A SUMMER TRAINING PROJECT REPORT REPORT ON RELIANCE MUTUAL FUND Submitted To Kurukshetra University, Kurukshetra In the Partial fulfillment

of the requirement for the degree Of MASTERS OF BUSINESS ADMINISTRATION SESSION (2009-2011)

SUBMITTED TO: KURUKSHETRA UNIVERSITY, KURUKSHETRA

SUBMITTED BY:NITISH BHARDWAJ M.B.A 3rd SEM. College Roll No. 1014 University Roll No.-

KARNAL INSTITUTE OF TECHNOLOGY & MANAGEMENT, KARNAL (Approved by AICTE, Affiliated to Kurukshetra University, Kurukshetra)

ACKNOWLEDGEMENT

It is my pleasure to be indebted to various people, who directly or indirectly contributed in the development of this work and who influenced my thinking, behavior, and acts during the course of study. I express my sincere gratitude to Dr. R.B. Sangwan, worthy Principal for providing me an opportunity to undergo Summer Training Project Report on reliance mutual fund I am thankful to Mr. sanjeev chouhan for his support, cooperation, and motivation provided to me during the training for constant inspiration, presence and blessings. I also extend my sincere appreciation to Miss Vidhi bansal who provided his valuable suggestions and precious time in accomplishing my project report. Lastly, I would like to thank the almighty and my parents for their moral support and my friends with whom I shared my day-to-day experience and received lots of suggestions that improved my quality of work.

NITISH BHARDWAJ

DECLARATION

I, Nitish Bhardwaj, student of MBA IIIrd Semester, studying at Karnal Institute of Technology and Management, Karnal, hereby declare that the Research Report on RELIANCE MUTUAL FUND submitted to Kurukshetra University, Kurkshetra in partial fulfillment of Degree of Masters of Business Administration is the original work conducted by me.

The information and data given in the report is authentic to the best of my knowledge.
This summer training report is not being submitted to any other University for award of any other Degree, Diploma and Fellowship.

NITISH BHARDWAJ

PREFACE

With the regards of my extreme good luck I got an opportunity to work with the one of the most reputed organization, where I came to know the vitality of savings and its proper management by investing it in various ways to yield maximum return. In a developing country like India, where the largest sector is composed of the middle class, savings act as foundation for the economical support and a financial-crisisproof system. Thus studying the various modes and methods of utilizing that savings so as to gain maximum return is quite nice field to get trained as a management trainee. Thats why during my training, a comparative study of different methods of long term investment viz fixed deposits, recurring deposits, long term investment in shares and bonds and mutual funds, not only captured my attention but also made me curious about the reliances New Fund Offer (NFO) that is Reliance Infrastructure Fund. This study would not only help me as a management student to gain a deep insight of how an organization works but also to put practical usage of all the management techniques that I have learnt. This project would also help me analyze the difference between the organizational realities and the theories that have been taught in my academic sessions and also gave me a real experience of the corporate world and let me better understand how it function. If the analysis of the report and the recommendation made by me would be practically feasible to be put to test in real life situations & this endeavor of mine is able to satisfy all those concerned and proves useful to anyone, I shall consider all my hard work worthwhile.

CONTENTS

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

Mutual funds Objective Fixed deposits Recurring deposits Shares Bonds Post office deposits Systematic investment plan Reliance mutual fund Reliance infrastructure fund Conclusion Suggestion Bibliography

CHAPTER-1 INTRODUCTION

Executive Summary

The entire report is an unforgettable journey of support, knowledge, experience, dedication, perfection, and patience. For me it is all about to understand a customer and market of mutual fund industry.

The report is specially oriented to particular area, though it is representing the strong base of Investment management-which covers different investment avenues, their handling contribution, strategy, portfolios, and related risk factors. Mutual funds- how they are formed, history, scenario, types, trends, myths, distribution, advantages, and even disadvantages of them. Tips to effectively sell the mutual funds, to be effective agent, some dos and donts about mutual funds while investing. Company details and its progress and its interpretation base for analysis, conclusion, findings, and questionnaire, which helped a lot in consumer, survey analysis. Asset allocation, accounting, taxation, valuation and necessary information for generating base for conclusion. And at last but not the least the collected data from city and their interpretation.

In short all efforts which was made to make this report explains

WORK IS WORSHIP

THE COMPANY PROFILE

Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Average Assets Under Management (AAUM) of Rs.1,02,730 Cr (AAUM for 31st May 09 ) and an investor base of over 71.30 Lac. 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 wellrounded portfolio of products to meet varying investor requirements and has presence in 118 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.

STATUTORY DETAILS: SPONSOR: Reliance Capital Limited. TRUSTEE: Reliance Capital Trustee Co. Limited.

INVESTMENT MANAGER: Reliance Capital Asset Management Limited. The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956. 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 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.

From time to time reliance mutual fund has launched various schemes regarding the best possible deployment of investors money in various high yield fetching plans. In this series from 1995 to 2009 a wide range of fund offers have been launched, some of them can be enlisted below-

Reliance Growth Fund- September 1995 Reliance Vision Fund- September 1995 Reliance Banking Fund- May 2003

 Reliance diversified Power Sector Fund- March 2004 Reliance Equity Opportunity Fund- February 2005 Reliance Regular Saving Fund- May 2005 Reliance Tax Saver Fund (ELSS) - July 2005 Reliance Equity Fund- February 2006 Reliance Long Term Equity Fund- November 2006 Reliance Equity Advantage Fund- June 2007 Reliance Natural Resource Fund- Jannuary 2008 Reliance Infrastructure Fund- May 2009 (NFO)

RELIANCE INFRASTRUCTURE FUND The particulars of the Scheme have been prepared in accordance with the Securities and Exchange Board of India Regulations 1996, (I)INVESTMENT OBJECTIVE: The primary investment objective of the scheme is to generate long term capital appreciation securities 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 and the secondary objective is to generate consistent returns by investing in debt and money market. (II) LIQUIDITY: The Scheme will offer for Subscription/Switch-in and Redemption/ Switch-out of Units on every Business Day on an ongoing basis, commencing not later than 30 days from the closure of New Fund Offer Period. As per SEBI Regulations, the Mutual Fund shall dispatch redemption proceeds within 10 Business Days of receiving a valid Redemption request. A penal interest of 15% or such other rate as may be prescribed by SEBI from time to time, will be paid in case the redemption proceeds are not made within 10 Business Days of the date of receipt of a valid redemption request. However, under normal circumstances, the Mutual Fund will endeavor to dispatch the Redemption cheque within 3 - 4 Business Days from the acceptance of a valid redemption request.

(III) BENCHMARK:BSE 100 (IV)TRANSPARENCY/NAV DISCLOSURE: The AMC will calculate and disclose the first NAV not later than 30 days from the closure of New Fund Offer Period. Subsequently, the NAV will be calculated and disclosed at the close of every Business Day which shall be published in at least two daily newspapers and also uploaded on the AMFI site www.amfi india.com and Reliance Mutual Fund site i.e. www.reliancemutual.com.

 Publication of Abridged Half-yearly Unaudited Financial Results in the newspapers or as may be prescribed under the Regulations from time to time. Communication of Portfolio on a half-yearly basis to the Unit holders directly or through the Publications or as may be prescribed under the Regulations from time to time. Dispatch of the Annual Reports of the respective Schemes within the stipulated period as required under the Regulations. (V) LOADS: During the New Fund Offer (NFO) Period & Continuous Offer Period including SIP Installments

RESEARCH

OBJECTIVE
The primary objective of the research is to find out the general tendency of investors to invest in different financial products and to invest in Reliance Mutual fund. Here we also want to know that the investors are aware about Reliance Infrastructure Fund or not, if yes than what they think about it.

Here we had just made an effort to tell the investors about the NFO of Reliance Infrastructure Fund. We had also tried to make them aware about the features of Infrastructure Fund and the benefits of investing in Infrastructure sector .As well as the objective of my project is to compare the different sources of long term investment that may be bank fixed deposits, recurring deposits, shares, bonds and mutual fund. After a comparison I have to decide and reach at the conclusion that which one among these sources is better for customer, who is knowledgeable and non knowledgeable for direct investment and investment through mutual funds. Apart from these the objective of my study and this report has also been reliances newly launched fund offer, the reliance infrastructure fund. Its constituents, futureperceptions regarding the performance and also its various pros and cons should be studied, discussed and formulated thoroughly.

TYPE OF RESEARCH:

The research is descriptive & a bit of exploratory in nature because the questionnaire carries close ended questions. The interviewers were also supposed to anticipate the things, which they had analyzed on the basis of observations.

SOURCES OF DATA:

The study is survey based and the primary data was collected through a structured questionnaire and through personal interaction with respondents. UNIVERSE & SAMPLE:

UNIVERSE: Office of the Reliance & near by work area

SAMPLE UNITS: Sample units chosen for the project is urban .

SAMPLE DESIGN: Convenience sampling is used.

SAMPLE SIZE: A sample of 100 respondents was taken for the purpose of the study mainly consumers of soft drinks. The technique of convenient sampling was used. Every care was taken to select the respondents from different regions so as to make the study fairly representative

ANALYSIS TECHNIQUE & FORMULAE:

ANALYSIS TECHNIQUE: Techniques used for data presentation and analyses are: Tabulation. Ranking. Percentage method. Weighted average. Column.

THEORETICAL OVERVIEW
MUTUAL FUND CONCEPT

A mutual fund is just the connecting bridge of a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the gathered money in to specific securities(stocks and bonds).when u

invest in a mutual fund , your buying units or portion of mutual fund and thus on investing becomes a shareholder or a unit holder of mutual fund. A mutual fund enables investors to pool their money and place it under professional investment management. The portfolio manager trades the fund's underlying securities, realizing a gain or loss, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. There are more mutual funds than there are individual stocks. In other words: - 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 the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. The small savings of all the investors are put together to increase the buying power and hire a professional manager to invest and monitor the money. Each Mutual Fund scheme has a defined investment objective and strategy. WHAT IS THE STRUCTURE OF MUTUAL FUND INDUSTRY? There are many entities involved in a mutual fund. This is what makes it safer than other investment avenues. Everyone is accountable for their part in the fund structure. SPONSOR: is like the promoter of a company.

ASSET MANAGEMENT COMPANY (AMC): approved by SEBI, it manages the funds by making investments in various types of instruments and securities. TRUSTEES: hold the mutual funds property for the benefit of unit holders. They are an independent authority set up under the aegis of SEBI. CUSTODIAN: registered with SEBI, it holds the securities of various schemes of fund in its custody. TRANSFER AGENTS: also known as Registrars, transfer the units to the unit holders accounts. DISTRIBUTORS/AGENTS: sell units on behalf of funds and are generally appointed by the AMC. APPLICABLE NAV: Applicable NAV is the Net Asset Value per Unit at the close of the Business Day on which the application for purchase or redemption/switch is received at the designated investor service centre and is considered accepted on that day. An application is considered accepted on that day, subject to it being complete in all respects and received prior to the cut-off time on that Business Day. ASSET MANAGEMENT COMPANY / AMC / INVESTMENT MANAGER: Reliance Capital Asset Management Limited, the Asset Management Company incorporated under the Companies Act,1956, and authorized by SEBI to act as the Investment Manager to the Schemes of Reliance Mutual Fund (RMF). BONUS UNIT: Bonus Unit means and includes, where the context so requires, a unit issued as fully paid-up bonus unit by capitalizing a part of the amount standing to the credit of the account of the reserves formed or otherwise in respect of this scheme.

BUSINESS DAY: A business day means any day other than Saturday, Sunday or a day on which The Stock Exchange, Mumbai or National Stock Exchange Limited or Reserve Bank of India or Banks in Mumbai are closed or a day on which there is no RBI clearing/settlement of securities or a day on which the sale and/or

redemption and /or switches of Units is suspended by the Trustees /AMC or a day on which normal business could not be transacted due to storms, floods, bands, strikes or any other events as the AMC may specify from time to time. CDSC: Contingent Deferred Sales Charge, a charge imposed when the units are redeemed within the first four years of unit ownership. The SEBI (Mutual Fund) Regulations, 1996 provides that a CDSC may be charged only for the first four years after purchase and mandates the maximum amount that can be charged in each year. PORTFOLIO: Combined holdings of many kinds of financial securities like shares, debentures and bonds. The objective is risk diversification and maximization of gain of group of assets. CORPUS: The total amount of money that a fund has at any point of time. LOAD: A load is a one time sales charge paid by an investor while buying or selling units of a scheme. An entry load is charged at the time of purchase of units and an exit load is charged at the time of redemption.

CONCEPT OF MUTUAL FUND

As the above chart tells that when several investors invest their money, this pool is invested in different securities by fund manager. The returns generates by this investment.

THE TRADITIONAL AND DISTINGHUISHING CHARACTERISTICS OF MUTUAL FUND-

Investors purchase mutual fund shares from the fund itself (or through a broker for the fund), but are not able to purchase the shares from other investors on a secondary market, such as the New York Stock Exchange or NASDAQ Stock Market. The price investors pay for mutual fund shares is the funds per share net asset value (NAV) plus any shareholder fees that the fund imposes at purchase (such as sales loads). Mutual fund shares are "redeemable." This means that when mutual fund investors want to sell their fund shares, they sell them back to the fund (or to a broker acting for the fund) at their approximate NAV, minus any fees the fund imposes at that time (such as deferred sales loads or redemption fees).Mutual funds generally sell

their shares on a continuous basis, although some funds will stop selling when, for example, they become too large. The investment portfolios of mutual funds typically are managed by separate entities known as "investment advisers" that are registered with the SEBI. Mutual funds come in many varieties. For example, there are index funds, stock funds, bond funds, money market funds, and more. Each of these may have a different investment objective and strategy and a different investment portfolio. Different mutual funds may also be subject to different risks, volatility, and fees and expenses. All funds charge management fees for operating the fund. Some also charge for their distribution and service costs, commonly referred to as "12b-1" fees. Some funds may also impose sales charge or loads when you purchase or sell fund shares. In this regard, a fund may offer different "classes" of shares in the same portfolio, with each class having different fees and expenses. To figure out how the costs of a mutual fund add up over time and to compare the costs of different mutual funds, you should use the SECs Mutual Fund Cost Calculator. Some funds may reduce their sales charges depending on the amount you invest in the fund. At certain thresholds, known as breakpoints, you may receive increasingly lower sales charges as your investment increases. Keep in mind that just because a fund had excellent performance last year does not necessarily mean that it will duplicate that performance. For example, market conditions can change and this years winning fund might be next years loser. That is why the SEC requires funds to tell investors that a funds past performance does not necessarily predict future results. To understand the factors you should consider before investing in a mutual fund, read Mutual Fund Investing: Look at More Than a Mutual Fund's Past Performance. In addition, you should carefully read all of a funds available information, including its prospectus, or profile if it has one, and most recent shareholder report.

There are some investment companies, known as exchange-traded funds or ETFs which are legally classified as open-end companies or UIT. ETF differ from traditional open-end companies and UIT, because, pursuant to SEC exceptive orders, shares issued by ETF trade on a secondary market and are only redeemable in very large blocks (blocks of 50,000 shares for example). ETF are not considered to be, and are not permitted to call themselves, mutual funds. Mutual funds are subject to SEC registration and regulation, and are subject to numerous requirements imposed for the protection of investors. Mutual funds are regulated primarily under the Investment Company Act of 1940 and the rules and registration forms adopted under that Act. Mutual funds are also subject to the Securities Act of 1933 and the Securities Exchange Act of 1934.

HOW TO INVEST IN MUTUAL FUNDSTEP ONE - IDENTIFY YOUR INVESTMENT NEED Your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, and level of income and expenses among many other factors. Therefore, the first step is to assess your needs. You can begin by defining your investment objectives and needs, which could be regular income, buying a home or finance a wedding or educate your children or a combination of all these needs, the quantum of risk you are willing to take and your cash flow requirements.

STEP TWO - CHOOSE THE RIGHT MUTUAL FUND

The important thing is to choose the right mutual fund scheme, which suits your requirements. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed by the same Fund Manager. Some factors to evaluate before choosing a particular Mutual Fund are the track record of the performance of the fund over the last few years in relation to the appropriate yardstick and similar funds in the same category. Other factors could be the portfolio allocation, the dividend yield and the degree of transparency as reflected in the frequency and quality of their communications.

STEP THREE - SELECT THE IDEAL MIX OF SCHEMES Investing in just one Mutual Fund scheme may not meet all your investment needs. You may consider investing in a combination of schemes to achieve your specific goals. So one should select the proper group of schemes to invest their funds, so that their savings should give maximum possible returns in minimum possible time.

STEP FOUR - INVEST REGULARLY The best approach is to invest a fixed amount at specific intervals, say every month. By investing a fixed sum each month, you buy fewer units when the price is higher and more units when the price is low, thus bringing down your average cost per unit. This is called rupee cost averaging and do investors all over the world follow a disciplined investment strategy. You can also avail the systematic investment plan facility offered by many open-end funds.

STEP FIVE - START EARLY It is desirable to start investing early and stick to a regular investment plan. If you start now, you will make more than if you wait and invest later. The power of compounding lets you earn income on income and your money multiplies at a compounded rate of return.

BRIEF HISTORY OF MUTUAL FUNDMutual funds were introduced in India in July 1964 with the establishment of Unit Trust of India (UTI 1963). The motive behind the establishment of this formal institution was the desire to increase the propensity of the middle and the lower groups to save and to invest. UTI came into existence during a period marked by great political and economic uncertainty in India. With war on the borders and economic turmoil that depressed the financial market, entrepreneurs were hesitant to enter capital market. The already existing companies found it difficult to raise fresh capital, as investors did not respond adequately to new issues. UTI commenced its operation from July 1964 with a view to encouraging savings and investment and participation in the income, profits and gains accruing to the Corporation from the acquisition, holding, management and disposal of securities. UTI enjoyed 23 years of monopoly in the mutual fund industry. The industry was one entity Show till 1987 when the monopoly of UTI was broken when SBI and Can bank Mutual Fund entered into the arena. This was followed by the entry of others like LIC, GIC etc sponsored by public sector banks. Amendment to the Banking Regulation Act in 1983, which empowered the RBI to permit the banks to carry on non-banking business such as leasing, mutual funds etc. under section 6 of this Act, was a major factor, which helps in ending of this monopoly. Whereas 1986 was the year for the entry of the other public sector mutual find, 1993 was the year

for entry of other public sector mutual funds. Starting with an asset base of Rs. 0.25 ban in 1964 the industry has grown at a compounded average growth of approx. 26 % to its current size. A mutual fund is an investment vehicle, which pools the money of many investors. The funds manager uses the money collected to purchase securities such as stocks and bonds. The securities purchased are referred as to the funds portfolio. A professional money manager who is called fund manager manages a mutual funds portfolio. The managers business is to choose securities, which are best, suited for the portfolio. Investments in securities are spread across a wide crosssection 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.

TYPES OF MUTUAL FUND

Mutual fund schemes may be classified on the basis of its structure and its investment objective. According to Stricter (a) OPEN-ENDED SCHEME:- An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity Period. Investors can conveniently buy and sell units at Net Asset Value (NAV) Related prices, which are declared on a daily basis. The key feature of open-end Schemes is liquidity. (B) CLOSEENDED SCHEME:- A closeended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of Launch of the scheme. Investors can invest in the scheme at the time of the Initial public issue and thereafter they can buy or sell the

units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the Units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual fund schemes disclose NAV generally on weekly basis. (C) INTERVAL SCHEME:- Interval funds combine the features of open-ended and close ended-schemes. They are open for sale or redemption during predetermine at NAV related prices.

ACCORDING TO INVESTMENT OBJECTIVE

(A) GROWTH/EQUITY ORIENTED SCHEME:The aim of growth funds is to provide capital appreciation over the medium to Long- Term. Such schemes normally invest a majority of their corpus in Equities. It has been proven that returns from stocks, have outperformed most other kind of investment held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time.

(B) INCOME/DEBT ORIENTED SCHEME:The aim of the income fund 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 fluctuation in equity markets. However, opportunities of Capital appreciations are also limited in such funds. The NAV of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAV of such funds are likely to increase in the short run and vice versa. However, long-term investors may not bother about these fluctuations.

(C) BALANCED SCHEME:The aim of balanced funds is to provide both growth and regular income. Such Schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a Combination of income and moderate growth. (D) MONEY MARKET/ LIQUID SCHEME:The aim of money market fund is to provide easy liquidity, preservation of Capital and moderate income. These schemes are generally invest in short term Instruments such as treasury bills, certificates of deposits, commercial paper and Inter bank call money. Return on these schemes may fluctuate depending upon the Interest rates prevailing in the market. These are ideal for Corporate and Individual investors as a means to park their surplus funds for shorter periods.

OTHER SCHEMES:(A) TAX SAVING SCHEMES:These schemes offer tax rebate to the investors under specific provision of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investment made in Equity Linked Saving Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30, 2000.

(B) INDEX SCHEME:-

Index funds replicate the portfolio of particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the same weight age comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as tracking error in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme.

(C) 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.

DIFFERENT PLANS IN MUTUAL INVESTMENT-

GROWTH: Where the income generated by way of capital appreciation stays in the fund and is reflected by rise in NAV. BONUS: Where the unit holder receives additional units as bonus when the value of the fund appreciates. DIVIDEND PAYOUT: Where the capital appreciation is passed on to the unit holder by way of dividends. DIVIDEND REINVESTMENT: Where he dividends are reinvested into the fund by buying additional units on the request of unit holders. In addition there are a host of investor-friendly features, which can be given belowSYSTEMATIC WITHDRAWL PLAN (SWP)It enables one to withdraw a

fixed amount according to a predetermined frequency that you specify to the fund.

SYSTEMATIC INVESTMENT PLAN (SIP)- An SIP lets one to invest in parts instead of one single lump sum amount. All you have to do is to issue post-dated cheques to the fund, which will be presented to your bank on the specified dates. Nowadays, SIP come with another convenient feature, an auto debit facility. The auto debit facility does away with post-dated cheques. The fund debits the money directly. SWITCH BETWEEN SCHEMES- A switch between schemes lets one to exit from one scheme and enter into another scheme without filling in the redemption request and issuing a cheque. SYSTEMATIC TRANSFER PLAN (STP)- An STP allows one to transfer a fixed amount of money from one scheme to the other. SYSTEMATIC INVESTMENT PLAN The Systematic Investment Plan (SIP) is a simple and time honored investment strategy for accumulation of wealth in a disciplined manner over long term period. The plan aims at a better future for its investors as an SIP investor gets good rate of returns compared to a one time investor.

WHAT IS SYSTEMATIC INVESTMENT PLAN?

A specific amount should be invested for a continuous period at regular

intervals under this plan.

SIP is similar to a regular saving scheme like a recurring deposit. It is a

method of investing a fixed sum regularly in a mutual fund.

SIP allows the investor to buy units on a given date every month. The

investor decides the amount and also the mutual fund scheme.

While the investor's investment remains the same, more number of units can

be bought in a declining market and less number of units in a rising market.

The investor automatically participates in the market swings once the option

for SIP is made. SIP ensures averaging of rupee cost as consistent investment ensures that average cost per unit fits in the lower range of average market price. An investor can either give post dated cheques or ECS instruction and the investment will be made regularly in the mutual fund desired for the required amount. SIP generally starts at minimum amounts of Rs.1000/- per month and upper limit for using an ECS is Rs.25000/- per instruction. For instance, if one wishes to invest Rs.1, 00,000/- per month, then they need to do it on four different dates.

SIP INVESTORS It is easy to become a systematic investor. One need to plan the saving effectively and set aside some amount of money every month for investment purposes in a fund that is ideally a diversified equity fund or balanced fund. Post dated cheques can be given to the fund house. The investor is at liberty to exit from the scheme depending on the market conditions. BENEFITS OF SYSTEMATIC INVESTMENT PLAN

POWER OF COMPOUNDING: The power of compounding underlines the essence of making money work if only invested at an early age. The longer one delays in investing, the greater the financial burden to meet desired goals. Saving a small sum of money regularly at an early age makes money work with greater power of compounding with significant impact on wealth accumulation. Rupee cost averaging: Timing the market consistency is a difficult task. Rupee cost averaging is an automatic market timing mechanism that eliminates the need to time one's investments. Here one need not worry about where share prices or interest are headed as investment of a regular sum is done at regular intervals; with fewer units being bought in a declining market and more units in a rising market. Although SIP does not guarantee profit, it can go a long way in minimizing the effects of investing in volatile markets.

Convenience: SIP can be operated by simply providing post dated cheques with the completed enrolment form or give ECS instructions. The cheques can be banked on the specified dates and the units credited into the investor's account. The SIP facility is available in the Principal Income Fund, Monthly Income Plan, Child Benefit Fund, Balanced Fund, Index Fund, Growth Fund, Equity fund and Tax Savings Fund.

SIP FEATURES: Disciplined investing is vital to earning good returns over a longer time frame. Investors are saved the bother of identifying the ideal entry and exit points from volatile markets. SIP options such as equity, debt and balanced schemes offer a range of investment

plans. While there is no entry load on SIP, investors face an exit load if the units are redeemed within a stipulated time frame. The success of your SIP hinges on the performance of your selected scheme.

ADVANTAGES OF MUTUAL FUNDThe best mutual funds design their portfolios so individual investments will react differently to the same economic conditions. For example, economic conditions like a rise in interest rates may cause certain securities in a diversified portfolio to decrease in value. Other securities in the portfolio will respond to the same economic conditions by increasing in value. When a portfolio is balanced in this way, the value of the overall portfolio should gradually increase over time, even if some securities lose value.

PROFESSIONAL

MANAGEMENT:

Most

mutual

funds

pay

topflight

professionals to manage their investments. These managers decide what securities the fund will buy and sell.

REGULATORY OVERSIGHT: Mutual funds are subject to many government regulations that protect investors from fraud.

LIQUIDITY: It's easy to get your money out of a mutual fund. Write a check, make a call, and you've got the cash.

CONVENIENCE: You can usually buy mutual fund shares by mail, phone, or over the Internet. LOW COST: Mutual fund expenses are often no more than 1.5 percent of your investment. Expenses for Index Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a specific index Besides above mentioned advantages of the mutual fund some other benefits can be presented as the following sub-heads

Transparency Flexibility Choice of schemes Tax benefits Well regulated

Higher risk Lower return

Higher risk Higher return

Equity

Lower risk Lower return

Postal Savings

Bank FD

Invest in mutual funds

Lower risk Higher return

DRAWBACKS OF MUTUAL FUNDS-

NO GUARANTEES: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money. FEES AND COMMISSIONS: All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund. TAXES: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made. MANAGEMENT RISK: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.

MUTUAL FUNDS INVESTMENT VERSUS DIRECT INVESTMENT

Investors have the option to invest directly through the stock market instead of investing through mutual funds. However a practical evaluation reveals that mutual funds are indeed a more recommended option for the individual investors. Here is the comparison between two options: Identifying stocks that have growth potential is a difficult process involving detailed research and monitoring of the market. Mutual funds specialize in this area and possess the requisite resources to carry out research and continuous market monitoring. Another critical element towards successful direct investing is

diversification. A diversified portfolio serves to minimize risk by ensuring that a downtrend in some securities/security is offset by an upswing in the others. Clearly diversification requires substantial investment that may be beyond the means of most individual investors. Mutual fund pool the resources of many investors and thus have the funds necessary to build a diversified portfolio, and by investing even a small amount in a mutual fund, an investor can, though his proportionate share, reap the benefits of diversification. Mutual funds specialize in the business of investment management, and therefore employ professional management for carting out the activities. Professional management ensures that the best investment avenues are taped with the aid of comprehensive information and detailed research. It also ensures that expenses are kept under tight control and market opportunities are fully utilized. Investors who opts for direct investment loses out on these benefits. Mutual funds focus their investment activities based on investment objectives such as income, growth or tax savings. An investor can choose a fund that has investment objectives in line with his objectives. Therefore,

funds provide the investor with a vehicle to attain his objectives in a planned manner. Mutual funds offer liquidity through listing on stock exchange (for close end funds) and repurchase option (for open end schemes). In case of direct investing, several stacks are often not traded for long periods. While some closed-end funds may not be traded frequently, they are nevertheless more liquid than many stocks. In any case, all funds provide one of the two avenues for liquidity. Direct investing involves a high level of transaction costs per rupee invested in form of brokerage, commission, stamp duty etc. while mutual funds charge a management fee; they succeed in keeping transaction costs under control because of the scale they enjoy. In terms of convenience, mutual funds score over direct investing. Funds serve investors not only through their investors service networks, but also through associates such as banks and other distributors. Many funds allow investors the flexibility to switch between schemes within a family of fund. They also offer facilities such as cheque writing and accumulation plans. These benefits are not matched by directly equity investing. The points mentioned above show the advantages of mutual funds over direct investment in equity.

CHAPTER-2 FIXED DEPOSITE

OTHER INVESTMENT SERVICES

FIXED DEPOSIT
A fixed deposit is meant for those investors who want to deposit a lump sum of money for a fixed period; say for a minimum period of 15 days to five years and above, thereby earning a higher rate of interest in return. Investor gets a lump sum (principal + interest) at the maturity of the deposit.

Bank fixed deposits are one of the most common savings scheme open to an average investor. Fixed deposits also give a higher rate of interest than a savings bank account. The facilities vary from bank to bank. Some of the facilities offered by banks are overdraft (loan) facility on the amount deposited, premature withdrawal before maturity period (which involves a loss of interest) etc. Bank deposits are fairly safer because banks are subject to control of the Reserve Bank of India.

FEATURES
Bank deposits are fairly safe because banks are subject to control of the Reserve Bank of India (RBI) with regard to several policy and operational parameters. The banks are free to offer varying interests in fixed deposits of different maturities. Interest is compounded once a quarter, leading to a somewhat higher effective rate. The minimum deposit amount varies with each bank. It can range from as low as Rs.100 to an unlimited amount with some banks. Deposits can be made in multiples of Rs.100/ Before opening a FD account, try to check the rates of interest for different banks for different periods. It is advisable to keep the amount in five or ten small deposits instead of making one big deposit. In case of any premature withdrawal of partial amount, then only one or two deposit need be prematurely enchased. The loss sustained in interest will, thus, be less than if one big deposit were to be enchased. Check deposit receipts carefully to see that all particulars have been properly and accurately filled in. The thing to consider before investing in an FD is the rate of interest and the inflation rate. A high inflation rate can simply chip away your real returns.

RETURNS
The rate of interest for Bank Fixed Deposits varies between 4 and 11 per cent, depending on the maturity period (duration) of the FD and the amount invested. Interest rate also varies between each bank. A Bank FD does not provide regular interest income, but a lump-sum amount on its maturity. Some banks have facility to pay interest every quarter or every month, but the interest paid may be at a discounted rate in case of monthly interest. The Interest payable on Fixed Deposit can also be transferred to Savings Bank or Current Account of the customer. The deposit period can vary from 15, 30 or 45 days to 3, 6 months, 1 year, 1.5 years to 10 years.

Duration 15-30 days 30-45 days 46-90 days 91-180 days 181-365 days 1-2 years 2-3 years 3-5 years

Interest rate (%) per annum 4 -5 % 4.25-5 % 4.75--5.5 % 5.5-6.5 % 5.75-6.5 % 6-8 % 6.25-8 6.75-8

ADVANTAGES
Bank deposits are the safest investment after Post office savings because all bank deposits are insured under the Deposit Insurance & Credit Guarantee Scheme of India. It is possible to get a loan up to75- 90% of the deposit amount from banks against fixed deposit receipts. The interest charged will be 2% more than the rate of interest earned by the deposit. With effect from A.Y. 1998-99, investment on bank deposits, along with other specified incomes, is exempt from income tax up to a limit of Rs.12, 000/- under Section 80L. Also, from A.Y. 1993-94, bank deposits are totally exempt from wealth tax. The 1995 Finance Bill Proposals introduced tax deduction at source (TDS) on fixed deposits on interest incomes of Rs.5000/- and above per annum.

CHAPTER-3 RECURRING DEPOSITE

RECURRING DEPOSIT The Recurring deposit in bank is meant for someone who wants to invest a specific sum of money on a monthly basis for a fixed rate of return. At the end, you will get the principal sum as well as the interest earned during that period. The scheme, a systematic way for long term savings, is one of the best investment options for the low income groups.

FEATURES The minimum investment of Recurring Deposit varies from bank to bank but usually it begins from Rs100/-. There is no upper limit in investing. The rate of interest varies between 7 and 11 percent depending on the maturity period and amount invested. The interest is calculated quarterly or as specified by the bank. The period of maturity ranging from 6 months to 10 years. The deposit shall be paid as monthly installments and each subsequent monthly installment shall be made before the end of the calendar month and shall be equal to the first deposit. In case of default in payment, a default fee is chargeable for delayed deposit at the rate of Rs1.50/- for every Rs100/- per month for deposits up to 5 years and Rs2/- per Rs100/- in case of longer maturities. Since a recurring deposit offers a fixed rate of return, it cannot guard against inflation if it is more than the rate of return offered by the bank. Worse, lower the gap between the interest rate on a recurring deposit and inflation, lower your real rate of return. Premature withdrawal is also possible but it demands a loss of interest.

RETURNS The rate of interest varies between 7 and 11 percent depending on the maturity period and amount invested. The interest is calculated quarterly or as specified by the bank.

Amount invested per month

Maturity amount in 2 years (5%interest)

Rs100 Rs500 Rs750 Rs3000

Rs2626 Rs13,132 Rs19,698 Rs78,792

ADVANTAGES Some Nationalized banks are giving more facilities to their customer, State Bank of India give Free Roaming Recurring Deposit facility to their customers. They can transfer their account to any branch of SBI free. Tax benefit on the interest earned on Recurring Deposit up to Rs12000 Tax Deductible at source if the interest paid on deposit exceeds Rs5000/-per customer, per year, per branch.

CHAPTER-4 SHARES

SHARES

Shares are also known as equity, issue of shares is the most important source of rising long term finance. Shares refer to a share in the share capital of a company. It is one of the units which the share capital of company can be divided. It indicates the interest in the assets and profits of a company. According to Justice Farewell, a share is the interest of the shareholder in the company measured by a sum of money for the purpose of liability and of interest (dividend).

SHARES ARE OF TWO TYPES: EQUITY SHARES Equity shares are those shares which do not carry special or preferential rights in the payment of annual dividend of repayment of capital; rate of dividend on such shares is not fixed. Equity shareholders are regarded as the real owners of the company. PREFERENCE SHARES Preference shares are those shares which carry certain special of priority rights. Firstly dividend at fixed rate is payable on these shares before any dividend is paid on equity shares. Secondly at the time of winding up of the company capital is repaid to preference shareholders prior to the return of equity capital.

ADVANTAGES

As far as the purpose of long term investment is concerned, investment in shares can proved to be a better source of investment as compared to bank fixed deposits and recurring deposits as it may usually yield 15 to 18 percent return but subjected to market risk. Any big shock to stock market may cause the big blow to the invested money. Apart from all these uphills and downfalls directly investing in share market can cause some really big advantages to the investors. As compared to investing the same amount for the same period in FD and RD, investing in shares would surely yield times better return. Secondly shareholders are the true owners of a company, thats why major decisions are taken by them or their representatives. They have all the rights of owner of the company as well as have claim on the various assets and belongings of the company. At the time of dissolution of the firm the rights of the preference shareholders are given priority. Even during the mergers, expansions and acquisitions the shareholders have major roles to play.

CHAPTER-5 BONDS

BONDS In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to repay the principle at a later date, termed maturity. A bond is a formal contract to repay borrowed money with interest at fixed intervals. Thus a bond is like a loan: the issuer is the borrower (debtor), the holder is the lender (creditor), and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or in the case of government bonds, to finance current expenditure. Certificates of deposit (CDs) or commercial paper are considered to be money market instruments and not bonds. Bonds must be repaid at fixed intervals over a period of time. Bonds and stocks are both securities, but the major difference between the two is that stockholders have an equity stake in the company (i.e., they are owners), whereas bondholders have a creditor stake in the company (i.e., they are lenders). Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks may be outstanding indefinitely. An exception is a consol bond, which is a perpetuity (i.e., bond with no maturity).

INVESTING IN BONDS Bonds are bought and traded mostly by institutions like pension funds, insurance companies and banks. Most individuals who want to own bonds do so through bond funds. Still, in the U.S., nearly 10% of all bonds outstanding are held directly by households. Sometimes, bond markets rise (while yields fall) when stock markets fall. More relevantly, the volatility of bonds (especially short and medium dated bonds) is lower than that of shares.

Thus bonds are generally viewed as safer investments than stocks, but this perception is only partially correct. Bonds do suffer from less day-to-day volatility than stocks, and bonds' interest payments are often higher than the general level of dividend payments. Bonds are liquid it is fairly easy to sell one's bond investments, though not nearly as easy as it is to sell stocks and the comparative certainty of a fixed interest payment twice per year is attractive. Bondholders also enjoy a measure of legal protection: under the law of most countries, if a company goes bankrupt, its bondholders will often receive some money back (the recovery amount), whereas the company's stock often ends up valueless. However, bonds can also be risky:

Fixed rate bonds are subject to interest rate risk, meaning that their market

prices will decrease in value when the generally prevailing interest rates rise. Since the payments are fixed, a decrease in the market price of the bond means an increase in its yield. When the market interest rate rises, the market price of bonds will fall, reflecting investors' ability to get a higher interest rate on their money elsewhere perhaps by purchasing a newly issued bond that already features the newly higher interest rate. Note that this drop in the bond's market price does not affect the interest payments to the bondholder at all, so long-term investors who want a specific amount at the maturity date need not worry about price swings in their bonds and do not suffer from interest rate risk. Price changes in a bond will also immediately affect mutual funds that hold these bonds. If the value of the bonds held in a trading portfolio has fallen over the day, the value of the portfolio will also have fallen. This can be damaging for professional investors such as banks, insurance companies, pension funds and asset managers (irrespective of whether the value is immediately "marked to market" or not). If there is any chance a holder of individual bonds may need to sell his bonds and "cash out", interest rate risk could become a real problem. (Conversely, bonds' market prices would increase if the prevailing interest rate were to drop, as it did from 2001 through 2003.) One way to quantify the interest rate risk on a bond is in terms of its duration. Efforts to control this risk are called immunization or hedging.

Bond prices can become volatile depending on the credit rating of the issuer

- for instance if the credit rating agencies like Standard & Poor's and Moody's upgrade or downgrade the credit rating of the issuer. A downgrade will cause the market price of the bond to fall. As with interest rate risk, this risk does not affect the bond's interest payments (provided the issuer does not actually default), but puts

at risk the market price, which affects mutual funds holding these bonds, and holders of individual bonds who may have to sell them.

A company's bondholders may lose much or all their money if the company

goes bankrupt. Under the laws of many countries (including the United States and Canada), bondholders are in line to receive the proceeds of the sale of the assets of a liquidated company ahead of some other creditors. Bank lenders, deposit holders (in the case of a deposit taking institution such as a bank) and trade creditors may take precedence.

There is no guarantee of how much money will remain to repay bondholders.

As an example, after an accounting scandal and a Chapter 11 bankruptcy at the giant telecommunications company Worldcom, in 2004 its bondholders ended up being paid 35.7 cents on the dollar. In a bankruptcy involving reorganization or recapitalization, as opposed to liquidation, bondholders may end up having the value of their bonds reduced, often through an exchange for a smaller number of newly issued bonds.

Some bonds are callable, meaning that even though the company has agreed

to make payments plus interest towards the debt for a certain period of time, the company can choose to pay off the bond early. This creates reinvestment risk, meaning the investor is forced to find a new place for his money, and the investor might not be able to find as good a deal, especially because this usually happens when interest rates are falling.

CHAPTER-6 POST OFFICE DEPOSIT

POST OFFICE DEPOSIT ACCOUNT

Post office time deposit account is just like the bank fixed deposit account. These time deposits are meant for those investors who want to deposit a lump sum for a fixed period.

TIME AND AMOUNT OF DEPOSIT The amount can be deposited for 1year, 2year, 3year, and 5years. The deposited amount is repayable after expiry of the period for which is of 1 year, 2 years, 3 years or 5 years. One has to deposit minimum amount of Rs200 while there is no cup on maximum limit. INTEREST PAID Interest is calculated on quarterly compounding basis, and is payable annually. Rate of interest varies according to the period of the deposit and is decided by the Central Government from time to time. Rate of interest increases with duration of deposit. Usually it is between 6 to 8%.

INCOME TAX BENEFIT Tax exemption on Five Years Time Deposit Account can be availed under U/S 80C of the IT Act. There is no deduction of income tax at source.

COMPARISON BETWEEN POST OFFICE TIME DEPOSITS AND BANKS FIXED DEPOSITS

Post office Time Deposits are of 1 year, 2 year, 3 year and 5 year tenures and the minimum investment is Rs20. Bank fixed deposits have ranging from 15 days to 10 years and the minimum amount is higher as compared to post office time deposits. Postal time deposits can be closed after 6 months but before one year of opening the account. On such closure, the amount invested is returned without interest. If a time deposit of more than a year is closed prematurely, post office will pay interest only for the completed year or years. For example if a time deposit of 3 years is withdrawn after 30 months, interest will be paid only for the two full years completed and the depositor will lose interest for the remaining 8 months. In case of bank FD is closed prematurely, banks have the discretion to charge penal interest.

PREMATURE WITHDRAWALS

Premature withdrawals from all types of post office time deposit accounts are permissible after expiry of 6 months with certain conditions. Principal amount cum accumulated interested is paid only at maturity. If a person withdraws after six months, amount is returned without interest. On withdraw after one year, interest is paid, but it is two per cent less.

CHAPTER-7 RELIANCE MUTUAL FUND

Positioning of the Fund

The fund belongs to the family of income funds. It is suitable for investors with short to medium term investment horizon of 6 9 months and medium appetite for risk. The fund predominantly invests in various debt instruments like Government and Corporate bonds, Securitized Debt, Money Market Instruments etc and normally maintains a moderate maturity of the portfolio between 1- 2 years.

Positioning based on Risk Profile

How to read the graph? Liquid signifies all liquid funds- Reliance Liquid Fund (Treasury Plan & Cash Plan). Reliance Liquidity Fund, RMTF Reliance Medium Term Fund, RMMF Reliance Money Manager Fund, RFRF STP Reliance Floating Rate Fund Short Term Plan, RSTF Reliance Short Term Fund, RDBF Reliance Dynamic Bond Fund, RRSF D Reliance Regular Savings Fund Debt Option, RMIP Reliance Monthly Income Plan, RIF Reliance Income Fund, RGSF Reliance Gilt Securities Fund.

Duration Risk is the risk undergone by a portfolio based on the forecasts of probable trends of interest rates and other macro economic factors and its impact on the funds portfolio and its constituents. It typically refers to the sensitivity to the value of a fixed income security/portfolio due to the changes in the interest rates. Duration is referred to in number of years. The higher the duration number, the greater the interest-rate risk for fixed income instruments. Credit Risk is the risk of loss of principal or loss of a financial reward stemming from a borrower's failure to repay a loan or otherwise meet a contractual obligation. The higher the perceived credit risk, the higher the rate of interest that investors will demand for lending their capital. Therefore, a portfolio with higher perceived credit risk should typically yield higher returns over an appropriate time frame, everything else being same.

The placement or position of each fund within the matrix conveys the combination of credit & duration risk that the fund or portfolio of the fund endeavors to hold. The shaded or the merged areas in the matrix display a combined duration & credit risk that two funds hold in that zone.

Credit Rating
Reliance Short Term Fund has been assigned Credit Risk Rating mfAAA by ICRA Limited
The rating is valid for a period of 1 year ending August 22, 2011. The rating indicates that the underlying portfolio of the Scheme has the lowest credit risk and highest degree of safety from credit losses. This scale applies to debt funds with weighted average maturity up to one year. The rating should not be construed as an indication of the performance of the Scheme or of volatility in its returns. Past performance is no guarantee of future results. Please refer to methodology at the end.

Investment Philosophy
Reliance Short Term Fund would be run as a low duration product and shall concentrate at the short to medium end of the yield curve.

As a part of the duration management strategy investments would be optimally allocated between
good rated corporate bonds, active G-Secs, cash and Money market instruments. Duration would be managed actively by using cash and G-Secs & Corporate issuances in the near term.

Portfolio & Scheme Features As on 31st March, 2011

Asset Allocation as on 31st March, 2011
Money Market Instruments 50.88% Floating Rate Instruments 0.00% Corporate Debt 26.33% Securitised Debt/PTC 9.85% Govt. Securities 10.19% Cash & Other Receivables 2.75% Weighted Average Maturity 659Days Modified Duration 548 Days Benchmark Crisil Liquid Fund Index Fund Manager Prashant Pimple Quarterly AAUM as on 31st March, 2011 Rs 2864 Crs Portfolio of RELIANCE SHOR

CHAPTER-8

DATA ANALYSIS AND INTERPRETATION

Q-1 which investment avenues are you aware of?

INVESTMENT AVANUES EQUITY/MUTUAL FUND POST OFFICE F.D. OTHERS

FREQUENCY 100 94 86 11

PERCENTAGE 34.36% 32.30% 29.55% 3.79%

11 86 100 EQUITY/M.F. POST OFFICE F.D. OTHERS 94

(Fig no 9: - Define investments avenues)

Interpretation: From the above charts we can interpret that awareness of equity/mutual (NSC, KVP, and PPF), fixed deposits is more compare to others like Instrument, GOVT Backed Instrument, Real Estate, gold etc. INFRASTRUCTURE assets Management Company needs to focus investors who are more invest in KVP, NSC, PPF and fixed deposits. fund, post office GOVT ISSUED so RELIANCE more on those

Q-2 do you invests in mutual fund?

YES 97 NO 3

120 100
NO OF PEOPLE

97

80 60 40 20 3 0 YES PREFERNCE NO Series1

(Fig no 10: - Define investments in mutual fund)

From the above chart it is getting clear that now a days people are like to invest their money in mutual fund of different assets management company, out of 100 people sampled 97 are investing in the mutual fund.

Q-3 If yes, in which assets class do you want to invest in Mutual Fund?

TYPES OF SCHEMES EQUITY DEBT LIQUID

RESPONSE PERCENTAGE 86 72.27% 27 22.69% 6 5.04%

RESPONSE 100
NO OF PEOPLE

86

80 60 RESPONSE 40 20 0 EQUITY DEBT SCHEMES LIQUID 27 6

(Fig no 11: - Define schemes preferred by investors) From the above chart it is getting clear that from 100 peoples sample 86(72.27%) people are invest in equity assets class and 27(22.69%) people choose to invests in debt class but only just 6(5.04%) peoples choose to invests in liquid class.

Q-4 Do you invest in RELIANCE INFRASTRUCTURE assets management company Limited?

YES 56

NO 44

TOTAL 100

60 50

56 44

NO OF PEOPLE

40 30 20 10 0 YES PREFERNCE NO Series1

(Fig no 12: - Define investment in RELIANCE INFRASTRUCTURE assets Management Company)

From the above chart it is getting clear that out of 100 people sampled, 56 peoples are invest in RELIANCE INFRASTRUCTURE assets management company and 44 peoples are not invests in RELIANCE INFRASTRUCTURE assets management company.

Q-5 If yes, in which scheme would you invest in RELIANCE INFRASTRUCTURE assets Management company limited?
SCHEMES OF RELIANCE INFRASTRUCTURE EQUITY FUND CAPITAL BUILDER FUND PRUDENCE FUND TAX SAVER FUND CORE AND SATELITE FUND TOP 200 FUND BALANCED FUND GROWTH FUND OTHERS FUND NO OF INVESTOERS 43 2 17 35 3 16 1 16 5

NO OF INVESTOERS 5 43

1 16 3

16

2 35 17 CAPITAL BUILDER FUND TAX SAVER FUND TOP 200 FUND GROWTH FUND

EQUITY FUND PRUDENCE FUND CORE AND SATELITE FUND BALANCED FUND OTHERS FUND

(Fig no 13: - Define scheme in which investors invest in RELIANCE INFRASTRUCTURE assets Management Company) From the above chart we can see that in RELIANCE INFRASTRUCTURE assets Management Companys EQUITY FUND maximum number (43) of people are invest. In TAX SAVER FUND 35 number of people invests. In both TOP 200 FUND and GROWTH FUND 16 numbers of people are invests but in BALANCED FUND, CAPITAL BUILDER FUND, CORE AND SATELITE FUND only 1,2 and 3 people are invest so investors are not invested in these 3 schemes. In PRUDENCE FUND 17 numbers of people are invested.

Q-6 By which medium you invest in RELIANCE INFRASTRUCTURE assets Management company limited?

MEDIUM OF INVESTMENT DISTRIBUTOR BANK ONLINE

NO OF PEOPLE 8 48 0

NO OF PEOPLE 48

50 45 40 35 30 25 20 15 10 5 0

NO OF PEOPLE 8 0 DISTRIBUTOR MEDIUMS ONLINE

(Fig no 14: - Define mediums choose by investors for invest in RELIANCE INFRASTRUCTURE assets management company) From the above chart its getting cleared that most of the peoples (48) are invest by bank and only 8 peoples are invest by distributors. Nobody invests through online. So here RELIANCE INFRASTRUCTURE assets Management Company has to provide facility by which investors invest their money with out any middle man in mutual fund schemes through online.

Notes: - here out of 100 responds, 44 responds are not invest in RELIANCE INFRASTRUCTURE assets Management Company. These responds are not considered in these questions.

Q-7 why do you prefer investing in RELIANCE INFRASTRUCTURE assets Management company limited?
PREFENCE CRITERIA BETTER FUND HOUSE EXCELLENT CUSTOMER SERVICE PROVIDER CONSISTANT RETURN OTHERS NUMBER 43 15 44 1

NUMBER

BETTER FUND HOUSE

1 44 43

EXCELLENT CUSTOMER SERVICE PROVIDER CONSISTANT RETURN

15

(Fig no 15: - Define Preference criteria of investors)

OTHERS

From the above pie - chart it can be seen that majority of the people that is 44 peoples give first rank to consistent return and 43 peoples invest in RELIANCE INFRASTRUCTURE assets management company because RELIANCE INFRASTRUCTURE assets management company is a better fund house and 15 peoples believes that RELIANCE INFRASTRUCTURE assets Management Company provides EXCELLENT CUSTOMER SERVICE.

Q-8 In which type of product /schemes would you prefer while Invested in equity schemes of RELIANCE INFRASTRUCTURE assets management Company limited?

TYPES OF SCHEMES OPEN ENDED CLOSE ENDED

RESPONSE 53 3

RESPONSE 60 53

NO OF PEOPLE

50 40 30 20 10 0 OPEN ENDED CLOSE ENDED TYPES OF SCHEMES 3 RESPONSE

(Fig no 16: - Define type of product /schemes investors prefer for investments) From the above chart it is getting clear that most of peoples (53) prefer to invest in OPEN ENDED equity schemes and only just 3 peoples want to invest in CLOSE ENDED equity schemes of RELIANCE INFRASTRUCTURE assets Management Company.

Notes: - here out of 100 responds, 44 responds are not invest in RELIANCE INFRASTRUCTURE assets Management Company. These responds are not considered in these questions.

Q-9 do you know about on going new fund offer of RELIANCE

INFRASTRUCTURE Assets Management company limited?

AWARENESS OF NFO YES NO TOTAL

NUMBER 58 42 100

PERCENTAGE 58% 42% 100%

NUMBER

42 YES NO 58

(Fig no 17: - Define awareness level about on going NFO of RELIANCE CAPITAL assets Management Company.)

The above pie - chart shows that around 58% people aware of on going new fund offer of RELIANCE CAPITAL assets Management Company and only 42% people are unaware from on going new fund offer of RELIANCE CAPITAL assets management company.

QUESTION MARKS ON INFRASTRUCTURE SPENDING:

Huge budgetary and fiscal deficit Past record on foreign flows so-so and not very robust

HOWEVER, FUTURE LOOKS BRIGHTER:

Avenues to control deficit in sight PPP

Foreign investments FUNDING PATTERN (XITH FYP):

Private Funding gains importance- 30% of planned expenditure FDI Private Equity

INFRASTRUCTURE FUND WHY NOW?

Despite recent spurt, still attractive Political stability for five years Some stability. Investors will move to higher growth economies Interest rates plunge, debt available, investors looking for equity investments Attractive Valuations

INVESTMENT STRATEGY: The investment focus would be guided by the growth potential and other economic factors of the country. The Fund aims to maximize long-term total return by investing in equity and equity-related securities which have their area of primary activity in India; the Fund intends to invest in

Companies in sectors related to infrastructure; Companies operating and listed in India engaged in Infrastructure Sector and In diversified companies, where a major portion of their revenues (primary activity) is derived from the infrastructure related activities.

CHAPTER-9 CONCLUSION

CONCLUSION
After considering all sources of long term investments, it can be very easy to conclude that mutual funds are the best source to invest in. Mutual funds are different from the conventional sources of investment and quite more better and more advantageous than investment in bank FDs, RDs, post office deposits, shares and bonds etc. A client usually seeks for better returns with least risk involved and for this purpose mutual funds can proved to be a milestone. Here the best returns are assured with less time and cost incurred. Investment in various mutual funds can be in lumpsum or in installments that is known as SIP, systematic investment plan. Although the market fluctuations causes some big jerks to the investors but usually a long term investment in mutual fund always yield much more better returns than other sources. Reliance mutual fund has launched various fund offers time to time, which have been performed very well in the period of recession. Reliance have different funds in equity, debt and hybrid plan with growth and dividend payout and dividend reinvestment options. Reliances NFO Reliance Infrastructure Fund has been launched recently, whose major concern is investment in infrastructural development of India. The poor infrastructure is the root cause of the slow down of the developmental pace of India, thats why proper focus towards the infrastructural development is mandatory. At last to conclude with, I can say that mutual funds are much more beneficial source of investment than the other sources and Reliances Infrastructure Fund is the most prospective fund for any investor to invest as according to present scenario.

CHAPTER-10 SUGGESTION

SUGGESTIONS
Company must go for advertising The processing fees charged by reliance mutual fun should be reduced New schemes for the customers should be introduced time to time Complains must be handled efficiently Proper conditions or information about the mutual fund should be given to

the customers. Reliance Mutual fund has launched a NFO, named as Reliance capital

Fund as we at this time, there is a slowdown in the market i.e. the market at the lower levels. So it needs more emphasis on advertisement and Promotion channels. The organization has tried to advertise and promote the NFO, through T.V. advertisement, print media such as newspaper advertisement, distributing pamphlets, banners and hoardings, arranging canopies, etc. The Organization has also need to enlarge its distribution channels in which there are brokers, sub-brokers, distributors and agents, etc. The organization also needs to increase or to maximize the returns of the shareholders. It can only be done by reducing the expense ratio of the organization. So that the net NAV of the fund should be increased. And ultimately the returns on the shareholders wealth should be increased.

CHAPTER-11 BIBLOGRAPHY

BIBLIOGRAPHY
www.reliancemutualfund.com www.amfiindia.com http://indiabudget.nic.in/ http://www.bseindia.com/about/abindices/bse30.asp http://www.bseindia.com/about/introbse.asp http://www.valueresearchonline.com http://www.bseindia.com http://www.rbi.org.in http://www.reliancemutual.com http://www.mutualfundsindia.com http://www.relianceinfra.com

Questionnaire

I a student of am undergoing my Summer Training Project in Reliance Mutual Fund, PANIPAT.

This is a part of my MBA Programme and for completing this I need your cooperation. The questionnaire is specially focused on Mutual Funds. The information so collected will be used for academic purpose only. You are required to fill this Questionnaire.

NAME: ADDRESS: -

CONTACT NO: (O)

(R)

(M)

1) Which investment avenues are you aware of? Equity /Mutual fund Post Office (NSC, KVP, PPF)

Fixed Deposits Others If others please specify

2) Do you invest in mutual funds? Yes No

3) If yes, in which assets class do you want to invest in mutual funds? Equity Debt Liquid

4) Do you invest in RELIANCE mutual fund? Yes No 5) If yes, in which scheme would you invest in RELIANCE MUTUAL FUND? Equity Capital builder Prudence fund Tax saver

Core & satellite Top 200 fund Balanced fund Growth Others

6) By which medium do you invest in RELIANCE mutual fund scheme? Distributor Bank Online

7) Why do you prefer investing in RELIANCE MF? Better fund house Excellent customer service provider Consistent return Other

If other please specify

8) Which type of product/scheme would you prefer while investing in Equity Scheme of RELIANCE mutual fund? Open-ended Close ended

9) Do you know about on going new fund offers of RELIANCE INFRASTRUCTURE AMC? Yes No

Remarks if any other please specifies: -

Thank you for your time.