A PROJECT REPORT OF SUMMER INTERNSHIP

IN

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A FINAL REPORT ON MARKETING OF FINANCIAL PRODUCTS and an insight towards
“ SERVICE PROLIFERATION AND CUSTOMER SATISFACTION AT RELIANCE MONEY, LUCKNOW”

Submitted In Partial Fulfillment Of the Requirement of Master Degree in Business Administration

(2008 – 2009)
SUBMITTED BY
Rahul Tripathi Enrollment No 070527014157 MBA Program (Session 2007-2009)

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Acknowledgement
Sometimes words fall short to show gratitude, the same happened with me during this project. The immense help and support received from Reliance Money Limited overwhelmed me during the project. I take this opportunity to express my gratitude to all the people who have guided and helped me directly or indirectly in the course of completion of my project. I feel immense pleasure to express a deep sense of gratitude to my beloved Head of Department Mr. ARUN MITTAL (Institute of Engineering and Technology , who has given me an opportunity to do my Summer Training in RELIANCE MONEY LTD. I would also thankful to my Faculty Guide DR.SYED HAIDER ALI (MBA,Phd.) for his constant support and guidance. His valuable suggestions and helping hands has helped me to complete my project successfully.

I would like to thank RELIANCE MONEY LIMITED for giving me an opportunity to do my internship in their esteemed organization. My special appreciation extends to Mr. Vineet Jaiswal, Center Manager, Reliance Money Limited Lucknow for his constant encouragement throughout this period. I also extend my gratitude to Mr. Nitish Garg, Cluster Head, Reliance Money Limited, who instructed me with the work procedures and dealt with me with patience at all times

My special thanks to my friends who being a part of the same internship, supported me throughout my Internship and with whose help I could complete my work efficiently and effectively. Their consistent help kept me motivated and going.

RAHUL TRIPATHI
Enrollment No 070527014157 MBA Program (Session 2007-2009)

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DECLARATION

I hereby declare that the Summer Training Report on the topic of “Marketing of Financial Products” confined to search the subjective insight “ Service Proliferation And Customer Satisfaction at RELIANCE MONEY LTD. LUCKNOW”, submitted by me to UTTAR PRADESH TECHNICAL UNIVERSITY, LUCKNOW is of my own and it is not submitted to any other college or published any time before.

RAHUL TRIPATHI
Enrollment No 070527014157 MBA Program (Session 2007-2009)

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CONTENTS
1. 2. 3. 4.

LIST OF TABLES, CHARTS AND DIAGRAMS ABBREVIATIONS SUMMARY/ABSTRACT INTRODUCTION
4.1.1.Purpose

of the study

4.1.2.Objectives 4.1.3.Limitations 5. 6. 7. 8. 9.

METHODOLOGY REVIEW OF LITERATURE INDUSTRY PROFILE COMPANY PROFILE DATA ANALYSIS

10. FINDINGS&SUGGESTIONS 11. CONCLUSIONS AND 12. QUESTIONNAIRE 13. BIBLIOGRAPHY 14. GLOSSARY

RECOMMENDATIONS

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LIST OF TABLES, CHARTS AND DIAGRAMS
Diagrams:

1. Customer behavior 2. Mutual Fund operation flow chart
3. Organization of a Mutual Fund

4. Mutual Fund Industry Growth 5. Mutual Funds Structure /Company Structure

Tables and Charts:
1. Market Share Of The Mutual Fund Industry 2. Different Age Group Of The Respondents 3. Preferred Fund Structure 4. Investors Scheme Preference 5. Investor Fund Preference 6. Repeating Of Investments 7. Getting Monthly / Quarterly Statements From Time To Time 8. Ranking On The Customer Service Of Reliance Mutual Funds 9. Regarding Areas For Improvement By Reliance Mutual Funds 10. Redemption Satisfaction Of The Customers 11. Usage Of Value Added Services Offered By Reliance Mutual Funds

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ABBREVIATIONS

ASL SE Mf MF’S NASDAQ BSE AMC AMFI AUM CBFI CCBI CRISIL FDI NAV NFO SEBI

: : : : : : : : : : : : : : : :

Allianz Securities Limited Securities Mutual Fund Mutual Funds National Association of Securities Dealers Automated Quotation Bombay Stock Exchange Asset Management Company Association of Mutual Funds India Assets under Management Crisil Balanced Fund Index Crisil Composite Bond Index Credit Rating & Information Services of India Ltd. Foreign Direct Investment Net Asset Value New Fund Offer Securities Exchange Board of India

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SUMMARY/ABSTRACT
The basic objective of any financial services company would be to provide an absolute tailor made products and services to the customer and to retain them into the organization, but to retain a particular customer is not easy because customer expectations change by time and it becomes a tough job for the companies to curb the needs of their customers. Now with the case of asset management company which is getting its pace and a lot of companies are emerging as players, here a study has been undertaken with regards to RELIANCE AMC where study looks into the expectation of the customers regarding mutual funds and issues relating to customers expectation. The need for this research is to emphasis the expectations of customer of mutual funds and how the company in contrast to the expectations is performing. This research is conducted to understand the customer’s perception towards financial products. Till yesterday people are having very less knowledge for mutual funds because of brokerage companies in India have not made efforts to expand the market. They have been doing business with the same clientele. There is also a lack of investor awareness as far as markets are concerned. The Harshad Mehta scam and various other scams have created a bad impression in people's minds and this need to be changed. Just to put things in perspective, India has 330 million bank accounts. The mutual fund industry has 30 million unique folios. Unfortunately, in the broking industry, the number of people with Demat accounts has continued to stagnate at 5.85 million in the last 10-12 years, which is worrisome. Every industry in India has grown over the last 10 years except this one. Whatever retail participation exists is coming from bigger cities such as Mumbai and Delhi. The services have not reached bottom-of-the-pyramid towns. Reliance is conducting investor awareness campaigns every Saturday at Reliance money centers. An Investment Product is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus financial products is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund.

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CHAPTER 1 INTRODUCTION

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INTRODUCTION
Customer satisfaction is a measure of how products and services supplied by a company can meet the customer’s expectations. Customer satisfaction is still one of the single strongest predictors of customer retention. It’s considerably more expensive to attract new customers than it is to keep old ones happy. In a climate of decreasing brand loyalties, understanding customer service and measuring customer satisfaction are very crucial. There is obviously a strong link between customer satisfaction and customer retention. Customer's perception of Service and Quality of product will determine the success of the product or service in the market. With better understanding of customers' perceptions, companies can determine the actions required to meet the customers' needs. They can identify their own strengths and weaknesses, where they stand in comparison to their competitors, chart out path future progress and improvement. Customer satisfaction measurement helps to promote an increased focus on customer outcomes and stimulate improvements in the work practices and processes used within the company. Customer expectations are the customer-defined attributes of your product or service you must meet or exceed to achieve customer satisfaction.1 There are many reasons why customer expectations are likely to change over time. Process improvements, advent of new technology, changes in customer's priorities, improved quality of service provided by competitors are just a few examples.

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PURPOSE OF THE STUDY
The main purpose of the study is to know the expectations of those investors who invested in RELIANCE MONEY and the satisfaction levels of investors with the services provided by the RELIANCE Asset Management Company Lucknow. In the present competitive environment it is very crucial to every business firm to ensure satisfaction to its customers. According to one survey it was found that it costs five times more to attract a new customer than to retain an existing customer. So with all these parameters taking into consideration one can say that it is very important to provide goods and services that satisfy customers needs or wants irrespective of the industry or scale of the business in which a firm is operating. Here the main purpose of the survey is to know the various factors that are very important in satisfying the customers needs and to know how RELIANCE MONEY is ensuring its customers satisfaction. The expectations of customers are vary from one customer to the other customer. For example some customers are only concerned about the returns that they are getting in a fund but at the same time there are some other customers who are very specific about the location, ambience and front line employees’ interaction and some other parameters. It is very difficult to any business firm to satisfy all the expectations of all customers but there are some common factors that are essential to fulfill. The objectives of the projects are given as below. The details of the survey such as the source of data, the sample size taken and the methods of analysis are all given briefly in the methodologies. There are some constraints throughout the project, which are given clearly in the limitations.

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OBJECTIVES

The following are the objectives of the Summer Internship.

 To understand the different investment options provided by RELIANCE MONEY

through it’s marketing schemes.
 To know the investors’ expectations on Investment Products offered by RELIANCE

MONEY LTD.
 To know the various services provided by RELIANCE AMC to its investors.  To study the satisfaction levels of customers in RELIANCE MONEY.

 To identify how the brand building helps in meeting the customers expectations to meet their investment objectives

LIMITATIONS

 As the data will be collected through questionnaire, there are chances of biased information provided by the respondent.
 The study is confined to the existing customers of RELIANCE MONEY only.  The survey will be limited only to LUCKNOW.  The study does not consider the equity investment portfolio of investors.

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METHODOLOGY

Data for the survey is collected through: Primary source

Visiting the organization (Observation Techniques) Using structured questionnaire for the existing customer.

Secondary Source • • • Company Broachers Company Website Internet

Sample size: sample size for the survey is 100. Type of sampling: stratified random sampling technique is used for collecting the primary data. The data is collected only from RELIANCE MONEY customers’, LUCKNOW. Methods used for analysis: bar charts and pie charts are the tools that will be used in analyzing the data.

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REVIEW OF LITERATURE
For the present study, the following literatures are being reviewed.
The title of Article is “Does customer satisfaction lead to profitability?”

Author(s): Timothy L. Keiningham, Tiffany Perkins-Munn, Lerzan Aksoy, Demitry Estrin Journal: Managing Service Quality Publisher: Emerald Group Publishing Limited Purpose – Many researchers have proposed a virtuous chain of effects from improved customer satisfaction to profits. In particular, satisfaction is thought to improve share-ofspending, which in turn leads to higher customer revenue and customer profitability. This paper aims to examine these proposed linkages using data from the institutional securities industry. Design/methodology/approach – The data used in the analyses were collected as part of an ongoing telephone satisfaction survey of 81 clients of an institutional securities firm across two continents (North America and Europe). Mediation analysis was used to test the hypothesized effects. Findings – Customer revenue was found to correlate negatively with customer profitability for unprofitable customers, and positively for profitable customers. Research limitations/implications – One of the limitations of this research is that it tests the propositions within a single industry. Future research should attempt to replicate these findings in other contexts. Practical implications – A simplistic focus on improving customer satisfaction for all customers in order to improve share-of-wallet and customer revenue does not seem to represent the best management approach to maximize overall firm profitability. In fact, it

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could actually result in a negative return on investment. Therefore, customers should first be segmented by their profitability to the firm before expending resources to improve customer satisfaction and share-of-wallet. Originality/value – The results of this paper challenge the conventional belief that customer satisfaction should lead to customer retention in turn, resulting in customer revenue and ultimately customer profitability. The findings indicate that this may not always be true.

CHAPTER 2 COMPANY PROFILE.

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Reliance Money
Reliance Money is a group company of Reliance Capital, one of India's leading and fastest growing private sector financial services companies, ranking among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital is a part of the Reliance Anil Dhirubhai Ambani Group. Reliance Money is a comprehensive electronic transaction platform offering a wide range of asset classes. Its endeavour is to change the way India transacts in financial markets and avails financial services. Reliance Money is a single window, enabling you to access, amongst others in Equities, Equity & Commodities Derivatives, Mutual Funds, IPOs, Life & General Insurance products, Offshore Investments, Money Transfer, Money Changing and Credit Cards

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Reliance Capital
Reliance Capital Ltd (RCL) is a registered as a depository participant with National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL) under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996. RCL has sponsored the Reliance Mutual Fund within the framework of the Securities and Exchange Board of India (Mutual Fund) regulations, 1996. RCL primarily focuses on funding projects in the infrastructure sectors and supports the growth of its subsidiary companies, Reliance Capital Asset Management Limited , Reliance Capital Trustee Co. Limited , Reliance General Insurance Company Limited and Reliance Life Insurance Company Limited. As of March 31, 2005, the company’s investment in infrastructure projects stood at Rs. 1071 Crores. The investment portfolio of RCL is Structured in a way that realizes the highest posttax. Dhirubhai Ambani Group, and is ranked among the 15 most valuable private companies in India. Reliance Capital is one of India's leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking groups, in terms of net worth. Reliance Capital has interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking, depository services, distribution of financial products, consumer finance and other activities in financial services. The Reliance Anil Dhirubhai Ambani Group is one of India's top 3 business houses, and has a market capitalisation of over Rs.2,90,000 crore (US$ 75 billion),net worth in excess of Rs.40,000 crore (US$ 10 billion), cash flows of Rs. 9,000 crore (US$ 2.2 billion), net profit of Rs. 5,000 crore (US$ 1.3 billion) and zero net debt. Chairman's Profile:

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Regarded as one of the foremost corporate leaders of contemporary India, Shri Anil Dhirubhai Ambani is the chairman of all listed companies of the Reliance ADA Group, namely, Reliance Communications, Reliance Capital, Reliance Energy, Reliance Natural Resources and Reliance Power. He is also Chairman of the Board of Governors of Dhirubhai Ambani Institute of Information and Communication Technology, Gandhi Nagar, Gujarat. Till recently, he also held the post of Vice Chairman and Managing Director in Reliance Industries Limited (RIL), India's largest private sector enterprise. Anil Dhirubhai Ambani joined Reliance in 1983 as Co-Chief Executive Officer, and was centrally involved in every aspect of the company's management over the next 22 years.

BUSSINES OVERVEIW
Reliance Capital has interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking, depository services, distribution of financial products, consumer finance and other activities in financial services. Reliance Mutual Fund is India's no.1 Mutual Fund. Reliance Life Insurance is India's fastest growing life insurance company and among the top 4 private sector insurers. Reliance General Insurance is India's fastest growing general insurance company and the top 3 private sector insurers. Reliance Money is the largest brokerage and distributor of financial products in India with more than 2.5 million customers and the largest distribution network. Reliance Consumer finance has a loan book of over Rs. 8,000 crores at the end of June 2008. Reliance Capital has a net worth of Rs.6,862 crores (US$ 1.6 billion) and total assets of Rs. 19,940 crores (US$ 4.6 billion) as of June 30, 2008 and over 26,000 employees. Money has increased its market share among private financial companies to nearly Convenient & effective – Anytime & anywhere financial transaction capability. Launched in
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April 2007. It provides the Flat fees system. It has 2.2 million customers in 1 year of official launch. It has over 5,000 outlets across 700 towns/cities. Average daily turnover – in excess of Rs 2,000 crores. Considering the entire life market, including the Rs. 12,890 crores booked by life insurance Corporation, Reliance life insurance market share works out to around 6.25% . The life insurance market continuous to be dominated by LIC which has about 67% share this only a marginal dip from its 73% share in end-July . These comparisons are only for first year or new business premium.

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FINANCIAL PRODUCTS: Financial products are of following types:1. Mutual Funds 2. Equity and Commodity Derivatives 3. Life and General Insurance Products 4. Portfolio Management Service (PMS) 5. Offshore Investments 6. Money Transfer 7. Money Changing 8. Credit Cards

Reliance Capital

Reliance Mutual fund

Reliance General Insurance

Reliance Life Reliance Money Insurance

Reliance Consumer Finance

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MUTUAL FUNDS SUBJECTIVE AND MARKET VEIW

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INTRODUCTION TO MUTUAL FUND INDUSTRY
The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry in the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470 bn in March 1993 and till April 2004; it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling. The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. First Phase - 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management. Second Phase - 1987-1993 (Entry of Public Sector Funds) Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets under management.

Third Phase - 1993-2003 (Entry of Private Sector Funds)
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With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds. Fourth Phase - since February 2003 This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

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Mutual Fund Operation Flow Chart

ORGANISATION OF A MUTUAL FUND:

There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:

 Mutual funds in INDIA have a 3-tier structure of Sponsor – Trustee – AMC.  Sponsor is the promoter of the fund.  Sponsor creates the AMC and the trustee company and appoints the Boards of both these companies, with SEBI approval.  A mutual fund is constituted as a Trust
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 A trust deed is signed by trustees and registered under the Indian Trust Act.  The mutual fund is formed as trust in INDIA, and supervised by the Board of Trustees.
 The trustees appoint the asset management company (AMC) to actually manage the

investor’s money.  The AMC’s capital is contributed by the sponsor. The AMC is the business face of the mutual fund.  Investor’s money is held in the Trust (the mutual fund). The AMC gets a fee for managing the funds, according to the mandate of the investors.  Sponsor should have at-least 5-year track record in the financial services business and should have made profit in at-least 3 out of the 5 years.  Sponsor should contribute at-least 40% of the capital of the AMC.  Trustees are appointed by the sponsor with SEBI approval.  At-least 2/3 of trustees should be independent.  At-least ½ of the AMC’s Board should be independent members.  An AMC of one fund cannot be Trustee of another fund.  AMC should have a net worth of at least Rs. 10 crore at all times.  AMC should be registered with SEBI.  AMC signs an investment management agreement with the trustees.  Trustee Company and AMC are usually private limited companies.  Trustees oversee the AMC and seek regular reports and information from them.  Trustees are required to meet at least 4 times a year to review the AMC.  The investor’s funds and the investments are held by the custodian.  Sponsor and the custodian cannot be the same entity.  R&T agents manage the sale and repurchase of units and keep the unit holder accounts.

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 If the schemes of one fund are taken over by another fund, it is called as scheme take over. This requires SEBI and trustee approval.  If two AMCs merge, the stakes of sponsor’s changes and the schemes of both funds come together. High court, SEBI and Trustee approval needed.  If one AMC or sponsor buys out the entire stake of another sponsor in an AMC, there is a takeover of AMC. The sponsor, who has sold out, exits the AMC. This needs high court approval as well as SEBI and Trustee approval.  Investors can choose to exit at NAV if they do not approve of the transfer. They have a right to be informed. No approval is required, in the case of open ended funds.  For close ended funds investor approvals is required for all cases of merger and take over.

GROWTH IN ASSETS UNDER MANAGEMENT

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REGULATORY STRUCTURE OF MUTUAL FUNDS IN INDIA
The regulation of mutual funds in India is governed by the SEBI vide the SEBI (Mutual Fund) Regulation, Act 1996 (here in after referred to as SEBI Regulations). These regulations make it mandatory for mutual funds to have a three-tier structure of sponsor – Trustee – Asset Management Company (AMC). The sponsor is the promoter of the mutual fund and appoints the trustees. The Trustees are responsible to the investors in the mutual fund and appoint the AMC for managing the investment portfolio.SEBI regulations also provide for who can be a sponsor, trustee and AMC, specifying the format of agreement between these entities. These agreements provide for the rights, duties and obligations of these three entities. The UTI is also structured as a trust. The important difference through is that UTI does not have sponsors or a separate AMC. Financial intuitions and banks that contributed to the initial capital of the UTI have their representatives on UTI’s Board of Trustees, which oversees the operation of UTI Mutual Fund. The Association of Mutual Funds in India (AMFI) is a self-regulatory body formed by the various MF Companies to address the practices and policies of various aspects like new scheme launches, payments to intermediaries’ comparisons and other ethical systems. Likewise, different companies have their own Compliance and Audit offices, which are mandated to control and report adherence to and deviations if any on the regulations and policies issued by SEBI. ADVANTAGES OF MUTUAL FUNDS Professional Management Diversification Convenient Administration Return Potential Low Costs Liquidity Transparency Flexibility Choice of schemes Tax benefits well regulated

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MUTUAL FUNDS STRUCTURE /COMPANY STRUCTURE.
Establishes the mutual fund as a trust and registers with SEBI Mutual fund (For e.g. Reliance AMC)

Sponsor Company

Managed by the board of trustees.

Hold unit holders funds in mutual fund. Enters into an agreement with SEBI.

Asset Management Company.

Floats mutual funds as per the regulations of SEBI regulations.

Custodian

Provides custodial services.

Registrar

Provides registrar and transfer services.

Distributors

Provides the network for distribution of schemes to the investors.

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Market Share of the mutual fund industry.
Assets Under Management (AUM) as at the end of Jan-2008 Sl.no. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Mutual Fund Name ABN AMRO Mutual Fund AIG Global Investment Group Mutual Fund Benchmark Mutual Fund Birla Sun Life Mutual Fund BOB Mutual Fund Can bank Mutual Fund DBS Chola Mutual Fund Deutsche Mutual Fund DSP Merrill Lynch Mutual Fund Escorts Mutual Fund Fidelity Mutual Fund Franklin Templeton Mutual Fund HDFC Mutual Fund HSBC Mutual Fund ICICI Prudential Mutual Fund ING Vysya Mutual Fund JM Financial Mutual Fund JPMorgan Mutual Fund Kotak Mahindra Mutual Fund LIC Mutual Fund Lotus India Mutual Fund Morgan Stanley Mutual Fund PRINCIPAL Mutual Fund Quantum Mutual Fund Reliance Mutual Fund Sahara Mutual Fund SBI Mutual Fund Standard Chartered Mutual Fund Sundaram BNP Paribas Mutual Fund Tata Mutual Fund Taurus Mutual Fund UTI Mutual Fund Grand Total % Market share 1.66 0.00 1.55 5.73 0.02 0.70 0.60 1.76 2.86 0.03 2.13 6.34 8.73 3.52 12.24 1.38 0.91 0.00 4.04 2.39 0.87 0.77 3.17 0.01 14.28 0.04 4.75 3.90 2.45 3.40 0.07 9.67 100.00

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BETA, Risk and Mutual Funds Every investment involves risk, and it's important to determine how much risk is appropriate for any fund that you are considering. Risk means making less than your planned return or even losing capital Although not exactly ideal, the standard deviation (dispersion around the mean return) is generally accepted as a measure of risk. Unlike the standard deviation, Beta measures the volatility of a fund relative to a benchmark index. Funds of the same type can have significantly different levels of risks. Fund-rating services such as Morningstar and Value Line rank risk in terms of Beta, a measurement of how volatile a fund is in comparison to a benchmark market indicator, such as the Standard & Poor's 500-stock index. A fund with a Beta of higher than 1.0 (1.0 = the benchmark index) would be expected to outperform the market, while one below that figure would likely underperform. But a Beta of greater than 1.0 also means the fund is volatile. In bear markets, the value of these funds may fall much more than the major market indexes. Beta, a component of Modern Portfolio Theory statistics, is a measure of a fund's sensitivity to market movements. It measures the relationship between a fund's excess return over T-bills and the excess return of the benchmark index. By definition, the Beta of the market benchmark (in this case, an index) is 1.00. Accordingly, a fund with a 1.10 Beta has performed 10% better than its benchmark index--after deducting the T-bill rate--than the index in up markets and 10% worse in Using Beta

Current Government regulations do not require Fund Companies to publish the value of Beta in the Prospectus. They only publish return data, portfolio turnover % and the MER so you’ll have to phone the Company for the data. Expect some pain, as customer service people don’t get this type of question every day. In general, Beta values are a useful way of determining how a mutual fund has done, and how well it may do from a risk perspective in the future. Beta values for many U.S. mutual funds can be found in financial magazines or special investing periodicals such as Investor's Business Daily. In Canada, it’s best to phone the fund Company or use www.globefund.com or equivalent web-site. Filtering on Beta is not provided so you’ll have to do some trial and error to find the fund that fits the Beta that’s right for you.

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A conservative investor whose main concern is preservation of capital should focus on funds with low Betas, whereas one willing to take high risks in an effort to earn high rewards should look for high-Beta funds. Some funds go better together than others. You do not diversify if you buy two funds that have a history of moving up and down at the same time. Also,never forget your personal financial goals and risk tolerance.

If you had a portfolio of Beta 1.2, and decided to add a fund or stock with Beta 1.5, then you know that you are slightly increasing the riskiness (and potential average return) of your portfolio. This conclusion is reached by merely comparing two numbers (1.2 and 1.5). That parsimony of computation is the major contribution of the notion of "Beta". Conversely if you got cold feet about the variability of your Beta = 1.2 portfolio, you could augment it with a few companies with Beta less than 1.The Beta of a portfolio is the dollar -weighted average of the securities held in the portfolio (i.e. mutual fund) relative to a given market.

DSP ML World Gold Fund 16.5 16 15.5 15 NAV 14.5 14 13.5 13 12.5 12
8 8 8 8 8 20 08 20 08 20 08 /2 00 /2 00 /2 00 /2 00 /2 00 /2 00 6/ 29 8

5/ 11

5/ 18

5/ 25

6/ 8/

5/ 4/

6/ 1/

6/ 15

NAVs from May to June 2008

6/ 22

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NAVs Scheme Name From Date To Date Date 2-May-08 3-May-08 4-May-08 5-May-08 6-May-08 7-May-08 8-May-08 9-May-08 12-May-08 13-May-08 14-May-08 15-May-08 16-May-08 20-May-08 21-May-08 22-May-08 23-May-08 26-May-08 27-May-08 Top 100 Equity Fund Reg 1-May-08 30-Jun-08 NAV (Rs.) 78.417 78.234 78.017 77.916 77.406 77.253 76.431 75.239 75.623 75.025 75.753 76.846 77.43 76.94 76.809 75.82 75.129 74.207 74.059 -0.233 -0.277 -0.129 -0.655 -0.198 -1.064 -1.560 0.510 -0.791 0.970 1.443 0.760 -0.633 -0.170 -1.288 -0.911 -1.227 -0.199 Daily Return in %

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28-May-08 29-May-08 30-May-08 2-Jun-08 3-Jun-08 4-Jun-08 5-Jun-08 6-Jun-08 9-Jun-08 10-Jun-08 11-Jun-08 12-Jun-08 13-Jun-08 16-Jun-08 17-Jun-08 18-Jun-08 19-Jun-08 20-Jun-08 23-Jun-08 24-Jun-08 25-Jun-08 26-Jun-08 27-Jun-08 30-Jun-08 average std. dev.

74.97 74.539 75.111 73.755 73.189 71.466 72.616 71.867 70.109 69.63 70.369 70.608 70.474 71.174 72.131 71.241 70.287 68.321 67.236 66.059 66.433 66.953 64.897 63.86

1.230 -0.575 0.767 -1.805 -0.767 -2.354 1.609 -1.031 -2.446 -0.683 1.061 0.340 -0.190 0.993 1.345 -1.234 -1.339 -2.797 -1.588 -1.751 0.566 0.783 -3.071 -1.598 -0.481 1.200
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Mean 1.07

Standard Deviation 3.30

Sharpe 0.29

Beta 0.88

Treynor 1.09

Sortino 0.47

Correlation 0.88

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Fama 0.22 Portfolio Attribites

38

P/E 23.56 as on Jun 2008

P/B 7.40 as on Jun 2008

Dividend Yield 1.23 as on Jun 2008

Market Cap (Rs. in crores) 65,481.03 as on Jun - 2008

Large 73.01 as on Jun 2008

Mid NA

Small NA

Top 5 Holding (%) 29.10 as on Jun 39

No. of Stocks 43

Expense Ratio (%) 2.13

Top 10 Holding

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Stock Sector P/E Percentage of Net Assets Qty Value Percentage of Change with last month

Nifty Miscellaneous NA 11.49 NA 96.46 -21.14

Bharti Airtel Ltd Telecom 22.05 5.41 630,234 45.46 61.73 41 Larsen & Toubro

Engineering & Industrial Machinery 33.12 4.63 178,122 38.91 -30.35 DSP Merrill Lynch Top 100 Equity Fund - Growth

Reliance BSE100 Industries Ltd Oil & Gas, Petroleum & Refinery DSP Merrill Lynch Government Sector Fund – Growth 21.09 3.90 Fund facts 156,303 Objective 32.75 BSE Sensex

The primary investment objective of the Scheme is to seek to generate medium to long-34.93

term capital appreciation from a diversified portfolio that is substantially constituted of equity and equity related securities of corporates, and to enable investors to avail of a deduction from total income, as permitted under the Income Tax Act, 1961 from time to

Hindustan Lever

time. Ltd
Diversified 27.50 3.66 1,484,330 30.75 16.31

Tata Consultancy Services Ltd.

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Computers Software & Education 19.08 3.48 340,818 29.25 16.03

Housing Development Finance Corporation Ltd Finance 25.40 3.30 140,836 27.67 -35.20

Nestle India Ltd Food & Dairy Products 31.35 3.28 168,869 27.53 5.85

Infosys Technologies Ltd 43

Software & Education 19.48 3.19 154,050 Type of 26.76 Scheme -39.05 Ended Open

Glenmark Nature Pharmaceutical

Equity s Ltd.
Pharmaceuticals Option 45.15 Growth 2.68 353,210 Inception 22.49 Date -3.42 Dec 21, 2006

Face Value (Rs/Unit) 10

Fund Size in Rs. Cr. 467.31 as on Jul 31, 2008

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SCHEME PERFORMANCE (%) AS ON AUG 8, 2008

1 Month 3 Months 6 Months 1 Year 3 Years 5 Years Since Inception

10.43 -11.45 -17.43 -1.02 NA NA 14.23

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The disadvantage of Mutual Fund

No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money. Fees and commissions: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund. Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made. Management risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers A measurement of an option position or premium in relation to the underlying instrument. In mutual fund also there is certain amount of risk-return factor associated according to the investment option these are as follows Table No.1 Risk and Return of Mutual Fund Equity Balanced Debt Risk High Medium Low Return High Medium Low

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COMMODITY:
Commodities means rice, wheat, sugar, gold etc. And did you know that you could trade
these commodities without owning a piece of the commodity you trade in. Commodities, which you have been eating or using all this years or donning it as a fashion accessory or even running you car with, can be now traded on the Indian exchanges.

Commodity Futures are contracts to buy specific quatity of a particular commodity at a future date. It is similar to the Index futures and Stock Futures but the underlying happens to be commodities instead of Stocks and Indices.

Major Commodity Exchanges
The Government of India permitted establishment of National-level Multi-Commodity exchanges in the year 2002 and accordingly three exchanges come in picture. They are: • Multi-Commodity Exchange in India Ltd, Mumbai ( MCX ).

National Commodity and Derivative Exchange of India, Mumbai ( NCDEX).

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National Multi Commodity Exchange, Ahemdabad (NMCE).

However there are regional commodities exchanges functioning all over the country. At international level there are major commodity exchanges in USA, Japan and UK.

Major commodities traded in Most popular Exchanges of the world are: Exchange
New York Mercantile Exchange (NYMEX)

Major Commodities Traded
Crude Oil, Heating Oil

Chicago Board of Trade(CBOT) London Metals Exchange (LME) Chicago Board Option Exchange (CBOE) Tokyo Commodity Exchange (TCE) Malaysian Derivatives Exchange (Mdex) Commodity Exchange (COMEX)

Soy Oil, Soy Beans, Corn Aluminum, Copper, Tin, Lead Options on Energy, Interest Rate Silver, Gold, Crude Oil, Rubber Rubber, Soy Oil, Palm Oil Gold ,Silver, Platinum

Volume traded in commodity exchanges. (In Rs.Crores)
S.no 1 2 3 4 5 MCX NCDEX NMCE NBOT OTHERS Total 2003-04 2456.23 1490.25 23840.87 53013.08 48562.65 2 129363.0 82 2004-05 165146. 92 266338. 28 13988.2 58462.8 4 67823.3 2 571759. 56 2005-06 961632.6 1 1046035. 87 18385.34 53683.04 54734.56 2134471. 42

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Values of trading at different natinal exchanges in last three years
1200000 1000000 800000 600000 400000 200000 0 2003-04 2004-05 2005-06 MCX NCDEX NMCE NBOT OTHERS

Who regulates the Commodity Exchanges?
Commodity exchanges are regulated by forward Market Commission ( FMC ); Forward market Commission works under the purview of the ministry of food, Agriculture and Public Distribution.

Benefits in dealing commodities futures are:
If you are an Investor, commodities futures represent a good form of investment because of the following reasons. •

Diversification: The returns from commodities market are free from the direct
influence of the equity and debt market, which means that they are capable of being used as effective hedging instruments providing better diversification.

• •

Less Manipulation: Commodities markets, as they are governed by international
price movements are less prone to rigging or price manipulations by individuals.

High Leverage: The margins in the commodity futures market are less than the F &
O section of the Equity market.

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How risky are these markets compared to stock & bond markets? Commodity prices are generally less volatile than the stocks and this has been statistically

proven. Therefore it’s relatively safer to trade in commodities. Also the regulatory authorities ensure through continuous vigil that the commodity prices are market- driven and free from manipulations However all investments are subject to market risk and depends on the individual decision. There is a risk of loss while trading in commodity futures like any other financial instruments. Top 10 Commodities are: Traded Value (In Rs. Commodity Crores) Gold Silver Guar Seed Channa Urad Crude Oil Tur Soya Oil Mentha Oil Guar Gum Others Total 414973.78 345701.08 330439.5 214252.4 196904.49 180776.35 41548.02 110229.65 41533.49 36986.32 221126.39 2134471.47

S.no. 1 2 3 4 5 6 7 8 9 10 11

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Top 10 Commodities

10% 2% 2% 5% 2% 8%

20%

Gold Silver Guar Seed Channa Urad 17% Crude Oil Tur Soya Oil Mentha Oil Guar Gum Others

9% 10% 15%

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Reliance Life Insurance
Reliance Life Insurance, a part of the Reliance - Anil Dhirubhai Ambani Group is India's fastest growing life insurance company and among the top 4 private sector life insurers. Reliance Life Insurance has a pan India presence and a range of products catering to individual as well as corporate needs. Reliance Life Insurance has over 700 branches and 1, 80,000 agents. It offers 26 products covering savings, protection & investment requirements. Reliance Life Insurance will endeavor to attain a leadership position in the market over the next few years, by further expanding and strengthening its distribution network and offering a diverse array of products to suit the varied and specific needs of individual customers.

Basics of Life Insurance What is Life Insurance? An amount of money paid to someone (called beneficiary) when the Life Assured (in whose name the insurance policy is taken) dies. This amount can be used to pay the expenses related to Life assureds death or can be invested to generate income that will replace your salary. Life Insurance is an important tool in any investors portfolio & can be used for - wealth creation, asset building, provide for contingencies and retirement planning.

The main reason to buy Life Insurance is to provide income replacement for your loved ones

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Types of Life Insurance Policies
• • Most Insurance policies are a combination of Savings & Protection. Products are formulated by either increasing or decreasing either one of these components. These combinations can be broadly divided into 4 groups - ULIPs -

Term Insurance Endowment Policies : Whole Life; Unit Linked etc Annuities & Pension

Systematic Investment Plans( SIP) – For regular investment SIP is investing a fixed sum periodically in a disciplined manner for long term. It gives benefit of Rupee Cost averaging. In SIP monthly minimum Rs.500 or Rs.100 are invested. Interest is calculating compoundly. Many SIP gives insurance benefits. VAP is modified version of SIP. It is Voluntary Accumulation Plan. It allows the investor flexibility with respect to the amount and frequency of investment. In VAP, investor has to impose voluntary self discipline.

Systematic Withdrawal Plan ( SWP) – For regular income The lump sum amount is invested for one time and then fixed percent amount is withdraw monthly.

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Life Stage in Life Insurance

Introduction of dependents. Start of financial planning – balance between asset creation &

Peak earning age range. High asset creation & build up of liabilities. Critical stage for dependents

Asset base build up & liabilities reduced/ taken care of. Need for retirement planning more than protection. Need for protection low. Greater need for regular income flow.

No dependents/ liabilities therefore need for insurance is less

253 0 M a r 30-45 years Couples with children

18-25 (Unmarrie d)

45 yrs and abov e Matured coupl

Retire d

Endowment / ULIP’s

Endowment / ULIP’s + Term

Annuities

At each stage , requirements, responsibilities and Financial Needs differ

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Need Analysis in life Stages

AGE

STATUS

INSURANCE NEEDS

SUGGESTED PRODUCTS

18yrs - 25yrs

Unmarried

1.Go on a holiday 2.Buy a new Car 3.Set up a new house 4.Set up Interiors 5.Buy jewellery

Short Term Endowment Product

1.High Debt, high expenditure Phase 25yrs -30yrs Married 2.Family dependency on your income 3.Low accumulated wealth 4.Need for Planning Requirement

Temporary term or whole life Product

30yrs - 45yrs

Matured couple

1.Retirement Planning 2.Wealth transfer or

Profits or Unit Linked Endowment/

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saving vehicles 3.Returns on investment 4.Opting for guaranteed Product

Deferred annuities

60yrs and above

Post Retirement

1.Protection in case you live long 2.Protection for spouse in case of death 3.Wealth accumulation for children

1.Single Premium annuities 2.Long term care products 3.Whole life products

Protection Plans

Protect your family even when you’re not around by investing in Reliance Protection Plans. Choose a limited period plan or a lifetime protection plan depending on your needs. The latest Protection Plans are as below…
1. Reliance Term plan 2. Reliance Simple Term plan 3. Reliance Special Term plan 4. Reliance Credit Guardian plan 5. Reliance Special Credit Guardian plan 6. Reliance Endowment plan 7. Reliance Special Endowment plan 8. Reliance Connect 2 Life plan 9. Reliance Whole Life plan 10. Reliance Wealth + Health plan

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11. Reliance Cash Flow plan

Savings & Investment Plans

Reliance Savings & Investment Plans help you to set aside some money to achieve specific goals in life, which means that you can enjoy life and provide for your family’s daily needs. The savings and investment Plans are as below…
1. Reliance Total Investment Plan Series I - Insurance 2. Reliance Wealth + Health plan 3. Reliance Automatic Investment plan 4. Reliance Money Guarantee plan 5. Reliance Cash Flow plan 6. Reliance Market Return plan 7. Reliance Endowment plan 8. Reliance Special Endowment plan 9. Reliance Whole Life plan 10. Reliance Golden Years Plan 11. Reliance Golden Years Plan Value 12. Reliance Golden Years Plan Plus 13. Reliance Connect 2 Life plan

Retirement Plans

Invest today in Reliance Retirement Plans and save money to enjoy life even after retirement. You will never have to depend on another person or make any compromises to maintain your current lifestyle. The latest Retirement Plans are as below…
1. Reliance Total Investment Plan Series II – Pension 2. Reliance Golden Years Plan 3. Reliance Golden Years Plan Value 4. Reliance Golden Years Plan Plus 5. Reliance Wealth + Health plan 6. Reliance Automatic Investment Plan 7. Reliance Money Guarantee Plan

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Child Plans

Save systematically and secure your child’s future needs by investing in Reliance Child Plans. You can always be there for your child when he or she needs you. The Childs plans are as below…
1. Reliance Child plan 2. Reliance Secure Child plan 3. Reliance Wealth + Health plan

Market Return Plan Under This plan the investment risk in the investment portfolio is borne by the policyholder. key features • • • • • • • • • Twin benefit of market linked return and insurance protection A unit linked plan, different from traditional life insurance products with maximum maturity age of 80 years. Option to create your own portfolio depending on your risk appetite. Choose from four different investment funds Flexibility to switch between funds Option to pay regular as well as single premium & top- ups Option to package your policy with accidental rider Flexibility to increase the sum assured Liquidity through partial withdrawals

How does this plan work The premium paid by the client net of premium allocation charges is invested in fund/funds of your choice and units are allocated depending on the price of units for the fund/funds. The fund value is the total value of units that you hold in the fund/funds. The mortality charges and policy administration charges are ducted through cancellation of units whereas the fund management charge is priced in the unit value.
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Benefits Life cover Assured: in case of unfortunate loss of life, the beneficiary will get sum assured or fund value, whichever is higher. The client can choose the basic sum assured within the minimum and maximum levels mentioned below.

Minimum sum Assured: • • Regular premium: annualized premium for 5 years or annualized premium for half the policy term, whichever is higher. Single premium: 125% of the single premium.

Maximum sum Assured No limit (50000 for age up to 12 years) Maturity Benefits On survival to maturity the fund value on maturity will be paid out. Rider Benefits The Client can add the Accidental Death & Total and Permanent Disablement Benefit Rider (available only with the regular premium option). This benefits doubles the life coverage in case of accidental death or accidental total and permanent disablement at a very nominal additional cost. The maximum cover is Rs. 50,00,000 per life. In case of accidental death of the life assured during the policy term, the accident benefit sum assured will be paid immediately in a lump sum. In case of accidental total and permanent disablement, 1/10th of the accident benefit sum assured will be paid at the end of each year for ten years. If the total and permanent disablement has commenced, the accidental death benefit cover ceases. In case of maturity or on death of the life assured before payment of all installments of accidental total and permanent disablement benefits, the remaining unpaid installments of any will be paid in one lump sum along with death or maturity benefit.

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Accidental total and permanent disablement means disability caused by bodily injury, which causes permanent inability to perform any occupation or to engage in any activities for remuneration or profits. This disability should last for at least 6 months before being eligible for accidental total and permanent disablement benefits. Accidental total and permanent disablement includes loss of both arms or both legs or one arm and one leg or of both eyes. Loss of arms or legs means dismemberment by amputation of the entire hand or foot. Loss of eyes means entire and irrecoverable loss of sight.

What are the different fund options. We understand the value of your hard earned money and in our Endeavour to help you grow your wealth, we offer you 4 different tailor-made investment funds. You have the option to allocate your premium in these funds as you wish.

They are: 1. Capital Secure Fund: The investment objective of this fund is to maintain the value of all contributions (net of charges) and all interest additions. This fund offers steady return for little risk. The risk profile of this fund is low. Investments would be 100% in bank deposits, government bonds and debt instruments that offer financial security. Further, allocation in Capital Secure Fund for a policy is subject to a maximum limit of 40% at any time.

2. Balanced Fund: The investment objective of this fund is to provide you with investment returns, which exceed the rate of inflation in the long term while maintaining a low probability of negative investment returns. Here, a major portion of your funds are invested in Fixed Securities while
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a small percentage is invested in the equity market, which is exposed to market movements. The risk profile of this fund is low to medium. Investments would be at least 80% in fixed interest securities and maximum 20% in equities.

3. Growth Fund: The investment objective of this fund is to provide you with investment returns, which exceed the rate of inflation in the long term while maintaining a moderate probability of negative investment returns. A greater portion of your funds are invested in fixed securities while a small percentage is invested in the equity market, which exposed to market movements. The risk profile of this fund is medium to high. Investment would be at least 60% in fixed interest securities and maximum 40% in equities.

4. Equity Fund: The investment objective of this fund is to provide policyholders with high exposure to equities and the possibility of investment returns, which generate a high real rate of return in the long term while recognizing that there is a significant probability of negative investment returns in the short term. This fund offers a totally equity based investment option. Your returns depend entirely upon the performance of the equity market. The risk profile of this fund is high. The higher risk of this portfolio means that expected returns would also be higher. Investment would not exceed 30% in bank deposits and may be up to 100% in equities.

Value of Units: The market value of assets plus/less expenses incurred In the purchase/sale of assets plus current assets plus

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Any accrued income net of fund management charges Less current liabilities less provision Unit Value = Total number of units on issue (before any new units are allocated/redeemed.)

Who can Buy the product Minimum age at entry Maximum age at entry Maximum age at maturity 30 days 65 years 80 years

What is the policy term Minimum policy term Maximum policy term 5 years 40 years

Flexible premium payment modes: Choose from five premium payment modes. a) Annual – minimum premium is Rs. 10,000. b) Half – yearly – minimum premium is Rs. 5,000.

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c) Quarterly – minimum premium is Rs. 2,500. d) Monthly – minimum premium is Rs. 1,000. e) Single premium – minimum premium is Rs. 25,000.

Charges under the plan: 1. Premium allocation charge For regular premium policies: Term of the policy as below Years First year Thereafter 5-9 10% 5% 10 - 14 15% 5% 15+ 20% 5%

(The premium allocation charge for single premium & top – ups is 2%.)

2. Policy Administration charges: Rs. 40 will be deducted from your unit account each month. 3. Fund Management Charges: (The fund management charges will be deducted on a daily basis.) Unit Linked Funds Capital Secure Balanced Fund Growth Fund Equity Fund Annual Rate 1.50% 1.50% 1.75% 1.75%

Revision of charges:

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The fund management charges are subject to revision at any time, but hey will not exceed 2% p.a. for the capital secure fund and 2.5% p.a. for the other funds. Any changes made to the charges under this policy will be subject to IRDA approval.

4. Partial Withdrawal Charges: Rs. 100 per withdrawal will be deducted from your unit account.

5. Switching Charge: 1% of the amount switched, with a maximum of Rs. 1,000/- per switch.

6. Mortality Charges: The Mortality charges, based on your attained age, are determined using 1/12th of the charges are different.

7. Surrender Charge: This charge is levied on the unit fund at the time of surrender of the policy as under:

Number of years premiums paid

Surrender charge as percentage of fund value

Less than 1 1 2 3 and more

100% 50% 20% NIL

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8. Service Tax Charge This charge will be levied on mortality, accident & disability benefit charges. The level of this charge will be as per the rate of service tax on risk premium levied by the government from time to time the correct rate of service tax is 12.36% this charge shall be collected along with charges.

How safe is your investment • The investments made in the unit funds are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of the fund and the factors influencing the capital market, and the insured is responsible for his/her decisions. • • • • • The unit price is a reflection of the financial and equity/debt market conditions and can increase or decrease at any time due to this. Benefits payable under the policy will be made according o the tax laws and other regulations in force at that time. There are no guarantees for any fund of any kind under this policy. The benefit payable on maturity will be equal to the value of your units. The name in the funds in n way indicates the returns derived from them. Please note that Reliance life Insurance company limited is only the name of the insurance company and Reliance market return plan is only the name of the unit linked life insurance policy and does not in anyway indicate the quality of the policy or its future prospects or returns

Free Look Period.

In case the policyholder disagrees with any of the terms and conditions of the policy, he may return the policy to the company within 15 days of its receipt for cancellation, stating his/her objections in which case the company will refund an amount equal to the non allocated premium plus the charges levied by cancellation of units plus fund value as on the date of
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receipt of the request in writing for cancellation, less the proportionate premium for the period the company has been on risk and the expenses incurred by the company medical examination and stamp duty charges. If the risk acceptance date falls within cooling off period, then on cancellation RLIC shall pay fund value less of charges.

RELIANCE DEMAT ACCOUNTS

Overview of Demat Account. In India, a Demat account, the abbreviation for dematerialised account, is a type of banking account which dematerializes paper-based physical stock shares. The dematerialised account is used to avoid holding physical shares: the shares are bought and sold through a stock broker. This account is popular in India. The Securities and Exchange Board of India (SEBI) mandates a demat account for share trading above 500 shares. As of April 2006, it became mandatory that any person holding a demat account should possess a Permanent Account

66

Number (PAN), and the deadline for submission of PAN details to the depository lapsed on January 2007. Procedure 1. Fill demat request form (DRF) (obtained from a depository participant or DP with whom your depository account is opened). 2. Deface the share certificate(s) you want to dematerialise by writing across Surrendered for dematerialisation. 3. Submit the DRF & share certificate(s) to DP. DP would forward them to the issuer / their R&T Agent . 4. After dematerialisation, your depository account with your DP, would be credited with the dematerialised securities.

Reliance Money Demat Account Services Reliance Money – Transacting and investing simplified. Get ready to change the way you transact and invest in financial products and services. Whether you wish to transact in equity, equity & commodity derivatives, IPO’s offshore investments or prefer to invest in mutual funds, life & general insurance products or avail money transfer and money changing services, you can do it all through reliance money. Simply open a reliance money account and enjoy the convenience of handling all your key financial transactions through this one window. Benefits of having a reliance money account

It’s cost effective

You pay comparatively lower transaction fees. As an introductory offer, we invite you to pay a flat fee of just Rs. 500/- and 750/- and transact through reliance money. This fee is valid for two months or a specified transaction value
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See the table below for details.

Its offers single – window access

Through reliance money’s associates, you can transact in equity, equity and commodities derivatives, offshore investments mutual funds, IPO’s life insurance, general insurance, money transfer, money changing and credit cards, amongst others.

Its convenient

You can access reliance money’s services through • • • • The internet Transaction kiosks The phone (call & transact) Our all – India network of associates

On an assisted trade (through the call centre or our network of associates) a charge of Rs 12 per executed trade will be applicable.

• Its Safe Your account is safeguarded with a unique security number that changes every 32 seconds. This number works as a dynamics password to keep your account extra safe.

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• Its provides you a demat account You get your own demat account with reliance capital at an annual fee of just Rs. 50/-.

Its provides you a 3-in-1 facility. You can access your banking, trading and demat account through a single window and transfer funds across accounts seamlessly.

• It provide you value- added services At www.reliancemoney.com, you get • • • • • •

Reliable research, including views of external experts with an enviable track record Live news updates from Reuters and Dow Jones CEO’s / expert views on the economy and financial markets Tools that help you plan your investments, tax, retirement, etc. in the personal finance section Risk Analyser for analysis of your risk profile Asset allocators to build an appropriate investment portfolio Innovative use of technology for facilitating convenient trading/investments – kiosks (similar to ATM’s)

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Reliance Money Provide the kiosks (similar to ATM’s) Facilities, to their customer through which the customers can trade on available kiosks at the particular Branch of Reliance Money. The company are going to open these kiosks in the market as the ATM’s of the Banks. Reliance Money provides 3 different trading platforms for equity trading: Insta Trade Fast Trade Easy trade The benefits • • • • • • A safe and convenient way to hold securities; Immediate transfer of securities; No stamp duty on transfer of securities; Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc.; Reduction in paperwork involved in transfer of securities; Reduction in transaction cost;

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• • •

No odd lot problem, even one share can be sold; Nomination facility; Change in address recorded with DP gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separately;

• • •

Transmission of securities is done by DP eliminating correspondence with companies; Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger etc. Holding investments in equity and debt instruments in a single account.

Research design/Methodology
Research design can be defined as the plan and structure of enquiry formulated in order to obtain answers to research questions on business on business aspects. Research design can be
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understood as that which gives the blueprint for collection, measurement and analysis of business data. The research plan constitutes the overall program of the business research process. The planning process includes the framework of the entire research process, starting from developing hypothesis to the final evaluation of collected data. Research design is essential because it facilitates the smooth flow of various research results can be obtained with minimum utilization of time, money and effort. Therefore it can be said that design is highly essential for planning research activities. If research design is not properly prepared, it will jeopardize the whole research process and will not meet its purpose.

Exploratory Studies
Exploratory research is carried out to make problem suited to more precise investigation or to frame a working hypothesis from an operational perspective. Exploratory studies help in understanding and assessing the critical issues of problems. It is not used in case where a definite result is desired. However, the study results are used for subsequent research to attain conclusive results for a particular problem situation. Exploratory studies are conducted for three main reasons, to analyze a problem situation, to evaluate alternatives and to discover new ideas.

Research hypothesis
If a hypothesized relationship or prediction has to be tested by scientific methods, it is called research hypothesis. A research hypothesis is one that links an independent variable to a dependent variable. It should generally contain one dependent and one independent variable.

Method of Data collection
Data can be collected in different ways from the subject of study. One method is to observe subjects on certain parameters, which is called observation studies. In such studies, the subjects (respondents) by asking them questions through a questionnaire. Here the researcher can adopt either method based on the study that needs to be conducted. For instance, if research has to be done on the traffic flow at a particular junction, then the observation method is best. On the other hand, if consumer preferences about a new product are to be estimated, then a questionnaire for obtaining consumer responses is the best method.

Research Design has been classified into four subsections they are:
1. Sample selection and size; 2. Sampling procedure; 3. Data collection; and

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4. Analytical tools

 Sample Selection and size
The first step of research is sample selection, for which the respondents were consumers in Nanded city. The total consumers covered were 400. The same numbers of questionnaires were distributed, but only 370 fully-completed questionnaires were received. Results are based on the response of these 370 respondents.

 Sampling procedure

The consumers are selected by the convenience sampling method. The selection of units from the population based on their easy availability and accessibility to the researcher is known as convenience sampling. Convenience sampling can be used as a part of a preliminary research that forms a basis for conducting the detailed research. Convenience sampling is at its best in surveys dealing with an exploratory purpose for generating ideas and hypothesis.

Steps in Sampling Procedure
• • • • • • • Defining the target population Specifying the sampling frame Specifying the sampling Unit Selection of the sampling method Determination of sample size Specifying the sampling plan Selecting the sample

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 Data Collection method.
For the present study, the survey method was used for collecting primary data. A structured questionnaire was used for the purpose. The questionnaire included multiple choice questions. The main source of secondary data has been Insurance Chronicle, ICFAI Journal of Services Marketing, the Icfai Journal of Consumer Behavior, Indian Journal of Marketing, and Behavioral Finance. The study employs primary data collected by communicating with the respondents with the help of structured questionnaire. Before undertaking the survey, pilot test of the questionnaire was done with 40 respondents. Their views were incorporated in the final questionnaire. The Marathi version of the questionnaire was also used in the survey to include responses of investors, who are not comfortable with the English language, as the research area is a area of Marathwada. The study mainly deals with the financial behavior of individual investors towards mutual funds and ULIP in Nanded.

 Analytical Data
The data thus collected, was tabulated, interpreted and analyzed with a view to make the study meaningful. In the present study, hypothesis testing, percentage, frequency and cross tabulation methods have been used for analysis.

3. Review of Literature

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Sunayna khurana (2008) analyzed the customer preference in life insurance industry in India. She had analyzed the customer preference regarding plans and company, their purpose of buying insurance policies, satisfaction level and their future plans for the new insurance policy. Mr. K B S Kumar edited the book ‘Insurance customer service’ of ICFAI University press; it includes the chapters like ‘Tracking customer satisfaction’ by Mr Tom moormam. U Jawaharlal and Nikhil Pareek analyzed ‘the customer service in Life Insurance’ In Insurance Chronical (April 2004) he had analyzed the different services of Life Insurance players in India. Narayan Krishnamurthy in Outlook money (Sep 15, 2003) article analyzed the situational need of Insurance at different situations and steps of life in his article ‘AT every step of Life…’. Navasiyam et al. (2006) analyzed the socioeconomic factors that are responsible for taking life insurance policies and examined the preferences of the policyholders towards various types of policies of LIC. From the analysis, it was found that factors such as age, educational level and sex of the policyholders are insignificant. However, income level, occupation and family size are significant while deciding on an insurance policy. From the analysis, it is inferred that respondents belonging to the age group of 31 to 40 years are much interested in taking a life insurance policy. MFs have attracted a lot of attention and kindled the interest of both academic and practitioner communities. Compared to the developed markets, very few studies on MFs are done in India. This literature review reveals investor behavior studies. The researches on mutual funds has been extremely skewed in terms of geographical coverage, most focused to developed countries like Us. Tamal Datta chaudhuri, Jayanta Kumar seal, edited the book named ‘Mutual Funds Industry’ it includes empirical study made by Navdeep agrwal and Mohit Gupta titled ‘performance of mutual fund in India: an empirical study’. Mary Rowland written ‘The New Common sense Guide to mutual funds’ it includes the guidelines while investing in mutual fund. How should one invest in mutual fund and when what step should be taken in a situation by a investor. Gupta LC (1993) conducted a household investor survey with the objective to provide data on investor preferences on MFs and other financial asset.

LIMITATIONS OF THE RESEARCH
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1. The research is confined to a certain parts of Lucknow and does not necessarily shows a pattern applicable to all of Country. 2. Some respondents were reluctant to divulge personal information which can affect the validity of all responses. 3. In a rapidly changing industry, analysis on one day or in one segment can change very quickly. The environmental changes are vital to be considered in order to assimilate the findings. 4. Sometime the customer did not give right information about himself. 5. Sometime the gap of communication was come in between the interaction. 6 . The lack of knowledge in customers was remained the major limitation.

CHAPTER 4
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EMPIRICAL ANALYSIS

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BODY OF RESEARCH

TABLE: 1

TABLE SHOWING DIFFERENT AGE GROUP OF THE RESPONDENTS
AGE
0-18 18-36 36-54 54-72 72 & ABOVE

NO OF RESPONDENTS
0 40 50 10 0 CHART - 1
72 & Above 0%

noof respondentS 0-18
0% 54-72 10% 18-36 40%

36-54 50%

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Inference: The majority of the respondents i.e. 46% are from the age group of 36-54. And
the second largest age group is 18-36. And the remaining investors are from 54-72 age group.

PREFERRED FUND STRUCTURE
Table-2

Structure of the fund Open – ended fund Close – ended fund Interval funds Total

No of investors preferred 64 24 12 100

CHART - 2

Noof investorspreferred
100 90 80 70 60 50 40 30 20 10 0 Open – ended fund 64 Close – ended fund 24 Interval funds 12 Total 100

e l t T s i x A

No of investors preferred

Inference: It is observed that 64 out of 100 that are 64% of investors are interested to invest their money in open ended funds the reason can be attributed to its convenience to enter and exit at any time. 24% investors preferred to invest in close ended funds because they are long
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term investors as well as they want some tax benefits. And the remaining 12% investors replied that they don’t mind to invest in any funds including interval funds

INVESTORS SCHEME PREFERENCE
Table-3 Preferred fund scheme Growth scheme Income scheme Balanced scheme Total No of investors preferred 52 16 32 100

CHART - 3

Inference: In the above given graph it is showed that 52 out of 100 that are 52% of customers are interested to invest in growth schemes. 8 out of 25 that are 32% of customers are interested to invest in Balanced schemes and the remaining 16% customers are preferred to invest in Income schemes.

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INVESTORS FUND PREFERENCE
Table-4 Type of fund Tax saver funds Index funds Sectorial funds Total No of investors preferred 15 40 45 100

CHART - 4

Inference: Out of 100 investors 15 that is 15% of customers are preferred to invest in Tax saver funds. 40 that is 40% of investors are preferred to invest in index funds which give returns based upon respective indexes.. 45 that is 45% of investors are interested to invest in sectorial funds that means they are ready to take high risk but want high returns

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Table-5

TABLE SHOWING REPEATION OF INVESTMENTS MADE BY THE RESPONDENTS.

RESPONSE
YES NO TOTAL Chart-5

NO OF RESPONDENTS
64 36 100

No of Respondents

NO, 36

YES NO
YES, 64

Inference: Out of 100 respondents 64 customers have already reinvested in the company, while the rest are waiting for a correct time to enter in the market for the second time.

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GETTING MONTHLY / QUARTERLY STATEMENTS FROM TIME TO TIME
TABLE-6 Getting Monthly / Quarterly statements from time to time

No of Investors 70 30

Yes No

CHART - 6

Inference: 70 out of 100 people getting monthly/quarterly statements from time to time 30 out of 100 people not getting monthly/quarterly statements from time to time .

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Table-7

RESPONDENTS RANKING ON THE CUSTOMER SERVICE OF RELIANCE MUTUAL FUNDS

RANKS
ONE TWO THREE FOUR FIVE

NO OF RESPONDENTS
34 16 26 16 8

Chart-7

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Inference: Out of 100 respondents 34 ranked RELIANCE as AMC one for customer service function. Table-8

RESPONSE REGARDING AREAS FOR IMPROVEMENT BY RELIANCE MUTUAL FUNDS
AREAS
CUSTOMER SERVICE MONITORING OF FUND AGENTS TRAINING OTHERS TOTAL

NO OF RESPONDENT
35 38 22 5 100

Chart-8

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Inference: Out of 100 respondents 38 respondents want RELIANCE to improve at their fund monitoring function.

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Table-9

REDEMPTION SATISFACTION OF THE CUSTOMERS

Satisfaction about Redemption facilities Yes No

No of Investors 65 35

Chart-9

Inference: Sixty five percent of the customers are happy with the redemption facilities of RMF.

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Table-10

RESPONSE REGARDING USAGE OF VALUE ADDED SERVICES OFFERED BY RELIANCE MUTUAL FUNDS

VALUE ADDED SERVICES
ATM Ecs Online transaction Direct investment

NO OF RESPONDENT
0 60 20 40

CHART-10

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Inference: Most of the customers are making use of value added services of Ecs and a few of them make use online transaction and direct investment.

Table 11 Factors to be Considered in future Investment
Factors to Considered for future Investment

Sr. No.

Factors Considered

Responses (No. of Persons)

1 2

Returns Security of Money Total

165 195 370

Chart 11

factors to Considered for future Investment

F actorsConsiderable while F uture Investm ent
200 195 190 185 180 175 170 165 160 155 150 Return Security

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Interpretation
In future people will be more preferring to the security of their money means they want an secured option which should provide good returns. As ULIP are the option in which you can have the security also and good returns. The second choice of the investors is return of their money.

Table12
Most preferred way for investment
Table11. Mutual fund or ULIP Sr.No. 1 2 Investment Option Mutual Fund ULIP Total Response (No. of Persons) 170 200 370

Chart 12 Mutual fund or ULIP

Mutual F und Or UL IP
205 200 195 190 185 180 175 170 165 160 155

UL IP

Mutua F l und

Interpretation
As most of the people want the option which should provide security and good returns and there is only option available with good liquidity is ULIP of Reliance. 54% people had opted for ULIP as their future investment and 45% of people opted for Mutual Fund. So we can find that there not so much difference in these option.

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Table 13

Rating for Reliance life Insurance ULIP
Rating for Reliance Life Insurance ULIP

Sr. No.

Ratings

Response (No. of Persons)

1

Fair Average Good Best

30 30 80 230

2 3 4

Chart 13 Rating for Reliance Life Insurance ULIP

Rating s
250 200 150 100 50 0 Fair Average Good Best Ratings

Interpretation
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62% of people given Best rating to the Reliance Life Insurance ULIP, so from this We can analyze that Reliance Life Insurance is doing good but it is having good potential in Market. To improve its market share they should improve the awareness level of the common people.

Table 14 Reasons to invest in RLIC USP of Reliance Life Insurance

Sr. No.

Factors

Responses (No. of Persons)

1 2 3 4

Innovative Products Good returns Good Brand Name Good Marketing strategy

110 70 90 65

Chart . USP of Reliance Life Insurance

USP
65 110
INNovative Products Good Returns Good Brand Name

90 70

Good Marketing Strategy

Illustration
Innovative Products and good brand name are the main success factor for Reliance Life Insurance. 35% customers are attracted due to the Innovative products offered by RLIC. So if

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RLIC wants to penetrate its market share they should improve the should give more emphasis on marketing strategy, improving the distribution channel etc.

Hypothesis testing

H 0 - People will not prefer investment in ULIP of RLIC as Compared to mutual fund in Nanded H 1 - People will prefer investment in ULIP of RLIC as Compared to mutual fund in Nanded

The Sample size taken for this Hypothesis is 370. The preference of 370 will be recorded and can be analyzed by ‘z’ test. Because sample size is more than 30 I have taken the response of 370 people. 210 persons had given positive preference for Reliance Life ULIP.

= 210 = 370 = 10 Sample size > 30

X −µ
Z=

σ

Z = 210-370/10

= -16 Level of significance = 5% i.e.1.96

93

-1.9 6 96

+1.

Two tailed test -16 falls in rejection region so Ho is rejected H0 is Rejected and H1 is accepted then we can say that People will prefer investment in ULIP of RLIC as Compared to mutual fund in Nanded

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Conclusions and/or Recommendations
From above analysis and survey we can conclude as follows  Awareness of Investment Products is increasing as more number of private players are entering in life insurance industry.  Mutual Fund is also getting more and more famous in Indian market as many private companies innovating new funds as the investors demand.
 

SIP differentiate from Mutual fund in respect of Insurance cover. Investors in Reliance Money Products will be getting the advantage of life insurance cover.

ULIP and Mutual fund are providing same type of investment funds like, equity funds, debt funds, infrastructure fund, balanced fund etc.

 

In terms of expenses mutual funds are having low expenses . Mutual fund companies charging 1.5% to 2.5% as entry and exit load, Reliance Capital are charging 25% yearly as asset allocation charges.

People are turning to words the Investment Products as a good investment option but as ULIP is in its starting phase so customers are preferring only big brands.

 Mutual fund is having good growth but many customers from rural areas don’t have any knowledge about Mutual fund.  Even investors from cities like NANDED don’t have that much of Knowledge about fund selection they all are depend on Brokers.

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 People in Nanded are investing in only good branded companies as they don’t believe on other financial companies for taking Investment Products.  There is a need for insurers to undertake a demand audit in order to understand what the policyholder wants and needs.  Deriving the right feedback from customers and bringing out innovative products which cater to customer demands will go a long way in tapping the market potential of the insurance and Mutual fund sector.  Mutual fund and ULIP Insurance both are facing fierce competition; increasingly more organizations are seeking to enhance their demand in the market place.  For Reliance MONEY They should go for creating more awareness about its ULIP & SIP as now also people are just investing because Reliance is India’s most Known and Favorite brand in past.  RELIANCE MONEY should go for innovating more and more products and improving the distribution channels as per the area of sales.  It was found that majority of the investors i.e.46% are from the age group of 36-54. This is the group of middle age people who deserve to invest for their future financial needs.  It was found that Out of 100 respondents 64 customers have already reinvested in the company, while the rest are waiting for a correct time to enter in the market for the second time.  It was observed that Out of 100 respondents 62 investors have reinvested due to better returns and performance of funds. While the rest of the

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investors have voted for performance of funds and services provided by the company.  It was observed that Out of 100 investors 15 that is 15% of customers are preferred to invest in Tax saver funds. 40 that is 40% of investors are preferred to invest in index funds which give returns based upon respective indexes.. 45 that is 45% of investors are interested to invest in sectorial funds that means they are ready to take high risk but want high returns  It was found that Out of 100 respondents 34 ranked RELIANCE as AMC one for customer service function.

It was found that Out of 100 respondents 38 respondents want RELIANCE to improve at their fund monitoring function.

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QUESTIONNAIRE

NAME: ………………………………………………… AGE: …………………………………………………… PROFESSION: …………………………………………..
1. Have you ever invested in RELIANCE INVESTMENT PRODUCTS?

Yes No

[ ] [ ]

2. If yes why did you choose RELIANCE Investment Products? 3. By structure in which type of schemes did you invested?

Open - Ended Schemes Close - Ended Schemes Interval Schemes

[ ] [ ] [ ]

4. By investment objective in which type of schemes have you invested?

Growth Schemes Income Schemes Balanced Schemes

[ ] [ ] [ ]

5. In which type of fund you want to invest?

Tax saver funds Index funds Sectorial funds

[ ] [ ] [ ]

6. Did you repeat your investment after your initial investments? Yes No

7. Are you getting Monthly / Quarterly statements from time to time?

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Yes No

[ ] [ ]

8. Are you satisfied with the redemption facilities provided by RELIANCE MONEY?

Yes No

[ ] [ ]

9. Are you satisfied with portfolio management managed by RELIANCE MONEY?

Yes No

[ ] [ ]

10.Which value added service you are using?

ATM [ ] Ecs [ ]

Online tranction Direct investment

[ ] [ ]

11.Are you satisfied with value added services offered by RELIANCE MONEY?

Yes No of 1-10

[ ] [ ]

12.Grade the customer service of RELIANCE with regards to Mutual Funds on a scale

(Where 1 will represent the best monitoring of fund, while 10 would reflect the poor monitoring of fund)

99

1

2

3

4

5

6

7

8

9

10

13.What is your opinion on RELIANCE Mutual Funds overall performance?

Excellent Good Better Bad

[ ] [ ] [ ] [ ]

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

E.g. Customer service Monitoring of fund Agents training Others

THANK YOU

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REFERENCES
1. FEFSI statistics (Fe´de´ration Europe´enes des Fonds et Socie´te´s D’Investissement, the European umbrella organisation of the investment fund industry), available at http://www.fefsi.org. 2. Wilcox, R. (2001) ‘Advertising mutual fund returns’, Journal of Public Policy and Marketing, Vol. 20, pp. 133– 137. 3. Jain, P. and Wu, J.S. (2000) ‘Truth in mutual fund advertising: Evidence on future performance and fund flows’, Journal of Finance, Vol. 55, pp. 937-958. 4. Sirri, E. and Tufano, P. (1998) ‘Costly search and mutual fund flows’, Journal of Finance, Vol. 53, pp. 1589–1622. 5. Advertising in the mutual fund business: The role of judgmental heuristics in private investors’ evaluation of risk and return 8th August, 2002 Jenny Jordan Klaus P. Kaas 6. MUTUAL FUNDS IN INDIA - PERSPECTIVES AND STRATEGIES Edition 2007 Published by ICFAI BUSINESS SCHOOL :- Arindam Banerjee
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BIBLIOGRAPHY
BOOKS/MAGAZINES REFFERED:

STUDY GUIDE- PRINCILES & PRACTICES OF LIFE / GENERALINSURANCE, by AIMA. Books published by INSURANCE INSTITUTE OF INDIA LIFE-INSURANCE, by Mc GILL INSURANCEWATCH. MONEYOUTLOOK

REFERENCES Websites: • • • www.reliancemutualfunds.com www.amfiindia.com www.mutualfundsindia.com
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• • • • • •

www.mutualfundsindia.com www.ask.com www.faq.com www.bseindia.com www.amfiindia.com/mutual funds/nav/about funds/open ended schemes.com www.investopedia/aboutus/html

GLOSSARY
Advisor Your financial consultant who gives professional advice on the fund's investments and to supervise the management of its assets. Amortization A method of equated monthly payments over the life of a loan. Payments usually are paid monthly but can be paid annually, quarterly, or on any other schedule. In the early part of a loan, repayment of interest is higher than that of principal. This relationship is reversed at the end of the loan. Appreciation When an investment increases in value, it appreciates. For example, a equity share whose price goes from Rs. 20/- to Rs. 25/- has appreciated by Rs. 5/-. Arbitrage

103

The practice of buying and selling an interlaced stock on different exchanges in order to profit from minute differences in price between the two markets. Asset Property and resources, such as cash and investments, comprise a person's assets; i.e., anything that has value and can be traded. Examples include stocks, bonds, real estate, bank accounts, and jeweler. Asset Allocation When you divide your money among various types of investments, such as stocks, bonds, and short-term investments (also known as "instruments"), you are allocating your assets. The way in which your money is divided is called your asset allocation. Annualized Return This is the hypothetical rate of return that, if the fund achieved it over a year's time, would produce the same cumulative total return if the fund performed consistently over the entire period. A total return is expressed in a percentage and tells you how much money you have earned or lost on an investment over time, assuming that all dividends and capital gains are reinvested. Balanced Fund A mutual fund that maintains a balanced portfolio, generally 40% bonds and 60% equity. Barter The exchange of goods and services for other goods and services without the use of money. Bid or Sell Price The price at which a mutual fund's shares are redeemed (bought back) by the fund. The bid or redemption price means the current net asset value per share, less any redemption fee or backend load. Blue Chip

104

A share in a large, safe, prestigious company, of the highest class among stock market investments. A blue-chip company would be called thus by being well-known, having a large paid-up capital, a good track record of dividend payments and skilled management. Capital This is the amount of money you have invested. When your investing objective is capital preservation, your priority is trying not to lose any money. When your investing objective is capital growth, your priority is trying to make your initial investment grow in value. Capital Gain Profit from a sale of an investment constitutes a capital gain. For example, if you bought a share of stock for Rs. 5/- and later sold it for Rs. 7/-, you would have a capital gain of Rs. 2/-. Capital Gains Distributions Payments (usually annually) to mutual fund shareholders of gains realized on the sale of portfolio securities.

Capital Growth A rise in market value of a mutual fund's securities, reflected in its NAV per share. This is a specific long-term objective of many mutual funds. Closed-ended Mutual Fund A mutual fund that offers a limited number of shares. They are traded in the securities markets. Price is determined by supply and demand. Unlike open-ended mutual funds, closed-ended funds do not redeem their shares. Derivative An investment contract based on an underlying investment called an "instrument." The most common type of derivative is an option contract, which involves the right to buy or sell the underlying instrument at an agreed price. Futures contracts are also derivatives. Diversification

105

The policy of spreading investments among a range of different securities to reduce the risks inherent in investing. Dividend When companies pay part of their profits to shareholders, those profits are called dividends. A mutual fund's dividend is money paid to shareholders from investment income the fund has earned. The amount of each share's dividend depends on how well the company does. Endorsement Assigning or transferring a lien to another person is accomplished through the use of an endorsement. The words "PAY TO THE ORDER OF" and then the name of the person to whom the lien is being assigned to, is written. If there is not enough space on the original note to write an endorsement, it is written on a separate piece of paper that is permanently affixed to the original note. This is called an along.

Face Value The face value is the term used to describe the value of a bond in terms of what the company which issued the bond will actually repay when the loan matures. It's sometimes described as nominal or par value. Growth Fund A mutual fund whose primary investment objective is long-term growth of capital. It invests principally in common stocks with significant growth potential. Income Fund A mutual fund that primarily seeks current income rather than growth of capital. It will tend to invest in stocks and bonds that normally pay high dividends and interest. Index Fund

106

A mutual fund that seeks to mirror general stock-market performance by matching its portfolio to a broad-based index (e.g. BSE Sensex). Load A sales charge or commission assessed by certain mutual funds ("load funds") to cover their selling costs. Net Asset Value Also known as NAV, this is the unit price (or rupee value) of one unit of a mutual fund. NAV is calculated at the end of every business day. It is calculated by adding up the value of all the securities and cash in the mutual fund's portfolio (its assets), subtracting the fund's liabilities, and dividing that number by the number of units that the fund has issued. It does not include a sales charge. The NAV increases (or decreases) when the value of the mutual fund's holdings increase (or decrease). Redeemable Preferred shares or bonds that give the issuing corporation an option to repurchase securities at a stated price. These are also known as callable securities.

Redemption Fee A fee charged by a limited number of funds for redeeming, or buying back, fund units. Redemption Price The price at which a mutual fund's units are redeemed (bought back) by the fund. The redemption price is usually equal to the current NAV per unit. Reinvestment Date The date on which a share's dividend and/or capital gains will be reinvested (if requested) in additional fund shares. Rupee Cost Averaging (SIP) The technique of investing a fixed sum at regular intervals regardless of stock market movements. This reduces average share costs to the investor, who acquires more shares in
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periods of lower securities prices and fewer shares in periods of high prices. In this way, investment risk is spread over time. Sector Fund A fund that operates several specialized industries sectors portfolios under one umbrella. These sectors could be FMCG or Technology. Systematic Investment Plan Many mutual funds offer investment programs whereby unit holders can invest. The Unit holders of the scheme can benefit by investing specific Rupee amounts periodically, for a continuous period. The SIP allows the investors to invest a fixed amount of Rupees every month or quarter for purchasing additional units of the scheme at NAV based prices. Systematic Withdrawal Plans Many mutual funds offer withdrawal programs whereby unit holders receive payments from their investments. These payments are usually drawn from the fund's dividend income and capital gain distributions, if any, and from principal only when necessary.

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