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Chapter no.


1.1 1.2 1.3 1.4 1.5 1.6

Meaning Definition Scope\ Elements Objective Of Financial Management Different Risk Involved In Financial Management Importa0nce Of Financial Management

1.1 Meaning: Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise. 1.2 Definition: According to Phillippatus Financial Management can be defined as follows: It is concerned with Managerial decision that result in the acquisition and financing of long term and short term credit of the firm as such it deals with the situation that require selection of specific asset (or combination of assets), the selection of specific liability(combination of liabilities) as well as the problem of size and growth of an enterprise. The analysis of this decisions is based on expected inflows and outflows of funds and their effects upon managerial objectives. 1.3 Scope/Elements: 1) Investment decisions includes investment in fixed assets (called as capital budgeting). Investment in current assets is also a part of investment decisions called as working capital decisions.

2) Financial decisions - They relate to the raising of finance from various resources which will depend upon decision on type of source, period of financing, cost of financing and the returns thereby.

3) Dividend decision - The finance manager has to take decision with regards to the net profit distribution. Net profits are generally divided into two:

a. Dividend for shareholders- Dividend and the rate of it has to be decided.

b. Retained profits- Amount of retained profits has to be finalized which will depend upon expansion and diversification plans of the enterprise.

1.4 Objective of financial management: The financial management is generally concerned with procurement, allocation and control of financial resources of a concern. The objectives can be-

1. To ensure regular and adequate supply of funds to the concern.

2. To ensure adequate returns to the shareholders which will depend upon the earning capacity, market price of the share, expectations of the shareholders

3. To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost.

4. To ensure safety on investment, funds should be invested in safe ventures so that adequate rate of return can be achieved.

5. To plan a sound capital structure-There should be sound and fair composition of capital so that a balance is maintained between debt and equity capital.

6. To earn minimum profits in the short term which must be able to cover up the cost of capital, whether dividends are paid or not.

7. To ensure proper co-ordination in the activities of finance department with those of other department in the organization.

8. To achieve break-even level as early as possible because once this point is achieved then it can begin to make profit sooner or later in future.

9. To ensure availability of adequate cash flow to meet its working expenses such as payment of raw material, wages and salaries, rent etc.

10. One of the aim of finance department is to bring a good name, reputation , image and goodwill for the firm in the market.

1.5 Different risk involved in financial management: 1. Country risk: The possibility that political events (a war, national elections), financial problems (rising inflation, government default), or natural disaster (an earthquake, a poor harvest) will weaken a countrys economy and cause investments in that country to decline.

2. Credit risk: The possibility that a bond issuer will fall to repay interest and principal in a timely manner. Also called default risk.

3. Currency risk: The possibility that could be reduced for Indians investing in foreign securities because of a rise in the value of the rate against foreign currencies. Also called exchange rate risk.

4. Income risk : The possibility that the dividends paid by a fixed-income investment, such as bond, will decline as a falling over all interest rates.

5. Industry risk: The possibility that a group of stocks in single industry will decline in price due to developments in that industry.

6. Inflation risk: The possibility that increases in the cost of living will reduce or eliminate on investments real returns

7. Interest rate risk: The possibility that a bond investment will decline in value because of an increases in the interest rates

8. Manager risk:

The possibility that an actively managed stock or bond funds investment advisor will fail to execute the funds investment strategy effectively and , the fund will fall to achieve its stated objective.

1.6 Importance Of Financial Management: Finance is regarded as the life blood of a business enterprise. This is because the modern money oriented economy; finance is one of the basic foundations of all kind of economic activities. It is the master key which provides access to all sources for being employed in manufacturing and merchandising activities. It has rightly been said that business needs money to make more money, only when it is properly managed. Hence efficient management of every business enterprises linked with efficient management of its business.

It is a common knowledge that a business runs on money. Finance is a lubricant that keeps the machinery of business in a continues state of activity. Finance is the life blood of various managerial functions, viz, production, marketing, personnel and research and development (R&D). Finance manager in a company is concerned with the procurement of funds and their effective utilization in the business.

Chapter No. 2 MUTUAL FUND

2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 Meaning Definition What Is Mutual Fund How Is Mutual Fund set up History Of Mutual Fund In India Diversification Types Of Mutual Fund Scheme Investment Objective Other Schemes Types Of Returns Advantage Of Mutual Funds Disadvantage Of Mutual Funds Advantage Of Investing Mutual Fund Disadvantage Of Investing Mutual Fund Scope Of Mutual Fund Selection Criteria Benefits Of Mutual Fund

2.1Meaning: A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short term money market instruments, and/or other securities.

2.2 Defination: Mutual fund defined in the pamphlet of the Association of mutual funds in india (AMFI),A mutual fund is a trust that pools the savings of a number of investors who share common financial goal. Anybody with an investible surplus of as little as a few thousand rupees can invest in mutual funds. These investors buy units of a particular mutual fund scheme that has a defined investment objective and strategy 2.3 What is a mutual fund: A mutual fund is just the connecting bridge or a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the gathered money into specific securities (stocks or bonds). When you invest in a mutual fund, you are buying units or portions of the mutual fund and thus on investing becomes a shareholder or unit holder of the fund. Mutual funds are considered as one of the best available investments as compare to others they are very cost efficient and also easy to invest in, thus by pooling money together in a mutual fund, investors can purchase stocks or

bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is diversification, by minimizing risk & maximizing returns.

2.4 How is a mutual fund set up? A mutual fund is set up in the form of a trust, which has sponsor, Trustees, Asset Management Company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The Trustee of mutual fund hold its property for the benefit of the unit holders. Asset Management Company approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The Trustees are vested with the general power of supervision and direction over AMC. They monitor the performance and compliance of SEBI regulation by athe mutual fund.

2.5 History of mutual fund in India: Unit Trust of India was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds. In the year 1992, Securities and exch-ange Board of India (SEBI) Act was passed. The objectives of SEBI are to protect the interest of investors in securities and to promote the development of and to regulate the securities market. As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector

entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type.

2.6 Diversification: Diversification is nothing but spreading out your money across available or different types of investments. By choosing to diversify respective investment holdings reduces risk tremendously up to certain extent. The most basic level of diversification is to buy multiple stocks rather than just one stock. Mutual funds are set up to buy many stocks. Beyond that, you can diversify even more by purchasing different kinds of stocks, then adding bonds, then international, and so on. It could take you weeks to buy all these investments, but if you purchased a few mutual funds you could be done in a few hours because mutual funds automatically diversify in a predetermined category of investments (i.e. - growth companies, emerging or mid size companies, low-grade corporate bonds, etc).


2.7 Types of mutual fund schemes: There are a wide variety of mutual fund schemes that carter to the needs of various classes of investor according to their age, financial position, risk tolerance and return expectations which aim to provide both capital appreciation and income by periodical distribution of dividends are as follws: 1. Open - Ended Schemes: An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity. 2. Close - Ended Schemes: These schemes have a pre-specified maturity period. One can invest directly in the scheme at the time of the initial issue. Depending on the structure of the scheme there are two exit options available to an investor after the initial offer period closes. Investors can transact (buy or sell) the units of the scheme on the stock exchanges where they are listed. The market price at the stock exchanges could vary from the net asset value (NAV) of the scheme on account of demand and supply situation, expectations of unit holder and other market factors. Alternatively some close-ended schemes provide an additional option of selling the units directly to the Mutual Fund through periodic repurchase at the schemes NAV; however one cannot buy units and can only sell units during the liquidity window. SEBI Regulations ensure that at least one of the two exit routes is provided to the investor. 3. Interval Schemes: Interval Schemes are that scheme, which combines the features of open-ended and close-ended schemes. The units may be traded on the stock exchange or may be

open for sale or redemption during pre-determined intervals at NAV related prices. The risk return trade-off indicates that if investor is willing to take higher risk then correspondingly he can expect higher returns and vise versa if he pertains to lower risk instruments, which would be satisfied by lower returns. For example, if an investors opt for bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest in capital protected funds and the profit-bonds that give out more return which is slightly higher as compared to the bank deposits but the risk involved also increases in the same proportion. Thus investors choose mutual funds as their primary means of investing, as Mutual funds provide professional management, diversification, convenience and liquidity. That doesnt mean mutual fund investments risk free. This is because the money that is pooled in are not invested only in debts funds which are less riskier but are also invested in the stock markets which involves a higher risk but can expect higher returns. Hedge fund involves a very high risk since it is mostly traded in the derivatives market which is considered very volatile.

Overview of existing schemes existed in mutual fund category: BY NATURE Equity fund: These funds invest a maximum part of their corpus into equities holdings. The structure of the fund may vary different for different schemes and the fund managers outlook on different stocks. The Equity Funds are sub-classified depending upon their investment objective, as follows: Diversified Equity Funds


Mid-Cap Funds Sector Specific Funds Tax saving funds(EASS) Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-return matrix. Debt fund: The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are further classified as: Gilt Funds: Invest their corpus in securities issued by Government, popularly known as Government of India debt papers. These Funds carry zero Default risk but are associated with Interest Rate risk. These schemes are safer as they invest in papers backed by Government. Income Funds: Invest a major portion into various debt instruments such as bonds, corporate debentures and Government securities. MIPs: Invests maximum of their total corpus in debt instruments while they take minimum exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly high on the risk-return matrix when compared with other debt schemes. Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested in

corporate debentures. Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity and preservation of capital. These schemes invest in short-term instruments like Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds. Balanced funds: As the name suggest they, are a mix of both equity and debt funds. They invest in both equities and fixed income securities, which are in line with pre-defined investment objective of the scheme. These schemes aim to provide investors with the best of both the worlds. Equity part provides growth and the debt part provides stability in returns. Further the mutual funds can be broadly classified on the basis of investment parameter are, Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives of the fund. The investor can align his own investment needs with the funds objective and invest accordingly.

2.8 Investment objective: Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these schemes is to provide capital appreciation over medium to long term. These schemes normally invest a major part of their fund in equities and are willing to bear

short-term decline in value for possible future appreciation. Income Schemes: Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular and steady income to investors. These schemes generally invest in fixed income securities such as bonds and corporate debentures. Capital appreciation in such schemes may be limited. Balanced Schemes: Balanced Schemes aim to provide both growth and income by periodically distributing a part of the income and capital gains they earn. These schemes invest in both shares and fixed income securities, in the proportion indicated in their offer documents (normally 50:50). Money Market Schemes: Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank call money.

2.9Other schemes: Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate. Index Schemes: Index schemes attempt to replicate the performance of a particular index such as the BSE sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the index. The percentage of each stock to the total holding will

be identical to the stocks index weightge. And hence, the returns from such schemes would be more or less equivalent to those of the Index. Sector Specific Schemes: These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate.


The risk return trade-off indicates that if investor is willing to take higher risk then correspondingly he can expect higher returns and vice- versa if he pertains to lower risk instruments, which would be satisfied by lower returns. For example, if an investors opt for bank FD, which provide moderate return with minimal risk. But as he moves ahead to invest in capital protected funds and the profit-bonds that give out more return which is slightly higher as compared to the bank deposits but the risk involved also increases in the same proportion.

Thus investors choose mutual funds as their primary means of investing, as Mutual funds provide professional management, diversification, convenience and liquidity. That doesnt mean mutual fund investments risk free. This is because the money that is pooled in are not invested only in debts funds which are less riskier but are also invested in the stock markets which involves a higher risk but can expect higher returns. Hedge fund involves a very high risk since it is mostly traded in the derivatives market which is considered very volatile.

2.10 Types of Returns

There are three ways, where the total returns provided by mutual funds can be enjoyed by investors: Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution. If the fund sells securities that have increased in price, the fund has a capital gain. Most funds also pass on these gains to investors in a distribution If fund holdings increase in price but are not sold by the fund manager, the fund's shares increase in price. You can then sell your mutual fund shares for a profit. Funds will also usually give you a choice either to receive a check for distributions or to reinvest the earnings and get more shares.

2.11 Advantages of mutual funds: Mutual funds have advantages compared to direct investing in individual securities these include: Increased diversification

Daily liquidity Professional investment management Ability to participate in investments that may be available only to larger investors Service and convenience Government oversight Ease of comparison.

2.12Disadvantages of mutual funds: Mutual funds have disadvantages as well, which include: Fees Less control over timing of recognition of gains Less predictable income No opportunity to customize.

2.13 Advantages of investing mutual fund: 1. Professional Management - The basic advantage of funds is that, they are professional managed, by well qualified professional. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is considered to be relatively less expensive way to make and monitor their investments.

2. Diversification - Purchasing units in a mutual fund instead of buying individual stocks or bonds, the investors risk is spread out and minimized up to certain extent. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others. 3. Economies of Scale - Mutual fund buy and sell large amounts of securities at a time, thus help to reducing transaction costs, and help to bring down the average cost of the unit for their investors. 4. Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate their holdings as and when they want. 5. Simplicity - Investments in mutual fund is considered to be easy, compare to other available instruments in the market, and the minimum investment is small. Most AMC also have automatic purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis.

2.14Disadvantage of investing mutual funds: 1. Professional Management- Some funds doesnt perform in neither the market, as their management is not dynamic enough to explore the available opportunity in the market, thus many investors debate over whether or not the so-called professionals are any better than mutual fund or investor him- self for picking up stocks. 2. Costs The biggest source of AMC income is generally from the entry & exit load which they charge for investors, at the time of purchase. The mutual fund industries are thus charging extra cost under layers of jargon. 3. Dilution - Because funds have small holdings across different companies, high

returns from a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money. 4. Taxes - when making decisions about your money, fund managers don't consider your personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability.

2.15 Scope of mutual fund: Scope of Mutual Funds has grown enormously over the years. In the first age of mutual funds, when the investment management companies started to offer mutual funds, choices were few. Even though people invested their money in mutual funds as these funds offered them diversified investment option for the first time. By investing in these funds they were able to diversify their investment in common stocks, preferred stocks, bonds and other financial securities. At the same time they also enjoyed the advantage of liquidity. With Mutual Funds, they got the scope of easy access to their invested funds on requirement. But, in today world, Scope of Mutual Funds has become so wide, that people sometimes take long time to decide the mutual fund type, they are going to invest in. Several Investment Management Companies have emerged over the years who offer various types of Mutual Funds, each type carrying unique characteristics and different beneficial features. To understand the broad scope of Mutual Funds we need to discuss the main

types of Mutual Funds that are normally offered by the Mutual Companies.

2.16 Selection criteria: It is very important to carefully analyse a mutual fund before one chooses the right funfund for himself. The following are a set of features to be looked into in a mutual fund: Fund managers track record: The fund manager should have proven track record at efficient fund management to create confidence in the mind of investor. Portfolio quality: If the poor quality investment dont backfire, a fund might generate high returns. High credit rating of investment means that the fund is investing in low risk instruments, indicating portfolio safety. Number of retail investors and average holding size: It is easier to deploy and manage a small fund but even if a few investors leave it, a small fund could be in a trouble. Size of fund: Critical mass gives access to opportunities not available to smaller fund.

Weighted average maturity:


Longer maturities hedge against downward movement in interest rates while it could it lose out on short term upswings in interest rates. Sudden change in portfolio or NAV: This might be a case of revamp of portfolio for good but also be aware that it might suddenly be open to more risk due to change investment. Dividend frequency: Tax-free dividends are good for those looking for regular returns but frequent dividends can hinder capital growth through redeployment.

2.17 Benefits of mutual funds: 1. Professional management: The funds are managed skilled and professionally experienced manager with a back of a research team. 2. Diversification: Mutual fund offer diversification in portfolio which reduces risk. 3. Convenient administration: There are no administrative risk of share transfer etc., as many of the mutual fund offer services in a demat form which save investors time and delays.

4.Higher returns:


Over a medium to long-term investment, investors always get higher returns in mutual fund as compared to other avenues of investment. This is already proved by the excellent returns mutual funds proved in last 2 years. 5.low cost of investment: No mutual fund increases the cost beyond prescribed limits of 2.5%maximum and any extra cost of management is to be borne by the AMC. 6.Liquidty: In all the open ended funds, liquidity is provided by direct sales/ repurchase by the mutual funds and in case of close ended funds, the liquidity is provided by listing the units on stock exchange. 7.Transprancy: The SEBI Regulation now compel all the funds to disclose their portfolio on ahalfyearly basis. However, many mutual funds disclose this on a quarterly or monthly basis to investors. 8.Other benefits: Mutual fund provide regular withdrawal and systematic as per the need of the investors. The investors can also switch from one scheme to another scheme without any load. 9.Highly flexible: Mutual funds provide regular withdrawal and systematic investment as per the need of the investor.


10.Highly regulated: Mutual funds all over the world are highly regulated and in India all mutual funds are registered with SEBI and are strictly regulated as per the mutual fund registration ACT.



3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8

HDFC Asset Management Company Limited Products NAV and Dividends Investor Corner NRI Corner Calculators Working Of Mutual Fund Distributor Advisor Comer


3.1 HDFC Asset Management Company Limited (AMC) HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund by SEBI vide its letter dated July 3, 2000.

The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai - 400 020.

In terms of the Investment Management Agreement, the Trustee has appointed the HDFC Asset Management Company Limited to manage the Mutual Fund. The paid up capital of the AMC is Rs. 25.169 crore.

The present equity shareholding pattern of the AMC is as follows : Particulars % of the paid up equity capital Housing Development Finance Corporation Limited Standard Life Investments Limited Other Shareholders (shares issued on exercise of Stock Options) 59.98 39.99 0.03

Zurich Insurance Company (ZIC), the Sponsor of Zurich India Mutual Fund, following a review of its overall strategy, had decided to divest its Asset Management business in India. The AMC had entered into an agreement with ZIC to acquire the said business, subject to necessary regulatory approvals.

On obtaining the regulatory approvals, the following Schemes of Zurich India Mutual Fund have migrated to HDFC Mutual Fund on June 19, 2003. These Schemes have been renamed as follows Former Name Zurich India Equity Fund Zurich India Prudence Fund Zurich India Capital Builder Fund Zurich India TaxSaver Fund Zurich India Top 200 Fund Zurich India High Interest Fund Zurich India Liquidity Fund Zurich India Sovereign Gilt Fund New Name HDFC Equity Fund HDFC Prudence Fund HDFC Capital Builder Fund HDFC TaxSaver HDFC Top 200 Fund HDFC High Interest Fund HDFC Cash Management Fund HDFC Sovereign Gilt Fund*

*HDFC Sovereign Gilt Fund has been wound up in March 2006 . 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 21, 2009 to act as a Portfolio Manager under the SEBI (Portfolio Managers) Regulations, 1993. The Certificate of Registration is valid from January 1, 2010 to December 31, 2012.


3.2 Products

Children's Gift Fund Children's Gift Fund

Fund of Fund Schemes

Invests primarily in other scheme(s) of the same mutual fund or other mutual funds

Debt/ Income Fund

Invest in money market and debt instruments and provide optimum balance of yield.

Fixed Maturity Plan

Invest primarily in Debt / Money Market Instruments and Government Securities.

Equity / Growth Fund

Invest primarily in equity and equity related instruments.

Liquid Funds
Provide high level of liquidity by investing in money market and debt instruments.

Exchange Traded Funds

Invest primarily in equity and equity related instruments.

Quarterly Interval Fund

Generate regular income through investments in Debt / Money Market Instruments..


3.3 NAV and Dividend

Net Asset Value is the worth, in market terms, for each unit of the fund. It is calculated as the market value of all investments in the fund less liabilities and expenses divided by the outstanding number of units in the fund. Most schemes announce their NAVs on a daily basis.

If the applicable NAV is Rs. 10.00 and the exit/redemption load is 1%, then the Repurchase Price will be Rs. 9.90.

3.4 Investor Corner

The first and most important step in your life as an investor is to define your goals at the onset of your investing activity. This will map the road ahead for you in terms of time, amount, type of asset and risk. At this point of time you must also decide how much you are willing to save. When you look at defining your goals think carefully and try to include all your requirements, here are a few things that might help you : Retirement In how many years?

How much money will you need? How long will you need it for? Daughters/Sons wedding When and how much? Daughters/Sons education When and how much? Purchase of big ticket items e.g. House, Car etc.

Again, when and how much?


A simple way to get an overall perspective is to draw a time line starting from today with the amount you have saved up till now labeled at time zero. Going forward you can label your major outflows as and when they occur till retirement and then the steady outflows for your retirement income. Please remember your worst enemy Inflation and factor this into your targets. Remember that in an inflationary environment an apple will cost more tomorrow than today. For example:

Let us say that you have Rs. 5,00,000 saved up today. In addition to this you figure that in year 10 you will need Rs. 5,00,000 for your daughters wedding. Also you decide with your wife that you will retire in thirty years time and will need Rs. 6,00,000 per year for 15 years after that. You also decide that you want to play it safe and want to invest only in debt products. Taking an annual rate of return of 7.00% you will have to save Rs. 38,042 per year for thirty year and you will be able to withdraw Rs. 4,61,958 (5,00,000 38,042) for your daughters wedding in year 10. Another scenario with 9.00% is available as well.

Now let us assume that you and your wife require Rs. 20,00,000 per annum for 15 years after retirement and want to spend Rs. 15,00,000 on your daughters wedding. Knowing this you decide to take the additional risk of investing your money in equities that historically do tend to provide double-digit returns in the long run. Assuming an annual rate of return on 13.00% per annum you would


have to save Rs. 36,328 per year for thirty years to achieve your goals. An example with a 15.00% return is provided as well.

For investment options based on your currrent investment profile and risk appetite visit Calculators.

3.5 NRI Corner

The following information is provided for general information only. However, in view of the individual nature of the implications, each investor is advised to consult with his or her own tax Advisors / Authorised dealers with respect to the specific tax and other implications arising out of his or her participation in the schemes.


3.6 Calculators

SIP Calculators

Yield Calculators

Life Stage Planner

Sensex Rolling Returns

Asset Allocator - Basic

Child Plan Calculator

Asset Allocator Advanced

Retirement Calculator


3.7 Working of Mutual Fund


3.8 Distributor Advisor Comer

HDFC Mutual Fund is one of the largest mutual funds in india with an investor base of over 25 lakhs which over wide network of distributors. We at HDFC Mutual fund recognize our distributors as the most important link between our investors and us. To keep distributors to advice and service their clients better. We together with our register (CAMS) offer range of facilities to them.

Basic of mutual funds

The article mentioned below is for the investors who have not yet started to investing in mutual funds, but willing to explore the opportunity and also for those who want to clear their basics for getting started before we move to explain

what is mutual fund its very important to know the area in which mutual funds works, the basic understanding of stocks and bonds.

Stock represent share of ownership in public company. Examples of public company include reliance, ONGC, and Infosys. Stocks are considered to be the most common owned investment traded on the market.

Bonds are basically the money which you lend to the government or a company and in return we can receive intrests on our invested amount which is back over predetermined amounts of time. Bonds are considered to be the most common lending investment traded on the market. There are many other types of investment other than stocks and bonds (including annuities, real estates, and precious metals) but the majority of mutual funds invest in stocks and\ or bonds.



4.1 Explanation


4.1 Explanation
A big boom has been witnessed in mutual fund industry in resent times. A large number of new players have entered the market and trying to gain market in this rapidly improving market. This research was carried on in Bhayander(E). I had been send an one of the branch of HDFC BANK Bhayander(E). Where I completed my project work . I surveyed on my project topic a study of preference of the investors for investment in mutual fund on the visiting customers of the HDFC BANK Phatak- Road, Bhayander(E). The study will help to know the preference of customer which company portfolio, mode of investment, option for getting return, and company on they prefer. This project report may help the company to make further planning and strategy.



Every investor contemplating mutual fund investing should do some research on their specific needs, expectations of profits, and willingness to pay management fees. As stated previously, most mutual fund management fees are based on results. In this way in most cases any money paid to management oversight of a given mutual fund will be compensated with increased profits. This however is not always the case so one should do a cursory if not in-depth review of both a funds past performance but also its policies for fee structures. In most cases the decision by an investor to pursue mutual fund investment is a wise one. Over historical trading periods on average mutual funds obtain higher returns for their shareholders than individual investors can get on their own. It is recommended that while not all of ones stock investment portfolio need be invested in mutual funds, a healthy stock portfolio should at a minimum consist of 25% investment in this securities sector. Mutual funds are a method for investors 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.



Book name and authors:

Financial Management Theory And Practice, Ergene F. Drigham , Michael C. Ehrhardt. (Indian Edition) Financial Management And Policy, James C.Van Horne, (12th-Edition) Financial Management, Shrutika Kesar-Jinan,(1st-published:2004) Financial Management Taxes and Cases, Prasanna Chandra (4th- Edition)