CONTENTS

SLNO PARTICULARS PAGE NO

1INTRODUCTION 1

2INDUSTRY PROFILE 4

3COMPANY PROFILE 18

4PRODUCT PROFILE 34

5RESEARCH DESIGN 43

6THEORITICAL BACKGROUND 49

7DATA ANALYSIS AND INTERPRETATION 56

8FINDINGS,SUGGESTIONS &CONCLUSIONS 66

9BIBLIOGRAPHY 70

LIST OF TABLES

Table no Particulars Page no

1 Growth in assets 9

2 Reliance equity products 40

3 Kotak equity products 41

4 Tata equity products 42

5 Reliance equity fund analysis 57

6 Kotak equity fund analysis 58

7 Tata equity fund analysis 59

8 NAV of Reliance 60

9 NAV of Kotak 61

10 NAV of Tata 62

11 Grades of risks and returns 64

12 Company’s position 64

13 Returns with BSE 65

LIST OF CHARTS

Chart no Particulars Page no

1 Growth in assets 9

2 NAV graph 63

3 Returns of companies 63

4 Risks of companies 63

Chapter -1

Chapter-1

INTRODUCTION Mutual Funds - The Concept

A mutual fund is a trust that pools the savings of number of investors who share a

common financial goal. The money thus collected is then invested in capital market

instruments such as shares, debentures and other securities. The income earned

through these investments and the capital appreciations realized are shared by its

unit holders on 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 basket of securities at a relatively

low cost. The flow chart below describes broadly the working of a mutual fund:

The following simple diagram shows the working of mutual fund:

Advantages of Mutual Funds: Professional Management

Diversification

Convenient Administration

Return Potential

Low Costs

Liquidity

Transparency

Flexibility

Choice of schemes

Tax benefits

Well regulated

Disadvantages of Mutual Funds:

No control over the costs

No tailor made portfolios

CHAPTER-2

Chapter-2INDUSTRY PROFILE

The emergence of the concept of mutual funds dates back to the very

emergence commercial activity in this world. When Egyptians and Phoenicians

started carrying the cargo on sea, they were exposed to greater risk. There was no

insurance concept at that time. In order to minimize the risk of carrying the cargo

during rough weather and to minimize pirates on sea, they were selling their shares in

vessels and caravans. But actual mutual fund was started by Foreign and colonial

government trust of London in 1868. This was followed by the promotion of number

of closed-end mutual funds in the USA. In 1930s, it spread to Europe, Far East and

Latin American countries. Both open-end and closed-end mutual funds were popular

in these countries.

Mutual fund with respect to India:

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 history of mutual

funds in India can be broadly divided into four distinct phases.

First Phase – 1964-1987:

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. 6700 crores of assets

under management (AUM).

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 1987 followed by Canbank mutual fund (Dec. 87), Punjab national

bank mutual fund (Aug. 89), LIC established its mutual fund in June 1989 while GIC

had set up its mutual funds 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.

In 1995, the RBI permitted private sector institutions to set up money market

mutual funds (MMMFs). They can invest in treasury bills, call and notice money,

commercial paper, commercial bills accepted/co-accepted by banks, certificates or

deposit and dated government securities having unexpired maturity upto one year.

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) regulation 1996.

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 funds.

The diagram below shows the three segments and some players in each segment:

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 the 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 second is the UTI mutual fund ltd., sponsored by SBI, PNB, BOB

and LIC. It is registered with the SEBI and functions under the mutual fund

regulations. As at the end of September, 2004, there were 29 funds, which manage

assets of Rs. 1, 53, 108 crores under 421 schemes.

On 31st march 2006, India’s MF assets stood at Rs. 2, 31,862 crores.

The following are the major events in Indian mutual fund industry:-

1963 - UTI is India’s first mutual fund.

1964 - UTI launches US-64.

1971 - ULIP (unit linked insurance plan) is second scheme was launched.

1986 - UTI master share, India’s first true mutual fund scheme launched.

1987 - PSU banks and insurers allowed to float mutual fund; State Bank of India

[SBI] first of the blocks.

1992 - The Harshad Mehta fuelled bull market arouses middle class interest in shares

and mutual funds.

1993 - Private sector and foreign players allowed, Kothari Pioneer first private fund

house to start operations SEBI set up to regulate industry.

1994 - Morgan Stanley is the first foreign layer.

1996 - SEBI’s mutual fund rules and regulations which form the basis of most current

laws came in to force.

1998 - Master index fund is the country’s first index fund.

1999 - The take over of 20th century AMC by the Zurich mutual fund is the first

acquisition in the mutual fund industry.

2000 - The industry’s assets under management crosses Rs. 1, 00, 000 crores.

2001 - US-64 scam lends to UTI overhaul.

2002 - UTI bifurcated comes under SEBI’s purview.

2003- AMFI certification made compulsory fro new agents, fund of funds launched.

The following graph shows the amount invested in Mutual Fund Industry And The graph indicates the

growth of assets over the years.

1.A GROWTH IN ASSETS UNDER MANAGEMENT

Association of Mutual Funds in India (AMFI)

With the increase in Mutual Fund players in India, a need for Mutual Fund Association

in India was generated to function as a non-profit organization. Association of Mutual

Funds in India (AMFI) was incorporated on 22nd August, 1995.

AMFI is an apex body of all Asset Management Companies (AMC) which has

been registered with Securities Exchange Board of India (SEBI). Till date all the AMCs

are that have launched mutual fund schemes are its members. It functions under the

supervision and Guidelines. Association of Mutual Funds India has brought down the

Indian Mutual Fund Industry to a professional and healthy market with ethical lines

enhancing and maintaining standards. It follows the principle of both protecting and

promoting the interests of mutual funds as well as their unit holders.

The objectives of Association of Mutual Funds in India

The Association of Mutual Funds of India works with 30 registered AMCs of the country.

This Mutual Fund Association of India maintains high professional and ethical

standards in all areas of operation of the industry.

It also recommends and promotes the top class business practices and code of

conduct.

AMFI interacts with SEBI and works according to SEBIs guidelines in the Mutual

Fund industry.

Represent the Government of India, the Reserve Bank of India and other related

bodies on matters relating to the Mutual Fund Industry.

It develops a team of well qualified and trained Agent distributors.

It implements a programme of training and certification for all intermediaries and

other engaged in the mutual fund industry.

AMFI undertakes all India awareness programme for investors in order to promote

proper understanding of the concept and working of Mutual Funds.

At last but not the least Association of Mutual Fund of India also disseminate

information on Mutual Fund Industry and undertakes studies and research either directly or

in association with other bodies

The sponsors of Association of Mutual Funds in India

Bank Sponsored

SBI Fund Management Ltd.

BOB Asset Management Co. Ltd.

Canbank Investment Management Services Ltd.

UTI Asset Management Company Pvt. Ltd. Institutions

GIC Asset Management Co. Ltd.

Jeevan Bima Sahayog Asset Management Co. Ltd.

Private Sector

Indian:-

Benchmark Asset Management Co. Pvt. Ltd.

Cholamandalam Asset Management Co. Ltd.

Credit Capital Asset Management Co. Ltd.

Escorts Asset Management Ltd.

JM Financial Mutual Fund

Kotak Mahindra Asset Management Co. Ltd.

Reliance Capital Asset Management Ltd.

Sahara Asset Management Co. Pvt. Ltd

Sundaram Asset Management Company Ltd.

Tata Asset Management Private Ltd.

Predominantly India Joint Ventures:-

Birla Sun Life Asset Management Co. Ltd.

DSP Merrill Lynch Fund Managers Limited

HDFC Asset Management Company Ltd.

Predominantly Foreign Joint Ventures:- ABN AMRO Asset Management (I) Ltd.

Alliance Capital Asset Management (India) Pvt. Ltd.

Deutsche Asset Management (India) Pvt. Ltd.

Fidelity Fund Management Private Limited

Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.

HSBC Asset Management (India) Private Ltd.

ING Investment Management (India) Pvt. Ltd.

Morgan Stanley Investment Management Pvt. Ltd.

Principal Asset Management Co. Pvt. Ltd.

Prudential ICICI Asset Management Co. Ltd.

Standard Chartered Asset Mgmt Co. Pvt. Ltd.

Association of Mutual Funds in India Publications:

AMFI publishes mainly two types of bulletin. One is on the monthly basis and the other

is quarterly. These publications are of great support for the investors to get intimation of

the know how of their parked money.

SEBI REGULATIONS ON MUTUAL FUNDS

The Government brought Mutual Funds in the Securities market under the regulatory

framework of the Securities and Exchange board of India (SEBI) in the year 1993.

Future of Mutual Funds in India

At the end of 2005 July, Indian mutual fund industry reached Rs. 1, 75, 918 crores. It is

estimated that by 2010 March-end, the total assets of all scheduled commercial banks

should be Rs. 40, 90, 000 crores.

The annual composite rate of growth is expected 13.4% during the rest of the decade. In

the last 5 years we have seen annual growth rate of 9%. According to the current growth

rate, by year 2010, mutual fund assets will be double.

Going by the above facts and generally, mutual funds have often been considered a good

route to invest and earn returns with reasonable safety. Small and big investors have both

invested in instruments that have suited their needs. And so equity and debt funds have

attracted investments alike. The performance of the investments, equity in particular, for

the last one-year, has however been disappointing for the investors.

The fall in NAVs of equity funds, and it is really steep in some, even to the extent of 60-70

percent, has left investors disgusted. Such backlash was only to be expected when funds, in

a hurry to post good returns invested in volatile tech stocks. The move, though good under

conducive market conditions, is the point of rebuttal now. Owing to volatility in market

and profit warnings by some IT majors, tech stocks have been on the downhill journey and

the result is fall in NAVs of most equity funds.

This hurts the investor but then investments in equity are never safe. Mutual funds are not

just guilty of mismanaging their risks as the recent survey by Pricewaterhouse Coopers

indicates but also not educating their investors enough on the risks facing them. It is for the

Mutual benefit of the investors as well as mutual funds that investor is educated enough or

else an agitated investor might route his investments to other avenues that are considered

safe.

Debt funds are safe investments and generate returns far in excess of what other so-

called safe avenues such as banks generate. Despite this, the inflow of funds in debt funds

and banks is by no means comparable. The factor contributing to this the lack of

understanding caused by improper guidance by the intermediaries.

Till now, Investor education has been one of the issues, less cared for, by the industry.

The industry focused upon the amounts and not why a person wanted to invest or whether

a particular product suited him or not. While educating the customer might not have been

on the cards earlier, the things are beginning to change now.

With SEBI passing on the guidelines, the funds will engage in investor education.

The guidelines state that funds will utilize the income earned on unclaimed money lying

with them for a period exceeding three years to educate the investors. AMFI has started a

certification program for intermediaries. This will be made mandatory for the

intermediaries and is aimed at educating the investors about the risks attached to the

schemes

Till now, investors have been ignorant about the kind of fund to be picked or how to

select a fund. Teaching an investor how to select a fund is thus an important aspect.

Educated investors can, on their part, ask pertinent questions to find funds that qualify to

be in their portfolio as per their risk bearing capacity.

It would not be improper to say that investor education is still the key to managing

the funds handed over by investors. The investors are important to the industry and

likewise, mutual funds form an important avenue for an investor. It would thus be of

critical importance to educate people for an informed investor is in the best position to pick

up Schemes as per his need. This would also infuse some confidence in the minds of the

investors who under the current scenario seem to be losing faith on account of the falls

suffered in recent times.

An educated and informed intermediary stands the best chance of understanding the

needs of the client and also of winning his confidence through proper guidance. As it is,

investor education will remain a key issue for mutual funds in the longer run and educating

the intermediaries will be the first step towards it.

ORGANIZATION CHART

CHAIRMAN

CHAPTER - 3

NON EXECUTIVE CHAIRMAN

CHIEF EXECUTIVEOFFICER

PRESIDENT DEPT., OF HRD

CHIEF FINANCIAL OFFICER

CHIEFMARKETING OFFICER

CHIEF INVESTMENT OFFICER

Chapter- 3 COMPANY PROFILE

ANANDRATHI:

AnandRathi (AR) is a leading full service securities firm providing the entire

gamut of financial services.

The firm was founded in 1994 by Mr. AnandRathi, today has a pan India

presence as well as an international presence through offices in Dubai and Bangkok.

AR provides a breadth of financial and advisory services including wealth

management, investment banking, corporate advisory, brokerage and distribution of

equities, commodities, mutual funds and insurance, structured products-all of which

are supported by powerful research teams.

The firm’s philosophy is entirely client centric, with a clear focus on providing

long term value additions to clients, while maintaining the highest standards of

excellence, ethics and professionalism. The entire firm activities are divided across

distinct client groups: Individuals, Private Clients, Corporates and Institutions and was

recently Ranked by Asia Money 2006 poll amongst South Asia's top 5 wealth managers for

the ultra-rich.

In year 2007 Citigroup Venture Capital International joined the group as financial partner.

MILESTONES:

1994:

Started activities in consulting and Institutional equity sales with staff of 15.

1995:

Set up a research desk and empanelled with major institutional investors.

1997:

Retail brokerage services launched.

1999:

Lead managed first IPO and executed first M & A deal.

2001:

Initiated Wealth Management Services.

2002:

Retail business expansion recommences with ownership model.

2003:

Wealth Management assets cross Rs1500 crores

2004:

Commodities brokerage and real estate services introduced.

Wealth Management assets cross Rs3000crores

Retail Branch network expands across 100 locations within India.

2004:

Commodities brokerage and real estate services introduced.

Wealth Management assets cross Rs3000crores

Retail Branch network expands across 100 locations within India.

2005:

Real Estate Private Equity Fund Launched.

Retail Branch network expands across 200 locations within India.

2006:

AR Middle East, WOS acquires membership of Dubai Gold &

Commodityexchange.

Ranked amongst South Asia's top 5 wealth managers for the ultra-rich.

Ranked 6th in FY2006 for All India Broker Performance in equity distribution

in the High Net worth Individuals (HNI).

Ranked 9th in the Retail Category having more than 5% market share.

Completes its presence in all States across the country with offices at 300+

locations within India.

2007:

Citigroup Venture Capital International picks up 19.9% equity stake.

Establishes presence in over 350 locations.

AnandRathi Mutual Funds:

AnandRathi is one of India's top mutual fund distribution houses. Its success lies in its

philosophy of providing consistently superior, independent and unbiased advice to its

clients backed by in-depth research. They firmly believe in the importance of selecting

appropriate asset allocations based on the client's risk profile. They have a dedicated

mutual fund research cell for mutual funds that consistently churns out superior investment

ideas, picking best performing funds across asset classes and providing insights into

performances of selected funds.

Products: Clients:

-Equities. -Institutional clients including most leading mutual fund co’s, -Derivatives. -Banks and insurance companies.-Commodities, IPO’s -Individuals, families and corporate across India.-Mutual funds. -Non resident Indians.-Life and non-life insurance.-Depository services.-Bonds.-Value-added services.

Latest news and events:

Anand Rathi financial services appoint Mr. Ratnesh Kumar as CEO, Institutional

Equities-Feb 07, 2008.

Mr. Nayan Sooda joins Anand Rathi Securities as director, wealth management,

Delhi-Feb 07, 2008.

Anand Rathi Securities Ltd promotes Mr. Manoj Shenoy as Executive Director-

Sep 16, 2007.

Mr. A.V. Srikanth joins Anand Rathi securities as director, wealth management,

Mumbai-sep 16, 2007.

Rakesh rawal head private wealth management- Deutsche bank, Bangalore joins

Anand rathi- Apr 03, 2007.

Citigroup venture capital international is picking up 19.9% stake in Anand Rathi

Securities Ltd. – Mar 23, 2007

Anand Rathi launches Chandigarh Office-Oct 09, 2006.

Anand rathi launches Chandigarh office- Oct 09, 2006

Anand Rathi cores and strengths:

In line with its client-centric philosophy, the firm offers to its clients the entire

spectrum of financial services.

Ranging from brokerage services in equities and commodities, distribution of mutual

funds, IPO’s and

Insurance products, real estate, investment banking, merger and acquisitions,

corporate finance and corporate advisory.

Clients deal with a relationship manager who leverages and brings together the

product specialists from across the firm to create an optimum solution to the client

needs.

ManagementTeam:

AR brings together a highly professional core management team that comprises of

individuals with extensive business as well as industry experience.

In-DepthResearch:

Our research expertise is at the core of the value proposition that we offer to our clients.

Research teams

Across the firm continuously track various markets and products. The aim is however

common - to go far deeper than others, to deliver incisive insights and ideas and be

accountable for results.

Management team:Its senior management comprises a diverse talent pool that brings together rich

experience from across industry as well as financial services.

Mr. ANAND RATHI – Group chairmanChartered AccountantPast President, BSEHeld several Senior Management positions with one of India’s largest industrial groups.

Mr. PRADEEP GUPTA – Vice ChairmanPlus 17 years of experience in financial Services

Mr. AMIT RATHI – Managing Director

Chartered Accountant & MBAPlus 11 years of experience in Financial Services.

COMPETITORS OF EQUITY MUTUAL FUNDS:

I have taken just three among the competitors in the field of equity mutual funds.

They are,

Reliance Mutual Fund.

Kotak Mutual Fund.

TATA Mutual Fund.

Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Assets

Under Management (AUM) of Rs. 93,532 crore (AUM as on 29th Feb 08) and an investor

base of over 65.73 lakhs.

Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one

of the fastest growing mutual funds in the country.

RMF offers investors a well-rounded portfolio of products to meet varying investor

requirements and has presence in 115 cities across the country. Reliance Mutual Fund

constantly endeavors to launch innovative products and customer service initiatives to

increase value to investors.

“Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management

Limited, a subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up

capital of RCAM, the balance paid up capital being held

By minority shareholders.”

Reliance Capital Ltd. is one of India’s leading and fastest growing private sector

financial services companies, and ranks among the top 3 private sector financial services

and banking companies, in terms of net worth.

Reliance Capital Ltd. has interests in asset management, life and general insurance,

private equity and proprietary investments, stock broking and other financial services.

Vision Statement:

“To be a globally respected wealth creator with an emphasis on customer care and a

culture of good corporate governance.”

Mission Statement:

“To create and nurture a world-class, high performance environment aimed at

delighting our customers.”

Reliance Capital Asset Management Limited (RCAM), a company registered

under the Companies Act, 1956 was appointed to act as the investment manager of

Reliance Mutual Fund.

Reliance Capital Asset Management Limited (RCAM) was approved as the Asset

Management Company for the Mutual Fund by SEBI vides their letter no

IIMARP/1264/95

Dated June 30, 1995. The Mutual Fund has entered into an Investment Management

Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997

in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is

authorized to act as Investment Manager of Reliance Mutual Fund. The net worth of the

Asset Management Company including preference shares as on September 30, 2007 is

Rs.152.02 crores. Reliance Mutual Fund has launched thirty-five Schemes till

Date namely,

"Reliance Mutual Fund schemes are managed by Reliance Capital Asset

Management Limited., a subsidiary of Reliance Capital Limited, which hold 93.37% of the

paid-up capital of RCAM, the balance paid up capital being held

By minority shareholders.”

Reliance Capital Asset Management Limited (RCAM) was approved as the Asset

Management Company for the Mutual Fund by SEBI vides their letter no

IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment

Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on

August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this

IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The net

worth of the Asset Management Company including preference shares as on March 31,

2005 is Rs.113.59 crores. Reliance Mutual Fund has launched thirty-two Schemes till

Date, namely:

1.BReliance Growth Fund (September 1995) Reliance Vision Fund (September 1995)

Reliance Income Fund (December 1997) Reliance Liquid Fund (March 1998)

Reliance Medium Term Fund (August 2000) Reliance Short Term Fund (December 2002)

Reliance Gilt Securities Fund (July 2003) Reliance Banking Fund (May 2003)

Reliance Monthly Income Plan (December 2003) Reliance Diversified Power Sector Fund (March 2004)

Reliance Pharma Fund ( May 2004) Reliance Floating Rate Fund (August 2004)

Reliance Media & Entertainment Fund (September 2004) Reliance NRI Equity Fund (October 2004)

Reliance NRI Income Fund (October 2004) Reliance Index Fund (February 2005)

Reliance Equity Opportunities Fund (February 2005) Reliance Regular Savings Fund (May 2005)

Reliance Liquidity Fund (June 2005) Reliance Tax Saver (ELSS) Fund (July 2005)

Reliance Fixed Tenor Fund (November 2005) Reliance Equity Fund (February 2006)

Reliance Fixed Horizon Fund I (August 2006) Reliance Fixed Horizon Fund (April 2006)

Reliance Fixed Horizon Fund III (March 2007) Reliance Fixed Horizon Fund II (November 2006)

Reliance Liquid Plus Fund (March 2007) Reliance Long Term Equity Fund (November 2006)

Reliance Long Term Equity Fund (Nov 2006) Reliance Interval Fund (March 2007)

The Mutual Fund: Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts

Act, 1882 with Reliance Capital Limited (RCL), as the Settler/Sponsor and Reliance

Capital Trustee Co. Limited

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 11th. March 2004 vide

SEBI's letter no. IMD/PSP/4958/2004 date 11th. 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.

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.

Equity Growth Schemes:

The aim of growth funds is to provide capital appreciation over the medium to long-

term. Such schemes normally invest a major part of their corpus in equities. Such funds

have comparatively high risks. These schemes provide different options to the investors

like dividend option, capital appreciation, etc. and the investors may choose an option

depending on their preferences. The investors must indicate the option in the application

form. The mutual funds also allow the investors to change the options at a later date.

Growth schemes are good for investors having a long-term outlook seeking appreciation

over a period of time.

VISION STATEMENT:

The global Indian financial service brand: – Kotak customer will enjoy the benefits

of dealing with a global Indian brand that best understands their needs and delivers.

customized pragmatic solutions across multiple platforms. Kotak will be a world

class Indian financial services group. Their technology and best practices will be

benchmarked along international lines while their understandings of customers.

The most preferred employer in financial services: - a culture of empowerment and a

spirit of enterprise attract bright minds like with an entrepreneurial streak to join the

Kotak and stay with Kotak. Working with a home – grown, professionally-managed

company, which has partnerships with internationally does, gives their people a

perspective that is universal as well as unique.

The most trusted financial services company: - Kotak will create an ethos of trust

across all their constituents. Adhering to high standards of compliance and corporate

governance will be an integral part of building trust.

Value creation: - value creation rather than size alone will be their business driver.

Key employees:

Ajay Bagga, CEO, Kotak Mahindra Mutual Fund, held the position of National Head, Sales, Distribution and Business Development at the erstwhile Pioneer ITI Asset Management Company Ltd. Prior to joining Kotak Mahindra Asset Management Company on 27th February 2004, Mr. Bagga headed Marketing for the credit card Joint Venture between GE Capital and SBI Cards, a role he held for a year and a half.

Mr. Sandesh Kirkire is the Chief Executive Officer of Kotak Mahindra Asset

Management Company. He moved into this role in May 2005. Mr. Kirkire joined the

Kotak Group in 1994, and has 15 years of in-depth knowledge and hands-on experience

related to fund management, corporate finance, proprietary trading, investment banking

and treasury. Prior to joining Kotak, Mr. Kirkire worked with SBI Capital Markets Limited

and ITC Bhadrachalam Finance & Investments Limited. Mr. Kirkire, 41, is a Mechanical

Engineer and holds a Masters Degree in Management from Jamnalal Bajaj Institute of

Management.

Backed by one of the most trusted and valued brands in India, Tata Mutual Fund has

earned the trust of lakhs of investors with its consistent performance and world-class

service.

Tata Mutual Fund manages around Rs. 23,252.02 crores (as on February 29, 2008)

worth of assets across its varied offerings. Tata Mutual Fund offers an investment option

for everyone, whether you are a businessman or salaried professional, a retired person or

housewife, an aggressive investor or a conservative capital builder.

The Tata Asset Management philosophy is centered on seeking consistent, long-term

results. Tata Asset Management aims at overall excellence, within the framework of

transparent and rigorous risk controls.

We constantly benchmark our efforts against these tenets of performance:

Consistency: We strive to deliver consistent results through our value-based

investing methodology, keeping alive the credo of the late doyen of the Tata Group, Mr.

J.R.D. Tata, that money received from the people should go back to them several times

over.

Flexibility: Tata Mutual Fund offers investors a broad range of managed investment

products in various asset classes and risk parameters.

Stability: Our commitment to the highest quality of service and integrity is the

foundation upon which we build trust with our clients.

Service: We offer a wide range of services to assist investors have a fulfilling and

rewarding financial planning experience with us. We have designed our services keeping in

mind the needs of our investors, giving them a smooth and hassle-free financial planning

process.

A Proud Pedigree:

Tata Asset Management Ltd is a part of the Tata group, one of India's largest and

most respected industrial groups, renowned for its adherence to business ethics.

The Group has always believed in returning wealth to the society that it serves.

Thus, nearly two-thirds of the equity of Tata Sons, the Group's promoter company, is held

by philanthropic trusts, which have created a host of national institutions in the natural

sciences, medical care, energy and the arts. The trusts also give substantial annual

grants and endowments to deserving individuals and institutions in the areas of education,

healthcare and social uplift.

By combining ethical values with business acumen, globalization with national

interests and core businesses with emerging ones, the Tata Group aims to be the largest and

most respected global brand from India. This way, it fulfils its long-standing commitment

to improving the quality of life of its stakeholders.

The Tata name is a unique asset, representing leadership with trust. Leveraging this

asset to enhance Group synergy and becoming globally competitive is the route to

sustained growth and long-term success.

Chapter- 4

MUTUAL FUND PRODUCTS

Mutual fund product includes mainly corporate,

Securities, viz., Equity shares and Debentures,

Government sponsored loan bonds for carrying out specific infrastructural and

other projects.

Other approved securities such as money market instruments like Treasury

Bills, Commercial Papers etc…

Each mutual fund will design its own marketing plan for its products. However

elements of marketing are helpful in developing a good marketing plan. The products

cited above are sold to the investors with different schemes.

Closed – end mutual funds.

Open – end mutual funds.

Large cap funds.

Mid cap funds.

Equity mutual funds.

Balanced fund.

Growth funds.

No load mutual funds.

Exchange traded funds.

Value funds.

Money market mutual funds.

International mutual funds.

Regional mutual fund.

Sector mutual funds.

Index funds.

Fund of funds.

1. Closed- end mutual funds:

A closed end mutual fund has a set number of shares issued to the public through an

initial public offering. These funds have a stipulated maturity period 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.

2. Open- end funds:

An open end mutual fund is a fund that does not have a set number of shares. It

continues to sell shares to investors and will buy back shares when investors wish to sell

units are bought and sold at their current asset value.

Open end funds keep some portion of their assets in short term and money market

securities to provide available funds for redemptions. A large portion of most mutual funds

is invested in highly liquid securities, which enables the fund to raise money by selling

securities at prices very close to those used for valuations.

3. Large cap funds:

Large cap funds are those mutual funds, which seek capital appreciation by investing

primarily in stocks of large blue chip companies with above-average prospects for earning

growth.

Different mutual funds have different criteria for classifying companies as large cap.

Generally, companies with a market capitalization in excess of Rs.1000 crore are known

large cap companies.

4. Mid cap funds:

Mid cap funds are those mutual funds, which invest in small/medium sized

companies. As there is no standard definition classifying companies as small or medium,

each mutual fund has its own classification for small and medium sized companies.

Generally companies with a market capitalization of up to Rs. 500 crore are classified as

small. Those companies that have a market capitalization between Rs. 500 crore and

Rs.1000 crore are classified as medium sized.

5. Equity mutual funds:

Equity mutual funds are also known as stock mutual funds. It invests pooled

amounts of money in the stocks of public companies. Stocks represent part ownership, or

equity, in companies, and the aim of stock ownership is to see the value of the companies

increase over time. Stocks are often categorized by their market capitalization and can be

classified in to 3 basic sizes as small medium and large.

.

6. Balanced fund:

Balanced fund is also known as hybrid fund. It is a type of mutual fund that buys

combination of common stock, preferred stock, bonds and short term bonds, to provide

both income and capital appreciation while avoiding excessive risk.

7. Growth funds:

Growth funds are those mutual funds that aim to achieve capital appreciation by

investing in growth stocks. They focus on those companies, which are experiencing

significant earnings or revenue growth, rather than companies that pay out dividends.

Growth funds look for the fastest growing companies in the market.

8. No load mutual funds:

Mutual funds can be classified in to two types- load mutual funds and no load

mutual funds. Load mutual funds are those funds that charge commission at the time of

purchase or redemption. They can be further classified in to,

(a) Front end load funds. (b) Back end load funds.

Front end load funds charge commission at the time of purchase and back end load funds at

the time of redemption.

9. Exchange traded funds:

Exchange traded funds represent a basket of securities that are traded in an

exchange. An ETF will invest in either all of the securities or a representative sample of the

securities included in the index. The investment objective of an ETF is to achieve the same

return as a particular market index.

10. Value funds:

Value funds are those mutual funds that tend to focus on safety rather that growth,

and often choose investments providing dividends as well as capital appreciation. They

invest in companies that the market has overlooked, and stocks that have fallen out of

favour with mainstream investors, either due to changing investor preferences.

11. Money market mutual funds:

A money market mutual fund is a mutual fund that invests solely in money market

instruments. Money market instruments are forms of debt that mature in less than one year

and are very liquid. Treasury bills make up the bulk of money market instruments.

Securities in the money market are relatively risk free.

12. International mutual funds:

International mutual funds are those mutual funds that invest in non-domestic

securities markets through out the world. Investing in international markets provides

greater portfolio diversification and let you capitalize on some of the world’s best

opportunities. If investments are chosen carefully, international mutual fund may be

profitable when some markets are rising and others are declining.

13. Regional mutual fund:

Regional mutual fund is a mutual fund that confines itself to investments in

securities from a specified geographical area, usually, the fund’s local region. A regional

mutual fund generally looks to own a diversified portfolio of companies based in and

operating out of its specified geographical area. The objective is to take advantage of

regional Growth potential before the national investment community does.

14. Sector mutual funds:

Sector mutual funds that restrict their investments to a particular segment or sector

of the economy. These funds concentrate on one industry such as infrastructure, health

care, utilities, pharmaceuticals etc. the idea is to allow investors to place bets on specific

industries or sectors, which have strong growth potential. These funds tend to be more

potential. These funds volatile than funds holding a diversified portfolio of securities in

many industries. Such concentrated portfolios can produce tremendous gains or losses,

depending on whether the chosen sector is in or out of favour.

15. Index funds:

An index fund is a type of mutual fund that builds its portfolio by buying stock in all

the companies of a particular index and thereby reproducing the performance of an entire

section of the market. The most popular index of stock index funds is the standard &

Poor’s 500. An S & P stock index fund owns 500 stocks- all the companies that are

included in the index.

16. Fund of funds:

A fund of fund is a type of mutual fund that invests in other mutual funds. Just as

mutual fund invests in a number of different securities, a fund of funds holds shares of

many different mutual funds.

FOF are designed to achieve greater diversification than traditional mutual funds.

But on the flipside, expense fees on fund of funds are typically higher than those on regular

funds because they include part of the expense fees charged by the underlying funds.

Equity products of taken three companies:

Reliance mutual fund products:

Reliance Growth Fund (September 1995) Reliance Vision Fund (September 1995)

Reliance Income Fund (December 1997) Reliance Liquid Fund (March 1998)Reliance Medium Term Fund (August 2000) Reliance Short Term Fund (December 2002)Reliance Gilt Securities Fund (July 2003) Reliance Banking Fund (May 2003)Reliance Monthly Income Plan (December 2003) Reliance Diversified Power Sector Fund (March

2004)Reliance Pharma Fund ( May 2004) Reliance Floating Rate Fund (August 2004)Reliance Media & Entertainment Fund (September 2004)

Reliance NRI Equity Fund (October 2004)

Reliance NRI Income Fund (October 2004) Reliance Index Fund (February 2005)Reliance Equity Opportunities Fund (February 2005) Reliance Regular Savings Fund (May 2005)Reliance Liquidity Fund (June 2005) Reliance Tax Saver (ELSS) Fund (July 2005)Reliance Fixed Tenor Fund (November 2005) Reliance Equity Fund (February 2006)Reliance Fixed Horizon Fund I (August 2006) Reliance Fixed Horizon Fund (April 2006)Reliance Fixed Horizon Fund III (March 2007) Reliance Fixed Horizon Fund II (November 2006)Reliance Liquid Plus Fund (March 2007) Reliance Long Term Equity Fund (November

2006)Reliance Long Term Equity Fund (Nov 2006) Reliance Interval Fund (March 2007)

Kotak Mutual Fund products:

Kotak 30 (D)

Kotak 30 (G)

Kotak Balance

Kotak Bond - Deposit Plan (D)

Kotak Bond - Deposit Plan (G)

Kotak Bond - Regular Plan (Bonus)

Kotak Bond - Regular Plan (Div-A)

Kotak Bond - Regular Plan (Div-Q)

Kotak Bond - Regular Plan (G)

Kotak Bond - Short Term Plan (D)

Kotak Bond - Short Term Plan (G)

Kotak Cash Plus (Div-M)

Kotak Cash Plus (G)

Kotak Contra (D)

Kotak Contra (G)

Kotak Dynamic FOF (G)

Kotak ELSS (D)

Kotak ELSS (G)

Kotak equity FOF(D)

Kotak Equity FOF(G)

TATA Mutual Fund products:

Tata Pure Equity Fund Tata Tax Saving Fund Tata Select Equity Fund Tata Life Sciences & Technology Fund Tata Equity Opportunities Fund Tata Index Fund Tata Growth Fund Tata Equity P/E Fund Tata Dividend Yield Fund Tata Infrastructure Fund Tata Service Industries Fund Tata Mid Cap Fund Tata Contra Fund Tata Tax Advantage Fund 1 Tata Equity Management Fund Tata Capital Builder Fund

Tata Indo-Global Infrastructure Fund Tata Growing Economies Infrastructure Fund

Chapter-5

Chapter- 5

RESEARCH DESIGN

Design of the study:

A detail study is done on various Investment Schemes of Mutual Fund.

Analysis is done on the Risk and Returns of Equity Scheme provided by the

organization. Where it is useful to the investors to mobilize the savings in the

respective schemes provided by the Company.

Title of the study:

“RISKS AND RETURNS OF MUTUAL FUNDS”

STATEMENT OF THE PROBLEM:

“An Overview of Mutual Fund Industry in India & Evaluation study on Risk and

Returns of Mutual Fund scheme in comparison with its respective Benchmark Indices”

NEED FOR THE STUDY: The evaluation study of risk and returns of Equity and Growth Schemes of Kotak Mutual

Fund is useful to know the performance of scheme and it helps the investors to invest in

Mutual Fund schemes either- Equity, Debt or Balanced. The performance of different

schemes however helps the prospective investors to choose the best schemes that suit his

objective.

SCOPE OF STUDY:Scope of study means what are the areas of the study. In other words it means the

risks and returns that will be faced by the various mutual funds in the market.

The study was limited to just finding the risk and returns associated with the one

scheme.

The study conducted in AnandRathi based on the information furnished by the

organization.

The study covers the one scheme for Quarterly bases.

The study covers the period of past three months from January 1, 2008 to April 1,

2008.

The study covers only the open-ended fund.

The study does not cover the other schemes of mutual funds.

In the study only three mutual fund companies have been considered.

The Project is a “finance project” which tries to explain about the

history, growth & pros and cons of investing in Mutual Funds and the

second part of it deals with the analysis of risk & returns.

OBJECTIVES OF THE STUDY:

The study relating to mutual funds has the following objectives:

To know the history of Anand Rathi.

To know the growth of mutual funds.

To understand the pros and cons of mutual funds.

To know the way of investing in mutual funds.

To analyze the risks and ret urns of mutual funds in general.

To suggest some measures to maximize return in minimum risk.

A Research design is a method and procedure for acquiring information needed to

solve the problem. A research design is the basic plan that helps in the data collection or

analysis. It specifies the type of information to be collected the sources and data collection

procedure.

METHOD OF RESEARCH DESIGN USED UNDER STUDY IS :

DESCRIPTIVE RESEARCH:

Descriptive research is study of existing facts to come to a conclusion. In this

research an attempt has been made to analyze the past performance of the Mutual schemes

and to know the benefits to the investors. The study is done on different schemes provided

by the company to know the company’s performance for the past few months and to know

the risk and returns of the funds.

TOOLS & TECHNIQUES USED FOR THE STUDY

To analyze the data in the project various statistical tools are used. They are:

1. Beta:

β= NΣxy-(Σx) (Σy) /NΣx2-(Σx) 2.

= Beta of the fund; N = Number of Observations;

X = Quarterly return of Index;

Y = Quarterly return of the NAV.

2. Treynor Ratio :

Τ= rp-rf/β

T= Treynor ratio’s

rp = portfolio return;

rf = risk free rate;

β= portfolio beta;

RESEARCH METHODOLOGY:

It is the scientific way of collection of data or information needed to carry out

the project work. The information is mainly needed for analysis and comparison of

data with reference to mutual funds schemes.

The information about the risks and returns has been gathered from branch

manager of Anand Rathi in Tumkur, Mr.Rajashekar.N. the detail of introduction of

the risks and returns of mutual funds is given in the forthcoming chapters of the

project.

The data is collected in the two ways are also known as methods or sources of data;

1. Primary Data:

The basic or preliminary information is collected through face to face

interaction with the manager, Anand Rathi, Tumkur district.

2. Secondary Data:

Besides the primary data, secondary data is required for

Analysis and the same was collected through the following sources

Internet

Brochures

Bulletins, Company advertisements, Public leaflets.

Net asset values issued by companies to the chief representative.

Etc…

Limitations of the study:

The study was limited only to ANANDRATHI MUTUAL FUND products.

Out of many schemes only one has been taken for analysis.

The study was limited to the extent of just finding the risks and returns of one

scheme of the fund on quarterly bases. So no any great research was done.

The study has been done on equity diversified scheme out of many schemes.

The study has been done on only three mutual fund companies of India.

The study of returns has been calculated by one method.

Chapter-6

Chapter-6

THEORETICAL BACKGROUND

Mutual funds:

Meaning:A mutual fund is trust that pools the savings of a number of savings of a number of

investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities.

Mutual fund is defined by securities and exchange board of India (mutual funds) regulations, 1003 as “a fund established in the form of a trust by a sponsor, to raise monies by the trustees through the sale of units to the public, under one or more schemes, for investing in securities in accordance with these regulations.”

OPERATIONAL DEFINITIONS OF THE CONCEPT

RISK:

The dictionary meaning of risk is the possibility of loss or injury. Any rational investor, before investing

his/her investible wealth in the security, analyzes the risk associated with a particular security. The actual

return he receives from a security may vary from his expected return and the risk is expressed in term of

variability of return. The down side of risk may be caused by several factors, either common to all

securities or specific to a particular security. Investor in general would like to analyze the risk factors and

a through knowledge of a risk helps him to plan his portfolio in such a manner so as to minimize risk

associated with the investment.

Risk consists of two components:

The systematic risk.

The unsystematic risk.

Systematic Risk: The systematic risk affects the entire market. The economic conditions,

political situations and the sociological changes affect the security market. These factors

are beyond the control of the corporate and the investor. The investor cannot avoid them.

This is subdivided into:

1. Market Risk

2. Interest Rate Risk

3. Purchasing Power Risk.

Unsystematic Risk: The unsystematic risk is unique and peculiar to a firm or an industry.

Unsystematic Risk stems from managerial inefficiency, technological change in the

production process, availability of raw material, changes in the customer preference, and

labour problems. The nature and magnitude of the above-mentioned factors differ from

industry to industry, and company to company. They have to be analyzed separately for

each industry and firm.

Broadly, unsystematic risk can be classified into:

1. Business Risk

2. Financial Risk

Risk Measurement: Understanding the nature of risk is not adequate unless the investor or

analyst is capable of expressing it in some quantitative terms. Measurements cannot be

assured of cent percent accuracy because risk is caused by numerous factors such as social,

political, economic and managerial efficiency. The statistical tools used to quantify risk

are:

I. Standard Deviation:

A measure of the dispersion of a set of data from its mean. The more spread apart

the data is, the higher the deviation.

In finance, standard deviation is applied to the annual rate of return of an

investment to measure the investment's volatility (risk).

A volatile stock would have a high standard deviation. In mutual funds, the standard

deviation tells us how much the return on the fund is deviating from the expected normal

returns. Standard deviation can also be calculated as the square root of the variance.

Beta:

Beta describes the relationship between the securities return and the index returns

Beta = + 1.0

One percent change in market index returns causes exactly one percent change in the

security return. It indicates that the security moves in tandem with the market.

Beta = + 0.5

One percent changes in the market index return causes 0.5 percent change in the security

return. The security is less volatile compared to the market.

Beta = + 2.0

One percent change in the market index return causes 2 percent change in the security

return. The security return is more volatile. When there is a decline of 10% in the market

return, the security with beta of 2 would give a negative return of 20%. The security with

more than 1 beta value is considered to be risky.

Negative Beta

Negative beta value indicates that the security return moves in the opposite direction to the

market return. A security with a negative beta of -1 would provide a return of 10%, if the

market return declines by 10% and vice-versa.

RATE OF RETURN:

The compounded annual return on a mutual fund scheme represents the return to investors

from a scheme since the date of issue. It is calculated on NAV basis or price basis. On

NAV basis it reflects the return generated by the fund manager on NAV. On price basis it

reflects the return to investors by way of market or repurchase price.

Net Asset Value (NAV):

The net asset value of the fund is the cumulative market value of the assets fund of its

liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets

in the fund, this is the amount that the shareholders would collectively own. This gives rise

to the concept of net asset value per unit, which is the value, represented by the ownership

of one unit in the fund.

It is calculated simply by dividing the net asset value of the fund by the number of units.

However, most people refer loosely to the NAV per unit as NAV, ignoring the “per unit”.

We also abide by the same convention.

Computation of Net Asset Value

The Net Asset Value (NAV) of the units will be determined as of every working day and

for such other days as may be required for the purpose of transaction of units.

The NAV shall be calculated in accordance with the following formula, or such other

formula as may be prescribed by SEBI from time to time.

Market /Fair value of scheme’s investments + Receivables +

Accrued Income + Other Assets – Accrued Expenses –

Payables-Other liabilities

NAV= _____________________________________________________

Number of Units OutstandingSome important terms with respect to mutual funds:

Corpus :

The total money available with a scheme at any point of time is referred to as the

‘corpus’ or assets under management. The mutual fund, on your and other investor’s

behalf, invests this corpus in various securities in line with its stated objectives.

Unit:

Your mutual fund issues you units against your investment. A unit is the currency

of a fund what share is to a company; a unit is to a fund.

Load:

Although the NAV represents the schemes current value. It is not the exact prices

are which investors enter or exit the scheme. Fund houses levy nominal shares, on most

of their schemes to meet their processing costs and to discourage investors from

leaving. This charge is referred to as load and it is the prices you pay over and above the

funds NAV when you buy or sell units. You pay and ‘entry load’ at time of buying

units. You pay and ‘exit load’ at the time of selling.

Expenses:

This is the fund charges you for managing your money. Fund managers have to be

paid a fee, as do the other constituents involved in managing your money.

Redemption:

When you sell your units, partly fully to your fund, it is sale from your point of view

in mutual fund parlance it is called ‘repurchase’ or ‘redemption’ you will have to fill

another form and mutual funds will pay you the schemes NAV on the prevailing

minus the exit load, and mail you cheque within there to five days.

Disclosure :

From time to time your fund will share with you information relating to your

scheme. Under SEBI rules, fund houses have to send to all unit holders. Annual reports

disclosing the complete portfolio of all their schemes performance over various time

periods and how it stands up in given market condition. Most fund houses update their

schemes portfolio on the websites even quicker the norm being on monthly basis.

Chapter- 7

Chapter- 7\

DATA ANALYSIS AND INTERPRETATION

The analysis and interpretation is done on the secondary data that is NAV of the equity

mutual fund scheme of the different mutual fund companies.

Secondary Data :

Besides the primary data, secondary data is required for

Analysis and the same was collected through the following sources

Internet

Brochures

Bulletins

Company advertisements

Public leaflets.

Net asset values issued by companies to the chief representative.

Etc…

Type of Scheme An open-ended equity fund(diversified)

Launch Date February 07, 2006.

Fund Objective  Objective of the scheme is to seek to generate capital appreciation and provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities of top 100 companies by market capitalization and of companies which are available in the derivatives segment from time to time.

 Fund Investment Strategy REF is mandated to invest in the top 100 companies by market capitalisation or stocks traded in the futures and the options segment. At any time, it will invest a minimum of 75% of net assets in equities. It has a flexible investment strategy that can respond to changes in the stock market valuations by short-selling.

Asset Allocation

Instrument

Proportion ** % of funds available Risk Profile

Likely Around (%)

Equity & Equity Related 75-100   High

Debt *(Including Money Market) 0-20   Low to Medium

** At the time of investment.  * Investment by the scheme in Securitised debt will not normally exceed 50% of the debt components.

Liquidity NAV calculation on all business days.

Options Available Growth & Dividend

Load Structure Entry Load: Nil *

Exit Load :  For Retail Plan for subscriptions of less than Rs 5 Crs per purchase transaction:1% if redeemed/switched on or before completion of 1 year from the date of allotment :nil if redeemed/switched after completion of 1 year from the date of allotment For subscriptions of more than Rs 5 Crs per purchase transaction: Nil

For Institutional Plan - Nil

Minimum Application Amount Rs.5, 000/- & in multiples of Re.1/- thereafter.

KotakOpportunities (Open Ended Equity Scheme)

Type of Scheme An open-ended equity fund.

Launch Date August 25, 2004.

Fund Objective  The objective of the scheme will be to provide income distribution and/or medium to long  term capital gains while at all times emphasizing the importance of capital appreciation.

 Fund Investment Strategy  Investments under this scheme will be made only in equities of growth value stocks.

Asset Allocation

Instrument

Proportion ** % of funds available Risk Profile

Likely Around (%)

Equity & Equity Related 70-100   High

Debt *(Including Money Market) 0-20   Low to Medium

** At the time of investment.  * Investment by the scheme in Securitised debt will not normally exceed 50% of the debt components.

Liquidity NAV calculation on all business days.

Options Available Growth, Dividend Payout, Dividend Re-Investment

Load Structure Entry Load: 2.25%Exit Load :1.00%Entry load of 2.25% for investments upto Rs. 5 Crores. Exit Load 1% for investment less than 5 crores if exit within 6 months from the date of allotment and 0.50% if the units are redeemed after 6 months but within 1 year.

Minimum Application Amount Initial : Rs. 5000/-Additional : Rs.1000/-Systematic : Rs.1000/-

Type of Scheme An open-ended equity fund.

Launch Date February 25, 1993.

Fund Objective  The objective of the scheme will be to provide income distribution and/or medium to long  term capital gains while at all times emphasizing the importance of capital appreciation.

 Fund Investment Strategy  Investments under this scheme will be made only in equities of growth value stocks.

Asset Allocation

Instrument

Proportion ** % of funds available Risk Profile

Likely Around (%)

Equity & Equity Related 80-100   High

Debt *(Including Money Market) 0-20   Low to Medium

** At the time of investment.  * Investment by the scheme in Securitised debt will not normally exceed 50% of the debt components.

Liquidity NAV calculation on all business days.

Options Available Growth & Dividend

Load Structure Entry Load: For investment amount greater than or equal to Rs.2 crores: Nil.For investment amount less than Rs.2 crores: 2.25%Exit Load - For each investment amount of less than Rs. 2crores: 1% if redeemed on or before expiry of 6 months from the date of allotment. For each investment amount greater than or equal to Rs.2 crores: Nil

Minimum Application Amount

Rs.5, 000/- & in multiples of Re.1/- thereafter.

Latest NAV of Reliance Equity fund:

 Scheme PlanNAV Change %Change

NAV Date

Reliance Equity Opportunities Fund

Dividend Plan 17.4609 -0.42 -2.41 31 Mar 2008

Growth Plan Bonus Option 21.8593 -0.53 -2.42 31 Mar 2008

Growth Plan Growth Option 21.8593 -0.53 -2.42 31 Mar 2008

Institutional Plan - Bonus Plan 21.8593 -0.53 -2.42 31 Mar 2008

Institutional Plan - Dividend Plan 21.8593 -0.53 -2.42 31 Mar 2008

KotakOpportunities (Open Ended Equity Scheme)

Latest NAV of Kotak opportunities equity fund:

Scheme Name

NAV Date NAV

Kotak Opportunities Growth 31-03-08 37.715

Kotak Opportunities Dividend 31-03-08 14.592

Latest NAV TATA Equity fund:

Scheme Name NAV Price Date

Tata Equity Management Fund - Div  10.2839  31 Mar 2008

Tata Equity Management Fund - Growth  11.0880  31 Mar 2008

Tata Equity Opportunities Fund - A Dividend  23.0998  31 Mar 2008

Tata Equity Opportunities Fund - B Growth  71.2481  31 Mar 2008

Tata Equity P/E Fund (Dividend)  31.0666  31 Mar 2008

Tata Equity P/E Fund (Growth Option)  32.9947  31 Mar 2008

Graph showing NAV of the three companies:

Graph showing returns of the three companies:

Graph showing Risk of the three companies:

Table of grades of risks and returns:

MUTUAL FUND RISK RETURN

Reliance Average High

Kotak Above Average Above Average

TATA Average Average

The companies position among India’s top 100 mutual funds:

Rank Fund

Name

Score 1-Yr

Return

(%)

3-Yr

Return

(%)

Worst

3month

Return

(%)

Risk

Grade

Sharpe

Ratio

Fund

size

(Rs.

Crore)

NAV

(Rs)

1 Kotak

opportunities 10.0 56.03 53.28 -23.78 - Avg 1.61 647.27 45.80

15 Reliance

equity fund 3.2 33.83 43.97 -39.59 - Avg 1.48 4286.63 246.44

24 TATA

equity

opportunities

1.6 42.58 45.33 -26.90 + Avg 1.37 584.54 84.91

Returns of the companies with the BSE:

Y X

DATE NAV(MF)BSE

INDEXRELIANCE BSE Index

X*Y X*XReturns (%) Returns

1/4/2008 37.715 15761.02 33.83 31.64 1070.3812 1001.08961/3/2008 34.287 17578.72 10.05 9.72 97.686 94.47841/2/2008 32.09 18233.42 1.837 0.546 1.003002 0.298116TOTAL 45.717 41.906 1169.070

Avg 15.23 13.96x2 1756.112beta 0.45317

TR 0.004735

Y X

DATE NAV(MF)BSE

INDEXKOTAK BSE Index

X*Y X*XReturns (%) Returns

1/4/2008 21.859 15761.02 56.03 54.10 3031.223 2926.811/3/2008 20.056 17578.72 16.44 14.21 233.6124 201.92411/2/2008 18.169 18233.42 1.59 0.296 0.47064 0.087616TOTAL 70.08 68.014 3265.306Avg 23.36 22.67x2 4625.904beta 0.538330TR 0.006814

Y X

DATE NAV(MF)BSE

INDEXTATA BSE Index

X*Y X*XReturns (%) Returns

1/4/2008 10.2839 15761.02 42.58 41.21 1754.7218 1698.24611/3/2008 10.1054 17578.72 15.68 13.54 212.3072 183.33161/2/2008 9.0678 18233.42 -0.612 -1.798 1.100376 3.232804TOTAL 57.648 52.952 1968.12

Avg 19.21 17.65x2 2803.91beta 0.508651TR 0.004381

Chapter-8

SUMMARY OF FINDINGS

FINDINGS:

The project was done at AnandRathi Mutual Fund in Tumkur for a period of from Feb 1 to

Apr1 and the data collected for the project was for a period of three years and in brief of

three months i.e. from 1st Jan 2008 to 2nd Apr 2008. And on the collected data, study was

done and the following were the findings:

The above equity mutual funds have given good returns in the recent 3 months and

also in the period of three years.

The Kotak Opportunities has given good returns when compared to other two mutual

fund companies in the equity diversified scheme in the period of quarter. (i.e.

2/1/2008 to 1/4/2008)

TATA Opportunities have given good return in last two months than Reliance, and

Reliance has suffered a great loss in the first month of this year.

Though there was the great downfall in the market in January, however all the three

have given average returns and it is impressive.

Reliance and Kotak have given in the last three months all positive returns.

Though Kotak has given positive returns it is of bit risk due to which of this

mutual fund of equity scheme is 0.538330

Reliance stands next in its positive returns compared to Kotak and it’s also of

average risk and but high return and its is 0.45317.

TATA has got both positive and negative returns and it’s of average risk and average

return and its is 0.508651.

The equity fund of Reliance has given 0.004735, Kotak of 0.006814 and TATA of

0.004381 excess returns than the risk free returns (Treasury bills) for per unit of risk.

And among India’s top 100 mutual funds in equity diversified scheme Kotak

opportunities stands 1st rank, reliance stands 15th rank and TATA opportunities

stands 24th rank.

SUGGESTIONS

The findings of the study relating to mutual funds, needs some recommendations or

suggestions for further development and to attract more number of investors.

Though some funds are meant long term investments the company has

to take efforts to improve returns so that they will get more at end of long terms.

When compared to overall market it’s still less return so it is advisable

for all the companies to divest the investment of the fund so that they can yield to

their best.

Steps may be taken to reduce the volatility of equity funds as it is more

volatile when compared to other funds.

They have to regularly pay dividends to their unit holders out of profits

to encourage investments.

And its also advisable to invest in basic industries as it gives more

returns.

For AnandRathi:

It is suggested promote its products through mass communication media like

television, radio and internet to promote its products. As it is effective media to

attract prospective investors

There is need to set up offices in every city and provide internet facility to

speed up the servicing activity to makeup transactions effectively and to maintain

goodwill.

It is advisable to appoint more agents to explain regarding the products and

services that the AnandRathi has.

CONCLUSIONS:

Indian stock market, one of the emerging markets in the world showed impressive

performance in last couple of years. It also overtook Dow Jones of USA & gave superb

returns when it touched all time high. But in early eighties Indian markets were literally

weighed down by the need to deal with shares in paper form. There were problems galore

with handling documents- fake & stolen shares, fake signatures & signature mismatches,

duplication & mutilation of shares, transfer problems etc. the trading volumes was small

due to small investing population. The real growth & change occurred from mid eighties in

the wake of liberalization initiative of the government. The reforms in the financial sector

were envisaged in the banking sector, capital market, securities market regulation, mutual

funds, foreign investments & government control.

Mutual Funds (MF) have become one of the most attractive ways for the average

person to invest HIS money. It is said that Bank investment is the first priority of people to

invest their savings and the second place is for investment in Mutual Funds and other

avenues. A Mutual Fund pools resources from thousands of investors and then diversifies

its investment into many different holdings such as stocks, bonds, or Government

securities in order to provide high relative safety and returns. . Also generate leads of the

prospective investors in Mutual Funds for the Asset Management Company (AMC) to sell

Mutual Fund products and to make people aware of the Mutual Funds and its products.

There are many improvements pending in the field and it has to happen as soon as

possible so as to call the MF industry as an Organized and well-developed sector.

If we see the performance of the Reliance, Kotak and TATA Equity Fund has shown

the impressive returns to the investors. However in spite of volatility in the market, they

stand at good position compared to their benchmark. No doubt there is fluctuation in the

NAV (Rs) of equity diversified Fund. But we can see that there has not been complete

downfall in NAV (Rs). The track record of the NAV (Rs) has shown sound increase even

though there was some what consistency but it has not decrease to a great extent.

We can say that at last taken these three Equity Growth mutual funds have performed

well than their benchmark due to the diversified allocation of fund into different sectors

which have been performing well in the market. And due to the systematic analysis of the

fund managers.

BIBLIOGRAPHY

BOOKS REFERRED:

Security Analysis and Portfolio Management by Punithavathy Pandian

Invest India Economic Foundation.

MAGAZINES:

Outlook Money by fortnightly magazines.

Value Research Mutual Fund Insight

Business Today.

Business World.

WEBSITES:

www.anandrathi.com

www.kotakmutual.com

www.reliancemutualfund.com

www.tatamutual.com

www.amfi.com

www.sebi.gov.in

www.mutualfundsindia.com

www.valueresearch.com