Thesis - Portfolio Management

Introduction to Portfolio Management
Investing in securities such as shares, debentures, and bonds is profitable as well as

exciting. It is indeed rewarding, but involves a great deal of risk and calls for scientific
knowledge as well artistic skill. In such investments both rationale and emotional
responses are involved. Investing in financial securities is now considered to be one of
the best avenues for investing one savings while it is acknowledged to be one of the best
avenues for investing one saving while it is acknowledged to be one of the most risky
avenues of investment.
“It is rare to find investors investing their entire savings in a single security.
Instead, they tend to invest in a group of securities. Such a group of securities is
called portfolio”. Creation of a portfolio helps to reduce risk, without sacrificing
returns. Portfolio management deals with the analysis of individual
securities as well as with the theory and practice of optimally combining securities
into portfolios. An investor who understands the fundamental principles and analytical
aspects of portfolio management has a better chance of success.
Portfolio Management
An investor considering investment in securities is faced with the problem of

choosing from among a large number of securities and how to allocate his funds over
this group of securities. Again he is faced with problem of deciding which securities to
hold and how much to invest in each. The risk and return characteristics of portfolios.
The investor tries to choose the optimal portfolio taking into consideration the risk
return characteristics of all possible portfolios.
As the risk return characteristics of individual securities as well as portfolios also

change. This calls for periodic review and revision of investment portfolios of investors.
An investor invests his funds in a portfolio expecting to get good returns consistent
with the risk that he has to bear. The return realized from the portfolio has to be
measured and the performance of the portfolio has to be evaluated.
It is evident that rational investment activity involves creation of an investment

portfolio. Portfolio management comprises all the processes involved in the
creation and maintenance of an investment portfolio. It deals specifically with the
security analysis, portfolio analysis, portfolio selection, portfolio revision & portfolio
evaluation. Portfolio management makes use of analytical techniques of analysis
and conceptual theories regarding rational allocation of funds. Portfolio management
is a complex process which tries to make investment activity more rewarding and less
risky.
Selection of Portfolio
The selection of portfolio depends upon the objectives of the investor. The selection
of portfolio under different objectives are dealt subsequently
Objectives and asset mix
If the main objective is getting adequate amount of current income, sixty percent of
the investment is made in debt instruments and remaining in equity. Proportion
varies according to individual preference.
Growth of income and asset mix
Here the investor requires a certain percentage of growth as the income from the
capital he has invested. The proportion of equity varies from 60 to 100 % and that of
debt from 0 to 40 %. The debt may be included to minimize risk and to get tax
exemption.
Capital appreciation and Asset Mix
It means that value of the investment made increases over the year. Investment in
real estate can give faster capital appreciation but the problem is of liquidity. In the
capital market, the value of the shares is much higher than the original issue price.
Safety of principle and asset mix
Usually, the risk adverse investors are very particular about the stability of principal.
Generally old people are more sensitive towards safety.
Risk and return analysis
The traditional approach of portfolio building has some basic assumptions. An

investor wants higher returns at the lower risk. But the rule of the game is that more
risk, more return. So while making a portfolio the investor must judge the risk taking
capability and the returns desired.
Diversification
Once the asset mix is determined and risk – return relationship is analyzed the next step
is to diversify the portfolio. The main advantage of diversification is that the
unsystematic
risk is minimized.
Evolution of Portf olio M anagement
Portfolio management is essentially a systematic method of maintainin g one‘s

in vestment
efficiently. Many factors have contributed to the existence and development of
the concept.
In the early years of the century analyst used financial statements to find the value of
the securities. The first to be analyzed using this was Railroad Securities of the
USA. A bo oklet entitled ―Th e Anatomy of the R ailroad ‖ was pub lished b y Thomas
F. Wo odlock
in 1900. As the time progressed this method became very important in the investment
field, although most of the writers adopted different ways to publish there
data.
They generally advocated the use of different ratios for this purpose. John Moody in
his bo ok ―The Art of wall Street Investing‖, strongly su p ported the use of financial
ratios to know the worth of the investment. The proposed type of analysis later on
became the
―common-size‖
analysis.
The other major method adopted was the study of stock price movement with the help
of price charts. This method later on was known as Technical Analysis. It evolved
during
1900-1902 when Charles H. Dow, the founder of the Dow Jones and Co. presented
his view in the series of editorials in the Wall Street Journal in USA. The advocates
of technical analysis believed that stock prices movement is ordered and systematic and
the definite pattern could be identified. There investment strategy was build around
the identification of the trend and pattern in the stock price movement.
Another prominent author who supported the technical analysis was Ralph N. Elliot
who pu bilshed a bo ok in the ye ar 1 9 3 8titled ―The Wave Principle‖. After analyzing
7 5 years data of share price, he concluded that the market movement was quite
orderly and
followed a pattern of waves. His theory is known as Elliot Wave
Theory.
According to J.C. Francis the development of investment management can be traced

chronologically through three different phases.
First phase is known as Speculative Phase. Investment was not a wide spread activity,
but a cake of few rich people. The process is speculative in nature. Investment
management was an art and needed skills. Price manipulation was resorted to by the
investors. During this time period pools and corners were used for manipulation. The
result of this was the stock exchange crash in the year 1929. Finally the daring
speculative ventures of investors were declared illegal in the US by the Securities Act
of 1934.
Second phase began in the year 1930. The phase was of professionalism. After coming
up of the Securities Act, the investment industry began the process of upgrading its
ethics, establishing standard practices and generating a good public image. As a
result the investments market became safer place to invest and the people in different
income group started investing. Investors began to analyze the security before investing.
During this period the research work of Benjamin Graham and David L. Dood was
widely publicized and publicly acclaimed. They published a bo ok ―Security
Analysis‖ in
1934, which was highly sought after. There research work was considered first work
in the field of security analysis and acted as the base for further study. They are
considered as pioneers of security analysis as a discipline.
Third phase was known as the scientific phase. The foundation of modern portfolio
theory was laid by Markowitz. His pioneering work on portfolio management
was described in his article in the Journal of Finance in the year 1952 and subsequent
books published later on.
He tried to quantify the risk. He showed how the risk can be minimized through
proper diversification of investment which required the creation of the portfolio. He
provided technical tools for the analysis and selection of optimal portfolio. For his
work he won the Noble Prize for Economics in the year 1990.
The work of Markowitz was extended by the William Sharpe, John Linter and Jan
Mossin through the development of the Capital Asset Pricing Model
(CAPM).
If we talk of the present the last two phases of Professionalism and Scientific
Analysis are currently advancing simultaneously with investment in various financial
instruments becoming safer, with proper knowledge to each and every investor.
Role of Portfolio Management
There was a time when portfolio management was an exotic term. A practice which
is beyond the reach of the small investor, but the time has changed now.
Portfolio management is now a common term and is widely practiced in INDIA. The
theories and concepts relating to portfolio management now find there way in the
front pages of the financial newspapers and magazines.
In early 90‘s India embarked on a program of e conom ic liberalization and

globalization, with high participation of private players. This reform process has
made the Indian industry efficient, with rapid computerization, increased market
transparency, better
infrastructure and customer services, closer integration and higher volume. The
markets are dominated by large institutional investors with their diversified
portfolios. A large number of mutual funds have come up in the market since 1987.
With this development investment in securities has gained considerable momentum
Along with the spread of the securities investment way among Indian investors have
changed due to the development of the quantitative techniques. Professional
portfolio management, backed by research is now being adopted by mutual funds,
investment consultants, individual investors and big brokers. The Securities Exchange
Board of India (SEBI) is a regulatory body in INDIA. It ensures that the stock market is
free from fraud,
and of course the main objective is to ensure that the investor‘s money is
safe.
With the advent of computers the whole process of portfolio management has
become quite easy. The computer can absorb large volumes of data, perform the
computations accurately and quickly give out the results in any desired form.
Moreover simulation, artificial intelligence etc provides means of testing alternative
solutions.
The trend towards liberalization and globalization of the economy has promoted free
flow of capital across international borders. Portfolio not only now include domestic
securities but foreign too. So financial investments can‘t be reaped withou t proper
management.
Another significant development in the field of investment management is

the introduction to Derivatives with the availability of Options and Futures. This
has broadened the scope of investment management.
Investment is no longer a simple process. It requires a scientific knowledge, a

systematic approach and also professional expertise. Portfolio management is the only
way through which an investor can get good returns, while minimizing risk at the same
time.
So portfolio management objectives can be stated as:

-
Risk minimization.
Safeguarding capital.
Capital Appreciation.
Choosing optimal mix of securities.
Keeping track on performance.
WHAT IS MUTUAL FUND??
A mutual fund is a form of collective investment that pools money from many
investors and invests the money in stocks, bonds, short-term money market
instruments, and/or other securities.
Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is invested by the fund manager in
different types of securities depending upon the objective of the scheme. These could
range from shares to debentures to money market instruments. The income
earned through these investments and the capital appreciation realized by the scheme
is shared by its unit holders in proportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the common man as it offers
an opportunity to invest in a diversified, professionally managed portfolio at a
relatively low cost. The small savings of all the investors are put together to increase
the buying power and hire a professional manager to invest and monitor the money.
Anybody with an investible surplus of as little as a few thousand rupees can invest
in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and
strategy.
The flow chart below describes broadly the working of a mutual

fund.
A mutual fund is a managed group of owned securities of several corporatio ns. These
corporations receive dividends on the shares that they hold and realize capital gains
or losses on their securities traded. Investors purchase shares in the mutual fund as if it
was an individual security. After paying operating costs, the earnings (dividends, capital
gains or loses) of the mutual fund are distributed to the investors, in proportion to the
amount of money invested.
A mutual fund may be either an open-end or a closed-end fund. An open-end mutual

fund does not have a set number of shares; it may be considered as a fluid capital
stock. The number of shares changes as investors buys or sell their shares. Investors are
able to buy and sell their shares of the company at any time for a market price.
However the open- end market price is influenced greatly by the fund managers. On
the other hand, closed- end mutual fund has a fixed number of shares and the value of
the shares fluctuates with the market. But with close-end funds, the fund manager has
less influence because the price of the underlining owned securities has greater
influence
Mutual fund is a mechanism for pooling the resources by issuing units to the
investors and investing funds in securities in accordance with objectives as
disclosed in offer document. Investments in securities are spread across a wide cross-
section of industries and sectors and thus the risk is reduced. Diversification reduces
the risk because all stocks may not move in the same direction in the same
proportion at the same time.
Mutual fund issues units to the investors in accordance with quantum of money
invested by them. Investors of mutual funds are known as unit holders. The profits or
losses are shared by the investors in proportion to their investments. The mutual
funds normally come out with a number of schemes with different investment
objectives, which are launched from time to time.
The concept of mutual fund originated in Belgium by the ―Society Generale

de Belgique” in the year 1822. Unit Trust of India was the first mutual fund set up in
India in the year 1963. In early 1990s, Government allowed public sector banks and
institutions
to set up mutual funds. SEBI formulates policies and regulates the mutual funds to
protect the interest of the investors. All mutual funds whether promoted by public
sector or private sector entities including those promoted by foreign entities are
governed by the same set of Regulations.
A mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset
Management Company (AMC) and custodian. The trust is established by a sponsor or
more than one sponsor who is like promoter of a company. The trustees of the
mutual fund hold its property for the benefit of the unit holders. Asset Management
Company (AMC) approved by SEBI manages the funds by making investments in
various types of securities. Custodian, who is registered with SEBI, holds the
securities of various schemes of the fund in its custody. The trustees are vested with
the general power of superintendence and direction over AMC. They monitor the
performance and compliance of SEBI Regulations by the mutual fund.
The performance of a particular scheme of a mutual fund is denoted by Net Asset

Value (NAV). In simple words, Net Asset Value is the market value of the securities
held by the scheme. Since market value of securities changes every day, NAV of a
scheme also varies on day-to-day basis. The NAV per unit is the market value of
securities of a scheme divided by the total number of units of the scheme on any
particular date. For example, if the market value of securities of a mutual fund
scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each
to the investors, then the NAV
per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on
a regular basis - daily or weekly - depending on the type of scheme.
TYPES OF MUTUAL FUNDS SCHEMES
Mutual fund schemes may be classified on the basis of its structure and its
investment objective-:
A) By Structure
1) Open-ended Fund
An open-end fund is one that is available for subscription all through the year. These
do not have a fixed maturity. Investors can conveniently buy and sell units at Net
Asset Value ("NAV") related prices. The key feature of open-end schemes is
liquidity. The term Mutual fund is the common name for an open-end investment
company. Being open-ended means that at the end of every day, the investment
management company sponsoring the fund issues new shares to investors and buys
back shares from investors wishing to leave the fund.
2) Closed-end Funds
A closed-end fund has a stipulated maturity period which generally ranging from 3 to
15 years. The fund is open for subscription only during a specified period. Investors
can invest in the scheme at the time of the initial public issue and thereafter they can
buy or sell the units of the scheme on the stock exchanges where they are listed. In
order to provide an exit route to the investors, some close-ended funds give an option
of selling back the units to the Mutual Fund through periodic repurchase at NAV
related prices. SEBI Regulations stipulate that at least one of the two exit routes is
provided to the investor. A close-ended fund or scheme has a stipulated maturity
period e.g. 5-7 years. The fund is open for subscription only during a specified period
at the time of launch of the scheme. Investors can invest in the scheme at the time of
the initial public issue and thereafter they can buy or sell the units of the scheme on the
stock exchanges.
3) Interval Funds
Interval funds combine the features of open-ended and close-ended schemes. They are
open for sale or redemption during pre-determined intervals at NAV related prices.
B) By Investment Objective
1) Growth Funds
The aim of growth funds is to provide capital appreciation over the medium to long
term. Such schemes normally invest a majority of their corpus in equities. It has been
proved
that returns from stocks, have outperformed most other kind of investments held over
the long term. Growth schemes are ideal for investors for a period of time.
2) Income Funds
The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate
debentures and Government securities. Income Funds are ideal for capital stability
and regular income.
3) Balanced
Funds
The aim of balanced funds is to provide both growth and regular income. Such
schemes periodically distribute a part of their earning and invest both in equities and
fixed income securities in the proportion indicated in their offer documents. In a
rising stock market, the NAV of these schemes may not normally keep pace, or fall
equally when the market falls. These are ideal for investors looking for a combination
of income and moderate growth.
4) Money Market Funds
The aim of money market funds is to provide easy liquidity, preservation of

capital and moderate income. These schemes generally invest in safer short-term
instruments such as treasury bills, certificates of deposit, commercial paper and
inter-bank call money. Returns on these schemes may fluctuate depending upon
the interest rates prevailing in the market. Money market funds have relatively low
risks, compared to other mutual funds (and most other investments). By law, they
can invest in only certain high-quality, short-term investments issued by the
U.S. government, U.S. corporations, and state and local governments. Money
market funds try to keep their
net asset value (NAV) — which represents the value of one share in a fund — at
a
stable $1.00 per share. But the NAV may fall below $1.00 if the fund's
investments perform poorly. Investor losses have been rare, but they are possible.
Money market funds pay dividends that generally reflect short-term interest rates,
and historically the returns for money market funds have been lower than for either
bond or stock funds.
That's why "inflation risks" — the risk that inflation will outpace and
erode
investment returns over time — can be a potential concern for investors in money
market funds.
HISTORY OF INDIAN MUTUAL FUND INDUSTRY
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank the. The history
of mutual funds in India can be broadly divided into four distinct phases
First Phase – 1964-
87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set
up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from
the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory
and administrative control in place of RBI. The first scheme launched by UTI was Unit
Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management.
Second Phase – 1987-1993 (Entry of Public Sector
Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public
sector banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June
1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual
Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of
Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while
GIC had set up its mutual fund in December 1990
At the end of 1993, the mutual fund industry had assets under management of Rs.47,
004 crores
Third Phase – 1993-2003 (Entry of Private Sector

Funds)
With the entry of private sector funds in 1993, a new era started in the Indian mutual
fund industry, giving the Indian investors a wider choice of fund families. Also, 1993
was the year in which the first Mutual Fund Regulations came into being, under which
all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996
The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several
mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with total
assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets
under management was way ahead of other mutual fund
Fourth Phase – since February

2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of t he Unit
Trust of India with assets under management of Rs.29, 835 crores as at the end of
January
2003, representing broadly, the assets of US 64 scheme, assured return and certain
other schemes. The Specified Undertaking of Unit Trust of India, functioning
under an administrator and under the rules framed by Government of India and does
not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With
the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000
crores of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers
taking place among different private sector funds, the mutual fund industry has
entered its current phase of consolidation and growth. As at the end of September,
2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
schemes.
GROWTH IN ASSETS UNDER MANAGEMENT

ORGANISATION OF MUTUAL FUND
There are many entities involved and the diagram below illustrates the
organizational set up of a mutual fund:
Trends in Transactions on Stock Exchanges by Mutual Funds
( s i nc e
January 2000)
Equity Debt (Rs

(Rs in in
Crores) Crores)
Net Net
Gross Gross Purchase Gross Gross Purchase
Time Purchase Sales / Sales Purchase Sales / Sales
Jan 2000-March 2000. 11070.54 11492.19 -421.65 2764.72 1864.29 900.43
April 2000 -March 2001. 17375.78 20142.76 -2766.98 13512.17 8488.68 5023.49
April 2001-March 2002. 12098.11 15893.99 -3795.88 33583.64 22624.42 10959.22
April 2002-March 2003 14520.89 16587.59 -2066.70 46663.83 34059.41 12604.42
April 2003-March 2004 36663.58 35355.67 1307.91 63169.93 40469.18 22700.75
April 2004-March 2005 45045.25 44597.23 448.02 62186.46 45199.17 16987.29
April 2005-March 2006 100435.90 86133.70 14302.20 109804.91 73003.67 36801.24
April 2006. 12752.47 9631.91 3120.56 11227.96 6800.08 4427.88
May 2006. 18345.43 10452.07 7893.36 15386.47 7774.06 7612.41
June 2006. 7843.52 9820.47 -1976.95 14235.54 8906.90 5328.64
July 2006. 7552.18 7633.89 -81.71 15982.62 8266.41 7716.21
August 2006. 8851.58 8425.14 426.44 16169.28 11853.22 4316.06
September 2006. 10345.23 9005.54 1339.69 12878.65 9591.24 3287.41
October 2006. 9944.46 9947.97 -3.51 10314.44 7929.50 2384.94
November 2006. 12675.21 12700.04 -24.83 13296.65 6961.92 6334.73
December 2006. 13181.43 11554.38 1627.05 7584.70 6256.15 1328.55
January 2007. 11643.60 12985.83 -1342.23 10830.62 8427.46 2403.16
February 2007. 12697.09 12971.14 -274.05 10351.99 7682.98 2669.01
March 2007 (upto 10th) 3844.74 4568.60 -723.86 4784.63 2660.08 2124.55
Total (April '06 - March '07) 129676.94 119696.98 9979.96 143043.55 93110.00 49933.55
Trends in Transactions on Stock Exchanges by Mutual Funds
Equity (Rs in crores) Debt (Rs in crores)

Gross Net Gross Net
Transacti Purchas Gross Purchas Purchas Gross Purchas
o n Date es Sales es/ es Sales e s/
01.03.07 767.80 796.92 Sales
-29.12 845.18 411.54 Sales
433.64
02.03.07 442.25 567.57 -125.32 238.24 272.74 -34.50
05.03.07 707.38 541.24 166.14 981.15 591.73 389.42
06.03.07 528.54 460.10 68.44 1148.53 243.93 904.60
07.03.07 338.20 717.76 -379.56 690.76 282.95 407.81
08.03.07 578.23 617.99 -39.76 533.50 524.92 8.58
09.03.07 482.34 867.02 -384.68 347.27 327.74 19.53
10.03.07 0.00 0.00 0.00 0.00 4.53 -4.53
4568.6 2660.0
Total 3844.74 0 -723.86 4784.63 8 2124.55
Union Budget 2007-08 & the Mutual Fund Industry
The 2007-08 budget presented by the Finance Minister was also a low impact budget,
compared with the last year, whose fundamental message was for overall growth of
the economy and a positive emphasis to be put on agricultural and rural development, as
well as education, which will certainly give a long term boost to the growth of the
economy. The reduction in fiscal deficit is also a positive step and the government will
also increase
spending on education by 34%.
th
Markets have seen a major correction over the last few trading sessions. On 28 the
markets was hit hard from both sides, internally as well as externally. The budget had
a few shockers when the dividend distribution tax was hiked, and on the other side
the global market saw major meltdown with the Asian market were beaten the most,
Chinese markets alone lost around 9% over the day. The Indian markets could not
sustain the beating it got from both ends and saw the maximum decline witnessed in
the last eight months. The market was around 200 points down after the markets
opened for the day.
But the announcement of the FM to hike dividend distribution tax saw another fall of
more than 300 points which the markets was not able to recover till the end of the
day. Among the major sectors Cement is clearly the most hit, and to some extent IT
services also got hit, because of bringing both the sector under MAT.
The announcement of MAT of 11.3 % on IT companies was misinterpreted by the

market on the budget day, by responding in negative, but saw some recovery, in the
next trading day when markets realized that MAT can be used as a deferred tax asset by
IT companies post FY 2010 to offset taxes, Secondly SEZs are still MAT free. Hence
the impact is not severe as was thought on the budget day. Secondly, as per Finance
Minister FBT on ESOP is still under notification.
The Indian Mutual Fund industry also suffered on announcement of the hike in
dividend distribution tax. The DDT for the money market and liquid mutual funds
has been proposed to be brought at par at 25%. Currently the rate is 12.5% for retail
investor and
23% for institutional investors. The FM said that this was being done to restrict the
arbitrage opportunities used by these schemes.
Another proposal put up by the Finance Minister was for Mutual Funds to play a
bigger role in infrastructure development by launching and operating dedicated
infrastructure funds which would directly invest into core sector projects. The Indian
Mutual Fund industry already have schemes which are sector specific and invest into
infrastructure sector through equities. Now after this particular proposal Mutual
Funds can directly invest into infrastructure projects.
FM also allowed delivery based short selling for institutional participants. Mostly in
all developed countries short selling is allowed. In India, till recently only the retail
investors
were allowed to enjoy this. Along with FII, Mutual Fund houses are also allowed for
delivery based short selling.
FM has proposed to bring the asset management services offered by individuals under
the service tax bracket. The individuals who provide investment fund management
advisory services will now have to pay service tax. The managers will have to register
themselves with the Central Excise department and have to pay service tax, if their
service fee is more than Rs.8 lakh per annum.
Along with the above the FM also proposed for the retail investor to invest abroad
through Mutual Funds. Currently the industry has quite a few mutual fund schemes
which invest dedicatedly abroad. A few more schemes invest partially abroad.
On a whole, the budget other than the DDT hike for the liquid and the money market
mutual funds and the infrastructure funds didn‘t have much in store for the Mutual
Fun d industry.
To summarize, the Budget will sustain high economic growth through larger
investments, increased savings and building of manpower capabilities.
USAGE OF MUTUAL FUND
Mutual funds can invest in many different kinds of securities. The most common are
cash, stock, and bonds, but there are hundreds of sub-categories. Stock funds, for
instance, can invest primarily in the shares of a particular industry, such as technology
or utilities. These are known as sector funds. Bond funds can vary according to risk
(high yield or junk bonds, investment-grade corporate bonds), type of issuers
(government agencies, corporations, or municipalities), or maturity of the bonds (short
or long term). Both stock and bond funds can invest in primarily US securities
(domestic funds), both US and foreign securities (global funds), or primarily foreign
securities (int ernational funds).
By law, mutual funds cannot invest in commodities and their derivatives or in real
estate. However, there do exist real estate investment trusts, or REITs, which invest
solely in real estate or mortgages, and mutual funds are allowed to hold shares in
REITs. A mutual fund may restrict itself in other ways. These restrictions,
permissions, and policies are found in the prospectus, which every open-end mutual
fund must make available to a potential investor before accepting his or her money.
Most mutual funds' investment portfolios are continually adjusted under the
supervision of a professional manager, who forecasts the future performance of
investments appropriate for the fund and chooses the ones which he or she believes will
most closely match the fund's stated investment objective. A mutual fund is
administered through a parent management company, which may hire or fire fund
managers.
Mutual funds are subject to a special set of regulatory, accounting, and tax rules.
Unlike most other types of business entities, they are not taxed on their income as
long as they distribute substantially all of it to their shareholders. Also, the type of
income they earn is often unchanged as it passes through to the shareholders. Mutual
fund distributions of tax-free municipal bond income are also tax-free to the
shareholder. Taxable distributions can either be ordinary income or capital gains,
depending on how the fund earned it.
ADVANTAGES AND DISADVANTAGES OF MUTUAL FUND
ADVANTAGES
 Professional Management
Mutual Funds provide the services of experienced and skilled professionals, backed by
a dedicated investment research team that analyses the performance and prospects
of companies and selects suitable investments to achieve the objectives of the scheme.
 Diversification
Mutual Funds invest in a number of companies across a broad cross-section of

industries and sectors. This diversification reduces the risk because seldom do all
stocks decline at the same time and in the same proportion. You achieve this
diversification through a Mutual Fund with far less money than you can do on your
own.
 Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems
such as bad deliveries, delayed payments and follow up with brokers and companies.
Mutual Funds save your time and make investing easy and convenient.
 Return Potential
Over a medium to long-term, Mutual Funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities.
 Low Costs
Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage, custodial and
other fees translate into lower costs for investors.
 Liquidity
In open-end schemes, the investor gets the money back promptly at net asset value
related prices from the Mutual Fund. In closed-end schemes, the units can be sold on
a stock exchange at the prevailing market price or the investor can avail of t he facility
of direct repurchase at NAV related prices by the Mutual Fund.
 Transparency
You get regular information on the value of your investment in addition to disclosure
on the specific investments made by your scheme, the proportion invested in each
class of assets and the fund manager's investment strategy and outlook.
 Flexibility
Through features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans, you can systematically invest or withdraw funds
according to yo ur needs and convenience.
 Affordability
Investors individually may lack sufficient funds to invest in high-grade stocks. A

mutual fund because of its large corpus allows even a small investor to take the
benefit of its investment strategy.
 Choice of Schemes
Mutual Funds offer a family of schemes to suit your varying needs over a
lifetime.
 Well Regulated
All Mutual Funds are registered with SEBI and they function within the provisions of
strict regulations designed to protect the interests of investors. The operations of
Mutual Funds are regularly monitored by SEBI.
DISADVANTAGES
 Costs Despite Negative Returns
Investors must pay sales charges, annual fees, and other expenses (which
we'll discuss below) regardless of how the fund performs. And, depending on the
timing of their investment, investors may also have to pay taxes on any
capital gains distribution they receive — even if the fund went on to perform
poorly after they
bought shares.
 Lack of Control
Investors typically cannot ascertain the exact make-up of a fund's portfolio at any
given time, nor can they directly influence which securities the fund manager
buys and sells or the timing of those trades.
 Price Uncertainty
With an individual stock, you can obtain real-time (or close to real-time) pricing
information with relative ease by checking financial websites or by calling your
broker. You can also monitor how a stock's price changes from hour to hour — or
even second to second. By contrast, with a mutual fund, the price at which you
purchase or redeem shares will typically depend on the fund's NAV, which the
fund might not calculate until many hours after you've placed your order. In
general, mutual funds must calculate their NAV at least once every business day,
typically after the major U.S. exchanges close.
HOW TO INVEST IN MUTUAL FUND??
Step One - Identify your Investment

needs
Your financial goals will vary, based on your age, lifestyle, financial independence,
family commitments, and level of income and expenses among many other
factors. Therefore, the first step is to assess your needs. You can begin by
defining your investment objectives and needs which could be regular income,
buying a home or finance a wedding or educate your children or a combination of
all these needs, the quantum of risk you are willing to take and your cash flow
requirements.
Step Two - Choose the right Mutual

Fund
The important thing is to choose the right mutual fund scheme which suits
your requirements. The offer document of the scheme tells you its objectives and
provides supplementary details like the track record of other schemes managed by the
same Fund Manager. Some factors to evaluate before choosing a particular Mutual Fund
are the track record of the performance of the fund over the last few years in relation to
the appropriate yardstick and similar funds in the same category. Other factors could
be the portfolio allocation, the dividend yield and the degree of transparency as
reflected in the frequency and quality of their communications. For selecting the right
scheme as per your specific requirements,
Step Three - Select the ideal mix of

Schemes
Investing in just one Mutual Fund scheme may not meet all your investment needs.
You may consider investing in a combination of schemes to achieve your specific goals.
Step Four - Invest

regularly
The best approach is to invest a fixed amount at specific intervals, say every month.
By investing a fixed sum each month, you buy fewer units when the price is higher and
more units when the price is low, thus bringing down your average cost per unit. This is
called rupee cost averaging and is a disciplined investment strategy followed by
investors all over the world. You can also avail the systematic investment plan
facility offered by many open end funds.
Step Five- Start

early
It is desirable to start investing early and stick to a regular investment plan. If you
start now, you will make more than if you wait and invest later. The power of
compounding
lets you earn income on income and your money multiplies at a compounded rate of
return.
Step Six - The final

step
All you need to do now is to for online application forms of various mutual fund
schemes and start investing. You may reap the rewards in the years to come. Mutual
Funds are suitable for every kind of investor - whether starting a career or
retiring, conservative or risk taking, growth oriented or income seeking
RIGHTS OF A MUTUAL FUND UNIT HOLDER
A unit holder in a Mutual Fund scheme governed by the SEBI (Mutual

Funds) Regulations is entitled to:
1) Receive unit certificates or statements of accounts confirming the title within 6

weeks from the date of closure of the subscription or within 6 weeks from the
date of request for a unit certificate is received by the Mutual Fund.
2) Receive information about the investment policies, investment

objectives, financial position and general affairs of the scheme.
3) Receive dividend within 42 days of their declaration and receive the
redemption or repurchase proceeds within 10 days from the date of redemption
or repurchase.
4) Vote in accordance with the Regulations to:-
 Approve or disapprove any change in the fundamental investment policies of

the scheme, which are likely to modify the scheme or affect the interest of the
unit holder. The dissenting unit holder has a right to redeem the investment.
 Change the Asset Management Company.
 Wind up the schemes.
5). Inspect the documents of the Mutual Funds specified in the scheme's
offer document.
CRITICISM OF MUTUAL FUNDS
The primary criticism of actively managed mutual funds comes from the historical
fact that, over long periods of time, most have not returned as much as an index fund
would.
There are also other criticisms levied against mutual funds as a consequence of the
first criticism. One critique covers the concept of the sales load, an upfront or deferred
fee as high as 8.5 percent of the amount invested in a fund. Firstly, some critics do not
believe that this should be charged on a percentage basis instead of a flat fee basis. A
so -called flat fee, annual fee or wrap fee does very little for an investor other than
insure that they will pay an advisor a commission for as many years as their
relationship exists. It helps
an advisor create predictable (and since most investments trend upwards) increasing
income flow. Secondly this payment for advice and other services seems dubious to
these critics because with so many mutual funds underperforming, but yet visibly
attracting money, the advice given seemingly would be bad advice.
Mutual funds are also seen by some to have a systemic conflict of interest with regards
to their size. Fund companies typically make money by charging a management fee
of anywhere between 0.5-2.5 percent of the funds total assets. Although theoretically
this could motivate them to cause the fund to perform well, since a well performing
fund would cause the amount invested in the fund to rise and thus increasing the fee
earned, it also could motivate the fund to focus on attracting more and more new
investors, as the new investors adding money to the fund would also cause the
assets of the fund t o increase. Many investors believe however that the larger the
pool of money one works with, the harder it is to invest. Thus the harder it becomes for
the mutual fund to perform well. Thus a fund company can be focused on attracting
new customers, hurting its existing investors' performance. A great deal of the funds
costs are flat and fixed costs, such as the salary for the manager. Thus it can be more
profitable to the fund to try and allow it to grow as large as possible, instead of limiting
its assets.
Other practices of mutual funds have been criticized from time to time, such as funds
allowing market timing. More recent criticisms have focused on the fund manager
s accepting extravagant gifts in exchange for trading stocks through certain
investment banks, who presumably overcharge the fund compared to what another,
non-gifting investment bank would charge
TABLE OF MUTUAL FUND SCHEMES
Mutua
Investment Who Investmen
l Fund Objective Risk
Portfolio t horizon
Type should invest
Liquidity + Treasury Bills, Those who
Moderate Certificate park their
Money 2 days -
Income + Negligible of funds in current
Market 3 weeks
Reservation Deposits, accounts or
of Capital Commercial short-
Papers, Call term bank
Short-
term Call
Funds
Liquidity + Little Money, Those
(Floatin 3 weeks -
Moderate Interes Commercial
g with surplus 3 months
Income t Rate Papers,
- short-term funds
Treasury
short- Bills, CDs,
term) Short- term

Bond
Predominantly
Funds
Credit Debentures, Salaried & More
Regular Risk
Government conservative
(Floatin Income than
& Interest
g securities, investors
9 -
Rate Risk
- Corporate
12
Bonds
Long- Salaried & months
Gilt Security Interest Governmen 12
conservative
Funds Rate Risk t securities
investors months
& Income
& more
Aggressive
Long-term
Equity investors
Capital High Risk Stocks 3 years
Funds with long plus
Appreciatio
term out
n
To look.
generate
returns NAV varies Portfolio
Index Aggressiv
that are with 3 years
Funds indices like BSE, e plus
commensurat
index NIFTY etc investors.
e with
performanc
returns of
e
Balance Growth Capital Balanced ratio Moderate
d 2 years
Market of equity and plus
Funds & Regular Risk & Aggressive
debt
Income and funds to
Interest
ensure
Risk
higher returns at
lower risk
FREQUENTLY USED TERMS
Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the scheme minus its liabilities.
Per unit NAV is the net asset value of the scheme divided by the number of units
outstanding on the Valuation Date. It is calculated as
Total market value of the assets or securities – liabilities in the portfolio of the fund
Number of fund‘s units (shares)
outstanding
Sale Price
It is the price you pay when you invest in a scheme. It is also called as Offer Price. It
may include a sales load.
Repurchase Price
It is the price at which a close-ended scheme repurchases its units and it may include
a back-end load. This is also called Bid Price.
Redemption Price
It is the price at which open-ended schemes repurchase their units and close-ended
schemes redeem their units on maturity. Such prices are NAV related.
Sales Load
It is a charge collected by a scheme when it sells the units. Also called as ‗Front-end‘
load . Schemes that do not charg e a load are called ‗No Load‘ schemes. Generally
it is
2.25% for subscription below Rs. 2 Crores, 1.25% for Rs. 2 Crore to Rs. 5 Crore and
nil above Rs. 5 Crore. However the load structure varies from company to company.
Repurchase or „Back-end‟
Load
It is a charge collected by a scheme when it buys back the units from the unit holders.
It is 2.25% and is charged if the investment is redeemed before six months from the
date of investment in a mutual fund.
RESEARCH METHODOLOGY
RESEARCH:-
Research is a voyage of discovery, a movement from unknown to known. In
common parlance, it refers to a scientific and systematic search for pertinent
information on a specific topic. It is the pursuit of truth with the help of study,
observation, comparison and experiment.
RESEARCH METHOD:-
Research methods may be understood as all those method / techniques that are used
by the researcher during the course of studying his research problem.
RESEARCH METHODOLOGY:-
Research methodology is a way to solve the problem scientifically and
systematically. In this we study the various steps that are generally adopted by
researcher in studying his research problem along with the logic behind them.
When we talk about research methodology, we not only talk of the research methods
but also the comparison of the logic behind the method we use in the context of our
research study and explain why we are using a particular method and why not others.
Research Objectives
 To compare performance of different mutual funds in last 1 year.
 To compare the return of a mutual fund using different investment ways.
 To develop a new investment way in mutual funds.

 To compare the different portfolios being maintained by selected mutual funds.
 To understand the concept and importance of Mutual Fund & Portfolio
Management in today‘s scenario.
RESEARCH DESIGN: -
A research design is the arrangement of conditions for collection and analysis of data in
a manner that aims to combine relevance to the research purpose with economy
in procedure. The research design used in my study is basically exploratory in nature.
METHOD OF DATA COLLECTION: -
The study made in use secondary sources.
SECONDARY DATA COLLECTION: Secondary data have been collected
from various Books and websites..
SAMPLING DESIGN: -
A sample design is a definite plan for obtaining a sample from a given population .It
refers to the technique or the procedure the researcher would adopt in selecting items
for
the sample i.e. the size of the sample. Judgment sampling has been adopted to select the
Mutual Funds.
SAMPL E SIZE: -
Nine
ANALYSIS OF DATA: -
The data after collection has to be processed and analyzed with the outline laid for
the purpose at the time of developing the research plan. This is essential for a scientific
study and for insuring that we have all relevant data for making contemplated
compariso n and analysis.
Technically speaking processing implies editing, coding, classification and tabulation
of collected data so that they are amenable to analysis.
The term analysis refer to the computation of certain measures along with searching
for patterns of relationship that exist among data groups .To analyze the data
percentages, graphs, pie charts etc are used. After that interpretations are drawn and
finally, a list of suggestions and recommendations is put forward.
I hope the study will be interesting for a layman, a good experience for
the teacher and a key for the industrial pioneers in understanding and facing challenges.
Introduction to the Topic
The topic of study is “Comparative Analysis of Different Mutual Funds
and
Investing Ways”. In it 9 mutual funds have been selected and there performance
st st
is compared in last 1 year starting from 1 February 2006 to 31 January 2007. For
this there Net Asset Values is used and portfolio maintained is studied. Further
returns of
different investing ways will be compared in the same mutual fund like One
Time Investment, Systematic Investment Plan. Further study would be done to find out
that can we develop a new way of investing in them and if yes than what the pre
requisite for its implementation. The whole study will be carried out in a manner like
firstly different
st
mutual funds will be selected. Than there NAV‘s will b e no ted from 1 February 2006
to
st
31 January 2007. Using some calculations performance will be compared. Using the
Fact Sheet of the selected mutual fund minute details of each will be
studied. The Mutual Funds under study are as follows: -
SBI MAGNUM CONTRA
RELIANCE GROWTH FUND
FRANKLIN INDIA PRIMA FUND
HDFC EQUITY FUND
DSPML OPPORTUNITIES FUND
KOTAK BOND REGULAR FUND
JM INCOME FUND
LIC MF BOND
UTI BOND
SBI MUTUAL FUND
Incorporated 29 JUNE 1987
Ownership Public
Ownership Pattern Foreign - 37%,

Domestic-63%
Sponsor State Bank of India,

Society
General Asset Management
Fund
The fund takes contrarian call on the markets. It has given compounded annual returns
of
67% in past 5 years against the category average of 46%. It is the top wealth creator
for the year 2006-07. The fund has mainly shifted its focus to large cap space. It
also contains a large cash component of Rs 120 Crore, which amounts to about 10%
of its portfolio. This prudence, along with its successful bet on banking stocks has
helped the fund out perform the category.
Fund Rating
Magnum Contra-G
Current Stats & Profile Trailing Returns
Latest NAV 34.63 (12/03/07) As on 12 Mar 2007 Fund Categor
y
52-W eek High 39.91 (06/02/07) Year to Date -7.65 -

8.15
52-W eek Low 25.02 (14/06/06) 1-Month -9.08 -

8.49
Fund Category Equity: Diversified 3-Month -0.83 -

1.40
Type Open End 1-Year 13.17 6.4

7
Launch Date July 1999 3-Year 57.66 33.1

8
Risk Grade Below Average 5-Year 53.60 37.9

0
Net Assets (Cr) 1,448.78 Returns upto 1 year are absolute and over 1 year
(28/02/07)
are annualized.
Benchmark BSE 100
Relative Performance (Fund Vs Category Average)
Portfolio
Security Instrument % Net Assets

Praj Industries Equity 4.97
Reliance Industries Equity 4.89
Hindustan Zinc Equity 3.78
Mahindra & Mahindra Equity 3.73
Jai Prakash Associates Equity 3.49
Aditya Birla Nuvo Equity 7.47
India Cements Equity 5.19
F A G Bearings India Equity 4.95
Motor Industries Co. Equity 4.42
Kansai Nerolac Paints Equity 3.1
Torrent Pharmaceuticals Equity 3.1
India Infoline Equity 2.97
C C L Products (I) Equity 2.88
Cummins India Equity 2.85
T V S Motor Co. Equity 2.84
Ashok Leyland Equity 2.61
Merck Ltd. Equity 2.53
Esab India Equity 2.48
Federal Bank Equity 2.09
Sundaram Fasteners Equity 1.86
Ruchi Soya Inds. Equity 1.81
Sesa Goa Equity 1.8
Raymond Equity 1.72
Indraprastha Gas Equity 1.36
Infotech Enterprises Equity 1.31
Ansal Prop & Infra Equity 1.27
TIL Equity 1.26
Ciba Speciality Chemicals Equity 1.24
Basic/Engineering
Financial Service
Diversified
Automobil
% Coposition
Basic/Engineerin
Health Care
13.61
Health Care
Services
12.62
Energy
Construction
12.37
TopAutomobile
Sectors in Portfolio
11.13
Metals & Metal

FMCG
5.6
Services
5.53 Comp osition of Vario us Sectors
Financial Services
18
16
3.77 14
12
Technology 10 Comp osition of Vario us
8 Sectors
2.21 6
Metals & Metal 4
2
Products 0
1.8
Textiles
1.72
Energy
10.83
Secto r
RELIANCE MUTUAL FUND
Incorporated 30 June 1995
Ownership Private

Domestic-100%
Sponsor Reliance Capital Ltd
About Reliance Mutual Fund
Reliance Mutual Fund (RMF) was established as a trust under the Indian Trusts Act,
1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor and Reliance
Capital Trustee Co. Limited (RCTCL), as the Trustee.
RMF has been registered with the Securities & Exchange Board of India (SEBI) vide
registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital
Mutual Fund has been changed to Reliance Mutual Fund effective from March 2004.
Reliance Mutual Fund was formed to launch various schemes under which units are
issued to the Public with a view to contribute to the capital market and to provide
investors the opportunities to make investments in diversified securities.
The main objectives of the Trust are:
To carry on the activity of a Mutual Fund as may be permitted at law

and formulate and devise various collective Schemes of savings and
investments for people in India and abroad and also ensure liquidity of
investments for the Unit holders;
To deploy Funds thus raised so as to help the Unit holders earn reasonable
returns on their savings and
To take such steps as may be necessary from time to time to realize the effects
without any limitation.
RELIANCE GROWTH FUND
It is a mid cap fund with around 75% in mid cap and a maximum of 25% in large
caps. Large cap exposure gives fund tremendous liquidity but not in bearish time. It
uses opportunistic style of investment i.e. looking at companies that are scalable in
sectors with growth and management passion to grow. It invests nearly in 60 stocks
with a bottom up approach. In top holdings, 5.3% of the assets are invested in
Reliance Industries. The fund also invests across sectors such as steel, infrastructure,
textile & cement, which move with economic and GDP growth. It is also one of the
wealth creators in the year 2006-07. Last year return of this fund is 34.22%.
FUND DATA
Structure Open-ended Equity Growth

Scheme
Inception Date October 8, 1995
Corpus Rs 3214.06 crore (January 31, 2007)
Minimum Investment Rs 5,000
Fund Manager Mr. Sunil Singhania
Entry Load <2cr - 2.25%; >_2cr<5cr - 1.25 %;> _5cr - Nil
Exit Load Nil
Benchmark BSE 100 Index
SPECIAL FEATURE Reliance Any Time Money Card
INVESTMENT OBJECTIVE To achieve long-term growth of capital by investing in
Equity and equity related securities through a
research- Based investment approach.
PORTFOLIO OF RELIANCE GROWTH FUND
Holdings Weightage
(%)
Equities
87.87
JSW Steels Ltd 4.51
Reliance Industries Ltd 3.93
Bharat Earth Movers Ltd 3.74
Jindal Saw Ltd 3.44
Divis Laboratories Ltd 2.84
Jaiprakash Associates 2.63
Northgate Technologies Ltd 2.55
Gujarat State Fertilizers & Chemicals Ltd 2.22
Cambridge Solutions Ltd 2.15
Adani Enterprises Ltd 2.03
Bombay Dyeing & Mfg Company Ltd 2.03
Bank Of Baroda 1.94
Escort India Ltd 1.94
Jain Irrigation Systems Ltd 1.93
Strides Arcolabs Ltd 1.89
Lupin Ltd 1.87
HCL Technologies Ltd 1.82
State Bank Of India 1.77
Greaves Cotton Ltd 1.61
Dena Bank 1.55
AIA Engineering Ltd 1.52
United Phosphorous Ltd 1.47
Jindal Steel & Power Ltd 1.45
Crompton Greaves Ltd 1.45
Maharashtra Seamless Ltd 1.40
Radico Khaitan Ltd 1.40
Gujarat Mineral Development Corporation 1.39
Bharati Shipyard Ltd 1.38
Orient Paper & Industries Ltd 1.34
Shivvani Oil And Gas Exploration 1.29
Allcargo Global Logistics Ltd 1.26
NIIT Technologies Ltd 1.24
Mahanagar Telephone Nigam Ltd 1.19
Bharat Petroleum Corp Ltd 1.17
Gammon India Ltd 1.16
Tamilnadu Newsprint Ltd 1.11
GHCL Ltd 1.06
Hexaware Technologies Ltd 1.03
Tata Motors 1.02
Educomp Solutions Ltd 1.02
Equity < 1% Of Corpus 14.11
Derivatives, Cash & Other Receivables 12.13
Grand Total 100.00
SECTOR ALLOCATION
Industry % Allocation
Ferrous Metals 10.81
Industrial Capital Goods 9.72
Software 8.08
Pharmaceuticals 6.89
Banks 5.27
Petroleum Products 5.11
Chemicals 4.53
Construction 4.14
Auto 3.94
Industrial Products 3.54
Fertilizers 3.39
Consumer Non Durables 2.93
Auto Ancillaries 2.72
Information Technology 2.55
Trading 2.03
Pesticides 1.47
Minerals/Mining 1.39
Cement 1.34
Oil 1.29
Transportation 1.26
Telecom - Services 1.19
Paper 1.11
Textiles – Cotton 0.97
Net Asset Value

Date Net Asset Value
Wednesday, February 01, 2006 201.18
Wednesday, March 01, 2006 210.22
Monday, April 03, 2006 229.75
Monday, May 01, 2006 251.68
Thursday, June 01, 2006 215.11
Monday, July 03, 2006 199.51
Tuesday, August 01, 2006 193.2
Friday, September 01, 2006 218.12
Tuesday, October 03, 2006 234.47
Wednesday, November 01, 2006 250.23
Friday, December 01, 2006 261.78
Tuesday, January 02, 2007 270.05
FRANKLIN INDIA PRIMA FUND
Fund
FRANKLIN India Prima Fund is a 12 year old diversified equity fund with a specific
focus on mid/small cap stocks from India‘s emergin g businesses. The
in vestment approach is style-agnostic i.e. neither pure growth nor value addition. This
style is chosen
keeping in mind that different styles tend to out perform in different market conditions.
If Rs. 1,000 is invested every month for last five years than there present value would
have been Rs 2.12 lakh. Its NAV shoot up from Rs 19.95 in 2001 to Rs. 174.84 in
2006. The fund holds around 40 stocks in its portfolio, with the top 10 holdings
accounting for
43.04% of its net assets. The fund holds about Rs 172 Crore as cash. The corpus of
the fund is Rs 2,4 1 8 Crore. The main fe ature of the fund is that it hasn‘t seen
heavy redemption pressures throughout its 12 years. It is also one of the wealth
creator funds.
Last year return of this fund is
20.56%.
Fund Style
Fund Facts
Asset Allo cat ion Portfo lio Concentration
Equity 94% Top 3 sectors 41.90

%
Debt 0% Top 5 holdings 26.67
%
Other 6% Top 10 holdings 43.04
%Fund Rating
Franklin India Prima-G
Current Stats & Trailing Returns
Profile
Latest NAV 184.17 As on 12 Mar 2007 Fund Category

(12/03/07)
52-W eek High 220.51 Year to Date -14.08 -8.15

(16/01/07)
52-W eek Low 139.55 1-Month -11.76 -8.49

(14/06/06)
Fund Category Equity: 3-Month -6.78 -1.40

Diversified
Type Open 1-Year -2.52 6.47

End
Launch Date November 3-Year 35.98 33.18

1993
Risk Grade Average 5-Year 48.12 37.90
Return Grade Above Return Since Launch 24.51 --

Average
Net Assets (Cr) 1,583.62 Returns upto 1 year are absolute and over 1 year
(28/02/07)
are annualised.
Benchmark S&P CNX 500
Relative Performance (Fund Vs Category Average)

Portfolio
Stock Instrument % Net

Assets
Aditya Birla Nuvo Equity
7.47
India Cements Equity 5.19
F A G Bearings India Equity 4.95
Ipca Laboratories Equity 4.31
Kansai Nerolac Paints Equity 3.1
Torrent Pharmaceuticals Equity 3.1
India Infoline Equity 2.97
C C L Products (I) Equity 2.88
Cummins India Equity 2.85
T V S Motor Co. Equity 2.84
Ashok Leyland Equity 2.61
Merck Ltd. Equity 2.53
Esab India Equity 2.48
Federal Bank Equity 2.09
Sundaram Fasteners Equity 1.86
Ruchi Soya Inds. Equity 1.81
Sesa Goa Equity 1.8
Raymond Equity 1.72
Indraprastha Gas Equity 1.36
Infotech Enterprises Equity 1.31
Ansal Prop & Infra Equity 1.27
TIL Equity 1.26
Ciba
Speciality Equity 1.24
Sector
% Composition
% Composition
Constructio
Diversified
Basic/Engineering
Health Care
15.67
Diversified
13.61
Health Care
12.62
Construction
Top Holdings in Portfolio
Financial Services
Metals & Metal

Automobile
Technology
Services
Textiles
Chemicals
12.37
FMCG
Products
Automobile
11.13
% Comp osition
FMCG
5.6 18
Services 16
14
5.53 12
10
8
Chemicals 6
4
4.34 2
0
Financial Services
3.77
Technology
Metals & Metal
Products
2.21 Secto r
1.8
Textiles
1.72
Net Asset Value

Monday, April 03, 2006 201.75
Monday, May 01, 2006 209.27
Monday, July 03, 2006 162.61
HDFC MUTUAL FUND

Ownership Private
Domestic-100%
Sponsor Housing Development
Divis Laboratories Ltd. Finance Corporation
Ltd. Pharmaceuticals
87,707
Fund Speak 2,635.60
6.88
Infosys Technologies Ltd.
The main feature of this fund is that it has beaten its category for eight consecutive
Software
years. The fund is not having large portfolio with number of stocks between 30– 40.
117,602
Top 5 stocks account for2,563.37
35-40%. The funds investment policy is to buy quality and
sustainable businesses at6.69a re asonable price. So even if a sector don‘t perform
well now , bu t has potential to perform in future, the fund will hold on to it. The
Industrial
fund is also known for quick sector move. The fund doesn‘t offer good returns in 1-
Capital
2 years, but in long term. It is also the wealth creator fund. Last year return of this fund
is 31% nearly.
Bharat Heavy Electricals Ltd.
Bharti Airtel Ltd.

Goods
Telecom
Services
-
80,000
310,000
2,004.60
1,955.17
5.23
5.10
Industrial
Capital
Crompton Greaves Ltd.

Goods
Portfolio 700,000
1,854.30
4.84
Name of Instrument State Bank
Industry +
of India Quantity Market/ % to
Banks Fair
Value NAV
140,000
(Rs. In
1,843.87
4.81 Lakhs)
EQUITY & Reliance Industries Ltd.
EQUITY
RELATED Petroleum
140,000
Lanco Infratech Ltd Engineering
1,742.23 48,119 125.59 0.33
Subtotal 4.55 125.59 0.33
(a) Listed / awaiting listing on Stock Exchanges
Products
Apollo Tyres Ltd. Auto Ancillaries 472,796 1,726.18 4.5
1
Sun Pharmaceutical Industries
Ltd. Pharmaceuticals 164,531 1,670.24 4.3
6
Consumer Non
Durables 900,000 1,665.90 4.35
ITC Ltd.
Consumer Non
Durables 186,000 1,589.93 4.15
Kansai Nerolac Paints
Industrial Capital
Goods 416,969 1,588.23 4.15
Ltd. Thermax Ltd.
Oil & Natural Gas
Corporation Ltd. Oil 172,500 1,487.55 3.88
Sundaram Clayton Ltd. Auto Ancillaries 112,000 1,367.02 3.57
Grasim Industries Ltd. Cement 47,500 1,321.90 3.45
Consumer Non
Hindustan Lever Ltd. Durables 500,000 1,176.00 3.07
Satyam Computer Services
Ltd. Software 240,000 1,102.80 2.88
Hindustan Petroleum
Petroleum
Corporation Ltd. Products 325,000 915.85 2.3
9
Tata Motors Ltd. Auto 110,000 890.07 2.3
2
Aditya Birla Nuvo Ltd. Textile Products 75,928 881.83 2.3
0
Birla Corporation Ltd. Cement 224,964 825.84 2.1
6
1,174,66
ISMT Ltd. Metals 8 811.70 2.1
2
Hanung Toys & Textiles Ltd Textile Products 519,066 670.37 1.7
5
Solar Explosives Ltd. Chemicals 424,937 590.45 1.5
4
Eimco Elecon (India) Ltd. Engineering 145,072 507.10 1.3
2
Voltamp Transformers Ltd Power 75,890 452.61 1.1
8
Phoenix Lamps Ltd. Auto Ancillaries 308,766 389.82 1.0
2
Global Vectra Helicorp Ltd Transportation 159,810 256.26 0.67
Chennai Petroleum Petroleum
Corporation Ltd. Products 98,859 218.23 0.57
Great Eastern Shipping
Company Ltd. Transportation 96,000 209.81 0.55
Consumer Non
EID Parry (India) Ltd. Durables 144,640 201.92 0.53
Great Offshore Ltd. Transportation 24,000 145.41 0.38
Subtotal 37,262.16 97.27
Total 37,387.75 97.60
MONEY MARKET INSTRUMENTS
Reverse Repos 873.55 2.28
Subtotal 873.55 2.28
Total 873.55 2.28
OTHERS
Net Current Assets 42.14 0.12
Net Assets 38,303.44 100.0
0
Top Holding
Sectoral Assets(%
)
Industrial Capital Goods
14.22
Consumer Non Durables 12.10
Pharmaceuticals 11.24
Software 9.57
Auto Ancillaries 9.10
Petroleum Products 7.51
Cement 5.61
Telecom - Services 5.10
Banks 4.81
Textile Products
Oil
Auto Ancillarie
Industrial Capital
% Assets
Pharmaceuticals
Banks
3.88
Goods
Auto
2.32
Metals
As sets(%)
2.12
1 6.00
Metals
Oil
Cement
Engineering 1 4.00
1 2.00
1 0.00
1.65 8.00
Transportation 6.00
4.00
2.00
1.60 0.00
Transportation
Chemicals
Power
1.54
Power Money Instruments/Net
Receivables
Secto r
Market
1.18
Net Asset Value

2.40
Monday, April 03, 2006 130.819
Monday, May 01, 2006 134.053
Thursday, June 01, 2006 112.237
Monday, July 03, 2006 114.59
DSP Merrill Lynch Opportunities Fund
Fund
The fund maintains a complicated portfolio. The fund has constantly figured in the
top
25% of its category. The funds mandate is to move around promising sectors. The
portfolio is highly diversified. Technology stock is the favourite, but fund also
has au tomob iles, FMCG, metals and engineering . If a sector isn‘t perform in g
the fun d
believes in buy and hold strategy. There is no mid and small cap stock in the portfolio
as
the exposure doesn‘t typic ally exce ed s 30%. Its fund managers are Mr.
Anup
Maheshwari and Mr. Soumendra Lahiri. It is also a wealth creator fund. Last year
return of this fund is 36.4%.
Type of Scheme: Open ended growth scheme
Options available: Growth

Dividend
Payout
Reinvest
Minimum Application First Purchase - Rs. 5,000/-

amount:
Subsequent Purchase - Rs. 1,000/-
Entry Load:  For Regular investments

2.25% : For investments < Rs 5.0 crs
Nil : For investments >= Rs 5.0 crs
 For SIP investments
1%
Exit Load: NIL
Contingent  For SIP investments

1.25% : If investment is redeemed before
Deferred
the completion of 2 years
Sales Charge (CDSC):
Nil : If investment is redeemed on or after the
completion of 2 years
Under normal circumstances, it is anticipated that the asset allocation shall be as follows:
Indicative Asset Allocation
Indicative Allocation (%
Instrumen of Risk Profile
t
Corpus)
Equity and equity-

related 80% - 100% Medium to High
securities
Fixed income
securities
0% - 20% Low to Medium
(debt* and money
market securities)
*Debt securities/instruments are deemed to include securitised debts.

HIGHLIGHTS
Cut Off Time - Subscription 3:00 PM

Cut Off Time -Redemption 3:00 PM
Cut Off Time - Switching 3:00 PM
Normally within 3 Business Days of the

Redemption cheques
issued^ receipt of redemption request
Systematic Investment Plan (SIP) Monthly and Quarterly Options available
Minimum Investment for SIP Rs. 2000/- (Effective November 15,2006)
Weekly, Monthly and Quarterly Options

Systematic Withdrawal Plan
(SWP) available
Minimum Withdrawal for SWP Rs. 1,000/-
Weekly, Monthly and Quarterly Options

Systematic Transfer Plan available
(STP)
Minimum Transfer for STP Rs. 1000/-
INVESTMENT OBJECTIVE
An Open Ended growth Scheme, seeking to generate long term capital appreciation
and whose secondary objective is income generation and the distribution of dividend
from a Portfolio constituted of equity and equity related securities concentrating
on the Investment Focus of the Scheme.
ASSET ALLOCATION
Equity & Equity related securities: 80% - 100%
Fixed Income securities (Debt* & Money market securities): 0% -
20%. Debt securities/ instruments are deemed to include securitised
debts
16 BHEL Industrial Capital Goods

3,228.42
2.17%
17 State Bank of India Banks
3,189.03
2.14%
18 ITC Consumer Non Durables
3,066.23
2.06%
19 Sterlite Industries Non - Ferrous Metals
2,763.33
Portfolio 1.86%
Sr.No. Name of the Instrument Industry Market Value % to Net Assets

(Rs. In lakhs)
EQUITY & EQUITY RELATED
(a) Listed / awaiting listing on the stock exchanges
1 Reliance Industries Petroleum Products 6,338.44 4.26%
2 L&T Industrial Capital Goods 5,621.09 3.78%
3 Infosys Technologies Software 5,553.37 3.73%
4 Tata Consultancy Services Software 4,632.03 3.11%
5 Reliance Communication 4,279.49 2.88%
6 Grasim Industries Cement 4,105.98 2.76%
7 Bharti Televentures Telecom - Services 4,095.93 2.75%
8 ONGC Oil 4,072.42 2.74%
9 Zee Entertainment Media & Entertainment 4,061.53 2.73%
10 Satyam Computer Services Software 3,972.92 2.67%
11 Aditya Birla Nuvo Textile Products 3,736.21 2.51%
12 Tata Motors Auto 3,556.37 2.39%
13 Jaiprakash Industries Construction 3,502.68 2.35%
14 Crompton Greaves Industrial Capital 3,420.59 2.30%
Goods
15 Deccan Chronicle Holdings Media & 3,277.04 2.20%
Entertainment
20 Century Textiles Cement 2,756.03 1.85
%
21 Gujarat Ambuja Cements Cement 2,689.09 1.81
%
22 Mahindra & Mahindra Auto 2,657.02 1.79
%
23 ICICI Bank Banks 2,503.18 1.68
2 4 Dr. Reddy‘s Laboratories 2,1 9 8.8 3 %
1.48
Pharmaceuticals %
25 TV 18 Media & Entertainment 2,167.36 1.46
%
26 Hindustan Lever Consumer Non 2,035.25 1.37
Durables %
27 MphasiS BFL Software 1,995.66 1.34
%
28 Ansal Properties Construction 1,961.41 1.32
%
29 Siemens Industrial Capital Goods 1,880.10 1.26
%
30 Bharat Electronics Industrial Capital Goods1,784.84 1.20%
31 Amtek Auto Auto Ancillaries 1,754.56 1.18%
32 Wire and Wireless Media & 1,722.55 1.16
Entertainment %
33 Voltas Consumer Durables 1,627.39 1.09
%
34 Lanco Infratech Engineering 1,623.97 1.09
%
35 HCL Technologies Software 1,559.48 1.05
%
36 Hindustan Construction Construction 1,463.70 0.98
%
37 Karur Vysya Bank Banks 1,374.13 0.92
%
38 United Phosphorus Pesticides 1,307.21 0.88
%
39 BPCL Petroleum Products 1,268.59 0.85
%
40 ACC Cement 1,245.82 0.84
%
41 Tech Mahindra Software 1,199.95 0.81
%
42 Birla Corporation Cement 1,194.11 0.80
%
43 Jindal Saw Pipes Industrial Capital 1,162.32 0.78
Goods %
44 Cipla Pharmaceuticals 1,094.23 0.74
%
45 IOC Petroleum Products 1,087.51 0.73
%
46 SAIL Ferrous Metals 1,075.56 0.72
%
47 Hindalco Non - Ferrous Metals 1,051.35 0.71
%
48 IPCL Petroleum Products 1,047.60 0.70
%
49 Bombay Dyeing Chemicals 1,009.92 0.68
%
50 Graphite India Industrial Products 949.62 0.64%
51 Colgate Consumer Non Durables 936.43 0.63%
52 Hexaware Technologies Software 918.13 0.62%
53 GE Shipping Transportation 869.41 0.58%
54 Mcleod Russell Consumer Non Durables 776.29 0.52%
55 NRB Bearings Industrial Products 764.44 0.51%
56 Sun TV Media & Entertainment 755.82 0.51%
57 Pantaloon Retail Retailing 752.44 0.51%
58 B L Kashyap & Sons Construction 741.82 0.50%
59 HPCL Petroleum Products 717.67 0.48%
60 Hindalco Rights Non - Ferrous Metals 690.61 0.46%
61 DCM Shriram Consolidated Fertilisers 652.77 0.44%
62 Financial Technologies Software 634.71 0.43%
63 Mastek Software 601.11 0.40%
64 Nestle Consumer Non Durables 579.26 0.39%
65 Bannari Amman Sugar Consumer 567.27 0.38%
Non Durables
66 Karur Vysya Bank - Rights Banks 540.97 0.36%
67 Sesa Goa Ferrous Metals 315.16 0.21%
68 I-Flex Solutions Software 291.70 0.20%
69 Centurion Bank of Punjab Banks 284.10 0.19%
70 Bajaj Auto Auto 277.22 0.19%
71 Maruti Udyog Auto 274.24 0.18%
72 Voltamp Transformers Industrial Capital 114.52 0.08%
Goods
73 Network18 Media & Entertainment 78.90 0.05%
Total 140,056.43 94.11
%
DERIVATIVES
74 ICICI Feb 2007 Banks 1,293.32 0.87%
75 BHEL Feb 2007 Industrial Capital Goods 622.16 0.42%
76 Bharti Feb 2007 Telecom - Services 315.72 0.21%
77 Century Textiles Feb 2007 Cement 230.92 -0.16%
Total 2,000.28 1.34%
MONEY MARKET
INSTRUMENTS Cash & Equivalent
CBLO / Reverse Repo Investments 6,417.46 4.31%
Net Receivables / (Payables) 347.60 0.23%
Total 6,765.06 4.55%
Grand Total 148,821.77 100.00
%
Major Holdings
Sector % Assets
MEDIA &
ENTERTAINMENT 8.11
CEMENT 7.9
PETROLEUM
PRODUCTS 7.03
BANKS 6.17
TELECOM - SERVICES 5.84
CONSUMER NON
DURABLES 5.3
5
CONSTRUCTION 5.1
5
AUTO 4.5
NON - FERROUS
METALS 3.0
3
OIL 2.7
4
TEXTILE PRODUCTS 2.5
1
PHARMACEUTICALS 2.2
1
AUTO ANCILLARIES 1.1
8
INDUSTRIAL 1.1
5
CONSTRUCTION
PRODUCTS
% Assets
TEXTILE
MEDIA &
TELECOM -
PETROLEUM
CONSUMER DURABLES
1.09
ENGINEERING
1.09
FERROUS METALS
AUTO
CHEMICALS
CONSUMER
NON - FERROUS
FERROUS
0.93
% As sets
PESTICIDES
0.88
16
CHEMICALS 14
12
0.68 10
FERTILISERS 8
6
INDUSTRIAL
RETAILING
0.44 4
CASH &
2
CASH & EQUIVALENT 0
4.55
SOFTWARE INDUSTRIALCAPITAL
GOODS
14.35
Secto r
11.98
Transportation has a share of 0.58% and Retailing has a share of 0.51% in the portfolio.
Net Asset Value

Monday, April 03, 2006 49.51
Monday, May 01, 2006 51.84
Monday, July 03, 2006 43.44
KOTAK MAHINDRA MUTUAL FUND
Ownership Private

Domestic-100%
Sponsor Kotak Mahindra Finance Ltd
Corpus Rs. 52.38 Crore

Ideal Investment Horizon 1-2 year
Fund Manager Mr. Ritesh Jain
Kotak Mahindra is one of India's leading financial institutions, offering

complete financial solutions that encompass every sphere of life. From commercial
banking, to stock broking, to mutual funds, to life insurance, to investment banking, the
group caters to the financial needs of individuals and corporates.
The group has a net worth of around Rs.2,900 crore and employs around
8,800 employees across its various businesses servicing around 2 million customer
accounts through a distribution network of branches, franchisees, representative
offices and
satellite offices across 282 cities and towns in India and offices in New York,
London, Dubai and Mauritius.
Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly

owned subsidiary of KMBL, is the Asset Manager for Kotak Mahindra Mutual Fund
(KMMF). KMAMC started operations in December 1998 and has over 4 Lac investors
in various schemes. KMMF offers schemes catering to investors with varying risk -
return profiles and was the first fund house in the country to launch a dedicated gilt
scheme investing only in government securities.
Fund
This fund has generated a decent income for its investors with reasonably low level
of volatility. 60-70% of its portfolio consists of high yield assets such as bonds,
commercial paper, corporate deposits and securitised debts. The balance is
employed in riskier government securities. Risk management is most important for
this fund. Emphasis on
high yield portfolio has kept the fund‘s volatility low . It is the fourth best
performin g
income fund in past six months based on returns. The portfolio of the scheme consists
of debt and money market instruments. The investment strategy is to invest across
wide maturity horizons and different kind of issuers in debt market, the G-Sec
component is
normally maintained between 30-50% and it generally doesn‘t invest in corporate
bond s
with less than AA rating. It is to be noted that NAV of this fund never fell down,
even when the Sensex was down. The fund is income generator. Last year return of this
fund is
7%.
Net Asset Value
Monday, April 03, 2006 18.3392
Monday, May 01, 2006 18.4542
Thursday, June 01, 2006 18.5166
Monday, July 03, 2006 18.6115
Portfolio
JM INCOME FUND
st
Inception 1 April, 1995
Fund Manager Mr. Dwijendra Srivastava
Bench Mark Index CRISIL COMPOSITE BOND FUND INDEX
Corpus Rs 26.58 Crore.
Investment Objective
To generate stable long term returns with low risk strategy and capital appreciation/
accretion through investment in debt instruments and related securities
besides preservation of capital.
JM Financial Mutual Fund is one of India's first private sector mutual funds-an
integral part of the first wave that commenced operations in 1993-94. Today, they are
among the top most mutual funds in the country, ranked by assets managed, and
enjoy a superior performance record.
The Group's origins can be traced back to the 1950s when the Kampani family began
to get involved in India's then nascent capital markets. J.M. Financial and
Investment Consultancy Services was founded on September 15, 1973. Under the
leadership of Chairman Nimesh N. Kampani, the JM Group has played a stellar and
multi-faceted role in the development of India's capital markets. Apart from
helping companies raise finance, JM has also been instrumental in educating a
burgeoning and prospering middle
class about the advantages of investing in blue chip companies. In 1999, they
commenced a joint venture with Morgan Stanley Dean Witter, that today spans
investment banking, broking, fixed income and retail distribution.
JM Financial Asset Management Private Limited, the Asset Management Company of

JM Financial Mutual Fund, is not a part of this joint venture. Sponsored by J.M.
Financial and Investment Consultancy Services Pvt. Ltd., and co-sponsored by JM
Financial Ltd., JM Financial Asset Management Private Limited started operations in
December 1994 with a simultaneous launch of three funds-JM Liquid Fund (now JM
Income Fund), JM Equity Fund and JM balanced Fund. Today, JM Financial Mutual
Fund offers a bouquet of funds that caters to the diverse needs of both its institutional
and individual investors.
Their mission is to manage risk effectively while generating top quartile returns across
all product categories. They believe that to cultivate investor loyalty, they must
provide a safe haven for their investments.
They are focused on helping their investors realize their investment goals through
prudent advice, judicious fund management, impeccable research, and strong
systems of managing risk scientifically.
Fund
The fund has given a one year return of 2.6% and five year return of 7.7%. The
philosophy behind investment is that invest in papers that offers value to the investor
i.e. they consider the relative value and the spread offered by the paper in a maturity
bucket instead of just the absolute yield. The fund is in medium risk-return segment.
The net assets are mainly invested in AAA rated instruments. The top 5 holdings
account fo r
55.6% of total assets. The major risks associated are Interest Rate Risk, Liquidity
Risk, and Reinvestment Risk. Nearly 25% of total assets are held as cash. The
portfolio basically includes corporate bonds, money market instruments, g-sec
investments. The fund is income generator. Last year return of this fund is 3%.
Portfolio
Net Assets Value

Monday, April 03, 2006 27.7041
Monday, May 01, 2006 27.8435
Thursday, June 01, 2006 27.9194
Monday, July 03, 2006 27.8875
UTI BOND FUND
UTI Mutual Fund is managed by UTI Asset Management Company Private Limited
who has been appointed by the UTI Trustee Company Private Limited for
managing the schemes of UTI Mutual Fund and the schemes transferred / migrated
from UTI Mutual Fund.
The UTI Asset Management Company has its registered office at : UTI Tower, Gn
Block, Bandra - Kurla Complex, Bandra (East), Mumbai - 400 051 will provide
professionally managed back office support for all business services of UTI Mutual
Fund (excluding fund management) in accordance with the provisions of the
Investment Management Agreement, the Trust Deed, the SEBI (Mutual Funds)
Regulations and the objectives of the schemes. State-of-the-art systems and
communications are in place to ensure a seamless flow across the various
activities undertaken by UTI AMC.
UTI AMC is a registered portfolio manager under the SEBI (Portfolio

Managers) Regulations, 1993 on February 3 2004, for undertaking portfolio
management services and also acts as the manager and marketer to offshore funds
through its 100 % subsidiary, UTI International Limited, registered in
Guernsey, Channel Islands.
UTI Mutual Fund has come into existence with effect from 1st February 2003. UTI
Asset
Management Company presently manages a corpus of over Rs. 34500
Crore. UTI Mutual Fund has a track record of managing a variety of schemes
catering to the
needs of every class of citizenry. It has a nationwide network consisting 70 UTI
Financial Centers (UFCs) and UTI International offices in London, Dubai and
Bahrain. With a view to reach to common investors at district level, 4 satellite
offices have also been opened in select towns and districts. It has a well-
qualified, professional fund management team, who has been highly empowered
to manage funds with greater efficiency and accountability in the sole interest of
unit holders. The fund managers are also ably supported with a strong in-house equity
research department. To ensure better management of funds, a risk
management department is also in operation.
It has reset and upgraded transparency standards for the mutual funds industry. All the
branches, UFCs and registrar offices are connected on a robust IT network to ensure
cost- effective quick and efficient service. All these have evolved UTI Mutual Fund to
position as a dynamic, responsive, restructured, efficient, and transparent and SEBI
compliant entity.
Fund
It is a income scheme with relatively low volatility and stable returns. Time horizon
of investment is medium. Investing way being conservative, so a portfolio of
Corporate Bonds and g-sec is made. The fund has seen a slow but sure growth in
NAV. The fund avoids extreme swings in either maturity or duration. It has a corpus of
Rs. 388.98 Crore. The top 10 holdings has major share of corporate bonds than g-sec.
nearly 61.7% holding is of AAA rated bonds. Emphasis is on adding value
through multiple, diversified strategies combined with volatility analytics, and
adjustment to traditional variables such as sector, coupon & quality of companies. The
average maturity of its portfolio is 3 years. Its fund manager is Mr. Amandeep Chopra.
Last year return of this fund is 4.7%.
Portfolio
MARKET % TO
NAME OF THE INSTRUMENT QUANTITY - VALUE NAV
Debt Instruments -
(a) Listed/awaiting listing on Stock Exchanges
NCDR 7.86% UTI BANK LTD. MATURING 25/07/2012 300 3001.23 9.58
NCD 6% TATA TEA LTD. MATURING 08/06/2007 20 2278.06 7.27
NCD 8.65% CITIFINANCIAL CONSUMER FINANCE INDIA LTD. MATURING
05/08/2008 150 1484.03 4.74
NCDR 7.45% HDFC LTD. MATURING 10/08/2009 100 1004.8 3.21
NCD 8.7% HINDALCO INDUSTRIES LTD. MATURING 23/04/2007 200 1001.46 3.2
NCD 8.78% POWER FINANCE CORPORATION LTD. MATURING 11/12/2016 100 976.21 3.12
NCD 14.75% RELIANCE INDUSTRIES LTD. MATURING 13/02/2008 1000000 686.39 2.19
NCD 8.71% INDIAN RAILWAYS FIN CORPN LTD. MATURING 15/03/2007 50 500.72 1.6
NCD 9.25% LIC HOUSING FINANCE LTD. MATURING 18/02/2009 3 299.8 0.96
NCD 6.98% INDIAN RAILWAYS FIN CORPN LTD. MATURING 31/03/2007 30 299.78 0.96
TOTAL:(a) Listed/awaiting listing on Stock Exchanges 11532.48
(b) Unlisted
NCDR 6.58% INDUSTRIAL DEVELOPMENT BANK OF INDIA LIMITED.
MATURING 23/08/2010 250 2500 7.98
PTC 8.8479% ICICI BANK LTD MATURING 22/10/2009 25 2366.27 7.55
NCD 6.58% TATA SONS LTD. MATURING 14/05/2008 15 1452.54 4.64
PTC 0% TATA MOTORS LTD. MATURING 14/01/2008 15 1090.64 3.48
NCD 13.05% HONGKONG & SHANGHAI BANKING CORP.LT MATURING
10/08/2009 10 1079.8 3.45
NCD 8.75% CITICORP FINANCE INDIA LTD. MATURING 12/09/2009 100 986.82 3.15
PTC 11.22% STANDARD CHARTERED BANK MATURING 15/05/2014 1000000 736.73 2.35
PTC 0% ICICI BANK LTD MATURING 07/02/2009 20 536.45 1.71
NCD 11.75% CITIBANK N.A. MATURING 31/01/2010 5 530.98 1.69
PTC 11.85% LIC HOUSING FINANCE LTD. MATURING 01/04/2007 25 0.64 *
PTC 11.85% HDFC LTD. MATURING 01/06/2007 20 0.63 *
PTC 10.25% LIC HOUSING FINANCE LTD. MATURING 01/05/2007 7 0.25 *
TOTAL:(b) Unlisted 13096.69
TOTAL:Debt Instruments - 24629.17
Others -
GSEC 7.59% RESERVE BANK OF INDIA MATURING 23/03/2015 150000000 1450.35 4.63
C D KOTAK MAHINDRA BANK LTD. MATURING 21/12/2007 100000000 928.03 2.96
GSEC 7.44% RESERVE BANK OF INDIA MATURING 23/03/2012 85000000 826.64 2.64
TOTAL: 3205.02
NET CURRENT ASSETS 0 2729.61 8.71

C P EXIM BANK MATURING 12/07/2007 80000000 769.08 2.45
TOTAL: 3498.69
TOTAL:Others - 6703.71
TOTAL:UTI-Bond Fund 31332.88
Net Asset Value

Monday, April 03, 2006 20.6422
Monday, May 01, 2006 20.7818
Thursday, June 01, 2006 20.8577
Monday, July 03, 2006 20.8763
LIC Mutual Fund Bond
Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989 and
contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund
was constituted as a Trust in accordance with the provisions of the Indian Trust Act,
1882. The Settlor is not responsible for the management of the Trust. The Settlor is
also not responsible or liable for any loss or shortfall resulting in any of the
schemes of LIC Mutual Fund.
The Trustees of the LIC Mutual Fund have exclusive ownership of Trust Fund and
are vested with general power of superintendence, discretion and management of the
affairs of the Trust. LIC Mutal Fund Asset Management Company Ltd. was formed
on 20th April 1994 in compliance with the Securities and Exchange Board of India
(Mutual Funds) Regulations, 1993. The Company commenced business on 29th April
1994. The Trustees of LIC Mutual Fund have appointed LIC Mutual Fund Asset
Management Company Ltd. as the Investment Managers for LIC Mutual Fund. The
Trustees are responsible for appointing a Custodian. The Trustees should also ensure
that the activities of the Trust and the Asset Management Company are in accordance
with the Trust Deed and the SEBI Mutual Fund Regulations as amended from time to
time. The Trustees have also to report periodically to SEBI on the functioning of the
Fund.
The investors under the schemes can obtain a copy of the Trust Deed, the text of the
concerned Scheme as also a copy of the Annual Report, on a written request made to
the LIC Mutual Fund Asset Management Company Ltd.
Fund
Life Insurance Corporation Mutual Fund Bond is one of the consistent performers in
the income category fund. This is due to high exposure to corporate bonds. In August
2006 it was having 87.4% of its net assets as corporate bonds. It is the only income
fund that
doesn‘t giv e exposure to government security. The average maturity of its portfolio
is 1.3
years. Ten year yield of the fund is nearly 7.6-7.7%. In its portfolio 24.3% holding is
of AA- & AA+ bonds. The annual average return is 7.75% in comparison to the
category average of 7.34%. Last year return of this fund is 4.43%.
Net Assets Value

Monday, April 03, 2006 19.1114
Monday, May 01, 2006 19.2687
Thursday, June 01, 2006 19.3326
Monday, July 03, 2006 19.3877
Portfolio
Debt Instruments - Bonds/Debentures

Listed / Awaiting Listing on Stock Exchanges
I C I C I BANK Banks AAA 1800 1,839.23 17.1
Ferrous
TISCO AAA 1650000 1,794.02 16.67
Metal
s
ACC Cement AA+ 50 515.7 4.79
SUNDARAM FINANCE Finance AA+ 50 500 4.65
FINOLEX INDUSTRIES Chemicals AA- 5 493.58 4.59
Govt
GOVT. Sovereign 500000 491.55 4.57
SECURITIES Securitie
s
RABO INDIA FINANCE Finance P1+ 37 370 3.44
Privately placed / Unlisted
Ferrou
JSW s AA- 2200000 1,209.30 11.24
STEEL
Metals
DSP ML CAPITAL Finance AAA(FSO) 100 1,000.00 9.29
KOTAK MAHINDRA
Finance AA+ 100 1,000.00 9.29
PRIME
Securitised Debt
INDIAN RETAIL ABS Finance AAA(SO) 3 294.86 2.74
TRUST
ASSET SECURITIES Finance AAA(SO) 14 128.95 1.2
TRUST
Total: 9,637.19 89.57
Money Market & Net Receivables/Payables
Cash 'n' Call, Current
1,121.64 10.43
Assets &
Receivables
Total: 1,121.64 10.43
Scheme Total: 10,758.83 100
Graphical Representation of the Portfolio
Net As sets
ICICI
BANK T I S
1.2
10.43 17.1 CO
2.74
A CC
9.29 SUNDARAM FINAN CE
FINOLEX
INDUSTRIES GOVT.
S ECURITIES RABO
16.6
9.29 7 INDIA FINANCE
JSW STE EL
4.7
11.24 9 DSP ML CA PITAL
3.4 4.5 4.5
4.65
4 7 9 KOTAK MAHINDRA
PRIME INDIAN RETAIL
ABS TR UST ASSET
S ECURITIES TRUST
Cash 'n' Call, Current Assets &
Receivables
Different Investing ways in Mutual Fund
There are basically two ways to invest in a Mutual Fund. These are:
- One Time Investment

Systematic Investment Plan (SIP)
Let us discuss each.
One time investment
In this way of investment investor pays the entire investment amount in one time
only. The minimum amount that must be invested in such a way is Rs. 5,000/- only.
An entry load of 2.25% (nearly every fund charges) has to be paid by the investor.
Depending upon the Net Asset Value (NAV) of the fund units are allotted to the
investor. Let us understand it with the help of an example.
Let an investor wants to invest Rs 12,000/- in one time only in Reliance Equity Fund.
At the date of investment let the NAV of the fund be Rs 12/- per unit. Than the
number of units that the investor will get is as follows: -
Total Investment Rs 12,000/-

NAV Rs 12/-
Entry Load 2.25%
Effective NAV that investor will get [Present Day NAV + 2.25% (Present Day
NAV)]
i.e. 12 + (2.25*12)/100 = Rs 12.27/-
Units actually purchased by investor = Rs 12,000 / Rs 12.27 = 978
Units.
This way of investment is recommended for those investors who are sensitive
because "emotions" may make the investor susceptible to "mistakes in timings of his
purchases and sales". However with this way of investment the investor might loose
future opportunities as available in SIP due to fluctuations in Sensex.
Systematic Investment Plan (SIP)
SIP is a method of investing a fixed sum, regularly, in a mutual fund. It is very similar
to regular saving schemes like a recurring deposit.
An SIP allows you to buy units on a given date each month, so that you can implement
an investment / saving plan for yourself. Once you have decided on the amount you
want to invest every month and the mutual fund scheme in which you want to invest,
you can either give post-dated cheques or ECS instruction, and the investment will
be made regularly. SIPs generally start at minimum amounts of Rs 500 per month and
the upper limit for using an ECS is Rs 25000 per instruction. Therefore, if you wish
to invest Rs
100,000 per month, you may need to do it on 4 different
dates.
In this way of investment investor pays the entire investment amount over a time
period generally 1 year. The minimum amount that must be invested in such a way is Rs.
6,000/- only i.e. Rs 500/- a month at least continuously for one year. An investor can
invest any amount in multiple of 5. Entry load of 2.25% (nearly every fund charges)
has to be paid by the investor every month. Depending upon the Net Asset Value
(NAV) of the fund units are allotted to the investor. Let us understand it with the help of
an example.
st
Let an investor wants to invest Rs 12,000/- in SIP in Reliance Equity Fund on 1
January,
2004. At the date of investment let the NAV of the fund be Rs 12/- per unit. Than
the number of units that the investor will get is as follows: -
Total Investment Rs 12,000/-

st
Investment on 1 January (Monday) 2004 Rs
1,000/- (Total Investment / Number of months)
NAV Rs 12/-
Entry Load 2.25%
Effective NAV that investor will get [Present Day NAV + 2.25% (Present Day NAV)]
i.e. 12 + (2.25*12)/100 = Rs 12.27/-
Units actually purchased by investor = Rs 1,000 / Rs 12.27 = 81.50 Units.
st
Now let NAV on 1 February (Wednesday) be Rs 12.50
Entry Load 2.25%
Effective NAV that investor will get [Present Day NAV + 2.25% (Present Day NAV)]
i.e. 12.50 + (2.25*12.50)/100 = Rs 12.78/-
Units actually purchased by investor = Rs 1,000 / Rs 12.78 = 78.24 Units.
So in the month of February the total units holded by the investor are 81.50 + 78.24 =
159.74 units.
In the same way investor will invest Rs 1000/- every month continuously for next 10
months. Depending upon the NAV every month investor will get units after deducting
the entry load.
The main advantage in SIP is that if Sensex is down on the day of investment than
previous day investor will get more units as NAV will also fall generally. The
investor can invest using SIP every month, quarterly, half yearly.
It is to be noted that Investor can do additional purchase any t ime both in One
time investment as well as SIP.
Value Averaging as an Investment way
An investment strategy designed to reduce volatility in which securities, typically mutual

funds, are purchased at regular intervals in amounts which increase when the market
drops and decrease when the market rises
Instead of simply adding X-amount into your portfolio every month (week, semester,
year...) you decide in the beginning, how much your portfolio shall be worth any
given time. (I.e. you start with a sum X to start with, and you decide to increase your
portfolio by a certain sum per month.)
The value of your portfolio will of course fluctuate according the movements of the
markets, and thus will you have to put in more money every month, when the
markets drop (to keep up with your projected growth) or less when the markets rise.
There might even be times when you will have to withdraw moneys when markets
make a big jump up.
This all seems logic in an academic sense, as it really forces you to buy low, and sell
high. This investment way is not practiced till time.
But there are certain drawbacks:

The administration of such a portfolio amounts to a fair-sized Excel sheet,
and needs careful attention at regular intervals.
One will have to make a calculation of how much a portfolio will have to
grow every month. Something that is filled with rough guesswork at best of
times. Of course can you say: I will need X amount when I'm 45 in order to
retire early, and then work out how much you have to save every month. But
even this number can be nothing short of arbitrary, as there are factors like:
Inflation, live expectation, change of lifestyle, health, development of social
security...
Many people in their accumulation phase would be hard put to suddenly even
out ones portfolio after a 20% market decline. As John Mayard said: Markets
can
remain irrational longer than you can remain solvent.
Comparison of returns from a fund in same time period using different

investment ways
Assumptions
st nd
1 There is no withdrawals from the selected funds from 1 February, 2006 to 2
January,
2007 by the investor.
2 Units are issued to the investor as soon as he made the investment.
Fund:
- RELIANCE GROWTH FUND
Investment Way Lump sum.

Total Investment = Rs 12,000/-
NAV as on Feb 1, 2006 = Rs 201.18
Entry load @ 2.25% (NAV of the day) = Rs 4.53
Effective NAV = 201.18 + 4.53 = Rs 205.70
Units Got = 12,000 / 205.70 = 58.33
NAV as on Jan 2, 2007 = Rs 270.05
Units Value = 58.33 * 270.05 = 15752
1 year return = [(15752-12000)*100]/ 12000 = 31.27%.
Average Price =
Total of NAV‘s in which investment is mad e / number of times investment mad e =
201.18 / 1 = Rs 201.18/-
Average Cost = Total Investment / Units Purchased = 12000 / 58.33 = Rs 205.70/-
Investment Way SIP

Date NAV Investment Load@2.25% Units
February 01, 2006 201.18 Rs 1000 Rs 22.5 4.86
March 01, 2006 210.22 Rs 1000 Rs 22.5 4.65
April 03, 2006 229.75 Rs 1000 Rs 22.5 4.25
May 01, 2006 251.68 Rs 1000 Rs 22.5 3.88
June 01, 2006 215.11 Rs 1000 Rs 22.5 4.54
July 03, 2006 199.51 Rs 1000 Rs 22.5 4.90
August 01, 2006 193.2 Rs 1000 Rs 22.5 5.06
September 01, 2006 218.12 Rs 1000 Rs 22.5 4.5
October 03, 2006 234.47 Rs 1000 Rs 22.5 4.17
November 01, 2006 250.23 Rs 1000 Rs 22.5 3.90
December 01, 2006 261.78 Rs 1000 Rs 22.5 3.73
January 02, 2007 270.05 Rs 1000 Rs 22.5 3.62
Total 2735.3 Rs 12,000 52.06
Calculations
Investment per month = Rs 1,000/-

Load @ 2.25% on Rs 1,000/- = Rs 22.5/-
Effective value at which unit will be purchased = Rs
st
977.5/- NAV on 1 Feb, 2006 = Rs 201.18/-
Units Purchased = 4.86
In the same way units purchased for the next 11 months has been
nd
calculated. On 2 Jan, 2007
Total Units Purchased = 52.06

NAV = Rs 270.05/-
Investment Value = 52.06 * 270.05 = Rs 14,059/-
Return = [(14059 – 12000)* 100]/12000 = 17.15%.
Average Price = 2735.3 / 12 = Rs 227.94/-
Average Cost = 120000 / 52.06 = Rs 230.5/-
Investment Way Value Averaging
st
Here our objective is that in 1 month the value of our investment should be Rs
nd th
1,000/- and in 2 month it should be Rs 2,000/-. Similarly in the beginning of 12
month it should be Rs 12,000/-.
Calculations
Investment per month = Rs 1,000/-

Load @ 2.25% on Feb 01, 2006 on NAV Rs 201.18 = Rs 4.53/-
Effective value at which unit will be purchased = Rs 205.71/-
Units Purchased = 4.86.
Now
On March 01, 2006
NAV = Rs 210.22/-
Units Holded = 4.86
Current Value = NAV* Total Units Holded = 210.22 * 4.86 = Rs 1021/-
Since we are in second month of investment so as per the rules we want our investment
to be of value Rs 2,000/-.
Thus Investment Required = Rs 2,000- Rs 1,021 = Rs
979/- Now
Load @ 2.25% on March 01, 2006 on NAV Rs 210.22 = Rs 4.73/-
Effective value at which unit will be purchased = Rs 214.95/-
Units Purchased = 979 / 214.95 = 4.55
nd
So Total Units Holded in 2 Month = 4.86 + 4.55 = 9.41.
In the same way we will calculate the investment require to be made in next ten
months. It is being assumed that Entry Load will be charged every month like in case of
SIP.
Returns
Value of the investment as on January 02, 2007 = 44.38 * 270.05 = Rs

11,985/- Total Investment Made = Rs 9914/-
One year return = [(11985-9914)* 100]/9914 = 20.88%.
Average Price = 2735.3 / 12 = Rs 227.94/-
Average Cost = 9914 / 44.38 = Rs 223.38/-
Date NAV Current Load Investment Units

(Rs) Value (2.25%) Made Got
(Rs) + (Rs)
NA
V
February 01, 2006 201.18 -------- (Rs)
205.71 1000 4.86
March 01, 2006 210.22 1021 214.95 979 4.55
April 03, 2006 229.75 2162 234.9 838 3.57
May 01, 2006 251.68 3267 257.34 733 2.85
June 01, 2006 215.11 3405 219.95 1595 7.25
July 03, 2006 199.51 4605 204 1395 6.84
August 01, 2006 193.2 5780 197.55 1220 6.17
September 01, 2006 218.12 7872 223 128 0.57
October 03, 2006 234.47 8596 240 404 1.68
November 01, 2006 250.23 9594 255.86 406 1.58
December 01, 2006 261.78 10450 267.67 550 2.05
January 02, 2007 270.05 11334 276.12 666 2.41
Total 2735.3 9914 44.38
Kotak Mahindra
Investment Way Lump sum.

Total Investment = Rs 12,000/-
NAV as on Feb 1, 2006 = Rs 18.2249
Entry load @ 2.25% (NAV of the day) = Rs .4096
Effective NAV = Rs 18.6345
Units Got = 12,000 / 18.6345 = 643.96
NAV as on Jan 2, 2007 = Rs 19.501
Units Value = 12558
1 year return = [(12558-12000)*100]/ 12000 = 4.65%.
Average Price =
Total of NAV‘s in which investment is mad e / number of times investment mad e =
18.2249 / 1 = Rs 18.2249/-
Average Cost = Total Investment / Units Purchased = 12000 / 643.96 = Rs 18.6345/-
Investment Way SIP

Date NAV Investment Load@2.25% Units
February 01, 2006 18.2249 Rs 1000 Rs 22.5 53.63
March 01, 2006 18.2803 Rs 1000 Rs 22.5 53.47
April 03, 2006 18.3392 Rs 1000 Rs 22.5 53.30
May 01, 2006 18.4542 Rs 1000 Rs 22.5 52.97
June 01, 2006 18.5166 Rs 1000 Rs 22.5 52.79
July 03, 2006 18.6115 Rs 1000 Rs 22.5 52.52
August 01, 2006 18.704 Rs 1000 Rs 22.5 52.26
September 01, 2006 18.9008 Rs 1000 Rs 22.5 51.71
October 03, 2006 19.0739 Rs 1000 Rs 22.5 51.24
November 01, 2006 19.1858 Rs 1000 Rs 22.5 50.94
December 01, 2006 19.3916 Rs 1000 Rs 22.5 50.40
January 02, 2007 19.501 Rs 1000 Rs 22.5 50.12
Total 225.1838 625.35
Using the same way and method as used in calculation of return of Reliance using SIP
we will find that
One year return = 1.625%
Average Price = Rs 18.7653
Average Cost = Rs 19.1892
Investment Way Value Averaging

Date NAV Current Load Investment Units
(Rs) Value (2.25%) Made Got
(Rs) + (Rs)
NA
V
February 01, 2006 18.2249 --------- (Rs)
18.6345 1000 53.63
March 01, 2006 18.2803 980 18.6916 1020 54.57
April 03, 2006 18.3392 1984 18.7518 1016 54.18
May 01, 2006 18.4542 2996 18.8694 1004 53.20
June 01, 2006 18.5166 3990 18.9332 1010 53.34
July 03, 2006 18.6115 5004 19.0302 996 52.33
August 01, 2006 18.704 6007 19.1248 993 51.92
September 01, 2006 18.9008 7052 19.326 948 49.05
October 03, 2006 19.0739 8052 19.503 948 48.60
November 01, 2006 19.1858 9032 19.6175 968 49.34
December 01, 2006 19.3916 10086 19.828 914 46.10
January 02, 2007 19.501 11041 19.9398 959 48.09
Total 225.1838 11776 614.29
Using the same way and method as used in calculation of return of Reliance using Value
Averaging we will find that
One year return = 1.73%
Average Price = Rs 18.7653
Average Cost = Rs 19.17
FINDINGS
Like a traveler, who after completing his long and arduous journey reaches
his destination and looks back upon the area covered by him for recalling the
important landmarks and experiences he came across; similarly, it would be
desirable to review the various aspects of the present study. So prior to winding up
this study, an attempt is made to summarize its major findings and suggestions on the
basis of forgoing chapters.
Findings: -
1. All the Equity related funds invested in high growth, current high importance
sectors
Like Energy, Infrastructure, IT, Telecom, Oil, Auto
etc.
2. To maintain liquidity all the mutual funds have cash holdings of nearly 10% out of
there total assets. Maintaining cash also enables them to invest in any
lucrative instrument as it comes.
3. NAV of all the equity related funds fell down in June, July, and August 2006 due
to
Fall in the Sensex. However those funds which invested in safer instruments like
Bonds, Government Securities there NAV were not much affected.
4. The main reasons for Sensex fall were found to

be:
The interest rate hike in the US by the Federal Reserve Bank.

BSE Metal Index lost 22 per cent. This putted lot of impact as infrastructure
development is in Boom in INDIA.
Some people viewed that Sensex growth was valuated higher.
Markets in US and Japan were attracting liquidity and inflation scare was also
there, so a lot of emerging markets pulled back.
Industry feared more tax brackets.
Many reports were issued which criticized the growth shown by Sensex. It
was speculated by experts that Sensex may touch 9000 mark.
FII‘s were net sellers in emerging markets to book profits.
The rise in the level of margin trading was very high.

International Crude Oil Prices were rising.
5. The one year equity related funds is higher than other funds. It proves the principal
of high risk, high return.
6. DSP Merrill Lynch Mutual Fund gave one year return of 36.4%. Total number of
instruments in its portfolio is 77. However HDFC Mutual Fund gave one year return
of nearly 34%, with number of instruments in its portfolio close to 6 0 . So it‘s
important
what instrument we include in portfolio rather than the number of securities.
More
number of securities only complexes the portfolio
management.
7. As the NAV increases, the number of units which an investor gets decreases and
vice- versa.
8. Average Price which a investor has to pay to invest in a mutual fund was found to
be less in one time investment than opting for SIP or Value Averaging (if available).
9. Average Price which an investor has to pay to invest in a mutual fund was found to
be equal in SIP and Value Averaging.
10. Average Cost associated with a mutual fund was found to be least in one time
investment than Value Averaging, whose average cost was further less than
that associated with SIP.
11. Average Price, Average Cost in one time investment was found to be less
in comparison to other investing ways. This is one of the reasons why its one year
returns are more.
12. To practically implement value averaging the minimum amount condition like in
SIP has to be eliminated. As we have seen in the calculations at one time investor
was investing Rs. 1596/- and at other Rs 158/- only.
13. One year return in One time investment was found to be more than in
Value
Averaging investment way, which was further high than one year return using
SIP.
14. Growth fund option gives investors good returns as well as capital appreciation.
Suggestions
1. Best time to invest in stock market is when it is down because with same
investment money he will get more value.
2. Mutual Fund is the best way to enter into market particularly for those investors
who want good returns with minimum risk as fund of mutual funds is handled by an
expert.
3. To get good returns investor must invest considering the time horizon of at least two
to three years. This will help him in getting good returns.
4. Portfolio management is a difficult task. So fund managers must choose

optimal number of securities which meets the objectives of fund.
5. Mutual Fund Companies must devise fund considering the end investor in mind.
6. Individual investors must also choose a basket of securities instead of making

investment in only one or two instruments, so that even if one instruments return
is negative other instruments return can compensate that.
7. Since there are large number of mutual funds in which an investor can invest, so
he must choose the fund in which investment is to be made by clearly understanding
the little aspects associated with it.
8. Those investors who are risk averse must invest in open ended funds because he
can look at the past performance of the fund under consideration.
9. Diversification of portfolio is must as it will reduce the unsystematic risk and give
the return an edge.
Limitations
The researcher was inexperienced.
The scope of the study was very wide as there are hundreds of mutual funds
of different types but only few have been studied.
The portfolio published by the various Asset Management Companies might

not be the real one. As, if it would be so than any individual can invest in the
manner similar to portfolio of funds.
The objective of including a particular sector in the portfolio by the fund

manager
couldn‘t be known.
The portfolio being maintained by different funds changes with
market conditions. The portfolio being actually maintained under different
market
conditions in last one ye ar couldn‘t be ascertained .
To develop a new way of investment lot of calculations needs to be done, but

here only few has been done.
The actual hurdles in making value averaging as an investment way in portfolio

couldn‘t be found .
Conclusion
Thus on the whole it can be concluded that there is
no conclusive evidence which suggest that performance of mutual fund scheme
portfolio is superior to others. But it is for sure performance of the most of the funds in
better.
Each investment alternative has its own strengths and weaknesses. Equity related
funds give more returns, but the risk associated is also very high. It would be clearer
from the fact that when Sensex was down in the middle of 2006, the NAV of all the
equity related funds fell down. On the other hand investing in safer instruments like
Bank Deposits,
Government Bonds….gives in vesto r the assured return with ne arly no risk.
Bu t the
returns are very less in comparison to other instruments. So if an investor wants to
get good returns with minimum risk he must invest in basket of securities. Selecting a
fund is not an easy task. So he must do his homework very clearly. While choosing the
fund it is also very necessary that he chose funds investing in different sectors. Mutual
Funds are
probab ly the best in vestment tool for those persons who don‘t know the basics of
Stock
Market but wish to invest in it. As mutual fund investments are taken, care by expert
fund managers so chances of making a loss in the investment are very less.
Right now practical application of investing in mutual fund by using Value Averaging
appears to be difficult. But if it is applied than by investing a small amount an
investor will be able to get good returns in comparison to SIP. A lot of research has
to be done onto it. In last we can conclude that those investors who wish to get good
returns with minimum risk they must invest in mutual funds. But while investing they
must consider there investment objectives, expected returns, risk taking capability.
Depending upon these they must choose the instrument in which they should invest.
Further they should insure that they make investment in basket of instruments as
this will give those advantages of various sectors, at the same time minimize the risk.
BIBLIOGRAPHY
Websites
www.reliancemutual.com
www.sbimf.com
www.franklintempletonindia.com
www.hdfcfund.com
www.dspmlmutualfund.com
www.kotakmutual.com
www.jmmutual.com
www.licmutual.com
www.utimf.com
www.valueresearchindia.com
www.amfiindia.com
www.mutualfundindia.co
Book
s
Verma, Dr J.C., ―Mutual Funds & Investment Portfolio‖, Bharat Pu b lications,
nd
2
Edition.
Pandia
n,
Punith
avathy,
―Securi
ty
Analys
is and
Portfol
io
Manag
ement‖
,
Vikas
Publica
tions,
nd
2
Reprin
t.
Kothar
i,
C.R.,
―Rese
arch
Metho
dolo gy
‖, New
Age
Interna
tional
Pub lish
ers,
2005.

Thesis - Portfolio Management

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Introduction to Portfolio Management

Investing in securities such as shares, debentures, and bonds is profitable as well as

An investor considering investment in securities is faced with the problem of

As the risk return characteristics of individual securities as well as portfolios also

It is evident that rational investment activity involves creation of an investment

Objectives and asset mix

Growth of income and asset mix

Capital appreciation and Asset Mix

Safety of principle and asset mix

The traditional approach of portfolio building has some basic assumptions. An

Portfolio management is essentially a systematic method of maintainin g one‘s

According to J.C. Francis the development of investment management can be traced

In early 90‘s India embarked on a program of e conom ic liberalization and

Another significant development in the field of investment management is

Investment is no longer a simple process. It requires a scientific knowledge, a

So portfolio management objectives can be stated as:

The flow chart below describes broadly the working of a mutual

A mutual fund may be either an open-end or a closed-end fund. An open-end mutual

The concept of mutual fund originated in Belgium by the ―Society Generale

The performance of a particular scheme of a mutual fund is denoted by Net Asset

4) Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation of

Third Phase – 1993-2003 (Entry of Private Sector

Fourth Phase – since February

GROWTH IN ASSETS UNDER MANAGEMENT

Equity Debt (Rs

Equity (Rs in crores) Debt (Rs in crores)

The announcement of MAT of 11.3 % on IT companies was misinterpreted by the

ADVANTAGES AND DISADVANTAGES OF MUTUAL FUND

Mutual Funds invest in a number of companies across a broad cross-section of

Investors individually may lack sufficient funds to invest in high-grade stocks. A

 Costs Despite Negative Returns

Step One - Identify your Investment

Step Two - Choose the right Mutual

Step Three - Select the ideal mix of

Step Four - Invest

Step Five- Start

Step Six - The final

RIGHTS OF A MUTUAL FUND UNIT HOLDER

A unit holder in a Mutual Fund scheme governed by the SEBI (Mutual

1) Receive unit certificates or statements of accounts confirming the title within 6

2) Receive information about the investment policies, investment

4) Vote in accordance with the Regulations to:-

 Approve or disapprove any change in the fundamental investment policies of

 Wind up the schemes.

CRITICISM OF MUTUAL FUNDS

short- Bills, CDs,

term) Short- term

FREQUENTLY USED TERMS

Net Asset Value (NAV)

common parlance, it refers to a scientific and systematic search for pertinent

observation, comparison and experiment.

by the researcher during the course of studying his research problem.

Research methodology is a way to solve the problem scientifically and

 To compare performance of different mutual funds in last 1 year.

 To compare the return of a mutual fund using different investment ways.

 To develop a new investment way in mutual funds.

 To understand the concept and importance of Mutual Fund & Portfolio

Management in today‘s scenario.

in procedure. The research design used in my study is basically exploratory in nature.

METHOD OF DATA COLLECTION: -

The study made in use secondary sources.