irfan mutual funds project

8/6/2019 Irfan Mutual Funds Project

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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


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certain risks. The investors should compare the risks and expected yields after

adjustment of tax on various instruments while taking investment decisions



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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.



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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 appreciationand 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.



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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).



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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 necessaryinformation from customers. In designing the questionnaire for the data collection,



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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.



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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.



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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 GeneralInsurance 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



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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.



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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. Thebank 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



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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 ReserveBank 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



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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 andretaining 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.



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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 alsoa 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.



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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 - ForeignExchange 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



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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 soundcorporate 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 banksrisk 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 November2004 issue.



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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 inRetail 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.



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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:

Invest/pool profit/loss from

Their Money

portfolio invest

Invest in a no. of Profit/Loss from

Stocks/Bonds Individual investment


Investor

Mutual Fund Company

Pool of Mone

Market (Fluctuates)


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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



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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



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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 Regulatoryand Development Authority to transact life insurance business in India.



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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 HongKong. 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 wasincorporated under the Companies Act, 1956, on December

10, 1999, and was approved to act as an Asset Management Company for the Mutual

http://www.standardlifeinvestments.com/http://www.standardlifeinvestments.com/


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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:

Particulars% of the paid up share

capital

HDFC 50.10

Standard Life Investments

Limited49.90

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following

a review of its overall strategy, had decided to divest its Asset Management business in

India. The AMC had entered into an agreement with ZIC to acquire the said business,

subject to necessary regulatory approvals. On obtaining the regulatory approvals, the

Schemes of Zurich India Mutual Fund has now migrated to HDFC Mutual Fund on

June 19, 2003. 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.



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The structure consists of Sponsor

Sponsor is the person who acting alone or in combination with another body

corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net

worth of the Investment Managed and meet the eligibility criteria prescribed under the

Securities and Exchange Board of India (Mutual 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 andin 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



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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 broadtypes:

(i) Open ended mutual funds and

(ii) Closed ended mutual funds.

OPEN ENDED MUTUAL FUNDS:



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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



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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.



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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.



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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 /



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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:-

]



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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.



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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



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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 redemptionduring 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



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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,



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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 andtransfer 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,



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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 arriveare using following formula.



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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 transferof 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.



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For the purpose of Analysis, I have taken below mentioned names of

the funds

HDFC EQUITY FUND

HDFC INCOME FUND

HDFC LIQUID FUND



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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 capitalAppreciation 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/dividendLoad MAY 31-2005

Entry Load 2.25% ,>5croreExit Load Nil



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Comments No lock in period

Features N.A

TABLE:-5.2ASSET BREAK DOWN OF HDFC EQUITY FUND

TABLE:-5.3ABSOLUTE AND ANNULISED RETURNS OF HDFC EQUITY FUND


Asset Breakdown JUNE30, 2005

Class %

Equity 98.33

Others / Unlisted 0.00

Debt N.A

Money Market N.A

Absolute Returns JUNE30, 2005

Period %

One year 29.54*

Three years 22.310**


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TABLE:-5.4

TOP HOLDING OF HDFC EQUITY FUND

TABLE:-5.5

SECTORAL WEIGHTAGES OF HDFC EQUITY FUND

TABLE:-5.6NAV AND GROWTH 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

Sectoral Weightages (Top Ten Holdings) JUNE30, 2005(%)

Industrial Capital Goods 17.83Software 14.87Banks 13.14Petroleum products 9.67

Auto Ancillaries 6.44Cement 6.23Pesticides 4.77Auto 4.16Oil 4.12

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


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TABLE:-5.7

RETURNS OF HDFC EQUITY FUND

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 theequity .

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


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


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HDFC INCOME FUND

Fund Class Inception

Date

Investment

Objective

Age of Fund Fund

Manager

Income Fund Sep 11,2000

Optimize

returnsbalance ofsafety yield&liquidity

53 Months Shabbir Kapasi

VALUE IN(Rs)

As on

Latest NAV 15.80 June30,2005

Fund AssetSize

56,512.87 June30,2005

Last Dividend 12% per unit May 24,2005

Bonus N.A N.A

Option Growth /Dividend

Load(As on31-03-2005 )

Entry

0%

Exit

0.50%

Features N.A

TABLE:-5.9ASSET BREAKDOWN OF HDFC INCOME FUND



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TABLE:-5.10

ABSOLUTE RETURNS OF HDFC INCOME FUND

TABLE:-5.11TOP HOLDING OF HDFC INCOME FUND

TABLE: 5.12

SECTORAL WEIGHTAGES OF HDFC INCOME FUND



Class %

Equity N.A

Others / Unlisted N.A

Debt 86.34

Money Market 0.92


Stocks %

7.38% GOI 2015 8.38

State Bank of India 10.24

Bharat Petroleum Corporation Ltd. 9.24


period %

One year 0.01*

Three years 7.33**

Sectoral Weightages (Top Ten Holdings) JUNE30, 2005 (%)

Government Securities 11.16

Debenchers 75.18

Money Market Instruments 0.92


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TABLE:-5.13NAV AND GROWTH OF HDFC INCOME FUND

TABLE:-5.14

RETURNS OF HDFC INCOME FUND

INTERPRETATION:


NAV (Rs.) JUNE30, 2005

Dividend Growth

NAV (Rs) 10.23 15.80

52 Weeks high (Rs) 10.77 15.85



April 1, 2004 10.07 15.78 JUNE30, 2005 10.23 15.80

Absolute Returns* 0.01


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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



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HDFC LIQUID FUND


Date

Investment

Objective

Age of Fund Fund

Manager

Liquid FundHLFSep 11,2000

Optimizereturns

balance ofsafety yield&liquidity

53 Months ShobhitMehrotra

VALUE IN(Rs)

As on

Latest NAV 13.5809 JUNE30,2005

Fund AssetSize

200,430.52 June30,2005

Last Dividend 10.2073 Per Unit

MAY24,2005

Bonus N.A N.A

Option Growth /Dividend

Load (Ason31-03-2005)

Entry

0%

Exit

0.50%

Features N.A

TABLE:-5.16ASSET BREAKDOWN OF HDFC LIQUID FUND



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TABLE:-5.17

ABSOLUTE RETURNS OF HDFC LIQUID FUND

TABLE:-5.18TOP HOLDINGS OF HDFC LIQUID FUND

TABLE:-5.19SECTORAL WEIGHTAGES OFHDFC LIQUID FUND



Class %

Equity N.A


Debt 35.02

Money Market 35.51

Cash / Call 20.73


Stocks %

Housing and Urban Dev Corp Ltd. 2.74

Indian retail ABS Trust ICICI Bank Ltd. 4.81

Jammu & Kashmir Bank Ltd. 4.08

Reverse Repos 18.13


Period %

One year 4.13*

Three years 5.14**

Sectoral Weightages (Top Ten Holdings) JUNE30, 2005 (%)

Debentures 35.02

Money Market Instruments 55.39

Deposits/ Net Receivables 9.59


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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 is5.14%

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 ahighly liquidate able fund investor can exit at any time. This fund maintains ahighly 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



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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


Date

Investment

Objective

Age of Fund Fund

Manager



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Equity Fund April 20,1992

Long-termappreciationwith incomedistribution.

148 Months Mr.VinayKulkarni

VALUE IN

(Rs)

As on

Latest NAV 22.84 JUNE30,2005

Fund AssetSize

1366.66 crore JUNE30,2005

Last Dividend 2Rs per unit 26-may-2005

Bonus N.A N.A

Option --------

Load (Ason31-03-2005)

Entry load

0%

Exit load

3%

Features N.A

TABLE:-5.23ASSET BREAKDOWN OF UTI EQUITY FUND

TABLE:-5.24ABSOLUTE RETUNS OFUTI EQUITY FUND


Asset Breakdown May 31, 2005

Class%

Equity 100.00


Debt N.A

Money Market N.A

Cash / Call N.A

Net Receivable / Payable N.A

Absolute Returns May 31, 2005

Period %

One year 28.98

Three years 39.90

Five years 10.50

Since Inception 11.56


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TABLE:-5.25TOP HOLDINGS OFUTI EQUITY FUND

TABLE:-5.26SECTORAL WEIGHTAGES OFUTI EQUITY FUND

TABLE:-5.27

NAV AND GROWTH 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

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

NAV (Rs) 29.82

52 Weeks high (Rs) 30.76

52 weeks Low (Rs) 20.73


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TABLE:-5.28RETURNS OF UTI EQUITY FUND

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



April 1, 2004 24.86 june30, 2005 29.82



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UTI INCOME FUND

Fund Class Inception Date Investment Objective Age of Fund Fund Manager

Income fund Jan 21, 2002

Generate credit risk-free return throughsovereign 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

Load(As on31-03-2005 )

Entry

0%

Exit

1% (exit in 365 days)

Features N.A

Table: 5.30

Asset break down of UTI INCOME Fund



Class %

Equity N.A

Others / Unlisted N.ADebt 26.10Money Market 61.26Cash / Call 12.68



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Table: 5.34

NAVand growth ofUTI INCOME Fund

Table:-5.35

Returns ofUTI INCOME Fund

INTERPRETATION

This Fund is the low risk, low-volatile fund aims at offering returns to investors looking

to park in short-term surpluses.


NAV (Rs.) (LTP) june30, 2005Dividend Growth

NAV (Rs) 10.28 13.80

52 Weeks high (Rs) 10.33 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

Absolute Returns* -0.78


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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 givenreturn in the month of march of 4.59

Table:-5.36

UTI LIQUID FUND


Date

Investment Objective Age of Fund Fund Manager

Liquid fund July 23,2001

Reasonable return &objective of low riskhigh 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

Load(As on31-03-2005 )

Entry

0%

Exit

0%



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Table: 5.37

Asset breakdown of UTI LIQUID Fund

Table:-5.38

Absolute and annualized returns of UTI LIQUID Fund

Table:-5.39

Top holdings of UTI LIQUID Fund



Class %

Equity N.A


Debt 26.10

Money Market 61.26

Cash / Call 12.68



Stocks %

Development Credit Bank Ltd. 16.46Sundaram Finance Ltd. 12.66Citifinancial Consumer Fin. India Ltd. 11.87Allahabad Bank 8.73

Cash / Call


Period %

7 Days 4.6130 Days 4.5990 Days 4.59

365 Days 4.59Since Inception 5.91


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Table:-5.40

Sectoral weightages of UTI LIQUID Fund

Table:-5.41

NAV and Growth rates of UTI LIQUID Fund

Table:-5.42

Returns of UTI LIQUID Fund


Sectoral Weightages (Top Ten Holdings) june30, 2005 (%)

Certificate of Deposits 24.81STD 26.10FRB 19.66Commercial Papers 16.79

NAV (Rs.) june30, 2005

Dividend Growth

NAV (Rs) 1000.02 1100.92

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



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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%



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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.



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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.



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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 multiplesectors.

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 nowlower, short-term funds are preferable.



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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.



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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.



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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
http://www.googlesearch.com/http://www.hdfcfund.com/http://www.utimf.com/http://www.sebi.gov.co.in/http://www.amfiindia.com/http://www.googlesearch.com/http://www.hdfcfund.com/http://www.utimf.com/http://www.sebi.gov.co.in/http://www.amfiindia.com/