Está en la página 1de 52

Executive summary

The project deals with understanding of mutual fund and analysis, during my project, I got the
opportunity to understand the concept, various AMC (Asset mgmt company) issuing various mutual
fund according to the need of investor. During my project, I came to know important regulations of SEBI
for mutual fund operation.
Project deals with an analysis of RELIANCE MUTUAL FUND various schemes in which I tried
to came out with a result which is best, for that purpose I conducted market research. During the project
I suggested the investors how to invest and in which fund they should invest.
During the project, I made an endeavour to understand the awareness of mutual fund among
the various classes of investors. The data collected mainly through fact sheets of funds, broachers, and
questionnaire and also from various site of Reliance mutual fund etc. the data analyzed and
recommendation is given on the basis of conclusions.


A mutual represents a vehicle for collective investment. Till 1986, the Unit Trust of India was
the only mutual fund in India. Since then public sector banks and insurance companies have been
allowed to set up subsidiaries to undertake mutual fund business. So, State Bank of India, Canara
Bank, LIC, GIC, and few other public sector banks entered the mutual fund industry.

In 1992, the mutual fund industry was opened to the private sector, and a number of private
sector mutual fund such as Birla Mutual Fund, DSP Merrill Lynch Mutual Fund, Kotak Mahindra
Mutual Fund, Morgan Stanley Mutual Fund, Tata Mutual Fund, Prudential ICICI Mutual Fund, Reliance
Mutual Fund, Standard Chartered Mutual Fund, Templeton Mutual Fund, IDBI- Principal Mutual Fund
have been set up. The process of consolidation began in recent years.

At present, there are about 30 mutual funds managing nearly 1000 schemes. While the
mutual fund industry in India has registered a healthy growth over the last 15 years, it is still very small
in relation to other intermediaries like banks and insurance companies. Mutual funds are one of the
best investments ever created because they are very cost efficient and very easy to invest in. by
pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower
trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is


A review of the history of investment trusts, unit trusts and mutual funds indicates that the earliest
investment trust called Societe General de Belgique was formed in Belgium in 1822. The institution
was formed by the Royal family of Holland before the separation of Belgium and Holland. The
institution acquired securities in a wide range of companies and practiced the precept of

Later, the investment trust concept attracted many countries in Europe and

considerable progress was achieved.

The concept of investment trust gained momentum in Great Britain and the first investment trust
called The Foreign and Colonial Government Trust was founded in London in 1868. Later in 1873,

Robert Fleming at Dundee established the Scottish American Trust. During the period 1925-29, just
before the depression, substantial expansion of investment trust moment happened in US. The
banking houses promoted investment trusts to unload the un-saleable securities and to control the
companies without investing substantial amounts of their own money. Since there were very little
rules and regulations, mismanagement in these institutions was wide spread. During the great
depression on 1930s the investors had staggering losses from these trusts.

In 1933, the US Congress directed the Securities and Exchange Commission (SEC) to investigate
the operations of the American Investment Trusts.

The SEC recommended the passage PF

legislation, which materialized in 1940. The Investment Companies Act of 1940 provides rules and
regulation for the establishment and management of Mutual Funds. The concept of mutual fund is
popular in the US, and they are regulated by the Investment Companies Act 1940. The act
categorizes investment companies broadly into Unit Investment Trusts and Managed Investment
Companies. Internationally, Mutual funds in the US are synonymous with unit trusts in the UK.


Reliance mutual fund, a part of the Reliance- Anil Dhirubhai group (RADAG) is one of the
fastest growing mutual funds in the country. Reliance mutual fund offers investors a well rounded
portfolio of products to meet varying investor requirements. Reliance mutual fund has a presence in
95 cities across the country, an investor base of over 2.8 million and manages assets of
Rs36927crore as on December 31, 2006. Reliance mutual constantly endeavors to launch innovative
products and customer service initiatives to increase value to investors.

Reliance mutual fund schemes are managed by reliance capital asset management Ltd., a
wholly owned subsidiary of reliance capital ltd. Reliance capital is one of the 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 has interests in asset management and mutual funds, life and general
insurance, private equity and investments, stock broking and other financial services. Reliance Mutual
Fund (RMF) has been established as a trust under the Indian Trusts Act, 1982 with Reliance Capital
Limited (RCL), as the Settler/Sponsor and Reliance Capital Trustee Co. Limited (RCTCL), as the

RMF has been registered with the Securities & Exchange Board of India (SEBI) vide
registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual Fund
has been changed to Reliance Mutual Fund effective 11th. March 2004 vide SEBI's letter no.
IMD/PSP/4958/2004 date 11th. March 2004. Reliance Mutual Fund was formed to launch various
schemes under which units are issued to the Public with a view to contribute to the capital market and
to provide investors the opportunities to make investments in diversified securities.

The main objectives of the Trust are:

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

To take such steps as may be necessary from time to time to realize the effects without any

Statutory Details:

Sponsor: Reliance Capital Limited.

Trustee: Reliance Capital Trustee Co. Limited.

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

Business overview
RCL is registered as a depository participant with national securities depository Ltd (NSDL)
and central depository services Ltd (CSDL) under the securities and exchange board of India
(Depositories and participants) regulations, 1996. RCL has sponsored the reliance mutual fund within
the frame work of the securities and exchange board of India

(Mutual fund) regulations, 1996

RCL primarily focuses on funding projects in the infrastructure sector and supports the
growth of its subsidiary companies, reliance capital trustee co. Limited, reliance capital asset
management limited, reliance general insurance company limited and reliance life insurance
Company limited. As of march 31, 2005, the companys investment in infrastructure projects stood at
Rs.1071 crores. The investment portfolio of RCL is structured in a way that realizes the highest posttax return on its investments.




Marketing Manager




IT Dept.





































Human Resource Development (HRD) is the frameworks for helping employees develop their
personal and organizational skills, knowledge, and abilities. Human Resource Development includes
such opportunities as employee training, employee career development, performance management
and development, coaching, mentoring, succession planning, key employee identification, tuition
assistance, and organization development.
The focus of all aspects of Human Resource Development is on developing the most superior
workforce so that the organization and individual employees can accomplish their work goals in
service to customers.
Organizations have many opportunities for human resources or employee development, both within
and outside of the workplace.
Human Resource Development can be formal such as in classroom training, a college course, or an
organizational planned change effort. Or, Human Resource Development can be informal as in
employee coaching by a manager. Healthy organizations believe in Human Resource Development
and cover all of these bases.
The field of HRD or Human Resource Development encompasses several aspects of enabling and
empowering human resources in organization. Whereas earlier HRD was denoted as managing
people in organizations with emphasis on payroll, training and other functions that were designed to
keep employees happy, the current line of management thought focuses on empowering and enabling
them to become employees capable of fulfilling their aspirations and actualizing their potential. This
shift in the way human resources are treated has come about due to the prevailing notion that human
resources are sources of competitive advantage and not merely employees fulfilling their job
responsibilities. The point here is that the current paradigm in HRD treats employees as value
creators and assets based on the RBV or the Resource Based View of the firm that has emerged in
the SHRM (Strategic Human Resource Management) field.
The field of HRD spans several functions across the organization starting with employee recruitment
and training, appraisals and payroll and extending to the recreational and motivational aspects of
employee development.
Indeed, one reason for the emergence of the RBV or the SHRM paradigm is that with the advent of
the service sector and the greater proportion of companies in the service sector, employees are not
merely a factor of production like land, labour and capital but in fact, they are sources of competitive
advantage. This is characterized by many CEOs calling employees their chief assets and valuing
their contribution accordingly. As a matter of fact, many IT and Financial Services companies routinely
refer to employees as the value creators and value enhancers rather than just resources doing their

What this has meant is that the field of HRD has become prominent and important for organizations
and has morphed into a function that takes its place among other support functions in organizations
and indeed, it is the main driver of competitive advantage.
Further, the field of HRD now has taken on a role that goes beyond employee satisfaction and
instead, the focus now is on ensuring that employees are delighted with the working conditions and
perform their jobs according to their latent potential which is brought to the fore. This has resulted in
the HRD manager and the employees of the HRD department becoming partners in the organizations
progress instead of just yet another line function. Further, the HR managers now routinely interact with
the functional managers and the people managers to ensure high levels of job satisfaction and
fulfilment. The category of people managers is a role that has been created in many multinational
companies like Fidelity and IBM to specifically look into the personality related aspects of employees
and to ensure that they bring the best to the table.
Finally, HRD is no longer just about payroll or timekeeping and leave tracking. On the other hand,
directors of HRD in companies like Infosys are much sought after for their inputs into the whole range
of activities spanning the function and they are expected to add value rather than just consume
resources. With this introduction, we will be moving into the module covering HRD with each aspect of
the HRD function and the associated topics being covered here. It is hoped that the readers would
gain an overall perspective about HRD after going through the HRD module.

This module covers the HRD function in organizations from a wide variety of perspectives. At the
outset, after the introduction to the module in the previous article, it is time to look at some theoretical
perspectives about the HRD function. When the field of management science and organizational
behaviour was in its infancy, the HRD function was envisaged as a department whose sole role was to
look after payroll and wage negotiation. This was in the era of the assembly line and manufacturing
where the HRD functions purpose was to check the attendance of the employees, process their pay
and benefits and act as a mediator in disputes between the management and the workers.
Concomitant with the rise of the services sector and the proliferation of technology and financial
services companies, the role of the HRD function changed correspondingly.
For instance, the RBV or the Resource Based View of organizations was conceptualized to place the
HRD function as a department that would leverage the human resources from the perspective of them
being sources of strategic advantage.
The shift in the way the human resources were viewed as yet another factor of production to being
viewed as sources of competitive advantage and the chief determinant of profits was mainly due to
the changing perceptions of the workforce being central to the organizations strategy. For instance,
many software and tech companies as well as other companies in the service sector routinely identify
their employees as the chief assets and something that can give them competitive advantage over
their rivals. Hence, the HRD function in these sectors has evolved from basic duties and is now
looked upon as a critical support function.

With the advent of globalization and the opening up of the economies of several nations, there was
again a shift in the way the HRD function was conceptualized. In line with the RBV and the view of the
resources as being international and ethnically diverse, the HRD function was thought of to be the
bridge between the different employees in multiple locations and the management. Further, the
present conceptualization also means that employees have to be not only motivated but also
empowered and enabled to help them actualize their potential. The point here is that no longer were
employees being treated like any other asset. On the contrary, they were the centre of attraction and
attention in the changed paradigm. This called for the HRD function to be envisaged as fulfilling a role
that was aimed at enabling and empowering employees instead of being just mediators and
Finally, the theory of HRD also morphed with the times and in recent years, there has been a
perceptible shift in the way the HRD function has come to encompass the gamut of activities ranging
from routine tasks like hiring and training and payroll to actually being the function that plays a critical
and crucial role in the employee development. The theory has also transformed the function from
being bystanders to the organizational processes to one where the HRD function is the layer between
the management and employees to ensure that the decisions made at the top are communicated to
the employees and the feedback from the employees is likewise communicated to the top

Personnel management can be defined as obtaining, using and maintaining a satisfied workforce. It
is a significant part of management concerned with employees at work and with their relationship
within the organization.
According to Flippo, Personnel management is the planning, organizing, compensation, integration
and maintenance of people for the purpose of contributing to organizational, individual and societal
According to Brech, Personnel Management is that part which is primarily concerned with human
resource of organization.


Personnel management includes the function of employment, development and compensationThese functions are performed primarily by the personnel management in consultation with other
Personnel management is an extension to general management. It is concerned with
promoting and stimulating competent work force to make their fullest contribution to the concern.
Personnel management exist to advice and assist the line managers in personnel matters.
Therefore, personnel department is a staff department of an organization.
Personnel management lays emphasize on action rather than making lengthy schedules,
plans, and work methods. The problems and grievances of people at work can be solved more
effectively through rationale personnel policies.

It is based on human orientation. It tries to help the workers to develop their potential fully to
the concern.
It also motivates the employees through its effective incentive plans so that the employees
provide fullest co-operation.
Personnel management deals with human resources of a concern. In context to human
resources, it manages both individual as well as blue- collar workers.


Personnel manager is the head of personnel department. He performs both managerial and operative
functions of management. His role can be summarized as :
Personnel manager provides assistance to top management- The top management are the
people who decide and frame the primary policies of the concern. All kinds of policies related to
personnel or workforce can be framed out effectively by the personnel manager.
He advices the line manager as a staff specialist- Personnel manager acts like a staff advisor
and assists the line managers in dealing with various personnel matters.
As a counsellor,- As a counsellor, personnel manager attends problems and grievances of
employees and guides them. He tries to solve them in best of his capacity.
Personnel manager acts as a mediator- He is a linking pin between management and workers.
He acts as a spokesman- Since he is in direct contact with the employees, he is required to act
as representative of organization in committees appointed by government. He represents company in
training programmes.


Following are the four functions of Personnel Management:
Manpower Planning
Training and Development
Manpower Planning which is also called as Human Resource Planning consists of putting right
number of people, right kind of people at the right place, right time, doing the right things for which
they are suited for the achievement of goals of the organization. Human Resource Planning has got
an important place in the arena of industrialization. Human Resource Planning has to be a systems
approach and is carried out in a set procedure. The procedure is as follows:
Analyzing the current manpower inventory
Making future manpower forecasts
Developing employment program
Design training program


1. Analyzing the current manpower inventory- Before a manager makes forecast of future manpower,
the current manpower status has to be analyzed. For this the following things have to be noted
Type of organization

Number of departments

Number and quantity of such departments

Employees in these work units

Once these factors are registered by a manager, he goes for the future forecasting.
Making future manpower forecasts- Once the factors affecting the future manpower forecasts
are known, planning can be done for the future manpower requirements in several work units.
The Manpower forecasting techniques commonly employed by the organizations are as follows:
a. Expert Forecasts: This includes informal decisions, formal expert surveys and Delphi technique.
b. Trend Analysis: Manpower needs can be projected through extrapolation (projecting past trends),
indexation (using base year as basis), and statistical analysis (central tendency measure).
c. Work Load Analysis: It is dependent upon the nature of work load in a department, in a branch or in
a division.
d. Work Force Analysis: Whenever production and time period has to be analysed, due allowances
have to be made for getting net manpower requirements.
e. Other methods: Several Mathematical models, with the aid of computers are used to forecast
manpower needs, like budget and planning analysis, regression, new venture analysis.
3. Developing employment program- Once the current inventory is compared with future forecasts,
the employment program can be framed and developed accordingly, which will include recruitment,
selection procedures and placement plans.
4. Design training program - These will be based upon extent of diversification, expansion plans,
development program ,etc. Training program depend upon the extent of improvement in technology
and advancement to take place. It is also done to improve upon the skills, capabilities, knowledge of
the workers.


1. Key to managerial functions- The four managerial functions, i.e., planning, organizing, directing
and controlling are based upon the manpower. Human resources help in the implementation of all
these managerial activities. Therefore, staffing becomes a key to all managerial functions.

2. Efficient utilization- Efficient management of personnels becomes an important function in the

industrialization world of today. Setting of large scale enterprises require management of large scale
manpower. It can be effectively done through staffing function.
Motivation- Staffing function not only includes putting right men on right job, but it also
comprises of motivational programmes, i.e., incentive plans to be framed for further participation and
employment of employees in a concern. Therefore, all types of incentive plans becomes an integral
part of staffing function.
Better human relations- A concern can stabilize itself if human relations develop and are strong.
Human relations become strong trough effective control, clear communication, effective supervision
and leadership in a concern. Staffing function also looks after training and development of the work
force which leads to co-operation and better human relations.
Higher productivity- Productivity level increases when resources are utilized in best possible
manner. Higher productivity is a result of minimum wastage of time, money, efforts and energies. This
is possible through the staffing and its related activities (Performance appraisal, training and
development, remuneration)


Manpower Planning is a two-phased process because manpower planning not only analyses the
current human resources but also makes manpower forecasts and thereby draw employment
Manpower Planning is advantageous to firm in following manner:
Shortages and surpluses can be identified so that quick action can be taken wherever required.

All the recruitment and selection programmes are based on manpower planning.

It also helps to reduce the labour cost as excess staff can be identified and thereby overstaffing
can be avoided.
It also helps to identify the available talents in a concern and accordingly training program can
be chalked out to develop those talents.
It helps in growth and diversification of business. Through manpower planning, human
resources can be readily available and they can be utilized in best manner.
It helps the organization to realize the importance of manpower management which ultimately
helps in the stability of a concern.

1. INTERNAL RECRUITMENT - is a recruitment which takes place within the concern or
organization. Internal sources of recruitment are readily available to an organization. Internal sources
are primarily three - Transfers, promotions and Re-employment of ex-employees. Re-employment of
ex-employees is one of the internal sources of recruitment in which employees can be invited and
appointed to fill vacancies in the concern. There are situations when ex-employees provide unsolicited
applications also.
Internal recruitment may lead to increase in employees productivity as their motivation level
increases. It also saves time, money and efforts. But a drawback of internal recruitment is that it
refrains the organization from new blood. Also, not all the manpower requirements can be met
through internal recruitment. Hiring from outside has to be done.
Internal sources are primarily 3 types
Promotions (through Internal Job Postings) and
Re-employment of ex-employees - Re-employment of ex-employees is one of the internal
sources of recruitment in which employees can be invited and appointed to fill vacancies in the
concern. There are situations when ex-employees provide unsolicited applications also.
2. EXTERNAL RECRUITMENT - External sources of recruitment have to be solicited from outside the
organization. External sources are external to a concern. But it involves lot of time and money. The
external sources of recruitment include - Employment at factory gate, advertisements, employment
exchanges, employment agencies, educational institutes, labor contractors, recommendations etc.
Employment at Factory Level - This a source of external recruitment in which the applications
for vacancies are presented on bulletin boards outside the Factory or at the Gate. This kind of
recruitment is applicable generally where factory workers are to be appointed. There are people who
keep on soliciting jobs from one place to another. These applicants are called as unsolicited
applicants. These types of workers apply on their own for their job. For this kind of recruitment
workers have a tendency to shift from one factory to another and therefore they are called as badli
Advertisement - It is an external source which has got an important place in recruitment
procedure. The biggest advantage of advertisement is that it covers a wide area of market and
scattered applicants can get information from advertisements. Medium used is Newspapers and
Employment Exchanges - There are certain Employment exchanges which are run by
government. Most of the government undertakings and concerns employ people through such
exchanges. Now-a-days recruitment in government agencies has become compulsory through
employment exchange.
Employment Agencies - There are certain professional organizations which look towards
recruitment and employment of people, i.e. these private agencies run by private individuals supply
required manpower to needy concerns.

Educational Institutions - There are certain professional Institutions which serves as an external
source for recruiting fresh graduates from these institutes. This kind of recruitment done through such
educational institutions is called as Campus Recruitment. They have special recruitment cells which
help in providing jobs to fresh candidates.
Recommendations - There are certain people who have experience in a particular area. They
enjoy goodwill and a stand in the company. There are certain vacancies which are filled by
recommendations of such people. The biggest drawback of this source is that the company has to rely
totally on such people which can later on prove to be inefficient.
Labour Contractors - These are the specialist people who supply manpower to the Factory or
Manufacturing plants. Through these contractors, workers are appointed on contract basis, i.e. for a
particular time period. Under conditions when these contractors leave the organization, such people
who are appointed have to also leave the concern.
Employee Selection is the process of putting right men on right job. It is a procedure of matching
organizational requirements with the skills and qualifications of people. Effective selection can be
done only when there is effective matching. By selecting best candidate for the required job, the
organization will get quality performance of employees. Moreover, organization will face less of
absenteeism and employee turnover problems. By selecting right candidate for the required job,
organization will also save time and money. Proper screening of candidates takes place during
selection procedure. All the potential candidates who apply for the given job are tested.
But selection must be differentiated from recruitment, though these are two phases of employment
process. Recruitment is considered to be a positive process as it motivates more of candidates to
apply for the job. It creates a pool of applicants. It is just sourcing of data. While selection is a
negative process as the inappropriate candidates are rejected here. Recruitment precedes selection
in staffing process. Selection involves choosing the best candidate with best abilities, skills and
knowledge for the required job.
The Employee selection Process takes place in following order1. Preliminary Interviews- It is used to eliminate those candidates who do not meet the minimum
eligibility criteria laid down by the organization. The skills, academic and family background,
competencies and interests of the candidate are examined during preliminary interview. Preliminary
interviews are less formalized and planned than the final interviews. The candidates are given a brief
up about the company and the job profile; and it is also examined how much the candidate knows
about the company. Preliminary interviews are also called screening interviews.
2. Application blanks- The candidates who clear the preliminary interview are required to fill
application blank. It contains data record of the candidates such as details about age, qualifications,
reason for leaving previous job, experience, etc.

3. Written Tests- Various written tests conducted during selection procedure are aptitude test,
intelligence test, reasoning test, personality test, etc. These tests are used to objectively assess the
potential candidate. They should not be biased.
4. Employment Interviews- It is a one to one interaction between the interviewer and the potential
candidate. It is used to find whether the candidate is best suited for the required job or not. But such
interviews consume time and money both. Moreover the competencies of the candidate cannot be
judged. Such interviews may be biased at times. Such interviews should be conducted properly. No
distractions should be there in room. There should be an honest communication between candidate
and interviewer.
Medical examination- Medical tests are conducted to ensure physical fitness of the potential
employee. It will decrease chances of employee absenteeism.
Appointment Letter- A reference check is made about the candidate selected and then finally
he is appointed by giving a formal appointment letter.
Training of employees takes place after orientation takes place. Training is the process of enhancing
the skills, capabilities and knowledge of employees for doing a particular job. Training process moulds
the thinking of employees and leads to quality performance of employees. It is continuous and never
ending in nature.

Training is crucial for organizational development and success. It is fruitful to both employers and
employees of an organization. An employee will become more efficient and productive if he is trained
Training is given on four basic grounds:
New candidates who join an organization are given training. This training familiarizes them with
the organizational mission, vision, rules and regulations and the working conditions.
The existing employees are trained to refresh and enhance their knowledge.
If any updations and amendments take place in technology, training is given to cope up with
those changes. For instance, purchasing a new equipment, changes in technique of production,
computer implantment. The employees are trained about use of new equipments and work methods.
When promotion and career growth becomes important. Training is given so that employees
are prepared to share the responsibilities of the higher level job.
The benefits of training can be summed up as:
Improves morale of employees- Training helps the employee to get job security and job
satisfaction. The more satisfied the employee is and the greater is his morale, the more he will
contribute to organizational success and the lesser will be employee absenteeism and turnover.
Less supervision- A well trained employee will be well acquainted with the job and will need
less of supervision. Thus, there will be less wastage of time and efforts.
Fewer accidents- Errors are likely to occur if the employees lack knowledge and skills required
for doing a particular job. The more trained an employee is, the less are the chances of committing
accidents in job and the more proficient the employee becomes.
Chances of promotion- Employees acquire skills and efficiency during training. They become
more eligible for promotion. They become an asset for the organization.

Increased productivity- Training improves efficiency and productivity of employees. Well trained
employees show both quantity and quality performance. There is less wastage of time, money and
resources if employees are properly trained.


Training is generally imparted in two ways:

On the job training- On the job training methods are those which are given to the employees within
the everyday working of a concern. It is a simple and cost-effective training method. The in-proficient
as well as semi- proficient employees can be well trained by using such training method. The
employees are trained in actual working scenario. The motto of such training is learning by doing.
Instances of such on-job training methods are job-rotation, coaching, temporary promotions, etc.
Off the job training- Off the job training methods are those in which training is provided away from the
actual working condition. It is generally used in case of new employees. Instances of off the job
training methods are workshops, seminars, conferences, etc. Such method is costly and is effective if
and only if large number of employees have to be trained within a short time period. Off the job
training is also called as vestibule training, i.e., the employees are trained in a separate area( may be
a hall, entrance, reception area, etc. known as a vestibule) where the actual working conditions are
Training methods pertain to the types of training that can be provided to employees to sharpen their
existing skills and learn new skills. The skills that they learn can be technical or soft skills and for all
categories of skills, some training methods are suggested here. The training methods can range from
onsite classroom based ones, training at the office during which employees might or not might check
their work, experiential training methods which are conducted in resorts and other places where there
is room for experiential learning. Training methods include many types of training tools and
techniques and we shall discuss some of the commonly employed tools and techniques. For instance,
it is common for trainers to use a variety of tools like visual and audio aids, study material, props and
other enactment of scene based material and finally, the experiential tools that include sports and
exercise equipment.
If we take the first aspect of the different training methods that are location based, we would infer from
the explanation that these training methods include the specific location based ones and would range
from classroom training done at the trainers location to the ones done on the office premises.
Further, the experiential training methods can include use of resorts and other nature based locations
so that employees can get the experience of learning through practice or the act itself rather than

through study material. It needs to be remembered that the trainings conducted in the office premises
often involve employees taking breaks to check their work and hence might not be ideal from the point
of view of the organizations. However, provision can be done to locate the training rooms away from
the main buildings so that employees can be trained in a relaxed manner. For instance, Infosys has
training centres that are exclusively built for training and these centres give the employees enough
scope and time for learning new skills.
The next aspect of the training methods includes the use of visual and audio aids, study material,
props and equipment. Depending on the kind of training that is being imparted, there can be a
mechanism to use the appropriate tools and techniques based on the needs of the trainers and the
trainees. The use of the training material often indicates the thoroughness of the training program and
the amount of work that the trainers have put in to make the training successful. Of course, if the
training material is good, it also means that the employees would benefit from the scope and depth of
the material though they need to invest time and energy as well.
Finally, the bottom line for any training to be successful is the synergy between the trainers and the
trainees and this is where the HRD function can act as a facilitator for effective trainings and ensure
that the trainers and trainees bond together and benefit in a mutual process of understanding and
learning. In conclusion, there are various ways to approach trainings and some of the methods
discussed above would be good starting points for follow up action and partnership between the
training agencies and the organizations.



Finance is the life blood of business. Finance is the base of all corporate activities
in the day to day world. Management of finance is broadly concerned with the acquisition
and use of funds by a business firm.
Reliance mutual fund has a very efficient Finance Department headed by Manager
Finance. All the Finance Department staffs are professionals. Finance Department consist of a
team of professionals headed by Manager Finance, having sufficient industry experience in
the field of accounting, costing, taxation, company law and financial management
1. To manage & account for the financial resource of the organization, to forecast its
requirement in the future and plan accordingly and to check for deviation.
2. Report the financial performance of the organization, to comply with the government
rules and regulation.
The main functions of finance department are defined as follows.
1. Recording of day-to-day business transaction.
2. Receiving payments from customers and accounting these funds.
3. Preparations of sales budgets and revenue budgets and expenditure budgets on a

quarterly basis.
Preparations and, maintenance of costing records.
Preparations of fund flow and cash flow statement for every month.
Preparing and filling of quarterly and final income tax returns.
Preparations and implementation of cost reduction and cost control methods
Conduct and co-ordinate internal and stationary audits.
Perpetual stock verification and asset evaluation.


Responsibility of people in finance department

Establishing and controlling the financial systems and administrative services of

the organization, and providing financial information to Board of Directors.
Main duties

Directing the establishment of financial/accounting principles, procedures and practices in

line with legal and corporate requirements.

Ensuring accurate and timely financial reports and forecasts for the whole organisation

so as to provide a clear insight into its financial condition.

Ensuring that the profits of the organisation are protected through the establishment of
effective financial controls; implementing and maintaining appropriate management
accounting and reporting systems, budgetary controls and expenditure procedures.


Main duties

Providing accurate and timely financial reports and forecasts and general accounting and

administrative services.
Ensuring effective costing and contribution analysis.
Implementing policies to ensure the security of funds and assets.

Main duties

Maintain an awareness of all promotions and advertisements.

Accurately and efficiently ring on registers and accurately maintain all cash and media
at the registers.

Communicate customer requests to top management.


The audit of all branch office departments of the corporation is completing every year
financial year. In keeping with practice of improving our systems and procedures through the
use of IT as a tool, audit packages are being used so that our auditors are able to carry out the
audit in a Front End Applications package environment.
The inspection of all the branches of the corporation in India is completing within time
schedule. Implementation of inspection package in all our offices led to transparency by online report writing, acceptance of compliance and closure process.
Special efforts were made to focus on disposal of vigilance cases pending for more than
one year. Besides expediting disposal of vigilance cases, emphasis is also laid on preventive
vigilance through the dissemination of information on areas susceptible to vigilance.
The corporation appoints nominee directors on the board of the companies where it has
substantial stake by way of debt or equity. Nominees are officials of the corporation who are
in service or retired. Adequate systems are in place to review and guide the nominee
directors from time to time. Nominee directors provide feedback with regard to operations
problems, prospects and corporate governance standards etc.

Corporation is the largest institutional investor in the financial market and its staggering
fund size which is placed in varying asset classes is exposed to various financial risks. To
mitigate the investment risks arising out of market risk, credit risk, interest rate risk and
other risks inherent in the financial market, a distinct full-fledged Risk management
structure has been created in the corporation.

Board meetings as per regulations are generally held once in three months. In addition to
policy matters, the board provides strategic direction for execution ensures financial
discipline and accountability to the policy holders and also ensures the interest of the policy
holders and stakeholders.


Manager (Sales)

Administrative Officers (AO)

Asst. Administrative
Officers (AAO)

Higher Grade Staffs


Record clerk

Sub Staff


Sales management is a business discipline which is focused on the practical

application of sales techniques and the management of a organizational sales operations. It is
an important business function as net sales through the sale of products and services and
resulting profit drive most commercial business. These are also typically the goals and
performance indicators of sales management.
The art of meeting the sales targets effectively through meticulous planning and
budgeting refers to sales management. Sales Management helps to extract the best out of
employees and achieve the sales goals of the organization in the most effective ways.
Process of Sales Management
1. Sales Planning

Marketers must plan things well in advance for the best results. It is essential to have

concrete plans. Mere guess works do not help in business.

Know product well. Sales professionals must know the benefits of the product for the

consumers to believe them.

Identify the target market.
Sales Planning makes the products available to the end users at the right time and at

the right place.

Sales Planning helps the marketers to analyse the customer demands and respond

efficiently to fluctuations in the market.

Devise appropriate strategies to increase the sales of the products.

2. Sales Reporting

Sales strategies are implemented in this stage.

Check the effectiveness of the various strategies. Find out whether they are bringing
the desired results or not.

Ask the sales team to submit reports of what all they have done throughout the week.
The management must sit with the sales team frequently to assess their performance
and chalk out future course of actions.

3. Sales Process

Sales process refers to various activities which help in the timely achievement of sales

targets for the successful functioning of an organization.

Sales Process includes various strategies and techniques employed by an individual to
achieve sales goals within the stipulated time frame.

Sales manager is the typical title of someone whose role is sales management. The
role typically involves sales planning, human resources, talent development, leadership and
control of resources such as organizational assets.
Main duties

Manage and coordinate all marketing, advertising and promotional staff and activities
Conduct market research to determine market requirements for existing and future

Analysis of customer research, current market conditions and competitor information

Develop and implement marketing plans and projects for new and existing products


In a competitive market, there is a greater need to provide insurance products that meet
the needs of customers RMF therefore a wide variety of products which fulfils the needs of

different segments of the society. As at the end of the financial year 2009-10, the corporation
had 54 plans available for sale.
The theme of FPT is professionalism. For the purpose, training in a big way is
conducting across all zones using reputed International / National Training Institutions.
Banc assurance is the term used to describe the partnership or relationship between a
bank and an insurance company whereby the insurance company uses the bank sales channel
in order to sell insurance products.
This vertical is started with an objective of creating new systems for business
generation, sales process monitoring and business processing with a view to reach out to
untapped markets and provide improved buying experience to customers.
In a short period, the channel has expanded and professionally trained Direct Sales
Executives (DSEs) to provide financial advice to prospective customers.
The main focus of the channel was setting up systems and processes. A state of art lead
management system has been established to provide easy access to prospective customers to
reach out to LIC to buy a policy. Such leads captured through our website. is passed on to well trained DSEs on real time basis who can
contact the customer instantly.

Most people have their first contact with an insurance company through an insurance
sales agent. These workers help individuals, families, and businesses select insurance policies
that provide the best protection for their lives, health, and property. Insurance sales agents
commonly referred to as producers in the insurance industry.
a) Agency Strength
The total number of agents on our role is 140280 as at 31.03.2011 as against 134485
as on 31.03.2012.

b) Agents Club Membership

In order to motivate and recognize high performers amongst agents a premium club
called the Corporate Club. The other 5 clubs which were formed to recognize agents, who
perform consistently year after year.


Name of the Club
Zonal Manager
Divisional Manager
Branch Manager
Distinguished Agents

c) Career Agents Scheme

The corporation has a scheme of Urban Career Agents and Rural Career Agents
to promote the cause of professionalizing the agency force. They are given Stipends at the
start of their career to enable them to settle down in the profession.
d) Chief mutual fund Advisor Scheme
The corporation introduced the above scheme with an objective of increasing its
market presence through more agents by utilizing capabilities of existing high performing
agents for organizational growth.
e) Authorised Agents

In tune with the increasing customer expectation for more conveniences in premium
payments and servicing, the corporation has empowered select agents to collect the renewal
premium through Premium Points.

The Claims department is headed by the claims manager
The claims department is responsible for the claim settlements arising from the
customers. In case of a life insurance claim the department gets information directly from the
customer, the department authenticates the policy details and issues a claim number, and then
assigns the surveyor for valuation. After proper enquiry, fund is collected and delivered to the

In case of reimbursement process, the customer will have to submit documents and
they will make the payment within 3 days of completion of documentation.
Survival Benefit/Maturity Claims:

RMF settles survival benefit/maturity claims on or before the due date.

Policyholders are intimated well in advance by the Branch Office which services the
policy regarding the payment, and the necessary Discharge Voucher is also sent for
execution by the assured. In case the policyholder does not get any intimation from
the Branch Office concerned, he/she should contact them, quoting the Policy Number.

Survival Benefit payment up to Rs.60,000/- are settled without insisting for Policy
Bond and Discharge Voucher.

Death Claims:

If the life assured dies during the term of the policy, death claim arises. The death of
the policyholder should be immediately intimated in writing to the Branch Office
where the policy is serviced along with the following particulars:
1. The No./s of the policy/ies
2. The name of the policyholder
3. Death Certificate issued by concerned Authority
4. The date of death
5. The cause of death and
6. Claimants relationship with the deceased

On receipt of the intimation of death, necessary claim forms are sent by the Branch
Office for completion along with instructions regarding the procedure to be followed
by the claimant.

The claims which have arisen after a period of three years are treated as non-early
claims and settled within 30 days from the date of receipt of all requirements.

The claims that have arisen within a period of two years from the date of
commencement of the policy, are treated as early claims and investigation is
compulsory in such cases.

The Corporation grants claims concessions under certain Plans whereby payment of
full sum assured is made, subject to the deduction of unpaid premiums with interest
till the date of death and unpaid premiums falling due before the next anniversary of
the policy, in the event of the death of the life assured within a period of six months or
one year from the date of the first unpaid premium, provided premiums have been
paid for at least three years and five years respectively.

Claim Review Committee:

The Corporation settles a large number of Death Claims every year. Only in case of
fraudulent suppression of material information is the liability repudiated. This is to ensure
that claims are not paid to fraudulent persons at the cost of honest policyholders. The number
of Death Claims repudiated is, however, very small. Even in these cases, an opportunity is
given to the claimant to make a representation for consideration by the Review Committees
of the Zonal office and the Central Office. As a result of such review, depending on the merits
of each case, appropriate decisions are taken. The Claims Review Committees of the Central
and Zonal Offices have among their Members, a retired High Court/District Court Judge.
This has helped providing transparency and confidence in our operations and has resulted in
greater satisfaction among claimants, policyholders and public.


Manager (IT)

Administrative Officers (AO)

Asst. Administrative
Officers (AAO)

Higher Grade Staffs


Record clerk

Sub Staff

RMF has been one of the pioneering organizations in India who
introduced the leverage of Information Technology in servicing and in their business.
Data pertaining to almost 10 crore policies is being held on computers in RMF. RMF
have gone in for relevant and appropriate technology over the years.
1964 saw the introduction of computers in RMF. Unit Record Machines
introduced in late 1950s were phased out in 1980s and replaced by Microprocessors
based computers in Branch and Divisional Offices for Back Office Computerization.
Standardization of Hardware and Software commenced in 1990s. Standard Computer
Packages were developed and implemented for Ordinary and Salary Savings Scheme
(SSS) Policies.



With a view to enhancing customer responsiveness and services, LIC started

a drive of On Line Service to Policyholders and Agents through Computer. This on
line service enabled policyholders to receive immediate policy status report, prompt
acceptance of their premium and get Revival Quotation, Loan Quotation on demand.
Incorporating change of address can be done on line. Quicker completion of proposals
and dispatch of policy documents have become a reality. All our 2048 branches across
the country have been covered under front-end operations. Thus all our 100 divisional
offices have achieved the distinction of 100% branch computerization. New payment
related Modules pertaining to both ordinary & SSS policies have been added to the
Front End Package catering to Loan, Claims and Development Officers Appraisal. All
these modules help to reduce time-lag and ensure accuracy.


A Metropolitan Area Network, connecting 74 branches in Mumbai was

commissioned in November, 1997, enabling policyholders in Mumbai to pay their
Premium or get their Status Report, Surrender Value Quotation, Loan Quotation etc.
from ANY Branch in the city. The System has been working successfully. More than
10,000 transactions are carried out over this Network on any given working day. Such
Networks have been implemented in other cities also.

All 7 Zonal Offices and all the MAN centres are connected through a Wide
Area Network (WAN). This will enable a customer to view his policy data and pay
premium from any branch of any MAN city. As at November 2005, we have 91
centers in India with more than 2035 branches networked under WAN.

IVRS has already been made functional in 59 centers all over the country.
This would enable customers to ring up RMF and receive information (e.g. next
premium due, Status, Loan Amount, Maturity payment due, Accumulated Bonus etc.)
about their policies on the telephone. This information could also be faxed on demand
to the customer.

Our Internet site is an information bank. We have displayed information

about RMF & its offices. Efforts are on to upgrade our web site to make it dynamic
and interactive. The addresses/e-mail Ids of RMF Zonal Offices, Zonal Training
Centers, Management Development Center, Overseas Branches, Divisional Offices
and also all Branch Offices with a view to speed up the communication process.


RMF has given its policyholders a unique facility to pay premiums through Internet
absolutely free and also view their policy details on Internet premium payments. There
are 11 service providers with whom RMF has signed the agreement to provide this

RMF have also set up call centers, manned by skilled employees to provide
you with information about our Products, Policy Services, Branch addresses and other
organizational information.

Product profile :

Reliance Equity Fund:
(An open-ended diversified Equity Scheme.) The primary investment objective of the scheme
is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a
portfolio constituted of equity & equity related securities of top 100 companies by market capitalization
& of companies which are available in the derivatives segment from time to time and the secondary
objective is to generate consistent returns by investing in debt and money market securities.

Reliance Tax Saver (ELSS) Fund:

(An Open-ended Equity Linked Savings Scheme.) The primary objective of the scheme is to
generate long-term capital appreciation from a portfolio that is invested predominantly in equity and
equity related instruments.

Reliance Equity Opportunities Fund:

(An Open-Ended Diversified Equity Scheme.) The primary investment objective of the
scheme is to seek to generate capital appreciation & provide long-term growth opportunities by
investing in a portfolio constituted of equity securities & equity related securities and the secondary
objective is to generate consistent returns by investing in debt and money market securities.

Reliance Vision Fund:

(An Open-ended Equity Growth Scheme.) The primary investment objective of the Scheme is
to achieve long term growth of capital by investment in equity and equity related securities through a
research based investment approach.

Reliance Growth Fund:

(An Open-ended Equity Growth Scheme.) The primary investment objective of the Scheme is
to achieve long term growth of capital by investment in equity and equity related securities through a
research based investment approach.

Reliance Index Fund:

(An Open Ended Index Linked Scheme.) The Investment Objective under the Nifty Plan is to
replicate the composition of the Nifty, with a view to endeavour to generate returns, which could
approximately be the same as that of Nifty. The Investment Objective under the Sensex plan is to
replicate the composition of the Sensex, with a view to endeavour to generate returns, which could
approximately be the same as that of Sensex.

Reliance NRI Equity Fund:

(An open-ended Diversified Equity Scheme.) The Primary investment objective of the scheme
is to generate optimal returns by investing in equity or equity related instruments primarily drawn from
the Companies in the BSE 200 Index.

Reliance Monthly Income Plan:
(An Open Ended Fund. Monthly Income is not assured & is subject to the availability of
distributable surplus ) The Primary investment objective of the Scheme is to generate regular income
in order to make regular dividend payments to unit holders and the secondary objective is growth of
capital. Primarily the investment shall be made in debt and money market securities (i.e. 80%) with a
small exposure (i.e. up to 20%) in equity.

Reliance Gilt Securities Fund - Short Term Gilt Plan & Long Term Gilt Plan:
Open-ended Government Securities Scheme) the primary objective of the Scheme is to
generate optimal credit risk-free returns by investing in a portfolio of securities issued and guaranteed
by the central Government and State Government
Reliance Income Fund:
(An Open-ended Income Scheme) The primary objective of the scheme is to generate optimal
returns consistent with moderate levels of risk. This income may be complemented by capital
appreciation of the portfolio. Accordingly, investments shall predominantly be made in Debt & Money

Reliance Medium Term Fund:

(An Open End Income Scheme with no assured returns.) The primary investment objective of
the Scheme is to generate regular income in order to make regular dividend payments to unit holders
and the secondary objective is growth of capital

Reliance Short Term Fund:

(An Open End Income Scheme) The primary investment objective of the scheme is to
generate stable returns for investors with a short investment horizon by investing in Fixed Income
Securities of short term maturity.

Reliance Liquid Fund:

(Open-ended Liquid Scheme). The primary investment objective of the Scheme is to generate
optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments
shall predominantly be made in Debt and Money Market Instruments.

Reliance Fixed Term Scheme:

(Close-ended Income Scheme) The primary objective of the Scheme is to seek to achieve
regular returns / growth of capital by investing in a portfolio of fixed income securities normally
maturing in line with the time profile of the plan with the objective of limiting interest rate volatility.

Reliance Floating Rate Fund:

(An Open End Income Scheme) The primary objective of the scheme is to generate regular
income through investment in a portfolio comprising substantially of Floating Rate Debt Securities
(including floating rate securitized debt and Money Market Instruments and Fixed Rate Debt
Instruments swapped for floating rate returns). The scheme shall also invest in fixed rate debt
Securities (including fixed rate securitized debt, Money Market Instruments and Floating Rate Debt
Instruments swapped for fixed returns.

Reliance NRI Income Fund:

(An Open-ended Income scheme) The primary investment objective of the Scheme is to
generate optimal returns consistent with moderate levels of risks. This income may be complimented
by capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in debt

Fixed Maturity Fund - Series I: Reliance

(A Close Ended Income Scheme)The primary investment objective of the Scheme is to seek
to achieve regular returns / growth of capital by investing in a portfolio of fixed income securities
normally maturing in line with the time profile of the Plan with the objective of limiting interest rate

Reliance Fixed Maturity Fund - Series II:

(A closed ended Income Scheme) The primary investment objective of the Scheme is to seek
to achieve growth of capital by investing in a portfolio of fixed income securities normally maturing in
line with the time profile of the respective plans.


The Investment Objectives:

Debt Option: The primary investment objective of this plan is to generate optimal returns consistent
with moderate level of risk. This income may be complemented by capital appreciation of the portfolio.
Accordingly investments shall predominantly be made in Debt & Money Market Instruments.

Equity Option: The primary investment objective is to seek capital appreciation and or consistent
returns by actively investing in equity / equity related securities.

Hybrid Option: The primary investment objective is to generate consistent return by investing a major
portion in debt & money market securities and a small portion in equity & equity related instruments.

Sector Specific Schemes

Sector Funds are specialty funds that invest in stocks falling into a certain sector of the
economy. Here the portfolio is dispersed or spread across the stocks in that particular sector. This
type of scheme is ideal for investors who have already made up their mind to confine risk and return
to a particular sector.

Reliance Banking Fund

Reliance Mutual Fund has an Open-Ended Banking Sector Scheme which has the primary
investment objective to generate continuous returns by actively investing in equity / equity related or
fixed income securities of banks.

Reliance Diversified Power Sector Fund

Reliance Diversified Power Sector Scheme is an Open-ended Power Sector Scheme. The
primary investment objective of the Scheme is to seek to generate consistent returns by actively
investing in equity / equity related or fixed income securities of Power and other associated
Reliance Pharma Fund
Reliance Pharma Fund is an Open-ended Pharma Sector Scheme. The primary investment
objective of the Scheme is to generate consistent returns by investing in equity / equity related or
fixed income securities of Pharma and other associated companies.

Reliance Media & Entertainment Fund

Reliance Media & Entertainment Fund is an Open-ended Media & Entertainment sector scheme. The
primary investment objective of the Scheme is to generate consistent returns by investing in equity /
equity related or fixed income securities of media & entertainment and other associated companies.



Choice of any scheme would depend to a large extent on the investor preferences. For an investor
willing to undertake risks, equity funds would be the most suitable as they offer the maximum returns.
Debt funds are suited for those investors who prefer regular income and safety. Gilt funds are best
suited for the medium to long-term investors who are averse to risk. Balanced funds are ideal for
medium- to long-term investors willing to take moderate risks.


Liquid funds are ideal for Corporate, institutional investors and business houses who invest their
funds for very short periods. Tax Saving Funds are ideal for those investors who want to avail taxbenefit.


An important aspect while selecting a particular scheme is the duration of the investment.
Depending on your time horizon you can select a particular scheme. Besides all this, factors like
promoters image, objective of the fund and returns given by the funds on different schemes should
also be taken into account while selecting a particular scheme.


Mutual Funds do not provide assured returns. Their returns are linked to their performance. They
invest in shares, debentures and deposits. All these investments involve an element of risk. The unit
value may vary depending upon the performance of the company and companies may default in
payment of interest/principal on their debentures/bonds/deposits. Besides this, the government may
come up with new regulation which may affect a particular industry or class of industries. All these
factors influence the performance of Mutual Funds.

Risk factors in mutual funds

The Risk-Return Trade-off: The most important relationship to understand is the risk-return
trade-off. Higher the risk greater the returns/loss and lower the risk lesser the returns/loss. Hence it is
up to you, the investor to decide how much risk you are willing to take. In order to do this you must
first be aware of the different types of risks involved with your investment decision .

Market Risk: Sometimes prices and yields of all securities rise and fall. Broad outside
influences affecting the market in general lead to this. This is true, may it be big corporations or

smaller mid-sized companies. This is known as Market Risk. A Systematic Investment Plan (SIP)
that works on the concept of Rupee Cost Averaging (RCA) might help mitigate this risk.

Credit Risk: The debt servicing ability (may it be interest payments or repayment of principal)
of a company through its cash flows determines the Credit Risk faced by you. This credit risk is
measured by independent rating agencies like CRISIL who rate companies and their paper. An AAA
rating is considered the safest whereas a D rating is considered poor credit quality. A well-diversified
portfolio might help mitigate this risk.

Inflation Risk: Things you hear people talk about:

Rs. 100 today is worth more than Rs. 100 tomorrow.
Remember the time when a bus ride costed 50 paise?
Mehangai Ka Jamana Hai.
The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot of times people
make conservative investment decisions to protect their capital but end up with a sum of money that
can buy less than what the principal could at the time of the investment. This happens when inflation
grows faster than the return on your investment. A well-diversified portfolio with some investment in
equities might help mitigate this risk.

Interest Rate Risk: In a free market economy interest rates are difficult if not impossible to
predict. Changes in interest rates affect the prices of bonds as well as equities. If interest rates rise
the prices of bonds fall and vice versa. Equity might be negatively affected as well in a rising interest
rate environment. A well-diversified portfolio might help mitigate this risk.

Political/Government Policy Risk: Changes in government policy and political decision

can change the investment environment. They can create a favorable environment for investment or
vice versa.

Liquidity Risk: Liquidity risk arises when it becomes difficult to sell the securities that one has
purchased. Liquidity Risk can be partly mitigated by diversification, staggering of maturities as well as
internal risk controls that lean towards purchase of liquid securities.


There are numerous benefits of investing in mutual funds and one of the key reasons for its
phenomenal success in the developed markets like US and UK is the range of benefits they offer,
which are unmatched by most other investment avenues. We have explained the key benefits in this
section. The benefits have been broadly split into universal benefits, applicable to all schemes and
benefits applicable specifically to open-ended schemes.

Diversification: The nuclear weapon in your arsenal for your fight against Risk. It simply means that
you must spread your investment across different securities (stocks, bonds, money market
instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology
etc.). This kind of a diversification may add to the stability of your returns, for example during one
period of time equities might underperform but bonds and money market instruments might do well
enough to offset the effect of a slump in the equity markets.

Affordability: A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon
the investment objective of the scheme. An investor can buy in to a portfolio of equities, which would
otherwise be extremely expensive. Each unit holder thus gets an exposure to such portfolios with an
investment as modest as Rs.500/-. This amount today would get you less than quarter of an Infosys
share! Thus it would be affordable for an investor to build a portfolio of investments through a mutual
fund rather than investing directly in the stock market.

Variety: Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways:
first, it offers different types of schemes to investors with different needs and risk appetites; secondly,
it offers an opportunity to an investor to invest sums across a variety of schemes, both debt and
equity. For example, an investor can invest his money in a Growth Fund (equity scheme) and Income

Fund (debt scheme) depending on his risk appetite and thus create a balanced portfolio easily or
simply just buy a Balanced Scheme.

Professional Management: Qualified investment professionals who seek to maximize returns and
minimize risk monitor investor's money. When you buy in to a mutual fund, you are handing your
money to an investment professional who has experience in making investment decisions. It is the
Fund Manager's job to (a) find the best securities for the fund, given the fund's stated investment
objectives; and (b) keep track of investments and changes in market conditions and adjust the mix of
the portfolio, as and when required.

Regulations: Securities Exchange Board of India (SEBI), the mutual funds regulator has clearly
defined rules, which govern mutual funds. These rules relate to the formation, administration and
management of mutual funds and also prescribe disclosure and accounting requirements. Such a
high level of regulation seeks to protect the interest of investors.

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

Convenience: An investor can purchase or sell fund units directly from a fund, through a broker or a
financial planner. The investor may opt for a Systematic Investment Plan (SIP) or a Systematic
Withdrawal Advantage Plan (SWAP). In addition to this an investor receives account statements and
portfolios of the schemes.

Flexibility: Mutual Funds offering multiple schemes allow investors to switch easily between various
schemes. This flexibility gives the investor a convenient way to change the mix of his portfolio over

Low cost: Mutual fund expenses are often no more than 1.5 percent of your investment. Expenses
for Index Funds are less than that, because index funds are not actively managed. Instead, they
automatically buy stock in companies that are listed on a specific index

Transparency: Mutual fund provide information on each scheme about the specific investment made
there-under and so on

Tax benefits: Any income distributed after March 31, 2002 will be subject to tax in the assessment of
all Unit holders. However, as a measure of concession to Unit holders of open-ended equity-oriented
funds, income distributions for the year ending March 31, 2003, will be taxed at a concessional rate of
10.5%. In case of Individuals and Hindu Undivided Families a deduction up to Rs. 9,000 from the Total
Income will be admissible in respect of income from investments specified in Section 80L, including
income from Units of the Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-

Tax. Well regulated: The funds are registered with the Securities and Exchange Board of India and
their operations are continuously monitored.

Mutual funds drawbacks and may not be for everyone:

No Guarantees: No investment is risk free. If the entire stock market declines in value, the
value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors
encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their
own. However, anyone who invests through a mutual fund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to cover their day-to-day
expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial
consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will
pay a sales commission if you buy shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70
percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes
on the income you receive, even if you reinvest the money you made.

Management risk: When you invest in a mutual fund, you depend on the fund's manager to
make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you
had hoped, you might not make as much money on your investment as you expected. Of course, if
you invest in Index Funds, you forego management risk, because these funds do not employ


Wide variety of mutual fund schemes exists to cater to the needs such as financial position, risk
tolerance and return expectations etc. the table below gives an overview into the existing types of
schemes in the industry.
By structure

Open- Ended schemes

Close- Ended schemes

Interval schemes
By investment objectives

Growth/Equity schemes

Income/Debt scheme

Money market

Guilt funds

Balanced schemes
Other schemes

Tax saving schemes

Special schemes:

Sector specific schemes

Index schemes

Open - Ended Schemes: An open-ended fund or scheme is one that is available for subscription and
repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can
conveniently buy and sell units at Net Asset Value (NAV) related prices, which are declared on a daily
basis. The key feature of open-end schemes is liquidity

Close - Ended Schemes: A close-ended fund or scheme has a stipulated maturity period e.g. 5-7
years. The fund is open for subscription only during a specified period at the time of launch of the
scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they
can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to
provide an exit route to the investors, some close-ended funds give an option of selling back the units
to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that
at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through
listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.
Interval Scheme: these combine the feature of open-ended and close ended schemes. They may be
traded on the stock exchange or may be open for sale or redemption during predetermined intervals
at NAV related prices.

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.

Income Schemes: The aim of income funds is to provide regular and steady income to investors.






fixed income securities



corporate debentures,


securities and money


Such funds are less


equity schemes. These

funds are not affected

because of fluctuations






However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds
are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such
funds are likely to increase in the short run and vice versa. However, long term investors may not
bother about these fluctuations.

Different types of debt schemes

Balanced Schemes: The aim of balanced funds is to provide both growth and regular income as
such schemes invest both in equities and fixed income securities in the proportion indicated in their
offer documents. These are appropriate for investors looking for moderate growth. They generally
invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations
in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile
compared to pure equity funds.

Money Market Schemes: These funds are also income funds and their aim is to provide easy
liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer
short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank
call money, government securities, etc. Returns on these schemes fluctuate much less compared to
other funds. These funds are appropriate for corporate and individual investors as a means to park
their surplus funds for short periods
Gilt Fund: These primarily invest in government debts. Hence, the investor usually does not have to
worry about credit risk since government debt is generally credit risk free. Reliance Gilt Securities
Fund - Short Term Gilt Plan & Long Term Gilt Plan are best example of such scheme .

Tax Saving Schemes: These schemes offer tax rebates to the investors under specific provisions of
the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified
avenues. E.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual
funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in
equities. Their growth opportunities and risks associated are like any equity-oriented scheme.

Index Schemes: Index Funds replicate the portfolio of a particular index such as the BSE
Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the same

weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the
rise or fall in the index, though not exactly by the same percentage due to some factors known as
"tracking error" in technical terms. Necessary disclosures in this regard are made in the offer
document of the mutual fund scheme. There are also exchange traded index funds launched by the
mutual funds which are traded on the stock exchanges.

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.


SEBI REGULATIONS 1996: Mutual funds in India are comprehensively regulated under the SEBI
(Mutual Funds) Regulation, 1996. Some of the important provisions of this regulation are as follows:

A mutual fund shall be constituted in the form of a thrust executed by the sponsor in favor of the

The sponsor or, if so authorized by the trust deed, the trustees, shall appoint an asset
management company.

The mutual fund shall appoint a custodian.

No scheme shall be launched by the AMC unless it is approved by the trustees an a copy of the
offer document has been filed with SEBI.

The offer document and advertisement materials shall not be misleading.

No guaranteed return shall be provided in a scheme unless such returns are fully guaranteed
by the sponsor or the AMC.

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

The 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 funds shall not borrow except to meet temporary liquidity needs.

The net asset value (NAV) and the sale and repurchase price of mutual fund schemes must be
regularly published in daily newspapers.

Every AMC shall keep and maintain proper books of accounts records, and documents for each

The investments of a mutual fund are subject to several restrictions relating to exposure to stocks of
individual companies, debt instruments of individual issuers so on and so forth.

Costs associated with mutual fund investing such as initial expenses, loads (entry and exit), and
annual recurring expenses are subject to certain ceilings.

The rights which are available to a Mutual Fund holder: As per SEBI Regulations on Mutual Funds, an
investor is entitled to

Receive unit certificates or statement of accounts confirming your title within 6 weeks from the date
your request for a unit certificate is received by the Mutual Fund.

Receive information about the investment policies, investment objectives, financial position and
general affairs of the scheme.

Receive dividend within 42 days of their declaration and receive the redemption of repurchase
proceeds within 10 days from the date of redemption or repurchase.

The trustees shall be bound to make such disclosures to the unit holders as they essential in order to
deep them informed about any information which may have an adverse bearing on their investments.

75% of the unit holders with the prior approval of SEBI can terminate the AMC of the fund.

75% of the unit holders can pass a resolution to wind-up the scheme.