.co.in

July 1998 Launch of NSE's Certification Programme in Financial Market

August 1998 CYBER CORPORATE OF THE YEAR 1998 award

February 1999 Launch of Automated Lending and Borrowing Mechanism

April 1999 CHIP Web Award by CHIP magazine

October 1999 Setting up of NSE.ITMr. subhash kumar

January 2000 Launch of NSE Research Initiative

February 2000 Commencement of Internet Trading

June 2000 Commencement of Derivatives Trading (Index Futures)

September 2000 Launch of'Zero Coupon Yield Curve'

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November 2000Launch of Broker Plaza by Dotex International, a joint venture between NSE.IT Ltd. and i-

flex Solutions Ltd.

December 2000 Commencement ofWAP trading

June 2001 Commencement of trading in Index Options

July 2001 Commencement of trading in Options on Individual Securities

November 2001 Commencement of trading in Futures on Individual Securities

December 2001 Launch ofNSE VaR for Government Securities

January 2002 Launch of Exchange Traded Funds (ETFs)

May 2002NSE wins the Wharton-Infosys Business Transformation Award in the Organization-wide

Transformation category

October 2002 Launch of NSE Government Securities Index

January 2003 Commencement of trading in Retail Debt Market

June 2003 Launch of Interest Rate Futures

August 2003 Launch of Futures & options in CNXIT Index

June 2004 Launch of STP Interoperability

August 2004 Launch of NSEs electronic interface for listed companies

March 2005 India Innovation Award by EMPI Business School, New Delhi

June 2005 Launch of Futures & options in BANK Nifty Index

December 2006 'Derivative Exchange of the Year', by Asia Risk magazine

January 2007 Launch of NSE CNBC TV 18 media centre

March 2007 NSE, CRISIL announce launch of IndiaBondWatch.com

June 2007 NSE launches derivatives on Nifty Junior & CNX 100

October 2007 NSE launches derivatives on Nifty Midcap 50

January 2008 Introduction of Mini Nifty derivative contracts on 1st January 2008

March 2008 Introduction of long term option contracts on S&P CNX Nifty Index

April 2008 Launch of India VIX

April 2008 Launch of Securities Lending & Borrowing Scheme

August 2008 Launch of Currency Derivatives

August 2009 Launch of Interest Rate Futures

November 2009 Launch of Mutual Fund Service System

December 2009 Commencement of settlement of corporate bonds

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February 2010 Launch of Currency Futures on additional currency pairs

Technology

Across the globe, developments in information, communication and network technologies have created

paradigm shifts in the securities market operations. Technology has enabled organizations to build new sources

of competitive advantage, bring about innovations in products and services, and to provide for new business

opportunities. Stock exchanges all over the world have realized the potential of IT and have moved over to

electronic trading systems, which are cheaper, have wider reach and provide a better mechanism for trade and

post trade

NSE believes that technology will continue to provide the necessary impetus for the organization to

retain its competitive edge and ensure timeliness and satisfaction in customer service. In recognition of the fact

that technology will continue to redefine the shape of the securities industry, NSE stresses on innovation and

sustained investment in technology to remain ahead of competition. NSE's IT set-up is the largest by any

company in India. It uses satellite communication technology to energies participation from around 200 cities

spread all over the country. In the recent past, capacity enhancement measures were taken up in regard to the

trading systems so as to effectively meet the requirements of increased users and associated trading loads. With

up gradation of trading hardware, NSE today can handle up to 15 million trades per day in Capital Market

segment. In order to capitalize on in-house expertise in technology, NSE set up a separate company, NSE

Technology Services Ltd. which is expected to provide a platform for taking up all IT related assignments of

NSE.

NEAT is a state-of-the-art client server based application. At the server end, all trading information is

stored in an in-memory database to achieve minimum response time and maximum system availability for users

The trading server software runs on a fault tolerant STRATUS main frame computer while the client software

runs under Windows on PCs

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The telecommunications network which was using X.25 protocol and is the backbone of the automated

trading system is being upgraded to use the more popular and modern IP Protocol. This is a major project

involving use of X.25 and IP in parallel and ensuring smooth transition to IP. Each trading member trades on the

NSE with other members through a PC located in the trading member's office, anywhere in India. The trading

members on the various market segments such as CM / F&O, WDM are linked to the central computer at the

NSE through dedicated leased lines and VSAT terminals. The Exchange uses powerful RISC -based UNIX

servers, procured from HP for the back office processing. The latest software platforms like ORACLE 10g

RDBMS, SQL/ORACLE FORMS Front - Ends, etc. have been used for the Exchange applications. The

Exchange currently manages its data centre operations, system and database administration, design and

development of in-house systems and design and implementationoftelecommunicationsolutions.

NSE is one of the largest interactive VSAT based stock exchanges in the world. Today it supports more

than 2000 VSATs and 3000 leased lines across the country. The NSE- network is the largest private wide area

network in the country and the first extended C- Band VSAT network in the world. Currently more than 9000

users are trading on the real time-online NSE application. There are over 15 large computer systems which

include non-stop fault-tolerant computers and high end UNIX servers, operational under one roof to support the

NSE applications. This coupled with the nation wide VSAT network makes NSE the country's larges

InformationTechnologyuser.

In an ongoing effort to improve NSE's infrastructure, a corporate network has been implemented

connecting all the offices at Mumbai, Delhi, Calcutta and Chennai. This corporate network enables speedy inter-

office communications and data and voice connectivity between offices

In keeping with the current trend, NSE has gone online on the Internet. Apart from having multiple

internet links and our own domain for internal browsing and e-mail purposes, we have also set up our own Web

site. Currently, NSE is displaying its live stock quotes on the web

site(www.nseindia.com)whichareupdatedonline.

NSE today allows members to provide internet trading facility to their clients through the use of NOW

(NSE on web), a shared web infrastructure.

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Indices

NSE also set up as index services firm known as India Index Services & Products Limited (IISL) and has

launched several stock indices, including

S&P CNX Nifty(Standard & Poor's CRISIL NSE Index)

CNX Nifty Junior

CNX 100 (= S&P CNX Nifty + CNX Nifty Junior)

S&P CNX 500 (= CNX 100 + 400 major players across 72 industries)

CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)

CHAPTER III

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INTRODUCTION TO MUTUAL FUND

Mutual fund is a trust that pools money from a group of investors (sharing common financial goals) and invest

the money thus collected into asset classes that match the stated investment objectives of the scheme. Since the

stated investment objective of a mutual fund scheme generally forms the basis for an investor's decision to

contribute money to the pool, a mutual fund can not deviate from its stated objectives at any point of time.

Every Mutual Fund is managed by a fund manager, who using his investment management skills and necessary

research works ensures much better return than what an investor can manage on his own. The capita

appreciation and other incomes earned from these investments are passed on to the investors (also known as uni

holders) in proportion of the number of units they own.

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When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the

fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund)

Mutual Fund investor is also known as a mutual fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments (such as shares, debentures

etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual

Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of

scheme's assets by the total number of units issued to the investors.

For example:

A. If the market value of the assets of a fund is Rs. 100,000

B. The total number of units issued to the investors is equal to 10,000.

C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00

D. Now if an investor 'X' owns 5 units of this scheme

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

scheme)

ADVANTAGES OF MUTUAL FUND

1. Portfolio Diversification: Mutual Funds invest in a well-diversified portfolio of securities which

enables investor to hold a diversified investment portfolio (whether the amount of investment is big or small).

2. Professional Management: Fund manager undergoes through various research works and has better

investment management skills which ensure higher returns to the investor than what he can manage on his own.

3. Less Risk:Investors acquire a diversified portfolio of securities even with a small investment in a Mutual

Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities.

4. Low Transaction Costs: Due to the economies of scale (benefits of larger volumes), mutual funds pay

lesser transaction costs. These benefits are passed on to the investors.

5. Liquidity: An investor may not be able to sell some of the shares held by him very easily and quickly,

whereas units of a mutual fund are far more liquid.

6. Choice of Schemes: Mutual funds provide investors with various schemes with different investmen

objectives. Investors have the option of investing in a scheme having a correlation between its investment

objectives and their own financial goals. These schemes further have different plans/options

7. Transparency: Funds provide investors with updated information pertaining to the markets and the

schemes. All material facts are disclosed to investors as required by the regulator.

8. Flexibility:Investors also benefit from the convenience and flexibility offered by Mutual Funds. Investors

can switch their holdings from a debt scheme to an equity scheme and vice-versa. Option of systematic (at

regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes.

9. Safety: Mutual Fund industry is part of a well-regulated investment environment where the interests of the

investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced.

Disadvantages of Mutual Funds:

Professional Management - Did you notice how we qualified the advantage of professional managemen

with the word "theoretically"? Many investors debate whether or not the so-called professionals are any better

than you or I at picking stocks. Management is by no means infallible, and, even if the fund loses money, the

manager still takes his/her cut. We'll talk about this in detail in a later section.

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Costs - Mutual funds don't exist solely to make your life easier - all funds are in it for a profit. The mutual

fund industry is masterful at burying costs under layers of jargon. These costs are so complicated that in this

tutorial we have devoted an entire section to the subject.

Dilution - It's possible to have too much diversification. Because funds have small holdings in so many

different companies, high returns from a few investments often don't make much difference on the overall

return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have

had strong success, the manager often has trouble finding a good investment for all the new money.

Taxes - When making decisions about your money, fund managers don't consider your personal tax situation

For example, when a fund manager sells a security, a capital-gains tax is triggered, which affects how profitable

the individual is from the sale. It might have been more advantageous for the individual to defer the capital

gains liability.

MUTUAL FUND STRUCTURE

The SEBI (Mutual Funds) Regulations 1993 define a mutual fund (MF) as a fund established in the form

of a trust by a sponsor to raise monies by the Trustees through the sale of units to the public under one or more

schemes for in vesting in securities in accordance with these regulations.

These regulations have since been replaced by the SEBI (Mutual Funds) Regulations, 1996. The structure

indicated by the new regulations is indicated as under.

A mutual fund comprises four separate entitles, namely sponsor, mutual fund trust, AMC and custodian. The

sponsor establishes the mutual fund and gets its registered with SEBI.

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The mutual fund needs to be constituted in the form of a trust and the instrument of the trust should be in

the form of a deed registered under the provisions of the Indian Registration Act, 1908.

The sponsor is required to contribute at lease 40% of the minimum net worth (Rs.10 core) of the asset

management company. The board of trustees manages the MF and the sponsor executes the trust deeds in favor

of the trustees. It is the job of the MF trustees to see that schemes floated and managed by the AMC appointed

by the trustees are in accordance with the trust deed and SEBI guidelines

CHOOSING A FUND

Following steps are involved in choosing a fund

IdentifyingGoalsandRiskTolerance

Before acquiring shares in any fund, an investor must first identify his or her goals and desires for the money

being invested. Are long-term capital gains desired, or is a current incomepreferred? Will the money be used to

pay for college expenses, or to supplement a retirement that is decades away? Identifying a goal is important

because it will enable you to dramatically whittle down the list of the more than 8,000 mutual funds in the

public domain.

In addition, investors must also consider the issue ofrisk tolerance. Is the investor able to afford and mentally

accept dramatic swings in portfolio value? Or, is a more conservative investment warranted? Identifying risk

tolerance is as important as identifying a goal. After all, what good is an investment if the investor has trouble

sleeping at night? (For more insight, see Determining Risk and the Risk Pyramid and A Guide To Portfolio

Construction.)

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Finally, the issue of time horizon must be addressed. Investors must think about how long they can afford to tie

up their money, or if they anticipate any liquidity concerns in the near future. This is because mutual funds have

sales charges that can take a big bite out of an investor's return over short periods of time. Ideally, mutual fund

holders should have an investment horizon with at least five years or more. (For related reading, see

Disadvantages Of Mutual Funds.)

StyleandFundType

If the investor intends to use the money in the fund for a longer term need and is willing to assume a fair amount

of risk and volatility, then the style/objective he or she may be suited for is a long-term capital appreciation

fund. These types of funds typically hold a high percentage of their assets in common stocks, and are therefore

considered to be volatile in nature. They also carrythepotentialforalargerewardovertime.

Conversely, if the investor is in need of current income, he or she should acquire shares in an income fund.

Government and corporate debt are the two of the more common holdings in an incomefund.

Of course, there are times when an investor has a longer term need, but is unwilling or unable to assume

substantial risk. In this case, a balanced fund, which invests in both stocks and bonds, maybethebestalternative.

ChargesandFeesMutual funds make their money by charging fees to the investor. It is important to gain an understanding of the

different types of fees that you may face when purchasing an investment.

Some funds charge a sales fee known as a load fee, which will either be charged upon initial investment or upon

sale of the investment. A front-end load/fee is paid out of the initial investment made by the investor while

aback-end load/fee is charged when an investor sells his or her investment, usually prior to a set time period,

such as seven years from purchase.

Both front- and back-end loaded funds typically charge 3-6% of the total amount invested or distributed, but this

number can be as much as 8.5% by law. Its purpose is to discourage turnover and to cover any administrative

charges associated with the investment. Depending on the mutual fund, the fees may go to a broker for selling

the mutual fund or to the fund itself, which mayresultinloweradministrationfeeslateron.

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To avoid these sales fees, look forno-load funds, which don't charge a front- or back-end load/fee. However, be

aware of the other fees in a no-load fund, such as the management expense ratio and other administration fees,

as they may be very high.

Still other funds charge 12b-1 fees, which are baked into the share price and are used by the fund for

promotions, sales and other activities related to the distribution of fund shares. These fees come right off of the

reported share price at a predetermined point in time. As a result, investors may not be aware of the fee at all.

12b-1 fees can, by law, be as much as 0.75% of a fund's averageassetsperyear.

One final tip when perusing mutual fund sales literature: The investor should look for the management expense

ratio. In fact, that one number can help clear up any and all confusion as it relates to sales charges. The ratio is

simply the total percentage of fund assets that are being charged to cover fund expenses. The higher the ratio,

the lower the investor's return will be at the endoftheyear.

EvaluatingManagers/PastResults

As with all investments, investors should research a fund's past results. To that end, the following is a list of

questions that perspective investors should ask themselves when reviewing the historical record:

Did the fund manager deliver results that were consistent with general market returns?

Was the fund more volatile than the big indexes (meaning did its returns vary dramatically throughou

the year)?

Was there an unusually high turnover (which can result in larger tax liabilities for the investor)?

This information is important because it will give the investor insight into how the portfolio managerperform

under certain conditions, as well as what historically has been the trend in termsofturnoverandreturn

With that in mind, past performance is no guarantee of future results. For this reason, prior to buying into a

fund, it makes sense to review the investment company's literature to look for information about anticipatedtrends in the market in the years ahead. In most cases, a candid fund manager will give the investor some sense

of the prospects for the fund and/or its holdings in the year(s) ahead as well as discuss general industry trends

which may be helpful. (For more insight,seeDiggingDeeper:TheMutualFundProspectus.

SizeoftheFund

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Typically, the size of a fund does not hinder its ability to meet its investment objectives. However, there are

times when a fund can get too big. A perfect example is Fidelity's Magellan Fund. Back in 1999 the fund topped

$100 billion in assets, and for the first time, it was forced to change its investment process to accommodate the

large daily (money) inflows. Instead of being nimble and buying small and mid cap stocks, it shifted its focus

primarily toward larger capitalization growth stocks. As a result, its performance has suffered. (To learn more

check out DoesSizeReallyMatter?

So how big is too big? There are no benchmarks that are set in stone, but that $100 billion mark certainly makes

it difficult for a fund manager to acquire a position in a stock and dispose of it without running up the stock

dramatically on the way up, and depressing it on the way down. It also makes the process of buying and selling

stocks with any kind of anonymity almost impossible

BottomLine

Selecting a mutual fund may seem like a daunting task, but knowing your objectives and risk tolerance is hal

the battle. If you follow this bit of due diligence before selecting a fund, you will increase your chances of

success.

The Ground rules of Mutual Fund Investing:

Moses gave to his followers 10 commandments that were to be followed till eternity. The world of investments

too has several ground rules meant for investors who are novices in their own right and wish to enter the myriad

world of investments. These come in handy for there is every possibility of losing what one has if due care is

not taken.

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

failing which; one will make more mistakes in putting money in right places than otherwise. One should

identify the degree of risk bearing capacity one has and also clearly state the expectations from the investments

Irrational expectations will only bring pain.

2. Try to understand where the money is going: It is important to identify the nature oinvestment and to know if one is compatible with the investment. One can lose substantially if one picks the

wrong kind of mutual fund. In order to avoid any confusion it is better to go through the literature such as offer

document and fact sheets that mutual fund companies provide on their funds.

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

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

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know the risks associated with the fund and align it with the quantum of risk one is willing to take. One should

take a look at the portfolio of the funds for the purpose. Excessive exposure to any specific sector should be

avoided, as it will only add to the risk of the entire portfolio. Mutual funds invest with a certain ideology such as

the "Value Principle" or "Growth Philosophy". Both have their share of critics but both philosophies work for

investors of different kinds. Identifying the proposed investment philosophy of the fund will give an insight into

the kind of risks that it shall be taking in future.

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

take. It is thus of key importance that there is thought given to the process of investment and to the time horizon

of the intended investment. One should abstain from speculating which in' other words would mean getting out

of one fund and investing in another with the intention of making quick money. One would do well to remember

that nobody can perfectly time the market so staying invested is the best option unless there are compelling

reasons to exit.

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

the risk profile of a person is, it is always advisable to diversify the risks associated. So putting one's money in

different asset classes is generally the best option as it averages the risks in each category. Thus, even investors

of equity should be judicious and invest some portion of the investment in debt. Diversification even in money

in the hands of several fund managers. This might reduce the maximum return possible, but will also reduce the

risks.

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

really benefit from them. As we said earlier, since it is extremely difficult to know when to enter or exit the

market. It is important to beat the market by being systematic. The basic philosophy of Rupee cost averaging

would suggest that if one invests regularly through the ups and downs of the market, he would stand a better

chance of generating more returns than the market for the entire duration. The SIPs (Systematic Investment

Plans) offered by all funds helps in being systematic.

Performance Measures of Mutual Funds

Mutual Fund industry today, with about 34 players and more than five hundred schemes, is one of the

most preferred investment avenues in India. However with a plethora of schemes to choose from the retailinvestor faces problems in selecting funds. Factors such as investment strategy and management style are

qualitative, but the funds record is an important indicator too. Though past performance alone cannot be

indicative of future performance, it is, frankly, the only quantitative way to judge how good a fund is at present

Therefore, there is a need to correctly assess the past performance of different mutual funds.

Worldwide, good Mutual fund companies over are known by their AMCs and this fame is directly linked

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to their superior stock selection skills. For mutual funds to grow, AMCs must be held accountable for their

selection of stocks. In other words, there must be some performance indicator that will reveal the quality of

stock selection of various AMCs.

Return alone should not be considered as the basis of measurement of the performance of a mutual fund

scheme. It should also include the risk taken by the fund manager because different funds will have different

levels of risk attached to them. Risk associated with a fund, in a general, can be defined as variability or

fluctuations in the returns generated by it. The higher the t1uctuations in the returns of a fund during a given

period, higher will be the risk associated with it. These fluctuations in the returns generated by a fund are

resultant of two guiding forces. First, general market fluctuations, which affect all the securities present in the

market, called market risk or systematic risk and second, t1uctuations due to specific securities present in the

portfolio of the fund, called unsystematic risk. The Total Riskof a given fund is sum of these t\VO and is

measured in terms ofstandard deviation of returns of the fund. Systematic risk. On the other hand is measured

in terms ofBeta, which represents t1uctuations in the NA V of the fund vis--vis market. The more responsive

the NA V of a mutual fund is to the changes in the market; higher will be its beta. Beta is calculated by relating

the returns on a mutual

fund with the returns in the market. While unsystematic risk can be diversified through investments in a

number of instruments, systematic risk can not.

By using the risk return relationship, we try to assess the competitive strength of the mutual funds vis--vis one

another in a better way:

In order to determine the risk-adjusted returns of investment portfolios, several eminent authors have worked

since 1960s to develop composite performance indices to evaluate a portfolio by comparing alternative

portfolios within a particular risk class.

Benefits of investing in stock market

The stock market is a big auction house for pieces of company ownership, called stocks. Despite the

risks and volatility of the stock market, there are considerable advantages in investing money in stocks.

Outperforms Other Investments

Historically, the returns on investments in the market are higher than those on investments held in other

markets and assets. This means that, over time, money will grow more if it is invested in the stock market. The

historical average for stock market investments is approximately eight percent per year.

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Easy Access

Another advantage of stock market investments is the ease of access (and exit) in the stock market

Thanks to new Internet technology, an investor can easily take a position in a company and leave that position

in a matter of seconds.

Asset Diversity

The diversity of options is one more advantage of investing in the stock market. Companies that have

their stocks listed in the market cover a range of industries and services. This offers the investor a chance to

diversify his portfolio and make money in a variety of economic conditions.

Dividends

Investing in stocks that earn dividends is a unique advantage of the stock market. Stocks release a

portion of the profits in the form of dividends to their stock holders. Meanwhile, the stock still has the ability to

increase in price, creating two ways for the stock to earn money for the investor.

Transparency

While critics often point out the examples of companies that release fraudulent earnings statements as a

way to taint the entire market, the vast majority of the companies release accurate information about the money

they spend and earn. This adds a layer of transparency in the investment.

Easy Review and Research

It's not difficult to research a company's financial statement. It's also easy to monitor the stock's share

price. This information is available in newspapers and magazines, as well as online.

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ICICI GROUP COMPANIES

As one of the largest and oldest financial sector conglomerates in India, ICICI Group believes that its

own long-term growth and profitability is linked to the balanced and sustainable growth of the Indian economy.

In line with its commitment to fuelling equitable growth in all segments of society, ICICI Group of Companies

(www.icicigroupcompanies.com) CSR activities aim to more effectively direct human and financial resources

towards the civil sector.

ICICI Foundation for Inclusive Growth (ICICI Foundation) was founded by the ICICI Group in early 2008 to

give focus to its efforts to promote inclusive growth amongst low-income Indian households.

We believe our fundamental challenge is to create a just society one where everyone has equal opportunity

to develop and grow. Towards this end, ICICI Foundation is committed to making Indias economic growth

more inclusive, allowing every individual to participate in and benefit from the growth process.

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We hold a set ofcore beliefs and values that defines our pathway towards inclusive growth and guides our five

strategic partnerships.

Vision

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

just society in which to live.

Mission

Our mission is to empower the poor to participate in and benefit from the Indian growth process through active

collaboration with government and independent organisations.

Core beliefs:

ICICI Foundations pathway towards inclusive growth and our five strategic partnerships are guided by severa

core beliefs:

Good health and basic education are fundamental prerequisites to achieving inclusive growth.

While healthy and educated individuals have the capacity to transform their lives, their ability to do so

depends on the quality of their access to transformative tools such as finance.

For the Indian growth process to be truly inclusive, health, education and access to complete financia

markets are necessary but not sufficient.

Our Approach

Rather than build departments within a large, monolithic foundation, we have chosen to collaborate with and

foster independent, responsive organizations, each with deep expertise in one of the five areas that we believe

provide essential elements for inclusive growth:primary health, elementary education,comprehensive access to

financial services, strong civil society and environmental sustainability.

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The Foundation provides active support and mentorship to each of these strategic partners a strategy we

believe will build knowledge and specialization in each field and ensure long-term impact.

Partners

Through ICICI Child Health in Pune, we support children in the poorest communities across India to

develop to their full potential in the critical first three years of life.

Through ICICI Elementary Education in Pune, we support children in government-run preschools and

elementary schools across India to become engaged citizens.

Through IFMR Finance Foundation in Chennai, we seek to ensure that every individual and every

enterprise in India has complete access to financial services. Through CSO Partners in Chennai, we

support civil society organizations (CSOs) across India to be more effective by enabling them to tap into

new resources and networks of support.

Through the Environmentally Sustainable Finance Group at the Centre for Development Finance in

Chennai, we support scalable private and community interventions as well as policies to make India's

economy more environmentally sustainable from the bottom up.

OVERVIEW

ICICI Group offers a wide range of banking products and financial services to corporate and retail customers

through a variety of delivery channels and through its specialised group companies, subsidiaries and affiliates inthe areas of personal banking, investment banking, life and general insurance, venture capital and asse

management. With a strong customer focus, the ICICI Group Companies have maintained and enhanced their

leadership position in their respective sectors.

ICICI Bankis India's second-largest bank with total assets of Rs. 3,793.01 billion (US$ 75 billion) at March 31

2009 and profit after tax Rs. 37.58 billion for the year ended March 31, 2009. The Bank has a network of 1,451

branches and about 4,721 ATMs in India and presence in 18countrie

ICICI Prudential Life Insurance Company is a 74:26 joint venture with Prudential plc (UK). It is the larges

private sector life insurance company offering a comprehensive suite of life, health and pensions products. It is

also the pioneer in launching innovative health care products like Diabetes Care Active and health Saver. The

company operates on a multi-channel platform and has a distribution strength of over 2,76,000 financia

advisors operating from more than 2000 branches spread across 1800 locations across the country. In addition to

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the agency force, it also has tie-ups with various banks, corporate agents and brokers. In fiscal 2009, ICICI

Prudential attained a market share of 10.9% based on retail weighted premium and garnered a total premium of

Rs 153.56 billion registering a growth of 13% and held assets of Rs. 327.88 billion as on March 31, 2009.

ICICI Lombard General Insurance Company, a joint venture with the Canada based Fairfax Financial Holdings

is the largest private sector general insurance company. It has a comprehensive product portfolio catering to all

corporate and retail insurance needs and is present in over 300 locations across the country. ICICI Lombard

General Insurance has achieved a market share of 27.2% among private sector general insurance companies and

an overall market share of 11.2% during fiscal 2009. The gross return premium grew by 2.2% from Rs. 33.45

billion in fiscal 2008 to 34.20 billion in fiscal 2009.

ICICI Securities Ltd is the largest equity house in the country providing end-to-end solutions (including web

based services) through the largest non-banking distribution channel so as to fulfill all the diverse needs of retail

and corporate customers. ICICI Securities (I-Sec) has a dominant position in its core segments of its operations -

Corporate Finance including Equity Capital Markets Advisory Services, Institutional Equities, Retail and

Financial Product Distribution

ICICI Securities Primary DealershipLimited is the largest Primary Dealer in Government Securities. It is an

acknowledged leader in the Indian fixed income and money markets, with a strong franchise across the

spectrum of interest rate products and services - institutional sales and trading, resource mobilization, portfolio

management services and research. One of the first entities to be granted Primary Dealership license by RBI, I-

Sec PD has made pioneering contributions since inception to debt market development in India. I-Sec PD is also

credited with pioneering debt market research in India. I-Sec PD has been recognized as the 'Best Domestic

Bond House in India' by Asia money every year from 2002 to 2007 and selected as 'Best Bond House' by

Financeasia.com for the years - 2001, 2004 to 2007 and 2009."

ICICI Prudential Asset Managementis the third largest mutual fund with average asset under management of

Rs. 514.33 billion and a market share of 10.43% as on March 31, 2009. The Company manages a

comprehensive range of mutual fund schemes and portfolio management services to meet the varying

investment needs of its investors through162 branches and 185 CAMS official point of transaction acceptance

spread across the country.

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

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management in excess of USD 2 billion. ICICI Venture, over the years has built an enviable portfolio of

companies across sectors including Life Sciences, Information Technology, Media, Manufacturing, Retail

Financial Services, and Real Estate thereby building sustainable value. It has several firsts to its credit in the

Indian Private Equity industry. Amongst them are Indias first leveraged buyout (Infomedia), the first real estate

investment (Cyber Gateway), the first mezzanine financing for a acquisition (Arch Pharmalabs), the firs

royalty-based structured deal in Pharma Research & Development (Dr Reddys Laboratories - JV) and the firs

fund level secondary transaction (Coller Capital).

ICICI PRUDENTIAL ASSET MANAGEMENT

ICICI Prudential Asset Management Company Ltd. is a joint venture between ICICI Bank, Indias second

largest commercial bank & a well-known and trusted name in the financial services in India, & Prudential Plc,

one of the United Kingdoms largest players in the financial services sectors.

In a span of just over 12 years, the company has forged a position of preeminence as one of the largest Asset

Management Companys in the country, contributing significantly towards the growth of the Indian mutual fund

industry.

Our Average Assets under Management (AAUM) as on September 2010 month-end in Mutual Fund Schemes

stood at Rs. 69,754.78 Crores. This is in addition to our Portfolio Management Services, inclusive of EPFO*

and International Advisory Mandates for clients across international markets in asset classes like Debt, Equity

and Real Estate with primary focus on risk adjusted returns.

As an Asset Management Company, we have over 15 years of experience and are currently managing a

comprehensive range of schemes of more than 46 Mutual funds and a wide range of PMS Products for our

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investors, spread across the country. We service this investor base with our own branch network of over 160

branches and a distribution reach of over 42,000 channel partners.

SPONSERS

ICICI Bank

ICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at 31st

March, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended 31st March, 2010. The

Bank has a network of 2016 branches and about 5219 ATMs in India and presence in 18 countries. ICICI Bank

offers a wide range of banking products and financial services to corporate and retail customers through a

variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investmen

banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiarie

in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri

Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China

South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in

Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the

National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New

York Stock Exchange (NYSE).

Prudential Plc (formerly known as Prudential Corporation plc)

Prudential plc of the United Kingdom is not affiliated in any manner with Prudential Financial, Inc., a company

whose principal place of business is in the United States of America.

Prudential plc is an international financial services group with significant operations in Asia, the US and the

UK. They serve appro

Documents

Sudheer Icici Finel Report - Copy