(Front Title page)

SUMMER TRAINNING REPORT

ON
(HDFC MUTUAL FUND)

SUBMITTED BY
(Makwana Rajnikant M.)
MBA Sem-III

Guided by
( Mr.Pragnesh Patel)

ACADEMIC YEAR
2005-2007

SUBMITTED TO
JAYSUKHLAL VADHAR INSTUTUTE OF MANAGEMENT STUDIES(JVIMS)
`BIPIN T. VADHAR COLLEGE OF MANAGEMENT
JAMNAGAR

AFFILIATED TO
SAURASHTRA UNIVERSITY
RAJKOT

(Inner title page)

SUMMER TRAINNING REPORT

ON
(Title of Project)
 SUBMITTED BY
(Makwana Rajnikant M.)
MBA Sem-III

Guided by

ACADEMIC YEAR
2005-2007

SUBMITTED TO
JAYSUKHLA VADHAR INSTUTUTE OF MANAGEMENT STUDIES(JVIMS)
BIPIN T. VADHAR COLLEGE OF MANAGEMENT
JAMNAGAR

AFFILIATED TO
SAURASHTRA UNIVERSITY
RAJKOT
 CERTIFICATE

This is to certify that Mr./Ms. MAKWANA RAJNIKANT M.has completed his

summer training project as a partial fulfillment of M.B.A. program satisfactorily.

The student has shown immense interest in the subject and the study was
carried out with total devotion.

________________
___________________
(Mr. Pragnesh Patel)
Mr.Vijay H. Vyas

(Dy. Director)

(This certificate to be obtained from the college after your project is

approved by your guide)
 CERTIFICATE (to be obtained from Company)

This is to certify that Mr. / Ms Makwana Rajnikant Mohanbhai, MBA-

Program 2005-2007, student of JVIMS from Jamnagar has successfully
completed his/her Project from (date to be Inserted)

During his/her tenure of two months project at our organization he/she was
found to be sincere, enthusiastic, hard working, and very much dedicated to
his/her work.

We wish him/her all the best in his/her future endeavors.

(Sign of person under whom you have worked)

(Note: - This certificate is indicative only, and is to be obtained from the

company on their letterhead)
 DECLARATION

I undersigned Makwana Rajnikant M. a student of MBA 3rd semester declare

that I have prepared this project report on (“Project title") at “HDFC ASSET
MANAGEMENT COMPANY LTD. ” under Mr. Amit Doshi and by Mr
Pragnesh Patel of JVIMS.

I also declare that this project report is my own preparation and not copied
from anywhere else.

(Signature)
Makwana Rajnikant M.

Roll No : 33

(Note: - This declaration is to be signed by student)

 Acknowledgement
I take this opportunity to express my deep sense of gratitude, thanks and
regards towards all of those who have directly or indirectly helped me in the
successful completion of this project.

I present my sincere thanks to Mr. Amit Doshi (Branch Manager ) who

allowed me to take training at HDFC Mutual Fund.

I am also grateful to all member of HDFC Mutual Fund who helped me

throughout my training period.

I would like to thank

Mr. Killol Karia

Miss Mittal Joshi
Mr. Manish Jasani

I would also like to thank HDFC bank Staff for their wonderful support &
inspirable guiding.

I also would like to thank Mr. John Mathew, Director (i/c) ,Mrs. Meeta Vora,
Faculty for Human Resource, Mrs., Niharika Bajeja , Faculty - Marketing &
Economics , Miss Rupal Rupani , Faculty - Marketing , Mr. Dharmesh
Raval , Placement Officer & Faculty - Accouting & Finance.

Last but not the least I am indebted to my PARENTS who provided me their
time, support and inspiration needed to prepare this report.

Date: -

Place: -

Signature

Rajnikant M. Makwana
 CONTENTS

Sr. Particulars Page

No No

1 Executive Summary
2 Introduction
(a) Company Details
(b) Industry Details
(c) Competitors Details
(d) Regulatory Environment Details
3 Organizational Study
(a) Marketing department study
(b) Operation department study
(c) Financial department study
(d) Human resource department study
4 Bibliography
 HDFC Asset Management Company Limited
A Joint Venture With Standard Life Investment
 Executive Summary

As a partial fulfillment of my MBA curriculum I have undergone two months of

training at “HDFC MUTUAL FUND”. I have done my training project at Rajkot
branch from 01/05/06 to 15/06/06

HDFC mutual fund is Asset Management Company formed with a key

objective to provide Indian Investors the investment options which suits their
investment objectives. The company has more than 7 years of experience in
mutual fund industry. I was placed under marketing department where direct
selling of Mutual Fund was done. I carried out the task in Rajkot city.

I had also done project work during my training. The title of the project is –
_____________________________________________________

Both primary and secondary source of data were used to collect the data.
Questionnaire was the main tool to collect primary source of data directly from
customers. Secondary source of data was collected from magazines like
HDFC Mutual fund review, Fact Sheets of various AMC’s, and websites.
More details about the project is given in the later part of the report.
 INTRODUCTION

The Indian financial market is one of the fastest growing emerging markets of
the world, thanks to the new economic policy - liberalization, deregulation and
measures of restructuring - which has dismantled entry barriers in the
financial markets, allowed the entry of new players and created an
environment for efficient allocation of resources. The major investors in the
markets are the Individual Investors, Corporate Sectors, Charitable Trusts,
etc.

The individual investors are now aware about of the other sources of the
investment avenues rather than the traditional investment avenue. They are
aware about the modern investment avenues.

One of the important investment avenues in the financial market is the ‘Mutual
Fund’. Through out the world, Mutual Funds have played a significant role as
far as an investment is concerned. Mutual Funds play a pivotal role in
transforming savings into investments and thereby improving financial health
of a country. One way to measure this role is to analyze performance of
mutual fund schemes. Also understanding of mutual fund structure and
advantages etc. is very important. A Mutual Fund is the ideal instrument
vehicle for today’s complex and modern financial scenario. Mutual funds offer
many benefits to the small investors such as Diversification, liquidity, low
transaction cost, low risk, transparency, more options and more schemes,
professional management, flexibility, convenience to switch and many more.

Other than Mutual Funds, Bank Deposits, Post Office Schemes, RBI Relief
Bond, Public Provident Fund, Unit Trust of India, Life Insurance, and Equity
are the investment avenues where generally investors invest their savings.

The survey conducted to understand about the Mutual Fund as an investment

Avenue and also generate the awareness of mutual funds in the minds of
individual investors & corporate.
HDFC Asset Management Company Limited
A Joint Venture With Standard Life Investment
 Introduction

HDFC Asset Management Company Ltd (AMC) was incorporated under the
Companies Act, 1956, on December 10, 1999, and was approved to act as an
Asset Management Company for the HDFC Mutual Fund by SEBI vide its
letter dated June 30, 2000.

The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T.
Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020.

In terms of the Investment Management Agreement, the Trustee has

appointed the AMC to manage the Mutual Fund.

As per the terms of the Investment Management Agreement, the AMC will
conduct the operations of the Mutual Fund and manage assets of the
schemes, including the schemes launched from time to time.

The present shareholding pattern of the AMC is as follows:

Particulars % of the paid up capital

Housing Development Finance Corporation Limited 50.10
Standard Life Investments Limited 49.90

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund,
following a review of its overall strategy, had decided to divest its Asset
Management business in India. The AMC had entered into an agreement with
ZIC to acquire the said business, subject to necessary regulatory approvals.

On obtaining the regulatory approvals, the following Schemes of Zurich India

Mutual Fund have migrated to HDFC Mutual Fund on June 19, 2003. These
Schemes have been renamed as follows:

Former Name 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 TaxSaver Fund HDFC TaxSaver
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

The Board of Directors of the HDFC Asset Management Company Limited

(AMC) consists of the following eminent persons.
Mr. Deepak S Parekh
Mr. Hoshang S. Billimoria
Mr. N. Keith Skeoch
Mr. Humayun Dhanrajgir
Ms. Renu S. Karnad
Mr. Milind Barve
Mr. Mark Connolly
Mr. Rajeshwar Ram Bajaj
Mr. P. M. Thampi
Dr. Deepak Phatak
Sponsors
Housing Development Finance Corporation Limited (HDFC)
HDFC was incorporated in 1977 as the first specialised housing finance
institution 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 currently has a client
base of over 8,00,000 borrowers, 12,00,000 depositors, 92,000 shareholders
and 50,000 deposit agents. HDFC raises funds from international agencies
such as the World Bank, IFC (Washington), USAID, CDC, ADB and KfW,
domestic term loans from banks and insurance companies, bonds and
deposits. HDFC has received the highest rating for its bonds and deposits
program for the ninth 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
HDFC is India's premier housing finance company and enjoys an
impeccable track record in India as well as in international markets. Since its
inception in 1977, the Corporation has maintained a consistent and healthy
growth in its operations to remain the market leader in mortgages. Its
outstanding loan portfolio covers well over a million dwelling units. HDFC has
developed significant expertise in retail mortgage loans to different market
segments and also has a large corporate client base for its housing related
credit facilities. With its experience in the financial markets, a strong market
reputation, large shareholder base and unique consumer franchise, HDFC
was ideally positioned to promote a bank in the Indian environment.
Awards and Achievements – Banking Services

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

class Indian Bank". We realised 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 appreciated both nationally and internationally.

2005
Asiamoney Best Domestic Commercial Bank
Awards
Asiamoney Best Cash Management Bank - India .
Awards
The Asian Banker Retail Banking Risk Management Award in India for
Excellence 2004
Hong Kong-based Best Bank – India
Finance Asia
magazine
The Asian Banker Retail Banking Risk Management Award for 2004
Excellence
Hong Kong-based "Best Bank in India"
Finance Asia
magazine
Asiamoney Best Domestic Commercial Bank Best Cash
Awards Management Bank - India.
Economic Times "Company of the Year" Award for Corporate
Awards Excellence 2004-05.
Table : 1 Awards Achieved By HDFC BANK As Per the year
2005.
MAN WITH A MISSION

If ever there was a man with a mission it was Hasmukhbhai Parekh, Founder
and Chairman-Emeritus,of HDFC Group who left this earthly abode on
November 18, 1994. Born in a traditional banking family in Surat, Gujarat, Mr.
Parekh started his financial career at Harkisandass Lukhmidass – a leading
stock broking firm. The firm closed down in the late seventies, but, long before
that, he went on to become a towering figure on the Indian financial scene.

In 1956 he began his lifelong financial affair with the economic world, as
General
Manager of the newly-formed Industrial Credit and Investment Corporation of
India (ICICI). He rose to become Chairman and continued so till his retirement
in 1972.
At the ripe age of 60, Hasmukhbhai started his second dynamic life, even
more illustrious than his first. His vision for mortgage finance for housing
gave birth to the Housing Development Finance Corporation – it was a
trend-setter for housing finance in the whole Asian continent.
He was also a writer in his own right. There are over 200 published articles by
him, full of incisive comments on finance and economics.
In 1992, the Government of India honoured him with the Padma Bhushan
Award. The London School of Economics & Political Science conferred on
him an Honorary Fellowship.
He was one of the Founder Members of the Centre for Advancement of
Philanthropy, and its Chairman till 1993.
He took active interest in the Bombay Community Public Trust, designed
specifically to serve the needs of the city’s underprivileged citizens.
When Mr. Deepak Parekh took over as Chairman from Hasmukhbhai, he said:
“Taking over from H.T. Parekh is a formidable task; his vision… brought about
not only an institution,
but an entire concept which has proved itself to be of lasting importance.”

About Mr. Deepak Parekh

HDFC happened in 1978. He had worked in various parts of

the world when H.T. Parekh (maternal uncle, who founded
HDFC in 1977) asked him, "How long will you continue to go
round the world? Come and settle down, this is an Indian
organization." He had been to the US, the UK, Hong Kong
and the Middle East, which was then every body's dream. He
chucked up my multinational job and came to HDFC. And He
had been in HDFC ever since. He had qualified as a chartered accountant in
England and had worked with Ernst & Young, Precision Fasteners, ANZ
Grindlay's and Chase Manhattan in New York and Mumbai before he came to
HDFC.

MR. DEEPAK S PAREKH

Mr. Deepak Parekh, the Chairman of the Board, is associated with Housing
Development Finance Corporation Limited (HDFC Ltd) in his capacity as its
Executive Chairman.
Mr. Parekh joined HDFC Ltd in a senior management position in 1978. He
was inducted as Wholetime Director of the Corporation in 1985 and was
appointed as the Chairman in 1993. He is the Chief Executive Officer of
HDFC Ltd.
Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England &
Wales).
His other Directorships as on April 30, 2006 are as follows
Background and Objective of HDFC group

Background
HDFC was incorporated in 1977 with the primary objective of meeting a social
need – that of promoting home ownership by providing long-term finance to
households for their housing needs. HDFC was promoted with an initial share
capital of Rs. 100 million.

Business Objectives
The primary objective of HDFC is to enhance residential housing stock in the
country through the provision of housing finance in a systematic and
professional manner, and to promote home ownership. Another objective is to
increase the flow of resources to the housing sector by integrating the housing
finance sector with the overall domestic financial markets...

Organizational Goals
HDFC’s main goals are to
a) Develop close relationships with individual households,
b) Maintain its position as the premier housing finance institution in the
country,
c) Transform ideas into viable and creative solutions,
d) Provide consistently high returns to shareholders, and
e) To grow through diversification by leveraging off the existing client
base.
 Organizational Culture & Values

HDFC group have an open and informal culture. HDFC value integrity,
commitment, teamwork and excellence in customer service. HDFC adopt a
policy of "Learning By Doing" which encourages decision making as well as
learning from doing.
In HDFC they continue to grow rapidly in spite of the competitive market
scenario, young professionals opting to make a career with HDFC, today will
find more challenging and exciting opportunities to contribute and grow with
HDFC.

Organization and Management

HDFC is a professionally managed organisation with a board of directors
consisting of eminent persons who represent various fields including finance,
taxation, construction and urban policy & development. The board primarily
focuses on strategy formulation, policy and control, designed to deliver
increasing value to shareholders.
Name and Designation Location Contact Number
Mr. Deepak S. Parekh is the executive Chairman of the
Corporation. He is a Fellow of the Institute of Chartered
Accountants (England & Wales).Mr. Parekh joined the
Corporation in a senior management position in 1978.He
was inducted as a wholetime director of the Corporation
in 1985 and was appointed as the Chairman in 1993. He is the chief executive
officer of the Corporation. Mumbai Tel : - 91-022-22029894, Fax :- 91-022-
22852336

Mr. K. M. Mistry the Managing Director of the

Corporation. Is a Fellow of the Institute of Chartered
Accountants of India. He has been employed with the
Corporation since 1981 and was the executive director of
the Corporation since 1993. He was appointed as the
deputy managing director in 1999 and the Managing Director in 2000. He is
also a member of the Investors’ Grievance Committee of Directors.Mumbai
Tel:- 91-022-22850487,Fax 91-022-22828175

Ms. Renu S. Karnad the Executive Director of the

Corporation. Is a graduate in law and holds a Master’s
degree in economics from Delhi University. She has been
employed with the Corporation since 1978 and was
appointed as the Executive Director of the Corporation in
2000. She is responsible for overseeing all aspects of
lending operations of HDFC.New Delhi Tel :- 91-011-26167393, Fax :-91-011-
26194617

Board of Directors
Mr. D S Parekh - Chairman Mr. D N Ghosh
Mr. Keshub Mahindra - Vice Chairman Dr. S A Dave
Ms. Renu S. Karnad - Executive Mr. S Venkitaramanan
Director
Mr. K M Mistry - Managing Director Dr. Ram S Tarneja
Mr. Shirish B Patel Mr. N M Munjee
Mr. B S Mehta Mr. D M Satwalekar
Mr. D M Sukthankar
Table : 2 Top Authorities Of HDFC.

HDFC has a staff strength of 1029, which includes professionals from the
fields of finance, law, accountancy, engineering and marketing.

HDFC Bank
Profile
The Housing Development Finance Corporation Limited (HDFC) was amongst
the first to receive an 'in principle' approval from the Reserve Bank of India
(RBI) to set up a bank in the private sector, as part of the RBI's liberalisation
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.

Business Focus
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to
build sound customer franchises across distinct businesses so as to be the
preferred provider of banking services for target retail and wholesale customer
segments, and to achieve healthy growth in profitability, consistent with the
bank's risk appetite. The bank is committed to maintain the highest level of
ethical standards, professional integrity, corporate governance and regulatory
compliance. HDFC Bank's business philosophy is based on four core values -
Operational Excellence, Customer Focus, Product Leadership and People.

Business
HDFC Bank offers a wide range of commercial and transactional banking
services and treasury products to wholesale and retail customers.

The bank has three key business segments:

 Wholesale Banking Services
 Retail Banking Services
 Treasury
 Respect Yourself

Standard Life Investments Limited

The Standard Life Assurance Company was established in 1825 and has
considerable experience in global financial markets. In 1998, Standard Life
Investments Limited became the dedicated investment management company
of the Standard Life Group and is owned 100% by The Standard Life
Assurance Company. With global assets under management of approximately
US$186.45 billion as at March 31, 2005, Standard Life Investments Limited is
one of the world's major investment companies and is responsible for
investing money on behalf of five million retail and institutional clients
worldwide. With its headquarters in Edinburgh, Standard Life Investments
Limited has an extensive and developing global presence with operations in
the United Kingdom, Ireland, Canada, USA, China, Korea and Hong Kong. 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 2% of the market capitalization of the London Stock Exchange.
 Respect Yourself

HDFC Standard Life Insurance Company Ltd. is one of India’s leading private
life insurance companies, which offers a range of individual and group
insurance solutions. It is a joint venture between Housing Development
Finance Corporation Limited (HDFC Ltd.), India’s leading housing finance
institution and The Standard Life Assurance Company, a leading provider of
financial services from the United Kingdom. Both the promoters are well
known for their ethical dealings and financial strength and are thus committed
to being a long-term player in the life insurance industry – all important factors
to consider when choosing your insurer.

Vision
'The most successful and admired life insurance company, which means that
we are the most trusted company, the easiest to deal with, offer the best
value for money, and set the standards in the industry'.

Values
Values that we observe while we work: Integrity, InnovationCustomer centric,
People Care “One for all and all for one”, Team work, Joy and Simplicity

Residence

The pages of this site are prepared in the United Kingdom for the information
of residents in countries in which Standard Life Investments Group products
may be sold. The information on our site does not constitute an offer or
solicitation to sell units or shares in any of the funds referred to on this site, by
anyone in any jurisdiction in which such offer, solicitation or distribution would
be unlawful or in which the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
Company details and regulation

Standard Life Investments Limited, tel. 0131 225 2345, is a company

registered in Scotland (no. SC 123321) Registered Office 1 George Street,
Edinburgh, EH2 2LL. It is also registered in Ireland (no. 904256) and has a
principal place of business at 90 St. Stephen's Green, Dublin 2, Ireland.
The Standard Life Investments Group includes Standard Life Investments
(Mutual Funds) Limited, SLTM Limited, Standard Life Investments (Corporate
Funds) Limited and Standard Life Investments (Private Equity) Limited.
Retail investment products and funds are issued by Standard Life Savings
Limited and Standard Life Investments (Mutual Funds) Limited.
ISA information is issued by Standard Life Savings Limited, the ISA Manager,
a company registered in Scotland (no. SC180203) Registered Office Standard
Life House, 30 Lothian Road, Edinburgh, EH1 2DH.
The above companies are authorized and regulated in the UK by the Financial
Services Authority.

Standard Life Investments (USA) Limited is a company registered in

Scotland (no. SC 215736) Registered Office 1 George Street, Edinburgh, EH2
2LL. It is a wholly owned subsidiary of Standard Life Investments Limited. It is
registered as an Investment Adviser with the US Securities and Exchange
Commission and has a principal place of business at One Beacon Street, 34th
Floor, Boston, MA 02108-3106, USA.
Standard Life Investments (Asia) Limited is a company registered in Scotland
(no. SC 193436) Registered Office 1 George Street, Edinburgh, EH2 2LL. It is
a wholly owned subsidiary of Standard Life Investments Limited. It is licensed
with and regulated in Hong Kong by the Securites and Futures Commission
and has a principal place of business at Suite 5301-5302 The Center, 99
Queen's Road Central, Hong Kong.

Standard Life Investments Inc. is a limited company incorporated in Canada

with its Registered Office at 1001 de Maisonneuve Boulevard West, Suite
700, Montreal, Quebec, Canada, H3A 3C8. It is a wholly owned subsidiary of
Standard Life Investments Limited.

General disclaimers and terms

While Standard Life Investments Limited has taken all reasonable care to
ensure that the information contained within the pages of this site is accurate,
current, complete, fit for its intended purpose and compliant with the relevant
United Kingdom legislation and regulations as at the date of issue, errors or
omissions may occur due to circumstances which are beyond our control.
If you are in any doubt as to the accuracy and currency of any information
contained within the pages of this site, or if you require any further
information, you may wish to contact us directly or take independent financial
advice.
Standard Life Investments Limited accepts no responsibility for information
contained in any other sites which can be accessed by hypertext link from
these pages or for these sites not being available at all times. Please note that
when you click on any external site hypertext link you will leave the Standard
Life Investments site.
Standard Life Investments Limited reserves the right to suspend or withdraw
access to the pages of this site without notice at any time and accepts no
responsibility for these pages not being available at all times.
Please remember that past performance is not necessarily a guide to future
performance. The value of units and shares and the income from them can go
down as well as up and investors may not get back the amount originally
invested. Exchange rate changes may cause the value of overseas
investments to rise or fall. For further details on any of the funds or products
mentioned, please read the relevant offering document or prospectus.
You may invest in a stocks and shares ISA if you are 18 or over, resident and
ordinarily resident in the UK or qualifying for ISA tax benefits as a Crown
employee serving overseas (or the spouse of such a person). The tax reliefs
on ISAs and PEPs may be altered in future and their value to you depends on
your own financial circumstances. The tax treatment of UK pension funds may
be subject to change in future.
The presence or absence of a CAT-standard cannot predict whether an ISA
will prove to be a good, bad or suitable investment. A CAT standard ISA has
not received Government or regulatory approval of any kind, nor is your
money or your investment return guaranteed by the Government or regulator
in any way. The adherence to a CAT standard is warranted by Standard Life
Savings Limited and does not carry certification by any other body.
By accessing these pages you shall be deemed to have accepted and agreed
to be bound by the terms of this Important Legal Information page which shall
be governed by the Law of Scotland.
The prices, which are shown are for information purposes only. They are not
the prices at which the shares or investment products can be bought or sold.
Investment products involving accumulation units or shares have income
distributions automatically re-invested. Other investments have income
distributions paid to the investor and this will be reflected in the price

Institutional investors based outside of Europe, North America and Asia can
access some specialist investment services outlined below. If you are
interested in any of these products or services please contact us to ascertain
your eligibility.

Segregated Fund Management

The specific investment needs of large investors and pension schemes are
often best accommodated by segregated funds, which are tailored to the
individual investor’s requirements. Our segregated funds benefit from our
specialist expertise in certain markets.
Assets are bought and sold for each segregated client according to an
individual brief, rather than being pooled with other clients' investments.
Available worldwide, a segregated fund can be used to benefit from our
specialist expertise in certain markets including equities, bonds, property,
private equity and treasury.
Money Market Fund Management
Investors are increasingly looking to access our cash management expertise.
In particular, our flagship AAA Fund for dollar, euro and sterling liquidity has
been widely acclaimed. Standard Life Investments AAA Cash Fund is an
open-ended investment company split into sub-funds that are denominated in
sterling, euro and dollar.
Evidence of the fund’s success is the explosion of assets under management
from a standing start to £7.2 billion* in only two years. Our active cash
management expertise is underpinned by a strong investment process with
three core principles – security of capital, daily liquidity and a competitive
yield. Our consistent success is testament to the resilience of our process.

Private Equity Investment

We manage approximately £2.4 billion* in private equity for insurance

companies, pension funds, and high net worth individuals. Our private equity
investments include retail funds, in-house capital and limited partnerships.
Our team has more than 150 years of private equity experience and can
demonstrate an outstanding long term track record. In addition, each member
of our investment team has extensive direct deal experience, which gives us a
unique insight into the investment strategies employed by the managers we
review for our private equity fund of funds vehicles.
Our clients invest with us because our process is consistent and focused. We
have always concentrated on buy-outs in Western Europe, a successful
strategy for over 20 years. It is this approach, combined with our wealth of
experience, which has allowed us to generate excellent returns for our clients.
SWOT Analysis

 Strength

• Young and well qualified staff.

• Well regained and reputed brand of HDFC.
• Experience of Standard Life Investment
• Well aware of customer need.

 Weakness

• Presence of HDFC MF in very less places.

• Less marketing.
• Comparatively very less staff and very heavy work load.

 Opportunities
• Day by day increasing knowledge about Mutual Fund.
• Only instrument with proper corporate governance and
• Compare high risk with lower risk.
• Rural market is totally untapped.

 Threat
• Presence of nationalized player like UTI and many more.
• Increase in competition and competitor.

In Summary…
HDFC has always believed in the enduring business advantage of “doing the
right thing” - having a well-defined purpose, adhering to our core values and
giving back to the society - thereby gaining in terms of not only customer
loyalty and employee satisfaction but also profitability.
In this context, HDFC was among the first Indian corporates to join the Global
Compact - an international initiative that brings companies together with UN
agencies, labour and civil society to support universal environmental and
social principles. HDFC remains wholly committed to the Global Compact and
strives to further its cause by upholding its ten principles in the areas of
human rights, labour, the environment and anti-corruption.
As our Chairman, Mr. Deepak Parekh quoted the following words of John
Wesley, the 18th century evangelist, while accepting The Economic Times
Corporate Citizen Award won by HDFC for the year 2003-04:
“Do all the good you can,
by all the means you can,
in all the ways you can,
in all the places you can,
at all the times you can,
to all the people you can,
as long as ever you can.”
Industry Detail
MUTUAL FUND SECTOR AND FINANCIAL MARKET OVERVIEW

Mutual funds have played a significant role in financial intermediation, the

development of capital markets and the growth of the Indian Economy. The
Indian mutual fund industry has been no exception. Though it is relatively
new, it has grown at a dynamic speed, influencing various sectors of the
financial market and the national economy. The Indian economy is under
transition on account of the on going structural adjustment programs and
liberalization. The corporate sector and the investment community play a
major role in the markets today. Economic transition is usually marked by
changes in the market mechanics, institutional integration, market regulations,
relocation of savings and investments and changes in inter-scrotal
relationships. These changes often include negativity and shake investors’
confidence in the capital market. Mutual funds as efficient allocates of
resources play a crucial role in this transitional period. They have opened new
vistas to investors and imparted much needed liquidity to the system. In the
process, they have challenged the hitherto dominant role of commercial banks
in the financial market and national economy.
Mutual funds are dynamic financial institutions that play a crucial role in an
economy by mobilizing savings and investing them in the capital markets,
thus establishing a link between savings and capital market. Therefore, the
activities of mutual funds have both short and long term impact on the savings
and capital markets and the national economy. They mobilize funds in the
savings market and act as complementary to banks.
 Emergence of Mutual Funds

Mutual funds now represent perhaps the most appropriate investment

opportunity for most investors. As financial markets become more
sophisticated and complex, investors need a financial intermediary who
provides the required knowledge and professional expertise on successful
investing. It is no wonder then that in the birthplace of mutual funds – the
U.S.A. – the fund industry has already overtaken the banking industry, more
funds being under mutual fund management than deposited with banks.
The Indian mutual fund industry has already started opening up many of the
exciting investment opportunities to Indian investors. We have started
witnessing the phenomenon of more savings now being entrusted to the funds
than to the banks. Despite the expected continuing growth in the industry,
mutual funds are still a new financial intermediary in India.

Place of Mutual Funds in Financial Markets

Indian households started allocating more of their savings to the capital
markets in 1980s, with investments flowing into equity and debt instruments,
besides the conventional mode of bank deposits.
Until 1992, primary market investors were effectively assured good returns as
the issue price of new equity issues was controlled and low. After introduction
of free pricing of shares, new issue prices were higher and with greater
volatility in the stock markets, many investors who bought highly priced
shares lost money, and withdrew from the markets altogether. Even those
investors who continued as

Direct investors in the stock markets realized that the key to successful
investing in the capital markets lay in building a diversified portfolio, which in
turn required substantial capital. Besides, selecting securities with growth and
income potential from the capital market involved careful research and
monitoring of the market, which was not possible for all investors. Under
similar circumstances in other countries, mutual funds had emerged as
professional intermediaries. Besides providing the expertise in stock market
investing, these funds allow investing in small amounts and yet holding a
diversified portfolio to limit risk, while providing the potential for income and
growth that is associated with the debt and equity instruments. In India, Unit
Trust of India occupied this place as the only capital markets intermediary
from 1964 until late 1987, when the Government started allowing other
sponsors also to set up mutual funds. With some ups and downs, this new
class of intermediary institutions has emerged, in India as elsewhere, as a
good alternative to direct investing in capital markets.
Mutual Funds serve as a link between the saving public and the capital
markets, as they mobilize savings from investors and bring them to borrowers
in the capital markets. By the very nature of their activities, and by virtue of
being knowledgeable and informed investors, they influence the stock
markets and play an active role in promoting good corporate governance,
investor protection and the health of capital markets. Mutual funds have
imparted much needed liquidity into the financial system and challenged the
hitherto dominant role of banking and financial institutions in the capital
markets.

What is a Mutual Fund?

A mutual fund is a common pool of money in to which investors with common

investment objective place their contributions that are to be invested in
accordance with the stated investment objective of the scheme. The
investment manager would invest the money collected from the investor in to
assets that are defined/ permitted by the stated objective of the scheme. For
example, an equity fund would invest equity and equity related instruments
and a debt fund would invest in bonds, debentures, gilts etc.
 Invest / Pool
Their Money

Profit / Loss From

Portfolio of Investment

Invest in number
Of Stocks & Bonds
Profit / Loss From
Individual Investment

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

Investments in securities are spread across a wide cross-section of industries

and sectors and thus the risk is reduced. Diversification reduces the risk
because all stocks may not move in the same direction in the same proportion
at the same time. Mutual fund issues units to the investors in accordance with
quantum of money invested by them. Investors of mutual funds are known as
unit holders.

The profits or losses are shared by the investors in proportion to their

investments. The mutual funds normally come out with a number of schemes
with different investment objectives which are launched from time to time. A
mutual fund is required to be registered with Securities and Exchange Board
of India (SEBI) which regulates securities markets before it can collect funds
from the public.
History of the Indian Mutual Fund Industry in India

The mutual fund industry in India started in 1963 with the formation of Unit
Trust of India, at the initiative of the Government of India and Reserve Bank
the. The history of mutual funds in India can be broadly divided into four
distinct phases.

First Phase – 1964-87

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

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

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

1987 marked the entry of non- UTI, public sector mutual funds set up by
public sector banks and Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI
Mutual Fund established in June 1987 followed by Canbank Mutual Fund
(Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual
Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92).
LIC established its mutual fund in June 1989 while GIC had set up its mutual
fund in December 1990.

At the end of 1993, the mutual fund industry had assets under management of
Rs.47, 004 crores.
Third Phase – 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund
families. Also, 1993 was the year in which the first Mutual Fund Regulations
came into being, under which all mutual funds, except UTI were to be
registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July
1993.

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

comprehensive and revised Mutual Fund Regulations in 1996. The industry
now functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed
several mergers and acquisitions. As at the end of January 2003, there were
33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of
India with Rs.44, 541 crores of assets under management was way ahead of
other mutual funds.

Fourth Phase – since February 2003

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 Ltd, sponsored by SBI, PNB, BOB and
LIC. It is registered with SEBI and functions under the Mutual Fund
Regulations. With the bifurcation of the erstwhile UTI which had in March
2000 more than Rs.76, 000 crores of 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. As at the end of September 2004, there were 29
funds, which manage assets of Rs.153108 crores under 421 schemes.

Structure of Mutual Fund

Chart 1 . Structure Of M.F.in India

The structure consists of

Sponsor

Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of
the net worth of the Investment Managed and meet the eligibility criteria
prescribed under the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996.The Sponsor is not responsible or liable for any loss or
shortfall resulting from the operation of the Schemes beyond the initial
contribution made by it towards setting up of the Mutual Fund.

Trust
The Mutual Fund is constituted as a trust in accordance with the provisions of
the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under
the Indian Registration Act, 1908.

Trustee
Trustee is usually a company (corporate body) or a Board of Trustees (body
of individuals). The main responsibility of the Trustee is to safeguard the
interest of the unit holders and inter alia ensure that the AMC functions in the
interest of investors and in accordance with the Securities and Exchange
Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust
Deed and the Offer Documents of the respective Schemes. At least 2/3rd
directors of the Trustee are independent directors who are not associated with
the Sponsor in any manner.

Asset Management Company (AMC)

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

Mutual Fund. The AMC is required to be approved by the Securities and
Exchange Board of India (SEBI) to act as an asset management company of
the Mutual Fund. Atleast 50% of the directors of the AMC are independent
directors who are not associated with the Sponsor in any manner. The AMC
must have a networth of atleast 10 crore at all times.

Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and
Transfer Agent to the Mutual Fund. The Registrar processes the application
form, redemption requests and dispatches account statements to the unit
holders. The Registrar and Transfer agent also handles communications with
investors and updates investor records.

VISION

Vision
To be a dominant player in the Indian mutual fund
space, recognized for its high levels of ethical and
professional conduct and a commitment towards
enhancing investor interests.

Awards and Achievements – Banking Services

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

class Indian 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 appreciated both nationally and internationally.

Industry Details

The Indian Financial Market

The economy of any country is widely influenced by the financial market of

that country. There is a strong link between the economy progress and the
financial system with institutional arrangement and prevailing delivery system.

The Indian economy is on the path of progress and the projection of GDP
growth rate in Budget-2006 is around 8.1%. The financial system has a strong
impact on GDP growth rate. The Indian financial system is divided into two
parts organized and unorganized.

The organized sector constitutes of Commercial Banks, FIs, Insurance

companies, Mutual Funds, Unit Trusts, etc. The Indian financial system has
also the involvement of public sector institutions.

Financial institutions being the important part of financial system in India help
to realize the opportunities for savings and real investment in the economy.
The FIs help in growth of economy, boosting the investment in various sectors
of economy and also the growth of GDP and per capita income.
The Investment Options

In India the investor has wide variety of investment options available to him.
Economic well being in the long run depends significantly on how wisely he
invests. Every investment options has two main aspects i.e. risk and return.
The investor has the choice of investment in capital markets of the country
and also in financial institution of the country like Banks and Insurance
companies. The various tools of investment available to investor are as
follows -:

 Post Office Savings

 Life Insurance
 Investment in Debt Market
 Real Estate
 Government Securities
 National Saving Certificate(NSC)
 Bank Deposits
 Equity Shares
 Kishan Vikas Patra(KVP)
 National Saving Certificate (NSC)

The investor can invest in any of the above investment tool depending on his
investment objective and need. Generally in India the investor prefer to invest
in banks and in post office savings account. But in last few years the trend
have changed and investors are moving towards capital markets.

Investment Attributes

1) Risk
The rate of return from investments like equity shares, real estate, etc vary
rather widely. The risk of an investment refers to the variability of its rate of
return. Bank deposits, post office savings, investment in debt market are less
risky and have fixed return.

2) Rate of Return
The rate of return is an very important aspect of the investment tool. The rate
of return is high in equity markets and it is low in post office savings and bank
deposits. It means the more risky the instrument the more the return will be.

3) Tax Benefits
Some investments provide tax benefits, other does not. Tax benefits are of
three kinds: Initial tax benefit, Continuing tax benefit and Terminal tax benefit.
Initial tax benefit refers to the relief enjoyed at the time of making the
investment. Continuing tax benefit represents the tax shield associated with
the periodic returns from the investment e.g. Insurance, bank interest, etc.
Terminal tax benefit refers to relief from taxation when an investment is
realized or liquidated.

4) Liquidity
An investment is highly liquid if:
a) It can be transacted quickly
b) The transaction cost is low
c) The price change between two successive transactions is negligible
The liquidity of market may be judged in terms of its depth, breadth, and
resilience. Depth refers to the existence of buy as well as sell orders around
the current market price. Breadth implies the presence of such orders in
substantial volume. Resilience means that new orders emerge in response to
price changes. High marketability is desirable characteristics and low
marketability is an undesirable characteristic

5) Convenience
Convenience broadly refers to the ease with which the investment can be
made and looked after. Convenience can be judged by ready availability of
investment and easy monitoring of investment. The degree of convenience
associated with investments varies widely. On one hand there is deposit in
savings bank account that can be readily available and does not require
maintenance effort. On the other hand is purchase of real estate that may
involve a lot of procedural and legal hassles at the time of acquisition and a
great deal of maintenance effort subsequently.

Some key Facts of Mutual Fund Industry

The graph indicates the growth of assets over the years.

Chart 2 : Phases Wise Increase in Amounts.

Source: www.amfiindia.com
Competitors
Details
Competitors Details
Index AMC Type
1 UTI Mutual Fund Public
2 Unit Trust of India Public
3 Taurus Mutual Fund International
4 Tata Mutual Fund Private
5 Sundaram Mutual Fund Private
6 Standard Chartered Mutual Fund Banking
7 SBI Mutual Fund Banking
8 Sahara Mutual Fund Public
9 Reliance Mutual Fund Private
10 Prudential ICICI Mutual fund Banking
11 PRINCIPAL Mutual Fund Private
13 Morgan Stanley Mutual Fund International
14 LIC Mutual Fund Public
15 Kotak Mahindra Mutual Fund Banking
16 JM Financial Mutual Fund Private
17 ING Vysya Mutual Fund Banking
18 HSBC Mutual Fund International
19 HDFC Mutual Fund Banking
20 GIC Mutual Fund Public
21 Franklin Templeton Investments International
22 Escorts Mutual Fund International
23 DSP Merrill Lynch Mutual Fund International
24 Deutsche Mutual Fund International
25 Chola Mutual Fund Private
26 Canbank Mutual Fund Banking
27 BOB Mutual Fund Banking
28 Birla Mutual Fund Public
29 Benchmark Mutual Fund Private
30 Alliance Mutual Fund International
31 ABN AMRO Mutual Fund International

Mutual Fund Assets Under Management (Rs. cr.)

March-06 April-06 Change % Change
UTI Mutual Fund 29,519 30,109 590 2.00
Prudential ICICI Mutual Fund 23,502 27,503 4,001 17.03
Reliance Capital Mutual Fund 24,670 26,420 1,750 7.10
HDFC Mutual Fund 21,550 22,539 989 4.59
Franklin Templeton Mutual Fund 17,827 19,639 1,813 10.17
Birla Sun Life Mutual Fund 15,019 17,390 2,371 15.79
SBI Mutual Fund 13,186 14,506 1,320 10.01
DSP Merrill Lynch Mutual Fund 10,795 13,201 2,406 22.28
Kotak Mahindra Mutual Fund 9,941 10,985 1,044 10.50
Tata Mutual Fund 9,717 10,652 936 9.63
HSBC Mutual Fund 9,220 10,079 859 9.32
Standard Chartered Mutual Fund 9,412 9,322 -89 -0.95
PRINCIPAL Mutual Fund 6,489 8,946 2,456 37.85
LIC Mutual Fund 5,229 6,134 905 17.31
Deutsche Mutual Fund 2,535 4,210 1,675 66.06
Fidelity Mutual Fund 3,663 3,692 29 0.80
Sundaram Mutual Fund 3,273 3,658 385 11.75
Canbank Mutual Fund 2,223 3,327 1,104 49.65
ABN AMRO Mutual Fund 2,769 2,886 117 4.22
J M Mutual Fund 2,596 2,784 188 7.24
ING Vysya Mutual Fund 1,961 2,684 723 36.87
Chola Mutual Fund 2,007 2,146 139 6.93
Benchmark Mutual Fund 982 782 -200 -20.40
Taurus Mutual Fund 232 261 29 12.35
Sahara Mutual Fund 282 254 -27 -9.71
BOB Mutual Fund 191 221 30 15.90
Escorts Mutual Fund 164 169 5 3.04
Quantum Mutual Fund 11 30 19 168.03
Total 228,964 254,529 25,565 10.04

Table 3 : AUM Of All Mutual Funds In India For The Month Of Mar – Apr.

Asset Under Management

Mutual Fund Name AUM Equity & Debt & Equity Debt
Balance MIP % %
ABN AMRO Mutual Fund 1580.36 464.589. 1115.92 29.39 70.61
Alliance Capital Mutual Fund 1431.46 589.48 841.98 41.18 58.82
Birla Sun Life Mutual Fund 10049.66 1668.77 8380.89 16.61 83.39
Canbank Mutual Fund 1565.19 224.35 1340.84 14.33 85.67
Chola Mutual Fund 1004.62 232.63 771.99 23.16 76.84
Deutsche Mutual Fund 2366.72 96.57 2270.15 4.08 95.92
DSP Merrill Lynch Mutual Fund 6472.80 1462.33 5010.47 22.59 77.41
Fidelity Mutual Fund 1628.06 1628.06 0.00 100.00 0.00
Franklin Templeton Mutual Fund 16704.74 6965.36 9739.38 41.70 58.30
HDFC Mutual Fund 15707.82 6126.04 9581.78 39.00 61.00
HSBC Mutual Fund 7250.63 1987.93 5262.70 27.42 72.58
ING Vysya Mutual Fund 2072.86 337.25 1735.62 16.27 83.73
JM Financial Mutual Fund 3780.83 85.52 3694.51 2.26 97.74
Kotak Mahindra Mutual Fund 6501.52 1065.12 5436.41 16.38 83.62
LIC Mutual Fund 2959.15 277.46 2681.69 9.38 90.62
PRINCIPAL Mutual Fund 6264.96 1682.48 4582.48 26.86 73.14
Prudential ICICI Mutual Fund 17095.89 2169.46 14926.44 12.69 87.31
Reliance Mutual Fund 9907.89 4226.40 5681.49 42.66 57.34
Sahara Mutual Fund 565.50 25.74 539.76 455 95.45
SBI Mutual Fund 7189.35 2311.54 4877.81 32.15 67.85
Standard Charted Mutual Fund 7636.86 0.00 7636.86 0.00 100.0
0
Sundaram Mutual Fund 2035.21 997.91 1037.31 49.03 50.97
Tata Mutual Fund 8713.95 2629.09 6084.86 30.17 69.83
Taurus Mutual Fund 170.76 157.53 13.23 92.25 7.75
UTI Mutual Fund 21975.57 8791.81 13183.77 40.01 59.99
Table 4 : % Changes in Equity & Debt as per the AUM Changes.
 Competitors
Profile

Competitors Profile

Other than AMC operating in India some other competitors are there who are
looking for to increase their market share. There are as follows:

Prudential ICICI Asset Management Company, (49%:51%) a joint venture

between Prudential Plc, UK's leading insurance company and ICICI Bank Ltd,
India's premier financial institution.
The joint venture was formed with the key objective of providing the Indian
investor mutual fund products to suit a variety of investment needs. The AMC
has already launched a range of products to suit different risk and maturity
profiles.

Prudential ICICI Asset Management Company Limited has a networth of

about Rs. 80.14 crore (1 crore = 10 million) as of March 31, 2004. Both
Prudential and ICICI Bank Ltd have a strategic long-term commitment to the
rapidly expanding financial services sector in India.

As of May 1998 As on April 30,2006

Assets under Management Rs. 160 crore Rs.27,550.49 crore
Number of Funds Managed 2 20

Franklin Templeton Investments is one of the largest financ ial services

groups in the world based at San Mateo, California USA. The group has US$
504.3 billion in assets under management globally (as of Apr 30, 2006).

Franklin Templeton has offices in 33 locations across India and manages

assets of Rs.19639.12 crores for around 13 lakh investors as of April 30,
2006.
 State Bank of India Mutual Fund
State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund
to launch offshore fund, the India Magnum Fund with a corpus of Rs. 225
cr. approximately. Today it is the largest Bank sponsored Mutual Fund in
India. They have already launched 35 Schemes out of which 15 have
already yielded handsome returns to investors. State Bank of India Mutual
Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor
base of over 8 Lakhs spread over 18 schemes

In the debt sector it always aims at the "risk adjusted returns" based on the
investors risk tolerance. The following four steps are worked upon while
investing:
• Manage the schemes on a "Portfolio basis".
• Active management of interest rate risk.
• Credit risk management by following the conservative approach.
• Continuous monitoring.
Partnership firms, corporates and even trusts & societies, duly
registered under the applicable laws, can invest in SBI Mutual
Funds.

Competitor’s Market Share

Market Share of All The Companies in Gujarat

Name Of The Company Market Share (%)

SBI Mutual Fund. 20
Franklin Templeton Investments. 15
Prudential ICICI Pvt. Ltd. 11
HDFC MF 13
 Table : 1

Competitor’s Market Share

22%

34% SBI Mutual Fund.

Franklin Templeton
Investments.
Prudential ICICI Pvt.
19% Ltd.
HDFC MF

25%

Chart 3 : Competitors Market Share in Diff. M.F. in India.

Legal And Regulatory Framework

Following are the regulators of Mutual Fund in India-:

AMFI

It is Association of Mutual Fund in India. It promotes Mutual Fund among the

masses and give recommendations in order to uphold the interest of
investors.

This Association conducts AMFI exam. Initially the Association gave rights of
conducting the exam to Bombay Stock Exchange (BSE) and National Stock
Exchange (NSE). Then rights were also give the UTI (Unit Trust of India).
Corporate distributors are also given rights to conduct exam. It is compulsory
for a person to clear AMFI exam in order to become advisor in Mutual Fund.

SEBI
Securities and Exchange Board of India (SEBI), the capital market 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.

All Mutual Fund schemes are registered with SEBI and they follow the rules
and regulation as prescribed by SEBI. It registers every mutual fund scheme
in order to protect the interest of investors.

RBI
Reserve Bank of India was the regulator of Mutual Fund before SEBI. It
regulated mutual fund initially and there were only few schemes in the market.
But now with coming of SEBI, it has now become the main regulator of the
Mutual Fund. RBI now only governs the Bank Sponsored Mutual Fund.

General Obligations Of the AMC:

 Every asset management company for each scheme shall keep and
maintain proper books of accounts, records and documents, for each
scheme so as to explain its transactions and to disclose at any point of time
the financial position of each scheme and in particular give a true and fair
view of the state of affairs of the fund and intimate to the Board the place
where such books of accounts, records and documents are maintained.

 The financial year for all the schemes shall end as of March 31 of each
year. Every mutual fund or the asset management company shall prepare in
respect of each financial year an annual report and annual statement of
accounts of the schemes and the fund as specified in Eleventh Schedule.

 Every mutual fund shall have the annual statement of accounts audited
by an auditor who is not in any way associated with the auditor of the asset
management company.
  The offer document and advertisement materials shall not be misleading
or contain any statement or opinion, which are incorrect or false.

 The price at which the units may be subscribed or sold and the price at
which such units may at any time be repurchased by the mutual fund shall
be made available to the investors

The Rights of Investors

Following are the legal rights of Investors-:
Inspect major documents of the fund.
 Appointment of the AMC can be terminated by 75% of the unit holders
of the scheme by voting.
 Right to obtain information from trustees.
 Entitled to receive dividend warrants within 30 days of the declaration
of dividend.
 Rights to receive a copy of annual financial statements of fund and
periodic transaction statements.
 75% of the unit holders can resolve to wind up the scheme.
 Structure of Indian Mutual Funds
Mutual Fund Structure

Mutual Fund industry is highly regulated in developed countries keeping in

view the protection of investors interest as well as to maintain operational
transparency. There is clear demarcation between open-ended schemes and
close ended schemes for which usually tow different type of structural and
management approaches are followed. Open-ended follows ‘trust approach’
while close-ended schemes follow ‘corporate approach’. The management
and operations are guided by separate regulatory mechanisms, separate
controlling authorities as well.

SEBI Regulations Act, 1996, guides the formations and operations of Mutual
Funds. A Mutual Fund comprises of four separate entities i.e Sponsor, Mutual
Fund Trust, AMC and Custodian.

Sponsor
Sponsor can be any person, acting alone or in a combination with another
corporate body, establishes the Mutual Funds and get it registered with SEBI.

As per SEBI regulations sponsor is required to contribute 40% of minimum net

worth of the AMC. It must also have sound track record. Mutual Fund shall be
constituted in form of a trust and the instrument of trust shall be in form of a
deed, duly registered under the provisions of Indian Registration Act,
executed by sponsor in favor of trustees.
For e.g. In Reliance Capital Mutual Fund the Sponsor is Reliance Capital
Limited.

Board of Trustees
Board of Trustees manages Mutual Fund and the sponsor executed the trust
deeds. Mutual Funds raise money through sale of units under one or more
schemes for investing in securities. As per SEBI Regulations, 1996 half of
trustees should be independent persons and they should not be employees of
AMC. As a trustee of Mutual Fund, he cannot be appointed as a trustee of
another Mutual Fund, until and unless he is an independent person or has
permission from Mutual Fund where his is a trustee. Trustee have right to
appoint custodian and supervise their activities. For e.g. In Reliance Capital
Mutual Fund the Trustee is Reliance Capital Trustee Co. Limited.
Asset Management Company
AMC is appointed by the trustees to float the schemes and manage the funds
raised by selling units under the scheme. They are to act as per SEBI
guidelines like they should be registered under the SEBI. Also the net worth of
the AMC should be in cash and all assets should be in the name of AMC. The
director of AMC should be a person of reputed high standing and at least
have five years experience in relevant field. AMC are required to disclose
scheme particulars and base of calculation of NAV.

Custodian

As per SEBI Regulations Mutual Funds shall have a custodian who is not any
way associated with the AMC. It carry outs the activity of safekeeping the
securities or participating, in any clearing system. The custodian should not
be associated with AMC or act as a sponsor or trustee of any Mutual Fund.
For e.g. In Reliance Capital Mutual Fund the Custodian is Deutsche Bank AG.
1) MARKETING DEPARTMENT

2) OPERATION DEPARTMENT

3) FINANCE DEPARTMENT
 4) HUMAN RESOURCE DEPARTMENT

MARKETING DEPARTMENT

Marketing scenario

The last few years have seen an increased attention to mutual funds across
all genres of investors’ big or small, individuals or corporate. The growing
awareness of the advantages that mutual funds offer over other investments
avenues have been better communicated and more understood

A mutual fund is the ideal investment vehicle for today’s 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 faraway 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.

A mutual fund is answer to all these situations. It appoints professionally

qualified and experienced staff that manages each of these functions on a
fulltime basis. Now, Mutual Fund is new developing market. In fact, the mutual
fund vehicle exploits economies of scale in all three areas –research,
investment and transaction processing.

Market Segmentation

Market segmentation is an effort to increase a company’s precision marketing.

A market segment consists of large identifiable group within a market with
similar wants, purchasing power, buying attitudes or buying habits. As HDFC
mutual fund is a service sector industry they introduce different schemes for
different people. Each person is different in nature and each have differ
criteria for investment like risk factor, return, liquidity, tax benefits etc.

So that HDFC Asset management company have introduced varities of

scheme like debt scheme, balanced scheme, equity related scheme and each
schemes have option to invest in SIP (Systematic Investment Plan) which
help investor to invest a specific amount for a continuous period, at regular
intervals so that investor has the advantage of rupee cost averaging and also
helps him save compulsorily a fixed amount each amount.

Target Market
HDFC Asset mangament company is a joint venture of HDFC BANK(50.10%)
and Standard Life Investment Limited(49.90%).The joint venture was formed
with the key objective of providing the Indian investor mutual fund products to
suit a variety of investment needs.
HDFCAsset Management Company, have variety of scheme both open ended
and close ended scheme. Both have different objective and different target
market. Equity Mutual Fund Scheme has target market of person who wants
to take high risk and also expect high return. Balanced scheme have target
market of person who wants to take moderate risk and expect average return
and Debt scheme have target market of person who wants to take less risk.
Close-ended scheme have target market of person who wants long-term
equity investment.
Customers’ profile

HDFC Asset Management Company, have variety scheme and each scheme
have different customer profile.

For Equity related scheme customer profile is young generation, for liquid
scheme customer profile is business man who wants to utilize their money in
effective manner for shorter period, in SIP (Systematic Investment Plan)
customer basically are serviced person who invest regularly and want to earn
more than average return. Thus, HDFC Asset Management Company, have
introduced variety of scheme to suit need of variety of customer.

Positioning strategy
“Positioning is the act of designing the company’s offering and image to
occupy a distinctive place in the target market’s mind.”

Positioning starts with a product. A piece of merchandise, a service, a

company, an institution, or even a person. But positioning is not what you do
to a product. Positioning is what you do the mind of the prospect. That is, you
position the product in the mind of prospect. A company’s differentiating and
positioning strategy must change as the product, market, and competitors
change over time. Once the company has developed a clear positioning
strategy, it must communicate the at positioning effectively. There should be
no under positioning, over positioning, confused positioning or doubtful
positioning.
HDFC Asset Management Company, have positioning strategy of
“Continuing a Tradition of Trust”. It is accurate positioning strategy
because it signifies a trust with its clients. Here is special Relationship
Manager dedicated towards customer service and satisfaction and give them
guidance about various schemes which helps them to get right scheme which
suit their investment needs. In this way it continues to maintain a trust with its
clients.
Product Details

What is a Mutual Fund?

A mutual fund is a common pool of money in to which investors with common
investment objective place their contributions that are to be invested in
accordance with the stated investment objective of the scheme. The
investment manager would invest the money collected from the investor in to
assets that are defined/ permitted by the stated objective of the scheme. For
example, an equity fund would invest equity and equity related instruments
and a debt fund would invest in bonds, debentures, gilts etc.

Benefits of Mutual Funds

Benefits of Investing through Mutual Funds

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

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.5000/-. This amount today would get you less than quarter
of an Infosys share! Thus it would be affordable for an investor to build a
portfolio of investments through a mutual fund rather than investing directly in
the stock market.

Diversification

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

Variety

Mutual funds offer a tremendous variety of schemes. This variety is beneficial

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

Professional Management

Qualified investment professionals who seek to maximise returns and

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

Tax Benefits

Any income distributed after March 31, 2002 will be subject to tax in the
assessment of all Unit holders. However, as a measure of concession to Unit
holders of open-ended equity-oriented funds, income distributions for the year
ending March 31, 2003, will be taxed at a concessional rate of 10.5%.
In case of Individuals and Hindu Undivided Families a deduction upto Rs.
9,000 from the Total Income will be admissible in respect of income from
investments specified in Section 80L, including income from Units of the
Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-
Tax.

Regulations

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

Disadvantages of Mutual Funds

No control over costs:

The funds are managed in huge volume and so the control on expenses
cannot be exercised, as there is lot of formalities and administrative expenses
attached. Though the limit of incurring expenses is predetermined but still it
cannot be kept in control.

No tailor made portfolio:

There is no tailor made portfolio available to any individual. The products and
scheme that is designed by the fund managers is on their philosophy and is
floated in the market with a common goal. No individual can have their own
portfolio maintained separately from the other investors.

Delay in redemption:

The redemption of the funds though have liquidity in 24-hours to 3 days takes
formal application of redemption as well as needs time for redemption. This
becomes cumbersome for the investors.

Non-availability of loans:

Mutual funds are not accepted as security against loan. The investor can not
deposit the mutual funds against taking any kind of bank loans though they
may be his assets.
Risk

The Risk-Return Trade-off

The most important relationship to understand is the risk-return trade-off.
Higher the risk greater the returns/loss and lower the risk lesser the
returns/loss.
Hence it is upto you, the investor to decide how much risk you are willing to
take. In order to do this you must first be aware of the different types of risks
involved with your investment decision.

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

Credit Risk
The debt servicing ability (may it be interest payments or repayment of
principal) of a company through its cash flows determines the Credit Risk
faced by you. This credit risk is measured by independent rating agencies like
CRISIL who rate companies and their paper. A ‘AAA’ rating is considered the
safest whereas a ‘D’ rating is considered poor credit quality. A well-diversified
portfolio might help mitigate this risk.

Inflation Risk
Things you hear people talk about:
“Rs. 100 today is worth more than Rs. 100 tomorrow.”
“Remember the time when a bus ride costed 50 paise?”
“Mehangai Ka Jamana Hai.”

The root cause, Inflation. Inflation is the loss of purchasing power over time. A
lot of times people make conservative investment decisions to protect their
capital but end up with a sum of money that can buy less than what the
principal could at the time of the investment. This happens when inflation
grows faster than the return on your investment. A well-diversified portfolio
with some investment in equities.
 Tax Benefit of Mutual Funds
Mutual fund enjoys the following tax benefits-:

 Under section10 (33) of Income Tax Act, Mutual Fund Investor is

exempt from paying any tax on the dividend-received upto Rs.9000 by
him from Mutual Fund irrespective of type of funds.

 Under section 88 of Income Tax Act, 20% of the amount invested in

specified Mutual Funds (referred to as ‘tax savings schemes’) is
deductible form the tax payable by the investor in a particular year
subject to a maximum of Rs.2000 per investor.

 Under section 10(23D) of Income Tax Act, the Mutual Fund is

completely exempt from paying taxes on dividend/interest/capital gains
earned by it. While this is benefit to the fund , it is indirect benefit to the
unit-holders as well.
Types of Schemes in Mutual Fund

Investment Objective

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

as Growth Fund, Balanced Fund, Income Fund etc.

Equity Oriented Schemes

These schemes, also commonly called Growth Schemes, seek to invest a

majority of their funds in equities and a small portion in money market
instruments. Such schemes have the potential to deliver superior returns over
the long term. However, because they invest in equities, these schemes are
exposed to fluctuations in value especially in the short term.
Equity schemes are hence not suitable for investors seeking regular income
or needing to use their investments in the short-term. They are ideal for
investors who have a long-term investment horizon. The NAV prices of equity
fund fluctuates with market value of the underlying stock which are influenced
by external factors such as social, political as well as economic.

General Purpose
The investment objectives of general-purpose equity schemes do not restrict
them to invest in specific industries or sectors. They thus have a diversified
portfolio of companies across a large spectrum of industries. While they are
exposed to equity price risks, diversified general-purpose equity funds seek to
reduce the sector or stock specific risks through diversification. They mainly
have market risk exposure. HDFC Growth Fund is a general-purpose equity
scheme.

Sector Specific
These schemes restrict their investing to one or more pre-defined sectors,
e.g. technology sector. Since they depend upon the performance of select
sectors only, these schemes are inherently more risky than general-purpose
schemes. They are suited for informed investors who wish to take a view and
risk on the concerned sector.
Special Schemes

Index schemes

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

of the market as a whole, or a specific sector of the market. An Index also
serves as a relevant benchmark to evaluate the performance of mutual funds.
Some investors are interested in investing in the market in general rather than
investing in any specific fund. Such investors are happy to receive the returns
posted by the markets. As it is not practical to invest in each and every stock
in the market in proportion to its size, these investors are comfortable
investing in a fund that they believe is a good representative of the entire
market. Index Funds are launched and managed for such investors. An
example to such a fund is the HDFC Index Fund.

Tax Saving schemes

Investors (individuals and Hindu Undivided Families (“HUFs”)) are being
encouraged to invest in equity markets through Equity Linked Savings
Scheme (“ELSS”) by offering them a tax rebate. Units purchased cannot be
assigned / transferred/ pledged / redeemed / switched – out until completion
of 3 years from the date of allotment of the respective Units.
The Scheme is subject to Securities & Exchange Board of India (Mutual
Funds) Regulations, 1996 and the notifications issued by the Ministry of
Finance (Department of Economic Affairs), Government of India regarding
ELSS.
Subject to such conditions and limitations, as prescribed under Section 88 of
the Income-tax Act, 1961, subscriptions to the Units not exceeding Rs.10, 000
would be eligible to a deduction, from income tax, of an amount equal to 20%
of the amount subscribed. HDFC Tax Plan 2000 is such a fund.
Real Estate Funds
Specialized real estate funds would invest in real estates directly, or may fund
real estate developers or lend to them directly or buy shares of housing
finance companies or may even buy their securitized assets.

Debt Based Schemes

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

Income Schemes
These schemes invest in money markets, bonds and debentures of
corporates with medium and long-term maturities. These schemes primarily
target current income instead of capital appreciation. They therefore distribute
a substantial part of their distributable surplus to the investor by way of
dividend distribution. Such schemes usually declare quarterly dividends and
are suitable for conservative investors who have medium to long term
investment horizon and are looking for regular income through dividend or
steady capital appreciation. HDFC Income Fund, HDFC Short Term Plan and
HDFC Fixed Investment Plans are examples of bond schemes.

Liquid Income Schemes

Similar to the Income scheme but with a shorter maturity than Income
schemes. An example of this scheme is the HDFC Liquid Fund.

Money Market Schemes

These schemes invest in short term instruments such as commercial paper
(“CP”), certificates of deposit (“CD”), treasury bills (“T-Bill”) and overnight
money (“Call”). The schemes are the least volatile of all the types of schemes
because of their investments in money market instrument with short-term
maturities. These schemes have become popular with institutional investors
and high networth individuals having short-term surplus funds.

Gilt Funds
This scheme primarily invests in Government Debt. Hence the investor
usually does not have to worry about credit risk since Government Debt is
generally credit risk free. HDFC Gilt Fund is an example of such a scheme.

Hybrid Schemes
These schemes are commonly known as balanced schemes. These schemes
invest in both equities as well as debt. By investing in a mix of this nature,
balanced schemes seek to attain the objective of income and moderate
capital appreciation and are ideal for investors with a conservative, long-term
orientation. HDFC Balanced Fund and HDFC Children’s Gift Fund are
examples of hybrid schemes.
Constitution

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

whether they give the investor the option to redeem at any time (open-ended)
or whether the investor has to wait till maturity of the scheme.

Open-ended Schemes
The units offered by these schemes are available for sale and repurchase on
any business day at NAV based prices. Hence, the unit capital of the
schemes keeps changing each day. Such schemes thus offer very high
liquidity to investors and are becoming increasingly popular in India. Please
note that an open-ended fund is NOT obliged to keep selling/issuing new units
at all times, and may stop issuing further subscription to new investors. On the
other hand, an open-ended fund rarely denies to its investor the facility to
redeem existing units.

Closed ended Schemes

The unit capital of a close-ended product is fixed as it makes a one-time sale
of fixed number of units. These schemes are launched with an initial public
offer (IPO) with a stated maturity period after which the units are fully
redeemed at NAV linked prices. In the interim, investors can buy or sell units
on the stock exchanges where they are listed. Unlike open-ended schemes,
the unit capital in closed-ended schemes usually remains unchanged. After an
initial closed period, the scheme may offer direct repurchase facility to the
investors. Closed-ended schemes are usually more illiquid as compared to
open-ended schemes and hence trade at a discount to the NAV. This
discount tends towards the NAV closer to the maturity date of the scheme.

Interval Schemes
These schemes combine the features of open-ended and closed-ended
schemes. They may be traded on the stock exchange or may be open for sale
or redemption during pre-determined intervals at NAV based prices.

Challenges In Mutual Fund Industry

The challenges faced by Mutual Fund Industry are as follows-:

 The investor profile is changing and they are now becoming more
mature and educated and also aware what’s happening in the markets.
Investor will invest in mutual fund if only they know where their money
is going to be invested and also the risk is low.
 Every year more and more player are entering into mutual fund market.
Currently there are 38 player and more than 600 schemes in the
market. So the mutual fund market itself has become competitive.
 Mutual Fund is a fast growing market and they are giving tough
competition to banks deposits and Insurance companies. So the
industry is expected to perform better and bring some new schemes in
the market.
 The product offered by various AMC is almost same so the AMC are
forced to focus on services provided to the investors.
 The AMC has to strengthen their marketing department as competition
has increased.
 Direct dealing with investor rather through additional channel of brokers
will provide better advice and investment objective can be properly
communicated.
Product Portfolio

Investment Strategy

INVESTMENT PROTECTION VS. INVESTMENT GROWTH

Investor Characteristic Investment Investment
Growth Protection
Time Horizon Short-term Long-term
Future Income Steady / High Variable / Low
Requirements
Volatility Limit Low High
(Risk Averseness)
Inflation Protection Low Protection High Protection
Needed Needed
Investor take on Equity Mostly Bearish Mostly Bullish
Market

Table 5 : Investor Growth v/s Investor Protection NVESTMENT

GROWTH INVESNVESTMENVESTMENT GROWTH

If you are a person who broadly falls into the Investment Growth category you
might be interested in looking at an Aggressive portfolio. On the other hand if
you are leaning towards an interest income with minimal risk investments you
might look at a Conservative asset allocation. Someone who wants a bit of
steady income as well as asset growth might go in for a moderate or a
balanced asset allocation.
AGGRESSIVE PORTFOLIO

MODERATE PORTFOLIO

CONSERVATIVE PORTFOLIO
 Chart 4 : Chart On Aggressive, Conservative & Moderate Portfolio
Another way to ascertain the right asset allocation is by looking at your life
cycle. The basis of this theory lies in the simple maxim that younger people
with secure jobs will normally opt for higher returns and take higher risks
compared to older retired people. One must remember that these are only
indicative strategies and will probably have to be fine-tuned to meet your
individual needs.

AGE MAIN OBJECTIVES PORTFOLIO STRATEGY

20-29 Aggressive Growth – Sow the
seeds, plan for housing and
create a safety cushion
30-39 Growth – Save for housing,
children’s expenses (present and
future – education etc.) and safety 05% - Blue Chip Stocks
cushion
40-49 Growth – Children’s expenses
(present and future – education
etc.) and safety cushion
50-59 Retirement – Save for retirement
and build on safety cushion
60-69 Safety – Preserve investments/
savings and opt for minimal
50% - Growth Funds
30% - Balanced Funds
20% - Money Markets / Cash
45% - Growth Funds
30% - Balanced Funds
20% - Money Markets / Cash
40% - Growth Funds
30% - Balanced Funds
10% - Blue Chip Stocks
20% - Money Markets / Cash
30% - Growth Funds
40% - Balanced Funds
10% - Blue Chip Stocks
20% - Money Markets / Cash
10% - Balanced Funds
15% - Income Funds
 growth 10% - Blue Chip Stocks
20% - Dividend Stocks
30% - Certificates of Deposits
(Shorter-term)
15% - Money Markets / Cash
70- Safety – Preserve investments/ 30% - Income Funds
savings 25% - Dividend Stocks
35% - Certificates of Deposits
(Shorter-term)
10% - Money Markets / Cash

Table 6 : Age Wise Objective & Portfolio Stretegy

HDFC Mutual Fund Products

Equity Funds

HDFC Growth Fund

HDFC Long Term Advantage Fund
HDFC Index Fund
HDFC Equity Fund
HDFC Capital Builder Fund
HDFC Taxsaver
HDFC Top 200 Fund
HDFC Core & Satellite Fund
HDFC Premier Multi-Cap Fund
HDFC Long Term Equity Fund

Balanced Funds
HDFC Children's Gift Fund Investment Plan
HDFC Children's Gift Fund Savings Plan
HDFC Balanced Fund
HDFC Prudence Fund
Debt Funds

HDFC Income Fund

HDFC Liquid Fund
HDFC Gilt Fund Short Term Plan
HDFC Gilt Fund Long Term Plan
HDFC Short Term Plan
HDFC Floating Rate Income Fund Short Term Plan
HDFC Floating Rate Income Fund Long Term Plan
HDFC Liquid Fund - PREMIUM PLAN
HDFC Liquid Fund - PREMIUM PLUS PLAN
HDFC Short Term Plan - PREMIUM PLAN
HDFC Short Term Plan - PREMIUM PLUS PLAN
HDFC Income Fund Premium Plan
HDFC Income Fund Premium plus Plan
HDFC High Interest Fund
HDFC High Interest Fund - Short Term Plan
HDFC Sovereign Gilt Fund - Savings Plan
HDFC Sovereign Gilt Fund - Investment Plan
HDFC Sovereign Gilt Fund - Provident Plan
HDFC Cash Management Fund - Savings Plan
HDFC Cash Management Fund - Call Plan
HDFCMF Monthly Income Plan - Short Term Plan
HDFCMF Monthly Income Plan - Long Term Plan
HDFC Cash Management Fund - Savings Plus Plan
HDFC Multiple Yield Fund
HDFC Multiple Yield Fund Plan 2005
Chart 5 : Changes in Fund As Per the Risk & Return Increases.

Distribution channel

INDIVIDUAL AGENTS

Use of agents has been the most widely prevalent practice for
distribution of funds over the years. By definition an agent act on behalf of
principal in this case of mutual funds. An agent is essentially a broker
between the fund and the investor. In India we also have the unique system
where by a broker has a number of sub broker working under him. The vast
sub broker network ensures a large geographic coverage then otherwise.

DISTRIBUTION COMPANIES

Availing of the services of established distribution companies is

practice accepted by mutual fund internationally. This practice evolve with a
view to provide the huge administrative mechanism require to support a large
agent force. Instead of having to deal with several agents, a fund can interact
with distribution companies which has several employees or sub brokers
under it.

BANK & NBFCs

In developed countries, bank are an important marketing vehicles for

mutual funds given that banks themselves had large depositors/ clients base
of their own. We can see the opening up of this new channel now in India.
Several banks, particularly private and foreign banks are involved in fund
distribution by providing services similar to those of distribution companies, on
a commission basis.

DIRECT MARKETING

Direct marketing means that the mutual funds sell their own products
without any use of intermediateries. Usually, this take the form of the sales
officer and employees of the AMC who approach the investor and accept their
contribution directly. However in India, independent agents may really be
created as a direct marketing channel in a sense that they do not form a well
knit independent and organized a single entity and act more like fund
employees. Others channel like distribution companies or banks or even
stockbrokers are clearly distinct and independent intermediaries.

Pricing Policy
HDFC Asset Management Company is service Provider Company so
there is Entry Load and Exit Load for each scheme.

NO Scheme name Entry load Exit load

1 Equity Funds 2.25% <=5 cr Nil
Nil above 5 cr
2 SIP 1% 1.25% before 6
months
3 MIP Nil 0.5% upto 10 lac
within 6 months
0.25 % above 10 lac
within 3 months
Thus each scheme has different Entry Load and Exit Load.

Promotional Tools

The objective of advertising of HDFC AMC is to create awareness about

services and scheme of HDFC among investors and sub-brokers and
increase sub-brokers of HDFC AMC.

Company does give advertisement in media like Newspapers, and Magazines

etc. when in introduce new scheme or mutual fund IPO and through direct
marketing they advertise and create awareness about their services and new
schemes. HDFC also do presentation about various schemes so that
investors can know more about their product and services.

Another tool of promotion of HDFC AMC is Public Relation involves a variety

of programs designed to promote or protect a company’s image or its
individual products. HDFC has PR department monitors the attitudes of the
organization’s publics and distributes information and communications to build
goodwill. They also perform following function:
Press relation: Presenting news and information about the HDFC AMC in the
most positive light.
Product publicity: Sponsoring efforts to publicize specific products.
Counseling: Advising management abut public issues and company positions
and image.

Innovative practices

Relationship Manager for all client base more than 5 lacs. Relationship
marketing is based on the premise that important accounts need focused and
continuous attention. Relationship marketing helps to judge which segments
and which specific customers will respond profitably to relationship
management.
Operations
Department
Location Details

HDFC AMC is located at Yagnik road which is in the heart of the city where
service is easily available for all customer and easy access compare with
other place that available in city. Location has major impact on success or
failure of operation. Advantages of this type of location are that service cost
and distribution cost is minimum comparison with other place.

The major investor service centers of HDFC MUTUAL FUND are as below.

Layout details

There is a plan of all the act of planning & optimum arrangement of planning
including flow of man & material and customer, operating equipment, storage
space, material handling equipments and all other supporting services along
with the design of best structure to contain all these facilities.
Planning and control

It is useful for effective utilization of resources, to achieve organization goal

and objectives with respect to quality service, cost control timely service.
Other objective is to co-ordinate with other department to ensure continuous
quality service. There is a proper planning and planning with respect o which
type of scheme to be introduced, what are expenses of R&D for finding out
feasibility of that scheme, how many people will work on that particular job,
before introducing new scheme. There is special research department who
carries out analysis of market and there is a fund manager who carrier out all
planning for investing in various sector and he is also responsible controlling
cost of transaction so that it can give return to investors.

Maintenance

HDFC AMC is the service sector industry so all work is carried out with the
help of computer System. There is contract given to service provider and
other maintenance is done by staff itself.

Procurement

HDFC AMC is the service sector industry so procurement is only for

computer machinery and computer stationary and other stationary include
brochures of all the scheme and monthly factsheet is used in daily work.
Procurement of computer machinery is done through central contract of main
branch and procurement for stationary is done through local stationary
distributor.

Store Management

HDFC AMC is the service sector industry so storage is only for files and fact
sheet and other document that published by AMC.
 Financial
Department
 Acquisition of Funds
&
Utilization of Funds

HDFC Asset Management Company is a service sector industry so

tacquisition of funds is done by introducing various schemes and utilization of
fund is done by Fund Manager and fund is invested in market and following is
the total AUM (Asset Under Management) and also given % of utilization in
equity and debt.

HDFC AUM Report

Assets Under Management (AUM) as at the end of May-2006 (Rs in Lakhs)
AUM Average AUM For The Month
Scheme Name Excluding Fund Of Excluding
Fund Of Funds
Fund Of Funds Funds Fund Of Funds
Open Ended
HDFC Long Term Advantage Fund
formerly HDFC Tax Plan 2000 22638.16 0 24124.49 0
Dividend
HDFC Long Term Advantage Fund
19814.87 0 21080.14 0
formerly HDFC Tax Plan 2000 Growth
HDFC Balanced Fund Dividend Plan 7751.88 0 8276.96 0
HDFC Balanced Fund Growth Plan 2967.05 0 3136.97 0
HDFC Capital Builder Fund Dividend
66295.87 0 74145.81 0
Plan
HDFC Capital Builder Fund Growth
27141.38 0 29094.18 0
Plan
HDFC Cash Management Fund - Call
2087.83 0 4300.48 0
Plan Daily Dividend Plan
HDFC Cash Management Fund - Call
10000.77 0 9616.71 0
Plan Growth Option
HDFC Cash Management Fund -
177885.78 0 140597.24 0
Savings Plan Daily Dividend Option
HDFC Cash Management Fund -
121631.98 0 91577.44 0
Savings Plan Growth Option
HDFC Cash Management Fund -
61691.21 0 54485.55 0
Savings Plan Weekly Dividend Option
HDFC Cash Management Savings Plus
24230.48 0 24745.04 0
Dividend Plan
HDFC Cash Management Savings Plus
8364.5 0 8667.59 0
Growth Plan
HDFC Children Gift Fund Investment 10086.9 0 10673.34 0
HDFC Children Gift Fund Savings 5848.24 0 5987.91 0
HDFC CORE & SATELLITE FUND
HDFC CORE & SATELLITE FUND - 46291.19 0 46728.21 0
DIVIDEND
HDFC CORE & SATELLITE FUND
HDFC CORE & SATELLITE FUND - 27467.93 0 28451.37 0
GROWTH
HDFC Equity Fund Dividend Plan 187418.13 0 200169.98 0
HDFC Equity Fund Growth Plan 101321.22 0 108510.45 0
HDFC Floating Rate Income Fund-
6795.65 0 6855.2 0
Long Term Plan DIVIDEND
HDFC Floating Rate Income Fund-
19356.57 0 19914.14 0
Long Term Plan GROWTH
HDFC Floating Rate Income Fund-
71060.71 0 74313.51 0
Short Term Plan Dividend
HDFC Floating Rate Income Fund-
11349.44 0 9549.29 0
Short Term Plan Dividend - Daily
HDFC Floating Rate Income Fund-
4886.91 0 5571.91 0
Short Term Plan Dividend - Monthly
HDFC Floating Rate Income Fund-
47355.66 0 41547.33 0
Short Term Plan Growth
HDFC Gilt Fund-Long Term Dividend 1657.36 0 1695.12 0
HDFC Gilt Fund-Long Term Growth 2689.06 0 2713.18 0
HDFC Gilt Fund-Short Term Dividend 269.8 0 270.32 0
HDFC Gilt Fund-Short Term Growth 1656.13 0 1694.74 0
HDFC Growth Fund Dividend Plan 17835.44 0 20022.86 0
HDFC Growth Fund Growth Plan 12656.06 0 13870.44 0
HDFC High Interest Fund Growth Plan 4386.9 0 4414.99 0
HDFC High Interest Fund Half Yearly
109.33 0 112.09 0
Dividend Plan
HDFC High Interest Fund Quarterly
1168.38 0 1203.39 0
Dividend Plan
HDFC High Interest Fund Yearly
42 0 32.1 0
Dividend Plan
HDFC High Interest Fund - Short Term
1418.48 0 2856.7 0
Plan Dividend Option
HDFC High Interest Fund - Short Term
2779.83 0 2523.14 0
Plan Growth Option
HDFC Income Fund Dividend 11101.51 0 11319.06 0
HDFC Income Fund Growth 13606.26 0 13959.52 0
HDFC Income Fund Premium Plan
0 0 0 0
Dividend
HDFC Income Fund Premium Plan
0 0 0 0
Growth
HDFC Income Fund Premium Plus
0 0 0 0
Dividend
HDFC Income Fund Premium Plus
0 0 0.01 0
Growth
HDFC Index Fund-Nifty Plan(FV Rs
696.88 0 649.38 0
10.326)
HDFC Index Fund-Sensex Plus( FV-
753.9 0 797.77 0
Rs32.161)
HDFC Index FundSensex Plan( FV Rs
873.8 0 684.53 0
32.161)
HDFC Liquid Fund DIVIDEND 36013.69 0 31512.02 0
HDFC Liquid Fund Dividend - Daily 3871.38 0 3154.57 0
HDFC Liquid Fund Dividend - Monthly 762.8 0 689.13 0
HDFC Liquid Fund GROWTH 29286.31 0 27065.73 0
HDFC Liquid Fund Premium Plan -
7777.52 0 6167.89 0
Dividend-Daily
HDFC Liquid Fund Premium Plan -
0 0 0 0
Dividend-Monthly
HDFC Liquid Fund Premium Plus Plan
0 0 0 0
- Dividend-Daily
HDFC Liquid Fund PREMIUM PLUS-
74193.74 0 61689.29 0
Dividend
HDFC Liquid Fund PREMIUM PLUS-
48901.23 0 52223.5 0
Growth
HDFC Liquid Fund PREMIUM-
4436.17 0 4319.92 0
Dividend
HDFC Liquid Fund PREMIUM- Growth 16544.69 0 15230.93 0
HDFC MF Monthly Income Plan Long
43554.42 0 44026.61 0
Term Plan Growth Option
HDFC MF Monthly Income Plan Long
16253 0 16375.66 0
Term Plan Monthly Dividend Option
HDFC MF Monthly Income Plan Long
29786.67 0 28591.1 0
Term Plan Quarterly Dividend Option
HDFC MF Monthly Income Plan Short
26704.35 0 25316.08 0
Term Plan Growth Option
HDFC MF Monthly Income Plan Short
7190.94 0 7198.23 0
Term Plan Monthly Dividend Option
HDFC MF Monthly Income Plan Short
8957.24 0 9491.96 0
Term Plan Quarterly Dividend Option
HDFC MULTIPLE YIELD HDFC
11155.58 0 11270.29 0
MULTIPLE YIELD - DIVIDEND
HDFC MULTIPLE YIELD HDFC
32403.65 0 36156.89 0
MULTIPLE YIELD - GROWTH
HDFC Multiple Yield Fund - Plan 2005
10447.71 0 10706.08 0
Dividend
HDFC Multiple Yield Fund - Plan 2005
37332.78 0 40036.1 0
Growth
HDFC Premier Multi-Cap Fund
63370.25 0 72458.43 0
Dividend
HDFC Premier Multi-Cap Fund Growth 34728.07 0 39319.7 0
HDFC Prudence Fund Dividend Plan 116141.88 0 122007.73 0
HDFC Prudence Fund Growth Plan 47303.91 0 48998.42 0
HDFC Short Term Plan DIVIDEND 1973.05 0 1961.67 0
HDFC Short Term Plan GROWTH 3771.65 0 3812.71 0
HDFC Short Term Plan PREMIUM
0 0 0 0
-Dividend
HDFC Short Term Plan PREMIUM
0 0 0 0
PLUS -Dividend
HDFC Short Term Plan PREMIUM
0 0 0 0
PLUS -Growth
HDFC Short Term Plan PREMIUM-
0 0 0 0
Growth
HDFC Sovereign Gilt Fund -
0 0 1.01 0
Investment Plan Dividend Option
HDFC Sovereign Gilt Fund -
0 0 1.61 0
Investment Plan Growth Option
HDFC Sovereign Gilt Fund - Provident
0 0 0.01 0
Plan Dividend Option
HDFC Sovereign Gilt Fund - Provident
0 0 0.02 0
Plan Growth Option
HDFC Sovereign Gilt Fund - Savings
0 0 0 0
Plan Dividend Option
HDFC Sovereign Gilt Fund - Savings
0 0 0.23 0
Plan Growth Option
HDFC TaxSaver Dividend Plan 23468.02 0 25381.14 0
HDFC TaxSaver Growth Plan 24130.95 0 26085.29 0
HDFC Top 200 Fund Dividend Plan 75611.56 0 80811.77 0
HDFC Top 200 Fund Growth Plan 37533.44 0 40177.29 0
Close Ended
HDFC LONG TERM EQUITY FUND
46133.32 0 49026.99 0
Dividend
HDFC LONG TERM EQUITY FUND
94828.13 0 101401.68 0
Growth
HDFC FMP 13M MARCH 2006
102.26 0 102.04 0
Institutional Plan Dividend
HDFC FMP 13M MARCH 2006
37234.08 0 37113.92 0
Institutional Plan Growth
HDFC FMP 13M MARCH 2006 Retail
39031.84 0 38843.27 0
Plan Growth
HDFC FMP 13M MARCH 2006 Retail
1017.07 0 1031.11 0
Plan Retail
HDFC FMP 3M MARCH 2006
40330.98 0 40193.08 0
Institutional Plan Dividend
HDFC FMP 3M MARCH 2006
4516.75 0 4501.28 0
Institutional Plan Growth
HDFC FMP 3M MARCH 2006 Retail
15203.74 0 15176.23 0
Plan Dividend
HDFC FMP 3M MARCH 2006 Retail
2006.7 0 2010.76 0
Plan Growth
HDFC FMP 3M MAY 2006(1)
38539.79 0 38768.31 0
INSTITUTIONAL PLAN Dividend
HDFC FMP 3M MAY 2006(1)
5608.42 0 5354.2 0
INSTITUTIONAL PLAN Growth
HDFC FMP 3M MAY 2006(1) RETAIL
1220.95 0 1165.61 0
Dividend
HDFC FMP 3M MAY 2006(1) RETAIL
152.81 0 145.88 0
Growth

Table : 7 AUM Report of all HDFC Schemes At the End Of MAY - 2006

Fund wise AUM Report

2364974.92 2358013.95
HDFC Mutual Fund 0 0
Human
Resource
Department
HUMAN RESOURCE DEPARTMENT

“Human Resource Management function that helps managers recruit select,

train and develop members for an organization. Obviously, HRM is concerned
with the people’s dimension in organizations

In all business concerns, there is one common element. I.e. HUMAN

RESOURCE. Work force of an Organization is one of the most important
inputs of components. It is said that people are our single most important
assets. Because of the unique importance of HUMAN RESOURCE and its
complexity due to ever changing psychology, behavior and attitudes of men
and women at work, personnel function, i.e., manpower management function
is becoming increasingly specialized. The personnel function or system can
be broadly defined as the management of people at work- management of
managers and management of workers. Personnel function is particularly
interested in personnel relationship and interaction of employees-human
relations.

In a sense, management is personnel administration. Management is the

development of people, and not mere direction of material resources. Human
capital is the greatest asset of a business enterprise. The essential ingredient
of management is the leadership and direction of people. Each manager of
people has to be his own personnel man. Personnel management is not
something you really turn over to personnel department staff.
 Manpower Planning

Human Resource Planning is the process by which an organization ensures

that it has the right number and kind of people, at the right place, at the right
time, capable of effectively and efficiently competing those tasks that will help
the organization achieve its overall objectives. Human Resource Planning
translates the organization’s objectives and plans into the number of workers
meet those objectives. Without a clear-cut planning, estimation of an
organization’s human resource need is reduced to mere guesswork

Manpower planning is needed with respect to persons who can work as sub-
broker for the companies. Companies focus on Advisors of Mutual Fund
product and ELSS schemes of HDFC AMC and focused on Insurance Advisor
and post office agent, Tax consultants and CAs for making sub-broker.

HDFC AMC follows the following process:

1) The first step is forecasting the need of man power in terms of

divisions, department or functions. Along with the estimate of the number
of the people required in different departments it is also decided that at
which level they will be needed.
2) After estimating the manpower requirement, next step is to have a look
at the current human resource. The current human resource is assessed
so as to know whether the requirement can be filled by the existing
personnel or not.
3) At last detailed policies for recruitment, selection, training, promotion,
retirement, replacement etc. of existing and new employees to meet the
forecasted needs is made.
 Recruitment & Selection

The upper level members like zonal managers, regional managers, branch
managers and senior executives are recruited by publishing recruitment
advertisement in leading national level newspaper. The qualified applicant are
then called for interview and selected.

The regional manager has authority to select lower level employee like peon,
marketing executives, financial accountant etc. by approval of zonal manager.

THE RECRUITMENT PROCESS

Step 1: Prospecting
Identify as many
prospective
candidates as
possible from multiple
sources.
Step 2:Attracting talent
Be prepared to talk
passionately about
the opportunities of
this career.

Step 3:selecting talent

Select quality talents
through effective
interviewing,
evaluation & hiring
practices.
Step 1: Prospecting

It consists of the following steps:

• Generating leads of potential candidates
• Contacting the leads and finding out their prima facie interest

Step 2: Attracting talent

• Developing your own recruiting style
• Developing a resource pool of talent
• Creating interest in the potential advisor

Step 3: Selecting talent

• Conducting an initial interview

• Administrating the candidate
• Final Selection interview is conducted by Managing Director.
 Training

Continuous training and upgrading technical, behavioral and managerial skills

is a way of life in HDFC AMC. HDFC AMC encourages agent or sub-broker to
hone their skills regularly to enable them to face the challenges of the
changing requirements of customers that fit market up and down.

Training needs analysis is done on a regular basis and systematic

methodologies are ensured that skills and capabilities of all agents are
constantly upgraded to enable them to perform in the challenging work. There
is special training session at regular time period in local branch to all financial
consultant and agents about new scheme and to improve their effectiveness.

The successful candidates of the AMFI Exam are given the product training.
The primary purpose is to become quite conversant with the product that one
sells. In other words, product knowledge is very important for any advisor.
Product knowledge is not just about knowing the broad terms and conditions
of the various schemes of mutual fund. The advisors are explained about the
schemes, the terms related with it, the benefits it provides to investor. This
training is aimed at making the advisors fully equipped with the companies’
product information. This training is aimed at making the advisors experts in
selling the mutual fund products.

This gives the advisors a systematic framework, which they can follow so as
to attract the customers and be effective in their work. Later the agents are
trained on products, need analyses and how to deliver the message to the
market.
 Performance Appraisal

Objective of Performance appraisal if for Developmental uses for agents and

financial consultants, for wages, transfer, promotion, for documentation and
for organizational purpose like Human Resource Planning, Job analysis and
for training and development.

For Performance Appraisal modern method is used like MBO (Management

by Objectives) and 360” appraisal. But there is some limitation like Hello
effect, Bias, Perception factor, Spill over etc.
RESEARCH
 RESEARCH OBJECTIVES

Research Objectives addresses the purpose of the investigation. The

Research Objectives flows naturally from the problem statement, giving the
sponsor specific, concrete, and achievable goals. It is best to list the
objectives either in order of importance or in general terms first, moving to
specific terms. Research Objective is the basis for judging the Research
process. It is the final step giving exact definition of problem.

PRIMARY OBJECTIVE:

 Comparison of open-ended & close ended fund & find best out of
these.

SECONDARY OBJECTIVE:

 It is to generate regular returns through investment primarily in debt &

money market instruments.

 It is to generate long-term capital appreciation by investing a portion of

the schemes assets in equity and its related instruments.

 It is to optimize returns while maintaining a balance of safety, yield &

liquidity.

 To generate regular income through investment in debt securities and

money market instruments.

 To generate credit risk free returns through investments in sovereign

securities issued by the central govt. or a state govt.

 To generate stable returns free of credit risk through dedicated

investments in govt. securities issued by the central govt. or a state
govt.
 SOURCES OF DATA
Collecting the required information from the right source is very important.
Sources from which the data are collected differ as per the required of
researcher.
Basically there are two types of data collection sources:

1) Primary data source

This data is gather for the first time for the problem solution. Primary
data has to be collected through well-equipped instruments, as they
are first hand information collected for the research.

2) Secondary data source

It refers to already gathered and collected data. These may be internal
sources within the clients firms. Externally, these sources may include
books or periodicals, data services, reports and computer data banks.

In context of this project study

Primary data has been collected through well-equipped Questionnaire

by interviewing investors having an informal talk during the meeting
with respondents.

Secondary data about Mutual Fund have been collected from the fact
sheets of various AMC. Information is also gathered from various
Mutual
Fund Reviews, books, magazines and websites.
 SAMPLING PLAN
Collecting the required information from the right source is very
important. Sources from which the data are collected differ as per the
required of researcher.
Basically there are two types of data collection sources:

1) Sampling Unit:
The sampling unit primarily consisted of investors like
businessman, professionals, salaried employees and others. The
sample unit is taken from the Rajkot city of Saurashtra region.

I. Sample Size:
Though large sample give more reliable results than small
samples but increases the cost, time and non-sampling error.
Keeping in view these constraints 100 respondents were chosen.
Attempts have been made to see that samples are chosen from
different strata.

II. Sampling Method:

Stratified random sampling method of choosing the samples has
been adopted.
 SAMPLING DESIGN
A sample design is a definite plan for obtaining a sample from a given
population. It refers to the technique or the procedure the researcher
would adopt in selecting items for the sample. Sample design may as
well lay down the number of items to be included in the sample i.e. the
size of sample. Sample design is determined before the data are
collected. There are many sample designs from which a researcher can
choose. Some designs are relatively more precise and easier to apply
than others. Researcher must select the sample design, which should
be reliable and appropriate for his research study.

There are different types of sample design based on two factors

namely: the representation basis and element selection technique. On
the representation basic, the PROBABILITY SAMPLING OR NON
PROBABILITY SAMPLING. On element selection basis, the sample
may be either UNRESTRICTED or RESTRICTED.

In context of this project study

The sampling procedure that selected for research is NON

PROBABILITY, CONVENIENCE sampling in administering of
questionnaire.
 DATA COLLECTION METHOD
Data, which is required for any research, is to be collected very
systematically. Data collection procedure is carried out into order to
know the exact information for the research work. Data collection is
done basically in three ways, which are mentioned as under:

1) Observation Method
This is very first method is data collection. Also this method is
very simple to be performed. It includes both human means of
perception and recording, which might be termed manual, and
non-human means and mechanical. Personal observations,
which are been seen or hear as specified in study, are carried out
manually.

2) Survey Method
This is second best method used for data collection method. This
method includes the survey that being done on the sample that
are taken randomly from the huge population. It includes each
and every minute information that is to be collected and needed
for research undertaken. Interview method is a part of survey
method.

3) Questionnaire
This method is one of the important data collection methods
wherein the formally designed questions are asked to the sample
population.
In context of this project study

The communication approach followed by me for this project is personal

questioning the respondents thru questionnaires probably the most desirable
method of questionnaires.
COMPARISON OF
MIPs
 Monthly Income Plans

Monthly Income Plans (MIP) are suitable for conservative investors who along
with an exposure to debt do not mind a small exposure to equities. These
funds aim to provide consistency in returns by investing a major part of their
portfolio in debt market instruments with a small exposure to equities. A
typical MIP would have an exposure of 80%-85% to debt and money market
instruments and an exposure of 10%-15% to equities. Thus an MIP would be
suitable for conservative investors who along with protection of capital seek
some capital appreciation as MIPs have an exposure to equities.

An MIP is essentially a medium-term bond fund with an average maturity

between 2 to 5 years and invests in debt market securities such as
debentures, fixed deposits, commercial papers, treasury bills, call money
market and a small or nil exposure to government securities which have a
lower maturity. The debt market rally, which had boosted the returns in
income and gilt funds, seems to be halted as the players feel that interest
rates have almost bottomed out and there are no immediate triggers to drive
the rally further. An income fund would ideally invest 40-50% in government
securities with longer maturity and remaining in bonds and money market
instruments. Gilt funds would invest 70-80% in government securities and the
maturity would depend upon the objective of the scheme i.e. long term,
medium term or short term and the remaining in money market instruments.
MIPs have almost a nil or a small exposure to government securities, which
display higher volatility in case of any interest rate movements

There were lot of expectations from the mid-term credit and monetary policy in
terms of the Repo rate cut which serves as the benchmark short-term rate
and is on a higher side as compared to the global standards. RBI did not
initiate any rate cuts, which failed to gather any momentum in the debt
markets. However RBI has also signaled that rate cuts can be initiated outside
the purview of the policy, which would help to bring some cheer to the debt
markets going ahead. Any movement in the interest rates would have an
impact on the long-term papers more as compared to the short-term papers
and as the portfolio component of an MIP has a nil or some exposure to the
long term papers would not be impacted much by adverse movements in the
interest rates.

MIPs were not lucrative two years back when the equity markets were
on a downward spiral but now as we are witnessing a bull run in the equity
markets a MIPs would be an attractive option as compared to the income and
gilt funds due to their exposure to equities. For one-year period top performing
MIPs have given a return ranging between 8%-20% and for the six-month
period the return has been in the range of 6%-13%. Though MIPs have an
objective to provide regular income there is a caveat that they may not be
able to give dividends in case there is no distributable surplus.

Introduction:

HDFC Long Term MIP:

HDFC MIP LT had a festive beginning in December 2003 when MIPs were
the flavour of the season. It started as the fourth largest fund with a handsome
corpus of nearly 650 crore. It did not disappoint its investors and returned 2.06
per cent in the first quarter of 2004 to comprehensively beat the 0.87 per cent
gain of an average peer. This saw its popularity soar, with the fund's corpus
rising to nearly Rs 1,550 crore within six months of the launch. Currently, it's
the second largest MIP managing around Rs 771 crore.

A high equity exposure led by mid- and small-cap stocks, active duration
management and exposure to lower rated papers have resulted into above
average volatility for the fund. Expenses are high as well.
FT (FRANKLIN TEMPLETON) India MIP:

Beginning its life as a Rs 43-crore fund in November 2000, FT India MIP

established itself as the best fund in the category the very next year. Since
then it has delivered top quartile returns every calendar year. However, it was
only in mid 2003 when investors realized the real potential of the fund. FT
India MIP started 2004 as the largest fund, achieved a maximum size of Rs
1,984 crore in May 2004 and since then has maintained its lead.

The fund's reason for success is adroit management of both the equity and
debt portfolios. On the debt side, the fund has benefited immensely by playing
its maturity card aggressively-normally, it keeps average maturity more than
an average peer. During its early life, the fund managed to reap heavy profits
by taking longer interest calls. For instance, between January 2001 and
March 2004, when yields were sliding, its average maturity of debt holdings
on an average was 3.97 years. Now, the fund has adjusted its average
maturity by bringing it down to 2.4 years as on December 31, 2005. Still, that's
more than its average peers'.

On the equity side, the fund makes optimum use of its mandate to invest up to
20 per cent of the assets in equities. In the last two years, the fund has
cashed in on the equity markets rally by allocating an average 18.65 per cent
of its corpus to equities. A combination of high maturity and equity exposure
has, though, resulted into above average volatility for the fund. As a risk
control measure, the fund has always maintained a concentration of large-
caps. Within that, it has distributed and diversified its portfolio over 25-35
stocks across various sectors.

The fund has also done a good job in keeping the expenses under control.
The expense ratio, which used to remain 2 per cent till February last year, has
dropped to 1.89 per cent as on September 30, 2005.
SBI MIP

This Open-end debt fund has investments of atleast in 85% in debt

instruments and not more than 15% in equity. Endeavor to provide regular
income to investors, this fund is suitable, both as a source of monthly income
or to supplement regular income.

UTI MIP

The fund started off with an equity-free portfolio in October 2000, though it
could have invested up to 15 per cent of the corpus in them. It adopted a
cautious approach to duration management as well. This resulted in an MIP
which lacked any returns firepower but was perfect for the normal MIP
investor whose priority was capital preservation. Soon, this fund's low volatility
and reasonable returns made it one of the more popular options in the
category. It continues to enjoy that reputation till date.

The fund wears a different look today. It changed tack during the start of 2005
by pushing its average maturity higher than an average peer for the first time
in its life. The fund also decided to exploit its under utilized equity mandate-
since the start of 2005, it has invested nearly 14 per cent of its assets in
equities. Exposure to relatively risky mid- and small-cap stocks too has been
close to 39 per cent of the equity portfolio since then. Though the recent
changes have increased the volatility of the fund, it's still one of the lowest in
the category. This new approach has resulted in good returns for investors-
the fund has generated category beating gains of 9.13 per cent till November-
end this year.

The fund has tried to minimize risk by keeping cash and diversifying the equity
portfolio in a number of stocks. Over the years, though expenses have
increased, it's still less than the average peers. A change of strategy has
worked well for the fund so far. But will it live up to its reputation of a capital
preserver with this approach? Nonetheless, UTI MIP is one of the better
options in the MIP category.

HDFC MIP LONG TERM-G

Asset
% Min % Max %
Allocation
Equity 19.44 0 20

Debt 76.56 80 100

Others 4.00 0 100

Name NAV Repurch Sale NAV

ase Prize prize Date
HDFC MF Monthly Income
13-Jun-
Plan – Short Term Plan 10.0885 10.0885 10.0885
2006
(Monthly Dividend Option)
HDFC MF Monthly Income
13-Jun-
Plan – Short Term Plan 10.3995 10.3995 10.3995
2006
(Quarterly Dividend Option)
HDFC MF Monthly Income
13-Jun-
Plan – Long Term Plan 12.9796 12.9796 12.9796
2006
(Growth Option)
HDFC MF Monthly Income
13-Jun-
Plan – Long Term Plan 10.8047 10.8047 10.8047
2006
(Monthly Dividend Option)

FT India MIP-G

Asset Min
% Max %
Allocation %
Equity 24.46 0 25

Debt 71.70 75 100

Others 3.84 75 100

 Repurchase Sale
NAME NAV NAV Date
price Price
FT India Monthly Income 13-Jun-
18.5396 18.5396 18.5400
Plan – Growth 2006
FT India Monthly Income 13-Jun-
11.5592 11.5592 11.5600
Plan - Monthly Dividend 2006
FT India Monthly Income 13-Jun-
11.4044 11.4044 11.4000
Plan - Quarterly Dividend 2006
FT India Monthly Income 13-Jun-
14.0360 14.0360 14.0400
Plan - Monthly Bonus 2006

SBI MIP

Asset
% Min % Max %
Allocation
Equity 14.31 0 15

Debt 70.02 0 85

Others 15.67 0 85

Repurchase Sale
NAME NAV NAV Date
price Price
SBI Magnum Monthly
13-Jun-
Income Plan - Dividend 10.3762 10.3243 10.3762
2006
(Annually )
SBI Magnum Monthly 13-Jun-
15.6461 15.5679 15.6461
Income Plan - Growth 2006
SBI Magnum Monthly
13-Jun-
Income Plan-Floater- 10.0355 10.0355 10.0355
2006
Dividend-(Annual)
SBI Magnum Monthly
10.0243 10.0243 10.0243 06
Income Plan-Floater-Growth
 UTI MIP

Asset
% Min % Max %
Allocation
Equity 19.06 0 20
Debt 74.50 0 100
Others 6.44 0 100

Debt Weightings

HDFC MIP LONG TERM-G

Instruments % Of Net Assets

Bonds/ NCDs 33.57
Securitised Debt 20.96
Certificate of Deposit 13.69
Government Securities 3.48
Net Current Assets 3.23
CBLO 0.61

FT India MIP-G

Instruments % Of Net Assets

Bonds/ NCDs 55.95
Securitised Debt 12.36
CP/ CD 5.80
Cash, Call and Others 4.00
Government Securities 2.45

SBI MIP

Instruments % Of Net Assets

Bonds/ NCDs 23.45
Securitised Debt 22.49
Certificate of Deposit 20.96
Term Deposits 8.99
Cash, Call, Repos and
6.68
CBLO

The Above tables indicate the debt weightings of the funds. HDFC LT
MIP having holding of 33.57% of bonds & 20.96% in securitiesed debt & FT
India MIP having holding of 55.95% of bonds & 12.36% in securitiesed debt.
SBI MIP having mixture of all the instruments. And from the above tables we
can say that SBI MIP & Templeton MIP having more holdings of bonds
around 67% as compare to other funds. So from the above table it is clear
that HDFC long term MIP & SBI MIP is more diversified.

Fundamentals of Schemes

Market Capitalization
Fund P/E Ratio
(In Cr.)
HDFC MIP Long Term
28.92 7000.75
G
FT India MIP-G 31.63 13802.20
SBI MIP 26.39 5900.75
UTI MIP 36.50 2679.25

PE ratio:
It is the ratio of the share price of a company to its earnings per share (EPS).
EPS is the profit that a company makes on a per share basis. So, if EPS is
one, the PE ratio will reflect the price that an investor will pay for this one
rupee of the company's profits. Because of this relation with a company's
profits this ratio is also called the earning multiple.

Some shares have higher PE ratio and some lower. Higher PE ratio signifies
that investor expectation from these shares is higher. This is because the
growth in share price is expected to follow earnings growth. So, if investors
are willing to pay more for a share, it is because they are expecting faster
growth of profits. These stocks are often referred to as growth stocks.

Here from the above table it is clear that investor’s expectations are higher in
the case of FT India MIP, UTI MIP & SBI MIP. As compare to this three in
HDFC LT MIP & SBI MIP investor having lower expectations.

Fund Performance

1 6
1 Year 3 Year 5 Year Since
YTD Month Month
Fund Return Retur Return Inceptio
% Retur Return
% n% % n
n% %
HDFC MIP
Long Term 2.27 1.17 9.24 18.22 -- -- 13.83
G
FT India
1.33 0.90 4.30 10.18 12.77 12.59 12.59
MIP-G
SBI MIP 2.70 1.20 5.20 11.90 10.80 10.57 10.86

UTI MIP 2.43 1.41 8.76 12.84 -- -- 9.06

Table 8 : Fund Performance Of MIPs As Per The Time Changes.

 Returns of the Fund since Last 1 Year

12 Month 12 Month Low Latest

Fund
High NAV NAV NAV
FT India MIP-
18.90 17.19 19.00
G
HDFC MIP
13.29 11.25 13.35
Long Term G
SBI MIP 17.35 15.45 17.40
UTI MIP 12.25 10.70 12.30

The Best and Worst Return

HDFC MIP LONG TERM-G

NAV
Period Best Period Worst Period
4.03 (28/10/2005 - -4.41 (16/04/2004 -
Month
28/11/2005) 17/05/2005)
7.87 (29/06/2005 - -3.49 (13/04/2004 -
Quarter
28/09/2005) 14/07/2005)
20.89 (25/01/2005 - 5.44 (13/01/2004 -
Year
25/05/2006) 12/01/2006)

FT India MIP-G

NAV
Period Best Period Worst Period
-3.38 (16/04/2004 -
Month 3.78 (17/09/2003 - 17/10/2004)
17/05/2005)
-2.17 (13/04/2004 -
Quarter 7.99 (18/07/2004 - 17/10/2005)
14/07/2005)
21.72 (14/02/2004 - 5.92 (13/01/2005 -
Year
16/02/2005) 12/01/2006)
SBI MIP

NAV
Period Best Period Worst Period
2.70 (17/09/2004 - -2.56 (16/04/2005 -
Month
17/10/2005) 17/05/2005)
6.22 (18/07/2004 - -1.96 (16/02/2005 -
Quarter
17/10/2004) 17/05/2005)
14.98 (02/01/2004 - 3.33 (13/01/2005 -
Year
02/01/2005) 12/01/2006)

UTI MIP

NAV
Period Best Period Worst Period
2.96 (20/06/2005 - -1.84 (28/09/2005 -
Month
20/07/2005) 28/10/2005)
6.53 (20/06/2005 - -2.20 (23/04/2004 -
Quarter
19/09/2005) 23/07/2004)
13.87 (24/01/2005 - 3.96 (23/04/2004 -
Year
24/01/2006) 25/04/2005)

The above tables clearly indicate the best period & worst period of a
particular scheme. HDFC LT MIP lunched in Dec- 2004. At the beginning of the
fund it gives worst returns in 2006 than after giving best results in 2006.& it also
gives around 28% best returns yearly. From the table it clearly shows that in
2005-06 period all the MIP giving the worst returns.
 Year To Year Returns of Schemes from Its Inception Date

HDFC LT MIP G FT India MIP G SBI MIP

Date NAV Returns % NAV Returns % NAV Returns %
30/04/1997 - - - - - -
31/03/1998 - - - - - -
31/03/1999 - - - - - -
31/03/2000 - - 10 Sep-2000 10 Oct-2004
31/03/2001 - - 10.62 6.2 10.55 5.5
31/03/2002 - - 12.11 14.03 11.78 11.65
31/03/2003 10 Dec-2003 13.24 9.33 12.74 8.14
31/03/2004 10.41 4.1 15.87 19.86 14.43 13.26
31/03/2005 11.27 8.26 17.22 8.5 15.47 7.2
17/02/2006 13.24 17.48 18.9 9.75 17.25 11.5

UTI MIP

Date NAV Returns %

30/04/1997 - -
31/03/1998 - -
31/03/1999 - -
31/03/2000 - -
31/03/2001 - -
31/03/2002 - -
31/03/2003 10 Dec-2003
31/03/2004 10.09 0.9
31/03/2005 10.7 6.04

Risk & Return aggregates

 HDFC MIP LONG TERM-G
Rating & Risk Modern Portfolio Stat Volatility Measures
Fund
R-Squared 0.03 Mean 0.36
Rating
Fund Risk Above Standard
Alpha 0.26 0.63
Grade Average Deviation
Fund
Sharpe
Return High Beta 0.10 0.46
Ratio
Grade

FT India MIP-G
Rating & Risk Modern Portfolio Stat Volatility Measures
Fund
R-Squared 0.05 Mean 0.26
Rating
Fund Risk Above Standard
Alpha 0.18 0.49
Grade Average Deviation
Fund
Above Sharpe
Return Beta 0.09 0.35
Average Ratio
Grade

SBI MIP
Rating & Risk Modern Portfolio Stat Volatility Measures
Fund
R-Squared 0.05 Mean 0.29
Rating
Fund Risk Standard
Average Alpha 0.15 0.45
Grade Deviation
Fund
Sharpe
Return Average Beta 0.09 0.42
Ratio
Grade

UTI MIP
 Rating & Risk Modern Portfolio Stat Volatility Measures
Fund
R-Squared 0.05 Mean 0.25
Rating
Fund Risk Standard
Average Alpha 0.20 0.48
Grade Deviation
Fund
Above Sharpe
Return Beta 0.09 0.39
Average Ratio
Grade

The above tables indicate the risk & return aggregates in all the fund. The
HDFC LT MIP has been rated 5 star while FT India MIP & SBI MIP has been
rated 4 star And other fund are rated 3 star.so it is clear that HDFC LT MIP is
good enough than other funds. And other most important point is that the risk
grade in the fund is above average but fund return grade is high while other
funds risk grade is average & below average in UTI MIP but the return grade is
also an average. But in HDFC LT MIP return grade is high.

Beta:

Beta, which represents fluctuations in the NAV of the fund vis-à-vis market. The
more responsive the NAV of a mutual fund is to the changes in the market;
higher will be its beta. Beta is calculated by relating the returns on a mutual fund
with the returns in the market. Here, HDFC LT MIP having higher the beta at 0.10
& and than Franklin Templeton MIP & UTI MIP having 0.07 beta value than
comes SBI at the value 0.06, 0.02 & 0.04. So it indicate that HDFC’s & Franklin
Templeton’s NAV are more responsive to the changes in the market.

Alpha :

Alpha tells you whether that fund has produced returns justifying the risks it is
taking by comparing its actual return to the one 'predicted' by the beta. Say, a
fund can be expected to earn—based on its beta—a return of 16 per cent in a
given year. However, it actually fetches you 20 per cent. Then the alpha of the
fund is simply 20-16 = 4, that is, 4.

Thus, a passive fund has an alpha of zero and an active fund's alpha is a
measure of what the fund manager's activity has contributed to the fund's
returns. On the whole a positive alpha implies that a fund has performed better
than expected, given its level of risk. So higher the alpha better are returns.

Here from the above tables it is clear that HDFC LT MIP having higher alpha at
0.29 than comes UTI MIP at 0.18 alpha than comes FT India MIP at 0.16 alpha.
So HDFC LT MIP having higher the alpha better is returns.

Performance of Fund

Average
Fund Expense Sharp Average
Fund Yield to
Style Ratio Ratio Maturity
Maturity
FT India MIP-G 1.93 0.38 2.45 Years 8%
HDFC MIP Long
2.00 0.46 1.60 Years --
Term G
SBI MIP 2.25 0.36 1.45 Years 9%
UTI MIP 2.49 0.37 0.34 Years 6%
The above table shows performance of the all funds. It clearly indicates the
Expense ratio, Sharp ratio, Fund Style & performance Turn Over ratio.

Fund Style:
The collection of a number of stocks in a fund's portfolio gives it a distinct style.
By understanding the characteristics of this portfolio we can conclude how the
fund will behave. One way of doing this is by looking at individual parameters
such as the fund's P/E ratio, P/B ratio, market capitalization etc. The problem
with these measures is that they are absolute. In order to get an idea of what
they mean, we need to draw a comparison. This requires that we have more
numbers on hand so that an appropriate comparison can be made. But so many
numbers can make things more complicated.

This problem is solved by presenting a unified snapshot of how a fund's portfolio

looks relative to others in its category. This snapshot is a nine-grid matrix, which
represents an equity fund in terms of its market capitalization and valuation.
Market cap refers to the total value of all the shares of a company. Larger and
better-established companies have higher market cap, while smaller companies
have lower market caps. Large-cap shares are usually more stable, though their
price rise may be slower. Smaller company shares are usually more volatile and
less liquid. The vertical scale of the VRFS represents market cap, with the
highest and lowest market cap on each end and the middle representing funds
whose portfolios are dominated by mid-cap shares.

Apart from market cap, equity fund style also tells you whether the fund's focus is
on growth or value oriented stocks or a combination of both (which we call
blend). In the growth investing style, the fund manager scouts for companies with
potential of growing faster than others. This optimism is reflected in the premium
valuations commanded by these companies' market price. On the other hand, a
value investor buys into stocks, which are undervalued and have the hidden
potential for turning around but are usually ignored by the market.

From the above table it is clear that HDFC LT MIP, FT India MIP, SBI MIP & UTI
MIP Fund having medium market capitalization & also Medium growth potential.

Expense ratio:

Expense ratio is the percentage of total assets that are spent to run a mutual
fund. As returns from bond funds tend to be similar, expenses become an
important factor while comparing bond funds.

A wise man once said: ''There is no free lunch on Wall Street.'' This holds true for
investing in a mutual fund too. Like a doctor who charges you for his service,
mutual funds too charge a fee for managing your money. This involves the fund
management fee, agent commissions, registrar fees, and selling and promoting
expenses. All this falls under a single basket called expense ratio or annual
recurring expenses that is disclosed every March and September and is
expressed as a percentage of the fund's average weekly net assets. The
Securities & Exchange Board of India has stipulated a limit that a fund can
charge. Equity funds can charge a maximum of 2.6 per cent, whereas a debt
fund can charge 2.29 per cent of the average weekly net assets.

Sharp ratio:
The Sharpe ratio is a single number which represents both the risk, and return
inherent in a fund. As is widely accepted, high returns are generally associated
with a high degree of volatility. The Sharpe ratio represents the trade off between
risk and returns. At the same time, it also factors in the desire to generate
returns, which are higher than risk-free returns.

Sharp ratio is the returns generated over the risk free rate, per unit of risk. A
higher the Sharp ratio is therefore better as it represents a higher generated per
unit of risk. Here HDFC LT MIP having higher Sharp ratio as compare to other
fund & also lower the expense ratio more benefited to investors so here expense
ratio is also some what lower as compare to other fund. And fund style is a
diagram representing asset allocation. Only UTI MIP & SBI MIP investing in small
companies while others asset allocation is from mid cap companies.