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Introduction TO MUTUAL FUND
Common Fundss: An overview

A Common Fund is a trust that pools the nest eggs of a figure of investors, who portion a common fiscal end. The money therefore collected is invested by the fund director in different types of securities depending upon the aim of the strategy. These could run from portions to unsecured bonds to money market instruments. The income earned through these investings and the capital grasps realized by the strategy are shared by its unit holders in proportion to the figure of units owned by them. Thus a Common Fund is the most suited investing for the common adult male as it offers an chance to put in a diversified, professionally managed portfolio at a comparatively low cost. Anybody with an investible excess of every bit small as a few thousand rupees can put in Common Fundss. Each Common Fund strategy has a defined investing aim and scheme.

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A common fund represents a vehicle for corporate investing. When anybody take part in the strategy of common fund, so he or she become portion proprietor of investings held under the strategy.

OFFER DOCUMENT AND KEY INFORMATION MEMORANDUM

The offer papers is most of import beginning of information for investors. Close-ended financess have to publish the OD at the clip of IPO whereas open-ended financess have to update the OD at least one time in two old ages. The Cardinal Information Memorandum ( KIM ) , which is an abridged version of OD, has to be obligatorily made along with the application for SEBI has prescribed the format and contents of the OD.

The OD contains preliminary information on fund construction and building, cardinal properties of the strategy, inside informations of the offer, investor rights and information on income and disbursals of bing strategies. The cardinal properties of a strategy include the strategy type, aims, investing form, fees and disbursals, liquidness conditions, accounting and rating, and investing limitations. The AMC prepares the OD and KIM and is responsible for the information contained in it and the legal guardians approve the contents of the OD and KIM.SEBI does non O.K. or attest the contents of the OD or KIM.

IMPORTANT CHARACTERISTICS OF THE MUTUAL FUND

A common fund really belongs to the investors who have pooled their financess. The ownership of the common fund is in the manus of the investor
A common fund is managed by investing professional and other service suppliers who earn a fee for their services from the fund
The pool of financess is invested in a portfolio of marketable investings. The value of the portfolio is updated every twenty-four hours.
The investor ‘s portion in the fund is denominated by “ UNIT ” . The value of the unit changes with alterations in the portfolio value every twenty-four hours the value of the unit of investing is called as the Net Assets Value or NAV.
TYPES OF MUTUAL FUND SCHEMES
Common fund strategies may be classified on the footing of its construction and its investing aim.

By Structure:

Open-ended Fundss

An open-end fund is one that is available for subscription all through the twelvemonth and these do non hold a fixed adulthood. Investors can conveniently purchase and sell units at current Net Asset Value ( “ NAV ” ) monetary values. The cardinal characteristic of open-end strategies is liquidness.

Closed-ended Fundss

Closed-ended Fundss are kept unfastened merely for a limited period normally one month to three months. It does non let the investors to retreat financess as and when they like. A stopping point -ended strategy has a fixed adulthood period. The close-ended strategies are listed on the secondary market.

Interval Fundss

Interval financess are those which have the characteristics of open-ended and close-ended strategies. They are unfastened for sale or salvation, during pre-determined intervals at NAV related monetary values.

By Investment Aim: –

Growth Fundss

The growing financess provide capital grasp over the medium to long- term. Such strategies usually invest a bulk of their part in equities. It has been proven that returns from stocks, have outperformed most other sort of investings held over the long term. Growth strategies are ideal for investors holding a long-run mentality seeking growing over a period of clip.

Income Fundss

The purpose of income financess is to supply regular and steady income to investors. Such strategies by and large invest in fixed income securities such as bonds, corporate unsecured bonds and Government securities. Income Fundss are ideal for capital stableness and regular income.

Balanced Fundss

The purpose of balanced financess is to supply both growing and regular income. Such strategies sporadically distribute a portion of their earning and put both in equities and fixed income securities in the proportion indicated in their offer paperss. In a lifting stock market, the NAV of these strategies may non usually maintain gait, or autumn every bit when the market falls. These are ideal for investors looking for a combination of income and moderate growing.

Money Market Fundss

The purpose of money market financess is to ; supply easy liquidness, saving of capital and moderate income. These strategies by and large invest in safer short-run instruments such as exchequer measures, certifications of sedimentation, commercial paper and in the market. These are ideal for Corporate and single investors as a agency to park their excess financess for short periods. Inter-bank call money. Tax returns on these strategies may fluctuate depending upon the involvement rates predominating

Load Fundss

A Load Fund is one that charges a committee for entry or issue. That is, each clip you buy or sell units in the fund, a committee will be collectible. Typically entry and issue tonss range from 1 % to 2 % . It could be deserving paying the burden, if the fund has a good public presentation history.

No-Load Fundss

A No-Load Fund is one that does non bear down a committee for entry or issue. That is, no committee is collectible on purchase or sale of units in the fund. The advantage of a no burden fund is that the full principal is put to work.

Other Schemes: –

Tax Salvaging Schemes

These strategies offer revenue enhancement discounts to the investors under specific commissariats of the Indian Income Tax Torahs as the Government offers revenue enhancement inducements for investing in specified avenues. Investings made in Equity Linked Savings Schemes ( ELSS ) and Pension Schemes are allowed as tax write-off u/s 88 of the Income Tax Act, 1961. The Act besides provides chances to investors to salvage capital additions u/s 54EA and 54EB by puting in Mutual Funds, provided the capital plus has been sold prior to April 1, 2000 and the sum is invested before September 30, 2000.

Particular Schemes

Industry Specific Schemes
Industry Specific Schemes invest merely in the industries specified in the offer papers. The investing of these financess is limited to specific industries like InfoTech, FMCG, and Pharmaceuticals etc.

Index Scheme
An index strategy is an equity strategy that invests its principal in a basket of equity stocks that comprise a given stock market index such as the S & A ; P Nifty Index or the Sensex, with each stock being assigned a weight age equal to what it has in the index.

Sectoral Schemes
A sectoral strategy invests its principal in the equity stocks of a given sector such as pharmaceuticals, information engineering, telecommunications, and power and so on.

Commodities Fundss
Commodities financess specialize are puting in different trade goods straight or through trade goods future contracts. Specialized financess may put in a individual trade good or a group of trade goods such as comestible oil or rains, while diversified trade good financess will distribute their assets over many trade goods

Common Fund Structure
The common fund construction consists of the undermentioned parties:

Patron: Patron is the individual who moving entirely or in combination with another organic structure corporate establishes a common fund. Sponsor must lend at least 40 % of the net worth of the Investment Managed and run into the eligibility standards prescribed under the Securities and Exchange Board of India ( Mutual Funds ) Regulations, 1996.

Trust: The Mutual Fund is constituted as a trust in conformity with the commissariats of the Indian Trusts Act, 1882 by the Sponsor. The trust title is registered under the Indian Registration Act, 1908.

Trustees: Trustee is normally a company ( corporate organic structure ) or a Board of Trustees ( organic structure of persons ) . The chief duty of the Trustee is to safeguard the involvement of the unit holders and inter alia guarantee that the AMC maps in the involvement of investors and in conformity with the Securities and Exchange Board of India ( Mutual Funds ) Regulations, 1996

Asset Management Company: The Trustee as the Investment Manager of the Mutual Fund appoints The AMC. The AMC is required to be approved by the Securities and Exchange Board of India ( SEBI ) to move as an plus direction company of the Mutual Fund

Registrar and Transfer Agent: The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application signifier, salvation petitions and despatchs account statements to the unit holders. The Registrar and Transfer agent besides handles communications with investors and updates investor records.

Custodian: It is frequently an independent organisation, and it takes detention of securities and other assets of a common fund. Among public sector common financess, the patron or the legal guardian by and large besides acts as an keeper.

The compounded one-year entire return on a common fund strategy represents the return to investors from a strategy, since the day of the month of issue. It includes the reinvestment of dividends and makes accommodations for fillip and rights. It is calculated on NAV footing or monetary value footing. On NAV footing, it reflects the return generated by fund director on NAV. In this computation, it is assumed that dividend is reinvested at the NAV prevailing on the twenty-four hours it is paid. On monetary value footing, it reflects the return to investors by manner of market or repurchase monetary value. In this computation, it is assumed that dividend is reinvested at the predominating market or reprint monetary value.

Hazard FACTORS

Common Funds and securities investings are capable to market hazards and there is no warrant that the aims of the Scheme will be achieved. As with any investing in securities, the NAV of the Units issued under the Scheme can travel up or down depending on the factors and forces impacting the capital markets. Past public presentation of the Sponsor/AMC/Mutual Fund is non a mark of the future public presentation of the Scheme.

The Sponsor is non responsible for any loss ensuing from the operation of the Scheme beyond their initial part of Rs.1 hundred thousand towards the puting up of the Mutual Fund. The NAV of the Scheme may be affected, due to alterations in the market conditions, involvement rates, trading volumes, colony periods and transportation processs. The Common Fund is non guaranting that it will do periodical dividend distributions, though it has every purpose of making so. All dividend distributions are capable to the handiness of distributable excess in the Scheme. For inside informations of strategy characteristics and for strategy specific hazard factors, please refer to the Scheme Information Document.

Introduction TO RELIANCE MUTUAL FUND

Reliance Mutual Fund ( RMF ) is one of the India ‘s taking Common Fundss and with Average Assets Under Management ( AAUM ) of Rs. 1,16,782 CRORES.Reliance Mutual Fund is portion of the Reliance – Anil Dhirubhai Ambani Group, is one of the fastest turning common financess in the state.
RMF offers investors a well-managed portfolio of merchandises to run into different investor demands and has presence in 118 metropoliss across the state.
Reliance Mutual Fund invariably endeavours to establish advanced and new merchandises and client service enterprises to increase value to investors.

“ Reliance Mutual Fund strategies are managed by Reliance Capital Asset Management Limited. , a subordinate of Reliance Capital Limited, which holds 93.37 % of the paid-up capital of RCAM and the balance paid up capital being held by minority stockholders. ”
Reliance Capital Ltd. is one of India ‘s prima and fastest turning private sector fiscal services companies, and ranks among the top 3 private sector fiscal services and banking companies, in footings of net worth. Reliance Capital Ltd. has involvements in plus direction, life and general insurance, private equity and proprietary investings, stock broking and other fiscal services.

SCHEMES OF RELIANCE MUTUAL FUND

Equity/Growth Schemes: -The chief motivation of growing financess is to supply capital grasp over the medium to long- term. Such strategies usually invest a major part of their principal in equities. Such financess have relatively high hazards as compared to other strategies. These strategies provide different options to the investors like dividend option, capital grasp etc. and the investors may take an option depending on their penchants or demand. The investors must bespeak the option in the application signifier. The common financess besides allow the investors to alter the options at a ulterior day of the month. Growth strategies are good for investors holding a long-run mentality and those who seeking grasp over a period of clip.

Debt/Income Schemes: -The income financess is to supply regular and steady income to investors. Such strategies by and large invest in fixed income securities such as bonds, corporate unsecured bonds, Government securities and money market instruments. These financess are less hazardous compared to equity strategies. These financess are non affected because of fluctuations in equity markets as they chiefly risk free common financess. But chances of capital grasp are besides limited in such financess. The NAVs of such financess are affected because of alteration in involvement rates in the state. If the involvement rates fall the NAVs of such financess are likely to increase in the short tally and frailty versa. However, long term investors may non trouble oneself about these fluctuations.

Sector Specific Schemes: -These are the financess or strategies which invest in the securities of merely those sectors or industries as specified in the offer paperss. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods ( FMCG ) , Petroleum stocks, etc. The returns in these financess are dependent on the public presentation of the several sectors/industries. While these financess may give higher returns and they are more hazardous compared to diversified financess. Investors need to maintain a ticker on the public presentation of those sectors or industries and must go out at an appropriate clip. They may besides seek advice of an expert in order to put in these common financess.

Exchange Traded Funds ( ETFs ) : -Exchange Traded Funds ( ETFs ) are normally managed common fund strategies tracking a benchmark index and reflect the public presentation of that index. These strategies are listed on the stock exchange and hence have the flexibleness of trading like a portion on the stock exchange. It can besides be looked as a security that tracks an index, a trade good or a basket of assets like an index fund, but trades like a stock on an exchange, therefore sing monetary value alterations throughout the twenty-four hours as it is bought and sold.

Fixed Maturity Plans ( FMPs ) : -Fixed Maturity Plans ( FMPs ) are fundamentally debt oriented investing strategies with a pre-specified term of office offered by common financess. FMPs invest in a portfolio of debt instruments whose adulthood coincides with the adulthood of the concerned FMP. The primary aim of a FMP is to bring forth income while taking to protect the capital by puting in a portfolio of debt and money market securities. Since FMPs are available with several adulthood options, one can put in the relevant program depending upon his investing skyline and the demand of hard currency flows.

RELIANCE PORTFOLIO MANAGEMENT SERVICES

Reliance Portfolio Management Services is a premium fiscal service, supplying advanced & A ; sole merchandises through discretional & A ; consultative services. Its expertness has earned the trust of 1000s of high net-worth individual/ institutional investors and created a household that is invariably turning. Reliance Portfolio Management Services can carry on investings with true delicacies coupled with passion and invention.

Reliance Portfolio Management Services is a portion of Reliance Capital Asset Management Ltd. , a entirely owned subordinate of Reliance Capital Ltd. Reliance Capital Ltd. is one of India ‘s prima and fastest turning private sector fiscal services companies, and ranks among the top 3 private sector fiscal services and banking companies, in footings of net worth. Reliance Capital Ltd. has involvements in plus direction, life and general insurance, private equity and proprietary investings, stock broking and other fiscal services.

SRUCTURE OF AMC OF RELIANCE MUTUAL FUND
Patron: Reliance Capital Limited

Trustee: Reliance Capital Trustee Co. Limited

Investing Director: Reliance Capital Asset Management Limited

Custodian-The legal guardians has appointed Deutsche Bank, AG located at KODAK House, Ground Floor,222 Dr.D.N.Road, Mumbai-400001.As the keeper of the securities that bought and sold under the strategy.

Registrar-Reliance Capital Asset Management Limited has appointed Karvy Computershare Private Limited to move as the Registrar and Transfer Agent to the strategies of Reliance Mutual Fund.

Working OF ASSET MANAGEMENT COMPANY

The plus direction company is a separate company appointed by the legal guardians to run common fund. In return for its services, the AMC is compensated in the signifier of investing direction and advisory fees. Each strategy of the common fund pays the AMC an one-year investing direction and advisory fees which is linked to the size of the strategy. Presently this fee is capable to the following bounds: 1.25 per centum on the first Rs.100 crores of the hebdomadal mean net assets and 1.00 per centum on the balance of assets. The caput of AMC is by and large referred to as the main executive officer ( CEO ) , following to him is the main investing officer ( CIO ) who shapes the fund ‘s investing doctrine and who is supported by fund directors responsible for pull offing assorted strategies. The fund directors are assisted by a squad of analysis who track markets, sectors and companies.

Introduction TO PRUDENTIAL ICICI MUTUAL FUND

Prudential ICICI Mutual Fund is the largest private sector common fund in India with assets of over Rs.34,119 crore under direction as of Aug 2006. The plus direction company, Prudential ICICI Asset Management Company Limited, is a joint venture between Prudential Plc, Europe ‘s taking insurance company and ICICI Bank, India ‘s premier fiscal establishment. Prudential Plc holds 55 per cent of the plus direction company and the balance by ICICI Bank. In a span of merely over six old ages, Prudential ICICI Asset Management Company has emerged as one of the largest plus direction companies in the state.

The Company manages a comprehensive scope of strategies to run into the varying investing demands of its investors spread across 68 metropoliss in the state.

ICICI Prudential Mutual Fund is the merchandise of ICICI Prudential Asset Management Company.It is one of the largest in the universe, ICICI Prudential Mutual Funds in India has gained a pre-eminent place of high returns and growing programs in the Indian investing markets. Get downing operations in 1998 with merely 2 financess, the merchandise count from ICICI Prudential Mutual Fund.ICICI Prudential Asset Management Co Ltd offers a different scope of solutions that enable the investors to make a portfolio of investing strategies harmonizing to the clip period, return and hazard they want. Fund director at ICICI Prudential Mutual Funds aid to choose the most efficient fund that is managed to minimise liquidness, recognition and involvement rate hazards. Investing in the assorted financess has ensured a fixed fund value, growing and therefore high returns for our income. Some of the common financess from ICICI Prudential Asset Management Company: –

Equity Fundss:

ICICI Prudential Mutual Fundss have proven to be good investing chances with minimal hazards and high returns as they indicated in the past investings with the company by the clients. Fundss like ICICI Prudential Infrastructure Fund, Power Fund, Discovery Fund that is long-run diversified equity investing strategies have gained unexpected support from the investors.

PRUDENTIAL ICICI PORTFOLIO MANAGEMENT SERVICES

The investing procedure consists of ab initio fixing a existence of stocks that are citing at low ratings, and later carry oning in depth cardinal research with an purpose of understanding the true worth of the concern, grounds behind the current undervaluation and the possible drivers that could take to a rerating of the stock. This is because there are besides a big figure of companies whose low ratings are justified by weak basicss.

The keeping periods of single stocks tend to be high as the necessary drivers for the expected re-rating could fall into topographic point over a period of clip. The public presentation of the Deep Value portfolio may therefore non travel in line with the overall markets, and could significantly under or surpass the markets at assorted points in clip.

ASSET MANAGEMENT COMPANY OF PRUDENTIAL ICICI MUTUAL FUND

Shahzad is the Executive Director of ICICI Prudential AMC. He joined the ICICI Bank ‘s Asset Management Business in August 1993, which later partnered with Prudential Plc in the twelvemonth 1998 to go ICICI Prudential AMC. Shahzad holds a Masters in Management Studies from Somaiya Institute of Management Studies and Research. He has more than 22 old ages of industry experience across the banking & A ; fiscal services sector. At ICICI Prudential AMC his duties include taking the PMS concern with an purpose towards guaranting farther robust growing of the concern. He is besides responsible for supervising International Business & A ; Marketing & A ; Brand edifice.

ICICI Prudential Asset Management has subscribed bulk of the securities in an Rs 48 crore micro loan securitization dealing in Equitas Micro Finance. This is the first clip a common fund industry is puting in micro finance in India. The dealing is backed by over 55,000 micro-loans originated by Equitas Micro Finance and was structured by IFMR Capital. Axis Bank, Dhanalakshmi Bank, and IFMR Capital besides participated in the dealing.

On November 18, FC broke the intelligence that a common fund and two Bankss are take parting in the dealing.

The Company manages a comprehensive scope of strategies to run into the varying investing demands of its investors

APPLICATIONS OF PRUDENTIAL ICICI MUTUAL FUND

There is medium to long-run investing of 3 old ages.
Investing Abroad-exposures to abroad markets entreaties to both sophisticated and unworldly investors.
Retirement Income-Investment while employed-take income in retirement/use capital as a net safety.
Accomplishment of long term ends i.e. lodging and instruction.
Investing for children-Parents and Grandparents set up investing history on the behalf of their kids and grandchildren.
Analysis OF THE STUDY
From the comparative survey of Reliance and ICICI Mutual Fund, we come to cognize that:

Prudential ICICI is the best acting financess.
Among the bing substructure financess, ICICI Prudential Infrastructure fund has a good public presentation from August 2005.
The substructure fund is presently heavy with over Rs.3, 800 crore in assets.
It is a high beta fund and it outperforms its benchmark index Nifty, with good borders, over the one twelvemonth to three twelvemonth periods.

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