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A

PROJECT REPORT ON

Detail Study
Of
HDFC Mutual Fund
Submitted For the partial fulfillment
of the requirement for The Degree
of MBA

Submitted by:
MD NABEEL
Registration No. –070651940
MBA –IV Trimester
SESSION (2007-2009)
INTERNAL GUIDE
JYOTSHNA RAI
IIPM - School Of Management

BIJU PATNAIK UNIVERSITY OF


Detail Study Of HDFC Mutual Fund

TECHNOLOGY ROURKELA, ORISSA.

DECLARATION

I do hereby declare that the project entitled “DETAIL STUDY OF HDFC-


MUTUAL FUND” submitted as a part of the requirement for the partial fulfillment of Master of
Business Administration at BIJU PATNAIK UNIVERSITY OF TECHNOLOGY, ORISSA
is an original piece of work done by me under the guidance of
• Mr Manmohan Mohapatra (Branch manager)
• Mr Sanket Swaroop
• Mr Vikash Gupta.
At HDFC Mutual Fund , Rourkela has not been submitted for award of any degree else where in
part or full.

Name:-Md Nabeel
Regd :-0706519040

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Detail Study Of HDFC Mutual Fund

CERTIFICATE OF THE GUIDE

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

To the best of my knowledge and belief the Summer Project Report:


1. Embodies the work of the candidate himself.
2. Has been duly completed
3. Is up to the standard both in respect of contents and language for being referred to the
examiner.

Forwarded

Internal Guide
JYOTSNA RAI
IIPM School of management

(Signature)

64
Detail Study Of HDFC Mutual Fund

CERTIFICATE OF THE GUIDE

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

To the best of my knowledge and belief the Summer Project Report:


1. Embodies the work of the candidate himself.
2. Has been duly completed
3. Is up to the standard both in respect of contents and language for being referred to the
examiner.

Forwarded

External Guide
MR SANKET SWAROOP
HDFC MUTUAL FUND
Rourkela

(Signature)

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Detail Study Of HDFC Mutual Fund

AKNOWLEDGEMANT

It is a great privilege on my part to submit this project as an intact piece of work. I


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

Name: - Md Nabeel
Regd: - 0706519040

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Detail Study Of HDFC Mutual Fund

CONTENTS
CHAPTER TOPIC PAGE NO

1 OBJECTIVE OF THE STUDY 6


2 INTRODUCTION 8
1. MUTUAL FUND SETUP
2. NAV
3. SCOPE
4. BENEFITS OF MUTUAL FUND
5. CAPITAL GAIN
6. INVESTMENT CRITERIA

3 ABOUT HDFC MUTUAL FUND 18


1. WHY HDFC MUTUAL FUND
2. SPONSORS
3. TRUSTEE
4. AMC DIRECTORS
5. AWARDS

4 PRODUCT &SERVICE 23
1. TYPES OF MUTUAL FUND
2. INVESTMENT PLAN
3. PRODUCT OF MUTUAL FUND
5 PART OF MY SUMMER TRAINING 47
6 METHODOLOGY OF THE STUDY 50
1. RESEARCH METHODOLOGY
2. HYPOTHESIS SOURCES OF DATA
COLLECTION
3. OF THE STUDY
4. DATA COLLECTION & ANALYSIS
7 QUESTIONARE 63
8 FINDING, RECOMMENDATION, 67
CONCLUSION
9 BIBLIOGRAPHY 72

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Detail Study Of HDFC Mutual Fund

OBJECTIVE
OF
THE STUDY

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Detail Study Of HDFC Mutual Fund

OBJECTIVE OF THE STUDY

Indian financial system has been expiring the vast effect of globalization i.e. drastic
interest rate cut, political disturbances, security scam etc have scattered the common investor’s
perception in selecting various investment portfolio. Most of the security holders have lost their
confidence in newly come-up corporate sectors for investment. Looking to the situation, it is
quite encouraging to analyze how the HDFC Mutual Fund able to trap the deposits by
introducing various schemes and how it protects the interest of the investors.

The main study is based on the performance and analysis of various schemes with
reference to HDFC Mutual Fund that is a leading mutual fund industry in India.

The total performance analysis of financial instruments with reference to the HDFC
Mutual Fund has got objectives. This are as follows:-

• To know the performance of the different schemes.


• The comparative study of HDFC Mutual Fund with other mutual funds.
• To know the investment pattern of the investors in different schemes.
• The benefits made from the investment on the different schemes.
• To know the ranking of the HDFC Mutual Fund Schemes.
• To know the diversify portfolio of HDFC Mutual Fund.
• To know the service which HDFC Mutual Fund is providing to its investors
with compare to other mutual funds.

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INTRODUCTION

1. MUTUAL FUND SETUP


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

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I NTRODUCTION
The financial market plays a crucial role in the in the economic development
of a country by facilitating the allocation of scarce resources. Financial
markets essentially involve the allocation of resources. This can be thought of
as the brain of the entire economic system, the locus of central decision-
making; if they fail, not only will the sectors profit be lower than would
otherwise have been, but the performance of the entire economic system may
be impaired.

The efficiency of financial market how ever, depends on the existence of


active and efficient financial intermediaries in the system. Deposit taking
institutional investor is the important financial intermediaries involved in the
task of allocating assets. Structural changes in the financial market have
induced a reverse trend in financial intermediation, i.e. financial
disintermediation, in which the central role of banking is being taken over by
investment institutions and institutional investors. The shift from a credit-
based system to a financial has initiated the process of disintermediation, and
capital market based factors like insurance, pension funds and mutual funds
are increasingly playing the central role.

The reforms have successfully dismantled the entry barriers, with the result
that today there are domestic and foreign financial institutions, like mutual
funds, broking firms and insurance companies, operating in the Indian market.
The introduction of capital adequacy norms, prudential regulation and world
class regulatory mechanisms to protect the interest of investor, besides the
strict requirement of disclosure, have given a boost to the confidence of
domestic and foreign investors. The Indian economy has slowly integrated
itself with the global economy and financial market.

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What is a Mutual Fund?

Mutual fund is a mechanism for pooling the resources by issuing units to the investors
and investing funds in securities in accordance with objectives as disclosed in offer
document.

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

A mutual fund is required to be registered with Securities and Exchange Board of India
(SEBI) which regulates securities markets before it can collect funds from the public.

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2.1 - How is a mutual fund set up?


A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset
Management Company (AMC) and custodian. The trust is established by a sponsor or
more than one sponsor who is like promoter of a company. The trustees of the mutual
fund hold its property for the benefit of the unit holders. Asset Management Company
(AMC) approved by SEBI manages the funds by making investments in various types of
securities.

Custodian, who is registered with SEBI, holds the securities of various schemes of the
fund in its custody. The trustees are vested with the general power of superintendence
and direction over AMC. They monitor the performance and compliance of SEBI
Regulations by the mutual fund.

SEBI Regulations require that at least two thirds of the directors of trustee company or
board of trustees must be independent i.e. they should not be associated with the
sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are
required to be registered with SEBI before they launch any scheme. However, Unit Trust
of India (UTI) is not registered with SEBI (as on January 15, 2002).

2.2 - What is Net Asset Value (NAV) of a scheme?


The performance of a particular scheme of a mutual fund is denoted by Net Asset Value
(NAV).

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

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2.3 - Scope for Development of Mutual Fund


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

2.4. - Benefits of Mutual Funds

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

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1. Professional Management

The investor avails of the services of experienced and skilled professionals who are
backed by a dedicated investment research team which analyses the performance
and prospects of companies and selects suitable investments to achieve the
objectives of the scheme.

2. Diversification

Mutual Funds invest in a number of companies across a broad cross-section of


industries and sectors. This diversification reduces the risk because seldom do all
stocks decline at the same time and in the same proportion. You achieve this
diversification through a Mutual Fund with far less money than you can do on your
own.

3. Convenient Administration
Investing n in a Mutual Fund reduces paperwork and helps you avoid many
problems such as bad deliveries, delayed payments and unnecessary follow up with
brokers and companies. Mutual Funds save your time and make investing easy and
convenient.

4. Return Potential

Over a medium to long-term, Mutual Funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities.

5. Low Costs

Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage, custodial
and other fees translate into lower costs for investors.

6. Liquidity

In open-ended schemes, you can get your money back promptly at net asset value
related prices from the Mutual Fund itself. With close-ended schemes, you can sell
your units on a stock exchange at the prevailing market price or avail of the facility
of direct repurchase at NAV related prices which some close-ended and interval
schemes offer you periodically.

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7. Transparency

You get regular information on the value of your investment in addition to


disclosure on the specific investments made by your scheme, the proportion
invested in each class of assets and the fund manager's investment strategy and
outlook.

8. Flexibility

Through features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans, you can systematically invest or withdraw funds
according to your needs and convenience.

9. Choice of Schemes

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

10. Well Regulated

All Mutual Funds are registered with SEBI and they function within the provisions
of strict regulations designed to protect the interests of investors. The operations of
Mutual Funds are regularly monitored by SEBI.

11. Understanding and Managing Risk

All investments whether in shares, debentures or deposits involve risk: share value
may go down depending upon the performance of the company, the industry, state
of capital market and the economy; generally, however longer the term, lesser the
risk; companies may default in payment of interest/principal on their deposits/bonds
debentures; the rate of interest on investment may fall short of the rate of inflation
reducing the purchasing power.

While risk cannot be eliminated, skillful management can minimize risk. Mutual
fund helps to reduce risk through diversification and professional management. The
experience and expertise of Mutual Fund managers in selecting fundamentally
sound securities and timing their purchases and sales help them to build a diversified
portfolio that minimize risk and maximizes returns.

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12. Tax Benefits

The incomes under Mutual Funds are much more Tax efficient than any fixed
income security due to the following benefits:-

• Section 80L of the income Tax Act ,1961 enables tax free income up to rs
15000 and dividends from MF s are eligible for this benefit.

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

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

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

• One has to pay tax only when he encash units, but have to pay tax on the
interest earned on other debt instruments every year on an accrual basis,
even though he receives the interest later. This generates higher post tax
returns compared to other debt instruments.

Tax is just like a monster that frightens a number of individuals through out the
nation. There are just tow way to fight with this monater:

. Conceal/Depress Income

. Make tax efficient investments.

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Perhaps the second option is far better than the first as it gives the peace of
mind together with a feeling that one is a responsible citizen of the nation. With
increasing amount of awareness that is taking birth in the minds of investors,
mutual fund has become cynosure of the eye of the several investors.

The taxes available are tow kinds:

. To the mutual fund- as explained below in No 1

. To the Investor- as explained below in No 2

1. Mutual Fund Taxation

. Mutual fund is fully exempted from the tax under Section10 (23D) of the
Income Tax Act1961.

. It receives all income without deduction at source.

. Mutual funds do not have to pay tax on trading profit, short term capital gain,
dividend income, underwriting commission, placement fees, long term capital
gains, other income, etc.

2. Benefits to the Investors

There are number of benefits that the investor of a mutual fund avail.
These are discussed as follows:

.Resident Unit Holders- In case of an individual or Hindu Undivided Families


(HUF’s), income by way of dividends, if any from unit of schemes of the fund
together with other income on specified investment/deposit are except from tax
within the overall limit of Rs.15000/- specified under Section80L of the I.T.
Act,1961. Since dividends from shares no longer invite dividend tax and hence
the whole limit is available for mutual fund dividends.

. Tax deduction at source- as per Section196A of the Income Tax Act, 1961, no
deduction of tax at source is made from any income payable to the unit holders.
This implies that there is no tax deduction at source for redemption up to any
limit.

As per Section194k of the I.T.Act 1961, deduction of tax at source is not made
if the dividend income from a mutual fund does not exceed Rs10000 per
annum.

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2.6 - Investment criteria


Lower cost

It is a lower cost of investment as compare to other mode of investment


option in the market. Here the investor can invest a minimum of Rs500 in the
scheme of ELSS (Equity Link Saving Scheme).

Less paper work

Here less paper work is require than other. The investor give his detail
information like his/her name,age,address,phone no., pan card no, nominee
name and address(in case of minor) and three full signature of the candided.

No cash Transactions

Investor need not require paying cash, instead of cash investor has to pay
cheque or demand draft. Which help to prevent misappropriation and also
save the tax. Here the investor just writes the product name of mutual fund
and sign on it. It also saves the time.

No Age Bar

There is no age bar of investor here any age group can invest in mutual fund.
In case of minor(below 18 year) there is a nominee, so a child can invest
through his guardian and a person having age of 70 also invest in mutual
fund ,which is not possible in other investments.

Service or any kind of income group

A service holder or any kind of income group or a student or unemployed


people can invest in mutual fund but the person is a rational human being
having sound knowledge of investment company.

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ABOUT
HDFC –MUTUAL FUND

1. WHY HDFC MUTUAL FUND


2. SPONSORS
3. TRUSTEE
4. AWARDS

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3.1 - Why HDFC Mutual Fund?

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

Our Investment Philosophy


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

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

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

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3.2 - SPONSORS
Housing Development Finance Corporation Limited (HDFC). HDFC was
incorporated in 1977 as the first specialized Mortgage Company in India. HDFC provides
financial assistance to individuals, corporate and developers for the purchase or construction of
residential housing. It also provides property related services (e.g. property identification, sales
services and valuation), training and consultancy. Of these activities, housing finance remains
the dominant activity. HDFC has a client base of around 12 lac borrowers, around 8 lac
depositors, over 1.08 lac shareholders and 50,000 deposit agents, as at March 31, 2008. HDFC
has raised funds from international agencies such as the World Bank, IFC (Washington),
USAID, DEG, ADB and KfW, international syndicated loans, domestic term loans from banks
and insurance companies, bonds and deposits. HDFC has received the highest rating for its bonds
and deposits program for the thirteenth year in succession. HDFC Standard Life Insurance
Company Limited, promoted by HDFC was the first life insurance company in the private sector
to be granted a Certificate of Registration (on October 23, 2000) by the Insurance Regulatory and
Development Authority to transact life insurance business in India.

Standard Life Investments Limited. The Standard Life Assurance Company was
established in 1825 and has considerable experience in global financial markets. The company
was present in the Indian life insurance market from 1847 to 1938 when agencies were set up in
Kolkata and Mumbai. The company re-entered the Indian market in 1995, when an agreement
was signed with HDFC to launch an insurance joint venture. On April 2006, the Board of The
Standard Life Assurance Company recommended that it should demutualise and Standard Life
plc float on the London Stock Exchange. At a Special General Meeting held in May voting
members overwhelmingly voted in favour of this. The Court of Session in Scotland approved
this in June and Standard Life plc floated on the London Stock Exchange on 10th July 2006.
Standard Life Investments is a leading asset management company, with approximately US$ 267
billion as at March 31, 2008, of assets under management. The company operates in the UK,
Canada, Hong Kong, China, Korea, Ireland, Paris, Sydney and the USA to ensure it is able to

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form a truly global investment view. In order to meet the different needs and risk profiles of its
clients, Standard Life Investments Limited manages a diverse portfolio covering all of the major
markets world-wide, which includes a range of private and public equities, government and
company bonds, property investments and various derivative instruments

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

The Board of Directors of HDFC Trustee company Limited consists of the


following eminent persons.
Mr. Anil Kumar Hirjee
Mr. James Aird
Mr. Shishir K. Diwanji
Mr. Ranjan Sanghi
Mr. V. Srinivasa Rangan

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3.4 - Awards & Accolades


CNBC - TV 18 - CRISIL Mutual Fund of the Year Awards 2008: (3 awards)

1. HDFC Prudence Fund was the only scheme that won the CNBC - TV 18 - CRISIL Mutual Fund
of the Year Award 2008 in the Most Consistent Balanced Fund under CRISIL ~ CPR for the
calendar year 2007 (from amongst 3 schemes).

2. HDFC Cash Management Fund - Savings Plan was the only scheme that won the CNBC - TV
18 - CRISIL Mutual Fund of the Year Award 2008 in the Most Consistent Liquid Fund under
CRISIL ~ CPR for the calendar year 2007 (from amongst 5 schemes).

3. HDFC Cash Management Fund - Savings Plan was the only scheme that won the CNBC - TV
18 - CRISIL Mutual Fund of the Year Award 2008 in the Liquid Scheme – Retail Category for
the calendar year 2007 (from amongst 19 schemes).

ICRA Mutual Fund Awards 2008: (3 awards)

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

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

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

Lipper Fund Awards 2008:

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

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PRODUCT & SERVICE


OF
HDFC MUTUAL FUND

1. TYPES OF MUTUAL FUND


2. INVESTMENT PLAN
3. PRODUCT OF MUTUAL
FUND

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4.1 - TYPES OF MUTUAL FUND SCHEME

(a)Open-ended Fund/ Scheme


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

(b)Close-ended Fund/ Scheme


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

(c)Sector specific funds/schemes


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

(d)Tax Saving Schemes


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

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4.2 - INVESTMENT PLAN

4.2.1 - SYSTEMATIC INVESTMENT PLAN (SIP)


HDFC MF SIP is similar to a Recurring Deposit. Every month on a specified date an amount you
choose is invested in a mutual fund scheme of your choice. The dates currently available for SIPs
are the 1st, 5th, 10th, 15th, 20th and the 25th of a month. You’ll be amazed to learn about the
many benefits of investing through HDFC MF SIP.

Benefit 1
Become A Disciplined Invester
Being disciplined - It’s the key to investing success. With the HDFC MF Systematic Investment
Plan you commit an amount of your choice (minimum of Rs. 1000 and in multiples of Rs. 100
thereof*) to be invested every month in one of our schemes.

Think of each SIP payment as laying a brick. One by one, you’ll see them transform into a
building. You’ll see your investments accrue month after month. It’s as simple as giving at least
6 postdated monthly cheques to us for a fixed amount in a scheme of your choice. It’s the perfect
solution for irregular investors.
*Minimum amounts may differ for each Scheme. Please refer to SIP Enrolment Form for details.

Benefit 2
Reach Your Financial Goal
Imagine you want to buy a car a year from now, but you don’t know where the down-payment
will come from. HDFC MF SIP is a perfect tool for people who have a specific, future financial
requirement. By investing an amount of your choice every month, you can plan for and meet
financial goals, like funds for a child’s education, a marriage in the family or a comfortable
postretirement life. The table below illustrates how a little every month can go a long way.
Monthly Savings - What your savings may generate
Savings per month Total amount invested Rate of return
(for 15 years) (Rs. in Lacs) 6.0% 8.0% 10.0%
(rupees in lacs, 15 years later)*
5000 9.0 14.6 17.4 20.9
4000 7.2 11.7 13.9 16.7
3000 5.4 8.8 10.4 12.5
2000 3.6 5.8 7.0 8.3
1000 1.8 2.9 3.5 4.2

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*Monthly instalments, compounded monthly, for a 15-year period.

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

Benefit 3
Take Advantage of Rupee Cost Averaging

Most investors want to buy stocks when the prices are low and sell them when prices are high.
But timing the market is timeconsuming and risky. A more successful investment strategy is to
adopt the method called Rupee Cost Averaging. To illustrate this we’ll compare investing the
identical amounts through a SIP and in one lump sum.

Imagine Suresh invests Rs. 1000 every month in an equity mutual fund scheme starting in
January. His friend, Rajesh, invests Rs. 12000 in one lump sum in the same scheme. The
following table illustrate how their respective investments would have performed from Jan to
Dec:

Suresh’s Investment Rajesh’s Investment

Month NAV Amount Units Amount Units

Jan-04 9.345 1000 107.0091 12000 1284.1091


Feb-04 9.399 1000 106.3943
Mar-04 8.123 1000 123.1072
Apr-04 8.750 1000 114.2857
May-04 8.012 1000 124.8128
Jun-04 8.925 1000 112.0448
Jul-04 9.102 1000 109.8660
Aug-04 8.310 1000 120.3369
Sep-04 7.568 1000 132.1353
Oct-04 6.462 1000 154.7509
Nov-04 6.931 1000 144.2793
Dec-04 7.600 1000 131.5789

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Detail Study Of HDFC Mutual Fund

*NAV as on the 10th every month. These are assumed NAVs in a volatile market

Disclaimer: The illustration above is merely indicative in nature and should not be construed
as investment advice. It does not in any manner imply or suggest performance of any HDFC
Mutual Fund Scheme(s). Rupee Cost Averaging neither ensures you profits nor protects you
from making a loss in declining markets. Please read Risk Factors.

As seen in the table, by investing through SIP, you end up buying more units when the price is
low and fewer units when the price is high. However, over a period of time these market
fluctuations are generally averaged. And the average cost of your investment is often reduced.

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

Suresh’s average unit price = 12000/1480.6012 = Rs. 8.105


Rajesh’s average unit price = Rs. 9.345

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Detail Study Of HDFC Mutual Fund

Benefit 4
Grow Your Investment With Compounded Benefits

It is far better to invest a small amount of money regularly, rather than save up to make one large
investment. This is because while you are saving the lump sum, your savings may not earn much
interest.

With HDFC MF SIP, each amount you invest grows through compounding benefits as well. That
is, the interest earned on your investment also earns interest. The following example illustrates
this.

Imagine Neha is 20 years old when she starts working. Every month she saves and invests Rs.
5,000 till she is 25 years old. The total investment made by her over 5 years is Rs. 3 lakhs.Arjun
also starts working when he is 20 years old. But he doesn’t invest monthly. He gets a large bonus
of Rs. 3 lakhs at 25 and decides to invest the entire amount.

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Detail Study Of HDFC Mutual Fund

Both of them decide not to withdraw these investments till they turn 50. At 50, Neha’s
Investments have grown to Rs. 46,68,273* whereas Arjun’s investments have grown to Rs.
36,17,084*. Neha’s small contributions to a SIP and her decision to start investing earlier than
Arjun have made her wealthier by over Rs. 10 lakhs.

*Figures based on 10% p.a. interest compounded monthly.

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

Benefit 5
Do All This Effortlessly

Investing with HDFC MF SIP is easy. Simply give us post-dated cheques or opt for an
Auto Debit from you bank account for an amount of your choice (minimum of Rs. 1000 and in
multiples of Rs. 100 thereof*) and we’ll invest the money every month in a fund of your choice.
The plans are completely flexible. You can invest for a minimum of six months, or for as long as
you want. You can also decide to invest quarterly and will need to invest for a minimum of two
quarters.

4.2.2 - SYSTEMATIC TRANSFER PLAN (STP)


STP refers to Systematic Transfer Plan where in an investor invests a lump sum amount in one
scheme and regularly transfers (i.e. switches) a pre-defined amount into another scheme. Every
month on a specified date an amount you choose is transfered from one mutual fund scheme to
another of your choice.

Currently, Fixed Systematic Transfer Plan (FSTP) - Monthly Interval and Capital Appreciation

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Detail Study Of HDFC Mutual Fund

Systematic Transfer Plan (CASTP) - Monthly Interval facility is available to the Unit holders on
1st, 5th, 10th, 15th, 20th and 25th of a month and FSTP - Quarterly Interval and CASTP -
Quarterly Interval facility is available to the Unit holders on 1st, 5th, 10th, 15th, 20th and 25th
of the first month of each quarter.

The Entry Load Structure for the transferee schemes - HDFC Growth Fund, HDFC Equity
Fund, HDFC Top 200 Fund, HDFC Capital Builder Fund, HDFC Core & Satellite Fund, HDFC
Premier Multi-Cap Fund, HDFC Balanced Fund, HDFC Prudence Fund, HDFC Long Term
Advantage Fund and HDFC TaxSaver will be as follows:

The Exit Load Structure is as follows:


For Transferee Schemes : HDFC Long Term Advantage Fund and HDFC TaxSaver - Nil
For Transferee Schemes : HDFC Growth Fund, HDFC Equity Fund, HDFC Top 200 Fund,
HDFC Capital Builder Fund, HDFC Core & Satellite Fund, HDFC Premier Multi-Cap Fund,
HDFC Balanced Fund and HDFC Prudence Fund.
In respect of each investment through STP less than Rs. 5 crore in value, an Exit Load of 1.25%
is payable if units are redeemed / switched-out on or before 2 years from the date of allotment. In
respect of each investment through STP equal to or greater than Rs. 5 crore in value, no Exit
Load is payable.

Thus, this facility offers the benefits similar to those of an SIP and is suitable for investors who
intend to invest systematically and currently have funds for investments.

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4.3 - PRODUCTS OF MUTUAL FUND

EQUITY/ GROWTH FUND

CHILDREN’S GIFT FUND

LIQUID FUND

DEBT/ INCOME FUND

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Detail Study Of HDFC Mutual Fund

EQUITY/ GROWTH FUND DEBT/INCOME FUND


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

HDFC Long Term Equity Fund HDFC Cash Management Fund - Savings Plus
Plan
HDFC Infrastructure Fund
HDFC MF Monthly Income Plan - Long Term
HDFC Capital Builder Fund Plan

HDFC Premier Multi-Cap HDFC Multiple Yield Fund - Plan 2005

HDFC Index Fund - Nifty Plan HDFC High Interest Fund

HDFC Arbitrage Fund HDFC High Interest Fund - Short term Plan

HDFC Equity Fund HDFC Gilt Fund - Long Term Plan

HDFC Prudence Fund HDFC Floating Rate Income Fund - Long


Term Plan
HDFC TaxSaver (ELSS)

HDFC Mid-Cap Opportunities Fund

CHILDREN’S GIFT FUND LIQUID FUND


HDFC Children's Gift Fund - Investment Plan HDFC Liquid Fund
HDFC Liquid Fund Premium Plan
HDFC Children's Gift Fund - Savings Plan
HDFC Liquid Fund Premium Plus Plan
HDFC Cash Management Fund – Call
HDFC Cash Management Fund - Savings Plan
SOME POPULAR FUNDS ARE EXPLAIN HERE
HDFC Growth Fund

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Detail Study Of HDFC Mutual Fund

HDFC Growth fund, an open-ended growth scheme, applies an investment approach


based on a set of well established but flexible principles that emphasize the concept of
sustainable economic earnings cash return on investment. The objective is to identify
“business with superior growth prospects nd good management at a reasonable price”.
The five basic principles that serve the foundation for this approach are as follows:

 Focus on the long term


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

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

Basic Scheme Information,


Nature of Scheme Open Ended Growth Scheme
Inception Date September 11, 2000
Option/Plan Dividend Plan, Growth Plan. The Dividend Plan offers
Plan name NAV Date NAV value
Dividend Payout and Reinvestment Facility.
Dividentd plan 18 Aug 2008 29.0270
Growth plan 18 Aug 2008 58.9370

The asset allocation under the Scheme will be as follows :

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

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Detail Study Of HDFC Mutual Fund
days)
June 30, 2003 Last 5 Years (1827 10.829 37.58** 30.1**
days)
June 30, 1998 Last 10 Years (3653 N.A N.A. 15.25**
days)
September 11, Since Inception (2849 10.000 23.96** 14.44**
2000 days)

* Absolute Returns ** Compounded Annualised Returns # SENSEX


~ Due to an over all sharp rise in the stock prices
^ Past performance may or may not be sustained in the future

SIP Returns
SIP Investments Since Inception 5 Year 3 Year 1 Year
Total Amount Invested (Rs.) 94,000.00 60,000.00 36,000.00 12,000.00
Market Value as on June 30, 2008 338,680.64 115,755.39 43,748.58 9,857.36
Returns (Annualised)*% 31.84% 26.64% 13.10% -31.44%
Benchmark Returns 22.77% 20.64% 6.77% -36.15%

# SENSEX

Benchmark - BSE Sensex


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

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Detail Study Of HDFC Mutual Fund

HDFC TOP-200 FUND

Investment Objective

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

Basic Scheme Information


Nature of Scheme Open Ended Growth Scheme
Inception Date October 11, 1996
Option/Plan Dividend Plan,Growth Plan. The Dividend Plan offers
Dividend Payout and Reinvestment Facility.

Plan Name NAV Date NAV Amount


Dividend Plan 18 Aug 2008 38.29
Growth Plan 18 Aug 2008 129.56

Investment Pattern

The Scheme may also invest upto 25% of net assets of the Scheme in derivatives such as Futures
& Options and such other derivative instruments as may be introduced from time to time for the
purpose of hedging and portfolio balancing and and other uses as may be permitted under the
regulations and guidelines.

The Scheme may also invest a part of its corpus, not exceeding 40% of its net assets, in overseas
markets in Global Depository Receipts (GDRs), ADRs, overseas equity, bonds and mutual funds
and such other instruments as may be allowed under the Regulations from time to time.

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Detail Study Of HDFC Mutual Fund

Returns
HDFC Top 200 (NAV as at evaluation date, Rs. 115.424
Fund Per unit)
Date Period NAV Returns(%) $$ Benchmark
^ Returns(%)#
March 30, 2007 Last 458 days 104.504 8.24** 4.45**
December 28, Last Six months (185 167.8880 -31.25* -37.53*
2007 days)
June 29, 2007 Last 1 Year (367 days) 120.34 -4.06** -8.85**
June 30, 2005 Last 3 Years (1096 57.343 26.23** 21.2**
days)
June 30, 2003 Last 5 Years (1827 23.358 37.6** 29.43**
days)
June 30, 1998 Last 10 Years (3653 12.749 27.12** 17.55**
days)
October 11, 1996 Since Inception (4280 10.000 25.3** 15.18**
days)
SIP Returns
SIP Investments Since 10 Year 5 Year 3 Year 1 Year
Inception
Total Amount Invested 141,000.00 120,000.0 60,000.00 36,000.0 12,000.00
(Rs.) 0 0
Market Value as on June 835,535.45 580,129.0 113,375.0 41,661.2 9,843.01
30, 2008 4 2 9
Returns (Annualised)*% 27.85% 29.65% 25.77% 9.73% -31.64%
Benchmark Returns 18.32% 20.25% 18.90% 5.82% -38.40%

Benchmark - BSE 200

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

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Detail Study Of HDFC Mutual Fund

HDFC – EQUITY FUND

HDFC Equity Fund is an open-ended growth scheme, which aims to generate long-
term capital appreciation. The scheme maintains a focused portfolio predominantly
of large cap stocks, through there is controlled exposure to mid caps. The schemes
however always remain diversified across sectors. Moreover, the sectoral allocation
is done keeping in mind to diversify across sectors weakly co-related to each other
to further reduce risk. The underlying theme while managing the scheme is to invest
in businesses that are sustainable and for good quality.

Basic Scheme Information

Nature of Scheme Open Ended Growth Scheme


Inception Date January 01, 1995
Option/Plan Dividend Plan,Growth Plan. The Dividend Plan offers
Dividend Payout and Reinvestment Facility.

Plan Name NAV Date NAV Amount


Dividend Plan 18 Aug 2008 36.1630
Growth Plan 18 Aug 2008 156.7660

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

• are likely achieve above average growth than the industry;


• enjoy distinct competitive advantages, and
• have superior financial strengths.

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

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Detail Study Of HDFC Mutual Fund
Investment Pattern
The asset allocation under the Scheme will be as follows :

Sr.No. Asset Type (% of Portfolio) Risk Profile


1 Equities and Equity Related Instruments 80 - 100 Medium to High
2 Debt & Money Market Instruments 0 - 20 Low to Medium

Investment in Securitised debt, if undertaken, would not exceed 20% of the net assets of the
scheme.
The Scheme may also invest upto 25% of net assets of the Scheme in derivatives such as Futures
& Options and such other derivative instruments as may be introduced from time to time for the
purpose of hedging and portfolio balancing and other uses as may be permitted under the
Regulations.

The Scheme may also invest a part of its corpus, not exceeding 40% of its net assets, in overseas
markets in Global Depository Receipts (GDRs), ADRs, overseas equity, bonds and mutual funds
and such other instruments as may be allowed under the Regulations from time to time. Also
refer to the Section on Policy on off-shore Investments by the Scheme(s).

If the investment in equities and related instruments falls below 70% of the portfolio of the
Scheme at any point in time, it would be endeavoured to review and rebalance the composition.

Not with standing anything stated above, subject to the regulations, the asset allocation pattern
indicated above may change from time to time, keeping in view market conditions, market
opportunities, applicable regulations and political and economic factors. It may be clearly
understood that the percentages stated above are only indicative and are not absolute and that
they can vary substantially depending upon the perception of the AMC, the intention being at all
times to seek to protect the NAV of the scheme. Such changes will be for short term and
defensive considerations. Provided further and subject to the above, any change in the asset
allocation affecting the investment profile of the Scheme and amounting to a change in the
Fundamental Attributes of the Scheme shall be effected in accordance with sub-regulation (15A)
of regulation 18 of SEBI regulations.

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Detail Study Of HDFC Mutual Fund
Returns

HDFC Equity (NAV as at evaluation date, Rs. 143.171


Fund Per unit)
Date Period NAV Returns(%) $$ Benchmark
^ Returns(%)#
March 30, 2007 Last 458 days 142.602 0.32** 1.47**
December 28, Last Six months (185 219.8570 -34.88* -39.38*
2007 days)
June 29, 2007 Last 1 Year (367 165.313 -13.33** -11.59**
days)
June 30, 2005 Last 3 Years (1096 73.768 24.71** 18.87**
days)
June 30, 2003 Last 5 Years (1827 29.960 36.68** 29.03**
days)
June 30, 1998 Last 10 Years (3653 7.280 34.67** 17.75**
days)
January 1, 1995 Since Inception (4929 10.000 21.78** 9.22**
days)

* Absolute Returns ** Compounded Annualised Returns # S&P CNX 500


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

SIP Returns

SIP Investments Since 10 Year 5 Year 3 Year 1 Year


Inception
Total Amount Invested 162,000.00 120,000.0 60,000.00 36,000.0 12,000.00
(Rs.) 0 0
Market Value as on June 1,494,753.92 646,490.6 107,904.1 38,998.6 9,408.57
30, 2008 5 2 7
Returns (Annualised)*% 29.53% 31.66% 23.71% 5.27% -37.52%
Benchmark Returns 16.18% 19.77% 17.56% 3.25% -40.27%

Disclaimer:

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

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Detail Study Of HDFC Mutual Fund

HDFC Infrastructure Fund

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

Basic Scheme Information


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

Plan Name NAV Date NAV Amount


Growth Option 18 Aug 2008 8.3830
Dividend Option 18 Aug 2008 8.3830

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

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Detail Study Of HDFC Mutual Fund

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

HDFC Infrastructure (NAV as at evaluation date, 7.48


Fund Rs. Per unit)
Date Period NAV Returns(%) $ Benchmark
$^ Returns(%)#
March 30, 2007 Last 458 days N.A N.A. 1.47**
December 28, 2007 Last Six months (185 N.A N.A. -39.38*
days)
June 29, 2007 Last 1 Year (367 days) N.A N.A. -11.59**
June 30, 2005 Last 3 Years (1096 N.A N.A. 18.87**
days)
June 30, 2003 Last 5 Years (1827 N.A N.A. 29.03**
days)
June 30, 1998 Last 10 Years (3653 N.A N.A. 17.75**
days)
March 10, 2008 Since Inception (112 10.000 -25.2* -18.45*
days)

* Absolute Returns ** Compounded Annualised Returns # S&P CNX 500


~ Due to an over all sharp rise in the stock prices
^ Past performance may or may not be sustained in the future

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Detail Study Of HDFC Mutual Fund

HDFC Prudence Fund

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

Basic Scheme Information

Nature of Scheme Open Ended Balanced Scheme


Inception Date February 01, 1994
Option/Plan Dividend Plan,Growth Plan. The Dividend Plan offers
Dividend Payout and Reinvestment Facility.

Returns
HDFC Prudence (NAV as at evaluation date, Rs. 112.678
Fund Per unit)
Date Period NAV Returns(%) $$ Benchmark
^ Returns(%)#
March 30, 2007 Last 458 days 110.132 1.84** 6.01**
December 28, Last 185 days 160.6870 -29.88* -22.7*
2007
June 29, 2007 Last 1 Year (367 days) 124.716 -9.6** -1.33**
June 30, 2005 Last 3 Years (1096 64.682 20.3** 15.38**
days)
June 30, 2003 Last 5 Years (1827 19.230 42.37** 19.31**
days)
June 30, 1998 Last 10 Years (3653 11.480 26.8** N.A.
days)
February 1, 1994 Since Inception (5263 10.000 20.41** N.A.
days)

* Absolute Returns ** Compounded Annualised Returns

# CRISIL Balanced Fund Index ~ Due to an over all sharp rise in the stock prices

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

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

Investment Strategy

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

Fund Manager
Mr. Prashant Jain
Mr. Anand Laddha - Dedicated Fund Manager - Foreign Securities

Investment Pattern
The following table provides the asset allocation of the Scheme's portfolio.
The asset allocation under the respective Plans will be as follows :

Sr.No. Type of Instruments Normal Risk Profile


Allocation
(% of Net Assets)
1 Equities & Equity related instruments 40 - 75% Medium to High
2 Debt Securities, Money Market 25 - 60% Low to Medium
instruments(including cash/call money)

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

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Detail Study Of HDFC Mutual Fund

HDFC Capital Builder Fund


HDFC Capital Builder Fund, an open-ended growth scheme, aims to invest in
strong companies at prices that below fair value in the opinion of the fund managers. The
investment approach is based on the philosophy that value may be uncovered only where
the crowd has not discovered it yet. In the opinion of the fund managers such value exists
in good quality well managed “neglected “stocks. The current neglect in these companies
by the broad market participants can be due to various factors such as difficult recent
market conditions, major restructuring charges, VRS expenses or other such one time
effects that may subdue profits in the near term. This also usually results in the shares of
such companies being relatively illiquid.

While assuming such relative risk adjusted liquidity risk the fund managers
propose to capitalize on expected pick up reported earning as result of strong growth
prospects in the future. This eventually translates in to more liquidity depending on the
success of this strategy. Such opportunities are available in large companies as well as
small companies. While there is no criteria for stock selection based on market
capitalization the endeavor is to keep a balance of companies in the portfolio between big
and small companies, on one category overwhelming the other

Basic Scheme Information

Nature of Scheme Open Ended Growth Scheme


Inception Date February 01, 1994
Option/Plan Dividend Plan,Growth Plan. The Dividend Plan offers
Dividend Payout and Reinvestment Facility.
Plan Name NA NAV Amount
V
Date
Dividend Plan 18 22.075
Aug

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Detail Study Of HDFC Mutual Fund
2008
Growth Plan 18 69.918
Aug
2008

Investment Pattern

The asset allocation under the Scheme will be as follows :

Sr.No. Asset Type (% of Portfolio) Risk Profile


1 Equities and Equity Related Instruments Upto 100% Medium to High
2 Debt & Money Market Instruments Not more than 20% Low to Medium

Investment in Securitised debt, if undertaken, would not exceed 20% of the net assets of
the scheme.
The Scheme may also invest upto 25% of net assets of the Scheme in derivatives such as
Futures & Options and such other derivative instruments as may be introduced from time
to time for the purpose of hedging and portfolio balancing and other uses as may be
permitted under the regulations and guidelines.

The Scheme may also invest a part of its corpus, not exceeding 40% of its net assets, in
overseas markets in Global Depository Receipts (GDRs), ADRs, overseas equity, bonds
and mutual funds and such other instruments as may be allowed under the Regulations
from time to time. Also refer to the Section on Policy on off-shore Investments by the

Scheme(s). SIP Returns

SIP Investments Since 10 Year 5 Year 3 Year 1 Year


Inception
Total Amount Invested 173,000.00 120,000.0 60,000.00 36,000.0 12,000.00
(Rs.) 0 0
Market Value as on June 890,131.42 463,752.0 103,349.4 37,539.3 9,242.16
30, 2008 8 0 4
Returns (Annualised)*% 20.51% 25.51% 21.92% 2.74% -39.73%

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Detail Study Of HDFC Mutual Fund
Benchmark Returns 15.04% 19.77% 17.56% 3.25% -40.27%

Past performance may or may not be sustained in the future

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

Returns
HDFC Capital (NAV as at evaluation date, 64.169
Builder Fund Rs. Per unit)
Date Period NAV Returns(%) $ Benchmark
$^ Returns(%)#
March 30, 2007 Last 458 days 60.3 5.08** 1.47**
December 28, 2007 Last Six months 105.1230 -38.96* -39.38*
(185 days)
June 29, 2007 Last 1 Year (367 73.27 -12.36** -11.59**
days)
June 30, 2005 Last 3 Years (1096 37.474 19.62** 18.87**
days)
June 30, 2003 Last 5 Years (1827 13.117 37.32** 29.03**
days)
June 30, 1998 Last 10 Years (3653 7.480 23.96** 17.75**
days)
February 1, 1994 Since Inception 10.000 13.76** 7.95**
(5263 days)

* Absolute Returns ** Compounded Annualised Returns


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

Benchmark - S & P CNX 500


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

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Detail Study Of HDFC Mutual Fund

PART
OF MY
SUMMER TRAINING

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Detail Study Of HDFC Mutual Fund

As part of my understudy training

For the purpose of fulfillment of masters degree in business administration i had


undertaken my summer training at HDFC-mutual fund at Rourkela branch for a period of 45
days. In course of the training i had an opportunity to get proper working knowledge about the
internal workings of Mutual funds dept.

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

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

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

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The largest amount of investment was made by Mr. MD ABID ,an amount of 1,50,000 , in the
scheme HDFC- equity fund for a duration of years.
Other investors were

NAME Investment Amount Scheme Duration


type
1. MD ABID SIP 2,000 HDFC GROWTH FUND 1 YEAR
2. SHOAIB AKHTER SIP 1,000 HDFC TOP 200 FUND 1 YEAR
3. DEBENDRA NATH PAUL One time 1,00,000 HDFC EQUITY FUND 3 YEAR
4. NAZM UZ ZAMA SIP 1,000 HDFC GROWTH FUND 1 YEAR
5. MD ABID ONE TIME 1,50,000 HDFC EQUITY FUND 2 YEAR
6. NISHIT HEMANI SIP 2,000 HDFC GROWTH FUND 1 YERA
7. Dr NEYAZ AHMED SIP 1,000 HDFC GROWTH FUND 1 YERA
8. KHALID SADAT SIP 2,000 HDFC TOP 200 FUND 1 YEAR
9. CHANDU LAL GUPTA SIP 1,000 HDFC TOP 200 FUND 1 YEAR
10. NISHIT HEMANI ONE TIME 50,000 HDFC EQUITY FUD 2 YEAR
11. MD PERWEZ ALAM SIP 1,000 HDFC BALANCED FUND 1 YEAR
12. JUBAIR KHAN SIP 1,000 HDFC BALANCED FUND 1 YEAR
13. D T MOHANTY SIP 1,000 HDFC GROWTH FUND 1 YEAR
14. PRAKASH JHA SIP 1,000 HDFC TOP 200 FUND 1 YEAR
15. KHALID SADAT One time 1,00,000 HDFC EQUITY FUND 3 YEAR
16. MD NABEEL SIP 2,000 HDFC GROWTH FUND 1 YEAR
17. VIKRANT GUPTA SIP 1,000 HDFC GROWTH FUND 2 YEAR
18. RAJESH KUMAR SIP 1,000 HDFC GROWTH FUND 1 YERA
19. MD ASIF SIP 1,000 HDFC GROWTH FUND 1 YERA
20. MAZAR KHAN SIP 1,000 HDFC TOP 200 FUND 1 YEAR
21. BISWAJIT RAI SIP 1,000 HDFC TOP 200 FUND 1 YEAR
22. NARENDRA NATH PAUL SIP 1,000 HDFC GROWTH FUND 2 YEAR
23. HARPREET KAUR SIP 1,000 HDFC BALANCED FUND 1 YEAR
24. SOMA AGARWAL SIP 1,000 HDFC EQUITY FUD 1 YEAR

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

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METHODOLOGY
OF
THE STUDY

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

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4. DATA COLLECTION &


ANALYSIS

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6.1 - Research Methodology:


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

6.2 - Sources of Data collection


There are two sources of data collection. They are:

1. PRIMARY DATA SOURCE


2. SECONDARY DATA SOURCE

The secondary data are those, which have already been collected by
someone else thorough Books, Internet, Television, journals, Magazines, etc.
On the other hand primary data does not exist here. The researcher has to
gather primary data afresh for the specific study undertaken by him. Primary
data has been collected here by questionnaire method and personal
interview method is followed. Primary sources such as Interviews,
Observation, and attending training and development classes. Secondary
sources such as Booklets, Monthly journal, Magazines, Official files etc.

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6.3 - HYPOTHESIS OF THE STUDY


For doing the dissertation topic “performance of mutual fund analysis” I took the hypothesis of
certain groups. I divide the total population on the basis of their age, income, gender, occupation
and status.
• Male jobholders within the age group of 24-40.
• Female jobholders within the age group of 24-40.
• Male jobholders above the age 40.
• Female jobholders above the age 40.
• Individual having the income in the range of 1lkh-3lkh per annum.
• Individual having the income above 3lkh per annum.
In Orissa i.e. rural area it is still a new concept so it will take some more time to really penetrate
into this market apart from people who are HNI’s though these people are given more emphasis
by all the Mutual funds and distribution channels. With the introduction of SIP’s the industry has
created some options clear for retail investors to enter this market. My survey says that it the
awareness level that is playing acting as an obstacle in the growth of Mutual fund Industry in
Orissa as a whole. People in Bhubaneswar are now opening up and interested in looking forward
for certified investment planners to help them designing their investment portfolio. Orissa as a
market was not that efficient few years back, but now with lot of multinational companies and
other reputed companies coming down, the Orissa market is slowly picking up. For mutual funds
it is one of the emerging markets that can be trapped form its developing stage and though
people of rural areas prefer Moderate risk they can easily accept mutual funds. Mutual fund
Industry is delivering a splendid performance and will of course continue in coming future. But
that can be only possible as the distribution channels like Karvy, Bajaj finance and Banks i.e.
Citi Bank, HDFC Bank, ICICI Bank and Standard Chartered Bank along with all Asset
Management Company.

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6.4 - Data Collection & Data Analysis

150
No of respondent - 200 100
135
Male - 135 50
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Female - 65 0
male female

Respondent

Number of respondents According to age 100


groups: 80
60
18 to 30 = 55
40 80
55
30 to 40 = 80 20 40
25
0
40 to 50 = 40 18 to 35 35 to 45 45 to 55 55 &
above
50 above =25
Respondent

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

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

of?

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

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

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Detail Study Of HDFC Mutual Fund
investment house which is not very high, but at the same time mutual fund
concept is growing
2. More attractive about mutual funds?

Returns
Moderate risk
Tax benefits
Hassle free
Past performance
Well regulated
No idea

.
INFRENCE:

According to people of Rourkela they attract with past performance of


the company if company past records is good then they interested to invest.
After that people attract with tax benefit then return on investment

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Detail Study Of HDFC Mutual Fund

3. Percentage of entire investment includes mutual funds?

Below 20%
20 to 50%
50 to 80%
80% above

INFRENCE:

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

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Detail Study Of HDFC Mutual Fund

4. For Investments in Mutual Fund, which company investors prefer?

HDFC MF
ABN AMRO MF
PRUDENTIAL ICICI MF
RELIANCE MF
BIRLA SUNLIFE

INFERENCE:

According to the Investors in Rourkela 35% of investors prefer to


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

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Detail Study Of HDFC Mutual Fund

5. How do investors manage his investment portfolio?

Solely of my own
On advise of a friend
On advise of a distributor/agent
On advise of your banker
On advice of mutual fund house people

INFRENCE:

According to my survey most no of people manage his investment port


folio by own, 84 people out of 200 manage his portfolio by own and 45 & 36
people manage with the help of bankers and MF house

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6. Savings/investment avenues 5 year back?

Bank FD, Savings


Insurance
Mutual funds
Equity market
Govt. securities
Real estate
Postal savings, FD

INFRENCE:

According to my survey before 5 year most of the people(113) of


Rourkela city invested his money in insurance sector and 90 people out of 200
invested in bank FD. But only 43 people out of 200 invest in mutual fund
which was very low

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

Equity Oriented
Debt Oriented
Balanced Oriented

INFERENCE:

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

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Detail Study Of HDFC Mutual Fund

Risk appetite of people in Orissa Preferred Risk and Return

High risk high return (H,H)

Moderate risk moderate return (M,M)

Low risk low return (L,L)

INFERENCE:

According to the survey, we can conclude that, people in rural areas


mostly believe in Moderate risk, and moderate returns. Even mutual funds
have moderate risk and the return is quite less than as it is in case of equities.
So, for the people of Rural areas mutual funds are the right kind of
investment option.

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Detail Study Of HDFC Mutual Fund

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


planning for them?

Yes

No

INFRENCE:

According to my survey of Rourkela people , most no of people are


more serious about financial planning

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QUESTIONARE

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Detail Study Of HDFC Mutual Fund

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

Name - _______________________________________________________

Age - <20-30> Sex M F

< 30-40

< 40-50

< 50-above>

Occupation - Service (Govt.)

Service (Pvt.)

Business

Self-employed

Retired

Organization - _______________________________________________________

Designation - _______________________________________________________

Annual Income - Below 1 lakh

1 – 3 lakh

3 – 5 lakh

Above 5 lakh

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Detail Study Of HDFC Mutual Fund
1. What are the Investment Avenues available in the market, that you are aware of?

Postal schemes (i.e. MIS/PPF/NSC/R.D/T.D etc.)


Government securities
Bank FD’s
Direct equity investment
Mutual funds
Insurance

2. Are you aware of the fact that some of the performing Mutual fund schemes in the
industry have posted 20% + annualized returns in last 10 years?

Yes No

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

Returns Hassle free


Moderate risk Past performance
Tax benefits Well regulated
No idea

4. If you have invested in Mutual funds, what percentage of your entire investment
includes mutual funds?

Below 20% 50 to 80%


20 to 50% 80% above

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

Bank FD, Savings Insurance


Mutual funds Equity market
Govt. securities Real estate
Postal savings, FD

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

Govt. securities Mutual funds


Insurance Derivatives
Equity market
Real estate
7. How do you manage your investment portfolio?

Solely of my own
On advise of a friend
On advise of a distributor/agent
On advise of your banker
On advice of mutual fund house people

8. How do you rate these while taking an investment decision? (Rate as 1,2,3,4,5
according to preference)

Returns Risk factors


Lock-in period past performance
Tax benefits

9. You believe in …

High risk, High returns


Moderate risk, moderate returns
Low risk, low returns

10. Have you been ever approached by a Certified Investment Financial Planner?
Yes No

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

Yes No

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Detail Study Of HDFC Mutual Fund

FINDING,
RECOMMENDATION,
&
CONCLUSION

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Detail Study Of HDFC Mutual Fund

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

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

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

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Detail Study Of HDFC Mutual Fund

Some of the Major Findings

1. It is found that HDFC is a favorable Mutual Fund.


2. The basis objective behind investments are mainly long-term capital appreciation, current
income & to some extent tax benefits.
3. The performance of HDFC Core & Satellite & HDFC Top 200 Fund is very good.
4. It is seen that the investment in growth fund is very high. Because the scope of income
and capital appreciation in the long term.
5. It is observed that the driving aspects of investments in mutual fund are safety, fund
performance, Service, Liquidity, return & tax benefits.
6. The type of investment plan that most investor s prefer is to get principal safety at all
time with low returns rather than high return with no safety.
7. HDFC Mutual Fund does not provide ‘monthly income scheme’ which other mutual
funds have and performance is very appreciable.
8. Fund Managers have suggested HDFC prudence ,HDFC Taxsaver , HDFC Equity for
investment , For the top 5.
9. HDFC Prudence is performing good with comparition to the prudence fund of any other
mutual fund house.
10. At this period of time when market condition is not so good, it is better for investors to
invest through Systamatic Investment plan. Which reduces the market risk.

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Detail Study Of HDFC Mutual Fund

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

Some major recommendation:


1) Fund managers should continuous Investor awareness Programs to make the
investors aware of technicalities of fund management and the return aspects.

2) Agents, Service personnel must be able to give correct and timely information
about NAV and the return on different schemes.

3) Monthly income scheme should be introduced.

4) Scheme should be offered as per the needs and the requirement of the industries.

5) The regulatory norms provided by the regulatory authorities like SEBI are
required to be known to all including investors.

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Detail Study Of HDFC Mutual Fund

CONCLUSION
The global financial market has transformed from Seller’s market to Buyer’s market with
liberalization, Globalizations and privatization. The Indian mutual fund market has also become
global when foreign funds entered, they came up with probably best marketing strategies to beat
Indian giants like BIRLA, HDFC, and ICICI have come up with aggressive strategies to beat the
foreign funds. Now the cutthroat competition goes on and on.

HDFC Mutual funds have rewarded investors with hand some returns. The good news is that this
is poised to become a trend. The mutual funds have strengthened their distribution networks,
become more transparent and investor friendly and are rewarding investors. The mutual fund is
finally, proving itself as a vehicle of safety for investments. But it is still the fund manager’s
investment philosophy that makes the difference between the winner and the losers.

Careful market analysis, consumer segmentation, identification of investor needs, service


designing are to be carried out for the successful implementation of different schemes by mutual
fund organizations. Regulatory measures by SEBI should be clearly explained to the investors.
Positioning of the schemes and their branding will help a lot for growth of the industry.
Creativity and innovation are the means of marketing in the days to come for Indian mutual fund
market.

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BIBLIOGRAPHY

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BIBLIOGRAPHY:-

MAGAZINES
INDIA TODAY
BUSINESS WORLD

WEB SITES
WWW.HDFCFUND.COM

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

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

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

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