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this project. I am very thankful to respected Mrs. Komal Deshpande whose timely

and valuable guidance enabled me to reach this stage.

I take this opportunity to express my deep gratitude to our Director Dr. J.N POL for

providing excellent environment and infrastructure at Matrix Business School,Pune.

I acknowledge my parents and almighty who gave me constant support to pass the

process of project work.

I take immense pleasure in completing this project and submitting this final project

report.

CERTIFICATE

This is to certify that project work entitled MUTUAL FUND is a piece of work done by Mr.

VINAY KUMAR MISHRA a student of Matrix Business School, Pune for fulfillment of

PGDFS course of University of Pune ,Pune

He has successfully completed his Yearlong project. He has worked under our guidance and

direction .His work is to be found satisfactory in all respect.

We wish him good luck for his future endeavor.

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Director Project Guide

Dr.J.N Pol

Date Date

Place Place

DECLARATION

I hereby declare that this Project Report entitled THE MUTUAL FUND is submitted

in the partial fulfillment of the requirement ofPOST GRADUATION DIPLOMA IN

FINANCIAL SERVICES of MATRIX BUSINESS SCHOOL,PUNE is based on

primary & secondary data found by me in various departments, books, magazines and

websites & Collected by me in under guidance of Mrs. Komal Deshpande.

DATE: VINAY KUMAR MISHRA

PGDFS

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C ONTENTS

PAGE NO.

Chapter - 1 INTRODUCTION 9

Chapter - 2 OBJECTIVES OF SCOPE 41

Chapter - 3 COMPANY PROFILE 44

Chapter - 4 RESEARCH METHODOLOGY 64

Chapter - 5 FINDINGS AND CONCLUSIONS 69

Chapter - 6 LIMITATIONS 79

Chapter - 7 SUGGESTIONS & RECOMMENDATIONS 80

COPY OF QUESTIONAIRE 83

BIBLIOGRAPHY 86

EXECUTIVE SUMMARY

In few years Mutual Fund has emerged as a tool for ensuring ones financial well

being. Mutual Funds have not only contributed to the India growth story but have also

helped families tap into the success of Indian Industry. As information and awareness

is rising more and more people are enjoying the benefits of investing in mutual funds.

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The main reason the number of retail mutual fund investors remains small is that nine

in ten people with incomes in India do not know that mutual funds exist. But once

people are aware of mutual fund investment opportunities, the number who decide to

invest in mutual funds increases to as many as one in five people. The trick for

converting a person with no knowledge of mutual funds to a new Mutual Fund

customer is to understand which of the potential investors are more likely to buy

mutual funds and to use the right arguments in the sales process that customers will

accept as important and relevant to their decision.

This Project gave me a great learning experience and at the same time it gave me

enough scope to implement my analytical ability. The analysis and advice presented in

this Project Report is based on market research on the saving and investment practices

of the investors and preferences of the investors for investment in Mutual Funds. This

Report will help to know about the investors Preferences in Mutual Fund means Are

they prefer any particular Asset Management Company (AMC), Which type of Product

they prefer, Which Option (Growth or Dividend) they prefer or Which Investment

Strategy they follow (Systematic Investment Plan or One time Plan).

Chapter - 1

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Introduction

MUTUAL FUNDS

ALL ABOUT MUTUAL FUNDS

WHAT IS MUTUAL FUND HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY TYPES OF FUNDS-BY INVESTMENT OBJECTIVE CATEGORIES OF MUTUAL FUNDS ADVANTAGES OF INVESTING MUTUAL FUNDS DISADVANTAGES OF INVESTING MUTUAL FUNDS

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MAJOR PLAYERS OF MUTUAL FUNDS IN INDIA WORKING OF A MUTUAL FUND GUIDELINES OF THE SEBI FOR MUTUAL FUND COMPANIES DISTRIBUTION CHANNELS PERFORMANCE MEASURES CHOOSING FUNDS

INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS

ASPECTS

Mutual fund is a trust that pools the savings of a number of investors who share a

common financial goal. This pool of money is invested in accordance with a stated

objective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to all

investors. The money thus collected is then invested in capital market instruments such

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

investments and the capital appreciations realized are shared by its unit holders in

proportion 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. A

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Mutual Fund is an investment tool that allows small investors access to a well-

diversified portfolio of equities, bonds and other securities. Each shareholder

participates in the gain or loss of the fund. Units are issued and can be redeemed as

needed. The funds Net Asset value (NAV) is determined each day.

Investments in securities are spread across a wide cross-section of industries and

sectors and thus the risk is reduced. Diversification reduces the risk because all stocks

may not move in the same direction in the same proportion at the same time. Mutual

fund issues units to the investors in accordance with quantum of money invested bythem. Investors of mutual funds are known as unit holders.

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When an investor subscribes for the units of a mutual fund, he becomes part owner of

the assets of the fund in the same proportion as his contribution amount put up with the

corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual

fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments (such

as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme.

NAV is defined as the market value of the Mutual Fund scheme's assets net of its

liabilities. NAV of a scheme is calculated by dividing the market value of scheme's

assets by the total number of units issued to the investors.

HISTORY OF THE INDIAN 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. Though the

growth was slow, but it accelerated from the year 1987 when non-UTI players entered

the Industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement, both

qualities wise as well as quantity wise. Before, the monopoly of the market had seen an

ending phase; the Assets Under Management (AUM) was Rs67 billion. The private

sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till

April 2004; it reached the height if Rs. 1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with the mutual

fund industry can be broadly put into four phases according to the development of the

sector. Each phase is briefly described as under.

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First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament 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 Can bank Mutual Fund (Dec 87), Punjab

National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of

India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC 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)

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.

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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. As at the end of January 2003, there were 33

mutual funds with total assets of Rs. 1,21,805 crores.

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 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. consolidation

and growth. As at the end of September, 2004, there were 29 funds, which manage

assets of Rs.153108 crores under 421 schemes.

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1. Equity fund:

These funds invest a maximum part of their corpus into equities holdings. The structure of the

fund may vary different for different schemes and the fund managers outlook on different stocks.

The Equity Funds are sub-classified depending upon their investment objective, as follows:

Diversified Equity Funds

Mid-Cap Funds

Sector Specific Funds

Tax Savings Funds (ELSS)Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-

return matrix.

2. Debt funds:

The objective of these Funds is to invest in debt papers. Government authorities, private companies,

banks and financial institutions are some of the major issuers of debt papers. By investing in debt

instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are

further classified as:

Gilt Funds: Invest their corpus in securities issued by Government, popularly known as

Government of India debt papers. These Funds carry zero Default risk but are associated with

Interest Rate risk. These schemes are safer as they invest in papers backed by Government.

Income Funds: Invest a major portion into various debt instruments such as bonds, corporate

debentures and Government securities.

MIPs: Invests maximum of their total corpus in debt instruments while they take minimum

exposure in equities. It gets benefit of both equity and debt market. These scheme ranksslightly high on the risk-return matrix when compared with other debt schemes.

Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds

primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial

Papers (CPs). Some portion of the corpus is also invested in corporate debentures.

Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity

and preservation of capital. These schemes invest in short-term instruments like Treasury

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Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash

management of corporate houses and are meant for an investment horizon of 1day to 3

months. These schemes rank low on risk-return matrix and are considered to be the safestamongst all categories of mutual funds.

3. Balanced funds: As the name suggest they, are a mix of both equity and debt funds. They invest in

both equities and fixed income securities, which are in line with pre-defined investment objective of

the scheme. These schemes aim to provide investors with the best of both the worlds. Equity part

provides growth and the debt part provides stability in returns.

Further the mutual funds can be broadly classified on the basis of investment parameter viz,

Each category of funds is backed by an investment philosophy, which is pre-defined in the objectivesof the fund. The investor can align his own investment needs with the funds objective and invest

accordingly.

BY INVESTMENT OBJECTIVE

Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these

schemes is to provide capital appreciation over medium to long term. These schemes normally

invest a major part of their fund in equities and are willing to bear short-term decline in valuefor possible future appreciation.

Income Schemes: Income Schemes are also known as debt schemes. The aim of these

schemes is to provide regular and steady income to investors. These schemes generally invest

in fixed income securities such as bonds and corporate debentures. Capital appreciation in

such schemes may be limited.

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Balanced Schemes: Balanced Schemes aim to provide both growth and income by

periodically distributing a part of the income and capital gains they earn. These schemes

invest in both shares and fixed income securities, in the proportion indicated in their offerdocuments (normally 50:50).

Money Market Schemes: Money Market Schemes aim to provide easy liquidity, preservation

of capital and moderate income. These schemes generally invest in safer, short-term

instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank

call money.

OTHER SCHEMES

Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax laws

prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any

Equity Linked Savings Scheme (ELSS) are eligible for rebate.

Index Schemes: Index schemes attempt to replicate the performance of a particular index

such as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only

those stocks that constitute the index. The percentage of each stock to the total holding will be

identical to the stocks index weightage. And hence, the returns from such schemes would be

more or less equivalent to those of the Index.

Sector Specific Schemes: These are the funds/schemes which invest in the securities of onlythose 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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CATEGORIES OF MUTUAL FUND:

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Types of returns:

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

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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.

PRONS AND CONS OF INVESTING IN MUTUAL FUNDS

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

Advantages of Investing Mutual Funds:

1. Professional Management - The basic advantage of funds is that, they are professional managed,

by well qualified professional. Investors purchase funds because they do not have the time or the

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expertise to manage their own portfolio. A mutual fund is considered to be relatively less expensive

way to make and monitor their investments.

2. Diversification - Purchasing units in a mutual fund instead of buying individual stocks or bonds,

the investors risk is spread out and minimized up to certain extent. The idea behind diversification is

to invest in a large number of assets so that a loss in any particular investment is minimized by gains

in others.

3. Economies of Scale - Mutual fund buy and sell large amounts of securities at a time, thus help to

reducing transaction costs, and help to bring down the average cost of the unit for their investors.

4. Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate their

holdings as and when they want.

5. Simplicity - Investments in mutual fund is considered to be easy, compare to other available

instruments in the market, and the minimum investment is small. Most AMC also have automatic

purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis.

Disadvantages of Investing Mutual Funds:

1. Professional Management- Some funds doesnt perform in neither the market, as theirmanagement is not dynamic enough to explore the available opportunity in the market, thus many

investors debate over whether or not the so-called professionals are any better than mutual fund or

investor himself, for picking up stocks.

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2. Costs The biggest source of AMC income, is generally from the entry & exit load which they

charge from an investors, at the time of purchase. The mutual fund industries are thus charging extra

cost under layers of jargon.

3. Dilution - Because funds have small holdings across different companies, high returns from a few

investments often don't make much difference on the overall return. Dilution is also the result of a

successful fund getting too big. When money pours into funds that have had strong success, the

manager often has trouble finding a good investment for all the new money.

4. Taxes - when making decisions about your money, fund managers don't consider your personal tax

situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, whichaffects how profitable the individual is from the sale. It might have been more advantageous for the

individual to defer the capital gains liability.

Major Players of Mutual Funds In India

Period (Last&nbsp1 Week)

Rank Scheme Name Date NAV(Rs.)

Last 1Week

SinceInception

1 JM Core 11 Fund - Series 1 -Growth

Mar 26, 2008

8.45 5.12 -94.64

2 Tata Indo-Global InfrastructureFund - Growth

Mar 26, 2008

8.26 5.05 -40.42

3 Tata Capital Builder Fund -Growth

Mar 26, 2008

12.44 5.03 15.35

4 Standard Chartered Enterprise Mar 26 14.07 5 20.92

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Equity Fund - Growth , 20085 DBS Chola Infrastructure Fund -

GrowthMar 26, 2008

9.01 4.65 -17.17

6 ICICI Prudential Fusion Fund -Series III - Institutional -Growth

Mar 26, 2008 10.2 4.62 23.69

7 DSP Merrill Lynch Micro CapFund - Regular - Growth

Mar 26, 2008

9.93 4.56 -0.85

8 ICICI Prudential Fusion Fund -Series III - Retail - Growth

Mar 26, 2008

10.19 4.51 22.39

9 DBS Chola Small Cap Fund -Growth

Mar 26, 2008

6.36 3.75 -81.78

10 Principal Personal Taxsaver Mar 25, 2008

124.66 3.44 29.97

11 Benchmark Split Capital Fund -Plan A - Preferred Units Mar 26, 2008 141.51 3.14 13.71

12 ICICI Prudential FMP - Series33 - Plan A - Growth

Mar 26, 2008

9.89 2.91 -7.88

13 Tata SIP Fund - Series I -Growth

Mar 26, 2008

10.25 2.38 2.39

14 Sahara R.E.A.L Fund - Growth Mar 25, 2008

7.64 1.86 -49.52

15 Tata SIP Fund - Series II -Growth

Mar 26, 2008

9.93 1.58 -0.94

A mutual fund is a professionally-managed firm of collective investments that pools money from

many investors and invests it in stocks, bonds, short-term money market instruments, and/or other

securities.in other words we can say that A Mutual Fund is a trust registered with the Securities and

Exchange Board of India (SEBI), which pools up the money from individual / corporate investors and

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

Bonds, Call money markets etc., and distributes the profits.

The value of each unit of the mutual fund, known as the net asset value (NAV), is mostly calculated

daily based on the total value of the fund divided by the number of shares currently issued and

outstanding. The value of all the securities in the portfolio in calculated daily. From this, all expenses

are deducted and the resultant value divided by the number of units in the fund is the funds NAV.

NAV = Total value of the fund.No. of shares currently issued and outstanding

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Guidelines of the SEBI for Mutual Fund Companies :

To protect the interest of the investors, SEBI formulates policies and regulates the mutual

funds. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time to

time.

SEBI approved Asset Management Company (AMC) manages the funds by making

investments in various types of securities. Custodian, registered with SEBI, holds the securities

of various schemes of the fund in its custody.

According to SEBI Regulations, two thirds of the directors of Trustee Company or board oftrustees must be independent.

The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual

funds that the mutual funds function within the strict regulatory framework. Its objective is to

increase public awareness of the mutual fund industry. AMFI also is engaged in upgrading

professional standards and in promoting best industry practices in diverse areas such as

valuation, disclosure, transparency etc.

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COMPANY DISTRIBUTION CHANNELS

Mutual funds posses a very strong distribution channel so that the ultimate customers doesnt

face any difficulty in the final procurement. The various parties involved in distribution of

mutual funds are:

1. Direct marketing by the AMCs: the forms could be obtained from the AMCs directly. The

investors can approach to the AMCs for the forms. some of the top AMCs of India are;

Reliance ,Birla Sunlife, Tata, SBI magnum, Kotak Mahindra, HDFC, Sundaram, ICICI, Mirae

Assets, Canara Robeco, Lotus India, LIC, UTI etc. whereas foreign AMCs include: StandardChartered, Franklin Templeton, Fidelity, JP Morgan, HSBC, DSP Merill Lynch, etc.

2 .Broker/ sub broker arrangements: the AMCs can simultaneously go for broker/sub-broker to

popularize their funds. AMCs can enjoy the advantage of large network of these brokers and

sub brokers.eg: SBI being the top financial intermediary of India has the greatest network. So

the AMCs dealing through SBI has access to most of the investors.

3. Individual agents, Banks, NBFC: investors can procure the funds through individual agents,

independent brokers, banks and several non- banking financial corporations too, whichever he

finds convenient for him.

Costs associated:

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Expenses:

AMCs charge an annual fee, or expense ratio that covers administrative expenses, salaries,advertising expenses, brokerage fee, etc. A 1.5% expense ratio means the AMC charges

Rs1.50 for every Rs100 in assets under management. A fund's expense ratio is typically to the

size of the funds under management and not to the returns earned. Normally, the costs of

running a fund grow slower than the growth in the fund size - so, the more assets in the fund,

the lower should be its expense ratio

Loads:

Entry Load/Front-End Load (0-2.25%)- its the commission charged at the time of buying

the fund to cover the cost of selling, processing etc.

Exit Load/Back- End Load (0.25-2.25%)- it is the commission or charged paid when an

investor exits from a mutual fund, it is imposed to discourage withdrawals. It may reduce to

zero with increase in holding period.

Measuring and evaluating mutual funds performance:

Every investor investing in the mutual funds is driven by the motto of either wealth creation or

wealth increment or both. Therefore its very necessary to continuously evaluate the funds

performance with the help of factsheets and newsletters, websites, newspapers and

professional advisors like SBI mutual fund services. If the investors ignore the evaluation of

funds performance then he can loose hold of it any time. In this ever-changing industry, he

can face any of the following problems:

1. Variation in the funds performance due to change in its management/ objective.

2. The funds performance can slip in comparison to similar funds.

3. There may be an increase in the various costs associated with the fund.

4 .Beta, a technical measure of the risk associated may also surge.

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5. The funds ratings may go down in the various lists published by independent rating

agencies.

6 .It can merge into another fund or could be acquired by another fund house.

Performance measures:

Equity funds: the performance of equity funds can be measured on the basis of: NAV

Growth, Total Return; Total Return with Reinvestment at NAV, Annualized Returns and

Distributions, Computing Total Return (Per Share Income and Expenses, Per Share Capital

Changes, Ratios, Shares Outstanding), the Expense Ratio, Portfolio Turnover Rate, Fund Size,

Transaction Costs, Cash Flow, Leverage.

Debt fund: likewise the performance of debt funds can be measured on the basis of: Peer

Group Comparisons, The Income Ratio, Industry Exposures and Concentrations, NPAs,

besides NAV Growth, Total Return and Expense Ratio.

Liquid funds: the performance of the highly volatile liquid funds can be measured on the

basis of: Fund Yield, besides NAV Growth, Total Return and Expense Ratio.

Concept of benchmarking for performance evaluation:

Every fund sets its benchmark according to its investment objective. The funds performance is

measured in comparison with the benchmark. If the fund generates a greater return than the

benchmark then it is said that the fund has outperformed benchmark , if it is equal to

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benchmark then the correlation between them is exactly 1. And if in case the return is lower

than the benchmark then the fund is said to be underperformed.

Some of the benchmarks are :

1. Equity funds: market indices such as S&P CNX nifty, BSE100, BSE200, BSE-PSU, BSE

500 index, BSE bankex, and other sectoral indices.

2. Debt funds: Interest Rates on Alternative Investments as Benchmarks, I-Bex Total Return

Index, JPM T-Bill Index Post-Tax Returns on Bank Deposits versus Debt Funds.3. Liquid funds: Short Term Government Instruments Interest Rates as Benchmarks, JPM T-

Bill Index

To measure the funds performance, the comparisons are usually done with:

I)with a market index.

ii) Funds from the same peer group.

iii) Other similar products in which investors invest their funds.

Financial planning for investors( ref. to mutual funds):

Investors are required to go for financial planning before making investments in any mutual

fund. The objective of financial planning is to ensure that the right amount of money is

available at the right time to the investor to be able to meet his financial goals. It is more than

mere tax planning.Steps in financial planning are:

Asset allocation.

Selection of fund.

Studying the features of a scheme.

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In case of mutual funds, financial planning is concerned only with broad asset allocation,

leaving the actual allocation of securities and their management to fund managers. A fund

manager has to closely follow the objectives stated in the offer document, because financialplans of users are chosen using these objectives.

Why has it become one of the largest financial instruments?

If we take a look at the recent scenario in the Indian financial market then we can find the

market flooded with a variety of investment options which includes mutual funds, equities,

fixed income bonds, corporate debentures, company fixed deposits, bank deposits, PPF, life

insurance, gold, real estate etc. all these investment options could be judged on the basis ofvarious parameters such as- return, safety convenience, volatility and liquidity. measuring

these investment options on the basis of the mentioned parameters, we get this in a tabular

form

Return Safety Volatility Liquidity Convenienc

e

Equity High Low High High Moderate

Bonds Moderate High Moderate Moderate High

Co.

Debentures

Moderate Moderate Moderate Low Low

Co. FDs Moderate Low Low Low Moderate

Bank

Deposits

Low High Low High High

PPF Moderate High Low Moderate High

Life

Insurance

Low High Low Low Moderate

Gold Moderate High Moderate Moderate Gold

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Real Estate High Moderate High Low Low

Mutual

Funds

High High Moderate High High

We can very well see that mutual funds outperform every other investment option. On three

parameters it scores high whereas its moderate at one. comparing it with the other options, we

find that equities gives us high returns with high liquidity but its volatility too is high with low

safety which doesnt makes it favourite among persons who have low risk- appetite. Even the

convenience involved with investing in equities is just moderate.

Now looking at bank deposits, it scores better than equities at all

fronts but lags badly in the parameter of utmost important ie; it scores low on return , so its

not an happening option for person who can afford to take risks for higher return. The other

option offering high return is real estate but that even comes with high volatility and moderatesafety level, even the liquidity and convenience involved are too low. Gold have always been a

favourite among Indians but when we look at it as an investment option then it definitely

doesnt gives a very bright picture. Although it ensures high safety but the returns generated

and liquidity are moderate. Similarly the other investment options are not at par with mutual

funds and serve the needs of only a specific customer group. Straightforward, we can say that

mutual fund emerges as a clear winner among all the options available.

The reasons for this being:

I)Mutual funds combine the advantage of each of the investment products: mutual fund is

one such option which can invest in all other investment options. Its principle of diversification

allows the investors to taste all the fruits in one plate. just by investing in it, the investor can

enjoy the best investment option as per the investment objective.

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II)dispense the shortcomings of the other options: every other investment option has more

or les some shortcomings. Such as if some are good at return then they are not safe, if some are

safe then either they have low liquidity or low safety or both.likewise, there exists no singleoption which can fit to the need of everybody. But mutual funds have definitely sorted out this

problem. Now everybody can choose their fund according to their investment objectives.

III) Returns get adjusted for the market movements: as the mutual funds are managed by

experts so they are ready to switch to the profitable option along with the market movement.

Suppose they predict that market is going to fall then they can sell some of their shares and

book profit and can reinvest the amount again in money market instruments.

IV) Flexibility of invested amount: Other then the above mentioned reasons, there exists one

more reason which has established mutual funds as one of the largest financial intermediary

and that is the flexibility that mutual funds offer regarding the investment amount. One can

start investing in mutual funds with amount as low as Rs. 500 through SIPs and even Rs. 100

in some cases.

HOW TO CHOOSE BETWEEN FUNDS ?

When the market is flooded with mutual funds, its a very tough job for the investors to choose

the best fund for them. Whenever an investor thinks of investing in mutual funds, he must look

at the investment objective of the fund. Then the investors sort out the funds whose investment

objective matches with that of the investors. Now the tough task for investors start, they may

carry on the further process themselves or can go for advisors like SBI . Of course theinvestors can save their money by going the direct route i.e. through the AMCs directly but it

will only save 1-2.25% (entry load) but could cost the investors in terms of returns if the

investor is not an expert. So it is always advisable to go for MF advisors. The mf advisors

thoughts go beyond just investment objectives and rate of return. Some of the basic tools

which an investor may ignore but an mf advisor will always look for are as follow:

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1. Rupee cost averaging:

The investors going for Systematic Investment Plans(SIP) and Systematic Transfer Plans(STP)may enjoy the benefits of RCA (Rupee Cost Averaging). Rupee cost averaging allows an

investor to bring down the average cost of buying a scheme by making a fixed investment

periodically, like Rs 5,000 a month and nowadays even as low as Rs. 500 or Rs. 100. In this

case, the investor is always at a profit, even if the market falls. In case if the NAV of fund falls,

the investors can get more number of units and vice-versa. This results in the average cost per

unit for the investor being lower than the average price per unit over time.

The investor needs to decide on the investment amount and the frequency. More frequent the

investment interval, greater the chances of benefiting from lower prices. Investors can alsobenefit by increasing the SIP amount during market downturns, which will result in reducing

the average cost and enhancing returns. Whereas STP allows investors who have lump sums to

park the funds in a low-risk fund like liquid funds and make periodic transfers to another fund

to take advantage of rupee cost averaging.

2. Rebalancing:

Rebalancing involves booking profit in the fund class that has gone up and investing in the

asset class that is down. Trigger and switching are tools that can be used to rebalance a

portfolio. Trigger facilities allow automatic redemption or switch if a specified event occurs.

The trigger could be the value of the investment, the net asset value of the scheme, level of

capital appreciation, level of the market indices or even a date. The funds redeemed can be

switched to other specified schemes within the same fund house. Some fund houses allow such

switches without charging an entry load.

To use the trigger and switch facility, the investor needs to specify the event, the amount or thenumber of units to be redeemed and the scheme into which the switch has to be made. This

ensures that the investor books some profits and maintains the asset allocation in the portfolio.

3. Diversification:

Diversification involves investing the amount into different options. In case of mutual funds,

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the investor may enjoy it afterwards also through dividend transfer option. Under this, the

dividend is reinvested not into the same scheme but into another scheme of the investor's

choice.For example, the dividends from debt funds may be transferred to equity schemes. This gives

the investor a small exposure to a new asset class without risk to the principal amount. Such

transfers may be done with or without entry loads, depending on the MF's policy.

4. Tax efficiency:

Tax factor acts as the x-factor for mutual funds. Tax efficiency affects the final decision of

any investor before investing. The investors gain through either dividends or capitalappreciation but if they havent considered the tax factor then they may end loosing.

Debt funds have to pay a dividend distribution tax of 12.50 per cent (plus surcharge and

education cess) on dividends paid out. Investors who need a regular stream of income have to

choose between the dividend option and a systematic withdrawal plan that allows them to

redeem units periodically. SWP implies capital gains for the investor.

If it is short-term, then the SWP is suitable only for investors in the 10-per-cent-tax bracket.

Investors in higher tax brackets will end up paying a higher rate as short-term capital gains and

should choose the dividend option.

If the capital gain is long-term (where the investment has been held for more than one year),

the growth option is more tax efficient for all investors. This is because investors can redeem

units using the SWP where they will have to pay 10 per cent as long-term capital gains tax

against the 12.50 per cent DDT paid by the MF on dividends.

All the tools discussed over here are used by all the advisors and have helped investors in

reducing risk, simplicity and affordability. Even then an investor needs to examine costs, taximplications and minimum applicable investment amounts before committing to a service.

What are the most lucrative sectors for mutual fund managers?

This is a question of utmost interest for all the investors even for those who dont invest in

mutual funds. Because the investments done by the MFs acts as trendsetters. The investments

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made by the fund managers are used for prediction. Huge investments assure liquidity and

reflects appositive picture whereas tight investment policy reflects crunch and investors may

look forward for a gloomy picture.Their investments show that which sector is hot? And will set the market trends. The expert

management of the funds will always look for profitable and high paying sectors. So we can

have a look at most lucrative sectors to know about the recent trends:

Sector name No. of MFs betting on it

automotive 255banking & financialservices

196

cement & construction 237consumer durables 51conglomerates 218chemicals 259consumer non durables 146engineering & capitalgoods

317

food & beverages 175information technology 284media & entertainment 218

Manufacturing 259metals& mining 275Miscellaneous 250oil & gas 290Pharmaceuticals 250Services 200Telecom 264Tobacco 150Utility 225

From the above data collected we can say that engineering & capital goods sector has emergedas the hottest as most of the funds are betting on it. We can say that this sector is on boom and

presents a bright picture. Other than it other sectors on height are oil & gas, telecom, metals &

mining and information technology. Sectors performing average are automotive, cement &

construction, chemicals, media & entertainment, manufacturing, miscellaneous,

pharmaceuticals and utility. The sectors which are not so favourite are banking & financial

services, conglomerates, consumer non- durables, food & beverages, services and tobacco.

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And the sector which failed to attract the fund managers is consumer durables with just 51

funds betting on it.

Thus this analysis not only gives a picture of the mindset of fund managers rather it also

reflects the liquidity existing in each of the sectors. It is not only useful for investors of mutual

funds rather the investors of equity and debt too could take a hint from it. Asset allocation by

fund managers are based on several researches carried on so, it is always advisable for other

investors too take a look on it. It can be further presented in the form of a graph as follow :

RISK V/S. RETURN

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Chapter - 3

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Objectives and scope

OBJECTIVES OF THE STUDY

To make a comparative analysis between investment through Equity and Mutual fund routes.

Analyzing rationale behind choosing some Mutual funds and their attractiveness to individual

investors.

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Scope of the study

A big boom has been witnessed in Mutual Fund Industry in recent times. A large

number of new players have entered the market and trying to gain market share in this

rapidly improving market.

.

The study will help to know the preferences of the customers, which company,

portfolio, mode of investment, option for getting return and so on they prefer. This

project report may help the company to make further planning and strategy.

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Chapter 3

Company Profile

INTRODUCTION TO RELIANCE MUTUAL FUND

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Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Average Assets

Under Management (AAUM) of Rs. 1,19,981 Crores and an investor base of over 71.60 Lacs.(AAUM and investor count as of December(2009)AAUM .

Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the

fastest growing mutual funds in the country. RMF offers investors a well-rounded portfolio of

products to meet varying investor requirements and has presence in 159 cities across the

country. Reliance Mutual Fund constantly endeavors to launch innovative products and

customer service initiatives to increase value to investors. "Reliance Mutual Fund schemes are

managed by Reliance Capital Asset Management Limited., a subsidiary of Reliance Capital

Limited, which holds 93.37% of the paid-up capital of RCAM, the balance paid up capital being

held by minority shareholders."

Reliance Capital Ltd. is one of Indias leading and fastest growing private sector financial

services companies, and ranks among the top 3 private sector financial services and banking

companies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, life

and general insurance, private equity and proprietary investments,stock,broking,and,other,financial,services.

Sponsor:,Reliance,Capital,Limited

Trustee:,Reliance,Capital,Trustee,Co.,Limited

Investment,Manager:,Reliance,Capital,Asset,Management,Limited

Statutory Details: The Sponsor, the Trustee and the Investment Manager are incorporated

under the Companies Act 1956.

Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act, 1882 with

Reliance Capital Limited (RCL), as the Settlor/Sponsor and Reliance Capital Trustee Co. Limited

(RCTCL), as the Trustee.

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RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration

number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual Fund has been

changed to Reliance Mutual Fund effective 11th. March 2004 vide SEBI's letter no.

IMD/PSP/4958/2004 date 11th. March 2004. Reliance Mutual Fund was formed to launch various

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

to provide investors the opportunities to make investments in diversified securities.

The main objectives of the Trust are :

1. To carry on the activity of a Mutual Fund as may be permitted at law and formulate anddevise various collective.

2. Schemes of savings and investments for people in India and abroad and also ensure liquidity

of investments for the Unit holders;

3. To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on their

savings and

4. To take such steps as may be necessary from time to time to realize the effects without anylimitation.

SCHEMES OF RMF

Equity/Growth Schemes

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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 preferences. The

investors must indicate the option in the application form. The mutual funds also allow the

investors to change the options at a later date. Growth schemes are good for investors having a

long-term outlook seeking appreciation over a period of time.

Debt/Income Schemes

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

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

securities and money market instruments. Such funds are less risky compared to equity schemes.

These funds are not affected because of fluctuations in equity markets. However, opportunities of

capital appreciation are also limited in such funds. The NAVs of such funds are affected because

of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely

to increase in the short run and vice versa. However, long term investors may not bother about

these fluctuations.

Sector Specific Schemes

These are the funds/schemes which invest in the securities of only those sectors or industries as

specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods

(FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of

the respective sectors/industries. While these funds may give higher returns, they are more risky

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compared to diversified funds. Investors need to keep a watch on the performance of those

sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

Exchange Traded Funds (ETFs)

Exchange Traded Funds (ETFs) are usually passively managed mutual fund schemes tracking a

benchmark index and reflect the performance of that index. These schemes are listed on the stock

exchange and therefore have the flexibility of trading like a share on the stock exchange. It can

also be looked as a security that tracks an index, a commodity or a basket of assets like an index

fund, but trades like a stock on an exchange, thus experiencing price changes throughout the day

as it is bought and sold.

Fixed Maturity Plans (FMPs)

Fixed Maturity Plans (FMPs) are basically debt oriented investment schemes with a pre-specified

tenure offered by mutual funds. FMPs invest in a portfolio of debt instruments whose maturitycoincides with the maturity of the concerned FMP. The primary objective of a FMP is to

generate income while aiming to protect the capital by investing in a portfolio of debt and money

market securities. Since FMPs are available with several maturity options, one can invest in the

relevant plan depending upon his investment horizon and the requirement of cash flows.

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PRODUCTS OF RELIANCE MUTUAL FUND

Equity schemes

Reliance Growth Fund (An Open-ended Equity Growth Scheme): The primary investment

objective of the scheme is to achieve long term growth of capital by investing in equity and

equity related securities through a research based investment approach.

Reliance Vision Fund (An Open-ended Equity Growth Scheme): The primary investment

objective of the scheme is to achieve long-term growth of capital by investment in equity and

equity related securities through a research based investment approach.

Reliance Equity Opportunities Fund (An Open-ended Diversified Equity Scheme): The

primary investment objective of the scheme is to seek to generate capital appreciation &

provide long-term growth opportunities by investing in a portfolio constituted of equity

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securities & equity related securities and the secondary objective is to generate consistent

returns by investing in debt and money market securities.

Reliance Quant Plus Fund (An Open-ended Equity Scheme): The investment objective of

the Scheme is to generate capital appreciation through investment in equity and equity related

instruments. The Scheme will seek to generate capital appreciation by investing in an active

portfolio of stocks selected from S & P CNX Nifty on the basis of a mathematical model.

Reliance NRI Equity Fund (An Open-ended Diversified Equity Scheme): The primary

investment objective of the scheme is to generate optimal returns by investing in equity and

equity related instruments primarily drawn from the Companies in the BSE 200 Index.

Reliance Tax Saver (ELSS) Fund (An Open-ended Equity Linked Savings Scheme): The

primary objective of the scheme is to generate long-term capital appreciation from a portfolio

that is invested predominantly in equity and equity related instruments.

Reliance Regular Savings Fund (An open ended Scheme) Equity Option: The primary

investment objective of this Option is to seek capital appreciation and/or to generate consistent

returns by actively investing in equity / equity related securities. Balanced Option: The primary

investment objective of this Option is to generate consistent return and appreciation of capital

by investing in mix of securities comprising of Equity, Equity related Instruments & Fixed

income instruments.

Reliance Equity Fund (An open-ended Diversified Equity Scheme): The primary investment

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objective of the scheme is to seek to generate capital appreciation & provide long-term growth

opportunities by investing in a portfolio constituted of equity & equity related securities of top

100 companies by market capitalization & of companies which are available in the derivatives

segment from time to time and the secondary objective is to generate consistent returns by

investing in debt and money market securities.

Reliance Equity Advantage Fund (An Open ended Diversified Equity Scheme): The

primary investment objective of the scheme is to seek to generate capital appreciation &

provide long-term growth opportunities by investing in a portfolio predominately of equity &

equity related instruments with investments generally in S & P CNX Nifty stocks and the

secondary objective is to generate consistent returns by investing in debt and money market

securities.

Reliance Long Term Equity Fund(An open ended Diversified Equity Scheme): The

primary investment objective of the scheme is to seek to generate long term capital appreciation

& provide long-term growth opportunities by investing in a portfolio constituted of equity &

equity related securities and Derivatives and the secondary objective is to generate consistent

returns by investing in debt and money market securities.

Reliance Equity Linked Saving Fund Series I (A 10 year close-ended Equity Linked

Savings Scheme): The primary objective of the scheme is to generate long-term capital

appreciation from a portfolio that is invested predominantly in equities along with income tax

benefit.

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Reliance Natural Resources Fund (An Open Ended Equity Scheme): The primary

investment objective of the scheme is to seek to generate capital appreciation & provide long-

term growth opportunities by investing in companies principally engaged in the discovery,

development, production, or distribution of natural resources and the secondary objective is to

generate consistent returns by investing in debt and money market securities.

Reliance Infrastructure Fund (An open ended Equity Scheme): The primary investment

objective of the scheme is to generate long term capital appreciation by investing predominantly

in equity and equity related instruments of companies engaged in infrastructure and

infrastructure related sectors and which are incorporated or have their area of primary activity,

in India and the secondary objective is to generate consistent returns by investing in debt and

money market securities.

Debt schemes

Reliance Income Fund (An Open-ended Income Scheme): The primary investment objective of the

scheme is to generate optimal returns consistent with moderate level of risk. This income may be

complemented by capital appreciation of the portfolio. Accordingly, investments shall predominantly

be made in Debt & Money Market Instruments.

Reliance Liquid Fund (An Open-ended Liquid Scheme): The primary investment objective of the

scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity.

Accordingly, investments shall predominantly be made in Debt and Money Market Instruments.

Reliance Medium Term Fund (An Open-ended Income Scheme with no assured returns): The

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primary investment objective of the scheme is to generate regular income in order to make regular

dividend payments to unit holders and the secondary objective is growth of capital.

Reliance Short Term Fund (An Open-ended Income Scheme): The primary investment objective

of the scheme is to generate stable returns for investors with a short term investment horizon by

investing in fixed income securities of a short term maturity.

Reliance Gilt Securities Fund (An Open-ended Govt. Securities Scheme): The primary

investment objective of the scheme is to generate optimal credit risk-free returns by investing in aportfolio of securities issued and guaranteed by the Central Government and State Government.

Reliance Monthly Income Plan (An Open-ended Fund-Monthly Income is not assured & is

subject to the availability of distributable surplus): The primary investment objective of the

scheme is to generate regular income in order to make regular dividend payments to unitholders and

the secondary objective is growth of capital.

Reliance Floating Rate Fund (An Open-ended Liquid Scheme): The primary investment objective

of the scheme is to generate regular income through investment in a portfolio comprising

substantially of Floating Rate Debt Securities (including floating rate securitised debt, Money Market

Instruments and Fixed Rate Debt Instruments swapped for floating rate returns). The scheme shall

also invest in Fixed Rate Debt Securities (including fixed rate securitised debt, Money Market

Instruments and Fixed Rate Debt Instruments swapped for fixed returns).

Reliance NRI Income Fund (An Open-ended Income Scheme): The primary investment objective

of the scheme is to generate optimal returns consistent with moderate levels of risk. This income may

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SECTOR SPECIFIC SCHEMES

Reliance Pharma Fund (An Open-ended Pharma Sector Scheme): The primary investment

objective of the scheme is to seek to generate consistent returns by investing in equity and

equity related securities

Or fixed income securities of Pharma and other associated companies.

Reliance Diversified Power Sector Fund (An Open-ended Power Sector Scheme): The

primary investment objective of the scheme is to seek to generate continuous returns by actively

investing in equity and equity related or fixed income securities of Power and other associated

companies.

Reliance Media & Entertainment Fund (An Open-ended Media & Entertainment Sector

Scheme): The primary investment objective of the scheme is to generate continuous returns by

investing in equity and equity related or fixed income securities of Media & Entertainment and

other associated companies.

Reliance Banking Fund (An Open-ended Banking Sector Scheme): The primary investment

objective of the scheme is to generate continuous returns by actively investing in equity and

equity related or fixed income securities of Banks.

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Interval Fund / Fixed Maturity Plan

Reliance Interval Fund (A Debt Oriented Interval Scheme): The investment objective of the

scheme is to seek to generate regular returns and growth of capital by investing in a diversified

portfolio of Central and State Government securities and other fixed income/ debt securities normally

maturing in line with the time profile of the plan with the objective of limiting interest rate volatility.

Reliance Fixed Horizon Fund Plan C (A close-ended scheme): The primary investment objective

of the scheme is to seek to generate regular returns and growth of capital by investing in a diversified

portfolio of Central and State Government securities and other fixed income/ debt securities normally

maturing in line with the time profile of the scheme with the objective of limiting interest rate

volatility.

Reliance Fixed Horizon Fund - IV (A closeended income scheme): The primary investment

objective of the scheme is to seek to generate regular returns and growth of capital by investing in a

diversified portfolio of Central and State Government securities and other fixed income/ debt

securities normally maturing in line with the time profile of the scheme with the objective of limiting

interest rate volatility.

Reliance Fixed Horizon Fund - V (A closed-ended income scheme): The primary investment



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securities normally maturing in line with the time profile of the plan with the objective of limiting


Reliance Fixed Horizon Fund - VII (A closed-ended income scheme): The primary investment





Reliance Fixed Horizon Fund - VIII (A closed-ended income scheme): The primary investment





Reliance Fixed Horizon Fund - IX (A closed-ended income scheme): The primary investment





Reliance Fixed Horizon Fund X (A closed-ended income scheme): The primary investment



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Reliance Fixed Horizon Fund XII (A closed-ended income scheme): The primary investment





Reliance Fixed Horizon Fund XIII (A closed-ended income scheme): The primary investment




interest rate volatility

Exchange Traded Fund

Reliance Banking Exchange Traded Fund (An Open-ended, exchange listed, index linked

Scheme {tracking CNX Bank Index} )::The investment objective of Reliance Banking

Exchange Traded Fund (RBETF) is to provide returns that, before expenses, closely correspond

to the total returns of the securities as represented by the CNX Bank Index. However, the

performance of Scheme may differ from that of the underlying index due to tracking error.

Reliance Gold Exchange Traded Fund (An open ended Gold Exchange Traded Fund that

tracks the domestic prices of gold through investments in physical gold.) : The investment

objective is to seek to provide returns that closely correspond to returns provided by price of gold

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2009) and an investor base of over 71.60 Lacs.

Rapid growth in Assets Under Management (AUM), 87.7% growth in AUM year on

year. AUM of over Rs.46,306 crore ($10.62 billion) as on March 30, 2007 from Rs.

24,669 crore ($5.53 billion) as on March 31, 2006.

Accelerated growth in investor base 66.89% growth in investor base year on year. Over

3.38 million investors as on March 31, 2007 from over 2.02 million investors as on

March 31, 2006.

Reliance Mutual Fund has over 10 years of extensive market experience, over 26

schemes combined with a strong performance track record.

Reliance Equity Fund NFO (6th Feb -7th March 2006), the largest ever collection of

Rs.5,759 crore ($1.29 billion) in the history of the Indian Mutual Fund industry.

Footprint in over 100 cities in India

Wide network of 130 collection points

Wide portfolio of 26 well-rounded products to meet varying investor requirements.

Reliance Mutual Fund is amongst the few mutual funds in the industry to offer

Subscription, Redemption and Switch through Online Transactions.

Lipper Fund Award India 2007 :

Reliance Gilt Securities Fund-Long Term Plan-Growth was declared the best fund

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over 3 years in the Bond INR Government category, out of 52 eligible schemes.

Reliance Growth Fund-Growth Plan was declared the best fund over 5 years in the

Equity India category, out of 81 eligible schemes

.

Lipper Fund Award Gulf 2007 :

Reliance Banking Fund-Growth Plan-Growth Option was declared the best fund

over 3 years in Equity Sector Banks and Other Financials


Equity India category


Equity India category

Reliance Income Fund-Growth Plan-Growth Option was declared the best fund

over 5 years in Bond Indian Rupee General category

Reliance Gilt Securities Fund-Long Term Plan-Growth was declared the best fund

over 3 years in the Bond INR Government category

Reliance Short Term Fund-Growth Plan was declared the best fund over 3 years

in Bond Indian Rupee

CNBC TV18 - CRISIL Mutual Fund of the Year Awards 2006 :

Reliance Gilt Securities Fund - Long Term Plan was awarded CNBC TV18 - CRISIL

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Mutual Fund of the Year Awards 2006, in the Open End Long Term Gilt Category

Reliance Short Term Fund was awarded CNBC TV18 - CRISIL Mutual Fund of

the Year Awards 2006, in the Open End Debt Short Term Category

ICRA Mutual Funds Awards 2007 :

Reliance Short Term Fund has been ranked ICRA MFR 1 by ICRA Mutual Funds

Awards 2007 in the category Open Ended Debt Short Term for its 1 year performance

till December 31, 2006. The rank indicates performance within the top 10% of the stated

category.

Reliance Gilt Securities Fund - Long Term Retail Plan has been ranked ICRA

MFR 1 by ICRA Mutual Funds Awards 2007 in the category Open Ended Gilt -

Long Term for its 3 year performance till December 31, 2006. The rank indicates

performance within the top 10% of the stated category.

Reliance Liquidity Fund has been ranked ICRA MFR 1 by ICRA Mutual Funds

Awards 2007 in the category Open Ended Liquid Scheme for its 1 year

performance till December 31, 2006. The rank indicates performance within the

top 10% of the stated category.

The first mutual fund in India to offer instant cash withdrawal facility on investments.

Reliance Mutual Fund offers the Reliance Any Time Money (ATM) Card with select

schemes. The card is a boon for retail investors as it enables them to withdraw their

investment any time.

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COMPETITORS OF RELAINCE MUTUAL FUND

Some of the main competitors of SBI Mutual Fund are as Follows:

i. ICICI Mutual Fund

ii.SBI Mutual Fund

iii.UTI Mutual Fund

iv.Birla Sun Life Mutual Fund

v.Kotak Mutual Fund

vi.HDFC Mutual Fund

vii.Sundaram Mutual Fund

viii.LIC Mutual Fund

ix.Principal

x.Franklin Templeton

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Chapter 4

Research Methodology

RESEARCH METHODOLOGY

Data Collection

Secondary Data

Secondary data was collected from various sources such as internet and financial magazines.

Primary Data

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In Primary data, structured questionnaire was made and the target respondents were asked to fill the

questionnaire.

Questionnaire Design

Objective was to make respondents little familiar with the context of the questions. This was also

aimed at collecting data about the sample profile thatll be subsequently analyzed so that the scope of

the project is fully explored.

Question 1: was aimed to check the awareness level of the respondent about various investment

avenues.?Question 2: was an open ended question intended to find out some more factors which people

consider important while investing?

Question 3: was aimed to understand the most preferred mode of investment?

Question 4: was designed to understand the types of mutual fund where people have invested?

Question 5: was designed to understand the importance of past returns in making decisions about

various investment schemes?

Question 6: was designed to understand if returns were the only criteria for evaluating the

performance?Question 7: was designed to understand the approach of people in making investment?

Question 8: was designed to find out what factors are considered important by people who invest

different investments?

Question 9: was formulated to know the period of portfolio review done by people?

Question 10: was put to find out the long term and short term investors?

Question 11: was asked to find out how actively investors change their portfolio?

Question :12 was asked to compare the equity diversified mutual funds and direct equity?

Question 13 & 15: were asked to judge the factors why people prefer to invest in Mutual Funds and

Direct Equity?

Question 14: was asked to find out the availability of information sources for various schemes?

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Sampling

Sample Framework

The sample framework consists of a people who have invested in any funds or investment

schemes.

Sample Design

The sample was taken using convenient sampling.

Sample sizeThe sample size was around 120 respondents.

Procedure for data collection

For the purpose of primary data collection the target population was administered with a

questionnaire which had both structured as well as unstructured questions.

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Chapter 6

Findings and analysis

Findings and analysis

In this chapter the findings of the performance evaluation of the various equity diversified mutual

funds and direct equity with respect to benchmarks is listed. The mutual funds and stocks have been

chosen on the basis of their returns over past five years. The benchmark chosen is BSE Sensex for the

comparison. The mutual funds chosen are:

1. SBI Magnum Global Fund (G)

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2. ICICI Prudential Services Indus.(G)

3. ICICI Prudential Dynamic Plan (G)

4. Reliance Growth Fund (G)5. Birla Frontline Equity (G)

Direct Equity chosen for purpose are:

1. Reliance Industries

2. Tata Motors

3. State Bank of India

4. Infosys Technologies

Reliance Diversified Power Sector Fund - Retail Plan (G)Absolute Returns (as on Jan 22,10)Period Returns (%) Rank #1 mth -0.1 8

3 mths -0.2 96 mths 17.4 81 year 104.7 62 year 4.8 43 year 109.5 15 year 543.9 1

Absolute Returns (in %)

Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Annual2009 -2.5 55.0 16.4 -0.2 89.72008 -23.6 -16.5 1.0 -21.2 -50.72007 -6.5 31.7 25.7 43.6 122.62006 31.0 -21.4 21.6 22.8 58.8

2005 13.0 6.3 30.4 11.4 81.4

Investment informationFund Type Open-EndedInvestment Plan GrowthAsset Size (Rs cr) 5,785.43 (Dec-31-2009)Minimum Investment Rs.5000Last Dividend N.A. VBonus N.A.

Launch Date Apr 15, 2004

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Benchmark N.A.Fund Manager Sunil Singhania

Notes N.A.

Entry Load N.A.Exit Load 1.00%Load Comments Exit load - 1% if redeemed/switched out on or before completion of

1 yrs from the date of allotment.

PortfolioTop Holdings (Dec 31, 09)Equity Sector Value

(Rs cr)Asset%

Torrent power Utilities 401.07 6.93Jindal Steel Metals & Mining 279.50 4.83Reliance Infra Utilities 267.31 4.62ICICI Bank Banking/Finance 255.98 4.42Cummins Engineering 236.92 4.10Tata Power Utilities 236.81 4.09Jaiprakash Asso Cement 209.40 3.62ONGC Oil & Gas 199.93 3.46PTC India Services 177.89 3.07Larsen Engineering 160.57 2.78

Sector Allocation (Dec 31, 09)Sector % -- 1-Year --

High LowEngineering 21.84 13.79 13.79Utilities 17.91 10.32 10.32Banking/Finance 10.09 8.27 8.27Metals & Mining 8.05 4.15 4.15Oil & Gas 6.49 6.04 6.04

Telecom 4.27 0.00 0.00

Asset Allocation (%) (Dec 31,09)Equity 76.78

Others 10.91

Debt 0.00Mutual Funds N.A

Money Market 0.00

Cash / Call 12.31

Concentration

Holdings %

Top 5 24.90

Top 10 41.92

Sector %

Top 3 49.84

Portfolio-holdings

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http://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=JSP&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=RI38&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=ICI02&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=CI02&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=TPC&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=JA02&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=ONG&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=PTC02&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=LT&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=JSP&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=RI38&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=ICI02&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=CI02&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=TPC&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=JA02&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=ONG&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=PTC02&flag=MChttp://www.moneycontrol.com/stocks/company_info/pricechart.php?sc_did=LT&flag=MC


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Portfolio (As on Dec 31, 2009)

Equity Value(Rs in cr.)

Qty %

Torrent Power 401.07 12,441,937.006.93

Jindal Steel & Power 279.50 3,970,387.00 4.83

Reliance Infrastructure 267.31 2,330,698.00 4.62

ICICI Bank 255.98 2,923,199.00 4.42

Cummins India 236.92 5,530,906.00 4.10

Tata Power Company 236.81 1,718,554.00 4.09

Jaiprakash Associates 209.40 14,254,572.003.62

Oil and Natural Gas Corporation 199.93 1,697,882.00 3.46

PTC India 177.89 15,756,207.003.07

Larsen and Toubro 160.57 956,116.00 2.78

Siemens 136.65 2,347,376.00 2.36KEC International 134.37 2,291,286.00 2.32

Crompton Greaves 134.20 3,151,264.00 2.32

Rural Electrification Corporation 132.10 5,424,906.00 2.28

NTPC 131.24 5,568,055.00 2.27

Sterlite Industries (India) 127.48 1,479,483.00 2.20

ABB 122.73 1,599,554.00 2.12

State Bank of India 122.58 540,118.00 2.12

Sterlite Technologies 110.10 2,977,741.00 1.90

Punj Lloyd 103.57 5,050,890.00 1.79

Kirloskar Brothers 98.28 3,756,816.00 1.70

Hindustan Petroleum Corporation 88.56 2,266,817.00 1.53

Reliance Industries 87.00 798,643.00 1.50

BGR Energy Systems 84.16 1,709,111.00 1.45

Bajaj Electricals 83.26 1,018,581.00 1.44

Infrastructure Development Finance Company 73.20 4,748,746.00 1.27

Thermax 68.72 1,129,583.00 1.19

Alstom Projects 60.15 1,053,436.00 1.04

Jyoti Structures 59.80 3,460,646.00 1.03

JSL 58.66 4,750,051.00 1.01

Others / Unlisted Value(Rs in cr.)

Rating %

Equity Less Than 1% of Corpus 631.29 10.91

Cash / Call Value(Rs in cr.)

Rating %

Derivatives,Cash and Other Receivables 711.97 12.31

Portfolio-sector allocation

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http://www.moneycontrol.com/india/stockpricequote/power-generationdistribution/torrentpower/TP14http://www.moneycontrol.com/india/stockpricequote/steel-spongeiron/jindalsteelpower/JSPhttp://www.moneycontrol.com/india/stockpricequote/power-generationdistribution/relianceinfrastructure/RI38http://www.moneycontrol.com/india/stockpricequote/banks-privatesector/icicibank/ICI02http://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/CI02http://www.moneycontrol.com/india/stockpricequote/power-generationdistribution/tatapowercompany/TPChttp://www.moneycontrol.com/india/stockpricequote/constructioncontracting-civil/jaiprakashassociates/JA02http://www.moneycontrol.com/india/stockpricequote/oildrillingandexploration/oilnaturalgascorporation/ONGhttp://www.moneycontrol.com/india/stockpricequote/trading/ptcindia/PTC02http://www.moneycontrol.com/india/stockpricequote/engineering-heavy/larsentoubro/LThttp://www.moneycontrol.com/india/stockpricequote/telecommunications-equipment/siemens/Shttp://www.moneycontrol.com/india/stockpricequote/power-transmissionequipment/kecinternational/KEC04http://www.moneycontrol.com/india/stockpricequote/electricequipment/cromptongreaves/CGhttp://www.moneycontrol.com/india/stockpricequote/finance-termlendinginstitutions/ruralelectrificationcorporation/REC02http://www.moneycontrol.com/india/stockpricequote/power-generationdistribution/ntpc/NTPhttp://www.moneycontrol.com/india/stockpricequote/metals-nonferrous/sterliteindustries(india)/SIIhttp://www.moneycontrol.com/india/stockpricequote/electricequipment/abb/ABBhttp://www.moneycontrol.com/india/stockpricequote/banks-publicsector/statebankindia/SBIhttp://www.moneycontrol.com/india/stockpricequote/cables-telephone/sterlitetechnologies/ST20http://www.moneycontrol.com/india/stockpricequote/engineering/punjlloyd/PL9http://www.moneycontrol.com/india/stockpricequote/pumps/kirloskarbrothers/KB02http://www.moneycontrol.com/india/stockpricequote/refineries/hindustanpetroleumcorporation/HPChttp://www.moneycontrol.com/india/stockpricequote/refineries/relianceindustries/RIhttp://www.moneycontrol.com/india/stockpricequote/engineering-heavy/bgrenergysystems/BEShttp://www.moneycontrol.com/india/stockpricequote/domesticappliances/bajajelectricals/BEhttp://www.moneycontrol.com/india/stockpricequote/finance-termlendinginstitutions/infrastructuredevelopmentfinancecompany/IDFhttp://www.moneycontrol.com/india/stockpricequote/engineering/thermax/Thttp://www.moneycontrol.com/india/stockpricequote/power-transmissionequipment/alstomprojects/AP29http://www.moneycontrol.com/india/stockpricequote/power-transmissionequipment/jyotistructures/JS03http://www.moneycontrol.com/india/stockpricequote/steel-mediumsmall/jsl/JSL01http://www.moneycontrol.com/india/stockpricequote/power-generationdistribution/torrentpower/TP14http://www.moneycontrol.com/india/stockpricequote/steel-spongeiron/jindalsteelpower/JSPhttp://www.moneycontrol.com/india/stockpricequote/power-generationdistribution/relianceinfrastructure/RI38http://www.moneycontrol.com/india/stockpricequote/banks-privatesector/icicibank/ICI02http://www.moneycontrol.com/india/stockpricequote/engines/cumminsindia/CI02http://www.moneycontrol.com/india/stockpricequote/power-generationdistribution/tatapowercompany/TPChttp://www.moneycontrol.com/india/stockpricequote/constructioncontracting-civil/jaiprakashassociates/JA02http://www.moneycontrol.com/india/stockpricequote/oildrillingandexploration/oilnaturalgascorporation/ONGhttp://www.moneycontrol.com/india/stockpricequote/trading/ptcindia/PTC02http://www.moneycontrol.com/india/stockpricequote/engineering-heavy/larsentoubro/LThttp://www.moneycontrol.com/india/stockpricequote/telecommunications-equipment/siemens/Shttp://www.moneycontrol.com/india/stockpricequote/power-transmissionequipment/kecinternational/KEC04http://www.moneycontrol.com/india/stockpricequote/electricequipment/cromptongreaves/CGhttp://www.moneycontrol.com/india/stockpricequote/finance-termlendinginstitutions/ruralelectrificationcorporation/REC02http://www.moneycontrol.com/india/stockpricequote/power-generationdistribution/ntpc/NTPhttp://www.moneycontrol.com/india/stockpricequote/metals-nonferrous/sterliteindustries(india)/SIIhttp://www.moneycontrol.com/india/stockpricequote/electricequipment/abb/ABBhttp://www.moneycontrol.com/india/stockpricequote/banks-publicsector/statebankindia/SBIhttp://www.moneycontrol.com/india/stockpricequote/cables-telephone/sterlitetechnologies/ST20http://www.moneycontrol.com/india/stockpricequote/engineering/punjlloyd/PL9http://www.moneycontrol.com/india/stockpricequote/pumps/kirloskarbrothers/KB02http://www.moneycontrol.com/india/stockpricequote/refineries/hindustanpetroleumcorporation/HPChttp://www.moneycontrol.com/india/stockpricequote/refineries/relianceindustries/RIhttp://www.moneycontrol.com/india/st

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