Reliance Mutual Project

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A

Project Report on

STUDYING THE BEHAVIOR OF NEW RECRUITED

ADVISORS

AT RELIANE MUTUAL FUND, SIKAR (RAJ.)

Submitted in partial fulfillment for the Degree of

Bachelor of Business Administration

Rajasthan University, Jaipur.

Submitted To: Submitted by:

Shekhawati College Sikar, Kamal Sharma

BBA- 3RD Year

Department of Management Studies


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PREFACE:

Progress is the continuous process. It is relative and absolute. We cannot stop at certain and destination anddeclare that target has achieved.

The summer training programme is designed to give the manager of the future, a feel of the corporate

happening and work culture. These real life situation are entirely different from the simulation exercise

enacted in an artificial environment in side of classroom and it is precisely because of this reason that this

summer training is a bridge between the institute and the organization. Summer training programme made

me to understood how theoretical knowledge will be applied in practical field.

It exactly in this context that I was privilege enough to join RELIANCE MUTUAL FUND as on july 2010

as a summer trainee. The experience that I got over the Past two months has certainly provided me with an

orientation, which I believe will help me, shouldering any assignment successfully in future.

In rapidly changing market scenario it is extremely necessary for a company to see that their product

provide complete satisfaction to their customers, by fulfilling their need. During this project I was out for

STUDYING THE BEHAVIOR OF NEW RECRUITED ADVISORS.

I have collected all the relevant information through survey. The rest of the report was done after a deep

comprehensive and full fledged study of the problem and in based on our original research and investment.

.

.


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ACKNOWLEDGEMENT

"The completion of any project depends upon the co-operation, co-ordination and combined efforts of

several resources of knowledge, inspiration and energy." I am grateful to the management OF RELIANCE

MUTUAL FUND (SIKAR) and special thanks to MR. NAVNEET SHARMA (sales manager)

I would like to thanks MR. NAVNEET SHARMA for allowing me to undertake summer training at such

esteemed organization. I would like to thanks my faculty. SURJEET SIR and MS. NISHA POONIA for his

valuable support, guidance and expertise

In relation to the topic which gives me immense help at the project. I would like to heartiest thank to my

family and friends who has helped me in completing my task to me satisfaction level.


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DECLERATION

I, Kamal Sharma, student of BBA session 2008-2011,"Declare that the present work titled

STUDYING . is an original work.

I anywhere else for the aware of any degree/diploma/certificate or for any prize submitted

this project report.

All the data given in the Report is the best of my knowledge and all reference whether of my

person or organization can be crosschecked.

Date: Submitted By: Kamal Sharma

Place: Shekhawati College Sikar,

Rajasthan.


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TABLE OF CONTENTS

Industry Profile

Company Profile

Introduction of the Topic

Research Methodology

Research Project

Objectives of the study

Findings ( Data Analysis)

Limitation of the study

RESULTS AND DISCUSSIONS

Recommendation

Bibliography

Annexure

Questionnaire


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INDUSTRY

PROFILE


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Mutual Funds

A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a mutual fund as a

company that brings together a group of people and invests their money in stocks, bonds, and other

securities. Each investor owns shares, which represent a portion of the holdings of the fund.

You can make money from a mutual fund in three ways:

1) Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all of

the income it receives over the year to fund owners in the form of a distribution.

2) 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.

3) 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.
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Advantages of Mutual Funds:

Professional Management - The primary advantage of funds (at least theoretically) is the professional

management of your money. Investors purchase funds because they do not have the time or the expertise to

manage their own portfolios. A mutual fund is a relatively inexpensive way for a small investor to get a full-

time manager to make and monitor investments.

Diversification- By owning shares in a mutual fund instead of owning individual stocks or bonds, your

risk is spread out. 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. In other words, the more stocks and bonds you own,

the less any one of them can hurt you (think about Enron). Large mutual funds typically own hundreds of

different stocks in many different industries. It wouldn't be possible for an investor to build this kind of a

portfolio with a small amount of money.

Economies of Scale - Because a mutual fund buys and sells large amounts of securities at a time, its

transaction costs are lower than what an individual would pay for securities transactions.

Liquidity- Just like an individual stock, a mutual fund allows you to request that your shares be converted

into cash at any time.

Simplicity - Buying a mutual fund is easy! Pretty well any bank has its own line of mutual funds, and theminimum investment is small. Most companies also have automatic purchase plans whereby as little as $100

can be invested on a monthly basis.
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Disadvantages of Mutual Funds:

Professional Management - Did you notice how we qualified the advantage of professional management

with the word "theoretically"? Many investors debate whether or not the so-called professionals are any

better than you or I at picking stocks. Management is by no means infallible, and, even if the fund loses

money, the manager still takes his/her cut. We'll talk about this in detail in a later section.

Costs - Mutual funds don't exist solely to make your life easier - all funds are in it for a profit. The mutual

fund industry is masterful at burying costs under layers of jargon. These costs are so complicated that in this

tutorial we have devoted an entire section to the subject.

Dilution - It's possible to have too much diversification. Because funds have small holdings in so many

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.

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-gains tax is triggered, which affects

how profitable the individual is from the sale. It might have been more advantageous for the individual to

defer the capital gains liability.
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Mutual Funds: Different Types Of Funds

No matter what type of investor you are, there is bound to be a mutual fund that fits your style. According to

the last count there are more than 10,000 mutual funds in North America! That means there are more mutual

funds than stocks.

It's important to understand that each mutual fund has different risks and rewards. In general, the higher the

potential return, the higher the risk of loss. Although some funds are less risky than others, all funds have

some level of risk - it's never possible to diversify away all risk. This is a fact for all investments.

Each fund has a predetermined investment objective that tailors the fund's assets, regions of investments and

investment strategies. At the fundamental level, there are three varieties of mutual funds:

1) Equity funds (stocks)

2) Fixed-income funds (bonds)

3) Money market funds

All mutual funds are variations of these three asset classes. For example, while equity funds that invest in

fast-growing companies are known as growth funds, equity funds that invest only in companies of the same

sector or region are known as specialty funds.

Let's go over the many different flavors of funds. We'll start with the safest and then work through to the

more risky.

Money Market Funds

The money market consists of short-term debt instruments, mostly Treasury bills. This is a safe place to

park your money. You won't get great returns, but you won't have to worry about losing yourprincipal. A

typical return is twice the amount you would earn in a regular checking/savings account and a little less than

the average certificate of deposit (CD).

Bond/Income Funds
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Income funds are named appropriately: their purpose is to provide current income on a steady basis. When

referring to mutual funds, the terms "fixed-income," "bond," and "income" are synonymous. These terms

denote funds that invest primarily in government and corporate debt. While fund holdings may appreciate in

value, the primary objective of these funds is to provide a steady cash flow to investors. As such, the

audience for these funds consists of conservative investors and retirees.

Bond funds are likely to pay higher returns than certificates of deposit and money market investments, but

bond funds aren't without risk. Because there are many different types of bonds, bond funds can vary

dramatically depending on where they invest. For example, a fund specializing in high-yield junk bonds is

much more risky than a fund that invests in government securities. Furthermore, nearly all bond funds are

subject to interest rate risk, which means that if rates go up the value of the fund goes down.

Balanced Funds

The objective of these funds is to provide a balanced mixture of safety, income and capital appreciation. The

strategy of balanced funds is to invest in a combination of fixed income and equities. A typical balanced

fund might have a weighting of 60% equity and 40% fixed income. The weighting might also be restricted

to a specified maximum or minimum for each asset class.

A similar type of fund is known as an asset allocation fund. Objectives are similar to those of a balanced

fund, but these kinds of funds typically do not have to hold a specified percentage of any asset class. The

portfolio manager is therefore given freedom to switch the ratio of asset classes as the economy moves

through thebusiness cycle.

Equity Funds

Funds that invest in stocks represent the largest category of mutual funds. Generally, the investment

objective of this class of funds is long-term capital growth with some income. There are, however, many

different types of equity funds because there are many different types of equities. A great way to understand

the universe of equity funds is to use a style box, an example of which is below.
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The idea is to classify funds based on both the size of the companies invested in and the investment style of

the manager. The term value refers to a style of investing that looks for high quality companies that are out

of favor with the market. These companies are characterized by low P/E andprice-to-book ratios and high

dividend yields. The opposite of value is growth, which refers to companies that have had (and are expected

to continue to have) strong growth in earnings, sales and cash flow. A compromise between value and

growth is blend, which simply refers to companies that are neither value nor growth stocks and are classified

as being somewhere in the middle.

For example, a mutual fund that invests in large-cap companies that are in strong financial shape but have

recently seen their share prices fall would be placed in the upper left quadrant of the style box (large and

value). The opposite of this would be a fund that invests in startup technology companies with excellent

growth prospects. Such a mutual fund would reside in the bottom right quadrant (small and growth).

Global/International Funds

An international fund (or foreign fund) invests only outside your home country. Global funds invest

anywhere around the world, including your home country.

It's tough to classify these funds as either riskier or safer than domestic investments. They do tend to be

more volatile and have unique country and/orpolitical risks. But, on the flip side, they can, as part of a well-

balanced portfolio, actually reduce risk by increasing diversification. Although the world's economies arebecoming more inter-related, it is likely that another economy somewhere is outperforming the economy of

your home country.
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Specialty Funds

This classification of mutual funds is more of an all-encompassing category that consists of funds that have

proved to be popular but don't necessarily belong to the categories we've described so far. This type of

mutual fund forgoes broad diversification to concentrate on a certain segment of the economy.

Sector funds are targeted at specific sectors of the economy such as financial, technology, health, etc. Sector

funds are extremely volatile. There is a greater possibility of big gains, but you have to accept that your

sector may tank.

Regional funds make it easier to focus on a specific area of the world. This may mean focusing on a region

(say Latin America) or an individual country (for example, only Brazil). An advantage of these funds is that

they make it easier to buy stock in foreign countries, which is otherwise difficult and expensive. Just like for

sector funds, you have to accept the high risk of loss, which occurs if the region goes into a bad recession.

Socially-responsible funds (or ethical funds) invest only in companies that meet the criteria of certain

guidelines or beliefs. Most socially responsible funds don't invest in industries such as tobacco, alcoholic

beverages, weapons or nuclear power. The idea is to get a competitive performance while still maintaining a

healthy conscience.

Index Funds

The last but certainly not the least important are index funds. This type of mutual fund replicates the

performance of a broad market index such as the S&P 500 orDow Jones Industrial Average (DJIA). An

investor in an index fund figures that most managers can't beat the market. An index fund merely replicates

the market return and benefits investors in the form of low fees.
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Mutual Funds: Picking A Mutual Fund

Buying and Selling

You can buy some mutual funds (no-load) by contacting the fund companies directly. Other funds are sold

through brokers, banks, financial planners, or insurance agents. If you buy through a third party there is a

good chance they'll hit you with a sales charge (load).

That being said, more and more funds can be purchased through no-transaction fee programs that offer

funds of many companies. Sometimes referred to as a "fund supermarket," this service lets you consolidate

your holdings and record keeping, and it still allows you to buy funds without sales charges from many

different companies. Popular examples are Schwab's OneSource, Vanguard's Fund Access, and Fidelity's

Funds Network. Many large brokerages have similar offerings.

Selling a fund is as easy as purchasing one. All mutual funds will redeem (buy back) your shares on any

business day. In the United States, companies must send you the payment within seven days.

The Value of Your Fund

Net asset value (NAV), which is a fund's assets minus liabilities, is the value of a mutual fund. NAV pershare is the value of one share in the mutual fund, and it is the number that is quoted in newspapers. You

can basically just think of NAV per share as the price of a mutual fund. It fluctuates everyday as fund

holdings and shares outstanding change.

When you buy shares, you pay the current NAV per share plus any sales front-end load. When you sell your

shares, the fund will pay you NAV less any back-end load.

Finding Funds
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The Mutual Fund Education Alliance is the not-for-profit trade association of the no-load mutual fund

industry. They have a tool for searching for no-load funds at

http://www.mfea.com/FundSelector

Morningstar is an investment research firm that is particularly well known for its fund information:

Mutual Funds: How to Read a Mutual Fund Table

Columns 1 & 2: 52-Week High and Low - These show the highest and lowest prices the mutual fund has

experienced over the previous 52 weeks (one year). This typically does not include the previous day's price.

Column 3: Fund Name - This column lists the name of the mutual fund. The company that manages the fund

is written above in bold type.
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Column 4: Fund Specifics - Different letters and symbols have various meanings. For example, "N" means

no load, "F" is front end load, and "B" means the fund has both front and back-end fees. For other symbols

see the legend in the newspaper in which you found the table.

Column 5: Dollar Change -This states the dollar change in the price of the mutual fund from the previous

day's trading.

Column 6: % Change - This states the percentage change in the price of the mutual fund from the previous

day's trading.

Column 7: Week High - This is the highest price the fund traded at during the past week.

Column 8: Week Low - This is the lowest price the fund traded at during the past week.

Column 9: Close - The last price at which the fund was traded is shown in this column.

Column 10: Week's Dollar Change - This represents the dollar change in the price of the mutual fund from

the previous week.

Column 11: Week's % Change - This shows the percentage change in the price of the mutual fund from the

previous

Mutual Funds: Don't Be Fooled By Mutual Fund Ads

Perhaps you've noticed all those mutual fund ads that quote their amazingly high one-year rates of return.

Your first thought is "wow, that mutual fund did great!" Well, yes it did great last year, but then you look at


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the three-year performance, which is lower, and the five year, which is yet even lower. What's the

underlying story here? Let's look at a real example. These figures came from a local paper:

1 year 3 year 5 year

53% 20% 11%

Last year, the fund had excellent performance at 53%. But in the past three years the average annual return

was 20%. What did it do in years 1 and 2 to bring the average return down to 20%? Some simple math

shows us that the fund made an average return of 3.5% over those first two years: 20% = (53% + 3.5% +

3.5%)/3. Because that is only an average, it is very possible that the fund lost money in one of those years.

It gets worse when we look at the five-year performance. We know that in the last year the fund returned

53% and in years 2 and 3 we are guessing it returned around 3.5%. So what happened in years 4 and 5 to

bring the average return down to 11%? Again, by doing some simple calculations we find that the fund must

have lost money, an average of -2.5% each year of those two years: 11% = (53% + 3.5% + 3.5% - 2.5% -

2.5%)/5. Now the fund's performance doesn't look so good!

It should be mentioned that, for the sake of simplicity, this example, besides making some big assumptions,

doesn't include calculating compound interest. Still, the point wasn't to be technically accurate but to

demonstrate how misleading mutual fund ads can be. A fund that loses money for a few years can bump the

average up significantly with one or two strong years.

Let's recap what we've learned in this tutorial:

A mutual fund brings together a group of people and invests their money in stocks, bonds, and other

securities.
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The advantages of mutuals are professional management, diversification, economies of scale,

simplicity and liquidity.

The disadvantages of mutuals are high costs, over-diversification, possible tax consequences, and the

inability of management to guarantee a superior return.

There are many, many types of mutual funds. You can classify funds based on asset class, investing

strategy, region, etc.

Mutual funds have lots of costs.

Costs can be broken down into ongoing fees (represented by the expense ratio) and transaction fees

(loads).

The biggest problems with mutual funds are their costs and fees.

Mutual funds are easy to buy and sell. You can either buy them directly from the fund company or

through a third party.

Mutual fund ads can be very deceiving.

Net Asset Value (NAV)

The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities. In other

words, if the fund is dissolved or liquidated, by selling off all the assets in the fund, this is the amount that

the shareholders would collectively own. This gives rise to the concept of net asset value per unit, which is

the value, represented by the ownership of one unit in the fund. It is calculated simply by dividing the net

asset value of the fund by the number of units. However, most people refer loosely to the NAV per unit as

NAV, ignoring the "per unit". We also abide by the same convention.

Calculation of NAV

The most important part of the calculation is the valuation of the assets owned by the fund. Once it is

calculated, the NAV is simply the net value of assets divided by the number of units outstanding. The

detailed methodology for the calculation of the asset value is given below.

Asset value is equal to
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Sum of market value of shares/debentures

+ Liquid assets/cash held, if any

+ Dividends/interest accrued

Amount due on unpaid assets

Expenses accrued but not paid

Details on the above items

For liquid shares/debentures, valuation is done on the basis of the last or closing market price on the

principal exchange where the security is traded

For illiquid and unlisted and/or thinly traded shares/debentures, the value has to be estimated. For shares,

this could be the book value per share or an estimated market price if suitable benchmarks are available. Fordebentures and bonds, value is estimated on the basis of yields of comparable liquid securities after

adjusting for illiquidity. The value of fixed interest bearing securities moves in a direction opposite to

interest rate changes Valuation of debentures and bonds is a big problem since most of them are unlisted and

thinly traded. This gives considerable leeway to the AMCs on valuation and some of the AMCs are believed

to take advantage of this and adopt flexible valuation policies depending on the situation.

Interest is payable on debentures/bonds on a periodic basis say every 6 months. But, with every passing day,

interest is said to be accrued, at the daily interest rate, which is calculated by dividing the periodic interest

payment with the number of days in each period. Thus, accrued interest on a particular day is equal to the

daily interest rate multiplied by the number of days since the last interest payment date.

Usually, dividends are proposed at the time of the Annual General meeting and become due on the record

date. There is a gap between the dates on which it becomes due and the actual payment date. In the

intermediate period, it is deemed to be "accrued".

Expenses including management fees, custody charges etc. are calculated on a daily basis.

Global Scenario

Some basic facts:

The money market mutual fund segment has a total corpus of $ 1.48 trillion in the U.S. against a

corpus of $ 100 million in India.


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Out of the top 10 mutual funds worldwide, eight are bank- sponsored. Only Fidelity and Capital are

non-bank mutual funds in this group.

In the U.S. the total number of schemes is higher than that of the listed companies while in India we

have just 277 schemes

Internationally, mutual funds are allowed to go short. In India fund managers do not have such

leeway.

In the U.S. about 9.7 million households will manage their assets on-line by the year 2003, such a

facility is not yet of avail in India.

On- line trading is a great idea to reduce management expenses from the current 2 % of total assets

to about 0.75 % of the total assets.

72% of the core customer base of mutual funds in the top 50-broking firms in the U.S. is expected to

trade on-line by 2003.

(Source: The Financial Express September, 99)

Internationally, on-line investing continues its meteoric rise. Many have debated about the success of e-

commerce and its breakthroughs, but it is true that this aspect of technology could and will change the way

financial sectors function. However, mutual funds cannot be left far behind. They have realized the potential

of the Internet and are equipping themselves to perform better.

In fact in advanced countries like the U.S.A, mutual funds buy- sell transactions have already begun on the

net, while in India the Net is used as a source of Information.

Such changes could facilitate easy access, lower intermediation costs and better services for all. A research

agency that specializes in internet technology estimates that over the next four years Mutual Fund Assets

traded on- line will grow ten folds from $ 128 billion to $ 1,227 billion; whereas equity assets traded on-line

will increase during the period from $ 246 billion to $ 1,561 billion. This will increase the share of mutual

funds from 34% to 40% during the period.

(Source: The Financial Express September, 99)

Such increases in volumes are expected to bring about large changes in the way Mutual Funds conduct their

business.

Here are some of the basic changes that have taken place since the advent of the Net.


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Lower Costs: Distribution of funds will fall in the online trading regime by 2003. Mutual funds

could bring down their administrative costs to 0.75% if trading is done on- line. As per SEBI

regulations, bond funds can charge a maximum of 2.25% and equity funds can charge 2.5% as

administrative fees. Therefore if the administrative costs are low, the benefits are passed down and

hence Mutual Funds are able to attract mire investors and increase their asset base.

Better advice: Mutual funds could provide better advice to their investors through the Net rather than

through the traditional investment routes where there is an additional channel to deal with the

Brokers. Direct dealing with the fund could help the investor with their financial planning.

In India, brokers could get more Net savvy than investors and could help the investors with the

knowledge through get from the Net.

New investors would prefer online: Mutual funds can target investors who are young individuals and

who are Net savvy, since servicing them would be easier on the Net.

India has around 1.6 million net users who are prime target for these funds and this could just be the

beginning. The Internet users are going to increase dramatically and mutual funds are going to be the

best beneficiary. With smaller administrative costs more funds would be mobilized .A fund manager

must be ready to tackle the volatility and will have to maintain sufficient amount of investments

which are high liquidity and low yielding investments to honor redemption.

Net based advertisements: There will be more sites involved in ads and promotion of mutual funds.

In the U.S. sites like AOL offer detailed research and financial details about the functioning of

different funds and their performance statistics. a is witnessing a genesis in this area.

FUTURE SCENARIO

The asset base will continue to grow at an annual rate of about 30 to 35 % over the next few years as

investors shift their assets from banks and other traditional avenues. Some of the older public and private

sector players will either close shop or be taken over.

Out of ten public sector players five will sell out, close down or merge with stronger players in three to four

years. In the private sector this trend has already started with two mergers and one takeover. Here too some

of them will down their shutters in the near future to come.


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But this does not mean there is no room for other players. The market will witness a flurry of new players

entering the arena. There will be a large number of offers from various asset management companies in the

time to come. Some big names like Fidelity, Principal, Old Mutual etc. are looking at Indian market

seriously. One important reason for it is that most major players already have presence here and hence these

big names would hardly like to get left behind.

In the U.S. most mutual funds concentrate only on financial funds like equity and debt. Some like real estate

funds and commodity funds also take an exposure to physical assets. The latter type of funds are preferred

by corporates who want to hedge their exposure to the commodities they deal with.

For instance, a cable manufacturer who needs 100 tons of Copper in the month of January could buy an

equivalent amount of copper by investing in a copper fund. For Example, Permanent Portfolio Fund, a

conservative U.S. based fund invests a fixed percentage of its corpus in Gold, Silver, Swiss francs, specific

stocks on various bourses around the world, short term and long-term U.S. treasuries etc.

In U.S.A. apart from bullion funds there are copper funds, precious metal funds and real estate funds

(investing in real estate and other related assets as well.).In India, the Canada based Dundee mutual fund is

planning to launch gold and a real estate fund before the year-end.

In developed countries like the U.S.A there are funds to satisfy everybodys requirement, but in India only

the tip of the iceberg has been explored. In the near future India too will concentrate on financial as well as

physical funds.

The mutual fund industry is awaiting the introduction of DERIVATIVES in the country as this would

enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV).

SEBI is working out the norms for enabling the existing mutual fund schemes to trade in Derivatives.

Importantly, many market players have called on the Regulator to initiate the process immediately, so that

the mutual funds can implement the changes that are required to trade in Derivatives.

Market Trends

A lone UTI with just one scheme in 1964 now competes with as many as 400 odd products and 34 players

in the market. In spite of the stiff competition and losing market share, UTI still remains a formidable forceto reckon with.


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Last six years have been the most turbulent as well as exiting ones for the industry. New players have come

in, while others have decided to close shop by either selling off or merging with others. Product innovation

is now pass with the game shifting to performance delivery in fund management as well as service. Those

directly associated with the fund management industry like distributors, registrars and transfer agents, and

even the regulators have become more mature and responsible.

The industry is also having a profound impact on financial markets. While UTI has always been a dominant

player on the bourses as well as the debt markets, the new generations of private funds which have gained

substantial mass are now seen flexing their muscles. Fund managers, by their selection criteria for stocks

have forced corporate governance on the industry. By rewarding honest and transparent management with

higher valuations, a system of risk-reward has been created where the corporate sector is more transparent

then before.

Funds have shifted their focus to the recession free sectors like pharmaceuticals, FMCG and technology

sector. Funds performances are improving. Funds collection, which averaged at less than Rs.100bn per

annum over five-year period spanning 1993-98 doubled to Rs.210bn in 1998-99. In the current year

mobilization till now have exceeded Rs.300bn. Total collection for the current financial year ending March

2000 is expected to reach Rs.450bn.

What is particularly noteworthy is that bulk of the mobilization has been by the private sector mutual funds

rather than public sector mutual funds. Indeed private MFs saw a net inflow of Rs.7819.34 crore during the

first nine months of the year as against a net inflow of Rs.604.40 crore in the case of public sector funds.

Mutual funds are now also competing with commercial banks in the race for retail investors savings and

corporate float money. The power shift towards mutual funds has become obvious. The coming few years

will show that the traditional saving avenues are losing out in the current scenario. Many investors are

realizing that investments in savings accounts are as good as locking up their deposits in a closet. The fund

mobilization trend by mutual funds in the current year indicates that money is going to mutual funds in a big

way. The collection in the first half of the financial year 1999-2000 matches the whole of 1998-99.

India is at the first stage of a revolution that has already peaked in the U.S. The U.S. boasts of an Asset

base that is much higher than its bank deposits. In India, mutual fund assets are not even 10% of the bank

deposits, but this trend is beginning to change. Recent figures indicate that in the first quarter of the current

fiscal year mutual fund assets went up by 115% whereas bank deposits rose by only 17%. (Source: Think-

tank, the Financial Express September, 99) This is forcing a large number of banks to adopt the concept of

narrow banking wherein the deposits are kept in Gilts and some other assets which improves liquidity and

reduces risk. The basic fact lies that banks cannot be ignored and they will not close down completely. Their

role as intermediaries cannot be ignored. It is just that Mutual Funds are going to change the way banks do

business in the future.


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BANKS V/S MUTUAL FUNDS

BANKS MUTUAL FUNDS

Returns Low Better

Administrative exp. High Low

Risk Low Moderate

Investment options Less More

Network High penetration Low but improving

Liquidity At a cost Better Quality of assets Not transparent Transparent

Interest calculation Minimum balance between 10th.

& 30th. Of every month

Everyday

Guarantee Maximum Rs.1 lakh on deposits None

Regulatory Aspects of Mutual Fund

SCHEMES OF MUTUAL FUND:

The asset management company shall launch no scheme unless the trustees approve such scheme

and a copy of the offer document has been filed with the Board.

Every mutual fund shall along with the offer document of each scheme pay filing fees.


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The offer document shall contain disclosures which are adequate in order to enable the investors to

make informed investment decision including the disclosure on maximum investments proposed to

be made by the scheme in the listed securities of the group companies of the sponsor.

No one shall issue any form of application for units of a mutual fund unless the form is accompanied

by the memorandum containing such information as may be specified by the Board.

Every close ended scheme shall be listed in a recognized stock exchange within six months from the

closure of the subscription

The asset management company may at its option repurchase or reissue the repurchased units of a

close ended scheme.

A close-ended scheme shall be fully redeemed at the end of the maturity period. "Unless a majority

of the unit holders otherwise decide for its rollover by passing a resolution".

The mutual fund and asset management company shall be liable to refund the application money to

the applicants,-

(i) If the mutual fund fails to receive the minimum subscription amount referred to in clause (a) of sub-

regulation (1);

(ii) If the moneys received from the applicants for units are in excess of subscription as referred to in clause

(b) of sub-regulation (1).

The asset management company shall issue to the applicant whose application has been accepted,

unit certificates or a statement of accounts specifying the number of units allotted to the applicant as

soon as possible but not later than six weeks from the date of closure of the initial subscription list

and or from the date of receipt of the request from the unit holders in any open ended scheme.

RULES REGARDING ADVERTISEMENT:

The advertisement for each scheme shall disclose investment objective for each scheme.

An advertisement shall be truthful, fair and clear and shall not contain a statement, promise or

forecast which is untrue or misleading.

Advertisements shall not be so framed as to exploit the lack of experience or knowledge of the

investors.


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All advertisements issued by a mutual fund or its sponsor or asset management company, shall state

"all investments in mutual funds and securities are subject to market risks and the NAV of the

schemes may go up or down depending upon the factors and forces affecting the securities market".

The advertisement shall not compare one fund with another, implicitly or explicitly, unless the

comparison is fair and all information relevant to the comparison is included in the advertisement.

The offer document and advertisement materials shall not be misleading or contain any statement or

opinion, which are incorrect or false.

INVESTMENT OBJECTIVES AND VALUATION POLICIES:

The moneys collected under any scheme of a mutual fund shall be invested only in transferable

securities in the money market or in the capital market or in privately placed debentures or

securitized debts.

Provided that moneys collected under any money market scheme of a mutual fund shall be invested

only in money market instruments in accordance with directions issued by the Reserve Bank of

India;

The mutual fund shall not borrow except to meet temporary liquidity needs of the mutual funds for

the purpose of repurchase, redemption of units or payment of interest or dividend to the unit holders.

The mutual fund shall not advance any loans for any purpose.

Every mutual fund shall compute and carry out valuation of its investments in its portfolio and

publish the same in accordance with the valuation norms specified in Eighth Schedule

Every mutual fund shall compute the Net Asset Value of each scheme by dividing the net assets of

the scheme by the number of units outstanding on the valuation date.

The Net Asset Value of the scheme shall be calculated and published at least in two daily

newspapers at intervals of not exceeding one week:

The price at which the units may be subscribed or sold and the price at which such units may at any

time be repurchased by the mutual fund shall be made available to the investors.

GENERAL OBLIGATIONS:

Every asset management company for each scheme shall keep and maintain proper books of

accounts, records and documents, for each scheme so as to explain its transactions and to disclose at

any point of time the financial position of each scheme and in particular give a true and fair view of

the state of affairs of the fund and intimate to the Board the place where such books of accounts,

records and documents are maintained.


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The financial year for all the schemes shall end as of March 31 of each year.

Every mutual fund or the asset management company shall prepare in respect of each financial year

an annual report and annual statement of accounts of the schemes and the fund as specified in

Eleventh Schedule.

Every mutual fund shall have the annual statement of accounts audited by an auditor who is not in

any way associated with the auditor of the asset management company.

PROCEDURE FOR ACTION IN CASE OF DEFAULT:

On and from the date of the suspension of the certificate or the approval, as the case may be, the

mutual fund, trustees or asset management company, shall cease to carry on any activity as a mutual

fund, trustee or asset management company, during the period of suspension, and shall be subject to

the directions of the Board with regard to any records, documents, or securities that may be in its

custody or control, relating to its activities as mutual fund, trustees or asset management company.

RESTRICTIONS ON INVESTMENTS:

A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments issued by a

single issuer, which are rated not below investment grade by a credit rating agency authorized to

carry out such activity under the Act. Such investment limit may be extended to 20% of the NAV of

the scheme with the prior approval of the Board of Trustees and the Board of asset management

company

A mutual fund scheme shall not invest more than 10% of its NAV in unrated debt instruments issued

by a single issuer and the total investment in such instruments shall not exceed 25% of the NAV of

the scheme. All such investments shall be made with the prior approval of the Board of Trustees and

the Board of asset management company.

No mutual fund under all its schemes should own more than ten per cent of any company's paid up

capital carrying voting rights.

Transfers of investments from one scheme to another scheme in the same mutual fund shall be

allowed only if, -

1. Such transfers are done at the prevailing market price for quoted instruments on spot basis.

2. The securities so transferred shall be in conformity with the investment objective of the

scheme to which such transfer has been made.

A scheme may invest in another scheme under the same asset management company

or any other mutual fund without charging any fees, provided that aggregate inter

scheme investment made by all schemes under the same management or in schemes

under the management of any other asset management company shall not exceed 5%

of the net asset value of the mutual fund.


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The initial issue expenses in respect of any scheme may not exceed six per cent of the

funds raised under that scheme.

Every mutual fund shall buy and sell securities on the basis of deliveries and shall in

all cases of purchases, take delivery of relative securities and in all cases of sale,

deliver the securities and shall in no case put itself in a position whereby it has to

make short sale or carry forward transaction or engage in badla finance.

Every mutual fund shall, get the securities purchased or transferred in the name of the

mutual fund on account of the concerned scheme, wherever investments are intended

to be of long-term nature.

Pending deployment of funds of a scheme in securities in terms of investment

objectives of the scheme a mutual fund can invest the funds of the scheme in short

term deposits of scheduled commercial banks.

No mutual fund scheme shall make any investment in;

Any unlisted security of an associate or group company of the sponsor; or

Any security issued by way of private placement by an associate or group company of

the sponsor; or

The listed securities of group companies of the sponsor which is in excess of 30% of

the net assets [of all the schemes of a mutual fund]

No mutual fund scheme shall invest more than 10 per cent of its NAV in the equity

shares or equity related instruments of any company. Provided that, the limit of 10 per

cent shall not be applicable for investments in index fund or sector or industry

specific scheme.

A mutual fund scheme shall not invest more than 5% of its NAV in the equity shares

or equity related investments in case of open-ended scheme and 10% of its NAV in

case of close-ended scheme.

Glossary

Advisor

The organization employed by a mutual fund to give professional advice on the fund's investments and to

supervise the management of its assets.


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Asked or Offering Price

The price at which a mutual fund's shares can be purchased. The asked or offering price means the current

net asset value (NAV) per share plus sales charge, if any. For a no-load fund, the asked price is the same as

the NAV.

Asset Allocation Fund

A fund that spreads its portfolio among a wide variety of investments, including domestic and foreign stocks

and bonds, government securities, gold bullion and real estate stocks. This gives small investors far more

diversification than they could get allocating money on their own. Some of these funds keep the proportions

allocated between different sectors relatively constant, while others alter the mix as market conditions

change.

Automatic Reinvestment

A service offered by most mutual funds whereby income dividends and capital gain distributions are

automatically invested into the fund by buying additional shares and thus building up holdings through the

effects of compounding.

Balanced Fund

A mutual fund that maintains a balanced portfolio, generally 60% bonds or preferred stocks and 40%

common stocks.

Bid or Sell Price

The price at which a mutual fund's shares are redeemed (bought back) by the fund. The bid or redemption

price means the current net asset value per share, less any redemption fee or back-end load.

Bond Fund

A mutual fund whose portfolio consists primarily of corporate, municipal or U.S. Government bonds. These

funds generally emphasize income rather than growth.

Bond Rating

System of evaluating the probability of whether a bond issuer will default. Standard and Poor's Corp. and

Moody's Investors Services, among other firms, analyze the financial stability of both corporate and

government bond issuers. Ratings range from AAA or Aaa (extremely unlikely to default) to D (currently in

default). Bonds rated BBB or below by S&P or Baa or below by Moody's are not considered to be of


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investment grade. Mutual funds generally restrict their bond purchases to issues of certain quality ratings,

which are specified in their prospectuses.

Capital Appreciation Fund

A mutual fund that seeks maximum capital appreciation through the use of investment techniques involving

greater than ordinary risk, such as borrowing money in order to provide leverage, short-selling and high

portfolio turnover.

Capital Gains Distributions

Payments (usually annually) to mutual fund shareholders of gains realized on the sale of portfolio securities.

Capital Growth

A rise in market value of a mutual fund's securities, reflected in its net asset value per share. This is a

specific long-term objective of many mutual funds.

Certificate of Deposit

Interest-bearing, short-term debt instrument issued by banks and thrifts.

Closed-End Investment Company

An investment company that offers a limited number of shares. They are traded in the securities markets,

usually through brokers. Price is determined by supply and demand. Unlike open-end investment companies

(mutual funds), closed-end funds do not redeem their shares.

Commercial Paper

Short-term, unsecured promissory notes with maturities no longer than 270 days. They are issued by

corporations, in denominations starting at $10,000, to fund short-term credit needs.

Common Stock Fund

An open-end investment company whose holdings consist mainly of common stocks and usually emphasize

growth.

Confirm Date

The date the fund processed your transaction, typically the same day or the day after your trade date.

Contingent Deferred Sales Charge (CDSC)


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Ex-Dividend Date

The date on which a fund's Net Asset Value (NAV) will fall by an amount equal to the dividend and/or

capital gains distribution (although market movements may alter the fund's closing NAV somewhat). Most

publications which list closing NAVs place an "X" after a fund name on its ex-dividend date.

Expense Ratio

The ratio of total expenses to net assets of the fund. Expenses include management fees, 12(b)1 charges, if

any, the cost of shareholder mailings and other administrative expenses. The ratio is listed in a fund's

prospectus. Expense ratios may be a function of a fund's size rather than of its success in controlling

expenses.

Fannie Mae (Federal Mortgage Association)

An agency established by the federal government, but owned by private stockholders, which issues

mortgage-backed certificates in $25,000 denominations. Timely payment of both interest and principal are

insured. A growing number of mutual funds emphasize investments in these and other mortgage-backed

securities.

Fiscal Year

An accounting period consisting of 12 consecutive months.

Global Fund

A fund that invests in both Indian. and foreign securities.

Growth Fund

A mutual fund whose primary investment objective is long-term growth of capital. It invests principally in

common stocks with significant growth potential.

Income Dividend

Payment of interest and dividends earned on the fund's portfolio securities after operating expenses are

deducted.

Income Fund

A mutual fund that primarily seeks current income rather than growth of capital. It will tend to invest in

stocks and bonds that normally pay high dividends and interest.


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Index Fund

A mutual fund that seeks to mirror general stock-market performance by matching its portfolio to a broad-

based index, most often the Standard & Poor's 500-stock index.

International Fund

A fund that invests in securities traded in markets outside India.

Investment Company

A corporation, partnership or trust that invests the pooled monies of many investors. It provides greater

professional management and diversification of investments than most investors can obtain independently.

Mutual funds, or "open-end" investment companies, are the most popular form of investment company.

Investment Objective

The financial goal (long-term growth, current income, etc.) that an investor or a mutual fund pursues.

Junk Bond

A speculative bond rated BB or below by Standard & Poor's Corp. and Ba or below by Moody's Investor

Service. "Junk bonds" are generally issued by corporations of questionable financial strength or without

proven track records. They tend to be more volatile and higher yielding than bonds with superior quality

ratings. "Junk bond funds" emphasize diversified investments in these low-rated, high-yielding debt issues.

Load

A sales charge or commission assessed by certain mutual funds ("load funds,") to cover their selling costs.

The commission is generally stated as a portion of the fund's offering price, usually on a sliding scale from

one to 8.5%.

Load Fund

A mutual fund that levies a sales charge up to 8.5%, which is included in the offering price of its shares, and

is sold by a broker or salesman. A front-end load is the fee charged when buying into a fund; a back-end

load is the fee charged when getting out of a fund.

Low-Load Fund

A mutual fund that charges a small sales commission, usually 3.5% or less, for the purchase of its shares.


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Management Fee

The amount a mutual fund pays to its investment adviser for services rendered, including management of

the fund's portfolio. In general, this fee ranges from .5% to 1% of the fund's asset value.

Money Market Fund

A mutual fund that aims to pay money market interest rates. This is accomplished by investing in safe,

highly liquid securities, including bank certificates of deposit, commercial paper, government securities and

repurchase agreements. Money Market funds make these high interest securities available to the average

investor seeking immediate income and high investment safety.

Mortgage-Backed Securities

Certificates backed by pooled mortgages (e.g., Freddie Mac or Ginnie Mae). Issuing agencies buy

mortgages from lending institutions and repackage them as securities that they sell to investors. They are

generally issued in denominations of $25,000 or above. Yields, which stem from interest and principal on

underlying mortgages, are generally higher than those of Treasury bonds that provide comparable liquidity

and safety. A growing number of income mutual funds concentrate their holdings in these securities.

Municipal Bond Fund

A mutual fund that invests in a broad range of short, intermediate or long-term tax-exempt bonds issued by

states, cities and other local governments. The interest obtained from these bonds is passed through to

shareholders free of tax. The objective of these funds is current tax-free income.

Mutual Fund

An open-end investment company that buys back or redeems its shares at current net asset value. Most

mutual funds continuously offer new shares to investors.

Net Asset Value Per Share

The current market worth of a mutual fund share. Calculated daily by taking the funds total assets securities,

cash and any accrued earnings deducting liabilities, and dividing the remainder by the number of shares

outstanding.

No-Load Fund

A commission-free mutual fund that sells its shares at net asset value, either directly to the public or through

an affiliated distributor, without the addition of a sales charge.


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Option Income Fund

A fund that invests primarily in dividend-paying common stocks on which call options are traded on

national securities exchanges. These funds seek high current return consisting of dividends, premiums from

selling options, net short-term gains (including those from the exercising of options) and any profits from

closing purchase transactions.

Payable Date

The date on which distributions are paid to shareholders who do not want to reinvest them. This date can be

anywhere from one week to one month after the Record Date.

Payroll Deduction Plan

An arrangement between an employer and a mutual fund, authorized by the employee, through which a

specified sum is deducted from an employee's salary to buy shares in the fund.

Portfolio Turnover Rate

The rate at which the fund's portfolio securities are changed each year. If a fund's assets total $100 million

and the fund bought and sold $100 million worth of securities that year, its portfolio turnover rate would be

100%. Aggressively managed funds generally have higher portfolio turnover rates than do conservative

funds that invest for the long term. High portfolio turnover rates generally add to the expenses of a fund.

Prospectus

An official document that each investment company must publish, describing the mutual fund and offering

its shares for sale. It contains information required by the Securities and Exchange Commission.

Record Date

The date the fund determines who its shareholders are; "shareholders of record" who will receive the fund's

income dividend and/or net capital gains distribution. Frequently the business day immediately prior to the

Ex-Dividend Date.

Redemption Fee


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A fee charged by a limited number of funds for redeeming, or buying back, fund shares.

Redemption Price

The price at which a mutual fund's shares are redeemed (bought back) by the less expensive fund. The

redemption price is usually equal to the current net asset value per share.

Regional Fund

A mutual fund that concentrates its investments within a specific geographic area, usually the fund's local

region. The objective is to take advantage of regional growth potential before the national investment

community does.

Reinvestment Date (Payable Date)

The date on which a share's dividend and/or capital gains will be reinvested (if requested) in additional fund

shares.

Reinvestment Privilege

A service that most mutual funds offer whereby a shareholder's income dividends and capital gains

distributions are automatically reinvested in additional shares.

Sector Fund

A fund that operates several specialized industry sector portfolios under one umbrella. Transfers between

the various portfolios can usually be executed by telephone at little or no cost.

Series Fund

A mutual fund whose prospectus allows for more than one portfolio. Portfolios may be specialized (Sector

Fund) or broad (growth stock, along with a money market portfolio). Management can create additional

portfolios as it sees fit.

Short Selling

The sale of a security which is not owned by the seller. The "short seller" borrows stock for delivery to the

buyer, and must eventually purchase the security for return to the lender.

Short-Term Municipal Bond Fund

A fund that invests in municipal bonds with maturities not exceeding two years. See Municipal Bond Fund.


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Simplified Employee Pension

An alternative to a Keogh plan that allows employers who have not established qualified retirement plans to

contribute to their employees Individual Retirement Accounts.

Specialty Fund

A mutual fund specializing in the securities of a particular industry or group of industries or special types of

securities.

Systematic Withdrawal Plans

Many mutual funds offer withdrawal programs whereby shareholders receive payments from their

investments. These payments are usually drawn from the funds dividend income and capital gain

distributions, if any, and from principal only when necessary.

Underwriter

The organization that acts as the distributor of a mutual fund's shares to broker/dealers and the public.

Variable Annuity

A type of insurance contract that guarantees future payments to the holder, or annuitant, usually at

retirement. The annuity's value varies with that of the underlying portfolio securities, which may include

mutual fund shares. All monies held in the annuity accumulate tax-deferred.

Voluntary Plan

A flexible plan for capital accumulation, involving no specified time frame or total sum to be invested.

Yield

Income or return received from an investment, usually expressed as a percentage of market price, over a

designated period. For a mutual fund, yield is interest or dividend before any gain or loss in the price per

share.

Zero Coupon Bond

Bond sold at a fraction of its face value. It appreciates gradually, but no periodic interest payments are

made. Earnings accumulate until maturity, when the bond is redeemable at full face value. Nonetheless,


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interest is taxable as it accrues. As a result, zero coupon bonds are often used for IRAs, Keoghs and other

tax-deferred retirement plans.


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COMPANY

PROFILE

RELIANCE MUTUAL FUND

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

Management (AAUM) of Rs. 67,816 Carors (AAUM for 30th Nov 08 ) and an investor base of over 71.02

Lacks.


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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. For details of scheme features and

scheme specific risk factors, please refer to the provisions of the offer document. Offer Document and KIM

is available at all the DISCs/ Distributors of RMF and also our web site http://202.138.126.192/. Please read

the offer document carefully before investing.

OUR SCHEMS

Equity/Growth Schemes

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

normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These

schemes provide different options to the investors like dividend option, capital appreciation, etc. and the

investors may choose an option depending on their 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
http://www.reliancemutual.com/http://www.reliancemutual.com/


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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 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.

Reliance Mutual Fund Advantage

Our past track record demonstrates our mid cap niche and stock picking capabilities* Proven investments into under researched stocks and sectors at an early stage Reliance MF has most stable equity investment team and a strong monitoring system in place

* Past Performance may or may not be sustained in the future

6-months close ended diversified equity fund with an automatic conversion into an open ended scheme on

xpiry of 36-months from the date of allotment

t aims to maximize returns by investing 70-100% in Equities focusing in small and mid cap companies.

PRODUCT POSITIONING

The scheme is targeted towards investors having a long-term investment horizon of around 3 years to 5

years. Unlike other equity schemes of Reliance Mutual Fund, this fund will predominantly concentrate on


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opportunities in small and mid cap space.

The positioning of our various schemes is further explained in the table below :

Scheme Name Predominantly invests inRecommended

Investment Horizon;

Reliance Vision Fund Large Cap Stocks 1+ years

Reliance Growth Fund Mid Cap & Large Cap Stocks 2-3 years

Reliance Equity Opportunities Fund with no bias on any Cap and Sector 1+ years

Reliance Equity Fund Stocks belonging to top 100

companies by M-Cap and which are present in

F&O Segment

1-2 years

Reliance Long Term Equity Fund

(Proposed)

Small and Mid Cap Stocks 3+ years

All other equity schemes of Reliance Mutual Fund are open-ended schemes. Reliance Long Term Equity

Fund will be a 36 months close-ended Fund with an automatic conversion into an open-ended scheme on

expiry of 36 months from the date of allotment. This nature of the fund will enable the fund manager to take

calls on stocks that are expected to perform over a longer period of time without worrying much about short

term market aberrations and thus the NAV of the fund.

Product Features

Type: A 36-months close ended diversified equity fund with an automatic conversion into an open ended

scheme on expiry of 36-months from the date of allotment

Investment Objective

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.

Asset Allocation/Investment pattern

Under normal circumstances, the anticipated asset allocation would be

InstrumentsIndicative asset

allocationRisk Profile

Equity and Equity related Securities 70% to 100% Medium to High

Debt and Money market securities (including investments in

securitized debt)

0% to 30% Low to Medium


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An overall limit of 100% of the portfolio value has been introduced for the purpose of equity derivatives in

the scheme.

Options Available:

Growth Option

Dividend: Only Dividend payout

Benchmark Index: BSE 200

Application Amount: Rs 5000 and in multiples of Re. 1 thereafter

Liquidity

The Scheme will offer for Redemption / Switch-out of Units on an ongoing basis at half yearly intervals at

NAV based prices. The Redemption / Switch-out of Units will be available only during the Specified

Redemption Period i.e. the first five Business Days immediately after the end of each calendar half year.

After the conversion of Scheme into an open-ended scheme, the Scheme will offer for Sale/Switch-in and

Redemption/Switch-out of Units at NAV based prices on every Business Day on an ongoing basis.

Load Structure: No Entry Load for Direct Investments w.e.f January 4th, 2008

Entry Load: Nil

Exit Load

For

subscription

If redeemed/ switched

before completion 12

months from the date of

allotment

If redeemed/ switched between 12

months - 1 day and on or before

completion of 24 month from the

date of allotment

If redeemed/ switched between 24

months - 1 day and on or before

completion of 36 month from the

date of allotment

Exit Load 4% 3% 2%

Load Structure: On Conversion into open ended scheme

Entry Load: For amt below Rs. 2 crs-2.25%, for amt of Rs.2 crs and below 5 crs-1.25%and for amt. Rs. 5

crors and above- Nil

Exit Load: Nil

Nomination facility: Available


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Statutory Details 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 Long Term Equity Fund: A 36-months close ended diversified equity fund with an automatic

conversion into an open ended scheme on expiry of 36-months from the date of allotment

Investment Objective: 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

Asset Allocation : 1. Equity and Equity related Securities - 70% to 100%, 2. Debt and Money market

securities (including investments in securitized debt) - 0% to 30% (An overall limit of 100% of the portfolio

value has been introduced for the purpose of equity derivatives in the scheme.)

Terms of Issue: The units are available at the face value of Rs. 10/- per unit during the New Fund Offer

Period. The scheme will open for redemption only during the Specified Redemption Period as mentioned in

the Offer Document. 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 at the close of every working

day and shall be published in tow daily newspapers at an interval not exceeding one week.

Load Structure: Entry Load: Nil, Exit Load: Redemption switch out from the date of allotment: upto 12

months 4%, >12months up to 24 months 3%, >24months upto 36 months 2%, >36months Nil

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


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the Scheme. Reliance Long Term Equity Fund is only the name of the Scheme and does not in any manner

indicate either the quality of the Scheme; it's future prospects or returns. 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. For details of scheme

features apart from those mentioned above and scheme specific risk factors, please refer to the provisions of

the offer document. Offer Document and KIM is available at all the DISCs/ Distributors of RMF.

INTRODUCTION TO TOPIC AND RESEARCH METHODLOGY

SALES PROMOTION

Any action or decision which helps to promote the sale is sales promotion. The basic aim of the activities

which come under this section is to attract customer. All the effort made by the officials of sharekhan ltd to

increase the sale forms the part of sales promotion Thus in ordinary terms sales promotion includes personal

selling, advertisement, public relation and supplementary selling activity e.t.c.


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OBJECTIVES OF SALES PROMOTION AT RELIANCE MUTUAL FUND

Following are the important objectives of sales promotion at reliance

Providing Information to Customers or already existing clients.

To increase sales volume regarding demat accounts.

To face competition offered by other trading houses.

To attract new customers for the company.

To induce present customer to invest more in shares.

IMPORTANCE OF PROMOTIONAL ACTIVITIES

The importance of promotional activities is as following

For facing the imperfect and uneven market tactfully.

For shortening the distance between the share khan and customer.

CONSUMER BEHAVIOUR

Consumer behavior is the behavior that consumer displays in searching for purchasing, using, evaluating,

and disposing of the product and service that they expect will satisfy their needs. It focuses on how

individual make decision to spend their available resources (time, effort and money) on consumption related

items, which it includes

What they buy.


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Why they buy.

When they buy.

Where they buy.

How often they buy.

How often they use

.

As customers are the king and they are the factor around whom sales of a product revolve and hence the

market share is affected so it is very important that product of a company should be able to fulfill the

customer expectations that it should be able to balance the experience and expectation. Therefore the main

concentration is to maintain the size of existing customer and to raise the satisfaction level of defectors so

that the number of loyalist of the company would increase and hence the market share shows a positive

change and which finally increase the profitability. A loyal consumer is very important as

Loyal customer buys more products.

They pay less attention to competitors advertisement

.

Servicing existing customers who are familiar with the companies offering and process

is cheaper

Loyal customer spread positive word of mouth.

DATABASE AND METHODOLOGY

Database

1) Primary sampling

2) Questionnaire Selection

3) Secondary Sources


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PRIMARY SAMPLING

WHAT IS MARKETING RESEARCH?

Marketing research is a set of technique and principle for systematically collecting, recording, analyzing and

interpreting data that can aid decision makers involved in marketing goods, services and ideas. Marketing

research is the functions which links the consumers, customers and public to marketer through information

(information use to identify and define marketing opportunities and problems, generates refine and evaluates

marketing problems, monitoring performance sand improve understanding of marketing as a process.

Marketing research involves:-

Gathering data from the market.

Conducting customer surveys.

Determining the needs of the customers.


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Evaluating customer responses.

Gathering sales and market share data.

Testing the product and policies.

MAJOR STEPS IN MARKETING RESEARCH PROCESS.

The major steps in the marketing research process are as following

Step 1- Justify the need of marketing research.

Step 2- Define the research objective.

Step 3- Identify the data need.

Step 4- Identify the data source.

Step 5- Choose an appropriate research design and data collection method.

Step 6- Design the research instrument.

Step 7- Identify the sample.

Step 8- Collect data from relevant source.

Step 9- Analyze and interpreter the data.

Step 10- Presentation of research findings.

TYPES OF MARKETING RESEARCH


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Research may be classified under following

1) EXPLORATORY RESEARCH - Exploratory research aims to develop initial hunches and provide

directions for any future research needed. The primary purpose is to through light on nature of a

situation and identifies any specific objectives through additional research. It is most useful when a

decision maker wishes to better understand the situation or to identify decision alternatives.

Exploratory research technique includes the following

Focus Group Interview.

Observation

2) CONCLUSIVE RESEARCH- Conclusive research is intended to verify insight and aid decision maker

in selecting a specific course of action. Its primary purpose is to help decision maker to choose the best

course of action in a situation.


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TYPES OF CONCLUSIVE RESEARCH

Conclusive research is further divided into following categories

1) Descriptive research - Descriptive research aims at describing something. Data collected through

descriptive research provides valuable information about the unit under study.

Descriptive research is further classified into

Cross sectional research- It is one time study involving data collection at a single period of

time. Here the sample is not repeated for again and again for the data collection.

Longitudinal research- Longitudinal research involves the repetition of the same sample for

the data collection over a period of time.

2) Experimental research - Experimental research is also known as causal research and it allows one

to make causal inferences about relationships among variable

TYPES OF DATA

Data can be classified as below

Primary data


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Secondary data

1) Primary data: - Primary data are to be collected by the researcher , they are not present in reports or

journals e.t.c and can be collected through a number of method which can be classified as follow

Personal interview of sample.

Telephonic interview.

E- Mails.

Observations.

Questionnaires.

Interviews.

2) Secondary data: - Secondary data are the data collected for some purpose other than the research

situation; such data are available from the sources such as books, company reports, journals, rating

organization, census department e.t.c . The secondary data are readily available and therefore they

are less costly and less time consuming. Sources of secondary data are

Internets.

Book and Journals.

Company reports.

Census department.

Research work of others.

METHODOLOGY USED FOR THE STUDY


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The methodology used in the study is analytical. A survey was done in different parts of SIKAR to ascertain

the facts about share trading and its sale process, and promotion in the market. This project is mainly based

on the primary data and information beside this secondary data is also used.

Sampling method adopted - Sampling method adopted for the study was Non Probability sampling. Non

Probability sampling is a subjective procedure in which the probability of selection for the population units

cannot be determined

Both convenience and judgment sampling is used for the study purpose.

Convenience sampling: - Here the researcher convenience forms the basis for selecting a sample

unit. During my project I had collected data from different type of respondents.

Judgment sampling: - Judgment sampling is a procedure in which a researcher exerts some efforts

in selecting a sample that he or she believes is most appropriate for the study. During the project

study the required data is also collected from the officials ofRELIANCE MUTUAL FUND, which

may provide a clear picture

SAMPLE SIZE- 100 RESPONDENTS

The

Documents

Reliance Mutual Project