PROJECT REPORT

ON

INVESTMENT PATTERN IN DEBT SCHEME OF

MUTUAL FUND
A report submitted in partial fulfillment of the requirement for the degree
of

Master of Business Administration

(2016 2017)

To

Punjabi University, Patiala

Submitted To:- Submitted

By:-

Dr. Rubinder Kaur Sidhu

Sandeep Kaur
(HOD of Management Department) MBA 4th
sem
Roll No. 1455

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 MALWA COLLEGE, BATHINDA
(Affiliated to Punjabi University, Patiala)
Approved By AICTE, New Delhi

DECLARATION

I declare that the project report submitted to my college Malwa

College, Bathinda. In partial fulfillment for the degree of Master
of Business Administration on Investment Pattern in Debt
Scheme of Mutual Fund.

This is a result of my own work under continuous guidance and kind

co-operation of our college faculty member I have not submitted this
report to any other university for the award of degree.

(Sandeep Kaur)

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 ACKNOWLEDGEMENT

Before we get into thick of things, I would like to add a few words of appreciation for
the people who have been a part of this project right from its inception. The writing of this
project has been one of the significant academic challenges I have faced and without the
support, patience, and guidance of the people involved, this task would not have been
completed. It is to them I owe my deepest gratitude.
It gives me immense pleasure in presenting this project report on Investment
Pattern in Debt Scheme of Mutual Fund. It has been my privilege to
have a team of project guide who have assisted me from the commencement of this project.
The success of this project is a result of sheer hard work, and determination put in by me with
the help of my project guide. I hereby take this opportunity to add a special note of thanks for

Dr. Rubinder Kaur Sidhu, who undertook to act as my mentor despite her many other
academic and professional commitments. Her wisdom, knowledge, and commitment to the
highest standards inspired and motivated me. Without her insight, support, and energy, this
project wouldn't have kick-started and neither would have reached fruitfulness.
I also feel heartiest sense of obligation to my library staff members & seniors, who
helped me in collection of data & resource material & also in its processing as well as in
drafting manuscript. The project is dedicated to all those people, who helped me while doing
this project.

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 CONTENTS

Sr.
Content Page No.
No.
1. Introduction 5
2. Structure & Functionaries of Mutual Fund 9
3. Objectives & Scope 16
4. Advantages & Disadvantages 18
5. Classifications & Plans of Mutual Funds 22
6. Research Methodology 31
7. Data Analysis & Interpretation 32
8. Mutual Fund Fees & Expenses 44
9. Risk Factors of Mutual Funds 47
10. Mutual Fund Companies in India 49
11. Reliance Mutual Fund 52
12. UTI Mutual Fund 58
13. Conclusion 64
14. Bibliography 65

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INTRODUCTION

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MUTUAL FUNDS AND ITS ASPECTS
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.

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 investors 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.

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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 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 managers 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.

A mutual fund, as defined in the regulations is a fund established in the

form of a trust to raise money through the sale of units to the public or a selection of
the public under one or more schemes for investing in securities, including money
market instruments .The income earned through these investments and the capital
appreciation realized are shared by its unit holders in proportion to the number of units
owned by them.

Thus it is clear that a mutual fund is a collection of investments. It is a pool of money,

the combined contributions of a number of individuals. The working of the mutual
fund has been shown with the help of the following diagram.

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 Investors have their individual preferences on how they would like their
money invested and how much risk they are willing to take. An individual investor
could choose to hire a professional manager to manage her/his money as per
investment and risk preference. Such personal treatment often referred to as Portfolio
Management Scheme (PMS) in India, entails significant demands on the time of the
managers.PMS is therefore economically feasible only for investment portfolios above
a particular value.

It is possible to balance the time and cost required to manage

investments by grouping investors together based on their preferences. In this manner,
the focus of the investment activity can be shifted from a single investor (as in the
case of PMS) to group of investors having similar expectations .This is what mutual
funds do, thus a mutual fund is a vehicle to pool money from the investors, with a
promise that the money would be invested in a particular manner by professional
managers who are expected to honor the promise.

Why Select Mutual Fund?

The risk return trade-off indicates that if investor is willing to take higher risk then
correspondingly he can expect higher returns and vise versa if he pertains to lower risk
instruments, which would be satisfied by lower returns. For example, if an investors opt for
bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest
in capital protected funds and the profit-bonds that give out more return which is slightly
higher as compared to the bank deposits but the risk involved also increases in the same
proportion.

Thus investors choose mutual funds as their primary means of investing, as Mutual
funds provide professional management, diversification, convenience and liquidity. That
doesnt mean mutual fund investments risk free.

This is because the money that is pooled in are not invested only in debts funds which
are less riskier but are also invested in the stock markets which involves a higher risk but can
expect higher returns. Hedge fund involves a very high risk since it is mostly traded in the
derivatives market which is considered very volatile.

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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 under SEBI (Mutual Fund) Regulations, 1996.

LEGAL STRUCTURE AND REGULATORY BODY

Mutual Funds in India have a 3 tier structure of Sponsor ,Trustee AMC and is
governed by SEBI (Mutual funds) regulations 1996 and it is mandatory for mutual
funds to have three tier structure is as follows.

SPONSOR

TRUSTEE

ASSEST MANAGEMENT COMPANY(AMC)

SEBI approved Asset Management Company (AMC) manages the funds by

making the investments in various types of securities. Custodian, registered with
SEBI, holds the securities of various schemes of the fund in its custody. The general
power of superintendence and direction over AMC is vested with the trustees.

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SPONSOR
Any project need to have a promoter, who initiates, establishes and promote the
project and work towards achieving the goals. In case of the mutual fund, promoter is
known as sponsor. They have to meet and satisfy SEBI requirements. Sponsor
appoints the trustee, custodian and the AMC with the prior approval of SEBI, and in
accordance with SEBI regulations.

Sponsor must have sound track record and a good reputation at businesses in
financial services for a period of minimum of five years and should have made profit
in at least 3 out of 5 years. Sponsor has to contribute at least 40% net worth of the
AMC.

TRUSTEE
Trustees are people within a mutual fund organization who are responsible for
ensuring that investors interests in a scheme are properly taken care of. In return for
their services they are paid trustee fees, which are normally charged to scheme. The
appointment of all trustees has to be done with prior approval of SEBI.

REGULATORY REQUIRMENT OF TRUSTEE

The mutual fund which is a trust is managed either by a Trust Company or a
Board of Trustee and trust companies are governed by the provisions of the Indian
Trust Acts. If the trust is a company, it is also subjected to provisions of the Indian
Companies Act. It is the responsibility of the trustees to promote the interest of
investors, whose fund is managed by AMC.

The sponsor executes and registers a trust deed in favor of the trustees. The
appointments of all trustees are to be done with prior approval of SEBI. There must be
at least 4 members in the Board of Trustees and at least 2/3 of the trustees need to be
independent.

Trustee of one mutual fund cannot be a trustee of another mutual fund unless he
is an independent trustee in both the cases, and has the approvals of both the boards.

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RIGHTS OF TRUSTEES

The trustee has the right to obtain from the AMC, such information as they
consider necessary to fulfill their obligations.

A majority of trustees have the right to terminate the appointment of an

AMC. Any change in the appointment of the AMC is however, subject to
prior approval of SEBI and the unit holders.

The trustees shall not be held liable for acts done in good faith if they have
exercised adequate due diligence honestly.

OBLIGATION OF THE TRUSTEES

Trustees must ensure that the transactions of the mutual fund are in
accordance with the trust deed.

Trustees must ensure that the AMC has systems and procedures in place,
and that all the fund constituents are appointed.

Trustees must furnish to SEBI, on half-yearly basis, a report on the

activities of the AMC.

Trustees must ensure that the activities of the mutual fund are in compliance
with SEBI regulations.

TRUST DEED
It has to contain certain clauses prescribed by SEBI and duly registered under
the provisions of the Indian Registration Act, 1908 and has to be executed by the
sponsor in favor of the trustees named in the deed. It cannot contain any clause which
limits or extinguishes the obligations and liabilities of the trust with respect to the
mutual fund or its investors

ASSEST MANAGEMENT COMPANY (AMC)

It is obligatory for every mutual fund to have an AMC to manage the mutual
fund and operate its schemes. The actual appointment could be made either by the
sponsor or, if so authorized by the trust deed, the trustees.

The AMC is usually a private limited company, in which the sponsors and their
associated or joint venture partners are shareholders.

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REGULATORY REQUITREMENTS OF AMC

Only SEBI registered AMC s can be appointed as investments managers of

mutual funds

AMC must have a minimum net worth of Rs.10 crores at all times.

An AMC cannot be an AMC or trustee of another mutual fund.

AMCs cannot indulge in any other business other than that of asset
management.

At least 50% of the members of an AMC have to be independent.

OBLIGATIONS OF AMC
The investments made by the AMC have to be in accordance with the
investment management agreement and SEBI regulations. The AMC shall be
responsible for acts of commission or omission of its employees and its other service
providers.

It shall issue or publish offer document of a scheme, key information

memorandum, abridged half yearly results and annual results only after prior written
approval of the trustees. The AMC has to maintain proper books of accounts, records
and documents for each scheme. It shall maintain and preserve these for a period of
eight years.

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OTHER FUNCTIONARIES OF MUTUAL FUNDS
Apart from Sponsor, trustee and AMC, other important functionaries include:

1. Registrars and Transfer Agents

2. Broker

3. Custodians

4. Depository Participants (DP)

5. Distributors

6. Legal Advisor and Auditor

REGISTRARS & TRANSFER AGENTS

The R&T agents are responsible for the investor servicing functions as they
maintain the record of investors in mutual funds. They process investor applications
,record details provided by the investor on application forms, send out to investors
details regarding their investments in the mutual funds, periodical information on the
performance of the mutual fund, process dividend payout investors, incorporate
changes in information as communicated by investors and removing new investors
and removing investors who have withdrawn their fund.

BROKERS
Brokers support the investment management function of the mutual fund, by
enabling the investment managers to buy and sell securities. Brokers are registered
members of the stock exchanges. They charge a commission for their services. In
many cases, brokers also provide investment managers with research reports on the
performance of various companies and industrial sectors, and investment
recommendations .Brokers also are an important source of market information to fund
managers.

CUSTODIANS
Custodians are responsible for the securities held in the mutual funds portfolio.
They discharge important back office function by ensuring that securities that are
bought are delivered and transferred to the books of the mutual funds. They keep the
investment account of the mutual fund and also collect the dividends and interest
payments due on the mutual fund investments.

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 Custodians also track corporate actions like bonuses issues, right offers, offer
for sale, buy back and open offers for acquisition .On the advice of the fund managers
they act on these corporate actions.

DEPOSITORY PARTICIPANT (DP)

DP holds the securities of mutual funds in dematerialized form. They work
with the custodians and handle the operational aspects of actually making/receiving
delivery of securities into the account of mutual fund. On instructions from the
custodian, they deliver /receive securities from the company /stock exchanges in
dematerialized form. They also communicate the custodians instructions on corporate
actions to the company.

DISTRIBUTORS
Mutual funds products are reached to investors across the country through
selling agents called distributors. They bring in the investors fund for a commission.
Distributors are institutions that appoint agents and other mechanisms to mobilize
funds from investors.

Most agents and distributors are paid commission on the funds they mobilize
from investors .These commissions are split into initial commission which is paid on
mobilization of funds, and transaction commission, which is paid depending on the
length of stay of the investor in the mutual fund. Some agents also pass on the
commission they receive, to the investors as incentive.

LEGAL ADVISORS AND AUDITORS

Legal advisors advise mutual funds on regulatory and taxation issues. Every
mutual fund has an employee designated as compliance officer, who works under the
advice of the legal advisors.

Each mutual fund scheme created by an AMC has to maintain a separate book
of accounts and draw up its annual report. These two sets of accounts are required to
be statutorily audited. SEBI Regulations stipulate that auditors of the fund cannot be
also be the auditors of the AMC. The two sets of accounts have to be audited by two
separate auditing firms .Auditors charge a fee from the mutual fund for these services.
The AMC pays the auditors out of its incomes, for auditing its book.

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REGULATORY BODY
Securities and Exchange Board of India (SEBI) is the apex regulator of capital
market instruments and the regulation of capital market intermediaries is under the
purview of SEBI.SEBI is the primary regulator of mutual funds in India.

SEBI has enacted the SEBI (Mutual funds) Regulations 1996, (hereinafter
referred to as SEBI Regulations) which provides the scope of the regulations of
Mutual funds in India. All mutual funds are required to be mandatorily registered with
SEBI. The structure and formation of Mutual funds appointment of key functionaries,
operation of the Mutual funds, accounting and disclosures norms right and obligations
and functionaries of investments, investment restrictions, compliance and penalties are
all defined under the SEBI regulation. Mutual funds have to send half-yearly
compliance reports to SEBI and SEBI also is empowered to periodically inspect
mutual fund organization to ensure compliance with SEBI Regulations.

REGULATORY JURISDICTION OF RBI over Mutual Funds

RBI is the monetary authority of the country and also the regulatory of the
banking system. Earlier bank sponsored mutual funds were under the dual regulatory
control of RBI and SEBI, and Money market mutual funds, which invested in short
term instruments were regulated by RBI. These provisions are no longer in place.
Now SEBI is the regulator of all mutual funds.

The present position is that RBI is involved with the Mutual fund industry, only
to the limited extent of being the regulator of the sponsors of bank sponsored Mutual
funds. If the sponsor has made any financial commitment to the investors of the
Mutual Funds, in the form of guaranteeing assured returns, such guarantees can no
longer be made without the prior approval of RBI.RBI will review financial condition
and capital adequacy of the sponsoring bank, before permitting it to make such
guarantees

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OBJECTIVE
1. To give a brief idea about the benefits available from Mutual Fund
investment.

2. To give an idea of the types of schemes available.

3. To discuss about the market trends of Mutual Fund investment.

4. To study some of the mutual fund schemes.

5. To study some mutual fund companies and their funds.

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SCOPE OF STUDY
A big boom has been witnessed in Mutual Fund Industry in recent times. A large
number of new players have entered the market and trying to gain market share
in this rapidly improving market.
The research was carried on in Ajmer. I had been sent at one of the branch of NJ
INDIA INVEST in Ajmer where I completed my Project work. I surveyed on my
Project Topic A study of preferences of the Investors for investment in Mutual
Fund on the visiting customers of NJ INDIA and advisors office.

The study will help to know the preferences of the customers, which company,
portfolio, mode of investment, and option for getting return and so on they prefer. This
project report may help the company to make further planning and strategy.

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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 funds 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 investors 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 todays 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. Liquidity of investment is clearly a big benefit.

6 Convenience And Flexibility:

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

7 Tax Benefits:

Any income distributed after March 31, 2002 will be subject to tax in the
assessment of all Unit holders. However, as a measure of concession to Unit holders
of open-ended equity-oriented funds, income distributions for the year ending March
31, 2003, will be taxed at a concessional rate of 10.5%.

In case of Individuals and Hindu Undivided Families a deduction upto Rs.

9,000 from the Total Income will be admissible in respect of income from investments
specified in Section 80L, including income from Units of the Mutual Fund. Units of
the schemes are not subject to Wealth-Tax and Gift-Tax.

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8 Choice of Schemes:

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

9 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.

10 Transparency:

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

DISADVANTAGES OF INVESTING THROUGH 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. However, this
shortcoming only means that there is a cost to obtain the mutual fund services.

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. However, most mutual
fund managers help investors overcome this constraint by offering families of funds- a
large number of different schemes- within their own management company. An

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investor can choose from different investment plans and constructs a portfolio to his
choice.

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 Dilution:

Mutual funds generally have such small holdings of so many different stocks
that insanely great performance by a fund's top holdings still doesn't make much of a
difference in a mutual fund's total performance.

7 Buried Costs:

Many mutual funds specialize in burying their costs and in hiring salesmen who do
not make those costs clear to their clients.

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 CATEGORIES OF MUTUAL FUND:

B
T
Y Y
P
S E
T S
R O
U F
C M
T
U
U
T
R
U
E
A
L
F
U
N
D
S

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BY STRUCTURE

OPEN ENDED SCHEME

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

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.

CLOSE ENDED SCHEME

A close ended fund has a stipulated maturity period which generally ranges
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 and sell the units of the scheme on the stock exchange where they are
listed. In the order to provide the 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.

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.

INTERVAL FUNDS

Interval funds combine the features of open ended and close ended schemes.
They are open for sale or redemption during pre-determined intervals at NAV related
prices.

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

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BY NATURE
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 managers
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.

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.

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 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.

Balanced Funds:

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

Further the mutual funds can be broadly classified on the basis of

investment parameter viz,

Each category of funds is backed by an investment philosophy, which is pre-defined in

the objectives of the fund. The investor can align his own investment needs with the
funds objective and invest accordingly.

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BY INVESTMENT OBJECTIVE

GROWTH FUNDS

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.

The aim of growth funds is to provide capital appreciation over the medium to
long term. Such schemes normally invest a majority of corpus in equity. Growth
schemes are ideal for investors having a long term outlook seeking growth over a
period of time.

INCOME FUNDS

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.

The aim of the income funds is to provide regular and steady income to
investors. Such schemes generally invest in fixed income securities such as bonds,
corporate debentures and government securities. Income funds are ideal for capital
stability and regular income.

BALANCED FUNDS
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).

The aim of the balanced fund is to provide both growth and regular income.
Such schemes periodically distribute a part of their earnings and invest both in
equities and fixed income securities in the proportion indicated in their offer
documents. In a rising stock market, the NAV of these schemes may not normally
keep pace, or fall equally when the market falls. These are ideal for investors looking
for a combination of income and moderate growth.

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MONEY MARKET FUNDS
The aim of money market funds is to provide easy liquidity, preservation of
capital and moderate income. These schemes generally invest in short term
instruments such as treasury bills, certificates of deposits, commercial papers and
interbank call money. Returns on these schemes may fluctuate depending upon the
interest rates prevailing in the market. These are ideal for corporate and individuals
investors as a means to park their surplus funds for short periods.

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.

Load Funds:
A Load Fund is one that charges a commission for entry or exit. That is, each
time you buy or sell units in the fund, a commission will be payable. Typically entry
and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has
a good performance history.

No-Load Funds:
A No-Load Fund is one that does not charge a commission for entry or exit.
That is, no commission is payable on purchase or sale of units in the fund. The
advantage of a no load fund is that the entire corpus is put to work.

27 | P a g e
OTHER SCHEMES

TAX SAVING SCHEMES

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

INDUSTRY SPECIFIC SCHEMES

Industry specific schemes invest only in the industries specified in the offer
document. the investment of these funds is limited to specific industries like Infotech,
FMCG, Pharmaceuticals.

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.

Index funds attempt to replicate the performance of a particular index such as

the BSE Sensex or the NSE 50.Such a position can be created through either of the
two methods:

It can either be done by maintaining an investment portfolio that replicates the

composition of the chosen index. Thus, the stocks in such a funds portfolio would be
same as are used in calculating the index. The proportion of each stock in the portfolio
too would be the same as the weight of the stock in the calculation of the index. This
replicating style of investment is called passive investing.

Alternatively, a mutual fund, through its research can identify a basket of

securities and /or derivatives whose movement is similar to that of the index. Schemes
that invest in such baskets can be viewed as active index funds.

SECTORAL 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

28 | P a g e
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.

Sect oral Schemes are those, which invest exclusively in a specified industry or
a group of industries or a various segments such as A Group shares or initial public
offerings

Mutual funds in order to cater to a range of investors have various

investment plans. Some of the important plans include:
GROWTH PLAN

Under the growth plan, the investor realizes only the capital appreciation on the
investment (by an increase in NAV) and doesnt get any income in the form of
dividend.

INCOME PLAN

Under the Income plan, the investor realizes income in the form of dividend.
However his NAV will fall to the extent of the dividend.

DIVIDEND REINVESTMENT PLAN

Here the dividend accrued on mutual funds is automatically re-invested in

purchasing, additional units in open ended funds. In most cases mutual funds offer the
investor an option of collecting dividends or reinvesting the same.

SYSTEMATIC INVESTMENT PLAN (SIP)

SIP involves investing a fixed sum of money in a specific investment scheme,

on a regular basis, for a pre-determined number of periods. It is very similar to regular
saving schemes like a recurring deposit.

SYSTEMATIC WITHDRAWAL PLAN

As opposed to the Systematic Investment Plan, the Systematic Withdrawal plan

allows the investor the facility to withdraw predetermined amount/units from his fund
at a pre-determined interval. The investors units will be redeemed at the existing
NAV as on that day.

29 | P a g e
SYSTEMATIC TRANSFER PLAN

Investors exposure to different types of securities, whether debt or equity

should flow from their risk profile or risk appetite. For instance, an investor may start
with a 40:60 mix of debt and equity, as determined by her risk profile. But if equity
markets boom and debt securities lose value, then the 40:60 mix could get
significantly distorted towards equity. In such a situation, it would be prudent to sell
some equity and re-invest the redeemed amount in debt to re-balance the mix of debt
and equity. In mutual funds such re-balancing can be achieved by systematically
moving moneys between schemes. This can be achieved by systematic transfer plan.

NET ASSET VALUE (NAV):

Since each owner is a part owner of a mutual fund, it is necessary to establish

the value of his part. In other words, each share or unit that an investor holds
needs to be assigned a value. Since the units held by investor evidence the
ownership of the funds assets, the value of the total assets of the fund when
divided by the total number of units issued by the mutual fund gives us the
value of one unit. This is generally called the Net Asset Value (NAV) of one unit
or one share. The value of an investors part ownership is thus determined by
the NAV of the number of units held.

Calculation of NAV:

Let us see an example. If the value of a funds assets stands at Rs. 100 and
it has 10 investors who have bought 10 units each, the total numbers of
units issued are 100, and the value of one unit is Rs. 10.00 (1000/100). If a
single investor in fact owns 3 units, the value of his ownership of the fund
will be Rs. 30.00(1000/100*3). Note that the value of the funds
investments will keep fluctuating with the market-price movements,
causing the Net Asset Value also to fluctuate. For example, if the value of
our funds asset increased from Rs. 1000 to 1200, the value of our
investors holding of 3 units will now be (1200/100*3) Rs. 36. The
investment value can go up or down, depending on the markets value of
the funds assets.

30 | P a g e
RESARCH METHODOLOGY

This report is based on primary as well secondary data, however primary data
collection was given more importance since it is overhearing factor in attitude studies.
One of the most important users of research methodology is that it helps in identifying
the problem, collecting, analyzing the required information data and providing an
alternative solution to the problem .It also helps in collecting the vital information that
is required by the top management to assist them for the better decision making both
day to day decision and critical ones.

DATA SOURCES:

Research is totally based on primary data. Secondary data can be used only for the
reference. Research has been done by primary data collection, and primary data has
been collected by interacting with various people. The secondary data has been
collected through various journals and websites.

DURATION OF STUDY:

The study was carried out for a period of three months, from 2nd April to 2nd July
2009.

31 | P a g e
DATA ANALYSIS AND INTERPRETATION

AGE DISTRIBUTION OF INVESTORS OF NJ INDIA:

AGE GROUP NO. OF INVESTORS

20-30 38
30-40 55
40-50 43
above 50 14

60 55
50
43
40 38

30
NO. OF INVESTORS
20
14
10

0
20-30 30-40 40-50 above 50
AGE GROUP OF INVESTOR'S

INTERPRETATION

According to this chart out of 150 respondents who visited NJ office

maximum 55 respondents are in age group of 30-40 that is they constitute approx
37 %,the second most investors i.e. 43 respondents are in age group of 40-50 and
this constitute 29 % and people above 50 yrs of age are the one who invest least.

32 | P a g e
EDUCATIONAL QUALIFICATION OF INVESTORS

EDUCATIONAL QUALIFICATION NO. OF INVESTORS

Graduate 76
Undergraduate 25
post graduate and above 49

80 76
70
60
49
50
40
30 25
20
NO.OF RESPONDENTS
10
0

EDUCATIONAL QUALIFICATION

INTERPRETATION

Out of 150 investors 51% of investors are graduate and 32% are post

graduate and above rest constitute undergraduates

33 | P a g e
OCCUPATION OF INVESTORS

OCCUPATION NO.OF INVESTORS

government job 35
private job 43
entrepreneur 17
Others 10

10%

16% 33%

41%

government job private job

enterpruener others

INTERPRETATION

From the chart above out of 150 respondents maximum no. of investors
for NJ India are in private job i.e. 41%. After that 33% people are entrepreneur
16% in government job rest constitute students, house wives and others.

34 | P a g e
 YEARLY FAMILY INCOME OF INVESTORS

INCOME GROUP NO.OF INVESTORS

60000-1lakh 9
1lakh-2lakh 39
2lakh-3lakh 53
above 3lakh 49

35 | P a g e
 60
53
49
50
39
40

30

NO OF INVESTORS 20
9
10

INCOME GROUP OF INVESTORS

INTERPRETATION

According to income group of investors maximum no. of investors are in

income group of 2lakh-3lakh i.e. they constitute approx 38% after that investors

36 | P a g e
of income group more than 3lakh invest which constitute around 32% and rest
26% are in income group of 1lakh-2lakh and remaining are in age group of
60000-1lakh

PERCENTAGE OF INCOME INVESTORS INVEST

%AGE OF INCOME
NO. OF INVESTORS
INVESTED
5%-10% 55
10%-20% 52
20% and above 43

60 55 52
50 43
40
30
20
NO. OF RESPONDENTS 10
0

%AGE OF INCOME INVESTORS INVEST

INTERPRETATION:

From the graph it is seen that investors invest maximum of 5-10% of their
income and this group constitute around 37% of investors after that it is 34% of
people who invest 10-20% of their income rest 29% people invest more than
20% of their income.

37 | P a g e
38 | P a g e
MODES OF DIFFERENT INVESTMENT PREFERRED BY INVESTORS

MODE OF INVESTMENT NO. OF INVESTORS

FD 29
RD 13
Insurance 93
Share market 42
Real estate 11
Mutual Funds 140
FD + RD 13
FD +insurance 2
FD+ share market 0
FD+ MF 14
RD+insurance 2
RD+share market 7
RD+real estate 1
RD+MF 4
Insurance+share market 2
insurance+real estate 49
insurance+MF 26
Share market+real estate 31
share market+MF 110
real estate+MF 3

39 | P a g e
 160
140
140

120 110
100 93

80

60 49
NO. OF INVESTORS 42
40 29 26 31
20 13 11 13 14
2 2 7 1 4 2 3
0
0

PREFERED MODE OF INVESTMENTS

INTERPRETATION

Out of 150 investors 140 of them invest in MF in NJ India invest, after

which there are investors who invest in MF as well as share market, after that
there are investors who invest in insurance, and then in insurance as well as real
estate.

40 | P a g e
Investors preference while investing IN A PARTICULAR MODE

INVESTORS PREFRENCE
WHILE INVESTING NO.OF INVESTORS
Trust 43
good returns 53
Security 51
Others 3

60
53
51
50
43
40

30
NO. OF INVESTORS

20

10
3
0
trust good re turns se curity othe rs

INVESTORS PREFRENCES

INTERPRETATION

Out of 150 respondents 37% i.e. maximum no. of respondents prefer good
returns while investing in a mode of investments while 34% investors prefer
security while investing and rest 28% prefer to have trust in the mode of
investment they are investing.

41 | P a g e
42 | P a g e
Respondents who invested in MUTUAL FUND

INVEST IN MF NO.OF INVESTORS

yes 140
No 10

7%

yes no

93%

INTERPRETATION

Out of 150 investors 140 i.e. 93% of investors do invest in mutual funds
and rest 7% dont invest in mutual funds.

43 | P a g e
 Reason for not investing in mutual funds

REASON FOR NOT

NO. OF INVESTORS
INVESTING
not aware 3
high risk 4
not any specific reason 3

4.5 4
4
3.5 3 3
3
2.5
2
1.5
1
NO. OF INVESTORS 0.5
0

REASON FOR NOT INVESTING IN MF

INTERPRETATION

Out of 10 investors who dont invest in mutual funds 4 of them consider

MF as risky mode for investment, other 3 are not aware about MF and rest 3
have no specific reason for not investing in MF.

44 | P a g e
 TIME PERIOD from now INVESTING IN MUTUAL FUNDS

FOR HOW MANY YEARS INVESTING

IN MF NO. OF INVESTORS
less than 6 months 39
last 1 year 36
last 2 year 36
more than 2 years 29

45
39
40 36 36
35
29
30
25
20
15
10
5
NO. OF RESPONDENTS 0

TIME PERIOD

INTERPRETATION

Out of 140 respondents it is 28% of investors who have invested in MF

since last 6 months, rest 25% investors are already in MF since last 2 or 1 years
and there are only 17% investors who are in MF for more than 2 years.

45 | P a g e
INVESTORS OBJECCTIVE BEHIND INVESTING IN MUTUAL
FUNDS

OBJECTIVE FOR INVESTMENT NO. OF INVESTORS

only retirement 86
retirement + future commitments 97
future commitments 113
regular income 65
regular income + retirement + future commitments 84
regular income + future commitments 73

120 113
97
100
86 84
80 73
65
60

40
NO. OF INVESTORS
20

INVESTMENT OBJECTIVE

INTERPRETATION

Out of 140 investors maximum no. of investors invest in MF to fulfill

their future commitments i.e. childs education and childs marriage, after
which investors invest in order to fulfill their needs for both future
commitments and their secured retirement period, while there are still
investors who invest for safe retirement period, some invest for future
commitments as well as safe retirement period as well as source of regular

46 | P a g e
 income, while there are very few investors who invest only for regular
income

47 | P a g e
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

48 | P a g e
 included in the "Other Expenses" category. They are also called
maintenance fees.

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.

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

49 | P a g e
 the fund. According to NASD rules, a front-end load cannot be higher
than 8.5% of your investment.

Back-end load:
Also known as Deferred Sales Charge, this is a fee paid when shares are
sold. Also known as a "back-end load," this fee typically goes to the
brokers that sell the fund's shares. 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.

50 | P a g e
RISK FACTORS OF MUTUAL FUNDS:

1. The Risk-Return Trade-Off:

The most important relationship to understand is the risk-return trade-off.
Higher the risk greater the returns / loss and lower the risk lesser the
returns/loss.
Hence it is up to you, the investor to decide how much risk you are
willing to take. 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 cash flows determines the Credit Risk
faced by you. This credit risk is measured by independent rating agencies
like CRISIL who rate companies and their paper. 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:
Things you hear people talk about:
"Rs. 100 today is worth more than Rs. 100 tomorrow."
"Remember the time when a bus ride costed 50 paise?"
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-

51 | P a g e
 diversified portfolio with some investment in equities might help mitigate
this risk.

5. Interest Rate Risk:

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

6. Political / Government Policy Risk:

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

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

52 | P a g e
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 existance 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.

53 | P a g e
Major Mutual Fund Companies in India
ABN AMRO Mutual Fund
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
GIC Mutual Fund
 For the first time in the history of Indian mutual fund industry,
Unit Trust of India Mutual Fund has slipped from the first slot. Earlier, in
May 2006, the Prudential ICICI Mutual Fund was ranked at the number
one slot in terms of total assets.

In the very next month, the UTIMF had regained its top position as the
largest fund house in India.

Now, according to the current pegging order and the data released by
Association of Mutual Funds in India (AMFI), the Reliance Mutual Fund, with a
January-end AUM of Rs 39,020 crore has become the largest mutual fund in
India

On the other hand, UTIMF, with an AUM of Rs 37,535 crore, has gone to
second position. The Prudential ICICI MF has slipped to the third position with
an AUM of Rs 34,746 crore.

It happened for the first time in last one year that a private sector mutual
fund house has reached to the top slot in terms of asset under management
(AUM). In the last one year to January, AUM of the Indian fund industry has
risen by 64% to Rs 3.39 lakh crore.

According to the data released by Association of Mutual Funds in India

(AMFI), the combined average AUM of the 35 fund houses in the country
increased to Rs 5,512.99 billion in April compared to Rs 4,932.86 billion in
March

Reliance MF maintained its top position as the largest fund house in the
country with Rs 74.25 billion jump in AUM to Rs 883.87 billion at April-end.

The second-largest fund house HDFC MF gained Rs 59.24 billion in its

AUM at Rs 638.80 billion.
 ICICI Prudential and state-run UTI MF added Rs 46.16 billion and Rs
57.35 billion re respectively to their assets last month. ICICI Prudential`s AUM
stood at Rs 560.49 billion at the end of April, while UTI MF had assets worth Rs
544.89 billion.

The other fund houses which saw an increase in their average AUM in
April include -Canara Robeco MF, IDFC MF, DSP Black Rock, Deutsche MF,
Kotak Mahindra MF and LIC MF.



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

Reliance Mutual Fund constantly endeavors to launch innovative

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

SOME SCHEMES BY RELIANCE MUTUAL FUND

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.
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.
An investment fund that approach stock selection process based on
quantitative analysis.

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.
Natural resources may include, for example, energy sources, precious
and other metals, forest products, food and agriculture, and other basic
commodities.

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.

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.

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.

1. 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.

2. 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.


3. 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

4. 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.

5. 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.

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 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 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.



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.

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.

 SOME SCHEMES BY UTI
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.
d) Companies manufacturing energy development equipment related ( like
petro and power )
e) Consultancy & Finance Companies

2. 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.

3. UTI Equity Tax Savings Plan (Open Ended Fund):

An open-ended equity fund investing a minimum of 80% in equity and
equity related instruments. It aims at enabling members to avail tax rebate under
Section 80C of the IT Act and provide them with the benefits of growth.
4. 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.

5. 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.

6. 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.

7. UTI India Lifestyle Fund (Close Ended Fund):

The investment objective of the scheme is to provide long term Capital
appreciation and / or income distribution from a diversified portfolio of equity and
equity related instruments of companies that are expected to benefit from changing
Indian demographics, Indian Lifestyle and rising consumption pattern. However,
there can be no assurance that the investment objective of the scheme will be
achieved.

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 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 endeavor 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%.

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 self-employed persons after they attain the age of 58 years, in the form
of periodical cash flow up to the extent of repurchase value of their holding
through a systematic withdrawal plan.


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 Central
Government 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.

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.
CONCLUSION
Running a successful Mutual Fund requires complete understanding of
the peculiarities of the Indian Stock Market and also the psyche of the small
investors. This study has made an attempt to understand the financial behavior of
Mutual Fund investors in connection with the preferences of Brand (AMC),
Products, Channels etc. I observed that many of people have fear of Mutual
Fund. They think their money will not be secure in Mutual Fund. They need the
knowledge of Mutual Fund and its related terms. Many of people do not have
invested in mutual fund due to lack of awareness although they have money to
invest. As the awareness and income is growing the number of mutual fund
investors are also growing.
Brand plays important role for the investment. People invest in those
Companies where they have faith or they are well known with them. There are
many AMCs in Ajmer but only some are performing well due to Brand
awareness. Some AMCs are not performing well although some of the schemes
of them are giving good return because of not awareness about Brand. Reliance,
HDFC, SBIMF, ICICI Prudential etc. they are well known Brand, they are
performing well and their Assets Under Management is larger than others whose
Brand name are not well known like Principle, Sundaram, etc.
Distribution channels are also important for the investment in mutual
fund. Financial Advisors are the most preferred channel for the investment in
mutual fund. They can change investors mind from one investment option to
others.

 BIBLIOGRAPHY
NEWS PAPERS

FINANCIAL MARKET AND SERVICES

-Gordon and Natarajan
OUTLOOK MONEY

MUTUAL FUND HAND BOOK

FACT SHEET AND STATEMENT

WWW.MONEYCONTROL.COM

WWW.AMFIINDIA.COM

WWW.ONLINERESEARCHONLINE.COM

WWW. MUTUALFUNDSINDIA.COM

WWW.ALTAVISTA.COM

WWW.UTIMF.COM

WWW.RELIANCEMUTUAL.COM

WWW.AMFIINDIA.COM