CONTENT

No 1 2 Particular Page No 2 3

EXECUTIVE SUMMARY THE CONCEPT OF MUTUAL FUND IN DETAIL AND INVESTMENT

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MUTUAL FUND OPERATION FLOW CHART TYPES OF MUTUAL FUNDS ORGANISATION OF MUTUAL FUND PHASES OF MUTUAL FUND INDUSTRY BENEFITS OF MUTUAL FUND MUTUAL FUND PLAYERS IN INDIA COMPANY DETAIL RESEARCH METHODOLOGY SURVEY ANALYSIS SWOT ANALYSIS CONCLUSION FINDINGS GLOSSARY BIBLIOGRAPHY SUGGESTIONS QUESTIONNAIRE OF SURVEY

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What Is An Investment?

An Investment is the use of capital to create more money through the acquisition of a security that promises the safety of the principal and generates a reasonable return. In Pipeline of Mutual Fund. A company that invests in securities of other companies; using funds acquired by selling shares to investors. A mutual fund is one type of Investment Company. Any purchase that fails to meet the safety and returns criteria is not an investment. It could either be speculation or gambling. For instance, betting or buying lottery tickets could make you lose all your money or give huge unreasonable returns. This is gambling and not an investment. There is a very thin line differentiating the two and one has to be careful not to cross that line.

Fundamentals of Investment
There are three fundamentals of investment, namely: SAFETY LIQUIDITY RETURN The order is quite clear: Safety- always first, then the Liquidity- next and Return- third. A lot of people fall prey to the lure of high returns, and usually, this has resulted in a LOSS

Investment Options Available in India

There are basically two kinds of investment options available for the investor on the basis of their Risk, Return and time horizon. As per the Return is concern one can earn a fixed rate of interest and other where the rates fluctuate depending on certain factors prevailing in the market at that point of time. Given below are the options available in each category.

Investment avenues in the last decades

The Indian investors in the last decades were very risky so the saving was focused in high fixed earning investment. Also there were not many investment options and investments with sovereign guarantee were preferred. This was partly due to high interest rates in India.

Investments

Liquid

Debt

Insurance

Equity

Small Savings

RBI Bonds

Primary Market

Secondary Market

PPF

Post office

THE CONCEPT OF MUTUAL FUND IN DETAIL

A mutual fund is a common pool of money into which investors place their contributions that are to be invested in accordance with a stated objective. The ownership of the fund is thus joint or mutual, fund belongs to all investors. The work Mutual means a vehicle wherein the benefits of a certain investment are reaped by investors in proportion to their investment.

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. 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 funds assets. The term unit-holder includes the mutual fund account-holder or closeend 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.

Mutual Fund Operation Flow Chart

How does a Mutual fund work?

TYPES OF MUTUAL FUNDS

There are two BASIC TYPES of mutual funds. "Open-ended" or "Open" mutual funds are the most common type of mutual funds. Investors may purchase units from the fund sponsor or redeem units at the valuation promised in the fund documents, usually on a daily basis. "Closed-ended" or "Closed" mutual funds are traded as financial securities, once they are issued, and holders must sell their units on the stock market to receive their funds back.

1. AS PER INVESTMENT OBJECTIVE

Schemes can be classified by the way of their stated investment objective such as Growth Fund, Balanced Fund and Income Fund etc

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1) EQUITY ORIENTED SCHEMES:

These schemes, also commonly called Growth Schemes, seek to invest a majority of their funds in equities and a small portion in money market instruments. Such schemes have the potential to deliver superior returns over the long term. However, because they invest in equities, these schemes are exposed to fluctuations in value especially in the short term. Equity schemes are hence not suitable for investors seeking regular income or needing to use their investments in the short term. They are ideal for investors who have a long term investment horizon. General Purpose The investment objectives of general-purpose equity schemes do not restrict them to invest in specific industries or sectors. They thus have a diversified portfolio of companies across a large spectrum of industries. While they are exposed to equity price risks, diversified general purpose equity funds seek to reduce the sector or stock specific risks through diversification. They mainly have market risk exposure. HDFC Growth Fund is a general purpose equity scheme. Sector Specific The schemes restrict their investing to one or more pre-defined sectors, e.g. technology sector. Since they depend upon the performance of select sectors only, these schemes are inherently more risky than general purpose schemes. They are suited for informed investors who wish to take a view and risk on the concerned sector.

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1) SPECIAL SCHEMES I. Index Schemes The primary purpose of an Index is to serve as a measure of the performance of the market as a whole, or a specific sector of the market. An Index also serves as a relevant benchmark to evaluate the performance of mutual funds. Some investors are interested in investing in the market in general rather than investing in any specific fund. Such investors are happy to receive the returns posted by the markets. As it is not practical to invest in each and every stock in the market in proportion to its size, these investors are comfortable investing in a fund that they believe is a good representative of the entire market. Index Funds are launched and managed for such investors. II. Tax Saving Schemes Investors (individuals and Hindu Undivided Families (HUFs)) are being encouraged to invest in equity market through Equity Linked Savings Scheme (ELSS) by offering them a tax rebate. Units purchased cannot be assigned/ transferred/ pledged/ redeemed/ switched out until completion of 3years from the date of allotment of the respective Units. The Scheme is subject to Securities & Exchange Board of India (Mutual Funds) Regulations, 1996 and the notifications issued by the Ministry of Finance (Department of Economic Affairs), Government of India regarding ELSS. III. Real Estate funds Specialized real estate funds would invest in real estates directly, or may fund real estate developers or lend to them directly or buy shares of housing of finance companies or may even buy their securitized assets.

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2) DEBT BASED SCHEME These schemes are commonly called Income Schemes; invest in debt securities such as corporate bonds, debentures and government securities. The prices of these schemes tend to be more stable compared with the equity schemes and most of the returns to the investors are generated through dividends or steady capital appreciation. These schemes are ideal for conservative investors or those not in a position to take higher equity risks, such as retired individuals. However, as compared to the money market schemes they do have a higher price fluctuation risk & compared to a Gilt fund they have a higher credit risk. I. Income Schemes These schemes invest in money markets, bonds and debentures of corporate with medium and long term maturities. These schemes primarily target current income instead of capital appreciation. They therefore distribute a substantial part of their distributable surplus to the investor by way of dividend distribution. Such schemes usually declare quarterly dividends and are suitable for conservative investors who have medium to long term investment horizon and are looking for regular income through dividend or steady capital appreciation. Liquid Income Schemes: Similar to the Income scheme but with a shorter maturity than Income schemes.

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II. Money Market Schemes These schemes invest in short term instruments such as commercial paper (CP), certificates of deposit (CD), treasury bills (T-Bill) and overnight money (Call). The schemes are the least volatile of all the types of schemes because of their investments in money market instrument with short term maturities. These schemes have become popular with institutional investors and high net worth individuals having short term surplus funds. III. Gilt fund This scheme primarily invests in Government Debt. Hence the investor usually does not have to worry about the credit risk since Government Debt is generally credit risk free. 3) HYBRID SCHEMES These schemes are commonly known as balanced schemes. These schemes invest in both Equity as well as Debt. By investing in a mix of this nature, balanced schemes seek to attain the objective of income and moderate capital appreciation and are ideal for investors with a conservative, long term orientation. 2. AS PER CONSTITUTION 1) OPEN ENDED MUTUAL FUNDS Open-ended schemes do not have a fixed maturity period. Investors can buy or sell units at NAV-related prices from and to the mutual fund on any business day. These schemes have unlimited capitalization, open-ended schemes do not have a fixed maturity, there is no cap on the amount you can buy from the fund and the unit capital can keep growing. These funds are not generally listed on any exchange.

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2) CLOSE-ENDED MUTUAL FUNDS Close-ended schemes have fixed maturity periods. Investors can buy into these funds during the period when these funds are open in the initial issue. After that such schemes can not issue new units except in case of bonus or rights issue. However, after the initial issue, you can buy or sell units of the scheme on the stock exchanges where they are listed. The market price of the units could vary from the NAV of the scheme due to demand and supply factors, investors expectations and other market factors.

3) INTERVAL SCHEME These schemes combine the features of open-ended and close-ended schemes. They may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV based prices.

ORGANISATION OF MUTUAL FUND

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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.

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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.
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. PHASES OF MUTUAL FUND INDUSTRY 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. The history of mutual fund in India can be broadly divided into four distinct phases.

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Phase-I

Phase-II

Phases of Mutual Fund Ind ustry in India

Phase-IV

Phase-III

FIRST PHASE 1964-1987 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978, UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme in 1964. At the end of 1988 UTI had Rs.6, 700 cores of assets under management.

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SECOND PHASE 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non-UTI, public sector mutual funds set up by the 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 Name of the Mutual Fund Company SBI Mutual Fund Can bank Mutual Fund Punjab National bank Mutual Fund Indian bank Mutual Fund Bank of India Mutual Fund Bank of Baroda Mutual Fund LIC Mutual Fund GIC Mutual Fund Time of establishment June December August November June October June December 1987 1987 1989 1989 1990 1992 1989 1990

At the end of 1993, the mutual fund industry had assets under management of Rs.47, 004 cores.

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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 the mutual funds except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first privates 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 the total assets of Rs. 1, 12,805 cores. The Unit Trust of India with Rs. 44,541 cores 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 cores 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.

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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 cores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations and with the 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 September, 2004, there were 29 funds, which manage assets of Rs. 153108 cores under 421 schemes. THE WAY & TYPE TO INVEST IN MUTUAL FUND Mutual funds normally come out with an advertisement in newspapers publishing the date of launch of the new schemes. Investors can also contact the agents and distributors of mutual funds who are spread all over the country for necessary information and application forms. Forms can be deposited with mutual funds through the agents and distributors who provide such services. Now days, the post offices and banks also distribute the units of mutual funds. However, the investors may please note that the mutual funds schemes being marketed by banks and post offices should not be taken as their own schemes and no assurance of returns is given by them. The only role of banks and post offices is to help in. distribution of mutual funds schemes to the investors. Investors should not be carried away by commission/gifts given by agents/distributors for investing in a particular scheme. On the other hand they must consider the track record of the mutual fund and should take objective decision.

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ONE TIME INVESTMENT

The amount that has to be invested in onetime is known as Onetime Investment. The investor has to pay the whole amount at once. The minimum amount is Rs. 5000 and maximum is as per the investors Choice. This investment is generally preferred for the business man who Are able to pay at one time.

SYSTEMATIC INVESTMENT PLAN (SIP)

The amount that has to be invested through same monthly installment is known as Systematic Investment Plan. The investor has to pay the minimum amount Rs.1000 monthly for all equity and balanced schemes like that for 6months. And Rs.500 monthly for Tax Saver scheme like that for 12 months. The minimum amount that the investor has to invest is Rs6000 and maximum as per their choice. This type of investment is generally preferred for the salaried people.

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BENEFITS OF MUTUAL FUND

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

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

DIVERSIFICATION
The nuclear weapon in your arsenal for your fight against Risk. It simply means that you must spread your investment across different securities (stocks, bonds, money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). This kind of a diversification may add to the stability of your returns, for example during one period of time equities might under perform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets. Similarly the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect your principal investment as well as help you meet your return objectives.

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VARIETY
Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways: first, it offers different types of schemes to investors with different needs and risk appetites; secondly, it offers an opportunity to an investor to invest sums across a variety of schemes, both debt and equity. For example, an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt scheme) depending on his risk appetite and thus create a balanced portfolio easily or simply just buy a Balanced Scheme.

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

TAX BENEFITS
Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit holders. However, as a measure of concession to Unit holders of openended equity-oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a confessional rate of 10.5%.

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In case of Individuals and Hindu Undivided Families a deduction unto Rs. 9,000 from the Total Income will be admissible in respect of income from investments specified in Section 80L, including income from Units of the Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-Tax.

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

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CONVENTIONAL ADMINISTRATION
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient. Return

Potential Over a medium to long-term; Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.

LIQUIDITY
In open-ended mutual funds, you can redeem all or part of your units any time you wish. Some schemes do have a lock-in period where an investor cannot return the units until the completion of such a lock-in period.

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

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MUTUAL FUND PLAYERS IN INDIA A) Bank Sponsored 1. Joint Ventures - Predominantly Indian a. SBI Funds Management Private Ltd. 2. Others a. BOB Asset Management Co. Ltd. b. Can bank Investment Management Services Ltd. c. UTI Asset Management Co. Private Ltd.

B) Institutions a. Jeevan Bima Sahayog Asset Management Co. Ltd.

C) Private Sector 1. Indian a. Benchmark Asset Management Co. Private Ltd. b. Cholamandalam Asset Management Co. Ltd. c. Credit Capital Asset Management Co. Ltd. d. Escorts Asset Management Ltd. e. J. M. Financial Asset Management Private Ltd. f. Kotak Mahindra Asset Management Co. Ltd. g. Reliance Capital Asset Management Ltd.

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h. Sahara Asset Management Co. Private Ltd i. Sundaram Asset Management Co. Ltd.

j. Tata Asset Management Ltd. 2. Joint Ventures - Predominantly Indian a. Birla Sun Life Asset Management Co. Ltd. b. DSP Merrill Lynch Fund Managers Ltd. c. HDFC Asset Management Co. Ltd. d. Prudential ICICI Asset Management Co. Ltd. 3. Joint Ventures - Predominantly Foreign a. ABN AMRO Asset Management (India) Ltd. b. Deutsche Asset Management (India) Private Ltd. c. Fidelity Fund Management Private Ltd. d. Franklin Templeton Asset Management (India) Private Ltd. e. HSBC Asset Management (India) Private Ltd. f. ING Investment Management (India) Private Ltd. g. Morgan Stanley Investment Management Private Ltd. h. Principal Pnb Asset Management Co. Private Ltd. i. Standard Chartered Asset Management Co. Private Ltd.

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COMPANY DETAIL
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. 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 its Chairman till 1993. He took active interest in the Bombay Community Public Trust, designed specifically to serve the needs of the citys underprivileged citizens.

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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.

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HDFC ASSET MANAGEMENT COMPANY LIMITED (AMC) AMC was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an AMC for the Mutual Fund by SEBI on July 30, 2000. The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169, Back bay Reclamation, Church gate, Mumbai - 400 020. In terms of the Investment Management Agreement, the Trustee has appointed HDFC Asset Management Company Limited to manage the Mutual Fund 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 Housing Development Finance Corporation Limited Standard Life Investments Limited % of the paid up capital 60% 40%

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.

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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: 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. SPONSORS HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (HDFC): HDFC was incorporated in 1977 as the first specialised housing finance institution in India. HDFC provides financial assistance to individuals, corporate 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.

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HDFC currently has a client base of over 8, 00,000 borrowers, 12, 00,000 depositors, 92,000 shareholders and 50,000 deposit agents. HDFC raises funds from international agencies such as the World Bank, IFC (Washington), USAID, CDC, ADB and KFW, 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 ninth 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. HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. STANDARD LIFE INVESTMENTS LIMITED The Standard Life Assurance Company was established in 1825 and has considerable experience in global financial markets. In 1998, Standard Life Investments Limited became the dedicated investment management company of the Standard Life Group and is owned 100% by The Standard Life Assurance Company.

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With global assets under management of approximately US$186.45 billion as at March 31, 2005, Standard Life Investments Limited is one of the world's major investment companies and is responsible for investing money on behalf of five million retail and institutional clients worldwide. With its headquarters in Edinburgh, Standard Life Investments Limited has an extensive and developing global presence with operations in the United Kingdom, Ireland, Canada, USA, China, Korea and Hong Kong. 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. The company's current holdings in UK equities account for approximately 2% of the market capitalization of the London Stock Exchange.

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HDFC MUTUAL FUND PRODUCTS

Equity Funds HDFC Growth Fund HDFC Long Term Advantage Fund HDFC Index Fund HDFC Equity Fund HDFC Capital Builder Fund HDFC Tax saver HDFC Top 200 Fund HDFC Core & Satellite Fund HDFC Premier Multi-Cap Fund HDFC Long Term Equity Fund HDFC Mid-Cap Opportunity Fund Balanced Funds HDFC Children's Gift Fund Investment Plan HDFC Children's Gift Fund Savings Plan HDFC Balanced Fund HDFC Prudence Fund

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 Debt Funds

HDFC Income Fund HDFC Liquid Fund HDFC Gilt Fund Short Term Plan HDFC Gilt Fund Long Term Plan HDFC Short Term Plan HDFC Floating Rate Income Fund Short Term Plan HDFC Floating Rate Income Fund Long Term Plan HDFC Liquid Fund - PREMIUM PLAN HDFC Liquid Fund - PREMIUM PLUS PLAN HDFC Short Term Plan - PREMIUM PLAN HDFC Short Term Plan - PREMIUM PLUS PLAN HDFC Income Fund Premium Plan HDFC Income Fund Premium plus Plan HDFC High Interest Fund HDFC High Interest Fund - Short Term Plan HDFC Sovereign Gilt Fund - Savings Plan HDFC Sovereign Gilt Fund - Investment Plan HDFC Sovereign Gilt Fund - Provident Plan HDFC Cash Management Fund - Savings Plan HDFC Cash Management Fund - Call Plan HDFCMF Monthly Income Plan - Short Term Plan HDFCMF Monthly Income Plan - Long Term Plan HDFC Cash Management Fund - Savings Plus Plan HDFC Multiple Yield Fund HDFC Multiple Yield Fund Plan 2005

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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.

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RESEARCH METHODOLOGY
OBJECTIVE : 1. primary objective : To know the investors perception regarding investment in HDFC mutual fund. 2 Secondary objective : To know the awareness of different products of HDFC mutual fund. To study the influence of age towards preference of HDFC mutual fund. To evaluate investment performance of HDFC mutual fund in terms of risk & return.
[[

To know which factor consider by investor while investing. To find out, which product of HDFC is better, according to investors To understand the association of saving and investment in HDFC mutual fund. DATA COLLECTION : Personal interviewing through Questionnaire. Questionnaire will be semi structured with open ended and closed ended questions. Data collection: Primary and Secondary.

DATA SOURCES :

We have used primary data source to collect the data of investors Perception
regarding mutual funds.

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 SAMPLE PLAN : Sample Size: 100 Sample Sample Method: In this study as suggested by the AMC Investors were selected through random sampling method. Sample Unit: 100 investors who are investing in mutual funds. Contact Method: All data have collected through survey method.
[

Area of Study: Ahmedabad & Gandhinagar LIMITATION OF THE STUDY: Sample size was limited to 100 respondents only and unable to represent the whole population. The research is limited to Ahmedabad & Gandhinagr city only, if the same research would have been carried in another city, the results could vary. Our own inexperience and knowledge might have affected the research study. The findings of this study are based on the information which was given by the respondents. As sampling techniques is Quota sampling so it may result in personal bias.

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1) Do you invest in any financial instrument available in the market ? 1) Yes 2) No ( ) ( )

The survey shows that 70% of people invested in financial Instruments, 30% of people are not Invested in financial instruments.

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2) Are you aware about Mutual Fund? 1) Aware 2) Unaware ( ) ( )

Today, Mutual fund is best investment option. The survey shows that 65% of the people are aware about the mutual fund when 35% of the people are not aware about the mutual fund.

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3) Describe your knowledge about mutual fund. 1) Excellent 2) Good 3) Average 4) Poor ( ( ( ( ) ) ) )

Here from the above graph, we can say that most investors have knowledge between good to average about mutual fund. In our findings around 49% investors have good knowledge & 25% investor have average knowledge only 11% investors who have expert type knowledge.

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4) Have you ever invested in mutual funds? 1) Yes 2) No ( ) ( )

From the above graph we can say that as per our sample size 68% respondents are investing in mutual funds. Remaining 32% people are not investing in mutual fund because they dont want to take any kind of risk in the market and they dont have any kind of awareness regarding investment in mutual.

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5) In which schemes of mutual fund have you invested? 1) Open ended scheme 2) Close ended scheme ( ) ( )

Above graph presents the kind of schemes in which investors prefer to park

their money.

The type of schemes selected for investment depends largely on the risk return matrix of an individual and the time horizon of his investments. 71% of investor invests in open-ended scheme and 29% of investors invest in close ended scheme.

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6) By investment objective, in which types of scheme hav you invested ? 1) Growth scheme 2) Income scheme 3) Balanced scheme 4) Money market scheme ( ( ( ( ) ) ) )

According to the investors point of view 65% investors are investing in growth scheme and 16% are investing in income scheme and 10% are investing in balance scheme and only 9% are invested in money market scheme.

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7) Which channel do you prefer while investing in MF? 1) Financial adviser 2) Bank 3) AMC ( ) ( ) ( )

The objective to ask this question is to know that by which medium; the investors are investing in mutual fund. We see in the above graph and say that the 55% Investors are using financial adviser as a medium of investment because advisers provide them proper advices regarding investment in different schemes, good return, tax benefit etc. In our findings 30% investors are using Bank &15% of invester are using AMC as a medium for investment

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8) In which AMCs you have invested? 1) RELIANCE 2) HDFC 3) ICICI 4) UTI 5) BIRLA 6) KOTAK 7) LIC 8) Other 9) None ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )

We can say from the above graph that investors mostly recommend Reliance and HDFC for Mutual fund . The investors mostly recommend this both funds because of this both fund are well known and perform very well in the market.

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9) Have you ever invested in HDFC mutual fund? 1) yes 2) no

Out of the 100 investors, 36% investors are investing in HDFC mutual fund. So we can say that ratio between HDFC mutual fund and other mutual funds are 36:64.

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10) Which of the products of HDFC mutual fund are you aware?

1) Equity/ growth fund 2) Childrens growth fund 3) Fixed maturity plan 4) Liquid fund 5) Debt/ income fund 6) No one

( ( ( ( ( (

) ) ) ) ) )

In our research we found that out of 36% investors of HDFC mutual fund, 40% of investors are aware about equity fund and 32% of invester are aware about childrens growth fund , only 4% of investors are not aware any product of HDFC mutual fund,

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11) Are you satisfied with quality of portfolio management manage HDFC AMC? (On the basis of return). 1) Yes 2) No ( ) ( )

As per our survey is concern 92% investors are satisfied with the quality of port folio management managed by HDFC AMC. It shows that they put trust indirectly on fund manager of HDFC AMC.

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12) What is your return expectation while investing in mutual fund? 1) Up to 8% 2) Between 8% to 15% 3) Above 15% ( ) ( ) ( )

Return of mutual fund is important factor to invest in mutual fund. 49% of Investor prefer return between 8%to15% & 42% of investor prefer return between above 15%.

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13) Specify, how much time horizon do you keep in mind while investing?
1) Less than 1 year 2) 2 5 years 3) 5 10 years 4) Above 10 years 5) Non one ( ) ( ) ( ) ( ) ( )

From the above graph we can say that majority (61%) investors are investing for 2-5 years . So that they get good return. Only 1% investors are those who do not keep in mind time horizon that means all the investors keep in mind time horizon while investing in mutual fund.

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14) What is the purpose of your investment in Mutual Fund? 1) Safety 2) Returns 3) Liquidity 4) Risk 5) Tax benefit 6) All ( ( ( ( ( ( ) ) ) ) ) )

The objective to ask this question is to know that which parameter is more important as per investors opinion.. From our survey we found that 26% of investors consider return, 15% of investors consider safety, 6% of investors consider liquidity and 18% of investors consider tax benefit at the time of investment.

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15) In mutual fund what kind of investment philosophy do you prefer?

1) Lump sum 2) SIP 3) STP 4) SWP Others (specify) ______________________ ( ) ( ) ( ) ( )

In our survey we found that 52% investors are investing in lump sum and 33% investors are investing in SIP. So we can say that investors are more preferring lump sum than SIP while investing in mutual fund.

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SWOT ANALYSIS
STRENGTH Good Brand Name of the company in all over India. Flexible products Expertise in the field of mutual fund Sound financial resources of the company as well as sponsors. Strong Communication Network all over the country. WEAKNESS Less awareness regarding mutual fund among investors Yet to build strong distribution network Cannot tap rural market

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OPPORTUNITIES: Untapped rural market Lack of competitive products to suit clients investment objective

THREAT The numbers of players are increasing which further increases the competition. Product Innovation done by other Asset Management companies and is able to collect large amounts. Customer mindsets are still rigid and they mostly prefer traditional pattern of investments.

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CONCLUSION
This report is prepared to get the basic 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.

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FINDINGS
In our finding majority of the investors are private employee and very few are business men because they directly invest their money in equity market. Most of the investors whose yearly saving is less than 30,000rs give their first preference to saving & current account and least preference to the mutual fund and equity market while the investors whose yearly saving is more than 30,000rs give their first preference to mutual fund and equity market. The investors of the age group 21-35 years prefer to invest their savings in saving & current account and least preference to the mutual fund and equity market while the investors of the age group above 35 years are prefer to invest their savings in mutual fund and equity market. The investors whose qualification is up to HSC are mostly invested in post office and least preference to the gold & silver. The investors whose qualification is graduate are mostly invested in saving & current account and least preference to the government security. The investors whose qualification is post graduation are mostly invested in saving & current account and least preference to the government security. 60% investors are invested in mutual fund out of that most of (70%) investors are invested in open ended schemes (growth option). As per top five AMCs Majority investors are invested in Reliance mutual fund than HDFC. Most of the investors are invested in mutual fund because of good return, market images and agents advice. They least concern with the fund manager.

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Equity fund of HDFC mutual fund has more awareness by investors than other funds. 97% of investors are satisfied with quality of portfolio management managed by HDFC mutual fund. Half of the investors are prefer their top MAC as a Reliance mutual fund. Majority investors are preferring financial adviser as a medium of investment. Majority Investors are investing in mutual fund for 2-5 years. Return is first parameter for investing in mutual fund. Majority investors have little & average knowledge about mutual fund. Investors are preferring lump sum and SIP as good investment plan.

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GLOSSARY
SHORT FORMS AMC AMFI AUM BSE FII Asset Management Company Association of Mutual Fund of India Asset under Management Bombay Stock Exchange Foreign Institute of Investor. FII can invest in Mutual Funds. They invest through the Non-resident rupee account. GILT Government of India Linked Treasury. These Funds are those that invest only in government securities. IPO IRP MIP MTM NAR NAV NSE OD Initial Public Offer Investor Risk Profile Monthly Investment Plan Market to Market Net Amount at Risk Net Asset Value National Stock Exchange Offer Document is the most important source of information for the investors. Abridged version of the OD is called as Key Information Memorandum (KIM).
PAR VALUE

It is said as face value. Sum at Risk Systematic Investment Plan Systematic Withdrawal Plan wholesale Debt Market

SAR SIP SWP WDM

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BIBLIOGRAPHY
BOOKS
Marketing Management - Philip Kotler Personnel Management - C.B.Memoria

MAGAZINES
Business Standard Newspaper Business world Mutual Fund Insight

WEBSITES
About Mutual Fund Companies www.hdfcfund.com, (12th feb,2011) www.amphiindia.com, (15th feb,2011) www.moneycontrol.com, (17th feb,2011) www.sebi.gov.in(17th feb,2011) , http://www.amfiindia.com/showhtml.asp?page=mfconcept, (1st march,2011) http://www.amfiindia.com/showhtml.asp?page=mfindustry, (3st march,2011)

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http://www.sebi.gov.in/Index.jsp?contentDisp=Department&dep_id=4, (7st march,2011) http://shell.windows.com/fileassoc/0409/xml/redir.asp?Ext=pdf, (7th april,2011) http://www.amfiindia.com/showhtml.asp?page=aum, (15th April,2011)

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SUGGESTIONS
An aggressive advertising campaigning should be there to encourage more people to invest. 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. There is a great potential for the mutual fund because the people are ready to invest in the mutual fund as there is a positive responses. Now a days people are investing in more of an equity fund because it gives high return as compare to other mutual fund schemes. People are preferred to invest in the long term savings when only they have enough of surplus. They are least concerned about the others advice. The people of Rajkot have enough purchasing power supported by N.R.I. Mutual Fund Companies should take this fact positively at the time of designing promotional scheme. HDFC MF is doing comparatively very less marketing in MF industry in compare to other players. Due to this other player are getting the advantage. Thus it should try to increase the marketing and advertising related activities time to time or at least at the time of new NFOs, at the time when they are declaring dividends or at the peak time (i.e. January - March) last quarter of financial year when people are searching for investing instruments. A very small part market has been cover by HDFC MF. It can increase the circle of its business in small and rural areas of every state and cities of India where they an find a huge business. 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.

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Questionnaire of survey
Questionnaire

Dear Respondent, We are the students of Chaudhari Technical Institute MBA, Gandhinagar. Presently, we are preparing a research report on the topic Investors perception regarding investment in HDFC Mutual Fund We will be very thankful to you if you will give your valuable time for fill up this questionnaire. All the information provided by you will be kept confidential and strictly used for academic purpose only. . 1) Do you invest in any financial instrument available in the market? 1) Yes ( ) 2) No ( ) 2) Are you aware about Mutual Fund? 1) Aware ( 2) Unaware ( ) )

3) Describe your knowledge about mutual fund. 1) Excellent ( ) 2) Good ( ) 3) Average ( ) 4) Poor ( ) 4) Have you ever invested in mutual funds? 1) Yes 2) No ( ( ) )

5) In which schemes of mutual fund have you invested? 1) Open ended scheme ( ) 2) Close ended scheme ( ) 6) By investment objective, in which types of scheme have you invested 1) Growth scheme ( ) 2) Income scheme ( ) 3) Balanced scheme ( ) 4) Money market scheme ( )

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7) Which channel do you prefer while investing in MF? 1) Financial adviser 2) Bank 3) AMC ( ( ( ) ) )

8) In which AMCs you have invested? 1) RELIANCE 2) HDFC 3) ICICI 4) UTI 5) BIRLA 6) KOTAK 7) LIC 8) Other 9) None 9) Have you ever invested in HDFC mutual fund? 1) Yes ( ) 2) No ( ) 10) Which of the products of HDFC mutual fund are you aware? 1) Equity/ growth fund ( ) 2) Childrens growth fund ( ) 3) Fixed maturity plan ( ) 4) Liquid fund ( ) 5) Debt/ income fund ( ) 6) No one ( ) 11) Are you satisfied with quality of portfolio management managed by HDFC AMC? (On the basis of return). 1) Yes ( ) 2) No ( ) 12) What is your return expectation while investing in mutual fund? 1) Up to 8% ( ) 2) Between 8% to 15% ( ) 3) Above 15% ( ) ( ( ( ( ( ( ( ( ( ) ) ) ) ) ) ) ) )

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13) Specify, how much time horizon do you keep in mind while investing? 1) Less than 1 year ( ) 2) 2 5 years ( ) 3) 5 10 years ( ) 4) Above 10 years ( ) 5) Non one ( ) 14) What is the purpose of your investment in Mutual Fund? 1) Safety 2) Returns 3) Liquidity 4) Risk 5) Tax benefit 6) All ( ( ( ( ( ( ) ) ) ) ) )

15) In mutual fund what kind of investment philosophy do you prefer? 1) Lump sum 2) SIP 3) STP 4) SWP Others (specify) ______________________ ( ( ( ( ) ) ) )

16) Personal details: 1) Name: ____________________________________________________ 2) Age: _____________________ 3) Sex: o o Male Female ( ( ) )

4) Occupation: o o o o o govt. sector Pvt. Sector business agriculture Others (specify) ________________ ( ( ( ( ) ) ) )

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5) Your familys yearly income: o o o o Below 1, 00,000 rs. 1, 00,000 - 2, 00,000 rs. 2, 00,000 3, 00,000 rs. above 3,00,000 ( ( ( ( ) ) ) )

Thank you for your cooperative response.

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