EXECUTIVE SUMMARY

The project work is pursued as a part of MBA( Finance) Curriculum at V.B.S.P.U

JAUNPUR. It is undertaken as training ship at Reliance securities Ltd Lucknow. The project

is undertaken expert supervision and guidance of Mr. Amit Mishra ,Mr. Abhishek Sharma (

Manager Reliance Securities)

The project is about the “Study of Financial Product of Reliance Securities with special

reference to Mutual Fund” At Reliance Securities initially the trainees were imparted process

and product knowledge. They gave sufficient time to know about the products and also about

sales and distribution channel. They had to work with the sales representative of the

Distributor and think of ways of improving the sales and distribution channel and

implementing them. The main aim was to increase knowledge about financial product & sales

and for this different ways were tried and implemented. They were provided with data base

and had to make cold calls from the data. Company activity was also one of the major sources

for generating business. Initially they even accompanied sales representatives to the clients

place. Main objective was to know the need of customer and how to fulfill that in the best

way.

The project dealt with various fields like.

1- Trading and Demat Account

2- Mutual Funds

3- Life Insurance

4- General Insurance

Thus it gave trainees the opportunity to learn about all the products and with the range

of products Reliance Securities offered it made the task bit easier as we could full fill

the need of customer in better way.

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 INTRODUCTION OF COMPANY

VISION

To build a global enterprise for all our stakeholders, and A great future for our

country, To give millions of young Indians the power to shape their destiny, The means to

realize their full potential…

MISSION

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

delighting our customers by providing endless financial products in all part of the country.

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 HISTORY OF COMPANY

Reliance Securities, a part of the Reliance Anil Dhirubhai Ambani Group is a comprehensive

financial services and solution provider, providing customers with access to Equity, Equity

and Commodity Derivatives, Portfolio Management Services, Wealth Management Services,

Mutual Funds, IPOs, Life and General Insurance and Gold Coins. Customers can also avail

Loans, Credit Card, Securities Transfer and Securities Changing services

Reliance Securities is promoted by 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 Ltd. has

interests in asset management, life and general insurance, private equity and proprietary

investments, stock broking and other financial services. Reliance Capital is a part of the

Reliance Anil Dhirubhai Ambani Group. Thus, Reliance Securities provides a comprehensive

platform, offering an investment avenue for a wide range of asset classes. Its endeavor is to

change the way India transacts in financial market and avails financial services. Reliance

Securities offers a single window facility, enabling you to access amongst others, Equities,

Equity and Commodity derivatives, Offshore Investments, IPO’s, Mutual Funds, Life

Insurance and General Insurance products, Securities Transfer, Securities Changing and

Credit Cards.

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 ORGANIZATIONAL STRUCTURE

National
Head

Zonal Zonal Zonal Zonal

Head Head Head Head

Region Region Region Region

al al al al
Head Head Head Head

Cluster Cluster
Head Head

Centre Centre
Manag Manag
er er

BDEs BDEs BDEs BDEs BDEs

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National Level : National Head

Zonal Level : Zonal Head

Regional Level : Regional head

Divisional level : Cluster Head

Branch Level : Center Manager

Area Level : Business Development Executives & Freelancers

Advantages offered by Reliance Securities over other companies:

 Cost Effective

 Convenience

 Security

 Single Window for Multiple Products

 3 in 1 Integrated Access

 Demat Account with Reliance Capital

 Other Services like research, live news from Reuter and Dow

Jones etc.

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 Growth of Company

The Reliance – Anil Dhirubhai Ambani Group (ADAG) is among India’s top three private

sector business houses on all major financial parameters, with a market capitalization of

Rs.325,000 crores (US$ 81 billion), net assets in excess of Rs.115,000 crores (US$ 29

billion), and net worth to the tune of Rs.55,000 crores (US$ 14 billion).

The largest broking house in India with 3.5 million customers and a wide network of over

10,000 outlets and 20,000 touch points in 5,165 cities/ towns. Reliance Securities endeavors

to change the way investors transact in financial markets and avails financial services. The

average daily volume on the stock exchanges is Rs. 3,000 crores, representing approximately

5% of the total stock exchange volume. 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.

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PRODUCT OFFERING

1. Trading Portal (with almost negligible brokerage)

 Equity Broking

 Commodity Broking

 Derivatives ( Futures & Options )

 Offshore Investments (Contract For Differences)

 D-Mat Account.

2. Financial Products

 Mutual Funds

 Life Insurance

o ULIP plan

o Term Plan

o Securities Back Plan

 General Insurance

o Vehicle/Motor Insurance

o Health Insurance

o House insurance

 IPO’s

 NFOs

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3. Value-Added Services

 Retirement Planning

 Financial Planning

 Tax Saving

 Children Future Planning

4. Credit Cards

5. Gold coins retailing

1- TRADING PORTAL

Introduction of Equity Broking

The Indian equity market has emerged as the third biggest after China and Hong Kong in the

emerging Asian region, with a market capitalization of nearly $600 billion, as per the Asian

Development Bank report of April 2009. For the first time in the history of Indian stock

market, in 2007 the market capitalization crossed the trillion dollar mark. Indian securities

market has one of the largest numbers of listings and trading takes place in about 2700

stocks. It is also one of the few markets with extensive dematerialization of shares and the

settlement cycle (T+2) is on par with global standards. The Indian equity market has emerged

as the third biggest after China and Hong Kong in the emerging Asian region, with a market

capitalization of nearly $600 billion, as per the Asian Development Bank report of April

2009. For the first time in the history of Indian stock market, in 2007 the market

capitalization crossed the trillion dollar mark. Indian securities market has one of the largest

numbers of listings and trading takes place in about 2700 stocks. It is also one of the few

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markets with extensive dematerialization of shares and the settlement cycle (T+2) is on par

with global standards.

Online trading refers to buying and selling of the shares / stocks / contracts / bonds with the

use of internet. In this shares are not issued in physical form rather they are transferred in the

dematerialized form in the Demat account directly.

About the Commodity Market.

Investment in India has traditionally meant property, gold and bank deposits. The more risk-

taking investors choose equity trading. But commodity trading forms a part of conventional

investment instruments. As a matter of fact, future trading in commodities was banned in

India in mid-1960 due to excessive speculation. In February 2003, the government revoked

the ban and threw open futures trading in 54 commodities in bullion and agriculture. It gave

the go-ahead to four exchanges (The National Commodity and

Derivative Exchange (NCDEX), The Multi Commodity Exchange of India

(MCX), The National Multi Commodity Exchange of India (NMCE) and The National Board

of Trading in Derivatives (NBOT)) to offer online trading in commodity Derivatives

products.

What makes commodity trading

attractive?

* A good low-risk portfolio diversifier

* A highly

liquid asset class, acting as a counterweight to stocks, bonds and real

estate.

* Less volatile, compared with, equities and bonds.

Investors can leverage their investments and multiply potential

earnings.

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* Better risk-adjusted returns.

* A good hedge against any

downturn in equities or bonds as there is little correlation with equity

and bond markets.

* High co-relation with changes in inflation.

* No

securities transaction tax levied.

DEMAT ACCOUNT:-

In India, a Demat account, the abbreviation for dematerialize account, is a type of banking

account which dematerializes paper based physical stock shares. The dematerialized account

is used to avoid holding physical shares: the shares are bought and sold through a broker.

This account is popular in India. The Securities and Exchange Board of India (SEBI)

mandates a Demat account for share trading and for opening a DEMAT account a Permanent

Account Number (PAN) is also mandatory.

What are the benefits of opening a Demat account?

Demat account has become a necessity for all categories of investors for the following

reasons/ benefits:

 SEBI has made it compulsory for trades in almost all scrip’s to be settled in Demat

mode. Although, trades up to 500 shares can be settled in physical form, physical

settlement is virtually not taking place for the apprehension of bad delivery on

account of mismatch of signatures, forgery of signatures fake certificates, etc.

 It is a safe and convenient way to hold securities compared to holding securities in

physical form..

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  No stamp duty is levied on transfer of securities held in Demat form.

 Instantaneous transfer of securities enhances liquidity.

 It eliminates delays, thefts, interceptions and subsequent misuse of certificates.

 Change of name, address, registration of power of attorney, deletion of deceased's

name, etc. - can be effected across companies by one single instruction to the DP.

 Each share is a market lot for the purpose of transactions – so no odd lot problem.

Any number of securities can be transferred/delivered with one delivery order. Therefore,

paperwork and signing of multiple transfer forms is done away with. It facilitates taking

advances against securities on low margin/low interest.

How Reliance Securities Scored Over Others?

1. Two Way Authentication: Reliance offers its customers with a token (an electronic

gadget) that generates a password, which are a third level of security in addition to the

customer log in and a password provided. The password generated by the token is valid only

for a period of 32 seconds. If the web page expires, for the fresh login, a new password

generated by the token has to be keyed in by the customer.

2. Lowest Brokerage: Reliance offers the lowest brokerage of 1 paisa which is very less with

respect to the other DPs in the market.

3. User friendly software: The portal offered is very easy to understand and use.

4. Forex and offshore investment: Reliance provides the offshore facility which no other

AMC is providing in the market.

5. Better research and news: Reliance offers news from the DOW JONES and REUTERS.

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Seeking to bring share trading closer to consumers just like ATMs, Reliance Capital's stock

brokerage arm Reliance Securities launched Internet trading services through web-enabled

retail kiosks.

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 2- Financial Products

MUTUAL FUND

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

financial goal. The Securities thus collected is then invested in capital market instruments

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

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

of units owned by them. Thus a Mutual Fund is the most suitable investment for the common

man as it offers an opportunity to invest in a diversified, professionally managed basket of

securities at a relatively low cost. The flow chart below describes broadly the working of a

mutual fund

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A Mutual Fund is a body corporate registered with the Securities and Exchange Board of

India (SEBI) that pools up the Securities from individual/corporate investors and invests the

same on behalf of the investors/unit holders, in Equity shares, Government securities,

Bonds, Call Securities Markets etc, and distributes the profits. In the other words, a Mutual

Fund allows investors to indirectly take a position in a basket of assets.

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 among a wide cross-section of industries and sectors

thus the risk is reduced. Diversification reduces the risk because all stocks may not move in

the same direction in the same proportion at same time. 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 come out with a number of schemes with different investment objectives

which are launched from time to time. A Mutual Fund is required to be registered with

Securities Exchange Board of India (SEBI) which regulates securities markets before it can

collect funds from the public.

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 INTRODUCTION OF MUTUAL FUND

Investment in share markets are influenced by the analysis & reasoning which help in

predicting the market to some extent. Over the past years a number of technical & theories

for analysis have evolved, these combined with modern technology guides the investor. The

big players in the market, like Foreign Institutional Investors, Mutual Funds, etc. have the

expertise for various analytical tools & make use of them. The small investors are not in a

position to benefit from the market the way Mutual Funds can do. Generally a small

investor’s investments are based on market sentiments, inside information, through

grapevine, tips & intuition. The small investors depend on brokers and brokerage house for

his investments. They can invest through the Mutual Funds who are more experienced and

expert in this field than a small investor himself.

In recent years a large number of players have entered into his market. The project has been

carried out to have an overview of Mutual Fund Industry and to understand investor’s

perception about Mutual Funds in the context of their trading preference, explore investor’s

risk perception & find out their preference over Top Mutual

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 ORGANISATION OF A MUTUAL FUND

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

The Mutual Funds are structured in two forms: Company form and Trust form.

 Company Form: These forms of mutual funds are more popular in US.

 Trust Form: In India, mutual funds are organized as Trusts. The Trust is either

managed by a Board of Trustees or by a Trustee Company. There must be at least 4

members in the Board of Trustees and at least 2/3 of the members of the board must

be independent. Trustee of one mutual fund cannot be a trustee of another mutual

fund.

Unit Trusts – Constituents:

A Mutual Fund is set up in the form of a Trust which has the following constituents:-

1. Fund Sponsor

2. Mutual Fund as Trust

3. Asset Management Company

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 4. Other Fund Constituents

4.1 Custodian and Depositors

4.2 Brokers

4.3 Transfer Agent

4.4 Distributors

FUND SPONSOR

What a promoter is to a company, a sponsor is to a mutual fund. The sponsor initiates the

idea to set up a mutual fund. It could be a financial services company, a bank or a financial

institution. It could be Indian or foreign. It could do it alone or through a joint venture. In

order to run a mutual fund in India, the sponsor has to obtain a license from SEBI. For this,

it has to satisfy certain conditions, such as on capital and profits, track record (at least five

years in financial services), default-free dealings and a general reputation for fairness. The

sponsor must have been profit making in at least 3 years of the above 5 years.

The Sponsor appoints the Trustees, Custodian and the AMC with the prior approval of

SEBI and in accordance with SEBI Regulations.

Like the company promoter, the sponsor takes big-picture decisions related to the mutual

fund, leaving Securities management and other such nitty-gritty to the other constituents,

whom it appoints. The sponsor should inspire confidence in you as a Securities manager

and, preferably, be profitable. Financial muscle, so long as it is complemented by good

fund management, helps, as Securities is then not an impediment for the mutual fund- it can

hire the best talent, invest in technology and continuously offer high service standards to

the investors.

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In the days of assured return schemes, sponsors also had to fulfill return promises made to

the unit holders. This sometimes meant meeting shortfalls from their own pockets, as the

government did for UTI. Now that assured return schemes are passed, such bailouts won’t

be required. All things considered, choose sponsors who are good Securities managers, who

have a reputation for fair business practices and who have deep pockets.

TRUST

The Mutual Fund is constituted as a Trust in accordance with the provisions of the Indian

Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration

Act, 1908. The Trust appoints the Trustees who are responsible to the investors of the fund.

TRUSTEES
Trustees are like internal regulators in a mutual fund, and their job is to protect the interests

of the unit holders. Trustees are appointed by the sponsors, and can be either individuals or

corporate bodies. In order to ensure they are impartial and fair, SEBI rules mandate that at

least two thirds of the trustees be independent, i.e., not have any association with the

sponsor. Trustees appoint the AMC, which subsequently, seeks their approval for the work

it does, and reports periodically to them on how the business being run. Trustees float and

market schemes, and secure necessary approvals. They check if the AMCs investments are

within defined limits and whether the fund’s assets are protected. Trustees can be held

accountable for financial irregularities in the mutual fund.

Rights of the Trustees:

 Trustees appoint the AMC in consultation with the sponsor and according to the SEBI

Regulations.

 All Mutual Fund Schemes floated by the AMC have to be approved by the Trustees.

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  Trustees can seek information from the AMC regarding the operations and

compliance of the mutual fund.

 Trustees can seek remedial actions from AMC, and in cases can dismiss the AMC.

 Trustees review and ensure that the net worth of the AMC is according to the

stipulated norms, every quarter.

Obligations of the Trustees:

 Trustees must ensure that the transactions of the mutual fund are in accordance with

the trust deed.

 Trustees must ensure that the AMC has systems and procedures in place.

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 Trustees must ensure due diligence on the part of AMC in the appointment of

constituents and business associates.

 Trustees must furnish to the SEBI, on half yearly basis a report on the activities of the

AMC.

 Trustees must ensure compliance with SEBI Regulations.

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 ASSET MANAGEMENT COMPANY (AMC)

An AMC is the legal entity formed by the sponsor to run a mutual fund. The AMC is

usually a private limited company in which the sponsors and their associates or joint

venture partners are the shareholders. The trustees sign an investment agreement with the

AMC, which spells out the functions of the AMC. It is the AMC that employs fund

managers and analysts, and other personnel. It is the AMC that handles all operational

matters of a mutual fund – from launching schemes to managing them to interacting with

investors.

The people in the AMC who should matter the most to you are those who take investment

decisions. There is the head of the fund house, generally referred to as the Chief Executive

Officer (CEO). Under him comes the Chief Investment Officer (CIO), who shapes the

fund’s investment philosophy, and fund managers, who manages its schemes. They are

assisted by a team of analysts, who track markets, sectors and companies.

Although these people are employed by the AMC, its you, the unit holders, who pays their

salaries, partly or wholly. Each scheme pays the AMC an annual ‘fund management fee’,

which is linked to the scheme size and results in a corresponding drop in your return. If a

scheme’s corpus is up to Rs.100 crores it pays 1.25% of its corpus a year; on over Rs.100

crores, the fee is 1% of the corpus. So, if a fund house has two schemes, with a corpus of

Rs.100 crores and Rs.200 crores respectively, the AMC will earn Rs.3.25 crore (1.25+2) as

fund management fee that year.

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If an AMCs expenses for the year exceed what it earns as fund management fee from its

schemes, the balance has to be met by the sponsor. Again, financial strength comes into

play: a cash-rich sponsor can easily pump in Securities to meet short falls, while a sponsor

with less financial clout might force the AMC to trim costs, which could well turn into an

exercise in cutting corners.

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Regulatory requirements for the AMC:

 Only SEBI registered AMC can be appointed as investment managers of mutual

funds.

 AMC must have a minimum net worth of Rs.10 crores at all times.

 An AMC cannot be an AMC or Trustee of another Mutual Fund.

 AMCs cannot indulge in any other business, other than that of asset management

 At least half of the members of the Board of an AMC have to be independent.

 The 4th schedule of SEBI Regulations spells out rights and obligations of both trustees

and AMCs.

Obligations of the AMC:

 Investments have to be according to the investment management agreement and SEBI

regulations.

 The actions of its employees and associates have to be as mandated by the trustees.

 AMCs have to submit detailed quarterly reports on the working and performance of

the mutual fund.

 AMCs have to make the necessary statutory disclosures on portfolio, NAV and price

to the investors.

Restrictions on the AMC:

 AMCs cannot launch a scheme without the prior approval of the trustees.

 AMCs have to provide full details of the investments by employees and Board

members in all cases where the investment exceeds Rs.1 lakh.

 AMCs cannot take up any activity that is in conflict with the activities of the mutual

fund.
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Conditions under which two AMCs can be merged:

SEBI Regulations require the following:

 SEBI and Trustees of both the funds must approve of the merger.

 Unit holders should be notified of the merger, and provided the option to exit at NAV

without load.

Conditions under which an AMC can be taken over:

SEBI approval is required for the change of ownership and unit holders have to be informed

of the takeover.

Scheme take over: If an existing mutual fund scheme is taken over by another AMC, it

is called as scheme take over. The two mutual funds continue to exist. Trustee and SEBI

approval and notification of the unit holders are required for scheme take over.

CUSTODIAN

A custodian handles the investment back office of a mutual fund. Its responsibilities include

receipt and delivery of securities, collection of income, and distribution of dividends and

segregation of assets between the schemes. It also track corporate actions like bonus issues,

right offers, offer for sale, buy back and open offers for acquisition. The sponsor of a

mutual fund cannot act as a custodian to the fund. This condition, formulated in the interest

of investors, ensures that the assets of a mutual fund are not in the hands of its sponsor. For

example, Deutsche Bank is a custodian, but it cannot service Deutsche Mutual Fund, its

mutual fund arm.

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 BROKERS

Role of Brokers in a Mutual Fund:

 They enable the investment managers to buy and sell securities.

 Brokers are the registered members of the stock exchange.

 They charge a commission for their services.

 In some cases, provide investment managers with research reports.

 Act as an important source of market information.

REGISTRAR OR TRANSFER AGENTS

Registrars, also known as the transfer agents, are responsible for the investor servicing

functions. This includes issuing and redeeming units, sending fact sheets and annual

reports. Some fund houses handle such functions in-house. Others outsource it to the

Registrars; Karvy and CAMS are the more popular ones. It doesn’t really matter which

model your mutual fund opt for, as longas it is prompt and efficient in servicing you. Most

mutual funds, in addition to registrars, also have investor service centers of their own in

some cities.s

Some of the investor – related services are:-

 Processing investor applications.

 Recording details of the investors.

 Sending information to the investors.

 Processing dividend payout.

 Incorporating changes in the investor information.

 Keeping investor information up to date.

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 DISTRIBUTORS

Role of Selling and Distribution Agents:

 Selling agents bring investor’s funds for a commission.

 Distributors appoint agents and other mechanisms to mobilize funds from the

investors.

 Banks and post offices also act as distributors.

 The commission received by the distributors is split into initial commission which is

paid on mobilization of funds and trail commission which is paid depending on the

time the investor stays with the fund.

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 HISTORY OF INDIAN MUTUAL FUNDS INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India,

at the initiative of the Government of India and Reserve Bank the. The history of mutual

funds in India can be broadly divided into four distinct phases.

First Phase – 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by

the Reserve Bank of India and functioned under the Regulatory and administrative control

of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial

Development Bank of India (IDBI) took over the regulatory and administrative control in

place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988

UTI had Rs.6,700 Crores of assets under management.

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

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector

banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of

India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987

followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),

Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund

(Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual

fund in December 1990. At the end of 1993, the mutual fund industry had assets under

management of Rs.47,004 Crores.

Third Phase – 1993-2003 (Entry of Private Sector Funds)

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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

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was

bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of

India with assets under management of Rs.29,835 crores as at the end of January 2003,

representing broadly, the assets of US 64 scheme, assured return and certain other schemes.

The Specified Undertaking of Unit Trust of India, functioning under an administrator and

under the rules framed by Government of India and does not come under the purview of the

Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is

registered with SEBI and functions under the Mutual Fund Regulations. With the

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bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 Crores of

assets under management and with the setting up of a UTI Mutual Fund, conforming to the

SEBI Mutual Fund Regulations, and with recent mergers taking place among different

private sector funds, the mutual fund industry has entered its current phase of consolidation

and growth. As at the end of September, 2004, there were 29 fundswhich manage assets of

Rs.153108 Crores under 421 schemes. The graph indicates the growth of assets over the

years.

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 Advantages of Mutual Fund

Professional Management

Mutual Funds provide the services of experienced and skilled professionals, backed by a

dedicated investment research team that analyses the performance and prospects of

companies and selects suitable investments to achieve the objectives of the scheme.

Diversification

Mutual Funds invest in a number of companies across a broad cross-section of industries

and sectors. This diversification reduces the risk because seldom do all stocks decline at the

same time and in the same proportion. You achieve this diversification through a Mutual

Fund with far less Securities than you can do on your own.

Convenient Administration

Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as

bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds

save your time and make investing easy and convenient.

Return Potential

Over a medium to long-term, Mutual Funds have the potential to provide a higher return as

they invest in a diversified basket of selected securities.

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Low Costs

Mutual Funds are a relatively less expensive way to invest compared to directly investing in

the capital markets because the benefits of scale in brokerage, custodial and other fees

translate into lower costs for investors.

Liquidity

In open-end schemes, the investor gets the Securities back promptly at net asset value

related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a

stock exchange at the prevailing market price or the investor can avail of the facility of

direct repurchase at NAV related prices by the Mutual Fund.

Transparency

Investors get regular information on the value of their investment in addition to disclosure

on the specific investments made by their scheme, the proportion invested in each class of

assets and the fund manager's investment strategy and outlook.

Flexibility

Through features such as regular investment plans, regular withdrawal plans and dividend

reinvestment plans, you can systematically invest or withdraw funds according to your

needs and convenience.

Affordability

Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual

fund because of its large corpus allows even a small investor to take the benefit of its

investment strategy.

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Choice of Schemes

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

Well Regulated

All Mutual Funds are registered with SEBI and they function within the provisions of strict

regulations designed to protect the interests of investors. The operations of Mutual Funds

are regularly monitored by SEBI.

No Entry Load

Entry load is the commission charged (1.25%) at the time of buying the fund to cover the

cost of selling, processing etc. but now SEBI has eliminated this entry load which will be

applicable from August 1, 2009

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 Disadvantages of Mutual Fund

Exit load

It is the commission or charged paid when an investor exits from a mutual fund, it is

imposed to discourage withdrawals. It takes 1% before 1 year and nill after 1 year.

No control over costs

The costs of the fund management process are deducted from the fund. This includes

marketing and initial costs deducted at the time of entry itself, called, ‘Load’. Then there is

the annual asset management fee and expenses, together called the expense ratio. Usually,

the former is not counted while measuring performance, while the latter is. A Standard 2

percent expense ratio means that, everything else being equal, the fund manager under

performs the benchmark index by an equal amount.

No tailor-made portfolio

The portfolio of a fund does not remain constant. The extent to which the portfolio changes

is a function of the style of the individual fund manager i.e. whether he is a buy and hold

type of manager or one who aggressively churns the fund. It is also depends on the

volatility of the fund size i.e. whether the fund constantly receives fresh subscriptions and

redemptions. Such portfolios changes have associated costs of brokerage, custody fees,

registration fees etc. that lowers the portfolio return commensurately.

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No Guarantee of return

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 Securities.

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 Securities 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 Securities 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.

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 TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis of its structure and its investment

objective.

By Structure:

Open Ended Fund :

As the name implies the size of the scheme (fund) is open – i.e. not specified or pre-

determined. Entry to the fund is always open, the investor who can subscribe at anytime.

Such fund stands ready to buy or sell its securities at anytime. The key feature of Open-

ended schemes is Liquidity. It implies that the capitalization of the fund is constantly

changing as investors sell or buy their shares. Further, the shares or units are normally not

traded on the stock exchange but are repurchased by the funds at announced rates. Open-

ended schemes have comparatively better liquidity despite the fact that these are not listed.

The reason is that investors can any time approach mutual fund for sale of such units. No

intermediaries are required. Moreover, the realizable amount is certain since repurchase is

at a price based on declared net asset value (NAV). The portfolio mix of such schemes has

to be investments, which are actively traded in the market. Otherwise it will not be possible

to calculate NAV. This is the reason that generally open-ended schemes are equity based.

In Open-ended schemes, the option of dividend reinvestment is available.

Close Ended Fund:

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

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

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

units of the scheme on the stock exchanges where they are listed. In order to provide an exit
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route to the investors, some close-ended funds give an option of selling back the units to the

Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations

stipulate that at least one of the two exit routes is provided to the investor.

Interval Scheme:

Interval Schemes combine the features of both open-ended and close-ended schemes. They

are open for sale or redemption during pre-determined intervals at NAV based prices.

By Investment Objective:

Growth/Equity Oriented Schemes:

The aim of growth funds is to provide capital appreciation over the medium to long term.

Such schemes normally invest a major part of their corpus in equities. Such funds have

comparatively high risks. These schemes provide different options to the investors like

dividend option; capital appreciation etc. and the investors may choose an option depending

on their preference. The investor 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 Schemes:

The aim of income funds is to provide regular and steady income to investors. Such

schemes generally invest in fixed income securities such as bonds, corporate debentures,

government securities and Securities market instruments. Such funds are less risky

compared to equity schemes. These funds are not affected because of fluctuations in equity

market. However, opportunities of capital appreciation are also limited in such funds. The

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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 equities and debt instruments. These funds are also affected

because of fluctuations in share prices in the stock markets. However, NAVs of such funds

are likely to be less volatile compared to pure equity funds.

 Debt-oriented funds- Investment below 65% in equities

 Equity-oriented funds - Invest at least 65% in equities, remaining in debt

Securities market / 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 Securities, government securities etc. Returns in 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.

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 Others Scheme:

Tax Saving (ELSS) Schemes:

All the mutual funds floated by public sector banks and insurance companies have launched

tax saving schemes. These schemes are designed on the basis of tax policy with special tax

incentives to tax taxpaying investors. 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 predominantly in equities. Their growth opportunities and risks

associated are like any equity-oriented scheme.

Sector Specific Schemes:

These are the 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), Power or Infrastructure etc. The return sin these funds are dependent in the

performance of the respective sector/ industries. While these funds may give higher returns,

they are more risky compared to diversified funds. Investors need to keep a watch in the

performance of those sectors/industries and must exit at an appropriate time. They may also

seek advice of an expert.

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

weightage comprising of an index. NAVs of such schemes would rise or fall in accordance

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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 disclosures in this regard

are made in the offer document of the mutual fund scheme.

Equity diversified funds:

100% of the capital is invested in equities spreading across different sectors and stocks.

Dividend yield funds:

It is similar to the equity diversified funds except that they invest in companies offering

high dividend yields.

Thematic funds:

Invest 100% of the assets in sectors which are related through some theme. E.g. an

infrastructure fund invests in power, construction, cements sectors etc.

Gilt funds:

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 factors as is the case with income or debt oriented schemes

Floating rate funds:

Invest in short-term debt papers. Floaters invest in debt instruments which have variable

coupon rate.

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Arbitrage fund :

They generate income through arbitrage opportunities due to mispricing between cash

market and derivatives market. Funds are allocated to equities, derivatives and Securities

markets. Higher proportion (around 75%) is put in Securities markets, in the absence of

arbitrage opportunities.

MIPs:

Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30%

to equities.

FMPs:

Fixed monthly plans invest in debt papers whose maturity is in line with that of the fund.

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.

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 Life Insurance

Life Insurance helps provide financial assurance & security for your dependents and Loved

ones. It is important part of the financial planning bouquet for all individuals and families.

Life Insurance products offer comprehensive financial solutions besides offering financial

security also provide opportunity for saving, investment & text planning.

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd., a part of

Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India's leading private

sector financial services companies, which ranks among the top 3 private sector financial

services and banking companies. Reliance Life Insurance is not only one of India's fastest

growing life insurance companies, but also counts among the top 4 private sector insurers. In

just 2 years, the Company has crossed the mark of 1.7 Million policies.

RLIC launched around 600 branches in 10 months, taking the overall branch network above

to 740. Reliance Life Insurance Co. is one of the only two ISO 9001:2000 certified Life

Insurance companies in India. It has been awarded with the Jamnalal Bajaj Uchit Vyavahar

Puraskar 2007- Ceritificate of Merit in the Financial Services category by Council for Fair

Business Practices (CFBP). Given below is the list of the policies provided by Reliance Life

Insurance Company:

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Protection Plans

 Reliance Term Plan

 Reliance Simple Term Plan

 Reliance Special Term Plan

 Reliance Credit Guardian Plan

 Reliance Special Credit Guardian Plan

 Reliance Endowment Plan

 Reliance Special Endowment Plan

 Reliance Connect 2 Life

 Reliance Whole Life Plan

 Reliance Wealth + Health Plan

 Reliance Cash Flow Plan

Child Plans

 Reliance Super Invest Assure Plan

 Reliance Child Plan

 Reliance Secure Child Plan

 Reliance Wealth + Health Plan

Savings & Investment Plans

 Reliance Savings Linked Insurance Plan

 Reliance Super Invest Assure Plus Plan

 Reliance Super Invest Assure Plan

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  Total Investment Plan I - Insurance

 Reliance TIPS -Series I- Insurance

 Reliance Wealth + Health Plan

 Reliance Super Automatic Investment Plan

 Reliance Securities Guarantee Plan

 Reliance Cash Flow Plan

 Reliance Super Market Return Plan

 Reliance Endowment Plan Reliance Special Endowment Plan

 Reliance Whole Life Plan

 Reliance Super Golden Years Plan

 Reliance Super Golden Years Plan - Value

 Reliance Super Golden Years Plan - Plus

 Reliance Connect 2 Life Plan

 Reliance Imaan Investment Plan

Retirement Plans

 Total Investment Plan II - Pension

 Reliance Super Golden Years Plan

 Reliance Super Golden Years Plan - Value

 Reliance Super Golden Years Plan - Plus

 Reliance Wealth + Health Plan

 Reliance Super Automatic Investment Plan

 Reliance Securities Guarantee Plan

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 Group Plans

 Employers Liability Solutions

 Employee Protection Solutions

 Employee Voluntary Benefits

Reliance General Insurance

Reliance General Insurance is one of India’s leading private general insurance companies

with over 94 customized insurance products catering to the corporate, SME and individual

customers. The Company has launched innovative products like India’s first Over-The-

Counter health & home insurance policies. Reliance General Insurance has an extended

network of over 200 offices spread across 173 cities in 22 states, a wide distribution channel

network, 24x7 customer service assistance and a full fledged website. It is also India’s first

insurance company to be awarded the ISO 9001:2000 certification across all functions,

processes, products and locations pan-India.

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 3- Value Added Services

Retirement Plans:

You are a young and earning individual. The income you earn allows you to enjoy life, your

only worry being whether you will be able to continue the same lifestyle after retirement. A

Reliance Retirement Plan will help you save Securities for your retirement. It ensures that

you continue to get some income after retirement thereby ensuring that you do not have to

depend on any other person or make any compromises to maintain the same lifestyle. Invest

in a Reliance Retirement Plan today and enjoy life after retirement on your own terms.

Achievements :-

Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered

with the Reserve Bank of India under section 45-IA of the Reserve Bank of India Act, 1934.

RCL was incorporated as a public limited company in 1986 and is now listed on the Bombay

Stock Exchange and the National Stock Exchange (India).

RCL has a net worth of over Rs 3,300 crore and over 165,000 shareholders. On conversion of

outstanding equity instruments, the net worth of the company will increase to about Rs 4,100

crore. It is headed by Anil Ambani and is a part of the Reliance ADA Group.

Reliance Capital ranks among the top 3 private sector financial services and banking

companies, 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.

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 [1]
Reliance Mutual Fund is India's no.1 Mutual Fund. Reliance Life Insurance is one of

India's fastest growing life insurance company and among the top 4 private sector insurers.

Reliance General Insurance is one of India's fastest growing general insurance company and

among the top 3 private sector insurers. Reliance Securities is the largest brokerage and

distributor of financial products in India with over 2.7 million customers and has the largest

distribution network. Reliance Consumer finance has a loan book of over Rs. 8,900 crore at

the end of December 2008.

Reliance Capital has a net worth of Rs. 7,250 crore (US$ 1.5 billion) and total assets of Rs.

22,340 crores (US$ 4.6 billion) as of December 31, 2008.

Reliance Capital is a constituent of S&P CNX Nifty and MSCI India and also features in the

Forbes list of World’s largest 2000 public companies.

Note

 Applauded by the management team of Reliance Securities

 Opened D-Mat and Trading Accounts which is an achievement.

 Selling 5 Reliance Infrastructure Fund (NFO) worth Rs. 40,000

 Opening the two SIP worth Rs. 1000 & 500.

 Generated revenues for the organization by performing heavy trading on behalf of the

self developed clients.

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 INVESTMENT STRATEGIES

Systematic Investment Plan (SIP): under this a fixed sum is invested each month on

a fixed date of a month. Payment is made through post dated cheques or direct debit

facilities. The investor gets fewer units when the NAV is high and more units when the

NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)

Systematic Transfer Plan (STP):

They allow the investors to transfer on a periodic basis a specified amount from one scheme

to another within the same fund family meaning two schemes belonging to the same mutual

fund. A transfer will be treated as redemption of units from the scheme from which the

transfer is made .Such redemption or investment will be at the applicable NAV. This

service allows the investor to manage his investment actively to achieve his objectives.

Many funds do not even charge even any transaction feed for this service an added

advantage for the active investor.

Systematic Withdrawal Plan (SWP):

These plans are best suited for people nearing retirement. In these plans an investor invests

in a mutual fund scheme and is allowed to withdraw a fixed sum of Securities at regular

intervals to take care of expenses.

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 Performance Evaluation

PARAMETERS OF MUTUAL FUND EVALUATION:

Risk

Returns

Liquidity

Expense Ratio

Composition of Portfolio

Risks Associated With Mutual Funds:

Investing in mutual funds as with any security, does not come without risk. One of the most

basic economic principles is that risk and reward are directly correlated. In other words, the

greater the potential risk, the greater the potential return. The types of risk commonly

associated with mutual funds are:

Market Risk:

Market risk relate to the market value of a security in the future. Market prices fluctuate

and are susceptible to economic and financial trends, supply and demand, and many other

factors that cannot be precisely predicted or controlled.

Political Risk:

Changes in the tax laws, trade regulations, administered prices etc. is some of the many

political factors that create market risk. Although collectively, as citizens, we have indirect

control through the power of our vote, individually as investors, we have virtually no

control.

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Inflation Risk:

Inflation or purchasing power risk, relates to the uncertainty of the future purchasing power

of the invested rupees. The risk is the increase in cost of the goods and services, as

measured by the Consumer Price Index.

Interest Rate Risk:

Interest Rate risk relates to the future changes in interest rates. For instance, if an investor

invests in a long term debt mutual fund scheme and interest rate increase, the NAV of the

scheme will fall because the scheme will be end up holding debt offering lowest interest

rates.

Business Risk:

Business Risk is the uncertainty concerning the future existence, stability and profitability

of the issuer of the security. Business Risk is inherent in all business ventures. The future

financial stability of a company can not be predicted or guaranteed, nor can the price of its

securities. Adverse changes in business circumstances will reduce the market price of the

company’s equity resulting in proportionate fall in the NAV of mutual fund scheme, which

has invested in the equity of such a company.

Economic Risk :

Economic Risk involves uncertainty in the economy, which, in turn can have an adverse

effect on a company’s business. For instance, if monsoons fall in a year, equity stocks of

agriculture bases companies will fall and NAVs of mutual funds, which have invested in

such stocks, will fall proportionately.

There are 3 different methods with the help of which we can measure the risk.

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Measurement of risk

I. Beta Coefficient Measure of Risk:

Beta relates a fund’s return with a market index. It basically measures the sensitivity of

funds return to changes in market index.

If Beta = 1 then Fund moves with the market i.e. Passive fund

If Beta < 1 then Fund is less volatile than the market i. e Defensive Fund

If Beta > 1 then Funds will give higher returns when market rises & higher losses when

market falls i.e. Aggressive Fund

II. Ex –Marks or R-squared Measure Of Risk :

Ex –Marks represents co relation with markets. Higher the Ex-marks lower the risk of the

fund because a fund with higher Ex-marks is better diversified than a fund with lower Ex-

marks.

III. Standard Deviation Measure Of Risk :

It is a statistical concept, which measures volatility. It measures the fluctuations of fund’s

returns around a mean level. Basically it gives you an idea of how volatile your earnings

are. It is broader concept than BETA. It also helps in measuring total risk and not just the

market risk of the portfolio.

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 RISK V/S. RETURN:

MAJOR PLAYERS IN MUTUAL FUNDS INDUSTRY

ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India)

Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd.

was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO

Mutual Fund.

Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life

Financial. Sun Life Financial is a global organization evolved in 1871 and is being

represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from

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India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment.

Recently it crossed AUM of Rs. 10,000 Crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund)

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the

sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of

BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the

custodian.

HDFC Mutual Fund

HDFC Mutual Fund was setup on June 30, 2000 with two sponsor namely Housing

Development Finance Corporation Limited and Standard Life Investments Limited.

HSBC Mutual Fund

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets

(India) Private Limited as the sponsor. The Board of Trustees, HSBC Mutual Fund acts as the

Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund

ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee

Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management

(India) Pvt. Ltd. was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the

largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on

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13th of October, 1993 with two sponsors, Prudential Plc. and ICICI Ltd. The Trustee

Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset

Management Company Limited incorporated on 22nd of June, 1993.

Sahara Mutual Fund

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation

Ltd. as the sponsor. Sahara Asset Management Company Private Limited incorporated on

August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC

stands at Rs 25.8 crore.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshore

fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the

largest Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out of

which 15 have already yielded handsome returns to investors. State Bank of India Mutual

Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs

spread over 18 schemes.

Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsors for Tata

Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment

manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited. Tata

Asset Management Limited is one of the fastest in the country with more than Rs. 7,703

Crores (as on April 30, 2005) of AUM.

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Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is

presently having more than 1, 99,818 investors in its various schemes. KMAMC started its

operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to

investors with varying risk - return profiles. It was the first company to launch dedicated gilt

scheme investing only in government securities.

Unit Trust of India Mutual Fund

UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the

UTI Mutual Fund with the support of UTI Trustee Company Private Limited. UTI Asset

Management Company presently manages a corpus of over Rs.20000 Crore. The sponsors of

UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State Bank of

India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual

Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds

and Balance Funds.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The

sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the

Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was

changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various

schemes under which units are issued to the Public with a view to contribute to the capital

market and to provide investors the opportunities to make investments in diversified

securities.

Standard Chartered Mutual Fund

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Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard

Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard

Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with

SEBI on December 20,1999.

Franklin Templeton India Mutual Fund

The group, Franklin Templeton Investments is a California (USA) based company with a

global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial services

groups in the world. Investors can buy or sell the Mutual Fund through their financial advisor

or through mail or through their website. They have Open end Diversified Equity schemes,

Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes,

Open end Income and Liquid schemes, Closed end Income schemes and Open end Fund of

Funds schemes to offer.

Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and its leading in the market in

securities, investment management and credit services. Morgan Stanley Investment

Management (MISM) was established in the year 1975. It provides customized asset

management services and products to governments, corporations, pension funds and non-

profit organizations. Its services are also extended to high net worth individuals and retail

investors. In India it is known as Morgan Stanley Investment Management Private Limited

(MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close

end diversified equity scheme serving the needs of Indian retail investors focusing on a long-

term capital appreciation.

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Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Escorts Finance Limited as its

sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was

incorporated on December 1, 1995 with the name Escorts Asset Management Limited.

Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital

Management Corp. of Delaware (USA) as sponsorer. The Trustee is ACAM Trust Company

Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt.) Ltd. with the

corporate office in Mumbai.

Benchmark Mutual Fund

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd.

as the sponsored and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company.

Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Asset

Management Company Pvt. Ltd. is the AMC.

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Canara Bank Mutual Fund

Canara bank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the

sponsor. Canara bank Investment Management Services Ltd. incorporated on March 2, 1993

is the AMC. The Corporate Office of the AMC is in Mumbai.

Chola Mutual Fund

Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance

Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee

Company and AMC is Cholamandalam AMC Limited.

LIC Mutual Fund

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It

contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as

a Trust in accordance with the provisions of the Indian Trust Act, 1882. . The Company

started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed

Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC

Mutual Fund.

GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a

Government of India undertaking and the four Public Sector General Insurance Companies,

viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The

Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is constituted

as a Trust in accordance with the provisions of the Indian Trusts Act, 1882.

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Fidelity Investments

Fidelity Investments was founded in 1946. Fidelity Investments is an international provider

of financial services and investment resources that help individuals and institutions meet their

financial objejectives

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 COMPETITION IN MUTUAL FUNDS INDUSTRY

The most important trend in the mutual fund industry is the aggressive expansion of the

foreign owned mutual fund companies and the decline of the companies floated by

nationalized banks and smaller private sector players.

Many nationalized banks got into the mutual fund business in the early nineties and got off

to a good start due to the stock market boom prevailing then. These banks did not really

understand the mutual fund business and they just viewed it as another kind of banking

activity. Few hired specialized staff and generally chose to transfer staff from the parent

organizations. The performance of most of the schemes floated by these funds was not

good. Some schemes had offered guaranteed returns and their parent organizations had to

bail out these AMCs by paying large amounts of Securities as the difference between the

guaranteed and actual returns. The service levels were also very bad. Most of these AMCs

have not been able to retain staff, float new schemes etc. and it is doubtful whether, barring

a few exceptions, they have serious plans of continuing the activity in a major way.

The experience of some of the AMCs floated by private sector Indian companies was also

very similar. They quickly realized that the AMC business is a business, which makes

Securities in a long term and requires deep-pocketed support in the intermediate years.

Some have sold out to foreign owned companies, some have merged with others and there

is general restructuring going on.

The foreign owned companies have deep pockets and have come in here with the

expectation of a long haul. They can be credited with introducing many new practices such

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as new product innovation, sharp improvement in service standards and disclosure, usage of

technology, broker education and support etc. In fact, they have forced the industry to

upgrade itself and service levels of organizations like UTI have improved dramatically in

the last few years in response to the competition provided by these.

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 OBJECTIVES
Training objective-

 To study the Mutual funds industry in detail

 To study in brief various Mutual funds promoted by Reliance Securities

Research Objective-
 To study the investors Preference regarding Investment in Mutual Funds
 To study the risk tolerance level of investors.

 To study the impact of company name on investment decision.

Significance:

Significance of the project is to find out prospect investors of Mutual Funds and also to

provide key information about the investor’s perception and preferences by Mutual Fund

industry. The study will help in getting information about their performance at distributors

as well as at their own investment center or why people go for Mutual Fund for

investments. Studies will also helps in finding out the problems related to distribution.

Managerial Usefulness of Study:

 The study also provides the problems related to distribution of Mutual Fund so that

they can improve the service rendered by them as a distributor.

 The study will also give information about prospective investors both individual as

well as institutional clients in areas of surrey where they can get lead.

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 The study provides the complete information about all close competitors in Mutual

Fund investment.

 It provides the AMC a feedback from customers regarding their problems and

perception about investing in mutual funds so that they can improve their services

Scope of the Study:

 This project will provide me better platform to understand the History, Growth and

various other aspects of mutual fund and other options for the investment.

 It will also help me to understand the behavior of Indian investor regarding different

investment tools.

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 RESEARCH METHODOLOGY

 Research Design : Descriptive

 Data Collection : Primary data, Secondary data

 Sample Universe : Varanasi

 Sample size : 100 people

 Sample technique : Convenience, sampling

 Research Instrument : Questionnaire

I decided to do the project in two parts. The first part of the project is comprised of the

study of Mutual Funds as a whole and the second part deals with the investor’s perception

regarding their investment preferences about investment in Mutual Funds.

The first part of the project i.e. descriptive study is comprising an overall study of Mutual

funds as what it is, why to invest and where to invest, risk factor associated with it i.e. an

overview of whole Mutual fund industry.

The second part of the project that is related to investor’s perception about investment in

Mutual funds available in market. Indian Stock market has undergone tremendous

changes over the years. Investment in Mutual Funds has become a major alternative

among Investors. The project has been carried out to understand investor’s

perception about Mutual Funds in the context of their trading preference and explore

investor’s risk perception.

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The first part of the project relating the study of Mutual funds is collected through

secondary data obtained from internet & books whereas the second part relating the

Investors perception about investment in Mutual Funds is covered using primary data.

the respondents. The tool used here is questionnaire.

SOURCE OF DATA COLLECTION

Primary data is the first hand information collected directly from Primary Data is

collected through survey among existing clients along with the other investors. I had

prepared a questionnaire for collecting the primary data.

Secondary data is collected through internet, books, magazines and fact sheets.

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 DATA ANALYSIS & INTERPRETATION

Q.1) Do you invest in Mutual Fund?

a) Yes b) No c) Earlier now stopped

Interpretation:- This Graph shows that 85% peoples are interested for investment in

mutual fund and 15% peoples were interested in mutual fund but now stopped.

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Q.2) What is your Trading Preferences?

a) Speculation b) Investment c)Both

Interpretation:- Individuals are more inclined towards investment i.e. 56% rather than

speculation i.e. 28 % and 16 % both.

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Q.3) Factors influencing the product decisions for investment?

a) Advice from Broker b) Current news

c) Reviews in Financial Magazines d)Advice fromFriends

e) Self Evaluation f)Others_

Factors Influencing Investment

40%
32% 30%
30%

20% 20%

10% 10%
6%
2%
0%
Broke News Magzi Frien Self Other
Series1 32% 10% 6% 20% 30% 2%

Interpretation:- There are many factors which influence the investment decision of the

investors. It may be the current news (political, technological, financial, etc.), Magazines,

friends, etc. in the study it proved that many people trust the brokers most for the

investment decisions. The “Self-Evaluation” is the next major factor. The experienced

person trust himself thereafter he/she invests. Magazines and current News also matters.

Any bad news can make a person change his/her decision.

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Q.4) How much loss are you willing to take?

a) High b) Moderate c) Low

Interpretation:- “The higher the Risk, the more the Profits”. The people need to take the

risk to enjoy the benefits. Some investors were willing to take lower risk and this was the

reason they gave for investing in the MF. Most of the people would like moderate level of

risk in there investments.

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Q.5) How much Appreciation do you expect from your product of investment?

a) Up to 15% b)15%-25% c)25%-35%

d) More than 35%

Expected Rise In Income

8%
12%
Upto 15%
48%
15-25%
25-35%
32% More than 35%

Interpretation:- The optimism is shown in the attitude of the respondents. The

confidence was appreciable with which they are looking forward to a rise in their

investments. Major part of the sample feels that the rise would be of around 15%. Only 8%

of the respondents were confident enough to expect a rise of upto 35%.

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Q. 6) What is your preference in Mutual Funds?

a) Equity fund b) Balanced fund c) Debt fund d) Securities Market

Interpretation:- Most preferred mutual fund scheme is Equity Fund, followed by

Balanced Fund, Debt Fund and MM Fund.

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Q.7) which type of Mutual funds do you prefer?

a) Open Ended Schemes b) Closed Ended Schemes

44% Open Ended

56% Schemes-56%
Close Ended
Scheme-44%

Interpretation:- The schemes offered in the market are of two types, closed ended and

open ended. The more demand was for the Open Ended Funds rather than Close Ended

Fund.

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Q.8) Do you get influenced by the name of Company promoting Mutual

Funds?

a) Yes b) No c) Can’t Say

23%
Yes-56%
21% 56% No-21%
Can't Say-23%

Interpretation:- From the data collected it is clear that most of the people are

influenced by the company name while investing in a Fund.

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.9) Do you get influenced by the returns given by a fund or by the

current NAV of a fund?

a) By NAV b) By Returns c) Both

60% 56%

50%

40%

30%
23% 21%
20%

10%

0%
BY NAV RETURNS Both

Interpretation:- From the data collected it is clear that most of people look at the returns

that the Mutual funds are providing .They look at the returns not the current NAV However

there is some class of people who look at these parameters and their percentage is 23% and

some consider both factors while investing in funds and their percentage is 21%.

(74)
 FINDINGS

The study done was a tool to analyze the present setup and to know the investors perception

regarding investment in Mutual Funds. The study proved fruitful and many facts came to

the light. The following were the findings of the study:

 Individuals are more inclined towards investment rather than speculation.

 Most preferred mutual fund scheme is Equity Fund, followed by Balanced Fund,

Debt Fund and MM Fund.

 Closed ended schemes are preferred by more investors.

 Maximum people are risk-neutral. Very few are risk takers.

 Most of the people are influenced by the company name while investing in a Fund

because they wish to put their Securities in reputed trustworthy companies only.

 People with less experience were inclined towards investment in the Mutual Funds.

It attracted as a safer avenue as compared to share market.

 48% respondents reflected confidence and optimism in the context of their

investments.

 Mutual Funds are more of an investment option than the speculative avenue. People

tend to gain through long investments rather than through short term.

 Income funds and ELSS are among the few top funds

 People are not willing to take much risk and bear loss.

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 Broker’s advice matters to as much as 32% of the people. Major part of people

preferred self-evaluation as best.

 Most of the people look at the returns that are given by a Funds56% are in this

favour and only 23% people are there who consider Fund name and current NAV of

the fund before investing into a Mutual Fund

 Experience was the main factor that made a person invest in mutual funds

(76)
 Conclusion

Reliance Securities is a group company of Reliance Capital; one of India’s leading and fastest

growing private sector financial service companies ranking among the top 3 private sectors

financial services and banking companies in terms of net worth. Reliance Capital is part of

the Reliance Anil Dhirubhai Ambani Group.

After the study and analysis as per my survey I found the following results;

1- Reliance Securities provides single window for –

 Equity

 Mutual fund

 Life insurance

 General Insurance

 Gold Coin

 Commodities

 Derivatives

 Demat

2- R Securities has more than 6 lack customer of demat.

3- Reliance Mutual Fund a Part of the Reliance-Anil Dhirubhai Ambani

Group(R-ADAG ) is one of the fastest growing mutual funds in the country .

4- Reliance Mutual Fund offers investors a well rounded portfolio of products to

meet varying investor requirement Reliance Mutual Fund is one of India’s

leading Mutual Funds Assets Under Management (AUM) of Rs. 59,857 Crore

and an investor base of over 3.4 million.

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5- A total of 16 Products covering Saving protection & investment Requirement.

6- Reliance General Insurance, a Subsidiary of Reliance Capital , is one of the

first non life companies to get the license from the IRDA. RGICL offers an

exhaustive range of insurance products that covers most risk including

property, marine, casualty and Liability.

7- It also floats Gold coin in market with 99.9% purity.

8- R Securities Provides online facility for Demat Mutual Fund and Life

Insurance.

9- Their Mission is to keep the customer satisfaction as focus point of all

operations adopt the best international practices in under writing claims and

customer service, be most innovative in product development, establish

presence all over India, ensure sustained value addition to all stake holders and

to uphold corporate value and corporate governance.

10- I have fund that people want to invest their investment where risk is minimum

and return is maximum.

(78)
 Recommendations

 MF Advisors should be trained properly so that they can take up the queries of the

customer effectively and spread awareness.

 Try to build goodwill of the company and keep it maintained as goodwill plays

important role in investment decision.

 As most investors avoid risk, more balanced and less-risky funds should be

introduced to address the needs of the investors.

What I recommend firstly there should be

[1] First Aid Kit for New Entrant into Securities Market

This will be a new step towards a good service provider in this field. After all, this market

depends on the after sales service. After seeing such a boost in the share market, not only

our Adult generation but also the young generation is also so much excited to enter the

share market. Now the actual problem starts specially with the young ones in excitement

initially they invests the Securities & due to lack of experience they loose big block of

Securities in one go & later they blames the company about the loss. So, to make them train

in the field we should provide them the initial precautions that they should take while enter

into the market.ge

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“The More You Care For Your Customer More The Faith Will Get

Develop From Customer Side”

[2] Provision for Class Room training for the new investors

For the above reason same thing to boost there moral and to give them some thing related to

the market will help them. Also some tips can also be given to this investor during the

session as precautions.

[3] Toll Free Number

Customers generally want to call to the respective branch for asking some problems or give

orders, a customer can save the Securities by dialing on the toll free number. It gives a

feeling to the customer that company care for them.

[4] Customer Care for general query handle

Initially customer want to solve his or her problem at the moment as it arises. Our

relationship manager many times don’t have that much time to discuss all that details on

phone, they may sometime get busy with the meeting with client. So for general query

handle we can have a separate section.

(5) More Appointments of Relationship Managers

There should be more appointments by RM so that every customer get equalized attention

(80)
Note:

The recommendations which I have listed here above are strictly based on the knowledge of

the securities market that I have acquired during my training of two months duration.

All the recommendations are for the improvement in the functioning of the front end

operations of the Reliance Securities Ltd. (Varanasi Branch).

The recommendations are purely based on the problems that I had faced as a Management

Trainee.

LIMITATIONS

There were certain limitations faced during the study.

 Some people were not willing to disclose the investment profile

 The biased ness was being taken care of.

 The area of sample was decided after taking into consideration the major factors like

 Availability of investors

 Approachability,

 Time available with investor for interaction, etc.

(81)
 BIBLIOGRAPHY

Books Referred-

 Kothari C.R., Research methodology methods & technology

 Khan M.Y. & P. K. Jain, financial management

 Nalini Prava Tripathi, Mutual Fund in India

Sites Visited-

1. www.RelianceSecurities.com

2. www.mutualfundsindia.com

3. www.indiainfoline.com

4. www.amfiindia.com

5. www.valueresearchonline.com

6. www.reliancelife.co.in

(82)
 ANNEXURE – 1

QUESTIONNAIRE

Name: ...…………………….. Occupation: ………………………

Phone: ...……………………..

Investment Presently Held in products:

Please list the value of the assets in your total investments portfolio :( in Rs.)

Stocks: ______ Mutual Funds: _______

Bonds: ______ Bullion: _______

Options: ______ Govt. Securities:_______

Real Estate: ______ Bank Deposits: _______

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(1) Do you invest in Mutual Funds?

Yes No Earlier, now stopped

(2) What is your Experience in the market?

Less than a year 1-4 years More than 4 years

(3) What is your Trading Preference?

Speculation Investment Both

(4) What is your Average investment period?

Less than 3 months. 3 to 9 months.

9 months to 2 year. More than 2 year.

(5) Factors influencing the product decisions for investment?

Advice from Broker Current news

Reviews in Financial Magazines Advice from Friends

Self Evaluation Others___________

(6) How much Risk are you willing to take?

High Low Moderate

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(7) How much Appreciation do you expect from your product of investment?

Up to 15% 15%-25% 25%-35%

More than 35%

(8) What is your preference in Mutual Funds?

Equity Fund Securities Market Funds

Balanced fund Debt fund

(9) How much loss are you willing to take?

High Moderate Low

(10) Which type of Mutual funds do you prefer?

Open Ended Schemes Closed Ended Schemes

(11) Do you get influenced by the name of Company promoting Mutual

Funds?

Yes No Can’t Say

(12) Do you get influenced by the returns given by a fund or by the current

NAV of a fund?

By NAV By Returns Both

(85)
(13) Any suggestions:

……………………………………………………………........

…………………………………………………………………

Thank You Signature

(86)