final rajya lakshmi project

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INTRODUCTION

Mutual funds are a very new type of intermediary on the Indian financialscene.Mutual fund is the trust at low. It is a special type of managed, pooled

portfolio financial company, or financial service organization. That

sells/units/stocks in itself to the public to obtain its resources and it invest the

savings so mobilized or pooled in a large, diversified and sound portfolio of

equity shares, Bonds, Money market instruments etc.,

In the US an alternative form of this is the unit investment trust

which is an unmanaged fixed-income security portfolio put together by a

sponsor and handled by an independent trustee. Redeemable trust certificates are

sold to investors NAV (Net Asset Value) plus a small commission. All

interest/dividend and principal repayment are distributed to the holders of the

certificates. The sponsor makes a secondary market in these certificates for those

who wish to sell the securities of the trust are almost always kept unchanged in

the case of fixed income securities, the trust ceases to exist when the bonds

mature.

The story of UTI began in 1964, the first mutual fund setup a Trust

in terms of UTI Act, 1963. It was an associate institute of the RBI till February,

1976 when it was made an associate institute of IDBI. UTI got its borrowings powers from this parent institute. UTI provides attractive

investment opportunities through issues of units and shares under various

schemes.

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OBJECTIVES & METHODOLOGY OF THE STUDY

An attempt has been made in this section to discuss about the objectives

of the study and methodology employed in this study. Attempts are also made topresent the need of the study, scope of the study, sources of collection of data &

limitations prescribed for the study.

OBJECTIVES OF THE STUDY

The Objectives and the Methodology employed in the study are as follows.

Attempts are also made to present the need and scope of the study.

The following are the Main and other objectives of the study is as follows

(1). To evaluate the performance of open-ended balanced growth schemes of

five mutual fund players.

(2) To assign Rank- to -Rank profile based on Net Asset Value (NAV).

Besides the above, the other objectives are:

a. This study enables an investor, the concepts constituents,advantages, disadvantages, types and Risks associated with the mutual

fund industry.

b. To guide the rationale investors to take wise investment decisions.

c. To suggest the Tax benefits associated with the investments inMutual funds under various schemes.

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NEED OF THE STUDY

The need of the present study is evaluate the performance of mutual fund

players in India. This study is confined to balanced growth funds of Birala Sun

Life, ICICI Prudential, Tata, JM finance, and Kotak mutual funds.

(1) The present study entitled on An Overview of Mutual fund Industry in

India With reference to Kotak Mutual funds, is an empirical study which

covers the concept, characteristics, Investment process and Risk return

profile of mutual funds according to SEBI guidelines.

(2) Mutual funds are diversified investments and the pattern of investment is

based on the principle dont put all eggs in one basket. The investor is

provided with the rightist information depending upon their investing

objective and respective risk return profile.

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SCOPE OF THE STUDY

The present study focus its attential on the performance of Tata, Biral

Sun Life, ICICI Prudential, JM finance in general Kotak in Particular. A mtual

fund is a pure intermediary which perform a basic function of buying and selling

of securities on behalf of its unit holders easily, economically, conveniently and

profitably.

Financial sector reforms since 1991 targeted operational flexibility and

functional autonomy to financial service industry to enhance, efficiency

productivity and profitability. Mutual funds are important segment of the

financial system hence this study evaluates the mutual fund industry in general

and the Kotak mutual funds in particular. The period of two months i.e April,

2010 and May, 2010 is taken as a reasonable period for this study.

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SOURCES OF COLLECTION OF DATA

The data that is collected for this study can be divided into two types.

1. Primary sources of collection of data.

2. Secondary sources of collections of data.

1. PRIMARY SOURCES OF COLLECTION OF DATA

The primary data collected from the corporate office of the Kotak

Mahindra Mutual Funds Pvt., Ltd.,, Hyderabad . The information which is

collected from the present study is of prime in nature.

2. SECONDARY SOURCES OF COLLECTION OF DATA

It is from various annual reports of Kotak Mahindra Mutual Funds Pvt.,

Ltd.,, Hyderabad. It is intended to collect the information form various

publications and also from various University Libraries.

PERIOD OF THE STUDY

For the sake of the present study, during the period of April To May,

2009 is taken as a reasonable period for drawing conclusions on Mutual Fund

Industry in India.

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SIGNIFICANCE OF THE STUDY

1) Over the past decades mutual funds have grown. Intensely in popularity and

have experience a considerable growth rate.

2) Mutual funds are popular because they make it easy for small investors to

invest their money in a diversified pool of securities.

3) As the mutual fund industry has evoved over the year.

4) Mutual funds are a very new type of intermediary on the Indian financial

scene.Mutual fund is the trust at low. It is a special type of managed, pooled

portfolio financial company, or financial service organization. That

sells/units/stocks in itself to the public to obtain its resources and it invest

the savings so mobilized or pooled in a large, diversified and sound

portfolio of equity shares, Bonds, Money market instruments etc.,

5) Mutual funds also provides investors:-

Continuous supervision and analysis.

Investment consultancy.

Judicious investment decisions.

Expert, Experience, Professional, Management of portfolio at

affordable cost.

6) Hence the present study is concerned mainly with the operational

efficiency of balanced growth funds of five mutual fund industry players.

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AN OVERVIEW OF MUTUAL FUND INDUSTRY IN

INDIA

CONCEPT OF MUTUAL FUNDS

A 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 then invested

in capital market instruments such as shares, debentures and other securities. The

income earned through these investments and the capital appreciation realized 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 basket of

securities at a relatively low cost.

MUTUAL FUND OPERATION FLOW CHART

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ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the

organizational set up of a mutual fund:

HISTORY OF THE MUTUAL FUND INDUSTRY

A mutual fund is a managed group of owned securities of several

corporations receive dividends on the shares that they hold and realize capital

gains or losses on their securities traded. Investors purchase shares in the mutualfund if it was individual security. After paying operating costs, the earnings of

the mutual fund are distributed to the investors, in proportion to the amount of

money invested. Investors hope that a loss on one holding will be made up by a

gain on another. Heeding the adage Dont put all eggs in one basket the

holders of mutual-fund shares are able collectively to ;gain the4 advantage by

diversifying their investments, which might be beyond their financial means

invidually.

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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 fu8nds, the fund manager has less influence because the price of the

underlining owned securities has greater influence.

The modern mutual fund was first introduced in Belgium in 1822. This

form of investment soon spread to Great Britain and France. Mutual funds

became popular in the United States in the 1920s and continue to be popular

since the 1930s, especially opened mutual funds. Mutual funds experience a

period of tremendous growth after world war II, especially in the 1980s and

1990s.

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 Reserve Bank

Of India. The history of mutual funds in India cab be broadly divided into four

distinct phases

First Phase 1964-87

Unit Trust of India (UTI) was established don 1963by 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

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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 fallowed 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 it mutual fund in

December 1990.

At the end of 1993, the mutual fund industry had asset under management of Rs.

47,004 crores

Third Phase 1993-2003 (Entry of Private Sector

Funds)

With the entry of private sector fund in 1993, in new era started in the

India mutual fund industry, giving the Indian investors a wider choice of fund

families. Also, 1993 was ;the year in which the first mutual fund regulationcome into being under which all mutual funds, except UTI were to be registered

and governed. The erstwhile Kothari pioneer was the first private sector mutual

fund registered in July 1993.

The SEBI (Mutual Fund), 1993, regulations were substituted by a more

comprehensive and revised Mutual Fund Regulation in 1996. The industry now

functions functions under the SEBI (Mutual Fund) Regulation 1996.

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The number of mutual fund housed when on increasing, with many

foreign mutual funds setting up funds in Indian 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 funds.

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 if India with assets under management o;f

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 underthe 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, 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 phjase o;f consolidation and growth.

FUTURE SCENARIO

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The asset bas e will continue to grow at an annual rate of about 30 to

35% over the next few years as investors shift their assets from banks and other

traditional avenues. Some of the older public and private sector players will

either close shop or be taken over.Out of ten public sector players five will sell

out, close down or merge with stronger players in three to four years. In the

private sector this trend has already started with two mergers and one takeover.

Here too some of them will down their shutters in the near future to come.

But this does not mean there is no room for other players. The market will

witness a flurry of new players entering the arena. There will be a large number

of offers from various asset management companies in the time to come. Some

big names like Fidelity, Principal, Old Mutual etc. are looking at Indian market

seriously. One important reason for it is that most major players already have

presence here and hence these big names would hardly like to get left behind.

The mutual fund industry is awaiting the introduction of derivatives in

India as would enable it to hedge its risk and this in turn would be reflected in its

Net Asset Value (NAV).SEBI is working out the norms for enabling the existing

mutual fund schemes to trade in derivatives. Importantly, many market players

have called on the regulator to initiate the process immediately, so that the

mutual funds can implement the changes that are required to trade in

Derivatives.

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PROFESSIONAL MANAGEMENT OF MUTUAL

FUNDS

Mutual funds use professional managers to make the decisions regarding

which companies securities should be bought and sold. The managers of the

mutual fund decide how the pooled funds will be invested. Investment

opportunities are abundant and complex. Fund managers are expected to know

what is available, the risks and gains possible, the cost of acquiring and selling

the investments and the law and regulations in the industry. The ability of the

managers to select porofitable investments and to sell those likely to decline in

value is a key factor for the mutual fund to earn money for the investors.

MARKET TRENDS

Alone UTI with just one scheme in 1964 now comets with as many as

400 odd products and 34 players in the market. In spite of the stiff competition

and losing market share, UTI still remains a formidable force to reckon with.

Last six years have been the most turbulent as will as exiting ones for the

industry. New players have come in, while others have decided to close shop by

either selling off or merging with others. Product innovation is now pass with

the game shifting to performance directly associated with the fund management

industry like distributors registrars and transfer agents, and even the regulators

have become mature and responsible.

The industry is also having a profound impact on financial markets.

While UTI has always been a dominant player on the bourses as well as the debt

markets, the new generations of private funds which have gained substantial

mass are now seen flexing their muscles. Fund managers, by their selection

criteria for stocks have forced corporate governance on the industry. By

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rewarding honest and transparent management with higher valuations, a system

of risk-reward has been created where the corporate sector is more transparent

then before.

Funds have shifted their focus to the recession free sectors like

pharmaceuticals, FMCG and technology sector. Funds performances are

improving. Funds collection, which averaged at less than Rs 1000bn per annum

over five-year period spanning 1993-98 doubled to Rs210bn in 1998-99. in the

current year mobilization till now have exceeded Rs300bn. Total collection for

the current financial year ending March 2000 is expected to reach Rs450bn. It is

noticed that bulk of the mobilization has been by the private sector mutual funds

rather than public sector mutual funds. Indeed private MFs saw a net inflow of

Rs. 7819.34 crore during the first nine months of the year as against a net inflow

of Rs.604.40 crore in the case of public sector funds.

Mutual funds are now also competing with commercial banks in the race

for retail investors savings and corporate float money. The power shift towards

mutual funds has become obvious. The coming few years will show that the

traditional saving avenues are losing out in the current scenario. Many investors

are realizing that investments in savings accounts are as good as locking up their

deposits in a closet. The fund mobilization trend by mutual funds in the current

year indicates that money is going to mutual funds in a big way. The collection

in the first half of the financial year 1999-2000 matches the whole of 1998-99.

India is at the first stage of a revolution that has already peaked in the

U.S the U.S. boasts of an Asset base that is much higher than its bank deposits.

In India, mutual fund assets are not even 10% of the bank deposits, but this

trends is beginning to change. Recent figures indicate that in the first quarter of

the current fiscal year mutual fund assets went up by 115% whereas bank

deposits rose by only 17%. This is forcing a large number of banks to adopt the

concept of narrow banking wherein the deposits are kept in Gilts and some other

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assets which improves liquidity and reduces risk. The basic fact lies that banks

cannot be ignored and they will not close down completely.

MUTUAL FUND COMPANIES

The concept of mutual funds in India dates back to the year 1963. the era

between 1963 and 1987 marked the existence of only one mutual fund company

in India with Rsa. 67bn assets under management (AUM).The new entries of

mutual fund companies in India were SBI Mutual Fund, Canbank Mutual Fund,

Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India

Mutual Fund Kothari pioneer was the first private sector mutual fund company I

India which has now merged with Franklin Templeton. Just after ten years with

private sector players penetration, the total assets rose up to Rs. 1218.05bn.

Today there are 33 mutual fund companies in India.

MAJOR MUTUAL FUND COMPANIES I INDIA

ABN AMRO MUTUAL FUND

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN

AMRO Trustee (India) Pvt. Ltd. As the Trustee Company. The AMC, ABN

AMRO Asset Management (India) Ltd. Was incorporated on November 4, 2003.

Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.

BIRLA SUN LIFE MUTUAL FUND

Birla sun life Mutual Funds is the joint venture of Aditya Birla Group

and Sun Life Financial. Sun Life Financial is a golbl organization evolved in

1871 and is being represented in Canada, the US, the Philippines, Japan,

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Indonesia and Bermuda apart from India. Birla sun Life Mutual Fund follows a

conservative long-term approach to investment. Recently it crossed AUM of Rs.

10,000 crores.

BANK OF BARODA MUTUAL FUND (BOB MUTUAL

FUND)

BANK OF Baroda Mutual Fund or BOB Mutual Fund was setup on

October 30, 1992 under the sponsorship of Bank of Baroda. BOB Mutual Fund

and was incorporated on November 5, 1992. Deutsche Bank AG is the

custodian.

HDFC MUTUAL FUND

HDFC Mutual Fund was setup on june 30, 2000 with two sponsorers

namely Housing Development Finance Corporation Limited and Standard Life

Investments Limited.

HSBC MUTUAL FUND

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

HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING VYSYA MUTUAL FUND

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ING Vysya Mutual Fund was setup on February 11, 1999 with the same

named Trustee Company. It is a joint venture of Vysya and ING. The AMC,

ING Investment Management (India) Pvt. Ltd. Was incorporated on April 6,

1998.

ICICI PRUDINTIAL MUTUAL FUND

The mutual fund of ICICI is a joint venture with prudential Plc. of

America, one of the largest life insurance companies in the US of A. ICICI

PRUDENTIAL Mutual Fund was setup on 13 th of October, 1993 with two

sponsor, prudential Plc. and ICICI Ltd. The trustee Company formed is ICICI

PURDENTIAL Trust Ltd. And the AMC is ICICI PRUDENTIAL Asset

Management Company Limited incorporated on 22an of June, 1993.

SAHARA MUTUAL FUND

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India

Financial Corporation Ltd. As the sponsor. Sahara Asset Management Company

Private Limited incorporated on August 31, 1995 works as the AMC of Sahara

Mutual Fund. The paid-up capital of the AMC stands at Rs 25.8 crore.

SBI MUTUAL FUND

State bank of India Mutual Fund is the firs Bank sponsored Mutual Fund

to launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr.

approximately. Today it is the largest Bank sponsored Mutual Fund in India.

They have already launched 35 Schemes out of which 15 have already yielded

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handsome returns to investors. State Bank of India Mutual Fund has more than

Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread

over 18 schemes.

TATA MUTUAL FUND

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. the

sponsor for Tata Mutual Fund are Tata Sons Ltd., and Tata InvestmentCorporation Ltd. The investment manager is Tata Asset Management Limited

and its Tata Trustee Company Pvt. Limited. Tata Asset Management Limiters is

one of the fastest in the country with more than Rs. 7,703 crores (as on April 30,

2005) of AUM.

KOTAK MAHINDRA MUTUAL FUND

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary

of KMBL. It is presently having more than 1,99,818 investors in its various

schemes. KMAMC started its operations in December 1998. Kotak Mahindra

Mutual Fund offers schemes catering to investors with varying risk- return

profiles. It was the firs company to launch dedicated gilt scheme investing only

in government securities.

UTI MUTUAL FUND

UTI Asset Management Company private Limited, Established in Jan 14,

2003, manages the UTI Mutual Fund with the support of UTI Trustee Company

private Limited. UTI Asset Management Company presently manages a corpus

of over Rs.20000 Crore. The sponsor of UTI Mutual Fund are Bank of Baroda

(BOB), Punjab Bat ional Bank (PNB), State Bank of India (SBI), and Life

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Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are

Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity

Funds and Balance Funds.

RELIANCE MUTUAL FUND

Reliance Mutual Fund (RMF) was established as trust under Indian

Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and RelianceCapital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as

Reliance Capital Mutual Fund which was changed on March 11, 2004. reliance

Mutual Fund was formed for launching of various schemes under which units

are issued to the public with a view to contribute to the capital market and to

provide investors the opportunities to make investments undiversified securities.

STANDARD CHARTERED MUTUAL FUND

Standard Chartered Mutual Fund was set up on March 13, 2000

sponsored by standard Chartered Bank. The Trustee is Standard Chartered

Trustee Company Pvt. Ltd. Standard Chartered Asset Management CompanyPvt. Ltd. Is the AMC which was incorporated with SEBI on December 20, 1999.

FRANKLIN TEMPLETON INDIA MUTUAL FUND

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Alliance Capital Mutual Fund was setup on December 30, 1994 with

Alliance Capital Management Corp. of Delaware (USA) as sponsored. The

Trustee is ACAM Trust Company Pvt. Ltd. And AMC, the Alliance Capital

Asset Management India (Pvt) Ltd. With the corporate office in Mumbai.

BENCHMARK MUTUAL FUND

Benchmark Mutual Fund was setup on June 12, 2001 with Niche

Financial Services Pvt. Ltd. As the sponsored and Benchmark Trustee Company

Pvt. Ltd. As the Trustee Company. Incorporated on October 16, 2000 and

headquartered in Mumbai, Asset Management Company Pvt. Ltd. Is the AMC.

CANBANK MUTUAL FUND

Canbank Mutual Fund was setup on December 19, 1987 with Canara

Bank acting as the sponsor. Canbank Investment Management Services Ltd.

Incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is

in Mumbai.

CHOLA MUTUAL FUND

Chola Mutual Fund under the sponsorship of Cholamandalam

investment & Finance Company Ltd. Was setup on January 3, 1997.

Cholamandalam Trustee Co. Ltd. Is the Trustee Company and AMC is

Cholamandalam AMC Limited.

LIC MUTUAL FUND

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Life Insurance Corporation of India set up LIC Mutual Fund on 19 th june

1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual

Fund was constituted as a Trust in accordance with the provisions of the Indian

Trust Act, 1882. The Company started its business on 29 th April 1994. The

Trustees of LIC Mutual Fund have appointed Jeevan Bima Sashay Asset

Management Company Ltd as the Investment Managers for LIC Mutual Fund.

PROFILE OF THE ORGANISATION

Corporate Profile

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.

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. KMMF has been registered with SEBI vide registration number

MF/038/98/1 dated 23rd June 1998.

The sponsor company, Kotak Mahindra Finance Limited (KMFL), was

converted into Kotak Mahindra Bank Limited (Kotak Bank) in March 2003 their

being granted a Banking License by Reserve Bank of India. KMFL promoted by

Mr. Uday S Kotak, Mr. S.A.A.Pinto and Kotak & Co., was incorporated on

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November 21, 1985, under the name Kotak Capital Management Finance

Limited

In early 1986, the promoters were joined by Late Mr.Harish Mahindra

and Mr. Anand G Mahindra and the Companys name was changed to Kotak

Mahindra Finance Limited. Kotak & Co is a highly respected trading company

of Mumbai, with international business. KMFL started with a capital base of

Rs.30.88 lakhs. From being a provider of a single financial product, KMFL grew

substantially during the seventeen years of its existence into a highly diversified

financial services company and has now converted into a Bank. As on

September 30, 2005, the net worth of Kotak Bank is around Rs. 800 crore and

combined with its subsidiaries, the Group net worth (before minority interest) is

around Rs. 2,000 crore. There are over 47,000 shareholders of Kotak Bank.

The Sponsor and its subsidiaries / associates offer wide ranging financial

services such as loans, lease and hire purchase, consumer finance, home loans,

commercial vehicles and car finance, investment banking, stock broking,

primary market distribution of equity and debt products and life insurance. The

group has offices in over 88 Indian cities and also present internationally in

Mauritius, London, Dubai and New York. Kotak Mahindra (UK) Limited, an

ultimate subsidiary of Kotak Bank, is the first company owned from India to be

registered with the Financial Services Authority in UK. Kotak Mahindra Old

Mutual Life Insurance Limited is a joint venture between Kotak Bank and Old

Mutual Plc based in the UK and with large presence in the South African

insurance market.

Some of the other subsidiaries of Kotak Bank are Kotak Mahindra

Securities Limited, Kotak Mahindra Prime Limited, Kotak Mahindra

International Limited, Kotak Mahindra Private-Equity Trustee Limited, Kotak

Mahindra Investments Limited, Kotak Mahindra Inc., and Kotak Forex

Brokerage Limited.The Sponsor has been consistently profitable and dividend

paying company since inception. All group companies are professionally run

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companies, employing over 5,000 professional staff including CAs, MBAs and

Engineers.

Credit recognitions and awards:

NDTV AWARDS, 2006

LIPPER FUND AWARDS, 2006

ICRA AWARDS, 2006

ICRA MFR 1 (December 2004 & December 2005)

OUTLOOK MONEY BEST WEALTH CREATOR DEBT 2003

CRISIL BEST FUND AWARD 2003

KOTAK MAHINDRA GROUP

Kotak Mahindra is one of India's leading financial conglomerates,

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 diverse financial needs of individuals

and corporate.

The group has a net worth of over Rs. 5,609 crore, employs around

17,100 people in its various businesses and has a distribution network of

branches, franchisees, representative offices and satellite offices across 344

cities and towns in India and offices in New York, London, Dubai, Mauritius

and Singapore. The Group services around 3.6 million customer accounts.

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The journey so far

Key group companies and their businesses

Kotak Mahindra Bank The Kotak Mahindra Group's flagship company,

Kotak Mahindra Finance Ltd which was established in 1985, was

converted into a bank- Kotak Mahindra Bank Ltd in March 2003

becoming the first Indian company to convert into a Bank. Its banking

operations offer a central platform for customer relationships across the

group's various businesses. The bank has presence in Commercial

Vehicles, Retail Finance, Corporate Banking, Treasury and Housing

Finance.

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Kotak Mahindra Capital Company Kotak Mahindra Capital Company

Limited (KMCC) is India's premier Investment Bank. KMCC's core

business areas include Equity Issuances, Mergers & Acquisitions,

Structured Finance and Advisory Services.

Kotak Securities Kotak Securities Ltd. is one of India's largest brokerage

and securities distribution houses. Over the years, Kotak Securities has

been one of the leading investment broking houses catering to the needs of

both institutional and non-institutional investor categories with presence

all over the country through franchisees and coordinators. Kotak Securities

Ltd. offers online (through www.kotaksecurities.com) and offline services

based on well-researched expertise and financial products to non-

institutional investors.

Kotak Mahindra Prime Kotak Mahindra Prime Limited (KMP) (formerly

known as Kotak Mahindra Primus Limited) has been formed with the

objective of financing the retail and wholesale trade of passenger and

multi utility vehicles in India. KMP offers customers retail finance for

both new as well as used cars and wholesale finance to dealers in the

automobile trade. KMP continues to be among the leading car finance

companies in India.

Kotak Mahindra Asset Management Company Kotak Mahindra Asset

Management Company Kotak Mahindra Asset Management Company

(KMAMC), a subsidiary of Kotak Mahindra Bank, is the asset manager

for Kotak Mahindra Mutual Fund (KMMF). KMMF manages funds in

excess of Rs 20,800 crore and offers schemes catering to investors with

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varying risk-return profiles. It was the first fund house in the country to

launch a dedicated gilt scheme investing only in government securities.

Kotak Mahindra Old Mutual Life Insurance Limited Kotak Mahindra Old

Mutual Life Insurance Limited is a joint venture between Kotak Mahindra

Bank Ltd. and Old Mutual plc. Kotak Life Insurance helps customers to

take important financial decisions at every stage in life by offering them a

wide range of innovative life insurance products, to make them financially

independent.

DIRECTORS TRUSTEE COMPANY

Uday S. Kotak B.Com, MMS has been an Executive Vice

Chairman and Managing Director of Kotak Mahindra Bank Limited

(Formerly known as Kotak Mahindra Finance Limited) since August 1, 2002.

Mr. Kotak is the principal founder and promoter of Kotak Mahindra Finance

Ltd. He is responsible for the growth of Kotak Mahindra from a fledgling

finance company in 1985 to a financial institution providing the full basket of

financial services today. He serves as Chairman of the Board.

Mr. Amit Desai is a graduate in Commerce and Law from the

Bombay University. He is an advocate and has about 20 years of experience

in criminal, economic and revenue laws. Mr. Desai is associated with the

Sponsor.

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Mr. Girish Sharedalal is a graduate in Commerce and Arts and

also a Fellow of the Institute of Chartered Accountants of India. Formerly a

Senior Partner of Messrs Dalal, Desai and Kumana, a firm of Chartered

Accountants, he has about 44 years of experience in the field of audit,

taxation and management consultancy.

Mr. Tushar Mavani is a graduate in Commerce and Law from the

Bombay University. He is a partner with Messrs Mulla & Mulla & Craigie

Blunt & Caroe and has about 14 years of experience in the legal field.

Mr. Anirudha Barwe is a postgraduate in Mathematics and also a

Certified Associate of Indian Institute of Bankers, Mumbai. Mr. Barwe has

about 43 years of experience in the field of banking and financial services.

Mr. Barwe was actively associated with and responsible to a great extent for

the success of the Resurgent India Bond issue of SBI. Mr. Barwe retired as

the Managing Director of SBI Capital Markets Limited in October 1998.

After retirement, Mr. Barwe worked with IDFC as Chief Financial Officer

for 3 years.

Mr. Chandrashekhar Sathe is a graduate with B. Tech.(Chemical

Engineering) from IIT, Mumbai. He has over 27 years' experience in

Banking and Finance. He has been a part of the Senior Management team of

the Kotak Mahindra Group since 1992 and was responsible for setting up

the Fixed Income Securities capability of Kotak Mahindra Capital

Company. Mr. Sathe is a widely consulted expert on Foreign Exchange and

Money Markets in India and is a frequent contributor to financial

newspapers, magazines and TV News channels. Mr. Sathe was the Chief

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Executive Officer of the AMC for the period, 1st April, 1998 to 30th

November, 2001 and currently heads the Risk Management function at

Kotak Mahindra Bank Limited. Mr. Sathe is associated with the Sponsor.

3.3 SCHEME DETAILS OF KOTAK MAHINDRA

1. KOTAK 30

Objective: - The investment objective is to generate capital appreciation from a

portfolio of predominantly equity and equity related securities with investment

in, generally not more than 30 stock.

Structure :- Open Ended Equity Growth Scheme

Minimum investment:- Rs 5,000

2. KOTAK TECH


predominantly equity and equity related securities issued by multinational

companies.

Structure: - Open Ended Equity Growth Scheme.


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3. KOTAK MNC


portfolio of predominantly equity and equity related securities issued by

multinational companies.

Structure: - Open Ended Equity Growth Scheme

Minimum investment: - Rs 5,000

4. KOTAK BALANCE

Objective: - The investment objective is to achieve growth by investing in

Equity and equity related instruments, balanced with income generation by

Investing in debt and money market instruments

Structure :- Open Ended Balanced Scheme.


5. KOTAK INCOME PLUS

Objective: - To enhance returns over a portfolio of debt instruments with a

moderate exposure in Equity & Equity related instruments

Structure:- Open Ended Income Scheme

Minimum Investment: - Rs 5,000

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6. KOTAK GILT

Objective: - To generate risk free returns through investments in sovereign

Securities issued by the central government and / or a state government and /

or reverse repos in such securities

Structure: - Open Ended Dedicated Gilt Scheme

Minimum Investment: - Savings & investment Plan; Rs 5,000

Serial Plans; Rs 10 lakhs

7. KOTAK BOND

Objective: - To create a portfolio of debt and money market instruments of

different maturities so as to spread the risk across a wide maturity Horizon &

different kinds of issuers in the debt market

Kotak Bond Short Term Plan

To provide reasonable returns and high level of liquidity by

investing in debt & money market instruments of different

maturities, So as to spread the risk across different kinds of issuers

in the debt market.

Structure: - Open Ended Debt Scheme

Minimum Investment: - Deposit Plan Rs 5,000

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Wholesale Plan: Rs 1 lakh

Short Term Plan: Rs5, 000

Institutional Plan; Rs 1 crore

8. KOTAK LIQUID

Objective; - To provide reasonable returns and high level of liquidity by

Investing in debt and money market instruments of different Maturities so as to

spread the risk across different kinds of Issuers in the debt markets

Structure; - Open Ended Debt Scheme

Minimum Investment: - Rs 5,000

Institutional plan: Rs 1 crore

Institutional Premium Plan: Rs 20 crores

9. KOTAK FLOATER

Objective: - To reduce the interest rate risk associated with investments in fixed

rate instruments by investing predominantly in floating rate securities, money

market Instruments and using appropriate derivatives

Structure: Open Ended Debt Scheme

Minimum Investment: Rs 5,000.

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10. KOTAK DYNAMIC INCOME

Objective: To maximize returns through an active management of a portfolio of

debt and securities.

Structure: Open Ended Debt Scheme

Minimum Investment: Rs 5,000

11. KOTAK GLOBAL INDIA

Objective: To generate capital appreciation from a diversified portfolio of

predominantly equity and equity related securities issued by globally

competitive Indian Companies.

Highlights

Investment in a diversified equity portfolio of Globally Competitive

Indian Companies.

Tax advantage

Recurring Investment Facility available during continuous offer.

Redemption on all Working days.

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FACILITIES PROVIDED BY KOTAK

MAHINDRA

1. Systematic Investment Plan (SIP):

Management of one's finances to attain a defined goal calls for a lot of

discipline, many a times self-imposed. Our Systematic Investment Plan is a tool,

which can help you, inject this discipline in your financial management efforts.

Our Systematic Investment Plan (SIP) provides you the facility to periodically

invest a fixed sum over any defined period of time (6 months or more) in a

disciplined manner. SIPs help in arresting uncertainties associated with trying to

time the market and thus, in the long term tends to iron out market fluctuations.

It brings down your average cost of acquisition of units. As you would allocate a

fixed sum every month, you would buy more units when the prices of our units

are lower than when they are higher.

2. Systematic Withdrawal Plan (SWP):

Our Systematic Withdrawal Plan (SWP) is designed receive a regular

stream of payouts in a defined frequency and to book profits periodically

Through our SWP you can redeem defined sums at a pre-defined frequency by

giving a one-time instruction to us. You may choose to regularly withdraw either

a fixed sum or just the appreciation on your investments.

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This facility caters to two segments of investor needs:

1) Investors wanting defined, regular funds inflow from their investments.

2) Investors interested in booking gains at a regular interval.

3. Systematic Transfer Plan (STP):

Systematic Transfer Plan (SWP) caters a phased entry into the Equity

markets rather than putting in all your money at one trench and to book profits

from your equity holdings. Through our STP you can choose to switch your

investments from one Kotak Mutual scheme to another at a predefined frequency

by giving a one-time instruction to us. You also have a choice between switching

a fixed sum or only the appreciation on your investments.

You can choose to transfer either a fixed sum every defined period or only the

appreciation on your investments over that period from one scheme to another.

The later is helpful, where you do not want the transfer to disturb your capital

contribution.

4. Direct Credit Facility:

Our Direct Credit Facility comes automatically to you (unless you

choose otherwise) if you hold an account with any of the 12 banks listed below:

ABN AMRO Bank HSBC IndusindS Bank

Citi Bank HDFC Kotak Mahindra Bank

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Centurion Bank of Punjab ICICI Standard Chartered

Deutsche Bank IDBI Bank UTI Bank

Direct Credit is safer, faster and convenient compared to the conventional

cheque payout mechanism.

5. ECS of Dividends:

ECS (Electronic Clearing Service) is a Reserve Bank of India offering to

facilitate, among others, faster and seamless payout of dividends directly into

your bank account.

ECS as a mechanism for payout of Dividends is faster, convenient, cost-effective

and hassle-free. Besides, you don't run the risk of loss of dividend instruments in

transit and the associated delays in obtaining a duplicate instrument. This facility

is currently offered across all banks in over 48 locations.

6. Online Transactions Facility:

Our Online Transactions Facility allows you to have instant access to

your investments at any time from anywhere just at the click of a button.

Here's a list of all facilities you can avail by signing in for our Online

Transactions Facility:

-Redemption.

-Switch Over.

-Account Statement.

7. Email Communication:

The world over, e-mail has been revolutionizing communication. No

more need to have paper trails; e-mail makes communication real-time, easy tostore and retrieve and cost-effective.

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You can now opt to receive all your communication from us over e-mail:

- Account Statement for your investments

-Transaction Confirmations

-Daily NAVs and Dividend Updates

-Market Reviews

-Information on product launches, service initiatives, dividends, etc.

-Annual Reports

-Other Statutory Communication

8. SMS Services:

With cell phones fast qualifying for an assured parking in every

pocket, we could not resist allowing you that extra convenience to be in touch

with your investments whenever you wish, wherever you are.

Try our SMS facility to :

-Access the latest NAVs and Dividends for our various schemes on

SMS.

-Receive information on product launches, service initiatives, dividends,

etc. on SMS.

-Post your queries to our Dedicated Services Desk.

9. Updates from Markets:

Market Review-Weekly Market Review [ended 29th February

2008]

Performance-Monthly Performance Snapshot [as on 31/12/2007]

Half Yearly Accounts and Portfolio- March 2007&September

2007 Fact Sheet- Current Month, Yearly Fact Sheet

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KMAMC Annual Report-2006 - 2007

Credit Policy for 2007-08

CONCEPTUAL FRAME WORK

MUTUAL FUNDS

Mutual Funds are professionally managed pool of money

from a group of investors. A Mutual fund manager invests your funds in

securities including stocks and bonds, Money Market instruments or some

combination and decides the best time to buy and sell. By pooling your resources

with other investors in Mutual Funds, you can diversify even a small investment

over a wide spectrum.

With the emergence of the capital market at the center stage of the Indian

financial system from its marginal role a decade earlier, the Indian capital

market also witnessed during the same period a significant institutional

development in the form of diversified structure of Mutual Funds. A Mutual

fund is a special type of investment institution which acts as an investment

conduit.

It pools the savings, particularly of the relatively small investors, and

invests them in a well-diversified portfolio of sound investment. As an

investment intermediary, it offers a variety of services/advantages to the

relatively small investors who on their own cannot successfully construct and

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manage investment portfolio mainly due to the small size of their funds, lack of

expertise and experience, and so on.

Regulated by the Investment Company Act of 1940, mutual

funds are open-ended investment companies that pool investors' money into a

fund operated by a portfolio manager. This manager then turns around and

invests this large pool of shareholder money in a portfolio of various assets, or

combinations of assets. This may include investments in stocks, bonds, options,

futures, currencies, treasuries and money market securities. Depending on the

stated objective of the fund, each will vary in regard to content and risk.

Funds issue and redeem shares on demand at the fund's NAV, or net asset value.

Mutual fund management fees typically range between 0.5% and 2% of assets

per year, but exchange fees and other administrative charges also apply.

DEFINITION :

According to SEBI - Mutual Fund is defined as - A fund established in

the form of a trust to raise moneys through the sale of units to the public or a

section of the public under one or more schemes for investing in securities,

including money market instruments.

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 the offer document.

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OBJECTIVES OF MUTUAL FUNDS

The objectives sought to be achieved by Mutual funds are as follows :-

To provide an opportunity for lower income groups to acquire without

much difficulty property in the form of shares.

To cater mainly to the need of individual investors whose means are

small?

To manage investors portfolios in a manner that provides regular

income, growth, safety, liquidity and diversification.

ADVANTAGES OF MUTUAL FUNDS

The following are the advantages of investing in a Mutual Fund are:

Professional Management

Diversification

Convenient Administration

Return Potential

Low Costs

Liquidity

Transparency

Flexibility

Choice of schemes

Tax benefits

Well regulated

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DISADVANTAGES OF INVESTING IN MUTUAL

FUNDS

-- Many funds charge hefty fees, leading to lower overall returns.

-- Over time, statistics have shown that most actively managed funds tend to

under perform their benchmark averages.

-- Mutual funds cannot be bought or sold during regular trading hours, but

instead are priced just once per day.

TYPES OF MUTUAL FUND SCHEMES

Wide variety of Mutual Fund Schemes exists to cater to the needs such as

financial position, risk tolerance and return expectations etc. The table below

gives an overview into the existing types of schemes in the Industry.

BY STRUCTURE

Open Ended Schemes

Close Ended Schemes

Interval Schemes

BY INVESTMENT OBJECTIVE

Growth Schemes

Income Schemes

Balanced Schemes

Money Market Schemes

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OTHER SCHEMES

Tax Saving Schemes

Special Schemes

Index Schemes

Sector Specific Schemes

SCHEMES OF MUTUAL FUNDS

Mutual fund schemes are usually open-ended (Perpetually

open for investors and redemption) or close-ended (with a fixed term). A Mutual

Fund scheme issues units that are normally priced at Rs.10/- during the initial

offer. The number of units you own against the total number of units issued by a

Mutual Fund scheme determines your share in the profits or losses in the

scheme.

The Mutual Funds can be classified under the following types:

ACCORDING TO STRUCTURE

STRUCTURE

OPEN-ENDED

SCHEME

CLOSED-ENDED

SCHEME

INTERVAL

SCHEME

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OPEN - ENDED SCHEME

An open-ended scheme is a scheme in which an investor can buy and sell

units on a daily basis. The scheme has a perpetual existence and flexible, ever

changing corpus. Open-Ended schemes do not have a fixed maturity period. The

investors are free to buy and sell any number of units, at any point of time, at

prices that are linked to the NAV of the units.

In these schemes the investor can invest and disinvest any amount, any

time after a short initial lock in period. This scheme gives investors with

instant liquidity and fund announces sale and repurchase price from time to time.

The units can be bought from and sold to any Mutual Fund.

ADVANTAGES OF OPEN-ENDED FUNDS OVER

CLOSE-ENDED FUNDS

Any time Entry Option.

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This provides ready liquidity to the investors and avoids reliance on

transfer deeds, signature verifications and bad deliveries.

Allows to enter the fund at any time and even to invest at regular

intervals.

Any time Exit Option.

CLOSE ENDED SCHEME

A Close-ended scheme has a stipulated maturity period. E.g. 5-7 years. A

Close-ended scheme is one in which the subscription period for the Mutual Fund

remains open only for a specific period, called the redemption period. At the

end of this period, the entire corpus is disinvested and the proceeds distributed to

unit holders. After final distribution the scheme ceases to exist. Such schemes

can be rolled over by approval of unit holders.

Reasons for fluctuations in NAV

Investors doubts about the abilities of the funds management.

Lack of sales effort (Brokers earn less commission on closed end schemes

than on open ended schemes).

Risk ness of the fund.

Lack of marketability of the funds units.

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INTERVAL SCHEMES

Interval schemes are those that combine both the features of both open-

ended and close-ended schemes. The units may be traded on the stock exchange

or may be open for sale redemption during during predetermined intervals at

NAV related prices.

ACCORDING TO INVESTMENT OBJECTIVE

INVESTMENT

OBJECTIVE

EQUITY SCHEME

DEBT OR BOND SCHEME

BALANCED SCHEME

MONEY MARKETSCHEME

GROWTH & INCOME

FUND

OTHER SCHEMES

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TYPES OF RISK

All investments involve some form of risk. Even an insured band account

is subject to the possibility that inflation will rise faster than your earnings,

leaving you with less real purchasing power than when you started (Rs.1000 gets

you less than it got your father when he was your age). Consider these common

types of risks and evaluate them against potential rewards when you select an

investment.

1) Market Risk: At times the prices or yields of the all the securities

in a particular market rise or fall due to broad outside influences. When this

happens, the stock prices of both an outstanding, highly profitable company

and a fledging corporation may be affected. This change in price is due to

Market Risk.

2 ) Inflation Risk: Some times referred to as loss of purchasing

power. Whenever inflation sprints forward faster than the earnings on your

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investment, you run the risk that youll actually be able to buy less, not more.

Inflation risk also occurs when prices rise faster than your return.

3) Credit Risk: In short, how stable is the company or entity to which

you lend your money when you invest. How certain are you that it will be

able to pay the interest you are promised, or repay your principal when the

investment matures.

4) Interest Risk: Changing interest rates affect both equities and bonds

in many ways. Investors are minded that predicting which way rates Effect

of loss rev professionals and inability to adapt: An industries key asset is

often the personnel who run the business i.e. intellectual properties or the key

employees of the respective companies. Given the ever-changing complexion

of few industries and the high obsolescence levels, availability of qualified,

trained and motivated personnel is very critical for the success of industries

in few sectors. It is, therefore, necessary to attract key personnel and also to

retain them to meet the changing environment and challenges the sector

offers. Failure or inability to attract/retain such qualified key personnel may

impact the prospects of the companies in the particular sector in which fund

invests.

5) Exchange risk: A number of companies generate revenues in foreign

currencies and may have investments or expenses also denominated in

foreign currencies. Changes in exchange rates may, therefore, have a positive

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negative impact on companies which in turn would have an effect on the

investment of the fund.

6). Changes in government policy: Changes in government

policy especially in regard to the tax benefits may impact business prospects

of the companies leading to an impact on the investments made by the fund.

RISK RETURN GRID

RISK

TOLERANCE/

RETURN

EXPECTED

FOCUS

SUITABLE

PRODUCTS

BENEFITS

OFFERED BY

MFS

Low DebtBank/company FD,

Debt based Funds

Liquidity, Better

Post-Tax return

Medium

Partially

Debt,

Partially

Equity

Balanced Funds,

some Diversified

Equity Funds are

some debt Funds,

Mix of share and

Fixed Deposits

Liquidity, Better

Post-Tax returns,

Better

Management,

Diversification

High Equity

Capital Market,

Equity Funds

(Diversified as well

as Sector)

Diversification,

Expertise in stock

picking, Liquidity,

Tax free dividends

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CLASSES OF MUTUAL FUND SHARES:

The most common variations of share classes for load mutual funds are front-

load A shares, back-end load B shares, and level-load C shares.

Class A Shares:

A mutual fund's A Shares charge a front-end load at the time of purchase. This is

a sales fee that is charged as a percentage of the total investment and is used to

compensate the financial representative who sells the fund. The amount of the

front-end load is subtracted from the original investment.

For example: If an investor places $10,000 in a mutual fund with a front-end

load of 2%, then the total sales charge would be $200. The remaining $9,800

will go toward the purchase of shares in the fund.

A shares may also impose an asset-based sales charge. Investors do not pay these

charges directly. Instead, they are taken from the fund's assets. The fund then

uses these fees to market and distribute its shares. The 12b-1 fee, which can

equal a maximum of 0.25% per year, is an example of an asset-based sales

charge.

Class B Shares:

B Shares charge back-end loads. When an investor purchases the B shares of a

mutual fund, the sales charge is deferred until the fund is sold. This deferred load

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usually decreases each year. B shares typically charge a higher asset-based sales

charge than Class A shares

For example: The B shares of a mutual fund may carry a 5% load if shares are

sold within the first year. This back-end load of 5%, however, could be reduced

by 1 % every year, until it is eliminated in the 5th year. Some B shares

automatically convert to A shares after a specified period of time, which reduces

the 12b-1 fees

Class C Shares:

Class C shares typically do not impose a front-end load, but will often charge a

nominal fee if the shares are sold within one year. Class C shares often impose a

high asset-based sales charge, but will not convert to A shares when the load

reverts to zero.

USAGE OF MUTUAL FUND

Since the Investment Company Act of 1940, a mutual fund is one of three basic

types ofinvestment companies available in theUnited States.

Mutual funds can invest in many kinds ofsecurities. The most common are cash

instruments, 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 (e.g., high-yieldjunk bonds or investment-grade corporate

bonds), type of issuers (e.g., government agencies, corporations, or

municipalities), or maturity of the bonds (short- or long-term). Both stock and

bond funds can invest in primarily U.S. securities (domestic funds), both U.S.

and foreign securities (global funds), or primarily foreign securities

(international funds).

Most mutual funds' investment portfolios are continually adjusted under the

supervision of a professional manager, who forecasts cash flows into and out of

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the fund by investors, as well as the future performance of investments

appropriate for the fund and chooses those which he or she believes will most

closely match the fund's stated investment objective. A mutual fund is

administered under an advisory contract with a management company, which

may hire or fire fund managers.

Mutual funds are subject to a special set of regulatory, accounting, and tax rules.

In the U.S., unlike most other types of business entities, they are not taxed on

their income as long as they distribute 90% of it to their shareholders and the

funds meet certain diversification requirements in the Internal Revenue Code.

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

tax-free to the shareholder. Taxable distributions can be eitherordinary income

or capital gains, depending on how the fund earned those distributions. Net

losses are not distributed or passed through to fund investors.

NET ASSET VALUE

The net asset value, or NAV, is the current market value of a fund's

holdings, less the fund's liabilities, usually expressed as a per-share amount. For

most funds, the NAV is determined daily, after the close of trading on some

specified financial exchange, but some funds update their NAV multiple times

during the trading day. The public offering price, or POP, is the NAV plus a

sales charge. Open-end funds sell shares at the POP and redeem shares at the

NAV, and so process orders only after the NAV is determined. Closed-end funds

(the shares of which are traded by investors) may trade at a higher or lower price

than their NAV; this is known as a premium ordiscount, respectively. If a fund

is divided into multiple classes of shares, each class will typically have its own

NAV, reflecting differences in fees and expenses paid by the different classes.

Some mutual funds own securities which are not regularly traded on any

formal exchange. These may be shares in very small or bankrupt companies;

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they may be derivatives; or they may be private investments in unregistered

financial instruments (such as stock in a non-public company). In the absence of

a public market for these securities, it is the responsibility of the fund manager to

form an estimate of their value when computing the NAV. How much of a fund's

assets may be invested in such securities is stated in the fund's prospectus.

MANAGEMENT FEES

The management fee for the fund is usually synonymous with the

contractual investment advisory fee charged for the management of a fund's

investments. However, as many fund companies include administrative fees inthe advisory fee component, when attempting to compare the total management

expenses of different funds, it is helpful to define management fee as equal to

the contractual advisory fee + the contractual administrator fee. This "levels the

playing field" when comparing management fee components across multiple

funds.

Contractual advisory fees may be structured as "flat-rate" fees, i.e., asingle fee charged to the fund, regardless of the asset size of the fund. However,

many funds have contractual fees which include breakpoints so that as the value

of a fund's assets increases, the advisory fee paid decreases. Another way in

which the advisory fees remain competitive is by structuring the fee so that it is

based on the value of all of the assets of a group or a complex of funds rather

than those of a single fund.

NON-MANAGEMENT EXPENSES

Apart from the management fee, there are certain non-management

expenses which most funds must pay. Some of the more significant (in terms of

amount) non-management expenses are: transfer agent expenses (this is usually

the person you get on the other end of the phone line when you want to

purchase/sell shares of a fund), custodian expense (the fund's assets are kept incustody by a bank which charges a custody fee), legal/audit expense, fund

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accounting expense, registration expense (the SEC charges a registration fee

when funds file registration statements with it), board of directors/trustees

expense (the members of the board who oversee the fund are usually paid a fee

for their time spent at meetings), and printing and postage expense (incurred

when printing and delivering shareholder reports).

INVESTOR FEES AND EXPENSES

Fees and expenses borne by the investor vary based on the arrangement

made with the investor's broker. Sales loads (or contingent deferred sales loads

(CDSL)) are not included in the fund's total expense ratio (TER) because they donot pass through the statement of operations for the fund. Additionally, funds

may charge early redemption fees to discourage investors from swapping money

into and out of the fund quickly, which may force the fund to make bad trades to

obtain the necessary liquidity. For example, Fidelity Diversified International

Fund (FDIVX) charges a 1 percent fee on money removed from the fund in less

than 30 days.

BROKERAGE COMMISSIONS

An additional expense which does not pass through the statement of

operations and cannot be controlled by the investor is brokerage commissions.

Brokerage commissions are incorporated into the price of the fund and are

reported usually 3 months after the fund's annual report in the statement of

additional information. Brokerage commissions are directly related to portfolioturnover (portfolio turnover refers to the number of times the fund's assets are

bought and sold over the course of a year). Usually, higher rate of portfolio

turnover returns in higher brokerage commissions. The advisors of mutual fund

companies are required to achieve "best execution" through brokerage

arrangements so that the commissions charged to the fund will not be excessive.

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DATA ANALYSIS

FUND : TATA OPEN-ENDED BALANCED

GROWTH FUND

OBJECTIVE : Aims to invest in equity and debt oriented securities so as to

give investor balanced returns.

PORTFOLIO OF THE FUND

Sector APR

2010

May

2010

A FM CG 15.14 15.89

B Energy 14.94 13.28

C Finance 8.65 8.05

D Engineering &industrymachinery

6.65 8.47

E Communication 4.98 7.21

F Technology 4.85 5.08

G Health care 2.72 3.05

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H Diversified 2.65 2.69

I Automobile 2.06 2.52

J Services 1.94 2.02

TATA OPEN-ENDED BALANCED GROWTH FUND

Sector wise chart

56

0

2

4

6

8

10

12

14

16

30-

30-


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FUND : BIRLA OPEN-ENDED BALANCED

GROWTH FUND

OBJECTIVE : The Scheme aims to balance income requirements

with growth of capital through balanced mix of investment in equity and debt.

66.38%

16.14%

17.48%

Equity Debt Money Market

CHART SHOWING ASSET ALLOCATION OF TATABALNCED FUND

57


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Sector Apr 2010 May

2010

A Health care 16.39 12.89

B FM CG 12.45 11.32

C Energy 6.18 7.44

D Engineering & industrymachinery

5.28 6.61

E Diversified 4.56 5.02

F Financial 4.54 4.80

G Chemical 4.22 4.34

H Technology 3.86 4.01

I Services 3.03 3.74

J Communication 1.31 2.01

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0

2

4

6

8

1 0

1 2

1 4

1 6

1 8

A B C D E F G H I J

3 0 / 0 4 / 2

3 0 / 0 5 / 2

Allocation

Sector Name

59

Sector wise chart:


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The BIRLA Balanced Fund Portfolio consists of 62.24% Equity

holdings, 29.36% Debt, 8.40% Money Market. It is evident from the data that

though the Investors have risk taking ability, they balanced their investments

by investing in Debt also.

FUND : PRU ICICI OPEN-ENDED BALANCED

GROWTH FUND

OBJECTIVE : Aims to invest in equity and debt oriented securities

so as to give investor balanced returns.

62.24%

29.36%

8.40%

CHART SHOWING ASSET ALLOCATION OF BIRLA

BALANCED

Equity Debt Money Market

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Sector Apr 10 May 10

A Energy 6.95 5.80

B Financial 5.65 4.92

C FM CG 4.43 4.48

D Diversified 4.29 4.01

E Communication 4.15 4.65

F Metals 3.62 4.87

G Engineering & industrymachinery

3.53 5.2

H Chemicals 3.26 4.3

I Health care 2.67 3.8

J Technology 2.67 3.2

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0

1

2

3

4

5

6

7

A B C D E F G H I J

3 0 -A p3 1 -M a

Sector Name

Allo

cation

62

Sector wise chart:


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The Pru ICICI Balanced Fund Portfolio consists of 53.87% Equity

holdings, 43.13% Debt. It is evident from the data that though the Investors

have risk taking ability, they balanced their investments by investing in Debt

also.

FUND : DSP BLACK ROCK OPEN-ENDED BALANCED

GROWTH FUND

OBJECTIVE : Seeks to generate long term capital appreciation and

current income from a portfolio constituted of equity and equity related

securities as well as fixed income securities.

CHART SHOWING ASSET ALLOCATION OF PRU ICICI

BALANCED FUND

56.87%

43.13%

63

Equity Debt


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Sector Apr 2010 may2010

A Energy 16.42 14.19

B FM CG 11.72 10.93

C Health care 8.43 8.51

D Engineering & IndustrialMachinery

3.88 4.65

E Technology 3.85 5.05

F Automobile 2.92 3.01

G Finance 2.83 2.88

H Services 2.57 4.87

I Chemicals 2.51 3.28

J Diversified 1.84 1.67

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CHART SHOWING ASSET ALLOCATION OFDSP MERRILL LYNCH BALANCED FUND

0

2

46

8

10

12

14

16

18

A B C D E F G H I J

30-Apr-10

31-May-1

Sector Name

Allocatio

n

SECTOR WISE CHART:

63.59%

20.16%

16.25%

Equity holdings Money market Debt holdings

65


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FUND : JM FINANCIAL OPEN-ENDED

BALANCED GROWTH

OBJECTIVE : Aims to provide investors with liquidity and current

income along with capital appreciation.


Sector APR10 MAY 10

A Financials 11.38 12.72

B Engineering 7.75 19.12

C Communication 7.64 9.49

D Energy 7.34 11.44

E Automobile 5.60 4.64

F Diversified 5.07 2.92

G Construction 4.71 4.58

H Textiles 2.60 0.00

66


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67

0

2

4

6

8

10

1214

16

18

20

A B C D E F G H

30-04-2010

31-05-2010

CHART SHOWING ASSET ALLOCATION OF JM FINANCIAL

BALANCED FUND

Equity Debt

52.09%

21.64%

26.27%

Money market


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TATA OPEN-ENDED BALANCED GROWTH FUND

DATE 1st JUN09

30thAUG 31st oct 31st dec 28th feb 30th apr 31st

May10

NAV 60.67 53.24 56.00 41.84 43.56 48.95 58.60

Fund performance and NAV values over a period of 1 year.

68

0

10

20

30

40

50

60

70

1stju

n08

31stAu

g

31stOc

t

31-Dec

28thFeb

30thAp

r

31stMa

ry09


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BIRLA OPEN-ENDED BALANCED GROWTH FUND

DATE 1st Jun09 30th aug 31st oct 31st dec 28st feb 30th apr 31st May10

NAV 31.60 28.722 27.0411 25.2149 26.9224 29.2455 32.29


0

5

10

15

20

25

30

35

stjun

ethau

g

0thoct

1std

ec

8thfeb

0thapr

ay2010

69


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Pru ICICI OPEN-ENDED BALANCED GROWTH FUND

DATE 1st

june09

30th aug 31st Oct 31th dec 28th feb 30th Apr 31st

May10

NAV 37.78 33.26 34.79 25.86 27.16 29.39 33.83


70

0

5

10

15

20

25

30

35

40

1stJun

e08

30thAu

g

31st

oct

31st

dec

28thfeb

30th

apr

31stMa

y10


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KOTAK OPEN-ENDED BALANCED GROWTH FUND

DATE 1st

June0930th july 30thSep 30th

Nov

31st Jan 31st mar 31st

May10

NAV 48.69 43.73 46.07 36.46 36.91 39.67 47.91


71

0

5

10

15

20

25

30

35

40

45

50

1stju

ne2009

30thjuly

30thsep

30thnov

31stjan

31stma

r

30thma

y


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JM FINANCIAL OPEN-ENDED BALANCED GROWTH

FUND

DATE 1st june08

30th

July31st Sep 30th Nov 31st jan 31thMar 31st

May09

NAV 24.12 21.13 22.12 14.06 15.00 14.85 20.76


72

0

5

10

15

20

25

1stju

ne09

30thjuly

31stsep

30thnov

31stjan

10

31stMa

r10

30th

may1

0


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INTERPRETATION

PERFORMANCE EVALUATION

We are interested in discovering if the management of a mutual fund is

performing well; that is, has management done better through its selective

buying and selling of securities than would have been achieved through merely

buying the market picking a large number of securities randomly and holding

them throughout the period?

One of the most popular ways of measuring managements

performance is by comparing the yields for the managed portfolio with the

market or with a random portfolio.

The following formula can be used to evaluate Mutual fund performance:-

Where:

NAV t = per-share net asset value at the end of yeart

D t = Capital appreciation during year.

73

NAVt + Dt1

NAVt 1


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NAV t-1 = per-share net asset value at the end of the previous year.

PERFORMANCE EVALUATION OF SELECTED

FUNDS

NAV t-1 = 1stJune, 2009

NAVt= 31st may2010

1) TATA Open-Ended Balanced growth Fund

NAV t-1 NAV t

D t (NAV t NAV t-

1)

60.67 59.60 -1.07

Applying the formula we get-

= -1.07

59.8878

= -0.0176 x 100

= -1.76 %

2) BIRLA Open-Ended Balanced growth Fund

NAV t-1 NAV t

D t (NAV t NAV t-

1)31.6 32.29 0.69


= 0.6931.6

= 0.0218 x 100

= 2.18%

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3) Pru ICICI Open-Ended Balanced growth Fund

NAV t-1 NAV t

D t (NAV t NAV t-

1)37.78 33.83 -3.95


= -3.95__37.78

= -0.1045x 100

= -10.45%

4) DSP MERRILL LYNCH Open-Ended Balanced growth

Fund

NAV t-1 NAV t

D t (NAV t NAV t-

1)

48.69 47.91 -0.78


= -0.78__48.69

= -0.01606x 100

= -1.6%

5) JM FINANCIAL Open-Ended Balanced growth Fund

NAV t-1 NAV t

D t (NAV t NAV t-

1)

24.12 20.76 -10.9269


= -3.36__24.12

75


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= -0.139 x 100 = -13.93%

FUND PERFORMANCE RANKING

Name of the Fund NAV Rank

Birla open-ended Balanced Growth Fund2.18% 1

DSP Merrill Lynch open-ended Balanced Growth

Fund -1.6%

2

Tata open-ended Balanced Growth Fund

-1.76%3

Pru ICICI open-ended Balanced Growth Fund-10.45% 4

JM Financial open-ended Balanced Growth Fund -13.93% 5

CHART SHOWING PERFORMANCE OF FUNDS

76

-1 4

-1 2

-1 0

-8

-6

-4

-2

0

2

4

BRILA

KOTA

KTA

TA

PRUICICI

JMFINA

NCE


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SWOT ANALYSIS

Strengths

1. Simplified speed and quality of services offered by Mutual Fund Companies.

2. As on investment tool for the investors to boost.

3. Wide range of investment schemes offered by mutual fund companies to

meet various requirements of investors.

4. Diversification of funds which minimizes the risk.

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Weakness

1. NAV range doesnt seem to fit in with corporate compensation. There is

positioning and pricing problem.

2. Delays in infrastructure development may dampen the growth rate of NAVs

of different schemes, which in turn affects the investor to invest.

3. Deregulation of interest rates may affect the profitability of companies.

4. Stiff competition from existing mutual fund companies and new Entrants.

Opportunities

1. Perceptive changes in life style.2. Addition of level of new class of entrepreneurs to the broad base of middle

class of the market.

3. The range of schemes and services offered by mutual fund companies is large

enough for all investors to have a slice of cake.

4. The falling interest rates would make to raise capital at less cost. Hence more

opportunities for companies.

5. Globalization is buying fresh opportunities in terms of foreign tie-ups.

Threats:

1. Risk of scams.

2. Severe increase in the competition among mutual fund companies results in

decreasing the spread.

FINDIGS OF THE STUDY

The following findings are emerged from the Present Study entitled on An

Overview of Mutual Fund Industry in India A Study with reference to Kotak

Mahindra Asset Management Co., Ltd. In a nutshell, these are:

Highest number of investors come from salary class.

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Most of the people in between the age group of 25-35 invest their money

up to 6% of their annual income in Mutual fund.

Five balanced fund schemes are chosen for the study TATA, BIRLA

SUN LIFE, ICICI PRUDENTIAL, JM FINANCE, KOTAK MUTUAL FUNDS.

The funds chosen for the study are some of the top performance in the market.

The fund investment is a combination of equity, debt and money market.

As such the investments are diversified and the risk is balanced.

The mutual funds are one of the biggest advantages to the investors those

who invest their money in all his favorite stocks and bonds.

Mutual Funds have still not become truly Investment

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