Objectives of Study

Without any aim or objective, no activity can exist, in the same direction of preparation of this report on HDFC assets Management Company limited. n different functional areas ! research on the "mutual fund a#areness in retail investors of HDFC assets Management Company limited in $urat% is based on the follo#ing objectives& '

(. My primary objective is to ac)uire primary functions of management li*e +lanning, ,rgani-ing, Directing and controlling from various functional areas such as Finance, Human .esource, Mar*eting, and $ales etc. /. Whatever #e are taught in the classrooms, there is a limitation that boo* can only give theoretical concept or *no#ledge and it has a limited vie# of practically. $o, the other important objective of this training is to *no# about practical aspect and to *no# ho# a company actually #or*s in practical situation. 0. 1o *no# the mutual fund a#areness level of the retail investors #ho are invest in HDFC assets Management Company limited.

Limitations of Study
1here is no activity #ithout any limitations. (. 1hough every one used to be very co'operative but every detail #as unable to be disclosed to me as the officials has to maintain secrets of the company. /. t is difficult to cover all the function of the company.

0. 1he analysis and conclusion made by me as per my limited understanding and there may be something variation in the actual situation. 2. 3ecause of the limited time period, the survey #or* #as conducted in the $urat region and the sample si-e #as ta*en as (44 respondents only. 5. n this rapidly changing turbulent era the suggestions and recommendations dra#n out today might prove inade)uate or improper tomorro#6 this is li*ely to limit its effectiveness.

CONTENTS

$r. 7o. ( / 0 2

7ame of 1able ,bjectives of $tudy 8imitations of study :xecutive summary Company details <bout the Company $ponsors of HDFC <ssets Management Company Management of HDFC <ssets Management Company ,ffices of HDFC assets management company limited +roduct details Future scenario ndustry details ntroduction History of Mutual Fund ndustry Customers +rofile of mutual fund industry +ositioning $trategy of mutual fund industry +romotional 1ools :mployed by various mutual fund companies Facts <bout Mutual Fund Mutual fund ntroduction to Mutual Fund Mutual Fund Cycle Critical vie# about Mutual Fund Why nvestor 7eeds Mutual Fund Mutual Fund .is* 1ypes of Mutual Fund $tructure of Mutual Fund ,ther various assets management companies details .egulatory <spects .esearch +urpose of the .esearch .esearch ,bjective .esearch Methodology

+age 7o. 5 9 ; (( (/ (0 (2 (= /2 0/ 00 02 09 24 2( 2/ 25 29 2= 2> 54 52 55 5; 94 92 9= =( =/ =0 =2

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.esearch Design $ources of Data $ampling +lan Data Collection Method Data analysis and findings Findings 8imitations Conclusions .ecommendations <nnexure ?lossary 8ist of 1able 8ist of ?raphs 3ibliography

=5 =9 =; ;4 ;( >/ >5 >= (44 (40 (45 (4= (4; (4>

COMPANY DETAILS

About the Company: <n HDFC asset Management Company limited is #ell'established fund house. HDFC <ssets Management Company limited is sponsored by Housing Development Finance Corporation 8imited @HDFCA and $tandard life investments limited.

HDFC assets Management Company limited launched its scheme HDFC :BC 1D FC7D in the year Eanuary (>>5. $ince then it focused on different class of schemes for many years and launched several innovative products that #ent to become bourgeoning categories in the ndian mutual fund industry.

$ome of these #ere HDFC ?.,W1H FC7D, HDFC 1,+ /44 FC7D, and HDFC 3<8<7C:D FC7D, HDFC +.CD:7C: FC7D etc.

HDFC assets Management Company limited have offices in /> cities and currently manage assets in excess of .s 09(29.9= cores. @May /44=.A

Sponsors of HDFC Assets Management Company:Housing Development Finance Corporation Limited (HDFC) HDFC #as incorporated in (>== as the first speciali-ed Mortgage Company in ndia. HDFC provides financial assistance to individuals, corporates and developers for the purchase or construction of residential housing. t also provides property related services @e.g. property identification, sales services and valuationA, training and consultancy. ,f these activities, housing finance remains the dominant activity. HDFC has a client base of around >.5 lac* borro#ers, around ( million depositors, over >(,444 shareholders and 54,444 deposit agents as at March 0(, /44=. HDFC has raised funds from international agencies such as the World 3an*, FC @WashingtonA, C$< D, D:?, <D3 and FfW, international syndicated loans, domestic term loans from ban*s and insurance companies, bonds and deposits. HDFC has received the highest rating for its bonds and deposits program for the t#elfth year in succession. HDFC $tandard 8ife nsurance Company 8imited, promoted by HDFC #as the first life insurance company in the private sector to be granted a Certificate of .egistration @on ,ctober /0, /444A by the nsurance .egulatory and Development <uthority to transact life insurance business in ndia. Standard Life nvestments Limited 1he $tandard 8ife <ssurance Company #as established in (;/5 and has considerable experience in global financial mar*ets. 1he company #as present in the ndian life insurance mar*et from (;2= to (>0; #hen agencies #ere set up in Fol*ata and Mumbai. 1he company re'entered the ndian mar*et in (>>5, #hen an agreement #as signed #ith HDFC to launch an insurance joint venture. ,n <pril /449, the 3oard of 1he $tandard 8ife <ssurance Company recommended that it should demutualise and $tandard 8ife plc float on the 8ondon $toc* :xchange. <t a $pecial ?eneral Meeting held in May voting members over#helmingly voted in favor of this. 1he Court of $ession in $cotland approved this in Eune and $tandard 8ife plc floated on the 8ondon $toc* :xchange on (4 Euly /449. $tandard 8ife nvestments #as launched as an investment management company in (>>;. t is a #holly o#ned subsidiary of $tandard 8ife nvestments @HoldingsA 8imited, #hich in turn is a #holly o#ned subsidiary of $tandard 8ife plc. $tandard 8ife nvestments is a leading asset management company, #ith approximately C$G /9> billion as at March 04, /44=, of assets under management. 1he company operates in the CF, Canada, Hong Fong, China, Forea, reland and the C$< to ensure it is able to form a truly global investment vie#. n order to meet the different needs and ris* profiles of its clients, $tandard 8ife nvestments 8imited manages a diverse portfolio covering all of the major mar*ets #orld'#ide, #hich includes a range of private and public e)uities, government and company bonds, property investments and various derivative instruments.

Management of HDFC Assets Management Company:-

HDFC !rustee Company Limited: < company incorporated under the Companies <ct, (>59 is the 1rustee to the Mutual Fund vides the 1rust deed dated Eune ;, /444, as amended from time to time. HDFC 1rustee Company 8imited is a #holly o#ned subsidiary of HDFC 8imited.

HDFC Asset Management Company Limited: HDFC assets Management Company limited #as incorporated under the Companies <ct, (>59, on December (4, (>>>, and #ere approved to act as an <sset Management Company for the Mutual Fund by $:3 on Euly 0, /444. 1he registered office of the HDFC assets Management Company limited is situated at .amon House, 0rd Floor, H.1. +are*h Marg, (9>, 3ac*bay .eclamation, Church gate, Mumbai ' 244 4/4. n terms of the nvestment Management <greement, the 1rustee has appointed HDFC <sset Management Company 8imited to manage the Mutual Fund. 1he paid up capital of the HDFC assets Management Company limited is .s.=5.(9( crore.

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1he present share holding pattern of the HDFC <ssets management company is as follo#s& +articulars HDFC $tandard 8ife nvestments 8imited H of the paid up share capital 54.(4 2>.>4

1he HDFC <ssets management company is managing (; open'ended schemes of the Mutual Fund vi-. HDFC ?ro#th Fund @H?FA, HDFC 3alanced Fund @H3FA, HDFC ncome Fund @H FA, HDFC 8i)uid Fund @H8FA, HDFC 1ax +lan /444 @H1+A, HDFC ChildrenIs ?ift Fund @HDFC C?FA, HDFC ?ilt Fund @H? 81A, HDFC $hort 1erm +lan @H$1+A, HDFC ndex Fund, HDFC Floating .ate ncome Fund @HF. FA, HDFC :)uity Fund @H:FA, HDFC 1op /44 Fund, @H1/44A, HDFC Capital 3uilder Fund @HC3FA, HDFC 1ax $aver @H1$A, HDFC +rudence Fund @H+FA, HDFC High nterest Fund @HH FA, HDFC $overeign ?ilt Fund @H$?FA and HDFC Cash Management Fund @HCMFA. HDFC assets Management Company limited is also managing the respective +lans of HDFC Fixed nvestment +lan, a closed ended ncome $cheme.

1he HDFC <ssets management company has obtained registration from $:3 vide .egistration 7o. ' +M J 7+444444549 dated December //, /444 to act as a +ortfolio Manager under the $:3 @+ortfolio ManagersA .egulations, (>>0. 1he HDFC <ssets management company is also providing portfolio management J advisory services and such activities are not in conflict #ith the activities of the Mutual Fund

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 HDFC assets Management CompanyKs punch line is "continuing a tradition of trust%. n ?ujarat HDFC assets Management Company is located at <hmadabad, $urat, vadodara, .aj*ot. HDFC assets Management Company is #or*ing from >&04 a.m. on#ards. HDFC assets Management Company Have /44 and more distributors in $urat. HDFC assets Management Company +rovide account statements to investors according to investorKs re)uirement. HDFC assets Management Company +rovide good services to investors.

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Offices of HDFC ASSETS MANAGEMENT COMPAN !"M"TED

7L:$1,. $:.L C: C:71.:$J ,FF C <8 +, 71$ ,F <CC:+1<7C: F,. HDFC MC1C<8 FC7D HDFC Mutual Fund ' Mumbai M .:? $1:.:D ,FF C: .amon House, 0rd Floor, H.1 +are*h Marg, (9>, 3ac*bay .eclamation, Church gate Mumbai 2444/4.

HDFC Mutual Fund ' Hyderabad 9'0';;0J=, /nd Floor, $aphire $)uare, $omajiguda, Hyderabad ' 544/;/. :mail&serviceshyderabadNhdfcfund.com HDFC Mutual Fund ' Lisa*hapatnam ?round Floor, $aigopal <rcade, ,pp Waltair Club, Waltair Main .oad, $iripuram, Lisa*hapatnam ' 504440. :mail&servicesvi-agNhdfcfund.com HDFC Mutual Fund ' +atna 3ihar .ani +la-a <partment, @+atna O'.ay ClinicA, :xhibition .oad, +atna ' ;4444(. :mail&servicespatnaNhdfcfund.com HDFC Mutual Fund ' 7e# Delhi 7e# Delhi 2th Floor, Mohan Dev 3ldg., (0, 1olstoy Marg, Connaught +lace, 7e# Delhi ' ((444(. :mail&servicesdelhiNhdfcfund.com HDFC Mutual Fund ' ?oa

<ndhra +radesh

?oa

(/

<0, First Floor, Frishna 3uilding, ,pp. :ducation Dept, 3ehind $usheela 3uilding, ?.+. .oad, +anaji ' 24044(. :mail&servicesgoaNhdfcfund.com HDFC Mutual Fund ' <hmadabad /nd Floor, Megha House, 3esides ?ruh House, Mitha*hali $ix .oads, <hmedabad ' 0;444>. :mail&servicesahmedabadNhdfcfund.com HDFC Mutual Fund ' .aj*ot /nd Floor, $hiv Darshan, Dr .adha Frishnan .oad, 5, Eagnath +lot Corner, .aj*ot ' 09444(. :mail&servicesraj*otNhdfcfund.com HDFC Mutual Fund ' $urat C( ' C0, Eolly +la-a, ,pp <th#a ?ate +olice $tation, <th#a ?ate, $urat ' 0>544(. :mail&servicessuratNhdfcfund.com HDFC Mutual Fund ' Ladodara Cpper ?round Floor, ?o*ulesh, . C Dutt .oad, Ladodara ' 0>444=. :mail&servicesvadodaraNhdfcfund.com HDFC Mutual Fund P Eamshedpur Ehar*hand ?ayatri :nclave, /nd Floor, QF .oadQ, 3istupur, Eamshedpur ' ;0(44(. :mail&servicesjamshedpurNhdfcfund.com HDFC Mutual Fund P 3angalore 7o.((2, (st Floor, +restige 1o#ers, >> ! (44, .esidency .oad, 3angalore ' 5944/5. :mail&servicesbangaloreNhdfcfund.com HDFC Mutual Fund P Mangalore

?ujarat

Farnata*a

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C? ' , 9 ! =, Cpper ?round Floor, Maximus Commercial Complex, 8ight House Hill .oad, ,pp. FMC, Mangalore ' 5=544(. :mail&servicesmangaloreNhdfcfund.com HDFC Mutual Fund P Fochi ?round Floor, Cinema Cum Commercial Complex, 3ehind .avipuram 3us $top, M.?. .oad, Fochi ' 9;/4(9. :mail&services*ochiNhdfcfund.com HDFC Mutual Fund P 3hopal .anjit 1o#ers, Rone , ; M+ 7agar, 3hopal ' 29/4((. :mail&servicesbhopalNhdfcfund.com HDFC Mutual Fund P ndore M(, M/ ! M0, Me--anine Floor, $terling <rcade,(5 J 0, .ace Course .oad, ndore ' 25/44(. :mail&servicesindoreNhdfcfund.com Maharashtra HDFC Mutual Fund P Mumbai Mistry 3havan, (st Flr, (//, 3ac*bay .eclamation, Dinsha Lachha .oad, Churchgate, Mumbai ' 2444/4. :mail&servicesmumbaiNhdfcfund.com HDFC Mutual Fund P 7agpur (49'((4, $hriram $hyam 1o#ers, /nd Floor, 7ext to 7 1 3uilding, Fings#ay, $adar, 7agpur ' 22444(. :mail&servicesnagpurNhdfcfund.com HDFC Mutual Fund P 7ashi* ?' ( ! ?'/, Q$uyojit HeightsQ, ,pp. .ajiv ?andhi 3havan, $haranpur .oad, 7ashi* ' 2//44/. :mail&servicesnashi*Nhdfcfund.com HDFC Mutual Fund P +une

Ferala

Madhya +radesh

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HDFC House, /nd Floor, $hivaji 7agar, Cniversity .oad, +une ' 2((445. :mail&servicespuneNhdfcfund.com HDFC Mutual Fund P 3hubanes#ar ,rissa /nd Floor, Linaya* >9, Eanpath, 3hubanesh#ar ' =5(44(. :mail&servicesbhubanesh#arNhdfcfund.com HDFC Mutual Fund P Chandigarh $C, 0=5'0=9, ?round Floor, $ector 05'3, Chandigarh ' (944//. :mail&serviceschandigarhNhdfcfund.com HDFC Mutual Fund P 8udhiana $C, (//, Fero-e ?andhi Mar*et, 8udhiana ' (2(44(. :mail&servicesludhianaNhdfcfund.com HDFC Mutual Fund P Eaipur Moondhra 3havan, 0 <jmer .d, Eaipur ' 04/44(. :mail&servicesjaipurNhdfcfund.com HDFC Mutual Fund P Eodhpur ?ulab $ingh 3uilding, ((, Chopasani .oad, Eodhpur ' 02/440. :mail&servicesjodhpurNhdfcfund.com HDFC Mutual Fund P Coimbatore (0=(<, ?round Floor, 7adar 3uilding 1richy .oad, Coimbatore ' 92(4(;. :mail&servicescoimbatoreNhdfcfund.com HDFC Mutual Fund P Chennai 1C Centre, (st Floor, =94 <nna $alai, Chennai ' 94444/. :mail&serviceschennaiNhdfcfund.com Cttar +radesh HDFC Mutual Fund P Fanpur

+unjab

.ajasthan

1amil 7adu

(5

(st Floor, (9J;4 D, 3ehind $3 Main, Civil 8ines, Fanpur ' /4;44(. :mail&services*anpurNhdfcfund.com HDFC Mutual Fund P 8uc*no# 2 $hahnajaf .oad, 8uc*no# ' //944(. :mail&servicesluc*no#Nhdfcfund.com HDFC Mutual Fund P Fol*ata

West 3engal

Mena*a :state, (st Floor, 0 .ed Cross +lace, Fol*ata ' =4444(. :mail&services*ol*ataNhdfcfund.com

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

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PROD CT DETAILS

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P#o$uct Detai%s

#$% !&

'ALA(C#D

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(Fig no ) - Different !ypes of *roducts) EQUITY SCHEMES OF HDFC ASSET MANAGEMENT COMPANY:1. HDFC Equity Fund: Investment Objective: 1he investment objective of the $cheme s to achieve capital appreciation. Investment Opti ns& Dividend ! ?ro#th ,ption N!t"#e $ Sc%eme: - ,pen :nded ?ro#th $cheme Incepti n D!te& ' Eanuary 4(, (>>5

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2. HDFC growth fund: Investment Objective: - 1he primary investment objective of the $cheme is to generate long term capital appreciation from a portfolio that is invested predominantly in e)uity and e)uity related instruments. Investment Opti ns: Dividend ! ?ro#th ,ption N!t"#e $ Sc%eme: - ,pen :nded ?ro#th $cheme Incepti n D!te& '$eptember ((, /444

3. HDFC Top 200 fund: Investment Objective: - 1o generate long'term capital appreciation from a portfolio of e)uity and e)uity'lin*ed instruments primarily dra#n from the companies in 3$: /44 index. Investment Opti ns: Dividend ! ?ro#th ,ption

4. HDFC mid c p! opportunity fund" Investment Objective: - 1o generate long'term capital appreciation from a portfolio that is substantially constituted of e)uity and e)uity related securities of small and Mid'Cap companies. Investment Opti ns: Dividend ! ?ro#th ,ption N!t"#e $ Sc%eme:- ,pen :nded ?ro#th $cheme Incepti n D!te&' May 4=, /44=

#. HDFC c pit $ %ui$d!r fund: Investment Objective: 1o generate long'term capital appreciation from a portfolio that is substantially constituted of e)uity and e)uity related securities of small and Mid'Cap companies. Investment Opti ns: Dividend ! ?ro#th ,ption N!t"#e $ Sc%eme:- ,pen :nded ?ro#th $cheme Incepti n D!te&' February 4(, (>>2 /4

&. HDFC cor! nd ' t!$$it! fund: Investment Objective: - 1he primary objective of the $cheme is to generate capital appreciation through e)uity investment in companies #hose shares are )uoting at prices belo# their true value. Investment Opti ns: Dividend ! ?ro#th ,ption N!t"#e $ Sc%eme:- ,pen :nded ?ro#th $cheme Incepti n D!te&' $eptember (=, /442 +, HDFC premier multicape fund: Investment Objective: - 1he primary objective of the $cheme is to generate capital appreciation in the long term through e)uity investments by investing in a diversified portfolio of Mid Cap and 8arge Cap Sblue chipS companies. Investment Opti ns: Dividend +lan, ?ro#th +lan, 1he Dividend +lan offers Dividend +ayout and .einvestment Facility. N!t"#e $ Sc%eme: - ,pen :nded ?ro#th $cheme Incepti n D!te& ' <pril 49, /445

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

HDFC % $ nc!d fund: Investment Objective: - 1he primary objective of the $cheme is to generate capital appreciation along #ith current income from a combined portfolio of e)uity and e)uity related and debt and money mar*et instruments. Investment Opti ns: Dividend ! ?ro#th ,ption N!t"#e $ Sc%eme: - ,pen :nded balanced fund Incepti n D!te: - $eptember ((, /444

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2.

HDFC prud!nc! fund: Investment Objective: - 1he investment objective of the $cheme is to provide periodic returns and capital appreciation over a long period of time, from a judicious mix of e)uity and debt investments, #ith the aim to preventJ minimi-e any capital erosion Investment Opti ns: Dividend ! ?ro#th ,ption N!t"#e $ Sc%eme: - ,pen :nded balanced fund Incepti n D!te: - February 4(, (>>2

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HDFC 'hort t!rm p$ n: Investment Objective: - 1he primary objective of the HDFC $hort 1erm +lan is to generate regular income through investment in debt securities and money mar*et instruments. Investment Opti ns: ?ro#th +lan, Dividend +lan. 1he Dividend +lan offers Dividend +ayout and .einvestment Facility. N!t"#e $ Sc%eme:- ,pen :nded income fund Incepti n D!te: - February /;, /44/

4.

HDFC mu$ti yi!$d fund: Investment Objective: - 1he primary objective of the $cheme is to generate positive returns over medium time frame #ith lo# ris* of capital loss over medium time frame. Investment Opti ns: ?ro#th +lan, Dividend +lan. 1he Dividend +lan offers Dividend +ayout and .einvestment Facility. N!t"#e $ Sc%eme: - ,pen :nded income fund Incepti n D!te: - $eptember (=, /442

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D#'! SCH#M#S -F HDFC ASS#! MA(A.#M#(! C-M*A(&:1. HDFC (ncom! Fund: Investment Objective: - 1he primary objective of the $cheme is to optimi-e returns #hile maintaining a balance of safety, yield and li)uidity. Investment Opti ns: Dividend ! ?ro#th ,ption N!t"#e $ Sc%eme: - ,pen :nded ncome $cheme Incepti n D!te: - $eptember ((, /444

2. HDFC (ncom! Fund: Investment Objective: - 1he investment objective of HDFC High nterest Fund is to generate income by investing in a range of debt and money mar*et instruments of various maturity dates #ith a vie# to maximi-ing income #hile maintaining the optimum balance of yield, safety and li)uidity. Investment Opti ns: Dividend ! ?ro#th ,ption N!t"#e $ Sc%eme: - ,pen :nded ncome $cheme Incepti n D!te: - <pril /;, (>>=

3. HDFC )F )onth$y (ncom! *$ n - +hort T!rm *$ n: Investment Objective: - 1he primary objective of $cheme is to generate regular returns through investment primarily in Debt and Money Mar*et nstruments. 1he secondary objective of the $cheme is to generate long'term capital appreciation by investing a portion of the $chemeKs assets in e)uity and e)uity related instruments. Ho#ever, there can be 7o assurance that the investment objective of the $cheme #ill be achieved.

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 Investment Opti ns: Buarterly Dividend ,ption, Monthly Dividend ,ption, and ?ro#th +lan. 1he Dividend +lan offers Dividend +ayout and .einvestment Facility N!t"#e $ Sc%eme: - <n open'ended income scheme. Monthly income is not assured and is subject to availability of distributable surplus Incepti n D!te:- December /9, /440

4. HDFC )F )onth$y (ncom! *$ n - ,ong T!rm *$ n: Investment Objective: - 1he primary objective of $cheme is to generate regular returns through investment primarily in Debt and Money Mar*et nstruments. 1he secondary objective of the $cheme is to generate long'term capital appreciation by investing a portion of the $chemeKs assets in e)uity and e)uity related instruments. Ho#ever, there can be no assurance that the investment objective of the $cheme #ill be achieved Investment Opti ns: ?ro#th +lan, Buarterly Dividend ,ption, Monthly Dividend ,ption. 1he Dividend +lan offers Dividend +ayout and .einvestment Facility. N!t"#e $ Sc%eme: - <n open'ended income scheme. Monthly income is not assured and is subject to availability of distributable surplus Incepti n D!te: - December /9, /440

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#. HDFC F$o ting - t! (ncom! Fund ,ong T!rm *$ n: Investment Objective: - 1he primary objective of the $cheme is to generate regular income through investment in a portfolio comprising substantially of floating rate debt J money mar*et instruments, fixed rate debt J money mar*et instruments s#apped for floating rate returns, and fixed rate debt securities and money mar*et instruments. Investment Opti ns: Dividend +lan, ?ro#th +lan. 1he Dividend +lan offers .einvestment Facility only N!t"#e $ Sc%eme: - <n open'ended income scheme. Incepti n D!te: - Eanuary (9, /440

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! T RE SCENARIO

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1he asset base #ill continue to gro# at an annual rate of about 05 to 24H over the next five year as investorKs shift their assets from ban*s and other traditional avenues. $ome of the older public and private sector players #ill either close shop or be ta*en over.

,ut of ten public players five #ill sell out, close do#n or merge #ith stronger player in three to four years. n the private sector this trend has already started #ith t#o mergers and one ta*e over. Here too some of them #ill do#n their shutters in the near future to come. 3ut this does not mean that there is no room for other players. 1he mar*et #ill #itness a flurry of ne# players entering the areas. 1here #ill be a large no. of offers from various asset management companies in the time to come, some big names li*e +rinciple, $3 , Fidelity, old mutual etc are loo*ing at ndian mar*et seriously. ,ne important reason for it is that most major players have presence here and hence these big names #ould hardly li*e to get left behind. 1he mutual fund industry is a#aiting the introduction of derivatives in ndia as this #ould enable it to hedge its ris* and this in turn #ould be reflected in its 7et <sset Lalue @7<LA. $:3 is #or*ing out the norms for enabling the existing mutual fund schemes to trade in derivatives. mportantly, many mar*et players have called on the .egular to initiate the process immediately, so that the mutual funds can implement the changes that are re)uired to trade in Derivatives.

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IND STRY DETAILS

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"nt#o$uction

< Mutual Fund is a trust that pools the savings of a number of investors #ho share a common financial goal. 1he money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. 1hese could range from shares to debentures to money mar*et instruments. 1he income earned through these investments and the capital appreciations reali-ed by the scheme are shared by its unit holders in proportion to the number of units o#ned by them. 1hus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively lo# cost.

<nybody #ith an investible surplus of as little as a fe# thousand rupees can invest in Mutual Funds. :ach Mutual Fund scheme has a defined investment objective and strategy.

< Mutual Fund is the ideal investment vehicle for todayKs complex and modern financial scenario. Mar*ets for e)uity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have become mature and information driven. +rice changes in these assets are driven by global events occurring in fara#ay places. < typical individual is unli*ely to have the *no#ledge, s*ills, inclination and time to *eep trac* of events, understand their implications and act speedily. <n individual also finds it difficult to *eep trac* of o#nership of his assets, investments, bro*erage dues and ban* transactions etc.

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< Mutual Fund is the ans#er to all these situations. t appoints professionally )ualified and experienced staff that manages each of these functions on a full time basis. 1he large pool of money collected in the fund allo#s it to hire such staff at a very lo# cost to each investor.

n effect, the Mutual Fund vehicle exploits economies of scale in all three areas ' research, investments and transaction processing. While the concept of individuals coming together to invest money collectively is not ne#, the mutual fund in present form is a /4th century phenomenon. n fact, mutual funds gained popularity only after the $econd World War. ?lobally, there are thousands of firms offering tens of thousands of mutual funds #ith different investment objectives. 1oday, Mutual Funds collectively manage almost as much as or more money as compared to ban*s.

04

Histo#y of Mutua% Fun$ "n$ust#y

1he mutual fund industry in ndia started in (>90 #ith the formation of Cnit 1rust of ndia, at the initiative of the ?overnment of ndia and .eserve 3an* of ndia. 1he history of mutual funds in ndia can be broadly divided into four distinct phases

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

<n <ct of +arliament established Cnit 1rust of ndia @C1 A on (>90. t #as set up by the .eserve 3an* of ndia and functioned under the .egulatory and administrative control of the .eserve 3an* of ndia. n (>=; C1 #as de'lin*ed from the .3 and the ndustrial Development 3an* of ndia @ D3 A too* over the regulatory and administrative control in place of .3 . 1he first scheme launched by C1 #as Cnit $cheme (>92. <t the end of (>;; C1 had .s.9, =44 crores of assets under management.

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

(>;= mar*ed the entry of non' C1 , public sector mutual funds set up by public sector ban*s and 8ife nsurance Corporation of ndia @8 CA and ?eneral nsurance Corporation of ndia @? CA. $3 Mutual Fund #as the first non' C1 Mutual Fund established in Eune (>;= follo#ed by Canban* Mutual Fund @Dec ;=A, +unjab 7ational 3an* Mutual Fund @<ug ;>A, ndian 3an* Mutual Fund @7ov ;>A, 3an* of ndia @Eun >4A, and 3an* of 3aroda Mutual Fund @,ct >/A. 8 C established its mutual fund in Eune (>;> #hile ? C had set up its mutual fund in December (>>4. <t the end of (>>0, the mutual fund industry had assets under management of .s.2=, 442 crores.

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

0(

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

With the entry of private sector funds in (>>0, a ne# era started in the ndian mutual fund industry, giving the ndian investors a #ider choice of fund families. <lso, (>>0 #as the year in #hich the first Mutual Fund .egulations came into being, under #hich all mutual funds, except C1 #ere to be registered and governed. 1he erst#hile Fothari +ioneer @no# merged #ith Fran*lin 1empletonA #as the first private sector mutual fund registered in Euly (>>0. 1he (>>0 $:3 @Mutual FundA .egulations #ere substituted by a more

comprehensive and revised Mutual Fund .egulations in (>>9. 1he industry no# functions under the $:3 @Mutual FundA .egulations (>>9. 1he number of mutual fund houses #ent on increasing, #ith many foreign mutual funds setting up funds in ndia and also the industry has #itnessed several mergers and ac)uisitions. <s at the end of Eanuary /440, there #ere 00 mutual funds #ith total assets of .s. (, /(,;45 crores. 1he Cnit 1rust of ndia #ith .s.22, 52( crores of assets under management #as #ay ahead of other mutual funds.

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

n February /440, follo#ing the repeal of the Cnit 1rust of ndia <ct (>90 C1 #as bifurcated into t#o separate entities. ,ne is the $pecified Cnderta*ing of the Cnit 1rust of ndia #ith assets under management of .s./>, ;05 crores as at the end of Eanuary /440, representing broadly, the assets of C$ 92 scheme, assured return and certain other schemes. 1he $pecified Cnderta*ing of Cnit 1rust of ndia, functioning under an administrator and under the rules framed by ?overnment of ndia and does not come under the purvie# of the Mutual Fund .egulations.

0/

1he second is the C1 Mutual Fund 8td, sponsored by $3 , +73, 3,3 and 8 C. t is registered #ith $:3 and functions under the Mutual Fund .egulations. With the bifurcation of the erst#hile C1 #hich had in March /444 more than .s.=9, 444 crores of assets under management and #ith the setting up of a C1 Mutual Fund, conforming to the $:3 Mutual Fund .egulations, and #ith recent mergers ta*ing place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and gro#th. <s at the end of ,ctober 0(, /440, there #ere 0( funds, #hich manage assets of .s.(/9=/9 crores under 0;9 schemes.

00

T%e &#!p% in'ic!tes t%e &# (t% $ !ssets ve# t%e )e!#s*

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

02

C"st me#s P# $i+e $ m"t"!+ $"n' in'"st#):-

(Fig no 2,!ype of Customer) (. While you recommend a financial plan, you also need to understand the needs and financial objectives of your customer along #ith his ris* tolerance and his expectations from the investments. /. Honest and straightfor#ard advice is appreciated. Help your customers ma*e the right choice 0. <dvise your customers to start investing early and regularly to help them optimi-e the benefits of the compounding rupee. 2. Help your investors #ith the procedures and paper #or* involved in ma*ing an investment. 1reat every customer exclusively. < satisfied customer can give you increased business through resale and referrals of other prospective customers

05

*ositioning Strategy of mutual fund industry:-

+ositioning starts #ith a product. 3ut positioning is not #hat you do to a product. +ositioning is #hat you do to the mind of the prospect. 1hat is, you position the product in the mind of prospect. < companyKs differentiating and positioning strategy must change as the product, mar*et, and competitors change over time. . T%e#e s% "+' be n "n'e# p siti nin&, ve# p siti nin&, c n$"se' p siti nin& # ' "bt$"+ p siti nin&*

C1annel of Distri3ution:n :very asset Management CompanyKs distribution channel played very important roles. Here assets management companies have distributors li*e Consultants <gents Distributors <dvisers 3ro*er

1heir role is very important for <ssets Management CompanyKs ,ffice.

09

*romotional !ools #mployed 3y various mutual fund companies:$ome specific other document help to increase selling product li*e& ' (") 'anners: 3anners define brief idea of scheme, it should be very attractive #ith specific objective ! its related picture in city, and 3anners *eep in specific places #hich very help to do good publicity. t distributes only by <MCKs office. When any ne# scheme is launched or any ne# 7F, coming up that times company ma*e banners before fe# days. ts helps to good advertising ! easy cover to customer or people. ()) Application Form: <ny product li*e :)uity, debt and balance, investor should fill up its common <pplication forms. Form define ac*no#ledge slip #hich give return to customer. <ctually 0'time stamp done in form, one of them is ac*no#ledged slip. 1hese forms are distributed by <ssets Management CompanyKs office. t is all <ssets Management CompanyKs office duty to dispatch forms to their customer li*e agents, bro*ers, and advisers time to time. (/) 'roac1ers: 3roachers include brief history of company. t defines #hen and #here assets management Company invests investorKs money. 1his defines performance of each scheme product ! also defines its comparison to last 0 months to more than 5 years. n end of every month <ssets Management CompanyKs office send 3oucher to their investors, bro*ers, agents, advisers regularly.

0=

(#! ASS#! 4AL%#:1he 7et <sset Lalue or 7<L is a term used to describe the value of an entityIs assets less the value of its liabilities. 1he term is commonly used in relation to collective investment schemes. t may also be used as a synonym for the boo* value of a firm.

7<L covers the companyIs current asset and liability position. nvestors might expect the company to have large gro#th prospects, in #hich case they #ould be prepared to pay more for the company than the 7<L suggests.

1he 7<L is usually belo# the mar*et price because the current values of the fundKs assets are higher than the historical financial statements used in the 7<L calculation.

CALC%LA! (. (#! ASS#! 4AL%# Cnit capital is the investorKs subscriptions. n MF it is not treated as a liability. nvestments made on behalf of the investors are assets side of the balance sheet. 1here are liabilities of short'term nature.

FC7D$ 7:1 <$$:1 T <$$:1 P 8 <3 8 1 :$ 7<L T 7et <ssets ssued Cnits .e. 7<LT @mar*et value of investments U other accrued income U other assets P accrued expenses P other payables Pother liabilitiesAJ @no. ,f units outstanding as at the 7<L dateA

0;

!H# FAC!-5 AFF#C! (. !H# (A4 A5# AS F-LL-6 (. : (. Capital gains or losses on the sale or purchase of investment $ecurities. /. Dividend and income earned on the assets 0. Capital appreciation in the underlying value of the stoc*s holds in the portfolio 2. ,ther assets and liabilities 5. 7umber of units sold or purchased

0>

Facts About Mutua% Fun$

:)uity nstruments li*e shares form only a part of the securities held by Mutual Funds. Mutual Funds also invest in debt securities, #hich are relatively much safer. 1he biggest advantage of Mutual Funds is their ability to diversify the ris*. Mutual Funds are there in ndia since (>92. Mutual Funds mar*et is much evolved in C.$.< and is there for last 94 years. Mutual Funds are the best solution for people #ho #ant to manage ris* and get good returns. 1he si-e of Mutual Funds mar*et in ndia is .s. (4==/; crores and that in C.$.< is many times higher. <ccording to the $:3 ' 7C<:. $urvey of ndian nvestors about (5 million or ;.=H of the households have invested in Mutual Funds and there are nearly /0 million unit holders in ndia. 04H of investors fall in the income group of investors having monthly income up to .s. (4,444J'. n C.$.< there are more deposits in the mutual funds than in ban* deposits. 1he truth is, as investors #e should al#ays pay attention to our mutual funds and continue to monitor them.

24

M T AL ! ND

2(

"nt#o$uction to Mutua% Fun$

< Mutual Fund is a trust that pools the savings of a number of investors #ho share a common financial goal. 1he money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. 1hese could range from shares to debentures to money mar*et instruments. 1he income earned in these investments and the capital appreciation reali-ed by the scheme is shared by its unit holders in proportion to the number of units o#ned by them. 1hus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively lo# cost. <nybody #ith an invest able surplus of a fe# thousand rupees can invest in Mutual Funds. :ach Mutual Fund scheme has a defined investment objective and strategy. < mutual fund is the ideal investment vehicle for todayKs complex and modern financial scenario. Mar*ets for e)uity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have become mature and information driven. +rice changes in these assets are driven by global events occurring in fara#ay places. < typical individual is unli*ely to have the *no#ledge, s*ills, inclination and time to *eep trac* of events, understand their implications and act speedily. < mutual fund is ans#er to all these situations. t appoints professionally )ualified and experienced staff that manages each of these functions on a fulltime basis. 1he large pool of money collected in the fund allo#s it to hire such staff at a very lo# cost to each investor. n fact, the mutual fund vehicle exploits economies of scale in all three areas Presearch, investment and transaction processing.

2/

< draft offer document is to be prepared at the time of launching the fund. 1ypically, it pre specifies the investment objective of the fund, the ris* associated, the cost involved in the process and the broad rules for entry into and exit from the fund and other areas of operation. n ndia, as in most countries, these sponsors need approval from a regulator, $:3 in our case. $:3 loo*s at trac* records of the sponsor and its financial strength in granting approval to the fund for commencing operations.

< sponsor then hires an asset management company to invest the funds according to the investment objective. t also hires another entity to be the custodian of the assets of the fund and perhaps a third one to handle registry #or* for the unit holders of the fund. n the ndian context, the sponsors promote the <sset Management Company also, in #hich it holds a majority sta*e. n many cases a sponsor can hold a (44H sta*e in the <sset Management Company @<MCA.

:.g. 3irla ?lobal Finance is the sponsor of the 3irla $un 8ife <sset Management Company 8td., #hich has floated different mutual funds schemes and also acts as an asset manager for the funds collected under the schemes.

<s per $:3 regulations, mutual funds can offer guaranteed returns for a maximum period of one year. n case returns are guaranteed, the name of the guarantor and ho# the guarantee #ould be honored is re)uired to be disclosed in the offer document.

20

Mutua% Fun$ Cyc%e

(Fig no 7,-Mutual Fund Cycle)

From the above cycle, it can be observed that ho# the money from the investors flo# and they get returns out of it. With a small amount of fund, investors pool their money #ith the funds managers. 1a*ing into consideration the mar*et strategy the funds managers invest this pool of money into reliable securities. With ups and do#ns in mar*et returns are generated and they are passed on to the investors. 1he above cycle should be very clear and also effective. 1he fund manager #hile investing on behalf of investors ta*es into consideration various factors li*e time, ris*, return, etc. so that he can ma*e proper investment decision.

22

C#itica% &ie' about Mutua% Fun$

3enefits
f mutual funds are emerging as favorite investment vehicle, it is because of the many advantages they have over other forms and avenues of investing, particularly for the investors #ho has limited resources available in terms of capital and ability to carry out details research and mar*et monitoring. 1he follo#ing are the major advantages offered by mutual funds to all investors. *5-F#SS -(AL #8*#5! S# Fund managers are professionals #ho trac* the mar*et on an on going basis. With their mix of professional )ualification and mar*et *no#ledge, they are better placed than the average investor to understand the mar*ets. D 4#5S F CA! -( $ince a mutual fund scheme invests in number of stoc*s andJor debentures, the associated ris*s are greatly reduced. 5#LA! 4#L& L#SS #8*#(S 4# When compared to direct investments in the capital mar*et, mutual funds cost less. 1his is due to savings in bro*erage costs, demat costs, depository costs etc. L $% D !& nvestments in mutual funds are completely li)uid and can be redeemed at 7et <ssets Lalue @7<LA related price on any #or*ing day. !5A(S*A5#(C& Dou #ill al#ays have access to up'to'date information on the value of your investment in addition to the complete portfolio of investments, the proportion allocated to different assets and the fund managerKs investment strategy.

25

 FL#8 ' L !& 1hrough features such as regular investment plans, regular #ithdra#al plans and dividend investment plans, you can systematically invest or #ithdra# funds according to your needs and convenience. S#' 5#.%LA!#D <ll mutual funds are registered #ith $:3 and function #ithin the provisions and regulations that protect the interests of investors.

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

29

8imitations
(- C-(!5-L -4#5 C-S! <ny investor in a mutual fund has no control over the overall cost of investing. He pays investment management fees as long as he remains #ith fund, albeit in return for the professional management and research. Fees are payable even in declining stage. < mutual fund investor also pays fund distribution costs, #hich he #ould not incur in direct investing. Ho#ever, this shortcoming only means that there is a cost to obtain the benefits of mutual fund services.

(- !A L-5-MAD# *-5!F-L -S nvestors #ho invest on there o#n can build their o#n portfolios of shares and bonds and other securities. nvesting through funds means he delegates this decision to the fund managers. 1he very high'net'#orth individuals or large corporate investors may find this to be a constraint in achieving their objectives. Ho#ever, most mutual fund managers help investors overcome this constraint by offering families of funds' a large number of different schemes P #ithin their o#n management company. <n investor can choose form different investment plans and construct a portfolio of his o#n.

MA(A. (. A *-5!F-L - -F F%(DS <vailability of a large number of funds can actually mean too much choice for the investor. He may again need advice on ho# to select a fund to achieve his objectives, )uite similar to the situation #hen he has to select individual shares or bonds to invest in.

2=

 #(!5& A(D #8 ! C-S! Mutual funds are a victim of their o#n success. When a large body li*e a fund invests in shares, the concentrated buying and selling often results in adverse price movement i.e. at the time of buying, the fund ends up paying a high price and by selling it reali-es a lo#er price. For obvious reasons, this problem is even more severe for funds investing in small capitali-ation stoc*s. Ho#ever, given the large si-e of debt mar*et, excluding C1 , most debt funds do not face this problem.

CHA(.# -F (D#8 C-M*-S ! -( 1he indices changing over the #orld to reflect changing mar*et conditions. 1here is an inherent survivorship bias in this process, #ith the bad stoc*s bided out and replaced by emerging blue chips. 1his is a severe problem in ndia #ith the sensex having being changing t#ice in last 5 years, #ith each change being )uite substantial. <nother reason for change index composition is Mergers and <c)uisitions. 1he #eight age of the shares of a particular company in the index changes if it ac)uires a large company not a part of the index.

2;

(hy "n&esto# Nee$s Mutua% Fun$

Mutual funds offer benefits, #hich are too significant to miss out. <ny investment has to be judged on the yardstic* of return, li)uidity and safety. Convenience and tax efficiency are the other benchmar*s relevant in mutual fund investment. n the #onderful game of financial safety and returns are the to#s opposite goals and investors cannot be nearer to both at the same time. 1he crux of mutual fund investing is averaging the ris*. Many investors possibly donKt *no# that considering returns alone, many mutual funds have outperformed a host of other investment products. Mutual funds have historically delivered yields averaging bet#een >H to /5H over a medium to long time frame. 1he duration is important because li*e #ise, mutual funds return taste bitter #ith the passage of time. nvestors should be prepared to loc* in their investments preferably for 0 years in an income fund and 5 years in an e)uity funds. 8i)uid funds of course, generate returns even in a short term.

2>

Mutua% Fun$ )is*

Mutual funds face ris*s based on the investments they hold. For example, a bond fund faces interest rate ris* and income ris*. 3ond values are inversely related to interest rates. f interest rates go up, bond values #ill go do#n and vice versa. 3ond income is also affected by the changes in interest rates. 3ond yields are directly related to interest rates falling as interest rates fall and rising as interest rates. $imilarly, a sector stoc* fund is at ris* that its price #ill decline due to developments in its industry. < stoc* fund that invests across many industries is more sheltered from this ris* defined as industry ris*. Follo#ings are glossary of some ris*s to consider #hen investing in mutual funds. Country 5is:

1he possibility that political events @a #ar, national electionA, financial problems @rising inflation, government defaultA, or natural disasters #ill #ea*en a countryKs economy and cause investments in that country to decline. ncome 5is:

1he possibility that a fixed'income fundKs dividends #ill decline as a result of falling overall interest rates. Mar:et 5is:

1he possibility that stoc* fund or bond fund prices overall #ill decline over short or even extended periods. $toc* and bond mar*ets tend to move in cycles, #ith periods #hen prices rise and other periods #hen prices fall.

54

)is* )etu#n )e'a#$ in Mutua% Fun$

:)uity Fund 3alance Fund M+ ncome Fund

$hort 1erm Fund 8i)uid Fund

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

1his graph sho#s ris* and return impact on various mutual funds. 1here is a direct relationship bet#een ris*s and return, i.e. schemes #ith higher ris* also have potential to provide higher returns.

5(

TYPES O! M T AL ! NDS

5/

Types of Mutua% Fun$

1here are a #ide variety of Mutual Fund schemes that cater to your needs, #hatever your age, financial position, ris* tolerance and return expectation. Whether as the foundation of your investment program or as a supplement, Mutual Fund schemes can help you meet your financial goals. 1he different types of Mutual Funds are as follo#s& Diversified #<uity Mutual Fund Sc1em!

< mutual fund scheme that achieves the benefits of diversification by investing in the stoc*s of companies across a large number of sectors. <s a result, it minimi-es the ris* of exposure to a single company or sector. Sectoral #<uity Mutual Fund Sc1eme

< mutual fund scheme, #hich focuses on investments in the e)uity of companies across a limited number of sectors P usually one to three. nde= Funds

1hese funds invest in the stoc*s of companies, #hich comprise major indices such as the 3$: $ensex or the $!+ C7O 7ifty in the same #eight age as the respective indices. !a= Saving #<uity Sc1emes

$chemes investing predominantly in e)uity #hich offer tax rebates to investors under specific provisions of the ncome 1ax <ct, (>9( as the ?overnment offers tax incentives for investment in specified avenues. :.g. :)uity 8in*ed $avings $chemes @:8$$A. Currently rebate uJs ;; can be availed unto a maximum investment of .s (4,444. < 8oc*'in of 0 years is mandatory.

50

Mont1ly ncome *lan Sc1eme

< mutual fund scheme #hich aims at providing regular income @not necessarily monthly, donIt get misled by the nameA to the unit holder, usually by #ay of dividend, #ith investments predominantly in debt securities @up to >5HA of corporate and the government, to ensure regularity of returns, and having a smaller component of e)uity investments @5H to (5HA to ensure higher return. ncome sc1emes

Debt oriented schemes investing in fixed income securities such as bonds, corporate debentures, ?overnment securities and money mar*et instruments. Floating-5ate De3t Fund

< fund comprising of bonds for #hich the interest rate is adjusted periodically according to a predator'mined formula, usually lin*ed to an index. .ilt Funds

1hese funds invest exclusively in government securities. 'alanced Funds

1he aim of balanced funds is to provide both gro#th and regular income as such schemes invest both in e)uities and fixed income securities in the proportion indicated in their offer documents. 1hey generally invest 24'94H in e)uity and debt instruments.

52

St#uctu#e of Mutua% Fun$

Savings !rust %nits %nit1olders

5egistrar !rust Custodian AMC

AMC nvestments 5eturns

S#'

-Fi& n . - St#"ct"#e $ M"t"!+ F"n'/

Fund $ponsor
<ny person or corporate body that establishes the Fund #ith a net #orth of .s. (4 crores and has paid out consistent returns to its investors for last three years consistently and registers it #ith $:3 can be a fund sponsor. 1he fund sponsor forms a trust and appoints board of trustees. He appoints Custodian and <sset Management Company @<MCA either directly or through trust in accordance #ith $:3 regulations. $:3 regulations also define that a sponsor must contribute at least 24 H to the net #orth of the asset management company.

55

1rustees
1rust is created through the document called 1rust deed that is executed by the fund sponsor and registered #ith $:3 . 3oard of trustees' a body of individuals or a trust company'a corporate body may manage the trust cum Mutual Fund. 1hese are protector of unit holders interests./J0 of the trustees #ill be individuals and #ill not be associated #ith the sponsors. Follo0ing are t1e rig1ts of trustees: <pprove each of the schemes floated by the assets Management Company. .ight to re)uest any necessary information from assets Management Company. .ight to ta*e corrective action if they believe that of fundKs business. .ight to dismiss the assets Management Company. :nsure that any shortfall in net #orth of the assets Management Company is made up. Follo0ing are t1e o3ligations of trustees: :nter in to an investment management agreement #ith the assets Management Company. :nsure that the fundKs transactions are in accordance #ith the trust deed. Furnish to $:3 on a half yearly basis, a report on the fundKs activities.

59

 :nsure that no change in the fundamental attributes of any scheme or the trust or any other change, #hich #ould affect the interest of unit holder, happens #ith informing to unit holder. .evie# the investor complaints received and redressed of the same by assets Management Company.

<sset Management Company

1his acts as investment manager of the trust under the board supervision and direction of trustees. n has to be approved and registered #ith $:3 . 1his #ill float and manage different investment schemes in the name of trust and in accordance #ith $:3 regulations. 1hese acts in the interest of holders and reports to the trustees. <t least 54H of the directors on the board are independent of the sponsor or the trustees. Follo0ing are t1e o3ligations of Assets Management Company: Float investment schemes only after getting approval from the trustees and $:3 . $end )uarterly reports to trustees. Ma*e the re)uired disclosures to the investors in the area such as calculation of 7<L and repurchase price. Must maintain a net #orth of at least .s.(4 crores at all the times Will not purchase or sale securities through any bro*er #ith the bro*erage of 5 H or more of the aggregate purchases and sale of securities made by the Mutual Fund in all its schemes. <ssets Management Company cannot act as trustees of any other Mutual Fund. 5=

 Do not underta*e any other activity conflicting #ith managing the fund.

Follo0ing are t1e 3odies appointed 3y t1e trustees>AMC, Custodian is the responsible person for physical handling and safe *eeping of the securities. He should be independent of the sponsor and registered #ith $:3 . ndian capital mar*et is moving a#ay from physical certificates for securities to demateriali-ed form #ith a depository. He holds demateriali-ed security holdings of Mutual Fund.

Custodian
,ften an independent organi-ation, it ta*es custody of securities and other assets of mutual fund. ts responsibilities include receipt and delivery of securities, collecting income'distributing dividends, safe*eeping of the units and segregating assets and settlements bet#een schemes. 1heir charges range bet#een 4.(5'4./ percent of the net value of the holding. Custodians can service more than one fund.

Depository
ndian capital mar*ets are moving a#ay from having physical certificates for securities, to o#nership of these securities in Vdemateriali-edK form #ith a Depository. 1hus, a mutual fundKs demateriali-ed securities holdings #ill be held by a Depository through a Depository +articipant. < fundKs physical securities #ill continue to be held by a Custodian. 1hus, deliveries of a fundKs securities are given or received by a custodian or a depository participant, at the instruction of the <MC, although under the overall direction and responsibility of the 1rustees.

5;

!1e ot1er various assets management companies? details are as under: A/ 0!n1 sp ns #e' a. 3,3 <sset Management Co. 8td. b. Canban* nvestment Management $ervices 8td. c. +73 <sset Management Co. 8td. d. $3 Funds Management 8td. e. C1 <sset Management Company @+A 8td. 0/ Instit"ti ns a. ? C <sset Management Co. 8td. b. c. D3 +rincipal <sset Management Co. 8td. 8 ! F$ <sset Management Co. 8td.

d. Eeevan 3ima $ahayog <sset Management Co. 8td. C/ P#iv!te Sect # 2* F #ei&n a. +rincipal <sset Management Co. 8td. b. Fidelity <sset Management Co. 8td. 3* In'i!n a. 3enchmar* <sset Management Co. 8td. b. Cholamandalam <sset Management Co. 8td. c. :scorts <sset Management 8td. d. E.M. Capital Management 8td. e. Fota* Mahindra <sset Management Co. 8td. f. $undaram <sset Management Company g. .eliance Capital <sset Management 8td.

5>

4* 5 int 6ent"#es - P#e' min!nt+) In'i!n a. 3irla $un 8ife <sset Management +vt. Co. 8td. b. Credit Capital <sset Management Co. 8td. c. D$+ Merrill 8ynch Fund Managers 8imited d. First ndia <sset Management +rivate 8td. 7* 5 int 6ent"#es 8 P#e' min!nt+) F #ei&n a. <lliance Capital <sset Management @ ndiaA +vt. 8td. b. Deutsche <sset Management @ ndiaA +vt. 8td. c. Dundee nvestment Management ! .esearch @+vt.A 8td. d. H$3C <sset Management @ ndiaA +rivate 8td. e. 7? nvestment Management @ ndiaA +vt. 8td. f. Morgan $tanley nvestment Management +vt. 8td. g. +rudential C C Management Co. 8td. h. $un F ! C <sset Management @ A +vt. 8td . 1empleton <sset Management @ ndiaA +vt. 8td.

94

Re"u#ato$y As%ects

9(

<MF @<ssociation of Mutual fund in ndiaA

<MF not a $elf .egulatory ,rgani-ation @$.,A. tKs made to promote mutual fund in the masses and give recommendation in order to uphold the interest of the investor.

Objectives $ AMFI: 1o define and maintain high professional and ethical standards in all areas of operation of mutual fund industry 1o recommend and promote best business practices and code of conduct to be follo#ed by members and others engaged in the activities of mutual fund and asset management including agencies connected or involved in the field of capital mar*ets and financial services. 1o interact #ith the $ecurities and :xchange 3oard of ndia @$:3 A and to represent to $:3 on all matters concerning the mutual fund industry. 1o represent to the ?overnment, .eserve 3an* of ndia and other bodies on all matters relating to the Mutual Fund ndustry. 1o develop a cadre of #ell'trained <gent distributors and to implement a +rogramme of training and certification for all intermediaries and other engaged in the industry. 1o underta*e nation #ide investor a#areness +rogramme so as to promote proper understanding of the concept and #or*ing of mutual funds.

9/

$:3 @$ecurity :xchange 3oard of ndiaA

$ecurities and :xchange 3oard of ndia @Q$:3 QA, the Capital Mar*ets regulator has clearly defined rules, #hich govern mutual funds. 1hese rules relate to the formation, administration and management of mutual funds and also prescribe disclosure and accounting re)uirements. $uch a high level of regulation see*s to protect the interest of investors. <ll Mutual Funds are registered #ith $:3 and they function #ithin the provision of strict regulations designed to protect the interests of investors. 1he operations of Mutual Funds are regularly monitored by $:3 .

.3 @.eserve 3an* of ndiaA

.eserve ban* of ndia #as the regulator of Mutual Fund before $:3 . t regulated mutual fund initially and there #ere only fe# schemes in the mar*et. 3ut no# #ith coming of $:3 , it has no# become the main regulator of the Mutual Fund. .3 no# only governs 3an* $ponsored Mutual Fund.

Ministry of Finance
1he Ministry of Finance, #hich is charged #ith implementing the government policies, ultimately supervises both the .3 and the $:3 . 3esides being the ultimate policy ma*ing and supervising entity, the M,F has also been playing the role of an <ppellate <uthority for any major disputes over $:3 guidelines on certain specific capital mar*et related guidelines P in particular any cases of insider trading or mergers and ac)uisitions.

90

Company 8a# 3oard

Mutual fund <sset Management Companies and corporate trustees are companies registered under the Companies <ct, (>59, and are therefore ans#erable to regulatory authorities empo#ered by the Companies <ct. 1he primary legal interface for all companies is the .egister of Companies @.oCA. 1he Department of Company <ffairs in turn supervises roCs. 1he DC< forms part of Company 8a# 3oard, #hich is part of the Ministry of 8a# and Eustice of the ?ovt. of ndia. 1he .oC ensures that the assets management company or the 1rustee Company as the case may be is in compliance #ith all Companies <ct provisions. <ll assets management company accounts and records are filed #ith the .oc, #ho may demand additional information and documents from the company. 1he .oC plays the role of a #atchdog #ith respect to regulatory compliance by companies. 1he Company 8a# 3oard @C83A is the apex regulatory authority under the Companies <ct. While the C83 guides the DC<, another arm of the C83 called the Company 8a# 3ench is the <ppellate <uthority for corporate offences. 1he Company 8a# 3oard @C83A is a body specially constituted by the Central ?overnment for carrying out judicial proceedings #ith respect to company affairs. $ince mutual fund assets Management Company are companies, the C83Ks role assumes importance. <s the members of assets management companies or 1rustee companies #ill usually be the sponsors and their joint venture partners or associates, it is unli*ely that mutual fund investors #ill have anything to do #ith any of these regulators. 1he authorities #ould generally regulate the assets management companies #hose shareholders may have recourse to them in specific cases.

92

nvestors .ights
+roportionate right to beneficial o#nership of schemeKs assets .ight to obtain information from trustees :ntitled to receive dividend #arrants #ithin 04 days of declaration of dividend nspect major documents of the fund <ppointment of the assets management company can be terminated by =5H of the unit holders of the scheme present and voting .ight to approve of changes in fundamental attributes of a close ended scheme @=5 H of unit holders should approveA ' right to be informed so in open ended schemes so that they can redeem .ight to receive a copy of annual financial statements of fund and periodic transaction statements =5H of the unit holders can resolve to #ind up the scheme

8egal 8imitations to nvestors

Cnit holders can not sue the trust Can initiate legal proceedings against trustees $ponsor of mutual funds have no obligation to meet any shortfall in the assured return ' unless explicitly guaranteed in the offer document 7o rights to a prospective investor

nvestor ,bligations
Carefully study the offer document before investing Monitor his investment in a scheme by referring financial statements, performance updates and research reports sent by the assets management company.

95

RESEARC&

99

Pu$%ose of t'e Resea$c'

With liberali-ation, privati-ation and globali-ation there has been a major change in the ndian Mutual Funds ndustry. 1he momentum is on and one is sure to see similar hectic activity at the offices of the ne# entrants especially after the >4Ks as private sector gained entry in the ndian mar*ets. With the private sector penetration, a large number of schemes have also been introduced due to #hich the average consumer has become vary sensitive to the ne# schemes coming its #ay. $o to ensure about the various consumer attitudes, a survey #as underta*en. De facto, to ensure #hat the "consumer thin*s% ! "#hat it thin*s the best% #e undertoo* a consumer survey, to get a clear picture of the future of the Mutual Funds companies #ho are busy #ooing the customers, #ith their lucrative schemes, to survive the rat race ! emerge as no.( in this field.

9=

)esea#ch Ob+ecti&e
.esearch ,bjectives addresses the purpose of the investigation. t is here that you 1he .esearch

layout exactly #hat is being planned by the proposed research. concrete, and achievable goals.

,bjectives flo#s naturally from the problem statement, giving the sponsor specific, t is best to list the objectives either in order of importance or in general terms first, moving to specific terms. .esearch ,bjective is the basis for judging the .esearch process. t is the final step giving exact definition of problem.

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

9;

RESEARC& MET&ODOLODY

9>

.esearch methodology is a systematic plan or schedule or program of the research done. t describes all the procedures of the research.

)esea#ch Desi,n
.esearch design can be described as an out line of a research project #or*ing or a pattern. n a research design there are series of prior decision that together provide a master plan for completing a research project. .esearch design is proved to be a bridge bet#een #hat has been established and #hat is to be done in conduct of the studies. .esearch design should be compressive and it should provide #hich method to be used and #hat #or* to be done. .esearch design describes as a master plan a series of *ey decisions that serves a model for conducting a research project. 1here are the main components of research design. ,bjective of research Data inputs

<nalysis of data collected T%e #ese!#c% 'esi&n (!s exploratory type and the focus #as on getting mutual fundKs employees vie#s for various products, expectations from mar*et.

#=ploratory 5esearc1: :xploratory study goes beyond description and attempts to explain the reasons for the phenomenon that the descriptive study only observed. 1he researcher uses theories or at least hypotheses to account for the forces that caused a certain phenomenon to occur.

=4

Sou#ces of Data
1he gathering of data may range from a simple observation at one location to a grandiose survey of multinational corporations at sites in different parts of the #orld. 1he method selected #ill largely determine ho# the data are collected. D<1< is the facts presented to the researcher from the studyKs environment. Characteristics of the data are as follo#s& Data are more metaphorical than real Data are processed by our senses'often limited in comparison to 1he senses of other living organisms. Capturing data are said to be trust#orthy because they may be Lerified. Data classify their verity by closeness to the phenomena 1here are t#o *inds of data that can be collected for research purpose. 3ased on the re)uirement in the research appropriate data is collected. 3oth the *inds of data are sho#n belo# in the figure& :rror& .eference source not found

(A +rimary data source

+rimary data are collected and gathered for the first time. +rimary data are sought for their proximity to the truth and controls over error. <dvantages of primary data are&

=(

.esearchers can collect precisely the information they #ant. 1hey usually can specify the operational definitions used and can eliminate, or at least monitor and record the extraneous influences on the data as they are gathered.

/A $econdary data source

$omeone else collects secondary data. $o, it becomes secondary information for the research. $econdary data have had least one level of interpretation inserted bet#een the event and its recording. .easons for using the secondary data are listed belo#& 1hey fill a need for specific reference or citation on some point $econdary data are an integral part of a larger research study $econdary data may be used as the sole basis for a research study, since n many research situations one cannot conduct primary research 3ecause of physical, legal, or cost influences. <naly-ing the re)uirement of data, it #as found that primary data is more important for achieving .esearch ,bjective. interviews. Primary data is collected with the help of

=/

Samp%in, P%an
Collecting the re)uired information from the right source is very important. $ources from #hich the data are collected differ as per the re)uired of researcher. 3asically there are t#o types of data collection sources&

(A $ampling Cnit&
1he sampling unit primarily consisted of investors li*e businessman, professionals, salaried employees and others. 1he sample unit is ta*en from the $urat city of ?ujarat region.

/A $ample $i-e&
1hough large sample give more reliable results than small samples but increases the cost, time and non'sampling error. Feeping in vie# these constraints (44 respondents #ere chosen. <ttempts have been made to see that samples are chosen from different areas of $urat. have ta*en (44 responds as a sample si-e for this particular project.

=0

1he follo#ing table sho#s area #ise distribution of sample si-e. A9EA CDH7< M,.<3H<?<8 <D<E<7 .<7D:. .,<D .<8W<D $1<1 ,7 .,<D +<.8: +, 71 ?H,DD,D .,<D + +8,D M<EC.<?<1: . 7? .,<D 3H<?<8 F<1<.?<M L<.<CH< C 1D 8 ?H1 .,<D 7<7+C.< +<7D:$<.< L:D .,<D +<8 3H:$1<7 TOTA: SAMP:E (= 0 (5 (= 5 5 ; / / 2 2 2 / 9 / ( ( ( ( 2;;

=2

Data Co%%ection Metho$

-This step in&o%&es ma*in, a &e#y specific p%an about ho' you 'i%% con$uct you# #esea#ch an$ co%%ect you# $ata./

(A $urveys ! Buestionnaires
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

=5

DATA ANALYSIS AND !INDIN(S

=9

B'( #hich investment avenues are you a#are ofW

7L:$1M:71 <L<7C:$ :BC 1DJMC1C<8 FC7D +,$1 ,FF C: F.D. ,1H:.$

F.:BC:7CD (44 >2 ;9 ((

+:.C:71<?: 02.09H 0/.04H />.55H 0.=>H

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

(Fig no A: - Define investments avenues) nterpretation: From the above charts #e can interpret that a#areness of e)uityJmutual fund, post office @7$C, FL+, and ++FA, fixed deposits is more compare to others li*e ?,L1 $$C:D nstrument, ?,L1 3ac*ed nstrument, .eal :state, gold etc. so HDFC assets Management Company needs to focus more on those investors #ho are more invest in FL+, 7$C, ++F and fixed deposits.

==

B'/ do you invests in mutual fundW

D:$ >= 7, 0

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)

From the above chart it is getting clear that no# a days people are li*e to invest their money in mutual fund of different assets management company, out of (44 people sampled >= are investing in the mutual fund.

=;

B'0 f yes, in #hich assets class do you #ant to invest in Mutual FundW

1D+:$ ,F $CH:M:$ :BC 1D D:31 8 BC D

.:$+,7$: +:.C:71<?: ;9 =/./=H /= //.9>H 9 5.42H

-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) From the above chart it is getting clear that from (44 peoples sample ;9@=/./=HA people are invest in e)uity assets class and /=@//.9>HA people choose to invests in debt class but only just 9@5.42HA peoples choose to invests in li)uid class.

=>

B'2 Do you invest in HDFC assets management company 8imitedW

D:$ 59

7, 22

1,1<8 (44

&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.

;4

B'5 f yes, in #hich scheme #ould you invest in HDFC assets Management company limitedW
NO OF IN6ESTOE9S 20 / (= 05 0 (9 ( (9 5

SCHEMES OF HDFC :BC 1D FC7D C<+ 1<8 3C 8D:. FC7D +.CD:7C: FC7D 1<O $<L:. FC7D C,.: <7D $<1:8 1: FC7D 1,+ /44 FC7D 3<8<7C:D FC7D ?.,W1H FC7D ,1H:.$ FC7D

=< <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) From the above chart #e can see that in HDFC assets Management CompanyKs :BC 1D FC7D maximum number @20A of people are invest. n 1<O $<L:. FC7D 05 number of people invests. n both 1,+ /44 FC7D and ?.,W1H FC7D (9 numbers of people are invests but in 3<8<7C:D FC7D, C<+ 1<8 3C 8D:. FC7D, C,.: <7D $<1:8 1: FC7D only (,/ and 0 people are invest so investors are not invested in these 0 schemes. n +.CD:7C: FC7D (= numbers of people are invested.

;(

B'9 3y #hich medium you invest in HDFC assets Management company limitedW
MEDIUM OF IN6ESTMENT D $1. 3C1,. 3<7F ,78 7: NO OF PEOP:E ; 2; 4

=< <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) From the above chart itKs getting cleared that most of the peoples @2;A are invest by ban* and only ; peoples are invest by distributors. 7obody invests through online. $o here HDFC assets Management Company has to provide facility by #hich investors invest their money #ith out any middle man in mutual fund schemes through online. 7otes& ' here out of (44 responds, 22 responds are not invest in HDFC assets Management Company. 1hese responds are not considered in these )uestions.

;/

B'= #hy do you prefer investing in HDFC assets Management company limitedW
P9EFENCE C9ITE9IA 3:11:. FC7D H,C$: :OC:88:71 CC$1,M:. $:.L C: +.,L D:. C,7$ $1<71 .:1C.7 ,1H:.$ NUM0E9 20 (5 22 (

=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#

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

<THE-+

From the above pie ' chart it can be seen that majority of the people that is 22 peoples give first ran* to consistent return and 20 peoples invest in HDFC assets management company because HDFC assets management company is a better fund house and (5 peoples believes that HDFC assets Management Company provides :OC:88:71 CC$1,M:. $:.L C:.

;0

B'; n #hich type of product Jschemes #ould you prefer #hile nvested in e)uity schemes of HDFC assets management Company limitedW

TYPES OF SCHEMES ,+:7 :7D:D C8,$: :7D:D

9ESPONSE 50 0

-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) From the above chart it is getting clear that most of peoples @50A prefer to invest in ,+:7 :7D:D e)uity schemes and only just 0 peoples #ant to invest in C8,$: :7D:D e)uity schemes of HDFC assets Management Company. 7otes& ' here out of (44 responds, 22 responds are not invest in HDFC assets Management Company. 1hese responds are not considered in these )uestions.

;2

B'> do you *no# about on going ne# fund offer of HDFC <ssets Management company limitedW

A<A9ENESS OF NFO D:$ 7, 1,1<8

NUM0E9 5; 2/ (44

PE9CENTAGE 5;H 2/H (44H

=3)>E-

42 :E+ =< #0

(Fig no "+: - Define a0areness level a3out on going (F- of HDFC assets Management Company,) 1he above pie ' chart sho#s that around 5;H people a#are of on going ne# fund offer of HDFC assets Management Company and only 2/H people are una#are from on going ne# fund offer of HDFC assets management company.

;5

!INDIN(S

;9

Findings
<lmost 59H are investing in HDFC assets management companyKs schemes. ,ut of the total respondent almost 04H said that they invest in fixed deposit and nsurance. Where as 02H said that they invest in $hares and mutual funds, #here as 0/H says that they invest in post office schemes. >=H of the investor #as found #ho is invested their savings in different schemes of mutual fund. 50 respondents prefer to invest in a open ended schemes of HDFC assets management company, #here as remaining only 0 respondents prefer to invest in a close ended of HDFC assets management company. t is found that a#areness level about Mutual Funds is >=H in $urat city of ?ujarat. ,ut of the total respondent =/./=H are investing in e)uity schemes. Where as remaining //.9>H prefer debt and 5.42H prefer to invest in li)uid schemes. HDFC assets Management Company are also highly popular for their consistent return and 20 responds believes that HDFC assets Management Company is better fund house. While only just (5 responds believes that HDFC assets Management Company provides :OC:88:71 CC$1,M:. $:.L C:.

;=

 ,ut of the total respondents almost 2; responds are investing through ban*, only ; responds investing their money by distributor and nobody invested by online. 1he 5;H of the respondent #ere a#are about the ongoing 7F, of HDFC assets management company and 2/H #ere not a#are about the ongoing 7F, of HDFC assets management company. n HDFC assets Management CompanyKs :BC 1D FC7D maximum number @20A of people are invested and n 1<O $<L:. FC7D 05 number of people are invests.

;;

LIMITATIONS

;>

Limitations of research
1his exploratory research is done focusing on the investment scenario of $urat city of ?ujarat region only and therefore findings and suggestions given on the basis of this research and cannot be considered for the entire Mutual Fund ndustry of ndia. $ome of the people, out of various sectors that had visited for study, did not give me cooperative response. Due to small mar*et and time limit could ta*e only (44 responses. <nother limitation is that due to lac* of *no#ledge and education many investors donKt *no# the basic ideas behind mutual fund. Due to 1ime constraint could not analy-e more. My o#n inexperience in research area might have affected the study.

>4

CONCL SIONS

>(

Conclusions
Half of the respondents are investing in different schemes of mutual fund companies. 1he investors prefer investing more in ban*s and post office, #hich sho#s that investors #ant security, and assured returns. ,thers than 3an*s and post office the next preference of investors #ho go for ris*y preposition in shares and Mutual Funds. 1hat is basically due to misconception that Mutual Fund Companies usually invest in e)uity mar*et, #hich sha*es trust of people in Mutual Fund. Majority of investors invested in open'ended schemes. 1he a#areness level about HDFC assets Management Company is moderate but still the a#areness should be created because 22H peoples still not invest in HDFC assets Management Company. <s the investor prefers safe investment and #ant consistent return, they invest in debt schemes @//.9>HA. 1he investors prefer HDFC assets Management Company more because of the tax benefit and consistent return. Mutual funds are also preferred because of the cost effectiveness and higher income by investing in e)uity schemes. 1he ban*s mostly ma*e the investments through the agentKs follo#ed.

>/

 +rofessional and 3usiness class, #hich is considered to be the most *no#ledgeable class of the region prefers Mutual Funds less compare to service class. 1he time frame of the investment by majority of the investors is open'ended schemes in #hich their money is not loc*ed for 0 to 5 years.

>0

RECOMMENDATION S

>2

Recommendations
1he company should try to ma*e a#are people about their different schemes through the road sho#6 seminars and presentation that it is not just e)uity based schemes but also debt and li)uid or balanced schemes also promoted by company. Company has to put hoardings, banners, pamphlets in that area #here peoples can #atch easily. 1he customers should be made a#are that if the time frame of the investment is more than 0 years :)uity option is the best tool for investing in mutual fund by this investors getting good and high returns for their investments. 1he company should be conducting special training and motivation +rogramme for their distributors and also for investors so that they are being motivated to #or*, their )uality of performance and contribution in sales is maintained. Company has to provide application forms and other promotional materials to their distributors time to time and company has to maintain better relationship #ith their distributors by these they can give good contribution in investments. 7one of responds invest their money in different schemes of company 3y ,nline, so company has opportunity to launch online services for their distributors and retail investors.

>5

 CompanyKs core and satellite fund, balanced fund, capital builder fund are preferred by very fe# investors because this schemes not perform #ell so company has to thin* about their companies in #hich they invest investorKs money so they have to change portfolio of investments.

Most of the people still preferred to invest in post office schemes and fixed deposits so company has to focus on these investors.

>9

ANNE) RE

>=

0uestionnai#e

=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

>;

#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

>>

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

Th nG you for your tim!.

G%ossa#y

(et Asset 4alue ((A4) 7et <sset Lalue is the mar*et value of the assets of the scheme minus its liabilities. 1he per unit 7<L is the net asset value of the scheme divided by the number of units outstanding on the Laluation Date. Sale *rice 1he price you pay #hen you invest in a scheme. <lso called ,ffer +rice. t May include a sales load. 5epurc1ase *rice 1he price at #hich a close'ended scheme repurchases its units and it may nclude a bac*'end load. 1his is also called 3id +rice. 5edemption *rice 1he price at #hich open'ended schemes repurchase their units and close' :nded schemes redeem their units on maturity. 1hese prices are 7<L .elated. 5epurc1ase or C'ac:-end? Load < charge collected by a scheme #hen it buys bac*s the units from the unit

(44

Holders.

#=pense 5atio: 1he :xpenses of a scheme include management fees and all the fees associated #ith the schemeIs daily operations. :xpense .atio refers to the annual percentage of fundIs assets that is paid out in expenses and can affect the performance of the scheme. #=it Load: t is the load charged by the fund #hen one redeems the units from the fund. t reduces the price of the units to less than the 7<L and is expressed as a percentage of 7<L. Face 4alue: 1he original issue price of one unit of a scheme, generally .s (4. Loc:-in period: 1he cooling period after investment in fresh units during #hich the investor Cannot redeem the units.

(o Load: t refers to the fund that does not charge any load for buying or selling its units, i.e. the investor can transact at the 7<L.

(4(

!ist of tab%e

$r. 7o. ( / 0 2 5 9 = ; > (4 (( (/

7ame of 1able ,ffices of HDFC assets management company limited ,ther various assets management companiesK details <rea #ise distribution of sample si-e. Define investments avenues Define investments in mutual fund Define schemes preferred by investors Define investment in HDFC assets management company Define scheme in #hich investors invest in HDFC assets management company Define medium choose by investors for invest in HDFC assets management company Define +.:F:7C: C. 1:. < of investors Define type of product Jschemes investors prefer for investments. Define a#areness level about on going 7F, of HDFC assets management company.

+age 7o. (= 92 => ;/ ;0 ;2 ;5 ;9 ;= ;; ;> >4

(4/

!ist of G#aph
S#* N * ( / 0 2 5 9 = ; > (4 (( (/ (0 (2 (5 (9 (= N!me $ G#!p% ,ffice locations of HDFC <ssets Management Company Different 1ypes of +roducts ?ro#th of <sset ,ver 1he year 1ypes of customers Mutual Fund Cycle .is* .eturn in Mutual Fund $tructure ,f Mutual Fund Classification ,f Data Define investments avenues Define investments in mutual fund Define schemes preferred by investors Define invest in HDFC assets management company Define scheme in #hich investors invest in HDFC assets management company Define medium choose by investors for invest in HDFC assets management company Define +reference criteria of investors Define type of product Jschemes investors prefer for investments. Define a#areness level about on going 7F, of HDFC assets management company. P!&e N * // /2 0> 24 2> 59 94 =9 ;/ ;0 ;2 ;5 ;9 ;= ;; ;> >4

(40

1ib%io,#aphy
3oo*s

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.

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

(42

CE9TIFICATE 1his is to certify that Mr. 0!'!mi =!+pes% D* has satisfactorily completed the project #or* entitled, >M"t"!+ $"n' A(!#eness in 9et!i+ Invest #s O$ HDFC Assets m!n!&ement c mp!n) in S"#!t? 0!se' on the declaration made by the candidate and my association as a guide for carrying out this #or*, recommended this project report for evaluation as a part of the M3< programmer of Leer 7armad $outh ?ujarat Cniversity.

+lace& Date&

XXXXXXXXXXXXXXX @Dr. .. $. $hahA

1his project is for#arded for evaluation to the Leer 7armad $outh ?ujarat Cniversity.

+lace& Date& XXXXXXXXXXXXXXXXXXXX Director of ?. M$ @Dr. .. $. $hahA

(45

(49