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A WINTER TRAINING PROJECT REPORT On

A study on performance Comparison of Equity Schemes of HDFC Mutual Fund with others.

at

SUBMITTED IN PARTIAL FULFILLMENT FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (SESSION 2010-2012)

Submitted To:
HPUBS,
Summerhill Shimla.

Submitted by
SHWETA SOOD MBA (3rd Semester) Class Roll No-2408 Univ.Roll No -2315

CONTENTS
Statement of the problem Objective of the study Scope of the study Introduction to mutual fund

Organization profile
Brief history of HDFC Bank Introduction of HDFC mutual fund

Analysis
Techniques of Analysis Findings Annexure Bibliography

ACKNOWLEDGEMENT
I owe my deepest gratitude to all the people associated with this project and helped me in the successfully completing this work. I wish to extend my sincere thanks to Mr. Dhruv Braghta The Branch Manager at HDFC Bank for giving me an opportunity to work for the organization. I would also like to extend my thanks to Mr. Yogendra Sudarshan, Sales Manager for his constant guidance and support all throughout the project duration. He has constantly encouraged and challenged me to deliver nothing less than the best. I would also like to express my gratitude to all the staff members at HDFC Bank for their support and co-operation during the period. Lastly I would like to thank all the members of the HPUBS family, my Parents, my Sister and the Lord Almighty for helping and supporting me all throughout this project. Thank You All Shweta Sood

Executive summary
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 2 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 study is A study on performance Comparison of Equity Schemes of HDFC Mutual Fund with others.

Title of project
A study on performance Comparison of HDFC Mutual Fund equity schemes with others companies mutual fund schemes. At HDFC Bank, Shimla.

Research problem
To find out the different types of equity scheme performance of HDFC and compare it with other 2 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 three 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 must be more than 3 years. The study cover only equity diversified which is having more fluctuations risk and returns.

Objective of the 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

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.

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 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:


1. Origination 2. Underwriting 3. Distribution

The main objectives of NSE are as follows.


To establish the nationwide 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 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 accelerated from the year 1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, 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 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 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


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

What is a Mutual Fund


Capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of 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 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.

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 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(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

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 external factors such as social, political as well as economic. HDFC Growth Fund, HDFC Tax Plan 2000 and HDFC Index Fund are examples of equity schemes.

General Purpose
The investment objectives of general-purpose equity schemes do not restrict them to invest in specific industries or sectors. They thus have a diversified portfolio of companies across a large spectrum of industries. While they are exposed to equity price risks, diversified general-purpose equity funds seek to reduce the sector or stock specific risks through diversification. They mainly have market risk exposure. HDFC Growth Fund is a general-purpose equity scheme.

Sector Specific
These schemes restrict their investing to one or more pre-defined sectors, e.g. technology sector. Since they depend upon the performance of select sectors only, these schemes are inherently more risky than general-purpose schemes. They are suited for informed investors who wish to take a view and risk on the concerned sector.

Special Schemes Index schemes


The primary purpose of an Index is to serve as a measure of the performance of the market as a whole, or a specific sector of the market. An Index also serves as a relevant benchmark to evaluate the performance of mutual funds. Some investors are interested in investing in the market in general rather than investing in any specific fund. Such investors are happy to receive the returns posted by the markets. As it is not practical to invest in each and every stock in the market in

proportion to its size, these investors are comfortable investing in a fund that they believe is a good representative of the entire market. Index Funds are launched and managed for such investors. An example to such a fund is the HDFC Index Fund.

Tax saving schemes


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

Real Estate Funds


Specialized real estate funds would invest in real estates directly, or may fund real estate developers or lend to them directly or buy shares of housing finance companies or may even buy their securitized assets.

Debt Based Schemes

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

Income Schemes
These schemes invest in money markets, bonds and debentures of 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.

Gilt Funds
This scheme primarily invests in Government Debt. Hence the investor usually does not have to worry about credit risk since Government Debt is generally credit risk free. HDFC Gilt Fund is an example of such a scheme

Hybrid Schemes
These schemes are commonly known as balanced schemes. These schemes invest in both equities as well as debt. By investing in a mix of this nature, balanced schemes seek to attain the objective of income and moderate capital appreciation and are ideal for investors with a conservative, long-term orientation. HDFC Balanced Fund and HDFC Childrens Gift Fund are examples of hybrid schemes.

Constitution
Schemes can be classified as Closed-ended or Open-ended depending upon whether they give the investor the option to redeem at any time (open-ended) or whether the investor has to wait till maturity of the scheme

Open ended Schemes


The units offered by these schemes are available for sale and repurchase on any business day at NAV based prices. Hence, the unit capital of the schemes keeps changing each day. Such schemes thus offer very high liquidity to investors and are becoming increasingly popular in India. Please note that an open-ended fund is NOT obliged to keep selling/issuing new units at all times, and may stop issuing further subscription to new investors. On the other hand, an open-ended fund rarely denies to its investor the facility to redeem existing units.

Closed-ended schemes
The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed number of units. These schemes are launched with an initial public offer (IPO) with a stated maturity period after which the units are fully redeemed at NAV linked prices. In the interim, investors can buy or sell units on the stock exchanges where they are listed. Unlike open-ended schemes, the unit capital in closed-ended schemes usually remains unchanged. After an initial closed period, the scheme may offer direct repurchase facility to the investors. Closed-ended schemes are usually more illiquid as compared to open-ended schemes and hence trade at a discount to the NAV. This discount tends towards the NAV closer to the maturity date of the scheme.

Interval Schemes
These schemes combine the features of open-ended and closed-ended schemes. They may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV based prices.

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 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.

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.

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


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. 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. 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.

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 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

Board of Directors
C M Vasudev Aditya Puri Harish Engineer Paresh Sukthankar Anami N Roy Ashim Samanta Bobby Parikh Partho Datta Renu Karnad Pandit Palande Non Executive Chairman Managing Director Executive Director Executive Director Director Director Director Director Director Director

Vice president (legal) & company secretary


Mr. Sanjay Dongre

Auditors
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 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 provides 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 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.

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
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 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 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
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. 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 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

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


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.

2010
Business Today: Best Bank in India. Forbes Top 2000 Companies: Bank at 632nd Position

Business world: Best Bank (large) The Banker Magazine: Words Top 1000 bank Asia money Awards: Best Local Cash Management Bank in Large and Medium segments Euro money Awards: "Best Bank" in India

2009
Asia money Awards: Best Domestic Commercial Bank Asia money Awards: Best Cash Management Bank India Global Finance Award : Best Trade Finance Bank.

The Asian Banker Excellence: Retail Banking Risk Management Award in India: Best Bank India Economic Times Awards: Best Bank in India 2009

2008
Finance Asia Country Awards For Achievement 2008: Best Bank and Best Cash and Management Bank. Buisness India: Best bank 2008 Forbes Asia: Fab 50 Companies in pacific Asia.

Buisness Today: Best Bank Award

Till Year 2007


HDFC Bank named the "Most Customer Responsive Company - Banking and Financial Services in The Economic Times - Avaya Global IT User in Banking' at the IT Users Awards 2003. Outlook Money & NDTV Profit : Best Bank in the Private sector category. The Asian Banker Excellence in Retail Financial Services Award : Best Retail Bank in India. Asian Banker : Managing Director Aditya Puri wins the Leadership Award For india. 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. Connect Customer Responsiveness Awards 2005" 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. 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

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. 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 Governance 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. 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 Housing Development Finance Corporation Limited Standard Life Investments Limited

Percentage of the Paid Capital 50.10 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

The Board of Directors of the HDFC Asset Management Company Limited (AMC)
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 HDFC Fixed Investment Plan HDFC Long Term Equity Fund and HDFC Fixed Maturity Plans

22 open-ended schemes of the Mutual Fund HDFC Growth Fund (HGF) HDFC Balanced Fund (HBF) 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) HDFC Multiple Yield Fund - Plan 2005 (HMY2005)

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 .

Techniques Used
1) Return
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 divided 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
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
i-E(r)) 2

Beta
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) 2 Where, n= number of days X =rolling returns of the NSE index Y= rolling returns of the schemes

3) Sharpe index
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

4) Treynors Index
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 2&3

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 than 3yrs only that fund is qualified for analysis

The following are the equity-diversified schemes in the selected funds:

HDFC Equity Fund (G) HDFC Top 200 Fund (G) HDFC Long Term Advantage Fund (G) HDFC Tax Saver (G) Reliance Growth Fund (G) Reliance Vision Fund (G) Pru ICICI Dynamic plan Pru ICICI Power Pru ICICI Tax Plan

Fund size 2887.39 1131.45 424.53 475.99 2524.13 1719.35 1044.27 1359.04 421.75

DOI 12/08/94 08/19/96 01/02/01 12/18/95 09/08/95 09/07/95 10/18/02 10/05/01 08/09/99

Tables for fund size and DOI

Absolute returns

Scheme Name

DOI nav 47.375 61.740 73.120

RT1y

RT2y

RT3y

RT4y

RT5y

Pru ICICI Dynamic Plan (G) Pru ICICI Power (G) Pru ICICI Tax Plan (G) Reliance Growth Fund (G)

61.468 180.655

0.000

55.870 143.262 267.719 381.967 475.933 36.316 190.389 344.498 453.101 603.077

199.520 48.210 186.379 416.624 557.181 909.717

Reliance Vision Fund (G) HDFC Equity Fund (G) HDFC Top 200 Fund (G) HDFC Long Term Advantage Fund (G) HDFC Tax Saver (G)

137.650 50.454 144.668 292.837 428.002 857.898

113.822 54.314 149.500 279.913 416.668 575.101 85.834 74.137 49.693 138.335 267.597 427.560 530.206 39.146 139.926 310.959 467.665 712.015

115.193 47.475 205.147 366.936 505.960 615.484

The selected funds returns from date of launch to date of inception

Criteria 4

Methodology

1. Return Name of Scheme DOI 1 yr Reliance Growth Fund (G) Reliance Vision Fund (G) HDFC Equity Fund(G) HDFC Long Term Advantage Fund(G) HDFC Tax Saver(G) 199.52 137.65 48.21 50.45 Returns(annualized) 2yr 3yr 4yr 93.23 62.62 61.68 72.43 Avg return 60.54 57.89 46.99 52.81 51.05

5yr

80.40 27.21 53.64 60.56 34.41 81.42 52.27 36.00 30.66 71.29 38.13 43.04

113.822 54.31 74.137 39.15

115.193 47.48 106.91 53.02 29.77 18.07

HDFC Top 200 Fund 85.834 49.69 59.22 (G) Pru ICICI Dynamic 47.3746 61.47 73.82 Plan (G) Pru ICICI Power (G) 61.74 55.87 56.07 Pru ICICI Tax Plan 73.12 36.32 113.03 (G)

54.24 43.52 19.46 31.67 0 0

45.22 55.65 42.73 50.79

51.16 31.07 19.50 53.07 24.43 27.12

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 5 years avg return* Pru ICICI Tax Plan (G) 50.79 Pru ICICI Dynamic Plan 55.65 (G) Reliance Vision Fund (G) 57.89 Pru ICICI Power (G) 42.73 HDFC Top 200 Fund (G) 45.22 HDFC Tax Saver (G) 51.05 Reliance Growth Fund (G) 60.54 HDFC Equity Fund (G) 46.99 HDFC Long Term 52.81 Advantage Fund (G Beta 1 0.99 0.98 0.97 0.96 0.93 0.91 0.9 0.75

Returns are annualized


2

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. 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

Returns (annualized) 1 yr 2yr 3yr 4yr 31.67 0

5yr 0

Pru ICICI Dynamic Plan (G) Pru ICICI Power (G) Pru ICICI Tax Plan (G) Reliance Growth Fund (G) Reliance Vision Fund (G) HDFC Equity Fund (G) HDFC Top 200 Fund (G) HDFC Long Term Advantage Fund (G) HDFC Tax Saver (G)

47.3746 61.47 73.82 61.74 73.12 199.52 137.65 55.87 56.07

5yrs SD Avg return 55.65 30.51 14.81 32.69 23.55 15.43 11.70 13.88 15.64

51.16 31.07 19.50 42.73

36.32 113.03 53.07 24.43 27.12 50.79 48.21 93.23 50.45 62.62 80.40 27.21 53.64 60.54 60.56 34.41 81.42 57.89 52.27 36.00 30.66 46.99 54.24 43.52 19.46 45.22 71.29 38.13 43.04 52.81

113.822 54.31 61.68 85.834 74.137 49.69 59.22 39.15 72.43

115.193 47.48 106.91 53.02 29.77 18.07 51.05

30.59

Standard deviation (SD) =\/ var Where Var = variance


i-E(r)) 2

Return & Risk for top 10 average returns

Name of Scheme

Reliance Growth Fund (G) Reliance Vision Fund (G) Pru ICICI Dynamic Plan (G) HDFC Long Term Advantage Fund (G) HDFC Tax Saver (G) Pru ICICI Tax Plan (G) HDFC Equity Fund (G) HDFC Top 200 fund Pru ICICI power

5yrs avg returns 199.52 60.54 137.65 57.89 47.3746 55.65 74.137 52.81 115.193 73.12 113.822 85.834 61.74 51.05 50.79 46.99 45.22 42.73

DOI

Sd

Beta

23.55 15.43 30.51 15.64 30.59 32.69 11.70 13.88 14.81

0.91 0.98 0.99 0.75 0.93 1 0.94 0.96 0.97

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 Reliance Growth Fund (G) Reliance Vision Fund (G) Pru ICICI Dynamic Plan (G) HDFC Long Term Advantage

DOI 199.52 137.65 47.3746 74.137

5 yrs avg returns Rp 60.54 57.89 55.65 52.81

Rf 8.00 8.00 8.00 8.00

sd 23.55 15.43 30.51 15.64

St 2.23 3.23 1.56 0.59

Fund (G) HDFC Tax Saver (G) Pru ICICI Tax Plan (G) HDFC Equity Fund (G) HDFC Top 200 fund Pru ICICI power

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

Where st =Sharpes index Rp=portfolio return Rf=Risk free rate of return (8.00%) SD= standard deviation of the port folio St= RP-Rf
SD

Treynors Index

Name of Scheme Reliance Growth Fund (G) Reliance Vision Fund (G) Pru ICICI Dynamic Plan (G) HDFC Long Term Advantage Fund (G) HDFC Tax Saver (G) Pru ICICI Tax Plan (G) HDFC Equity Fund (G) HDFC Top 200 fund Pru ICICI power

DOI 199.52 137.65 47.3746 74.137 115.193 73.12 113.822 85.834 61.74

Rp 60.54 57.89 55.65 52.81 51.05 50.79 46.99 45.22 42.73

Rf 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00 8.00

Beta Tn 0.91 0.98 0.99 0.75 0.93 1 0.94 0.96 0.97 57.73 50.91 48.13 59.75 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
Beta

Performance Evaluation Tables

Name of DOI) Scheme Reliance 199.52 Growth Fund (G) Reliance 137.65 Vision Fund (G) Pru ICICI 47.3746 Dynamic Plan (G) HDFC Long 74.137 Term Advantage Fund (G) HDFC Tax 115.193 Saver (G)

Rp

Beta SD

Sharpes Treynor's 2.23 57.73

60.54 0.91 23.55

57.89 0.98 15.43

3.23

50.91

55.65 0.99 30.51

1.56

48.13

52.81 0.75 15.64

0.59

59.75

51.05 0.93 30.59

1.41

46.29

Pru ICICI 73.12 50.79 1 Tax Plan (G) HDFC 113.822 46.99 0.94 Equity Fund (G) HDFC Top 85.834 45.22 0.96 200 fund Pru ICICI 61.71 42.73 0.97 power

32.69

1.31

42.79

11.70

3.33

43.32

13.88 14.81

2.68 2.34

38.77 35.80

Ranking

Ranking on the basis of Sharpes Name of the scheme Hdfc equity fund Reliance vision 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 DOI 113.822 137.65 85.834 61.74 199.52 47.37 115.193 73.12 74.134 Rp 46.99 57.89 45.22 42.73 60.54 55.65 51.05 50.79 52.81 Sharpes Ranks 3.33 3.23 2.68 2.34 2.23 1.56 1.41 1.31 0.59 1 2 3 4 5 6 7 8 9

3.5 3 2.5 2 1.5 1 0.5 0 Sharpes

Hdfc equity fund Reliance vision fund Franklin india prima 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

Ranking on the basis of Treynors

Name of Scheme Hdfc long tern advantage fund Reliance growth fund Reliance vision fund Pru ICICI dyanamic fund Hdfc tax saver fund Hdfc equity fund Pru icici tax plan Hdfc top 200 fund Pru ICICI power

DOI 74.134 199.52 137.65 47.3746 115.193 113.822 73.12 85.834 61.74

Rp 51.81 60.54 57.89 55.65 51.05 46.99 50.79 45.22 42.73

Treynors 60.29 58.18 57.33 51.33 48.55 46.73 43.20 41.91 38.61

Ranks 1 2 3 4 5 6 7 8 9

70 60 50 40 30 20 10 0 Treynors Pru ICICI power Hdfc long tern advantage fund Reliance growth fund Reliance vision fund Pru ICICI dyanamic fund Hdfc tax saver fund Hdfc equity fund Pru icici tax plan Hdfc top 200 fund

Limitations of the study


The data collection was strictly confined to secondary sources. No primary Data was not associated with the project Collecting historical NAV is very difficult Selection of schemes for study is very difficult because lot of verities of schemes.

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 1st rank but here only diff was 2.11 as compare reliance. 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.

Annexure Details about top Schemes


HDFC Equity fund

Fund manager Investment objective Date of allotment Growth plan Dividend plan Entry load Exit load Minimum investment Fund size

Prasanth jain To achive capital apprecition 12-8-94 151.389 45.193 < 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 %NAV Infosys technologies ltd software Oil& natural gas corp ltd oil ITC ltd consumer non durables Larsen & toubro ltd diversified Cropton greaves ltd industrial capital goods

8.27 6.09 5.31 5.17 4.95

Amrtech auto ltd Reliance industry ltd Punj lioyod ltd Hindustan petroleum CMCltd

auto ancilaries petrolium prod construction petroliun prod hardware

4.33 4.26 3.87 3.77 3.48

HDFC Top 200 Funds


Fund manager objective Prasanth jain To genarate long term capital appriciation from portfolio of equity &equity linked instruments 19-8-1996 151.386 45,193 < 5 cr 2.25%,> 5cr no entry load 5000 1131.45

Date of inception Growth plan Dividend plan Entry load Exit load Minimum amt Fund

Portfolio- top 10 holdings


Company/issuer Equity &equity related Oil& natural gas corp ltd Reliance industry ltd Infosys technologies ltd Tata consultancy service ltd Bharati airtel ltd Hindustan petroleum industry oil petrolium prod software software Telecom service petroliun prod % to nav 7.90 6.11 4.97 4.29 4.06 4.01

coporation ltd Larsen & toubro ltd Icici bank Wipro State bank fo india

diversified bank software bank

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 < 5 cr 2.25%,> 5cr no entry load 5000 424.53

Portfolio- top 10 holdings


Company/issuer Equity &equity related Maharastra seemless ltd Container corporation of india ltd Heritage foods india ltd Reliance industry ltd Blue star ltd State bank fo india AIA enginneering ltd industry Ferrous metals transportation Consumer non durables petrolium prod Consumer durable bank Industrial capital goods % to nav 5.07 5.04 4.97 4.54 4.19 3.79 3.31

Kansai nerolac paints ltd Infosys technologies ltd Bharati elestronic ltd

Consumer non durables 3.29 software 3.11 Industrial capital goods 3.09

HDFC Tax saver


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 18-12-95 146.134 69.916 < 5 cr 2.25%,> 5cr no entry load 5000 475.99

Portfolio- top 10 holdings


Company/issuer Equity &equity related Oil& natural gas corp ltd Reliance industry ltd Infosys technologies ltd Tata consultancy service ltd Bharati airtel ltd Hindustan petroleum coporation ltd Larsen & toubro ltd Icici bank Wipro State bank fo india industry oil petrolium prod software software Telecom service petroliun prod diversified bank software bank % to nav 7.90 6.11 4.97 4.29 4.06 4.01 3.73 3.16 3.16 3.03

Reliance vision fund


Fund manager objective 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 160.53 49.81 < 2 r 2.25%,>/= to 2 cr.5 cr -1.25%:_> 5 cr nil Nil 5000 1719.35

Date of inception Growth plan Dividend plan Entry load Exit load Minimum amt Fund

Portfolio- top 10 holdings


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 association associtiongujarath state fertimliser % weightage 5.14 4.12 3.91 3.23 3.18 3.09 2.71 2.68 2.61 2,44

Reliance growth fund


Fund manager objective 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

Date of inception Growth plan Dividend plan Entry load Exit load Minimum amt Fund

Portfolio- top 10 holdings


Holdings Equity 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 Weightage(%) 90.52 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 To achive long term grpwth capital 10-05-2001 76.66 20.65 < 5 cr 2.25%,> 5cr no entry load 5000 1359.04

Portfolio- top 10 holdings


Company/issuer ITC LTD Reliance indutries ltd Hindalco industries ltd Patni computer system ltd Grasim industries ltd Mahindra & mahindra ltd Tata consultancy service ltd Infosys technologies 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


Fund manager objective Date of inception Growth plan Dividend plan Entry load Exit load Minimum amt Fund Sankaran naren To achive long term grpwth capital 18-10-2002 59.1741 20.2430 < 5 cr 2.25%,> 5cr no entry load 5000 1044.27

Portfolio- top 10 holdings


Company/issuer ITC ltd Decan chronicle holdings ltd Reliance indutries ltd i-fex solution ltd Tata consultancy service 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 To achive long term grpwth capital 18-9-99 91.23 29.29 < 5 cr 2.25%,> 5cr no entry load 5000 421.75

Portfolio- top 10 holdings


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

Bibliography
Reference books security analysis & portfolio management By Punithavathy pandian

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