In training project report

on
“RISK & RETURN ANALYSIS
MANAGEMENT OF MUTUAL FUNDS”

Training Supervisor Submitted by

Name & Designation Md.Pasha
of the Supervisor Enrolment No.
Mr.Abhinav sharma 07511001005

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 ACKNOWLEDGEMENT

I am very thankful to Reliance money Ltd. for having given me an opportunity for
training in the company.
I express my sincere thanks to Ms. Aarti Mittal HR of Reliance Money Ltd., for
involving me in day-to-day work at the office,which gave me an insight to the actual
environment in the industry.
I extend my thanks to my research guide Mr. Abhinav sharma (project manager) for
giving me his valuable time out of his busy schedule and guidance in my project.
My sincere appreciation to Mr. Uma Shankar, their valuable suggestions and critical
comments surely would be of great help in the longer run. They spread their valuable
time to respond to my queries. Their valuable suggestions about handling and analysis of
data collected in my work are also appreciable. Their constant moral support during my
training is appreciable.
Thanks are due to all other team members of the Human Resources Department for their
immense cooperation
Thank you all

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Here that the present work titled “RISK & RETURN ANALYSIS MANAGEMENT
OF MUTUAL FUNDS IN RELIANCE” is an original work. I anywhere else for the
award of any degree/ diploma/ certificate or for any prize have not submitted this project
report. All the data given in the report is to the best of my knowledge and all references
whether of any person or organization can be crosschecked.

MD.PASHA

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 PREFACE

This project has been prepared in the fulfillment of the .of Business Administration ( ). I
have tried my best to present the best for my project title “RISK & RETURN
ANALYSIS MANAGEMENT OF MUTUAL FUNDS” under the able guidance of all
staff and my faculties of VIMS.

Mutual funds are now the most appropriate investment option for the investors. As
financial markets become more sophisticated and complex, investors need a financial
intermediary who provides the required knowledge and professional expertise on
successful investing. It is no wondering then that the birthplace of the mutual funds – the
USA – the fund industry has already overtaken the banking industry, more funds are
being under mutual fund management than deposit with banks.

The Indian Mutual Fund industry has already started opening up many of the exciting
investment opportunities to the Indian investors. We have started witnessing the
phenomenon of more savings now being entrusted to the funds than to the banks. Despite
the expected continuing growth in the industry, Mutual Funds are still a new financial
intermediary in India. Hence it is important for the investors, the Mutual Fund agents, the
Mutual Fund distributors, then investment advisors and even the fund employees acquire
better knowledge of what Mutual Funds are, what they cannot, and how they function
differently from other intermediaries such as banks.

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 TABLE OF CONTENTS

TOPICS: PAGE NO.

ACKNOWLEDGEMENT
CERTIFICATE
DECLARATION
PREFACE
PART 1: INDUSTRY PROFILE
1.1 Concept of Mutual Fund 01-07
1.2 Types of Mutual Fund 08-11

1.3 Structure of Mutual Fund 12-13

1.4 Operation flow chart 14-14
1.5 Mutual Fund Management 15-16
1.6 Recent trends 17-18

1.7 History 19-21

1.8 Future scenario 22-23

PART 2: COMPANY PROFILE

2.1 Introduction of the company 24-25
2.2 Business Overview 25-26
2.3 Vision 26-26
2.4 Mission 27-27
2.5 Board of directors 28-28

2.6 Products & Services 29-29

PART 3: INTRODUCTION OF TOPIC

3.1 Mutual Fund 30-31
3.2 Investment Objectives of Fund 32-33

3.3 How funds determine its share price or NAV? 34-34

3.4 Mutual fund markets 35-36
3.5 How to buy mutual fund? 37-38
3.6 Risk and Return 39-48
3.7 Investment strategies 49-49

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RESEARCH METHODOLOGY 50-53
OBJECTIVE OF STUDY 54-54

FINDINGS AND ANALYSIS 55-66

CONCLUSION 67-67
LIMITATION OF STUDY 68-68
RECOMMANDATION 69-69
BIBLIOGRAPHY 70-70
ANNEXURE 71-73

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 PART-1

INDUSTRY PROFILE

1.1 CONCEPT OF MUTUAL FUND

A mutual fund is a company that pools the money of many people and institutions and
invests it in stocks, bonds, or other securities to pursue a specific financial objective.
Professional money managers make the day-to-day decisions about which stocks, bonds,
or other securities to buy and sell. Each investor shares in the fund’s gains or losses
according to how many shares they own.

Mutual Funds are one of the prominent financial instruments. It is preferred by any
investors when compared with other financial instruments. There are some who claim
investing in mutual funds does not create the levels or profit that other investments can
earn.

The diversified portfolios of investment companies mean that mutual funds are a safe
investment option. There are lots of mutual fund companies in the market today. They are
an attractive form of investment.

A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is invested by the fund manager in
different types of securities depending upon the objective of

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the scheme. These could range from shares to debentures to money market instruments.
The income earned through these investments and the capital appreciation realized by the
scheme is shared by its unit holders in proportion to the number of units owned by them
(pro rata). 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 portfolio at a
relatively low cost. Anybody with an investigable surplus of as little as a few thousand
rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment
objective and strategy.

A Mutual fund is the ideal investment vehicle for today's complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income instruments,
real estate, derivatives and other assets have become mature and information driven.
Price changes in these assets are driven by global events occurring in faraway places. A
typical individual is unlikely to have the. An individual also finds it difficult to keep track
of ownership of his assets, investments, brokerage dues and bank transactions etc.

A mutual fund is the answer to all these situations. It appoints professionally qualified
and experienced staff that manages each of these functions on a full time basis. The large
pool of money collected in the fund allows it to hire such staff at a very low cost to each
investor.

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OBJECTIVES OF MUTUAL FUND

 To define and maintain high professional and ethical standards in all areas of
operation of mutual fund industry.

 To interact with the Securities and Exchange Board of India (SEBI) and to represent
to SEBI on all matters concerning the mutual fund industry.

 To represent to the Government, Reserve Bank of India and other bodies on all
matters relating to the Mutual Fund Industry.

 To develop a cadre of well-trained Agent distributors and to implement a program of

training and certification for all intermediaries and others engaged in the industry.

 To undertake nation wide investor awareness program so as to promote proper

understanding of the concept and working of mutual funds.

 To recommend and promote best business practices and code of conduct to be

followed by members and other engaged in the activities of mutual fund and asset
management including agencies connected or involved in the field of capital markets
and financial services.

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ADVANTAGES OF MUTUAL FUND
 Diversification
 Professional Management
 Convenience
 Liquidity
 Minimum initial investment
 Return Potential
 Low Costs
 Transparency
 Flexibility
 Well regulated
 Choice of schemes
 Tax Efficiency

Diversification:

Using mutual funds can help an investor diversify their portfolio with a minimum
investment. When investing in a single fund, an investor is actually investing in
numerous securities. Spreading your investment across
a range of securities can help to reduce risk. A stock mutual fund, for example, invests in
many stocks - hundreds or even thousands.  This minimizes the risk attributed to a
concentrated position. If a few securities in the mutual fund lose value or become
worthless, the loss maybe offset by other securities that appreciate in value. Further
diversification can be achieved by investing in multiple funds which invest in different
sectors.

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Professional Management:

Mutual funds are managed and supervised by investment professionals.  As per the stated
objectives set forth in the prospectus, along with prevailing market conditions and other
factors, the mutual fund manager will decide when to buy or sell securities.  This
eliminates the investor of the difficult task of trying to time the market.  Furthermore,
mutual funds can eliminate the cost an investor would incur when proper due diligence is
given to researching securities.  This cost of managing numerous securities is dispersed
among all the investors according to the amount of shares they own with a fraction of
each dollar invested used to cover the expenses of the fund.  What does this mean?  Fund
managers have more money to research more securities more in depth than the average
investor.  

Convenience:

With most mutual funds, buying and selling shares, changing distribution options, and
obtaining information can be accomplished conveniently by telephone, by mail, or online.

Although a fund's shareholder is relieved of the day-to-day tasks involved in researching,

buying, and selling securities, an investor will still need to evaluate a mutual fund based
on investment goals and risk tolerance before making a purchase decision.  Investors
should always read the prospectus carefully before investing in any mutual fund.

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Liquidity:

Mutual fund shares are liquid and orders to buy or sell are placed during market hours. 
However, orders are not executed until the close of business when the NAV (Net
Average Value) of the fund can be determined.  Fees or commissions may or may not be
applicable.  Fees and commissions are determined by the specific fund and the institution
that executes the order.

Minimum Initial Investment:

Most funds have a minimum initial purchase of $2,500 but some are as low as $1,000.  If
you purchase a mutual fund in an IRA, the minimum initial purchase requirement tends
to be lower.  You can buy some funds for as little as $50 per month if you agree to dollar-
cost average, or invest a certain dollar amount each month or quarter.

Return Potential:

Over a medium to long-term, Mutual Funds have the potential to provide a higher return
as they invest in a diversified basket of selected securities.

Low Costs:

Mutual Funds are a relatively less expensive way to invest compared to directly investing
in the capital markets because the benefits of scale in brokerage, custodial and other fees
translate into lower costs for investors.

Transparency:

You get regular information on the value of your investment in addition to disclosure on
the specific investments made by your scheme, the proportion invested in each class of
assets and the fund manager's investment strategy and outlook.

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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.

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.

Choice of Schemes:

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

Tax efficiency:

Income tax benefits are granted to investors in mutual funds, making it more tax efficient
as compared to other comparable investment avenues.

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1.2 TYPES OF MUTUAL FUND

The figure below gives an overview into the existing types of schemes …

TA
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BY STRUCTURE

OPEN ENDED – These do not have fixed maturity. The investors are free to buy or sell
any number of units at any point of time. We directly deal to mutual fund for our
investment and redemption. The key feature is liquidity. We can conveniently buy and
sell of units at NAV related prices.

CLOSE ENDED – The scheme have stipulated maturity period. We can invest in the
scheme at the time of initial issue and there after we can buy and sell the units under
stock exchange where they are listed or these will be repurchased by the mutual fund at
their maturity. The market price at the stock exchange could vary from the schemes NAV
on account of demand and supply situation.
One of the characteristics of close ended scheme is that they are generally traded at
discount to NAV but closer to maturity.

INTERVAL – This scheme have combine the features of open ended and close ended
schemes and may be traded on stock exchange any time or well be open for sale or
redemption during predetermined intervals at NAV related prices.

BY INVESTMENT OBJECTIVE
GROWTH SCHEMES - The aim of growth funds is to provide capital appreciation
over the medium to long-term. These schemes invest majority
of their funds in equities and are willing to bear short term decline in value for possible
future appreciation. These may be of diversified nature or may be sector oriented.

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INCOME SCHEME – Debt schemes typically invest a major part, if not all their funds
in debt, in many market investment like bonds, debentures, government securities, in the
inter banks call money market or commercial paper. These instruments provide a fixed
interest which is generally paid out at various intervals access to such investment. The
aim of income funds is to provide regular and steady income to investors.

BALANCED SCHEME – These invest both in shares and fixed income securities in the
proper way indicated in the offer document. These provide moderate risk and moderate
return to the investors. As the NAV of these schemes may not keep pace or face equity
when the equity market rises or falls respectively.

MONEY MARKET SCHEME – The aim of money market funds is to provide easy
liquidity, preservation of capital and moderate income. These schemes generally invest in
safer short-term instruments such a treasury bills, certificates of deposit commercial
paper and inter-bank call money.

OTHER SCHEMES
TAX SAVING SCHEME – These schemes aims to offer tax benefits to the investors
and it invests accordingly in schemes of government etc. These schemes involve less risk
and slow growth.

SECTOR SPECIFIC SCHEME – 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.

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INDEX SCHEME – These schemes are those where the portfolio are designed in such a
way that they reflect composition of some broad base market index. This is done by
holding securities in the same prop

1.3 STRUCTURE OF THE MUTUAL FUND INDUSTRY

The Indian mutual fund industry is dominated by the Unit Trust of India which has a total
corpus of Rs 700bn collected from more than 20 million investors. The UTI has many
funds/schemes in all categories i.e. equity, balanced income etc with some being open-
ended and some being closed-ended. The Unit Scheme 1964 commonly referred to as US
64, which is a balanced fund, is the biggest scheme with a corpus of about Rs 200 bn.
UTI was floated by financial institutions and is governed by a special act of Parliament.
Most of its investors believe that the UTI is government owned and controlled, which,
while legally incorrect, is true for all practical purposes.

The second largest categories of mutual funds are the ones floated by nationalized banks.
Canbank Asset Management floated by Canara Bank and SBI Funds Management floated
by the State Bank of India are the largest of these. GIC AMC floated by General
Insurance Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of
the other prominent ones. The aggregate corpus of funds managed by this category of
AMCs is about Rs 150 bn.

the third largest category of mutual funds is the ones floated by the private sector and by
foreign asset management companies. The largest of these are Prudential ICICI AMC and

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Birla Sun Life AMC>the aggregate corpus of assets managed by this category of AMCs
is in excess of Rs 250 bn.

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1.4 OPERATION FLOW CHART

1.5 FUND MANAGEMENT

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Actively managed funds: Mutual Fund managers are professionals.  They are considered
professionals because of their knowledge and experience.  Managers are hired to actively
manage mutual fund portfolios.  Instead of seeking to track market performance, active
fund management tries to beat it.  To do this, fund managers "actively" buy and sell
individual securities.  For an actively managed fund, the corresponding index can be used
as a performance benchmark.

Is an active fund a better investment because it is trying to outperform the market? Not
necessarily. While there is the potential for higher returns with active funds, they are
more unpredictable and more risky. From 1990 through 1999, on average, 76% of large
cap actively managed stock funds actually under performed the S&P 500. (Source -
Schwab Center for Investment Research)

Actively managed fund styles: Some active fund managers follow an investing "style"
to try and maximize fund performance while meeting the investment objectives of the
fund. Fund styles usually fall with in the following three categories.

Fund Styles:

 Value: The manager invests in stocks believed to be currently undervalued by the

market.

 Growth: The manager selects stocks they believe have a strong potential for
beating the market.

 Blend: The manager looks for a combination of both growth and value stocks.

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To determine the style of a mutual fund, consult the prospectus as well as other sources
that review mutual funds.  Don't be surprised if the information conflicts.  Although a
prospectus may state a specific fund style, the style may change.  Value stocks held in the
portfolio over a period of time may become growth stocks and vice versa.  Other research
may give a more current and accurate account of the style of the fund. 

1.6 RECENT TRENDS IN MUTUAL FUND 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 has offered guaranteed returns and their parent organizations
had to bail out these AMCs by paying large amounts of money as the difference between
the guaranteed and actual returns. The service levels were also very bad. Most of these

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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
money in the 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 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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1.7 HISTORY OF MUTUAL FUND 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

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GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund
industry had assets under management of Rs.47, 004 crores.

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

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the
year in which the first Mutual Fund Regulations came into being, under which all mutual
funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer
(now merged with Franklin Templeton) was the first private sector mutual fund registered
in July 1993.The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual 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

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2003, representing broadly, the assets of US 64 scheme, assured return and certain other
schemes. The Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India and does not come
under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of
assets under management and with the setting up of a UTI Mutual Fund, conforming to
the SEBI Mutual Fund Regulations, and with recent mergers taking place among
different private

Sector funds, the mutual fund industry has entered its current phase of consolidation and
growth. As at the end of September, 2004, there were 29 funds, which manage assets of
Rs.153108 crores under 421 schemes.

1.8 GLOBAL SCENARIO

Some basic facts—

 The money market mutual fund segment has a total corpus of $ 1.48 trillion in the
U.S. against a corpus of $ 100 million in India.
 Out of the top 10 mutual funds worldwide, eight are bank-sponsored. Only
Fidelity and Capital are non-bank mutual funds in this group.
 In the U.S. the total number of schemes is higher than that of the listed companies
while in India we have just 277 schemes.

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  Internationally, mutual funds are allowed to go short. In India fund managers do
not have such leeway.
 In the U.S. about 9.7 million households will manage their assets on-line by the
year 2003, such a facility is not yet of avail in India.
 On-line trading is a great idea to reduce management expenses from the current
2% of total assets to about 0.75% of the total assets.
 72% of the core customer base of mutual funds in the top 50-broking firms in the
U.S. is expected to trade on-line by 2003.

Internationally, on-line investing continues its meteoric rise. Many have debated about
the success of e-commerce and its breakthroughs, but it is true that this aspect of
technology could and will change the way financial sectors function. However, mutual
funds cannot be left far behind. They have realized the potential of the Internet and are
equipping themselves to perform better.
In fact in advanced countries like the U.S.A. mutual funds buy-sell transactions
have already begun on the Net, while in India the Net is used as a source of
Information.
Such changes could facilitate easy access, lower intermediation costs and better
services for all. A research agency that specializes in internet technology estimates that
over the next four years Mutual Fund Assets traded on-line will grow ten folds from $
128 billion to $ 1,227 billion; whereas equity assets traded on-line will increase during

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the period from $ 246 billion to $ 1,561 billion. This will increase the share of mutual
funds from 34% to 40% during the period. Such increases in volumes are expected to
bring about large changes in the way Mutual Funds conduct their business.

PART-2

COMPANY PROFILE

2.1 INTRODUCTION OF THE COMPANY

Reliance Money is a group company of Reliance Capital; one of India's leading and
fastest growing private sector financial services companies, ranking among the top 3
private sector financial services and banking companies, in terms of net worth. Reliance
Capital is a part of the Reliance Anil Dhirubhai Ambani Group.

Reliance Money is a comprehensive electronic transaction platform offering a wide range

of asset classes. Its endeavor is to change the way India transacts in financial markets and
avails financial services. Reliance Money is a single window, enabling you to access,
amongst others in Equities, Equity & Commodities Derivatives, Mutual Funds, IPOs,
Life & General Insurance products, Offshore Investments, Money Transfer, Money
Changing and Credit Cards.

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

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2.2 BUSINESS OVERVIEW

RCL is registered as a depository participant with National Securities Depository Ltd

(NSDL) and Central Depository Services Ltd (CDSL) under the Securities and Exchange
Board of India (Depositories and Participants) Regulations, 1996. RCL has sponsored the
Reliance Mutual Fund within the framework of the Securities and Exchange Board of
India (Mutual Fund) Regulations, 1996.RCL primarily focuses on funding projects in the
infrastructure sector and supports the growth of its subsidiary companies, Reliance
Capital Asset Management Limited, Reliance Capital Trustee Co. Limited, Reliance
General Insurance Company Limited and Reliance Life Insurance Company Limited. As
of March 31, 2005, the company’s investment in infrastructure projects stood at Rs. 1071
Crores. The investment portfolio of RCL is structured in a way that realizes the highest
post-tax return on its investments.

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2.3 VISION OF THE COMPANY

“Growth has no limit at Reliance. I

keep revising my vision. Only when you

MR.ANIL AMBANI
can dream it, you can do it.”

CHAIRMAN

“To be a globally respected wealth creator with an emphasis on customer care and

a culture of good corporate governance.”

"We will leverage our strengths in executing complex global-scale projects to make
leading edge information and financial services affordable by all individual consumers
and businesses in India. We will offer unparalleled value to create customer delight and
enhance business productivity. We will also generate value for our capabilities beyond
Indian boarders while enabling millions of knowledge workers to deliver their service
globally."

2.3 MISSION OF THE COMPANY

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

delighting our customers.”

“To offer unparalleled value by providing the customer transparent, convenient and

cost–effective, anytime-anywhere financial transaction capability”

2.4 BOARD OF DIRECTORS

Amitabh Jhunjhunwala, Vice-Chairman 

He is 51, a Fellow Chartered Accountant.

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 Rajendra Chitale, Independent Director 

He is 46, an eminent Chartered Accountant, is the Managing

Partner of M/s M. P. Chitale & Associates.

Shri C. P. Jain

He is 61, is the former Chairman and Managing Director of

NTPC Ltd. (National Thermal Power Corporation).

2.5 PRODUCTS & SERVICES

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PART-3

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 INTRODUCTION OF THE TOPIC

3.1 MUTUAL FUND

A mutual fund is a company that pools the money of many people and institutions and
invests it in stocks, bonds, or other securities to pursue a specific financial objective.
Professional money managers make the day-to-day decisions about which stocks, bonds,
or other securities to buy and sell. Each investor shares in the fund’s gains or losses
according to how many shares they own.

Mutual funds can be categorized as money market funds, stock funds, corporate and
government bond funds, municipal or tax-free bond funds, and balanced funds (which
own both stocks and bonds). Within these categories there are specific types of funds. For
example, stock or equity funds range from the conservative growth and income funds to
the more aggressive small company and international funds.

Reliance Mutual Fund (RMF)

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.
Reliance Mutual Fund offers investors a well rounded portfolio of products to meet
varying investor requirements.

Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Assets Under
Management (AUM) of Rs.59,857 crore (AUM as on 30th June 2007) and an investor
base of over 3.4million.Reliance Mutual Fund constantly endeavor’s 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.

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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 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 and other financial
services.

3.2 INVESTMENT OBJECTIVES OF MUTUAL FUND

The following table shows five mutual fund categories, listed by 33 different investment
objectives:

Investment
Fund Category Subcategory
Objective

Equity Capital appreciation Aggressive growth

-- -- Growth

- 34 -
 -- -- Sector

-- Total return Growth-and-income

-- -- Income-equity

-- World equity Emerging market

-- -- Global equity

-- -- International equity

-- -- Regional equity

Hybrid Hybrid Asset allocation

-- -- Balanced

-- -- Flexible portfolio

-- -- Income-mixed

Taxable bond Corporate General

-- -- Intermediate-term

-- -- Short-term

-- High yield High yield

-- World Global bond, general

-- -- Global bond, short-term

-- -- Other world bond

-- Government General

-- -- Intermediate-term

- 35 -
 -- -- Short-term

-- -- Mortgage-backed

-- Strategic income Strategic income

Tax-free bond State municipal General

-- -- Short-term

-- National municipal General

-- -- Short-term

Money market Taxable Government

-- -- Non-government

-- Tax-exempt National

-- -- State

3.3 HOW FUND DETERMINE ITS SHARE PRICE OR NAV

- 36 -
3.4 MUTUAL FUND MARKETS

Rapid growth of the mutual fund market is a challenge to both management companies
and supervision. Similarly to the assets in mutual funds, the number of Finnish mutual
funds has experienced strong growth. At the moment, there are already 508 mutual funds,

- 37 -
while the figure stood at 469 at the end of 2005 and 403 at the end of 2004. The number
of unit holders has also increased steadily. In particular, mutual fund ownership of
individuals has increased strongly.

Rapid growth requires expertise and moderation in order to control the operational risks
related to growth, so that eg the processes of NAV calculation and mutual fund unit
register function without errors as the number of transactions increases. Similarly the
sufficiency and expertise of personnel is put to the test amid rapid growth. From a
supervision point of view it is important to pay attention to the capability of management
companies to review their operating modes in line with their growth.

- 38 -
Increase in the number of unit holders increases the number of those investors in the
markets with little knowledge about mutual funds as investments or even about the
securities markets. Supervision must now focus on the supervision of the disclosure
obligation, since the key processes and risk management in the industry have been
inspected extensively in 2009 - 2010.

3.5 HOW TO BUY MUTUAL FUND?

Buying mutual funds have never been difficult even considering the complexities
involved in it. You can buy mutual funds as easily as 1-2-3. Here are the typical steps
involved when you want to buy mutual funds

 You can buy mutual funds when mutual fund companies make initial public
offerings. At this time you will usually have to pay the basic face value and not
the market dictated price that includes a premium as in many cases. Filling out an
application form with a payment of some initial deposit is all it takes.

 Buying mutual funds called closed end funds is from stock exchanges. Closed end
funds are initially sold by fund companies in limited numbers and they are listed

- 39 -
 in a stock exchange to facilitate trading by investors. These will be usually at
premium prices or as dictated by demands in the market (higher demands for
various reasons attract higher premiums).

Buying mutual funds called closed end funds is from stock exchanges. Closed end funds
are initially sold by fund companies in limited numbers and they are listed in a stock
exchange to facilitate trading by investors. These will be usually at premium prices or as
dictated by demands in the market (higher demands for various reasons attract higher
premiums).

 You can also buy mutual funds (open end funds - funds purchasable perpetually
from the company). Here the price at which you buy will be a figure called as
NAV in the industry circles. This term stands for net asset value, a figure that
denotes the current value of a share of the company after adding the earnings and
deducting the expenses and taxes equally amongst all the number of shares.

 Most companies and banks that are in the mutual funds business facilitate online
buying of mutual funds to their customers. They need you to have a trading as
well as a demat account and connect your bank account to this. You can log on to
a broker's or the company's own trading internet portal to be able to buy online.
Once online you can choose from the array of exchange traded mutual funds
(ETF) and open end funds too. Your trades will be either credited or debited to
your demat account (an account to hold dematerialized shares - electronic form of

- 40 -
 shares) instantaneously. This is some what like you can transfer funds from your
bank account.

3.6 RISK AND RETURN

RISK

Risk can be defined as the potential for harm.

But when anyone analyzing mutual funds uses this term, what is actually being talked
about is volatility.

Volatility is nothing but the fluctuation of the Net Asset Value (price of a unit of a fund).
The higher the volatility, the greater the fluctuations of the NAV.

Generally, past volatility is taken as an indicator of future risk and for the task of
evaluating a mutual fund; this is an adequate (even if not ideal) approximation.

What is risk?

Every type of investment, including mutual funds, involves risk.  Risk refers to the
possibility that you will lose money (both principal and any earnings) or fail to make
money on an investment.  A fund's investment objective and its holdings are influential
factors in determining how risky a fund is.  Reading the prospectus will help you to
understand the risk associated with that particular fund. 

Generally speaking, risk and potential return are related. This is the risk/return trade-off. 
Higher risks are usually taken with the expectation of

- 41 -
higher returns at the cost of increased volatility.  While a fund with higher risk has the
potential for higher return, it also has the greater potential for losses or negative returns. 
The school of thought when investing in mutual funds suggests that the longer your
investment time horizon is the less affected you should be by short-term
volatility.   Therefore, the shorter your investment time horizon, the more concerned you
should be with short-term volatility and higher risk.

Defining Mutual fund risk

Different mutual fund categories as previously defined have inherently different risk
characteristics and should not be compared side by side. A bond fund with below-average
risk, for example, should not be compared to a stock fund with below average risk. Even
though both funds have low risk for their respective categories, stock funds overall have
a  higher risk/return potential than bond funds.

Of all the asset classes, cash investments (i.e. money markets) offer the greatest price
stability but have yielded the lowest long-term returns. Bonds typically experience more
short-term price swings, and in turn have generated higher long-term returns. However,
stocks historically have been subject to the greatest short-term price fluctuations—and
have provided the highest long-term returns.  Investors looking for a fund which
incorporates all asset classes may consider a balanced or hybrid mutual fund.  These

funds can be very conservative or very aggressive.  Asset allocation portfolios are mutual
funds that invest in other mutual funds with different asset classes.  At the discretion of
the manager(s), securities are bought, sold, and shifted between funds with different asset
classes according to market conditions.

Mutual funds face risks based on the investments they hold. For example, a bond fund
faces interest rate risk and income risk.  Bond values are inversely related to interest

- 42 -
rates.  If interest rates go up, bond values will go down and vice versa.  Bond income is
also affected by the change in interest rates.  Bond yields are directly related to interest
rates falling as interest rates fall and rising as interest rise.  Income risk is greater for a
short-term bond fund than for a long-term bond fund.

Similarly, a sector stock fund (which invests in a single industry, such as

telecommunications) is at risk that its price will decline due to developments in its
industry. A stock fund that invests across many industries is more sheltered from this risk
defined as industry risk.

Risk factors

General Risk Factors: Mutual Funds and securities investments are subject to market
risks and there is no assurance or guarantee that the objectives of the Scheme will be
achieved. As with any investment in securities, the NAV of the Units issued under the
Scheme can go up or down depending on the

factors and forces affecting the capital markets. Past performance of the
Sponsor/AMC/Mutual Fund is not indicative of the future performance of the Scheme.
The Sponsor is not responsible or liable for any loss resulting from the operation of the
Scheme beyond their initial contribution of Rs.1 lakh towards the setting up of the

- 43 -
Mutual Fund and such other accretions and additions to the corpus. The Mutual Fund is
not guaranteeing or assuring any dividend/ bonus. The Mutual Fund is also not assuring
that it will make periodical dividend/bonus distributions, though it has every intention of
doing so. All dividend/bonus distributions are subject to the availability of the
distributable surplus in the Scheme.

Types of risk

Following is a glossary of some risks to consider when investing in mutual funds.

 Call Risk. The possibility that falling interest rates will cause a bond issuer to
redeem—or call—its high-yielding bond before the bond's maturity date.

 Country Risk. The possibility that political events (a war, national elections),
financial problems (rising inflation, government default), or natural disasters (an
earthquake, a poor harvest) will weaken a country's economy and cause
investments in that country to decline.

 Credit Risk. The possibility that a bond issuer will fail to repay interest and
principal in a timely manner. Also called default risk.

- 44 -
 Currency Risk. The possibility that returns could be reduced for Americans
investing in foreign securities because of a rise in the value of the U.S. dollar
against foreign currencies. Also called exchange-rate risk.

 Income Risk. The possibility that a fixed-income fund's dividends will decline as
a result of falling overall interest rates.

 Industry Risk. The possibility that a group of stocks in a single industry will
decline in price due to developments in that industry.

 Inflation Risk. The possibility that increases in the cost of living will reduce or
eliminate a fund's real inflation-adjusted returns.

 Interest Rate Risk. The possibility that a bond fund will decline in value because
of an increase in interest rates.

 Manager Risk. The possibility that an actively managed mutual fund's

investment adviser will fail to execute the fund's investment strategy effectively
resulting in the failure of stated objectives.

 Market Risk. The possibility that stock fund or bond fund prices overall will
decline over short or even extended periods. Stock and bond markets tend to
move in cycles, with periods when prices rise and other periods when prices fall.

 Principal Risk. The possibility that an investment will go down in value, or "lose
money," from the original or invested amount.

- 45 -
How Mutual Funds Manage To Reduce Their Risk?

Fund managers allocate available funds in a specified proportion among various

instruments of investments. Consider a fund being well diversified across the spectrum of
exchange listed stocks and bonds which yield a guaranteed return in addition to being
invested in money markets and real estates. While bonds and money market investments
provide a low but steady return, other instruments are of high yielding character in a short
period. The higher risk of high yielding portfolio is compensated for by the investments
in bonds in events of adverse market behavior. The portfolio will be constantly reviewed
and adjusted to variations in order to maximize returns and minimize risks. This means,
fund managers buy or sell stocks or bonds as per the dictates of the fund and market
pulls. For example an investment in a perceived risky instrument will be sold
immediately and reinvested in a prospective media of the time.

RETURN

As an investor, you want to know the fund's return-its track record over a specified period
of time. So what exactly is "return?"

A mutual fund's return is the rate of increase or decrease in its value over a specific
period of time usually expressed in the following increments: one, three, five, and ten
year, year to date, and since the inception of the fund.  Since return is a common measure
of performance, you can use it to

- 46 -
evaluate and compare mutual funds within the same fund category.  Generally expressed
as an annualized percentage rate, return is calculated assuming that all distributions from
the fund are reinvested.

Since average returns can sometimes "hide" short-term highs and lows, you should
evaluate returns for a time period of several years-not just one year or less. A fund that
has a high return in one year may have experienced losses in other years-these
fluctuations may not be apparent in its average return.  While a fund's return shows its
track record, keep in mind that past performance is no guarantee of future results. 

When using returns to compare funds, always use net returns.  Net returns are the true
returns of both load and no-load funds after deducting all costs and expenses.

Types of return

There are three ways, where the total returns provided by mutual funds can be enjoyed by
investors:

 Income is earned from dividends on stocks and interest on bonds. A fund pays out
nearly all income it receives over the year to fund owners in the form of a
distribution.

 If the fund sells securities that have increased in price, the fund has a capital gain.
Most funds also pass on these gains to investors in a distribution.

 If fund holdings increase in price but are not sold by the fund manager, the fund's
shares increase in price. You can then sell your mutual fund shares for a profit.
Funds will also usually give you a choice either to receive a check for
distributions or to reinvest the earnings and get more shares.

Mutual fund returns

- 47 -
Fund  Category   Rating 3Yr
Return
UTI Infrastructure Equity: Diversified 66.62  

Magnum Contra Equity: Diversified 66.14  

DSPML T.I.G.E.R. Reg Equity: Diversified 64.56  

Magnum Global Equity: Diversified 63.32  

Reliance Growth Equity: Diversified 60.93  

Sundaram BNP Paribas Select Equity: Diversified 60.50  

Midcap

Kotak Opportunities Equity: Diversified 60.05  

HDFC Equity Equity: Diversified 51.13  

HDFC Top 200 Equity: Diversified 50.88  

Magnum Balanced Hybrid: Equity-oriented 46.69  

Canara Robeco Balance II Hybrid: Equity-oriented 42.82  

HDFC Prudence Hybrid: Equity-oriented 40.78  

ICICI Prudential Long-... Debt: Medium-term 9.07  

Birla Sun Life Income Debt: Medium-term 7.57  

Canara Robeco Income Debt: Medium-term 6.72  

ICICI Prudential Flexible Debt: Medium-term 6.51  

Income

ICICI Prudential Advis... Debt: Medium-term 6.34  

Magnum Multiplier Plus Equity: Diversified 67.04  

Birla Sun Life Equity Equity: Diversified 60.02  

DSPML Equity Fund Equity: Diversified 57.78  

- 48 -
 Sundaram BNP Paribas S... Equity: Diversified 56.67  

ICICI Prudential Dynamic Equity: Diversified 56.19  

Sundaram BNP Paribas I... Equity: Diversified 55.05  

Kotak 30 Equity: Diversified 54.91  

Birla Mid Cap Equity: Diversified 54.87  

Risk return trade off

The table below shows the different types of funds and the potential risk/return trade off.

Lower risk and return Moderate risk and return Higher risk and return

Long- Growth
Money Short- and
term Balanced and Growth Aggressive
market intermediate-
bond funds income funds growth funds
funds term bond funds
funds funds

- 49 -
3.7 Investment strategies

Knowing your tolerance for risk is one of the important issues you must consider when
you are making an investment decision. You must have a strong understanding of your
personal situation and investment goals. Consider the following criteria when developing
your investment strategy.

1. Current income needs: Do you need income from your investment to meet
current living expenses? Will you reinvest any dividends or interest paid that
exceeds your current income needs?

2. Capital risk tolerance: Will you be seriously concerned over a temporary drop in
market value or your investment?

3. Time horizon: How long can you invest before withdrawing substantial funds?
Will you need to withdraw money for a new car, tuition, or a vacation home?

4. Tax liability: Are you in a high tax bracket? Are you subject to a state capital
gains and dividend tax?

5. Legal considerations: Are there investment restrictions due to the nature or

source of your funds? Are the funds part of an organization or other entity on
which investment restrictions have been imposed by law or other regulations?

- 50 -
 6. Liquidity requirements: Is there a foreseeable need for large amounts of cash for
which provisions should be made?

7. Unique requirements: Is there anything unique or special that must be

considered in your financial planning?

RESEARCH METHODOLOGY
DEFINATION

Research methodology is a way to systematically solve the research problem. It may be

understood as science of studying how research is done scientifically.
According to Clifford woody “Research Comprises defining and redefining problem
formulating hypothesis or suggested solution Collecting, Organizing and evaluating data
making deductions and reaching Conclusion at Carefully testing the Conclusion to
determine whether they fit the formulating hypothesis”.

TYPES OF RESEARCH
Descriptive research is also called Statistical Research. The main goal of this type of
research is to describe the data and characteristics about what is being studied. The idea
behind this type of research is to study frequencies, averages, and other statistical
calculations. Although this research is highly accurate, it does not gather the causes
behind a situation.

Exploratory research is a type of research conducted because a problem has not been
clearly defined. Exploratory research helps determine the best research design, data
collection method and selection of subjects. Given its fundamental nature, exploratory
research often concludes that a perceived problem does not actually exist.

- 51 -
Quantitative research is based on the measurement of quantity or amount. It is
applicable to phenomena that can be expressed in term of quantity. We have also found
requirement in quantity so it’s the quantitative research.

POPULATION
 Specific Area :- Waranagal,Hanamankonda
 population :- 2 lacks

SAMPLE DESIGN
Sample design refers to the technique or the procedure the researcher would adopt in
selecting item for the Sample. Sample design may be well lay down the number of items
to be included in the sample that is the size of the sample design is determined before
data are collected. There are many Sample designs from which a researcher can choose
some designs are relatively more precise and easier to apply than other researcher must
select a sample design which should be reliable and appropriate for his research study.
Here we have used random sampling and the sample size was 300. We have
made a questionnaire through personal interview filled the questionnaire.

Data Collection

Data collection is a very important step in any research. It’s the pivot along which the
whole research revolves. If the data collected is not appropriate then the whole research
will be of no use.
Data Collection basically involves collecting the relevant data from various sources may
be primary or secondary and then sorting the information so that meaningful information
can be gathered from the sorted data.
Data can be collected from two sources:

- 52 -
 Sources of Data Collection

Primary sources Secondary Sources

Primary Sources: Primary sources include the data, which are first handed. They are
collected directly from the respondents using the data collection methods like the
questionnaires, survey interviews, direct observation, or tabulation.

Secondary Sources: Secondary sources are the sources in which data has already been
collected by some other person or organization for their use and is used by the researcher
for his purpose. These include websites, trade associations, journals, books etc.

My research is based on the mixture of both primary and secondary sources. I have
collected the information with the help of Questionnaire, journals and websites.
Questionnaires have helped me to know about the needs of the individual investors.
Journals and websites have provided me the information about the MF industry, its past
and future performance.

- 53 -
 OBJECTIVE OF THE STUDY

The Purpose of research is to discover answer to question through the Application of

scientific procedure. The main aim of research is to find out the truth which is hidden and
which has not been discovered as yet.

 To highlight the satisfaction level regarding fund.

 To know buying behavior of people.
 To make familiar with mutual fund.
 To know the perception regarding mutual fund schemes and prospectus.
 To gain familiarity with a phenomenon or to achieve new insights into it (Studies
with this object in view are termed as exploratory or formulate research studies)

- 54 -
 FINDINGS AND ANALYSIS

As part of the project we had make a survey with the help of questionnaire that has to
taken to different people to get perception towards mutual fund the questionnaire is
passed on the general public and requested to give their opinion toward mutual fund the
questionnaire Consists of both open and close ended question the main motto behind the
Study is to find out how people react against the mutual fund and aware about the
benefits of mutual fund.
In research methodology we have used random sampling and sample size was
300. Simple random sampling method is followed where every member of population
have equal chance of been selected. The questionnaire is administrated on sample to find
out their perception towards mutual fund. After analysis of questionnaire conclusions
were made based on finding from pie charts.

- 55 -
DATA ANALYSIS AND INTREPRETATION

Q.1.Are you aware of the mutual fund?

(a) YES [ ]

(b) NO [ ]

(c) NO IDEA [ ]

- 56 -
 MUTUAL FUND AWARENESS

10%
NO IDEA
20%
NO

YES
70%

INTERPRETATION
From the survey it was find out that 70% of customers know about mutual fund. While
20% Customer are not aware with mutual fund and rest of the customers they have no
idea about the mutual fund.

Q.2. Have you ever invested in any mutual fund?

(a) YES [ ]

(b) NO [ ]

- 57 -
 MUTUAL FUND INVESTMENT

45% NO
55%
YES

INTERPRETATION

Out of total respondents 55% have at least some amount in mutual fund, the fact that
some how majority for investment in mutual fund.

Q.2 (a) If YES,

Then how much return you are earning?

Ans. As per the survey 55% people invested in mutual fund. Most of them say that it is
the most appropriate amount of return that a person should demand, a number of factors

- 58 -
have to be considered such as his current situation, future business plans etc. It is an
investment avenue that has the potential for safety as well as growth

They are earning near about 32% annual return from their investment which is quite
good as per the investment purpose.

Q.3.Which of the following investment instruments as your 1st preference?

(a) Gold & Silver (b) Fixed Deposits (c) Stock Market

(d) Life Insurance (e) Mutual Fund (f) Real Estate

(g) Post Office, PPF, NSC etc.

- 59 -
 INVESTMENT PREFERENCE

REAL ... 10

STOCK... 20

MUTUAL F... 30

40 REAL EST.

LIFE ... 50

GOLD&SI... 60

PO,PPF... 70

INTERPRETATION

The above chart depicts that people mainly give their 1st preference to PO, PPF, NSC etc
and only 30% people give their 1 st preference to mutual fund as because the reason
behind is this that people are not so much aware of it.

Q.4.Why should you choose to invest in mutual fund?

(a) Maximum Return [ ]

(b) Tax Benefit [ ]

(c) Easy to Invest [ ]

- 60 -
 INVESTMENT PURPOSE

10%
EASY TO INVEST
50% TAX BENEFIT
40% MAXIMUM RETURN

INTERPRETATION

From the survey it was find out that 50% people invest for the higher return and 40%
invest for the tax benefit and the rest are invest as it is easy to invest.

Q.5.How can you select your mutual fund?

(a) Fund Performance [ ]

(b) Fund NAV [ ]

(c) Brand Image [ ]

- 61 -
 FUND SELECTION CRITERIA

20%
BRAND IMAGE
45%
FUND PERFORMANCE
FUND NAV
35%

INTERPRETATION

From the survey it was found that 45% people select their mutual fund according to the
fund brand image, 35% people select their fund according to its performance and the rest
were select on the basis of its NAV. It reflects that fund brand image should be very
important in selection of any mutual fund.

Q.6.What rate of return did you expect annually from mutual fund under today’s
capital market scenario?

(a) 6%-10% [ ]

(b) 11%-15% [ ]

(c) 16%-20% [ ]

(d) Above 20% [ ]

- 62 -
 MUTUAL FUND RETURNS

10%

20% 16%-20%
40%
ABOVE 20%

11%-15%
30%
6%-10%

INTERPRETATION

As per the above diagram it represents that only 10% people thought that they could earn
6%-10%, 20% thought they could earn 11%-15%, 40% thought they could earn 16%-
20% and 30% thought that they could earn above 20% from the mutual fund.

Q.7 Are mutual fund risky?

(a) YES [ ]

(b) NO [ ]

- 63 -
 30%

NO

YES
70%

INTERPRETATION

Out of total respondents 30% answered that mutual fund are not risky but 70% answered
that yes mutual fund are risky because it overall depends on the stock market which is not
clearly predictable every time.

Q.8.For how many years do you like to invest in mutual fund?

(a) 1 year [ ]

(b) 2-4 years [ ]

(c) 4-6 years [ ]
(d) Above 6 years [ ]

- 64 -
Q.9. Have you ever heard about Reliance mutual fund?
(a) YES [ ]
(b) NO [ ]

- 65 -
 RELIANCE MUTUAL FUND AWARENESS

30%

NO

YES
70%

INTERPRETATION

Out of total respondents 60% answered YES that they know about Reliance Mutual Fund
and 40% answered NO.

Q.10.What type of return you are earning from your mutual fund?
(a) High [ ]
(b) Low [ ]
(c) Average [ ]

- 66 -
 CONCLUSION

Mutual Funds Should Creative Value

Mutual funds can create value in several ways, such as by

(1) Adopting a research-driven investment strategy aimed at discovering value and

identifying the best performing companies and stocks, thereby also putting pressure

on company management’s to improve their performance.

(2) Designing investment products based on a better understanding of the investor’s

needs.

(3) Providing liquidity (through open-ended schemes which are akin to market-making

service) to securities, like bonds or infrequently traded shares, which may otherwise

be liquid.

(4) Providing an easy way to investors to diversity risk.

(5) Improving the reach of investment products to small investors through widest

possible distribution networks.

- 67 -
(6) We should give the first priority promotional activities for awareness of customers
and it is less expensive than others.

In order to facilitate a steady growth of the mutual fund industry, there is also a
clear responsibility on the Government, viz. to provide a rational and stable tax
environment relating to mutual funds.
LIMITATIONS

 Due to the financial & time constraints the study was limited to our place thus the

conclusion arrived in the end rely in short term experience.

 Being an opinion survey the personal bases of he respondents might have entered into

their responses.

 Time constraints resource constraints were some of the limitations

 The selected sample might have affected the results of the study therefore the findings

& conclusions of the study are only suggestive & not conclusive.

- 68 -
 RECOMMENDATION

 Company should have extensive advertising to attract potential Customers.

 Adequate training improves the skill of employee.

 Company should put stress on market Capture

 Adequate transparency in product plan and policies

 Maintain proper Customer relationship

 Company should publish its weekly review of internal or external Competitive

business.

 There must be proper management information system in Company.

 Monthly NAV statement to provide to the customer

BIBLIOGRAPHY

WEBSITES

- 69 -
 www.amfindia.com
 www.reliancemoney.com
 www.reliancecapital.com
 www.uti.com
 www.mutualfundhelper.com

- 70 -
 ANNEXURE

NAME: AGE:

OCCUPATION: GENDER: M/F

Q.1.Are you aware of the mutual fund?

(a) YES [ ]

(b) NO [ ]

(c) NO IDEA [ ]

Q.2. Have you ever invested in any mutual fund?

(a) YES [ ]

(b) NO [ ]

Q.2 (a) If YES,

Then how much return you are earning?

ANS……

Q.3.Which of the following investment instruments as your 1st preference?

(a) Gold & Silver (b) Fixed Deposits (c) Stock Market

(d) Life Insurance (e) Mutual Fund (f) Real Estate

(g) Post Office, PPF, NSC etc.

- 71 -
Q.4.Why should you choose to invest in mutual fund?

(a) Maximum Return [ ]

(b) Tax Benefit [ ]

(c) Easy to Invest [ ]

Q.5.How can you select your mutual fund?

(a) Fund Performance [ ]

(b) Fund NAV [ ]

(c) Brand Image [ ]

Q.6.What rate of return did you expect annually from mutual fund under today’s
capital market scenario?

(a) 6%-10% []

(b) 11%-15% [ ]

(c) 16%-20% [ ]

(d) Above 20% [ ]

Q.7 Are mutual fund risky?

(a) YES [ ]

(b) NO [ ]

- 72 -
Q.8.For how many years do you like to invest in mutual fund?
(a) 1 year [ ]

(b) 2-4 years [ ]

(c) 4-6 years [ ]

(d) Above 6 years [ ]

Q.9. Have you ever heard about Reliance mutual fund?

(a) YES [ ]
(b) NO [ ]

Q.10.What type of return you are earning from your mutual fund?
(a) High [ ]
(b) Low [ ]
(c) Average [ ]

11. If you invested in Share Market, what has been your experience?

A) Satisfactory Return B) Burned Finger C) Unsatisfactory Results

D) No

12. How do you trade in Share Market?

A) Hedging B) Speculation C) Investment

- 73 -
- 74 -