Sagar[1] Modi Final New

7/28/2019 Sagar[1] Modi Final New

1/105

A STUDY ON

MUTUAL FUND INVESTMENTS

With reference toKOTAK MUTUAL FUNDS,

VIJAYAWADA.

A project report submitted to the Department of Commerce and

Management Studies, Andhra University, Visakhapatnam in partial

fulfillment for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

By

S.VIDYA SAGAR(Reg No.2055455109)

UNDER THE GUIDANCE OF

Dr. N.KISHORE BABU Ph.D.,

Associate ProfessorDCMS - Andhra University

DEPARTMENT OF COMMERCE AND MANAGEMENT STUDIES

ANDHRA UNIVERSITY (CAMPUS)VISAKHAPATNAM

2005-2007

1


2/105

ACKNOWLEDGEMENT

I would like to take this opportunity to express my deep and profound

gratitude to the people concerned who have helped me directly or indirectly

in successful completion of this project.

My sincere thanks to P.Kiran Kumar, (Project guide external),

KOTAK MUTUAL FUNDS, Vijayawada who has motivated me with his

valuable suggestions and helped me at each and every point for the

completion of my project for permitting me to do this project in such an

esteemed organization.

I would like to thank Dr. N.Kishore Babu, (Project guide internal)

who has given his valuable guidance and support to make my project more

successful.

(S.VIDYA SAGAR)

2


3/105

DECLARATION

I take the privilege to declare that the project work entitled A STUDY ON

MUTUAL FUNDS with reference to KOTAK MUTUAL FUNDS,

Vijayawada has been carried out by me under the able guidance of Dr.

N.Kishore Babu, Ph.D. The project is submitted in partial fulfillment of the

requirement for the award of the degree of MASTER OF BUSINESS

ADMINISTRATION.

This work has not been submitted else where either in part or wholly for any

other degree or discipline.

(S.VIDYA SAGAR)

3


4/105

CERTIFICATE

This is to certify that the project report entitled A STUDY ON

MUTUAL FUND INVESTMENTS submittedby S. VIDYA SAGAR in

partial fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION during the period 2005-

07 is a bonafide required of the work done by him under my supervision

Dr. N.KISHORE BABU, Ph.D

Project Guide

4


5/105

CONTENTSPage No.

INTRODUCTION 07

CONCEPT OF MUTUAL FUNDS 09

HISTORY OF MUTUAL FUNDS 11

A BRIEF PROFILE OF THE INDUSTRY 19

DETAIL PROFILE OF THE ORGANIZATION 42

PERFORMANCE OF THE MUTUAL FUNDS 47

SCHEMES IN KOTAK MUTUAL FUNDS 70

CHAPTER-5

ANALYSIS OF STUDY 74

FINDINGS, SUGGESTIONS 100

BIBLIOGRAPHY

5

CHAPTER-1 CHAPTER-2CHAPTER-3

CHAPTER-4 CHAPTER-6


6/105

6


7/105

CHAPTER-I

7


8/105

INTRODUCTION

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 invested by the

fund manager in different types of securities depending upon the objective of the

scheme. These could range from shares to debentures to money market

instruments. The income earned through these investments and the capital

appreciations realized by the scheme are shared by its unit holders in proportion to

the number of units owned by them (prorate). Thus a Mutual Fund is the most

suitable investment for the common man as it offers an opportunity to invest in a

diversified, professionally managed portfolio at a relatively low cost. Anybody

with an investaible surplus of as little as a few thousand rupees can invest in

Mutual Funds. Each Mutual Fund scheme has a defined investment objective and

strategy.

A mutual fund is the ideal investment vehicle for todays complex andmodern financial scenario. Market for equity shares, bonds and other fixed income

instruments, real estate, derivatives and other assets have become mature and

information driven. Price changes in these assets are driven by global events

occurring in faraway place. A typical individual is unlikely to have the knowledge,

skills, inclination and time to keep track of events, understand their implications

and act speedily. An individual also funds it difficult to keep track of ownership of

his assets, investments, brokerage dues and bank transactions etc.

A mutual fund is the answer to all these situations. It appoints

professionally qualified and experienced staff that manages each of these functions

on a full time basis. The large pool of money collected in the fund allows it to hire

8


9/105

such staff at a very low cost to each investor. In effect, the mutual fund vehicle

exploits economics of scale in all three areas research, investments and

transaction processing. While the concept of individuals coming together to invest

money collectively is not new, the mutual fund in its present form is a 20

th

centuryphenomenon. In fact, mutual funds gained popularity only after the Second World

War. Globally, there are thousands of firms offering tens of thousands of mutual

funds with different investment objectives. Today, mutual funds collectively

manage almost as much as or more money as compared to banks.

A draft offer document is to be prepared at the time of launching the fund.

Typically, it pre specifies the investment objectives of the fund, the risk

associated, the costs involved in the process and the broad rules for entry into and

exit from the fund and other areas of operation. In India, as in most countries,

these sponsors need approval from a regulator, SEBI (Securities exchange Board

of India) in our case. SEBI looks at track records of the sponsor and its financial

strength in granting approval to the fund for commencing operations.

A sponsor then hires an asset management company to invest the funds

according to the investment objective. It also hires another entity to be the

custodian of the assets of the fund and perhaps a third one to handle registry work

for the unit holders (Subscribers) of the fund.

In the Indian context, the sponsors promote the Asset Management

Company also, in which it holds a majority stake. In many cases a sponsor can

hold a 100% stake in the Asset Management Company (AMC), E.g. Birla Global

Finance is the sponsor of the Birla Sun Life Asset Management Company LTD.,

which has floated different mutual funds schemes and also acts as an asset

manager for the funds collected under the schemes.

9


10/105

CONCEPT

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 appreciations realized are

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 ofsecurities at a relatively low cost.

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

10


11/105

The investors are known as unit holder. The fund pools money from a

number of all investors and invest the in the securities according the objectives of

the scheme to generate returns to the investors on their investment.

11


12/105

HISTORY OF THE INDIAN MUTUAL

FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of

Unit Trust of India, at the initiative of the Government of India and Reserve Bank

the. The history of mutual funds in India can be broadly divided into four distinct

phases.

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament.

It was set up by the Reserve Bank of India and functioned under the Regulatory

and administrative control of the Reserve Bank of India. In 1978 UTI was de-

linked from the RBI and the Industrial Development Bank of India (IDBI) took

over the regulatory and administrative control in place of RBI. The first scheme

launched by UTI was Unit Scheme 1964. at the end of 1988 UTI had Rs. 6,700

crores of assets under management.

Second Phase 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non-UTI, public sector mutual funds set up by

public sector banks and Life Insurance Corporation of India (LIC) and General

Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI

Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec

87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov89), Bank of India (Jan 90), Bank of Baroda Mutual Fund (Oct 92), LIC

established its mutual fund in June 1989 while GIC had set up its mutual fund in

December 1990.

12


13/105

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

47,004 crores.

Third Phase 1993-2003 (Entry of Private Sector Funds)With the entry of private sector funds in 1993, a new era started in the

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

families. Also, 1993 was the year in which the first Mutual Fund Regulations

came into being under which all mutual funds, except UTI were to be registered

and governed. The erstwhile

Kothari Pioneer (now merged with Franklin Templeton) was the first private

sector mutual fund registered in July 1993.

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

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

functions under the SEBI (Mutual Funds) Regulations 1996.

The number of mutual fund houses went on increasing with many foreign

mutual funds setting up funds in India and also the industry has witnessed several

mergers and acquisitions. As at the end of January 2003, there were 33 mutual

funds with total assets of Rs. 1, 21,805 cross. The Unit Trust of India with Rs.

44,541 cross 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 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

13


14/105

return and certain other schemes. The Specified Undertaking of Unit Trust of

India, functioning under an administrator and under the rules framed by

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

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

Regulations. With the bifurcation of the erstwhile UTI which had in March 2000

more than Rs. 76,000 crores of assets under management and with the setting sup

of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and

with recent mergers taking place among different private sector funds, the mutual

fund Industry has entered its current phase of consolidation and growth. As at the

end of October 31, 2003, there were 31 funds, which manage assets of Rs. 126726

crores under 386 schemes.

14


15/105

OBJECTIVES OF MUTUAL FUNDS

The objectives of investing in a Mutual Fund are:

Professional Management

One of the major advantage of the mutual fund is the availability of low

cost highly professional and skilled management services. The managers have

sound knowledge and wide experience in investment. Their skills along with much

needed research into available investment options ensure a much better return than

what an investor can manage on his own.

Diversification

Market related risk can be reduced by diversification of portfolio. For a

small investor appropriate diversification is not possible due to shortage of

minimum required funds. But with the investments in mutual funds, portfolio of

even a small investor gets automatically diversified.

Convenient Administration

Mutual funds are administrated by a group of well qualified experts and

research analyst. They have a in-depth knowledge of the market.

Return Potential Mutual funds provide a new avenue of returns to the investors. A

large pool of money is brought and invested in the securities by experts and

generate a good return to the unit holders.

Low Costs

A mutual fund can offer economies of search and verification due to the

size and scale of operations.

15


16/105

Liquidity

Mutual fund invests in a number of securities but not all the securities are

easily sellable. When a investor invests in a mutual fund, he can sell his units any

time to the fund, in case of open ended schemes of cash his investment by sellingin the secondary market. In case of close ended schemes.

Transparency

Mutual funds maintain complete transparency in the funds invested. In the

offer document there have to disclose information regarding the trustees of the

company. Asset Management Company, where the fund will be invested, etc.

Flexibility

Mutual funds provide investor the flexibility to shift from one schemes to

another without any additional cost. If the investor likes to change the scheme

which he is in to another he can.

16


17/105

MUTUAL FUNDS IN INDIA (1964-

2000)

The end of millennium marks 36 years of existence of mutual funds in this

country. The ride through these 36 years is not been smooth. Investor opinion is

still divided. While some are for mutual funds others are against it.

UTI commenced its operations from July 1964. The impetus for

establishing a formal institution came from the desire to increase the propensity of

the middle and lower groups to save and to invest. UTI came into existence during

a period market by great political and economic uncertainty in India. With war on

the borders and economic turmoil that depressed the financial market,

entrepreneurs were hesitant to enter capital market.

The already existing companies found it difficult to raise fresh capital, as

investors did not respond adequately to new issues. Earnest efforts were required

to canalize savings of the community into productive uses in order to speed up the

process of industrial growth.

The then Finance Minister, T.T. Krishnamachari set up the idea of a unit

trust that would be open to any person or institution to purchase the units offered

by the trust. However, this institution as we see it, is intended to cater to the needs

of individual investors, and even among them as far as possible, to those whosemeans are small.

His ideas took the form of the Unit Trust of India, an intermediary that

would help fulfill the twin objectives of mobilizing retail savings and investing

17


18/105

those savings in the capital market and passing on the benefits so accrued to the

small investors.

UTI commenced its operations from July 1964 with a view to encouragingsavings and investment and participation in the income, profits and gains accruing

to the Corporation from acquisition, holding, management and disposal of

securities. Different provisions of the UTI Act laid down the structure of

management, scope of business, powers and functions of the Trust as well as

accounting, disclosures and regulatory requirements for the Trust.

One thing is certain the fund industry is here to stay. The industry was

one-entity show till 1986 when the UTI monopoly was broken when SBI and

Canbank mutual fund entered the arena. This was followed by the entry of others

like BOL, LIC, GIC, etc, sponsored by public sector banks. Starting with an asset

base of Rs0.25bn in 1964 the industry has grown at a compounded average growth

rate of 26.34% to its current size of Rs1130bn.

The period 1986-1993 can be termed as the period of public sector mutual

funds (PMFs). From one player in 1985 the number increased to 8 in 1993. the

party did not last long. When the private sector made its debut in 1993-94, the

stock market was booming.

The opening up of the asset management business to private sector in 1993

saw international players lie Morgan Stanley, Jardine Fleming, JP Morgan, George

Soros and Capital International along with the host of domestic players join the

party. But for equity funds, the period of 1994-96 was one of the worst in the

history of Indian Mutual Funds.

18


19/105

1999-2000 Year of the funds

Mutual funds have been around for a long period of time to be precise for

36 yrs but the year 1999 saw immense future potential and developments in this

sector,. This year signed the year of resurgence of mutual funds and the regaining

of investor confidence in these MFs. This time around all the participants are

involved in the revival of the funds ----- the AMCs, the unit holders, the other

related parties. However the sole factor that gave life to the revival of he funds

was the Union Budget. The budget brought about a large number of changes in

one stroke. An insight of the Union Budget on mutual funds taxation benefits is

provided later.

It provided centre stage to the mutual funds, made them more attractive and

provides acceptability among the investors. The Union Budget exempted mutual

fund divided given out by equity-oriented schemes from tax, both at the hands of

the investor as well as the mutual fund. No longer were the mutual funds

interested in selling the concept of mutual funds they wanted to talk business

which would mean to increase asset base, and to get asset base and investor base

they had to be fully armed with a whole lot schemes for every investor. So new

schemes for new IPOs were inevitable. The quest to attract investors extended

beyond just new schemes. The funds stated to regulate themselves and were all out

on winning the trust and confidence of the investors under the aegis of the

Association of Mutual Funds of India (AMFI).

One cam say that the industry is moving from infancy to adolescence, the

industry is maturing and the investors and funds are frankly and openly discussing

difficulties opportunities and compulsions.

19


20/105

Future Scenario

The asset base 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.

20


21/105

CHAPTER-II

21


22/105

STRUCTURE OF THE

INDIAN MUTUAL FUND INDUSTRY

The Indian mutual fund industry is dominated by the Unit Trust of India

which has a total corpus of Rs700bn collected from more than 20 million

investors. The UTI has many funds/schemes I all categories ie equity, balanced,

income etc with some being open-ended and some being closed-ended. The unit

scheme 1964 commonly referred to as US 64, which is a balanced fund, is the

biggest scheme with a corpus of about Rs200bn. UTI was floated by financial

institutions and is governed by a s special act of Parliament. Most of its investors

believe that the UTI is government owned and controlled, which, while legally

incorrect, is true for all practical purposes

The second largest categories of mutual funds are the ones floated by

nationalized banks. Canbank Asset Management floated by Canara Bank and SBI

Funds Management floated by the State Bank of India are the largest of these. GIC

AMC floated by General Insurance Corporation and Jeevan Bima Sahayog AMC

floated by the LIC are some of the other prominent ones. The aggregate corpus of

funds managed by this category of AMCs is about Rs150bn.

The third largest categories of mutual funds are the ones floated by the

private sector and by foreign asset management companies. The largest of theseare prudential ICICI AMC and Birla Sun Life AMC. The aggregate corpus of

assets managed by this category of AMCs is in excess of Rs250bn.

22


23/105

Some of the AMCs operating currently are:

Name of the AMC Nature of ownershipAlliance Capital Asset Management (I) Private

Limited

Private Foreign

Birla Sun Life Asset Management Company Limited Private Indian

Bank Of Baroda Asset Management Company

Limited

Banks

Bank Of India Asset Management Company Limited Banks

Canbank Investment Management Services Limited Banks

Cholamandalam Cazenove AMC Ltd Private Foreign

DSP Merrill Lynch AMC Limited Private ForeignEscorts Asset Management Limited Private Indian

First India Asset Management Limited Private India

GIC Investment Management Company Limited Institutions

IDBI Investment Management Company Limited Institutions

Indfund Management Limited Banks

ING Investment AMC Private Limited Private Foreign

JM Capital Management Limited Private Indian

Jardine Fleming (I) Asset Management Limited Private Foreign

Kotak Mahindra Asset Management Company

Limited

Private Indian

Kothari Pioneer Asset Management Company

Limited

Private Indian

Jeevan Bima Sahayog AMC Limited Institutions

Morgan Stanley AMC private limited Private foreign

Punjab National Bank AMC Limited Banks

Reliance Capital Asset Management Company

Limited

Private Indian

State Bank Of India Funds Management Limited Banks

Shriram Asset Management Company Limited Private IndianSun F And C Asset Management (I) Private Limited Private Foreign

Sundaram Vewton AMC Limited Private Foreign

Tata Asset Management Company Limited Private Indian

Credit Capital Asset Management Company Limited Private Indian

Templeton Asset Management (India) Private Private Foreign

23


24/105

Limited

Unit Trust Of India Institutions

Zurich Asset Management Company (I) Limited Private Foreign

MAJOR MUTUAL FUND COMPANIES IN INDIAABN AMRO Mutual Funds

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 Fund is the joint venture of Aditya Birla Group and

Sun Life Financial. Sun Life Financial is a golbal organisation evolved in 1871

and is being represented in Canada, the US, the Philippines, Japan, 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 Asset Management

Company Limited is the AMC of 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

nemely Housing Development Finance Corporation Limited and Standard Life

Investments Limited.

HSBC Mutual Fund

24
http://finance.indiamart.com/india_business_information/abn_amro.htmlhttp://finance.indiamart.com/india_business_information/birla_sunlife.htmlhttp://finance.indiamart.com/india_business_information/bank_of_baroda.htmlhttp://finance.indiamart.com/india_business_information/hdfc.htmlhttp://finance.indiamart.com/india_business_information/hsbc.htmlhttp://finance.indiamart.com/india_business_information/abn_amro.htmlhttp://finance.indiamart.com/india_business_information/birla_sunlife.htmlhttp://finance.indiamart.com/india_business_information/bank_of_baroda.htmlhttp://finance.indiamart.com/india_business_information/hdfc.htmlhttp://finance.indiamart.com/india_business_information/hsbc.html


25/105

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and

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

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.

Prudential ICICI 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. Prudential

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

Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential ICICI

Trust Ltd. and the AMC is Prudential ICICI Asset Management Company Limited

incorporated on 22nd 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.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund

to launch offshor 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

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

25
http://finance.indiamart.com/india_business_information/ing_vysya.htmlhttp://finance.indiamart.com/india_business_information/prudential_icici.htmlhttp://finance.indiamart.com/india_business_information/sahara.htmlhttp://finance.indiamart.com/india_business_information/sbi.htmlhttp://finance.indiamart.com/india_business_information/ing_vysya.htmlhttp://finance.indiamart.com/india_business_information/prudential_icici.htmlhttp://finance.indiamart.com/india_business_information/sahara.htmlhttp://finance.indiamart.com/india_business_information/sbi.html


26/105

schemes.

Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. Thesponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment

Corporation Ltd. The investment manager is Tata Asset Management Limited and

its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's 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 first company to launch dedicated gilt scheme investing only in

government securities.

Unit Trust of India 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

Privete Limited. UTI Asset Management Company presently manages a corpus of

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

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

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

26
http://finance.indiamart.com/india_business_information/tata.htmlhttp://finance.indiamart.com/india_business_information/tata.html


27/105

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

Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital

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 MutualFund 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 in diversified 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 Company Pvt. Ltd. is the AMC

which was incorporated with SEBI on December 20,1999.

Franklin Templeton India Mutual Fund

The group, Frnaklin Templeton Investments is a California (USA) based

company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of

the largest financial services groups in the world. Investors can buy or sell the

Mutual Fund through their financial advisor or through mail or through their

website. They have Open end Diversified Equity schemes, Open end Sector

Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open

end Income and Liquid schemes, Closed end Income schemes and Open end Fund

of Funds schemes to offer.

Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and its leading

in the market in securities, investmenty management and credit services. Morgan

Stanley Investment Management (MISM) was established in the year 1975. It

27


28/105

provides customized asset management services and products to governments,

corporations, pension funds and non-profit organisations. Its services are also

extended to high net worth individuals and retail investors. In India it is known as

Morgan Stanley Investment Management Private Limited (MSIM India) and itsAMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end

diversified equity scheme serving the needs of Indian retail investors focussing on

a long-term capital appreciation.

Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance

Limited as its sponsor. The Trustee Company is Escorts Investment Trust Limited.

Its AMC was incorporated on December 1, 1995 with the name Escorts Asset

Management Limited.

Alliance Capital Mutual Fund

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

Alliance Capital Management Corp. of Delaware (USA) as sponsorer. 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 sponsorer and Benchmark Trustee Company Pvt. Ltd. as

the Trustee Company. Incorporated on October 16, 2000 and headquartered in

Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.

Canbank Mutual Fund

28


29/105

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

Life Insurance Corporation of India set up LIC Mutual Fund on 19th 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 29th April 1994. The

Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset

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

GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India

(GIC), a Government of India undertaking and the four Public Sector General

Insurance Companies, viz. National Insurance Co. Ltd (NIC), The New India

Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India

Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance with the

provisions of the Indian Trusts Act, 1882.

29


30/105

ORGANIZATION OF A MUTUAL

FUND

There are many entities involved and the diagram below illustrates the

organizational set up of mutual fund:

UNIT HOLDER

SPONSORS

TRUSTEE

30


31/105

CUSTODIAN

SEBI

A Mutual Fund in India is constituted in the form of trust created under the

Indian Trusts Act. 1882. The fund sponsor acts as Settlor of the trust, contributing

to its initial capital and appoints a Trustee to hold the assets of the trusts for the

benefit of the unit holders, who are the beneficiaries of the Trust. Under the Indian

Trusts Act, the Trust or the fund has no independent legal capacity itself, rather it

is the Trustee or Trustees who have the legal capacity and therefore all acts in

relation to the trust are taken on its behalf by the trustees. The trustees hold the

unit holders money in a fiduciary capacity that is the money belongs to the unit

holders and it is entrusted to the fund for the purpose of investment. The fund

sponsor can be compared to a promoter of a company. The Asset Management

Company is appointed to act as the investment manager of the trust under the

Board supervision and direction of the Trustees. The sponsor appoints the AMC

which would in the name of the Trust, float and then marriage the different

investment scheme as per SEBI guidelines.

Unit Holder:

The individual who invest money in the mutual fund with an aim of getting

returns. The Mutual fund allots him number of units based on his investment and

the value of the unit.

31

AMC

THE MUTUAL

FUND

TRANSPER

AGENT


32/105

Sponsor:

A Sponsor means any body corporate who, acting alone or in combination

with another body corporate, established a mutual fund after completing theformalities prescribed in the SEBIs Mutual Funds Regulations. The Sponsor

should have a sound track record and general reputation of fairness and integrity in

all his business transactions.

Trustee:

Trustee means the Board of Trustees or the Trustee Company who hold the

property of the Mutual Fund in trust for the benefit of the unit holder.

Asset Management Company:

A Company formed and registered under the Companies Act, 1956 and

which has obtained the approval of SEBI to function as an Asset Management

Company may be appointed by the sponsor of the mutual fund as such.

Custodian and Depositories:

Custodian is a person appointed for safe keeping of the securities. Mutual

Funds deals in buying and selling of large number of securities. AMC appoints a

custodian for safe keeping of these securities and for participating in clearing

system on its behalf. In case of demateralised securities, holdings will be held by

Depository through a Depository Participant.

Transfer Agents:

32


33/105

He is responsible for issuing and redeeming units of mutual funds. He

prepares transfer documents and update investor records.

SEBI:Securities and Exchange Board of India is the regulator which is

responsible for regulating the working of different bodies or individual dealing in

Securities market and projecting the interest of Investors.

TYPES OF SCHMES

Schemes according to Structure:

Open-Ended Fund/Scheme

Close-Ended Fund/Scheme

Interval Fund

33


34/105

Schemes according to Investment Objectives:

Growth/Equity Oriented Scheme

Income/Debt Oriented Scheme

Balance Fund

Money Market or Liquid Fund

Gilt Fund

Load Fund

No-Load Fund

Other Schemes:

Tax Saving Schemes

Special Scheme

Industry Specific Schemes

Index Funds

Sector Specific Schemes

By Structure:

Open-ended Funds

An open-end fund is one that is available for subscription all through the

year. These do not have a fixed maturity. Investors can conveniently buy and sell

units at Net Asset Value (NAV) related prices. The key feature of open-end

schemes is liquidity.

34


35/105

Closed-ended Funds

A closed-end fund has a stipulated maturity period which generally ranging

from 3 to 15 years. The fund is open for subscription only during a specifiedperiod. Investors can invest in the scheme at the time of the initial public issue and

thereafter they can buy or sell the units of the scheme on the stock exchanges

where they are listed. In order to provide an exit route to the investors, some close-

ended funds give an option of selling back the units to the Mutual Fund through

periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least

one of the two exit route is provided to the investor.

Interval Funds

Interval funds combine the features of open-ended and close-ended

schemes. They are open for sale or redemption during pre-determined intervals at

NAV related prices.

By investment Objective:

Growth Funds

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

to long-term. Such schemes normally invest a majority of their corpus in equities.

It has been proven that returns from stocks, have outperformed most other kind of

35


36/105

investments held over the long term. Growth schemes are ideal for investors

having a long-term outlook seeking growth over a period of time.

Income FundsThe aim of income funds is to provide regular and steady income to

investors. Such schemes generally invest in fixed income securities such as bonds,

corporate debentures and Government securities. Income Funds are ideal for

capital stability and regular income.

Balanced Funds

The aim of balanced funds is to provide both growth and regular income.

Such schemes periodically distribute a part of their earning and invest both in

equities and fixed income securities in the proportion indicated in their offer

documents. In a rising stock market, the NAV of these schemes may not normally

keep pace, or fall equally when the market falls. These are ideal for investors

looking for a combination of income and moderate growth.

Money Market Funds

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

capital and moderate income. These schemes generally invest in safer short-term

instruments such as treasury bills, certificates of deposit, commercial paper and

inter-bank call money. Returns on these schemes may fluctuate depending upon

the interest rates prevailing in the market. These are ideal for Corporate and

individual investors as a means to park their surplus funds for short periods.

Gilt Fund

These funds invest exclusively in government securities. Government

securities have no default risk. NAVs of these schemes also fluctuate due to

36


37/105

change in interest rates and other economic factors as is the case with income or

debt oriented schemes.

Load FundsA Load fund is one that charges a commission for entry or exit. That is,

each time you buy or sell units in the fund, a commission will be payable.

Typically entry and exit loads range from 1% to 2%. It could be worth paying the

load, if the fund has a good performance history.

No-Load Funds

A No-Load Fund is one that does not charge a commission for entry or exit.

That is, no commission is payable on purchase or sale of units in the fund. The

advantage of a no load fund is that the entire corpus is put to work.

Other Schemes:

Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions

of the Indian Income Tax laws as the Government offers tax incentives for

investment in specified avenues. Investments made in Equity Linked Savings

Schemes (ELSS) and pension Schemes are allowed as deduction u/s 88 of the

Income Tax Act, 1961. the Act also provides opportunities to investors to save

capital gains u/s 54EA and 54EB by investing in Mutual Funds, provided the

capital asset has been sold prior to April 1,2000 and the amount is invested before

September 30, 2000

SPECIAL SCHEMES:

Industry Specific Schemes

37


38/105

Industry Specific Schemes invest only in the industries specified in the

offer document. The investment of these funds is limited to specific industries like

InfoTech, FMCG, Pharmaceuticals etc.

Index schemes:

Index funds attempt to replicate the performance of a particular index such

as the BSE Sensex or the NSE 50

Sectoral Schemes

Sectoral Funds are those, which invest exclusively in a specified industry or

a group of industries or various segments such as A Group shares or initial

public offerings.

OPERATIONS OF MUTUAL FUNDS

The Operations of mutual fund generally includes the following heads.

1. Valuation of Investment

38


39/105

2. Pricing of Units

3. Dividend Distribution

4. Apportionment of expenses

5. Advertisement Norms

6. Investment Approaches

7. Offer Document

Investment Valuation Norms

Mutual fund value he traded securities on a Mark to Market: basis. They

are valued at a date known as valuation date; the untraded securities are valued by

the SEBI given principles of valuation

Pricing of Units

Mutual funds shall provide to the investors the price at which the units of

the scheme may be subscribed. In case of open ended scheme the mutual funds

shall publish at least in once a week in daily newspaper of all India circulations,

the sale and repurchase price of units, Every mutual fund shall compute the net

asset value of each scheme by dividing the net assets of the scheme by the number

of units outstanding in the valuation date.

The NAV shall be calculated and published at least in two daily newspapers

at intervals not exceeding one week.

Dividend Distribution

Every mutual fund and AMC shall dispatch to the unit holders the dividend

warrants within 42 days of the declaration of the dividend. It should dispatch to

the redemption or repurchase proceeds within 10 working days from the date of

39


40/105

redemption or repurchase. The AMC shall be liable for penalty for failure to

dispatch the redemption or repurchase proceeds within the stipulated period. It is

liable to pay interest to the unit holders at the rate of 15% per annum.

Apportionment of Expenses

An AMC incur various expenses such as initial expenses, recurring

expenses and investment management and advisory fees. Whatever be the

expenses but it should clearly identify all the expenses and apportion it in the

individual schemes.

Advertisement of schemes

An advertisement relating to any scheme of the Mutual Fund has to comply

with the provision of Advertisement code Prescribed by SEBI in Sixth Schedule of

its Regulations. The advertisement shall be submitted to SEBI within 7 days from

the date of issue. The advertisement for each scheme shall disclose investment

objectives of each scheme.

Investment Approaches

There are two types of investment approaches practices by the investment

managers. There are top down approach and bottom up approach. The top down

approach begins by analysis the national and international market environment

through quantitative forecasting and scenario planning. The bottom approach

begins with the

analysis of the concerned company. The top down approach helps in long tern

investment goals, whereas the bottom approach is utilized for short term or

speculative gains.

40


41/105

Offer Document

Before the launching of any scheme, such scheme should be approved by

the trustee and a copy of offer document should be filled with SEBI. The

document containing the details of anew scheme that the AMC or sponsorprepares for and circulates to the prospective investor is called the Prospectus or

the offer document.

41


42/105

COMPANY PROFILE

42


43/105

Kotak Mahindra Asset Management Company Limited (KMAMC)

Kotak mahindra Asset Management Company Limited (KMAMC), a wholly

owned subsidiary of KMBL, is the Asset Manager for Kotak Mahindra MutualFund (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 dedecated gilt scheme investing only in government securities.

They are sponsored by Kotak Mahindra Bank Limited, one of Indias fastest

growing banks, with a pedigree of over twenty years in the Indian Financial

Markets. Kotak Mahindra Asset Management Co. Ltd., a wholly owned subsidiary

of the bank, is their investment Manager.

They made a humble beginning in the Mutual Fund space with the launch of

oour first scheme in December, 1998. Today they offer a complete bouquet of

products and services suiting the diverse and varying needs and risk return

profiles of their investors.

They are committed to offering innovative investment solutions and world

class services and conveniences to facilitate wealth creation for their investors.

43


44/105

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 andcorporates.

The group has a net worth of around Rs.2,900 crore and employs around

8,800 employees across its various businesses servicing around 2 million customer

accounts through a distribution network of branches, franchisees, representative

offices and satellite offices across 282 cities and towns in India and offices in New

York, London, Dubai and Mauritius.

Kotak Mahindra Asset Management Company Limited (KMAMC), a

wholly owned subsidiary of KMBL, is the Asset Manager for Kotak Mahindra

Mutual Fund (KMMF). KMAMC started operations in December 1998 and has

over 4 Lac investors in various schemes. KMMF offers schemes catering to

investors with varying risk - return profiles and was the first fund house in the

country to launch a dedicated gilt scheme investing only in government securities.

Kotak Mahindra Bank Limited.

The erstwhile Sponsor company, Kotak Mahindra Finance Limited

(KMFL) was converted into Kotak Mahindra Bank Limited (Kotak Bank) in

March 2003 after being granted a banking license by the Reserve Bank of India.

Thus, the Sponsor of the Fund is Kotak Bank. KMFL promoted by Mr. Uday S.

Kotak, Mr. S. A. A. Pinto and Kotak & Co., was incorporated on 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 Company's name was changed to Kotak Mahindra Finance

44


45/105

Limited. Kotak & Co. (now Kotak & Co. Limited) is a highly respected trading

company of Mumbai, with international business.

Mr. Uday Kotak, a scion of the Kotak family, was an outstanding student through

school, Sydenham College (Bombay University) and Jamnalal Bajaj Institute of

Management Studies (Bombay University). Mr. S. A. A. Pinto, trained as a

lawyer, has held senior positions in well-known organisations like ICI and

Grindlays Bank. For instance, he was part of the team in Grindlays Bank, which

started the first merchant banking unit in India in 1968. Mr. Harish Mahindra was

an industrialist of repute and had played a prominent role in social service and

public life, thereby earning him high esteem. Mr. Anand Mahindra, an MBA from

Harvard University, is the Managing Director of one of India's most reputed

industrial firms, Mahindra & Mahindra Limited. KMFL started with a capital base

of Rs. 30.88 lakh. 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 andcombined 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

45


46/105

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, KotakMahindra Inc., and Kotak Forex Brokerage Limited.The Sponsor has been

consistently profitable and dividend paying company since inception. All group

companies are professionally run companies, employing over 5,000 professional

staff including CAs, MBAs and Engineers.

46


47/105

CHAPTER-III

47


48/105

EVALUATION OF PORTFOLIO

PERFORMANCE

Portfolio management aims simultaneously at maximizing returns ad

minimizing risks. The evaluation criteria for portfolio performance therefore take

both of the factors into consideration. The Sharpe Ratio computes excess of

portfolio return over risk free return for one unit of risk as measured by portfolio

standard deviation. The Treynor Ratio computes excess of portfolio return over

risk free return fro one unit of risk as measured by portfolio beta. Since standard

deviation gives same weightage to upside and downside deviations, the beta as a

measure of risk is considered better than standard deviation. The Treynor Ratio is

therefore more reliable than the Sharpe Ratio.

The Jensons Alpha, a third evaluation criteria take the difference between

actual return from a portfolio and expected return from another comparable

portfolio having similar risk. The risk for computation Jensens Alpha is measured

by portfolio beta.

SHARPE RATIO:

This ratio measures the return earned in excess of the risk free rate

(normally Treasury instruments) on a portfolio to the portfolios total risk as

measured by the standard deviation in its return over the measurement period.

Nobel Laureate William Sharpe developed the model and the results of it indicatethe amount of return earned per unit of risk. The Sharpe ratio is often used to rank

the risk-adjusted performance of various portfolios over the same time. The

higher a Sharpe ratio, the better a portfolios returns have been relative to the

amount of investment risk the investor has taken. The major advantage of using

48


49/105

the Sharpe ratio over other models (CAPM) is that the Sharpe ratio used the

volatility of the portfolio return instead of measuring the volatility against a

benchmark (i.e., index). The primary disadvantage of the Sharpe ratio is that it is

jest a number and it is meaningless unless you compare it to several other types ofportfolios with similar objectives.

Return portfolio Return of Risk free investment

S = ------------------------------------------------------------------------

Standard Deviation of Portfolio

Example:

If during one year period an index fund earned @10%, risk free rate of

return on investment is 8% and the standard deviation of the index fund was 20%,

then Sharpe Ratio is

Portfolio return Risk free return on investment

Sharpe Ratio = ------------------------------------------------------------------------

Standard Deviation of Portfolio

10-8

0.20

= 10%

49


50/105

TREYNOR RATIO :

This ratio is similar to the Sharpe Ratio except is used beta instead of

standard deviation. Its also known as the Reward to Volatility Ratio, it is the ratio

of a funds average excess return to the funds beta. It measures the returns earnedin excess of those that could have been earned on a riskless investment per unit of

market risk assumed. The formula is typically used in ranking Mutual Funds with

similar objectives.


T = ------------------------------------------------------------------------

Beta of Portfolio

Example:

The return of two portfolios x and y is given by rx = 10%, ry =12%, and

their beta is 2x= 0.5, 2y=0.9. If risk free rate of return is 8% then Treynor Ratio is?


T = ------------------------------------------------------------------------

Beta of Portfolio

0.10 0.08

Tx = ------------------- = 0.04

0.5

0.12 0.08

Ty = ------------------- =0.044

0.9

50


51/105

JENSENS ALPHA:

This is the difference between a funds actual return and those that could

have been made on a benchmark portfolio with the same risk i.e beta. Itmeasures the ability of active management to increase returns above those that are

purely a reward for bearing market risk. Caveats apply however since it will only

produce meaningful results if it is used to compare two portfolios which have

similar heats.

Jensens Alpha = portfolio Return Expected Return

Expected Return = Risk Free Return + Beta portfolio (Return of market

Risk Free Return)

Example:

A portfolio P has a return of 14% and beta 0.5. if the market return is 14%

and risk free return 10%, then Jensens Alpha is ?

Jensens Alpha = portfolio Return Expected Return

Expected Return=Risk Free Return + Beta Portfolio (Return of Market

Risk Free Return)

Expected return of P = 0.10 + 0.5 (0.14 0.10) = 0.12

Jensens alpha = 0.14 0.12

= 0.02

= 2%

51


52/105

ACCOUNTING POLICIES

The annual report of a mutual fund consists of

(a) Balance sheet

(b) Revenue Account

(c) Report of the Board of Trustees

(d) Auditors Report and

(e) Statement of the Board of Trustees on specified matters.

As per regulation 50(3) of SEBI (Mutual Funds) Regulation, 1996, the

Asset Management Companies are required to follow the accounting policies and

standards specified in the Ninth Schedule of the Regulations, the requirements of

the said schedule are as below:

(a) For the purpose of the financial statements, mutual funds shall mark all

investments to market and carry investments in the balance sheet at

market value. However, since the unrealized gain arising out of

appreciation on investments cannot be distributed, provision has to be

made for exclusion of this item when arriving at distributable income.

(b) Dividend income earned by a scheme should be recognized, not on the

date the dividend is declared, but on the date the share is quoted on the

ex-dividend basis. For investments, which are not quoted on the stock

exchanges, dividend income must be recognized on the date of

declaration.

52


53/105

(c) In respect of all interest bearing investments, income must be accrued

on a day-today basis as it is earned. Therefore, when such investments

are purchased, interest paid for the period from the last interest due date

upto the date of purchase must not be treaded as a cost of purchase butmust be debited to interest Recoverable Account. Similarly interest

received at the time of sale for the period from the last interest due date

upto the date of sale must not be treated as an addition to sale value but

must be credited to interest recoverable account.

(d) In determining the holding cost of investments and the gains and loss on

sale of investments, the average cost method must be followed.

(e) Transaction for purchase or sale of investments should be recognized as of

the trade date and not as of the settlement date, so that the effect of all

investments traded during a financial year are recorded and reflected in the

financial statements for that year. Here investment transactions take place

outside the stock market, for example, acquisition through private

placement or purchases or sales through private treaty, the transaction

should be recorded in the event of a purchase, as of the date on which the

scheme obtain an enforceable obligation to pay price or, in the event or a

sale, when the scheme obtain an enforceable right to collect the proceeds or

sale or an enforceable obligation to deliver the instruments sold.

(f) Bonus shares to which the scheme becomes entitled should be recognized

only when the original shares on which the bonus entitlement accrues are

traded on the stock exchange on an ex-bonus. Similarly, rights entitlement

should be recognized only when the original shares on which the right

entitlement accrues are traded on the stock exchange on an ex-rights basis.

53


54/105

(g) Where income receivable on investments has accrued but has not been

received for the period specified in the guideline issued by the Board,

provision shall be made be debiting to the revenue account the income so

accrued in the manner specified by guidelines issued by the Board.

(h) When in the case of an open ended scheme units are sold, the difference

between the sale price and the face value of the unit, if positive, should be

credited to reserves and if negative be debited to reserves, the face value

being credited to Capital Account. Similarly, when in respect of such

scheme, units are repurchased, the difference between the purchase price

and face value of the unit, if positive should be debited to reserves and, if

negative, should be credited to reserves, the face value being debited to the

capital account.

(i) In the case of an open-ended scheme, when units are sold an appropriate

part of the sale proceeds should be credited to an Equalization Account and

when units are repurchased an appropriate amount should be debited to

Equalization Account. The new balance on this account should be credited

or debited to the Revenue Account. The balance on the Equalization

Account debited or credited to the Revenue Account should not decrease or

increase the net income of the fund but is only an adjustment to the

distributable surplus. It should, therefore, be reflected in the Revenue

Account only after the net income of the fund is determined.

(j) In a close-ended scheme which provide to the unit holders the option for an

early redemption or repurchase their own units, the par value of the unit has

to be debited to Capital Account and the difference between the purchase

price and the par value, if positive should be credited to reserves and, if

negative, should be debited to reserves. A proportionate part of the

54


55/105

unamortized initial issue expenses should also be transferred to the reserves

so that the balance carried forward on that account is proportional to the

number of units remaining outstanding.

(k) The cost of investments acquired or purchased should include brokerage,

stamp charges and any charge customarily included in the brokers brought

note. In respect or privately placed debt instruments any front end

discount offered should be reduced from the cost of the investment

(l) Underwriting commission should be recognized as revenue only when there

is no development on the scheme. Where is development on the scheme,

the full underwriting commission received and not merely the portion

applicable to the development should be reduced from the cost of the

investment.

55


56/105

REGULATORY ASPECTS

Schemes of Mutual Fund

The asset management company shall launch no scheme unless the trustees

approve such scheme and a copy of the offer document has been filed with

the Board.

Every mutual fund shall along with the offer document of each scheme pay

filing fees.

The offer document shall contain disclosures which are adequate in order to

enable the investors to make informed to be made by the scheme in thelisted securities of the group companies of the maturity period. Unless a

majority of the unit holders otherwise decide for its rollover by passing a

resolution.

The mutual fund and asset management company shall be liable to refund

the application money to the applicants,-

(i) If the mutual fund fails to receive the minimum

subscription amount referred to in clause (a) of sub-

regulation (1);

(ii) If the moneys received from the applicants for units are in

excess of subscription as referred to in clause (b) of sub-

regulation (1).

The asset management company shall issue to the applicant whose

application has been accepted, unit certificates or a statement of accounts

specifying the number of units allotted to the applicant as soon as possible

but not later than six week from the date of closure of the initial

subscription list and or from the date of receipt of the request from the unit

holders in any open ended scheme.

56


57/105

Rules Regarding Advertisement:

The offer document and advertisement materials shall not be misleading or

contain any statement or opinion, which are incorrect or false.

Investment objectives and valuation policies:

The price at which the units may be subscribed or sold and the price at

which such units may at any time be repurchased by the mutual fund shall

be made available to the investors.

General Obligations:

Every asset management company for each scheme shall keep and maintain

proper books of accounts, records and documents, for each scheme so as to

explain its transactions and to disclose at any point of time the financial

position of each scheme and in particular give a true and fair view of the

state of affairs of the fund and intimate to the Board the place where such

books of account, records and documents are maintained.

The financial year for all the schemes shall end as of March 31 of each

year. Every mutual fund or the asset management company shall prepare in

respect of each financial year an annual report and annual statement of

accounts of the schemes and the fund as specified in Eleventh Schedule.

Every mutual fund shall have the annual statement of accounts audited by

an auditor who is not in any way associated with the auditor of the asset

management company.

Procedure for Action In Case Of Default:

On and from the date of the suspension of the certificate or the approval, as

the case may be, the mutual fund, trustees or asset management company, shall

ease to carry on any activity as a mutual fund, trustee or asset management

57


58/105

company, during the period of suspension, and shall be subject to the directions of

the Board with regard to any records, documents, or securities that may be in its

custody or control, relating to its activities as mutual fund, trustees or asset

management company.

Restrictions on Investments:

A mutual fund scheme shall not invest more than 15% of its NAV in debt

instruments issued by a single issuer, which are rated not below investment

grade by accredit rating agency authorized to carry out such activity under

the Act. Such investment limit may be extended to 20% of the NAV of the

scheme with the prior approval of the Board of Trustees and the Board of

asset Management Company.

A mutual fund scheme shall not invest more that 10% of its NAV in

unrated debt instruments issued by a single issuer and the total investment

in such instruments shall not exceed 25% of the NAV of the scheme. All

such investments shall be made with the prior approval of the Board of

Trustees and the Board of asset Management Company.

No mutual fund under all its schemes should own more than ten per cent of

any companys paid up capital carrying voting rights.

Such transfers are done at the prevailing market price for quoted

instruments on spot basis. The securities so transferred shall be in

conformity with the investment objective of the scheme to which such

transfer has been made.

A scheme may invest in another scheme under the same asset management

company or any other mutual fund without charging any fees, provided that

aggregate interscheme investment made by all schemes under the same

management or in schemes under the management of any other asset

58


59/105

management company shall not exceed 5% of the net asset value of the

mutual fund.

The initial issue expenses in respect of any scheme may not exceed six per

cent of the funds raised under that scheme. Every mutual fund shall buy and sell securities on the basis of deliveries

and shall in all cases of purchases, take delivery of relative securities and in

all cases of sale, deliver the securities and shall in no case put itself in a

position whereby it has to make short sale or carry forward transaction or

engage in badla finance.

Every mutual fund shall, get the securities purchased or transferred in the

name of the mutual fund on account of the concerned scheme, wherever

investments are intended to be of long-term nature.

Pending deployment of funds of a scheme in securities in terms of

investment objectives of the scheme a mutual fund can invest the funds of

the scheme in short term deposits of scheduled commercial banks.

No mutual fund scheme shall make any investment in;

i. Any unlisted security of an associate or group company of the

sponsor; or

ii. Any security issued by way of private placement by an associate or

group company of the sponsor or

iii. The listed securities of group companies of the sponsor which is in

excess of 30% of the net assts [of all the schemes of a mutual fund]

No mutual fund scheme shall invest more than 10 per cent of its NAV inthe equity shares or equity related instruments of any company. Provided

that, the limit of 10 per cent shall not be applicable for investments in index

fund or sector or industry specific scheme.

59


60/105

A mutual fund scheme shall not invest more than 5% of its NAV in the

equity shares or equity related investments in case of open-ended scheme

and 10% of its NAV in case of close-ended scheme.

Market Watch - Mutual Fund Listed Schemes in IndiaEquity Diversified Equity Sector Equity Tax Saving Equity Index Balanced Income (Debt) Money Market Gilt Monthly Income Plan Hybr

Equity Diversified Assets(Rs. cr.)

NAV 1wk 1mth 3mth 6mth 1yr 2yr 3yr 5yr

Reliance RSF - Equity 141.16 16.35 1.9 3.2 7.6 41.2 59.3 -- -- --

Sundaram Select Midcap (G) 1,815.52 96.29 1.9 3.1 8.4 30.9 52.1 158.8 315.9 --

Franklin India Oppor. (G) 791.31 27.66 2.6 2.9 7.9 43.8 51.6 143.7 201.6 443.4

Magnum Global Fund (G) 1,138.22 46.88 2.3 4.5 14.3 49.4 51.5 182.2 408.5 909.3

Pru ICICI Dynamic Plan (G) 1,533.33 68.71 1.3 4.9 13.3 42.1 49.6 160.3 222.2 --

Equity - Auto Assets(Rs. cr.)


JM Auto Sector Fund (G) 11.08 23.50 2.8 2.8 7.7 41.7 23.8 86.4 -- --

UTI Auto Sector (G) 86.51 20.40 3.9 3.2 7.1 24.4 12.9 66.9 -- --

Equity - FMCG Assets(Rs. cr.)


Pru ICICI FMCG Fund (G) 94.01 41.55 -0.1 0.2 4.3 24.7 19.6 142.4 240.6 373.8

Franklin FMCG Fund (G) 46.59 35.54 -0.1 2.6 -1.3 8.2 10.0 89.0 128.8 231.5

60
http://finance.indiamart.com/markets/mutual_funds/equity_diversified.htmlhttp://finance.indiamart.com/markets/mutual_funds/equity_sector.htmlhttp://finance.indiamart.com/markets/mutual_funds/equity-tax-saving.htmlhttp://finance.indiamart.com/markets/mutual_funds/equity_index.htmlhttp://finance.indiamart.com/markets/mutual_funds/balanced.htmlhttp://finance.indiamart.com/markets/mutual_funds/income_debt.htmlhttp://finance.indiamart.com/markets/mutual_funds/money_market.htmlhttp://finance.indiamart.com/markets/mutual_funds/gilt.htmlhttp://finance.indiamart.com/markets/mutual_funds/monthly_income_plan.htmlhttp://finance.indiamart.com/markets/mutual_funds/hybrid.htmlhttp://finance.indiamart.com/markets/mutual_funds/equity_diversified.htmlhttp://finance.indiamart.com/markets/mutual_funds/equity_sector.htmlhttp://finance.indiamart.com/markets/mutual_funds/equity-tax-saving.htmlhttp://finance.indiamart.com/markets/mutual_funds/equity_index.htmlhttp://finance.indiamart.com/markets/mutual_funds/balanced.htmlhttp://finance.indiamart.com/markets/mutual_funds/income_debt.htmlhttp://finance.indiamart.com/markets/mutual_funds/money_market.htmlhttp://finance.indiamart.com/markets/mutual_funds/gilt.htmlhttp://finance.indiamart.com/markets/mutual_funds/monthly_income_plan.htmlhttp://finance.indiamart.com/markets/mutual_funds/hybrid.html


61/105

Magnum FMCG Fund 14.10 14.42 0.6 0.1 -3.9 6.8 -1.0 50.8 97.6 227.4

Equity - Tech Assets(Rs. cr.)


Magnum IT Fund 95.01 30.75 2.4 11.1 27.9 64.9 70.8 194.0 275.5 392.0

DSP-ML Technology.Com (G) 43.15 26.16 3.9 10.8 30.1 64.2 62.4 152.5 228.7 466.3

Birla New Millennium (G) 124.21 22.10 3.2 9.0 24.3 55.0 61.3 142.1 224.5 415.2

UTI Software Fund (G) 125.73 30.37 4.9 9.0 24.5 53.5 60.5 145.7 200.9 310.7

Pru ICICI Tech. Fund (G) 152.94 16.88 2.1 8.7 29.5 70.0 60.2 153.5 216.7 439.3

Equity - Pharma Assets(Rs. cr.)


JM Healthcare Sector Fund (G) 9.41 18.24 1.4 -0.1 10.3 23.2 8.2 49.9 -- --

Reliance Pharma Fund (G) 146.19 20.72 0.6 0.8 2.3 24.9 7.3 64.2 -- --

Franklin Pharma Fund (G) 98.74 29.61 1.1 0.1 5.0 21.2 5.7 51.5 81.8 221.1

Magnum Pharma Fund (G) 82.08 36.41 1.1 -0.5 1.7 21.1 5.5 73.8 169.7 445.9

UTI Pharma & Health (G) 79.09 22.74 1.6 -0.4 4.0 19.9 2.8 40.5 74.1 192.5

61


62/105

Equity - Banking Assets(Rs. cr.)


UTI Banking Sector (G) 70.55 22.13 2.7 7.3 17.0 52.1 38.1 81.5 -- --

Reliance Banking Fund (G) 159.41 39.81 2.8 6.0 11.2 43.0 28.4 64.9 136.0 --

JM Financial Services Fund(G)

5.49 10.36 3.5 5.3 3.6 -- -- -- -- --

Equity - MNC Assets(Rs. cr.)


Birla MNC Fund (G) 240.20 128.56 1.5 3.3 6.7 31.1 20.9 91.0 145.5 352.2

Kotak MNC 47.07 27.87 2.0 4.6 7.4 25.7 13.3 75.5 153.1 361.9

UTI MNC Fund (G) 165.59 35.86 2.1 3.0 3.9 25.1 9.7 71.2 99.6 244.5

Equity Others Assets(Rs. cr.)


Reliance Media & Entertain (G) 52.67 25.45 4.8 6.7 20.4 61.0 56.0 134.2 -- --

UTI Infrastructure Fund (G) 662.84 29.99 2.4 4.8 12.8 44.8 53.3 153.1 -- --

Reliance Diversified Power (G) 838.71 38.49 4.1 6.0 16.3 52.9 50.9 182.6 -- --

JM Basic Fund 9.04 20.86 1.6 10.2 17.9 44.8 43.1 90.7 94.1 324.5

Tata Life Sc & Tech Fund (G) 37.62 50.64 1.2 3.5 13.1 37.3 38.9 118.1 192.4 502.5

62


63/105

Equity Tax Saving Assets(Rs. cr.)


Magnum Tax Gain Scheme 1,332.22 59.41 2.7 6.5 14.1 42.8 45.4 185.9 319.7 974.5

Principal Tax Savings 175.53 81.60 2.4 7.0 12.6 44.9 43.1 124.1 201.2 593.7

Birla Tax Relief 96 292.54 155.84 3.6 7.4 10.2 41.9 42.9 113.8 142.4 441.8

Principal Personal Tax Saver 37.56 136.30 1.6 6.7 13.8 48.1 39.3 83.4 126.0 --

Escorts Tax Plan (G) 2.61 45.94 2.2 5.5 9.5 33.6 34.7 84.7 128.9 417.6

Equity Index Assets(Rs. cr.)


Pru ICICI SPIcE Plan 0.76 148.26 2.7 5.9 9.8 33.6 44.4 123.7 148.4 --

UTI Master Index Fund (G) 46.85 45.41 2.8 6.0 9.9 33.6 43.9 123.9 147.7 335.2

Tata Index Fund SensexPlan(A)

0.41 36.53 2.6 5.7 9.1 31.7 43.2 111.2 137.6 --

Tata Index Fund Nifty Plan (A) 2.00 26.02 2.8 6.6 10.3 32.2 42.0 119.4 138.9 --

HDFC Index - Sensex Plan 28.33 133.40 2.6 5.6 8.8 29.4 41.8 115.3 136.7 --

Balanced Assets(Rs. cr.)


Principal Child Benefit - CBP 12.24 59.18 0.9 5.4 14.7 40.9 40.8 96.9 133.4 274.2

63


64/105

Principal Child Benefit - FGP 2.72 58.39 0.9 5.4 14.7 40.8 40.7 96.7 133.4 274.3

JM Balanced Fund (G) 16.10 24.32 3.0 4.4 9.8 27.7 34.3 89.3 114.5 229.9

HDFC Prudence Fund (G) 2,324.09 118.14 1.0 3.4 7.8 29.2 33.6 102.9 154.0 462.3

Birla 95 Fund (G) 133.18 183.65 2.2 5.1 6.6 31.3 31.7 80.8 117.4 294.4

Money Market Assets(Rs. cr.)


LIC MF Liquid Fund (G) 6,714.29 13.45 0.1 0.6 2.0 3.8 7.3 13.5 19.0 --

Reliance Liquidity Fund (G) 3,193.15 11.10 0.1 0.6 1.9 3.7 7.0 -- -- --

UTI Money Market Fund (G) 491.06 20.80 0.1 0.6 1.9 3.7 6.9 12.8 17.8 32.2

Canliquid Fund (G) 28.24 13.50 0.1 0.6 1.8 3.5 6.9 12.9 18.2 34.2

HDFC Cash Mgmt. Fund - SP(G)

5,380.70 15.44 0.1 0.6 1.9 3.7 6.9 12.8 18.1 33.1

Monthly Income Plan Assets(Rs. cr.)


ABN Amro MIP (G) 53.72 13.16 -0.2 1.1 6.2 12.4 14.2 26.0 -- --

Reliance MIP (G) 496.12 14.00 0.4 1.0 3.1 9.7 13.8 32.7 40.2 --

64


65/105

UTI MIS - Advantage Plan (G) 111.63 14.37 0.7 2.2 4.3 10.8 12.9 32.1 41.9 --

Birla Sun Life MIP (G) 145.37 25.51 0.5 0.9 2.4 9.1 12.5 22.2 27.7 71.7

HDFC MIP - LTP (G) 1,194.72 14.96 0.5 2.1 3.1 10.1 12.5 34.1 44.5 --

Hybrid Assets(Rs. cr.)


Pru ICICI AS- Very Aggres. (G) 10.44 26.28 1.9 4.4 9.1 31.2 31.8 114.7 146.5 --

Kotak Equity Fund of Fund (G) 79.40 26.70 2.6 5.6 9.7 32.6 31.1 102.7 -- --

Birla AAF- Aggressive (G) 8.62 21.39 1.8 3.8 7.2 28.1 30.3 80.9 115.0 --

Pru ICICI Advisor - Aggres (G) 8.67 21.76 1.4 3.3 7.6 24.6 29.5 86.0 107.6 --

FT (I) Dyn. PE Ratio FOF (G) 42.80 25.52 1.5 3.4 5.2 20.7 28.9 81.7 112.1

--

Debt - Short Term Assets(Rs. cr.)


ABN Amro Flexi Debt - RP (G) 15.09 11.45 0.1 0.6 2.3 5.1 8.7 13.3 -- --

Sundaram Debt STP AP (G) 24.40 12.95 0.1 0.6 1.9 3.7 7.5 12.2 17.5 --

Reliance Short Term Fund (G) 511.17 12.93 0.1 0.6 1.9 3.9 7.3 13.6 19.6 --

65


66/105

Birla GSec - ShortTerm (G) 0.34 15.91 0.2 0.7 3.7 5.0 7.3 11.0 10.5 24.4

Kotak Flexi Debt (G) 442.27 11.50 0.1 0.6 1.9 3.7 7.3 13.6 -- --

Debt - Long Term Assets(Rs. cr.)


Pru ICICI Gilt Inv Plan - PF 82.93 11.80 0.6 -1.6 1.1 7.2 8.4 14.0 16.5 --

Birla Income Fund (G) 28.29 25.74 -- 0.1 2.2 4.9 7.7 12.1 13.1 38.6

Birla Gilt Plus (Reg Plan) (G) 60.45 23.46 0.4 -0.2 1.8 6.2 7.7 12.2 11.9 47.8

Grindlays GSec Fund - PF (G) 24.17 11.17 0.1 0.5 1.9 5.5 7.5 12.9 -- --

Pru ICICI Gilt (IP) (G) 108.42 22.40 0.3 -1.0 1.6 6.8 7.4 11.6 12.3 41.8

Debt - Floating Rate Assets(Rs. cr.)


LIC MF Floating Rate Fund (G) 1,419.85 11.83 0.1 0.7 2.1 4.0 7.4 13.7 -- --

CanFloating Rate - STP (G) 544.70 11.32 0.1 0.6 1.9 3.6 7.2 13.2 -- --

DBS Chola Short Term FRF(G)

476.50 11.02 0.1 0.6 2.0 3.8 7.2 -- -- --

Principal FRF- SMP RP (G) 93.82 11.50 0.1 0.6 1.9 3.7 7.0 12.7 -- --

66


67/105

Reliance Floating Rate (G) 775.37 11.54 0.1 0.6 1.9 3.8 7.0 12.9 -- --

Debt Speciality Assets(Rs. cr.)


Templeton (I) Childrens AP (G) 3.32 31.82 1.9 5.1 8.0 25.5 30.2 53.9 63.7 96.4

Cancigo (G) 9.37 19.59 0.7 0.4 4.3 13.5 16.2 39.5 48.0 85.4

Pru ICICI Income Multi. RP (G) 509.67 14.61 0.5 1.5 4.1 11.3 15.1 36.3 -- --

Pru ICICI CCP - Study Plan 29.25 20.02 0.8 2.6 5.1 12.0 14.9 33.4 42.2 87.6

LIC MF Childrens Fund 13.67 15.18 0.3 1.3 2.4 13.8 14.7 20.2 24.5 47.2

Money Market - Inst Assets(Rs. cr.)


Birla Cash - Inst Premium (G) 1,028.77 11.78 0.1 0.6 1.9 3.7 7.1 13.1 -- --

Kotak Liquid-Inst Premium (G) 3,849.71 14.97 0.1 0.6 1.9 3.7 7.0 13.1 18.5 --

HSBC Cash Fund -Inst Plus(G)

1,528.05 11.67 0.1 0.6 1.9 3.6 7.0 12.9 -- --

Tata Liquid Fund - SHIP (G) 4,297.30 1,364.82 0.1 0.6 1.9 3.7 7.0 13.0 18.5 --

67


68/105

ING Liquid - Super Inst (G) 1,237.28 11.02 0.1 0.6 1.9 3.7 7.0 -- -- --

Debt - Institutional Assets(Rs. cr.)


Sundaram FRF- IP LTP (G) 0.01 13.13 0.1 0.5 19.2 21.1 24.7 30.6 -- --

Principal Income-Inst Plan (G) 3.73 12.33 0.1 0.4 1.2 4.6 7.7 13.2 15.8 --

Grindlays GSec - PF Inst (G) 24.17 11.20 0.1 0.5 1.9 5.4 7.4 12.8 -- --

Principal Income STP- Inst (G) 602.15 12.46 0.1 0.6 1.8 3.9 7.3 13.4 19.2 --

ABN Amro Long Term FRF- IP(G)

204.57 10.90 0.1 0.6 2.0 3.8 7.2 -- -- --

Index 1wk 1mth 3mth 6mth 1yr 2yr 3yr 5yrSensex 2.7 6.1 9.8 33.9 45.1 121.5 150.2 322.4

Nifty 2.8 7.3 10.2 33.2 39.8 104.2 128.8 277.0

BSE TECk 3.9 8.4 18.7 47.4 59.4 131.8 210.1 288.2

BSE PSU 0.5 3.4 4.2 24.9 15.2 46.2 70.4 404.4

BSE FMCG0.7 3.8 -8.1 3.3 9.4 71.1 84.0 105.8

BSE Healthcare 2.0 1.3 4.7 18.6 11.5 45.4 70.4 204.7

BSE CD 3.8 6.4 20.6 43.4 26.3 168.3 260.5 544.6

BSE IT 2.0 3.9 13.6 35.9 46.1 112.8 184.1 217.3

68


69/105

Note : Returns have been calculated based on NAV's as on Feb 06, 2007 & Index values as on Feb 06, 2007

69


70/105

CHAPTER-IV

MUTUAL FUND SCHEMES

IN

KOTAK MUTUAL FUNDS

EQUITY FUNDS:

Kotak 30

Kotak Midcap

Kotak Opportunities

Kotak contra

70


71/105

Kotak Tax saver

Kotak Global India

Kotak MNC

Kotak Tech

Kotak FOF

BALANCE FUNDS

Kotak Balance

KOTAK DEBT FUNDS

Kotak Bond Short Term

Kotak Gilt-Savings

Kotak Gilt-Invest

Kotak Flexi Debt

Kotak Floater Long Term

Kotak Cash Plus

71


72/105

Kotak Income Plus

Kotak Floater Short Term

Kotak Liquid

Risk Return Stack Up

Risk

72

Bond De osit &Gilt IncomeBALANCKotak

Kotak 30

Kotak

Flexi Debt GiltBond ShortFloater LonCash lus

O ortunities

Kotak

Kotak Mid cap

Kotak

Kotak

FloaterShortKotak Li uid


73/105

Potential Return

73


74/105

CHAPTER-V

ANALYSIS

KOTAK OPPORTUNITIES

Open-Ended Equity Growth Scheme :

A diversified aggressive equity scheme that has a flexibility to invest across

market capitalization and sectors. The investment strategy is to make strategic use

of debt and money market securities upto 35% with flexibility for large exposure

in select sectors.

74


75/105

Sector Allocation :

15.21%

10.75%

10.16%

9.83%

9.80%

7.13%

5.01%

4.99%

4.74%

4.31%

18.07% Consumer Non Durables

PharmaceuticalsCollateral Borrowing & Lending obligation

Banks

Industrial Capital Goods

Cement

Industrial Products

Auto

Software

Auto Ancilliaries

Rest

Interpretation :

From the above in 100% of sector allocation consumer Non-durables

15.21%, pharmaceuticals 10.75%, collateral borrowing & lending obligation10.16% Banks 9.83%, Industrial capital goods 9.80%, Cement 7.13%, Industrial

Products 5.01%, Auto 4.99%, Software 4.74%, Auto Ancilliaries 4.31%, Rest

18.07% are allotted for this scheme.

Performance of the Scheme :

Period Returns % Benchmark Returns %

S&PCNX5001 year 76.6 53.8

Since Allotment

( 9th Sept,2004)

73.9 58.4

75


76/105

Kotak opportunities NAV Rs.17.955 ( Growth Option )

KOTAK CONTRA

Open-Ended Equity

Documents

Sagar[1] Modi Final New