Aditya Final Report (To Edit)

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 10-12 years, 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.
Summer Internship Project/Aditya Nagaraja/IMCOST
CHAPTER 1 INTRODUCTION
PURPOSE OF THE STUDY

The 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 line employees 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.
METHODOLOGY
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DATA SOURCE
Primary source Research 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.
Sample size: The sample 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 1. Chowpatty 2. Crawford 3. Fort 4. Santacruz 5. Goregaon 6. Chembur 7. Ghatkopar ING Vaisya 1. Khar 2. Vile Parle 3. Juhu Tara 4. Juhu 5. Lokhadwala 6. Andheri (E) 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 Funds Before 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.
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
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 closeended schemes. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices.
BY 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, investment in 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 across different 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 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 mispricing between cash market and derivatives market. Funds are allocated to equities, T-
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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 longterm 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 nearly all 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 funds

For 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 predict the 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 INDUSTRY

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, it accelerated from the year 1987 when non-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

Establishes the mutual fund as a trust and registers with SEBI Managed by the board of trustees.
Sponsor Company
Mutual fund (For e.g. Reliance AMC)
Hold unit holders funds in mutual fund. Enters into an agreement with SEBI.
Asset Management Company.
Floats mutual funds as per the regulations of SEBI regulations.
Custodian
Provides custodial services.
Registrar
Provides registrar transfer services.
and
Provides the network for distribution of schemes to the 24 Distributors Nagaraja/IMCOST Summer Internship Project/Aditya investors.
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 Details
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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) Average AUM Excluding Fund of Sr. No Mutual Fund Name Funds - Domestic but Fund Of Funds including Fund of Funds - Overseas 1 2 3 4 5 6 7 8 9 AEGON Mutual Fund AIG Global Investment Group Mutual Fund Axis Mutual Fund Baroda Pioneer Mutual Fund Benchmark Mutual Fund Bharti AXA Mutual Fund Birla Sun Life Mutual Fund BNP Paribas Mutual Fund Canara Robeco Mutual Fund N/A 71,640.25 7,45,288.35 4,42,985.87 4,11,499.76 21,640.26 67,47,515.77 5,72,334.27 8,62,487.99 66,457.44 11,08,353.71 30,02,193.16 25,838.33 20,941.87 9,34,656.07 34,72,935.77 N/A 92,03,291.15 4,85,535.82 79,75,871.50 5,12,411.01 27,84,861.00 N/A N/A 0 0 0 0 0 3,441.54 0 0 0 0 0 0 0 11,567.71 1,81,008.24 N/A 0 0 9,810.01 0 73,036.66 N/A 29 Domestic
10 Daiwa Mutual Fund 11 Deutsche Mutual Fund 12 DSP BlackRock Mutual Fund 13 Edelweiss Mutual Fund 14 Escorts Mutual Fund 15 Fidelity Mutual Fund 16 Franklin Templeton Mutual Fund 17 Goldman Sachs Mutual Fund 18 HDFC Mutual Fund 19 HSBC Mutual Fund 20 ICICI Prudential Mutual Fund 21 IDBI Mutual Fund 22 IDFC Mutual Fund 23 IIFL Mutual Fund
24 ING Mutual Fund 25 JM Financial Mutual Fund 26 JPMorgan Mutual Fund 27 Kotak Mahindra Mutual Fund 28 L&T Mutual Fund 29 LIC NOMURA Mutual Fund 30 Mirae Asset Mutual Fund 31 Morgan Stanley Mutual Fund 32 Motilal Oswal Mutual Fund 33 Peerless Mutual Fund 34 Pramerica Mutual Fund 35 PRINCIPAL Mutual Fund 36 Quantum Mutual Fund 37 Reliance Mutual Fund 38 Religare Mutual Fund 39 Sahara Mutual Fund 40 SBI Mutual Fund 41 Sundaram Mutual Fund 42 Tata Mutual Fund 43 Taurus Mutual Fund 44 Union KBC Mutual Fund 45 UTI Mutual Fund Grand Total
99,322.89 5,84,976.42 3,72,412.52 33,99,354.13 5,21,470.59 9,33,839.87 42,528.13 2,05,254.82 34,504.53 4,90,793.71 1,68,365.30 5,43,350.35 13,884.21 1,01,25,932.98 11,34,246.83 26,537.35 47,87,445.88 14,54,110.82 25,00,617.07 5,02,123.06 29,849.90 69,10,509.45 7,43,50,170.16
22,218.42 0 0 17,349.76 0 0 0 0 0 0 0 0 294.14 79,010.38 0 0 0 0 0 0 0 0 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 longterm. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.
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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 and the secondary objective is to generate consistent returns by investing in debt and money market securities.
Reliance Tax Saver (ELSS) Fund (An Open-ended Equity Linked Savings Scheme.) The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments. Reliance Equity Opportunities Fund (An Open-Ended Diversified Equity Scheme.) The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity securities & equity related securities and the secondary objective is to generate consistent returns by investing in debt and money market securities.
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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 generate capital appreciation through investment in equity and equity related instruments. The Scheme will seek to generate capital appreciation by investing in an active portfolio of stocks selected from S & P CNX Nifty on the basis of a mathematical model.
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 returns by 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: (A Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of: Central and State Government securities and
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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: (A Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of: Central and State Government securities and other fixed income/ debt securities normally maturing in line with the time profile of the series with the objective of limiting interest rate volatility Reliance Fixed Horizon Fund - VII: (A Close-ended Income Scheme.) The primary investment objective of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified portfolio of: Central and State Government securities and other fixed income/ debt securities normally maturing in line with the time profile of the series with the objective of limiting interest rate volatility.
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 ANALYSIS
A 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 of skilled 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 be stellar.
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 they will soon 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 THESIS
TABLE - 1 TABLE SHOWING PREFERRED FUND STRUCTURE
Structure of the fund

Open ended fund Close ended fund
No of investors preferred
12 05
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No Preference Total
03 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 and exit 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

Growth scheme Income scheme Balanced scheme
No of investors preferred
10 03 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
Equity
No. of respondents
06
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Debt Gold Funds ETF
07 05 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
Fixed Deposits
No. of Respondent
02
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Bank Deposits PMS Direct Equity Mutual Funds Insurance
01 02 03 10 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 RMs recommendation Friend/Family Recommendation
08 10 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 Moderate Low
10 05 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

Yes No Cant say
No. of respondents
15 04 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

Yes No Cant say
No. of respondents
09 10 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
Creating Wealth Parking Surplus Tax Benefits Childs Future Retirement All of the above
No. of respondents
03 03 01 00 01 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
AREAS
CUSTOMER SERVICE MONITORING OF FUND AGENTS TRAINING OTHERS TOTAL
NO OF RESPONDENT
07 08 03 02 20 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.
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CHAPTER 5
FINDINGS & SUGGESTIONS
FINDINGS & SUGGESTIONS

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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 good returns. 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 Company Brochures - Arindam Banerjee
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
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QUESTIONNAIRE
Name: ______________________________ 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 __________ Rank 2 __________ Rank 3 __________ Rank 4 __________ Rank 5 __________ Rank 6 __________
b. Bank Deposits c. PMS d. Direct Equity e. Mutual Funds f. Insurance
2. If investments, you generally recommend (and rank them in the order of preference)
a. Equity Funds b. Debts Funds c. ETF d. Gold Funds
Rank 1 __________ Rank 2 __________ Rank 3 __________ 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 c. Tax benefits
Rank 2 __________ Rank 3 __________ Rank 4 __________ Rank 5 __________
d. Childs future
e. Retirements
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 b. No
Comments:______________________________________ _______________________________________________
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c. Cant say
_______________________________________________
8. Is, Duration of involvement Risk appetite --- (as duration increases risk appetite
increases)
a. Yes b. No c. Cant say
Comments:______________________________________ _______________________________________________ _______________________________________________
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 b. No
Comments:______________________________________ _______________________________________________
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
GLOSSARY
Advisor
Your 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, prestigious company, of the highest class among stock market investments. A blue-chip company would be called thus by being well-known, having a large paid-up capital, a good track record of dividend payments and skilled management.
Capital
This is the amount of money you have invested. When youre investing objective is capital preservation, your priority is trying not to lose any money. When youre investing objective is capital growth, your priority is trying to make your initial investment grow in value.
Capital Gain
Profit from a sale of an investment constitutes a capital gain. For example, if you bought a share of stock for Rs. 5/- and later sold it for Rs. 7/-, you would have a capital gain of Rs. 2/-.
Capital Gains Distributions

Payments (usually annually) to mutual fund shareholders of gains realized on the sale of portfolio securities.
Capital Growth
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A rise in market value of a mutual fund's securities, reflected in its NAV per share. This is a specific long-term objective of many mutual funds.
Closed-ended Mutual Fund

A mutual fund that offers a limited number of shares. They are traded in the securities markets. Price is determined by supply and demand. Unlike open-ended mutual funds, closed-ended funds do not redeem their shares.
Derivative
An investment contract based on an underlying investment called an "instrument." The most common type of derivative is an option contract, which involves the right to buy or sell the underlying instrument at an agreed price. Futures contracts are also derivatives.
Diversification
The policy of spreading investments among a range of different securities to reduce the risks inherent in investing.
Dividend
When companies pay part of their profits to shareholders, those profits are called dividends. A mutual fund's dividend is money paid to shareholders from investment income the fund has earned. The amount of each share's dividend depends on how well the company does.
Endorsement
Assigning or transferring a lien to another person is accomplished through the use of an endorsement. The words "PAY TO THE ORDER OF" and then the name of the person to whom the lien is being assigned to, is written. If there is not enough space on the original note to write an
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endorsement, it is written on a separate piece of paper that is permanently affixed to the original note. This is called an along.
Face Value
The face value is the term used to describe the value of a bond in terms of what the company which issued the bond will actually repay when the loan matures. It's sometimes described as nominal or par value.
Growth Fund
A mutual fund whose primary investment objective is long-term growth of capital. It invests principally in common stocks with significant growth potential.
Income Fund
A mutual fund that primarily seeks current income rather than growth of capital. It will tend to invest in stocks and bonds that normally pay high dividends and interest.
Index Fund
A mutual fund that seeks to mirror general stock-market performance by matching its portfolio to a broad-based index (e.g. BSE Sensex).
Load
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A sales charge or commission assessed by certain mutual funds ("load funds") to cover their selling costs.
Net Asset Value

Also known as NAV, this is the unit price (or rupee value) of one unit of a mutual fund. NAV is calculated at the end of every business day. It is calculated by adding up the value of all the securities and cash in the mutual fund's portfolio (its assets), subtracting the fund's liabilities, and dividing that number by the number of units that the fund has issued. It does not include a sales charge. The NAV increases (or decreases) when the value of the mutual fund's holdings increase (or decrease).
Redeemable
Preferred shares or bonds that give the issuing corporation an option to repurchase securities at a stated price. These are also known as callable securities.
Redemption Fee
A fee charged by a limited number of funds for redeeming, or buying back, fund units.
Redemption Price
The price at which a mutual fund's units are redeemed (bought back) by the fund. The redemption price is usually equal to the current NAV per unit.
Reinvestment Date
The date on which a share's dividend and/or capital gains will be reinvested (if requested) in additional fund shares.
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Rupee Cost Averaging (SIP)

The technique of investing a fixed sum at regular intervals regardless of stock market movements. This reduces average share costs to the investor, who acquires more shares in periods of lower securities prices and fewer shares in periods of high prices. In this way, investment risk is spread over time.
Sector Fund
A fund that operates several specialized industries sectors portfolios under one umbrella. These sectors could be FMCG or Technology.
Systematic Investment Plan

Many mutual funds offer investment programs whereby unit holders can invest. The Unit holders of the scheme can benefit by investing specific Rupee amounts periodically, for a continuous period. The SIP allows the investors to invest a fixed amount of Rupees every month or quarter for purchasing additional units of the scheme at NAV based prices.
Systematic Withdrawal Plans
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Many mutual funds offer withdrawal programs whereby unit holders receive payments from their investments. These payments are usually drawn from the fund's dividend income and capital gain distributions, if any, and from principal only when necessary.
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SUMMARY/ABSTRACT

Summer Internship Project/Aditya Nagaraja/IMCOST

Summer Internship Project/Aditya Nagaraja/IMCOST

PURPOSE OF THE STUDY

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Company Brochures Company Website Internet

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UNDERSTANDING MUTUAL FUNDS

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Types of Mutual Fund Schemes

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Pros & cons of investing in mutual funds

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CHAPTER 2 INDUSTRY PROFILE

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INTRODUCTION TO MUTUAL FUND INDUSTRY

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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

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REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA

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Diagram 5 MUTUAL FUNDS STRUCTURE /COMPANY STRUCTURE

Mutual fund (For e.g. Reliance AMC)

Asset Management Company.

Floats mutual funds as per the regulations of SEBI regulations.

Provides custodial services.

Provides registrar transfer services.

CHAPTER 3 COMPANY PROFILE

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22,218.42 0 0 17,349.76 0 0 0 0 0 0 0 0 294.14 79,010.38 0 0 0 0 0 0 0 0 3,97,736.86

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RELIANCE CUSTOMER SERVICE

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RELIANCE MUTUAL FUND SCHEMES

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SECTOR SPECIFIC SCHEMES

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Bank: _________ Phone: _

Rank 1 Rank 2 Rank 3 Rank 4

Rank 2 Rank 3 Rank 4 Rank 5

Comments:______________ _ _________________________