Tax Saving Schemes in Mutual Funds

SUBMITTED BY: PRAVAKAR DASH | ROLL NO: 11MBAS21542
Project submitted in partial fulfillment for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION
In Guidance With
Pravas Satpat!
Submitted By:
PRAVAKAR DASH
R"## N"$ : 11MBAS21542
DD%E& SAMBALPUR UNIVERSITY
1
EXAMINERS CERTIFICATE
This project report Study of Tax Saving Schemes in Mutua Funds! is submitted
by "#ava$a# Dash of MBA bearing the Roll o! %%MBAS&%'(& under
DD"#$ %ambalpur &ni'ersity and forwarded for e'aluation!
(nternal #)aminer #)ternal #)aminer
*
DE)*ARATION
( here by declare that the project report titled Study of Tax Saving Schemes in Mutua
Funds+ prepared under the guidance of Pra'as %atpathy and submitted by me to the
Department of DD"#$ %ambalpur &ni'ersity$ is a bonafied wor, underta,en by me and it is
not submitted to any other &ni'ersity or (nstitution for the award of any degree-certificate or
published any time before
"#ava$a# Dash
.
TO 'HOM SO EVER IT MAY %ON%ERN TO 'HOM SO EVER IT MAY %ON%ERN
This is to certify that the project titled Study of Tax Saving
Schemes in Mutua Funds an original piece of worked done by
Prava(ar Das and is submitted in the partial fulfllment of
Mast)r I* B+s,*)ss A-.,*,strat,"*. This project has been
carried out under my guidance and supervision.
I am pleased to record here that his performance during the
project was extremely satisfactory.
ish his all !uccess in future endeavors.

Pravas Satpat!

&nit Manager
("("( Prudential /ife (nsurance "o!/td
0
)ERTIFI)ATE OF A""RO+A*
This is to Certify that the Project Entitled:
Study of Tax Saving Schemes in Mutua Funds
%ubmitted by Pravakar Dash 1Roll o! 11MBA%*120*3$ %ambalpur &ni'ersity$ Burla
towards partial fulfillment of the re4uirements for the award of the degree of Master of
Business Administration 1MBA3 is a bona fide record of the wor, carried out by him under
the able guidance of M#, Mani$ )hand -hosh$ 5aculty$ RD "omputer 6 Management$
Talcher!
1Appro'al of the "enter Director3
2
A).NO/*ED-EMENT
( ta,e this opportunity to e)press my deep and sincere gratitude to "#avas Sat0at#hy 1&nit
Manager3 of ("("( Prudential /ife (nsurance "o!/td!$ Bhubaneswar Branch for his gesture
of allowing me to underta,e this project and its 'arious employees who lent their hands
towards the completion of this study
( would li,e to than,s and gratitude to my 5aculty of Mani$ )hand -hosh for their ,ind
cooperation and made it easy for me to complete this assignment!
7e wish and e)press my heart full gratitude to the project guide for the guidance and
suggestions throughout the project$ without which we would not ha'e been able to complete
this project successfully!
7e e)tend my than,s to all my friends for their moral support and encouragement! /ast but
not least we than, my parents and relati'e who inspired us always to do the best!
"#ava$a# Dash
8

)1A"TER I
INTRODU)TION
9
MUTUA* FUND INDUSTR2
An Ove#vie3
The mutual fund industry in india began with the setting up of the &nit Trust of india 1&T(3
in 1:8. by the ;o'ernment of (ndia! Till the year *<<<$ &T( has grown to be a dominant player in
the industry with the assets of o'er Rs! 98$209 crores as of March .1$ *<<<! the &T( is go'erned by
a special legislation$ the &nit Trust of (ndia Act$ 1:8.! in 1:=9 public sector ban,s and insurance
companies were permitted to set up mutual funds! Also the two insurance companies /(" and ;("
established mutual funds! %ecurities #)change Board of (ndia 1%#B(3 formulated the Mutual 5und
1Regulation3 1::.$ which for the first time established a comprehensi'e regulatory framewor, for
the mutual fund industry! %ince then se'eral mutual funds ha'e been set up by the pri'ate and the
joint sectrors!
-#o3th of Mutua Funds
The (ndian Mutual 5und has passed through three phases! The first phase was between 1:80
and 1:=9 and the only player was the &nit Trust of (ndia$ which had a total assets of Rs! 89<< crores
at the end of 1:==! The second phase is between 1:=9 and 1::. in which period = funds were
established 18 by ban,s and one each by /(" and ;("3! The total assets under management had
grown to rs! 81<*= crores at the end of 1::0 and the number of schemes were 189!
=
INTRODU)TION
The third phase began with the entry of pri'ate and foreign sectors in the Mutual 5und
industry in 1::.! >othari Pioneer Mutual 5und was the first fund to be established the pri'ate
sector in association with a foreign fund! At the end of financial year *<<< 1.1
st
March3 funds were
functioning with Rs! 11.<<2 crores as total assets under management! As on August end *<<< there
were .. funds with .:1 schemes and assets under management with Rs! 1<*=0: crores!
As you probably ,now$ mutual funds ha'e become e)tremely popular o'er the last *< years!
7hat was once just another obscure financial instrument is now a part of our daily li'es! More than
=< million people$ or one half of the households in America$ in'est in mutual funds That means
that$ in the &nited %tates alone$ trillions 1yes$ with a ?T?3 of dollars are in'ested in mutual funds!
(n fact$ to many people$ in'esting meaying mutual funds! After all$ it@s common ,nowledge
that incesting in mutual funds is 1or at least should be3 better than simply letting your cash waste
away in a sa'ings account$ but$ for most people$ that@s where the understanding of funds ends! (t
doesn@t help that mutual fund salespeople spea, a strange language that$ sounding sort of li,e
#nglish$ is interspersed with jargon li,e M#R$ AAP%$ load-noBload$ etc!
Criginally mutual funds were heralded as a way for the little guy to get a piece of the mar,et!
(nstead of spending all your free time buried in the financial pages of the 7all %treet Dournal$ all
you ha'e to do is buy a mutual fund and you@d be set on your way to financial freedom! As you
might ha'e guessed$ it@s not that easy! Mutual funds are an e)cellent idea in theory$ but$ in reality$
they ha'en@t always deli'ered! ot all mutual funds are created e4ual$ and in'esting in mutuals isn@t
as easy as throwing your money at the first salesperson who solicits your business!
:
OB4E)TI+ES
To study the ta) sa'ings scheme on mutual funds$ its performance in the mar,et$ and its
e)posure to stoc,!
To study the potential of mutual funds in ("("( Prudential life insurance co!ltd!
To analyse the performance of 'arious mutual funds schemes and suggests the best one!
RESEAR)1 MET1ODO*O-2
SOUR)ES OF DATA5
%econdary dataEThis data has been collected from the financial reports and statements of the
company,
*IMITATIONSE
The study is limited to the mutual 5und of ("("( prudential life insurance!
(t studies about its performance and ta) sa'ings!
The duration of the study is limited!
1<

)1A"TER6&
*ITERATURE RE+IE/
11
1isto#y of the Indian Mutua Fund Indust#y
The mutual fund industry in (ndia started in 1:8. with the formation of &nit Trust of (ndia$
at the initiati'e of the ;o'ernment of (ndia and Reser'e Ban,! The history of mutual funds in (ndia
can be broadly di'ided into four distinct phases
Fi#st "hase 7 %89(6:; <UTI MONO"O*2=
An Act of Parliament established &nit Trust of (ndia 1&T(3 on 1:8.! (t was set up by the
Reser'e Ban, of (ndia and functioned under the Regulatory and administrati'e control of the
Reser'e Ban, of (ndia! (n 1:9= &T( was deBlin,ed from the RB( and the (ndustrial De'elopment
Ban, of (ndia 1(DB(3 too, o'er the regulatory and administrati'e control in place of RB(! The first
scheme launched by &T( was &nit %cheme 1:80! At the end of 1:== &T( had Rs!8$9<< crores of
assets under management!
Second "hase 7 %8:;6%88> <Ent#y of "u?ic Secto# Funds=
1:=9 mar,ed the entry of nonB &T($ public sector mutual funds set up by public sector ban,s
and /ife (nsurance "orporation of (ndia 1/("3 and ;eneral (nsurance "orporation of (ndia 1;("3!
%B( Mutual 5und was the first nonB &T( Mutual 5und established in Dune 1:=9 followed by "an
ban, Mutual 5und 1Dec =93$ Punjab ational Ban, Mutual 5und 1Aug =:3$ (ndian Ban, Mutual
5und 1o' =:3$ Ban, of (ndia 1Dun :<3$ Ban, of Baroda Mutual 5und 1Cct :*3! /(" established its
mutual fund in Dune 1:=: while ;(" had set up its mutual fund in December 1::<!At the end of
1::.$ the mutual fund industry had assets under management of Rs!09$<<0 crores!
Thi#d "hase 7 %88>6&@@> <Ent#y of "#ivate Secto# Funds=
7ith the entry of pri'ate sector funds in 1::.$ a new era started in the (ndian mutual fund
industry$ gi'ing the (ndian in'estors a wider choice of fund families! Also$ 1::. was the year in
which the first Mutual 5und Regulations came into being$ under which all mutual funds$ e)cept &T(
were to be registered and go'erned! The erstwhile
>othari Pioneer 1now merged with 5ran,lin Templeton3 was the first pri'ate sector mutual fund
registered in Duly 1::.!
1*
The 1::. %#B( 1Mutual 5und3 Regulations were substituted by a more comprehensi'e and
re'ised Mutual 5und Regulations in 1::8! The industry now functions under the %#B( 1Mutual
5und3 Regulations 1::8!
The number of mutual fund houses went on increasing$ with many foreign mutual funds setting up
funds in (ndia and also the industry has witnessed
%e'eral mergers and ac4uisitions! As at the end of Danuary *<<.$ there were .. mutual funds with
total assets of Rs! 1$*1$=<2 crores! The &nit Trust of (ndia with Rs!00$201 crores of assets under
management was way ahead of other mutual funds!
Fou#th "hase 7 Since Fe?#ua#y &@@>
(n 5ebruary *<<.$ following the repeal of the &nit Trust of (ndia Act 1:8. &T( was bifurcated into
two separate entities! Cne is the specified &nderta,ing of the &nit trust of (ndia with assets under
management of Rs!*:$=.2 crores as at the end of Danuary *<<.$ representing broadly$ the assets of
&% 80 scheme$ assured return and certain other schemes! The %pecified &nderta,ing of &nit Trust
of (ndia$ function under an administrator and under the rules framed by ;o'ernment of (ndia and
does not come under the pur'iew of the Mutual 5und Regulations!
The second is the &T( Mutual 5und /td$ sponsored by %B($ PB$ BCB and /("! (t is
registered with %#B( and functions under the Mutual 5und Regulations! 7ith the bifurcation of the
erstwhile &T( which had in March *<<< more than Rs! 98$<<< crores of assets under management
and with the setting up of a &T( Mutual 5und$ conforming to the %#B( Mutual 5und Regulations$
and with recent mergers ta,ing place among different pri'ate sector funds$ the mutual fund industry
has entered its current phase of consolidation and growth! As at the end of Dune .<$ *<<.$ there
were .1 funds$ which manage assets of Rs! 1<098* crores under .98 schemes!
The graph indicates the growth of assets o'er the year
-RO/T1 IN ASSETS UNDER MANA-EMENT
10<<<< B 1*1=<2

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!

i
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1.
F 1<098*
1*<<<< G :=1*0 F
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8<<<< G
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*<<<< G
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10

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(
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12
Phase (A %ince 5eb <.
H#AR%

oteE 7hile &T( was bifurcated into &T( Mutual 5und and the %pecified &nderta,ing
of the &nit Trust of (ndia effecti'e from 5ebruary *<<.! The Assets under management of the
%pecified &nderta,ing of the &nit Trust of (ndia has therefore been e)cluded from the total assets of
the industry as a whole from 5ebruary!
T#end in Mutua Funds Indust#y
The (ndian Mutual fund industry$ despite all that has been said about it is still in a nascent
stage and has e)tremely bright future ahead! The industry is still oneBtenth siIe of the ban,ing
deposits in the country!
The pri'ate sector mutual fund industry in its resent Ja'atarK is barely 9 years old! The total
asset under management o'er the past 0 to 2 tears has almost remain stagnant around the Rs 1<<$
<<< crore mar,!
This has put a 4uestion mar, in front of the claims that mutual funds are growing part of the
financial sa'ings and planning industry in (ndia! (t holds scope for growth! (n (ndia this industry
began with the setting up of the &nit Trust Cf (ndia 1&T(3 in 1:80 by the go'ernment of (ndia in
order to mobiles small sa'ing! During the past .9 years$ &T( has grown to be a dominant player in
the industry with assets with o'er Rs 98$209 crore as of March*<<<! Lowe'er$ trouble hit &T( has
lost its dominant position in the industry and the asset under management has slipped drastically to
Rs 08$.:8 crore!
18
Pri'ate sector mutual funds$ which were permitted along with foreign partners in 1::.$ now
enjoy a dominant position in the country! >othari Pioneer Mutual fund was the first fund to be
established in the pri'ate sector with foreign fund! The pri'ate sector now controls around R%
02$=1= crore assets under management$ almost half the siIe of the industry!
The mutual fund industry has become a fastest growing sector in the countryKs capital and
financial mar,et with an a'erage compounded growth rate of *< percent o'er the past fi'e years!
This is despite increasing competition with more than .< asset management companies for
in'estorKs money! As on Dune *<<*$ the industry has Rs 1<<$9<. crore asset under management
spread across .8 funds with more than .:< schemes!
#)change Board of (ndia 1%#B(3 came out with comprehensi'e regulation in 1::.$ which defined
the structure of the mutual fund and asset management$ "ompanies for the first time! The industry
is in the process of e'ol'ing into a bigger and better in'estment medium for all mar,et segment+$
%ay >a'ita Lurry$ "#C (; (n'estment Management$ further$ currently$ (; (n'estments manages
around Rs!.80 crore as on Dune *<<*!
D#astic T#ansfo#mation5
The industry is undergoing a transformation and is witnessing large number of mergers$
ac4uisitions and ta,eo'ers in the schemes and asset management companies! Mutual fund products
are competing with the ban,s deposits$ Reser'es Ban,s of (ndia 1RB(3 bonds$ pension funds and
post offices schemes that pro'ide not only guaranteed return but also ta)Bfree returns! Lowe'er$
mutual funds are unable to pro'ide assured return since they are in'esting in financial mar,ets and
returns from them are$ by definition$ uncertain! These transformation benefiting the in'estor
friendly openBended schemes$ increasing the range of funds to choose from$ enhanced transparency
and impro'ement regulation!
Ma#$et T#ends5
A lone &T( with just one scheme in 1:80 now competes with as many as 0<< odd products
and .0 players in the mar,et! (n spite of the stiff competition and losing mar,et share$ &T( still
remains a formidable force to rec,on with!
19
/ast si) years ha'e been the most turbulent as well as e)iting ones for the industry! ew
players ha'e come in$ while others ha'e decided to close shop by either selling off or merging with
others! Product inno'ation is now passM with the game shifting to performance deli'ery in fund
management as well as ser'ice! Those directly associated with the fund management industry li,e
distributors$ registrars and transfer agents$ and e'en the regulators ha'e become more mature and
responsible!
The industry is also ha'ing a profound impact on financial mar,ets! 7hile &T( has always
been a dominant player on the bourses as well as the debt mar,ets$ the new generations of pri'ate
funds$ which ha'e gained substantial mass$ are now seen fle)ing their muscles! 5und managers by
their selection criteria for stoc,s ha'e forced corporate go'ernance on the industry! By rewarding
honest and transparent management with higher 'aluations$ a system of ris,Breward has been
created where the corporate sector is more transparent then before!
5unds ha'e shifted their focus to the recession free sectors li,e pharmaceuticals$ 5M"; and
technology sector! 5unds performances are impro'ing! 5unds collection$ which a'eraged at less
than Rs1<<bn per annum o'er fi'eByear period spanning 1::.B:= doubled to Rs*1<bn in 1::=B::!
(n the current year mobiliIation till now ha'e e)ceeded Rs.<<bn! Total collection for the current
financial year ending March *<<< is e)pected to reach Rs02<bn!
7hat is particularly noteworthy is that bul, of the mobiliIation has been by the pri'ate
sector mutual funds rather than public sector mutual funds! (ndeed pri'ate M5s saw a net inflow of
Rs! 9=1:!.0 crore during the first nine months of the year as against a net inflow of Rs! 8<0!0< crore
in the case of public sector funds!
Mutual funds are now also competing with commercial ban,s in the race for retail in'estorKs
sa'ings and corporate float money! The power shift towards mutual funds has become ob'ious!
The coming few years will show that the traditional sa'ing a'enues are losing out in the current
scenario! Many in'estors are realiIing that in'estments in sa'ings accounts are as good as loc,ing
up their deposits in a closet! The fund mobiliIation trend by mutual funds in the current year
indicates that money is going to mutual funds in a big way! The collection in the first half of the
financial year 1:::B*<<< matches the whole of 1::=B::!
1=
ASSET MANA-EMENT )OM"ANIES
( 1 &T( Asset Management "o! /td!
(( BA> %PC%CR#D
1 BCB Asset Management %er'ices /td!
* "anban, (n'estment Management %er'ices /td!
. PB Asset Management "o! /td!
0 %B( 5unds Management /td!
((( (%T(T&T(C%
1 ;(" Asset Management "o /tdN
* (dbi Principal Asset Management "o! /td!
. (/ 6 5% Asset Management "o! /td!
0 Dee'an Bima %ahayoog Asset Management "o! /td!
(A PR(AAT# %#"TCR
1 Benchmar, Asset Management co! /td!
* "holamandalam Asset Management "o! /td!
1:
. #scorts Asset Management /td!
0 D!M!"apital Management P't! /td!
2 >ota, Mahindra Asset Management "o! /td!
8 Reliance "apital Asset Management /td!
9 %undaram Asset Management "ompany /td!
A DC(T A#T&R#%BPR#DCM(AT/H (D(A
1 Birla %un /ife Asset Management "o! /td!
* "redit "apital Asset Management "o! /td!
. D%P Merrill /ynch 5und Managers /td!
0 5irst (ndian Management Pri'ate /td!
2 LD5" Asset Management "o! /td!
8 Tata TD 7aterhouse Asset Management Pri'ate /td!
A( DC(T A#T&R#%BPR#DCM(AT/H 5CR#(;
1 Alliance "apital Asset Management 1(ndia3 P't! /td!
* Deutsche Asset Management 1(ndia3 P't! /td!
. Dundee (n'estment management 6 Research 1P't!3 /td!
0 L%B" Asset Management 1(ndia3 P't! /td!
2 (; (n'estment Management 1(ndia3 P't! /td!
8 Morgan %tanley Dean 7riter (n'estment Management P't! /td!
9 Prudential ("("( Asset management "o! /td!
= %tandard "hartered Asset Management "o! P't! /td!
: %un 5 6 " Asset Management 1(ndia3 P't! /td!
1< Templeton Asset Management 1(ndia3 P't! /td!
11 Ourich Asset Management "o! 1(ndia3 P't! /td!
+A*UE )1AIN
As a business organisation$ a mutual fund management company or fund comple) 1firm3
underta,es a series of acti'ities designed to generate 'alue ofr its customers! By arraying a firmKs
strategically important acti'ities$ one can construct a firmKs 'alue chain representation! This
analytic tool has been ad'anced by Micheae "o#te#, (n grouping a firmKs acti'ities the analyst
*<
must consider the manner in which the economies of 'arious acti'ities differ and how ri'als
distinguish themsel'es on the basis of these acti'ities! 7e identify fi'e lin,s in the 'alue chain for a
typical mutual fund$ as shown in the figure 1pre'ious page3!
The fi#st activity is the investment seection, Mutual funds implement their in'estments
strategy through their selection of security holdings! 5unds 'ary in the amount of latitude they grant
to portfolio managers! (n'estments may be dectated completely by fund charter$ as is done in an %6
P 2<< inde) fund$or security selection may be left completely to the fund managerKs discretion$ as in
a growth fund! To support this function$ funds re4uire research which may be conducted inBhouse
or purchased from 'endors either with cash or with softBdollar payment from bro,ers!
The next activity is t#ading and execution, Cnce the decision has been made to buy or sell
a particular security$ a trade must be e)ecuted in the capital mar,ets! This process in'ol'es not only
getting the best price for the security$ but also administering bac,office functions such as custodial
ser'ies! This particular lin, in the chain may seem minor at first glance$ trading and e)ecution
e)pertise are increasingly being recognised as critical acti'ities!
The thi#d item in the chain is customer record ,eeping and reporting! This refers to the
tas,s performed by transfer agents and to the acti'ities and resources re4uired to produce periodic
statements for funds share holders!
The fou#th activityA ma#$eting and dist#i?utionA describes how the funds communicate
with potential customers and sell their products! Traditionally$ openBended mutual funds were
categoriIed as either noBlaid funds used print and electronic media$ word of mouth$ and mailing to
appeal to consumers directly whereas load funds hired sales people to mar,et and sell their
products! To pay the sales people$ load funds charged customers oneBtime fees$ called loads+!
The fina activity in our 'alue chain is investo# iBuidity se#vices, By this we mean the
acti'ities funds underta,e to permit in'estors to switch among 'arious in'estment or to li4uidate
portfolios!
S2STEMATI) "ORTFO*IO MANA-EMENT
The goal of portfolio management is to assemble 'arious securities and other assets into
portfolios that address in'estor needs and then to manage those protfolios so as to achie'e
in'estment objecti'es! The in'estorKs needs are defined in term of ris,$ and the portfolio manager
ma)imiIes return for in'estment underta,en!
C Asset aocation
*1
%ecurity selection within asset classes asset allocation can best be characteriIed as the
blending together of major asset classes to obtain the highest longBrun return at the lowest ris,!
Managers can ma,e opportnistic shifts in asset class weightings in order to impro'e return prospects
o'er the longBterm objecti'e! Also managers can impro'e return prospects by selecting securities
that ha'e abo'e a'erage e)pected return within the indi'idual asset classes!
F Investment manage#s
Multitudes of in'estment management organiIation offer portfolio management ser'ices to
clients including mutual funds! (n'estments organiIation differ not only in siIe and degree of
specialiIation but also in their approaches to in'estment analysis and portfolio management! Cn the
whole$ howe'er the business portfolio management has tended toward greater structure and
discipline in the in'estment process and toward greater use of systematic approaches to in'esting!
Those organiIations at the forefront in implementing systematic approaches to portfolio
management ha'e gained mar,et share at the e)pense of other firms$ in large part because they ha'e
been more effecti'e in addressing client needs and achie'ing in'estment objecti'es!
F "a#tici0ants
%e'eral groups other than professional portfolio managers are important participants in the
portfolio management process!
(n mar,eting the asset allocation decision$ major portfolio in'estors employ the ser'ice of
in'estment management consultants! These are organiIations that specialiIe in not only ad'ising on
asset allocation but other critical aspects$ such as setting of goal and selection of in'estment
managers!
F Asset casses
De'eloping the appropriate asset allocation is a critical phase of the portfolio management
process!
#4uities$ bonds and money mar,et instruments are major asset categories that are large$ are
generally highly mar,etable and ha'e tradionally been used e)tensi'ely by longterm portfolio
in'estors!
Asset classes for portfolio in'estment
"orporates
"ommon stoc,s
**
Domestic e4uities
/argeBcapitaliIation
%mallBcapitaliIation
(nternational e4uities
MajorBcountry mar,ets
#merging mar,ets
Bonds
;o'ernment and agencies
AAABrated
LighlyByield 1jun,3 bonds
MortgageBbac,ed securities
(nternational bonds
Money mar,et instruments
Treasury bills
"Ds and commercial paper
;uaranteed in'estment contracts
Real estate
Aenture capital
The portfolio management industry has e'ol'ed o'er the last two decades into a structure
with se'eral distinct groupings of highly professional participants! Although the current structure
differs from the past$ the critical components of the in'estment decision process remain the same!
(n'estors need to establish goals and be aware of the capital mar,et tradeoff in de'eloping an asset
allocation that the best meets the return target at an acceptable le'el!
There are three based areaswhich in'esting styles differ! All influence the ris,$ returns and
period of in'estment and in'ol'e finding a sport between the e)tremes that suits the fund and
in'estors the best!
Attitude5 does it follow a topBdown approach 1first list industries or sectors for in'estment and then
select specific companies within these industries3 or a bottomBup approach 1indi'idual stoc,s which
are li,ely to outperform the mar,et are identified first and only then study the industry or macro
le'el factors3P
Intensity of management5 is the scheme acti'ely 1re'iew the portfolios regularly3 or passi'ely
1less intensely managed stoc,s3P
Dist#i?ution net3o#$5
*.
The rapid accumulation in assets of mutual funds creates more challenges$ most important
among them being the distribution networ,! 5or the longBterm health of the industry$ it is crucial
that in'estors who come into a fund come with a full understanding of the ris,s in'ol'ed in the
in'estment! And distributors play an important role in dissemination of such information! At
present$ the majority of funds rely on branch networ, of ban,s in order to sell their products since
the branch networ, of most fund houses is restricted to a few cities!
Afte#6saes se#vice5
(n (ndia typically the distributorKs role comes to an end as soon as the product is sold to the
in'estor! 5or subse4uent transactionsBredemption or switcho'ersBthe in'estors often has to get bac,
to the fund itself! An in'estorKs interface with a fund would be simpler if the whole range of
ser'ices$ from deciding on the right product to processing the final redemption re4uest$ is handled
by a singled entity!
BASI) MUTUA* FUND IN+ESTMENT INSTRUMENT
Mutua Funds a#e investing in > ty0es of funds5
%toc,s
Bonds
Money mar,et instruments
B#oadyA Mutua Funds invest ?asicay in > ty0es of asset casses,
%, Stoc$s56 %toc,s represent ownership or e4uity in a company popularly ,nown as shares!
&, Bonds56 These represent debt from companies$ financial institutions or go'ernment
agencies!
>, Money Ma#$et Inst#uments56 These include short G term dent instrument such as treasury
bills$ certificate of deposits$ and inter ban, call money!
Mutua Fund can ?e cassified ?ased on thei# o?Dectives as5
Secto# eBuity schemes56 These schemes in'est in share of companies in as specific sector!
Dive#sified eBuity schemes56 These schemes in'est in shares and fi)ed income of the
economy of companies across different sectors!
1y?#id economy schemes56 These schemes in'est in a mi) shares and fi)ed income
instruments!
Income schemes56 These schemes in'est in fi)ed income instruments such as bonds issued
by corporate and financial institutions$ and go'ernment securities!
*0
Money Ma#$et schemes56 These schemes in'est in short G term instrument such as
certificate of deposits$ treasury bills and short G term bonds!
ANA*2SIS OF MUTUA* FUND
B#oady the anaysis catego#ies in > ty0es5
5undamental analysis
Technical analysis
Beta-Modern portfolio theory 1MPT3
FUNDAMENTA* ANA*2SIS5
The analysis of such fundamental factor general business conditions$ industry
outloo,$ earnings$ di'idends$ 4uality of management etc!$
In this ta$e conside#ation on the some foo3ing facto#s56
1! "ompany net asset 'alue!
*! #stimation of True+!
.! Aalue of profit earning ratio!
0! #stimating the mar,et 'alue of current and forecasting!
2! "ompare with 'arious ratios li,e &%$ &>!
8! #stimate the future yield di'idends!
Stoc$ #ating5
The rating for common stoc, depends o'er the certain of di'idend in ta,e the
consideration followingsQ!
1! (ngredients of security analysis!
*! (t include historical data$ sales$ capital etc!$
Economic anaysis5
1! "yclic effect
*! #conomic analysis 1fashions3
Financia anaysis5
%, #P%
&, #B(T
>, RC(
*2
(, PAT
Bond #atingE
%, AAA 7 high investment g#ade5 Debentures rated AAA+ are judged to offer highest
safety of timely payment and interest and principles!
&, AA 7 high safety5 (t is offer highest safety of timely payment and interest and
principles!
Investment g#ades
>, A 7 adeBuate safety5 Debentures rates A+ are judged offer highest safety of timely
payment and interest and principles!
(, BBB 7mode#ate safety BBB are judged to offer sufficient safety of timely payment and
interest and principles!
S0ecuative g#ade5
', BB 7 InadeBuate safety5 Debentures rated BB+ are judged to offer timely payment and
interest and principles!
9, B 7 high #is$
;, ) 7 su?stantia #is$5 Timely payment possible only in fa'orable circumstances
continues!
:, D6 In defaut
BETA F M"T ANA*2SIS
Analysis the responsi'eness of the price of a particular company stoc, to
change in the 'alue some mar,et a'erage!
TE)1NI)A* ANA*2SIS5
An analysis of mar,et based factors such as %toc, price mo'ements$ charts
etc!$
T2"ES OF MUTUA* FUND S)1EMES
B2 STRU)TURE5
O"EN 7 ENDED S)1EME
*8
)*OSED 7 ENDED S)1EME
INTER+A* S)1EME
B2 IN+ESTMENT OB4E)TI+E5
-RO/T1 S)1EME
IN)OME S)1EME
MONE2 MAR.ET S)1EME
OT1ER S)1EMES5
TAG SA+IN- S)1EME
S"E)IA* S)1EME
INDEG S)1EME
Mutua Fund ?#oady cassified into T/O catego#ies5
%, O0en 7 Ended Scheme funds
&, )osed 7 Ended Scheme funds
ow discuss details regarding abo'e funds
O"EN 6 ENDED S)1EME FUND5
The concept of these funds is that the in'estors are free to enter or e)it the scheme at
any point of time during the fund period! The in'estors can purchase- sale units of mutual fund
through mutual fund trust! The prices at which the units are purchased- sold depend on the AA of
the fund! At that point of time as specified by the funds! The AA of fund is the current mar,et
'alue of their in'estments! Besides the et Asset Aalue$ certain funds ta,e an additional charge from
the in'estors in the form of #ntry load or #)it load! %ome #)amples of Cpen G #nded scheme funds
areE
Templeton (ndia ;rowth 5und!
Pru("("( Disco'ery 5und!
>ota, Cpportunities
*9
Principal Di'idend Hield 5und!
Reliance ;rowth 5und!
)*OSED 7 ENDED S)1EME FUND5
(n the care of close ended fund$ the in'estors ha'e to loo, their funds with the trust
for particular periods of time as a specified y the terms of the offer! The main problem for the
in'estor is that they cannot mo'e in out of the fund freely! (n the case of "losed G#nded schemes
the prices of the units are calculated in the same manner as in the case of Cpen G #nded schemes!
Lowe'er these schemes do not charge an #ntry- #)it load as in the case of open G ended scheme!
INTER+A* S)1EME FUND5
The concept of these funds is that the in'estors are free to #nter- #)it the scheme at
any point of time during the fund period and the in'estors ha'e to loc, their funds with the trust for
a particular periods of time as a specified by the terms of the offer!
-RO/T1 FUND5
(t is primarily loo, for growth of capital such funds in'ests in shorter with potential
for growth and capital appreciation! They in'est in well G established companies where the
company it self and the industry in which it operates are thought to ha'e well long G term growth
potential and hence growth fund pro'ide low current income! ;rowth potential generally incurred
higher ris,s than (ncome 5und$ in an effort to secure more pronounced growth! %ome growth funds
concentrate on one or more industry sectors and also in'est in a Broad range of industries! ;rowth
funds are suitable for in'estors who can offer to assume the ris, of potential loss in 'alue their
in'estment in the short G term in the hope of achie'ing substantial and risings gains!
*=
#'entually they are not suitable for in'estors who must conser'e their principal or
who must ma)imiIe current income!
-RO/T1 AND IN)OME FUND5
;rowth and (ncome funds see, long G term growth of capital as well as current
income! The in'estment strategies used to reach there goals 'ery among funds! %ome in'est in a
dual portfolio consisting of growth stoc, and income stoc,s$ or a combination of growth stoc,s
paying high di'idends preferred stoc,$ con'ertible securities or fi)ed income securities such as
corporate bonds and money mar,et instruments!
;rowth and (ncome funds ha'e low to moderate stability of principal and moderate
potential for current income and growth they are suitable for in'estors who can assume some ris, to
achie'e growth of capital but who also want to maintain a moderate le'el of current income!
MONE2 MAR.ET S)1EME5
(t is in'ested only in high li4uidityN shortB term top G rated money mar,et
instruments! Money mar,et funds are suitable for in'estors who want high stability of principal and
current income with immediate li4uidity!
*A/ RE*ATIN- TO TAG SA+IN-S UFS :@
B!Deductions in respect of certain payments
92RDeduction in respect of life insurance premia$ deferred annuity$ contributions to pro'ident fund$
subscription to certain e4uity shares or debentures$ etc!
98=<"! 99113 (n computing the total income of an assessee$ being an indi'idual or a Lindu
undi'ided family$ there shall be deducted$ in accordance with and subject to the pro'isions of this
*:
section$ the whole of the amount paid or deposited in the pre'ious year$ being the aggregate of the
sums referred to in subBsection 1*3$ as does not e)ceed one la,h rupees!
1*3 The sums referred to in subBsection 113 shall be any sums paid or deposited in the pre'ious year
by the assessee
1i3 to effect or to ,eep in force an insurance on the life of persons specified in subBsection 103N
1ii3 to effect or to ,eep in force a contract for a deferred annuity$ not being an annuity plan referred
to in clause 1)ii3$ on the life of persons specified in subBsection 103E
Pro'ided that such contract does not contain a pro'ision for the e)ercise by the insured of an option
to recei'e a cash payment in lieu of the payment of the annuityN
1iii3 by way of deduction from the salary payable by or on behalf of the ;o'ernment to any
indi'idual being a sum deducted in accordance with the conditions of his ser'ice$ for the purpose of
securing to him a deferred annuity or ma,ing pro'ision for his spouse or children$ in so far as the
sum so deducted does not e)ceed oneBfifth of the salaryN
1i'3 as a contribution by an indi'idual to any pro'ident fund to which the Pro'ident 5unds Act$ 1:*2
11: of 1:*23 appliesN
1'3 as a contribution to any pro'ident fund set up by the "entral ;o'ernment and notified9= by it in
this behalf in the Cfficial ;aIette$ where such contribution is to an account standing in the name of
any person specified in subBsection 103N
1'i3 as a contribution by an employee to a recognised pro'ident fundN
1'ii3 as a contribution by an employee to an appro'ed superannuation fundN
1'iii3 as subscription to any such security of the "entral ;o'ernment or any such deposit scheme as
that ;o'ernment may$ by notification in the Cfficial ;aIette$ specify in this behalfN
.<
1i)3 as subscription to any such sa'ings certificate as defined in clause 1c3 of section *9: of the
;o'ernment %a'ings "ertificates Act$ 1:2: 108 of 1:2:3$ as the "entral ;o'ernment may$ by
notification=< in the Cfficial ;aIette$ specify in this behalfN
1)3 as a contribution$ in the name of any person specified in subBsection 103$ for participation in the
&nitBlin,ed (nsurance Plan$ 1:91 1hereafter in this section referred to as the &nitBlin,ed (nsurance
Plan3 specified in %chedule (( of the &nit Trust of (ndia 1Transfer of &nderta,ing and Repeal3 Act$
*<<* 12= of *<<*3N
1)i3 as a contribution in the name of any person specified in subBsection 103 for participation in any
such unitBlin,ed insurance plan of the /(" Mutual 5und =<aRnotified underS clause 1*.D3 of section
1<$ as the "entral ;o'ernment may$ by notification=1 in the Cfficial ;aIette$ specify in this behalfN
1)ii3 to effect or to ,eep in force a contract for such annuity plan of the /ife (nsurance "orporation
or any other insurer as the "entral ;o'ernment may$ by notification=* in the Cfficial ;aIette$
specifyN
1)iii3 as subscription to any units of any Mutual 5und =*aRnotified underS clause 1*.D3 of section 1<
or from the Administrator or the specified company under any plan formulated in accordance with
such scheme as the "entral ;o'ernment may$ by notification=. in the Cfficial ;aIette$ specify in
this behalfN
1)i'3 as a contribution by an indi'idual to any pension fund set up by any Mutual 5und =.aRnotified
underS clause 1*.D3 of section 1< or by the Administrator or the specified company$ as the "entral
;o'ernment may$ by notification=0 in the Cfficial ;aIette$ specify in this behalfN
1)'3 as subscription to any such deposit scheme of$ or as a contribution to any such pension fund set
up by$ the ational Lousing Ban, established under section . of the ational Lousing Ban, Act$
1:=9 12. of 1:=93 1hereafter in this section referred to as the ational Lousing Ban,3$ as the "entral
;o'ernment may$ by notification in the Cfficial ;aIette$ specify in this behalfN
1)'i3 as subscription to any such deposit scheme of
.1
1a3 a public sector company which is engaged in pro'iding longBterm finance for construction or
purchase of houses in (ndia for residential purposesN or
1b3 any authority constituted in (ndia by or under any law enacted either for the purpose of dealing
with and satisfying the need for housing accommodation or for the purpose of planning$
de'elopment or impro'ement of cities$ towns and 'illages$ or for both$
as the "entral ;o'ernment may$ by notification in the Cfficial ;aIette$ specify in this behalfN
1)'ii3 as tuition fees 1e)cluding any payment towards any de'elopment fees or donation or payment
of similar nature3$ whether at the time of admission or thereafter$
1a3 to any uni'ersity$ college$ school or other educational institution situated within (ndiaN
1b3 for the purpose of fullBtime education of any of the persons specified in subBsection 103N
1)'iii3 for the purposes of purchase or construction of a residential house property the income from
which is chargeable to ta) under the head (ncome from house property 1or which would$ if it had not
been used for the assessees own residence$ ha'e been chargeable to ta) under that head3$ where such
payments are made towards or by way of
1a3 any instalment or part payment of the amount due under any selfBfinancing or other scheme of
any de'elopment authority$ housing board or other authority engaged in the construction and sale of
house property on ownership basisN or
1b3 any instalment or part payment of the amount due to any company or coBoperati'e society of
which the assessee is a shareholder or member towards the cost of the house property allotted to
himN or
1c3 repayment of the amount borrowed by the assessee from
113 the "entral ;o'ernment or any %tate ;o'ernment$ or
1*3 any ban,$ including a coBoperati'e ban,$ or
.*
1.3 the /ife (nsurance "orporation$ or
103 the ational Lousing Ban,$ or
123 any public company formed and registered in (ndia with the main object of carrying on the
business of pro'iding longBterm finance for construction or purchase of houses in (ndia for
residential purposes which is eligible for deduction under clause 1'iii3 of subBsection 113 of section
.8$ or
183 any company in which the public are substantially interested or any coBoperati'e society$ where
such company or coBoperati'e society is engaged in the business of financing the construction of
houses$ or
193 the assessees employer where such employer is an authority or a board or a corporation or any
other body established or constituted under a "entral or %tate Act$ or
1=3 the assessees employer where such employer is a public company or a public sector company or
a uni'ersity established by law or a college affiliated to such uni'ersity or a local authority or a coB
operati'e societyN or
1d3 stamp duty$ registration fee and other e)penses for the purpose of transfer of such house property
to the assessee$
but shall not include any payment towards or by way of
1A3 the admission fee$ cost of share and initial deposit which a shareholder of a company or a
member of a coBoperati'e society has to pay for becoming such shareholder or memberN or
1B3 the cost of any addition or alteration to$ or reno'ation or repair of$ the house property which is
carried out after the issue of the completion certificate in respect of the house property by the
authority competent to issue such certificate or after the house property or any part thereof has
either been occupied by the assessee or any other person on his behalf or been let outN or
1"3 any e)penditure in respect of which deduction is allowable under the pro'isions of section *0N
..
1)i)3 as subscription to e4uity shares or debentures forming part of any eligible issue of capital
appro'ed by the Board on an application made by a public company or as subscription to any
eligible issue of capital by any public financial institution in the prescribed form=0a!
#)planation!5or the purposes of this clause$
1i3 eligible issue of capital means an issue made by a public company formed and registered in (ndia
or a public financial institution and the entire proceeds of the issue are utilised wholly and
e)clusi'ely for the purposes of any business referred to in subBsection 103 of section =<B(AN
1ii3 public company shall ha'e the meaning assigned to it in section .=2 of the "ompanies Act$ 1:28
11 of 1:283N
1iii3 public financial institution shall ha'e the meaning assigned to it in section 0A=8 of the
"ompanies Act$ 1:28 11 of 1:283N
1))3 as subscription to any units of any mutual fund referred to in clause 1*.D3 of section 1< and
appro'ed by the Board on an application made by such mutual fund in the prescribed form=8aE
Pro'ided that this clause shall apply if the amount of subscription to such units is subscribed only in
the eligible issue of capital of any company!
#)planation!5or the purposes of this clause eligible issue of capital means an issue referred to in
clause 1i3 of the #)planation to clause 1)i)3 of subBsection 1*3!
The following clause 1))i3 shall be inserted after clause 1))3 of subBsection 1*3 of section =<" by
the 5inance Act$ *<<8$ w!e!f! 1B0B*<<9 E
1))i3 as term deposit
1a3 for a fi)ed period of not less than fi'e years with a scheduled ban,N and
1b3 which is in accordance with a scheme framed and notified$ by the "entral ;o'ernment$ in the
Cfficial ;aIette for the purposes of this clause!
.0
#)planation!5or the purposes of this clause$ scheduled ban, means the %tate Ban, of (ndia
constituted under the %tate Ban, of (ndia Act$ 1:22 1*. of 1:223$ or a subsidiary ban, as defined in
the %tate Ban, of (ndia 1%ubsidiary Ban,s3 Act$ 1:2: 1.= of 1:2:3$ or a corresponding new ban,
constituted under section . of the Ban,ing "ompanies 1Ac4uisition and Transfer of &nderta,ings3
Act$ 1:9< 12 of 1:9<3$ or under section . of the Ban,ing "ompanies 1Ac4uisition and Transfer of
&nderta,ings3 Act$ 1:=< 10< of 1:=<3$ or any other ban,$ being a ban, included in the %econd
%chedule to the Reser'e Ban, of (ndia Act$ 1:.0 1* of 1:.03!
1.3 The pro'isions of subBsection 1*3 shall apply only to so much of any premium or other payment
made on an insurance policy other than a contract for a deferred annuity as is not in e)cess of
twenty per cent of the actual capital sum assured!
#)planation!(n calculating any such actual capital sum assured$ no account shall be ta,en
1i3 of the 'alue of any premiums agreed to be returned$ or
1ii3 of any benefit by way of bonus or otherwise o'er and abo'e the sum actually assured$ which is
to be or may be recei'ed under the policy by any person!
103 The persons referred to in subBsection 1*3 shall be the following$ namelyE
1a3 for the purposes of clauses 1i3$ 1'3$ 1)3 and 1)i3 of that subBsection$
1i3 in the case of an indi'idual$ the indi'idual$ the wife or husband and any child of such indi'idual$
and
1ii3 in the case of a Lindu undi'ided family$ any member thereofN
1b3 for the purposes of clause 1ii3 of that subBsection$ in the case of an indi'idual$ the indi'idual$ the
wife or husband and any child of such indi'idualN
1c3 for the purposes of clause 1)'ii3 of that subBsection$ in the case of an indi'idual$ any two
children of such indi'idual!
123 7here$ in any pre'ious year$ an assessee
.2
1i3 terminates his contract of insurance referred to in clause 1i3 of subBsection 1*3$ by notice to that
effect or where the contract ceases to be in force by reason of failure to pay any premium$ by not
re'i'ing contract of insurance$
1a3 in case of any single premium policy$ within two years after the date of commencement of
insuranceN or
1b3 in any other case$ before premiums ha'e been paid for two yearsN or
1ii3 terminates his participation in any unitBlin,ed insurance plan referred to in clause 1)3 or clause
1)i3 of subBsection 1*3$ by notice to that effect or where he ceases to participate by reason of failure
to pay any contribution$ by not re'i'ing his participation$ before contributions in respect of such
participation ha'e been paid for fi'e yearsN or
1iii3 transfers the house property referred to in clause 1)'iii3 of subBsection 1*3 before the e)piry of
fi'e years from the end of the financial year in which possession of such property is obtained by
him$ or recei'es bac,$ whether by way of refund or otherwise$ any sum specified in that clause$then$
1a3 no deduction shall be allowed to the assessee under subBsection 113 with reference to any of the
sums$ referred to in clauses 1i3$ 1)3$ 1)i3 and 1)'iii3 of subBsection 1*3$ paid in such pre'ious yearN
and
1b3 the aggregate amount of the deductions of income so allowed in respect of the pre'ious year or
years preceding such pre'ious year$ shall be deemed to be the income of the assessee of such
pre'ious year and shall be liable to ta) in the assessment year rele'ant to such pre'ious year!
183 (f any e4uity shares or debentures$ with reference to the cost of which a deduction is allowed
under subBsection 113$ are sold or otherwise transferred by the assessee to any person at any time
within a period of three years from the date of their ac4uisition$ the aggregate amount of the
deductions of income so allowed in respect of such e4uity shares or debentures in the pre'ious year
or years preceding the pre'ious year in which such sale or transfer has ta,en place shall be deemed
to be the income of the assessee of such pre'ious year and shall be liable to ta) in the assessment
year rele'ant to such pre'ious year!
.8
#)planation!A person shall be treated as ha'ing ac4uired any shares or debentures on the date on
which his name is entered in relation to those shares or debentures in the register of members or of
debentureBholders$ as the case may be$ of the public company!
193 5or the purposes of this section$
1a3 the insurance$ deferred annuity$ pro'ident fund and superannuation fund referred to in clauses 1i3
to 1'ii3N
1b3 unitBlin,ed insurance plan and annuity plan referred to in clauses 1)ii3 to 1)iiia3N
1c3 pension fund and subscription to deposit scheme referred to in clauses 1)iiic3 to 1)i'a3N
1d3 amount borrowed for purchase or construction of a residential house referred to in clause 1)'3$
of subBsection 1*3 of section == shall be eligible for deduction under the corresponding pro'isions of
this section and the deduction shall be allowed in accordance with the pro'isions of this section!
1=3 (n this section$
1i3 Administrator means the Administrator as referred to in clause 1a3 of section * of the &nit Trust
of (ndia 1Transfer of &nderta,ing and Repeal3 Act$ *<<* 12= of *<<*3N
1ii3 contribution to any fund shall not include any sums in repayment of loanN
1iii3 insurance shall include
1a3 a policy of insurance on the life of an indi'idual or the spouse or the child of such indi'idual or a
member of a Lindu undi'ided family securing the payment of specified sum on the stipulated date
of maturity$ if such person is ali'e on such date notwithstanding that the policy of insurance
pro'ides only for the return of premiums paid 1with or without any interest thereon3 in the e'ent of
such person dying before the said stipulated dateN
1b3 a policy of insurance effected by an indi'idual or a member of a Lindu undi'ided family for the
benefit of a minor with the object of enabling the minor$ after he has attained majority to secure
insurance on his own life by adopting the policy and on his being ali'e on a date 1after such
adoption3 specified in the policy in this behalfN
1i'3 /ife (nsurance "orporation means the /ife (nsurance "orporation of (ndia established under the
/ife (nsurance "orporation Act$ 1:28 1.1 of 1:283N
.9
1'3 public company shall ha'e the same meaning as in section .=9 of the "ompanies Act$ 1:28 11 of
1:283N
1'i3 security means a ;o'ernment security as defined in clause 1*3 of section *== of the Public Debt
Act$ 1:00 11= of 1:003N
1'ii3 specified company means a company as referred to in clause 1h3 of section * of the &nit Trust
of (ndia 1Transfer of &nderta,ing and Repeal3 Act$ *<<* 12= of *<<*3N
1'iii3 transfer shall be deemed to include also the transactions referred to in clause 1f3 of section
*8:&A!S
Tax 7 "anning5
5or most indi'iduals$financial planning and ta)Bplanning are to mutually e)clusi'e
e)ercises! 7hile planning our in'estments we spend a considerable amount of time e'aluating
'arious options and determining which suits us the best! But when it comes to planning out
in'estments from a ta) G sa'ing perspecti'e$ more often than not$ we simply go the traditional way
and do the e)act same thing that we did in the earlier years! 7ell$ in case you were not aware the
guidelines go'erning such in'estments are a lot different this year and lethargy on your part to
rewor, your in'estment plan could cost you dear!
7hy are the sta,es higher this yearP
&ntil the pre'ious$ta) benefit was pro'ided as a rebate on the in'estment amount$ which could not
e)ceed Rs 1$<<$<<< N of this Rs .<$<<< was e)clusi'ely reser'ed for infrastructure Bonds! Also$ the
.=
rebate reduced with e'ery rise in the income slabN indi'iduals earning o'er Rs 2<<$<<< per year
were not eligible to clain any rebate!5or the current financial year$ the Rs 1$<<$<<< limit has been
retainedN howe'er internal caps ha'e been done away with! (ndi'iduals ha'e a greater degree of
fle)ibility in deciding how much to in'est in the eligible instruments! The other significant changer
are B
Cne$ the rebate has been replaced by a deduction from gross total income$ effecti'ely! The higher
your income slab$ the greater is the ta) benefit! And two$ all indi'iduals irrespecti'e of the income
brac,et are eligible for this in'estment! 5or most readers$ these de'elopments will result in higher
ta)Bsa'ings!
TAG SA+IN- S)1EME5
(n the care of close ended fund$ the in'estors ha'e to loo, their funds with the trust
for particular periods of time as a specified y the terms of the offer! The main problem for the
in'estor is that they cannot mo'e in out of the fund freely! (n the case of "losed G#nded schemes
the prices of the units are calculated in the same manner as in the case of Cpen G #nded schemes!
Lowe'er these schemes do not charge an #ntry- #)it load as in the case of open G ended scheme! (n
this scheme main ad'antage is that the in'estor can claim for the ta) sa'ing! This one on the other
same to the closed G ended scheme but one e)tra feature is in this that the ta) sa'ing he can claim
that under the section =< " for this the in'estor has to through with the ta) brac,ets!
According to the new budget *<<8 G <9 e'ery body who earns an income falls under a Ta)
Brac,et+! (t is important to ,eep in mid that your Ta)able (ncome+$ or income after deductions$
defines your ta) brac,et which could actually be lower than the amount of money you ha'e earned
o'er the year! The current income ta) determined four main ta) brac,ets$ which are as followsE
/ower /imit &pper limit Ta) Payable
< Rs!1$<<$<<< il
Rs!1$<<$<<1 Rs!1$2<$<<< 1<T of income in e)cess of Rs!1$<<$<<<
Rs!1$2<$<<1 Rs!*$2<$<<< Rs!2$<<< U *<T of income in e)cess of Rs!1$2<$<<<
Rs!*$2<$<<1 o &pper /imit Rs!*2$<<< U .<T of income in e)cess of Rs!*$2<$<<<
5or e)ample$ if your ta)able income is Rs!*$<<$<<< for the year$ you would fall within the
Rs!1$2<$<<1 to Rs!*$2<$<<< ta) brac,et! Hou would ha'e to pay the fi)ed sum for this slab$ which is
Rs!2$<<< plus *<T of the amount that e)ceeds Rs!1$2<$<<<! (n your case$ this e)cess amount would
be Rs!2<$<<<! %o$ your total income ta) for the year would be Rs!2$<<< U Rs!1<$<<< V Rs!12$<<<!
.:
Hou can Jmo'eK into a lower ta) brac,et by in'esting in a ta) sa'ing instrument! Low does
this wor,P Read on!
1o3 much can you save5
The go'ernment has made a host of indi'idual sa'ings Ta) G deductible+ under one
umbrella called %ection =<" and a simple new rule has emerged G if you in'est up to Ra!1 la,h in a
ta) sa'ing instrument or e'en a combination of them$ you effecti'ely reduce our ta)able income by
up to Rs!1 la,h! This means you could sa'e up to Rs!.<$<<<W 1"onditions apply3 in ta)es!
The chart below shows how this happensE
Hour annual
ta)able
income
1Rs3
Hour
applicable ta)
before
in'estment
1Rs3
Amount
in'ested under
%ection =<"
1Rs3
Hour JnewK
ta)able
income
1Rs3
Hour applicable
ta) after
in'estment
1Rs3
Hour
%a'ings
1Rs3
1$*<$<<< *$<<< 1$<<$<<< *<$<<< < *$<<<
1$2<$<<< 2$<<< 1$<<$<<< 2<$<<< < 2$<<<
*$<<$<<< 12$<<< 1$<<$<<< 1$<<$<<< < 12$<<<
.$<<$<<< 0<$<<< 1$<<$<<< *$<<$<<< 12$<<< *2$<<<
0$<<$<<< 9<$<<< 1$<<$<<< .$<<$<<< 0<$<<< .<$<<<
2$<<$<<< 1$<<$<<< 1$<<$<<< 0$<<$<<< 9<$<<< .<$<<<
9$2<$<<< 1$92$<<< 1$<<$<<< 8$2<$<<< 1$02$<<< .<$<<<
:$<<$<<< *$*<$<<< 1$<<$<<< =$<<$<<< 1$:<$<<< .<$<<<
The 4ualities that ha'e to be seen before in'esting are that$ All #4uity /in,ed %a'ing
%chemes are eligible for ta) benefits under %ection =<"! 7hile there is no set way of determining
which scheme may fit your re4uirements$ remember that by in'esting in an #/%%$ you trust your
hard G earned money to the asset management company for at least three years!
As, yourself certain 4uestions before ma,ing your decisions! (s the company respected in
the in'estment fieldP Las it done well in the pastP Does it ha'e the right credentials$ e)perience$
philosophy and e)pertise to ma,e your money grow in the long runP Does it ha'e a well B defined
in'estment process and has it demonstrated commitment to this process through good and not G so G
good timesP Abo'e all$ do you trust it to ma,e the right decisions for youP
By satisfying these 4uestions$ you can rest assured that your money is in good hands! As
always$ spea,ing to your ta) and- or your in'estment ad'iser will certainly help you ma,e the right
ta) sa'ing in'estment for your future!
According to the new budget *<<9 G <= e'ery body who earns an income falls under a Ta)
Brac,et+! (t is important to ,eep in mind that your Ta)able (ncome+$ or income after deductions$
0<
defines your ta) brac,et which could actually be lower than the amount of money you ha'e earned
o'er the year! The current income ta) determined four main ta) brac,ets$ which are as followsE
/ower /imit &pper limit Ta) Payable
< Rs!1$1<$<<< il
Rs!1$1<$<<1 Rs!1$2<$<<< 1<T of 1T( B Rs!1$1<$<<<3U.T#"
Rs!1$2<$<<1 Rs!*$2<$<<< Rs!0$<<< U *<T of 1T( B Rs!1$2<$<<<3U.T#"
Rs!*$2<$<<1 Rs1<$<<$<<< Rs!*2$<<< U .<T 1T( B Rs!*$2<$<<<3U.T#"
R%
1<$<<$<<<
o limit Rs *$0:$<<< U.<T1T( G Rs 1<$<<$<<<3U1<T%"U.T#"
5or e)ample$ if your ta)able income is Rs!*$<<$<<< for the year$ you would fall within the
Rs!1$2<$<<1 to Rs!*$2<$<<< ta) brac,et! Hou would ha'e to pay the fi)ed sum for this slab$ which is
Rs!0$<<< plus *<T of the amount that e)ceeds Rs!1$2<$<<<! (n your case$ this e)cess amount would
be Rs!2<$<<<! %o$ your total income ta) for the year would be Rs!0$<<< U Rs!1<$<<< V Rs!10$<<<!(n
this e)ample for simple calculation no e)tra ta) are considered other than the slab rates!
The go'ernment has made a host of indi'idual sa'ings Ta) G deductible+ under one umbrella
called %ection =<" and a simple new rule has emerged G if you in'est up to Ra!1 la,h in a ta)
sa'ing instrument or e'en a combination of them$ you effecti'ely reduce our ta)able income by up
to Rs!1 la,h! This means you could sa'e up to Rs!.<$<<<W 1"onditions apply3 in ta)es!
The chart below shows how this happensE
Hour annual
ta)able
income
1Rs3
Hour
applicable ta)
before
in'estment
1Rs3
Amount
in'ested under
%ection =<"
1Rs3
Hour JnewK
ta)able
income
1Rs3
Hour applicable
ta) after
in'estment
1Rs3
Hour
%a'ings
1Rs3
1$*<$<<< 1<<< 1$<<$<<< *<$<<< < 1$<<<
1$2<$<<< 0$<<< 1$<<$<<< 2<$<<< < 0$<<<
*$<<$<<< 10$<<< 1$<<$<<< 1$<<$<<< < 10$<<<
.$<<$<<< .:$<<< 1$<<$<<< *$<<$<<< 10$<<< *2$<<<
0$<<$<<< 8:$<<< 1$<<$<<< .$<<$<<< .:$<<< .<$<<<
2$<<$<<< ::$<<< 1$<<$<<< 0$<<$<<< 8:$<<< .<$<<<
9$2<$<<< 1$90$<<< 1$<<$<<< 8$2<$<<< 1$00$<<< .<$<<<
:$<<$<<< *$1:$<<< 1$<<$<<< =$<<$<<< 1$=:$<<< .<$<<<
01
DOHS AND DONTHS /1I*E SE*E)TIN- A MUTUA* FUND5
DOHS5
"hec, the trac, record of the asset management company!
%ee what is offered in terms of afterBsales ser'ice!
Cpt for an income or growth scheme on the basis of income re4uirements!
"onsider your li4uidity needs to choose between an openBorBcloseBended fund!
#)amine redemption and reBpurchase facilities!
DONTHS5
e'er judge a mutual fund by the name of the group that is floating it!
DonKt in'est in a mutual fund when the mar,et is on an upswing!
Do not opt for a fund where the AA independently on the sense)!
Do not 'iew AA independently of the sense)!
e'er but when the unit is 4uoted at a premium to AA!
AD+ANTA-ES OF MUTUA* FUND5
"ROFESSIONA* MANA-EMENT5
#)perienced fund managers supported by research team$ select appropriate securities
to the fund! The forecasting of the mar,et is done effecti'ely!
DI+ERSIFI)ATION5
Mutual 5und in'ests in a di'erse range of securities and o'er many industries!
Lence$ all the eggs are not played in one bas,et! ormally an in'estor has to ha'e large sump of
money to achie'e this objecti'e! (f he in'ests directly in the stoc, mar,et! Through Mutual 5und$ he
can achie'e di'ersification of portfolio at a fraction at of the cost!
)ON+INIENT ADMINISTRATION5
5or the in'estors there is reduction in paper wor, and sa'ing in time! (t is also 'ery
con'enient! Mutual 5und helps in o'ercoming the problems relating to bad deli'eries delayed
payments and the li,e!
0*
RETURN "OTENTIA*5
Medium and the long term Mutual 5und ha'e the potential to pro'ide high return!
*O/ )OST5
The funds handle the in'estments of a large number of peopleN they are in a position
to pass on relati'ely low bro,erage and other costs! This is because the funds can ta,e ad'antage of
the economics of scale!
*IIUIDIT25
M&T&A/ 5und pro'ides li4uidity in two ways! (n open Gended schemes$ the
in'estors can get bac, this money at any time by selling bac, the units to the fund at AA related
prices! (n closed G ended schemes fund$ he has the option to sell the units through the stoc,
e)change!
F*EGIBI*IT25
"urrently most funds ha'e regular in'estment plans$ regular withdrawal plans and
di'ided rein'estment schemes! A great deal of fle)ibility is assured in the process!
)1OI)E OF S)1EME5
Mutual 5und offers a 'ariety of schemes to suit 'arying needs of the in'estors!
/E** RE-U*ATED5
The funds are registered with the securities and e)change of board in (ndia and their
operations are continuously monitored!
TRANS"ARAN)25
Mutual 5unds pro'ide information on each scheme about the specific in'estments
made there under and so on!
SE*E)TION OF A FUND
O?Dective of the fund5
The 5und whether income oriented or growth oriented! "onsistency of performanceE
a mutual fund is always intended to gi'e steady long term returnsN hence the in'estors should
measure the performance of a fund o'er a period of at least three years!
0.
1isto#ica ?ac$g#ound5
The success of any fund depends upon the competence of the management$ its
integrity$ periodicity and e)perience!
)ost of O0e#ation5
Mutual funds see, to do a better job of the in'estible funds at a lower cost the he
in'estible fund at lower cost! The in'estors compare with their funds with others!
)a0acity of innovation5
%ome companiesK introduced inno'ation schemes to meet the di'erse needs of
in'estors! (n'estors will loo, for funds which are capable of introducing inno'ation in the financial
mar,et!
Investo# se#vicing5
The most important factor is prompt and efficient ser'icing! %er'ice li,e 4uic,
response to in'estors 4ueries$ prompt dispatch of unit certificates$ 4uic, transfer of units etc!$
FA)I*ITIES A+AI*AB*E TO IN+ESTORS
Re purchase facilities
Reissue facilities
Roll o'er facilities
/ateral shifting facilities
Ta) G %a'ing 5undsE
%ection =<c has come as a boon to in'estors who ha'e an appetite for ris,!&ntil the pre'ious
year$ in'estment in ta) G sa'ing funds 1otherwise ,nown as #4uity /in,ed %a'ings %chemes3 for the
purpose of a'ailing a ta) benefit was restricted to Rs 1<<<< P!A (n the current year all such
restrictions ha'e been done away withN an indi'idual assessee now has the fle)ibility to in'est the
Rs 1<<<<< that is allowed uncer section =<-c in any proportion that he wishes 1only in PP5 is there
00
an upper limit of Rs 9<<<< pa3 in specified instruments! aturally$ those with a ris, appetite should
be loo,ing at increase their e)posure to ta)Bsa'ing funds!
But now Ta) Benefit will get up to Rs 1$<<$<<< !These leading ta)Bsa'ing funds as on 10B11B*<<2!
Ta) sa'ing funds are simply e4uity funds that ha'e mandatory loc,Bin of three years! The
loc,Bin is one of the ,ey strengths of such fundsN it allows the fund manager to in'est for the
longterm and also sa'es him from the pressures of managing fund inflows and outflows on a dayBtoB
day basis! (n case of ta)Bsa'ings funds$ the fund outflows are ,nown relati'ely well in ad'ance and
therefore can be planned for!
Before we del'e further into understanding why ta)Bsa'ing funds should be considered for
your portfolio$let us first understand ris,s associated with them!
RIS. FA)TORS IN MUTUA* FUND
Dust li,e in any other in'estment$ Mutual 5und in'estment also carry certain ris,s$ the ris,s in
particular scheme of a mutual fund is a basically a function of fi'e factor!
Ma#$et Ris$5
(n generally$ there are certain ris,s associated with e'ery ,ind of in'estments of
shares! They are called mar,et ris,s! The mar,et ris,s can be reduced! But cannot be completely
eliminated e'en by good in'estment management! The prices of shares are subjected to wide
price fluctuations depending upon mar,et conditions! #g$ cycle G boom 6 slump and reco'ery!
Scheme Ris$s5
02
There are certain ris,s inherent in the scheme itself! T all depends upon the nature of
the scheme! 5or instance$ in a pure growth scheme$ ris,s are greater! (t is ob'ious because if one
e)pects more returns an in the case of a growth scheme$ one has to ta,e more ris,s!
Investment Ris$s5
7hether the Mutual 5und ma,es money in shares or loses depends upon the
in'estment e)pertise of the Asset management "ompany 1AM"3! (f the in'estment ad'ice goes
wrong$ the fund has to suffer a lot! The in'estment e)pertises of 'arious funds are different and
it is reflected on the returns which they offer to in'estors!
Business Ris$5
The corpus of a Mutual 5und might ha'e been in'ested in companyKs shares! (f the
business of that company suffers any set bac,$ it cannot declare any di'idend!
"oitica Ris$5
%uccessi'e ;o'ernments bring with them fancy new economy ideologies and
policies! (t is often said that many economy decisions are politically moti'ated! "hanged in
;o'ernment bring in the ris, of uncertainty which e'ery player in the financial ser'ice industry
has to face! %o Mutual 5unds are no e)ception to it!
08
)1A"TER6>
)OM"AN2 "ROFI*E
I)I)I Ban$
I)I)I Ban$ is (ndia@s second largest ban, and largest pri'ate sector ban, with assets of Rs!
*:2=!.* billion as on December .1$ *<<8! ("("( Ban, pro'ides a broad spectrum of financial
ser'ices to indi'iduals and companies! This includes mortgages$ car and personal loans$ credit and
debit cards$ corporate and agricultural finance! The Ban, ser'ices a growing customer base through
09
a multiBchannel access networ, which includes o'er 8:2 branches and e)tension counters$ .<21
ATMs$ call centers and (nternet ban,ing!
"#udentia"*)
#stablished in /ondon in 1=0=$ Prudential plc$ through its businesses in the &> and #urope$ the &%
and Asia$ pro'ides retail financial ser'ices products and ser'ices to more than *1 million customers$
policyholder and unit holders worldwide! Today$ Prudential has millions of customers worldwide
and o'er X*.= billion 1as of .< Dune *<<83 of funds under management! (n Asia$ Prudential is the
leading #uropean life insurance company with a 'ast networ, of life and fund management
operations in thirteen countries B "hina$ Long >ong$ (ndia$ (ndonesia$ Dapan$ >orea$ Malaysia$ the
Philippines$ %ingapore$ Taiwan$ Thailand$ Aietnam and &nited Arab #mirates
The ("("( Prudential edge comes from our commitment to our customers$ in all that we do B be it
product de'elopment$ distribution$ the sales process or ser'icing! Lere@s a pee, into what ma,es us
leaders!
1! Cur products ha'e been de'eloped after a clear and thorough understanding of customers@ needs!
(t is this research that helps us de'elop #ducation plans that offer the ideal way to truly guarantee
your child@s education$ Retirement solutions that are a hedge against inflation and yet promise a
fi)ed income after you retire$ or Lealth insurance that arms you with the funds you might need to
reco'er from a dreaded disease!
*! La'ing the right products is the first step$ but it@s e4ually important to ensure that our customers
can access them easily and 4uic,ly! To this end$ ("("( Prudential has an ad'isor base across the
0=
length and breadth of the country$ and also partners with leading ban,s$ corporate agents and
bro,ers to distribute our products
.! Robust ris, management and underwriting practices form the core of our business! 7ith clear
guidelines in place$ we ensure e4uitable costing of ris,s$ and thereby ensure a smooth and hassleB
free claims process!
0! #ntrusted with helping our customers meet their longBterm goals$ we adopt an in'estment
philosophy that aims to achie'e ris, adjusted returns o'er the longBterm!
2! /ast but definitely not the least$ our 12$<<< plus strong team is gi'en the opportunity to learn and
grow$ e'ery day in a multitude of ways! 7e belie'e this ,eeps them engaged and enthusiastic$ so
that they can deli'er on our promise to co'er you$ at e'ery step in life!
(ndia@s umber Cne pri'ate life insurer$ ("("( Prudential /ife (nsurance "ompany is a joint
'enture between ("("( Ban,Bone of (ndia@s foremost financial ser'ices companiesBand Prudential
plcB a leading international financial ser'ices group head4uartered in the &nited >ingdom! Total
capital infusion stands at Rs! 1=!12 billion$ with ("("( Ban, holding a sta,e of 90T and Prudential
plc holding *8T!
7e began our operations in December *<<< after recei'ing appro'al from (nsurance
Regulatory De'elopment Authority 1(RDA3! Today$ our nationBwide team comprises$ about 2<<
offices$ o'er *<<$<<< ad'isorsN and ** Ban, assurance partners!
("("( Prudential was the first life insurer in (ndia to recei'e a ational (nsurer 5inancial
%trength rating of AAA 1(nd3 from 5itch ratings! 5or three years in a row$ ("("( Prudential has been
Ioted as (ndia@s Most Trusted Pri'ate /ife (nsurer$ by The #conomic Times B A" ielsen CR; Marg
sur'ey of @Most Trusted Brands@! As we grow our distribution$ product range and customer base$ we
continue to tirelessly uphold our commitment to deli'er worldBclass financial solutions to customers
all o'er (
0:
T1E )om0any
("("( Prudential /ife (nsurance "ompany is a joint 'enture between ("("( Ban,$ a premier
financial powerhouse$ and Prudential plc$ a leading international financial ser'ices group
head4uartered in the &nited >ingdom! ("("( Prudential was amongst the first pri'ate sector
insurance companies to begin operations in December *<<< after recei'ing appro'al from (nsurance
Regulatory De'elopment Authority 1(RDA3!
("("( Prudential@s capital stands at Rs! 1=!12 billion with ("("( Ban, and Prudential plc holding
90T and *8T sta,e respecti'ely! 5or the 1< months ended Danuary .1$ *<<9$ the company garnered
Rs .$*0< crore of weighted retail U group new business premiums and wrote o'er 1!. million
policies! The company has assets held to the tune of o'er Rs! 10$<<< crore!
("("( Prudential is also the only pri'ate life insurer in (ndia to recei'e a ational (nsurer 5inancial
%trength rating of AAA 1(nd3 from 5itch ratings! The AAA 1(nd3 rating is the highest rating$ and is a
clear assurance of ("("( Prudential@s ability to meet its obligations to customers at the time of
maturity or claims!
5or the past si) years$ ("("( Prudential has retained its position as the o! 1 pri'ate life insurer in
the country$ with a wide range of fle)ible products that meet the needs of the (ndian customer at
e'ery step in life! To ,now more about the company$ please 'isit www!iciciprulife!com!
Dist#i?ution
("("( Prudential has one of the largest distribution networ,s amongst pri'ate life insurers in (ndia!
2<
As of Danuary .1$ *<<9 the company has o'er 20< offices across the country and o'er *<<$<<<
ad'isors!
The company has o'er *< bancassurnace partners$ ha'ing tieBups with ("("( Ban,$ 5ederal Ban,$
%outh (ndian Ban,$ Ban, of (ndia$ /ord >rishna Ban,$ (du,,i District "oBoperati'e Ban,$ Dalgaon
Peoples "oBoperati'e Ban,$ %hamrao Aithal "oBop Ban,$ #rna,ulam Ban, and : Ban, of (ndia
sponsored Regional Rural Ban,s 1RRBs3! (t has also tied up with ;Cs M5(s and corporates for
the distribution of rural policies!
Boa#d of Di#ecto#s
Ms,Shi$haSha#maAManagingDirector6"#C
M#,N,S.annanA#)ecuti'eDirector
M#,Bha#gavDasgu0taA#)ecuti'eDirector
Ms,Anita"aiA#APB"ustomer%er'ice6Technology
M#,AJimMithaniA"hiefActuary
M#,"uneetNandaA"hief(n'estmentsCfficer
M#, Binaya$ DuttaA "hief G %ales and distribution
"uneet Nanda5 )hief Investment Office#
Manish .uma#5 1ead 7EBuity
*a$shmi$anth Reddy5 +"6Investments
4itend#a A#o#a5 A+"6Investments
A#un S#inivasan5 A+"6Fixed Income
A$a0 -u0ta5 Anayst
"#udentia I)I)I ?ecomes No,% Mutua Fund
*<<9B<.B<8
21
Prudential ("("( AM" has emerged as the largest (ndian mutual fund ha'ing recorded assets
under management 1A&M3 of Rs! 0.$*=<!89 crores$ as per figures released by the Association of
Mutual 5unds of (ndia 1AM5(3 for the month ended 5ebruary *<<9! Pru("("( has added Rs! =$2.2
crores during the month of 5ebruary to achie'e this milestone!

"ommenting on the occasion$ Mr! Pan,aj RaIdan$ Managing Director$ Prudential ("("( AM" said$
7e are committed to deli'er customer outcomes and will continue to offer our in'estors 4uality
ser'ice$ inno'ati'e in'estment solutions$ con'enience in transaction and consistency in product
performance! More than position$ it is our consistent and sustained efforts to offer our customers an
o'erall e)perience$ ,eeping in mind the regulatory framewor,! +

%tarting with an A&M base of Rs! 18< crores in May1::=$ Prudential ("("( has successfully
managed to grow its assets by o'er *<< times to Rs! 0.$*=<!89 crore 1as on 5eb *=$ *<<93! La'ing
started with * schemes in 1::=$ the company currently has o'er .< schemes in its product portfolio!
(n order to address the issue of penetration and to offer customer con'enience$ the company has
e)panded its networ, from a presence in merely * cities to more than =< cities across (ndia!

The following table depicts Prudential ("("( AM"Ks A&M growth o'er the years!

"#udentia I)I)I MF is no3 I)I)I
"#udentia MF
Prudential ("("( Mutual 5und$ changed its name to ("("( Prudential Mutual 5und with effect from
Apr! *$ *<<9!
Date "orpus1Rs! crores3
*=!<*!*<<9 0.*=1
.1!1*!*<<8 ...<2
.1!1*!*<<2 *1::*
.1!1*!*<<0 19111
.1!1*!*<<. 18109
.1!1*!*<<* 1<2.=
.1!1*!*<<1 921.
.1!1*!*<<< 0=..
.1!1*!1::: .192
.1!1*!1::= .*0
(nception
11::=3
18<
2*
The fund changed its name$ owing to the change in the shareholding pattern of ("("( Ban, and
Prudential Plc 1effected in August *<<23$ in the Asset Management "ompany 1AM"3$ and the Trust
"ompany!
The names of the AM" and the Trust "ompany$ ha'e been changed to ("("( Prudential Asset
Management "ompany and ("("( Prudential Trust respecti'ely!
(n sync with the abo'e changes$ names of its entire schemes underwent changes!
(n March 1::=$ Prudential Plc of &> ac4uired 22T sta,e in the erstwhile ("("( Asset Management
"ompany subse4uent to which$ it was renamed as Prudential ("("( Asset Management "ompany!
The remaining 02T share were with ("("( ;roup!
Lowe'er$ (n August *<<2$ 8T of Prudential PlcYs holding in the AM" was transferred to ("("(
Ban,! 7ith this transfer the total holding of ("("( ban, increased to 21T$ due to which the fund has
now changed its name! There is no change in the board!
2.
Definition5
%#B( 1M5s3 Regulation 1::.$ defines Mutual 5und as followsN
Mutual fund means a fund established in the form of a trust by a sponsor to raise money by the
Trustees through the sale of units to the public under one or more schemes for in'esting in
%ecurities in accordance with these Regulations!
A mutual fund is a special type of company that pools together money from many in'estors
and in'ests it on behalf of the group$ in accordance with a stated set of objecti'es! Mutual funds
raise the money by selling shares of trhe fund to the public$ much li,e any other company can sell
stoc, in itself to the public! 5unds then ta,e the money they recei'e from the sales of their shares
1along with any money from pre'ious in'estments3 and use it to purchase 'arious in'estments
'ehicles$ such as stoc,s$ bonds and money mar,et instruments! (n return for the money they gi'e to
the fund and$ in effect$ in each of its underlying securities! 5or most mutual funds$ shareholders are
free to sell their share at anytime$ although the price of a share in a mutual fund will fluctuate daily$
depending upon the performance of the securities held by the fund!
Mutual fund units are in'estment 'ehicles that pro'ide a means! A large number of
in'estors pool their money in order to obtain a spread of professionally managed %toc, #)change
in'estments that they cannot obtain indi'idually! According to 7eston D!5red and Bridgham$
#ugene$ 5!$ &nit Trusts are "orporations which accept dollars from sa'ers and then use these
dollars to buy stoc,$ long term bonds$ short term debt instruments issued by business of go'ernment
unitsN these corporations pool funds and thus reduce ris, by di'ersification!

20
)1A"TER6(
DATA ANA*2SIS
AND
INTER"RETATION
22
/eading Ta)B%a'ing funds
Ta)B%a'ing 5unds AA
1"rKs3
1Byr
1T3
.Byr
1T3
2Byr
1T3
%td
De'
1T3
%harpe
Ratio
1T3
MA;&M TAZ ;A(
08!:= 118!= :1!9 *:!2 =!=1 <!2=
LD5" TAZ %AA#R 1;3 1<<!8 :*!8 9:!: 0*!* =!<9 <!2.
PR& ("("( TAZ P/A 1;3 88!=: 98!= 9=!2 0<!. :!=9 <!.:
LD5" /T ADAATA;# 1;3 89!29 81!* 92!< B 9!=1 <!09
B(R/A #[&(TH P/A 02!08 2=!: 9*!< *:!. 9!:2 <!.=
TATA TAZ %AA(; .1!20 2.!1 9*!. .<!0 9!*1 <!.2
%&DARAM TAZ %AA#R 19!:0 2:!: 8.!2 .1!2 =!22 <!.:
5RA>/( (D(A TAZ
%L(#/D1;3
==!*0 2<!< 2=!. *=!< 8!99 <!0*
Inte#0#etation5
MA;&M TAZ ;A( has AA of Rs! 08!:= crs! (t has standard de'iation =!=1T by using
sharpe ratio it has <!2=T!
LD5" TAZ %AA#R has AA of Rs! 1<<!8 crs! (t has standard de'iation =!<9T by using
sharpe ratio it has <!2.T!
PR& ("("( TAZ P/A has AA of Rs! 88!=:T crs! (t has standard de'iation :!=9T by
using sharpe ratio it has <!.:T!
LD5" /T ADAATA;# has AA of Rs! 89!29T crs! (t has standard de'iation 9!=1T by
using sharpe ratio it has <!09T!
B(R/A #[&(TH P/A has AA of Rs! 02!08T crs! (t has standard de'iation 9!:2T by
using sharpe ratio it has <!.=T!
TATA TAZ %AA(; has AA of Rs! .1!20T crs! (t has standard de'iation 9!*1T by using
sharpe ratio it has <!.2T!
28
%&DARAM TAZ %AA#R has AA of Rs! 19!:0T crs! (t has standard de'iation =!22T by
using sharpe ratio it has <!.:T!
5RA>/( (D(A TAZ %L(#/D has AA of Rs! ==!*0T crs! (t has standard de'iation
8!99T by using sharpe ratio it has <!0*T!
"#uI)I)I Tax "an
Sna0shot5
Fund Manage#s 5 %an,aran aren
Indicative Investment 1o#iJon5 . yrs 6 more
Ince0tion date5 1:B<=B1:::
Fund SiJe5 Rs! *0*!:9 crores
NA+ <As on >%64anua#y6@9=5
-#o3th o0tion5 Rs! 98!*9
Dividend o0tion5 Rs! *:!1.
NA+ <As on @'6A0#i6@;=5
-#o3th o0tion5 Rs! =1!==
KKEx0ense Ratio fo# the month of 4anL@95 *!.8T
WWThis is a close appro)imation of the number!
Rs,%@A@@@ invested at ince0tion5 Tax "an +s SM" )NG Nifty5
29
"e#fo#mance Reco#dK5
-#o3th O0tion5
Secto# Aocation5
2=
"o#tfoio56
)om0any F Issue#
Ma#$et +aue <
Rs *a$h=
N to
NA+
Auto >&',;( %,>(N
Lero Londa /imited .*2!90 1!.0T
Auto Ancia#ies >@%9,8& %&,(&N
F %undaram "layton /imited :08!=2 .!:<T
F #)ide (ndustries /imited 9=9!*9 .!*0T
%undaram Bra,e /inings /td *=.!19 1!19T
>esoram (ndustries /imited *8*!== 1!<=T
Rane Madras /imited *2<!9. 1!<.T
Rane Loldings /imited *2<!.* 1!<.T
Rane Bra,e /inings /td *.2!9< <!:9T
Ban$s ;98,(' >,%;N
"orporation Ban, .90!<8 1!20T
Punjab ational Ban, *9:!*1 1!12T
Ban, of Baroda 118!1= <!0=T
)ement %>;>,&% ',9'N
F "entury Te)tiles 6 (ndustries /td :9*!:8 0!<<T
Crient Paper 6 (ndustries /imited *20!=8 1!<2T
Po,arna /td 102!.: <!8<T
)hemicas %(9;,;( 9,@(N
Andhra %ugars /td 9**!1< *!:9T
(ndia ;lycols /imited ..0!98 1!.=T
a'in 5lourine (nternational /td *80!.* 1!<:T
&ltramarine 6 Pigments /td! 108!28 <!8<T
)onsume# Non6Du#a?e &@%>,8( :,&8N
F Mawana %ugars /td =2<!28 .!2<T
Pidilite (ndustries /imited 292!.< *!.9T
;odrej "onsumers 090!0: 1!:2T
Larrisons Malayalam /imited :=!82 <!01T
&nited Breweries /td 10!:0 <!<8T
Fe##ous Metas (8,8( @,&%N
Tayo Rolls /td 0:!:0 <!*1T
Fe#tiiJe#s &@&>,>( :,>>N
F D"M %hriram "onsolidated /imited =0*!1* .!09T
;ujarat %tate 5ert 6 "hem /imited 9*0!1. *!:=T
Ouari (ndustries /imited 029!<: 1!==T
2:
Finance %8,@; @,@:N
Reliance "apital Aentures /td 1:!<9 <!<=T
)om0any F Issue#
Ma#$et +aue <
Rs *a$h=
N to
NA+
1a#d3a#e (&8,(% %,;;N
L"/ (nfosystems /td 0*:!01 1!99T
1otes (:9,8@ &,@@N
Taj ;', Lotels 6 Resorts /td .<1!28 1!*0T
Criental Lotels /imited 1=2!.0 <!98T
Indust#ia )a0ita -oods %@%%,(& (,%9N
Aban /loyd "hiles Cffshore /imited 92:!<8 .!1*T
umeric Power %ystems /td *2*!.8 1!<0T
Indust#ia "#oducts %&@&,(( (,8'N
Polyple) "orporation /imited .20!9= 1!08T
M M 5orgings /imited .0*!80 1!01T
%upreme (ndustries /imited *81!8= 1!<=T
#sab (ndia /imited *0.!.0 1!<<T
Mine#asFMining &@:,'( @,:9N
;ujarat Mineral De'elopment "orporation
/td *<=!20 <!=8T
Non6Fe##ous Metas %%@(,:@ (,''N
F ational Aluminium "ompany /imited 11<0!=< 0!22T
Oi %%@,&> @,('N
Lindustan Cil #)ploration /td 1<8!*8 <!00T
Reliance atural Resources /td .!:9 <!<*T
"et#oeum "#oducts '9;,@% &,>>N
Reliance (ndustries /imited 289!<1 *!..T
"ha#maceuticas >&8:,(9 %>,':N
F %un Pharmaceuticals /imited 1.28!0: 2!2=T
F 5D" /imited 1<8*!89 0!.9T
F "adila Lealthcare /imited =<9!:1 .!..T
5ulford (ndia /imited 91!.: <!*:T
"o3e# %@;,99 @,((N
;ujarat (ndustries Power "o /imited 8:!99 <!*:T
Reliance #nergy Aentures /td .9!=: <!18T
Soft3a#e :(:,&% >,(8N
%ube) %ystems /imited 29<!<1 *!.2T
>P(T (nfosystems *9=!*< 1!10T
Teecom Se#vices %&8,>; @,'>N
Reliance "ommunications Aentures /td 1*:!.9 <!2.T
Texties 6 )otton 8:%,&& (,@(N
Precot Mills /td 9*0!0< *!:=T
Maral C'erseas /imited *28!=* 1!<8T
Texties 6 "#oducts :@:,8; >,>>N
8<
)om0any F Issue#
Ma#$et +aue <
Rs *a$h=
N to
NA+
Raymond /imited 8:*!:1 *!=2T
>! ;! Denim /imited 11*!*2 <!08T
itin %pinners /td .!=1 <!<*T
Texties 6 Synthetic :&:,>@ >,(%N
F %R5 /imited =*=!.< .!01T
)ashA )aA )B*O M Reve#se Re0o &(',@9 %,@%N
Othe# )u##ent Assets :;@,@: >,':N
Tota Net Assets &(&8;,(> %@@,@@N
F Top Ten Loldings
Iuantitative Indicato#s5
A'erage P-# E 18!2<
A'erage P-BA E *!2:
A'erage Di'idend yield E 1!*8
Annual Portfolio Turno'er Ratio E *!:9 times
Portfolio turno'er has been computed as the ratio of the higher 'alue of a'erage purchase
and a'erage sales$ to the a'erage net assets in the past one year 1since inception for schemes that
ha'e not completed a year3! The figures are not netted for deri'ati'e transactions!
Rs In )#s
Assets hed as on 4an >%A &@@; Rs %(A&;; )#s
#4uity 2:T =$01<
Debt 01T 2$=89
Total 1<<T 10$*99

Assets hed ?y 5

Cther than /in,ed policy
holders
*$010
/in,ed policy holders 11$=8.
10$*99
.OTA. E*SS
O0en 7 Ended EBuity *in$ed Saving Schemes
81
A?out the Scheme5
A di'ersified e4uity scheme that in'ests in e4uity and e4uity related securities and enable
in'estors to a'ail the income ta) rebate$ as permitted from time to time! The in'estment strategy is
to ha'e =< G 1<< T in e4uity portion and < G *<T in one e4uity portion!
Idea Investment 1o#iJon5 . years and abo'e!
)o#0us5 Rs!1<8!9. crores
Ratio5 Portfolio P-# E *9!<9
NA+ <As on >% 7 Danuary G <83E
o -#o3th o0tion5 Rs!11!2=8
NA+ <As on @' 7 April G <93E
o -#o3th o0tion5 Rs!1.!9*
"e#fo#mance5
8*
Secto# Aocation5
"o#tfoio5B
Name of the Inst#ument Indust#yF Rating
N to Net
Assets
EBuity M EBuity Reated <*istedF A3aiting
isting=
Daipra,ash Associates /td "onstruction .!==
ational Aluminium "ompany /td onB5errous Metals .!88
Are'a T and D (ndia /td! (ndustrial capital ;oods .!8*
Tele'ision #ighteen (ndia /td! Media 6 #ntertainment .!21
Mcdowell 6 "ompany /td! "onsumer on Durables .!01
Pantaloon Retail 1india3 /td! Retailing .!*:
MR5 /imited Auto Ancillaries *!=0
LD5" /td! 5inance *!92
(nfosys Technologies /td! %oftware *!9*
Alembic /td! Pharmacuticals *!89
Alfa /a'al 1(ndia3 /td (ndustrial capital ;oods *!8.
#(D Parry 1(ndia3 /td! "onsumer on Durables *!2=
Andhra %ugars /td "hemicals *!29
Taj;A> Lotels 6 Resorts /imited Lotels *!28
estle (ndia /td! "onsumer on Durables *!22
"enturion Ban, of Punjab /td! Ban,s *!09
8.
Lindalco (ndustries /td onB5errous Metals *!*=
%>5 (ndia /td (ndustrial Products *!*1
Punjab ational Ban, Ban,s *!*<
("("( Ban, /td! Ban,s *!12
agarjuna "onstruction "ompany /td "onstruction *!12
Amte, Auto /td! Auto Ancillaries *!1*
Bajaj Auto /td! Auto *!<2
Britannia (ndustries /td! "onsumer on Durables 1!::
Raymond /imited Products 1!:1
Apollo Tyres /td! Auto Ancillaries 1!=.
&gar %ugar 7or,s /td "onsumer on Durables 1!=.
Tata "hemicals /td! 5ertilisers 1!98
PAR /td! Media 6 #ntertainment 1!91
%R#( (nfrastructure 6 5inance /td 5inance 1!80
Bharat Bijlee /td (ndustrial capital ;oods 1!8.
ahar (ndustrial #nterprises /td! Te)tiles B "otton 1!81
%iemens /td! (ndustrial capital ;oods 1!2=
Bharati %hipyard /td! (ndustrial capital ;oods 1!08
>P(T "ummins (nfosystems /td! %oftware 1!08
L"/ (nfosystems /td! Lardware 1!.9
Name of the Inst#ument Indust#yF Rating
N to Net
Assets
"elebrity 5ashions /td! Te)tile Products 1!*=
Marico /td! "onsumer on Durables 1!*0
Deccan "hronicle Loldings /td! Media 6 #ntertainment 1!12
(ndo ;ulf 5ertiliIer /td! 5ertilisers <!::
(pca /aboratories /td! Pharmacuticals <!=:
Te)maco /td! (ndustrial capital ;oods <!0:
;A> Power 6 (nfrastructure /td! Power <!1=
%adbha' #ngineering /td! "onstruction <!18
Tota 8%,@> 8%,@>
Money Ma#$et Inst#uments
)omme#cia "a0e#sF)e#tificate of De0osits
)o#0o#ate De?t F Financia Institutions
"itifinancial "onsumer 5inance (ndia /td! P1U <!=9
Tota @,:;
"ollateral Borrowing 6 /ending Cbligation 1!92
Net )u##ent AssetsF<*ia?iites= 8!.2
-#and Tota 1<<!<<
"#inci0a Tax Saving Fund
80
An Cpen G #nded #4uity /in,ed %a'ing %chemes
FUND FEATURES
/ho shoud invest5
The Scheme is suita?e fo# investo#s see$ing income tax deduction
unde# Section :@) <&= of ITA aong 3ith ong6te#m eBuity6ma#$et #etu#ns f#om
investment in eBuities,
Investment O?Dective 5
To pro'ide longBterm growth of capital!
*iBuidity5
%ale and Repurchase on a continuous basis$ subject to loc,Bin period of . years!
Investment O0tions5 ;rowth
Tax Benefits5
An in'estment by an (ndi'idual or a Lindu &ndi'ided 5amily in the #/%% scheme will
entitle the in'estor to a deduction from their ;ross Total (ncome as pro'ided under clause 1)iii3 of
section =<" 1*3 of the (ncome Ta) Act$ 1:81! The ma)imum deduction permissible under this
section is Rs! 1<<$<<<-B in a year$ subject to a'ailability of gross total income of the assessee! o
;ift Ta)$ no 7ealth Ta)! Please consult your own professional ad'isor concerning possible ta)
conse4uences on your in'estment!

Fund Manage#5 R! %rini'asan
Assets unde# management5 Rs!1.2!12 core
o -#o3th o0tion5 Rs!*0!08
o ;rowth optionE
"e#fo#mance5
82
Secto# St#ategy5
0o#tfoio5B
88
Inst#ument Indust#y N of NA+
BL#/ (ndustrial "apital ;oods 2!.*
Reliance (ndustries /td Petroeum Products 0!:2
;odrej (ndustries /td "hemicals 0!*0
Maharashtra %eamless /td 5errous Metals .!::
C;" /td Cil .!.8
;odrej "onsumer Products /td "onsumer on Durables .!*=
&nited Breweries Lolding /td 5inance .!*8
"rompton ;rea'es /td (ndustrial "apital ;oods .!18
Automati'e A)les /td Auto Ancillaries .!10
%B( Ban,s .!1<
Pantaloon Retail 1(3 /td Retailing .!<2
;rea'es "otton /td (ndustrial Products .!<.
Daipra,ash Associates /td "onstruction .!<1
;oodlass erolac Paints /td "onsumer on Durables *!:<
LD5" Ban, /td Ban,s *!=.
Mahindra and Mahindra /td Auto *!=1
Cma) Auto /td Auto Ancillaries *!9:
Blue %tar /td "onsume Durables *!8.
Dindal %teel 6 Power /td 5errous Metals *!2=
PAR /td Media 6 #ntertianment *!21
Blue Dart #)press /td "ourier *!*:
Inst#ument Indust#y N of NA+
>irlos,ar Brothers /td (ndustrial Products *!*2
(nfosys Technologies %oftware *!1<
Rajshree %ugars 6 "hemicals /td %ugar *!<:
ABB /td (ndustrial "apital ;oods *!<8
"#%" Power 1!:=
Lindustan "onstruction "ompany
/td
"onstruction 1!9=
%pice Det /td Transport 1!9<
Maha'ir %pinning Mills /td Te)tiles B "otton 1!2=
The %outh (ndian Ban, /td Ban,s 1!22
;raphite /td (ndustrial Products 1!21
#(D Parry /td "onsumer on Durables 1!*9
MidBday Multimedia /td Media 6 #ntertianment 1!*8
Reliance atural Resources /td ;as 1!**
%uper %ales /td Te)tiles B "otton 1!10
Bannari Amman %ugar /td "onsumer on Durables 1!<9
Aardhaman %pinning 6 ;eneral
Mills
5inance <!:.
)ashA )a and Othe# Assets 9,&:
Net Assets %@@,@@
F#an$in India Taxshied
89
Investment Stye5
The fund manager see,s steady growth by maintaining a di'ersified portfolio of e4uities
across sectors and mar,et cap ranges!
Investment O?Dective5
Aims to pro'ide medium to long term growth of capital along with income
ta) rebate!
Date of Aotment5 April 1<$ 1:::
Fund Manage#5 %atish Ramanathan
*atest NA+5
<As on >% 7 Danuary G <83E
;rowth Plan Rs! 11<!21
Di'idend Plan Rs! .0!=2
o -#o3th o0tion5 Rs!11=!09
Fund SiJe5 Rs! *.8!21 crores
Tu#nove#5 Portfolio Turno'er 91!0=T
Standa#d DeviationE 8!.2
R6sBua#ed5 <!:*
Beta5 <!=.
Sha#0e RatioK5 <!8<
W Ris,Bfree rate assumed to be 2!<.T 1based on DP Morgan . month TBBill (nde)3
Ex0ense Ratio5 *!0.T
Minimum InvestmentF Muti0es fo# Ne3 Investo#s5 Rs!2<<-2<<
Additiona InvestmentF Muti0es fo# Existing Investo#s5 Rs!2<<-2<<
Tax Benefits5
(n'estments will 4ualify for ta) benefit under the new %ection =<" as amended by the
5inance Act *<<2
8=
Fund Manage#Hs )ommenta#y5
The e4uity e)posure of the fund has increased to :0!2.T from ==!91T during the month$ as
we deployed the cash position! The main addition to the portfolio was Reliance "apital! #)posure to
5M"; and finance sectors has gone up$ while that to software and media has come down!
Rs,%@A@@@ invested at ince0tion in FIT M SM" )NG '@@5
Secto# St#ategy5
8:
Reiance Tax Save# <E*SS= Fund
9<
FUND DATA
St#uctu#e5 CpenBended #4uity /in,ed %a'ings %cheme
Ince0tion Date5 %eptember **$ *<<2
)o#0us5 Rs 1$1:8!.1 crore 1March .1$ *<<83
Minimum Investment5 Rs 2<< 6 in multiples of Rs 2<<
Fund Manage#5 Ashwani >umar
Ent#y *oad5 \*cr B *!*2TN V*cr \2cr B 1!*2TN V2cr B il
Exit *oad5 il
o -#o3th o0tion5 Rs!1.!21
o -#o3th o0tion5 Rs!1.!1<
IN+ESTMENT OB4E)TI+E:
The primary objecti'e of the scheme is to generate longBterm capital appreciation from a
portfolio that is in'ested predominantly in e4uity and e4uityBrelated instruments!
Secto# Aocation5
91
Indust#y
N
Aocation
Auto 1*!:8
(ndustrial "apital ;oods 1*!.:
%oftware :!.8
Ban,s =!9
Auto Ancillaries 8!18
"ement 2!*=
"onsumer on Durables 0!2*
(ndustrial Products 0!.8
Pharmaceuticals 0!**
5errous Metals .!:
Te)tiles .!9.
Petroleum Products .!.1
"hemicals *!0
5ertilisers *!**
Te)tile Products 1!::
Power 1!90
%teel 1!.:
Telecom %er'ices 1!*:
Media 6 #ntertainment 1!1
Indust#y
N
Aocation
Dredging <!=:
"onstruction <!9*
(ndustrial Machinery <!00
Retail <!11
#ngineering <!<=
Cil <!<8
Tota 8>,>&
"#uI)I)I Tax "an5
Fund SiJe5 Rs! *0*!:9 crores
9*
NA+ <As on >%64anua#y6@9=5
-#o3th o0tion5 Rs! 98!*9
NA+ <As on @'6A0#i6@;=5
-#o3th o0tion5 Rs! =1!==
As we ,now that at the inception the fund 'alue will be Rs!1< but at this stage the 'alue of
the fund is Rs!98!*9!
The return of the fund is .8!:9T where as the bench mar, of the %6P ifty was 1.!*.T!
According to this the fund has done better then the assumption of the mar,et!
AA has been increased from rs 98!*9 to Rs =1!==!
.ota$ E*SS5
Fund SiJe5 Rs!1<8!9. crores
o -#o3th o0tion5 Rs!11!2=8
o -#o3th o0tion5 Rs!1.!9*
the fund is Rs!11!2=8!
The return of the fund is 19!:<T where as the bench mar, of the %6P ifty 2<< was
12!8<T! According to this the fund has done better then the assumption of the mar,et!
AA has been increase from Rs!11!2=8 to Rs!1.!9*

"#inci0a Tax Saving Fund5
Fund SiJe5 Rs!1.2!12 crores
o -#o3th o0tion5 Rs!*0!08
o -#o3th o0tion5 Rs!9*
the fund is Rs!*0!08!
9.
The return of the fund is *2!<*T where as the bench mar, of the %6P ifty was 1.!1=T!
According to this the fund has done better then the assumption of the mar,et!
AA has been increased from Rs!*0!08 to Rs!9*
Tem0eton India Taxsheid5
Fund SiJe5 Rs!*.8!2= crores
o -#o3th o0tion5 Rs!11<!21
o -#o3th o0tion5 Rs!11=!09
the fund is Rs!11<!21!
The return of the fund is 91!0=T where as the bench mar, of the %6P ifty 2<< was
2<!*9T! According to this the fund has done better then the assumption of the mar,et!
AA has been increased from Rs!11<!21 to Rs Rs!11=!09
Reiance Tax Save# <E*SS= Fund5
Fund SiJe5 Rs!11:8!.1 crores
o -#o3th o0tion5 Rs!1.!21
o -#o3th o0tion5 Rs!1.!1<
the fund is Rs!1.!21!
The return of the fund is .<!21T where as the bench mar, of the %6P ifty 2<< was
*1!<9T! According to this the fund has done better then the assumption of the mar,et!
AA has been decreased from Rs!1.!21 to Rs!1.!1<
90
INTER"RETATION5
F Mutual funds outnumber traded securities!
F Mutual funds ha'e a number of objecti'e functions which lead to obser'ably different trading
styles!
These styles includeE
F A wide 'ariety of firms that trade on news regarding the endowment shoc,s of indi'iduals! (n the
real world this might correspond to fundamental research about how 'arious parts of the economy
are doing!
F A price fund that trades only on the e4uilibrium price G essentially a technical trading fund!
F A fund that simply trades a fi)ed amount of stoc, G basically an inde) fund!
F Adding mutual funds to the economy increases stoc, price 'olatility! This result contrasts sharply
with models where funds act li,e people with utility functions! (n those papers additional funds
reduce 'olatility!
F %ince many funds ha'e demands which are completely price inelastic$ the introduction of an
additional such fund does not directly affect the ris, discount in the prices of ris,y securities! There
may be such an effect$ but it operates through a change in in'estorsK implied ris, a'ersions!
F ;enerally$ new funds should be endowed with trading strategies which are ma)imally different
from those of e)isting funds!
92
)1A"TER6'
98
)ON)*USION M SU--ESTIONS
1! By this study we conclude that the minimum Ta) sa'ing of and indi'idual is Rs 1<<< and the
ma)imum Ta) sa'ing is .<<<<!
*! An (ndi'idual can ta,e an ad'antage of this funds and schemes to sa'e ta) by in'esting ma)imum of
Rs 1$<<$<<<
.! (f an (ndi'idual pays a premium more than Rs 1$<<$<<< then he or she canKt a'ail ta) benefit of what
he or she pays e)cess of Rs 1$<<$
a! The conclusion of this study is that the lower ris, with the higher returns is the important
aspet of the mutual funds! As we are studing on the ta) sa'ing funds in this the two type of
benefits will be enjoyed by the in'estor i!e!$ first he will be sa'ing the ta) and the money
what he is in'esting in that he should not pay any type of ta)!
b! (n the abo'e funds we can see that Pru("("( ta) plan fund had gi'en .8!:9T of return form
the inception time$ >ota, #/%% fund has gi'en the return of 19!:T in one year$ the Principal
Ta) %a'ing 5ud has gi'en *2!<*T of returns form the inception period$ Templeton (ndia Ta)
sheild fund had gi'en the returns of 91!0=T from the inception period and the Reliance Ta)
sa'er 1#/%%3 fund had gi'en .<!21T of return from the inception!
c! According to the AA the Principal Ta) %a'ing Plan 5und is well$but the other and the
competetor is 5ran,lin Templeton Ta)shield fund and ("("( PR&D#T(A/ Ta) Plan 5und!
The fund is in the mar,et for the long time but also the return of the fund are well! %o$ the
in'estor can in'est in the Principal Ta) %a'ing Plan 5und or ("("( PR&D#T(A/ Ta) Plan
5und both! Lere$ the 5ran,lin Templeton fund in the mar,et for the long time more than the
fi'e years and the performance of the fund is also well! The more fluctions are not i!e!$ the
fund is not ha'e more up and downs in the mar,et the fund manager had maintained the fund
in a good order and the portfolio is maintained in the well desired way and same with the
("("( PR&D#T(A/ Ta) Plan 5und also the in'estor can in'est any one of the
fund!Relience 5undKs AA has come down during this one year!%o (n'estigate properly
before in'esting in Relience Ta) %a'er
d! 7hile in'esting the main things are that has to be noted that the fluctions are there are and
how the fund is doing from the inception period! (n the ta) sa'ing scheme the main intension
of the in'estor is to sa'e the ta)$ and he wants the money to be get some 'alue added to it!
99
BIB*IO-RA"12
1! L!Prem Raja $*<<9$ %ystematic %tudy of (ncome Ta)+!
*! Allen$ 5! and D! ;ale$ 1:=:$ Cptimal %ecurity Design$+ Review of Financial Studies, 1 1.3$
**:G*8.!
.! Allen$ 5! and ;! ;orton$ 1::.$ "hurning Bubbles$+ Review of Economic Studies$ 8< 103$
=1.B=.8!
0! Biais$ B!$ T! 5oucault$ and 5! %alaniM$ 1::=$ 5loors$ Dealer Mar,ets and /imit Crder
Mar,ets$+ Journal of Financial Markets$ 1$ *2.B*=0!
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2! www!pruicici!com
8! www!,ota,mutual!com
9! www!principalindia!com
=! www!templetonindia!com
:! www!reliancemutual!com
1<!www!google!com
11! www!myiris!com
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SUBMITTED BY: PRAVAKAR DASH | ROLL NO: 11MBAS21542

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