sonam project

7/30/2019 Sonam Project

1/115

SUMMER TRAINING PROJECT REPORTON

Mutual funds and its market

Underthe partial fulfillment of the requirements of MBA curriculum

Gautam Budha Technical University

Under the guidance of

(Mr.Aman Verma)&

Summer Training Faculty Guide(Mrs.sonali singh)

Submitted To:Dr.M.K. Rastogi

(H.O.D)

Submitted By:

SHOBHNAM BISHTMBA Sem(2012-13)

Department of Management StudiesBabu Banarsi Das Northern Indian Institute of Technology

Lucknow

.1


2/115

COMPANY PROFILE

INTRODUCTION OF COMPANY

HDFC LIMITED

HDFC 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

.2


3/115

The primary objective of HDFC is to enhance residential housing stock in the country through

the provision of housing finance in a systematic and professional manner, and to

promote home ownership. Another objective is to increase the flow of resources to the

housing sector by integrating the housing finance sector with the overall domestic

financial markets.

Organizational Goals

HDFCs main goals are to

a) Develop close relationships with individual households,

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

c) Transform ideas into viable and creative solutions,

d) Provide consistently high returns to shareholders,

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

HDFC GROUP COMPANIES

HDFC Limited

HDFC Bank

HDFC Asset Management Co. Limited

HDFC Securities Limited

HDFC Standard Life Insurance Company

Intel net Global

CIBIL Credit Information Bureau Investigation Ltd

HDFC Chubb General Insurance.3


4/115

HDFC securities Ltd, a trusted financial services intermediary is a subsidiary of

India's respected private sector Bank - HDFC Bank.

A leading stock broking company having completed 10 years in operation, serves a diverse

customer base of retail and institutional investors.

Discerning investors experience a robust platform to trade in Equities, derivatives, currency

futures and mutual funds through both NSE & BSE and other investment options like IPO's,

bonds, corporate fixed deposits, insurance etc.

Investors are also provided with niche - Equity Investment advise and execution platform with

superior technology aid and unbiased research across sectors, economy and scrips.

Our webportal is designed to meet the requirements of everyone from a beginner to a savvy

and well-informed trader with highest service standards,convenience and hassle-free trading

tools.

The Webportal aims to provide a one stop window for all financial needs with seamlessness

and customer centric services

WEBPORTAL

Based on Web 2.0 technology.

SPEED

State-of-the art technology enabling seamless trading experience on both the exchanges BSE

and NSE..4


5/115

CONVENIENCE

Clients could adopt to trade with us either online, or on the phone, or relationship

managers from the convenience of their home or office.

The 4-in-1 Advantage account enables clients to seamlessly move funds and securities

across your bank, Demat and trading account.

Clients get to enjoy limits across exchanges to trade

No need to issue cheques or delivery instructions.

Place IPO / NCD applications via few clicks using the trading account or by the

phone. No standing in queues or filling application forms.

ASBA application facility.

Customer care centre to address all queries and grievances.

REACH

HDFC securities has a strong unified call centre catering to clients across India and overseas

aiding clients who wish to have their orders placed by a tele-agent. 7 Regional language call

centre facility is available for clients.

Over 128 exclusive branches across India also service clients locally by dedicated

relationship managers.

TRANSPARENCY

With our trusted pedigree, a client can be assured of best services in a transparent manner and

is in total control of their funds and stocks.

EXPERTISE

With a decade of experience and a rating of A1+1, HDFC securities has a admired lineage of

.5


6/115

providing financial services to customers in a transparent and trusted manner. We have a

dedicated, motivated and experienced team of professionals to provide you top class service.

TIMELY AND RELEVANT INFORMATION

We realize the importance of making information available to clients as it happens.

Empowered with the latest news, developments and unbiased research, enables a client to take

informed decisions.

YOUR INTEREST

For HDFC securities, client's interest comes first. We endeavor to provide high quality

investment services, in a simple, direct and cost-effective manner to help you achieve your

financial goals.

MISSION

We aim to be the top new investment company in the market.

This does not just mean being the largest or the most productive company in the market,

rather it is a combination of several things like-Customer service of the highest

order Value for money for customers Professionalism in carrying out business Innovative

products to cater to different needs of different customers Use of technology to improve

service standards Increasing market share

VISION

.6


7/115

The most successful and admired Investment company, which mean that we are

the most trusted company, the easiest to deal with, offer the best value for

money, and set the standards in the industry. In short, The most obvious

choice for all

SECURITY : Providing long term financial security to its policy holders will

be the companys constant endeavor. It will do this by offering

life insurance and pension products.

TRUST : HDFC Securities appreciates the trust placed by its policy holders in

it. Hence, it will aim to manage their investments very carefully

and live up to this trust.

INNOVATION : Recognizing the different needs of its customers, it will be

offering a range of innovative products to meet these needs. The

companys mission is to be the best new life insurance company

in India and these are the values that will guide it in this

Simple Saying "A right Path will always lead

to the right way".

HISTORY OF ORGANISATION

.7


8/115

HDFC LTD.

HDFC is India's premier housing finance company and enjoys an impeccable track record in

India as well as in international markets. Since its inception in 1977, the Corporation has

maintained a consistent and healthy growth in its operations to remain the market leader in

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

developed significant expertise in retail mortgage loans to different market segments and also

has a large corporate client base for its housing related credit facilities. With its experience in

the financial markets, a strong market reputation, large shareholder base and unique consumer

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

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to

receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the

private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The

bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its

registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled

Commercial Bank in January 1995.

Registered office

Hdfc bank HouseSenapati Bapat MargLower ParelMumbai 400013Tel No: 56521000

Fax No: 24960739Web site : www.hdfcbank.com

HDFC SECURITIES

.8
http://www.hdfcbank.com/http://www.hdfcbank.com/


9/115

HDFC Bank Ltd is a major Indian financial services company based in Mumbai. The Bank is

a publicly held banking company engaged in providing a wide range of banking and financial

services including commercial banking and treasury operations. The Bank at present has an

enviable network of 2201 branches and 7110 ATMs spread in 996 cities across India. They

also have one overseas wholesale banking branch in Bahrain, a branch in Hong Kong and two

representative offices in UAE and Kenya. The Bank has two subsidiary companies, namely

HDFC Securities Ltd and HDB Financial Services Ltd. The Bank has three primary business

segments, namely banking, wholesale banking and treasury. The retail banking segment

serves retail customers through a branch network and other delivery channels. This segment

raises deposits from customers and makes loans and provides other services with the help of

specialist product groups to such customers. The wholesale banking segment provides loans,

non-fund facilities and transaction services to corporate, public sector units, government

bodies, financial institutions and medium-scale enterprises. The treasury segment includes net

interest earnings on investments portfolio of the Bank. The Bank`s ATM network can be

accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro,

Plus/Cirrus and American Express Credit/Charge cardholders. The Bank`s shares are listed on

the Bombay Stock Exchange Limited and The National Stock Exchange of India Ltd. The

Bank`s American Depository Shares (ADS) are listed on the New York Stock Exchange

(NYSE) and the Bank`s Global Depository Receipts (GDRs) are listed on Luxembourg Stock

Exchange. HDFC Bank Ltd Was incorporated on August 30, 1994 by Housing Development

Finance Corporation Ltd. In the year 1994, Housing Development Finance Corporation Ltd

was amongst the first to receive an "in principle" approval from the Reserve Bank of India to

set up a bank in the private sector, as part of the RBI`s liberalization of the Indian Banking

Industry. HDFC Bank commenced operations as a Scheduled Commercial Bank in January

.9


10/115

1995. In the year 1996, the Bank was appointed as the clearing bank by the NSCCL. In the

year 1997, the launched retail investment advisory services. In the year 1998, they launched

their first retail lending product, Loans against Shares. In the year 1999, the Bank launched

online, real-time Net Banking. In February 2000, Times Bank Ltd, owned by Bennett,

Coleman & Co. / Times Group amalgamated with the Bank Ltd. This was the first merger of

two private banks in India. The Bank was the first Bank to launch an International Debit Card

in association with VISA (Visa Electron). In the year 2001, they started their Credit Card

business. Also, they became the first private sector bank to be authorized by the Central Board

of Direct Taxes (CBDT) as well as the RBI to accept direct taxes. During the year, the Bank

made a strategic tie-up with a Bangalore-based business solutions software developer, Tally

Solutions Pvt Ltd for developing and offering products and services facilitating on-line

accounting and banking services to SMEs. During the year 2001-02 the bank was listed on the

New York Stock Exchange. Also, they made the alliance with LIC for providing online

payment of insurance premium to the customers. During the year 2002-03, the Bank increased

the number of branches from 171 Nos to 231 Nos and the size of the Bank`s ATM network

expanded from 479 Nos to 732 Nos. They also expanded their presence in the "merchant

acquiring" business. During the year 2003-04, the Bank expanded the distribution network

with the number of branches increased from 231 Nos to 312 Nos and the size of the Bank`s

ATM network increased from 732 Nos to 910 Nos. In September 2003, they entered the

housing loan business through an arrangement with HDFC Ltd, whereby they sell HDFC

Home Loan product. During the year 2004-05, the Bank expanded the distribution network

with the number of branches increased from 312 Nos to 467 Nos and the size of the Bank`s

ATM network increased from 910 Nos to 1147 Nos. During the year 2005-06, the Bank

launched the "no-frills account", a basic savings account offering to the customer. Also, the

.10


11/115

distribution network was expanded with the number of branches increased from 467 Nos (in

211 cities) to 535 Nos (in 228 cities) and the number of ATMs from 1147 Nos to 1323 Nos.

During the year 2006-07, the distribution network was expanded with the number of branches

increased from 535 Nos (in 228 cities) to 684 Nos (in 316 cities) and the number of ATMs

from 1323 Nos to 1605 Nos. They commenced direct lending to Self Help Groups. Also, they

opened a dedicated branch for lending to SHGs, in Thudiyalur village (Tamil Nadu). In

September 28, 2005, the Bank increased their stake in HDFC Securities Ltd from 29.5% to

55%. Consequently, HDFC Securities Ltd became a subsidiary of the Bank. During the year

2007-08, the Bank added 77 Nos new branches take the total to 761 Nos branches. Also, 372

Nos new ATMs were also added taking the size of the ATM network from 1605 Nos to 1977

Nos. HDB Financial Services Ltd became a subsidiary company with effect from August 31,

2007. In June 2, 2007, the Bank opened 19 branches in a day in Delhi and the National

Capital Region (NCR). During the year 2008-09, the Bank expanded their distribution

network from 761 branches in 327 cities to 1,412 branches in 528 Indian cities. The Bank`s

ATMs increased from 1,977 to 3,295 during the year. As per the scheme of amalgamation,

Centurion Bank of Punjab Ltd was amalgamated with the Bank with effect from May 23,

2008. The appointed date for the merger was April 01, 2008. In October 2008, the bank

opened their first overseas commercial branch in Bahrain. The branch offers the bank`s suite

of banking services including treasury and trade finance products for corporate clients and

wealth management products for Non-resident Indians. During the year 2009-10, the Bank

expanded their distribution network from 1,412 branches in 528 cities to 1,725 branches in

779 cities. The Bank`s ATMs increased from 3,295 Nos to 4,232 Nos during the year. During

the year 2010-11, the Bank expanded their distribution network from 1,725 branches in 779

.11


12/115

cities to 1,986 branches in 996 Indian cities. The Bank`s ATMs increased from 4,232 to 5,471

Nos.

REGISTERED OFFICE / CORPORATE OFFICE

HDFC Securities Limited

Office Floor 8, "I THINK" Bldg,

Jolly Board Campus,

Kanjurmarg (East),

Mumbai - 400042. India.

Tel : 022 - 30753400

Fax : 022 -30753435

ORGANISATION STRUCTURE

The Composition of the Board of Directors of the Bank is governed by the Companies Act,

1956, the Banking Regulation Act, 1949 and the listing requirements of the Indian Stock

Exchanges where securities issued by the Bank are listed. The Board has strength of 12

Directors as on March 31, 2008. All Directors other than Mr. Aditya Puri, Mr. Harish

Engineer and Mr. Paresh Sukthankar are non-executive directors. The Bank has five

independent directors and seven non-independent directors. The Board consists of eminent

persons with considerable professional expertise and experience in banking, finance,

agriculture, small scale industries and other related fields. None of the Directors on the Board

is a member of more than 10 Committees and Chairman of more than 5 Committees across all

the companies in which he/she is a Director. All the Directors have made necessary

disclosures regarding Committee positions occupied by them in other companies. Mr. Jagdish

Capoor, Mr. Keki Mistry, Mrs. Renu Karnad, Mr. Vineet Jain, Mr. Aditya Puri, Mr. Harish

Engineer and Mr. Paresh Sukthankar are non-independent Directors on the Board. Mr. Arvind

Pande, Mr. Ashim Samanta, Mr. Gautam Divan, Mr. C. M. Vasudev and Dr. Pandit Palande

.12


13/115

are independent directors on the Board. Mr. Keki Mistry and Mrs. Renu Karnad represent

HDFC Limited on the Board of the Bank. Mr. Vineet Jain represents Bennett, Coleman Group

on the Board of the Bank. The Bank has not entered into any materially significant

transactions during the year, which could have a potential conflict of interest between the

Bank and its promoters, directors, management and/or their relatives, etc. other than the

transactions entered into in the normal course of business. The Senior Management have

made disclosures to the Board confirming that there are no material, financial and/or

commercial transactions between them and the Bank which could have potential conflict of

interest with the Bank at large. List of the directors-

NameDesignation

C M Vasudev Chairman

Aditya Puri Managing Director

Sanjay Dongre Company Secretary

Paresh Sukthankar Executive Director

Harish Engineer Executive Director

Renu Karnad DirectorAshim Samanta Director

Pandit Palande Director

Partho S Datta Director

Bobby Parikh Director

Anami N Roy Director

Keki Mistry Additional Director

Renu Karnad Additional Director

Partho Datta Additional Director

Bobby Parikh Additional Director

A N Roy Additional Director

Awards and Achievements

.13


14/115

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

Bank". They realized that only a single-minded focus on product quality and service

excellence would help them get there. Today, they are proud to say that they are well on the

way towards that goal.

2010

Business Today : Best Bank in India.

Forbes Top 2000 Companies : Bank at 632nd Position

Business world : Best Bank (large)

The Banker Magazine : Words Top 1000 bank

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

Euro money Awards : "Best Bank" in India

2009

Asia money Awards : Best Domestic Commercial Bank

Asia money Awards : Best Cash Management Bank India

Global Finance Award : Best Trade Finance Bank.

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

Economic Times Awards : Best Bank in India 2009

2008

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

Buisness India : Best bank 2008

.14


15/115

Forbes Asia : Fab 50 Companies in pacific Asia.

Buisness Today : Best Bank Award

Till Year 2007

HDFC Bank named the "Most Customer Responsive Company - Banking and Financial

Services in The Economic Times - Avaya Global IT User in Banking' at the IT Users Awards

2003. Outlook Money & NDTV Profit : Best Bank in the Private sector category.

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

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

Most Improved Company for Best Management Practices in India 2004

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

Awards 2005.

The Business Today-KPMG Survey published in the leading Indian business magazine

Business Today has named HDFC Bank "Best Bank in India" for the third consecutive year in2005.

The Asset magazine named HDFC Bank "Best Cash Management Bank" and "Best Trade

Finance Bank" in India, in 2006.

Connect Customer Responsiveness Awards 2005"

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

In 2004, HDFC Bank was selected by BusinessWorld as "One of India's Most Respected

Companies" as part of The Business World Most Respected Company Awards 2004.

.15


16/115

In 2004, Forbes Global again named us in its listing of Best under a Billion, 100 Best Smaller

Size Enterprises in Asia/Pacific and Europe, in its November 1, 2004 issue.

In 2004, HDFC Bank won the award for "Operational Excellence in Retail Financial

Services" - India as part of the Asian Banker Awards 2003.

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

Companies for 2003".

Leading business newspaper The Financial Express named HDFC Bank the "Best New

Private Sector Bank 2003" in the FE-Ernst & Young Best Banks Survey 2003.

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

Leading Indian business magazine Business Today in a survey rated us "Best Bank in India"

2003, and "Best Private Sector Bank" in India in 1999.

NASSCOM and economictimes.com have named us the 'Best

There have been some other proud moments as well

London-based Euromoney magazine gave us the award for "Best Bank - India" in 1999, "Best

Domestic Bank" in India in 2000, and "Best Bank in India" in 2001 and 2002

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

For our use of information technology we have been recognized as a "Computerworld Honors

Laureate" and awarded the 21st Century Achievement Award in 2002 for Finance, Insurance

& Real Estate category by Computerworld, Inc., USA.

.16


17/115

Our technology initiative has been included as a case study in their online global archives.The

Economic Times has conferred on us The Economic Times Awards for Corporate Excellence

as the Emerging Company of the Year 2000-01.

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

In the year 2000, leading financial magazine Forbes Global named us in its list of "The 300

Best Small Companies" in the world and as one of the "20 for 2001" best small companies in

the world.

PRODUCT AND SERVICES OFFERED BY ORGANISATION

OUR OFFERINGS' ONE STOP SHOP, FOR ALL YOUR INVESTMENT NEEDS

Equity and Derivatives

IPO

Mutual Fund

Fixed Deposits

Non Convertible Debentures

General Insurance

Life Insurance

Bonds

Currency Derivatives

PMS

Derivatives Trading

.17


18/115

For the mature investor, who is aware of risks in the market, Derivatives could be a great way

to trade, and we offer a robust platform to trade Derivatives.

Derivatives lets you trade in a large number of stocks and also in Index for a small margin.

For example, if you had only Rs 2 lakh instead of Rs 10 lakh to buy a stock, by paying margin

of Rs. 2 Lakh you can create position in Derivatives Futures for higher value.

HDFC Securities delivers crisp information on Futures and Options, contract specifications,

and calculators on Option pricing and cost of carry. Use our robust platform to trade

derivatives.

IPO

.18


19/115

HDFC securities has made applying in IPO/FPOs as easy as ordering a Pizza.

No more filling up lengthy forms & providing supporting documents, you can apply in IPOsas per your convenience.

How can you apply in IPO/FPO through HDFC securities?

Online

Log on to yourtrading account & Visit IPO section

Over the Phone

Call ourCall N trade deskor any of ourBranch Dealing desk

Through your HDFC Securities Trading A/c, you can place order through ASBA process.

Benefits of ASBA process

Amount will debited on allotment of shares

Earn interest on you application money

No refund hassles

NRI OFFERINGS

.19
https://trade.hdfcsec.com/http://www.hdfcsec.com/contentpages.aspx?docid=201011090343118735944http://www.hdfcsec.com/BranchLocator.aspxhttps://trade.hdfcsec.com/http://www.hdfcsec.com/contentpages.aspx?docid=201011090343118735944http://www.hdfcsec.com/BranchLocator.aspx


20/115

Our offerings for NRI Clients:

Comprehensive NRI NRI Derivative Product

Convenient trading platform options - Online, Relationship Manager-NR desk,

Mobile, LITS, BLINK.

Off- Market facility (different time zones / when markets are closed) to help place

order to buy & sell.

Delivery based trading, on both NSE & BSE.

Invest in ETF's (Gold, Index, sectoral) using the trading account.

Do It Yourself SIP (Equity SIP) .

PIS (Portfolio Investment Scheme) transactions online.

Invest through Repatriable & non-repatriable funds.

Apply forIPO's online through NRE/NRO account.

Daily Investment Calls from our Research desk.

Dedicated NR-desk with Relationship managers.

Advanced Portfolio Tracker tracking all asset classes with alerts.

Dedicated customer care.

Hassle- free

Simplified account opening process.

.20
http://www.hdfcsec.com/nri_derivative/201201161629528277662http://www.hdfcsec.com/Market/IPO.aspxhttp://www.hdfcsec.com/nri_derivative/201201161629528277662http://www.hdfcsec.com/Market/IPO.aspx


21/115

Open 2 different sets of account (i.e. NRE & NRO Bank, PIS, Demat & Trading

account) all integrated.

No need to separately send transaction details to RBI.

Seamless

No need to write cheques or TIFD.

Just few clicks with your online trading account or a phone call is all that is necessary

to apply for IPO's, NCD's etc

Funds/shares credited directly to client's linked HDFC Bank/DP account.

Direct pay-out of funds on the same day as that of exchange.

Secure

Secured Socket Layer with 128 bit encryption on Internet and Mobile trading

systems.

Detailed audit trail of transaction with stamp on all orders.

Funds/ Securities with HDFC Bank is remitted directly into Clients accounts

Insurance

General Insurance

Life Insurance

Motor Insurance

.21
http://www.hdfcsec.com/ContentPages.aspx?docid=201102110500561662414http://www.hdfcsec.com/Insurance.aspx?docid=201008230424405312500http://www.hdfcsec.com/Insurance.aspx?docid=201011090615312588469http://www.hdfcsec.com/ContentPages.aspx?docid=201102110500561662414http://www.hdfcsec.com/Insurance.aspx?docid=201008230424405312500http://www.hdfcsec.com/Insurance.aspx?docid=201011090615312588469


22/115

You can trust HDFC ERGO Motor Insurance to protect your vehicle, your most prized

possession. It ensures you to get back in the driver's seat quickly, no matter what happens to

your vehicle. We ensure that you not only get Motor Insurance but also package post-accident

assistance, when you need it.

With a focus on Package policies for Private cars, HDFC ERGO General Insurance offers you

the convenience of purchasing a policy online without any documentation!...

Critical illness

A diagnosis of a critical illness for you or your loved one may get your life to a stand still,

literally. What could worsen the situation would be the unavailability of the requisite funds

for treatment costs and associated expenses. It's a known fact that medical treatment costs for

critical illnesses are really high.

HDFC ERGO's Critical Illness Insurance Policy ensures that you can avail the best-in-class

treatment coupled with easy and hassle free claims process, you can spend your precious time

with your loved one, than arranging for funds.

Travel Insurance

.22
https://netinsure.hdfcergo.com/onlineproducts/ANHportal/ANH/CI.aspx?ref=S08H0886&utm_source=hdfcsec_BUYOnline&utm_medium=sitelinkhttps://netinsure.hdfcergo.com/OnlineProducts/MotorPortal/NewBusiness/MotorPremCalc.aspx?ref=S08H0886&utm_source=hdfcsec_BUYOnline&utm_medium=sitelink


23/115

Staying away from home brings with it worries ranging from inconvenience to safety in a

foreign land. With HDFC ERGO Travel Insurance, there is a plan to suit every need. These

plans come with a host of features including no medical check ups, cashless hospitalization

and 24x7 international helpline assistance. With a range of plans covering pleasure and

business travel, you will find adequate coverage for a premium that is much lower than you

ever expected

Health Suraksha

With medical costs spiraling out of control, healthcare today is at its all-time-high in terms of

treatment costs. In the event of an unforeseen illness, you may have no option but to utilize

your hard - earned savings, built over your life time.

With HDFC ERGO's Health Suraksha ensure complete peace of mind with minimum out-of-

pocket expenses. Now, make sure that you use your hard-earned savings for the real reasons

Be it your child's higher education, a well deserved family vacation or just about anything you

dreamt of

.23
https://netinsure.hdfcergo.com/onlineproducts/ANHportal/ANH/HSP.ASPX?ref=S08H0886&utm_source=hdfcsec_BUYOnline&utm_medium=sitelinkhttps://netinsure.hdfcergo.com/onlineproducts/TravelPortal/Overseas/CalcuatePremium.aspx?ref=S08H0886&utm_source=hdfcsec_BUYOnline&utm_medium=sitelink


24/115

Life Insurance

HDFC SL Crest

Any uncertainty should not affect your plans. Be it of life, or of markets. You want to secure

happiness for yourself and your loved ones.

We present HDFC SL Crest insurance cum investment plan that provides valuable financial

protection to your family when needed the most along with an investment option for certainty

of highest NAV along with a miniumum guaranteed NAV of Rs.15 on returns*.

HDFC SL ProGrowth Super IIYou will settle for nothing but the best. Be it for self or for your loved ones. With HDFC SL

ProGrowth Super II, you have a unit linked savings-cum-insurance plan that will help you

effortlessly provide the finest for your family, be it today or tomorrow.

HDFC SL YoungStar Super II

There is no bigger joy than being able to fulfill your child's dream on your own. With HDFC

SL YoungStar Super II you can fulfill your child's immediate and future needs. So tomorrow

when your child needs your support you don't have to depend on anyone else.

.24
http://www.hdfcsec.com/contentpages.aspx?docid=201010250816032066006http://www.hdfcsec.com/contentpages.aspx?docid=201010250834058173021http://www.hdfcsec.com/ContentPages.aspx?docid=201103140310375584784


25/115

Fixed Deposit Schemes & Bonds

Corporate Fixed Deposits Infrastructure Bonds


Bonds

Benefits of Investing in Corporate Fixed Deposit::

Fixed Return on investment

Relatively Safe and stable return on Investments

No Income Tax is deducted at source if the interest income is up to Rs 5,000 in one

financial year

Investment can be spread in more than one company, so that interest from one

company does not exceed Rs. 5,000.

If highly volatile markets, other attractive investment options that give good returns are your

concerns, we recommend a rich menu of Fixed Income options. As a prudent investor, you

could take advantage of the current high interest rate and choose from "rated" to diversified

corporate as per your investment horizon and appetite.

Capture these high interest rates, hurry.

Loans Against Securities

Get liquidity from your investments, without selling them.

Multiply your Trading Power with HDFC Bank LAS Equity account

Features & Benefits :

.25
http://www.hdfcsec.com/bonds/IIFCL-infrastructure-bonds/201106030409327670249http://www.hdfcsec.com/learning-curve/NCD/201108181158494708496http://www.hdfcsec.com/Product-Services/Bonds/201102170658339171591http://www.hdfcsec.com/bonds/IIFCL-infrastructure-bonds/201106030409327670249http://www.hdfcsec.com/learning-curve/NCD/201108181158494708496http://www.hdfcsec.com/Product-Services/Bonds/201102170658339171591


26/115

You can enjoy the benefits of your securities and still avail a loan on the same.

No EMIs

No Post Dated cheques

No Pre-payment charges

Interest charged only on utilised amount

Exhaustive number of approved securities

Upto 80% Loan

Simple and speedy processing

Term Loan facility also available against select securities

Overdraft facility can be availed against pledge of :

Equity Shares* - Demat Shares up to 50% of the value.

Mutual Fund units* - Mutual Funds up to 50% of NAV (Net Asset Value)..

Gold ETF

NABARD's Bhavishya Nirman Bonds

RBI Bonds (8% Savings Bonds 2003 (Taxable))

Life Insurance Policies issued by LIC & Select Private Insurance Companies.

National Savings Certificate (NSC)

Kisan Vikas Patra(KVP)

Gold Deposit Certificates (GDC)


*The contribution of single scrip should not exceed 65% of the total portfolio value at any

point of time during the tenure of the account. Loan is sanctioned as per applicable internal

policy of the Bank.

.26


27/115

Single Scrip Lending - up to 50% of the value with any Depository Participant.

Minimum loan amount - Rs. 2,00,000/-

Pay interest only on the amount outstanding and only for the time you use it. Interest is

calculated on the daily outstanding balance and debited to your account every month end.

Shares can be pledged from any Depository (NSDL or CDSL) and any Depository

Participant across the country.

Loan available to NRIs against Shares, Mutual Funds(equity,Debt,FMPs), Insurance

Policies, NSC, KVP

Careers

We @ HDFC Securities Ltd. EMPOWERS our employees to contribute to our success with

personal growth and development.

We initiate culture of leading with a zeal for teamwork. Putting on Show behaviors of high

performance with honesty, integrity and teamwork is what employees are motivated here for.

Integration of business with ethics and long-term relationships is what we believe at HDFC

Securities.

We also initiate open door policy, a platform to share the vision and mission of business and

working together towards it.

At HSL we create a young culture of work and fun, with providing various challenges,

responsibilities, stage for innovation along with celebrations, events making our growth

contributors feel special.

If you feel you have the Zeal to lead and the passion to deliver then we are right here for you

.27


28/115

INTRODUCTION OF MUTUAL FUND:

Mutual funds are for everyone. Around the world, millions of investor invests in mutual

funds because of their safety, ease of investing and the many advantages they offer.

A mutual fund is financial intermediary that pools the saving of investors for

collective investment in a diversified portfolio of securities. A fund is mutual as all of its

returns, minus its expenses, are shared by the fund investors.

The securities and Exchange Board of India(Mutual Fund) Regulation, 1996 defines a

mutual fund as a a fund established in the form of a trust to raise money through the sale of

units to the public or a section of the public under one or more schemes for investing in

securities, including money market instrument.

.28


29/115

According to this definition, a mutual fund in India can raise resources through the

sale of units to the public. It can be set up in the form of Trust under the Indian Trust Act,

1882. The definition has been further extended by allowing mutual fund to diversify their

activities in the areas under:

Portfolio management services

Management of offshore funds

Providing advice to offshore funds

Management of pension or provident funds

Management of venture capital funds

Management of money market funds

Management of real estate funds

A mutual fund serves as a link between the investors and the securities market by

mobilizing savings from the investors and investing them in the securities to generate returns.

Thus, a mutual fund is akin to portfolio management services (PMS). Although, both are

conceptually same, they are different from each other. Portfolio management services are

offered to high net worth individuals; taking into account their risk profile, their investment

are managed separately. In the case of mutual funds, saving of small investors is pooled under

a scheme and the returns are distributed in the same proportion in which the investments are

made by the investors/unit holders.

Mutual Fund is collective saving scheme. Mutual Fund plays an important role in

mobilizing the savings of small investors and channelizing the same for productive venture in

the Indian economy.

.29


30/115

Mutual Fund Operation Flow Chart

ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organisational set up of

a mutual fund:

.30


31/115

Organisation of a Mutual Fund

Investments and you:

Investment is never an easy process. However, a sound understanding of some basic

concepts make the process of investment decision-making much easier and the experience

much more enjoyable. The following step can help you get started on your path to becoming a

successful investor:

1. Identify your financial needs and goals:

The first step is to get a clear understanding of your own financial needs and goals. Ask

yourself the question When do I need money and for what purpose? List down your financial

goals and when they will materialise (daughters higher education after 6 years, purchase of a

house after 10 years), and how much money you will need for the same. The answer will help

you arrive at the time frame for your investment short term, medium term or long term.

Financial Goals Amount required

at todays price

Years to achieve

your goal

Investment horizon

Retirement

Daughters higher

Education

Buying a car

Sons Computer

Education

Rs. 25 Lakhs

Rs. 2 Lakhs

Rs. 4 Lakhs

Rs. 0.5 Lakhs

20 years

6 years

2 years

6 months

Long term

Long term

Medium term

Short term

.31


32/115

2. Understand your tolerance to risk:

Before making an investment decision, it is very necessary for an investor to know his

risk tolerance limits. Will he be comfortable with fluctuations in the value of his investments?

Or would he prefer to settle down for a lower return without many ups and downs. By

knowing risk tolerance limit of himself an investor can decide his portfolio and also choose

from a variety of financial investment tools , one which suit his portfolio the most.

3. Estimate your required rate of return:

Your required rate of return depends on your financial goals and the time you have to

achieve them. Take an example that your retirement goal at 58 years is Rs.20 lakhs and your

monthly savings is Rs.5000, your required rate of return depending on your current age would

be:

Present Age Returns

43 years

48 years

9.5 %

21.2%

As you can see, the later you start, the higher will be your required rate of return, hence as

your investment horizon reduces, for the same level of saving you may need to take higher

risk. Alternatively, if you were not willing to take a higher risk, you would have to save a

higher amount every month- Rs 9800, almost twice the original savings required to achieve

your target accumulation.

.32


33/115

These three steps give a very basic idea about how to invest, when an investor is seeking

investment in different financial tools. Though there are different steps of investment in each

financial tool, these acts as blue print for them too.

Mutual Funds and You:

What is a mutual fund?

A mutual fund is a type of financial intermediary that pools the funds of investors who

seek the same general investment objective and invests them in a number of different types of

financial claims (e.g. equity shares, bonds, money market instrument). These pooled funds

provide thousands of investors with proportional ownership of diversified managed by

professional investment managers.

Where do mutual funds invest?

Broadly, mutual funds invest basically in three types of asset classes:

Stocks:

Stocks represent ownership or equity in a company. These are also called as shares .

Bonds:

.33


34/115

These represent debt from companies, financial institutions or govt. agencies.

Money Market Instruments:

These include short term debt instrument such as treasury bills, certificates of deposits

and inter bank money.

History of Mutual Funds in India:

The history of Mutual Funds, dates back to 19th century Europe, in particular, Great

Britain. Robert Fleming set up in 1868th first investment trust called Foreign and Colonial

Investment Trust which promised to manage the finances of the moneyed classes of Scotland

by spreading the investment over a number of different stocks. This investment trust and other

investment trusts which were subsequently set up in Britain and the US, resembled toadys

close-ended mutual funds. The first mutual fund in the US, Massachusetts Investors trust, was

set up in March1924. This was the first open-ended mutual fund.

The stock market crash in 1929, the Great Depression, and the outbreak of Second

World War slackened the pace of growth of the mutual fund industry. Innovations in products

and services increased the popularity of mutual funds in the 1950s and 1960s.The first

international stock mutual fund was introduced in the U.S. in the 1940s.In 1976,the first tax-

exempt municipal bond funds emerged and in 1979,the first money market mutual fund were

created. The latest additions are the international bond fund in 1986 and arm funds in

.34


35/115

1990s.This industry witnessed substantial growth in the eighties and nineties when there was

a significant increase in the number of mutual fund, schemes, assets and shareholders. In the

U.S.,the mutual fund industry registered a ten fold growth in the eighties (1980-1990) only,

with 25 percent of the household sectors investment in financial assets made through them.

Fund assets increased from less than $150 billion in 1980 to over $4trillion by the end

of1997.Since 1996, mutual fund assets have exceeded bank deposits. The mutual fund

industry and the banking industry virtually rival each other in size.

In India the setting up of Unit Trust of India (UTI) in 1963 marked the advent of mutual

fund industry. Unit Trust of India was set up by an Act of Parliament. The purpose of

establishing of Unit Trust of India was to give a fillip to the equity market. In the wake of

Indo-China war of 1962, there was shortage of savings going into industrial investment for

economic development. There was a need to mobilize adequate amount of risk capital for

industrial enterprise. The household savings were sought to be channelized into primary and

secondary market through units. However, in the initial years, the emphasis in UTI was on

income product. Master Share launched in 1986 ushered in the equity-oriented schemes in

India. Unit Trust of India launched a variety of innovative products suited to meet diverse

needs of investors, virtually the complete life cycle of investors.

Evolution of Mutual Fund in India:

.35


36/115

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

India, at the initiative of the Government of India and Reserve Bank the. The history of

mutual funds in India can be broadly divided into four distinct phases.

1. Phase 1 (1964-1987)

2. Phase 2 (1987-1993)

3. Phase 3 (1993-2003)

4. Phase 4 (Since February 2003)

First Phase: 1964-1987

Unit Trust of India

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

up by the Reserve Bank of India and functioned under the Regulatory and administrative

control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the

Industrial Development Bank of India (IDBI) took over the regulatory and administrative

control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. Over the

years, US-64 attracted, and probably still has, the largest number of investors in any single

investment scheme. It was also at least partially the first open-end scheme in the country.

Later in 1970s and 80s, UTI started innovating and offering different schemes to suit the

needs of different classes of investors. Unit Linked Insurance Plan (ULIP) was launched in

.36


37/115

1971. Six new schemes were introduced between 1981 and 1984. During 1984-87, new

schemes like Childrens Gift Growth

Fund (1986) and Mastershare (1987) were launched. Mastershare could be termed as the

first diversified equity investment scheme in India. The first Indian offshore fund, India Fund,

was launched in 1986. During 1990s, UTI catered to the demand for income-oriented

schemes by launching Monthly Income Schemes, a somewhat unusual mutual fund product

offering assured returns.

The Mutual fund industry in India not only started with UTI, but still counts UTI as its

largest player with the largest corpus of investible funds among all mutual funds currently

operating in India. Until 1980s, UTIs operations in the stock market often determined the

direction of market movements. Now, many Indian investors have taken to direct investing on

the stock markets. Foreign and other institutional players have brought in. So direct influence

of UTI on the markets may be less than before, though it remains the largest player in the fund

industry. In absolute terms, the investible funds corpus of even UTI was still relatively small

at about Rs. 600 crores in 1984. But, at the end of this Phase One, UTI had grown large as

evidenced by the following statistics:

.

1987-1988

Amount Mobilised

(Rs. Crores)

Assets Under

Management

(Rs. Crores)

UTI 2,175 6,700

Total 2,175 6,700

37


38/115

At the end of 1988 UTI had Rs.6,700 crores of assets under management

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

Entry of 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. These mutual funds helped enlarge the investor community and the

investible funds. From 1987 to 1992-93, the fund industry expanded nearly seven times in

terms of Assets under Management, as seen in the following figures:

1992-1993

Amount

Mobilised

(Rs. Crores)

Assets Under

Management

(Rs. Crores)

UTI 11,057 38,247

Public Sector 1,964 8,757

Total 13,021 47,004

.38


39/115

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

Entry of Private Sector Funds&

SEBI Regulation for Mutual 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 and increasing

competition for the existing public sector funds. Quite significantly, foreign fund management

companies were also allowed to operate mutual funds, most of them coming into India

through joint ventures with Indian promoters. These private funds have brought in with them

the latest product innovations, investment management techniques and investor servicing

technology that make the Indian mutual fund industry today a vibrant and growing financial

intermediary.

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.

During the year 1993-94, five private sector mutual funds launched their schemes

followed by six others in 1994-95. Initially, the mobilization of funds by the private mutual

funds was slow. But, this segment of the fund industry now has been witnessing much greater

investor confidence in them. One influencing factor has been the development of a SEBI

driven regulatory framework for mutual funds. But another important factor has been the

steadily improving performance of several funds themselves. Investors in India now clearly

see the benefits of investing through mutual funds and have started becoming selective.

.39


40/115

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 entire mutual fund industry in India, despite initial hiccups, has since scaled new

heights in terms of mobilization of funds and number of players. Deregulation and

liberalization of the Indian economy has introduced competition and provided impetus to the

growth of the industry. Finally, most investors small or large have started shifting towards

mutual funds as opposed to banks or direct market investments.

More investor friendly regulatory measures have been taken both by SEBI to protect the

investor and by the government to enhance investors returns through tax benefits. A

comprehensive set of regulations for all mutual funds operating in India was introduced with

SEBI (Mutual Fund) Regulations, 1996. These regulations set uniform standards for all

mutual funds and will eventually be applied in full to Unit Trust of India as well, even though

UTI is governed by its own UTI Act. In fact, UTI has been voluntarily adopting SEBI

guidelines for most of its schemes. Similarly, the 1999 Union Government Budget took a big

step in exempting all mutual fund dividends from income tax in the hands of the investors.

Both the 1996 regulations and the 1999 Budget must be considered historic importance, given

their far-reaching impact on the fund industry and investors. 1999 marks the beginning of a

new phase in the history of the mutual fund industry in India, a phase of significant growth in

terms of both amounts mobilized from investors and assets under management.

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

.40


41/115

crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way

ahead of other mutual funds.

MUTUAL FUND MOBILIZATION ANDASSETS UNDER MANAGEMENT

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1987-88 1992-93 1998-99 1999-00

Period

Mutual Fund Mobilisation

Public Sector

Private Sector

UTI

.41


42/115

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1987-88 1992-93 1998-99 1999-00

Period

Mutual Fund Assets Under Management

Public Sector

Private Sector

UTI

Fourth Phase: Since 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.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is

registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation

.42


43/115

of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of assets under

management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual

Fund Regulations, and with recent mergers taking place among different private sector funds,

the mutual fund industry has entered its current phase of consolidation and growth. As at the

end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under

421 schemes.

The graph indicates the growth of assets over the years

.43


44/115

Note:

Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified

Undertaking of the Unit Trust of India effective from February 2003. The Assets

under management of the Specified undertaking of the Unit Trust of India has

therefore been excluded from the total assets of the industry as a whole from February

2003 onwards.

TYPES OF MUTUAL FUNDS: -

Mutual Funds have specific investment objectives such as growth of capital, safety of

principal current income or tax exempt income, one can select one fund or any number of

different funds to help one meets ones specific goals. In general mutual fund fall under 3

general categories: -

Equity fund invest in shares of common stocks.

Fixed income funds invest in government or corporate securities which offer fixed rate

of returns.

Balanced fund invest in a combination of both stocks and bonds.

AGGRESSIVE GROWTH FUNDS :-

.44


45/115

These funds seek to provide maximum growth of capital with secondary emphasis on

dividend or interest income. They invest in common stocks with a high potential for rapid

growth and capital appreciation.

Aggressive growth funds are suitable for those investors who can afford to assume the

risk of potential loss in value of their investment in the hope of achieving substantial and

rapid gains. They are not suitable for investors who must conserve their principal or who must

maximize their current income.

GROWTH FUNDS:-

Like aggressive growth funds, growth fund generally invests in stocks for growth rather

than income. They are considered more conservative in their approach because they usually

invest in established companies to achieve long-term growth. Growth fund provides low

current income but the investor principal is more stable then it would be in an aggressive

growth fund. While the growth potential may be less over the short term, many growth funds

have superior long-term performance records.

These funds are suitable for growth oriented investors but not investors who are unable

to assume risk or who are dependent on maximizing current income from there investments.

GROWTH AND INCOME FUNDS:-

.45


46/115

Growth and income funds seek long-term growth of capital as well as current income.

The investments strategies use to reach these goals vary among funds.

Growth and income funds have low to moderate stability of principal and moderate

potential for current income and growth. They are suitable for investors who can assume some

risk to achieve growth of capital but want to maintain a moderate level of current income.

FIXED INCOME FUNDS:-

The goal of fixed income fund is to provide high current income consistent with the

level of capital. Growth of capital is of secondary importance.

Fixed income funds offer a higher level of current income than money market funds,

but a lower stability of principal. Fixed income funds are suitable for investors who want to

maximize current income and who can assume a degree of capital risk in order to do so.

EQUITY FUNDS:-

Funds that invest in stocks represent the largest category of mutual fund. Generally the

investment objective of this class of fund is long-term capital growth with some income.

There are however many type of equity funds.

.46


47/115

BALANCED FUNDS:-

The Balanced funds aims to provide both growth and income. These funds invest in both

shares and fixed income securities in the proportion indicated in their offer documents. It is an

idea for investors who are looking for the combinations of income and moderate growth.

MONEY MARKET FUNDS/ LIQUID FUNDS:-

For the cautious investors these funds provide a very high stability of principal while

seeking a moderate to high current income. They invest in highly liquid; virtually risk free,

short-term debt securities of agencies of the Indian government, banks and corporation and

treasury bills. Because of their short-term investments, money market mutual funds are able to

keep a virtually constant unit price; only the yield fluctuates.

Money market funds are suitable for those investors who want high stability of

principal and current income with immediate liquidity.

SPECIALITY / SECTOR FUNDS:-

These funds invest in securities of a specific industry or sector of the economy such as

health care, technology, leisure, utilities or precious metals. The funds enable investor to

.47


48/115

diversify holding among many companies within an industry, a more conservative approach

than investing directly in one particular company.

Sector funds offer a opportunity for sharp capital gains in cases where the funds

industry is in favor but also entail the risk of capital losses when the industry is out of favor.

While sectors funds restrict holdings to a particular industry, other specialty funds such as

index funds gives investors a broadly diversified portfolio and attempt to mirror the

performance of various market averages.

OPEN ENDED SCHEMES:-

Open-ended schemes do not have a fixed maturity period. Investors can buy or sell units

at NAV- related prices from and to the mutual fund on any business day. These schemes have

unlimited capitalization, open-ended schemes do not have a fixed maturity, there is no cap on

the amount you can buy from the fund and the unit capital keep growing. These funds are not

generally listed on any exchange.

Open-ended schemes are preferred for their liquidity. Such funds can issue and redeem

units any time during the life of schemes. Hence unit capital of open-ended funds can

fluctuate on a daily basis. The advantages of open ended schemes are: -

1. Any time exit option

2. Any time enter option.

.48


49/115

CLOSE ENDED SCHEMES:-

Close-ended schemes have fixed maturity periods. Investors can buy into these funds

during the period when these funds are open in the initial issue. After that such scheme cannot

issue new units except in case of bonus or right issue. However after the initial issue you can

buy or sell units of the schemes on the stock exchange where they are listed. The market price

of the unit could vary from the NAV of the schemes due to demand and supply factor

HOW LONG TO KEEP INVESTMENT TO GET MAXIMUM

RETURNS?

Technically open-ended funds you can withdraw your investments even within a week,

but to get desired returns positive time frame is required are:

.49


50/115

WHAT RETURNS CAN I EXPECT IF I KEEP MY MONEY

FOR SUGGESTED TIME FRAMES?

.

Funds Time Period

Equity Funds 3 Years (plus)

Balanced Funds 18 months to 3 Years

MIPs 1 Year (plus)

Income Funds 6 months to 1 Year

Liquid Funds few days to 6 months

50


51/115

The above-mentioned returns in the table are indicative and not assured. All

investments in MUTUAL FUNDS are securities and are subject to market risk and the NAVs

of the schemes may go up and down depending upon the factors and forces affecting the

security market including the fluctuations in the internal rates .The past performance of the

MUTUAL FUNDS is not indicative of future performance.

.

Funds Returns

Sector funds 22% to 25% p.a

Balance funds 15% to 18% p.a

MIPs Pension Plans 12% to 15% p.a

Income Funds 10% to 12% p.a

Liquid Funds 7% to 9% p.a

51


52/115

THE RISK RETURNS GRAPHS FOR VARIOUS FUNDS:-

The above Graph shows the Risk and Returns generated by different Funds. Liquid

Funds are less Risky and also generate less Returns where as Sector Funds are more Risky but

generate more Returns by the example of above two Funds it is clear that Risk and Returns

are directly proportional to each other. Other Funds like Equity Funds, Balanced Funds and

Income Funds also gives the same percentage of Returns as the Risk involved.

.

Liquid Funds

Income Funds

Balanced Funds

Equity Funds

Sector Funds

R

E

T

UR

N

S

52

RISKS


53/115

HDFC MUTUAL FUND

Mutual Fund HDFC Mutual Fund

Setup Date Jun-30-2000

Incorporation Date Dec-10-1999

Sponsor Housing Development Finance Corporation Limited, Standard Life

Investments LimitedTrustee HDFC Trustee Company Limited

Chairman Mr. Deepak Parekh

CEO / MD Mr. Milind Barve

CIO Mr. Prashant Jain

Compliance Officer Mr. Yezdi Khariwala

Investor Service

OfficerMr. John Mathews

Assets Managed Rs. 92624.52 crore (Jun-30-2012)

Introduction to HDFC Asset Management Company.

Overview and Background: - The Housing Development Finance Corporation Limited

(HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of

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

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

'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced

operations as a Scheduled Commercial Bank in January 1995. 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

.53


54/115

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. HDFC provides financial

assistance to individuals, corporate 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 has a client base of around 11 lac borrowers, 9 lac

depositors, 1.95 lac shareholders and about 25,000 deposit agents, as at December 31, 2010.

HDFC had raised funds from international agencies such as the World Bank, IFC

(Washington), USAID, DEG, ADB and KfW, international syndicated loans, 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 fifteenth 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. (Data source from-www.hdfcfund.com) 2011

STANDARD LIFE INVESTMENTS LIMITED

Standard Life Investments was launched as an investment management company in 1998. It is

the dedicated investment management company of the Standard Life group and is a wholly

.54


55/115

owned subsidiary of Standard Life Investments (Holdings) Limited, which in turn is a wholly

owned subsidiary of Standard Life plc With global assets under management of

approximately US$213.9 billion as at June 30, 2010 Standard Life Investments Limited is one

of the world's major investment companies, operating in the UK, Canada, Hong Kong, China,

Korea, Ireland and the USA, and is responsible for investing money on behalf of five million

retail and institutional clients worldwide The Standard Life Assurance Company was

established in 1825 and has considerable experience in global financial markets. The company

was present in the Indian life insurance market from 1847 to 1938 when agencies were set up

in Kolkata and Mumbai. The company re-entered the Indian market in 1995, when an

agreement was signed with HDFC to launch an insurance joint venture. In April 2006, the

Board of The Standard Life Assurance Company recommended that it should demutualise and

Standard Life plc float on the London Stock Exchange. At a Special General Meeting held in

May voting members overwhelmingly voted in favor of this. The Court of Session in Scotland

approved this in June and Standard Life plc floated on the London Stock Exchange on 10th

July 2006.

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 1.8% of the market capitalization of the London Stock

Exchange.

VISION

.55


56/115

To be a dominant player in the Indian Mutual Fund industry recognized for its high levels of

ethical and professional conduct and a commitment towards enhancing investor interests.

SPONSOR

HOUSING DEVELOPMENT FINANCE CORPORATION (HDFC).

The sponsor of HDFC MF is Housing Development Finance Corporation (HDFC). HDFC

was incorporated in 1977 as the first specialized housing finance institution in India. HDFC

provides financial assistance to individuals, corporate and developers for purchase or

construction of residential housing. As on December 31st, 2002, HDFCs cumulative loan

disbursement are Rs.40, 060 crores financing over 2.1 million units all over India.

PARTNERS

Standard Life Insurance Company of UK set up base in 1825. It is today the largest pension

fund in UK and the largest Mutual life assurance company in Europe. Standard Life

Investment was set up as a dedicated investment management company.

MANAGEMENT

HDFC Trustee Company Limited

A company incorporated under companies Act, 1956 is the trustee to the Mutual Fund vide

the trust deed dated June 8th, 2000 as amended from time to time. HDFC Trustee Company

Limited is a wholly owned subsidiary of HDFC Limited.

HDFC ASSET MANAGEMENT COMPANY LIMITED (HDFC AMC)

It was incorporated under the companys act, 1956, on December 10th, 1999 and was

approved to act as an asset management company for the MF by SEBI on July 3rd 2000. In

.56


57/115

terms of the Joint participation agreement dated October 29th, 1999 entered between Housing

Development Finance Corporation (HDFC) and Standard Life Investment , 25.6% of the paid

up share capital of the AMC had been transferred by HDFC to Standard Life assurance

company, the parent company of Standard Life Investment Limited, on April 17th 2001.

Pursuant to the shareholders agreement dated October 17th entered between Housing

Development Finance Corporation Limited (HDFC) and Standard Life Investments Limited.

13.9% of the paid up share capital of the AMC has been transferred by HDFC to Standard

Life Investments Limited as on January 31st, 2002.

The present share holding pattern of the AMC is as follows:

HDFC 50.1%

Standard Life Investments 49.9%

The AMC is managing many schemes as per the requirements of the varied class of investors.

The AMC has obtained registration from SEBI vide registration no. PM /inp0000000506

dated December 22nd, 2000 to act as a portfolio manager under the SEBI regulations, 1993.

The certificate of registration is valid from January 1st, 2003 to December 31st, 2003. The

AMC is also providing portfolio management / advisory services and such activities are not in

conflict with the activities of the mutual funds.

The Board of Directors of the HDFC Asset Management

Company Limited (AMC)

Mr. Deepak S Parekh

Mr. N. Keith Skeoch

.57
http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#1#1http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#181#181http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#1#1http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#181#181


58/115

Mr Mark Connolly

Mr. Hoshang S. Billimoria

Mr. Humayun Dhanrajgir

Mr. P. M. Thampi

Dr. Deepak Phatak

Mr Rajeshwar Raj Bajaaj

Ms. Renu S. Karnad

Mr. Milind Barve

The AMC is managing 3 close ended schemes

HDFC Fixed Investment Plan

HDFC Long Term Equity Fund and

HDFC Fixed Maturity Plans

22 open-ended schemes of the Mutual Fund

HDFC Growth Fund (HGF)

HDFC Balanced Fund (HBF)

HDFC Income Fund (HIF)

HDFC Liquid Fund (HLF)

.58
http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#183#183http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#183#183http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#4#4http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#4#4http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#5#5http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#5#5http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#3#3http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#3#3http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#6#6http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#6#6http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#184#184http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#7#7http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#8#8http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#183#183http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#4#4http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#5#5http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#3#3http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#6#6http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#184#184http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#7#7http://c/Documents%20and%20Settings/sadanand/Desktop/aaa/managementAMCShow.jsp.htm#8#8


59/115

HDFC Long Term Advantage Fund (formerly HDFC Tax Plan 2000)

(HTP)

HDFC Children's Gift Fund (HDFC CGF)

HDFC Gilt Fund (HGILT)

HDFC Short Term Plan (HSTP)

HDFC Index Fund

HDFC Floating Rate Income Fund (HFRIF)

HDFC Equity Fund (HEF)

HDFC Top 200 Fund (HT200)

HDFC Capital Builder Fund (HCBF)

HDFC TaxSaver (HTS)

HDFC Prudence Fund (HPF)

HDFC High Interest Fund (HHIF)

HDFC Cash Management Fund (HCMF)

HDFC MF Monthly Income Plan (HMIP)

HDFC Core & Satellite Fund (HCSF)

HDFC Multiple Yield Fund (HMYF)

HDFC Premier Multi-Cap Fund. (HPM)

HDFC Multiple Yield Fund - Plan 2005 (HMY2005)

.59


60/115

The AMC is also providing portfolio management / advisory services and such activities are

not in conflict with the activities of the Mutual Fund.The AMC has renewed its registration

from SEBI vide Registration No. - PM / INP000000506 dated December 4, 2003 to act as a

Portfolio Manager under the SEBI (Portfolio Managers) Regulations, 1993.The Certificate of

Registration is valid from January 1, 2004 to December 31, 2006 .

HDFC mutual fund was incorporated on December, 10th 1999. It was setup on June 30th,

2000. In 2003 HDFC Asset Management Company had entered into an agreement with

Zurich Insurance Company to acquire the asset management business. Consequently, all the

schemes of Zurich Mutual Fund in India had been transferred to HDFC Mutual Fund. The

HDFC AMC now offers Equity Funds, Balanced Funds and Debt Funds. They have been the

best performing mutual funds in the last several years.

The assets under management are Rs 86,648.10 crores as of June 30, 2010.

InvestmentYogi analyses the best performing HDFC mutual funds in the Balanced Fund,

Equity Fund and Equity Linked Savings Scheme (ELSS) categories.

Best performing Balanced Funds are:

HDFC Prudence Fund: The objective is to provide periodic returns and capital

appreciation over a long period of time, by investing in equity and debt investments,

with an aim to minimize any capital erosion. This scheme was launched on December

16, 1993. The top sector allocations for this fund are BFSI, Pharmaceuticals, Oil and

Gas. The fund manager is Prashant Jain.

HDFC Balanced Fund: The objective is to generate capital appreciation along with

current income from a combined portfolio of equity, debt and money market

.60


61/115

instruments. This scheme was launched on September 11, 2000. The top sector

allocation for this fund is Pharmaceuticals. The fund manager is Chirag Setalvad.

Source: Morningstar Direct Data as of June 30, 2010

The annualized return for both the funds during the last three years is equivalent to 16%

(approx). This shows both funds performed equally well during the recession period. When

markets were recovering in the last one year the returns for HDFC Prudence showed 4%

higher returns while comparing to its peer fund HDFC Balanced. Also, in the last five years

HDFC Prudence has managed to outperform HDFC Balanced fund.

Best performing Equity Funds are:

HDFC Equity Fund: The objective of this fund is to provide capital appreciation

through investments in equity oriented securities. This scheme was launched on

December 8, 1994. The benchmark index is S&P CNX 500. The top sector allocations

for this fund are BFSI, Pharmaceuticals, Oil and Gas. The fund manager is Prashant

Jain .

HDFC Top 200: The objective of this fund is to generate long term capital

appreciation by investing in a portfolio of equities and equity linked instruments

.61
http://www.investmentyogi.com/blogs/mutualfundas/HDFCMFTable1_7051158A.png


62/115

drawn from the BSE 200 Index. This scheme was launched on August 19, 1996. The

benchmark index is BSE 200. The top sector allocations for this fund are BFSI, Oil

and Gas. The fund manager is Prashant Jain.


The annualized return for HDFC Equity Fund was 46.5% in the last one year. These returns

are much higher by comparing it with its peer fund HDFC Top 200. This shows when markets

were recovering, the fund manager made the right investment decisions and managed to

generate better returns for their investors in HDFC Equity Fund. Whereas, when you compare

the returns for the last three years (i.e during the global slowdown) its HDFC Top 200 fund

generated 2% higher returns by comparing it to HDFC Equity Fund. In the last five years both

funds have given equivalent returns of 28% (approx).

Best performing Tax Saving Funds are:

HDFC Long Term Advantage Fund: The objective is to generate long term

capital appreciation from a portfolio that is predominantly in equity and equity

related instruments and providing tax benefits to investors. This scheme was

launched on January 2, 2001. The benchmark index is BSE Sensitive Index. The

.62


63/115

top sector allocations for this fund are Information Technology and

Pharmaceuticals. The fund manager is Chirag Setalvad.

HDFC Taxsaver: The objective is to provide tax benefits along with capital

appreciation. This scheme was launched on December 18, 1995. The benchmark

index is S&P CNX 500. The top sector allocations for this fund are Information

Technology, Pharmaceuticals and BFSI. The fund manager is Vinay Kulkarni.


The annualized return for HDFC Taxsaver is much better while comparing to its peer fund

HDFC Long Term Advantage Fund. As, you can analyze HDFC Taxsaver fund has

outperformed in the 1st and 3rd year, as well as in the 5th year returns. In the last three years

of global slowdown, which had impacted Indian stock market, HDFC Taxsaver fund managed

to deliver 11.7% returns. This is quite appreciable. Also, during the recovery phase in the last

one year, HDFC Taxsaver has managed to generate 48.7% returns for their

investors.

There are many HDFC Mutual Funds in each category other than the schemes discussed

above. An investor needs to identify their own risk taking ability, time-frame of investments

and goals while taking a decision to invest in any particular mutual funds.

ADVANTAGE OF MUTUAL FUND:-

.63
http://http/www.investmentyogi.com/MutualFunds/default.aspxhttp://www.investmentyogi.com/blogs/mutualfundas/HDFCMFTable3_3F1E62C5.pnghttp://http/www.investmentyogi.com/MutualFunds/default.aspx


64/115

The advantages of investing in a Mutual Fund are:

Diversification: The best mutual funds design their portfolios such that individual

investments will react differently to the same economic conditions. For example,

economic conditions like a rise in interest rates may cause certain securities in a

diversified portfolio to decrease in value. Other securities in the portfolio will respond

to the same economic conditions by increasing in value. When a portfolio is balanced

in this way, the value of the overall portfolio should gradually increase over time, even

if some securities lose value.

Professional Management: Most mutual funds pay topflight professionals to

manage their investments. These managers decide what securities the fund will buy

and sell.

Regulatory oversight: Mutual funds are subject to many government regulations

that protect investors from fraud.

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.

.64


65/115

Convenience: You can usually buy mutual fund shares by mail, phone, or over the

Internet.

Low cost: Mutual fund expenses are often no more than 1.5 percent of your

investment. Expenses for Index Funds are less than that, because index funds are not

actively managed. Instead, they automatically buy stock in companies that are listed

on a specific index.

Transparency: Mutual Fund schemes are said to be Transparent because they

show the clear allocation of Funds to Investors.

Flexibility: Mutual funds are flexible because they change time to time and also if

an Investor wants his money back before the maturity of the Fund He/she can easily

redeem it.

DRAWBACKS OF MUTUAL FUNDS:-

Mutual funds have their drawbacks and may not be for everyone:

.65


66/115

No Guarantees: No investment is risk free. If the entire stock market declines in

value, the value of mutual fund shares will go down as well, no matter how balanced

the portfolio. Investors encounter fewer risks when they invest in mutual funds than

when they buy and sell stocks on their own. However, anyone who invests through a

mutual fund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to cover their day-

to-day expenses. Some funds also charge sales commissions or "loads" to compensate

brokers, financial consultants, or financial planners. Even if you don't use a broker or

other financial adviser, you will pay a sales commission if you buy shares in a Load

Fund.

Taxes: During a typical year, most actively managed mutual funds sell anywhere

from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit

on its sales, you will pay taxes on the income you receive, even if you reinvest the

money you made.

Management risk: When you invest in a mutual fund, you depend on the fund's

manager to make the right decisions regarding the fund's portfolio. If the manager

does not perform as well as you had hoped, you might not make as much money on

your investment as you expected. Of course, if you invest in Index Funds, you forego

management risk, because these funds do not employ managers.

ASSOCIATION OF MUTUAL FUNDS IN INDIA:-

.66


67/115

With the increase in mutual fund players in India, a need for mutual fund association in

India was generated to function as a non-profit organization. Association of Mutual Funds in

India (AMFI) was incorporated on 22nd August 1995.

AMFI is an apex body of all Asset Management Companies (AMC), which has been

registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are

its members. It functions under the supervision and guidelines of its Board of Directors.

Association of Mutual Funds India has brought down the Indian Mutual Fund Industry

to a professional and healthy market with ethical lines enhancing and maintaining standards.

It follows the principle of both protecting and promoting the interests of mutual funds as well

as their unit holder

The objectives of Association of Mutual Funds in India:-

The Association of Mutual Funds of India works with 30 registered AMCs of the

country. It has certain defined objectives, which juxtaposes the guidelines of its Board of

Directors. The objectives are as follows:

This mutual fund association of India maintains high professional and ethical

standards in all areas of operation of the industry. It also recommends and promotes

the top class business practices and code of conduct which is followed by members

and related people engaged in the activities of mutual fund and asset management. The

a