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MBA (2010-12)



For the partial fulfillment of the requirement for the degree of Master of Business Administration from G. B.Technical University, Lucknow

Submitted To: G. B.Technical University, Lucknow

Project Supervisor: Mr. Amit Prakash (Assistant manager )

Submitted By: Nidhi Soni (MBA-2 year) Roll No. 1028170024


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NIDHI SONI , Roll no. 1028170024, a student of MBA III semester of SHERWOOD COLLEGE OF ENGINEERING RESEARCH & TECHNOLOGY, SHERWOOD BUSINESS SCHOOL ,LUCKNOW FAIZABAD ROAD , BARABANKI hereby declare that the Research report titled PUBLIC SECTOR UNION BANKS INVESTORS AWARENESS OF MUTUAL FUND AS ON INVESTMENT of any other diploma or degree. is my original work and the same has not been submitted for the award



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1. 2. 3. 4. 5. 6.

Acknowledgement Abstract Executive summary Objectives of the project Industry Profile Introduction


Assets under management in india

8. 9.

The cooperate governance The AMC & Schemes


The Product Profile


The investment objective

12. 13.

The mutual fund Design of the study

14. 15.

Objective of project topic. History of mutual fund

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16. 17.

Drawback of mutual fund SWOT analysis

18. 19. 20. 21. 22. 23. 24. 25.

About SIP Research design & Methodology Research Process steps & Research Objectives Research Questionnaire Sampling processes and Design Limitations and Recommendations Annexure Bibliography

I take this opportunity to express my deep sense of gratitude to all those who have contributed significantly by sharing their knowledge and experience in the completion of this project work. I am greatly obliged to, for providing me with the right kind of opportunity and facilities to complete this venture. My first word of gratitude is due to Mr. AMIT PRAKASH - Assistant Manager, Reliance Mutual Fund, My corporate guide, for his kind help and support and his valuable guidance throughout my project. I am thankful to him for providing me with necessary insights and helping me out at every single step. Finally, I would

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also like to thank all my dear friends for their cooperation, advice and encouragement during the long and arduous task of carrying out the project and preparing this report.


I joined RELIANCE MUTUAL FUND for internship program (as a part of MBA), I only had a theoretical knowledge of related subjects, thanks to my Faculty Guide and my Company Mentor for giving me an opportunity to implement my theoretical knowledge in practical aspect.

My Company mentor

Mr.Amit Prakash

has given me the project to manage

awareness of union bank investors about mutual fund, updating all the necessary information to them & to empanel new investors by visiting banks with Reliance Mutual Fund in Lucknow. I started this project by understanding the concept & technicalities of Mutual Fund. Analysis of Lucknow market through Primary & Secondary data helped me for further strategy. I have collected the secondary data of different ratios, portfolios, volatility measures, NAVs performance &

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returns of all the leading AMCs from the net and other source to make my analysis more effective. For the analysis of services & overall quality of Reliance AMC with other leading AMCs, I collected the Primary Data through Questionnaire. It helped me a lot to complete my project on time. Interaction with IFAs (Individual Financial Adviser) also helped me to understand more the concept & technicalities of mutual funds & also, compare our AMC with other AMCs because these are the persons who have enough knowledge about the investment market and investor behavior.

The Final Report includes, the analysis of the whole data (primary and Secondary) by putting in Graphical Mode. This analysis might be a Value Addition to RELIANCE Mutual Fund to make a strategy for particular Area (LUCKNOW).

Executive Summary

The project involves a study of mutual fund industry and evaluating and suggesting measures to create the awareness among unit bank investor about mutual funds of Reliance Mutual fund and also to identify the strong as well as the weak points so that an appropriate sales pitch could be developed. The sales pitch highlighted features like Reliance being the pioneer in terms of AUM, its huge distributor base, returns being independent of the market ups and downs, etc. Calls were made to all the different channel distributors (Retail) across all tiers from companys database and appointments were sought. Thereafter a brief questionnaire was tilled up by them regarding their and consumers perception about reliance since they get the direct interaction with investors.

The second part of the project is to study & analyze the comparison of beta, volatility measures, portfolios and returns of different large Cap, mid cap & small

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cap funds because every distributors ask about the different ratios & beta (risk factor) of Reliance. So I have to provide all the necessary information to them so as to manage the relationship with them.

A comparative analysis is also done of Reliance Mutual Fund with other AMCs in order to find the market position of the company with respect to services provided by it. It was found that there are many issues on which the company needs to improve, which are elaborated in future parts of the report.

This project aims to identify PUBLIC SECTOR UNIT BANKS INVESTORS AWARENESS OF MUTUAL FUND AS ON INVESTMENT for the Reliance mutual funds, to know how much people are aware of mutual fund as investment option specially union banks public sectors investors. A modest attempt has been made to study and understand the behavior and perception of the target audience, about mutual funds and their awareness.

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The mutual fund industry is a lot like the film star of the finance business. Though it is perhaps the smallest segment of the industry, it is also the most glamorous in that it is a young industry where there are changes in the rules of the game every day, and there are constant shifts and upheavals. The mutual fund is structured around a fairly simple concept, the mitigation of risk through the spreading of investments across multiple entities, which is achieved by the pooling of a number of small investments into a large bucket. Yet it has been the subject of perhaps the most elaborate and prolonged regulatory effort in the history of the country. The Indian mutual fund industry is one of the fastest growing sectors in the Indian capital and financial markets. The mutual fund industry in India has seen dramatic improvements in quantity as well as quality of product and service offerings in recent years. Mutual funds assets under management grew by 96% between the end of 1997 and June 2003 and as a result it rose from 8% of GDP to 15%. The industry has grown in size and manages total assets of more than $30351 million. Of the various sectors, the private sector accounts for nearly 91% of the resources mobilized showing their overwhelming dominance in the market.

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Individuals constitute 98.04% of the total number of investors and contribute US $12062 million, which is 55.16% of the net assets under management. Steady growth of mutual fund business in India in the four decades from 1964, when UTI was set up is given in the table below: Period (Year) Aggregate Investment In Crores of (Year) 1964-69 1969-74 1974-79 1979-84 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 Rupees 65 172 402 1261 4563.68 6738.81 13455.65 19110.92 23060.45 37480.20 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 Period Aggregate Investment In Crores of Rupees 46988.02 61301.21 75050.21 81026.52 80539.00 68984.00 63472.00 107966.10 90587.00 94571.00

Mutual Fund Industry in its true spirit rooted in a free market and oriented towards competitive functioning with the dedicated goal of service to the investors can be said to have settled in India only in 1993. However the industry took its roots much earlier with the setting up of the Unit Trust in India (UTI) in 1964 by the Government of India. During the last 36 years, UTI has grown to be a dominant player in the industry with assets of over Rs.72,333.43 Crores as on March 31, 2000. The UTI is governed by a special legislation, the Unit Trust of India Act, 1963. In 1987 public sector banks and insurance companies were permitted to set up mutual funds and accordingly since 1987, 6 public sector banks have set up mutual funds. Also the two Insurance companies LIC and GIC established mutual funds. Securities Exchange Board of India (SEBI) formulated the Mutual Fund (Regulation) 1993, which for the first time established a comprehensive regulatory framework for the mutual fund industry. Since then several mutual funds have been set up by the private and joint sectors.

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The Reliance group - one of India's largest business houses with revenues of Rs. 990 billion ($22.6 billion) that is equal to 3.5 percent of the country's gross domestic product was split into two.

The group - which claims to contribute nearly 10 per cent of the country's indirect tax revenues and over six percent of India's exports - was divided between Mukesh Ambani and his younger brother Anil on June 18, 2005.

The group's activities span exploration, production, refining and marketing of oil and natural gas, petrochemicals, textiles, financial services, insurance, power and telecom. The family also has interests in advertising agency and life sciences. Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Average Assets Under Management (AAUM) of Rs. 90,938 Crores (AAUM for Mar 08 ) and an investor base of over 66.87 Lakhs.

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

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financial services. Reliance Mutual fund has largest AUM in India. Reliance capital asset Management is no. 1 AMC in India but the picture is not the same in Chhattisgarh. In Chhattisgarh they are no. 2 AMC. Management of Reliance mutual fund wants to expand its feet in Chhattisgarh, before taking any step they want to understand market & investor and distributor behavior of SMEs, so they may plan accordingly to capture Chhattisgarh Market. In this research we have to analyze why, how, where, when & how much an investor invest & according to it, we have to make profile of investors.

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Asset under Management in India

Mutual Funds

Assets under management (Rs.Cr)

March 2011 June 2011 101,259 92,033 79,759 69,105 67,475 47,874 34,729 33,994 30,022 27,849 25,006 14,541 Change -317 5,751 6,293 1,916 3,779 6,203 -3,153 1,791 -579 6,830 2,325 63 % Change -0.31 6.66 8.57 2.85 5.93 14.88 -8.32 5.56 -1.89 32.49 10.25 0.43

Reliance Mutual Fund HDFC Mutual Fund ICICI Prudential Mutual Fund UTI Mutual Fund Birla Sun Life Mutual Fund SBI Mutual Fund Franklin Templeton Mutual Fund Kotak Mahindra Mutual Fund DSP BlackRock Mutual Fund IDFC Mutual Fund Tata Mutual Fund Sundaram Mutual Fund

101,577 86,282 73,466 67,189 63,696 41,672 37,883 32,202 30,601 21,019 22,681 14,479

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Religare Mutual Fund Deutsche Mutual Fund Fidelity Mutual Fund LIC NOMURA Mutual Fund Canara Robeco Mutual Fund Axis Mutual Fund JM Financial Mutual Fund BNP Paribas Mutual Fund PRINCIPAL Mutual Fund L&T Mutual Fund IDBI Mutual Fund Taurus Mutual Fund Peerless Mutual Fund HSBC Mutual Fund Baroda Pioneer Mutual Fund Benchmark Mutual Fund JPMorgan Mutual Fund Morgan Stanley Mutual Fund Pramerica Mutual Fund ING Mutual Fund AIG Global Investment Group MF Daiwa Mutual Fund Mirae Asset Mutual Fund Motilal Oswal Mutual Fund Sahara Mutual Fund Edelweiss Mutual Fund Bharti AXA Mutual Fund Escorts Mutual Fund

11,505 8,187 9,074 11,196 7,824 8,302 5,918 4,674 5,246 4,030 3,528 2,560 4,202 4,452 2,585 3,404 3,410 2,076 1,629 1,301 796 244 380 301 179 182 289 197

11,342 11,084 9,347 9,338 8,625 7,453 5,850 5,723 5,434 5,215 5,124 5,021 4,908 4,855 4,430 4,115 3,724 2,053 1,684 993 716 665 425 345 265 258 216 209

-162 2,897 272 -1,857 801 -849 -68 1,049 187 1,185 1,596 2,461 706 403 1,845 711 315 -24 54 -308 -80 421 46 45 86 76 -72 13

-1.41 35.39 3.00 -16.59 10.24 -10.22 -1.15 22.45 3.57 29.40 45.25 96.16 16.80 9.06 71.38 20.90 9.23 -1.13 3.33 -23.68 -9.99 172.48 12.06 14.82 48.08 41.99 -25.01 6.39

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Quantum Mutual Fund







743,20 3



Vision Statement:
To be a globally respected wealth creator, with an emphasis on customer care and a culture of good corporate governance.

Mission Statement:
To create and nurture a world-class, high performance environment aimed at delighting their customers

Corporate Governance:
Corporate Governance Policy:
Reliance Capital Asset Management Ltd. has a vision of being a leading player in the Mutual Fund business and has achieved significant success and visibility in the market. However, an imperative part of growth and visibility is adherence to Good Conduct in the marketplace. At Reliance Capital Asset Management Ltd., the implementation and observance of ethical processes and policies has helped us in standing up to the scrutiny of our domestic and international investors.

The management at Reliance Capital Asset Management Ltd. is committed to good Corporate Governance, which includes transparency and timely

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dissemination of information to its investors and unit holders. The Board of Directors of RCAM is a professional body, including well-experienced and knowledgeable Independent Members. Regular Audit Committee meetings are conducted to review the operations and performance of the company.

Reliance Capital Asset Management Ltd. has at present, a code of conduct for all its officers. It has a clearly defined prohibition on insider trading policy and regulations. The management believes in the principles of propriety and utmost care is taken while handling public money, making proper and adequate disclosures. All personnel at Reliance Capital Asset Management Ltd are made aware of their rights, obligations and duties as part of the Dealing Policy laid down in terms of SEBI guidelines. They are taken through a well-designed HR program, conducted to impart work ethics, the Code of Conduct, information security, Internet and email usage and a host of other issues. One of the core objectives of Reliance Capital Asset Management Ltd. is to identify issues considered sensitive by global corporate standards, and implement policies/guidelines in conformity with the best practices as an ongoing process. Reliance Capital Asset Management Ltd. gives top priority to compliance in true letter and spirit, fully understanding its fiduciary responsibilities.

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.", the sponsor. Reliance Mutual Fund (RMF) has been sponsored by Reliance Capital Ltd (RCL). The promoter of RCL is AAA Enterprises Private Limited. Reliance Capital Limited is a Non Banking Finance Company. Reliance Capital Limited is one of the Indias leading and fastest growing financial services companies, and ranks among the top three private sector financial services and banking companies, in terms of net worth. Reliance Capital has interests in asset management and mutual funds, life and

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non-life insurance, private equity and proprietary investments, stock broking and other activities in the financial services sector. The net worth of RCL is Rs. 5,161.23 crores as on March 31, 2007.

Given below is a summary of RCLs financials:

Particulars (Rs. in crores) Total Income Profit Before Tax Profit After Tax Reserves Surplus Net Worth Earnings Share (Rs.) 5161.23 per 28.39 (Basic Diluted)
Book Value per Share





883.86 733.18 646.18 & 4915.07

652.02 550.61 537.61 3849.58

295.69 111.21 105.81 1310.08

356.79 105.79 105.79 1271.84

4122.46 29.74 + (Basic Diluted) 112.95 30% 223.40

1437.92 8.31 + (Basic Diluted) 112.95 30% 127.84

1399.81 8.31 + (Basic Diluted) 109.96 29% 127.84 +

210.12 35%


Dividend (%) Paid Capital up

Equity 246.16


Year (2009-10)

Year (2008-09)

Year (2007-08)

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Net Worth Total Income Profit after Tax

6885.70 2366.62 339.42

6687.30 2974.85 968.02

5927.50 2079.79 1025.45

The AMC:
About Reliance Capital Asset Management Ltd.:

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(Dhirubhai Ambani)

(Anil Dhirubhai Ambani)

Reliance Capital Asset Management Limited (RCAM), a company registered under the Companies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund.

Reliance Capital Asset Management Limited (RCAM) was approved as the Asset Management Company for the Mutual Fund by SEBI vide their letter no

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IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The net worth of the Asset Management Company including preference shares as on September 30, 2007 is Rs.152.02 crores. "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 Asset Management Limited (RCAM) was approved as the Asset Management Company for the Mutual Fund by SEBI by their letter no. IIMARP/1264/95 dated June 30, 1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds) Regulations..1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager of Reliance Mutual Fund. The net worth of the Asset Management Company including preference shares as on March 31, 2005 is Rs.113.59 crores.

The Schemes: Equity/Growth Schemes:

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

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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.

Debt/Income Schemes:
The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

Sector Specific Schemes:

These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. E.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

Product Profile:

Reliance Mutual Fund has launched 32 Schemes till date, namely:

Reliance Growth Fund (September Reliance Vision Fund (September

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1995) Liquid Fund Term Fund (March Fund (May

Reliance Income Fund (December Reliance 1997) 1998) Reliance Medium (August 2000) Term

Fund Reliance Short (December 2002) Banking

Reliance Gilt Securities Fund (July Reliance 2003) 2003) Reliance Monthly (December 2003) Reliance 2004) Pharma Income Fund (

Plan Reliance Diversified Power Sector Fund (March 2004) May Reliance Floating Rate Fund (Aug 2004) Equity Fund

Reliance Media & Entertainment Reliance NRI Fund (September 2004) (October 2004) Reliance NRI (October 2004) Income

Fund Reliance Index Fund (February 2005)

Reliance Equity Opportunities Reliance Regular Savings Fund Fund (February 2005) (May 2005) Reliance 2005) Liquidity Fund Tenor (June Reliance Tax Saver (ELSS) Fund (July 2005) Fund Reliance Equity Fund (February 2006) Horizon Fund

Reliance Fixed (November 2005)

Reliance Fixed Horizon Fund I Reliance Fixed (August 2006) (April 2006)

Reliance Fixed Horizon Fund III Reliance Fixed Horizon Fund II (March 2007) (November 2006) Reliance Liquid Plus Fund (March Reliance Long Term Equity Fund 2007) (November 2006) Reliance Long Term Equity Fund Reliance Interval Fund (March (Nov 2006) 2007) Reliance Fixed Horizon Fund - IV Reliance Fixed Horizon Fund-V (August 2007) (September 2007)

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Reliance Equity Linked Saving Reliance Fixed Fund Series1 (dec 2007) 6th(dec 2007)



Reliance Natural Resource Fund Reliance Fixed Horizon Fund 7th January(2008) (jan 2008) Reliance Fixed Horizon Fund 8th Reliance Fixed (March 2008) 9th(March 2008) Horizon Fund Fund Fund Fund Fund

Reliance Banking Exchange Reliance Fixed Horizon Traded Fund may 2008 10th(August 2008) Reliance Fixed 11th(Oct 2008) Horizon Fund Reliance Fixed 12th(dNov 2008) Horizon Horizon Horizon

Reliance Infrastructure Fund (June Reliance Fixed 2009) 13th(Sep 2009) Reliance Fixed 14th(Feb 2010) Horizon Fund Reliance Fixed 15th(April 2010)

Investment Objectives:
Reliance Monthly Income Plan aims 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 aims 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 and Money Market Instruments.

Reliance Medium Term Fund aims to generate regular

income in order to make regular dividend payments to unit holders and the secondary objective is growth of capital.

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Reliance Liquid Fund aims 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.


aims 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 Short Term Fund aims to generate stable

returns for investors with a short term investment horizon by investing in fixed income securities of a short term maturity.

Reliance Gilt Securities Fund aims to generate optimal

credit risk free returns by investing in a portfolio of securities issued and guaranteed by the Central Government and State Governments

Reliance Floating Rate Fund aims to generate regular

income through investment in a portfolio comprising substantially of Floating Rate Debt Securities (including floating rate securitized debt and Money Market Instruments and Fixed Rate Debt Instruments swapped for floating rate returns).

Reliance Regular Savings Fund Debt Option: The

primary investment objective of this plan is to generate optimal returns consistent with moderate level of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly investments shall predominantly be made in Debt & Money Market Instruments.

Reliance Regular Savings Fund Equity Option: The

primary investment objective is to seek capital appreciation and or consistent returns by actively investing in equity / equity related securities.

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Reliance Regular Savings Fund Hybrid Option : The

primary investment objective is to generate consistent return by investing a major portion in debt & money market securities and a small portion in equity & equity related instruments.

Reliance Growth Fund aims to achieve long term growth

of capital by investment in equity and equity related securities through a research based investment approach.

Reliance Vision Fund aims to achieve long term growth

of capital by investment in equity and equity related securities through a research based investment approach.

Reliance Equity Opportunities Fund aims to generate

capital appreciation & provide long term growth opportunities by investing in a portfolio constituted of equity securities & equity related securities

Reliance Banking Fund aims to generate continuous

returns by actively investing in equity / equity related or fixed income securities of banks.


seek to generate consistent returns by investing in equity / equity related or fixed income securities of Power and other associated companies





Reliance Pharma Fund aims generate consistent returns

by investing in equity / equity related or fixed income securities of Pharma and other associated companies.

Reliance Media & Entertainment Fund to generate

consistent returns by investing in equity / equity related or fixed income securities of media & entertainment and other associated companies.

Reliance Index Fund-Sensex Plan aims to replicate the

composition of the Sensex, with a view to endeavor to

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generate returns, which could approximately be the same as that of Sensex.

Reliance Index Fund-Nifty Plan aims to replicate the

composition of the Nifty, with a view to endeavor to generate returns, which could approximately be the same as that of Nifty.

Reliance NRI Equity Fund aims to generate optimal

returns by investing in equity and equity related instruments primarily drawn from the Companies in the BSE 200 Index.

Reliance Equity Fund: 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.

The Mutual Fund:

About Reliance Mutual Fund:
Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act, 1882 with Reliance Capital Limited (RCL), as the Settler /Sponsor and Reliance Capital Trustee Co. Limited (RCTCL), as the Trustee. RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number

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MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual Fund has been changed to Reliance Mutual Fund effective 11th. March 2004 vide SEBI's letter no. IMD / PSP / 4958 / 2004 date 11th. March 2004. Reliance Mutual Fund was formed to launch various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities.

The main objectives of the Trust are:

To carry on the activity of a Mutual Fund as may be permitted at law and formulate and devise various collective Schemes of savings and investments for people in India and abroad and also ensure liquidity of investments for the Unit holders; To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on their savings and To take such steps as may be necessary from time to time to realize the effects without any limitation.

Social Responsibilities:
Organizations, like individuals, depend for their survival, sustenance and growth on the support and goodwill of the communities of which they are an integral part, and must pay back this 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

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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 proactively 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.

The Management Team:

Board of Directors
Mr. Soumen Ghosh

Mr. Kanu Doshi Mr. Manu Chadha Mr. Sushil Tripathi Management Team CEO
Mr. Sudeep Sikka

Deputy CEO

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Mr. Sunil B . Singhania

Head Fixed Income Mr. Amitabh Mohanty Equity Fund Managers

Mr. Krishan Daga

Mr. Ashwani Kumar Mr. Shiv Chanani

Mr. Govind

Mr. Shailesh Raj Bhan Mr. Omprakash S. Kuckian


Debt Fund Managers Mr. Amit Tripathi

Mr. Prashant Pimple

Ms. Anju Chhajer

Commodities Fund Manager Head Of Departments Infrastruture & Admin Finance and Accounts Human Resource Development
Mr. Pradeep Andrade Mr.Milind Gandhi Mr. Hiren Chandarian

Mr. Rajesh Derhgawen

Information Technology Legal, Secretarial & Compliance Operations & Settlement Head-Service Delivery& Operations Excel

Mr. Vinay Nigudkar

Mr. Munish Sud

Ms. Geeta Chandran Mr. Bhalchandra Joshi

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Head -Sales & Distribution,Product Zonal Heads Northern Zone Head Western Zone Head Southern Zone Head Eastern Zone Head

Mr Himanshu Vyapak

Mr. Gurbir Chopra Mr. Aashwin Dugal Mr. Gopal Khaitan Mr Vkash Raithe


Defining the purpose of research Determining the data required and their resources. A Questionnaire was designed to get detailed information. Face to face interviews was taken were conducted to get the required information. Analysis of Data Drawing Conclusions Suggestions/ Recommendation


This project is an attempt to deep and thorough approach creating awareness among unit banks investors about mutual funds for Reliance Mutual Funds.

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As in the present scenario of business world, the companies need to develop a wide network of its investors and moreover need to have a smooth relationship with them. So this project is tending to find out that what actually the mutual fund is, history regarding it, its types and other facts and figures related to it. Some points are listed below which can be considered as the objective of this project topic: To identify activities that has the greatest potential benefits in increasing the network.

To discover what is of most concern to your client, and therefore the greatest risk of losing them.

To learn the reasons your clients stay to continue and improve in these areas.

How to improve your organization with the specific feedback from the tool and become more attractive to current and potential clients.

Topic summary- A little history:

The mutual fund industry started in India in a small way with the UTI Act creating what was effectively a small savings division within the RBI. Over a period of 25 years this grew fairly successfully and gave investors a good return, and therefore in 1989, as the next logical step, public sector banks and financial institutions were allowed to float mutual funds and their success emboldened the government to allow the private sector to

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foray into this area. The initial years of the industry also saw the emerging years of the Indian equity market, when a number of mistakes were made and hence the mutual fund schemes, which invested in lesser-known stocks and at very high levels, became loss leaders for retail investors. From those days to today the retail investor, for whom the mutual fund is actually intended, has not yet returned to the industry in a big way. But to be fair, the industry too has focused on brining in the large investor, so that it can create a significant base corpus, which can make the retail investor feel more secure. The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases.

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.

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Second Phase 1987-1993 (Entry of Public Sector Funds):

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 crores.

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

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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

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. 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 assets under management 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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Presntly unit trust of India operates under the name of UTI mutual funds & its past schemes (likes US-64,assured return schemes) are being gradually wound up.However,UTI mutual fund is still the largest player in the Industry.In 1999,there was a significant growth in mobilisation of funds from investors and assets under management which is supported by the following data-

Gross Fund Mobilisation (Rs.Crores)

From To UTI Public Privat sector e sector 1,732 4,039 6,192 13,61 3 7,966 Total

01-April-98 01-April-99 01-April-00 01-April-01

31-March-99 31-March-00 31-March-01 31-March-02

11,67 9 13,53 6 12,41 3 4,643


42,173 59,748 74,352 92,957 1,46,2 67 1,64,52 3




22,92 3
7,259 *

2,20,5 2,48,57 51 9
58,435 65,694

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01-April-03 01-April-04 01-April-05

31-March-02 31-March-05 31-March-06

_ -

68,55 8

5,21,6 32

5,90,19 0 8,39,66 2 10,98,1 58

1,03.2 7,36,4 46 14 1,83,4 9,14,7 46 12

Assets under management (Rs.Crores)-

As on 31-March99

UTI 53,320

Public sector 8,292

Private sector 6,860

Total 68,472

The graph indicates the growth of assets over the years.

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WHAT ARE MUTUAL FUNDS? CONCEPT: 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 appreciations realized are 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

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

DEFINITION: Mutual funds are collective savings and investment vehicles where savings of small (or sometimes big) investors are pooled together to invest for their mutual benefit and returns distributed proportionately. Pooling of money ensures that small investors get the benefit of advice and expertise that is normally available only to very large investors. A mutual fund is an investment that pools your money with the money of an unlimited number of other investors. In return, you and the other investors each own shares of the fund. The fund's assets are invested according to an investment objective into the fund's portfolio of investments. Aggressive growth funds seek long-term capital growth by investing primarily in stocks of fast-growing smaller companies or market segments. Aggressive growth funds are also called capital appreciation funds. Mutual Funds are investment companies that make investments on behalf of individuals and institutions that

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share common financial goals. The suitability of a particular mutual fund for an individual investor depends on the type and nature of the fund's investments and amount of diversification. Funds are rated widely as to risk and return, and such ratings can be used to establish a match with investor goals and suitability. "Mutual Funds schemes are managed by respective Asset Management Companies sponsored by financial institutions, banks, private companies or international firms. The biggest Indian AMC is UTI while Alliance, Franklin Templeton etc are international AMC's.

Growth of Mutual Fund Business in India

The Indian Mutual fund business has passed through three phases. The first phase was between 1964 and 1987, when the only player was the Unit Trust of India, which had a total asset of Rs. 6,700/- crores at the end of 1988. The second phase is between 1987 and 1993 during which period 8 funds were established (6 by banks and one each by LIC and GIC). The total assets under management had grown to Rs. 61,028/- crores at the end of 1994 and the number of schemes were 167. The third phase began with the entry of private and foreign sectors in the Mutual fund industry in 1993. Kothari Pioneer Mutual fund was the first fund to be established by the private sector in association with a foreign fund. The share of the private players has risen rapidly since then.

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Within a short period of seven years after 1993 the growth statistics of the business of Mutual Funds in India is given in the table below:

Amount (Rs Crores) UTI Public Sector Private Sector Total 72,333.43 10,444.78 25,167.89 1,07,946.10

Percentage (%) 67.00 9.68 23.32 100.00

Scope for Development of Mutual Fund Business in India

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. India has a burgeoning population of middle class now estimated around 300 million. A typical Indian middle class family can have liquid savings ranging from Rs.2 to Rs.10 Lacs today. Investments in Banks are liquid and safe, but with the falling rate of interest offered by Banks on Deposits, it is no longer attractive. At

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best a part can be saved in bank deposits, but what are the other sources of investment for the common man? Mutual Fund is the ready answer. Viewed in this sense globally India is one of the best markets for Mutual Fund Business, so also for Insurance business. This is the reason that foreign companies compete with one another in setting up insurance and mutual fund business units in India. The sheer magnitude of the population of educated white collar employees provides unlimited scope for development of Mutual Fund Business in India. The alternative to mutual fund is direct investment by the investor in equities and bonds or corporate deposits. All investments whether in shares, debentures or deposits involve risk. While risk cannot be eliminated, skillful management can minimise risk. Mutual Funds help to reduce risk through diversification and professional management. The experience and expertise of Mutual Fund managers in selecting fundamentally sound securities and timing their purchases and sales help them to build a diversified portfolio that minimises risk and maximises returns.


For investments in mutual fund, one must keep in mind about the Pros and cons of investments in mutual fund.

The Advantages of Investing in a Mutual Fund:

Professional Management:

The investor avails of the services of experienced and skilled professionals who are backed by a dedicated investment research team which analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme.

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Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own. Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and unnecessary follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient. Return Potential: Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. Low Costs: Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. Liquidity: In open-ended schemes, you can get your money back promptly at net asset value related prices from the Mutual Fund itself. With close-ended schemes, you can sell your units on a stock exchange at the prevailing market price or avail of the facility of direct repurchase at NAV related prices which some close-ended and interval schemes offer you periodically. Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion

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invested in each class of assets and the fund manager's investment strategy and outlook. Flexibility: Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience. Choice of Schemes: Mutual Funds offer a family of schemes to suit your varying needs over a lifetime. Well Regulated: All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.

Drawbacks of mutual funds

Fluctuating Returns:

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 doesn't mean the performance will be stellar. Another important thing to know is that mutual funds are not guaranteed by the U.S. government, so in the case of dissolution, you won't get anything back. This is especially important for investors in money market funds. Unlike a bank deposit, a mutual fund will be

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insured by the Federal Deposit Insurance Corporation (FDIC).


Although diversification is one of the keys to successful investing, many mutual fund investors tend to over diversify. The idea of diversification is to reduce the risks associated with holding a single security; over diversification (also known as diworsification) occurs when investors acquire many funds that are highly related and, as a result, don't get the risk reducing benefits of diversification. At the other extreme, just because you own mutual funds doesn't mean you are automatically diversified. For example, a fund that invests only in a particular industry or region is still relatively risky.
Cash, Cash and More Cash:

As you know already, mutual funds pool money from thousands of investors, so everyday investors are putting money into the fund as well as withdrawing investments. To maintain liquidity and the capacity to accommodate withdrawals, funds typically have to keep a large portion of their portfolios as cash. Having ample cash is great for liquidity, but money sitting around as cash is not working for you and thus is not very advantageous.

Mutual funds provide investors with professional management, but it comes at a cost. Funds will typically have a range of different fees that reduce the overall payout. 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

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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 to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesn't make money, these fees only magnify losses.

Misleading Advertisements:

The misleading advertisements of different funds can guide investors down the wrong path. Some funds may be incorrectly labeled as growth funds, while others are classified as small cap or income funds. The Securities and Exchange Commission (SEC) requires that funds have at least 80% of assets in the particular type of investment implied in their names. How the remaining assets are invested is up to the fund manager. However, the different categories that qualify for the required 80% of the assets may be vague and wideranging. A fund can therefore manipulate prospective investors by using names that are attractive and misleading. Instead of labeling itself a small cap, a fund may be sold as a "growth fund". Or, the "Congo HighTech Fund" could be sold with the title "International High-Tech Fund".

Evaluating Funds:

Another disadvantage of mutual funds is the difficulty they pose for investors interested in researching and evaluating the different funds. Unlike stocks, mutual funds do not offer investors the opportunity to compare the P/E ratio, sales growth, earnings per share, etc. A mutual fund's net asset value gives investors the total value of the fund's portfolio less liabilities, but how do you know if one fund is better than another?

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Furthermore, advertisements, rankings and ratings issued by fund companies only describe past performance. Always note that mutual fund descriptions/advertisements always include the tagline "past results are not indicative of future returns". Be sure not to pick funds only because they have performed well in the past - yesterday's big winners may be today's big losers.

Dilution: It's possible to have too much

diversification. Because funds have small holdings in so many 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.
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-gains 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.

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Structure of Investment Companies (Mutual Funds) A typical MF in India has the following constituents:

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Fund Sponsor: A 'sponsor' is any person who, acting

alone or in combination with another body corporate, establishes a MF. The sponsor of a fund is similar to the promoter of a company. In accordance with SEBI Regulations, the sponsor forms a trust and appoints a Board of Trustees, and 'also generally appoints an AMC as fund manager. In addition, the sponsor also appoints a custodian to hold the fund assets. The sponsor must contribute at least 40% of the net worth of the AMC and possess a sound financial track record over five years prior to registration.
Mutual Fund: A MF in India is constituted in the form of

a trust under the Indian Trusts Act, 1882. The fund invites investors to contribute their money in the common pool, by subscribing to 'units' issued by various schemes established by the trust. The assets of the trust are held by the trustee for the benefit of unit holders, who are the, beneficiaries of the trust. Under the Indian Trusts Act, the trust or the fund has no independent legal capacity; it is the trustee(s) who have the legal capacity.
Trustees: The MF or trust can either be managed by the

Board of Trustees, which is a body of individuals, or by a Trust Company, which is a corporate body. Most of the funds in India are managed by Board of Trustees. The trustees being the primary; guardians of the unit holders funds and assets, a trustee has to be a person of high repute and integrity. The trustees, however, do not directly manage the portfolio securities. The portfolio is managed by the AMC as per the defined objectives, accordance with Trust Deed and SEBI (Mutual Funds) Regulations.

Management Company: The AMC, which is appointed by the sponsor or the trustees and approved by SEBI, acts like the investment manager of the trust. The AMC functions under the supervision of its own Board of Directors, and also under the direction of the

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trustees and SEBI. AMC, in the name of the trust, floats and manages the different investment 'schemes' as per the SEBI Regulations and as per the Investment Management Agreement signed with the Trustees. from these, the MF has some other fund constituents, such as custodians and depositories, banks, transfer agents and distributors. The custodian is appointed for safe keeping of securities and participating in the clearing system through approved depository. The bankers handle the financial dealings of the fund. Transfer agents a responsible for issue and redemption of units of MF. AMCs appoint distributors of brokers who sell units on behalf of the Fund, and also serve as investment advisers. Besides brokers, independent individuals are also appointed as 'agents' for the purpose of selling fund schemes to investors.


Types of Investment Companies

Investment companies fall into two general categories: Open-end; and
Closed-end companies.




These companies raise capital through issue of shares, which are NOT TRADED, ON STOCK EXCHANGES, but handled by specified dealer in over-the-counter, transactions. The money obtained from the sale of share is invested directly in the shares of other companies. Usually, no level age occurs in the open-end fund, unless the company can borrow money to invest, as some companies do.

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An example of open-end investment company in India is the Unit Trust of India. It came into existence on 1 February 1964 under the Unit Trust of India Act, 1963. The actual sales of units were commenced by the UTI from 1 July 1964. The sale is conducted through branches of banks and through members of recognized stock exchanges. The UTI is declared to be a balanced fund, investing in both equity and fixed- income securities. Its investment policy is conservative in nature - it deals only in actively traded securities. Not more than 5 per cent of its total investible funds can be invested in initial issues of any industrial undertakings. This considerably narrows down its scope of operation, and its investment in the channelization of funds for development purposes. The policy is aimed at securing a high current income as against capital appreciation.

Closed-end Investment Companies

These companies operate in much the same fashion as any industrial company. It issues a fixed number of shares, which may be listed on a stock exchange and bought and sold like any company's shares. If the management desires, it might revise additional equity issues, bonds or preferred stock issues. Majority of such companies have bonds and preferred stocks outstanding as apart of their capital structure. The use of fixed income securities results in financial leverage for equity shareholders. Such a company will have both asset leverage as well as earnings leverage. Asset leverage is said to occur when the price of equity owned by the company (company's assets) increase or decreases. If the value of the total assets increases, there is greater proportional increase in the value of the equity shares of the investment company and being fixed claims,

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against assets, any increase in assets goes to equity shareholders. Thus, as the value of investment of an investment company increases the value of its equity shares increases faster. However, as the asset value increases without a corresponding increase in debt capital, the leverage effect is diminished. The interest of debt and the dividends on preference shares represent a fixed charge on the company's earnings. Any increase in earnings over the interest payments and dividends goes to the equity shareholders. As long as company earns more than is needed to pay the interest and dividends, the owner will benefit owing to the earning leverage. As earnings increase, the rate of increase of the return to the equity shareholder increases faster than the rate of increase of the return on the total assets, but, it may have adverse effects when earnings fall and assets decline in value. A closed-end company that raises a substantial portion of its capital by way of debt will be susceptible to wider fluctuations in value, than a company with a relatively small amount of debt. These leverage effects to also tend to accentuate the cyclical movement of stock prices.

Closed-end investment companies offer various Advantages to an investor. Some of these may be listed as follows:
Their investment policies are highly flexible and hence, they provide an opportunity for greater diversification of investment than open-end companies. Due to greater diversification and a higher scope for gearing of capital, they offer better returns to investors.
They have an additional advantage of ploughing back

profit and, hence increasing returns to their members. Risk of loss is minimized due to above reasons. Given

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that most such companies are listed on the stock exchange, shareholders face no problems in disposing of their holdings.

In addition to the above, there are many other types of mutual funds which may be classified on the basis of their objectives and portfolios. These mutual funds are:
Equity funds: Those funds which invest only in equity

shares and undertake the associated risk;

Income funds: Those funds which invest in securities

which will earn high income;

Growth funds: Those funds which invest in growth

oriented securities so as to assure appreciation in their value in the long run;

Liquid funds: Those funds which specialize in investing

in shortterm money market instruments with emphasis on liquidity with a low rate of return;

funds: Those funds specialized channels like (a) specific country (Japan Fund, specific category of companies

which invest only in gold and silver, (b) a India Fund, etc.), (c) a (Technology Fund);

Index-Linked funds: Those funds which invest only in

those shares which are included in the market indices and in the same proportion. They move with the market index;

funds: Leveraged funds are those which increase the size of the value of the portfolio and benefit the shareholders by gains exceeding the cost of the borrowed funds; estate ventures.

Real Estate fund: Such funds are meant for the real Balanced funds: Those which divide their investments

between equity shares and bonds in order to meet the objectives of safety, growth, and regularity of income;

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Hedge funds: Funds that buy shares whose prices are

likely to go up and sell short, shares whose prices are expected to go down; and finally
Offshore funds: These specialize in investing in foreign


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The primary authority for regulating Mutual Funds in India is SEBI. SEBI requires all Mutual Funds to be registered with it. The SEBI (Mutual Funds) Regulations, 1996 outlined the broad framework of authorization process and selection criteria. Accordingly, the authorization for the mutual fund will be granted in two steps. The first step will involve approval and eligibility of each of the constituents of the mutual fund viz. sponsors, trustees, asset management company (AMC) and custodian. For this purpose the interested parties would be required to submit necessary information only in on prescribed formats). The second stage will involve formal authorization of the mutual funds for business. For this purpose the sponsor or the AMC would be required to apply to SEBI in an application form for authorization along with an application fee to be specified later. The authorization shall be granted subject to conditions as may be considered necessary by SEBI and payment of auth9risation fee as may be specified. It shall be SEBI's endeavor to advise an applicant within 10 to 15 working days of receipt of his letter / application form regarding status of his application. The eligibility of the sponsor will be examined with respect to the following: Sponsor could be a registered company, scheduled bank or all India or State level financial institution; More than one registered company can also act as sponsor for a mutual fund; Joint sponsorship with any of the entities in (a) above will also be eligible, and Sponsoring registered companies could be private or public limited companies either listed or unlisted.

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Sponsor and where there is more than one sponsor, each of the sponsoring entities, must have a sound track record as evidenced by Audited balance sheet and profit and loss .account for last five years; A positive net worth and consistent record of profitability and a good financial standing during the last five years; Good credit institutions; record with banks and financial

General reputation in the market; Organization and management, and Fairness in business transactions. Sponsor or more than one sponsor put together should have at least a 40 per cent stake in the paid-up equity of the AMC.

Guidelines for mutual funds as per SEBI

The AMC will be authorized by SEBI on the basis of the criteria indicated in the guidelines. , SEBI regulations clearly state that all funds and schemes operational under them would be bound by their

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regulations. SEBI has recently taken following steps for the regulation of mutual funds:


Certain structural changes have also been made in the mutual fund industry, as part of which, mutual funds are required to set up asset management companies with fifty percent independent directors, separate board of trustee companies, consisting of a minimum fifty percent of independent trustees and to appoint independent custodians. This is to ensure an arm's length relationship between trustees, fund managers and custodians, and is in contrast with the situation prevailing earlier in which all three functions were often performed by one body which was usually the sponsor of the fund or a subsidiary of the sponsor . Thus, the process of forming and floating mutual funds has been made a tripartite exercise by authorities. The trustees, the asset management companies (AMCs) and the mutual fund shareholders form the three legs. SEBI guidelines provide for the trustees to maintain an arm's length relationship with the AMCs and do all those things that would secure the right of investors. With funds being managed by AMCs and custody of assets remaining with trustees, an element of counter-balancing of risks exists as both can keep tabs on each other.


In January 1993, SEBI prescribed registration of mutual funds taking into account track record of a sponsor, integrity in business transactions and financial soundness while granting permission. This will curb excessive growth of the mutual funds and protect investor's interest by registering only the sound promoters with a proven track record and financial strength. In February 1993, SEBI cleared six private sect9r mutual funds viz. 20th Century Finance Corporation, Industrial Credit& Investment

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Corporation of India, Tata Sons, Credit Capital Finance Corporation, Ceat Financial Services and Apple Industries.


The offer documents of schemes launched by mutual funds and the scheme particulars are required to be vetted by SEBI. A standard format for mutual fund prospectuses is being formulated.

Code of advertisement:

Mutual funds have been required to adhere to a code of advertisement.

Assurance on returns:

SEBI has introduced a change in the Securities Control and Regulations Act governing the mutual funds. Now the mutual funds were prevented from giving any assurance on the land of returns they would be providing. However, under pressure from the mutual funds, SEBI revised the guidelines allowing assurances on return subject to certain conditions. Hence, only those mutual funds which have been in the market for at least live years are allowed to assure a maximum return of 12 per cent only, for one year. With this, SEBI, by default, allowed public sector mutual funds an advantage against the newly set up private mutual funds. As per basic tenets of investment, it can be justifiably argued that investments in the capital market carried a certain amount of risk, and any investor investing in the markets with an aim of making profit from capital appreciation, or otherwise, should also be prepared to bear the risks of loss.

Minimum corpus:

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The current SEBI guidelines on mutual funds prescribe a minimum s art-up corpus of Rs.50 crore for a open-ended scheme, and Rs.20 crore corpus :or closed-ended scheme, failing which application money has to be refunded. The idea behind forwarding such a proposal to SEBI is that in the past, the minimum corpus requirements have forced AMCs to solicit funds from corporate bodies, thus, reducing mutual funds into quasi-portfolio management outfits. In fact, the Association' of Mutual Funds in India (AMFI) has repeatedly appealed to the regulatory authorities for scrapping the minimum corpus requirements,


The efforts of SEBI have, in the last few years, been to institutionalize the market by introducing proportionate allotment and increasing the minimum deposit amount to Rs.5000 etc. These efforts are to channel the investment of individual investors into the mutual funds.

Investment of funds mobilized:

In November 1992, SEBI increased the time limit from six months to nine months within which the mutual funds have to invest resources raised from the latest tax saving schemes. The guideline was issued to protect the mutual funds from the disadvantage of investing funds in the bullish market at very high prices and suffering from poor NA V thereafter.

Investment in money market:

SEBI guidelines say that mutual funds can invest a maximum of 25 per cent of resources mobilized into money-market instruments in the first six months after closing the funds and a maximum of 15 per cent of the corpus after six months to meet short term liquidity requirements. Private sector mutual funds, for the first

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time, were allowed to invest in the call money market after this year's budget. As SEBI regulations limit their exposure to money markets, mutual funds are not major players in the call money market. Thus, mutual funds do not have a significant impact on the call money market. SEBI also conclude that mutual funds were not responsible for the unprecedented shooting up of call money rates. Some funds exceeded their limits in an effort to improve their sagging net asset values (NAVs), Usually, funds can early only about 9-12 per cent. Thus, the prospect of earning more than 40 per cent may have been tempting,

Valuation of investment:

SEBI should work in tandem with the Institute of Chartered Accountants of India (ICAI) to take up a fresh look at mutual fund regulations enacted in 1993. The valuation of investments, a key aspect of fund accounting, as on balance sheet date, needs review, SEBI regulations 1993, give discretionary powers to the fund managers as far as the valuation of the investment portfolio on the balance sheet date is concerned, There are no accounting standards or guidelines prescribed by the ICAI for the valuation of a mutual fund's investment portfolio. The mutual funds are clearly taking advantage of this situation and valuing the portfolio at cost of acquisition. The subsequent depreciation or appreciation in the investment portfolio are not accounted for. Thus, the mutual funds may be able to show profits in the balance sheet even if there is a severe erosion in the value of the investment portfolio. This erosion in the values of the investment portfolios is clearly seen in the net asset values (NA V) as on the balance sheet date. But the accounts of the mutual funds do not reveal the same. The objective of the accounting in case of a mutual fund should be besides showing details of income, expenses,

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assets and liabilities, has to reveal the true value of the fund.. The transparent and well understood declaration or Net Asset Values (NAVs) of mutual fund schemes is an important issue in providing investors with information as to the performance of the fund. SEBI had warned some mutual funds earlier of unhealthy market practices, and is currently working on a common format for calculating the net asset values (NAVs) of mutual funds, which are done in various ways by them at present.


SEBI inspect mutual funds every year. A full SEBI inspection of all f the 27 mutual funds was proposed to be done by the March 1996 to streamline their operations and protect the investor's interests. Mutual funds are monitored and inspected by SEBI to ensure compliance with the regulations.

In July 1994, SEBI permitted mutual funds to take up underwriting of primary issues as apart of their investment activity. This step may assist the mutual funds in diversifying the business.


In September 1994, it was clarified by SEBI that mutual funds shall not offer buy back schemes or assured returns to corporate investors. The Regulations governing Mutual Funds and Portfolio Managers ensure transparency in their functioning.

Voting rights:

In September 1993, mutual funds were allowed to exercise their voting rights. Department of Company Affairs has reportedly granted mutual funds the right to

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vote as full-fledged shareholders in companies where they have equity investments


The policy and regulatory initiatives since April 2000 include: Investment by Mutual funds.

SEBI amended regulations to:

Permit investments by Mutual funds in the mortgagebacked securities. These securities, however, must have a credit rating of not below investment grade and would represent investments in real estate mortgages (i.e., loans secured by real estate collateral) and not directly in real estate. This was expected to augment the availability of funds for housing sector and provide greater investment flexibility to the MFS. Allow Mutual Funds to invest in unlisted companies. A MF scheme could invest upto 5% of its net asset value (NAV) in the unlisted equity shares or equity related instruments in case of open-ended scheme and up to 10% of its NAV in case of closed-ended scheme. Within the investment limit of 15% of NAV in debt instruments issued by a single issuer, Mutual Funds could also invest in mortgage-backed securitized debt, which are rated not below investment grade by a credit rating agency registered with SEBI. SEBI Regulations also stipulate that the asset management company (AMC) shall exercise due diligence and care in all its investment decisions. For

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effective implementation and bringing about transparency in the investment decisions, all the AMCs were advised to maintain records in support of each investment decisions which would indicate data, facts and opinion leading to that decision. AMC boards may develop a mechanism to verify that due diligence is being exercised while making investment decisions.

Specific attention may be given to investments in unlisted' and privately placed securities, unrated debt securities, non-performing assets (NP As), transactions where associates are involved and the instances where there is poor performance of the schemes.

MF Distribution by NSCCL:
In a move to encourage the MF industry, NSE and NSCCL have launched the Mutual' Fund Service System (MFSS) to effectively cater to buying/redemption of units of Mutual Funds by individual investors, which presently takes place manually. The main objective of MFSS is to provide a onestop shop to investors for transacting in financial products. NSE with its trading terminals across the country offers a mechanism for collection of orders from the market and NSCCL undertakes the clearing and settlement of the same. : While a good number of closedended schemes are traded on the exchanges; the facilities for transacting in open-ended schemes of the Mutual Funds are very limited. Today the entire process of buying and redeeming open-ended MF scheme units takes place directly between the individual investor and the AMC.

The salient features of the system are as follows:

Orders for purchase and sale of units from investors are collected using the on- line order collection system of NSE, which are finally settled using the clearing and settlement system of NSCCL.

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The orders collected on 'T' day would be received by NSCCL by the end of the day or latest on T +1 morning and conveyed to the MFS to facilitate computation of the NA V and the corresponding sale/repurchase prices of the units. The MF would send the issue/repurchase prices computed by them to the NSCCL on T+l day. The respective MF would be the counter-party for each trade. The orders would be cleared and settled on an order to order basis. Settlement would be on rolling basis with the orders received on T day being settled on T+5 day. The members are required to deliver the securities/ funds due to the investors within two working days of receiving the pay-out from NSCCL. No transaction charges will be levied on members.

MF Distribution through Post Offices:

Post offices started distributing MF products. IDBI Principal Mutual Fund has started distributing its index, balanced and income funds through select post offices branches. Other Mutual Funds like, SBI Mutual, ICICI Prudential, UTI and Zurich Mutual Fund are also tying up with Department of Posts to distribute their products. The MF supplies application forms for their schemes to the post office for sale over the counter and any customer who wishes to invest in MF can take a form from the counter, fill it in and hand it back to the officials in the post office which in turn are handed over to the MF office, This system of distribution is presently operational only in selected post offices in the 4 cities of Delhi, Mumbai, Patna and Kolkata.

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The share ice of the mutual fund is based on its net asset value (NAV) per share, which is found by subtracting from the market value of the portfolio the mutual fund liabilities and the dividing by the number of mutual fund shares issued. That is:

Market value of portfolio -Liabilities Net asset value -------------------------------------------per share =

In August 1994, SEBI had formed a six-member committee to suggest disclosure practices and standardized procedures for computation of net asset values for mutual fund schemes. The committee finalized its report on 12 December 1995 and the same was released on 1 January 1996.

Area wise Identifying Potential unit bank investors, which leads to increase the business.

The Starting point is everyone who might conceivably buy the product that is called suspects and from these the company determines the most likely prospects which it hopes to convert into first time customers then repeat customers and then clients.

Following figure shows the main steps of attracting and keeping customers.

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Reliance Mutual fund is targeting the Charted accountants and Tax Advisors to increase its channel of distribution, in this process of expansion new prospects are needed to be tapped.









Brand strategy: as opposed to some of its competitors

(e.g. HSBC), Reliance ADAG operates a multi-brand

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strategy. The company operates under numerous wellknown 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.

Large pool of

skilled and knowledgeable manpower.

Increasing liberalization of government policies.


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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 doesn't 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 to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesn't make money, these fees only magnify losses.


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.

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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.


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. Hedge funds: sometimes referred to as hot money , are also causing a threat for mutual funds have gained worldwide notoriety for bringing the markets down. Be it a crash in the currency, stock or bond market, usually a hedge fund prominently figures somewhere in the picture


A program that allows an investor to provide post-dated cheques to the mutual fund to allot fresh units at specified intervals (usually monthly or quarterly). On the specified dates, the cheques are realized by the mutual fund and additional units at the prevailing NAV are

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allotted to the investor. This enables him to invest as little as Rs 1000 a month and take advantage of rupee cost averaging.

SYSTEMATIC WITHDRAWAL PLANS (SWP): A plan offered with some schemes under which post-dated cheques for fixed amounts (as may be fixed by the fund) are issued to the investors for monthly, bi-monthly or quarterly withdrawals. The withdrawals are as per the requirements of the investor specified by him/ her at the time of investment. TRANSACTION SLIP: A brief form to be filled at the time of additional purchases or redemption. TRUST FUND: The corpus of the Trust, unit capital and all property belonging to and i or vested in the Trustee UNIT: A Unit represents one undivided share in the assets of the Schemes. UNIT HOLDER: A person who holds Unit(s) under any plan of the Scheme. VALUATION: Calculation of the market value of the assets of a mutual fund scheme at any point of time VOLATILITY: In investing, volatility refers to the ups and downs of the price of an investment. The greater the ups and downs, the more volatile the investment 52 WEEK HIGH: The highest market value of a unit (in terms of NAV) during the immediately preceding 52 weeks.

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WEEK LOW: The lowest value of a unit (in terms of NAV) during the immediately preceding 52 weeks owns, the more volatile the investment. YIELD: Distributions form investment income, usually expressed as a percentage of net asset value or market price. Unlike total return, yield has the single component of investment income and does not include capital gains distributions or capital appreciation of underlying shares. ZERO-COUPON BOND: A bond where no periodic interest payments are made. The investor purchases the bond at a discounted price and receives one payment at maturity. The maturity value an investor receives is equal to the principal invested plus interest earned compounded semi-annually at the original rate to maturity. Interest income from zero-coupon bonds is subject to taxes annually even though no payments will be made.

Research Methodology is a way to systematically solve the problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by the researcher in studying his research problem along with logic behind them . it is necessary for the researcher to know not only the research methods/techniques but also the methodology used. Researchers not only need to know how to develop certain indices or tests , how to calculate mean or median or mode, how to apply

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particular research techniques but must also know which of these methods or techniques are relevant and what would they mean and indicate and why Research process consists of series of actions or steps necessary to effectively carry out the research.


A research design is the detailed blueprint used to guide a research study toward its objectives. The process of designing a research study involves many interrelated decisions. The most significant decision is the choice of research means to approach, ensure of because that this the it determines how the The information will be obtained. To design something also pieces fit together. achievement process in fit among objective, are research constantly

approach, and research tactics is inherently an iterative which earlier decisions reconsidered in light of subsequent decisions. The function of research design is to provide for collection of relevant evidence with minimal expenditure of time effort and money. The following methodology was adopted for the study purpose:

Type of research:

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conducting the project. Sampling Design was taken by the researcher as the Research design. The major purpose of the study is to describe the state of affairs as it exists at present.

Research Method/Technique:
In the project report the researcher used following techniques while conducting his study: Analysis of documents

Survey Method: A market survey was done on VARIOUS PUBLIC BANKS.

Interview (Personal): Both open and closed ended (unstructured) questions were asked while taking some information from the Investors of the banks at LUCKNOW.





comprehensive questionnaire was framed and Protested

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for data collection from the customer of mobile Data collection sources

Research Data
Data is the key activity of marketing research. The design of the data collecting method is backbone of research design. Data can be obtained from two important sources,

namely: 1. Primary Data 2. Secondary Data

I Primary sources
Personal interview

The observation was done by the following meted Keeping the markets in view Keeping the customers and consumers in view Interacting with various group of people work in unit banks


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Survey was done with the questionnaire as well as personal interaction

Personal interviews
This method of date collection involves the interviewers asking question in a face to face con tact situation there in direct personal investigation and the interview inn properly structured as it involves the use of set of predetermined questions which are asked in the form and order pre-decided. This technique is preferred as it is economical, more informative, non responses are low, spontaneous reaction which are realistic. Lots of

supplementary information comes up.

Secondary Data
Secondary data consists of information that already exists some where and may have collected for a different purpose, it provide a starting point. As information was taken for company profile as well as to know about financial product as well as to know about the insurance. To know about the company as well as about insurance the secondary data was used.

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Area of Sample:

The areas covered up in this survey was LUCKNOW

Selection of units under study:


1) Gomti nagar 2) Kapoorthala 3) Sahara state 4) Hajaratganj 5) Aliganj

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Source list (Sampling Frame):


Sample size: 100

Sampling Procedure: Probability Sampling (Simple Random Sampling



What kind of investments you prefer most? Pl tick (). All applicable.

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a. Saving account b. Fixed deposits c. Insurance d. Mutual Fund e. Post Office-NSC, etc f. Shares/Debentures g. Gold/ Silver h. Real Estate I. PPF j. PF

35 30 25 20 15 10 5 0 s avingaccout fix depos ed it ins urance m utual fund pos office-NS etc t C

2. While investing your money, which factor you prefermost? a.

Any one

b. Liquidity c. Low Risk d. High Return e. Company reputation

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35 30 25 20 15 10 5 0

Anyone L iquidity L risk ow H h return ig com pany reputation

3. Have you ever invested your money in mutual fund?

a. Yes b .No

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70 60 50 40 30 20 10 0

Y es No

4.Where do you find yourself as a mutual fund investor?

a. Totally ignorant [ ] b. Partial knowledge of mutual funds [ ] c. Aware only of any specific scheme in which you invested [ ] d. Fully aware [ ]

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60 T otally ig norant 50 40 30 20 10 0 P artial knowledg e Aware only of any s pcific s chem e F ully aware

5. In which kind of mutual you would like to invest?

Public [ ] Private [ ]

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70 60 50 40 30 20 10 0 Public Priv ate

6. how do you come to know about Mutual Fund?

a. Advertisement b. Peer Group c. Banks d. Financial Advisors

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35 30 25 20 15 10 5 0
7.Which mutual fund scheme have you used?

Advertis ent em P g eer roup Banks F ncial advis ina or

a.Open-ended b.Close-ended c.Liquid fund d.Growth fund

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35 30 25 20 15 10 5 0 open ended close ended liquid fund g rowth fund

8.If not invested in Mutual Fund then why?

a. Not aware of MF b. Higher risk c. Not any specific reason

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45 40 35 30 25 20 15 10 5 0 N any specific ot reason N aware of MF ot H her risk ig

9.Which feature of the mutual funds allure you most?

a. Diversification [ ] b. Better return and safety [ ] c. Reduction in risk and transaction cost [ ] d. Regular Income [ ] e. Tax benefit [ ]

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30 25 20 15 10 5 0

Divers ification

Better return and safety Reduction inris k andtrans action cos t Reg ular incom g e

Tax benefit

10. In which Mutual Fund you have invested? Please tick (). All applicable.
a. SBIMF b. UTI c. HDFC d. Reliance e. ICICI prudential funds f. JM mutual fund g. Other. Specify

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25 20 15 10 5 0

S BIMF UT I HDF C R elience IC I IC JM m utual fund Other S pecify

11. When you invest in Mutual Funds which mode of investment will you prefer?

a. One Time Investment b. Systematic Investment Plan (SIP)

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60 50 40 30 20 10 0 One T e im S IP

12. Where from you purchase mutual funds?

a. Directly from the AMCs [ ] b. Brokers only [ ] ]

c. Brokers/ sub-brokers [ d. Other sources [ ]

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40 35 30 25 20 15 10 5 0 D irectly from Am c Broker only Broker/s ub broker other s ources

13. Which AMC will you prefer to invest? Assets Management Co.

a. SBIMF b. UTI c. Reliance d. HDFC e. Kotak f. ICICI g. JM finance

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25 20 15 10 5 0 S IMF B UTI R IEN EL CE H C DF K OTAK ICICI JM F inance

14. Which sector are you investing in mutual fund sector?

i. General 1st ii. Oil and petroleum iii. Gold fund iv. Diversified equity fund v. Debt fund vi. Banking fund vii. Real estate fund

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25 20 G enera 1s l t 15 10 5 0 Oil & petroleum G old D ivers ified B nkingfund a R l s te fund ea ta

15. How would you like to receive the returns every year?

a. Dividend payout b. Dividend re-investment c. Growth in NAV

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45 40 35 30 25 20 15 10 5 0 D ividend payout D ividend reinves ent tm Growth in NAV

16. Personal Details:

(a). Name:(b). Add: (c)Contact No:(d). Age:(e). Qualification:(f). Occupation. Pl tick () Govt. Sec Pvt. Sec Business

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Agriculture Others

40 35 30 25 20 15 10 5 0 Govt s ector P s vt ector bus s ines Ag riculture Others

17.. What is your monthly family income approximately? Pl tick ().

Up to Rs.10,000 Rs. 10,001 to 15000 Rs. 15,001 to 20,000 Rs. 20,001 to 30,000 Rs. 30,001 and above

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40 35 30 25 20 15 10 5 0 Upto 10 000 10001 to 15000 15001 to 30000 30001 & above

18) what is your education qualification

a. under graduate b .graduate c.PG d. any other

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35 30 25 20 15 10 5 0 Under g raduate g raduate PG anyother

Lucknow has huge untapped market as far as MF is concerned. Create Awareness about Mutual Fund. Remove the differences in perception of audience about Private Company & PSU. Literate audience about MF as better investment option. Run some program to bring MF in final decision set while prospects decide about distributorship. Brand Equity of Reliance is very high just, go & hit the market. Need to create awareness among investors about mutual fund

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As study was conducted in lucknow only therefore result cannot be applicable to other cities Information provided by people can false Peoples negative response Financial problem in conducting research Insufficient time Peoples unawareness about mutual fund

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ACCOUNT STATEMENT: A document issued by the mutual fund, giving details of transactions and holdings of an investor. ADJUSTED NAV (TOTAL RETURN): The net asset value of a unit assuming reinvestment of distributions made to the investors in any form. ADVISOR: Your financial consultant who gives professional advice on the fund's investments and who supervise the management of its assets. ANNUAL RETURN: The percentage of change in net asset value over a year's time, assuming reinvestment of distribution such as dividend payment and bonuses. 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/-. APPLICATION FORM: Form prescribed for investors to make applications for subscribing to the units of a fund 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 jewellery. ASSET ALLOCATION: When you divide your money among various types of

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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. CLOSED-ENDED MUTUAL FUND: They are schemes that have a pre-specified maturity period generally ranging from 2 to 15 years. One can invest directly in the scheme at the time for the initial issue and thereafter transact (buy or sell) the units of the scheme on the stock exchanges where they are listed. The market price at the stock exchanges could vary from the scheme's net asset value (NAV) on account of demand and supply situation, unit holders' expectations and other market factors. Some close-ended schemes provide an additional option of selling the units directly to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations ensure that at least one of the two exit routes are provided to the investor. COMMISSION: The broker's or agent's fee for buying or selling securities for a client. The fee is usually based on a percentage of the transaction's market value. CONVERTIBLE BOND: A corporate bond, usually a junior subordinated debenture, which can be exchanged for shares of the issuer's common stock.

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. Growth Stocks Stocks of companies that have shown or are expected to show rapid earnings and revenue growth. Growth stocks have relatively more risk than other conventional forms of investment.

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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 type of mutual fund in which the portfolios are constructed to mirror a specific market index. Index funds are expected to provide a rate of return over time that will approximate or match, but not exceed, that of the market, which they are mirroring.

LIQUIDITY: The ability to buy or sell an asset quickly or the ability to convert to cash quickly LIQUID FUNDS /MONEY MARKET FUNDS : Funds investing only in short-term money market instruments including treasury bills, commercial paper and certificates of deposit. The objective is to provide liquidity and preserve the capital LOAD: A charge that may be levied as a percentage of NAV at the time of entry into the Scheme/Plans or at the time of exiting from the Scheme/Plans. LOCK IN PERIOD: The period after investment in fresh units during which the investor cannot redeem the units. MANAGEMENT FEE: Money paid by a mutual fund to its investment manager or advisor for overseeing the portfolio. A management fee is usually between one-half and one percent of the fund's net asset value. MATURITY OR MATURITY DATE: The date upon which the principal of a security becomes due and payable to the security holder. MATURITY VALUE:

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The amount (other than periodic interest payment) that will be received at the time a security is redeemed at its maturity. On most securities the maturity value equals the par value. MUTUAL FUNDS: An investment company that pools money from its unitholders and invests that money into a variety of securities, including stocks, bonds, and money-market instruments. This represents a way of investing money into a professionally managed and diversified pool of securities that hopefully will provide a good return on unitholders money. MUTUAL FUND REGULATIONS: Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended up to date and such other Regulations, as may be in force from time to time, to regulate the activities of the Mutual Fund. NAV Change: The difference between today's closing net asset value (NAV) and the previous day's closing net asset value (NAV). NAV Change %: The percentage change between today's closing net asset value (NAV) and the previous day's closing net asset value (NAV) NET WORTH: A person's net worth is equal to the total value of all possessions, such as a house, stocks, bonds, and other securities, minus all outstanding debts, such as mortgage and revolving credit lines. NET YIELD: Rate of return on a security net of out-of-pocket costs associated with its purchase, such as commissions or markups.

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OPEN-ENDED SCHEMES/ FUNDS: Scheme of a mutual fund where purchase or sale of units is allowed on a continued basis. Funds that do not have any fixed maturity and are continuously open for subscription and redemption. The key feature is liquidity. One can conveniently buy and sell the units held at the NAV related price. OPENING NAV: The NAV disclosed by the fund for the first time after the closure of an NFO. PORTFOLIO: It refers to the total investment holdings of the fund. PORTFOLIO CHURNING: It refers to the changes made to the portfolio keeping in view the market conditions. It includes both buying and selling of holdings and is aimed at giving a better yield to the investor. REDEMPTION: The paying off or buying back of units of a mutual fund / bond by the issuer. 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. RETURNS: The dividend and capital appreciation accruing to the investor on the investment held by him SCHEME: A mutual fund can launch more than one scheme. With different schemes, in spite of there being a common trust, the assets contributed by the unit holders of a particular

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scheme are maintained and managed separately from other schemes and any profit/loss from the assets accrue only to the unit holders of that scheme

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