Comparative Study of Mutual fund 2017

INDEX

PAGE
SRNO. TOPICS
NO

1. INTRODUCTION OF MUTUAL FUND 2-3

2. HISTORY OF MUTUAL FUND 4-5

3. TYPES OF MUTUAL FUND 6-10

4. STRUCTURE OF MUTUAL FUND 11-13

5. SEBI REGULATION 14

6. MUTUAL FUND COMPANIES IN INDIA 15

7. RELIANCE MUTUAL FUND vs. UTI MUTUAL FUND 16-33

8. ADVANTAGES & DISADVANTAGES OF MUTUAL FUND 34-36

9. MUTUAL FUND FEES AND EXPENSES 37-39

10. RISK FACTORS OF MUTUAL FUND 40-41

11. FUTURE PROSPECT OF MUTUAL FUNDS IN INDIA 42

12. CONCLUSION 43

13. BIBLIOGRAPHY 44

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 Comparative Study of Mutual fund 2017

INTRODUCTION OF MUTUAL FUND

There are a lot of investment avenues available today in the financial market for an
investor with an investable surplus. He can invest in Bank Deposits, Corporate Debentures,
and Bonds where there is low risk but low return. He may invest in Stock of companies
where the risk is high and the returns are also proportionately high. The recent trends in the
Stock Market have shown that an average retail investor always lost with periodic bearish
tends. People began opting for portfolio managers with expertise in stock markets who would
invest on their behalf. Thus we had wealth management services provided by many
institutions. However they proved too costly for a small investor. These investors have found
a good shelter with the mutual funds.

CONCEPT OF MUTUAL FUND:

A mutual fund is a common pool of money into which investors place their contributions that
are to be invested in accordance with a stated objective. The ownership of the fund is thus
joint or “mutual”; the fund belongs to all investors. A single investor‟s ownership of the fund
is in the same proportion as the amount of the contribution made by him or her bears to the
total amount of the fund.

Mutual Funds are trusts, which accept savings from investors and invest the same in
diversified financial instruments in terms of objectives set out in the trusts deed with the view
to reduce the risk and maximize the income and capital appreciation for distribution for the
members. A Mutual Fund is a corporation and the fund manager‟s interest is to
professionally manage the funds provided by the investors and provide a return on them after
deducting reasonable management fees.

The objective sought to be achieved by Mutual Fund is to provide an opportunity for lower
income groups to acquire without much difficulty financial assets. They cater mainly to the
needs of the individual investor whose means are small and to manage investors portfolio in a
manner that provides a regular income, growth, safety, liquidity and diversification
opportunities.

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DEFINITION:

“Mutual funds are collective savings and investment vehicles where savings of small (or
sometimes big) investors are pooled together to invest for their mutual benefit and returns
distributed proportionately”.

“A mutual fund is an investment that pools your money with the money of an unlimited
number of other investors. In return, you and the other investors each own shares of the fund.
The fund's assets are invested according to an investment objective into the fund's portfolio of
investments. Aggressive growth funds seek long-term capital growth by investing primarily
in stocks of fast-growing smaller companies or market segments. Aggressive growth funds
are also called capital appreciation funds”.

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HISTORY OF MUTUAL FUNDS IN INDIA

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

FIRST PHASE – 1964-87:

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by
the Reserve Bank of India and functioned under the Regulatory and administrative control of
the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in
place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988
UTI had Rs.6,700crores 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.47,004crores.

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

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year
in which the first Mutual Fund Regulations came into being, under which all mutual funds,
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.

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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.
1,21,805crores. The Unit Trust of India with Rs.44,541crores 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.29,835crores 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.76,000crores 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.

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TYPES OF MUTUAL FUNDS SCHEMES IN INDIA

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

A). BY STRUCTURE

1. Open - Ended Schemes:

An open-end fund is one that is available for subscription all through the year. These do
not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value
("NAV") related prices. The key feature of open-end schemes is liquidity.

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2. Close - Ended Schemes:

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15
years. The fund is open for subscription only during a specified period. Investors can
invest in the scheme at the time of the initial public issue and thereafter they can buy or
sell the units of the scheme on the stock exchanges where they are listed. In order to
provide an exit route to the investors, some close-ended funds give an option of selling
back the units to the Mutual Fund through periodic repurchase at NAV related prices.
SEBI Regulations stipulate that at least one of the two exit routes is provided to the
investor.

3. Interval Schemes:

Interval Schemes are that scheme, which combines the features of open-ended and
closeended schemes. The units may be traded on the stock exchange or may be open for
sale or redemption during pre-determined intervals at NAV related prices.

B). BY NATURE

1. Equity Fund:

These funds invest a maximum part of their corpus into equities holdings. The structure of
the fund may vary different for different schemes and the fund manager‟s outlook on
different stocks. The Equity Funds are sub-classified depending upon their investment
objective, as follows:

• Diversified Equity Funds

• Mid-Cap Funds

• Sector Specific Funds

• Tax Savings Funds (ELSS)

Equity investments are meant for a longer time horizon, thus Equity funds rank high on the
risk-return matrix.

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2. Debt Funds:

The objective of these Funds is to invest in debt papers. Government authorities, private
companies, banks and financial institutions are some of the major issuers of debt papers.
By investing in debt instruments, these funds ensure low risk and provide stable income to
the investors. Debt funds are further classified as:

• Gilt Funds: Invest their corpus in securities issued by Government, popularly known
as Government of India debt papers. These Funds carry zero Default risk but are
associated with Interest Rate risk. These schemes are safer as they invest in papers
backed by Government.

• Income Funds: Invest a major portion into various debt instruments such as bonds,
corporate debentures and Government securities.

• MIPs: Invests maximum of their total corpus in debt instruments while they take
minimum exposure in equities. It gets benefit of both equity and debt market. These
scheme ranks slightly high on the risk-return matrix when compared with other debt
schemes.
• Short Term Plans (STPs): Meant for investment horizon for three to six months.
These funds primarily invest in short term papers like Certificate of Deposits (CDs)
and Commercial Papers (CPs). Some portion of the corpus is also invested in
corporate debentures.

• Liquid Funds: Also known as Money Market Schemes, These funds provides easy
liquidity and preservation of capital. These schemes invest in short-term instruments
like Treasury Bills, inter-bank call money market, CPs and CDs. These funds are
meant for short-term cash management of corporate houses and are meant for an
investment horizon of 1day to 3 months. These schemes rank low on risk-return
matrix and are considered to be the safest amongst all categories of mutual funds.

3. Balanced Funds:

As the name suggest they, are a mix of both equity and debt funds. They invest in both
equities and fixed income securities, which are in line with pre-defined investment
objective of the scheme. These schemes aim to provide investors with the best of both the
worlds. Equity part provides growth and the debt part provides stability in returns.

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Further the mutual funds can be broadly classified on the basis of investment
parameter viz, Each category of funds is backed by an investment philosophy, which is
pre-defined in the objectives of the fund. The investor can align his own investment needs
with the funds objective and invest accordingly.

C). BY INVESTMENT OBJECTIVE:

1. Growth Schemes:
Growth Schemes are also known as equity schemes. The aim of these schemes is to
provide capital appreciation over medium to long term. These schemes normally invest a
major part of their fund in equities and are willing to bear short-term decline in value for
possible future appreciation.

2. Income Schemes:

Income Schemes are also known as debt schemes. The aim of these schemes is to provide
regular and steady income to investors. These schemes generally invest in fixed income
securities such as bonds and corporate debentures. Capital appreciation in such schemes
may be limited.

3. Balanced Schemes:

Balanced Schemes aim to provide both growth and income by periodically distributing a
part of the income and capital gains they earn. These schemes invest in both shares and
fixed income securities, in the proportion indicated in their offer documents (normally
50:50).

4. Money Market Schemes:

Money Market Schemes aim to provide easy liquidity, preservation of capital and
moderate income. These schemes generally invest in safer, short-term instruments, such
as treasury bills, certificates of deposit, commercial paper and inter-bank call money.

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OTHER SCHEMES

1. Tax Saving Schemes:

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time
to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked
Savings Scheme (ELSS) are eligible for rebate.

2. Index Schemes:

Index schemes attempt to replicate the performance of a particular index such as the BSE
Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks
that constitute the index. The percentage of each stock to the total holding will be
identical to the stocks index weightage. And hence, the returns from such schemes would
be more or less equivalent to those of the Index.

3. Sector Specific Schemes:

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

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STRUCTURE OF A MUTUAL FUND

India has a legal framework within which Mutual Fund have to be constituted. In
India open and close-end funds operate under the same regulatory structure i.e. as unit Trusts.
A Mutual Fund in India is allowed to issue open-end and close-end schemes under a common
legal structure. The structure that is required to be followed by any Mutual Fund in India is
laid down

The Fund Sponsor:

Sponsor is defined under SEBI regulations as any person who, acting alone or in combination
of another corporate body establishes a Mutual Fund. The sponsor of the fund is akin to the
promoter of a company as he gets the fund registered with SEBI. The sponsor forms a trust
and appoints a Board of Trustees. The sponsor also appoints the Asset Management Company
as fund managers. The sponsor either directly or acting through the trustees will also appoint
a custodian to hold funds assets. All these are made in accordance with the regulation and
guidelines of SEBI. As per the SEBI regulations, for the person to qualify as a sponsor, he
must contribute at least 40% of the net worth of the Asset Management Company and
possesses a sound financial track record over 5 years prior to registration.

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Mutual Funds as Trusts:

A Mutual Fund in India is constituted in the form of Public trust Act, 1882. The Fund sponsor
acts as a settlor of the Trust, contributing to its initial capital and appoints a trustee to hold the
assets of the trust for the benefit of the unit-holders, who are the beneficiaries of the trust. The
fund then invites investors to contribute their money in common pool, by scribing to “units”
issued by various schemes established by the Trusts as evidence of their beneficial interest in
the fund.

Trustees:

A Trust is created through a document called the Trust Deed that is executed by the fund
sponsor in favour of the trustees. The Trust- the Mutual Fund – may be managed by a board
of trustees- a body of individuals, or a trust company- a corporate body. Most of the funds in
India are managed by Boards of Trustees. While the boards of trustees are governed by the
Indian Trusts Act, where the trusts are a corporate body, it would also require to comply with
the Companies Act, 1956. The Board or the Trust company as an independent body, acts as a
protector of the of the unit-holders interests. The Trustees do not directly manage the
portfolio of securities. For this specialist function, the appoint an Asset Management
Company. They ensure that the Fund is managed by ht AMC as per the defined objectives
and in accordance with the trusts deeds and SEBI regulations.

The Asset Management Companies:

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

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Custodian and Depositories:

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

Bankers:
A Fund‟s activities involve dealing in money on a continuous basis primarily with respect to
buying and selling units, paying for investment made, receiving the proceeds from sale of the
investments and discharging its obligations towards operating expenses. Thus the Fund‟s
banker plays an important role to determine quality of service that the fund gives in timely
delivery of remittances etc.

Transfer Agents:
Transfer agents are responsible for issuing and redeeming units of the Mutual Fund and
provide other related services such as preparation of transfer documents and updating investor
records. A fund may choose to carry out its activity in-house and charge the scheme for the
service at a competitive market rate. Where an outside Transfer agent is used, the fund
investor will find the agent to be an important interface to deal with, since all of the investor
services that a fund provides are going to be dependent on the transfer agent.

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SEBI REGULATIONS

Securities and Exchange Board of India (SEBI) is the primary regulator of mutual funds
in India. SEBI is also apex regulator of capital markets. Issuance and trading of capital
market instruments and the regulation of capital market intermediaries is under the purview
of SEBI. Apart from SEBI, mutual funds follow the regulations of other regulators in limited
manner.

1. RBI – RBI acts as regulator of sponsors of bank-sponsored mutual funds, especially in

case of funds offering guaranteed/assured returns. No mutual fund is allowed to bring
out a guaranteed returns scheme without taking approval from RBI
2. Companies Act, 1956 – Asset Management Company and Trustee Company will be
subject to the provisions of the Companies Act, 1956.
3. Stock Exchange – Closed-end funds might list their units on a stock exchange. In such a
case, the listings are subject to the listing regulation of stock exchanges. Mutual funds
have to sign the listing agreement and abide by its provisions, which primarily deal with
periodic notifications and disclosure of information that may impact the trading of listed
units.
4. Indian Trusts Act, 1882 – Recall that mutual funds are formed and registered as a
public trusts under the Indian trusts Act, 1882. Hence, they have to follow the provisions
of the Indian Trusts Act, 1882.
5. Ministry of Finance (MoF) – The finance ministry is the supervisor of both the RBI
and SEBI. The MoF is also the appellate authority under SEBI regulations. Aggrieved
parties can make appeals to the MoF on the SEBI rulings relating to mutual funds.

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MUTUAL FUND COMPANIES IN INDIA:

The concept of mutual funds in India dates back to the year 1963. The era between 1963 and
1987 marked the existence of only one mutual fund Company in India with Rs. 67bn Assets
Under Management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI).
By the end of the 80s decade, few other mutual fund companies in India took their position in
mutual fund market.

The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual
Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual
Fund.The succeeding decade showed a new horizon in Indian mutual fund industry. By the
end of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds
started penetrating the fund families. In the same year the first Mutual Fund Regulations
came into existence with re-registering all mutual funds except UTI. The regulations were
further given a revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in India which has now
merged with Franklin Templeton. Just after ten years with private sector players penetration,
the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.

Major mutual funds companies in India

Birla Sun Life Mutual Fund Bank of Baroda Mutual Fund

HDFC Mutual Fund HSBC Mutual Fund

ING Vysya Mutual Fund Prudential ICICI Mutual Fund

State Bank of India Mutual Fund Tata Mutual Fund

Unit Trust of India Mutual Fund Reliance Mutual Fund

Standard Chartered Mutual Fund Franklin Templeton India Mutual Fund

Morgan Stanley Mutual Fund India Escorts Mutual Fund

Alliance Capital Mutual Fund Benchmark Mutual Fund

Canbank Mutual Fund Chola Mutual Fund

LIC Mutual Fund GICMutualFun

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RELIANCE MUTUAL FUND Vs UTI MUTUAL FUND

RELIANCE MUTUAL FUND

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The
sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the
Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was
changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various
schemes under which units are issued to the Public with a view to contribute to the capital
market and to provide investors the opportunities to make investments in diversified
securities.

RMF is one of India‟s leading Mutual Funds, with Average Assets Under Management
(AAUM) of Rs. 88,388 crs (AAUM for 30th Apr 09) and an investor base of over 71.53
Lacs. Reliance Mutual Fund, a part of the Reliance - Anil DhirubhaiAmbani Group, is one of
the fastest growing mutual funds in the country. RMF offers investors a well-rounded
portfolio of products to meet varying investor requirements and has presence in 118 cities
across the country.

Reliance Mutual Fund constantly endeavors to launch innovative products and customer
service initiatives to increase value to investors. "Reliance Mutual Fund schemes are
managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital
Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital
being held by minority shareholders."

Sponsor : Reliance Capital Limited.

Trustee : Reliance Capital Trustee Co. Limited.

Investment Manager : Reliance Capital Asset Management Limited.

The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies
Act 1956.

Vision Statement

“To be a globally respected wealth creator with an emphasis on customer care and a culture
of good corporate governance.”

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Mission Statement

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

The Main Objectives Of The Trust:

• To carry on the activity of a Mutual Fund as may be permitted at law and formulate and
devise various collective Schemes of savings and investments for people in India and
abroad and also ensure liquidity of investments for the Unit holders;
• To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on their
savings and
• To take such steps as may be necessary from time to time to realise the effects without
any limitation.

SCHEMES

A). EQUITY/GROWTH SCHEMES:

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

1. Reliance Infrastructure Fund(Open-Ended Equity):

The primary investment objective of the scheme is to generate long term capital
appreciation by investing predominantly in equity and equity related instruments of
companies engaged in infrastructure (Airports, Construction, Telecommunication,
Transportation) and infrastructure related sectors and which are incorporated or
have their area of primary activity, in India and the secondary objective is to
generate consistent returns by investing in debt and money market securities.

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2. Reliance Quant Plus Fund/Reliance Index Fund (Open-Ended Equity):

The investment objective of the Scheme is to generate capital appreciation through

investment in equity and equity related instruments. The Scheme will seek to
generate capital appreciation by investing in an active portfolio of stocks selected
from S & P CNX Nifty on the basis of a mathematical model.

3. Reliance Natural Resources Fund (Open-Ended Equity):

The primary investment objective of the scheme is to seek to generate capital

appreciation & provide long-term growth opportunities by investing in companies
principally engaged in the discovery, development, production, or distribution of
natural resources and the secondary objective is to generate consistent returns by
investing in debt and money market securities.

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

The primary objective of the scheme is to generate long-term capital appreciation

from a portfolio that is invested predominantly in equities along with income tax
benefit.

The scheme may invest in equity shares in foreign companies and instruments
convertible into equity shares of domestic or foreign companies and in derivatives
as may be permissible under the guidelines issued by SEBI and RBI.

5. Reliance Equity Advantage Fund (Open-Ended Diversified Equity):

The primary investment objective of the scheme is to seek to generate capital

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

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

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

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time to time and the secondary objective is to generate consistent returns by

investing in debt and money market securities.

7. Reliance Tax Saver (ELSS) Fund (Open-Ended Equity):

The primary objective of the scheme is to generate long-term capital appreciation

from a portfolio that is invested predominantly in equity and equity related
instruments.

Tax Benefits:

• Investment uptoRs 1 lakh by the eligible investor in this fund would enable you
to avail the benefits under Section 80C (2) of the Income-tax Act, 1961.
• Dividends received will be absolutely TAX FREE.

• The dividend distribution tax (payable by the AMC) for equity schemes is also
NIL

8. Reliance Growth Fund (Open-Ended Equity):

The primary investment objective of the Scheme is to achieve long term growth of
capital by investment in equity and equity related securities through a research
based investment approach.

9. Reliance Vision Fund (Open-Ended Equity) :

The primary investment objective of the Scheme is to achieve long term growth of
capital by investment in equity and equity related securities through a research
based investment approach.

10. Reliance Equity Opportunities Fund (Open-Ended Diversified Equity):

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.

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11. Reliance NRI Equity Fund (Open-Ended Diversified Equity):

The Primary investment objective of the scheme is to generate optimal returns by

investing in equity or equity related instruments primarily drawn from the
Companies in the BSE 200 Index.

12. Reliance Long Term Equity Fund (Open-Ended Diversified Equity):

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

13. Reliance Regular Savings Fund (Open-Ended Equity):

Reliance Regular Savings Fund provides you the choice of investing in Debt, Equity
or Hybrid options with a pertinent investment objective and pattern for each option.
Invest as little as Rs.100/-every month in the Reliance Regular Savings Fund.

B). DEBT/INCOME SCHEMES:

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

1. 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.

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2. 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.

3. 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 market Instruments.

4. 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

5. 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.

6. 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.

7. Reliance Floating Rate Fund :

(An Open End Liquid 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 securitised debt and Money
Market Instruments and Fixed Rate Debt Instruments swapped for floating rate
returns).

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8. 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.

9. Reliance Liquidity Fund :

(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.

10. Reliance Interval Fund :

(A Debt Oriented Interval Scheme) The primary investment objective of the scheme
is to seek to generate regular returns and growth of capital by investing in a
diversified portfolio.

11. Reliance Liquid Plus Fund:

(An Open-ended Income Scheme) The investment objective of the Scheme is to

generate optimal returns consistent with moderate levels of risk and liquidity by
investing in debt securities and money market securities.

12. Reliance Fixed Horizon Fund:

(A closed ended Scheme) The primary investment objective of the scheme is to seek
to generate regular returns and growth of capital by investing in a diversified
portfolio.

13. Reliance Fixed Tenor Fund :

(A Close-ended Scheme) The primary investment objective of the Plan is to seek to

generate regular returns and growth of capital by investing in a diversified portfolio.

C). SECTOR SPECIFIC SCHEMES:

These are the funds/schemes which invest in the securities of specified sectors or
industries e.g. Pharmaceuticals, Software, FMCG, Petroleum stocks, etc. The returns in

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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.

1. Reliance Banking Fund :

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

2. Reliance Diversified Power Sector Fund :

Reliance Diversified Power Sector Scheme is an Open-ended Power Sector Scheme.

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.

3. Reliance Pharma Fund :

Reliance Pharma Fund is an Open-ended Pharma Sector Scheme. The primary

investment objective of the Scheme is to generate consistent returns by investing in
equity / equity related or fixed income securities of Pharma and other associated
companies.

4. Reliance Media & Entertainment Fund :

Reliance Media & Entertainment Fund is an Open-ended Media & Entertainment

sector scheme. The primary investment objective of the Scheme is to generate
consistent returns by investing in equity / equity related or fixed income securities
of media & entertainment and other associated companies.

D). RELIANCE GOLD EXCHANGE TRADED FUND:

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

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UNIT TRUST OF INDIA MUTUAL FUND

'Unit Trust of India was created by the UTI Act passed by the Parliament in 1963. For more
than two decades it remained the sole vehicle for investment in the capital market by the
Indian citizens. In mid- 1980s public sector banks were allowed to open mutual funds. The
real vibrancy and competition in the MF industry came with the setting up of the Regulator
SEBI and its laying down the MF Regulations in 1993.UTI maintained its pre-eminent place
till 2001, when a massive decline in the market indices and negative investor sentiments after
Ketan Parekh scam created doubts about the capacity of UTI to meet its obligations to the
investors. This was further compounded by two factors; namely, its flagship and largest
scheme US 64 was sold and re-purchased not at intrinsic NAV but at artificial price and its
Assured Return Schemes had promised returns as high as 18% over a period going up to two
decades.
In order to distance Government from running a mutual fund the ownership was transferred
to four institutions; namely SBI, LIC, BOB and PNB, each owning 25%. UTI lost its market
dominance rapidly and by end of 2005,when the new share-holders actually paid the
consideration money to Government its market share had come down to close to 10%.

A new board was constituted and a new management inducted. Systematic study of its
problems role and functions was carried out with the help of a reputed international
consultant. Once again UTI has emerged as a serious player in the industry. Some of the
funds have won famous awards, including the Best Infra Fund globally from Lipper. UTI has
been able to benchmark its employee compensation to the best in the market.

Besides running domestic MF Schemes UTI AMC is also a registered portfolio manager
under the SEBI (Portfolio Managers) Regulations.

This company runs two successful funds with large international investors being active
participants. UTI has also launched a Private Equity Infrastructure Fund along with HSH
Nord Bank of Germany and Shinsei Bank of Japan.

Vision:

To be the most Preferred Mutual Fund.

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Mission:

• The most trusted brand, admired by all stakeholders.

• The largest and most efficient money manager with global presence

• The best in class customer service provider

• The most preferred employer

• The most innovative and best wealth creator

• A socially responsible organisation known for best corporate governance

Assets Under Management:UTI Asset Management Co. Ltd

Sponsor:

• State Bank of India

• Bank of Baroda
• Punjab National Bank
• Life Insurance Corporation of India

Trustee: UTI Trustee Co. Limited.

Reliability

UTIMF has consistently reset and upgraded transparency standards. All the branches, UFCs
and registrar offices are connected on a robust IT network to ensure cost-effective quick and
efficient service. All these have evolved UTIMF to position as a dynamic, responsive,
restructured, efficient and transparent entity, fully compliant with SEBI regulations.

SCHEMES

A). EQUITY FUND

1. UTI Energy Fund (Open Ended Fund):

Investment will be made in stocks of those companies engaged in the following are:

a) Petro sector - oil and gas products & processing

b) All types of Power generation companies.

c) Companies related to storage of energy.

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d) Companies manufacturing energy development equipment related ( like

petro and power )
e) Consultancy & Finance Companies

2. UTI Transportation And Logistics Fund (Auto Sector Fund) (Open Ended
Fund):
Investment Objective is “capital appreciation” through investments in stocks of the
companies engaged in the transportation and logistics sector. At least 90% of the
funds will be invested in equity and equity related instruments. Atleast 80% of the
funds will be invested in equity and equity related instruments of the companies
principally engaged in providing transportation services, companies principally
engaged in the design, manufacture, distribution, or sale of transportation equipment
and companies in the logistics sector. Upto 10% of the funds will be invested in
cash/money market instruments.

3. UTI Banking Sector Fund (Open Ended Fund):

An open-ended equity fund with the objective to provide capital appreciation through
investments in the stocks of the companies/institutions engaged in the banking and
financial services activities.

4. UTI Infrastructure Fund (Open Ended Fund):

An open-ended equity fund with the objective to provide Capital appreciation through
investing in the stocks of the companies engaged in the sectors like Metals, Building
materials, oil and gas, power, chemicals, engineering etc. The fund will invest in the
stocks of the companies which form part of Infrastructure Industries

5. UTI Growth Sector Fund – Pharma (Open Ended Fund):

An open-ended fund which exclusively invests in the equities of the Pharma&

Healthcare sector companies. This fund is one of the growth sector funds aiming to
invest in companies engaged in business of manufacturing and marketing of bulk
drug, formulations and healthcare products and services.

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6. UTI Growth Sector Fund – Services (Open Ended Fund):

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

7. UTI Growth Sector Fund – Software (Open Ended Fund):

An open-ended fund which invests exclusively in the equities of the Software Sector
companies. One of the growth sectors funds aiming to invest in equity shares of
companies belonging to information technology sector to provide returns to investors
through capital growth as well as through regular income distribution

8. UTI Master Equity Plan Unit Scheme (Close Ended Fund):

The scheme primarily aims at securing for the investors capital appreciation by
investing the funds of the scheme in equity shares of companies with good growth
prospects.

9. UTI Master Plus Unit Scheme (Open Ended Fund):

An open-ended equity fund with an objective of long-term capital appreciation

through investments in equities and equity related instruments, convertible
debentures, derivatives in India and also in overseas markets.

10. UTI Master Value Fund (Open Ended Fund):

An open-ended equity fund investing in stocks which are currently undervalued to

their future earning potential and carry medium risk profile to provide 'Capital
Appreciation'.

11. UTI Mastershare Unit Scheme (Open Ended Fund):

An Open-end equity fund aiming to provide benefit of capital appreciation and

income distribution through investment in equity.

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12. UTI Mid Cap Fund (Open Ended Fund):

An open-ended equity fund with the objective to provide 'Capital appreciation' by

investing primarily in mid cap stocks.

13. UTI MNC Fund (Open Ended Fund):

An open-ended equity fund with the objective to invest predominantly in the equity
shares of multinational companies in diverse sectors such as FMCG, Pharmaceutical,
Engineering etc.

14. UTI Dividend Yield Fund (Open Ended Fund):

It aims to provide medium to long term capital gains and/or dividend distribution by
investing predominantly in equity and equity related instruments which offer high
dividend yield.

15. UTI Contra Fund (Open Ended Fund):

An open ended equity scheme with the objective to provide long term capital
appreciation/dividend distribution through investments in listed equities & equity
related instruments.

16. UTI Wealth Builder Fund (Close Ended Fund):

The objective of the scheme is to achieve long term capital appreciation by investing
predominantly in a diversified portfolio of equity and equity related instruments.

17. UTI Long Term Advantage Fund - Series I (Close Ended Fund):

The investment objective of the scheme is to provide medium to long term capital
appreciation along with income tax benefit.

B). INDEX FUND:

1. UTI Master Index Fund (Open Ended Fund):

UTI MIF is an open-ended passive fund with the primary investment objective to
invest in securities of companies comprising the BSE sensex in the same weightage as

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these companies have in BSE sensex. The fund strives to minimise performance
difference with the sensex by keeping the tracking error to the minimum.

2. UTI Gold Exchange Traded Fund (Open Ended Fund):

To endeavour to provide returns that, before expenses, closely track the performance
and yield of Gold. However the performance of the scheme may differ from that of the
underlying asset due to racking error. There can be no assurance or guarantee that the
investment objective of UTI-Gold ETF will be achieved.

3. UTI Sunder (Open Ended Fund):

To provide investment returns that, before expenses, closely correspond to the
performance and yield of the basket of securities underlying the S & P CNX Nifty
Index.

C). ASSETS FUND

UTI Variable Investment Scheme:

UTI VIS-ILP is an open ended scheme with the objective of providing the investors
with a product that would enable them to diversify their risks through a suitable
allocation between debt and equity asset classes and thereby generate superior risk-
adjusted returns through a dynamic asset allocation process.

D). BALANCED FUND:

1. UTI Mahila Unit Scheme (Open Ended Fund):

To invest in a portfolio of equity/equity related securities and debt and money market
instruments with a view to generate reasonable income with moderate capital
appreciation. The asset allocation will be Debt : Minimum 70%, Maximum 100%
Equity : Minimum 0%, Maximum 30%.

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2. UTI Balanced Fund (Open Ended Fund):

An open-ended balanced fund investing between 40% to 75% in equity /equity related
securities and the balance in debt (fixed income securities) with a view to generate
regular income together with capital appreciation.

3. UTI Retirement Benefit Pension Fund (Open Ended Fund):

The objective of the scheme is to provide pension to investors particularly
selfemployed persons after they attain the age of 58 years, in the form of periodical
cash flow upto the extent of repurchase value of their holding through a systematic
withdrawal plan.

4. UTI Unit Link Insurance Plan (Open Ended Fund):

To provide return through growth in the NAV or through dividend distribution and
reinvestment thereof.

5. UTI CCP (Children Career Plan) Advantage Fund (Open Ended Fund):
An open ended balanced fund with 70-100% investment in Equity. Investment can be
made in the name of the children upto the age of 15 years so as to provide them, after
they attain the age of 18 years, a means to receive scholarship to meet the cost of
higher education / or help them in setting up a profession, practice or business or
enabling them to set up a home or finance, the cost of other social obligations.

6. UTI Charitable, Religious Trust And Registered Society (Open Ended Fund):
Open-ended debt oriented Income scheme with an objective of investing not more than
30% of the funds in equity related instruments and the balance in debt and money
market instruments with low to medium risk profile. The scheme is catering to the
Investment needs of Charitable, Religious and Educational Trusts as well as Registered
societies with the goal of providing regular income.

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E).INCOME FUND (DEBT FUND)

1. UTI Bond Fund (Open Ended Fund):

Open-end 100% pure debt fund, which invests in rated corporate debt papers and
government securities with relatively low risk and easy liquidity.

2. UTI Floating Rate Fund STP (Open Ended Fund):

To generate regular income through investment in a portfolio comprising substantially

of floating rate debt / money market instruments and fixed rate debt / money market
instruments.

3. UTI Gilt Advantage Fund LTP(Open Ended Fund):

To generate credit risk-free return through investments in sovereign securities issued

the Central and / or a State Government.

4. UTI Gilt Advantage Fund STP (Open Ended Fund):

To generate credit risk-free return through investment in sovereign securities issued the
Central and / or a State Government.

5. UTI G-SEC STP (Open Ended Fund):

An open-end Gilt-Fund with the objective to invest only in CentralGovernment

securities including call money, treasury bills and repos of varying maturities with a
view to generate credit risk free return with a stated objective of maintaining the
average maturity of the portfolio at less than 3 years.

6. UTI G-Sec-Investment Plan (Open Ended Fund):

An open-end Gilt-Fund with the objective to Invests only in Central government

securities including call money, treasury bills and repos of varying maturities with a
view to generatie credit risk free return. While selecting the maturity profile of the
investment in government securities the need for maximisation of the returns and
meeting of the liquidity requirements of the scheme is kept in view.

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7. UTI Treasury Advantage Fund (Open Ended Fund):

It aims to generate attractive returns consistent with capital preservation and liquidity.

8. UTI Monthly Income Scheme (Open Ended Fund):

This is an open-end debt oriented scheme with no assured returns. The scheme aims at
distributing income, if any, periodically.

9. UTI Mis Advantage Plan (Open Ended Fund):

Endeavours to make periodic income distribution to unitholders through investments in

fixed income securities and equity & equity related instruments.

10. UTI Short Term Income Fund (Open Ended Fund):

The Scheme seeks to generate steady & reasonable income with low risk & high level
of liquidity from a portfolio of money market securities & high quality debt.

11. UTI Capital Protection Oriented Scheme (Open Ended Fund):

The investment objective of the scheme is to endeavour to protect the capital by

investing in high quality fixed income securities as the primary objective and generate
capital appreciation by investing in equity and equity related instruments as secondary
objective.

F).LIQUID FUND (DEBT FUND):

1. UTI Liquid Cash Plan (Open Ended Fund):

The scheme seeks to generate steady & reasonable income with low risk & high level of
liquidity from a portfolio of money market securities & high quality debt.

2. UTI Money Market Fund (Open Ended Fund):

An open-ended pure debt liquid plan seeking to provide highest possible current
income by investing in a diversified portfolio of short-term money market
securities.

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DISTINGUISH:

RELIANCE MUTUAL FUND UTI MUTUAL FUND

When Started? Established in 1995, Established in 1964.

Currently, number one company in India. First mutual fund company in India

How they came into Registered with SEBI as trust under Indian By the UTI Act passed by the
business Trusts Act, 1882 Parliament in 1963.
Minimum investment. Rs. 500 Rs.1000
Investment. Equity Equity
Bank: 8-15% Financial Service: 16-22%
Software: 8-19% Energy: 12-18%
Petroleum Products: 4-8% Pharmaceuticals: Consumer goods: 08-14%
6-10% Invest in 7-15 sectors which
invest in 12-20 sectors which include: include:
Auto , Auto Ancillaries, Finance, IT, Telecom, Automobile,
Industrial Capital Goods, Telecom- Cement Products, Derivatives,
Services, Power, Construction Textile, Metals etc
Project, Hotels, Retailing, Media &
Entertainment, Transportation etc
Main Funds. UTI Dividend yield Fund, UTI Opportunity Reliance Diversified Fund,
Fund, Reliance Equity Opportunity Fund,
Reliance Regular Saving Funds
Type of fund offered Equity Fund, Debt Fund, Sector Specific Equity Fund, Index Fund,
Fund and Gold Exchange Traded Fund. Asset Fund, Balanced Fund,
Debt Fund (Income, Liquid)
Distribution Online and internet based distribution. Tie-up with Post offices branches.
Reliance outlets and branches. UTI outlets and branches.

Is any other venture? Life Insurance UTI Bank

General Insurance Pan card
Broking & Distribution Bank Recruitment
Consumer Finance ULIP
Private Equity
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ADVANTAGES AND DISADVANTAGES OF MUTUAL FUND

ADVANTAGES OF MUTUAL FUNDS:

If mutual funds are emerging as the favorite investment vehicle, it is because of the many
advantages they have over other forms and the avenues of investing, particularly for the
investor who has limited resources available in terms of capital and the ability to carry out
detailed research and market monitoring. The following are the major advantages offered by
mutual funds to all investors:

1. Portfolio Diversification:
Each investor in the fund is a part owner of all the fund‟s assets, thus enabling him to
hold a diversified investment portfolio even with a small amount of investment that
would otherwise require big capital.

2. Professional Management:
Even if an investor has a big amount of capital available to him, he benefits from the
professional management skills brought in by the fund in the management of the
investor‟s portfolio. The investment management skills, along with the needed research
into available investment options, ensure a much better return than what an investor can
manage on his own. Few investors have the skill and resources of their own to succeed in
today‟s fast moving, global and sophisticated markets.

3. Reduction/Diversification Of Risk:
When an investor invests directly, all the risk of potential loss is his own, whether he
places a deposit with a company or a bank, or he buys a share or debenture on his own or
in any other from. While investing in the pool of funds with investors, the potential losses
are also shared with other investors. The risk reduction is one of the most important
benefits of a collective investment vehicle like the mutual fund.

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4. Reduction Of Transaction Costs:

What is true of risk as also true of the transaction costs. The investor bears all the costs of
investing such as brokerage or custody of securities. When going through a fund, he has
the benefit of economies of scale; the funds pay lesser costs because of larger volumes, a
benefit passed on to its investors.

5. Liquidity:
Often, investors hold shares or bonds they cannot directly, easily and quickly sell. When
they invest in the units of a fund, they can generally cash their investments any time, by
selling their units to the fund if open-ended, or selling them in the market if the fund is
close-end.

6. Convenience And Flexibility:

Mutual fund management companies offer many investor services that a direct market
investor cannot get. Investors can easily transfer their holding from one scheme to the
other; get updated market information and so on.

7. Well Regulated:
All Mutual Funds are registered with SEBI and they function within the provisions of
strict regulations designed to protect the interests of investors. The operations of Mutual
Funds are regularly monitored by SEBI.

8. Transparency:
You get regular information on the value of your investment in addition to disclosure on
the specific investments made by your scheme, the proportion invested in each class of
assets and the fund manager's investment strategy and outlook.

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DISADVANTAGES OF MUTUAL FUNDS:

1. No Control Over Costs:

An investor in a mutual fund has no control of the overall costs of investing. The investor
pays investment management fees as long as he remains with the fund, albeit in return
for the professional management and research. Fees are payable even if the value of his
investments is declining. A mutual fund investor also pays fund distribution costs, which
he would not incur in direct investing.

2. No Tailor-Made Portfolio:
Investors who invest on their own can build their own portfolios of shares and bonds and
other securities. Investing through fund means he delegates this decision to the fund
managers. The very-high-net-worth individuals or large corporate investors may find this
to be a constraint in achieving their objectives.

3. Managing A Portfolio Of Funds:

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

4. The Wisdom Of Professional Management:

That's right, this is not an advantage. The average mutual fund manager is no better at
picking stocks than the average nonprofessional, but charges fees.

5. No Control:
Unlike picking your own individual stocks, a mutual fund puts you in the passenger seat
of somebody else's car.

6. Fees:
The fees that are charged will depend on the type of mutual fund purchased. If a fund is
risky and more aggressive, the management fee will tend to be higher.

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MUTUAL FUND FEES AND EXPENSES

Mutual fund fees and expenses are charges that may be incurred by investors who hold
mutual funds. Running a mutual fund involves costs, including shareholder transaction costs,
investment advisory fees, and marketing and distribution expenses. Funds pass along these
costs to investors in a number of ways.

1. TRANSACTION FEES

i) Purchase Fee:

It is a type of fee that some funds charge their shareholders when they buy shares.
Unlike a front-end sales load, a purchase fee is paid to the fund (not to a broker) and
is typically imposed to defray some of the fund's costs associated with the purchase.

ii) Redemption Fee:

It is another type of fee that some funds charge their shareholders when they sell or
redeem shares. Unlike a deferred sales load, a redemption fee is paid to the fund (not
to a broker) and is typically used to defray fund costs associated with a shareholder's
redemption.

iii) Exchange Fee:

Exchange fee that some funds impose on shareholders if they exchange (transfer) to
another fund within the same fund group or family of funds"

2. PERIODIC FEES

i) Management Fee:

Management fees are fees that are paid out of fund assets to the fund's investment
adviser for investment portfolio management, any other management fees payable to
the fund's investment adviser or its affiliates, and administrative fees payable to the
investment adviser that are not included in the "Other Expenses" category. They are
also called maintenance fees.

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ii) Account Fee:

Account fees are fees that some funds separately impose on investors in connection
with the maintenance of their accounts. For example, some funds impose an account
maintenance fee on accounts whose value is less than a certain dollar amount.

3. OTHER OPERATING EXPENSES

Transaction Costs:

These costs are incurred in the trading of the fund's assets. Funds with a high turnover
ratio, or investing in illiquid or exotic markets usually face higher transaction costs.
Unlike the Total Expense Ratio these costs are usually not reported.

4. LOADS

 Definition of a load

Load funds exhibit a "Sales Load" with a percentage charge levied on purchase or
sale of shares. A load is a type of Commission (remuneration). Depending on the type
of load a mutual fund exhibits, charges may be incurred at time of purchase, time of
sale, or a mix of both. The different types of loads are outlined below.

 Front-end load
Also known as Sales Charge, this is a fee paid when shares are purchased. Also
known as a "front-end load," this fee typically goes to the brokers that sell the fund's
shares. Front-end loads reduce the amount of your investment. For example, let's say
you have Rs.10,000 and want to invest it in a mutual fund with a 5% front-end load.
The Rs.500 sales load you must pay comes off the top, and the remaining Rs.9500
will be invested in the fund. According to NASD rules, a front-end load cannot be
higher than 8.5% of your investment.

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 Back-end load
Also known as Deferred Sales Charge, this is a fee paid when shares are sold. Also
known as a "back-end load," this fee typically goes to the brokersthat sell the fund's
shares. The amount of this type of load will depend on how long the investor holds his
or her shares and typically decreases to zero if the investor holds his or her shares
long enough.

 Level load / Low load

It's similar to a back-end load in that no sales charges are paid when buying the fund.
Instead a back-end load may be charged if the shares purchased are sold within a
given time frame. The distinction between level loads and low loads as opposed to
back-end loads, is that this time frame where charges are levied is shorter.

 No-load Fund
As the name implies, this means that the fund does not charge any type of sales load.
But, as outlined above, not every type of shareholder fee is a "sales load." A no-load
fund may charge fees that are not sales loads, such as purchase fees, redemption fees,
exchange fees, and account fees.

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RISK FACTORS OF MUTUAL FUNDS:

1. The Risk-Return Trade-Off:

The most important relationship to understand is the risk-return trade-off. Higher the risk
greater the returns / loss and lower the risk lesser the returns/loss.

Hence it is upto you, the investor to decide how much risk you are willing to take. In
order to do this you must first be aware of the different types of risks involved with your
investment decision.

2. Market Risk:
Sometimes prices and yields of all securities rise and fall. Broad outside influences
affecting the market in general lead to this. This is true, may it be big corporations or
smaller mid-sized companies. This is known as Market Risk. A Systematic Investment
Plan (“SIP”) that works on the concept of Rupee Cost Averaging (“RCA”) might help
mitigate this risk.

3. Credit Risk:
The debt servicing ability (may it be interest payments or repayment of principal) of a
company through its cashflows determines the Credit Risk faced by you. This credit risk
is measured by independent rating agencies like CRISIL who rate companies and their
paper. A „AAA‟ rating is considered the safest whereas a „D‟ rating is considered poor
credit quality. A well-diversified portfolio might help mitigate this risk.

4. Inflation Risk:
The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot of
times people make conservative investment decisions to protect their capital but end up
with a sum of money that can buy less than what the principal could at the time of the
investment. This happens when inflation grows faster than the return on your investment.
A well-diversified portfolio with some investment in equities might help mitigate this
risk.

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5. Interest Rate Risk:

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

6. Political / Government Policy Risk:

Changes in government policy and political decision can change the investment
environment. They can create a favourable environment for investment or vice versa.

7. Liquidity Risk:
Liquidity risk arises when it becomes difficult to sell the securities that one has
purchased. Liquidity Risk can be partly mitigated by diversification, staggering of
maturities as well as internal risk controls that lean towards purchase of liquid securities.

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FUTURE PROSPECT OF MUTUAL FUNDS IN INDIA

Financial experts believe that the future of Mutual Funds in India will be very bright. It has
been estimated that by March-end of 2010, the mutual fund industry of India will reach Rs
40,90,000 crore, taking into account the total assets of the Indian commercial banks. In the
coming 10 years the annual composite growth rate is expected to go up by 13.4%.

• 100% growth in the last 6 years.

• Number of foreign AMC's are in the queue to enter the Indian markets like
Fidelity Investments, US based, with over US$1trillion assets under
management worldwide.
• Our saving rate is over 23%, highest in the world. Only channelizing these
savings in mutual funds sector is required.
• We have approximately 29 mutual funds which is much less than US having
more than 800. There is a big scope for expansion.
• 'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are
concentrating on the 'A' class cities. Soon they will find scope in the growing
cities.
• Mutual fund can penetrate rurals like the Indian insurance industry with simple
and limited products.
• SEBI allowing the MF's to launch commodity mutual funds.

• Emphasis on better corporate governance.

• Trying to curb the late trading practices.

• Introduction of Financial Planners who can provide need based advice.

Looking at the past developments and combining it with the current trends it can be
concluded that the future of Mutual Funds in India has lot of positive things to offer to
its investors.

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CONCLUSION
Mutual Funds now represent perhaps most appropriate investment opportunity for most
investors. As financial markets become more sophisticated and complex, investors need a
financial intermediary who provides the required knowledge and professional expertise on
successful investing. As the investor always try to maximize the returns and minimize the
risk. Mutual fund satisfies these requirements by providing attractive returns with affordable
risks. The fund industry has already overtaken the banking industry, more funds being under
mutual fund management than deposited with banks. With the emergence of tough
competition in this sector mutual funds are launching a variety of schemes which caters to the
requirement of the particular class of investors. Risk takers for getting capital appreciation
should invest in growth, equity schemes. Investors who are in need of regular income should
invest in income plans.

The stock market has been rising for over three years now. This in turn has not only protected
the money invested in funds but has also to helped grow these investments.

This has also instilled greater confidence among fund investors who are investing more into
the market through the MF route than ever before.

Reliance India mutual funds provide major benefits to a common man who wants to make his
life better than previous. India's largest mutual fund, UTI, still controls nearly 80 per cent of
the market. Also, the mutual fund industry as a whole gets less than 2 per cent of household
savings against the 46 per cent that go into bank deposits. Some fund managers say this only
indicates the sector's potential. "If mutual funds succeed in chipping away at bank deposits,
even a triple digit growth is possible over the next few years.

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BIBLIOGRAPHY

WEBSITE:

www.utimf.com

www.reliancemutualfund.com

www.amfindia.com

www.wikipedia.com

www.investopedia.com

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