Comparative Analysis of Mutual Funds

FINAL RESEARCH PROJECT
ON
COMPARATIVE ANALYSIS OF MUTUAL

FUNDS
(CASE STUDY OF HDFC WITH OTHER BANKS)
Submitted in partial fulfillment for the degree of
MASTERS IN BUSINESS ADMINISTRATION

OF
Punjab Technical University, Jalandhar
Session 2005- 2007
SUBMITTED TO
Dr. Harpreet Singh
H.O.D.
Dept. of Business Admn.
SUBMITTED BY
Mukesh Arora
Univ Roll No. 559221769
RIMT INSTITUTE OF ENGINEERING AND TECHNOLOGY

MANDI GOBINDGARH
CERTIFICATE
This is to certify that Mr. Mukesh Arora, has completed his project report title
COMPARATIVE ANALYSIS OF MUTUAL FUNDS (CASE STUDY OF HDFC
WITH OTHER BANKS) under my supervision. To the best of my knowledge and belief
this is his original work and this, wholly or partially, has not been submitted for any
degree of this or any other University.
Date:
Dr. Harpreet Singh

(RIMT-IET)
Mandi Gobindgarh
ACKNOWLEDGEMENT
The research on COMPARATIVE ANALYSIS OF MUTUAL FUNDS
(CASE STUDY OF HDFC WITH OTHER BANKS) has been given to me as part of
the curriculum in Masters Degree in Business Administration.
I have tried my best to present this information as clearly as possible using basic
terms that I hope will be comprehended by the widest spectrum of researchers, analysts
and students for further studies. I have completed this study under the able guidance and
supervision of Dr. Harpreet Singh
(H.O.D., RIMT-IET), Mandi
Gobindgarh. I will be failed in my duty if I do not acknowledge the esteemed scholarly

guidance, assistance and knowledge. I have received from them towards fruitful and
timely completion of this work. Mere acknowledgement may not redeem the debt I owe
to my parents for their direct/indirect support during the entire course of this project.
Date:
Compiled by
Mukesh Arora
MBA 4th Semester
Univ. Roll No.:- 559221769
CONTENTS
Title
Page No
MUTUAL FUNDS: AN OVERVIEW.
16
LITERATURE REVIEW.
34
REASERCH METHODOLOGY
35
OBJECTIVES OF THE STUDY 37

INTRODUCTION OF HDFC BANK 1
MUTUAL FUND SCHEMES 38
ANALYSIS AND INTERPRETATIONS.
59
SUGGESTIONS.77
CONCLUSION.78
LIMITATIONS OF THE SURVEY.
79
BIBLIOGRAPHY82
CHAPTER 1
MUTUAL FUNDS: AN OVERVIEW
MUTUAL FUNDS: AN OVERVIEW

A Mutual Fund is a trust that pools the saving of a number of investors who share a common
financial goal. The money thus collected is invested by the fund manager in different types of
securities depending upon the objective of the scheme. These could range from shares to
debentures of money market instruments. The income earned thorough these investments and the
capital appreciation realized by the scheme are shared by its units holders in proportion to the
number of units owned by them (prorate). Thus a Mutual Fund is the most suitable investment
for the common man as it offers an opportunity to invest in a diversified, professionally managed
portfolio at a relatively low cost. Anybody with an investible surplus of as little as a few
thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment
objective and strategy.
The flow chart below describes broadly the working of Mutual Fund:
Investors
Pool their
money with
Passed back to
Fund
Manager
Returns
Invest in
Generate
s
Securitie
s
WORKING OF MUTUAL FUND
A Mutual Fund is the ideal investment vehicle for todays complex and modern financial
scenario. Markets for equity shares, bonds and other fixed income instruments, real estate,
derivatives and other
assets have become
mature and information driven. Price changes
in these assets are driven by global events occurring in fare way places. A typical individual is
unlikely to have the knowledge, skills, inclination and time to keep track of events, understand
their implications and act speedily. An individual also finds it difficult to keep track of ownership
of his assets, investment, brokerage dues and bank transactions etc.
A Mutual Fund is the answer to all these situations. It appoints professionally qualified and
experienced staff tat manages each of these functions on full times basis. The large pool of
money collected in the fund allows it to hire such at a very low cost to each investor. In effect,
the mutual fund vehicle exploits economics of scale in all these areas research, investment and
transaction processing. Mutual Funds gained popularity only after the second world war.
Globally, there are thousands of firms offering ten thousand of mutual funds with different
investment objectives. Today, Mutual funds collectively manage almost as much as or more
money as compared to banks.
A draft offer document is to be prepared at the time of launching the fund typically, it pre species
the investment objectives or the fund, the risk associated , the cost involved in the process and
the broad rules for entry in to and exit from the fund and other areas of operation. In India, as in
countries, these sponsors need approval from a regulator, SEBI (Security and Exchange Board of
India) in our Case SEBI looks at track records of the sponsor and its financial strength in
granting approval to the fund for commencing operations.
A sponsor then hires an asset management company to invest the fund according to the
investment objective. It also hires another entity to be the custodian of the assets of the fund and
perhaps a third one to handle registry work for the unit holders (subscribers) of the fund.
In the India context, the sponsors promote the Assets Management Company also, in which it
holds a majority stake. In many cases a sponsor can hold a 100% stake in the Asset management
Company (AMC). E.g. Birla Global Finance is the sponsor of the Birla Sun Life Asset
management Ltd. which has floated different mutual funds schemes an also acts as an manager
for the funds collected under the schemes.
STRUCTURE OF THE INDIAS MUTUAL FUND INDUSTRY

The India mutual fund industry is dominated by the Unit trust of India which has a total corpus
of Rs. 700 bn. collected from more than 20 million investors. Unit Trust of India (UTI) is the
largest Mutual fund Organization. UTI manages funds over Rs. 58,221 crore as on 30.06.2001
and over 41.80 million investors account under 85 schemes.
UTI was set up in 1964 by an act of parliament and commenced its operation from July 1964,
with a view to encouraging saving and investment and participation in the income, profit and
gain accruing to corporation form the acquisition, holding, management and disposal of
securities.
UTI is a trust without ownership capital and independent board of trustees. The first scheme was
unit scheme 1964. The contributors of initial capital of Rs. 5crore for US-64 scheme were RBI,
SBI and some foreign banks. Under the provision of the act chairman of the board would be
appointed by the government of India. Today it has 54 branches office, 266 representatives and
about 67,000 agents. It provides complete range of services to its investors.
UTI has set up associate in the field of banking, securities, trading, investor servicing advice and
training, meeting investors varying needs under a common umbrella.
UTI Bank Ltd. (1994)

UTI Securities Exchange Ltd. (1994)
UTI Investors Services Ltd. (1993)
UTI Institute of Capital Market (1989)
UTI Investment Advisory Services (1988)
UTI Mutual Fund Growth Schemes
The second largest category of mutual funds are the floated by nationalized bank. Bank asset
management floated by Canara Bank and SBI Funds management floated by the State Bank of
India are the largest of these. GIC AMC Asset Management Companies floated by General
Insurance Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the other
prominent ones. The aggregate corpus of funds managed by this category of AMCs is about Rs.
150 bn.
The third largest categories of mutual fund are the ones floated by the private sector asset and by
foreign asset management companies. The largest of these are Prudential ICICI AMC and Birla
Sun Life AMC. The aggregate corpus of assets managed by this category of AMCs is in excess
of Rs. 250 bn.
TYPE OF MUTUAL FUNDS

Mutual fund schemes may be classified based on its structure and its investment objectives.
By structure:
Open-ended Funds
An open-end is one that is available for subscription all thorough the year. These do not have a
fixed maturity. Investors can conveniently buy and sell units at net asset value (NAV) related
prices. The key feature of the open-end schemes is liquidity.
Closed-ended Funds
A closed-end fund has a stipulated maturity period generally ranging from 3 to 15 years. The
fund is open for subscription only during a specified period. Investor can invest in the scheme at
the time of the initial public issue and thereafter they can by or sell the units of the stock
exchanges where they are listed. In order to provide an exit route to the investors, some closeended funds give an option of selling back the units to the Mutual Fund through periodic
repurchase at NAV related prices. SEBI regulations stipulate that at least one of the two exit
routes is provided to the investor.
Interval Funds
Interval fund combine the features of open-ended and close-end schemes. They are open for sale
or redemption during predetermined intervals at NAV related prices.
10
By Investment Objective:
Growth Funds
The aims of growth are to provide capital appreciation over the medium to long term. Such
schemes normally invest a majority of their corpus in equities. It has been proven that returns
from stocks, have outperformed most other kind of investments holdover the long term. Growth
schemes are ideal for investors having a long term out look seeking growth over a period of time.
Income Funds
The aim of income fund is to provide regular and steady income to investors. Such schemes
generally invest in fixed income securities such as bonds, corporate departures and Government
securities. Income funds are ideal for capital stability and regular income.
Balanced Income
The aim of balanced funds is to provide both growth and regular income. Such schemes
periodically distribute a part of their earning and invest both in equities and fixed securities in the
proportion indicated in their offer documents. Ina rising market, the NAV of these schemes may
not normally keep pace or fall equally when the market falls. These are ideal for investors
looking for a combination of income and moderate growth.
Money market Funds

The aim of money market funds is to provide easy liquidity, preservation of capital and moderate
income. These schemes generally invest in safer short-term instruments such as treasury bills.
Certificates of deposits, commercial paper and inter-bank call money. Returns of these schemes
may fluctuate depending upon the interest rates prevailing in the market. These are ideal for
Corporate and individual investors as a mean to park their surplus funds for short periods.
11
Load Fund
A load Fund is one that charges a commission for entry or exit. That is each time you buy or sell
units in the fund, a commission will be payable. Typically entry or exit loads range from 1% to
2%. It could be worth paying the load, if the fund has a good performance history.
No-load Fund
A No-load fund is one that does not charge a commission for entry or exit. That is no
commission is payable on purchase or sale of units in the fund. The advantage of no load fund is
that the entire corpus is put to work.
Other schemes:
Tax Saving Schemes
These schemes offer tax rebate to the investors under specific provision of the Indian income tax
law as the government offers ax incentives for investment in specified avenues. Investment made
inequity Linked saving Schemes (ELSS) and pension schemes are allowed as deduction under
section 88 of Income tax Act 1961. The act also provides opportunities to investors to save
capital gains U/S 54 EA and 54 EB by investing in Mutual Funds, providing the capital asset has
been sold prior to April 1, 2000 and the amount is invested before September 30, 2000.
Special schemes:
Industry Specific schemes
Industry Specific schemes invest only n the industries specified in offer document. The
investment of these funds is limited to specific industries like Info Tech, HDFC Bank Ltd. etc.
12
Index schemes
Index funds attempt to replicate the performance of a particular index such as the BSE sensex or
the NSE.
Sectoral schemes
Sectoral Funds are those, which invest exclusively in a specified industry or a group of industries
or various segments such as A group shares or initial public offering.
BENEFITS OF MUTUAL FUND INVESMENT

Professional management
Mutual funds provide the service of experienced and skilled professionals, backed by a dedicated
investment research team that analyze the performance and prospects of companies and selects
suitable investments to achieve the objectives of the scheme.
Diversification
Mutual fund investment in a number of companies across a broad cross section of industries and
sectors. This diversification reduces the risk because seldom do all stocks decline at same time
and in the same proportion. You achieve this diversification through a Mutual Fund with far less
money than you can do on your own.
Convenient Administration
Investing in Mutual Fund reduces paper work and helps you avoid many problems such as bad
deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save
your time and make investing easy and convenient.
13
Return Potential
Over a medium to a long term, Mutual Funds have the potential to provide a higher return as
they invest in a diversified base of selected securities.
Low cost
Mutual Funds are a relatively less expensive way to invest compared to directly investing in the
capital markets because the benefits of scale in brokerage, custodial and other fees translate into
lower costs for investors.
Liquidity
In open end schemes, the investor gets the money back promptly at net asset value related prices
from the mutual funds. In closed end schemes, the units can be sold on a stock exchange at the
prevailing market price or the investor can avail of the facility of direct repurchase at NAV
related prices by Mutual fund.
Transparency
You get regular information on the value of your investment in addition to disclosure on the
specific investment made by your scheme, the proportion invested in each class of assets and the
fund managers investment strategy and outlook.
Flexibility
Through features such as regular investment plans, regular withdrawal plans and divided
reinvestment plan, you can systematically invest or withdraw funds according to your needs and
convenience.
14
Affordability
Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund
because of its large corpus allows even a small investor to take the benefits of its investment
strategy.
Choice of Schemes
Mutual funds offer a family of schemes to suit your varying needs over a life.
Well regulated
All mutual funds are registered with SEBI and there function with the provisions of strict
regulations designed to protect the investment of investors. The operations of mutual funds are
regularly monitored by SEBI.
NET ASSET VALUE (NAV)

The net asset value of the fund is the cumulative market value of the fund net of its liabilities. In
other words, if the fund is dissolved or liquidated, by selling off all the assets in the fund, the
shareholders would collectively own this amount. This gives rise to the concept of net asset value
per unit, which is the value, represented by the ownership of one unit in the fund. It is calculated
simply by dividing the net asset value of the fund by the number of units. However, most people
refer loosely to the NAV percent in NAV, ignoring the per unit. We also abide by the some
convention.
15
Asset value is equal to

Sum of market value of shares/debentures + liquid assets/ cash held, if any + dividends/ interest
accrued amount due on unpaid assets expenses accrued but not paid.
Details on above items

For liquid shares/debentures, valuation is done on the basis of the last or closing market price on
the principal exchange where the security is traded.
For illiquid and unlisted and or thinly traded shares/ debentures, the value has to be estimated.
For shares, this could be the book value per shares or an estimated market price if suitable
benchmarks are available. For debentures and bonds, value is estimated on the basis of yields of
comparable liquid securities after adjusting for illiquidity. The value of fixed interest bearing
securities moves in a direction opposite to interest rate changes valuation of debentures and
bonds is a big problem since most of them are unlisted and thinly traded. This gives considerable
leeway to the AMC on valuation and some of the AMC are believed to take advantage of this and
adopt flexible valuation policies depending on the situation.
Interest is payable on debentures/bonds on a periodic basis say every 6 months but with every
passing day, interest is said to be accrued, at the daily interest rate, which is calculated by
dividing the periodic interest payment with the number of days in each period. Thus accrued
interest on a particular day is equal to the daily interest rate multiplied by the number of days
since the last interest payment date.
Usually dividends are proposed at the time of the annual amount general meeting and become
due on the record date. There is a gap between the dates on which it becomes due and the actual
payment date. In the intermediate period, it is deemed to be accrued.
Expenses including management fees, custody etc. is calculated on a daily basis.
16
RECENT TRENDS IN MUTUAL FUND INDUSTRY IN INDIA

Alone HDFC Bank Ltd. with just one scheme is 1964, now competes with as many as odd
products and 34 players in the market. In spite of the stiff competition and losing market share.
HDFC Bank Ltd. still remains a formidable force to recon with.
Last six years have been the most turbulent as well as existing ones for the industry. New players
have come in, while others have decided to close shop by either selling off or merging with
others. Product innovation is now passed with the game shifted to performance delivery in fund
management industry like distributors, registrars and transfer agents, and even the regulators
have become more mature and responsible.
The industry is also having a profound impact on financial markets. While HDFC Bank Ltd. has
always been a dominant player on the bourses as well as the debt markets, the new generation of
private funds which have gain substantial mass are now seen flexing their muscles. Fund
managers, by their selection criteria for stock have forced corporate governance on the industry.
By rewarding honest and transparent management with higher valuation, a system of risk reward
has been created where the corporate sector is more transport than before.
Funds have shifted focus to the recession free sectors like HDFC Bank Ltd., FMCG and
technology sector. Funds performances are improving. Funds collection which averaged at less
than Rs. 100 bn. per annum for five year period spanning 1993-98 doubled to Rs. 210 bn. in
1998-99. In the current year mobilizations till now have exceeded Rs. 300 bn. Total collection
for the current financial year ending March, 2000 is expected to reach Rs.450 bn.
What is particularly noteworthy is that bulk of the mobilization has been by the private sector
mutual funds rather public sector mutual funds. Indeed private Mutual Funds saw a net inflow of
17
Rs. 7819.34 crore during the first nine months of the year as against a net flow of Rs. 604.40
crore in the case of public sector funds.
Mutual funds are competing with commercial banks in the race fir the investors saving and
corporate float money. The power shift towards mutual funds has become obvious. The coming
few years will show that the traditional saving avenues are losing out in the current
scenario. Many investors are realizing that investments in saving accounts are as good as looking
up their deposits in a closet. The fund mobilization trend by the mutual funds in the current year
indicates that the money is going to mutual funds in a big way. The collection in the first half of
the financial year 1999-2000 matches the whole of 1998-99.
In India, mutual fund asset are not even 10 % of the bank deposits, but this trend is beginning to
change. Recent figures indicates that in the first quarter of the current financial year mutual fund
assets went up by 115 % whereas bank deposit rose by only 17 % (Source: Thick tank. The
financial Express September, 99). This is forcing a large number of banks to adopt the concept of
narrow banking where in the deposit are kept in Gifts and some other assets improve liquidity
and reduces risk. The basic fact lies that banks cannot be ignored and they will not close down
completely. Their role as intermediaries cannot be ignored. It is just that mutual funds are going
to change the way banks do business in future.
The most important trend in the mutual fund industry is the aggressive expansion of the foreign
owned mutual fund companies and the decline of the companies floated by the nationalized
banks and smaller private players.
Many nationalized banks got in to the mutual fund business in the early nineties and got off to a
good start due to the stock market boom prevailing then. These banks did not really understand
the mutual fund business and they just viewed it as another kind of banking activity. Few hired
18
specialized staff and generally choose to transfer staff from the parent organization. The
performance of most of the schemes floated by these funds was not good. Some scheme are
offered guaranteed returns and their parents organization had out these AMCs by paying large
amount of money as the difference between the guarantee and the actual returns. The service
level was also very bad. Most of these AMCs by paying large amount of money as the difference
between the guaranteed and actual returns. The service levels were also very bad. Most of these
AMC share not been able to retain staff, float new schemes etc. and it is doubtful whether, barren
a few exceptions, they have serious plans of continuing the activity in the major way.
The experience of some of the AMCs floated by private sector Indian companies. Indian
companies were also very similar. They quickly realized that the AMC business is a business,
which makes money in the long term and required deep-pocketed support in the intermediate
years. Some have solved out to foreign owned companies, some have merged with others and
there is general restructuring going on.
The foreign owned companies have deep pockets and have come in here with the expectation of
long haul. They can be crediting with introducing many new practices such as new product
innovation, sharp improvement in service standards and disclosure, usage of technology, broker
education and support etc. In fact, they forced the industry to upgrade itself and services levels of
organizations like HDFC Bank Ltd. have improved dramatically in the last few years in response
to the competition provided by these.
19
FUND RANKING
Equity-Diversified
Rank
Scheme
NAV
Returns
(%)
Star Rating
(Rs.)*
1-yr
5-yr
01.
Reliance Vision
67.07
155.2
45.5
-------
02.
Franklin Prima Fund
73.87
177.1
46.5
-------
03.
HDFC Equity Fund
53.09
126.3
41.1
--------
04.
Franklin Bluechip
54.74
120.6
40.9
--------
05.
Reliance Growth
77.42
155.7
42.5
--------
06.
Templeton Growth (D)
22.49
138.6
35.7
-------
07.
Franklin Prima Plus
50.66
107.3
37.5
-------
08.
Alliance Equity
58.40
118.7
40.0
-------
09.
Tata Pure equity
24.25
140.6
35.8
-------
10.
HDFC Top 200 (D)
21.43
134.1
30.0
-------
*As on 03 march, 2004

5 year returns are compounded annual returns.
Ranks based on 5 year risk adjusted returns
Equity Sector
Rank
Scheme
NAV
Return
(%)
(Rs.)*
1-yr
5yr
20
Information Technology
1.
Tata life SC & TEC
18.96
120.5
25.9
2.
Franklin Internet OPP
8.81
83.8
14.2
3.
DSP- ML Tecnology.com
7.94
66.7
9.4
1.
Birla MNC Fund
53.55
93.8
23.2
2.
UTI MNC
18.37
80.2
17.3
3.
Kotak MNC Scheme
14.66
98.3
17.3
1.
Franklin FMCG Fund
15.20
47.4
9.7
2.
PRU ICICI FMCG Fund
11.96
59.2
8.0
3.
SBI Magnum FMCG Fund
10.02
79.8
7.7
MNC
FMCG

Income Funds
Rank Scheme
NAV
Returns
(%)
Star
(Rs.)*
1-yr
5-yr
Rating
01.
PNB Debt Fund
19.63
9.6
17.0
-----
02.
Principal Income
15.35
8.4
14.1
-----
03.
Alliance Income
22.77
8.3
13.6
-----
04.
HDFC Income Fund
15.58
8.9
14.1
------
05.
UTI Bond Fund
18.61
6.3
11.7
------
21
06.
DSP-ML Bond Fund
22.61
7.9
13.9
-----
07.
Templeton GIP
10.71
4.8
8.3
-----
08.
Templeton Income
23.57
8.2
13.5
-----
09.
Birla Income Plus B
27.83
8.1
13.9
------
10.
HDFC High Interest
22.94
8.3
14.2
-----
NAV
Returns
(%)
Star
(Rs.)*
1-Yr
5-Yr
Rating

Gift Funds
Rank Scheme
01.
Alliance G-Sec
18.43
12.5
17.1
-----
02.
Tata G-Sec Fund B
21.93
11.9
19.2
-----
03.
Birla Gift Plus
21.93
12.3
17.6
-----
04.
Kotak Gift
21.52
12.0
16.5
-----
05.
Templeton Govt. Sec
22.13
11.9
17.5
-----
06.
HDFC Gift Fund
14.62
15.7
20.1
-----
07.
FT Gift fund
14.62
15.7
20.1
-----
08.
HDFC Sov Gift
15.27
08.0
09.9
-----
09.
LIC G-Sec Fund
17.38
07.8
14.8
-----
10.
SBI Magnum Gift
15.87
09.1
13.8
------
22

Liquid Funds
Rank Scheme
NAV
Returns (%)
Star
(Rs.)*
1-Yr
Rating
01.
First India Liquid
11.32
5.7
-----
02.
Can Liquid
11.45
5.7
-----
03.
Reliance Liquid
15.36
5.5
-----
04.
IL&FS Liquid Fund
11.74
5.4
-----
05.
Kotak Liquid
12.63
5.3
----
06.
JM High Liquidity
17.51
5.3
-----
07.
Templeton Liquid
15.66
5.3
-----
08.
SBI Magnum Insta (Cash)
14.19
5.3
-----
09.
DSP-ML liquidity
15.41
5.3
-----
10.
PRU ICICI Liquid
15.53
5.2
----
*As on 3 March, 2004

Ranks based on one year risk adjusted returns
Balanced Funds
Rank Scheme
NAV
Returns
(%)
Star
(Rs.)*
1-Yr
3-Yr
Rating
01.
Principal Child
25.02
49.9
24.1
-----
02.
Templeton Pension
28.33
42.2
19.5
-----
23
03.
HDFC Prudence
46.8
91.9
32.5
-----
04.
Can Premium
19.59
36.7
24.4
-----
05.
Franklin Balanced
17.85
65.9
24.5
-----
06.
UTI CCP
15.43
32.2
16.6
-----
07.
UTI US 95
30.47
60.0
21.1
-----
08.
JM Balanced Fund
11.61
46.1
31.3
-----
09.
Sundaram Balanced
16.95
66.0
21.9
-----
10.
UTI ULIP 71
14.28
49.3
16.4
------
NAV
Returns
(%)
Star
(Rs.)*
1-Yr
3-Yr
Rating

Monthly Income Plans
Rank Scheme
01.
Birla MIP
15.42
16.0
14.9
-----
02.
PRU ICICI MIP
14.45
14.6
12.3
-----
03.
Templeton MIP
15.81
17.3
13.5
-----
04.
Alliance MIP
20.07
20.1
15.2
-----
05.
FT India MIP
15.86
18.0
15.2
-----
06.
Templeton MIP
1026
05.8
09.7
-----
07.
Reliance Medium Term
15.06
06.9
10.6
-----
08.
Sun F&C MIP
13.87
06.5
10.7
-----
24

25
CHAPTER - 2
LITERATURE REVIEW
26
LITERATURE REVIEW
Chandra Prassana Managing Investments 1st Edition, 40-43, New Delhi, Tata Mc-Graw
Hill, 1998.
Mutual Fund is trust that pools the saving of a number of investors who share a common
financial goal.
Waghmare, Tushar, The Future of Fund Management in India, 91-96, New Delhi, Tata
Mc-Graw Hill, 1998.
The basic objective of a mutual fund is providing a diversified portfolio so as to reduce the risk
in investment at a lower cost.
Srivastava, R.M. & Nigam Divya, Management of Indian Financial Institute HDFC Bank
Ltd. On edition III, 35-37, New Delhi, Himalaya Publication House, 1996.
The Indian mutual fund industry is dominated by the HDFC Bank Ltd. which has a total corpus
of. 700 billion collected from more than 20 million investors.
Krishnamurthy, Suresh, Mutual Funds, Portfolio Organizer, 16-20, March2004.
Worldwide, good mutual fund companies are known by their AMCs and this fame is directly
linked to their superior stock selection skills
Adajania, Kayejad E., Best Mutual Funds 2004, Outlook Money, 26-31, March2004.
Fund ranking.
27
CHAPTER -3
28
Methodology is conceptual structure with in which research is conducted. It constitutes the blue
prints for collection, measurement and analysis of data.
Research is an academic activity and the term is used in a technical sense. According to
CLIFFORD research comprises defining & refining problems, formulating hypothesis,
collecting, organizing & evaluating data, making deductions and reaching conclusions and at last
carefully testing the conclusion to determine whether it fits the formulating hypothesis or not.
RESEARCH DESIGN
The methodology adopted to achieve the project objective involved casual and descriptive
research method. The information required for fulfilling the objective of the study was collected
from various primary and secondary sources.
SAMPLING
The survey comprised of Judgment Sampling Technique for preferred insurance companies.
SAMPLE DESIGN
Number of Schemes studied:
EQUITY FUNDS
LIQUID FUNDS
BALANCED EQUITY FUNDS
MIP FUNDS
GIFT FUNDS
29
SOURCES OF DATA
As the study is broadly in descriptive in nature, it requires collections of information both
primary and secondary sources.
Primary Data:Primary data needed for the purpose of study are collected through direct communication with
respondents.
Secondary Data:Secondary data needed for the purpose of study are collected from newspaper, journals,
magazines and websites etc.
DATA ANALYSIS
For data analysis line charts & time series have been used.
30
CHAPTER 4
OBJECTIVE OF THE STUDY
31
OBJECTIVE OF THE STUDY

To make the performance appraisal of various schemes of mutual funds.
To check the performance of various banks based on various schemes related with
Mutual Funds.
To analyze a performance of Mutual Funds based upon different time period say six
mths, 3 yrs, & from inception of these funds.
To analyze and compare different mutual funds.
32
CHAPTER - 5
ABOUT HDFC BANK LTD.
33
ABOUT HDFC BANK LTD.

The Housing Development Finance Corporation Limited (HDFC) was amongst the first
to receive an in-principle approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, as part of the RBIs liberalization of the Indian Banking Industry in 1994. The
bank was incorporated in August 1994 in the name of HDFC Bank Limited, with its registered
office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank
in January 1995.
PROMOTER
HDFC is Indias premier housing fianc company and enjoys an impeccable track record in India
as well as in international markets. Since its inception in 1977, the Corporation has maintained a
consistent and healthy growth in its operations to remain a market leader in mortgages. It
outstanding loan portfolio covers well over a million dwelling loans to different units. HDFC has
developed significant expertise in retail mortgage loans to different market segments and also has
a large corporate client base for its housing related credit facilities. With its experience in the
financial markets, a strong market reputation, large shareholder base and unique consumer
franchise, HDFC was ideally positioned to promote a bank in the India environment.
BUSSINESS FOCUS
HDFC Banks mission is to be a World-Class Indian Bank. The Banks aim is to build sound
customer franchises across distinct businesses so as to be the preferred provider of banking
services in the segments that the bank operates in and to healthy growth in profitability,
consistent with the banks risk appetite. The bank is committed to maintain the highest level of
ethical standards, professional integrity and regulatory compliance. HDFC Banks business
34
philosophy is based on four-core value: Operational Excellence, Customer Focus, Product

Leadership and People.
CAPITAL STRUCTURE
The authorized capital of HDFC Bank is Rs. 450 crore (Rs. 45 Billion). The paid-up capital is
Rs. 282 crore (Rs. 28.2 billion). The HDFC group HOLDS 24.2% of the banks equity while
about 13.1% of the equity is held by the depository in respect of the banks issue American
Depository Shares (ADS/ADR Issue). The Indian Private Equity Fund Mauritius (IPEF) and
Indocean Financial Holding Ltd. Mauritius (IFHL) (both funds advised by J P Morgan Partners,
formerly Chase Capital Partners) together hold about 5.5 % of the banks equity. Roughly 27.5%
of the equity is held by FLL,NRIs/OCBs while the balance is widely held by about 214,000
shareholders. The shares are listed on The Stock Exchange, Mumbai and the National Stock
Exchange. The banks American Depository Shares are listed on the New York Stock Exchange
(NYSE) under the symbol HDB.
TIMES BANK AMALGAMATION

In the milestone transaction in the Indian banking industry, Times Bank Limited (another new
private bank promoted by Bennett, Coleman & Co. /Times Group) was merged with HDFC Bank
Ltd., effective February 26, 2000. As per the scheme of amalgamation approved by the
shareholders of both banks and the Reserve bank of India, shareholders of Tomes Bank received
one share of HDFC Bank for every 5.75 shares of Tomes bank. The amalgamation added
significant value to HDFC Bank in terms of increased branch network, expended geographic
reach, enhanced customer base, skilled manpower and the opportunity to cross-sell and leverage
alternative channels.
35
DISTRIBUTION NETWORK
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of over
331 branches spread over 170 cities across the country. All the branches are linked on a real-time
basis. Customers in 90 locations are also serviced through Phone Banking. The Banks expansion
plans take into account the need to have a presence in all major industrial and commercial
centers where its corporate customers are located as well as the need to build a strong retail
customer base for both deposits and loan products. Being a clearing/settlement bank to various
leading stock exchanges, the Bank has branches in the centers where the NSE/BSE has a strong
and active member base.
The bank also has a network of over 900 networked ATMs across these cities. Moreover, HDFC
Banks ATM network can be accessed by all domestic and international Visa/Master Card, Visa
Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders.
MANAGEMENT
Mr. Deepak Parekh is present chairman of HDFC Bank.
The Managing Director Mr. Aditya Puri has been a professional banker for over 25 years and
before joining HDFC Bank in 1994 was heading Citibanks operation in Malaysia.
The Banks Board of Directors is composed of eminent individuals with a wealth of experience
in public policy, administration, industry and commercial banking. Senior executives
representing HDFC are also on the Board.
Senior banking professionals with substantial experience in India and aboard hear carious
businesses and functions and report to the Managing Director. Given the professional expertise
of the management team and the overall focus on recruiting and retaining the best talent in the
industry, the bank believes that its people are a significant competitive strength.
36
TECHNOLOGY
HDFC Bank operates in a highly automated environment in terms of information technology and
communication systems. All the banks branches have connectivity which enables the bank to
offer speedy funds transfer facilities to its customers. Multi-branch across is also provided to
retail customers through the branch network and Automated Teller Machines (ATMs).
The Bank has made substantial efforts and investments in acquiring the best technology available
internationally to build the infrastructure for a world class bank. In terms of software, the
Corporate Banking business is supported by Flex cube, while the Retail Banking business by Fin
ware, both from I-Flex Solutions Ltd. The systems are open, scan able and web enables.
The Bank has prioritized its engagement in technology and the internet as one of its key goals
and has already made significant progress in web enabling its core business. In each of its
business, The Bank has succeeded in leveraging its market position, expertise and technology to
create a competitive advantage and build market share.
BUSINESS PROFILE
HDFC Bank caters to a wide range of banking services covering both commercial and
investment banking on the wholesale side and transactional/ branch banking on the retail side.
The Bank has three key business areas:-
a) Wholesale Banking Services

The Banks target market is primarily large, blue-chip manufacturing companies in the Indian
corporate sector and to a lesser extent, emerging mid-sized corporate. For these corporate, the
bank provides a wide range of commercial and transactional banking services, including working
capital finance, trade services, transactional services, cash management etc. The bank is also a
leading provider of structured solutions which combine cash management services with vendor
37
and distributor finance for facilitating superior supply chain management for its corporate
customers. Based on its superior product delivery/ service levels and strong customer orientation,
the Bank has made significant inroads into the banking consortia of a number of leading Indian
corporate including multinationals companies from the domestic business houses and prime
Public Sector Companies. It is recognized as a leading provider of cash management and
transactional banking solutions to corporate customers, mutual funds, stock exchange members
and banks.
b) Retail Banking Services

The objective of the Retail Bank is to provide its target market customers a full range of financial
products and banking services giving the customers a one stop window for all his/her banking
requirements. The products are backed by world-class service and delivered to the customers
through the growing branch network, as well as through alternative delivery like ATMs, Phone
banking, Net banking and Mobile banking.
RATING
HDFC Bank has its deposit programmes rated by two rating agencies Credit Analysis &
Research Limited (CARE) and Fitch Rating India Pvt. Ltd. The banks fixed deposit programme
has been rated CARE AAA (FD) [Triple A] by CARE, which represents instruments considered
being of the best quality, carrying negligible investment risk. CARE has also rated the
Banks
certificate of
Deposit
(CD) programmePR 1+ which represents superior
capacity for repayment of short terms promissory obligations. Fitch Rating India Pvt. Ltd.
(100% subsidiary of Fitch Inc.) has assigned the AAA (ind.) rating to the Banks deposit
programme, with the outlook on the rating as stable. This rating indicates highest credit
quality where protection factors are very high. HDFC Bank also has its long-term unsecured,
38
subordinated (Tier-II) Bonds Rated by CARE and Fitch Rating Pvt. Ltd. CARE has assigned the
rating of CARE AAA for the Tier II Bonds while Fitch Rated India Pvt. Ltd. has assigned the
rating AAA (ind) with the outlook on the rating as stable. In each case referred to above, the
rating awarded were the highest assigned by the rating agency for those instruments.
CORPORATE GOVENANCE RTAING

The bank was one of the first four companies which subjected itself to a corporate Governance
and Value Creation (GVC) rating by the rating agency. The credit Rating Information Services of
India Limited (CRISIL). The rating provides an independent assessment of an entitys current
performance and an exception on its balanced value creation and corporate governance
practices in future. The bank has been assigned a CRISIL GVC Level 1 rating which indicates
that the banks capability with respect to wealth for all its stakeholders while adopting sound
corporate governance practices is the highest.
PRODUCT RANGE
Saving, fixed Deposits, current and Demat Accounts

Saving Account:
Apart from the usual facilities you get a free ATM Card, Inter branch banking, Net banking, Bill
pay, Phone banking, Debit Card and Mobile Banking, among others.
HDFC Bank Preferred:

A preferential saving Account where you are assigned a dedicated Relationship Manger, who is
your one point contact. You also get privilege like fee waivers, enhanced ATM withdrawal limit,
priority locker allotment free Demat Account and lower interest rates on loans, to name a few.
39
Sweep-In Account:
A fixed deposit linked to your saving account. So, even if your Saving account runs a bit short,
you can issue a cheque (or use your ATM Card). The money is automatically swept in from your
fixed deposit into your saving account.
Super Saver Account:

Gives you an overdraft facility up to 75% of your Fixed Deposit. In an emergency, you can
access your funds while your Fixed Deposit continues to earn high interest.
HDFC Bank PLUS:

Apart from Regular and Premium Current accounts we also have HDFC Bank Plus, a Current
Account and then some more. You can transfer up to 50 Lakh per month at no extra charge,
between the four metros. You can also avail of cheque clearing between the four metros, get cash
delivery/pickup up to Rs. 25000/- , home delivery of Demand Drafts, at par cheques, outstation
cheques, clearance facility etc.
Demat Account:
Conduct hassle free transactions on your shares. You can also access your Demat Account on the
Internet.
INNOVATIVE SERVICES FOR YOUR CONVENIENCE

Phone Banking:
24 hours automated banking services with 39 Phone banking numbers available.
ATM: 24 Hours banking
Apart from routine transactions, you can also pay your utility bills and transfer funds at any of
our ATMs across the country all year round.
40
Inter city/Inter branch Banking:

Access your account from any of your 31 branches in 170 cities.
Net banking:
Access your bank account from anywhere in the world, at anytime your own convenience. You
can also view your Demat Account through Net Banking.
International Debit Card:

An ATM card can shop with all over the country and in over 140 countries with. You can spend
in any currency and pay in Rupees.
Mobile Banking:
Access your account on your mobile phone screen at no airtime cost. Use SMS technology to
conduct your banking transactions from your cell phone.
Bill Pay:
Pay your telephone, electricity and mobile phone bills through our ATMs, Internet, Phone or
mobile phone. No more standing in long queues or writing cheques.
LOANS FOR EVERY NEED:

Now, our loans come to you in easy-to-pay monthly installments and are available with easy
documentation and quick delivery.
Personal Loan:
Take a loan of up to 3 Lakh for a wedding, education, purchase of a computer or an existing
holiday.
New Car Loans and Used Car Loans:

Finance up to 90 % of the Cost of a car new or used and the loans come to you with easy
documentation and speedy processing at attractive interest rates.
41
Loans against Shares:

Get an overdraft up to Rs. 10 Lakh at an attractive interest rate against shares up to 50% of the
market value of your shares. Incase of Demat Shares you can get a loans against Shares of up to
65% of the market value of your shares, till Rs. 20 Lakh.
Two Wheeler & Consumer Loans:

To help you buy the best durables for your.
Current Account:
Get a personalized cheque book, monthly account statement, inter branch banking and much
more.
Mutual Fund
Apart from a wide choice of Mutual Funds to suit your individual needs, you benefit from expert
advice on choosing the right funds based on in-depth market analysis.
International Credit Card:

Get an option of Silver, Gold or Health plus Credit card accepted world wise from a world class
bank. If you have outstanding balance on your other credit card, you can transfer that balance to
this card at a lower interest rate.
NRI Services:
A comprehensive range, backed by unmatched features and world class service, ensures NRIs all
the banking support they need.
Forex Facilities:
Avail of foreign currency, travelers cheques, foreign exchange, demand drafts to meet your travel
needs.
42
Insurance*:
HDFC Bank now brings you Life Insurance and Pension Solutions like Risk Cover Scheme,
saving Scheme, Childrens Plan and Personal Plan from HDFC Standard Life Insurance Co. Ltd.
*Insurance is the subject matter of solicitation.
AWARDS AND ACHIEVEMENTS- BANKING SERVICES

HDFC Bank began operations in1995 with a simple mission to be a World class India Bank.
We realized that only a single minded focus on product quality and service excellence would
help us get there. Today, we are proud to say that we are well on our way towards that goal.
It is extremely gratifying that our efforts towards providing customer convenience have been
recognized both nationally and internationally.
In 2004 HDFC Bank was named Best Overall Local/Domestic Bank-India in the Corporate
Cash Management Poll conducted by the Hong Kong based Asia money Magazine.
In 2003 Forbes Global again named us in its ranking of Best Under a Billion, 200 Best Small
Companies for 2003.
Hong Kong based Finance Asia Magazine rated us Best Domestic Commercial Bank in
India in 1999, 2000, 2001 respectively and Best Local Bank in India in 2002 and 2003.
HDFC Bank has been named Best Domestic Bank in India Region in The Asset Triple A
Country Awards 2003.
Leading Indian business Magazine Today in a survey rated us Best Private Sector Bank in
India in1999 and Best Bank in India in 2003.
NASSCOM and economictimes.com have named us the Best IT User in Banking at the IT
Users Awards 2003.
43
Leading Personal Finance magazine in India Outlook Money named HDFC Bank the Best
Bank in the Private Sector for the year 2003.
Leading business newspaper The Financial Express named HDFC Bank the Best New Private
Bank 2003 in the FE-Ernst & Young Best Banks Survey 2003.
There have been some other proud moments as well:
Landon based Euro Money Magazine gave us the award for Best Bank India in
1999, Best Domestic Bank in India in 2000 and Best Bank in India in 2001 and
2002.
Asia Money Magazine has named us Best Commercial Bank in India 2002
The economic Times have conferred on us The Economic Times Awards for Corporate
Excellence as the Emerging Company of the Year 2000-01.
For our use of information technology we have been recognized as a Computer world
Honors Laureate and awarded the 21st Century Achievement Award in 2002 for Finance,
Insurance & Real Estate category by Computerworld, Inc., USA. Our technology
initiative has been included as a case study in their online global archives.
The Economics Times has conferred on us The Economics Times Awards for Corporate
Excellence as the Emerging Company of the Year 2000-01.
Leading India business magazine Business India named us Indias Best Bank in 2000.
In the year 2000 leading financial magazine Forbes Global named us in its list of The
300 Best Small Companies in the world and as one of the 20 for 2001 best small
companies in the world.
44
We are aware that these awards are more milestones in the continuing, never ending journey of
providing excellent services to our customers. We are confident, however, that with your
feedback and support, we will able to maintain and improve our services.
FINANCIAL INFORMATION
NEWS RELEASE HDFC BANK LTD.
FINANCIAL RESULTS (INDIAN GAAP)
FOR THE PERIOD APRIL-JUNE2006
The board of Directors of HDFC Bank Ltd. approved the banks account for the quarter ended
june30, 2004 at its meeting on Wednesday July 14 th 2006. The accounts have been subjected to
limited review by the banks statutory auditors.
FINANCIAL RESULTS:
For the quarter ended June 30, 2006 the bank has earned total income of Rs. 810.6 crore as
against Rs. 709.3 crore in the corresponding quarter ended year June 30, 2003. Net revenues (net
interest income plus other income) were Rs. 506.8 crore for the quarter ended June 30, 2004 an
increase of 23.7% over Rs.409.9 crore for the corresponding quarter of the previous year. Interest
earned (net of loan origination costs) increased from Rs.577.1 crore in the corresponding quarter
ended June 30, 2006 to Rs. 702.6 crore. Net interest income (interest earned less interest
expended) for the quarter ended June 30, 2004 increased by 43.6% to 398.8 crore, with strong
average asset growth of 33.9% and core net interest margin remaining healthy at just over3.8%.
Other income for the quarter ended June 30, 2004 was Rs.108.0 crore consisting principally of
fees and commissions of Rs. 144.0 crore, foreign exchange & derivatives revenues of Rs.27.9
crore and profit/(loss) on sale/revaluation of investments of (Rs. 65.2) crore as against Rs.60.8
45
crore, Rs. 28.8 crore and Rs. 42.3 crore respectively for the quarter ended June 30, 2003. Loss on
revaluation of investment is primarily in respect of government (SLR) securities in the Available
for sale (AFS) category, in particular, on account of the pull to par effect of a declining term to
maturity as the security approach their redemption dates. Operating expanses for the quarter at
Rs. 230.8 crore were 45.5% of net revenues and 28.5% of total income.
Provisions and contingencies for the quarter were Rs. 69.0 crore, primarily comprising general &
specific loan loss provisions of Rs. 40.0 crore and amortization of premia (for investment in the
Held to Maturity category) of Rs. 28.8 crore. Profit before tax was Rs. 207.0 crore for the
quarter ended June 30, 2004 an increase of 31.2% over the corresponding quarter in 2003. After
providing Rs. 67.0 crore for taxation the bank earned a net profit of Rs. 140.0 crore a 30.5%
increase over the quarter ended June 30, 2003. Balance sheet growth was also healthy, coming
from both the retail and corporate segments. As on June 30, 2004 total deposits were Rs.
31406.00 crore,
an increase of 34.6% over Rs.23340.00 crore as of June 30, 2003. Saving
account deposits, which are core to the banks strategy of building stable, low cost source of
funds and reflect the strength of the retail liability franchise, were at Rs. 8,729.00 crore an
increase of 66.7% over June 30, 2003. The banks core customer assets (including advances,
corporate debentures, CPs etc.) increased from Rs. 14,113.00 crore as on June 30, 2003 to Rs.
19543.00 crore as on June 30, 2004 a growth of 38.5%. Retail loans (net of Rs. 740.00 crore
loans securities out) grew 82.4 on a year- on year basis to Rs. 7871.00 crore and new form 41%
of gross advances as against 35% of gross advances as on June 30, 2003. In line with its entry
into mortgages business, during the quarter, the bank made its first investment of Rs. 101.00
crore in mortgage backed securities (MBS) in respect and serviced by HDFC.
46
BUSINESS UPDATES:
During the current financial year so far, the branch network has been expended up 330 outlets in
169 cities from 241 outlets in 129 cities in June 2003. as of June 2004, the number of debit cards
issued by the bank crossed 202 million while credit cards issued touched 640,000. The bank
further consolidated its position in the merchant-acquiring segment of the cards business with the
number of POS terminals deployed at over 30,000. Portfolio quality as of June30, 2004 remained
healthy with net non-performing assets at 0.2% of advances. General loan loss provisions were
about 0.9% of standard advances as against the regulatory requirement of 0.25%. Capital
Adequacy Ratio (CAR) was 11.0% against the regulatory minimum of 9%. Tier I CAR was at
7.7%.
Note:
(i)
Rs. = Indian Rupees
(ii)
1 crore = 10 million
(iii)
All figures and ratio are in accordance with Indian GAAP.
Certain statement in this release which contain words or phrases such as continue to ,
remain, should, etc., and similar expressions or variation of these expressions or those
concerning our future prospects are forward looking statements. Actual results may differ
materially from those suggested by the forward-looking statement due to a number of risks or
uncertainties associated with the expectations. These risks and uncertainties include, but are not
limited to our ability to successfully implement our strategy, future levels of non-performing
loans, our growth and expansion, the adequacy of our allowances for investment and credit
losses technological changes, volatility in investment income, our exposure to market risks as
well as other risks detailed in the reports filed with the United State Securities and Exchange
47
Commission. The bank may from time to time make additional written and oral forward-looking
statements, including statements contained in the banks filing with the Securities and Exchange
Commission and our reports to shareholders. The bank does not undertake to update any
forward-looking statements that may be made from time to time by or on behalf of the bank, to
reflect events or circumstances after the date thereof.
48
CHAPTER -6
MUTUAL FUNDS SCHEMES
49
MUTUAL FUNDS SCHEMES
NOTICE
Notice is hereby given that pursuant to SEBI circular no. SEBI/IMD/CIR NO.
8/5611/2004 dated March 19, 2004.
I
With effect from March 25, 2004, the cut off timings and the Applicable NAV of the
schemes of the mutual fund have been revised as under
A.
Grindlays Super Saver Income Fund-Investment Plan, Short Term Plan, Medium
Term Plan, Grindlays Government Securities Fund-Investment Plan, Short Term
Plan, Provident Fund Plan & Grindlays Dynamic Bond Fund
i)
Purchases including switch ins
In respect of valid applications received upto 3 p.m. by the Mutual Fund alongwith a local
cheque or a demand draft payable at par at the place where the application is received, the
closing NAV of the day on which application is received shall be applicable.
In respect of valid applications received after 3 p.m. by the Mutual Fund alongwith a local
cheque or a demand draft payable at par at the place where the application is received, the
closing NAV of the next business day shall be applicable.
However, in respect of valid applications with outstation cheques/ demand drafts not payable at
par at the place where the application is received, closing NAV of the day on which
cheque/demand draft is credited shall be applicable.
50
ii)
Redemptions including switch outs
In respect of valid applications received upto 3 p.m. by the Mutual Fund, same days closing
NAV shall be applicable.
In respect of valid applications received after 3 p.m. by the Mutual Fund, the closing NAV of the
next business day shall be applicable.
In view of the above, the Mutual Fund shall ensure that there is an uniformity in time taken for
issuing redemption proceeds to all investors.
B)
Grindlays Cash Fund & Grindlays Floating Rate Fund
i)
Purchases including switch ins
In respect of valid applications, closing NAV of the day immediately previous to the day on
which funds are available for utilization by the fund shall be applicable. However, in respect of
any application received after 1 p.m. by the Mutual Fund and the funds are available for
utlisation by the fund on the same day, closing NAV of the same day shall be applied.
ii)
Redemptions including switch outs
In respect of valid applications received upto 10:00 a.m., by the Mutual Fund, previous days
closing NAV shall be applicable. In respect of valid applications received after 10:00 a.m. by the
Mutual Fund, same days closing NAV shall be applicable.
II
Investment pattern and Investment restrictions of GCF & GFRF have

been revised to include following
applicable requirements:
Mark-to-Market component of the fund on a weekly average basis will be less than 10%.
For a fixed rate asset, the remaining tenor will be 1 year or less.
For a floating rate asset, the interest reset frequency will be 1 year or less.
51
For a fixed rate/floating rate asset where the principal is paid in a staggered and/or on
amortizing basis (e.g. securitized papers), the average maturity of such an asset will be 1 year
or less.
For a portfolio using Interest Rate Swaps,

a) The composite floating rate asset will have an interest reset frequency up to 1 year.
b) For Interest Rate Swaps used to convert a floating rate asset into a fixed rate asset, the
fixed leg of the Interest Rate Swap will have remaining tenor upto 1 year.
For Forward Rate Agreements, the summation of the beginning and end dates of the
period covered will be 1 year or less.
For Interest Rate Futures and Bond Futures, the repricing risk will be 1 year or less.
CORPORATE
INVESTOR SCHOOL
PRODUCTS
NAV CORNER
DOWNLOADS
MF NEWS
52
HDFC MF Systematic Investment Plan (SIP) is similar to a Recurring Deposit. Every month an amount
you choose is invested in a mutual fund scheme of your choice. Youll be amazed to learn about the
many benefits of investing through HDFC MF SIP.
Being disciplined - Its the key to investing success. With the HDFC MF Systematic Investment
Plan you commit an amount of your choice (minimum of Rs. 1000 and in multiples of Rs. 100
thereof*) to be invested every month in one of our schemes.
Think of each SIP payment as laying a brick. One by one, youll see them transform into a
building. Youll see your investments accrue month after month. Its as simple as giving at least 6
postdated
monthly cheques to us for a fixed amount in a scheme of your choice. Its the perfect solution for
irregular
investors.
*Minimum amounts may differ for each Scheme. Please refer to SIP Enrolment Form for details.
Imagine you want to buy a car a year from now, but you dont know where the down-payment will
come from. HDFC MF SIP is a perfect tool for people who have a specific, future financial
requirement. By investing an amount of your choice every month, you can plan for and meet
financial goals, like funds for a childs education, a marriage in the family or a comfortable
postretirement life. The table below illustrates how a little every month can go a long way.
Monthly Savings - What
Savings
Total amount
per month
invested
(for 15 years) (Rs. in Lacs)
5000
9.0
4000
7.2
3000
5.4
2000
3.6
1000
1.8
your savings may generate

Rate of return
6.0%
8.0%
10.0%
(rupees in lacs, 15 years later)*
14.6
17.4
20.9
11.7
13.9
16.7
8.8
10.4
12.5
5.8
7.0
8.3
2.9
3.5
4.2
*Monthly instalments, compounded monthly, for a 15-year period.

Disclaimer: The illustration above is merely indicative in nature and should not be construed as investment advice. It does not in
any manner imply or suggest performance of any HDFC Mutual Fund Scheme(s). Please read Risk Factors.
53
Most investors want to buy stocks when the prices are low and sell them when prices are high.
But timing the market is timeconsuming and risky. A more successful investment strategy is to
adopt the method called Rupee Cost Averaging. To illustrate this well compare investing the
identical amounts through a SIP and in one lump sum.
Imagine Suresh invests Rs. 1000 every month in an equity mutual fund scheme starting in
January. His friend, Rajesh, invests Rs. 12000 in one lump sum in the same scheme. The following
table illustrate how their respective investments would have performed from Jan to Dec:
Month
Jan-04
Feb-04
Mar-04
Apr-04
May-04
Jun-04
Jul-04
Aug-04
Sep-04
Oct-04
Nov-04
Dec-04
Total
NAV
9.345
9.399
8.123
8.750
8.012
8.925
9.102
8.310
7.568
6.462
6.931
7.600
Sureshs Investment
Amount
Units
1000
107.0091
1000
106.3943
1000
123.1072
1000
114.2857
1000
124.8128
1000
112.0448
1000
109.8660
1000
120.3369
1000
132.1353
1000
154.7509
1000
144.2793
1000
131.5789
12000
1480.6012
Rajeshs Investment
Amount
Units
12000 1284.1091
12000
1284.1091
*NAV as on the 10th every month. These are assumed NAVs in a volatile market
Disclaimer: The illustration above is merely indicative in nature and should not be construed as investment advice. It does not in
any manner imply or suggest performance of any HDFC Mutual Fund Scheme(s). Rupee Cost Averaging neither ensures you profits
nor protects you from making a loss in declining markets. Please read Risk Factors.
As seen in the table, by investing through SIP, you end up buying more units when the price is low
and fewer units when the price is high. However, over a period of time these market fluctuations
are generally averaged. And the average cost of your investment is often reduced.
54
At the end of the 12 months, Suresh has more units than Rajesh, even though they invested the
same amount. Thats because the average cost of Sureshs units is much lower than that of
Rajesh. Rajesh made only one investment and that too when the per-unit price was high.
Sureshs
average
unit
price
Rajeshs average unit price = Rs. 9.345
12000/1480.6012
Rs.
55
8.105
It is far better to invest a small amount of money regularly, rather than save up to make one large
investment. This is because while you are saving the lump sum, your savings may not earn much
interest.
With HDFC MF SIP, each amount you invest grows through compounding benefits as well. That is,
the interest earned on your investment also earns interest. The following example illustrates this.
Imagine Neha is 20 years old when she starts working. Every month she saves and invests Rs.
5,000 till she is 25 years old. The total investment made by her over 5 years is Rs. 3 lakhs.Arjun
also starts working when he is 20 years old. But he doesnt invest monthly. He gets a large bonus
of Rs. 3 lakhs at 25 and decides to invest the entire amount.
Both of them decide not to withdraw these investments till they turn 50. At 50, Nehas
Investments have grown to Rs. 46,68,273* whereas Arjuns investments have grown to Rs.
36,17,084*. Nehas small contributions to a SIP and her decision to start investing earlier than
Arjun have made her wealthier byover Rs. 10 lakhs.
*Figures based on 10% p.a. interest compounded monthly.
Disclaimer: TheThe illustration above is merely indicative in nature and should not be construed as investment advice. It does not
in any manner imply or suggest performance of any HDFC Mutual Fund Scheme(s). Please read Risk Factors.
Investing with HDFC MF SIP is easy. Simply give us post-dated cheques for an amount of your
choice (minimum of Rs. 1000 and in multiples of Rs. 100 thereof*) and well invest the money
every month in a fund of your choice. The plans are completely flexible. You can invest for a
minimum of six months, or for as long as you want. You can also decide to invest quarterly and
will need to invest for a minimum of two quarters.
All you have to do after that is sit back and watch your investments accumulate. Please refer to
the
SIP
Enrolment
Form
for
terms
and
conditions
before
enrolment.
*Minimum amounts may differ for each Scheme.
The Proof of the Pudding

To illustrate the advantages of SIP Investments, this is how your investments would have grown if
you had invested say Rs. 1,000 systematically in the following schemes, on the first Business Day
of Every Month over a period of time.
HDFC Growth Fund
SIP Investments
Since
10 5 Year3 Year
Inception Year
HDFC Growth Fund

SIP Investments
Since
10 5 Year 3 1 Year
Inception Year
Year
SIP
56
Total Amount
68.00
Invested (Rs.000)
Market Value as on Apr
251.44
28, 06 (Rs.000)
Returns (Annualised)*
47.50
(%)
Benchmark Returns
35.95
(Annualised)# (%)
Past Performance may or may not be
#SENSEX
HDFC Top 200 Fund

SIP Investments
SIP
SIP
SIP
SIP
Total Amount
134.00 120.00 60.00 36.00 12.00
Invested (Rs.000)
213.76 81.25 17.07
471.99 426.63 163.28 83.19 17.30
28, 06 (Rs.000)
53.55 61.12 88.57
21.08
23.97 41.39 62.83 93.19%
(%)
Benchmark Returns
40.53 53.31 89.75
13.01
15.01 26.54 40.32 76.61%
(Annualised)# (%)
sustained in the future. Past Performance may or may not be sustained in the future.
#S&P CNX500
60.00
SIP
SIP
36.00 12.00
10 5 Year 3 Year
Since
Year
Inception
SIP
SIP
SIP
Total Amount
115.00
Invested (Rs.000)
691.26
28, 06 (Rs.000)
35.44
(%)
Benchmark Returns
23.65
(Annualised)# (%)
#BSE 200
36.00 12.00
10 5 Year 3 Year
Since
Year
Inception
SIP
SIP
SIP
Total Amount
64.00
Invested (Rs.000)
316.09
28, 06 (Rs.000)
63.45
(%)
Benchmark Returns
38.41
(Annualised)# (%)
#SENSEX
HDFC Balanced Fund
SIP Investments
60.00
36.00 12.00
280.41 90.37 16.27

66.20
70.42 73.55
41.15
53.51 89.75
sustained in the future.
10 5 Year 3 Year
Since
Year
Inception
SIP
SIP
SIP
Total Amount
68.00
Invested (Rs.000)
156.03
28, 06 (Rs.000)
29.58
(%)
Benchmark Returns
N.A
(Annualised)# (%)
#CRISIL Balanced Fund Index
SIP Investments
10 5 Year
1
Since
3 Year
Year
Year
Inception
SIP
SIP
SIP
SIP
Total Amount
Invested (Rs.000)
242.56 85.09 17.30
28, 06 (Rs.000)
59.38 65.11 93.09
(%)
Benchmark Returns
42.58 50.69 80.04
(Annualised)# (%)
sustained in the future. Past Performance may or
#S&P CNX500
60.00
HDFC Long Term Advantage Fund

SIP Investments
HDFC Capital Builder Fund
HDFC TaxSaver
SIP Investments
147.00
120.00 60.00
879.06
695.44 246.30 91.78 16.94
26.73
33.06 60.09 71.80% 86.21
18.78
23.28 44.16
SIP Investments
Since 5 Year 3 Year 1 Year

Inception SIP
SIP
SIP
36.00 12.00
60.00
36.00
12.00
302.29 108.29 17.82

69.80
87.02 103.03
44.16
51.97
76.61
sustained in the future.
10 5 Year 3
1
Since
Year
Year Year
Inception
SIP
SIP
SIP SIP
Total Amount
147.00
Invested (Rs.000)
132.06 60.21 15.00
980.52
28, 06 (Rs.000)
32.30 36.66 50.46
28.31
(%)
Benchmark Returns
N.A
29.48 45.71
N.A
(Annualised)# (%)
sustained in the future. Past Performance may or may not
60.00
51.97 76.61
may not be sustained in the future.
Total Amount
118.00
Invested (Rs.000)
Market Value as on Apr 28,
1,592.87
06 (Rs.000)
Returns (Annualised)* (%)
50.07
Benchmark Returns
23.68
(Annualised)# (%)
#S&P CNX500
HDFC Prudence Fund
36.00 12.00
120.00 60.00 36.00 12.00

704.02 181.27 69.10 15.12
32.82 46.12 47.60 52.65
N.A
N.A
29.48 45.71
be sustained in the future.
57
HDFC Children's Gift Fund - Savings Plan

HDFC Children's Gift Fund - Investment Plan
10 5 Year 3 Year
3 Year
Since
Since 5 Year
1 Year
SIP Investments
Year
SIP Investments
Inception
Inception SIP
SIP
SIP
SIP
SIP
SIP
Total Amount
Total Amount
62.00
60.00 36.00 12.00
62.00
60.00 36.00 12.00
Invested (Rs.000)
Invested (Rs.000)
Market Value as on Apr 28,
87.44
83.57 43.25 12.60
133.14 126.77 58.38 14.27
28, 06 (Rs.000)
06 (Rs.000)
30.12
30.56 34.28 37.72
13.31
13.26 12.37 9.60
(%)
Benchmark Returns
Benchmark Returns
N.A
N.A
29.48 45.71
N.A
N.A 29.48 45.71
(Annualised)# (%)
(Annualised)# (%)
Past
Performance
may
or
may
not
be
sustained
in the future.
Past Performance may or may not be sustained in the future.
HDFC Index Fund - Sensex Plus Plan
SIP Investments
Total Amount
Invested (Rs.000)
Market Value as on Apr 28, 06
(Rs.000)
Since
Inception
10 Year
SIP
HDFC Index Fund - Sensex Plan

5 Year
SIP
46.00
36.00
12.00
115.07
75.35
16.95
51.82
54.73
86.28
SIP Investments
Total Amount
Invested (Rs.000)
(Rs.000)
Since
5 Year 3 Year
Inception SIP
SIP
46.00
36.00
12.00
106.33
71.59
16.92
46.94
50.48
85.75
Benchmark Returns
54.50
58.12
94.56
(Annualised)# (%)
Benchmark Returns
54.50
58.12 94.53
(Annualised)# (%)
Past Performance may or may not be sustained in the future. #SENSEX (Total Returns Index)
#SENSEX (Total Returns Index)
HDFC Index Fund - Nifty Plan
SIP Investments
Total Amount
Invested (Rs.000)
(Rs.000)
Benchmark Returns
(Annualised)# (%)
#S&P CNX Nifty (Total Returns Index)
Since
Inception
10 Year
SIP
5 Year
SIP
46.00
36.00
12.00
102.62
68.90
16.85
44.77
47.36
83.12
48.65
55.60
85.97
*Load is not taken into consideration and the Returns are of Growth Plan. Investors are advised to refer to the Relative
Performance table furnished in our monthly newsletter In touch Mutually also available on our website - www.hdfcfund.com. Past
Performance may or may not be sustained in the future. Please refer SIP enrolment form or contact nearest ISC for SIP load
structure.
Disclaimer: The above investment simulation is for illustrative purposes only and should not be construed as a promise on
minimum returns and safeguard of capital. The AMC/Mutual Fund is not guaranteeing or promising or forecasting any returns. SIP
does not assure a profit or guarantee protection against a loss in a declining market.
HDFC Capital Builder Fund, HDFC Equity Fund and HDFC Tax Saver which are benchmarked to S&P CNX 500 Index and HDFC Index
Fund-Nifty Plan which is benchmarked to S&P CNX Nifty Index are not sponsored, endorsed, sold or promoted by India Index
Services & Products Limited (IISL). IISL is not responsible for any errors or omissions or the results obtained from the use of such
58
index and in no event shall IISL have any liability to any party for any damages of whatsoever nature (including lost profits)
resulted to such party due to purchase or sale or otherwise of such product benchmarked to such index.
Risk Factors: All mutual funds and securities investments are subject to market risks and there can be no assurance that the
scheme's objectives will be achieved and the NAV of the schemes may go up or down depending upon the factors and forces
affecting the securities market. Past performance of the Sponsors / AMC / Mutual Fund / Scheme(s) and their affiliates do not
indicate the future performance of the Scheme of the Mutual Fund. There is no assurance or guarantee to unit holders as to the
rate of dividend distribution nor that dividends will be paid regularly. Investors in the Scheme are not being offered any guaranteed
/ assured returns. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates,
trading volumes, settlement periods, transfer procedures and performance of individual securities. The NAV will inter-alia be
exposed to Price / Interest Rate Risk and Credit Risk. HDFC Growth Fund (an open-ended growth scheme; the primary objective of
the scheme is to generate long term capital appreciation from a portfolio that is invested predominantly in equity and equity
related instruments), HDFC Equity Fund (an open ended growth scheme; the primary objective of the scheme is to achieve capital
appreciation), HDFC Capital Builder Fund (an open ended growth scheme; the primary objective of the scheme is to achieve capital
appreciation in the long term), HDFC Index Fund (an open ended index linked scheme; this scheme has 3 plans viz - Nifty Plan the
primary objective of this Plan is to generate returns that are commensurate with the performance of the Nifty, subject to tracking
error, Sensex Plan the primary objective of this Plan is to generate returns that are commensurate with the performance of the
SENSEX, subject to tracking error, and Sensex Plus Plan the primary objective of this Plan is to invest 80 to 90% of the net assets
of the Plan in companies whose securities are included in SENSEX and between 10% & 20% of the net assets in companies whose
securities are not included in the SENSEX), HDFC Children's Gift Fund (an open ended balanced scheme; the primary objective of
both the Plans under the Scheme is to generate long term capital appreciation), HDFC Balanced Fund (an open ended balanced
scheme; the primary objective of the Scheme is to generate capital appreciation along with current income from a combined
portfolio of equity and equity related and debt and money market instruments), HDFC Prudence Fund (an open ended balanced
fund; the primary objective of the scheme is to provide periodic returns and capital appreciation over a long period of time from a
judicious mix of equity and debt instruments with an aim to prevent / minimise any capital erosion), HDFC Long Term Advantage
Fund (an open ended equity linked savings scheme with a lock in period of 3 years; the primary objective of the Scheme is to
generate long term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments),
HDFC Tax Saver (an open ended equity linked savings scheme with a lock in period of 3 years; the primary objective of the scheme
is to achieve long term growth of capital), HDFC Top 200 Fund (an open ended growth scheme; the primary objective of the
scheme is to generate long term capital appreciation from a portfolio of equity and equity linked instruments primarily drawn from
the companies in BSE 200 index) are only the names of the Scheme(s) and do not in any manner indicate either the quality of the
Scheme(s), its future prospects and returns. In view of the individual nature of tax consequences, each investor is advised to
consult his/her professional tax advisor. Please read the offer document(s) of the respective Scheme(s) before investing.
Statutory Details: HDFC Mutual Fund has been set up as a trust sponsored by Housing Development Finance Corporation Limited
and Standard Life Investments Limited (liability restricted to their contribution of Rs. 1 lakh each to the corpus) with HDFC Trustee
Company Limited as the Trustee (Trustee under the Indian Trusts Act, 1882) and with HDFC Asset Management Company Limited
as the Investment Manager.
59
SBI MUTUAL FUND SCHEMES

The investments of these schemes will predominantly be in the stock markets and endeavor will
be to provide investors the opportunity to benefit from the higher returns which stock markets
can provide. However they are also exposed to the volatility and attendant risks of stock markets
and hence should be chosen only by such investors who have high risk taking capacities and are
willing to think long term. Equity Funds include diversified Equity Funds, Sectoral Funds and
Index Funds. Diversified Equity Funds invest in various stocks across different sectors while
Sectoral funds which are specialized Equity Funds restrict their investments only to shares of a
particular sector and hence, are riskier than Diversified Equity Funds. Index Funds invest
passively only in the stocks of a particular index and the performance of such funds move with
the movements of the index.
Magnum Equity Fund
Magnum Tax Gain
Magnum Index Fund
Magnum Sector Funds Umbrella
60
Magnum Multiplier Plus Scheme
Magnum Global Fund
Magnum Mid Cap Fund
Magnum Comma Fund
Magnum Multicap
BLUE CHIP Fund
Magnum Equity Fund

This actively managed fund offers growth through investment in a portfolio of select blue chip
stocks. The main features of the scheme are:
A diversified equity fund, focusing on aggressive growth
Minimum application of Rs. 1000
Entry Load: Investments below Rs. 5 crores 2.25% Investments of Rs.5 crores and above
NIL" SIP/STP - 2.25%
Exit Load Investments below Rs.5 crores < 6 months - 1.00% 6 months and < 12 months 0.50% Investments of Rs.5 crores and above - NIL SIP /STP-< 6 months from the date of
investment of each installment - 1.00%
Ideal for investors who wish to benefit from the growth of the equity markets and are
comfortable with the attendant volatility
SIP Minimum amount Rs.500/month - 12 months Rs.1000/month - 6months, Rs.1500/quarter 12 months
61
STP Minimum amount Rs.1000/- month - minimum period of 6 months Rs.3000/ Quarter minimum period of 6 months
Inter scheme switches to other equity schemes will not carry an Entry Load. However exit load
will be applicable.
In respect of STP transactions, an investor would now be permitted to transfer any
amount from the switch-out scheme, subject to a minimum transfer of Rs.1000 pm or Rs.3000
per quarter, without any restriction on maintaining the minimum balance requirement as
stipulated for the switch out scheme. The minimum period for STP will be at least 6 months.
Magnum Tax Gain

What is Magnum Tax Gain Scheme about?
Magnum Tax Gain Scheme is an Equity Linked Savings Scheme (ELSS) from SBI Mutual Fund
which offers investors tax benefits on an investment upto Rs 1 Lakh under Section 80C of Indian
Income Tax Act 1961. The fund was launched in the year 1993 and is one of the top performers
in the ELSS category.
Scheme Highlights:
Entry Load Investments below Rs. 5 crores 2.25%, Investments of Rs.5 crores and above
NIL
SIP/STP Entry Load - 2.25%
Exit Load: NIL
SIP: Minimum amount Rs.500/month - 12 months Rs.1000/month - 6months, Rs.1500/quarter 12 months
STP: Minimum amount Rs.1000/- month - 6 months, Rs.3000/ Quarter - 6 months
62
Asset Allocation 80-100% in Equity, partly convertible debentures and fully convertible
debentures and bonds & 0 20% in Money market instruments.
Minimum Application Amount Rs 500 for purchase & Multiples of Rs 500 for additional
purchase.
Plans & Options Dividend option with payout and reinvestment facility.
In respect of STP transactions, an investor would now be permitted to transfer any amount from
the switch-out scheme, subject to a minimum transfer of Rs.1000 pm or Rs.3000 per quarter,
without any restriction on maintaining the minimum balance requirement as stipulated for the
switch out scheme. The minimum period for STP will be atleast 6 months.
Why should I invest in Magnum Tax Gain Scheme?

Magnum Tax Gain Scheme offers you tax savings upto Rs 33,360 (Calculation based on
applicable income slab, tax amount, surcharge & education cess) on an investment of upto Rs 1
Lakh. It also gives you equity market linked returns.
Returns of Magnum Tax gain Scheme
As on 31 January, 2006
FUND
CATEGORY
BENCHMARK
(BSE 100)
1-Years
105.57%
59.77%
48.36%
3-Years
99.60%
63.65%
48.28%
5-Years
32.13%
29.82%
18.77%
Return Since Launch
19.62%
13.55%
What is the investment strategy of Magnum Tax Gain Scheme?
63
Magnum Tax Gain Scheme follows the bottom up investment strategy. We have also kept the
portfolio size limited to about 35 stocks in all. While we believe that India is a growth story, we
feel that our strength lies in our ability to identify promising stocks and take them in the
portfolio. This strategy has worked in favour of the funds in the last couple of years and we
intend to pursue this strategy in future also
Awards & Achievements:

Magnum Tax Gain Scheme has been ranked CPR 1 by CRISIL which indicates very good
performance It has recently bagged 2 gold awards in the 1 year & 3 year category for
performance in the ICRA Online Awards. Magnum Tax Gain Scheme has consistently given
dividends and the last dividend given was 102% in June 2005.
Magnum Index Fund
Magnum Index Fund invests only in the 50 stocks that constitute S&P CNX Nifty index in
proportion to each stock's weightage in the index. Hence, who the portfolio Manager is or what
his style is does not really matter in such funds. Volatility of such schemes will be in
synchronization with the index. This investment is ideal for:
Corporate, Institutions, Banks HNIs and Retail Investors desirous of investing in a basket of
Nifty Index stocks for an investment as low as Rs. 5000/- with liquidity of Open-ended Mutual
Fund
Entry load: Investments below Rs. 50 Lakhs 1.25% Investments of Rs.50 Lakhs and above
NIL SIP/STP - 1.00%
Exit Load: Nil SIP /STP- < 12 months from the date of investment of each instalment - 1.00%
64
SIP : Minimum amount Rs.500/month - 12 months Rs.1000/month - 6months, Rs.1500/quarter 12 months

STP : Minimum amount Rs.1000/- month - 6 months ,Rs.3000/ Quarter - 6 months
Dividend Option Available
Magnum Sector Funds Umbrella
Launched in August 1999
Minimum investment of Rs. 2000 per sector
Entry Load : Investments below Rs. 5 crores 2.25% Investments of Rs.5 crores and above
Exit Load: Investments below Rs.5 crores < 6 months - 1.00% 6 months and < 12 months 0.50% Investments of Rs.5 crores and above - NIL
SIP /STP-< 6 months from the date of investment of each instalment - 1.00%
STP : Minimum amount Rs.1000/- month - minimum period of 6 months Rs.3000/ Quarter minimum period of 6 months
will be applicable. In respect of STP transactions, an investor would now be permitted to transfer
any amount from the switch-out scheme, subject to a minimum transfer of Rs.1000 pm or
65
Rs.3000 per quarter, without any restriction on maintaining the minimum balance requirement as
stipulated for the switch out scheme. The minimum period for STP will be atleast 6 months.
Magnum Multiplier Plus Scheme
A diversified equity fund, focussing on steady growth
Open-ended from April 1998
Minimum application of Rs. 1000
will be applicable.
Magnum Global Fund
66
The Magnum Global Fund Scheme 1994 commenced from 24th August 1994. This scheme was
launched as a close-ended scheme redeeming on 30th September 1999. the scheme was
converted into an Open-Ended Fund from 1st October 1999. Main features of the scheme are:
will be applicable.
Magnum MidCap Fund
The latest investment option from SBI Mutual Fund enables you to benefit from our expertise in
the intricacies of MidCap stocks. So you can leave the hard part of choosing the right stock to
grow with and concentrate on enjoying your returns, now and in the long run:
Open-ended growth shceme
67
Exit Load: Investments below Rs.5 crores < 6 months - 1.00% 6 months and < 12 months 0.50%
Investments of Rs.5 crores and above - NIL
will be applicable.
In respect of STP transactions, an investor would now be permitted to transfer anyamount from
Magnum Comma Fund
A first of its kind scheme. COMMA is an acronym for Commodities in Oil, Metals, Materials
and Agriculture. The objective of the scheme would be to generate opportunities for growth
along with possibility of consistent returns by investing predominantly in a portfolio of stocks of
companies engaged in the commodity business within the following sectors - Oil& Gas, Metals,
Materials & Agriculture and in debt & money market instruments
Key Features
68
An open-ended equity scheme investing in stocks of commodity based companies

SIP: Minimum amount Rs.500/month - 12 months Rs.1000/month - 6months, Rs.1500/quarter 12 months
will be applicable.
Magnum Multicap
SBI Mutual Fund launches Magnum Mutlicap Fund (An open ended Growth Scheme)
Objective
Scheme objective - To provide investors with opportunities for long-term growth in capital along
with the liquidity of an open-ended scheme through an active management of investments in a
diversified basket of equity stocks spanning the entire market capitalization spectrum, debt and
money market instruments.
69
Fund to invest in large, medium and small cap segments in equity instruments. The fund would
invest a minimum of 50 per cent of its equity/equity related instruments in large cap stocks and
the balance 50 per cent would be dividend between mid cap and small caps with a provision to
invest at least 10 per cent in mid cap stocks.
Market Cap Segment Minimum Allocation Maximum Allocation
Large Cap
50%
90%
Mid Cap
10%
40%
Small Cap
0%
10%
Key Features
Launch date 22nd August 2005
Scheme opened for continuous sale and repurchase.
Exit Load: Investments below Rs.5 crores < 6 months - 1.00% 6 months and < 12 months 0.50%Investments of Rs.5 crores and above - NIL
will be applicable.
70
BLUE CHIP Fund
Launch date - 23rd December 2005
NFO open from 23rd December 2005 to 20th January 2006
Scheme reopens for continuous sale and repurchase from 17th February 2006
Minimum investment - Rs. 5000 and in multiples of Rs. 1000
Dividend and Growth options available. Reinvestment and payout facility available
Dividends will be completely tax-free. Long term capital gains to be completely tax-free. Short
-term capital gains to be taxed at 10% (plus applicable surcharge and cess)
Scheme objective: To provide investors with opportunities for long-term growth in capital
through an active management of investments in a diversified basket of equity stocks of
companies whose market capitalization is atleast equal to or more than the least market
capitalized stock of BSE 100 Index.
Systematic Investment Plan available during the NFO.
Asset allocation pattern
Type of Instrument
Normal Allocation (% of Net Assets) Risk Profile
Equities and equity related instruments including derivatives

Debt and Money Market instruments 0% - 30%
70% - 100%
High
Medium to Low
71
will be applicable.
72
CHAPTER - 7
ANALYSIS
AND
INTERPRETATIONS
73
ANALYSIS AND INTERPRETATIONS

TABLE -1
COMPARISON SHOWING EQUITY FUNDS FOR
NAV
COMPANY
HDFC Equity Fund
Franklin India Growth Fund
ING Vysya Equity Fund
Kotak 30
LIC equity fund
VALUE
47.602
10.44
13.93
22.898
10.5755
74
HDFC Equity Fund
EQUITY SHARES
10.5755
22.898
Franklin India
Growth Fund
47.602
ING Vysya Equity

Fund
Kotak 30
13.93
10.44
LIC equity fund
From the above diagram it is clear that HDFC Equity Funds have 47.602, Franklin India Growth
have 10.44, ING Vysya Equity Fund have 13.93, Kotak 30 have 22.898 and LIC Equity Fund
have 10.5755 amount of share in market out of which HDFC Equity Fund have maximum share
in the market for NAV.
TABLE -2
(14 DAYS)
COMPANY
HDFC Equity Fund
Kotak 30
LIC equity fund
VALUE
2.91
2.76
3.65
0.58
1.95
75
EQUITY SHARES
fund have 2.76, ING Vysya Equity Fund have 3.65, Kotak 30 have 0.58 and LIC Equity Fund
have 1.95 amount of share in market out of which HDFC Equity Fund dont have maximum
share in the market for fourteen days.
TABLE -3
(6 MONTHS)
COMPANY
HDFC Equity Fund
Kotak 30
LIC equity fund
VALUE
-11.56
-7.77
-12.28
-6.40
-12.70
76
EQUITY SHARES
From the above diagram it is clear that HDFC Equity Funds have -11.56, Franklin India Growth
fund have -7.77, ING Vysya Equity Fund have -12.28, Kotak 30 have -6.40 and LIC Equity Fund
have -12.70 amount of share in market out of which HDFC Equity Fund dont have maximum
share in the market for six months.
77
TABLE -4
(3 YEARS)
COMPANY
HDFC Equity Fund
Kotak 30
LIC equity fund
VALUE
41.69
29.99
0.00
28.15
23.80
EQUITY SHARES
have 23.80 amount of share in market out of which HDFC Equity Fund have maximum share in
the market for 3 years.
78
TABLE -5
(SINCE INCEPTION)
COMPANY
HDFC Equity Fund
Kotak 30
LIC equity fund
VALUE
17.71
0.97
14.54
22.54
0.49
EQUITY SHARES
have 0.49 amount of share in market out of which HDFC Equity Fund dont have maximum
share in the market since inception.
79
Balanced Mutual Funds:

A balanced mutual fund generally consists of a mix of 60% stocks and 40% bonds. This is a
traditional asset allocation model for investors who want exposure but want the security of fixed
income securities. Although these mutual funds do allow investors to reach a certain asset mix,
there are other investment methods for obtaining similar asset allocations.
There are some drawbacks to investing in balanced mutual funds. The bond holding in a
balanced fund may be of varying lengths; hence they can never match the individual needs of
each investor. For instance a balanced fund may hold bonds for 3 years while you need a bond
for 10 years. In that case you would significantly earn les on your bond investments. For a do-ityourself investor not familiar or comfortable with making investment mix decisions, a balance
fund may be suitable.
Investors should consider building their own portfolio mix by owning stocks or stock index
funds either bond funds or individual bonds that you hold to maturity. An independent fee- only
financial adviser can help you do that.
80
TABLE -6
COMPARISON SHOWING BALANCED FUNDS FOR
(NAV)
COMPANY
HDFC Balanced Fund
ING Vysya Balanced Fund
Kotak Balance
LIC Dhanasahayog
Prudential ICICI Balanced Fund
VALUE
15.868
9.06
13.08
22.7933
15.22
Balanced Fund
From the above graph it is clear that HDFC Balanced Fund have 15.868, ING Vysya balanced
fund have 9.06, Kotak Balance have 13.08, LIC Dhanasahayog have 22.7933 and Prudential
ICICI Balanced Fund have 15.22. Out of which HDFC Balanced dont have maximum value for
NAV.
81
TABLE -7
(14 DAYS)
COMPANY
HDFC Balanced Fund
Kotak Balance
LIC Dhanasahayog
VALUE
1.41
1.12
2.37
1.29
2.84
Balanced Fund
From the above graph it is clear that HDFC Balanced Fund has 1.41, ING Vysya balanced fund
have 1.12, Kotak Balance have 2.37, LIC Dhanasahayog have 1.29 and Prudential ICICI
Balanced Fund have 2.84. Out of which HDFC Balanced dont have maximum value for 14 days
82
TABLE -8
(6 MONTHS)
COMPANY
HDFC Balanced Fund
Kotak Balance
LIC Dhanasahayog
VALUE
-8.04
-7.93
-3.89
-8.43
-6.74
Balanced Fund
From the above graph it is clear that HDFC Balanced Fund have -8.04, ING Vysya balanced fund
have -7.93, Kotak Balance have -3.39, LIC Dhanasahayog have -8.48 and Prudential ICICI
Balanced Fund have -6.74. Out of which HDFC Balanced dont have maximum value for 6
months.
83
TABLE -9
(3 YEARS)
COMPANY
HDFC Balanced Fund
Kotak Balance
LIC Dhanasahayog
VALUE
18.83
16.35
21.00
0.00
20.89
Balanced Fund
have 16.35, Kotak Balance have 21.00, LIC Dhanasahayog have 0.00 and Prudential ICICI
Balanced Fund have 20.89. Out of which HDFC Balanced dont have maximum value for 3
years.
84
TABLE -10
(SINCE INCEPTION)
COMPANY
HDFC Balanced Fund
Kotak Balance
LIC Dhanasahayog
VALUE
12.45
-2.30
12.34
6.27
9.19
Balanced Fund
have -2.30, Kotak Balance have 12.34, LIC Dhanasahayog have 06.27 and Prudential ICICI
Balanced Fund have 9.19. Out of which HDFC Balanced have maximum value since inception.
85
MIPs:
For most individuals living away from their family, life tends to be tough. The situation is further
complicated by concerns for the familys finance well-being. This is a condition those staying
away from home will easily identify with (including NRIs). So what can be done to ease the
financial burden on the family within the given constraints? The solution lies in providing
regular income to family members using financial tools like monthly income plans (MIPs) and
pension plans.
Monthly income plans are a hybrid version of balanced funds; however the composition is lopsided in favour of the debt component. The equity component (ranging from 0% to 20%)
provides the much required impetus to the returns-while retaining the relative safety and stability
from the debt element.
Although MIPs dont assure monthly returns, their performance history seems to suggest
otherwise. Leading MIPs (Templeton MIP, Principal MIP) have consistently offered tax free
dividends to investors. More importantly for the investors, investing is a one time activity. All an
investor needs to do is select a top-performing MIP and invest the appropriate amount for his/her
dependants. The MIPs dividends will act as monthly income for the recipients. To make things
even better, dividends can be credited directly to the unit holders bank account using the
electronic clearing systems (ECS).
Pension plans are touted as ideal retirement tools; however their utility clearly transcends the
stated purpose. Like MIPs, pension plans can also be used to dependents. Heres what you need
86
to do. Decide the amount you would like to gift your dependants, now opt for a pension plan
which delivers the requisite amount in favour of your parents.
Gifting a pension plan need not involve any inconvenience. If paying annual premiums seems
like a tough chore, the option of paying a single premium is always available. Effectively a onetime payment can ensure that your parents back home are provided with a monthly income.
If your dependent is currently 50 years of age, you can gift him/her a pension plan with a vesting
of 10 years i.e. from the age of 60 years, he/she will start receiving a pension of approximately
Rs.5,000 per month. This is what the pension plan will look like.
Effectively making a one-time payment of Rs. 700,000 as a single premium towards the pension
plan will provide nearly Rs. 5,000 as a monthly income to your dependents back home. Also a
pure pension plan (Like the one offered by the HDFC Standard Life) works out to be very
convenient vis--vis an insurance policy. The policy holder is not required to undertake medical
check ups or grapple with cumbersome paper work.
In both the above cases after the initial investment is made with the fund house/insurance
company, the regular returns lies on the respective entities, which implies that you are spared the
bother of drawing drafts, delivering them and hoping that they are credited promptly.
Another aspect, which needs to be highlighted, is asset creation. By investing in a monthly plan
or a pension plan, an asset is created which will provide for your dependents over a longer
horizon. Clearly a MIP or a pension plan is a much smarter choice vis--vis a monthly draft.
87
TABLE -11
COMPARISON SHOWING MIP FOR
(NAV)
COMPANY
HDFC Monthly Income Plan-Long Term Plan
HDFC Bank Ltd. MIS- Advantage Fund
ING Vysya MIP-Plan A
LIC Monthly Income Plan
Prudential ICICI MIP
VALUE
10.2863
10.1063
10.2289
18.2316
14.4485
MONTHLY INCOME PLAN (MIP)
From the above diagram it is clear that HDFC Monthly Income Plan-Long Term Plan have
10.2963, HDFC Bank Ltd.- MIS- Advantage Fund have 10.1063, ING Vysya MIP- Plan A have
10.2289, LIC Monthly Income Plan have 18.2316 and Prudential ICICI MIP have 14.4485. Out
of which HDFC dont have maximum share for NAV.
88
TABLE -12
(14 DAYS)
COMPANY
VALUE
6.84
11.30
4.80
8.77
4.79
From the above diagram it is clear that HDFC Monthly Income Plan-Long Term Plan have 6.84,
HDFC Bank Ltd.- MIS- Advantage Fund have 11.30, ING Vysya MIP- Plan A have 4.80, LIC
Monthly Income Plan have 8.77 and Prudential ICICI MIP have 4.79. Out of which HDFC dont
have maximum share for 14 days.
89
TABLE -13
(6 MONTHS)
COMPANY
VALUE
13.00
9.00
N.A
2.00
12.00
From the above diagram it is clear that HDFC Monthly Income Plan-Long Term Plan have
13.00, HDFC Bank Ltd.- MIS- Advantage Fund have 9.00, ING Vysya MIP- Plan A have 0.00,
LIC Monthly Income Plan have 2.00 and Prudential ICICI MIP have 12.00. Out of which HDFC
dont have maximum share for 6 months.
90
TABLE -14
(3 YEARS)
COMPANY
VALUE
N.A.
N.A.
N.A.
N.A.
9.59
Monthly Income Plan have 0.00 and Prudential ICICI MIP have 9.59. Out of which HDFC dont
have maximum share for 3 years.
91
TABLE -15
(SINCE INCEPTION)
COMPANY
VALUE
4.73
1.82
5.19
9.64
10.29
Monthly Income Plan have 9.64 and Prudential ICICI MIP have 10.29. Out of which HDFC
dont have maximum share since inception.
92
CHAPTER 8
SUGGESTIONS
93
SUGGESTIONS
The investors are influenced by the intrinsic qualities of products followed by efficient fund
management and general image of the fund/scheme. Hence, it is suggested that HDFC Bank Ltd.
should design products consciously to meet the inventors need and should be alert to capture the
changing market moods and be innovative. Continuous product development and introduction of
innovative products is a must to attract and retain this market segment, some suggestions are:1. since insurance business has now become upon, MFs can design more & more products
combining insurance and investment benefits to eater to the investors needs of safety and
returns respectively. This will surely attract/ retain low and moderate risk profile
investors who often resist their desire to pay directly in the capital market.
2. Retirement scheme will attract the middle income group which seeks regular income after
retirement. AMFI has suggested a similar scheme and submitted on monthly or yearly
basis to select MFs which in turn will invest them. On retirement of the individual, his
accumulated NAV will be converted into units of their monthly income schemes.
3. The investors are influenced by the infrastructural facilities of the sponsor and the
deputation enjoyed by the sponsor, in their selection of the schemes. Hence HDFC Bank
Ltd. should take steps to develop their infrastructure facilities.
4. Further investors are influenced by the extent by quality of disclosure for information
subsequent to their investment regarding disclosure of NAV, profile investment and
disclosure of deviation of investment from the stated objectives and attached fringe
benefits to the scheme in their selection of the scheme. Hence HDFC Bank Ltd. should
take steps to be as connection.
94
5. In spite of having access to Internet, investors prefer Personal Communication mode to

Automated Service Mode. This necessitates establishment or more manually operated
services centers though out the length and breadth of the country.
95
CHAPTER - 9
CONCLUSION
96
CONCLUSION
Thus mutual funds offers a relativity less expansive way to invest when compared to other
avenues such as capital market operations. Investment in mutual funds also offers a lot of
flexibility with features such as regular investment. Plans regular withdrawal plans and divided
reinvestment plans enabling systematic investment.
1. HDFC Equity Funds have 47.602, Franklin India Growth have 10.44, ING Vysya Equity
Fund have 13.93, Kotak 30 have 22.898 and LIC Equity Fund have 10.5755 amount of
share in market out of which HDFC Equity Fund have maximum share in the market for
NAV.
2. HDFC Equity Funds have 2.91, Franklin India Growth fund have 2.76, ING Vysya
Equity Fund have 3.65, Kotak 30 have 0.58 and LIC Equity Fund have 1.95 amount of
share in market out of which HDFC Equity Fund dont have maximum share in the
market for fourteen days.
3. HDFC Equity Funds have -11.56, Franklin India Growth fund have -7.77, ING Vysya
Equity Fund have -12.28, Kotak 30 have -6.40 and LIC Equity Fund have -12.70 amount
of share in market out of which HDFC Equity Fund dont have maximum share in the
market for six months.
97
CHAPTER 10
LIMITATIONS
98
LIMITATIONS OF THE SURVEY

A study without shortcoming is like an illusion
I have tried to put in maximum efforts to obtain the best possible data but despite of all
hardships, I sincerely accept some limitations which were beyond my control in this research.
The limitations of the present study can be summarized as follows:
Due to the paucity of time, the data could not be collected in entirely
The method adopted for forecasting ignores cyclical fluctuations
Due to difficulty in selecting moving average period, the result could be inaccurate and
misleading.
99
BIBLIOGRAPHY
100
BIBLIOGRAPHY
BOOKS
Chandra, Prasanna, Managing Investments 1st Edition, 40-43, New Delhi, Tata Megraw Hill,
1998 Bhole, LM, Financial Institutions & Markets IInd
Edition, 180-200, New Delhi, Tata
Megraw Hill, 1998 Waghmare, Tushar, The Future of Fund Management in India, 15-17, 9196, 161-165 Tata Megraw Hill,1998.
Avadhani, VA, Securities Analysis and Portfolio Management Edition 1 511-554, New Delhi,
Himalaya Publication House, 1997.
Srivastava, RM, and Nigam Divya, Management of Indian Financial Institution Edition III,
35-37, New Delhi Himalaya Publication House, 1996.
MAGAZINES
Golkar, NA, Investors Perception of Mutual funds, Business Review vol. IX, No. 1 September,
2002.
Krishnamurthi, Suresh, Mutual Funds, portfolio Organizer March2004.
LIST OF WEBSITES
www.unittrustfundai.com
www.indiainfolie.com
www.mutualfundsindia.com
www.hdfcbank.com
101

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FINAL RESEARCH PROJECT

COMPARATIVE ANALYSIS OF MUTUAL

MASTERS IN BUSINESS ADMINISTRATION

RIMT INSTITUTE OF ENGINEERING AND TECHNOLOGY

Dr. Harpreet Singh

(H.O.D., RIMT-IET), Mandi

Gobindgarh. I will be failed in my duty if I do not acknowledge the esteemed scholarly

MUTUAL FUNDS: AN OVERVIEW.

OBJECTIVES OF THE STUDY 37

MUTUAL FUNDS: AN OVERVIEW

assets have become

mature and information driven. Price changes

STRUCTURE OF THE INDIAS MUTUAL FUND INDUSTRY

UTI Bank Ltd. (1994)

TYPE OF MUTUAL FUNDS

Money market Funds

BENEFITS OF MUTUAL FUND INVESMENT

NET ASSET VALUE (NAV)

Asset value is equal to

Details on above items

RECENT TRENDS IN MUTUAL FUND INDUSTRY IN INDIA

Franklin Prima Fund

HDFC Equity Fund

Templeton Growth (D)

Franklin Prima Plus

Tata Pure equity

HDFC Top 200 (D)

*As on 03 march, 2004

Tata life SC & TEC

Franklin Internet OPP

Birla MNC Fund

Kotak MNC Scheme

Franklin FMCG Fund

PRU ICICI FMCG Fund

SBI Magnum FMCG Fund

*As on 03 march, 2004

PNB Debt Fund

HDFC Income Fund

UTI Bond Fund

DSP-ML Bond Fund

Birla Income Plus B

HDFC High Interest

*As on 03 march, 2004

Tata G-Sec Fund B

Birla Gift Plus

Templeton Govt. Sec

HDFC Gift Fund

HDFC Sov Gift

LIC G-Sec Fund

SBI Magnum Gift

*As on 03 march, 2004

First India Liquid

IL&FS Liquid Fund

SBI Magnum Insta (Cash)

PRU ICICI Liquid

*As on 3 March, 2004

*As on 03 march, 2004

PRU ICICI MIP

Reliance Medium Term

Sun F&C MIP

*As on 03 march, 2004

BALANCED EQUITY FUNDS

OBJECTIVE OF THE STUDY