A Study On Mutual Fund - (Rajni) Mba (Fin), Rdias.................. Delhi Cantt-110010

CHAPTER – 1
INTRODUCTION
1.1 INTRODUCTION TO MUTUAL FUND
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is invested by the fund
manager in different types of securities depending upon the objective of the
scheme.These could range from shares to debentures to money market instruments. The
income earned in these investments and the capital appreciation realized by the scheme is
shared by its unit holders in proportion to the number of units owned by them. Thus 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 low
cost. Anybody with an invest able surplus of a few thousand rupees can invest in Mutual
Funds. Each Mutual Fund scheme has a defined investment objective and strategy.
A mutual fund is the ideal investment vehicle for today’s complex and modern
financial scenario. Markets for equity shares, bonds and other fixed income instruments,
real estate, derivatives and other assets have become mature and information driven.
Price changes in these assets are driven by global events occurring in faraway places. A
typical individual is unlikely to have the knowledge, skills, inclination and time to keep
track of events, understand their implications and act speedily.
A mutual fund is answer to all these situations. It appoints professionally

qualified and experienced staff that manages each of these functions on a fulltime basis.
The large pool of money collected in the fund allows it to hire such staff at a very low
cost to each investor. In fact, the mutual fund vehicle exploits economies of scale in all
three areas –research, investment and transaction processing.
A draft offer document is to be prepared at the time of launching the fund.

Typically, it pre specifies the investment objective of the fund, the risk associated, the
Rukmini Devi Institute of Advanced Studies 1

cost involved in the process and the broad rules for entry into and exit from the fund and
other areas of operation. In India, as in most countries, these sponsors need approval
from a regulator, SEBI in our case. SEBI looks at track records of the sponsor and its
financial strength in granting approval to the fund for commencing operations.
A sponsor then hires an asset management company to invest the funds

according to the investment objective. It also hires another entity to be the custodian of
the assets of the fund and perhaps a third one to handle registry work for the unit holders
of the fund.In the Indian context, the sponsors promote the Asset Management Company
also,in which it holds a majority stake. In many cases a sponsor can hold a 100% stake in
the Asset Management Company (AMC). E.g. Birla Global Finance is the sponsor of the
Birla Sun Life Asset Management Company Ltd., which has floated different mutual
funds schemes and also acts as an asset manager for the funds collected under the
schemes.
As per SEBI regulations, mutual funds can offer guaranteed returns for a
maximum period of one year. In case returns are guaranteed, the name of the guarantor
and how the guarantee would be honored is required to be disclosed in the offer
document.
Investments in securities are spread across a wide cross-section of industries and

sectors and thus the risk is reduced. Diversification reduces the risk because all stocks
may not move in the same direction in the same proportion at the same time. Mutual fund
issues units to the investors in accordance with quantum of money invested by them.
Investors of mutual funds are known as unit holders.

1.2 THE CONCEPT OF MUTUAL FUND IN DETAIL :-
A mutual fund uses the money collected from investors to buy those assets which
are specifically permitted by its stated investment objective. Thus, an equity fund would
buy equity assets – ordinary shares, preference shares, warrants etc. A bond fund would
buy debt instruments such as debentures, bonds or government securities. It is these
assets which are owned by the investors in the same proportion as their contribution
bears to the total contributions of all investors put together.
Any change in the value of the investments made into capital market instruments
(such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme.
NAV is defined as the market value of the Mutual Fund scheme's assets net of its
liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets
by the total number of units issued to the investors.
A Mutual Fund is an investment tool that allows small investors access to a well-
diversified portfolio of equities, bonds and other securities. Each shareholder participates
in the gain or loss of the fund. Units are issued and can be redeemed as needed. The
funds Net Asset value (NAV) is determined each day.

When an investor subscribes to a mutual fund, he or she buys a part of the assets
or the pool of funds that are outstanding at that time. It is no different from buying
“shares” of joint stock Company, in which case the purchase makes the investor a part
owner of the company and its assets. In fact, in the USA, a mutual fund is constituted as
an investment company and an investor “buys in to the fund”, meaning he buys the
shares of the fund. In India, a mutual fund is constituted as a Trust and the investor
subscribes to the “units” issued by the fund, which is where the term Unit Trust comes
from. However, whether the investor gets fund shares or units is only a matter of legal
distinction. In any case, a mutual fund shareholder or unit-holder is a part owner of the
fund’s assets. The term unit-holder includes the mutual fund account-holder or close-end
fund shareholder.

A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in capital
market instruments such as shares, debentures and other securities. The income earned
through these investments and the capital appreciation realized is shared by its unit
holders in proportion to the number of units owned by them. Thus Mutual fund is most
suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost.
1.3 MUTUAL FUND OPERATION FLOW CHART :-

CHART 1.2
From the above chart , it can be observed that how the money from the investors
flow and they get returns out of it. With a small amount of fund, investors pool their
money with the funds managers. Taking into consideration the market strategy the funds
managers invest this pool of money into reliable securities. With ups and downs in
market returns are generated and they are passed on to the investors. The above cycle
should be very clear and also effective.
The fund manager while investing on behalf of investors takes into consideration
various factors like time, risk, return, etc. so that he can make proper investment
decision.

1.4 ADVANTAGES OF MUTUAL FUND :-
The following are the major advantages offered by mutual funds to all investors:-
• PROFESSIONAL EXPERTISE : -
Fund managers are professionals who track the market on an on going
basis. With heir mix of professional qualification and market knowledge, they are
better placed than the average investor to understand the markets.
• DIVERSIFICATION :-
Since a mutual fund scheme invests in number of stocks and/or
debentures, the ssociated risks are greatly reduced.
• RELATIVELY LESS EXPENSIVE :-

When compared to direct investments in the capital market, mutual funds
cost less. This is due to savings in brokerage costs, demat costs, depository costs
etc.
• LIQUIDITY :-
Investments in mutual funds are completely liquid and can be redeemed at
Net Assets Value (NAV) related price on any working day.
• TRANSPARENCY :-
You will always 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 manager’s investment
strategy.
• FLEXIBILITY :-
Through features such as regular investment plans, regular withdrawal
plans and dividend investment plans, you can systematically invest or withdraw
funds according to your needs and convenience.

• SEBI REGULATED :-
All mutual funds are registered with SEBI and function within the provisions and
regulations that protect the interests of investors.
1.5 DISADVANTAGES OF MUTUAL FUND :-

The main disadvantages of mutual fund are high lightened as below:-
• NO CONTROL OVER COST :-

Any investor in a mutual fund has no control over the overall cost of investing.
He pays investment management fees as long as he remains with fund, albeit in return for
the professional management and research. Fees are payable even in declining stage. A
mutual fund investor also pays fund distribution costs, which he would not incur in direct
investing. However, this shortcoming only means that there is a cost to obtain the
benefits of mutual fund services.
• NO TAILOR-MADE PORTFOLIOS :-
Investors who invest on there own can build their own portfolios of shares and
bonds and other securities. Investing through funds means he delegates this decision to
the fund managers. The very high-net-worth individuals or large corporate investors may
find this to be a constraint in achieving their objectives. However, most mutual fund
managers help investors overcome this constraint by offering families of funds- a large
number of different schemes – within their own management company. An investor can
choose form different investment plans and construct a portfolio of his own.
• MANAGING A PORTFOLIO OF FUNDS :-

Availability of a large number of funds can actually mean too much choice for the
investor. He may again need advice on how to select a fund to achieve his objectives,
quite similar to the situation when he has to select individual shares or bonds to invest in.

• ENTRY AND EXIT COST :-
Mutual funds are a victim of their own success. When a large body like 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 realizes a lower price. For obvious reasons, this problem is even more severe for funds
investing in small capitalization stocks. However, given the large size of debt market,
excluding UTI, most debt funds do not face this problem.
• CHANGE OF INDEX COMPOSITION :-

The indices changing over the world to reflect changing market conditions. There
is an inherent survivorship bias in this process, with the bad stocks bided out and
replaced by emerging blue chips. This is a severe problem in India with the sensex
having being changing twice in last 5 years, with each change being quite substantial.
Another reason for change index composition is Mergers and Acquisitions. The weight
age of the shares of a particular company in the index changes if it acquires a large
company not a part of the index.
1.6 WHY INVESTOR NEEDS MUTUAL FUND:-

Mutual funds offer benefits, which are too significant to miss out. Any investment
has to be judged on the yardstick of return, liquidity and safety. Convenience and tax
efficiency are the other benchmarks relevant in mutual fund investment. In the wonderful
game of financial safety and returns are the tows opposite goals and investors cannot be
nearer to both at the same time. The crux of mutual fund investing is averaging the risk.
Many investors possibly don’t know that considering returns alone, many mutual
funds have outperformed a host of other investment products. Mutual funds have
historically delivered yields averaging between 9% to 25% over a medium to long time
frame. The duration is important because like wise, mutual funds return taste bitter with
the passage of time. Investors should be prepared to lock in their investments preferably
for 3 years in an income fund and 5 years in an equity funds. Liquid funds of course,
generate returns even in a short term.

1.7 MUTUAL FUND RISK :-
Mutual funds face risks based on the investments they hold. For example, a bond
fund faces interest rate risk and income risk. Bond values are inversely related to interest
rates. If interest rates go up, bond values will go down and vice versa. Bond income is
also affected by the changes in interest rates. Bond yields are directly related to interest
rates falling as interest rates fall and rising as interest rates.
Similarly, a sector stock fund is at risk that its price will decline due to developments
in its industry. A stock fund that invests across many industries is more sheltered from
this risk defined as industry risk.
Followings are glossary of some risks to consider when investing in mutual funds:-
• COUNTRY RISK :-
The possibility that political events (a war, national election), financial problems
(rising inflation, government default), or natural disasters will weaken a country’s
economy and cause investments in that country to decline.
• INCOME RISK :-
The possibility that political events (a war, national election), financial problems
(rising inflation, government default), or natural disasters will weaken a country’s
economy and cause investments in that country to decline.
• MARKET RISK :-
The possibility that stock fund or bond fund prices overall will decline over short or
even extended periods. Stock and bond markets tend to move in cycles, with periods
when prices rise and other periods when prices fall.

GRAPH 1.3:- RISK RETURN REWRAD IN MUTUAL FUND
Equity Fund
Balance Fund
MIP
Income Fund
Short Term
Fund
Liquid Fund
This graph shows risk and return impact on various mutual funds. There is a direct
relationship between risks and return, i.e. schemes with higher risk also have potential to
provide higher returns.

CHAPTER-2
OBJECTIVES OF THE STUDY
The present study has been undertaken with the object of examining, analyzing and
inferring the performance of the mutual funds, The main objectives of the study are as
follows :-
1) Analyzing mutual fund awareness in retail investors of HDFC assets Management

Company in DELHI.
2) To know the Preferences for the portfolios.
3) To find out the most preferred channel.
4) To find out what should do to boost Mutual Fund Industry.
5) To know why one has invested or not invested in HDFC Mutual fund
6) To analyze the history of HDFC mutual fund

7) To learn about various aspect of HDFC mutual fund
8) To understand the best way to attract customer investing in mutual fund by
understanding the factors responsible for making a mutual fund successful.
2.1 PURPOSE OF THE STUDY
With liberalization, privatization and globalization there has been a major change in the
Indian Mutual Funds Industry. The momentum is on and one is sure to see similar hectic
activity at the offices of the new entrants especially after the 90’s as private sector gained
entry in the Indian markets.
With the private sector penetration, a large number of schemes have also been introduced
due to which the average consumer has become vary sensitive to the new schemes
coming its way. So to ensure about the various consumer attitudes, a survey was
undertaken.

De facto, to ensure what the “consumer thinks” & “what it thinks the best” we undertook
a consumer survey, to get a clear picture of the future of the Mutual Funds companies
who are busy wooing the customers, with their lucrative schemes, to survive the rat race
& emerge as no.1 in this field. The main purpose of the study are as follows:-
• To understand the best way to attract customer investing in mutual fund by
understanding the factors responsible for making a mutual fund successful.
• To find out what should do to boost Mutual Fund Industry.
• Analyzing mutual fund awareness in retail investors of HDFC assets Management

Company in DELHI.
• To find out the most preferred channel.
2.2 SCOPE OF THE STUDY
A big boom has been witnessed in Mutual Fund Industry in resent times. A large number
of new players have entered the market and trying to gain market share in this rapidly
improving market.
The study will help to know the preferences of the customers, which company, portfolio,
mode of investment, option for getting return and so on they prefer. This project report
may help the company to make further planning and strategy.

CHAPTER-3
RESEARCH METHODOLOGY OF THE STUDY
RESEARCH METHODOLOGY:-
Research methodology is a way to systematically show the research problem. It

may be understood as a science of studying how research is done scientifically. It is
necessary for the researcher to know not only the research methods but also the
methodology. This Section includes the methodology which includes. The research
design, objectives of study, scope of study along with research methodology and
limitations of study etc.
3.1- RESEARCH DESIGN:-
Research design can be described as an out line of a research project working or a

pattern. In a research design there are series of prior decision that together provide a
master plan for completing a research project. Research design is proved to be a bridge
between what has been established and what is to be done in conduct of the studies.
Research design should be compressive and it should provide which method to be used
and what work to be done.
Research design describes as a master plan a series of key decisions that serves a
model for conducting a research project. There are the main components of research
design.
 Objective of research
 Data inputs
 Analysis of data collected
The research design was exploratory type and the focus was on getting
mutual fund’s employees views for various products, expectations from market.

EXPLORATORY RESEARCH:-
Exploratory study goes beyond description and attempts to explain the reasons for
the phenomenon that the descriptive study only observed. The researcher uses theories or
at least hypotheses to account for the forces that caused a certain phenomenon to occur.
3.2 – SOURCES OF DATA:-
The 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 world. The
method selected will largely determine how the data are collected. DATA is the facts
presented to the researcher from the study’s environment. Characteristics of the data are
as follows:
 Data are more metaphorical than real

 Data are processed by our senses-often limited in comparison to
The senses of other living organisms.
 Capturing data are said to be trustworthy because they may be
Verified.
 Data classify their verity by closeness to the phenomena
There are two kinds of data that can be collected for research purpose. Based on
the requirement in the research appropriate data is collected.
A - PRIMARY SOURCE:-
Primary data are collected and gathered for the first time. Primary data are sought
for their proximity to the truth and controls over error. Advantages of primary data are:
 Researchers can collect precisely the information they want.
 They 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.

B – SECONDARY SOURCE:-
Someone else collects secondary data. So, it becomes secondary information for the
research. Secondary data have had least one level of interpretation inserted between the
event and its recording. The secondary data was collected on the basis of organizational
file, official records, news papers, magazines, management books, preserved information
in the company’s database and website of the company.
Reasons for using the secondary data are listed below:
 They fill a need for specific reference or citation on some point

 Secondary data are an integral part of a larger research study
 Secondary 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, legal, or cost influences.
Analyzing the requirement of data, it was found that primary data is more important for
achieving Research Objective. Primary data is collected with the help of interviews.
3.3- SAMPLING :-
Sampling refers to the method of selecting a sample from a given universe with a view to
draw conclusions about that universe. A sample is a representative of the universe
selected for study.
SAMPLE SIZE:-
Large sample gives reliable result than small sample. However, it is not feasible to target
entire population or even a substantial portion to achieve a reliable result. So, in this
aspect selecting the sample to study is known as sample size. Hence, for my project my
sample size was 50.
The Sample Size consists of both the Professional and Business class people. IT peoples,
Doctors, Jewelers, Timber Merchants & Real estate Agents are taken as Sample.

SAMPLING TECHNIQUE:-
Random sampling technique was used in the survey conducted.
TOOLS OF ANALYSIS:-
Data has been presented with the help of bar graph, pie charts, line graphs etc.
PLAN OF ANALYSIS:-
Tables were used for the analysis of the collected data. The data is also neatly
presented with the help of statistical tools such as graphs and pie charts. Percentages and
averages have also been used to represent data clearly and effectively.
3.4 - DATA COLLECTION INSTRUMENT DEVELOPMENT:-

The mode of collection of data will be based on Survey Method and Field Activity.
Primary data collection will base on personal interview. I have prepared the questionnaire
according to the necessity of the data to be collected.
3.5 LIMITATIONS OF THE STUDY:-

This study also includes some limitations which have been discussed as follows:
• Though every one used to be very co-operative but every detail was unable to be
disclosed to me as the officials has to maintain secrets of the company.
• It is difficult to cover all the function of the company.
• Because of the limited time period, the survey work was conducted in the Delhi
region and the sample size was taken as 20 respondents only.
• Some of the persons were not so responsive.
• Some respondents were reluctant to divulge personal information which can

affect the validity of all responses.

• Possibility of error in data collection because many of investors may have not
given actual answers of my questionnaire.
CHAPTER – 4
REVIEW OF LITERATURE
All information pertaining to mutual fund has been collected through vast source of
literature which includes books, journals, websites and some topics have been picked
from newspaper as well.
BOOKS: - Books have proved to be the most important source of information contained
in the project most theoretical aspects related to mutual funds have been taken from it,
topics like advantages and disadvantage of mutual fund, types of mutual fund and
structure have been directly from there.
WEBSITES:- Guidelines of SEBI and other aspects of mutual fund which are subject to
change over time have been collected from websites of securities and exchange board of
India national stock exchange and mutual fund sites.
NEWSPAPER:- Newspaper have provided with the fresh updates and other information
related to what investment strategies can be recommended to the investors.
JOURNAL:- Bostan journal have also provided with some valuable information
pertaining to model portfolios which has helped in better understanding of the subject
concerned.

CHAPTER-5
INTRODUCTION TO THE INDUSTRY
5.1 THE HISTORY OF INDIAN MUTUAL FUND:-
The mutual fund industry in India started in 1963 with the formation of Unit Trust
of India, at the initiative of the Government of India and Reserve Bank. Though the
growth was slow, but it accelerated from the year 1987 when non-UTI players entered
the Industry.
In the past decade, Indian mutual fund industry had seen a dramatic improvement,
both qualities wise as well as quantity wise. Before, the monopoly of the market had seen
an ending phase; the Assets Under Management (AUM) was Rs67 billion. The private
sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till
April 2004; it reached the height if Rs. 1540 billion.
The Mutual Fund Industry is obviously growing at a tremendous space with the
mutual fund industry can be broadly put into four phases according to the development of
the sector. Each phase is briefly described as under.
FIRST PHASE -1964-87 (MONOPOLY OF UTI) :-
An Act of Parliament established Unit Trust of India (UTI) on 1963. It was set up
by the Reserve Bank of India and functioned under the Regulatory and administrative
control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the
Industrial Development Bank of India (IDBI) took over the regulatory and administrative
control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the
end of 1988 UTI had Rs.6, 700 crores of assets under management.
SECOND PHASE -1987-93( ENTRY OF PUBLIC SECTOR FUNDS) :-

1987 marked the entry of non- UTI, public sector mutual funds set up by public
sector banks and Life Insurance Corporation of India (LIC) and General Insurance
Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund
established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National
Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun
90), and Bank of Baroda
Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set
up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of Rs.47,
004 crores.
THIRD PHASE-1993-2003(ENTRY OF PRIVATE SECTOR FUNDS):-
With the entry of private sector funds in 1993, a new era started in the Indian mutual
fund industry, giving the Indian investors a wider choice of fund families. Also, 1993
was the year in which the first Mutual Fund Regulations came into being, under which all
mutual funds, except UTI were to be registered and governed. The erstwhile Kothari
Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund
registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the
SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual funds
setting up funds in India and also the industry has witnessed several mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets
of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under
management was way ahead of other mutual funds.
FOURTH PHASE-(SINCE FEBRUARY 2003) :-
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust

of India with assets under management of Rs.29, 835 crores as at the end of January
2003, representing broadly, the assets of US 64 scheme, assured return and certain other
schemes. The Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India and does not come
under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of
assets under management and with the setting up of a UTI Mutual Fund, conforming to
the SEBI Mutual Fund Regulations, and with recent mergers taking place among
different private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. As at the end of October 31, 2003, there were 31 funds, which
manage assets of Rs.126726 crores under 386 schemes.
GRAPH:-5.1:- The following figure shows the growth in AUM (Asset under
Management) of the Indian Mutual Fund Industry as on March 2009

Erstwhile UTI was bifurcated into UTI Mutual fund and the Specified Undertaking of the
Unit Trust of India effective from February 2003. The Assets under management of the
Specified Undertaking of the Unit Trust of India has thereof been executed from the total
assets of the industry as a whole from February 2003 onwards. Today there are over 30
AMC’s offering a huge number of schemes giving the investor a huge horizon to choose
from. The market has become very competitive with the companies fighting tooth and
nail to attract and keep the investor from investing in their competitor’s schemes.
5.2 STRUCTURE OF A MUTUAL FUND :-
CHART-5.2:-

THE STRUCTURE CONSISTS OF:-
SPONSOR:-
Sponsor is the person who acting alone or in combination with another body corporate
establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the
Investment managed and meet the eligibility criteria prescribed under the Securities and
Exchange Board of India (Mutual Fund) Regulations, 1996. The sponsor is not
responsible or liable for any loss or shortfall resulting from the operation of the Schemes
beyond the initial contribution made by it towards setting up of the Mutual Fund.
TRUST
The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian
Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian
Registration Act, 1908.
TRUSTEE
Trustee is usually a company (corporate body) or a Board of Trustees (body of
individuals). The main responsibility of the Trustee is to safeguard the interest of the unit
holders and ensure that the AMC functions in the interest of investors and in accordance
with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the
provisions of the Trust Deed and the Offer Documents of the respective Schemes. At
least 2/3rd directors of the Trustee are independent directors who are not associated with
the Sponsor in any manner
FOLLOWING ARE THE RIGHTS OF TRUSTEES:-
 Approve each of the schemes floated by the assets Management Company.
 Right to request any necessary information from assets Management

Company.
 Right to take corrective action if they believe that of fund’s business.
 Right to dismiss the assets Management Company.
 Ensure that any shortfall in net worth of the assets Management Company is
made up.
FOLLOWING ARE THE OBLIGATIONS OF TRUSTEES:-
 Enter in to an investment management agreement with the assets Management

Company.
 Ensure that the fund’s transactions are in accordance with the trust deed.
 Furnish to SEBI on a half yearly basis, a report on the fund’s activities.
 Ensure that no change in the fundamental attributes of any scheme or the trust
or any other change, which would affect the interest of unit holder, happens
with informing to unit holder.
 Review the investor complaints received and redressed of the same by assets
Management Company
ASSET MANAGEMENT COMPANY (AMC)

The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund.
The AMC is required to be approved by the Securities and Exchange Board of India
(SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the
directors of the AMC are independent directors who are not associated with the Sponsor
in any manner. The AMC must have a net worth of at least 10 cores at all times.
FOLLOWING ARE THE OBLIGATIONS OF ASSETS MANAGEMENT

COMPANY:-
 Float investment schemes only after getting approval from the trustees and SEBI.
 Send quarterly reports to trustees.
 Make the required disclosures to the investors in the area such as calculation of
NAV and repurchase price.
 Must maintain a net worth of at least Rs.10 crores at all the times
 Will not purchase or sale securities through any broker with the brokerage of 5 %
or more of the aggregate purchases and sale of securities made by the Mutual
Fund in all its schemes.
 Assets Management Company cannot act as trustees of any other Mutual Fund.
 Do not undertake any other activity conflicting with managing the fund.
FOLLOWING ARE THE BODIES APPOINTED BY THE TRUSTEES/AMC:-
 Custodian is the responsible person for physical handling and safe keeping of the
securities. He should be independent of the sponsor and registered with SEBI.

 Indian capital market is moving away from physical certificates for securities to
dematerialized form with a depository. He holds dematerialized security holdings
of Mutual Fund.
REGISTRAR AND TRANSFER AGENT

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent
to the Mutual Fund. The Registrar processes the application form, redemption requests
and dispatches account statements to the unit holders. The Registrar and Transfer agent
also handles communications with investors and updates investor records.
5.3 INVESTORS PROFILE:-
An investor normally prioritizes his investment needs before undertaking an

investment. So different goals will be allocated to different proportions of the total
disposable amount. Investments for specific goals normally find their way into the debt
market as risk reduction is of prime importance, this is the area for the risk-averse
investors and here, Mutual Funds are generally the best option. One can avail of the
benefits of better returns with added benefits of anytime liquidity by investing in open-
ended debt funds at lower risk, this risk of default by any company that one has chosen
to invest in, can be minimized by investing in Mutual Funds as the fund managers
analyze the companies financials more minutely than an individual can do as they have
the expertise to do so.
Moving up the risk spectrum, there are people who would like to take some risk and
invest in equity funds/capital market. However, since their appetite for risk is also
limited, they would rather have some exposure to debt as well. For these investors,
balanced funds provide an easy route of investment, armed with expertise of investment
techniques, they can invest in equity as well as good quality debt thereby reducing risks
and providing the investor with better returns than he could otherwise manage. Since
they can reshuffle their portfolio as per market conditions, they are likely to generate
moderate returns even in pessimistic market conditions.
Next comes the risk takers, risk takers by their nature, would not be averse to investing
in high-risk avenues. Capital markets find their fancy more often than not, because they

have historically generated better returns than any other avenue, provided, the money
was judiciously invested. Though the risk associated is generally on the higher side of
the spectrum, the return-potential compensates for the risk attached.
5.4 POSITIONING STRATEGY OF MUTUAL FUND INDUSTRY: -
Positioning starts with a product. But positioning is not what you do to a product.
Positioning is what you do to the mind of the prospect. That is, you position the product
in the mind of prospect. A company’s differentiating and positioning strategy must
change as the product, market, and competitors change over time. . There should be no
under positioning, over positioning, confused positioning or doubtful positioning.
CHANNEL OF DISTRIBUTION:-
In Every asset Management Company’s distribution channel played very important roles.
Here assets management companies have distributors like:-
 Consultants
 Agents
 Distributors
 Advisers
 Broker
Their role is very important for Assets Management Company’s Office.
5.5 PROMOTIONAL TOOLS EMPLOYED BY VARIOUS MUTUAL FUND

COMPANIES:-
Some specific other document help to increase selling product like: -
• BANNERS:-
Banners define brief idea of scheme, it should be very attractive with specific
objective & its related picture in city, and Banners keep in specific places which very
help to do good publicity. It distributes only by AMC’s office.

When any new scheme is launched or any new NFO coming up that times company
make banners before few days. Its helps to good advertising & easy cover to
customer or people.
• APPLICATION FORM :-
Any product like Equity, debt and balance, investor should fill up its common
Application forms.
Form define acknowledge slip which give return to customer. Actually 3-time stamp
done in form, one of them is acknowledged slip These forms are distributed by Assets
Management Company’s office. It is all Assets Management Company’s office duty
to dispatch forms to their customer like agents, brokers, and advisers time to time.
• BROACHERS:-
Broachers include brief history of company. It defines when and where assets
management Company invests investor’s money.
This defines performance of each scheme product & also defines its comparison to
last 3 months to more than 5 years.
In end of every month Assets Management Company’s office send Boucher to their
investors, brokers, agents, advisers regularly.
5.6 MUTUAL FUND INVESTING STRATEGIES:

• Systematic Investment Plans (SIPs)
These are best suited for young people who have started their careers and need to
build their wealth. SIPs entail an investor to invest a fixed sum of money at regular
intervals in the Mutual fund scheme the investor has chosen, an investor opting for
SIP in xyz Mutual Fund scheme will need to invest a certain sum on money every
month/quarter/half-year in the scheme.
• Systematic Withdrawal Plans (SWPs)

These plans are best suited for people nearing retirement. In these plans, an investor
invests in a mutual fund scheme and is allowed to withdraw a fixed sum of money
at regular intervals to take care of his expenses
• Systematic Transfer Plans (STPs)

They allow the investor to transfer on a periodic basis a specified amount from one
scheme to another within the same fund family – meaning two schemes belonging
to the same mutual fund. A transfer will be treated as redemption of units from the
scheme from which the transfer is made. Such redemption or investment will be at
the applicable NAV. This service allows the investor to manage his investments
actively to achieve his objectives. Many funds do not even charge any transaction
fees for his service – an added advantage for the active investor.
5.7 NET ASSET VALUE:-
The Net Asset Value or NAV is a term used to describe the value of an entity's
assets less the value of its liabilities. The term is commonly used in relation to collective
investment schemes. It may also be used as a synonym for the book value of a firm.
NAV covers the company's current asset and liability position. Investors might
expect the company to have large growth prospects, in which case they would be
prepared to pay more for the company than the NAV suggests.
The NAV is usually below the market price because the current values of the
fund’s assets are higher than the historical financial statements used in the NAV
calculation.
 CALCULATING NET ASSET VALUE
Unit capital is the investor’s subscriptions. In MF it is not treated as a liability.

Investments made on behalf of the investors are assets side of the balance sheet. There
are liabilities of short-term nature.
FUNDS NET ASSET = ASSET – LIABILITIES

NAV = Net Assets
Issued Units
I.e.
NAV= (market value of investments + other accrued income + other assets –
accrued expenses – other payables –other liabilities)/ (no. Of units outstanding as at the
NAV date)
THE FACTOR AFFECTING THE NAV ARE AS FOLLOWING:
1. Capital gains or losses on the sale or purchase of investment

Securities.
2. Dividend and income earned on the assets
3. Capital appreciation in the underlying value of the stocks holds in the portfolio
4. Other assets and liabilities
5. Number of units sold or purchased
5.8 FACTS ABOUT MUTUAL FUND

 Equity Instruments like shares form only a part of the securities held by Mutual
Funds. Mutual Funds also invest in debt securities, which are relatively much safer.
 The biggest advantage of Mutual Funds is their ability to diversify the risk.
 Mutual Funds are there in India since 1964. Mutual Funds market is much evolved in
U.S.A and is there for last 60 years.
 Mutual Funds are the best solution for people who want to manage risk and get good
returns.
 The size of Mutual Funds market in India is Rs. 107728 crores and that in U.S.A is
many times higher.

 According to the SEBI - NCAER Survey of Indian Investors about 15 million or
8.7% of the households have invested in Mutual Funds and there are nearly 23
million unit holders in India.
 30% of investors fall in the income group of investors having monthly income up to
Rs. 10,000/-.
 In U.S.A there are more deposits in the mutual funds than in bank deposits.
 The truth is, as investors we should always pay attention to our mutual funds and
continue to monitor them.
5.9 PERFORMANCE MEASURES OF MUTUAL FUNDS:

Mutual Fund industry today, with about 30 players and more than six hundred schemes,
is one of the most preferred investment avenues in India. However, with a plethora of
schemes to choose from, the retail investor faces problems in selecting funds. Factors
such as investment strategy and management style are qualitative, but the funds record
is an important indicator too.
Though past performance alone cannot be indicative of future performance, it is,
frankly, the only quantitative way to judge how good a fund is at present. Therefore,
there is a need to correctly assess the past performance of different Mutual Funds.
Worldwide, good Mutual Fund companies over are known by their AMC’s and this
fame is directly linked to their superior stock selection skills. For Mutual Funds to
grow, AMC’s must be held accountable for their selection of stocks. In other words,
there must be some performance indicator that will reveal the quality of stock selection
of various AMC’s.
Return alone should not be considered as the basis of measurement of the performance
of a Mutual Fund scheme, it should also include the risk taken by the fund manager
because different funds will have different levels of risk attached to them. Risk
associated with a fund, in a general, can be defined as Variability or fluctuations in the

returns generated by it. The higher the fluctuations in the returns of a fund during a
given period, higher will be the risk associated with it. These fluctuations in the returns
generated by a fund are resultant of two guiding forces. First, general market
fluctuations, which affect all the securities, present in the market, called Market risk or
Systematic risk and second, fluctuations due to specific securities present in the
portfolio of the fund, called Unsystematic risk. The Total Risk of a given fund is sum
of these two and is measured in terms of standard deviation of returns of the fund.
Systematic risk, on the other hand, is measured in terms of Beta, which represents
fluctuations in the NAV of the fund vis-à-vis market. The more responsive the NAV of
a Mutual Fund is to the changes in the market; higher will be its beta. Beta is calculated
by relating the returns on a Mutual Fund with the returns in the market. While
Unsystematic risk can be diversified through investments in a number of instruments,
systematic risk cannot. By using the risk return relationship, we try to assess the
competitive strength of the Mutual Funds one another in a better way. In order to
determine the risk-adjusted returns of investment portfolios, several eminent authors
have worked since 1960s to develop composite performance indices to evaluate a
portfolio by comparing alternative portfolios within a particular risk class.
The most important and widely used measures of performance are:
• The Treynor’Measure
• The Sharpe Measure
• Jenson Model
• Fama Model
• THE TREYNOR’ MEASURE:-

Developed by Jack Treynor, this performance measure evaluates funds on the basis of
Treynor's Index.
This Index is a ratio of return generated by the fund over and above risk free rate of
return (generally taken to be the return on securities backed by the government, as there
is no credit risk associated), during a given period and systematic risk associated with it
(beta). Symbolically, it can be represented as:

Treynor's Index (Ti) = (Ri - Rf)/Bi.
Where,
Ri represents return on fund,
Rf is risk free rate of return, and
Bi is beta of the fund.
All risk-averse investors would like to maximize this value. While a high and positive
Treynor's Index shows a superior risk-adjusted performance of a fund, a low and
negative Treynor's Index is an indication of unfavorable performance.
• THE SHARPE MEASURE:-

In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is
a ratio of returns generated by the fund over and above risk free rate of return and the
total risk associated with it.
According to Sharpe, it is the total risk of the fund that the investors are concerned
about. So, the model evaluates funds on the basis of reward per unit of total risk.
Symbolically, it can be written as:
Sharpe Index (Si) = (Ri - Rf)/Si
Where,
Si is standard deviation of the fund,
Ri represents return on fund, and
Rf is risk free rate of return
While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a
fund, a low and negative Sharpe Ratio is an indication of unfavorable performance.
Comparison of Sharpe and Treynor

Sharpe and Treynor measures are similar in a way, since they both divide the risk
premium by a numerical risk measure. The total risk is appropriate when we are

evaluating the risk return relationship for well-diversified portfolios. On the other hand,
the systematic risk is the relevant measure of risk when we are evaluating less than
fully diversified portfolios or individual stocks. For a well-diversified portfolio the total
risk is equal to systematic risk. Rankings based on total risk (Sharpe measure) and
systematic risk (Treynor measure) should be identical for a well-diversified portfolio,
as the total risk is reduced to systematic risk. Therefore, a poorly diversified fund that
ranks higher on Treynor measure, compared with another fund that is highly
diversified, will rank lower on Sharpe Measure.
Calculation of Treynor and sharp ratio for selected mutual funds schemes:-
TABLE-5.3:-
Measures/ schemes HDFC equity fund SBI Magnum LICMF Equity Fund-
(Growth) comma fund (Growth)
( Growth)
Return on fund (Ri) 7.2% 6% 5%
Risk free rate of return 9% 8% 7%
(Rf)
Beta 0.85 0.92 1.08
Standard deviation 5.09 5.71 6.48
Treynor ratio 7.2-9/0.85 6-8/0.92 5-7/1.08
(Ti) = (Ri - Rf)/Bi. = -2.11 = -2.17 = -1.85
Sharp ratio 7.2-9/5.09 6-8/5.71 5-7/6.48
(Si) = (Ri - Rf)/Si = -0.353 = -0.350 = -0.308
All risk-averse investors would like to maximize this value. While a high and positive Treynor's
Index shows a superior risk-adjusted performance of a fund, a low and negative Treynor's Index
is an indication of unfavorable performance.
While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund, a
low and negative Sharpe Ratio is an indication of unfavorable performance.
Findings:

• All these three mutual fund shows the unfavorable performance but HDFC equity
growth plan having the low negative value so it will be the greater performer over the
past three year.
• Same as sharp ratio for SBI magnum comma fund growth and LIC equity fund
growth are having high negative value that depicts the performance of these plans are
lower comparison to HDFC equity growth plan.
• JENSON MODEL :-
Jenson's model proposes another risk adjusted performance measure. This measure was
developed by Michael Jenson and is sometimes referred to as the differential Return
Method. This measure involves evaluation of the returns that the fund has generated vs.
the returns actually expected out of the fund1 given the level of its systematic risk. The
surplus between the two returns is called Alpha, which measures the performance of a
fund compared with the actual returns over the period. Required return of a fund at a
given level of risk (Bi) can be calculated as:
Ri = Rf + Bi (Rm - Rf)
Where,
Ri represents return on fund, and
Rm is average market return during the given period,
Rf is risk free rate of return, and
Bi is Beta deviation of the fund.
After calculating it, Alpha can be obtained by subtracting required return from the
actual return of the fund.
Higher alpha represents superior performance of the fund and vice versa. Limitation of
this model is that it considers only systematic risk not the entire risk associated with the
fund and an ordinary investor cannot mitigate unsystematic risk, as his knowledge of
market is primitive.
• FAMA MODEL:-

The Eugene Fama model is an extension of Jenson model. This model compares the
performance, measured in terms of returns, of a fund with the required return
commensurate with the total risk associated with it. The difference between these two
is taken as a measure of the performance of the fund and is called Net Selectivity.
The Net Selectivity represents the stock selection skill of the fund manager, as it is the
excess returns over and above the return required to compensate for the total risk taken
by the fund manager. Higher value of which indicates that fund manager has earned
returns well above the return commensurate with the level of risk taken by him.
Required return can be calculated as: Ri = Rf + Si/Sm*(Rm - Rf)
Where,
Ri represents return on fund,
Sm is standard deviation of market returns,
Rm is average market return during the given period, and
Rf is risk free rate of return.
The Net Selectivity is then calculated by subtracting this required return from the
actual return of the fund.
Among the above performance measures, two models namely, Treynor measure and
Jenson model use Systematic risk is based on the premise that the Unsystematic risk is
diversifiable. These models are suitable for large investors like institutional investors
with high risk taking capacities as they do not face paucity of funds and can invest in a
number of options to dilute some risks. For them, a portfolio can be spread across a
number of stocks and sectors. However, Sharpe measure and Fama model that consider
the entire risk associated with fund are suitable for small investors, as the ordinary
investor lacks the necessary skill and resources to diversify. Moreover, the selection of
the fund on the basis of superior stock selection ability of the fund manager will also
help in safeguarding the money invested to a great extent. The investment in funds that
have generated big returns at higher levels of risks leaves the money all the more prone
to risks of all kinds that may exceed the individual investors' risk appetite.

5.10 RECENT TRENDS IN THE MUTUAL FUND INDUSTRY:-
The most important in the mutual fund industry is the aggressive expansion of the foreign
owned mutual fund companies and the decline of the companies floated by the
nationalized bank and smaller private sector players. Many nationalized banks got into
the mutual fund business in the early nineties and go off to a good start due to the stock
market boom prevailing then. These banks did not really understand the mutual fund
business and they just viewed it as another kind of banking activity. Few hired
specialized staff and generally choose to transfer staff from the parent organization.
Some schemes had offered guaranteed returns and their patent organization had to bail
out these AMCs by paying large amount of money the difference between the guaranteed
and actual returns. The service level was also bad. Most of these AMCs have not been
able to retain staffs, float, and new schemes etc. and it is doubtful whether barring a few
expectations, they have serious plans of continuing the activity in a major way.
The experience of some of the AMCs floated by private sector Indian companies was
also very similar. They quickly realized that the AMCs business is a business, which
makes money in the long term and requires deep pocketed support in the intermediate
years. Some have sold out to foreign owned companies, some have merged with the
others and there is general restructuring going on.
The foreign owned companies have deep pockets and have come in here with the
expectation of a long haul. They can be credited with introducing many new practices
such as new product innovation, sharp improvement in the service standards and
disclosure, usage of technology, broker education etc. In fact, they have forced the
industry to upgrade itself and service levels of the organization like UTI have improved
dramatically in the last few years in response to the competition provided by these.
5.11 FUTURE SCENARIO:-

The asset base will continue to grow at an annual rate of about 30 to 35% over the next
few years as investor’s shift their asset from banks and other traditional avenues. Some of
the older public and private sector players will either close or be taken over. Out of ten
public sectors players five will sell out, close down or merge with strong players in three

to four years. In the private sector this trend has already started with two mergers and one
takeover. Here too some of them will down their shutter in the near future to come.
But this does not mean there is no room for other players. The market will witness a
flurry of new players entering the area. There will be a large number of offers from
various asset management companies in times to come. Some big names like Fidelity,
Principal and Old Mutual etc. are looking at Indian market seriously.
The mutual fund industry is awaiting the derivation in India as this would enable it to
hedge its risk and this in turn would be reflected in its Net Asset Value (NAV).
SEBI is working out the norms for enabling the existing mutual fund scheme to trade in
derivatives. Importantly, many market players have called on the Regulator to initiate the
process immediately, so that the mutual funds can implement the changes that are
required to trade in derivates.

CHAPTER-6
COMPANY PROFILE
OF
HDFC MUTUAL FUND
INTRODUCTION:-
HDFC Mutual Fund is governed by HDFC Asset Management Company Limited
(AMC). The HDFC mutual fund was approved by SEBI in June 2000. Equity Funds,
Balanced Funds, and Debt Funds are the mutual fund schemes offered by HDFC Mutual
Fund.
HDFC Mutual Fund has witnessed significant growth in the past few years. It is
regulated by HDFC Asset Management Company Limited (AMC) which works as an
Asset Management Company (AMC) for HDFC Mutual Fund. HDFC Asset
Management Company Limited (AMC) is a Joint Venture concern between the large-
scale housing finance company HDFC and British investment firm Standard Life
Investments Limited.
The HDFC Asset Management Company Limited conducts the activities carried out by
the HDFC Mutual Fund and manages the assets of various mutual fund schemes. The
August 2006 report states that the fund has assets of Rs. 25,892 crores under (AMC)
HDFC Asset Management Company Limited (AMC) entered into an agreement with
Zurich Insurance Company (ZIC) with the aim to develop the asset management business
in India in the year 2003. Following to this, all the mutual fund schemes of Zurich
Mutual Fund in India got transferred to HDFC Mutual Fund and gained the name of
HDFC schemes.
HDFC Asset Management Company Ltd (AMC) was set up on December 10, 1999 under
the Companies Act, 1956. It got the approval to function as an Asset Management
Company for the HDFC Mutual Fund by SEBI on June 30, 2000. AMC was appointed in
order manage the HDFC Mutual Fund. The registered office of HDFC Asset
Management Company Limited (AMC) is located at Ramon House, 3rd Floor, H.T.
Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020.

As per the terms of the Investment Management Agreement, the AMC will conduct the
operations of the Mutual Fund and manage assets of the schemes, including the schemes
launched from time to time.
The present share holding pattern of the AMC is as follows:
Particulars % of the paid up capital

Housing Development Finance Corporation Limited 50.10
Standard Life Investments Limited 49.90
Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a
review of its overall strategy, had decided to divest its Asset Management business in
India. The AMC had entered into an agreement with ZIC to acquire the said business,
subject to necessary regulatory approvals.
On obtaining the regulatory approvals, the Schemes of Zurich India Mutual Fund has
now migrated to HDFC Mutual Fund on June 19, 2003. These schemes have been
renamed as follows:
FORMER NAME NEW NAME
Zurich India Equity Fund HDFC Equity Fund
Zurich India Prudence Fund HDFC Prudence Fund
Zurich India Capital Builder Fund HDFC Capital Builder Fund
Zurich India Tax Saver Fund HDFC Tax Saver Fund
Zurich India Top 200 Fund HDFC Top 200 Fund
Zurich India High Interest Fund HDFC High Interest Fund
Zurich India Liquidity Fund HDFC Liquidity Fund
Zurich India Sovereign Gilt Fund HDFC Sovereign Gilt Fund

The AMC is managing 2 close ended Income Scheme viz. HDFC Fixed Investment Plan
and HDFC Long Term Equity Fund and 23 open-ended schemes of the Mutual Fund viz.
HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF), HDFC Income Fund (HIF),
HDFC Liquid Fund (HLF), HDFC Long Term Advantage Fund, HDFC Tax Plan 2000
(HTP), HDFC Children's Gift Fund (HDFC CGF), HDFC Gilt Fund (HGILT), HDFC
Short Term Plan (HSTP), HDFC Index Fund, HDFC Floating Rate Income Fund
(HFRIF), HDFC Equity Fund (HEF), HDFC Top 200 Fund, (HT200), HDFC Capital
Builder Fund (HCBF), HDFC Tax Saver (HTS), HDFC Prudence Fund (HPF), HDFC
High Interest Fund (HHIF), HDFC Sovereign Gilt Fund (HSGF) and HDFC Cash
Management Fund (HCMF), HDFC MF Monthly Income Plan (HMIP), HDFC Core &
Satellite Fund (HSCF), HDFC Multiple Yield Fund (HMYF), HDFC Premier Multi-Cap
Fund (HPM) and HDFC Multiple Yield Fund Plan 2005 (HMY2005).
The AMC is also providing portfolio management / advisory services and such activities
are not in conflict with the activities of the Mutual Fund. The AMC has renewed its
registration from SEBI vide Registration No. - PM / INP000000506 dated December 22,
2000 to act as a Portfolio Manager under the SEBI (Portfolio Managers) Regulations,
1993. The Certificate of Registration is valid from January 1, 2004 to December 31,
2006.
 HDFC assets Management Company’s punch line is “continuing a tradition of
trust”.
 In Gujarat HDFC assets Management Company is located at Ahmadabad, Surat,

vadodara, Rajkot.
 HDFC assets Management Company is working from 9:30 a.m. onwards.
 HDFC assets Management Company Have 200 and more distributors in Surat.
 HDFC assets Management Company Provide account statements to investors

according to investor’s requirement.

 HDFC assets Management Company Provide good services to investors.

SNAPSHOT-I
CHART-6.1
HDFC
LTD
23.26%
72.26% 60%
HDFC
HDFC HDFC
BANK (inclusive
STANDARD ASSET
LIFE MANAGEMENT
 HDFC Standard Life insurance Company- HDFC holds 72.26 %.

 HDFC Asset Management Company – HDFC holds 60%
 HDFC Bank- HDFC holds 23.26%.
 Intelenet Global (Business Process Outsourcing) – HDFC holds 50%.
 HDFC Chubb General Insurance Company – HDFC holds 74%.
MAN WITH A MISSION

If ever there was a man with a mission it was Hasmukhbhai Parekh,
Founder and Chairman-Emeritus, of HDFC Group who left this
earthly abode on November 18, 1994. Born in a traditional banking
family in Surat, Gujarat, Mr. Parekh started his financial career at
Harkisandass Lukhmidass – a leading stock broking firm. The firm
closed down in the late seventies, but, long before that, he went on
to become a towering figure on the Indian financial scene.
In 1956 he began his lifelong financial affair with the economic
world, as General

Manager of the newly-formed Industrial Credit and Investment Corporation of India
(ICICI). He rose to become Chairman and continued so till his retirement in 1972.At the
ripe age of 60, Hasmukhbhai started his second dynamic life, even more illustrious than
his first. His vision for mortgage finance for housing gave birth to the Housing
Development Finance Corporation – it was a trend-setter for housing finance in the
whole Asian continent.
He was also a writer in his own right. There are over 200 published articles by him... In
1992, the Government of India honoured him with the Padma Bhushan Award. The
London School of Economics & Political Science conferred on him an Honorary
Fellowship.
He was one of the Founder Members of the Centre for Advancement of Philanthropy,
and it’s Chairman till 1993.
He took active interest in the Bombay Community Public Trust, designed specifically to
serve the needs of the city’s underprivileged citizens.
When Mr. Deepak Parekh took over as Chairman from Hasmukhbhai, he said: “Taking
over from H.T. Parekh is a formidable task; his vision… brought about not only an
institution, but an entire concept which has proved itself to be of lasting importance.”
Today we are the largest residential mortgage finance institution in India, with a net
worth of Rs. 2,703 cores as of March 31, 2006 and an asset base of over Rs. 22,000
cores. We also aim to increase the flow of resources to the housing sector by integrating
the housing finance sector with the overall domestic financial markets.
Over a span of 25 years, HDFC has become the pioneer in housing finance in India and
made it possible for over two million Families to own their homes, through housing loans
worth over Rs. 42,000 cores.
VISION
To be a dominant player in the Indian mutual fund

space, recognized for its high levels of ethical and
professional conduct and a commitment towards
enhancing investor interests.

ORGANIZATION AND MANAGEMENT
HDFC is a professionally managed organization with a board of directors consisting of

eminent persons who represent various fields including finance, taxation, construction
and urban policy & development. The board primarily focuses on strategy formulation,
policy and control, designed to deliver increasing value to shareholders.
Name and Designation Location Contact Number
Mr. Deepak S. Parekh is the executive Chairman of the
Corporation. He is fellow of the Institute of Chartered
Accountants (England & Wales).Mr. Parekh joined the
Corporation in a senior management position in 1978.He was
inducted as a whole time director of the Corporation in 1985
and was appointed as the Chairman in 1993. He is the chief executive officer of the
Corporation Mumbai.
Mr. K. M. Mistry the Managing Director of the Corporation. Is

a Fellow of the Institute of Chartered Accountants of India? He
has been employed with the Corporation since 1981 and was
the executive director of the Corporation since 1993. He was
appointed as the deputy managing director in 1999 and the
Managing Director in 2000. He is also a member of the
Investors’ Grievance Committee of Directors.
Ms. Renu S. Karnad the Executive Director of the Corporation.

Is a graduate in law and holds a Master’s degree in economics
from Delhi University. She has been employed with the
Corporation since 1978 and was appointed as the Executive
Director of the Corporation in 2000. She is responsible for
overseeing all aspects of lending operations of HDFC.New
Delhi.

BOARD OF DIRECTORS
Mr. D S Parekh - Chairman Mr. D N Ghosh
Mr. Keshub Mahindra - Vice Chairman Dr. S A Dave
Ms. Renu S. Karnad - Executive Director Mr. S Venkitaramanan
Mr. K M Mistry - Managing Director Dr. Ram S Tarneja
Mr. Shirish B Patel Mr. N M Munjee
Mr. B S Mehta Mr. D M Satwalekar
SPONSORS OF HDFC ASSETS MANAGEMENT COMPANY:-
HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (HDFC):-

HDFC was incorporated in 1977 as the first specialized Mortgage Company in India.
HDFC provides financial assistance to individuals, corporates and developers for the
purchase or construction of residential housing. It also provides property related services
(e.g. property identification, sales services and valuation), training and consultancy. Of
these activities, housing finance remains the dominant activity. HDFC has a client base
of around 9.5 lack borrowers, around 1 million depositors, over 91,000 shareholders and
50,000 deposit agents as at March 31, 2007. HDFC has raised funds from international
agencies such as the World Bank, IFC (Washington), USAID, DEG, ADB and KfW,
international syndicated loans, domestic term loans from banks and insurance companies,
bonds and deposits. HDFC has received the highest rating for its bonds and deposits
program for the twelfth year in succession. HDFC Standard Life Insurance Company
Limited, promoted by HDFC was the first life insurance company in the private sector to

be granted a Certificate of Registration (on October 23, 2000) by the Insurance
Regulatory and Development Authority to transact life insurance business in India.
STANDARD LIFE INVESTMENTS LIMITED:-

The Standard Life Assurance Company was established in 1825 and has considerable
experience in global financial markets. The company was present in the Indian life
insurance market from 1847 to 1938 when agencies were set up in Kolkata and Mumbai.
The company re-entered the Indian market in 1995, when an agreement was signed with
HDFC to launch an insurance joint venture. On April 2006, the Board of The Standard
Life Assurance Company recommended that it should demutualise and Standard Life plc
float on the London Stock Exchange. At a Special General Meeting held in May voting
members overwhelmingly voted in favor of this. The Court of Session in Scotland
approved this in June and Standard Life plc floated on the London Stock Exchange on 10
July 2006. Standard Life Investments was launched as an investment management
company in 1998. It is a wholly owned subsidiary of Standard Life Investments
(Holdings) Limited, which in turn is a wholly owned subsidiary of Standard Life plc.
Standard Life Investments is a leading asset management company, with approximately
US$ 269 billion as at March 30, 2007, of assets under management. The company
operates in the UK, Canada, Hong Kong, China, Korea, Ireland and the USA to ensure it
is able to form a truly global investment view. In order to meet the different needs and
risk profiles of its clients, Standard Life Investments Limited manages a diverse portfolio
covering all of the major markets world-wide, which includes a range of private and
public equities, government and company bonds, property investments and various
derivative instruments.

PRODUCT DETAILS:-
Different Types of Products:-
EQUITY BALANCED DEBT
EQUITY SCHEMES OF HDFC ASSET MANAGEMENT

COMPANY:-
1. HDFC Equity Fund:-
 Investment Objective: The investment objective of the Scheme

Is to achieve capital appreciation.
 Investment Options: Dividend & Growth Option
 Nature of Scheme: - Open Ended Growth Scheme
 Inception Date: - January 01, 1995
2. HDFC growth fund:-

 Investment Objective: - The primary investment objective of the Scheme
is to generate long term capital appreciation from a portfolio that is
invested predominantly in equity and equity related instruments.

 Inception Date: -September 11, 2000
3. HDFC Top 200 fund:-
 Investment Objective: - To generate long-term capital appreciation from

a portfolio of equity and equity-linked instruments primarily drawn from
the companies in BSE 200 index.
4. HDFC mid cape opportunity fund;-

a portfolio that is substantially constituted of equity and equity related
securities of small and Mid-Cap companies.
 Nature of Scheme:- Open Ended Growth Scheme
 Inception Date:- May 07, 2007
5. HDFC capital builder fund:-
a portfolio that is substantially constituted of equity and equity related
securities of small and Mid-Cap companies.
 Inception Date:- February 01, 1994
6. HDFC core and satellite fund:-
 Investment Objective: - The primary objective of the Scheme is to
generate capital appreciation through equity investment in companies
whose shares are quoting at prices below their true value.
 Inception Date:- September 17, 2004

7. HDFC premier multicape fund:-

generate capital appreciation in the long term through equity investments
by investing in a diversified portfolio of Mid Cap and Large Cap `blue
chip` companies.
 Investment Options: Dividend Plan, Growth Plan, The Dividend Plan
offers Dividend Payout and Reinvestment Facility.
 Inception Date: - April 06, 2005
BALANCED SCHEMES OF HDFC ASSET MANAGEMENT

COMPANY:-
1) HDFC balanced fund: -
generate capital appreciation along with current income from a combined
portfolio of equity and equity related and debt and money market
instruments.
 Nature of Scheme: - Open Ended balanced fund
 Inception Date: - September 11, 2000
2) HDFC prudence fund:-

 Investment Objective: - The investment objective of the Scheme is to
provide periodic returns and capital appreciation over a long period of
time, from a judicious mix of equity and debt investments, with the aim to
prevent/ minimize any capital erosion
 Nature of Scheme: - Open Ended balanced fund
 Inception Date: - February 01, 1994

3. HDFC short term plan:-
 Investment Objective: - The primary objective of the HDFC Short Term
Plan is to generate regular income through investment in debt securities
and money market instruments.
 Investment Options: Growth Plan, Dividend Plan. The Dividend Plan
 Nature of Scheme:- Open Ended income fund
 Inception Date: - February 28, 2002
4. HDFC multi yield fund:-
generate positive returns over medium time frame with low risk of capital
loss over medium time frame.
 Investment Options: Growth Plan, Dividend Plan. The Dividend Plan
 Nature of Scheme: - Open Ended income fund
DEBT SCHEMES OF HDFC ASSET MANAGEMENT COMPANY:-

1. HDFC Income Fund:-
optimize returns while maintaining a balance of safety, yield and liquidity.
 Nature of Scheme: - Open Ended Income Scheme
2. HDFC Income Fund: -
 Investment Objective: - The investment objective of HDFC High
Interest Fund is to generate income by investing in a range of debt and
money market instruments of various maturity dates with a view to

maximizing income while maintaining the optimum balance of yield,
safety and liquidity.
 Nature of Scheme: - Open Ended Income Scheme
 Inception Date: - April 28, 1997
3. HDFC MF Monthly Income Plan - Short Term Plan:-

 Investment Objective: - The primary objective of Scheme is to generate
regular returns through investment primarily in Debt and Money Market
Instruments. The secondary objective of the Scheme is to generate long-
term capital appreciation by investing a portion of the Scheme’s assets in
equity and equity related instruments. However, there can be No
assurance that the investment objective of the Scheme will be achieved.
 Investment Options: Quarterly Dividend Option, Monthly Dividend
Option, and Growth Plan. The Dividend Plan offers Dividend Payout and
Reinvestment Facility
 Nature of Scheme: - An open-ended income scheme. Monthly income is
not assured and is subject to availability of distributable surplus
 Inception Date:- December 26, 2003
4. HDFC MF Monthly Income Plan - Long Term Plan:-

 Investment Objective: - The primary objective of Scheme is to generate
regular returns through investment primarily in Debt and Money Market
Instruments. The secondary objective of the Scheme is to generate long-
term capital appreciation by investing a portion of the Scheme’s assets in
equity and equity related instruments. However, there can be no assurance
that the investment objective of the Scheme will be achieved
 Investment Options: Growth Plan, Quarterly Dividend Option, Monthly
Dividend Option. The Dividend Plan offers Dividend Payout and
Reinvestment Facility.

 Nature of Scheme: - An open-ended income scheme. Monthly income is
not assured and is subject to availability of distributable surplus
 Inception Date: - December 26, 2003
5. HDFC Floating Rate Income Fund Long Term Plan:-

generate regular income through investment in a portfolio comprising
substantially of floating rate debt / money market instruments, fixed rate
debt / money market instruments swapped for floating rate returns, and
fixed rate debt securities and money market instruments.
 Investment Options: Dividend Plan, Growth Plan. The Dividend Plan

offers Reinvestment Facility only
 Nature of Scheme: - An open-ended income scheme.
 Inception Date: - January 16, 2003
LOCATION DETAILS
HDFC AMC is located at Yagnik road which is in the heart of the city where
service is easily available for all customer and easy access compare with other
place that available in city. Location has major impact on success or failure of
operation. Advantages of this type of location are that service cost and
distribution cost is minimum comparison with other place.
The major investor service centres of HDFC MUTUAL FUND are as below.

Locations of HDFC Assets Management Company
ACHIEVEMENT AND AWARDS

 “HDFC Prudence fund” has been ranked ICRA-MFR 1, and Has Been awarded the
Gold Award for ‘Best Performance’ in the category of “Open Ended Balanced
Scheme” for one year Period Ending Dec 31, 2005.

 “HDFC Tax saver fund” has been ranked ICRA-MFR 1, and Has Been Silver award
for “Second Best Performance” in the category of “Open Ended Equity Linked
Saving Scheme(ELSS)” for Three year Period Ending Dec 31, 2005.
 “HDFC MIP~LTP” has been ranked ICRA-MFR 1, and Has been awarded the Gold
Award For “Best Performance” in the category of “Open Ended Marginal Equity
Scheme” for one year Period Ending Dec 31, 2005.
FUTURE SCENARIO:-
 The asset base will continue to grow at an annual rate of about 35 to 40% over the
next five year as investor’s shift their assets from banks and other traditional avenues.
Some of the older public and private sector players will either close shop or be taken
over.
 Out of ten public players five will sell out, close down or merge with stronger player
in three to four years. In the private sector this trend has already started with two
mergers and one take over. Here 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. The market will
witness a flurry of new players entering the areas. There will be a large no. of offers
from various asset management companies in the time to come, some big names like
Principle, SBI, Fidelity, old mutual etc are looking at Indian market seriously. One
important reason for it is that most major players have presence here and hence these
big names would hardly like to get left behind.
 The mutual fund industry is awaiting the introduction of derivatives in India as this
would enable it to hedge its risk and this in turn would be reflected in its Net Asset
Value (NAV).
 SEBI is working out the norms for enabling the existing mutual fund schemes to
trade in derivatives. Importantly, many market players have called on the Regular to

initiate the process immediately, so that the mutual funds can implement the changes
that are required to trade in Derivatives.
CHAPTER- 7
TYPES OF MUTUAL FUNDS
TYPES OF MUTUAL FUND:-

There are a wide variety of Mutual Fund schemes that cater to your needs, whatever your
age, financial position, risk 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. The different types of Mutual Funds are as follows:-
CHART-7.1

BASED ON THEIR STRUCTURE:-
 OPEN-ENDED FUNDS: - Investors can buy and sell the units from the
fund, at any point of time.
 CLOSE-ENDED FUNDS: - These funds raise money from investors only
once. Therefore, after the offer period, fresh investments can not be made into the
fund. If the fund is listed on a stocks exchange the units can be traded like stocks
(E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of
close-ended funds provided liquidity window on a periodic basis such as monthly
or weekly. Redemption of units can be made during specified intervals. Therefore,
such funds have relatively low liquidity.
BASED ON THEIR INVESTMENT OBJECTIVE:-
 EQUITY FUNDS: - These funds invest in equities and equity

related instruments. With fluctuating share prices, such funds show volatile
performance, even losses. However, short term fluctuations in the market,
generally smoothens out in the long term, thereby offering higher returns at
relatively lower volatility. At the same time, such funds can yield great
capital appreciation as, historically, equities have outperformed all asset
classes in the long term. Hence, investment in equity funds should be
considered for a period of at least 3-5 years. It can be further classified as:-
• Index funds- In this case a key stock market index, like BSE Sensex or
Nifty is tracked. Their portfolio mirrors the benchmark index both in terms of
composition and individual stock weightages.
• Equity diversified funds- 100% of the capital is invested in equities
spreading across different sectors and stocks.
• Dividend yield funds- it is similar to the equity diversified funds except

that they invest in companies offering high dividend yields.
• Thematic funds- Invest 100% of the assets in sectors which are related
through some theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.
• Sector funds- Invest 100% of the capital in a specific sector. e.g. - A
banking sector fund will invest in banking stocks.
• ELSS- Equity Linked Saving Scheme provides tax benefit to the investors
 BALANCED FUND:- Their investment portfolio includes both debt and equity.
As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced
funds are the ideal mutual funds vehicle for investors who prefer spreading their risk
across various instruments. Following are balanced funds classes:-

• Debt-oriented funds -Investment below 65% in equities.
• Equity-oriented funds -Invest at least 65% in equities, remaining in
debt.
 DEBT FUND:- They invest only in debt instruments, and are a good option
for investors averse to idea of taking risk associated with equities. Therefore, they
invest exclusively in fixed-income instruments like bonds, debentures, Government
of India securities; and money market instruments such as certificates of deposit
(CD), commercial paper (CP) and call money. Put your money into any of these
debt funds depending on your investment horizon and needs.
• Liquid funds- These funds invest 100% in money market instruments,

a large portion being invested in call money market.
• Gilt funds ST- They invest 100% of their portfolio in government
securities of and T-bills.
• Floating rate funds - Invest in short-term debt papers. Floaters invest
in debt instruments which have variable coupon rate.
• Arbitrage fund- They generate income through arbitrage opportunities
due to mis-pricing between cash market and derivatives market. Funds are
allocated to equities, derivatives and money markets. Higher proportion (around
75%) is put in money markets, in the absence of arbitrage opportunities.
• Gilt funds LT- They invest 100% of their portfolio in long-term
government securities.
• Income funds LT- Typically, such funds invest a major portion of the
portfolio in long-term debt papers.
• MIPs- Monthly Income Plans have an exposure of 70%-90% to debt
and an exposure of 10%-30% to equities.
• FMPs- fixed monthly plans invest in debt papers whose maturity is in
line with that of the fund.

CHAPTER-8
REGULATORY ASPECTS
AMFI (Association of Mutual fund in India):-
 AMFI not a Self Regulatory Organization (SRO).
 It’s made to promote mutual fund in the masses and give recommendation in order
to uphold the interest of the investor.
OBJECTIVES OF AMFI:-
 To define and maintain high professional and ethical standards in all areas of
operation of mutual fund industry.
 To recommend and promote best business practices and code of conduct to be
followed by members and others engaged in the activities of mutual fund and
asset management including agencies connected or involved in the field of capital
markets and financial services.
 To interact with the Securities and Exchange Board of India (SEBI) and to
represent to SEBI on all matters concerning the mutual fund industry.

 To represent to the Government, Reserve Bank of India and other bodies on all
matters relating to the mutual fund industry.
 To develop a cadre of well-trained Agent distributors and to implement a
Programme of training and certification for all intermediaries and other engaged
in the industry.
 To undertake nation wide investor awareness Programme so as to promote proper
understanding of the concept and working mutual fund.
SEBI (Security Exchange Board of India) :-

Securities and Exchange Board of India ("SEBI"), the Capital Markets regulator has
clearly defined rules, which govern mutual funds. These rules relate to the formation,
administration and management of mutual funds and also prescribe disclosure and
accounting requirements. Such a high level of regulation seeks to protect the interest of
investors.
All Mutual Funds are registered with SEBI and they function within the provision of
strict regulations designed to protect the interests of investors. The operations of Mutual
Funds are regularly monitored by SEBI.
RBI (Reserve Bank of India):-

Reserve bank of India was the regulator of Mutual Fund before SEBI. It regulated mutual
fund initially and there were only few schemes in the market. But now with coming of
SEBI, it has now become the main regulator of the Mutual Fund. RBI now only governs
Bank Sponsored Mutual Fund.
MINISTRY OF FINANCE:-
The Ministry of Finance, which is charged with implementing the government policies,
ultimately supervises both the RBI and the SEBI. Besides being the ultimate policy
making and supervising entity, the MOF has also been playing the role of an Appellate
Authority for any major disputes over SEBI guidelines on certain specific capital market
related guidelines – in particular any cases of insider trading or mergers and acquisitions.

COMPANY LAW BOARD:-
Mutual fund Asset Management Companies and corporate trustees are companies
registered under the Companies Act, 1956, and are therefore answerable to regulatory
authorities empowered by the Companies Act.
The primary legal interface for all companies is the Register of Companies (RoC). The
Department of Company Affairs in turn supervises roCs. The DCA forms part of
Company Law Board, which is part of the Ministry of Law and Justice of the Govt. of
India.
The RoC ensures that the assets management company or the Trustee Company as the
case may be is in compliance with all Companies Act provisions. All assets management
company accounts and records are filed with the Roc, who may demand additional
information and documents from the company. The RoC plays the role of a watchdog
with respect to regulatory compliance by companies.
The Company Law Board (CLB) is the apex regulatory authority under the Companies
Act. While the CLB guides the DCA, another arm of the CLB called the Company Law
Bench is the Appellate Authority for corporate offences.
The Company Law Board (CLB) is a body specially constituted by the Central
Government for carrying out judicial proceedings with respect to company affairs. Since
mutual fund assets Management Company are companies, the CLB’s role assumes
importance.
As the members of assets management companies or Trustee companies will usually be

the sponsors and their joint venture partners or associates, it is unlikely that mutual fund
investors will have anything to do with any of these regulators. The authorities would
generally regulate the assets management companies whose shareholders may have
recourse to them in specific cases.
INVESTORS RIGHTS:-
 Proportionate right to beneficial ownership of scheme’s assets
 Right to obtain information from trustees
 Entitled to receive dividend warrants within 30 days of declaration of dividend

 Inspect major documents of the fund
 Appointment of the assets management company can be terminated by 75% of
the unit holders of the scheme present and voting
 Right to approve of changes in fundamental attributes of a close ended scheme
(75 % of unit holders should approve) - right to be informed so in open ended
schemes so that they can redeem
 Right to receive a copy of annual financial statements of fund and periodic
transaction statements
 75% of the unit holders can resolve to wind up the scheme
LEGAL LIMITATIONS TO INVESTORS:-
 Unit holders can not sue the trust

 Can initiate legal proceedings against trustees
 Sponsor of mutual funds have no obligation to meet any shortfall in the assured
return - unless explicitly guaranteed in the offer document
 No rights to a prospective investor
INVESTOR OBLIGATIONS:-
 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.

CHAPTER-9
ANALYSIS & INTERPRETATION
The analysis is based on the responses given by customers through questionnaires.
ON THE BASIS OF AGE OF THE INVESTORS

TABLE-9.1
Age group No. of Respondents
31-35 4
36-40 3
41-45 2
46-50 1
<50 0
CHART-9.1

10% 0%
31-35
20% 40%
36-40
41-45
46-50
<50
30%
Interpretation:-
According to this chart out of 10 Mutual Fund investors of Delhi the most are in the
age group of 31-35 yrs. i.e. 40%, the second most investors are in the age group of 36-
40yrs i.e. 30% and the least investors are in the age group of below 46-50 yrs.
OCCUPATION OF THE INVESTORS OF DELHI
TABLE 9.2:-
Occupation No. of Investors

Govt.Service 3
Pvt.Service 4
Business 2
Agriculture 0
Others 1

CHART-9.2
OCCUPATION OF THE INVESTORS
Interpretation: - In Occupation group out of 10 investors, 40% are Pvt. Employees,

20% are Businessman, 30% are Govt. Employees, 0% are in Agriculture and 10% are
in others.
WHICH INVESTMENT AVENUES ARE YOU AWARE OF?
TABLE-9.3:-
INVESTMENT AVENUES FREQUENCY

EQUITY/MUTUAL FUND 25
POST OFFICE 15
F.D. 10
OTHERS 7
CHART-9.3

Which investment avenues are you aware of?
Interpretation: -
From the above charts we can interpret that awareness of equity/mutual fund, post office
(NSC, KVP, and PPF), fixed deposits is more compare to others like GOVT ISSUED
Instrument, GOVT Backed Instrument, Real Estate, gold etc. so HDFC assets
Management Company needs to focus more on those investors who are more invest in
KVP, NSC, PPF and fixed deposits.
DO YOU INVESTS IN MUTUAL FUND?

TABLE -9.4:-
YES NO
45 5
GRAPH 9.4:-

DO YOU INVESTS IN MUTUAL FUND
50
40
No.of 30
people
20
10
0
YES NO
Interpretation: -
From the above chart it is getting clear that now a days people are like to invest their
money in mutual fund of different assets management company, out of 50 people
sampled 45 are investing in the mutual fund.
IF YES, IN WHICH ASSETS CLASS DO YOU WANT TO INVEST IN MUTUAL

FUND?
TABLE-9.5:-
TYPES OF SCHEMES RESPONSE
EQUITY 25
DEBT 15
LIQUID 10
GRAPH- 9.5:-

If yes, in which assets class do you want to invest in mutual fund?
30
20
NO.OF
PEOPLE
10
0
EQUITY DEBT LIQUID
SCHEMES
Interpretation: -
From the above chart it is getting clear that from 50 peoples sample 25 people are invest
in equity assets class and 15 people choose to invests in debt class but only just 10
peoples choose to invests in liquid class.
DO YOU INVEST IN HDFC ASSETS MANAGEMENT COMPANY LIMITED?

TABLE-9.6:-
YES NO TOTAL
40 10 50
CHART -9.6:-

DO YOU INVEST IN HDFC ASSETS MANAGEMENT COMPANY
LIMITED?
Interpretation
From the above chart it is getting clear that out of 100 people sampled, 40 peoples are
invest in HDFC assets management company and 10 peoples are not invests in HDFC
assets management company.
IF YES, IN WHICH SCHEME WOULD YOU INVEST IN HDFC ASSETS

MANAGEMENT COMPANY LIMITED?
TABLE-9.7:-
NO OF
SCHEMES OF HDFC INVESTOERS
EQUITY FUND 20
CAPITAL BUILDER FUND 2
PRUDENCE FUND 5
TAX SAVER FUND 10
CORE AND SATELITE FUND 2
TOP 200 FUND 3
BALANCED FUND 4
GROWTH FUND 3
OTHERS FUND 1
CHART-9.7:-
If yes, in which scheme would you invest in HDFC assets management company limited?
Equity fund
8% 6% 2%
6% capital builder fund
4% prudence fund
tax saver fund
core and satelite fund
40% top 200 fund
20%
balanced fund
growth fund
10% 4%
others fund
Interpretation:-
From the above chart we can see that in HDFC assets Management Company’s EQUITY
FUND maximum number (20) of people are invest. In TAX SAVER FUND (10) number
of people invests. In both TOP 200 FUND and GROWTH FUND (3)numbers of people
are invests but in BALANCED FUND, CAPITAL BUILDER FUND, CORE AND
SATELITE FUND only (4),(2) and (2) people are invest so investors are not invested in
these 3 schemes. In PRUDENCE FUND (5) numbers of people are invested.
BY WHICH MEDIUM YOU INVEST IN HDFC ASSETS MANAGEMENT

COMPANY LIMITED?

TABLE-9.8:-
MEDIUM OF INVESTMENT NO OF PEOPLE
DISTRIBUTOR 10
BANK 40
ONLINE 0
GRAPH-9.8:-
By which medium you invest in HDFC assets management company limited?
40
30
NO.OF
20
PEOPLE
10
0
DISTRIBUTOR ONLINE
MEDIUMS
Interpretation:-
From the above chart it’s getting cleared that most of the peoples (40) are invest by bank
and only (10) peoples are invest by distributors. Nobody invests through online. So here
HDFC assets Management Company has to provide facility by which investors invest
their money with out any middle man in mutual fund schemes through online.
WHY DO YOU PREFER INVESTING IN HDFC ASSETS MANAGEMENT

COMPANY LIMITED?
TABLE-9.9:-
PREFENCE CRITERIA NUMBER
BETTER FUND HOUSE 20
EXCELLENT CUSTOMER SERVICE 4

PROVIDER
CONSISTANT RETURN 25
OTHERS 1
GRAPH-9.9:-
Why do you prefer investing in HDFC assets management company limited?
30
20
NO.OF
PEOPLE
10
0
Better fund excellent consistant others
house customer return
service
provider
Interpretation:-
From the above graph - it can be seen that majority of the people that is 25 peoples give
first rank to consistent return and 20 peoples invest in HDFC assets management
company because HDFC assets management company is a better fund house and 4
peoples believes that HDFC assets Management Company provides EXCELLENT
CUSTOMER SERVICE.
IN WHICH TYPE OF PRODUCT/SCHEMES WOULD YOU PREFER WHILE

INVESTED IN EQUITY SCHEMES OF HDFC ASSETS MANAGEMENT
COMPANY LIMITED?
TABLE-9.10:-
TYPES OF SCHEMES RESPONSE

OPEN ENDED 47
CLOSE ENDED 3
GRAPH-9.10:-
In which type of product/schemes would you prefer while invested in equity schemes of
HDFC assets management company limited?
50
40
NO.OF 30
PEOPLE 20
10
0
OPEN CLOSE
ENDED ENDED
TYPES OF SCHEMES
Interpretation
From the above graph it is getting clear that most of peoples (47) prefer to invest in
OPEN ENDED equity schemes and only just (3) peoples want to invest in CLOSE
ENDED equity schemes of HDFC assets Management Company.
DO YOU KNOW ABOUT ON GOING NEW FUND OFFER OF HDFC ASSTES

MANAGEMENT COMPANY LIMITED?
TABLE-9.11:-
AWARENESS OF NFO NUMBER
YES 40
NO 10
TOTAL 50

GRAPH-9.11:-
Do you know about on going new fund offer of HDFC assets management
company limited?
50
40
30
NO.OF
PEOPLE
20
10
0
YES NO
Interpretation:-
The above graph shows that around 40 % people aware of on going new fund offer of
HDFC assets Management Company and only 10 % people are unaware from on going
new fund offer of HDFC assets management company.
CHAPTER-10
FINDINGS
 Almost 40 % are investing in HDFC assets management company’s schemes.
 Out of the total respondent almost 10% said that they invest in fixed deposit and
Insurance. Where as 25% said that they invest in Shares and mutual funds, where
as 15% says that they invest in post office schemes.
 45% of the investor was found who is invested their savings in different
schemes of mutual fund.

 47% respondents prefer to invest in a open ended schemes of HDFC assets
management company, where as remaining only 3% respondents prefer to invest
in a close ended of HDFC assets management company.
 It is found that awareness level about Mutual Funds is 47% in Delhi .
 Out of the total respondent 25% are investing in equity schemes. Where as
remaining 15% prefer debt and 10% prefer to invest in liquid 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 4% responds believes that HDFC assets
Management Company provides EXCELLENT CUSTOMER SERVICE.
 Out of the total respondents almost 40% responds are investing through bank,
only 10% responds investing their money by distributor and nobody invested by
online.
 The 40% of the respondent were aware about the ongoing NFO of HDFC assets
management company and 10% were not aware about the ongoing NFO of HDFC
assets management company.
 In HDFC assets Management Company’s EQUITY FUND maximum number

20% of people are invested and In TAX SAVER FUND 10% number of people
are invests.

CHAPTER-11
RECOMMENDATIONS AND SUGGESTIONS
 The company should try to make aware people about their different schemes
through the road show; seminars and presentation that it is not just equity based
schemes but also debt and liquid or balanced schemes also promoted by company.
Company has to put hoardings, banners, pamphlets in that area where peoples can
watch easily.
 The customers should be made aware that if the time frame of the investment is
more than 3 years Equity option is the best tool for investing in mutual fund by
this investors getting good and high returns for their investments.

 The company should be conducting special training and motivation Programme
for their distributors and also for investors so that they are being motivated to
work, their quality 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
with their distributors by these they can give good contribution in investments.
 None of responds invest their money in different schemes of company By Online,

so company has opportunity to launch online services for their distributors and
retail investors.
 Company’s core and satellite fund, balanced fund, capital builder fund are
preferred by very few investors because this schemes not perform well so
company has to think about their companies in which they invest investor’s
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.
 Before making any investment Financial Advisors should first enquire about the
risk tolerance of the investors/customers, their need and time (how long they want to
invest). By considering these three things they can take the customers into
consideration.
 Systematic Investment Plan (SIP) is one the innovative products launched by

Assets Management companies very recently in the industry. SIP is easy for
monthly salaried person as it provides the facility of do the investment in EMI.

Though most of the prospects and potential investors are not aware about the SIP.
There is a large scope for the companies to tap the salaried persons.
 They need to reorient their staff and effectively utilize technology platforms to
retain customers.
 They have to update their portfolio timely.
 The need of the hour is to make improvements in mutual funds and to create
awareness among investors about the risks involved before selling the products to
them.
 As some of the people think that mutual fund is risky so the company should
show people the advantages of the mutual fund and how it is better than the other
investment avenues.
 To uproot the investment level the company should give training programme to
financial agents who approach the investor for the investments. And they should
be aware of all the benefits of the mutual Funds.
 Company should undertake the Campaign, Road shows, Advertisement and other
type of Publicity for the effective awareness of different schemes that are
available in the market.
 The company should arrange seminars and presentations, giving detail idea about
securities and benefits of investment in mutual fund.

CHAPTER-12
CONCLUSION
 This report is prepared to get the ideas of mutual fund and various schemes of
HDFC. The general concept of the market study will help the different individuals
to invest in different investment tools as per their appetite. Through research
study, it is very much visualized the present market trend opted by the selected
number of people and their perception regarding Mutual Fund.
Hence, from this report I conclude that people are more keen to invest in Mutual
Fund due to the stability and getting more diversified options.
 Looking at the performance of all the three funds of last 1 year we can say that
HDFC Balanced Fund is the top performer among the three funds

 Half of the respondents are investing in different schemes of mutual fund
companies.
 The investors prefer investing more in banks and post office, which shows that
investors want security, and assured returns.
 Others than Banks and post office the next preference of investors who go for
risky preposition in shares and Mutual Funds. That is basically due to
misconception that Mutual Fund Companies usually invest in equity market,
which shakes trust of people in Mutual Fund.
 Majority of investors invested in open-ended schemes.
 The awareness level about HDFC assets Management Company is moderate but
still the awareness should be created because 10% peoples still not invest in
HDFC assets Management Company.
 As the investor prefers safe investment and want consistent return, they invest in
debt schemes (22.69%).
 The 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 equity schemes.
 The banks mostly make the investments through the agent’s followed.

 Professional and Business class, which is considered to be the most
knowledgeable class of the region prefers Mutual Funds less compare to service
class.
 The time frame of the investment by majority of the investors is open-ended

schemes in which their money is not locked for 3 to 5 years.
BIBLIOGRAPHY
REFERENCES
BOOKS
Marketing Management - Philip Kotler
Personnel Management - C.B.Memoria
MAGAZINES
Business Standard Newspaper
Business world
Mutual Fund Insight

NEWS PAPERS
 The Times of India
 Financial Express
WEB SITES
www.google.com
www.hdfcfund.com
www.amphiindia.com
www.moneycontrol.com
www.sebi.gov.in
http://www.amfiindia.com/showhtml.asp?page=mfconcept
http://www.amfiindia.com/showhtml.asp?page=mfindustry
http://www.sebi.gov.in/Index.jsp?contentDisp=Department&dep_id=4
http://shell.windows.com/fileassoc/0409/xml/redir.asp?Ext=pdf
http://www.amfiindia.com/showhtml.asp?page=aum
http://www.hdfcfund.com/products/schemeShow.jsp?schemeId=342&fundID=1
http://www.hdfcfund.com/aboutus/index.jsp
http://www.hdfcfund.com/fundschool/index.jsp
http://www.hdfcfund.com/navcorner/index.jsp
http://www.hdfcfund.com/news/index.jsp
http://www.hdfcfund.com/download/sebiCirculatShow.jsp
http://www.amfiindia.com/pu-showfundwiseaum.asp?admin=yn
http://www.amfiindia.com/accounts_halfyearly.asp
http://www.amfiindia.com/showhtml.asp?page=sitemap
http://www.amfiindia.com/accounts_annual.asp
http://www.moneycontrol.com/mutualfundindia/
http://www.moneycontrol.com/india/mutualfunds/bestmfipo/15/30/bestmutualfundIPOm
f
http://www.moneycontrol.com/planning_desk/understandingmf.php?step1=1

http://www.moneycontrol.com/india/mutualfunds/comparefunds/15/30/mf_compare/All
http://www.moneycontrol.com/easymf/learn/
http://www.moneycontrol.com/planning_desk/understandingmf.php?step1=1
QUESTIONNAIRE
Dear Sir/ madam
I am Rajni doing MBA from G.G.S.I.P University. I m preparing a project on A STUDY

ON MUTUAL FUND. For this I have designed a Questionniare to know your views.
please fill the given as per your thinking and experiences with this. I will be thankful to
you for this.

Name: ………………………………………………………………………..
Address: ……………………………………………………………………..
Contact No :®………………( O)……………… (M)………………………
City: ………...............Pin: ………………….State: ……………………….
1. Name: ____________________
2. Age:
(a) Below 30 (b) 30-40 (c) 40-50 (d) Above 50
3. Occupation:
(a) Govt.service (b) Pvt.service (c) Business
(d) Agriculture (e) others
4. Which investment avenues are you aware of?

Equity /Mutual fund
Post Office (NSC, KVP, PPF)
Fixed Deposits
Others
If others please specify
5. Do you invest in mutual funds?

Yes No
6. If yes, in which assets class do you want to invest in mutual funds?
Equity Debt Liquid

7. Do you invest in HDFC mutual fund?
Yes No
8. If yes, in which scheme would you invest in HDFC MUTUAL FUND?

Equity
Capital builder
Prudence fund

Tax saver
Core & satellite
Top 200 fund
Balanced fund
Growth
Others
9. By which medium do you invest in HDFC mutual fund scheme?

Distributor Bank Online
10.Why do you prefer investing in HDFC MF?
Better fund house
Excellent customer service provider
Consistent return
Other
If other please specify
11.Which type of product/scheme would you prefer while investing in Equity

Scheme of HDFC mutual fund?
Open-ended Close ended
12. Do you know about on going new fund offers of HDFC AMC?
Yes No
Remarks if any other please specifies: -

THANKS

A Study On Mutual Fund - (Rajni) Mba (Fin), Rdias.................. Delhi Cantt-110010

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CHAPTER – 1

1.1 INTRODUCTION TO MUTUAL FUND

A mutual fund is answer to all these situations. It appoints professionally

A draft offer document is to be prepared at the time of launching the fund.

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A sponsor then hires an asset management company to invest the funds

Investments in securities are spread across a wide cross-section of industries and

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1.3 MUTUAL FUND OPERATION FLOW CHART :-

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• RELATIVELY LESS EXPENSIVE :-

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1.5 DISADVANTAGES OF MUTUAL FUND :-

• NO CONTROL OVER COST :-

• MANAGING A PORTFOLIO OF FUNDS :-

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• CHANGE OF INDEX COMPOSITION :-

1.6 WHY INVESTOR NEEDS MUTUAL FUND:-

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OBJECTIVES OF THE STUDY

1) Analyzing mutual fund awareness in retail investors of HDFC assets Management

3) To find out the most preferred channel.

4) To find out what should do to boost Mutual Fund Industry.

6) To analyze the history of HDFC mutual fund

2.1 PURPOSE OF THE STUDY

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• Analyzing mutual fund awareness in retail investors of HDFC assets Management

2.2 SCOPE OF THE STUDY

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RESEARCH METHODOLOGY OF THE STUDY

Research methodology is a way to systematically show the research problem. It

3.1- RESEARCH DESIGN:-

Research design can be described as an out line of a research project working or a

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3.2 – SOURCES OF DATA:-

 Data are more metaphorical than real

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 They fill a need for specific reference or citation on some point

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Random sampling technique was used in the survey conducted.

3.4 - DATA COLLECTION INSTRUMENT DEVELOPMENT:-

3.5 LIMITATIONS OF THE STUDY:-

• It is difficult to cover all the function of the company.

• Some respondents were reluctant to divulge personal information which can

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INTRODUCTION TO THE INDUSTRY

5.1 THE HISTORY OF INDIAN MUTUAL FUND:-

FIRST PHASE -1964-87 (MONOPOLY OF UTI) :-

SECOND PHASE -1987-93( ENTRY OF PUBLIC SECTOR FUNDS) :-

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THIRD PHASE-1993-2003(ENTRY OF PRIVATE SECTOR FUNDS):-

FOURTH PHASE-(SINCE FEBRUARY 2003) :-

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5.2 STRUCTURE OF A MUTUAL FUND :-

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FOLLOWING ARE THE RIGHTS OF TRUSTEES:-

 Approve each of the schemes floated by the assets Management Company.