suresh part b

8/2/2019 Suresh Part b

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PERFORMANCE OF MUTUAL FUND

Amruta Institute Of Engineering &Management Science Page 1


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MUTUAL FUND OVERVIEW

A mutual fund is professionally managed form of collective investment that pools of

money from many investors and invest it in stocks,bonds,short term money market instruments

and other securities

Mutual fund is an investment company that pools money from small investors andinvests in a variety of securities, such as stocks, bonds and money market instruments. Mostopen-end Mutual funds stand ready to buy back (redeem) its shares at their current net assetvalue, which depends on the total market value of the fund's investment portfolio at thetime of redemption. Most open-end Mutual funds continuously offer new shares toinvestors. It is also known as an open-end investment company, to differentiate it from a

closed-end investment company

Mutual funds invest pooled cash of many investors to meet the fund's stated investmentobjective. Mutual funds stand ready to sell and redeem their shares at any time at the fundscurrent net asset value: total fund assets divided by shares outstanding.


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HISTORY OF MUTUAL FUND

The firstmutual fundwas started in the Netherlands in 1774. Then mutual funds spread

across Scotland, the U.K and France before entering the U.S. These early mutual funds arecalled Investment Trusts. The first American mutual fund was New York stock trust, established

in 1889. Then most of the mutual funds were started in Boston in the early 1920s, including the

State Street Fund, Massachusetts Investors Trust (MFS), Fidelity, Pioneer, and the

PutnamFund.

In India, first mutual fund was started by Unit Trust of India in 1964.Reserve bank of

indiapromoted UTI and continued to regulate it until the relationship had broken up in 1978.

UTI launched a ULIP in 1971 and six more schemes between 1981 and 1984. UTI

enjoyedmonopoly until the public sector funds were allowed in to the industry. The second

mutual fund was started by SBI in 1987.
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ADVANTAGES OF MUTUAL FUND

Portfolio Diversification Professional management Reduction / Diversification of Risk Liquidity Flexibility & Convenience Reduction in Transaction cost Safety of regulated environment Choice of schemes Transparency

DISADVANTAGE OF MUTUAL FUND

No control over Cost in the Hands of an Investor No tailor-made Portfolios Managing a Portfolio Funds Difficulty in selecting a Suitable Fund Scheme


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CATEGORIES OF MUTUAL FUNDS

MUTUAL

FUNDS

OPEN ENDED

FUNDS

CLOSE ENDED

FUNDS

BASED ON THEIR

STRUCTURE

EQUITY FUNDS

BALANCEDFUNDS

DEBT FUNDS

BASED ON THEIR

INVESTMENT

FLOATING RATE FU

FMPs

INCOME FUNDS

ARBITRAGE FUNDS

GILT FUNDS

DIVIDENT YIELD FU

EQUITY DIVERSIFIE

SECTOR FUNDS

ELSS

LI UID FUNDS

MIPs

DEBT ORIENTED

EQUITY ORIENTE

THEMATIC FUNDS

INDEX FUNDS


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Mutual funds can be classified as follow :

Based on their structure: Open-ended funds: Investors can buy and sell the units from the fund, at an point

of time.

Close-ended funds: These funds raise money from investors only once.Therefore, after the offer period, fresh investments can not be made into the fund. Ifthe fund is listed on a stocks exchange the units can be traded like stocks (E.g.,Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly orweekly. Redemption of units can be made during specified intervals. Therefore,such funds have relatively low liquidity.

Based on their investment objective:Equity funds: These funds invest in equities and equity related instruments. With

fluctuating share prices, such funds show volatile performance, even losses.However,short term fluctuations in the market, generally smoothens out in the longterm, thereby offering higher returns at relatively lower volatility. At the same time,such funds can yield great capital appreciation as, historically, equities haveoutperformed all asset classes in the long term. Hence, investment in equity fundsshould be considered for a period of at least 3-5 years.

It can be further classified as:i)Index funds- In this case a key stock market index, like BSE Sensex or Nifty is

tracked. Their portfolio mirrors the benchmark index both in terms ofcomposition and individual stock weightages.

ii)Equity diversified funds- 100% of the capital is invested in equities spreadingacross different sectors and stocks.

iii)Dividend yield funds- it is similar to the equity diversified funds except thatthe invest in companies offering high dividend yields.

iv) Thematic funds- Invest 100% of the assets in sectors which are relatedthrough some theme. e.g. -An infrastructure fund invests in power,construction, cements sectors etc.

v) Sector funds-Invest 100% of the capital in a specific sector. e.g. - A bankingsector fund will invest in banking stocks.

vi)ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.


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Balanced fund: Their investment portfolio includes both debt and equity. As a result, onthe risk-return ladder, they fall between equity and debt funds. Balanced funds are the idealmutual funds vehicle for investors who prefer spreading their risk across various instruments.

Following are balanced funds classes:

i)Debt-oriented funds -Investment below 65% in equities.

ii)Equity-oriented funds-Invest at least 65% in equities, remaining in debt.

Debt fund: They invest only in debt instruments, and are a good option for investorsaverse to idea of taking risk associated with equities. Therefore, they invest exclusivelyin fixed-income instruments like bonds, debentures, Government of India securities;and money market instruments such as certificates of deposit (CD), commercial paper(CP) and call money. Put your money into any of these debt funds depending on your

investment horizon and needs.

i)Liquid funds- These funds invest 100% in money market instruments, a largeportion being invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government securities ofand T-bills.

iii)Floating rate funds - Invest in short-term debt papers. Floaters invest in debtinstruments which have variable coupon rate.

iv)Arbitrage fund- They generate income through arbitrage opportunities due tomispricing between cash market and derivatives market. Funds are allocated toequities, derivatives and money markets. Higher proportion (around 75%) is putin money markets, in the absence of arbitrage opportunities.

v) Gilt funds - They invest 100% of their portfolio in long-term governmentsecurities.

vi)Income funds - Typically, such funds invest a major portion of the portfolio inlong-term debt papers.

vii)MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and anexposure of 10%-30% to equities.

viii)FMPs-fixed monthly plans invest in debt papers whose maturity is in line withthat of the fund.


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History of Indian Mutual Fund Industry

The history of Mutual Funds in India can be broadly divided into 4 Phases:

1.First phase (1964-1987)

1.1 The Unit Trust of India (UTI) was established in the year 1963 by passing anact in the Parliament.

1.2. The UTI was setup by the Reserve Bank of India (RBI) and functioned underthe Regulatory and Administrative control of the RBI.

1.3. The First scheme in the history of mutual funds was UNIT SCHEME-64,

which is popularly known as US-64.

1.4. In 1978, UTI was de-linked from RBI. The Industrial Development Bank ofIndia (IDBI) took over the Regulatory and Administrative control.

1.5. At the end of the year 1988, UTI had Rs.6,700/- Crores of Assets UnderManagement.

2. Second phase (1987-1993)

2.1. Entry of Public Sector Funds.

2.2. In the year 1987, public sector Mutual Funds setup by public sector banks.

2.3 Life Insurance Corporation of India (LIC) and General Insurance

2.4 Corporation of India (GIC) are came in to existence.

2.5 State Bank of India Mutual Fund was the first non-UTI Mutual Fund.

2.6 The following are the non-UTI Mutual Funds at initial stages.

2.7 SBI Mutual Fund in June 1987.

2.8 Can Bank Mutual Fund in December 1987.

2.9 LIC Mutual Fund in June 1989.

2.10 Punjab National Bank Mutual Fund in August 1989.


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3. Third phase (1993-2003)

3.1 Entry of Private Sector Funds - a wide choice to Indian Mutual Fund

investors.

3.2 In 1993, the first Mutual Fund Regulations came into existence, under whichall mutual funds except UTI were to be registered and governed.

3.3 The Erstwhile Kothari Pioneer (now merged with Franklin Templeton) wasthe first private sector Mutual Fund Registered in July 1993.

3.4 In 1996, the 1993 Securities Exchange Board of India (SEBI) Mutual Fundsregulations were substituted by a more comprehensive and revised Mutualfund Regulations.

3.5 The number of Mutual Fund houses went on increasing, with many foreignmutual funds setting up funds in India.

3.6 In this time, the Mutual Fund industry has witnessed several Mergers&Acquisitions.

3.7 The UTI with Rs.44, 541/- Crores. Of Assets Under management was wayahead of all other Mutual Funds.

The following was the status at end of February 2003:


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The diagram below shows three segments and some players in each segment.

4.Fourth phase (since 2003 February)

4.1 Following the repeal of the UTI Act in February 2003, it was (UTI)bifurcated into 2 separate entities.

4.2 One is the specified undertaking of the UTI with asset under management ofRs.29, 835/- Crores as at the end of January 2003.

4.3 The second is the UTI Mutual Funds Limited, sponsored by State Bank ofIndia, Punjab National Bank, Bank of Baroda and Life Insurance Corporationof India.

4.4 UTI is functioning under an Administrator andunder the Rules framed by thegovernment of India and does not comeunder the purview of the mutual FundRegulations.

4.5 The UTI Mutual Funds Limited is registered with SEBI and functions under theMutual Funds Regulations.


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4.6 With the bifurcation of the Erstwhile UTI, with the setting up of a UTIMutual Fund, confirming to the SEBI Mutual Fund Regulations and withrecent mergers taking place among different private sector funds, the Mutual FundIndustry has entered its current phases of consolidation and growth.

4.7 At the end of September 2004, there were 29 funds,which manage assets of Rs.1, 53,108/- Crores under 421 different schemes.

4.8 At the end of March 2006, the status of Mutualfund Industry was:

INVESTMENT STRATEGIES

1. Systematic Investment Plan: Under this, a fixed sum is invested each month on a fixeddate of a month. Payment ismade through post-dated cheques or direct debit facilities.Theinvestor gets fewer units when the NAV is high and more units when the NAV is lowThis is called as the benefit of Rupee Cost Averaging (RCA)

2. Systematic Transfer Plan: Under this, an investor invest in debt-oriented fund and giveinstructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the samemutual fund.

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund thenhe can withdraw a fixed amount each month..


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ORGANISATION OF MUTUAL FUND

THE STRUCTURE CONSISTS OF:

SPONSOR

Sponsor is the person who acting alone or in combination with another body corporateestablishes a mutual fund. Sponsor must contribute at least 40% of the net worth of theinvestment managed and meet the eligibility criteria prescribed under the Securities andExchange Board of India (Mutual Fund) Regulations, 1996. The sponsor is not responsible orliable for any loss or shortfall resulting from the operation of the Schemes beyond the initialcontribution made by it towards setting up of the Mutual Fund.

TRUST

SEBI

DISTRIBUTERMKT. / SALES

SPONSOR

TRUSTEE

AMCOPERATION MKT./ SALES

FUND MANAGER

MUTUAL FUND

SCHEMES

INVESTOR


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The Mutual Fund is constituted as a trust in accordance with the provisions of theIndianTrusts Act, 1882 by the Sponsor. The trust deed is registered under theIndian Registration Act,1908.

TRUSTEE

Trustee is usually a company (corporate body) or a Board of Trustees (body ofindividuals). The main responsibility of the Trustee is to safeguard the interest of the unitholders and ensure that the AMC functions in the interest of investors and in accordance with theSecurities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of theTrust Deed and the Offer Documents of the respective Schemes. At least 2/3rd directors of theTrustee are independent directors who are not associated with the Sponsor in any manner.

ASSET MANAGEMENT COMPANY (AMC)

The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund.The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) toact as an asset management company of the Mutual Fund. At least 50% of the directors of theAMC are independent directors who are not associated with the Sponsor in any manner. TheAMC must have a net worth of at least 10 cores at all times.

REGISTRAR AND TRANSFER AGENT

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agentto the Mutual Fund. The Registrar processes the application form, redemption requests anddispatches account statements to the unit holders. The Registrar and Transfer agent also handlescommunications with investors and updates investor records.


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DIFFERENT TYPES OF MUTUAL FUND

Reliance Mutual Fund HDFC Mutual Fund ICICI Prudential Mutual Fund UTI Mutual Fund Birla Sun Life Mutual Fund SBI Mutual Fund LIC Mutual Fund Kotak Mahindra Mutual Fund Franklin Templeton Mutual Fund IDFC Mutual Fund Tata Mutual Fund


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GROWTH UNDER ASSETS MANAGEMENT


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DISTRIBUTION CHANNELS:

Mutual funds posses a very strong distribution channel so that the ultimate customersdoesnt face any difficulty in the final procurement. The various parties involved in distribution

of mutual funds are:

1. Direct marketing by the AMCs:the forms could be obtained from the AMCs directly.The investors can approach to the AMCs for the forms. some of the top AMCs of Indiaare; Reliance ,Birla Sunlife, Tata, SBI magnum, Kotak Mahindra, HDFC,Sundaram,ICICI, Mirae Assets, Canara Robeco, Lotus India, LIC, UTI etc. whereasforeign AMCs include: Standard Chartered, Franklin Templeton, Fidelity, JP Morgan,HSBC, DSP Merill Lynch, etc.

2. Broker/ sub broker arrangements: the AMCs can simultaneously go for broker/sub-broker to popularize their funds. AMCs can enjoy the advantage of large network ofthese brokers and sub brokers.

3. Individual agents, Banks, NBFC: investors can procure the funds through individualagents, independent brokers, banks and several non- banking financial corporations too,whichever he finds convenient for him.


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Types of Mutual Funds Scheme in India

Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial position, risktolerance and return expectations etc. The table below gives an overview into theexisting types of schemes in the Industry.

By Structure

Open - Ended Schemes

Close - Ended Schemes Interval Schemes

By Investment Objective Growth Schemes Income Schemes Balanced Schemes Money Market Schemes

Other Schemes Tax Saving Schemes Special Schemes Index Schemes Sector Specific


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RELIANCE MUTUAL FUND

Reliance mutual fund, promoted by the Anil Dhirubhai Ambani (ADAG) group, is one of

the fastest growing mutual funds in India having doubled its assets over the last one year. In

March, 2006, the Reliance mutual fund emerged as the largest private sector fund house in the

country, overtaking Prudential ICICI which has been holding that position for many years.

The sponsor of the fund is Reliance Capital Limited, the financial services arm of ADAG.

Reliance Capital Asset Management Limited, a wholly owned subsidiary of Reliance Capital

Limited, acts as the AMC to the fund. Directors of the company include Amitabh Jhunjhunwala,

a senior executive of ADAG. Amitabh Chaturvedi is the managing director of the AMC.

As of end August 2006, Reliance mutual fund has Rs 28,753 crore of assets under management.

Reliance Equity Fund, launched by Reliance MF in early 2006, is the largest mutual find scheme

in the country with a fund size of over Rs 5,500 crore.


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About Reliance Capital Asset Management Ltd.

Reliance Capital Asset Management Limited ( RCAM), a company registered under theCompanies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual fund. .Reliance Capital Asset Management Limited (RCAM) was approved as the Asset ManagementCompany for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95

"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."

COMPITITORS OF RELIANCE MUTUAL FUND

ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee(India) Pvt. Ltd. As the Trustee Company. The AMC, ABN AMRO Asset Management(India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian ofABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun LifeFinancial. Sun Life Financial is a global organization evolved in 1871 and is being represented inCanada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun LifeMutual Fund follows a conservative long-term approach to investment. Recently it crossed AUMof Rs. 10,000 crores

Bank of Baroda Mutual Fund (BOB Mutual Fund)

Bank of Baroda Mutual Fund or BOB Mutual Fund was setupon October 30, 1992 under

the sponsorship of Bank ofBaroda. BOB Asset Management Company Limited is theAMC of

BOB Mutual Fund and was incorporated onNovember 5, 1992. Deutsche Bank AG is the

custodian


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HDFC Mutual Fund

HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers namely HousingDevelopment Finance Corporation Limited and Standard Life Investments Limited. HSBCMutual Fund HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities andCapital Markets (India) Private Limited as the sponsor. Board of Trustees, HSBCMutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund

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

Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management(India) Pvt. Ltd. Was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largestlife insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th ofOctober,1993 with two sponsorers, Prudential Plc. and ICICI Ltd. The Trustee Company formedis Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management CompanyLimited Incorporated on 22nd of June, 1993.

Sahara Mutual Fund

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd.As the sponsor. Sahara Asset Management Company Private Limited incorporated on August 31,1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC stands at Rs25.8 crore.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshor fund,the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest Banksponsored Mutual Fund in India. They have already launched 35 Schemes out of which 15 havealready yielded handsome returns to investors. State Bank of India Mutual Fund has more thanRs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.


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Tata Mutual Fund

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

Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. Theinvestment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt.Limited. Tata Asset Management Limited's is one of the fastest in the countrywith more than Rs. 7,703 crores (as on April 30, 2005) of AUM.

Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It ispresently having more than 1, 99,818 investors in its various schemes. KMAMC started itsoperations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investorswith varying riskreturn profiles. It was the first company to launch dedicated gilt schemeinvesting only in government securities.

Unit Trust of India Mutual Fund

UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTIMutual Fund with the support of UTI Trustee Company Private Limited. UTI AssetManagement.

Standard Chartered Mutual Fund

Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by StandardChartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. StandardChartered Asset Management Company Pvt. Ltd. is the AMCwhich was incorporated with SEBI on December 20,1999.

Franklin Templeton India Mutual Fund

The group, Franklin Templeton Investments is a California (USA) based company with a globalAUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financialservices groups in the world. Investors can buy or sell the Mutual Fund through their financialadvisor or through mail or through their website. They have Open end Diversified Equityschemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Savingschemes, Open end Income and Liquid schemes, Closed end Income schemes and Open endFund of Funds schemes to offer.


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Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and its leading in the market insecurities, investment management and credit services. Morgan Stanley InvestmentManagement (MISM) was established in the year 1975. It provides customized assetmanagement services and products to governments, corporations, pension funds and non-profitorganizations. Its services are also extended to high net worth individuals and retail investors. InIndia it is known as Morgan Stanley Investment Management Private Limited (MSIM India) andits AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end diversified equityscheme serving the needs of Indian retail investors focusing on a long-term capital appreciation.

Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Escorts Finance Limited as its sponsor.The Trustee Company is Escorts Investment Trust Limited. Its AMC wasincorporated on December 1, 1995 with the name Escorts Asset Management Limited.

Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance CapitalManagement Corp. of Delaware (USA) as sponsored. The Trustee is ACAM Trust Company

,Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd. with the corporateoffice in Mumbai. Benchmark Mutual Fund Benchmark Mutual Fund was setup on June 12,2001 with Niche Financial Services Pvt. Ltd. as the sponsored and Benchmark Trustee CompanyPvt. Ltd. as the Trustee Company. Incorporated on October 16, 2000 and headquartered inMumbai, Benchmark Asset ManagementCompany Pvt. Ltd. is the AMC.

Canbank Mutual Fund

Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor.Canbank Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC. TheCorporate Office of the AMC is in Mumbai.


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Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance CompanyLtd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and

AMC is Cholamandalam AMC Limited.

LIC Mutual Fund

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributedRs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust inaccordance with the provisions of the Indian TrustAct, 1882. . The Company started its business on 29th April 1994. The Trustees of LIC MutualFund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the InvestmentManagers for LIC Mutual Fund.

GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government ofIndia undertaking and the four Public Sector General InsuranceCompanies , viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA),The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co.Ltd. (UII) and is constituted as a Trust in accordance with the provisions of the Indian TrustsAct, 1882. Future of Mutual Funds in India By December 2004, Indian mutualfund industry reached Rs 1, 50,537 crore. It is estimated that

VISION STATEMENT

To be a globally respected wealth creator with an emphasis on customer care and a culture ofgood corporate governance

MISSION STATEMENT

To create and nurture a world-class, high performance environment aimed at delighting ourcustomers.


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Types of Reliance Mutual Funds

Reliance Growth Fund

Reliance Vision Fund

Reliance Banking Fund Reliance Di versified Power Sector Fund Reliance Pharma Fund Reliance Media & Entertainment Fund Reliance NRI Equity Fund Reliance Equity opportunities Fund Reliance Index Fund Reliance Tax Saver (ELSS) Fund Reliance Equity Fund Reliance Long Term Equity Fund Reliance Regular Saving Fund

There are two types of investment in Mutual Funds.

Lump Sum Systematic Investment Plan(SIP)

Lump Sum : In Lump sum the investment is only one timesthat is of Rs. 5,000. and if theinvestment is monthly then theinvestment will be 6,000/-.

Systematic Investment Plan(SIP): We have already mentioned about SIPs in brief in theprevious pages butnow going into details, we will see how the power of compounding couldbenefit us. In such case, every small amounts invested regularly can grow substantially.


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RELIANCE MUTUAL FUND SCHEMES

Equity/Growth SchemesThe 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 havecomparatively high risks. These schemes provide different options to the investors like dividendoption, capital appreciation, etc. and the investors may choose an option depending on theirpreferences. The investors must indicate the option in the application form. The mutual fundsalso allow the investors to change the options at a later date. Growth schemes are good forinvestors having a long-term outlook seeking appreciation over a period of time.

Debt/Income SchemesThe aim of income funds is to provide regular and steady income to investors. Such

schemesgenerally invest in fixed income securities such as bonds, corporate debentures,Government securities and money market instruments. Such funds are less risky compared toequity schemes. These funds are not affected because of fluctuations in equity markets.However, opportunities of capital appreciation are also limited in such funds. The NAVsof such funds are affected because of change in interest rates in the country. If the interest ratesfall, NAVs of such funds are likely to increase in the short run and vice versa.However, long term investors may not bother about these fluctuations

Sector Specific SchemesThese are the funds/schemes which invest in the securities of only those sectors or industries asspecified 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 performanceof the respective sectors/industries. While these funds may give higher returns, they are morerisky compared to diversified funds. Investors need to keep a watch on the performance of thosesectors/industries and must exit at an appropriate time. They may also seek advice of an expert.


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AWARDS OF THE COMPANY-

1. Reliance Capital Asset Management Ltd. won the AsiaAsset Management Award 2007

2. Reliance Capital Asset Management Ltd. won the Social &Corporate Governance Award 2007

3. Reliance Mutual Fund has been awarded the "NDTVBusiness Leadership Award 2007" in the Mutual Fundcategory.

4. CNBC TV18 - CRISIL Mutual Fund of the Year Award for2007

Achievements

In two successive joint surveys by The Economic Times Brand Equity and AC Nielsen,Reliance was recognized as Indias Most Trusted Mutual Fund. The company also walkedaway with seven other scheme prizesfive of them being outright winnersin the Gulf 2007Lipper Awards. These included the Fund House of the Year by Lipper GCC as well

as ICRA Online and the Most Improved Fund House by Asia Asset Management. It alsoreceived the NDTV Business Leadership Award 2007 in the mutual fund category andrunners up recognition as the Best Fund House in the Outlook Money-NDTV Profit Awards. Inaddition, the company received the coveted CNBC Web18 Genius of the Web distinction for theBest Mutual Fund Website in the country. RCAM was awarded the India Onshore Fund House2008 instituted by the Asian Investor magazine. The company also won the India Equities awardin the 5- yearPerformance category.


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