29800444 a Project on Comparative Analysis of Hdfc Mutual Fund With Other Mutual Funds in the City...

7/31/2019 29800444 a Project on Comparative Analysis of Hdfc Mutual Fund With Other Mutual Funds in the City of Jamshed

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PROJJECTREPORTONPROECTREPORTONAACOMPARATIIVEANALYSIISCOMPARATVEANALYSSOFHDFCMUTUALFUNDWIITHCOMPARIISIIONOFHDFCMUTUALFUNDWTHCOMPARSONWIITHOTHERMUTUALFUNDWTHOTHERMUTUALFUNDIINCIITYOFJJAMSHEDPURNCTYOFAMSHEDPUR

AREPORTSUBMITTEDINPARTIALFULFILLMENTOFTHEREQUIREMENTOFPGDMPROGRAMOFKOUSTUVBUSINESSSCHOOL

SUBMITTEDTO:FACULTYGUIDEPROF.GOPALPRUSETHKOUSTUVBUSINESSSCHOOLBHUBANESWARSUBMITTEDBY:GOPALKUMARAGARWALDM-0829KOUSTUVBUSINESSSCHOOLBHUBANESWARPROJECTGUIDESHAILESHKUMARBANSALHDFCMUTUALFUNDJAMSHEDPUR

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CERTIFICATEBYGUIDEThisistocertifythatthefollowingstudentissubmittingtheprojectreporttitledAComparativestudyontheperformancebetweentwosectorialfundsinJamshedpur.ItistheoriginalandbonafideworksubmittedinpartialfulfillmentoftherequirementfortheawardofPGDMprogram.

Prof.GOPALPRUSETH(ProjectGuide)KBS,Bhubaneswar

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ACKNOWLEDGEMENTInthecourseofthisprojectIgotaninsightintothemutualfundindustry,cametoknowalotaboutthebasicworkingofanassetmanagementcompany,understoodhowthemutualfundsofdifferentfundhousesarecompared,learntvariouscomputationsandoverallgotapreviewofwhatajobinthemutualfundindustrywouldentail.FirstandforemostIamveryproudtobeastudentofKoustuvBusinessSchool,BhubaneswarandammostgratefulforhavingbeengiventhechancetoworkwithareputedcompanylikeHDFCMUTUALFUNDatthebeginningofmycareer.IwouldfailtodomydutyifIdidnttakethisopportunitytothankmyfacultyguide,Prof.GopalSirforhistimelyhelpandguidance.IwouldliketothankhimwholeheartedlyformakingmeworkhardersoastogainamoreindepthknowledgeofthesubjectwhichIamsurewillhelpmealotinthelongrunaswell.Iwouldsaythatthisprojectwouldnthavebeenthesamewithouthissupport,guidance,encouragementandconstantdemandforimprovement.Mycompanyguide,Mr.ShaileshKumarBansal,Managerisanotherpersonwhohasplayedakeyroleinthedevelopmentofmeasaperson,inthecompletionofthisprojectandinbeingeducatedaboutthemutualfundindustryingeneral.Withouttheknowledge,attentionandtimethathehasbestowedonme,thisprojectwouldsimplyhavebeenimpossible.Heistrulyaninspirationformeanddrovemetowardsworkingharderthanmyexpectationswhichsimplymadememorereadyforthecorporatelife.HetrulygavemethecorporateexposureIhadthoughtof.MyacknowledgementwouldbeincompleteifIdidntthankmyteammates.DuringthecourseofthisSIPwehavedevelopedacamaraderiewhichwasveryhealthyandenjoyable.Iamgratefulforeveryonessupportandhelpwhenneeded.Withoutthemthistrainingwouldnot

havebeenthesame.GOPALKUMARAGARWAL

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EXECUTIVESUMMARYThesignificantoutcomeofthegovernmentpolicyofliberalizationinindustrialandfinancialsectorhasbeenthedevelopmentofnewfinancialinstruments.Thesenewinstrumentsareexpectedtoimpartgreatercompetitivenessflexibilityandefficiencytothefinancialsector.GrowthanddevelopmentofvariousmutualfundproductsinIndiancapitalmarkethasprovedtobeoneofthemostcatalyticinstrumentsingeneratingmomentousinvestmentgrowthinthecapitalmarket.Thereisasubstantialgrowthinthemutualfundmarketduetoahighlevelofprecisioninthedesignandmarketingofvarietyofmutualfundproductsbybanksandotherfinancialinstitutionprovidinggrowth,liquidityandreturn.Inthiscontext,prioritization,preferencebuildingandclosemonitoringofmutualfundsareessentialsforfundmanagerstomakethisthestrongestandmostpreferredinstrumentinIndiancapitalmarketforthecomingyears.Withthedeclineinthebankinterestrates,frequentfluctuationsinthesecondarymarketandtheinherentattitudeofIndiansmallinvestorstoavoidrisk,itisimportantonthepartoffundmanagersandmutualfundproductdesignerstocombinevariouselementsofliquidity,returnandsecurityinmakingmutualfundproductsthebestpossiblealternativeforthesmallinvestorsinIndianmarket.Therearevariousparameterswhichaninvestorshouldconsiderbeforeinvestinginmutualfunds.Thecomparativeanalysisbetweentwomutualfundwillhelptheinvestortotakeappropriatedecisionbeforeinvestinginmutualfunds.

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TABLEOFCONTENTSDECLARATIONCERTIFICATEBYGUIDEACKNOWLEDGEMENTEXECUTIVESUMMARYTOPICS#1.INTRODUCTION2.ORGANISATIONOFMUTUALFUND3.CHARACTERISTICSOFMUTUALFUND4.OBJECTIVESOFMUTUALFUND5.STRUCTUREOFMUTUALFUND6.INVESTORPROFILE7.FACTORSIMPACTINGTHEINDUSTRY8.OPPURTUNITIES&THREATS9.BENEFITSOFMUTUALFUND10.CATEGORIESOFMUTUALFUND11.THEWAYTOINVESTINMUTUALFUND12.LEGALFRAMEWORKOFSEBI13.REGULATORYOFMUTUALFUND14.MUTUALFUNDININDIAATAGLANCE15.COMPANYDETAIL16.COMPETITORANALYSIS17.COMPARATIVEANALYSISBETWEENHDFC&TATAPGNO.1012131414171820222631323437425762

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18.FUTUREGROWTHDRIVERS19.FINANCIALANALYSES20.CONCLUSION21.SUGGESTIONS22.GLOSSARY23.BIBLIOGRAPHY24.QUESTIONAIRE

68717475777879

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PARTAINDUSTRYOVERVIEW

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INTRODUCTION

AMutualFundisatrustthatpoolsthesavingsofanumberofinvestorswhoshareacommonfinancialgoal.Themoneythuscollectedistheninvestedincapitalmarketinstrumentssuchasshares,debenturesandothersecurities.Theincomeearnedthroughtheseinvestmentsandthecapitalappreciationsrealizedaresharedbyitsunitholdersinproportiontothenumberofunitsownedbythem.ThusaMutualFundisthemostsuitableinvestmentforthecommonmanasitoffersanopportunitytoinvestinadiversified,professionallymanagedbasketofsecuritiesatarelativelylowcost.TheflowchartbelowdescribesbroadlytheworkingofaMutualFund.

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AMutualFundisabodycorporateregisteredwiththeSecuritiesandExchangeBoardofIndia(SEBI)thatpoolsupthemoneyfromindividual/corporateinvestorsandinveststhesameonbehalfoftheinvestors/unitholders,inEquityshares,Governmentsecurities,Bonds,CallMoneyMarketsetc,anddistributestheprofits.Intheotherwords,aMutualFundallowsinvestorstoindirectlytakeapositioninabasketofassets.MutualFundisamechanismforpoolingtheresourcesbyissuingunitstotheinvestorsandinvestingfundsinsecuritiesinaccordancewithobjectivesasdisclosedinofferdocument.Investmentsinsecuritiesarespreadamongawidecross-sectionofindustriesandsectorsthustheriskisreduced.Diversificationreducestheriskbecauseallstocksmaynotmoveinthesamedirectioninthesameproportionatsametime.Investorsofmutualfundsareknownasunitholders.Theinvestorsinproportiontotheirinvestmentssharetheprofitsorlosses.Themutualfundsnormallycomeoutwithanumberofschemeswithdifferentinvestmentobjectiveswhicharelaunchedfromtimetotime.AMutualFundisrequiredtoberegisteredwithSecuritiesExchangeBoardofIndia(SEBI)whichregulatessecuritiesmarketsbeforeitcancollectfundsfromthepublic.

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ORGANISATIONOFAMUTUALFUND:TherearemanyentitiesinvolvedandthediagrambelowillustratestheorganizationalsetupofaMutualFund:

MutualFundsdiversifytheirriskbyholdingaportfolioofinsteadofonlyoneasset.Thisisbecausebyholdingallyourmoneyinjustoneasset,theentirefortunesofyourportfoliodependonthisoneasset.Bycreatingaportfolioofavarietyofassets,thisriskissubstantiallyreduced.MutualFundinvestmentsarenottotallyriskfree.Infact,investinginMutualFundscontainsthesameriskasinvestinginthemarkets,theonlydifferencebeingthatduetoprofessionalmanagementoffundsthecontrollablerisksaresubstantiallyreduced.AveryimportantriskinvolvedinMutualFundinvestmentsisthemarketrisk.However,thecompanyspecificrisksarelargelyeliminatedduetoprofessionalfundmanagement.

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CHARACTERISTICSOFAMUTUALFUND:AMutualFundactuallybelongstotheinvestorswhohavepooledtheirfunds.TheownershipofthemutualfundisinthehandsoftheInvestors.AMutualFundismanagedbyinvestmentprofessionalandotherServiceproviders,whoearnsafeefortheirservices,fromthefunds.ThepoolofFundsisinvestedinaportfolioofmarketableinvestments.Thevalueoftheportfolioisupdatedeveryday.Theinvestorsshareinthefundisdenominatedbyunits.Thevalueoftheunitschangeswithchangeintheportfoliovalue,everyday.Thevalueofoneunitofinvestmentiscallednetassetvalue(NAV).TheinvestmentportfolioofthemutualfundiscreatedaccordingtothestatedInvestmentobjectivesoftheFund.

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OBJECTIVESOFAMUTUALFUND:ToProvideanopportunityforlowerincomegroupstoacquirewithoutmuchdifficulty,propertyintheformofshares.ToCatermainlyoftheneedofindividualinvestors,whosemeansaresmall?ToManageinvestorsportfoliothatprovidesregularincome,growth,Safety,liquidity,taxadvantage,professionalmanagementanddiversification.

STRUCTUREOFAMUTUALFUND:-

THESTRUCTURECONSISTSOF:14|Page

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SPONSOR:Sponsoristhepersonwhoactingaloneorincombinationwithanotherbodycorporateestablishesamutualfund.Sponsormustcontributeatleast40%ofthenetworthoftheInvestmentmanagedandmeettheeligibilitycriteriaprescribedundertheSecuritiesandExchangeBoardofIndia(MutualFund)Regulations,1996.ThesponsorisnotresponsibleorliableforanylossorshortfallresultingfromtheoperationoftheSchemesbeyondtheinitialcontributionmadebyittowardssettingupoftheMutualFund.TRUST:TheMutualFundisconstitutedasatrustinaccordancewiththeprovisionsoftheIndianTrustsAct,1882bytheSponsor.ThetrustdeedisregisteredundertheIndianRegistrationAct,1908.TRUSTEE:Trusteeisusuallyacompany(corporatebody)oraBoardofTrustees(bodyofindividuals).ThemainresponsibilityoftheTrusteeistosafeguardtheinterestoftheunitholdersandensurethattheAMCfunctionsintheinterestofinvestorsandinaccordancewiththeSecuritiesandExchangeBoardofIndia(MutualFunds)Regulations,1996,theprovisionsoftheTrustDeedandtheOfferDocumentsoftherespectiveSchemes.Atleast2/3rddirectorsoftheTrusteeareindependentdirectorswhoarenotassociatedwiththeSponsorinanymanner.

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ASSETMANAGEMENTCOMPANY(AMC):

TheAMCisappointedbytheTrusteeastheInvestmentManageroftheMutualFund.TheAMCisrequiredtobeapprovedbytheSecuritiesandExchangeBoardofIndia(SEBI)toactasanassetmanagementcompanyoftheMutualFund.Atleast50%ofthedirectorsoftheAMCareindependentdirectorswhoarenotassociatedwiththeSponsorinanymanner.TheAMCmusthaveanetworthofatleast10coresatalltimes.

REGISTRARANDTRANSFERAGENT:

TheAMCifsoauthorizedbytheTrustDeedappointstheRegistrarandTransferAgenttotheMutualFund.TheRegistrarprocessestheapplicationform,redemptionrequestsanddispatchesaccountstatementstotheunitholders.TheRegistrarandTransferagentalsohandlescommunicationswithinvestorsandupdatesinvestorrecords.

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INVESTORSPROFILE:Aninvestornormallyprioritizeshisinvestmentneedsbeforeundertakinganinvestment.Sodifferentgoalswillbeallocatedtodifferentproportionsofthetotaldisposableamount.Investmentsforspecificgoalsnormallyfindtheirwayintothedebtmarketasriskreductionisofprimeimportance,thisistheareafortherisk-averseinvestorsandhere,MutualFundsaregenerallythebestoption.Onecanavailofthebenefitsofbetterreturnswithaddedbenefitsofanytimeliquiditybyinvestinginopen-endeddebtfundsatlowerrisk,thisriskofdefaultbyanycompanythatonehaschosentoinvestin,canbeminimizedbyinvestinginMutualFundsasthefundmanagersanalyzethecompaniesfinancialsmoreminutelythananindividualcandoastheyhavetheexpertisetodoso.Movinguptheriskspectrum,therearepeoplewhowouldliketotakesomeriskandinvestinequityfunds/capitalmarket.However,sincetheirappetiteforriskisalsolimited,theywouldratherhavesomeexposuretodebtaswell.Fortheseinvestors,balancedfundsprovideaneasyrouteofinvestment,armedwithexpertiseofinvestmenttechniques,theycaninvestinequityaswellasgoodqualitydebttherebyreducingrisksandprovidingtheinvestorwithbetterreturnsthanhecouldotherwisemanage.Sincetheycanreshuffletheirportfolioaspermarketconditions,theyarelikelytogeneratemoderatereturnseveninpessimisticmarketconditions.

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Nextcomestherisktakers,risktakersbytheirnature,wouldnotbeaversetoinvestinginhigh-riskavenues.Capitalmarketsfindtheirfancymoreoftenthannot,becausetheyhavehistoricallygeneratedbetterreturnsthananyotheravenue,provided,themoneywasjudiciouslyinvested.Thoughtheriskassociatedisgenerallyonthehighersideofthespectrum,thereturn-potentialcompensatesfortheriskattached.

FACTORSIMPACTINGTHEINDUSTRY:PESTAnalysis:PoliticalFactors:a)GovernmentRegulation:SEBIregulatestheindustryandeverydecisiontakenbythemimpacttheindustryveryquickly.b)Stableconstituency:Themutualfundindustrycantakelongtermdecisionifthegovernmentisstable.c)Fiscalpolicy:taxstructureplaysaveryimportantroleinthegrowthoftheindustry.Ifthetaxstructurewillbehighthantherewillbelesssavingsandinvestment.WehaveseentheinterestratereducingcontinuouslywhichboosttheindustrytosellproductswhicharebetterthantheFDs,PF,NSCandKVPs.

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Economicfactors:d)Marketperformance:Thelastfiveyearswitnessedasharpriseinthemarkets.Themutualfundindustrybasicallyworksparallelwiththemarkets.Suppose,ifthemarketsalwaysbeondownside,thentheinvestorswillnotbesocomfortabletoinvest.Thiswillreducethemarketsizedrastically.e)GlobalStandards:Astheindustrywillgrowbetter,Indiabeingaglobaleconomy,theMFindustryhastomatchtotheglobalmatureMFmarkets.Theyhavetogivedueemphasisonproductinnovation,costreductionandpenetration.f)Inflation:priceriseaffectsinterestrateandreducesthechancesofinvestment.

Socialfactors:g)Consumerbehaviour:thisisveryunpredictableandbasedonsentimentsgetschangedveryfrequently,whichsometimesmakessellingofproductsdifficult.h)Income:Therichpeopleareinbiggercities,sothemutualfundindustryismuchmoreconcentratedthere.

Technologicalfactors:Thisistheeraofinformationtechnologyandduetonetbanking,onlinetransaction,onlineRTGS,clearingsystemhelpstheindustryalot.

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OPPORTUNITIESANDTHREATS:-

a)RealEstatesectorboom:TheRealestatehasalwaysbeenoneofthepreferredinvestmentavenuesfortheIndianinvestor.Andwhatbetterwayforthesmallerinvestorstoparticipateinthisboomthantohavearealestatemutualfund.AMChastocomeupwiththestructuredproductsinthissegmentandshouldtakecompetitiveadvantage.

b)PenetrationtoRuralmarkets:Theindustryhastotakethemselvestothelocalandruralmarketstoincreasethemarketsize.Also,thecostofsettingupbusinessinbiggercitiesishugecomparetosmallercities.ThiswillreducetheAMCbusinesscost.

c)ConcentrationofCorporateInvestors:Mutualfundshavebecomeoverlyattractivetocorporateinvestorsbecauseofhigherreturnsthanbankdepositsandabilitytodistributecapitalgainstax.Corporateinvestorsaccountformorethan55%oftheAUM(byvalue).ItisclearthatthelackofgrowthinfundsundermanagementinIndiaisbecauseoftheabsenceoflongterminvestors.Corporateinvestorstakeprofitsfrequentlyresultingindestructioninthecompoundgrowthinfundsundermanagement.Distributorsareforcedtopassonmorecommissionstocompanies,whilefundcompaniesarecompelledtoofferfundswithwaferthinmargins.

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d)Retailinvestorsloseoutinthesensethattheycontinuetopayhigherexpenses.

e)HigherReturnsofAlternativeDebtInstruments:Governmentguaranteedschemesprovideriskfreereturnsatcompetitiveratesofreturns.Thisiswhymutualfundshavedifficultycompetingretailbusiness.

f)Hugescopeforexpansion:Thereareonly33AMCwhichisverysmallfigurecomparedtothematuremarkets.

g)Distribution:Oneofthemajorfactorsimpactingthegrowthofmutualfundindustryistheabsenceofanyregulationindistributionofmutualfunds.Mutualfundinvestorsneed

distributorswhoareabletoinformthemabouttheefficacyofdistributionproductforaparticularriskprofileandstageinlifecycle.LackofdistributorawarenessandtheabsenceofanydisclosuresfromdistributorsmakemissellingofMFproductscommonplace.

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BENEFITSOFMUTUALFUND

TherearenumerousbenefitsofinvestinginmutualfundsandoneofthekeyreasonsforitsphenomenalsuccessinthedevelopedmarketslikeUSandUKistherangeofbenefitstheyoffer,whichareunmatchedbymostotherinvestmentavenues.Wehaveexplainedthekeybenefitsinthissection.Thebenefitshavebeenbroadlysplitintouniversalbenefits,applicabletoallschemesandbenefitsapplicablespecificallytoopenendedschemes.

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1.AFFORDABILITYAmutualfundinvestsinaportfolioofassets,i.e.bonds,shares,etc.dependingupontheinvestmentobjectiveofthescheme.Aninvestorcanbuyintoaportfolioofequities,whichwouldotherwisebeextremelyexpensive.EachunitholderthusgetsanexposuretosuchportfolioswithaninvestmentasmodestasRs.500/-.ThisamounttodaywouldgetyoulessthanquarterofanInfosysshare!Thusitwouldbeaffordableforaninvestortobuildaportfolioofinvestmentsthroughamutualfundratherthaninvestingdirectlyinthestockmarket.2.DIVERSIFICATIONThenuclearweaponinyourarsenalforyourfightagainstRisk.Itsimplymeansthatyoumustspreadyourinvestmentacrossdifferentsecurities(stocks,bonds,moneymarketinstruments,realestate,fixeddepositsetc.)anddifferentsectors(auto,textile,informationtechnologyetc.).Thiskindofadiversificationmayaddtothestabilityofyourreturns,forexampleduringoneperiodoftimeequitiesmightunderperformbutbondsandmoneymarketinstrumentsmightdowellenoughtooffsettheeffectofaslumpintheequitymarkets.Similarlytheinformationtechnologysectormightbefaringpoorlybuttheautoandtextilesectorsmightdowellandmayprotectyourprincipalinvestmentaswellashelpyoumeetyourreturnobjectives.3.VARIETYMutualfundsofferatremendousvarietyofschemes.Thisvarietyisbeneficialintwoways:first,itoffersdifferenttypesofschemesto

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investorswithdifferentneedsandriskappetites;Secondly,itoffersanopportunitytoaninvestortoinvestsumsacrossavarietyofschemes,bothdebtandequity.Forexample,aninvestorcaninvesthismoneyinaGrowthFund(equityscheme)andIncomeFund(debtscheme)dependingonhisriskappetiteandthuscreateabalancedportfolioeasilyorsimplyjustbuyaBalancedScheme.4.PROFESSIONALMANAGEMENTQualifiedinvestmentprofessionalswhoseektomaximizereturnsandminimizeriskmonitorinvestor smoney.Whenyoubuyintoamutualfund,youarehandingyourmoneytoaninvestmentprofessionalthathasexperienceinmakinginvestmentdecisions.ItistheFundManager sjobto(a)findthebestsecuritiesforthefund,giventhefund sstatedinvestmentobjectives;and(b)keeptrackofinvestmentsandchangesinmarketconditionsandadjustthemixoftheportfolio,asandwhenrequired.5.TAXBENEFITSAnyincomedistributedafterMarch31,2002willbesubjecttotaxintheassessmentofallUnitholders.However,asameasureofconcessiontoUnitholdersofopen-endedequity-orientedfunds,incomedistributionsfortheyearendingMarch31,2003,willbetaxedataconfessionalrateof10.5%.IncaseofIndividualsandHinduUndividedFamiliesadeductionuntoRs.9,000fromtheTotalIncomewillbeadmissibleinrespectofincomefrominvestmentsspecifiedinSection80L,including

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incomefromUnitsoftheMutualFund.UnitsoftheschemesarenotsubjecttoWealth-TaxandGift-Tax.6.REGULATIONSSecuritiesExchangeBoardofIndia(SEBI),themutualfundsregulatorhasclearlydefinedrules,whichgovernmutualfunds.Theserulesrelatetotheformation,administrationandmanagementofmutualfundsandalsoprescribedisclosureandaccountingrequirements.Suchahighlevelofregulationseekstoprotecttheinterestofinvestors.7.CONVENTIONALADMINISTRATIONInvestinginaMutualFundreducespaperworkandhelpsyouavoidmanyproblemssuchasbaddeliveries,delayedpaymentsandfollowupwithbrokersandcompanies.MutualFundssaveyourtimeandmakeinvestingeasyandconvenient.ReturnPotentialOveramediumtolongterm;MutualFundshavethepotentialtoprovideahigherreturnastheyinvestinadiversifiedbasketofselectedsecurities.8.LIQUIDITYInopen-endedmutualfunds,youcanredeemallorpartofyourunitsanytimeyouwish.Someschemesdohavealock-inperiodwhereaninvestorcannotreturntheunitsuntilthecompletionofsuchalock-inperiod.

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9.CONVENIENCEAninvestorcanpurchaseorsellfundunitsdirectlyfromafund,throughabrokerorafinancialplanner.TheinvestormayoptforaSystematicInvestmentPlan(SIP)oraSystematicWithdrawalAdvantagePlan(SWAP).Inadditiontothisaninvestorreceivesaccountstatementsandportfoliosoftheschemes.

CATEGORIESOFMUTUALFUNDS:

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MutualFundcanbeclassifiedasfollows:BasedontheStructure:1.OPEN-ENDEDMUTUALFUNDS:TheholdersofthesharesintheFundcanresellthemtotheissuingMutualFundcompanyatthetime.Theyreceiveinturnthenetassetsvalue(NAV)ofthesharesatthetimeofre-sale.SuchMutualFundCompaniesplacetheirfundsinthesecondarysecuritiesmarket.Theydonotparticipateinnewissuemarketasdopensionfundsorlifeinsurancecompanies.Thustheyinfluencemarketpriceofcorporatesecurities.Open-endinvestmentcompaniescansellanunlimitednumberofSharesandthuskeepgoinglarger.TheopenendMutualFundCompanyBuysorsellstheirshares.ThesecompaniessellnewsharesNAVplusaLoadingormanagementfeesandredeemsharesatNAV.Inotherwords,thetargetamountandtheperiodbothareindefiniteinsuchfunds.2.CLOSED-ENDEDMUTUALFUNDS:AclosedendFundisopenforsaletoinvestorsforaspecificperiod,afterwhichfurthersalesareclosed.Anyfurthertransactionforbuyingtheunitsorrepurchasingthem,Happeninthesecondarymarkets,whereclosedendFundsarelisted.Thereforenewinvestorsbuyfromtheexistinginvestors,andexistinginvestorscanliquidatetheirunitsbysellingthemtootherwillingbuyers.InaclosedendFunds,thusthepooloffundscantechnicallybekeptconstant.

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Theassetmanagementcompany(AMC)however,canbuyouttheunitsfromtheinvestors,inthesecondarymarkets,thusreducingtheamountoffundsheldbyoutsideinvestors.ThepriceatwhichunitscanbesoldorredeemedDependsonthemarketprices,whicharefundamentallylinkedtotheNAV.InvestorsinclosedendFundsreceiveeithercertificatesorDepositoryreceipts,fortheirholdingsinaclosedendmutualFund.Basedontheirinvestmentobjective:

1.EQUITYFUNDS:Thesefundsinvestinequitiesandequityrelatedinstruments.Withfluctuatingshareprices,suchfundsshowvolatileperformance,evenlosses.However,shorttermfluctuationsinthemarket,generallysmoothensoutinthelongterm,therebyofferinghigherreturnsatrelativelylowervolatility.Atthesametime,suchfundscanyieldgreatcapitalappreciationas,historically,equitieshaveoutperformedallassetclassesinthelongterm.Hence,investmentinequityfundsshouldbeconsideredforaperiodofatleast3-5years.Itcanbefurtherclassifiedas:i)Indexfunds-Inthiscaseakeystockmarketindex,likeBSESensexorNiftyistracked.Theirportfoliomirrorsthebenchmarkindexbothintermsofcompositionandindividualstockweightages.ii)Equitydiversifiedfunds-100%ofthecapitalisinvestedinequitiesspreadingacrossdifferentsectorsandstocks.

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iii)DividendYieldfunds-Itissimilartotheequitydiversifiedfundsexceptthattheyinvestincompaniesofferinghighyielddividends.iv)Thematicfunds-Invest100%oftheassetsinsectorswhicharerelatedthroughsometheme.e.g.-Aninfrastructurefundinvestsinpower,construction,cementssectorsetc.v)Sectorfunds-Invest100%ofthecapitalinaspecificsector.e.g.-Abankingsectorfundwillinvestinbankingstocks.vi)ELSS-EquityLinkedSavingSchemeprovidestaxbenefittotheinvestors.2.BALANCEDFUNDS:Theirinvestmentportfolioincludesbothdebtandequity.Asaresult,ontherisk-returnladder,theyfallbetweenequityanddebtfunds.Balancedfundsaretheidealmutualfundsvehicleforinvestorswhopreferspreadingtheirriskacrossvariousinstruments.Followingarebalancedfundsclasses:i)Debt-orientedfunds-Investmentbelow65%inequities.ii)Equity-orientedfunds-Investatleast65%inequities,remainingindebt.

3.DEBTFUND:Theyinvestonlyindebtinstruments,andareagoodoptionforinvestorsaversetoideaoftakingriskassociatedwithequities.Therefore,theyinvestexclusivelyinfixed-incomeinstrumentslikebonds,debentures,GovernmentofIndiasecurities;andmoneymarketinstrumentssuchascertificatesofdeposit(CD),commercialpaper(CP)

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andcallmoney.Putyourmoneyintoanyofthesedebtfundsdependingonyourinvestmenthorizonandneeds.i)Liquidfunds-Thesefundsinvest100%inmoneymarketinstruments,alargeportionbeinginvestedincallmoneymarket.ii)GiltfundsST-Theyinvest100%oftheirportfolioingovernmentsecuritiesofandT-bills.iii)Floatingratefunds-Investinshort-termdebtpapers.Floatersinvestindebtinstrumentswhichhavevariablecouponrate.iv)Arbitragefund-Theygenerateincomethrougharbitrageopportunitiesduetomis-pricingbetweencashmarketandderivativesmarket.Fundsareallocatedtoequities,derivativesandmoneymarkets.Higherproportion(around75%)isputinmoneymarkets,intheabsenceofarbitrageopportunities.v)GiltfundsLT-Theyinvest100%oftheirportfolioinlong-termgovernmentsecurities.vi)IncomefundsLT-Typically,suchfundsinvestamajorportionoftheportfolioinlong-termdebtpapers.vii)MIPs-MonthlyIncomePlanshaveanexposureof70%-90%todebtandanexposureof10%-30%toequities.viii)FMPs-fixedmonthlyplansinvestindebtpaperswhosematurityisinlinewiththatofthefund.

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THEWAYTOINVESTINMUTUALFUNDMutualfundsnormallycomeoutwithanadvertisementinnewspaperspublishingthedateoflaunchofthenewschemes.Investorscanalsocontacttheagentsanddistributorsofmutualfundswhoarespreadalloverthecountryfornecessaryinformationandapplicationforms.Formscanbedepositedwithmutualfundsthroughtheagentsanddistributorswhoprovidesuchservices.Nowdays,thepostofficesandbanksalsodistributetheunitsofmutualfunds.However,theinvestorsmaypleasenotethatthemutualfundsschemesbeingmarketedbybanksandpostofficesshouldnotbetakenastheirownschemesandnoassuranceofreturnsisgivenbythem.Theonlyroleofbanksandpostofficesistohelpin.distributionofmutualfundsschemestotheinvestors.Investorsshouldnotbecarriedawaybycommission/giftsgivenby

agents/distributorsforinvestinginaparticularscheme.Ontheotherhandtheymustconsiderthetrackrecordofthemutualfundandshouldtakeobjectivedecision.ONETIMEINVESTMENTTheamountthathastobeinvestedinonetimeisknownasOnetimeInvestment.Theinvestorhastopaythewholeamountatonce.TheminimumamountisRs.5000andmaximumisaspertheinvestorsChoice.ThisinvestmentisgenerallypreferredforthebusinessmanwhoAreabletopayatonetime.

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SYSTEMATICINVESTMENTPLAN(SIP)

TheamountthathastobeinvestedthroughsamemonthlyinstallmentisknownasSystematicInvestmentPlan.TheinvestorhastopaytheminimumamountRs.1000monthlyforallequityandbalancedschemeslikethatfor6months.AndRs.500monthlyforTaxSaverschemelikethatfor12months.TheminimumamountthattheinvestorhastoinvestisRs6000andmaximumaspertheirchoice.Thistypeofinvestmentisgenerallypreferredforthesalariedpeople.

LEGALFRAMEWORKOFSEBI&AMFIREGULATORYASPECTSOFMUTUALFUNDS:

Intheyear1992,SecuritiesandexchangeBoardofIndia(SEBI)Actwaspassed.TheobjectivesofSEBIaretoprotecttheinterestofinvestorsinsecuritiesandtopromotethedevelopmentofandtoregulatethesecuritiesmarket.SEBIformulatespoliciesandregulatesthemutualfundstoprotecttheinterestoftheinvestors.

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GUIDELINESOFSEBI&AMFIMutualfundsareregulatedbytheSEBI(mutualFund)Regulations,1996.SEBIistheregulatorofallfunds,exceptoffshorefunds.Bank-sponsoredmutualfundsarejointlyregulatedbySEBIandRBI.Thebank-sponsoredfundcannotprovideaguaranteewithoutRBIPermission.RBIregulatesmoneyandgovernmentsecuritiesmarkets,inwhichmutualFundsareinvested.Listedmutualfundsaresubjecttothelistingregulationsofstockexchange.SincetheAMCandTrusteeCompanyarecompanies,theDepartmentofCompanyaffairsregulatethem.TheyhavetosendperiodicreportstotheROC(RegisterofCompanies)andtheCLB(CompanyLawBoard)istheappellateauthority.Investorscannotsuethetrust,astheyarethesameasthetrustandcantsuethemselves.UTIdoesnothaveaseparatesponsorandAMC.UTIisgovernedbytheUTIAct,1963andisvoluntarilyunderSEBIRegulations.UTIcanborrowaswellaslendalsoengageinotherfinancialservicesactivities.OnlyAMFIcertifiedagentscansellMutualFundunits.MutualFundsCompanyisrequiredtoupdatetheNAVoftheschemeontheAMFIwebsiteonadailybasisincaseofopen-endedscheme.

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REGULATORYOFMUTUALFUNDININDIA

SEBIThecapitalmarketregulatesthemutualfundsinIndia.SEBIrequiresallmutualfundstoberegisteredwiththem.SEBIissuesguidelinesforallmutualfundsoperations-investment,accounts,expensesetc.Recently,ithasbeendecidedthatMoneyMarketMutualFundsofregisteredmutualfundswillberegulatedbySEBIthrough(MutualFund)Regulations1996.RBIRBI,asupervisoroftheBanksownedMutualFunds-AsbanksinIndiacomeundertheregulatoryJurisdictionofRBI,banksownedfundstobeundersupervisionofRBIandSEBI.RBIhassupervisoryresponsibilityoverallentitiesthatoperateinthemoneymarkets.MINISTRYOFFINANCE(MOF)MinistryofFinanceultimatelysupervisesboththeRBIandtheSEBIandplaystheroleofapexauthorityforanymajordisputesoverSEBIguidelines.

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COMPANYLOWBOARDRegistrarofcompaniesiscalledCompanyLowBoard.AMCsofMutualFundsarecompaniesregisteredunderthecompaniesAct1956andthereforeanswerabletoregulatoryauthoritiesempoweredbytheCompaniesAct.STOCKEXCHANGEStockExchangesareSelf-regulatoryorganizationssupervisedbySEBI.ManyclosedendedfundsofAMCsarelistedasstockexchangesandaretradedlikeshares.OFFICEOFTHEPUBLICTRUSTEEMutualFundbeingpublictrustisgovernedbytheIndianTrustAct1882.TheBoardoftrusteeortheTrusteesCompanyisaccountabletotheofficeofpublictrustee,whichinturnreportstotheCharitycommissioner.

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RISKV/S.RETURN:

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MUTUALFUNDSININDIAATAGLANCEThemutualfundindustryinIndiastartedin1963withtheformationofUnitTrustofIndia,attheinitiativeoftheGovernmentofIndiaandReserveBankthe.ThehistoryofmutualfundsinIndiacanbebroadlydividedintofourdistinctphases:-

Phase-I

Phase-IIPhasesofMutualFundIndustryinIndia

Phase-IV

Phase-III

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FirstPhase1964-87

UnitTrustofIndia(UTI)wasestablishedon1963byanActofParliament.ItwassetupbytheReserveBankofIndiaandfunctionedundertheRegulatoryandadministrativecontroloftheReserveBankofIndia.In1978UTIwasde-linkedfromtheRBIandtheIndustrialDevelopmentBankofIndia(IDBI)tookovertheregulatoryandadministrativecontrolinplaceofRBI.ThefirstschemelaunchedbyUTIwasUnitScheme1964.Attheendof1988UTIhadRs.6,700croresofassetsundermanagement.SecondPhase1987-1993(EntryofPublicSectorFunds)

1987markedtheentryofnon-UTI,publicsectormutualfundssetupbypublicsectorbanksandLifeInsuranceCorporationofIndia(LIC)andGeneralInsuranceCorporationofIndia(GIC).SBIMutualFundwasthefirstnon-UTIMutualFundestablishedinJune1987followedbyCanbankMutualFund(Dec87),PunjabNationalBankMutualFund(Aug89),IndianBankMutualFund(Nov89),BankofIndia(Jun90),BankofBarodaMutualFund(Oct92).LICestablisheditsmutualfundinJune1989whileGIChadsetupitsmutualfundinDecember1990.Attheendof1993,themutualfundindustryhadassetsundermanagementofRs.47,004crores.

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ThirdPhase1993-2003(EntryofPrivateSectorFunds)

Withtheentryofprivatesectorfundsin1993,anewerastartedintheIndianmutualfundindustry,givingtheIndianinvestorsawiderchoiceoffundfamilies.Also,1993wastheyearinwhichthefirstMutualFundRegulationscameintobeing,underwhichallmutualfunds,exceptUTIweretoberegisteredandgoverned.TheerstwhileKothariPioneer(nowmergedwithFranklinTempleton)wasthefirstprivatesectormutualfundregisteredinJuly1993.

The1993SEBI(MutualFund)RegulationsweresubstitutedbyamorecomprehensiveandrevisedMutualFundRegulationsin1996.TheindustrynowfunctionsundertheSEBI(MutualFund)Regulations1996.

Thenumberofmutualfundhouseswentonincreasing,withmanyforeignmutualfundssettingupfundsinIndiaandalsotheindustryhaswitnessedseveralmergersandacquisitions.AsattheendofJanuary2003,therewere33mutualfundswithtotalassetsofRs.1,21,805crores.TheUnitTrustofIndiawithRs.44,541croresofassetsundermanagementwaswayaheadofothermutualfunds.

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FourthPhasesinceFebruary2003

InFebruary2003,followingtherepealoftheUnitTrustofIndiaAct1963UTIwasbifurcatedintotwoseparateentities.OneistheSpecifiedUndertakingoftheUnitTrustofIndiawithassetsundermanagementofRs.29,835croresasattheendofJanuary2003,representingbroadly,theassetsofUS64scheme,assuredreturnandcertainotherschemes.TheSpecifiedUndertakingofUnitTrustofIndia,functioningunderanadministratorandundertherulesframedbyGovernmentofIndiaanddoesnotcomeunderthepurviewoftheMutualFundRegulations.ThesecondistheUTIMutualFundLtd,sponsoredbySBI,PNB,BOBandLIC.ItisregisteredwithSEBIandfunctionsundertheMutualFundRegulations.WiththebifurcationoftheerstwhileUTIwhichhadinMarch2000morethanRs.76,000croresofassetsundermanagementandwiththesettingupofaUTIMutualFund,conformingtotheSEBIMutualFundRegulations,andwithrecentmergerstakingplaceamongdifferentprivatesectorfunds,themutualfundindustryhasentereditscurrentphaseofconsolidationandgrowth.AsattheendofSeptember,2004,therewere29funds,whichmanageassetsofRs.153108croresunder421schemes.

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Thegraphindicatesthegrowthofassetsovertheyears.

NoteErstwhileUTIwasbifurcatedintoUTIMutualfundandtheSpecifiedUndertakingoftheUnitTrustofIndiaeffectivefromFebruary2003.TheAssetsundermanagementoftheSpecifiedUndertakingoftheUnitTrustofIndiahasthereofbeenexecutedfromthetotalassetsoftheindustryasawholefromFebruary2003onwards.

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PARTBCOMPANYDETAIL

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MANWITHAMISSIONIfevertherewasamanwithamissionitwasHasmukhbhaiParekh,FounderandChairmanEmeritus,ofHDFCGroupwholeftthisearthlyabodeonNovember18,1994.BorninatraditionalbankingfamilyinSurat,Gujarat,Mr.Parekhstartedhisfinancialcareerat

HarkisandassLukhmidassaleadingstockbrokingfirm.Thefirmcloseddowninthelateseventies,but,longbeforethat,hewentontobecomeatoweringfigureontheIndianfinancialscene.In1956hebeganhislifelongfinancialaffairwiththeeconomicworld,asGeneral.Managerofthenewly-formedIndustrialCreditandInvestmentCorporationofIndia(ICICI).HerosetobecomeChairmanandcontinuedsotillhisretirementin1972.Attheripeageof60,Hasmukhbhaistartedhisseconddynamiclife,evenmoreillustriousthanhisfirst.HisvisionformortgagefinanceforhousinggavebirthtotheHousingDevelopmentFinanceCorporationitwasatrend-setterforhousingfinanceinthewholeAsiancontinent.Hewasalsoawriterinhisownright.Thereareover200publishedarticlesbyhim...

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In1992,theGovernmentofIndiahonouredhimwiththePadmaBhushanAward.TheLondonSchoolofEconomics&PoliticalScienceconferredFellowship.HewasoneoftheFounderMembersoftheCentreforAdvancementofPhilanthropy,anditsChairmantill1993.HetookactiveinterestintheBombayCommunityPublicTrust,designedspecificallytoservetheneedsoftheMr.H.T.PAREKHisconferredthePadmaBhushanbytheGovernmentofIndiaintheyear1992.

on

him

an

Honorary

citysunderprivilegedcitizens.WhenMr.DeepakParekhtookoverasChairmanfromHasmukhbhai,hesaid:

TakingoverfromH.T.Parekhisaformidabletask;hisvisionbroughtaboutnotonlyaninstitution,butanentireconceptwhichhasproveditselftobeoflastingimportance.TodaywearethelargestresidentialmortgagefinanceinstitutioninIndia,withanetworthofRs.2,703croresasofMarch31,2006andanassetbaseofoverRs.22,000crores.Wealsoaimtoincreasetheflowofresourcesto

thehousingsectorbyintegratingthehousingfinancesectorwiththeoveralldomesticfinancialmarkets.Overaspanof25years,HDFChasbecomethepioneerinhousingfinanceinIndiaandmadeitpossibleforovertwomillionFamiliestoowntheirhomes,throughhousingloansworthoverRs.42,000crores.

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ABOUTCOMPANYHDFC:-

VISIONSTATEMENT:-

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ORGANISATIONSTRUCTURE:TheHDFCAMChasthebelowgivenorganisationalstructureandthedifferentfunctionaldepartmentareheadedbydifferentpeople.

ManagingDirectorMr.MilindBarve

CIO-EDMr.PrashantJain

CFOMr.RahulBhandari

HeadOperationsMr.SureshBabu

HeadClientServicingMr.JohnMathews

HeadComplianceMr.YezdiKhariwala

HeadSalesMr.KiranKaushik

HeadPMSMr.PankajChopra

HeadHRMr.AlokSheopurkar

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LINEOFBUSINESS:

PMSHDFCAMCMutualFund

Retail

CorporateBusiness

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HDFCASSETMANAGEMENTCOMPANYLIMITED(AMC)InternalStructure&processes:

ManagementTeam:HDFCTrusteecompanyLimited:acompanyincorporatedundertheCompaniesAct,1956istheTrusteetotheMutualFundvidetheTrustdeeddatedJune8,2000,asamendedfromtimetotime.HDFCTrusteeCompanyLimitedisawhollyownedsubsidiaryofHDFCLimited.

HDFCAssetManagementCompanyLtd(AMC)wasincorporatedundertheCompaniesAct,1956,onDecember10,1999,andwasapprovedtoactasanAssetManagementCompanyfortheHDFCMutualFundbySEBIvideitsletterdatedJuly3,2000.TheregisteredofficeoftheAMCissituatedatRamonHouse,3rdFloor,H.T.ParekhMarg,169,BackbayReclamation,Churchgate,Mumbai-400020.IntermsoftheInvestmentManagementAgreement,theTrusteehasappointedtheHDFCAssetManagementCompanyLimitedtomanagetheMutualFund.ThepaidupcapitaloftheAMCisRs.45.161crore.

ThepresentequityshareholdingpatternoftheAMCisasfollows:Particulars%ofthepaidupequitycapital

HDFCLimitedStandardLifeInvestmentsLimited

6040

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HDFCLtd.60.0%

HDFCAssetManagementCompanyLtd.

StandardLifeInvestments40.0%

HDFCMutualFund

HDFCAssetManagementCompany(AMC)isthefirstAMCinIndiatohavebeenassignedtheCRISILFundHouseLevel1rating.ThisisitshighestFundGovernanceandProcessQualityRatingwhichreflectsthehighestgovernancelevelsandfundmanagementpracticesatHDFCAMCItistheonlyfundhousetohavebeenassignedthisratingfortwoyearsinsuccession.Overthepast,wehavewonanumberofawardsandaccoladesforourPerformance.HDFCMutualFundisoneofthelargestmutualfundsandwell-establishedfundhouseinthecountrywithconsistentandaboveaveragefundperformanceacrosscategoriessinceitsincorporationonDecember10,1999.

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Whileourpastexperiencedoesmakeusaveteran,butwhenitcomestoinvestments,wehaveneverbelievedthattheexperienceisenough.ThesinglemostimportantfactorthatdrivesHDFCMutualFundisitsbelieftogivetheinvestorthechancetoprofitablyinvestinthefinancialmarket,withoutconstantlyworryingaboutthemarketswings.Torealizethisbelief,HDFCMutualFundhassetuptheinfrastructurerequiredtoconductallthefundamentalresearchandbackitupwitheffectiveanalysis.Ourstrongemphasisonmanagingandcontrollingportfolioriskavoidschasingthelatestfadsandtrends.INTERNALANALYSISOFHDFCAMCHDFChasgrowninleapsandboundsaftertakingZurichin2003,nowitisthethirdlargestprivatecompanyinAssetmanagementcompany.InJamshedpur,HDFChasnearly20%ofthetotalAUMandaccordingtotheCAMSreport,inAUMunderCAMSwehave35%marketshareandwedogrosssalesof70%everymonth.AUMMarch.2003March.2004March.2005March.2006March.2007March.2008March.20096482

GrowthRate-------

14985131.18150100.172155043.572835831.594629163.245795625.19

Thebelowgivengraphdepictsthesame.

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DFCAMChas4%marketofthetotalassetmanagementbusiness.Thepie-chartshowsthemarketshareoftheotherAMCsandofHDFC.

28%

50%

5%

4%

5%

8%

OTHERS(29)UTIHDFCMutualFundPrudentialICICIMutualFundRelianceMutualFundGrandTotal

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STRENGTHSANDWEAKNESSES:STRENGTHS:

a)Widerangeofproducts:TheAMChasgotgoodnumberofdifferentiatedproductsintheentireassetclass.b)Consistentperformance:Thefundshavegivenconsistentperformanceover10years.c)Experiencedteam:HDFChasfundmanagerswithrichexperiencewhoseconsistentperformancehasmadethisAMCCRISILlevelonefundhouse.d)StrongCompliance:TheAMChasverystrongcomplianceofindustrysetrulestoprotecttheinterestoftheinvestors.e)Riskmanagementteam:AMChasaseparateriskmanagementteamwhichconstantlymonitortheriskexposurerelatedtodifferentfundmanagement.WEAKNESSES:

a)Restrictivereach:HDFCbusinessismoreconcentratedonurbanareas.HDFChasverylimitedoffices.b)LessAggressiveinMarketingandexecution:HDFCdoesmatchtheaggressivenessrequiredintheindustryandareslowinexecution.

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HDFCMUTUALFUNDATAGLANCE

NameofUnit

:

HDFCMUTUALFUND

Address

:

GayatriEnclave,2ndFloor,"K"Road,Bistupur,Jamshedpur-831001.:PrivateSector

FormofOrganization

ContactNumber

:Tel.:18002336767(Toll-free)Telefax:06572249730/2249691

EstablishmentyearSponsors:

:

2007HousingDevelopmentFinanceCorporationLimited(HDFC),StandardLifeInvestmentsLimited.

Management

:Trustee.HDFCAssetManagementCompanyLimited(AMC).

WorkingHoursWebsite

::

9.30amto5.30p.mwww.hdfcfund.com

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ACHIEVEMENTANDAWARDSHDFCPrudencefundhasbeenrankedICRA-MFR1,andHasBeenawardedtheGoldAwardforBestPerformanceinthecategoryofOpenEndedBalancedSchemeforoneyearPeiodEndingDec31,2005.

HDFCTaxsaverfundhasbeenrankedICRA-MFR1,andHasBeenSilverawardforSecodBestPerformanceinthecategoryofOpenEndedEquityLinkedSavingScheme(ELSS)forThreeyearPeriodEndingDec31,2005.

HDFCMIP~LTPhasbeenrankedICRA-MFR1,andHasbeenawardedtheGoldAwardForBstPerformanceinthecategoryofOpenEndedMarginalEquitySchemeforoneyearPeriodEndingDec31,2005.

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HDFCPROVIDES:PersonalizedServiceWebelieveinprovidingapersonalizedserviceenablingindividualattentiontoachieveyourinvestmentgoal.ProfessionalAdviceWeprovideprofessionaladviceonequityanddebtportfoliowithanobjectivetoprovideconsistentlong-termreturnwhiletakingcalculatedmarketrisk.Ourapproachhelpsyoutobuildapropermixofportfolio,notjusttopromoteoneindividualproduct.Henceyourlongtermobjectivesarebestserved.Long-termRelationshipWebelievesteadywealthcreationrequireslong-termvision,itcantbeachievedinashortspanoftime.Toachievethisoneneedstotakeadvantageofshort-termmarketopportunitywhilenotloosingsightoflongtermobjective.Hencewepartnerallourclientsintheirobjectiveofachievingtheirlong-termVision.AccesstoResearchReportsThroughus,youwillhaveaccesstocertainresearchworkofCRISIL,sothatyouwillbenefitfromtheexpertknowledgeofeconomistsandanalystsofoneoftheleadingfinancialresearchandratingcompanyofIndia.Thisthirdpartyresearchgivesyouacomfortofgettingunbiasedadvicetomakeaproperdecisionforyourinvestment.

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Transparency&ConfidentialityThroughemailyouwillgetaregularportfoliostatementfromus.Youwillalsobegivenawebaccesstoviewatyourconveniencethedetailsofyourinvestmentsanditsperformance.Accesstoyourportfolioisrestrictedtoyouandourmonitoringsystemenablesustodetectanyunauthorizedaccesstoyourinvestments.FlexibilityTofacilitatesmoothdealingandconsistentattention,allourclientswillbeservicedbytheirrespectiverelationshipexecutive.Thisallowsustoprovidetailormadeadvicetoachieveyourinvestmentobjective.HassleFreeInvestmentOurrelationshippersonwillprovideyouwithacustomizedserviceatyourconvenience.Wetakecareofalltheadministrativeaspectsofyourinvestmentsincludingsubmissionofapplicationformstofundhousesalongwithmonthlyreportingonoverallstateofyourinvestmentsandperformanceofyourportfolio.MutualfundsarealltheragetodaysimplybecausepeoplehaverealizedthesymbioticrelationshipthataninvestorshareswiththeassetmanagementcompaniesascomparedtotheevervolatileandruthlessworldofSENSEX.

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COMPETITORANALYSIS:TataMutualFund:TataAssetManagementPrivateLimitedisveryoldhouseandiswellplacedinthemarket.TataMutualFundhasAUMofRs.21304Crores.SizeandGrowth:TataMFopeneditsofficeinJamshedpurfouryearsago.Sincethanithasdonegoodbusiness.TatahavebrandadvantageinJamshedpur,asinvestorstrustTATAgroup.JamshedpurwhichisamarketofRs1300cr,TataMFhasnearly10-12%ofthemarketshareofJamshedpur.InJharkhandtheyhavefouroffices.InternalStructure&processes:TataMutualFundhasbeenconstitutedasatruston9thMay1995inaccordancewiththeprovisionsoftheIndianTrustsAct,1882withTataSonsLimited(TSL)andTataInvestmentCorporationLimited(TICL)asthesponsersandthesettlers.TheMutualFundwasregisteredwithSEBIon30thTataMutualFund(TMF)hasbeenconstitutedasaTrustinaccordancewiththeprovisionsoftheIndiansTrustsAct,1882andisregisteredasaTrustunderTheIndianRegistrationAct,1908.TMFwasregisteredwithSecurities&ExchangeBoardofIndia(SEBI)andcommencedoperationbylaunching

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itsfirstschemeon30thAugust1995.TataSonsLimited(TSL)andTataInvestmentCorporationLtd(TICL)aretheSponsersandtheSettlors.

ShareHoldingPatternOfTataAssetManagementLtd(TAML)

TatasonsLtd.67.91%

TataAssetManagementLtd.

TataInvestmentCorporationLtd32.09%

TataMutualFund

BoardOfDirectors:-

BoardOfTataTrusteeCompanyPrivateLimitedMr.S.M.Datta(Chairman)Mr.I.Hussain(Director)Mr.J.N.Godrej(Director)Mr.NowrozeJ.N.Vazifdar(Director)

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BoardOfDirectorsOfTataAssetManagmentLimited:Mr.F.K.Kavarana(Chairman)Mr.VedPrakashChaturvedi(ManagingDirector)Mr.A.R.Gandhi(Director)Mr.M.L.Apte(Director)Mr.A.Hasib(Director)

LineofBusiness:

TataMutualFund

Mutualfundbusiness

Portfoliomanagement

Strengths&Weaknesses:Strengths:a)TrustedParentcompany:TataAssetManagementLtdisapartoftheTatagroup,oneofIndia slargestandmostrespectedindustrialgroups.JamshedpuristhehomegroundforTataMFandtheyenjoygreatsupportandtrust.

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b)Highpayoutstructure:TheypaymoreincentiveandbrokeragetotheredistributorsincomparisonofotherAMCs,whichgivesthemsomeedgetoattractthedistributorstoselltheproduct.Weaknesses:a)Focussedononeproduct:AtJamshedpur,TataMFisfocussedononlyoneproductthatisTataInfrastructureFundwhichsomehownarrowstheirproductdiversification.b)LackofAggression:TheteaminJamshedpurlackaggressionandactiveness,theydonotpushthereproductstoomuchinthemarkets.Productsgetsoldoftherebrandpresence.c)Services:TheAMCisnotgivinggoodserviceandtheresponsetimeisslow.ProjectedFutureStrategy:Tomeetthecompetition,Tatamutualfundwillhavetoexpandtherebusinessandpenetrationbyincreasingthenumberofbranchesandmanpower.Distributor/Businessmodel:ThedistributormodelisdividedintotwopartsthatisIFAsandBanksandnationaldistributors.ThentheIFAsarecategorisedintwocategoriesi.e.preferredandbasic.Preferredgets2.25%brokerageandbasicgets2.10%.Formakingpreferredpartnerthereisnosuchsetofrule.Also,TatahasschemespecificbrokeragestructurelikeinTatainfrastructuretheypay3.00%,insomeschemes2.25%andinsome1.75%.

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Products(NFOs/schemes):

TatahasnotgotsogoodwiderangeofproductsinallcategoriesandmaximumAUMofthereisconcentratedindebtthemaximumpartisindebt.No.ofschemesNo.ofschemesincludingoptionsEquitySchemesDebtSchemesShorttermdebtSchemesEquity&DebtMoneyMarketGiltFund9837537291147026

Fromthetherepatterntheyaremorecashingbusinessontheinfrastructuretheme.TillnowtheyhavetwoinfrastructurebasedfundsandoneNFOisrunningwhichisalsoInfrastructurebasedfund.Recently,theyhadalsofiledofferdocumentwithSEBIforthereTatasmallandMidcapInfrastructurefund.

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ComparativeAnalysisofHDFCAMCwithTATA:i)Infrastructure:SCHEMEFUNDCLASSAveragemkt.cap.(inCrores)InceptiondateMAY.2009MAY.2009HDFCINFRASTRUCTUREEquitydiversified75406.10TATAINFRASTRUCTUREEquitydiversified21304.00

FromthefollowingdatawecananalyisethatHDFCMUTUALFUNDhasfaredbetterthanTATAMUTUALFUND..

ii)SWOTanalysisofHDFCAMCwithTataAMC.

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SWOTAnalysisofHDFCAssetManagementCompanyLtd.

BuySmartDraw!-purchasedcopiesprintthisdocumentwithoutawatermark.Visitwww.smartdraw.comorcall1-800-768-3729.

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SWOTAnalysisofTataAssetManagementLtd

BuySmartDraw!-purchasedcopiesprintthisdocumentwithoutawatermark.Visitwww.smartdraw.comorcall1-800-768-3729.

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iii)AdditionalServicesOfferedByHDFCMutualFunds:-

HDFCMFOnline,

whichenablesyoutotransactonlineonhttps://investor.hdfcfund.com/mfonline/24hoursaday,7daysaweek,365daysayear.OnHDFCMFOnline,youcanPurchase.Redeem.Switch.ViewAccountDetails.ViewPortFolioValuation.DownloadAccountStatements........Online!!TheServicesofferedinHDFCMFOnline:eDocs:HDFCMutualFundOffersyoutheconvenienceofrecievingdocumentsbyemailatnoadditionalcosttoyou.ePayouts:Saveyourtimeandexperiencetheconvenienceofreceivingyourdividendandredemptionpayout(s),ifany,directlyintoyourbankaccount.ThisfacilitycanbeoptedbyselectingRBI sNationalElectronicFundTransfer(NEFT)orElectronicClearingService(ECS*).NEFTandECSfacilitatesfaster,reliableandtroublefreecreditofredemption/dividendintoyourbankaccount.Itisalsooneofthesafestmodeofpaymentasiteliminatespossibilitiesoffraudulentencashmentofredemption/dividendinstrumentsoranypossiblelosswhileinpostaltransittoyou.

HDFCMF

Mobile,Nowtransactingwithmobilecanalsobedone.HDFCofferthefacilitytransactingusingthemobilephoneanywhereandanytime.OnHDFCMFMobile,youcanPurchase.Redeem.Switch.

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ViewAccountDetails.ViewPortFolioValuation.RequestforAccountStatements.CheckNAV.

NEFTFacility(NationalElectronicFundTransfer):

ThisisafacilityintroducedbytheReserveBankofIndia(RBI).NEFTisanationwideelectronicfundstransfersystemtomovefundsfromanybankbranchinanypartofcountrytoanyotherbankbranchinanotherpartofthecountry.Whowillbenefitfromthisservice?Thispayoutchannelwillbeparticularlybeneficialtoallsuchinvestorswhosemandatedbankaccountisnotinthelistofbankswithwhomwepresentlyhaveadirectcreditarrangementforcreditingtheirdividend/redemptionproceeds.ThisservicewillalsobenefitallsuchinvestorsatlocationswhereaHDFCMutualFundInvestorServiceCentre(ISC)/aHDFCBankbranch,isnotpresentandsuchlocationsarecoveredbytheRBIforpaymentsthroughtheNEFTmode.WhataretheadvantagesofNEFToverthecurrentpayoutmode?Investorswhosecurrentpaymentsaresettledthroughademanddraft(DD)/PayOrder(PO)fortheirdividend/redemptionpayoutsaretheprimebeneficiaries.SuchDDs/POsarethendispatchedtotheinvestor,whichwouldtakeacoupleofdaystoreach.Incomparison,throughNEFTthebeneficiarygetsthecreditusuallyonthesamedayorthenextdaydependingonthetimeofsettlement.Thismakespaymentsettlementfaster,saferandriskfree.

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iv)NAVPerformance:NAVOFHDFCGROWTHFUNDisRs.NAV58.91,Dateis2ndJuly,2009.NAVOFTATAGROWTHFUNDisRs.31.4833,Dateis2ndJuly,2009.&NAVOFHDFCEQUITYFUNDisRs.NAV177.86,Dateis2ndJuly,2009.NAVOFTATAPUREGROWTHFUNDisRs.72.34Dateis2ndJuly,2009.

v)DividendHistory:HDFCGROWTHFUNDcurrentdividendis25.02TATAGROWTHFUNDcurrentdividendis14.04&HDFCEQUITYFUNDcurrentdividendis35.702TATAEQUITYFUNDcurrentdividendis28.6397

SobyabovedatawecananalyisethatHDFCGROWTHFUNDisbetterforinvestorwholookforhighdividends.

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THEFUTUREGROWTHDRIVERS:HigherGDPGrowth.India shugefinancialspreadInvestmentSystem.Systematicinvestmentplanningratiowhichisprojectedtodoubleby20092010.Fastpacedurbanizationrisefrom28to40%by2020.GrowingworkingclasspopulationandMiddleclassexpandingby3040millioneveryyear.Upwardmigrationofhouseholdincomelevels.FasteconomicDevelopment.IncreasingdisposableIncomewiththeservicesector.Cheaper(declininginterestrates)&easierfinanceSchemes.Increasingdispensableincomeofruralagriculturesector.Govt.policypromotestaxinvestment&planningSec80C.IncreasinglevelofFDIincountry.EmergenceofIndiaasBPOandIThub.

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Equitymarketshavebeenbuoyantoverthepastfewmonthsprimarilyonthebackofexpectedgoodcorporateperformance,stronggloballiquidityandstrongflowstoemergingmarkets.Therushofplayersintothemutualfundindustryduringthelastdecadecouldbeattributedtolowentrybarriers,bothregulatoryandcompetitive,andthedesireoftheexistingfinancialplayerstobroad-basetheiractivitiesinthefinancialsector.ThelastfewyearsalsohighlightstheemergenceofthemutualfundindustryasamajorforceinIndianfinancialmarkets.WiththetotalAssetsUnderManagement(AUM)increasingfromRs.1,13,005crinMarch2000toRs.565469CrinFeb.2008,the

industry sgrowthhasbeennothingbutexceptional.Andifsizeisthemeasureofdominance,theIndianmutualfundindustrycannowboastofthat.Soletsnowtakealookattheoverallgrowthofthemutualfundindustryinthelastdecade.

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Tosumitup,wecanenumeratethatthehostofthingswhichsuggestthatthemutualfundindustryisallsettoenteraperiodofhighgrowthare:

Arobusteconomy,fledglingstockmarket,increasingawarenessandacceptanceofmutualfundsamonginvestors,strongdomesticcurrency,andhealthycorporateperformances.

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FINANCIALANALYSISObjectiveofthestudyTheprimaryobjectiveofthisstudyistoanalyzethefinancialperformanceofthetwoleadingSectorialMutualFundschemesofHDFCandTATAonthebasisofvariousfinancialparameters,whichwillbediscussedlaterinthefollowingsectionsofthereport.Thiswillhelpinthefollowingways:AcompleteandcomprehensivefinancialanalysiscanbemadebeforemakingadecisiontoinvestinaparticularMutualFundscheme.Anin-depthandcompleteapproachtowardsmanagingaportfolioofinvestmentscanbemadebyanalyzingthefundsonthebasisofthesefinancialparameters.ThisstudywillalsogiveusabriefoverviewofthequalityandconsistencyofthefundmanagementinkeepingupwiththevariousexpectationsandhopesthatthemutualfundinvestorshaveintheAssetManagementCompany(AMC).Italsohelpsustocomparetheindividualfundperformancewiththeperformanceoftheoverallmarket,includingtheBombayStockExchange(BSE),andNationalStockExchange(NSE).Italsohelpsustostudytherisk-returntrade-offi.e.whetherthehand-in-handrelationshipbetweenRiskandReturnholdstrueincaseofMutualfundsornot.

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RationaleofchoosingthesefundsTheabovechosenfundshavehadamarketpresenceofatleastthreeyears.AlsothegovernmentofIndiahasalargeinterestinIndiangrowthstorywhichisincompletewithouthaveamuchimpetusininfrastructuresector.Hence,withthisfactwecanhaveafairideaoftheiracceptabilityinthemarket.Thebasicrationaleofchoosingthesefundsistohaveandpresentabriefideaofthecurrentmutualfundsmarketandtounderstandthelatesttrendsinthemarket.DataCollectionAllthedatausedforthestudywassecondarydata.Thisdatawascollectedfromthefollowingsources:FundsFactSheetsMagazinesJournalInternetKeyinformationmemorandumofvariousschemesMehodologyTheprojectreportismadepreciselykeepinginmindtheAssetmanagementbusinessinJamshedpur.Therefore,Ihaddoneprimaryaswellassecondarydatacollectiontofacilitatemyfindings.Inprimarydatacollection,Ihavemadeaquestionnairerelatingtosales,servicesanddistributionservicesoftheAssetmanagementcompany.Thesamplesizeis40personswhichincludeindividualARNs,

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DistributionhouseRMs,Bankingstaffsandsomecustomers.ThedatawascollectedandthecollatedtogiveabriefideaaboutwhichAMCisgoodinproducts,salesandservices.Thequestionnairealsoshowssometraitslikedependability,trustandsuitabilityoftheAMCsincontexttothevariousrequirementsofthedistributors.Thesecondarydatawascollectedfromtheabyssofdifferentwebsitesandonlinearticlesofexperts.Therawdatawasthencompiledandanalysedusingdifferenttools.PrimaryDatacollection:TheprimarydataisbasicallyconsistingofProducts(offerings,innovationandfundperformance),Services(responsetime,reliability,premiumservices)andDistribution(brokeragesandincentives).

Secondarydatacollection:Itiscollectedfromdifferentwebsites;thisprojectismadeofmoreofsecondarydatacollection.

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CONCLUSION:HDFCEquityFundhasaabilitytospotthesectortrends&ithasdeliveredhandsomely.InCurrentstatusitemergedasthethirdbestperformingdiversifiedequityfund.

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8.AverysmallpartmarkethasbeencoverbyHDFCMF.ItcanincreasethecircleofitsbusinessinsmallandruralareasofeverystateandcitiesofIndiawheretheyanfindahugebusiness.

9.Touproottheinvestmentlevelthecompanyshouldgivetrainingprogrammetofinancialagentswhoapproachtheinvestorfortheinvestments.AndtheyshouldbeawareofallthebenefitsofthemutualFunds.10.CompanyshouldundertaketheCampaign,Roadshows,

Advertisementandother

typeofPublicityfortheeffective

awarenessofdifferentschemesthatareavailableinthemarket.11.Thecompanyshouldarrangeseminarsandpresentations,givingdetailideaaboutsecuritiesandbenefitsofinvestmentinmutualfund.

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GLOSSARYSHORTFORMSAMCAssetManagementCompany.AMFIAssociationofMutualFundofIndia.AUMAssetunderManagement.BSEFIIBombayStockExchange.ForeignInstituteofInvestor.FIIcaninvestinMutualFunds.TheyinvestthroughtheNon-residentrupeeaccount.GILTGovernmentofIndiaLinkedTreasury.TheseFundsarethosethatinvestonlyingovernmentsecurities.IPOIRPInitialPublicOffer.InvestorRiskProfile.

MIPMonthlyInvestmentPlan.MTMMarkettoMarket.NARNetAmountatRisk.NAVetAssetValue.NSENationalStockExchange.ODOfferDocumentisthemostimportantsourceofinformationfortheinvestors.AbridgedversionoftheODiscalledasKeyInformationMemorandum(KIM).PARVALUEItissaidasfacevalue.SARSumatRiskSIPSystematicInvestmentPlan

SWPSystematicWithdrawalPlanWDMWholesaleDebtMarket

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BIBLIOGRAPHY1.www.investsmartindia.com2.www.amfiindia.com3.www.mutualfundsindia.com4.www.valueresearchonline.com5.www.investopedia.com6.www.bcg.com7.www.tatamutual.com8.www.google.com9.www.hdfcfund.com10.www.wikepedia.org

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QUESTIONAIREQ1):Amongthefollowingwhichmutualfundhouseisthebetterfundhouseinthetermsofproducts?a)TataMutualFundb)HDFCMutualFundc)Others()

Q2):Outofthefollowingwhichfundhousegivesyouandyourcustomerbettersatisfactioninthetermsofsalessupport?a)TataMutualFundb)HDFCMutualFundc)Others()

Q3):Amongthefollowingwhichmutualfundhousegivesyoupremiumservicesandaftersalesservices?a)TataMutualFundb)HDFCMutualFundc)Others()

Q4):Whichmutualfundishavingmoreeffectivestrategyregardingthedistributionservicesintermsofbrokerageandincentives?a)TataMutualFundb)HDFCMutualFundc)Others()

Q5):Whichmutualfundismoreaggressive&innovativeintermsofmarketingandsalesi.e.comingwiththeNFOandnewproducts?a)TataMutualFundb)HDFCMutualFundc)Others()

Q6)Whichfundhouseisbetterinthetermsoffundperformanceinlongandshortrun?a)TataMutualFundb)HDFCMutualFundc)Others()

Q7)Whichfundhousesemployeeyoufeelmorecomfortablediscussingyoursalesactivities?a)TataMutualFundb)HDFCMutualFundc)Others()

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Q8)Whichfundhouseismorereliabletoworkwith:a)TataMutualFundb)HDFCMutualFundc)Others()

Q9):Whichofthefollowingfundhousegivesyouquickresponsetoyourqueries?a)TataMutualFundb)HDFCMutualFundc)Others()

Q10):Whichofthefollowingfundhouseyoufeeloverallgoodtoworkwith?

a)TataMutualFund

b)HDFCMutualFund

c)Others(

)

AnySuggestions:

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29800444 a Project on Comparative Analysis of Hdfc Mutual Fund With Other Mutual Funds in the City...

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Transcript of 29800444 a Project on Comparative Analysis of Hdfc Mutual Fund With Other Mutual Funds in the City...