PROJECT

ON
METHOD OF INVESTING IN
VARIOUS SCHEMES
&
REQUIREMENR REQUIRED
IN VARIOUS SCHEMES

SUBMITTED TO: - SUBMITTEDBY

PROF. AMRINDER SINGH KAVITA
ROLL NO. 1556
MBA 4th SEM

CONTENTS
• preface
• Acknowledgement
• Declaration
• Introduction
• Objective of study
• Scope of study
• Research methodology
• Finding
• Recommendation
• Limitation
• Conclusion
• Bibliography
• Annexure

PREFACE
Education becomes more meaningful when its theoretical aspects are combined
with practical experience. This provides an opportunity to the students to improve
their understanding of the studies.

MBA is a course, which combines both its theory and application as its content of
study in the field of management as a part of this course, every aspirant has to
undergo this project for the purpose to expose the students or management sciences
to real business situation and to provide insight into the various functions carried
out within the organization

In order to use the theoretical knowledge I get the opportunity of prepare this
project investing in various mutual fund scheme and requirement required in
various scheme.

ACKNOWLEDGEMENT
Sometimes words fall short to show gratitude, the same happened with me during
this project. The immense help and support received from HDFC Prudential
Mutual Funds overwhelmed me during the project.

My sincere gratitude to Mr. Vijay Sharma for providing me with an opportunity to

work with HDFC Mutual Funds.

I also thank Prof. Amrinder Singh , S.G.T.B.Khalsa College Anandpur Sahib who
has sincerely supported me with the valuable insights into the completion of this
project.
I am grateful to Mr. Punit thakur , Branch Head and all of the members of branch,
who have helped me in the successful completion of this project.
Last but not the least; my heartfelt love for my parents, whose constant support and
blessings helped me throughout this project.

DECLAIRTION
I the undersigned, hereby declare that this project entitled “method of investing in
mutual fund scheme & requirement required in various scheme and submitted by
me to Shri Guru Teg Bhadur Khalsa college Shri Anandpur Sahib in partial
fulfillment of the requirements for the award of MBA under the guidance of my
faculty guide Mr. Amrinder Singh.This report neither full nor in part has ever been
submitted for award of any other course of either this Institute or any other
Institute

INTRODUCTION
Different investment avenues are available to investors. Mutual funds also offer
good investment opportunities to the investors. Like all investments, they also
carry certain risks; the investors should compare the risk and expected yields after
adjustment of tax on various instruments while taking investment decisions. The
investors may seek advice from experts and consultants including agents and
distributors of mutual fund schemes while making investment decision. With an
objectives to make the investors aware of functioning of mutual funds. (HDFC
MUTUAL FUND)

Mutual fund
Mutual fund is a mechanism for pooling the resources by issuing units to the
investor and investing fund in securities in accordance with objectives as disclosed
in offer document. Investments in securities are spread across a wide cross section
of industries and sectors and thus the risk is reduced. Diversification reduced the
risk because all stocks may not move in the same direction in the same proportion
at the same time. Investors of mutual fund are known as unit holders. The profits or
losses are shared by the investors in proportion to their investments. The mutual
fund normally comes out with a number of schemes with different investment
objectives which are launched from time to time. A mutual fund is required to be
registered with securities and exchange board of India (SEBI) which regulate
securities markets before it can collect funds from the public.

OBJECTIVE OF STUDY:-

1) To find out requirement of various scheme

2) Analyzing the Method are involve in various scheme

SCOPE OF STUDY: - CHANDIGARH

RESEARCH METHODOLOGY

A research is purely and simply framework or a plot for study that guides is
collection of data.
METHOD OF INVESTING IN VARIOUS SCHEMES

1) Systematic Investment Plan

2) Systematic withdrawal Plan

3) Systematic Transfer Plan

4) Monthly Income plan

5) Equity Linked Saving Scheme

SYSTEMATIC INVESTMENT PLAN

Systematic Investment Plan is an approach to investing within managed

investments which involves investing a set of amount at regular intervals rather
than investing a larger lump sum amount in one shot. By investing this way you
are not attempting to capture the highs and lows of the market but rather the cost of
your investment is averaged over a period of time. The essence of SIPs is that
when the markets fall investors automatically acquire more units. Likewise they
acquire lesser units when the market rises. This means that you buy less when the
price is high whereas you buy more the price is low. Hence the average cost per
unit drops down over a period of time. The way SIP works that your money is in
your bank account and every month a fixed sum is taken away from your bank &
invested in mutual fund.

Is far better to invest a small amount of money regularly, rather than save up
to make one large investment. This is because while you are saving the lump sum,
your savings may not earn much interest.

With HDFC MF SIP, each amount you invest grows through compounding
benefits as well. That is, the interest earned on your investment also earns interest.

Investing with HDFC MF SIP is easy. Simply give us post-dated cheques or opt for
an Auto Debit from your bank account for an amount of your choice (minimum of
Rs. 500 and in multiples of Rs. 100 thereof) and we’ll invest the money every
month in a fund of your choice. The plans are completely flexible. You can invest
for a minimum of six months, or for as long as you want. You can also decide to
invest quarterly and will need to invest for a minimum of two quarters.

Depends on the MF scheme you are investing and your risk profile. HDFC have
many mutual funds that offer SIP.
If you investing in long term (more than 5 years) or medium term (3 to 5 years),
HDFC Top 200 or HDFC Prudence fund (Growth) is a very good option.
Investment in MF through SIP is the best way. One should not be AMC specific.
One should invest as per ones time horizon and risk appetite.

Mutual fund is one of the best investing options. Since many of them do not know
about share trading, they like to invest in mutual funds. HDFC mutual fund has
introduced some schemes, which allows everybody to invest in funds. One of the
methods is SIP. SIP is Systematic Investment Plan. It is more or less similar to
investing in a recurring deposit. In recurring deposit, the rate of interest is very
important. Profits are based on the rate of interest. Mutual funds profits are based
on performance of the shares and bond in which the company has invested.
Selection of shares is very important here. Before investing, fund manager will do
the necessary research and collect the required information.

SIP is a gateway for middle class people and rural people to invest in mutual funds.
This plan allows very low monthly investments. The monthly investments are in
range of 100 to 500 rupees. HDFC bank has SIP calculator. This calculator allows
the investor to decide about the monthly investment. This calculator calculates
based upon various factors. The important factors are listed below here.

• Amount at the end of the tenure.

• Number of months for which the investments are made.
• Rate of return desired.

These factors will decide the approximate amount to be invested per month. SIP
plan has many benefits. The advantages are listed below here.

• It makes you as disciplined investor.

• It will help you to achieve your financial goal.
• Rupee cost averaging is possible.
HDFC SIP plan is available in many schemes. One of the famous schemes is
"HDFC Top 200 fund". Since inception of this scheme, the return of the SIP
investment is 31.60%.

It is high on convenience.

All you have to do is give your bank a standing order to debit a fixed sum every
month to the mutual fund house. And, that money is invested in the mutual fund of
your choice.

Depending on the Net Asset Value (price of the unit of a fund), you will get units
allocated to your name.

Also, this cultivates a savings habit. What does not come into your hands, you
don't spend.

HDFC Systematic Investment Plan is one of the best scheme yielding high returns
for its investors. It is just like recurring deposit where you need to make a
systematic investment every month on some date.

Benefits

HDFC Systematic Investment Plan entices most of the investors as its plans are
more flexible and very convenient. If you have five hundred rupees then you can
be an investor by investing in multiples of hundred rupees. The key to success for
the investor depends in being disciplined investors. The best Systematic
Investment Plan in HDFC is SIP auto debit facility. If you apply for it, the monthly
payment will be made automatically from your bank account every month. While
filling the HDFC mutual fund application form you need to fill the bank
authorization form too.

Some of the schemes of HDFC mutual funds are facilitated with tax benefits. If
you go for it you have tax benefits which come under income tax act. You should
not withdraw your fund for three years once you invest in it.

According to your convenience you can make a financial planning every month. If
you have financial crisis in a particular month, then you can reduce your amount in
that particular month. If you are financially healthy and NAV of the units are cheap
in a particular month, then you can buy more units in that period. This is the
smartest way to invest your money and get high returns.
HDFC SIP plan is well known. Most of the investors invest in HDFC mutual
funds. At present, mutual funds are the high money yielding investments. High risk
is also involved in investing in these funds and shares. SIP is Systematic
Investment Plan. Monthly investments are made in this plan. It is much similar to
the recurring deposit. SIP plans are famous because they have numerous
advantages. Advantages are listed here below.

SIP Plans Advantages:

• It is economical.
• It makes you a disciplined investor.
• Rupee cost averaging and lower per unit acquiring cost is possible.
• It enables the investment to grow with the compounded benefits.
• It helps you to achieve financial goals.

Middle class people as well as rural people can invest in this plan. Monthly
investments are very low in range of 100 to 500 rupees. So, it is economical. By
investing, you will oblige to pay the monthly amount. This plan disciplines middle
class and rural people. The investment will slowly increase and yield high returns.
This helps the investors to achieve their financial goals. Usually, monthly
investments are paid for months and years. In this time period, more number of
units is bought at low NAV and less number of units is bought at high NAV. This
leads to rupee cost averaging. Due to long time frame, averaging takes place and
shares are bought at low cost.

HDFC Bank has introduced many mutual fund schemes. HDFC Top 200 scheme is
a famous one. This scheme has systematic investment plan. The SIP investment
return is 30.6%, whereas non SIP investment return is 27.51%.

Systematic Transfer Plan (STP)

STP refers to Systematic Transfer Plan where in an investor invests a lump sum
amount in one scheme and regularly transfers (i.e. switches) a pre-defined amount
into another scheme. Every month on a specified date an amount you choose is
transferred from one mutual fund scheme to another of your choice.

Currently, Fixed Systematic Transfer Plan (FSTP) - Monthly Interval and Capital
Appreciation Systematic Transfer Plan (CASTP) - Monthly Interval facility is
available to the Unit holders on 1st, 5th, 10th, 15th, 20th and 25th of a month and
FSTP - Quarterly Interval and CASTP - Quarterly Interval facility is available to
the Unit holders on 1st, 5th, 10th, 15th, 20th and 25th of the first month of each
quarter.

Load Structure
The Entry Load Structure for the transferee schemes - HDFC Growth Fund,
HDFC Equity Fund, HDFC Top 200 Fund, HDFC Capital Builder Fund, HDFC
Core & Satellite Fund, HDFC Premier Multi-Cap Fund, HDFC Balanced Fund,
HDFC Prudence Fund, HDFC Long Term Advantage Fund and HDFC TaxSaver
will be as follows:

The Exit Load Structure is as follows:

For Transferee Schemes : HDFC Long Term Advantage Fund and HDFC
TaxSaver - Nil
For Transferee Schemes : HDFC Growth Fund, HDFC Equity Fund, HDFC Top
200 Fund, HDFC Capital Builder Fund, HDFC Core & Satellite Fund, HDFC
Premier Multi-Cap Fund, HDFC Balanced Fund and HDFC Prudence Fund.
In respect of each investment through STP less than Rs. 5 crore in value, an Exit
Load of 1.25% is payable if units are redeemed / switched-out on or before 2 years
from the date of allotment. In respect of each investment through STP equal to or
greater than Rs. 5 crore in value, no Exit Load is payable.

HDFC Mutual Fund has decided to revise the load structure for investments
through Systematic Transfer Plan (STP) from the Transferor Schemes (all Schemes
offering STP facility) to the following Transferee Schemes: HDFC Multiple Yield
Fund, HDFC Multiple Yield Fund - Plan 2005, HDFC Income Fund, HDFC High
Interest Fund, HDFC Short Term Plan, HDFC Cash Management Fund, HDFC MF
Monthly Income Plan, HDFC Gilt Fund, HDFC Floating Rate Income Fund,
HDFC Liquid Fund and HDFC Arbitrage Fund

Entry Load

The amount transferred under the STP from the Transferor Scheme to the
Transferee Scheme will be effected by redeeming units of Transferor Scheme at
applicable NAV, after payment of Exit Load, if any, and subscribing to the units of
the Transferee Scheme at applicable NAV, without payment of any Entry Load, if
any, as on the specified date of a month or a quarter. In case the date falls on a
Non-Business Day or falls during a book closure period, the immediate next
Business Day will be considered for the purpose of determining the applicability of
NAV.

Exit Load
The applicable Entry Load (% wise) originally waived will be levied in the
Transferee Scheme if units are redeemed/ switched-out on or before expiration of
two years from the date of transfer. Further, applicable Exit Load, if any, in the
Transferee Scheme / Plan / Option as on the date of allotment of units will also be
levied.

Thus, this facility offers the benefits similar to those of an SIP and is suitable for
investors who intend to invest systematically and currently have funds for
investments.

You should first understand SIP is way of investing in Mutual funds monthly,
where a fixed amount of money goes from your Bank Account to Mutual funds, so
if you do a SIP of 1,000 for 1 yr, it means that every month on a fixed date (chosen
by you) 1,000 will be invested in a Fixed Mutual fund you choose. Lets understand
STP now, In STP we invest a lump sum amount in some Mutual Fund and then a
fixed sum is transferred from that mutual fund to another mutual fund .

STP will make sense from DEBT -> EQUITY when markets are may very volatile
and you don’t want to take risk with your money in a short span of time, If you
invest through STP in markets and markets fall or have lots of volatile moves, then
this situation will be better than the one time investment option. This is still better
than putting money in Bank and doing a SIP, because at least you money is earning
some returns on debt part in STP.
STP can be used as switching mechanism in ULIP though it’s very restrictive and
with less choice.

Using STP when an important goal is near, if your are saving for some important
goal like child education, buying home or retirement and your goal is approaching
nearby, don’t wait till target date, you don’t want to see your money dip by 40-
50% within 6 month or so if markets suddenly crash, start moving your money out
of equity and transfer it to dept now through STP.

There are two types of STP plan, fixed and capital appreciation.

In fixed plan means a fixed sum will be transferred to the target mutual funds. on
the other hand in capital appreciation, only the amount of capital which is
appreciated gets transferred, that was the original lumpsum amount invested in the
start is protected. Capital appreciation choice is only with growth plan and not
dividend plan.

Here is the all the STP plan as of now

• Typically a minimum of six such transfer are to be agreed on by investors in

STP.
 • STP is a facility for convenience, when the transfer happens from one
mutual funds to another its still considered as selling of mutual fund and
then buying another one, so tax rule applies in the same way.
• Most of the fund allows only monthly and quarterly STP, some allow
weekly.
• There can be some minimum amount requirement for starting an STP like
say at least 1, 00,000 needs to be investing in debt funds to start a STP to
equity. Some restriction like this will be there
• There can be additional switching charges for availing STP facility.
• Entry load and entry load may still apply while buying and selling of mutual
fund through STP.
• Securities transaction TAX. 0.25% will be deducted on equity oriented funds
at the time of redemption or switch to another scheme in STP.

Systematic withdrawal plan (SWP)

A systematic withdrawal plan is a financial plan that allows a shareholder to
withdraw money from an existing mutual fund portfolio at predetermined intervals.
The money withdrawn through a systematic withdrawal plan can be reinvested in
another portfolio or used to pay for something else. Often, a systematic withdrawal
plan is used to fund expenses during retirement. However, this type of plan may be
used for other purposes as well.

With a systematic withdrawal plan, a fixed or variable amount is withdrawn at

regular intervals. Withdrawals can be made on a monthly, quarterly, semi-annual,
or annual schedule. The holder of the plan may choose withdrawal intervals based
on his or her commitments and needs.

A service offered by a mutual fund that provides a specific payout amount to the
shareholder at predetermined intervals, generally monthly, quarterly, semiannually
or annually.

TAX AVOIDED THROUGH SWP

Most MF industry watchers predicted the doom for Debt funds when the tax on
dividends declared by Income and debt funds was raised to 22% in the last Union
Budget. But nothing of that sort has happened. Incidentally income funds have
seen better collections as compared to equity and growth funds.

As per the modified regulations only the tax rate of 22% applies only to dividends
declared by the mutual funds. This can however be circumvented if the investor
opts for a Systematic Withdrawal Plan instead of receiving periodic dividends
since withdrawals tantamount to capital depletion and hence are not taxed in the
same form as dividends. Although both dividends and systematic withdrawals
actually mean partial liquidation of the fund capital for tax purposes they are
treated differently. And it is this loophole that investors and savvy income fund
managers have exploited to the hilt.

ADVANTAGES

Systematic Withdrawal Plan (SWP) enables investors to redeem a pre-defined

amount from their investments at regular intervals. Every month on a specified
date an amount you choose is withdrawn from the scheme of your choice.

Currently, Fixed Systematic Withdrawal Plan is available for Monthly/ Quarterly /

Half yearly / Yearly intervals and Variable Systematic Withdrawal Advantage Plan
is available for Quarterly/ Half Yearly / Yearly intervals only.
Fixed Plan is available for Growth and Dividend option whereas Variable Plan is
available for Growth Option only.

Load Structure:
In respect of amount withdrawn under SWP, the Exit Load, if any, applicable to
the Scheme/Plan as on the date of allotment of units shall be levied.

HDFC Trustee Company Limited, the Trustee to HDFC Mutual Fund has decided
to carry out the following changes in
The Systematic Withdrawal Plan (SWP) facility:
1) Fixed Plan will be available for Growth as well as Dividend Option and
Variable Plan will be available for Growth Option only for eligible
Scheme(s)/Plan(s) under SWAP facility.
2. Yearly interval is being introduced under Fixed as well as Variable Plan.
Therefore, unit holder(s) who opt for Fixed
Plan under systematic withdrawal from each Scheme/ Plan will now have the
option of Monthly, Quarterly, Half-
Yearly and Yearly intervals and unit holder(s) who opt for Variable Plan under
systematic withdrawal from each
Scheme/Plan will now have the option of Quarterly, Half-Yearly and Yearly
intervals.

3. Minimum Amount of withdrawal for each interval under Fixed Plan for each
Scheme(s)/ Plan(s) would be Rs. 500
And multiples of Rs. 100 thereafter.

4. Currently, SWP facility is available to the Unit holders on the following dates
i.e. 1st or 25th. It is now proposed to
Offer SWAP facility for four additional dates viz. 5th, 10th, 15th and 20th. Thus,
after the change, Unit holder shall have an option to select any one of the following
SWAP withdrawal date i. e. 1st, 5th, 10th, 15th, 20th, 25th.

5. Exit Load: In respect of amount withdrawn under SWP, the Exit Load, if any,
applicable to the Scheme/Plan as on the date of allotment of units shall be levied.

6. Unit holder(s) who wish to enroll for SWP facility are required to fill SWP
Enrolment Form available with the ISCs, distributors and also displayed on the
website www.hdfcfund.com. Unit holder(s) are advised to read the terms and
Conditions carefully before enrolment.

Mutual Fund Monthly Income Plan (MIP) –

Monthly Income Plan or MIPs are debt oriented hybrid schemes where debt
component is more than 70% to 95% and equity is 5% to 30%. The equity
component provides MIPs with just the edge it needs to outperform conventional
debts funds. Since the equity component is capped, this ensures that the MIP does
not take on more risk. Different MIPs have different level of Equity component in
it, starting from 5% in a conservative MIP to an aggressive MIP which has 30%
equity in it.

Benefits of Monthly Income Plans

Benefit of both worlds -Stability of Debt and returns of Equity: Normally debt
instruments may provide the safety and stability of regular income from coupon
payments whereas equities provide the chance to earn an extra income through
dividends and capital appreciation over a period of time.

Diversification: Since each asset classes have their own cycles, which at times
may run in opposite directions, it pays to invest across different assets so to
balance the portfolio. Majority of debt investments are into high credit quality
papers.

Stable return: If we see the track record, MIPs have given stable return, though
one have to watch out extreme bearish and bullish phase where return may
misguide you.

If you are investing in MIPs for the reason that Equity Markets are high and this
product is going to give you some comfort, you are actually going wrong here. To
manage the volatility in Stock Market, one should go for Asset Allocation strategy
rather than investing in MIPs. MIP is good for conservative investors and retired
people looking for better return than traditional Fixed Deposits. If you are looking
for regular income, use Systematic Withdrawal Plan rather than Dividend Payout
Option. Just make sure that you exercise such option only after 1 year of
investment.

Guaranteed Return: The aim of MIP is to protect the capital and give consistent
return but at any point in time, there is no guarantee in this product. In fact, SEBI
does not permit any AMC to give an sort of guaranteed return product. Though the
chances that MIP will give negative return are low hence a safer product Though
many investor belief that MIPs will give 12-15% guaranteed return year on year
which is not true. Though, if you look at return chart, there are reasonably good
return but they are not guaranteed.

Regular Dividends: Though fund manager try to give regular dividend but it is
again not certain. MIPs have often missed many dividends especially when equity
markets are not performing. Also with the regulating of SEBI allowing dividends
from EARNED income only, makes the job of fund manager more difficult. Now
at any point in time, dividend cannot be more than the growth in NAV. As advised,
its better to work on SWP rather than looking for dividends.

Primarily, MIP of mutual fund is a debt-oriented scheme that generally invests up

to 75-80% of its corpus in debt instruments and the remaining in equity
instruments. MIPs aim to provide investors with regular pay-outs (though
dividends) - although it is not mandatory for the mutual fund scheme as dividends
are paid at the discretion of the fund house and subject to availability of
distributable surplus.

Investment Objective

MIP aims to provide reasonable returns on a monthly basis through investment in

debt as well as a small portion in equities. They invest predominantly in interest
yielding debt instruments (commercial paper, certificate of deposits, government
securities and treasury bills). The debt investments ensure stability and consistency
while the equity instruments in the portfolio boost the returns. MIPs are market-
linked (to the extent of their equity portfolio).

Risk – Associated with debt assets in the portfolio: MIPs are affected by interest
rate changes in the economy (due to majority investment in debt instruments) as
explained below:

When interest rates (in the economy) fall: NAV of MIPs rises (due to increase in
bond prices);

When interest rates rise (as in the current scenario): NAV of MIPs fall; this is
when MIPs look to the equity portion in the portfolio to sustain return.

Associated with equity assets in the portfolio: Since MIPs are market-linked (to the
extent of their equity portfolio – which is generally 15-20%), they are less risky
than balanced funds (that usually have a 60-70% exposure to equities) but riskier
than pure debt funds/income funds (income funds invest only in pure debt
securities). As no one can accurately forecast how the equity and debt markets will
behave over any reasonable period, this raises the risk of capital erosion and non-
payment of dividend for investors. Most MIP fund managers have been notorious
in the past for increasing their equity exposure to up to 30% when they were
bullish about the stock market. While this may boost the overall returns of the fund
during a bull market, the fund NAV may take a beating during market fall.
An investor must evaluate the structure of the equity portfolio and invest only if
the risk levels are acceptable.

Return: MIPs aim to provide steady returns with limited volatility. In the past 3
years, most MIPs have provided average returns in the range of 12-13%.

Tenure: MIPs are ideal for investment horizon of 2-3 years

Taxability: MIPs being debt mutual funds, a dividend distribution tax (DDT) of
12.867% is levied.

If you sell the fund units before a year and there is a gain, short-term capital gains
(STCG) tax is applicable - the net gain will be added to current taxable income and
tax will be levied as per your personal income tax slab. If you sell units after a year
and there is a gain, a long-term capital gains (LTCG) tax is applicable - 10% tax
will be levied (without indexation benefit) or 20% tax with indexation benefit,
whichever is lower. Conservative investors who are looking for better returns than
bank FDs, mutual fund MIP could be a good option. Although monthly returns
cannot be guaranteed, one can bank on them for a steady income.

Alternatives to mutual fund MIPs:

Alternatives to mutual fund MIPs are bank term deposits, post-office MIP, Fixed
Maturity Plans (FMPs).

MIPs cannot assure you uninterrupted monthly income. The monthly dividends are
subject to interest rate fluctuations and even market volatility (with the increasing
exposure to equities). However, mutual fund MIPs score over ‘regular-income
products’ on two fronts: returns and tax efficiency. They can be an investment
alternative for senior citizens looking for regular income beyond fixed deposits.
They are also a preferred choice for risk-averse investors wanting to enter the stock
market with limited exposure. However, do not depend only on MIPs of mutual
funds for regular income. Instead, invest in a mix of assets to limit the loss from
any one investment.

Equity linked Saving Scheme (ELSS)

Investment in Securitized debt, if undertaken, would not exceed 20% of the net
assets of the scheme.
The Scheme may also invest up to 25% of net assets of the Scheme in derivatives
such as Futures & Options and such other derivative instruments as may be
introduced from time to time for the purpose of hedging and portfolio balancing
and other uses as may be permitted under the regulations and guidelines.

The Scheme may also invest a part of its corpus, not exceeding 40% of its net
assets, in overseas markets in Global Depository Receipts (GDRs), bonds and
mutual funds and such other instruments as may be allowed under the Regulations
from time to time.

Subject to the Regulations and the applicable guidelines, the Scheme may, engage
in Stock Lending activities. Also refer to Section on Stock Lending by the Fund.

The ELSS (Equity Linked Savings Scheme) guidelines, as applicable, would be

adhered to in the management of this Fund.

If the investment in equities and related instruments falls below 80% of the
portfolio of the Scheme at any point in time, it would be endeavored to review and
rebalance the composition.

Not withstanding anything stated above, subject to the regulations, the asset
allocation pattern indicated above may change from time to time, keeping in view
market conditions, market opportunities, applicable regulations and political and
economic factors. It may be clearly understood that the percentages stated above
are only indicative and are not absolute and that they can vary substantially
depending upon the perception of the AMC, the intention being at all times to seek
to protect the NAV of the scheme. Such changes will be for short term and
defensive considerations.

Provided further and subject to the above, any change in the asset allocation
affecting the investment profile of the Scheme and amounting to a change in the
Fundamental Attributes of the Scheme shall be effected in accordance with sub-
regulation (15A) of regulation 18 of SEBI regulations.

Investment Strategy

Debt securities (in the form of non-convertible debentures, bonds, secured

premium notes, zero interest bonds, deep discount bonds, floating rate bond /
notes, securitized debt, pass through certificates, asset backed securities, mortgage
backed securities and any other domestic fixed income securities including
structured obligations etc.) include, but are not limited to :

• Debt obligations of the Government of India, State and local Governments,

Government Agencies and statutory bodies (which may or may not carry a
state / central government guarantee),
• Securities that have been guaranteed by Government of India and State
Governments,
• Securities issued by Corporate Entities (Public / Private sector
undertakings),
• Securities issued by Public / Private sector banks and development financial
institutions.

ELSS MF INVESTMENT

There are several ELSS funds which are good now. There are several advantages if
you want to pick one in-addition to getting tax benefits.

1) Since the funds (sure most of them) have a lock-in period of 3-years, the fund
manager has enough liberty in order to time the market and invest accordingly.
You can also adopt the SIP route (Systematic Investment Plan) if you do want to
invest in one shot
2) since the funds are held for at least 3 years, you won't be paying in long term
capital gains the consistency of return generation over shorter and longer time
periods
3) The ability of the fund in protecting the downfall of NAV during bearish market
phases (should fall less than the category average)
4) Consistent, long term association of the fund management team with the fund
(frequent changes are not good).

REQUIREMENT REQUIRED IN VARIOUS SCHEME

• Permanent account number it’s a single solution to all financing related

identity
• Permanent Account Number PAN is a ten-digit alphanumeric number,
issued in the form of a laminated card of a laminated card.
 • Pan allotment letter from income tax department stating proof of your
original PAN number
• The zerox copy of the original pay card

FINDING

If you were to invest your funds directly in the capital markets without any
knowledge in the investments, you are often likely to make mistakes in the choice
of financial assets, which could ultimately result in the loss of capital.

Being an investor in a Mutual Fund scheme, you get the opportunity to invest in a
large diversified portfolio even with a small amount of funds, which in normal
circumstances would require big capital.

Investments in Mutual Funds offer one of the best options when it comes to
liquidity of your funds. Although as a prudent investor, you should stick to your
investments for at least 3-5 years to earn good returns but in case of urgent
requirement of funds, you can redeem your investments whenever you require.

The investing in mutual fund are not exposed to risks associated with defaults in
payment because the entire Mutual Fund industry is highly regulated by SEBI.
Therefore, you get the benefit from the safety of a regulated investment
environment.

Suggestion
There are no federally-regulated limits to the amount of money that you may place
into a mutual fund. There may be minimum or maximum contribution limits
defined by the broker through which you are investing

• Investing is about making your money work for you.

• Reinvesting your earnings allows you to take advantage of compounding.
• Each investor is different in his or her objectives and risk tolerance.
• There isn't just one strategy that can be used to invest successfully.
• Each investment vehicle has its own unique characteristics.
• Diversifying investments in a portfolio helps to manage risk.

Limitations
The biggest limitation for a retail investor is to select the right scheme and the right
Fund House especially when there are large numbers of options. For selecting the
best portfolio of Mutual Funds, you might need to seek the advice of Financial
Planners especially if you do not know the basics of financial planning.

As an investor in a Mutual Fund, you generally do not have any control over the
costs associated with investments. You have to pay different charges, known as
loads, which are levied by the Mutual Funds to recover various expenses such
marketing and distribution expenses, investment management fees, and
administrative expenses.

When you invest through Mutual Funds, you delegate the decisions about the
choice of financial assets to the Fund Managers. However, if you were to invest on
your own, depending upon your objectives, you can take the decisions about where
and when to invest your money.

CONCLUSION
The investing methods in mutual fund are to diversify risk and to benefit from
professional money management. The prospectus identifies key information about
the fund including its operating boundaries and its costs. The fund manager
operates within those boundaries and is a critical to achieving strong results within
those boundaries.
BIBLIOGRAPHY
• Marketing research (Naresh Malhotra)

• Financial institution (kalyani publisher)

• www.himpub.com

• www.hdfc mutual fund.com