hdfc mutual fund pro

8/8/2019 Hdfc Mutual Fund Pro.

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(Front Title page)

SUMMER TRAINNING REPORT

ON(HDFC MUTUAL FUND)

SUBMITTED BY(Makwana Rajnikant M.)

MBA Sem-III

Guided by( Mr.Pragnesh Patel)

ACADEMIC YEAR

2005-2007

SUBMITTED TO

JAYSUKHLAL VADHAR INSTUTUTE OF MANAGEMENT STUDIES(JVIMS)

`BIPIN T. VADHAR COLLEGE OF MANAGEMENT

JAMNAGAR

AFFILIATED TO

SAURASHTRA UNIVERSITYRAJKOT

(Inner title page)

SUMMER TRAINNING REPORT

ON

(Title of Project)


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SUBMITTED BY

(Makwana Rajnikant M.)MBA Sem-III

Guided by

ACADEMIC YEAR

2005-2007

SUBMITTED TO

JAYSUKHLA VADHAR INSTUTUTE OF MANAGEMENT STUDIES(JVIMS)

BIPIN T. VADHAR COLLEGE OF MANAGEMENT

JAMNAGAR

AFFILIATED TO

SAURASHTRA UNIVERSITYRAJKOT


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CERTIFICATE

This is to certify that Mr./Ms. MAKWANA RAJNIKANT M.has completed hissummer training project as a partial fulfillment of M.B.A. program satisfactorily.

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

___________________________________(Mr. Pragnesh Patel)

Mr.Vijay H. Vyas

(Dy. Director)

(This certificate to be obtained from the college after your project isapproved by your guide)


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CERTIFICATE (to be obtained from Company)

This is to certify that Mr. / Ms Makwana Rajnikant Mohanbhai, MBA-Program 2005-2007, student of JVIMS from Jamnagar has successfullycompleted his/her Project from (date to be Inserted)

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

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

(Sign of person under whom you have worked)

(Note: - This certificate is indicative only, and is to be obtained from thecompany on their letterhead)


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DECLARATION

I undersigned Makwana Rajnikant M. a student of MBA 3rd semester declarethat I have prepared this project report on (Project title") at HDFC ASSETMANAGEMENT COMPANY LTD. under Mr. Amit Doshi and by MrPragnesh Patel of JVIMS.

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

(Signature)Makwana Rajnikant M.

Roll No : 33

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


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Acknowledgement

I take this opportunity to express my deep sense of gratitude, thanks andregards towards all of those who have directly or indirectly helped me in thesuccessful completion of this project.

I present my sincere thanks to Mr. Amit Doshi (Branch Manager ) whoallowed me to take training at HDFC Mutual Fund.

I am also grateful to all member of HDFC Mutual Fund who helped methroughout my training period.

I would like to thank

Mr. Killol KariaMiss Mittal JoshiMr. Manish Jasani

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

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

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

Date: -

Place: -

Signature

Rajnikant M. Makwana


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CONTENTS

Sr.

No

Particulars Page

No

1 Executive Summary

2 Introduction

(a) Company Details

(b) Industry Details

(c) Competitors Details

(d) Regulatory Environment Details

3 Organizational Study

(a) Marketing department study

(b) Operation department study

(c) Financial department study

(d) Human resource department study

4 Bibliography


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HDFC Asset Management Company Limited

A Joint Venture With Standard Life Investment


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Executive Summary

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

training at HDFC MUTUAL FUND. I have done my training project at Rajkot

branch from 01/05/06 to 15/06/06

HDFC mutual fund is Asset Management Company formed with a key

objective to provide Indian Investors the investment options which suits their

investment objectives. The company has more than 7 years of experience in

mutual fund industry. I was placed under marketing department where direct

selling of Mutual Fund was done. I carried out the task in Rajkot city.

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

_____________________________________________________

Both primary and secondary source of data were used to collect the data.

Questionnaire was the main tool to collect primary source of data directly from

customers. Secondary source of data was collected from magazines like

HDFC Mutual fund review, Fact Sheets of various AMCs, and websites.

More details about the project is given in the later part of the report.


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INTRODUCTION

The Indian financial market is one of the fastest growing emerging markets ofthe world, thanks to the new economic policy - liberalization, deregulation and

measures of restructuring - which has dismantled entry barriers in the

financial markets, allowed the entry of new players and created an

environment for efficient allocation of resources. The major investors in the

markets are the Individual Investors, Corporate Sectors, Charitable Trusts,

etc.

The individual investors are now aware about of the other sources of the

investment avenues rather than the traditional investment avenue. They are

aware about the modern investment avenues.

One of the important investment avenues in the financial market is the Mutual

Fund. Through out the world, Mutual Funds have played a significant role as

far as an investment is concerned. Mutual Funds play a pivotal role in

transforming savings into investments and thereby improving financial healthof a country. One way to measure this role is to analyze performance of

mutual fund schemes. Also understanding of mutual fund structure and

advantages etc. is very important. A Mutual Fund is the ideal instrument

vehicle for todays complex and modern financial scenario. Mutual funds offer

many benefits to the small investors such as Diversification, liquidity, low

transaction cost, low risk, transparency, more options and more schemes,

professional management, flexibility, convenience to switch and many more.

Other than Mutual Funds, Bank Deposits, Post Office Schemes, RBI Relief

Bond, Public Provident Fund, Unit Trust of India, Life Insurance, and Equity

are the investment avenues where generally investors invest their savings.

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

Avenue and also generate the awareness of mutual funds in the minds of

individual investors & corporate.


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HDFC Asset Management Company Limited

A Joint Venture With Standard Life Investment


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Introduction

HDFC Asset Management Company Ltd (AMC) was incorporated under the

Companies Act, 1956, on December 10, 1999, and was approved to act as an

Asset Management Company for the HDFC Mutual Fund by SEBI vide its

letter dated June 30, 2000.

The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T.

Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020.

In terms of the Investment Management Agreement, the Trustee has

appointed the AMC to manage the Mutual Fund.

As per the terms of the Investment Management Agreement, the AMC will

conduct the operations of the Mutual Fund and manage assets of the

schemes, including the schemes launched from time to time.

The present shareholding pattern of the AMC is as follows:

Particulars % of the paid up capitalHousing Development Finance Corporation Limited 50.10

Standard Life Investments Limited 49.90

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund,

following a review of its overall strategy, had decided to divest its Asset

Management business in India. The AMC had entered into an agreement with

ZIC to acquire the said business, subject to necessary regulatory approvals.

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

Mutual Fund have migrated to HDFC Mutual Fund on June 19, 2003. These

Schemes have been renamed as follows:

Former Name New Name


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Zurich India Equity Fund HDFC Equity Fund

Zurich India Prudence Fund HDFC Prudence Fund

Zurich India Capital Builder Fund HDFC Capital Builder Fund

Zurich India TaxSaver Fund HDFC TaxSaver

Zurich India Top 200 Fund HDFC Top 200 Fund

Zurich India High Interest Fund HDFC High Interest Fund

Zurich India Liquidity Fund HDFC Cash Management Fund

Zurich India Sovereign Gilt Fund HDFC Sovereign Gilt Fund

The Board of Directors of the HDFC Asset Management Company Limited

(AMC) consists of the following eminent persons.

Mr. Deepak S Parekh

Mr. Hoshang S. Billimoria

Mr. N. Keith Skeoch

Mr. Humayun Dhanrajgir

Ms. Renu S. Karnad

Mr. Milind Barve

Mr. Mark Connolly

Mr. Rajeshwar Ram Bajaj

Mr. P. M. Thampi

Dr. Deepak Phatak


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Sponsors

Housing Development Finance Corporation Limited (HDFC)

HDFC was incorporated in 1977 as the first specialised housing finance

institution in India. HDFC provides financial assistance to individuals,

corporates and developers for the purchase or construction of residential

housing. It also provides property related services (e.g. property identification,

sales services and valuation), training and consultancy. Of these activities,

housing finance remains the dominant activity. HDFC currently has a client

base of over 8,00,000 borrowers, 12,00,000 depositors, 92,000 shareholders

and 50,000 deposit agents. HDFC raises funds from international agenciessuch as the World Bank, IFC (Washington), USAID, CDC, ADB and KfW,

domestic term loans from banks and insurance companies, bonds and

deposits. HDFC has received the highest rating for its bonds and deposits

program for the ninth year in succession. HDFC Standard Life Insurance

Company Limited, promoted by HDFC was the first life insurance company in

the private sector to be granted a Certificate of Registration (on October 23,

2000) by the Insurance Regulatory and Development Authority to transact life

insurance business in India

HDFC is India's premier housing finance company and enjoys an

impeccable track record in India as well as in international markets. Since its

inception in 1977, the Corporation has maintained a consistent and healthy

growth in its operations to remain the market leader in mortgages. Its

outstanding loan portfolio covers well over a million dwelling units. HDFC has

developed significant expertise in retail mortgage loans to different market

segments and also has a large corporate client base for its housing related

credit facilities. With its experience in the financial markets, a strong market

reputation, large shareholder base and unique consumer franchise, HDFC

was ideally positioned to promote a bank in the Indian environment.


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Awards and Achievements Banking Services

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian Bank". We realised that only a single-minded focus on product

quality and service excellence would help us get there. Today, we are proud

to say that we are well on our way towards that goal.

It is extremely gratifying that our efforts towards providing customer

convenience have been appreciated both nationally and internationally.

2005

Asiamoney

Awards

Best Domestic Commercial Bank

Asiamoney

Awards

Best Cash Management Bank - India .

The Asian Banker

Excellence

Retail Banking Risk Management Award in India for

2004

Hong Kong-based

Finance Asia

magazine

Best Bank India

The Asian Banker

Excellence

Retail Banking Risk Management Award for 2004

Hong Kong-based

Finance Asia

magazine

"Best Bank in India"

Asiamoney

Awards

Best Domestic Commercial Bank Best Cash

Management Bank - India.

Economic Times

Awards

"Company of the Year" Award for Corporate

Excellence 2004-05.

Table : 1 Awards Achieved By HDFC BANK As Per the year

2005.


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MAN WITH A MISSION

If ever there was a man with a mission it was Hasmukhbhai Parekh, Founder

and Chairman-Emeritus,of HDFC Group who left this earthly abode on

November 18, 1994. Born in a traditional banking family in Surat, Gujarat, Mr.

Parekh started his financial career at Harkisandass Lukhmidass a leading

stock broking firm. The firm closed down in the late seventies, but, long before

that, he went on to become a towering figure on the Indian financial scene.

In 1956 he began his lifelong financial affair with the economic world, as

General

Manager of the newly-formed Industrial Credit and Investment Corporation of

India (ICICI). He rose to become Chairman and continued so till his retirement

in 1972.

At the ripe age of 60, Hasmukhbhai started his second dynamic life, even

more illustrious than his first. His vision for mortgage finance for housing

gave birth to the Housing Development Finance Corporation it was a

trend-setter for housing finance in the whole Asian continent.

He was also a writer in his own right. There are over 200 published articles by

him, full of incisive comments on finance and economics.

In 1992, the Government of India honoured him with the Padma Bhushan

Award. The London School of Economics & Political Science conferred on

him an Honorary Fellowship.

He was one of the Founder Members of the Centre for Advancement of

Philanthropy, and its Chairman till 1993.

He took active interest in the Bombay Community Public Trust, designed

specifically to serve the needs of the citys underprivileged citizens.


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When Mr. Deepak Parekh took over as Chairman from Hasmukhbhai, he said:

Taking over from H.T. Parekh is a formidable task; his vision brought about

not only an institution,

but an entire concept which has proved itself to be of lasting importance.

About Mr. Deepak Parekh

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

the world when H.T. Parekh (maternal uncle, who founded

HDFC in 1977) asked him, "How long will you continue to go

round the world? Come and settle down, this is an Indian

organization." He had been to the US, the UK, Hong Kong

and the Middle East, which was then every body's dream. He

chucked up my multinational job and came to HDFC. And He

had been in HDFC ever since. He had qualified as a chartered accountant in

England and had worked with Ernst & Young, Precision Fasteners, ANZ

Grindlay's and Chase Manhattan in New York and Mumbai before he came to

HDFC.

MR. DEEPAK S PAREKH

Mr. Deepak Parekh, the Chairman of the Board, is associated with Housing

Development Finance Corporation Limited (HDFC Ltd) in his capacity as its

Executive Chairman.

Mr. Parekh joined HDFC Ltd in a senior management position in 1978. He

was inducted as Wholetime Director of the Corporation in 1985 and was

appointed as the Chairman in 1993. He is the Chief Executive Officer of

HDFC Ltd.

Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England &

Wales).

His other Directorships as on April 30, 2006 are as follows


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Background and Objective of HDFC group

BackgroundHDFC was incorporated in 1977 with the primary objective of meeting a social

need that of promoting home ownership by providing long-term finance to

households for their housing needs. HDFC was promoted with an initial share

capital of Rs. 100 million.

Business Objectives

The primary objective of HDFC is to enhance residential housing stock in thecountry through the provision of housing finance in a systematic and

professional manner, and to promote home ownership. Another objective is to

increase the flow of resources to the housing sector by integrating the housing

finance sector with the overall domestic financial markets...

Organizational Goals

HDFCs main goals are toa) Develop close relationships with individual households,

b) Maintain its position as the premier housing finance institution in the

country,

c) Transform ideas into viable and creative solutions,

d) Provide consistently high returns to shareholders, and

e) To grow through diversification by leveraging off the existing client

base.


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Organizational Culture & Values

HDFC group have an open and informal culture. HDFC value integrity,

commitment, teamwork and excellence in customer service. HDFC adopt apolicy of "Learning By Doing" which encourages decision making as well as

learning from doing.

In HDFC they continue to grow rapidly in spite of the competitive market

scenario, young professionals opting to make a career with HDFC, today will

find more challenging and exciting opportunities to contribute and grow with

HDFC.

Organization and Management

HDFC is a professionally managed organisation with a board of directors

consisting of eminent persons who represent various fields including finance,

taxation, construction and urban policy & development. The board primarily

focuses on strategy formulation, policy and control, designed to deliver

increasing value to shareholders.

Name and Designation Location Contact Number

Mr. Deepak S. Parekh is the executive Chairman of the

Corporation. He is a Fellow of the Institute of Chartered

Accountants (England & Wales).Mr. Parekh joined the

Corporation in a senior management position in 1978.He

was inducted as a wholetime director of the Corporation

in 1985 and was appointed as the Chairman in 1993. He is the chief executive

officer of the Corporation. Mumbai Tel : - 91-022-22029894, Fax :- 91-022-

22852336

Mr. K. M. Mistrythe Managing Director of the

Corporation. Is a Fellow of the Institute of Chartered

Accountants of India. He has been employed with the

Corporation since 1981 and was the executive director of

the Corporation since 1993. He was appointed as the


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deputy managing director in 1999 and the Managing Director in 2000. He is

also a member of the Investors Grievance Committee of Directors.Mumbai

Tel:- 91-022-22850487,Fax 91-022-22828175

Ms. Renu S. Karnadthe Executive Director of the

Corporation. Is a graduate in law and holds a Masters

degree in economics from Delhi University. She has been

employed with the Corporation since 1978 and was

appointed as the Executive Director of the Corporation in

2000. She is responsible for overseeing all aspects of

lending operations of HDFC.New Delhi Tel :- 91-011-26167393,Fax :-91-011-

26194617

Board of Directors

Mr. D S Parekh - Chairman Mr. D N GhoshMr. Keshub Mahindra - Vice Chairman Dr. S A Dave

Ms. Renu S. Karnad - ExecutiveDirector

Mr. S Venkitaramanan

Mr. K M Mistry - Managing Director Dr. Ram S TarnejaMr. Shirish B Patel Mr. N M MunjeeMr. B S Mehta Mr. D M SatwalekarMr. D M SukthankarTable : 2 Top Authorities Of HDFC.

HDFC has a staff strength of 1029, which includes professionals from the

fields of finance, law, accountancy, engineering and marketing.

HDFC Bank
http://www.hdfc.com/we_directors_parekh.asphttp://www.hdfc.com/we_directors_ghosh.asphttp://www.hdfc.com/we_directors_mahindra.asphttp://www.hdfc.com/we_directors_dave.asphttp://www.hdfc.com/we_directors_karnad.asphttp://www.hdfc.com/we_directors_venkitaramanan.asphttp://www.hdfc.com/we_directors_mistry.asphttp://www.hdfc.com/we_directors_tarneja.asphttp://www.hdfc.com/we_directors_patel.asphttp://www.hdfc.com/we_directors_munjee.asphttp://www.hdfc.com/we_directors_mehta.asphttp://www.hdfc.com/we_directors_satwalekar.asphttp://www.hdfc.com/we_directors_sukthankar.asphttp://www.hdfc.com/we_directors_parekh.asphttp://www.hdfc.com/we_directors_ghosh.asphttp://www.hdfc.com/we_directors_mahindra.asphttp://www.hdfc.com/we_directors_dave.asphttp://www.hdfc.com/we_directors_karnad.asphttp://www.hdfc.com/we_directors_venkitaramanan.asphttp://www.hdfc.com/we_directors_mistry.asphttp://www.hdfc.com/we_directors_tarneja.asphttp://www.hdfc.com/we_directors_patel.asphttp://www.hdfc.com/we_directors_munjee.asphttp://www.hdfc.com/we_directors_mehta.asphttp://www.hdfc.com/we_directors_satwalekar.asphttp://www.hdfc.com/we_directors_sukthankar.asp


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Profile

The Housing Development Finance Corporation Limited (HDFC) was amongst

the first to receive an 'in principle' approval from the Reserve Bank of India

(RBI) to set up a bank in the private sector, as part of the RBI's liberalisation

of the Indian Banking Industry in 1994. The bank was incorporated in August

1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai,

India. HDFC Bank commenced operations as a Scheduled Commercial Bankin January 1995.

Business Focus

HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to

build sound customer franchises across distinct businesses so as to be the

preferred provider of banking services for target retail and wholesale customer

segments, and to achieve healthy growth in profitability, consistent with thebank's risk appetite. The bank is committed to maintain the highest level of

ethical standards, professional integrity, corporate governance and regulatory

compliance. HDFC Bank's business philosophy is based on four core values -

Operational Excellence, Customer Focus, Product Leadership and People.

Business

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

The bank has three key business segments:

Wholesale Banking Services

Retail Banking Services

Treasury


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Respect Yourself

Standard Life Investments Limited

The Standard Life Assurance Company was established in 1825 and has

considerable experience in global financial markets. In 1998, Standard Life

Investments Limited became the dedicated investment management company

of the Standard Life Group and is owned 100% by The Standard Life

Assurance Company. With global assets under management of approximately

US$186.45 billion as at March 31, 2005, Standard Life Investments Limited is

one of the world's major investment companies and is responsible for

investing money on behalf of five million retail and institutional clients

worldwide. With its headquarters in Edinburgh, Standard Life Investments

Limited has an extensive and developing global presence with operations in

the United Kingdom, Ireland, Canada, USA, China, Korea and Hong Kong. In

order to meet the different needs and risk profiles of its clients, Standard Life

Investments Limited manages a diverse portfolio covering all of the major

markets world-wide, which includes a range of private and public equities,

government and company bonds, property investments and various derivative

instruments. The company's current holdings in UK equities account for

approximately 2% of the market capitalization of the London Stock Exchange.


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Respect Yourself

HDFC Standard Life Insurance Company Ltd. is one of Indias leading private

life insurance companies, which offers a range of individual and group

insurance solutions. It is a joint venture between Housing Development

Finance Corporation Limited (HDFC Ltd.), Indias leading housing finance

institution and The Standard Life Assurance Company, a leading provider of

financial services from the United Kingdom. Both the promoters are well

known for their ethical dealings and financial strength and are thus committed

to being a long-term player in the life insurance industry all important factors

to consider when choosing your insurer.

Vision

'The most successful and admired life insurance company, which means that

we are the most trusted company, the easiest to deal with, offer the best

value for money, and set the standards in the industry'.

Values

Values that we observe while we work: Integrity, InnovationCustomer centric,

People Care One for all and all for one, Team work, Joy and Simplicity

Residence

The pages of this site are prepared in the United Kingdom for the information

of residents in countries in which Standard Life Investments Group products

may be sold. The information on our site does not constitute an offer or

solicitation to sell units or shares in any of the funds referred to on this site, by

anyone in any jurisdiction in which such offer, solicitation or distribution would

be unlawful or in which the person making such offer or solicitation is not

qualified to do so or to anyone to whom it is unlawful to make such offer or

solicitation.


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Company details and regulation

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

registered in Scotland (no. SC 123321) Registered Office 1 George Street,Edinburgh, EH2 2LL. It is also registered in Ireland (no. 904256) and has a

principal place of business at 90 St. Stephen's Green, Dublin 2, Ireland.

The Standard Life Investments Group includes Standard Life Investments

(Mutual Funds) Limited, SLTM Limited, Standard Life Investments (Corporate

Funds) Limited and Standard Life Investments (Private Equity) Limited.

Retail investment products and funds are issued by Standard Life Savings

Limited and Standard Life Investments (Mutual Funds) Limited.

ISA information is issued by Standard Life Savings Limited, the ISA Manager,

a company registered in Scotland (no. SC180203) Registered Office Standard

Life House, 30 Lothian Road, Edinburgh, EH1 2DH.

The above companies are authorized and regulated in the UK by the Financial

Services Authority.

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

Scotland (no. SC 215736) Registered Office 1 George Street, Edinburgh, EH2

2LL. It is a wholly owned subsidiary of Standard Life Investments Limited. It is

registered as an Investment Adviser with the US Securities and Exchange

Commission and has a principal place of business at One Beacon Street, 34th

Floor, Boston, MA 02108-3106, USA.

Standard Life Investments (Asia) Limited is a company registered in Scotland

(no. SC 193436) Registered Office 1 George Street, Edinburgh, EH2 2LL. It is

a wholly owned subsidiary of Standard Life Investments Limited. It is licensed

with and regulated in Hong Kong by the Securites and Futures Commission

and has a principal place of business at Suite 5301-5302 The Center, 99

Queen's Road Central, Hong Kong.

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

with its Registered Office at 1001 de Maisonneuve Boulevard West, Suite


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700, Montreal, Quebec, Canada, H3A 3C8. It is a wholly owned subsidiary of

Standard Life Investments Limited.

General disclaimers and terms

While Standard Life Investments Limited has taken all reasonable care to

ensure that the information contained within the pages of this site is accurate,

current, complete, fit for its intended purpose and compliant with the relevant

United Kingdom legislation and regulations as at the date of issue, errors or

omissions may occur due to circumstances which are beyond our control.

If you are in any doubt as to the accuracy and currency of any information

contained within the pages of this site, or if you require any further

information, you may wish to contact us directly or take independent financial

advice.

Standard Life Investments Limited accepts no responsibility for information

contained in any other sites which can be accessed by hypertext link from

these pages or for these sites not being available at all times. Please note that

when you click on any external site hypertext link you will leave the Standard

Life Investments site.

Standard Life Investments Limited reserves the right to suspend or withdraw

access to the pages of this site without notice at any time and accepts no

responsibility for these pages not being available at all times.

Please remember that past performance is not necessarily a guide to future

performance. The value of units and shares and the income from them can go

down as well as up and investors may not get back the amount originally

invested. Exchange rate changes may cause the value of overseas

investments to rise or fall. For further details on any of the funds or products

mentioned, please read the relevant offering document or prospectus.

You may invest in a stocks and shares ISA if you are 18 or over, resident and

ordinarily resident in the UK or qualifying for ISA tax benefits as a Crown

employee serving overseas (or the spouse of such a person). The tax reliefs

on ISAs and PEPs may be altered in future and their value to you depends on


27/133

your own financial circumstances. The tax treatment of UK pension funds may

be subject to change in future.

The presence or absence of a CAT-standard cannot predict whether an ISA

will prove to be a good, bad or suitable investment. A CAT standard ISA has

not received Government or regulatory approval of any kind, nor is your

money or your investment return guaranteed by the Government or regulator

in any way. The adherence to a CAT standard is warranted by Standard Life

Savings Limited and does not carry certification by any other body.

By accessing these pages you shall be deemed to have accepted and agreed

to be bound by the terms of this Important Legal Information page which shall

be governed by the Law of Scotland.

The prices, which are shown are for information purposes only. They are not

the prices at which the shares or investment products can be bought or sold.

Investment products involving accumulation units or shares have income

distributions automatically re-invested. Other investments have income

distributions paid to the investor and this will be reflected in the price

Institutional investors based outside of Europe, North America and Asia can

access some specialist investment services outlined below. If you are

interested in any of these products or services please contact us to ascertain

your eligibility.

Segregated Fund Management

The specific investment needs of large investors and pension schemes are

often best accommodated by segregated funds, which are tailored to the

individual investors requirements. Our segregated funds benefit from our

specialist expertise in certain markets.

Assets are bought and sold for each segregated client according to an

individual brief, rather than being pooled with other clients' investments.

Available worldwide, a segregated fund can be used to benefit from our

specialist expertise in certain markets including equities, bonds, property,

private equity and treasury.


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Money Market Fund Management

Investors are increasingly looking to access our cash management expertise.In particular, our flagship AAA Fund for dollar, euro and sterling liquidity has

been widely acclaimed. Standard Life Investments AAA Cash Fund is an

open-ended investment company split into sub-funds that are denominated in

sterling, euro and dollar.

Evidence of the funds success is the explosion of assets under management

from a standing start to 7.2 billion* in only two years. Our active cash

management expertise is underpinned by a strong investment process with

three core principles security of capital, daily liquidity and a competitive

yield. Our consistent success is testament to the resilience of our process.

Private Equity Investment

We manage approximately 2.4 billion* in private equity for insurance

companies, pension funds, and high net worth individuals. Our private equity

investments include retail funds, in-house capital and limited partnerships.

Our team has more than 150 years of private equity experience and can

demonstrate an outstanding long term track record. In addition, each member

of our investment team has extensive direct deal experience, which gives us a

unique insight into the investment strategies employed by the managers we

review for our private equity fund of funds vehicles.

Our clients invest with us because our process is consistent and focused. We

have always concentrated on buy-outs in Western Europe, a successful

strategy for over 20 years. It is this approach, combined with our wealth of

experience, which has allowed us to generate excellent returns for our clients.


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SWOT Analysis

Strength

Young and well qualified staff.

Well regained and reputed brand of HDFC.

Experience of Standard Life Investment

Well aware of customer need.

Weakness

Presence of HDFC MF in very less places.

Less marketing.

Comparatively very less staff and very heavy work load.

Opportunities

Day by day increasing knowledge about Mutual Fund.

Only instrument with proper corporate governance and

Compare high risk with lower risk.

Rural market is totally untapped.

Threat

Presence of nationalized player like UTI and many more.

Increase in competition and competitor.

In Summary


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HDFC has always believed in the enduring business advantage of doing the

right thing - having a well-defined purpose, adhering to our core values and

giving back to the society - thereby gaining in terms of not only customerloyalty and employee satisfaction but also profitability.

In this context, HDFC was among the first Indian corporates to join the Global

Compact - an international initiative that brings companies together with UN

agencies, labour and civil society to support universal environmental and

social principles. HDFC remains wholly committed to the Global Compact and

strives to further its cause by upholding its ten principles in the areas of

human rights, labour, the environment and anti-corruption.

As our Chairman, Mr. Deepak Parekh quoted the following words of John

Wesley, the 18th century evangelist, while accepting The Economic Times

Corporate Citizen Awardwon by HDFC for the year 2003-04:

Do all the good you can,

by all the means you can,

in all the ways you can,

in all the places you can,

at all the times you can,

to all the people you can,

as long as ever you can.


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Industry Detail


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MUTUAL FUND SECTOR AND FINANCIAL MARKET OVERVIEW

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

development of capital markets and the growth of the Indian Economy. TheIndian mutual fund industry has been no exception. Though it is relatively

new, it has grown at a dynamic speed, influencing various sectors of the

financial market and the national economy. The Indian economy is under

transition on account of the on going structural adjustment programs and

liberalization. The corporate sector and the investment community play a

major role in the markets today. Economic transition is usually marked by

changes in the market mechanics, institutional integration, market regulations,

relocation of savings and investments and changes in inter-scrotal

relationships. These changes often include negativity and shake investors

confidence in the capital market. Mutual funds as efficient allocates of

resources play a crucial role in this transitional period. They have opened new

vistas to investors and imparted much needed liquidity to the system. In the

process, they have challenged the hitherto dominant role of commercial banks

in the financial market and national economy.

Mutual funds are dynamic financial institutions that play a crucial role in an

economy by mobilizing savings and investing them in the capital markets,

thus establishing a link between savings and capital market. Therefore, the

activities of mutual funds have both short and long term impact on the savings

and capital markets and the national economy. They mobilize funds in the

savings market and act as complementary to banks.


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Emergence of Mutual Funds

Mutual funds now represent perhaps the most appropriate investment

opportunity for most investors. As financial markets become more

sophisticated and complex, investors need a financial intermediary who

provides the required knowledge and professional expertise on successful

investing. It is no wonder then that in the birthplace of mutual funds the

U.S.A. the fund industry has already overtaken the banking industry, more

funds being under mutual fund management than deposited with banks.

The Indian mutual fund industry has already started opening up many of the

exciting investment opportunities to Indian investors. We have started

witnessing the phenomenon of more savings now being entrusted to the funds

than to the banks. Despite the expected continuing growth in the industry,

mutual funds are still a new financial intermediary in India.

Place of Mutual Funds in Financial Markets

Indian households started allocating more of their savings to the capital

markets in 1980s, with investments flowing into equity and debt instruments,

besides the conventional mode of bank deposits.

Until 1992, primary market investors were effectively assured good returns as

the issue price of new equity issues was controlled and low. After introduction

of free pricing of shares, new issue prices were higher and with greater

volatility in the stock markets, many investors who bought highly priced

shares lost money, and withdrew from the markets altogether. Even those

investors who continued as

Direct investors in the stock markets realized that the key to successful

investing in the capital markets lay in building a diversified portfolio, which in

turn required substantial capital. Besides, selecting securities with growth and

income potential from the capital market involved careful research and

monitoring of the market, which was not possible for all investors. Under


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similar circumstances in other countries, mutual funds had emerged as

professional intermediaries. Besides providing the expertise in stock market

investing, these funds allow investing in small amounts and yet holding a

diversified portfolio to limit risk, while providing the potential for income and

growth that is associated with the debt and equity instruments. In India, Unit

Trust of India occupied this place as the only capital markets intermediary

from 1964 until late 1987, when the Government started allowing other

sponsors also to set up mutual funds. With some ups and downs, this new

class of intermediary institutions has emerged, in India as elsewhere, as a

good alternative to direct investing in capital markets.

Mutual Funds serve as a link between the saving public and the capital

markets, as they mobilize savings from investors and bring them to borrowers

in the capital markets. By the very nature of their activities, and by virtue of

being knowledgeable and informed investors, they influence the stock

markets and play an active role in promoting good corporate governance,

investor protection and the health of capital markets. Mutual funds have

imparted much needed liquidity into the financial system and challenged the

hitherto dominant role of banking and financial institutions in the capital

markets.

What is a Mutual Fund?

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

investment objective place their contributions that are to be invested in

accordance with the stated investment objective of the scheme. The

investment manager would invest the money collected from the investor in to

assets that are defined/ permitted by the stated objective of the scheme. For

example, an equity fund would invest equity and equity related instruments

and a debt fund would invest in bonds, debentures, gilts etc.


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Mutual fund is a mechanism for pooling the resources by issuing units to the

investors and investing funds in securities in accordance with objectives as

disclosed

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

and sectors and thus the risk is reduced. Diversification reduces the risk

because all stocks may not move in the same direction in the same proportion

at the same time. Mutual fund issues units to the investors in accordance with

quantum of money invested by them. Investors of mutual funds are known as

unit holders.

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

investments. The mutual funds normally come out with a number of schemes

with different investment objectives which are launched from time to time. A

mutual fund is required to be registered with Securities and Exchange Board

of India (SEBI) which regulates securities markets before it can collect funds

from the public.

Invest / PoolTheir Money

Invest in numberOf Stocks & Bonds

Profit / Loss FromIndividual Investment

Profit / Loss FromPortfolio of Investment


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History of the Indian Mutual Fund Industry in India

The mutual fund industry in India started in 1963 with the formation of Unit

Trust of India, at the initiative of the Government of India and Reserve Bankthe. The history of mutual funds in India can be broadly divided into four

distinct phases.

First Phase 1964-87

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

was set up by the Reserve Bank of India and functioned under the Regulatoryand administrative control of the Reserve Bank of India. In 1978 UTI was de-

linked from the RBI and the Industrial Development Bank of India (IDBI) took

over the regulatory and administrative control in place of RBI. The first

scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had

Rs.6,700 crores of assets under management.

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

1987 marked the entry of non- UTI, public sector mutual funds set up by

public sector banks and Life Insurance Corporation of India (LIC) and General

Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI

Mutual Fund established in June 1987 followed by Canbank Mutual Fund

(Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual

Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92).

LIC established its mutual fund in June 1989 while GIC had set up its mutual

fund in December 1990.

At the end of 1993, the mutual fund industry had assets under management of

Rs.47, 004 crores.


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

With the entry of private sector funds in 1993, a new era started in the Indian

mutual fund industry, giving the Indian investors a wider choice of fund

families. Also, 1993 was the year in which the first Mutual Fund Regulations

came into being, under which all mutual funds, except UTI were to be

registered and governed. The erstwhile Kothari Pioneer (now merged with

Franklin Templeton) was the first private sector mutual fund registered in July

1993.

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

comprehensive and revised Mutual Fund Regulations in 1996. The industry

now functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign

mutual funds setting up funds in India and also the industry has witnessed

several mergers and acquisitions. As at the end of January 2003, there were

33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of

India with Rs.44, 541 crores of assets under management was way ahead of

other mutual funds.

Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI

was bifurcated into two separate entities. One is the Specified Undertaking of

the Unit Trust of India with assets under management of Rs.29, 835 crores as

at the end of January 2003, representing broadly, the assets of US 64

scheme, assured return and certain other schemes. The Specified

Undertaking of Unit Trust of India, functioning under an administrator and

under the rules framed by Government of India and does not come under the

purview of the Mutual Fund Regulations.


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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 TrustDeed and the Offer Documents of the respective Schemes. At least 2/3rd

directors of the Trustee are independent directors who are not associated with

the Sponsor in any manner.

Asset Management Company (AMC)

The AMC is appointed by the Trustee as the Investment Manager of theMutual Fund. The AMC is required to be approved by the Securities and


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Exchange Board of India (SEBI) to act as an asset management company of

the Mutual Fund. Atleast 50% of the directors of the AMC are independent

directors who are not associated with the Sponsor in any manner. The AMC

must have a networth of atleast 10 crore at all times.

Registrar and Transfer Agent

The AMC if so authorized by the Trust Deed appoints the Registrar and

Transfer Agent to the Mutual Fund. The Registrar processes the application

form, redemption requests and dispatches account statements to the unit

holders. The Registrar and Transfer agent also handles communications with

investors and updates investor records.

VISION

Awards and Achievements Banking Services

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

class Indian Bank". We realized that only a single-minded focus on product

VisionTo be a dominant player in the Indian mutual fundspace, recognized for its high levels of ethical andprofessional conduct and a commitment towardsenhancing investor interests.


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quality and service excellence would help us get there. Today, we are proud

to say that we are well on our way towards that goal.

It is extremely gratifying that our efforts towards providing customer

convenience have been appreciated both nationally and internationally.

Industry Details

The Indian Financial Market

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

that country. There is a strong link between the economy progress and the

financial system with institutional arrangement and prevailing delivery system.

The Indian economy is on the path of progress and the projection of GDP

growth rate in Budget-2006 is around 8.1%. The financial system has a strong

impact on GDP growth rate. The Indian financial system is divided into two

parts organized and unorganized.

The organized sector constitutes of Commercial Banks, FIs, Insurance

companies, Mutual Funds, Unit Trusts, etc. The Indian financial system has

also the involvement of public sector institutions.

Financial institutions being the important part of financial system in India help

to realize the opportunities for savings and real investment in the economy.

The FIs help in growth of economy, boosting the investment in various sectors

of economy and also the growth of GDP and per capita income.


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The Investment Options

In India the investor has wide variety of investment options available to him.

Economic well being in the long run depends significantly on how wisely heinvests. Every investment options has two main aspects i.e. risk and return.

The investor has the choice of investment in capital markets of the country

and also in financial institution of the country like Banks and Insurance

companies. The various tools of investment available to investor are as

follows -:

Post Office Savings Life Insurance

Investment in Debt Market

Real Estate

Government Securities

National Saving Certificate(NSC)

Bank Deposits

Equity Shares

Kishan Vikas Patra(KVP)

National Saving Certificate (NSC)

The investor can invest in any of the above investment tool depending on his

investment objective and need. Generally in India the investor prefer to invest

in banks and in post office savings account. But in last few years the trend

have changed and investors are moving towards capital markets.

Investment Attributes

1) Risk


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The rate of return from investments like equity shares, real estate, etc vary

rather widely. The risk of an investment refers to the variability of its rate of

return. Bank deposits, post office savings, investment in debt market are less

risky and have fixed return.

2) Rate of Return

The rate of return is an very important aspect of the investment tool. The rate

of return is high in equity markets and it is low in post office savings and bank

deposits. It means the more risky the instrument the more the return will be.

3) Tax Benefits

Some investments provide tax benefits, other does not. Tax benefits are of

three kinds: Initial tax benefit, Continuing tax benefit and Terminal tax benefit.

Initial tax benefit refers to the relief enjoyed at the time of making the

investment. Continuing tax benefit represents the tax shield associated with

the periodic returns from the investment e.g. Insurance, bank interest, etc.

Terminal tax benefit refers to relief from taxation when an investment is

realized or liquidated.

4) Liquidity

An investment is highly liquid if:

a) It can be transacted quickly

b) The transaction cost is low

c) The price change between two successive transactions is negligible

The liquidity of market may be judged in terms of its depth, breadth, and

resilience. Depth refers to the existence of buy as well as sell orders around

the current market price. Breadth implies the presence of such orders in

substantial volume. Resilience means that new orders emerge in response to

price changes. High marketability is desirable characteristics and low

marketability is an undesirable characteristic

5) Convenience


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Convenience broadly refers to the ease with which the investment can be

made and looked after. Convenience can be judged by ready availability of

investment and easy monitoring of investment. The degree of convenience

associated with investments varies widely. On one hand there is deposit in

savings bank account that can be readily available and does not require

maintenance effort. On the other hand is purchase of real estate that may

involve a lot of procedural and legal hassles at the time of acquisition and a

great deal of maintenance effort subsequently.

Some key Facts of Mutual Fund Industry

The graph indicates the growth of assets over the years.

Chart 2 : Phases Wise Increase in Amounts.

Source: www.amfiindia.com


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Competitors

Details


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Competitors Details

Index AMC Type1 UTI Mutual Fund Public

2 Unit Trust of India Public

3 Taurus Mutual Fund International

4 Tata Mutual Fund Private

5 Sundaram Mutual Fund Private

6 Standard Chartered Mutual Fund Banking

7 SBI Mutual Fund Banking

8 Sahara Mutual Fund Public9 Reliance Mutual Fund Private

10 Prudential ICICI Mutual fund Banking

11 PRINCIPAL Mutual Fund Private

13 Morgan Stanley Mutual Fund International

14 LIC Mutual Fund Public

15 Kotak Mahindra Mutual Fund Banking

16 JM Financial Mutual Fund Private

17 ING Vysya Mutual Fund Banking

18 HSBC Mutual Fund International

19 HDFC Mutual Fund Banking

20 GIC Mutual Fund Public

21 Franklin Templeton Investments International

22 Escorts Mutual Fund International

23 DSP Merrill Lynch Mutual Fund International

24 Deutsche Mutual Fund International

25 Chola Mutual Fund Private

26 Canbank Mutual Fund Banking

27 BOB Mutual Fund Banking

28 Birla Mutual Fund Public

29 Benchmark Mutual Fund Private

30 Alliance Mutual Fund International

31 ABN AMRO Mutual Fund International

Mutual Fund Assets Under Management (Rs. cr.)

March-06 April-06 Change % ChangeUTI Mutual Fund 29,519 30,109 590 2.00
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Prudential ICICI Mutual Fund 23,502 27,503 4,001 17.03Reliance Capital Mutual Fund 24,670 26,420 1,750 7.10HDFC Mutual Fund 21,550 22,539 989 4.59Franklin Templeton Mutual Fund 17,827 19,639 1,813 10.17Birla Sun Life Mutual Fund 15,019 17,390 2,371 15.79

SBI Mutual Fund 13,186 14,506 1,320 10.01DSP Merrill Lynch Mutual Fund 10,795 13,201 2,406 22.28Kotak Mahindra Mutual Fund 9,941 10,985 1,044 10.50Tata Mutual Fund 9,717 10,652 936 9.63HSBC Mutual Fund 9,220 10,079 859 9.32Standard Chartered Mutual Fund 9,412 9,322 -89 -0.95PRINCIPAL Mutual Fund 6,489 8,946 2,456 37.85LIC Mutual Fund 5,229 6,134 905 17.31Deutsche Mutual Fund 2,535 4,210 1,675 66.06Fidelity Mutual Fund 3,663 3,692 29 0.80Sundaram Mutual Fund 3,273 3,658 385 11.75

Canbank Mutual Fund 2,223 3,327 1,104 49.65ABN AMRO Mutual Fund 2,769 2,886 117 4.22J M Mutual Fund 2,596 2,784 188 7.24ING Vysya Mutual Fund 1,961 2,684 723 36.87Chola Mutual Fund 2,007 2,146 139 6.93Benchmark Mutual Fund 982 782 -200 -20.40Taurus Mutual Fund 232 261 29 12.35Sahara Mutual Fund 282 254 -27 -9.71

BOB Mutual Fund 191 221 30 15.90

Escorts Mutual Fund 164 169 5 3.04

Quantum Mutual Fund 11 30 19 168.03Total 228,964 254,529 25,565 10.04

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

Asset Under Management

Mutual Fund Name AUM Equity &

Balance

Debt &

MIP

Equity

%

Debt

%ABN AMRO Mutual Fund 1580.36 464.589. 1115.92 29.39 70.61

Alliance Capital Mutual Fund 1431.46 589.48 841.98 41.18 58.82

Birla Sun Life Mutual Fund 10049.66 1668.77 8380.89 16.61 83.39

Canbank Mutual Fund 1565.19 224.35 1340.84 14.33 85.67

Chola Mutual Fund 1004.62 232.63 771.99 23.16 76.84

Deutsche Mutual Fund 2366.72 96.57 2270.15 4.08 95.92

DSP Merrill Lynch Mutual Fund 6472.80 1462.33 5010.47 22.59 77.41
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Fidelity Mutual Fund 1628.06 1628.06 0.00 100.00 0.00

Franklin Templeton Mutual Fund 16704.74 6965.36 9739.38 41.70 58.30

HDFC Mutual Fund 15707.82 6126.04 9581.78 39.00 61.00

HSBC Mutual Fund 7250.63 1987.93 5262.70 27.42 72.58

ING Vysya Mutual Fund 2072.86 337.25 1735.62 16.27 83.73

JM Financial Mutual Fund 3780.83 85.52 3694.51 2.26 97.74

Kotak Mahindra Mutual Fund 6501.52 1065.12 5436.41 16.38 83.62

LIC Mutual Fund 2959.15 277.46 2681.69 9.38 90.62

PRINCIPAL Mutual Fund 6264.96 1682.48 4582.48 26.86 73.14

Prudential ICICI Mutual Fund 17095.89 2169.46 14926.44 12.69 87.31

Reliance Mutual Fund 9907.89 4226.40 5681.49 42.66 57.34

Sahara Mutual Fund 565.50 25.74 539.76 455 95.45SBI Mutual Fund 7189.35 2311.54 4877.81 32.15 67.85

Standard Charted Mutual Fund 7636.86 0.00 7636.86 0.00 100.0

0Sundaram Mutual Fund 2035.21 997.91 1037.31 49.03 50.97

Tata Mutual Fund 8713.95 2629.09 6084.86 30.17 69.83

Taurus Mutual Fund 170.76 157.53 13.23 92.25 7.75

UTI Mutual Fund 21975.57 8791.81 13183.77 40.01 59.99

Table 4 : % Changes in Equity & Debt as per the AUM Changes.


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The joint venture was formed with the key objective of providing the Indian

investor mutual fund products to suit a variety of investment needs. The AMC

has already launched a range of products to suit different risk and maturity

profiles.

Prudential ICICI Asset Management Company Limited has a networth of

about Rs. 80.14 crore (1 crore = 10 million) as of March 31, 2004. Both

Prudential and ICICI Bank Ltd have a strategic long-term commitment to the

rapidly expanding financial services sector in India.

As of May 1998 As on April 30,2006Assets under Management Rs. 160 crore Rs.27,550.49 crore

Number of Funds Managed 2 20

Franklin Templeton Investments is one of the largest financ ial services

groups in the world based at San Mateo, California USA. The group has US$

504.3 billion in assets under management globally (as of Apr 30, 2006).

Franklin Templeton has offices in 33 locations across India and manages

assets of Rs.19639.12 crores for around 13 lakh investors as of April 30,

2006.


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State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund

to launch offshore fund, the India Magnum Fund with a corpus of Rs. 225cr. approximately. Today it is the largest Bank sponsored Mutual Fund in

India. They have already launched 35 Schemes out of which 15 have

already yielded handsome returns to investors. State Bank of India Mutual

Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor

base of over 8 Lakhs spread over 18 schemes

In the debt sector it always aims at the "risk adjusted returns" based on the

investors risk tolerance. The following four steps are worked upon while

investing:

Manage the schemes on a "Portfolio basis".

Active management of interest rate risk.

Credit risk management by following the conservative approach.

Continuous monitoring.

Partnership firms, corporates and even trusts & societies, dulyregistered under the applicable laws, can invest in SBI Mutual

Funds.

Competitors Market Share

Market Share of All The Companies in Gujarat

Name Of The Company Market Share (%)

SBI Mutual Fund. 20

Franklin Templeton Investments. 15

Prudential ICICI Pvt. Ltd. 11

HDFC MF 13


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Table : 1

Competitors Market Share

34%

25%

19%

22%

SBI Mutual Fund.

Franklin Templeton

Investments.

Prudential ICICI Pvt.

Ltd.

HDFC MF

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

Legal And Regulatory Framework

Following are the regulators of Mutual Fund in India-:

AMFI

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

masses and give recommendations in order to uphold the interest of

investors.

This Association conducts AMFI exam. Initially the Association gave rights of

conducting the exam to Bombay Stock Exchange (BSE) and National Stock

Exchange (NSE). Then rights were also give the UTI (Unit Trust of India).

Corporate distributors are also given rights to conduct exam. It is compulsory

for a person to clear AMFI exam in order to become advisor in Mutual Fund.

SEBI


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

has clearly defined rules which govern mutual funds. These rules relate to the

formation, administration, and management of mutual funds and also

prescribe disclosure and accounting requirements. Such a high level of

regulation seeks to protect the interest of investors.

All Mutual Fund schemes are registered with SEBI and they follow the rules

and regulation as prescribed by SEBI. It registers every mutual fund scheme

in order to protect the interest of investors.

RBI

Reserve Bank of India was the regulator of Mutual Fund before SEBI. It

regulated mutual fund initially and there were only few schemes in the market.

But now with coming of SEBI, it has now become the main regulator of the

Mutual Fund. RBI now only governs the Bank Sponsored Mutual Fund.

General Obligations Of the AMC:

Every asset management company for each scheme shall keep and

maintain proper books of accounts, records and documents, for each

scheme so as to explain its transactions and to disclose at any point of time

the financial position of each scheme and in particular give a true and fair

view of the state of affairs of the fund and intimate to the Board the place

where such books of accounts, records and documents are maintained.

The financial year for all the schemes shall end as of March 31 of each

year. Every mutual fund or the asset management company shall prepare in

respect of each financial year an annual report and annual statement of

accounts of the schemes and the fund as specified in Eleventh Schedule.

Every mutual fund shall have the annual statement of accounts audited

by an auditor who is not in any way associated with the auditor of the asset

management company.


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The offer document and advertisement materials shall not be misleading

or contain any statement or opinion, which are incorrect or false.

The price at which the units may be subscribed or sold and the price at

which such units may at any time be repurchased by the mutual fund shall

be made available to the investors

The Rights of Investors

Following are the legal rights of Investors-:

Inspect major documents of the fund.

Appointment of the AMC can be terminated by 75% of the unit holders

of the scheme by voting.

Right to obtain information from trustees.

Entitled to receive dividend warrants within 30 days of the declaration

of dividend.

Rights to receive a copy of annual financial statements of fund and

periodic transaction statements.

75% of the unit holders can resolve to wind up the scheme.


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Structure of Indian Mutual Funds

Mutual Fund Structure

Mutual Fund industry is highly regulated in developed countries keeping in

view the protection of investors interest as well as to maintain operational

transparency. There is clear demarcation between open-ended schemes and

close ended schemes for which usually tow different type of structural and

management approaches are followed. Open-ended follows trust approach


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while close-ended schemes follow corporate approach. The management

and operations are guided by separate regulatory mechanisms, separate

controlling authorities as well.

SEBI Regulations Act, 1996, guides the formations and operations of Mutual

Funds. A Mutual Fund comprises of four separate entities i.e Sponsor, Mutual

Fund Trust, AMC and Custodian.

Sponsor

Sponsor can be any person, acting alone or in a combination with another

corporate body, establishes the Mutual Funds and get it registered with SEBI.

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

worth of the AMC. It must also have sound track record. Mutual Fund shall be

constituted in form of a trust and the instrument of trust shall be in form of a

deed, duly registered under the provisions of Indian Registration Act,

executed by sponsor in favor of trustees.

For e.g. In Reliance Capital Mutual Fund the Sponsor is Reliance Capital

Limited.

Board of Trustees

Board of Trustees manages Mutual Fund and the sponsor executed the trust

deeds. Mutual Funds raise money through sale of units under one or more

schemes for investing in securities. As per SEBI Regulations, 1996 half of

trustees should be independent persons and they should not be employees of

AMC. As a trustee of Mutual Fund, he cannot be appointed as a trustee of

another Mutual Fund, until and unless he is an independent person or has

permission from Mutual Fund where his is a trustee. Trustee have right to

appoint custodian and supervise their activities. For e.g. In Reliance Capital

Mutual Fund the Trustee is Reliance Capital Trustee Co. Limited.


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Asset Management Company

AMC is appointed by the trustees to float the schemes and manage the funds

raised by selling units under the scheme. They are to act as per SEBI

guidelines like they should be registered under the SEBI. Also the net worth ofthe AMC should be in cash and all assets should be in the name of AMC. The

director of AMC should be a person of reputed high standing and at least

have five years experience in relevant field. AMC are required to disclose

scheme particulars and base of calculation of NAV.

Custodian

As per SEBI Regulations Mutual Funds shall have a custodian who is not any

way associated with the AMC. It carry outs the activity of safekeeping the

securities or participating, in any clearing system. The custodian should not

be associated with AMC or act as a sponsor or trustee of any Mutual Fund.

For e.g. In Reliance Capital Mutual Fund the Custodian is Deutsche Bank AG.


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1) MARKETING DEPARTMENT

2) OPERATION DEPARTMENT

3) FINANCE DEPARTMENT


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4) HUMAN RESOURCE DEPARTMENT

MARKETING DEPARTMENT

Marketing scenario

The last few years have seen an increased attention to mutual funds across

all genres of investors big or small, individuals or corporate. The growing

awareness of the advantages that mutual funds offer over other investments

avenues have been better communicated and more understood

A mutual fund is the ideal investment vehicle for todays complex and modern

financial scenario. Markets for equity shares, bonds and other fixed income

instruments, real estate, derivatives and other assets have become matureand information driven. Price changes in these assets are driven by global

events occurring in faraway places. A typical individual is unlikely to have the

knowledge, skills, inclination and time to keep track of events, understand

their implications and act speedily.

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

qualified and experienced staff that manages each of these functions on afulltime basis. Now, Mutual Fund is new developing market. In fact, the mutual


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fund vehicle exploits economies of scale in all three areas research,

investment and transaction processing.

Market Segmentation

Market segmentation is an effort to increase a companys precision marketing.

A market segment consists of large identifiable group within a market with

similar wants, purchasing power, buying attitudes or buying habits. As HDFC

mutual fund is a service sector industry they introduce different schemes for

different people. Each person is different in nature and each have differ

criteria for investment like risk factor, return, liquidity, tax benefits etc.

So that HDFC Asset management company have introduced varities of

scheme like debt scheme, balanced scheme, equity related scheme and each

schemes have option to invest in SIP (Systematic Investment Plan) which

help investor to invest a specific amount for a continuous period, at regular

intervals so that investor has the advantage of rupee cost averaging and also

helps him save compulsorily a fixed amount each amount.

Target Market

HDFC Asset mangament company is a joint venture of HDFC BANK(50.10%)

and Standard Life Investment Limited(49.90%).The joint venture was formed

with the key objective of providing the Indian investor mutual fund products to

suit a variety of investment needs.

HDFCAsset Management Company, have variety of scheme both open ended

and close ended scheme. Both have different objective and different target

market. Equity Mutual Fund Scheme has target market of person who wants

to take high risk and also expect high return. Balanced scheme have target

market of person who wants to take moderate risk and expect average return

and Debt scheme have target market of person who wants to take less risk.

Close-ended scheme have target market of person who wants long-term

equity investment.


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Customers profile

HDFC Asset Management Company, have variety scheme and each scheme

have different customer profile.

For Equity related scheme customer profile is young generation, for liquid

scheme customer profile is business man who wants to utilize their money in

effective manner for shorter period, in SIP (Systematic Investment Plan)

customer basically are serviced person who invest regularly and want to earn

more than average return. Thus, HDFC Asset Management Company, have

introduced variety of scheme to suit need of variety of customer.

Positioning strategy

Positioning is the act of designing the companys offering and image to

occupy a distinctive place in the target markets mind.

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

company, an institution, or even a person. But positioning is not what you do

to a product. Positioning is what you do the mind of the prospect. That is, you

position the product in the mind of prospect. A companys differentiating and

positioning strategy must change as the product, market, and competitors

change over time. Once the company has developed a clear positioning

strategy, it must communicate the at positioning effectively. There should be

no under positioning, over positioning, confused positioning or doubtful

positioning.

HDFC Asset Management Company, have positioning strategy of

Continuing a Tradition of Trust. It is accurate positioning strategy

because it signifies a trust with its clients. Here is special Relationship

Managerdedicated towards customer service and satisfaction and give them

guidance about various schemes which helps them to get right scheme which


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suit their investment needs. In this way it continues to maintain a trust with its

clients.

Product Details

What is a Mutual Fund?

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

investment objective place their contributions that are to be invested in

accordance with the stated investment objective of the scheme. The

investment manager would invest the money collected from the investor in to

assets that are defined/ permitted by the stated objective of the scheme. For

example, an equity fund would invest equity and equity related instrumentsand a debt fund would invest in bonds, debentures, gilts etc.

Benefits of Mutual Funds

Benefits of Investing through Mutual Funds

There are numerous benefits of investing in mutual funds and one of the key

reasons for its phenomenal success in the developed markets like US and UK

is the range of benefits they offer, which are unmatched by most other


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investment avenues. The benefits have been broadly split into universal

benefits, applicable to all schemes and benefits applicable specifically to

open-ended schemes.

Affordability

A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc.

depending upon the investment objective of the scheme. An investor can buy

in to a portfolio of equities, which would otherwise be extremely expensive.

Each unit holder thus gets an exposure to such portfolios with an investment

as modest as Rs.5000/-. This amount today would get you less than quarter

of an Infosys share! Thus it would be affordable for an investor to build a

portfolio of investments through a mutual fund rather than investing directly in

the stock market.

Diversification

The nuclear weapon in your arsenal for your fight against Risk. It simply

means that you must spread your investment across different securities

(stocks, bonds, money market instruments, real estate, fixed deposits etc.)

and different sectors (auto, textile, information technology etc.). This kind of a

diversification may add to the stability of your returns, for example during one

period of time equities might under perform but bonds and money market

instruments might do well enough to offset the effect of a slump in the equity

markets. Similarly the information technology sector might be faring poorly but

the auto and textile sectors might do well and may protect your principal

investment as well as help you meet your return objectives.

Variety

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

in two ways: first, it offers different types of schemes to investors with different

needs and risk appetites; secondly, it offers an opportunity to an investor to


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invest sums across a variety of schemes, both debt and equity. For example,

an investor can invest his money in a Growth Fund (equity scheme) and

Income Fund (debt scheme) depending on his risk appetite and thus create a

balanced portfolio easily or simply just buy a Balanced Scheme.

Professional Management

Qualified investment professionals who seek to maximise returns and

minimise risk monitor investor's money. When you buy in to a mutual fund,

you are handing your money to an investment professional who has

experience in making investment decisions. It is the Fund Manager's job to (a)

find the best securities for the fund, given the fund's stated investment

objectives; and (b) keep track of investments and changes in market

conditions and adjust the mix of the portfolio, as and when required.

Tax Benefits

Any income distributed after March 31, 2002 will be subject to tax in the

assessment of all Unit holders. However, as a measure of concession to Unit

holders of open-ended equity-oriented funds, income distributions for the year

ending March 31, 2003, will be taxed at a concessional rate of 10.5%.

In case of Individuals and Hindu Undivided Families a deduction upto Rs.

9,000 from the Total Income will be admissible in respect of income from

investments specified in Section 80L, including income from Units of the

Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-

Tax.

Regulations

Securities Exchange Board of India (SEBI), the mutual funds regulator has

clearly defined rules, which govern mutual funds. These rules relate to the

formation, administration and management of mutual funds and also prescribe


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disclosure and accounting requirements. Such a high level of regulation seeks

to protect the interest of investors.

Disadvantages of Mutual Funds

No control over costs:

The funds are managed in huge volume and so the control on expenses

cannot be exercised, as there is lot of formalities and administrative expenses

attached. Though the limit of incurring expenses is predetermined but still it

cannot be kept in control.

No tailor made portfolio:

There is no tailor made portfolio available to any individual. The products and

scheme that is designed by the fund managers is on their philosophy and is

floated in the market with a common goal. No individual can have their own

portfolio maintained separately from the other investors.

Delay in redemption:

The redemption of the funds though have liquidity in 24-hours to 3 days takes

formal application of redemption as well as needs time for redemption. This

becomes cumbersome for the investors.

Non-availability of loans:

Mutual funds are not accepted as security against loan. The investor can not

deposit the mutual funds against taking any kind of bank loans though they

may be his assets.


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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.


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Hence it is upto you, the investor to decide how much risk you are willing to

take. In order to do this you must first be aware of the different types of risks

involved with your investment decision.

Market Risk

Sometimes prices and yields of all securities rise and fall. Broad outside

influences affecting the market in general lead to this. This is true, may it be

big corporations or smaller mid-sized companies. This is known as Market

Risk. A Systematic Investment Plan (SIP) that works on the concept of

Rupee Cost Averaging (RCA) might help mitigate this risk.

Credit Risk

The debt servicing ability (may it be interest payments or repayment of

principal) of a company through its cash flows determines the Credit Risk

faced by you. This credit risk is measured by independent rating agencies like

CRISIL who rate companies and their paper. A AAA rating is considered the

safest whereas a D rating is considered poor credit quality. A well-diversified

portfolio might help mitigate this risk.

Inflation Risk

Things you hear people talk about:

Rs. 100 today is worth more than Rs. 100 tomorrow.

Remember the time when a bus ride costed 50 paise?

Mehangai Ka Jamana Hai.

The root cause, Inflation. Inflation is the loss of purchasing power over time. A

lot of times people make conservative investment decisions to protec