Mutual Fund About SMC

A STUDY OF MUTUAL FUND WITH REFRENCE TO SMC
CHAPTER NO. I
INTRODUCTION
1.1 INTRODUCTION
There are a lot of investment avenues available today in the financial market for an
investor within investable surplus. He can invest in Bank Deposits, Corporate
Debentures, and Bonds where there is low risk but low return. He may invest in
Stock of companies where the risk is high and the returns are also proportionately
high. The recent trends in the Stock Market have shown that an average retail
investor always lost with periodic bearish tends. People began opting for portfolio
managers with expertise in stock markets who would invest on their behalf. Thus
we had wealth management services provided by many institutions. However they
proved too costly for a small investor. These investors have found a good shelter
with the mutual funds.
1.2 CONCEPT OF MUTUAL FUND

A mutual fund is a common pool of money into which investors place their
contributions that are to be invested in accordance with a stated objective. The
ownership of the fund is thus joint or “mutual”; the fund belongs to all investors. A
single investor’s ownership of the fund is in the same proportion as the amount of
the contribution made by him or her bears to the total amount of the fund. Mutual
Funds are trusts, which accept savings from investors and invest the same in
diversified financial instruments in terms of objectives set out in the trusts deed
with the view to reduce the risk and maximize the income and capital appreciation
for distribution for the members.
A Mutual Fund is a corporation and the fund manager’s interest is to professionally

manage the funds provided by the investors and provide a return on them after
deducting reasonable management fees. The objective sought to be achieved by
Mutual Fund is to provide an opportunity for lower income groups to acquire
without much difficulty financial assets.
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1.3 DEFINITION
“Mutual funds are collective savings and investment vehicles where savings of
small (or sometimes big) investors are pooled together to invest for their mutual
benefit and returns distributed proportionately”. “A mutual fund is an investment
that pools your money with the money of an unlimited number of other investors.
In return, you and the other investors each own shares of the fund. The funds’
assets are invested according to an investment objective into the fund’s portfolio of
investments. Aggressive growth funds seek long-term capital growth by investing
primarily in stocks of fast-growing smaller companies or market segments.
Aggressive growth funds are also called capital appreciation funds”.
1.4 NEED AND SCOPE FOR THE STUDY

The main purpose of doing this project was to know about mutual fund and its
functioning. This helps to know in details about mutual fund industry right from its
inception stage, growth and future prospects. It also helps in understanding
different schemes of mutual funds. Because my study depends upon prominent
funds in India and their schemes like equity, income, balance as well as the returns
associated with those schemes. The project study was done to ascertain the asset
allocation, entry load, exit load, associated with the mutual funds.
1.5 OBJECTIVE
 To give a brief idea about the benefits available from Mutual Fund investment.
 To give an idea of the types of schemes available.
 To discuss about the market trends of Mutual Fund investment.
 To study some of the mutual fund schemes.
 To study some mutual fund companies and their funds.
 Observe the fund management process of mutual funds.
 Explore the recent developments in the mutual funds in India.
 To give an idea about the regulations of mutual funds.
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1.6 LIMITATIONS
 The lack of information sources for the analysis part.
 Though I tried to collect some primary data but they were too inadequate for the
purposes of the study.
 Time and money are critical factors limiting this study.
 The data provided by the prospects may not be 100% correct as they too have
their limitations.
1.7 NATURE OF THE STUDY

The research study involves exploration of which attribute of mutual fund is more
intense effect on the investor decision and which attributes of mutual funds are
relatively significant or insignificant for investors, and also to determine which
level of each attributes is most or least preferred. The study involves collecting data
through questionnaire and formulating the data in the required format to apply
statistical tools like CWA, chi-square tests, to find out whether the investor are
influenced by the attributes of mutual funds in mutual fund industry, are attributes
are really significant in helping the users or not and to convey the same to mutual
fund houses to use the findings for effective design and redesigning of mutual fund
products.
1.8 SIGNIFICANCE OF THE STUDY

Becoming increasingly competitive, the mutual fund industry has registered rapid
growth dramatically with more complex structure and increasing diversification.
Determining the salient characteristics of mutual funds or Attributes of mutual
funds as demanded by professional investors is of great importance for the mutual
fund founder when introducing new funds and structuring the funds under their
management. Furthermore, identifying such Characteristics or attributes will guide
the mutual fund houses and other small investors in their investment decision.
1.9 REVIEW OF LITERATURE

A large number of studies on the growth and financial performance of mutual funds
have been carried out during the past, in the developed and developing countries.
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Brief reviews of the following research works reveal the wealth of contributions
towards the performance evaluation of mutual fund, market timing and stock
selection abilities of fund managers. In India, one of the earliest attempts was made
by National Council of Applied Economics Research (NCAER) in 1964 when a
survey of households was undertaken to understand the attitude towards and
motivation for savings of individuals. Another NCAER study in 1996 analyzed the
structure of the capital market and presented the views and attitudes of individual
shareholders. SEBI – NCAER Survey (2000) was carried out to estimate the
number of households and the population of individual investors, their economic
and demographic profile, portfolio size, and investment preference for equity as
well as other savings instruments.
1.10 RESEARCH METHODOLGY

Mutual fund is a mechanism for pooling the resources by issuing units to the
investors and investing funds in securities in accordance with the objective as
disclosed in offer document. Investment in securities is spread across a wide section
of industry and sector and the risk is reduced. Diversification reduces the risk
because all stock may or may not move in the same direction in the same
proportion to their proportion at the same time. Mutual fund issues units to the
investors in accordance with quantum of money invested by them. Investor of
mutual are called unit holders. The profit or losses are shared by the investors in
proportion to their investment. The mutual fund usually comes out with a number
of schemes with different investment objectives which are launched from time to
time. A mutual fund is required to be registered with the SEBI, which regulates
securities markets before it can collect fund from the public
The research work titled “A Study on Intensity of Mutual Fund Attributes on

investor decisions” is paving a way to the fund houses determining the salient
characteristics of mutual funds or Attributes of mutual funds as demanded by
professional investors is of great importance for the mutual fund founder when
introducing new funds and structuring the funds under their management.
Furthermore, identifying such characteristic or attributes will guide the mutual fund
houses and other small investors in their investment decision. Mutual fund is a
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topic which is of enormous interest not only researchers all over the world but also
to investors. Mutual as a medium to long-term investment option is preferred as a
suitable investment option by investors. However, with several market entrants the
question is the choice of mutual fund. The study focuses on this problem of mutual
fund selection by investors. Though the investment objective define investor’s
intensity among fund types (Equity or Growth oriented fund, Debt, Balanced fund)
and their attributes. The present research study strictly aides by conceptual frame
work of research process. All elements in various stages of research process are
explained hereafter. Secondary data, the detailed information from publications,
internal records, books, magazines, journals, web services. Primary data, it is the
detailed information from respondents.
 Statement of the Problem

“Mutual Fund investment is today flooded with innumerable number of players
both indigenous, Foreign and collaboration. Annual Growth rate of Mutual Fund
increasing offer of investment patterns and plans open the Crepitate innumerable
research study aiming to throw light on various aspect of Mutual Fund
Investment. These Developments resulted in offer of many products to
customers by various investment agencies. The present research forms of the
proposals endeavoring to establish the influence of Mutual Funds Attributes on
Investors”
1.11 DATA SOURCES

An empirical study of this nature should generate sufficient data through survey to
base its findings on evaluation of data. The data collected for the present study
comprises of both primary and secondary sources.
1. Primary Data
It is the detailed information from respondent collected through questionnaire.
The respondent were interviewed and asked to fill the questionnaire. The first
part of questionnaire deals with questions concerning the respondents profile in
terms of their Age, Gender, Education, profession background and income. The
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second part of the questionnaire contains the attributes evaluation of mutual

funds towards equity debt and balanced funds.
2. Secondary Data
In order to lend initial direction, development of relationship and formulation of
hypotheses, secondary data was collected from all the sources available. The
sources of secondary data pertaining to Equity, Debt and Balanced fund are
government publications, magazines, journals, Survey reports and reference
books etc. Major source of secondary data being SEBI Web site.
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CHAPTER NO. II
THEORETICAL BACKGROUND
2.1 THEORETICAL BACKGROUND

Why Select Mutual Fund?
The risk return trade-off indicates that if investor is willing to take higher risk then
correspondingly he can expect higher returns and vice versa if he pertains to lower
risk instruments, which would be satisfied by lower returns. For example, if an
investors opt for bank FD, which provide moderate return with minimal risk. But as
he moves ahead to invest in capital protected funds and the profit-bonds that give
out more return which is slightly higher as compared to the bank deposits but the
risk involved also increases in the same proportion. Thus investors choose mutual
funds as their primary means of investing, as Mutual funds provide professional
management, diversification, convenience and liquidity. That doesn’t mean mutual
fund investments risk free. This is because the money that is pooled in are not
invested only in debts funds which are less riskier but are also invested in the stock
markets which involves a higher risk but can expect higher returns. Hedge fund
involves a very high risk since it is mostly traded in the derivatives market which is
considered very volatile.
2.2 HISTORY OF MUTUAL FUNDS IN INDIA:

The mutual fund industry in India started in 1963 with the formation of Unit Trust
of India, at the initiative of the Government of India and Reserve Bank. The history
of mutual funds in India can be broadly divided into four distinct phases
 FIRST PHASE – 1964-87:

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
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launched by UTI was Unit Scheme 1964. At the end of 1988 UTI hadRs.6, 700
cores of assets under management.
 SECOND PHASE – 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS):

1987 marked the entry of non- UTI, public sector mutual funds set up by public
sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India(GIC). SBI Mutual Fund was the first non- UTI
Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec
87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund
(Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in
December1990. At the end of 1993, the mutual fund industry had assets under
management of Rs.47, 004crores.
 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, excepted were to be registered
and governed. The erstwhile Kothari Pioneer (now merged with Franklin
Templeton) was the first private sector mutual fund registered in July 1993. The
1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996. The number of
mutual fund houses went on increasing, with many foreign mutual funds setting
up funds in India and also the industry has witnessed several mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with
total assets of Rs. 1, 21,805 cores. The Unit Trust of India with Rs.44, 541 cores
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
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the Unit Trust of India with assets under management of Rs.29,835 cores as at
the end of January 2003, representing broadly, the assets of US 64 scheme,
assured return and certain other schemes. The Specified Undertaking of Unit
Trust of India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund
Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB,
BOB and LIC. It is registered with SEBI and functions under the Mutual Fund
Regulations. With the bifurcation of the erstwhile UTI which had in March 2000
more than Rs.76, 000 cores of assets under management and with the setting up
of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and
with recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and growth.
2.3 GROWTH IN ASSETS UNDER MANAGEMENT

 ADVANTAGES OF MUTUAL FUNDS:
If mutual funds are emerging as the favorite investment vehicle, it is because of
the many advantages they have over other forms and the avenues of investing,
particularly for the investor who has limited resources available in terms of
capital and the ability to carry out detailed research and market monitoring. The
following are the major advantages offered by mutual funds to all investors:
1. Portfolio Diversification:
Each investor in the fund is a part owner of all the fund’s assets, thus enabling
him to hold a diversified investment portfolio even with a small amount of
investment that would otherwise require big capital.
2. Professional Management:
Even if an investor has a big amount of capital available to him, he benefits from
the professional management skills brought in by the fund in the management of
the investor’s portfolio. The investment management skills, along with the
needed research into available investment options, ensure a much better return
than what an investor can manage on his own.
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3. Reduction/Diversification of Risk:
When an investor invests directly, all the risk of potential loss is his own,
whether he places a deposit with a company or a bank, or he buys a share or
debenture on his own or in another from. While investing in the pool of funds
with investors, the potential losses are also shared with other investors. The risk
reduction is one of the most important benefits of collective investment vehicle
like the mutual fund.
4. Reduction of Transaction Costs:

What is true of risk as also true of the transaction costs? The investor bears all
the costs of investing such as brokerage or custody of securities. When going
through a fund, he has the benefit of economies of scale.
5. Liquidity:
Often, investors hold shares or bonds they cannot directly, easily and quickly
sell. When they invest in the units of a fund, they can generally cash their
investments any time, by selling their units to the fund if open-ended, or selling
them in the market if the fund is close-end.
6. Convenience and Flexibility:

Mutual fund management companies offer many investor services that a direct
market investor cannot get. Investors can easily transfer their holding from one
scheme to the other; get updated market information and so on.
7. Tax Benefits:
Any income distributed after March 31, 2002 will be subject to tax in the
assessment of all Unit holders. However, as a measure of concession to Unit
holders of open-ended equity-oriented funds, income distributions for the year
ending March 31, 2003, will be taxed at concessional rate of 10.5%..
8. Choice of Schemes:
Mutual Funds offer a family of schemes to suit your varying needs over a
lifetime.
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9. Regulated:
All Mutual Funds are registered with SEBI and they function within the
provisions of strict regulations designed to protect the interests of investors. The
operations of Mutual Funds are regularly monitored by SEBI.
10. Transparency:
You get regular information on the value of your investment in addition to
disclosure on the specific investments made by your scheme, the proportion
invested in each class of assets and the fund managers investment strategy and
outlook.
 DISADVANTAGES OF INVESTING THROUGH MUTUALFUNDS:

1. No Control over Costs
An investor in a mutual fund has no control of the overall costs of investing. The
investor pays investment management fees as long as he remains with the fund,
albeit in return for the professional management and research. Fees are payable
even if the value of his investments is declining. A mutual fund investor also
pays fund distribution costs, which he would not incur indirect investing.
2. No Tailor-Made Portfolio
Investors who invest on their own can build their own portfolios of shares and
bonds another securities. Investing through fund means he delegates this
decision to the fund managers. The very-high-net-worth individuals or large
corporate investors may find this to be a constraint in achieving their objectives.
3. Managing a Portfolio of Funds

Availability of a large number of funds can actually mean too much choice for
the investor. He may again need advice on how to select a fund to achieve his
objectives, quite similar to the situation when he has individual shares or bonds
to select.
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4. The Wisdom of Professional Management

That’s right, this is not an advantage. The average mutual fund manager is no
better at picking stocks than the average nonprofessional, but charges fees.
5. No Control
Unlike picking your own individual stocks, a mutual fund puts you in the
passenger seat of somebody else’s car.
6. Dilution
Mutual funds generally have such small holdings of so many different stocks
that insanely great performance by a funds top holding still doesn’t make much
of a difference in mutual funds total performance.
2.4 TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial
position, risk tolerance and return expectations etc. thus mutual funds has Variety
of flavors, Being a collection of many stocks, an investors can go for picking a
mutual fund might be easy. There are over hundreds of mutual funds scheme to
choose from. It is easier to think of mutual funds in categories, mentioned below.
A) BY STRUCTURE
1. Open - Ended Schemes
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.
2. Close - Ended Schemes

A closed-end fund has a stipulated maturity period which generally ranging from
3 to 15years. The fund is open for subscription only during a specified period.
Investors can invest in the scheme at the time of the initial public issue and
thereafter they can buy or sell the units of the scheme on the stock exchanges
where they are listed. In order to provide an exit route to the investors, some
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close-ended funds give an option of selling back the units to the Mutual Fund
through periodic repurchase at NAV related prices.
3. Interval Schemes
Interval Schemes are that scheme, which combines the features of open-ended
and close-ended schemes. The units may be traded on the stock exchange or may
be open for sale or redemption during pre-determined intervals at NAV related
prices.
B) BY NATURE
1. Equity Fund
These funds invest a maximum part of their corpus into equities holdings. The
structure of the fund may vary different for different schemes and the fund
manager’s outlook on different stocks. The Equity Funds are sub-classified
depending upon their investment objective, as follows:
 Diversified Equity Funds
 Mid-Cap Funds
 Sector Specific Funds
 Tax Savings Funds (ELSS) Equity investments are meant for a longer
time horizon, thus Equity funds rank high on the risk-return matrix.
2. Debt Funds
The objective of these Funds is to invest in debt papers. Government authorities,
private companies, banks and financial institutions are some of the major issuers
of debt papers. By investing in debt instruments, these funds ensure low risk and
provide stable income to the investors. Debt funds are further classified as:
 Gilt Funds: Invest their corpus in securities issued by Government, popularly
known as Government of India debt papers. These Funds carry zero Default
risk but are associated with Interest Rate risk.
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 Income Funds: Invest a major portion into various debt instruments such as
bonds, corporate debentures and Government securities.
 MIPs: Invests maximum of their total corpus in debt instruments while they
take minimum exposure in equities. It gets benefit of both equity and debt
market. These scheme ranks slightly high on the risk-return matrix when
compared with other debt schemes.
 Short Term Plans (STPs): Meant for investment horizon for three to six
months. These funds primarily invest in short term papers like Certificate of
Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is
also invested in corporate debentures.
 Liquid Funds: Also known as Money Market Schemes, These funds provides
easy liquidity and preservation of capital. These schemes invest in short-term
instruments like Treasury Bills, inter-bank call money market, CPs and CDs.
These funds are meant for short-term cash management of corporate houses
and are meant for an investment horizon of 1day to 3 months. These
schemes rank low on risk-return matrix and are considered to be the safest
amongst all categories of mutual funds.
3. Balanced Funds
As the name suggest they, are a mix of both equity and debt funds. They invest
in both equities and fixed income securities, which are in line with pre-defined
investment objective of the scheme. These schemes aim to provide investors
with the best of both the worlds. Equity part provides growth and the debt part
provides stability in returns. Further the mutual funds can be broadly classified
on the basis of investment parameter viz, each category of funds is backed by an
investment philosophy, which is pre-defined in the objectives of the fund.
C) BY INVESTMENT OBJECTIVE
Growth Schemes: Growth Schemes are also known as equity schemes. The aim
of these schemes is to provide capital appreciation over medium to long term.
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These schemes normally invest a major part of their fund in equities and are
willing to bear short-term decline in value for possible future appreciation.
Income Schemes: Income Schemes are also known as debt schemes. The aim of
these schemes is to provide regular and steady income to investors. These
schemes generally invest in fixed income securities such as bonds and corporate
debentures. Capital appreciation in such schemes may be limited. Balanced
Schemes: Balanced Schemes aim to provide both growth and income by
periodically distributing apart of the income and capital gains they earn.
1. Money Market Schemes

Money Market Schemes aim 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.
2. Load Funds
A 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
funds that the entire corpus is put to work.
3. OTHER SCHEMES
 Tax Saving Schemes
Tax-saving schemes offer tax rebates to the investors under tax laws
prescribed from time to time. Under Sec.88 of the Income Tax Act,
contributions made to any Equity Linked Savings Scheme (ELSS) are
eligible for rebate.
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 Index Schemes
Index schemes attempt to replicate the performance of a particular index
such as the NSE 50. The portfolio of these schemes will consist of only those
stocks that constitute the index. The percentage of each stock to the total
holding will be identical to the stocks index weightage and hence, the returns
from such schemes would be more or less equivalent to those of the Index.
 Sector Specific 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.
2.5 NET ASSET VALUE (NAV)

Since each owner is a part owner of a mutual fund, it is necessary to establish the
value of his part. In other words, each share or unit that an investor holds needs to
be assigned a value. Since the units held by investor evidence the ownership of the
fund’s assets, the value of the total assets of the fund when divided by the total
number of units issued by the mutual fund gives us the value of one unit. This is
generally called the Net Asset Value (NAV) of one unit or one share.
 Calculation of NAV
Let us see an example. If the value of a fund’s assets stands at Rs. 100 and it
has 10investors who have bought 10 units each, the total numbers of units
issued are 100, and the value of one unit is Rs. 10.00 (1000/100). If a single
investor in fact owns 3 units, the value of his ownership of the fund will be Rs.
30.00(1000/100*3). Note that the value of the fund’s investments will keep
fluctuating with the market-price movements, causing the Net Asset Value also
to fluctuate.
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2.6 MUTUAL FUND FEES AND EXPENSES

Mutual fund fees and expenses are charges that may be incurred by investors who
hold mutual funds. Running a mutual fund involves costs, including shareholder
transaction costs, investment advisory fees, and marketing and distribution
expenses.
1. TRANSACTION FEES
 Purchase Fee:
It is a type of fee that some funds charge their shareholders when they buy
shares. Unlike a front-end sales load, a purchase fee is paid to the fund and is
typically imposed to defray some of the funds costs associated with the
purchase.
 Redemption Fee:
It is another type of fee that some funds charge their shareholders when they sell
or redeem shares. Unlike a deferred sales load, a redemption fee is paid to the
fund & is typically used to defray fund costs associated with a shareholders
redemption.
 Exchange Fee:
Exchange fee that some funds impose on shareholders if they exchange
(transfer) to another fund within the same fund group or "family of funds."
2. PERIODIC FEES
 Management Fee:
Management fees are fees that are paid out of fund assets to the fund’s
investment adviser for investment portfolio management, any other management
fees payable to the fund’s investment adviser or its affiliates, and administrative
fees payable to the investment adviser that are not included in the "Other
Expenses" category. They are also called maintenance fees.
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 Account Fee:
Account fees are fees that some funds separately impose on investors in
connection with the maintenance of their accounts.
3. OTHER OPERATING EXPENSES

 Transaction Costs
These costs are incurred in the trading of the funds’ assets. Funds with a high
turnover ratio, or investing in illiquid or exotic markets usually face higher
transaction costs. Unlike the Total Expense Ratio these costs are usually not
reported. LOADS Definition of a load funds exhibit a "Sales Load" with a
percentage charge levied on purchase or sale of shares. A load is a type of
Commission (remuneration). Depending on the type of load a mutual fund
exhibits, charges may be incurred at time of purchase, time of sale, or a mix of
both. The different types of loads are outlined below.
 Front-end load
Also known as Sales Charge, this is a fee paid when shares are purchased. Also
known as a "front-end load," this fee typically goes to the brokers that sell the
fund’s shares. Front-end loads reduce the amount of your investment. For
example, let’s say you have Rs.10, 000 and want to invest it in a mutual fund
with a 5% front-end load. The Rs.500 sales load you must pay comes off the top,
and the remaining Rs.9500 will be invested in the fund. According to NAS
Drupes, a front-end load cannot be higher than 8.5% of your investment. Back-
end load: Also known as Deferred Sales Charge, this is a fee paid when shares
are sold. Also known as a "back-end load," this fee typically goes to the brokers
that sell the fund’s shares.
 Level load / Low load

It’s similar to a back-end load in that no sales charges are paid when buying the
fund. Instead a back-end load may be charged if the shares purchased are sold
within a given timeframe. The distinction between level loads and low loads as
opposed to back-end loads, is that this time frame where charges are levied is
shorter.
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 No-load Fund
As the name implies, this means that the fund does not charge any type of sales
load. But, as outlined above, not every type of shareholder fee is a "sales load." A
no-load fund may charge fees that are not sales loads, such as purchase fees,
redemption fees, exchange fees, and account fees.
2.7 SELECTION PARAMETERS FOR MUTUAL FUND

 Objective
The first point to note before investing in a fund is to find out whether your
objective matches with the scheme. It is necessary, as any conflict would directly
affect your prospective returns. Similarly, you should pick schemes that meet
your specific needs. Examples: pension plans, children’s plans, sector-specific
schemes, etc.
 Your risk capacity and capability

This dictates the choice of schemes. Those with no risk tolerance should go for
debt schemes, as they are relatively safer. Aggressive investors can go for equity
investments. Investors that are even more aggressive can try schemes that invest
in specific industry or sectors.
 Fund Manager’s and scheme track record

Since you are giving your hard earned money to someone to manage it, it is
imperative that he manages it well. It is also essential that the fund house you
choose has excellent track record. It also should be professional and maintain
high transparency in operations. Look at the performance of the scheme against
relevant market benchmarks and its competitors. Look at the performance of a
longer period, as it will give you how the scheme fared in different market
conditions.
 Cost factor
Though the AMC fee is regulated, you should look at the expense ratio of the
fund before investing. This is because the money is deducted from your
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investments. A higher entry load or exit load also will eat into your returns. A
higher expense ratio can be justified only by superlative returns.
2.8 TYPES OF RETURNS ON MUTUAL FUND

There are three ways, where the total returns provided by mutual funds can be
enjoyed by investors:
 Income is earned from dividends on stocks and interest on bonds. A fund pays
out nearly all income it receives over the year to fund owners in the form of a
distribution.
 If the fund sells securities that have increased in price, the fund has a capital
gain. Most funds also pass on these gains to investors in a distribution.
 If fund holdings increase in price but are not sold by the fund manager, the
fund’s shares increase in price. You can then sell your mutual fund shares for a
profit.
2.9 RISK FACTORS OF MUTUAL FUNDS

1. The Risk-Return Trade-Off
The most important relationship to understand is the risk-return trade-off. Higher
the risk greater the returns / loss and lower the risk lesser the returns/loss. Hence
it is up to you, the investor to decide how much risk you are willing to take.
2. Market Risk:
Sometimes prices and yields of all securities rise and fall. Broad outside
influences affecting the market in general lead to this. This is true, may it be big
corporations or small armed-sized companies. This is known as Market Risk.
3. Credit Risk:
The debt servicing ability (May it be interest payments or repayment of principal)
of accompany through its cash flows determines the Credit Risk faced by you.
This credit risk is measured by independent rating agencies like CRISIL who rate
companies and their paper.
20 | P A G E
4. Inflation Risk:
Things you hear people talk about:"Rs. 100 today is worth more than Rs. 100
tomorrow. “Remember the time when a bus ride costed 50 paise?""Mehangai Ka
Jamana Hai. "The root cause, Inflation. Inflation is the loss of purchasing power
over time. A lot of times people make conservative investment decisions to
protect their capital but end up with a sum of money that can buy less than what
the principal could at the time of the investment. This happens when inflation
grows faster than the return on your investment. A well-diversified portfolio
with some investment in equities might help mitigate this risk.
5. Interest Rate Risk:

In a free market economy interest rates are difficult if not impossible to predict.
Changes in interest rates affect the prices of bonds as well as equities. If interest
rates rise the prices of bonds fall and vice versa. Equity might be negatively
affected as well in a rising interest rate environment. A well-diversified portfolio
might help mitigate this risk.
6. Political / Government Policy Risk:

Changes in government policy and political decision can change the investment
environment. They can create a favorable environment for investment or vice
versa.7. Liquidity Risk: Liquidity risk arises when it becomes difficult to sell the
securities that one has purchased. Liquidity Risk can be partly mitigated by
diversification, staggering of maturities as well as internal risk controls that lean
towards purchase of liquid securities.
2.10 WORKING OF MUTUAL FUNDS

The mutual fund collects money directly or through brokers from investors. The
money is invested in various instruments depending on the objective of the scheme.
The income generated by selling securities or capital appreciation of these
securities is passed on to the investors in proportion to their investment in the
scheme. The investments are divided into units and the value of the units will be
reflected in Net Asset Value or NAV of the unit. NAV is the market value of the
assets of the scheme minus its liabilities. The per unit NAV is the net asset value of
21 | P A G E
the scheme divided by the number of units outstanding on the valuation date.
Mutual fund companies provide daily net asset value of their schemes to their
investors.
2.11 STRUCTURE OF A MUTUAL FUND

India has a legal framework within which Mutual Fund have to be constituted. In
India open and close-end funds operate under the same regulatory structure i.e. as
unit Trusts. A Mutual Fund in India is allowed to issue open-end and close-end
schemes under a common legal structure. The structure that is required to be
followed by any Mutual Fund in India is laid down under SEBI (Mutual Fund)
Regulations, 1996.The Fund Sponsor: Sponsor is defined under SEBI regulations as
any person who, acting alone or in combination of another corporate body
establishes a Mutual Fund.
 Mutual Funds as Trusts

A Mutual Fund in India is constituted in the form of Public trust Act, 1882. The
Fund sponsor acts as a settlor of the Trust, contributing to its initial capital and
appoints a trustee to hold the assets of the trust for the benefit of the unit-
holders, who are the beneficiaries of the trust. The fund then invites investors to
contribute their money in common pool, by scribing to “units” issued by various
schemes established by the Trusts as evidence of their beneficial interest in the
fund. It should be understood that the fund should be just a “pass through”
vehicle. Under the Indian Trusts Act, the trust of the fund has no independent
legal capacity itself, rather it is the Trustee or the Trustees who have the legal
capacity and therefore all acts in relation to the trusts are taken on its behalf by
the Trustees.
 Trustees
A Trust is created through a document called the Trust Deed that is executed by
the fund sponsor in favor of the trustees. The Trust- the Mutual Fund – may be
managed by a board of trustees- a body of individuals, or a trust company- a
corporate body. Most of the funds in India are managed by Boards of Trustees.
While the boards of trustees are governed by the Indian Trusts Act, where the
22 | P A G E
trusts are a corporate body, it would also require to comply with the Companies
Act, 1956. The Board or the Trust company as an independent body, acts as
protector of the of the unit-holders interests. The Trustees do not directly
manage the portfolio of securities. For this specialist function, the appoint an
Asset Management Company. They ensure that the Fund is managed by the
AMC as per the defined objectives and in accordance with the trusts deeds and
SEBI regulations.
 The Asset Management Companies

The role of an Asset Management Company (AMC) is to act as the investment
manager of the Trust under the board supervision and the guidance of the
Trustees. The AMC is required to be approved and registered with SEBI as an
AMC. The AMC of a Mutual Fund must have ante worth of at least Rs. 10
Cores at all times. The Directors of the AMC, both independent and non-
independent, should have adequate professional expertise in financial services
and should be individuals of high morale standing, a condition also applicable to
other key personnel of them. The AMC cannot act as a Trustee of any other
Mutual Fund. Besides its role as a fund manager, it may undertake specified
activities such as advisory services and financial consulting, provided these
activities are run independent of one another and the AMC’s resources (such as
personnel, systems etc.) are properly segregated by the activity. The AMC must
always act in the interest of the unit-holders and reports to the trustees with
respect to its activities.
 Custodian and Depositories

Mutual Fund is in the business of buying and selling of securities in large
volumes. Handling these securities in terms of physical delivery and eventual
safekeeping is a specialized activity. The custodian is appointed by the Board of
Trustees for safekeeping of securities or participating in any clearance system
through approved depository companies on behalf of the Mutual Fund and it
must fulfill its responsibilities in accordance with its agreement with the Mutual
Fund. The custodian should be an entity independent of the sponsors and is
required tube registered with SEBI. With the introduction of the concept of
23 | P A G E
dematerialization of shares the dematerialized shares are kept with the

Depository participant while the custodian holds the physical securities.
 Trustees Bankers
A Fund’s activities involve dealing in money on a continuous basis primarily
with respect to buying and selling units, paying for investment made, receiving
the proceeds from sale of the investments and discharging its obligations
towards operating expenses. Thus the Fund’s banker plays an important role to
determine quality of service that the fund gives in timely delivery of remittances
etc. Transfer Agents: Transfer agents are responsible for issuing and redeeming
units of the Mutual Fund and provide other related services such as preparation
of transfer documents and updating investor records. A fund may choose to
carry out its activity in-house and charge the scheme for the service at a
competitive market rate. Where an outside Transfer agent is used, the fund
investor will find the agent to be an important interface to deal with, since all of
the investor services that a fund provides are going to be dependent on the
transfer agent.
2.12 REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA

The structure of mutual funds in India is guided by the SEBI. Regulations,
1996.Theseregulations make it mandatory for mutual fund to have three structures
of sponsor trustee and asset Management Company. The sponsor of the mutual
fund and appoints the trustees. The trustees are responsible to the investors in
mutual fund and appoint the AMC for managing the investment portfolio. The
AMC is the business face of the mutual fund, as it manages all the affairs of the
mutual fund. The AMC and the mutual fund have to be registered with SEBI.
1. SEBI REGULATIONS
 As far as mutual funds are concerned, SEBI formulates policies and regulates
the mutual funds to protect the interest of the investors.
24 | P A G E
 SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds
sponsored by private sector entities were allowed to enter the capital market.
 The regulations were fully revised in 1996 and have been amended thereafter
from time to time.
 SEBI has also issued guidelines to the mutual funds from time to time to protect
the interests of investors.
 All mutual funds whether promoted by public sector or private sector entities
including those promoted by foreign entities are governed by the same set of
Regulations. The risks associated with the schemes launched by the mutual
funds sponsored by these entities are of similar type.
 SEBI Regulations require that at least two thirds of the directors of trustee
company or board of trustees must be independent
 Also, 50% of the directors of AMC must be independent. All mutual funds are
required to be registered with SEBI before they launch any scheme.
2.12 ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI):

With the increase in mutual fund players in India, a need for mutual fund
association in India was generated to function as a non-profit organization.
Association of Mutual Funds in India (AMFI) was incorporated on 22nd August,
1995. AMFI is an apex body of all Asset Management Companies (AMC) which
has been registered with SEBI. Till date all the AMCs are that have launched
mutual fund schemes are its members. It functions under the supervision and
guidelines of its Board of Directors.
 The Objectives of Association of Mutual Funds in India

The Association of Mutual Funds of India works with 30 registered AMCs of
the country. It has certain defined objectives which juxtaposes the guidelines of
its Board of Directors. The objectives are as follows:
25 | P A G E
 This mutual fund association of India maintains high professional and ethical
standards in all areas of operation of the industry.
 It also recommends and promotes the top class business practices and code
of conduct which is followed by members and related people engaged in the
activities of mutual fund and asset management. The agencies who are by
any means connected or involved in the field of capital markets and financial
services also involved in this code of conduct of the association.
 AMFI interacts with SEBI and works according to SEBIs guidelines in the
mutual fund industry.
 Association of Mutual Fund of India do represent the Government of India,

the Reserve Bank of India and other
 Related bodies on matters relating to the Mutual Fund Industry.
 It develops a team of well qualified and trained Agent distributors. It

implements a programmer of training and certification for all intermediaries
and other engaged in the mutual fund industry.
2.13 MUTUAL FUNDS IN INDIA

In 1963, the day the concept of Mutual Fund took birth in India. Unit Trust of India
invited investors or rather to those who believed in savings, to park their money in
UTI Mutual Fund. For 30 years it goaled without a single second player. Though
the 1988 year saw some new mutual fund companies, but UTI remained in a
monopoly position. The performance of mutual funds in India in the initial phase
was not even closer to satisfactory level. People rarely understood, and of course
investing was out of question. But yes, some 24 million shareholders were
accustomed with guaranteed high returns by the beginning of liberalization of the
industry in 1992. This good record of UTI became marketing tool for new entrants.
The expectations of investors touched the sky in profitability factor. However,
people were miles away from the preparedness of risks factor after the
26 | P A G E
liberalization. The net asset value (NAV) of mutual funds in India declined when
stock prices started falling in the year 1992. Those days, the market regulations did
not allow portfolio shifts into alternative investments. There was rather no choice
apart from holding the cash or to further continue investing in shares. One more
thing to be noted, since only closed-end funds were floated in the market, the
investors disinvested by selling at a loss in the secondary market.
The performance of mutual funds in India suffered qualitatively. The 1992 stock
market scandal, the losses by disinvestments and of course the lack of transparent
rules in the whereabouts rocked confidence among the investors. Partly owing to a
relatively weak stock market performance, mutual funds have not yet recovered,
with funds trading at an average discount of 1020 percent of their net asset value.
The securities and Exchange Board of India (SEBI) came out with comprehensive
regulation in 1993 which defined the structure of Mutual Fund and Asset
Management Companies for the first time. The supervisory authority adopted a set
of measures to create a transparent and competitive environment in mutual funds.
Some of them were like relaxing investment restrictions into the market,
introduction of open-ended funds, and paving the gateway for mutual funds to
launch pension schemes.
2.14 MUTUAL FUND COMPANIES IN INDIA:

The concept of mutual funds in India dates back to the year 1963. The era between
1963and 1987 marked the existence of only one mutual fund company in India with
Rs. 67bn assets under management (AUM), by the end of its monopoly era, the
Unit Trust of India (UTI). By the end of the 80s decade, few other mutual fund
companies in India took their position in mutual fund market. The new entries of
mutual fund companies in India were SBI Mutual Fund, Can bank Mutual Fund,
Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India
Mutual Fund. The succeeding decade showed a new horizon in Indian mutual fund
industry. By the end of 1993, the total AUM of the industry was Rs. 470.04 bn. The
private sector funds started penetrating the fund families. In the same year the first
Mutual Fund Regulations came into existence with re-registering all mutual funds
except UTI. The regulations were further given a revised shape in 1996. Kothari
27 | P A G E
Pioneer was the first private sector mutual fund company in India which has now
merged with Franklin Templeton. Just after ten years with private sector player’s
penetration, the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual
fund companies in India. Major Mutual Fund Companies in India
 ABN AMRO Mutual Fund
 Standard Chartered Mutual Fund
 Birla Sun Life Mutual Fund
 Franklin Templeton India Mutual Fund
 Bank of Baroda Mutual Fund
 Morgan Stanley Mutual Fund India
 HDFC Mutual Fund
 Escorts Mutual Fund
 HSBC Mutual Fund
 Alliance Capital Mutual Fund
 Benchmark Mutual Fund
 Prudential ICICI Mutual Fund
 Can bank Mutual Fund
 State Bank of India Mutual Fund
 Tata Mutual Fund
 LIC Mutual Fund
 Unit Trust of India Mutual Fund
For the first time in the history of Indian mutual fund industry, Unit Trust of India
Mutual Fund has slipped from the first slot. Earlier, in May 2006, the Prudential
ICICI Mutual Fund was ranked at the number one slot in terms of total assets. In
the very next month, the UTIMF had regained its top position as the largest fund
house in India. Now, according to the current pegging order and the data released
by Association of Mutual Funds in India (AMFI), the Reliance Mutual Fund, with a
January-end AUM of Rs39, 020 core has become the largest mutual fund in India
On the other hand, UTIMF, with an AUM of Rs 37,535 core, has gone to
decomposition. The Prudential ICICI MF has slipped to the third position with an
AUM of Rs 34,746crore.It happened for the first time in last one year that a private
sector mutual fund house has reached to the top slot in terms of asset under
28 | P A G E
management (AUM). In the last one year to January, AUMof the Indian fund
industry has risen by 64% to Rs 3.39 lakh crore. According to the data released by
Association of Mutual Funds in India (AMFI), the combined average AUM of the
35 fund houses in the country increased to Rs 5,512.99 billion in April compared to
Rs 4,932.86 billion in March Reliance MF maintained its top position as the largest
fund house in the country with Rs74.25 billion jump in AUM to Rs 883.87 billion
at April-end. The second-largest fund house HDFC MF gained Rs 59.24 billion in
its AUM at Rs 638.80billion. ICICI Prudential and state-run UTI MF added Rs
46.16 billion and Rs 57.35 billion retrospectively to their assets last month. ICICI
Prudential`s AUM stood at Rs 560.49 billion at the end of April, while UTI MF had
assets worth Rs 544.89 billion.
2.15RELIANCE MUTUAL FUND vs. UTI MUTUAL

FUNDRELIANCE MUTUAL FUND
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 Mutual
Fund was formed for launching of various schemes under which units are issued to
the Public with a view to contribute to the capital market and to provide investors
the opportunities to make investments in diversified securities. RMF is one of
India’s leading Mutual Funds, with Average Assets under Management (AAUM) of
Rs. 88,388 crs (AAUM for 30th Apr 09) and an investor base of over 71.53 Lacs.
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 118 cities across the country. Reliance Mutual Fund constantly
endeavors to launch innovative products and customer service initiatives to increase
value to investors. "Reliance Mutual Fund schemes are managed by Reliance
Capital Asset Management Limited., a subsidiary of Reliance Capital Limited,
which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital
being held by minority shareholders.
29 | P A G E
 Sponsor: Reliance Capital Ltd. 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.Vision
Statement “To be a globally respected wealth creator with an emphasis on
customer care and culture of good corporate governance. Mission Statement To
create and nurture a world-class, high performance environment aimed at
delighting our customers.
The Main Objectives of the Trust:

 To carry on the activity of a Mutual Fund as may be permitted at law and
formulate and devise various collective Schemes of savings and investments for
people in India and abroad and also ensure liquidity of investments for the Unit
holders
 To deploy Funds thus raised so as to help the Unit holders earn reasonable
returns on their savings.
2.16 EQUITY/GROWTH SCHEMES:

The aim of growth funds is to provide capital appreciation over the medium to
long-term. Such schemes normally invest a major part of their corpus in equities.
Such funds have comparatively high risks. Growth schemes are good for investors
having a long-term outlook seeking appreciation over a period of time.
1. Reliance Infrastructure Fund (Open-Ended Equity)

The primary investment objective of the scheme is to generate long term capital
appreciation by investing predominantly in equity and equity related instruments
of companies engaged in infrastructure and infrastructure related sectors and
which are incorporated or have their area of primary activity, in India and the
secondary objective is to generate consistent returns by investing in debt and
money market securities.
30 | P A G E
2. Investment Strategy
The investment focus would be guided by the growth potential and other
economic factors of the country. The Fund aims to maximize long-term total
return by investing in equity and equity-related securities which have their area
of primary activity in India.
3. Reliance Quant plus Fund/Reliance Index Fund (Open-Ended Equity)

The investment objective of the Scheme is to generate capital appreciation
through investment in equity and equity related instruments. The Scheme will
seek to generate capital appreciation by investing in an active portfolio of stocks
selected from S & P CNX Nifty on the basis of a mathematical model. An
investment fund that approach stock selection process based on quantitative
analysis.
4. Reliance Natural Resources Fund (Open-Ended Equity)

The primary investment objective of the scheme is to seek to generate capital
appreciation & provide long-term growth opportunities by investing in
companies principally engaged in the discovery, development, production, or
distribution of natural resources and the secondary objective is to generate
consistent returns by investing in debt and money market securities. Natural
resources may include, forest products, food and agriculture, and other basic
commodities.
5. Reliance Equity Linked Saving Fund (A 10 Year Close-Ended Equity)

The primary objective of the scheme is to generate long-term capital
appreciation from a portfolio that is invested predominantly in equities along
with income tax benefit. The scheme may invest in equity shares in foreign
companies and instruments convertible into equity shares of domestic or foreign
companies and in derivatives as may be permissible under the guidelines issued
by SEBI and RBI.
31 | P A G E
6. Reliance Equity Advantage Fund (Open-Ended Diversified Equity)

appreciation & provide long-term growth opportunities by investing in a
portfolio predominantly of equity & equity related instruments with investments
generally in S & P CNX Nifty stocks and the secondary objective is to generate
consistent returns by investing in debt and money market securities.
7. Reliance Equity Fund (Open-Ended Diversified Equity)

portfolio constituted of equity & equity related securities of top 100 companies
by market capitalization & of companies which are available in the derivatives
segment from time to time and the secondary objective is to generate consistent
returns by investing in debt and money market securities.
8. Reliance Tax Saver (ELSS) Fund (Open-Ended Equity)

The primary objective of the scheme is to generate long-term capital
appreciation from a portfolio that is invested predominantly in equity and equity
related instruments.
Tax Benefits:
 Investment up to Rs 1 lakh by the eligible investor in this fund would enable
you to avail the benefits under Section 80C (2) of the Income-tax Act, 1961.
 Dividends received will be absolutely TAX FREE.
 The dividend distribution tax (payable by the AMC) for equity schemes is
also NIL
9. Reliance Growth Fund (Open-Ended Equity)

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.
32 | P A G E
10. Reliance Vision Fund (Open-Ended Equity)

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.
11. Reliance Equity Opportunities Fund (Open-Ended Diversified Equity)

portfolio constituted of equity securities & equity related securities and the
secondary objective is to generate consistent returns by investing in debt and
12. Reliance NRI Equity Fund (Open-Ended Diversified Equity)

The Primary investment objective of the scheme is to generate optimal returns
by investing in equity or equity related instruments primarily drawn from the
Companies in the BSE 200 Index.
13. Reliance Long Term Equity Fund (Open-Ended Diversified Equity)

The primary investment objective of the scheme is to seek to generate long term
capital appreciation & provide long-term growth opportunities by investing in a
portfolio constituted of equity & equity related securities and Derivatives and
the secondary objective is to generate consistent returns by investing in debt and
money market securities. It is a 36-month close ended diversified equity fund
with an automatic conversion into an open ended scheme on expiry of 36-
months from the date of allotment. It aims to maximize returns by investing 70-
100% in Equities focusing in small and mid-cap companies.
14. Reliance Regular Savings Fund (Open-Ended Equity)

Reliance Regular Savings Fund provides you the choice of investing in Debt,
Equity or Hybrid options with a pertinent investment objective and pattern for
each option. Invest as little as Rs.100/-every month in the Reliance Regular
Savings Fund.
33 | P A G E
B) DEBT/INCOME SCHEMES
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.
1. Reliance Monthly Income Plan

The Primary investment objective of the Scheme is to generate regular income
in order to make regular dividend payments to unit holders and the secondary
objective is growth of capital.
2. Reliance Gilt Securities Fund

The primary objective of the Scheme is to generate optimal credit risk-free
returns by investing in a portfolio of securities issued and guaranteed by the
central Government and State Government.
3. Reliance Income Fund

The primary objective of the scheme is to generate optimal returns consistent
with moderate levels of risk. This income may be complemented by capital
appreciation of the portfolio.
4. Reliance Medium Term Fund

The primary investment objective of the Scheme is to generate regular income in
order to make regular dividend payments to unit holders and the secondary
objective is growth of capital.
5. Reliance Short Term Fund

The primary investment objective of the scheme is to generate stable returns for
investors with a short investment horizon by investing in Fixed Income
Securities of short term maturity.
34 | P A G E
6. Reliance Liquid Fund:

The primary investment objective of the Scheme is to generate optimal returns
consistent with moderate levels of risk and high liquidity.
7. Reliance Floating Rate Fund

The primary objective of the scheme is to generate regular income through
investment in a portfolio comprising substantially of Floating Rate Debt
Securities the scheme shall also invest in fixed rate debt Securities.
8. Reliance NRI Income Fund
The primary investment objective of the Scheme is to generate optimal returns
consistent with moderate levels of risks.
9. Reliance Liquidity Fund

The investment objective of the Scheme is to generate optimal returns consistent
with moderate levels of risk and high liquidity. Accordingly, investments shall
predominantly be made in Debt and Money Market Instruments.
10. Reliance Interval Fund

The primary investment objective of the scheme is to seek to generate regular
returns and growth of capital by investing in a diversified portfolio
11. Reliance Liquid plus Fund

The investment objective of the Scheme is to generate optimal returns consistent
with moderate levels of risk and liquidity by investing in debt securities and
12. Reliance Fixed Horizon Fund–I

returns and growth of capital by investing in a diversified portfolio.
13. Reliance Fixed Horizon Fund –II

35 | P A G E
14. Reliance Fixed Horizon Fund –III

15. Reliance Fixed Tenor Fund

The primary investment objective of the Plan is to seek to generate regular
16. Reliance Fixed Horizon Fund -Plan C
17. Reliance Fixed Horizon Fund – IV

18. Reliance Fixed Horizon Fund – V

returns and growth of capital by investing in a diversified portfolio of: Central
and State Government securities and other fixed income/ debt securities
normally maturing in line with the time profile of the scheme with the objective
of limiting interest rate volatility
19. Reliance Fixed Horizon Fund – VI

returns and growth of capital by investing in a diversified portfolio of: - Central
and State Government securities and other fixed income/ debt securities
normally maturing in line with the time profile of the series with the objective of
limiting interest rate volatility
C) SECTOR SPECIFIC SCHEMES

These are the funds/schemes which invest in the securities of specified sectors or
industries e.g. Pharmaceuticals, Software, FMCG, Petroleum stocks, etc.
36 | P A G E
1. Reliance Banking Fund

Reliance Mutual Fund has an Open-Ended Banking Sector Scheme which has
the primary investment objective to generate continuous returns by actively
investing in equity / equity related or fixed income securities of banks.
2. Reliance Diversified Power Sector Fund

Reliance Diversified Power Sector Scheme is an Open-ended Power Sector
Scheme.
3. Reliance Pharma Fund

Reliance Pharma Fund is an Open-ended Pharma Sector Scheme. The primary
investment objective of the Scheme is to generate consistent returns by investing
in equity / equity related or fixed income securities of Pharma and other
associated companies.
4. Reliance Media & Entertainment Fund

Reliance Media & Entertainment Fund is an Open-ended Media &
Entertainment sector scheme. The primary investment objective of the Scheme
is to generate consistent returns by investing in equity / equity related or fixed
income securities of media & entertainment and other associated companies.
D) RELIANCE GOLD EXCHANGE TRADED FUND

(An open-ended Gold Exchange Traded Fund) The investment objective is to seek
to provide returns that closely correspond to returns provided by price of gold
through investment in physical Gold (and Gold related securities as permitted by
Regulators from time to time).However, the performance of the scheme may differ
from that of the domestic prices of Gold due to expenses and or other related
factors.
2.16 UNIT TRUST OF INDIA MUTUAL FUND

Unit Trust of India was created by the UTI Act passed by the Parliament in 1963.
For more than two decades it remained the sole vehicle for investment in the capital
market by the Indian citizens. In mid- 1980s public sector banks were allowed to
37 | P A G E
open mutual funds. The real vibrancy and competition in the MF industry came
with the setting up of the Regulator SEBI and its laying down the MF Regulations
in 1993.UTI maintained its pre-eminent place till 2001, when a massive decline in
the market indices and negative investor sentiments after Ketan Parekh scam
created doubts about the capacity of UTI to meet its obligations to the investors.
This was further compounded by two factors; namely, its flagship and largest
scheme US 64 was sold and re-purchased not at intrinsic NAV but at artificial price
and its Assured Return Schemes had promised returns as high as 18% over a period
going up to two decades. In order to distance Government from running a mutual
fund the ownership was transferred to four institutions; namely SBI, LIC, BOB and
PNB, each owning 25%.
Vision:
 To be the most Preferred Mutual Fund.
Mission:
 The most trusted brand, admired by all stakeholders.
 The largest and most efficient money manager with global presence• The best in
class customer service provider
 The most preferred employer
 The most innovative and best wealth creator
 A socially responsible organization known for best corporate governance Assets
Under Management: UTI Asset Management Co. Ltd Sponsor:
 State Bank of India
 Bank of Baroda
 Punjab National Bank
 Life Insurance Corporation of India
 Trustee: UTI Trustee Co. Limited.
Reliability UTIMF has consistently reset and upgraded transparency standards. All
the branches, UFCs and registrar offices are connected on a robust IT network to
ensure cost-effective quick and efficient service. All these have evolved UTIMF to
38 | P A G E
position as a dynamic, responsive, restructured, efficient and transparent entity,

fully compliant with SEBI regulations.
2.17 EQUITY FUND1. UTI Energy Fund (Open Ended Fund)

1. Investment will be made in stocks of those companies engaged in the
following are:
a) Petro sector - oil and gas products & processing
b) All types of Power generation companies.
c) Companies related to storage of energy.
d) Companies manufacturing energy development equipment related ( like petro
and power )
e) Consultancy & Finance Companies
2. UTI Transportation and Logistics Fund (Auto Sector Fund) (Open Ended
Fund)
Investment Objective is “capital appreciation” through investments in stocks of the
companies engaged in the transportation and logistics sector. At least 90% of the
funds will be invested in equity and equity related instruments. At least 80% of the
funds will be invested in equity and equity related instruments of the companies
principally engaged in providing transportation services, companies principally
engaged in the design, manufacture, distribution, or sale of transportation
equipment and companies in the logistics sector. Up to 10% of the funds will be
invested in cash/money market instruments.
3. UTI Banking Sector Fund (Open Ended Fund)

An open-ended equity fund with the objective to provide capital appreciation
through investments in the stocks of the companies/institutions engaged in the
banking and financial services activities.
4. UTI Infrastructure Fund (Open Ended Fund)

An open-ended equity fund with the objective to provide Capital appreciation
through investing in the stocks of the companies engaged in the sectors like Metals,
39 | P A G E
Building materials, oil and gas, power, chemicals, engineering etc. The fund will
invest in the stocks of the companies which form part of Infrastructure Industries
5. UTI Equity Tax Savings Plan (Open Ended Fund)

An open-ended equity fund investing a minimum of 80% in equity and equity
related instruments. It aims at enabling members to avail tax rebate under Section
80C of the IT Act and provide them with the benefits of growth.
6. UTI Growth Sector Fund – Pharma (Open Ended Fund)

An open-ended fund which exclusively invests in the equities of the Pharma &
Healthcare sector companies. This fund is one of the growth sector funds aiming to
invest in companies engaged in business of manufacturing and marketing of bulk
drug, formulations and healthcare products and services.
7. UTI Growth Sector Fund – Services (Open Ended Fund)

An open-ended fund which invests in the equities of the Services Sector companies
of the country. One of the growth sector funds aiming to provide growth of capital
over a period of time as well as to make income distribution by investing the funds
in stocks of companies engaged in service sector such as banking, finance,
insurance, education, training, telecom, travel, entertainment, hotels, etc.
8. UTI Growth Sector Fund – Software (Open Ended Fund)

An open-ended fund which invests exclusively in the equities of the Software
Sector companies. One of the growth sectors funds aiming to invest in equity shares
of companies belonging to information technology sector to provide returns to
investors through capital growth as well as through regular income distribution.
9. UTI Master Equity Plan Unit Scheme (Close Ended Fund)

The scheme primarily aims at securing for the investors capital appreciation by
investing the funds of the scheme in equity shares of companies with good growth
prospects.
40 | P A G E
CHAPTER NO. III

COMPANY PROFILE
3.1 COMPANY PROFILE
3.2 STUDY OF DEMAT ACCOUNT AND ONLINE TRADING

WITH REFERENCE TO SMC LTD.
Share Mantra Pvt Ltd operates as a financial services company in India & is leading
Investment consultant and caters to some of the biggest names in the Indian
financial services sector. The company offers broking services in the areas of
equities, futures and options (F&O), commodities, debt, life and general insurance,
and mutual funds. It also provides portfolio management and wealth management
services, as well as depository services. In addition, the company operates an online
trading platform that offers access to equities, commodities and F&O; and
undertakes fundamental and technical research. It serves high net worth individuals,
retail investors, and NRI clients, as well as financial institutions. The company was
founded in 2008 and is based in Kudal,India.
Over the 9 years, we have established you as an independent and credible source of
authentic information solutions provider to various segments of clients including
bank, Mutual Funds, Financial Intermediaries, Investment Advisors, Portfolio
Managers and Investors. The company pioneered the concept of financial verticals
in Kudal. In a veru short span of time; we have built a good dedicated team and a
large pool of satisfied clients. The company’s unwavering focus on quality,
innovation and differentiation backed by deep customer insights, world-class R&D
and an efficient and responsive franchisee chain will further strengthen its
leadership position in the investment industry.
41 | P A G E
 Corporate Office:
3630, Audumbar Plazza, Kudal, Sindhudurg, 416520.Contact Us 02362-221355.
 Vision:
“We intend to provide our customers with the best investment & reliable
solutions, also to build a place where people can come to find and discover
securities market a best tool for future investments.”
 Mission:
“Profitable growth through its superior customer service, innovation, quality and
commitment”
3.3 SERVIECES (CORE):

 Financial advising.
 Investment solutions
 Platform for investing in financial tools.
 Internet and Mobile treading.
 Online equity (shares) purchase and sale.
 Entire transactions through net banking.
 Online and offline mutual fund purchases, redemptions and transaction.
 Research analysis.
 Timely updating of investment in client portfolios.
 Assisting regular traders for creating long (buy) and short (sell) positions
through providing accurate levels with the help of technical Analysis.
 Regular SIPs in equity and mutual fund.
 SIP intimations to clients on monthly basis.
 Premium payment intimations to clients on regular basis.
3.4 SERVIECES(Education)
 Creating awareness and educating interested investors.
 Providing through market knowledge.
42 | P A G E
 Building confidence in treading for long term and short term investments across
all segments and products.
 Treading programmers for freshers and hardcore traders.
SMC Broking charges, brokerage, services:

SMC BROAKING:
Criteria SMC stock broking
Demat account opening charges No charges
Brokerage intraday, delivery 5 paisa, 50 paisa
AMC (Annual Caintaence Charges) Rs.300
Treading funding intraday, delivery 6 times, 4 times (minimum stock rest.
50000)
Debit period T+2 days
Mode of trading Both online and offline
Margin money 5000
Software installation charges No one charges
3.5 COMPANY POLICY:

Share mantra pvt Ltd, is committed to maximizing customer satisfaction and
service to achieve the goal of excellence by continual improvement through
providing better financial advisor, time tested and proven investment solutions,
products and services best suitable to every investor, continual increase in levels 0f
efficiency.
 PRODUCTS:
 Depository services (NSDL and CDSL)
 BSE and NSE capital market terminals
 BSE and NSE derrivitives market trading terminals
 NSE and MCX currency derivatives trading terminals
 IPO and Bonds
 Mutual funds (online and offline –Traditional method)
 Life insurance
 General insurance
 Portfolio management servieces
43 | P A G E
CHAPTER NO. IV
DATA ANALYSIS AND INTERPRETATION
4.1 DATA ANALYSIS AND INTERPRETATION

1. What is occupation?
TABLE NO. 4.1
Occupation No. of respondents

Government job 6
Private Job 5
Retired 5
Business 4
Total 20
GRAPH NO. 4.1
Occupation
20%
30%
Government job
Private Job
Retired
25% Business
25%
Interpretation:-
From the above graph, as per the occupation of represents, 25% are in private job, 25%
are in retired, 30% are in government jobs, 20% are in business.
44 | P A G E
2. What is your annual income?
TABLE NO. 4.2
Annual Income No. of respondents

Rs. 20,000 - 35,000 7
Rs. 35,000 - 50,000 6
Rs. 50,000 - 70,000 4
Rs. 70,000 - 1,00,000 3
Total 20
GRAPH NO. 4.2
Anual Income
15%
35% Rs. 20,000 - 35,000

Rs. 35,000 - 50,000
20%
Rs. 50,000 - 70,000
Rs. 70,000 - 1,00,000
30%
Interpretation:-
From this graph no. 2, as per the annual income they respondents who’s annual income
is above Rs. 20,000 – 35,000 is more interested to invest which is 35%, the respondents
whose income is above Rs. 35,000 – 50,000 is 30%, the respondents whose income is
below Rs. 50,000 – 70,000 is 20%, the respondents whose income is above Rs. 70,000 –
1, 00,000 is 15%.
45 | P A G E
3. What is % of your annual income do you save to invest?
TABLE NO. 4.3
% of annual income No. of respondents

10% 11
20% 4
30% 3
40% 2
Total 20
GRAPH NO. 4.3
Invest
10%
15% 10%
20%
30%
55%
40%
20%
Interpretation:-
This graph is related with percentage of invest report.55% peoples are respondent of
10% invest. 20% peoples are respondent to 20% invest. 15% peoples ar respondent to
30% invest and 10% peoples are respondent to 405 invest.
46 | P A G E
4. Where do you prefer to invest your money?
TABLE NO. 4.4
Answers No. of respondents

Mutual Fund 5
Fixed deposit 10
Post office 3
Share market 2
Total 20
GRAPH NO. 4.4
Imvest Prefer
10%
25%
Mutual Fund
15%
Fixed deposit
Post office
Share market
50%
Interpretation:-
From this graph no. 4 the 25% of total respondents prefer to invest money in mutual
funds 15% in post office, 50% in fixed deposits and 10% in share market
47 | P A G E
5. In the high volatile market, do you think mutual funds are a destination for
investments?
TABLE NO. 4.5

Yes 14
No 6
Total 20
GRAPH NO. 4.5
Destination for Investments
30%
Yes
No
70%
Interpretation:-
From the graph no. 5, the 70% of total respondents prefer to invest money in mutual
fund are destination for investment in high volatile marker.
48 | P A G E
6. How to long would you like to hold your mutual funds’ investments?
TABLE NO. 4.6

1 - 2 Years 10
2 - 4 Years 5
4 - 6 Years 3
6 - 10 Years 2
Total 20
GRAPH NO. 4.6
Hold Mutual Investment
10%
15% 1 - 2 Years
2 - 4 Years
50%
4 - 6 Years
6 - 10 Years
25%
Interpretation:-
From the graph no.6 the 50% respondents hold investment in mutual funds for 1 to 2
years, 25% invest for 2 to 4 years, 15% respondents like to invest for 4 to 6 years and
10% respondents invest for more than 6 to 10 years.
49 | P A G E
7. How do you rate the risks associated with mutual funds?
TABLE NO. 4.7

Low 10
Moderate 7
High 3
Total 20
GRAPH NO. 4.7
Risk
15%
Low
50% Moderate
High
35%
Interpretation:-
From the graph no. 7, the 50% respondents rate the risk as low, 35% rate the risk as
moderate 15% respondents rate the risk as high.
50 | P A G E
8. Which Mutual fund you prefer to invest money?
TABLE NO. 4.8

SBI 5
UTI 2
HDFC 6
Reliance 3
Other 4
Total 20
GRAPH NO. 4.8
Prefer to Invest Money
20%
25%
SBI
UTI
HDFC
15%
10% Reliance
Other
30%
Interpretation:-
From the graph no. 8 the 25% respondents prefer to invest money in SBI MF, 10%
prefer in UTI MF, 30% prefer in HDFC MF, 15% prefer in Reliance MF and 20%
prefer to invest in other mutual funds.
51 | P A G E
9. When you invest in mutual funds which mode of investment will you prefer?
Table no. 4.9

Other time investment 5
Systematic investment 5
Plan (SIP) 6
Other 4
Total 20
GRAPH NO. 4.9
Investment Prefer
20%
25%
Other time investment
Systematic investment
Plan (SIP)
Other
30%
25%
Interpretation:-
From the graph no. 9, the 25% of respondents to invest in mutual fund 30% respondents
SIP to invest money, 20% of respondents choose other modes for investments and 25%
respondents choose systematic investment to invest money.
52 | P A G E
10. Which channel will you prefer which investing in mutual fund?
TABLE NO. 4.10

Financial advisor 11
Bank 7
AMC 2
Total 20
GRAPH NO. 4.10
Investing in Mutual Funds
10%
Financial advisor
Bank
35% 55% AMC
Interpretation:-
From the graph no. 10, 10% respondents invest in MF through AMC, 55% invest
through financial adviser and 35% respondents invest through bank.
53 | P A G E
CHAPTER NO. IV
FINDINGS & SUGGESTION
4.1 FINDINGS & SUGGESTION

4.1.1 FINDINGS
In the last decade investors have been attracted towards Mutual Fund because of the
following benefits:
 Risk of loss due to ill-informed purchase and sale of securities is minimum.
 Diversification of investments in term of companies and industries spread risk.
 Returns are automatically re-invested and ordinary investor is relieved of paper

work.
 Safety against speculative operations is provided.
 The above said brief discussions has made crystal clear that investor today at
large has got a new option of investment in the form of Mutual Fund i.e. he has
one more very attractive choice in kitty.
There are several factors which affects the perception of customers to invest in
Mutual Funds:
1. AGE OF INVESTOR:
Survey reports simply indicates that young, energetic and people with sound health
take initiative to invest high percentage of the saving in equities for long run. On
other hand old age and retired people neglect investment in equity based schemes,
they rather prefer either Fixed Maturity Plans (FMPs) or balanced schemes. Young
people prefer equities but are interested in their own research analysis before
investing while old people are based on the suggestion of authorized T.V.
programmers.
54 | P A G E
2. MARKET CONDITION:
With the fluctuation in market, perception of investors also fluctuates meaning
thereby greater the stability in market, greater is confidence. On the other hand
erratic market discourages investors in equity fund.
3. REGIONAL SEGMENTATION:
Investor dwelling in urban areas are well aware of Mutual funds and have aware of
Mutual funds have positive frame of mind for investment in mutual fund. On other
hand, due to lack of information, people of rural and semi-urban areas neglect
investment in mutual fund.
4. ROLE OF DISTRIBUTORS:
Knowledge and perception of investor is directly linked with the kind of information
feuded by the distributor. If the queries and doubts of investors are properly
quenched then they will certainly be encouraged towards Mutual Fund investment.
Distributor is unable to clear.
55 | P A G E
4.1.2 SUGGESTION
 Comparatively the knowledge of Mutual funds among customers is increasing
 Respondent are very loyal to their brands, and brand name also influence the
investment decision
 Risk and NAV per unit of funds do play an important role in the purchase of
mutual funds
 Customers prefer equity schemes more than Fixed Income Funds
 Most of the respondents prefer to have Television as the media for

advertisement.
 Reliance Equity Funds got a good popularity among investors.
 A good number of people invest for a longer time period with a long term
growth option
 A good number of people invest in mutual funds to have tax benefit
Not so long ago a common investor when asked about investing would have
pointed out to the Fixed Deposits that he holds with the bank, the deposits with the
Post Office, the Government Bonds that he has invested in, and the basket of shares
(if any) that he holds in his kitty. He was not aware of the alternate route to
investment, that of Mutual Funds. Slowly and gradually with the opening up of
international borders and privatization, people are getting informed about other
avenues of investment, be it Mutual Funds or Insurance. If we compare the Indian
market with the global standards then we notice that the Indian Mutual Funds
Industry is in its nascent stages, unlike the United States where every second
household invests through this route. He links this route with risk. However, risk
diversification is the very purpose of mutual funds.
56 | P A G E
CHAPTER NO. V
CONCLUSION
5.1 CONCLUSION
In Indian mutual fund industry, most of the mutual fund schemes have been
performing inefficiently. However, when analyzed within their category as Growth,
Income, Balanced and ELSS, situation is much better and approximately half of the
schemes in each category have been performing efficiently. Load fee and expense
ratio have been found as the major cause of inefficiency in mutual fund. For all the
inefficient schemes, there are respective peer efficient schemes in particular
weights by following which these schemes might attain efficiency level.
Thus, for the entire set of inefficient schemes, target values or virtual inputs are
there for achieving the efficiency level. These target values shows that expense
ratio and load fee should be reduced to achieve efficiency. There are some
attributes of mutual fund schemes as their age, asset ratio and past performance that
affect their efficiency performance. Older schemes and schemes with high asset
ratio are performing inefficiently. However, mutual funds which had good
performance in past are more likely to perform well in future.
The number of investors and the amount invested in mutual funds is quite low.
Investors consider mutual funds as low return and high risk Investment Avenue. Its
liquidity is perceived as high but tax benefits and procedural understanding are low
for these. Also, investors judge mutual fund schemes for investment on the basis of
their structure, size, performance, status and professional expertise. Further,
investors expect good regulations, expert advice and strong grievance mechanism
from mutual fund companies. Most of the investors have been investing in Growth,
Income and Balanced mutual fund schemes.
57 | P A G E
BIBLIOGRAPHY
 www.wekipidea.org
 Book: Financial Account
58 | P A G E
ANNEXURE
A study of preferences of the investors for investment in mutual funds.
1. Personal Details:
i. Name:-
ii. Add: -
iii. Age:-
iv. Phone:-
2. Qualification:-
Answers:-
a) Graduation b) Under Graduation

c) other
3. What is occupation?
Answers:-
a) Government job c) Private Job
b) Retired d) Business
4. What is your annual income?
Answers:-
a) Rs. 20,000 - 35,000 b) Rs. 35,000 - 50,000
c) Rs. 50,000 - 70,000 d) Rs. 70,000 - 1,00,000
59 | P A G E
5. What is % of your annual income do you save to invest?
Answers:-
a) 10% b) 20%
c) 30% d) 40%
6. Where do you prefer to invest your money?
Answers:-
a) Mutual Fund b) Fixed deposit

c) Post office d) Share market
7. In the high volatile market, do you think mutual funds are a destination for
investments?
Answers:-
a) Yes b) No
8. How to long would you like to hold your mutual funds’ investments?
Answers:-
a) 1 - 2 Years b) 2 - 4 Years
c) 4 - 6 Years d) 6 - 10 Years
60 | P A G E
9. How do you rate the risks associated with mutual funds?
Answers:-
a) Low b) Moderate
c) High
10. Which Mutual fund you prefer to invest money?
Answers:-
a) SBI b) UTI
c) HDFC d) Reliance
d) Other
11. When you invest in mutual funds which mode of investment will you prefer?
Answers:-
a) Other time investment b) Systematic investment

c) Plan (SIP) d) Other
12. Which channel will you prefer which investing in mutual fund?
Answers:-
a) Financial advisor c) Bank

b) AMC
61 | P A G E

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A STUDY OF MUTUAL FUND WITH REFRENCE TO SMC

1.2 CONCEPT OF MUTUAL FUND

A Mutual Fund is a corporation and the fund manager’s interest is to professionally

1.4 NEED AND SCOPE FOR THE STUDY

1.7 NATURE OF THE STUDY

1.8 SIGNIFICANCE OF THE STUDY

1.9 REVIEW OF LITERATURE

1.10 RESEARCH METHODOLGY

The research work titled “A Study on Intensity of Mutual Fund Attributes on

 Statement of the Problem

1.11 DATA SOURCES

second part of the questionnaire contains the attributes evaluation of mutual

2.1 THEORETICAL BACKGROUND

2.2 HISTORY OF MUTUAL FUNDS IN INDIA:

 FIRST PHASE – 1964-87:

 SECOND PHASE – 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS):

 THIRD PHASE – 1993-2003 (ENTRY OF PRIVATE SECTOR FUNDS):

 FOURTH PHASE – SINCE FEBRUARY 2003:

2.3 GROWTH IN ASSETS UNDER MANAGEMENT

4. Reduction of Transaction Costs:

6. Convenience and Flexibility:

 DISADVANTAGES OF INVESTING THROUGH MUTUALFUNDS:

3. Managing a Portfolio of Funds

4. The Wisdom of Professional Management

2.4 TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

2. Close - Ended Schemes

 Sector Specific Funds

1. Money Market Schemes

 Sector Specific Schemes

2.5 NET ASSET VALUE (NAV)

2.6 MUTUAL FUND FEES AND EXPENSES

3. OTHER OPERATING EXPENSES

 Level load / Low load

2.7 SELECTION PARAMETERS FOR MUTUAL FUND

 Your risk capacity and capability

 Fund Manager’s and scheme track record

2.8 TYPES OF RETURNS ON MUTUAL FUND

2.9 RISK FACTORS OF MUTUAL FUNDS

5. Interest Rate Risk:

6. Political / Government Policy Risk:

2.10 WORKING OF MUTUAL FUNDS

2.11 STRUCTURE OF A MUTUAL FUND

 Mutual Funds as Trusts

 The Asset Management Companies

 Custodian and Depositories

dematerialization of shares the dematerialized shares are kept with the

2.12 REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA

2.12 ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI):

 The Objectives of Association of Mutual Funds in India

 Association of Mutual Fund of India do represent the Government of India,

 Related bodies on matters relating to the Mutual Fund Industry.

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

2.13 MUTUAL FUNDS IN INDIA

2.14 MUTUAL FUND COMPANIES IN INDIA:

2.15RELIANCE MUTUAL FUND vs. UTI MUTUAL

 Sponsor: Reliance Capital Ltd. Trustee

The Main Objectives of the Trust:

2.16 EQUITY/GROWTH SCHEMES:

1. Reliance Infrastructure Fund (Open-Ended Equity)

3. Reliance Quant plus Fund/Reliance Index Fund (Open-Ended Equity)

4. Reliance Natural Resources Fund (Open-Ended Equity)

5. Reliance Equity Linked Saving Fund (A 10 Year Close-Ended Equity)

6. Reliance Equity Advantage Fund (Open-Ended Diversified Equity)