Project Report IDFC Mutual Fund

Mutual funds
A Case Study and survey

at
(HDFC Bank branches: Jalandhar City.)
Submitted to: Shaheed Udham Singh College
of
Engineering and Technology Tangori (Mohali)
Submitted by: Munish Kapil
Roll no. 90692234759
Session (2009-11)
Contents
Acknowledgment 3
Student undertaking 4
Executive summery 5
Introduction 7-38
- What is Mutual Fund; 7
- History of Mutual Fund in India; 9
- Types of mutual funds schemes; 12
- Advantages of Mutual Funds; 17
- Disadvantage of Investing Through Mutual Funds; 18
- Mutual Fund investment strategies; 19
- Performance evaluation; 20
- Risk and Return; 25
- Tax treatment for unit holder; 29
- Mutual fund set up; 33
- AMFI; 33
- Tips on buying mutual funds; 36
- AUM; 37
Company Profile 39-54

- HDFC AMC Nam Dev Choak Jalandhar
- Schemes
- Acquisition of standard charted by IDFC
Findings 52
- Survey background; 52
- Methodology; 52
- Findings;53
Conclusion and reconditions 60

Questionnaire 61
Glossary 65
References 67
Acknowledgment
2 |Page
It took great deal of help, tolerance and understanding on the part of a variety of people and
organizations to prepare this project report. I would particularly thank to Harmeet Sir , Naresh
Sir, Rijju Sir and Manjit sir( HDFC AMC) as they provided me guide line and support during my
training.
My special thanks go to JIMS College and its placement department for providing me such an
opportunity to work with HDFC AMC.
I would also thank to all staff members of different branches of HDFC Bank Ltd. To all the
above and the many colleagues whose ideas and practice I adopted in the project I wish to
express my warmest appreciation for their help and support along the way.
Munish Kapil
Student undertaking
This is to certify that this project “Mutual Funds : study & survey” is original work
done for the partial fulfillment for the award of post graduate Degree in business
3 |Page
management from Shaheed Udham Singh College of Engineering and Technology ,
Tangori ( Mohali) . I am grateful to Prof.Shaweta Mam , faculty of MBA Department
S.U.S.C.E.T. Tangori
Project guide Student
(HOD Pankaj Mahindroo) (Munish

Kapil)
Executive summary
4 |Page
The Indian mutual fund industry in recent years has exponential growth and yet it is
still at a very nascent stage. We believe that the mutual fund industry has grown in
terms of size or choices available, but is a long distance from being regarded as a
mature one. To understand this one has to look at the global scenario. If one look at
the global mutual fund industry, one has see that assets have grown by 185%
between 2000 and 2006. In comparison, Indian assets outgrew at a staggering 446%,
where as the US only grew by 158% and Europe by 242%.
As our economy continues to grow at a spectacular rate there is a huge amount of

wealth creating opportunities surfacing everywhere. Financial Planners have an
immensely responsible role to play by identifying these opportunities and channeling
them into wealth creating initiatives that would enable people to address their
financial needs. To give an overview of a recent study conducted by Invest India, there
are about 321.8 millions paid workers in India. Of this only 5.3 millions have an
exposure to mutual funds. This is less than 2% of total work force. Even more
interesting fact is that 77% of them reside in super metros and Tier I cities. Again,
about 4 millions come in the Rs 90,000-5 lack income bracket. The penetration among
the less than Rs 90,000 and more than Rs 5 lack income bracket is very low. The need
for the hour is to expend the market boundaries and expand scope in Tier II and Tier III
cities.
India is also one of the fastest growing markets for mutual funds, attracting a host of
global players. Hence, investors will have an even wider range of products to choose
from. The combination of the increase in number of fund houses along with new
schemes and the increase in the number of people parking their saving in mutual
funds has resulted in per cent during April-December 2007. This now stands at Rs
30314 billions as against Rs 13476 billions for the corresponding period last year.
As on January 31,2008, Indian assets stood at $ 137 billions and are growing. We
already have many experts expressing their concentration at the frequency of NFO
launches. Yet we have less than 1000 schemes in India, compared to 15000 in the US
and 36000 in Europe. The gap is significant and has to be filled up with unique and
better priced products.
There has also been a rapid rise in the HNI segment. India stands only second-best to
Korea in the Asia- Pacific region in terms of percentage growth. The total HNWI (High
Net Worth Individual) assets stood at about Rs 12 trillion and their assets are
distributed over various assets classes. To top them MFs will have to come up with
structured products, real estate funds, commodity based funds, art funds and the like.
Indian house holds have also increased their exposure to the capital market. Very
interestingly, the MF proportion in this has increased. In fact, there has been more
than 2000% growth in the assets coming to MFs in the last 3 years. Statistics reveal
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that a higher portion of investors’ savings is now invested in market-linked avenues
like mutual funds as compared to earlier times.
Passing through the growth phase
We have always read that fund industry has seen three phases – the UTI phase, the
public sector phase and the post – UTI phase. But if we study a bit more closely, there
have been four clear stages.
- UTI Phase (1964 – 1987)
- Public sector phase (1987 – 1993), during which the likes of SBI,BOB and Canara
Bank comes in to existence
- The emergence phase (1993 – 2003), when international players come in to

India. Some have wound up their operations and a few of them are looking for
re-entry.
- Post UTI phase (2003 – 2007), when domestic players along with some global
players have consolidated the MF industry.
And now we are entering Phase V of the industry, when not only are newer players
readying to enter the market but are also looking at penetration and market
expansion. All in all, this is a win-win situation for Indian investors. We have also come
up a long way from plain vanilla equity funds to hybrid funds, from balanced funds to
arbitrage funds, from sect oral funds to quant strategies.
Changing investor profile
Today’s investor is quite young and very unlike the older generation. He follows a
contrarian’s approach. How buys when the market flips and books profit when it
rallies. While the market corrected by almost 22% during the January mayhem, mutual
funds were net buyers to the tune of Rs 4,200 crores. Much of this support came from
domestic investors. The retail participation in equity schemes has also increased
tremendously. The total AUM of 330 schemes in December last year stood at Rs 2,157
billions as compared to 197 schemes and Rs92 billions In march 2000. Also in the last
three years, mobilizations from NFOs stood at Rs 95,000 crores. Although many
complain that the industry is still brokerage driven, the trends clearly suggest that
investors prefer NFOs to enter equities.
Our economy is booming, we have now a sustained GDP growth of 8%, which is likely
to remain at this level for years to come, our per capita income is about to touch $
1000 by the end of 2008. The number of AMCs is increasing. Their presence across
India is expending. Distributors too are expanding their networks. Besides, the
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regulator has taken up measures to safeguard investor interests. These are all drivers
for the fund industry. Together, these greet investor warmly. The need of the investor
populace has changed, resulting in a change in asset management styles. In a way,
this is leading to the design of new and competitively-priced products, implying
greater emphasis on higher quality of intermediation. This in itself is both an
opportunity and a challenge. As our economy continuous to grow at a spectacular rate
there is a huge amount of wealth creating opportunities surfacing everywhere.
Financial Planners have an immensely responsible role to play by identifying these
opportunities and channeling them into wealth creating initiatives that would enable
people to adequately address their financial needs.
Introduction
A mutual fund is a professionally-managed form of collective investments that pools
money from many investors and invests it in stocks, bonds, short-term money market
instruments, and/or other securities.[1In a mutual fund, the fund manager, who is also
known as the portfolio manager, trades the fund's underlying securities, realizing
capital gains or losses, and collects the dividend or interest income. The investment
proceeds are then passed along to the individual investors. The value of a share of the
mutual fund, known as the net asset value per share (NAV) is calculated daily based
on the total value of the fund divided by the number of shares currently issued and
outstanding.
Legally known as an "open-end company" under the Investment Company Act of

1940(the primary regulatory statute governing investment companies), a mutual fund
is one of three basic types of investment companies available in the United States. [2]
Outside of the United States (with the exception of Canada, which follows the U.S.
model), mutual fund may be used as a generic term for various types of collective
investment vehicle. In the United Kingdom and Western Europe (including offshore
jurisdictions), other forms of collective investment vehicle are prevalent, including unit
trusts, open-ended investment companies (OEICs), SICAVs and unitized insurance
funds. In Australia and New Zealand the term "mutual fund" is generally not used; the
name "managed fund" is used instead.
What is a Mutual Fund?

Mutual funds belong to the class of firms known as investment companies. While
companies may offer a "family" of funds under a single umbrella name and common
administration - for example, the Vanguard Group, Fidelity Investments, or Strong
Funds - each fund offered is a separately incorporated investment company. These are
entities that pool investor money to buy the securities that make up the fund’s
portfolio. The idea behind this pooling of investor money is to give each investor the
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benefits that come from the ownership of a diversified portfolio of securities chosen
and monitored daily by experience, professional advisers.
The funds create and sell new shares on demand. Investors` shares represent a
portion of the fund’s portfolio and income proportional to the number of shares they
purchase. Individual shareholders of the mutual funds have voting rights in the
operation of the fund, just as most holders of common stocks in corporations have the
right to vote on certain issues involving the running of the company. The key attribute
of a mutual fund, regardless of how it is structured, is that the investor is entitled to
receive on demand, or within a specified period after demand, an amount computed
by reference to the value of the investor’s proportionate interest in the net assets of
the mutual fund. This means that the owner of mutual fund shares can "cash in," or
redeem his or her shares at any time.
Mutual funds, therefore, are considered a liquid investment. The investor’s selling
(redemption) price may be higher or lower than the purchase price. It all depends on
the performance of the fund’s portfolio. The fund has an adviser who charges a fee for
managing the portfolio. The adviser decides when and what securities to buy and sell,
and is responsible for providing or causing to be provided all services required by the
mutual fund in carrying on its day-to-day activities. All fund investors get this built-in
portfolio management whether they own 50 shares or 10,000.The adviser generally
purchases many different securities for the portfolio, since investment theory holds
that diversification reduces risk. It is this diminished risk that is one of the attractions
of mutual funds. The fund also has a custodian, usually a financial institution such as a
bank, which holds all cash and securities for the fund.
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History of Mutual Fund in India
The Evolution
The formation of Unit Trust of India marked the evolution of the Indian mutual fund
industry in the year 1963. The primary objective at that time was to attract the small
investors and it was made possible through the collective efforts of the Government of
India and the Reserve Bank of India. The history of mutual fund industry in India can
be better understood divided into following phases:
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Phase 1. Establishment and Growth of Unit Trust of India
- 1964-87
Unit Trust of India enjoyed complete monopoly when it was established in the year
1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it
continued to operate under the regulatory control of the RBI until the two were de-
linked in 1978 and the entire control was transferred in the hands of Industrial
Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as
Unit Scheme 1964 (US-64), which attracted the largest number of investors in any
single investment scheme over the years.
UTI launched more innovative schemes in 1970s and 80s to suit the needs of different
investors. It launched ULIP in 1971, six more schemes between 1981-84, Children's
Gift Growth Fund and India Fund (India's first offshore fund) in 1986, Master share
(India’s first equity diversified scheme) in 1987 and Monthly Income Schemes (offering
assured returns) during 1990s. By the end of 1987, UTI's assets under management
grew ten times to Rs 6700 crores.
Phase II. Entry of Public Sector Funds - 1987-1993
The Indian mutual fund industry witnessed a number of public sector players entering
the market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank
of India became the first non-UTI mutual fund in India. SBI Mutual Fund was later
followed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of
India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under
management of the industry increased seven times to Rs. 47,004 crores. However, UTI
remained to be the leader with about 80% market share.
199 Amo Assets Mobili

2-93 unt Under sation
Mob Manag as %
ilise ement of
d gross
Domes
tic
Saving
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s
11,0
UTI 38,247 5.2%
57
Publ
ic 1,96
8,757 0.9%
Sect 4
or
Tota 13,0
47,004 6.1%
l 21
Phase III. Emergence of Private Sector Funds - 1993-96
The permission given to private sector funds including foreign fund management
companies (most of them entering through joint ventures with Indian promoters) to
enter the mutual fund industry in 1993, provided a wide range of choice to investors
and more competition in the industry. Private funds introduced innovative products,
investment techniques and investor-servicing technology. By 1994-95, about 11
private sector funds had launched their schemes.
Phase IV. Growth and SEBI Regulation - 1996-2004
The mutual fund industry witnessed robust growth and stricter regulation from the
SEBI after the year 1996. The mobilization of funds and the number of players
operating in the industry reached new heights as investors started showing more
interest in mutual funds.
Inventors’ interests were safeguarded by SEBI and the Government offered tax
benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations,
1996 was introduced by SEBI that set uniform standards for all mutual funds in India.
The Union Budget in 1999 exempted all dividend incomes in the hands of investors
from income tax. Various Investor Awareness Programmes were launched during this
phase, both by SEBI and AMFI, with an objective to educate investors and make them
informed about the mutual fund industry.
In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal
status as a trust formed by an Act of Parliament. The primary objective behind this
was to bring all mutual fund players on the same level. UTI was re-organized into two
parts: 1. The Specified Undertaking, 2. The UTI Mutual Fund
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Phase V. Growth and Consolidation - 2004 Onwards
The industry has also witnessed several mergers and acquisitions recently, examples
of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C
Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more
international mutual fund players have entered India like Fidelity, Franklin Templeton
Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing
phase of growth of the industry through consolidation and entry of new international
and private sector players.
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Types of mutual funds
1. Schemes according to Maturity Period:-

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A mutual fund scheme can be classified into open-ended scheme or close-
ended scheme depending on its maturity period.
 Open-ended Fund/ Scheme:-
An open-ended fund or scheme is one that is available

for subscription and repurchase on a continuous basis.
These schemes do not have a fixed maturity period.
Investors can conveniently buy and sell units at Net
Asset Value (NAV) related prices which are declared on a
daily basis. The key feature of open-end schemes is
liquidity.
 Close-ended Fund/ Scheme:-
A close-ended fund or scheme has a stipulated maturity

period e.g. 5-7 years. The fund is open for subscription
only during a specified period at the time of launch of
the scheme. Investors can invest in the scheme at the
time of the initial public issue and thereafter they can
buy or sell the units of the scheme on the stock
exchanges where the units are listed. In order to provide
an exit route to the investors, some close-ended funds
give an option of selling back the units to the mutual
fund through periodic repurchase at NAV related prices.
SEBI Regulations stipulate that at least one of the two
exit routes is provided to the investor i.e. either
repurchase facility or through listing on stock exchanges.
These mutual funds schemes disclose NAV generally on
weekly basis.
2. Schemes according to Investment Objective:-
A scheme can also be classified as growth scheme, income

scheme, or balanced scheme considering its investment
objective. Such schemes may be open-ended or close-ended
schemes as described earlier. Such schemes may be classified
mainly as follows:
 Growth / Equity Oriented Scheme:-
The aim of growth funds is to provide capital appreciation over

the medium to long- term. Such schemes normally invest a
major part of their corpus in equities. Such funds have
comparatively high risks. These schemes provide different
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options to the investors like dividend option, capital
appreciation, etc. and the investors may choose an option
depending on their preferences. The investors must indicate
the option in the application form. The mutual funds also allow
the investors to change the options at a later date. Growth
schemes are good for investors having a long-term outlook
seeking appreciation over a period of time.
 Income / Debt Oriented Scheme:-
The aim of income funds is to provide regular and steady

income to investors. Such schemes generally invest in fixed
income securities such as bonds, corporate debentures,
Government securities and money market instruments. Such
funds are less risky compared to equity schemes. These funds
are not affected because of fluctuations in equity markets.
However, opportunities of capital appreciation are also limited
in such funds. The NAVs of such funds are affected because of
change in interest rates in the country. If the interest rates fall,
NAVs of such funds are likely to increase in the short run and
vice versa. However, long term investors may not bother about
these fluctuations.
 Balanced Fund:-
The aim of balanced funds is to provide both growth and

regular income as such schemes invest both in equities and
fixed income securities in the proportion indicated in their offer
documents. These are appropriate for investors looking for
moderate growth. They generally invest 40-60% in equity and
debt instruments. These funds are also affected because of
fluctuations in share prices in the stock markets. However,
NAVs of such funds are likely to be less volatile compared to
pure equity funds.
 Money Market or Liquid Fund:-
These funds are also income funds and their aim is to provide
easy liquidity, preservation of capital and moderate income.
These schemes invest exclusively in safer short-term
instruments such as treasury bills, certificates of deposit,
commercial paper and inter-bank call money, government
securities, etc. Returns on these schemes fluctuate much less
compared to other funds. These funds are appropriate for
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corporate and individual investors as a means to park their
surplus funds for short periods.
 Gilt Fund:-
These funds invest exclusively in government securities.

Government securities have no default risk. NAVs of these schemes
also fluctuate due to change in interest rates and other economic
factors as is the case with income or debt oriented schemes.
 Index Funds :-
Index Funds replicate the portfolio of a particular index such as the

BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes
invest in the securities in the same weightage comprising of an
index. NAVs of such schemes would rise or fall in accordance with
the rise or fall in the index, though not exactly by the same
percentage due to some factors known as "tracking error" in
technical terms. Necessary disclosures in this regard are made in the
offer document of the mutual fund scheme.
3. Sector specific funds/schemes:-
These are the funds/schemes which invest in the securities of only those
sectors or industries as specified in the offer documents. e.g.
Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG),
Petroleum stocks, etc. The returns in these funds are dependent on the
performance of the respective sectors/industries. While these funds may
give higher returns, they are more risky compared to diversified funds.
Investors need to keep a watch on the performance of those
sectors/industries and must exit at an appropriate time. They may also
seek advice of an expert.
4. Tax Saving Schemes:-
These schemes offer tax rebates to the investors under specific provisions
of the Income Tax Act, 1961 as the Government offers tax incentives for
investment in specified avenues. e.g. Equity Linked Savings Schemes
(ELSS). Pension schemes launched by the mutual funds also offer tax
benefits. These schemes are growth oriented and invest pre-dominantly in
equities. Their growth opportunities and risks associated are like any
equity-oriented scheme.
5. Fund of Funds (FoF) scheme:-

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A scheme that invests primarily in other schemes of the same mutual fund
or other mutual funds is known as a FoF scheme. An FoF scheme enables
the investors to achieve greater diversification through one scheme. It
spreads risks across a greater universe.
6. Load or no-load Fund:-
A Load Fund is one that charges a percentage of NAV for entry or exit.
That is, each time one buys or sells units in the fund, a charge will be
payable. This charge is used by the mutual fund for marketing and
distribution expenses. Suppose the NAV per unit is Rs.10. If the entry as
well as exit load charged is 1%, then the investors who buy would be
required to pay Rs.10.10 and those who offer their units for repurchase to
the mutual fund will get only Rs.9.90 per unit. The investors should take
the loads into consideration while making investment as these affect their
yields/returns. However, the investors should also consider the
performance track record and service standards of the mutual fund which
are more important. Efficient funds may give higher returns in spite of
loads. A no-load fund is one that does not charge for entry or exit. It
means the investors can enter the fund/scheme at NAV and no additional
charges are payable on purchase or sale of units.
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ADVANTAGES OF MUTUAL FUND
S.
Advantage Particulars
No.
Portfolio Mutual Funds invest in a well-diversified portfolio of securities which enables

1. Diversifica investor to hold a diversified investment portfolio (whether the amount of
tion investment is big or small).
Profession
Fund manager undergoes through various research works and has better
al
2. investment management skills which ensure higher returns to the investor than
Manageme
what he can manage on his own.
nt
Investors acquire a diversified portfolio of securities even with a small

3. Less Risk investment in a Mutual Fund. The risk in a diversified portfolio is lesser than
investing in merely 2 or 3 securities.
Low
Due to the economies of scale (benefits of larger volumes), mutual funds pay
4. Transactio
lesser transaction costs. These benefits are passed on to the investors.
n Costs
An investor may not be able to sell some of the shares held by him very easily
5. Liquidity
and quickly, whereas units of a mutual fund are far more liquid.
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Mutual funds provide investors with various schemes with different investment
Choice of objectives. Investors have the option of investing in a scheme having a
6.
Schemes correlation between its investment objectives and their own financial goals.
These schemes further have different plans/options
Funds provide investors with updated information pertaining to the markets and
Transpare
7. the schemes. All material facts are disclosed to investors as required by the
ncy
regulator.
Investors also benefit from the convenience and flexibility offered by Mutual
Funds. Investors can switch their holdings from a debt scheme to an equity
8. Flexibility
scheme and vice-versa. Option of systematic (at regular intervals) investment
and withdrawal is also offered to the investors in most open-end schemes.
Mutual Fund industry is part of a well-regulated investment environment where

9. Safety the interests of the investors are protected by the regulator. All funds are
registered with SEBI and complete transparency is forced.
Disadvantage of Investing Through Mutual Funds
S. Disadvanta
Particulars
No. ge
Costs
Control Not
Investor has to pay investment management fees and fund distribution costs
in the
1. as a percentage of the value of his investments (as long as he holds the
Hands of
units), irrespective of the performance of the fund.
an
Investor
The portfolio of securities in which a fund invests is a decision taken by the

No
fund manager. Investors have no right to interfere in the decision making
2. Customize
process of a fund manager, which some investors find as a constraint in
d Portfolios
achieving their financial objectives.
Difficulty
in Many investors find it difficult to select one option from the plethora of
Selecting a funds/schemes/plans available. For this, they may have to take advice from
3.
Suitable financial planners in order to invest in the right fund to achieve their
Fund objectives.
Scheme
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Mutual Fund Investment Strategies
Systematic Investment Plan (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
mutual fund scheme the investor has chosen. For instance an investor opting for SIP in xyz
mutual fund scheme will need to invest a certain sum of money every month / quarter
/half year in the scheme.
Systematic Withdrawal Plan (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 expenses.
Systematic Transfer Plan (STPs) :
They allow the investors 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 investment actively to achieve his
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objectives. Many funds do not even charge even any transaction feed for this service an
added advantage for the active investor.
Performance Evaluation
PARAMETERS OF MUTUAL FUND EVALUATION:
 Risk
 Returns
 Liquidity
 Expense Ratio
 Composition of Portfolio
Risks Associated With Mutual Funds
Investing in mutual funds as with any security, does not come without risk. One of the
most basic economic principles is that risk and reward are directly correlated. In other
words, the greater the potential risk, the greater the potential return. The types of risk
commonly associated with mutual funds are:
Market Risk:
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Market risk relate to the market value of a security in the future. Market prices fluctuate
and are susceptible to economic and financial trends, supply and demand, and many
other factors that cannot be precisely predicted or controlled.
Political Risk:
Changes in the tax laws, trade regulations, administered prices etc. is some of the many
political factors that create market risk. Although collectively, as citizens, we have indirect
control through the power of our vote, individually as investors, we have virtually no
control.
Inflation Risk:
Inflation or purchasing power risk, relates to the uncertainty of the future purchasing
power of the invested rupees. The risk is the increase in cost of the goods and services, as
measured by the Consumer Price Index.
Interest Rate Risk:
Interest Rate risk relates to the future changes in interest rates. For instance, if an
investor invests in a long term debt mutual fund scheme and interest rate increase, the
NAV of the scheme will fall because the scheme will be end up holding debt offering
lowest interest rates.
Business Risk:
Business Risk is the uncertainty concerning the future existence, stability and profitability
of the issuer of the security. Business Risk is inherent in all business ventures. The future
financial stability of a company can not be predicted or guaranteed, nor can the price of
its securities. Adverse changes in business circumstances will reduce the market price of
the company’s equity resulting in proportionate fall in the NAV of mutual fund scheme,
which has invested in the equity of such a company.
Economic Risk :
Economic Risk involves uncertainty in the economy, which, in turn can have an
adverse effect on a company’s business. For instance, if monsoons fall in a year, equity
stocks of agriculture bases companies will fall and NAVs of mutual funds, which have
invested in such stocks, will fall proportionately.
There are 3 different methods with the help of which we can measure the risk.
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Measurement of risk
I. Beta Coefficient Measure Of Risk :
Beta relates a fund’s return with a market index. It basically measures the sensitivity of
funds return to changes in market index.
If Beta = 1
Fund moves with the market i.e. Passive fund
If Beta < 1
Fund is less volatile than the market i. e Defensive Fund
If Beta > 1
Funds will give higher returns when market rises & higher losses when market falls i.e.
Aggressive Fund
II. Ex –Marks or R-squared Measure Of Risk :
Ex –Marks represents co relation with markets. Higher the Ex-marks lower the risk of the
fund because a fund with higher Ex-marks is better diversified than a fund with lower Ex-
marks.
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III. Standard Deviation Measure Of Risk :
It is a statistical concept, which measures volatility. It measures the fluctuations of fund’s

returns around a mean level. Basically it gives you an idea of how volatile your earnings
are. It is broader concept than BETA. It also helps in measuring total risk and not just the
market risk of the portfolio.
How to Calculate the Value of a Mutual Fund:
The investors’ funds are deployed in a portfolio of securities by the fund manager. The
value of these investments keeps changing as the market price of the securities change.
Since investors are free to enter and exit the fund at any time, it is essential that the
market value of their investments is used to determine the price at which such entry and
exit will take place. The net assets represent the market value of assets, which belong to
the investors, on a given date.
Net Asset Value or NAV of a mutual fund is the value of one unit of investment in the fund,
in net asset terms.
NAV = Net Assets of the scheme / Number of Units Outstanding
Where Net Assets are calculated as:-
(Market value of investments + current assets and other assets + Accrued income –
current liabilities and other liabilities – less accrued expenses) / No. of Units Outstanding
as at the NAV date
NAV of all schemes must be calculated and published at least weekly for closed-end
schemes and daily for open-end schemes.
The major factors affecting the NAV of a fund are:
 Sale and purchase of securities

 Sale and repurchase of units
 Valuation of assets
 Accrual of income and expenses
SEBI requires that the fund must ensure that repurchase price is not lower than 93% of
NAV (95% in the case of a closed-fund). On the other side, a fund may sell new units at a
price that is different from the NAV, but the sale price cannot be higher than 107 % of
NAV. Also the difference between the repurchase price and the sale price of the unit is not
permitted to exceed 7% of the sale price.
Measuring Mutual Fund Performance:

We can measure mutual fund’s performance by different method:
24 | P a g e
• Absolute Return Method:
Percentage change in NAV is an absolute measure of return, which finds the NAV
appreciation between two points of time, as a percentage.
e .g: If NAV of one fund changes from Rs.20 to Rs.22 in 12 months then
Absolute return = (22 – 20)/20 X 100 =10%
• Simple Annual Return Method :
Converting a return value for a period other than one year, into a value for one year, is
called as annualisation. In order to annualize a rate, we find out what the return would be
for a year, if the return behaved for a year, in the same manner it did, for any other
fractional period.
E .g: If NAV of one fund changes from Rs.20 to Rs.22 in 6 months then
Annual Return = (22 – 20) /20 X 12/6 X 100 = 20%
• Total Return Method:
The total return method takes into account the dividends distributed by the mutual fund,
and adds it to the NAV appreciation, to arrive at returns.
Total Return =
(Dividend distributed + Change in NAV)/ NAV at the start X 100
e .g: If NAV of one fund changes from Rs.20 to Rs.22 in 6 months if in between dividend of
Rs. 4 has been distributed then
Total Return = {4 + (22 – 20)}/20 X 100 = 30%
• Total Return when dividend is reinvested:
This method is also called the return on investment (ROI) method. In this method, the
dividends are reinvested into the scheme as soon as they are received at the then
prevailing NAV (ex-dividend NAV).
= ((Value of holdings at the end of the period/ value of the holdings at the beginning) –
1)*100
E.g. An investor buys 100 units of a fund at Rs. 10.5 on January 1, 2007. On June 30, 2007
he receives dividends at the rate of 10%. The ex-dividend NAV was Rs. 10.25. On
December 31, 2007, the fund’s NAV was Rs. 12.25.
Value of holdings at the beginning period= 10.5*100= 1050
Number of units re-invested = 100/10.25 = 9.756
End period value of investment = 109.756*12.25 = 1344.51 Rs.
Return on Investment = ((1344.51/1050)-1)*100
= 28.05%
• Compounded Average Annual Return Method:
25 | P a g e
This method is basically used for calculating the return for more than 1 year. In this
method return is calculated with the following formula:
A = P X (1 + R / 100) N
Where P = Principal invested
A = maturity value
N = period of investment in years
R = Annualized compounded interest rate in %
R = {(Nth root of A / P) – 1} X 100
E. g: If amount invested is Rs. 100 & in the end we get return of Rs. 200 & period of
investment is 10 years then annualized compounded return is
200 = 100 (1 + R / 100) 10
Rate = 7.2 %
RETURNS:
Returns have to be studied along with the risk. A fund could have earned higher return
than the benchmark. But such higher return may be accompanied by high risk. Therefore,
we have to compare funds with the benchmarks, on a risk adjusted basis. William Sharpe
created a metric for fund performance, which enables the ranking of funds on a risk
adjusted basis.
Sharpe Ratio = Risk Premium

Funds Standard Deviation
Treynor Ratio = Risk Premium
Funds Beta
Risk Premium = Difference between the Fund’s Average return and Risk free return on
government security or treasury bill over a given period .
LIQUIDITY:
26 | P a g e
Most of the funds being sold today are open-ended. That is, investors can sell their
existing units, or buy new units, at any point of time, at prices that are related to the NAV
of the fund on the date of the transaction. Since investors continuously enter and exit
funds, funds are actually able to provide liquidity to investors, even if the underlying
markets, in which the portfolio is invested, may not have the liquidity that the investor
seeks.
EXPENSE RATIO:
Expense ratio is defined as the ratio of total expenses of the fund to the average net
assets of the fund. Expense ratio can actually understate the total expenses, because
brokerage paid on transactions of a fund are not included in the expenses. According to
the current SEBI norms, brokerage commissions are capitalized and included in the cost of
the transactions.
Expense ratio = Total Expenses

Average Net Assets
COMPOSITION OF THE PORTFOLIO:

Credit quality of the portfolio is measured by looking at the credit ratings of the
investments in the portfolio. Mutual Fund fact sheets show the composition of the portfolio
and the investments in various asset classes over time.
Portfolio turnover rate is the ratio of lesser of asset purchased or sold by funds in the
market to the net assets of the fund.
If Portfolio ratio is 100% means portfolio has been changed fully. When Portfolio ratio is
high means expense ratio is high.
Portfolio Ratio = Total Sales & Purchase

Net Assets of fund
In order to meaningfully compare funds some level of similarity in the following factors has
to be ensured:
 Size of the funds

 Investment objective
 Risk profile
 Portfolio composition
 Expense ratios
Fund evaluation against benchmark:
Funds can be evaluated against some performance indicators which are known as
benchmarks.
27 | P a g e
There are 3 types of benchmarks:
 Relative to market as whole
 Relative to other comparable financial products
 Relative to other mutual funds
 Relative to market as whole:
There are different ways to measure the performance of fund w.r.t market as
Equity Funds
• Index Fund – An Index fund invests in the stock comprising of the index in the
same ratio. This is a passive management style.
For example,
Market Index Fund - BSE Sensex
Nifty Index Fund - NIFTY
The difference between the return of this fund and its index benchmark can be explained
by “TRACKING ERROR”.
• Active Equity Funds:

The fund manager actively manages this fund. To evaluate performance in such case we
have to select an appropriate benchmark.
Large diversified equity fund - BSE 100
Sector fund - Sectoral Indices
• Debt Funds:
Debt fund can also be judged against a debt market index e.g. I-BEX
 Relative to other comparable financial products:
Schemes Return Safety Volatility Liquidity

Convenience
Equity High Low High High

Moderate
FI Bonds Moderate High Moderate Moderate

28 | P a g e
High
Corporate Moderate Moderate Moderate Low

Debentures Low
Company Fixed
Moderate Low Low Low
Deposits Moderate
Bank Deposits Low High Low High

High
PPF Moderate High Low Moderate

High
Life Insurance Low High Low Low

Moderate
Gold Moderate High Moderate Moderate

Low
Real Estate High Moderate High Low

Low
Mutual Funds High High Moderate High

High
Schemes Investment Risk Investment

Objective Tolerance Horizon
Equity Term Capital Appreciation High Long
FI Bonds Income Low Medium to Long term
Corporate Income High Moderate Medium to Long term

Debentures
Company Fixed
Income Moderate Low Medium
Deposits
29 | P a g e
Bank Deposits Income Generally Flexible all terms
PPF Income Low Long
Life Insurance Risk Cover Low Long
Gold Inflation Hedge Low Long
Real Estate Inflation Hedge Low Long
TAX TREATMENT FOR THE INVESTORS (UNITHOLDERS):-
Tax benefits of investing in the Mutual Fund
As per the taxation laws in force as at the date of the Offer Document, some broad
income tax implications of investing in the units of the Scheme are stated below. The
information so stated is based on the Mutual Fund's understanding of the tax laws in
force as of the date of the Offer Document, which have been confirmed by its auditors.
The information stated below is only for the purposes of providing general information
to the investors and is neither designed nor intended tobe a substitute for professional
tax advice. As the tax consequences are specific to each investor and in view of the
changing tax laws, each investor is advised to consult his or her or its own tax
consultant with respect to the specific tax implications arising out of his or her or its
participation in the Scheme.
30 | P a g e
Implications of the Income-tax Act, 1961 as amended by the Finance Act, 2006
To the Unit holders
(a.) Tax on Income
In accordance with the provisions of section 10(35)(a) of the Act, income received by
all categories of unit holders in respect of units of the Fund will be exempt from
income-tax in their hands.
Exemption from income tax under section 10(35) of the Act would, however, not apply
to any income arising from the transfer of these units.
(b.) Tax on capital gains:
As per the provisions of section 2(42A) of the Act, a unit of a Mutual Fund, held by the
investor as a capital asset, is considered to be a short-term capital asset, if it is held
for 12 months or less from the date of its acquisition by the unit holder. Accordingly, if
the unit is held for a period of more than 12 months, it is treated as a long-term capital
asset.
Computation of capital gain

Capital gains on transfer of units will be
computed after taking into account the cost of their acquisition. While calculating long-
term capital gains, such cost will be indexed by using the cost inflation index notified
by the Government of India.
Individuals and HUFs, are granted a deduction
from total income, under section 80C of the Act upto Rs. 100,000, in respect of
specified investments made during the year (please also refer paragraph d).
Long-term capital gains

As per Section 10(38) of the Act, long-term
capital gains arising from the sale of unit of an equity oriented fund entered into in a
recognized stock exchange or sale of such unit of an equity oriented fund to the
mutual fund would be exempt from income-tax, provided such transaction of sale is
chargeable to securities transaction tax.
Pursuant to an amendment made in the
Finance Act, 2006, effective 1 April 2006, companies would be required to include such
long term capital gains in computing the book profits and minimum alternated tax
liability under section 115JB of the Act.
Short -term capital gains

As per Section 111A of the Act, short-term
capital gains from the sale of unit of an equity oriented fund entered into in a
recognized stock exchange or sale of such unit of an equity oriented fund to the
31 | P a g e
mutual fund would be taxed at 10 per cent, provided such transaction of sale is
chargeable to securities transaction tax.
The said tax rate would be increased by a surcharge of:

- 10 per cent in case of non-corporate Unit holders, where the total income exceeds
Rs.1,000,000,
- 10 per cent in case of resident corporate Unit holders, and
- 2.5 per cent in case of non-resident corporate unit holders irrespective of the amount
of taxable income.
Further, an additional surcharge of 2 per cent by
way of education cess would be charged on amount of tax inclusive of surcharge.
In case of resident individual, if the income from
short term capital gains is less than the maximum amount not chargeable to tax, then
there will be no tax payable.
Further, in case of individuals/ HUFs, being residents, where the total income
excluding short-term capital gains is below the maximum amount not chargeable to
tax1, then the difference between the current maximum amount not chargeable to tax
and total income excluding short-term capital gains, shall be adjusted from short-term
capital gains. Therefore only the balance short term capital gains will be liable to
income tax at the rate of 10 percent plus surcharge, if applicable and education cess.
Non-residents
In case of non-resident unit holder who is a
resident of a country with which India has signed a Double Taxation Avoidance
Agreement (which is in force) income tax is payable at the rates provided in the Act,
as discussed above, or the rates provided in the such agreement, if any, whichever is
more beneficial to such non-resident unit holder.
Investment by Minors
Where sale / repurchase is made during the
minority of the child, tax will be levied on either of the parents, whose income is
greater, where the said income is not covered by the exception in the proviso to
section 64(1A) of the Act. When the child attains majority, such tax liability will be on
the child.
Losses arising from sale of units
- As per the provisions of section 94(7) of the Act, loss arising on transfer
of units, which are acquired within a period of three months prior to the
record date (date fixed by the Fund for the purposes of entitlement of the
unit holder to receive the income from units) and sold within a period of
nine months after the record date, shall not be allowed to the extent of
income distributed by the Fund in respect of such units.
32 | P a g e
- As per the provisions of section 94(8) of the Act, where any units
("original units") are acquired within a period of three months prior to the
record date (date fixed by the Fund for the purposes of entitlement of the
unit holder to receive bonus units) and any bonus units are allotted (free of
cost) based on the holding of the original units, the loss, if any, on sale of
the original units within a period of nine months after the record date, shall
be ignored in the computation of the unit holder's taxable income. Such
loss will however, be deemed to be the cost of acquisition of the bonus
units.
--Each Unit holder is advised to consult his / her or its own professional tax
advisor before claiming set off of long-term capital loss arising on sale /
repurchase of units of an equity oriented fund referred to above, against
long-term capital gains arising on sale of other assets.
- Short-term capital loss suffered on sale / repurchase of units shall be

available for set off against both long-term and short-term capital gains
arising on sale of other assets and balance short-term capital loss shall be
carried forward for set off against capital gains in subsequent years.
- Carry forward of losses is admissible maximum upto eight assessment

years.
(c.) Tax withholding on capital gains
Capital gains arising to a unit holder on repurchase of units by the

Fund should attract tax withholding as under:
- No tax needs to be withheld from capital gains arising to a FII on the

basis of the provisions of section 196D of the Act.
- In case of non-resident unit holder who is a resident of a country with

which India has signed a double taxation avoidance agreement (which is in
force) the tax should be deducted at source under section 195 of the Act
at the rate provided in the Finance Act of the relevant year or the rate
provided in the said agreement, whichever is beneficial to such non-
resident unit holder. However, such a nonresident unit holder will be
required to provide appropriate documents to the Fund, to be entitled to
the beneficial rate provided under such agreement.
- No tax needs to be withheld from capital gains arising to a resident unit

holder on the basis of the Circular no. 715 dated 8 August 1995 issued by
the CBDT.
Subject to the above, the provisions relating to tax withholding in respect of gains
arising from the sale of units of the various schemes of the fund are as under:
33 | P a g e
- No tax is required is to be withheld from long term capital gains arising
from sale of units in equity oriented fund schemes, that are subject to
securities transaction tax.
- In respect of short-term capital gains arising to foreign companies

(including Overseas Corporate Bodies), the Fund is required to deduct tax
at source at the rate of 10.46 per cent (10 per cent tax plus 2.5 per cent
surcharge thereon plus additional surcharge of 2 per cent by way of
education cess on the tax plus surcharge). In respect of short-term capital
gains arising to non-resident individual unit holders, the Fund is required to
deduct tax at source at the rate of 11.22 per cent (10 per cent tax plus 10
per cent surcharge thereon2 plus additional surcharge of 2 per cent by
way of education cess on the tax plus surcharge).
(d.) Wealth Tax
Units held under the Schemes of the Fund are not treated as assets
within the meaning of section 2(ea) of the Wealth Tax Act, 1957 and therefore, not
liable to wealth-tax.
(e.) Securities Transaction Tax
Nature of Transaction Current tax rate Tax rate effective (%) 1 June
2006 (%) Delivery based purchase transaction in equity shares or units of equity
oriented fund entered in a recognized stock exchange 0.1 0.125 Delivery based sale
transaction in equity shares or units of equity oriented fund entered in a recognized
stock exchange 0.1 0.125 Non-delivery based sale transaction in equity shares or units
of equity oriented fund entered in a recognized stock exchange. 0.02 0.025 Sale of
units of an equity oriented fund to the mutual fund 0.2 0.25 Value of taxable securities
transaction in case of units shall be the price at which such units are purchased or
sold.
A deduction in respect of securities transaction tax
paid is not permitted for the purpose of computation of business income or capital
gains.
However, if the total income of an assessee
includes any business income arising from taxable securities transactions, he shall be
entitled to a rebate3 from income-tax of an amount equal to the securities transaction
tax paid by him in respect of the taxable securities transactions entered during the
course of his business.
The maximum amounts of total income, not chargeable to tax are as under:
Type of person Maximum amount of income not chargeable to tax
Women Rs. 135,000

Senior citizens Rs. 185,000
Other individuals and HUFs Rs. 100,000
34 | P a g e
How is a mutual fund set up?
A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset
management company (AMC) and custodian. The trust is established by a sponsor or
more than one sponsor who is like promoter of a company. The trustees of the mutual
fund hold its property for the benefit of the unit holders. Asset Management Company
(AMC) approved by SEBI manages the funds by making investments in various types of
securities. Custodian, who is registered with SEBI, holds the securities of various
schemes of the fund in its custody. The trustees are vested with the general power of
superintendence and direction over AMC. They monitor the performance and
compliance of SEBI Regulations by the mutual fund.
SEBI Regulations require that at least two thirds of the directors of trustee company or
board of trustees must be independent i.e. they should not be associated with the
sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are
required to be registered with SEBI before they launch any scheme.
Association of Mutual Funds in India (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association in
India was generated to function as a non-profit organization. Association of Mutual
Funds in India (AMFI) was incorporated on 22nd August, 1995.AMFI is an apex body of
all Asset Management Companies (AMC) which has been registered with SEBI. Till date
all the AMCs are that have launched mutual fund schemes are its members. It
functions under the supervision and guidelines of its Board of Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to
a professional and healthy market with ethical lines enhancing and maintaining
standards. It follows the principle of both protecting and promoting the interests of
mutual funds as well as their unit holders.
The objectives of Association of Mutual Funds in India: ---
The Association of Mutual Funds of India works with 30 registered AMCs of the country.
It has certain defined objectives which juxtaposes the guidelines of its Board of
Directors. The objectives are as follows:-
 This mutual fund association of India maintains a high professional and

ethical standard in all areas of operation of the industry.
35 | P a g e
 It also recommends and promotes the top class business practices and code
of conduct which is followed by members and related people engaged in the
activities of mutual fund and asset management. The agencies who are by
any means connected or involved in the field of capital markets and financial
services also involved in this code of conduct of the association.
 AMFI interacts with SEBI and works according to SEBIs guidelines in the
mutual fund industry.
 Associations of Mutual Fund of India do represent the Government of India,

the Reserve Bank of India and other related bodies on matters relating to the
Mutual Fund Industry.
 It develops a team of well qualified and trained Agent distributors. It

implements a programme of training and certification for all intermediaries
and other engaged in the mutual fund industry.
 AMFI undertakes all India awareness programme for investors in order to

promote proper understanding of the concept and working of mutual funds.
At last but not the least association of mutual fund of India also disseminate
information on Mutual Fund Industry and undertakes studies and research either
directly or in association with other bodies.
The sponsorers of Association of Mutual Funds in India :---

- Bank Sponsored
- SBI Fund Management Ltd.
- BOB Asset Management Co. Ltd.
- Canara bank Investment Management Services Ltd.
- UTI Asset Management Company Pvt. Ltd.
Institutions -
- GIC Asset Management Co. Ltd.
- Jeevan Bima Sahayog Asset Management Co. Ltd.
Private Sector: -
36 | P a g e
Indian -
- Bench Mark Asset Management Co. Pvt. Ltd.
- Cholamandalam Asset Management Co. Ltd.
- Credit Capital Asset Management Co. Ltd.
- Escorts Asset Management Ltd.
- JM Financial Mutual Fund
- Kotak Mahindra Asset Management Co. Ltd.
- Reliance Capital Asset Management Ltd.
- Sahara Asset Management Co. Pvt. Ltd
- Sundaram Asset Management Company Ltd.
- Tata Asset Management Private Ltd.
- Predominantly India Joint Ventures:-
- Birla Sun Life Asset Management Co. Ltd.
- DSP Merrill Lynch Fund Managers Limited
- HDFC Asset Management Company Ltd.
Predominantly Foreign Joint Ventures:-
- ABN AMRO Asset Management (I) Ltd.
- Alliance Capital Asset Management (India) Pvt. Ltd.
- Deutsche Asset Management (India) Pvt. Ltd.
- Fidelity Fund Management Private Limited
- Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.
- HSBC Asset Management (India) Private Ltd.
- ING Investment Management (India) Pvt. Ltd.

37 | P a g e
- Morgan Stanley Investment Management Pvt. Ltd.
- Principal Asset Management Co. Pvt. Ltd.
- Prudential ICICI Asset Management Co. Ltd.
- Standard Chartered Asset Mgmt Co. Pvt. Ltd.
Tips on buying mutual funds:-

1. Determine your financial objectives and how much money you have to invest. Make
sure the fund’s objectives coincide with your own. Don’t change your objectives or
exceed the amount set aside for investment unless you have good reason.
2. Always obtain all available information before you invest. Request the prospectus,
the Statement of Additional Information and the latest shareholder report from each
fund you are considering.
3. Never invest in periodic payment plans unless you are virtually certain that you will
not have to redeem early. If you redeem early or do not complete the plan, you may
have to pay sales charges of up to 51% of your investment.
4. Be on the alert for incorporation by reference. You will have "no excuse" for not
38 | P a g e
knowing this information, if a problem arises. You may be legally presumed to know
materials incorporated by reference in a prospectus or other documents.
5. Always determine all sales charges, fees and expenses before you invest. Fees such
as 12b-1 fees can cost you dearly and charges for reinvestment of dividends and
capital gains distributions can substantially add to your costs. Shop around among the
many funds offered and compare the various fees and costs connected with funds that
appeal to you.
6. Learn the costs of redemption. Sometimes investors are surprised to learn that they
have to pay to get out of funds through back-end loads or redemption fees. Find out
the redemption costs before you invest so you won’t be unpleasantly surprised when
you redeem your shares.
7. Never treat the risks of investment in a fund lightly. Weigh the risks of the funds you
want to buy against your ability to tolerate the ups and downs of the market and your
investment goals. Be extra cautious when considering investing in funds with high
yield/high risk portfolios. Junk bond problems, for example, invariably affect the fund’s
performance.
8. Don’t be misled by the name of a fund. Some funds have been given names
denoting safety, stability and low risk, despite the fact that the underlying investments
in the portfolio are volatile and highly risky.
AUM
Assets Under Management (AUM) as at the end of May-2008 (Rs in

Lakhs)
Mutual Fund Name Average AUM For The Month
Excluding Fund Fund Of Funds -
of Funds - Domestic
Domestic but
including Fund
of Funds -
39 | P a g e
Overseas
1. ABN AMRO Mutual Fund 592459.08 20979.02
2. AIG Global Investment Group Mutual
456809.8 0
Fund
3. Benchmark Mutual Fund 280241.84 0
4. Bharti AXA Mutual Fund N/A N/A
5. Birla Sun Life Mutual Fund 4142342.8 1854.08
6. BOB Mutual Fund 6776.69 0
7. Canara Robeco Mutual Fund 420417.41 0
8. DBS Chola Mutual Fund 185289.01 0
9. Deutsche Mutual Fund 1240531.71 0
10. DSP Merrill Lynch Mutual Fund 2155962.79 0
11. Edelweiss Mutual Fund N/A N/A
12. Escorts Mutual Fund 17065.31 0
13. Fidelity Mutual Fund 887973.14 2763.41
14. Franklin Templeton Mutual Fund 2799087.37 23660.71
15. HDFC Mutual Fund 5610729.27 0
16. HSBC Mutual Fund 1847223.18 0
17. ICICI Prudential Mutual Fund 5906002.34 3359.41
18. IDFC Mutual Fund 1427291.26 3776.66
19. ING Mutual Fund 916079.34 47916.62
20. JM Financial Mutual Fund 1296780.93 0
21. JPMorgan Mutual Fund 273018.18 0
22. Kotak Mahindra Mutual Fund 2217001.56 30651.82
23. LIC Mutual Fund 1864914.45 0
24. Lotus India Mutual Fund 788330.4 0
25. Mirae Asset Mutual Fund 216037.01 0
26. Morgan Stanley Mutual Fund 350997.47 0
27. PRINCIPAL Mutual Fund 1670542.76 0
28. Quantum Mutual Fund 6632.78 0
29. Reliance Mutual Fund 9843093.38 0
30. Sahara Mutual Fund 19814.33 0
31. SBI Mutual Fund 3179496.78 0
32. Sundaram BNP Paribas Mutual Fund 1459384.72 0
33. Tata Mutual Fund 2449586.66 0
34. Taurus Mutual Fund 33550.65 0
35. UTI Mutual Fund 5465168.28 0
Grand Total 60026632.68 134961.73
40 | P a g e
Company profile:
About Standard Chartered Mutual Fund
41 | P a g e
Standard Chartered Mutual Fund is well-established fund house and is sponsored by
the Standard Chartered Group. At Standard Chartered Mutual Fund we strive to launch
not just innovative products, but products that truly add value to our investors. We
were among the first to launch an active management debt fund-the Dynamic Bond
Fund - that had the capability to mimic a cash fund or an income fund depending on
market situations. The Short term and Medium term funds that were uniquely
positioned at various points along the interest rate curve with the sole objective of
maximizing value to investors with different investment time horizons.
Lately this innovation was again brought to the fore with the launch of the Standard
Chartered Enterprise Equity Fund, a close-ended fund that sought to invest a portion in
Equity IPOs. The fund also launched the Standard Chartered Premier Equity fund an
equity fund that seeks to generate wealth by investing in relatively smaller companies.
We manage our schemes through well-researched and thoroughly tested processes
like the 3 D Factor (For debt funds and helps us in predicting interest rate movements)
and the Equity Circle process. SCMF also pioneered several service initiatives that
helped increase transactional ease. It was the first mutual fund to initiate
 Across the counter redemptions for all classes of investors in liquid funds,
 Toll Free No accessible in 976 cities
 Phone transact service wherein investors can redeem without having any
Personal Identification Number
Standard Chartered Mutual Fund currently manages assets in excess of Rs 15801.53Cr

as on 5th February 2008 and has touched the lives of more than lakhs of investors
residing in more than 1000 Indian towns.
Schemes Managed
Scheme Name
Grindlays Cash Fund (G)
42 | P a g e
Grindlays CF - Inst Plan (G)
Grindlays Dynamic Bond (G)
Grindlays FRF - LTP Inst (G)
Grindlays Floating Rate (G)
Grindlays FRF- Inst Plan (G)
Grindlays FRF - LTP (RP) (G)
Grindlays GSec - Inv Plan (G)
Grindlays GSec Fund - PF (G)
Grindlays GSec - STP (G)
Grindlays SSIF - MTP A (G)
Grindlays SSIF STP - Inst (G)
GSSIF STP - MF Plan C (G)
GSSIF STP - Super Inst C (G)
Grindlays SSIF (G)
Grindlays SSIF - STP (G)
SC All Seasons Bond - RP (G)
StanChart Arbitrage - Inst (G)
StanChart Arbitrage Fund (G)
StanChart Classic Equity (G)
StanChart Enterprise Equity(G)
StanChart Imperial Equity (G)
StanChart Imperial Equity (G)
StanChart Liquidity Manager –G
StanChart Liq. Manager Plus-G
StanChart Premier Equity (G)
StanChart Small&Midcap Eqty –G
StanChart Tax Saver Fund (G)
HDFC Asset Management Company Private Ltd
43 | P a g e
The fund was established on March 13, 2000. Now the management of the fund has
been taken over by Standard Chartered Bank, the UK based banking conglomerate.
The name of the AMC too has been changed from ANZ AMC. Previously sponsored by
ANZ Banking Group, Australia, this fund has just set up its operations in the year 2000.
Australia and New Zealand Banking Group Limited, the previous sponsor of the fund, is
a leading international bank and is also one of the "Big Four" Australian commercial
banks providing a full range of banking and financial services with total assets of US $
97.35 billion as on 30th Sept, 1999. ANZ Funds Management is a core business unit of
the group and is one of Australia s large fund managers. It has a full range of
investment products and services managing more than AUD $ 13267.7 million in
customer funds on 30th Sept., 1999. ANZ Banking Group has significant presence in
35 nations from the Middle East through South Asia and East Asia to the Pacific.
No. of schemes 84
No. of schemes including 269
options
Equity Schemes 24
Debt Schemes 209
Short term debt Schemes 19
Equity & Debt 0
Money Market 0
Gilt Fund 13
44 | P a g e
Open Ended Schemes
Scheme Name
Fund Size
Performance ( % Return )
30 91 Rs. in As on
As On 1 Year 3 Year
Days Days Cr.
IDFC Arbitrage Fund -

Jun 24, 0.4885 1.4969 7.4858 May 30,
Plan A (Regular) - NA 953.23
2008 2008
Dividend
IDFC Arbitrage Fund - Jun 24, 0.4876 1.4962 7.492 May 30,
NA 953.23
Plan A (Regular) - Growth 2008 2008
NA 953.23
Plan B (I P) - Dividend 2008 2008
NA 953.23
Plan B (I P) - Growth 2008 2008
IDFC Arbitrage Plus Fund Jun 24,

NA NA NA NA NA NA
- Plan A - Dividend 2008

NA NA NA NA NA NA
- Plan A - Growth 2008
45 | P a g e
NA NA NA NA NA NA
- Plan B - Dividend 2008

NA NA NA NA NA NA
- Plan B - Growth 2008
- 5.820
IDFC ASBF - Plan A - Jun 24, 0.2939 6.8617
7 May 30,
5.3391 35.34
Annual Dividend 2008 2008
6.761
IDFC ASBF - Plan A - Jun 24, 0.2935 1.5911 8.2078 1 May 30,
35.34
Growth 2008 2008
5.933
IDFC ASBF - Plan A - Half Jun 24, 0.293 7.3385
6 May 30,
-0.806 35.34
Yly Div 2008 2008
6.019
IDFC ASBF - Plan A - Qtly Jun 24, 0.2937 0.1307 7.1652 2 May 30,
35.34
Dividend 2008 2008
4.952
IDFC Cash Fund - Plan A - Jun 24, 0.4832 1.2309 4.602
1 May 31,
75.61
Daily Dividend 2008 2008
5.971
IDFC Cash Fund - Plan A - Jun 24, 0.6198 1.5808 5.9411 2 May 31,
75.61
Growth 2008 2008
4.942
IDFC Cash Fund - Plan A - Jun 24, 0.4063 1.1466 4.5146 2 May 31,
75.61
Wkly Div 2008 2008
4.977
IDFC Cash Fund - Plan B - Jun 24, 0.4832 1.2365 4.6088 3 May 31,
75.61
IP - Daily Div 2008 2008
IDFC Cash Fund - Plan B - Jun 24, 0.6206 1.5821 5.9428 5.981 75.61 May 31,
IP - Growth 2008
46 | P a g e
2008
Dec - 0.548
IDFC Cash Fund - Plan B - - 5 Jun 30,
10, 0.3388 NA 315.07
IP - Periodic Dividend 0.3388 2007
2006
4.982
IDFC Cash Fund - Plan B - Jun 24, 0.4991 1.2401 4.6164 8 May 31,
75.61
IP - Wkly Div 2008 2008
5.292
IDFC Cash Fund - Plan C - Jun 24, 0.5137 1.3128 4.913
2 May 31,
75.61
Super I P - Daily Div 2008 2008
- -
IDFC Cash Fund - Plan C - Jun 24, Sep 30,
NA NA 16.434 1.869 160.04
Super I P - Growth 2008 2007
1 3
Dec - 2.7921
IDFC Cash Fund - Plan C - - Jun 30,
10, 0.6724 NA 315.07
Super I P - Mtly Div 0.6724 2007
2006
5.195
IDFC Cash Fund - Plan C - Nov 4, 0.2482 1.1995 5.5526 2 Oct 31,
204.83
Super I P - Wkly Div 2007 2007
- - 0.0176
IDFC Classic Equity Fund - Jun 24, May 30,
12.855 4.9533 NA 375.65
Dividend 2008 2008
3
- - 0.0152
IDFC Classic Equity Fund - Jun 24, May 30,
12.856 4.9534 NA 375.65
Growth 2008 2008
2
6.532
IDFC D B F - Plan A - Jun 24, - 9.0802 May 30,
-5.258 7 21.9
Annual Dividend 2008 0.3287 2008
- 6.657
IDFC D B F - Plan A - Qtly Jun 24, - 9.1944 May 30,
0.9222 7 21.9
Div 2008 0.3288 2008
47 | P a g e
10.400 7.397
IDFC D B F- Plan A - Jun 24, - 1.4593 May 30,
2 3 21.9
Growth 2008 0.3294 2008
0.298
IDFC F R F - IP - LTP - Plan Dec 7, 0.6768 5 Nov 30,
NA NA 4659.8
B - Annual Div. 2007 2007
IDFC F R F - IP - LTP - Plan Jun 24, 0.6358 1.8665 7.357 3416.1 May 30,
NA
B - Daily Div 2008 5 2008
IDFC F R F - IP - LTP - Plan Jun 24, 0.7264 2.133 8.4368 6.934 3416.1 May 30,
B - Growth 2008 5 2008
3.400
IDFC F R F - IP - LTP - Plan Jun 24, 0.0577 1.2852 6.7581 5 3416.1 May 30,
B - Mtly Div 2008 5 2008
- 6.187
IDFC F R F - IP - LTP - Plan Jun 24, 0.726 7.2733
6 3416.1 May 30,
0.3002
B - Qtly Div 2008 5 2008
4.019
IDFC F R F - IP - LTP - Plan Jun 24, 0.6483 1.8515 7.3721 3 3416.1 May 30,
B - Wkly Div 2008 5 2008
IDFC F R F - LTP - Plan A - Jun 24, 0.5893 1.733 6.8208 3416.1 May 30,
NA
Daily Div. 2008 5 2008
6.543
IDFC F R F - LTP - Plan A - Jun 24, 0.6727 1.9831 7.8407 8 3416.1 May 30,
Growth 2008 5 2008
5.371
IDFC F R F - LTP - Plan A - Jun 24, 0.5995 1.711 6.1764
7 3416.1 May 30,
Mtly Div. 2008 5 2008
IDFC F R F - LTP - Plan A - Jun 24, 0.6722 - 6.6976 5.807 3416.1 May 30,
Qtly Div. 2008 0.4767
48 | P a g e
5
5 2008
4.998
IDFC F R F - LTP - Plan A- Jun 24, 0.6728 1.9793 6.8914 4 3416.1 May 30,
Annual Div. 2008 5 2008
4.953
IDFC F R F - STP - Plan A - Jun 24, 0.414 1.2201 4.6269
8 May 31,
117.63
Daily Div 2008 2008
5.964
IDFC F R F - STP - Plan A - Jun 24, 0.5317 1.5688 5.9976 7 May 31,
117.63
Growth 2008 2008
4.889
117.63
Mthly Div 2008 2008
4.959
117.63
Wkly Div 2008 2008
IDFC F R F - STP - Plan B - Jun 24, 0.4144 1.2212 4.6456 4.969 May 31,
117.63
IP - Daily Div 2008 2008
5.968
IDFC F R F - STP - Plan B - Jun 24, 0.5315 1.5692 5.9992 6 May 31,
117.63
IP - Growth 2008 2008
Feb 4.770
IDFC F R F - STP - Plan B - 0.4808 1.4559 5.5025 Jul 31,
21, 9 140.47
IP - Mthly Div 2007
2007
4.980
IDFC F R F - STP - Plan B - Jun 24, 0.4228 1.2227 4.6507 5 May 31,
117.63
IP - Wkly Div 2008 2008
IDFC F R F - STP - Plan C - Jun 24, 0.4342 1.2668 4.8759 5.251 117.63 May 31,
49 | P a g e
3
Super I P - Daily Div 2008 2008
- - -
IDFC F R F - STP - Plan C - Nov 7, Jul 31,
NA 17.080 13.053 0.910 140.47
Super I P - Growth 2007 2007
8 5 3
Dec 0.1209 3.5741

IDFC F R F - STP - Plan C - - Nov 30,
10, NA 364.26
Super I P - Monthly Div 0.4678 2006
2006
Dec 2.259
IDFC F R F - STP - Plan C - Nov 30,
10, 0 0 NA 364.26
Super I P - Weekly Div 2006
2006
IDFC G Sec Fund - - 5.885

Jun 24, - 7.8655 May 30,
Investment - Plan A - 3.5388 7 8.05
2008 0.5188 2008
Annual Div.
IDFC G Sec Fund - 6.453

Jun 24, - 0.9384 8.643 May 30,
Investment - Plan A - 2 8.05
2008 0.5197 2008
Growth

Jun 24, - 7.8489 May 30,
Investment - Plan A - HY 2.7098 3 8.05
2008 0.5185 2008
Div.

Jun 24, - 7.8695 May 30,
Investment - Plan A - 0.4688 8 8.05
2008 0.5188 2008
Qtrly Div.
- 4.078
IDFC G Sec Fund - Short Jun 24, - 4.1879 May 30,
0.3116 3 0.29
Term - Plan A - Growth 2008 0.3101 2008
- 3.623
IDFC G Sec Fund - Short Jun 24, - 3.7783 May 30,
0.1873 9 0.29
Term - Plan A - Mthly Div. 2008 0.3097 2008
IDFC G Sec Fund - Short Jun 24, - - 2.1828 3.110 0.29 May 30,
Term - Plan A - Qtly Div. 2008 0.3094 1.2873
50 | P a g e
4
2008
IDFC G-Sec Fund - IP - PF 0.8139

Dec 2, Apr 30,
Plan - Plan B - Annual 0 0 NA 17.5
2005 2008
Dividend
IDFC G-Sec Fund - IP - PF - 6.425

Jun 24, - 9.2156 May 30,
Plan - Plan B -Qty 0.8643 5 17.64
2008 0.0653 2008
Dividend
10.298 7.125
IDFC G-Sec Fund - IP- PF Jun 24, - 1.5199 May 30,
8 8 17.64
Plan - Plan B - Growth 2008 0.0665 2008
- 6.377
IDFC G-Sec Fund - PF Plan Jun 24, 8.9937 May 30,
-0.066 5.2848 5 17.64
- Plan A - Annual Dividend 2008 2008
10.330 7.203
IDFC G-Sec Fund - PF Plan Jun 24, - 1.5199 May 30,
7 9 17.64
- Plan A - Growth 2008 0.0659 2008
IDFC G-Sec Fund - PF Plan Jun 24, - 9.217 6.498 May 30,
-0.861 17.64
- Plan A - Qtly Dividend 2008 0.0662 2008
- - 6.4711
IDFC Imperial Equity Fund Jun 24, May 30,
12.498 5.0837 NA 144.49
- Dividend 2008 2008
6
- - 6.0593
IDFC Imperial Equity Fund Jun 24, May 30,
12.499 5.4539 NA 144.49
- Growth 2008 2008
5
IDFC Liquidity Manager Jun 24, 0.4837 1.2568 4.7504 May 31,
NA 34.65
Fund - Daily Div 2008 2008
NA 34.65
Fund - Monthly Div 2008 2008
51 | P a g e
NA 34.65
Fund - Weekly Div 2008 2008
NA 34.65
Fund -Growth 2008 2008
IDFC Liquidity Manager Jun 24, 0.5514 1.6129 6.0924 2420.4 May 31,
NA
Fund Plus - Daily Div 2008 1 2008
NA
Fund Plus - Growth 2008 1 2008
NA
Fund Plus - Monthly Div 2008 1 2008
NA
Fund Plus - Weekly Div 2008 1 2008
- 12.003
IDFC Premier Equity Fund Jun 24, 0.4989 May 30,
12.631 7 NA 785.32
- Dividend 2008 2008
5
- 12.003
IDFC Premier Equity Fund Jun 24, 0.4989 May 30,
12.631 7 NA 785.32
- Growth 2008 2008
5
5.483
IDFC SSIF - Invt. Plan - Jun 24, - 8.5943 May 30,
-5.639 9 68.94
Plan A - Ann Div. 2008 0.4539 2008
6.193
IDFC SSIF - Invt. Plan - Jun 24, - 1.0729 9.9139 May 30,
1 68.94
Plan A - Growth 2008 0.4535 2008
- 4.689
3.4994 9 68.94
Plan A - H Y Div. 2008 0.4536 2008
52 | P a g e
- 5.615
1.2874 5 68.94
Plan A - Qtly Div. 2008 0.4522 2008
5.626
IDFC SSIF - MTP - Plan A - Jun 24, 0.1003 0.6906 6.2578 7 May 30,
181.93
Bimonthly Dividend 2008 2008
IDFC SSIF - MTP - Plan A - Jun 24, 0.1575 1.5463 6.2093 May 30,
NA 181.93
Daily Dividend 2008 2008
NA 181.93
Fortnightly Dividend 2008 2008
6.460
5 181.93
Growth 2008 2008
NA 181.93
Monthly Dividend 2008 2008
IDFC SSIF - Short Term - Jun 24, - 0.9306 6.7801 May 30,
NA 261.54
Plan A - Fortnightly Div 2008 0.2826 2008
6.746
3 261.54
Plan A - Growth 2008 0.2652 2008
5.804
9 261.54
Plan A - Monthly Dividend 2008 0.3178 2008
NA 261.54
Plan B - Fortnightly Div 2008 0.2618 2008
IDFC SSIF - Short Term - Jun 24, 1.219 8.0156 May 30,
-0.243 NA 261.54
Plan B - Growth 2008 2008
53 | P a g e
NA 261.54
Plan B - Monthly Dividend 2008 0.2987 2008
IDFC SSIF - Short Term - 1.0057 6.9577

Jun 24, - May 30,
Plan C - Super IP - Frtly NA 261.54
2008 0.2548 2008
Div
IDFC SSIF - Short Term - Jun 18, 0.1099 1.7759 8.4959 May 30,
NA 261.54
Plan C - Super IP - Growth 2008 2008
IDFC SSIF - Short Term - 0.9874 4.4279

Jun 24, - May 30,
Plan C - Super IP - NA 261.54
2008 0.2901 2008
Monthly Div
IDFC SSIF - Short Term - Jun 24, - 1.1675 May 30,

NA NA 261.54
Plan D - MF Plan - Growth 2008 0.2612 2008
IDFC SSIF - Short Term - 0.925

Jun 24, - May 30,
Plan D - MF Plan - Monthly NA NA 261.54
2008 0.3107 2008
Div
IDFC acquires StanChart's mutual fund
Infrastructure Finance Development Company Ltd today acquired mutual fund

business of Standard Chartered Bank. The company has received all necessary
approvals from the concerned regulatory authority, IDFC informed the Bombay Stock
54 | P a g e
Exchange in a communiqué here. The company had earlier signed an agreement with
Standard Chartered Bank in March for a consideration of Rs 820 crore.
Standard Chartered MF has around Rs 14,000 crore in assets of which Rs 4,000 crore is
in equity while rest is in debt. With this IDFC acquires Standard Chartered Trustee
Company and Standard Chartered Asset Management Company, both of which
represent Standard Chartered's mutual fund business in India.
IDFC is one of the leading infrastructure finance institutions, and the acquisition would
give it a foothold in the retail sector and improve its high margin fee based income.
Study and Survey:
Objective
55 | P a g e
This study is conducted in order to find out:-
- Current trends of mutual funds in the Indian market.
- Investor’s perception towards mutual funds investment option.
- Different views of professional advisors.
RATIONALE OF STUDY
The study of this nature is being conducted on the behalf of IDFC AMC (Standard
charted) for prediction of future of mutual funds in Indian emerging market. A high
level of competition entering the mutual funds sector, companies need to catch up
with the ever changing demands of the industry. The study is being conducted to get
an edge over other MFs houses in the mutual fund industry. It is also done in order to
know as to how much knowledge and money the consumers contribute in the MFs
schemes.
Survey Methodology
Survey comprises collecting, organizing, and evaluating data, reaching at a specific
conclusion and at the same time careful evaluation of the conclusion. Collection of
data has been done by two ways (1) primary data collection; and (2) secondary data
collection, through questionnaires and websites, magazines, newspapers, documents,
etc. Area of data collection was HDFC Bank branches at Chandnichowk, Ashok vihar
(Delhi). Analysis of data has been done with the help of spss software. Articles are
attached from various magazines. Conclusion is drown from result of different data
processing and articles analyzation.
LIMITATIONS OF THE STUDY
The survey was conducted in chandnichowk and ashok vihar. The standard of living,
per capita income of people, earning style, etc. of this region is different from other
areas. Therefore, the inferences drawn from the survey can’t be generalized.
Another major limitation was unwillingness of

respondents to reveal information. Due to lack of sufficient time and hesitation to
reveal information regarding their investments, it was a difficult task to extract
information from them.
Sample size was also small i.e. 100. Therefore, it is very difficult to infer correct
conclusions from small sample.
Findings
56 | P a g e
1. This graph clearly shows that young people are more likely to visit bank
branches. Thus more chances of getting long term, more risk taker and
aggressive investors.
Figure 1
Age group
57 | P a g e
2. Here data shows that people are willing to earn more return than
that of they earn in traditional ways of investment.
Expected returns
Figure 2
58 | P a g e
3. This graph predicts that generally consumers keep a smaller part of
their disposable income aside for different investment options.
% of disposable income
Figure 3
59 | P a g e
4. This graphical representation clearly shows that investors give smaller
part of their investment pool to mutual funds investment.
% of total investment
Figure 4
60 | P a g e
5. These pillars provide a clear thought to our mind that in India
professional advisors are more reliable source to get mutual funds related
information.
No. of persons
Figure 5
61 | P a g e
6. This chart is showing that Indian investors are willing to stay invested
for a time duration of more than 12 months. They have patience, they
want to earn more money on their investment, and this is a bright sign for
mutual funds industry.
Figure 6
Key findings:-
62 | P a g e
# Study found that more young people are likely to involved in financial activities.
They more frequently visit banks and meet financial advisors. This is an opportunity
for mutual funds houses to attract these people.
# More than 50% of surveyed persons willing to take high risk for high rate of return.
This indicates that riskier investment options can also attract big pool of money if
investors are properly convinced.
# Study shows professional advisors are considered to be more reliable source of

mutual funds information, not because they provide human touch to investor but
others are not aggressively proposed, advertised, availed and used .
# An another observation made by study was , many a time advisors themselves do

not get timely updates from AMCs. This leads them not to offer some of schemes those
may give good returns.
# technological advancements are at nascent stage. Therefore these channels will

take time to come in picture. In other words these are seems to narrow ways to walk.
# surveyed persons are not having knowledge of more than 10 AMCs name and not
more than 7 schemes of any one of mutual fund houses. This requires an aggressive
marketing of funds. So that awareness level of investor can be improved.
Professional advisors think that investors are not educated properly. They (investor)
rely on what others say or what they (advisors) say. It’s easy to convince them for
investment but not so easy to make them clear about market affecting factors. “Stock
market is going low and I am already losing, you are asking for investment in market,
sorry I am not interested.” An investor grievance.
Conclusion & recommendations:
63 | P a g e
After going through a two months summer training and survey, I have come to know
about different aspects of mutual funds and mutual funds industry. India is an
emerging market. Consumption level is rising with rising earning level. Economic
indicators micro and macro both show a sky facing arrows. Data shows that there will
be more number of billionaires from India than any of other country.
We know that Indians are earning more therefore spending more, but how much they
save/invest in order to secure future. There are numbers of traditional ways of saving.
They give guaranteed return with low risk. High risk associated investment options
was not considered a right decision. India is a young country having a considerably big
part of young people. They are more risk taker. They need a right direction for
investment options.
This study and survey on mutual funds is a small eye hole to see the picture of mutual
funds industry in India. This provides almost clear view to the readers.
Mutual funds industry is enlarging its size in India. JVs, foreign JVs and acquisitions are
in trend. AUM has gone to $8 trillion, number of investors is rising, and number of
AMCs is going up. These changes are likely to happen. Indian monetary policy is
supporting new business. Private sector is aggressively participating in mutual funds
business. Numbers of schemes are much more than earlier.
With such shining sides, double digit inflation rate, bearish stock market, RBI’s high
bank rates, squeezing liquidity and other dark sides putting pressure on consumers
saving. This situation pushes investors back from investment. They wait and hold cash
rather than investing. This study found that investors are willing to invest with high
rate of return. They know high return always adhere to high risk but market still is not
in correction mode. It will take time.
Indian market potential is high, investors are willing to pour money in mutual funds,
despite some temporary restraints, other economic factors are in favorable mode.
Thus we need proper management of advisory services, more schemes, financial
advisors and institutions to cater untouched markets.
Industry need to revise its business strategy. Investor’s perception is not prioritized
yet. Instead of completing targets, advisors working under institutions should consider
the requirement of investors. We need to change pattern of selling mutual funds
schemes.
I hope this study will help readers to identify industry’s unidentified areas where they
need to work out.
64 | P a g e
Questionnaires
[I] For staff of HDFC Bank Ltd. and Brokers.
1. How long have you been selling mutual funds?
2. By what way did you used to communicate to your clients?
3. Do you still follow the same modes?
4. Industry is changing, consumer`s perception is changing, Indian economy is

also dynamic, growing, how do you justify your job with such a changing
scenario?
5. How do you describe ‘technological innovation in mutual funds ‘, by what

extent seen and foreseen changes are caused by it?
6. If I keep all recommendations aside and simply ask you, what factors do you
consider before suggesting any scheme to a prospective client?
7. Demand and supply mechanism moreover is applicable to buying and

selling, what is the present seen of this mechanism for mutual funds in India?
8. Data says that in US number of mutual funds schemes are more than that of
number of listed companies at stock exchange whereas in India not more than
1000 schemes. How do you react on this situation?
9. One side double digit inflation rate, RBI’s norms for curbing liquidity from
market, high price of fuel, are putting pressure on consumer’ s savings, on the
other side SEBI and RBI are relaxing norms for AMCs business. How these two
repelling poles can stand simultaneously?
10. Number of distribution channels is increasing just to cater untouched

market. What do you think?
11. Finally, where do you see this industry in coming 10years horizon?
65 | P a g e
[II] For clients of HDFC Bank Ltd.
1. Which of the following age bands do you fall in to?
Less than 21
21 to 25
25 to 35
35 to 60
Above 60
2. What is your primary source of income?
Your pension
Your salary
Income from your business
Rental income from investment properties
3. What is your return expectation on your investment?
Up to 8%
Between 8% to 18%
Above 18%
4. How would you describe/rate your level of knowledge of financial products?
Low level of knowledge
Medium level of knowledge
High level of knowledge
5. What level of risk are you willing to accept on your investment?
66 | P a g e
I want to protect my capital
I am comfortable with a small degree of risk
I am comfortable accepting the fact that investment could decline
I am willing to tolerate putting my principal at risk by investing in volatile

investments
6. What percent of your disposable income do you keep aside for different
investment options?
0% to 5%
5% to 10%
10% to 15%
15% to 20%
20% to 30%
Above 30%
7. What percent of above mentioned percentage part do you invest in mutual

funds?
0% to 5%
5% to 10%
10% to 20%
20% to 30%
30% to 50%
Above 50%
67 | P a g e
8. Which of the following source of mutual funds information do you like to opt
for?
Professional advisory
Company advisory
Mutual fund prospects
Newspaper, magazine, television
Mutual fund rating service
9. How long are you planning to stay invested?
Long term > 12 months
Medium term 6 – 12 months
Short term < 6 months
10. How likely are you stay invested during volatile times?
Unlikely you will stay invested
Likely you will stay invested
Highly likely to remain invested
Glossary:-
68 | P a g e
Back-end Load - Charge imposed by a mutual fund when an investor redeems
shares. Redemption fees and contingent deferred sales charges are examples.
Contingent Deferred Sales Charges - Back-end load imposed on an investor who

redeems shares. It is usually expressed as a percentage of the original purchase
price or of the value of shares redeemed. In most cases, the longer the investor
holds his shares, the smaller the deferred sales charge.
Distribution - Payments made to shareholders by the mutual fund. Interest and

stock dividends earned by the fund’s portfolio are passed to shareholders as
dividends, while capital gains are passed as capital gains distributions.
Dividend Reinvestment Fee - Fee charged when an investor uses dividends paid
by a mutual fund to purchase additional shares of the mutual fund.
Exchange Fee - Fee charged when an investor switches from one mutual fund to
another in the same family of funds.
Front-end Load - Sales charge applied at the time the investor purchases shares.
Investment Companies - The companies that pool investor monies to purchase

securities. The Investment Company Act of 1940 created three types of
investment companies: face-amount certificate companies, unit investment
trusts and management companies.
Management Companies - There are two types: open-end and closed-end. Open-
end funds, which sell and buy shares back on demand, are called mutual funds.
Closed-end funds have a fixed number of shares. After the initial public offering,
shares in closed-end funds trade only on exchanges. The price is determined by
the market and does not necessarily reflect the net asset value of the shares.
Management Fee - A fee paid by the mutual fund to its investment adviser and
charged against fund assets, generally 1% or less per year.
Net Asset Value - In effect, the share price of a fund computed daily by adding
the value of the fund’s securities and other assets, subtracting liabilities, and
dividing by the number of shares outstanding. For a mutual fund with a front-end
load, net asset value is identical to the "asked price" or "offering price."
Prospectus - A disclosure document which should provide the investor with full
69 | P a g e
and complete disclosure of all material information needed by the investor to
make a decision whether or not to invest. The prospectus generally incorporates
the SAI by "reference." (See SAI definition.)
Redemption Fee - A fee charged to an investor who redeems shares. It is

generally expressed as a percentage of the value of shares redeemed.
Rule 12b-1 Fee - An asset-based sales load, permitted by SEC Rule 12b-1,
representing annual charges of up to 1-1/4% for specific sales or promotional
activities of the mutual fund. Over time, the amount paid in Rule 12b-1 fees can
surpass the amount paid in sales fees charged by load funds.
SAI - A disclosure document called a Statement of Additional Information. The

SAI is not required to be furnished by mutual funds to investors unless investors
specifically request it. Investors are responsible for information in the SAI, even
if they don’t request it.
Total Return - A computation of mutual fund performance which measures

changes in total value over a specified time period. Included in the computation
are distributions paid to investors, capital gains distributions and unrealized
capital gains and losses. Since all fund activity which has an effect on net asset
value is represented, this measure provides a picture of performance which is
more complete than yield.
Yield - A measure of mutual fund performance, which is figured by dividing the

income generated (dividends, capital gains distribution, etc.) per share for a
specific time period by the fund’s current price per share. For example if, during
a year, a single share of a fund had paid income totaling $1 and its share price
was $10, the annual yield for that year would be figured by dividing 1 by 10,
which equals one tenth, or a yield of 10%.
70 | P a g e
References:-
www.IDFCMF.com
www.moneycontrolindia.com
http://www.nse-india.com
http://www.amfiindia.com
http://www.mutualfundsindia.com
http://www.sebi.gov.in
www.businessmapsofindia.com
www.ceicdata.com
www.economictimes.com
www.valueresearchonline.com
71 | P a g e

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Mutual funds

A Case Study and survey

(HDFC Bank branches: Jalandhar City.)

Submitted to: Shaheed Udham Singh College

Engineering and Technology Tangori (Mohali)

Submitted by: Munish Kapil

Roll no. 90692234759

Company Profile 39-54

Conclusion and reconditions 60

Project guide Student

(HOD Pankaj Mahindroo) (Munish

As our economy continues to grow at a spectacular rate there is a huge amount of

Passing through the growth phase

- UTI Phase (1964 – 1987)

- The emergence phase (1993 – 2003), when international players come in to

Changing investor profile

Legally known as an "open-end company" under the Investment Company Act of

What is a Mutual Fund?

Phase II. Entry of Public Sector Funds - 1987-1993

199 Amo Assets Mobili

Phase III. Emergence of Private Sector Funds - 1993-96

Phase IV. Growth and SEBI Regulation - 1996-2004

1. Schemes according to Maturity Period:-

 Open-ended Fund/ Scheme:-

An open-ended fund or scheme is one that is available

 Close-ended Fund/ Scheme:-

A close-ended fund or scheme has a stipulated maturity

2. Schemes according to Investment Objective:-

A scheme can also be classified as growth scheme, income

 Growth / Equity Oriented Scheme:-

The aim of growth funds is to provide capital appreciation over

 Income / Debt Oriented Scheme:-

The aim of income funds is to provide regular and steady

The aim of balanced funds is to provide both growth and

 Money Market or Liquid Fund:-

These funds invest exclusively in government securities.

Index Funds replicate the portfolio of a particular index such as the

3. Sector specific funds/schemes:-

4. Tax Saving Schemes:-

5. Fund of Funds (FoF) scheme:-

6. Load or no-load Fund:-

Portfolio Mutual Funds invest in a well-diversified portfolio of securities which enables

Investors acquire a diversified portfolio of securities even with a small

Mutual Fund industry is part of a well-regulated investment environment where

Disadvantage of Investing Through Mutual Funds

The portfolio of securities in which a fund invests is a decision taken by the

Systematic Withdrawal Plan (SWPs):

Systematic Transfer Plan (STPs) :

PARAMETERS OF MUTUAL FUND EVALUATION:

Risks Associated With Mutual Funds

Interest Rate Risk:

II. Ex –Marks or R-squared Measure Of Risk :

It is a statistical concept, which measures volatility. It measures the fluctuations of fund’s

How to Calculate the Value of a Mutual Fund:

NAV = Net Assets of the scheme / Number of Units Outstanding

Where Net Assets are calculated as:-

The major factors affecting the NAV of a fund are:

 Sale and purchase of securities

Measuring Mutual Fund Performance:

• Simple Annual Return Method :

• Total Return Method:

• Total Return when dividend is reinvested: