INTRODUCTION TO STUDY

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 mutual funds.

Mutual fund is a mechanism for pooling the resources by issuing units to the investors
and investing funds in securities in accordance with objectives as disclosed in offer
document.
Investments in securities are spread across a wide cross-section of industries and
sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may
not move in the same direction in the same proportion at the same time. Mutual fund issues
units to the investors in accordance with quantum of money invested by them. Investors of
mutual funds are known as unit holders.
The investors in proportion to their investments share the profits or losses. The
mutual funds normally come out with a number of schemes with different investment

objectives that are launched from time to time. A mutual fund is required to be registered
with Securities and Exchange Board of India (SEBI), which regulates securities markets
before it can collect funds from the public.
Different investment avenues are available to investors. Mutual funds also offer good
investment opportunities to the investors. Like all investments, they also carry certain risks.
The investors should compare the risks and expected yields after adjustment of tax on various
instruments while taking investment decisions.
ORGANISATION OF A MUTUAL FUND
A mutual fund is set up in the form of a trust, which has sponsor, trustees,
Asset Management Company (AMC) and custodian. The trust is established by a sponsor or
more than one sponsor who is like promoter of a company. The trustees of the mutual fund
hold its property for the benefit of the unit holders. Asset Management Company (AMC)
approved by SEBI manages the funds by making investments in various types of securities.
Custodian, who is registered with SEBI, holds the securities of various schemes of the fund
in its custody. The trustees are vested with the general power of superintendence and
direction over AMC. They monitor the performance and compliance of SEBI Regulations by
the mutual fund SEBI Regulations require that at least two thirds of the directors of trustee
company or board of trustees must be independent i.e. they should not be associated with the
sponsors. 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

Mutual fund structure:

The structure consists of:

Sponsor:
Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of
the Investment Managed and meet the eligibility criteria prescribed under the Securities and
Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible
or liable for any loss or shortfall resulting from the operation of the Schemes beyond the
initial contribution made by it towards setting up of the Mutual Fund
Trust:
The Mutual Fund is constituted as a trust in accordance with the provisions of the
Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian
Registration Act, 1908
Trustee:
Trustee is usually a company (corporate body) or a Board of Trustees (body of
individuals). The main responsibility of the Trustee is to safeguard the interest of the unit
holders and inter alia ensure that the AMC functions in the interest of investors and in
accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations,
1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes.

At least 2/3rd directors of the Trustee are independent directors who are not associated with
the Sponsor in any manner
Asset Management Company:
The Trustee as the Investment Manager of the Mutual Fund appoints the AMC. The
AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act
as an asset management company of the Mutual Fund. Atleast 50% of the directors of the
AMC are independent directors who are not associated with the Sponsor in any manner. The
AMC must have a net worth of atleast 10 crore at all times
Registrar or Transfer agent:
The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer
Agent to the Mutual Fund. The Registrar processes the application form; redemption requests
and dispatches account statements to the unit holders. The Registrar and Transfer agent also
handles communications with investors and updates investor records
History of Mutual Funds in India and role of SEBI in mutual funds industry.
Unit Trust of India was the first mutual fund set up in India in the year 1963. In early
1990s, Government allowed public sector banks and institutions to set up mutual funds.
In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The
objectives of SEBI are to protect the interest of investors in securities and to promote the
development of and to regulate the securities market.
As far as mutual funds are concerned, SEBI formulates policies and regulates the
mutual funds to protect the interest of the investors. 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.

There is no distinction in regulatory requirements for these mutual funds and all are subject
to monitoring and inspections by SEBI. The risks associated with the schemes launched by
the mutual funds sponsored by these entities are of similar type.
History of the Indian Mutual Fund Industry
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank the. The history of
mutual funds in India can be broadly divided into four distinct phases
First Phase 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set
up by the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took over the regulatory and administrative
control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end
of 1988 UTI had Rs.6,700 crores of assets under management.
Second Phase 1987-1993 (Entry of Public Sector Funds)
1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of
India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987
followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),
Indian Bank Mutual Fund (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 December 1990.
At the end of 1993, the mutual fund industry had assets under management of
Rs.47,004 crores.

Third Phase 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the
Indian mutual fund industry, giving the Indian investors a wider choice of fund families.
Also, 1993 was the year in which the first Mutual Fund. Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual
fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI
(Mutual 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 crores. The Unit Trust of India with Rs.44,541 crores of assets under
management was way ahead of other mutual funds.
Fourth Phase since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of
India with assets under management of Rs.29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other schemes.
The 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 crores of assets under

management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector funds,
the mutual fund industry.
Has entered its current phase of consolidation and growth. As at the end of September,
2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.
The graph indicates the growth of assets over the years.
GROWTH IN ASSETS UNDER MANAGEMENT

Note:
Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of
the Unit Trust of India effective from February 2003. The Assets under management of the
Specified Undertaking of the Unit Trust of India has therefore been excluded from the total
assets of the industry as a whole from February 2003 onwards.

ADVANTAGES OF MUTUAL FUNDS

Professional Management

Diversification

Convenient Administration

Return Potential

Low Costs

Liquidity

Transparency

Flexibility

Choice of schemes

Tax benefits

Well regulated

There are numerous benefits of investing in mutual funds and one of the key reasons for its
phenomenal success in the developed markets like US and UK is the range of benefits they
offer, which are unmatched by most other investment avenues
Affordability:
A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon
the investment objective of the scheme. An investor can buy in to a portfolio of equities,
which would otherwise be extremely expensive. Each unit holder thus gets an exposure to
such portfolios with an investment as modest as Rs.500/-. This amount today would get you
less than quarter of an Infosys share! Thus it would be affordable for an investor to build a
portfolio of investments through a mutual fund rather than investing directly in the stock
market.

Diversification:
It simply means that spread the investment across different securities (stocks, bonds,
money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile,
information technology etc.). This kind of diversification may add to the stability of returns,
for example during one period of time equities might under perform but bonds and money
market instruments might do well enough to offset the effect of a slump in the equity
markets. Similarly the information technology sector might be faring poorly but the auto and
textile sectors might do well and may protect principal investment as well as help to meet
return objectives.
Variety:
Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two
ways: first, it offers different types of schemes to investors with different needs and risk
appetites; secondly, it offers an opportunity to an investor to invest sums across a variety of
schemes, both debt and equity. For example, an investor can invest his money in a Growth
Fund (equity scheme) and Income Fund (debt scheme) depending on his risk appetite and
thus create a balanced portfolio easily or simply just buy a Balanced Scheme.
Professional management:
Qualified investment professionals who seek to maximize returns and minimize risk
monitor investor's money. When you buy in to a mutual fund, you are handing your money to
an investment professional that has experience in making investment decisions. It is the Fund
Manager's job to (a) find the best securities for the fund, given the fund's stated investment
objectives; and (b) keep track of investments and changes in market conditions and adjust the
mix of the portfolio, as and when required
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 a confessional rate of 10.5%.

In case of Individuals and Hindu Undivided Families a deduction up to RS. 9,000 from the
Total Income will be admissible in respect of income from investments specified in Section
80L, including income from Units of the Mutual Fund. Units of the schemes are not subject
to Wealth-Tax and Gift-Tax.
Regulations:
Securities Exchange Board of India (SEBI), the mutual funds regulator has clearly
defined rules, which govern mutual funds. These rules relate to the formation, administration
and management of mutual funds and also prescribe disclosure and accounting requirements.
Such a high level of regulation seeks to protect the interest of investors
Liquidity:
In open-ended mutual funds, you can redeem all or part of your units any time you
wish. Some schemes do have a lock-in period where an investor cannot return the units until
the completion of such a lock-in period.
Convenience:
An investor can purchase or sell fund units directly from a fund, through a broker or a
financial planner. The investor may opt for a Systematic Investment Plan (SIP) or a
Systematic Withdrawal Advantage Plan (SWAP). In addition to this an investor receives
account statements and portfolios of the schemes.
Flexibility:
Mutual Funds offering multiple schemes allow investors to switch easily between
various schemes. This flexibility gives the investor a convenient way to change the mix of his
portfolio over time.
Transparency:
Open-ended mutual funds disclose their Net Asset Value (NAV) daily and the entire
portfolio monthly. This level of transparency, where the investor himself sees the underlying
assets bought with his money, is unmatched by any other financial instrument. Thus the
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investor is in the know of the quality of the portfolio and can invest further or redeem
depending on the kind of the portfolio that has been constructed by the investment manager
Structure of Indian Mutual funds
In developed countries like UK and the US, the mutual funds industry is highly
regulated with a view to imparting operational transparency and protecting the investors
interests. Since there is a clear distinction between open ended schemes(mutual funds) and
close ended schemes, usually two different types of structural and management approaches
are followed. Open ended funds (unit trusts) in the UK follow the trust approach), while
close ended schemes follow the corporate approach the management and operations of the
two types of the funds are there fore guided by separate regulatory mechanisms and the rules
are laid down by separate regulatory mechanisms, and rules are laid down by separate
controlling authorities. However, no such distinctions exist in Indian and both approaches
(trust and corporate, have been integrated by SEBI.
The formation and operations of mutual funds in Indian are guided solely by the SEBI
regulations (for details of the securities and Exchange Board of India (Mutual funds)
regulations, 1996,see Appendix
Gives us an idea of the structure of Indian mutual funds. A mutual fund comprises four
separate entitiessponsor, mutual trust, AMC and custodian. These are, of Course, assisted
by other independent administrative entities, such as banks, registrars and transfer agents. We
may discuss in brief the formation of different entities, their functions and obligations.
TYPES OF MUTUAL FUND SCHEMES
By structure
Open-Ended schemes
Close-ended schemes
Interval schemes

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By Investment objective
Growth schemes
Income schemes
Balanced schemes
Money market schemes
Other schemes
Tax saving schemes
Special saving schemes
Index schemes
Sector specific schemes

Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme or close-ended
scheme depending on its maturity period.
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

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A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The
fund is 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, 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
Schemes according to Investment Objective:
A scheme can also be classified as growth scheme, income scheme, or balanced
scheme considering its investment objective. Such schemes may be open-ended or closeended schemes as described earlier. Such schemes may be classified mainly as follows:
Growth / Equity Oriented Scheme:
The aim of growth funds is to provide capital appreciation over the medium to longterm. 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

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fall, NAVs of such funds are likely to increase in the short run and vice versa. However, longterm 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.
Gilt Fund:
These funds invest exclusively in government securities. Government securities have no
default risk. NAVs of these schemes also fluctuate due to change in interest rates and other
economic factors as are the case with income or debt oriented schemes.
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 weight age
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

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"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.
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.

Fund of Funds (FoF) scheme:

A scheme that invests primarily in other schemes of the same mutual fund or other mutual
funds is known as a FoF scheme. A FoF scheme enables the investors to achieve greater
diversification through one scheme. It spreads risks across a greater universe.
Load or no-load fund:

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A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one
buys or sells units in the fund, a charge will be payable. This charge is used by the mutual
fund for marketing and distribution expenses. Suppose the NAV per unit is Rs.10. If the entry
as well as exit load charged is 1%, then the investors who buy would be required to pay
Rs.10.10 and those who offer their units for repurchase to the mutual fund will get only
Rs.9.90 per unit. The investors should take the loads into consideration while making
investment as these affect their yields/returns. However, the investors should also consider
the performance track record and service standards of the mutual fund, which are more
important. Efficient funds may give higher returns in spite of loads.
A no-load fund is one that does not charge for entry or exit. It means the investors can enter
the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.
Mutual funds cannot increase the load beyond the level mentioned in the offer document.
Any change in the load will be applicable only to prospective investments and not to the
original investments. In case of imposition of fresh loads or increase in existing loads, the
mutual funds are required to amend their offer documents so that the new investors are aware
of loads at the time of investments.
Assured return scheme:
Assured return schemes are those schemes that assure a specific return to the unit holders
irrespective of performance of the scheme.
A scheme cannot promise returns unless such returns are fully guaranteed by the sponsor or
AMC and this is required to be disclosed in the offer document.
Investors should carefully read the offer document whether return is assured for the entire
period of the scheme or only for a certain period. Some schemes assure returns one year at a
time and they review and change it at the beginning of the next year.

Asset allocation funds:

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These funds invest in various asset classes including, but not limited to, equities,
fixed income securities, and money market instruments. They seek high total return by
maintaining precise weightings in asset classes. Global asset allocation funds invest in a mix
of equity & debt securities issued worldwide

Need of the study:The mutual fund is one of the investment proposal of the investor the Reliance
mutual fund limited is a deemed public limited company in corporation under companies act
1956. The funds can be subtending from secondary market and primary market. The NAV is
the most widely accepted for measuring the performance the any scheme of mutual fund.

The most important trend in the mutual fund industry is the expansion of the
foreign owned mutual fund companies. Many nationalized banks got into the mutual funds in
the early 90s and got of too good start due to the stock marked boom prevailing. The
investment in mutual funds gets the result low risk and low retom. The performance of most
of the schemes flitted by this good results some schemes had offered guarantied schemes.

Due to the high demand and low risk good results the most of the investor
focusing an investment in mutual fund.

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OBJECTIVE OF THE STUDY:

1) To evaluate, interpret and analyze the performance of reliance equity funds.
2)

To help an investor to make a right choice of investment, while considering the

inherent risk factors.

3) To know why NAV changes

4) To Study the Market Potentiality of Mutual Fund among Retail Investors
in

Hyderabad

5) To Create Awareness among the investors about the Mutual Fund

6) To help the customers with a Financial Planning process according to their investment
objectives, investment horizon period, according to their risk taking ability.
7) To study whether the advertisements influence the individuals to take investment
decision
8) To Study whether individuals are aware of the the distributor of the Mutual Fund
METHODOLOGY OF THE STUDY:
These are two sources of collecting data

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1. Primary collection method

2. Secondary collection method
In the survey being conducted both primary and a secondary source of data has been used in
the collection of relevant information.

PRIMARY COLLECTION METHOD

A questionnaire is used as a tool for the systematic collection of relevant information. A
well questionnaire consisting of simple questions has been prepared and directed to the
respondents.
The questionnaire prepared consists of closed-ended questions which includes
The first section of the questionnaire is prepared mainly for collecting the personal
information about the respondent.
The second section of questionnaire consists of multiple choice questions. It is prepared to
collect the information about the customer perception towards the close-ended questions are
very easy to answer from the questionnaires responded by the respondents. And there are also
few open- ended questions.
SECONDARY COLLECTION METHOD
Secondary data is the data that is collected for another purpose and already exist
somewhere. Data pertaining to company is collected from the companys websites
catalogues, Books etc.
SCOPE OF THE STUDY

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The scope of the project includes acquiring knowledge about the Mutual fund industry. As a
whole this included the detailed study of mutual funds, their types, benefits, present scenario,
equities as a part of mutual fund, the risk return relationship related to investment avenues.
It also included the marketing and promotional aspects, the marketing & promotional
activities have been carried out at the Reliance mutual fund Somajiguda branch and other
areas of Hyderabad, and they have provided an opportunity to apply the financial planning
process in practice & recommending financial strategies to investors. It enabled to create
awareness among the investors about the right investment products, helping investors
understand the risk & return in the fund investing recommending model portfolios and
selecting the right fund.
It has helped me to put the learning into practice and to get a feel of the market by
interacting with the prospective investors.
LIMITATIONS
1. The study is limited only to the analysis of different equity schemes in reliance
mutual fund.

2. The period of the study is limited i.e. 6 weeks. So all the information required to
analysis may not be accurate.

3. Mutual funds and securities investments are subjected to market risks and here can be
no assurance as guarantee that the schemes objectives will be achieved.

4. As with any investment in securities the NAV of units issued under the schemes may
go up and down depending upon the various factors affecting the capital markets.

5. Investors in the schemes are not being offered any guaranteed or assured returns.

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6. Due to insufficient time the study has been restricted to only a few selected schemes.

THEORITICAL PART
Mutual Funds in India (1964-2005)
The end of millennium marks 36 years of existence of mutual funds in this country. The ride
through these 36 years is not been smooth. Investor opinion is still divided. While some are
for mutual funds others are against it.
UTI commenced its operations from July 1964 .The impetus for establishing a formal
institution came from the desire to increase the propensity of the middle and lower groups to
save and to invest. UTI came into existence during a period marked by great political and
economic uncertainty in India. With war on the borders and economic turmoil that depressed
the financial market, entrepreneurs were hesitant to enter capital market.

The already existing companies found it difficult to raise fresh capital, as investors did not
respond adequately to new issues. Earnest efforts were required to canalize savings of the
community into productive uses in order to speed up the process of industrial growth.

The then Finance Minister, T.T. Krishnamachari set up the idea of a unit trust that would be
"open to any person or institution to purchase The units offered by the trust. However, this
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institution as we see it, is intended to cater to the needs of individual investors, and even
among them as far as possible, to those whose means are small."
His ideas took the form of the Unit Trust of India, an intermediary that would help fulfill the
twin objectives of mobilizing retail savings and investing those savings in the capital market
and passing on the benefits so accrued to the small investors.
UTI commenced its operations from July 1964 "with a view to encouraging savings and
investment and participation in the income, profits and gains accruing to the Corporation
from the acquisition, holding, management and disposal of securities." Different provisions
of the UTI Act laid down the structure of management, scope of business, powers and
functions of the Trust as well as accounting, disclosures and regulatory requirements for the
Trust.
One thing is certain the fund industry is here to stay. The industry was one-entity show till
1986 when the UTI monopoly was broken when SBI and Can bank mutual fund entered the
arena. This was followed by the entry of others like BOI, LIC, GIC, etc. sponsored by public
sector banks. Starting with an asset base of Rs0.25bn in 1964 the industry has grown at a
compounded average growth rate of 26.34% to its current size of Rs1130bn.
The period 1986-1993 can be termed as the period of public sector mutual funds (PMFs).
From one player in 1985 the number increased to 8 in 1993. The party did not last long.
When the private sector made its debut in 1993-94, the stock market was booming.
The opening up of the asset management business to private sector in 1993 saw international
players like Morgan Stanley, Jar dine Fleming, JP Morgan, George Sores and Capital
International along with the host of domestic players join the party. But for the equity funds,
the period of 1994-96 was one of the worst in the history of Indian Mutual Funds.
1999-2000 Year of the funds
Mutual funds have been around for a long period of time to be precise for 36 yrs but the year
1999 saw immense future potential and developments in this sector. This year signaled the

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year of resurgence of mutual funds and the regaining of investor confidence in these MFS.
This time around all the participants are involved in the revival of the funds ----- the AMCS,
the unit holders, the other related parties. However the sole factor that gave lift to the revival
of the funds was the Union Budget. The budget brought about a large number of changes in
one stroke. An insight of the Union Budget on mutual funds taxation benefits is provided
later.
It provided centre stage to the mutual funds, made them more attractive and provides
acceptability among the investors. The Union Budget exempted mutual fund dividend given
out by equity-oriented schemes from tax, both at the hands of the investor as well as the
mutual fund. No longer were the mutual funds interested in selling the concept of mutual
funds they wanted to talk business which would mean to increase asset base, and to get asset
base and investor base they had to be fully armed with a whole lot of schemes for every
investor .So new schemes for new IPOs were inevitable. The quest to attract investors
extended beyond just new schemes.
The funds started to regulate themselves and were all out on winning the trust and confidence
of the investors under the aegis of the Association of Mutual Funds of India (AMFI)
One cam say that the industry is moving from infancy to adolescence, the industry is
maturing and the investors and funds are frankly and openly discussing difficulties
opportunities and compulsions.
Future Scenario
The asset base will continue to grow at an annual rate of about 30 to 35 % over the next few
years as investors shift their assets from banks and other traditional avenues. Some of the
older public and private sector players will either close shop or be taken over.
Out of ten public sector players five will sell out, close down or merge with stronger players
in three to four years. In the private sector this trend has already started with two mergers and
one takeover. Here too some of them will down their shutters in the near future to come.

23

But this does not mean there is no room for other players. The market will witness a flurry of
new players entering the arena. There will be a large number of offers from various asset
management companies in the time to come. Some big names like Fidelity, Principal, and
Old Mutual etc. are looking at Indian market seriously. One important reason for it is that
most major players already have presence here and hence these big names would hardly like
to get left behind.
The mutual fund industry is awaiting the introduction of derivatives in India as this would
enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV).
SEBI is working out the norms for enabling the existing mutual fund schemes to trade in
derivatives. Importantly, many market players have called on the Regulator to initiate the
process immediately, so that the mutual funds can implement the changes that are required to
trade in Derivatives.
NAV AND LOADS
Load is charged to the investor when the investor buys or redeems( repurchases units)
Load is the adjustment to the NAV, to arrive at the price.
Load that is charged when the investor redeems his units is called as exit load.
An entry load will increase the price above the n NAV, for his investor.
Load that is charged when the investor redeems his units is called as exit load.
Exit load reduces the redemption proceeds of the investor.
Load is primarily used to meet the expenses related to sale and distribution of units.
An exit load that varies with the holding period of an investor is called as Contingent
Deferred Sales Charges.
To arrive at the sales price, given NAV and load (%), we have to calculate the amount of
load and add it to the NAV. the amount of load will be = NAV * entry load/ 100.

24

 To arrive at the sales price, given NAV and load (%), we have to calculate the amount of
load and reduce it from the NAV. The amount of load will be = NAV * exit load/ 100
Load is subjected to SEBI regulation

SEBI has stipulated that the maximum entry of exit load cannot be higher than 7%.
SEBI also stipulates that the repurchase price cannot be less than 93% of the sale price.

Max sale price given repurchase price is =NAV/ (1-load)

Min repurchase price, given sale price is=NAV* (1- load)

For closed end fund, the maximum entry of exit load cannot be higher than 5%.
The repurchase price cannot be less than 95 % of the sale price.

Restriction and investment

1.

Investment pattern of a scheme is a driven by the objective, as

stated in the offer

document.
2.

SEBI (mf) regulation places a number of restrictions on the investment of a mutual fund.

3.

Mutual fund can invest in marketable securities only.

4. All the investment by the mutual fund have to be on delivery basis, that is ,a mutual scheme
cannot invest 10% of the paid up capital of a company.

25

5. Investment in unrated securities cannot exceed 10% of the net asset for one issue and 25% of
net asset for all such issues.
6.

Investment in unlisted shares cannot exceed 5% of net assets for an open ended scheme,
and 10% of net assets for closed end scheme.

7. Inter scheme transfers are allowed by the SEBI regulations, provided

Such transfer on a delivery basis, at market prices.

Such transfers do not result in significantly altering the investment objective

of the scheme involved.

Such transfer is not of illiquid securities

8. The fund of one mutual fund scheme can be invested in another scheme. Investment
management fees are not paid on such investments.
9. Such investment cannot exceed 5% of the net assets of the scheme that invest its fund in
another scheme. Investment management fees are not paid on such investment.
10.

A mutual fund can borrow a sum not exceeding 20% of its net asset for a period not
exceeding 6 months. This facility is clearly designed as a stop gap arrangement and is not a
permanent source of funds for the scheme.

11. A fund can borrow only to meet liquidity requirement for

paying dividend or meeting

redemptions.
12.

All investment made in the marketable securities of the sponsor and its associated
companies must be disclosed by the mutual fund in its annual report and offer document,
along with the amount invested and the share of such investment in the total portfolio of
the mutual fund.

26

13.

A mutual fund sponsor cannot invest in unlisted securities of the sponsor or an

associate or group company of the sponsor.

14.

A mutual fund scheme cannot invest in privately placed securities of the sponsor or its
associates.

15.

Investment by a scheme in listed securities of the sponsor or associate companies

cannot exceed 25% of the net assets of the scheme.

Tax aspect

The tax provision are as on the date of curriculum, which is January 2005-06

Taxation provision applicable to investor are stated and explained in the offer document
and the Kim.

Dividends are exempt from tax in of the investor.

Mutual funds pay a distribution tax of 10% +surcharge of 2% effective 10.2 before
paying out of dividend.

Open ended equity funds with more than 50% invested in equity do not pay any dividend
distribution tax

Investment in ELSS schemes of mutual fund, up to maximum of Rs. 10000/ provides the
investor a rebate under section 88 (up to a maximum of rs.2000).

27

Mutual funds themselves pay no tax on the incomes they earn. They are fully exempt
from tax.

Capital gains or losses arise when investors buy and sell units. The differences between sales and
purchase price is the gain (sale price> purchase price) or loss (sale price< purchase price).

If an investor holds units for 12 month or less, any gain from selling the units is called as
short term capital gain.

Short term capital gains are taxable at the marginal rate of taxation of the investor.

If an investors holding period is more than 12 months, any gainer loss from sale as long term
capital gain.

Long term capital gain can be indexed from inflation.

Indexing refer to updating of the purchase price, based on the cost of inflation index
published by the cadet.

The formula for indexation is purchase price*index in the year of sale /index in the year of
purchase.
Investor can either pay 10% tax (plus surcharge) on the capital gain tax without indexation or
20% (plus surcharge) on capital gains after indexation, which ever is lower.
Investment management, equity markets and mutual funds

28

 The investment pattern of the fund is primarily dictated by the fund objectives
Investment style refers to the manner in which a fund manager will choose securities in a
given sector
A fund manager whose style is value investing. Will prefer to invest in established profit
making companies, and will buy only if the price is right. He will look for undervalued
shares, which have a value proposition that is yet to be recognized by the market.

A fund manager, whose style is growth, is more aggressive and is willing to invest in
companies with future profit potential. He is willing to buy even if the stock looks
expensive. He focuses on sectors that are expected to do well in future, and will be
willing to buy them even at higher prices.
Equity

stock

can

be

classified

as

large

cap

and

small

cap

stocks.

Equity derivatives refer to product whose prices depend on prices of equity shares.
We have index futures and index options as well as equity stock futures and option in the
Indian markets.
In The Derivative Market, The Settlement Is In Cash, And There Is No Delivery Of
Underlying Stocks.
Risk, Return and Performance
The major sources of return to an investor are dividend and capital gain.
Holding period is the period for which an investor stays invested in a fund
Rate of return is computed as ( income earned / amount invested * 100
This number can be annualized by multiplying the result by the factor 12/n where n is the
number of months in the holding period. If the holding period in days, the above factor will
be 365/n is the number of days in the holding period.

29

 Change in NAV method of calculating return is applicable to growth funds and fund with no
income distribution.
Change in NAV method computed return as follows;

(NAV at the end of the holding period NAV at the beginning of the holding period) / NAV
at the beginning of the period.
Return is then multiplied by 100 and annualized.
Simple total return method includes the dividend paid to the investor.
Simple total return method computes return as follows;
(NAV at the end of the holding period NAV at the beginning of the period.
Return is then multiplied by 100 and annualized.

The total return with investment method or the ROI method is superior to all these methods.
It considers dividend and assumes that dividend is re invested at the exe dividend nav.
( value of holdings at the end of the period value of holdings at the beginning of the
period ) / value of the holdings at the beginning of the period.
Return is then multiplied by 100 and annualized.
The total return with re- investment method or ROI method is superior to all these methods.
It considers dividend and assumes that dividend is re-invested NAV.
Value of holding at the beginning of the period = number of units at the beginning * begin
NAV.

Value of holdings end of the period = (number of units held at the beginning +
number of units re- invested) * end NAV.

Number of units re-invested = dividends / ex-dividend NAV.

If an investment has doubled over a period of time, we can use the rule of 72 to find the
approximate rate of return.

30

 If there is an entry load, the investors return will be lower as amount actually invested is less
by the amount of load.
SEBI regulations on returns are as follows;

Standard measurements to be used for computation of return.

Compounded annual growth rate to be used for fund for 1 year.

Debt market and mutual funds
Debt instrument can be classified as follows;

Instrument issued by the government such as treasury bonds, and treasury bills, and
instrument issued by other agencies like the corporate sector and financial institutions.

Long term instrument like bonds and debentures and short term instrument like commercial
paper, certificates of deposit etc., instrument with less than 1 year s term to maturity are also
called as money market instrument.

Instrument that are secured, as in the case of secured corporate debenture and instrument that
are unsecured such as bonds of financial institution or company fixed deposits.

Instrument that pays a periodic interest ( coupon) and instruments those are issued on
discounted basis, and mature at face value ( zero coupon or deep discount bonds )

1)

Instrument that pay a fixed rate of interest; instrument that pay a floating rate of interest.
Debt markets are wholesale markets in which large institutional investors operate.
Banks are the largest players in debt market.

2)

The wholesale debt market (WDMO segment of the NSE is a nationwide platform for
trading in debt market securities.

3)

About 96% of secondary market trading happens in government securities.

4) CDS are usually issued by bank and have a maturity of 91 days to a year.
5) CPS are unsecured instrument issued by corporate. Their maturity ranges from 3
month to 1 year.

31

6) Corporate debenture is long term instrument issued by corporate. They are usually
secured and listed on stock exchanges.
7) Government securities are issued through an auction, by the RBI, on behalf of the
government of India.
8) Government securities are held in the form of book entries in the securities general
ledger (SGL), maintained by the public debt office (PDO) of the RBI.
9) Treasury bills are short term instrument with maturity of 91 days or 364 days, issued
by the RBI basic characteristics of bonds are as follows;
A. Principal value, per value, or face value is the amount representing the
principal borrowed and the interest is calculated on the sum .on redemption
this amount is payable.

B. Coupon is the interest paid periodically to the investor.

C. Maturity date is the date on which a bond is redeemed. Term to maturity or
tenor is the period remaining for the bond to mature.
D. Put option is the option refer to the investor to redeem the bond before
maturity. Call option is the option to the borrower to redeem before maturity.
If the interest rates go up, investor may exercise the put option. If interest rates
fall, issuers may exercise the call option.
E. The base rate is the benchmark rate in the bond market is the rate at which the
government borrows in the market. All other borrowers pay a rate that is
higher, due to presence of credit risk.
F. Interest rate swap is an interest rate derivative product, used in the debt
markets to hedge interest rate risk.
G. Interest rate is affected by inflation rates, exchanges rate situation, and the
policies of the RBI.
Sponsor, trustees, AMC and other constituents
Mutual fund in India has three tier structure of sponsor-trustee-AMC.

32

 Sponsor is the promoter of the fund.

Sponsor creates the trustee company and appoint the boards of both these
companies with SEBI approval.
A mutual fund is constituted as trust
A trust deed is signed by trustees and registered under the Indian trust act
The mutual fund is formed as trust in India, and supervised by the board of trustees.
The trustees appoint the asset management company (AMC) to actually manage the
investors money
The AMCS capital is contributed by the sponsor. The AMC is the business face of
the mutual fund.

33

About Reliance Mutual Fund

Reliance Mutual Fund (RMF) has been established as a trust under the Indian trusts act, 1882
with Reliance Capital Limited (RCL), as the settler/sponsor and Reliance Capital Trustee Co.
Limited

(RCTCL),

as

the

trustee.

RMF has been registered with the securities & exchange board of India (SEBI) vides
registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual
Fund has been changed to Reliance Mutual Fund effective 11th. March 2004 vide SEBI'S
letter no. Imd/psp/4958/2004 date 11th. March 2004. Reliance mutual fund was formed to
launch various schemes under which units are issued to the public with a view to contribute
to the capital market and to provide investors the opportunities to make investments in
diversified

securities.

The main objectives of the trust are:

To carry on the activity of a mutual fund as may be permitted at law 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;

34

To deploy funds thus raised so as to help the unit holders earn reasonable returns on

their savings and

To take such steps as may be necessary from time to time to realize the effects without any
limitation.
Board of Directors

Amitabh Jhunjhunwala

Amitabh chaturvedi

Kanu Doshi

Manu chadha

Management Team
President
Chief Investment Officer
Head-Equity
Head-Fixed Income

: Vikran Gugnani
: K.Rajgopal
: Madhusudhan Kela
: Amitabh Mohanty

Equity Fund Managers

Ashish N Mehta

Sunil B Singhania

Ashwani Kumar

Shailesh Raj Bhan

Our Corporate Governance Policy

Reliance Capital Asset Management Ltd. has a vision of being a leading player in the
Mutual Fund business and has achieved significant success and visibility in the market.

35

However, an imperative part of growth and visibility is adherence to Good Conduct in the
marketplace. At Reliance Capital Asset Management Ltd., the implementation and
observance of ethical processes and policies has helped us in standing up to the scrutiny
of our domestic and international investors.
Management
The management at Reliance Capital Asset Management Ltd. is committed to good
Corporate Governance, which includes transparency and timely dissemination of
information to its investors and unit holders. The Reliance Capital Asset Management
Limited Board is a professional body, including well-experienced and knowledgeable
Independent Directors. Regular Audit Committee meetings are conducted to review the
operations and performance of the company

Employees
Reliance Capital Asset Management Ltd. has a preset code of conduct for all its officers.
It has a clearly defined prohibition on insider trading policy and regulations. The
management believes in the principles of propriety and utmost care is taken while
handling

public

money,

making

proper

and

adequate

disclosures.

All personnel at Reliance Capital Asset Management Ltd. are made aware of the dos and
donts as part of the Dealing policy laid down by the Securities and Exchange Board of
India (SEBI). They are taken through a well-designed HR program, conducted to impart
work ethics, the Code of Conduct, information security, Internet and e-mail usage and a
host of other issues.

One of the core objectives of Reliance Capital Asset Management Ltd. is to identify
issues

considered

sensitive

by

global

corporate

standards,

and

implement

policies/guidelines in conformity with the best practices as an ongoing process.

36

Reliance Capital Asset Management Ltd. gives top priority to compliance in true letter
and spirit, fully understanding its fiduciary responsibilities.
Debt Schemes
Reliance Monthly Income Plan

(An Open Ended Fund. Monthly Income is not assured & is subject to the availability of
distributable surplus ) 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. Primarily the investment shall be made in debt and money
market securities (i.e. 80%) with a small exposure (i.e. up to 20%) in equity.

Reliance Gilt Securities Fund - Short Term Gilt Plan & Long Term Gilt Plan
Open-ended Government Securities Scheme) 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
Reliance Income Fund
(An Open-ended Income Scheme) 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. Accordingly, investments shall predominantly be made in Debt
& Money Instruments.

37

Reliance Medium Term Fund

(An Open End Income Scheme with no assured returns.) 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
Reliance Short Term Fund
(An Open End Income Scheme) 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.
Reliance Liquid Fund
(Open-ended Liquid Scheme). The primary 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.

Reliance Fixed Term Scheme

(Close-ended Income Scheme) the primary objective of the Scheme is to seek to achieve
regular returns / growth of capital by investing in a portfolio of fixed income securities
normally maturing in line with the time profile of the plan with the objective of limiting
interest rate volatility.

Reliance Floating Rate Fund

(An Open End Income Scheme) the primary objective of the scheme is to generate regular
income through investment in a portfolio comprising substantially of Floating Rate Debt
Securities (including floating rate securities debt and Money Market Instruments and Fixed

38

Rate Debt Instruments swapped for floating rate returns). The scheme shall also invest in
fixed rate debt Securities (including fixed rate securities debt, Money Market Instruments
and Floating Rate Debt Instruments swapped for fixed returns

Reliance NRI Income Fund

(An Open-ended Income scheme) the primary investment objective of the Scheme is to
generate optimal returns consistent with moderate levels of risks. This income may be
complimented by capital appreciation of the portfolio. Accordingly, investments shall
predominantly be made in debt Instruments.

Reliance Fixed Maturity Fund - Series I

(A Close Ended Income Scheme)
The primary investment objective of the Scheme is to seek to achieve regular returns /
growth of capital by investing in a portfolio of fixed income securities normally maturing in
line with the time profile of the Plan with the objective of limiting interest rate volatility.

Reliance Fixed Maturity Fund - Series II

(A closed ended Income Scheme) The primary investment objective of the Scheme is to seek
to achieve growth of capital by investing in a portfolio of fixed income securities normally
maturing in line with the time profile of the respective plans.
Reliance Liquidity Fund

39

(An Open - ended Liquid Scheme) 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.
Debt Option:
The primary investment objective of this plan is to generate optimal returns consistent
with moderate level of risk. This income may be complemented by capital appreciation of the
portfolio. Accordingly investments shall predominantly be made in Debt & Money Market
Instruments.
Equity Option:
The primary investment objective is to seek capital appreciation and or consistent
returns by actively investing in equity / equity related securities.
Hybrid Option:
The primary investment objective is to generate consistent return by investing a major
portion in debt & money market securities and a small portion in equity & equity related
instruments.
Sector Funds are specialty funds that invest in stocks falling into a certain sector of the
economy. Here the portfolio is dispersed or spread across the stocks in that particular sector.
This type of scheme is ideal for investors who have already made up their mind to confine
risk and return to a particular sector.
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.

40

Reliance Diversified Power Sector Fund

Reliance Diversified Power Sector Scheme is an Open-ended Power Sector Scheme. The
primary investment objective of the Scheme is to seek to generate consistent returns by
actively investing in equity / equity related or fixed income securities of Power and other
associated companies
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.
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.
Reliance Equity Fund
(An open-ended diversified Equity Scheme.) The primary investment objective of the scheme
is to seek to generate capital appreciation & provide long-term growth opportunities by
investing in a 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.

Reliance Tax Saver (ELSS) Fund

41

(An Open-ended Equity Linked Savings Scheme.) 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.

Reliance Equity Opportunities Fund

(An Open-Ended Diversified Equity Scheme.) The primary investment objective of the
scheme is to seek to generate capital appreciation & provide long-term growth opportunities
by investing in a portfolio constituted of equity securities & equity related securities and the
secondary objective is to generate consistent returns by investing in debt and money market
securities.

Reliance Vision Fund

(An Open-ended Equity Growth Scheme.) 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.

Reliance growth Fund

(An Open-ended Equity Growth Scheme.) The primary investment objective of the Scheme
is to achieve long term growth of capital by investment in equity and equity related securities
through

research.

Reliance NRI Equity Fund

42

(An open-ended Diversified Equity Scheme.) The Primary investment objective of the
scheme is to generate optimal returns by investing in equity or equity related instruments.

RELIANCE EQUITY FUND

Investment Objective
The primary investment objective of the scheme is to seek to generate capital
appreciation and provide long term growth opportunities by investing in a portfolio
constituted of equity & equity related securities of top 100 companies by market
capitalization & of companies which are available in the derivative segment from time to
time and the secondary objective is to generate consistent returns by investing in debt and
money market securities
Features:
Structure

: open-ended equity diversified scheme

Date of allotment

: 29th December, 1998

Minimum Investment Amount : Rs.5,000

UTI EQUITY FUND

Investment objective

43

UTI (Unit trust of India) UTI Equity fund is open ended equity scheme with on
objective of investing at least 80% of its funds in equity and equity related instrument with
medium to high risk profile and up to 20% in debt and money market instruments with low to
medium risk profile.

Features:
Structure
Launch Date

: Open-ended equity diversified scheme

: 20th April, 1992

Minimum Investment Amount : Rs.5, 000.

FRANKLIN EQUITY FUND

Investment Objective
It is an open ended scheme with on objective of investing long term capital gain.
Features:
Fund Class

: Equity diversified

Fund Type

: Open ended

Launch date

: 9th april,1996

Minimum
Investment Amount

: Rs.5, 000

44

RELIANCE EQUITY FUND

PERFORMANCE COMPARISION WITH UTI EQUITY AND FRANKLIN EQUITY
Compounded Month wise and NAV % of
Annualized Returns
RELIANCE

NAV % NAV % of
of UTI
FRANKLIN

6 Months
1 Year
3 Years
5 Years

263.74
69.58
66.93
33.08

320.15
98.8
69.3
40.7

205.05
28.08
20.06
14.11

45

350
300
250
200
6Months

1Year

3Years

5Years

150
100
50
0
NAV% of Reliance

NAV % of UTI

NAV% of Franklin

INTERPRETATION
1. In last 6 months Net Asset Value of RELIANCE EQUITY is

320.15. It has

greater performance than UTI and FRANKLIN.

2. In last 1 year the fund performance of RELIANCE excellent Net Asset Value is
98.8. It is more than UTI & FRANKLIN.
3. In last 3 years Net Asset Value of RELIANCE is 69.3. It has greater performance
than UTI & FRANKLIN.
4. In last 5 years Net Asset Value of RELIANCE is 40.17.

It has greater

performance than UTI & FRANKLIN.

46

RELIANCE MID-CAP
Features:
MID CAP MF FAMILY : RELIANCE ASSET ANGEMENT
COMPANY LTD.
Fund class

: Equity diversified

Inception date

: 5th Jan, 2000

Scheme assets

: 90.35

UTI MID-CAP
Investment objective
An open-ended equity fund with the objective to provide capital
47

Appreciation by investing primarily in mid cap stocks.

Features:
Mutual Fund Family

: UTI Asset Management Company Pvt. Ltd.

Fund Class

: Equity Diversified

Fund Type

: open Ended

Inception Date

: 9th march, 1999

Scheme Assets

: 8.60

FRANKLIN MID - CAP FUND

Investment Objective
The Investment Objective is to provide income distribution and/or medium to longterm capital gains by investing predominantly in equity or equity related instrument of midcap companies.

Features:
Fund class

: Equity diversified

Fund Type

: Open ended

Launch date

: 25th Feb. 1993

Minimum Investment Amount : Rs.5, 000

RELIANCE MID-CAP FUND

PERFORMACE COMPARISION WITH UTI MID- CAP AND FRANKLIN MID-CAP
Compounded Month wise and NAV % of NAV % of NAV % of
Annualized Returns
RELIANCE
UTI
FRANKLIN

48

6 Months
1 Year
3 Years
5 Years

105.28
94.0
48.46
78.66

136.15
83.80
63.20
69.18

79.66
68.05
58.11
61.02

140
120
100
80
60

6 Months

1 Year

3 Years

5 Years

40
20
0
NAV % of RELIANCE

NAV % of UTI

NAV % of FRANKLIN

INTER PRETATIONS

1. RELIANCE MID CAP performance in last 6 months is good when compared to

FRANKLIN. But UTI has greater Net Asset Value than RELIANCE & FRANKLIN.
2. In last 1 year RELIANCE MID CAP has greater performance than UTI &
FRANKLIN.

49

3. Last 3 years & 5 years also RELIANCE MID CAP has greater Net Asset Value than
UTI MID CAP & FRANKLIN MID CAP.

RELIANCE EQUITY OPPORTUNTIES FUND

Investment objective
The primary investment objective of the scheme is to seek to generate capital
appreciation & provide long term growth opportunities by investing in a portfolio constituted
of equity securities & equity related securities and the secondary objective is to generate
consistent returns by investing in debt and money market securities.
Features:
Structure
Launch date

: Open-ended Equity diversified scheme

: 16Th April 1996

Minimum
Investment Amount

: Rs. 5,000

UTI OPPORTUNTIES FUND

Investment Objective
This scheme seeks to generate capital appreciation and/or income distribution by investing
the funds of the scheme in equity shares and equity-related instruments. The main focus of
this scheme is to capitalize on opportunities arising in the market by responding to the

50

dynamically changing Indian economy by moving its investments amongst different sectors
as prevailing trends change.
Features:
Structure

: Open-ended equity growth scheme

Launch date

: 20th May 2000

Minimum investment
Amount

: Rs 5,000

FRANKLIN OPPORTUNTIES FUND

Investment Objective
The objective of the scheme is to provide medium to long-term capital gains and/or income
distribution along with capital gains tax relief to its unit holders. While at all times
emphasizing the importance of capital appreciation.
Features:
Fund class

: Equity diversified

Fund Type

: Open-ended

Launch date

: 07thJuly, 1999

Minimum
Investment Amount : Rs.5, 000

RELIANCE EQUITY OPPORTUNTIES FUND

PERFORMANCE COMPARISON WITH UTI
OPPORTUNTIES FUND AND FRANKLIN OPPORTUNTIES FUND

Compounded Month wise and NAV % of NAV % NAV % of

Annualized Returns
RELIANCE
of UTI
FRANKLIN

51

6 Months
1 Year
3 Years
5 Years

68.20
55.20
48.05
18.16

72.45
63.25
48.47
29.30

85.38
114.20
129.10
139.48

140
120
100
80
60

6 Months

1 Year

3 Years

5 Years

40
20
0
NAV % of RELIANCE

NAV % of UTI

NAV % of FRANKLIN

INTER PRETATIONS

52

1. RELIANCE opportunities Fund performance in last 6 months Net Asset Value is

68.20. It is less than UTI and FRANKLIN.
2. In last 1 year the fund performance of RELIANCE opportunities is

55.20. It has

lower performance than UTI i.e.63.25 but it has under performance when compared
to FRANKLIN i.e.114.20 opportunities.
3. In last 3 years the fund performance of RELIANCE opportunities is 48.05. It is less
than UTI and FRANKLIN.
4. In last 5 yrs The Fund performance of RELIANCE opportunities is 18.16 it is less
than UTI i.e.29.30 and FRANKLIN opportunities Fund. i.e 139.48.
In this Scheme it we take in to consideration of overall performance FRANKLIN has
played an efficient role compared to RELIANCE & UTI.

RELIANCE TAX SAVER

Investment Objective
The primary objective of the scheme is to generate long term capital appreciation from
a portfolio that is investor predominantly in equity and equity related instruments.
Features:
Structure

: Equity diversified

Fund Type

: open ended

Inception date

: September 22, 1998

Minimum investment Amount : Rs.5,000

UTI TAX SAVING PLAN

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Investment objective
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 benefit of growth.
Features:
Structure

: Equity diversified

Fund type

: Open ended

Launch date

: 15th Nov, 1999

Minimum Investment Amount

: Rs.5, 000

FRANKLIN TAX SAVING FUND

Investment objective
To provide medium to long term capital gains along with income tax relief to its
unit holders. While at all times emphasizing the importance to capital appreciation.

Features:
Structure
Fund type
Launch date

: Equity diversified
: Open ended
: 2ndApril, 1997

Minimum investment amount : Rs 5,000.00

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RELIANCE TAX SAVER FUND

PERFORMANCE WITH UTI TAX SAVING AND FRANKLIN TAX SAVING
Compounded Month
Annualized Returns

wise

and NAV % of NAV % of NAV % of

RELIANCE
UTI
FRANKLIN

6 Months
1 Year
3 Years
5 Years

71.89
11.79
28.05
33.45

66.52
61.33
34.27
28.06

213.28
36.86
24.20
18.81

250
200
150
6 Months

1 Year

3 Years

5 Years

100
50
0
NAV % of RELIANCE

NAV % of UTI

NAV % of FRANKLIN

INTER PRETATIONS
1. RELIANCE TAX SAVER performance in last 6 months Net Asset Value 71.89. It is
greater than UTI. But in this month FRANKLIN has greater Net Asset Value than
RELAINCE and UTI.

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2. In last 1 year RELIANCE tax saver performance is 11.79. is less than UTI and
FRANKLIN. That is 61.33 and 36.86.
3. RELIANCE tax saver performance in last 3 years is good. When compared to
FRANKLIN. But UTI has greater Net Asset Value than RELIANCE and
FRANKLIN.
4. RELIANCE tax saver fund Net Asset Value is 33.45. In last month which is more
than UTI and FRANKLIN (28.06, 18.81).

CONCLUSIONS
With regard to the analysis of different types of RELIANCE mutual funds with UTI &
FRANKLIN.
The following conclusions were come into existence:1. The performance of the RELIANCE. Equity funds with that of

UTI and

FRANKLIN funds was found to be bed among others with the NAVS 320.15,98.8
& 69.3
2. The performance of RELIANCE mid cap fund was not satisfactory with the NAV of
105.28 in last 6 months when compared to the NAV of 136.15 of UTI. The fund
performance was in fluctuation.
3. The investing of funds in equity related funds through opportunities scanning & the
performance of the RELIANCE opportunities was not satisfactory with the NAV of
68.20 when compared to 72.45 of UTI & 85.38 of FRANKLIN.

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4. According to the NAV comparison of tax saving funds of RELIANCE with UTI &
FRANKLIN, the investors were more benefited with the FRANKLIN funds NAV of
213.28. Than the RELIANCE NAV of 71.89.
As the investment is spread over a large number of securities.
The risk of loss due to fall in the value of any of them is utilized.

SUGGESSTIONS
As per the analysis of performance of different types of mutual funds of reliance industry
with that of UTI & Franklin, and the tool of NAV, was resulting in to the following
recommendations or improvements.
1. The generating of capital appreciation and providing of long term growth
opportunities, by investing in equity & related securities was very good in Reliance
with that of others. It is expected to continue the same, even after.
2. The performance of Reliance mid cap fund was not good with the yearly & month
wise comparison. The investing of the funds in Reliance mid-cap funds. Was not
preferred to the investors, as it is performance is degrading & also in fluctuation.
3. The generating of returns by investing in debt & money must securities through
equity opportunities fund need to be improved income of NAV of Reliance with that
of others with the yearly and month, performance indicators.

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4. The investors, who want to enjoy the tax rebate u/s 88 of the Act, can go for others
types of funds then Reliance industry, because of the performance of it was not
satisfactory providing enough tax rebates to its investors with that of others.
At last, the performance of Reliance industry was good in sum amount of funds, but still
there is a need for improvement.

BIBLIOGRAPHY

SECURITY ANALYSIS &

PORTFOLIO MANAGEMENT
SECURITY MANAGEMENT
ANALYSIS OF INVESTMENT

P.G.APTE
PRASANNA CHANDRA
I.M.PANDAY

WEBSITES
www. Reliancemututalfund.com
www. Amfi.com
www. Valueresearchonline.com

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www. Utimutualfund.com
www. Franklintempleton.com
www. Money control.com
www. Google.com

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