A PROJECT REPORT ON MUTUAL FUNDS AT HDFC Submitted by B.K.SWARNALATHADEVI (1424-09-672-034) Under guidance of Ms.P.

ANITHA

ST. PIOUS X P.G. (MBA) COLLEGE FOR WOMEN

(Affiliated to Osmania University) Snehapuri colony, Nacharam, Hyderabad-500076

SUBMITTED TO OSMANIA UNIVERSITY

A Project Report Submitted in Partial Fulfillment for the Award of the Degree of MASTER OF BUSINESS ADMINISTRATION
(2009-2011) 1

CONTENTS
Unit I
1.1 Introduction 1.2Need of the study 1.3Scope of the study 1.4 objective of the study

Page Numbers
9 14 15 16 17

Unit -II
2.1 Company profile

Unit -III
3.1 Theoretical frame work 31

Unit IV
4.1 Analysis and interpretation 55

Unit V
5.1 Conclusions 5.2 Suggestions 77 78 79

Unit- VI
6.1 Bibliography

ANNEXURE I DECLARATION
I hereby that this Project Report titled MUTUAL FUNDS in HDFC has been carried out by me towards the partial fulfillment of the award of MASTER OF BUSINESS ADMINISTRATION in department of Business Management, ST. PIOUS X P.G. (MBA) COLLEGE FOR WOMEN, O.U., Hyderabad, in the academic year2009-2011. This is my original work and result embodied in this project work has not been submitted to any other university or institution for the award of any degree as per my knowledge and believe.

B.K.SWARNALATHADEVI H.No. 348 CHINTAL BAZAR, BOLARUM, SECUNDERABAD. Pin code 500076. B.K.SWARNALATHADEVI

Name and Address of the Student: Student:

Signature of the

ANNEXURE II CERTIFICATION
This is to certify that the Project Report title The study on MUTUAL FUNDS at HDFCsubmitted in partial fulfilment for the award of MBA Programme of Department of Business Management, O.U. Hyderabad, was carried out by

B.K.SWARNALATHADEVI under my guidance. This has not been submitted to any other University or Institution for the award of any degree/diploma/certificate.

Name and address of the Guide

Signature of the Guide

ANNEXURE III ACKNOWLEDGEMENT

I owe to great many people for the successful completion of this project work. Firstly, I would like to thank HDFC BANK, HYDERABAD for giving me an opportunity to undergo a project study. My indebtedness is due to my guide Shri.A.RAVINDRANATH, SM (P), (ISG). I would like to thank Shri.N.CHANDRA MOULI, SR.SUPERINDENT & Kumari SUCHARITHA.MBA (FINANCE), (NSCI TRANIEE) HDFC for having spared their valuable time, guidance and suggestion for project. And I express my heartful thanks to those respondents, who have whole heartedly supported me directly or indirectly in finishing this interesting project.

LIST OF TABLES
S. NO 1 TABLE NAME SBI EQUITY FUND GROWTH & DIVIDEND ING VYSA EQUITY FUND GROWTH & DIVIDEND UTI EQUITY FUND GROWTH & DIVIDEND HSBC EQUITY FUND GROWTH & DIVIDEND HDFCPRUDENTIAL MUTUAL FUND EQUITY FUND GROWTH & DIVIDEND ABN AMRO EQUITY FUND GROWTH & DIVIDEND NET ASSET VALUE HISTORY PAGE NO. 51

1.1

53

1.2 1.3 1.4

56 58 60

1.5 1.6

63 65

LIST OF GRAPHS

S. NO

GRAPH NAME

PAGE NO.

SBI EQUITY FUND GROWTH & DIVIDEND ING VYSA EQUITY FUND GROWTH & DIVIDEND
UTI EQUITY FUND GROWTH & DIVIDEND HSBC EQUITY FUND GROWTH & DIVIDEND HDFCPRUDENTIAL MUTUAL FUND EQUITY FUND GROWTH & DIVIDEND ABN AMRO EQUITY FUND GROWTH & DIVIDEND PERFORMANCE CHART OF DIVIDEND

52

1.2

54

1.3 1.4 1.5 1.6 1.7

56 59 61 64 66

1.8

PERFORMANCE CHART OF GROWTH

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CHAPTER 1

INTRODUCTION

Introduction to Mutual Fund

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 in offer document. 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. A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody.The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund. Unit Trust of India was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds. In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI are to protect the interest of investors in securities and to promote the development of and to regulate the securities market.

As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type

You can make money from a mutual fund in three ways: 1. Income is earned from dividends on stocks and interest on bonds.

2. If the fund sells securities that have increased in price, the fund has a capital gain. 3. If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit.

Advantages of Mutual Funds:

Professional Management - The primary advantage of funds is the

professional management of your money. Investors purchase funds because

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they do not have the time or the expertise to manage their own portfolios. A mutual fund is a relatively inexpensive way for a small investor to get a fulltime manager to make and monitor investments.

Diversification - By owning shares in a mutual fund instead of owning

individual stocks or bonds, your risk is spread out. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others.

Economies of Scale - Because a mutual fund buys and sells large

amounts of securities at a time, its transaction costs are lower than what an individual would pay for securities transactions.

Liquidity - Just like an individual stock, a mutual fund allows you to

request that your shares be converted into cash at any time.

Simplicity Minimum investment is small.

Disadvantages: Dilution - It's possible to have too much diversification. Because funds

have small holdings in so many different companies, high returns from a few
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investments often don't make much difference on the overall return.

Taxes - When making decisions about your money, fund managers don't

consider your personal tax situation.

DIFFERENT TYPES OF FUNDS: It's important to understand that each mutual fund has different risks and rewards. In general, the higher the potential return, the higher the risk of loss. Although some funds are less risky than others, all funds have some level of risk - it's never possible to diversify away all risk. Each fund has a predetermined investment objective that tailors the fund's assets, regions of investments and investment strategies. At the fundamental level, there are three varieties of mutual funds: 1) Equity funds (stocks) 2) Fixed-income funds (bonds) 3) Money market funds

Money Market Funds The money market consists of short-term debt instruments, mostly Treasury bills.

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Bond/Income Funds Income funds are named appropriately: their purpose is to provide current income on a steady basis. When referring to mutual funds, the terms "fixedincome," "bond," and "income" are synonymous. Bond funds are likely to pay higher returns than certificates of deposit and money market investments, but bond funds aren't without risk. Balanced Funds The objective of these funds is to provide a balanced mixture of safety, income and capital appreciation. The strategy of balanced funds is to invest in a combination of fixed income and equities. A typical balanced fund might have a weighting of 60% equity and 40% fixed income. The weighting might also be restricted to a specified maximum or minimum for each asset class. A similar type of fund is known as an asset allocation fund. Objectives are similar to those of a balanced fund, but these kinds of funds typically do not have to hold a specified percentage of any asset class.

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Equity Funds Funds that invest in stocks represent the largest category of mutual funds. Generally, the investment objective of this class of funds is long-term capital

growth with some income. There are, however, many different types of equity funds because there are many different types of equities. A way to understand the universe of equity funds is to use a style box, an example of which is below. The idea is to classify funds based on both the size of the companies invested in and the Investment style of the manager

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Global/International Funds An international fund (or foreign fund) invests only outside your home country. Global funds invest anywhere around the world, including your home country.

Index Funds The last but certainly not the least important are index funds. An investor in an index fund figures that most managers can't beat the market. An index fund merely replicates the market return and benefits investors in the form of low fees. The Value of Your Fund Net asset value (NAV), which is a fund's assets minus liabilities, is the value of a mutual fund. NAV per share is the value of one share in the mutual fund, and it is the number that is quoted in newspapers.

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When you buy shares, you pay the current NAV per share plus any sales frontend load. When you sell your shares, the fund will pay you NAV less any back-end load.

There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:

Organization of a Mutual Fund

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CONCEPT A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

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18

SCOPE OF THE STUDY: The study is limited to the analysis made on two major types of schemes offered by six banks. Each scheme is calculated in term of their risk and return using different performance measurement theories. The reasons for such performance in immediately analyzed in the commentary. Column charts are used to reflect the portfolio risk and return.

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OBJECTIVES OF THE STUDY:

To understand what Mutual fund companies are.

To understand Mutual fund companies viz. UTI, SBI, ABN AMRO, HDFC,

HSBC & ING VYSYA BANK.

To understand each company performance basing on weekly wise data starting from Monday.

To understand the investment strategies followed by each company.

HYPOTHESIS The Market data that has been used to see whether the risk and return calculated can be used has an indicator to the investor to minimize the risk and maximize the returns on its investment.

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RESEARCH METHODOLOGY: For, the purpose of the study, the data collected from primary and Secondary has sanitized edited and presented in the from of tables and statements. The analysis of the data has been made with the help of certain mathematical techniques lie percentages etc. Where ever feasible and opportiate graphs and diagrams are used.

The collection of data is done through two principles sources viz i. ii. Primary Data Secondary Data

PRIMARY DATA

It is the information collected directly without any reference. In the study, it mainly interviews with concerned officers and staff either individually or collectively. Some of the information had been verified or supplemented with personal observation, the data collected through conducting personal interview
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with the officer of the India bulls.

SECONDARY DATA:

The data that is used in this project is of secondary nature. The data has been collected from secondary sources such has various websites, journals, newspapers, books, etc.

METHOD OF STUDY:

The data collected for the two sectors are of three months data i.e., Nov 2008 Jan 2009.The data for study purpose is taken on weekly basis .The data taken into consideration is every Monday.
NATIONALISED BANKS: SBI, UTI, ING VYSYA CORPORATE BANKS: ABN AMRO, HSBC, HDFC

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LIMITATIONS OF THE STUDY: The study is conducted in short period, due to which the study may not

be detailed in all aspects. The study is limited only to the analysis of different schemes and its

suitability to different investors according to their risk-taking ability. The study is based on secondary data available from monthly fact sheets,

web sites, offer documents, magazines and newspapers etc. as primary data was not accessible. The study is limited by the detailed study of various schemes.

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CHAPTER 2

INDUSTRY PROFILE

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MUTUAL FUNDS:
Phases of mutual funds in India

In India, the Mutual fund Industry has been monopolized by the Unit Trust

of India ever since 1963. Now, the commercial banks like the state bank of

India, Canara Bank, Indian Bank, Bank of India and Punjab National bank

have entered into the field. To add to list are the LIC of India and the private

sector banks and other financial institutions. These institutions have

successfully launched a variety of schemes to meet the diverse needs of

millions of small investors. The Unit Trust of India has introduced huge

portfolio of schemes like unit64, Master gain, Master share etc. It is the

country s largest mutual fund company with over 25 millions investors

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and a corpus exceeding Rs.55,000 crores ,accounting for nearly 10% of the

countrys stock market capitalization. The total corpus of the 13 other

mutual funds in the country is less than Rs. 15,000crores. The SBI fund has

a corpus of Rs. 2925 crores deployed in its 16 schemes servicing over

2.5 million Shareholders.

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 history of mutual funds In India can be broadly divided into four distinct Phases.

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First phase-1964-87 Unit trust of India (UTI) was established on 1963 by an act of parliament. It was up the Reserve Bank of India and functioned under the Regulatory and administrative control of The Reserve Bank of India. In 1987 UTI was delinked from the RBI and the Industrial Development of India (IDBI).Took over the regulatory and administrative control in place Of RBI. The first scheme Launched by UTI 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 funds was the first non-UTI Mutual fund established in June 1987 followed By Can Bank Mutual Fund (Des87), Punjab National Bank
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Mutual Fund (Aug 89), Indian Bank Fund (Nov89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (oct92).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-1992-2003(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 investor a wide choice of fund families. Also, 1993 was the Year in which the first Mutual fund Regulation came into being, under which all mutual funds, expect UTI were to be Registered and governed. The erstwhile kothari pioneer (Now merged with Franklin temple ton) was the First private sector mutual fund registered In July 1993.
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The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulation in 1996. The industry now functions under the SEBI (Mutual Funds) Regulation 1996 Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 was bif-acurated into separate Entities. One is the specific under taking 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 schemes, Assured return and certain other schemes. The specified under taking of Unit Trust India, functioning under an administrator and the rules framed by government of India and does not come under the purview of the mutual fund regulations. The second is UTI mutual fund Ltd. sponsored by SBI, PNB, BOB and LIC.
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It is registered with SEBI and functions under the mutual funds Regulations. With the bif-acuration of the Rest while 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 the end of October 31, 2003, there were 31 funds which manage assets Of Rs 126726 crores under 386 schemes.

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CHAPTER 3

COMPANY PROFILE

31

OVERVIEW OF THE HDFC

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. As on 31st December, 2009 the authorized share capital of the Bank is Rs. 550 crore. The paid-up capital as on said date is Rs. 455,23,65,640/- (45,52,36,564 equity shares of Rs. 10/- each). The HDFC Group holds 23.87 % of the Bank's equity and about 16.94 % of the equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). 27.46 % of the equity is held by Foreign Institutional Investors

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(FIIs) and the Bank has about 4,58,683 shareholders. The shares are listed on the Bombay Stock Exchange Limited and The National Stock Exchange of India Limited. The Bank's American Depository Shares (ADS) are listed on the New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange under ISIN No US40415F2002. Mr. Jagdish Capoor took over as the bank's Chairman in July 2001. Prior to this, Mr. Capoor was Deputy Governor of the RBI HDFC has since emerged as the largest residential mortgage finance institution in the country. The corporation has had a series of share issues raising its capital to Rs. 119 crores. The net worth of the corporation as on March 31, 2000 stood at Rs. 2,096 crores. HDFC operates through 75 locations throughout the country with its Corporate Headquarters in Mumbai, India. HDFC also has an international office in Dubai, U.A.E., with service associates in Kuwait, Oman and Qatar.

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STANDARD LIFE

Standard Life is Europe's largest mutual life assurance company. Standard Life, which has been in the life insurance business for the past 175 years, is a modern company surviving quite a few changes since selling its first policy in 1825. The company expanded in the 19th century from its original Edinburgh premises, opening offices in other towns and acquiring other similar businesses. Standard Life currently has assets exeeding over 70 billion under its manage ment and has the distinction of being accorded "AAA" rating consequently for the past six years by Standard & Poor. The Joint Venture HDFC Standard Life Insurance Company Limited was one of the first companies to be granted licence by the IRDA to operate in life insurance sector. Each of the JV player is highly rated and been conferred with many awards. HDFC is rated 'AAA' by both CRISIL and ICRA. Similarly, Standard Life is rated 'AAA' both by Moody's and Standard and Poors. These reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.

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HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000. HDFC is the majority stakeholder in the insurance JV with 81.4 % stake and Standard Life has a stake of 18.6%. Mr. Deepak Satwalekar is the MD and CEO of the venture. HDFC Standard Life Insurance Company Ltd. is one of Indias 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.), Indias leading housing finance institution and The Standard Life Assurance Company, a leading provider of financial services from the United Kingdom.

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Key strengths As a joint venture of leading financial services groups, HDFC Standard Life has the financial expertise required to manage your long-term investments safely and efficiently. The company has a range of individual and group solutions, which can be easily customized to specific needs. The group solutions have been designed to offer complete flexibility combined with a low charging structure.

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. In short, The Most Obvious choice for all.

Values:
1. Integrity: Honesty and truthful in every action, Transparency, Stick to Principles irrespective of outcome, Be just and fair to everyone. 2. Innovation: Building a store house of treasures through experiences, looking at every product and process through fresh eyes everyday.

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3.Customer Centric: Understand customers expectations by keeping him as the centre point, Listen actively, Understand customer needs and deliver solutions, Customer interest always supreme. 4. People Care: Genuinely understanding the people we work with, Guiding their development through training and support, Helping them develop requisite skills to reach their true potential, Know them on a personal front, Create an environment of trust and openness, Respect for the time of others. 5. Team Work: Whole team takes the ownership of the deliverables, Consult all involved, understand and arrive at a common objective, Co-operate and support across departmental boundaries, Identify strengths and weaknesses accordingly allocate responsibility to achieve common objectives 6. Joy and Simplicity: Environment that fosters fun in the form of celebration of individual and team success, To encourage work as fun that contributed to personal and organizational development, Joy is also derived through simple processes and forms, Being approach able, radiates simplicity and spreads a sense of joy, more over lead to results.

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HDFC Group Companies are: HDFC Home Loans. HDFC Deposits. HDFCSL Insurance (Respect Yourself). HDFC Mutual Fund. HDFC Securitisation. HDFC Intelnet. HDFC Securities. HDFC Future Activities. HDFC Distribution. HDFC Centre for Housing Finance. CIBIL. CHUBB. HDFC Bank. HDFC Reality.Com

HDFC Asset Management Company Limited (AMC) HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 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 HDFC Asset Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is Rs. 25.161 crore. The present equity shareholding pattern of the AMC is as follows : Particulars Housing Development Finance Corporation Limited Standard Life Investments Limited % of the paid up equity capital 60 40

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a review of its overall strategy, had decided to divest its Asset Management business in 38

India. The AMC had entered into an agreement with ZIC to acquire the said business, subject to necessary regulatory approvals.

On obtaining the regulatory approvals, the following Schemes of Zurich India Mutual Fund have migrated to HDFC Mutual Fund on June 19, 2003. These Schemes have been renamed as follows: Former Name Zurich India Equity Fund Zurich India Prudence Fund Zurich India Capital Builder Fund Zurich India TaxSaver Fund Zurich India Top 200 Fund Zurich India High Interest Fund Zurich India Liquidity Fund Zurich India Sovereign Gilt Fund New Name HDFC Equity Fund HDFC Prudence Fund HDFC Capital Builder Fund HDFC TaxSaver HDFC Top 200 Fund HDFC High Interest Fund HDFC Cash Management Fund HDFC Sovereign Gilt Fund*

*HDFC Sovereign Gilt Fund has been wound up in March 2006 The AMC is managing 24 open-ended schemes of the Mutual Fund viz. HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF), HDFC Income Fund (HIF) HDFC Liquid Fund (HLF), HDFC Long Term Advantage Fund (HLTAF), HDFC Children's Gift Fund (HDFC CGF), HDFC Gilt Fund (HGILT), HDFC Short Term Plan (HSTP), 39

HDFC Index Fund, HDFC Floating Rate Income Fund (HFRIF), HDFC Equity Fund (HEF), HDFC Top 200 Fund (HT200), HDFC Capital Builder Fund (HCBF), HDFC TaxSaver (HTS), HDFC Prudence Fund (HPF), HDFC High Interest Fund (HHIF), HDFC Cash Management Fund (HCMF), HDFC MF Monthly Income Plan (HMIP), HDFC Core & Satellite Fund (HCSF), HDFC Multiple Yield Fund (HMYF), HDFC Premier Multi-Cap Fund (HPMCF), HDFC Multiple Yield Fund . Plan 2005 (HMYF-Plan 2005), HDFC Quarterly Interval Fund (HQIF) and HDFC Arbitrage Fund (HAF). The AMC is also managing 10 closed ended Schemes of the HDFC Mutual Fund viz. HDFC Long Term Equity Fund, HDFC Mid-Cap Opportunities Fund, HDFC Infrastructure Fund, HDFC Fixed Maturity Plans - Series V, HDFC Fixed Maturity Plans - Series VII, HDFC Fixed Maturity Plans - Series VIII, 40

HDFC Fixed Maturity Plans - Series IX, HDFC Fixed Maturity Plans - Series X, HDFC Fixed Maturity Plans - Series XI HDFC Fixed Maturity Plans - Series XII.

The AMC is also providing portfolio management / advisory services and such activities are not in conflict with the activities of the Mutual Fund. The AMC has renewed its registration from SEBI vide Registration No. - PM / INP000000506 dated December 21, 2009 to act as a Portfolio Manager under the SEBI (Portfolio Managers) Regulations, 1993. The Certificate of Registration is valid from January 1, 2010 to December 31, 2012. Name of Director 1 2 3 4 5 6 7 8 9 10 11 12 Mr. Deepak S. Parekh Mr. Keshub Mahindra Mr. Shirish B. Patel Mr. B. S. Mehta Mr. D. M. Sukthankar Mr. D. N. Ghosh Dr. S. A. Dave Dr. Ram S. Tarneja Mr. N. M. Munjee Dr. Bimal Jalan Mr. D. M. Satwalekar Dr. J. J. Irani Chairman Vice Chairman Independent Independent Independent Independent Independent Independent Independent Independent Independent Non-executive Category*

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Awards:
ICRA Mutual Funds Ranking 2009 HDFC Growth Fund was ranked as ICRA ~ MFR Five Star Fund indicating performance among the top 10% in the category of Open Ended Diversified Equity Defensive' for the three - year period ending December 31, 2008 (from amongst 55 schemes) at ICRA Mutual Fund Awards 2009 HDFC Multiple Yield Fund - Plan 2005 was ranked as ICRA ~ MFR Five Star Fund indicating performance among the top 10% in the category of Open Ended Marginal Equity' for the one - year period ending December 31, 2008 (from amongst 26 schemes) at ICRA Mutual Fund Awards 2009 Lipper Fund Awards 2009 HDFC Equity Fund - Growth Option was once again awarded the Best Fund over Ten Years in the Equity India Category (from amongst 34/23/18/14 schemes) for the period ending December 31, 2008/2007/2006/2005 at Lipper Fund Awards 2009 (India) for fourth year in a row. HDFC Prudence Fund Growth Option was awarded the Best Fund for over Five years in the Mixed Asset INR Aggressive category (from amongst 7 schemes) for the period ending December 31, 2008 at Lipper Fund Awards 2009 (Gulf Universe). HDFC Prudence Fund - Growth Option was awarded the Best Fund over Ten Years in the Mixed Asset INR Aggressive category (from amongst 6 schemes) for the period ending December 31, 2008 at Lipper Fund Awards 2009 (India). CNBC- TV18- CRISIL Mutual Fund Awards 2009 HDFC Cash Management Fund - Savings Plan won the CNBC - TV 18 - CRISIL Mutual Fund of the Year Award 2009 in the Consistent Liquid Fund under CRISIL ~ CPR for 42

outstanding performance for the calendar year 2008 (from amongst 13 schemes) at CNBC TV 18 - CRISIL Mutual Fund of the Year Awards 2009. HDFC Cash Management Fund - Savings Plan is the only Scheme to have been awarded under this category

Products:
Equity / Growth Fund Invest primarily in equity and equity related instruments. Children's Gift Fund Children's Gift Fund Fixed Maturity Plan Invest primarily in Debt / Money Market Instruments and Government Securities... Liquid Funds Provide high level of liquidity by investing in money market and debt instruments. Debt/ Income Fund Invest in money market and debt instruments and provide optimum balance of yield, ... Quarterly Interval Fund The primary objective of the Scheme is to generate regular income through investme...

REGISTERED OFFICE HDFC Bank House, Senapati Bapat Marg, Lower Parel, Website: www.hdfcbank.com 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

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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.

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MUTUAL FUND
Mutual fund is a trust that pools money from a group of investors (sharing common financial goals) and invest the money thus collected into asset classes that match the stated investment objectives of the scheme. Since the stated investment objective of a mutual fund scheme generally forms the basis for an investor's decision to contribute money to the pool, a mutual fund can not deviate from its stated objectives at any point of time. Every Mutual Fund is managed by a fund manager, who using his investment management skills and necessary research works ensures much better return than what an Investor can manage on his own. The capital appreciation and other incomes earned from these investments are passed on to the investors (also known as unit holders) in proportion of the number of units they own.

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When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors.

For example: A. If the market value of the assets of a fund is Rs. 100,000 B. The total number of units issued to the investors is equal to 10,000. C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00 D. Now if an investor 'X' owns 5 units of this scheme E. Then his total contribution to the fund is Rs. 50 (i.e. Number of units held multiplied by the NAV of the scheme)

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47

ADVANTAGES OF MUTUAL FUND

1. Portfolio Diversification Mutual Funds invest in a well-diversified portfolio of securities which enables investor to hold a diversified investment portfolio (whether the amount of investment is big or small). 2. Professional Management Fund manager undergoes through various research works and has better investment management skills which ensure higher returns to the investor than what he can manage on his own. 3. Less Risk Investors acquire a diversified portfolio of securities even with a small

investment in a Mutual Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities. 4. Low Transaction Costs Due to the economies of scale (benefits of larger volumes), mutual funds pay lesser transaction costs. These benefits are passed on to the investors. 5. Liquidity An investor may not be able to sell some of the shares held by him very easily and quickly, whereas units of a mutual fund are far more liquid. 6. Choice of Schemes Mutual funds provide investors with various schemes with different investment objectives. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own financial goals. These schemes further have different plans/options 7. Transparency Funds provide investors with updated information pertaining to the markets and the schemes. All material facts are disclosed to investors as required by the regulator.

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8. Flexibility Investors also benefit from the convenience and flexibility offered by Mutual Funds. Investors can switch their holdings from a debt scheme to an equity scheme and vice-versa. Option of systematic (at regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes. 9. Safety Mutual Fund industry is part of a well-regulated investment environment where the interests of the investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced.

DISADVANTAGES OF MUTUAL FUND

1.Costs Control Not in the Hands of an Investor Investor has to pay investment management fees and fund distribution costs as a percentage of the value of his investments (as long as he holds the units), irrespective of the performance of the fund. 2. No Customized Portfolios The portfolio of securities in which a fund invests is a decision taken by the fund manager. Investors have no right to interfere in the decision making process of a fund manager, which some investors find as a constraint in achieving their financial objectives. 3. Difficulty in Selecting a Suitable Fund Scheme Many investors find it difficult to select one option from the plethora of funds/schemes/plans available. For this, they may have to take advice from financial planners in order to invest in the right fund to achieve their objectives.

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TYPES OF MUTUAL FUNDS

General Classification of Mutual Funds Open-end Funds / Closed-end Funds Open-end Funds Funds that can sell and purchase units at any point in time are classified as Open-end Funds. The fund size (corpus) of an open-end fund is variable (keeps changing) because of continuous selling (to investors) and repurchases (from the investors) by the fund. An open-end fund is not required to keep selling new units to the investors at all times but is required to always repurchase, when an investor wants to sell his units. The NAV of an open-end fund is calculated every day. Closed-end Funds Funds that can sell a fixed number of units only during the New Fund Offer (NFO) period are known as Closed-end Funds. The corpus of a Closed-end Fund remains unchanged at all times. After the closure of the offer, buying and redemption of units by the investors directly from the Funds is not allowed. However, to protect the interests of the investors, SEBI provides investors with two avenues to liquidate their positions: 50

Closed-end Funds are listed on the stock exchanges where investors can buy/sell units from/to each other. The trading is generally done at a discount to the NAV of the scheme.

The NAV of a closed-end fund is computed on a weekly basis (updated every Thursday). Closed-end Funds may also offer "buy-back of units" to the unit holders. In this case, the corpus of the Fund and its outstanding units do get changed.

Load Funds/no-load funds Load Funds Mutual Funds incur various expenses on marketing, distribution, advertising, portfolio churning, fund managers salary etc. Many funds recover these expenses from the investors in the form of load. These funds are known as Load Funds. A load fund may impose following types of loads on the investors:

Entry Load Also known as Front-end load, it refers to the load charged to an investor at the time of his entry into a scheme. Entry load is deducted from the investors contribution amount to the fund.

Exit Load Also known as Back-end load, these charges are imposed on an investor when he redeems his units (exits from the scheme). Exit load is deducted from the redemption proceeds to an outgoing investor.

Deferred Load Deferred load is charged to the scheme over a period of time. Contingent Deferred Sales Charge (CDSS) In some schemes, the percentage of exit load reduces as the investor stays longer with the fund. This type of load is known as Contingent Deferred Sales Charge.

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No-load Funds All those funds that do not charge any of the above mentioned loads are known as Noload Funds. Tax-exempt Funds/ Non-Tax-exempt Funds Tax-exempt Funds Funds that invest in securities free from tax are known as Tax-exempt Funds. All openend equity oriented funds are exempt from distribution tax (tax for distributing income to investors). Long term capital gains and dividend income in the hands of investors are taxfree. Non-Tax-exempt Funds Funds that invest in taxable securities are known as Non-Tax-exempt Funds. In India, all funds, except open-end equity oriented funds are liable to pay tax on distribution income. Profits arising out of sale of units by an investor within 12 months of purchase are categorized as short-term capital gains, which are taxable. Sale of units of an equity oriented fund is subject to Securities Transaction Tax (STT). STT is deducted from the redemption proceeds to an investor

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 BROAD MUTUAL FUND TYPES

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1. Equity Funds Equity funds are considered to be the more risky funds as compared to other fund types, but they also provide higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest for long term i.e. for 3 years or more. There are different types of equity funds each falling into different risk bracket. In the order of decreasing risk level, there are following types of equity funds: o Aggressive Growth Funds - In Aggressive Growth Funds, fund managers aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive Growth Funds become more volatile and thus, are prone to higher risk than other equity funds. o Growth Funds - Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are expected to outperform the market in the future. Without entirely adopting speculative strategies, Growth Funds invest in those companies that are expected to post above average earnings in the future. o Speciality Funds - Speciality Funds have stated criteria for investments and their portfolio comprises of only those companies that meet their criteria. Criteria for some speciality funds could be to invest/not to invest in particular regions/companies. Speciality funds are concentrated and thus, are comparatively riskier than diversified funds. There are following types of speciality funds:

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1. Sector Funds: Equity funds that invest in a particular sector/industry of the market are known as Sector Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer Goods) which is why they are more risky than equity funds that invest in multiple sectors 2.Foreign Securities Funds: Foreign Securities Equity Funds have the option to invest in one or more foreign companies. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk. 3.Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower marketcapitalization than large capitalization companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap companies is less than that of big, blue chip companies (less than Rs. 2500 crores but more than Rs. 500 crores) and Small-Cap companies have market capitalization of less than Rs. 500 crores. Market Capitalization of a company can be calculated by multiplying the market price of the company's share by the total number of its outstanding shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of Large-Cap Companies which gives rise to volatility in share prices of these companies and consequently, investment gets risky. 4. Diversified Equity Funds Except for a small portion of investment in liquid money market, diversified equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well diversified and reduce sector-specific or companyspecific risk. However, like all other funds diversified equity funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity Linked Savings Schemes (ELSS). As per the mandate, a minimum 55

of 90% of investments by ELSS should be in equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which he may have received any tax exemption(s) in the past. a. Equity Index Funds - Equity Index Funds have the objective to match the performance of a specific stock market index. The portfolio of these funds comprises of the same companies that form the index and is constituted in the same proportion as the index. Equity index funds that follow broad indices (like S&P CNX Nifty, Sensex) are less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX Bank Index etc). Narrow indices are less diversified and therefore, are more risky.

2.Debt/IncomeFunds Funds that invest in medium to long-term debt instruments issued by private companies, banks, financial institutions, governments and other entities belonging to various sectors (like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors. In order to ensure regular income to investors, debt (or income) funds distribute large fraction of their surplus to investors. Although debt securities are generally less risky than equities, they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment. To minimize the risk of default, debt funds usually invest in securities from issuers who are rated by credit rating agencies and are considered to be of "Investment Grade". Debt funds that target high returns are more risky. Based on different investment objectives, there can be following types of debt funds:

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o Diversified Debt Funds - Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. The best feature of diversified debt funds is that investments are properly diversified into all sectors which results in risk reduction. Any loss incurred, on account of default by a debt issuer, is shared by all investors which further reduces risk for an individual investor. o Focused Debt Funds* - Unlike diversified debt funds, focused debt funds are narrow focus funds that are confined to investments in selective debt securities, issued by companies of a specific sector or industry or origin. Some examples of focused debt funds are sector, specialized and offshore debt funds, funds that invest only in Tax Free Infrastructure or Municipal Bonds. Because of their narrow orientation, focused debt funds are more risky as compared to diversified debt funds. Although not yet available in India, these funds are conceivable and may be offered to investors very soon. o Assured Return Funds - Although it is not necessary that a fund will meet its objectives or provide assured returns to investors, but there can be funds that come with a lock-in period and offer assurance of annual returns to investors during the lock-in period. Any shortfall in returns is suffered by the sponsors or the Asset Management Companies (AMCs). These funds are generally debt funds and provide investors with a low-risk investment opportunity. However, the security of investments depends upon the net worth of the guarantor (whose name is specified in advance on the offer document). To safeguard the interests of investors, SEBI permits only those funds to offer assured return schemes whose sponsors have adequate net-worth to guarantee returns in the future. In the past, UTI had offered assured return schemes (i.e. Monthly Income Plans of UTI) that assured specified returns to investors in the future. UTI was not able to fulfill its promises and faced large shortfalls in returns. Eventually, government had to intervene and took over UTI's payment obligations on itself. Currently, no AMC in India offers assured return schemes to investors, though possible.

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o Fixed Term Plan Series - Fixed Term Plan Series usually are closed-end schemes having short term maturity period (of less than one year) that offer a series of plans and issue units to investors at regular intervals. Unlike closed-end funds, fixed term plans are not listed on the exchanges. Fixed term plan series usually invest in debt / income schemes and target short-term investors. The objective of fixed term plan schemes is to gratify investors by generating some expected returns in a short period. nds | Closed-end

3.GiltFunds

Also known as Government Securities in India, Gilt Funds invest in government papers (named dated securities) having medium to long term maturity period. Issued by the Government of India, these investments have little credit risk (risk of default) and provide safety of principal to the investors. However, like all debt funds, gilt funds too are exposed to interest rate risk. Interest rates and prices of debt securities are inversely related and any change in the interest rates results in a change in the NAV of debt/gilt funds in an opposite direction. 4. Money Market/Liquid Funds Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt instruments. These securities are highly liquid and provide safety of investment, thus making money market / liquid funds the safest investment option when compared with other mutual fund types. However, even money market / liquid funds are exposed to the interest rate risk. The typical investment options for liquid funds include Treasury Bills (issued by governments), Commercial papers (issued by companies) and Certificates of Deposit (issued by banks).

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5. HybridFunds As the name suggests, hybrid funds are those funds whose portfolio includes a blend of equities, debts and money market securities. Hybrid funds have an equal proportion of debt and equity in their portfolio. There are following types of hybrid funds in India: a. Balanced Funds The portfolio of balanced funds include assets like debt securities, convertible securities, and equity and preference shares held in a relatively equal proportion. The objectives of balanced funds are to reward investors with a regular income, moderate capital appreciation and at the same time minimizing the risk of capital erosion. Balanced funds are appropriate for conservative investors having a long term investment horizon. b. Growth-and-Income Funds Funds that combine features of growth funds and income funds are known as Growth-and-Income Funds. These funds invest in companies having potential for capital appreciation and those known for issuing high dividends. The level of risks involved in these funds is lower than growth funds and higher than income funds. 6. Commodity Funds Those funds that focus on investing in different commodities (like metals, food grains, crude oil etc.) or commodity companies or commodity futures contracts are termed as Commodity Funds. A commodity fund that invests in a single commodity or a group of commodities is a specialized commodity fund and a commodity fund that invests in all available commodities is a diversified commodity fund and bears less risk than a specialized commodity fund. Precious Metals Fund and Gold Funds (that invest in gold, gold futures or shares of gold mines) are common examples of commodity funds. 7. Real Estate Funds 59

Funds that invest directly in real estate or lend to real estate developers or invest in shares/securitized assets of housing finance companies, are known as Specialized Real Estate Funds. The objective of these funds may be to generate regular income for investors or capital appreciation. 8. ExchangeTradedFunds (ETF) Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-end mutual fund. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock at index linked prices. The biggest advantage offered by these funds is that they offer diversification, flexibility of holding a single share (tradable at index linked prices) at the same time. Recently introduced in India, these funds are quite popular abroad.

9. Fund of Funds Mutual funds that do not invest in financial or physical assets, but do invest in other mutual fund schemes offered by different AMCs, are known as Fund of Funds. Fund of Funds maintain a portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market instruments or non financial assets. Fund of Funds provide investors with an added advantage of diversifying into different mutual fund schemes with even a small amount of investment, which further helps in diversification of risks. However, the expenses of Fund of Funds are quite high on account of compounding expenses of investments into different mutual fund schemes. Risk Hierarchy of Different Mutual Funds Thus, different mutual fund schemes are exposed to different levels of risk and investors should know the level of risks associated with these schemes before investing. The 60

graphical representation hereunder provides a clearer picture of the relationship between mutual funds and levels of risk associated with these funds:

MUTUAL FUND STRUCTURE

The SEBI (Mutual Funds) Regulations 1993 define a mutual fund (MF) as a fund established in the form of a trust by a sponsor to raise monies by the Trustees through the sale of units to the public under one or more schemes for in vesting in securities in accordance with these regulations. These regulations have since been replaced by the SEBI (Mutual Funds) Regulations, 1996. The structure indicated by the new regulations is indicated as under.

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

Sponsor Company (E.g. Prudential, HDFC) Managed by a Board of Trustees Mutual Fund (E.g. Prudential, HDFC, Mutual Fund) AMC (e.g. prudential HDFC Asset Management Company) Custodian Registrar

Establishes the MF as a trust Registers the MF with SEBI

Hold unit-holders funds in MF enter into an agreement with SEBI and ensure compliance Float MF funds Manages the fund as per SEBI guidelines and AMC agreement Provide custodial services Provides registrar and transfer services Provides the network for distribution of the scheme to the investors

Distributors

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Choosing a fund
The first step to investing in Mutual Fund is to define the objective of investing. You should clearly lay down the purpose for which you desire to invest. There are several schemes tailor made to meet certain personal financial goals (children's education, marriage, retirement etc.) which can be availed of. You should define the tenure of investment and the risk appetite you have. Thereafter, you can select a fund type that best meets your need i.e. income schemes, liquid schemes, tax saving schemes, equity schemes etc. Given the plethora of fund options available to you, you can then choose the particular fund that you are comfortable with. You can choose the fund on various criteria but primarily these can be the following: The track record of performance of schemes over the last few years managed by Quality of management and administration Parentage of the Mutual Fund Quality and adequacy of disclosures Service levels The price at which you can enter/exit (i.e. entry load / exit load) the scheme and The market price of the units of the scheme (where available) to see the

the fund

its impact on overall return discount/premium that the market .assigns to the stated NA V of the scheme 63

Independent rating of the schemes, if available

You could be investing in a mutual fund either at the initial stage when the mutual fund approaches the market through an offer document route or at a subsequent stage. If you choose to invest at the initial stage, the offer document would detail the schemes being offered and the manner of investing. The manner is usually similar to that of investing any public issue of any security (equity/debt). If you are planning to purchase the units subsequently. Then the following choices exist: 1. A close ended scheme. If the desired, units are of a close-ended scheme, then the

investor would be able to purchase them at the stock exchange where the MF has listed them. This purchase would resemble the purchase of an equity share wherein the investor would pay the quoted price of the unit as well as a brokerage for the purchase transaction. In the case of a close ended scheme, the sale also is affected through the stock exchange mechanism and resembles the sale of equity share. The pricing for the transaction, as was mentioned earlier, is driven by the price the units quote. This is driven by the NA V (Net Asset Value) of the scheme. The price, however, may be either at a discount or premium to the NA V. 2. Purchasing a unit in a open-ended scheme is different as there is no exchange

where these units are traded. Their price ret1ects the NA V of the scheme. The mutual fund in an open-ended scheme sells these units to the investor at the NA V (plus a sale / entry load). Selling units in an open-ended scheme is similar to the way they are purchased. It is the mutual fund that buys back the units and at a price based on the NA V. The actual price is the NA V less the exit load. The exit load is similar in concept to the entry load.

The Ground rules of Mutual Fund Investing

Moses gave to his followers 10 commandments that were to be followed till eternity. The world of investments too has several ground rules meant for investors who are novices in their own right and wish to enter the myriad world of investments. These come in handy 64

for there is every possibility of losing what one has if due care is not taken. 1. Assess yourself: Self-assessment of one's needs; expectations and risk profile is

of prime importance failing which; one will make more mistakes in putting money in right places than otherwise. One should identify the degree of risk bearing capacity one has and also clearly state the expectations from the investments. Irrational expectations will only bring pain.

2.

Try to understand where the money is going: It is important to identify the

nature of investment and to know if one is compatible with the investment. One can lose substantially if one picks the wrong kind of mutual fund. In order to avoid any confusion it is better to go through the literature such as offer document and fact sheets that mutual fund companies provide on their funds. 3. Don't rush in picking funds, think first: one first has to decide what he wants

the money for and it is this investment goal that should be the guiding light for all investments done. It is thus important to know the risks associated with the fund and align it with the quantum of risk one is willing to take. One should take a look at the portfolio of the funds for the purpose. Excessive exposure to any specific sector should be avoided, as it will only add to the risk of the entire portfolio. Mutual funds invest with a certain ideology such as the "Value Principle" or "Growth Philosophy". Both have their share of critics but both philosophies work for investors of different kinds. Identifying the proposed investment philosophy of the fund will give an insight into the kind of risks that it shall be taking in future. 4. Invest. Don't speculate: A common investor is limited in the degree of risk that

he is willing to take. It is thus of key importance that there is thought given to the process of investment and to the time horizon of the intended investment. One should abstain from speculating which in' other words would mean getting out of one fund and investing in another with the intention of making quick money. One would do well to remember that nobody can perfectly time the market so staying invested is the best option unless 65

there are compelling reasons to exit. 5. Don't put all the eggs in one basket: This old age adage is of utmost importance.

No matter what the risk profile of a person is, it is always advisable to diversify the risks associated. So putting one's money in different asset classes is generally the best option as it averages the risks in each category. Thus, even investors of equity should be judicious and invest some portion of the investment in debt. Diversification even in money in the hands of several fund managers. This might reduce the maximum return possible, but will also reduce the risks. 6. Be regular: Investing should be a habit and not an exercise undertaken at one's wishes, if one has to really benefit from them. As we said earlier, since it is extremely difficult to know when to enter or exit the market. It is important to beat the market by being systematic. The basic philosophy of Rupee cost averaging would suggest that if one invests regularly through the ups and downs of the market, he would stand a better chance of generating more returns than the market for the entire duration. The SIPs (Systematic Investment Plans) offered by all funds helps in being systematic.

Performance Measures of Mutual Funds

Mutual Fund industry today, with about 34 players and more than five hundred schemes, is one of the most preferred investment avenues in India. However with a plethora of schemes to choose from the retail investor faces problems in selecting funds. Factors such as investment strategy and management style are qualitative, but the funds record is an important indicator too. Though past performance alone cannot be indicative of future performance, it is, frankly, the only quantitative way to judge how good a fund is at present. Therefore, there is a need to correctly assess the past performance of different mutual funds. Worldwide, good Mutual fund companies over are known by their AMCs and this fame is directly linked to their superior stock selection skills. For mutual funds to grow, AMCs must be held accountable for their selection of stocks. In other words, there must be some performance indicator that will reveal the quality of stock selection of various AMCs. 66

Return alone should not be considered as the basis of measurement of the performance of a mutual fund scheme. It should also include the risk taken by the fund manager because different funds will have different levels of risk attached to them. Risk associated with a fund, in a general, can be defined as variability or fluctuations in the returns generated by it. The higher the t1uctuations in the returns of a fund during a given period, higher will be the risk associated with it. These fluctuations in the returns generated by a fund are resultant of two guiding forces. First, general market fluctuations, which affect all the securities present in the market, called market risk or systematic risk and second, t1uctuations due to specific securities present in the portfolio of the fund, called unsystematic risk. The Total Risk of a given fund is sum of these t\VO and is measured in terms of standard deviation of returns of the fund. Systematic risk. On the other hand is measured in terms of Beta, which represents t1uctuations in the NA V of the fund vis-vis market. The more responsive the NA V 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. While unsystematic risk can be diversified through investments in a number of instruments, systematic risk can not. By using the risk return relationship, we try to assess the competitive strength of the mutual funds vis--vis one another in a better way: In order to determine the risk-adjusted returns of investment portfolios, several eminent authors have worked since 1960s to develop composite performance indices to evaluate a portfolio by comparing alternative portfolios within a particular risk class.

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The most important and widely used measures of performance are: The Treynor Measure The Sharpe Measure Jenson Model Fama Model The Trevnor Measure Developed by Jack Treynor, this performance measure evaluates funds on the basis of Treynor's Index. This Index is a ratio of return generated by the fund over and above risk free rate of return (generally taken to be the return on securities backed by the government, as there is no credit risk associated), during a given period and systematic risk associated with it (beta). Symbolically, it can be represented as: Treynor's index (Ti) = (Ri - Rf)/Bi Where, Ri represents return on fund, Rf is risk free rate of return and Hi is beta of the fund. All risk-averse investors would like to maximize this value. While a high and positive Treynor's Index shows a superior risk-adjusted performance of a fund, a low and negative Treynor's Index is an indication of unfavorable performance. The Sharpe Measure In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is a ratio of returns generated by the fund over and above risk free rate of return and the total risk associated with it. According to Sharpe, it is the total risk of the fund that the investors are concerned about. So, the model evaluates funds on the basis of reward per 68

unit of total risk. Symbolically, it can be written as: Sharpe Index (Si) = (Ri Rf)/Si Where, Si is standard deviation of the fund. While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund, a low and negative Sharpe Ratio is an indication of unfavorable performance.

Comparison of Sharpe and Treynor

Sharpe and Treynor measures are similar in a way, since they both divide the risk premium by a numerical risk measure. The total risk is appropriate when we are evaluating the risk return relationship for well diversified portfolios. On the other hand, the systematic risk is the relevant measure of risk when we are evaluating less than fully diversified portfolios or individual stocks. For a well-diversified portfolio the total risk is equal to systematic risk. Rankings based on total risk (Sharpe measure) and systematic risk (Treynor measure) should be identical for a well-diversified portfolio,a s thtotal risk e is reduced to systematic risk. Therefore, a poorly diversified fund that ranks higher on Treynor measure, compared with another fund that is highly diversified, will rank lower on Sharpe Measure. Jenson Model Jensons model proposes another risk adjusted performance measure. This measure was developed by Michael Jenson and is sometimes referred to as the Differential Return Method. This measure involves evaluation of the returns that the fund has generated vs. the returns actually expected out of the fund given the level of its systematic risk. The surplus between the two returns is called Alpha, which measures the performance of a fund compared with the actual returns over the period. Required return of a fund at a given level of risk (Bi) can be calculated as: Ri = Rf+ Bi (Rm Rf) Where, Rm is average market return during the given period. After calculating it alpha can be obtained by subtracting required return from the actual return of the fund. 69

Higher alpha represents superior performance of the fund and vice versa. Limitation of this model is that it considers only systematic risk not the entire risk associated with the fund and an ordinary investor can not mitigate unsystematic risk, as his knowledge of market is primitive.

Fam a M odel The Eugene Fama model is an extension of Jenson model. This model compares the performance, measured in terms of returns, of a fund with the required return commensurate with the total risk associated with it. The difference between these two is taken as a measure of the performance of the fund and is called net selectivity. The net selectivity represents the stock selection skill of the fund manager, as it is the excess return over and above the return required to compensate for the total risk taken by the fund manager. Higher value of which indicates that fund manager has earned returns well above the return commensurate with the level of risk taken by him. Required return can be calculated as: Ri = Rf + Si/Sm*(Rm Rf) Where, Sm is standard deviation of market returns. The net selectivity is then calculated by subtracting this required return from the actual return of the fund. Among the above performance measures, two models namely, Treynor measure and Jenson model use systematic risk based on the premise that the unsystematic risk is diversifiable. These models are suitable for large investors like institutional investors with high risk taking capacities as they do not face paucity of funds and can invest in a number of options to dilute some risks. For them, a portfolio can be spread across a number of stocks and sectors. However, Sharpe measure and Fama model that consider the entire risk associated with fund are suitable for small investors, as the ordinary investor lacks the necessary skill and resources to diversified. Moreover, the selection of the fund on the basis of superior stock selection ability of the fund manager will also help in safeguarding the money invested to a great extent. The investment in funds that have generated big returns at higher levels of risks leaves the money all the more prone to risks of all kinds that may exceed the individual investors risk appetite. 70

LIST OF AMCS
ABN AMRO Mutual fund Birla Mutual fund Deutsche Mutual fund DSP Merrill Lynch Mutual fund Franklin Templeton Mutual fund HDFC Mutual fund HSBC Mutual fund ING Vysya Mutual fund JM Financial Mutual fund Kotak Mahindra Mutual fund LIC Mutual fund Morgan Stanley Mutual fund Principal Mutual fund Prudential HDFC Mutual fund Reliance Mutual fund SBI Mutual fund Sundaram Mutual fund TATA Mutual fund Unit Trust of India Mutual fund UTI Mutual fund

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TYPES OF MUTUAL FUND SEHEMES

BY STRUCTURE
Open-Ended Schemes Close-Ended Schemes Interval Schemes

BY INVESTMENT OBJECTIVE
Growth Schemes Income Schemes Balanced Schemes Money Market Schemes

OTHER SCHEMES
Tax saving Schemes Special Schemes Index Schemes Sector Specific Schemes

Mutual fund schemes may be classified on the basis of its structure and its investment objective.

By Structure: Open-ended funds

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An open ended fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices. The key feature of open-end schemes is liquidity.

Closed-ended funds
A closed end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specific period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed.

Interval funds
These combine the features of open-ended and closed-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.

By Investment Objective: Growth funds

The aim of growth funds is to provide capital appreciation over the medium to long-term. Such schemes normally invest the majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time.

Income funds

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The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and government securities. Income funds are ideal for capital stability and regular income.

Balanced funds
The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and investment both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.

Money market funds

For over 30 years, money market funds have treated investors well. Money market funds have been around for 30 years and are a very popular place for investors to park their money. Money market funds are a type of mutual fund that invests in short-term (less than a year) debt securities of agencies of the U.S. Government, banks and corporations and U.S. Treasury Bills. They are fixed at $1 per share and only the yield fluctuates.

Load Funds
A load fund is one that charges a commission for entry of exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry exit loads range from 1% to 2%. It could be corpus is put to work.

No-Load Funds
A No-Load fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a No-Load fund is that the entire corpus is put to work. 74

Other Schemes: Tax saving Schemes:

These schemes offer tax rebates to the investor under specific provisions of the Indian income tax laws as the Government offers tax incentives for investment in Equity Linked Saving Scheme (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act. The Act also provide opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual funds, provided the capital asset has been sold to April 1,2000 and the amount is invested before September 30,2000.

Special Schemes: Industry Specific Schemes

Industry Specific Schemes invest in the industries specified in the offer document. The investment of these funds is limited to specific like Info Tech, FMCG, and Pharmaceuticals etc.

Index Schemes:
75

Index Funds attempt to replicate the performance of a particular index such as the BSE sensex or the NSE.

Sectoral Schemes:
Sectoral funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as A Group shares or initial public offerings.

FREQUENTLY USED TERMS Net Asset Value (NAV) Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date. Is the price at which a close-ended scheme repurchases its units and it may include a backend load. This is also called Bid Price. Redemption Price Is the price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related. Sales Load Is a charge collected by a scheme when it sells the units. Also called, Front-end load. Schemes that do not charge a load are called No Load schemes. Repurchase or Back-end Load Is a charge collected by a scheme when it buys back the units from the unit holders.

76

CHAPTER 4&5

77

DATA ANALYSIS AND INTERPRETATION

78

DATA ANALYSIS AND INTERPRETATION

SBI ING VYSYA UTI HSBC HDFC ABN AMRO

STATE BANK OF INDIA

State Bank of India 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 18schemes

NAV History Historical value for a period of 5-Nov-2009 to 28-Jan-2010 79

SBI MUTUAL FUND Magnum Equity Fund Growth & Dividend DATE 05-Nov-2009 12-Nov-2009 19-Nov-2009 26-Nov-2009 03-Dec-2009 10-Dec-2009 17-Dec-2009 24-Dec-2009 31-Dec-2009 07-Jan-2010 14-Jan-2010 21-Jan-2010 28-Jan-2010 DIVIDEND 42.14 35.57 37.84 38.33 39.31 40.06 38.80 39.68 41.52 42.51 41.46 33.74 34.89 GROWTH 42.17 40.47 43.06 43.61 44.73 45.58 44.15 45.15 47.24 48.36 47.17 43.24 39.70

SBI MAGNUM EQUITY FUND Dividend & Growth

80

50 45 40 35 30 25 20 15 10 5 0

Divdend Growth

5/11/200 9

3/12/200 9

7/1/2010

14/1/201 0

21/1/201 0

19/11/2009

24/12/2009

12/11/2009

26/11/2009

10/12/2009

17/12/2009

The above graph indicates that the Equity Fund - Growth and Dividend from the 1st week of Dec is almost performing same but in 2nd week of Jan the performance of Growth has drastically changed when compared to Dividends, and again the performance showed is similar in rest of the weeks. Because of declaring Dividends frequently, the performance of Dividend always shows less when compared with others.

81

31/12/2009

28/1/201 0

ING VYSYA BANK

ING Vysya Bank Ltd., is an entity formed with the Vysya Bank Ltd, a premier bank in the Indian Private Sector and a global financial powerhouse, ING (International Nederlanden Group) of Dutch origin, in the year 2002. The origin of the Vysya Bank dates back to 1930. Since then the Bank has grown in size and stature and has reached the coveted position of number one private sector bank in India. In 1948, the Bank acquired the status of Scheduled Bank. In 1992, its deposits crossed Rs. 1000 crores. The very next year, ING Vysya crossed 300 branches.

ING Vysya Bank's Deposit Scheme

The following two types of deposits are offered by ING Vysya Bank: Access Plus Features: A single Current Account, with access from 8 cities in India Separate cheque books for each centre for easy reconciliation Pooling of funds in the city of residence A cost effective product A perfect product for the trading community Current Account Eligibility: Individuals for single account More than one individual for joint account Sole proprietary concerns Partnership concerns Private and Public Limited companies Clubs, associations, benevolent and friendly societies Co-operative organizations Statutory bodies, municipalities and such other Quasi-Government Institutions

82

ING VYSA ING Balanced Fund Growth & Dividend DATE 05-Nov-2009 12-Nov-2009 19-Nov-2009 26-Nov-2009 03-Dec-2009 10-Dec-2009 17-Dec-2009 24-Dec-2009 31-Dec-2009 07-Jan-2010 14-Jan-2010 21-Jan-2010 28-Jan-2010 DIVIDEND 17.17 16.78 17.77 17.60 17.91 18.14 17.89 18.14 18.67 18.88 18.74 16.51 16.80 GROWTH 24.54 23.99 25.40 25.15 25.60 25.93 25.56 25.93 26.69 26.98 26.78 23.59 24.02

ING VYSA EQUITY FUND Dividend & Growth 83

30

25

20

15

Divdend Growth
10

31/12/2 009

21/01/2 010

12/11/2 009

19/11/2 009

26/11/2 009

10/12/2 009

17/12/2 009

24/12/2 008

7/1/201 0

14/01/2 010

The above graph indicates that Growth is performing well when compared to Dividends. From the starting month Growth is high. There are slight fluctuations in both Growth and Dividend. Because of declaring Dividends frequently, the performance of Dividend always shows less when compared with others. As compared to SBI the performance showed is better.

UNIT TRUST OF INDIA (UTI)

84

28/01/2 010

5/11/20 09

3/12/20 09

UTI, the first bank to begin operations as new private banks in 1994 after the Government of India allowed new private banks to be established. UTI Bank was jointly promoted by the Administrator of the specified undertaking of the Unit Trust of India (UTI-I), Life Insurance Corporation of India (LIC) and General Insurance Corporation Ltd. Also with associates viz. National Insurance Company Ltd., the New India Assurance Company, The Oriental Insurance Corporation and United Insurance Company Ltd. UTI Bank in India today is capitalized with Rs. 232.86 Crores with 47.50% public holding other than promoters. It has more than 200 branch offices and Extension Counters in the country with over 1250 UTI Bank ATM proving to be one of the largest ATM networks in the country. UTI Bank India commits to adopt the best industry practices internationally to achieve excellence. UTI Bank has strengths in retail as well as corporate banking. By the end of December 2004, UTI Bank in India had over 2.7 million debit cards. This is the first bank in India to offer the AT PAR Cheque facility, without any charges, to all its Savings Bank customers in all the places across the country where it has presence. The latest offerings of the bank along with Dollar variant is the Euro and Pound Sterling variants of the International Travel Currency Card. The Travel Currency Card is a signature based pre-paid travel card which enables travellers global access to their money in local currency of the visiting country in a safe and convenient way.

UTI MUTUL FUND 85

UTI Equity Fund Growth & Dividend DATE 05-Nov-2009 12-Nov-2009 19-Nov-2009 26-Nov-2009 03-Dec-2009 10-Dec-2009 17-Dec-2009 24-Dec-2009 31-Dec-2009 07-Jan-20010 14-Jan-2010 21-Jan-2010 28-Jan-2010 DIVIDEND 41.42 39.88 42.09 40.80 41.63 41.30 41.85 42.73 44.30 45.68 44.91 38.30 39.10 GROWTH 44.89 43.22 45.60 44.21 45.11 45.20 45.36 46.31 48.02 49.51 48.68 41.50 42.39

UTI EQUITY FUND Dividend & Growth

50 45 40 35 30 25 20 15 10 5 0
3/12/2009 10/12/2009 17/12/2009 12/11/2009 19/11/2009 26/11/2009 24/12/2009 31/12/2009 28/1/2010 5/11/2009 7/1/2010 14/1/2010 21/1/2010

Divdend Grow th

86

From the Bellow graph we can observe that Growth is showing more performance than Dividends. In the month of Feb we can see that Growth has fallen down in the last week and raised in first week and the Dividend has also risen in the 1st week of Feb. Because of declaring Dividends frequently, the performance of Dividend always shows less when compared with others

87

HSBC
HSBC is the largest bank in Hong Kong and second largest group in the world after Citicorp. Before moving its headquarter to London in 1990, it was headquartered in Hong Kong. HSBC India is having branches in Ahmedabad, Bangalore, Chennai, Chandigarh, Coimbatore, Gurgaon, Hyderabad, Jaipur, Kochi, Kolkata, Ludhiana, Mumbai, New Delhi, Noida, Pune, Thane, Trivandrum and Visakhapatnam. HSBC NRI centres are located in Asia-Pacific, the Middle East, Europe and North America. HSBC NRI centres provide full range of personal and private banking products in India and overseas. HSBC Internet banking adds to the services of HSBC India abroad. HSBC India, along with HSBC Investment product and HSBC Insurance, it offers international Gold Card and Classic Credit Cards from VISA and MasterCard and debit cards from Visa. HSBC in India gives 24 hour banking services, extensive network of ATMs, integrated Call Centre and also HSBC e-banking.

88

HSBC MUTUAL FUND HSBC Equity Fund Growth & Dividend DATE 05-Nov-2009 12-Nov-2009 19-Nov-2009 26-Nov-2009 03-Dec-2009 10-Dec-2009 17-Dec-2009 24-Dec-2009 31-Dec-2009 07-Jan-2010 14-Jan-2010 21-Jan-2010 28-Jan-2010 DIVIDEND 44.25 42.82 45.02 43.96 45.27 46.10 45.20 46.12 47.68 48.95 48.40 41.49 42.67 GROWTH 106.75 103.31 108.62 106.06 109.22 111.23 109.06 111.27 114.92 118.11 116.78 100.10 102.96

89

120

100

80

60

Divdend
40

Growth

20

5/11/2009

3/12/200 9

19/11/20 09

26/11/20 09

10/12/20 09

24/12/20 09

7/1/2010

14/01/20 10

HSBC EQUITY FUND Dividend & Growth The above graph there is little fluctuations in the values of Dividends and Growth. But here we can see that Growth is again performing well. It showed a less performance in the last week and Dividend showed similar performance in all the weeks. Because of declaring 90

28/01/20 10

12/11/2009

17/12/20 09

31/12/20 09

21/01/20 10

Dividends frequently, the performance of Dividend always shows less when compared with others.

HDFC BANK
HDFC Limited was established in 1977 by the World Bank, the Government of India and the Indian Industry, for the promotion of industrial development in India by giving project and corporate finance to the industries in India. HDFC Bank has grown from a development bank to a financial conglomerate and has become one of the largest public financial institutions in India. HDFC Bank has financed all the major sectors of the economy, covering 6,848 companies and 16,851 projects. As of March 31, 2000, HDFC had disbursed a total of Rs. 1, 13,070 crores, since inception.

HDFC PRUDENTIAL MUTUAL FUND HDFC EMERGING STAR FUND Growth & Dividend DATE 05-Nov-2009 12-Nov-2009 19-Nov-2009 26-Nov-2009 03-Dec-2009 10-Dec-2009 DIVIDEND 24.13 23.63 25.86 25.14 26.05 27.85 91 GROWTH 36.87 36.10 39.51 38.42 39.80 42.56

17-Dec-2009 24-Dec-2009 31-Dec-2009 07-Jan-2010 14-Jan-2010 21-Jan-2010 28-Jan-2010

28.07 28.06 30.19 31.14 29.62 23.25 23.55

41.95 42.88 46.12 47.58 45.26 38.30 38.80

HDFC EQUITY FUND Dividend & Growth

50 45 40 35 30 25 20 15 10 5 0

Divdend Growth

5/11/200 9

3/12/200 9

7/1/2010

14/1/201 0

21/1/201 0

12/11/2009

19/11/2009

26/11/2009

10/12/2009

17/12/2009

24/12/2009

From the above graph it indicates that the Growth and Dividend are performing similar but in the month of Feb both of them have declined .It had drastically fallen in the month of the Feb. From the 1st week of Dec to 1st week of Feb both have increased and the performance showed is well. Because of declaring Dividends 92

31/12/2009

28/1/201 0

frequently, the performance of Dividend always shows less when compared with others.

ABN AMRO Profile

ABN AMRO is an international bank with European roots. We have a clear focus on consumer and commercial clients in our local markets and focus globally on select multinational corporations and financial institutions, as well as private clients. Our business mix gives us a competitive edge in our chosen markets and client segments. Our strategy is built on leveraging our advantages as a Group to create the best value for ? and with ? our clients. We are active in four principal customer segments: Personal Banking, Private Banking, Business and Commercial and Corporate and Institutional. Although we serve a broad range of clients, our strategic focus is on the mid-market segment. This is the client area where we have a strong and distinctive competitive advantage and where we feel we can be most profitable in the future. The ABN AMRO Corporate Values and Business Principles provide the framework within which we carry out our operations.

In brief...
ABN AMRO is a prominent international bank, our history going back to 1824. ABN AMRO ranks eighth in Europe and 12th in the world based on total assets, with more than 4,000 branches in 53 countries, a staff of more than 99,000 full-time equivalents and total assets of EUR 1,120.1 bln (as at 1 November 2008).

93

ABN AMRO MUTUAL FUND ABN AMRO Equity Fund Growth & Dividend DATE 05-Nov-2009 12-Nov-2009 19-Nov-2009 26-Nov-2009 03-Dec-2009 10-Dec-2009 17-Dec-2009 24-Dec-2009 31-Dec-2009 07-Jan-2010 14-Jan-2010 21-Jan-2010 28-Jan-2010 DIVIDEND 22.48 21.67 23.00 22.24 23.04 23.78 23.26 17.61 18.54 19.33 18.75 15.20 15.55 GROWTH 41.10 39.62 42.04 40.64 42.12 43.46 42.52 43.46 45.76 47.71 46.28 37.52 38.41

94

50 45 40 35 30 25 20 15 10 5 0

Divdend Growth

5/11/200 9

3/12/200 9

7/1/2010

14/1/201 0

21/1/201 0

19/11/2009

24/12/2009

12/11/2009

26/11/2009

10/12/2009

17/12/2009

ABN AMRO EQUITY FUND Dividend & Growth

In this you can see that right from the starting month Growth is showing good performance compare to Dividends. There are some fluctuations in growth, but in dividends the values shown are almost constant. Because of declaring Dividends frequently, the performance of Dividend always shows less when compared with others.

95

31/12/2009

28/1/201 0

NET ASSET VALUE History Historical NAV for a Period from 5TH NOV2009-28TH NOV2010.
NATIONAL BANKS
SBI DATE 05/11/09 12/11/09 19/11/09 26/11/09 03/12/09 10/12/09 17/12/09 24/12/09 31/12/09 07/01/10 14/01/10 21/01/10 28/01/10 Divid end 42.14 35.57 37.84 38.33 39.31 40.06 38.80 39.68 41.52 42.51 41.46 33.74 34.89 Grow th 42.17 40.47 43.06 43.61 44.73 45.58 44.15 45.15 47.24 48.36 47.17 43.24 39.70 ING Divide nd 17.17 16.78 17.77 17.60 17.91 18.14 17.89 18.14 18.67 18.88 18.74 16.51 16.80 Grow th 24.54 23.98 25.40 25.15 25.60 25.93 25.56 25.93 26.69 26.98 26.78 23.59 24.02 UTI Dividen d 41.42 39.88 42.08 40.80 41.63 41.30 41.85 42.73 44.30 45.68 44.91 38.30 39.10 Grow th 44.89 43.22 45.60 44.21 45.11 45.20 45.36 46.31 48.02 49.51 48.68 41.50 42.39

COPERATE BANKS
HSBC Divide nd 44.25 42.82 45.02 43.96 45.27 46.10 45.20 46.12 47.68 48.95 48.40 41.49 42.67 Growth 106.75 103.31 108.62 106.06 109.22 111.23 109.06 111.27 114.92 118.11 116.78 100.10 102.96 HDFC Divide nd 24.13 23.63 25.86 25.14 26.05 27.85 28.07 28.06 30.19 31.14 29.62 23.25 23.55 Grow th 36.87 36.10 39.51 38.42 39.80 42.56 41.95 42.88 46.12 47.58 45.26 38.30 38.80 ABN AMRO Divide nd 22.48 21.67 23.00 22.24 23.04 23.78 23.26 17.61 18.54 19.33 18.75 15.20 15.55

Gro wth

41.10

39.62

42.04

40.64

42.12

43.46

42.52

43.46

45.76

47.71

46.28

37.52

38.41

PERFORMANCE CHART OF DIVEDEND

96

50 45 40 35 30 25 20 15 10 5 0 SBI ING UTI HSBC HDFC ABN AMRO

5/11/2009

14/1/2010

12/11/2009

19/11/2009

26/11/2009

10/12/2009

17/12/2009

24/12/2009

31/12/2009

PERFORMANCE CHART OF GROWTH

120 100 80 SBI 60 40 20 0 ING UTI HSBC HDFC ABN AMRO

5/11/2009

12/11/2009

19/11/2009

26/11/2009

3/12/2009

10/12/2009

17/12/2009

24/12/2009

31/12/2009

7/1/2010

14/1/2010

21/1/2010

The above graph clearly indicates the overall performance of Equity Fund-Dividend and Growth of all the banks taken into consideration. In SBI, from the 1st week of Dec both are 97

28/1/2010

28/1/2010

3/12/2009

7/1/2010

21/1/2010

almost performing same but in 2nd week of Jan the performance of Growth has drastically changed when compared to Dividends, and again the performance showed is similar in rest of the weeks. In ING VYSYA, Growth is performing well when compared to Dividends. From the starting month Growth is high. There are slight fluctuations in both Growth and Dividend. In UTI, we can observe that Growth is showing more performance than Dividends. In the month of Feb we can see that Growth has fallen down in the last week and raised in first week and the Dividend has also raised in the 1st week of Feb. In HSBC, there are little fluctuations in the values of Dividends and Growth. But here we can see that Growth is again performing well. It showed a less performance in the last week and Dividend showed similar performance in all the weeks. In HDFC, it indicates that the Growth and Dividend are performing similar but in the month of Feb both of them have declined .It had drastically fallen in the month of the Feb. From the 1st week of Dec to 1st week of Feb both have increased and the performance showed is well. In HDFC, right from the starting month Growth is showing good performance compare to Dividends. There are some fluctuations in Growth, but in dividends the values shown are almost constant. Because of declaring Dividends frequently, the performance of Dividend always shows less when compared with others. From the above graph it clearly indicates that the HDFC bank is showing excellent performance when compared to other Banks. The Corporate Banking sectors are showing good performance than nationalized Banking sectors.

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FINDINGS & SUGGESTIONS:

1. From the table 1 (i.e.) SBI bank we can see that both Dividend and Growth are

similar to each other .where as growth has been increased in the 2nd week of Jan with a value of 29.64%. 2. In UTI bank table we can see that growth has performed well when compared to

dividends. There was a slight fluctuation in the values of dividends and growth. 3. In ING VYSYA bank table we can see that performance of growth was good. The

dividends was constant in there values. During the first week of Feb the NAV values of both Dividends and Growth were high. 4. When we see corporate banks (i e) HDFC the performance of Growth is very good

when compared to Dividends. This bank has been shown a positive performance when compared to other banks were it is good for investing in this bank. 5. When we see HDFC bank both the Dividends and Growth are equal or similar to

each other there is no change in them. In the month of Feb it raised in the first week but it had a drastic fall in all the following weeks. 6. When we see HSBC bank here again growth has been performed well when we

compare to dividends. This increase in the value has been reached to certain extent and it has been declined in last week of Feb. 7. If we compare Nationalized and Corporate banks we can see that corporate banks

have performed well during these 3 months. 8. Nationalized banks performed well up to certain extent and it values were declining

further. This decline may cause due to declaration of any dividends in those banks and so it was showing low values. 9. In Nationalized banks we can see internally in Dividends SBI bank has performed

well and if wee see Growth UTI bank has performed well.

99

10.

In corporate banks we can see internally in Dividends and Growth HDFC bank has

performed relatively well when compare to other banks. Both the values are high in this bank. It had reached to a maximum height. 11. So its better for investors to invest in corporate sectors rather than investing in

Nationalized sector which gives them maximum number of return for their investment.

CONCLUSION:
100

1.

Corporate sectors provide good services if we see through customer point of view.

They are very caring to their customers. 2. banks. 3. sector. Now u can see most of them are opening their account in corporate banks instead of With the increase in infrastructure, technology, introduction of various schemes and

services, online trading its clear that any one wants to invest will surely invest in corporate

nationalized banks this is due to extra benefit & services which they are getting from that

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BIBLIOGRAPHY

Books References: 1. Security Analysis and Portfolio Management (Fischer & Jordan) 2. Investment Decisions (V.K. Bhalla) 3. Security Analysis & Portfolio Management (Robbins)

WEBSITES www.mutualfundsindia.com www.reliancemutual.com www.sbimf.com www.uti.com www.moneycontrol.com www.amfiindia.com www.nse-india.com

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