INTRODUCTION TO MUTUAL FUNDS

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of mutual funds.

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders. The investors in proportion to their investments share the profits or losses. The mutual funds normally come out with a number of schemes with different investment objectives that are launched from time to time.

Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry SJCET -1MBA Dept

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

SJCET

-2-

MBA Dept

OBJECTIVES OF THE STUDY

To make a more informed investment decision while selecting a specific scheme. To give a brief idea about the History of Mutual Fund in India. To make a detailed study about the funds available in Mutual Fund Industry. To discuss about the Market Trends of the Mutual Fund investment. To discuss comparative study of HDFC & UTI schemes of Mutual Fund.

To study the recent trends and future scenario of Mutual Fund performance in
the market.

SJCET

-3-

MBA Dept

NEED FOR THE STUDY

A mutual fund is a special type of financial service organization. It acts as an investment intermediary. It channels savings of a large no of people to the corporate securities in such a way that investors get steady return, capital appreciation and a low risk. The need for the study is investors who got the specific return with a low risk and also suggest which funds to choose invest his capital. The study provides me an opportunity to helpful to my theoretical knowledge and also practical experience for the investing the capital in to the mutual funds with a low risk and get steady return. And also know the various practical aspects in marketing and finance area Hence the study of performance of mutual fund is helpful to understanding the customer preference to words mutual funds. In India, first mutual fund was started in 1964 when Unit Trust of India was established. Unit Trust of India brought out a number of schemes beneficial to investors. It is the biggest mutual fund in India. The government of India amended Banking Regulation Act in 1987 to enable commercial banks to establish mutual funds in India. A number of mutual funds to mop up savings of every section of society. The State Bank of India has launched a mutual fund called SBI Mutual Fund in 1987. Indian Bank established a mutual fund called Indian Bank Mutual Fund in 1990. the government of India allowed the private sector corporate or companies to join the mutual fund in industry in 1992.HDFC AMC for the mutual fund by SEBI on July 3rd 2000.

SJCET

-4-

MBA Dept

SCOPE OF THE STUDY

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

SJCET

-5-

MBA Dept

METHODOLOGY OF THE STUDY

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

Research Instrument:Questionnaire has been used in this research to collect the necessary information. Questionnaire is the most common instrument, in collecting the primary data. The questionnaire consists of a set of questions presented to the respondents for their valuable answers. The questionnaire consist of questions, were used to obtain necessary information from customers. In designing the questionnaire for the data collection, SJCET -6MBA Dept

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

SJCET

-7-

MBA Dept

LIMITATIONS OF THE STUDY

This study is under taken as a part of M.B.A course curriculum during the summer vocation. Short span of time 8 weeks is a limitation of the study. The comparative study of performance is taken for selecting three schemes in HDFC and three schemes in UTI. This study covers mostly on customers and not covers the agents and corporate agents of mutual fund. Because of time constraint.

The limitation of the study is entire schemes are not taken into consideration only limited are taken each type of the mutual funds for the study.

SJCET

-8-

MBA Dept

INDUSTRY PROFILE
The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct phases. First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management. Second Phase 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores. Third Phase 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund. Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund SJCET -9MBA Dept

Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds. Fourth Phase since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry. Has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

SJCET

- 10 -

MBA Dept

COMPANY PROFILE
HDFC Bank Limited The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an in principle approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBIs liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of HDFC Bank Limited, with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. Promoter HDFC is Indias premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment. Business focus HDFC Banks mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the banks risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, and corporate governance and regulatory.Compliance. HDFC Banks business philosophy is based on four core values - Operational Excellence, Customer Focus, Product Leadership and People

Capital Structure The authorised capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up capital is Rs.309.9 crore (Rs.3.09 billion). The HDFC Group holds 22.2% of SJCET - 11 MBA Dept

the banks equity and about 19.5% of the equity is held by the ADS Depository (in respect of the banks American Depository Shares (ADS) Issue). Roughly 31.7% of the equity is held by Foreign Institutional Investors (FIIs) and the bank has about 190,000 shareholders. The shares are listed on the Stock Exchange, Mumbai and the National Stock Exchange. The banks American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol HDB. Times Bank Amalgamation In a milestone transaction in the Indian banking industry, Times Bank Limited (another new private sector bank promoted by Bennett, Coleman & Co. /Times Group) was merged with HDFC Bank Ltd., effective February 26, 2000. As per the scheme of amalgamation approved by the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank. The acquisition added significant value to HDFC Bank in terms of increased branch network, expanded geographic reach, enhanced customer base, skilled manpower and the opportunity to cross-sell and leverage alternative delivery channels. Distribution Network HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over 495 branches spread over 218 cities across India. All branches are linked on an online real-time basis. Customers in over 120 locations are also serviced through Telephone Banking. The Banks expansion plans take into account the need to have a presence in all major industrial and commercial centers where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement bank to various leading stock exchanges, the Bank has branches in the centers where the NSE/BSE has a strong and active member base. The Bank also has a network of about over 1054-networked ATMs across these cities. Moreover, HDFC Banks ATM network can be accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders. Management

SJCET

- 12 -

MBA Dept

Mr. Jagadish kapoor took over as the bank's Chairman in July 2001. Prior to this, Mr. kapoor was a Deputy Governor of the Reserve Bank of India. The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years and before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia. The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public policy, administration, industry and commercial banking. Senior executives representing HDFC are also on the Board. Senior banking professionals with substantial experience in India and abroad head various businesses and functions and report to the Managing Director. Given the professional expertise of the management team and the overall focus on recruiting and retaining the best talent in the industry, the bank believes that its people are a significant competitive strength.

Technology HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the banks branches have online connectivity, which enables the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs). The Bank has made substantial efforts and investments in acquiring the best technology available internationally, to build the infrastructure for a world class bank. In terms of software, the Corporate Banking business is supported by Flexcube, while the Retail Banking business by Finware, both from i-flex Solutions Ltd. The systems are open, scaleable and web-enabled. The Bank has prioritized its engagement in technology and the Internet as one of its key goals and has already made significant progress in web-enabling its core businesses. In each of its businesses, the Bank has succeeded in leveraging its market position, expertise and technology to create a competitive advantage and build market share.

SJCET

- 13 -

MBA Dept

Business Profile HDFC Bank caters to a wide range of banking services covering commercial and investment banking on the wholesale side and transactional / branch banking on the retail side. The bank has three key business segments: a) Wholesale Banking Services The Banks target market is primarily large, blue chip manufacturing companies in the Indian corporate sector and to a lesser extent, small & mid-sized corporate and agri-based businesses. For these customers, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions, which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporate including multinationals, companies from the domestic business houses and prime public sector companies. It is recognized as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks. b) Retail Banking Services The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by world-class service and delivered to the customers through the growing branch network, as well as through alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile Banking. The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus and the Investment Advisory Services programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans and Loans for Two-wheelers. SJCET - 14 MBA Dept

HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron) and issues the MasterCard Maestro debit card as well. The Bank launched its credit card business in late 2001. By March 2005, the bank had a total card base (debit and credit cards) of 4.2 million cards. The Bank is also one of the leading players in the merchant acquiring business with over 42,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments. The Bank is well positioned as a leader in various net based B2C opportunities including a wide range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc. c) Treasury Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalization of the financial markets in India, corporate need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the banks Treasury team. To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio. RATINGS/AWARDS a) Credit Rating HDFC Bank has its deposit programmes rated by two rating agencies - Credit Analysis & Research Limited. (CARE) and Fitch Ratings India Private Limited. The Banks Fixed Deposit programmed has been rated CARE AAA (FD) [Triple A] by CARE, which represents instruments considered to be of the best quality, carrying negligible investment risk. CARE has also rated the Banks Certificate of Deposit (CD) programmed PR 1+ which represents superior capacity for repayment of short term promissory obligations. Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the tAAA (ind) rating to the Banks deposit programmed, with the outlook on the rating as stable. This rating indicates highest credit quality where protection factors are very high. HDFC Bank also has its long term unsecured, subordinated (Tier II) Bonds of Rs.4 billion rated by CARE and Fitch Ratings India Private Limited. CARE has assigned the rating of CARE AAA for the SJCET - 15 MBA Dept

Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating AAA(ind) with the outlook on the rating as stable. In each of the cases referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments? b) Corporate Governance Rating The bank was one of the first four companies, which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entitys current performance and an expectation on its balanced value creation and corporate governance practices in future. The bank has been assigned a CRISIL GVC Level 1 rating which indicates that the banks capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest. c) Awards and Accolades Over the years, HDFC Bank has received recognition and awards from various leading organizations and publications, both domestic and international.

Awards and achievements-Bank services

In June 2005, HDFC Bank won Asia money magazines Best Domestic Commercial Bank Award 2005 for India. The Bank was awarded The Asian Bankers, Excellence in Retail Banking Risk Management Award for 2004, and pan-Asia recognition of the banks risk management abilities. The Asset (Triple a Country Awards) rated HDFC Bank as the Best Domestic Bank in India 2004 and Best Domestic Bank in India 2003. Forbes Global again named the Bank in its listing of Best under a Billion, 100 Best Smaller Size Enterprises in Asia/Pacific and Europe, in its November 2004 issue. SJCET - 16 MBA Dept

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

SJCET

- 17 -

MBA Dept

THEORETICAL FRAME WORK

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a Mutual Fund:

Investor

Invest/pool Their Money portfolio invest

profit/loss

from

Mutual Fund Company (Pool of Money)

Invest in a no. of Stocks/Bonds Profit/Loss from Individual investment

Market (Fluctuates)

SJCET

- 18 -

MBA Dept

ORGANISATION OF A MUTUAL FUND

There are man entities involved and the diagram below illustrates the organizational set up of a mutual fund:

HDFC Mutual Fund Products

Schemes: Equity Funds HDFC Growth Fund HDFC Long Term Advantage Fund HDFC Index Fund

SJCET

- 19 -

MBA Dept

HDFC Equity Fund HDFC Capital Builder Fund HDFC Tax Saver HDFC Top 200 Fund HDFC Core & Satellite Fund HDFC Premier Multi-Cap Fund Balanced Funds HDFC Children's Gift Fund Investment Plan HDFC Children's Gift Fund Savings Plan HDFC Balanced Fund HDFC Prudence Fund Debt Funds HDFC Income Fund HDFC Liquid Fund HDFC Gilt Fund Short Term Plan HDFC Gilt Fund Long Term Plan HDFC Short Term Plan HDFC Floating Rate Income Fund Short Term Plan HDFC Floating Rate Income Fund Long Term Plan HDFC Liquid Fund - PREMIUM PLAN HDFC Liquid Fund - PREMIUM PLUS PLAN HDFC Short Term Plan - PREMIUM PLAN HDFC Short Term Plan - PREMIUM PLUS PLAN HDFC Income Fund Premium Plan HDFC Income Fund Premium plus Plan HDFC High Interest Fund HDFC High Interest Fund - Short Term Plan HDFC Sovereign Gilt Fund - Savings Plan HDFC Sovereign Gilt Fund - Investment Plan HDFC Sovereign Gilt Fund - Provident Plan HDFC Cash Management Fund - Savings Plan HDFC Cash Management Fund - Call Plan SJCET - 20 MBA Dept

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

Awards:
HDFC Mutual Fund awarded Fund House of The Year in three years category & Best Performing Open-Ended Balance Fund at the Annual CNBC TV 18 - BNP Paribas Awards 2004.

Sponsors:Housing development Finance Corporation (HDFC): HDFC was incorporated in 1977 as the first specialized housing finance institution in India. HDFC provides financial assistance to individuals, corporate and developers for the purchase or construction of residential housing. It also provides property related services (e.g. property identification, sales services and valuation), training and consultancy. Of these activities, housing finance remains the dominant activity. HDFC currently has a client base of over 5, 00,000 borrowers, 13, 00,000 depositors, 1, 00,000 shareholders and 52,000 deposit agents. HDFC raises funds from international agencies such as the World Bank, IFC (Washington), USAID, CDC, ADB and KfW, domestic term loans from banks and insurance companies, bonds and deposits. HDFC has received the highest rating for its bonds and deposits program for the eighth year in succession. HDFC Standard Life Insurance Company Limited, promoted by HDFC was the first life insurance company in the private sector to be granted a Certificate of Registration (on October 23, 2000) by the Insurance Regulatory and Development Authority to transact life insurance business in India. SJCET - 21 MBA Dept

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

Management:
HDFC Trustee Company Limited: It is a company incorporated under the Companies Act, 1956 is the Trustee to the Mutual Fund vide the Trust deed dated June 8, 2000, as amended from time to time. HDFC Trustee Company Limited is a wholly owned subsidiary of HDFC Limited. HDFC Asset Management Company Limited (AMC): HDFC AMC was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the Mutual SJCET - 22 MBA Dept

Fund by SEBI on July 3, 2000. The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169, Back bay Reclamation, Church gate, Mumbai 400 020. In terms of the Investment Management Agreement, the Trustee has appointed HDFC Asset Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is Rs. 75.161 crore. The present share holding pattern of the AMC is as follows: Particulars HDFC Standard Life Investments Limited % of the paid up share capital 50.10 49.90

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a review of its overall strategy, had decided to divest its Asset Management business in India. The AMC had entered into an agreement with ZIC to acquire the said business, subject to necessary regulatory approvals. On obtaining the regulatory approvals, the Schemes of Zurich India Mutual Fund has now migrated to HDFC Mutual Fund on June 19, 2003. The AMC is managing 18 open-ended schemes of the Mutual Fund viz. HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF), HDFC Income Fund (HIF), HDFC Liquid Fund (HLF), HDFC Tax Plan 2000 (HTP), HDFC Children's Gift Fund (HDFC CGF), HDFC Gilt Fund (HGILT), HDFC Short Term Plan (HSTP), HDFC Index Fund, HDFC Floating Rate Income Fund (HFRIF), HDFC Equity Fund (HEF), HDFC Top 200 Fund, (HT200), HDFC Capital Builder Fund (HCBF), HDFC Tax Saver (HTS), HDFC Prudence Fund (HPF), HDFC High Interest Fund (HHIF), HDFC Sovereign Gilt Fund (HSGF) and HDFC Cash Management Fund (HCMF). The AMC is also managing the respective Plans of HDFC Fixed Investment Plan, a closed ended Income Scheme. The AMC has obtained registration from SEBI vide Registration No. - PM / INP000000506 dated December 22, 2000 to act as a Portfolio Manager under the SEBI (Portfolio Managers) Regulations, 1993. The Certificate of Registration is valid from January 1, 2001 to December 31, 2003. The AMC is also providing portfolio management / advisory services and such activities are not in conflict with the activities of the Mutual Fund.

SJCET

- 23 -

MBA Dept

The structure consists of Sponsor

Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment Managed and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor is not responsible or liable for any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund.

Trust
The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908.

Trustee:Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main responsibility of the Trustee is to safeguard the interest of the unit holders and inter alia ensure that the AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes. At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner.

Asset Management Company (AMC)

The Trustee as the Investment Manager of the Mutual Fund appoints the AMC. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC must have a net worth of at least 10 crore at all times. Registrar and Transfer Agent The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form, redemption requests and dispatches account statements to the unit holders. The SJCET - 24 MBA Dept

Registrar and Transfer agent also handles communications with investors and updates investor records.

Investment Objective: Schemes can be classified by way of their stated investment objective such as Growth Fund, Balanced Fund, and Income Fund etc

TYPES OF MUTUAL FUND SCHEMES

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and return expectation etc. Functional classification of mutual funds is based on the basic characteristics of mutual fund schemes opened for the public for subscription. On this account mutual funds are classified into two broad types: (i) (ii) Open ended mutual funds and Closed ended mutual funds.

OPEN ENDED MUTUAL FUNDS: SJCET - 25 MBA Dept

An open-ended fund (scheme) is characterized by: Unlimited Capitalization. No predetermined date of redemption. Sale & purchase of units at current Net Asset Value( NAV ) No restriction on Entry and Exit. Purchase of units directly from the funds. Sale of units directly to the funds.

The open-ended mutual fund companies place their funds in the Secondary Securities Market. They dont participate in New Issue market. They influence market price of corporate securities. CLOSED ENDED MUTUAL FUNDS: A closed-ended fund (scheme) is characterized by: Constant Capitalization. Predetermined date of redemption. Predetermined date of closing subscription. Frequent lock in period.

Purchase and sale of units at the traded prices at the Stock Exchange.
TYPES OF MUTUAL FUND SCHEMES BY STRUCTURE . Open-Ended Schemes . Close-Ended Schemes . Interval Schemes BY INVESTMENT OBJECTIVE . Growth Schemes . Income Schemes . Balanced Schemes

SJCET

- 26 -

MBA Dept

OTHER SCHEMES TAX SAVING SCHEMES SPECIAL SCHEMES INDEX SCHEMES SECTOR SPECIFIC SCHEMES

INTERVAL SCHEMES: These schemes are a combination of the features of open-ended and closedended scheme. Which will be traded on the Stock Exchange at a time or will be open for sale or redemption during the predetermined intervals at NAV related prices.

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

SJCET

- 27 -

MBA Dept

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.

SJCET

- 28 -

MBA Dept

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 /

SJCET

- 29 -

MBA Dept

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

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

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

Credit risk:]

SJCET

- 30 -

MBA Dept

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

SJCET

- 31 -

MBA Dept

Liquid Income Schemes:Similar to the Income scheme but with a shorter maturity than Income schemes. An example of this scheme is the HDFC Liquid Fund. Money Market Schemes:These schemes invest in short term instruments such as commercial paper (CP), certificates of deposit (CD), treasury bills (T-Bill) and overnight money (Call). The schemes are the least volatile of all the types of schemes because of their investments in money market instrument with short-term maturities. These schemes have become popular with institutional investors and high net worth individuals having short-term surplus funds.

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

Hybrid Schemes:These schemes are commonly known as balanced schemes. These schemes invest in both equities as well as debt. By investing in a mix of this nature, balanced schemes seek to attain the objective of income and moderate capital appreciation and are ideal for investors with a conservative, long-term orientation. HDFC Balanced Fund and HDFC Childrens Gift Fund are examples of hybrid schemes. Constitution:Schemes can be classified as Closed-ended or Open-ended depending upon whether they give the investor the option to redeem at any time (open-ended) or whether the investor has to wait till maturity of the scheme.

Open ended Schemes

The units offered by these schemes are available for sale and repurchase on any business day at NAV based prices. Hence, the unit capital of the schemes keeps changing each day. Such schemes thus offer very high liquidity to investors and are becoming increasingly popular in India. Please note that an open-ended fund is NOT SJCET - 32 MBA Dept

obliged to keep selling/issuing new units at all times, and may stop issuing further subscription to new investors. On the other hand, an open-ended fund rarely denies to its investor the facility to redeem existing units.

Closed ended Schemes

The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed number of units. These schemes are launched with an initial public offer (IPO) with a stated maturity period after which the units are fully redeemed at NAV linked prices. In the interim, investors can buy or sell units on the stock exchanges where they are listed. Unlike open-ended schemes, the unit capital in closed-ended schemes usually remains unchanged. After an initial closed period, the scheme may offer direct repurchase facility to the investors. Closed-ended schemes are usually more illiquid as compared to open-ended schemes and hence trade at a discount to the NAV. This discount tends towards the NAV closer to the maturity date of the scheme. Interval Schemes These schemes combine the features of open-ended and closed-ended schemes. They may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV based prices. The Risk-Return Trade-off The most important relationship to understand is the riskreturn 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 SJCET - 33 MBA Dept

independent rating agencies like CRISIL who rate companies and their paper. An AAA rating is considered the safest whereas a D rating is considered poor credit quality. A well-diversified portfolio might help mitigate the risk Things you hear people talk about: Rs 100 Today is a worth more than Rs 100 tomorrow. Remember the time when a bus ridecosted50paise? The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot of times people make conservative investment decisions to protect their capital but end up with a sum of money that can buy less than what the principal could at the time of the investment. This happens when inflation grows faster than the return on your investment. A well-diversified portfolio with some investment in equities might help

Mitigate this risk. Interest Rate Risk In free market economy interest rates is difficult if not impossible to predict. Changes in interest rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds fall and vice versa. Equity might be negatively affected as well in a rising interest rate environment. A well-diversified portfolio might help mitigate this risk. Political/Government Policy Risk Changes in government policy and political decision can change the investment environment. They can create a favorable environment for investment or vice versa. Liquidity Risk Liquidity risk arises when it becomes difficult to sell the securities that one has purchased. Liquidity Risk can be partly mitigated by diversification, staggering of maturities as well as internal risk controls that lean towards purchase of liquid securities. You have been reading about diversification above, but what is it? Diversification the nuclear weapon in your arsenal for your fight against Risk. It simply means that you must spread your investment across different securities (stocks, bonds, SJCET - 34 MBA Dept

money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). This kind of a diversification may add to the stability of your returns, for example during one period of time equities might under perform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets. Similarly the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect you principal investment as well as help you meet your return objectives.

OPERATING EXPENSES:
These referred to cost incurred to operate a mutual fund. Advisory fees paid to Investment managers, audit fees to charted accountant, custodial fees, register and transfer agent fees, trustee fee, agent commission. Operating expenses also known as expenses expressed as a percentage of the funds average daily net Assets mutual funds. The break up of these expenses is required to be reported in the schemes offer document or prospectus.

Operating expenses Expenses Ratio = . Average Net Assets For instant if funds Rs.100 crores and expenses 20 laces then expenses ratio is 20% expenses ratio is available in the offer document and historical per unit statistics included in the financial results of the fund which are published by annually. UN audited for the half year ending Sep 30 and audited for the physically year end March 30. Depending upon scheme and net asset, operating expenses are determined by limits mandated by SEBI mutual fund regulation Act. Any excess over specified limits as to be born by asset Management Company, the trustees or sponsors.

SALES CHARGES; There are known commonly sales loads, these are charged directly to investor. Sales loads are used by mutual fund SJCET for the payment of agents commission, MBA Dept

- 35 -

distribution and marketing expenses. These charges have no effect on the performance of the scheme. Sales loads are usually expression percentage and or of two types frontend and back-end.

Front-End Load: It is a one time fixed fee paid by an investor when buying a mutual funds scheme. It determines public offer price which in term decides how much of your initial investment actually get invested the standard practice of arriving a public offer price is as follows.

Net Asset Value Public offer price = (1 front-end load) Let us assume, an investor invests RS.10000 in a scheme that charges a 2% front-end load at a NAV per unit Rs. 10 using the formula public offer price = 10/(10.02) is Rs. 10.20. So only 980units are allotted to the investor.

Amount invested Number of units allotted = Public offer price 10000/10.20 =980 units at a NAV of Rs. 10 This means units worth 9800 are allotted to him an initial investment of Rs. 10000. Front end loads trend to decrease as initial investment amount increase.

BACK END LOAD:

May be affixed fee redemption or a contingent deferred sales charges- redemption Load continues so long as the redeeming or selling of units of the units of a fund does not take place in the event of a back end load is applied. The redemption price is arrive are using following formula. SJCET - 36 MBA Dept

Net Asset Value Redemption price = .. (1 + back end load)

Let us assume an investor redeems units valued at rs 10000 in a scheme that charges a 2% back end load at a NAV per units of Rs. 10. Using the formula redemption price 10/ (1+0.02)= Rs9.08. so, what the investor gets in hand is 9800(9.8*1000)

CONTINGENT DEFERRED SALES CHARGES (CDSC):

Contingent deferred sales charges are a structured back end load. It is paid when the Units are determined period only and reduced over the time you invested for a fund. The longer the investor remains in a fund the lower the CDSC. The SEBI (Mutual Funds Regulation 1996) stipulate that a CDSC may be charge only for first 4 years after purchase of units and also stipulate the maximum CDSC that can we charge every year. The SEBI mutual funds regulation 1996 do not allow either the front end load or back end load to any combination is higher than 7%.

TRANSACTION COST:
Some funds may also impose a switch over fee, which is a charge on transfer of investment from one scheme to another with a same mutual funds family and also to switch from one plan (short term) to another (long term) within same scheme.

SJCET

- 37 -

MBA Dept

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

SJCET

- 38 -

MBA Dept

DATA ANALYSIS AND INTERPRETATION

Analysis of the Funds: HDFC EQUITY FUND HDFC INCOME FUND HDFC LIQUID FUND

TABLE:-5.1

HDFC EQUITY FUND

FUND CLASS EQUITY

Inception date December 8, 1994

INVESTMENT Age of Fund OBJECTIVE To achieve capital Appreciation 123 Months

Minimum Investment Rs. 5,000 Fund Manger As on Latest NAV Fund Asset Size Last Dividend Bonus 66.83 / 22.65 107,458.86 Rs. 3.00 per unit N.A June 30,2005 June 30, 2005 November30,2004 N.A Prashant Jain Value in (Rs.)

Option Growth/dividend Load 2005 Entry Load Exit Load

MAY 312.25% ,>5crore Nil

SJCET

- 39 -

MBA Dept

Comments Features

No lock in period N.A

TABLE:-5.2
ASSET BREAK DOWN OF HDFC EQUITY FUND

Asset Breakdown

JUNE30, 2005

Class Equity Others / Unlisted Debt Money Market Cash / Call TABLE:-5.3

%
98.33 0.00 N.A N.A 1.56

ABSOLUTE AND ANNULISED RETURNS OF HDFC EQUITY FUND

Absolute Returns Period One year Three years Five years

JUNE30, 2005

%
29.54* 22.310** 24.89**

SJCET

- 40 -

MBA Dept

TABLE:-5.4
TOP HOLDING OF HDFC EQUITY FUND

Top Holdings

JUNE30, 2005

Stocks
State Bank of India Reliance Industries Ltd. Satyam Computer Services Ltd.

%
10.05 7.37 6.47

TABLE:-5.5
SECTORAL WEIGHTAGES OF HDFC EQUITY FUND

Sectoral Weightages (%)

(Top Ten Holdings)

JUNE30, 2005

Industrial Capital Goods Software Banks Petroleum products Auto Ancillaries Cement Pesticides Auto Oil TABLE:-5.6
NAV AND GROWTH OF HDFC EQUITY FUND

17.83 14.87 13.14 9.67 6.44 6.23 4.77 4.16 4.12

NAV (Rs.)

JUNE30, 2005 Dividend 22.65 (Rs) 17.61 23.44

Growth 66.83 68.69 45.31

NAV (Rs) 52 Weeks high 52 weeks Low (Rs)

SJCET

- 41 -

MBA Dept

TABLE:-5.7
RETURNS OF HDFC EQUITY FUND

From Date

NAV (Rs) Dividend Growth 53.29

To Date

NAV (Rs) Dividend Growth 66.83

April 1, 2004

20.71

JUNE30, 2005

22.65

INTERPRETATION:
This is an open-ended growth Scheme. This fund is fully invested in equity & equity related instruments. The table 5.2 shows the Asset break down of HDFC Equity Fund more % in the equity . The table 5.3 shows the annualized returns of last five years average is 24.89% The table 5.4 shows the major Top Holdings of HDFC Equity Fund

The table 5.5 shows the fund portfolio sectors like Industrial Capital Goods, Software, and Banks etc., The table 5.6 shows NAV had increased from Rs. 53.29 to 66.83.Shows the securitised portfolio that has maintained. This table 5.7 shows fund had generated a return of 29.54%. The benchmark return(S & P CNX 500) has given 21.64% comparatively fund has given more returns than the benchmark index.

TABLE: - 5.8 SJCET - 42 MBA Dept

HDFC INCOME FUND

Fund Class Inception Date Sep 11,2000 Investment Objective Age of Fund Fund Manager Shabbir Kapasi

Income Fund

Optimize returns balance of safety yield &liquidity

VALUE IN (Rs)

53 Months

As on

Latest NAV

15.80

June30,2005

Fund Asset Size Last Dividend Bonus Option

56,512.87 12% per unit N.A

June30,2005 May 24,2005 N.A Growth /Dividend

Entry Load(As on 31-03-2005 ) 0%

Exit 0.50%

Features

N.A

TABLE:-5.9
ASSET BREAKDOWN OF HDFC INCOME FUND

SJCET

- 43 -

MBA Dept

Asset Breakdown

JUNE30, 2005

Class Equity Others / Unlisted Debt Money Market Cash

%
N.A N.A 86.34 0.92 12.74 TABLE:-5.10

ABSOLUTE RETURNS OF HDFC INCOME FUND

Absolute Returns

JUNE30, 2005

period
One year Three years Since inception TABLE:-5.11

%
0.01* 7.33** 10.49**

TOP HOLDING OF HDFC INCOME FUND

Top Holdings

JUNE30, 2005

Stocks
7.38% GOI 2015 State Bank of India Bharat Petroleum Corporation Ltd. JUS Trust Jet Airways TABLE: 5.12 Sectoral Weightages Government Securities Debenchers SJCET Money Market Instruments - 44 -

%
8.38 10.24 9.24 9.72 JUNE30, 2005 (%)

SECTORAL WEIGHTAGES OF HDFC INCOME FUND

(Top Ten Holdings)

11.16 75.18 0.92 MBA Dept

TABLE:-5.13
NAV AND GROWTH OF HDFC INCOME FUND

NAV (Rs.)
NAV (Rs) 52 Weeks high 52 weeks Low (Rs) TABLE:-5.14
RETURNS OF HDFC INCOME FUND

JUNE30, 2005
Dividend 10.23 (Rs) 10.23 10.77 15.42 Growth 15.80 15.85

From Date

NAV (Rs) Dividend Growth 15.78 0.01

To Date

NAV (Rs) Dividend Growth 15.80

April 1, 2004

10.07

JUNE30, 2005

10.23

Absolute Returns*

INTERPRETATION:
SJCET - 45 MBA Dept

This is an open-ended income scheme. The table 5.9 shows the Asset break down of HDFC INCOME Fund more % in the Debt. The table 5.10 shows the annualized returns of last five years average is 10.49% The table 5.11 shows the major Top Holdings of HDFC INCOME Fund

The table 5.12 shows the fund portfolio sectors like government bonds, debentures, money market instruments. Etc., The table 5.13shows NAV has15.80%.Shows the securitized portfolio that has maintained. This fund completely concentrated on the debt market. This fund has investments in non-convertible debentures, convertible debentures & money market.

The returns compared with the market benchmark are also ver low bench mark returns are 0.26% where as the fund results are 0.01% only.

TABLE:-5.15

SJCET

- 46 -

MBA Dept

HDFC LIQUID FUND

Fund Class

Inception Date HLF Sep 11,2000

Investment Objective

Age of Fund

Fund Manager Shobhit Mehrotra

Liquid Fund

Optimize returns balance of safety yield &liquidity

VALUE IN (Rs)

53 Months

As on

Latest NAV

13.5809

JUNE30,2005

Fund Asset Size Last Dividend Bonus Option

200,430.52 10.2073 Per Unit N.A

June30,2005 MAY24,2005 N.A Growth /Dividend

Entry Load (As on31-03-2005) 0%

Exit 0.50%

Features

N.A

TABLE:-5.16
ASSET BREAKDOWN OF HDFC LIQUID FUND

SJCET

- 47 -

MBA Dept

Asset Breakdown Class

Equity Others / Unlisted Debt Money Market Cash / Call Others

JUNE30, 2005

%
N.A N.A 35.02 35.51 20.73 8.74

TABLE:-5.17
ABSOLUTE RETURNS OF HDFC LIQUID FUND

Absolute Returns Period

One year Three years Since inception TABLE:-5.18
TOP HOLDINGS OF HDFC LIQUID FUND

JUNE30, 2005

%
4.13* 5.14** 6.26

Top Holdings Stocks

Housing and Urban Dev Corp Ltd. Indian retail ABS Trust ICICI Bank Ltd. Jammu & Kashmir Bank Ltd.

JUNE30, 2005

%
2.74 4.81 4.08

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

TABLE:-5.20
NAV AND GROWTH OF HDFC LIQUID FUND

NAV (Rs.)
Dividend NAV (Rs) 52 Weeks high 52 weeks Low (Rs) (Rs) 10.07 10.12

JUNE30, 2005
Growth 15.80 10.12 15.26 15.89

TABLE:-5.21
RETURNS OF HDFC LIQUID FUND

From Date

NAV (Rs)
Dividend Growth 15.78

To Date

NAV (Rs)
Dividend Growth 15.80

April 1, 2004

10.07

May, 2005

10.12

Absolute Returns* 4.13

SJCET

- 49 -

MBA Dept

INTERPRETATION:

This is an open-ended liquid scheme. The table 5.16 shows asset break down in most debt and money market The table 5.17 shows the absolute returns and annualised of last three years is 5.14% The table 5.18 shows the major Top holding companies of the stocks. The table 5.19 shows the debentures / bonds, Money market, deposits. This is a highly liquidate able fund investor can exit at any time. This fund maintains a highly volatile portfolio.

Most of the funds are kept in the Money Market instruments. The table 5.20 have NAV of growth/dividend shows the last performance

The table 5.21 shows fund has generated a return of 4.13% where as the benchmark index has give 3.80%. This is highly securitized portfolio

SJCET

- 50 -

MBA Dept

INTRODUCTION TO UTI MUTUAL FUND:Unit Trust of India (UTI) is the first Mutual Fund Company that had been started in India it was first started by the government and run by government. This plays a major role in the Indian market. The company has a trustee named as UTI Trustee Co. (p) Ltd. This mutual fund is maintained by UTI Asset Management Company. The sponsors of the company are State Bank Of India Punjab National Bank Bank of Baroda Life Insurance Corporation of India

UTI Mutual Fund has come into existence with effect from 1 st Feb 2003. UTI Asset Management Company presently manages 42 NAV based domestic SEBI complaint schemes and 4 offshore funds having a corpus Rs.15243 crores from about 10 million investor accounts. UTI mutual fund has a track record of managing a variety of schemes catering to the needs of every class of citizenry over a period of 39 years. It has a nation wide network consisting 54 branch offices, 3 UTI Financial Centers (UFCs) and representative offices in Dubai and London. With a view to reach to common investors at district level, 18 satellite offices have also been opened in select towns and districts. It has 2400 committed employees and over 10000 active agents and 226 chief representatives to sell and service its schemes. It has well- qualified, professional fund management teams, who have been highly empowered to manage funds with greater efficiency and accountability in the sole interest of unit holders. The fund managers are also ably supported with a strong in-house equity research department.

Analysis of the funds:

UTI EQUITY FUND UTI INCOME FUND UTI LIQUID FUND

TABLE:-5.22

UTI EQUITY FUND

Fund Class Inception Date Investment Objective Age of Fund Fund Manager

SJCET

- 51 -

MBA Dept

Equity Fund

April 20,1992

Long-term appreciation with income distribution.

VALUE IN (Rs)

148 Months

Mr.Vinay Kulkarni

As on

Latest NAV

22.84

JUNE30,2005

Fund Asset Size Last Dividend Bonus Option

1366.66 crore 2Rs per unit N.A

JUNE30,2005 26-may-2005 N.A --------

Entry load Load (As on31-03-2005) 0%

Exit load 3%

Features

N.A

TABLE:-5.23
ASSET BREAKDOWN OF UTI EQUITY FUND

Asset Breakdown Class

May 31, 2005 %

Equity Others / Unlisted

100.00 N.A N.A May 31, 2005 N.A N.A

AbsoluteDebt Returns

Period

Money Market ABSOLUTE RETUNS OF UTI EQUITY FUND Cash / Call

TABLE:-5.24

Net Receivable / Payable One year Three years Five years - 52 -

N.A 28.98 39.90

SJCET

10.50MBA Dept 11.56

Since Inception

TABLE:-5.25
TOP HOLDINGS OF UTI EQUITY FUND

Top Holdings

May 31, 2005

Stocks
Tata motors Satyam Computers Ltd. I.T.C. Ltd. TABLE:-5.26 .

%
6.05 3.94 3.63 3.51

Industrial Development Bank of India

SECTORAL WEIGHTAGES OF UTI EQUITY FUND

Sectoral Weightages (%)

(Top Ten Holdings)

JUNE30, 2005
18.27 10.81 8.98 6.60 7.79 5.52 4.86

Pharmaceuticals Finance Technology Automobile Petroleum Engineering Consumer Product

NAV (Rs.)
TABLE:-5.27 NAV (Rs) 52 Weeks high SJCET 52 weeks Low (Rs)

june30, 2005
NAV AND GROWTH OF UTI EQUITY FUND 29.82

(Rs) - 53 -

30.76 MBA Dept 20.73

TABLE:-5.28
RETURNS OF UTI EQUITY FUND

From Date

NAV (Rs)

To Date

NAV (Rs)

April 1, 2004

24.86

june30, 2005

29.82

Absolute Returns* 23.98

INTERPRITATION:
The table5.23 shows that major asset breakdown in equity The table 5.24 shows that absolute returns of last five years 11.56% The table 5.25 shows that major top holdings of equity fund The table 5.26 shows top ten sectoral weightages The table 5.27 shows the NAV and growth of last 52 weeks The table 5.28 shows the absolute returns given as on June 30th This fund is continued with its diversification focus. The credit off take has witnessed a strong growth and the fund feels that the banking companies are attractively valued.

Table: 5.29 SJCET - 54 MBA Dept

UTI INCOME FUND

Fund Class

Inception Date

Investment Objective

Age of Fund

Fund Manager

Income fund

Jan 21, 2002

Generate credit riskfree return through sovereign securities

VALUE IN (Rs)

38 Months As on JUNE302005 JUNE302005 May , 2003 N.A Growth

Mr.Puneet Pal

Latest NAV

13.80

Fund Asset Size Last Dividend Bonus Option

72.98 / 7038(LTP/STP) STP: 2%, LTP: 7% N.A

Entry Load(As on31-032005 ) 0%

Exit 1% (exit in 365 days)

Features

N.A

Asset Breakdown Class

Table: 5.30

JUNE30, 2005 % N.A N.A 26.10 61.26 12.68 MBA Dept N.A

SJCET

Equity Asset Unlisted Others / break down of UTI INCOME Fund Debt Money Market Cash / Call - 55 Net Receivable / Payable

Table: 5.31 Absolute retuns and annualized returns of UTI INCOME Fund Absolute Returns JUNE30, 2005

Period
7 Days 30 Days 90 Days 365 Days Since Inception Table: 5.32 Top holdings of UTI INCOME Fund Top Holdings 4.61 4.59 4.59 4.59 5.91

JUNE30, 2005

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

LTP: Net Gsec Receivable / Payable 44.00 Table: 5.33 Sectoral weightages of UTI INCOME Fund NCA 39.00 T bill 17.00 STP: SJCET - 56 NCA 74.00 T bill 26.00

Sectoral Weightages (Top Ten Holdings) Cash / Call

june30, 2005 (%)

MBA Dept

Table: 5.34 NAVand growth of UTI INCOME Fund

NAV (Rs.)
NAV (Rs) Table:-5.35 52 Weeks high (Rs)

(LTP) june30, 2005

Dividend 10.28 10.33 Returns of UTI INCOME Fund Growth 13.80 13.80

52 weeks Low (Rs)

10.04

13.39

From Date

(LTP) Dividend 10.20

NAV (Rs) Growth 13.54

To Date

(LTP) Dividend 10.28

NAV (Rs) Growth 13.80

April 1, 2004

INTERPRETATION
-0.78

june30, 2005

Absolute Returns*

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

SJCET

- 57 -

MBA Dept

The table 5.30 shows the asset break downs of debt fund is 26.10% The table 5.31 shows the absolute and annualized returns of last five years is 5.91% The table 5.32 shows the top holdings of investing funds in it. The table 5.33 shows the sectoral weightages to the industry wide. The table 5.34 shows the NAV and growth rates of last 1 year The 10-year old GOI yield opened at 7.18% and eased down to 6.69% due to cancellation of scheduled auction and inflation rate * The NAV in the growth option has an increase in percentage of Rs.41 and given return in the month of march of 4.59 Table:-5.36

UTI LIQUID FUND

Fund Class Inception Date July 23,2001 Investment Objective Age of Fund Fund Manager

Liquid fund

Reasonable return & objective of low risk high liquidity

VALUE IN (Rs)

44 months

Mr.Amandeep S.chopra

As on JUNE302005 June30-2005

Latest NAV

18.9102

Fund Asset Size Last Dividend Bonus Option

115 crores N.A N.A

N.A Growth/Income

Entry Load(As on3103-2005 ) 0%

Exit 0%

SJCET

- 58 -

MBA Dept

Table: 5.37 Asset breakdown of UTI LIQUID Fund Asset Breakdown Class Equity Others / Unlisted Debt Money Market Cash / Call NetTable:-5.38 / Payable Receivable N.A N.A 26.10 61.26 12.68 N.A JUNE30, 2005 %

Absolute and annualized returns of UTI LIQUID Fund Absolute Returns Period 7 Days 30 Days 90 Days
365 Days

JUNE30, 2005 % 4.61 4.59 4.59 4.59 5.91

Since Inception Cash / Call Table:-5.39 Top holdings of UTI LIQUID Fund Top Holdings

JUNE30, 2005

Stocks
Development Credit Bank Ltd. Sundaram Finance Ltd. Citifinancial Consumer Fin. India Ltd. Allahabad Bank Cash / Call Net Receivable / Payable

%
16.46 12.66 11.87 8.73

SJCET

- 59 -

MBA Dept

Table:-5.40 Sectoral weightages of UTI LIQUID Fund

Sectoral Weightages (Top Ten Holdings)

Certificate of Deposits STD FRB Commercial Papers Call/Repo Table:-5.41

june30, 2005 (%)

24.81 26.10 19.66 16.79 12.64

NAV and Growth rates of UTI LIQUID Fund

NAV (Rs.)
Dividend NAV (Rs) Table:-5.42

june30, 2005
Growth 1100.92 1000.02 Returns of UTI LIQUID Fund

52 Weeks high 52 weeks Low (Rs)

(Rs)

1005.09 1000.02

1233.50 1100.92

From Date

NAV (Rs) Dividend Growth

To Date

NAV (Rs Dividend Growth

April 1, 2004 1000.02 1100.92 june30, 2005 Absolute Returns* 4.61

1005.09

1233.50

SJCET

- 60 -

MBA Dept

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

SJCET

- 61 -

MBA Dept

FINDINGS
Mutual Funds simplifie investors experience and allows him to depend on the expertise and experience of professional money managers freeing up his time to be used for more enjoyable pursuits. Mutual Funds generally Invest in Stocks, Bonds and Money Market Instruments. When investor invest in a Mutual Fund, he is hiring a team of professionals with years of experience and expertise making these decisions on behalf of investors, which will put him at ease with investing. The other major benefit of investing in Mutual Fund is diversification. Mutual Fund will typically in a basket of 100 or more stocks or bonds in each fund giving him the peace of mind assuring that all of his eggs are not in one basket in other words, some of the stronger performing holdings will help to offsets some of the lesser performing holdings in the funds. By utilizing professional money managers in Mutual Fund, investor can take a giant step toward potentially reducing investment risk. In addition he can use a time proven technique called Asset Allocation which is the process of spreading his Mutual Fund investment across different asset classes and management styles. As far as the two companies are concerned, HDFC and UTI the following the points may be considered The HDFC Mutual Fund had worked competitively well than the UTI Mutual Funds. The sectorial allocation of HDFC is good than that of the UTI due to the high level of diversification.

SJCET

- 62 -

MBA Dept

The NAV returns compared in the funds are. In EQUITY FUND category HDFC has given 29.54% of return in the latest year where as UTI has given 23.98% of return. In INCOME FUND category HDFC has given 0.01% of return where as UTI has given 0.78% of return. In BALANCED FUND category HDFC has given 19.4% of return in the latest year where as UTI has given 15.87% of return. In LIQUID FUND category HDFC has given 4.13% where as UTI had given 4.59% this fund had done better than HDFC liquid fund.

SJCET

- 63 -

MBA Dept

SUGGESTIONS
Four sequential steps will enable investor to decide effectively. 1.Divide the spectrum of Mutual Fund depending on major asset class invested in, presently there are only two. Equity funds investing in Stocks and Shares. Debt funds investing in interest paying securities issued Government, Semi-government bodies Public Sector Units and Corporates. 2.Categorize equities: Diversifiedsectors. Sectorial * invest in specific sectors only, like technology, FMCG, Pharmaceutical and Petroleum. Categorize debt: Gilt- invest only in Government securities, Long maturity securities with average if 9-13years, very sensitive to invest rate movement. Medium term debt (or income funds) invest in corporate debt, Government securities and PSU bonds. Average maturity is 5-7years. Short- term debt-average maturity is 1 year; interest rate sensitivity is very low, with steady returns. Liquid- invest in money market, other short term paper and each, highly liquid, average maturity is 3 months. 3.REVIEW CATEGORIES: Diversified equity has done well while Sectoral categories have fared poorly in Indian market. Index funds have delivered much less compared to actively managed funds. Gilt and income funds have performed very well during in last three years. They perform best in a failing interest rate environment. Since interest rates are now lower, short-term funds are preferable. SJCET - 64 MBA Dept invest in large capitalized stocks belonging to multiple

4.SPECIFIC SCHEME SELECTION: Ranking are based on criteria including past performance, risk and resilience in unfavorable conditions, stability and investment style of fund management, costs and service levels. Some recommended schemes are Diversified equity, Gilt funds, and Short-term funds. With in debt class presently more is allocated towards Short-term fund because of low prevailing interest rate. However, if interest rates go up investor can allocate more in Mutual Funds.

SJCET

- 65 -

MBA Dept

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

SJCET

- 66 -

MBA Dept

BIBILOGRAPHY
Books: Mutual Funds in India H.SADAK, edition 1999, response Books, New Delhi. Security Analysis and Portfolio Management V.A.AVADHANI, edition 1999,

JOURNALS: Charted Financial Analysis by I.C.F.A.I

NEWS PAPERS: Financial Express Economic Times Business line Times of India Websites: www.googlesearch.com www.hdfcfund.com www.utimf.com www.sebi.gov.co.in www.amfiindia.com

SJCET

- 67 -

MBA Dept