Detail Study Of HDFC Mutual Fund

A PROJECT REPORT ON

Detail Study Of HDFC Mutual Fund Submitted For the partial fulfillment of the requirement for The Degree of MBA Submitted by: MD NABEEL Registration No. –070651940 MBA –IV Trimester SESSION (2007-2009) INTERNAL GUIDE JYOTSHNA RAI IIPM - School Of Management BIJU PATNAIK UNIVERSITY OF

Detail Study Of HDFC Mutual Fund TECHNOLOGY ROURKELA, ORISSA.

DECLARATION

I do hereby declare that the project entitled “DETAIL STUDY OF HDFCMUTUAL FUND” submitted as a part of the requirement for the partial fulfillment of Master of Business Administration at BIJU PATNAIK UNIVERSITY OF TECHNOLOGY, ORISSA is an original piece of work done by me under the guidance of •

Mr Manmohan Mohapatra (Branch manager)

•

Mr Sanket Swaroop

•

Mr Vikash Gupta.

At HDFC Mutual Fund , Rourkela has not been submitted for award of any degree else where in part or full.

Name:-Md Nabeel Regd :-0706519040

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Detail Study Of HDFC Mutual Fund

CERTIFICATE OF THE

GUIDE

This is to certify that the work entitled “DETAIL STUDY OF HDFC- MUTUAL FUND” is a piece of Summer Project Report done by MD NABEEL, student of MBA IV Trimester IIPM SCHOOL OF MANAGEMENT, Kansbahal , Rourkela bearing Reg. No 0706519042 under my guidance and supervision for partial fulfillment of MBA curriculum of BIJU PATNAIK UNIVERSITY OF TECHNOLOGY, Rourkela, Orissa.

To the best of my knowledge and belief the Summer Project Report: 1. Embodies the work of the candidate himself. 2. Has been duly completed 3. Is up to the standard both in respect of contents and language for being referred to the examiner.

Forwarded

Internal Guide JYOTSNA RAI IIPM School of management

(Signature)

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CERTIFICATE OF THE

GUIDE

This is to certify that the work entitled “DETAIL STUDY OF HDFC- MUTUAL FUND” is a piece of Summer Project Report done by MD NABEEL, student of MBA IV Trimester IIPM SCHOOL OF MANAGEMENT, Kansbahal , Rourkela bearing Reg. No 0706519042 under my guidance and supervision for partial fulfillment of MBA curriculum of BIJU PATNAIK UNIVERSITY OF TECHNOLOGY, Rourkela, Orissa.

To the best of my knowledge and belief the Summer Project Report: 1. Embodies the work of the candidate himself. 2. Has been duly completed 3. Is up to the standard both in respect of contents and language for being referred to the examiner.

Forwarded

External Guide MR SANKET SWAROOP HDFC MUTUAL FUND Rourkela

(Signature)

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Detail Study Of HDFC Mutual Fund AKNOWLEDGEMANT

It is a great privilege on my part to submit this project as an intact piece of work. I am greatful to JYOTSNA RAI, faculty of iipm-som who made the training programme possible Further I express my gratitude to my guide vikash gupta, for is able guidance and variable suggestions throught the training program. I would be failing in my in my duty if I didn’t express my gratitude to mr sanket swaroop who provide facilities, data and information required to prepare the report. Also I express my thanks to all personnel of HDFC mutual fund who extended their co-operation and timely help without which this study program would not have been successful

Name: - Md Nabeel Regd: - 0706519040

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CONTENTS TOPIC CHAPTER OBJECTIVE OF THE STUDY 1

2

INTRODUCTION

3

ABOUT HDFC MUTUAL FUND

4

PRODUCT &SERVICE

5 6

PART OF MY SUMMER TRAINING

1. 2. 3. 4. 5. 6.

PAGE NO

MUTUAL FUND SETUP NAV SCOPE BENEFITS OF MUTUAL FUND CAPITAL GAIN INVESTMENT CRITERIA

1. 2. 3. 4. 5.

WHY HDFC MUTUAL FUND SPONSORS TRUSTEE AMC DIRECTORS AWARDS

1. TYPES OF MUTUAL FUND 2. INVESTMENT PLAN 3. PRODUCT OF MUTUAL FUND

METHODOLOGY OF THE STUDY 1. RESEARCH METHODOLOGY 2. HYPOTHESIS SOURCES OF DATA

6 8

18

23 47 50

COLLECTION 3. OF THE STUDY 4. DATA COLLECTION & ANALYSIS

7 8 9

QUESTIONARE FINDING, RECOMMENDATION, CONCLUSION BIBLIOGRAPHY

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OBJECTIVE OF THE STUDY

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OBJECTIVE OF THE STUDY Indian financial system has been expiring the vast effect of globalization i.e. drastic interest rate cut, political disturbances, security scam etc have scattered the common investor’s perception in selecting various investment portfolio. Most of the security holders have lost their confidence in newly come-up corporate sectors for investment. Looking to the situation, it is quite encouraging to analyze how the HDFC Mutual Fund able to trap the deposits by introducing various schemes and how it protects the interest of the investors. The main study is based on the performance and analysis of various schemes with reference to HDFC Mutual Fund that is a leading mutual fund industry in India. The total performance analysis of financial instruments with reference to the HDFC Mutual Fund has got objectives. This are as follows:•

To know the performance of the different schemes.

•

The comparative study of HDFC Mutual Fund with other mutual funds.

•

To know the investment pattern of the investors in different schemes.

•

The benefits made from the investment on the different schemes.

•

To know the ranking of the HDFC Mutual Fund Schemes.

•

To know the diversify portfolio of HDFC Mutual Fund.

•

To know the service which HDFC Mutual Fund is providing to its investors with compare to other mutual funds.

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INTRODUCTION

1. MUTUAL FUND SETUP 2. NAV 3. SCOPE 4. BENEFITS OF MUTUAL FUND 5. CAPITAL GAIN 6. INVESTMENT CRITERIA

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I NTRODUCTION The financial market plays a crucial role in the in the economic development of a country by facilitating the allocation of scarce resources. Financial markets essentially involve the allocation of resources. This can be thought of as the brain of the entire economic system, the locus of central decisionmaking; if they fail, not only will the sectors profit be lower than would otherwise have been, but the performance of the entire economic system may be impaired. The efficiency of financial market how ever, depends on the existence of active and efficient financial intermediaries in the system. Deposit taking institutional investor is the important financial intermediaries involved in the task of allocating assets. Structural changes in the financial market have induced a reverse trend in financial intermediation, i.e. financial disintermediation, in which the central role of banking is being taken over by investment institutions and institutional investors. The shift from a creditbased system to a financial has initiated the process of disintermediation, and capital market based factors like insurance, pension funds and mutual funds are increasingly playing the central role. The reforms have successfully dismantled the entry barriers, with the result that today there are domestic and foreign financial institutions, like mutual funds, broking firms and insurance companies, operating in the Indian market. The introduction of capital adequacy norms, prudential regulation and world class regulatory mechanisms to protect the interest of investor, besides the strict requirement of disclosure, have given a boost to the confidence of domestic and foreign investors. The Indian economy has slowly integrated itself with the global economy and financial market.

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Detail Study Of HDFC Mutual Fund What is a Mutual Fund? 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 profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.

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2.1 - How is a mutual fund set up? A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund. SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme. However, Unit Trust of India (UTI) is not registered with SEBI (as on January 15, 2002).

2.2 - What is Net Asset Value (NAV) of a scheme? The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV). Mutual funds invest the money collected from the investors in securities markets. In simple words, Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day to day basis. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis - daily or weekly - depending on the type of scheme.

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2.3 - Scope for Development of Mutual Fund 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. India has a burgeoning population of middle class now estimated around 300 million. A typical Indian middle class family can have liquid savings ranging from Rs.2 to Rs.10 Lacs today. Investments in Banks are liquid and safe, but with the falling rate of interest offered by Banks on Deposits, it is no longer attractive. At best a part can be saved in bank deposits, but what is the other sources of investment for the common man? Mutual Fund is the ready answer. Viewed in this sense globally India is one of the best markets for Mutual Fund Business, so also for Insurance business. This is the reason that foreign companies compete with one another in setting up insurance and mutual fund business units in India. The sheer magnitude of the population of educated white collar employees provides unlimited scope for development of Mutual Fund Business in India.

2.4. - Benefits of Mutual Funds

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

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Detail Study Of HDFC Mutual Fund 1. Professional Management The investor avails of the services of experienced and skilled professionals who are backed by a dedicated investment research team which analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. 2. Diversification Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.

3.

Convenient Administration

Investing n in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and unnecessary follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient. 4. Return Potential Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. 5. Low Costs Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. 6. Liquidity In open-ended schemes, you can get your money back promptly at net asset value related prices from the Mutual Fund itself. With close-ended schemes, you can sell your units on a stock exchange at the prevailing market price or avail of the facility of direct repurchase at NAV related prices which some close-ended and interval schemes offer you periodically.

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7. Transparency You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook. 8. Flexibility Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.

9. Choice of Schemes Mutual Funds offer a family of schemes to suit your varying needs over a lifetime. 10. Well Regulated All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI. 11. Understanding and Managing Risk All investments whether in shares, debentures or deposits involve risk: share value may go down depending upon the performance of the company, the industry, state of capital market and the economy; generally, however longer the term, lesser the risk; companies may default in payment of interest/principal on their deposits/bonds debentures; the rate of interest on investment may fall short of the rate of inflation reducing the purchasing power. While risk cannot be eliminated, skillful management can minimize risk. Mutual fund helps to reduce risk through diversification and professional management. The experience and expertise of Mutual Fund managers in selecting fundamentally sound securities and timing their purchases and sales help them to build a diversified portfolio that minimize risk and maximizes returns.

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Detail Study Of HDFC Mutual Fund 12.

Tax Benefits

The incomes under Mutual Funds are much more Tax efficient than any fixed income security due to the following benefits:• Section 80L of the income Tax Act ,1961 enables tax free income up to rs 15000 and dividends from MF s are eligible for this benefit.

• When you invest for over a year, the tax payable on encashment is Long term Capitals gains tax at 20%. Once also get an indexation benefit which has been approximately 8% per year. This reduces the taxable income and thus decreases the tax liability.

• There is also an opportunity to set off capital losses against gains from income schemes.

• Full exemption from capital gains tax as it comes under Section 54EA/EB of the income tax Act.

• One has to pay tax only when he encash units, but have to pay tax on the interest earned on other debt instruments every year on an accrual basis, even though he receives the interest later. This generates higher post tax returns compared to other debt instruments. Tax is just like a monster that frightens a number of individuals through out the nation. There are just tow way to fight with this monater: . Conceal/Depress Income . Make tax efficient investments.

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Detail Study Of HDFC Mutual Fund Perhaps the second option is far better than the first as it gives the peace of mind together with a feeling that one is a responsible citizen of the nation. With increasing amount of awareness that is taking birth in the minds of investors, mutual fund has become cynosure of the eye of the several investors. The taxes available are tow kinds: . To the mutual fund- as explained below in No 1 . To the Investor- as explained below in No 2 1. Mutual Fund Taxation . Mutual fund is fully exempted from the tax under Section10 (23D) of the Income Tax Act1961. . It receives all income without deduction at source. . Mutual funds do not have to pay tax on trading profit, short term capital gain, dividend income, underwriting commission, placement fees, long term capital gains, other income, etc. 2. Benefits to the Investors There are number of benefits that the investor of a mutual fund avail. These are discussed as follows: .Resident Unit Holders- In case of an individual or Hindu Undivided Families (HUF’s), income by way of dividends, if any from unit of schemes of the fund together with other income on specified investment/deposit are except from tax within the overall limit of Rs.15000/- specified under Section80L of the I.T. Act,1961. Since dividends from shares no longer invite dividend tax and hence the whole limit is available for mutual fund dividends. . Tax deduction at source- as per Section196A of the Income Tax Act, 1961, no deduction of tax at source is made from any income payable to the unit holders. This implies that there is no tax deduction at source for redemption up to any limit. As per Section194k of the I.T.Act 1961, deduction of tax at source is not made if the dividend income from a mutual fund does not exceed Rs10000 per annum.

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2.6 - Investment criteria Lower cost It is a lower cost of investment as compare to other mode of investment option in the market. Here the investor can invest a minimum of Rs500 in the scheme of ELSS (Equity Link Saving Scheme). Less paper work Here less paper work is require than other. The investor give his detail information like his/her name,age,address,phone no., pan card no, nominee name and address(in case of minor) and three full signature of the candided. No cash Transactions Investor need not require paying cash, instead of cash investor has to pay cheque or demand draft. Which help to prevent misappropriation and also save the tax. Here the investor just writes the product name of mutual fund and sign on it. It also saves the time. No Age Bar There is no age bar of investor here any age group can invest in mutual fund. In case of minor(below 18 year) there is a nominee, so a child can invest through his guardian and a person having age of 70 also invest in mutual fund ,which is not possible in other investments. Service or any kind of income group A service holder or any kind of income group or a student or unemployed people can invest in mutual fund but the person is a rational human being having sound knowledge of investment company.

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ABOUT HDFC –MUTUAL FUND 1. WHY HDFC MUTUAL FUND 2. SPONSORS 3. TRUSTEE 4. AWARDS

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3.1 - Why HDFC Mutual Fund? HDFC Mutual Fund is one of the largest mutual funds and well-established fund house in the country with consistent and above average fund performance across categories since its incorporation on December 10, 1999. While our past experience does make us a veteran, but when it comes to investments, we have never believed that the experience is enough.

Our Investment Philosophy The single most important factor that drives HDFC Mutual Fund is its belief to give the investor the chance to profitably invest in the financial market, without constantly worrying about the market swings. To realize this belief, HDFC Mutual Fund has set up the infrastructure required to conduct all the fundamental research and back it up with effective analysis. Our strong emphasis on managing and controlling portfolio risk avoids chasing the latest “fads” and trends.

We Offer We believe, that, by giving the investor long-term benefits, we have to constantly review the markets for new trends, to identify new growth sectors and share this knowledge with our investors in the form of product offerings. We have come up with various products across asset and risk categories to enable investors to invest in line with their investment objectives and risk taking capacity. Besides, we also offer Portfolio Management Services.

Our Achievements HDFC Asset Management Company (AMC) is the first AMC in India to have been assigned the ‘CRISIL Fund House Level – 1’ rating. This is its highest Fund Governance and Process Quality Rating which reflects the highest governance levels and fund management practices at HDFC AMC It is the only fund house to have been assigned this rating for two years in succession. Over the past, we have won a number of awards and accolades for our performance

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3.2 - SPONSORS Housing Development Finance Corporation Limited (HDFC). HDFC was incorporated in 1977 as the first specialized Mortgage Company 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 has a client base of around 12 lac borrowers, around 8 lac depositors, over 1.08 lac shareholders and 50,000 deposit agents, as at March 31, 2008. HDFC has raised funds from international agencies such as the World Bank, IFC (Washington), USAID, DEG, ADB and KfW, international syndicated loans, 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 thirteenth 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. The company was present in the Indian life insurance market from 1847 to 1938 when agencies were set up in Kolkata and Mumbai. The company re-entered the Indian market in 1995, when an agreement was signed with HDFC to launch an insurance joint venture. On April 2006, the Board of The Standard Life Assurance Company recommended that it should demutualise and Standard Life plc float on the London Stock Exchange. At a Special General Meeting held in May voting members overwhelmingly voted in favour of this. The Court of Session in Scotland approved this in June and Standard Life plc floated on the London Stock Exchange on 10th July 2006. Standard Life Investments is a leading asset management company, with approximately US$ 267 billion as at March 31, 2008, of assets under management. The company operates in the UK, Canada, Hong Kong, China, Korea, Ireland, Paris, Sydney and the USA to ensure it is able to

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Detail Study Of HDFC Mutual Fund form a truly global investment view. 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

3.3 - TRUSTEE HDFC Trustee Company Limited, a company incorporated under the Companies Act, 1956 is the Trustee to HDFC Mutual Fund vide the Trust deed dated June 8, 2000, as amended from time to time. HDFC Trustee Company Ltd is wholly owned subsidiary of HDFC

The Board of Directors of HDFC Trustee company Limited consists of the following eminent persons. Mr. Anil Kumar Hirjee Mr. James Aird Mr. Shishir K. Diwanji Mr. Ranjan Sanghi Mr. V. Srinivasa Rangan

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3.4 - Awards & Accolades CNBC - TV 18 - CRISIL Mutual Fund of the Year Awards 2008: (3 awards) 1. HDFC Prudence Fund was the only scheme that won the CNBC - TV 18 - CRISIL Mutual Fund of the Year Award 2008 in the Most Consistent Balanced Fund under CRISIL ~ CPR for the calendar year 2007 (from amongst 3 schemes). 2. HDFC Cash Management Fund - Savings Plan was the only scheme that won the CNBC - TV 18 - CRISIL Mutual Fund of the Year Award 2008 in the Most Consistent Liquid Fund under CRISIL ~ CPR for the calendar year 2007 (from amongst 5 schemes). 3. HDFC Cash Management Fund - Savings Plan was the only scheme that won the CNBC - TV 18 - CRISIL Mutual Fund of the Year Award 2008 in the Liquid Scheme – Retail Category for the calendar year 2007 (from amongst 19 schemes).

ICRA Mutual Fund Awards 2008: (3 awards) 1. HDFC MF Monthly Income Plan-Long Term Plan- Ranked a Seven Star Fund and has been awarded the Gold Award for "Best Performance" in the category of "Open Ended Marginal Equity" for the three year period ending December 31, 2007 (from amongst 27 schemes)

2. HDFC High Interest Fund - Short Term Plan - Ranked a Five Star Fund indicating performance among the top 10% in the category of "Open Ended Debt - Short Term" for one year period ending December 31, 2007 (from amongst 20 schemes).

3. HDFC Prudence Fund - Ranked a Five Star Fund indicating performance among the top 10% in the category of "Open Ended Balanced" for the three year period ending December 31, 2007 (from amongst 16 schemes).

Lipper Fund Awards 2008: 1. HDFC Equity Fund - Growth has been awarded the 'Best Fund over Ten Years' in the 'Equity India Category' at the Lipper Fund Awards 2008 (form amongst 23 schemes). It was awarded the Best Fund over ten years in 2006 and 2007 as well. 2008 makes it three in a row

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PRODUCT & SERVICE OF HDFC MUTUAL FUND 1. TYPES OF MUTUAL FUND 2. INVESTMENT PLAN 3. PRODUCT OF MUTUAL FUND

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4.1 - TYPES OF MUTUAL FUND SCHEME (a)Open-ended Fund/ Scheme An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity.

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

(c)Sector specific funds/schemes These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

(d)Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest predominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme.

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4.2 - INVESTMENT PLAN 4.2.1 - SYSTEMATIC INVESTMENT PLAN (SIP) HDFC MF SIP is similar to a Recurring Deposit. Every month on a specified date an amount you choose is invested in a mutual fund scheme of your choice. The dates currently available for SIPs are the 1st, 5th, 10th, 15th, 20th and the 25th of a month. You’ll be amazed to learn about the many benefits of investing through HDFC MF SIP. Benefit 1 Become A Disciplined Invester Being disciplined - It’s the key to investing success. With the HDFC MF Systematic Investment Plan you commit an amount of your choice (minimum of Rs. 1000 and in multiples of Rs. 100 thereof*) to be invested every month in one of our schemes. Think of each SIP payment as laying a brick. One by one, you’ll see them transform into a building. You’ll see your investments accrue month after month. It’s as simple as giving at least 6 postdated monthly cheques to us for a fixed amount in a scheme of your choice. It’s the perfect solution for irregular investors. *Minimum amounts may differ for each Scheme. Please refer to SIP Enrolment Form for details. Benefit 2 Reach Your Financial Goal Imagine you want to buy a car a year from now, but you don’t know where the down-payment will come from. HDFC MF SIP is a perfect tool for people who have a specific, future financial requirement. By investing an amount of your choice every month, you can plan for and meet financial goals, like funds for a child’s education, a marriage in the family or a comfortable postretirement life. The table below illustrates how a little every month can go a long way. Monthly Savings - What your savings may generate Savings per month Total amount invested Rate of return (for 15 years) (Rs. in Lacs) 6.0% 8.0% 10.0% (rupees in lacs, 15 years later)* 5000 9.0 14.6 17.4 20.9 4000 7.2 11.7 13.9 16.7 3000 5.4 8.8 10.4 12.5 2000 3.6 5.8 7.0 8.3 1000 1.8 2.9 3.5 4.2

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Detail Study Of HDFC Mutual Fund *Monthly instalments, compounded monthly, for a 15-year period.

Disclaimer: The illustration above is merely indicative in nature and should not be construed as investment advice. It does not in any manner imply or suggest performance of any HDFC Mutual Fund Scheme(s). Please read Risk Factors.

Benefit 3 Take Advantage of Rupee Cost Averaging Most investors want to buy stocks when the prices are low and sell them when prices are high. But timing the market is timeconsuming and risky. A more successful investment strategy is to adopt the method called Rupee Cost Averaging. To illustrate this we’ll compare investing the identical amounts through a SIP and in one lump sum. Imagine Suresh invests Rs. 1000 every month in an equity mutual fund scheme starting in January. His friend, Rajesh, invests Rs. 12000 in one lump sum in the same scheme. The following table illustrate how their respective investments would have performed from Jan to Dec: Suresh’s Investment

Rajesh’s Investment

Month

NAV

Amount

Units

Amount

Units

Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04

9.345 9.399 8.123 8.750 8.012 8.925 9.102 8.310 7.568 6.462 6.931 7.600

1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000

107.0091 106.3943 123.1072 114.2857 124.8128 112.0448 109.8660 120.3369 132.1353 154.7509 144.2793 131.5789

12000

1284.1091

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Detail Study Of HDFC Mutual Fund *NAV as on the 10th every month. These are assumed NAVs in a volatile market

Disclaimer: The illustration above is merely indicative in nature and should not be construed as investment advice. It does not in any manner imply or suggest performance of any HDFC Mutual Fund Scheme(s). Rupee Cost Averaging neither ensures you profits nor protects you from making a loss in declining markets. Please read Risk Factors. As seen in the table, by investing through SIP, you end up buying more units when the price is low and fewer units when the price is high. However, over a period of time these market fluctuations are generally averaged. And the average cost of your investment is often reduced.

At the end of the 12 months, Suresh has more units than Rajesh, even though they invested the same amount. That’s because the average cost of Suresh’s units is much lower than that of Rajesh. Rajesh made only one investment and that too when the per-unit price was high. Suresh’s average unit price = 12000/1480.6012 = Rs. 8.105 Rajesh’s average unit price = Rs. 9.345

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Benefit 4 Grow Your Investment With Compounded Benefits It is far better to invest a small amount of money regularly, rather than save up to make one large investment. This is because while you are saving the lump sum, your savings may not earn much interest. With HDFC MF SIP, each amount you invest grows through compounding benefits as well. That is, the interest earned on your investment also earns interest. The following example illustrates this. Imagine Neha is 20 years old when she starts working. Every month she saves and invests Rs. 5,000 till she is 25 years old. The total investment made by her over 5 years is Rs. 3 lakhs.Arjun also starts working when he is 20 years old. But he doesn’t invest monthly. He gets a large bonus of Rs. 3 lakhs at 25 and decides to invest the entire amount.

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Detail Study Of HDFC Mutual Fund Both of them decide not to withdraw these investments till they turn 50. At 50, Neha’s Investments have grown to Rs. 46,68,273* whereas Arjun’s investments have grown to Rs. 36,17,084*. Neha’s small contributions to a SIP and her decision to start investing earlier than Arjun have made her wealthier by over Rs. 10 lakhs. *Figures based on 10% p.a. interest compounded monthly. Disclaimer: TheThe illustration above is merely indicative in nature and should not be construed as investment advice. It does not in any manner imply or suggest performance of any HDFC Mutual Fund Scheme(s). Please read Risk Factors. Benefit 5 Do All This Effortlessly Investing with HDFC MF SIP is easy. Simply give us post-dated cheques or opt for an Auto Debit from you bank account for an amount of your choice (minimum of Rs. 1000 and in multiples of Rs. 100 thereof*) and we’ll invest the money every month in a fund of your choice. The plans are completely flexible. You can invest for a minimum of six months, or for as long as you want. You can also decide to invest quarterly and will need to invest for a minimum of two quarters.

4.2.2 - SYSTEMATIC TRANSFER PLAN (STP) STP refers to Systematic Transfer Plan where in an investor invests a lump sum amount in one scheme and regularly transfers (i.e. switches) a pre-defined amount into another scheme. Every month on a specified date an amount you choose is transfered from one mutual fund scheme to another of your choice. Currently, Fixed Systematic Transfer Plan (FSTP) - Monthly Interval and Capital Appreciation

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Detail Study Of HDFC Mutual Fund Systematic Transfer Plan (CASTP) - Monthly Interval facility is available to the Unit holders on 1st, 5th, 10th, 15th, 20th and 25th of a month and FSTP - Quarterly Interval and CASTP Quarterly Interval facility is available to the Unit holders on 1st, 5th, 10th, 15th, 20th and 25th of the first month of each quarter. The Entry Load Structure for the transferee schemes - HDFC Growth Fund, HDFC Equity Fund, HDFC Top 200 Fund, HDFC Capital Builder Fund, HDFC Core & Satellite Fund, HDFC Premier Multi-Cap Fund, HDFC Balanced Fund, HDFC Prudence Fund, HDFC Long Term Advantage Fund and HDFC TaxSaver will be as follows: The Exit Load Structure is as follows: For Transferee Schemes : HDFC Long Term Advantage Fund and HDFC TaxSaver - Nil For Transferee Schemes : HDFC Growth Fund, HDFC Equity Fund, HDFC Top 200 Fund, HDFC Capital Builder Fund, HDFC Core & Satellite Fund, HDFC Premier Multi-Cap Fund, HDFC Balanced Fund and HDFC Prudence Fund. In respect of each investment through STP less than Rs. 5 crore in value, an Exit Load of 1.25% is payable if units are redeemed / switched-out on or before 2 years from the date of allotment. In respect of each investment through STP equal to or greater than Rs. 5 crore in value, no Exit Load is payable. Thus, this facility offers the benefits similar to those of an SIP and is suitable for investors who intend to invest systematically and currently have funds for investments.

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4.3 - PRODUCTS OF MUTUAL FUND

EQUITY/ GROWTH FUND

CHILDREN’S GIFT FUND

LIQUID FUND

DEBT/ INCOME FUND

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Detail Study Of HDFC Mutual Fund EQUITY/ GROWTH FUND

DEBT/INCOME FUND

HDFC Growth Fund

HDFC MF Monthly Income Plan - Short Term Plan

HDFC Top 200 Fund HDFC Multiple Yield Fund HDFC Core and Satellite Fund HDFC Income Fund HDFC Index Fund - Sensex Plan HDFC Short Term Plan HDFC Index Fund - Sensex Plus Plan HDFC Gilt Fund - Short Term Plan HDFC Balanced Fund HDFC Long Term Advantage Fund (ELSS) HDFC Long Term Equity Fund

HDFC Floating Rate Income Fund -Short Term Plan HDFC Cash Management Fund - Savings Plus Plan

HDFC Infrastructure Fund HDFC Capital Builder Fund

HDFC MF Monthly Income Plan - Long Term Plan

HDFC Premier Multi-Cap

HDFC Multiple Yield Fund - Plan 2005

HDFC Index Fund - Nifty Plan

HDFC High Interest Fund

HDFC Arbitrage Fund

HDFC High Interest Fund - Short term Plan

HDFC Equity Fund

HDFC Gilt Fund - Long Term Plan

HDFC Prudence Fund

HDFC Floating Rate Income Fund - Long Term Plan

HDFC TaxSaver (ELSS) HDFC Mid-Cap Opportunities Fund

CHILDREN’S GIFT FUND

LIQUID FUND

HDFC Children's Gift Fund - Investment Plan

HDFC Liquid Fund

HDFC Children's Gift Fund - Savings Plan

HDFC Liquid Fund Premium Plan HDFC Liquid Fund Premium Plus Plan HDFC Cash Management Fund – Call HDFC Cash Management Fund - Savings Plan

SOME POPULAR FUNDS ARE EXPLAIN HERE

HDFC Growth Fund MD NABEEL

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Detail Study Of HDFC Mutual Fund HDFC Growth fund, an open-ended growth scheme, applies an investment approach based on a set of well established but flexible principles that emphasize the concept of sustainable economic earnings cash return on investment. The objective is to identify “business with superior growth prospects nd good management at a reasonable price”. The five basic principles that serve the foundation for this approach are as follows:     

Focus on the long term Investment confers proportionate ownership of the business Maintain a margin safety Maintain a balanced outlook on the market Discipline approach to selling.

The investment philosophy rests on a two-pronged approach. 60-80% of the portfolio will aim to stay invested for most of the time in large cap stocks that satisfy the above investment criteria. This allocation to large cap stocks also ensures greater liquidity in the portfolio. 20-40% of the portfolio will be invested in companies of scale that are either large market share holder

Basic Scheme Information, Nature of Scheme Inception Date Option/Plan Plan name Dividentd plan Growth plan

Open Ended Growth Scheme September 11, 2000 Dividend Plan, Growth Plan. The Dividend Plan offers NAV Date NAV value Dividend Payout and Reinvestment Facility. 18 Aug 2008 29.0270 18 Aug 2008 58.9370

The asset allocation under the Scheme will be as follows : HDFC (NAV as at evaluation date, Rs. 53.472 Sr.noGrowth Type of Instruments Normal Normal Risk Profile Fund Per unit) Allocation Allocation (% of Net Asset) (% of Net Date Period NAV Returns(%) $$ Asset) Benchmark 1 Equity & Equity related 80-100 ^ 00 Returns(%)# Medium to high instruments March 30, 2007 Last 458 days 45.461 13.81** 2.37** Securities, Money 00 -33.38* Low to medium December 28, DebtLast Six months (185 79.6670 -32.88* Marketdays) instruments & Cash 00-20 2007 2 (including money at call) June 29, 2007 Last 1 Year (367 days) 54.695 -2.22** -8.07** June 30, 2005 Last 3 Years (1096 25.499 27.97** 23.21**

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Detail Study Of HDFC Mutual Fund June 30, 2003 June 30, 1998 September 11, 2000

days) Last 5 Years (1827 days) Last 10 Years (3653 days) Since Inception (2849 days)

10.829

37.58**

30.1**

N.A

N.A.

15.25**

10.000

23.96**

14.44**

* Absolute Returns ** Compounded Annualised Returns # SENSEX ~ Due to an over all sharp rise in the stock prices ^ Past performance may or may not be sustained in the future

SIP Returns SIP Investments Total Amount Invested (Rs.) Market Value as on June 30, 2008 Returns (Annualised)*% Benchmark Returns

Since Inception 94,000.00 338,680.64 31.84% 22.77%

5 Year 60,000.00 115,755.39 26.64% 20.64%

3 Year 36,000.00 43,748.58 13.10% 6.77%

1 Year 12,000.00 9,857.36 -31.44% -36.15%

# SENSEX

Benchmark - BSE Sensex Disclaimer: The above investment simulation is for illustrative purposes only and should not be construed as a promise on minimum returns and safeguard of capital. The AMC / Mutual Fund is not guaranteeing or promising or forecasting any returns. SIP does not assure a profit or guarantee protection against a loss in a declining market. Please refer SIP Enrolment Form or contact nearest ISC for SIP Load Structure

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HDFC TOP-200 FUND Investment Objective The investment objective is to generate long term capital appreciation from a portfolio of equity and equity linked instruments. The investment portfolio for equity and equity linked instruments will be primarily drawn from the companies in the BSE 200 Index. Further, the Scheme may also invest in listed companies that would qualify to be in the top 200 by market capitalization on the BSE even though they may not be listed on the BSE This includes participation in large IPOs where in the market capitalization of the company based on issue price would make the company a part of the top 200 companies listed on the BSE based on market capitalization Basic Scheme Information Nature of Scheme Inception Date Option/Plan

Plan Name Dividend Plan Growth Plan

Open Ended Growth Scheme October 11, 1996 Dividend Plan,Growth Plan. The Dividend Plan offers Dividend Payout and Reinvestment Facility. NAV Date 18 Aug 2008 18 Aug 2008

NAV Amount 38.29 129.56

Investment Pattern The Scheme may also invest upto 25% of net assets of the Scheme in derivatives such as Futures & Options and such other derivative instruments as may be introduced from time to time for the purpose of hedging and portfolio balancing and and other uses as may be permitted under the regulations and guidelines. The Scheme may also invest a part of its corpus, not exceeding 40% of its net assets, in overseas markets in Global Depository Receipts (GDRs), ADRs, overseas equity, bonds and mutual funds and such other instruments as may be allowed under the Regulations from time to time.

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Detail Study Of HDFC Mutual Fund Returns HDFC Top 200 Fund Date

(NAV as at evaluation date, Rs. Per unit) Period NAV

March 30, 2007 December 28, 2007 June 29, 2007 June 30, 2005

Last 458 days Last Six months (185 days) Last 1 Year (367 days) Last 3 Years (1096 days) Last 5 Years (1827 days) Last 10 Years (3653 days) Since Inception (4280 days)

June 30, 2003 June 30, 1998 October 11, 1996

115.424

104.504 167.8880

Returns(%) $$ ^ 8.24** -31.25*

Benchmark Returns(%)# 4.45** -37.53*

120.34 57.343

-4.06** 26.23**

-8.85** 21.2**

23.358

37.6**

29.43**

12.749

27.12**

17.55**

10.000

25.3**

15.18**


Since Inception 141,000.00 835,535.45 27.85% 18.32%

10 Year

5 Year

3 Year

1 Year

120,000.0 0 580,129.0 4 29.65% 20.25%

60,000.00

36,000.0 0 41,661.2 9 9.73% 5.82%

12,000.00

113,375.0 2 25.77% 18.90%

9,843.01 -31.64% -38.40%

Benchmark - BSE 200 Disclaimer: The above investment simulation is for illustrative purposes only and should not be construed as a promise on minimum returns and safeguard of capital. The AMC / Mutual Fund is not guaranteeing or promising or forecasting any returns. SIP does not assure a profit or guarantee protection against a loss in a declining market. Please refer SIP Enrolment Form or contact nearest ISC for SIP Load Structure

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Detail Study Of HDFC Mutual Fund HDFC – EQUITY FUND HDFC Equity Fund is an open-ended growth scheme, which aims to generate longterm capital appreciation. The scheme maintains a focused portfolio predominantly of large cap stocks, through there is controlled exposure to mid caps. The schemes however always remain diversified across sectors. Moreover, the sectoral allocation is done keeping in mind to diversify across sectors weakly co-related to each other to further reduce risk. The underlying theme while managing the scheme is to invest in businesses that are sustainable and for good quality. Basic Scheme Information Nature of Scheme Inception Date Option/Plan

Plan Name Dividend Plan Growth Plan

Open Ended Growth Scheme January 01, 1995 Dividend Plan,Growth Plan. The Dividend Plan offers Dividend Payout and Reinvestment Facility. NAV Date 18 Aug 2008 18 Aug 2008

NAV Amount 36.1630 156.7660

Investment Strategy: In order to provide long term capital appreciation, the Scheme will invest predominantly in growth companies. Companies selected under this portfolio would as far as practicable consist of medium to large sized companies which: •

are likely achieve above average growth than the industry;

•

enjoy distinct competitive advantages, and

•

have superior financial strengths. The aim will be to build a portfolio, which represents a cross-section of the strong growth companies in the prevailing market. In order to reduce the risk of volatility, the Scheme will diversify across major industries and economic sectors

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Detail Study Of HDFC Mutual Fund Investment Pattern The asset allocation under the Scheme will be as follows : Sr.No. 1 2

Asset Type Equities and Equity Related Instruments Debt & Money Market Instruments

(% of Portfolio) 80 - 100 0 - 20

Risk Profile Medium to High Low to Medium

Investment in Securitised debt, if undertaken, would not exceed 20% of the net assets of the scheme. The Scheme may also invest upto 25% of net assets of the Scheme in derivatives such as Futures & Options and such other derivative instruments as may be introduced from time to time for the purpose of hedging and portfolio balancing and other uses as may be permitted under the Regulations. The Scheme may also invest a part of its corpus, not exceeding 40% of its net assets, in overseas markets in Global Depository Receipts (GDRs), ADRs, overseas equity, bonds and mutual funds and such other instruments as may be allowed under the Regulations from time to time. Also refer to the Section on Policy on off-shore Investments by the Scheme(s). If the investment in equities and related instruments falls below 70% of the portfolio of the Scheme at any point in time, it would be endeavoured to review and rebalance the composition. Not with standing anything stated above, subject to the regulations, the asset allocation pattern indicated above may change from time to time, keeping in view market conditions, market opportunities, applicable regulations and political and economic factors. It may be clearly understood that the percentages stated above are only indicative and are not absolute and that they can vary substantially depending upon the perception of the AMC, the intention being at all times to seek to protect the NAV of the scheme. Such changes will be for short term and defensive considerations. Provided further and subject to the above, any change in the asset allocation affecting the investment profile of the Scheme and amounting to a change in the Fundamental Attributes of the Scheme shall be effected in accordance with sub-regulation (15A) of regulation 18 of SEBI regulations.

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Detail Study Of HDFC Mutual Fund Returns HDFC Equity Fund Date


March 30, 2007 December 28, 2007 June 29, 2007


June 30, 2005 June 30, 2003 June 30, 1998 January 1, 1995

143.171

142.602 219.8570

Returns(%) $$ ^ 0.32** -34.88*


165.313

-13.33**

-11.59**

73.768

24.71**

18.87**

29.960

36.68**

29.03**

7.280

34.67**

17.75**

10.000

21.78**

9.22**

* Absolute Returns ** Compounded Annualised Returns # S&P CNX 500 ^ Past performance may or may not be sustained in the future


Since Inception 162,000.00 1,494,753.92 29.53% 16.18%

10 Year

5 Year

3 Year

1 Year

120,000.0 0 646,490.6 5 31.66% 19.77%

60,000.00

36,000.0 0 38,998.6 7 5.27% 3.25%

12,000.00

107,904.1 2 23.71% 17.56%

9,408.57 -37.52% -40.27%

Disclaimer: The above investment simulation is for illustrative purposes only and should not be construed as a promise on minimum returns and safeguard of capital. The AMC / Mutual Fund is not guaranteeing or promising or forecasting any returns. SIP does not assure a profit or guarantee protection against a loss in a declining market. Please refer SIP Enrolment Form or contact nearest ISC for SIP Load Structure.

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Detail Study Of HDFC Mutual Fund HDFC Infrastructure Fund Investment Objective To seek long-term capital appreciation by investing predominantly in equity and equity related securities of companies engaged in or expected to benefit from growth and development of infrastructure.

Basic Scheme Information Nature of Scheme

Inception Date Option/Plan

Plan Name Growth Option Dividend Option

Close Ended Equity Scheme with a maturity period of 3 years from the date of allotment with automatic conversion into an open-ended scheme upon maturity of the Scheme. March 10, 2008 Dividend Option, Growth Option. Dividend Option currently offers with payout facility only NAV Date 18 Aug 2008 18 Aug 2008

NAV Amount 8.3830 8.3830

Investment Pattern: The asset allocation under the respective Plans will be as follows: Type of Instruments Minimum Maximum Allocation (% of Allocation(% of Net Assets) Net Assets) Equity and Equity Related 65% 100% Instruments of infrastructure / infrastructure related companies Equity and Equity Related 0% 35% Instruments of companies other than mentioned above Debt Securities and Money 0% 35% Market Instruments* and Fixed Income Derivative ;

Risk Profile of the Instrument Medium to High

Medium to High Low to Medium

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Detail Study Of HDFC Mutual Fund * Investments in securitised debt shall not normally exceed 30% of the net assets of the Scheme. The Scheme may seek investment opportunity in Foreign Securities (max. 35% of net assets). The Scheme may take derivatives position for hedging, portfolio balancing or to undertake any other strategy as permitted under SEBI Regulations from time to time (max. 20% of the net assets) based on the opportunities available subject to SEBI Regulations.

Returns HDFC Infrastructure Fund Date


March 30, 2007 December 28, 2007


June 29, 2007 June 30, 2005 June 30, 2003 June 30, 1998 March 10, 2008

7.48

N.A N.A

Returns(%) $ $^ N.A. N.A.


N.A N.A

N.A. N.A.

-11.59** 18.87**

N.A

N.A.

29.03**

N.A

N.A.

17.75**

10.000

-25.2*

-18.45*

* Absolute Returns ** Compounded Annualised Returns # S&P CNX 500 ~ Due to an over all sharp rise in the stock prices ^ Past performance may or may not be sustained in the future

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HDFC Prudence Fund Investment Objective The investment objective of the Scheme is to provide periodic returns and capital appreciation over a long period of time, from a judicious mix of equity and debt investments, with the aim to prevent/ minimise any capital erosion.

Basic Scheme Information Nature of Scheme Inception Date Option/Plan

Open Ended Balanced Scheme February 01, 1994 Dividend Plan,Growth Plan. The Dividend Plan offers Dividend Payout and Reinvestment Facility.

Returns HDFC Prudence Fund Date


March 30, 2007 December 28, 2007 June 29, 2007 June 30, 2005

Last 458 days Last 185 days Last 1 Year (367 days) Last 3 Years (1096 days) Last 5 Years (1827 days) Last 10 Years (3653 days) Since Inception (5263 days)

June 30, 2003 June 30, 1998 February 1, 1994 * Absolute Returns

112.678

110.132 160.6870

Returns(%) $$ ^ 1.84** -29.88*


124.716 64.682

-9.6** 20.3**

-1.33** 15.38**

19.230

42.37**

19.31**

11.480

26.8**

N.A.

10.000

20.41**

N.A.

** Compounded Annualised Returns

# CRISIL Balanced Fund Index ~

Due to an over all sharp rise in the stock prices

^ Past performance may or may not be sustained in the future

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Detail Study Of HDFC Mutual Fund $$ Adjusted for the dividends declared under the scheme prior to its splitting into the Dividend and Growth Plan

Investment Strategy As outlined above, the investments in the Scheme will comprise both debt and equities. The Fund would invest in Debt instruments such as Government securities, money market instruments, securitised debts, corporate debentures and bonds, preference shares, quasi Government bonds, and in equity shares. In the long term, the mix between debt instruments and equity instruments is targeted between 60:40 and 40:60 respectively. The exact mix will be a function of interest rates, equity valuations, reserves position, risk taking capacity of the portfolio without compromising the consistency of dividend pay out (in the case of Dividend Plan), need for capital preservation and the need to generate capital appreciation. Fund Manager Mr. Prashant Jain Mr. Anand Laddha - Dedicated Fund Manager - Foreign Securities

Investment Pattern The following table provides the asset allocation of the Scheme's portfolio. The asset allocation under the respective Plans will be as follows : Sr.No. Type of Instruments 1 2

Equities & Equity related instruments Debt Securities, Money Market instruments(including cash/call money)

Normal Allocation (% of Net Assets) 40 - 75% 25 - 60%

Risk Profile Medium to High Low to Medium

(Investment in Securitised debt, if undertaken,would not exceed 10% of the net assets of the Scheme.)

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HDFC Capital Builder Fund HDFC Capital Builder Fund, an open-ended growth scheme, aims to invest in strong companies at prices that below fair value in the opinion of the fund managers. The investment approach is based on the philosophy that value may be uncovered only where the crowd has not discovered it yet. In the opinion of the fund managers such value exists in good quality well managed “neglected “stocks. The current neglect in these companies by the broad market participants can be due to various factors such as difficult recent market conditions, major restructuring charges, VRS expenses or other such one time effects that may subdue profits in the near term. This also usually results in the shares of such companies being relatively illiquid. While assuming such relative risk adjusted liquidity risk the fund managers propose to capitalize on expected pick up reported earning as result of strong growth prospects in the future. This eventually translates in to more liquidity depending on the success of this strategy. Such opportunities are available in large companies as well as small companies. While there is no criteria for stock selection based on market capitalization the endeavor is to keep a balance of companies in the portfolio between big and small companies, on one category overwhelming the other Basic Scheme Information Nature of Scheme Inception Date Option/Plan Plan Name Dividend Plan

Open Ended Growth Scheme February 01, 1994 Dividend Plan,Growth Plan. The Dividend Plan offers Dividend Payout and Reinvestment Facility. NA NAV Amount V Date 18 22.075 Aug

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Detail Study Of HDFC Mutual Fund Growth Plan

2008 18 Aug 2008

69.918

Investment Pattern The asset allocation under the Scheme will be as follows : Sr.No. 1 2

Asset Type Equities and Equity Related Instruments Debt & Money Market Instruments

(% of Portfolio) Risk Profile Upto 100% Medium to High Not more than 20% Low to Medium

Investment in Securitised debt, if undertaken, would not exceed 20% of the net assets of the scheme. The Scheme may also invest upto 25% of net assets of the Scheme in derivatives such as Futures & Options and such other derivative instruments as may be introduced from time to time for the purpose of hedging and portfolio balancing and other uses as may be permitted under the regulations and guidelines. The Scheme may also invest a part of its corpus, not exceeding 40% of its net assets, in overseas markets in Global Depository Receipts (GDRs), ADRs, overseas equity, bonds and mutual funds and such other instruments as may be allowed under the Regulations from time to time. Also refer to the Section on Policy on off-shore Investments by the

SIP Returns

Scheme(s). SIP Investments Total Amount Invested (Rs.) Market Value as on June 30, 2008 Returns (Annualised)*%

Since Inception 173,000.00 890,131.42 20.51%

10 Year

5 Year

3 Year

1 Year

120,000.0 0 463,752.0 8 25.51%

60,000.00

36,000.0 0 37,539.3 4 2.74%

12,000.00

103,349.4 0 21.92%

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Detail Study Of HDFC Mutual Fund Benchmark Returns

15.04%

19.77%

17.56%

3.25%

-40.27%

Past performance may or may not be sustained in the future * Load is not taken into consideration and the Returns are of Growth Plan / Option. Investors are advised to refer to the Relative Performance table furnished as above for non-SIP returns

Returns HDFC Capital Builder Fund Date


March 30, 2007 December 28, 2007


June 29, 2007 June 30, 2005 June 30, 2003 June 30, 1998 February 1, 1994 * Absolute Returns

64.169

60.3 105.1230

Returns(%) $ $^ 5.08** -38.96*


73.27

-12.36**

-11.59**

37.474

19.62**

18.87**

13.117

37.32**

29.03**

7.480

23.96**

17.75**

10.000

13.76**

7.95**

** Compounded Annualised Returns

# S&P CNX 500 ^ Past performance may or may not be sustained in the future

Benchmark - S & P CNX 500 Disclaimer: The above investment simulation is for illustrative purposes only and should not be construed as a promise on minimum returns and safeguard of capital. The AMC / Mutual Fund is not guaranteeing or promising or forecasting any returns. SIP does not assure a profit or guarantee protection against a loss in a declining market. Please refer SIP Enrolment Form or contact nearest ISC for SIP Load Structure.

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PART OF MY SUMMER TRAINING

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As part of my understudy training For the purpose of fulfillment of masters degree in business administration i had undertaken my summer training at HDFC-mutual fund at Rourkela branch for a period of 45 days. In course of the training i had an opportunity to get proper working knowledge about the internal workings of Mutual funds dept.

The single most important factor that drives HDFC Mutual Fund is its belief to give the investor the chance to profitably invest in the financial market, without constantly worrying about the market swings.

I had chosen the HDFC-mutual fund as it is one of the most highly reputed mutual fund all over the INDIA and offers under study training to students during summer. I had the job of convincing investors to choose HDFC mutual funds over others. For this purpose I also maintained a database of all the investors who had been approached.

Money is a valuable asset and it is obvious that people think many times before investing their money into any kind of funds. They frequently ask questions about the time period, interest rates, current status of the share market, etc which requires good running knowledge in the field. It was not very easy to convince people to make investment in the HDFC mutual funds but with the help of Mr. Manmohan Mohapatra, Branch Manager, of HDF-mutual fund Rourkela branch. I accomplished my task.

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The largest amount of investment was made by Mr. MD ABID ,an amount of 1,50,000 , in the scheme HDFC- equity fund for a duration of years. Other investors were NAME 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24.

MD ABID SHOAIB AKHTER DEBENDRA NATH PAUL NAZM UZ ZAMA MD ABID NISHIT HEMANI Dr NEYAZ AHMED KHALID SADAT CHANDU LAL GUPTA NISHIT HEMANI MD PERWEZ ALAM JUBAIR KHAN D T MOHANTY PRAKASH JHA KHALID SADAT MD NABEEL VIKRANT GUPTA RAJESH KUMAR MD ASIF MAZAR KHAN BISWAJIT RAI NARENDRA NATH PAUL HARPREET KAUR SOMA AGARWAL

Investment type SIP SIP One time SIP ONE TIME SIP SIP SIP SIP ONE TIME SIP SIP SIP SIP One time SIP SIP SIP SIP SIP SIP SIP SIP SIP

Amount 2,000 1,000 1,00,000 1,000 1,50,000 2,000 1,000 2,000 1,000 50,000 1,000 1,000 1,000 1,000 1,00,000 2,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000

Scheme

Duration

HDFC GROWTH FUND HDFC TOP 200 FUND HDFC EQUITY FUND HDFC GROWTH FUND HDFC EQUITY FUND HDFC GROWTH FUND HDFC GROWTH FUND HDFC TOP 200 FUND HDFC TOP 200 FUND HDFC EQUITY FUD HDFC BALANCED FUND HDFC BALANCED FUND HDFC GROWTH FUND HDFC TOP 200 FUND HDFC EQUITY FUND HDFC GROWTH FUND HDFC GROWTH FUND HDFC GROWTH FUND HDFC GROWTH FUND HDFC TOP 200 FUND HDFC TOP 200 FUND HDFC GROWTH FUND HDFC BALANCED FUND HDFC EQUITY FUD

1 YEAR 1 YEAR 3 YEAR 1 YEAR 2 YEAR 1 YERA 1 YERA 1 YEAR 1 YEAR 2 YEAR 1 YEAR 1 YEAR 1 YEAR 1 YEAR 3 YEAR 1 YEAR 2 YEAR 1 YERA 1 YERA 1 YEAR 1 YEAR 2 YEAR 1 YEAR 1 YEAR

During the training period i managed to convince people to make investment in Hdfc Mutual funds.The total amount of trasaction i provided was about Rs 7,00,000

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METHODOLOGY OF THE STUDY 1. RESEARCH METHODOLOGY 2. SOURCES OF DATA COLLECTION 3. HYPOTHESIS OF THE STUDY

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Detail Study Of HDFC Mutual Fund 4. DATA COLLECTION & ANALYSIS

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6.1 - Research Methodology: Since the study undertaken by me is related to the study of mutual fund in India, the means adopted for collection of various facts and data were in the form of personal observation, officials documents, and directly interacting with the officers concerned and also directly interacting with the existing customers as well as new customer formed. It was an exploratory research. Work is mainly emphasized on the primary data. Primary data are gathered form prescribed questionnaire and by personal interview and the secondary data are collected from different books and magazines.

6.2 - Sources of Data collection There are two sources of data collection. They are:

1.

PRIMARY DATA SOURCE

2.

SECONDARY DATA SOURCE

The secondary data are those, which have already been collected by someone else thorough Books, Internet, Television, journals, Magazines, etc. On the other hand primary data does not exist here. The researcher has to gather primary data afresh for the specific study undertaken by him. Primary data has been collected here by questionnaire method and personal interview

method

is

followed.

Primary

sources

such

as

Interviews,

Observation, and attending training and development classes. Secondary sources such as Booklets, Monthly journal, Magazines, Official files etc.

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6.3 - HYPOTHESIS OF THE STUDY For doing the dissertation topic “performance of mutual fund analysis” I took the hypothesis of certain groups. I divide the total population on the basis of their age, income, gender, occupation and status. •

Male jobholders within the age group of 24-40.

•

Female jobholders within the age group of 24-40.

•

Male jobholders above the age 40.

•

Female jobholders above the age 40.

•

Individual having the income in the range of 1lkh-3lkh per annum.

•

Individual having the income above 3lkh per annum.

In Orissa i.e. rural area it is still a new concept so it will take some more time to really penetrate into this market apart from people who are HNI’s though these people are given more emphasis by all the Mutual funds and distribution channels. With the introduction of SIP’s the industry has created some options clear for retail investors to enter this market. My survey says that it the awareness level that is playing acting as an obstacle in the growth of Mutual fund Industry in Orissa as a whole. People in Bhubaneswar are now opening up and interested in looking forward for certified investment planners to help them designing their investment portfolio. Orissa as a market was not that efficient few years back, but now with lot of multinational companies and other reputed companies coming down, the Orissa market is slowly picking up. For mutual funds it is one of the emerging markets that can be trapped form its developing stage and though people of rural areas prefer Moderate risk they can easily accept mutual funds. Mutual fund Industry is delivering a splendid performance and will of course continue in coming future. But that can be only possible as the distribution channels like Karvy, Bajaj finance and Banks i.e. Citi Bank, HDFC Bank, ICICI Bank and Standard Chartered Bank along with all Asset Management Company.

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6.4 - Data Collection & Data Analysis

150

No of respondent - 200

100

Male

- 135

50

Female

- 65

0

135 65 male

female

Respondent

Number of respondents According to age groups: 18 to 30 = 55 30 to 40 = 80

100 80 60 40 20

55

80 40

0

40 to 50 = 40 50 above =25

18 to 35 35 to 45 45 to 55

25 55 & above

Respondent

The survey is conducted on a sample of 200 people which includes 110 males and 90 females. The sample contains consumers from all the age groups so that an ideal sample can be obtained.

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1. Investment Avenues available in the market, that investor are aware

of? Postal schemes Government securities Direct equity investment Bank FD’s Mutual funds Insurance

INFERENCE: According to the investors in Rourkela, 33% of investors prefer to deposit there money in bank FD’s. Where as 8% of the investors want to invest in postal scheme, 4% in government security, 15% invest in direct equity 20% of investors they prefer mutual fund & insurance, as there

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Detail Study Of HDFC Mutual Fund investment house which is not very high, but at the same time mutual fund concept is growing 2. More attractive about mutual funds? Returns Moderate risk Tax benefits Hassle free Past performance Well regulated No idea

. INFRENCE: According to people of Rourkela they attract with past performance of the company if company past records is good then they interested to invest. After that people attract with tax benefit then return on investment

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3. Percentage of entire investment includes mutual funds? Below 20% 20 to 50% 50 to 80% 80% above

INFRENCE: By this we come to know that most of the people use to go for mutual fund as we can see by the above graph that 83 people from 200 goes for 20% to50% investment in Mutual Funds.

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4. For Investments in Mutual Fund, which company investors prefer? HDFC MF ABN AMRO MF PRUDENTIAL ICICI MF RELIANCE MF BIRLA SUNLIFE

INFERENCE: According to the Investors in Rourkela 35% of investors prefer to invest in HDFC mutual fund, 27% of investors prefer Reliance mutual fund where as Birla share 12% and ICICI by 17%.but only 9% investors invest in ABN AMRO mutual fund. I have compared these five fund house because they are the main competitors in Rourkela.

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5. How do investors manage his investment portfolio? Solely of my own On advise of a friend On advise of a distributor/agent On advise of your banker On advice of mutual fund house people

INFRENCE: According to my survey most no of people manage his investment port folio by own, 84 people out of 200 manage his portfolio by own and 45 & 36 people manage with the help of bankers and MF house

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6. Savings/investment avenues 5 year back? Bank FD, Savings Insurance Mutual funds Equity market Govt. securities Real estate Postal savings, FD

INFRENCE: According to my survey before 5 year most of the people(113) of Rourkela city invested his money in insurance sector and 90 people out of 200 invested in bank FD. But only 43 people out of 200 invest in mutual fund which was very low

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7. Among the huge number of people going for mutual fund, in which kind of fund they normally invest? Equity Oriented Debt Oriented Balanced Oriented

INFERENCE: In the city like Rourkela in between the age group 18-30, 62% investor invested in equity oriented, and only 18% people invest in debt fund. But group of people more than 50 year 55% investor invest in debt fund and only 23% people invest in equity fund. It mean younger people attract with equity fund and old man attract with debt fund. but in balanced fund every groups are equally invest

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Risk appetite of people in Orissa Preferred Risk and Return High risk high return

(H,H)

Moderate risk moderate return

(M,M)

Low risk low return

(L,L)

INFERENCE: According to the survey, we can conclude that, people in rural areas mostly believe in Moderate risk, and moderate returns. Even mutual funds have moderate risk and the return is quite less than as it is in case of equities. So, for the people of Rural areas mutual funds are the right kind of investment option.

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8. How seriously people in Rourkela thing about undergoing a financial

planning for them? Yes No

INFRENCE: According to my survey of Rourkela people , most no of people are more serious about financial planning

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QUESTIONARE

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Detail Study Of HDFC Mutual Fund Questionnaire Please fill up the questionnaire according to the questions asked. (Just put on a tick mark [√] wherever needed)

Name

-

_______________________________________________________

Age

-

<20-30>

Occupation

-

<

30-40

<

40-50

<

50-above>

Sex

M

F

Service (Govt.) Service (Pvt.) Business Self-employed Retired

Organization -

_______________________________________________________

Designation -

_______________________________________________________

Annual Income -

Below 1 lakh 1 – 3 lakh 3 – 5 lakh Above 5 lakh

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Detail Study Of HDFC Mutual Fund 1. What are the Investment Avenues available in the market, that you are aware of? Postal schemes (i.e. MIS/PPF/NSC/R.D/T.D etc.) Government securities Bank FD’s Direct equity investment Mutual funds Insurance 2. Are you aware of the fact that some of the performing Mutual fund schemes in the industry have posted 20% + annualized returns in last 10 years? Yes

No

3. In your point of view what is more attractive about mutual funds? Returns

Hassle free

Moderate risk

Past performance

Tax benefits

Well regulated

No idea 4. If you have invested in Mutual funds, what percentage of your entire investment includes mutual funds? Below 20%

50 to 80%

20 to 50%

80% above

5. What were your Savings/investment avenues 5 year back? Bank FD, Savings

Insurance

Mutual funds

Equity market

Govt. securities

Real estate

Postal savings, FD

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Detail Study Of HDFC Mutual Fund 6. Now, what new avenues are included in your Investment portfolio? Govt. securities

Mutual funds

Insurance

Derivatives

Equity market Real estate 7. How do you manage your investment portfolio? Solely of my own On advise of a friend On advise of a distributor/agent On advise of your banker On advice of mutual fund house people 8. How do you rate these while taking an investment decision? (Rate as 1,2,3,4,5 according to preference) Returns

Risk factors

Lock-in period

past performance

Tax benefits 9. You believe in … High risk, High returns Moderate risk, moderate returns Low risk, low returns 10. Have you been ever approached by a Certified Investment Financial Planner? Yes

No

11. Would you like to undergo a financial planning exercise for yourself? Yes

No

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FINDING, RECOMMENDATION, & CONCLUSION

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FINDINGS In India Mutual fund Industry has seen Dramatic improvements in Quality as well as quality of products and services offering over the past decade, but the industry has witnessed growth in the last 10 years considerably below potential. The Asset under Management have grown from about Rs. 470 billion in march 1993 to Rs. 1,540 billion in April 2004(CAGR of 11.4 percent) & now it grown to Rs. 5,620 billion till sep 2008. This has mainly achieved due to collection through mutual fund IPO’s that has been increasing due to the investors feeling that it is cheaper in its IPO stage on account of its Rs. 10 NAV.

There has been a strong appreciation in equities in comparison to the debt market, which has shown a downward trend last year. And in turn Mid-cap and diversified funds have delivered the highest in comparison to other funds. As the Indian economy is showing a growing trend with GDP more than 6% and expected to show 8% and Indian household saving being 24% of the entire GDP. There is a strong growth potential of Mutual fund industry in India.

In Orissa i.e. rural area it is still a new concept so it will take some more time to really penetrate into this market apart from people who are HNI’s though these people are given more emphasis by all the Mutual funds and distribution channels. With the introduction of SIP’s the industry has created some options clear for retail investors to enter this market. My survey says that it the awareness level that is playing acting as an obstacle in the growth of Mutual fund Industry in Orissa as a whole.

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Some of the Major Findings 1. It is found that HDFC is a favorable Mutual Fund. 2. The basis objective behind investments are mainly long-term capital appreciation, current income & to some extent tax benefits. 3. The performance of HDFC Core & Satellite & HDFC Top 200 Fund is very good. 4. It is seen that the investment in growth fund is very high. Because the scope of income and capital appreciation in the long term. 5. It is observed that the driving aspects of investments in mutual fund are safety, fund performance, Service, Liquidity, return & tax benefits. 6. The type of investment plan that most investor s prefer is to get principal safety at all time with low returns rather than high return with no safety. 7.

HDFC Mutual Fund does not provide ‘monthly income scheme’ which other mutual funds have and performance is very appreciable.

8. Fund Managers have suggested HDFC prudence ,HDFC Taxsaver , HDFC Equity for investment , For the top 5. 9. HDFC Prudence is performing good with comparition to the prudence fund of any other mutual fund house. 10. At this period of time when market condition is not so good, it is better for investors to invest through Systamatic Investment plan. Which reduces the market risk.

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RECOMMENDATION HDFC Mutual Fund is one of the largest mutual funds and well-established fund house in the country with consistent and above average fund performance across categories since its incorporation on December 10,1999.The single most important factor that drives HDFC Mutual Fund is its belief to give the investor the chance to profitably invest in the financial market, without constantly worrying about the market swings.

Some major recommendation: 1) Fund managers should continuous Investor awareness Programs to make the investors aware of technicalities of fund management and the return aspects. 2) Agents, Service personnel must be able to give correct and timely information about NAV and the return on different schemes. 3) Monthly income scheme should be introduced. 4) Scheme should be offered as per the needs and the requirement of the industries. 5) The regulatory norms provided by the regulatory authorities like SEBI are required to be known to all including investors.

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CONCLUSION The global financial market has transformed from Seller’s market to Buyer’s market with liberalization, Globalizations and privatization. The Indian mutual fund market has also become global when foreign funds entered, they came up with probably best marketing strategies to beat Indian giants like BIRLA, HDFC, and ICICI have come up with aggressive strategies to beat the foreign funds. Now the cutthroat competition goes on and on. HDFC Mutual funds have rewarded investors with hand some returns. The good news is that this is poised to become a trend. The mutual funds have strengthened their distribution networks, become more transparent and investor friendly and are rewarding investors. The mutual fund is finally, proving itself as a vehicle of safety for investments. But it is still the fund manager’s investment philosophy that makes the difference between the winner and the losers. Careful market analysis, consumer segmentation, identification of investor needs, service designing are to be carried out for the successful implementation of different schemes by mutual fund organizations. Regulatory measures by SEBI should be clearly explained to the investors. Positioning of the schemes and their branding will help a lot for growth of the industry. Creativity and innovation are the means of marketing in the days to come for Indian mutual fund market.

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BIBLIOGRAPHY

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BIBLIOGRAPHY:MAGAZINES INDIA TODAY BUSINESS WORLD

WEB SITES WWW.HDFCFUND.COM

http://www.hdfcfund.com/AboutUs/ http://www.hdfcfund.com/Products/ WWW.AMFIINDIA.COM

http://www.amfiindia.com/showhtml.asp?page=mfconcept#A

JOURNAL INTOUCH MUTUALLY Vol. no. 5 Issue no. 11 may 2008

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Detail Study Of HDFC Mutual Fund

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