Portfolio Management of Mutual Funds Report

2009
PORTFPLIO OF MUTUAL FUND

Portfolio of Reliance mutual fund
Portfolio management is an important foundation of mutual fund
business. We have listed professional management as a major benefit
of a mutual fund brought to the investor.
DEEPAK KHATRI
MBA FINANCE FROM TIT
30/04/2009
Project Report
On
PORTFOLIO MANAGEMENT OF MUTUAL

FUND
Submitted
For the partial fulfillment of MBA (F.T) Degree

Of
Barkatullah University, Bhopal
By
Deepak Khatri
(MBA IV Semester)
Under the supervision of

Mrs. Manisha Singh
TIT Engg, Bhopal
Technocrats Institute of Technology - Engg.

Bhopal.
2009
DECLARATION
I, Deepak Khatri, student of MBA fourth semester of Technocrats Institute of

Technology- Engg.,, Bhopal hereby declare that the project Report entitled
PORTFOLIO MANAGEMENT OF MUTUAL FUND is my own original
work based on the survey undertaken by me. I also declare that this report
has not been submitted to any University/Institute for the award of any
degree or any professional diploma.
Date:
DEEPAK KHATRI
MBA 4th Semester
CERTIFICATE
This is to certify that Mr. Deepak Khatri has completed his project work on
the subject entitled PORTFOLIO MANAGEMENT OF MUTUAL FUND
which is based on the survey/research study undertaken by him.
The project report is completed by the candidate under my supervision. It is

an original, unaided research study completed under my supervision to meet
the partial requirement of the MBA (F.T.) degree of the Barkatullah
University, Bhopal.
Date:
(Mrs. MANISHA SINGH)

Supervisor
Acknowledgement
It has been our privilege to benefit from the guidance and help
from many quarters in completing this work. We express our
sincere gratitude towards Dr. Prof. R.K. Bharti for giving us the
golden opportunity to work on this project which helped us gain
immense knowledge. We also thank his for the guidance provided
by him in the process without which it would not have been
possible for us to complete the task successfully
CONTENTS
Chapter I : Introduction of the topic and brief profile of the Organisation.
Chapter II : Objective of the study and Research Methodology.
Chapter III : Presentation of Tabulated Data and Analysis.
Chapter IV : Main Findings/ Suggestion/ Recommendations.
Bibliography
CHAPTER - I
Introduction of the topic and brief

profile of the Orgnisation
INTRODUCTION OF THE TOPIC
Portfolio management is an important foundation of mutual fund business. We have listed

professional management as a major benefit of a mutual fund brought to the investor. The
performance of the fund measured by the risk adjusted returns produced for the investor
arises largely by the successful portfolio management function. After collection the
investors funds, effective portfolio management will have to give returns acceptable to
the investor; else, investor may move on to better performing funds.
From the investor perspective, the need for successful portfolio management function is
obviously paramount. However, in the complex world of financial markets, portfolio
management is a specialist function. Even within a mutual fund, all employees would
not find it possible or even necessary to understand all the intricacies of this specialist
task. For distributors, much as it is important to be able to assess which asset
management company has better asset management skills, it is not possible and certainly
not necessary to get to know how to manage mutual fund portfolios.
Portfolio management allows investors to estimate both the expected risks and
returns, as measured statistically, for their investment portfolios.
It described how to combine assets into efficiently diversified portfolios. It was his
position that a portfolio's risk could be reduced and the expected rate of return
could be improved if investments having dissimilar price movements were
combined.
Under the Portfolio Management, Asset Management Company Limited (AMC)
offers investment management and advisory services to individuals who not only
understand the long-term potential of equities as an asset class, but also understand
the associated risks.
Through Portfolio management, AMC is targeted to investors who want to
improve their current approach to equity investment. Whatever be their investment
approach viz. active, research based or otherwise, it is clear that equity investment
has become a more involved activity. It calls for awareness and understanding of
the business and economic variables that affect equity valuations. The AMC being
in the investment business is better equipped to understand these variables. The
PMS will also give an opportunity to investors to interact with its investment team.
This may enable investors to gain insights into the investment process and better
understand the performance of their portfolio.
The investment philosophy of the AMC is to invest in companies in strong
businesses, run by competent managers and available at a price that represents a
discount to the intrinsic value of that business. However, several issues restrict
large equity mutual funds from acquiring sizeable positions in companies that
otherwise satisfy the above-mentioned criteria, for example, liquidity, regulatory
investment restrictions, etc. The investor, by virtue of his smaller portfolio size
may exploit such opportunities.
We at the AMC propose to take advantage of these opportunities and attempt to
meet the investment objectives of the investors. However attention is also drawn
to the fact that in many cases, highly illiquid equities also are more volatile than
more liquid securities.
Exclusivity:
The investor will have exclusive ownership of his or her portfolio and will receive
a periodic update on its performance. The analysis of performance will also
include comparative performance parameters.
Responsiveness:
The AMC will spend considerable time understanding the specific investment
objective of each investor and attempt to design a portfolio that may facilitate to
achieve the objectives of the investor.
Risk
Investors are not being offered any guaranteed / assured returns. Investments in
securities are subject to market risks. The value of investments may go up or down
depending on the various factors and forces affecting the capital markets. Past
Performance of the Sponsor and its affiliates / Mutual Fund / AMC does not
indicate the future performance of the Portfolio Manager and its schemes.
Investors are urged to read the Disclosure Document before signing the agreement.
MUTUAL FUND
3.1 Introduction
A Mutual Fund is an investment tool that allows small investors access to a well-
diversified portfolio of equities, bonds and other securities. Each shareholder
participates in the gain or loss of the fund. Units are issued and can be redeemed
as needed. The fund's Net Asset Value (NAV) is determined each day.
Mutual Funds are financial intermediaries. They are companies set up to receive
your money, and then having received it, make investments with the money Via an
AMC. It is an ideal tool for people who want to invest but don't want to be
bothered with deciphering the numbers and deciding whether the stock is a good
buy or not. A mutual fund manager proceeds to buy a number of stocks from
various markets and industries. Depending on the amount you invest, you own part
of the overall fund.
The beauty of mutual funds is that anyone with an investible surplus of a few
hundred rupees can invest and reap returns as high as those provided by the equity
markets or have a steady and comparatively secure investment as offered by debt
instruments.
ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the
organisational set up of a mutual fund:
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. The flow chart below describes broadly the working of a
mutual fund:
CONCEPT
Mutual Fund Operation Flow Chart
Benefits of investing in a Mutual Fund

There are several benefits from investing in a Mutual Fund.
Small investments: Mutual funds help you to reap the benefit of returns by a
portfolio spread across a wide spectrum of companies with small investments.
Such a spread would not have been possible without their assistance.
Professional Fund Management: Professionals having considerable expertise,

experience and resources manage the pool of money collected by a mutual fund.
They thoroughly analyze the markets and economy to pick good investment
opportunities.
Spreading Risk: An investor with a limited amount of fund might be able to to
invest in only one or two stocks / bonds, thus increasing his or her risk. However,
a mutual fund will spread its risk by investing a number of sound stocks or bonds.
A fund normally invests in companies across a wide range of industries, so the risk
is diversified at the same time taking advantage of the position it holds. Also in
cases of liquidity crisis where stocks are sold at a distress, mutual funds have the
advantage of the redemption option at the NAVs.
Transparency and interactivity: Mutual Funds regularly provide investors with

information on the value of their investments. Mutual Funds also provide complete
portfolio disclosure of the investments made by various schemes and also the
proportion invested in each asset type. Mutual Funds clearly layout their
investment strategy to the investor.
Liquidity: Closed ended funds have their units listed at the stock exchange, thus
they can be bought and sold at their market value. Over and above this the units
can be directly redeemed to the Mutual Fund as and when they announce the
repurchase.
Choice: The large amount of Mutual Funds offer the investor a wide variety to
choose from. An investor can pick up a scheme depending upon his risk / return
profile.
Regulations: All the mutual funds are registered with SEBI and they function
within the provisions of strict regulation designed to protect the interests of the
investor.
A Mutual Fund is not an alternative investment option to stocks and bond; rather it
pools the money of several investors and invests this in stocks, bonds, money
market instruments and other types of securities.
3.2 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 Fund / Scheme
An open-ended fund or scheme is one that is available for subscription and
repurchase on a continuous basis. These schemes do not have a fixed maturity
period. Investors can conveniently buy and sell units at Net Asset Value (NAV)
related prices which are declared on a daily basis. The key feature of open-end
schemes is liquidity.
Close-ended Fund / Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The
fund is open for subscription only during a specified period at the time of launch
of the scheme. Investors can invest in the scheme at the time of the initial public
issue and thereafter they can buy or sell the units of the scheme on the stock
exchanges where the units are listed. In order to provide an exit route to the
investors, some close-ended funds give an option of selling back the units to the
mutual fund through periodic repurchase at NAV related prices. SEBI Regulations
stipulate that at least one of the two exit routes is provided to the investor i.e.
either repurchase facility or through listing on stock exchanges. These mutual
funds schemes disclose NAV generally on weekly basis.
By Investment Objectives
Growth / Equity Oriented Schemes
The aim of growth funds is to provide capital appreciation over the medium to
long- term. Such schemes normally invest a major part of their corpus in equities.
Such funds have comparatively high risks. These schemes provide different
options to the investors like dividend option, capital appreciation, etc. and the
investors may choose an option depending on their preferences. The investors
must indicate the option in the application form. The mutual funds also allow the
investors to change the options at a later date. Growth schemes are good for
investors having a long-term outlook seeking appreciation over a period of time.
Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds, corporate
debentures, Government securities and money market instruments. Such funds are
less risky compared to equity schemes. These funds are not affected because of
fluctuations in equity markets. However, opportunities of capital appreciation are
also limited in such funds. The NAVs of such funds are affected because of change
in interest rates in the country. If the interest rates fall, NAVs of such funds are
likely to increase in the short run and vice versa. However, long term investors
may not bother about these fluctuations.
Balanced Fund
The aim of balanced funds is to provide both growth and regular income as such
schemes invest both in equities and fixed income securities in the proportion
indicated in their offer documents. These are appropriate for investors looking for
moderate growth. They generally invest 40-60% in equity and debt instruments.
These funds are also affected because of fluctuations in share prices in the stock
markets. However, NAVs of such funds are likely to be less volatile compared to
pure equity funds.
Money Market or Liquid Fund
These funds are also income funds and their aim is to provide easy liquidity,
preservation of capital and moderate income. These schemes invest exclusively in
safer short-term instruments such as treasury bills, certificates of deposit,
commercial paper and inter-bank call money, government securities, etc. Returns
on these schemes fluctuate much less compared to other funds. These funds are
appropriate for corporate and individual investors as a means to park their surplus
funds for short periods.
Other Scheme
Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of the
Income Tax Act, 1961 as the Government offers tax incentives for investment in
specified avenues. E.g. Equity Linked Savings Schemes (ELSS). Pension schemes
launched by the mutual funds also offer tax benefits. These schemes are growth
oriented and invest pre-dominantly in equities. Their growth opportunities and
risks associated are like any equity-oriented scheme.
Special Scheme
Index Funds
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive
index, S&P NSE 50 index (Nifty), etc these schemes invest in the securities in the
same weightage comprising of an index. NAVs of such schemes would rise or fall
in accordance with the rise or fall in the index, though not exactly by the same
percentage due to some factors known as "tracking error" in technical terms.
Necessary disclosures in this regard are made in the offer document of the mutual
fund scheme.
There are also exchange traded index funds launched by the mutual funds which
are traded on the stock exchanges.
Sector specific funds / schemes

These are the funds/schemes which invest in the securities of only those sectors or
industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast
Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these
funds are dependent on the performance of the respective sectors/industries. While
these funds may give higher returns, they are more risky compared to diversified
funds. Investors need to keep a watch on the performance of those
sectors/industries and must exit at an appropriate time. They may also seek advice
of an expert.
3.3 Portfolio management

Portfolio management is an important foundation of mutual fund business. We
have listed professional management as a major benefit of a mutual fund brought
to the investor. The performance of the fund measured by the risk adjusted returns
produced for the investor arises largely by the successful portfolio management
function. After collection the investors funds, effective portfolio management will
have to give returns acceptable to the investor; else, investor may move on to
better performing funds.
From the investor perspective, the need for successful portfolio management
function is obviously paramount. However, in the complex world of financial
markets, portfolio management is a specialist function. Even within a mutual
fund, all employees would not find it possible or even necessary to understand all
the intricacies of this specialist task. For distributors, much as it is important to be
able to assess which asset management company has better asset management
skills, it is not possible and certainly not necessary to get to know how to manage
mutual fund portfolios.
Portfolio management allows investors to estimate both the expected risks and
returns, as measured statistically, for their investment portfolios.
It described how to combine assets into efficiently diversified portfolios. It was his
position that a portfolio's risk could be reduced and the expected rate of return
could be improved if investments having dissimilar price movements were
combined.
3.4 Types of Portfolio management
There are two types of Portfolio Strategies:
A. Passive Portfolio Strategy
A strategy that involves minimal expectational input, and instead relies on

diversification to match the performance of some market index.
A passive strategy assumes that the marketplace will reflect all available
information in the price paid for securities.
Passive management is a financial strategy in which a fund manager makes as

few portfolio decisions as possible, in order to minimize transaction costs,
including the incidence of capital gains tax. One popular method is to mimic the
performance of an externally specified indexcalled 'index funds'. The ethos of
an index fund is aptly summed up in the injunction to an index fund manager:
"Don't just do something, sit there!"
Passive management is most common on the equity market, where index funds
track a stock market index, but it is becoming more common in other investment
types, including bonds, commodities and hedge funds. Today, there is a plethora of
market indexes in the world, and thousands of different index funds tracking many
of them.
One of the largest equity mutual funds, the Vanguard 500, is a passive
management fund. The two firms with the largest amounts of money under
management: Barclay's Global Investors, and State Street, primarily engage in
passive management strategies.
B. Active Portfolio Strategy
A strategy that uses available information and forecasting techniques to seek a

better performance than a portfolio that is simply diversified broadly.
Active management refers to a portfolio management strategy where the manager

makes specific investments with the goal of outperforming a benchmark index.
Ideally, the manager exploits market inefficiencies by purchasing securities that
are undervalued, and/or short selling securities that are overvalued. Depending on
the goals of the specific investment portfolio or mutual fund, active management
may also strive to achieve a goal of less volatility or risk than the benchmark index
instead of, or in addition to, greater long-term return.
Active management is the opposite of passive management, where the manager

does not seek to outperform the benchmark index.
Active portfolio managers may use a variety of factors and strategies to construct
their portfolio. These include quantitative measures such as P/E ratios and PEG
ratios, sector bets that attempt to anticipate long-term macroeconomic trends, and
purchasing stocks of companies that are temporarily out-of-favor or selling at a
discount to their intrinsic value. Some actively managed funds also pursue
strategies such as merger arbitrage, short positions, option writing, and asset
allocation.
The effectiveness of an actively-managed investment portfolio obviously depends

on the skill of the manager and research staff. In reality, the majority of actively
managed collective investment schemes rarely outperform their index counterparts
over long periods of time, assuming that they are benchmarked correctly. For
example, the Standard & Poor's Index Versus Active (SPIVA) quarterly scorecards
demonstrate that only a minority of actively managed mutual funds usually beat
Standard & Poor's various index benchmarks. As the time period for comparison
increases, this minority percentage tends to shrink even more.
When all expenses are taken into account one might actually see
underperformance even if the securities outperform the Market. However, if not
for active management, passive management would become a gamble, thus the
incentives for active management will always exist. In addition, many investors
find active management an attractive strategy within market segments that are less
likely to be fully efficient, such as investments in small cap stocks.
Moreover, there are three more types of Portfolios:
1. The Patient Portfolio
This type invests in well-known stocks. Most pay dividends and are candidates to
buy and hold for long periods...
Perhaps forever!
The vast majority of the stocks in this portfolio represent classic growth
companies, those that can be expected to deliver higher earnings on a regular basis
regardless of economic conditions.
2. The Aggressive Portfolio
This portfolio invests in "expensive stocks" (in terms of such measurements as

price-earnings ratios) that offer big rewards but also carry big risks.
This portfolio "collects" stocks of rapidly growing companies of all sizes, that over
the next few years are expected to deliver rapid annual earnings growth.
Because many of these stocks are on the less-established side, this portfolio is the
likeliest to experience big turnovers over time, as winners and losers become
apparent.
3. The Conservative Portfolio
They choose stocks with an eye on yield, as well as earnings growth and a steady
dividend history.
Portfolio management involves deciding what assets to include in the portfolio,
given the goals of the portfolio owner and changing economic conditions.
Selection involves deciding what assets to purchase, how many to purchase, when
to purchase them, and what assets to divest. These decisions always involve some
sort of performance measurement, most typically expected return on the portfolio,
and the risk associated with this return. Typically the expected return from
portfolios comprised of different asset bundles is compared.
The unique goals and circumstances of the investor must also be considered. Some
investors are more risk averse than others.
Mutual fund has developed particular techniques to optimize their portfolio

holdings. We can understand ore with the help of investment management.
3.5 Investment management
Investment management is the professional management of various securities,

assets, to meet specified investment goals for the benefit of the investors. Investors
may be institutions or private investors through both directly via investment
contracts and more commonly via collective investment schemes.
The term asset management is often used to refer to the investment management of
collective investments, whilst the more generic fund management may refer to all
forms of institutional investment as well as investment management for private
investors. Investment managers who specialize in advisory or discretionary
management on behalf of private investors may often refer to their services as
wealth management or portfolio management often within the context of so-called
"private banking".
The provision of 'investment management services' includes elements of financial
analysis, asset selection, stock selection, plan implementation and ongoing
monitoring of investments. Investment management is a large and important
global industry in its own right responsible for caretaking of trillions of dollars,
euro, pounds and yen. Coming under the remit of financial services many of the
world's largest companies are at least in part investment managers and employ
millions of staff and create billions in revenue.
Fund manager refers to both a firm that provides investment management services
and an individual who directs 'fund management' decisions.
Investment managers and portfolio structures
At the heart of the investment management industry are the managers who invest
and divest client investments.
A certified company investment advisor should conduct an assessment of each

client's individual needs and risk profile. The advisor then recommends
appropriate investments.
Asset allocation
The different asset classes are stocks, bonds, real-estate and commodities. The
exercise of allocating funds among these assets is what investment management
firms are paid for. Asset classes exhibit different market dynamics, and different
interaction effects; thus, the allocation of monies among asset classes will have a
significant effect on the performance of the fund. Some research suggests that
allocation among asset classes has more predictive power than the choice of
individual holdings in determining portfolio return. Arguably, the skill of a
successful investment manager resides in constructing the asset allocation, and
separately the individual holdings, so as to outperform certain benchmarks.
Long-term returns
It is important to look at the evidence on the long-term returns to different assets,
and to holding period returns. For example, over very long holding periods (eg.
10+ years) in most countries, equities have generated higher returns than bonds,
and bonds have generated higher returns than cash. According to financial theory,
this is because equities are riskier (more volatile) than bonds which are them
selves more risky than cash.
Diversification
Against the background of the asset allocation, fund managers consider the degree
of diversification that makes sense for a given client and construct a list of planned
holdings accordingly. The list will indicate what percentage of the fund should be
invested in each particular stock or bond. The theory of portfolio diversification
was originated by Markowitz and effective diversification requires management of
the correlation between the asset returns and the liability returns, issues internal to
the portfolio, and cross-correlations between the returns.
Investment styles
There are a range of different styles of fund management that the institution can
implement. For example, growth, value, market neutral, small capitalization,
indexed, etc. Each of these approaches has its distinctive features, adherents and,
in any particular financial environment, distinctive risk characteristics. For
example, there is evidence that growth styles are especially effective when the
companies able to generate such growth are scarce; conversely, when such growth
is plentiful, then there is evidence that value styles tend to outperform the indices
particularly successfully.
Performance measurement
Fund performance is the acid test of fund management, and in the institutional
context accurate measurement is a necessity. For that purpose, institutions measure
the performance of each fund under their management, and performance is also
measured by external firms that specialize in performance measurement. The
leading performance measurement firms compile aggregate industry data, e.g.,
showing how funds in general performed against given indices and peer groups
over various time periods.
In a typical case of the equity fund, then the calculation would be made every
quarter and would show a percentage change compared with the prior quarter. This
figure would be compared with other similar funds managed within the institution,
with performance data for peer group funds, and with relevant indices or tailor-
made performance benchmarks where appropriate. The specialist performance
measurement firms calculate quartile and decile data and close attention would be
paid to the ranking of any fund.
Generally speaking it is probably appropriate for an investment firm to persuade

its clients to assess performance over longer periods to smooth out very short term
fluctuations in performance and the influence of the business cycle. This can be
difficult however and, industry-wide, there is a serious preoccupation with short-
term numbers and the effect on the relationship with clients.
An enduring problem is whether to measure before-tax or after-tax performance.

After-tax represents the benefit to the investor, but investors tax positions may
vary. Before tax measurement can be misleading, especially in regimens that tax
realized capital gains. It is thus possible that successful active managers may
produce miserable after-tax results. One possible solution is to report the after-tax
position of some standard tax-payer.
Absolute versus relative performance
In the USA and the UK, two of the world's most sophisticated fund management
markets, the tradition is for institutions to manage client money relative to
benchmarks. For example, an institution believes it has done well if it has
generated a return of 5% when the average manager generates a 4% return.
Risk-adjusted performance measurement

Performance measurement should not be reduced to the evaluation of fund returns
alone, but must also integrate other fund elements that would be of interest to
investors, such as the measure of risk taken. Several other aspects are also part of
performance measurement: evaluating if managers have succeeded in reaching
their objective, i.e. if their return was sufficiently high to reward the risks taken;
how they compare to their peers; and finally whether the portfolio management
results were due to luck or the managers skill. The need to answer all these
questions has led to the development of more sophisticated performance measures,
many of which originate in modern portfolio theory.
Modern portfolio theory established the quantitative link that exists between
portfolio risk and return. The Capital Asset Pricing Model (CAPM) developed by
Sharpe (1964) highlighted the notion of rewarding risk and produced the first
performance indicators, be they risk-adjusted ratios (Sharpe ratio, information
ratio) or differential returns compared to benchmarks (alphas). The Sharpe ratio is
the simplest and best known performance measure. It measures the return of a
portfolio in excess of the risk-free rate, compared to the total risk of the portfolio.
This measure is said to be absolute, as it does not refer to any benchmark,
avoiding drawbacks related to a poor choice of benchmark. Meanwhile, it does not
allow the separation of the performance of the market in which the portfolio is
invested from that of the manager. The information ratio is a more general form of
the Sharpe ratio in which the risk-free asset is replaced by a benchmark portfolio.
This measure is relative, as it evaluates portfolio performance in reference to a
benchmark, making the result strongly dependent on this benchmark choice.
Portfolio alpha is obtained by measuring the difference between the return of the
portfolio and that of a benchmark portfolio. This measure appears to be the only
reliable performance measure to evaluate active management. In fact, we have to
distinguish between normal returns, provided by the fair reward for portfolio
exposure to different risks, and obtained through passive management, from
abnormal performance due to the managers skill, whether through market timing
or stock picking. The first component is related to allocation and style investment
choices, which may not be under the sole control of the manager, and depends on
the economic context, while the second component is an evaluation of the success
of the managers decisions. Only the latter, measured by alpha, allows the
evaluation of the managers true performance.
Portfolio normal return may be evaluated using factor models. The first model,
proposed by Jensen (1968), relies on the CAPM and explains portfolio normal
returns with the market index as the only factor. It quickly becomes clear,
however, that one factor is not enough to explain the returns and that other factors
have to be considered. Multi-factor models were developed as an alternative to the
CAPM, allowing a better description of portfolio risks and an accurate evaluation
of managers performance. For example, Fama and French (1993) have
highlighted two important factors that characterize a company's risk in addition to
market risk. These factors are the book-to-market ratio and the company's size as
measured by its market capitalization. Fama and French therefore proposed a
three-factor model to describe portfolio normal returns. Carhart (1997) proposed
to add momentum as a fourth factor to allow the persistence of the returns to be
taken into account. Also of interest for performance measurement is Sharpes
(1992) style analysis model, in which factors are style indices. This model allows a
custom benchmark for each portfolio to be developed, using the linear
combination of style indices that best replicate portfolio style allocation, and leads
to an accurate evaluation of portfolio alpha.
RELIANCE MUTUAL FUND
Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Assets
Under Management (AUM) of Rs. 66,420 crore (AUM as on July 31st 2007) and
an investor base of over 3.27lacs.Reliance Mutual Fund, a part of the Reliance -
Anil Dhirubhai Ambani Group, is one of the fastest growing mutual funds in the
country. RMF offers investors a well-rounded portfolio of products to meet
varying investor requirements and has presence in 115 cities across the
country.Reliance Mutual Fund constantly endeavors to launch innovative products
and customer service initiatives to increase value to investors.
Reliance Mutual Fund schemes are managed by Reliance Capital Asset

Management Ltd., a wholly owned subsidiary of Reliance Capital Ltd. Reliance
Capital Ltd. is one of Indias leading and fastest growing private sector financial
services companies, and ranks among the top 3 private sector financial services
and banking companies, in terms of net worth. Reliance Capital Ltd. has interests
in asset management, life and general insurance, private equity and proprietary
investments, stock broking and other financial services.
AUM Source: http://www.amfiindia.com/
Statutory Details:
Sponsor: Reliance Capital Limited.
Trustee: Reliance Capital Trustee Co. Limited.

Investment Manager: Reliance Capital Asset Management Limited. The Sponsor,
the Trustee and the Investment Manager are incorporated under the Companies
Act 1956.
General Risk Factors: Mutual Funds and securities investments are subject to
market risks and there is no assurance or guarantee that the objectives of the
Scheme will be achieved. As with any investment in securities, the NAV of the
Units issued under the Scheme can go up or down depending on the factors and
forces affecting the capital markets. Past performance of the
Sponsor/AMC/Mutual Fund is not indicative of the future performance of the
Scheme. The Sponsor is not responsible or liable for any loss resulting from the
operation of the Scheme beyond their initial contribution of Rs.1 lakh towards the
setting up of the Mutual Fund and such other accretions and additions to the
corpus. The Mutual Fund is not guaranteeing or assuring any dividend/ bonus. The
Mutual Fund is also not assuring that it will make periodical dividend/bonus
distributions, though it has every intention of doing so. All dividend/bonus
distributions are subject to the availability of the distributable surplus in the
Scheme. For details of scheme features and scheme specific risk factors, please
refer to the provisions of the offer document. Offer Document and KIM is
available at all the DISCs/ Distributors of RMF and also our web site
http://www.reliancemutual.com/
Growth Fund
Scheme Features
Type: An Open-ended equity growth Scheme
Investment Pattern:
Equity and Equity related Instruments - 65% - 100%.
Debt and Money Market Instruments - Upto 35%.
Investment Objective:
The primary investment objective of the Scheme is to achieve long-term growth of
capital by investment in equity and equity related securities through a research
based investment approach.
Net Asset Value: Calculated & declared every working day
Plans / Options:
Growth Plan: Growth Option & Bonus Option
Dividend Plan: Dividend Pay-out Option & Dividend Reinvestment Option
Application Amount: Rs.5,000/- for Resident Indians and Non-Resident Indians

and in multiples of Rs.1/- thereafter for both plans.
Min. Additional Investment: Rs.1000/- and in multiples of Rs.1/- thereafter for

both plans
Portfolio Disclosures: Half-yearly
Entry Load:
For Subscription below Rs. 2 crs - 2.25%
For subscription of Rs. 2 crs & above and below Rs 5 crs - 1.25%
For Subscription of Rs 5 crs & above - Nil
Exit Load:
For Subscriptions of less than Rs 5 Crs;
1% if redeemed/switched on or before completion of 6 months from the date of

allotment.
0.5% if redeemed/switched between 6 months 1 day & before completion of 1
year from the date of allotment & Nil thereafter
For subscription of Rs 5 Crs and above, no exit load shall be charge
Contingent Deferred Sales Charge: Nil
Inter-Scheme Switch:
At applicable loads in the respective schemes.
Inter Plan/ Inter Option Switch: Nil
Redemption Cheques Issued: Mutual Fund shall endeavor to issue within 3

Working days
Minimum Redemption Amount: Any amount or any number of units
Cut off time: 3:00 p.m. on working days as defined in the Offer Document
Recurring Investment Plan (RIP): Available
Regular investment option for corporate employees (RICE): Available
Regular withdrawal Plan (RWP): Available
Trigger Facility: Value & NAV Trigger to introduce a Stop loss or a Gain Cap.
Switch Facility: Available
Systematic Transfer Plan / Dividend Transfer Plan: Available

Nomination Facility: Available
Mode of Holding: Single, Joint or Anyone or Survivor
Benchmark Index: BSE 100 Index
Switching Option:
Investors may opt to switch Units between the Dividend Plan and Growth Plan of
the Scheme at NAV based prices after completion of lock in period, if any.
Switching will also be allowed into/from any other eligible open-ended Schemes
of the Fund either currently in existence or a Scheme (s) that may be launched /
managed in future, as per the features of the respective scheme.
Recurring Expenses
Investment Management Expenses 1.25 %
Operational Expenses 0.25 %
Marketing Expenses 1.00 %
Total 2.50%
Allotment of Units:
For Subscriptions received at the Designated Investor Service Center's within the
cut-off timings and considered accepted for that day, the units will be allotted on
the T day. Where the T day is the transaction day, provided the application is
received within the cut-off timings for the transaction day.
Applicable NAV:
Sale of units by Reliance Mutual Fund : In respect of valid applications received
upto 3 p.m. by the Mutual Fund along with a local cheque or a demand draft
payable at par at the place where the application is received, the closing NAV of
the day on which application is received shall be applicable.
In respect of valid applications received after 3 p.m. by the Mutual Fund along
with a local cheque or a demand draft payable at par at the place where the
application is received, the closing NAV of the next business day shall be
applicable. (Business Day shall have the same meaning as working day, wherever
used)
Repurchase including Switch-out: In respect of valid applications received upto 3
p.m. by the Mutual Fund, same day's closing NAV shall be applicable.
In respect of valid applications received after 3 p.m. by the Mutual Fund, the
closing NAV of the next business day shall be applicable.
General Risk Factors:

Mutual Funds and securities investments are subject to market risks and there is no
assurance and no guarantee that the Schemes objectives will be achieved. As with
investments in any securities, the NAVs of the units issued under the Scheme can
go up or down depending on the factors and forces affecting the securities market.
Past performance of the Sponsor/AMC/Mutual Fund is not indicative of future
performance of the Scheme. Reliance Growth Fund is only name of the scheme
and does not in any manner indicate either the quality of the scheme, its future
prospects or returns. The Sponsor is not responsible or liable for any loss resulting
from the operation of the Scheme beyond their initial contribution of Rs.1 lac
towards the setting up of the Mutual Fund and such other accretions and additions
to the corpus. The Mutual Fund is not guaranteeing or assuring any dividends/
bonus. The Mutual Fund is also not assuring that it will make periodical dividend/
bonus distributions, though it has every intention of doing so. All dividend/ bonus
distributions are subject to the availability of distributable surplus in the respective
Scheme. For details of scheme features apart from those mentioned above and
scheme specific risk factors please refer to the Offer Document.
Vision Fund
Scheme Features
Type: An Open-ended equity growth Scheme
Investment Pattern:
Equity and Equity related Instruments - Atleast 60%
Debt Instruments - Upto 30%
Money Market Instruments - Upto 10%
The primary investment objective of the Scheme is to achieve long term growth of
capital by investment in equity and equity related securities through a research
based investment approach.
Net Asset Value: Calculated & declared every working day
Plans / Options:
Growth Plan: Growth Option & Bonus Option
Dividend Plan: Dividend Pay-out Option & Dividend Reinvestment Option
Application Amount: Rs.5,000/- for Residents and Non-Resident investors and in

multiples of Rs.1/- thereafter for both plans.
Min. Additional Investment: Rs.1000/- and in multiples of Rs.1/- thereafter for
both plans.
Entry Load:
For Subscription of Rs. 2 crs & above and below Rs.5 crs - 1.25%
Exit Load:
For Subscriptions of less than Rs 5 Crs;
1% if redeemed/switched on or before completion of 6 months from the date of

allotment.
0.5% if redeemed/switched between 6 months 1 day & before completion of 1
year from the date of allotment & Nil thereafter
For Subscription of Rs 5 Crs and above, no exit load shall be charge
At applicable loads in the respective schemes.
Inter Plan/ Inter Option Switch: Nil
Redemption Cheques Issued: Mutual Fund shall endeavour to issue within 3

Working days
Minimum Redemption Amount: Any amount or any number of units
Regular investment option for corporate employees (RICE): Available
Switch Facility: Available
Systematic Transfer Plan/ Dividend Transfer Plan: Available
Nomination Facility : Available
Benchmark Index: BSE 100 Index
Switching Option:
Recurring Expenses: Investment Management Expenses 1.25 %
Operational Expenses 0.25 %
Marketing Expenses 1.00 %
Total 2.50%
The above expenses are estimates only and are subject to change as per actuals.
While the AMC fees remains the same, other expenses, namely, Marketing
Expenses and Operational Expenses may change inter se and the total expenses
shall not exceed 2.50% of the amount the Scheme's average daily net assets.
Subject to SEBI Regulations, the Trustees reserve the right to modify the above
estimate for recurring expenses on a prospective basis.
Allotment of Units:
Applicable NAV:
upto 3 p.m. by the Mutual Fund along with a local cheque or a demand draft
In respect of valid applications received after 3 p.m. by the Mutual Fund
alongwith a local cheque or a demand draft payable at par at the place where the
applicable.(Business Day shall have the same meaning as working day, wherever
used)
Repurchase including Switch-out: In respect of valid applications received upto
3 p.m. by the Mutual Fund, same day's closing NAV shall be applicable.
General Risk Factors:

Mutual Funds and securities investments are subject to market risks and there is no
assurance and no guarantee that the Schemes objectives will be achieved. As with
investments in any securities, the NAVs of the units issued under the Scheme can
go up or down depending on the factors and forces affecting the securities market.
Past performance of the Sponsor/AMC/Mutual Fund is not indicative of future
performance of the Scheme. Reliance Growth Fund is only name of the scheme
and does not in any manner indicate either the quality of the scheme, its future
prospects or returns. The Sponsor is not responsible or liable for any loss resulting
from the operation of the Scheme beyond their initial contribution of Rs.1 lac
towards the setting up of the Mutual Fund and such other accretions and additions
to the corpus. The Mutual Fund is not guaranteeing or assuring any dividends/
bonus. The Mutual Fund is also not assuring that it will make periodical dividend/
bonus distributions, though it has every intention of doing so. All dividend/ bonus
distributions are subject to the availability of distributable surplus in the respective
Scheme. For details of scheme features apart from those mentioned above and
scheme specific risk factors please refer to the Offer Document.
DIVERSIFIED POWER SECTOR FUND
Scheme Features
Type: An Open-ended Power Sector Scheme.
Investment Pattern:
Asset Allocation
Types of Instruments
(% of Net Assets)
Minimum Most Maximu
Likely m
Equity and Equity related Securities 0% 80% 100%
Debt and Money market Instruments with
average Maturity of 5 to 10 years. 0% 20% 100%
The primary Investment Objective of the Scheme is to seek to generate continuous
returns by actively investing in equity / equity related or fixed income securities of
Power and other associated companies.
Net Asset Value: Calculated & declared every day
Plans / Options:
Growth Plan:
Growth Option
Bonus Option
Dividend Plan:
Dividend (Pay-out) Option
Dividend (Reinvestment) Option
Application Amount: Rs.5,000/- for Resident Indians and Non-Resident Indians
and in multiples of Rs.1/- thereafter for both plans.
Min. Additional Investment: Rs.1000/- and in multiples of Rs.1/- , thereafter for

both plans.
Entry (Sales) Load:

For subscription of Rs. 2 crs & above and below Rs. 5 crs - 1.25%
Exit Load: Nil
At the applicable loads on the respective schemes. No load applicable for switches
between the equity /sector specific schemes and Reliance Diversified Power
Sector Fund and vice-versa except Reliance NRI Equity Fund.
Inter Plan/Inter Option Switch: Nil
Redemption Cheques Issued: Mutual fund shall endeavour to issue within 3

Working days
Minimum Redemption Amount: Any amount

Regular investment option for corporate employees (RICE) : Available
Switch Facility: Available. No load applicable for switches between the equity
schemes except Reliance NRI Equity Scheme.
Systematic Transfer Plan / Dividend Transfer Plan: Available
Nomination Facility: Available
Benchmark Index: India Power Index
Switching Option:
Recurring Expenses:
Investment Management Expenses 1.25%
Operational Expenses 0.75%
Marketing Expenses 0.25%
Total 2.25%
The above expenses are estimates only and are subject to change as per actuals.
Expenses on an ongoing basis will not exceed the maximum limits as may be
specified by SEBI Regulations from time to time.Please read the offer document
for details.
Allotment of Units:
Applicable NAV for Redemption:

upto 3 p.m. by the Mutual Fund alongwith a local cheque or a demand draft
In respect of valid applications received after 3 p.m. by the Mutual Fund along
with a local cheque or a demand draft payable at par at the place where the
applicable.(Business Day shall have the same meaning as working day, wherever
used)
Repurchase including Switch-out: In respect of valid applications received upto
3 p.m. by the Mutual Fund, same day's closing NAV shall be applicable.
CHAPTER - II
Objective of the study and

Research Methodology
3.0 RESEARCH METHODOLOGY
3.1 OBJECTIVES OF THE STUDY:

To analyze the sector allocation of Mutual Funds of Reliance.
To analyze the Fund Allocation of Reliance Mutual Funds.
3.2 RESEARCH METHODOLOGY

I have used Secondary data which I got from Company and Internet.
3.3 SOURCE OF DATA

The data was taken from Internet and Published sources from the company.
3.4 LIMITATIONS OF STUDY

The study was based on the secondary data so this may be possible that the
site or the research data available may not be reliable.
Due to Lack of Time and resources I was not able to cover all the aspects
but I have tried to the best extend and covered each and every aspect related
to the project.
CHAPTER - III
Presentation of Tabulated
Data and Analysis
PORTFOLIO ANALYSIS
With actively managed portfolio spread across 35 stocks, reliance growth Fund has
been successful in achieving its objective of aggressive growth though at a higher
risk compared to other equity funds.
As on Mar 31, 2006, the schemes portfolio is spread across 30 sectors with
Electrical Equipment, Banking, Metals and Automobiles being the top sector
picks. Meanwhile, the scheme is under weight on the technology sector. The top 4
sectors together account for almost 67% of the total portfolio
RELIANCE VISION FUND
FUND DATA
Structure . . .Open-ended Equity Growth Scheme

Inception Date .October 8, 1995
Corpus . . . . .Rs 1,832.32 crore (March 31, 2006)
Minimum Investment. .Rs 5,000
Fund Manager . .Ashwani Kumar
Entry Load .<2cr - 2.25%; 2cr<5cr - 1.25%; 5cr - Nil
Exit Load . . . .Nil
INVESTMENT OBJECTIVE The primary investment objective of the scheme is

to achieve long-term growth of capital by investment in equity and equity-related
securities through a research-based investment approach.
APRIL 2006
PORTFOLIO OF RELIANCE VISION FUND

As on April 28, 2006
Holdings Weightage (%)

Equities 95.06
Siemens Ltd 6.47
Hindustan Lever Ltd 5.31
Maruti Udyog Ltd 5.28
Reliance Industries Ltd 5.01
Divis Laboratories Ltd 4.42
Tata Motors 4.36
Infosys Technologies Ltd 4.10
Reliance Communication Venture 3.95
Sterlite Ind 3.90
Hindalco Industries Ltd 3.90
Punjab Tractors Ltd 3.68
Indian Oil Corporation Ltd 3.49
ITC Ltd 3.15
Gujarat State Fertilizers & Chemicals Ltd 2.87
Grasim Industries Ltd 2.76
Bharat Forge Ltd 2.74
ICICI Bank Ltd 2.71
Hero Honda Motors Ltd 2.65
Television 18 Ltd 2.58
Century Textiles & Industries Ltd 2.54
Automative Axles 2.53
Ranbaxy Laboratories Ltd 2.49
HCL Technologies Ltd 2.41
Jaiprakash Associates 2.35
Associated Cement Companies Ltd 2.24
Reliance Energy Ventures Ltd 2.19
Lupin Ltd 1.80
Tata Consultancy Services Ltd 1.55
Wipro Ltd 1.14
Equity Holdings < 1% of Corpus 0.50
Debt, Derivatives, Call & other Receivables 4.94
Grand Total 100.00
NAV as on April 28, 2006 Rs
RVF Growth Plan- Bonus Option 27.75
RVF Dividend Plan 51.38
RVF Growth Plan- Growth Option 165.65
SECTOR ALLOCATION
Industry % Allocation
Auto 15.97
Software 9.20
Pharmaceuticals 8.71
Petroleum Products 8.50
Consumer Non Durables 8.46
Non - Ferrous Metals 7.80
Industrial Capital Goods 6.47
Cement 5.00
Telecom Services 3.95
Media & Entertainment 3.08
Fertilisers 2.87
Industrial Products 2.74
Banks 2.71
Textiles 2.54
Auto Ancillaries 2.53
Construction 2.35
Power 2.19
Total 95.06
NAV PERFORMANCE OF RELIANCE VISION FUND vs BSE 100 INDEX as

on April 28, 2006
Period % Change in NAV % Change in Index

1 Year 89.62 82.00
3Years 81.76 61.37
5 Years 64.22 30.47
Since Inception 30.45 13.33
MAY 2006
Equities 86.61
Larsen & Toubro Ltd 5.24
Reliance Communications Ltd 4.59
Siemens Ltd 4.31
Alstom Projects India Ltd 4.15
Television Eighteen India Ltd 2.71
Cummins India Ltd 2.57
Jaiprakash Associates Ltd 2.56
JSW Steel Ltd 2.48
Tata Motors Ltd 2.45
Indian Hotels Co Ltd 2.35
Automotive Axles Ltd 2.32
HPCL 2.26
Apollo Tyres Ltd 1.93
HDFC Bank Ltd 1.93
Tata Tea Ltd 1.75
State Bank Of India 1.66
Network Eighteen Fincap Ltd 1.49
ITC Ltd 1.42
Ambuja Cements Ltd 1.34
Deccan Aviation Ltd 1.28
Indian Petrochemicals Corporation Ltd 1.18
Reliance Energy Ltd 1.14
Equity < 1% Of Corpus 1.22
Debt, Derivatives, Cash And Other Receivables 13.39
Grand Total 100.00
NAV as on May 31, 2007 Rs
SECTOR ALLOCATION
Software 8.58
Auto 7.21
Diversified 5.24
Cement 4.28
Banks 3.60
Construction 3.14
Ferrous Metals 2.48
Hotels 2.35
Fertilisers 1.77
Finance 1.49
Transportation 1.28
Chemicals 1.18
Power 1.14
Total 86.61

on May 31, 2007

1 Year 41.01 38.69
3 Years 54.30 43.54
5 Years 55.49 36.12
JUNE 2006
PORTFOLIO OF RELIANCE VISION FUND as on June 30, 2006

Equities
Siemens Ltd 5.68
Indian Hotels Ltd. 3.98
Tata Motors 3.56
ITC Ltd 3.50
Tata Tea Ltd 3.25
Sterlite Industries India Ltd 2.60
Reliance Energy Ventures Ltd 2.12
ONGC Ltd 1.77
JSW Steels Ltd 1.28
Triveni Engineering & Ind Ltd 1.01
Sub Total 88.52
Derivatives, Calls & Other Receivables 11.48
Grand Total 100.00
NAV as on June 30, 2006 Rs
RVF Growth Plan - Bonus Option 23.06
RVF Growth Plan - Growth Option 137.65
SECTOR ALLOCATION
Auto 16.18
Software 6.52
Non-ferrous Metals 5.18
Hotels 3.98
Fertilisers 3.49
Cement 2.78
Textiles 2.14
Power 2.12
Construction 2.01
Oil 1.77
Ferrous Metals 1.28
Banks 0.83
Total 88.52

on June 30, 2006

1 Year 50.45 41.62
3 Years 57.72 43.50
5 Years 57.06 29.96
JULY 2006
PORTFOLIO OF RELIANCE VISION FUND as on July 31, 2006

Equities 91.42
Tata Motors 5.60
Siemens Ltd 5.57
Tata Tea Ltd 5.04
Indian Hotels Ltd 3.66
ITC Ltd 3.16
Tata Steel Ltd 2.18
ONGC Ltd 1.84
JSW Steels Ltd 1.10
Triveni Engineering & Ind Ltd 1.00
Derivatives, Call & other Receivables 8.58
Grand Total 100.00
NAV as on July 31, 2006 Rs
SECTOR ALLOCATION
Auto 15.10
Software 6.78
Hotels 3.66
Ferrous Metals 3.28
Fertilisers 2.95
Cement 2.94
Construction 2.31
Textiles 2.27
Power 2.08
Oil 1.84
Banks 1.06
Total 91.42

on July 31, 2006

1 Year 39.21 32.95
3 Years 54.53 41.96
5 Years 59.39 28.21
AUGUST 2006
PORTFOLIO OF RELIANCE VISION FUND as on August 31, 2006

Equities
Siemens Ltd 5.88
Tata Motors 4.74
Tata Tea Ltd 4.31
ITC Ltd 2.68
Tech Mahindra Ltd 2.42
Tata Steel Ltd 1.95
ONGC Ltd 1.71
Zee Telefilms Ltd 1.55
JSW Steels Ltd 1.13
Sub Total 91.51
Derivatives, Call & Other Receivables 8.49
Grand Total 100.00
NAV as on August 31, 2006 Rs
SECTOR ALLOCATION
Auto 12.51
Software 6.66
Cement 5.05
Hotels 3.62
Ferrous Metals 3.07
Fertilisers 2.96
Construction 2.43
Textiles 2.26
Power 1.80
Oil 1.71
Banks 0.56
Total 91.51

on August 31, 2006

1 Year 44.05 41.79
3 Years 51.46 38.46
5 Years 61.89 31.04
Since Inception28.27 12.52
SEPTEMBER 2006
PORTFOLIO OF RELIANCE VISION FUND as on September 30, 2006

Equities 90.58
Siemens Ltd 5.48
Tata Tea Ltd 3.68
Tata Motors 3.52
ITC Ltd 2.39
Hindustan Petroleum Corporation Ltd 2.14
Bank Of Baroda 1.77
Tech Mahindra Ltd 1.58
Zee Telefilms Ltd 1.56
ONGC Ltd 1.49
JSW Steels Ltd 1.06
Equity Holdings < 1% Of Corpus 2.15
Derivatives, Call & Other Receivables 9.42
Grand Total 100.00
NAV as on September 29, 2006 Rs
RVF Growth Plan - Growth Option160.53
SECTOR ALLOCATION
Auto 11.10
Software 6.49
Cement 5.15
Hotels 4.42
Construction 2.77
Fertilizers 2.59
Textiles 2.44
Banks 1.77
Power 1.55
Oil 1.49
Ferrous Metals 1.06
Total 90.58

on September 29, 2006

1 Year 41.51 38.57
3 Years 50.53 40.29
5 Years 66.37 36.93
OCTOBER 2006
PORTFOLIO OF RELIANCE VISION FUND as on October 31, 2006

Equities 93.83
Siemens Ltd 5.89
Tata Tea Ltd 3.25
Automotive Axles 3.03
Alstom Power India Ltd 2.29
Tata Motors 2.29
ITC Ltd 2.09
Bank Of Baroda 1.48
JSW Steels Ltd 1.09
Derivatives, Cash & Other Receivables 6.17
Grand Total 100.00
NAV as on October 31, 2006 Rs

SECTOR ALLOCATION
Auto 10.09
Software 6.82
Cement 5.83
Hotels 4.38
Construction 3.85
Fertilisers 2.39
Banks 1.48
Power 1.34
Ferrous Metals 1.09
Transportation 0.99
Total 93.83

on October 31, 2006

1 Year 62.40 58.76
3 Years 47.70 38.46
5 Years 66.04 36.56
NOVEMBER 2006
Equities 94.31
Siemens Ltd 4.49
Tata Motors 4.07
Dr Reddy Laboratories 2.83
Tata Tea Ltd 2.71
Television 18 India Ltd 1.49
Bank Of Baroda 1.31
ITC Ltd 1.16
JSW Steels Ltd 1.00
Grand Total 100.00
NAV as on November 30, 2006 Rs

SECTOR ALLOCATION
Auto 11.41
Software 6.68
Cement 5.08
Hotels 4.73
Construction 3.33
Fertilisers 2.30
Transportation 2.00
Power 1.39
Banks 1.31
Information Technology 1.28
Ferrous Metals 1.00
Total 94.31

on November 30, 2006

1 Year 48.18 49.06
3 Years 44.43 38.63
5 Years 63.66 34.76
DECEMBER 2006
Equities 94.85
Tata Motors 5.34
Siemens Ltd 4.26
Tata Steel Ltd 3.71
Tata Tea Ltd 2.50
JSW Steels Ltd 1.49
Indian Petrochemicals Corprn Ltd 1.32
Bank Of Baroda 1.11
Grand Total 100.00
NAV as on December 29, 2006 Rs
SECTOR ALLOCATION
Auto 9.51
Software 6.28
Telecom - Services 5.44
Cement 5.33
Ferrous Metals 5.20
Hotels 4.46
Construction 3.02
Fertilisers 2.09
Transportation 1.80
Chemicals 1.32
Power 1.26
Banks 1.11
Total 94.85

on December 29, 2006

1 Year 46.89 42.29
3 Years 39.05 31.98
5 Years 65.55 35.57
JANUARY 2007
Equities 94.08
Tata Motors 5.38
Siemens Ltd 5.28
Tata Steel Ltd 2.37
Tata Tea Ltd 1.91
JSW Steels Ltd 1.76
Grand Total 100.00
NAV as on January 31, 2007 Rs
SECTOR ALLOCATION
Auto 8.44
Software 7.58
Cement 5.07
Hotels 4.37
Ferrous Metals 4.12
Construction 2.41
Fertilisers 2.21
Transportation 1.94
Chemicals 1.80
Power 1.24
Banks 0.96
Total 94.08

on January 31, 2007

1 Year 37.03 36.76
3 Years 42.37 34.29
5 Years 62.26 35.00
Since Inception29.34 13.89
FEBRUARY 2007
Equities 94.27
Tata Motors 6.48
Siemens Ltd 5.92
JSW Steels Ltd 2.40
Tata Tea Ltd 1.79
Suzlon Energy Ltd 1.51
Tata Steel Ltd 1.10
Grand Total 100.00
NAV as on February 28, 2007 Rs

SECTOR ALLOCATION
Auto 10.14
Software 10.05
Hotels 3.54
Ferrous Metals 3.50
Cement 2.94
Banks 2.85
Construction 2.62
Transportation 2.40
Fertilisers 2.33
Chemicals 1.62
Power 1.25
Total 94.27

on February 28, 2007

1 Year 23.09 20.37
3 Years 37.80 30.63
5 Years 56.86 30.74
MARCH 2007
Equities 92.15
Tata Motors 5.92
Siemens Ltd 5.76
JSW Steels Ltd 2.44
Tata Steel Ltd 1.83
Tata Tea Ltd 1.73
Gujarat Ambuja Cements Ltd 1.30
Cash & Other Receivables 7.85
Grand Total 100.00
NAV as on March 30, 2007 Rs

SECTOR ALLOCATION
Software 10.06
Auto 9.24
Banks 4.58
Ferrous Metals 4.27
Cement 4.03
Hotels 3.56
Construction 2.74
Fertilisers 2.14
Transportation 1.74
Power 1.26
Chemicals 1.08
Total 92.15

on March 30, 2007
1 Year 10.04 11.70
3 Years 39.49 30.91
5 Years 54.35 30.81
APRIL 2007
Holdings Weightage
Equities 92.15
Tata Motors 5.92
Siemens Ltd 5.76
Divis Laboratories 5.62
Infosys Technology Ltd 4.92
Reliance Communication Ltd 4.62
Larsen Toubro Ltd 3.95
State Bank of India 3.78
Indian Hotels Ltd. 3.56
Alstone Power Ltd. 3.43
Cummins India Ltd. 3.20
Tata Consultancy Ltd. 3.01
Grasim Industries Ltd. 2.73
Television 18 India Ltd. 2.56
JSW Steel Ltd. 2.44
Punjab Tractors Ltd. 2.36
JaiPrakash Associates 2.19
Gujrat State Fertilizers & Chemicals Ltd. 2.14
HCL Technologies Ltd. 2.13
Bharat Forg Ltd. 1.95
Tata Steel Ltd. 1.83
Appollo tyres Ltd. 1.82
Deccan Aviation Ltd. 1.74
Tata Tea Ltd. 1.73
HPCL 1.40
Gujrat Ambhuja Cement 1.30
Reliance Energy Ltd. 1.26
Network Eighteen fincap Ltd. 1.23
Indian Petro Chemicals Corprn Ltd. 1.08
Equity Holdings <1% of corpus 4.59
Cash and other Receivables 7.85
Grand Total 100.00
NAV as on March 30, 2007 Rs

RVF Dividend plan 43.32
Portfolio of Reliance Vision Fund
as on may 30,2007
Holdings Weightage(%)
Siemens Ltd 4.30
Tata Motors 3.85
Tata Consultancy Service Ltd 3.77
JSW Steel Ltd 3.59
Automative Axies Ltd 3.30
HCL Technology Ltd 3.20
Gujarat State Fertilizer & Chemicals Ltd 2.96
Tata Tea Ltd 2.87
Tata Steel Ltd 1.64
Network 18 Fincap Ltd 1.26
Equity Holdings <1% of Corprs 3-13
Debts, Derivaties, Cash & Other Receivables 14.64
Grand Totals 100%
NAV as on April 30, 2007
as on 30 June, 2007
Holdings Weightage %
Equities
Siemens Ltd 4.31
Grasim Industries Ltd. 2.95
JSW Steel Ltd 2.48
Tata Motors 2.45
Automative Axies Ltd 2.32
HPCL 2.26
HDFC Bank Ltd 1.93
Gujarat State Fertilizer & Chemicals Ltd 1.77
Tata Tea Ltd 1.75
ITC Ltd 1.42
Indian Petrochemical Corporation Ltd 1.18
Equity < 1% of Corpus 1.22
Debts, Derivatives, Cash & Other Receivables 13.39
Grand Total 100.00
NAV as on 30 May, 2007

as on 30 July,2007
Equities 86.39
Siemens Ltd 4.50
HDFC Bank Ltd 3.70
HPCL 1.74
Gujarat State Fertilizer & Chemical Ltd 1.71
Tata Tea Ltd !.56
ITC Ltd 1.52
Ambuja Cements Ltd 1.40
Debts, Derivatives, Cash & Other Receivables 13.61
Grand Totals 100.00
NAV as on May 31, 2007 Rs

As on December 31, 2008
Equities 97.42
Siemens Ltd 6.44
ICICI Bank Ltd 4.95
Tata Steels Ltd 4.58
Maruti Suzuki India Ltd 4.44
Indiabulls Financial Service Ltd 2.89
Gammon India Ltd 2.41
ITC Ltd 2.23
Gujarat Fertilizers & Chemicals Ltd 2.17
Infrastructure Development Finance Company 1.94
Steel Authority of India Ltd 1.82
Ranbaxy Laboratories Ltd 1.81
Patni Computer System Ltd 1.55
Indian Hotels Company Ltd 1.36
Network 18 Media and Investment Ltd 1.26
Bajaj Auto Ltd 1.24
Hindustan Petroleum Cooperation Ltd 1.18
HDFC Bank Ltd 1.10
Equity Less Than 1 of Corpus 1.05
Derivatives, Cash & Other Receivable 2.58
Grand Total 100.00
NAV as on December 31,2007 Rs
RVF GROWTH PLAN 287.66
RVF BONUS PLAN 48.20
RVF DIVIDEND PLAN 70.21
RVF Institutional Growth 284.94
RVF Institutional Bonus 284.94
RVF Institutional Dividend 284.94
VOLATILITY MEASURE
Beta 0.9634
Standard deviation 1.2161
R squared 0.8449
Sharp ratio 0.0938
Portfolio turnover ratio 1.55

as on January 31, 2008
Equities 93.83
Reliance industries ltd. 7.52
ICICI bank ltd. 6.15
State bank of india 6.07
Reliance communication ltd. 6.01
Siemens ltd. 5.86
Divis laboratories ltd. 5.76
Reliance energy ltd. 4.67
Maruti Suzuki india ltd. 4.22
Tata steel ltd. 4.09
Grasim industries ltd. 3.89
Tata moters ltd. 3.51
Larsen & turbo ltd. 3.41
Deccan aviation ltd. 2.92
Alstom project ltd. 2.89
Infosys technologies ltd. 2.64
Television 18india ltd. 2.40
Gammon india ltd. 2.38
Infrastructure development finance company ltd. 2.32
Gujrat state fertilizer & chemical ltd. 1.78
Automotive axles ltd. 1.72
Tata consultancy services ltd. 1.63
Indiabulls financial services ltd. 1.63
Indian hotels co. ltd. 1.48
Bhart forg ltd. 1.41
Patni computer system ltd. 1.31
Equity less than 1% of corpus 6.18
Debt, cash and other receivable 6.17
Grand total 100
NAV as on January 31,2008 Rs
RVF GROWTH PLAN 246.44
RVF BONUS PLAN 41.30
RVF DIVIDEND PLAN 60.16

as on February 31, 2008
Equities 94.69
ICICI Bank Ltd 5.87
T ata Steel Ltd 5.52
State Bank of India 5.38
Maruti Suzuki India Ltd 4.63
Siemens Ltd 4.22
T ata Motors Ltd 3.53
Infrastructure Development Finance Company Ltd 2.29
Gammon India Ltd 2.10
Triveni Engeering And Industries Ltd 1.67
T ata Consultancy Services Ltd 1.67
Indiabulls Financial Services Ltd 1.41
Patni Computers System Ltd 1.24
Equity Less Than 1% of Corpus 3.91
Debt , Derivatives, cash and Other Receivables 5.31
Grand total 100

as on march 31, 2008
Holdings Weight %
Equities 91.54
Divis laboratory ltd 6.31
State of india 6.27
Larsen & tourbo ltd 5.05
Tata steel ltd 4.03
Tata motors ltd. 3.62
Siemens ltd. 2.99
Alstom projects india ltd. 2.91
Television eighteen india ltd. 2.61
Indian hotels co ltd. 2.49
Hindalco industries ltd 2.35
Gammon inda ltd 1.98
Tata consultancy services ltd 1.87
Infrastructure development finance company ltd 1.72
Bharat forg ltd 1.63
Triveni engeering and industries ltd 1.54
Patni computers system ltd 1.39
Automotive axles ltd 1.29
Indiabulls securities ltd 1.04
Ultratech cement ltd 1.03
Preference share debt, derivatives, cash and other 8.46
receivables
Grand total 100
VOLATILITY MEASURES
Beta 0.959
R squared 0.8733
Sharp ratio 0.0727
NAV as on march 31, 2008 Rs

Reliance vision fund-Growth plan 206.12
Reliance vision fund-Bonus plan 34.55
Reliance vision fund-Dividend plan 43.06

as on April 30, 2008
Holdings Weight %
Equities 88.36
Divis laboratory ltd 6.80
State of india 6.33
Larsen & tourbo ltd 4.27
Tata steel ltd 4.32
Tata motors ltd. 3.69
Siemens ltd. 2.17
Alstom projects india ltd. 2.80
Television eighteen india ltd. 2.09
Indian hotels co ltd. 2.79
Hindalco industries ltd 2.51
Gammon inda ltd 1.99
Tata consultancy services ltd 1.93
Infrastructure development finance company ltd 1.84
Bharat forg ltd 1.44
Triveni engeering and industries ltd 1.66
Patni computers system ltd 1.51
Automotive axles ltd 1.08

Preference share debt, derivatives, cash and other 11.64
receivables
Grand total 100
VOLATILITY MEASURES
Beta 0.955
R squared 0.8718
Sharp ratio 0.0737
NAV as on march 31, 2008 Rs

Reliance vision fund-Growth plan 221.46
Reliance vision fund-Bonus plan 37.12
Reliance vision fund-Dividend plan 46.26

As on May 31, 2008
Equities 90.58
Siemens Ltd 4.38
HDFC Bank Ltd 3.62
ICICI Bank Ltd 2.79
TV 18 India Ltd 2.34
Ambuja Cements Limited 1.58
ITC Ltd 1.57

Tata Tea Ltd 1.31
Derivatives, Cash and Other Receivables 9.42
Grand Total 100.00
NAV as on July 31, 2007 Rs

NAV PERFORMANCE OF RELIANCE VISION FUND
VS BSE 100 INDEX as on July 31, 2007 % Change in % Change in
Period NAV Index
1 Year 57.90 47.61
3 Years 53.20 42.64
5 Years 56.23 39.64

as on August 31, 2007
Equities 84.12
Reliance Industries Ltd7.02
Divis Laboratories Ltd6.22
Maruti Udyog Ltd4.83
Alstom Projects India Ltd4.55
Reliance Communications Ltd4.52
Larsen & Toubro Ltd4.44
Siemens Ltd4.20
Reliance Energy Ltd3.87
Infosys Technologies Ltd3.80
ICICI Bank Ltd3.56
HDFC Bank Ltd2.68
Tata Motors Ltd2.66
Ambuja Cements Ltd2.47
ITC Ltd 2.47
Indian Hotels Co. Ltd 1.89
Sterlite Industries Ltd 1.27
Tata Steel Ltd 1.25
Tata Tea Ltd 1.22
Derivatives, Cash And Other Receivables 15.88
Grand Total 100.00
NAV as on August 31, 2007 Rs

RVF- IP- Growth 214.32
RVF- IP- Bonus 214.32
RVF- IP- Dividend 214.32
SECTOR ALLOCATION % Allocation

Industry
Auto 8.21
Banks 6.25
Software 5.32
Cement 4.87
Diversified 4.44
Power 3.87
Finance 2.30
Fertilisers 1.96
Hotels 1.89
Transportation 1.76
Construction 1.47
Ferrous Metals 1.25
Total 84.12
ASSET ALLOCATION
Holdings Weightage %
Equities 84.12
Derivatives, Cash and Other Receivables 15.88
Total 100.00
NAV PERFORMANCE OF RELIANCE VISION FUND

VS BSE 100 INDEX as on August 31, 2007
1 Year 41.92 32.42
3 Years 49.65 41.24
5 Years 54.47 37.77
Since inception 29.36 14.07
FUND DISTRIBUTION IN EQUITY & OTHERS
CHAPTER - IV
OBSERVATION AND
FINDINGS
In April 2006 the company has invested 15.97% of the the total corpus in
Auto Sector,in May it was 7.21%,in June it was 16.18, in July it was 15.1%,
in Aug it was 12.5%, in Sept it was 11.1%, in Oct it was 10.09%,in Nov it
was 11.41%, in Dec. it was 9.51%, in Jan 07 it was 8.44%, in Feb it was
10.14 & In March 2007 it was 9.24. This shows that the total investment in
the month of June is the highest investment in this sector.
Pharmaceutical Sector, in May it was 7.54%,in June it was 3.75%, in July
it was 4.33%, in Aug it was 4.52%, in Sept it was 5.07%, in Oct it was
5.34%,in Nov it was 8.49%, in Dec. it was 8.33%, in Jan 07 it was 7.78%,
in Feb it was 6.46% & In March 2007 it was 6.51. This Shows that the total
investment in the month of April 2006 is the highest investment in this
sector.
Software Sector, in May it was 8.58%,in June it was 6.52, in July it was
6.78%, in Aug it was 6.66%, in Sept it was 6.49%, in Oct it was 6.82%,in
Nov it was 6.68%, in Dec. it was 6.28%, in Jan 07 it was 7.58%, in Feb it
was 10.05% & In March 2007 it was 10.05%. This Shows that the total
investment in the month of March 2007 is the highest investment in this
sector.
In September 2006 the company has invested 9.46% of the total corpus in
Petroleum Sector which is the highest as compared to other months. The
lowest investment in this sector is in March 2007 i.e. 6.41%.
In Consumer Non Durable Sector the company has invested 10.74% of the
total corpus in the month of July which is the highest. In the March 2007
they have invested 2.16% of the total corpus in Consumer Non Durable
Sectors.
In NON FEROUS METALS Sector the company has invested 7.8% of the
total corpus in the month of April 2006 which is the highest. In the May
2006 they have invested 0.28% of the total corpus in Consumer NON
FEROUS METALS.
In Industrial Capital Good Sector the company has invested 15.26% of the
total corpus in the month of Feb 2007 which is the highest. In the July 2006
they have invested 6.56% of the total corpus in Industrial Capital Good.
In Cement Industry Sector the company has invested 5.83% of the total
corpus in the month of Oct 2006 which is the highest. In the June 2006 they
have invested 2.78% of the total corpus in Cement Industry.
In Telecom Sector the company has invested 5.44% of the total corpus in
the month of Dec. 2006 which is the highest. In the April 2006 they have
invested 3.95% of the total corpus in Telecom Sector.
In Media Sector the company has invested 4.04% of the total corpus in the
month of Aug. 2006 which is the highest. In the Nov. 2006 they have
invested 1.49% of the total corpus in Media Sector.
In Fertilizer Sector the company has invested 3.49% of the total corpus in
the month of June 2006 which is the highest. In the May 2006 they have
invested 1.77% of the total corpus in Fertilizer Sector.
In Industrial Products the company has invested 5.15% of the total corpus
in the month of March 2007 which is the highest. In the Aug 2006 they
have invested 1.55% of the total corpus in Industrial Products Sector.
In Banking Sectors the company has invested 4.58% of the total corpus in
the month of March 2007 which is the highest. In the Aug 2006 they have
invested 0.56% of the total corpus in Banking Sectors.
In Textile Sector the company has invested 2.54% of the total corpus in the
month of April 2006 which is the highest. In the June 2006 they have
invested 2.14% of the total corpus in Textile Sector.
In Auto Ancillaries Sector the company has invested 7.6% of the total
corpus in the month of Aug. 2006 which is the highest. In the June 2006
they have invested 2.14% of the total corpus in Auto Ancillaries Sector.
In Construction Sector the company has invested 3.85% of the total corpus
in the month of Oct. 2006 which is the highest. In the June 2006 they have
invested 2.01% of the total corpus in Construction Sector.
In Power Sector the company has invested 2.19% of the total corpus in the
month of April 2006 which is the highest. In the May 2006 they have
invested 1.14% of the total corpus in Power Sector.
In Ferrous Metals the company has invested 5.2% of the total corpus in the
month of Dec 2006 which is the highest. In the November 2006 they have
invested 1% of the total corpus in Ferrous Metals.
In Hotels the company has invested 4.73% of the total corpus in the month
of November 2006 which is the highest. In the May 2006 they have
invested 2.35% of the total corpus in Hotel Industry.
In Finance the company has invested only one time in the month of may
2006, 1.49% of the total corpus.
In Transportation the company has invested 2.4% of the total corpus in the
month of Feb. 2006 which is the highest. In the Oct 2006 they have
invested 0.99% of the total corpus in Transportation Industry.
In Chemicals the company has invested 1.8% of the total corpus in the
month of Jan. 2006 which is the highest. In the Mar 2006 they have
invested 1.08% of the total corpus in Chemicals Industry.
In Diversified the company has invested only one time in the month of may
2006, 5.24% of the total corpus.
In Oil the company has invested 1.84% of the total corpus in the month of
July 2006 which is the highest. In the September 2006 they have invested
1.49% of the total corpus in Oil Sector.
In Information Technology Sector the company has invested 1.28% of the
total corpus in the month of October 2006.
CHAPTER V
SUMMARY
&
CONCLUSION
Summary
Portfolio management is an important foundation of mutual fund business. We

have listed professional management as a major benefit of a mutual fund brought
to the investor. The performance of the fund measured by the risk adjusted returns
produced for the investor arises largely by the successful portfolio management
function. After collection the investors funds, effective portfolio management will
have to give returns acceptable to the investor; else, investor may move on to
better performing funds.
I started my project with brief Introduction of Mutual Funds definition, benefits,

disadvantage, types, and design of portfolio. What is the basic structure of any
mutual fund, how it can be design and how a fund manager takes the decision
according to market situation? This type of question arose in our mind that has
been solved. Portfolio management of private mutual fund houses like RILANCE
MUTUAL FUND SCHEME such that RELIANCE VISION FUND &
RELIANCE GROWTH FUND. In second step, I described the Research
Methodology that how it can be done accordingly my project title and go ahead
step by step from beginning to findings. Then, as per my project topic
PORTFOLIO MANAGEMENT OF MUTUAL FUND Firstly I selected
Reliance Vision Fund of Reliance Assets management Company and described the
Scheme feature of the Vision fund. Then I described the Portfolio of Vision Fund
and their sectoral allocation. From April 2006 to March 2008, I found that the fund
manager of this particular funds corpus has invested in different sector following:
Auto sector,
Pharmaceutical sector,
Software sector,
Petroleum sector,
Non Durable sector,
Non Ferrous Metal sector,
Industrial Capital sector,
Cement Industry sector,
Telecom sector ,
Media sector,
Fertilizer sector,
Banking sector,
Textile sector ,
Construction sector,
Power sector and
Information Technology sector.
Through this project I have seen the portfolio structure which is

designed by the fund manager has been changing each month. They also
are changing the weightage (percentage) of securities in the portfolio
which is already designed.
BIBLIOGRAPHY
BIBLIOGRAPHY
Advisor Book of AMFI India.

www.reliancemutualfund.com
www.wikipedia.com
www.amfiindia.com
www.mutualfundindia.com
www.moneycontrol.com

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2009

PORTFPLIO OF MUTUAL FUND

PORTFOLIO MANAGEMENT OF MUTUAL

For the partial fulfillment of MBA (F.T) Degree

Barkatullah University, Bhopal

Under the supervision of

Technocrats Institute of Technology - Engg.

I, Deepak Khatri, student of MBA fourth semester of Technocrats Institute of

The project report is completed by the candidate under my supervision. It is

(Mrs. MANISHA SINGH)

Chapter I : Introduction of the topic and brief profile of the Organisation.

Chapter II : Objective of the study and Research Methodology.

Chapter III : Presentation of Tabulated Data and Analysis.

Chapter IV : Main Findings/ Suggestion/ Recommendations.

Introduction of the topic and brief

Portfolio management is an important foundation of mutual fund business. We have listed

ORGANISATION OF A MUTUAL FUND

Benefits of investing in a Mutual Fund

Professional Fund Management: Professionals having considerable expertise,

Transparency and interactivity: Mutual Funds regularly provide investors with

Close-ended Fund / Scheme

Income / Debt Oriented Scheme

Tax Saving Schemes

Sector specific funds / schemes

3.3 Portfolio management

3.4 Types of Portfolio management

There are two types of Portfolio Strategies:

A. Passive Portfolio Strategy

A strategy that involves minimal expectational input, and instead relies on

Passive management is a financial strategy in which a fund manager makes as

B. Active Portfolio Strategy

A strategy that uses available information and forecasting techniques to seek a

Active management refers to a portfolio management strategy where the manager

Active management is the opposite of passive management, where the manager

The effectiveness of an actively-managed investment portfolio obviously depends

Moreover, there are three more types of Portfolios:

1. The Patient Portfolio

2. The Aggressive Portfolio

This portfolio invests in "expensive stocks" (in terms of such measurements as

3. The Conservative Portfolio

Mutual fund has developed particular techniques to optimize their portfolio

3.5 Investment management

Investment management is the professional management of various securities,

Investment managers and portfolio structures

A certified company investment advisor should conduct an assessment of each

Generally speaking it is probably appropriate for an investment firm to persuade

An enduring problem is whether to measure before-tax or after-tax performance.

Risk-adjusted performance measurement

RELIANCE MUTUAL FUND

Reliance Mutual Fund schemes are managed by Reliance Capital Asset

AUM Source: http://www.amfiindia.com/

Sponsor: Reliance Capital Limited.

Trustee: Reliance Capital Trustee Co. Limited.

Net Asset Value: Calculated & declared every working day

Application Amount: Rs.5,000/- for Resident Indians and Non-Resident Indians

Min. Additional Investment: Rs.1000/- and in multiples of Rs.1/- thereafter for

Portfolio Disclosures: Half-yearly

1% if redeemed/switched on or before completion of 6 months from the date of

Contingent Deferred Sales Charge: Nil

Inter Plan/ Inter Option Switch: Nil

Redemption Cheques Issued: Mutual Fund shall endeavor to issue within 3

Minimum Redemption Amount: Any amount or any number of units

Recurring Investment Plan (RIP): Available