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A PROJECT REPORT

ON
COMPARATIVE STUDY OF RELIANCE
MUTUAL FUND WITH OTHER
COMPETITIVE MUTUAL FUNDS

AT

BHOPAL (M.P.)

SUBMITTED BY

CHHAVI MISHRA
BBA-VI SEMESTER

2008-2009

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DECLARATION

I, hereby declare that the following documented Project


Report titled Comparative Study of Reliance
Mutual Funds with other Competitive Mutual
Funds. is an authentic work done by me based on
summer training/In Plant training in RELIANCE
MONEY from 1 MARCH 2008 to 31 MAY 2008. The
project was undertaken as a part of the course curriculum
of BBA full Time program, of Extol Institute of
Management, Bhopal

CHHAVI MISHRA

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ACKNOWLEDGEMENT

As per the requirement of my curriculum, I had to


prepare a project in Marketing.. This project work has
been made possible through the direct and indirect
cooperation of various persons, who inspired me at every
step of this work.

I sincerely thank RELIANCE MONEY for giving me an


opportunity to work and learn as a Trainee in their
concern. I am extremely grateful to Mr. CHETAN
NIGAM (Centre Manager), and all RELIANCE
MONEY members with all the respect for their constant
encouragement and guidance. And also to Mr. SAMEER
KHAN (Cluster Head) and Mr.GAURAV JOSHI (Equity
Advisor) to help me in getting the data.

Lastly, I thank my parents whose useful suggestions and


guidance helped me a lot in completing this project.

CHHAVI MISHRA

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Chapter No. Chapter Name Page No.

4
Introduction to mutual fund
Chapter I
Executive summary 6
What is mutual fund? 7-10
Schemes in mutual funds 11-14
Queries, benefits and disadvantages related 16-32
to mutual fund

Chapter II Company Profile 33


Reliance SIP and Process 38

Chapter III Research Methodology 44


Object of the study 45
Methodology used 45
Selection criteria 46
Period of study 46
Area of study 46

Chapter IV Data Analysis and Interpretation. 47


Explanation of Tools used and there significance 48-50
Mutual fund Performance-Comparative Analysis

Chapter V Observations and Findings. 51-59

Chapter VI Conclusion and Suggestions. 60-63

Chapter VII Bibliography. 64-65


66-67

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INTRODUCTION
TO
MUTUAL FUND

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EXECUTIVE SUMMARY:

The mutual fund today emerged as a very profitable sector for


the investor .As compared to shares the people can now get
better returns on there investment and the risk factor is also very
less as compared to investment in shares market. The project of
mutual fund is made to compare the 3 schemes i.e. Balance fund,
Debt fund (income fund) and Equity fund (tax plan) of the 3
different mutual fund companies viz.RELIANCE MUTUAL
FUNDS, PRUDENTIAL ICICI and UTI MUTUAL FUNDS.
The comparisons are made between the schemes through taking
the NAV (NET ASSETS VALUE), provided by these companies.
The ranking is done of these 3 schemes on the basis of there
Return on Investment and Coefficient of Variation which are
calculated by the standard formulas.
The Return on Investment (ROI) tells us that a
person can invest in which scheme as seeing the ROI of the any
companys mutual fund. The more will be the ROI of the mutual
fund the more will be the chances for getting the higher returns
as compared to other mutual fund.
The Coefficient of Variation (C.V.) tells that if the C.V. is higher
then the chances of risk returns are much higher as compared to
other mutual funds. Because as the C.V. will be more, the more
returns will people get in investing that particular mutual fund
scheme.

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INTRODUCTION

MUTUAL FUNDS

Different investment avenues are available to investors. Mutual funds


also offer good investment opportunities to the investors. Like all
investments, they also carry certain risks. The investors should
compare the risks and expected yields after adjustment of tax on
various instruments while taking investment decisions. The investors
may seek advice from experts and consultants including agents and
distributors of mutual funds schemes while making investment
decisions. With an objective to make the investors aware of
functioning of mutual funds, an attempt has been made to provide
information in question-answer format that may help the investors in
taking investment decisions.

What is a Mutual Fund?

Mutual fund is a mechanism for pooling the resources by issuing units


to the investors and investing funds in securities in accordance with
objectives as disclosed in offer document. Investments in securities
are spread across a wide cross-section of industries and sectors and
thus the risk is reduced. Diversification reduces the risk because all
stocks may not move in the same direction in the same proportion at
the same time. Mutual fund issues units to the investors in accordance
with quantum of money invested by them. Investors of mutual funds
are known as unit holders. The investors in proportion to their
investments share the profits or losses. The mutual funds normally

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come out with a number of schemes with different investment
objectives that are launched from time to time. A mutual fund is
required to be registered with Securities and Exchange Board of India
(SEBI), which regulates securities markets before it can collect funds
from the public.

Fig. I.1: Investment pattern of Mutual Fund industry.

What is the history of Mutual Funds in India and role of SEBI in


mutual funds industry?

Unit Trust of India was the first mutual fund set up in India in the year
1963. In early 1990s, Government allowed public sector banks and
institutions to set up mutual funds. In the year 1992, Securities and
exchange Board of India (SEBI) Act was passed. The objectives of
SEBI are - to protect the interest of investors in securities and to
promote the development of and to regulate the securities market. As

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far as mutual funds are concerned, SEBI formulates policies and
regulates the mutual funds to protect the interest of the investors.
SEBI notified regulations for the mutual funds in 1993. Thereafter,
mutual funds sponsored by private sector entities were allowed to
enter the capital market. The regulations were fully revised in 1996
and have been amended thereafter from time to time. SEBI has also
issued guidelines to the mutual funds from time to time to protect the
interests of investors. All mutual funds whether promoted by public
sector or private sector entities including those promoted by foreign
entities are governed by the same set of Regulations. There is no
distinction in regulatory requirements for these mutual funds and all
are subject to monitoring and inspections by SEBI. The risks
associated with the schemes launched by the mutual funds sponsored
by these entities are of similar type. It may be mentioned here that
Unit Trust of India (UTI) is not registered with SEBI as a mutual fund
(as on January 15, 2002).

How is a mutual fund set up?

A mutual fund is set up in the form of a trust, which has sponsor,


trustees, Asset Management Company (AMC) and custodian. The
trust is established by a sponsor or more than one sponsor who is like
promoter of a company. The trustees of the mutual fund hold its
property for the benefit of the unit holders. Asset Management
Company (AMC) approved by SEBI manages the funds by making
investments in various types of securities. Custodian, who is
registered with SEBI, holds the securities of various schemes of the
fund in its custody. The trustees are vested with the general power of
superintendence and direction over AMC. They monitor the

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performance and compliance of SEBI Regulations by the mutual fund.
SEBI Regulations require that at least two thirds of the directors of
trustee company or board of trustees must be independent i.e. they
should not be associated with the sponsors. Also, 50% of the directors
of AMC must be independent. All mutual funds are required to be
registered with SEBI before they launch any scheme. However, Unit
Trust of India (UTI) is not registered with SEBI (as on January 15,
2002).

1.1.2 STRUCTURE OF A MUTUAL FUND.

Fig. I.2: The structure of Mutual Fund industry.

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What is Net Asset Value (NAV) of a scheme?

Net Asset Value (NAV) denotes the performance of a particular


scheme of a mutual fund. Mutual funds invest the money collected
from the investors in securities markets. In simple words, Net Asset
Value is the market value of the securities held by the scheme. Since
market value of securities changes every day, NAV of a scheme also
varies on day-to-day basis. The NAV per unit is the market value of
securities of a scheme divided by the total number of units of the
scheme on any particular date. For example, if the market value of
securities of a mutual fund scheme is Rs 200 lakhs and the mutual
fund has issued 10 lakhs units of Rs. 10 each to the investors, then the
NAV per unit of the fund is Rs.20. NAV is required to be disclosed by
the mutual funds on a regular basis - daily or weekly - depending on
the type of scheme.
Calculation of NAV:

NAV/unit = Net value of assets


Number of outstanding on valuation
date

*Where,
Net asset value = Sum of the market value of securities
Add Liquid assets / cash held
Add Dividend /interest accrued
Less Amount due on unpaid assets
Less Expenses accrued but not paid

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What are the different types of mutual fund schemes?
Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme or


close-ended scheme depending on its maturity period

TYPES OF MUTUAL FUND SCHEMES .

Fig. I.3 : The Types of Mutual Fund Schemes.

Open-ended Fund/ Scheme

An open-ended fund or scheme is one that is available for subscription


and repurchase on a continuous basis. These schemes do not have a
fixed maturity period. Investors can conveniently buy and sell units at
Net Asset Value (NAV) related prices, which are declared on a daily
basis. The key feature of open-end schemes is liquidity.

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Close-ended Fund/ Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7


years. The fund is open for subscription only during a specified period
at the time of launch of the scheme. Investors can invest in the scheme
at the time of the initial public issue and thereafter they can buy or sell
the units of the scheme on the stock exchanges where the units are
listed. In order to provide an exit route to the investors, some close-
ended funds give an option of selling back the units to the mutual fund
through periodic repurchase at NAV related prices. SEBI Regulations
stipulate that at least one of the two exit routes is provided to the
investor i.e. either repurchase facility or through listing on stock
exchanges. These mutual funds schemes disclose NAV generally on
weekly basis.

Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or


balanced scheme considering its investment objective. Such schemes
may be open-ended or close-ended schemes as described earlier. Such
schemes may be classified mainly as follows:

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the


medium to long- term. Such schemes normally invest a major part of
their corpus in equities. Such funds have comparatively high risks.
These schemes provide different options to the investors like dividend
option, capital appreciation, etc. and the investors may choose an

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option depending on their preferences. The investors must indicate the
option in the application form. The mutual funds also allow the
investors to change the options at a later date. Growth schemes are
good for investors having a long-term outlook seeking appreciation
over a period of time.

Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to


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

Balanced Fund

The aim of balanced funds is to provide both growth and regular


income as such schemes invest both in equities and fixed income
securities in the proportion indicated in their offer documents. These
are appropriate for investors looking for moderate growth. They
generally invest 40-60% in equity and debt instruments. These funds
are also affected because of fluctuations in share prices in the stock

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markets. However, NAVs of such funds are likely to be less volatile
compared to pure equity funds.

Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy
liquidity, preservation of capital and moderate income. These schemes
invest exclusively in safer short-term instruments such as treasury
bills, certificates of deposit, commercial paper and inter-bank call
money, government securities, etc. Returns on these schemes fluctuate
much less compared to other funds. These funds are appropriate for
corporate and individual investors as a means to park their surplus
funds for short periods.

Gilt Fund

These funds invest exclusively in government securities. Government


securities have no default risk. NAVs of these schemes also fluctuate
due to change in interest rates and other economic factor as is the case
with income or debt oriented schemes.

Index Funds

Index Funds replicate the portfolio of a particular index such as the


BSE Sensitive index, S&P NSE 50 index (Nifty), etc these schemes
invest in the securities in the same weight age comprising of an index.
NAVs of such schemes would rise or fall in accordance with the rise
or fall in the index, though not exactly by the same percentage due to
some factors known as "tracking error" in technical terms. Necessary

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disclosures in this regard are made in the offer document of the
mutual fund scheme. There are also exchange traded index funds
launched by the mutual funds, which are traded on the stock
exchanges.

What are sector specific funds/schemes?

These are the funds/schemes, which invest in the securities of only


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

What is Tax Saving Schemes?

These schemes offer tax rebates to the investors under specific


provisions of the Income Tax Act, 1961 as the Government offers tax
incentives for investment in specified avenues. e.g. Equity Linked
Savings Schemes (ELSS). Pension schemes launched by the mutual
funds also offer tax benefits. These schemes are growth oriented and
invest pre-dominantly in equities. Their growth opportunities and
risks associated are like any equity-oriented scheme.

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What is a Load or no-load Fund?

A Load Fund is one that charges a percentage of NAV for entry or


exit. That is, each time one buys or sells units in the fund, a charge
will be payable. This charge is used by the mutual fund for marketing
and distribution expenses. Suppose the NAV per unit is Rs.10. If the
entry as well as exit load charged is 1%, then the investors who buy
would be required to pay Rs.10.10 and those who offer their units for
repurchase to the mutual fund will get only Rs.9.90 per unit. The
investors should take the loads into consideration while making
investment as these affect their yields/returns. However, the investors
should also consider the performance track record and service
standards of the mutual fund which are more important. Efficient
funds may give higher returns in spite of loads. A no-load fund is one
that does not charge for entry or exit. It means the investors can enter
the fund/scheme at NAV and no additional charges are payable on
purchase or sale of units.

Can a mutual fund impose fresh load or increase the load beyond
the level mentioned in the offer documents?

Mutual funds cannot increase the load beyond the level mentioned in
the offer document. Any change in the load will be applicable only to
prospective investments and not to the original investments. In case of
imposition of fresh loads or increase in existing loads, the mutual
funds are required to amend their offer documents so that the new
investors are aware of loads at the time of investments.

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What is a sale or repurchase/redemption price?

The price or NAV a unit holder is charged while investing in an open-


ended scheme is called sales price. It may include sales load, if
applicable. Repurchase or redemption price is the price or NAV at
which an open-ended scheme purchases or redeems its units from the
unit holders. It may include exit load, if applicable.

What is an assured return scheme?

Assured return schemes are those schemes that assure a specific return
to the unit holders irrespective of performance of the scheme. A
scheme cannot promise returns unless such returns are fully
guaranteed by the sponsor or AMC and this is required to be disclosed
in the offer document. Investors should carefully read the offer
document whether return is assured for the entire period of the scheme
or only for a certain period. Some schemes assure returns one year at
a time and they review and change it at the beginning of the next year.

Can a mutual fund change the asset allocation while deploying


funds of investors?

Considering the market trends, any prudent fund managers can change
the asset allocation i.e. he can invest higher or lower percentage of the
fund in equity or debt instruments compared to what is disclosed in
the offer document. It can be done on a short term basis on defensive
considerations i.e. to protect the NAV. Hence the fund managers are
allowed certain flexibility in altering the asset allocation considering
the interest of the investors. In case the mutual fund wants to change

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the asset allocation on a permanent basis, they are required to inform
the unit holders and giving them option to exit the scheme at
prevailing NAV without any load.

How to invest in a scheme of a mutual fund?

Mutual funds normally come out with an advertisement in newspapers


publishing the date of launch of the new schemes. Investors can also
contact the agents and distributors of mutual funds who are spread all
over the country for necessary information and application forms.
Forms can be deposited with mutual funds through the agents and
distributors who provide such services. Now a day, the post offices
and banks also distribute the units of mutual funds. However, the
investors may please note that the mutual funds schemes being
marketed by banks and post offices should not be taken as their own
schemes and they give no assurance of returns. The only role of banks
and post offices is to help in distribution of mutual funds schemes to
the investors. Investors should not be carried away by
commission/gifts given by agents/distributors for investing in a
particular scheme. On the other hand they must consider the track
record of the mutual fund and should take objective decisions.

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INVESTORS LIFE CYCLE AND PREFERENCES.

AGE
(IN YEARS) MAIN OBJECTIVES PORTFOLIO STRATEGY

20-29 Aggressive Growth Sow 50% - Growth Funds


the seeds, plan for housing 30% - Balanced Funds
and create a safety cushion 20% - Money Markets / Cash

30-39 Growth Save for housing, 45% - Growth Funds


childrens expenses (present 30% - Balanced Funds
and future education etc.) 05% - Blue Chip Stocks
and safety cushion 20% - Money Markets / Cash

40-49 Growth Childrens 40% - Growth Funds


expenses (present and future 30% - Balanced Funds
education etc.) and safety 10% - Blue Chip Stocks
cushion 20% - Money Markets / Cash
50-59 Retirement Save for 30% - Growth Funds
retirement and build on safety 40% - Balanced Funds
cushion 10% - Blue Chip Stocks
20% - Money Markets / Cash
60-69 Safety Preserve 10% - Balanced Funds
investments/ savings and opt 15% - Income Funds
for minimal growth 10% - Blue Chip Stocks
20% - Dividend Stocks
30% - Certificates of Deposits
(Shorter-term)
15% - Money Markets / Cash
70- Safety Preserve 30% - Income Funds

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investments/ savings 25% - Dividend Stocks
35% - Certificates of Deposits
(Shorter-term)
10% - Money Markets / Cash

Can non-resident Indians (NRIs) invest in mutual funds?

Yes, non-resident Indians can also invest in mutual funds. Necessary


details in this respect are given in the offer documents of the schemes.

How much should one invest in debt or equity oriented schemes?

An investor should take into account his risk taking capacity, age
factor, financial position, etc. As already mentioned, the schemes
invest in different type of securities as disclosed in the offer
documents and offer different returns and risks. Investors may also
consult financial experts before taking decisions. Agents and
distributors may also help in this regard.

BENEFITS OF MUTUAL FUND INVESTMENT

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The advantages of investing in a Mutual Fund are:

Professional Management
Diversification
Convenient Administration
Return Potential
Low Costs
Liquidity
Transparency
Flexibility
Choice of schemes
Tax benefits
Well regulated

FIG I.4: BENEFITS OF INVESTMENT IN MUTUAL FUNDS.

DISADVANTAGES:

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The management fees charged by the fund reduce the
return to investors.
No assured returns.
There is risk of fund manager not performing well.
Investors cant choose the securities they want to invest in.

TABLE 1.1: BANKS V/S MUTUAL FUNDS

BANKS MUTUAL FUNDS

Returns Low Better

Administrative High Low


exp.

Risk Low Moderate

Investment Less More


options

Network High penetration Low but improving

Liquidity At a cost Better

Quality of assets Not transparent Transparent

Interest Minimum balance between Everyday


calculation 10th. & 30th. Of every month

Guarantee Maximum Rs.1 lakhs on None


deposits

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COMPANY
PROFILE

BACKGROUND INFORMATION
OF RELIANCE CAPITAL

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Vision Statement

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

Mission Statement

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

Current status of the company:

Reliance Capital Ltd is a part of the Reliance - Anil 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.

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 Indias no.1 Mutual Fund. Reliance Life Insurance is Indias fastest
growing life insurance company and among the top 5 private sector insurers. Reliance General
Insurance is Indias fastest growing general insurance company and the top 3 private sector
insurers. Reliance Money which commenced commercial operations in April 2007 has over
300,000 customers and 4,300 outlets in more than 3,500 locations across India. Reliance
Consumer finance which commenced commercial operations in May 2007 has disbursed loans of
over Rs.3,000 crores within 6 months of operations.

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Reliance Capital has a Networth of Rs.5, 662 crores and total assets of Rs. 10,083 crores as of
September 30, 2007 and over 16,000 employees.

Chairman's Profile

(ANIL DHIRUBHAI AMBANI)

Regarded as one of the foremost corporate leaders of contemporary India, Shri Anil D Ambani,
48, is the chairman of all listed companies of the Reliance ADA Group, namely, Reliance
Communications, Reliance Capital, Reliance Energy and Reliance Natural Resources limited.

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), Indias largest private sector enterprise.

Anil D Ambani joined Reliance in 1983 as Co-Chief Executive Officer, and was centrally
involved in every aspect of the companys management over the next 22 years.

He is credited with having pioneered a number of path-breaking


financial innovations in the Indian capital markets. He spearheaded
the countrys first forays into the overseas capital markets with
international public offerings of global depositary receipts,
convertibles and bonds. Starting in 1991, he directed Reliance
Industries in its efforts to raise over US$ 2 billion. He also steered the
100-year Yankee bond issue for the company in January 1997

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Reliance Capital

Reliance Capital is a part of the Reliance Anil Dhirubhai Ambani Group.

We are one of Indias leading and fastest growing private sector financial services companies. It
ranks among the top three private sector financial companies and banking groups in terms of net
worth.

Our interests are in asset management and mutual funds, life and general insurance, private equity
and proprietary investments, stock broking and other activities in financial services.

Reliance Money

Reliance Money is a financial transaction platform offering customers a wide range of asset
classes to diversify their portfolio. Through Reliance Money, customers would be in a position to
transact in Equity, Derivatives, Commodities, Forex, IPOs, Mutual Funds and Insurance products.

The company is in the process of launching a comprehensive financial portal enabling customers
to carry out on-line trading and investment activities in a secured, cost-effective and convenient
manner.

To enable wider participation, Reliance Money also offers the convenience of off-line transacting
through its branches, call & trade facility, franchisee network and other technically advanced,
user-friendly methods.

Reliance Mutual Fund

Reliance Mutual Fund is amongst the largest private sector mutual funds in India. It constantly
endeavors to launch innovative products and customer service initiatives to increase value to
investors.

We offer a wide spectrum of products to meet varying investment requirements. It has a presence
in over eighty cities across the country with an impressive investor base of over two million.

Our schemes are managed by Reliance Capital Asset Management Ltd., a wholly owned
subsidiary of Reliance Capital Limited.

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Reliance Mutual Fund (RMF), a part of the Reliance - Anil Dhirubhai Ambani Group, is India's
leading Mutual Fund, with Assets Under Management of Rs. 77,765 crores (AUM as on 30th
November 2007), and an investor base of over 4.2 million. Reliance Mutual Fund is one of the
fastest growing mutual funds in the country.

Reliance Mutual Fund offers investors a well rounded portfolio of products to meet varying
investor requirements. Reliance Mutual Fund has a presence in 300 cities across the country and
constantly endeavors to launch innovative products and customer service initiatives to increase
value to investors. Reliance Mutual Fund schemes are managed by Reliance Capital Asset
Management Ltd., a wholly owned subsidiary of Reliance Capital Ltd.

GROWTH IN ASSET UNDER MANAGEMENT

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New Fund Offer (NFO)
NFO (New Fund Offer) is offered by the AMC for a specified
period. The NFO Schemes are made live on the portal for the period
specified for the NFO.
After the NFO closes the registrar processes the transactions & a
folio is generated for the Client.
The whole process takes a time period of 1 month. After the
allotment the
Investors can view the holdings on the portal.
If the scheme is open ended, after listing, it is made available for
general public for investment if not applied in NFO period but if the
scheme is close ended, clients can not purchase after NFO period is
over.

SIP at Reliance Money

SIP means systematic investment plan. Investor can allocate a fixed


amount every month which would ensure regular savings.
The SIP is triggered on monthly basis or Quarterly basis. SIP is for
a fixed period as selected by the investor.
SIP gets triggered every month on a given date selected by the
Investor. The ledger would be debited on the SIP date. If the funds
are not available, the SIP would get cancelled for the given month.
The amount would be debited from the Ledger every month. Please
advice clients to keep sufficient a day prior to the trigger date of
SIP.
If the funds are not available SIP would be rejected for that
particular month.
If the SIP gets executed investor will view the executed transaction
after T+1 on the portal.
The SIP transactions would appear on SIP Details page.

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The SIP order can be cancelled before the trigger date. The
investor can place a
Redemption order in SIP & the funds would be credited by the
AMC in customers
Bank account directly. (Direct Credit)

Brief Overview of Process at Reliance Money -

The investor places an order on the portal. The funds are debited
from the Ledger.
The status of the transaction would be PROCESSING WITH
AMC & when the transaction is processed & confirmation feed is
uploaded the status would change to Executed.
Investor can invest in Growth Schemes or Dividend Schemes. In
Dividend Scheme there are two options Dividend Reinvestment &
Dividend Payout.
The customer can select Dividend Reinvestment by clicking the
Dividend Reinvestment BOX. He can select Dividend Payout by
UN checking the BOX.
When the investor places a purchase transaction then the
transaction is sent for processing to the registrar & the
confirmation is received on the next day along with the FOLIO
number. Folio number is unique for an individual. After the folio is
generated the investor can place additional Purchase order after the
folio is available on the portal.

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Reliance Money Operational Procedure

1. At present we are offering following AMCs on line

Sr AMC Name RTA


No
1 Reliance Mutual Fund Karvy
2 Deutsche Mutual Fund Karvy
3 JM Financial Mutual Karvy
4 Mirae Asset Management Karvy
5 Morgan Stanley Mutual Fund Karvy
6 Principal Mutual Fund Karvy
7 Taurus Mutual Fund Karvy
8 UTI Mutual Fund Karvy
9 AIG Mutual Fund CAMS
10 DBS Chola Mutual Fund CAMS
11 Fidelity Mutual Fund CAMS
12 HSBC Mutual Fund CAMS
13 ING Vysya Mutual Fund CAMS
14 ICICI Prudential Mutual Fund CAMS
15 Lotus Mutual Fund CAMS
16 SBI Mutual Fund CAMS
17 Standard Chartered Mutual Fund CAMS
18 Sunderam Mutual Fund CAMS
19 TATA Mutual Fund CAMS
20 LIC Mutual Fund Karvy

1. MF statement process
a. Create a query
b. Assign it to Reliance Help Desk user 13
c. Statement (for Karvy)/ Standard Draft (CAMS) will be
attached and sent back to the user.
d. Users will close the query.

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2. Investors can place PURCHASE orders in Liquid & Non liquid
Schemes the payout cycle is as follows
Equity Schemes: T+3
Liquid Schemes: T+1
Debt Schemes: T+1 or T+2
The investor will get the redemption credit on the basis of above
mentioned trading days. The redemption amount is credited to
investors Bank account.
3. The investor can apply in the schemes provided on the portal
according to the Minimum amount mentioned for that scheme.
4. When the investor places a Purchase order amount is debited from
Ledger. But the redemption proceeds are credited to investors bank
account.
5. Investor can place the redemption transaction for all units or for
partial units. He can even place the redemption order by mentioning
the amount.
6. In fixed Series schemes the investors can not place redemption order
till the lock in
Period is over. The same goes for TAX Saving schemes.
7. AMC applies an Entry load and/or Exit load on the schemes offered
as applicable. The NAV applicable would be after
adding the load.

KYC

Any investors investing Rs.50, 000 or more will have to comply


with KYC effective from March 3, 2008.
KYC formalities are required to be completed for all Unit Holders,
including Guardians and Power of Attorney holders, for any

33
investment (whether new or additional purchase) of Rs. 50,000 or
more in mutual funds.
Client can not complete the KYC procedure online. Client will have
to fill up physical form and client will have to submit duly filled
KYC form at the POS (Point of Services) available on AMFIs site.
The procedure is offered free of cost.
Investors have to provide the relevant documents and information
ONLY ONCE for complying with KYC.
Form, Documents and Information to be provided by investors and
the entire procedure is given on Mutual Fund page.
Any subsequent changes in address or other details could be
intimated to any of the POS on AMFIs site with relevant
documentary evidence and the same will get updated in all the
mutual funds where the investor has invested.
Please note that incase of investments thru POA, the investor as well
as POA have to complete the KYC

Transfer In Process
We have started TRANSFER IN process in Mutual Funds where
clients can transfer units bought through another broker to Reliance
Money so that client can keep all his MF investments under one
roof.
Please find enclosed the following documents:
1. 'Transfer In' form- To be filled by the client.
2. NOC format- To be filled by the broker and printed on the
brokers letter head.
The investor has to make a fresh purchase in the scheme on our
portal in which he is requesting a TRANSFER IN.
The registrar would be able to change the broker code only if the
investor has units under our ARN-29889.

34
The folio number & units of NON Reliance Money holdings would
get converted in to the folio number of Reliance Money unit holding
(Existing Folio) on submitting Transfer In Form.
The investor also needs to provide a NOC from the previous broker
from where he wants to transfer the units. (Letter head of the Broker
& duly signed by him)

Enclosed
Transfer In Form
NOC format

MF query format
1. Request (MF statement / purchase of additional units / redemption
queries)
2. Client code
3. AMC name.
4. Scheme name.
5. Folio no.
6. Ledger ( if required)

35
RESEARCH
METHODOLOGY

36
METHODOLOGY

OBJECTIVES OF THE STUDY


Ranking of Mutual fund schemes so that we come to know that
which schemes generate good returns with the help of ROI and
C.V.

METHODOLOGY USED
Analysis of mutual Funds in view of the objective of the study a
detailed review study was done to analyze the mutual fund. The Data
is collected is purely secondary from various sources qualitatively
known in the sector. Finding of the study are based on judgment
theory on literature available. I have used return on investment and
coefficient of variation method to analyze various scheme of mutual
fund. The ranking is done on the basis of the returns and variations
come of all the 3 schemes.
The 3 schemes of the mutual funds are as follows:
1. Balance fund
2. Equity fund (tax plan) and
3. Debt fund (income fund)
These 3 schemes are compared between the 3 companys
mutual fund i.e. RELIANCE MUTUAL FUND,PRUDENTIAL ICICI
MUTUAL FUND, and UTI MUTUAL FUND.
The procedure for ranking between the 3 mutual funds is
based on ROI and C.V., the return on investment and coefficient of
variation of companys mutual fund is higher is given rank 1 and so
on. As we know that the return on investment is higher then the
person is going to invest in that scheme due to more returns. The
calculation of coefficient of variation is done to know the risk factor

37
of a particular mutual funds scheme. The more will be the risk the
more will be the possible returns for a person who had invested in that
scheme.
SELECTION CRITERIA:
Only open-ended schemes have been considered for running purposes.
Among growth and divided schemes only growth schemes have been
taken so as to avoid repetition. Portfolio remains identical for the
option.

PERIOD OF THE STUDY:


To complete return, the cut off date for NAV has been taken from 31
Dec01 to 31 Dec05. i.e. 5 years NAV is taken into consideration.

AREA OF THE STUDY:


The area of the study covers the top Performing Mutual Funds. They
are as follows:
1. RELIANCE MUTUAL FUND.
2. PRUDENTIAL ICICI MUTUAL FUND.
3. UTI MUTUAL FUND.

38
DATA ANALYSIS
&
INTERPRETATION

39
EXPLANATION OF FORMULAS AND THEIR
SIGNIFICANCE IN ANALYSING THE DATA:

The following formulas are used for making the comparison of


various mutual fund schemes. These formulas help in making the
difference between actual and theoretical workings in mutual funds.
These are as follows:
1. MEAN
2. STANDARD DEVIATION
3. COEFFICIENT OF VARIATION
4. RETURN ON INVESTMENT
5. AVERAGE YEARLY RETURN

1. MEAN :
The arithmetic mean or simply mean is the quantity
obtained by dividing the sum of the values of the items in a
variable by their number. According to Connor, the arithmetic
average (arithmetic mean) is the sum of the values of the items
concerned, divided by their number. mean is better than other
averages, specially in economic and social studies where direct
quantitative measurements are possible.

Arithmetic mean = x / n
Where:
X = value of different units,
= summation or total
n = total number of items.

40
2. STANDARD DEVIATION :
The standard deviation is a special form of average
deviation from the mean. Standard deviation is the square root of the
sum of the squares of the individual deviations from the mean divided
by the number of items. In other words, the standard deviations the
root-mean square of the deviations from the arithmetic mean.
= ( d2 / n )
Where:
= denotes standard deviation.
n= number of items.
d2= sum of the squares of deviations of individual items from
the arithmetic mean.

3. COEFFICIENT OF VARIATION :
According to Karl Pearson, who was first suggested its
use, coefficient of variation is the percentage variation in the mean,
the standard deviation being treated as the variation in the mean,
symbolically,

Coefficient of variation (C.V.) = * 100 / a


Where
= standard deviation.
a = mean.

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4. RETURN ON INVESTMENT :
The return on investment on investment method is also
known as the Average Rate of Return Method (ARR) of evaluating
investments proposals is also known as Accounting Rate of Return
Method. This method is based on accounting income instead of cash
inflows. It attempts to measure the rate of return on investment on the
basis of accounting information contained in financial statements.
Since there are number of ways for calculating the ARR, there is no
unanimity regarding the rate of return. The rate of return can be
calculated on the basis of (1) income before depreciation and taxes.
(2) Income after taxes but including depreciation, and (3) income after
depreciation and after taxes. Accordingly, the rate of return will also
differ on account of the usage of original investment or average
investment figures. Thus, this method provides different rates of
returns.
Formulas for calculating ROI are as follows:
(i) Annual Average Net Income After Taxes * 100 / Original
Investment
(ii) Annual Average Net Income After Taxes * 100 /
Average investment of the life of the project.

(iii) Thus, average investment:


Original investment scrap value / 2 + additional net working capital
+ scrap value.

42
5. AVERAGE YEARLY RETURN :
This is the most appropriate method of rate of
return on investment. Under this method, average profit after
depreciation and taxes is divided by the average amount of
investment; thus: the average yearly return for any organization is
calculated to know what amount of there profit is going to get the
shareholder. So by knowing the average yearly return a person can
know in which organization he should invest so that he could get
maximum returns on his investment.
Average Return on Average Investment =
Average Annual Profit * 100 / Average
Investment

RELIANCE BALANCE FUND

43
DATE NAV (In Rs.) Increase / decrease in
NAV Value
31-March-04 8.65 -
31-March-05 9.79 1.14
31-March-06 16.54 6.75
31-March-07 19.3 2.76
31-March-08 26.77 7.47

Mean 16.21
Standard Deviation 6.6263
Coefficient of Variation 40.88%
Return On Investment 209.48%
Average Yearly Return 41.90

ICICI PRUDENTIAL BALANCE FUND

DATE NAV (In Rs.) Increase / decrease in

44
NAV Value
31-March-04 9.43 -
31-March-05 10.81 1.38
31-March-06 15.85 5.04
31-March-07 18.17 2.32
31-March-08 18.27 .10

Mean 14.51
Standard Deviation 3.7101
Coefficient of Variation 25.569%
Return On Investment 93.74%
Average Yearly Return 18.75

UTI BALANCE FUND

DATE NAV (In Rs.) Increase / decrease in


NAV Value
31-March-04 13 -
31-March-05 13.48 0.48
31-March-06 13.94 0.46
31-March-07 17.03 3.09
31-March-08 17.56 0.53

45
Mean 15
Standard Deviation 1.9031
Coefficient of Variation 12.687%
Return On Investment 35.08%
Average Yearly Return 7.02

46
RELIANCE DEBT FUND
(INCOME FUND)

DATE NAV (In Rs.) Increase / decrease in


NAV Value
31-Dec-01 10 -.
31-Dec-02 11 1.0
31-Dec-03 13.54 2.54
31-Dec-04 14.75 1.03
31-Dec-05 15.55 0.8

Mean 12.968
Standard Deviation 2.1378
Coefficient of Variation 16.48%
Return On Investment 55.5%
Average Yearly Return 11.1

ICICI PRUDENTIAL DEBT FUND


(INCOME FUND)

DATE NAV (In Rs.) Increase / decrease in

47
NAV Value
31-Dec-01 10.41 -
31-Dec-02 10.88 .47
31-Dec-03 10.74 -.014
31-Dec-04 10.24 -.50
31-Dec-05 10.13 -.11

Mean 10.48
Standard Deviation 0.2873
Coefficient of Variation 2.741%
Return On Investment -2.69%
Average Yearly Return -0.54

UTI DEBT
(INCOME FUND)

DATE NAV (In Rs.) Increase / decrease in


NAV Value
31-Dec-01 10.10 -
31-Dec-02 10.25 0.15
31-Dec-03 11.14 0.89
31-Dec-04 11.04 -.10
31-Dec-05 10.96 -0.08

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Mean 10.70
Standard Deviation 0.43342
Coefficient of Variation 4.501%
Return On Investment 8.51%
Average Yearly Return 1.70

RELIANCE EQUITY FUND


(TAX PLAN)

DATE NAV (In Rs.) Increase / decrease in


NAV Value
31-Dec-01 15.69 -
31-Dec-02 21.38 5.69
31-Dec-03 27.07 5.69
31-Dec-04 32.76 5.69
31-Dec-05 38.45 5.69

Mean 27.07
Standard Deviation 8.0469
Coefficient of Variation 29.73%

49
Return On Investment 145.63%
Average Yearly Return 29.13

ICICI PRUDENTIAL EQUITY FUND


(TAX PLAN)

DATE NAV (In Rs.) Increase / decrease in


NAV Value
31-Dec-01 10.15 -
31-Dec-02 12.32 2.17
31-Dec-03 26.48 14.16
31-Dec-04 32.67 6.19
31-Dec-05 43.06 10.39

Mean 24.94
Standard Deviation 12.3973
Coefficient of Variation 49.711%
Return On Investment 324.24%
Average Yearly Return 64.85

50
UTI EQUITY
(TAX SAVING)

DATE NAV (In Rs.) Increase / decrease in


NAV Value
31-Dec-01 13.15 -
31-Dec-02 16.30 3.15
31-Dec-03 19.45 3.15
31-Dec-04 22.60 3.15
31-Dec-05 25.75 3.15

Mean 19.45
Standard Deviation 4.4548
Coefficient of Variation 22.90%
Return On Investment 95.82%
Average Yearly Return 19.63

51
OBSERVATIONS
&

FINDINGS

52
OBSERVATIONS & FINDING
FOR BALANCE FUND SCHEMES BETWEEN THE THREE MUTUAL
FUNDS
Scheme Mean Standard Coefficient Return On Ranking
Deviation of Investment
Variation
RELIANCE 14.5 13.7101 25.569% 93.74% 2
BALANCE FUND
PRU ICICI FUND 16.21 6.6263 40.88% 209.48% 1

UTI BALANCE 15 1.9031 12.687% 35.08% 3


FUND

*THE RANKING IS DONE ON THE BASIS OF RETURN ON


INVESTMENT. HIGHER THE RETURNS, MORE WILL BE THE
PROFIT TO THE INVESTORS.

OBSERVATIONS & FINDING

53
FOR DEBT FUND (INCOME FUND) SCHEMES BETWEEN
THE THREE MUTUAL FUNDS

Scheme Mean Standard Coefficient Return On Ranking


Deviation of Investment
Variation
RELIANCE 12.968 2.1378 16.48% 55.5% 1
DEBT FUND
PRU ICICI DEBT 10.48 0.2873 2.747% -2.69% 3
FUND
UTI DEBT FUND 10.70 0.43342 4.501% 8.51% 2

*THE RANKING IS DONE ON THE BASIS OF RETURN ON


INVESTMENT. HIGHER THE RETURNS, MORE WILL BE THE
PROFIT TO THE INVESTORS

OBSERVATIONS & FINDING

54
FOR EQUITY (TAX PLAN) FUND SCHEMES BETWEEN THE
THREE MUTUAL FUNDS

Scheme Mean Standard Coefficient Return On Ranking


Deviation of Investment
Variation
RELIANCE 27.07 8.0469 29.73% 145.63% 2
EQUITY FUND
PRU ICICI 24.94 12.3973 49.71% 324.24% 1
EQUITY FUND
UTI EQUITY 19.45 4.4548 22.90% 95.82% 3
FUND

*THE RANKING IS DONE ON THE BASIS OF RETURN ON


INVESTMENT. HIGHER THE RETURNS, MORE WILL BE THE
PROFIT TO THE INVESTORS

55
CONCLUSIONS
AND
SUGGESTIONS

56
CONCLUSIONS

Considering the return of investment and Coefficient of Variation


of the Balance Fund scheme of three mutual funds i.e.
PRU.ICICI MF, RELIANCE MF, and UTI MF. We found that
the best performance of mutual fund scheme is PRU ICICI
BALANCE FUND. This is best for investment to get higher
returns.

Considering the return of investment and Coefficient of Variation


of the Debt Fund (Income Plan) scheme of three mutual funds
i.e. PRU.ICICI MF, RELIANCE MF, and UTI MF. We found
that the best performance of mutual fund scheme is RELIANCE
DEBT FUND. This is best for investment to get higher returns.

Considering the return of investment and Coefficient of Variation


of the Equity Fund (Tax Plan) scheme of three mutual funds i.e.
PRU.ICICI MF, RELIANCE MF, and UTI MF. We found that
the best performance of mutual fund scheme is RELIANCE
EQUITY FUND. This is best for investment to get higher
returns

To conclude with, as an old saying goes, it is important to note


the past performance is no guaranty of future return, how
ever a good record is must. Hence it is imperative that investor
look at several other factors apart from past performance which
could have an impact on a fund performance.

57
BIBLIOGRAPHY

58
BIBLIOGRAPHY

1. www.Reliancemoney.com
2. www.icicidirect.com
3. www.utisecurities.com
4. www.pruiciciamc.com
5. www.amfiindia.com
6. www.mutualfundindia
7. www.moneymarket.com.
8. www.mutualsadvisor.com
9. www.moneycontrol.com

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