SUMMER TRAINING PROJECT REPORT

On Comparative Analysis of Portfolio And Performance of Selected Mutual Fund And Investment Pattern of Investor In India. In Partial Fulfillment of Masters in Business Administration. Study undertaken at

HDFC AMC LTD. CHANDIGARH.

SUBMITTED TO: BY: CBM DEPT. AGGARWAL A (F) SUBMITTED SORABH M.B.

GURU NANAK DEV UNIVERSITY AMRITSAR

PREFACE
The Summer Internship Program forms an important component of education. It is an attempt to bridge the gap between the academic institution and the corporate world. It provides us an opportunity to apply the concepts learnt in real life situations. The perfect combination of Project and OJT help us in exploring our skills and capabilities. This internship program makes a mark of hard work, sincerity, knowledge and ethics on the host organization. It would also be a great learning experience since it enables us to apply theory to practice and observe and learn the current trends in the market. It provides an opportunity for us to satisfy our inquisitiveness about corporate, provides exposure to technical skills, and helps us to acquire social skills by being in constant interaction with the professionals of other organizations. It helps us in developing a network, which will be useful in enhancing in career prospects. This will help to gain a deeper understanding of the work, culture, deadlines, pressures etc. of an organization. Thus, it helps to develop the qualities of a Manager by involving teamwork, goal orientation and managing interpersonal relationships and by creating awareness about strengths and weaknesses in the work environment.

ACKNOWLEDGEMENT
Words are often to be a mode of expression for ones deep feelings. I take this opportunity to express my deepest gratitude to those who have generously helped me in providing the valuable knowledge and expertise during my training. At the very outset, I bow my head to thank the God Almighty, whose kind grace has made it possible for me to bring this report. I, hereby express my sincere gratitude to my Company Guide Ms. SHAILJA SHARMA for the valuable guidance and immense cooperation right from the day 1st till the end of the training without which this project would not have become a successful one. I shall also like to specially thank Mrs. MANDEEP KAUR (Faculty Guide) for giving me the required guidance and removing any difficulties faced by me during training. Last but not the least I would like to thank Company staff to help me write this report by providing full cooperation and continuous support during the course of this assignment. Thanks to my parents and GURU NANAK DEV UNIVERSITY Faculty Members for their belief and constant support. And finally, I would like to thank each and every person who has contributed in any of the ways in my training.

SORABH AGGARWAL

CONTENTS
Chapter-1- Introduction (A)Company profile- HDFC AMC LTD. (B)Introduction to project (C)Introduction to mutual funds Meaning

1 8 9

Types Mutual fund industry in India (A)History (B)No. Of AMCS in India

11 22 22 26 32 39 42 43 44 45 48 99 104 105

Performance of mutual funds in India Benefits of mutual funds Drawbacks of mutual funds Future of mutual funds in India

Association of Mutual Funds in India.(AMFI) 35

Chapter-2- Objective of study Chapter-3- Research methodology Chapter-4- Comparative Analysis Chapter-5- Inferences drawn Chapter-6- Swot Analysis Chapter-7- Conclusion

Chapter-8- Questionnaire Chapter-9- Bibliography

106 109

CHAPTER 1 INTRODUCTION (A) COMPANY PROFILE- HDFC AMC LTD. HDFC ASSET MANAGEMENT COMPANY LIMITED (AMC)
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, Backbay Reclamation, Churchgate, Mumbai - 400 020. In terms of the Investment Management Agreement, the Trustee has appointed the AMC to manage the Mutual Fund. As per the terms of the Investment Management Agreement, the AMC will conduct the operations of the Mutual Fund and manage assets of the schemes, including the schemes launched from time to time. The present shareholding pattern of the AMC is as follows: Particulars Housing Development Finance Corporation Limited Standard Life Investments Limited % of the paid up capital 60 40

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a review of its overall strategy, had decided to divest its Asset Management business in India. The AMC had entered into an agreement with ZIC to acquire the said business, subject to necessary regulatory approvals. On obtaining the regulatory approvals, the following Schemes of Zurich India Mutual Fund have migrated to HDFC Mutual Fund on June 19, 2003. These Schemes have been renamed as follows: Former Name Zurich India Equity Fund Zurich India Prudence Fund Zurich India Capital Builder Fund Zurich India TaxSaver Fund Zurich India Top 200 Fund Zurich India High Interest Fund Zurich India Liquidity Fund Zurich India Sovereign Gilt Fund New Name HDFC Equity Fund HDFC Prudence Fund HDFC Capital Builder Fund HDFC TaxSaver HDFC Top 200 Fund HDFC High Interest Fund HDFC Cash Management Fund HDFC Sovereign Gilt Fund

The AMC is managing 23 open-ended schemes of the Mutual Fund viz. HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF), HDFC Income Fund (HIF), HDFC Liquid Fund (HLF), HDFC Long Term Advantage Fund (HLTAF), HDFC Childrens 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 (HPMCF), HDFC Multiple Yield Fund . Plan 2005 (HMYF-Plan 2005) and HDFC Quarterly Interval Fund (HQIF). The AMC is also managing 6 closed ended Schemes of the HDFC Mutual Fund viz. HDFC Fixed Maturity Plans, HDFC Long Term Equity Fund, HDFC Fixed Maturity Plans - Series II, HDFC Fixed Maturity Plans - Series III, HDFC Fixed Maturity Plans - Series IV and HDFC Fixed Maturity Plans - Series V. 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 8, 2006 to act as a Portfolio Manager under the SEBI (Portfolio Managers) Regulations, 1993. The Certificate of Registration is valid from January 1, 2007 to December 31, 2009 The Board of Directors of the HDFC Asset Management Company Limited (AMC) consists of the following eminent persons. Mr. Deepak S Parekh Mr. N. Keith Skeoch Mr Mark Connolly Mr. Hoshang S. Billimoria Mr. Humayun Dhanrajgir Mr. P. M. Thampi Dr. Deepak Phatak Mr Rajeshwar Raj Bajaaj Ms. Renu S. Karnad Mr. Milind Barve

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, corporates 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 9.5 lac borrowers, over 1 million depositors, over 91,000 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 twelfth 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 10 July 2006. Standard Life Investments was launched as an investment management company in 1998. It is a wholly owned subsidiary of Standard Life Investments (Holdings) Limited, which in turn is a wholly owned subsidiary of Standard Life plc. Standard Life Investments is a leading asset management company, with approximately US$ 300 billion as at March 30, 2008, of assets under management. The company operates in the UK, Canada, Hong Kong, China, Korea, Ireland and the USA to ensure it is able to 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,

VISION OF HDFC MUTUAL FUND

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

HDFC MUTUAL FUND PRODUCTS SCHEMES EQUITY FUNDS HDFC Capital Builder Fund HDFC Core & Satellite Fund HDFC Equity Fund HDFC Growth Fund HDFC Long Term Equity Fund HDFC Premier Multi-Cap Fund HDFC Top 200 Fund HDFC Mid-Cap Opportunities Fund HDFC Index Fund HDFC Index Fund Nifty Plan HDFC Index Fund SENSEX Plan HDFC Index Fund SENSEX Plus Plan Equity Linked Savings Scheme HDFC Long Term Advantage Fund HDFC Tax Saver

BALANCED FUNDS HDFC Balanced Fund HDFC Children's Gift Fund Investment Plan HDFC Children's Gift Fund Savings Plan

DEBT FUNDS
HDFC Cash Management Fund - Savings Plus Plan HDFC Floating Rate Income Fund Long Term Plan HDFC Floating Rate Income Fund Short Term Plan HDFC Gilt Fund Short Term Plan HDFC Gilt Fund Long Term Plan HDFC High Interest Fund HDFC High Interest Fund - Short Term Plan HDFC Income Fund HDFC MF Monthly Income Plan - Short Term Plan HDFC MF Monthly Income Plan - Long Term Plan HDFC Multiple Yield Fund HDFC Multiple Yield Fund Plan 2005 HDFC Short Term Plan HDFC Quarterly Interval Fund - Plan A HDFC Quarterly Interval Fund - Plan B HDFC Quarterly Interval Fund - Plan C

LIQUID FUNDS-

HDFC Cash Management Fund - Call Plan HDFC Cash Management Fund - Savings Plan HDFC Liquid Fund HDFC Liquid Fund - PREMIUM PLAN HDFC Liquid Fund - PREMIUM PLUS PLAN HDFC Fixed Maturity Plan

 FMP

(B)INTRODUCTION TO PROJECTThe name of the project is comparative Analysis of Performance and portfolio of Selected mutual Fund and Investment Pattern of Investor in India. Analysis is being done at HDFC MUTUAL FUNDS CHANDIGARH. A MUTUAL FUND is an investment company designed to pool the funds of smaller investors and place them under professional management. A mutual fund allows small investors to diversify their portfolios. When a mutual fund is formed, it issues a prospectus detailing its intended investment strategy, and it is not permitted to deviate from that strategy without public disclosure. A mutual fund prospectus also details the fees investors will be charged, which can be substantial. In the US, a mutual fund is regulated by the SEC. A mutual fund may invest in stocks, bonds, options, futures, currencies, and commodities. Although any specific mutual fund is required to follow a specific investing strategy, the range of strategies available is wide. A mutual fund such as an index fund may attempt to replicate market or sector index. A mutual fund may specialize in large-cap, small-cap or even micro-cap stocks. Investors seeking regular income can invest in a mutual fund that specializes in government bonds or, for the more aggressive corporate debt. For comparative analysis of performance of mutual funds in India I have taken 4 INDIAN AMCS EQUITY MUTUL FUND SCHEMES. These are 1. HDFC Equity Fund 2. FIDELITY Equity Fund 3. RELIANCE Vision Fund 4. FRANKLIN INDIA Blue Chip Fund For comparing the performance of these mutual fund schemes, I have used four different financial ratios, which generally depicts risk and return relationship, concerned with these

funds then performance will be deduced by interpreting the result of the ratios that which fund is performing well on the financial basis.

(C)INTRODUCTION TO MUTUAL FUNDSMUTUAL FUNDS

A MUTUAL FUND is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a shareholder of the fund. Mutual funds are one of the best investments ever created because they are very cost efficient and very easy to invest in (you don't have to figure out which stocks or bonds to buy). If you would like to know the history of mutual funds, By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification. Diversification is the idea of spreading out your money across many different types of investments. When one investment is down another might be up. Choosing to diversify your investment holdings reduces your risk tremendously. The most basic level of diversification is to buy multiple stocks rather than just one stock. Mutual funds are set up to buy many stocks (even hundreds or thousands). Beyond that, you can diversify even more by purchasing different kinds of stocks, then adding bonds, then international, and so on. It could take you weeks to buy all these investments, but if you purchased a few mutual funds you could be done in a few hours because mutual funds automatically diversify in a predetermined category of investments (i.e. - growth companies, low-grade corporate bond )

A MUTUAL FUND is an investment company designed to pool the funds of smaller investors and place them under professional management. A mutual fund allows small investors to diversify their portfolios. When a mutual fund is formed, it issues a prospectus detailing its intended investment strategy, and it is not permitted to deviate from that strategy without public disclosure. A mutual fund prospectus also details the fees investors will be charged, which can be substantial. In the US, a mutual fund is regulated by the SEC. A mutual fund may invest in stocks, bonds, options, futures, currencies, and/or commodities. Although any specific mutual fund is required to follow a specific investing strategy, the range of strategies available is wide. A mutual fund such as an index fund may attempt to replicate market or sector index. A mutual fund may specialize in large-cap, small-cap or even microcap stocks. Investors seeking regular income can invest in a mutual fund that specializes in government bonds or, for the more aggressive, corporate debt.

STOCKS
Stocks represent shares of ownership in a public company. Examples of public companies include IBM, Microsoft, Ford, Coca-Cola, and General Motors etc. Stocks are the most common ownership investment traded on the market.

BONDS
Bonds are basically a chance for you to lend your money to the government or a company. You can receive interest and your principle back over predetermined amounts of time. Bonds are the most common lending investment traded on the market. There are many other types of investments other than stocks and bonds (including annuities, real estate, and precious metals), but the majority of mutual funds invest in stocks and/or bonds. A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the

capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund

In the working of mutual fund, there are following steps1. 2. 3. 4. 5. First of all, Asset Management Company issues new fund offer. Interested investors invest the money with fund manager. Then fund manager invests the money in different profitable securities. Then securities generate returns. These returns are passed back to investors.

Returns are given to investors according to the units given to them which is determined according to the investment made by them in the mutual funds.

ORGANIZATION OF MUTUAL FUNDFor organization of mutual fund there is a set criterion which has to be opted. There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:

SPONSORS
The sponsor establishes the mutual fund and gets it registered with SEBI. The mutual fund needs to be constituted in the form of a trust and the instrument of the trust should be in the form of a deed registered under the provisions of the Indian Registration Act, 1908. The sponsor is required to contribute at least 40% of the minimum net worth (Rs. 10 crore) of the asset management company. The board of trustees manages the MF and the sponsor executes the trust deeds in favor of the trustees. It is the job of the MF trustees to see that schemes floated and managed by the AMC appointed by the trustees are in accordance with the trust deed and SEBI guidelines.

ASSET MANAGEMENT COMPANY

The sponsor also appoints the asset management company (AMC) for the investment and administrative functions. The AMC does the research, the managers the corpus of the fund. It launches the various schemes of the fund, manages them, and then liquidates them at the end of their term. It also takes care of the other administrative work of the fund. It receives an annual management fee from the fund for its services.

BOARD OF TRUSTEES
The board of trustees is responsible for protecting the investors interests. Under the SEBI regulation 1996, trustee means a person who holds the property of the mutual fund in trust, for the benefit of the unit holders. The word trustee can be used to denote board of trustees. In case a trustee company governs the trust, it can be used to denote either the trustee company or its directors.

CUSTODIANS
The custodians are appointed by the sponsor to look after the transfer and storage of securities. Only a registered custodian under the SEBI Regulation can act as a custodian of a mutual fund. The functions of custodian a cover a wider range of services like safe keeping of securities bid settlement, corporate action, and transfer agent. In addition, they may be contracted to perform administrative functions like fund accounting, cash management and other similar functions

TYPES OF MUTUAL FUNDS SCHEMESWide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.

Equity / Growth Fund Invest primarily in equity and equity related instruments. Children's Gift Fund Children's Gift Fund

Liquid Funds Provide high level of liquidity by investing in money market and debt instruments. Debt/ Income Fund Invest in money market and debt instruments and provide optimum balance of yield, ...

Fixed Maturity Plan Invest primarily in Debt / Money Market Instruments and Government Securities...

Mutual Fund Schemes 1. By Structure

Open - Ended Schemes Close - Ended Schemes Interval Schemes

2. By Investment Objective Growth Schemes Income Schemes Balanced Schemes Money Market Schemes

3. Other Schemes
Tax Saving Schemes Special Schemes Index Schemes Sector specific schemes

CLOSED ENDED MUTUAL FUND

A closed-end mutual fund has a set number of shares issued to the public through an initial public offering. These funds have a stipulated maturity period generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. 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 they are listed. nice underwritten, closed-end funds

trade on stock exchanges like stocks or bonds. The market price of closed-end funds is determined by supply and demand and not by net-asset value (NAV), as is the case in openend funds. Usually closed mutual funds trade at discounts to their underlying asset value.

OPEN ENDED MUTUAL FUND

An open-end mutual fund is a fund that does not have a set number of shares. It continues to sell shares to investors and will buy back shares when investors wish to sell. Units are bought and sold at their current net asset value. Open-end funds keep some portion of their assets in short-term and money market securities to provide available funds for redemptions. A large portion of most open mutual funds is invested in highly liquid securities, which enables the fund to raise money by selling securities at prices very close to those used for valuations.

LARGE CAP FUNDS

Large cap funds are those mutual funds, which seek capital appreciation by investing primarily in stocks of large blue chip companies with above-average prospects for earnings growth. Different mutual funds have different criteria for classifying companies as large cap. Generally, companies with a market capitalization in excess of Rs. 1000 crore are known large cap companies. Investing in large caps is a lower risk-lower return proposition (vis--vis mid cap stocks), because such companies are usually widely researched and information is widely available.

MID CAP FUNDS

Mid cap funds are those mutual funds, which invest in small / medium sized companies. As there is no standard definition classifying companies as small or medium, each mutual fund has its own classification for small and medium sized companies. Generally, companies with a market capitalization of up to Rs.500 crores are classified as small. Those companies that

have a market capitalization between Rs. 500 crores and Rs. 1,000 crores are classified as medium sized. Big investors like mutual funds and Foreign Institutional Investors are increasingly investing in mid caps nowadays because the price of large caps has increased substantially. Small / mid sized companies tend to be under researched thus they present an opportunity to invest in a company that is yet to be identified by the market. Such companies offer higher growth potential going forward and therefore an opportunity But mid cap funds are very volatile and tend to fall like a pack of cards in bad times. So, caution should be exercised while investing in mid cap mutual funds.

EQUITY MUTUAL FUNDS

Equity mutual funds are also known as stock mutual funds. Equity mutual funds invest pooled amounts of money in the stocks of public companies. Stocks represent part ownership, or equity, in companies, and the aim of stock ownership is to see the value of the companies increase over time. Stocks are often categorized by their market capitalization (or caps), and can be classified in three basic sizes: small, medium, and large. Many mutual funds invest primarily in companies of one of these sizes and are thus classified as large-cap, mid-cap or small-cap funds. Equity fund managers employ different styles of stock picking when they make investment decisions for their portfolios. Some fund managers use a value approach to stocks, searching for stocks that are undervalued when compared to other, similar companies. Another approach to picking is to look primarily at growth, trying to find stocks that are growing faster than their competitors, or the market as a whole. Some managers buy both kinds of stocks, building a portfolio of both growth and value stocks.

BALANCED FUND
Balanced fund is also known as hybrid fund. It is a type of mutual fund that buys a combination of common stock, preferred stock, bonds, and short-term bonds, to provide both income and capital appreciation while avoiding excessive risk. Balanced funds provide investor with an option of single mutual fund that combines both growth and income objectives, by investing in both stocks (for growth) and bonds (for income). Such diversified holdings ensure that these funds will manage downturns in the stock market without too much of a loss. But on the flip side, balanced funds will usually increase less than an all-stock fund during a bull market

GROWTH FUNDS
Growth funds are those mutual funds that aim to achieve capital appreciation by investing in growth stocks. They focus on those companies, which are experiencing significant earnings or revenue growth, rather than companies that pay out dividends. Growth funds tend to look for the fastest-growing companies in the market. Growth managers are willing to take more risk and pay a premium for their stocks in an effort to build a portfolio of companies with above-average earnings momentum or price appreciation.In general, growth funds are more volatile than other types of funds, rising more than other funds in bull markets and falling more in bear markets. Only aggressive investors, or those with enough time to make up for short-term market losses, should buy these funds.

NO-LOAD MUTUAL FUNDS

Mutual funds can be classified into two types - Load mutual funds and No-Load mutual funds. Load funds are those funds that charge commission at the time of purchase or redemption. They can be further subdivided into (1) Front-end load funds and (2) Back-end load funds. Front-end load funds charge commission at the time of purchase and back-end load funds charge commission at the time of redemption.

On the other hand, no-load funds are those funds that can be purchased without commission. No load funds have several advantages over load funds. Firstly, funds with loads, on average, consistently under perform no-load funds when the load is taken into consideration in performance calculations. Secondly, loads understate the real commission charged because they reduce the total amount being invested. Finally, when a load fund is held over a long time period, the effect of the load, if paid up front, is not diminished because if the money paid for the load had invested, as in a no-load fund, it would have been compounding over the whole time period.

EXCHANGE TRADED FUNDS

Exchange Traded Funds (ETFs) represent a basket of securities that are traded on an exchange. An exchange traded fund is similar to an index fund in that it will primarily invest in the securities of companies that are included in a selected market index. An ETF will invest in either all of the securities or a representative sample of the securities included in the index. The investment objective of an ETF is to achieve the same return as a particular market index.

Exchange traded funds rely on an arbitrage mechanism to keep the prices at which they trade roughly in line with the net asset values of their underlying portfolios.

VALUE FUNDS
Value funds are those mutual funds that tend to focus on safety rather than growth, and often choose investments providing dividends as well as capital appreciation. They invest in companies that the market has overlooked, and stocks that have fallen out of favour with mainstream investors, either due to changing investor preferences, a poor quarterly earnings report, or hard times in a particular industry. Value stocks are often mature companies that have stopped growing and that use their earnings to pay dividends. Thus value funds produce current income (from the dividends) as

well as long-term growth (from capital appreciation once the stocks become popular again). They tend to have more conservative and less volatile returns than growth funds.

MONEY MARKET MUTUAL FUNDS

A money market fund is a mutual fund that invests solely in money market instruments. Money market instruments are forms of debt that mature in less than one year and are very liquid. Treasury bills make up the bulk of the money market instruments. Securities in the money market are relatively risk-free. Money market funds are generally the safest and most secure of mutual fund investments. The goal of a money-market fund is to preserve principal while yielding a modest return. Moneymarket mutual fund is akin to a high-yield bank account but is not entirely risk free. When investing in a money-market fund, attention should be paid to the interest rate that is being offered.

INTERNATIONAL MUTUAL FUNDS

International mutual funds are those funds that invest in non-domestic securities markets throughout the world. Investing in international markets provides greater portfolio diversification and let you capitalize on some of the world's best opportunities. If investments are chosen carefully, international mutual fund may be profitable when some markets are rising and others are declining. However, fund managers need to keep close watch on foreign currencies and world markets as profitable investments in a rising market can lose money if the foreign currency rises against the dollar

SECTOR MUTUAL FUNDS

Sector mutual funds are those mutual funds that restrict their investments to a particular segment or sector of the economy. These funds concentrate on one industry such as

infrastructure, heath care, utilities, pharmaceuticals etc. The idea is to allow investors to place bets on specific industries or sectors, which have strong growth potential. These funds tend to be more volatile than funds holding a diversified portfolio of securities in many industries. Such concentrated portfolios can produce tremendous gains or losses, depending on whether the chosen sector is in or out of favour.

INDEX FUNDS
An index fund is a type of mutual fund that builds its portfolio by buying stock in all the companies of a particular index and thereby reproducing the performance of an entire section of the market. The most popular index of stock index funds is the Standard & Poor's 500. An S&P 500 stock index fund owns 500 stocks-all the companies that are included in the index. Investing in an index fund is a form of passive investing. Passive investing has two big advantages over active investing. First, a passive stock market mutual fund is much cheaper to run than an active fund. Second, a majority of mutual funds fail to beat broad indexes such as the S&P.

FUND OF FUNDS
A fund of funds is a type of mutual fund that invests in other mutual funds. Just as a mutual fund invests in a number of different securities, a fund of funds holds shares of many different mutual funds. Fund of funds are designed to achieve greater diversification than traditional mutual funds. But on the flipside, expense fees on fund of funds are typically higher than those on regular funds because they include part of the expense fees charged by the underlying funds.

MUTUAL FUND INDUSTRY IN INDIA (A)HISTORY GLOBAL HISTORY- Introduced in Belgium in 1822. This form of investment soon
spread to Great Britain and France. Mutual funds became popular in the United States in the 1920s and continue to be popular since the 1930s, especially open-end mutual funds. Mutual funds experienced a period of tremendous growth after World War II, especially in the 1980s and 1990s.

HISTORY OF MUTUAL FUND INDUSTRY IN INDIAThe 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. UTI remained the only fund till the government allowed public sector banks to start mutual funds in 1987. Major PSU banks like SBI, Canara Bank, Indian Bank and Punjab National Bank started offering their products. Insurance giants LIC and GIC also started their own mutual fund subsidiaries. They were all reasonably successful as equity investments gained popularity during the bull market of the early nineties. In the past decade, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470 ban in March 1993 and till 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 con April 2004; it reached the height of 1,540 ban 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. Private sector players were allowed into the industry in 1993 after SEBI was established as the market regulator. A host of private banks and international fund houses started their operations and investors could chose from many innovative products. SEBI brought out comprehensive guidelines for establishment and management of mutual funds in 1996. In 2003, the Unit Trust of India, which was not under SEBI regulation, was split into two parts, UTI Mutual Fund (UTI MF) and a specified undertaking of UTI or UTI-I. UTI MF was brought under SEBI regulations while UTI-I was kept under direct government control since its schemes offered guaranteed returns. From just Rs.25 crore under management in 1965, the total funds managed by the mutual fund industry stood at over Rs.2,91,000 crore as of September 2006. The industry has matured very fast over the last few years with a large number of players and diverse product 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.

PHASES-FIRST PHASE 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

SECOND PHASE - 1987-1993 (ENTRY OF PUBLIC SECTOR FUNDS)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC 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 Private sector players were allowed into the industry in 1993 after SEBI was established as the market regulator. A host of private banks and international fund houses started their operations and investors could chose from many innovative products. SEBI brought out comprehensive guidelines for establishment and management of mutual funds in 1996. In 2003, the Unit Trust of India, which was not under SEBI regulation, was split into two parts, UTI Mutual Fund (UTI MF) and a specified undertaking of UTI or UTI-I. UTI MF was brought under SEBI regulations while UTI-I was kept under direct government control since its schemes offered guaranteed returns. From just Rs.25 crore under management in 1965, the total funds managed by the mutual fund industry stood at over Rs.2,91,000 crore as of September 2006.

(B) NO. OF AMCS IN INDIA

ABN Amro Asset Management co. Ltd. Benchmark Asset Management co. Ltd. Birla Asset Management co. Ltd BOB Asset Management co. Ltd Canbank Asset Management co. Ltd Chola Asset Management co. Ltd Deutsche Asset Management co. Ltd DSP Asset Management co. Ltd Escorts Asset Management co. Ltd Fidelity Asset Management co. Ltd Franklin Templeton Investments HDFC Asset Management co. Ltd HSBC Asset Management co. Ltd ING Vysya Asset Management co. Ltd JM Financial Asset Management co. Ltd Kotak Mahindra Asset Management co. Ltd LIC Asset Management co. Ltd Morgan Stanley Asset Management co. Ltd Principal Asset Management co. Ltd

Prudential ICICI Asset Management co. Ltd Reliance Asset Management co. Ltd Sahara Asset Management co. Ltd SBI Asset Management co. Ltd Standard Chartered Asset Management co. Ltd Sundaram Asset Management co. Ltd Tata Asset Management co. Ltd Taurus Asset Management co. Ltd UTI Asset Management co. Ltd

THE MAJOR MUTUAL FUND HOUSES IN INDIA ARE: HDFC MUTUAL FUND
HDFC Mutual Fund has been one of the best performing funds in recent years. The sponsors of the fund are housing finance major HDFC and British investment company Standard Life Investments. The paid up capital of the AMC is Rs. 25.161 crore. Standard Life is one of the better known investment companies in the UK. The company offers pension fund management, money market funds and private equity among other products. The Standard Life group has a history of over 175 years and has over $190 billion in assets under management globally. The trustee of the fund is HDFC Trustee Company Limited, a subsidiary of HDFC Limited. The chairman of the board of trustees is Anil Kumar Hirjee, vice chairman of Bombay Burmah Trading Corporation. Other members of the board include Keki Mistry of HDFC and James Aird of Standard Life.

The AMC, HDFC Asset Management Company Limited, is owned between HDFC and Standard Life with HDFC holding slightly more than 50 per cent of the shares. The board of directors has among its members Alexander Crombie of Standard Life, former head of Kodak India H Dhanrajgir, former head of BASF India P M Thampi, and Renu S Karnad of HDFC. The management of the AMC is headed by Milind Barve, managing director. In 2003, HDFC Asset Management Company took over the asset management business of Zurich India Mutual Fund. Subsequently, all the schemes of Zurich Mutual Fund in India had been transferred to HDFC Mutual Fund and renamed as HDFC schemes

PRUDENTIAL ICICI
Prudential ICICI is the largest private sector mutual fund in the country with assets of over Rs.43,281 crore under management as of February 2007. The sponsors of the fund are Prudential Plc, one of the largest insurance companies in Europe, and ICICI Bank, the second largest Indian bank. Prudential group has assets of over $300 billion under management globally. Apart from the main insurance operations, the group also owns fund management firm M&G and internet bank Egg. In all, 55 per cent of the asset management company, Prudential ICICI Asset Management Company, is held by Prudential Plc and the balance by ICICI Bank. There are reports that ICICI Bank is trying to acquire a 6 per cent stake in the AMC from Prudential and gain majority control.

FRANKLIN TEMPLETON
One of the largest and most high profile mutual funds in the country, Franklin Templeton has over Rs.22,102 crore under management as of February 2007. The sponsor of the fund is Templeton International.

Templeton is one of the largest mutual funds globally. Its parent company Franklin Resources and Subsidiaries have over $400 billion under management. The trustee of the fund is Franklin Templeton Trustee Services Private Limited. The board of directors of the trustee includes Gregory McGowan and Stephen Dover of Templeton and Bharat Doshi of the Mahindra group. Franklin Templeton Asset Management Private Limited acts as the fund manager. A majority of 75 per cent of the asset management company's equity is held by Templeton and the balance by the Raheja group. The board of directors of the company has Gregory Johnson, president of Franklin Templeton USA as its chairman. Deepak Satwalekar of HDFC and Rajan Raheja are the other prominent members. The fund management is headed by Mark Mobius, who is also a director of the AMC. Rated as one of the best fund managers in the world, Mark Mobius is probably the best known emerging markets fund manager.

DSP MERRILL LYNCH

One of the more prominent private mutual funds in the country, DSP Merrill Lynch has over Rs.13,638 crore under its management as of February 2007. The sponsor of the fund is DSP Merrill Lynch Limited, one of India's largest investment bankers. DSP Merrill Lynch is a joint venture between domestic stock brokerage DSP and Merrill Lynch. The US financial services major Merrill Lynch holds 40 per cent stake in the joint venture. Merrill Lynch is one of the largest investment banks in the world and ranks 53rd on the Fortune 500 list of largest American companies with revenues of over $32 billion. The company is one of the best known names on Wall Street and has assets of over $500 billion under its management worldwide. DSP Merrill Lynch Trustee Company Private Limited is the trustee of the fund and is owned between Merrill Lynch, DSP Merrill Lynch and Hemendra Kothari of DSP.

FIDELITY INDIA
A recent entrant into the Indian mutual fund industry, Fidelity launched its first domestic fund in April this year. However, Fidelity has been managing India specific funds for overseas investors for over 10 years now. Its exposure to Indian markets through such funds stands at over $2.5 billion at present, which makes Fidelity one of the largest FIIs investing in the country. Globally, Fidelity is the grand daddy of all mutual funds with assets of over $1.2 trillion under management. In the US alone it has over $850 billion under management and accounts for 3 to 5 per cent of the daily trading volumes on the New York stock exchange. Privately owned Fidelity is the best known brand in the fund management business and its flagship fund Magellan is probably the best known fund among American investors. The sponsor of the fund is Fidelity International Investment Advisors. The trustee is Fidelity Trustee Company Private limited and has Ann Stock of Fidelity Investments and former TRAI chairman Justice S S Sodhi on its board among others. The AMC of the fund is Fidelity Fund Management Private Limited. Simon Haslam of Fidelity International, former Castrol India CEO Ramesh Savoor and former CEO of Bank of America Arun Duggal are among the directors of the company. Fidelity International Investment Advisors holds 75 per cent stake in the AMC. Arun Mehra, who was earlier with Fidelity UK, heads fund management. As of February 2007, Fidelity India had over Rs.5,671 crore under its management.

TATA MUTUAL FUND

Promoted by the Tata group, Tata MF is one of the better known private sector funds in the country. The fund has over Rs.14,198 crore under its management as of February 2007. The sponsors of the fund are Tata Sons Limited and Tata Investment Corporation Limited. The trustee of the fund is Tata Trustee Company Private Limited. The board of trustees is headed by former HLL chief S M Data as chairman. J N Godrej of Godrej & Boyce and Ishaat Hussain of Tata Sons are also on the board of trustees. Tata Sons and Tata Investment Corporation hold equal stakes in the trustee company. The AMC, Tata Asset Management Limited, has F K Karavana of Tata Sons as its chairman. Other directors include A R Gandhi of Tata Sons and former executive director of IMF, S S Marathe. The management of the AMC is headed by Ved Prakash Chaturvedi, managing director. Tata Sons holds a majority stake in the AMC with the balance being held by Tata Investment Corporation. Fund management of equity schemes is headed by S Sankaranarayanan and that of debt funds by Murthy Nagarajan.

UTI MUTUAL FUND

The most experienced player in the Indian mutual fund industry, UTI was almost a generic term for mutual fund schemes till the sector opened up. However, the fund house disappointed most of its investors for a long period starting mid-nineties. From the verge of a collapse, the government bailed out the fund before restructuring it. After the restructuring, the fund has recovered some of its stature helped equally by professional management and a booming market.

The fund's sponsors are public sector financial giants like Life Insurance Corporation, SBI, Bank of Baroda and Punjab National Bank. The sponsors hold equal stakes in the asset management company, UTI Asset Management Company Private Limited. The asset management company has R H Patil, the former managing director of the National Stock Exchange, as its chairman. The current SEBI chairman M Damodaran was his predecessor. The fund management team is headed by A K Sridhar, chief investment officer. The company employs four different registrars for its various schemes. Associate company UTI Technology Consultants and Karvy Computershare act as registrars and transfer agents for majority of the schemes. Citibank, HDFC Bank and Stock Holding Corporation are the fund's cu stodians.

PERFORMANCE OF MUTUAL FUNDS IN INDIA

The year was 1963. Unit Trust of India invited investors or rather to those who believed in savings, F to park their money in UTI Mutual Fund or 30 years it goaled without a single second player. Though the 1988 year saw some new mutual fund companies, but UTI remained in a monopoly position. The performance of mutual funds in India in the initial phase was not even closer to satisfactory level. People rarely understood, and of course investing was out of question. But yes, some 24 million shareholders was accustomed with guaranteed high returns by the begining of liberalization of the industry in 1992. This good record of UTI became marketing tool for new entrants. The expectations of investors touched the sky in profitability factor. However, people were miles away from the praparedness of risks factor after the liberalization. The Assets Under Management of UTI was Rs. 67bn. by the end of 1987. Let me concentrate about the performance of mutual funds in India through figures. From Rs. 67bn. the Assets Under Management rose to Rs. 470 bn. in March 1993 and the figure had a three times higher performance by April 2004. It rose as high as Rs. 1,540bn. The net asset value (NAV) of mutual funds in India declined when stock prices started falling in the year 1992. Those days, the market regulations did not allow portfolio shifts into alternative investments. There were

rather no choice apart from holding the cash or to further continue investing in shares. One more thing to be noted, since only closed-end funds were floated in the market, the investors disinvested by selling at a loss in the secondary market. The performance of mutual funds in India suffered qualitatively. The 1992 stock market scandal, the losses by disinvestments and of course the lack of transparent rules in the where about rocked confidence among the investors. Partly owing to a relatively weak stock market performance, mutual funds have not yet recovered, with funds trading at an average discount of 1020 percent of their net asset value. The supervisory authority adopted a set of measures to create a transparent and competitve environment in mutual funds. Some of them were like relaxing investment restrictions into the market, introduction of open-ended funds, and paving the gateway for mutual funds to launch pension schemes. The measure was taken to make mutual funds the key instrument for longterm saving. The more the variety offered, the quantitative will be investors. At last to mention, as long as mutual fund companies are performing with lower risks and higher profitability within a short span of time, more and more people will be inclined to invest until and unless they are fully educated with the dos and donts of mutual funds. The year 1993 was a remarkable turning point in the Indian Mutual Fund industry. The stock investment scenario till then was restricted to UTI (Unit Trust of India) and public sector. This year marked the entry of private sector mutual funds, giving the Indian investors a wider choice of selecting mutual funds. From then on, the graph of mutual fund players has been on the rise with many foreign mutual funds also setting up funds in India. The industry has also witnessed several mergers and acquisitions proving it advantageous to the Indian investors. Are mutual funds emerging as preferred investment option? Are they safe and will your money be secured with them? Before proceeding to answer these questions, a look at the February 2006, Indian bull market scenario is worth a mention For the first time ever, stock market indices in India are at a record high. The Bombay Stock Exchange closed above the 10,000-mark for the first time ever, an ecstatic event in the history of the Stock exchange. Market savvy Indian investors have been busy transacting across sectors such as banking automobile, sugar, consumer durable, fast moving consumer goods

(FMCG) and pharmaceutical scripts. And, the Union Finance Minister, Mr.P.Chidambaram, has responded positively and advised investors to take informed decisions or invest through mutual funds. Mutual funds are not considered any more as obscure investment opportunities. The mutual funds assets have registered an annual growth rate of 9% over the past 5 years. Considering the current trend and the relative positive response of the Indian economy, a much bigger jump is on the anvil. With the Sensex on a scorching bull rally, many investors prefer to trade on stocks themselves. Mutual funds are more balanced since they diversify over a large number of stocks and sectors. In the rally of 2000, it was noticed that mutual funds did better than the stocks mainly due to prudent fund management based on the virtues of diversification Different Indian mutual funds allow investors various solutions ranging from retirement planning and buying a house to planning for child's education or marriage. Tax-wise stocks and mutual funds work similarly since long-term capital gains from both stocks and equityoriented mutual funds are tax-free. Well, what are the charges, fees and expenses associated with investing in Indian mutual funds? At the time of entry into a mutual fund, you have to pay an additional charge or entry load along with the value of units purchased When you exit from the scheme, you will get back the value of the units less the exit load charges. If you want to switch from one type of mutual fund investment to another, you will be required to pay the exchange fees. Advisory fees, broker fees, audit fees and registrar fees are some of the other recurring expenditures that would be charged to you. These expenses involve administrative and other running costs. In India, SEBI (The Securities and Exchange Board of India) is the regulating authority that SEBI formulates policies and regulates the mutual funds to protect the interest of the Indian investors.

ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organization. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August, 1995. AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders.

THE OBJECTIVES OF ASSOCIATION OF MUTUAL FUNDS IN INDIA

The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has certain defined objectives which juxtaposes the guidelines of its Board of Directors. The objectives are as follows: This mutual fund association of India maintains a high professional and ethical standards in all areas of operation of the industry. It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset

management. The agencies who are by any means connected or involved in the field of capital markets and financial services also involved in this code of conduct of the association. AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry. Association of Mutual Fund of India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry. It develops a team of well qualified and trained Agent distributors. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry. AMFI undertakes all India awarness programme for investors inorder to promote proper understanding of the concept and working of mutual funds. At last but not the least association of mutual fund of India also disseminate informations on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.

THE SPONSORERS OF ASSOCIATION OF MUTUAL FUNDS IN INDIA BANK SPONSORED

1.SBI Fund Management Ltd. 2.BOB Asset Management Co. Ltd. 3.Canbank Investment Management Services Ltd. 4.UTI Asset Management Company Pvt. Ltd 5.Institutions

6.GIC Asset Management Co. Ltd. 7.Jeevan Bima Sahayog Asset Management Co. Ltd.

PRIVATE SECTOR INDIAN:(a) BenchMark Asset Management Co. Pvt. Ltd. (b) Cholamandalam Asset Management Co. Ltd. Credit Capital Asset Management Co. Ltd. (d) Escorts Asset Management Ltd. (e) JM Financial Mutual Fund (f) Kotak Mahindra Asset Management Co. Ltd. (g) Reliance Capital Asset Management Ltd. (h) Sahara Asset Management Co. Pvt. Ltd (i)_Sundaram Asset Management Company Ltd. (j)Tata Asset Management Private Ltd.

PREDOMINANTLY INDIA JOINT VENTURES:1.Birla Sun Life Asset Management Co. Ltd. 2.DSP Merrill Lynch Fund Managers Limited 3.HDFC Asset Management Company Ltd.

PREDOMINANTLY FOREIGN JOINT VENTURES:1.ABN AMRO Asset Management (I) Ltd. 2.Alliance Capital Asset Management (India) Pvt. Ltd. 3.Deutsche Asset Management (India) Pvt. Ltd. 4.Fidelity Fund Management Private Limited 5.Franklin Templeton Asset Mgmt. (India) Pvt. Ltd. 6.HSBC Asset Management (India) Private Ltd. 7.ING Investment Management (India) Pvt. Ltd. 8.Morgan Stanley Investment Management Pvt. Ltd. 9.Principal Asset Management Co. Pvt. Ltd. 10.Prudential ICICI Asset Management Co. Ltd. 11.Standard Chartered Asset Mgmt Co. Pvt. Ltd.

ASSOCIATION PUBLICATIONS

OF

MUTUAL

FUNDS

IN

INDIA

AMFI publices mainly two types of bulletin. One is on the monthly basis and the other is

quarterly. These publications are of great support for the investors to get intimation of the knowhow of their parked money.

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.

UNIVERSAL BENEFITS AFFORDABILITY

A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon the investment objective of the scheme. An investor can buy in to a portfolio of equities, which would otherwise be extremely expensive. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs.500/-. This amount today would get you less than quarter of an Infosys share! Thus it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directly in the stock market.

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 your principal investment as well as help you meet your return objectives

VARIETY
Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways: first, it offers different types of schemes to investors with different needs and risk appetites; secondly, it offers an opportunity to an investor to invest sums across a variety of schemes, both debt and equity. For example, an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt scheme) depending on his risk appetite and thus create a balanced portfolio easily or simply just buy a Balanced Scheme.

PROFESSIONAL MANAGEMENT

Qualified investment professionals who seek to maximise returns and minimise risk monitor investor's money. When you buy in to a mutual fund, you are handing your money to an investment professional who has experience in making investment decisions. It is the Fund Manager's job to (a) find the best securities for the fund, given the fund's stated investment objectives; and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio, as and when required.

TAX BENEFITS-

Any income distributed after March 31,2002 will be subject to tax

in the assessment of all Unit holders. However, as a measure of concession to Unit holders of open-ended equity-oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a concessional rate of 10.5%. In case of Individuals and Hindu Undivided Families a deduction upto Rs. 9,000 from the Total Income will be admissible in respect of income from investments specified in Section 80L, including income from Units of the Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-Tax.

REGULATIONS
Securities Exchange Board of India (SEBI), the mutual funds regulator has clearly defined rules, which govern mutual funds. These rules relate to the formation, administration and management of mutual funds and also prescribe disclosure and accounting requirements. Such a high level of regulation seeks to protect the interest of investors.

BENEFITS OF OPEN-ENDED SCHEMES LIQUIDITY

In open-ended mutual funds, you can redeem all or part of your units any time you wish. Some schemes do have a lock-in period where an investor cannot return the units until the completion of such a lock-in period.

CONVENIENCE-

An investor can purchase or sell fund units directly from a fund,

through a broker or a financial planner. The investor may opt for a Systematic Investment

Plan (SIP) or a Systematic Withdrawal Advantage Plan (SWAP). In addition to this an investor receives account statements and portfolios of the schemes.

FLEXIBILITY -

Mutual Funds offering multiple schemes allow investors to switch

easily between various schemes. This flexibility gives the investor a convenient way to change the mix of his portfolio over time

TRANSPARENCY
Open-ended mutual funds disclose their Net Asset Value (NAV) daily and the entire portfolio monthly. This level of transparency, where the investor himself sees the underlying assets bought with his money, is unmatched by any other financial instrument. Thus the investor is in the know of the quality of the portfolio and can invest further or redeem depending on the kind of the portfolio that has been constructed by the investment manager.

DRAWBACKS OF MUTUAL FUNDS

Mutual funds have their drawbacks and may not be for everyone:

NO GUARANTEES:
No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.

FEES AND COMMISSIONS:

All funds charge administrative fees to cover their day-to-day expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund.

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.

FUTURE OF MUTUAL FUNDS IN INDIA

December 2008, Indian mutual fund industry reached Rs 2,50,537 crore. It is estimated that by 2010 March-end, the total assets of all scheduled commercial Banks should be Rs 40,90,000 crore. The annual composite rate of growth is expected 13.4% during the rest of the decade. In the last 5 Years we have seen annual growth rate of 9%. According to the current growth rate, by year 2010, mutual fund assets will be double. Number of foreign AMC's are in the queue to enter the Indian markets like Fidelity Investments, US based, with over US$1trillion assets under management worldwide. our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual funds sector is required. we have approximately 29 mutual funds which is much less than US having more than 800. There is a big scope for expansion and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'Cclass cities. Soon they will find scope in the growing cities.

Mutual fund can penetrate rural like the Indian insurance industry with simple and limited product. SEBI allowing the MF's to launch commodity mutual fundse,emphasis on better corporate governance trying to curb the late trading practices. Introduction of Financial Planners who can provide need based advice.

CHAPTER-2 OBJECTIVE OF THE STUDY

This project has been made to study about mutual funds, so the purpose of study includes following objectives1. To understand the concept and working of mutual funds. 2. To compare and analyze the performance of selected mutual fund schemes on the basis of risk and past returns. 3. To know the investment pattern of investor in mutual funds. The schemes names are Hdfc Equity Fund- Growth Fidelity Equity Fund- Growth Reliance Vision Fund- Growth Franklin India Blue Chip Fund- Growth

The ratios used for comparison on the basis of risk are Beta ratio Sharpe ratio Treynor ratio

Alpha ratio

CHAPTER-3 RESEARCH METHODOLOGY ResearchResearch comprises defining and redefining problems ,formulating

hypothesis or suggested solutions, collecting, organizing and evaluating data; making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis.

-clifford woody
Research methodology has many dimensions. It includes not only research methods but also consists the logic behind the methods used in the context of the study and explains why only a particular method of technique had been used so that search lend themselves to proper evaluation. Thus in a way it is a written game plan for concluding research. Therefore in order to solve our research problem, it is necessary to design a research methodology for the problem as the same may differ from problem to problem.

RESEARCH DESIGN-

Research design is the conceptual structure within which

the research is conducted. Its function is to provide for the collection of relevant evidence with minimum expenditure of effort, time and money. But how this can be achieved depends on the research purpose, Research design is of mainly three types-

1. Exploratory research 2. Descriptive research 3. Experimental research

Exploratory Research- It focuses on the discovery of ideas and is generally based on

primary data. It is preliminary investigation which does not have a rigid design. This is because a researcher engaged in exploratory study may have to focus as a result of new ideas and relationship among the variables.

Descriptive Research-

This kind of research is concerned with describing the

characteristics of a particular individual or of a group. In this kind of research primary and secondary both type of data is used. As my project is comparative analysis of performance of mutual fund schemes on the basis of past data about NAVS and PAST RETURNS. I have collected data from secondary sources. So my research study is based on Descriptive Research Design.

Experimental research-

This is also called hypothesis-testing research. In it the

researcher tests the hypothesis of causal relationship between variables.

Data collection- The objectives of the project are such that secondary data is required to
achieve them. So secondary data was used for the project. The mode of collecting secondary data are magazines, books, newspapers, and websites companys brochures. So my project contains the Descriptive Research Design. So data is taken from secondary sources.

Methodology for Customer Survey

Target Population:

All customers of HDFC Bank.

Survey Frame: I chose HDFC Banks to conduct my survey. Sampling Element:

Individuals.

Sample Size: 250 customers. Sample Area: Sector-46 and Sector- 35 Chandigarh and Sohana (Mohali). Type of data used: Primary data. Tools Used: Questionnaire Gender: Males and Females Age: 25 years to 70 years.

CHAPTER-4 CUSTOMERS ANALYSIS AND INTERPRETATION

1. Do you make investment? This question was asked to know how much percentage of people makes investments in financial products.

This figure represents that 89% of 250 i.e. 223 people make investments in financial products such as bank, equity, mutual funds, etc. 2. What kind of investment do you make? This question is asked to find out the investment patterns of people in financial products.

Investment Avenues Bank Govt. Securities/Debts Insurance Mutual Fund Equity Real Estate

No. of Respondents (Out of 223) 45 35 59 81 46 24

Percentage (%) 18 14 23.6 32.4 18.4 10.81

depicts that 18% of the respondents save their money in saving accounts, 14% invest in Govt. Securities/Debts like FDs, Post Savings etc., 23.6% of the respondents buy insurance for their safety, 32.4% invest in Mfs, 18.4% in Equities and only 10.81% people invest in Real Estate.

3. From last how many years are you doing investment?

The table depicts that 13% people are investing from less than 2 years and 29% people are investing from last 3-5 years, and majority of the people i.e. 35% of the people are investing since last 5-10 years and remaining 23% of people are investing from last more than 10 years.

4. What is your main investment objective? This question is to find out the criteria of respondents behind investment.

From the figure it can be see that out of sample size of 223 people, 52% of the respondents have returns as their main investment consideration because everybody wants good income on their saved income, 34% respondents save their money for the purpose of tax saving so that they can pay less tax to the government and only 9% look safety perspective. Majority of the people main consideration of investment is returns, they want higher returns on their investment. 5. Time Horizon of investments: This question is to find out whether people think for short term or for long term.

The above figure shows that 62% of the respondents think for long term i.e. above 5 years, 18% respondents invest for middle term i.e. 1-5 years and only 20% respondents save their money for short term i.e. up to 1 year. 6. How much return are you getting? Less than 10%-20% 20%-30% More than 10% 30% ======== ======== ======= ======= ======= ======= ========

(a) Bank (b) Government Securities/Debts (c) Insurance (d) Mutual funds (e) Equity (f) Real Estate

The above pie diagram shows that 17% respondents are getting returns less than 10% due to saving accounts, 44% of the respondents between 10%-20% per annum due to their insurance policies,24% respondents who invested in equities or in mutual funds get between 20%-30% returns and only 15% respondents get very good returns that is more than 30%. The people invested in Equity, Mutual Funds and Real Estates get good returns due to the boom in these sectors. 7. How much risk are you ready to assume in following? This question was asked to find out the risk appetite of people. (a) Bank (b) Government securities/Debts (c) Insurance (d) Mutual funds (d) Equity (e) Real Estate

The above diagram shows that 11% respondents dont want to take risk at all, 39% respondents are ready to take moderate returns, 34% invest their money at low risk and only 11% respondents have high risk appetite to get high returns. 8. Have you ever invested in HDFC Mutual Funds?

The above diagram depicts that 148 people out of 180 i.e. 82% people who does investment in mutual funds are known to the HDFC Mutual Funds and they have been investing in this company and only 18% i.e. 32 out of 180 people have never invested in HDFC Mutual Funds. 9. In which plan of HDFC Mutual Funds, are you doing investment? (a)Equity (i) Mid-cap (ii) Tax-saver (iii) Small-cap (iv) Any other (1) Top 200 (b) Debt

(c) Liquid Funds

In the above diagram, maximum people i.e. 70 out of 148 people (47%) wants more returns in a short period or they prioritize returns as their main investment consideration, Next main consideration for people for investment is to save tax, 58 people out of 148 i.e. 39% of people wants to save tax or wants to get tax rebate from govt. Only 4 people or just 3% people invest in small-cap and 11% people invest in other plans other than tax-saver or mid-cap like Top 200 which is a large-cap, less risky and good for longer period. 10. In HDFC Mutual Funds, in which plan have you opted?

Looking at the above diagram, we can find out that majority of the people go for SIP (Systematic Investment Plan) and these people do not want to take risk and mostly are middle-class people. Rest 46% of the remaining people opt the lump sum payment plan as they want more returns on their investment.

11. Why have you choose SIP for doing investment?

In the above diagram, we find that majority of the people (56% i.e. 45 out of 80 people) go for the option of monthly saving, 31% people i.e. 25 of them wants to reduce the risk of fluctuating market and rest 13% wants to do SIP for long term purpose. 12. Why have you opted lump sum for doing investment?

In the above diagram it is shown the preference of the people regarding investment in lump sum plan and it is found that majority of the people (60% i.e. 41 out of 68 people) invest for the purpose of getting higher returns, they give first preference of investing in lump sum plan to getting higher returns and they give preference to the fluctuating market or arbitrage i.e. buying in lower market and selling in higher market (30% i.e. 20 people) and lastly they want to invest for short period (only7 out of 68 people). As they earn profit or get returns maximum returns they sell the fund.

13. Are you doing investment in any other company mutual funds? 1. 2. 3. 4. 5. 6. Reliance Tata Kotak Mahindra Sundaram BNP SBI Fidelity

14. In which plan are you doing investment?

According to the diagram, maximum people (108 out of 180 people) want to do taxsaving. They want to get tax rebate under Section 80 C up to Rs. One lakh and wants to get dividend tax-free so they invest in tax-saver plan. Rest 40% i.e. 72 out of 180 people invest in Mid-cap as these days Mid-cap is a good option to invest. 15. Is HDFC products better than any other companys products? If Yes how and which product? Top 200 1. More returns 2. Award-winning product 3. Declared maximum dividend i.e. 85% in last financial year 4. Best Diversified Scheme 5. 5 star plan, given by value research team TAX-SAVER 1. Given 50%-60% dividend consequently in past 4 years. 2. Investing in blue chip companies 3. More returns 4. Prioritize in banking sector 5. 4 star plan, given by value research team.

GROWTH FUND 1. Invest in top 30 companies 2. Award-winning product 3. Declared maximum dividend i.e. 85% in last financial year 16. What you expect from the HDFC Mutual funds? (a) Good returns (b) Monthly statements (c) High dividend (d) Safety (e) Tax-rebate (f) Liquidity (g) Security DEMOGRAPHICS Age (in years) : - Age was divided into five categories i.e. o o o o o 20-25 25-30 30-35 35-40 Above 40

Figure: Age Group Out of total sample of 250 people, 10 are in the category of 20-25, 36 falls in the category of 25-30, 65 people are in the age group of 30-35 years, 86 falls in the category of 35-40 and rest 53 are above 40 years of age.

 Occupation : o Business o Service

In the sample, the occupation of people shows that 47% i.e. 118 are from Business class and 53% i.e. 132 people are salaried people. Income : o o o o Less than Rs.100000 Between Rs.100000- Rs.250000 Between Rs.250000- Rs.500000 Above Rs.500000

48% respondents are having an annual income between Rs. 2.5 Lacs and Rs. 5 Lacs, 35% respondents are having an annual income between Rs. 1 Lac and Rs. 2.5 Lacs, 10% respondents are earning above Rs. 5 Lacs and only 7% are in the category of below 1 Lac.

Observations Some people consider stock trading as a type of gambling and some do trading as a hobby. People dont have enough knowledge about trading and they are scared off from stock market. People who had lost their money in Harshad Mehtas scam do not want to invest again in equity. People, who are into the Real Estate business, are not interested in equity at all because they think that investment in Real Estate is much safer and giver good returns than investment in stock market.

COMPARATIVE ANALYSIS
The project contains the study of comparative analysis of performance of selected mutual fund schemes in India. Project includes the equity diversified schemes of 4 AMCS. These four schemes are1 .HDFC Equity Fund 2. Fidelity Equity Fund 3. Reliance Vision Fund 4. Franklin India Blue Chip Fund For doing comparison we have taken past years returns and reached the result regarding the performance of the funds.

ON THE BASIS OF PAST YEARS RETURNS OF FUNDS

Details of terms used in the following table-

NAV-

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. Formula of calculating NAV- Market value of total assets of funds Total no. of units issued to investors.

Compounded Annual Growth Rate (CAGR)-

Refers to the

year over year growth rate of an investment over a specific period of time. Calculated by taking the nth root of the total percentage growth rate where n is the number of years in the period being considered. Formula for CAGR = (1+r/100)n Here in the table, NAV means Net Asset Value and CAGR means Compounded Annual Growth Rate.

Table of compounded annual growth rate

Scheme name

NAV

Incepti

CAGR

CAGR

CAGR 5year s
50.98

CAGR r
37.15

CAGR 2008
25.76

on date 1 year 3year

1Jan1995 47.82 51.38

10Yea July

HDFC Equity 168.74 Fund Reliance Vision Fund Franklin IndiaBlue Chip Fund Fidelity Equity Fund
24.67 215.51

10Aug1995

56.88

53.04

54.57

32.68

29.7

147.75

12Jan1993

46.24

44.59

47.19

35.85

28.75

19April 2005

60..39

NA

NA

NA

50.77

1. In the past one year, Fidelity Equity Fund has given highest returns. 2. In the past three years, Reliance Vision Fund has given highest returns. 3. In the past five years also, Reliance Vision Fund has given highest returns. 4. In the past 10 years, HDFC Equity Fund has performed well. 5. Since inception, fidelity equity fund has highest Compounded annual growth returns. So Fidelity Equity Fund and Reliance Vision Fund are performing well in the market and growing at a rapid pace.

ON THE BASIS OF RISK FACTOR INVOLVED IN THEMRisk and Return go hand n hand n investments and finance. One cant talk about returns without talking about risk, because investment decisions always involve a trade off between risk and return. Risk can be defined as the chance that the actual outcome from an investment

will differ from the expected income this means that the more variable the possible outcomes that can occur, the greater the risk. For determining the risk-return relationship of the funds following four technical ratios have been used which depict which fund has performed well in the market despite the risk factor involved in them: Ratios1.Beta ratio 2.Sharpe ratio 3.Treynor ratio 4 Alpha ratio

Formulas used1. Beta ratioFormula of BETA = COVARIANCE(X,Y) VARIANCE OF Y Where X = Annualized Return of Fund Y = Annualized Return of Market Index

2. Sharpe ratioSharpe ratio- Mean of the fund- Assured return (risk free return) Standard deviation (Risk= variability of returns=standard deviation)

3. Treynor ratioTreynor ratio- Mean of the fund- Assured return (risk free return) Beta of portfolio

4. Alpha ratio-

Alpha ratio Mean of fund (Beta * Mean of benchmark index)

Beta ratioA measure of the volatility or systematic risk, of a security or a portfolio in comparison to the market as a whole. Also known as "beta coefficient". Beta is calculated using regression analysis, and you can think of beta as the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the market. Many utilities stocks have a beta of less than 1. Conversely, most high-tech Nasdaq-based stocks have a beta of greater than 1, offering the possibility of a higher rate of return, but also posing more risk.

Sharpe ratioThe Sharpe Ratio is a measure of the risk-adjusted return of an investment. It was derived by Prof. William Sharpe, now at of Stanford University who was one of three economists who received the Nobel Prize in Economics in 1990 for their contributions to what is now called "Modern Portfolio Theory. He introduced a measure for the performance of mutual funds And proposed the term reward-to-variability ratio to describe it The calculation is pretty straightforward. You invest money in some investment. You then calculate the value of your investment account (including the initial investment plus the profit/loss) periodically, say for example, every month. You then calculate the percentage return in each month. It doesn't matter what kind of investment. It could be simply buying and holding a single stock, or trading several different commodities with several different trading systems. All that matters is the account value at the end of each month.

Then calculate the average monthly return over some number of months, say for example, 24 months, by averaging the returns for the 24 months. You also calculate the standard deviation of the monthly returns over the same period.

Then annualize the numbers by:

Multiplying the average monthly return by 12 Multiplying the standard deviation of the monthly returns by the square root of 12. You also need a number for the "risk-free return" which is the annualized return currently available on "risk-free" investments. This is usually assumed to be the return on a 90-day TBill which is now about 5% per year. You now calculate the "Excess return" which is the annualized return achieved by your investment in excess of the risk-free rate of return available. This is the extra return you receive by assuming some risk. (Risk is measured by the standard deviation of the returns, which is actually the "variability" of the returns.) Excess_return = Annualized_annual_return - Risk_free_return Then you calculate the Sharpe Ratio as follows: Sharpe = Excess_return / Annualized_standard_deviation_of_returns which gives you the Sharpe Ratio of the past returns over the past 24 months. This is pretty straightforward when you invest in stocks or mutual funds not using margin. If you use margin or invest in futures contracts, it is a little more complicated. An example below will illustrate this.

Mutual Funds

If the investment was in buying and holding a mutual fund, you will get a number between about 0.5 and 3. They say that a Sharpe Ratio of over 1.0 is "pretty good". Outstanding funds achieve something over 2.0.

Trading Systems
If you are "investing" in a system for trading, you still measure the value of your account with the profit/loss resulting from the trades. You are, in effect sampling the value of the equity curve (plus the initial investment as defined above). An example will clarify this. As above, a Sharpe Ratio of a system of over 2.0 is considered very good. Sharpe Ratios above 3.0 are outstanding. (The Sharpe Ratio reported by services such as Future Truth are calculated in some other way and get other numbers.)

Treynor ratioA ratio developed by Jack Treynor that measures returns earned in excess of that which could have been earned on a risk less investment per each unit of market risk. The Treynor ratio is calculated as: (Average Return of the Portfolio - Average Return of the Risk-Free Rate) / Beta of the Portfolio. In other words, the Treynor ratio is a risk-adjusted measure of return based on systematic risk. It is similar to the Sharpe ratio, with the difference being that the Treynor ratio uses beta as the measurement of volatility. Also known as the "reward-to-volatility ratio".

Alpha ratio1. A measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a mutual fund and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund's alpha.

2. The abnormal rate of return on a security or portfolio in excess of what would be predicted by an equilibrium model like the capital asset pricing model (CAPM). 1. Alpha is one of five technical risk ratios; the others are beta, standard deviation, R-squared, and the Sharpe ratio. These are all statistical measurements used in modern portfolio theory (MPT). All of these indicators are intended to help investors determine the risk-reward profile of a mutual fund. Simply stated, alpha is often considered to represent the value that a portfolio manager adds to or subtracts from a fund's return. A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%. 2. If a CAPM analysis estimates that a portfolio should earn 10% based on the risk of the portfolio but the portfolio actually earns 15%, the portfolio's alpha would be 5%. This 5% is the excess return over what was predicted in the CAPM model.

Schemes are1. HDFC Equity Fund- Growth Fact sheet Objective

Aims at providing capital appreciation through investments predominantly in equity oriented securities

Scheme Performance (%) as on Jul 16 , 2008

14 days 3.04 1 month 7.36 3 months 15.11 1 year 49.14 3 yrs 53.37 * Inception* 25.29

Top 10 Holdings as on Jun 30, 2008

Portfolio Top 10 Holdings (as on june 30, 2008) Company Equity & Equity Related Reliance Industries Ltd. ITC Ltd. State Bank of India Divi?s Laboratories Ltd. ICICI Bank Ltd. Bharti Airtel Ltd. Petroleum Products Consumer Durables Banks Pharmaceuticals Banks Telecom Services 7.93 Non6.54 5.23 4.84 4.08 4.04 3.89 Capital3.66 3.12 2.97 46.30 86.18 13.82 100.00 97580.44 Industry % to NAV

Housing Development Finance Corporation Ltd.$ Finance Bharat Heavy Electricals Ltd. Biocon Ltd. Sun Pharmaceutical Industries Ltd. Total of Top Ten Equity Holdings Total Equity Related Holdings Other Current Assets (Including Reverse Repos' / CBLO) Grand Total Net Assets (Rs. In Lakhs) Industrial Goods

Pharmaceuticals Pharmaceuticals

Portfolio Holdings

Returns
HDFC Growth (NAV as at evaluation date,62.813 Fund Rs. Per unit) Date Period NAV 45.461 Returns(%) $$ ^ 31.83** -16.13* 19.85** 35.31** 45.59** N.A. 26.87** 13.87** 35.02** 38.8** 16.09** 17.6** Benchmark Returns(%)# 21.49** -15.22*

March 30, 2008 Last 427 days November 2007

30, Last Six months (18274.895 days) Last 1 Year (36652.3840 days) Last 3 Years (109625.332 days) Last 5 Years (18279.583 days) Last 10 Years (3654N.A days)

May 30, 2007 May 30, 2005 May 30, 2003 May 29, 1998 September 2000

11, Since Inception (281810.000 days)

* Absolute Returns ** Compounded Annualised ~ Due to an over all sharp rise in ^ Past performance may or may not be sustained in the future

Returns # SENSEX the stock prices

Portfolio As On Jun 30, 2008

Fund Size as on Jun 30, 2008 - Fund Size ( Rs. in crores) 4516.6 Asset Allocation as on Jun 30, 2008 Equity Debt Other 98.09% 0.66% 1.25% portfolio diversification

equity debt others

Equity

Company Name Crompton Greaves Ltd Larsen & Toubro Limited Amtek Auto Ltd Reliance

Instrument

No. of Shares

Market Value % (Rs. in crores)

of

Net

Assets 5.33 5.23 4.52 4.33 4.23 4.09

Equity Equity Equity

9500000 1074811 5000000 1150000 7416975 1199800

240.73 236.2435 204.175 195.5633 190.8388 184.5112

Equity Industries Ltd Punj Lloyd Ltd Equity Bharat Heavy Equity

Electricals Ltd Infosys Technologies Ltd State Bank of

Equity

843479 1032490 1244984 250972 1740000 1344068 5000000 1474200

162.7113 157.5373 148.3336 146.8312 145.4553 137.8342 135.125 133.4962

3.6 3.49 3.28 3.25 3.22 3.05 2.99 2.96

Equity India CMC Ltd Equity Divis Laboratories Equity Limited Bharti Airtel Ltd Equity Sun Pharmaceuticals Equity Industries Ltd Bank of Baroda Equity Oil & Natural Gas Equity Corpn Ltd United Phosphorus Equity Limited (New) Siemens Ltd Equity Zee Entertainment Equity Enterprises Ltd Hindustan Petroleum Corporation Ltd HT Media Equity

4251092 915000 4000000

132.379 127.5647 118.92

2.93 2.82 2.63

4375741

118.4294

2.62

Equity Limited. Nestle India Ltd Equity Tata Consultancy Equity Services Ltd. Bharat Electronics Equity Ltd AIA Engineering Equity Limited. Wipro Ltd Equity Glaxo Smithkline Equity Consumer Ltd

4594629 927625 900000 563021 582177 1600000 1287176

108.7089 107.5999 103.4415 103.0948 102.3962 82.952 74.3666

2.41 2.38 2.29 2.28 2.27 1.84 1.65

Dishman Pharmaceuticals & Chemicals Biocon Ltd. ISMT Ltd. Himatsingka Seide Ltd Balkrishna Industries Ltd Reliance Petroleum Ltd Exide Industries Ltd ICICI LTD. Britannia Industries Ltd Infotech Enterprises Limited Jagran Prakashan Ltd Television Eighteen Ltd HDFC BANK Equity Equity Equity Equity Equity Equity Equity Equity Equity 2331574 1595271 7430000 4950245 945640 5000000 10140000 483895 280878 71.2529 70.2557 68.2074 57.7199 57.6651 55.55 48.9762 46.2337 44.2509 1.58 1.56 1.51 1.28 1.28 1.23 1.08 1.02 0.98

Equity

851531

33.8271

0.75

Equity

662436

31.7439

0.7

India Equity Mutual

335000

30.1869

0.67

Fund Pidilite Industries Ltd J K Industries Ltd TV Today Network Ltd ASC Enterprises Ltd Indo

MF Equity Equity Equity Equity Equity

18818452 2397672 2195326 2000000 2500000 4638229

30.0105 29.3115 29.2747 28.77 26.675 22.7273

0.66 0.65 0.65 0.64 0.59 0.5

Rama Equity

Synthetics (India)

Ltd Sun

Pharma 1344068 21.8223 0.48

Advance Research Equity Co Ltd Savita Chemicals

Equity Ltd Shoppers Stop Ltd Equity Motherson Sumi Equity Systems Ltd

812563 342642 1286511

21.0738 20.0206 15.6247

0.47 0.44 0.35

OTHERS

Name Clearing Corporation of India Ltd. Current Assets

Instrument Money Market Current Assets

Market Value (Rs. in crores) 82.7898 -26.6088

% of Net Assets 1.83 -0.59

Table for calculating ratiosHDFC Equity Fund (Growth Option)

DATE 1/5/2006 1/6/2006 1/7/2006 1/8/2006 1/9/200 1/10/2006 1/11/2006 1/12/2006 purchase NAV of fund 65.484 71.78 74.338 80.94 85.992 94.324 89.329 100.945 DATE 1/5/2007 1/6/2007 1/7/2007 1/8/2007 1/9/2007 1/10/2007 1/11/2007 1/12/2007 Redemption NAV 134.053 112.327 114.59 115.648 128.063 132.634 140.191 147.937 ANNUALISED RETURN 104.7110745 56.48787963 54.14727327 42.88114653 48.92431854 40.6153259 56.93783654 46.55208282

1/1/2007 1/2/2007 1/3/2007 1/4/2007

107.188 112.483 119.495 130.819

1/1/2008 1/2/2008 1/3/2008 1/4/2008

147.286 152.415 143.676 136.747 Mean SD Variance Covariance

37.40903833 35.50047563 20.23599314 4.531451853 45.744 23.017 529.772 412.914

BENCHMARK- S&P CNX-500

DATE 1/5/2006 1/6/2006 1/7/2006 1/8/2006 1/9/2006 1/10/2006 1/11/2006 1/12/2006 1/1/2007 1/2/2007 1/3/2007 1/4/2007 Index 1695.25 1838.45 1912.35 2039.6 2143.6 2299.45 2084.65 2342.3 2464.25 2560.55 2698.6 2974.1 DATE 1/5/2007 1/6/2007 1/7/2007 1/8/2007 1/9/2007 1/10/2007 1/11/2007 1/12/2007 1/1/2008 1/2/2008 1/3/2008 1/4/2008 Index 3100.7 2548.35 2577.2 2559.65 2828.3 2985 3130.45 3318.9 3323.1 3432 3147.5 3008.75 Mean SD Variance Annualised Return 82.91 38.61 34.77 25.50 31.94 29.81 50.17 41.69 34.85 34.033 16.63 1.17 35.174 18.691 349.341

Ratios calculated Beta Ratio Sharpe Ratio Alpha Ratio 1.182 1.748 4.170

Treynor Ratio 34.048

2. Fidelity equity fund- Growth Factsheet

Objective-

To generate long-term capital growth from a diversified portfolio of

predominantly equity and equity-related securities.

Scheme Performance (%) as on Jul 26 , 200814 days 2.53 1 month 6.78 3 months 14.83 1 year 67.99 3 yrs NA * Inception* 52.98

Top 10 Holdings as on May 31, 2008

Company Reliance Industries Ltd Bharati Tele - Ventures Bharat Heavy Electricals Ltd State Bank of India Infosys Technologies Ltd ICICI BANK LTD. Tata Consultancy Services Ltd. Larsen & Toubro Limited Cipla Ltd Bank of Baroda Nature EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ Value (Cr.) 152.58 127.21 110.73 107.23 102.22 94.44 85.1 80.86 69.99 65.31 % 5.28 4.4 3.83 3.71 3.54 3.27 2.94 2.8 2.42 2.26

Asset Allocation as on May 31, 2008

Equity 96.16 Debt 0 Money Market 3.84

Fund information-

Type of Scheme Nature of Scheme NAV Inception Date Face Value(Rs/Unit) Fund Size (Rs. in crores) Increase/Decrease (Rs. In crores) Minimum Investment (Rs) Purchase Redemptions NAV Calculation Entry Load

Open Ended Equity 25.419 As On Jul 26, 2008 Apr 19, 2005 10 2989.2549 on Jun 29, 2008 98.181(since May 31, 200) 5000 Daily Daily Amount Bet. 0 to 49999999 then Entry Load is 2.25% and amount greater than rs.5,00,000 then entry load is 0%.

Exit Load

Exit load is 1%.

Top Industry Allocation as on May 31, 2008

Banks Diversified Computers - Software & Education Pharmaceuticals Electricals & Electrical Equipments Oil & Gas, Petroleum & Refinery Entertainment Telecom Auto & Auto ancilliaries Engineering & Industrial Machinery

17.202% 17.0982% 14.0135% 7.4767% 5.6582% 4.8271% 4.6937% 4.6794% 4.3711% 3.5491%

Portfolio As On May 31, 2008 Fund Size as on Jun 29, 2008

Fund Size ( Rs. in crores) 2989.25

Asset Allocation as on May 31, 2008

Equity Debt Others 96.16% 0% 3.84%

portfolio diversification

equity debt others

Equity
Market Value % (Rs. in crores) 152.5771 127.2064 110.7267 107.2265 102.2242 94.4443 85.1036 80.8615 69.9941 of Net

Company Name Reliance Industries Ltd Bharati Tele Ventures Bharat

Instrument Equity Equity Equity Equity Equity Equity Equity Equity Equity

No. of Shares 867507 1497867 791414 792129 531449 1027518 704296 402316 3218860

Assets 5.28 4.4 3.83 3.71 3.54 3.27 2.94 2.8 2.42

Heavy

Electricals Ltd State Bank of India Infosys Technologies Ltd ICICI BANK LTD. Tata Consultancy Services Ltd. Larsen & Toubro Limited Cipla Ltd

Bank of Baroda Equity Punjab National Equity Bank Grasim Industries Equity Ltd Kotak Mahindra Equity Bank Ltd. Aditya Birla Nuvo Equity Limited. Zee Entertainment Equity Deccan Chronicle Equity Holdings Ltd Hindustan Lever Equity Ltd Satyam Computer Equity Services Ltd Everest Kanto Equity Cylinder Ltd. Dr Reddys Equity

2368973 1170390 238921 993123 399249 1755403 2596088 2622283 1077179 452878

65.3126 62.7153 59.7374 56.8364 55.9547 55.0582 54.388 53.3372 50.6166 48.7931

2.26 2.17 2.07 1.97 1.94 1.9 1.88 1.84 1.75 1.69

Laboratories Ltd Ess Dee

739328

47.8456

1.65

Equity Aluminium Ltd HDFC Bank Ltd Equity Gas Authority Of Equity India Ltd UTI Bank Ltd Equity Financial Equity Technologies Crompton Equity Greaves Ltd Jagran Prakashan Equity Ltd Television Equity Eighteen India Ltd Reliance Equity Petroleum Ltd

1085258 391061 1350195 708800 180560 1641095 861289 438465 3681709

45.2715 44.8782 41.2282 40.7525 40.4933 40.3545 40.0026 36.9231 36.9091

1.57 1.55 1.43 1.41 1.4 1.4 1.38 1.28 1.28

Tata Motors Ltd Equity Max India Ltd Equity Network Eighteen Equity Fincap Ltd ONGC Equity Aurobindo Equity Pharma Ltd. Gujarat Flourochemicals Ltd HCL technologies Equity

470945 1364750 657362.4 348773 465119

35.5893 33.9959 32.6709 32.1673 31.8351

1.23 1.18 1.13 1.11 1.1

467308

29.2511

1.01

Equity ltd. Raymond Ltd Equity NIIT Ltd Equity ING Vysya Bank Equity Ltd Motherson Sumi Equity Systems Ltd SKF Bearings Equity India Ltd C M C Ltd Equity Gujarat Ambuja Equity Cements Ltd JSW Steel Equity Limited. Lupin Ltd. NTPC Limited. Equity Equity

848958 829675 293500 965130 1972630 524946 199556 2066127 386300 328307 1424059 496607 945915 199201 1273246 1160555 923233

29.2254 27.1096 25.3892 25.1561 24.4606 23.9874 23.7661 23.4299 23.3731 23.3525 22.5713 21.4038 20.8622 20.7956 20.2064 19.0099 17.9615

1.01 0.94 0.88 0.87 0.85 0.83 0.82 0.81 0.81 0.81 0.78 0.74 0.72 0.72 0.7 0.66 0.62

Pantaloo(India) Equity HT Media Equity Limited. Bharat Earth Equity Movers Ltd Power Finance Equity Corporation Ltd ITC Ltd Equity McNally Bharat Equity Engineering

Corporation Marico Industries Ltd Bajaj Auto Ltd Radico-Khaitan Ltd Nucleus Software Exports Ltd KEC International Ltd. Dish TV India Ltd Texmaco Ltd Eicher Motors Ltd Hindustan Construction Company Ltd Infrastructure Leasing LTD Sintex & Financial Services Industries

Equity Equity Equity Equity Equity Equity Equity Equity Equity

2963470 74763 1121210 156306 292646 1128934.875 154297 443543 1496661

17.0251 16.6318 15.9716 15.6517 15.3507 15.1842 15.0571 14.8831 14.3904

0.59 0.58 0.55 0.54 0.53 0.53 0.52 0.51 0.5

Equity

643145

13.7762

0.48

Ltd Emco Ltd (Emco

Equity

606529 150852 30000 85316 1650498 2380544

13.7227 12.5004 12.4257 11.2715 10.819 8.4985

0.47 0.43 0.43 0.39 0.37 0.29

Equity Transformers Ltd) MRF Ltd Equity Aventis Pharma Equity India Ltd. TVS Motor Equity Company Suven Life Equity Science Ltd. Container Corporation Of Equity India Ltd Idea Cellular

36075

8.2383

0.28

Equity Limited Wire and Wireless Equity

641830 1035352.5

8.0774 7.672

0.28 0.27

India Ltd. Shoppers Stop Ltd Equity V I P Industries Equity Ltd McDowell Holdings Equity

119902 483156 90858.4

7.2391 4.718 2.1329

0.25 0.16 0.07

Others
Name Cash Instrument Cash Market Value (Rs. in crores) 111.1341 % of Net Assets 3.84

Table for calculating ratiosFidelity Equity Fund (Growth Option)

DATE 1/5/2006 1/6/2006 1/7/2006 1/8/2006 1/9/2006 1/10/2006 1/11/2006 1/12/2006 1/1/2007 1/2/2007 purchase NAV DATE of fund 10.029 10.311 11.013 11.981 12.659 13.564 12.399 13.857 14.488 15.163 1/5/2007 1/6/2007 1/7/2007 1/8/2007 1/9/2007 1/10/2007 1/11/2007 1/12/2007 1/1/2008 1/2/2008 Redemption NAV 18.74 15.783 15.136 15.523 17.177 18.317 19.335 20.946 21.055 21.804 ANNUALISED RETURN 86.86 53.07 37.44 29.56 35.69 35.04 55.94 51.16 45.33 43.80

1/4/2007

18.283

1/4/2008

19.743 MEAN SD VARIANCE COVARIANCE

7.99 42.308 18.501 342.358 340.528

BENCHMARK-BSE200
DATE 1/5/2006 1/6/2006 1/7/2006 1/8/2006 1/9/2006 1/10/2006 1/11/2006 1/12/2006 1/1/2007 1/2/2007 1/3/200 1/4/2007 Index 824.62 890.25 926.4 984.62 1020.29 1108.83 1007.59 1132.92 1187.26 1240.72 1318.85 1446.09 DATE 1/5/2007 1/6/2007 1/7/2007 1/8/2007 1/9/2007 1/10/2007 1/11/2007 1/12/2007 1/1/2008 1/2/2008 1/3/2008 1/4/2008 Index 1521.68 1247.92 1278.05 1273.99 1411.2 1489.46 1569.1 1665.53 1669.59 1711.74 1564.49 1487.13 MEAN SD VARIANCE ANNUALISED RETURN 84.53 40.18 37.96 29.39 38.31 34.33 55.73 47.01 40.63 37.96 18.63 2.84 38.96 18.84 355.06

Ratios calculatedBeta Ratio Sharpe Ratio Alpha Ratio Treynor Ratio

0.959 1.989
38.379

4.946

3.Reliance Vision fund - Growth Factsheet Objectiveoriented stocks. Seeks to provide long term capital appreciation primarily investing in growth

Scheme Performance (%) as on Jul 26 , 2008

14 days 1.66 1 month 7.75 3 months 19.66 1 year 61.84 3 yrs 53.73 * Inception* 29.97

Top 10 Holdings as on Jun 29, 2008Company Divis Laboratories Limited Larsen & Toubro Limited Reliance Industries Ltd Infosys Technologies Ltd Alstom Projects India Ltd. Reliance Communication. Siemens Ltd Other Equities HDFC Bank Ltd JaiPrakash Associates Ltd. Nature EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ Value (Cr.) 263.27 175.84 173.89 173.61 144.23 139.71 139.54 115.18 114.68 111.15 % 8.48 5.67 5.6 5.59 4.65 4.5 4.5 3.71 3.7 3.58

Asset Allocation as on Jun 29, 2008

Equity Debt 86.4 0 Money Market 13.6

Fund InformationType of Scheme Nature of Scheme Inception Date Face Value(Rs/Unit) Net Asset Value (Rs/Unit) Fund Size (Rs. in crores) Open Ended Equity Oct 7, 1995 10 220.86 on july2007-2008 3103.37 on Jun 29, 2008

Increase/Decrease since May 31, 2007 (Rs. 133 in crores) Minimum Investment (Rs) Purchase Redemptions NAV Calculation Fund Manager Entry Load 5000 Daily Daily Kunj Bansal Amount Bet. 0 to 19999999 then Entry load is 2.25%. and Amount Bet. 20000000 to 49999999 then Entry load is 1.25%. and Amount greater than 50000000 then Entry load is 0%. If redeemed bet. 0 Months to 6 Months; and Amount Bet. 0 to 49999999 Exit Load then Exit load is 1%. If redeemed bet. 6 Months to 12 Months; and Amount Bet. 0 to 49999999 then Exit load is 0.5%. and Amount greater than 50000000 then Exit load is 0%.

Top Industry Allocation as on Jun 29, 2008-

Diversified Computers - Software & Education Pharmaceuticals Auto & Auto ancilliaries Power Generation, Transmission & Equip Banks Telecom Electronics Miscellaneous Housing & Construction

14.2423% 10.3082% 8.4834% 6.4516% 5.889% 5.4907% 4.5019% 4.4962% 3.7114% 3.5816%

Portfolio As On Jun 29, 2008 Fund Size as on Jun 29, 2008

Fund Size ( Rs. in crores) 3103.37

Asset Allocation as on Jun 29, 2008

Equity 86.4% Debt 0% Others 13.6%

portfolio diversification

equity debt others

EQUITY
Company Name Divis Laboratories Limited Larsen & Toubro Limited Reliance Industries Ltd Infosys Technologies Ltd Alstom Projects India Ltd. Reliance Communication Ventures Ltd. Siemens Ltd HDFC Bank Ltd JaiPrakash Associates Ltd. Equity 450000 263.2726 8.48 Instrument No. of Shares Market Value % (Rs. in crores) of Net Assets

Equity Equity Equity Equity

800000 1022559 900000 1788623

175.8401 173.8913 173.6146 144.2345

5.67 5.6 5.59 4.65

Equity Equity Equity Equity

2700001 1000861 1000000 1500001

139.7116 139.5351 114.675 111.15

4.5 4.5 3.7 3.58

Grasim

Equity Industries Ltd Tata Consultancy Equity Television Eighteen Ltd Maruti India Equity Udyog

350000 755443 925501

92.26 86.8269 83.3969

2.97 2.8 2.69

Ltd Indian Hotels Co Ltd Cummins India

Equity Equity Equity Equity

1000000 4825002 2000001 1000000 1154332

74.415 72.8093 67.99 67.02 59.4597

2.4 2.35 2.19 2.16 1.92

Ltd Tata Motors Ltd Network Ltd Automotive Axles Ltd State Bank India Hindustan Petroleum Corporation Ltd Gujarat State Fertilizers of

Eighteen Fincap Equity

Equity Equity

1200000 365187

58.782 55.7203

1.89 1.8

Equity

2000001

54.13

1.74

& Equity Equity Equity Equity Equity Equity Equity Equity

3007425 563353 3043841 1495965 1400001 3500997 627858 2599614

53.066 48.2878 47.0882 46.1505 44.695 43.5874 38.5222 35.7447

1.71 1.56 1.52 1.49 1.44 1.4 1.24 1.15

Chemicals Ltd Tata Tea Ltd ITC Ltd Bharat Forge Ltd Apollo Tyres Ltd Gujarat Ambuja Cements Ltd Reliance Energy Ltd Deccan Aviation Ltd.

Table For Calculating RatiosReliance Vision Fund- (Growth option)

DATE 1/5/2006 1/6/2006 1/7/2006 1/8/2006 1/9/2006 1/10/2006 1/11/2006 1/12/2006 1/1/2007 1/2/2007 1/3/2007 1/4/2007 purchase NAV of fund 86.09 92.05 92.23 100.41 105.54 114.32 107.47 120.08 126.56 132.87 141.83 160.34 DATE 1/5/2007 1/6/2007 1/7/2007 1/8/2007 1/9/2007 1/10/2007 1/11/2007 1/12/2007 1/1/2007 1/2/2008 1/3/2008 1/4/2008 Redemption NAV 171.6 136.11 137.64 138.71 152.2 234.47 172.67 178.48 184.85 186.17 173.56 163.04 Mean SD Variance Covariance ANNUALISED RETURN 99.33 47.87 49.24 38.14 44.21 105.09 60.67 48.63 46.06 40.11 22.37 1.68

50.284 27.347 747.835 403.060

Benchmark-BSE100
DATE Index DATE Index ANNUALISED RETURN 1/5/2006 1/6/2006 1/7/2006 1/8/2006 1/9/2006 1/10/2006 1/11/2006 1/12/2006 1/1/2007 1/2/2007 1/3/2007 3332.31 3611.25 3822.89 4090.31 4218.18 4610.17 4191.1 4731.96 4951.69 5182.28 5523.69 1/5/2007 1/6/2007 1/7/2007 1/8/2007 1/9/200 1/10/2007 1/11/2007 1/12/2007 1/1/2008 1/2/2008 1/3/2008 6344.04 5210.33 5415.86 5418.86 5983.43 6295.82 6639.14 7018.37 7059.84 7233.71 6614.12 90.38 44.28 41.67 32.48 41.85 36.56 58.41 48.32 42.57 39.59 19.74

1/4/2007

6046.49

1/4/2008

6287.69 Mean SD Variance

3.99 41.65 19.83 393.36

Ratios calculatedBeta Ratio Sharpe Ratio Treynor Ratio Alpha Ratio

1.0247 1.638 43.707 7.604

4.Franklin India Blue Chip Fund-Factsheet-ObjectiveAims to achieve a high degree of capital appreciation through investments in well-established, large size blue chip companies.

Scheme Performance (%) as on Jul 16 , 2008

14 days 4.52 1 month 10.14 3 months 16.41 1 year 47.56 3 yrs 46.13 * Inception* 28.66

Top 10 Holdings as on Jun 29, 2008

Company Reliance Industries Ltd Grasim Industries Ltd Bharati Tele - Ventures Infosys Technologies Ltd Nature EQ EQ EQ EQ Value (Cr.) 170.03 155.6 147.12 141.79 % 6.68 6.12 5.78 5.57

Kotak Mahindra Bank Ltd. Larsen & Toubro Limited Siemens Ltd BHEL HDFC Ltd

EQ EQ EQ EQ EQ

134.5 120.78 116.27 113.87 107.68 101.51

5.29 4.75 4.57 4.48 4.23 3.99

Aditya Birla Nuvo Limited. EQ

Asset Allocation as on
Equity Debt Money Market

Jun 29, 2008

95.41

4.59

Fund Information
Type of Scheme Nature of Scheme Inception Date Face Value(Rs/Unit Net Asset Value (Rs/Unit) Fund Size (Rs. in crores) Open Ended Equity Nov 30, 1993 10 149.1463 As On Jul 16, 2008 2544.3445 on Jun 29, 2008

Increase/Decrease since May 31, 2007 (Rs. -28.7 in crores) Previous Name Pioneer ITI Bluechip - Growth

Minimum Investment (Rs) Purchase Redemptions NAV Calculation Fund Manager Entry Load Exit Load Last Dividend Declared

5000 Daily Daily K. N. Siva Subramanian Entry Load is 2.25%. Exit Load is 0%. 1:1 Bonus / Rights On Mar 24, 2000

Top Industry Allocation as on

Diversified Banks Computers - Software & Education Telecom Auto & Auto ancilliaries Finance Electricals & Electrical Equipments Entertainment Electronics Tobacco & Pan Masala

Jun 29, 2008

24.1323% 11.5145% 9.8214% 8.926% 7.4254% 6.6915% 6.3025% 4.7096% 4.5699% 3.4605%

Portfolio as on Jun 29, 2008 Fund Size as on Jun 29, 2008

Fund Size ( Rs. in crores) 2544.34

Asset Allocation as on Jun 29, 2008

Equity Debt Others 95.41% 0% 4.59

portfolio diversification

equity debt others

EQUITY
Company Name Reliance Industries Ltd Grasim Industries Ltd Bharati Tele Ventures Infosys Technologies Ltd Kotak Mahindra Bank Ltd. Larsen & Toubro Limited Instrument No. of Shares Market Value % of Net

(Rs. in crores) Equity Equity Equity Equity Equity Equity 1000000 589837 1759892 734944 2000000 550000 170.03 155.5961 147.1182 141.7854 134.5 120.7827

Assets 6.68 6.12 5.78 5.57 5.29 4.75

Siemens Ltd Equity Aditya Birla Equity Nuvo Limited. Bharat Heavy Equity Electricals Ltd Housing Development Finance Corporation Ltd Zee Entertainment Equity Equity

832729 850000 700000

116.274 113.8702 107.6775

4.57 4.48 4.23

500000

101.51

3.99

3260416 5691412 800000 1000000

96.9811 88.0461 76.424 74.31

3.81 3.46 3 2.92

Enterprises Ltd ITC Ltd Equity ICICI BANK Equity LTD. Maruti Udyog Equity Ltd Infrastructure Development Finance company Cummins India Equity

5227676

68.7439

2.7

Equity Ltd MICO Equity Tata Consultancy Equity Services Ltd. HDFC Bank Ltd Equity Dr Reddys Equity Laboratories Ltd Hindustan Lever Equity Ltd ABB Ltd Equity Tata Motors Ltd Equity Satyam Computer Services Ltd Reliance Communication Equity Equity

1902806 141376 500000 500000 820874 2845042 480955 765281 1083721 800000

64.6859 63.364 57.4625 57.205 53.8452 53.7286 52.679 51.2547 50.6423 41.364

2.54 2.49 2.26 2.25 2.12 2.11 2.07 2.01 1.99 1.63

Ventures Ltd. Idea Cellular Limited Indian Hotels Co

Equity

3100000 1805591 1187249 2139204 160000 100000 135000 220000

38.626 27.1922 24.7482 22.8467 18.5592 15.253 10.9478 5.9323

1.52 1.07 0.97 0.9 0.73 0.6 0.43 0.23

Equity Ltd Cipla Ltd Equity Dish TV India Equity Ltd Nestle India Ltd Equity State Bank of Equity India Asian Paints Equity Limited Canara Bank Ltd Equity

Table for calculating ratiosFranklin India Blue Chip Fund- Growth

DATE

Purchase NAV of fund

DATE

Redemption NAV

ANNUALISED RETURN

1/5/2006 1/6/2006 1/7/2006 1/8/2006 1/9/2006 1/10/2006 1/11/2006 1/12/2006 1/1/2007 1/2/2007 1/3/2007 1/4/2007

60.13 63.8 67.8 73.18 77.57 83.91 77.89 87.46 90.68 96.51 104.26 114.84

1/5/2007 1/6/2007 1/7/2007 1/8/2007 1/9/2007 1/10/2007 1/11/2007 1/12/2007 1/1/2008 1/2/2008 1/3/2008 1/4/2008

121.08 98.22 100.88 101.39 111.75 116.9 125.01 130.49 132.85 135.42 123.16 118.0375 Mean SD

101.3637 53.94984 48.79056 38.54878 44.06343 39.31593 60.49557 49.19963 46.50419 40.31707 18.12776 2.784309 45.288 22.604

Variance 510.947 Covariance 458.238

BENCHMARK BSE SENSEX

DATE 1/5/2006 1/6/2006 1/7/2006 1/8/2006

Index 6195.15 6729.9 7210.77 7669.45

DATE 1/5/2007 1/6/2007 1/7/2007 1/8/2007

Index 12218.78 10071.42 10695.26 10751.66

ANNUALISED RETURN 97.23 49.65 48.32 40.19

1/9/2006 1/10/2006 1/11/2006 1/12/2006 1/1/2007 1/2/2007 1/3/2007 1/4/2007

7876.15 8697.65 7944.1 8944.78 9390.14 9859.26 10565.47 11564.36

1/9/2007 1/10/2007 1/11/2007 1/12/2007 1/1/2008 1/2/2008 1/3/2008 1/4/2008

11778.02 12366.39 13033.04 13844.78 13942.24 14267.18 13159.55 12455.37 Mean SD Variance

49.54 42.18 64.06 54.78 48.48 44.71 24.55 7.70 47.62 20.43 417.54

Ratios calculatedBeta ratioSharpe ratioAlpha ratio CHAPTER 5 INFERENCES DRAWN Table Containing Ratios For Drawing Inferences
Fund name Beta ratio HDFC Equity 1.182 Fund Fidelity Equity 0.959 Sharpe ratio 1.748 1.989 1.638 1.760 Treynor ratio 34.048 38.379 43.707 36.255 Alpha ratio 4.170 4.946 7.604 -6.969

1.097 1.760

Treynor ratio- 36.255 -6.969

Fund Reliance Vision 1.025 Fund Franklin India 1.097

Bluechip Fund

INFERENCES ACCORDING TO BETA RATIO

Lower the Beta, lesser the volatility and risk. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. In the above chart Fidelity Equity Fund has lowest Beta .It means that Fidelity Equity Fund is less volatile in comparison to other funds . Beta measures the relative risk associated with any individual portfolio as measured in relation to market portfolio.

Beta Ratio
1.4 1.2 percentages 1 0.8 0.6 0.4 0.2 0 BETA RATIO HDFC Equity Fund Fidelity Equity Fund Reliance Vision Fund Franklin India Blue Chip Fund

According to Sharpe ratiocalled reward-to-variability ratio .

The Sharpe Ratio is a measure of the risk-adjusted

return of an investment and it is a measure for the performance of mutual funds and it is also

Higher the ratio, better the fund performance. A Sharpe Ratio of a system of over 2.0 is considered very good. Sharpe Ratios above 3.0 are outstanding. So from the ratios calculated, Fidelity Equity Fund has higher sharpe ratio with lowest standard deviation means with less risk. Sharpe Ratio
2.5 2 percentage 1.5 1 0.5 0 Sharpe Ratio HDFC Equity Fund Fidelity Equity Fund Reliance Vision Fund Franklin India Blue Chip Fund

According to Treynor ratio-

The Treynor ratio is a risk-adjusted measure of

return based on systematic risk. It is similar to the Sharpe ratio, with the difference being that the Treynor ratio uses beta as the measurement of volatility.it measures returns earned in excess of that which could have been earned on a riskless investment per each unit of market risk. Higher the Treynor Ratio,better the fundperformance. So Reliance Vision fund has the highest treynor ratio in comparison to other funds.

Treynor ratio
50 45 40 35 30 25 20 15 10 5 0 Treynor Ratio

HDFC Equity Fund Fidelity Equity Fund Reliance Vision Fund Franklin India Blue Chip Fund

According to Alpha ratio-

percentage

Alpha takes the volatility (price risk) of a mutual fund

and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund's alpha. A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%. Higher the alpha ratio,better the funds performance Reliance Vision Fund has highest alpha ratio. So this fund has outperformed its benchmarks index by 7.6%. but franklin India blue chip fund has a negative alpha so this fund is not performing well.

Alpha Ratio
10 8 6 percentage 4 2 0 -2 -4 -6 -8 Alpha Ratio Franklin India Blue Chip Fund HDFC Equity Fund Fidelity Equity Fund Reliance Vision Fund

CHAPTER-6 SWOT ANALYSIS OF HDFC AMC VIZ-A-VIZ OTHER FUND HOUSES

Strengths: Brand image. Image of an Ethical player. Brand Reach Prompt service provider. Good relationship with distributors Efficient Sales Staff Fair understanding of market and competition. Weakness: Inability to fully cover the outstation market Lack of manpower. Overshadowing of Home Loans.

Opportunity: Unexplored/ outstation market. Target export segment aggressively

Threats: Substitute products like bank FDs, RDs etc. New entrants

CHAPTER-7 CONCLUSION
Mutual fund industry is on growth now a days. People are becoming more interested in purchasing mutual funds because they find it less risky and more beneficial compared to direct equity investment. In this project, comparison have been done on the basis of technical ratios which depict riskreturn relationship and by analyzing past years returns of the funds. By analyzing the ratios it has been found out that Fidelity Equity Fund and reliance vision fund is less risky and also giving fair returns. HDFC Equity Fund had performed above average and given consistent returns year over year. Number of foreign AMC's are in the queue to enter the Indian markets.we have approximately 29 mutual funds which is much less than US. There is a big scope for expansion. Mutual fund can penetrate rural like the Indian insurance industry with simple and limited products.

CHAPTER-8 COMPARATIVE STUDY OF THE PRODUCTS OF HDFC AMC WITH ITS COMPETITORS
NAME: NAME OF THE COMPANY: DESIGNATION IN THE COMPANY: CONTACT NO: 1. What is your age? (a) 20-25 (b) 25-30 (c) 30-35 (d) 35-40 (e) Above 40

2. What is your annual income? (a) Less than Rs.100000 (b) Between Rs.100000- Rs.250000 (c) Between Rs.250000- Rs.500000 (d) Above Rs.500000 3. From last how many years are you doing investment? (a) Less than 2 years (b) 3-5 years (c) 5-10 years (d) More than 10 years 4. What kind of investment do you make? (You can tick more than one) (a) Bank (b) Government Securities/Debts (c) Insurance (d) Mutual funds (d) Equity (e) Real Estate (f) Others (please specify) 5. What is your main investment objective? Ranking (1 to 10) (a) Safety (b) Tax saving (c) Returns (d) Capital appreciation

6. For what time period do you do investment? (a) Short term (Up to 1 year) (b) Middle term (1-5 years) (c) Long term (Above 5 years) 7. How much return are you getting? (a) Bank (b) Government Securities/Debts (c) Insurance (d) Mutual funds (d) Equity (e) Real Estate 8. How much risk are you ready to assume in following? (a) Bank (b) Government Securities/Debts (c) Insurance (d) Mutual funds (d) Equity (e) Real Estate 9. Have you ever invested in HDFC Mutual Funds? (a) Yes (b) No 10. In which plan of HDFC, are you doing investment? (a)Equity (i) Mid-cap (ii) Tax-saver (iii) Small-cap (iv) Any other (b) Debt (c) Liquid Fund 11. In HDFC Mutual Funds, in which plan have you opted? (a) SIP (Systematic Investment Plan) (b) Lump sum 12. Why have you choose SIP for doing investment? (a) Long term purpose (b) Monthly saving (c) To reduce risk of fluctuating market (d) Any other

13. Why have you opted lump sum for doing investment? (a) Short period investment (b) Greater returns (c) To take the advantage of arbitrage (buying in lower market and selling in higher market) 14. Are you doing investment in any other company mutual funds? ___________________________ 15. In which plan are you doing investment? ___________________________ 16. Is HDFC products better than any other companys products? If Yes how which product? ___________________________ 17. What you expect from the HDFC Mutual funds? (a) Good returns (b) Monthly statements (c) High dividend (d) Safety (e) Tax-rebate (f) Liquidity (g) Any other and

CHAPTER-9 BIBLIOGRAPHY
1. Books on mutual fundAMFI publications, Investment Analysis and Portfolio

Management by Prasanna Chandra. 2. Journals- ICFAI Publications- Overview on Mutual Funds. 3. Newspapers- The Economic Times, Business Standard. 4. Internet sites a) www.Google.com b) www.mutualfundsindia.com c) www.amfi.com d) www.valueresarchonline.com e) www.investopedia.com f) www.wikipedia.com g) www.answers.com h) www.hdfcfund.com i) www.nribanks.com j) www.mutualfunds.about.com/cs/history/a/fundhistory.htm 5. Mutual fund insight magazine