Introduction: Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing fund

in securities in accordance with objectives as disclosed in offer document.

Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders. The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.

Unit Trust of India was the first mutual fund set up in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds. In the year 1992, Securities and exchange board of India (SEBI) ACT was passed. The objectives of SEBI are to protect interest of investors in securities and promote the development of and to regulate the securities market. SEBI formulates policies and regulates the mutual funds to protect the interest of the investors.

SEBI notified regulations for the mutual funds in 1993.Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interest of investors.

All mutual funds whether promoted by public sector entities including those promoted by foreign entities are governed by the same set of regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type. A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI managers the funds by making investments in various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulation by the mutual fund. SEBI Regulations require that at least two third of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme.

1.2 DIFFERENT TYPES OF MUTUAL FUND SCHEMES: Schemes according to maturity period:
A Mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.

Open-ended Fund/scheme An open-ended fund or scheme is one that is available for subscription and repurchase continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-ended schemes is liquidity.

Close-ended Fund/scheme A close-ended fund or scheme has a stipulated maturity period e.r.5-7 years. the time of the initial public The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units 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 routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

Schemes according to investment objective:

growth scheme, income scheme, be classified mainly as follows: A scheme can also be classified as or balanced scheme considering its investment objective.

Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may

Growth / equity oriented scheme The aim of growth funds is to provide capital appreciation over medium to long term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation,etc and the investors may choose an option depending on their preferences.

Income/ Debt Oriented Scheme The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets .The NAVs of such funds are affected because of change in interest rates in the

country. If the NAVs of such funds are likely to increase in the short run and vice versa. Balanced Fund The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds. Money Market or Liquid fund These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short- term instruments such as treasury bills, certificates of deposits, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual as a means to park their surplus funds for short periods. Gilt Fund These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes.

Index Funds Index funds replicate the portfolio of a particular index such as the BSE sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the same weight age comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as tracking error in technical terms.

Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges. Sector specific funds 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. Tax saving schemes These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the government offers tax incentives for the investment in specified avenues. (ELSS). E.g. Equity Linked Saving Schemes Pension schemes launched by the mutual funds also

offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme.

Fund Of Funds scheme A Scheme that invests primarily in other schemes of the same mutual fund or other mutual funds is known as a FOF scheme. An FOF scheme enables the investor to achieve greater diversification through one scheme. It spreads risks across a greater universe. Load or no-load Fund A load fund is one that charges a percentage of NAV foe entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs.10.

If the entry as well as exit load charged is 1%, then the investors who buy would be required to pay Rs10.10 and those who offer their units for repurchase to the mutual fund will get only Rs9.90 per unit. The investors should also consider the performance track record and service standards of the mutual fund which are more important. Efficient funds may give higher returns in spite of loads. A no-load fund is one that does not charge for entry or exit. It means the investor can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.

1.3Advantages of mutual funds

Mutual funds give investors best of the the worlds. Investors money is managed by professional fund managers and the money is deployed in a diversified portfolio. Investors may not have resources at their disposal to do detailed analysis of companies. Time is a big constraint and they may not have the expertise to read and analyze balance sheets, annreportsresearch reports etc. The advantages of mutual funds are as follows: Small investment: Mutual fund help to reap the benefits of returns by a portfolio spread across the spectrum of companies with small investment such a spread wouldnt have being impossible without their assistance.

Professional fund management : Professional having considering expertise, experience, resources, manage the pool of money collected by mutual fund. They thoroughly analyze the market and economy to pick good investment opportunity.

Spreading risk: An investor with a limited amount of fund might be able to invest in only one or two stocks/ bonds, thus increasing his /her risk however a mutual fund will spread its risk by investing in number of sound stocks afford normally invest in companies across the wide range of industries.

Transparency and interactivity: Mutual funds are regularly provide investors with information on the value of their investments. Mutual fund also provide complete portfolio disclosure on the value of their investments. Mutual fund clearly layout their investment strategy to the investor.

Liquidity Close ended funds have their units listed at the stock exchange thus they can be bought and sold at their market value over and above this units can be directly redeemed to the mutual fund as and then when they announce the repurchase

Regulation: All mutual funds are registered with SEBI and their functions with in provision of strict regulation designed to protect the interest of the investors. Investors can enter/exit schemes anytime they want. They can invest in an SIP, where

every month, a stipulated amount automatically goes out of their savings account into a scheme of their choice. Investors can either invest with the objectives of getting capital appreciation or regular dividends. Young investors who are having a steady regular monthly income would prefer to invest for the

long term to meet various goals Net Asset value (NAV):

The funds Net asset value (NAV) is determined each day.Net Asset Value is the actual value of one unit of a given scheme on any given business day. The NAV reflects the liquidation value of the funds investments on that particular day after accounting for all expenses. It is calculated by deducting all liabilities of fund from the realizable value of all assets and dividing it by number of units of outstanding. NAV=market or fair value of scheme investment+ accrued income + other assets accrued expenses - payable other liabilities /number of units outstanding

Company profile

Reliance capital asset management Limited (RCAM) is an unlisted public Limited company incorporated under the companies Act, 1956 on February 24, 1995, having its registered office at Reliance House. Near Mardia Plaza off.C.G.Road, Ahmadabad, 380006 and its corporate office at one indiabulls centre, Tower 1,11-12 Floors, Jupiter Mills compound,841,senapati BapatMarg Eliphinstone Road, Mumbai -400013.

RCAM has been appointed as the Asset Management Company of Reliance Mutual Fund vide Investment Management Agreement (IMA) dated May 12, 1995 and executed between Reliance Capital Trustee Co. Limited and Reliance Capital Asset Management Limited and amended on August 12, 1997 and January 20, 2004 in line with SEBI (mutual funds) Regulations, 1996. Pursuant to this IMA, RCAM is acting as the investment manager of the mutual fund. The net worth of the asset management company based unaudited financial statements as on September 30, 2010 is Rs .1, 239.32 crore. Reliance Capital Asset Management Limited has appointed M/S. Karvy Computershare pvt. Limited to act as the register and Transfer agent to the schemes of Reliance Mutual fund. M/s Karvy Computershare pvt.Limited (KCL) having their office at Madura Estate. Municipal No1-9/13/ R District, Hyderabad 500081, is a registrar and transfer agent registered with SEBI under registration no. INR000000221.

Deutsche Bank, AG The Trustee has appointed Deutsche Bank, AG located at Kodak House, Ground Floor, 222 Dr. D.N. Road, Mumbai-400 001, as the Custodian of the securities that are bought and sold under the scheme. A Custody Agreement has been entered with Deutsche Bank in accordance with SEBI Regulations. The Custodian is approved by SEBI under registration no. IN/CUS/003 to act as Custodian for the Fund.

Reliance Capital Asset Management Ltd. Key information Reliance mutual fund Jun-30-1995 Feb-24-1995 Reliance capital Limited Reliance capital Trustee co.Ltd.

Mutual fund Setup Date Incorporation Date Sponsor Trustee

CEO/MD Compliance officer Investor Service officer Assets managed

Sundeep sikka Mr.muneesh sud Mr. BHALCHANDRA JOSHI Rs 102066.22 crores(Dec-31-2010)

Other Details Auditors Custodians Registrars Address Haribhakti &co. chartered Accountants Deutsche Bank AG Kravy computer share pvt.ltd One India Bulls centre-towerone,11th&12th flr,Jupiter Mills,Elphinstone rd,mum-400013 022-030994699/touchbase30301111 022-30994699 Customer_care@reliancemutual.com

Telephone Fax no E-mail 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. About Reliance Industries: Reliance group holdings has grown from a small office e data-processing equipment firm in 1961 into a major insurance and financial services group in one generation under one chief. Reliance insurance operations constitute the nations 27th largest property and casually operation. The parent company also includes a development subsidiary in commercial real estate. Reliance international consulting group contains several subsidiaries in energy, environment, and natural resources consulting. A financial arm invests in other business, primarily television on stations. Reliance insurance started as the fire association of Philadelphia in 1817, organized by 5 hose and 11 engine fire companies. It became the nations first associations of volunteer fire department. Business got a boost as a result of the great Chicago fire of 1871. The association soon developed a field of agents to write policies across the country. For the first two years, shareholders received dividend twice a year of $5 a share, which increased gradually to $10 in 1876. In 1972, the reliance insurance group dividend its pool so that reliance insurance company and its subsidiaries handled most standard lines, while united pacific insurance company handled the nonstandard and other operations. In 1977, the company moved into real estate, forming continental cities corporation, which became Reliance development group. This division handled all real estate operations of the parent company and other subsidiaries. Reliance capital Group l.p constituted the investment branch of the reliance conglomerate. In December 1989, reliance capital sold its investment, Days Corporation, parent company of days of America, the world third largest hotel chain it had been purchased in 1984. RELIANCE MUTUAL FUND: This group dominates this key area in the financial sector. This mega business houses show that it has assets under management of Rs 90,938(US$ 22.73 billion) and an investor base of over

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6.6 million. Reliance mutual fund schemes are managed by reliance capital asset management limited (RCAM) a subsidiary of reliance capital limited, which holds 93.37% of the paid-up capital of RCAM. The company notched up a healthy growth of rs.16, 354 crores (US$4.09 billion) in assets under management in February 2008 and helped total industry wide AUM to Rs.565,459 crores (US$ 141.36 billion). A sharp rise in fixed maturity plans ( fmps) and collection of Rs 7000 crores ( US$ 1.75 billion) through new fund offers (nfos) created this surge. Reliance mutual fund is one of the Indias leading mutual funds with Average Assets under Management (AAUM) of Rs1,02,066 crores and an investor count of over 72 lakh folios.

Reliance mutual fund a part of the RELIANCE group is one of the fastest growing mutual funds in India. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 159 cities across the country. RMF constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. Reliance capital Asset management limited is the asset manager of RMF. RCAM 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. Reliance Capital Limited (RCL) was incorporated in year 1986 at Ahmadabad in Gujarat as Reliance Capital &Finance Trust Limited. The name RCL came into effect from January 5, 1995. In 2002, RCL shifted its registered office to Jamnagar in Gujarat before it finally moved to Mumbai in Maharashtra, in 2006. In 2006, Reliance Capital Ventures Limited merged with RCL and with this merger the shareholder base of RCL rose from 0.15 million shareholders to 1.3 million. RCL entered the Capital Market with a maiden public issue in 1990 and in subsequent years further tapped the capital market through rights issue and public issues. The equity shares were initially listed on the Ahmedabad Stock Exchange and The Stock Exchange Mumbai. Presently the shares are listed on The Stock Exchange Mumbai and the National Stock Exchange of India. RCL in the initial years engaged itself in steady annuity yielding businesses such as leasing; bill discounting and inter-corporate deposits .Later, in 1993 diversified its business in the areas of portfolio investment, lending against securities, custodial services, money market operations, project finance advisory services and investment banking.

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RCL was accredited a Category 1Merchant banker by the Securities Exchange Board of India (SEBI). It had lead managed/co-managed 15 issues of an aggregate value of Rs.400 crores and had underwritten 33 issues for an aggregate value of Rs.550 crores. All these companies were listed on various exchanges. RCL obtained its registration as a Non-banking Finance Company (NBFC) in December 1998. In view of the regulatory requirements RCL surrendered its Merchant Banking License. RCL has since diversified its activities in the areas of asset management and mutual fund; life and general insurance; consumer finance and industrial finance; stock broking depository services; private equity and proprietary investments; exchanges; asset reconstruction; distribution of financial products and other activities in financial services. Reliance Capital, a constituent of S&P CNX Nifty and MSCI India, is a part of the Reliance Group (www.relianceadagroup.com). It is one of Indias leading and amongst most valuable financial services companies in the private sector. Reliance Capital has interests in asset management and mutual funds; life and general insurance; commercial finance; stock broking; investment banking; wealth management services; distribution of financial products; exchanges; private equity; asset reconstruction; proprietary investments and other activities in financial services. Reliance Mutual Fund is Indias largest Mutual Fund with over seven million investor folios. Reliance Life Insurance is amongst the leading private sector life insurers. Reliance General Insurance is amongst the leading private sector general insurers. Reliance Securities is one of Indias leading broking houses. Reliance Money is one of Indias leading distributors of financial products and services.

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