INTRODUCTION

1.1 Introduction to HDFC Asset Management Company:

HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies
Act, 1956, on December 10, 1999, and was approved to act as an Asset Management
Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000.
The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh
Marg, 169, Back bay Reclamation, Church gate, Mumbai - 400 020. In terms of the
Investment Management Agreement, the Trustee has appointed the HDFC Asset
Management Company Limited to manage the Mutual Fund. The paid up capital of the
AMC is Rs. 25.161 crore. The present equity shareholding pattern of the AMC is as
follows:

Table 1.1: Present Equity Shareholding Pattern of the AMC

Particulars % of the paid up equity capital

Housing Development Finance Corporation Limited 60
Standard Life Investments Limited 40

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a
review of its overall strategy, had decided to divest its Asset Management business in
India. The AMC had entered into an agreement with ZIC to acquire the said business,
subject to necessary regulatory approvals.
On obtaining the regulatory approvals, the following Schemes of Zurich India Mutual
Fund have migrated to HDFC Mutual Fund on June 19, 2003. These Schemes have been
renamed as follows:

Table 1.2: Renamed Schemes

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Former Name New Name
Zurich India Equity Fund HDFC Equity Fund
Zurich India Prudence Fund HDFC Prudence Fund
Zurich India Capital Builder Fund HDFC Capital Builder Fund
Zurich India Tax Saver Fund HDFC Tax Saver
Zurich India Top 200 Fund HDFC Top 200 Fund
Zurich India High Interest Fund HDFC High Interest Fund
Zurich India Liquidity Fund HDFC Cash Management Fund
Zurich India Sovereign Gilt Fund HDFC Sovereign Gilt Fund*
*HDFC Sovereign Gilt Fund has been wound up in March 2006

The AMC is managing 24 open-ended schemes of the Mutual Fund viz.

HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF),

HDFC Income Fund (HIF), HDFC Liquid Fund (HLF),
HDFC Long Term Advantage Fund (HLTAF), HDFC Gilt Fund (HGILT),
HDFC Children's Gift Fund (HDFC CGF), HDFC Short Term Plan (HSTP),
HDFC Floating Rate Income Fund (HFRIF), HDFC Index Fund,
HDFC MF Monthly Income Plan (HMIP), HDFC Top 200 Fund (HT200),
HDFC Capital Builder Fund (HCBF), HDFC Tax Saver (HTS),
HDFC Core & Satellite Fund (HCSF), HDFC High Interest Fund (HHIF),
HDFC Cash Management Fund (HCMF), HDFC Prudence Fund (HPF),
HDFC Multiple Yield Fund (HMYF), HDFC Equity Fund (HEF),
HDFC Premier Multi-Cap Fund (HPMCF), HDFC Multiple Yield Fund (HMYF),
HDFC Quarterly Interval Fund (HQIF) and HDFC Arbitrage Fund (HAF).

The AMC is also managing 11 closed ended Schemes of the HDFC Mutual Fund:

HDFC Long Term Equity Fund, HDFC Mid-Cap Opportunities Fund,

HDFC Infrastructure Fund, HDFC Fixed Maturity Plans,

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HDFC Fixed Maturity Plans - Series II, HDFC Fixed Maturity Plans - Series III,
HDFC Fixed Maturity Plans - Series IV, HDFC Fixed Maturity Plans - Series V,
HDFC Fixed Maturity Plans - Series VI, HFDC Fixed Maturity Plans - Series VII and
HFDC Fixed Maturity Plans - Series VIII.

The AMC is also providing portfolio management / advisory services and such activities
are not in conflict with the activities of the Mutual Fund. The AMC has renewed its
registration from SEBI vide Registration No. - PM / INP000000506 dated December 8,
2006 to act as a Portfolio Manager under the SEBI (Portfolio Managers) Regulations,
1993. The Certificate of Registration is valid from January 1, 2007 to December 31,
2009.
The Board of Directors of HDFC Trustee company Limited consists of the following
eminent persons:

 Mr. Anil Kumar Hirjee

 Mr. Vincent Joseph O’Brien
 Mr. Shishir K. Diwanji
 Mr. Ranjan Sanghi
 Mr. V. Srinivasa Rangan

1.1.1 Housing Development Finance Corporation Limited (HDFC)

HDFC was incorporated in 1977 as the first specialised mortgage company in India.
HDFC provides financial assistance to individuals, corporates and developers for the
purchase or construction of residential housing. It also provides property related services
(e.g. property identification, sales services and valuation), training and consultancy. Of
these activities, housing finance remains the dominant activity. HDFC has a client base of
around 10 lac borrowers, around 10 lac depositors, 1, 23,000 shareholders and 50,000
deposit agents, as at March 31, 2009. HDFC has raised funds from international agencies
such as the World Bank, IFC (Washington), USAID, DEG, ADB and KfW, international
syndicated loans, domestic term loans from banks and insurance companies, bonds and

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deposits. HDFC has received the highest rating for its bonds and deposits program for the
fourteenth year in succession. HDFC Standard Life Insurance Company Limited,
promoted by HDFC was the first life insurance company in the private sector to be
granted a Certificate of Registration (on October 23, 2000) by the Insurance Regulatory
and Development Authority to transact life insurance business in India.

1.1.2 Standard Life Investments Limited

The Standard Life Assurance Company was established in 1825 and has considerable
experience in global financial markets. The company was present in the Indian life
insurance market from 1847 to 1938 when agencies were set up in Kolkata and Mumbai.
The company re-entered the Indian market in 1995, when an agreement was signed with
HDFC to launch an insurance joint venture. On April 2006, the Board of The Standard
Life Assurance Company recommended that it should demutualise and Standard Life plc
float on the London Stock Exchange. At a Special General Meeting held in May voting
members overwhelmingly voted in favour of this. The Court of Session in Scotland
approved this in June and Standard Life plc floated on the London Stock Exchange on
10th July 2006. Standard Life Investments was launched as an investment management
company in 1998. It is a wholly owned subsidiary of Standard Life Investments
(Holdings) Limited, which in turn is a wholly owned subsidiary of Standard Life plc.
Standard Life Investments is a leading asset management company, with approximately
US$168.7 billion as at March 31, 2009, of assets under management. The company
operates in the UK, Canada, Hong Kong, China, Korea, Ireland, Paris, Sydney and the
USA to ensure it is able to form a truly global investment view. In order to meet the
different needs and risk profiles of its clients, Standard Life Investments Limited
manages a diverse portfolio covering all of the major markets world-wide, which
includes a range of private and public equities, government and company bonds, property
investments and various derivative instruments. The company's current holdings in UK
equities account for approximately 1.8% of the market capitalisation of the London Stock
Exchange.

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

Key Statistics
Average Assets under Management for may 2010 : Rs. 84,770.82 crore
No. of investors (As on 30-Apr-08) : 3,065,557
No. of ARN certified distributors (As on 30-Apr-0) : 32,061

1.1.3 Distribution Channels of HDFC AMC

The HDFC AMC is having some major distribution channels for selling its products.
Some of these are as follows:
 Banks: The major share in distribution channel of HDFC AMC goes to the Banks.
The various banks act as brokers of the AMC. The AMC thus captures business from
the banks.
 I.F.A.s; IFA stands for Independent Financial Advisers. These are independent
advisers or commonly known as Agents who sell Mutual Funds out of their personal
links.
 Direct Selling: The AMC also can directly sell the mutual funds. For these purposes
they have their offices all over the country, where an investor can directly buy the
mutual funds.
 National Distributors: These are the distributors or we can say Brokers that have
their presence countrywide. E.g. Religare.
Thus the above four are the major distribution channels of HDFC AMC.

1.1.4 Investment Plans In HDFC Mutual Funds

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Lump sum Investment: Here the investor invests a particular amount lump sum i.e. in
the starting of a time period.

Systematic Investment Plan (SIP): Systematic Investment Plan (SIP) - lets you invest
small amounts of money on a predetermined basis and gives you the option of increasing
these amounts as your investment capacity increases. SIP worth as powerful tool that can
help you create wealth over time.

Systematic Transfer Plan (STP): Invest a lump sum amount in a debt-oriented scheme
and Specify a desired amount to be transferred to any of the equity schemes. The amount
will be transferred to the selected scheme on a particular date of every month.
Investor has the option of:
 Monthly Systematic Transfer Plan
 Quarterly Systematic Transfer Plan

Systematic Withdrawal Plan (SWP): Systematic Withdrawal Plan - is the best

alternative for investors who need regular income. SWP is available in two options:

 Fixed Withdrawal: Where you specify amounts you wish to withdraw from
your investment on a monthly/quarterly basis.
 Appreciation Withdrawal: Where you can withdraw 90% of your appreciated
amount on a monthly/quarterly basis. Post-dated warrants sent to investors are
dated 1st of every month.

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1.2 Introduction to Mutual Funds
A mutual fund is a professionally managed type of collective investment scheme that
pools money from many investors and invests it in stocks, bonds, short-term money
market instruments, and/or other securities. The mutual fund will have a fund manager
that trades the pooled money on a regular basis. The net proceeds or losses are then
typically distributed to the investors annually.

Figure 1.1: Concept of Mutual Fund

1.2.1 Why Investors Need Mutual Funds?

Mutual Funds offer benefits, which are too significant to miss out. Any investment has to
be judged on the yardsticks of return, liquidity and safety. Convenience and Tax

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efficiency are the other benchmark relevant in Mutual Fund investments. In the
wonderful game of finance safety and return are two opposite goals and investor cannot
be nearer to both at the same time. Mutual Funds are pooled resources that get invested
in a diversified portfolio. The crux of Mutual Fund investing is averaging the risk. When
risk is equalized so are the returns.

When investor are confronted with a mind-boggling range of products, from traditional
bank deposits to downright shady money-multiplier schemes-let alone the physical assets
and non-conventional investments. Investor choice perhaps normally falls somewhere
amongst the products shown in the table below:

Table 1.3: Mutual Fund Review

Option Current Capital Risk Marketability Convenie

Yield Appreciati or Liquidity nce
on
Equity Low High High Variable High
Shares
Non High Negligible Low Average High
Convertible
Debentures
Growth Low High High High Very High
Schemes
Income High Low Low High Very High
Schemes
Bank Moderate Nil Negligible High Very High
Deposits
PPF Nil High Nil Average Very High
Life Nil Moderate Nil Average Very High
Insurance
Residential Low High Negligible Low Fair
House
Gold and Nil Moderate Average Average Average

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 Silver
(Source: Mutual Fund Review, Dec. 2003)

Many investors possibly don’t know that considering returns alone, many Mutual Funds
have outperformed a host of other investment products. Mutual Funds have historically
delivered yields averaging between 9% to 25% over a medium to long time frame
(source: www.moneycontrol.com). The duration is important because like wise, Mutual
Fund returns taste better with the passage of time. Investor should be prepared to lock in
your investments preferably for 3 years in an income fund and 5 years in an equity fund.
Liquid Funds of course, generate returns even in a very short term.

Performance analysis of several funds shows that depending on the scheme and the
duration returns from funds average between 9% to 25%. Such average may be
misleading, as some would have fared poorly while others would have posted
phenomenally high returns. The burden of intelligent choice therefore rests on investor.
As the market matures and funds develop equal capabilities – returns may however level
out.

1.2.2 Types of Mutual Funds

There are two BASIC TYPES of mutual funds. "Open-ended" or "Open" mutual funds
are the most common type of mutual funds. Investors may purchase units from the fund
sponsor or redeem units at the valuation promised in the fund documents, usually on a
daily basis. "Closed-ended" or "Closed" mutual funds are traded as financial securities,
once they are issued, and holders must sell their units on the stock market to receive their
funds back.

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 Figure 1.2: Types of Mutual Funds

As per investment objective

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

1) Equity Oriented Schemes

These schemes, also commonly called Growth Schemes, seek to invest a majority of their
funds in equities and a small portion in money market instruments. Such schemes have
the potential to deliver superior returns over the long term. However, because they invest
in equities, these schemes are exposed to fluctuations in value especially in the short
term. Equity schemes are hence not suitable for investors seeking regular income or
needing to use their investments in the short term. They are ideal for investors who have
a long term investment horizon.

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2) Tax Saving Schemes
Investors (individuals and Hindu Undivided Families (“HUFs”)) are being encouraged to
invest in equity market through Equity Linked Savings Scheme (“ELSS”) by offering
them a tax rebate. Units purchased cannot be assigned/ transferred/ pledged/ redeemed/
switched – out until completion of 3years from the date of allotment of the respective
Units.
The Scheme is subject to Securities & Exchange Board of India (Mutual Funds)
Regulations, 1996 and the notifications issued by the Ministry of Finance (Department of
Economic Affairs), Government of India regarding ELSS.

3) Debt Based Scheme

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

4) Hybrid Schemes
These schemes are commonly known as balanced schemes. These schemes invest in both
Equity as well as Debt. By investing in a mix of this nature, balanced schemes seek to
attain the objective of income and moderate capital appreciation and are ideal for
investors with a conservative, long term orientation.

AS PER CONSTITUTION

1) Open –Ended Mutual Funds

Open-ended schemes do not have a fixed maturity period. Investors can buy or sell units
at NAV-related prices from and to the mutual fund on any business day. These schemes

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have unlimited capitalization, open-ended schemes do not have a fixed maturity, there is
no cap on the amount you can buy from the fund and the unit capital can keep growing.
These funds are not generally listed on any exchange.

2) Close-Ended Mutual Funds

Close-ended schemes have fixed maturity periods. Investors can buy into these funds
during the period when these funds are open in the initial issue. After that such schemes
can not issue new units except in case of bonus or rights issue. However, after the initial
issue, you can buy or sell units of the scheme on the stock exchanges where they are
listed. The market price of the units could vary from the NAV of the scheme due to
demand and supply factors, investors’ expectations and other market factors

1.2.3 Regulatory of Mutual Fund In India

SEBI
The capital market regulates the mutual funds in India. SEBI requires all mutual funds to
be registered with them. SEBI issues guidelines for all mutual funds operations-
investment, accounts, expenses etc. Recently, it has been decided that Money Market
Mutual Funds of registered mutual funds will be regulated by SEBI through (Mutual
Fund) Regulations 1996.

RBI
RBI, a supervisor of the Banks owned Mutual Funds-As banks in India come under the
regulatory Jurisdiction of RBI, banks owned funds to be under supervision of RBI and
SEBI. RBI has supervisory responsibility over all entities that operate in the money
markets.

Ministry Of Finance (Mof)

Ministry of Finance ultimately supervises both the RBI and the SEBI and plays the role
of apex authority for any major disputes over SEBI guidelines.

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Company Law Board
Registrar of companies is called Company Law Board. AMCs of Mutual Funds are
companies registered under the companies Act 1956 and therefore answerable to
regulatory authorities empowered by the Companies Act.

Stock Exchange
Stock Exchanges are Self-regulatory organizations supervised by SEBI. Many closed
ended funds of AMCs are listed as stock exchanges and are traded like shares.

Office Of The Public Trustee

Mutual Fund being public trust is governed y the Indian Trust Act 1882. The Board of
trustee or the Trustees Company is accountable to the office of public trustee, which in
turn reports to the Charity commissioner.

1.2.4 Benefits Of Mutual Fund

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

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

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2. Diversification
The nuclear weapon in your arsenal for your fight against Risk. It simply means that you
must spread your investment across different securities (stocks, bonds, money market
instruments, real estate, fixed deposits etc.) and different sectors (auto, textile,
information technology etc.). This kind of a diversification may add to the stability of
your returns, for example during one period of time equities might under perform but
bonds and money market instruments might do well enough to offset the effect of a
slump in the equity markets..

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

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

5. Tax Benefits
Any income distributed after March 31, 2002 will be subject to tax in the assessment of
all Unit holders. However, as a measure of concession to Unit holders of open-ended
equity-oriented funds, income distributions for the year ending March 31, 2003, will be
taxed at a confessional rate of 10.5%.

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

7. Conventional Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such
as bad deliveries, delayed payments and follow up with brokers and companies. Mutual
Funds save your time and make investing easy and convenient. Return Potential Over a
medium to long-term; Mutual Funds have the potential to provide a higher return as they
invest in a diversified basket of selected securities.

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

9. Convenience
An investor can purchase or sell fund units directly from a fund, through a broker or a
financial planner. The investor may opt for a Systematic Investment Plan (“SIP”) or a
Systematic Withdrawal Advantage Plan (“SWAP”). In addition to this an investor
receives account statements and portfolios of the schemes.

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1.3 Indian Mutual Fund Industry

The Indian mutual fund industry has witnessed significant growth in the past few years
driven by several favourable economic and demographic factors such as rising income
levels and the increasing reach of Asset Management Companies (AMCs) and
distributors. However, after several years of relentless growth, the industry witnessed a
fall of 8 percent in the assets under management in the financial year 2008-09 that has
impacted revenues and profitability. Recent developments triggered by the global
economic crisis have served to highlight the vulnerability of the Indian mutual fund
industry to global economic turbulence and exposed our increased dependence on
corporate customers and the retail distribution system. It is therefore and opportune time
for the industry to dwell on the experiences and develop a roadmap through a
collaborative effort across all stakeholders, to achieve sustained profitable growth and
strengthen investor faith and confidence in the health of the industry.

Figure 1.3: Share of Mutual Funds in Household Financial Savings

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1.3.1 Industry Structure
The Indian mutual fund industry currently consists of 38 players that have been given
regulatory approval by SEBI. The industry has witnessed a shift has changed drastically
in favour of private sector players, as the number of public sector players reduced from
11 in 2001 to 5 in 2009.

The mutual fund houses based on product portfolio and distribution strategy, the key
elements of competitive strategy, can be segmented into three categories:
• The market leaders having presence across all the product segments.
• Players having dominant focus on a single product segment-debt or equity.
• Players having niche focus on an emerging product category or distribution
channels.

Figure 1.4: Market Share of Players as of May 2010

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In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust
of India with assets under management of Rs.29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other
schemes. The Specified Undertaking of Unit Trust of India, functioning under an
administrator and under the rules framed by Government of India and does not come
under the purview of the Mutual Fund Regulations
The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of
assets under management and with the setting up of a UTI Mutual Fund, conforming to
the SEBI Mutual Fund Regulations, and with recent mergers taking place among
different private sector funds, the mutual fund industry has entered its current phase of
consolidation and growth.

Table 1.4: Rise in Asset Under Management of Various Mutual Fund Houses

Jan, 10 Dec, 09 % Change

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1.3.2 Why HDFC Mutual Fund ?

HDFC Mutual Fund is one of the largest mutual funds and well-established fund house in
the country with consistent and above average fund performance across categories since
its incorporation on December 10, 1999. While their past experience does make them a
veteran, but when it comes to investments, they have never believed that the experience is
enough.
Investment Philosophy:
The single most important factor that drives HDFC Mutual Fund is its belief to give the
investor the chance to profitably invest in the financial market, without constantly
worrying about the market swings. To realize this belief, HDFC Mutual Fund has set up
the infrastructure required to conduct all the fundamental research and back it up with
effective analysis. Our strong emphasis on managing and controlling portfolio risk avoids
chasing the latest “fads” and trends.
HDFC Offers:
We believe, that, by giving the investor long-term benefits, we have to constantly review
the markets for new trends, to identify new growth sectors and share this knowledge with
our investors in the form of product offerings. We have come up with various products
across asset and risk categories to enable investors to invest in line with their investment
objectives and risk taking capacity. Besides, we also offer Portfolio Management
Services.

1.3.3 Awards & Accolades:

1. CNBC - TV 18 - CRISIL Mutual Fund of the Year Awards 2008 :

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

HDFC Cash Management Fund - Savings Plan was the only scheme that won the
CNBC - TV 18 - CRISIL Mutual Fund of the Year Award 2008 in the Most Consistent

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Liquid Fund under CRISIL ~ CPR for the calendar year 2007 (from amongst 5 schemes).

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

2. Lipper Fund Awards 2008 :

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

3. Lipper Fund Awards 2009 :

HDFC Equity Fund - Growth has been awarded the 'Best Fund over Ten Years' in the
'Equity India Category' (form amongst 34 schemes) and HDFC Prudence Fund – Growth
Plan in the ‘Mixed Asset INR Aggressive Category’ (from amongst 6 schemes), have
been awarded the ‘Best Fund over 10 Years’ by Lipper Fund Awards India 2009.

4. ICRA Mutual Fund Awards – 2008 :

HDFC MF Monthly Income Plan - Long Term Plan - Ranked a Seven Star Fund and
has been awarded the Gold Award for "Best Performance" in the category of "Open
Ended Marginal Equity" for the three year period ending December 31, 2007 (from
amongst 27 schemes)
HDFC High Interest Fund - Short Term Plan - Ranked a Five Star Fund indicating
performance among the top 10% in the category of "Open Ended Debt - Short Term" for
one year period ending December 31, 2007 (from amongst 20 schemes).
HDFC Prudence Fund - Ranked a Five Star Fund indicating performance among the top
10% in the category of "Open Ended Balanced" for the three year period ending
December 31, 2007 (from amongst 16 schemes).

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1.3.4 Products of HDFC Mutual Fund:

• Equity /Growth fund

• Liquid fund
• Children's Gift fund
• Debt/Income fund
• Fixed Maturity plan
• Quarterly Interval fund

1.3.5 HDFC Top 200 Fund

Value research rating:

IN EQUITY - DIVERSIFIED CATEGORY (147 schemes) for 3 and 5 year
periods ending July 31, 2009

Investment objective: To generate long term capital appreciation from a portfolio of

equity and equity-linked instruments primarily drawn from the companies in BSE 200
index.
Basic information:
Table 1.5: HDFC Top 200 Fund

Nature of Scheme Open Ended Growth Scheme

Inception Date October 11, 1996
Option/Plan Dividend Option,Growth Option. The Dividend Option
offers Dividend Payout and Reinvestment Facility.
Entry Load NIL
(purchase / additional (With effect from August 1, 2009)
purchase / switch-in)

Exit Load In respect of each purchase / switchin of units, an Exit

(as a % of the Applicable Load of 1.00% is payable if Units are redeemed /
NAV) switched-out within 1 year from the date of allotment..

No Exit Load is payable if Units are redeemed /

switched-out after 1 year from the date of allotment.

(With effect from August 24, 2009)

Minimum Application
Amount
Lock-In-Period
Net Asset Value Periodicity
For new investors :Rs.5000 and any amount thereafter.
For existing investors : Rs. 1000 and any amount
thereafter.
Nil
Every Business Day.

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 Redemption Proceeds Normally despatched within 3 Business days
Tax Benefits Depends upon various factors
(As per present Laws)
Current Expense Ratio (#) On the first 100 crores average weekly net assets 2.50%
(Effective Date 22nd May On the next 300 crores average weekly net assets 2.25%
2009) On the next 300 crores average weekly net assets 2.00%
On the balance of the assets 1.75%
(#) Any change in the expense ratio will be updated within two working days.
Plan Name NAV Date NAV Amount
Dividend Option 27 Aug 2009 40.9930
Growth Option 27 Aug 2009 158.5160
Investment Pattern
The asset allocation under the Scheme will be as follows :
Sr.No. Asset Type (% of Portfolio) Risk Profile
1 Equities and Equity Upto 100% (including use of derivatives Medium to
Related Instruments for hedging and other uses as permitted by High
prevailing SEBI Regulations)
2 Debt & Money Balance in Debt & Money Market Low to
Market Instruments Instruments Medium

HDFC TaxSaver (ELSS):

Table 1.6: HDFC TaxSaver (ELSS

Value Research Rating*

IN EQUITY - TAX PLANNING CATEGORY (24 schemes) for 3 and 5 year periods
ending July 31, 2009
Investment objective

The investment objective of the Scheme is to achieve long term growth of capital.

Basic Scheme Information

Nature of Scheme Open Ended Equity Linked Savings Scheme with a lock-
in period of 3 years
Inception Date December 18, 1995
Option/Plan Dividend Option,Growth Option. The Dividend Option
offers Dividend Payout and Reinvestment Facility.
Entry Load NIL
(purchase / additional (With effect from August 1, 2009)

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 purchase / switch-in)

Exit Load
(as a % of the Applicable No Exit Load shall be levied on bonus units and units
NAV) allotted on dividend reinvestment.

Minimum Application For new & existing investors :Rs.500 and in multiples
Amount thereafter.

Lock-In-Period 3 Years from the date of allotment of the respective

Units.
Net Asset Value Periodicity Every Business Day.
Redemption Proceeds Normally dispatched within 3 Business days(Subject to
completion of Lock-in period)
Tax Benefits Depends upon various factors.
(As per present Laws)
Current Expense Ratio (#) On the first 100 crores average weekly net assets 2.50%
(Effective Date 22nd May On the next 300 crores average weekly net assets 2.25%
2009) On the next 300 crores average weekly net assets 2.00%
On the balance of the assets 1.75%
(#) Any change in the expense ratio will be updated within two working days.
Plan Name NAV Date NAV Amount
Dividend Option 27 Aug 2009 51.7570
Growth Option 27 Aug 2009 166.3880
Investment Pattern
The asset allocation under the respective Plans will be as follows :

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

1 Equities & Equity related instruments Minimum 80% Medium to High
2 Debt Securities, Money Market Maximum 20% Low to Medium
instruments(including cash/call money)

1.3.6 Other Major Mutual Fund Players

Reliance Mutual Fund

Reliance Mutual Fund (RMF) is one of India’s leading Mutual Funds, with Average
Assets Under Management (AAUM) of Rs. 1,08,334.38 Crores and an investor base of
over 74.63 Lacs. (AAUM and investor count as on July 31, 2009)
Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of

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the fastest growing mutual funds in the country. RMF offers investors a well-rounded
portfolio of products to meet varying investor requirements and has presence in 118 cities
across the country. Reliance Mutual Fund constantly endeavors to launch innovative
products and customer service initiatives to increase value to investors. "Reliance Mutual
Fund schemes are managed by Reliance Capital Asset Management Limited., a
subsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of
RCAM, the balance paid up capital being held by minority shareholders."
Reliance Capital Ltd. is one of India’s leading and fastest growing private sector financial
services companies, and ranks among the top 3 private sector financial services and
banking companies, in terms of net worth. Reliance Capital Ltd. has interests in asset
management, life and general insurance, private equity and proprietary investments, stock
broking and other financial services.
Kotak Mahindra Securities
Kotak Mahindra is one of India's leading financial institutions, offering complete
financial solutions that encompass every sphere of life. From commercial banking, to
stock broking, to mutual funds, to life insurance, to investment banking, the group caters
to the financial needs of individuals and corporates.

The group has a net worth of around Rs.5,997 crore and employs around 20,000
employees across its various businesses servicing around 5 million customer accounts
through a distribution network of branches, franchisees, representative offices and
satellite offices across 370 cities and towns in India and offices in New York, London,
Dubai, Mauritius and Singapore.

Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned

subsidiary of KMBL, is the Asset Manager for Kotak Mahindra Mutual Fund (KMMF).
KMAMC started operations in December 1998 and has over 10 Lac investors in various
schemes. KMMF offers schemes catering to investors with varying risk - return profiles
and was the first fund house in the country to launch a dedicated gilt scheme investing
only in government securities.

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UTI Bank

January 14, 2003 is when UTI Mutual Fund started to pave its path following the vision
of UTI Asset Management Co. Ltd. (UTIAMC), which was appointed by UTI Trustee
Co, Pvt. Ltd. for managing the schemes of UTI Mutual Fund and the schemes
transferred/migrated from the erstwhile Unit Trust of India.
UTIAMC provides professionally managed back office support for all business services
of UTI Mutual Fund in accordance with the provisions of the Investment Management
Agreement, the Trust Deed, the SEBI (Mutual Funds) Regulations and the objectives of
the schemes. State-of-the-art systems and communications are in place to ensure a
seamless flow across the various activities undertaken by UTIMF.

ICICI Prudential

ICICI Prudential Asset Management Company enjoys the strong parentage of Prudential
plc, one of UK's largest players in the insurance & fund management sectors and ICICI
Bank, a well-known and trusted name in financial services in India. ICICI Prudential
Asset Management Company, in a span of just over eight years, has forged a position of
pre-eminence in the Indian Mutual Fund industry as one of the largest asset management
companies in the country with average assets under management of Rs. 73,356.07 Crore
(as of July 31, 2009). The Company manages a comprehensive range of schemes to meet
the varying needs of its investors spread across 230 cities in the country.

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TATA Mutual Fund

Backed by one of the most trusted and valued brands in India, Tata Mutual Fund has
earned the trust of lakhs of investors with its consistent performance and world-class
service. Tata Mutual Fund manages around Rs. 20,593.00 crores (average AUM for the
month) as on July 31, 2009 worth of assets across its varied offerings. Tata Mutual Fund
offers an investment option for everyone, whether you are a businessman or salaried
professional, a retired person or housewife, an aggressive investor or a conservative
capital builder.

The Tata Asset Management philosophy is centred on seeking consistent, long-term

results. Tata Asset Management aims at overall excellence, within the framework of
transparent and rigorous risk controls.

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