Final Project

Performance Comparision of HDFC Mutual Fund Equity Schemes
With other Equity Schemes
CONTENTS
Chapter 1
Introduction
Executive summary
Statement of the problem
Purpose of the study
Scope of the study
Objectives of the study
Introduction of mutual fund
Chapter 2
Organization profile
Brief history of HDFC
Introduction of HDFC mutual fund
Chapter 3
Analysis
Techniques of Analysis
Findings
Chapter 4
Belgaum Institute of Management Studies ( MBA )
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Annexure
Bibliography
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Executive summary
Introduction:
The main aims of the investor is to minimize the risk involved in investment &
maximize return and today there are number of options available to investor like
Post office investment, bank deposit, Real estate, debentures, Government
securities, stock market, insurance & gold etc. Among these, Mutual Fund &
ULIP introduced by the insurance companies are the two options which require
less capital & give the benefit of Professional Management & suitable for all
especially to the persons who do not have time to watch the market regularly.
HDFC Mutual Fund is one of India's largest brokerage and securities
distribution house in India. It is considered to be one of the leading investment
broking houses catering to the needs of both institutional and non-institutional
investor categories with presence all over the country through franchisees and
co-coordinators.
In this project I studied the schemes of HDFC Mutual fund and their
returns in various period of time by comparing risk and returns of other 4
companies Mutual Fund, which helped me in knowing how the various schemes
are performing and the risk and return associates with them. Hence my topic of
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study is A study on performance Comparision of Equity Schemes of HDFC
Mutual Fund with others.
Title of project
A study on performance Comparision of HDFC Mutual Fund equity
shemes with others companies mtual fund schemes. At HDFC bank
Belgaum.
Research problem:
To find out the different equity scheme performance of HDFC and compare with
other 4 competitors by evaluating risk & returns with the help of index.
Purpose of the study:

The study will help the organization in knowing how the companys equity is
performing.
Scope of the study

The present study includes the 5 years average returns of the mutual funds, which
have the total corpus value, is more than 10000 crores. For the study five mutual
funds companies have been scan and only those scheme are include in the study
which are having the corpus value of more than 400 crores and age of the fund
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must be more than 3 years. The study cover only equity diversified which is
having more fluctuations risk and returns.
The evaluate the performance of the scheme and funds applied sharps index,
Treynors index
Objectives if study:
To understand the concept of Mutual Fund, working and mechanism
and types of Mutual Funds traded in India.
To know the Performance of HDFC Mutual Fund scheme compared to

the other companies mutual fund scheme.
To evaluate performance of mutual funds in the terms of risk and

return
To appraise investment performance of mutual funds with risk

adjustment, the theoretical parameters as suggested by Sharpe, Treynor
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INTRODUCTION
An investment means employment of funds on assets (i.e. securities or mutual
funds or any of the investment avenues) with the aim of earning of income as well
as capital appreciation. There are mainly two attributes while investing to any of
the means, i.e. time and risk. There are mainly four objectives, which the
investments activities will carry on those are:
Return
Risk
Liquidity
Safety
There are many alternatives which investment avenues are open to the
investors to suit their needs and nature .The selection of investment alternatives
are depends up on the required level of return and the risk tolerance level. These
alternatives range from financial securities to traditional non-securities
investment.
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Following are the various investment alternatives.
Negotiable and fixed income securities
Equity shares
Preference share
Debentures
Bonds
Government securities
Non-negotiable securities
Bank deposit
Post office deposit
NBFC deposit
Tax saving schemes
Public provident fund scheme
National saving scheme
Life insurance
Mutual funds
Real estate
Securities
Companies raise funds to finance their projects through various methods. The
promoters can bring their own money or barrow from the financial institutions
or mobilizes capital by issuing securities. The funds `may be raised through
issue of fresh share at per or premium. Preference shares debenture or global
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depository receipts. These are mainly two markets which any company can raise
their funds; those are primary market and secondary market .the companies raise
funds for the following purposes:
To promote a new company
To expand an existing company
To diversify the production
To meet the regular working capital requirement
To capitalize the reserves.
NEW ISSUE MARKET (PRIMARY MARKET)

Stock available for the first time is offered through new issue market. The issuer
may be a new company or an existing company. These issues may be of new
type or the secure used in the past. In the new market the issuer can be consider
as a manufacturers. The issuing house, investing banker and broker act as the
channel of distributing for new issue. They take the responsibility of selling the
stock to the public
The main survives function of the primary market are:
Origination
Underwriting
Distribution
The main objectives of NSE are as follows.
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To establish the nation wide trading facility for Equities, Debt instruments
and hybrids.
To ensure equal access to investors all over the country through
appropriate communication network.
To enable shorter settlement cycle and book entry settlement system.
Introduction of mutual fund

Concept of 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 realised are 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
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at a relatively low cost. The flow chart below describes broadly the working of a
mutual fund:
Mutual Fund Operation Flow Chart
Mutual Funds Industry in India

The origin of mutual fund industry in India is with the introduction of the concept
of mutual fund by UTI in the year 1963. Though the growth was slow, but it

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accelerated from the year 1987 when non-UTI players entered the industry.
In the past decade, Indian mutual fund industry had seen a dramatic
improvements, both quality wise as well as quantity wise. Before, the monopoly
of the market had seen an ending phase, the Assets Under Management (AUM)
was Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs.
470 bn in March 1993 and till April 2004, it reached the height of 1,540
bn.Putting the AUM of the Indian Mutual Funds Industry into comparison, the
total of it is less than the deposits of SBI alone, constitute less than 11% of the
total deposits held by the Indian banking industry.
The main reason of its poor growth is that the mutual fund industry in India is
new in the country. Large sections of Indian investors are yet to be intellectuated
with the concept. Hence, it is the prime responsibility of all mutual fund
companies, to market the product correctly abreast of selling.
The mutual fund industry can be broadly put into four phases according to the
development of the sector. Each phase is briefly described as under.
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

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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)
Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by
Canbank 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 in 1989 and GIC in 1990. The end of 1993 marked
Rs.47,004 as assets under management.
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 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

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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
this phase had bitter experience for UTI. It was bifurcated into two separate
entities. One is the Specified Undertaking of the Unit Trust of India with AUM of
Rs.29,835 crores (as on January 2003). 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 AUM 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.
.Major Mutual Fund Companies in India

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Prudential Mutual Fund

UTI Mutual Fund
Reliance Mutual Fund
HDFC Mutual Fund
Franklin Mutual Fund
Birla sun Mutual Fund
SBI Mutual Fund
DSP Merrill Lynch Mutual Fund
Kotak Mutual Fund
Tata Mutual Fund
HSBC Mutual Fund
PRINCIPAL Mutual Fund
Standard chartered Mutual Fund
LIC Mutual Fund
Sundaram Mutual Fund
Deutsche Mutual Fund
Fidelity Mutual Fund
ABN AMRO Mutual Fund
ING Vysya Mutual Fund
Canbank Mutual Fund
JM Mutual Fund
Chola Mutual Fund
Benchmark Mutual Fund
BOB Mutual Fund
Taurus Mutual Fund
Sahara Mutual Fund
Escorts Mutual Fund
Quantum Mutual Fund

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What is a Mutual Fund:

A Mutual Fund is a trust that pools the savings of a number of investors who share
a common financial goal. The money thus collected is invested by the fund
manager in different types of securities depending upon the objective of the
scheme. These could range from shares to debentures to money market
instruments. The income earned through these investments and the capital
appreciations realized by the scheme are 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 portfolio at a relatively low cost. The small
savings of all the investors are put together to increase the buying power and hire
a professional manager to invest and monitor the money. Anybody with an
investible surplus of as little as a few thousand rupees can invest in Mutual Funds.
Each Mutual Fund scheme has a defined investment objective and strategy.

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Mutual Fund Structure
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

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net worth of the Investment Managed and meet the eligibility criteria prescribed
under the Securities and Exchange Board of India (Mutual Funds) Regulations,
1996.The Sponsor is not responsible or liable for any loss or shortfall resulting
from the operation of the Schemes beyond the initial contribution made by it
towards setting up of the Mutual Fund.
Trust
The Mutual Fund is constituted as a trust in accordance with the provisions of the
Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the
Indian Registration Act, 1908
Trustee
Trustee is usually a company (corporate body) or a Board of Trustees (body of
individuals). The main responsibility of the Trustee is to safeguard the interest of
the unit holders and inter alia ensure that the AMC functions in the interest of
investors and in accordance with the Securities and Exchange Board of India
(Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer
Documents of the respective Schemes. Atleast 2/3rd directors of the Trustee are
independent directors who are not associated with the Sponsor in any manner.
Asset Management Company (AMC)
The AMC is appointed by the Trustee as the Investment Manager of the Mutual
Fund. The AMC is required to be approved by the Securities and Exchange Board
of India

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(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 corers
at all times
Registrar and Transfer Agent
The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer
Agent to the Mutual Fund. The Registrar processes the application form,
redemption requests and dispatches account statements to the unit holders. The
Registrar and Transfer agent also handles communications with investors and
updates investor records
The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer
Agent to the Mutual Fund. The Registrar processes the application form,
redemption requests and dispatches account statements to the unit holders. The
Registrar and Transfer agent also handles communications with investors and
updates investor records.
Types of Schemes

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Investment Objective
Schemes can be classified by way of their stated investment objective such as
Growth Fund, Balanced Fund, Income Fund etc
Equity Oriented Schemes
These schemes, also commonly called Growth Schemes, seek to invest a majority
of their funds in equities and a small portion in money market instruments. Such
schemes have the potential to deliver superior returns over the long term.
However, because they invest in equities, these schemes are exposed to
fluctuations in value especially in the short term.
Equity schemes are hence not suitable for investors seeking regular income or
needing to use their investments in the short-term. They are ideal for investors
who have a long-term investment horizon. The NAV prices of equity fund
fluctuates with market value of the underlying stock which are influenced by

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external factors such as social, political as well as economic.HDFC Growth Fund,
HDFC Tax Plan 2000 and HDFC Index Fund are examples of equity schemes.
General Purpose
The investment objectives of general-purpose equity schemes do not restrict them
to invest in specific industries or sectors. They thus have a diversified portfolio of
companies across a large spectrum of industries. While they are exposed to equity
price risks, diversified general-purpose equity funds seek to reduce the sector or

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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

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Investors (individuals and Hindu Undivided Families (HUFs)) are being
encouraged to invest in equity markets through Equity Linked Savings Scheme
(ELSS) by offering them a tax rebate. Units purchased cannot be assigned /
transferred/ pledged / redeemed / switched out until completion of 3 years from
the date of allotment of the respective Units.
The Scheme is subject to Securities & Exchange Board of India (Mutual Funds)
Regulations, 1996 and the notifications issued by the Ministry of Finance
(Department of Economic Affairs), Government of India regarding ELSS.
Subject to such conditions and limitations, as prescribed under Section 88 of the
Income-tax Act, 1961, subscriptions to the Units not exceeding Rs.10, 000 would
be eligible to a deduction, from income tax, of an amount equal to 20% of the
amount subscribed. HDFC Tax Plan 2000 is such a fund.
Real Estate Funds
Specialized real estate funds would invest in real estates directly, or may fund real
estate developers or lend to them directly or buy shares of housing finance
companies or may even buy their securitized assets.
Debt Based Schemes

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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 corporates with
medium and long-term maturities. These schemes primarily target current income
instead of capital appreciation. They therefore distribute a substantial part of their
distributable surplus to the investor by way of dividend distribution. Such
schemes usually declare quarterly dividends and are suitable for conservative
investors who have medium to long term investment horizon and are looking for
regular income through dividend or steady capital appreciation. HDFC Income
Fund, HDFC Short Term Plan and HDFC Fixed Investment Plans are examples of
bond schemes.
Liquid Income Schemes
Similar to the Income scheme but with a shorter maturity than Income schemes.
An example of this scheme is the HDFC Liquid Fund.
Money Market Schemes
These schemes invest in short term instruments such as commercial paper (CP),
certificates of deposit (CD), treasury bills (T-Bill) and overnight money
(Call). The schemes are the least volatile of all the types of schemes because of
their investments in money market instrument with short-term maturities. These
schemes have become popular with institutional investors and high networth
individuals having short-term surplus funds.

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Gilt Funds
This scheme primarily invests in Government Debt. Hence the investor usually
does not have to worry about credit risk since Government Debt is generally
credit risk free. HDFC Gilt Fund is an example of such a scheme
Hybrid Schemes
These schemes are commonly known as balanced schemes. These schemes invest
in both equities as well as debt. By investing in a mix of this nature, balanced
schemes seek to attain the objective of income and moderate capital appreciation
and are ideal for investors with a conservative, long-term orientation. HDFC
Balanced Fund and HDFC Childrens Gift Fund are examples of hybrid schemes.
Constitution
Schemes can be classified as Closed-ended or Open-ended depending upon
whether they give the investor the option to redeem at any time (open-ended) or
whether the investor has to wait till maturity of the scheme
Open ended Schemes
The units offered by these schemes are available for sale and repurchase on any
business day at NAV based prices. Hence, the unit capital of the schemes keeps
changing each day. Such schemes thus offer very high liquidity to investors and
are becoming increasingly popular in India. Please note that an open-ended fund
is NOT obliged to keep selling/issuing new units at all times, and may stop

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issuing further subscription to new investors. On the other hand, an open-ended
fund rarely denies to its investor the facility to redeem existing units.
Closed-ended schemes
The unit capital of a close-ended product is fixed as it makes a one-time sale of
fixed number of units. These schemes are launched with an initial public offer
(IPO) with a stated maturity period after which the units are fully redeemed at
NAV linked prices. In the interim, investors can buy or sell units on the stock
exchanges where they are listed. Unlike open-ended schemes, the unit capital in
closed-ended schemes usually remains unchanged. After an initial closed period,
the scheme may offer direct repurchase facility to the investors. Closed-ended
schemes are usually more illiquid as compared to open-ended schemes and hence
trade at a discount to the NAV. This discount tends towards the NAV closer to the
maturity date of the scheme.
Interval Schemes
These schemes combine the features of open-ended and closed-ended schemes.
They may be traded on the stock exchange or may be open for sale or redemption
during pre-determined intervals at NAV based prices.

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RISK
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

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Systematic Investment Plan (SIP) that works on the concept of Rupee Cost
Averaging (RCA) might help mitigate this risk.
Credit Risk
The debt servicing ability (may it be interest payments or repayment of principal)
of a company through its cash flows determines the Credit Risk faced by you.
This credit risk is measured by independent rating agencies like CRISIL who rate
companies and their paper. A AAA rating is considered the safest whereas a D
rating is considered poor credit quality. A well-diversified portfolio might help
mitigate this risk.
Inflation Risk
Things you hear people talk about:
Rs. 100 today is worth more than Rs. 100 tomorrow.
Remember the time when a bus ride coated 50 paise?
Mehangai Ka Jamana Hai.
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.

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A well-diversified portfolio with some investment in equities might help mitigate
this risk.
Interest Rate Risk

In a free market economy interest rates are 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

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The nuclear weapon in your arsenal for your fight against Risk. It simply means
that you must spread your investment across different securities (stocks, bonds,
money market instruments, real estate, fixed deposits etc.) and different sectors
(auto, textile, information technology etc.). This kind of a diversification may add
to the stability of your returns, for example during one period of time equities
might underperform 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
Benefits of Investing in Mutual Funds

Professional Management
Mutual Funds provide the services of experienced and skilled professionals,
backed by a dedicated investment research team that analyses the performance
and prospects of companies and selects suitable investments to achieve the
objectives of the scheme.
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

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diversification through a Mutual Fund with far less money than you can do on
your own.
Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many
problems such as bad deliveries, delayed payments and follow up with brokers
and companies. Mutual Funds save your time and make investing easy and
convenient.
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.
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.
Liquidity
In open-end schemes, the investor gets the money back promptly at net asset
value related prices from the Mutual Fund. In closed-end schemes, the units can
be sold on a stock exchange at the prevailing market price or the investor can

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avail of the facility of direct repurchase at NAV related prices by the Mutual
Fund.
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.
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.
Affordability
Investors individually may lack sufficient funds to invest in high-grade stocks. A
mutual fund because of its large corpus allows even a small investor to take the
benefit of its investment strategy.
Choice of Schemes
Mutual Funds offer a family of schemes to suit your varying needs over a
lifetime.

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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.
Drawbacks of Mutual Funds

Mutual funds have their drawbacks and may not be for everyone:
No Guarantees: No investment is risk free. If the entire stock market

declines in value, the value of mutual fund shares will go down as well, no
matter how balanced the portfolio. Investors encounter fewer risks when
they invest in mutual funds than when they buy and sell stocks on their
own. However, anyone who invests through a mutual fund runs the risk of
losing money.
Fees and commissions: All funds charge administrative fees to cover their
day-to-day expenses. Some funds also charge sales commissions or
"loads" to compensate brokers, financial consultants, or financial planners.
Even if you don't use a broker or other financial adviser, you will pay a
sales commission if you buy shares in a Load Fund.

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Taxes: During a typical year, most actively managed mutual funds sell
anywhere from 20 to 70 percent of the securities in their portfolios. If your
fund makes a profit on its sales, you will pay taxes on the income you
receive, even if you reinvest the money you made.
Management risk: When you invest in a mutual fund, you depend on the
fund's manager to make the right decisions regarding the fund's portfolio.
If the manager does not perform as well as you had hoped, you might not
make as much money on your investment as you expected. Of course, if
you invest in Index Funds, you forego management risk, because these
funds do not employ managers
Rights of a Mutual Fund Unit holder

A unit holder in a Mutual Fund scheme governed by the SEBI (Mutual Funds)
Regulations is entitled to:
1. Receive unit certificates or statements of accounts confirming the title
within 6 weeks from the date of closure of the subscription or within 6
weeks from the date of request for a unit certificate is received by the
Mutual Fund.
2. Receive information about the investment policies, investment objectives,
financial position and general affairs of the scheme.

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3. Receive dividend within 42 days of their declaration and receive the
redemption or repurchase proceeds within 10 days from the date of
redemption or repurchase.
4. Vote in accordance with the Regulations to:a. Approve or disapprove any change in the fundamental investment policies
of the scheme, which are likely to modify the scheme or affect the interest
of the unit holder. The dissenting unit holder has a right to redeem the
investment.
b. Change the Asset Management Company.
c. Wind up the schemes.

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Brief history of Company

HDFC is India's 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

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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.
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 RBI's 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.
Registered office
Hdfc bank House
Senapati Bapat Marg
Lower Parel
Mumbai 400013
Tel No: 56521000
Fax No: 24960739
Web site : www.hdfcbank.com

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BOARD OF DIRECTORS
Mr. Jagdish Capoor, Chairman
Mr. Aditya Puri , Managing Director
Mr. Keki Mistry
Dr. (Mrs.) Alma Samanta
Mr.Anil Ahuja
Dr. Venkat Rao Gadwai
Mr.Vineet Jain
Renu Karnad
Mr.Aravind Pande
Mr. Ranjan Kanpur(w.e.f January 9, 2004)
Mr. Bobby Parikh
(w.e.f.January 9,2004)
Vice president (legal) & company secretary

Mr. Sanjay Dongre
AUDITOTS
Mr. P.C. Hansotia&Co (Chartered accountants)
BROAD AREAS IN WHICH IT OPERATES
The Bank operates in three segments: retail banking, wholesale banking and
treasury services. The retail banking segment serves retail customers through a
branch network and other delivery channels. The wholesale banking provides

-38-

loans and transaction services to corporate and institutional customers. The
treasury services segment undertakes trading operations on the proprietary
account, foreign exchange operations and derivatives trading. The Bank operates
in India.
Retail Banking
This segment raises deposits from customers and makes loans and provides
advisory services to such customers. The objective of the Retail Bank is to
provide its target market customers a 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 service and delivered to the customers
through the growing branch network, as well as through alternative delivery
channels like automated teller machines (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 an
array of retail loan products, including auto loans, loans against marketable
securities, personal loans and loans for two-wheelers. It is also a provider of

-39-

depository participant (DP) services for retail customers, providing customers the
facility to hold their investments in electronic form.
HDFC Bank has launched an international debit card in association with VISA
(VISA Electron) and also issues the MasterCard Maestro debit card. The Bank
launched its credit card business during the fiscal year ended March 31, 2001. By
September 30, 2005, the bank had a total card base (debit and credit cards) of 5.2
million cards. The Bank is also
Engaged in the merchant acquiring business with over 50,000 point-of-sale (POS)
terminals for debit/credit cards acceptance at merchant establishments.
Wholesale Banking
The Bank's target market ranges from large, blue-chip manufacturing companies
in the Indian corporate to small and mid-sized corporates and agri-based
businesses. For these customers, the Bank provides a range of commercial and
transactional banking services, including working capital finance, trade services,
transactional services and cash management. The bank is also a provider of
structured solutions, which combine cash management services with vendor and
distributor finance for facilitating superior supply chain management for its
corporate customers. It provides cash management and transactional banking
solutions to corporate customers

-40-

Treasury Services
Within this business, the bank has three main product areas: Foreign Exchange
and Derivatives, Local Currency Money Market & Debt Securities, and Equities.
Risk management information, advice and product structures, as well as fine
pricing on various treasury products are provided through the Bank's Treasury
team. The Treasury business is responsible for managing the returns and market
risk on this investment portfolio.
Customer focus
HDFC Bank's 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 bank's risk appetite. The bank is committed to maintain the highest level of
ethical standards, professional integrity, corporate governance and regulatory
compliance. HDFC Bank's business philosophy is based on four core values
Operational Excellence,
Customer Focus,
Product Leadership and
People
Capital structure

-41-

Authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up
capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the
bank's equity and about 19.4% of the equity is held by the ADS Depository (in
respect of the bank's American Depository Shares (ADS) Issue). Roughly 31.3%
of the equity is held by Foreign Institutional Investors (FIIs) and the bank has
about 190,000 shareholders. The shares are listed on the The Stock Exchange,
Mumbai and the National Stock Exchange. The bank's American Depository
Shares are listed on the New York Stock Exchange (NYSE) under the symbol
"HDB
VARIOUS SERVICES
Forex and trade services
HDFC Bank has a range of products and services that one can choose from to
transact smoothly.
The following are different methods of transacting in foreign exchange and
remitting money.
Travelers cheques
Foreign currency cash.
Foreign currency drafts
Cheque deposits
Remittances

-42-

Cash to master
Trade services
Foreign services branch locator
Important guidelines and schedules
All Foreign Exchange transactions are conducted by strictly adhering to RBI
guidelines. Depending on the nature of your transaction or point of travel, you
will need to understand your Foreign Exchange limits.
LOANS
Whatever your need, our range of loans can help

Home Loans
Personal Loans
Two Wheeler Loans
New Car Loans
Used Car Loans
Overdraft Against Car
Express Loans

-43-

Loans Against Securities
Loans Against Property
PERSONAL BANKING
Savings Accounts
These Accounts are primarily meant to inculcate a sense of saving for the future,
accumulating funds over a period of time. Whatever may be the occupation, bank
is confident that customer will find the perfect banking solution. Open an account
in your name (customers name) or register for one jointly with a family member
today.
Current Accounts
Now, with an HDFC Bank Current Account, experience the freedom of multi-city
banking! Customer can have the power of multi-location access to his account
from any of banks 500 branches in 220 cities. Not only that, he can do most of his
banking transactions from the comfort of his office or home without stepping out.
At HDFC Bank, it understands that running a business requires time and money,
also that customers business needs are constantly evolving. That's where it come
in. It provides
him with a choice of Current Account options to exclusively suit his business whatever the size or scope.
Fixed Deposits

-44-

Long-term investments form the chunk of everybody's future plans. An alternative
to simply applying for loans, fixed deposits allow the customer to borrow from his
own funds for a limited period, thus fulfilling his needs as well as keeping his
savings secure.
As per the finance (No 2) Act 2004, all fees & charges mentioned in the Tarriffs,
Charges or Fees Brochures will attract Service Tax @10% & Education Cess
@2% of the service tax amount effective 10th September 2004. The same will
appear as separate debits in the statements.
Private banking
HDFC Bank offers Private Banking services to high net worth individuals and
institutions. Banks team of seasoned financial and investment professionals
provide objective guidance backed by thorough research and in-depth analysis
keeping in mind customers financial goals.
Multiple Recognition from Euro money
At HDFC Bank, they have always strived towards providing exceptional service
to each of their esteemed customers. As testament to this dedication, they have
earned the following ranks in a recently conducted Euromoney Survey.
Rated as the best private bank in the super effluent category in India
HDFC Bank Investment Advisory Services - Helping you take your
Investment portfolio further.

-45-

Dedicated investment advisor
HDFC Private Banking service involves a high degree of personalization.
When customer avail of this facility, a dedicated Investment Advisor serves
him. This seasoned finance professional adds value to his portfolio by keeping
him up to date with financial markets and investment opportunities
Payment services
With HDFC Bank's payment services, one can bid goodbye to queues and paper
work. Its range of payment options make it easy for customer to pay for a variety
of utilities and services.
Verified by visa
If one wants to be worry free for his online purchases. Now he can shop
securely online with his existing Visa Debit/Credit card.
Net safe
Now shop online without revealing your (customers) HDFC Bank Credit Card
number.
Prepaid refill
If a person is a HDFC Bank Account holder and a prepaid customer, he can
now refill his Prepaid Mobile card with this service.
Bill pay

-46-

One can pay his telephone, electricity and mobile phone bills at his
convenience. Through the Internet, ATMs, his mobile phone and telephone with Bill Pay, banks comprehensive bill payments solution
Visa Bill Pay
One can pay his utility bills from the comfort of his home! Pay using his
HDFC Bank Visa credit card and forget long queue and late payments forever
Insta pay
One can Pay his bills, make donations and subscribe to magazines without
going through the hassles of any registration.
Direct pay
Shop or Pay bills online without cash or card. Debit your (customers) account
directly with banks Direct Pay service!
Smart pay(with credit cards)
With Smart Pay, paying customers r electricity, telephone, mobile phone,
water bills, gas and insurance premia payments becomes easy like never
before.
Visa money transfer
One can transfer funds to any Visa Card (debit or credit) within India at his
own convenience through HDFC Bank's Net Banking facility.
e-Monies Electronic Funds Transfer

-47-

Transfer funds from customers account to any account in any Bank in India at
15 locations - FREE of cost!
Online payment of excise and service tax
One can make his Excise and Service Tax payments at his own convenience.
Preferred/classic banking
If a customer expects more from everything, even HDFC bank, will invite him
into the world of exclusive banking. Where he will never again have to wait to
be served. With HDFC Bank Preferred Programme, his comfort always comes
first.
Ideal for seasoned professionals or businessmen, this programme will provide
him with a banker dedicated to take care of all his banking and investment
needs. It also means he get preferential rates on various banking products and
other exclusive benefits.
Hdfc bank classic banking
If a person wants to experience banking beyond the ordinary, our HDFC Bank
Classic Programme is just for him.
Becoming an HDFC Bank Classic customer entitles him to a host of benefits,
including a bouquet of preferentially priced products and specialized wealth
management solutions.
Awards and achievements

-48-

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class
Indian Bank". They realized that only a single-minded focus on product quality
and service excellence would help them get there. Today, they are proud to say
that they are well on the way towards that goal.
2006
Business Today: Best Bank in India.
Forbes Magazine: One of Asia Pacific's Best 50 companies
Business world: Best listed Bank of India
The Asset Magazine's Triple A Country Awards: Best Domestic Bank
Asia money Awards: Best Local Cash Management Bank in Large and Medium
segments
Euro money Awards: "Best Bank" in India
2005
Asia money Awards: Best Domestic Commercial Bank
Asia money Awards: Best Cash Management Bank India
The Asian Banker Excellence: Retail Banking Risk Management Award in India
Hong Kong-based Finance Asia magazine: Best Bank India

-49-

Economic Times Awards: "Company of the Year" Award for Corporate
Excellence.
Asia money also named the bank:
Best Local Cash Management Bank in India 2004 - US$11-100m
Best Local Cash Management Bank in India 2004 - >US$501m
Best Local Cash Management Bank in India 1989-2004 (poll of polls)
Best Overall Domestic Trade Finance Services in India 2004
Most Improved Company for Best Management Practices in India 2004
HDFC Bank has been named Best Domestic Bank in India in The Asset Triple A
Country Awards 2005.
The Business Today-KPMG Survey published in the leading Indian business
magazine Business Today has named HDFC Bank "Best Bank in India" for the
third consecutive year in 2005.
The Asset magazine named HDFC Bank "Best Cash Management Bank" and
"Best Trade Finance Bank" in India, in 2006.
HDFC Bank named the "Most Customer Responsive Company - Banking and
Financial Services in The Economic Times - Avaya Global Connect Customer
Responsiveness Awards 2005"

-50-

HDFC Bank has been named Best Domestic Bank in India Region in The Asset
Triple A Country Awards 2004 and 2003.
In 2004, HDFC Bank was selected by BusinessWorld as "One of India's Most
Respected Companies" as part of The Business World Most Respected Company
Awards 2004.
In 2004, Forbes Global again named us in its listing of Best under a Billion, 100
Best Smaller Size Enterprises in Asia/Pacific and Europe, in its November 1, 2004
issue.
In 2004, HDFC Bank won the award for "Operational Excellence in Retail
Financial Services" - India as part of the Asian Banker Awards 2003.
In 2003, Forbes Global named us in its ranking of "Best under a Billion, 200 Best
Small Companies for 2003".
Leading business newspaper The Financial Express named HDFC Bank the "Best
New Private Sector Bank 2003" in the FE-Ernst & Young Best Banks Survey
2003.
Leading Personal Finance Magazine in India Outlook Money named HDFC Bank
the "Best Bank in the Private Sector" for the year 2003.

-51-

Leading Indian business magazine Business Today in a survey rated us "Best
Bank in India" 2003, and "Best Private Sector Bank" in India in 1999.
NASSCOM and economictimes.com have named us the 'Best IT User in Banking'
at the IT Users Awards 2003.
There have been some other proud moments as well
London-based Euromoney magazine gave us the award for "Best Bank - India" in
1999, "Best Domestic Bank" in India in 2000, and "Best Bank in India" in 2001
and 2002
Asia money magazine has named us "Best Commercial Bank in India 2002".
For our use of information technology we have been recognized as a
"Computerworld Honors Laureate" and awarded the 21st Century Achievement
Award in 2002 for Finance, Insurance & Real Estate category by Computerworld,
Inc., USA.
Our technology initiative has been included as a case study in their online global
archives.The Economic Times has conferred on us The Economic Times Awards
for Corporate Excellence as the Emerging Company of the Year 2000-01.

-52-

Leading Indian business magazine Business India named us "India's Best Bank"
in 2000.
In the year 2000, leading financial magazine Forbes Global named us in its list of
"The 300 Best Small Companies" in the world and as one of the "20 for 2001"
best small companies in the world
CORPORATE GOVERNARCE
HDFC Bank recognizes the importance of good corporate governance, which is
generally accepted as a key factor in attaining fairness for all stakeholders and
achieving organizational efficiency. This Corporate Governance Policy, therefore,
is established to provide a direction and framework for managing and monitoring
the bank in accordance with the principles of good corporate governance.
Profile of HDFC mutual fund

HDFC Asset Management Company Ltd (AMC) was incorporated under the
Companies Act, 1956, on December 10, 1999, and was approved to act as an
Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter
dated June 30, 2000.

-53-

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 the
AMC to manage the Mutual Fund.
As per the terms of the Investment Management Agreement, the AMC will
conduct the operations of the Mutual Fund and manage assets of the schemes,
including the schemes launched from time to time.
The present shareholding pattern of the AMC is as follows:
Particulars
% of the paid up capital
Housing Development Finance Corporation Limited: 50.10

Standard Life Investments Limited
: 49.90
Vision
To be a dominant player in the Indian mutual fund space, recognized for its high
levels of ethical and professional conduct and a commitment towards enhancing
investor interests

-54-

The Board of Directors of the HDFC Asset Management Company Limited
(AMC) consists of the following eminent persons.
Mr. Deepak S Parekh
Mr. N. Keith Skeoch
Mr Mark Connolly
Mr. Hoshang S. Billimoria
Mr. Humayun Dhanrajgir
Mr. P. M. Thampi
Dr. Deepak Phatak
Mr Rajeshwar Raj Bajaaj
Ms. Renu S. Karnad
Mr. Milind Barve
The AMC is managing 3 close ended schemes viz.

HDFC Fixed Investment Plan,
HDFC Long Term Equity Fund and
HDFC Fixed Maturity Plans
And 22 open-ended schemes of the Mutual Fund viz.
HDFC Growth Fund (HGF),
HDFC Balanced Fund (HBF),

-55-

HDFC Income Fund (HIF),
HDFC Liquid Fund (HLF),
HDFC Long Term Advantage Fund (formerly 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 TaxSaver (HTS),
HDFC Prudence Fund (HPF),
HDFC High Interest Fund (HHIF),
HDFC Cash Management Fund (HCMF),
HDFC MF Monthly Income Plan (HMIP),
HDFC Core & Satellite Fund (HCSF),
HDFC Multiple Yield Fund (HMYF),
HDFC Premier Multi-Cap Fund. (HPM) and
HDFC Multiple Yield Fund - Plan 2005 (HMY2005)

-56-

The AMC is also providing portfolio management / advisory services and such
activities are not in conflict with the activities of the Mutual Fund.The AMC has
renewed its registration from SEBI vide Registration No. - PM / INP000000506
dated December 4, 2003 to act as a Portfolio Manager under the SEBI (Portfolio
Managers) Regulations, 1993.The Certificate of Registration is valid from
January 1, 2004 to December 31, 2006

-57-

Techniques of analysis:
1. Return:

-58-

Return on a typical investment consists of two components. The basic is the
periodic cash receipts (or income) on the investment, either in the form of interest
or dividends. The second component is the change in the price of the assetscommonly called the capital gain or loss. This element of return is the difference
between the purchase price and the price at which the assets can be or is sold;
therefore, it can be again or a loss.
The return has been calculated as under:
NAVt NAVt-1
Portfolio return: Rit =--------------------------------NAV t-1
Where Rit is the difference between Net Asset Values for two consecutive days
dividend
by the NAV of the preceding day.
M.indt M.indt-1
Market return: Rmt =-------------------------------M.indt-1
Where Rmt is the difference between market indices of two consecutive days
dividend by the market index for the preceding day
2. Risk:

-59-

Risk is neither good nor bad. Risk in holding securities is generally associated
with the possibility that realized returns will be less than expected returns. The
difference between the required rate of returns on mutual fund investment and the
risk free return is the risk premium. Risk can be measured in terms of Beta &
standard deviations.
Standard deviation
It is used to measure the variation in individual returns from the average
expected returns over a certain period. Standard deviation is used in the concept
of risk of a portfolio of investments. Higher standard deviation means a greater
fluctuation in expected return.
Standard deviation (SD) =\/ var

Where Var = variance
4.
Var=
p (ri-E(r)) 2
Beta

-60-

Beta measures the systematic risk and shows how prices of securities
respond to the market forces. It is calculated by relating the return on a security
with return for the market. By convention, market will have beta 1.0.Mutual
fund is said to be volatile, more volatile or less volatile. If beta is grater than 1
the stock is said to be riskier than market. If beta is less than 1,the indication is
that stock is less risky in comparison to market. If beta is zero then the risk is the
same as that of the market. Negative beta is rare.
nxy-(x)( y)
nx2-(x)
Where n= number of days

X =rolling returns of the NSE index
Y= rolling returns of the schemes
3. Sharpe index

-61-

Sharpe index measures risk premium of a portfolio, relative to the total amount
of risk in the portfolio. Sharpe index summarizes the risk and return of a portfolio
in a single measure that categorizes the performance of funds on the risk- adjusted
basis. The larger the Sharpes index the portfolio over performs the market and
vise versa.
Where
st = Sharpes index
Rp= portfolio return
Rf= Risk free rate of return (7.59%)
SD= Standard Deviation of the port folio
St= RP-Rf
SD
4. Treynors Index

-62-

Treynors model is on the concept of the characteristics straight line. The
characteristics line has drawn a relationship between the market return and a
specific portfolio without taking into consideration any direct adjustment for
risk. It is also known as reward to volatility ratio and is defined as:
The formula for Treynors Index is:
Portfolio avg return (Rp) risk-free rate of interest (Rf)

Treynor index (Tn) = --------------------------------------------------------------------Beta coefficient of portfolio (Bp)
Rp -Rf
Tn = ------------------------Bp
It measures portfolio risk in terms of beta, which is weighted average of
individual security beta. The ratio is investors, for who the fund represents only
a fraction of their total assets. The higher the ratio better is the performance.
Criteria 1

-63-

The AMC which are the major competitor for HDFC at belgaum.
Corpus of Mutual Funds
The following table shows the corpus value of individual AMC.
AMC
Feb (2007)(In
Crs)
Prudential Mutual Fund

UTI Mutual Fund
Reliance Mutual Fund
HDFC Mutual Fund
Franklin Mutual Fund
27,503
30,109
26,420
22,539
19,639
march (2007)(In
Crs)
32,151
30,551
27,915
23,650
22,360
Corpus values table

AMC
march(2007) (in
Absolute
change
32,151
30,551
27,915
23,650
22,360
4,648
442
1,495
1,111
2,721
Feb (2007)(In Crs)

Crs)
Prudential Mutual Fund27,503

UTI Mutual Fund
30,109
Reliance Mutual Fund 26,420
HDFC Mutual Fund
22,539
Franklin Mutual Fund 19,639
Criteria 2&3:
-64-

Equity diversified schemes

There is lot of variety schemes offered by AMCs. Equity diversified is one of the
Scheme offered by the AMC .the selection criteria of schemes is totally depend on
the fund size and age of the fund. The scheme, which has the corpus value, is
more than 400Crs and the age of the fund is more then 3yrs only that fund is
qualified for analysis
The following are the equity-diversified schemes in the selected funds
Tables for fund size and DOI

Fund size
Scheme name
HDFC Equity Fund (G)
HDFC Top 200 Fund (G)
HDFC Long Term Advantage Fund (G)
HDFC Tax Saver (G)
Franklin India Bluechip Fund (G)
Franklin India Prima Fund (G)
Franklin India Prima Plus Fund (G)
Reliance Growth Fund (G)
Reliance Vision Fund (G)
UTI Equity Fund
UTI Master Plus 91
UTI Master Value Fund
UTI Master share
Pru ICICI Dynamic plan
Pru ICICI Power
Pru ICICI Tax Plan
2887.39
1131.45
424.53
475.99
2060.4
2057.77
633.52
2524.13
1719.35
1511.82
842.52
678.93
1648.35
1044.27
1359.04
421.75
DOI
12/08/94
08/19/96
01/02/01
12/18/95
11/30/93
11/30/93
09/28/94
09/08/95
09/07/95
05/18/92
12/31/91
06/01/98
09/19/86
10/18/02
10/05/01
08/09/99

-65-

Absolute returns:
The selected funds returns from date of launch to date of
inception
Scheme name
DOI nav RT1y RT2y
RT3y
RT4y
RT5y
Pru ICICI Dynamic Plan (G) 47.375 61.468 180.655 0.000

Pru ICICI Power (G)
61.740 55.870 143.262 267.719 381.967 475.933
Pru ICICI Tax Plan (G)
73.120 36.316 190.389 344.498 453.101 603.077
UTI Equity Fund (G)
UTI Master Plus 91 (G)
UTI Mastershare (G)
UTI Unit Scheme - 2002 (G)
26.520
49.620
26.950
12.230
32.468
46.675
26.883
26.213
84.167
86.261
59.656
56.795
135.733 159.238
158.438 193.783
114.741 128.778 106.672
95.367
0
-
Reliance Growth Fund (G) 199.520 48.210 186.379 416.624 557.181 909.717
Reliance Vision Fund (G) 137.650 50.454 144.668 292.837 428.002 857.898
HDFC Long Term
Advantage Fund (G)
HDFC Tax Saver (G)
113.822 54.314 149.500 279.913 416.668 575.101

85.834 49.693 138.335 267.597 427.560 530.206
74.137 39.146 139.926 310.959 467.665 712.015
115.193 47.475 205.147 366.936 505.960 615.484
Franklin India Bluechip 100.380 49.375 113.393 252.954 357.312 407.482

Fund (G)
Franklin India Prima Fund 162.060 31.874 130.559 293.923 456.907 829.243
(G)
Franklin India Prima Plus 100.290 45.201 117.219 244.876 340.061 416.959
Fund (G)

-66-

Criteria 4:
Methodology
1. Return:
Name of Scheme
DOI

returns(annualized)
2yr 3yr 4yr
5yr
5yrs
Avg
1 yr
return
199.52 48.21 93.23 80.40 27.21 53.64 60.54
137.65 50.45 62.62 60.56 34.41 81.42 57.89
Franklin India Prima Fund

(G)
Franklin India Bluechip
Fund (G)
Franklin India Prima Plus
Fund (G)
162.06 31.87 74.83 70.86 41.37 66.86
57.16
100.38 49.38 42.86 65.40 29.57 10.97
39.63
100.29 45.20 49.60 58.77 27.60 17.47
39.73

HDFC Long Term
Advantage Fund (G)
HDFC Tax Saver (G)
113.822 54.31 61.68 52.27 36.00 30.66

74.137 39.15 72.43 71.29 38.13 43.04
46.99
52.81
115.193 47.48 106.91 53.02 29.77 18.07

85.834 49.69 59.22 54.24 43.52 19.46
51.05
45.22
Pru ICICI Dynamic Plan

(G)
Pru ICICI Power (G)
47.3746 61.47 73.82 31.67
55.65
UTI Equity Fund (G)

UTI Mastershare (G)
UTI Unit Scheme - 2002
(G)
61.74
73.12
55.87 56.07 51.16 31.07 19.50

36.32 113.03 53.07 24.43 27.12
42.73
50.79
26.52
49.62
26.95
12.23
32.47
46.67
26.88
26.21
27.37
31.52
16.82
25.01
39.03
26.99
25.83
24.23
28.00
38.75
34.50
24.60
9.97
13.68
6.54
0.00
0.00
0.00
-9.66
0.00

-67-

NAVt NAVt-1
Portfolio return: Rit =--------------------------------NAV t-1
Where Rit is the difference between Net Asset Values for two consecutive days
dividend by the NAV of the preceding day.
Risk
Beta
Scheme name
Pru ICICI Dynamic Plan (G)
Pru ICICI Power (G)
Franklin India Bluechip Fund (G)
UTI Equity Fund (G)
HDFC Tax Saver (G)
UTI Mastershare (G)
Franklin India Prima Plus Fund (G)
HDFC Long Term Advantage Fund (G)
5 years avg
return*
25.01
50.79
55.65
57.89
42.73
39.63
31.52
45.22
27.37
51.05
60.54
46.99
16.82
39.73
57.16
25.01
52.81

-68-
Beta
1.15
1
0.99
0.98
0.97
0.97
0.96
0.96
0.94
0.93
0.91
0.9
0.87
0.86
0.82
1.15
0.75

Returns are annualized
n xy-( x)( y)
n x2-( x)
Where n= number of days

X =rolling returns of the NSE index
Y= rolling returns of the schemes
Beta describes the relationship between the stocks return
and the index returns. it describes the risk in the portfolio
with comparing market risk as 1 .
If beta =1
One percent changes in market index return causes exactly
one percent change in the stock returns. it indicates that the
stock moves in randem with the market .
If Beta <1
Then the stock is less volatile compared to the market.
If Beta >1
Then the stock is more volatile compared to the
market. The stock value
With more then 1 beta value is considered to be risky.

-69-

If Beta ve: nagative Beta indicates that the stock returns moves in
the opposite direction to the market return.
Standard deviation
It is used to measure the variation in individual returns from the average

expected returns over a certain period. Standard deviation is used in the
concept of risk of a portfolio of investments. Higher standard deviation
means a greater fluctuation in expected return.
Name of Scheme DOI
Pru ICICI Dynamic 47.3746

Plan (G)
Pru ICICI Power (G) 61.74
Pru ICICI Tax Plan 73.12
(G)
UTI Equity Fund (G) 26.52
UTI Master Plus 91 49.62
(G)
UTI Mastershare (G) 26.95
UTI Unit Scheme - 12.23
2002 (G)
Reliance Growth
199.52
Fund (G)
Reliance Vision Fund 137.65
(G)
HDFC Equity Fund 113.822
(G)
HDFC Top 200 Fund 85.834
(G)
HDFC Long Term
74.137
Returns (annualized)
1 yr 2yr
3yr 4yr
5yr
61.47 73.82 31.67 0
5yrs SD
Avg
return
55.65 30.51
55.87 56.07 51.16 31.07 19.50

36.32 113.03 53.07 24.43 27.12
42.73 14.81
50.79 32.69
32.47 39.03 28.00 9.97 0.00

46.67 26.99 38.75 13.68 0.00
27.37 14.59
31.52 16.83
26.88 25.83 34.50 6.54 -9.66

26.21 24.23 24.60 0.00 0.00
16.82 16.14
25.01 12.27
48.21 93.23 80.40 27.21 53.64
60.54 23.55
50.45 62.62 60.56 34.41 81.42
57.89 15.43
54.31 61.68 52.27 36.00 30.66
46.99 11.70
49.69 59.22 54.24 43.52 19.46
45.22 13.88
39.15 72.43 71.29 38.13 43.04
52.81 15.64

-70-

Advantage Fund (G)
HDFC Tax Saver (G)
Franklin India
Bluechip Fund (G)
Franklin India Prima
Fund (G)
Franklin India Prima
Plus Fund (G)
115.193 47.48 106.91 53.02 29.77 18.07

100.38 49.38 42.86 65.40 29.57 10.97
51.05 30.59
39.63 18.40
162.06
31.87 74.83 70.86 41.37 66.86
57.16 17.22
100.29
45.20 49.60 58.77 27.60 17.47
39.73 15.05
Standard deviation (SD) =\/ var

Where Var = variance
Var=
p (ri-E(r)) 2
Return & Risk for top 10 average returns

Name of Scheme
HDFC Long Term Advantage Fund
(G)
HDFC Tax Saver (G)
HDFC Top 200 fund
Pru ICICI power
DOI
Sd
beta
199.52
137.65
162.06
47.3746
74.137
5 yrs avg
returns
60.54
57.89
57.16
55.65
52.81
23.55
15.43
17.22
30.51
15.64
0.91
0.98
0.82
0.99
0.75
115.193
73.12
113.822
85.834
61.74
51.05
50.79
46.99
45.22
42.73
30.59
32.69
11.70
13.88
14.81
0.93
1
0.94
0.96
0.97

-71-

Sharpes
Sharpes index measures the risk premium of the portfolio relative to the total
amt of risk in the portfolio. This risk premium is the difference between the
portfolios average rate of return and the risk less rate of return. The index assigns
the highest values to assets that have best risk-adjusted average rate of returns.
Name of Scheme
HDFC Long Term Advantage
Fund (G)
HDFC Tax Saver (G)
HDFC Top 200 fund
Pru ICICI power
Where
DOI
Rf
sd
St
199.52
137.65
162.06
47.3746
74.137
5 yrs avg
returns Rp
60.54
57.89
57.16
55.65
52.81
8.00
8.00
8.00
8.00
8.00
23.55
15.43
17.22
30.51
15.64
2.23
3.23
2.85
1.56
0.59
115.193
73.12
113.822
85.834
61.74
51.05
50.79
46.99
45.22
42.73
8.00
8.00
8.00
8.00
8.00
30.59
32.69
11.70
13.88
14.81
1.41
1.31
3.33
2.68
2.34
st =Sharpes index
Rp=portfolio return

-72-

Rf=Risk free rate of return (8.00%)
SD= standard deviation of the port folio
St= RP-Rf
SD
Treynors Index:
Name of Scheme
DOI)
Rp
199.52
60.54
137.65
57.89
162.06
57.16
47.3746 55.65
HDFC Long Term Advantage Fund 74.137
52.81
(G)
HDFC Tax Saver (G)
115.193 51.05
73.12
50.79
113.822 46.99
HDFC Top 200 fund
85.834
45.22
Pru ICICI power
61.74
42.73
Rf
Beta
Tn
8.00
8.00
8.00
8.00
8.00
0.91
0.98
0.82
0.99
0.75
57.73
50.91
59.95
48.13
59.75
8.00
8.00
8.00
8.00
8.00
0.93
1
0.94
0.96
0.97
46.29
42.79
43.32
38.77
35.80
In Treynors higher the ratio higher the performance.

Tn =Treynors index
Rp=portfolio return
Rf=Risk free rate of return (7.59%)
Formula
Tn= RP-Rf
-73-

Beta
Performance Evaluation Tables

Name of the scheme DOI)
Rp Beta SD Sharpes Treynor's

Reliance Growth Fund (G) 199.52 60.54 0.91 23.55 2.23
57.73
Reliance Vision Fund (G) 137.65 57.89 0.98 15.43 3.23
50.91
Franklin India Prima Fund 162.06 57.16 0.82 17.22 2.85
59.95
(G)
Pru ICICI Dynamic Plan 47.3746 55.65 0.99 30.51 1.56
48.13
(G)
HDFC Long Term
74.137 52.81 0.75 15.64 0.59
59.75
Advantage Fund (G)
HDFC Tax Saver (G)
115.193 51.05 0.93 30.59 1.41
46.29
73.12 50.79 1 32.69 1.31
42.79
HDFC Equity Fund (G) 113.822 46.99 0.94 11.70 3.33
43.32
HDFC Top 200 fund
85.834 45.22 0.96 13.88 2.68
38.77
Pru ICICI power
61.71 42.73 0.97 14.81 2.34
35.80

-74-

Ranking:
Ranking on the basis of Sharpes:
Name of the scheme
DOI
Rp
Hdfc equity fund

Reliance vision fund
Franklin india prima fund
Hdfc top 200 fund
Pru ICICI power
Reliance growth fund
Pru ICICI dyanamic fund
Hdfc tax saver fund
Pru icici tax plan
Hdfc long tern advantage fund
113.822 46.99
137.65 57.89
162.06 57.16
85.834 45.22
61.74 42.73
199.52 60.54
47.37 55.65
115.193 51.05
73.12 50.79
74.134 52.81
Sharpes Ranks
3.33
3.23
2.85
2.68
2.34
2.23
1.56
1.41
1.31
0.59
1
2
3
4
5
6
7
8
9
10

-75-

Ranking on the basis of Treynors

-76-

Name of the scheme
DOI
Franklin india prima fund

Hdfc long tern advantage
fund
Pru ICICI dyanamic fund
Hdfc tax saver fund
Hdfc equity fund
Pru icici tax plan
Hdfc top 200 fund
Pru ICICI power
162.06
74.134
Rp
59.16
51.81
199.52
137.65
47.3746
115.193
113.822
73.12
85.834
61.74
60.54
57.89
55.65
51.05
46.99
50.79
45.22
42.73
Treynors
Ranks
60.45
60.29
1
2
58.18
57.33
51.33
48.55
46.73
43.20
41.91
38.61
3
4
5
6
7
8
9
10

-77-

Limitations of the study:

The data collection was strictly confined to secondary sources. No
primary
data was associated with the project.
Collecting historical NAV is very difficult.
Selection of schemes for study is very difficult because lot of verities
of schemes.

-78-

Conclusion
The above evaluation according to Sharpe index the HDFC equity scheme falls
under 1st rank & according to traynor HDFC long term advantage fund falls under
2nd rank but here only diff was 0.16 as compare franklin it could consider as 1st
rank.

-79-

I would like to conclude that HDFC schems are performing well as compare to
other competitors even time factor it was started late but its returns is high as
compared to competitor.
As HDFC mutual fund has to concentrate more on marketing their scheme, as its
schemes are performing well, and it should maintain its rank 1 position.

-80-

Annexure
Details about top schemes
Franklin India prima fund

-81-

Fund manager
Investment objective
Date of allotment
Growth plan
Dividend plan
Entry load
Exit load
Minimum investment
Fund size
Portfolio turnover
Expenses ratio
K.N.Sivasubramanian/satish ramanathan
Aims to provide long term capital appreciation as
primary objective & income as secomdary objective
December 1,1993
Rs.184.11
Rs.51.26
Less thn rs 25 cr:2.25%;rs25 crs &above nil
Less than rs 25crs:nil;rs 25crs & above :2%(if
redeemed within 1 year of allotment
Rs 5000
Rs 2057 crs
58.21%
2.10%
Portfolio top 10 holdings

Company name
Aditya birla nuvo
Jaiprakash associats
Fag bearings
India cement
MICO
Kansai nerolac paints
Matrix labs
IPCA labs
Ashoka leylan
% of asset
8.78
8.06
5.19
5.10
4.75
4.70
4.44
4.38
3.8
HDFC Equity fund

Fund manager
Investment objective
Date of allotment
Growth plan
Dividend plan
Prasanth jain
To achive capital apprecition
12-8-94
151.389
45.193

-82-

Entry load
Exit load
Minimum investment
Fund size
< 5 cr 2.25%,> 5cr no entry load

Less than or =to rs 5crs nil;rs <5crs :1%(if redeemed
within 1 year of allotment
5000
2887.39
Portfolio holding top 10 holdings industry

Infosys technologies ltd
Oil& natural gas corp ltd
ITC ltd
Larsen & toubro ltd
Cropton greaves ltd
Amrtech auto ltd
Reliance industry ltd
Punj lioyod ltd
Hindustan petroleum
CMCltd
software
oil
consumer non durables
diversified
industrial capital goods
auto ancilaries
petrolium prod
construction
petroliun prod
hardware
%NAV
8.27
6.09
5.31
5.17
4.95
4.33
4.26
3.87
3.77
3.48
HDFC TOP 200 FUND

Fund manager
objective
Date of inception
Growth plan
Dividend plan
Entry load
Exit load
Minimum amt
fund
Prasanth jain
To genarate long term capital appriciation from portfolio of
equity &equity linked instruments
19-8-1996
151.386
45,193
5000
1131.45

-83-

Portfolio- top 10 holdings

Company/issuer
Equity &equity related
Tata consultancy service ltd
Bharati airtel ltd
Hindustan petroleum coporation ltd
Larsen & toubro ltd
Icici bank
Wipro
State bank fo india
industry
% to nav
oil
petrolium prod
software
software
Telecom service
petroliun prod
diversified
bank
software
bank
7.90
6.11
4.97
4.29
4.06
4.01
3.73
3.16
3.16
3.03
HDFC long term advantage fund

Fund manager
objective
Date of inception
Growth plan
Dividend plan
Entry load
Exit load
Minimum amt
fund
Vinay kulkarni
To achive long term grpwth capital
1-2-01
95.254
41.458
5000
424.53

Company/issuer
Maharastra seemless ltd
Container corporation of india ltd
Heritage foods india ltd
Blue star ltd
State bank fo india
industry
% to nav
Ferrous metals
transportation
Consumer non durables
petrolium prod
Consumer durable
bank
5.07
5.04
4.97
4.54
4.19
3.79

-84-

AIA enginneering ltd
Kansai nerolac paints ltd
Bharati elestronic ltd
Industrial capital goods

Consumer non durables
software
Industrial capital goods
3.31
3.29
3.11
3.09
HDFC Tax saver

Fund manager
objective
Date of inception
Growth plan
Dividend plan
Entry load
Exit load
Minimum amt
fund
Vinay kulkarni
18-12-95
146.134
69.916
5000
475.99

Company/issuer
Bharati airtel ltd
Hindustan petroleum coporation ltd
Larsen & toubro ltd
Icici bank
Wipro
State bank fo india
industry
% to nav
oil
petrolium prod
software
software
Telecom service
petroliun prod
diversified
bank
software
bank
7.90
6.11
4.97
4.29
4.06
4.01
3.73
3.16
3.16
3.03

Fund manager
objective
Date of inception
Ashwani kumar
The primary investment objective 0f the scheme is to
achive long term growth of capital by investment in
equity & its related securities.
9-7-1995

-85-

Growth plan
Dividend plan
Entry load
Exit load
Minimum amt
fund
160.53
49.81
< 2 r 2.25%,>/= to 2 cr.5 cr -1.25%:_> 5 cr -nil
Nil
5000
1719.35

Holdings
Reliance indutries ltd
JSW steel ltd
Bharath earth mover ltd
Bomby dyeing 7 mfg co ltd
Crompton greaves ltd
Bank of borada
Jindal saw ltd
Divis laboratieas
Jaipk sh assocition
associtiongujarath state fertimliser
% weightage
5.14
4.12
3.91
3.23
3.18
3.09
2.71
2.68
2.61
2,44

Fund manager
objective
Date of inception
Growth plan
Dividend plan
Entry load
Exit load
Minimum amt
fund
Sunil singania
The primary investment objective 0f the scheme is to
achive long term growth of capital by investment in
equity & its related securities.
9-8-95
234.80
52.22
< 2 r 2.25%,>/= to 2 cr.5 cr -1.25%:_> 5 cr -nil
Nil
5000
2524.13

Holdings
Equity
Weightage(%)
90.52

-86-

Siemens ltd
Grasim industries ltd
Divis laboraters ltd
Reliance comm ltd
India hotels ltd
Infosys technology ltd
Indian oil corporation ltd
Tata tea ltd
Reliance industries ltd
Auomative axies
5,48
5.15
5.07
4.42
4.42
4.25
3.73
3.68
3.59
3.55
PruICICI power
Fund manager
objective
Date of inception
Growth plan
Dividend plan
Entry load
Exit load
Minimum amt
fund
Sankaran naren
10-05-2001
76.66
20.65
5000
1359.04

Company/issuer
ITC LTD
Hindalco industries ltd
Patni computer system ltd
Grasim industries ltd
Mahindra & mahindra ltd
Bharath electronic ltd
Deccan chronicle holdings ltd
(%)NAV
6.38
5.77
4.91
4.71
3.69
3.68
3.43
3.17
2.98
2.96
PruICICI dynamic plan

-87-

Fund manager
objective
Date of inception
Growth plan
Dividend plan
Entry load
Exit load
Minimum amt
fund
Sankaran naren
18-10-2002
59.1741
20.2430
5000
1044.27

Company/issuer
ITC ltd
Decan chronicle holdings ltd
i-fex solution ltd
Jain irrigation systems ltd
Bharati airtel ltd
Mahinra & mahindra ltd
Oil & natural gas company ltd
Sterlite indutries (india) ltd
(%)NAV
5.86
5.31
4.95
4.17
399
3.13
3.11
3.03
2.69
2.68
PruICICI tax plan

Fund manager
objective
Date of inception
Growth plan
Dividend plan
Entry load
Exit load
Minimum amt
fund
Sankaran naren
18-9-99
91.23
29.29
5000
421.75

-88-


Company/issuer
H.E.G LTD
Cadila health care
Kesoram industries ltd
ITC ltd
Sundaram clayton ltd
Aventis pharma ltd
Trent ltd
Raymonds ltd
IBP company ltd
Orient peper & indutries ltd
(%)NAV
5.06
5.04
4.99
4.51
4.44
4.12
3.49
3.35
3.32
3.16

-89-

Bibliography
Reference books
security analysis & portfolio management
By Punithavathy pandian
Websites
www.hdfcmutualfund.com
www.amfi.com
www.myirish.com
www.indiainfoline.com

-90-


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Performance Comparision of HDFC Mutual Fund Equity Schemes

With other Equity Schemes

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Purpose of the study:

Scope of the study

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

To know the Performance of HDFC Mutual Fund scheme compared to

To evaluate performance of mutual funds in the terms of risk and

To appraise investment performance of mutual funds with risk

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Post office deposit

Tax saving schemes

Public provident fund scheme

National saving scheme

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

NEW ISSUE MARKET (PRIMARY MARKET)

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Introduction of mutual fund

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Mutual Funds Industry in India

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

.Major Mutual Fund Companies in India

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Prudential Mutual Fund

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

What is a Mutual Fund:

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Mutual Fund Structure

The structure consists of

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Belgaum Institute of Management Studies ( MBA )

Performance Comparision of HDFC Mutual Fund Equity Schemes

Belgaum Institute of Management Studies ( MBA )