AProject Study Report On Training Undertaken atIDFC AMC ltd, AhmadabadSTUDY ABOUT INVESTORS PERCEPTION AND INVESTMENT PETTERN IN MUTUAL FUND AT IDFC AMC ltd

Submitted by: - MANTHAN SONI (Enr. No: - 137690592115) MBA PROGRAMME 2013-2015

In partial fulfillment of the requirements for Summer Internship Programme for the award of the degree ofMASTER OF BUSINESS ADMINISTRATIONSHRI JAIRAMBHAI PATEL INSTITUTE OF BUSINESS MANAGEMENT AND COMPUTER APPLICATIONS (NICM-MBA)

Submitted to:-GUJARAT TECHNOLOGICAL UNIVERSITY,AHMEDABAD

PREFACEWith the growth of rapid industrialization the need of management is felt every where. A research report provides the most natural condition under which a student can learn and got success in implementing the theoretically learned in to the practical and current environment of daily practices done by the people (investor) it helps a student to learn, to improve, to improvise, to experiment, to find knowledge in all possible ways and to translate that knowledge into action.MBA is a foundation stone to the management career. The classroom learning needs to practical exposure. To develop concrete managerial and administrative skills of potential manager, it is important that the interaction to the real environment be there.The project is a real life venture for me. It is a great privilege that you have spread your for reading this. In forthcoming pages, an attempt has been made to present the different aspect of my project.

Date: Manthan soni Place: Gandhinagar (GTUs Enrollment No: - 137690592115)

Declaration

This project report entitled Understanding Study of Investors perception and investment pattern in mutual fund at IDFC has been submitted to Gujarat Technological University, Ahmadabad in partial fulfillment for the award of degree of Master of Business Administration. I, the undersigned hereby declare that this report has been completed by me under the guidance of Mr.Pankil thakker (Assistant Vise President) and Prof.Rashesh Patel (Faculty Member, ShriJairambhai Patel Institute of Business Management & Computer Applications, Gandhinagar.)

The report is entirely the result of my own efforts and has not been submitted either in part or whole to any other institute or university for any degree.

Manthan soni(GTUs Enrollment No: - 137690592115)

Date: Place: Gandhinagar

ACKNOWLEDGEMENT

Chain of mistakes leads towards failures, chain of failures leads to experience & chain of experience leads to success. Thats what a lifes path is. I express my heartfelt thanks to Dr. S.O. Junare, Director of NICM for providing me an opportunity for carrying out this study.My special thanks to Prof. Rashesh Patel, Assistant Professor, NICM, who had been a mentor and had supported me by his vast knowledge, experience and wisdom. He had been a constant support me throughout the completion of the studyI take the opportunity to thank Mr. Hardik, Senior vise president, IDFC, who has motivated us to achieve new heights and work creatively.I would also like to thank my guide Mr. Pankil Thakker, Assistant Vise President, IDFC. Who have immensely guided, supported and helped me in the process of completion of my Organizational Study through his constant encouragement and suggestions. I take the opportunity to thank Mrs.Rekha nair, Sales manager, IDFC. Who had been a constant support throughout the completion of the study?My sincere and humble thanks to all my faculty members, my beloved parents, my dear friends and each and everyone who have been never ending source of knowledge, inspiration and support to me. Signature of the Student Manthan soniEr.No: - 137690592115

Shri Jairambhai Patel Institute of Business Management and Computer Applications (Formerly known as National Institute of Cooperative Management), Approved by AICTE, New Delhi and Affiliated with Gujarat Technological UniversityOpposite Amusement Park, Indroda Circle, Gandhinagar - 382 007Phone: 079 23213043, 37 - 38 - 39 Fax : 079 23213036Web: www.nicm.coop E mail: director_mbanicm@yahoo.com

CERTIFICATE

This is to certify that (Name of the student), student of MBA (2012-2014 batch) at Post Graduate Centre of Gujarat Technological University MBA, SJPI has prepared a Summer Internship Project Report on (.Topic.) in partial fulfillment of two years full-time MBA Programme of Gujarat Technological University, Ahmedabad. This project work has been undertaken under my supervision and found satisfactory.

Date :----------------- (.NAME OF FACULTY GUIDE.) Place: Gandhinagar Core Faculty MBA Dept. & Project Guide

Dr. S O JunareDirector Technical CampusABSTRACTBeing such a hot and much talked about financial product in the recent times, I take it as a great opportunity to study and analyze the Indian mutual fund Industry and give my observation on it. It will not only help building my career but it will also help Mahindra finance in certain aspect.The Indian Mutual Funds Industry has witnessed a sea change since UTI was first established in 1963. From a single player the number of players has increased to more than 30 and the number of schemes has spiraled to more than 3500. The last decade has been a period of rapid growth for the MF industry. The industry is in nascent stage at present. It has come a long way and still has lots of potential for growth.My project in IDFC mainly deals with to Understanding Investors perception and investment pattern in mutual fund at IDFC and also selling through several financial channels available in the market. And my main aim is to attain profit for the company and give them good business. Fist part of study, I undertake the research study survey through questionnaire fill up on investment pattern in mutual fund by Investors. And after that I visited the list of bank given to me Kotak, HDFC, Axis Bank etc. And Meet with Relationship manager and try to give them knowledge about the product and then try to sale the product to their client and Understanding of Investors perception and investment pattern in mutual fund. And in these project my main aim to see which schemes are giving better returns and at a reasonable risk. But risk itself is a very subjective terms that depend on person to person. And also how asset management companies are performing and how their ranking in investment terms is.And during the course of the project I have not only learnt about mutual fund industry but also try to Understanding of Investors perception and investment pattern in mutual fund at IDFC the company.

INTRODUCTION

Chapter -01INTRODUCTION

1.1IMPORTANCE OF MUTUAL FUNDS

1.2NEED & IMPORTANCE OF STUDY

1.3DESIGN OF STUDY

a.Statement of Problem

b.Objectives

c.Study Methodology

d.Data Analysis & Interpretation

e.Limitation

Chapter-02REVIEW OF LITERATURE

Chapter -03COMPANY PROFILE

Chapter- 04 Data Analysis & Interpretation

Questionnaire

CHAPTER-I

INTRODUCTION

The one investment vehicle that has truly come of age in India in the past decade is mutual funds. Today, the mutual fund industry in the country manages around Rs 329,162 crore (As of Dec, 2006) of assets, a large part of which comes from retail investors. And this amount is invested not just in equities, but also in the entire gamut of debt instruments. Mutual funds have emerged as a proxy for investing in avenues that are out of reach of most retail investors, particularly government securities and money market instruments.

Specialization is the order of the day, be it with regard to a schemes investment objective or its targeted investment universe. Given the plethora of options on hand and the hard-sell adopted by mutual funds vying for a piece of your savings, finding the right scheme can sometimes seem a bit daunting. Mind you, its not just about going with the fund that gives you the highest returns. Its also about managing riskfinding funds that suit your risk appetite and investment needs.So, how can you, the retail investor, create wealth for yourself by investing through mutual funds? To answer that, we need to get down to brass tackswhat exactly is a mutual fund?

Very simply, a mutual fund is an investment vehicle that pools in the monies of several investors, and collectively invests this amount in either the equity market or the debt market, or both, depending upon the funds objective. This means you can access either the equity or the debt market, or both, without investing directly in equity or debt.

The essential features of the mutual funds distinguishing from other of the investments are:-

The mutual fund is a trust into which many relatively small investors invest their money to form a large pool of cash which is then invested in securities by the manager of the trust. The price at which units can be bought and sold is governed solely by the value of the underlying securities held by the MF and dealing in units are on the basis of net market value of the investment per unit. The managers of MF are obliged to redeem any units in issue on demand or certain specified period. All dividend income that the MF receives on its investments is paid out to unit holders. Since the unit held by investor evidences the ownership of the funds assets, the value of an investors part ownership is determined by the NAV of the number of units held.

Concept of a Mutual Fund

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is 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 a Mutual Fund is the 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. The flow chart below describes broadly the working of a mutual fund:-

Figure 1

Savings form an important part of the economy of any nation. With savings invested in various options available to the people, the money acts as the driver for growth of the country. Indian financial scene too presents multiple avenues to the investors. Though certainly not the best or deepest of markets in the world, it has ignited the growth rate in mutual fund industry to provide reasonable options for an ordinary man to invest his savings. Investment goals vary from person to person. While somebody wants security, others might give more weightage to returns alone. Somebody else might want to plan for his childs education while somebody might be saving for the proverbial rainy day or even life after retirement. With objectives defying any range, it is obvious that the products required will vary as well.

Investors earn from a Mutual Fund in three ways:1. Income is earned from dividends declared by mutual fund schemes from time to time.1. If the fund sells securities that have increased in price, the fund has a capital gain. This is reflected in the price of each unit. When investors sell these units at prices higher than their purchase price, they stand to make a gain. 1. If fund holdings increase in price but are not sold by the fund manager, the fund's unit price increases. You can then sell your mutual fund units for a profit. This is tantamount to a valuation gain.

Though still at a nascent stage, Indian MF industry offers a plethora of schemes and serves broadly all type of investors. The range of products includes equity funds, debt, liquid, gilt and balanced funds. There are also funds meant exclusively for young and old, small and large investors. Moreover, the setup of a legal structure, which has enough teeth to safeguard investors interest, ensures that the investors are not cheated out of their hard-earned money. All in all, benefits provided by them cut across the boundaries of investor category and thus create for them, a universal appeal.Investors of all categories could choose to invest on their own in multiple options but opt for mutual funds for the sole reason that all benefits come in a package. Conceptual Framework of Mutual FundA mutual fund is constituted as a public trust created under the Indian Trust Act, 1882. SEBI (mutual fund) regulations, 1996 regulate the structure of the mutual funds in India. As per these regulations should have the following three-tier structure:i) Sponsor ii) Trust/trusteeiii) Asset Management Company

Apart from this mutual fund consist ofFigure 2 SponsorSponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. The sponsor establishes the mutual fund and registers the same with SEBI. Sponsor appoints the Trustees, custodians and the AMC with prior approval of SEBI and in accordance with SEBI Regulations. Sponsor must have a 5-year track record of business interest in the financial markets. Sponsor must have been profit making in at least 3 of the above 5 years. 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 Funds) 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.

TrustThe 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.

TrusteeTrustee 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 inter alia 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.

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 crore at all times.

Registrar and Transfer AgentThe 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.

CustodianA custodian is an agent, bank, trust company, or other organization which holds and safeguards an individual's, mutual funds, or investment company's assets for them.

Advantages of Mutual Funds

1. Professional Management Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. This risk of default by any company that one has chosen to invest in, can be minimized by investing in mutual funds as the fund managers analyze the companies financials more minutely than an individual can do as they have the expertise to do so. They can manage the maturity of their portfolio by investing in instruments of varied maturity profiles.

1. DiversificationMutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.

1. ConvenientAdministrationInvesting 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.

1. ReturnPotentialOver 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. Apart from liquidity, these funds have also provided very good post-tax returns on year to year basis. Even historically, we find that some of the debt funds have generated superior returns at relatively low level of risks. On an average debt funds have posted returns over 10 percent over one-year horizon. The best performing funds have given returns of around 14 percent in the last one-year period. In nutshell we can say that these funds have delivered more than what one expects of debt avenues such as post office schemes or bank fixed deposits. Though they are charged with a dividend distribution tax on dividend payout at 12.5 percent (plus a surcharge of 10 percent), the net income received is still tax free in the hands of investor and is generally much more than all other avenues, on a post-tax basis.

1. LowCostsMutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.

1. LiquidityIn open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund. Since there is no penalty on pre-mature withdrawal, as in the cases of fixed deposits, debt funds provide enough liquidity. Moreover, mutual funds are better placed to absorb the fluctuations in the prices of the securities as a result of interest rate variation and one can benefits from any such price movement.

1. TransparencyInvestors get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook.

1. FlexibilityThrough features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans; you can systematically invest or withdraw funds according to your needs and convenience.

1. AffordabilityA single person cannot invest in multiple high-priced stocks for the sole reason that his pockets are not likely to be deep enough. This limits him from diversifying his portfolio as well as benefiting from multiple investments. Here again, investing through MF route enables an investor to invest in many good stocks and reap benefits even through a small investment. Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy.

1. ChoiceofSchemesMutual Funds offer a family of schemes to suit your varying needs over a lifetime.

1. WellRegulatedAll Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.

1. Tax BenefitsLast but not the least, mutual funds offer significant tax advantages. Dividends distributed by them are tax-free in the hands of the investor. They also give you the advantages of capital gains taxation. If you hold units beyond one year, you get the benefits of indexation. Simply put, indexation benefits increase your purchase cost by a certain portion, depending upon the yearly cost-inflation index (which is calculated to account for rising inflation), thereby reducing the gap between your actual purchase cost and selling price. This reduces your tax liability. Whats more, tax-saving schemes and pension schemes give you the added advantage of benefits under Section 88. You can avail of a 20 per cent tax exemption on an investment of up to Rs 10,000 in the scheme in a year.

Disadvantages of mutual fundsMutual funds are good investment vehicles to navigate the complex and unpredictable world of investments. However, even mutual funds have some inherent drawbacks. Understand these before you commit your money to a mutual fund.

1. No assured returns and no protection of capitalIf you are planning to go with a mutual fund, this must be your mantra: mutual funds do not offer assured returns and carry risk. For instance, unlike bank deposits, your investment in a mutual fund can fall in value. In addition, mutual funds are not insured or guaranteed by any government body (unlike a bank deposit, where up to Rs 1 lakh per bank is insured by the Deposit and Credit Insurance Corporation, a subsidiary of the Reserve Bank of India). There are strict norms for any fund that assures returns and it is now compulsory for funds to establish that they have resources to back such assurances. This is because most closed-end funds that assured returns in the early-nineties failed to stick to their assurances made at the time of launch, resulting in losses to investors. A scheme cannot make any guarantee of return, without stating the name of the guarantor, and disclosing the net worth of the guarantor. The past performance of the assured return schemes should also be given.

2. Restrictive gainsDiversification helps, if risk minimization is your objective. However, the lack of investment focus also means you gain less than if you had invested directly in a single security. Assume, Reliance appreciated 50 per cent. A direct investment in the stock would appreciate by 50 per cent. But your investment in the mutual fund, which had invested 10 per cent of its corpus in Reliance, will see only a 5 per cent appreciation.

3. TaxesDuring a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.

4. Management riskWhen you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.

TYPES OF MUTUAL FUND SCHEMESThere are a wide variety of Mutual Fund schemes that cater to your needs, whatever your age, financialposition, risk tolerance and return expectations. Whether as the foundation of your investmentprogramme or as a supplement, Mutual Fund schemes can help you meet your financial goals.

TYPES OF MUTUAL FUND SCHEME

By structureOther SchemesBy Investment Objectives

Tax saving fundEquity SchemesDebt SchemesOpen-ended Schemes

Sector specific fundClose Ended Schemes

MM Mutual fundLarge cap fund

Index SchemesMid cap FundFMPInterval Schemes

Other Debt Schemes

Small cap fund

Any Other Equity Fund

Figure 3

(AI) By Structure Open-Ended SchemesThese do not have a fixed maturity. You deal directly with the Mutual Fund for your investments and redemptions. The key feature is liquidity. You can conveniently buy and sell your units at Net Asset Value ("NAV") related prices. Close-Ended SchemesSchemes that have a stipulated maturity period (ranging from 2 to 15 years) are called close-ended schemes. You can invest directly in the scheme at the time of the initial issue and thereafter you can buy or sell the units of the scheme on the stock exchanges where they are listed. The market price at the stock exchange could vary from the scheme's NAV on account of demand and supply situation, Unit holders' expectations and other market factors.One of the characteristics of the close-ended schemes is that they are generally traded at a discount to NAV but closer to maturity, the discount narrows. Some close-ended schemes give you an additional option of selling your units directly to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations ensure that at least one of the two exit routes are provided to the investor. Interval SchemesThese 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 predetermined intervals at NAV related prices.

(B) By Investment Objective Growth SchemesAim to provide capital appreciation over the medium to long term. These schemes normally invest amajority of their funds in equities and are willing to bear short-term decline in value for possible futureappreciation. These schemes are not for investors seeking regular income or needing their money backin the short term. Income SchemesAim to provide regular and steady income to investors. These schemes generally invest in fixed income securities such as bonds and corporate debentures. Capital appreciation in such schemes may be limited.Ideal for Retired people and others with a need for capital Stability and regular income Investor who need some income to supplement their earnings. Balanced SchemesAim to provide both growth and income by periodically distributing a part of the income and capital gains they earn. They invest in both shares and fixed income securities in the proportion indicated in their offer documents. In a rising stock market the NAV of these schemes may not normally keep pace, or fall equally when the market falls.Ideal for: Investors looking for a combination of income and moderate growth.

Money Market/Liquid SchemesAim to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer, short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate, depending upon the interest rates prevailing in the market.Ideal for: Corporate and individual investors as a means to park their surplus funds for short periods or awaiting a more favorable investment alternative. Other Schemes Tax Saving SchemesThese schemes offer tax rebates to the investors under tax laws as prescribed from time to time. This is made possible because the Government offers tax incentives for investment in specified avenues. For example, Equity Linked Savings Schemes (ELSS) and Pension Schemes. The details of such tax saving schemes are provided in the relevant offer documents.Ideal for: Investors seeking tax rebates. Special SchemesThis category includes index schemes that attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50, or industry specific schemes (which invest in specific industries) or sectorial schemes (which invest exclusively in segments such as A Group shares or initial public offerings)

Different Modes of Receiving the Income Earned From Mutual Fund Investments

Mutual funds offer three methods of receiving income:

Growth Plan:In this plan, dividend is neither declared nor paid out to the investors but it is built into the value of the NAV. In the other words, the NAV increases over time due to such incomes and the investor realizes only the capital appreciation on redemption of his investment.

Income plan or Dividend Payout Plan:In this plan, dividends are paid-out to the investors. In other words, the NAV only reflects the capital appreciation or depreciation in the market price of the underlying portfolio.

Dividend Reinvestment Plan:In this plan, dividend is declared but not paid out to the investors. Instead, it is reinvested back in to the scheme at the then prevailing NAV. In other words, the investor is given additional units and not cash as dividend.

RISK HIERARCHY OF MUTUAL FUNDSRISK

Money Market FundEquity FundDebt Fund

Hybrid Fund

Gilt Fund

High Yield Debt FundsGrowth and Income FundsAggressive Growth Fund

Growth Funds

Focused Debt FundsFlexible Asset Allocation Fund

Value Funds

Diversified Equity Fund

Equity Income Funds

Index FundBalanced FundsDiversified Debt FundGilt FundsMoney Market Funds

TYPE OF FUND

Mutual Fund Investment Strategies Systematic Investment Plan (SIP):SIPs entail an investor to invest a fixed sum of money at regular intervals in MF scheme the investor has chosen. This may help you gain from any appreciation in the event of upside or alternatively, average your cost during downside. Seeing the present volatility in the market SIP is the best option available to the investor due to regular entry into the market which causes rupee cost averaging and hence covers the volatility.

Systematic Withdrawal Plan (SWPs):

These plans are best suited for people nearing retirement. In these plans investor invest 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 (STP):

They allow the investor to transfer on a periodic basis a specified amount from one scheme to another with in 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.

METHODOLOGY OF STUDY:

I have prepared questionnaire for the person whom I meet to recognize the factors which they take into account while investing in mutual fund and then also I see various factors like age , occupation , income group , locality and then see how this factor affect while investing in various schemes.

And sometimes I also tried to contact Relationship manager of Bank and try to convince about our product and if he feels satisfied then we take permission to give corporate presentation to his employees and then try to convince and then sell the product to there client. We also provide them after sale service by sending them statement every month and also the factsheet of the various AMC so they can know there return exactly and also know properly that where their money is invested.

SCOPE OF STUDY : This project provides me with learning insight about mutual fund and also little bit about equity market. The Mutual fund industry in India comprises of a large number of fund houses and schemes, however the project is limited to study of a few fund houses and schemes which are performing well in the current market scenario. The analysis will mainly be carried on mainly by the data collected from investors and from the internet

The primary research required going to various employees and speaking to relationship managers of various banks and customers present in Ahmedabad.

The secondary research required exploring research papers, newspapers, magazines, fact sheets of various funds and their offer documents.

SCHEDULE:

ACTIVITY

TIME PERIOD

Training on mutual fund- learns about the concept of mutual fund and the different schemes related to different mutual fund. And also Something about taxation and Financial planning

09-06-14 to 18-06-14

Then done survey by asking People to fill questionnaire and Understanding of Investors perception and investment pattern in mutual fund19-06-14 to 1-07-14

And after that I visited the list of bank given to me Kotak, HDFC, Axis Bank etc. And Meet with Relationship manager2-07-14 to 20-07-14

Submission of project proposal report21-07-14 to 23-07-14

Submit of project interim report

Submission of project final report

Total project period09-06-14 to 10-08-14

GROWTH OF MUTUAL FUND INDUSTRY IN INDIA

While the Indian mutual fund industry has grown in size by about 320% from March, 1993 (Rs.470 billion) to December, 2010 (Rs.4505 billion) in terms of AUM, the AUM of the sector excluding UTI has grown over times from Rs.152 billion in March 1999 to $ 148 billion as at March 2008.

Though India is a minor player in the global mutual fund industry, its AUM as a proportion of the global AUM has steadily increased and has doubled over its levels in 1999. The growth rate of Indian mutual fund industry has been increasing for the last few years. It was approximately 0.12% in the year of 1999 and it is noticed 0.50% in 2010 in terms of AUM as percentage of global AUM.

Some facts for the growth of mutual funds in India 100% growth in the last 6 years. Number of foreign AMCs is in the queue to enter the Indian markets. Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual funds sector is required. We have approximately 29 mutual funds which are much less than US having more than 800. There is a big scope for expansion. Mutual fund can penetrate rural like the Indian insurance industry with simple and limited products. SEBI allowing the MF's to launch commodity mutual funds.

RISKS OF INVESTING IN MUTUAL FUNDS

Market / Interest Risk

Volatility of prices leading to floating returns

Largely mitigated with a holding period of over 6 months

Credit Risk

Potential default of bonds on the portfolio

Equity Risk

Possibility of the fund manager not able to meet redemptions

GROWTH OF MUTUAL FUND INDUSTRY IN INDIAWhile the Indian mutual fund industry has grown in size by about 320% from March, 1993 (Rs.470 billion) to December, 2010 (Rs.4505 billion) in terms of AUM, the AUM of the sector excluding UTI has grown over times from Rs.152 billion in March 1999 to $ 148 billion as at March 2008.

Though India is a minor player in the global mutual fund industry, its AUM as a proportion of the global AUM has steadily increased and has doubled over its levels in 1999. The growth rate of Indian mutual fund industry has been increasing for the last few years. It was approximately 0.12% in the year of 1999 and it is noticed 0.50% in 2010 in terms of AUM as percentage of global AUM.

Some facts for the growth of mutual funds in India 100% growth in the last 6 years. Number of foreign AMCs is in the queue to enter the Indian markets. Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual funds sector is required. We have approximately 29 mutual funds which are much less than US having more than 800. There is a big scope for expansion. Mutual fund can penetrate rural like the Indian insurance industry with simple and limited products. SEBI allowing the MF's to launch commodity mutual funds. Emphasis on better corporate governance. Trying to curb the late trading practices. Introduction of Financial Planners who can provide need based advice.

IMPACT OF TECHNOLOGY

Mutual fund, during the last one decade brought out several innovations in their products and is offering value added services to their investors. Some of the value added services that are being offered are: Electronic fund transfer facility. Investment and re-purchase facility through internet. Added features like accident insurance cover, med claim etc. Holding the investment in electronic form, doing away with the traditional form of unitcertificates. Cheque writing facilities. Systematic withdrawal and deposit facility.

ONLINE MUTUAL FUND TRADING

The innovation the industry saw was in the field of distribution to make it more easily accessible to an ever increasing number of investors across the country. For the first time in India the mutual fund start using the automated trading, clearing and settlement system of stock exchanges for sale and repurchase of open-ended de-materialized mutual fund units.

Systematic Investment Plan (SIP) and Systematic Withdrawal Plan (SWP) were options introduced which have come in very handy for the investor to maximize their returns from their investments. SIP ensures that there is a regular investment that the investor makes on specified dates making his purchases to spread out reducing the effect of the short term volatility of markets. SWP was designed to ensure that investors who wanted a regular income or cash flow from their investments were able to do so with a pre-defined automated form. Today the SW facility has come in handy for the investors to reduce their taxes.

HOW TO INVEST IN MUTUAL FUNDS.Step One- Identify your investment needs. Your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, level of income and expenses among many other factors. Therefore, the first step is to assess your needs.Step Two- Choose the right Mutual Fund. Once you have a clear strategy in mind, you now have to choose which Mutual Fund and scheme you want to invest in. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed by the same Fund Manager. Some factors to evaluate before choosing a particular Mutual Fund are: The track record of performance over the last few years in relation to the appropriate yardstick and similar funds in the same category. How well the Mutual Fund is organized to provide efficient, prompt and personalized service. Degree of transparency as reflected in frequency and quality of their communications.Step Three- Select the ideal mix of Schemes. Investing in just one Mutual Fund scheme may not meet all your investment needs. You may consider investing in a combination of schemes to achieve your specific goals.

The following charts could prove useful in selecting a combination of schemes that satisfy your needs.

Figure 4

Thisplanmay suit Investor seeking Income & moderate growth. Investor looking for growth & stability with moderate risk

Figure 5Step Four - Invest regularly.Step Five- Keep your taxes in mindStep Six- Start early It is desirable to start investing early and stick to a regular investment plan. If you start now, you will make more than if you wait and invest later. The power of compounding lets you earn income on income and your money multiplies at a compounded rate of return.

Step Seven-The final step all you need to do now is to get in touch with a Mutual Fund or yourAgent/broker and start investing. Reap the rewards in the years to come. Mutual Funds are suitable for every kind of investor-whether starting a career or retiring, conservative or risk taking, growth oriented or income seeking.

What fees and commissions will you pay when you invest in mutual funds?

The fees and commissions you may be charged can vary widely from one fund, and one dealer, to the next. Some of the charges may be negotiable, but you should make sure that you understand all of the costs before you invest. There are two main costs to consider themanagement and operating expenses that are charged tothe fund each year, and the sales charges (or loads) that you pay when you buy or sellthe fund.

Management and Operating Expenses are expenses paid each year by the fund and include such things as the managers fees, legal and accounting fees, custodial fees and bookkeeping costs. The Management Expense Ratio (MER) is the percentage of the funds average net assets that these expenses represent. For example, if a $100 million fund has $2 million in costs for the year its MER will be 2%. MERs can range from under 1% per year for some money market funds to almost 3% for some equity funds. The higher the MER, the greater the impact on the funds performance and the return to its investors because these expenses are removed before the value is reported.

Sales Charges (Loads) are the commissions that you may have to pay when you buy or redeem units of a fund. Sales charges may be applied when you buy units of the fund(Afront-end load), when you redeem your units (a back-end load), or there may be no sales charges at all (no-load).Where front-end loads are charged, the rate can vary fromdealer to dealer and may be negotiable. Shop around, andremember that every dollar you pay up-front in commissionis a dollar that does not go to work for you in the fund.Many funds are sold on a back-end load basis, meaninggenerally that the sales charges are applied only when youredeem the fund. Back-end load fees are paid by the fundmanagement company to your mutual fund salesperson youdo not pay this fee. You do, however, pay a redemption fee ifyou redeem your units in the fund before a certain time period,typically 7 years. Redemption fees decline each year thatyou hold the investment.

For example, you might have to paya 6% fee if you redeem the fund after one year, 4% if youredeem after three years, and no commission if you redeemafter seven years.An increasing number of funds are being sold on a no-loadbasis, in which investors pay no sales charges, but beforeyou decide that a no-load fund is right for you, consider thefunds performance, its management expense ratio and thelevel of service and advice you will receive.

Different Avenues of investment

OPTIONSRETURNRISKLIQUIDITY

Savings accountVery lowVery lowHigh

Fixed DepositsLowLowLow

Direct EquityVery high returnVery highHigh

InsuranceMediumLowLow

Company fixed depositsLowHighVery low

DebenturesLowMediumMedium

BondsLowLowLow

Mutual fundsHighMediumHigh

Post office schemesLowLowLow

Government securitiesLowLowLow

Real estateHighHighLow

CurrencyHighHighHigh

BullionMediumHighMedium

STATEMENT OF PROBLEM

Mutual Funds are Financial intermediaries concern with the mobilizing savings of surplus income & channelisation of these savings in those avenues where there is demand of funds.

The main purpose behind this study of investment preferences in Mutual Funds is to see that how the investors are employing their resources in a manner to afford, combine benefits to low risks, steady or consistent returns, high liquidity & capital appreciation through diversification & Expert Management.

Therefore the activities of mutual funds have both short & long term impact on the savings & capital market & the national economy. Mutual Funds, thus, assist the process of financial depending & intermediation.

Objectives of the Study

To study various investment alternatives and in particular investors preference towards mutual funds.

To study the preference of investors in todays scenario (less risk and more return).

To assess the risk of investors with reference to diversifiable risk & non-diversifiable risk.

To study market potentiality of mutual fund among investors.

To study whether the investors are considering IDFC a better option or not.

Research Methodology

Research Methodology is a systematic method of discovering new facts or verifying old facts, their sequence, inter-relationship, casual explanation and the natural laws which governs them. In it we study the various steps that are generally adopted by a researcher in the studying his research problem along with the logic behind them.

Different stages involved in research consists of enacting the problem, formulating a hypothesis, collecting the facts or data, analyzing the facts and reaching certain conclusion either in the form of solution towards the concerned problem or in generalization for some theoretical formulation.

Type of Sample Design: Judgment Sampling

Sample Size: 200

In Research Methodology mainly Data plays an important role.

The Data is divided in two parts:a) Primary Data.b) Secondary Data.Primary Data is the data, which is collected directly by direct personal interview,Interview, indirect oral investigation, Information received through local agents, Drafting a schedule, drafting a questionnaire.

Secondary Data is the data, which is collected from: Various books. Magazine and material. Internet Fact sheets of various MFsThe data which is stored in the organization and provide by the FINANCE people are also secondary data. The various information is taken out regarding that subject as well other subject from various sources and stored. The last years data stored can also be secondary data. This data is kept for the internal use of the organization.The FINANCE manual is for the internal use of the organization they are secondary data which help people to gain information. In this report the data plays a very crucial role. For this report the data was provided to me by FINANCE department and other departmental head in the organization.

SURVEY ANALYSIS

Sampling MethodThe sampling method so as to obtain a representative sample is the Non- Probability Sampling methods. Under non-probability sampling, we selected the respondents to the survey on the basis of Judgment sampling with Convenience taken into account.

Research instrument

The research instrument used for this survey is a structured questionnaire. The questionnaire contains both open-ended and close ended questions. The questionnaire provides a provision with respect to rating scales.

Assumptions The sample selected represents the population fully.

The data has been collected by administering an open and close ended questionnaire to sample of end investors andwith the assumption that the primary data collected is true and reflects the actual preferences of the investors.

The sample selected has thorough knowledge of the subject.

LIMITATIONS OF THE STUDY

1) Sometime stock market are not performing well so people are not interested to invest2) Sometime because of negative sentiments in the market people are not ready to invest for e.g. the subprime crisis in US affected the stock market in India.3) Many people have good knowledge of the equity market by themselves so they dont want to invest in mutual fund4) Many are looking for the short term benefits for which sometime mutual fund is not the best option5) Many people who want to have high risk high return are not suitable for mutual fund6) Some people are not ready to invest in mutual fund because of the lack of knowledge about the product7) Most of the time people are busy in their schedule and so they dont want to listen to anything on the telephone calls.8) In small towns people are not willing to purchase mutual fund because of lack of knowledge they rather prefer to invest in real state9) It is also difficult to measure economic factor associated with time constrain10) Time constrain

CHAPTER-II

LITERATURE REVIEW

Literature on mutual fund performance evaluation is enormous. A few research studies that haveinfluenced the preparation of this paper substantially are discussed in this section.

Sharpe, William F. (1966) suggested a measure for the evaluation of portfolio performance. Drawing onresults obtained in the field of portfolio analysis, economist Jack L. Treynor has suggested a newpredictor of mutual fund performance, one that differs from virtually all those used previously byincorporating the volatility of a fund's return in a simple yet meaningful manner.

Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio performance(Jensens alpha) that estimates how much a managers forecasting ability contributes to funds returns.As indicated by Statman (2000), the e SDAR of a fund portfolio is the excess return of the portfolio overthe return of the benchmark index, where the portfolio is leveraged to have the benchmark indexsstandard deviation. NarayanRao,ET. al., evaluated performance of Indian mutual funds in a bearmarket through relative performance index, risk-return analysis, Treynors ratio, Sharpes ratio, Sharpesmeasure , Jensens measure, and Famas measure. The study used 269 open-ended schemes (out of totalschemes of 433) for computing relative performance index. Then after excluding funds whose returns areless than risk-free returns, 58 schemes are finally used for further analysis. The results of performancemeasures suggest that most of mutual fund schemes in the sample of 58 were able to satisfy investorsexpectations by giving excess returns over expected returns based on both premiums for systematic riskand total risk.

Bijan Roy, ET. al., conducted an empirical study on conditional performance of Indianmutual funds. This paper uses a technique called conditional performance evaluation on a sample ofeighty-nine Indian mutual fund schemes .This paper measures the performance of various mutual fundswith both unconditional and conditional form of CAPM, Treynor- Mazuy model and Henriksson-Mertonmodel. The effect of incorporating lagged information variables into the evaluation of mutual fundmanagers performance is examined in the Indian context. The results suggest that the use ofconditioning lagged information variables improves the performance of mutual fund schemes, causingalphas to shift towards right and reducing the number of negative timing coefficients.

Mishra, et al., (2002) measured mutual fund performance using lower partial moment. Inthis paper, measures of evaluating portfolio performance based on lower partial moment are developed.Risk from the lower partial moment is measured by taking into account only those states in which returnis below a pre-specified target rate like risk-free rate. Kshama Fernandes (2003) evaluated index fundimplementation in India. In this paper, tracking error of index funds in India is measured .Theconsistency and level of tracking errors obtained by some well-run index fund suggests that it is possibleto attain low levels of tracking error under Indian conditions. At the same time, there do seem to beperiods where certain index funds appear to depart from the discipline of indexation. K. Pendaraki et al.studied construction of mutual fund portfolios, developed a multi-criteria methodology and applied it tothe Greek market of equity mutual funds. The methodology is based on the combination of discrete andcontinuous multi-criteria decision aid methods for mutual fund selection and composition. UTADISmulti-criteria decision aid method is employed in order to develop mutual funds performance models.Goal programming model is employed to determine proportion of selected mutual funds in the finalportfolios.Zakri Y.Bello (2005) matched a sample of socially responsible stock mutual funds matchedto randomly select conventional funds of similar net assets to investigate differences in characteristicsof assets held, degree of portfolio diversification and variable effects of diversification on investmentperformance. The study found that socially responsible funds do not differ significantly fromconventional funds in terms of any of these attributes. Moreover, the effect of diversification oninvestment performance is not different between the two groups. Both groups underperformed theDomini 400 Social Index and S & P 500 during the study period.

Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio performance (Jensens alpha) that estimates how much a managers forecasting ability contributes to funds returns. As indicated by Statman (2000), the e SDAR of a fund portfolio is the excess return of the portfolio over the return of the benchmark index, where the portfolio is leveraged to have the benchmark indexs standard deviation. S.Narayan Rao,ET. al., evaluated performance of Indian mutual funds in a bear market through relative performance index, risk-return analysis, Treynors ratio, Sharpes ratio, Sharpes measure , Jensens measure, and Famas measure. The study used 269 open-ended schemes (out of total schemes of 433) for computing relative performance index. Then after excluding funds whose returns are less than risk-free returns, 58 schemes are finally used for further analysis. The results of performance measures suggest that most of mutual fund schemes in the sample of 58 were able to satisfy investors expectations by giving excess returns over expected returns based on both premiums for systematic risk and total risk.

DEFNITION OF MUTUAL FUNDS

DEFNITION:

A mutual fund, also referred to as an open-end fund, is an investment company that spreads its money across a diversified portfolio of securities -- including stocks, bonds, or money market instruments.

Shareholders who invest in a fund each own a representative portion of those investments, less any expenses charged by the fund.

Mutual fund investors make money either by receiving dividends and interest from their investments, or by the rise in value of the securities. Dividends, interest and profits from the sale of any securities (capital gains) are passed on to the shareholders in the form of distributions. And shareholders generally are allowed to sell (redeem) their shares at any time for the closing market price of the fund on that day.

DEFNITION:

Mutual funds have been around for a long time, dating back to the early 19th century. The first modern American mutual fund opened in 1924, yet it was only in the 1990s that mutual funds became mainstream investments, as the number of households owning them nearly tripled during that decade. With recent surveys showing that over 88% of all investors participate in mutual funds, you're probably already familiar with these investments, or perhaps even own some. In any case, it's important that you know exactly how these investments work and how you can use them to your advantage.

A mutual fund is a special type of company that pools together money from many investors and invests it on behalf of the group, in accordance with a stated set of objectives. Mutual funds raise the money by selling shares of the fund to the public, much like any other company can sell stock in itself to the public. Funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments. In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. For most mutual funds, shareholders are free to sell their shares at any time, although the price of a share in a mutual fund will fluctuate daily, depending upon the performance of the securities held by the fund.

DEFNITION:

A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund wil have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund.

.

DEFNITION:

An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments. In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. For most mutual funds, shareholders are free to sell their shares at any time, although the price of a share in a mutual fund will fluctuate daily, depending upon the performance of the securities held by the fund. Benefits of mutual funds include diversification and professional money management. Mutual funds offer choice, liquidity, and convenience, but charge fees and often require a minimum investment. A closed-end fund is often incorrectly referred to as a mutual fund, but is actually an investment trust. There are many types of mutual funds, including aggressive growth fund, asset allocation fund, balanced fund, blend fund, bond fund, capital appreciation fund, clone fund, closed fund, crossover fund, equity fund, fund of funds, global fund, growth fund, growth and income fund, hedge fund, income fund, index fund, international fund, money market fund, municipal bond fund, prime rate fund, regional fund, sector fund, specialty fund, stock fund, and tax-free bond fund.

DEFNITION:

A security that gives small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Shares are issued and can be redeemed as needed

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 Asset of the scheme / Number of Units OutstandingWhere Net Assets are calculated as:-(Market value of investment + 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. NAV-: Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date.

How is NAV calculated? The value of all the securities in the portfolio in calculated daily. From this, all expenses are deducted and the resultant value divided by the number of units in the fund is the funds NAV.

Expense Ratio AMCs charge an annual fee, or expense ratio that covers administrative expenses, salaries, advertising expenses, brokerage fee, etc. A 1.5% expense ratio means the AMC charges Rs1.50 for every Rs100 in assets under management.

A fund's expense ratio is typically to the size of the funds under management and not to the returns earned. Normally, the costs of running a fund grow slower than the growth in the fund size - so, the more assets in the fund, the lower should be its expense.

Entry load and an exit load

Some Asset Management Companies (AMCs) have sales charges, or loads, on their funds (entry load and/or exit load) to compensate for distribution costs. Funds that can be purchased without a sales charge are called no-load funds. Entry load is charged at the time an investor purchases the units of a scheme. The entry load percentage is added to the prevailing NAV at the time of allotment of units. Exit load is charged at the time of redeeming (or transferring an investment between schemes). The exit load percentage is deducted from the NAV at the time of redemption (or transfer between schemes). This amount goes to the Asset Management Company and not into the pool of funds of the scheme.How does "entry load" affect the investment returns? A 2.25% entry load sounds small. But it still bites a chunk off the returns over a long period of time. For instance, Rs 1 lakh invested directly in the no-load option of an equity fund that grows at a rate of 15% over a period of 20 years yields around Rs 16.36 lakh against Rs 15.99 lakh that a load fund would returna difference of Rs 36,820. This is because even a small sum of 2.25% gets compounded over the years. The pinch remains the same even in a systematic investment plan (SIP). As SIPs entail investments on a regular basis, say every month, you end up paying entry loads on all your investment installments. Assume you had invested Rs 5,000 in Reliance Vision Fund (RVF) on January 1, 2003 through a monthly SIP. If you had withdrawn your entire investment after five years, on December 31, 2007, you would have got back Rs 11.52 lakh in the no-load option and Rs 11.25 lakh in a load option, a difference of a cool Rs 25,914.

Are investments in mutual fund units risk-free or safe? This depends on the underlying instrument that a mutual fund invests in, based on its investment objectives. Mutual funds that invest in stock market-related instruments cannot be termed risk-free or safe as investment in shares are inherently risky by nature, whereas funds that invest in fixed-income instruments are relatively safe and those that invest only in government securities are the safest. Why Mutual Funds are an investment option?Firstly, we are not all investment professionals. We go to a doctor when we need medical advice or a lawyer for legal guidance, similarly mutual funds are investment vehicles managed by professional fund managers. And unless you rate highly on the Investment IQ Quiz, we recommend you use this option for investing. Mutual funds are like professional money managers, however a key factor in their favor is that they are more regulated and hence offer investors the ability to analyze and evaluate their track record. Secondly, investing is becoming more complex. There was a time when things were quite simple - the market went up with the arrival of the first monsoon showers and every year around Diwali. Since India started integrating with the world (with the start of the liberalization process), complex factors such as an increase in short-term US interest rates, the collapse of the Brazilian currency or default on its debt by the Russian government, have started having an impact on the Indian stock market. Although it is possible for an individual investor to understand Indian companies (and investing) in such an environment, the process can become fairly time consuming. Mutual funds (whose fund managers are paid to understand these issues and whose asset management company invests in research) provide an option of investing without getting lost in the complexities. Lastly, and most importantly, mutual funds provide risk diversification: Diversification of a portfolio is amongst the primary tenets of portfolio structuring (see The Need to Diversify). And a necessary one to reduce the level of risk assumed by the portfolio holder. Most of us are not necessarily well qualified to apply the theories of portfolio structuring to our holdings and hence would be better off leaving that to a professional. Mutual funds represent one such option.How to select a mutual fund scheme? What's strategy got to do with selecting a mutual fund? Shouldn't you just go and invest in the best performing fund? The answer is no. Mutual fund investing requires as much strategic input as any other investment option. But the advantage is that the strategy here is a natural extension of your asset allocation plan (use our Asset Allocator to understand what your optimum asset allocation plan should be, based on your personal risk profile). The following processes are important to select a mutual fund scheme. Identify funds whose investment objectives match your asset allocation needs Just as you would buy a computer that fits your needs and budget, you should choose a mutual fund that meets your risk tolerance (need) and your risk capacity (budget) levels (i.e. has similar investment objectives as your own). Typical investment objectives of mutual funds include fixed income or equity, general equity or sector-focused, high risk or low risk, blue-chips or turnarounds, long-term or short-term liquidity focus. The investment objectives match yours are Evaluate past performance, look for consistency. Although past performance is no guarantee of future performance, it is a useful way of assessing how well or badly a fund has performed in comparison to its stated objectives and peer group. A good way to do this would be to identify the five best performing funds (within your selected investment objectives) over various periods, say 3 months, 6 months, one year, two years and three years. Shortlist funds that appear in the top 5 in each of these time horizons as they would have thus demonstrated their ability to be not only good but also, consistent performers. .Are investments in mutual fund units risk-free or safe?

This depends on the instrument mutual fund invests in, based on its investment objectives. Mutual funds that invest in stock market-related instruments cannot be termed risk-free or safe as investment in shares are inherently risky by nature, whereas funds that invest in fixed-income instruments are relatively safe and those that invest only in government securities are the safest.

Role of a Fund Manager: Fund managers are responsible for implementing a consistent investment strategy that reflects the goals and objectives of the fund. Normally, fund managers monitor market and economic trends and analyze securities in order to make informed investment decisions.How are mutual funds regulated? All Asset Management Companies (AMCs) are regulated by SEBI and or the RBI (in case the AMC is promoted by a bank). In addition, every mutual fund has a board of directors that represents the unit holders interests in the mutual fund.

CHAPTER: -III

COMPANY PROFILE-IDFC have been an integral part of the country's development story since 1997, when our company was formed with the specific mandate to build the nation.Since 2005,we have built on our vision to be the 'one firm' that looks after the diverse needs of infrastructure development. Whether it is financial intermediation for infrastructure projects and services, adding value through innovative products to the infrastructure value chain or asset maintenance of existing infrastructure projects, we focus on supporting companies to get the best return on investments.Our growth has been driven by the substantial investment requirements of the infrastructure sector in India combined with the growth in the Indian economy over the last several years. Our ability to tap global as well as Indian financial resources makes us the acknowledged experts ininfrastructure finance. This, coupled with a strong synergy between the company management and key shareholders, and a dedicated team of over 550 people makes us an organization that is committed to improving the face of India's infrastructure sector.At IDFC, our commitment to building India's infrastructure goes beyond business. We work closely with government entities and regulators to advise and assist them in formulating policy and regulatory frameworks that support private investment and public-private partnerships ininfrastructure development.

MissionTo be the leading knowledge-driven financialservices company, creating enduring value, promotinginfrastructureand nation building

Values

IntegrityWe engage in honest and straight forward communication with all stakeholders and adhere to the highest ethical standards in everything we do. Our reputation is paramount. We will act in the best interests of our clients but without compromising our values and principles.

Nurturing HumilityWe are modest enough to know that we can be wrong and smart enough to learn from our mistakes. We treat everyone as an equal no task is beneath us.

StewardshipWe act as custodians of ourfirmand accept the charge of passing on a better business than the one we inherited. Our actions will be guided by rules and ethical principles creating long term value with due care for society and environment.

PartnershipWe emphasize a ONE FIRM culture. We foster mutual respect and proactively collaborate with each other, with clients, and with partners keeping just one thing in mind to be the best at what we do.

InitiativeWe encourage new ideas and independent action within a culture that fosters sharing knowledge and information, critical debate and constructive dissent.

ResponsibilityWe take complete ownership for our actions, emphasizing a results-oriented and problem-solving approach to business. We are personally accountable to the communities that we serve.

ExcellenceWe constantly strive to raise industry standards, be theemployer of choice, and work to be the best rather than the biggest. Dedication to excellence results in superior execution and generates creative, imaginative and innovative outcomes.

Board Committees

Audit Committee:Mr. S. H. KhanChairmanDr. Omkar GoswamiMr. Gautam KajiMs. Marianne klandMs. Snehlata Shrivastava

Nomination & Remuneration Committee:Dr. Omkar GoswamiChairmanDr. Rajiv B. LallMr. Gautam KajiMr. Donald Peck

Stakeholders' Relationship Committee:Mr. S. H. KhanChairmanDr. Rajiv B. LallMr. Vikram Limaye

Corporate Social Responsibility Committee:Dr. Rajiv B. LallChairmanDr. Omkar GoswamiMr. Vikram Limaye

Executive Committee:Dr. Rajiv B. LallChairmanMr. S. S. KohliMr. S. H. KhanDr. Omkar GoswamiMr. Donald PeckMr. Vikram Limaye

Risk Committee:Mr. Gautam KajiChairmanMr. S. H. KhanDr. Rajiv B. LallMs. Marianne klandMr. Vikram Limaye

History & Timelines

Our Group was born out of the need for a specialized financial intermediary for infrastructure. Incorporated on January 30, 1997 in Chennai, our company was set up on the recommendations of the 'Expert Group on Commercialisation of Infrastructure Projects' under the Chairmanship of Dr. Rakesh Mohan.Since then, we have been a leading catalyst for providing private sectorinfrastructure development in India. We focus on developing and leveraging our knowledge base in the infrastructure space to devise and provide appropriate financing solutions to our customers. Our strong capitalization reflects the crucial role that we play in infrastructure development.

1997

IDFC is founded on the recommendations of the 'Expert Group on Commercialization of Infrastructure Projects' under the Chairmanship of Dr. Rakesh Mohan. The group is conceptualized to channel private capital into commercially viable projects.

1999

Is notified as a Public Financial Institution under Section 4A of the Companies Act.

2000

Gets registered with SEBI as a merchant banker.

2001

Gets registered with SEBI as a debenture trustee. Sets up Infrastructure Development Corporation (Karnataka) Limited (iDeCK)

2002

Sets up IDFC Private Equity as an investment manager for private equity funds. Sets up Uttaranchal Infrastructure Development Company Limited (UDEC).

2003

Successfully raises $200 million for the India Development Fund, the first infrastructure-focused private equity fund.

2005

Becomes a public company after listing its shares on NSE and BSE.

2006

Successfully raises $450 million for its second infrastructure - focused private equity fund.

2007

Raises Rs. 2,100 crore through QIP. Sets up IDFC Project Equity Company Limited as a specialized project finance entity focused on developing Indian infrastructure projects. Establishes IDFC Projects to develop, implement, own and operate projects in the infrastructure space.

2008

Successfully raises $930 million through the India Infrastructure Fund to invest equity capital in infrastructure projects and $700 million in its third private equity fund. Enters into asset management by acquiring the AMC business of Standard Chartered Bank in India. Incorporates IDFC Capital (Singapore) Pte Limited, for an emerging markets private equity fund-of-funds business.

2009

The company's loan book crosses Rs. 20,000 crore with more than 200 infrastructure projects funded. Establishes IDFC Foundation to focus on capacity building, policy advisory and sustainability initiatives. Becomes part of Nifty 50.

2010

Raises additional capital of Rs. 26,542 million through a Qualified Institution Placement at Rs.168.25 per share and CCPS at a conversion price of Rs.176 per share. Government shareholding reduces to 18%. Classified as an Infrastructure Finance Company (IFC). Raises Rs. 480 crores in the first tranche of its Long Term Infrastructure Bonds.

2011

Certified as India's first "Green Data Centre". IDFC opens an office in US. Sets up IDFC Foundation as a Section 25 Company for all its developmental work. IDFC & Natixis Global Asset Management enter into a strategic partnership. Raise USD 310 million of ECB's. Starts "Partners Program".

2012

IDFC Completes 15 years with over 1.5 million investors. Launches "In Our Hands" an youth engagement initiative, to socialize the policy advocacy work being done under the aegis of the India Infrastructure Report (IIR). Releases a handbook titled "EVOLVING PERSPECTIVES IN THE DEVELOPMENT OF INDIAN INFRASTRUCTURE", encompassing the policy work done in the last 15 years.

IDFC business Corporate InvestmentBanking Project Finance Financial Markets Group Securities Alternative AssetManagement Private Equity Infrastructure Real Estate Public MarketAsset Management Mutual Fund Foundation Government Advisory Services Policy Advocacy Capacity Building Initiatives Community Engagement

Structure of the organization Companys structure Structure of the company consists of following entities:-

Country head State head distribution channel Cluster heads of investments Individual brokers Back office operation Sales team

State head looks after all the operation in Karnataka region like Bellary, Mysore and other cities of Karnataka and coordinates with asset management companies i.e. AMCs and reports to country head, and cluster heads of investments are responsible for sales team and report to state head distribution channel and sales people who directly interact with investors for the investments report to cluster head investment. Sales team is supported by back office operations, like role of back office operation

SWOT analysis of the company and its competitor STRENGTH

BRANDNAME KNOWN TO BE ETHICAL PRESENCE IN ALL OVER INDIA EXPERIENCED PEOPLE IN THE COMPANY UNBIASNESS

WEAKNESS

BRANCHASE OF COMPANY IS LESS ONLY 27 IN INDIA. LACK OF MANPOWER NOT HAVING NECESSARY INFRASTRUCTURE

OPPORTUNITY

ZERO BASE LACK OF PROPER SERVICES AVAILABLE IN THE MARKET ABSENCE OF LEADER IN THE MARKET, IN DISTRIBUTION ( MUTUAL FUNDS) HUGE POTENTIAL OF MUTUAL FUND MARKET GROWTH OF MUTUAL FUND MARKET INCREASE IN INCOME LEVEL OF PEOPLE

THREATS

INDIVIDUAL BROKERS ITS COMPETITORS PROMOTIOAL ACTIVITIES ITS COMPETITORNEW BUSINESS PLANS ATTRITION LACK OF MANPOWER NOT HAVING NECESSARY INFRASTRUCTURE

Average Assets under Management

Assets under management (AUM) is a financial term denoting the market value of all the funds being managed by a financial institution (a mutual fund, hedge fund, private equity firm, venture capital firm, or brokerage house) on behalf of its clients, investors, partners, depositors, etc.The averageAssets under managementof all Mutual funds in India for the quarter Jul-13 to Sep-13 (in INR billion) is given below: Sr NoMutual Fund NameAverage AUM%

1HDFC Mutual Fund1,034.4212.70%

2Reliance Mutual Fund952.2811.69%

3ICICI Prudential Mutual Fund853.0310.48%

4Birla Sun Life Mutual Fund773.449.50%

5UTI Mutual Fund700.578.60%

6SBI Mutual Fund595.587.31%

7Franklin Templeton Mutual Fund448.125.50%

8IDFC Mutual Fund396.654.87%

9Kotak Mahindra Mutual Fund352.994.34%

10DSP BlackRock Mutual Fund304.863.74%

11Tata Mutual Fund179.662.21%

12Deutsche Mutual Fund170.592.10%

13L&T Mutual Fund150.791.85%

14Sundaram Mutual Fund139.471.71%

15JPMorgan Mutual Fund132.571.63%

16Religare Invesco Mutual Fund125.121.54%

17Axis Mutual Fund123.181.51%

18LIC NOMURA Mutual Fund79.760.98%

19Canara Robeco Mutual Fund76.160.94%

20HSBC Mutual Fund67.180.83%

21JM Financial Mutual Fund62.440.77%

22Baroda Pioneer Mutual Fund52.630.65%

23IDBI Mutual Fund47.710.59%

24PRINCIPAL Mutual Fund43.000.53%

25Goldman Sachs Mutual Fund41.490.51%

26BNP Paribas Mutual Fund35.380.43%

27Morgan Stanley Mutual Fund32.900.40%

28Peerless Mutual Fund28.350.35%

29Taurus Mutual Fund27.320.34%

30Pramerica Mutual Fund21.660.27%

31Union KBC Mutual Fund19.800.24%

32Indiabulls Mutual Fund16.060.20%

33ING Mutual Fund11.050.14%

34PineBridge Mutual Fund11.030.14%

35BOI AXA Mutual Fund10.820.13%

36Mirae Asset Mutual Fund5.080.06%

37Motilal Oswal Mutual Fund4.370.05%

38Quantum Mutual Fund3.150.04%

39PPFAS Mutual Fund2.670.03%

40Escorts Mutual Fund2.520.03%

41Sahara Mutual Fund2.330.03%

42IIFL Mutual Fund2.070.03%

43Edelweiss Mutual Fund1.940.02%

44Daiwa Mutual Fund0.510.01%

45IL&FS Mutual Fund (IDF)-0.00%

46Shriram Mutual Fund-0.00%

47SREI Mutual Fund (IDF)-0.00%

Grand Total8,142.68100.0%

A COMPARATIVE ANALYSIS OF MUTUAL FUND SCHEMESEquity Diversified Scheme

SchemeNAV1 year annualized3 year annualized5 year annualizedSince Inception

Birla Sun Life Frontline Equity Fund58.39-0.5326.65934.5336.58

DBS Chola Opportunities Fund-Cumulative34.9809.8325.733.1712.39

DSP Merrill Lynch Equity Fund-Growth10.9605.36N.AN.A8.56

DSP Merrill Lynch India T.I.G.E.R Fund Growth37.63-04.3329.13N.A38.34

DSP Merrill Lynch Top 100 Equity Growth Fund 69.3806.9230.92337.7144.36

DWS Alpha Equity Growth Fund62.7608.2329.0738.28339.77

DWS Investment Opportunity Fund31.2011.2330.27N.A29.07

Fidelity Equity Fund Growth23.15-04.4123.47N.A29.49

HDFC Growth Fund-Growth60.5308.6128.2434.6331.77

HSBC Equity Fund- Growth85.3408.9125.1941.8146.15

ICICI Prudential Dynamic Plan-Growth72.8101.9827.6731.7829.76

ICICI Prudential Infrastructure Fund-Growth25.1717.82N.AN.A34.26

IDFC Imperial Equity fund-Growth16.2706.82N.AN.A17.48

Kodak 30-Growth81.0905.7826.6739.2945.02

Kodak Opportunities-Growth35.7108.5726.6139.2841.39

Reliance growth fund-growth331.506.9726.7247.1731.91

Reliance Regular Saving Fund-Equity-Growth20.8618.4126.56N.A22.62

SBI Magnum Sector Umbrella-Contra Fund-Growth34.7309.1116.7422.7817.64

Sundaram BNP Paribas CAPEX opportunities Fund-Growth19.18-06.67N.AN.A20.18

Sundaram BNP Paribas Select Focus-Growth71.0113.4730.4036.9140.29

Tata Equity PE Fund-Growth31.9102,8722.71N.A32.81

Tata Infrastructure Fund-Growth29.5604.7832.06N.A36.26

Templeton India Growth Fund-Growth82.1910.5124.84N.A32.63

UTI Dividend Yield Fund-Growth19.6806.2821.49N.A22.68

UTI Contra Fund-(G)10.6402.1216.49N.A18.82

ELSS

Scheme NameNAV1 Year Annualized3 Year Annualized5 Year AnnualizedSince Inception

DWS Tax Saving Fund12.341.59N.AN.A8.52

Fidelity Tax Advantage Fund14.23-1.43N.AN.A14.48

Franklin India Taxshield-Growth112.208.3914.2327.3226.56

HDFC Long Term Tax Adv. Fund68.4905.2912.3818.4524.32

HSBC Tax Saver Equity Fund12.561.6216.86N.A17.86

Kodak Tax Saver Scheme14.43-10.1322.49N.A15.64

Principal Personal Tax Saver82.40-5.8524.5133.7426.49

Reliance Tax Saver-Growth17.643.0612.73N.A13.45

Sundaram BNP Paribas Tax Saver32.617.6322.5040.9429.56

Tata Tax Advantage Scheme19.413.5713.5717.8317.78

Balance

Scheme NameNAV1 Year Annualized3 Year Annualized5 Year AnnualizedSince Inception

Birla Sun Life Balanced Fund29.34-2.8214.4221.3913.21

DSP Merrill Lynch Balanced Fund-Growth46.827.1922.7222.7218.38

FT India Balanced Fund-Growth36.620.3618.5225.7818.62

HDFC Balanced Fund-Growth34.275.6114.7221.6217.82

Kodak Balance Fund20.532.7517.7828.4317.77

Tata Balanced Fund-Growth56.820.0818.7926.7819.72

UTI Childrens Career Balanced12.451.2409.5716.8415.22

MIPScheme NameNAV1 Year Annualized3 Year Annualized5 Year AnnualizedSince Inception

Baroda Pioneer MIP Fund14.965.6712.78N.A12.93

Birla Sun Life Savings MIP 2 Savings-Growth 14.5413.5422.37N.A18.59

DBS Chola MIP Regular-Growth15.555.5410.7414.4310.89

FT India Monthly Income Plan22.463.847.729.2209.73

HSBC MIP Savings-Growth1.43.568.78N.A10.99

LICMF MIP-Growth27.677.6510.6709.7809.49

Principal MIP-MIP Growth15.369.6711.64N.A08.96

Reliance MIP15.688.1110.7619.8916.56

Tata Monthly Income Fund (G)21.455.6113.4117.4117.72

Gilt FundScheme NameNAV1 Year Annualized3 Year Annualized5 Year AnnualizedSince Inception

Birla Sun Life Gilt Plus Regular Plan Growth31.4007.3310.6814.7812.93

DSP Blackrock G Sec Plan A Long Duration Growth31.9806.9111.2813.6512.06

DWS Gilt Fund - Regular Growth10.9908.1116.6726.4121.02

Fidelity Flexi Gilt Fund Growth11.8708.9815.9929.1026.09

ICICI Prudential Gilt Fund Investment Plan - Growth31.6505.8211.6718.5412.91

Mirae Asset Gilt Fund - Investment Plan - Provident Fund 10.369.6118.5124.6119.71

Reliance Gilt Securities Fund -Retail Growth11.9210.1719.7132.7629.62

Templeton India Govt. Securities Fund - Composite Plan Growth32.6608.4513.4118.3414.72

Debt (Income) FundScheme NameNAV1 Year Annualized3 Year Annualized5 Year AnnualizedSince Inception

Birla Sun Life Income Fund - Growth33.1106.4709.8910.7810.18

Birla Sun Life Income Plus - Growth41.4105.6809.1811.6811.28

Canara Robeco Income Scheme - Growth18.9909.7309.8710.7810.20

ICICI Prudential Income Fund Growth29.4206.4409.7408.9909.18

IDFC Dynamic Bond Fund - Plan A - Growth18.7107.6107.9909.9809.64

Kotak Bond Regular Plan Growth25.6408.6110.6111.4510.23

Reliance Income Fund - Retail - Growth Plan Growth30.8907.8109.7811.2810.93

CHRONICLE ORDER OF COMPANIES GIVING MOST RETURN.

FundCategory5 YrReturn

DSPML T.I.G.E.R. FundEquity: Diversified 45.45

Tata Infrastructure Equity: Diversified 44.92

Magnum Contra Equity: Diversified 44.81

Kodak Opportunities Equity: Diversified 44.57

UTI Infrastructure Equity: Diversified 43.14

Reliance Growth Equity: Diversified 42.88

Magnum Multiplier Plus Equity: Diversified 42.76

Sundaram BNP Paribas Select Midcap Equity: Diversified 40.64

HDFC Top 200 Equity: Diversified 39.29

BoB Growth Equity: Diversified 38.57

Principal Child Benefit Hybrid: Equity-oriented 36.79

Magnum Balanced Hybrid: Equity-oriented 31.24

HDFC Prudence Hybrid: Equity-oriented 29.68

Birla Sun Life Income Debt: Medium-term 8.29

ABN AMRO Flexi Debt Plan Debt: Medium-term 7.78

ICICI Prudential Long-term Debt: Medium-term 7.55

Birla Dynamic Bond Retail Debt: Medium-term 7.51

Kotak Flexi Debt Debt: Medium-term 7.47

Sundaram BNP Paribas S... Equity: Diversified 43.35

ICICI Prudential Dynamic Equity: Diversified 43.26

DWS Investment Opportunity Equity: Diversified 43.07

DSPML Equity Fund Equity: Diversified 42.89

DSPML Top 100 Equity Reg Equity: Diversified 41.96

Kotak 30 Equity: Diversified 41.33

IDFC Premier Equity fund Equity-oriented 29.67

RANKING OF THE COMPANYBy looking at this table we can rank various asset management companies on the basis of asset under management. They are as follows:1) Reliance mutual fund2) ICICI prudential mutual fund3) UTI mutual fund4) BIRLA sun life mutual fund5) SBI mutual fund By looking at this rank we can say that in India people prefer to invest in reliance scheme and they are having great faith on Reliance Company.

SCHEMES OF IDFC

Scheme: IDFC Advantage Fund

TypeOpen ended growth scheme

Investment70% in equity & 30% in Debt

pattern

Fund ObjectiveLong term growth of capital

InvestmentMin of one year

horizon

Scheme: IDFC Dividend Yield plus

TypeOpen ended Growth Scheme

Investment100% in equity

pattern

Fund objectiveCapital growth & income

InvestmentMin of one year

horizon

Scheme: IDFC Equity plan

TypeOpen ended equity linked savings schemes

Investment80% in equity & 20% in short term, money market &

liquid instruments

Fund objectiveLong term growth of capital along with income tax

relief for investment

InvestmentMinimum of 3years

horizon

Scheme: IDFC Index Fund

TypeOpen ended index Linked Scheme

Investment100% in Securities

pattern

Fund ObjectiveGenerate Returns

InvestmentMin of one Year

Horizon

Scheme: IDFC opportunities Fund

TypeOpen ended growth scheme

Investment70-100% in equity, 30% in cash & money market

patterninstruments

Fund objectiveLong term growth of capital

InvestmentMinimum of one year

horizon

Scheme: IDFC Mid Cap Fund

TypeOpen ended growth scheme

Investment65-100% in equity related companies with market

patterncapitalization of Rs.150 crores to Rs.1,500 crores

35% in equity related companies with a market

capitalization.

Fund ObjectiveLong term growth of capital

InvestmentMinimum of 1 year

horizon

Scheme: IDFC Balance Fund

TypeOpen ended balanced scheme

Investment50 to 75% in equity 25-50% in debt

pattern

Fund objectTo balance income requirements with long term growth

of capital

InvestmentMinimum of one year

horizon

Scheme: IDFC Asset Allocation Fund

TypeOpen ended fund of funds

InvestmentAggressive plan 70-80% in equity 20-25% indebt

patternModerate plan 40-60% in equity 40-60% indebt

Conservative plan 20-25% in equity 75-80% indebt

Fund objectiveIncome & capital Application with diversification in

equity & debt schemes in line with risk profile of

investor

InvestmentMinimum of one year

horizon

Scheme: IDFC Gilt Plus

TypeOpen ended governments securities schemes

Investment100% in securities permitted by RBI

pattern

Fund objectiveTo generate in income & capital appreciation through

investments in government securities.

InvestmentLeast 6 months to 1 year

horizon

Scheme: IDFC Dynamic Bond Fund

TypeOpen ended income scheme

Investment50-65% in Government securities, 25-35% in corporate

patternbonds, 0-25% in cash liquid instruments.

Fund objectiveTo generate optimal returns with high liquidity

InvestmentMinimum of one year

horizon

Scheme: IDFC Income Plus

TypeOpen ended income scheme

Investment100% in debt & money market

pattern

Fund objectiveTo generate consistent income

InvestmentMinimum of 1 year

horizon

CHAPTER-IV

TABLE -1:

AGE WISE CLASSIFICATION OF RESPONDENTS