hdfc nifty fun

8/6/2019 HDFC Nifty Fun

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PORTFOLIO MANAGEMENT

VAIBHAV JASANI

ROLL NO. -12

HDFC INDEXFUND-

NIFTY PLAN

SIES COLLEGE OF COMMERCE AND ECONOMICS


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1

Table of Contents

PORTFOLIO MANAGEMENT .......................................2

MUTUAL FUND ..........................................................4

EQUITY FUNDS ........................................................ 11

MUTUAL FUNDS COMPANY ....................................... 14

FUND MANAGER ..................................................... 18

HDFC INDEX FUND- NIFTY PLAN ............................... 19

ACKNOWLEDGEMENT ............................................. 30


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PORTFOLOIO MANAGEMENT

PORTFOLIO MANAGEMENT is the on-

going process of constructing

portfolios that balance an investor's

ever changing goals with the portfoliomanager's assumptions about the

future. Within the framework

established by the investorsinvestment policy, a strategy will be

adopted that ensures that the

investors long-term objective(s) will

be attained. Often, the specific tactics

that the portfolio manager might

employ are also specified. Theportfolio is then monitored so that the

strategy and tactics can be ad justed to

accommodate the outcomes realizedand changes in the investor's

objectives.

What is the portfolio investment process? The process used to manage portfolios of

securities is shown here.

Planning

Policy >>>>>>>> Implementation>>>>>>>> Monitor

The Portfolio Management

Process

Planning involves assessingthe investor's current situationand market conditions to

produce a formal statement of

investment policy. This

includes the investor's optimalstrategic asset allocation -- or

the portion of assets to be

allocated to various types ofsecurities, like stocks, bonds

and money market instrument.

The Implementation stageinvolves acquiring or sellingsecurities, so called portfolio

rebalancing, to bring the

portfolio into alignment withthe policy statement. The last

stage is monitoring the

performance of the portfolio. Let's look at each stage for important points.


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A vital question in the productinnovation battleground is, "How

should corporations most effectively

invest their R&D and new productresources?" That is what portfolio

management is all about: resource

allocation to achieve corporate newproduct objectives.

Today's new product projects decidetomorrow's product/market profile of

the firm. An estimated 50% of a firm's

sales today come from new products

introduced in the market within theprevious five years. Much like stock

market portfolio managers, senior

executives who optimize their R&Dinvestments have a much better

chance of winning in the long run. But

how do winning companies manage

their R&D and product innovation

portfolios to achieve higher returns

from their investments?

There are many different approaches

with no easy answers. However, it is a

problem that every company is

addressing to produce and maintain

leading edge products. Portfolio

management for new products is a

dynamic decision process wherein the

list of active new products and R&D

projects is constantly revised. In this

process, new projects are evaluated,

selected, and prioritized. Existing

projects may be accelerated, killed, or

de-prioritized and resources areallocated (or reallocated) to the active

projects.

WHY PORTFOLIO MANAGEMENT???


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MUTUAL FUNDS

A mutual fund is essentially a

professionally managed pool of money

from numerous investors. This allows

thousands of small investors to band

together to buy a large portfolio

stocks, bonds, etc. The fund

manager/company then invests the

pooled funds according to the stated

goals of the mutual fund.

Mutual funds can be actively or

passively managed. With an actively

managed fund, there is a fund

manager who actively seeks to

provide better returns than the broad

market. Obviously, not everyone can

be above average, so youre

essentially betting on the managers

ability to outperform.

In the case of passively managed

index funds, the investments are

managed to mirror the holdings of an

underlying investment index such as

the S&P 500, or the stock market as a

whole. As such, these funds seek to

match the returns of the overall market

(minus a small amount to cover

expenses).

If we break the phrase 'mutual funds'

and analyze the words, we realize that

it refers to funds that are raised and

invested mutually, i.e. on behalf of

everyone participating in the scheme.

If you and your friend both pool your

money and invest it jointly, you have

created your own mutual fund.

When the concept of companiesinitially formed, people who knew

each other and were willing to take the

risk of the venture used to put in the

share capital of the company. Slowly,

entrepreneurs realized that many are

interested in investing financially in

the company but do not want to take

the day-to-day hassle of managing the

company. Thus began the concept ofpassive investing in companies: with

shareholders and executives

separated.

Similarly, in the case of mutual funds,

people are not interested in the day-

to-day management of the funds but

are interested in the final outcome of

the investment. Hence, they pool their

money together, hire an investmentmanager who manages funds for them

and expect to earn a return on them.

Interestingly, while the process started

from the point of view of the investor

and the fund was the outcome, in

today's time, it is hard to see the reality

this way. With rampant marketing of

the mutual funds, it seems as if the

funds came in first and they want the

investor money to increase their assets

under management.


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PROCESS

A mutual fund is a company that poolsmoney from many investors andinvests the money in stocks, bonds,

short-term money-market instruments,

other securities or assets, or some

combination of these investments. Thecombined holdings the mutual fund

owns are known as its portfolio. Each

share represents an investor'sproportionate ownership of the fund's

holdings and the income those

holdings generate.

When you invest in a mutual fund you

hope that the value will rise and youcan eventually sell your shares for a

profit. This is one of the ways you canprofit with mutual funds. Another wayis through capital gains. When a

mutual fund sells a security for a

higher price than it originally paid for

it, it is known as a capital gain. Mostmutual funds distribute their capital

gains to shareholders at least annually,

some more often. The last way to profitwith mutual funds is with dividends or

interest. If the fund has invested in

bonds or dividend-paying stocks, itmust pass the dividends or interestearned on to its shareholders. Like

capital gains, this is done at least

annually.


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CHARACTERISTICSSome of the traditional, distinguishing characteristics of mutual funds include the

following:

Investors purchase mutual fund shares from the fund itself (or through abroker for the fund) instead of from other investors on a secondary

market, such as the New York Stock Exchange or Nasdaq Stock Market.

The price that investors pay for mutual fund shares is the fund's per sharenet asset value (NAV) plus any shareholder fees that the fund imposes at

the time of purchase (such as sales loads).

Mutual fund shares are "redeemable," meaning investors can sell theirshares back to the fund (or to a broker acting for the fund).

Mutual funds generally create and sell new shares to accommodate newinvestors. In other words, they sell their shares on a continuous basis,

although some funds stop selling when, for example, they become toolarge.

Wealthy individuals and institutionshave always had access to professional

money managers. They also have the

wherewithal to properly diversify theirholdings. These are the two major

disadvantages for the small timeindividual investor the relatively

small size of their portfolio does notallow them to properly diversify and

most top money managers require a

minimum of $250,000 (or more) toopen an account.

Mutual funds provide the answer forthe individual investor. Most have very

low initial investment requirements

and some have no minimum

requirement at all you can startinvesting with as little as $100.00 or

even less!

When you invest your money in a

mutual fund, you buy shares in thatfund. To determine the price of those

shares, each day the fund adds up the

total value of the securities held in its

portfolio. This total is divided by thenumber of shares outstanding. The

resulting figure is known as the Net

Asset Value or NAV.

To find out the value of your holdings,

you simply multiply the number ofshares you own by the net asset value.

The NAV of most funds is listed in most

daily newspapers. The NAV will

change daily depending on how wellthe underlying securities of the fund

perform. If the securities held by thefund go up in value so will the value ofyour shares.


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ADVANTAGES OF MUTUAL FUNDS

The advantages of investing in a Mutual Fund are:

y Diversification: The best mutual funds design their portfolios so individualinvestments will react differently to the same economic conditions. Forexample, economic conditions like a rise in interest rates may cause certain

securities in a diversified portfolio to decrease in value. Other securities inthe portfolio will respond to the same economic conditions by increasing in

value. When a portfolio is balanced in this way, the value of the overallportfolio should gradually increase over time, even if some securities lose

value.

y Professional Management:Most mutual funds pay topflight professionals tomanage their investments. These managers decide what securities the fund

will buy and sell.

y Regulatory oversight: Mutual funds are subject to many governmentregulations that protect investors from fraud.

y Liquidity: It's easy to get your money out of a mutual fund. Write a check,make a call, and you've got the cash.

y Convenience: You can usually buy mutual fund shares by mail, phone, or overthe Internet.

y Low cost: Mutual fund expenses are often no more than 1.5 percent of yourinvestment. Expenses for Index Funds are less than that, because index funds

are not actively managed. Instead, they automatically buy stock in companiesthat are listed on a specific index

y Transparencyy Flexibilityy Choice of schemesy Tax benefitsy Well regulated


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MUTUAL FUND INDUSTRY IN INDIA

The Evolution

The formation of Unit Trust of India

marked the evolution of the Indian

mutual fund industry in the year 1963.The primary objective at that time was

to attract the small investors and it was

made possible through the collective

efforts of the Government of India and

the Reserve Bank of India. The history

of mutual fund industry in India can bebetter understood divided into

following phases

Phase 1. Establishment and Growth of Unit Trust of India - 1964-87

Unit Trust of India enjoyed completemonopoly when it was established in

the year 1963 by an act of Parliament.

UTI was set up by the Reserve Bank of

India and it continued to operate underthe regulatory control of the RBI until

the two were de-linked in 1978 and the

entire control was tranferred in the

hands of Industrial Development Bankof India (IDBI). UTI launched its first

scheme in 1964, named as Unit

Scheme 1964 (US-64), which attractedthe largest number of investors in any

single investment scheme over the

years.

UTI launched more innovative

schemes in 1970s and 80s to suit the

needs of different investors. It

launched ULIP in 1971, six moreschemes between 1981-84, Children's

Gift Growth Fund and India Fund

(India's first offshore fund) in 1986,

Mastershare (Inida's first equitydiversified scheme) in 1987 and

Monthly Income Schemes (offering

assured returns) during 1990s. By theend of 1987, UTI's assets under

management grew ten times to Rs 6700

crores.

Phase II. Entry of Public Sector Funds - 1987-1993

The Indian mutual fund industry

witnessed a number of public sectorplayers entering the market in the year

1987. In November 1987, SBI Mutual

Fund from the State Bank of India

became the first non-UTI mutual fundin India. SBI Mutual Fund was later

followed by Canbank Mutual Fund, LIC

Mutual Fund, Indian Bank Muatual

Fund, Bank of India Mutual Fund, GICMutual Fund and PNB Mutual Fund. By

1993, the assets under management of

the industry increased seven times to

Rs. 47,004 crores. However, UTIremained to be the leader with about

80% market share.

1992-93 AmountMobilised

Assets UnderManagement

Mobilisation as % of gross DomesticSavings

UTI 11,057 38,247 5.2%

Public

Sector1,964 8,757 0.9%

Total 13,021 47,004 6.1%


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Phase III. Emergence of Private Sector Funds - 1993-96

The permission given to private sectorfunds including foreign fund

management companies (most of thementering through joint ventures with

Indian promoters) to enter the mutualfund industry in 1993, provided a wide

range of choice to investors and more

competition in the industry. Privatefunds introduced innovative products,

investment techniques and investor-servicing technology. By 1994-95,

about 11 private sector funds hadlaunched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004

The mutual fund industry witnessed

robust growth and stricter regulation

from the SEBI after the year 1996. The

mobilization of funds and the numberof players operating in the industry

reached new heights as investorsstarted showing more interest inmutual funds.

Investors' interests were safeguarded

by SEBI and the Government offeredtax benefits to the investors in order to

encourage them. SEBI (Mutual Funds)

Regulations, 1996 was introduced bySEBI that set uniform standards for all

mutual funds in India. The Union

Budget in 1999 exempted all dividend

incomes in the hands of investors fromincome tax. Various Investor

Awareness Programmes were

launched during this phase, both bySEBI and AMFI, with an objective to

educate investors and make them

informed about the mutual fund

industry.

In February 2003, the UTI Act was

repealed and UTI was stripped of itsSpecial legal status as a trust formed

by an Act of Parliament. The primaryobjective behind this was to bring allmutal fund players on the same level.

UTI was re-organised into two parts: 1.

The Specified Undertaking, 2. The UTI

Mutual Fund

Presently Unit Trust of India operates

under the name of UTI Mutual Fundand its past schemes (like US-64,

Assured Return Schemes) are being

gradually wound up. However, UTI

Mutual Fund is still the largest playerin the industry. In 1999, there was a

significant growth in mobilisation of

funds from investors and assets undermanagement which is supported by

the following data:

GROSS FUND MOBILISATION (RS. CRORES)

FROM TO UTIPUBLIC

SECTOR

PRIVATE

SECTOR

TOTAL

01-April-98 31-March-99 11,679 1,732 7,966 21,377

01-April-99 31-March-00 13,536 4,039 42,173 59,748

01-April-00 31-March-01 12,413 6,192 74,352 92,957

01-April-01 31-March-02 4,643 13,613 1,46,267 1,64,523


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01-April-02 31-Jan-03 5,505 22,923 2,20,551 2,48,979

01-Feb.-03 31-March-03 * 7,259* 58,435 65,694

01-April-03 31-March-04 - 68,558 5,21,632 5,90,190

01-April-04 31-March-05 - 1,03,246 7,36,416 8,39,662

01-April-05 31-March-06 - 1,83,446 9,14,712 10,98,158

ASSETS UNDER MANAGEMENT (RS. CRORES)

AS ON UTI PUBLIC SECTOR PRIVATE SECTOR TOTAL

31-March-99 53,320 8,292 6,860 68,472

Phase V. Growth and Consolidation - 2004 Onwards

The industry has also witnessedseveral mergers and acquisitions

recently, examples of which areacquisition of schemes of Alliance

Mutual Fund by Birla Sun Life, Sun F&C

Mutual Fund and PNB Mutual Fund by

Principal Mutual Fund. Simultaneously,more international mutal fund players

have entered India like Fidelity,Franklin Templeton Mutual Fund etc.

There were 29 funds as at the end ofMarch 2006. This is a continuing phase

of growth of the industry through

consolidation and entry of new

international and private sectorplayers.


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EQUITY FUNDS

A mutual fund that invests principally

in stocks. It can be actively orpassively (index fund) managed.

Also known as a "stock fund".

Stock mutual funds are principally

categorized according to company

size, the investment style of the

holdings in the portfolio and

geography:

Size is determined by a company's

market capitalization, while the

investment style, reflected in the fund's

stock holdings, is also used to

categorize equity mutual funds.

Stock funds are also categorized

by whether they are domestic or

international. These can be broad

market, regional or single-country

funds.There are so-called "specialty"

stock funds that target business sectors

such as healthcare, commodities andreal estate. Equity mutual funds are

also known as stock mutual funds.

Equity mutual funds invest pooled

amounts of money in the stocks of

public companies. Stocks represent

part ownership, or equity, in

companies, and the aim of stock

ownership is to see the value of the

companies increase over time. Stocks

are often categorized by their market

capitalization (or caps), and can be

classified in three basic sizes: small,

medium, and large. Many mutual funds

invest primarily in companies of one of

these sizes and are thus classified as

large-cap, mid-cap or small-cap

funds.

Equity fund managers employ

different styles of stock picking when

they make investment decisions for

their portfolios. Some fund managers

use a value approach to stocks,

searching for stocks that are

undervalued when compared to other

similar companies. Another approach

to picking is to look primarily at

growth, trying to find stocks that are

growing faster than their competitors,

or the market as a whole. Some

managers buy both kinds of stocks,

building a portfolio of both growth andvalue stocks. On the other hand they

carry greater risks too. Equity funds

can be classified into diversified

equity funds and sectoral equity

funds.


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TYPES OF FUNDS

Index fundIndex funds invest in securities to

mirror a market index. An index fund

buys and sells securities in a manner

that mirrors the composition of the

selected index. The fund's

performance tracks the underlying

index's performance. Turnover of

securities in an index fund's portfolio is

minimal. As a result, an index fund

generally has lower management costs

than other types of funds.

Growth fundA growth fund invests in the stock of

companies that are growing rapidly.

Growth companies tend to reinvest all

or most of their profits for research and

development rather than pay

dividends. Growth funds are focused

on generating capital gains rather than

income.

Value fundThis is a fund that invests in "value"

stocks.Companies rated as valuestocks usually are older, established

businesses that pay dividends.

Fund of funds"Fund of funds" implies that the

assets of a fund are other funds.

The other funds may be stock

funds, in which case the original

fund can be called "fund of stock

funds".


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Sector fundA fund that invests in one area of

industry is called a sector fund.

Most sector funds have a

minimum of 25% of their assetsinvested in its specialty. These

funds offer high appreciation

potential, but may also pose

higher risks to the investor.

Examples include gold funds

(gold mining stock), technology

funds, and utility funds.

Income fundAn equity income fund stresses

current income over growth.

The funds objective may be

accomplished by investing in

the stocks of companies with

long histories of dividend

payments, such as utility stocks,blue-chip stocks, and preferred

stocks.Option income

funds invest in securities on

which options may by written

and earn premium income from

writing options. They may also

earn capital gains from trading

options at a profit. These funds

seek to increase total return by

adding income generated by

the options to appreciation on

the securities held in the

portfolio.

Balanced fundBalanced Funds invest in stocks

for appreciation and bonds for

income. The goal is to provide a

regular income payment to thefund holder, while increasing its

principal...

Asset allocation fundThese funds split investments

between growth stocks, income

stocks/bonds, and money

market instruments or cash for

stability. Fund advisers switch

the percentage of holdings in

each asset category according

to the performance of that

group. Example: A fund may

have 60% invested in stocks,

20% in bonds, and 20% in cash

or money market. If the stockmarket is expected to do well,

that could switch to 80% stocks,

and 10% each in both bond and

cash investments. Conversely, if

the stock market is expected to

perform poorly, the fund would

decrease its stock holdings.

Hedge funds"Hedge fund" is a legal

structure. Hedge funds often

trade stocks, but may trade or

invest in anything else

depending on the fund. This is

done to reduce the risk of

investments in stocks.


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MUTUAL FUND COMPANIES

AEGON Asset Management

Company Pvt. Ltd.N/A

AIG Global Asset Management

Company (India) Pvt. Ltd.www.aiginvestments.co.in

Axis Asset Management Company

Ltd.www.axismf.com

Baroda Pioneer Asset Management

Company Limitedwww.barodapioneer.in

Benchmark Asset Management

Company Pvt. Ltd.www.benchmarkfunds.com

Bharti AXA Investment Managers

Private Limitedwww.bhartiaxa-im.com

Birla Sun Life Asset Management

Company Limitedwww.birlasunlife.com

BNP Paribas Asset Management

India Private Limitedwww.bnpparibasmf.in

CanaraRobeco Asset Management

Company Limitedwww.canararobeco.com

Daiwa Asset Management (India)

Private Limitedwww.daiwafunds.in

Deutsche Asset Management (India)

Pvt. Ltd.www.dws-india.com

DSP BlackRock Investment

Managers Private Limitedwww.dspblackrock.com


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Edelweiss Asset Management

Limitedwww.edelweissmf.com

Escorts Asset Management Limited www.escortsmutual.com

FIL Fund Management Private

Limited fidelity.co.in

Franklin Templeton Asset

Management (India) Private Limitedwww.franklintempletonindia.com

Goldman Sachs Asset Management

(India) Private Limitedwww.gsam.in

HDFC Asset ManagementCompany

Limitedwww.hdfcfund.com

HSBC Asset Management (India)

Private Ltd.www.assetmanagement.hsbc.com/in

ICICI Prudential Asset

Mgmt.Company Limitedwww.icicipruamc.com

IDBI Asset Management Ltd. www.idbimutual.co.in

IDFC Asset ManagementCompany

Limitedwww.idfcmf.com

India Infoline Asset Management

Co. Ltd.www.iiflmf.com

ING Investment Management

(India) Pvt. Ltd.www.ingim.co.in

JM Financial Asset Management

Private Limitedwww.JMFinancialmf.com

JPMorgan Asset Management India

Pvt. Ltd.www.jpmorganmf.com


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Kotak Mahindra Asset Management

Company Limited(KMAMCL)www.kotakmutual.com

L&T Investment Management

Limitedwww.lntmf.com

LIC NOMURA Mutual Fund Asset

ManagementCompany Limitedwww.licnomuramf.com

Mirae Asset Global Investments

(India) Pvt. Ltd.www.miraeassetmf.co.in

Morgan Stanley Investment

Management Pvt.Ltd.www.morganstanley.com/indiamf

MotilalOswal Asset ManagementCompany Limited

www.motilaloswal.com/assetmanagement/

Peerless Funds Management Co.

Ltd.www.peerlessmf.co.in

Pramerica Asset Managers Private

Limitedwww.pramericamf.com

Principal Pnb Asset ManagementCo. Pvt. Ltd.

www.principalindia.com

Quantum Asset Management

Company Private Limitedwww.QuantumAMC.com

RelianceCapital Asset Management

Ltd.www.reliancemutual.com

Religare Asset Management

Company Limited www.religaremf.com

Sahara Asset Management

Company Private Limitedwww.saharamutual.com


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SBI Funds Management Private

Limitedwww.sbimf.com

Sundaram Asset Management

Company Limitedwww.sundarammutual.com

Tata Asset Management Limited www.tatamutualfund.com

Taurus Asset Management

Company Limitedwww.taurusmutualfund.com

Union KBC Asset Management

Company Pvt. Ltd.www.unionkbc.com

UTI Asset ManagementCompany

Ltdwww.utimf.com


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FUND MANAGER

The person(s) responsible for

implementing a fund's investing

strategy and managing its portfolio

trading activities. A fund can bemanaged by one person, by two

people as co-managers and by a team

of three or more people. Fund

managers are paid a fee for their work,

which is a percentage of the fund's

average assets under management.

Also known as an "investment

manager".

The individuals involved in fund

management (mutual, pension, trust

funds or hedge funds) must have a

high level of educational and

professional credentials

and appropriate investment

managerial experience to qualify for

this position. Investors should look forlong-term, consistent fund

performance with a fund manager

whose tenure with the fund

matches its performance time period.

The whole point of investing in a fund

is to leave the investment management

function to the professionals.

Therefore, the quality of the fund

manager is one of the key factors to

consider when analyzing the

investment quality of any particular

fund.


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HDFC INDEX FUND- NIFTY

PLAN

Investment Objective

The objective of this Plan is to generate returns that are commensurate with theperformance of the Nifty, subject to tracking errors.

Basic Scheme Information

Nature of Scheme Open Ended Index Linked Scheme

Inception Date July 17, 2002

Option/Plan Growth Plan.

Entry Load(For Lumpsum Purchases

and investments through

SIP/STP)

NILUnfront commission shall be paid directly by the

investor to the ARN Holder (AMFI registered

Distributor) based on the investors' assessment of

various factors including the service rendered by the

ARN Holder..

Exit Load

(as a % of the Applicable

NAV)

NIL

No Entry/ Exit Load shall be levied on bonus units

Minimum Application

Amount

For new investors :Rs.5000 and any amountthereafter.

For existing investors :Rs. 1000 and any amount

thereafter.

$ All applications for purchase of units includingadditional purchases for an amount of Rs 5 lakhs and

above will be accepted with payment mode only as

Real Time Gross Settlement (RTGS) / National

Electronic Funds Transfer (NEFT) / Funds transferLetter / Transfer Cheque of a bank where the Scheme

has a collection account. Any application for an

amount of Rs 5 lakhs and above with payment modeother than the above will be rejected.

Lock-In-Period Nil


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Net Asset Value Periodicity Every Business Day.

Redemption Proceeds Normally dispatched within 3-4 Business days

Tax Benefits

(As per present Laws)

Please click for details

Current Expense Ratio (#)

(Effective Date 22nd May

2009)

1.00%

(#) Any change in the expense ratio will be updated within two working days.

Plan Name NAV Date NAV Amount

Nifty Plan (Growth) 11 Aug 2011 44.8024

Investment Pattern

The net assets of the Plan will be invested predominantly in stocks constituting theS&P CNX Nifty and / or in exchange traded derivatives on the S&PCNX Nifty. This

would be done by investing in almost all the stocks comprising the S&PCNX Nifty in

approximately the same weightage that they represent in the S&PCNX Nifty Index

and / or investing in derivatives including futures contracts and options contracts onthe S&P CNX Nifty Index. A small portion of the net assets will be invested in money

market instruments permitted by SEBI / RBI including call money market or in

alternative investment for the call money market as may be provided by the RBI, tomeet the liquidity requirements of the Plan.

Instruments Normal

Allocation

Risk Profile of

the Instrument

Securities covered by the Nifty 95 to 100 Medium to High

Cash & Money Market Instruments, including

money at call but excluding Subscription and

RedemptionCash Flow

0 to 5 Low to Medium

SubscriptionCash Flow is the subscription money in transit before deployment and

RedemptionCash Flow is the money kept aside for meeting redemptions.


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Investment Strategy

The SENSEX Plan and the Nifty Plan will be managed passively with investments in

stocks in a proportion that is as close as possible to the weightages of these stocks inthe respective indices. The investment strategy would revolve around reducing the

tracking error to the least possible through regular rebalancing of the portfolio,

taking into account the change in weights of stocks in the indices as well as theincremental collections / redemptions from these Plans.

The SENSEX Plus Plan will be passively managed to the extent of 80-90% of the net

assets of the Plan and would follow similar investment strategy as for the SENSEXand the Nifty Plan, for this component. The actively managed portion of 10-20% of

net assets of the Plan would be invested in stocks that have been identified as having

high probability to outperform the SENSEX. The Investment Manager would follow

the process of in-depth research to identify such candidates from stocks other thanthose comprising the SENSEX, for potential investment.

Pursuant to the SEBI Regulations, the respective Plans shall not make any investmentin:

y any unlisted security of an associate or group company of the Sponsor; ory any security issued by way of private placement by an associate or group company

of the Sponsor; or

y the listed securities of group companies of the Sponsor which is in excess of 25% ofthe net assets.

Risk Control

For the SENSEX Plan, the Nifty Plan and the proportion of the SENSEX Plus Plan thatwould be managed similar to the SENSEX Plan, risks would be the impact cost on

securities, the delayed communication of weightage changes by the index service

providers and the delayed calculation of net change in assets of each of the Plans,amongst others.

It is proposed to manage the risks by placing limit orders for basket trades and

other trades, proactive follow-up with the service providers for daily change inweights in the respective indices as well as monitor daily inflows and outflows to and

from the Fund closely.

While these measures are expected to mitigate the above risks to a large extent,

there can be no assurance that these risks would be completely eliminated.

Risk control for the actively managed portion of the SENSEX Plus Plan would entailsetting limits for single stock and single industry exposures by the Investment

committee for this portion, subject to SEBI Regulations.


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Systematic Investment Plan (SIP) Details

Serial

No.

Scheme Name Minimum

Application

Amount(Rs.)

Entry Load # Exit Load #

1 HDFC Index Fund

- Nifty Plan

Rs.500 for

Monthly &

Rs.1500 for

Quarterly

NIL NIL

# Applicable for SIPs registered w.e.f from August 1, 2009

Fund ManagerMr. VinayKulkarni (since Nov 21, 06)

Portfolio - Holdings (as on June 30, 2011)

Company Industry+ % to

NAV

EQUITY & EQUITY RELATED

Reliance Industries Ltd. Petroleum

Products

8.63

Infosys Ltd. Software 7.99

ICICI Bank Ltd. Banks 7.16

ITC Ltd. Consumer NonDurables

6.11

Larsen & Toubro Ltd. Construction

Project

5.56


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Housing Development Finance Corporation Ltd. $ Finance 5.20

HDFC Bank Ltd. Banks 5.06

State Bank of India Banks 3.57

Tata Consultancy Services Ltd. Software 3.46

BhartiAirtel Ltd. Telecom -

Services

2.78

Total of Top Ten Equity Holdings 55.52

Total Equity & Equity Related Holdings 96.54

Total Money Market Instrument & Other Credit

Exposures (aggregated holdings in a single

issuer)

0.00

Cash margin / Earmarked cash for Futures & Options 3.58

Other Cash, Cash Equivalents and NetCurrent

Assets

-0.12

Grand Total 100.00

Net Assets (Rs. In Lakhs) 5,496.30

Note : $ Sponsor

Returns

HDFC Index Fund

- NIFTY Plan

(NAV as at evaluation date 30-June-11, Rs.48.9867 Per unit)

Date Period NAV Per

Unit (Rs.)

Returns

(%) ^

Benchmark

Returns (%) #

March 30, 2007 Last 1553 days 37.3006 6.62** 10.83**


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December 30, 2010 Last Six months

(182 days)

52.8786 -7.36* -6.84*

June 30, 2010 Last 1 Year (365

days)

46.3246 5.75* 7.48*

June 30, 2008 Last 3 Years(1095 days)

36.004 10.81** 13.11**

June 30, 2006 Last 5 Years

(1826 days)

30.994 9.58** 13.89**

June 29, 2001 Last 10 Years

(3653 days)

N.A N.A. N.A.

July 17, 2002 Since Inception

(3270 days)

10.326 18.98** 22.81**

* Absolute Returns ** Compounded Annualised Returns# S&P CNX Nifty (Total Returns Index)

^ Past performance may or may not be sustained in the future

SIP Returns

SIP Investments Since Inception 15

Year

10

Year

5 Year 3 Year 1 Year

Total Amount

Invested (Rs.)

108,000 N.A. N.A. 60,000 36,000 12,000

Market Value as

on June 30, 2011

(Rs.)

222,997.92 N.A. N.A. 73,673.35 44,938.34 11,881.58

Returns

(Annualised)*(%)

15.54% N.A. N.A. 8.16% 14.99% -1.84%

Benchmark

Returns

19.67% N.A. N.A. 11.43% 17.68% -0.39%


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(Annualised)(%)#

Market Value of

SIP in

Benchmark#

271,318.34 N.A. N.A. 79,917.18 46,685.78 11,974.88

Past Performance may or may not be sustained in the future

Inception Date of HDFC Index Fund - NIFTY Plan is July 17, 2002

* Load is not taken into consideration and the returns are of Growth Plan/Option. Incase the SIP date falls on a non business day, the SIP is processed on the next

business day

# Benchmark - S&P CNX Nifty (Total Returns Index)

Disclaimer: The above investment simulation is for illustrative purposes only andshould not be construed as a promise on minimum returns and safeguard of capital.

The AMC / Mutual Fund is not guaranteeing or promising or forecasting any returns.

SIP does not assure a profit or guarantee protection against a loss in a declining

market. Please refer SIP Enrolment Form or contact nearest ISC for SIP Load

Structure.


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FUND PERFORMANCE

Fund Type Open-Ended

Asset Size (Rscr)56.69 (Jun-30-

2011)

Minimum Investment Rs.5000

Launch Date Jul 10, 2002

Benchmark S&P CNX Nifty

Returns (as on Aug 10, 11)

Period Returns (%) Rank #

1 mth -8.1 27

3 mths -6.9 28

6 mths -2.7 27

1 year -5.2 26

2 year 6.7 27

3 year 2.9 24

5 year 6.8 19

Absolute Returns (in %)

Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Annua

2011 -5.4 -2.8 - - -

2010 -0.1 0.6 14.7 -0.6 16.2

2009 -0.3 37.5 16.5 2.0 66.5

2008 -26.1 -15.2 0.9 -24.4 -53.5

2007 -4.0 18.4 14.4 18.4 47.5

2006 19.8 -9.6 12.5 10.1 37.2


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HDFC Index Fund - Nifty Plan - Growth Sector AllocationsSector Percentage(%)

Banks 19.36

Computers-Software 13.88

Refineries 10.20

Cigarettes 5.31

Finance-Housing 5.00


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FUTURE OUTLOOK

EQUITY MARKET OUTLOOK

In the near term, internationally

attention is likely to remain on how the

Eurozone copes with sovereign debt

issues and whether the economic

recovery in the US gathers momentum

or begins to peter out. This in turn willimpact the direction of both equity and

commodity markets. Domestically, the

pace of government decision-making

will hopefully improve. Inflation, which

is likely to remain at elevated levels, is

likely to remain a challenge but should

begin to temper towards the end of the

year.At the current levels, the

SENSEXs valuation at 15x one-year

forward earnings is close to its

historical average. At that level, the

earnings yield works out to 6-7%. With

growth of 15-20% achievable from a

long term perspective this is favorable

compared to bond yields of 8%.With

valuations at close to their historical

levels, returns are likely to be driven

more by earnings growth than by a

change in valuations. With the Indianeconomy growing at a steady pace,

the long term outlook for earnings

remains positive. Near terms concerns

could result in some market volatility.

However, for investors with a tolerance

for volatility and a long-term

perspective, there continues to be

merit in investing in equities. Over a

longer period, the market should

move in line with underlying

fundamentals which continue to

remain strong

DEBT MARKET OUTLOOK

The global recovery is expected to

sustain in 2011, although growth may

slow down marginally due to the

waning impact of fiscal stimulus

measures in advanced economies,

monetary tightening in EMEs and

rising commodity prices. Growth of

the Indian economy is also expected to

moderate in FY12.Agricultural growth

may be lower on account of the high

base established in the previous year.

In addition, industrial activity is

expected to slow down mainly due to

the impact of monetary tightening and


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high input prices. The headline

Wholesale Price Index (WPI) inflation

is expected to remain high during the

first half due to an expected increase

in fuel prices and the impact of high

input cost on the price of manufactured

products. The RBI has projected WPIinflation for March 2012 at 6%, with an

upward bias.In the short term,

governmentbonds yields are likely to

remain firm due to uncertainties

emanating from both domestic as well

as external factors.

On the domestic front, uncertainty

associated with the inflation trajectory,

likely fiscal slippage on account of the

subsidy burden and monetary policy

actions by the RBI are the key issues.

On the global front, growth in

advanced economies and sovereigndebt problems in the Euro area are

some of the main concerns. However,

in the long term, yields on government

bonds are likely to head lower due to a

moderating inflation outlook, possible

subsidy reforms and efforts towards

fiscal consolidation.


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ACKNOWLEDGEMENT

On acknowledging, The HDFC Nifty fund is one of the mutual funds, which is traded

on large scale. The brief information on this fund given in the project is taken fromthe HDFC mutual fund site and many more.

THANK YOU

hdfc nifty fun

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