PROJECT REPORT ON

Dynamic changes in mutual fund And The role of online mutual fund services

(adherence to RELIANCE MUTUAL FUND)

Submitted to: Mr. Mohit Sharma

Submitted by: Sumeer MBA -2nd

PREFACE

The successful completion of this project was a unique experience for me because by visiting many place and interacting various person, I achieved a better knowledge about mutual fund products and perception of people about investment in mutual fund. The experience which I gained by doing this project was essential at this turning point of my career. The project content detailed analysis of research.

The research provides an opportunity to the student to devote his/her skills knowledge and competencies required during the technical session. The research is on the topic dynamic changes in mutual fund and the role of online mutual fund services.

ACKNOWLEDGEMENT

I would like to express my appreciation and gratitude to various people who have shared their valuable time and made possible this project through their direct indirect cooperation. Honourable sir Mr. Mohit Sharma, branch manager (Reliance mutual fund) allowing me to work on this project and provide necessary help. I thank my respected faculties and colleagues, who helped me in every possible ways, support me and encouraged me to explore new dimensions.

Sumeer MBA-2nd semester GNA-IMT, Phagwara, Punjab.

EXECUTIVE SUMMARY

The project deals with understanding of mutual fund and analysis. During my project, I got the opportunity to understand the concept of various AMCs (Asset Management Company) issuing various mutual funds according to the needs of the investors. During my project I came to know important regulations of SEBI for mutual fund operations. Project deals with an analysis of RELIANCE mutual funds various schemes in which I tried to come out with a result which is best, for that purpose I conducted a market research. During the training period I suggested the investors how to invest and in which fund they should invest. During the project, I made an endeavor to understand the awareness of mutual funds among the various classes of investors.

CHAPTER 1:
INTRODUCTION TO THE COMPANY

1.1 PROFILE OF THE COMPANY:

Reliance Mutual Fund ('RMF'/ 'Mutual Fund') is one of Indias leading Mutual Funds, with Average Assets Under Management (AAUM) of Rs. 1,01,259 Crores and an investor count of over 66.90 Lakh folios. (AAUM and investor count as of Apr-June 11)

Reliance Mutual Fund, a part of the Reliance Group, is one of the fastest growing mutual funds in India. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 159 cities across the country.

Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors. Reliance Capital Asset Management Limited (RCAM) is the asset manager of Reliance Mutual Fund. RCAM 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.

y VISION AND MISSION STATEMENT:

 Vision statement: To be a globally respected wealth creator with an emphasis on customer care and a culture of good corporate governance.

 Mission statement: To create and nurture a world-class, high performance environment aimed at delighting our customers. The main objectives of the Reliance Mutual Fund are:  To carry on the activity of a Mutual Fund as may be permitted at law and formulate and devise various collective Schemes of savings and investments for people in India and abroad and also ensure liquidity of investments for the Unit holders;  To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on their savings and

Sponsor Trustee Investment Manager / AMC Statutory Details

: Reliance Capital Limited : Reliance Capital Trustee Co. Limited : Reliance Capital Asset Management Limited

: The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956.

FUND MANAGER VIEW:

DEBT: Globally, correction in commodity prices, rise in concern about peripheral European countries debt repayment and expectations of global growth moderation were the other highlights of the month. Consolidating domestic growth, high inflation coupled with domestic fuel price hike leading to growing inflationary expectations and hawkish RBI stance were the key highlights of the month.

GOLD: Gold prices continue to find support from concerns over sovereign debt crisis, slowing economic growth, rising inflation, central banks buying activity and strong investment demand. Euro along with the global growth momentum seems to suffocate in debt clutches. Though it may seem that no new developments have taken place over last few weeks, the problem has become much more sever and risk aversion has increased.

1.2 : COMPANY HISTORY:

Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act, 1882 with Reliance Capital Limited (RCL), as the Settler/Sponsor and Reliance Capital Trustee Co. Limited (RCTCL), as the Trustee.

RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual Fund was changed to Reliance Mutual Fund effective 11th March 2004 vide SEBI's letter no. IMD/PSP/4958/2004 date 11th March 2004.

Reliance Mutual Fund was formed to launch various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities.

1.3: ORGANISATION STRUCTURE:

 Management team: Sundeep sikka Sunil B. SinghaniaAmitabh MohantyCEO Head- equity investments Head- fixed income

 Equity fund managers: Shailesh raj bhan, Ashwani kumar, Krishan Daga, Omprakash S.Kuckian, Govind agrawal  Debt fund managers: Amit Tripathi, Prashant Pimple, Anju chhajer  Commodities : Hiren Chandaria

 Head of departments:

Himanshu Vyapak: Executive vice president, head- sales & distribution, product management, customer service. Pradeep Andrade: Milind Gandhi: Infrastructure & Admin Chief financial officer

Rajesh Derhgawen: Head- HR,Admin & infrastructure Vinay Nigudkar: Information technology Geeta Chandran: Operations and settlement

Zonal heads: Gurbir chopra: Northern zonal head Aashwin dugal: Western zone head Gopal Khaitan: Southern zone head Vikas Rathie: Eastern zone head

 Sponsor: Reliance Capital Limited:

Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited, a subsidiary of Reliance Capital Limited, which holds 92.93% of the paid-up capital of Reliance Capital Asset Management Limited, the balance paid up capital being held by minority shareholders. Reliance Mutual Fund (RMF) has been sponsored by Reliance Capital Ltd (RCL). The promoter of RCL is AAA Enterprises Private Limited. Reliance Capital Limited is a Non Banking Finance Company and is one of the Indias leading and fastest growing financial services companies, and ranks among the top three private sector financial services and banking companies in India, in terms of net worth.

Reliance Capital Limited has interests in asset management and mutual funds, life and non-life insurance, private equity and proprietary investments, stock broking and other activities in the financial services sector. Reliance Capital Limited has contributed Rupees One Lac as the initial contribution to the corpus for the setting up of the Reliance Mutual Fund. Reliance Capital Limited is responsible for discharging its functions and responsibilities towards the Fund in accordance with the Securities and Exchange Board of India (SEBI) Regulations. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond the contribution of an amount of Rupees one Lac made by them towards the initial corpus for setting up the Fund and such other accretions and additions to the corpus.  The AMC:

About Reliance Capital Asset Management Limited: Reliance Capital Asset Management Limited (RCAM) is an unlisted Public Limited Company incorporated under the Companies Act, 1956 on February 24, 1995, having its registered office at 'H' Block, 1st Floor, Dhirubhai Ambani Knowledge City, Koparkhairne, Navi Mumbai - 400710 Maharashtra and its Corporate Office at One Indiabulls Centre, Tower 1, 11-12 Floors, Jupiter Mills Compound, 841, Senapati Bapat Marg, Elphinstone Road, Mumbai 400013 RCAM has been appointed as the Asset Management company of Reliance Mutual Fund by the Trustees of Reliance Mutual Fund vide Investment Management Agreement (IMA) dated May 12, 1995 and executed between Reliance Capital Trustee Co. Limited and Reliance Capital Asset Management Limited and

amended on August 12, 1997 and amended on August 12, 1997, January 20, 2004 and February 17, 2011 in line with SEBI (Mutual Funds) Regulations, 1996. The AMC is also rendering advisory services in respect of Emergent India Investment Limited, an offshore fund for investment in India. RCAM - has also incorporated a wholly owned subsidiary in India named Reliance Capital Pension Fund Limited for managing the funds of New Pension System introduced by Pension Fund Regulatory and Development Authority.

 Custodian: Deutsche Bank, AG: The Trustee has appointed Deutsche Bank, AG located at Kodak House, Ground Floor, 222 Dr. D.N.Road, Mumbai-400 001, as the Custodian of the securities that are bought and sold under the Scheme. A Custody Agreement has been entered with Deutsche Bank in accordance with SEBI Regulations. The Custodian is approved by SEBI under registration no. IN/CUS/003 to act as Custodian for the Fund.

 Registrar: Reliance Capital Asset Management Limited has appointed M/s. Karvy Computershare Pvt. Limited to act as the Registrar and Transfer Agent to the Schemes of Reliance Mutual Fund. M/s. Karvy Computershare Pvt. Limited (KCL) having their office at Madhura Estate, Muncipal No 1-9/13/C, Plot No 13 & 13C, Survey No 74 & 75,Madhapur Village, Serlingampally Mandal & Municipality R R District, Hyderabad 500 081, is a Registrar and Transfer Agent registered with SEBI under registration no. INR000000221. Reliance Capital Asset Management Ltd. and the Trustee have satisfied themselves, after undertaking appropriate due diligence measures, that they can

provide the services required and have adequate facilities, including systems facilities and back up, to do so.

 Trustees: Reliance Capital Trustee Co. Limited (RCTC), a company incorporated under the Companies Act, 1956, has been appointed as the Trustee to the Fund vide the Trust Deed dated April 25, 1995 executed between the Sponsor and the Trustee and amended on March 15, 2011 in line with SEBI (Mutual Funds) Regulations, 1996.

1.3 PRODUCT RANGE OF THE COMPANY:  EQUITY

 Diversified large cap: Reliance Vision Fund Reliance Equity Advantage Fund. Reliance Quant plus Fund Reliance NRI Equity Fund Reliance Equity Fund

 Diversied Mid Cap & Small Cap: Reliance Growth Fund Reliance Long Term Equity Fund

Reliance Small Cap Fund Diversied Multi Cap Reliance Regular Savings Fund Equity Option Reliance Equity Opportunities Fund

 Balanced Reliance Regular Savings Fund Balanced Option  Diversied Theme Based Reliance Infrastructure Fund Reliance Natural Resources Fund

 Sector Reliance Banking Fund Reliance Diversied Power Sector Fund Reliance Media & Entertainment Fund Reliance Pharma Fund

 Tax Saver Reliance Tax Saver (ELSS) Fund Reliance Equity Linked Saving Funds - Series 1

 Arbitrage Reliance Arbitrage Advantage Fund

 ETF Reliance Banking Exchange Traded Fund

 FIXED INCOME:
 Liquid Reliance Liquidity Fund Reliance Liquid Fund Treasury Plan Reliance Liquid Fund Cash Plan  Ultra Short Term Reliance Floating Rate Fund Short Term Plan Reliance Money Manager Fund Reliance Medium Term Fund  Short Term Reliance Short Term Fund  Long Term Reliance Regular Savings Fund Debt Option Reliance Income Fund

 Dynamic Reliance Dynamic Bond Fund  Gilt Reliance Gilt Securities Fund

 MIP Reliance Monthly Income Plan

 GOLD:
 ETF Reliance Gold Exchange Traded Fund  FOF Reliance Gold Savings Fund

1.5: FUTURE PROSPECTUS:

y Vision Statement To be a globally respected wealth creator with an emphasis on customer care and a culture of good corporate governance. y Mission Statement To create and nurture a world-class, high performance environment aimed at delighting our customers.

CHAPTER 2 :

INTRODUCTION TO THE PROJECT

2.1: REASONS FOR CHOICE OF PROJECT:

As RELIANCE MUTUAL FUND is one of the leading AMC amongst all the mutual fund companies, its being a great learning experience for me to work on this project. As mutual fund is one of the best option for the investment purpose of any class of society, it is necessary to aware the people about this investment so that everyone can know, how to invest in a fund at right time. The project is mainly related to the changes in mutual fund and the role of online mutual fund services. I have chosen this project because the changes in mutual fund affected the investors perception and preference regarding the investment in mutual funds. This project will also help me to understand the importance of changes in mutual fund. The facility of online mutual fund services helps the investors to buy and sell the products easily and also provide the knowledge of latest funds at the website of the company. So the topic which I have chosen is beneficial for the proper study of the project and the concept of mutual funds regarding to the changes which has taken place in previous years.

2.2 : SCOPE OF THE PROJECT: The scope of the project refers to the job that to know about the activities of the organization. It means the analysis of the products of the company on which he/she has to focus. During the summer training the volunteer need to find out the corporate strategies of the company and the mile stone which the company has covered during its journey. In the summer training, it is necessary for the student that he/she involves with the experience guys to get the knowledge about the company. That is how the company has got the success or if it is going in the loss, why. In my summer training I have found that Reliance mutual fund is one of the leading company which is selling the best financial product. The whole project is based on the concept of mutual fund industry. The project also shows the position of reliance mutual fund amongst the other major companies. The project will be helpful to analyze the changes in mutual fund and to forecast the importance of changes in the near future. The project also consists in itself a role of online mutual fund services which shows the benefits of online buying and selling of financial products.

2.3: CONCEPTUAL FRAMEWORK:

 THEORETICAL ASPECTS OF THE PROJECT : Mutual Fund Definition: A mutual fund is made up of money that is pooled together by a large number of investors who give their money to a fund manager to invest in a large portfolio of stocks and / or bonds. Mutual fund is a kind of trust that manages the pool of money collected from various investors and it is managed by a team of professional fund managers (usually called an Asset Management Company) for a small fee. The investments by the Mutual Funds are made in equities, bonds, debentures, call money etc., depending on the terms of each scheme floated by the Fund. The current value of such investments is now a day is calculated almost on daily basis and the same is reflected in the Net Asset Value (NAV) declared by the funds from time to time. This NAV keeps on changing with the changes in the equity and bond market. Therefore, the investments in Mutual Funds is not risk free, but a good managed Fund can give you regular and higher returns than when you can get from fixed deposits of a bank etc.

The Above diagram shows the Working of all mutual funds:

INVESTORS: (All those who want to save) deposit their money with the Mutual fund Company.

FUND MANAGERS: (Professionals in financial sector, appointed by the Mutual fund Company) invest the money collected from all the investors around the world in the listed securities of different corporate after analyzing the effect of market changes on the performance of different companies.

RETURNS: the profit earned by the different companies in which fund managers has invested the funds is distributed among the investors (in proportion to the amount invested by them) in the form of Returns.

ORGANISATION OF A MUTUAL FUND: There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:

Why Should I Invest in a Mutual Fund when I can Invest Directly in the Same Instruments : We have already mentioned that like all other investments in equities and debts, the investments in Mutual funds also carry risk. However, investments through Mutual Funds is considered better due to the following reasons :y

Your investments will be managed by professional finance managers who are in a better position to assess the risk profile of the investments

Your small investment cannot be spread into equity shares of various good companies due to high price of such shares. Mutual Funds are in a much better position to effectively spread your investments across various sectors and among several products available in the

market. This is called risk diversification and can effectively shield the steep slide in the value of your investments. Thus, we can say that Mutual funds are better options for investments as they offer regular investors a chance to diversify their portfolios, which is something they may not be able to do if they decide to make direct investments in stock market or bond market.

TYPES OF MUTUAL FUNDS: (A) ACCORDING TO TYPE OF INVESTMENTS :While launching a new scheme, every Mutual Fund is supposed to declare in the prospectus the kind of instruments in which it will make investments of the funds collected under that scheme. Thus, the various kinds of Mutual Fund schemes as categorized according to the type of investments are as follows :(a) EQUITY FUNDS / SCHEMES (b) DEBT FUNDS / SCHEMES (also called Income Funds) (c ) DIVERSIFIED FUNDS / SCHEMES (Also called Balanced Funds) (d) GILT FUNDS / SCHEMES (e) MONEY MARKET FUNDS / SCHEMES (f) SECTOR SPECIFIC FUNDS (g) INDEX FUNDS B) ACCORDING TO THE TIME OF CLOSURE OF THE SCHEME :- While launching a new schemes, Mutual Funds also declare whether this will be an open ended scheme (i.e. there is no specific date when the scheme will be closed) or there is a closing date when finally the scheme will

be wind up. Thus, according to the time of closure schemes are classified as follows :(a) OPEN ENDED SCHEMES (b) CLOSE ENDED SCHEMES

C) ACCORDING TO TAX INCENTIVE SCHEMES: - Mutual Funds are also allowed to float some tax saving schemes. Therefore, sometimes the schemes are classified according to this also:(a) TAX SAVING FUNDS (b) NOT TAX SAVING FUNDS / OTHER FUNDS (D) ACCORDING TO THE TIME OF PAYOUT: Sometimes Mutual Fund schemes are classified according to the periodicity of the pay outs (i.e. dividend etc.). The categories are as follows :(a) Dividend Paying Schemes (b) Reinvestment Schemes

The mutual fund schemes come with various combinations of the above categories. Therefore, we can have an Equity Fund which is open ended and is dividend paying plan. Before you invest, you must find out what kind of the scheme you are being asked to invest. You should choose a scheme as per your risk capacity and the regularity at which you wish to have the dividends from such schemes. Association of Mutual Funds in India: It is popularly known as AMFI (www.amfindia.com). The site provides valuable information about mutual fund industry in India.

BRIEF HISTORY: The first mutual fund to be introduced in India was way back in 1963 when the Government of India launched Unit Trust of India (UTI). UTI enjoyed a monopoly in the Indian mutual fund market till 1987 when a host of other government controlled Indian financial companies came up with their own funds. These included State Bank of India, Canara Bank, Punjab National Bank etc. This market was made open to private players in 1993 after the historic constitutional amendments brought forward by the then Congress led government under the existing regime of Liberalization, Privatization and Globalization (LPG). The first private sector fund to operate in India was Kothari Pioneer which was later merged with Franklin Templeton.

INDIAN MUTUAL FUND COMPANIES:

y ABN AMRO Mutual Fund y Bank of Baroda Mutual Fund (BOB Mutual Fund) y HDFC Mutual Fund y HSBC Mutual Fund y ING Vysya Mutual Fund y Prudential ICICI Mutual Fund y Sahara Mutual Fund y State Bank of India Mutual Fund y Tata Mutual Fund

y Kotak Mahindra Mutual Fund y Unit Trust of India Mutual Fund y Reliance Mutual Fund y Standard Chartered Mutual Fund y Franklin Templeton India Mutual Fund y Morgan Stanley Mutual Fund India y Escorts Mutual Fund y Alliance Capital Mutual Fund y Benchmark Mutual Fund y Canbank Mutual Fund y Chola Mutual Fund y LIC Mutual Fund

ADVANTAGES OF MUTUAL FUND:

       

Increased diversification Daily liquidity Professional investment management Ability to participate in investments that may be available only to larger investors Service and convenience Government oversight Ease of comparison Transparency

DISADVANTAGES OF MUTUAL FUNDS:

Mutual funds have disadvantages as well, which include:

   

Fees Less control over timing of recognition of gains Less predictable income No opportunity to customize

SOME OF THE TERMS USED IN MUTUAL FUNDS:

Net Asset Value (NAV) Net Asset Value is the market value of the assets of the scheme minus its liabilities divided by the units outstanding. Simply put, if the fund is dissolved or liquidated, by selling off all the assets in the fund, this is the amount that the unit holder would collectively own. The NAV is used to calculate the value of your investments and to determine the price of per unit for buying or selling. i.e. NAV= Portfolio value liabilities / No of Shares outstanding

Sale Price: It is the price you pay when you invest in a scheme and is also called "Offer Price". It may include a sales load. Repurchase Price : It is the price at which a Mutual Fund repurchases its units and it may include a back-end load. This i also called Bid Price. Redemption Price : It is the price at which open-ended schemes repurchase their units and close-ended schemes redeem the units on maturity. Such prices are NAV related. Sales Load / Front End Load : It is a charge collected by a scheme when it sells the units. Also called, Front-end load. Schemes which do not charge a load at the time of entry are called No Load schemes. Repurchase / Back-end Load : It is a charge collected by Mutual Funds when it buys back / Repurchases the units from the unit holders.

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. Unit: A Unit Represents an investors share in the assets of the scheme s/he has invested. Load: A load is a one-time sales charge paid by an investor while buying or selling units of a scheme. Load can be charged by two ways: Entry Load: An entry load is an additional cost that an investor pays at the point of entry. Example: your proposed investment is Rs.10, 000/-. Also assume that the current NAV of the fund is Rs.12.00 and that the entry load is Rs.0.50. Then you will receive 10000/12.50 = 800 units.
y

Exit Load: An exit load is levy that an investor pays at the point of exit. This is levied to dissuade investors from exiting the fund. Example: Assume that the current NAV of the fund is Rs.12.00 and that the exit load is Rs.0.50. Now if you sell 800 units then you stand to receive 800X11.5 = Rs. 9200.

Expense ratio: Expense Ratio is defined as the ratio of total expenses to the net assets of the fund. It is the annual percentage of the funds assets that is paid out in expenses. Expenses include management fees and all the fees associated with the funds daily operations. The ratio is listed in a funds offer document.

PHASES SHOWING THE CHANGES IN MUTUAL FUND:

First phase- 1964-87: Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI.

Second phase- 1987-1993: Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990.

Third phase- 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. Private funds introduced innovative products, investment techniques and investor-servicing technology.

Phase IV. Growth and SEBI Regulation - 1996-2004 The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the year 1996. The mobilization of funds and the number of players operating in the industry reached new heights as investors started showing more interest in mutual funds. Inventors' interests were safeguarded by SEBI and the Government offered tax benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands of investors from income tax. Various Investor Awareness Programm es were launched during this phase, both by SEBI and AMFI, with an objective to educate investors and make them informed about the mutual fund industry. In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a trus t formed by an Act of Parliament. The primary objective behind this was to bring all mutual fund players on the same level. UTI was re-organized into two parts: 1. The Specified Undertaking, 2. The UTI Mutual Fund Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes (like US-64, Assured Return Schemes) are being gradually wound up. However, UTI Mutual Fund is still the largest player in the industry

Phase V. Growth and Consolidation - 2004 Onwards The industry has also witnessed several mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end Of March 2006. This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players.

KNOW YOUR CUSTOMER (KYC): KYC is an acronym for "Know your Customer", a term commonly used for Customer Identification Process. The Prevention of Money Laundering Act, 2002 ("PMLA") forms the core of the legal framework put in place by the Indian Regulators to combat money laundering to be followed by banking companies, financial institutions and intermediaries by administering KYC process and other reporting requirements such as suspicious transactions reporting, etc. SEBI has prescribed certain requirements relating to KYC norms for Financial Institutions and Financial Intermediaries (such as Mutual Funds) to 'know' their customers. All investors (Individuals or Non Individuals) who wish to make an investment in a mutual fund scheme via a Lump sum amount or via a Systematic Investment Plan (SIP) will be required to complete the KYC process. This one-time verification is valid for transactions across all mutual Funds. Applicability of KYC norms: Category of investors Resident individuals Non Resident Investors/ Persons of Indian Origin Investors investing through Channel Partners/Channel Distributors Non Individual Investors (Corporate, Partnerships, Trusts, HUF, etc.) Up to 31,December 2010 Rs 50000 and more Any amount Any amount w.e.f January 1,2011 Any amount Any amount Any amount

Any amount

Any amount

CHANGE IN ENTRY AND EXIT LOADS : The entry and exit loads are revised by the SEBI, which is beneficial in the context of investor, Where they were earlier paying the entry load and exit nearly to 2% and 2.5%. But with effect from august 2009, there are revised entry and exit loads, where there are no entry Loads on the funds for the entry of investors, but there is exit load of 1 % and 2%(on some funds) on the exit before the completion of 1 year after the investment. The exit load is different from fund to fund of a company. For example. In reliance mutual fund there is common exit load of 1 % on exit before 1 year on the funds, but in Reliance gold saving funds the entry load is 2%.

KNOW YOUR DISTRIBUTORS(KYD): AMFI vide Circular 35P/ MEM-COR/ 13/ 10-11 dated August 27, 2010, has decided to introduce Know Your Distributor (KYD) for Mutual Fund Distributors with effect from September 1, 2010, which will be similar to that of Know Your Client (KYC) for investors. KYD process requires distributors to submit mandatorily identity proof, address proof, PAN and bank account details with proof. Further AMFI has also decided to introduce bio-metrics as a part of KYD process. Agents, who sell mutual funds, will now have to go through a proper identification or due diligence process. Mutual fund body AMFI is putted in place Know Your Distributor Norms to make mutual fund agents or distributors more accountable to their investors. On the same lines as Know Your Customer norms or KYC, AMFI proposes that distributors will now have to submit their complete details, including their address proof, bio-data, pan card number and possibly even a biometric proof like their fingerprint, to a central agency like NSDL. Fund houses and investors will be able to verify the details of their agent, and if the agent has a history of fraud or money laundering.

BIO-METRIC PROCESS IN KYD: The bio-metric process involves taking impression of right hand index figure and registering the same for identification process.

GROWTH IN ASSETS UNDER MANAGEMENT

POSITION OF MUTUAL FUNDS IN VARIOUS PHASES: The position of the mutual fund can be shown by various phases of mutual funds. It was firstly ever started in India in the year 1963. Unit trust of India was the first mutual fund set up in India.

AT THE START: UTI came 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 commenced its operations from July 1964. The impetus for establishing a formal institution came from the desire to increase the propensity of the middle and lower groups to save and to invest. At a starting point , there are various hurdles in path of this sector like, economic and political uncertainty, depressed financial market due to wars, entrepreneurs were hesitant to enter in capital market, investors did not respond adequately to new issues.

GROWTH OF UTI: As there are so many hurdles in the growth of UTI, but there are efforts on the part of finance minister, TT Krishnamachari who set up the ideas for the unit trust that would be open to any person or institution to purchase the units offered by the trust. His ideas took the form of unit trust of India, an intermediary that would help fulfill the twin objectives of mobilizing retail saving and investing those savings in the capital market and passing on the benefits so accrued to small investors. The UTI was the only single entity in the mutual funds till the year 1986. It was like a base of mutual fund industry at that period of time.

IN THE YEAR 1986: In this year the monopoly of UTI was broken by the entry of some non-UTI mutual funds. The companies enters in this sector was SBI mutual fund, can bank mutual fund, Punjab national bank mutual fund, Indian bank mutual fund, bank of India , bank of Baroda mutual fund. LIC and GIC. At the end of 1988 UTI has Rs 6700 crores of assets under management. At the end of the year 1993 assets under management marked as Rs. 47004 crores.

POSITION AS FROM 1993 TO 2003: In 1993 there was an entry of private sector funds. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses are went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. At the end of January 2003, there were 33 mutual funds with total assets of Rs. 121805 crores

Since 2003: This face had bitter experience for UTI; it was bifurcated into two separate entities. One is the specified undertaking of the UTI with AUM of Rs 29835 crores, 2. The UTI Mutual Fund. The primary objective behind this was to bring all mutual fund players on the same level. GROWTH AND CONSOLIDATION PERIOD: Since the private sector mutual fund established well and covered a major proportion of market the

mutual fund sector is gaining momentum. There were mergers and acquisitions between the various companies. There was also an arrival of some foreign companies also in the Indian market.

ROLE OF SECURITIES EXCHANGE BOARD OF INDIA: SEBI playing a vital role in the control and development of mutual fund sector since 1993. SEBI plays an important role in forming policies and regulates the mutual funds to protect the interest of the investors. The regulations for mutual funds were notified by SEBI in 1993 which later paved the way for private sector entities in the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type. It may be mentioned here that Unit Trust of India (UTI) is not registered with SEBI as a mutual fund (as on January 15, 2002). With an objective of the awareness of mutual funds SEBI conducted the awareness programmes from time to time. It provides all necessary information to the public for their queries. SEBI control the mutual fund sector with the various regulations which plays a very vital role for the control of mutual fund sector. SEBI also controls the sector with the circulars, guidelines and orders.

The basic objectives of the Board were identified as: y to protect the interests of investors in securities; y to promote the development of Securities Market;

y to regulate the securities market and y for matters connected therewith or incidental thereto

The regulations are generally for the: y enhanced level of investor protection y empowerment of investors y stringent disclosure norms in the offer documents, so that investors are better informed, better advised, better aware of risks and rewards y complete freedom to asset management companies to structure schemes in accordance with investor preferences y removal of quantitative restrictions on investment by mutual funds and replacement by prudential supervision y guaranteed return schemes by mutual funds permitted provided returns including capital were guaranteed y better governance of mutual funds through higher responsibilities and empowerment of trustees as front-line regulators of mutual funds y code of ethics for asset management companies

Tips for investments in Indian Mutual Funds:

y Before you make any investment in Mutual Funds, you should decide about the level of risk which is ready to take. In case you are ready to take maximum risk, you can opt for Equity Funds or even Sector Specific Funds. However, if you want to take only moderate risk, you can opt for Diversified Funds or Balanced Funds. In case you are ready to take only the minimal risk opt for Gilt Funds etc. y Try to invest in a Mutual Fund which is professionally managed and has shown good returns in the past. Although, the past trends cannot guarantee the similar returns in the future, yet it gives clues as to the management of the fund. y In case you are ready to take higher risk in Equity Funds, you can make investments as and when the market shows some steep fall due to some unexpected events and the market is likely to revive soon. y In case you have large sums but wants to invest for a very short period say less than one month, you can explore the possibilities of investment in Liquid Funds or Money Market Funds, which are likely to give you higher returns than the returns given by Saving Fund accounts etc. y In case of some tax concessions available for dividend pay outs of the Mutual Funds; you should evaluate the same keeping in view the total income and benefits that can be derived by investments in such Mutual Funds.

ROLE OF ONLINE MUTUAL FUND SERVICE:

Now a days all mutual fund companies are providing online mutual fund services for the investors convenience and accessibility. This service helps the user to easily access his account and to take necessary information regarding his investment. Following are the features of the online mutual fund services: 1. Now you have convenience of getting a statement of account to your email ID registered with the company. It is with help of folio number 2. It provides information regarding latest NAV rate

3. Make transactions online, where service is offered for investors whereby they can purchase, redeem or switch units online 4. There is no charges for transactions 5. It also provides the facility of SIP calculator for an investor 6. It provides the knowledge regarding various schemes by the Scheme information document 7. It helps the investors to check the KYC status 8. It also shows the power of compounding calculator 9. Provides all the necessary reports of the company like annual reports

10. It discloses the various guidelines of SEBI and AMFI which helps the investor to know the recent changes in mutual fund sector 11. It also provides the service of E-payouts in which by the update of bank account details one can get instant credit in his account for dividend/redemption payment. It removes the problem of dealing in cheques. It is secure and fast medium to make payments. In this funds are transferred electronically.

FACTORS INFLUENCING MUTUAL FUND: There are many factor which influence the mutual funds, some of them categorized as: A.) Product qualities: y Funds performance record y Funds reputation or brand name y Scheme portfolio of investments y Withdrawal facilities y Innovativeness of the product y Product with tax benefits y Entry and exit loads

B.) Fund sponsor qualities: y Reputation of sponsoring firm y Recognized brand name y Well developed agency network/infrastructure y Efficient research wing y Expertise in managing money

C.) Investors services: y Disclosure of investment objectives, methods and periodicity of valuation in advertisement y Disclosure of NAV on every trading day y Mutual fund investors grievance redressal machinery y Benefits like free insurance, free credit card, tax benefits etc.

There are also many factors which influence the mutual fund sector like, inflation, population, national income, demand and supply, trade policies of a country etc.

CHAPTER-3

RESEARCH METHODOLOGY

3.1 OBJECTIVES OF THE PROJECT:

y To study the changes during the phases of mutual funds y To study the position of mutual funds in various phases y To study the role of online mutual fund services y To study the factors influencing mutual funds y To know the perception of investors regarding mutual fund

3.2 PRIMARY AND SECONDARY DATA TO BE COLLECTED:

Primary data was collected with the help of questionnaires provided by the company. The questionnaire consisted of multiple choice questions, close ended questions, open ended question, so as to gain the information from the respondent. The secondary data was collected through companys website, other websites, and newspapers etc.

3.3 SAMPLE DESIGN, SIZE AND METHOD TO BE USED:

Sampling is an effective step of collection of primary data and has a great influence on the quality of results. The sampling plan includes the population, sampling size and sampling design.

Population: The study aimed to include the area of Jalandhar city specially the government banks.

Sample Size: The sample size for the research was 30.

Sample Technique: Descriptive and exploratory sampling technique was used.

Time: The research was conducted in the months of June and July 2011.

3.5

LIMITATION OF THE PROJECT:

Though every care has been taken to make this report authentic in every sense, yet there were a few uncomfortable factors, which might have their influence on the final report. Some are: y The respondents did not have their serious attitude towards the questionnaires y Limited area for the study

y Corporate officials have no sufficient time due to their hectic schedule y No full disclosure of information on the websites

CHAPTER-4

ANALYSIS AND FINDINGS

1. TO STUDY THE CHANGES DURING PHASES OF MUTUAL FUND:

This study has been done with the help of various phases of mutual fund which are as follows: 1. Phase 1: It was a start of mutual fund sector by unit trust of India in the year 1963, which comes into operation in 1964. It was the only one entity holding the share in mutual fund sector. This was a new sector for investment in India. UTI launched different schemes in spite of various hurdles at that time. Till 1987 UTI is the single player in the market. 2. Phase 2: Entry of public sector funds: In this phase the monopoly of UTI was broke due to the entry of public sector funds of SBI, LIC, CANBANK, INDIAN BANK, BOI, GIC, and PNB. 3. Phase 3: Emergence of private sector funds: The permission given to private sector funds including foreign fund management companies (most of them entering through joint ventures with Indian promoters) to enter the mutual fund industry in 1993, provided a wide range of choice to investors and more competition in the industry. Private funds introduced innovative products, investment techniques and investorservicing technology. By 1994-95, about 11 private sector funds had launched their schemes. 4. Phase 4: Growth and SEBI Regulation - 1996-2004:

The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the year 1996. The mobilization of funds and the number of players operating in the industry reached new heights as investors started showing more interest in mutual funds. Inventors' interests were safeguarded by SEBI and the Government offered tax benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set uniform standards for all mutual funds in India. Various Investor Awareness Programmes were launched during this phase, both by SEBI and AMFI, with an objective to educate investors and make them informed about the mutual fund industry. 5. PHASE 5: Growth and Consolidation - 2004 Onwards: The industry has also witnessed several mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players.

2. TO STUDY THE POSITION OF MUTUAL FUNDS IN VARIOUS PHASES: The position of mutual funds can be analyzed by the study of various phases of mutual fund. It is mainly shown by the assets under management during the various phases.

The above graph shows the increasing trend of assets under management with some of the declining trends. From its start in March 1965 the graph of assets increased up to the year 1993. Then the graph declined to some extent but again moving upward up to march 2008 with the AUM of Rs 505152 crores. The graph then declined suddenly, it was due to the recession in the year 2008. After recovery graph again moving upward and stands at a AUM of 592250 crores till march 2011. 3. TO STUDY THE ROLE OF ONLINE MUTUAL FUND SERVICES:

y Convenience of getting a statement of account to your email ID registered with the company. It is with help of folio number y It provides information regarding latest NAV rate y Make transactions online, where service is offered for investors whereby they can purchase, redeem or switch units online y There is no charges for transactions y It also provides the facility of SIP calculator for an investor y It provides the knowledge regarding various schemes by the Scheme information document y It helps the investors to check the KYC status y It also shows the power of compounding calculator y Provides all the necessary reports of the company like annual reports y It discloses the various guidelines of SEBI and AMFI which helps the investor to know the recent changes in mutual fund sector

y It also provides the service of E-payouts in which by the update of bank account details one can get instant credit in his account for dividend/redemption payment.

USE OF ONLINE MUTUAL FUND SERVICE:

YES OR NO
30

25
25 20 15

YES OR NO
10

5
5 0 YES NO

Out of 30 respondents only 5 are using online mutual fund service. It shows that people are not much aware about the online facilities of mutual fund. They generally invest their money through the agents or brokers etc and they generally have no time for the use of these services or lack of knowledge.

4. TO KNOW THE FACTORS INFLUENCING THE MUTUAL FUNDS:

y RISK PREFERENCE OF INVESTOR: Mutual fund Risk Public 10 Private 20

Risk

10

Public Private

20

The investor considers the private mutual fund more risky than public mutual fund. It shows that investor risk preference can influence mutual fund investment.

y RETURN ON INVESTMENT: 5%-10% 0 11%-15% 20 16%-20% 5

More than 20%

Cant say 2

Return
0 2 3 5%-10% 11%-15% 5 16%-20% more than 20 20 can't say

In the above graph it is shown that investors want more returns from the investments in mutual funds. Return preference of investors can also influence the mutual fund investment. Majority of people want return between 11% to 15%.

y INVESTOR SERVICE BY MUTUAL FUND COMPANIES:

Very good 3

Good 10

Average 15

Poor 2

Investors service
16 14 12

15

10
10 8

Investors service
6 4 2 0

3 2

Very good

Good

Average

Poor

It is shown in the graph that majority of investors consider service of mutual fund as on average. It shows that it is satisfactory to some extent.

5. TO STUDY THE PERCEPTION OF INVESTOR REGARDING MUTUAL FUND:

y PREFERENCE OF FACTOR IN MUTUAL FUND INVESTMENT: Liquidity 4 Low risk 8 High return 13 Company reputation 5

Factors
14 12 10 8 8 6 4 4 2 0 Liquidity Low risk High Return company reputation 5 Factors 13

The above graph shows that majority of investors consider mutual fund investment for the higher returns. They know that risk is always in the securities market, by taking more risk they want to get higher returns. The investors have a perception of higher returns.

y PERCEPTION REGARDING ROLE OF FUND MANAGERS PERFORMANCE:

YES 18

NO 12

FUND MANAGER ROLE

20 18 16 14 12 10 8 6 4 2 0 YES NO FUND MANAGER ROLE

18

12

Out of 30 respondents 18 have a perception that fund managers are playing a vital role in managing the mutual fund whereas 12 have a view that alone fund manager cannot control the other factors that can affect mutual fund sector.

y TYPE OF MUTUAL FUND INVESTMENT:

One time investment 8

Systematic investment plan 22

Investment
25 22 20

15 Investment 8

10

0 One time SIP

Since the respondents are mainly belongs to service class, they like to invest monthly through systematic investment plan (SIP). They want to invest a fixed proportion of amount regularly every month for the compounded return. They have a perception of regular return on their investment.

y WHY YOU NOT INVEST IN MUTUAL FUNDS: Not aware of mutual fund 8 Higher risk 15 Returns not stable 7

Reason for not to invest

8 Non awareness High risk non stability oof returns

15

The above graph shows that investors have a perception that the investment in mutual funds are highly risky and there is instability of return because returns are depend on the movement of market which cannot give assurance regarding the

returns. Respondents are also dont want to invest because they are not aware of mutual funds and they generally invest in banks fixed deposits, saving accounts etc.

FINDINGS

y Mutual fund sector has established widely in a nation. It managing the funds of various sectors in the economy y People are not much aware regarding the mutual fund y SEBI is playing a vital role in the management and control of mutual fund sector y Companies providing online services for the easy data accessibility and to save the time of the investors, but many of the investors do not using these services properly y Investors are taking into consideration various factor like risk, return, in investment even without the knowledge of mutual fund schemes y Investors generally rely on the information from other known investors and just take the decision of investment merely on their personnel judgement y Investors generally prefer to invest more in saving accounts, fixed deposits, etc rather than in market investment plans.

CHAPTER-5 SUGGESTION, RECOMMENDATIONS, AND CONCLUSION

SUGGESTIONS AND RECOMMENDATIONS

y As people are not aware of mutual funds, they should know the mutual fund concepts and schemes before taking the decision of investment y On the part of company, the investment awareness programmes (IAP) should be conducted for the awareness of mutual funds y New investors should give time to the market, for the higher returns y Investors should use the online mutual fund facilities for the day to day information regarding their investment and for the easy accessibility on their account y Both public and private company must disclose the risk factor to the investors y Companies should improve the investor services y The benefits of investment in mutual fund should be told rightly to the new investors by showing the past records of the investment

CONCLUSION: Mutual funds now days can be as one of the best option for investment amongst the various alternatives of investment. Proper knowledge of mutual fund scheme and the investment for a long time can give better results to an investor. People prefer to invest in safe investment alternatives and ignore the market investments only because of one reason that is risk and ignore the other factors in the market. This will lead to no investment in mutual funds.

On the part of company it is necessary to disclose and also provide all the necessary information regarding the mutual fund benefits and schemes to the investors those are totally ignorant about the market investment plans. SEBI playing a vital role for the management and control of mutual fund industry which is very essential for the development of this industry and as on the part of economy also. Mutual fund industry achieving its goals by its wide operations and make the standards in the present competitive economy.

BIBLIOGRAPHY

y Economic times y Reliancemutualfund.com y Economic times y IBIBO.COM y Moneycontrol.com y Finance.indiamart.com/india_business_information/mutual-fundsindustry.html

QUESTIONNAIRE 1.

What kind of investment you prefer most? Tick an appropriate answer? a. Saving b. Fixed c. Insurance d. Mutual account deposits fund e. Post f. Shares, g. Gold h. Real office debentur estate e i. PPF j. PF

2. While investing your money, which factor you prefer most? a. Liquidity

b. low risk

c. high return

d. company reputation

3. Are you aware of mutual fund? a. Yes

b. no

4. Have you ever invested your money in mutual fund? a. Yes

b. no

If yes, answer the following questions:

a. Where do you find yourself as a mutual fund investor? Tick your answer in bracket.     Totally ignorant ( ) Partial knowledge of mutual funds ( ) Aware only of a specific scheme in which you invested ( Fully aware ( )

b. Do you find your investment in mutual fund safe? a. Yes b. no

c. In which kind of Mutual fund you would like to invest? a. Public b. private d. Are you using the online mutual fund service? a. Yes b. no If, you havent ever invested your money in mutual fund, answer the following question:Why you have not invested in mutual fund, tick in bracket:a. Not aware of mutual fund ( ) b. Higher risk ( ) c. Non stability of returns ( )
5. Which feature of the mutual fund allure you most? Tick in bracket :-

a. b. c. d.

Diversification ( ) Better return and safety ( ) Reduction in risk and transaction cost ( Regular income ( )

) e. Tax benefits ( )

6. When you invest in mutual funds, which mode of investment will you

prefer? a. One time investment

b. SIP

7. In which sector are you investing in mutual fund sector? Tick one answer:-

a. b. c. d. e.

General Oil and petroleum Gold fund Power sector Diversified equity fund

f. debt fund g. banking fund

8. What do you think about Mutual fund? Tick one answer :-

a. Very good b. Good c. Average

d. poor

9. Do you think various fund managers are playing a vital role in managing the

funds in mutual fund? a. Yes

b. no

10. How much return you expect from mutual fund? Tick one option:-

a. 5% - 10% ( ) b. 11% - 15% ( ) e. Cant say ( ) Name: Age:Occupation:-

c. 16% - 20% ( ) d. more than 20 % (

contact no:-