Aditya Final Report (to Edit)

8/2/2019 Aditya Final Report (to Edit)

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SUMMARY/ABSTRACT

The basic objective of any financial services company is to provide absolute tailor made products

and services to the customer and to retain them in the organization, but to retain a particular

customer is not easy because customer expectations change with time and it becomes a tough job

for the company to curb the needs of its customers. Now in the case of an asset management

company, a lot of companies are emerging as players. Here a study has been undertaken with

regards to RELIANCE AMC. This study looks at the expectation of the customers regarding

mutual funds and issues relating to customers expectation. The need for this research is to

emphasize the expectations of the customers of mutual funds and how the company is performing

in accordance to their expectations.

This research is conducted to understand the customers perception towards mutual fund.

Previously people were having very little knowledge of mutual funds because the brokerage

companies in India had not made efforts to expand the market. They had been doing business with

the same clientele. There is also a lack of investor awareness as far as markets are concerned. The

Harshad Mehta scam and various other scams have created a bad impression in people's minds and

this need to be changed. Just to put things in perspective, India has 330 million bank accounts. The

mutual fund industry has 30 million unique folios. Unfortunately, in the broking industry, the

number of people with Demat accounts has continued to stagnate at 5.85 million in the last 10-12years, which is worrisome. Every industry in India has grown over the last 10 years except this

one. Whatever retail participation exists is coming from bigger cities such as Mumbai and Delhi.

The services have not reached bottom-of-the-pyramid towns. Good Mutual funds in India have

given a return of 1520% p.a. over the long term.

A Mutual Fund is a trust that pools, the savings of a number of investors who share a common

financial goal. The money thus collected is then invested in capital market instruments such as

shares, debentures and other securities. The income earned through these investments and the

capital appreciation realized is shared by its unit holders in proportion to the number of units

owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it

offers an opportunity to invest in a diversified, professionally managed basket of securities at a

relatively lower cost.

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Summer Internship Project/Aditya Nagaraja/IMCOST


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CHAPTER 1

INTRODUCTION

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PURPOSE OF THE STUDYThe main purpose of the study is to know the expectations and preferences of those investors who

invested in RELIANCE mutual funds and the satisfaction levels of investors with the services

provided by the RELIANCE Asset Management Company, Mumbai

In the present competitive environment it is very crucial for every business firm to ensure

satisfaction of its customers. According to one survey it was found that it costs five times more to

attract a new customer than to retain an existing one. So with all these parameters taking into

consideration one can say that it is very important to provide goods and services that satisfies the

customers needs or wants irrespective of the industry or scale of the business in which a firm is

operating.

Here the main purpose of the survey is to know the various factors that are very important in

satisfying the customers needs and to know how RELIANCE AMC is ensuring its customers

satisfaction.

The expectations of customers vary from one customer to the other customer. For example some

customers are only concerned about the returns that they are getting from a fund but at the same

time there are other customers who are very specific about the location, ambience and front lineemployees interaction and some other parameters. It is very difficult for any business firm to

satisfy all the expectations of each and every customer but there are some common factors that are

essential to fulfill them.

The objectives of the projects are given as below. The details of the survey such as the source of

data, the sample size taken and the methods of analysis are all given briefly in the methodologies.

There are some constraints throughout the project, which are given clearly in the limitations.

OBJECTIVES

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1. To understand the different investment options provided by RELIANCE mutual funds through

its mutual fund schemes.

2. To know the investors expectations of mutual funds offered by RELIANCE mutual funds.

3. To know the various services provided by RELIANCE AMC to its investors.

4. To study the satisfaction levels of customers in RELIANCE mutual funds.

5. To identify how brand building helps in meeting the customers expectations to meet their

investment objectives

LIMITATIONS

1. As the data will be collected through a questionnaire, there are chances of biased information

provided by the respondent.

2. The study is confined to the existing customers of RELIANCE mutual funds only.

3. The survey will be limited only to Mumbai city.

4. The views and preferences of investors are inferred through the knowledge and perception of the

relationship managers of different banks and hence are subject to some errors.

METHODOLOGY4



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DATA SOURCE

Primary sourceResearch is based on primary and secondary data. The research has been done by primary

and secondary data collection, and primary data has been collected by a structured questionnaire

and interacting with the Relationship Managers during the branch visits and by telephonic

conversations.

Secondary Source

Company Brochures

Company Website

Internet

RESEARCH DESIGN

This report is based on primary data; this primary data collected was given more

importance as it was collected from the Relationship Managers during the branch visits since

it is an overhearing factor in attitude studies.

The most important use of the survey is that it helped in identifying the kind of

investors the Relationship Managers come across, and the investors knowledge about

Mutual Fund.

It also helped in collecting vital information that is required by the top management

to assist them for the better decision making in both day to day decision and critical ones.

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Sample size: Thesample size for the survey is 20.

Type of sampling: Stratified random sampling technique is used for collecting the primary

data. The data is collected only from RELIANCE mutual fund AMC. i.e. The RMs of ING

Vaisya and Standard Chartered Bank, Mumbai branches.

Methods used for analysis: Bar charts and pie charts are the tools that are used in analyzing

the data.

SAMPLE

Relationship Managers from Standard Chartered and ING Vysya in Mumbai

Standard Chartered ING Vaisya

1.Chowpatty 1. Khar

2. Crawford 2. Vile Parle

3. Fort 3. Juhu Tara

4. Santacruz 4. Juhu

5. Goregaon 5. Lokhadwala

6. Chembur 6. Andheri (E)

7. Ghatkopar 7. Saki Vihar

8. Malad

9. Kandivili (E)

10. Kandivili (W)

11. Borivili

12. Mira Road

13. Vasai

14. Ghatkopar

15. Vashi

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UNDERSTANDING MUTUAL FUNDS

Mutual FundsBefore we understand what is mutual fund, its very important to know the area in which

mutual funds works, the basic understanding of stocks and bonds.

Stocks: Stocks represent shares of ownership in a public company. Examples of public companies

include Reliance, ONGC and Infosys. Stocks are considered to be the most common owned

investment traded in the market.

Bonds: Bonds are basically the money which you lend to the government or a company, and in

return you can receive interest on your invested amount, which is back over predetermined

amounts of time. Bonds are considered to be the most common lending investment traded on the

market. There are many other types of investments other than stocks and bonds (including

annuities, real estate, and precious metals), but the majority of mutual funds invest in stocks and/or

bonds.

What Is Mutual Fund

A mutual fund is just the connecting bridge or a financial intermediary that allows a group

of investors to pool their money together with a predetermined investment objective. The mutual

fund will have a fund manager who is responsible for investing the gathered money into specific

securities (stocks or bonds). When you invest in a mutual fund, you are buying units or portions of

the mutual fund and thus on investing becomes a shareholder or unit holder of the fund.

Mutual funds are considered as one of the best available investments as compared to others.

They are very cost efficient and also easy to invest in, thus by pooling money together in a mutual

fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do

it on their own. But the biggest advantage to mutual funds is diversification, by minimizing risk &

maximizing returns.

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Thus a Mutual Fund is the most suitable investment for the common man as it offers an

opportunity to invest in a diversified, professionally managed basket of securities at a relatively

low cost. The flow chart below describes broadly the working of a mutual fund.

Diagram 1: Types of mutual funds

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Types of Mutual Fund Schemes

BY STRUCTURE

Open Ended Schemes

An open-end fund is one that is available for subscription all through the year. These do not

have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV")

related prices. The key feature of open-end schemes is liquidity.

Close Ended Schemes

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15

years. The fund is open for subscription only during a specified period. Investors can invest in the

scheme at the time of the initial public issue and thereafter they can buy or sell the units of the

scheme on the stock exchanges where they are listed. In order to provide an exit route to the

investors, some close-ended funds give an option of selling back the units to the Mutual Fund

through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of

the two exit routes is provided to the investor.

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.

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BY INVESTMENT OBJECTIVE

Equity funds

These funds invest in equities and equity related instruments. With fluctuating share prices,

such funds show volatile performance, even losses. However, short term fluctuations in the

market, generally smoothens out in the long term, thereby offering higher returns at relatively

lower volatility. At the same time, such funds can yield great capital appreciation as,

historically, equities have outperformed all asset classes in the long term. Hence, investmentin equity funds should be considered for a period of at least 3-5 years. It can be further

classified as:

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked.

Their portfolio mirrors the benchmark index both in terms of composition and individual

stock weightages.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading acrossdifferent sectors and stocks.

iii) Dividend yield funds- It is similar to the equity diversified funds except that they invest

in companies offering high dividend yields.

iv) Thematic funds- Invest 100% of the assets in sectors which are related through some

theme.

e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund

will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

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Balanced fund

Their investment portfolio includes both debt and equity. As a result, on the risk-return

ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds

vehicle for investors who prefer spreading their risk across various instruments. Following

are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund

They invest only in debt instruments, and are a good option for investors averse to idea of

taking risk associated with equities. Therefore, they invest exclusively in fixed-income

instruments like bonds, debentures, Government of India securities; and money market

instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put

your money into any of these debt funds depending on your investment horizon and needs.

i) Liquid funds- These funds invest 100% in money market instruments, a large portion

being invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and T-

bills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt instruments

which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage opportunities due to mis-

pricing between cash market and derivatives market. Funds are allocated to equities,

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derivatives and money markets. Higher proportion (around 75%) is put in money markets, in

the absence of arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government securities.

vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in long-

term debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of

10%-30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of

the fund.

Types of returns

There are three ways, through which the total returns provided by mutual funds can be enjoyed by

investors:

Income is earned from dividends on stocks and interest on bonds. A fund pays out nearlyall income it receives over the year to fund owners in the form of a distribution.

If the fund sells securities that have increased in price, the fund has a capital gain. Most

funds also pass on these gains to investors in a distribution.

If fund holdings increase in price but are not sold by the fund manager, the fund's shares

increase in price. You can then sell your mutual fund shares for a profit. Funds will also

usually give you a choice either to receive a check for distributions or to reinvest the

earnings and get more shares.

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Pros & cons of investing in mutual fundsFor investments in mutual fund, one must keep in mind about the Pros and cons of investments in

mutual fund.

Advantages of Investing Mutual Funds

1. Professional Management - The basic advantage of funds is that, they are professionally

managed, by well qualified professionals. 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.

2. 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.

3. 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.

4. Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate their

holdings as and when they want.

5. 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 which start at as little as Rs. 2000, whereas SIP start with just Rs.50 per month

basis.

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Disadvantages of Investing Mutual Funds

1. Professional Management- Some funds dont perform in either market, as their management is

not dynamic enough to explore the available opportunity in the market, thus many investors debate

over whether or not the so-called professionals are any better than mutual fund or investor himself,

for picking up stocks.

2. Costs The biggest source of AMC income is generally from the entry & exit load which they

charge from investors, at the time of purchase. The mutual fund industries are thus charging extra

cost under layers of jargon.

3. Dilution - Because funds have small holdings across different companies, high returns from a

few investments often don't make much difference on the overall return. Dilution is also the result

of a successful fund getting too big. When money pours into funds that have had strong success,

the manager often has trouble finding a good investment for all the new money.

4. Taxes When making decisions about your money, fund managers don't consider your personal

tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered,

which affects how profitable the individual is from the sale. It might have been more advantageous

for the individual to defer the capital gains liability.

Choosing the right Financial Product

Choosing a qualified financial adviser is an important first step in any investment program. With

the help of your financial adviser youll want to establish your investment goals, assess your risk

tolerance, and develop a personal investment strategy. Ask your financial adviser if mutual funds

are an appropriate investment for you. Discuss what type of fund best matches your personal

investment strategy, and then ask for some specific suggestions.

Once you have identified some funds that seem to meet your investment needs, read the prospectus

and financial statements for each one.

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Consider:

1. Investment objectives: Are the funds investment objective consistent with your own? Can

the fund provide the level of regular income you need? Does it provide the type of

diversification youre looking for?

2. Risk: Are you comfortable with the level of risk associated with the fund? If you have

other investments, would this fund tend to increase or decrease your overall risk exposure?

3. Time Horizons: Does the investment fit with your expected investment time horizon? For

example, if you are investing for relatively short time, will sales charges and redemption

fees offset any possible gains? Might the value of the fund be down just when you need to

redeem you investment?

4. Expected Return: Does the fund have potential to provide the returns you need to meet

your goals? Remember, predicting the return of any mutual fund requires that you predictthe future- something that can never be done with certainty. Past performance will tell you

about the funds historical volatility and its performance relative to competing funds, but it

is not a reliable indicator of future performance. The return you can expect from a mutual

fund is closely related to its risk. The lower the risk of the fund, the lower the return you

should expect. Be realistic in your expectations.

5. Costs: Fees and commissions associated with mutual funds will affect your overall return

and can vary widely from one fund to the next. Higher fees and commissions do not

necessarily mean better performance, check and compare fees and commissions before you

invest.

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6. Service Provider: Do you know something about the mutual fund firm offering the mutual

funds for sale? Youll also want to look at the performance history of the fund manager

who selects the securities to be held in the fund.

Tax Considerations

Tax factor acts as the x-factor for mutual funds. Tax efficiency affects the final decision of any

investor before investing. The investors gain through either dividends or capital appreciation but if

they havent considered the tax factor then they may end loosing.

Debt funds have to pay a dividend distribution tax of 12.50 per cent (plus surcharge and education

cess) on dividends paid out. Investors who need a regular stream of income have to choose

between the dividend option and a systematic withdrawal plan that allows them to redeem units

periodically. SWP implies capital gains for the investor.If it is short-term, then the SWP is suitable only for investors in the 10-per-cent-tax bracket. If the

capital gain is long-term (where the investment has been held for more than one year), the growth

option is more tax efficient for all investors. This is because investors can redeem units using the

SWP where they will have to pay 10 per cent as long-term capital gains tax against the 12.50 per

cent DDT paid by the MF on dividends.

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CHAPTER 2

INDUSTRY PROFILE

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INTRODUCTION TO MUTUAL FUND INDUSTRYThe 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, it accelerated from the year 1987 whennon-UTI players entered the industry. In the past decade, Indian mutual fund industry has seen a

dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the

market had seen an ending phase; the Assets under Management (AUM) were 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. The mutual fund industry can be broadly put into four phases according to the development

of the sector. Each phase is briefly described as under.

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 Can bank 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.

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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.

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Diagram 2

GROWTH IN ASSETS UNDER MANAGEMENT

Diagram 3

Mutual Fund Operation Flow Chart

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ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organizational set up

of a mutual fund:

Diagram 4

Mutual funds in INDIA have a 3-tier structure of Sponsor Trustee AMC.

Sponsor is the promoter of the fund.

Sponsor creates the AMC and the trustee company and appoints the Boards of both

these companies, with SEBI approval.

A mutual fund is constituted as a Trust

A trust deed is signed by trustees and registered under the Indian Trust Act.

The mutual fund is formed as trust in INDIA, and supervised by the Board of Trustees.

The trustees appoint the asset management company (AMC) to actually manage the

investors money.

The AMCs capital is contributed by the sponsor. The AMC is the business face of the

mutual fund.

Investors money is held in the Trust (the mutual fund). The AMC gets a fee for

managing the funds, according to the mandate of the investors.

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Sponsor should have at-least 5-year track record in the financial services business and

should have made profit in at-least 3 out of the 5 years.

Sponsor should contribute at-least 40% of the capital of the AMC.

Trustees are appointed by the sponsor with SEBI approval.

At-least 2/3 of trustees should be independent.

At-least of the AMCs Board should be independent members.

An AMC of one fund cannot be Trustee of another fund.

AMC should have a net worth of at least Rs. 10 crore at all times.

AMC should be registered with SEBI.

AMC signs an investment management agreement with the trustees.

Trustee Company and AMC are usually private limited companies.

Trustees oversee the AMC and seek regular reports and information from them.

Trustees are required to meet at least 4 times a year to review the AMC.

The investors funds and the investments are held by the custodian.

Sponsor and the custodian cannot be the same entity.

R&T agents manage the sale and repurchase of units and keep the unit holder accounts.

If the schemes of one fund are taken over by another fund, it is called as scheme take

over. This requires SEBI and trustee approval.

If two AMCs merge, the stakes of sponsors changes and the schemes of both funds

come together. High court, SEBI and Trustee approval needed.

If one AMC or sponsor buys out the entire stake of another sponsor in an AMC, there is

a takeover of AMC. The sponsor, who has sold out, exits the AMC. This needs high court

approval as well as SEBI and Trustee approval.

Investors can choose to exit at NAV if they do not approve of the transfer. They have a

right to be informed. No approval is required, in the case of open ended funds.

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For close ended funds investor approvals is required for all cases of merger and take

over.

REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA

The regulation of mutual funds in India is governed by the SEBI vide the SEBI (Mutual Fund)

Regulation, Act 1996 (here in after referred to as SEBI Regulations). These regulations make it

mandatory for mutual funds to have a three-tier structure of sponsor Trustee Asset

Management Company (AMC). The sponsor is the promoter of the mutual fund and appoints the

trustees. The Trustees are responsible to the investors in the mutual fund and appoint the AMC for

managing the investment portfolio. SEBI regulations also provide for who can be a sponsor, trustee

and AMC, specifying the format of agreement between these entities. These agreements provide

for the rights, duties and obligations of these three entities. The UTI is also structured as a trust.

The important difference through is that UTI does not have sponsors or a separate AMC. Financial

intuitions and banks that contributed to the initial capital of the UTI have their representatives on

UTIs Board of Trustees, which oversees the operation of UTI Mutual Fund. The Association of

Mutual Funds in India (AMFI) is a self-regulatory body formed by the various MF Companies to

address the practices and policies of various aspects like new scheme launches, payments to

intermediaries comparisons and other ethical systems.

Likewise, different companies have their own Compliance and Audit offices, which are mandated

to control and report adherence to and deviations if any on the regulations and policies issued by

SEBI

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Diagram 5

MUTUAL FUNDS STRUCTURE /COMPANY STRUCTURE

24


Establishes themutual fund as atrust andregisters withSEBI

Mutual fund(For e.g. Reliance

AMC)

AssetManagement

Company.

Custodian

Registrar

Hold unit holders funds inmutual fund. Enters into anagreement with SEBI.

Floats mutual funds as perthe regulations of SEBIregulations.

Provides custodial services.

Provides registrar andtransfer services.

SponsorCompany

Managed by theboard oftrustees.

Distributors

Provides the network fordistribution of schemes to theinvestors.


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CHAPTER 3

COMPANY PROFILE

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Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the fastest

growing mutual funds in the country. RMF offers investors a well-rounded portfolio of products to

meet varying investor requirements and has presence in 115 cities across the country.

Reliance Mutual Fund constantly endeavors to launch innovative products and customer service

initiatives to increase value to investors.

"Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., a

subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, the

balance paid up capital being held by minority shareholders."

Reliance Capital Ltd. is one of Indias 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.

Statutory Details26



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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.

General Risk Factors: Mutual Funds and securities investments are subject to market risks and

there is no assurance or guarantee that the objectives of the Scheme will be achieved. As with any

investment in securities, the NAV of the Units issued under the Scheme can go up or down

depending on the factors and forces affecting the capital markets. Past performance of the

Sponsor/AMC/Mutual Fund is not indicative of the future performance of the Scheme. The

Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond

their initial contribution of Rs.1 lakh towards the setting up of the Mutual Fund and such other

accretions and additions to the corpus. The Mutual Fund is not guaranteeing or assuring any

dividend/ bonus. The Mutual Fund is also not assuring that it will make periodical dividend/bonus

distributions, though it has every intention of doing so. All dividend/bonus distributions are subject

to the availability of the distributable surplus in the Scheme. For details of scheme features and

scheme specific risk factors, please refer to the provisions of the offer document.

Diagram 6

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MISSION STATEMENT

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

customers.

Vision Statement

To be a globally respected wealth creator with an emphasis on customer care and a culture of good

corporate governance.

MUTUAL FUNDS ASSET UNDER MANAGEMENT: COMPANIES LIST

Average Assets under Management (AAUM) for the quarter of April - June 2011 (Rs in Lakhs)

Sr. No Mutual Fund Name

Average AUM

Excluding Fund of

Funds - Domestic but

including Fund of

Funds - Overseas

Fund Of Funds -

Domestic

1 AEGON Mutual Fund N/A N/A

2 AIG Global Investment Group Mutual Fund 71,640.25 0

3 Axis Mutual Fund 7,45,288.35 0

4 Baroda Pioneer Mutual Fund 4,42,985.87 0

5 Benchmark Mutual Fund 4,11,499.76 0

6 Bharti AXA Mutual Fund 21,640.26 0

7 Birla Sun Life Mutual Fund 67,47,515.77 3,441.54

8 BNP Paribas Mutual Fund 5,72,334.27 0

9 Canara Robeco Mutual Fund 8,62,487.99 0

10 Daiwa Mutual Fund 66,457.44 0

11 Deutsche Mutual Fund 11,08,353.71 0

12 DSP BlackRock Mutual Fund 30,02,193.16 0

13 Edelweiss Mutual Fund 25,838.33 0

14 Escorts Mutual Fund 20,941.87 0

15 Fidelity Mutual Fund 9,34,656.07 11,567.71

16 Franklin Templeton Mutual Fund 34,72,935.77 1,81,008.24

17 Goldman Sachs Mutual Fund N/A N/A

18 HDFC Mutual Fund 92,03,291.15 0

19 HSBC Mutual Fund 4,85,535.82 0

20 ICICI Prudential Mutual Fund 79,75,871.50 9,810.01

21 IDBI Mutual Fund 5,12,411.01 0

22 IDFC Mutual Fund 27,84,861.00 73,036.66

23 IIFL Mutual Fund N/A N/A

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24 ING Mutual Fund 99,322.89 22,218.42

25 JM Financial Mutual Fund 5,84,976.42 0

26 JPMorgan Mutual Fund 3,72,412.52 0

27 Kotak Mahindra Mutual Fund 33,99,354.13 17,349.76

28 L&T Mutual Fund 5,21,470.59 029 LIC NOMURA Mutual Fund 9,33,839.87 0

30 Mirae Asset Mutual Fund 42,528.13 0

31 Morgan Stanley Mutual Fund 2,05,254.82 0

32 Motilal Oswal Mutual Fund 34,504.53 0

33 Peerless Mutual Fund 4,90,793.71 0

34 Pramerica Mutual Fund 1,68,365.30 0

35 PRINCIPAL Mutual Fund 5,43,350.35 0

36 Quantum Mutual Fund 13,884.21 294.14

37 Reliance Mutual Fund 1,01,25,932.98 79,010.38

38 Religare Mutual Fund 11,34,246.83 0

39 Sahara Mutual Fund 26,537.35 0

40 SBI Mutual Fund 47,87,445.88 0

41 Sundaram Mutual Fund 14,54,110.82 0

42 Tata Mutual Fund 25,00,617.07 0

43 Taurus Mutual Fund 5,02,123.06 0

44 Union KBC Mutual Fund 29,849.90 0

45 UTI Mutual Fund 69,10,509.45 0

Grand Total 7,43,50,170.16 3,97,736.86

PRODUCTS

Types of Reliance Mutual Funds

1. Reliance Growth Fund

2. Reliance Vision Fund

3. Reliance Banking Fund

4. Reliance Diversified Power Sector Fund

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5. Reliance Pharma Fund

6. Reliance Media & Entertainment Fund

7. Reliance NRI Equity Fund

8. Reliance Equity opportunities Fund

9. Reliance Index Fund

10. Reliance Tax Saver (ELSS) Fund

11. Reliance Equity Fund

12. Reliance Long Term Equity Fund

13. Reliance Regular Saving Fund

RELIANCE CUSTOMER SERVICE

Online Services

Transact Online.

One can now purchase, redeem or switch your units of Reliance Mutual Fund schemes at

www.reliancemutual.com. You can also check your account statement, fill in and submit the

application form as well as view and download Offer Documents. You can do all this from the

comfort of your home or office. Here is a simple step-by-step online transaction guide that will

help you get started.

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Online Transaction

Customers can purchase, switch or redeem their Reliance Mutual Fund units through online.

Online Payment: When customers can choose Online Payment, they will be directed to the

Payment Gateway Page, where they have to choose one of the banks to make the payment. Once

they select their bank, they will be directed to the Net Banking page of the respective bank. Log in

to their bank account and make the payment. A confirmatory mail will be sent to their registered

email address after the transaction has been completed by the customer.

Cheque Payment: If they choose to make the payment by Cheque, they will need to download and

print the application form by clicking on the link provided. They need to simply sign this form and

submit it at the nearest Investor Service Centre (ISC), along with their cheque. The transaction

reference number should be written on the reverse of the cheque before submission. The ISC will

acknowledge receipt of the same and send their application for further processing.

RELIANCE MUTUAL FUND SCHEMES

Equity/Growth

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.

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Debt/Income

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 by 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.

Sector specific

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.

EQUITY/GROWTH SCHEMES

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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 andthe 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.

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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 Quant Plus Fund (Formerly known as Reliance Index Fund)

(An Open Ended Equity Scheme.) The investment objective of the Scheme is to generatecapital appreciation through investment in equity and equity related instruments. The Scheme will

seek to generate capital appreciation by investing in an active portfolio of stocks selected from S &

P CNX Nifty on the basis of a mathematical model.

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.

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Reliance Long Term Equity Fund

(A 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 returnsby investing in debt and money market securities.

DEBT/LIQUID SCHEMES

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 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.

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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 securitised 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 securitised 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

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(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, II and III

(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 Tenor Fund

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

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

Reliance Fixed Horizon Fund -Plan C

(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 - IV:

(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

Reliance Fixed Horizon Fund - V:


to generate regular returns and growth of capital by investing in a diversified portfolio of: -

Central and State Government securities and

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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:




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:




other fixed income/ debt securities normally maturing in line with the time profile of the series

with the objective of limiting interest rate volatility.

SECTOR SPECIFIC SCHEMES

Sector Funds are specialty funds that invest in stocks falling into a certain sector of the

economy. Here the portfolio is dispersed or spread across the stocks in that particular sector. This

type of scheme is ideal for investors who have already made up their mind to confine risk and

return to a particular sector.

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

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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

SOCIAL RESPONSIBILITIES

Organizations, like individuals, for their survival, sustenance and growth depend on the support

and goodwill of the communities of which they are an integral part, and must pay back this

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generosity in every way they can. This ethical standpoint, derived from the vision of the founder,

lies at the heart of the CSR philosophy of the Reliance Group.

While they strongly believe that their primary obligation or duty as corporate entities is to their

shareholders they are just as mindful of the fact that this imperative does not exist in isolation; it

is part of a much larger compact which they have with their entire body of stakeholders: From

employees, customers and vendors to business partners, eco-system, local communities, and

society at large.

They evaluate and assess each critical business decision or choice from the point of view of diverse

stakeholder interest, driven by the need to minimize risk and to pro-actively address long-term

social, economic and environmental costs and concerns. For them, being socially responsible is not

an occasional act of charity or that one-time token financial contribution to the local school,

hospital or environmental NGO. It is an ongoing year-round commitment, which is integrated into

the very core of their business objectives and strategy.

Because they believe that there is no contradiction between doing well and doing right. Indeed,

doing right is a necessary condition for doing well.

GROWTH OF RELIANCE MUTUAL FUND THROUGH RECOGNITION

Growth through Recognition

Reliance has merited a series of awards and recognitions for excellence for businesses and

operations.

Corporate Ranking and Ratings:

Reliance featured in the Fortune Global 500 list of Worlds Largest Corporations for the fourth

consecutive year.

Ranked 269th in 2007 having moved up 73 places from the previous year.

Featured as one of the worlds Top 200 companies in terms of Profits.

Among the top 25 climbers for two years in a row.

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Featured among top 50 companies with the biggest increase in Revenues.

Ranked 26th within the refining industry.

Reliance is ranked 182nd in the FT Global 500 (up from previous years 284th rank).

PetroFed, an apex hydrocarbon industry association, conferred the PetroFed 2007 awards in

the categories of Refinery of the Year and Exploration & Production - Company of the

Year.

Brand Reliance was conferred the Bronze Award at The Buzziest Brands Awards 2008,

organized by agency faqs!

Institute of Economic Studies conferred the Udyog Ratna award in October 2007 for

contributions to the industry.

Chemtech Foundation conferred the Hall of Fame in February 2008 for sterling

contributions to the industry.

Chemtech Foundation conferred the Outstanding Achievement - Oil Refining for work at

the Jamnagar Manufacturing Division.

Petroleum Federation of India conferred the Refinery of the Year Award - 2007 to Jamnagar

Manufacturing Division

The Plastics Export Promotion Council - PLEXCOUNCIL Export Award in the category

of Plastic Polymers for the year 2006-2007 was awarded to Reliance being the largest

exporter in this category.

AWARDS OF THE COMPANY

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1. Reliance Capital Asset Management Ltd. won the Asia Asset Management Award 2007

2.Reliance Capital Asset Management Ltd. won the Social & Corporate Governance Award 2007

3.Reliance Mutual Fund has been awarded the "NDTV Business Leadership Award 2007" in the

Mutual Fund category.

4.CNBC TV18 - CRISIL Mutual Fund of the Year Award for 2007

SWOT ANALYSISA type of fundamental analysis of the health of a company by examining its strengths(S),

weakness (W), business opportunity (O), and any threat (T) or dangers it might be exposed

to.

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I. STRENGTHS

Brand strategy : As opposed to some of its competitors (e.g. HSBC), Reliance ADAG

operates a multi-brand strategy. The company operates under numerous well-known brand

names, which allows the company to appeal to many different segments of the market.

Distribution channel strategy: Reliance is continuously improving the distribution of its

products. Its online and Internet-based access offers a combination of excellent growth

prospects and its retail direct business also saw growth of 27% in 2002 and 15% in 2003.

Various sources of income: Reliance has many sources of income throughout the group,

and this diversity within the group makes the company more flexible and resistant to

economic and environmental changes.

Large pool of installed capacities.

Experienced managers for large number of Generics.

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Large pool ofskilled and knowledgeable manpower.

Increasing liberalization of government policies.

II. WEAKNESS

Emerging markets : since there is more investment demand in the United States, Japan and

the rest of Asia, Reliance should concentrate on these markets, especially in view of low

global interest rates.

Mutual funds are like many other investments without a guaranteed return:there is

always the possibility that the value of your mutual fund will depreciate. Unlike fixed-income

products, such as bonds and Treasury bills, mutual funds experience price fluctuations along

with the stocks that make up the fund. When deciding on a particular fund to buy, you need to

research the risks involved just because a professional manager is looking after the fund, that

doesnt mean the performance will bestellar.

Fees: In mutual funds, the fees are classified into two categories: shareholder fees and

annual operating fees. The shareholder fees, in the forms of loads and redemption fees are

paid directly by shareholders purchasing or selling the funds. The annual fund operating fees

are charged as an annual percentage usually ranging from 1-3%. These fees are assessed

tomutual fund investors regardless of the performance of the fund. As you can imagine, in

years when the fund doesnt make money, these fees only magnify losses.

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III. OPPORTUNITIES

Potential markets : The Indian rural market has great potential. All the major market

leaders consider the segments and real markets for their products. A senior official in a one of

the leading company says foray into rural India already started and there has been realization

that the rural market is both price and quantity conscious.

Entry of MNCs: Due to multinationals are entering into market job opportunities are

increasing day by day. Also India Mutual Fund majors are tie up with other financial

institutions.

IV. THREATS

Increased Competition : With intense competition by so many local players causing

headache to the current marketers. In addition to this though multinational brands are not yet

established but still theywillsoon hit the mark. Almost 60 to 70% of the revenue is spending

on the management and services.

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CHAPTER 4

EMPIRICAL ANALYSIS

BODY OF THESISTABLE - 1

TABLE SHOWING PREFERRED FUND STRUCTURE

Structure of the fund No of investors preferred

Open ended fund 12

Close ended fund 05

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No Preference 03

Total 20

CHART 1

Inference: It is observed that 12 out of 20 that are 60% of investors are believed to be interested to

invest their money in open ended funds the reason can be attributed to its convenience to enter andexit at any time. 25% investors preferred to invest in close ended funds because they are long term

investors as well as they want some tax benefits. And the remaining 15% investors replied that

they didnt have any preference as such

TABLE 2

TABLE SHOWING INVESTORS SCHEME PREFERENCE

Preferred fund scheme No of investors preferred

Growth scheme 10

Income scheme 03

Balanced scheme 07

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Total 20

CHART 2

Inference: In the above given graph it is showed that10 out of 20 that is 50% of customers are

interested to invest in growth schemes. 07 out of 20 that are 35% of customers are interested to

invest in Balanced schemes and the remaining 15% customers are preferred to invest in Income

schemes.

TABLE 3

TABLE SHOWING RELATIONSHIP MANAGERS RECOMMENDATIONS

Investments No. of respondents

Equity 06

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Debt 07

Gold Funds 05

ETF 02

CHART 3

Inference: In the above given graph, it can be clearly seen that the RMs of banks mainly

recommend Debt oriented products as the markets are very volatile as of now closely followed by

Equity, preferred by investors for the long run and gold as it is a safe investment.

TABLE 4

TABLE SHOWING THE PRODUCTS UNDER CONSIDERATION OF RMS

Financial Products No. of Respondent

Fixed Deposits 02

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Bank Deposits 01

PMS 02

Direct Equity 03

Mutual Funds 10

Insurance 02

CHART 4

Inference: It can be clearly seen from the above graph that most of the RMs look up to mutual

funds as the best financial product to offer to their investors as it carries a limited amount of risk

and better and safer returns with a tax benefit, followed by equity and FDs and insurance.

TABLE 5

TABLE SHOWING THE INVESTORS REASONS FOR INVESTING IN AN FINANCIAL

PRODUCT

Reason of purchase No. of informants

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His/her interest 08

RMs recommendation 10

Friend/Family Recommendation 02

CHART 5

Inference: The above pie chart shows that an investor is mainly influenced by the RM of a

particular bank into buying a financial product, whereas a few investors who do have sufficient

knowledge about the finance world prefer to go by their understanding and a very few go by their

friends and family recommendations.

TABLE 6

TABLE SHOWING THE LEVEL OF INVESTOR KNOWLEDGE OF MUTUAL FUNDS

Investor Knowledge No. of informants

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Good 10

Moderate 05

Low 05

CHART 6

Inference: The above chart clearly suggests that the majority of the investors have sufficient

knowledge above mutual funds and the way they work, and their risks and advantages over other

financial products available in the market. It is evident in the popularity of mutual funds today.

CHART 7

CHART SHOWING THE ROLE OF INVESTORS RISK APPETITE IN

RECOMMENDING A PRODUCT

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Inference: 100% respondents said yes to the question, i.e. an investors risk appetite plays a major

or the main role in suggesting them a financial product or mutual fund.

CHART 8

CHART SHOWING THE EFFECT OF BRAND NAME

Inference: If 2 companies are offering similar product, i.e. Mutual fund, then the brand name

definitely matters in the decision making process. Not only that, the past performance of the

product (if any), and the brand name of the company matters. 100% respondents agreed on same.

TABLE 7

TABLE SHOWING RELATIONSHIP BETWEEN DURATION AND RISK APPETITE

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Duration directly proportional to

risk appetite

No. of respondents

Yes 15

No 04

Cant say 01

CHART 9

Inference: Majority of the respondents feel that there is a direct relationship between duration of

the money invested and the risk appetite, i.e. as the duration increases, so does the risk appetite.

This can happen because of the increasing confidence of the investor because of the performance

of the fund.

TABLE 8

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TABLE SHOWING RELATIONSHIP BETWEEN AGE OF THE INVESTOR AND RISK

APPETITE

Age inversely proportional to risk

appetite

No. of respondents

Yes 09

No 10

Cant say 01

CHART 10

Inference: The chart above suggests that the majority of the respondents said that age is not

inversely proportional to the risk appetite, i.e., they believe that ad age increases, so does the risk

appetite, closely followed by the number of respondents, i.e. 9 who believe otherwise.

TABLE 9

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TABLE SHOWING THE MAIN INTENTION BEHIND INVESTMENTS IN MUTUAL

FUNDS

Investment objective No. of respondents

Creating Wealth 03

Parking Surplus 03

Tax Benefits 01

Childs Future 00

Retirement 01

All of the above 12

CHART 11

Inference: As the chart suggests, most of the respondents believe that investors prefer mutual

funds for not one but all the factors mentioned above making it a winner in all the categories.

TABLE 10

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TABLE SHOWING THE RESPONSE REGARDING AREAS FOR IMPROVEMENT BY

RELIANCE MUTUAL FUNDS

CHART 12

Inference: Majority of the respondents feel that investors have a problem in monitoring their funds

closely followed by the number of respondents feeling that customer service should be improved

which is connected to the earlier option. A few of them also feel that agent training is required in

order to better serve the interests of the company and investors.

58


AREAS NO OF RESPONDENT

CUSTOMER SERVICE 07

MONITORING OF FUND 08

AGENTS TRAINING 03

OTHERS 02

TOTAL 20


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CHAPTER 5

FINDINGS &

SUGGESTIONS

FINDINGS & SUGGESTIONS59



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The findings for the above research are as follows:

1. It was found that majority of the investors prefer open ended schemes. This shows that the

investors are looking for the flexibility and freedom in their investments.

2. It can be seen that the investors tend to prefer a balanced or growth schemes showing that

safety is the first priority in this market and then prosperity or creation of wealth.

3. It can be seen that the Relationship Managers and the Investment Advisors favorite product

in the financial market is mutual funds. It is the first thing that they consider as the risks are

moderate and the returns are mostly good.

4. It can also be noted that the RMs of banks are mainly suggesting Debt based MFs as the

financial market is not stable and safety is the first priority. It can also be deduced that the

investors are not ready to invest in equities freely as of now.

5. It can be noted that most of the investors have good knowledge about MFs and they mostly

take a decision by consulting with the respective RM of the bank.

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6. It is also seen that the risk appetite of the investor and the past performance of the product

and the brand name of the company are important aspects that are considered before suggesting

a mutual fund by the RM of a bank.

7. It can be clearly seen that the duration of the investment has a direct affect on the risk

appetite of the investor. In other words, if the product is doing well in the market since few

years and the investor is getting good returns, his/her risk appetite will increase accordingly of

that particular product.

8. It is seen that that the age of the investor has varying effects on the risk appetite. On one

hand the risk appetite might increase because of the experience, or it might decrease because of

the safety concerns.

9. It was seen that there was no main reason as such for investing in MFs, but several of them.

Creating wealth and parking surplus were two main reasons why investors preferred MFs over

other financial products.

10. It was suggested that the facilities for monitoring of funds could be improved, along with

customer service, and agent training.

LEARNING EXPERIENCE

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The main purpose of an internship is to gain practical knowledge and apply ones skill in practical

and real environment. It is the time when the internship company professionals have to sharpen our

skills, abilities and knowledge which would help us in getting final placement.

In Reliance Mutual Fund, I got an opportunity to explore my potential, by preparing extensive

research reports I now know the fundamentals of the mutual funds industry, and how mutual funds

work. I have also come across various technicalities related to mutual fund services

Major learning from the project

On the whole, I feel the mutual fund industry, though slowly, is growing steadily in India. I feel the

main reason for its success is that it provides a relatively safer option of investment with goodreturns. People here, have realized its benefits and since there are various companies providing

different types of mutual funds, there is really no better option of investment. The awareness, I feel

has still not penetrated to remote corners of the country, resulting in the urban class being more

exposed to the benefits of mutual funds.

Benefits of being in an MMS Course during my Internship

I feel that being in the MMS program, I have learnt well to manage my time and my multi-tasking

skills have helped me a lot during my internship at RMF as it was a very demanding job. Also

because of the finance subjects and a basic knowledge of the finance industry, I could learn the

concepts faster, and adapt quicker to the working environment at RMF.

Lastly, I feel that the internship and the project will help me in my final placement, as I now know

the working environment and culture of corporate and what it takes to survive and grow in such

environments.

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Most people see FMPs as a replica of an FD. Thus it becomes difficult for an RM to

convince a potential investor to invest in an FMP as the FD also provides a similar rate of

interest or even at times marginally more than the FMP. Investors should be educated that, it

is the tax treatment on these products that plays the major role.

When 2 or more AMCs offering similar product the following factors play the crucial role

for the purchase decision

Brand name of the AMC

Brokerage

AMU

Past Record of the fund

Fund Managers profile

Rapport between the representative and RM.

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RECOMMENDATIONS

The following recommendations are the outcome of the research and applications of these are not

necessary:-

The company should come up with innovative ways of services like door to door selling.

This may be a costly affair but will surely give positive results in the long run.

The company should take the initiative of training the Investment advisors and RMs of

banks selling RMF about the new funds from time to time which also makes the advisors

connected to the company.

The company should also emphasize on the better monitoring of funds by its Relationship

Managers to provide better and more accurate services to the investors.

Mutual funds offer a lot of benefit which no other single option could offer. But most of the

people are not even aware of these benefits coupled with mutual fund. They only see it as

just another investment option. So the advisors should try to change their mindsets.

The company should use brand ambassadors for example the CEOs of major companies

where the company allocate the funds. This will probably ensure proper results.

The company should focus on the advertising strategy and also the marketing of the

product.

The advisors should target for more and younger investors cause the faster the individual

starts to invest, higher are the benefits on the invested amount.

The company should emphasize on creating an awareness about the SIP options which is

always preferable when the market is volatile.

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FMP though being an excellent investment tool, most people are either not aware or see it

as an AMCs substitute to a Bank FD. Conceptual clarity will help them to determine the

Tax Treatment and thus the higher returns available on the same amount of investment

BIBLIOGRAPHY

BOOKS

MUTUAL FUNDS IN INDIA - PERSPECTIVES AND STRATEGIES

Edition 2007 Published by ICFAI BUSINESS SCHOOL - Arindam Banerjee

Company Brochures

REFERENCES

Websites:

www.reliancemutualfunds.com

www.amfiindia.com

www.mutualfundsindia.com

www.bseindia.com

www.amfiindia.com/mutual funds/nav/about funds/open ended schemes.com

www.investopedia/aboutus/html

65

http://www.reliancemutualfunds.com/http://www.amfiindia.com/http://www.mutualfundsindia.com/http://www.bseindia.com/http://www.amfiindia.com/mutual%20funds/nav/about%20funds/open%20ended%20schemes.comhttp://www.investopedia/aboutus/htmlhttp://www.reliancemutualfunds.com/http://www.amfiindia.com/http://www.mutualfundsindia.com/http://www.bseindia.com/http://www.amfiindia.com/mutual%20funds/nav/about%20funds/open%20ended%20schemes.comhttp://www.investopedia/aboutus/html


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QUESTIONNAIREName: ______________________________ Date: ________________________

Bank: _______________________________ Phone: _______________________

1. As a financial planner, which of the following products you look at ( and rank them in the

order of preference)

a. Fixed Deposits Rank 1 __________

b. Bank Deposits Rank 2 __________

c. PMS Rank 3 __________

d. Direct Equity Rank 4 __________

e. Mutual Funds Rank 5 __________

f. Insurance Rank 6 __________

2. If investments, you generally recommend (and rank them in the order of preference)

a. Equity Funds Rank 1 __________

b. Debts Funds Rank 2 __________

c. ETF Rank 3 __________

d. Gold Funds Rank 4 __________

3. Mutual Fund investments done generally for (and rank them in the order of preference)

a. Creating wealth Rank 1 __________

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b. Parking surplus Rank 2 __________

c. Tax benefits Rank 3 __________

d. Childs future Rank 4 __________

e. Retirements Rank 5 __________

4. Investors purchase decision is generally motivated by

a. His/her interest in mutual funds

b. RMs recommended

c. Friend or Family member recommended

5. Investors knowledge about Mutual Funds

a. Good

b. Moderate

c. Low

6. Investors risk appetite plays a major role while recommending a product?

a. Yes

b. No

7. Is, Age (1/Risk appetite) ---- (as age increases risk appetite decreases)

a. Yes Comments:______________________________________

b. No _______________________________________________

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c. Cant say _______________________________________________

8. Is, Duration of involvement Risk appetite --- (as duration increases risk appetite

increases)

a. Yes Comments:______________________________________

b. No _______________________________________________

c. Cant say _______________________________________________

9. If 2 AMCs offer similar products, does the brand name of the AMC impact the investment

decision (any other factors apart from the brand name, if any)

a. Yes Comments:______________________________________

b. No _______________________________________________

10. Investors prefer

a. Open ended schemes

b. Close ended schemes

c. No preference

11.In what areas do you want RELIANCE mutual funds to improve?

E.g. Customer service

Monitoring of fund

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Agents training

Others

12. By investment objective in which type of schemes do investors generally invest?

Growth Schemes [ ]

Income Schemes [ ]

Balanced Schemes [ ]

No data would be shared with any AMC and is purely for academic purpose.

Name Aditya Nagaraja Contact 9967307550

GLOSSARYAdvisorYour financial consultant who gives professional advice on the fund's investments and to supervise

the management of its assets.

Amortization

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A method of equated monthly payments over the life of a loan. Payments usually are paid monthly

but can be paid annually, quarterly, or on any other schedule. In the early part of a loan, repayment

of interest is higher than that of principal. This relationship is reversed at the end of the loan.

Appreciation

When an investment increases in value, it appreciates. For example, a equity share whose price

goes from Rs. 20/- to Rs. 25/- has appreciated by Rs. 5/-.

Arbitrage

The practice of buying and selling an interlaced stock on different exchanges in order to gain profit

from minute differences in price between the two markets.

Asset

Property and resources, such as cash and investments, comprise a person's assets; i.e., anything that

has value and can be traded. Examples include stocks, bonds, real estate, bank accounts, and

jeweler.

Asset Allocation

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When you divide your money among various types of investments, such as stocks, bonds, and

short-term investments (also known as "instruments"), you are allocating your assets. The way in

which your money is divided is called your asset allocation.

Annualized Return

This is the hypothetical rate of return that, if the fund achieved it over a year's time, would produce

the same cumulative total return if the fund performed consistently over the entire period. A total

return is expressed in a percentage and tells you how much money you have earned or lost on an

investment over time, assuming that all dividends and capital gains are reinvested.

Balanced Fund

A mutual fund that maintains a balanced portfolio, generally 40% bonds and 60% equity.

Barter

The exchange of goods and services for other goods and services without the use of money.

Bid or Sell Price

The price at which a mutual fund's shares are redeemed (bought back) by the fund. The bid or

redemption price means the current net asset value per share, less any redemption fee or back-end

load.

Blue Chip

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A share in a large, safe, prestigiou