SUMMER INTERNSHIP PROGRAM 2009 INDUSTRY: FINANCE ORGANISATION: HDFC MUTUAL FUND HDFC MUTUAL FUND 1 | Page

PROJJECT REPORT ON PRO ECT REPORT ON A A COMPARATIIVE ANALYSIIS COMPARAT VE ANAL YS S OF HDFC MUTUAL FUND WIITH COMPARIISIION OF HDFC MUTUAL FUND W TH COMPAR S O N WIITH OTHER MUTUAL FUND W TH OTHER MUTUAL FUND IIN CIITY OF JJAMSHEDPUR N C TY OF AMSHEDPUR A REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF PGDM PROGRAM OF KOUSTUV BUSINESS SCHOOL SUBMITTED TO: FACULTY GUIDE PROF. GOPAL PRUSETH KOUSTUV BUSINESS SCHOOL BHUBANES WAR SUBMITTED BY : GOPAL KUMAR AGARWAL DM-0829 KOUSTUV BUSINESS SCHOOL BHUBANESW AR PROJECT GUIDE SHAILESH KUMAR BANSAL HDFC MUTUAL FUND JAMSHEDPUR HDFC MUTUAL FUND 2 | Page

KOUSTUV BUSINESS SCHOOL BHUBANESWAR June`2009 DECLARATION I hereby declare that the projects entitled A Comparative study on the performan ce between two sectorial funds in Jamshedpur conducted at HDFC MUTUAL FUND has b een prepared by me during the academic year 2009-10 under the able guidance of m y faculty guide Prof. GOPAL PRUSETH and my project mentor Mr. SHAILESH KUMAR BAN SAL. I also declare that this project is the result of my effort and has not bee n submitted to any other University or Institution for the award of any degree, or personal favors whatsoever. All the details and analysis provided in the repo rt hold true to the best of my knowledge. Place: Bhubaneswar Date: June 2009 GOPAL KUMAR AGARWAL HDFC MUTUAL FUND 3 | Page

CERTIFICATE BY GUIDE This is to certify that the following student is submitting the project report t itled A Comparative study on the performance between two sectorial funds in Jams hedpur. It is the original and bonafide work submitted in partial fulfillment of the requirement for the award of PGDM program. Prof. GOPAL PRUSETH (Project Guide) KBS, Bhubaneswar HDFC MUTUAL FUND 4 | Page

ACKNOWLEDGEMENT In the course of this project I got an insight into the mutual fund industry, ca me to know a lot about the basic working of an asset management company, underst ood how the mutual funds of different fund houses are compared, learnt various c omputations and overall got a preview of what a job in the mutual fund industry would entail. First and foremost I am very proud to be a student of Koustuv Busi ness School, Bhubaneswar and am most grateful for having been given the chance t o work with a reputed company like HDFC MUTUAL FUND at the beginning of my caree r. I would fail to do my duty if I didnt take this opportunity to thank my facult y guide, Prof. Gopal Sir for his timely help and guidance. I would like to thank him whole heartedly for making me work harder so as to gain a more in depth kno wledge of the subject which I am sure will help me a lot in the long run as well . I would say that this project wouldnt have been the same without his support, g uidance, encouragement and constant demand for improvement. My company guide, Mr . Shailesh Kumar Bansal, Manager is another person who has played a key role in the development of me as a person, in the completion of this project and in bein g educated about the mutual fund industry in general. Without the knowledge, att ention and time that he has bestowed on me, this project would simply have been impossible. He is truly an inspiration for me and drove me towards working harde r than my expectations which simply made me more ready for the corporate life. H e truly gave me the corporate exposure I had thought of. My acknowledgement woul d be incomplete if I didnt thank my team mates. During the course of this SIP we have developed a camaraderie which was very healthy and enjoyable. I am grateful for everyones support and help when needed. Without them this training would not have been the same. GOPAL KUMAR AGARWAL HDFC MUTUAL FUND 5 | Page

EXECUTIVE SUMMARY The significant outcome of the government policy of liberalization in industrial and financial sector has been the development of new financial instruments. The se new instruments are expected to impart greater competitiveness flexibility an d efficiency to the financial sector. Growth and development of various mutual f und products in Indian capital market has proved to be one of the most catalytic instruments in generating momentous investment growth in the capital market. Th ere is a substantial growth in the mutual fund market due to a high level of pre cision in the design and marketing of variety of mutual fund products by banks a nd other financial institution providing growth, liquidity and return. In this c ontext, prioritization, preference building and close monitoring of mutual funds are essentials for fund managers to make this the strongest and most preferred instrument in Indian capital market for the coming years. With the decline in th e bank interest rates, frequent fluctuations in the secondary market and the inh erent attitude of Indian small investors to avoid risk, it is important on the p art of fund managers and mutual fund product designers to combine various elemen ts of liquidity, return and security in making mutual fund products the best pos sible alternative for the small investors in Indian market. There are various pa rameters which an investor should consider before investing in mutual funds. The comparative analysis between two mutual fund will help the investor to take app ropriate decision before investing in mutual funds. HDFC MUTUAL FUND 6 | Page

TABLE OF CONTENTS DECLARATION CERTIFICATE BY GUIDE ACKNOWLEDGEMENT EXECUTIVE SUMMARY TOPICS # 1. I NTRODUCTION 2. ORGANISATION OF MUTUAL FUND 3. CHARACTERISTICS OF MUTUAL FUND 4. OBJECTIVES OF MUTUAL FUND 5. STRUCTURE OF MUTUAL FUND 6. INVESTOR PROFILE 7. FAC TORS IMPACTING THE INDUSTRY 8. OPPURTUNITIES & THREATS 9. BENEFITS OF MUTUAL FUN D 10. CATEGORIES OF MUTUAL FUND 11. THE WAY TO INVEST IN MUTUAL FUND 12. LEGAL F RAMEWORK OF SEBI 13. REGULATORY OF MUTUAL FUND 14. MUTUAL FUND IN INDIA AT A GLA NCE 15. COMPANY DETAIL 16. COMPETITOR ANALYSIS 17. COMPARATIVE ANALYSIS BETWEEN HDFC & TATA PG NO. 10 12 13 14 14 17 18 20 22 26 31 32 34 37 42 57 62 HDFC MUTUAL FUND 7 | Page

18. FUTURE GROWTH DRIVERS 19. FINANCIAL ANALYSES 20. CONCLUSION 21. SUGGESTIONS 22. GLOSSARY 23. BIBLIOGRAPHY 24. QUESTIONAIRE 68 71 74 75 77 78 79 HDFC MUTUAL FUND 8 | Page

PART A INDUSTRY OVERVIEW HDFC MUTUAL FUND 9 | Page

INTRODUCTION A Mutual Fund is a trust that pools the savings of a number of investors who sha re 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 appreciations realized are shar ed 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 securi ties at a relatively low cost. The flow chart below describes broadly the workin g of a Mutual Fund. HDFC MUTUAL FUND 10 | Page

A Mutual Fund is a body corporate registered with the Securities and Exchange Bo ard of India (SEBI) that pools up the money from individual/corporate investors and invests the same on behalf of the investors/unit holders, in Equity shares, Government securities, Bonds, Call Money Markets etc, and distributes the profit s. In the other words, a Mutual Fund allows investors to indirectly take a posit ion in a basket of assets. Mutual Fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordanc e with objectives as disclosed in offer document. Investments in securities are spread among a wide cross-section of industries and sectors thus the risk is red uced. Diversification reduces the risk because all stocks may not move in the sa me direction in the same proportion at same time. Investors of mutual funds are known as unit holders. The investors in proportion to their investments share th e profits or losses. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A Mu tual Fund is required to be registered with Securities Exchange Board of India ( SEBI) which regulates securities markets before it can collect funds from the pu blic. HDFC MUTUAL FUND 11 | Page

ORGANISATION OF A MUTUAL FUND:There are many entities involved and the diagram b elow illustrates the organizational set up of a Mutual Fund: Mutual Funds diversify their risk by holding a portfolio of instead of only one asset. This is because by holding all your money in just one asset, the entire f ortunes of your portfolio depend on this one asset. By creating a portfolio of a variety of assets, this risk is substantially reduced. Mutual Fund investments are not totally risk free. In fact, investing in Mutual Funds contains the same risk as investing in the markets, the only difference being that due to professi onal management of funds the controllable risks are substantially reduced. A ver y important risk involved in Mutual Fund investments is the market risk. However , the company specific risks are largely eliminated due to professional fund man agement. HDFC MUTUAL FUND 12 | Page

CHARACTERISTICS OF A MUTUAL FUND: A Mutual Fund actually belongs to the investors who have pooled their funds. The ownership of the mutual fund is in the hands o f the Investors. A Mutual Fund is managed by investment professional and other S ervice providers, who earns a fee for their services, from the funds. The pool o f Funds is invested in a portfolio of marketable investments. The value of the p ortfolio is updated every day. The investors share in the fund is denominated by u nits. The value of the units changes with change in the portfolio value, every da y. The value of one unit of investment is called net asset value (NAV). The inve stment portfolio of the mutual fund is created according to the stated Investmen t objectives of the Fund. HDFC MUTUAL FUND 13 | Page

OBJECTIVES OF A MUTUAL FUND: To Provide an opportunity for lower income groups to acquire without much difficulty, property in the form of shares. To Cater mainl y of the need of individual investors, whose means are small? To Manage investor s portfolio that provides regular income, growth, Safety, liquidity, tax advanta ge, professional management and diversification. STRUCTURE OF A MUTUAL FUND:THE STRUCTURE CONSISTS OF: 14 | Page HDFC MUTUAL FUND

SPONSOR : Sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. Sponsor must contribute at least 40% o f the net worth of the Investment managed and meet the eligibility criteria pres cribed under the Securities and Exchange Board of India (Mutual Fund) Regulation s, 1996. The sponsor is not responsible or liable for any loss or shortfall resu lting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual Fund. TRUST: The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 by t he Sponsor. The trust deed is registered under the Indian Registration Act, 1908 . TRUSTEE: Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The main responsibility of the Trustee is to safeguard th e interest of the unit holders and ensure that the AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes. At least 2/3rd directors of the Trustee ar e independent directors who are not associated with the Sponsor in any manner. HDFC MUTUAL FUND 15 | Page

ASSET MANAGEMENT COMPANY (AMC): The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund . The AMC is required to be approved by the Securities and Exchange Board of Ind ia (SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated wi th the Sponsor in any manner. The AMC must have a net worth of at least 10 cores at all times. REGISTRAR AND TRANSFER AGENT: The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer A gent to the Mutual Fund. The Registrar processes the application form, redemptio n requests and dispatches account statements to the unit holders. The Registrar and Transfer agent also handles communications with investors and updates invest or records. HDFC MUTUAL FUND 16 | Page

INVESTORS PROFILE: An investor normally prioritizes his investment needs before undertaking an inve stment. So different goals will be allocated to different proportions of the tot al disposable amount. Investments for specific goals normally find their way int o the debt market as risk reduction is of prime importance, this is the area for the risk-averse investors and here, Mutual Funds are generally the best option. One can avail of the benefits of better returns with added benefits of anytime liquidity by investing in open-ended debt funds at lower risk, this risk of defa ult by any company that one has chosen to invest in, can be minimized by investi ng in Mutual Funds as the fund managers analyze the companies financials more mi nutely than an individual can do as they have the expertise to do so. Moving up the risk spectrum, there are people who would like to take some risk and invest in equity funds/capital market. However, since their appetite for risk is also l imited, they would rather have some exposure to debt as well. For these investor s, balanced funds provide an easy route of investment, armed with expertise of i nvestment techniques, they can invest in equity as well as good quality debt the reby reducing risks and providing the investor with better returns than he could otherwise manage. Since they can reshuffle their portfolio as per market condit ions, they are likely to generate moderate returns even in pessimistic market co nditions. HDFC MUTUAL FUND 17 | Page

Next comes the risk takers, risk takers by their nature, would not be averse to investing in high-risk avenues. Capital markets find their fancy more often than not, because they have historically generated better returns than any other ave nue, provided, the money was judiciously invested. Though the risk associated is generally on the higher side of the spectrum, the return-potential compensates for the risk attached. FACTORS IMPACTING THE INDUSTRY: PEST Analysis: Political Factors: a) Government Regulation: SEBI regulates the i ndustry and every decision taken by them impact the industry very quickly. b) St able constituency: The mutual fund industry can take long term decision if the g overnment is stable. c) Fiscal policy: tax structure plays a very important role in the growth of the industry .If the tax structure will be high than there wil l be less savings and investment. We have seen the interest rate reducing contin uously which boost the industry to sell products which are better than the FDs, PF, NSC and KVPs. HDFC MUTUAL FUND 18 | Page

Economic factors: d) Market performance: The last five years witnessed a sharp r ise in the markets. The mutual fund industry basically works parallel with the m arkets. Suppose, if the markets always be on downside, then the investors will n ot be so comfortable to invest. This will reduce the market size drastically. e) Global Standards: As the industry will grow better, India being a global econom y, the MF industry has to match to the global mature MF markets. They have to gi ve due emphasis on product innovation, cost reduction and penetration. f) Inflat ion: price rise affects interest rate and reduces the chances of investment. Social factors: g) Consumer behaviour: this is very unpredictable and based on s entiments gets changed very frequently, which sometimes makes selling of product s difficult. h) Income: The rich people are in bigger cities, so the mutual fund industry is much more concentrated there. Technological factors: This is the era of information technology and due to net banking, online transaction, online RTGS, clearing system helps the industry a l ot. HDFC MUTUAL FUND 19 | Page

OPPORTUNITIES AND THREATS:a) Real Estate sector boom: The Real estate has always been one of the preferred investment avenues for the Indian investor. And what better way for the smaller investors to participate in this boom than to have a real estate mutual fund. A MC has to come up with the structured products in this segment and should take c ompetitive advantage. b) Penetration to Rural markets: The industry has to take themselves to the loca l and rural markets to increase the market size. Also, the cost of setting up bu siness in bigger cities is huge compare to smaller cities. This will reduce the AMC business cost. c) Concentration of Corporate Investors: Mutual funds have become overly attract ive to corporate investors because of higher returns than bank deposits and abil ity to distribute capital gains tax. Corporate investors account for more than 5 5% of the AUM (by value).It is clear that the lack of growth in funds under mana gement in India is because of the absence of long term investors.Corporate inves tors take profits frequently resulting in destruction in the compound growth in funds under management. Distributors are forced to pass on more commissions to c ompanies, while fund companies are compelled to offer funds with wafer thin marg ins. HDFC MUTUAL FUND 20 | Page

d) Retail investors lose out in the sense that they continue to pay higher expen ses. e) Higher Returns of Alternative Debt Instruments: Government guaranteed schemes provide risk free returns at competitive rates of returns. This is why mutual f unds have difficulty competing retail business. f) Huge scope for expansion: There are only 33 AMC which is very small figure co mpared to the mature markets. g) Distribution: One of the major factors impacting the growth of mutual fund in dustry is the absence of any regulation in distribution of mutualfunds.Mutual fu nd investors need distributors who are able to inform them about the efficacy of distribution prod uct for a particular risk profile and stage in life cycle. Lack of distributor a wareness and the absence of any disclosures from distributors make misselling of MF products commonplace. HDFC MUTUAL FUND 21 | Page

BENEFITS OF MUTUAL FUND There are numerous benefits of investing in mutual funds and one of the key reas ons for its phenomenal success in the developed markets like US and UK is the ra nge of benefits they offer, which are unmatched by most other investment avenues . We have explained the key benefits in this section. The benefits have been bro adly split into universal benefits, applicable to all schemes and benefits appli cable specifically to openended schemes. HDFC MUTUAL FUND 22 | Page

1. AFFORDABILITY A mutual fund invests in a portfolio of assets, i.e. bonds, sha res, etc. depending upon the investment objective of the scheme. An investor can buy in to a portfolio of equities, which would otherwise be extremely expensive . Each unit holder thus gets an exposure to such portfolios with an investment a s modest as Rs.500/-. This amount today would get you less than quarter of an In fosys share! Thus it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directly in the stock m arket. 2. DIVERSIFICATION The nuclear weapon in your arsenal for your fight agai nst Risk. It simply means that you must spread your investment across different securities (stocks, bonds, money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). This kind of a diversification may add to the stability of your returns, for example during one period of time equities might under perform but bonds and money marke t instruments might do well enough to offset the effect of a slump in the equity markets. Similarly the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect your principal inves tment as well as help you meet your return objectives. 3. VARIETY Mutual funds o ffer a tremendous variety of schemes. This variety is beneficial in two ways: fi rst, it offers different types of schemes to HDFC MUTUAL FUND 23 | Page

investors with different needs and risk appetites; Secondly, it offers an opport unity to an investor to invest sums across a variety of schemes, both debt and e quity. For example, an investor can invest his money in a Growth Fund (equity sc heme) and Income Fund (debt scheme) depending on his risk appetite and thus crea te a balanced portfolio easily or simply just buy a Balanced Scheme. 4. PROFESSI ONAL MANAGEMENT Qualified investment professionals who seek to maximize returns and minimize risk monitor investor s money. When you buy in to a mutual fund, yo u are handing your money to an investment professional that has experience in ma king investment decisions. It is the Fund Manager s job to (a) find the best sec urities for the fund, given the fund s stated investment objectives; and (b) kee p track of investments and changes in market conditions and adjust the mix of th e portfolio, as and when required. 5. TAX BENEFITS Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit holders. How ever, as a measure of concession to Unit holders of open-ended equity-oriented f unds, income distributions for the year ending March 31, 2003, will be taxed at a confessional rate of 10.5%. In case of Individuals and Hindu Undivided Familie s a deduction unto Rs. 9,000 from the Total Income will be admissible in respect of income from investments specified in Section 80L, including HDFC MUTUAL FUND 24 | Page

income from Units of the Mutual Fund. Units of the schemes are not subject to We alth-Tax and Gift-Tax. 6. REGULATIONS Securities Exchange Board of India (SEBI), t he mutual funds regulator has clearly defined rules, which govern mutual funds. These rules relate to the formation, administration and management of mutual fun ds and also prescribe disclosure and accounting requirements. Such a high level of regulation seeks to protect the interest of investors. 7. CONVENTIONAL ADMINI STRATION Investing in a Mutual Fund reduces paperwork and helps you avoid many p roblems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient. R eturn Potential Over a medium to longterm; Mutual Funds have the potential to pr ovide a higher return as they invest in a diversified basket of selected securit ies. 8. LIQUIDITY In open-ended mutual funds, you can redeem all or part of your units any time you wish. Some schemes do have a lock-in period where an investo r cannot return the units until the completion of such a lock-in period. HDFC MUTUAL FUND 25 | Page

9. CONVENIENCE An investor can purchase or sell fund units directly from a fund, through a broker or a financial planner. The investor may opt for a Systematic Investment Plan (SIP) or a Systematic Withdrawal Advantage Plan (SWAP). In addition to this an investor receives account statements and portfolios of the schemes. CATEGORIES OF MUTUAL FUNDS: HDFC MUTUAL FUND 26 | Page

Mutual Fund can be classified as follows:Based on the Structure:1. OPEN-ENDED MU TUAL FUNDS: The holders of the shares in the Fund can resell them to the issuing Mutual Fund company at the time. They receive in turn the net assets value (NAV ) of the shares at the time of re-sale. Such Mutual Fund Companies place their f unds in the secondary securities market. They do not participate in new issue ma rket as do pension funds or life insurance companies. Thus they influence market price of corporate securities. Open-end investment companies can sell an unlimi ted number of Shares and thus keep going larger. The openend Mutual Fund Company Buys or sells their shares. These companies sell new shares NAV plus a Loading or management fees and redeem shares at NAV.In other words, the target amount an d the period both are indefinite in such funds. 2. CLOSED-ENDED MUTUAL FUNDS:A c losedend Fund is open for sale to investors for a specific period, after which fu rther sales are closed. Any further transaction for buying the units or repurcha sing them, Happen in the secondary markets, where closed end Funds are listed. T herefore new investors buy from the existing investors, and existing investors c an liquidate their units by selling them to other willing buyers. In a closed en d Funds, thus the pool of funds can technically be kept constant. HDFC MUTUAL FUND 27 | Page

The asset management company (AMC) however, can buy out the units from the inves tors, in the secondary markets, thus reducing the amount of funds held by outsid e investors. The price at which units can be sold or redeemed Depends on the mar ket prices, which are fundamentally linked to the NAV. Investors in closed end F unds receive either certificates or Depository receipts, for their holdings in a closed end mutual Fund. Based on their investment objective: 1. EQUITY FUNDS: These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance , even losses. However, short term fluctuations in the market, generally smoothe ns out in the long term, thereby offering higher returns at relatively lower vol atility. At the same time, such funds can yield great capital appreciation as, h istorically, equities have outperformed all asset classes in the long term. Henc e, investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as: i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their portfolio mirrors the benchmark index both in terms of composition and individual stock weightages. ii ) Equity diversified funds- 100% of the capital is invested in equities spreadin g across different sectors and stocks. HDFC MUTUAL FUND 28 | Page

iii) Dividend Yield funds- It is similar to the equity diversified funds except that they invest in companies offering high yield dividends. iv) Thematic fundsInvest 100% of the assets in sectors which are related through some theme. e.g. -An infrastructure fund invests in power, construction, cements sectors etc. v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund will invest in banking stocks. vi) ELSS- Equity Linked Saving Schem e provides tax benefit to the investors. 2. BALANCED FUNDS: Their investment por tfolio includes both debt and equity. As a result, on the risk-return ladder, th ey fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instrument s. Following are balanced funds classes: i) Debt-oriented funds -Investment belo w 65% in equities. ii) Equity-oriented funds -Invest at least 65% in equities, r emaining in debt. 3. DEBT FUND: They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. The refore, they invest exclusively in fixed-income instruments like bonds, debentur es, Government of India securities; and money market instruments such as certifi cates of deposit (CD), commercial paper (CP) HDFC MUTUAL FUND 29 | Page

and call money. Put your money into any of these debt funds depending on your in vestment horizon and needs. i) Liquid funds- These funds invest 100% in money ma rket instruments, a large portion being invested in call money market. ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and Tbills. iii) Floating rate funds - Invest in short-term debt papers. Floaters inv est in debt instruments which have variable coupon rate. iv) Arbitrage fund- The y generate income through arbitrage opportunities due to mis-pricing between cas h market and derivatives market. Funds are allocated to equities, derivatives an d money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities. v) Gilt funds LT- They invest 100% of their portfolio in long-term government securities. vi) Income funds LT- Typically, su ch funds invest a major portion of the portfolio in long-term debt papers. vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure o f 10%-30% to equities. viii) FMPs- fixed monthly plans invest in debt papers who se maturity is in line with that of the fund. HDFC MUTUAL FUND 30 | Page

THE WAY TO INVEST IN MUTUAL FUND Mutual funds normally come out with an advertisement in newspapers publishing th e date of launch of the new schemes. Investors can also contact the agents and d istributors of mutual funds who are spread all over the country for necessary in formation and application forms. Forms can be deposited with mutual funds throug h the agents and distributors who provide such services. Now days, the post offi ces and banks also distribute the units of mutual funds. However, the investors may please note that the mutual funds schemes being marketed by banks and post o ffices should not be taken as their own schemes and no assurance of returns is g iven by them. The only role of banks and post offices is to help in. distributio n of mutual funds schemes to the investors. Investors should not be carried away by commission/gifts given by agents/distributors for investing in a particular scheme. On the other hand they must consider the track record of the mutual fund and should take objective dec ision. ONE TIME INVESTMENT The amount that has to be invested in onetime is know n as Onetime Investment. The investor has to pay the whole amount at once. The m inimum amount is Rs. 5000 and maximum is as per the investors Choice. This invest ment is generally preferred for the business man who Are able to pay at one time . HDFC MUTUAL FUND 31 | Page

SYSTEMATIC INVESTMENT PLAN (SIP) The amount that has to be invested through same monthly installment is known as Systematic Investment Plan. The investor has to pay the minimum amount Rs.1000 m onthly for all equity and balanced schemes like that for 6months. And Rs.500 mon thly for Tax Saver scheme like that for 12 months. The minimum amount that the i nvestor has to invest is Rs6000 and maximum as per their choice. This type of in vestment is generally preferred for the salaried people. LEGAL FRAME WORK OF SEBI & AMFI REGULATORY ASPECTS OF 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 an d to promote the development of and to regulate the securities market. SEBI form ulates policies and regulates the mutual funds to protect the interest of the in vestors. HDFC MUTUAL FUND 32 | Page

GUIDELINES OF SEBI & AMFI Mutual funds are regulated by the SEBI (mutual Fund) R egulations, 1996. SEBI is the regulator of all funds, except offshore funds. Ban k-sponsored mutual funds are jointly regulated by SEBI and RBI. The bank-sponsor ed fund cannot provide a guarantee without RBI Permission. RBI regulates money a nd government securities markets, in which mutual Funds are invested. Listed mut ual funds are subject to the listing regulations of stock exchange. Since the AM C and Trustee Company are companies, the Department of Company affairs regulate them. They have to send periodic reports to the ROC (Register of Companies) and the CLB (Company Law Board) is the appellate authority. Investors cannot sue the trust, as they are the same as the trust and cant sue themselves. UTI does not h ave a separate sponsor and AMC. UTI is governed by the UTI Act, 1963 and is volu ntarily under SEBI Regulations. UTI can borrow as well as lend also engage in ot her financial services activities. Only AMFI certified agents can sell Mutual Fu nd units. Mutual Funds Company is required to update the NAV of the scheme on th e AMFI website on a daily basis in case of open-ended scheme. HDFC MUTUAL FUND 33 | Page

REGULATORY OF MUTUAL FUND IN INDIA SEBI The capital market regulates the mutual funds in India. SEBI requires all m utual funds to be registered with them. SEBI issues guidelines for all mutual fu nds operations-investment, accounts, expenses etc. Recently, it has been decided that Money Market Mutual Funds of registered mutual funds will be regulated by SEBI through (Mutual Fund) Regulations 1996. RBI RBI, a supervisor of the Banks owned Mutual Funds-As banks in India come under the regulatory Jurisdiction of R BI, banks owned funds to be under supervision of RBI and SEBI. RBI has superviso ry responsibility over all entities that operate in the money markets. MINISTRY OF FINANCE (MOF) Ministry of Finance ultimately supervises both the RBI and the SEBI and plays the role of apex authority for any major disputes over SEBI guide lines. HDFC MUTUAL FUND 34 | Page

COMPANY LOW BOARD Registrar of companies is called Company Low Board. AMCs of Mu tual Funds are companies registered under the companies Act 1956 and therefore a nswerable to regulatory authorities empowered by the Companies Act. STOCK EXCHAN GE Stock Exchanges are Self-regulatory organizations supervised by SEBI. Many cl osed ended funds of AMCs are listed as stock exchanges and are traded like share s. OFFICE OF THE PUBLIC TRUSTEE Mutual Fund being public trust is governed by th e Indian Trust Act 1882. The Board of trustee or the Trustees Company is account able to the office of public trustee, which in turn reports to the Charity commi ssioner. HDFC MUTUAL FUND 35 | Page

RISK V/S. RETURN: HDFC MUTUAL FUND 36 | Page

MUTUAL FUNDS IN INDIA AT A GLANCE The mutual fund industry in India started in 1963 with the formation of Unit Tru st of India, at the initiative of the Government of India and Reserve Bank the. The history of mutual funds in India can be broadly divided into four distinct p hases :Phase-I Phase-II Phases of Mutual Fund Industry in India Phase-IV Phase-III HDFC MUTUAL FUND 37 | Page

First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It wa s set up by the Reserve Bank of India and functioned under the Regulatory and ad ministrative control of the Reserve Bank of India. In 1978 UTI was de-linked fro m the RBI and the Industrial Development Bank of India (IDBI) took over the regu latory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets u nder 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 s ector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund e stablished in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab Nationa l Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Ju n 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in J une 1989 while GIC had set up its mutual fund in December 1990. At the end of 19 93, the mutual fund industry had assets under management of Rs.47,004 crores. HDFC MUTUAL FUND 38 | Page

Third Phase 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund familie s. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and govern ed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the f irst private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under t he SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual fu nds setting up funds in India and also the industry has witnessed several merger s and acquisitions. As at the end of January 2003, there were 33 mutual funds wi th total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 c rores of assets under management was way ahead of other mutual funds. HDFC MUTUAL FUND 39 | Page

Fourth Phase since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI w as bifurcated into two separate entities. One is the Specified Undertaking of th e Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of Ind ia, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is re gistered with SEBI and functions under the Mutual Fund Regulations. With the bif urcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, confor ming to the SEBI Mutual Fund Regulations, and with recent mergers taking place a mong different private sector funds, the mutual fund industry has entered its cu rrent phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes. HDFC MUTUAL FUND 40 | Page

The graph indicates the growth of assets over the years. Note Erstwhile UTI was bifurcated into UTI Mutual fund and the Specified Underta king of the Unit Trust of India effective from February 2003. The Assets under m anagement of the Specified Undertaking of the Unit Trust of India has thereof be en executed from the total assets of the industry as a whole from February 2003 onwards. HDFC MUTUAL FUND 41 | Page

PART B COMPANY DETAIL HDFC MUTUAL FUND 42 | Page

MAN WITH A MISSION If ever there was a man with a mission it was Hasmukhbhai Parekh, Founder and Ch airmanEmeritus, of HDFC Group who left this earthly abode on November 18, 1994. Born in a traditional banking family in Surat, Gujarat, Mr. Parekh started his f inancial career at Harkisandass Lukhmidass a leading stock broking firm. The firm closed down in th e late seventies, but, long before that, he went on to become a towering figure on the Indian financial scene. In 1956 he began his lifelong financial affair wi th the economic world, as General . Manager of the newly-formed Industrial Credi t and Investment Corporation of India (ICICI). He rose to become Chairman and co ntinued so till his retirement in 1972. At the ripe age of 60, Hasmukhbhai start ed his second dynamic life, even more illustrious than his first. His vision for mortgage finance for housing gave birth to the Housing Development Finance Corp oration it was a trend-setter for housing finance in the whole Asian continent. He was also a writer in his own right. There are over 200 published articles by him... HDFC MUTUAL FUND 43 | Page

In 1992, the Government of India honoured him with the Padma Bhushan Award. The London School of Economics & Political Science conferred Fellowship. He was one of the Founder Members of the Centre for Advancement of Philanthropy, and its Cha irman till 1993. He took active interest in the Bombay Community Public Trust, d esigned specifically to serve the needs of the Mr. H.T. PAREKH is conferred the PadmaBhushan by the Government of India in the year 1992. on him an Honorary citys underprivileged citizens. When Mr. Deepak Parekh took over as Chairman from Hasmukhbhai, he said: Taking over from H.T. Parekh is a formidable task; his vision brought about not on ly an institution, but an entire concept which has proved itself to be of lastin g importance. Today we are the largest residential mortgage finance institution i n India, with a net worth of Rs. 2,703 crores as of March 31, 2006 and an asset base of over Rs. 22,000 crores. We also aim to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall d omestic financial markets. Over a span of 25 years, HDFC has become the pioneer in housing finance in India and made it possible for over two million Families t o own their homes, through housing loans worth over Rs. 42,000 crores. HDFC MUTUAL FUND 44 | Page

ABOUT COMPANY HDFC :VISION STATEMENT :HDFC MUTUAL FUND 45 | Page

ORGANISATION STRUCTURE:The HDFC AMC has the below given organisational structure and the different functional department are headed by different people. Managing Director Mr. Milind Barve CIO-ED Mr. Prashant Jain CFO Mr. Rahul Bhandari Head Operations Mr. Suresh Babu Head Client Servicing Mr. John Mathews Head Compliance Mr. Yezdi Khariwala Head Sales Mr. Kiran Kaushik Head PMS Mr. Pankaj Chopra Head HR Mr. Alok Sheopurkar HDFC MUTUAL FUND 46 | Page

LINE OF BUSINESS : PMS HDFC AMC Mutual Fund Retail Corporate Business HDFC MUTUAL FUND 47 | Page

HDFC ASSET MANAGEMENT COMPANY LIMITED (AMC) Internal Structure & processes: Management Team: HDFC Trustee company Limited: a company incorporated under the Companies Act, 1956 is the Trustee to the Mutual Fund vide the Trust deed dated June 8, 2000, as amended from time to time. HDFC Trustee Company Limited is a wh olly owned subsidiary of HDFC Limited. 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 Com pany for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000. The re gistered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Ma rg, 169, Backbay Reclamation, Churchgate, Mumbai-400020. In terms of the Investm ent Management Agreement, the Trustee has appointed the HDFC Asset Management Co mpany Limited to manage the Mutual Fund. The paid up capital of the AMC is Rs. 4 5.161crore. The present equity shareholding pattern of the AMC is as follows : Particulars % of the paid up equity capital HDFC Limited Standard Life Investments Limited 60 40 HDFC MUTUAL FUND 48 | Page

HDFC Ltd. 60.0% HDFC Asset Management Company Ltd. Standard Life Investments 40.0% HDFC Mutual Fund HDFC Asset Management Company (AMC) is the first AMC in India to have been assig ned the CRISIL Fund House Level 1 rating. This is its highest Fund Governance and Process Quality Rating which reflects the highest governance levels and fund man agement practices at HDFC AMC It is the only fund house to have been assigned th is rating for two years in succession. Over the past, we have won a number of aw ards and accolades for our Performance. HDFC Mutual Fund is one of the largest m utual funds and well-established fund house in the country with consistent and a bove average fund performance across categories since its incorporation on Decem ber 10, 1999. HDFC MUTUAL FUND 49 | Page

While our past experience does make us a veteran, but when it comes to investmen ts, we have never believed that the experience is enough. The single most import ant factor that drives HDFC Mutual Fund is its belief to give the investor the c hance to profitably invest in the financial market, without constantly worrying about the market swings. To realize this belief, HDFC Mutual Fund has set up the infrastructure required to conduct all the fundamental research and back it up with effective analysis. Our strong emphasis on managing and controlling portfol io risk avoids chasing the latest fads and trends. INTERNAL ANALYSIS OF HDFC AMC H DFC has grown in leaps and bounds after taking Zurich in 2003 , now it is the th ird largest private company in Asset management company. In Jamshedpur, HDFC has nearly 20% of the total AUM and according to the CAMS report, in AUM under CAMS we have 35% market share and we do gross sales of 70% every month. AUM March. 2003 March. 2004 March. 2005 March. 2006 March. 2007 March. 2008 March. 2 009 6482 Growth Rate ------14985 131.18 15010 0.17 21550 43.57 28358 31.59 46291 63.24 57956 25.19 The below given graph depicts the same. HDFC MUTUAL FUND 50 | Page

DFC AMC has 4% market of the total asset management business. The pie-chart show s the market share of the other AMCs and of HDFC. 28% 50% 5% 4% 5% 8% OTHERS (29) UTI HDFC Mutual Fund Prudential ICICI Mutual Fund Reliance Mutual Fu nd Grand Total HDFC MUTUAL FUND 51 | Page

STRENGTHS AND WEAKNESSES : STRENGTHS: a) Wide range of products: The AMC has got good number of differentiated product s in the entire asset class. b) Consistent performance: The funds have given con sistent performance over 10 years. c) Experienced team: HDFC has fund managers w ith rich experience whose consistent performance has made this AMC CRISIL level one fund house. d) Strong Compliance: The AMC has very strong compliance of indu stry set rules to protect the interest of the investors. e) Risk management team : AMC has a separate risk management team which constantly monitor the risk expo sure related to different fund management. WEAKNESSES: a) Restrictive reach: HDFC business is more concentrated on urban areas. HDFC ha s very limited offices. b) Less Aggressive in Marketing and execution: HDFC does match the aggressiveness required in the industry and are slow in execution. HDFC MUTUAL FUND 52 | Page

HDFC MUTUAL FUND AT A GLANCE Name of Unit : HDFC MUTUAL FUND Address : Gayatri Enclave, 2nd Floor, "K" Road, Bistupur, Jamshedpur - 831001. : Private S ector Form of Organization Contact Number : Tel. : 18002336767 (Toll-free) Telefax : 0657 2249730/ 2249691 Establishment year Sponsors : : 2007 Housing Development Finance Corporation Limited (HDFC), Standard Life Inves tments Limited. Management :Trustee. HDFC Asset Management Company Limited (AMC). Working Hours Web site : : 9.30 am to 5.30 p.m www.hdfcfund.com HDFC MUTUAL FUND 53 | Page

ACHIEVEMENT AND AWARDS HDFC Prudence fund has been ranked ICRA-MFR 1, and Has Been awarded the Gold Award for Best Performance in the category of Open Ended Balanced Scheme for one year Per iod Ending Dec 31, 2005. HDFC Tax saver fund has been ranked ICRA-MFR 1, and Has Been Silver award for Secon d Best Performance in the category of Open Ended Equity Linked Saving Scheme(ELSS) for Three year Period Ending Dec 31, 2005. HDFC MIP~LTP has been ranked ICRA-MFR 1, and Has been awarded the Gold Award For Be st Performance in the category of Open Ended Marginal Equity Scheme for one year Pe riod Ending Dec 31, 2005. HDFC MUTUAL FUND 54 | Page

HDFC PROVIDES:Personalized Service We believe in providing a personalized servic e enabling individual attention to achieve your investment goal. Professional Ad vice We provide professional advice on equity and debt portfolio with an objecti ve to provide consistent long-term return while taking calculated market risk. O ur approach helps you to build a proper mix of portfolio, not just to promote on e individual product. Hence your long term objectives are best served. Long-term Relationship We believe steady wealth creation requires long-term vision, it ca nt be achieved in a short span of time. To achieve this one needs to take advanta ge of short-term market opportunity while not loosing sight of long term objecti ve. Hence we partner all our clients in their objective of achieving their longterm Vision. Access to Research Reports Through us, you will have access to cert ain research work of CRISIL, so that you will benefit from the expert knowledge of economists and analysts of one of the leading financial research and rating c ompany of India. This third party research gives you a comfort of getting unbias ed advice to make a proper decision for your investment. HDFC MUTUAL FUND 55 | Page

Transparency & Confidentiality Through email you will get a regular portfolio st atement from us. You will also be given a web access to view at your convenience the details of your investments and its performance. Access to your portfolio i s restricted to you and our monitoring system enables us to detect any unauthori zed access to your investments. Flexibility To facilitate smooth dealing and con sistent attention, all our clients will be serviced by their respective relation ship executive. This allows us to provide tailor made advice to achieve your inv estment objective. Hassle Free Investment Our relationship person will provide y ou with a customized service at your convenience. We take care of all the admini strative aspects of your investments including submission of application forms t o fund houses along with monthly reporting on overall state of your investments and performance of your portfolio. Mutual funds are all the rage today simply be cause people have realized the symbiotic relationship that an investor shares wi th the asset management companies as compared to the ever volatile and ruthless world of SENSEX. HDFC MUTUAL FUND 56 | Page

COMPETITOR ANALYSIS:Tata Mutual Fund :Tata Asset Management Private Limited is v ery old house and is well placed in the market. Tata Mutual Fund has AUM of Rs.2 1304 Crores. Size and Growth: Tata MF opened its office in Jamshedpur four years ago. Since than it has done good business. Tata have brand advantage in Jamshed pur, as investors trust TATA group. Jamshedpur which is a market of Rs 1300cr, T ata MF has nearly 10-12% of the market share of Jamshedpur. In Jharkhand they ha ve four offices. Internal Structure & processes: Tata Mutual Fund has been const ituted as a trust on 9th May 1995 in accordance with the provisions of the India n Trusts Act, 1882 with Tata Sons Limited (TSL) and Tata Investment Corporation Limited (TICL) as the sponsers and the settlers. The Mutual Fund was registered with SEBI on 30th Tata Mutual Fund (TMF) has been constituted as a Trust in acco rdance with the provisions of the Indians Trusts Act, 1882 and is registered as a Trust under The Indian Registration Act, 1908. TMF was registered with Securit ies & Exchange Board of India (SEBI) and commenced operation by launching HDFC MUTUAL FUND 57 | Page

its first scheme on 30th August 1995. Tata Sons Limited(TSL) and Tata Investment Corporation Ltd (TICL) are the Sponsers and the Settlors. Share Holding Pattern Of Tata Asset Management Ltd (TAML) Tata sons Ltd. 67.91% Tata Asset Management Ltd. Tata Investment Corporation Ltd 32.09% Tata Mutual Fund Board Of Directors:Board Of Tata Trustee Company Private Limited ussain (Director) Mr. J.N. Godrej (Director) ) HDFC MUTUAL FUND 58 | Page Mr. S.M. Datta (Chairman) Mr. I. H Mr. Nowroze J.N. Vazifdar (Director

Board Of Directors Of Tata Asset Managment Limited: Mr. F.K. Kavarana (Chairman) Mr. Ved Prakash Chaturvedi (Managing Director) Mr. A.R. Gandhi (Director) Mr. M. L. Apte (Director) Mr. A. Hasib (Director) Line of Business: Tata Mutual Fund Mutual fund business Portfolio management Strengths & Weaknesses:Strengths: a) Trusted Parent company: Tata Asset Manageme nt Ltd is a part of the Tata group, one of India s largest and most respected in dustrial groups. Jamshedpur is the home ground for Tata MF and they enjoy great support and trust. HDFC MUTUAL FUND 59 | Page

b) High payout structure: They pay more incentive and brokerage to there distrib utors in comparison of other AMCs, which gives them some edge to attract the dis tributors to sell the product. Weaknesses: a) Focussed on one product: At Jamshe dpur, Tata MF is focussed on only one product that is Tata Infrastructure Fund w hich some how narrows their product diversification. b) Lack of Aggression: The team in Jamshedpur lack aggression and activeness, they do not push there produc ts too much in the markets. Products get sold of there brand presence. c) Servic es: The AMC is not giving good service and the response time is slow. Projected Future Strategy: To meet the competition, Tata mutual fund will have to expand t here business and penetration by increasing the number of branches and manpower. Distributor/Business model: The distributor model is divided into two parts tha t is IFAs and Banks and national distributors. Then the IFAs are categorised in two categories i.e. preferred and basic. Preferred gets 2.25% brokerage and basi c gets 2.10%. For making preferred partner there is no such set of rule. Also, T ata has scheme specific brokerage structure like in Tata infrastructure they pay 3.00%,in some schemes 2.25% and in some 1.75%. HDFC MUTUAL FUND 60 | Page

Products (NFOs/schemes): Tata has not got so good wide range of products in all categories and maximum AU M of there is concentrated in debt the maximum part is in debt. No. of schemes N o. of schemes including options Equity Schemes Debt Schemes Short term debt Sche mes Equity & Debt Money Market Gilt Fund 98 375 37 291 14 7 0 26 From the there pattern they are more cashing business on the infrastructure them e. Till now they have two infrastructure based funds and one NFO is running whic h is also Infrastructure based fund. Recently, they had also filed offer documen t with SEBI for there Tata small and Mid cap Infrastructure fund. HDFC MUTUAL FUND 61 | Page

Comparative Analysis of HDFC AMC with TATA:i) Infrastructure :SCHEME FUND CLASS Average mkt. cap. (in Crores) Inception date MAY. 2009 MAY. 2009 HDFC INFRASTRUC TURE Equity diversified 75406.10 TATA INFRASTRUCTURE Equity diversified 21304.00 From the following data we can analyise that HDFC MUTUAL FUND has fared better t han TATA MUTUAL FUND .. ii) SWOT analysis of HDFC AMC with Tata AMC. HDFC MUTUAL FUND 62 | Page

SWOT Analysis of HDFC Asset Management Company Ltd. Buy SmartDraw!- purchased copies print this document without a watermark . Visit www.smartdraw.com or call 1-800-768-3729. HDFC MUTUAL FUND 63 | Page

SWOT Analysis of Tata Asset Management Ltd Buy SmartDraw!- purchased copies print this document without a watermark . Visit www.smartdraw.com or call 1-800-768-3729. HDFC MUTUAL FUND 64 | Page

iii) Additional Services Offered By HDFC Mutual Funds:HDFCMFOnline, which enables you to transact online on https://investor.hdfcfund.com/mfonline/ 24 hours a day, 7 days a week, 365 days a year. On HDFCMFOnline, you can Purchas e. Redeem. Switch. View Account Details. View Port Folio Valuation. Download Acc ount Statements........Online !! The Services offered in HDFCMF Online: eDocs : H DFC Mutual Fund Offers you the convenience of recieving documents by email at no additional cost to you. ePayouts: Save your time and experience the convenience of receiving your dividend and redemption payout(s), if any, directly into your bank account. This facility can be opted by selecting RBI s National Electronic Fund Transfer (NEFT) or Electronic Clearing Service (ECS*). NEFT and ECS facili tates faster, reliable and trouble free credit of redemption/dividend into your bank account. It is also one of the safest mode of payment as it eliminates poss ibilities of fraudulent encashment of redemption / dividend instruments or any p ossible loss while in postal transit to you. HDFCMF Mobile, Now transacting with mobile can also be done. HDFC offer the facility tr ansacting using the mobile phone anywhere and anytime. On HDFCMF Mobile, you can Purchase. Redeem. Switch. HDFC MUTUAL FUND 65 | Page

View Account Details. View Port Folio Valuation. Request for Account Statements. Check NAV. NEFT Facility (National Electronic Fund Transfer) : This is a facility introduced by the Reserve Bank of India (RBI). NEFT is a nati on wide electronic funds transfer system to move funds from any bank branch in a ny part of country to any other bank branch in another part of the country. Who will benefit from this service? This payout channel will be particularly benefic ial to all such investors whose mandated bank account is not in the list of bank s with whom we presently have a direct credit arrangement for crediting their di vidend / redemption proceeds. This service will also benefit all such investors at locations where a HDFC Mutual Fund Investor Service Centre (ISC) / a HDFC Ban k branch, is not present and such locations are covered by the RBI for payments through the NEFT mode. What are the advantages of NEFT over the current payout m ode? Investors whose current payments are settled through a demand draft (DD) / Pay Order (PO) for their dividend / redemption payouts are the prime beneficiari es. Such DDs / POs are then dispatched to the investor, which would take a couple of days to reach. In comparison, through NEFT the beneficiary gets the credit us ually on the same day or the next day depending on the time of settlement. This makes payment settlement faster, safer and risk free. HDFC MUTUAL FUND 66 | Page

iv) NAV Performance: NAV OF HDFC GROWTH FUND is Rs. NAV 58.91 , Date is 2nd July , 2009. NAV OF TATA GROWTH FUND is Rs. 31.4833, Date is 2nd July, 2009. & NAV OF HDFC EQUITY FUND is Rs. NAV 177.86 , Date is 2nd July, 2009. NAV OF TATA PURE G ROWTH FUND is Rs. 72.34 Date is 2nd July, 2009. v) Dividend History: HDFC GROWTH FUND current dividend is 25.02 TATA GROWTH FUND current dividend is 14.04 & HDFC EQUITY FUND current dividend is 35.702 TATA EQ UITY FUND current dividend is 28.6397 So by above data we can analyise that HDFC GROWTH FUND is better for investor wh o look for high dividends. HDFC MUTUAL FUND 67 | Page

THE FUTURE GROWTH DRIVERS: Higher GDP Growth. India s huge financial spread Inves tment System. Systematic investment planning ratio which is projected to double by 2009 2010. Fast paced urbanization rise from 28 to 40% by 2020. Growing workin g class population and Middle class expanding by 30 40 million every year. Upwar d migration of household income levels. Fast economic Development. Increasing di sposable Income with the service sector. Cheaper (declining interest rates) & ea sier finance Schemes. Increasing dispensable income of rural agriculture sector. Govt. policy promotes tax investment & planning Sec 80 C. Increasing level of F DI in country. Emergence of India as BPO and IT hub. HDFC MUTUAL FUND 68 | Page

Equity markets have been buoyant over the past few months primarily on the back of expected good corporate performance, strong global liquidity and strong flows to emerging markets. The rush of players into the mutual fund industry during t he last decade could be attributed to low entry barriers, both regulatory and co mpetitive, and the desire of the existing financial players to broad-base their activities in the financial sector. The last few years also highlights the emerg ence of the mutual fund industry as a major force in Indian financial markets. W ith the total Assets Under Management (AUM) increasing from Rs.1,13,005 cr in Ma rch 2000 to Rs. 565469 Cr in Feb. 2008, the industry s growth has been nothing but exceptional. And if size is the measure o f dominance, the Indian mutual fund industry can now boast of that. So lets now take a look at the overall growth of the mutual fund industry in the last decade . HDFC MUTUAL FUND 69 | Page

To sum it up, we can enumerate that the host of things which suggest that the mu tual fund industry is all set to enter a period of high growth are: A robust economy, fledgling stock market, increasing awareness and acceptance of mutual funds among investors, strong domestic currency, and healthy corporate p erformances. HDFC MUTUAL FUND 70 | Page

FINANCIAL ANALYSIS Objective of the studyThe primary objective of this study is to analyze the fina ncial performance of the two leading Sectorial Mutual Fund schemes of HDFC and T ATA on the basis of various financial parameters, which will be discussed later in the following sections of the report. This will help in the following ways: A complete and comprehensive financial analysis can be made before making a decis ion to invest in a particular Mutual Fund scheme. An in-depth and complete appro ach towards managing a portfolio of investments can be made by analyzing the fun ds on the basis of these financial parameters. This study will also give us a br ief overview of the quality and consistency of the fund management in keeping up with the various expectations and hopes that the mutual fund investors have in the Asset Management Company (AMC). It also helps us to compare the individual f und performance with the performance of the overall market, including the Bombay Stock Exchange (BSE), and National Stock Exchange (NSE). It also helps us to st udy the risk-return trade-off i.e. whether the hand-in-hand relationship between Risk and Return holds true in case of Mutual funds or not. HDFC MUTUAL FUND 71 | Page

Rationale of choosing these fundsThe above chosen funds have had a market presen ce of at least three years. Also the government of India has a large interest in Indian growth story which is in complete without have a much impetus in infrast ructure sector. Hence, with this fact we can have a fair idea of their acceptabi lity in the market. The basic rationale of choosing these funds is to have and p resent a brief idea of the current mutual funds market and to understand the lat est trends in the market. Data Collection All the data used for the study was se condary data. This data was collected from the following sources: Funds Fact She ets Magazines Journal Internet Key information memorandum of various schemes Met hodology The project report is made precisely keeping in mind the Asset manageme nt business in Jamshedpur. Therefore, I had done primary as well as secondary da ta collection to facilitate my findings. In primary data collection, I have made a questionnaire relating to sales, services and distribution services of the As set management company. The sample size is 40 persons which include individual A RNs, HDFC MUTUAL FUND 72 | Page

Distribution house RMs, Banking staffs and some customers. The data was collecte d and the collated to give a brief idea about which AMC is good in products, sal es and services. The questionnaire also shows some traits like dependability, tr ust and suitability of the AMCs in context to the various requirements of the di stributors. The secondary data was collected from the abyss of different website s and online articles of experts. The raw data was then compiled and analysed us ing different tools. Primary Data collection: The primary data is basically cons isting of Products (offerings, innovation and fund performance), Services (respo nse time, reliability, premium services) and Distribution (brokerages and incent ives). Secondary data collection: It is collected from different websites; this project is made of more of secondary data collection. HDFC MUTUAL FUND 73 | Page

CONCLUSION:HDFC Equity Fund has a ability to spot the sector trends & it has del ivered handsomely. In Current status it emerged as the third bestperforming dive rsified equity fund. HDFC MUTUAL FUND 74 | Page

SUGGESTIONS TO HDFC MUTUAL FUND: 1. An aggressive advertising campaigning should be there to encourage more peopl e to invest. 2. As some of the people think that mutual fund is risky so the com pany should show people the advantages of the mutual fund and how it is better t han the other investment avenues. 3. There is a great potential for the mutual f und because the people are ready to invest in the mutual fund as there is a posi tive responses. 4. Now a days people are investing in more of an equity fund bec ause it gives high return as compare to other mutual fund schemes. 5. People are preferred to invest in the long term savings when only they have enough of surp lus. They are least concerned about the others advice. 6. The people of Rajkot ha ve enough purchasing power supported by N.R.I. Mutual Fund Companies should take this fact positively at the time of designing promotional scheme. 7. HDFC MF is doing comparatively very less marketing in MF industry in compare to other play ers. Due to this other player are getting the advantage. Thus it should try to i ncrease the marketing and advertising related activities time to time or at leas t at the time of new NFOs, at the time when they are declaring dividends or at th e peak time (i.e. January - March) last quarter of financial year when people ar e searching for investing instruments. HDFC MUTUAL FUND 75 | Page

8. A very small part market has been cover by HDFC MF. It can increase the circl e of its business in small and rural areas of every state and cities of India wh ere they an find a huge business. 9. To uproot the investment level the company should give training programme to financial agents who approach the investor for the investments. And they should be aware of all the benefits of the mutual Funds. 10. Company should undertake t he Campaign, Road shows, Advertisement and other type of Publicity for the effective awareness of different schemes that are available in the market. 11. The company should arrange seminars and presentations, giving detail idea about securities and benefits of investment in mutual fund. HDFC MUTUAL FUND 76 | Page

GLOSSARY SHORT FORMS AMC Asset Management Company. AMFI Association of Mutual Fund of Ind ia. AUM Asset under Management. BSE FII Bombay Stock Exchange. Foreign Institute of Investor. FII can invest in Mutual Funds.They invest through the Non-residen t rupeeaccount. GILT Government of India Linked Treasury. These Funds are those that invest only in government securities. IPO IRP Initial Public Offer. Investo r Risk Profile. MIP Monthly Investment Plan. MTM Market to Market. NAR Net Amount at Risk. NAV N et Asset Value. NSE National Stock Exchange. OD Offer Document is the most impor tant source of information for the investors. Abridged version of the OD is call ed as Key Information Memorandum (KIM). PAR VALUE It is said as face value. SAR S um at Risk SIP Systematic Investment Plan SWP Systematic Withdrawal Plan WDM Wholesale Debt Market HDFC MUTUAL FUND 77 | Page

BIBLIOGRAPHY 1. www.investsmartindia.com 2. www.amfiindia.com 3. www.mutualfundsindia.com 4. www.valueresearchonline.com 5. www.investopedia.com 6. www.bcg.com 7. www.tatamu tual.com 8. www.google.com 9. www.hdfcfund.com 10.www.wikepedia.org HDFC MUTUAL FUND 78 | Page

QUESTIONAIRE Q 1) : Among the following which mutual fund house is the better fund house in t he terms of products? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Q 2) : Out of the following which fund house gives you and your customer better satisfaction in the terms of sales support? a)Tata Mutual Fund b)HDFC Mutual Fun d c) Others ( ) Q 3): Among the following which mutual fund house gives you premium services and after sales services ? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Q 4): Which mutual fund is having more effective strategy regarding the distribu tion services in terms of brokerage and incentives? a)Tata Mutual Fund b)HDFC Mu tual Fund c) Others ( ) Q 5): Which mutual fund is more aggressive & innovative in terms of marketing an d sales i.e. coming with the NFO and new products ? a)Tata Mutual Fund b)HDFC Mu tual Fund c) Others ( ) Q 6) Which fund house is better in the terms of fund performance in long and sho rt run? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Q 7) Which fund houses employee you feel more comfortable discussing your sales a ctivities? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) HDFC MUTUAL FUND 79 | Page

Q 8) Which fund house is more reliable to work with: a)Tata Mutual Fund b)HDFC M utual Fund c) Others ( ) Q 9): Which of the following fund house gives you quick response to your queries ? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Q 10): Which of the following fund house you feel overall good to work with? a)Tata Mutual Fund b)HDFC Mutual Fund c) Others ( ) Any Suggestions: HDFC MUTUAL FUND 80 | Page