HDFC MUTUAL FUND (HDFC ASSETS MANAGEMENT COMPANY LTD)

IN PARTIAL FULFILLMENT OF MASTER OF BUSINESS ADMINISTRATION PROGRAMME

SUBMITTED BY: BADAMI KALPESH. D.

GUIDED BY:

INTERNAL GUIDE AT GRIMS DR.R.S.SHAH EXTERNAL GUIDE AT CO. MR.RAJAN MEHTA

GIDC RAJJU SHROFF ROFEL INSTITUTE OF MANAGEMENT STUDIES, VAPI SUMMER TRAINING PROJECT (200 )

DECLARATION
I, Badami Kalpesh D. a student of MBA semester iii, here by declare that the project work presented in this report is my contribution and has been carried out under super ision of DI!"#$%! DR.R.S.SHAH of GIDC RAJJU SHROFF INSTITUTE OF MANAGEMENT STUDIES.

$he objecti e of the trainin& undertaken is to &et speciali'ed knowled&e in the speciali'ed field, which further sharpen the skill and add practicality in the speciali'ation. $his work has not been pre iously submitted to any other uni ersity for any other e(amination

DA$") *

SIGNATURE (student+

BADAMI KA,-"./ D. -,A#") * SIGNATURE (guide)

D!.!..../A/

PREFACE
1"(perience is the best teacher.2 $his sayin& is ery well applicable in e eryone3s life. $herefore as a student of mana&ement it must apply to me also. $hen the 4uestion arises that from where we can &et this e(perience. %b iously we must under&o practical $rainin&. $o ser e this purpose I had under&one two months summer trainin& at /D5# assets Mana&ement #ompany limited and as an outcome I ha e prepared this project report. $his project report on 1mutual fund awareness in retail in estors of /D5# assets Mana&ement #ompany in .urat2 is as per syllabus prescribed by 6eer 7armad south 8ujarat 9ni ersity for MBA students. $his project also deals with arious acti ities of /D5# assets Mana&ement #ompany limited. $he e(perience of this trainin& will be useful in my future and findin&s of this particular project will be /elpful to take decision re&ardin& to marketin& and ad ertisin& of mutual fund schemes $o /D5# assets Mana&ement #ompany limited.

ACKNO!LEDGEMENT
5irst of all, I would like to e(press my sincere &ratitude to Mr. !ajan Mehta, Branch mana&er of /D5# assets Mana&ement #ompany limited, .urat branch for allowin& me for summer trainin& at /D5# assets Mana&ement #ompany limited. I heartily feel thanks to Mr. -iyush lal, sales e(ecuti e who pro ided me aluable su&&estions and &uidance at e ery sta&e of my summer trainin&. I would also like to e(press my &ratitude to Mr. !.s.shah, my project mentor and other faculty members of 8ID# !A;;9 ./!%55 !%5", I7.$I$9$" %5 MA7A8"M"7$ .$9DI"., api for &uide me. I would like to thank followin& persons who help me a lot in my summer trainin&. Mr. 8aura maheshwari, /D5# assets Mana&ement #ompany limited Mr. -inkal shah, /D5# assets Mana&ement #ompany limited. Mr. #hintan patel, /D5# assets Mana&ement #ompany limited. Mr. !itesh jariwala, /D5# assets Mana&ement #ompany limited. Mr. 9tkrash &heewala, /D5# bank, -arle point branch Mr. 7ilesh patel, /D5# bank, -arle point branch. Mr. Mitesh sampat, /D5# bank, -arle point branch. I also thank to respondents, who ha e been helpful and faithful enou&h to &i e the re4uired information, which helped my project to be a &reat success, which was the main and important part of my project. I feel happy indeed and it has &i en me a lot of pleasure in company. ,ast but not the least I would like to e(tent my deep sense of &ratitude to my family, friends and all whom &uided and helped me durin& my trainin& period. -lace) * .urat. Date) * <thAu&ust 0==> Badami Kalpesh. B.

O"#$%&'($) *+ S&,-.
@ithout any aim or objecti e, no acti ity can e(ist, in the same direction of preparation of this report on /D5# assets Mana&ement #ompany limited. In different functional areas A research on the 1mutual fund awareness in retail in estors of /D5# assets Mana&ement #ompany limited in .urat2 is based on the followin& objecti es) *

1. My primary objecti e is to ac4uire primary functions of mana&ement like -lannin&, %r&ani'in&, Directin& and controllin& from arious functional areas such as 5inance, /uman !esource, Marketin&, and .ales etc. 0. @hate er we are tau&ht in the classrooms, there is a limitation that book can only &i e theoretical concept or knowled&e and it has a limited iew of practically. .o, the other important objecti e of this trainin& is to know about practical aspect and to know how a company actually works in practical situation. :. $o know the mutual fund awareness le el of the retail in estors who are in est in /D5# assets Mana&ement #ompany limited.

L'/'&0&'*1) *+ S&,-.
$here is no acti ity without any limitations. 1. $hou&h e ery one used to be ery co*operati e but e ery detail was unable to be disclosed to me as the officials has to maintain secrets of the company. 0. It is difficult to co er all the function of the company. :. $he analysis and conclusion made by me as per my limited understandin& and there may be somethin& ariation in the actual situation. ?. Because of the limited time period, the sur ey work was conducted in the .urat re&ion and the sample si'e was taken as 1== respondents only. B. In this rapidly chan&in& turbulent era the su&&estions and recommendations drawn out today mi&ht pro e inade4uate or improper tomorrowC this is likely to limit its effecti eness.

EXECUTIVE SUMMARY

>

Executive Summary
$he entire report is an unfor&ettable journey of support, knowled&e, e(perience, dedication, perfection, and patience. 5or me it is all about to understand a customer and market of mutual fund industry. $he report is specially oriented to particular area, thou&h it is representin& the stron& base of In estment mana&ement*which co ers different in estment a enues, their handlin& contribution, strate&y, portfolios, and related risk factors. Mutual funds* how they are formed, history, scenario, types, trends, myths, distribution, ad anta&es, and e en disad anta&es of them. $ips to effecti ely sell the mutual funds, to be effecti e a&ent, some do3s and don3ts about mutual funds while in estin&. #ompany details and its pro&ress and its interpretation base for analysis, conclusion, findin&s, and 4uestionnaire, which helped a lot in consumer, sur ey analysis. Asset allocation, accountin&, ta(ation, aluation and necessary information for &eneratin& base for conclusion. And at last but not the least the collected data from city and their interpretation. In short all efforts which was made to make this report e(plains

2!ORK IS !ORSHIP3

CONTENTS

.r. 7o. 1 0 : ?

7ame of $able %bjecti es of .tudy ,imitations of study "(ecuti e summary #ompany details About the #ompany .ponsors of /D5# Assets Mana&ement #ompany Mana&ement of /D5# Assets Mana&ement #ompany %ffices of /D5# assets mana&ement company limited -roduct details 5uture scenario Industry details Introduction /istory of Mutual 5und Industry #ustomers -rofile of mutual fund industry -ositionin& .trate&y of mutual fund industry -romotional $ools "mployed by arious mutual fund companies 5acts About Mutual 5und Mutual fund Introduction to Mutual 5und Mutual 5und #ycle #ritical iew about Mutual 5und @hy In estor 7eeds Mutual 5und Mutual 5und !isk $ypes of Mutual 5und .tructure of Mutual 5und %ther arious assets mana&ement companies details !e&ulatory Aspects !esearch -urpose of the !esearch !esearch %bjecti e

-a&e 7o. B D E 11 10 1: 1? 1> 0? :0 :: :? :D ?= ?1 ?0 ?B ?D ?> ?< B= B? BB BE D= D? D> >1 >0 >:

B D >

< 1= 11 10 1:

<

1?

!esearch Methodolo&y !esearch Desi&n .ources of Data .amplin& -lan Data #ollection Method Data analysis and findin&s 5indin&s ,imitations #onclusions !ecommendations Anne(ure 8lossary ,ist of $able ,ist of 8raphs Biblio&raphy

>? >B >D >E E= E1 <0 <B <> 1== 1=: 1=B 1=> 1=E 1=<

1B 1D 1> 1E 1< 0= 01 00 0: 0?

1=

COMPANY DETAILS

11

About t e Com!a"y# $
An /D5# asset Mana&ement #ompany limited is well*established fund house. /D5# Assets Mana&ement #ompany limited is sponsored by /ousin& De elopment 5inance #orporation ,imited F/D5#+ and .tandard life in estments limited.

/D5# assets Mana&ement #ompany limited launched its scheme /D5# "G9I$H 597D in the year ;anuary 1<<B. .ince then it focused on different class of schemes for many years and launched se eral inno ati e products that went to become bour&eonin& cate&ories in the Indian mutual fund industry.

.ome of these were /D5# 8!%@$/ 597D, /D5# $%- 0== 597D, and /D5# BA,A7#"D 597D, /D5# -!9D"7#" 597D etc.

/D5# assets Mana&ement #ompany limited ha e offices in 0< cities and currently mana&e assets in e(cess of !s :D1?D.D> cores. FMay 0==>.+

10

Sponsors of HDFC Assets Management Company:Housing Development Finance Corporation Limited (HDFC) /D5# was incorporated in 1<>> as the first speciali'ed Mort&a&e #ompany in India. /D5# pro ides financial assistance to indi iduals, corporates and de elopers for the purchase or construction of residential housin&. It also pro ides property related ser ices Fe.&. property identification, sales ser ices and aluation+, trainin& and consultancy. %f these acti ities, housin& finance remains the dominant acti ity. /D5# has a client base of around <.B lack borrowers, around 1 million depositors, o er <1,=== shareholders and B=,=== deposit a&ents as at March :1, 0==>. /D5# has raised funds from international a&encies such as the @orld Bank, I5# F@ashin&ton+, 9.AID, D"8, ADB and Kf@, international syndicated loans, domestic term loans from banks and insurance companies, bonds and deposits. /D5# has recei ed the hi&hest ratin& for its bonds and deposits pro&ram for the twelfth year in succession. /D5# .tandard ,ife Insurance #ompany ,imited, promoted by /D5# was the first life insurance company in the pri ate sector to be &ranted a #ertificate of !e&istration Fon %ctober 0:, 0===+ by the Insurance !e&ulatory and De elopment Authority to transact life insurance business in India. Standard Life nvestments Limited $he .tandard ,ife Assurance #ompany was established in 1E0B and has considerable e(perience in &lobal financial markets. $he company was present in the Indian life insurance market from 1E?> to 1<:E when a&encies were set up in Kolkata and Mumbai. $he company re*entered the Indian market in 1<<B, when an a&reement was si&ned with /D5# to launch an insurance joint enture. %n April 0==D, the Board of $he .tandard ,ife Assurance #ompany recommended that it should demutualise and .tandard ,ife plc float on the ,ondon .tock "(chan&e. At a .pecial 8eneral Meetin& held in May otin& members o erwhelmin&ly oted in fa or of this. $he #ourt of .ession in .cotland appro ed this in ;une and .tandard ,ife plc floated on the ,ondon .tock "(chan&e on 1= ;uly 0==D. .tandard ,ife In estments was launched as an in estment mana&ement company in 1<<E. It is a wholly owned subsidiary of .tandard ,ife In estments F/oldin&s+ ,imited, which in turn is a wholly owned subsidiary of .tandard ,ife plc. .tandard ,ife In estments is a leadin& asset mana&ement company, with appro(imately 9.I 0D< billion as at March :=, 0==>, of assets under mana&ement. $he company operates in the 9K, #anada, /on& Kon&, #hina, Korea, Ireland and the 9.A to ensure it is able to form a truly &lobal in estment iew. In order to meet the different needs and risk profiles of its clients, .tandard ,ife In estments ,imited mana&es a di erse portfolio co erin& all of the major markets world*wide, which includes a ran&e of pri ate and public e4uities, &o ernment and company bonds, property in estments and arious deri ati e instruments.

1:

Management of HDFC Assets Management Company:-

HDFC !rustee Company Limited: A company incorporated under the #ompanies Act, 1<BD is the $rustee to the Mutual 5und ides the $rust deed dated ;une E, 0===, as amended from time to time. /D5# $rustee #ompany ,imited is a wholly owned subsidiary of /D5# ,imited.

HDFC Asset Management Company Limited: /D5# assets Mana&ement #ompany limited was incorporated under the #ompanies Act, 1<BD, on December 1=, 1<<<, and were appro ed to act as an Asset Mana&ement #ompany for the Mutual 5und by ."BI on ;uly :, 0===. $he re&istered office of the /D5# assets Mana&ement #ompany limited is situated at !amon /ouse, :rd 5loor, /.$. -arekh Mar&, 1D<, Backbay !eclamation, #hurch &ate, Mumbai * ?== =0=. In terms of the In estment Mana&ement A&reement, the $rustee has appointed /D5# Asset Mana&ement #ompany ,imited to mana&e the Mutual 5und. $he paid up capital of the /D5# assets Mana&ement #ompany limited is !s.>B.1D1 crore.

1?

$he present share holdin& pattern of the /D5# Assets mana&ement company is as follows) -articulars /D5# .tandard ,ife In estments ,imited J of the paid up share capital B=.1= ?<.<=

$he /D5# Assets mana&ement company is mana&in& 1E open*ended schemes of the Mutual 5und i'. /D5# 8rowth 5und F/85+, /D5# Balanced 5und F/B5+, /D5# Income 5und F/I5+, /D5# ,i4uid 5und F/,5+, /D5# $a( -lan 0=== F/$-+, /D5# #hildrenKs 8ift 5und F/D5# #85+, /D5# 8ilt 5und F/8I,$+, /D5# .hort $erm -lan F/.$-+, /D5# Inde( 5und, /D5# 5loatin& !ate Income 5und F/5!I5+, /D5# "4uity 5und F/"5+, /D5# $op 0== 5und, F/$0==+, /D5# #apital Builder 5und F/#B5+, /D5# $a( .a er F/$.+, /D5# -rudence 5und F/-5+, /D5# /i&h Interest 5und F//I5+, /D5# .o erei&n 8ilt 5und F/.85+ and /D5# #ash Mana&ement 5und F/#M5+. /D5# assets Mana&ement #ompany limited is also mana&in& the respecti e -lans of /D5# 5i(ed In estment -lan, a closed ended Income .cheme.

$he /D5# Assets mana&ement company has obtained re&istration from ."BI ide !e&istration 7o. * -M L I7-======B=D dated December 00, 0=== to act as a -ortfolio Mana&er under the ."BI F-ortfolio Mana&ers+ !e&ulations, 1<<:. $he /D5# Assets mana&ement company is also pro idin& portfolio mana&ement L ad isory ser ices and such acti ities are not in conflict with the acti ities of the Mutual 5und

1B

 /D5# assets Mana&ement #ompany3s punch line is 1continuin& a tradition of trust2. In 8ujarat /D5# assets Mana&ement #ompany is located at Ahmadabad, .urat, adodara, !ajkot. /D5# assets Mana&ement #ompany is workin& from <):= a.m. onwards. /D5# assets Mana&ement #ompany /a e 0== and more distributors in .urat. /D5# assets Mana&ement #ompany -ro ide account statements to in estors accordin& to in estor3s re4uirement. /D5# assets Mana&ement #ompany -ro ide &ood ser ices to in estors.

1D

O%%ice& o% HDFC ASSETS MANAGEMENT COM'AN( )IMITED

I76".$%! ."!6I#" #"7$!".L %55I#IA, -%I7$. %5 A##"-$A7#" 5%! /D5# M9$9A, 597D /D5# Mutual 5und * Mumbai M !"8I.$"!"D %55I#" !amon /ouse, :rd 5loor, /.$ -arekh Mar&, 1D<, Backbay !eclamation, #hurch &ate Mumbai ?===0=.

/D5# Mutual 5und * /yderabad D*:*EE:L>, 0nd 5loor, .aphire .4uare, .omaji&uda, /yderabad * B==0E0. "mail)ser iceshyderabadNhdfcfund.com /D5# Mutual 5und * 6isakhapatnam 8round 5loor, .ai&opal Arcade, %pp @altair #lub, @altair Main !oad, .iripuram, 6isakhapatnam * B:===:. "mail)ser ices i'a&Nhdfcfund.com /D5# Mutual 5und * -atna Bihar !ani -la'a Apartment, F-atna O*!ay #linic+, "(hibition !oad, -atna * E====1. "mail)ser icespatnaNhdfcfund.com /D5# Mutual 5und * 7ew Delhi 7ew Delhi ?th 5loor, Mohan De Bld&., 1:, $olstoy Mar&, #onnau&ht -lace, 7ew Delhi * 11===1. "mail)ser icesdelhiNhdfcfund.com /D5# Mutual 5und * 8oa

Andhra -radesh

8oa

1>

A:, 5irst 5loor, Krishna Buildin&, %pp. "ducation Dept, Behind .usheela Buildin&, 8.-. !oad, -anaji * ?=:==1. "mail)ser ices&oaNhdfcfund.com /D5# Mutual 5und * Ahmadabad 0nd 5loor, Me&ha /ouse, Besides 8ruh /ouse, Mithakhali .i( !oads, Ahmedabad * :E===<. "mail)ser icesahmedabadNhdfcfund.com /D5# Mutual 5und * !ajkot 0nd 5loor, .hi Darshan, Dr !adha Krishnan !oad, B, ;a&nath -lot #orner, !ajkot * :D===1. "mail)ser icesrajkotNhdfcfund.com /D5# Mutual 5und * .urat 91 * 9:, ;olly -la'a, %pp Athwa 8ate -olice .tation, Athwa 8ate, .urat * :<B==1. "mail)ser icessuratNhdfcfund.com /D5# Mutual 5und * 6adodara 9pper 8round 5loor, 8okulesh, ! # Dutt !oad, 6adodara * :<===>. "mail)ser ices adodaraNhdfcfund.com /D5# Mutual 5und P ;amshedpur ;harkhand 8ayatri "ncla e, 0nd 5loor, QK !oadQ, Bistupur, ;amshedpur * E:1==1. "mail)ser icesjamshedpurNhdfcfund.com /D5# Mutual 5und P Ban&alore 7o.11?, 1st 5loor, -resti&e $owers, << A 1==, !esidency !oad, Ban&alore * BD==0B. "mail)ser icesban&aloreNhdfcfund.com /D5# Mutual 5und P Man&alore

8ujarat

Karnataka

1E

98 *II, D A >, 9pper 8round 5loor, Ma(imus #ommercial #omple(, ,i&ht /ouse /ill !oad, %pp. KM#, Man&alore * B>B==1. "mail)ser icesman&aloreNhdfcfund.com /D5# Mutual 5und P Kochi 8round 5loor, #inema #um #ommercial #omple(, Behind !a ipuram Bus .top, M.8. !oad, Kochi * DE0=1D. "mail)ser iceskochiNhdfcfund.com /D5# Mutual 5und P Bhopal !anjit $owers, Rone II, E M- 7a&ar, Bhopal * ?D0=11. "mail)ser icesbhopalNhdfcfund.com /D5# Mutual 5und P Indore M1, M0 A M:, Me''anine 5loor, .terlin& Arcade,1B L :, !ace #ourse !oad, Indore * ?B0==1. "mail)ser icesindoreNhdfcfund.com Maharashtra /D5# Mutual 5und P Mumbai Mistry Bha an, 1st 5lr, 100, Backbay !eclamation, Dinsha 6achha !oad, #hurch&ate, Mumbai * ?===0=. "mail)ser icesmumbaiNhdfcfund.com /D5# Mutual 5und P 7a&pur 1=D*11=, .hriram .hyam $owers, 0nd 5loor, 7e(t to 7I$ Buildin&, Kin&sway, .adar, 7a&pur * ??===1. "mail)ser icesna&purNhdfcfund.com /D5# Mutual 5und P 7ashik 8* 1 A 8*0, Q.uyojit /ei&htsQ, %pp. !aji 8andhi Bha an, .haranpur !oad, 7ashik * ?00==0. "mail)ser icesnashikNhdfcfund.com /D5# Mutual 5und P -une

Kerala

Madhya -radesh

1<

/D5# /ouse, 0nd 5loor, .hi aji 7a&ar, 9ni ersity !oad, -une * ?11==B. "mail)ser icespuneNhdfcfund.com /D5# Mutual 5und P Bhubaneswar %rissa 0nd 5loor, 6inayak <D, ;anpath, Bhubaneshwar * >B1==1. "mail)ser icesbhubaneshwarNhdfcfund.com /D5# Mutual 5und P #handi&arh .#% :>B*:>D, 8round 5loor, .ector :B*B, #handi&arh * 1D==00. "mail)ser iceschandi&arhNhdfcfund.com /D5# Mutual 5und P ,udhiana .#% 100, 5ero'e 8andhi Market, ,udhiana * 1?1==1. "mail)ser icesludhianaNhdfcfund.com /D5# Mutual 5und P ;aipur Moondhra Bha an, : Ajmer !d, ;aipur * :=0==1. "mail)ser icesjaipurNhdfcfund.com /D5# Mutual 5und P ;odhpur 8ulab .in&h Buildin&, 11, #hopasani !oad, ;odhpur * :?0==:. "mail)ser icesjodhpurNhdfcfund.com /D5# Mutual 5und P #oimbatore 1:>1A, 8round 5loor, 7adar Buildin& $richy !oad, #oimbatore * D?1=1E. "mail)ser icescoimbatoreNhdfcfund.com /D5# Mutual 5und P #hennai I$# #entre, 1st 5loor, >D= Anna .alai, #hennai * D====0. "mail)ser iceschennaiNhdfcfund.com 9ttar -radesh /D5# Mutual 5und P Kanpur

-unjab

!ajasthan

$amil 7adu

0=

1st 5loor, 1DLE= D, Behind .BI Main, #i il ,ines, Kanpur * 0=E==1. "mail)ser iceskanpurNhdfcfund.com /D5# Mutual 5und P ,ucknow ? .hahnajaf !oad, ,ucknow * 00D==1. "mail)ser iceslucknowNhdfcfund.com /D5# Mutual 5und P Kolkata

@est Ben&al

Menaka "state, 1st 5loor, : !ed #ross -lace, Kolkata * >====1. "mail)ser iceskolkataNhdfcfund.com

01

(Fig no "- office locations of HDFC Assets Management Company)

00

PRODUCT DETAILS

0:

'ro*uct Detai+&

#$% !&

'ALA(C#D

D#'!

(Fig no ) - Different !ypes of *roducts) EQUITY SCHEMES OF HDFC ASSET MANAGEMENT COMPANY:1. HDFC Equity Fund: In est!ent O"#e$ti e: $he in estment objecti e of the .cheme Is to achie e capital appreciation. In est!ent O%ti&ns) Di idend A 8rowth %ption N'tu(e &) S$*e!e: - %pen "nded 8rowth .cheme In$e%ti&n D'te) * ;anuary =1, 1<<B

0?

2. HDFC growth fund: In est!ent O"#e$ti e: - $he primary in estment objecti e of the .cheme is to &enerate lon& term capital appreciation from a portfolio that is in ested predominantly in e4uity and e4uity related instruments. In est!ent O%ti&ns: Di idend A 8rowth %ption N'tu(e &) S$*e!e: - %pen "nded 8rowth .cheme In$e%ti&n D'te) *.eptember 11, 0===

3. HDFC Top 200 fund: In est!ent O"#e$ti e: - $o &enerate lon&*term capital appreciation from a portfolio of e4uity and e4uity*linked instruments primarily drawn from the companies in B." 0== inde(. In est!ent O%ti&ns: Di idend A 8rowth %ption

4. HDFC mid c p! opportunity fund" In est!ent O"#e$ti e: - $o &enerate lon&*term capital appreciation from a portfolio that is substantially constituted of e4uity and e4uity related securities of small and Mid*#ap companies. In est!ent O%ti&ns: Di idend A 8rowth %ption N'tu(e &) S$*e!e:- %pen "nded 8rowth .cheme In$e%ti&n D'te)* May =>, 0==>

#. HDFC c pit $ %ui$d!r fund: In est!ent O"#e$ti e: $o &enerate lon&*term capital appreciation from a portfolio that is substantially constituted of e4uity and e4uity related securities of small and Mid*#ap companies. In est!ent O%ti&ns: Di idend A 8rowth %ption N'tu(e &) S$*e!e:- %pen "nded 8rowth .cheme In$e%ti&n D'te)* 5ebruary =1, 1<<? 0B

&. HDFC cor! nd ' t!$$it! fund: In est!ent O"#e$ti e: - $he primary objecti e of the .cheme is to &enerate capital appreciation throu&h e4uity in estment in companies whose shares are 4uotin& at prices below their true alue. In est!ent O%ti&ns: Di idend A 8rowth %ption N'tu(e &) S$*e!e:- %pen "nded 8rowth .cheme In$e%ti&n D'te)* .eptember 1>, 0==? +, HDFC premier multicape fund: In est!ent O"#e$ti e: - $he primary objecti e of the .cheme is to &enerate capital appreciation in the lon& term throu&h e4uity in estments by in estin& in a di ersified portfolio of Mid #ap and ,ar&e #ap Sblue chipS companies. In est!ent O%ti&ns: Di idend -lan, 8rowth -lan, $he Di idend -lan offers Di idend -ayout and !ein estment 5acility. N'tu(e &) S$*e!e: - %pen "nded 8rowth .cheme In$e%ti&n D'te) * April =D, 0==B

'ALA(C#D SCH#M#S -F HDFC ASS#! MA(A.#M#(! C-M*A(&:1.

HDFC % $ nc!d fund: In est!ent O"#e$ti e: - $he primary objecti e of the .cheme is to &enerate capital appreciation alon& with current income from a combined portfolio of e4uity and e4uity related and debt and money market instruments. In est!ent O%ti&ns: Di idend A 8rowth %ption N'tu(e &) S$*e!e: - %pen "nded balanced fund In$e%ti&n D'te: - .eptember 11, 0===

0D

2.

HDFC prud!nc! fund: In est!ent O"#e$ti e: - $he in estment objecti e of the .cheme is to pro ide periodic returns and capital appreciation o er a lon& period of time, from a judicious mi( of e4uity and debt in estments, with the aim to pre entL minimi'e any capital erosion In est!ent O%ti&ns: Di idend A 8rowth %ption N'tu(e &) S$*e!e: - %pen "nded balanced fund In$e%ti&n D'te: - 5ebruary =1, 1<<?

/,

HDFC 'hort t!rm p$ n: In est!ent O"#e$ti e: - $he primary objecti e of the /D5# .hort $erm -lan is to &enerate re&ular income throu&h in estment in debt securities and money market instruments. In est!ent O%ti&ns: 8rowth -lan, Di idend -lan. $he Di idend -lan offers Di idend -ayout and !ein estment 5acility. N'tu(e &) S$*e!e:- %pen "nded income fund In$e%ti&n D'te: - 5ebruary 0E, 0==0

4.

HDFC mu$ti yi!$d fund: In est!ent O"#e$ti e: - $he primary objecti e of the .cheme is to &enerate positi e returns o er medium time frame with low risk of capital loss o er medium time frame. In est!ent O%ti&ns: 8rowth -lan, Di idend -lan. $he Di idend -lan offers Di idend -ayout and !ein estment 5acility. N'tu(e &) S$*e!e: - %pen "nded income fund In$e%ti&n D'te: - .eptember 1>, 0==?

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D#'! SCH#M#S -F HDFC ASS#! MA(A.#M#(! C-M*A(&:1. HDFC (ncom! Fund: In est!ent O"#e$ti e: - $he primary objecti e of the .cheme is to optimi'e returns while maintainin& a balance of safety, yield and li4uidity. In est!ent O%ti&ns: Di idend A 8rowth %ption N'tu(e &) S$*e!e: - %pen "nded Income .cheme In$e%ti&n D'te: - .eptember 11, 0===

2. HDFC (ncom! Fund: In est!ent O"#e$ti e: - $he in estment objecti e of /D5# /i&h Interest 5und is to &enerate income by in estin& in a ran&e of debt and money market instruments of maturity dates with a arious iew to ma(imi'in& income while

maintainin& the optimum balance of yield, safety and li4uidity. In est!ent O%ti&ns: Di idend A 8rowth %ption N'tu(e &) S$*e!e: - %pen "nded Income .cheme In$e%ti&n D'te: - April 0E, 1<<>

3. HDFC )F )onth$y (ncom! *$ n - +hort T!rm *$ n: In est!ent O"#e$ti e: - $he primary objecti e of .cheme is to &enerate re&ular returns throu&h in estment primarily in Debt and Money Market Instruments. $he secondary objecti e of the .cheme is to &enerate lon&*term capital appreciation by in estin& a portion of the .cheme3s assets in e4uity and e4uity related instruments. /owe er, there can be 7o assurance that the in estment objecti e of the .cheme will be achie ed.

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 In est!ent O%ti&ns: Guarterly Di idend %ption, Monthly Di idend %ption, and 8rowth -lan. $he Di idend -lan offers Di idend -ayout and !ein estment 5acility N'tu(e &) S$*e!e: - An open*ended income scheme. Monthly income is not assured and is subject to a ailability of distributable surplus In$e%ti&n D'te:- December 0D, 0==:

4. HDFC )F )onth$y (ncom! *$ n - ,ong T!rm *$ n: In est!ent O"#e$ti e: - $he primary objecti e of .cheme is to &enerate re&ular returns throu&h in estment primarily in Debt and Money Market Instruments. $he secondary objecti e of the .cheme is to &enerate lon&*term capital appreciation by in estin& a portion of the .cheme3s assets in e4uity and e4uity related instruments. /owe er, there can be no assurance that the in estment objecti e of the .cheme will be achie ed In est!ent O%ti&ns: 8rowth -lan, Guarterly Di idend %ption, Monthly Di idend %ption. $he Di idend -lan offers Di idend -ayout and !ein estment 5acility. N'tu(e &) S$*e!e: - An open*ended income scheme. Monthly income is not assured and is subject to a ailability of distributable surplus In$e%ti&n D'te: - December 0D, 0==:

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#. HDFC F$o ting - t! (ncom! Fund ,ong T!rm *$ n: In est!ent O"#e$ti e: - $he primary objecti e of the .cheme is to &enerate re&ular income throu&h in estment in a portfolio comprisin& substantially of floatin& rate debt L money market instruments, fi(ed rate debt L money market instruments swapped for floatin& rate returns, and fi(ed rate debt securities and money market instruments. In est!ent O%ti&ns: Di idend -lan, 8rowth -lan. $he Di idend -lan offers !ein estment 5acility only N'tu(e &) S$*e!e: - An open*ended income scheme. In$e%ti&n D'te: - ;anuary 1D, 0==:

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FUTURE SCENARIO

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$he asset base will continue to &row at an annual rate of about :B to ?=J o er the ne(t fi e year as in estor3s shift their assets from banks and other traditional a enues. .ome of the older public and pri ate sector players will either close shop or be taken o er.

%ut of ten public players fi e will sell out, close down or mer&e with stron&er player in three to four years. In the pri ate sector this trend has already started with two mer&ers and one take o er. /ere too some of them will down their shutters in the near future to come. But this does not mean that there is no room for other players. $he market will witness a flurry of new players enterin& the areas. $here will be a lar&e no. of offers from arious asset mana&ement companies in the time to come, some bi& names like -rinciple, .BI, 5idelity, old mutual etc are lookin& at Indian market seriously. %ne important reason for it is that most major players ha e presence here and hence these bi& names would hardly like to &et left behind. $he mutual fund industry is awaitin& the introduction of deri ati es in India as this would enable it to hed&e its risk and this in turn would be reflected in its 7et Asset 6alue F7A6+. ."BI is workin& out the norms for enablin& the e(istin& mutual fund schemes to trade in deri ati es. Importantly, many market players ha e called on the !e&ular to initiate the process immediately, so that the mutual funds can implement the chan&es that are re4uired to trade in Deri ati es.

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INDUSTRY DETAILS

::

I"tro*uctio"

A Mutual 5und is a trust that pools the sa in&s of a number of in estors who share a common financial &oal. $he money thus collected is in ested by the fund mana&er in different types of securities dependin& upon the objecti e of the scheme. $hese could ran&e from shares to debentures to money market instruments. $he income earned throu&h these in estments and the capital appreciations reali'ed by the scheme are shared by its unit holders in proportion to the number of units owned by them. $hus a Mutual 5und is the most suitable in estment for the common man as it offers an opportunity to in est in a di ersified, professionally mana&ed portfolio at a relati ely low cost.

Anybody with an in estible surplus of as little as a few thousand rupees can in est in Mutual 5unds. "ach Mutual 5und scheme has a defined in estment objecti e and strate&y.

A Mutual 5und is the ideal in estment ehicle for today3s comple( and modern financial scenario. Markets for e4uity shares, bonds and other fi(ed income instruments, real estate, deri ati es and other assets ha e become mature and information dri en. -rice chan&es in these assets are dri en by &lobal e ents occurrin& in faraway places. A typical indi idual is unlikely to ha e the knowled&e, skills, inclination and time to keep track of e ents, understand their implications and act speedily. An indi idual also finds it difficult to keep track of ownership of his assets, in estments, brokera&e dues and bank transactions etc.

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A Mutual 5und is the answer to all these situations. It appoints professionally 4ualified and e(perienced staff that mana&es each of these functions on a full time basis. $he lar&e pool of money collected in the fund allows it to hire such staff at a ery low cost to each in estor.

In effect, the Mutual 5und ehicle e(ploits economies of scale in all three areas * research, in estments and transaction processin&. @hile the concept of indi iduals comin& to&ether to in est money collecti ely is not new, the mutual fund in present form is a 0=th century phenomenon. In fact, mutual funds &ained popularity only after the .econd @orld @ar. 8lobally, there are thousands of firms offerin& tens of thousands of mutual funds with different in estment objecti es. $oday, Mutual 5unds collecti ely mana&e almost as much as or more money as compared to banks.

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Hi&tory o% Mutua+ Fu"* I"*u&try

$he mutual fund industry in India started in 1<D: with the formation of 9nit $rust of India, at the initiati e of the 8o ernment of India and !eser e Bank of India. $he history of mutual funds in India can be broadly di ided into four distinct phases

Fir't ph '! . 1/&4-01 2)onopo$y of 3T(4

An Act of -arliament established 9nit $rust of India F9$I+ on 1<D:. It was set up by the !eser e Bank of India and functioned under the !e&ulatory and administrati e control of the !eser e Bank of India. In 1<>E 9$I was de*linked from the !BI and the Industrial De elopment Bank of India FIDBI+ took o er the re&ulatory and administrati e control in place of !BI. $he first scheme launched by 9$I was 9nit .cheme 1<D?. At the end of 1<EE 9$I had !s.D, >== crores of assets under mana&ement.

+!cond *h '! . 1/01-/3 2Entry of *u%$ic +!ctor Fund'4

1<E> marked the entry of non* 9$I, public sector mutual funds set up by public sector banks and ,ife Insurance #orporation of India F,I#+ and 8eneral Insurance #orporation of India F8I#+. .BI Mutual 5und was the first non* 9$I Mutual 5und established in ;une 1<E> followed by #anbank Mutual 5und FDec E>+, -unjab 7ational Bank Mutual 5und FAu& E<+, Indian Bank Mutual 5und F7o E<+, Bank of India F;un <=+, and Bank of Baroda Mutual 5und F%ct <0+. ,I# established its mutual fund in ;une 1<E< while 8I# had set up its mutual fund in December 1<<=. At the end of 1<<:, the mutual fund industry had assets under mana&ement of !s.?>, ==? crores.

Third *h '! . 1//3-2003

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2Entry of *ri5 t! +!ctor Fund'4

@ith the entry of pri ate sector funds in 1<<:, a new era started in the Indian mutual fund industry, &i in& the Indian in estors a wider choice of fund families. Also, 1<<: was the year in which the first Mutual 5und !e&ulations came into bein&, under which all mutual funds, e(cept 9$I were to be re&istered and &o erned. $he erstwhile Kothari -ioneer Fnow mer&ed with 5ranklin $empleton+ was the first pri ate sector mutual fund re&istered in ;uly 1<<:. $he 1<<: ."BI FMutual 5und+ !e&ulations were substituted by a more comprehensi e and re ised Mutual 5und !e&ulations in 1<<D. $he industry now functions under the ."BI FMutual 5und+ !e&ulations 1<<D. $he number of mutual fund houses went on increasin&, with many forei&n mutual funds settin& up funds in India and also the industry has witnessed se eral mer&ers and ac4uisitions. As at the end of ;anuary 0==:, there were :: mutual funds with total assets of !s. 1, 01,E=B crores. $he 9nit $rust of India with !s.??, B?1 crores of assets under mana&ement was way ahead of other mutual funds.

Forth *h '! . +inc! F!%ru ry 2003

In 5ebruary 0==:, followin& the repeal of the 9nit $rust of India Act 1<D: 9$I was bifurcated into two separate entities. %ne is the .pecified 9ndertakin& of the 9nit $rust of India with assets under mana&ement of !s.0<, E:B crores as at the end of ;anuary 0==:, representin& broadly, the assets of 9. D? scheme, assured return and certain other schemes. $he .pecified 9ndertakin& of 9nit $rust of India, functionin& under an administrator and under the rules framed by 8o ernment of India and does not come under the pur iew of the Mutual 5und !e&ulations.

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$he second is the 9$I Mutual 5und ,td, sponsored by .BI, -7B, B%B and ,I#. It is re&istered with ."BI and functions under the Mutual 5und !e&ulations. @ith the bifurcation of the erstwhile 9$I which had in March 0=== more than !s.>D, === crores of assets under mana&ement and with the settin& up of a 9$I Mutual 5und, conformin& to the ."BI Mutual 5und !e&ulations, and with recent mer&ers takin& place amon& different pri ate sector funds, the mutual fund industry has entered its current phase of consolidation and &rowth. As at the end of %ctober :1, 0==:, there were :1 funds, which mana&e assets of !s.10D>0D crores under :ED schemes.

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T*e g('%* indi$'tes t*e g(&+t* &) 'ssets & e( t*e ,e'(s-

(Fig no /, .ro0t1 of Asset -ver !1e year)

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Cust&!e(s P(&)i.e &) !utu'. )und indust(,:-

(Fig no 2,!ype of Customer) 1. @hile you recommend a financial plan, you also need to understand the needs and financial objecti es of your customer alon& with his risk tolerance and his e(pectations from the in estments. 0. /onest and strai&htforward ad ice is appreciated. /elp your customers make the ri&ht choice :. Ad ise your customers to start in estin& early and re&ularly to help them optimi'e the benefits of the compoundin& rupee. ?. /elp your in estors with the procedures and paper work in ol ed in makin& an in estment. $reat e ery customer e(clusi ely. A satisfied customer can &i e you increased business throu&h resale and referrals of other prospecti e customers

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*ositioning Strategy of mutual fund industry:-

-ositionin& starts with a product. But positionin& is not what you do to a product. -ositionin& is what you do to the mind of the prospect. $hat is, you position the product in the mind of prospect. A company3s differentiatin& and positionin& strate&y must chan&e as the product, market, and competitors chan&e o er time. . T*e(e s*&u.d "e n& unde( %&siti&ning/ & e( %&siti&ning/ $&n)used %&siti&ning &( d&u"t)u. %&siti&ning-

C1annel of Distri3ution:In " ery asset Mana&ement #ompany3s distribution channel played important roles. /ere assets mana&ement companies ha e distributors like #onsultants A&ents Distributors Ad isers Broker ery

$heir role is ery important for Assets Mana&ement #ompany3s %ffice.

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*romotional !ools #mployed 3y various mutual fund companies:.ome specific other document help to increase sellin& product like) * (") 'anners: Banners define brief idea of scheme, it should be ery attracti e with specific objecti e A its related picture in city, and Banners keep in specific places which ery help to do &ood publicity. It distributes only by AM#3s office. @hen any new scheme is launched or any new 75% comin& up that times company make banners before few days. Its helps to &ood ad ertisin& A easy co er to customer or people. ()) Application Form: Any product like "4uity, debt and balance, in estor should fill up its common Application forms. 5orm define acknowled&e slip which &i e return to customer. Actually :*time stamp done in form, one of them is acknowled&ed slip. $hese forms are distributed by Assets Mana&ement #ompany3s office. It is all Assets Mana&ement #ompany3s office duty to dispatch forms to their customer like a&ents, brokers, and ad isers time to time. (/) 'roac1ers: Broachers include brief history of company. It defines when and where assets mana&ement #ompany in ests in estor3s money. $his defines performance of each scheme product A also defines its comparison to last : months to more than B years. In end of e ery month Assets Mana&ement #ompany3s office send Boucher to their in estors, brokers, a&ents, ad isers re&ularly.

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(#! ASS#! 4AL%#:$he 7et Asset 6alue or 7A6 is a term used to describe the alue of an entityKs assets less the alue of its liabilities. $he term is commonly used in relation to collecti e in estment schemes. It may also be used as a synonym for the book alue of a firm.

7A6 co ers the companyKs current asset and liability position. In estors mi&ht e(pect the company to ha e lar&e &rowth prospects, in which case they would be prepared to pay more for the company than the 7A6 su&&ests.

$he 7A6 is usually below the market price because the current alues of the fund3s assets are hi&her than the historical financial statements used in the 7A6 calculation.

CALC%LA! (. (#! ASS#! 4AL%# 9nit capital is the in estor3s subscriptions. In M5 it is not treated as a liability. In estments made on behalf of the in estors are assets side of the balance sheet. $here are liabilities of short*term nature.

597D. 7"$ A.."$ T A.."$ P ,IABI,I$I". 7A6 T 7et Assets Issued 9nits I.e. 7A6T Fmarket alue of in estments U other accrued income U other assets P accrued e(penses P other payables Pother liabilities+L Fno. %f units outstandin& as at the 7A6 date+

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!H# FAC!-5 AFF#C! (. !H# (A4 A5# AS F-LL-6 (. : 1. #apital &ains or losses on the sale or purchase of in estment .ecurities. 0. Di idend and income earned on the assets :. #apital appreciation in the underlyin& alue of the stocks holds in the portfolio ?. %ther assets and liabilities B. 7umber of units sold or purchased

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Fact& About Mutua+ Fu"*

"4uity Instruments like shares form only a part of the securities held by Mutual 5unds. Mutual 5unds also in est in debt securities, which are relati ely much safer. $he bi&&est ad anta&e of Mutual 5unds is their ability to di ersify the risk. Mutual 5unds are there in India since 1<D?. Mutual 5unds market is much e ol ed in 9...A and is there for last D= years. Mutual 5unds are the best solution for people who want to mana&e risk and &et &ood returns. $he si'e of Mutual 5unds market in India is !s. 1=>>0E crores and that in 9...A is many times hi&her. Accordin& to the ."BI * 7#A"! .ur ey of Indian In estors about 1B million or E.>J of the households ha e in ested in Mutual 5unds and there are nearly 0: million unit holders in India. :=J of in estors fall in the income &roup of in estors ha in& monthly income up to !s. 1=,===L*. In 9...A there are more deposits in the mutual funds than in bank deposits. $he truth is, as in estors we should always pay attention to our mutual funds and continue to monitor them.

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MUTUAL FUND

?D

I"tro*uctio" to Mutua+ Fu"*

A Mutual 5und is a trust that pools the sa in&s of a number of in estors who share a common financial &oal. $he money thus collected is in ested by the fund mana&er in different types of securities dependin& upon the objecti e of the scheme. $hese could ran&e from shares to debentures to money market instruments. $he income earned in these in estments and the capital appreciation reali'ed by the scheme is shared by its unit holders in proportion to the number of units owned by them. $hus a Mutual 5und is the most suitable in estment for the common man as it offers an opportunity to in est in a di ersified, professionally mana&ed portfolio at a relati ely low cost. Anybody with an in est able surplus of a few thousand rupees can in est in Mutual 5unds. "ach Mutual 5und scheme has a defined in estment objecti e and strate&y. A mutual fund is the ideal in estment ehicle for today3s comple( and modern

financial scenario. Markets for e4uity shares, bonds and other fi(ed income instruments, real estate, deri ati es and other assets ha e become mature and information dri en. -rice chan&es in these assets are dri en by &lobal e ents occurrin& in faraway places. A typical indi idual is unlikely to ha e the knowled&e, skills, inclination and time to keep track of e ents, understand their implications and act speedily. A mutual fund is answer to all these situations. It appoints professionally 4ualified and e(perienced staff that mana&es each of these functions on a fulltime basis. $he lar&e pool of money collected in the fund allows it to hire such staff at a ery low cost to each in estor. In fact, the mutual fund ehicle e(ploits economies of scale in all three areas Presearch, in estment and transaction processin&.

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A draft offer document is to be prepared at the time of launchin& the fund. $ypically, it pre specifies the in estment objecti e of the fund, the risk associated, the cost in ol ed in the process and the broad rules for entry into and e(it from the fund and other areas of operation. In India, as in most countries, these sponsors need appro al from a re&ulator, ."BI in our case. ."BI looks at track records of the sponsor and its financial stren&th in &rantin& appro al to the fund for commencin& operations.

A sponsor then hires an asset mana&ement company to in est the funds accordin& to the in estment objecti e. It also hires another entity to be the custodian of the assets of the fund and perhaps a third one to handle re&istry work for the unit holders of the fund. In the Indian conte(t, the sponsors promote the Asset Mana&ement #ompany also, in which it holds a majority stake. In many cases a sponsor can hold a 1==J stake in the Asset Mana&ement #ompany FAM#+.

".&. Birla 8lobal 5inance is the sponsor of the Birla .un ,ife Asset Mana&ement #ompany ,td., which has floated different mutual funds schemes and also acts as an asset mana&er for the funds collected under the schemes.

As per ."BI re&ulations, mutual funds can offer &uaranteed returns for a ma(imum period of one year. In case returns are &uaranteed, the name of the &uarantor and how the &uarantee would be honored is re4uired to be disclosed in the offer document.

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Mutua+ Fu"* Cyc+e

(Fig no 7,-Mutual Fund Cycle)

5rom the abo e cycle, it can be obser ed that how the money from the in estors flow and they &et returns out of it. @ith a small amount of fund, in estors pool their money with the funds mana&ers. $akin& into consideration the market strate&y the funds mana&ers in est this pool of money into reliable securities. @ith ups and downs in market returns are &enerated and they are passed on to the in estors. $he abo e cycle should be ery clear and also effecti e. $he fund mana&er while in estin& on behalf of in estors takes into consideration arious factors like time, risk, return, etc. so that he can make proper in estment decision.

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Critica+ vie, about Mutua+ Fu"*

Benefits
If mutual funds are emer&in& as fa orite in estment ehicle, it is because of the many ad anta&es they ha e o er other forms and a enues of in estin&, particularly for the in estors who has limited resources a ailable in terms of capital and ability to carry out details research and market monitorin&. $he followin& are the major ad anta&es offered by mutual funds to all in estors. *5-F#SS -(AL #8*#5! S# 5und mana&ers are professionals who track the market on an on &oin& basis. @ith their mi( of professional 4ualification and market knowled&e, they are better placed than the a era&e in estor to understand the markets. D 4#5S F CA! -( .ince a mutual fund scheme in ests in number of stocks andLor debentures, the associated risks are &reatly reduced. 5#LA! 4#L& L#SS #8*#(S 4# @hen compared to direct in estments in the capital market, mutual funds cost less. $his is due to sa in&s in brokera&e costs, demat costs, depository costs etc. L $% D !& In estments in mutual funds are completely li4uid and can be redeemed at 7et Assets 6alue F7A6+ related price on any workin& day. !5A(S*A5#(C& Hou will always ha e access to up*to*date information on the alue of your in estment in addition to the complete portfolio of in estments, the proportion allocated to different assets and the fund mana&er3s in estment strate&y.

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 FL#8 ' L !& $hrou&h features such as re&ular in estment plans, re&ular withdrawal plans and di idend in estment plans, you can systematically in est or withdraw funds accordin& to your needs and con enience. S#' 5#.%LA!#D All mutual funds are re&istered with ."BI and function within the pro isions and re&ulations that protect the interests of in estors.

61ile most investment options provide most of t1ese features9 only Mutual Funds provide all of t1ese options,

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,imitations
(- C-(!5-L -4#5 C-S! Any in estor in a mutual fund has no control o er the o erall cost of in estin&. /e pays in estment mana&ement fees as lon& as he remains with fund, albeit in return for the professional mana&ement and research. 5ees are payable e en in declinin& sta&e. A mutual fund in estor also pays fund distribution costs, which he would not incur in direct in estin&. /owe er, this shortcomin& only means that there is a cost to obtain the benefits of mutual fund ser ices.

(- !A L-5-MAD# *-5!F-L -S In estors who in est on there own can build their own portfolios of shares and bonds and other securities. In estin& throu&h funds means he dele&ates this decision to the fund mana&ers. $he ery hi&h*net*worth indi iduals or lar&e corporate in estors may find this to be a constraint in achie in& their objecti es. /owe er, most mutual fund mana&ers help in estors o ercome this constraint by offerin& families of funds* a lar&e number of different schemes P within their own mana&ement company. An in estor can choose form different in estment plans and construct a portfolio of his own.

MA(A. (. A *-5!F-L - -F F%(DS A ailability of a lar&e number of funds can actually mean too much choice for the in estor. /e may a&ain need ad ice on how to select a fund to achie e his objecti es, 4uite similar to the situation when he has to select indi idual shares or bonds to in est in.

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 #(!5& A(D #8 ! C-S! Mutual funds are a ictim of their own success. @hen a lar&e body like a fund in ests in shares, the concentrated buyin& and sellin& often results in ad erse price mo ement i.e. at the time of buyin&, the fund ends up payin& a hi&h price and by sellin& it reali'es a lower price. 5or ob ious reasons, this problem is e en more se ere for funds in estin& in small capitali'ation stocks. /owe er, &i en the lar&e si'e of debt market, e(cludin& 9$I, most debt funds do not face this problem.

CHA(.# -F (D#8 C-M*-S ! -( $he indices chan&in& o er the world to reflect chan&in& market conditions. $here is an inherent sur i orship bias in this process, with the bad stocks bided out and replaced by emer&in& blue chips. $his is a se ere problem in India with the sense( ha in& bein& chan&in& twice in last B years, with each chan&e bein& 4uite substantial. Another reason for chan&e inde( composition is Mer&ers and Ac4uisitions. $he wei&ht a&e of the shares of a particular company in the inde( chan&es if it ac4uires a lar&e company not a part of the inde(.

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- y I"ve&tor Nee*& Mutua+ Fu"*

Mutual funds offer benefits, which are too si&nificant to miss out. Any in estment has to be jud&ed on the yardstick of return, li4uidity and safety. #on enience and ta( efficiency are the other benchmarks rele ant in mutual fund in estment. In the wonderful &ame of financial safety and returns are the tows opposite &oals and in estors cannot be nearer to both at the same time. $he cru( of mutual fund in estin& is a era&in& the risk. Many in estors possibly don3t know that considerin& returns alone, many mutual funds ha e outperformed a host of other in estment products. Mutual funds ha e historically deli ered yields a era&in& between <J to 0BJ o er a medium to lon& time frame. $he duration is important because like wise, mutual funds return taste bitter with the passa&e of time. In estors should be prepared to lock in their in estments preferably for : years in an income fund and B years in an e4uity funds. ,i4uid funds of course, &enerate returns e en in a short term.

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Mutua+ Fu"* Ri&.

Mutual funds face risks based on the in estments they hold. 5or e(ample, a bond fund faces interest rate risk and income risk. Bond alues are in ersely related to interest rates. If interest rates &o up, bond alues will &o down and ice ersa. Bond income is also affected by the chan&es in interest rates. Bond yields are directly related to interest rates fallin& as interest rates fall and risin& as interest rates. .imilarly, a sector stock fund is at risk that its price will decline due to de elopments in its industry. A stock fund that in ests across many industries is more sheltered from this risk defined as industry risk. 5ollowin&s are &lossary of some risks to consider when in estin& in mutual funds. Country 5is:

$he possibility that political e ents Fa war, national election+, financial problems Frisin& inflation, &o ernment default+, or natural disasters will weaken a country3s economy and cause in estments in that country to decline. ncome 5is:

$he possibility that a fi(ed*income fund3s di idends will decline as a result of fallin& o erall interest rates. Mar:et 5is:

$he possibility that stock fund or bond fund prices o erall will decline o er short or e en e(tended periods. .tock and bond markets tend to mo e in cycles, with periods when prices rise and other periods when prices fall.

BB

Ri&. Retur" Re,ar* i" Mutua+ Fu"*

"4uity 5und Balance 5und MIIncome 5und

.hort $erm 5und ,i4uid 5und

(Fig no ;: - 5is: 5eturn in Mutual Fund)

$his &raph shows risk and return impact on arious mutual funds. $here is a direct relationship between risks and return, i.e. schemes with hi&her risk also ha e potential to pro ide hi&her returns.

BD

TYPES OF MUTUAL FUNDS

B>

Ty!e& o% Mutua+ Fu"*

$here are a wide ariety of Mutual 5und schemes that cater to your needs, whate er your a&e, financial position, risk tolerance and return e(pectation. @hether as the foundation of your in estment pro&ram or as a supplement, Mutual 5und schemes can help you meet your financial &oals. $he different types of Mutual 5unds are as follows) Diversified #<uity Mutual Fund Sc1em!

A mutual fund scheme that achie es the benefits of di ersification by in estin& in the stocks of companies across a lar&e number of sectors. As a result, it minimi'es the risk of e(posure to a sin&le company or sector. Sectoral #<uity Mutual Fund Sc1eme

A mutual fund scheme, which focuses on in estments in the e4uity of companies across a limited number of sectors P usually one to three. nde= Funds

$hese funds in est in the stocks of companies, which comprise major indices such as the B." .ense( or the .A- #7O 7ifty in the same wei&ht a&e as the respecti e indices. !a= Saving #<uity Sc1emes

.chemes in estin& predominantly in e4uity which offer ta( rebates to in estors under specific pro isions of the Income $a( Act, 1<D1 as the 8o ernment offers ta( incenti es for in estment in specified a enues. ".&. "4uity ,inked .a in&s .chemes F",..+. #urrently rebate uLs EE can be a ailed unto a ma(imum in estment of !s 1=,===. A ,ock*in of : years is mandatory.

BE

Mont1ly ncome *lan Sc1eme

A mutual fund scheme which aims at pro idin& re&ular income Fnot necessarily monthly, donKt &et misled by the name+ to the unit holder, usually by way of di idend, with in estments predominantly in debt securities Fup to <BJ+ of corporate and the &o ernment, to ensure re&ularity of returns, and ha in& a smaller component of e4uity in estments FBJ to 1BJ+ to ensure hi&her return. ncome sc1emes

Debt oriented schemes in estin& in fi(ed income securities such as bonds, corporate debentures, 8o ernment securities and money market instruments. Floating-5ate De3t Fund

A fund comprisin& of bonds for which the interest rate is adjusted periodically accordin& to a predator*mined formula, usually linked to an inde(. .ilt Funds

$hese funds in est e(clusi ely in &o ernment securities. 'alanced Funds

$he aim of balanced funds is to pro ide both &rowth and re&ular income as such schemes in est both in e4uities and fi(ed income securities in the proportion indicated in their offer documents. $hey &enerally in est ?=*D=J in e4uity and debt instruments.

B<

Structure o% Mutua+ Fu"*

Savings !rust %nits %nit1olders

5egistrar !rust Custodian AMC

AMC nvestments 5eturns

S#'

(Fig n& 0 - St(u$tu(e &) Mutu'. Fund)

5und .ponsor
Any person or corporate body that establishes the 5und with a net worth of !s. 1= crores and has paid out consistent returns to its in estors for last three years consistently and re&isters it with ."BI can be a fund sponsor. $he fund sponsor forms a trust and appoints board of trustees. /e appoints #ustodian and Asset Mana&ement #ompany FAM#+ either directly or throu&h trust in accordance with ."BI re&ulations. ."BI re&ulations also define that a sponsor must contribute at least ?= J to the net worth of the asset mana&ement company.

D=

$rustees
$rust is created throu&h the document called $rust deed that is e(ecuted by the fund sponsor and re&istered with ."BI. Board of trustees* a body of indi iduals or a trust company*a corporate body may mana&e the trust cum Mutual 5und. $hese are protector of unit holders interests.0L: of the trustees will be indi iduals and will not be associated with the sponsors. Follo0ing are t1e rig1ts of trustees: Appro e each of the schemes floated by the assets Mana&ement #ompany. !i&ht to re4uest any necessary information from assets Mana&ement #ompany. !i&ht to take correcti e action if they belie e that of fund3s business. !i&ht to dismiss the assets Mana&ement #ompany. "nsure that any shortfall in net worth of the assets Mana&ement #ompany is made up. Follo0ing are t1e o3ligations of trustees: "nter in to an in estment mana&ement a&reement with the assets Mana&ement #ompany. "nsure that the fund3s transactions are in accordance with the trust deed. 5urnish to ."BI on a half yearly basis, a report on the fund3s acti ities.

D1

 "nsure that no chan&e in the fundamental attributes of any scheme or the trust or any other chan&e, which would affect the interest of unit holder, happens with informin& to unit holder. !e iew the in estor complaints recei ed and redressed of the same by assets Mana&ement #ompany.

Asset Mana&ement #ompany

$his acts as in estment mana&er of the trust under the board super ision and direction of trustees. In has to be appro ed and re&istered with ."BI. $his will float and mana&e different in estment schemes in the name of trust and in accordance with ."BI re&ulations. $hese acts in the interest of holders and reports to the trustees. At least B=J of the directors on the board are independent of the sponsor or the trustees. Follo0ing are t1e o3ligations of Assets Management Company: 5loat in estment schemes only after &ettin& appro al from the trustees and ."BI. .end 4uarterly reports to trustees. Make the re4uired disclosures to the in estors in the area such as calculation of 7A6 and repurchase price. Must maintain a net worth of at least !s.1= crores at all the times @ill not purchase or sale securities throu&h any broker with the brokera&e of B J or more of the a&&re&ate purchases and sale of securities made by the Mutual 5und in all its schemes. Assets Mana&ement #ompany cannot act as trustees of any other Mutual 5und. D0

 Do not undertake any other acti ity conflictin& with mana&in& the fund.

Follo0ing are t1e 3odies appointed 3y t1e trustees>AMC, #ustodian is the responsible person for physical handlin& and safe keepin& of the securities. /e should be independent of the sponsor and re&istered with ."BI. Indian capital market is mo in& away from physical certificates for securities to demateriali'ed form with a depository. /e holds demateriali'ed security holdin&s of Mutual 5und.

#ustodian
%ften an independent or&ani'ation, it takes custody of securities and other assets of mutual fund. Its responsibilities include receipt and deli ery of securities, collectin& income*distributin& di idends, safekeepin& of the units and se&re&atin& assets and settlements between schemes. $heir char&es ran&e between =.1B*=.0 percent of the net alue of the holdin&. #ustodians can ser ice more than one fund.

Depository
Indian capital markets are mo in& away from ha in& physical certificates for securities, to ownership of these securities in Vdemateriali'ed3 form with a Depository. $hus, a mutual fund3s demateriali'ed securities holdin&s will be held by a Depository throu&h a Depository -articipant. A fund3s physical securities will continue to be held by a #ustodian. $hus, deli eries of a fund3s securities are &i en or recei ed by a custodian or a depository participant, at the instruction of the AM#, althou&h under the o erall direction and responsibility of the $rustees.

D:

!1e ot1er various assets management companies? details are as under: A) 1'n2 s%&ns&(ed a. B%B Asset Mana&ement #o. ,td. b. #anbank In estment Mana&ement .er ices ,td. c. -7B Asset Mana&ement #o. ,td. d. .BI 5unds Mana&ement ,td. e. 9$I Asset Mana&ement #ompany F-+ ,td. 1) Instituti&ns a. 8I# Asset Mana&ement #o. ,td. b. IDBI -rincipal Asset Mana&ement #o. ,td. c. I, A 5. Asset Mana&ement #o. ,td. d. ;ee an Bima .ahayo& Asset Mana&ement #o. ,td. C) P(i 'te Se$t&( 3- F&(eign a. -rincipal Asset Mana&ement #o. ,td. b. 5idelity Asset Mana&ement #o. ,td. 4- Indi'n a. Benchmark Asset Mana&ement #o. ,td. b. #holamandalam Asset Mana&ement #o. ,td. c. "scorts Asset Mana&ement ,td. d. ;.M. #apital Mana&ement ,td. e. Kotak Mahindra Asset Mana&ement #o. ,td. f. .undaram Asset Mana&ement #ompany &. !eliance #apital Asset Mana&ement ,td.

D?

5- 6&int 7entu(es - P(ed&!in'nt., Indi'n a. Birla .un ,ife Asset Mana&ement - t. #o. ,td. b. #redit #apital Asset Mana&ement #o. ,td. c. D.- Merrill ,ynch 5und Mana&ers ,imited d. 5irst India Asset Mana&ement -ri ate ,td. 8- 6&int 7entu(es 9 P(ed&!in'nt., F&(eign a. Alliance #apital Asset Mana&ement FIndia+ - t. ,td. b. Deutsche Asset Mana&ement FIndia+ - t. ,td. c. Dundee In estment Mana&ement A !esearch F- t.+ ,td. d. /.B# Asset Mana&ement FIndia+ -ri ate ,td. e. I78 In estment Mana&ement FIndia+ - t. ,td. f. Mor&an .tanley In estment Mana&ement - t. ,td. &. -rudential I#I#I Mana&ement #o. ,td. h. .un 5 A # Asset Mana&ement FI+ - t. ,td I. $empleton Asset Mana&ement FIndia+ - t. ,td.

DB

R$4,50&*6. A)7$%&)

DD

AM5I FAssociation of Mutual fund in India+

AM5I not a .elf !e&ulatory %r&ani'ation F.!%+. It3s made to promote mutual fund in the masses and &i e recommendation in order to uphold the interest of the in estor.

O"#e$ti es &) AMFI: $o define and maintain hi&h professional and ethical standards in all areas of operation of mutual fund industry $o recommend and promote best business practices and code of conduct to be followed by members and others en&a&ed in the acti ities of mutual fund and asset mana&ement includin& a&encies connected or in ol ed in the field of capital markets and financial ser ices. $o interact with the .ecurities and "(chan&e Board of India F."BI+ and to represent to ."BI on all matters concernin& the mutual fund industry. $o represent to the 8o ernment, !eser e Bank of India and other bodies on all matters relatin& to the Mutual 5und Industry. $o de elop a cadre of well*trained A&ent distributors and to implement a -ro&ramme of trainin& and certification for all intermediaries and other en&a&ed in the industry. $o undertake nation wide in estor awareness -ro&ramme so as to promote proper understandin& of the concept and workin& of mutual funds.

D>

."BI F.ecurity "(chan&e Board of India+

.ecurities and "(chan&e Board of India FQ."BIQ+, the #apital Markets re&ulator has clearly defined rules, which &o ern mutual funds. $hese rules relate to the formation, administration and mana&ement of mutual funds and also prescribe disclosure and accountin& re4uirements. .uch a hi&h le el of re&ulation seeks to protect the interest of in estors. All Mutual 5unds are re&istered with ."BI and they function within the pro ision of strict re&ulations desi&ned to protect the interests of in estors. $he operations of Mutual 5unds are re&ularly monitored by ."BI.

!BI F!eser e Bank of India+

!eser e bank of India was the re&ulator of Mutual 5und before ."BI. It re&ulated mutual fund initially and there were only few schemes in the market. But now with comin& of ."BI, it has now become the main re&ulator of the Mutual 5und. !BI now only &o erns Bank .ponsored Mutual 5und.

Ministry of 5inance
$he Ministry of 5inance, which is char&ed with implementin& the &o ernment policies, ultimately super ises both the !BI and the ."BI. Besides bein& the ultimate policy makin& and super isin& entity, the M%5 has also been playin& the role of an Appellate Authority for any major disputes o er ."BI &uidelines on certain specific capital market related &uidelines P in particular any cases of insider tradin& or mer&ers and ac4uisitions.

DE

#ompany ,aw Board

Mutual fund Asset Mana&ement #ompanies and corporate trustees are companies re&istered under the #ompanies Act, 1<BD, and are therefore answerable to re&ulatory authorities empowered by the #ompanies Act. $he primary le&al interface for all companies is the !e&ister of #ompanies F!o#+. $he Department of #ompany Affairs in turn super ises ro#s. $he D#A forms part of #ompany ,aw Board, which is part of the Ministry of ,aw and ;ustice of the 8o t. of India. $he !o# ensures that the assets mana&ement company or the $rustee #ompany as the case may be is in compliance with all #ompanies Act pro isions. All assets mana&ement company accounts and records are filed with the !oc, who may demand additional information and documents from the company. $he !o# plays the role of a watchdo& with respect to re&ulatory compliance by companies. $he #ompany ,aw Board F#,B+ is the ape( re&ulatory authority under the #ompanies Act. @hile the #,B &uides the D#A, another arm of the #,B called the #ompany ,aw Bench is the Appellate Authority for corporate offences. $he #ompany ,aw Board F#,B+ is a body specially constituted by the #entral 8o ernment for carryin& out judicial proceedin&s with respect to company affairs. .ince mutual fund assets Mana&ement #ompany are companies, the #,B3s role assumes importance. As the members of assets mana&ement companies or $rustee companies will usually be the sponsors and their joint enture partners or associates, it is unlikely that mutual fund in estors will ha e anythin& to do with any of these re&ulators. $he authorities would &enerally re&ulate the assets mana&ement companies whose shareholders may ha e recourse to them in specific cases.

D<

In estors !i&hts
-roportionate ri&ht to beneficial ownership of scheme3s assets !i&ht to obtain information from trustees "ntitled to recei e di idend warrants within := days of declaration of di idend Inspect major documents of the fund Appointment of the assets mana&ement company can be terminated by >BJ of the unit holders of the scheme present and otin& !i&ht to appro e of chan&es in fundamental attributes of a close ended scheme F>B J of unit holders should appro e+ * ri&ht to be informed so in open ended schemes so that they can redeem !i&ht to recei e a copy of annual financial statements of fund and periodic transaction statements >BJ of the unit holders can resol e to wind up the scheme

,e&al ,imitations to In estors

9nit holders can not sue the trust #an initiate le&al proceedin&s a&ainst trustees .ponsor of mutual funds ha e no obli&ation to meet any shortfall in the assured return * unless e(plicitly &uaranteed in the offer document 7o ri&hts to a prospecti e in estor

In estor %bli&ations
#arefully study the offer document before in estin& Monitor his in estment in a scheme by referrin& financial statements, performance updates and research reports sent by the assets mana&ement company.

>=

RESEARCH

>1

P,67*)$ *+ &8$ R$)$06%8

@ith liberali'ation, pri ati'ation and &lobali'ation there has been a major chan&e in the Indian Mutual 5unds Industry. $he momentum is on and one is sure to see similar hectic acti ity at the offices of the new entrants especially after the <=3s as pri ate sector &ained entry in the Indian markets. @ith the pri ate sector penetration, a lar&e number of schemes ha e also been introduced due to which the a era&e consumer has become ary sensiti e to the new schemes comin& its way. .o to ensure about the arious consumer attitudes, a sur ey was undertaken. De facto, to ensure what the 1consumer thinks2 A 1what it thinks the best2 we undertook a consumer sur ey, to &et a clear picture of the future of the Mutual 5unds companies who are busy wooin& the customers, with their lucrati e schemes, to sur i e the rat race A emer&e as no.1 in this field.

>0

Re&earc Ob/ective
!esearch %bjecti es addresses the purpose of the in esti&ation. It is here that you layout e(actly what is bein& planned by the proposed research. $he !esearch %bjecti es flows naturally from the problem statement, &i in& the sponsor specific, concrete, and achie able &oals. It is best to list the objecti es either in order of importance or in &eneral terms first, mo in& to specific terms. !esearch %bjecti e is the basis for jud&in& the !esearch process. It is the final step &i in& e(act definition of problem.

Analy@ing mutual fund a0areness in retail investors of HDFC assets Management Company in Surat,

>:

RESEARCH METHODOLODY

>?

!esearch methodolo&y is a systematic plan or schedule or pro&ram of the research done. It describes all the procedures of the research.

Re&earc De&i0"
!esearch desi&n can be described as an out line of a research project workin& or a pattern. In a research desi&n there are series of prior decision that to&ether pro ide a master plan for completin& a research project. !esearch desi&n is pro ed to be a brid&e between what has been established and what is to be done in conduct of the studies. !esearch desi&n should be compressi e and it should pro ide which method to be used and what work to be done. !esearch desi&n describes as a master plan a series of key decisions that ser es a model for conductin& a research project. $here are the main components of research desi&n. %bjecti e of research Data inputs

Analysis of data collected T*e (ese'($* design +'s exploratory type and the focus was on &ettin& mutual fund3s employees iews for arious products, e(pectations from market.

#=ploratory 5esearc1: "(ploratory study &oes beyond description and attempts to e(plain the reasons for the phenomenon that the descripti e study only obser ed. $he researcher uses theories or at least hypotheses to account for the forces that caused a certain phenomenon to occur.

>B

Source& o% Data
$he &atherin& of data may ran&e from a simple obser ation at one location to a &randiose sur ey of multinational corporations at sites in different parts of the world. $he method selected will lar&ely determine how the data are collected. DA$A is the facts presented to the researcher from the study3s en ironment. #haracteristics of the data are as follows) Data are more metaphorical than real Data are processed by our senses*often limited in comparison to $he senses of other li in& or&anisms. #apturin& data are said to be trustworthy because they may be 6erified. Data classify their erity by closeness to the phenomena $here are two kinds of data that can be collected for research purpose. Based on the re4uirement in the research appropriate data is collected. Both the kinds of data are shown below in the fi&ure) "rror) !eference source not found

1+ -rimary data source

-rimary data are collected and &athered for the first time. -rimary data are sou&ht for their pro(imity to the truth and controls o er error. Ad anta&es of primary data are)

>D

!esearchers can collect precisely the information they want. $hey usually can specify the operational definitions used and can eliminate, or at least monitor and record the e(traneous influences on the data as they are &athered.

0+ .econdary data source

.omeone else collects secondary data. .o, it becomes secondary information for the research. .econdary data ha e had least one le el of interpretation inserted between the e ent and its recordin&. !easons for usin& the secondary data are listed below) $hey fill a need for specific reference or citation on some point .econdary data are an inte&ral part of a lar&er research study .econdary data may be used as the sole basis for a research study, since In many research situations one cannot conduct primary research Because of physical, le&al, or cost influences. Analy'in& the re4uirement of data, it was found that primary data is more important for achie in& !esearch %bjecti e. interviews. Primary data is collected with the help of

>>

Sam!+i"0 '+a"
#ollectin& the re4uired information from the ri&ht source is ery important. .ources from which the data are collected differ as per the re4uired of researcher. Basically there are two types of data collection sources)

1+ .amplin& 9nit)
$he samplin& unit primarily consisted of in estors like businessman, professionals, salaried employees and others. $he sample unit is taken from the .urat city of 8ujarat re&ion.

0+ .ample .i'e)
$hou&h lar&e sample &i e more reliable results than small samples but increases the cost, time and non*samplin& error. Keepin& in iew these constraints 1== respondents were chosen. Attempts ha e been made to see that samples are chosen from different areas of .urat. I ha e taken 1== responds as a sample si'e for this particular project.

>E

$he followin& table shows area wise distribution of sample si'e. AREA 9D/7A M%!AB/A8A, ADA;A7 !A7D"! !%AD !A,@AH .$A$I%7 !%AD -A!," -%I7$ 8/%DD%D !%AD -I-,%D MA;9!A8A$" !I78 !%AD B/A8A, KA$A!8AM 6A!A#/A #I$H ,I8/$ !%AD 7A7-9!A -A7D".A!A 6"D !%AD -A, B/".$A7 TOTA: SAMP:E 1> : 1B 1> B B E 0 0 ? ? ? 0 D 0 1 1 1 1 3;;

><

Data Co++ectio" Met o*

1T i& &te! i"vo+ve& ma.i"0 a very &!eci%ic !+a" about o, you ,i++ co"*uct your re&earc a"* co++ect your *ata.2

1+ .ur eys A Guestionnaires

Survey Th! m! n' %y which qu ntit ti5! r!'! rch i' conduct!d. $uestionnaire 6 pr!p r!d '!t of qu!'tion' d!'ign!d to g!n!r t! d t n!c!'' ry for ccomp$i'hing th! o%7!cti5!' of th! r!'! rch pro7!ct.

used survey met1od for data collection . (nform tion w ' co$$!ct!d %y personal intervie0s through <uestionnaire,

Fo$$owing typ!' of m! 'ur!m!nt 'c $!' w!r! u'!d in th! qu!'tionn ir!. +imp$! c t!gory 'c $!: - 28-29 8-49 8-09 8-/4 )u$tip$! choic! 'ing$! r!'pon'! 'c $!': - 28-&4 )u$tip$! choic! mu$tip$! r!'pon'! 'c $!:-28-19 8-39 8-#9 8-14

E=

DATA ANALYSIS AND FINDINGS

E1

G*1 which in estment a enues are you aware ofW

I76".$M"7$ A6A79". "G9I$HLM9$9A, 597D -%.$ %55I#" 5.D. %$/"!.

5!"G9"7#H 1== <? ED 11

-"!#"7$A8" :?.:DJ :0.:=J 0<.BBJ :.><J

11 0& 100 E83(T:;).F. *<+T <FF(CE F.D. <THE-+ /4

(Fig no A: - Define investments avenues) nterpretation: 5rom the abo e charts we can interpret that awareness of e4uityLmutual fund, post office F7.#, K6-, and --5+, fi(ed deposits is more compare to others like 8%6$ I..9"D Instrument, 8%6$ Backed Instrument, !eal "state, &old etc. so /D5# assets Mana&ement #ompany needs to focus more on those in estors who are more in est in K6-, 7.#, --5 and fi(ed deposits.

E0

G*0 do you in ests in mutual fundW

H". <> 7% :

120 100 (- -F *#-*L# 00 &0 40 20 0 :E+ *5#F#5(C# =< +!ri!'1 /1

(Fig no "B: - Define investments in mutual fund)

5rom the abo e chart it is &ettin& clear that now a days people are like to in est their money in mutual fund of different assets mana&ement company, out of 1== people sampled <> are in estin& in the mutual fund.

E:

G*: If yes, in which assets class do you want to in est in Mutual 5undW

$H-". %5 .#/"M". "G9I$H D"B$ ,IG9ID

!".-%7." -"!#"7$A8" ED >0.0>J 0> 00.D<J D B.=?J

-E+*<=+E 100 00 (- -F *#-*L# &0 -E+*<=+E 40 20 0 E83(T: DE>T SCH#M#S ,(83(D 21 & 0&

(Fig no "": - Define sc1emes preferred 3y investors) 5rom the abo e chart it is &ettin& clear that from 1== peoples sample EDF>0.0>J+ people are in est in e4uity assets class and 0>F00.D<J+ people choose to in ests in debt class but only just DFB.=?J+ peoples choose to in ests in li4uid class.

E?

G*? Do you in est in /D5# assets mana&ement company ,imitedW

H". BD

7% ??

$%$A, 1==

&0 #0 (- -F *#-*L# 40 30 20 10 0

#& 44

+!ri!'1

:E+ *5#F#5(C#

=<

(Fig no "): - Define investment in HDFC assets Management Company)

From th! %o5! ch rt it i' g!tting c$! r th t out of 100 p!op$! ' mp$!d9 #& p!op$!' r! in5!'t in HDFC ''!t' m n g!m!nt comp ny nd 44 p!op$!' r! not in5!'t' in HDFC ''!t' m n g!m!nt comp ny.

EB

G*B If yes, in which scheme would you in est in /D5# assets Mana&ement company limitedW
NO OF IN7ESTOERS ?: 0 1> :B : 1D 1 1D B

SCHEMES OF HDFC "G9I$H 597D #A-I$A, B9I,D"! 597D -!9D"7#" 597D $AO .A6"! 597D #%!" A7D .A$",I$" 597D $%- 0== 597D BA,A7#"D 597D 8!%@$/ 597D %$/"!. 597D

=< <F (=?E+T<E-+ 1& #

1& 3

43

2 3# 11 C6*(T6, >3(,DE- F3=D T6@ +6?E- F3=D T<* 200 F3=D A-<BTH F3=D

E83(T: F3=D *-3DE=CE F3=D C<-E 6=D +6TE,(TE F3=D >6,6=CED F3=D <THE-+ F3=D

(Fig no "/: - Define sc1eme in 01ic1 investors invest in HDFC assets Management Company) 5rom the abo e chart we can see that in /D5# assets Mana&ement #ompany3s "G9I$H 597D ma(imum number F?:+ of people are in est. In $AO .A6"! 597D :B number of people in ests. In both $%- 0== 597D and 8!%@$/ 597D 1D numbers of people are in ests but in BA,A7#"D 597D, #A-I$A, B9I,D"! 597D, #%!" A7D .A$",I$" 597D only 1,0 and : people are in est so in estors are not in ested in these : schemes. In -!9D"7#" 597D 1> numbers of people are in ested.

ED

G*D By which medium you in est in /D5# assets Mana&ement company limitedW
MEDIUM OF IN7ESTMENT DI.$!IB9$%! BA7K %7,I7" NO OF PEOP:E E ?E =

=< <F *E<*,E 40

#0 4# 40 3# 30 2# 20 1# 10 # 0

=< <F *E<*,E 0 0 D(+T-(>3T<M#D %MS <=,(=E

(Fig no "2: - Define mediums c1oose 3y investors for invest in HDFC assets management company) 5rom the abo e chart it3s &ettin& cleared that most of the peoples F?E+ are in est by bank and only E peoples are in est by distributors. 7obody in ests throu&h online. .o here /D5# assets Mana&ement #ompany has to pro ide facility by which in estors in est their money with out any middle man in mutual fund schemes throu&h online. 7otes) * here out of 1== responds, ?? responds are not in est in /D5# assets Mana&ement #ompany. $hese responds are not considered in these 4uestions.

E>

G*> why do you prefer in estin& in /D5# assets Mana&ement company limitedW
PREFENCE CRITERIA B"$$"! 597D /%9." "O#",,"7$ #9.$%M"! ."!6I#" -!%6ID"! #%7.I.$A7$ !"$9!7 %$/"!. NUM1ER ?: 1B ?? 1

=3)>E-

>ETTE- F3=D H<3+E

1 44 43

E@CE,,E=T C3+T<)E+E-?(CE *-<?(DEC<=+(+T6=T -ET3-=

1#

FFig no "7: - Define *reference criteria of investors)

<THE-+

5rom the abo e pie * chart it can be seen that majority of the people that is ?? peoples &i e first rank to consistent return and ?: peoples in est in /D5# assets mana&ement company because /D5# assets mana&ement company is a better fund house and 1B peoples belie es that /D5# assets Mana&ement #ompany pro ides "O#",,"7$ #9.$%M"! ."!6I#".

EE

G*E In which type of product Lschemes would you prefer while In ested in e4uity schemes of /D5# assets mana&ement #ompany limitedW

TYPES OF SCHEMES %-"7 "7D"D #,%." "7D"D

RESPONSE B: :

-E+*<=+E &0 (- -F *#-*L# #0 40 30 20 10 0 <*E= E=DED C,<+E E=DED !&*#S -F SCH#M#S 3 -E+*<=+E #3

(Fig no ";: - Define type of product >sc1emes investors prefer for investments) 5rom the abo e chart it is &ettin& clear that most of peoples FB:+ prefer to in est in %-"7 "7D"D e4uity schemes and only just : peoples want to in est in #,%." "7D"D e4uity schemes of /D5# assets Mana&ement #ompany. 7otes) * here out of 1== responds, ?? responds are not in est in /D5# assets Mana&ement #ompany. $hese responds are not considered in these 4uestions.

E<

G*< do you know about on &oin& new fund offer of /D5# Assets Mana&ement company limitedW

A<ARENESS OF NFO H". 7% $%$A,

NUM1ER BE ?0 1==

PERCENTAGE BEJ ?0J 1==J

=3)>E-

42 :E+ =< #0

(Fig no "+: - Define a0areness level a3out on going (F- of HDFC assets Management Company,) $he abo e pie * chart shows that around BEJ people aware of on &oin& new fund offer of /D5# assets Mana&ement #ompany and only ?0J people are unaware from on &oin& new fund offer of /D5# assets mana&ement company.

<=

FINDINGS

<1

Findings
Almost BDJ are in estin& in /D5# assets mana&ement company3s schemes. %ut of the total respondent almost :=J said that they in est in fi(ed deposit and Insurance. @here as :?J said that they in est in .hares and mutual funds, where as :0J says that they in est in post office schemes. <>J of the in estor was found who is in ested their sa in&s in different schemes of mutual fund. B: respondents prefer to in est in a open ended schemes of /D5# assets mana&ement company, where as remainin& only : respondents prefer to in est in a close ended of /D5# assets mana&ement company. It is found that awareness le el about Mutual 5unds is <>J in .urat city of 8ujarat. %ut of the total respondent >0.0>J are in estin& in e4uity schemes. @here as remainin& 00.D<J prefer debt and B.=?J prefer to in est in li4uid schemes. /D5# assets Mana&ement #ompany are also hi&hly popular for their consistent return and ?: responds belie es that /D5# assets Mana&ement #ompany is better fund house. @hile only just 1B responds belie es that /D5# assets Mana&ement #ompany pro ides "O#",,"7$ #9.$%M"! ."!6I#".

<0

 %ut of the total respondents almost ?E responds are in estin& throu&h bank, only E responds in estin& their money by distributor and nobody in ested by online. $he BEJ of the respondent were aware about the on&oin& 75% of /D5# assets mana&ement company and ?0J were not aware about the on&oin& 75% of /D5# assets mana&ement company. In /D5# assets Mana&ement #ompany3s "G9I$H 597D ma(imum number F?:+ of people are in ested and In $AO .A6"! 597D :B number of people are in ests.

<:

LIMITATIONS

<?

Limitations of research
$his e(ploratory research is done focusin& on the in estment scenario of .urat city of 8ujarat re&ion only and therefore findin&s and su&&estions &i en on the basis of this research and cannot be considered for the entire Mutual 5und Industry of India. .ome of the people, out of arious sectors that I had isited for study, did not &i e me cooperati e response. Due to small market and time limit I could take only 1== responses. Another limitation is that due to lack of knowled&e and education many in estors don3t know the basic ideas behind mutual fund. Due to $ime constraint I could not analy'e more. My own ine(perience in research area mi&ht ha e affected the study.

<B

CONCLUSIONS

<D

Conclusions
/alf of the respondents are in estin& in different schemes of mutual fund companies. $he in estors prefer in estin& more in banks and post office, which shows that in estors want security, and assured returns. %thers than Banks and post office the ne(t preference of in estors who &o for risky preposition in shares and Mutual 5unds. $hat is basically due to misconception that Mutual 5und #ompanies usually in est in e4uity market, which shakes trust of people in Mutual 5und. Majority of in estors in ested in open*ended schemes. $he awareness le el about /D5# assets Mana&ement #ompany is moderate but still the awareness should be created because ??J peoples still not in est in /D5# assets Mana&ement #ompany. As the in estor prefers safe in estment and want consistent return, they in est in debt schemes F00.D<J+. $he in estors prefer /D5# assets Mana&ement #ompany more because of the ta( benefit and consistent return. Mutual funds are also preferred because of the cost effecti eness and hi&her income by in estin& in e4uity schemes. $he banks mostly make the in estments throu&h the a&ent3s followed.

<>

 -rofessional and Business class, which is considered to be the most knowled&eable class of the re&ion prefers Mutual 5unds less compare to ser ice class. $he time frame of the in estment by majority of the in estors is open*ended schemes in which their money is not locked for : to B years.

<E

RECOMMENDATION S

<<

Recommendations
$he company should try to make aware people about their different schemes throu&h the road showC seminars and presentation that it is not just e4uity based schemes but also debt and li4uid or balanced schemes also promoted by company. #ompany has to put hoardin&s, banners, pamphlets in that area where peoples can watch easily. $he customers should be made aware that if the time frame of the in estment is more than : years "4uity option is the best tool for in estin& in mutual fund by this in estors &ettin& &ood and hi&h returns for their in estments. $he company should be conductin& special trainin& and moti ation -ro&ramme for their distributors and also for in estors so that they are bein& moti ated to work, their 4uality of performance and contribution in sales is maintained. #ompany has to pro ide application forms and other promotional materials to their distributors time to time and company has to maintain better relationship with their distributors by these they can &i e &ood contribution in in estments. 7one of responds in est their money in different schemes of company By %nline, so company has opportunity to launch online ser ices for their distributors and retail in estors.

1==

 #ompany3s core and satellite fund, balanced fund, capital builder fund are preferred by ery few in estors because this schemes not perform well so company has to think about their companies in which they in est in estor3s money so they ha e to chan&e portfolio of in estments.

Most of the people still preferred to in est in post office schemes and fi(ed deposits so company has to focus on these in estors.

1=1

ANNEXURE

1=0

3ue&tio""aire

=6)E: 6DD-E++: C<=T6CT =<: 2<4 2-4 2)4

14 Bhich in5!'tm!nt 5!nu!' r! you w r! ofC Equity ;)utu $ fund *o't <ffic! 2=+C9 D?*9 **F4 FiE!d D!po'it' <th!r' (f oth!r' p$! '! 'p!cify 24 Do you in5!'t in mutu $ fund'C :!' =o 34 (f y!'9 in which ''!t' c$ '' do you w nt to in5!'t in mutu $ fund'C Equity D!%t ,iquid

44 Do you in5!'t in HDFC mutu $ fundC :!' =o

1=:

#4 (f y!'9 in which 'ch!m! wou$d you in5!'t in HDFC )3T36, F3=DC Equity C pit $ %ui$d!r *rud!nc! fund T E ' 5!r

Cor! F ' t!$$it! Top 200 fund > $ nc!d fund Arowth <th!r' &4 >y which m!dium do you in5!'t in HDFC mutu $ fund 'ch!m!C Di'tri%utor > nG <n$in! 14 Bhy do you pr!f!r in5!'ting in HDFC )FC >!tt!r fund hou'! EEc!$$!nt cu'tom!r '!r5ic! pro5id!r Con'i't!nt r!turn <th!r (f oth!r p$! '! 'p!cify 04 Bhich typ! of product;'ch!m! wou$d you pr!f!r whi$! in5!'ting in Equity +ch!m! of HDFC mutu $ fundC <p!n-!nd!d C$o'! !nd!d

/4 Do you Gnow %out on going n!w fund off!r' of HDFC 6)CC :!' =o

1=?

-!m rG' if ny oth!r p$! '! 'p!cifi!': -

Th nG you for your tim!.

G+o&&ary

(et Asset 4alue ((A4) 7et Asset 6alue is the market alue of the assets of the scheme minus its liabilities. $he per unit 7A6 is the net asset alue of the scheme di ided by the number of units outstandin& on the 6aluation Date. Sale *rice $he price you pay when you in est in a scheme. Also called %ffer -rice. It May include a sales load. 5epurc1ase *rice $he price at which a close*ended scheme repurchases its units and it may Include a back*end load. $his is also called Bid -rice. 5edemption *rice $he price at which open*ended schemes repurchase their units and close* "nded schemes redeem their units on maturity. $hese prices are 7A6 !elated. 5epurc1ase or C'ac:-end? Load A char&e collected by a scheme when it buys backs the units from the unit

1=B

/olders.

#=pense 5atio: $he "(penses of a scheme include mana&ement fees and all the fees associated with the schemeKs daily operations. "(pense !atio refers to the annual percenta&e of fundKs assets that is paid out in e(penses and can affect the performance of the scheme. #=it Load: It is the load char&ed by the fund when one redeems the units from the fund. It reduces the price of the units to less than the 7A6 and is e(pressed as a percenta&e of 7A6. Face 4alue: $he ori&inal issue price of one unit of a scheme, &enerally !s 1=. Loc:-in period: $he coolin& period after in estment in fresh units durin& which the in estor #annot redeem the units.

(o Load: It refers to the fund that does not char&e any load for buyin& or sellin& its units, i.e. the in estor can transact at the 7A6.

1=D

)i&t o% tab+e

.r. 7o. 1 0 : ? B D > E < 1= 11 10

7ame of $able %ffices of /D5# assets mana&ement company limited %ther arious assets mana&ement companies3 details Area wise distribution of sample si'e. Define in estments a enues Define in estments in mutual fund Define schemes preferred by in estors Define in estment in /D5# assets mana&ement company Define scheme in which in estors in est in /D5# assets mana&ement company Define medium choose by in estors for in est in /D5# assets mana&ement company Define -!"5"7#" #!I$"!IA of in estors Define type of product Lschemes in estors prefer for in estments. Define awareness le el about on &oin& 75% of /D5# assets mana&ement company.

-a&e 7o. 1> D? >< E0 E: E? EB ED E> EE E< <=

1=>

)i&t o% Gra!
S(- N&1 0 : ? B D > E < 1= 11 10 1: 1? 1B 1D 1> N'!e &) G('%* %ffice locations of /D5# Assets Mana&ement #ompany Different $ypes of -roducts 8rowth of Asset % er $he year $ypes of customers Mutual 5und #ycle !isk !eturn in Mutual 5und .tructure %f Mutual 5und #lassification %f Data Define in estments a enues Define in estments in mutual fund Define schemes preferred by in estors Define in est in /D5# assets mana&ement company Define scheme in which in estors in est in /D5# assets mana&ement company Define medium choose by in estors for in est in /D5# assets mana&ement company Define -reference criteria of in estors Define type of product Lschemes in estors prefer for in estments. Define awareness le el about on &oin& 75% of /D5# assets mana&ement company. P'ge N&00 0? :< ?= ?< BD D= >D E0 E: E? EB ED E> EE E< <=

1=E

4ib+io0ra! y
Books

Cooper and sc1inder Research Methodology =!w D!$hi T t )cAr w-Hi$$ ,td 2001 F ct 'h!!t of HDFC ''!t' ) n g!m!nt Comp ny $imit!d.

@ebsites
www.hdfcfund.com www. mfiindi .com www.5 $u!r!'!rchon$in!.com www.mon!ycontro$.com

1=<

CERTIFICATE $his is to certify that Mr. 1'd'!i ='.%es* D- has satisfactorily completed the project work entitled, >Mutu'. )und A+'(eness in Ret'i. In est&(s O) HDFC Assets !'n'ge!ent $&!%'n, in Su('t? 1'sed on the declaration made by the candidate and my association as a &uide for carryin& out this work, I recommended this project report for e aluation as a part of the MBA pro&rammer of 6eer 7armad .outh 8ujarat 9ni ersity.

-lace) Date)

XXXXXXXXXXXXXXX FDr. !. .. .hah+

$his project is forwarded for e aluation to the 6eer 7armad .outh 8ujarat 9ni ersity.

-lace) Date) XXXXXXXXXXXXXXXXXXXX Director of 8!IM. FDr. !. .. .hah+

11=

111