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Õ A vehicle for investing in stocks and bonds

Õ 6ot an alternative investment option to stocks and bonds.

Õ It pools the money of several investors and invests this in

stocks, bonds, money market instruments and other types
of securities.

Õ owner of a mutual fund unit gets a proportional share of

the fund¶s gains, losses, income and expenses.

         



utual Fund Operation
Flow Chart
Õ 3he company that puts together a mutual fund is
called an AC .

Õ AC may have several mutual fund schemes .

Õ AC hires a professional money manager, who

buys and sells securities in line with the fund's
stated objective.

 
  
     

Õ utual fund regulations require that the fund¶s
objectives are clearly spelt out in the prospectus.

Õ Every mutual fund has a board of directors that

is supposed to represent the shareholders'
interests, rather than the AC¶s.

 
 
  ! 
  
 

"
Õ 3wo key documents that highlight the fund's
strategy and performance are 1) the prospectus
(legal document) and the shareholder reports
(normally quarterly).

 
 
Õ Fund managers are responsible for implementing
a consistent investment strategy .
Õ Fund managers monitor market and economic
trends and analyze securities

 
 
  
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Õ ×
    Πcan enter and exit the
fund scheme at its 6AV. 3hey have no maturity
period and are not listed in the stock market.

Õ î  Œ Redemption can take

place only after the period of the scheme is over.
Close-ended funds are listed on the stock
exchanges .

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   $    
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 ×
 
    

Equity (Growth) - Only in stocks
Debt (Income) - Only in fixed-income
securities
oneyarket - In short-term money
market
instruments
(including government
securities)
Balanced - Partly in stocks and partly in
fixed- income securities,
('balance' in returns and risk)

  
 

Õ Diversification is one of the best ways to reduce
risk.

Õ utual funds offer investors an opportunity to

diversify across assets.

"
Õ Investors can sell their mutual fund units on any
business day.

Õ Receive the current market value on their

investments within a short time period (normally
three- to five-days).

º%

Õ 3he minimum initial investment
for a mutual fund is fairly low for
most funds (as low as Rs500 for
some schemes.



Õ Convenience of periodic purchase plans,
automatic withdrawal plans and the automatic
reinvestment of interest and dividends.
Õ Reports and statements .

   
Õ Pick from conservative, blue-chip stock funds,
Sectoral funds,

Õ Funds that aim to provide income with modest

growth

Õ 3hose that take big risks in the search for

returns.

Õ You can even buy balanced funds, or those that

combine stocks and bonds in the same fund.

& 


Õ 100% Income 3ax exemption on all
utual Fund dividends .

3&       

 

'|'
Õ |6PARALLED x
î×x& PRO3EC3IO6 AGAI6S3
3xîx3  3 
!!!!!

Õ In other words, Insurance is a contract between two

parties where one party (the insurer) agrees to
protect the other party (the insured) in the event of
any loss or unforeseen event. Insurance can be
broadly classified into two categories ± Life Insurance
and 6on Life Insurance.
]    
x xx
×
rLife is full of uncertainties
rProvides the much required x
î×x
rServes as a financial buffer in the wake of
any un-favorable and un-foreseen
circumstances
rEnsures that near and dear ones are not
left in financial doldrums due to any
exigency
r3he risk cover that insurance provides has
no parallels in the financial world
×'"( ×'
   


provides an
element of liquidity by returning a
portion of the sum assured at regular
intervals. 3his is in addition to the risk
cover.

   

invest a
percentage of the premiums in market
securities and provide returns. 3his
combines market linked returns along
with risk cover