Training project

A WINTER TRAINING PROJECT REPORT

On “A study on performance Comparison of Equity Schemes of

HDFC Mutual Fund with others.”

at

SUBMITTED IN PARTIAL FULFILLMENT FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

(SESSION 2010-2012)

Submitted To: Submitted by

HPUBS, SHWETA SOOD

Summerhill MBA (3rd Semester)

Shimla. Class Roll No-2408

Univ.Roll No -2315

CONTENTS

Statement of the problem

Objective of the study

Scope of the study

Introduction to mutual fund

Organization profile

Brief history of HDFC Bank

Introduction of HDFC mutual fund

Analysis

Techniques of Analysis

Findings

Annexure

Bibliography

ACKNOWLEDGEMENT

I owe my deepest gratitude to all the people associated with this project and helped

me in the successfully completing this work.

I wish to extend my sincere thanks to Mr. Dhruv Braghta – The Branch Manager

at HDFC Bank for giving me an opportunity to work for the organization. I would

also like to extend my thanks to Mr. Yogendra Sudarshan, Sales Manager for

his constant guidance and support all throughout the project duration. He has

constantly encouraged and challenged me to deliver nothing less than the best.

I would also like to express my gratitude to all the staff members at HDFC Bank

for their support and co-operation during the period.

Lastly I would like to thank all the members of the HPUBS family, my Parents, my

Sister and the Lord Almighty for helping and supporting me all throughout this

project.

Thank You All

Shweta Sood

Executive summary

The main aims of the investor is to minimize the risk involved in investment &

maximize return and today there are number of options available to investor like

Post office investment, bank deposit, Real estate, debentures, Government

securities, stock market, insurance & gold etc. Among these, Mutual Fund & ULIP

introduced by the insurance companies are the two options which require less

capital & give the benefit of Professional Management & suitable for all especially

to the persons who do not have time to watch the market regularly.

HDFC Mutual Fund is one of India's largest brokerage and securities distribution

house in India. It is considered to be one of the leading investment broking houses

catering to the needs of both institutional and non-institutional investor categories

with presence all over the country through franchisees and co-coordinators.

In this project I studied the schemes of HDFC Mutual fund and their returns in

various period of time by comparing risk and returns of other 2 companies Mutual

Fund, which helped me in knowing how the various schemes are performing and

the risk and return associates with them. Hence my topic of study is “A study on

performance Comparison of Equity Schemes of HDFC Mutual Fund with

others.”

Title of project

“A study on performance Comparison of HDFC Mutual Fund equity schemes

with others companies mutual fund schemes.” At HDFC Bank, Shimla.

Research problem

To find out the different types of equity scheme performance of HDFC and

compare it with other 2 competitors by evaluating risk & returns with the help of

index.

Purpose of the study

The study will help the organization in knowing how the company’s equity is

performing.

Scope of the study

The present study includes the 5 years average returns of the mutual funds, which

have the total corpus value, is more than 10000 crores. For the study three mutual

funds companies have been scan and only those scheme are include in the study

which are having the corpus value of more than 400 crores and age of the fund

must be more than 3 years. The study cover only equity diversified which is having

more fluctuations risk and returns.

Objective of the study

To understand the concept of Mutual Fund, working and mechanism and

types of Mutual Funds traded in India.

To know the Performance of HDFC Mutual Fund scheme compared to the

other companies mutual fund scheme.

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

To appraise investment performance of mutual funds with risk adjustment,

the theoretical parameters as suggested by Sharpe, Treynor

Introduction

An investment means employment of funds on assets (i.e. securities or mutual

funds or any of the investment avenues) with the aim of earning of income as well

as capital appreciation. There are mainly two attributes while investing to any of

the means, i.e. time and risk. There are mainly four objectives, which the

investments activities will carry on those are:

Return Risk Liquidity Safety

There are many alternatives which investment avenues are open to the investors

to suit their needs and nature .The selection of investment alternatives are

depends up on the required level of return and the risk tolerance level. These

alternatives range from financial securities to traditional non-securities

investment.

Following are the various investment alternatives.

Negotiable and fixed income securities

Equity shares

Preference share

Debentures

Bonds

Government securities

Non-negotiable securities

Bank deposit

Post office deposit

NBFC deposit

Tax saving schemes

Public provident fund scheme

National saving scheme

Life insurance

Mutual funds

Real estate

Securities

Companies raise funds to finance their projects through various methods. The

promoters can bring their own money or barrow from the financial institutions or

Mobilizes capital by issuing securities. The funds `may be raised through issue of

fresh share at per or premium. Preference shares debenture or global depository

receipts. These are mainly two markets which any company can raise their funds;

those are primary market and secondary market .the companies raise funds for the

following purposes:

To promote a new company

To expand an existing company

To diversify the production

To meet the regular working capital requirement

To capitalize the reserves.

New Issue Market (Primary Market)

Stock available for the first time is offered through new issue market. The issuer

may be a new company or an existing company. These issues may be of new type

or the secure used in the past. In the new market the issuer can be consider as a

manufacturers. The issuing house, investing banker and broker act as the channel

of distributing for new issue. They take the responsibility of selling the stock to

the public.

The main survives function of the primary market are:

1. Origination

2. Underwriting

3. Distribution

The main objectives of NSE are as follows.

To establish the nationwide trading facility for Equities, Debt instruments

and hybrids.

To ensure equal access to investors all over the country through appropriate

communication network.

To enable shorter settlement cycle and book entry settlement system.

Introduction of mutual fund

Concept of mutual funds

A Mutual Fund is a trust that pools the savings of a number of investors who share

a common financial goal. The money thus collected is then invested in capital

market instruments such as shares, debentures and other securities. The income

earned through these investments and the capital appreciation realised are shared

by its unit holders in proportion to the number of units owned by them. Thus a

Mutual Fund is the most suitable investment for the common man as it offers an

opportunity to invest in a diversified, professionally managed basket of securities

at a relatively low cost. The flow chart below describes broadly the working of a

mutual fund:

Mutual Fund Operation Flow Chart

Mutual Funds Industry in India

The origin of mutual fund industry in India is with the introduction of the concept

of mutual fund by UTI in the year 1963. Though the growth was slow, but it

accelerated from the year 1987 when non-UTI players entered the industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement,

both quality wise as well as quantity wise. Before, the monopoly of the market had

seen an ending phase, the Assets Under Management (AUM) was Rs. 67bn. The

private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993

and till April 2004, it reached the height of 1,540 bn. Putting the AUM of the

Indian Mutual Funds Industry into comparison, the total of it is less than the

deposits of SBI alone, constitute less than 11% of the total deposits held by the

Indian banking industry.

The main reason of its poor growth is that the mutual fund industry in India is new

in the country. Large sections of Indian investors are yet to be intellectuated with

the concept. Hence, it is the prime responsibility of all mutual fund companies, to

market the product correctly abreast of selling.

The mutual fund industry can be broadly put into four phases according to the

development of the sector. Each phase is briefly described as under.

First Phase - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was

set up by the Reserve Bank of India and functioned under the Regulatory and

administrative control of the Reserve Bank of India. In 1978 UTI was de-linked

from the RBI and the Industrial Development Bank of India (IDBI) took over the

regulatory and administrative control in place of RBI. The first scheme launched

by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of

assets under management.

Second Phase - 1987-1993 (Entry of Public Sector Funds)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by

Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),

Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda

Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked

Rs.47,004 as assets under management.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian

mutual fund industry, giving the Indian investors a wider choice of fund families.

Also, 1993 was the year in which the first Mutual Fund Regulations came into

being, under which all mutual funds, except UTI were to be registered and

governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton)

was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in 1996. The industry now

functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual

funds setting up funds in India and also the industry has witnessed several mergers

and acquisitions. As at the end of January 2003, there were 33 mutual funds with

total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores

of assets under management was way ahead of other mutual funds.

Fourth Phase - since February 2003

This phase had bitter experience for UTI. It was bifurcated into two separate

entities. One is the Specified Undertaking of the Unit Trust of India with AUM of

Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of

India, functioning under an administrator and under the rules framed by

Government of India and does not come under the purview of the Mutual Fund

Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It

is registered with SEBI and functions under the Mutual Fund Regulations. With the

bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000

crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the

SEBI Mutual Fund Regulations, and with recent mergers taking place among

different private sector funds, the mutual fund industry has entered its current

phase of consolidation and growth. As at the end of September, 2004, there were

29 funds, which manage assets of Rs.153108 crores under 421 schemes.

Major Mutual Fund Companies in India

Prudential Mutual Fund

UTI Mutual Fund

Reliance Mutual Fund

HDFC Mutual Fund

Franklin Mutual Fund

Birla sun Mutual Fund

SBI Mutual Fund

DSP Merrill Lynch Mutual Fund

Kotak Mutual Fund

Tata Mutual Fund

HSBC Mutual Fund

PRINCIPAL Mutual Fund

Standard chartered Mutual Fund

LIC Mutual Fund

Sundaram Mutual Fund

Deutsche Mutual Fund

Fidelity Mutual Fund

ABN AMRO Mutual Fund

ING Vysya Mutual Fund

Canbank Mutual Fund

JM Mutual Fund

Chola Mutual Fund

Benchmark Mutual Fund

BOB Mutual Fund

Taurus Mutual Fund

Sahara Mutual Fund

Escorts Mutual Fund

Quantum Mutual Fund

What is a Mutual Fund

Capital appreciations realized by the scheme are shared by its unit holders in

proportion to the number of A Mutual Fund is a trust that pools the savings of a

number of investors who share a common financial goal. The money thus collected

is invested by the fund manager in different types of securities depending upon the

objective of the scheme. These could range from shares to debentures to money

market instruments. The income earned through these investments and the units

owned by them. Thus a Mutual Fund is the most suitable investment for the

common man as it offers an opportunity to invest in a diversified, professionally

managed portfolio at a relatively low cost. The small savings of all the investors

are put together to increase the buying power and hire a professional manager to

invest and monitor the money. Anybody with an investible surplus of as little as a

few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a

defined investment objective and strategy.

Mutual Fund Structure

The structure consists of :

Sponsor

Sponsor is the person who acting alone or in combination with another body

corporate establishes a mutual fund. Sponsor must contribute at least 40% of the

net worth of the Investment Managed and meet the eligibility criteria prescribed

under the Securities and Exchange Board of India (Mutual Funds) Regulations,

1996.The Sponsor is not responsible or liable for any loss or shortfall resulting

from the operation of the Schemes beyond the initial contribution made by it

towards setting up of the Mutual Fund.

Trust

The Mutual Fund is constituted as a trust in accordance with the provisions of the

Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the

Indian Registration Act, 1908

Trustee

Trustee is usually a company (corporate body) or a Board of Trustees (body of

individuals). The main responsibility of the Trustee is to safeguard the interest of

the unit holders and inter alia ensure that the AMC functions in the interest of

investors and in accordance with the Securities and Exchange Board of India

(Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer

Documents of the respective Schemes. Atleast 2/3rd directors of the Trustee are

independent directors who are not associated with the Sponsor in any manner.

Asset Management Company (AMC)

The AMC is appointed by the Trustee as the Investment Manager of the Mutual

Fund. The AMC is required to be approved by the Securities and Exchange Board

of India(SEBI) to act as an asset management company of the Mutual Fund. At

least 50% of the directors of the AMC are independent directors who are not

associated with the Sponsor in any manner. The AMC must have a net worth of at

least 10 corers at all times.

Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer

Agent to the Mutual Fund. The Registrar processes the application form,

redemption requests and dispatches account statements to the unit holders. The

Registrar and Transfer agent also handles communications with investors and

updates investor records

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer

Agent to the Mutual Fund. The Registrar processes the application form,

redemption requests and dispatches account statements to the unit holders. The

Registrar and Transfer agent also handles communications with investors and

updates investor records.

Types of Schemes

Investment Objective

Schemes can be classified by way of their stated investment objective such as

Growth Fund, Balanced Fund, Income Fund etc.

Equity Oriented Schemes

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

Equity schemes are hence not suitable for investors seeking regular income or needing to use their investments in the short-term. They are ideal for investors who have a long-term investment horizon. The NAV prices of equity fund fluctuates with market value of the underlying stock which are influenced by external factors such as social, political as well as economic. HDFC Growth Fund, HDFC Tax Plan 2000 and HDFC Index Fund are examples of equity schemes.

General Purpose

The investment objectives of general-purpose equity schemes do not restrict them

to invest in specific industries or sectors. They thus have a diversified portfolio of

companies across a large spectrum of industries. While they are exposed to equity

price risks, diversified general-purpose equity funds seek to reduce the sector or

stock specific risks through diversification. They mainly have market risk

exposure. HDFC Growth Fund is a general-purpose equity scheme.

Sector Specific

These schemes restrict their investing to one or more pre-defined sectors, e.g.

technology sector. Since they depend upon the performance of select sectors only,

these schemes are inherently more risky than general-purpose schemes. They are

suited for informed investors who wish to take a view and risk on the concerned

sector.

Special Schemes

Index schemes

The primary purpose of an Index is to serve as a measure of the performance of the

market as a whole, or a specific sector of the market. An Index also serves as a

relevant benchmark to evaluate the performance of mutual funds. Some investors

are interested in investing in the market in general rather than investing in any

specific fund. Such investors are happy to receive the returns posted by the

markets. As it is not practical to invest in each and every stock in the market in

proportion to its size, these investors are comfortable investing in a fund that they

believe is a good representative of the entire market. Index Funds are launched and

managed for such investors. An example to such a fund is the HDFC Index Fund.

Tax saving schemes

Investors (individuals and Hindu Undivided Families (“HUFs”)) are being

encouraged to invest in equity markets through Equity Linked Savings Scheme

(“ELSS”) by offering them a tax rebate. Units purchased cannot be assigned /

transferred/ pledged / redeemed / switched – out until completion of 3 years from

the date of allotment of the respective Units.

The Scheme is subject to Securities & Exchange Board of India (Mutual Funds)

Regulations, 1996 and the notifications issued by the Ministry of Finance

(Department of Economic Affairs), Government of India regarding ELSS.

Subject to such conditions and limitations, as prescribed under Section 88 of the

Income-tax Act, 1961, subscriptions to the Units not exceeding Rs.10, 000 would

be eligible to a deduction, from income tax, of an amount equal to 20% of the

amount subscribed. HDFC Tax Plan 2000 is such a fund.

Real Estate Funds

Specialized real estate funds would invest in real estates directly, or may fund real

estate developers or lend to them directly or buy shares of housing finance

companies or may even buy their securitized assets.

Debt Based Schemes

These schemes, also commonly called Income Schemes, invest in debt securities

such as corporate bonds, debentures and government securities. The prices of these

schemes tend to be more stable compared with equity schemes and most of the

returns to the investors are generated through dividends or steady capital

appreciation. These schemes are ideal for conservative investors or those not in a

position to take higher equity risks, such as retired individuals. However, as

compared to the money market schemes they do have a higher price fluctuation

risk and compared to a Gilt fund they have a higher credit risk

Income Schemes

These schemes invest in money markets, bonds and debentures of corporates with

medium and long-term maturities. These schemes primarily target current income

instead of capital appreciation. They therefore distribute a substantial part of their

distributable surplus to the investor by way of dividend distribution. Such schemes

usually declare quarterly dividends and are suitable for conservative investors who

have medium to long term investment horizon and are looking for regular income

through dividend or steady capital appreciation. HDFC Income Fund, HDFC Short

Term Plan and HDFC Fixed Investment Plans are examples of bond schemes.

Liquid Income Schemes

Similar to the Income scheme but with a shorter maturity than Income schemes.

An example of this scheme is the HDFC Liquid Fund.

Money Market Schemes

These schemes invest in short term instruments such as commercial paper (“CP”),

certificates of deposit (“CD”), treasury bills (“T-Bill”) and overnight money

(“Call”). The schemes are the least volatile of all the types of schemes because of

their investments in money market instrument with short-term maturities. These

schemes have become popular with institutional investors and high networth

individuals having short-term surplus funds.

Gilt Funds

This scheme primarily invests in Government Debt. Hence the investor usually

does not have to worry about credit risk since Government Debt is generally credit

risk free. HDFC Gilt Fund is an example of such a scheme

Hybrid Schemes

These schemes are commonly known as balanced schemes. These schemes invest

in both equities as well as debt. By investing in a mix of this nature, balanced

schemes seek to attain the objective of income and moderate capital appreciation

and are ideal for investors with a conservative, long-term orientation. HDFC

Balanced Fund and HDFC Children’s Gift Fund are examples of hybrid schemes.

Constitution

Schemes can be classified as Closed-ended or Open-ended depending upon

whether they give the investor the option to redeem at any time (open-ended) or

whether the investor has to wait till maturity of the scheme

Open ended Schemes

The units offered by these schemes are available for sale and repurchase on any

business day at NAV based prices. Hence, the unit capital of the schemes keeps

changing each day. Such schemes thus offer very high liquidity to investors and

are becoming increasingly popular in India. Please note that an open-ended fund is

NOT obliged to keep selling/issuing new units at all times, and may stop issuing

further subscription to new investors. On the other hand, an open-ended fund rarely

denies to its investor the facility to redeem existing units.

Closed-ended schemes

The unit capital of a close-ended product is fixed as it makes a one-time sale of

fixed number of units. These schemes are launched with an initial public offer

(IPO) with a stated maturity period after which the units are fully redeemed at

NAV linked prices. In the interim, investors can buy or sell units on the stock

exchanges where they are listed. Unlike open-ended schemes, the unit capital in

closed-ended schemes usually remains unchanged. After an initial closed period,

the scheme may offer direct repurchase facility to the investors. Closed-ended

schemes are usually more illiquid as compared to open-ended schemes and hence

trade at a discount to the NAV. This discount tends towards the NAV closer to the

maturity date of the scheme.

Interval Schemes

These schemes combine the features of open-ended and closed-ended schemes.

They may be traded on the stock exchange or may be open for sale or redemption

during pre-determined intervals at NAV based prices.

RISK

The Risk-Return Trade-off

The most important relationship to understand is the risk-return trade-off. Higher

the risk greater the returns/loss and lower the risk lesser the returns/loss. Hence it is

upto you, the investor to decide how much risk you are willing to take. In order to

do this you must first be aware of the different types of risks involved with your

investment decision

Market Risk

Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the market in general lead to this. This is true, may it be big corporations or smaller mid-sized companies. This is known as Market Risk. A Systematic Investment Plan (“SIP”) that works on the concept of Rupee Cost Averaging (“RCA”) might help mitigate this risk.

Credit Risk

The debt servicing ability (may it be interest payments or repayment of principal)

of a company through its cash flows determines the Credit Risk faced by you. This

credit risk is measured by independent rating agencies like CRISIL who rate

companies and their paper. A ‘AAA’ rating is considered the safest whereas a ‘D’

rating is considered poor credit quality. A well-diversified portfolio might help

mitigate this risk.

Inflation Risk

Things you hear people talk about:

“Rs. 100 today is worth more than Rs. 100 tomorrow.”

“Remember the time when a bus ride coated 50 paise?”

“Mehangai Ka Jamana Hai.”

The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot

of times people make conservative investment decisions to protect their capital but

end up with a sum of money that can buy less than what the principal could at the

time of the investment. This happens when inflation grows faster than the return on

your investment.

http://www.hdfcfund.com/fundschool/financial1Show.jsp#rupee

http://www.hdfcfund.com/fundschool/financial1Show.jsp#rupee

Interest Rate Risk

In a free market economy interest rates are difficult if not impossible to predict.

Changes in interest rates affect the prices of bonds as well as equities. If interest

rates rise the prices of bonds fall and vice versa. Equity might be negatively

affected as well in a rising interest rate environment. A well-diversified portfolio

might help mitigate this risk.

Political/Government Policy Risk

Changes in government policy and political decision can change the investment

environment. They can create a favorable environment for investment or vice versa

Liquidity Risk

Liquidity risk arises when it becomes difficult to sell the securities that one has

purchased. Liquidity Risk can be partly mitigated by diversification, staggering of

maturities as well as internal risk controls that lean towards purchase of liquid

securities.

Diversification

The nuclear weapon in your arsenal for your fight against Risk. It simply means

that you must spread your investment across different securities (stocks, bonds,

money market instruments, real estate, fixed deposits etc.) and different sectors

(auto, textile, information technology etc.). This kind of a diversification may add

to the stability of your returns, for example during one period of time equities

might underperform but bonds and money market instruments might do well

enough to offset the effect of a slump in the equity markets. Similarly the

information technology sector might be faring poorly but the auto and textile

sectors might do well and may protect you principal investment as well as help you

meet your return objectives

Benefits of Investing in Mutual Funds

Professional Management

Mutual Funds provide the services of experienced and skilled professionals,

backed by a dedicated investment research team that analyses the performance and

prospects of companies and selects suitable investments to achieve the objectives

of the scheme.

Diversification

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

industries and sectors. This diversification reduces the risk because seldom do all

stocks decline at the same time and in the same proportion. You achieve this

diversification through a Mutual Fund with far less money than you can do on your

own.

Convenient Administration

Investing in a Mutual Fund reduces paperwork and helps you avoid many

problems such as bad deliveries, delayed payments and follow up with brokers and

companies. Mutual Funds save your time and make investing easy and convenient.

Return Potential

Over a medium to long-term, Mutual Funds have the potential to provide a higher

return as they invest in a diversified basket of selected securities.

Low Costs

Mutual Funds are a relatively less expensive way to invest compared to directly

investing in the capital markets because the benefits of scale in brokerage,

custodial and other fees translate into lower costs for investors.

Liquidity

In open-end schemes, the investor gets the money back promptly at net asset value

related prices from the Mutual Fund. In closed-end schemes, the units can be sold

on a stock exchange at the prevailing market price or the investor can avail of the

facility of direct repurchase at NAV related prices by the Mutual Fund.

Transparency

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

disclosure on the specific investments made by your scheme, the proportion

invested in each class of assets and the fund manager's investment strategy and

outlook.

Flexibility

Through features such as regular investment plans, regular withdrawal plans and

dividend reinvestment plans, you can systematically invest or withdraw funds

according to your needs and convenience.

Affordability

Investors individually may lack sufficient funds to invest in high-grade stocks. A

mutual fund because of its large corpus allows even a small investor to take the

benefit of its investment strategy.

Choice of Schemes

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

a lifetime.

Well Regulated

All Mutual Funds are registered with SEBI and they function within the provisions

of strict regulations designed to protect the interests of investors. The operations of

Mutual Funds are regularly monitored by SEBI.

Drawbacks of Mutual Funds

No Guarantees: No investment is risk free. If the entire stock market

declines in value, the value of mutual fund shares will go down as well, no

matter how balanced the portfolio. Investors encounter fewer risks when

they invest in mutual funds than when they buy and sell stocks on their own.

However, anyone who invests through a mutual fund runs the risk of losing

money.

Fees and commissions: All funds charge administrative fees to cover

their day-to-day expenses. Some funds also charge sales commissions or

"loads" to compensate brokers, financial consultants, or financial planners.

Even if you don't use a broker or other financial adviser, you will pay a sales

commission if you buy shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual funds sell

anywhere from 20 to 70 percent of the securities in their portfolios. If your

fund makes a profit on its sales, you will pay taxes on the income you

receive, even if you reinvest the money you made.

Management Risk: When you invest in a mutual fund, you depend on

the fund's manager to make the right decisions regarding the fund's portfolio.

If the manager does not perform as well as you had hoped, you might not

make as much money on your investment as you expected. Of course, if you

invest in Index Funds, you forego management risk, because these funds do

not employ managers

Rights of a Mutual Fund Unit holder

A unit holder in a Mutual Fund scheme governed by the SEBI (Mutual Funds) Regulations is entitled to:

1. Receive unit certificates or statements of accounts confirming the title within

6 weeks from the date of closure of the subscription or within 6 weeks from

the date of request for a unit certificate is received by the Mutual Fund.

2. Receive information about the investment policies, investment objectives,

financial position and general affairs of the scheme.

3. Receive dividend within 42 days of their declaration and receive the

redemption or repurchase proceeds within 10 days from the date of

redemption or repurchase.

4. Vote in accordance with the Regulations to:-

a. Approve or disapprove any change in the fundamental investment policies of

the scheme, which are likely to modify the scheme or affect the interest of

the unit holder. The dissenting unit holder has a right to redeem the

investment.

b. Change the Asset Management Company.

c. Wind up the schemes.

Brief history of Company

HDFC is India's premier housing finance company and enjoys an impeccable track

record in India as well as in international markets. Since its inception in 1977, the

Corporation has maintained a consistent and healthy growth in its operations to

remain the market leader in mortgages. Its outstanding loan portfolio covers well

over a million dwelling units. HDFC has developed significant expertise in retail

mortgage loans to different market segments and also has a large corporate client

base for its housing related credit facilities. With its experience in the financial

markets, a strong market reputation, large shareholder base and unique consumer

franchise, HDFC was ideally positioned to promote a bank in the Indian

environment.

The Housing Development Finance Corporation Limited (HDFC) was amongst the

first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to

set up a bank in the private sector, as part of the RBI's liberalization of the Indian

Banking Industry in 1994. The bank was incorporated in August 1994 in the name

of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank

commenced operations as a Scheduled Commercial Bank in January 1995.

Registered office

Hdfc bank House

Senapati Bapat Marg

Lower Parel

Mumbai 400013

Tel No: 56521000

Fax No: 24960739

Web –site : www.hdfcbank.com

Board of Directors

C M Vasudev Non Executive Chairman

Aditya Puri Managing Director

Harish Engineer Executive Director

Paresh Sukthankar Executive Director

Anami N Roy Director

Ashim Samanta Director

Bobby Parikh Director

Partho Datta Director

Renu Karnad Director

Pandit Palande Director

http://www.hdfcbank.com/

Vice president (legal) & company secretary

Mr. Sanjay Dongre

Auditors

Mr. P.C. Hansotia &Co (Chartered accountants)

Broad Areas in Which it Operates

The Bank operates in three segments: retail banking, wholesale banking and

treasury services. The retail banking segment serves retail customers through a

branch network and other delivery channels. The wholesale banking provides loans

and transaction services to corporate and institutional customers. The treasury

services segment undertakes trading operations on the proprietary account, foreign

exchange operations and derivatives trading. The Bank operates in India.

Retail Banking

This segment raises deposits from customers and makes loans and provides

advisory services to such customers. The objective of the Retail Bank is to

provides its target market customers a range of financial products and banking

services, giving the customer a one-stop window for all his/her banking

requirements. The products are backed by service and delivered to the customers

through the growing branch network, as well as through alternative delivery

channels like automated teller machines (ATMs), phone banking, net banking and

mobile banking.

The HDFC Bank Preferred program for high net worth individuals, the HDFC

Bank Plus and the Investment Advisory Services programs have been designed

keeping in mind needs of customers who seek distinct financial solutions,

information and advice on various investment avenues. The Bank also has an array

of retail loan products, including auto loans, loans against marketable securities,

personal loans and loans for two-wheelers. It is also a provider of depository

participant (DP) services for retail customers, providing customers the facility to

hold their investments in electronic form.

HDFC Bank has launched an international debit card in association with VISA

(VISA Electron) and also issues the MasterCard Maestro debit card. The Bank

launched its credit card business during the fiscal year ended March 31, 2001. By

September 30, 2005, the bank had a total card base (debit and credit cards) of 5.2

million cards. The Bank is also engaged in the merchant acquiring business with

over 50,000 point-of-sale (POS) terminals for debit/credit cards acceptance at

merchant establishments.

Wholesale Banking

The Bank's target market ranges from large, blue-chip manufacturing companies in

the Indian corporate to small and mid-sized corporates and agri-based businesses.

For these customers, the Bank provides a range of commercial and transactional

banking services, including working capital finance, trade services, transactional

services and cash management. The bank is also a provider of structured solutions,

which combine cash management services with vendor and distributor finance for

facilitating superior supply chain management for its corporate customers. It

provides cash management and transactional banking solutions to corporate

customers.

Treasury Services

Within this business, the bank has three main product areas: Foreign Exchange and

Derivatives, Local Currency Money Market & Debt Securities, and Equities. Risk

management information, advice and product structures, as well as fine pricing on

various treasury products are provided through the Bank's Treasury team. The

Treasury business is responsible for managing the returns and market risk on this

investment portfolio.

Customer focus

HDFC Bank's mission is to be a “World-Class Indian Bank.”

The objective is to build sound customer franchises across distinct businesses so as

to be the preferred provider of banking services for target retail and wholesale

customer segments, and to achieve healthy growth in profitability, consistent with

the bank's risk appetite. The bank is committed to maintain the highest level of

ethical standards, professional integrity, corporate governance and regulatory

compliance. HDFC Bank's business philosophy is based on four core values –

Operational Excellence,

Customer Focus,

Product Leadership and

People

Capital structure

Authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up

capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the

bank's equity and about 19.4% of the equity is held by the ADS Depository (in

respect of the bank's American Depository Shares (ADS) Issue). Roughly 31.3% of

the equity is held by Foreign Institutional Investors (FIIs) and the bank has about

190,000 shareholders. The shares are listed on the The Stock Exchange, Mumbai

and the National Stock Exchange. The bank's American Depository Shares are

listed on the New York Stock Exchange (NYSE) under the symbol "HDB

Various Services

Forex and trade services

HDFC Bank has a range of products and services that one can choose from to

transact smoothly.The following are different methods of transacting in foreign

exchange and remitting money.

Travelers cheques

Foreign currency cash.

Foreign currency drafts

Cheque deposits

Remittances

Cash to master

Trade services

Foreign services branch locator

Important guidelines and schedules

http://www.hdfcbank.com/personal/forex/forex_products_services.htm

All Foreign Exchange transactions are conducted by strictly adhering to RBI

guidelines. Depending on the nature of your transaction or point of travel, you will

need to understand your Foreign Exchange limits.

Loans

Whatever your need, our range of loans can help

Home Loans

Personal Loans

Two Wheeler Loans

New Car Loans

Used Car Loans

Overdraft Against Car

Express Loans

Loans Against Securities

Loans Against Property

Personal Banking

Savings Accounts

These Accounts are primarily meant to inculcate a sense of saving for the future,

accumulating funds over a period of time. Whatever may be the occupation, bank

is confident that customer will find the perfect banking solution. Open an account

in your name (customer’s name) or register for one jointly with a family member

today.

Current Accounts

Now, with an HDFC Bank Current Account, experience the freedom of multi-city

banking! Customer can have the power of multi-location access to his account

from any of banks 500 branches in 220 cities. Not only that, he can do most of his

banking transactions from the comfort of his office or home without stepping out.

At HDFC Bank, it understands that running a business requires time and money,

also that customers business needs are constantly evolving. That's where it come

in. It provides him with a choice of Current Account options to exclusively suit his

business - whatever the size or scope.

Fixed Deposits

Long-term investments form the chunk of everybody's future plans. An alternative

to simply applying for loans, fixed deposits allow the customer to borrow from his

own funds for a limited period, thus fulfilling his needs as well as keeping his

savings secure.

As per the finance (No 2) Act 2004, all fees & charges mentioned in the Tarriffs,

Charges or Fees Brochures will attract Service Tax @10% & Education Cess @2%

of the service tax amount effective 10th September 2004. The same will appear as

separate debits in the statements.

Private banking

HDFC Bank offers Private Banking services to high net worth individuals and

institutions. Banks team of seasoned financial and investment professionals

provide objective guidance backed by thorough research and in-depth analysis

keeping in mind customer’s financial goals.

Multiple Recognition from Euro money

At HDFC Bank, they have always strived towards providing exceptional service to

each of their esteemed customers. As testament to this dedication, they have earned

the following ranks in a recently conducted Euromoney Survey.

Rated as the best private bank in the super effluent category in India HDFC

Bank Investment Advisory Services - Helping you take your Investment

portfolio further.

Dedicated investment advisor

HDFC Private Banking service involves a high degree of personalization. When

customer avail of this facility, a dedicated Investment Advisor serves him. This

seasoned finance professional adds value to his portfolio by keeping him up to date

with financial markets and investment opportunities

Payment services

With HDFC Bank's payment services, one can bid goodbye to queues and paper

work. Its range of payment options make it easy for customer to pay for a variety

of utilities and services.

Verified by visa

If one wants to be worry free for his online purchases. Now he can shop

securely online with his existing Visa Debit/Credit card.

Net safe

Now shop online without revealing your (customers) HDFC Bank Credit Card

number.

Prepaid refill

If a person is a HDFC Bank Account holder and a prepaid customer, he can

now refill his Prepaid Mobile card with this service.

Bill pay

One can pay his telephone, electricity and mobile phone bills at his

convenience. Through the Internet, ATMs, his mobile phone and telephone -

with Bill Pay, bank’s comprehensive bill payments solution

Visa Bill Pay

One can pay his utility bills from the comfort of his home! Pay using his HDFC

Bank Visa credit card and forget long queue and late payments forever

Insta pay

One can Pay his bills, make donations and subscribe to magazines without

going through the hassles of any registration.

Direct pay

Shop or Pay bills online without cash or card. Debit your (customers) account

directly with bank’s Direct Pay service!

Smart pay(with credit cards)

With Smart Pay, paying customer’s r electricity, telephone, mobile phone,

water bills, gas and insurance premia payments becomes easy like never before.

Visa money transfer

One can transfer funds to any Visa Card (debit or credit) within India at his

own convenience through HDFC Bank's Net Banking facility.

E-Monies Electronic Funds Transfer

Transfer funds from customers account to any account in any Bank in India at

15 locations - FREE of cost

Online payment of excise and service tax

One can make his Excise and Service Tax payments at his own convenience.

Preferred/classic banking

If a customer expects more from everything, even HDFC bank, will invite him

into the world of exclusive banking. Where he will never again have to wait to

be served. With HDFC Bank Preferred Programme, his comfort always comes

first.

Ideal for seasoned professionals or businessmen, this programme will provide

him with a banker dedicated to take care of all his banking and investment

needs. It also means he get preferential rates on various banking products and

other exclusive benefits.

Hdfc bank classic banking

If a person wants to experience banking beyond the ordinary, our HDFC Bank

Classic Programme is just for him.

Becoming an HDFC Bank Classic customer entitles him to a host of benefits,

including a bouquet of preferentially priced products and specialized wealth

management solutions.

Awards and Achievements

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class

Indian Bank". They realized that only a single-minded focus on product quality

and service excellence would help them get there. Today, they are proud to say that

they are well on the way towards that goal.

2010

Business Today: Best Bank in India.

Forbes Top 2000 Companies: Bank at 632nd Position

Business world: Best Bank (large)

The Banker Magazine: Word’s Top 1000 bank

Asia money Awards: Best Local Cash Management Bank in Large and Medium segments

Euro money Awards: "Best Bank" in India

2009

Asia money Awards: Best Domestic Commercial Bank

Asia money Awards: Best Cash Management Bank – India

Global Finance Award : Best Trade Finance Bank.

The Asian Banker Excellence: Retail Banking Risk Management Award in India: Best Bank India

Economic Times Awards: Best Bank in India 2009

2008

Finance Asia Country Awards For Achievement 2008: Best Bank and Best Cash and Management Bank.

Buisness India: Best bank 2008

Forbes Asia: Fab 50 Companies in pacific Asia.

Buisness Today: Best Bank Award

Till Year 2007

HDFC Bank named the "Most Customer Responsive Company - Banking and Financial Services in The Economic Times - Avaya Global IT User in Banking' at the IT Users Awards 2003. Outlook Money & NDTV Profit : Best Bank in the Private sector category.

The Asian Banker Excellence in Retail Financial Services Award : Best Retail Bank in India.

Asian Banker : Managing Director Aditya Puri wins the Leadership Award For india.

Most Improved Company for Best Management Practices in India 2004

HDFC Bank has been named Best Domestic Bank in India in The Asset Triple A Country Awards 2005.

The Business Today-KPMG Survey published in the leading Indian business magazine Business Today has named HDFC Bank "Best Bank in India" for the third consecutive year in 2005.

The Asset magazine named HDFC Bank "Best Cash Management Bank" and "Best Trade Finance Bank" in India, in 2006.

Connect Customer Responsiveness Awards 2005"

HDFC Bank has been named Best Domestic Bank in India Region in The Asset Triple A Country Awards 2004 and 2003.

In 2004, HDFC Bank was selected by BusinessWorld as "One of India's Most Respected Companies" as part of The Business World Most Respected Company Awards 2004.

In 2004, Forbes Global again named us in its listing of Best under a Billion, 100 Best Smaller Size Enterprises in Asia/Pacific and Europe, in its November 1, 2004 issue.

In 2004, HDFC Bank won the award for "Operational Excellence in Retail Financial Services" - India as part of the Asian Banker Awards 2003.

In 2003, Forbes Global named us in its ranking of "Best under a Billion, 200 Best Small Companies for 2003".

Leading business newspaper The Financial Express named HDFC Bank the "Best New Private Sector Bank 2003" in the FE-Ernst & Young Best Banks Survey 2003.

Leading Personal Finance Magazine in India Outlook Money named HDFC Bank the "Best Bank in the Private Sector" for the year 2003.

Leading Indian business magazine Business Today in a survey rated us "Best Bank in India" 2003, and "Best Private Sector Bank" in India in 1999.

NASSCOM and economictimes.com have named us the 'Best

There have been some other proud moments as well

London-based Euromoney magazine gave us the award for "Best Bank - India" in 1999, "Best Domestic Bank" in India in 2000, and "Best Bank in India" in 2001 and 2002

Asia money magazine has named us "Best Commercial Bank in India 2002".

For our use of information technology we have been recognized as a "Computerworld Honors Laureate" and awarded the 21st Century Achievement Award in 2002 for Finance, Insurance & Real Estate category by Computerworld, Inc., USA.

Our technology initiative has been included as a case study in their online global archives.The Economic Times has conferred on us The Economic Times Awards for Corporate Excellence as the Emerging Company of the Year 2000-01.

Leading Indian business magazine Business India named us "India's Best Bank" in 2000.

In the year 2000, leading financial magazine Forbes Global named us in its list of "The 300 Best Small Companies" in the world and as one of the "20 for 2001" best small companies in the world.

Corporate Governance

HDFC Bank recognizes the importance of good corporate governance, which is

generally accepted as a key factor in attaining fairness for all stakeholders and

achieving organizational efficiency. This Corporate Governance Policy, therefore,

is established to provide a direction and framework for managing and monitoring

the bank in accordance with the principles of good corporate governance.

Profile of HDFC Mutual Fund

HDFC Asset Management Company Ltd (AMC) was incorporated under the

Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset

Management Company for the HDFC Mutual Fund by SEBI vide its letter dated

June 30, 2000. The registered office of the AMC is situated at Ramon House, 3rd

Floor, H.T. Parekh Marg, 169, Back bay Reclamation, Church gate, Mumbai - 400

020.

In terms of the Investment Management Agreement, the Trustee has appointed the

AMC to manage the Mutual Fund.

As per the terms of the Investment Management Agreement, the AMC will

conduct the operations of the Mutual Fund and manage assets of the schemes,

including the schemes launched from time to time.

The present shareholding pattern of the AMC is as follows

Particulars Percentage of the Paid Capital

Housing Development Finance Corporation Limited

50.10

Standard Life Investments Limited 49.90

V ision

“ To be a dominant player in the Indian mutual fund space, recognized for its high

levels of ethical and professional conduct and a commitment towards enhancing

investor interests”

The Board of Directors of the HDFC Asset

Management Company Limited (AMC)

Mr. Deepak S Parekh

Mr. N. Keith Skeoch

Mr Mark Connolly

Mr. Hoshang S. Billimoria

Mr. Humayun Dhanrajgir

Mr. P. M. Thampi

Dr. Deepak Phatak

Mr Rajeshwar Raj Bajaaj

Ms. Renu S. Karnad

Mr. Milind Barve

The AMC is managing 3 close ended schemes

HDFC Fixed Investment Plan

HDFC Long Term Equity Fund and

HDFC Fixed Maturity Plans

22 open-ended schemes of the Mutual Fund

HDFC Growth Fund (HGF)

HDFC Balanced Fund (HBF)

HDFC Income Fund (HIF)

HDFC Liquid Fund (HLF)

HDFC Long Term Advantage Fund (formerly HDFC Tax Plan 2000)(HTP)

HDFC Children's Gift Fund (HDFC CGF)

HDFC Gilt Fund (HGILT)

HDFC Short Term Plan (HSTP)

HDFC Index Fund

HDFC Floating Rate Income Fund (HFRIF)

HDFC Equity Fund (HEF)

HDFC Top 200 Fund (HT200)

HDFC Capital Builder Fund (HCBF)

HDFC TaxSaver (HTS)

HDFC Prudence Fund (HPF)

HDFC High Interest Fund (HHIF)

HDFC Cash Management Fund (HCMF)

HDFC MF Monthly Income Plan (HMIP)

HDFC Core & Satellite Fund (HCSF)

HDFC Multiple Yield Fund (HMYF)

HDFC Premier Multi-Cap Fund. (HPM)

HDFC Multiple Yield Fund - Plan 2005 (HMY2005)

The AMC is also providing portfolio management / advisory services and such

activities are not in conflict with the activities of the Mutual Fund.The AMC has

renewed its registration from SEBI vide Registration No. - PM / INP000000506

dated December 4, 2003 to act as a Portfolio Manager under the SEBI (Portfolio

Managers) Regulations, 1993.The Certificate of Registration is valid from January

1, 2004 to December 31, 2006 .

Techniques Used

1) Return

Return on a typical investment consists of two components. The basic is the

periodic cash receipts (or income) on the investment, either in the form of interest

or dividends. The second component is the change in the price of the assets-

commonly called the capital gain or loss. This element of return is the difference

between the purchase price and the price at which the assets can be or is sold;

therefore, it can be again or a loss.

The return has been calculated as under

NAVt – NAVt-1

Portfolio return: Rit =---------------------------------

NAV t-1

Where Rit is the difference between Net Asset Values for two consecutive days divided by the NAV of the preceding day.

M.indt – M.indt-1

Market return: Rmt =--------------------------------

M.indt-1

Where Rmt is the difference between market indices of two consecutive day’s dividend by the market index for the preceding day

2) Risk

Risk is neither good nor bad. Risk in holding securities is generally associated with the possibility that realized returns will be less than expected returns. The difference between the required rate of returns on mutual fund investment and the risk free return is the risk premium. Risk can be measured in terms of Beta & standard deviations.

Standard deviation

It is used to measure the variation in individual returns from the average expected

returns over a certain period. Standard deviation is used in the concept of risk of a

portfolio of investments. Higher standard deviation means a greater fluctuation in

expected return.

Standard deviation (SD) =\/ var

Where Var = variance

Var= p (ri-E(r)) 2

Beta

Beta measures the systematic risk and shows how prices of securities respond to

the market forces. It is calculated by relating the return on a security with return for

the market. By convention, market will have beta 1.0.Mutual fund is said to be

volatile, more volatile or less volatile. If beta is grater than 1 the stock is said to be

riskier than market. If beta is less than 1,the indication is that stock is less risky in

comparison to market. If beta is zero then the risk is the same as that of the market.

Negative beta is rare.

= nxy-(x)( y)

nx2-(x) 2

Where,

n= number of days

X =rolling returns of the NSE index

Y= rolling returns of the schemes

3) Sharpe index

Sharpe index measures risk premium of a portfolio, relative to the total amount of

risk in the portfolio. Sharpe index summarizes the risk and return of a portfolio in a

single measure that categorizes the performance of funds on the risk- adjusted

basis. The larger the Sharpe’s index the portfolio over performs the market and

vise versa.

Where,

St = Sharpe’s index

Rp= portfolio return

Rf= Risk free rate of return (7.59%)

SD= Standard Deviation of the port folio

St= RP-Rf

4) Treynor’s Index

Treynor’s model is on the concept of the characteristics straight line. The

characteristics line has drawn a relationship between the market return and a

specific portfolio without taking into consideration any direct adjustment for risk.

It is also known as reward to volatility ratio and is defined as:

The formula for Treynor’s Index is:

Portfolio avg return (Rp) – risk-free rate of interest (Rf)

Treynor index (Tn) = ---------------------------------------------------------------------

Beta coefficient of portfolio (Bp)

Rp -Rf

Tn = -------------------------

Bp

It measures portfolio risk in terms of beta, which is weighted average of individual

security beta. The ratio is investors, for who the fund represents only a fraction of

their total assets. The higher the ratio better is the performance.

Criteria 2&3

Equity diversified schemes

There is lot of variety schemes offered by AMCs. Equity diversified is one of the

scheme offered by the AMC .the selection criteria of schemes is totally depend on

the fund size and age of the fund. The scheme, which has the corpus value, is

more than 400Crs and the age of the fund is more than 3yrs only that fund is

qualified for analysis

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

Fund size DOIHDFC Equity Fund (G) 2887.39 12/08/94HDFC Top 200 Fund (G) 1131.45 08/19/96HDFC Long Term Advantage Fund (G)

424.53 01/02/01

HDFC Tax Saver (G) 475.99 12/18/95Reliance Growth Fund (G) 2524.13 09/08/95Reliance Vision Fund (G) 1719.35 09/07/95Pru ICICI Dynamic plan 1044.27 10/18/02Pru ICICI Power 1359.04 10/05/01Pru ICICI Tax Plan 421.75 08/09/99

Tables for fund size and DOI

Absolute returns

Scheme Name DOI nav

RT1y RT2y RT3y RT4y RT5y

Pru ICICI Dynamic Plan (G)

47.375 61.468 180.655 0.000 - -

Pru ICICI Power (G) 61.740 55.870 143.262 267.719 381.967 475.933Pru ICICI Tax Plan (G)

73.120 36.316 190.389 344.498 453.101 603.077

Reliance Growth Fund (G)

199.520 48.210 186.379 416.624 557.181 909.717

Reliance Vision Fund (G)

137.650 50.454 144.668 292.837 428.002 857.898

HDFC Equity Fund (G)

113.822 54.314 149.500 279.913 416.668 575.101

HDFC Top 200 Fund (G)

85.834 49.693 138.335 267.597 427.560 530.206

HDFC Long Term Advantage Fund (G)

74.137 39.146 139.926 310.959 467.665 712.015

HDFC Tax Saver (G) 115.193 47.475 205.147 366.936 505.960 615.484

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

Criteria 4

Methodology

1. Return

Name of Scheme DOI Returns(annualized) Avg return1 yr 2yr 3yr 4yr 5yr


199.52 48.21

93.23 80.40

27.21 53.64 60.54


137.65 50.45

62.62 60.56

34.41 81.42 57.89

HDFC Equity Fund(G)

113.822 54.31

61.68 52.27

36.00 30.66 46.99

HDFC Long TermAdvantage Fund(G)

74.137 39.15

72.43 71.29

38.13 43.04 52.81

HDFC Tax Saver(G) 115.193 47.4 106.91 53.0 29.77 18.07 51.05

8 2HDFC Top 200 Fund (G)

85.834 49.69

59.22 54.24

43.52 19.46 45.22


47.3746 61.47

73.82 31.67

0 0 55.65

Pru ICICI Power (G) 61.74 55.87

56.07 51.16

31.07 19.50 42.73

Pru ICICI Tax Plan (G)

73.12 36.32

113.03 53.07

24.43 27.12 50.79

NAVt – NAVt-1

Portfolio return: Rit =---------------------------------

NAV t-1

Where Rit is the difference between Net Asset Values for two consecutive days dividend by the NAV of the preceding day.

Risk

Beta

Scheme Name 5 years avg return* BetaPru ICICI Tax Plan (G) 50.79 1Pru ICICI Dynamic Plan (G)

55.65 0.99

Reliance Vision Fund (G) 57.89 0.98Pru ICICI Power (G) 42.73 0.97HDFC Top 200 Fund (G) 45.22 0.96HDFC Tax Saver (G) 51.05 0.93Reliance Growth Fund (G) 60.54 0.91HDFC Equity Fund (G) 46.99 0.9HDFC Long Term

Advantage Fund (G52.81 0.75

Returns are annualized

= nxy-(x)( y)

nx2-(x) 2

Where,

n= number of days

X =rolling returns of the NSE index

Y= rolling returns of the schemes

Beta describes the relationship between the stock’s return and the index returns. it describes the risk in the portfolio with comparing market risk as 1 .

If beta =1

One percent changes in market index return causes exactly one percent change in the stock returns. it indicates that the stock moves in randem with the market .

If Beta <1

Then the stock is less volatile compared to the market.

If Beta >1

Then the stock is more volatile compared to the market. The stock value

With more then 1 beta value is considered to be risky.

If Beta –ve: nagative Beta indicates that the stock returns moves in the opposite direction to the market return.

Standard deviation

It is used to measure the variation in individual returns from the average expected returns over a certain period. Standard deviation is used in the concept of risk of a portfolio of investments. Higher standard deviation means a greater fluctuation in expected return.

Name of Scheme

DOI Returns (annualized) 5yrs Avg return

SD1 yr 2yr 3yr 4yr 5yr


47.3746

61.47

73.82 31.67

0 0 55.65 30.51

Pru ICICI Power (G)

61.74 55.87

56.07 51.16

31.07

19.50

42.73 14.81


73.12 36.32

113.03

53.07

24.43

27.12

50.79 32.69


199.52 48.21

93.23 80.40

27.21

53.64

60.54 23.55


137.65 50.45

62.62 60.56

34.41

81.42

57.89 15.43


113.822

54.31

61.68 52.27

36.00

30.66

46.99 11.70

HDFC Top 200 Fund (G)

85.834 49.69

59.22 54.24

43.52

19.46

45.22 13.88


74.137 39.15

72.43 71.29

38.13

43.04

52.81 15.64

HDFC Tax Saver (G)

115.193

47.48

106.91

53.02

29.77

18.07

51.05 30.59

Standard deviation (SD) =\/ var

Where Var = variance

Var= p (ri-E(r)) 2

Return & Risk for top 10 average returns

Name of Scheme DOI 5yrs avg returns

Sd Beta

Reliance Growth Fund (G) 199.52 60.54 23.55 0.91Reliance Vision Fund (G) 137.65 57.89 15.43 0.98Pru ICICI Dynamic Plan (G) 47.3746 55.65 30.51 0.99HDFC Long Term Advantage Fund (G)

74.137 52.81 15.64 0.75

HDFC Tax Saver (G) 115.193 51.05 30.59 0.93Pru ICICI Tax Plan (G) 73.12 50.79 32.69HDFC Equity Fund (G) 113.822 46.99 11.70 0.94HDFC Top 200 fund 85.834 45.22 13.88 0.96Pru ICICI power 61.74 42.73 14.81 0.97

Sharpe’s

Sharpe’s index measures the risk premium of the portfolio relative to the total amt of risk in the portfolio. This risk premium is the difference between the portfolio’s average rate of return and the risk less rate of return. The index assigns the highest values to assets that have best risk-adjusted average rate of returns.

Name of Scheme DOI 5 yrs avg returns

Rp

Rf sd St

Reliance Growth Fund (G) 199.52 60.54 8.00 23.55

2.23

Reliance Vision Fund (G) 137.65 57.89 8.00 15.43

3.23

Pru ICICI Dynamic Plan (G) 47.3746 55.65 8.00 30.51

1.56


74.137 52.81 8.00 15.64

0.59

HDFC Tax Saver (G) 115.193 51.05 8.00 30.59

1.41

Pru ICICI Tax Plan (G) 73.12 50.79 8.00 32.69

1.31

HDFC Equity Fund (G) 113.822 46.99 8.00 11.70

3.33

HDFC Top 200 fund 85.834 45.22 8.00 13.88

2.68

Pru ICICI power 61.74 42.73 8.00 14.81

2.34

Where st =Sharpe’s index

Rp=portfolio return

Rf=Risk free rate of return (8.00%)

SD= standard deviation of the port folio

St= RP-Rf

SD

Treynor’s Index

Name of Scheme DOIRp

Rf Beta Tn

Reliance Growth Fund (G) 199.52 60.54 8.00 0.91 57.73Reliance Vision Fund (G) 137.65 57.89 8.00 0.98 50.91

Pru ICICI Dynamic Plan (G) 47.3746 55.65 8.00 0.99 48.13HDFC Long Term Advantage

Fund (G)74.137 52.81 8.00 0.75 59.75

HDFC Tax Saver (G) 115.193 51.05 8.00 0.93 46.29Pru ICICI Tax Plan (G) 73.12 50.79 8.00 1 42.79HDFC Equity Fund (G) 113.822 46.99 8.00 0.94 43.32

HDFC Top 200 fund 85.834 45.22 8.00 0.96 38.77Pru ICICI power 61.74 42.73 8.00 0.97 35.80

In Treynor’s higher the ratio higher the performance.

Tn =Treynor’s index

Rp=portfolio return

Rf=Risk free rate of return (7.59%)

Formula

Tn= RP-Rf

Beta

Performance Evaluation Tables

Name of Scheme

DOI) Rp Beta

SD Sharpe’s

Treynor's

Reliance Growth

199.52 60.54 0.91 23.55 2.23 57.73

Fund (G)Reliance Vision Fund (G)

137.65 57.89 0.98 15.43 3.23 50.91


47.3746 55.65 0.99 30.51 1.56 48.13


74.137 52.81 0.75 15.64 0.59 59.75

HDFC Tax Saver (G)

115.193 51.05 0.93 30.59 1.41 46.29


73.12 50.79 1 32.69 1.31 42.79


113.822 46.99 0.94 11.70 3.33 43.32

HDFC Top 200 fund

85.834 45.22 0.96 13.88 2.68 38.77

Pru ICICI power

61.71 42.73 0.97 14.81 2.34 35.80

Ranking

Ranking on the basis of Sharpe’s

Name of the scheme DOI Rp Sharpe’s Ranks

Hdfc equity fund 113.822 46.99 3.33Reliance vision fund 137.65 57.89 3.23Hdfc top 200 fund 85.834 45.22 2.68Pru ICICI power 61.74 42.73 2.34Reliance growth fund 199.52 60.54 2.23

0

0.5

1

1.5

2

2.5

3

3.5

Sharpe’s

Hdfc equity fund

Reliance vision fund

Franklin india prima

Hdfc top 200 fund

Pru ICICI power

Reliance growthfundPru ICICI dyanamicfundHdfc tax saver fund

Pru icici tax plan

Hdfc long ternadvantage fund

Pru ICICI dyanamic fund 47.37 55.65 1.56Hdfc tax saver fund 115.193 51.05 1.41Pru icici tax plan 73.12 50.79 1.31Hdfc long tern advantage fund

74.134 52.81 0.59

Ranking on the basis of Treynor’s

Name of Scheme DOIRp

Treynor’s Ranks

Hdfc long tern advantage fund

74.134 51.81 60.29

Reliance growth fund 199.52 60.54 58.18Reliance vision fund 137.65 57.89 57.33Pru ICICI dyanamic fund 47.374

655.65 51.33

Hdfc tax saver fund 115.193

51.05 48.55

Hdfc equity fund 113.822

46.99 46.73

Pru icici tax plan 73.12 50.79 43.20Hdfc top 200 fund 85.834 45.22 41.91Pru ICICI power 61.74 42.73 38.61

0

10

20

30

40

50

60

70

Treynor’s

Hdfc long ternadvantage fundReliance growthfundReliance vision fund

Pru ICICI dyanamicfundHdfc tax saver fund

Hdfc equity fund

Pru icici tax plan

Hdfc top 200 fund

Pru ICICI power

Limitations of the study

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

schemes.

Conclusion

The above evaluation according to Sharpe index the HDFC equity scheme falls

under 1st rank & according to traynor HDFC long term advantage fund falls under

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

I would like to conclude that HDFC schems are performing well as compare to

other competitors even time factor it was started late but its returns is high as

compared to competitor.

As HDFC mutual fund has to concentrate more on marketing their scheme, as its

schemes are performing well, and it should maintain its rank 1 position.

Annexure

Details about top Schemes

HDFC Equity fund

Fund manager Prasanth jain

Investment objective To achive capital apprecition

Date of allotment 12-8-94

Growth plan 151.389

Dividend plan 45.193

Entry load

Exit load

< 5 cr 2.25%,> 5cr no entry loadLess than or =to rs 5crs nil;rs <5crs :1%(if redeemed within 1 year of allotment

Minimum investment 5000

Fund size 2887.39

Portfolio holding top 10 holdings industry %NAVInfosys technologies ltd software 8.27Oil& natural gas corp ltd oil 6.09ITC ltd consumer non durables 5.31Larsen & toubro ltd diversified 5.17Cropton greaves ltd industrial capital goods 4.95Amrtech auto ltd auto ancilaries 4.33Reliance industry ltd petrolium prod 4.26Punj lioyod ltd construction 3.87Hindustan petroleum petroliun prod 3.77CMCltd hardware 3.48

HDFC Top 200 Funds

Fund manager Prasanth jainobjective To genarate long term capital appriciation

from portfolio of equity &equity linked instruments

Date of inception

19-8-1996

Growth plan 151.386Dividend plan 45,193Entry load < 5 cr 2.25%,> 5cr no entry loadExit load -Minimum amt 5000Fund 1131.45

Portfolio- top 10 holdings

Company/issuer industry % to navEquity &equity relatedOil& natural gas corp ltd oil 7.90Reliance industry ltd petrolium prod 6.11Infosys technologies ltd software 4.97Tata consultancy service ltd software 4.29Bharati airtel ltd Telecom

service4.06

Hindustan petroleum coporation ltd

petroliun prod 4.01

Larsen & toubro ltd diversified 3.73Icici bank bank 3.16Wipro software 3.16State bank fo india bank 3.03

HDFC long term advantage fund

Fund manager Vinay kulkarniobjective To achive long term grpwth capitalDate of inception

1-2-01

Growth plan 95.254Dividend plan 41.458Entry load < 5 cr 2.25%,> 5cr no entry loadExit load -Minimum amt 5000Fund 424.53


Company/issuer industry % to navEquity &equity relatedMaharastra seemless ltd Ferrous metals 5.07Container corporation of india ltd

transportation 5.04

Heritage foods india ltd Consumer non durables 4.97Reliance industry ltd petrolium prod 4.54Blue star ltd Consumer durable 4.19State bank fo india bank 3.79AIA enginneering ltd Industrial capital goods 3.31Kansai nerolac paints ltd Consumer non durables 3.29Infosys technologies ltd software 3.11Bharati elestronic ltd Industrial capital goods 3.09

HDFC Tax saver

Fund manager Vinay kulkarniobjective To achive long term grpwth capitalDate of inception

18-12-95



Company/issuer industry % to navEquity &equity relatedOil& natural gas corp ltd oil 7.90Reliance industry ltd petrolium prod 6.11

Infosys technologies ltd software 4.97Tata consultancy service ltd software 4.29Bharati airtel ltd Telecom

service4.06

Hindustan petroleum coporation ltd

petroliun prod 4.01

Larsen & toubro ltd diversified 3.73Icici bank bank 3.16Wipro software 3.16State bank fo india bank 3.03

Reliance vision fund

Fund manager Ashwani kumarobjective The primary investment objective 0f the

scheme is to achive long term growth of capital by investment in equity & its related securities.

Date of inception

9-7-1995

Growth plan 160.53Dividend plan 49.81Entry load < 2 r 2.25%,>/= to 2 cr.5 cr -1.25%:_> 5 cr -

nilExit load NilMinimum amt 5000Fund 1719.35


Holdings % weightageReliance indutries ltd 5.14JSW steel ltd 4.12Bharath earth mover ltd 3.91

Bomby dyeing 7 mfg co ltd 3.23Crompton greaves ltd 3.18Bank of borada 3.09Jindal saw ltd 2.71Divis laboratieas 2.68Jaipk sh association 2.61associtiongujarath state fertimliser

2,44

Reliance growth fund

Fund manager Sunil singaniaobjective The primary investment objective 0f the

scheme is to achive long term growth of capital by investment in equity & its related securities.

Date of inception

9-8-95

Growth plan 234.80Dividend plan 52.22Entry load < 2 r 2.25%,>/= to 2 cr.5 cr -1.25%:_> 5 cr -

nilExit load NilMinimum amt 5000Fund 2524.13


Holdings Weightage(%)

Equity 90.52Siemens ltd 5,48Grasim industries ltd 5.15Divis laboraters ltd 5.07Reliance comm ltd 4.42India hotels ltd 4.42Infosys technology ltd 4.25Indian oil corporation ltd 3.73Tata tea ltd 3.68Reliance industries ltd 3.59Auomative axies 3.55

PruICICI power

Fund manager Sankaran narenobjective To achive long term grpwth capitalDate of inception

10-05-2001



Company/issuer (%)NAVITC LTD 6.38Reliance indutries ltd 5.77Hindalco industries ltd 4.91Patni computer system ltd 4.71Grasim industries ltd 3.69

Mahindra & mahindra ltd 3.68Tata consultancy service ltd 3.43Infosys technologies ltd 3.17Bharath electronic ltd 2.98Deccan chronicle holdings ltd

2.96

PruICICI dynamic plan


18-10-2002



Company/issuer (%)NAVITC ltd 5.86Decan chronicle holdings ltd 5.31Reliance indutries ltd 4.95

i-fex solution ltd 4.17Tata consultancy service ltd 399Jain irrigation systems ltd 3.13Bharati airtel ltd 3.11Mahinra & mahindra ltd 3.03Oil & natural gas company ltd

2.69

Sterlite indutries (india) ltd 2.68

PruICICI tax plan


18-9-99



Company/issuer (%)NAVH.E.G LTD 5.06

Cadila health care 5.04Kesoram industries ltd 4.99ITC ltd 4.51Sundaram clayton ltd 4.44Aventis pharma ltd 4.12Trent ltd 3.49Raymonds ltd 3.35IBP company ltd 3.32Orient peper & indutries ltd 3.16

Bibliography

Reference books

security analysis & portfolio management

By Punithavathy pandian

Websites

www.hdfcmutualfund.com

www.amfi.com

www.myirish.com

http://www.myirish.com/

http://www.amfi.com/

http://www.hdfcmutualfund.com/

www.indiainfoline.com

http://www.indiainfoline.com/

Economy & Finance

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