Training project

A WINTER TRAININGPROJECT
REPORT
On
“A study on performance Comparison of Equity Schemes of
HDFC Mutual Fund with others.”

at

SUBMITTED IN PARTIAL FULFILLMENT FOR THE DEGREE
OF MASTER OF BUSINESS ADMINISTRATION
(SESSION 2010-2012)

Submitted To:Submitted by
HPUBS, SHWETA SOOD
Summerhill MBA (3rd Semester)
Shimla. Class Roll No-2408
Univ.Roll No -2315

CONTENTS

 Statement of the problem
 Objective of the study
 Scope of the study
 Introduction to mutual fund

Organization profile

 Brief history of HDFC Bank
 Introduction of HDFC mutual fund

Analysis

 Techniques of Analysis
 Findings
 Annexure
 Bibliography

ACKNOWLEDGEMENT

I owe my deepest gratitude to all the people associated with this project and helped
me in the successfully completing this work.

I wish to extend my sincere thanks to Mr. Dhruv Braghta – The Branch Manager
at HDFC Bank for giving me an opportunity to work for the organization. I would
also like to extend my thanks to Mr. Yogendra Sudarshan, Sales Manager for
his constant guidance and support all throughout the project duration. He has
constantly encouraged and challenged me to deliver nothing less than the best.

I would also like to express my gratitude to all the staff members at HDFC Bank
for their support and co-operation during the period.

Lastly I would like to thank all the members of the HPUBS family, my Parents, my
Sister and the Lord Almighty for helping and supporting me all throughout this
project.

Thank You All

Shweta Sood

Executive summary

The main aims of the investor is to minimize the risk involved in investment &
maximize return and today there are number of options available to investor like
Post office investment, bank deposit, Real estate, debentures, Government
securities, stock market, insurance & gold etc. Among these, Mutual Fund & ULIP
introduced by the insurance companies are the two options which require less
capital & give the benefit of Professional Management& suitable for all especially
to the persons who do not have time to watch the market regularly.

HDFC Mutual Fund is one of India's largest brokerage and securities distribution
house in India. It is considered to be one of the leading investment broking houses
catering to the needs of both institutional and non-institutional investor categories
with presence all over the country through franchisees and co-coordinators.

In this project I studied the schemes of HDFC Mutual fund and their returns in
various period of time by comparing risk and returns of other 2 companies Mutual
Fund, which helped me in knowing how the various schemes are performing and
the risk and return associates with them. Hence my topic of study is “A study on
performance Comparison of Equity Schemes of HDFC Mutual Fund with
others.”

Title of project

“A study on performance Comparison of HDFC Mutual Fund equity schemes
with others companies mutual fund schemes.” At HDFC Bank, Shimla.

Research problem

To find out the different types of equity scheme performance of HDFC and
compare it with other 2 competitors by evaluating risk & returns with the help of
index.

Purpose of the study

The study will help the organization in knowing how the company‟s equity is

performing.

Scope of the study

The present study includes the 5 years average returns of the mutual funds, which
have the total corpus value, is more than 10000 crores. For the study three mutual
funds companies have been scan and only those scheme are include in the study
which are having the corpus value of more than 400 crores and age of the fund
must be more than 3 years. The study cover only equity diversified which is having
more fluctuations risk and returns.

Objective of the study

To understand the concept of Mutual Fund, working and mechanism and
types of Mutual Funds traded in India.
To know the Performance of HDFC Mutual Fund scheme compared to the
other companies mutual fund scheme.
To evaluate performance of mutual funds in the terms of risk and return.
To appraise investment performance of mutual funds with risk adjustment,
the theoretical parameters as suggested by Sharpe, Treynor

Introduction

An investment means employment of funds on assets (i.e. securities or mutual
funds or any of the investment avenues) with the aim of earning of income as well
as capital appreciation. There are mainly two attributes while investing to any of
the means, i.e. time and risk. There are mainly four objectives, which the
investments activities will carry on those are:

Return
Risk
Liquidity
Safety

There are many alternatives which investment avenues are open to the investors
to suit their needs and nature .The selection of investment alternatives are
depends up on the required level of return and the risk tolerance level. These
alternatives range from financial securities to traditional non-securities
investment.

Following are the various investment alternatives.

Negotiable and fixed income securities

Equity shares
Preference share
Debentures
Bonds
Government securities

Non-negotiable securities

Bank deposit
Post office deposit
NBFC deposit
Tax saving schemes
Public provident fund scheme
National saving scheme
Life insurance
Mutual funds
Real estate

Securities

Companies raise funds to finance their projects through various methods. The
promoters can bring their own money or barrow from the financial institutions or
Mobilizes capital by issuing securities. The funds `may be raised through issue of
fresh share at per or premium. Preference shares debenture or global depository

receipts. These are mainly two markets which any company can raise their funds;
those are primary market and secondary market .the companies raise funds for the
following purposes:

To promote a new company
To expand an existing company
To diversify the production
To meet the regular working capital requirement
To capitalize the reserves.

New Issue Market (Primary Market)

Stock available for the first time is offered through new issue market. The issuer
may be a new company or an existing company. These issues may be of new type
or the secure used in the past. In the new market the issuer can be consider as a
manufacturers. The issuing house, investing banker and broker act as the channel
of distributing for new issue. They take the responsibility of selling the stock to
the public.

The main survives function of the primary market are:

1. Origination
2. Underwriting
3. Distribution

The main objectives of NSE are as follows.

To establish the nationwide trading facility for Equities, Debt instruments
and hybrids.
To ensure equal access to investors all over the country through appropriate
communication network.
To enable shorter settlement cycle and book entry settlement system.

Introduction of mutual fund

Concept of mutual funds
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:

Mutual Fund Operation Flow Chart

Mutual Funds Industry in India

The origin of mutual fund industry in India is with the introduction of the concept
of mutual fund by UTI in the year 1963. Though the growth was slow, but it
accelerated from the year 1987 when non-UTI players entered the industry.
In the past decade, Indian mutual fund industry had seen a dramatic improvement,
both quality wise as well as quantity wise. Before, the monopoly of the market had
seen an ending phase, the Assets Under Management (AUM) was Rs. 67bn. The
private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993

and till April 2004, it reached the height of 1,540 bn.Putting the AUM of the
Indian Mutual Funds Industry into comparison, the total of it is less than the
deposits of SBI alone, constitute less than 11% of the total deposits held by the
Indian banking industry.
The main reason of its poor growth is that the mutual fund industry in India is new
in the country. Large sections of Indian investors are yet to be intellectuated with
the concept. Hence, it is the prime responsibility of all mutual fund companies, to
market the product correctly abreast of selling.
The mutual fund industry can be broadly put into four phases according to the
development of the sector. Each phase is briefly described as under.

First Phase - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was
set up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked
from the RBI and the Industrial Development Bank of India (IDBI) took over the
regulatory and administrative control in place of RBI. The first scheme launched
by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of
assets under management.

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

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by
Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),

Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda
Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked
Rs.47,004 as assets under management.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund families.
Also, 1993 was the year in which the first Mutual Fund Regulations came into
being, under which all mutual funds, except UTI were to be registered and
governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton)
was the first private sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds with
total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores
of assets under management was way ahead of other mutual funds.

Fourth Phase - since February 2003

This phase had bitter experience for UTI. It was bifurcated into two separate
entities. One is the Specified Undertaking of the Unit Trust of India with AUM of

Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of
India, functioning under an administrator and under the rules framed by
Government of India and does not come under the purview of the Mutual Fund
Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It
is registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000
crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the
SEBI Mutual Fund Regulations, and with recent mergers taking place among
different private sector funds, the mutual fund industry has entered its current
phase of consolidation and growth. As at the end of September, 2004, there were
29 funds, which manage assets of Rs.153108 crores under 421 schemes.

Major Mutual Fund Companies in India

Prudential Mutual Fund
UTI Mutual Fund
Reliance Mutual Fund
HDFC Mutual Fund
Franklin Mutual Fund
Birla sun Mutual Fund
SBI Mutual Fund

DSP Merrill Lynch Mutual Fund
Kotak Mutual Fund
Tata Mutual Fund
HSBC Mutual Fund
PRINCIPAL Mutual Fund
Standard chartered Mutual Fund
LIC Mutual Fund
Sundaram Mutual Fund
Deutsche Mutual Fund
Fidelity Mutual Fund
ABN AMRO Mutual Fund
ING Vysya Mutual Fund
Canbank Mutual Fund
JM Mutual Fund
Chola Mutual Fund
Benchmark Mutual Fund
BOB Mutual Fund
Taurus Mutual Fund
Sahara Mutual Fund
Escorts Mutual Fund
Quantum Mutual Fund

What is a Mutual Fund

Capital appreciations realized by the scheme are shared by its unit holders in
proportion to the number of 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 invested by the fund manager in different types of securities depending upon the
objective of the scheme. These could range from shares to debentures to money
market instruments. The income earned through these investments and the 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 portfolio at a relatively low cost. The small savings of all the investors
are put together to increase the buying power and hire a professional manager to
invest and monitor the money. Anybody with an investible surplus of as little as a
few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a
defined investment objective and strategy.

Mutual Fund Structure

The structure consists of :

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

Trust
The Mutual Fund is constituted as a trust in accordance with the provisions of the

Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the

Indian Registration Act, 1908

Trustee

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

Asset Management Company (AMC)

The AMC is appointed by the Trustee as the Investment Manager of the Mutual
Fund. The AMC is required to be approved by the Securities and Exchange Board
of India(SEBI) to act as an asset management company of the Mutual Fund. At
least 50% of the directors of the AMC are independent directors who are not

associated with the Sponsor in any manner. The AMC must have a net worth of at
least 10 corers at all times.

Registrar and Transfer Agent

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

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

Types of Schemes

Investment Objective

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

Equity Oriented Schemes

These schemes, also commonly called Growth Schemes, seek to invest a majority
of their funds in equities and a small portion in money market instruments. Such
schemes have the potential to deliver superior returns over the long term. However,
because they invest in equities, these schemes are exposed to fluctuations in value
especially in the short term.

Equity schemes are hence not suitable for investors seeking regular income or
needing to use their investments in the short-term. They are ideal for investors who
have a long-term investment horizon. The NAV prices of equity fund fluctuates
with market value of the underlying stock which are influenced by external factors
such as social, political as well as economic.HDFC Growth Fund, HDFC Tax Plan
2000 and HDFC Index Fund are examples of equity schemes.

General Purpose

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

Sector Specific

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

Special Schemes

Index schemes

The primary purpose of an Index is to serve as a measure of the performance of the
market as a whole, or a specific sector of the market. An Index also serves as a
relevant benchmark to evaluate the performance of mutual funds. Some investors
are interested in investing in the market in general rather than investing in any
specific fund. Such investors are happy to receive the returns posted by the
markets. As it is not practical to invest in each and every stock in the market in

proportion to its size, these investors are comfortable investing in a fund that they
believe is a good representative of the entire market. Index Funds are launched and
managed for such investors. An example to such a fund is the HDFC Index Fund.

Tax saving schemes

Investors (individuals and Hindu Undivided Families (“HUFs”)) are being
encouraged to invest in equity markets through Equity Linked Savings Scheme
(“ELSS”) by offering them a tax rebate. Units purchased cannot be assigned /
transferred/ pledged / redeemed / switched – out until completion of 3 years from
the date of allotment of the respective Units.

The Scheme is subject to Securities & Exchange Board of India (Mutual Funds)
Regulations, 1996 and the notifications issued by the Ministry of Finance
(Department of Economic Affairs), Government of India regarding ELSS.

Subject to such conditions and limitations, as prescribed under Section 88 of the
Income-tax Act, 1961, subscriptions to the Units not exceeding Rs.10, 000 would
be eligible to a deduction, from income tax, of an amount equal to 20% of the
amount subscribed. HDFC Tax Plan 2000 is such a fund.

Real Estate Funds

Specialized real estate funds would invest in real estates directly, or may fund real
estate developers or lend to them directly or buy shares of housing finance
companies or may even buy their securitized assets.

Debt Based Schemes

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

Income Schemes

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

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

Money Market Schemes

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

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

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

Constitution

Schemes can be classified as Closed-ended or Open-ended depending upon
whether they give the investor the option to redeem at any time (open-ended) or
whether the investor has to wait till maturity of the scheme

Open ended Schemes

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

Closed-ended schemes

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

Interval Schemes

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

RISK

The Risk-Return Trade-off

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

Market Risk

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

Credit Risk

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

Inflation Risk

Things you hear people talk about:
“Rs. 100 today is worth more than Rs. 100 tomorrow.”
“Remember the time when a bus ride coated 50 paise?”
“Mehangai Ka Jamana Hai.”
The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot
of times people make conservative investment decisions to protect their capital but
end up with a sum of money that can buy less than what the principal could at the
time of the investment. This happens when inflation grows faster than the return on
your investment.

Interest Rate Risk

In a free market economy interest rates are difficult if not impossible to predict.
Changes in interest rates affect the prices of bonds as well as equities. If interest
rates rise the prices of bonds fall and vice versa. Equity might be negatively
affected as well in a rising interest rate environment. A well-diversified portfolio
might help mitigate this risk.

Political/Government Policy Risk

Changes in government policy and political decision can change the investment
environment. They can create a favorable environment for investment or vice versa

Liquidity Risk

Liquidity risk arises when it becomes difficult to sell the securities that one has
purchased. Liquidity Risk can be partly mitigated by diversification, staggering of
maturities as well as internal risk controls that lean towards purchase of liquid
securities.

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

enough to offset the effect of a slump in the equity markets. Similarly the
information technology sector might be faring poorly but the auto and textile
sectors might do well and may protect you principal investment as well as help you
meet your return objectives

Benefits of Investing in Mutual Funds
Professional Management

Mutual Funds provide the services of experienced and skilled professionals,
backed by a dedicated investment research team that analyses the performance and
prospects of companies and selects suitable investments to achieve the objectives
of the scheme.

Diversification
Mutual Funds invest in a number of companies across a broad cross-section of
industries and sectors. This diversification reduces the risk because seldom do all
stocks decline at the same time and in the same proportion. You achieve this
diversification through a Mutual Fund with far less money than you can do on your
own.

Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps you avoid many
problems such as bad deliveries, delayed payments and follow up with brokers and
companies. Mutual Funds save your time and make investing easy and convenient.

Return Potential

Over a medium to long-term, Mutual Funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities.

Low Costs
Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage,
custodial and other fees translate into lower costs for investors.

Liquidity
In open-end schemes, the investor gets the money back promptly at net asset value
related prices from the Mutual Fund. In closed-end schemes, the units can be sold
on a stock exchange at the prevailing market price or the investor can avail of the
facility of direct repurchase at NAV related prices by the Mutual Fund.

Transparency
you get regular information on the value of your investment in addition to
disclosure on the specific investments made by your scheme, the proportion
invested in each class of assets and the fund manager's investment strategy and
outlook.

Flexibility
Through features such as regular investment plans, regular withdrawal plans and

dividend reinvestment plans, you can systematically invest or withdraw funds
according to your needs and convenience.

Affordability
Investors individually may lack sufficient funds to invest in high-grade stocks. A
mutual fund because of its large corpus allows even a small investor to take the
benefit of its investment strategy.

Choice of Schemes

Mutual Funds offer a family of schemes to suit your varying needs over
a lifetime.

Well Regulated
All Mutual Funds are registered with SEBI and they function within the provisions
of strict regulations designed to protect the interests of investors. The operations of
Mutual Funds are regularly monitored by SEBI.

Drawbacks of Mutual Funds

No Guarantees:No investment is risk free. If the entire stock market
declines in value, the value of mutual fund shares will go down as well, no
matter how balanced the portfolio. Investors encounter fewer risks when

they invest in mutual funds than when they buy and sell stocks on their own.
However, anyone who invests through a mutual fund runs the risk of losing
money.

Fees and commissions:All funds charge administrative fees to cover
their day-to-day expenses. Some funds also charge sales commissions or
"loads" to compensate brokers, financial consultants, or financial planners.
Even if you don't use a broker or other financial adviser, you will pay a sales
commission if you buy shares in a Load Fund.

Taxes:During a typical year, most actively managed mutual funds sell
anywhere from 20 to 70 percent of the securities in their portfolios. If your
fund makes a profit on its sales, you will pay taxes on the income you
receive, even if you reinvest the money you made.

Management Risk: When you invest in a mutual fund, you depend on
the fund's manager to make the right decisions regarding the fund's portfolio.
If the manager does not perform as well as you had hoped, you might not
make as much money on your investment as you expected. Of course, if you
invest in Index Funds, you forego management risk, because these funds do
not employ managers

Rights of a Mutual Fund Unit holder

A unit holder in a Mutual Fund scheme governed by the SEBI (Mutual
Funds) Regulations is entitled to:

1. Receive unit certificates or statements of accounts confirming the title within
6 weeks from the date of closure of the subscription or within 6 weeks from
the date of request for a unit certificate is received by the Mutual Fund.

2. Receive information about the investment policies, investment objectives,
financial position and general affairs of the scheme.
3. Receive dividend within 42 days of their declaration and receive the
redemption or repurchase proceeds within 10 days from the date of
redemption or repurchase.
4. Vote in accordance with the Regulations to:-

a. Approve or disapprove any change in the fundamental investment policies of
the scheme, which are likely to modify the scheme or affect the interest of
the unit holder. The dissenting unit holder has a right to redeem the
investment.
b. Change the Asset Management Company.
c. Wind up the schemes.

Brief history of Company

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.

The Housing Development Finance Corporation Limited (HDFC) was amongst the
first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to
set up a bank in the private sector, as part of the RBI's liberalization of the Indian
Banking Industry in 1994. The bank was incorporated in August 1994 in the name
of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank
commenced operations as a Scheduled Commercial Bank in January 1995.

Registered office
Hdfc bank House
Senapati Bapat Marg
Lower Parel
Mumbai 400013
Tel No: 56521000
Fax No: 24960739
Web –site : www.hdfcbank.com

Board of Directors

C M Vasudev Non Executive Chairman
Aditya Puri Managing Director
Harish Engineer Executive Director
Paresh Sukthankar Executive Director
Anami N Roy Director
Ashim Samanta Director
Bobby Parikh Director
Partho Datta Director
Renu Karnad Director
Pandit Palande Director

Vice president (legal) & company secretary

Mr. Sanjay Dongre

Auditors

Mr. P.C. Hansotia&Co (Chartered accountants)

Broad Areas in Which it Operates

The Bank operates in three segments: retail banking, wholesale banking and
treasury services. The retail banking segment serves retail customers through a
branch network and other delivery channels. The wholesale banking provides loans
and transaction services to corporate and institutional customers. The treasury
services segment undertakes trading operations on the proprietary account, foreign
exchange operations and derivatives trading. The Bank operates in India.

Retail Banking
This segment raises deposits from customers and makes loans and provides
advisory services to such customers. The objective of the Retail Bank is to
provides its target market customers a range of financial products and banking

services, giving the customer a one-stop window for all his/her banking
requirements. The products are backed by service and delivered to the customers
through the growing branch network, as well as through alternative delivery
channels like automated teller machines (ATMs), phone banking, net banking and
mobile banking.

The HDFC Bank Preferred program for high net worth individuals, the HDFC
Bank Plus and the Investment Advisory Services programs have been designed
keeping in mind needs of customers who seek distinct financial solutions,
information and advice on various investment avenues. The Bank also has an array
of retail loan products, including auto loans, loans against marketable securities,
personal loans and loans for two-wheelers. It is also a provider of depository
participant (DP) services for retail customers, providing customers the facility to
hold their investments in electronic form.

HDFC Bank has launched an international debit card in association with VISA
(VISA Electron) and also issues the MasterCard Maestro debit card. The Bank
launched its credit card business during the fiscal year ended March 31, 2001. By
September 30, 2005, the bank had a total card base (debit and credit cards) of 5.2
million cards. The Bank is also engaged in the merchant acquiring business with
over 50,000 point-of-sale (POS) terminals for debit/credit cards acceptance at
merchant establishments.

Wholesale Banking
The Bank's target market ranges from large, blue-chip manufacturing companies in
the Indian corporate to small and mid-sized corporates and agri-based businesses.

For these customers, the Bank provides a range of commercial and transactional
banking services, including working capital finance, trade services, transactional
services and cash management. The bank is also a provider of structured solutions,
which combine cash management services with vendor and distributor finance for
facilitating superior supply chain management for its corporate customers. It
provides cash management and transactional banking solutions to corporate
customers.

Treasury Services
Within this business, the bank has three main product areas: Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. Risk
management information, advice and product structures, as well as fine pricing on
various treasury products are provided through the Bank's Treasury team. The
Treasury business is responsible for managing the returns and market risk on this
investment portfolio.

Customer focus

HDFC Bank's mission is to be a “World-Class Indian Bank.”

The objective is to build sound customer franchises across distinct businesses so as
to be the preferred provider of banking services for target retail and wholesale
customer segments, and to achieve healthy growth in profitability, consistent with
the bank's risk appetite. The bank is committed to maintain the highest level of

ethical standards, professional integrity, corporate governance and regulatory
compliance. HDFC Bank's business philosophy is based on four core values –

Operational Excellence,

Customer Focus,

Product Leadership and

People

Capital structure

Authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up
capital is Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the
bank's equity and about 19.4% of the equity is held by the ADS Depository (in
respect of the bank's American Depository Shares (ADS) Issue). Roughly 31.3% of

the equity is held by Foreign Institutional Investors (FIIs) and the bank has about
190,000 shareholders. The shares are listed on the The Stock Exchange, Mumbai
and the National Stock Exchange. The bank's American Depository Shares are
listed on the New York Stock Exchange (NYSE) under the symbol "HDB

Various Services

Forex and trade services

HDFC Bank has a range of products and services that one can choose from to
transact smoothly.The following are different methods of transacting in foreign
exchange and remitting money.

Travelers cheques

Foreign currency cash.

Foreign currency drafts

Cheque deposits

Remittances

Cash to master

Trade services

Foreign services branch locator

Important guidelines and schedules

All Foreign Exchange transactions are conducted by strictly adhering to RBI
guidelines. Depending on the nature of your transaction or point of travel, you will
need to understand your Foreign Exchange limits.

Loans

Whatever your need, our range of loans can help

Home Loans

Personal Loans

Two Wheeler Loans

New Car Loans

Used Car Loans

Overdraft Against Car

Express Loans

Loans Against Securities

Loans Against Property

Personal Banking

Savings Accounts

These Accounts are primarily meant to inculcate a sense of saving for the future,
accumulating funds over a period of time. Whatever may be the occupation, bank
is confident that customer will find the perfect banking solution. Open an account
in your name (customer‟s name) or register for one jointly with a family member
today.

Current Accounts

Now, with an HDFC Bank Current Account, experience the freedom of multi-city
banking! Customer can have the power of multi-location access to his account
from any of banks 500 branches in 220 cities. Not only that, he can do most of his
banking transactions from the comfort of his office or home without stepping out.

At HDFC Bank, it understands that running a business requires time and money,
also that customers business needs are constantly evolving. That's where it come
in. It provideshim with a choice of Current Account options to exclusively suit his
business - whatever the size or scope.

Fixed Deposits

Long-term investments form the chunk of everybody's future plans. An alternative
to simply applying for loans, fixed deposits allow the customer to borrow from his
own funds for a limited period, thus fulfilling his needs as well as keeping his
savings secure.

As per the finance (No 2) Act 2004, all fees & charges mentioned in the Tarriffs,
Charges or Fees Brochures will attract Service Tax @10% & Education Cess @2%
of the service tax amount effective 10th September 2004. The same will appear as
separate debits in the statements.

Private banking

HDFC Bank offers Private Banking services to high net worth individuals and

institutions. Banks team of seasoned financial and investment professionals

provide objective guidance backed by thorough research and in-depth analysis

keeping in mind customer‟s financial goals.

Multiple Recognition from Euro money

At HDFC Bank, they have always strived towards providing exceptional service to
each of their esteemed customers. As testament to this dedication, they have earned
the following ranks in a recently conducted Euromoney Survey.

Rated as the best private bank in the super effluent category in India HDFC
Bank Investment Advisory Services - Helping you take your Investment
portfolio further.
Dedicated investment advisor

HDFC Private Banking service involves a high degree of personalization. When
customer avail of this facility, a dedicated Investment Advisor serves him. This
seasoned finance professional adds value to his portfolio by keeping him up to date
with financial markets and investment opportunities

Payment services

With HDFC Bank's payment services, one can bid goodbye to queues and paper
work. Its range of payment options make it easy for customer to pay for a variety
of utilities and services.

Verified by visa

If one wants to be worry free for his online purchases. Now he can shop
securely online with his existing Visa Debit/Credit card.

Net safe

Now shop online without revealing your (customers) HDFC Bank Credit Card

number.

Prepaid refill

If a person is a HDFC Bank Account holder and a prepaid customer, he can
now refill his Prepaid Mobile card with this service.

Bill pay

One can pay his telephone, electricity and mobile phone bills at his
convenience. Through the Internet, ATMs, his mobile phone and telephone -
with Bill Pay, bank‟s comprehensive bill payments solution

Visa Bill Pay

One can pay his utility bills from the comfort of his home! Pay using his HDFC
Bank Visa credit card and forget long queue and late payments forever

Insta pay

One can Pay his bills, make donations and subscribe to magazines without
going through the hassles of any registration.

Direct pay

Shop or Pay bills online without cash or card. Debit your (customers) account
directly with bank‟s Direct Pay service!

Smart pay(with credit cards)

With Smart Pay, paying customer‟s r electricity, telephone, mobile phone,
water bills, gas and insurance premia payments becomes easy like never before.

Visa money transfer

One can transfer funds to any Visa Card (debit or credit) within India at his
own convenience through HDFC Bank's Net Banking facility.

E-Monies Electronic Funds Transfer

Transfer funds from customers account to any account in any Bank in India at
15 locations - FREE of cost

Online payment of excise and service tax

One can make his Excise and Service Tax payments at his own convenience.

Preferred/classic banking

If a customer expects more from everything, even HDFC bank, will invite him
into the world of exclusive banking. Where he will never again have to wait to
be served. With HDFC Bank Preferred Programme, his comfort always comes
first.
Ideal for seasoned professionals or businessmen, this programme will provide
him with a banker dedicated to take care of all his banking and investment

needs. It also means he get preferential rates on various banking products and
other exclusive benefits.

Hdfc bank classic banking

If a person wants to experience banking beyond the ordinary, our HDFC Bank
Classic Programme is just for him.
Becoming an HDFC Bank Classic customer entitles him to a host of benefits,
including a bouquet of preferentially priced products and specialized wealth
management solutions.

Awards and Achievements

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class
Indian Bank". They realized that only a single-minded focus on product quality and
service excellence would help them get there. Today, they are proud to say that
they are well on the way towards that goal.

2010
Business Today:Best Bank in India.

Forbes Top 2000 Companies: Bank at 632nd Position

Business world: Best Bank (large)

The Banker Magazine: Word‟s Top 1000 bank

Asia money Awards: Best Local Cash Management Bank in Large and Medium
segments

Euro money Awards: "Best Bank" in India

2009
Asia money Awards: Best Domestic Commercial Bank

Asia money Awards: Best Cash Management Bank – India

Global Finance Award : Best Trade Finance Bank.

The Asian Banker Excellence: Retail Banking Risk Management Award in India:
Best Bank India

Economic Times Awards: Best Bank in India 2009

2008

Finance Asia Country Awards For Achievement 2008: Best Bank and Best
Cash and Management Bank.

Buisness India: Best bank 2008

Forbes Asia: Fab 50 Companies in pacific Asia.

Buisness Today: Best Bank Award

Till Year 2007
HDFC Bank named the "Most Customer Responsive Company - Banking and
Financial Services in The Economic Times - Avaya Global IT User in Banking' at
the IT Users Awards 2003. Outlook Money & NDTV Profit : Best Bank in the
Private sector category.

The Asian Banker Excellence in Retail Financial Services Award : Best Retail
Bank in India.

Asian Banker : Managing Director Aditya Puri wins the Leadership Award For
india.

Most Improved Company for Best Management Practices in India 2004

HDFC Bank has been named Best Domestic Bank in India in The Asset Triple A
Country Awards 2005.

The Business Today-KPMG Survey published in the leading Indian business
magazine Business Today has named HDFC Bank "Best Bank in India" for the
third consecutive year in 2005.

The Asset magazine named HDFC Bank "Best Cash Management Bank" and "Best
Trade Finance Bank" in India, in 2006.

Connect Customer Responsiveness Awards 2005"

HDFC Bank has been named Best Domestic Bank in India Region in The Asset
Triple A Country Awards 2004 and 2003.

In 2004, HDFC Bank was selected by BusinessWorld as "One of India's Most
Respected Companies" as part of The Business World Most Respected Company
Awards 2004.

In 2004, Forbes Global again named us in its listing of Best under a Billion, 100
Best Smaller Size Enterprises in Asia/Pacific and Europe, in its November 1, 2004
issue.

In 2004, HDFC Bank won the award for "Operational Excellence in Retail
Financial Services" - India as part of the Asian Banker Awards 2003.

In 2003, Forbes Global named us in its ranking of "Best under a Billion, 200 Best
Small Companies for 2003".

Leading business newspaper The Financial Express named HDFC Bank the "Best
New Private Sector Bank 2003" in the FE-Ernst & Young Best Banks Survey
2003.

Leading Personal Finance Magazine in India Outlook Money named HDFC Bank
the "Best Bank in the Private Sector" for the year 2003.

Leading Indian business magazine Business Today in a survey rated us "Best Bank
in India" 2003, and "Best Private Sector Bank" in India in 1999.

NASSCOM and economictimes.com have named us the 'Best

There have been some other proud moments as well

London-based Euromoney magazine gave us the award for "Best Bank - India" in
1999, "Best Domestic Bank" in India in 2000, and "Best Bank in India" in 2001
and 2002

Asia money magazine has named us "Best Commercial Bank in India 2002".

For our use of information technology we have been recognized as a
"Computerworld Honors Laureate" and awarded the 21st Century Achievement
Award in 2002 for Finance, Insurance & Real Estate category by Computerworld,
Inc., USA.

Our technology initiative has been included as a case study in their online global
archives.The Economic Times has conferred on us The Economic Times Awards
for Corporate Excellence as the Emerging Company of the Year 2000-01.

Leading Indian business magazine Business India named us "India's Best Bank" in
2000.

In the year 2000, leading financial magazine Forbes Global named us in its list of
"The 300 Best Small Companies" in the world and as one of the "20 for 2001" best
small companies in the world.

Corporate Governance

HDFC Bank recognizes the importance of good corporate governance, which is
generally accepted as a key factor in attaining fairness for all stakeholders and
achieving organizational efficiency. This Corporate Governance Policy, therefore,
is established to provide a direction and framework for managing and monitoring
the bank in accordance with the principles of good corporate governance.

Profile of HDFC Mutual Fund

HDFC Asset Management Company Ltd (AMC) was incorporated under the
Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset
Management Company for the HDFC Mutual Fund by SEBI vide its letter dated
June 30, 2000.The registered office of the AMC is situated at Ramon House, 3rd
Floor, H.T. Parekh Marg, 169, Back bay Reclamation, Church gate, Mumbai - 400
020.

In terms of the Investment Management Agreement, the Trustee has appointed the
AMC to manage the Mutual Fund.

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

The present shareholding pattern of the AMC is as follows

Particulars Percentage of the Paid Capital
Housing Development Finance 50.10
Corporation Limited
Standard Life Investments Limited 49.90

Vision

“To be a dominant player in the Indian mutual fund space, recognized for its high
levels ofethical and professional conduct and a commitment towards enhancing
investor interests”

The Board of Directors of the HDFC Asset
Management Company Limited (AMC)

Mr. Deepak S Parekh
Mr. N. Keith Skeoch
Mr Mark Connolly
Mr. Hoshang S. Billimoria
Mr. Humayun Dhanrajgir
Mr. P. M. Thampi
Dr. Deepak Phatak
Mr Rajeshwar Raj Bajaaj
Ms. Renu S. Karnad
Mr. Milind Barve

The AMC is managing 3 close ended schemes

HDFC Fixed Investment Plan
HDFC Long Term Equity Fund and
HDFC Fixed Maturity Plans

22 open-ended schemes of the Mutual Fund

HDFC Growth Fund (HGF)
HDFC Balanced Fund (HBF)
HDFC Income Fund (HIF)
HDFC Liquid Fund (HLF)
HDFC Long Term Advantage Fund (formerly HDFC Tax Plan 2000)(HTP)
HDFC Children's Gift Fund (HDFC CGF)
HDFC Gilt Fund (HGILT)
HDFC Short Term Plan (HSTP)
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. (HPM)
HDFC Multiple Yield Fund - Plan 2005 (HMY2005)

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 4, 2003 to act as a Portfolio Manager under the SEBI (Portfolio
Managers) Regulations, 1993.The Certificate of Registration is valid from January
1, 2004 to December 31, 2006 .

Techniques Used

1) Return
Return on a typical investment consists of two components. The basic is the
periodic cash receipts (or income) on the investment, either in the form of interest
or dividends. The second component is the change in the price of the assets-
commonly called the capital gain or loss. This element of return is the difference
between the purchase price and the price at which the assets can be or is sold;
therefore, it can be again or a loss.

The return has been calculated as under

NAVt – NAVt-1

Portfolio return: Rit =---------------------------------

NAV t-1

Where Rit is the difference between Net Asset Values for two consecutive days
divided by the NAV of the preceding day.

M.indt – M.indt-1

Market return: Rmt =--------------------------------

M.indt-1

Where Rmt is the difference between market indices of two consecutive day‟s
dividend by the market index for the preceding day

2) Risk
Risk is neither good nor bad. Risk in holding securities is generally associated
with the possibility that realized returns will be less than expected returns. The
difference between the required rate of returns on mutual fund investment and the
risk free return is the risk premium. Risk can be measured in terms of Beta &
standard deviations.

Standard deviation

It is used to measure the variation in individual returns from the average expected
returns over a certain period. Standard deviation is used in the concept of risk of a
portfolio of investments. Higher standard deviation means a greater fluctuation in
expected return.

Standard deviation (SD) =/ var

Where Var = variance

Var=  p (r-E(r)) 2
i

Beta

Beta measures the systematic risk and shows how prices of securities respond to
the market forces. It is calculated by relating the return on a security with return for
the market. By convention, market will have beta 1.0.Mutual fund is said to be
volatile, more volatile or less volatile. If beta is grater than 1 the stock is said to be
riskier than market. If beta is less than 1,the indication is that stock is less risky in
comparison to market. If beta is zero then the risk is the same as that of the market.
Negative beta is rare.

= n xy-( x)( y)

n x2-( x) 2

Where,

n= number of days

X =rolling returns of the NSE index

Y= rolling returns of the schemes

3) Sharpe index

Sharpe index measures risk premium of a portfolio, relative to the total amount of
risk in the portfolio. Sharpe index summarizes the risk and return of a portfolio in a
single measure that categorizes the performance of funds on the risk- adjusted

basis. The larger the Sharpe‟s index the portfolio over performs the market and
vise versa.

Where,

St = Sharpe‟s index

Rp= portfolio return

Rf= Risk free rate of return (7.59%)

SD= Standard Deviation of the port folio

St= RP-Rf

4) Treynor’s Index

Treynor‟s model is on the concept of the characteristics straight line. The
characteristics line has drawn a relationship between the market return and a
specific portfolio without taking into consideration any direct adjustment for risk.
It is also known as reward to volatility ratio and is defined as:

The formula for Treynor‟s Index is:

Portfolio avg return (Rp) – risk-free rate of interest (Rf)

Treynor index (Tn) = ---------------------------------------------------------------------

Beta coefficient of portfolio (Bp)

Rp -Rf

Tn = -------------------------

Bp

It measures portfolio risk in terms of beta, which is weighted average of individual
security beta. The ratio is investors, for who the fund represents only a fraction of
their total assets. The higher the ratio better is the performance.

Criteria 2&3

Equity diversified schemes
There is lot of variety schemes offered by AMCs. Equity diversified is one of the
scheme offered by the AMC .the selection criteria of schemes is totally depend on
the fund size and age of the fund. The scheme, which has the corpus value, is
more than 400Crs and the age of the fund is more than 3yrs only that fund is
qualified for analysis

The following are the equity-diversified schemes in the selected funds:

Fund size DOI
HDFC Equity Fund (G) 2887.39 12/08/94
HDFC Top 200 Fund (G) 1131.45 08/19/96
HDFC Long Term Advantage 424.53 01/02/01
Fund (G)
HDFC Tax Saver (G) 475.99 12/18/95
Reliance Growth Fund (G) 2524.13 09/08/95
Reliance Vision Fund (G) 1719.35 09/07/95
Pru ICICI Dynamic plan 1044.27 10/18/02
Pru ICICI Power 1359.04 10/05/01
Pru ICICI Tax Plan 421.75 08/09/99

Tables for fund size and DOI

Absolute returns

Scheme Name DOI RT1y RT2y RT3y RT4y RT5y
nav

Pru ICICI Dynamic 47.375 61.468 180.655 0.000 - -
Plan (G)
Pru ICICI Power (G) 61.740 55.870 143.262 267.719 381.967 475.933
Pru ICICI Tax Plan 73.120 36.316 190.389 344.498 453.101 603.077
(G)

Reliance Growth 199.520 48.210 186.379 416.624 557.181 909.717
Fund (G)

Reliance Vision Fund 137.650 50.454 144.668 292.837 428.002 857.898
(G)

HDFC Equity Fund 113.822 54.314 149.500 279.913 416.668 575.101
(G)
HDFC Top 200 Fund 85.834 49.693 138.335 267.597 427.560 530.206
(G)
HDFC Long Term 74.137 39.146 139.926 310.959 467.665 712.015
Advantage Fund (G)
HDFC Tax Saver (G) 115.193 47.475 205.147 366.936 505.960 615.484

The selected funds returns from date of launch to date of inception

Criteria 4

Methodology

1. Return

Name of Scheme DOI Returns(annualized) Avg
1 yr 2yr 3yr 4yr 5yr return

Reliance Growth 199.52 48.21 93.23 80.40 27.21 53.64 60.54
Fund (G)
Reliance Vision 137.65 50.45 62.62 60.56 34.41 81.42 57.89
Fund (G)
HDFC Equity 113.822 54.31 61.68 52.27 36.00 30.66 46.99
Fund(G)
HDFC Long Term 74.137 39.15 72.43 71.29 38.13 43.04 52.81
Advantage Fund(G)
HDFC Tax Saver(G) 115.193 47.48 106.91 53.02 29.77 18.07 51.05

HDFC Top 200 Fund 85.834 49.69 59.22 54.24 43.52 19.46 45.22
(G)
Pru ICICI Dynamic 47.3746 61.47 73.82 31.67 0 0 55.65
Plan (G)
Pru ICICI Power (G) 61.74 55.87 56.07 51.16 31.07 19.50 42.73
Pru ICICI Tax Plan 73.12 36.32 113.03 53.07 24.43 27.12 50.79
(G)

NAVt – NAVt-1

Portfolio return: Rit =---------------------------------

NAV t-1

Where Rit is the difference between Net Asset Values for two consecutive days
dividend by the NAV of the preceding day.

Risk

Beta

Scheme Name 5 years avg return* Beta
Pru ICICI Tax Plan (G) 50.79 1
Pru ICICI Dynamic Plan 55.65 0.99
(G)
Reliance Vision Fund (G) 57.89 0.98
Pru ICICI Power (G) 42.73 0.97
HDFC Top 200 Fund (G) 45.22 0.96
HDFC Tax Saver (G) 51.05 0.93
Reliance Growth Fund (G) 60.54 0.91
HDFC Equity Fund (G) 46.99 0.9
HDFC Long Term 52.81 0.75
Advantage Fund (G

Returns are annualized

= nxy-(x)( y)

nx -(x)2
2

Where,

n= number of days

X =rolling returns of the NSE index

Y= rolling returns of the schemes

Beta describes the relationship between the stock‟s return and the index returns. it
describes the risk in the portfolio with comparing market risk as 1 .

If beta =1

One percent changes in market index return causes exactly one percent change in
the stock returns. it indicates that the stock moves in randem with the market .

If Beta <1

Then the stock is less volatile compared to the market.

If Beta >1

Then the stock is more volatile compared to the market. The stock value

With more then 1 beta value is considered to be risky.

If Beta –ve: nagative Beta indicates that the stock returns moves in the opposite
direction to the market return.

Standard deviation
It is used to measure the variation in individual returns from the average expected
returns over a certain period. Standard deviation is used in the concept of risk of a
portfolio of investments. Higher standard deviation means a greater fluctuation in
expected return.

Name of Scheme DOI Returns (annualized) 5yrs SD
1 yr 2yr 3yr 4yr 5yr Avg
return
Pru ICICI Dynamic 47.3746 61.47 73.82 31.67 0 0 55.65 30.51
Plan (G)
Pru ICICI Power 61.74 55.87 56.07 51.16 31.07 19.50 42.73 14.81
(G)
Pru ICICI Tax Plan 73.12 36.32 113.03 53.07 24.43 27.12 50.79 32.69
(G)
Reliance Growth 199.52 48.21 93.23 80.40 27.21 53.64 60.54 23.55
Fund (G)
Reliance Vision 137.65 50.45 62.62 60.56 34.41 81.42 57.89 15.43
Fund (G)
HDFC Equity Fund 113.822 54.31 61.68 52.27 36.00 30.66 46.99 11.70
(G)
HDFC Top 200 85.834 49.69 59.22 54.24 43.52 19.46 45.22 13.88
Fund (G)
HDFC Long Term 74.137 39.15 72.43 71.29 38.13 43.04 52.81 15.64
Advantage Fund
(G)
HDFC Tax Saver 115.193 47.48 106.91 53.02 29.77 18.07 51.05 30.59
(G)

Standard deviation (SD) =/ var

Where Var = variance

Var=  p (r-E(r)) 2
i

Return & Risk for top 10 average returns

Name of Scheme DOI 5yrs Sd Beta
avg
returns
Reliance Growth Fund (G) 199.52 60.54 23.55 0.91
Reliance Vision Fund (G) 137.65 57.89 15.43 0.98
Pru ICICI Dynamic Plan (G) 47.3746 55.65 30.51 0.99
HDFC Long Term Advantage 74.137 52.81 15.64 0.75
Fund (G)
HDFC Tax Saver (G) 115.193 51.05 30.59 0.93
Pru ICICI Tax Plan (G) 73.12 50.79 32.69 1
HDFC Equity Fund (G) 113.822 46.99 11.70 0.94
HDFC Top 200 fund 85.834 45.22 13.88 0.96
Pru ICICI power 61.74 42.73 14.81 0.97

Sharpe’s
Sharpe‟s index measures the risk premium of the portfolio relative to the total amt
of risk in the portfolio. This risk premium is the difference between the portfolio‟s
average rate of return and the risk less rate of return. The index assigns the highest
values to assets that have best risk-adjusted average rate of returns.

Name of Scheme DOI 5 yrs avg Rf sd St
returns Rp
Reliance Growth Fund (G) 199.52 60.54 8.00 23.55 2.23
Reliance Vision Fund (G) 137.65 57.89 8.00 15.43 3.23
Pru ICICI Dynamic Plan (G) 47.3746 55.65 8.00 30.51 1.56
HDFC Long Term Advantage 74.137 52.81 8.00 15.64 0.59

Fund (G)
HDFC Tax Saver (G) 115.193 51.05 8.00 30.59 1.41
Pru ICICI Tax Plan (G) 73.12 50.79 8.00 32.69 1.31
HDFC Equity Fund (G) 113.822 46.99 8.00 11.70 3.33
HDFC Top 200 fund 85.834 45.22 8.00 13.88 2.68
Pru ICICI power 61.74 42.73 8.00 14.81 2.34

Where st =Sharpe‟s index

Rp=portfolio return

Rf=Risk free rate of return (8.00%)

SD= standard deviation of the port folio

St= RP-Rf
SD

Treynor’s Index

Name of Scheme DOI Rf Beta Tn
Rp
Reliance Growth Fund (G) 199.52 60.54 8.00 0.91 57.73
Reliance Vision Fund (G) 137.65 57.89 8.00 0.98 50.91
Pru ICICI Dynamic Plan (G) 47.3746 55.65 8.00 0.99 48.13
HDFC Long Term Advantage 74.137 52.81 8.00 0.75 59.75
Fund (G)
HDFC Tax Saver (G) 115.193 51.05 8.00 0.93 46.29
Pru ICICI Tax Plan (G) 73.12 50.79 8.00 1 42.79
HDFC Equity Fund (G) 113.822 46.99 8.00 0.94 43.32
HDFC Top 200 fund 85.834 45.22 8.00 0.96 38.77
Pru ICICI power 61.74 42.73 8.00 0.97 35.80

In Treynor‟s higher the ratio higher the performance.

Tn =Treynor‟s index

Rp=portfolio return

Rf=Risk free rate of return (7.59%)

Formula

Tn= RP-Rf
Beta

Performance Evaluation Tables

Name of DOI) Rp Beta SD Sharpe’s Treynor's
Scheme
Reliance 199.52 60.54 0.91 23.55 2.23 57.73
Growth
Fund (G)
Reliance 137.65 57.89 0.98 15.43 3.23 50.91
Vision Fund
(G)
Pru ICICI 47.3746 55.65 0.99 30.51 1.56 48.13
Dynamic
Plan (G)
HDFC Long 74.137 52.81 0.75 15.64 0.59 59.75
Term
Advantage
Fund (G)
HDFC Tax 115.193 51.05 0.93 30.59 1.41 46.29
Saver (G)

Pru ICICI 73.12 50.79 1 32.69 1.31 42.79
Tax Plan
(G)
HDFC 113.822 46.99 0.94 11.70 3.33 43.32
Equity Fund
(G)
HDFC Top 85.834 45.22 0.96 13.88 2.68 38.77
200 fund
Pru ICICI 61.71 42.73 0.97 14.81 2.34 35.80
power

Ranking

Ranking on the basis of Sharpe’s

Name of the scheme DOI Rp Sharpe’s Ranks

Hdfc equity fund 113.822 46.99 3.33 1
Reliance vision fund 137.65 57.89 3.23 2
Hdfc top 200 fund 85.834 45.22 2.68 3
Pru ICICI power 61.74 42.73 2.34 4
Reliance growth fund 199.52 60.54 2.23 5
Pru ICICI dyanamic fund 47.37 55.65 1.56 6
Hdfc tax saver fund 115.193 51.05 1.41 7
Pru icici tax plan 73.12 50.79 1.31 8
Hdfc long tern advantage 74.134 52.81 0.59 9
fund

Hdfc equity fund
3.5
Reliance vision fund
3
Franklin india prima
2.5
Hdfc top 200 fund
2 Pru ICICI power

1.5 Reliance growth
fund
1 Pru ICICI dyanamic
fund
Hdfc tax saver fund
0.5
Pru icici tax plan
0
Sharpe’s Hdfc long tern
advantage fund

Ranking on the basis of Treynor’s

Name of Scheme DOI Treynor’s Ranks
Rp
Hdfc long tern advantage 74.134 51.81 60.29 1
fund
Reliance growth fund 199.52 60.54 58.18 2
Reliance vision fund 137.65 57.89 57.33 3
Pru ICICI dyanamic fund 47.3746 55.65 51.33 4
Hdfc tax saver fund 115.193 51.05 48.55 5
Hdfc equity fund 113.822 46.99 46.73 6
Pru icici tax plan 73.12 50.79 43.20 7
Hdfc top 200 fund 85.834 45.22 41.91 8
Pru ICICI power 61.74 42.73 38.61 9

70
Hdfc long tern
60 advantage fund
Reliance growth
50 fund
40 Pru ICICI dyanamic
fund
30 Hdfc tax saver fund

20 Hdfc equity fund

Pru icici tax plan
10
Hdfc top 200 fund
0
Treynor’s Pru ICICI power

Limitations of the study

The data collection was strictly confined to secondary sources. No primary
Data was not associated with the project
Collecting historical NAV is very difficult
Selection of schemes for study is very difficult because lot of verities of
schemes.

Conclusion

The above evaluation according to Sharpe index the HDFC equity scheme falls
under 1st rank & according to traynor HDFC long term advantage fund falls under
1st rank but here only diff was 2.11 as compare reliance.

I would like to conclude that HDFC schems are performing well as compare to
other competitors even time factor it was started late but its returns is high as
compared to competitor.

As HDFC mutual fund has to concentrate more on marketing their scheme, as its
schemes are performing well, and it should maintain its rank 1 position.

Annexure

Details about top Schemes
HDFC Equity fund

Fund manager Prasanth jain

Investment objective To achive capital apprecition

Date of allotment 12-8-94

Growth plan 151.389

Dividend plan 45.193

Entry load < 5 cr 2.25%,> 5cr no entry load
Less than or =to rs 5crs nil;rs <5crs :1%(if
Exit load redeemed within 1 year of allotment
Minimum investment 5000

Fund size 2887.39

Portfolio holding top 10 holdings industry %NAV
Infosys technologies ltd software 8.27
Oil& natural gas corp ltd oil 6.09
ITC ltd consumer non durables 5.31
Larsen & toubro ltd diversified 5.17
Cropton greaves ltd industrial capital goods 4.95

Amrtech auto ltd auto ancilaries 4.33
Reliance industry ltd petrolium prod 4.26
Punj lioyod ltd construction 3.87
Hindustan petroleum petroliun prod 3.77
CMCltd hardware 3.48

HDFC Top 200 Funds
Fund manager Prasanth jain
objective To genarate long term capital appriciation
from portfolio of equity &equity linked
instruments
Date of 19-8-1996
inception
Growth plan 151.386
Dividend plan 45,193
Exit load -
Minimum amt 5000
Fund 1131.45

Portfolio- top 10 holdings
Company/issuer industry % to nav
Equity &equity related
Tata consultancy service ltd software 4.29
Bharati airtel ltd Telecom 4.06
service

coporation ltd
Icici bank bank 3.16
Wipro software 3.16
State bank fo india bank 3.03

HDFC long term advantage fund
Fund manager Vinay kulkarni
objective To achive long term grpwth capital
Date of 1-2-01
inception
Growth plan 95.254
Exit load -
Minimum amt 5000
Fund 424.53

Maharastra seemless ltd Ferrous metals 5.07
Container corporation of transportation 5.04
india ltd
Heritage foods india ltd Consumer non durables 4.97
Blue star ltd Consumer durable 4.19
AIA enginneering ltd Industrial capital goods 3.31

Kansai nerolac paints ltd Consumer non durables 3.29
Bharati elestronic ltd Industrial capital goods 3.09

HDFC Tax saver
Fund manager Vinay kulkarni
Date of 18-12-95
inception
Growth plan 146.134
Exit load -
Minimum amt 5000
Fund 475.99

Tata consultancy service ltd software 4.29
Bharati airtel ltd Telecom 4.06
service
coporation ltd
Icici bank bank 3.16
Wipro software 3.16

Fund manager Ashwani kumar
objective The primary investment objective 0f the
scheme is to achive long term growth of
capital by investment in equity & its related
securities.
Date of 9-7-1995
inception
Growth plan 160.53
Dividend plan 49.81
Entry load < 2 r 2.25%,>/= to 2 cr.5 cr -1.25%:_> 5 cr -
nil
Exit load Nil
Minimum amt 5000
Fund 1719.35

Holdings % weightage
Reliance indutries ltd 5.14
JSW steel ltd 4.12
Bharath earth mover ltd 3.91
Bomby dyeing 7 mfg co ltd 3.23
Crompton greaves ltd 3.18
Bank of borada 3.09
Jindal saw ltd 2.71
Divis laboratieas 2.68
Jaipk sh association 2.61
associtiongujarath state 2,44
fertimliser

Reliance growth fund
Fund manager Sunil singania
objective The primary investment objective 0f the
scheme is to achive long term growth of
capital by investment in equity & its related
securities.
Date of 9-8-95
inception
Growth plan 234.80
Dividend plan 52.22
Entry load < 2 r 2.25%,>/= to 2 cr.5 cr -1.25%:_> 5 cr -
nil
Exit load Nil
Minimum amt 5000
Fund 2524.13

Holdings Weightage(%)
Equity 90.52
Siemens ltd 5,48
Grasim industries ltd 5.15
Divis laboraters ltd 5.07
Reliance comm ltd 4.42
India hotels ltd 4.42
Infosys technology ltd 4.25
Indian oil corporation ltd 3.73
Tata tea ltd 3.68
Reliance industries ltd 3.59
Auomative axies 3.55

PruICICI power
Fund manager Sankaran naren
Date of 10-05-2001
inception
Growth plan 76.66
Dividend plan 20.65
Exit load -
Minimum amt 5000
Fund 1359.04

Company/issuer (%)NAV
ITC LTD 6.38
Hindalco industries ltd 4.91
Patni computer system ltd 4.71
Grasim industries ltd 3.69
Mahindra & mahindra ltd 3.68
Tata consultancy service ltd 3.43
Infosys technologies ltd 3.17
Bharath electronic ltd 2.98
Deccan chronicle holdings 2.96
ltd

PruICICI dynamic plan
Date of 18-10-2002
inception
Growth plan 59.1741
Exit load -
Minimum amt 5000
Fund 1044.27

ITC ltd 5.86
Decan chronicle holdings ltd 5.31
i-fex solution ltd 4.17
Tata consultancy service ltd 399
Jain irrigation systems ltd 3.13
Bharati airtel ltd 3.11
Mahinra & mahindra ltd 3.03
Oil & natural gas company 2.69
ltd
Sterlite indutries (india) ltd 2.68

PruICICI tax plan
Date of 18-9-99
inception
Growth plan 91.23
Dividend plan 29.29
Exit load -
Minimum amt 5000
Fund 421.75

H.E.G LTD 5.06
Cadila health care 5.04
Kesoram industries ltd 4.99
ITC ltd 4.51
Sundaram clayton ltd 4.44
Aventis pharma ltd 4.12
Trent ltd 3.49
Raymonds ltd 3.35
IBP company ltd 3.32
Orient peper & indutries ltd 3.16

Bibliography

Reference books

security analysis & portfolio management

By Punithavathy pandian

Websites

www.hdfcmutualfund.com

www.amfi.com

www.myirish.com

www.indiainfoline.com

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