A PROJECT REPORT PERFORMANCE ANALYSIS OF RELIANCE MUTUAL FUNDS AT RELIANCE MONEY LTD. SUBMITTED TO UNIVERSITY OF PUNE BY
CERTIFICATE
This is to certify that MR. JAIN DHIRAJ student of SINHGAD INSTITUTE OF BUSINESS ADMINISTRATION & RESEARCH, PUNE has completed His fieldwork report at RELIANCE MONEY LTD. on the topic of PERFORMANCE ANALYSIS OF RELIANCE MUTUAL FUND
and has Submitted the field work report in partial
fulfillment of MASTER’S IN BUSINESS ADMINISTRATION Of the UNIVERSITY OF XYZ.He has worked under our guidance and direction. The said report is based on bonafide information.
Designation
Prof. XYZ Director
Date:
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DECLARATION I hereby declare that the Project titled “PERFORMANCE ANALYSIS OF RELIANCE MUTUAL FUND”.
Is an original piece of research work
carried out by me under the guidance and supervision of Prof. XYZ. The information has been collected from genuine & authentic sources. The work has been submitted in partial fulfillment of the requirement of MASTER’S IN BUSINESS ADMINISTRATION to XYZ University.
Place : Date :
Signature XYZ
ACKNOWLEDGEMENT I would like to sincerely thank RELIANCE MONEY LTD, PUNE for allowing me to do the project work with them. I attribute the success to the guidance and inputs by Mr. SHUBHAM MALOTHRA (CENTRAL MANAGER). I am also thankful to him for monitoring the progress and helping and suggesting alternatives whenever required. I am grateful to Mr.GAJANAN ALURE & Mr. SUNIL INDANE for giving the inside information about the company and also helped in completing my project. My thanks are also due to the employees of RELIANCE MONEY LTD.Who are directly and indirectly related to the successful completion of my project. I take this opportunity to express my gratitude to respected Director Prof. Sunil Kumar and internal guide Prof. NIVIDITA MOHARIR, for his guidance and valuable suggestion.
XYZ
EXECUTIVE SUMMARY
TABLE OF CONTENTS
1) Introduction 2) Objective 3) Research Methodology 4) Company Profile 5) Data Analysis 6) Conclusion 7) Limitation 8) Recommendation 9) Bibliography 10) Annexure
Introduction
Mutual Funds - Concept
A mutual fund is a trust that pools the money of several investors and manages investments on their behalf. Legally it is like any other company you know of. Hence, the fund is also called a mutual fund company. The fund company takes your money and like you from other new investors. This is added to the money that's already invested with the fund. The fund collects this money from investors through various schemes. Each scheme is differentiated by its objective of investment or in other words, a broadly defined purpose of how the collected money is going to be invested. Based on these broad purposes schemes are classified into a dozen or so categories. When you buy into a scheme of a mutual fund you are holding units of the scheme. Buying units is like owning shares of a scheme. The total money collected through a scheme constitutes the fund’s assets. Investing and managing the collected money is a difficult task. The fund company delegates this to a company of professional investors, usually experts who are known for smart stock picks. This company is the Asset Management Company (AMC) and the fund company usually delegates the job of investment management for a fee. The income earned through these investments and the capital appreciation realized by the scheme is shared by its unit holders in proportion to the number of units owned by them.
Mutual Fund Operation Flow Chart
Mutual Funds - Organization There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:
Mutual Funds Industry in India The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470 bn in March 1993 and till April 2004; it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling.
HISTORY OF MUTUAL FUND:. First Phase - 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.
Second Phase - 1987-1993 (Entry of Public Sector Funds) Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under management.
Third Phase - 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds.
Fourth Phase - since February 2003 This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.
GROWTH IN ASSETS UNDER MANAGEMENT
Performance of Mutual Funds in India
The year was 1963. Unit Trust of India invited investors or rather to those who believed in savings, to park their money in UTI Mutual Fund. For 30 years it goaled without a single second player. Though the 1988-year saw some new mutual fund companies, but UTI remained in a monopoly position. The performance of mutual funds in India in the initial phase was not even closer to satisfactory level. People rarely understood, and of course investing was out of question. But yes, some 24 million shareholders were accustomed with guaranteed high returns by the beginning of liberalization of the industry in 1992. This good record of UTI became marketing tool for new entrants. The expectations of investors touched the sky in profitability factor. However, people were miles away from the preparedness of risks factor after the liberalization. The Assets Under Management of UTI was Rs. 67bn. by the end of 1987. Let me concentrate about the performance of mutual funds in India through figures. From Rs. 67bn. the Assets Under Management rose to Rs. 470 bn. in March 1993 and the figure had a three times higher performance by April 2004. It rose as high as Rs. 1,540bn. The net asset value (NAV) of mutual funds in India declined when stock prices started falling in the year 1992. Those days, the market regulations did not allow portfolio shifts into alternative investments. There were rather no choices apart from holding the cash or to further continue investing in shares. One more thing to be noted, since only closed-end funds were floated in the market, the investors disinvested by selling at a loss in the secondary market. The performance of mutual funds in India suffered qualitatively. The 1992 stock market scandals, the losses by disinvestments and of course the lack of transparent rules in the where about rocked confidence among the investors. Partly owing to a relatively weak stock market performance, mutual funds have not yet recovered, with funds trading at an average discount of 1020 percent of their net asset value. The supervisory authority adopted a set of measures to create a transparent and
competitive environment in mutual funds. Some of them were like relaxing investment restrictions into the market, introduction of open-ended funds, and paving the gateway for mutual funds to launch pension schemes. The measure was taken to make mutual funds the key instrument for long-term saving. The more the variety offered, the quantitative will be investors. At last to mention, as long as mutual fund companies are performing with lower risks and higher profitability within a short span of time, more and more people will be inclined to invest until and unless they are fully educated with the dos and don’ts of mutual funds.
Mutual Fund Companies in India The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987 marked the existence of only one mutual fund company in India with Rs. 67bn assets under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the 80s decade, few other mutual fund companies in India took their position in mutual fund market. The new entries of mutual fund companies in India were SBI Mutual Fund, Canbank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund. The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started penetrating the fund families. In the same year the first Mutual Fund Regulations came into existence with reregistering 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 player’s penetration, the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.
Major Mutual Fund Companies in India Abn Amro Mutual Fund ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund. Alliance Capital Mutual Fund Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsored. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd. with the corporate office in Mumbai. Benchmark Mutual Fund Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsored and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC. Birla Sun Life Mutual Fund Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a global organization evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs. 10,000 crores. Bank of Baroda Mutual Fund (BOB Mutual Fund) Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the
AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the custodian. Canbank Mutual Fund Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai. Chola Mutual Fund Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited. Escorts Mutual Fund Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance Limited as its sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was incorporated on December 1, 1995 with the name Escorts Asset Management Limited. Franklin Templeton India Mutual Fund The group, Franklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial services groups in the world. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. They have Open end Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open end Income and Liquid schemes, closed end Income schemes and Open end Fund of Funds schemes to offer Franklin Templeton. GIC Mutual Fund GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government of India undertaking and the four Public Sector General Insurance
Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882. HDFC Mutual Fund HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers namely Housing Development Finance Corporation Limited and Standard Life Investments Limited.
HSBC Mutual Fund HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund. ING Vysya Mutual Fund ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998. Kotak Mahindra Mutual Fund Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is presently having more than 1,99,818 investors in its various schemes. KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk - return profiles. It was the first company to launch dedicated gilt scheme investing only in government securities LIC Mutual Fund Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. .
The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund. Morgan Stanley Mutual Fund India Morgan Stanley is a worldwide financial services company and its leading in the market in securities, investmenty management and credit services. Morgan Stanley Investment Management (MISM) was established in the year 1975. It provides customized asset management services and products to governments, corporations, pension funds and nonprofit organizations. Its services are also extended to high net worth individuals and retail investors. In India it is known as Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end diversified equity scheme serving the needs of Indian retail investors focusing on a long-term capital appreciation. Prudential ICICI Mutual Fund The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th of October 1993 with two sponsorers, Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management Company Limited incorporated on 22nd of June, 1993. 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.
Sahara Mutual Fund Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd. as the sponsor. Sahara Asset Management Company Private Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC stands at Rs 25.8 crore. Standard Chartered Mutual Fund Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI on December 20,1999. State Bank of India Mutual Fund State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes. Tata Mutual Fund Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's is one of the fastest in the country with more than Rs. 7,703 crores (as on April 30, 2005) of AUM. Unit Trust of India Mutual Fund UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000 Crore. The
sponsorers of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds and Balance Funds.
Direct Equity Investing versus Mutual Fund Investing Investors have the option to invest directly in equities through the stock market instead of investing through mutual funds. However, a practical evaluation reveals that mutual funds are indeed a more recommended option for the individual investor. Here is a comparison between the two options: •
Identifying stocks that have growth potential is a difficult process involving detailed research and monitoring of the market. Mutual Funds specialize in this area and possess the requisite resources to carry out research and continuous market monitoring. This is clearly beyond the capability of most individual investors.
•
A critical element towards successful equity investment is Diversification. A diversified portfolio serves to minimize risk by ensuring that a downtrend in some securities/sectors is offset by an upswing in the others. Clearly, diversification requires substantial investment that may be beyond the means of most individual investors. Mutual Funds pool the resources of many investors and thus have the funds necessary to build a diversified portfolio, and by investing even a small amount in a Mutual Fund, an investor can, through his proportionate share, reap the benefit of diversification.
•
Mutual funds specialize in the business of investment management, and therefore employ Professional Management for carrying out their activities. Professional management ensures that the best investment avenues are tapped with the aid of comprehensive information and detailed research. It also ensures that expenses are kept under tight control and market opportunities are fully utilized. An investor who opts for Direct Equity Investing loses out on these benefits.
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Mutual Funds focus their investment activities based on Investment Objectives such as income, growth or tax savings. An investor can choose a fund that has investment objectives in line with his objectives. Therefore, funds provide the investor with a vehicle to attain his objectives in a planned manner.
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Mutual funds offer Liquidity through listing on stock exchanges (for closed end funds) and repurchase options (for open-end funds). In case of Direct Equity Investing, several stocks are often not traded for long periods. While some closed end funds may not be traded frequently, they are nevertheless more liquid than many stocks. In any case, all funds provide one of the two avenues for liquidity.
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Direct Equity Investing involves a high level of Transaction Costs per rupee invested in the form of brokerage, commissions, stamp duty, etc. While Mutual Funds charge a management fee, they succeed in keeping transaction costs under control because of the economies of scale they enjoy.
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In term of Convenience, Mutual Funds score over Direct Equity Investing. Funds serve investors not only through their investor services networks, but also through associates such as banks and other distributors. Many funds allow investors the flexibility to switch between schemes within a family of funds. They also offer facilities such as cheque writing and accumulation plans. These benefits are not matched by Direct Equity Investing.
OBJECTIVE
The objectives of the survey 1) T o study the performance of Reliance mutual fund. 2) To study the growth of Mutual fund industry in India. 3) To study the concept of mutual fund. 4) How effectively company is reaching their customer needs. 5) To study the investors perception about investing in the Mutual Funds.
RESEARCH METHODOLOGY
Research methodology: Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. One can also define research as a scientific and systematic search for pertinent information on a specific topic. Problem statement In this project an attempt to study and analyze the relationship between the characteristics of Mutual Funds as an Investment Vehicle and the Investment Behavior of the Investors. To study and find out the maximum information that we can get, we need a research design or a plan in advance of data collection and analysis for our project. Research design in fact, has a great bearing on the reliability of the results. A good design is often characterized by adjectives like flexibility, appropriate, efficient and economical & so on. Generally, the design that minimizes bias and maximizes the reliability of the data collected and analyzed is considered as a good deign. Similarly, a design which yields maximal information and provides an opportunity many different aspects of a problem is considered most appropriate and efficient design in respect of many research problems. Research design: Research design facilitates the smooth sailing of the various research operations, thereby making the research as efficient as possible, yielding maximal information with minimal expenditure of efforts. Sampling Design (1) Type of Universe: The first step in developing any sample design is to clearly define the set of objects, technically called the Universe, to be studied. The Universe for this Project was the Investors in the City of Pune.
(2) Sampling Unit: The sampling unit for this Project was the Investors working in the business areas, employees, students. (3) Size of Sample: Due to the time, the Sample size was restricted to 30 Investors. (4) Period of Study: The Project Study was conducted in the time period of two months i.e., from June 1st to July 31st, 2008. Collection of Data: The methods used for the collection of Data were: (1) The Interview Technique (2) The Observation Method DATA SOURCES After identifying and defining the research problem and determining specific information required solving the problem, the researcher task is to look for the type and sources of the data, which may yield the desired results. There are two types of data available to researcher, these are 1. Primary Data. 2. Secondary Data. Primary Data are generated when particular problem in hand is investigated by researcher employing a mail questionnaire, telephonic surveys and personal interview. Secondary Data on the other hand includes that data which is collected from some earlier research work and is applicable or usable in the study, the researcher has presently undertaken.
COMPANY PROFILE
About Reliance Money Reliance Money is a group company of Reliance Capital; one of India's leading and fastest growing private sector financial services companies, ranking among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital is a part of the Reliance Anil Dhirubhai Ambani Group. Reliance Money which commenced commercial operations in April 2007 has over 300,000 customers and 4,300 outlets in more than 3,500 locations across India. Reliance Money is a comprehensive electronic transaction platform offering a wide range of asset classes. Its endeavor is to change the way India transacts in financial markets and avails financial services. Reliance Money is a single window, enabling you to access, amongst others in Equities, Equity & Commodities Derivatives, Mutual Funds, IPOs, and Life & General Insurance products, Offshore Investments, Money Transfer, Money Changing and Credit Cards.
Reliance Mutual Fund (RMF) Reliance Mutual Fund (RMF), a part of the Reliance - Anil Dhirubhai Ambani Group, is India's leading Mutual Fund, with Assets Under Management of Rs. 77,765 crores (AUM as on 30th November 2007), and an investor base of over 4.2 million. Reliance Mutual Fund is one of the fastest growing mutual funds in the country. Reliance Mutual Fund offers investors a well-rounded portfolio of products to meet varying investor requirements. Reliance Mutual Fund has a presence in 300 cities across the country and 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 Ltd., a wholly owned subsidiary of Reliance Capital Ltd. Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Average Assets Under Management (AAUM) of Rs. 90,813.45 Crores (AAUM for June 30th 08 ) and an investor base of over 67.39 Lakhs. 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." Reliance Capital Ltd. is one of India’s leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity and proprietary investments, stock broking and other financial services. Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Average Assets Under Management (AAUM) of Rs.90, 813.45 Crores (AAUM for June 30th 08) and an investor base of over 67.39 Lakhs. Reliance Capital Ltd. has interests in asset management, life and general insurance, private equity and proprietary investments, stock broking and other financial services. Statutory Details: 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
WANOWARIE
RELIANCE MONEY LTD, SHOP NO G-23, GROUND FLOOR, SACRED WORLD COMPLEX WANOWARIE, PUNE, MAHARASHTRA. PIN-CODE: 411040. Contact number : 020-30483143/44
Bhandarkar Road
RELIANCE MONEY LTD, AMAR BUILDING, GROUND FLOOR, OPP. LORD SHRIKRISHNA BANK, BHANDARKAR ROAD, PUNE - 411004, MAHARASHTRA. Contact number : 020-66207534 / 7535
VIMAN NAGAR
RELIANCE MONEY LTD , SHOP NO 6 &7 SAI APEX BLDG, VIMAN NAGAR, PUNE, MAHARASHTRA. PIN-CODE: 411032. Contact number : 020-30483281/83/84
Future of Mutual Funds in India
By December 2004, Indian mutual fund industry reached Rs 1,50,537 crore. It is estimated that by 2010 March-end, the total assets of all scheduled commercial banks should be Rs 40,90,000 crore. The annual composite rate of growth is expected 13.4% during the rest of the decade. In the last 5 years we have seen annual growth rate of 9%. According to the current growth rate, by year 2010, mutual fund assets will be double.
Some facts for the growth of mutual funds in India •
100% growth in the last 6 years.
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Number of foreign AMC's are in the que to enter the Indian markets like Fidelity Investments, US based, with over US$1trillion assets under management worldwide.
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Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual funds sector is required.
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We have approximately 29 mutual funds, which is much less than US having more than 800. There is a big scope for expansion.
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'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'A' class cities. Soon they will find scope in the growing cities.
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Mutual fund can penetrate rural like the Indian insurance industry with simple and limited products.
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SEBI allowing the MF's to launch commodity mutual funds.
TYPES OF MUTUAL FUND SCHEMES •
By Structure
•
•
o
Open - Ended Schemes
o
Close - Ended Schemes
o
Interval Schemes
By Investment Objective o
Growth Schemes
o
Income Schemes
o
Balanced Schemes
o
Money Market Schemes
Other Schemes o
Tax Saving Schemes
o
Special Schemes
Index Schemes
Sector Specific Schemes
BY STRUCTURE •
Close-ended Fund/ Scheme: A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. 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 the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. 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 i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.
•
Growth / Equity Oriented Scheme: 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. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.
•
Interval Schemes: 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
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 manager’s outlook on different stocks. The Equity Funds are sub-classified depending upon their investment objective, as follows : •
Diversified Equity Funds
•
Mid-Cap Funds
•
Sector Specific Funds
•
Tax Savings Funds (ELSS)
Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-return matrix.
•
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.
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Income Funds: Invest a major portion into various debt instruments such as bonds, corporate debentures and Government securities.
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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.
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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 provide 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.
BY INVESTMENT OBJECTIVE:
• Growth Schemes Growth Schemes are also known as equity schemes. The aim of these schemes is to provide capital appreciation over medium to long term. These schemes normally invest a major part of their fund in equities and are willing to bear short-term decline in value for possible future appreciation.
• Income Schemes Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular and steady income to investors. These schemes generally invest in
fixed income securities such as bonds and corporate debentures. Capital appreciation in such schemes may be limited.
•
Balanced Schemes Balanced Schemes aim to provide both growth and income by periodically distributing a part of the income and capital gains they earn. These schemes invest in both shares and fixed income securities, in the proportion indicated in their offer documents (normally 50:50).
•
Money Market Schemes Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank call money.
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.
•
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.
•
Sector Specific Schemes: These are the funds/schemes, which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time.
Advantages of Mutual Funds •
Professional Management - The basic advantage of funds is that, they are professional managed, by well-qualified professional. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is considered to be relatively less expensive way to make and monitor their investments.
•
Diversification – purchasing units in a mutual fund instead of buying individual stocks or bonds, the investors risk is spread out and minimized up to certain extent. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others.
•
Economies of Scale - Mutual fund buy and sell large amounts of securities at a time, thus help to reducing transaction costs, and help to bring down the average cost of the unit for their investors.
•
Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate their holdings as and when they want.
•
Simplicity – Investments in mutual fund is considered to be easy, compare to other available instruments in the market, and the minimum investment is small. Most AMC also have automatic purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis.
•
Regulatory oversight: Mutual funds are subject to many government regulations that protect investors from fraud.
Disadvantages of Mutual Funds Mutual funds have their drawbacks and may not be for everyone: •
No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.
•
Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund.
•
Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.
•
Management risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.
CONCLUSION
Mutual Funds: Conclusion: I would like to conclude that, it is immense learning experience while preparing the project. To state on the concluding for the mutual funds, it can be said that Mutual funds are method for investors to diversify risk and to benefit from professional money management. A mutual fund brings together a group of people and invests their money in stocks, bonds, and other securities. The advantages of mutuals are professional management, diversification, economies of scale, simplicity and liquidity.
The disadvantages of mutuals are high costs, over-diversification, possible tax consequences, and the inability of management to guarantee a superior return. Mutual funds have lots of costs. Costs can be broken down into ongoing fees (represented by the expense ratio) and transaction fees (loads). The biggest problems with mutual funds are their costs and fees. Mutual funds are easy to buy and sell. You can either buy them directly from the fund company or through a third party. It is clear that investing through Mutual Funds is far superior to Direct Equity Investing except perhaps for the investor who has truly large portfolio and the time, knowledge and resources required for direct investing.
1 Equity/Growth Schemes The aim of growth funds is to provide capital appreciation over the medium to longterm. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation
over a period of time.
Reliance Natural Resources Fund : (An Open Ended Equity Scheme) 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.
Reliance Equity Fund: (An open-ended diversified Equity Scheme.) The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities of top 100 companies by market capitalization & of companies which are available in the derivatives segment from time to time and the secondary objective is to generate consistent returns by investing in debt and money market securities.
Reliance Tax Saver (ELSS) Fund : (An Open-ended Equity Linked Savings Scheme.) The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments.
Reliance Equity Opportunities Fund : (An Open-Ended Diversified Equity Scheme.) The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity securities & equity related securities and the secondary objective is to generate consistent returns by investing in debt and money market securities.
Reliance Vision Fund : (An Open-ended Equity Growth Scheme.) The primary investment objective of the
Scheme is to achieve long term growth of capital by investment in equity and equity related securities through a research based investment approach.
Reliance Growth Fund : (An Open-ended Equity Growth Scheme.) The primary investment objective of the Scheme is to achieve long term growth of capital by investment in equity and equity related securities through a research based investment approach.
Reliance Index Fund : (An Open Ended Index Linked Scheme.) The Investment Objective under the Nifty Plan is to replicate the composition of the Nifty, with a view to endeavor to generate returns, which could approximately be the same as that of Nifty. The Investment Objective under the Sensex plan is to replicate the composition of the Sensex, with a view to endeavor to generate returns, which could approximately be the same as that of Sensex.
Reliance NRI Equity Fund: (An open-ended Diversified Equity Scheme.) The Primary investment objective of the scheme is to generate optimal returns by investing in equity or equity related instruments primarily drawn from the Companies in the BSE 200 Index.
Reliance Regular Savings Fund: (An Open-ended Scheme.) Equity Option: The primary investment objective of this option is to seek capital appreciation and/or to generate consistent returns by actively investing in Equity &Equity-related Securities. Balanced Option: The primary investment objective of this option is to generate consistent returns and appreciation of capital by investing in mix of securities comprising of equity, equity related instruments & fixed income instruments.
Reliance Long Term Equity Fund: (An close-ended Diversified Equity Scheme.) The primary investment objective of the
scheme is to seek to generate long term capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities and Derivatives and the secondary objective is to generate consistent returns by investing in debt and money market securities.
Reliance Equity Advantage Fund: (An open-ended Diversified Equity Scheme.) The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio 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.
2 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.
Reliance Gilt Securities Fund - Short Term Gilt Plan & Long Term Gilt
Plan: Open-ended Government Securities Scheme) The primary objective of the Scheme is to generate Optimal credit risk-free returns by investing in a portfolio of securities issued and guaranteed by the central Government and State Government
Reliance Income Fund : (An Open-ended Income Scheme) The primary objective of the scheme is to generate optimal returns consistent with moderate levels of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in Debt & Money market Instruments.
Reliance Medium Term Fund: (An Open End Income Scheme with no assured returns.) The primary investment objective of the Scheme is to generate regular income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital
Reliance Short Term Fund: (An Open End Income Scheme) The primary investment objective of the scheme is to generate stable returns for investors with a short investment horizon by investing in Fixed Income Securities of short term maturity.
Reliance Liquid Fund : (Open-ended Liquid Scheme). The primary investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments.
Reliance Floating Rate Fund : (An Open End Liquid Scheme) The primary objective of the scheme is to generate regular income through investment in a portfolio comprising substantially of Floating
Rate Debt Securities (including floating rate securitized debt and Money Market Instruments and Fixed Rate Debt Instruments swapped for floating rate returns). The scheme shall also invest in Fixed rate debt Securities (including fixed rate securitized debt, Money Market Instruments and Floating Rate Debt Instruments swapped for fixed returns
Reliance NRI Income Fund : (An Open-ended Income scheme) The primary investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risks. This income may be complimented by capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in debt Instruments.
Reliance Liquidity Fund: (An Open - ended Liquid Scheme) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments.
Reliance Interval Fund (A Debt Oriented Interval Scheme) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio
Reliance Liquid plus Fund (An Open-ended Income Scheme.) The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and liquidity by investing in debt securities and money market securities.
Reliance Fixed Horizon Fund -I (A closed ended Scheme) The primary investment objective of the scheme is to seek to
generate regular returns and growth of capital by investing in a diversified portfolio.
Reliance Fixed Horizon Fund -II (An closed ended Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio.
Reliance Fixed Horizon Fund -III (An Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio
Reliance Fixed Tenor Fund (An Close-ended Scheme.) The primary investment objective of the Plan is to seek to generate regular returns and growth of capital by investing in a diversified portfolio.
Reliance Fixed Horizon Fund -Plan C (An closed ended Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio.
Reliance Fixed Horizon Fund - IV: (An Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio
Reliance Fixed Horizon Fund - V: (A Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified
portfolio of: Central and State Government securities and other fixed income/ debt securities normally maturing in line with the time profile of the scheme with the objective of limiting interest rate volatility
Reliance Fixed Horizon Fund - VI: (A Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of: Central and State Government securities and other fixed income/ debt securities normally maturing in line with the time profile of the series with the objective of limiting interest rate volatility
Reliance Fixed Horizon Fund - VII: (An Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of: Central and State Government securities and other fixed income/ debt securities normally maturing in line with the time profile of the series with the objective of limiting interest rate volatility.
3 Sector Specific Schemes These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. E.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to
keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.
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.
Reliance Diversified Power Sector Fund Reliance Diversified Power Sector Scheme is an Open-ended Power Sector Scheme. The primary investment objective of the Scheme is to seek to generate consistent returns by actively investing in equity / equity related or fixed income securities of Power and other associated companies.
Reliance Pharma Fund Reliance Pharma Fund is an Open-ended Pharma Sector Scheme. The primary investment objective of the Scheme is to generate consistent returns by investing in equity / equity related or fixed income securities of Pharma and other associated companies.
Reliance Media & Entertainment Fund Reliance Media & Entertainment Fund is an Open-ended Media & Entertainment sector scheme. The primary investment objective of the Scheme is to generate consistent returns by investing in equity / equity related or fixed income securities of media & entertainment and other associated companies
4 Exchange Traded Fund 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.
What Are NAVs The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets in the fund, this is the amount that the shareholders would collectively own.
Net Asset Value (NAV) is the actual value of one unit of a given scheme for a given
business day.
Units in the schemes are allotted on the basis of the Sale Price, which is calculated as follows: Sale Price= NAV *(1+ Entry Load) Units in the schemes are repurchased on the basis of Repurchase Price, which is calculated as follows: Repurchase Price= NAV *(1- Exit Load)
LIMITATIONS
Limitations Though the report has been given the insight to the various mutual fund schmes but it cannot be said fully relevant because of some limitations: •
It is difficult to get full insight of how fund managers have deployed their funds.
•
Mutual fund industry performance is dependent on daily churning of portfolio and NAV and the volatility of each funds change every day. The fund that is in comparision doing better today may not perform well tomorrow and thus affects the analysis process.
•
As of in these projects for the analysis purpose the concentration of only few schmes of Reliance mutual fund. Remaining schmes of Reliance mutual fund were not studied due to time limitation.
RECOMMENDATION Investors Most of us spend more than half our lives working and saving because money is important, in fact crucial. However, most of us spend almost no time planning to make that hard-earned money work more effectively for us. So, how do you plan your financial life? Here are some suggestions that will help you, the Investors, to make Investment Decisions that will lead to more fruitful results
(A) Put your house (Financial Profile) in order Financial planning does not begin at investing, but instead at reviewing your overall financial profile. You need to address the following issues before rushing to build an investment portfolio. (i) Insure your health, life and assets You should start your financial planning by taking steps to protect your family’s current lifestyle from events and expenses that are not in your control. You can achieve this by buying appropriate insurance policies for your medical expenses, life, car, and other important assets. (ii) Repay your high-cost loans A rupee saved is a rupee earned. Paying your credit card bills on time can save you more money in interest costs than most of your investments could earn you. This is also true of borrowings that cost you more than 15% per annum (after adjusting for any tax benefits). So, invest in repaying your high-cost loans first before you start building your investment portfolio.
(iii) Put aside money for emergencies Deploy some money in short-term investments that can be encashed on demand to help you tide over unforeseen needs and emergencies. (iv) Draw up a savings plan
Income - Expenditure = Savings You don't want this equation to be left to chance; it is strongly recommended that you make a savings plan. Under your savings plan you should put away as much as you can, as regularly as you can, with the aim to save at least 15% of your take home annual income. Depending on your financial commitments, you may be able to save more or less. It doesn't matter, as long as you are saving something.
RELIANCE TAX SAVER FUND(ELSS) Performance as on 30/06/2008 Absolute Compound Annualized 6 months 1 Year Since Inception Reliance Tax Saver (ELSS) Fund -20.50 7.57 Growth
-41.41
BSE100
-36.49
-7.53
18.89
Scheme Features Type : An Open-ended Equity Linked Savings Scheme. Investment Pattern : 80-100% in equity and equity related securities. Upto 20% in Debt and Money Market Instruments. Investment Objective : The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments. Net Asset Value : Calculated & declared every working day Plans / Options : Growth Option Dividend Pay-out Option & Dividend Reinvestment Option
Entry Load For Subscription below Rs.2 crores 2.25% For Subscription of Rs.2 crores & 1.25% Above but below Rs. 5 crores For Subscriptions of Rs.5 crore & Nil
Exit Load : Nil
Inter-Scheme Switch : Unitholders will have the flexibility to alter the allocation of their investments among the
scheme(s) offered by the Mutual Fund, in order to suit their changing investment needs, by easily switching between all the scheme(s)/plans/options of the Mutual Fund, after the statutory lock-in period of 3 Years. No load applicable for switches between the equity schemes. However, differential load shall be charged for switching from Reliance Index Fund and switching to Reliance NRI Equity Fund. Inter Plan/Inter Option Switch : Unitholders will have the flexibility to alter the allocation of their investments among the scheme(s) offered by the Mutual Fund, in order to suit their changing investment needs, by easily switching between all the scheme (s)/plans/options of the Mutual Fund, after the statutory lock-in period of 3 Years.
Recurring Expenses : AMC Fees Operational Expenses Marketing Expenses Total
1.25% 0.25 % 1.00 % 2.50%
Reliance Pharma Fund (Bonus) Scheme Details
Asset Size (Cr.) Fund Mngr 121.56
Launch Date
Sailesh Raj Bhan May 10, 2004
Latest Information
Min. Inv 5000.00
Inc. Inv(Rs.) 1
Date
NAV (Rs.)
31 Jul 2008
23.2480
28 Jul 2008
23.0638
15 Jul 2008
21.4630
1 Jul 2008
21.5824
20 Jun 2008
23.3599
Sectorial Allocation Sector
Assests (%)
Pharma Debt
Value (Rs. /Cr.)
96.11
133.59
3.89
5.40
Asset Allocation Equity
93.63
Debt
0
Return Summary Scheme Name 3MONTH
6MONTH 1YEAR
Reliance
-0.94
5.33
-0.81
Nifty
-2.26
-12.68
23.66
Sensex
-3.40
-11.49
23.41
Scheme Portfolio
Company
% of Inv
Inv Amt
Divi's Lab
14.45
17.57
Cipla
8.83
10.73
Fulford (Ind
8.07
9.81
Ranbaxy Labs.
7.17
8.72
Aventis Phar
6.71
8.16
Performance as on 31/07/2008 Absolute Compound Annualized 6 months 1 Year 3 Years Since Inception Reliance Pharma Fund - Growth 2.4 -11.26 16.73 22.54 BSE-HC 15.5 11.9 12.8 16.05 Scheme Features Type : An Open-ended Pharma Sector Scheme.
Investment Pattern : Types of Instruments
Equity and Equity related Securities Debt and Money market Instruments with average Maturity of 5 to 10 years.
Asset Allocation (% of Net Assets) Minimum Most Maximum Likely 0% 80% 100% 0% 20% 100%
Investment Objective : 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.
Net Asset Value : Calculated & declared every day Plans / Options : • o o • o o
Growth Plan : Growth Option Bonus Option Dividend Plan : Dividend (Pay-out) Option Dividend (Reinvestment) Option
Entry (Sales) Load : For Subscriptions Below Rs. 2 crores - 2.25% For Subscriptions of Rs. 2 crores and above and below Rs. 5 crores - 1.25% For Subscriptions of Rs. 5 crores and above - NIL Inter-Scheme Switch : At the applicable loads on the respective schemes. No load applicable for switches between the equity /sector specific schemes and Reliance Pharma Fund and vice-versa except Reliance NRI Equity Fund. Inter Plan/Inter Option Switch : Nil Exit Load : For Retail Plan for subscriptions of less than Rs 5 Crs per purchase transaction :1% if redeemed/switched on or before completion of 1 year from the date of allotment :nil if redeemed/switched after completion of 1 year from the date of allotment For subscriptions of more than Rs 5 Crs per purchase transaction: Nil
Switching Option : Investors may opt to switch Units between the Dividend Plan and Growth Plan of the Scheme at NAV based prices after completion of lock in period, if any. Switching will also be allowed into/from any other eligible open-ended Schemes of the Fund either currently in existence or a Scheme (s) that may be launched / managed in future, as per the features of the respective scheme. Recurring Expenses : Investment Management Expenses Operational Expenses
1.25% 0.75%
Marketing Expenses
0.25%
Total
2.25%
1 Year NAV Chart
Reliance Banking Fund - (Bonus) Scheme Details Asset Size (Cr.) Fund Mngr Launch Date 788.12 Sunil Singhania May 08, 2003
Min. Inv 5000.00
Previous NAV Date 31 Jul 2008 28 Jul 2008 18 Jul 2008 1 Jul 2008 20 June2008 Sectorial Allocation Sector Banking &
NAV (Rs.) 47.5284 48.7490 44.9341 40.2399 46.8400 Assests(%) 79.36
Value(Rs./Cr.) 745.05
Inc. Inv(Rs.) 1
Others
20.64
193.77
Asset Allocation Equity Debt
83.16 0
Return Summary Scheme Name 3MONTH6MONTH1YEAR Reliance -13.37 -23.11 5.65 Nifty -2.26 -12.68 23.66 Sensex -3.40 -11.49 23.41 Scheme Portfolio Company Cash & Bank St Bk of Ind ICICI Bank Pun. Natl. B Bank of Baro
% of Inv 16.84 15.87 10.64 7.27 6.43
Inv Amt 132.72 125.07 83.86 57.30 50.68
Performance as on 31/07/2008 Absolute 6 months
Compound Annualized
Reliance Banking Fund - Growth
-25.09
1 Year -3.27
S&P CNX Banks Index
-38.62
-14.55
3 Years 15.73
Since Inception 34.95
10.06
28.37
Scheme Features Type : An open-ended banking sector scheme. Investment Pattern : Asset Allocation Pattern of the Scheme :
Types of Instruments Equity & Equity related securities
Normal Allocation (% of Net Assets) 0 - 100 %
Debt & Money Market Instruments
0 - 100 %
Investment Objective : The primary investment objective of the Scheme is to seek to generate continuous returns by actively investing in equity / equity related or fixed income securities of banks. Net Asset Value : Calculated & declared every day
Plans / Options :
• o o • o o
Growth Plan : Growth Option Bonus Option Dividend Plan : Dividend Pay-out Option Dividend Reinvestment Option
Application Amount : Rs.5,000/- for Resident Indians and Non-Resident Indians and in multiples of Rs.1/- thereafter for both plans. Min. Additional Investment : Rs.1000/- and in multiples of Rs.1/- , thereafter for both plans. Portfolio Disclosures : Half-yearly Entry Load : For Subscription below Rs. 2 crs - 2.25% For subscription of Rs. 2 crs & above and below Rs. 5 crs - 1.25% For Subscription of Rs 5 crs & above - Nil Exit Load : Contingent Deferred Sales Charge : Nil For Retail Plan for subscriptions of less than Rs 5 Crs per purchase transaction :1% if redeemed/switched on or before completion of 1 year from the date of allotment :nil if redeemed/switched after completion of 1 year from the date of allotment For subscriptions of more than Rs 5 Crs per purchase transaction: Nil For Institutional Plan - Nil Inter-Scheme Switch : At the applicable loads in the respective scheme/s. No load applicable for switches between the equity/sector specific schemes and Reliance Banking Fund and vice-versa except Reliance NRI Equity Fund. Inter Plan/Inter Option Switch : Nil Redemption Cheques Issued : Mutual fund shall endeavour to issue within 3 Working days Minimum Redemption Amount :Any amount Recurring Investment Plan (RIP) : Available Regular investment option for corporate employees(RICE) : Available Regular withdrawal Plan (RWP) : Available Trigger Facility : Value & NAV Trigger to introduce a Stop loss or a Gain Cap. Switch Facility :Available. Systematic Transfer Plan / Dividend Transfer Plan : Available Nomination Facility : Available Mode of Holding : Single, Joint or Anyone or Survivor Benchmark Index : S & P CNX Banks Index Switching Option : Investors may opt to switch Units between the Dividend Plan and Growth Plan of the Scheme at NAV based prices after completion of lock in period, if any. Switching will also be allowed into/from any other eligible open-ended Schemes of the Fund either currently in existence or a Scheme (s) that may be launched / managed in future, as per the features of the respective scheme. Recurring Expenses :
Investment Management Expenses
1.25%
Operational Expenses
0.75%
Marketing Expenses
0.25%
Total
2.25%
1 Year NAV Chart
Summary of Reliance Gilt Securities Fund - Short Term & Long Term Gilt Plans Type : An Open-ended Government Securities Scheme Investment Pattern : Types of Instruments Short Term Gilt Plan Gilts Money Market Instruments Long-Term Gilt Plan Gilts Money Market Instruments
Allocation (% of Net Assets) 65 - 100% 0 - 35% 70 - 100% 0 - 30%
Investment Objective : 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. Net Asset Value : Calculated on daily basis Choice of Plans : Short Term Gilt Plan Plan Option Retail Plan Growth option
Application Amount : Rs.100,000 and in multiples of Rs.1 thereafter for all Options under the Retail Plan of Short Term Gilt Plan and Long Term Gilt Plan. Min. Additional Investment : Rs.1000 and in multiples of Rs.1 thereafter, for all Options under the Retail Plan of Short Term Gilt Plan and Long Term Gilt Plan. Portfolio Disclosures : Half-yearly Entry Load : NIL Long Term
0.0 %
Long Term PF Option
0.0 %
Short Term
0.0 %
Exit Load : Long Term (Retail Option)
0.0 %
Long Term PF Option
0.8 %
Short Term
0.0 %
Contingent Deferred Sales Charge : Nil Inter-Scheme Switch : Available at applicable loads in the respective schemes. Inter Plan/ Inter Option Switch : No Load for inter plan or inter option switch Redemption Cheques Issued : Mutual Fund shall endeavour to issue within 1 working day Minimum Redemption Amount : Any amount or any number of units Cut off time : 3:00 p.m. on working days as defined in the Offer Document Facilities Available : Systematic Transfer Plan Dividend Transfer Plan Switch Facility Nomination Facility
Mode of Holding : Single, Joint or Anyone or Survivor Benchmark Index : Short Term Gilt Plan: I Sec - Si Bex Long Term Gilt Plan: I Sec - Li Bex Switching Option : Investors may opt to switch Units between the plan and/or options under the plan of the Scheme at NAV based prices after completion of lock in period, if any. Switching will also be allowed into/from any other eligible open-ended Schemes of the Fund either currently in existence or a Scheme (s) that may be launched / managed in future, as per the features of the respective scheme. Recurring Expenses : Investment Management Expenses
0.25 %
Operational Expenses
0.20 %
Marketing Expenses Total
0.80 % 1.25%
Performance as on 31/07/2008 Absolute 6 months
Compound Annualized
Reliance G Sec Fund - LTP - Retail - Growth
-2.98
1 Year 4.56
I-Sec Li-BEX
-9.17
-3.44
3 Years 5.34 2.97
5 Yrs 6.56
Since Inception 6.54
3.11
3.27
Performance as on 31/07/2008 Absolute 6 months
Compound Annualized
Reliance G Sec Fund - STP - Retail - Growth
0.8
1 Year 2.95
I-Sec Si-BEX
1.96
5.33
3 Years 4.29 6.33
5 years 4
Since Inception 4.05
5.67
1 Year NAV Chart
NAV Performance as on 31/07/2008
Reliance Gold Exchange Traded Fund Prices of Gold
Absolute
Absolute
6 months 5.7
Since Inception 20.44
5.48
22.31
Exchange Traded Funds‌ETFs as they are called Exchange Traded Funds are usually passively managed mutual fund schemes tracking a benchmark index and reflect the performance of that index. These schemes are listed on the stock exchange and therefore have the flexibility of trading like a share on the stock exchange. It can also be looked as a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange, thus experiencing price changes throughout the day as it is bought and sold. Introducing Reliance Gold Exchange Traded Fund‌. RGETF as they will be called Reliance Gold Exchange Traded Fund (RGETF) is an open ended Gold Exchange Traded Fund which will track the performance of Gold Bullion. The units issued under the scheme will represent the value of gold held in the scheme. It is designed to provide returns that, before expenses, closely correspond to the returns provided by domestic price of Gold.
5.7
Gold ETF is a security listed on the stock exchange available for trading with an intention to offer investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold. Benefits of investing in Reliance Gold Exchange Traded Fund
• • •
•
• •
Safety & Security Zero concerns about physical security, theft or adulteration when faced with the tasks of custody and spot transactions. Safeguard in the form of electronic mode in case of unforeseen circumstances where you have lost all the physical wealth Long Term Commitments A cost effective and convenient way to invest in gold through an instantaneous exposure to a physical asset viz gold. For example it can help accumulate gold for your daughter’s wedding Transparency & Liquidity Its units can be traded like a share and therefore it provides the ability to buy and sell them quickly at the ruling market price and therefore highly liquid Diversification An efficient diversification for the portfolio of the investorM Cost Effective The expenses incurred in buying and selling units and the schemes ongoing expenses will be less than the costs associated with buying and selling of gold and storing and insuring gold bullion in a traditional gold bullion market.
Background on Gold & Exchange Traded Funds World Scenario India is the world’s largest gold consumer Worldwide Consumption
Source : World Gold Council
• • • •
Indian Scenario There is no doubt about the popularity & demand of gold in a country which exceeds 1000 tonnes of this metal. They buy it for Jewellery, contingencies, gifting, wedding, mortgage requirement etc. Gold has ritual, religious, sentimental values attached to it, so it cant be substituted and demand is more or less indispensable. However apart from Jewellery purpose one does not need it in a physical form. The per capital gold consumption is 0.7 grams, half that of the US and one third of the Middle East that is likely to go up. Source : www.reuters.com
Gold – A Portfolio Diversifier Gold Vs Sensex during different market cycles
Source : Bloomberg, www.bseindia.com During different market cycles Gold as an asset class has been delivering consistent returns. Debt Vs Gold prices during rising yields
Source : Bloomberg, 10 year bond yields rose from 4.97% in Oct ‘03 to 7.17% in Oct ‘05 to 8.11% in Apr ‘07 indicating a fall in debt market returns During the period of Apr ‘03 to Apr ‘07 Gold gave a CAGR of 14.9% Yields and prices of the bonds are inversely related. Therefore rise in yields would lead to lower prices & hence tend to reduce returns Gold – Hedge against US $
Source : Bloomberg The above graph shows that Gold has an inverse relationship with US dollar indicating that Gold can act as a hedge against dollar currency exposure. With the dollar weakening & the growth slowing down in the US, investors are flocking back to Gold Gold Vs Inflation
Source : Bloomberg The above data of WPI & Gold prices ($ terms) are equated to 100 as on Jan ‘99 Rising oil prices, coupled with high liquidity, have contributed to a rise in inflationary pressures globally. Inflation, simply put, is erosion in the value of money and therefore in such times there is a strong case to move money into real assets such as gold. Gold has been an effective hedge against inflation. Historically higher inflation has led to higher gold prices.
• • • • •
Outlook on Gold The return of positive investor sentiment, key external factors turning significantly price-positive, and an improving supply/demand balance drove gold prices over $700. In an environment of expected slower US growth momentum, fed funds rate easing, a weakening dollar, rising oil prices and heightened geopolitical concerns, gold prices appear to be firmly supported in the months ahead. Meanwhile, market conditions for gold-specific factors have now evolved unfavorably such that two price drivers have become less supportive. First, central bank selling has picked up, and second, de-hedging is set to slow. However, strong recovery in physical demand and positive external drivers outweigh the two gold specific factors for now. Hence in our view the gold prices are likely to maintain their upward momentum in the months ahead.
Rationale for investment in RGETF vis a vis other forms of investments in Gold Parameters
RGETF
Jewellers
Banks
Form
Demat Form
Bar or Coin
Bar or Coin
Security
Taken care by Fund
Investor’s Concern
Investor’s Concern
Transparency
Very High
Very Low
High
Impurity Risk
Nil
High
Nil
Pricing (for retail investors) Transparent. Will be traded at NSE Selling Back Sell back on exchange
Neither standard nor transparent. Not standard. Huge Markup, 10-15% ideally Conditional and uneconomical Restricted
Bid Ask Spread
Very Low
Very High
Denomination
1 gram and in multiples of 1 gram Available in Standard denomination No* Yes
Available in standard denomination.
Short-term Capital Gains Tax
Applicable before 1 year
Applicable before 3 years
Applicable before 3 years
Long-term Capital Gains Tax
Applicable after 1 year
Applicable after 3 years
Applicable after 3 years
Wealth Tax
Can’t Sell back
Yes
*Converting RGETF units to Gold may also attract Wealth Tax Product Features Type : An open-ended Gold Exchange Traded Fund that tracks the domestic prices of gold through investments in physical Gold. Investment Pattern : Instruments Physical Gold or Gold Related Instruments as permitted by regulators from time to time # Money Market instruments, Bonds, Debentures, Government Securities including T-Bills, Securitised Debt* & other debt securities as permitted by regulators from time to time
% of Corpus 90%- 100%
Risk Profile Medium
0– 10%
Low to Medium
# Presently, investment only in physical gold is allowed as per SEBI guidelines. Investment in gold or gold related instruments may be undertaken as and when permitted by SEBI. *Upto 10% in securitised debt Investment Objective : 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. Options : Only Dividend Pay-out Option Minimum Application Amount During New Fund Offer For All Investors : Investor can invest during the New Fund Offer with a minimum application amount of Rs. 5000/- and in multiples of Re 1/thereafter.
•
• •
During Continuous Offer On going purchases directly from the Mutual Fund would be restricted to Authorised Participants and Large Investors provided the value of units to be purchased is in *creation unit size. Authorised Participants and Large Investors may buy the units on any business day for the scheme directly from the Mutual Fund at applicable NAV and transaction charges, if applicable, by depositing Gold or cash, value of which is equal to creation unit size. Each creation unit consist of 100 units and cash component, if any, of Reliance Gold Exchange Traded Fund. RGETF units will be credited to the unitholders demat account on the date of realisation of instrument, at the applicable NAV. The AMC will appoint Authorised Participants to provide liquidity in secondary market on an ongoing basis. The Authorised Participants would offer daily two way quote in the market.
Modes of payment for subscriptions & redemptions during NFO & continuous offer with the AMC During NFO all the subscriptions will happen by cash (by issuing a cheque / DD) however during continuous offer the transactions with the AMC by Authorized Participants & Large Investors can happen by issuing a cheque / DD or by transferring requisite gold (as per LBMA Good Delivery Norms referred in the Offer Document) to the fund’s Designated DP account (in the form of Portfolio Deposit) while the balance Cash Component, if any has to be paid to the AMC. Please refer to the offer Document for further details. Allotment Price Allotment price will be equal to the face value of Rs100/- plus premium equivalent to the difference between the face value and price of one gram of gold on the date of allotment. For example : If on the date of allotment the price of 10 gm of gold is 9000, then the allotment price becomes as follows;
Rs 100 + premium equivalent to the difference between the face value and price of one gram of gold on the date of allotment. i.e Rs 100 + Rs (900-100) = Rs 900 approx (The above example is for illustration purpose and does not include the expenses of the scheme) Purity of Gold All gold bullion held in the scheme’s allocated account with the custodian shall be of fineness (or purity) of 995 parts per 1000 (99.5%) or higher. Load Structure : During NFO and Continuous Offer For all investors during the NFO Entry Load : Less than Rs. 1 lacs -
1.50%
Rs. 1 lacs & less than Rs. 25 lacs
0.75%
Rs. 25 lacs & less than Rs. 50 lacs
0.50%
Rs. 25 lacs & less than Rs. 1 crs
0.25%
Rs 50 lacs & less than Rs 1cr
0.25% & NOT Rs 25 lacs & less..
Exit Load : Nil During continuous offer : Entry & Exit Load: NIL Listing : The Fund would endeavor to get the units of the Scheme listed on the National Stock Exchange and / or any other stock exchange(s) as may be decided by the AMC within 30 days from the closure of the New Fund Offer period. Liquidity : After the close of the NFO, as RGETF would be listed on the Exchange, subsequent buying or selling by Unit holders can be made from the secondary market. The minimum number of Units that can be bought or sold on the exchange is 1 (one) unit. All investors including Authorised Participants and large investors may sell their units in the stock exchange(s) on which these units are listed on all the trading days of the stock exchange. The trading will be as per the normal settlement cycle. Alternatively, Authorised Participants and Large investors can directly buy / sell Units in blocks from the Fund in ‘Creation Unit’ size, as defined in this Offer Document on all working days. Mutual fund will repurchase units from Authorised Participants and Large investors on any business day provided the units offered for repurchase is not less than 100 units. New Fund Offer price : During the NFO, the RGETF units offered will have a face value of Rs.100/- each and will be issued at a premium equivalent to the difference between the allotment price and the face value of Rs.100/- as on the date of allotment. RGETF will be available in Dematerialized Form Switch Facility : Switch-in into RGETF from other schemes will be allowed during the New Fund Offer period at the applicable loads. Benchmark Index : As there are no indices catering to the gold sector/securities linked to Gold, currently GETF shall be benchmarked against the price of Gold. Risk Factors Statutory Details : Sponsor : Reliance Capital Limited. Trustee : Reliance Capital Trustee Co. Limited. Investment Manager : Reliance Capital Asset Management Limited. Statutory Details : The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956. Reliance Gold Exchange Traded Fund (RGETF)(An open-ended Gold ETF) : Investment Objective : 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. Asset Allocation : 1. Physical Gold or Gold Related Instruments as permitted by regulators from time to time - 90% - 100% (Presently, investment only in physical gold is allowed as per SEBI guidelines. Investment in gold or gold related instruments may be undertaken as and when permitted by SEBI); Money Market instruments, Bonds, Debentures, Government Securities including T-Bills, Securitized Debt & other debt securities as permitted by regulators from time to time - 0 – 10% (Upto 10% in securitized debt). Terms of Issue : The RGETF being offered will have a face value of Rs. 100/- each and will be issued at a premium equivalent to the allotment price and the face value of Rs. 100/- during the New Fund Offer period. The AMC will calculate and disclose the first NAV not later than 30 days from the closure of New Fund Offer Period. Subsequently, the NAV will be calculated at the close of every working day and shall be published in two daily newspapers. Liquidity : After the close of the NFO, as RGETF would be listed on the Exchange, subsequent buying or selling by Unit holders can be made from the secondary market. The minimum number of Units that can be bought or sold on the exchange is 1 (one) unit. All investors including Authorized Participants and large investors may sell their units in the stock exchange(s) on which these units are listed on all the trading days of the stock exchange. The trading will be as per the normal settlement cycle. Alternatively, Authorized Participants and Large investors can directly buy / sell Units in blocks from the Fund in ‘Creation Unit’ size, on all working days. Mutual fund will repurchase units from Authorized Participants and Large investors on any business day provided the units offered for repurchase is not less than 100 units. Load Structure : (For NFO) Entry Load: Less than Rs. 1 lacs - 1.50%; Rs. 1 lacs & less than Rs. 25 lacs - 0.75%; Rs. 25 lacs & less than Rs. 50 lacs - 0.50%; Rs. 50 lacs & less than Rs. 1 crs - 0.25%; Rs. 1 crore & above Nil; Exit Load : Nil (During Continuous Offer) Entry & Exit Load : NIL. It is to be distinctly understood that the permission given by NSE should not in any way be deemed or construed that the Offer Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the contents of the Draft Offer Document. The investors are advised to refer to the Offer Document for the full text of the ‘Disclaimer Clause of NSE.
Performance as on 31/07/2008 Absolute 6 months Reliance Diversified Power Fund - Retail Plan- Growth
-21.54
India Power Index
-23.96
Compound Annualized 1 Year 18.85
3 Years 47.2
Since Inception 50.8
2.87
25.98
26.05
Past Performance may or may not be sustained in the future. Compounded annualized returns of Growth Option. (Inception Date:10/05/2004) Calculations assume that all payouts during the period have been reinvested in the units of the scheme at the then prevailing NAV. Scheme Features Type : An Open-ended Power Sector Scheme. Investment Pattern :
Types of Instruments Minimum Equity and Equity related Securities Debt and Money market Instruments with average Maturity of 5 to 10 years.
Asset Allocation (% of Net Assets) Most Likely Maximum
0%
80%
100%
0%
20%
100%
Investment Objective : The primary Investment Objective of the Scheme is to seek to generate continuous returns by actively investing in equity / equity related or fixed income securities of Power and other associated companies. Net Asset Value :Calculated & declared every day Plans / Options :
• o o • o o
Growth Plan : Growth Option Bonus Option Dividend Plan : Dividend (Pay-out) Option Dividend (Reinvestment) Option
Application Amount : Rs.5,000/- for Resident Indians and Non-Resident Indians and in multiples of Rs.1/- thereafter for both plans. Min. Additional Investment : Rs.1000/- and in multiples of Rs.1/- , thereafter for both plans. Portfolio Disclosures : Half-yearly Entry (Sales) Load : For Subscription below Rs. 2 crs - 2.25% For subscription of Rs. 2 crs & above and below Rs. 5 crs - 1.25% For Subscription of Rs 5 crs & above - Nil Exit Load : For Retail Plan for subscriptions of less than Rs 5 Crs per purchase transaction :1% if redeemed/switched on or before completion of 1 year from the date of allotment :nil if redeemed/switched after completion of 1 year from the date of allotment For subscriptions of more than Rs 5 Crs per purchase transaction: Nil
For Institutional Plan - Nil Contingent Deferred Sales Charge : Nil Inter-Scheme Switch : At the applicable loads on the respective schemes. No load applicable for switches between the equity /sector specific schemes and Reliance Diversified Power Sector Fund and vice-versa except Reliance NRI Equity Fund. Inter Plan/Inter Option Switch : Nil Redemption Cheques Issued : Mutual fund shall endeavour to issue within 3 Working days Minimum Redemption Amount :Any amount Cut off time : 3:00 p.m. on working days as defined in the Offer Document Recurring Investment Plan (RIP) : Available Regular investment option for corporate employees(RICE) : Available Regular withdrawal Plan (RWP) : Available Trigger Facility : Value & NAV Trigger to introduce a Stop loss or a Gain Cap. Switch Facility :Available. No load applicable for switches between the equity schemes except Reliance NRI Equity Scheme. Systematic Transfer Plan / Dividend Transfer Plan : Available Nomination Facility : Available Mode of Holding : Single, Joint or Anyone or Survivor Benchmark Index : India Power Index Switching Option : Investors may opt to switch Units between the Dividend Plan and Growth Plan of the Scheme at NAV based prices after completion of lock in period, if any. Switching will also be allowed into/from any other eligible open-ended Schemes of the Fund either currently in existence or a Scheme (s) that may be launched / managed in future, as per the features of the respective scheme. Recurring Expenses :
Investment Management Expenses
1.25%
Operational Expenses
0.75%
Marketing Expenses Total
0.25% 2.25%
The above expenses are estimates only and are subject to change as per actuals. Expenses on an ongoing basis will not exceed the maximum limits as may be specified by SEBI Regulations from time to time.Please read the offer document for details.
Scheme Details Asset Size (Cr.) 4975.90
Fund Mngr Sunil Singhania
Launch Date Mar 29, 2004
Min. Inv
Inc. Inv(Rs.) 5000.00
1
Latest Information Latest NAV Latest Dividend
Date
57.3884 0
NAV (Rs.)
31 Jul 2008
57.0046
22 Jul 2008
55.4487
15 Jul 2008
51.4232
18 Jun 2008
59.6168
12 Jun 2008
58.8194
Sectorial Allocation Sector
Assests(%)
Value(Rs./Cr.)
Diversified
74.21
4343.11
Debt
25.79
1509.34 More
Asset Allocation Equity
74.18
Debt
0
1 Year NAV Chart
Return Summary Scheme Name 3MONTH Reliance
6MONTH 1YEAR
-11.95
-16.13
25.02
Nifty
-2.26
-12.68
23.66
Sensex
-3.40
-11.49
23.41
Scheme Portfolio Company Net CA & Oth
% of Inv
Inv Amt
25.82
1284.78
Other Equiti
8.69
432.41
Tata Power C
5.24
260.74
Reliance Ind
4.89
243.32
Jindal Steel
4.72
234.86
BIBLIOGRAPHY
URLS: www.reliancemoney.com www.reliancemutualfund.com www.moneycontrol.com www.amfiindia.com www.myiris.com
BOOKS:
ANNEXUERE
Annexure Name of respondent: Address: Occupation: Age: Gender: Male Education: Contact No: Email_id:
Female
1) Are you interested in investment? a) Yes
b) No
2) What are your preferred investment priorities? (1-6) Name of investment a) Insurance b) Bank c) Bonds and debentures d) Equities and share market
Priorities
e) National saving scheme f) Real Estate g) Others
3) What percentage of your income do you invest? a) Below 10% b) 10-30% c) 30-50% d) Above 50 4) What is the Period of Investments? (A) Short Term (Less than 1 year) (B) Medium Term (1-5 years) (C) Long Term (More than 5 years) 5) If the Performance of an Investment you have recently made is below your expectations, How would you feel? (A) Very Upset (B) Somewhat upset ,but hope that it will improve in the future (C) Not upset because I know that all investments carry risks 6) Are you aware about Mutual fund? a)Yes
b) No
7) What is your perception about mutual fund? a) Safe
b) Risky c) Others 8) Have you invested in mutual fund? a) Yes
b) No
9) Do you know different type of Reliance mutual fund schemes? a) Yes
b) No
10) Are you invested in Reliance mutual fund? a) Yes
b) No
11) How do you select mutual fund? a) A brandname b) High NAV c) High returns d) Publicity e) Others 12) Give comments on Reliance Mutual Fund: