Irfan Mutual Funds Project PDF

INTRODUCTION TO MUTUAL FUNDS
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 mutual funds.
Mutual fund is a mechanism for pooling the resources by issuing units to the
investors and investing funds in securities in accordance with objectives as disclosed in
offer document.
Investments in securities are spread across a wide cross-section of industries

and sectors and thus the risk is reduced. Diversification reduces the risk because all
stocks may not move in the same direction in the same proportion at the same time.
Mutual fund issues units to the investors in accordance with quantum of money
invested by them. Investors of mutual funds are known as unit holders.
The investors in proportion to their investments share the profits or losses. The
mutual funds normally come out with a number of schemes with different investment
objectives that are launched from time to time.
Different investment avenues are available to investors. Mutual funds also offer
good investment opportunities to the investors. Like all investments, they also carry
SJCET -1- MBA Dept

certain risks. The investors should compare the risks and expected yields after
adjustment of tax on various instruments while taking investment decisions
SJCET -2- MBA Dept

OBJECTIVES OF THE STUDY
To make a more informed investment decision while selecting a specific

scheme.
To give a brief idea about the History of Mutual Fund in India.
To make a detailed study about the funds available in Mutual Fund

Industry.
To discuss about the Market Trends of the Mutual Fund investment.
To discuss comparative study of HDFC & UTI schemes of

Mutual Fund.
To study the recent trends and future scenario of Mutual Fund performance in
the market.
SJCET -3- MBA Dept

NEED FOR THE STUDY
A mutual fund is a special type of financial service organization. It

acts as an investment intermediary. It channels savings of a large no of people to the
corporate securities in such a way that investors get steady return, capital appreciation
and a low risk. The need for the study is investors who got the specific return with a
low risk and also suggest which funds to choose invest his capital.
The study provides me an opportunity to helpful to my theoretical

knowledge and also practical experience for the investing the capital in to the mutual
funds with a low risk and get steady return. And also know the various practical aspects
in marketing and finance area
Hence the study of performance of mutual fund is helpful to

understanding the customer preference to words mutual funds. In India, first mutual
fund was started in 1964 when Unit Trust of India was established. Unit Trust of India
brought out a number of schemes beneficial to investors. It is the biggest mutual fund
in India. The government of India amended Banking Regulation Act in 1987 to enable
commercial banks to establish mutual funds in India. A number of mutual funds to mop
up savings of every section of society. The State Bank of India has launched a mutual
fund called SBI Mutual Fund in 1987. Indian Bank established a mutual fund called
Indian Bank Mutual Fund in 1990. the government of India allowed the private
sector corporate or companies to join the mutual fund in industry in 1992.HDFC AMC
for the mutual fund by SEBI on July 3rd 2000.
SJCET -4- MBA Dept

SCOPE OF THE STUDY
The scope of the calculations is growth funds are to know whether the schemes
are performing really well, than can be known by looking annulized returns earned by
the Study that is taken into consideration, in this respect five growth fund schemes
taken viz., HDFC Growth Fund, Reliance Growth Fund and Franklin Growth Fund.
The study covers the randomly selected three companies growth funds for the period
of 4 years i.e. (July 2006 to March 2010).
SJCET -5- MBA Dept

METHODOLOGY OF THE STUDY
Data collection method:

The collection of data refers to a planned gathering of information relevant to
the subject matter of the study from the units under investigation. The method of
collection of data depends mainly upon the nature, objectives and scope of the inquiry
on one hand and available of resources and time on the other hand. Data may be
classified into primary and secondary data, depending upon the nature and mode of
collection.
Primary data:-
Primary data is collected directly from the prospective customers, agents, and
staff of HDFC BANK employees. Primary data is collected through interaction with
various respondents.
Secondary data:-
Secondary data collected from the published magazines and websites to collect
the data. the secondary data is collected form the following sources.
Business magazines
Journals
Published Books
Websites
Company broachers and books
Research Instrument:-
Questionnaire has been used in this research to collect the necessary

information. Questionnaire is the most common instrument, in collecting the primary
data. The questionnaire consists of a set of questions presented to the respondents for
their valuable answers.
The questionnaire consist of questions, were used to obtain necessary

information from customers. In designing the questionnaire for the data collection,
SJCET -6- MBA Dept

effort was made to avoid unnecessary questions and to include all the necessary
questions.
Most of the questions in the questionnaire are closed-end questions i.e., they
pre- specify all possible answers and respondents make a choice among them. There
are only few questions which are opened questions, i.e. That allows the respondents to
answers in their own words. Care has been taken to make the wording of question as
simple, direct and unbiased as possible, so that, the customer can feel easy.
SJCET -7- MBA Dept

LIMITATIONS OF THE STUDY
This study is under taken as a part of M.B.A course curriculum during the
summer vocation. Short span of time 8 weeks is a limitation of the study.
The comparative study of performance is taken for selecting three schemes in

HDFC and three schemes in UTI.
This study covers mostly on customers and not covers the agents and corporate
agents of mutual fund. Because of time constraint.
The limitation of the study is entire schemes are not taken into consideration
only limited are taken each type of the mutual funds for the study.
SJCET -8- MBA Dept

INDUSTRY PROFILE
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank the. The history of
mutual funds in India can be broadly divided into four distinct phases.
First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of
Parliament. It was set up by the Reserve Bank of India and functioned under the
Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was
de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over
the regulatory and administrative control in place of RBI. The first scheme launched by
UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets
under management.
Second Phase 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up
by public sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual
Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of
India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund
in June 1989 while GIC had set up its mutual fund in December 1990.
At the end of 1993, the mutual fund industry had assets under management of
Rs.47,004 crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in
the Indian mutual fund industry, giving the Indian investors a wider choice of fund
families. Also, 1993 was the year in which the first Mutual Fund. Regulations came
into being, under which all mutual funds, except UTI were to be registered and
governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was
the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual
Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund
SJCET -9- MBA Dept

Regulations in 1996. The industry now functions under the SEBI (Mutual Fund)
Regulations 1996. The number of mutual fund houses went on increasing, with many
foreign mutual funds setting up funds in India and also the industry has witnessed
several mergers and acquisitions. As at the end of January 2003, there were 33 mutual
funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541
crores of assets under management was way ahead of other mutual funds.
Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India
Act 1963 UTI was bifurcated into two separate entities. One is the Specified
Undertaking of the Unit Trust of India with assets under management of Rs.29,835
crores as at the end of January 2003, representing broadly, the assets of US 64 scheme,
assured return and certain other schemes. The Specified Undertaking of Unit Trust of
India, functioning under an administrator and under the rules framed by Government of
India and does not come under the purview of the Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB,
BOB and LIC. It is registered with SEBI and functions under the Mutual Fund
Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more
than Rs.76,000 crores of assets under management and with the setting up of a UTI
Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent
mergers taking place among different private sector funds, the mutual fund industry.
Has entered its current phase of consolidation and growth. As at the end of September,
2004, there were 29 funds, which manage assets of Rs.153108 crores under 421
schemes.
SJCET - 10 - MBA Dept

COMPANY PROFILE
HDFC Bank Limited

The Housing Development Finance Corporation Limited (HDFC) was
amongst the first to receive an in principle approval from the Reserve Bank of India
(RBI) to set up a bank in the private sector, as part of the RBIs liberalization of the
Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the
name of HDFC Bank Limited, with its registered office in Mumbai, India. HDFC
Bank commenced operations as a Scheduled Commercial Bank in January 1995.
Promoter
HDFC is Indias premier housing finance company and enjoys an impeccable
track record in India as well as in international markets. Since its inception in 1977,
the Corporation has maintained a consistent and healthy growth in its operations to
remain the market leader in mortgages. Its outstanding loan portfolio covers well over
a million dwelling units. HDFC has developed significant expertise in retail mortgage
loans to different market segments and also has a large corporate client base for its
housing related credit facilities. With its experience in the financial markets, a strong
market reputation, large shareholder base and unique consumer franchise, HDFC was
ideally positioned to promote a bank in the Indian environment.
Business focus
HDFC Banks mission is to be a World-Class Indian Bank. The objective is to
build sound customer franchises across distinct businesses so as to be the preferred
provider of banking services for target retail and wholesale customer segments, and to
achieve healthy growth in profitability, consistent with the banks risk appetite. The
bank is committed to maintain the highest level of ethical standards, professional
integrity, and corporate governance and regulatory.Compliance. HDFC Banks
business philosophy is based on four core values - Operational Excellence, Customer
Focus, Product Leadership and People
Capital Structure
The authorised capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The
paid-up capital is Rs.309.9 crore (Rs.3.09 billion). The HDFC Group holds 22.2% of
the banks equity and about 19.5% of the equity is held by the ADS Depository (in
respect of the banks American Depository Shares (ADS) Issue). Roughly 31.7% of
the equity is held by Foreign Institutional Investors (FIIs) and the bank has about
190,000 shareholders. The shares are listed on the Stock Exchange, Mumbai and the
National Stock Exchange. The banks American Depository Shares are listed on the
New York Stock Exchange (NYSE) under the symbol HDB.
Times Bank Amalgamation

In a milestone transaction in the Indian banking industry, Times Bank Limited
(another new private sector bank promoted by Bennett, Coleman & Co. /Times
Group) was merged with HDFC Bank Ltd., effective February 26, 2000. As per the
scheme of amalgamation approved by the shareholders of both banks and the Reserve
Bank of India, shareholders of Times Bank received 1 share of HDFC Bank for every
5.75 shares of Times Bank. The acquisition added significant value to HDFC Bank in
terms of increased branch network, expanded geographic reach, enhanced customer
base, skilled manpower and the opportunity to cross-sell and leverage alternative
delivery channels.
Distribution Network
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable
network of over 495 branches spread over 218 cities across India. All branches are
linked on an online real-time basis. Customers in over 120 locations are also serviced
through Telephone Banking. The Banks expansion plans take into account the need
to have a presence in all major industrial and commercial centers where its corporate
customers are located as well as the need to build a strong retail customer base for
both deposits and loan products. Being a clearing/settlement bank to various leading
stock exchanges, the Bank has branches in the centers where the NSE/BSE has a
strong and active member base.
The Bank also has a network of about over 1054-networked ATMs across these cities.
Moreover, HDFC Banks ATM network can be accessed by all domestic and
international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American
Express Credit/Charge cardholders.
Management

Mr. Jagadish kapoor took over as the bank's Chairman in July 2001. Prior to
this,
Mr. kapoor was a Deputy Governor of the Reserve Bank of India.
The Managing Director, Mr. Aditya Puri, has been a professional banker for
over 25 years and before joining HDFC Bank in 1994 was heading Citibank's
operations in Malaysia.
The Bank's Board of Directors is composed of eminent individuals with a wealth of
experience in public policy, administration, industry and commercial banking. Senior
executives representing HDFC are also on the Board.
Senior banking professionals with substantial experience in India and abroad head
various businesses and functions and report to the Managing Director. Given the
professional expertise of the management team and the overall focus on recruiting and
retaining the best talent in the industry, the bank believes that its people are a
significant competitive strength.
Technology
HDFC Bank operates in a highly automated environment in terms of
information technology and communication systems. All the banks branches have
online connectivity, which enables the bank to offer speedy funds transfer facilities to
its customers. Multi-branch access is also provided to retail customers through the
branch network and Automated Teller Machines (ATMs).
The Bank has made substantial efforts and investments in acquiring the best
technology available internationally, to build the infrastructure for a world class bank.
In terms of software, the Corporate Banking business is supported by Flexcube, while
the Retail Banking business by Finware, both from i-flex Solutions Ltd. The systems
are open, scaleable and web-enabled.
The Bank has prioritized its engagement in technology and the Internet as one of its
key goals and has already made significant progress in web-enabling its core
businesses. In each of its businesses, the Bank has succeeded in leveraging its market
position, expertise and technology to create a competitive advantage and build market
share.

Business Profile
HDFC Bank caters to a wide range of banking services covering commercial
and investment banking on the wholesale side and transactional / branch banking on
the retail side. The bank has three key business segments:
a) Wholesale Banking Services
The Banks target market is primarily large, blue chip manufacturing

companies in the Indian corporate sector and to a lesser extent, small & mid-sized
corporate and agri-based businesses. For these customers, the Bank provides a wide
range of commercial and transactional banking services, including working capital
finance, trade services, transactional services, cash management, etc. The bank is also
a leading provider of structured solutions, which combine cash management services
with vendor and distributor finance for facilitating superior supply chain management
for its corporate customers. Based on its superior product delivery / service levels and
strong customer orientation, the Bank has made significant inroads into the banking
consortia of a number of leading Indian corporate including multinationals,
companies from the domestic business houses and prime public sector companies. It
is recognized as a leading provider of cash management and transactional banking
solutions to corporate customers, mutual funds, stock exchange members and banks.
b) Retail Banking Services
The objective of the Retail Bank is to provide its target market customers a
full range of financial products and banking services, giving the customer a one-stop
window for all his/her banking requirements. The products are backed by world-class
service and delivered to the customers through the growing branch network, as well as
through alternative delivery channels like ATMs, Phone Banking, Net Banking and
Mobile Banking.
The HDFC Bank Preferred program for high net worth individuals, the HDFC
Bank Plus and the Investment Advisory Services programs have been designed
keeping in mind needs of customers who seek distinct financial solutions, information
and advice on various investment avenues. The Bank also has a wide array of retail
loan products including Auto Loans, Loans against marketable securities, Personal
Loans and Loans for Two-wheelers.

HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (VISA Electron) and issues the MasterCard Maestro debit card
as well. The Bank launched its credit card business in late 2001. By March 2005, the
bank had a total card base (debit and credit cards) of 4.2 million cards. The Bank is
also one of the leading players in the merchant acquiring business with over 42,000
Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant
establishments. The Bank is well positioned as a leader in various net based B2C
opportunities including a wide range of internet banking services for Fixed Deposits,
Loans, Bill Payments, etc.
c) Treasury
Within this business, the bank has three main product areas - Foreign
Exchange and Derivatives, Local Currency Money Market & Debt Securities, and
Equities. With the liberalization of the financial markets in India, corporate need more
sophisticated risk management information, advice and product structures. These and
fine pricing on various treasury products are provided through the banks Treasury
team. To comply with statutory reserve requirements, the bank is required to hold
25% of its deposits in government securities. The Treasury business is responsible for
managing the returns and market risk on this investment portfolio.
RATINGS/AWARDS
a) Credit Rating
HDFC Bank has its deposit programmes rated by two rating agencies - Credit
Analysis & Research Limited. (CARE) and Fitch Ratings India Private Limited. The
Banks Fixed Deposit programmed has been rated CARE AAA (FD) [Triple A] by
CARE, which represents instruments considered to be of the best quality, carrying
negligible investment risk. CARE has also rated the Banks Certificate of Deposit
(CD) programmed PR 1+ which represents superior capacity for repayment of
short term promissory obligations. Fitch Ratings India Pvt. Ltd. (100% subsidiary of
Fitch Inc.) has assigned the tAAA (ind) rating to the Banks deposit programmed,
with the outlook on the rating as stable. This rating indicates highest credit
quality where protection factors are very high. HDFC Bank also has its long term
unsecured, subordinated (Tier II) Bonds of Rs.4 billion rated by CARE and Fitch
Ratings India Private Limited. CARE has assigned the rating of CARE AAA for the

Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating AAA(ind)
with the outlook on the rating as stable. In each of the cases referred to above, the
ratings awarded were the highest assigned by the rating agency for those instruments?
b) Corporate Governance Rating

The bank was one of the first four companies, which subjected itself to a
Corporate Governance and Value Creation (GVC) rating by the rating agency, The
Credit Rating Information Services of India Limited (CRISIL). The rating provides an
independent assessment of an entitys current performance and an expectation on its
balanced value creation and corporate governance practices in future. The bank has
been assigned a CRISIL GVC Level 1 rating which indicates that the banks
capability with respect to wealth creation for all its stakeholders while adopting sound
corporate governance practices is the highest.
c) Awards and Accolades
Over the years, HDFC Bank has received recognition and awards from various
leading organizations and publications, both domestic and international.
Awards and achievements-Bank services
In June 2005, HDFC Bank won Asia money magazines Best Domestic
Commercial Bank Award 2005 for India.
The Bank was awarded The Asian Bankers, Excellence in Retail Banking
Risk Management Award for 2004, and pan-Asia recognition of the banks
risk management abilities.
The Asset (Triple a Country Awards) rated HDFC Bank as the Best Domestic
Bank in India 2004 and Best Domestic Bank in India 2003.
Forbes Global again named the Bank in its listing of Best under a Billion, 100
Best Smaller Size Enterprises in Asia/Pacific and Europe, in its November
2004 issue.

The Bank was rated as the Best Overall Local/Domestic Bank India in the
Corporate Cash Management Poll conducted by the Hong Kong based Asia
money magazine.
The said magazine also awarded the Bank with the titles of Overall Most
Improved Company for Best Management Practices in India in the Best
Managed Companies poll 2004, Best Local Cash Management Bank, Best
Overall Domestic Trade Finance Services Award, and also awarded the
Managing Director, Mr. Aditya Puri as the Best Chief Executive Officer in
India. In May 2004, the Bank also won the Operational Excellence in Retail
Financial Services India award as part of the Asian Banker Excellence in
Retail Financial Services Program 2003.
HDFC Bank was selected by Finance Asia as the Best Local Bank India
2003, Best Local Bank in India 2002, Best Domestic Commercial Bank
India 2001, Best Domestic Commercial Bank India 2000 and Best
Domestic Commercial Bank India 1999.
Euro money rated HDFC Bank as Best Bank in India 2002, Best Bank
India 2001, Best Domestic Bank India 2000 and Best Bank India 1999.
For its use of information technology the bank has been recognized as a
Computer world Honors Laureate and awarded the 21st Century
Achievement Award in 2002 for Finance, Insurance & Real Estate category by
Computer world, Inc., USA.
Closer home, HDFC Bank was selected as the Best Bank in India for the
second consecutive year in 2004 by Business Today.
The Bank was selected by Business World as "one of India's Most Respected
Companies" as part of The Business World Most Respected Company Awards
2004.

THEORETICAL FRAME WORK
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:
Investor
Invest/pool profit/loss from

Their Money
portfolio invest
Mutual Fund Company

(Pool of Money)
Invest in a no. of Profit/Loss from

Stocks/Bonds Individual investment
Market (Fluctuates)

ORGANISATION OF A MUTUAL FUND
There are man entities involved and the diagram below illustrates the organizational set
up of a mutual fund:
HDFC Mutual Fund Products

Schemes:
Equity Funds
HDFC Growth Fund

HDFC Long Term Advantage Fund
HDFC Index Fund

HDFC Equity Fund
HDFC Capital Builder Fund
HDFC Tax Saver
HDFC Top 200 Fund
HDFC Core & Satellite Fund
HDFC Premier Multi-Cap Fund
Balanced Funds
HDFC Children's Gift Fund Investment Plan

HDFC Children's Gift Fund Savings Plan
HDFC Balanced Fund
HDFC Prudence Fund
Debt Funds
HDFC Income Fund

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

HDFCMF Monthly Income Plan - Short Term Plan
HDFCMF Monthly Income Plan - Long Term Plan
HDFC Cash Management Fund - Savings Plus Plan
HDFC Multiple Yield Fund
HDFC Multiple Yield Fund Plan 2005
Value Added Services
SIP (Systematic Investment Plan)

STP (Systematic Transfer Plan)
SWAP (Systematic Withdrawal Advantage Plan)
Awards:
HDFC Mutual Fund awarded Fund House of The Year in three years
category & Best Performing Open-Ended Balance Fund at the Annual CNBC TV 18
- BNP Paribas Awards 2004.
Sponsors:-
Housing development Finance Corporation (HDFC):

HDFC was incorporated in 1977 as the first specialized housing finance
institution in India. HDFC provides financial assistance to individuals, corporate and
developers for the purchase or construction of residential housing. It also provides
property related services (e.g. property identification, sales services and valuation),
training and consultancy. Of these activities, housing finance remains the dominant
activity. HDFC currently has a client base of over 5, 00,000 borrowers, 13, 00,000
depositors, 1, 00,000 shareholders and 52,000 deposit agents. HDFC raises funds from
international agencies such as the World Bank, IFC (Washington), USAID, CDC, ADB
and KfW, domestic term loans from banks and insurance companies, bonds and
deposits. HDFC has received the highest rating for its bonds and deposits program for
the eighth year in succession. HDFC Standard Life Insurance Company Limited,
promoted by HDFC was the first life insurance company in the private sector to be
granted a Certificate of Registration (on October 23, 2000) by the Insurance Regulatory
and Development Authority to transact life insurance business in India.

Standard Life Investments Limited
The Standard Life Assurance Company was established in 1825 and has
considerable experience in global financial markets. In 1998, Standard Life
Investments Limited became the dedicated investment management company of the
Standard Life Group and is owned 100% by The Standard Life Assurance Company.
With global assets under management of approximately US$126 billion as at May 15,
2003, Standard Life Investments Limited is one of the world's major investment
companies and is responsible for investing money on
Behalf of five million retail and institutional clients worldwide. With its headquarters in
Edinburgh, Standard Life Investments Limited has an extensive and developing global
presence with operations in the United Kingdom, Ireland, Canada, USA and Hong
Kong. In order to meet the different needs and risk profiles of its clients, Standard Life
Investments Limited manages a diverse portfolio covering all of the major markets
world-wide, which includes a range of private and public equities, government and
company bonds, property investments and various derivative instruments. The
company's current holdings in UK equities account for approximately 2% of the market
capitalization of the London Stock Exchange. The Standard Life Assurance Company
was present in the Indian life insurance market from 1847 to 1938 when agencies were
set up in Kolkata and Mumbai. The Standard Life Assurance Company was therefore
keen to re-enter the Indian market and in 1995, signed an agreement with HDFC to
launch an insurance joint venture. HDFC and Standard Life Investments Limited are
neither responsible nor liable for any loss resulting from the operation of the Scheme(s)
beyond their contribution of an amount of Rs. 1 lakh each made by them towards the
corpus of the Mutual Fund.
Management:
HDFC Trustee Company Limited:
It is a company incorporated under the Companies Act, 1956 is the Trustee to
the Mutual Fund vide the Trust deed dated June 8, 2000, as amended from time to time.
HDFC Trustee Company Limited is a wholly owned subsidiary of HDFC Limited.
HDFC Asset Management Company Limited (AMC):

HDFC AMC was incorporated under the Companies Act, 1956, on December
10, 1999, and was approved to act as an Asset Management Company for the Mutual

Fund by SEBI on July 3, 2000. The registered office of the AMC is situated at Ramon
House,
3rd Floor, H.T. Parekh Marg, 169, Back bay Reclamation, Church gate, Mumbai
400 020. In terms of the Investment Management Agreement, the Trustee has
appointed HDFC Asset Management Company Limited to manage the Mutual Fund.
The paid up capital of the AMC is Rs. 75.161 crore.
The present share holding pattern of the AMC is as follows:
% of the paid up share
Particulars
capital
HDFC 50.10
Standard Life Investments
49.90
Limited
Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following
a review of its overall strategy, had decided to divest its Asset Management business in
India. The AMC had entered into an agreement with ZIC to acquire the said business,
subject to necessary regulatory approvals. On obtaining the regulatory approvals, the
Schemes of Zurich India Mutual Fund has now migrated to HDFC Mutual Fund on
June 19, 2003. The AMC is managing 18 open-ended schemes of the Mutual Fund viz.
HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF), HDFC Income Fund (HIF),
HDFC Liquid Fund (HLF), HDFC Tax Plan 2000 (HTP), HDFC Children's Gift Fund
(HDFC CGF), HDFC Gilt Fund (HGILT), HDFC Short Term Plan (HSTP), HDFC
Index Fund, HDFC Floating Rate Income Fund (HFRIF), HDFC Equity Fund (HEF),
HDFC Top 200 Fund, (HT200), HDFC Capital Builder Fund (HCBF), HDFC Tax
Saver (HTS), HDFC Prudence Fund (HPF), HDFC High Interest Fund (HHIF), HDFC
Sovereign Gilt Fund (HSGF) and HDFC Cash Management Fund (HCMF). The AMC
is also managing the respective Plans of HDFC Fixed Investment Plan, a closed ended
Income Scheme. The AMC has obtained registration from
SEBI vide Registration No. - PM / INP000000506 dated December 22, 2000 to act as a
Portfolio Manager under the SEBI (Portfolio Managers) Regulations, 1993. The
Certificate of Registration is valid from January 1, 2001 to December 31, 2003. The
AMC is also providing portfolio management / advisory services and such activities are
not in conflict with the activities of the Mutual Fund.

The structure consists of Sponsor
Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net
worth of the Investment Managed and meet the eligibility criteria prescribed under the
Securities and Exchange Board of India (Mutual 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.
Trust
The Mutual Fund is constituted as a trust in accordance with the provisions of
the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the
Indian Registration Act, 1908.
Trustee:-
Trustee is usually a company (corporate body) or a Board of Trustees (body of
individuals). The main responsibility of the Trustee is to safeguard the interest of the
unit holders and 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 Trustee as the Investment Manager of the Mutual Fund appoints the AMC.
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 Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and
Transfer Agent to the Mutual Fund. The Registrar processes the application form,
redemption requests and dispatches account statements to the unit holders. The

Registrar and Transfer agent also handles communications with investors and updates
investor records.
Investment Objective:
Schemes can be classified by way of their stated investment objective such as
Growth Fund, Balanced Fund, and Income Fund etc
TYPES OF MUTUAL FUND SCHEMES
Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial
position, risk tolerance and return expectation etc. Functional classification of mutual
funds is based on the basic characteristics of mutual fund schemes opened for the
public for subscription. On this account mutual funds are classified into two broad
types:
(i) Open ended mutual funds and
(ii) Closed ended mutual funds.
OPEN ENDED MUTUAL FUNDS:

An open-ended fund (scheme) is characterized by:
Unlimited Capitalization.
No predetermined date of redemption.
Sale & purchase of units at current Net Asset Value( NAV )
No restriction on Entry and Exit.
Purchase of units directly from the funds.
Sale of units directly to the funds.
The open-ended mutual fund companies place their funds in the Secondary
Securities Market. They dont participate in New Issue market. They influence market
price of corporate securities.
CLOSED ENDED MUTUAL FUNDS:

A closed-ended fund (scheme) is characterized by:
Constant Capitalization.
Predetermined date of redemption.
Predetermined date of closing subscription.
Frequent lock in period.
Purchase and sale of units at the traded prices at the Stock Exchange.
TYPES OF MUTUAL FUND SCHEMES

BY STRUCTURE
. Open-Ended Schemes
. Close-Ended Schemes
. Interval Schemes
BY INVESTMENT OBJECTIVE
. Growth Schemes
. Income Schemes
. Balanced Schemes

OTHER SCHEMES
TAX SAVING SCHEMES
SPECIAL SCHEMES
INDEX SCHEMES
SECTOR SPECIFIC SCHEMES
INTERVAL SCHEMES:
These schemes are a combination of the features of open-ended and closed-
ended scheme. Which will be traded on the Stock Exchange at a time or will be open
for sale or redemption during the predetermined intervals at NAV related prices.
Equity Oriented Schemes
These schemes, also commonly called Growth Schemes, seek to invest a

majority of their funds in equities and a small portion in money market instruments.
Such schemes have the potential to deliver superior returns over the long term.
However, because they invest in equities, these schemes are exposed to fluctuations in
value especially in the short term.

Equity schemes are hence not suitable for investors seeking regular
income or needing to use their investments in the short-term. They are ideal for
investors who have a long-term investment horizon. The NAV prices of equity fund
fluctuates with market value of the underlying stock which are influenced by external
factors such as social, political as well as economic. HDFC Growth Fund, HDFC Tax
Plan 2000 and HDFC Index Fund are examples of equity schemes.

General Purpose
The investment objectives of general-purpose equity schemes do not restrict

them to invest in specific industries or sectors. They thus have a diversified portfolio of
companies across a large spectrum of industries. While they are exposed to equity price
risks, diversified general-purpose equity funds seek to reduce the sector or stock
specific risks through diversification. They mainly have market risk exposure. HDFC
Growth Fund is a general-purpose equity scheme.
Sector Specific
These schemes restrict their investing to one or more pre-defined sectors, e.g.
technology sector. Since they depend upon the performance of select sectors only, these
schemes are inherently more risky than general-purpose schemes. They are suited for
informed investors who wish to take a view and risk on the concerned sector.
Special Schemes:
Index schemes
The primary purpose of an Index is to serve as a measure of the performance of

the market as a whole, or a specific sector of the market. An Index also serves as a
relevant benchmark to evaluate the performance of mutual funds. Some investors are
interested in investing in the market in general rather than investing in any specific
fund. Such investors are happy to receive the returns posted by the markets. As it is not
practical to invest in each and every stock in the market in proportion to its size, these
investors are comfortable investing in a fund that they believe is a good representative
of the entire market. Index Funds are launched and managed for such investors. An
example to such a fund is the HDFC Index Fund.
Tax saving schemes

Investors (individuals and Hindu Undivided Families (HUFs)) are being
encouraged to invest in equity markets through Equity Linked Savings Scheme
(ELSS) by offering them a tax rebate. Units purchased cannot be assigned /

transferred/ pledged / redeemed / switched out until completion of 3 years from the
date of allotment of the respective Units.
The Scheme is subject to Securities & Exchange Board of India (Mutual Funds)
Regulations, 1996 and the notifications issued by the Ministry of Finance (Department
of Economic Affairs), Government of India regarding ELSS.
Subject to such conditions and limitations, as prescribed under Section 88 of the
Income-tax Act, 1961, subscriptions to the Units not exceeding Rs.10, 000 would be
eligible to a deduction, from income tax, of an amount equal to 20% of the amount
subscribed. HDFC Tax Plan 2000 is such a fund.
Real Estate Funds

Specialized real estate funds would invest in real estates directly, or may fund
real estate developers or lend to them directly or buy shares of housing finance
companies or may even buy their securities assets.
Debt Based Schemes:-
These schemes, also commonly called Income Schemes, invest in debt

securities such as corporate bonds, debentures and government securities. The prices of
these schemes tend to be more stable compared with equity schemes and most of the
returns to the investors are generated through dividends or steady capital appreciation.
These schemes are ideal for conservative investors or those not in a position to take
higher equity risks, such as retired individuals. However, as compared to the money
market schemes they do have a higher price fluctuation risk and compared to a Gilt
fund they have a higher
Credit risk:-

Income schemes:-
These schemes invest in money markets, bonds and debentures of corporate
with medium and long-term maturities. These schemes primarily target current income
instead of capital appreciation. They therefore distribute a substantial part of their
distributable surplus to the investor by way of dividend distribution. Such schemes
usually declare quarterly dividends and are suitable for conservative investors who
have medium to long-term investment horizon and are looking for regular income
through dividend or steady capital appreciation. HDFC Income Fund, HDFC Short
Term Plan and HDFC Fixed Investment Plans are examples of bond schemes.

Liquid Income Schemes:-
Similar to the Income scheme but with a shorter maturity than Income schemes.
An example of this scheme is the HDFC Liquid Fund.
Money Market Schemes:-

These schemes invest in short term instruments such as commercial paper
(CP), certificates of deposit (CD), treasury bills (T-Bill) and overnight money
(Call). The schemes are the least volatile of all the types of schemes because of their
investments in money market instrument with short-term maturities. These schemes
have become popular with institutional investors and high net worth individuals having
short-term surplus funds.
Gilt Funds:-
This scheme primarily invests in Government Debt. Hence the investor usually
does not have to worry about credit risk since Government Debt is generally credit risk
free. HDFC Gilt Fund is an example of such a scheme.
Hybrid Schemes:-
These schemes are commonly known as balanced schemes. These schemes
invest in both equities as well as debt. By investing in a mix of this nature, balanced
schemes seek to attain the objective of income and moderate capital appreciation and
are ideal for investors with a conservative, long-term orientation. HDFC Balanced Fund
and HDFC Childrens Gift Fund are examples of hybrid schemes.
Constitution:-
Schemes can be classified as Closed-ended or Open-ended depending upon
whether they give the investor the option to redeem at any time (open-ended) or
whether the investor has to wait till maturity of the scheme.
Open ended Schemes
The units offered by these schemes are available for sale and repurchase on any
business day at NAV based prices. Hence, the unit capital of the schemes keeps
changing each day. Such schemes thus offer very high liquidity to investors and are
becoming increasingly popular in India. Please note that an open-ended fund is NOT

obliged to keep selling/issuing new units at all times, and may stop issuing further
subscription to new investors. On the other hand, an open-ended fund rarely denies to
its investor the facility to redeem existing units.
Closed ended Schemes
The unit capital of a close-ended product is fixed as it makes a one-time sale of

fixed number of units. These schemes are launched with an initial public offer (IPO)
with a stated maturity period after which the units are fully redeemed at NAV linked
prices. In the interim, investors can buy or sell units on the stock exchanges where they
are listed. Unlike open-ended schemes, the unit capital in closed-ended schemes usually
remains unchanged. After an initial closed period, the scheme may offer direct
repurchase facility to the investors. Closed-ended schemes are usually more illiquid as
compared to open-ended schemes and hence trade at a discount to the NAV. This
discount tends towards the NAV closer to the maturity date of the scheme.
Interval Schemes
These schemes combine the features of open-ended and closed-ended schemes.
They may be traded on the stock exchange or may be open for sale or redemption
during pre-determined intervals at NAV based prices.
The Risk-Return Trade-off The most important relationship to understand is the risk-
return trade-off. Higher the risk greater the returns/loss and lower the risk lesser the
returns/loss.
Hence it is upto you, the investor to decide how much risk you are willing to take. In
order to do this you must first be aware of the different types of risks involved with
your investment decision.
Market Risk
Sometimes prices and yields of all securities rise and fall. Broad outside
influences affecting the market in general lead to this. This is true, may it be big
corporations or smaller mid-sized companies. This is known as Market Risk. A
Systematic Investment Plan (SIP) that works on the concept of Rupee Cost
Averaging (RCA) might help mitigate this risk. Credit Risk The debt servicing ability
(may it be interest payments or repayment of principal) of a company through its cash
flows determines the Credit Risk faced by you. This credit risk is measured by

independent rating agencies like CRISIL who rate companies and their paper. An
AAA rating is considered the safest whereas a D rating is considered poor credit
quality. A well-diversified portfolio might help mitigate the risk Things you hear
people talk about: Rs 100 Today is a worth more than Rs 100 tomorrow. Remember
the time when a bus ridecosted50paise? The root cause, Inflation. Inflation is the loss
of purchasing power over time. A lot of times people make conservative investment
decisions to protect their capital but end up with a sum of money that can buy less than
what the principal could at the time of the investment. This happens when inflation
grows faster than the return on your investment. A well-diversified portfolio with some
investment in equities might help
Mitigate this risk. Interest Rate Risk In free market economy interest rates is difficult if
not impossible to predict. Changes in interest rates affect the prices of bonds as well as
equities. If interest rates rise the prices of bonds fall and vice versa. Equity might be
negatively affected as well in a rising interest rate environment. A well-diversified
portfolio might help mitigate this risk. Political/Government Policy Risk Changes in
government policy and political decision can change the investment environment. They
can create a favorable environment for investment or vice versa. Liquidity Risk
Liquidity risk arises when it becomes difficult to sell the securities that one has
purchased. Liquidity Risk can be partly mitigated by diversification, staggering of
maturities as well as internal risk controls that lean towards purchase of liquid
securities. You have been reading about diversification above, but what is it?
Diversification the nuclear weapon in your arsenal for your fight against Risk. It simply
means that you must spread your investment across different securities (stocks, bonds,

money market instruments, real estate, fixed deposits etc.) and different sectors (auto,
textile, information technology etc.). This kind of a diversification may add to the
stability of your returns, for example during one period of time equities might under
perform but bonds and money market instruments might do well enough to offset the
effect of a slump in the equity markets. Similarly the information technology sector
might be faring poorly but the auto and textile sectors might do well and may protect
you principal investment as well as help you meet your return objectives.
OPERATING EXPENSES:
These referred to cost incurred to operate a mutual fund. Advisory fees paid to
Investment managers, audit fees to charted accountant, custodial fees, register and
transfer agent fees, trustee fee, agent commission. Operating expenses also known as
expenses expressed as a percentage of the funds average daily net Assets mutual funds.
The break up of these expenses is required to be reported in the schemes offer
document or prospectus.
Operating expenses
Expenses Ratio = .
Average Net Assets
For instant if funds Rs.100 crores and expenses 20 laces then expenses ratio is 20%
expenses ratio is available in the offer document and historical per unit statistics
included in the financial results of the fund which are published by annually. UN
audited for the half year ending Sep 30 and audited for the physically year end March
30.
Depending upon scheme and net asset, operating expenses are determined by
limits mandated by SEBI mutual fund regulation Act. Any excess over specified limits
as to be born by asset Management Company, the trustees or sponsors.
SALES CHARGES;
There are known commonly sales loads, these are charged directly to investor.
Sales loads are used by mutual fund for the payment of agents commission,

distribution and marketing expenses. These charges have no effect on the performance
of the scheme. Sales loads are usually expression percentage and or of two types front-
end and back-end.
Front-End Load: -
It is a one time fixed fee paid by an investor when buying a mutual funds
scheme. It determines public offer price which in term decides how much of your initial
investment actually get invested the standard practice of arriving a public offer price is
as follows.
Net Asset Value
Public offer price =
(1 front-end load)
Let us assume, an investor invests RS.10000 in a scheme that charges a 2%

front-end load at a NAV per unit Rs. 10 using the formula public offer price = 10/(1-
0.02) is Rs. 10.20. So only 980units are allotted to the investor.
Amount invested
Number of units allotted =
Public offer price
10000/10.20 =980 units at a NAV of Rs. 10
This means units worth 9800 are allotted to him an initial investment of Rs. 10000.
Front end loads trend to decrease as initial investment amount increase.
BACK END LOAD:
May be affixed fee redemption or a contingent deferred sales charges- redemption
Load continues so long as the redeeming or selling of units of the units of a fund does
not take place in the event of a back end load is applied. The redemption price is arrive
are using following formula.

Net Asset Value
Redemption price = ..
(1 + back end load)
Let us assume an investor redeems units valued at rs 10000 in a scheme that charges a
2% back end load at a NAV per units of Rs. 10. Using the formula redemption price 10/
(1+0.02)= Rs9.08. so, what the investor gets in hand is 9800(9.8*1000)
CONTINGENT DEFERRED SALES CHARGES (CDSC):
Contingent deferred sales charges are a structured back end load. It is paid
when the Units are determined period only and reduced over the time you invested for a
fund. The longer the investor remains in a fund the lower the CDSC.
The SEBI (Mutual Funds Regulation 1996) stipulate that a CDSC may be
charge only for first 4 years after purchase of units and also stipulate the maximum
CDSC that can we charge every year. The SEBI mutual funds regulation 1996 do not
allow either the front end load or back end load to any combination is higher than 7%.
TRANSACTION COST:
Some funds may also impose a switch over fee, which is a charge on transfer
of investment from one scheme to another with a same mutual funds family and also to
switch from one plan (short term) to another (long term) within same scheme.

For the purpose of Analysis, I have taken below mentioned names of
the funds
HDFC EQUITY FUND

HDFC INCOME FUND
HDFC LIQUID FUND

DATA ANALYSIS AND INTERPRETATION
Analysis of the Funds:

HDFC EQUITY FUND
HDFC INCOME FUND
HDFC LIQUID FUND
TABLE:-5.1
HDFC EQUITY FUND
FUND CLASS Inception date INVESTMENT Age of Fund

OBJECTIVE
EQUITY December 8, 1994 To achieve capital

Appreciation 123 Months
Minimum Investment Rs. 5,000
Fund Manger Prashant Jain
Value in (Rs.)
As on
Latest NAV 66.83 / 22.65 June 30,2005
Fund Asset Size 107,458.86 June 30, 2005
Last Dividend Rs. 3.00 per unit November30,2004
Bonus N.A N.A
Option
Growth/dividend
Load MAY 31-
2005
Entry Load 2.25% ,>5crore

Exit Load Nil

Comments No lock in period
Features N.A
TABLE:-5.2
ASSET BREAK DOWN OF HDFC EQUITY FUND
Asset Breakdown JUNE30, 2005
Class %
Equity 98.33
Others / Unlisted 0.00
Debt N.A
Money Market N.A
Cash / Call 1.56
TABLE:-5.3
ABSOLUTE AND ANNULISED RETURNS OF HDFC EQUITY FUND
Absolute Returns JUNE30, 2005
Period %
One year 29.54*
Three years 22.310**
Five years 24.89**

TABLE:-5.4
TOP HOLDING OF HDFC EQUITY FUND
Top Holdings JUNE30, 2005
Stocks %
State Bank of India 10.05
Reliance Industries Ltd. 7.37
Satyam Computer Services Ltd. 6.47
TABLE:-5.5
SECTORAL WEIGHTAGES OF HDFC EQUITY FUND
Sectoral Weightages (Top Ten Holdings) JUNE30, 2005

(%)
Industrial Capital Goods 17.83

Software 14.87
Banks 13.14
Petroleum products 9.67
Auto Ancillaries 6.44
Cement 6.23
Pesticides 4.77
Auto 4.16
Oil 4.12
TABLE:-5.6
NAV AND GROWTH OF HDFC EQUITY FUND
NAV (Rs.) JUNE30, 2005

Dividend Growth
NAV (Rs) 22.65 66.83
52 Weeks high (Rs) 23.44 68.69
52 weeks Low (Rs) 17.61 45.31

TABLE:-5.7
RETURNS OF HDFC EQUITY FUND
From Date NAV (Rs) To Date NAV (Rs)
Dividend Growth Dividend Growth
April 1, 2004 20.71 53.29 JUNE30, 2005 22.65 66.83
INTERPRETATION:
This is an open-ended growth Scheme. This fund is fully invested in equity & equity
related instruments.
The table 5.2 shows the Asset break down of HDFC Equity Fund more % in the
equity .
The table 5.3 shows the annualized returns of last five years average is 24.89%
The table 5.4 shows the major Top Holdings of HDFC Equity Fund
The table 5.5 shows the fund portfolio sectors like Industrial Capital Goods, Software,
and Banks etc.,
The table 5.6 shows NAV had increased from Rs. 53.29 to 66.83.Shows the securitised
portfolio that has maintained.
This table 5.7 shows fund had generated a return of 29.54%. The benchmark return(S &
P CNX 500) has given 21.64% comparatively fund has given more returns than
the benchmark index.
TABLE: - 5.8
HDFC INCOME FUND
Fund Class Inception Investment Age of Fund Fund

Date Objective Manager
Optimize
returns
Income Fund Sep 11,2000 balance of 53 Months Shabbir Kapasi
safety yield
&liquidity
VALUE IN As on
(Rs)
Latest NAV 15.80 June30,2005
Fund Asset 56,512.87 June30,2005

Size
Last Dividend 12% per unit May 24,2005
Bonus N.A N.A
Option Growth /Dividend
Entry Exit
Load(As on
31-03-2005 ) 0% 0.50%
Features N.A
TABLE:-5.9
ASSET BREAKDOWN OF HDFC INCOME FUND

Class %
Equity N.A
Others / Unlisted N.A
Debt 86.34
Money Market 0.92
Cash 12.74
TABLE:-5.10
ABSOLUTE RETURNS OF HDFC INCOME FUND
period %
One year 0.01*
Three years 7.33**
Since inception 10.49**

TABLE:-5.11
TOP HOLDING OF HDFC INCOME FUND
Stocks %
7.38% GOI 2015 8.38
State Bank of India 10.24
Bharat Petroleum Corporation Ltd. 9.24

JUS Trust Jet Airways 9.72
TABLE:
Sectoral5.12
Weightages (Top Ten Holdings) JUNE30, 2005 (%)
SECTORAL WEIGHTAGES OF HDFC INCOME FUND
Government Securities 11.16
Debenchers 75.18
Money Market Instruments 0.92
TABLE:-5.13
NAV AND GROWTH OF HDFC INCOME FUND

Dividend Growth
NAV (Rs) 10.23 15.80
52 Weeks high (Rs) 10.77 15.85

52 weeks Low (Rs) 10.23 15.42
TABLE:-5.14
RETURNS OF HDFC INCOME FUND

April 1, 2004 10.07 15.78 JUNE30, 2005 10.23 15.80
Absolute Returns* 0.01
INTERPRETATION:

This is an open-ended income scheme.
The table 5.9 shows the Asset break down of HDFC INCOME Fund more % in the
Debt.
The table 5.10 shows the annualized returns of last five years average is 10.49%
The table 5.11 shows the major Top Holdings of HDFC INCOME Fund
The table 5.12 shows the fund portfolio sectors like government bonds, debentures,
money market instruments. Etc.,
The table 5.13shows NAV has15.80%.Shows the securitized portfolio that has
maintained.
This fund completely concentrated on the debt market. This fund has investments in
non-convertible debentures, convertible debentures & money market.
The returns compared with the market benchmark are also ver low bench mark returns
are 0.26% where as the fund results are 0.01% only.
TABLE:-5.15

HDFC LIQUID FUND

Optimize
HLF returns
Liquid Fund Sep 11,2000 balance of 53 Months Shobhit
safety yield Mehrotra
&liquidity
VALUE IN As on
(Rs)
Latest NAV 13.5809 JUNE30,2005
Fund Asset 200,430.52 June30,2005

Size
Last Dividend 10.2073 Per MAY24,2005

Unit
Bonus N.A N.A
Option Growth /Dividend
Entry Exit
Load (As
on31-03-2005) 0% 0.50%
Features N.A
TABLE:-5.16
ASSET BREAKDOWN OF HDFC LIQUID FUND

Class %
Equity N.A
Debt 35.02
Money Market 35.51
Cash / Call 20.73
Others 8.74
TABLE:-5.17
ABSOLUTE RETURNS OF HDFC LIQUID FUND
Period %
One year 4.13*
Three years 5.14**
Since inception 6.26
TABLE:-5.18
TOP HOLDINGS OF HDFC LIQUID FUND
Stocks %
Housing and Urban Dev Corp Ltd. 2.74
Indian retail ABS Trust ICICI Bank Ltd. 4.81
Jammu & Kashmir Bank Ltd. 4.08

TABLE:-5.19
Sectoral Weightages (Top Ten Holdings) JUNE30, 2005 (%)
Reverse Repos 18.13
SECTORAL WEIGHTAGES OF HDFC LIQUID FUND
Debentures 35.02
SJCET
Money Market Instruments - 48 - 55.39 MBA Dept
Deposits/ Net Receivables 9.59

TABLE:-5.20
NAV AND GROWTH OF HDFC LIQUID FUND

Dividend Growth
NAV (Rs) 10.12 15.80
52 Weeks high (Rs) 10.12 15.89
52 weeks Low (Rs) 10.07 15.26
TABLE:-5.21
RETURNS OF HDFC LIQUID FUND
April 1, 2004 10.07 15.78 May, 2005 10.12 15.80

INTERPRETATION:
This is an open-ended liquid scheme.
The table 5.16 shows asset break down in most debt and money market
The table 5.17 shows the absolute returns and annualised of last three years is
5.14%
The table 5.18 shows the major Top holding companies of the stocks.
The table 5.19 shows the debentures / bonds, Money market, deposits. This is a
highly liquidate able fund investor can exit at any time. This fund maintains a
highly volatile portfolio.
Most of the funds are kept in the Money Market instruments.
The table 5.20 have NAV of growth/dividend shows the last performance
The table 5.21 shows fund has generated a return of 4.13% where as the benchmark
index has give 3.80%. This is highly securitized portfolio

INTRODUCTION TO UTI MUTUAL FUND:-
Unit Trust of India (UTI) is the first Mutual Fund Company that had been
started in India it was first started by the government and run by government. This
plays a major role in the Indian market. The company has a trustee named as UTI
Trustee Co. (p) Ltd.
This mutual fund is maintained by UTI Asset Management Company. The
sponsors of the company are
State Bank Of India
Punjab National Bank
Bank of Baroda
Life Insurance Corporation of India
UTI Mutual Fund has come into existence with effect from 1 st Feb 2003. UTI Asset
Management Company presently manages 42 NAV based domestic SEBI complaint
schemes and 4 offshore funds having a corpus Rs.15243 crores from about 10 million
investor accounts.
UTI mutual fund has a track record of managing a variety of schemes catering
to the needs of every class of citizenry over a period of 39 years. It has a nation wide
network consisting 54 branch offices, 3 UTI Financial Centers (UFCs) and
representative offices in Dubai and London. With a view to reach to common investors
at district level, 18 satellite offices have also been opened in select towns and districts.
It has 2400 committed employees and over 10000 active agents and 226 chief
representatives to sell and service its schemes. It has well- qualified, professional fund
management teams, who have been highly empowered to manage funds with greater
efficiency and accountability in the sole interest of unit holders. The fund managers are
also ably supported with a strong in-house equity research department.
Analysis of the funds:
UTI EQUITY FUND
UTI INCOME FUND
UTI LIQUID FUND
TABLE:-5.22
UTI EQUITY FUND


Long-term
appreciation
Equity Fund April 20,1992 148 Months Mr.Vinay
with income
Kulkarni
distribution.
VALUE IN As on
(Rs)
Latest NAV 22.84 JUNE30,2005
Fund Asset 1366.66 crore JUNE30,2005

Size
Last Dividend 2Rs per unit 26-may-2005
Bonus N.A N.A
Option --------
Entry load Exit load

Load (As
on31-03-2005) 0% 3%
Features N.A
TABLE:-5.23
ASSET BREAKDOWN OF UTI EQUITY FUND
Asset Breakdown May 31, 2005
Class
%
Equity 100.00
AbsoluteDebt
Returns N.A31, 2005
May
Money Market TABLE:-5.24 N.A
ABSOLUTE RETUNS OF UTI EQUITY FUND
Cash / Call N.A
Period %
Net Receivable / Payable N.A
One year 28.98
Three years 39.90
SJCET Five years - 52 - 10.50MBA Dept
Since Inception 11.56
TABLE:-5.25
TOP HOLDINGS OF UTI EQUITY FUND
Top Holdings May 31, 2005
Stocks %
Tata motors . 6.05

Industrial Development Bank of India 3.94
Satyam Computers Ltd. 3.63
I.T.C. Ltd. 3.51
TABLE:-5.26
SECTORAL WEIGHTAGES OF UTI EQUITY FUND
Sectoral Weightages (Top Ten Holdings) JUNE30, 2005

(%)
Pharmaceuticals 18.27
Finance 10.81
Technology 8.98
Automobile 6.60
Petroleum 7.79
Engineering 5.52
Consumer Product 4.86
NAV (Rs.) june30, 2005
TABLE:-5.27
NAV (Rs) NAV AND GROWTH OF UTI EQUITY
29.82 FUND
52 Weeks high (Rs) 30.76

52 weeks Low (Rs) 20.73
TABLE:-5.28
RETURNS OF UTI EQUITY FUND
April 1, 2004 24.86 june30, 2005 29.82
INTERPRITATION:
The table5.23 shows that major asset breakdown in equity
The table 5.24 shows that absolute returns of last five years 11.56%
The table 5.25 shows that major top holdings of equity fund
The table 5.26 shows top ten sectoral weightages
The table 5.27 shows the NAV and growth of last 52 weeks
The table 5.28 shows the absolute returns given as on June 30th
This fund is continued with its diversification focus.
The credit off take has witnessed a strong growth and the fund feels that the banking
companies are attractively valued.
Table: 5.29

UTI INCOME FUND
Fund Class Inception Date Investment Objective Age of Fund Fund Manager
Generate credit risk-
free return through
Income fund Jan 21, 2002 sovereign securities 38 Months Mr.Puneet Pal
VALUE IN (Rs) As on
Latest NAV 13.80 JUNE30-

2005
Fund Asset Size 72.98 / 7038(LTP/STP) JUNE30-

2005
Last Dividend STP: 2%, LTP: 7% May , 2003
Bonus N.A N.A
Option Growth
Entry Exit
Load(As on31-03-
2005 ) 0% 1% (exit in 365 days)
Features N.A
Class %
Table: 5.30 Equity N.A

Others
Asset/ break
Unlisted
down of UTI INCOME Fund N.A
Debt 26.10
Money Market 61.26
Cash / Call 12.68
Net Receivable / Payable N.A
Table: 5.31
Absolute retuns and annualized returns of UTI INCOME Fund
Period %
7 Days 4.61
30 Days 4.59
90 Days 4.59
365 Days 4.59
Table: 5.32
Top holdings of UTI INCOME Fund
Stocks %
Development Credit Bank Ltd. 16.46

Sundaram Finance Ltd. 12.66
Citifinancial Consumer Fin. India Ltd. 11.87
Allahabad Bank 8.73
Sectoral Weightages (Top Ten Holdings)
Cash / Call june30, 2005 (%)
LTP:
Net Receivable / Payable
Gsec 44.00
Table: 5.33
NCA Sectoral weightages of UTI INCOME
39.00 Fund
T bill 17.00
STP:
NCA 74.00
T bill 26.00
Table: 5.34
NAVand growth of UTI INCOME Fund
NAV (Rs.) (LTP) june30, 2005

Dividend Growth
NAV (Rs) 10.28 13.80
Table:-5.35
52 Weeks high (Rs) Returns of UTI INCOME10.33
Fund 13.80
52 weeks Low (Rs) 10.04 13.39
From Date (LTP) NAV (Rs) To Date (LTP) NAV (Rs)

April 1, 2004 10.20 13.54 june30, 2005 10.28 13.80

INTERPRETATION
Absolute Returns* -0.78
This Fund is the low risk, low-volatile fund aims at offering returns to investors looking
to park in short-term surpluses.

The table 5.30 shows the asset break downs of debt fund is 26.10%
The table 5.31 shows the absolute and annualized returns of last five years is 5.91%
The table 5.32 shows the top holdings of investing funds in it.
The table 5.33 shows the sectoral weightages to the industry wide.
The table 5.34 shows the NAV and growth rates of last 1 year
The 10-year old GOI yield opened at 7.18% and eased down to 6.69% due to
cancellation of scheduled auction and inflation rate
* The NAV in the growth option has an increase in percentage of Rs.41 and given
return in the month of march of 4.59
Table:-5.36
UTI LIQUID FUND
Fund Class Inception Investment Objective Age of Fund Fund Manager
Date
Reasonable return &
objective of low risk
Liquid fund July 23,2001 high liquidity 44 months Mr.Amandeep
S.chopra
VALUE IN (Rs) As on
Latest NAV 18.9102 JUNE30-

2005
Fund Asset Size 115 crores June30-2005
Last Dividend N.A
Bonus N.A N.A
Option Growth/Income
Entry Exit
Load(As on31-
03-2005 ) 0% 0%

Table: 5.37
Asset breakdown of UTI LIQUID Fund
Class %
Equity N.A
Debt 26.10
Money Market 61.26
Cash / Call 12.68
NetTable:-5.38
Receivable / Payable N.A
Absolute and annualized returns of UTI LIQUID Fund

Period %
7 Days 4.61
30 Days 4.59
90 Days 4.59
365 Days 4.59
Cash / Call
Table:-5.39
Top holdings of UTI LIQUID Fund
Stocks %
Development Credit Bank Ltd. 16.46

Sundaram Finance Ltd. 12.66
Citifinancial Consumer Fin. India Ltd. 11.87
Allahabad Bank 8.73
Cash / Call
Net Receivable / Payable

Table:-5.40
Sectoral weightages of UTI LIQUID Fund
Sectoral Weightages (Top Ten Holdings) june30, 2005 (%)
Certificate of Deposits 24.81

STD 26.10
FRB 19.66
Commercial Papers 16.79
Call/Repo 12.64
Table:-5.41
NAV and Growth rates of UTI LIQUID Fund
NAV (Rs.) june30, 2005

Dividend Growth
NAV (Rs) 1000.02 1100.92

Table:-5.42
Returns of UTI LIQUID Fund
52 Weeks high (Rs) 1005.09 1233.50
52 weeks Low (Rs) 1000.02 1100.92
From Date NAV (Rs) To Date NAV (Rs

April 1, 2004 1000.02 1100.92 june30, 2005 1005.09 1233.50

INTERPRETATION:
This Fund is the low risk, low-volatile fund aims at offering returns to investors looking
to park in short-term surpluses.
The table 5.37 shows the major asset breakdown in money market is 61.8%
The table 5.38 shows the absolute and annualized returns since inception5.91%
The table 5.39 shows the top holdings of investment securities
The table 5.40 shows the sectoral weightages of major industries
The table 5.41 shows the NAV and growth rate of last 1 year is 4.61%
The table 5.42 shows the returns of uti liquid fund absolute returns is 4.61%
The 10-year old GOI yield opened at 7.18% and eased down to 6.69% due to
cancellation of scheduled auction and inflation rate
The NAV in the growth option has an increase in percentage of Rs.41 and given return
in the month of March of 4.59%

FINDINGS
Mutual Funds simplifie investors experience and allows him to depend

on the expertise and experience of professional money managers freeing
up his time to be used for more enjoyable pursuits.
Mutual Funds generally Invest in Stocks, Bonds and Money Market

Instruments.
When investor invest in a Mutual Fund, he is hiring a team of
professionals with years of experience and expertise making these
decisions on behalf of investors, which will put him at ease with
investing.
The other major benefit of investing in Mutual Fund is diversification.
Mutual Fund will typically in a basket of 100 or more stocks or bonds in
each fund giving him the peace of mind assuring that all of his eggs are
not in one basket in other words, some of the stronger performing
holdings will help to offsets some of the lesser performing holdings in
the funds.
By utilizing professional money managers in Mutual Fund, investor can

take a giant step toward potentially reducing investment risk. In addition
he can use a time proven technique called Asset Allocation which is
the process of spreading his Mutual Fund investment across different
asset classes and management styles.
As far as the two companies are concerned, HDFC and UTI the
following the points may be considered
The HDFC Mutual Fund had worked competitively well than the UTI
Mutual Funds.
The sectorial allocation of HDFC is good than that of the UTI due to the
high level of diversification.

The NAV returns compared in the funds are.
In EQUITY FUND category HDFC has given 29.54% of return in the

latest year where as UTI has given 23.98% of return.
In INCOME FUND category HDFC has given 0.01% of return where as

UTI has given 0.78% of return.
In BALANCED FUND category HDFC has given 19.4% of return in

the latest year where as UTI has given 15.87% of return.
In LIQUID FUND category HDFC has given 4.13% where as UTI had
given 4.59% this fund had done better than HDFC liquid fund.

SUGGESTIONS
Four sequential steps will enable investor to decide effectively.
1.Divide the spectrum of Mutual Fund depending on major asset class invested in,
presently there are only two.
Equity funds investing in Stocks and Shares.
Debt funds investing in interest paying securities issued Government,
Semi-government bodies Public Sector Units and Corporates.
2.Categorize equities:
Diversified- invest in large capitalized stocks belonging to multiple
sectors.
Sectorial - invest in specific sectors only, like technology, FMCG,
Pharmaceutical and Petroleum.
* Categorize debt:
Gilt- invest only in Government securities, Long maturity securities with
average if 9-13years, very sensitive to invest rate movement.
Medium term debt (or income funds) invest in corporate debt,
Government securities and PSU bonds. Average maturity is 5-7years.
Short- term debt-average maturity is 1 year; interest rate sensitivity is very
low, with steady returns.
Liquid- invest in money market, other short term paper and each, highly
liquid, average maturity is 3 months.

3.REVIEW CATEGORIES:
Diversified equity has done well while Sectoral categories have fared poorly in
Indian market.
Index funds have delivered much less compared to actively managed funds.
Gilt and income funds have performed very well during in last three years. They
perform best in a failing interest rate environment. Since interest rates are now
lower, short-term funds are preferable.

4.SPECIFIC SCHEME SELECTION:
Ranking are based on criteria including past performance, risk and

resilience in unfavorable conditions, stability and investment style of fund
management, costs and service levels. Some recommended schemes are Diversified
equity, Gilt funds, and Short-term funds. With in debt class presently more is
allocated towards Short-term fund because of low prevailing interest rate. However,
if interest rates go up investor can allocate more in Mutual Funds.

CONCLUSION
Mutual Fund is affordable for most individuals. They are less risky
investments. The market is growing day by day, increasing the number of schemes and
making easy way to invest for the investors. The availability of the technology makes
the investor at ease of knowing every bit of information needed. So, investment had
become easier with the introduction of technology.

BIBILOGRAPHY
Books:
Mutual Funds in India H.SADAK, edition 1999, response
Books, New Delhi.
Security Analysis and Portfolio Management V.A.AVADHANI,
edition 1999,
JOURNALS:
Charted Financial Analysis by I.C.F.A.I
NEWS PAPERS:
Financial Express
Economic Times
Business line
Times of India
Websites:
www.googlesearch.com
www.hdfcfund.com
www.utimf.com
www.sebi.gov.co.in
www.amfiindia.com

Irfan Mutual Funds Project PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Irfan Mutual Funds Project PDF

Uploaded by

Copyright:

Available Formats

INTRODUCTION TO MUTUAL FUNDS

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

SJCET -1- MBA Dept

SJCET -2- MBA Dept

To make a more informed investment decision while selecting a specific

To give a brief idea about the History of Mutual Fund in India.

To make a detailed study about the funds available in Mutual Fund

To discuss about the Market Trends of the Mutual Fund investment.

To discuss comparative study of HDFC & UTI schemes of

SJCET -3- MBA Dept

A mutual fund is a special type of financial service organization. It

The study provides me an opportunity to helpful to my theoretical

Hence the study of performance of mutual fund is helpful to

SJCET -4- MBA Dept

SJCET -5- MBA Dept

Data collection method:

Questionnaire has been used in this research to collect the necessary

The questionnaire consist of questions, were used to obtain necessary

SJCET -6- MBA Dept

SJCET -7- MBA Dept

The comparative study of performance is taken for selecting three schemes in

SJCET -8- MBA Dept

First Phase 1964-87

Second Phase 1987-1993 (Entry of Public Sector Funds)

Third Phase 1993-2003 (Entry of Private Sector Funds)

SJCET -9- MBA Dept

Fourth Phase since February 2003

SJCET - 10 - MBA Dept

HDFC Bank Limited

Times Bank Amalgamation

SJCET - 12 - MBA Dept

SJCET - 13 - MBA Dept

a) Wholesale Banking Services

The Banks target market is primarily large, blue chip manufacturing

b) Retail Banking Services

SJCET - 14 - MBA Dept

SJCET - 15 - MBA Dept

b) Corporate Governance Rating

c) Awards and Accolades

Awards and achievements-Bank services

SJCET - 16 - MBA Dept

SJCET - 17 - MBA Dept

A Mutual Fund is a trust that pools the savings of a number of investors

Invest/pool profit/loss from

Mutual Fund Company

Invest in a no. of Profit/Loss from

SJCET - 18 - MBA Dept

HDFC Mutual Fund Products

HDFC Growth Fund

HDFC Index Fund

SJCET - 19 - MBA Dept

HDFC Children's Gift Fund Investment Plan

HDFC Income Fund

SJCET - 20 - MBA Dept

Value Added Services

SIP (Systematic Investment Plan)

Housing development Finance Corporation (HDFC):

SJCET - 21 - MBA Dept

HDFC Asset Management Company Limited (AMC):

SJCET - 22 - MBA Dept

SJCET - 23 - MBA Dept

Registrar and Transfer Agent

SJCET - 24 - MBA Dept