MF

Concept and Evolution of Mutual Funds in India
Genesis As the name suggests, a 'mutual fund' is an investment vehicle that allows several investors to pool their resources in order to purchase stocks, bonds and other securities. These collective funds (referred to as Assets Under Management or AUM) are then invested b an e!pert fund manager appointed b a mutual fund compan (called Asset Management "ompan or AM"). The combined underl ing holding of the fund is known as the 'portfolio', and each investor owns a portion of this portfolio in the form of units. History The mutual fund industr in #ndia began in 1963 with the formation of the Unit Trust of #ndia (UT#) as an initiative of the $overnment of #ndia and the %eserve &ank of #ndia. Much later, in '()*, +&# Mutual ,und became the first non-UT# mutual fund in #ndia. +ubse.uentl , the ear '((/ heralded a new era in the mutual fund industr . This was marked b the entr of private companies in the sector. After the +ecurities and 0!change &oard of #ndia (+0&#) Act was passed in '((1, the +0&# Mutual ,und %egulations came into being in '((2. +ince then, the Mutual fund companies have continued to grow e!ponentiall with foreign institutions setting shop in #ndia, through 3oint ventures and ac.uisitions. As the industr e!panded, a non-profit organi4ation, the Association of Mutual ,unds in #ndia (AM,#), was established on '((5. #ts ob3ective is to promote health and ethical marketing practices in the #ndian mutual fund #ndustr . +0&# has made AM,# certification mandator for all those engaged in selling or marketing mutual fund products. Why should one invest in a mutual fund 1! M,s are managed b professional fund managers, responsible for making wise investments according to market movements and trend anal sis. "! M,s allow ou to invest our savings across a variet of securities and diversif our assets according to our ob3ectives, and risk tolerance. 3! M,s provide investors the freedom to earn on their personal savings. #nvestments can be as less as %s. 566. #! M,s offer relativel high li.uidit .

$! "ertain mutual fund investments are ta! efficient. ,or e!ample, domestic e.uit mutual funds investors do not need to pa capital gains ta! if the remain invested for a period of above ' ear. %elated Article7 8h +hould 9ou #nvest in Mutual ,unds: ;ifferent <eople ;ifferent +olutions What are the different types of mutual funds 0ach mutual fund scheme has its own ob3ective that determines its assets allocation and investment strateg . These are classified according to their maturit period, or investment ob3ective. =ne can also classif mutual funds as 'open ended funds' - where investors ma invest or redeem at an point in time and 'close ended funds' - where investors can invest onl during the initial launch period known as the >,= (>ew ,und =ffer) period. Mutual funds classified according to their investment ob3ective range from 0.uit ,unds (with substantial risk), to Mone Market ,unds (which are ver safe). =ther t pes include debt schemes, inde! funds, balanced funds, etc. %elated Article7 ;ifferent ?inds @ T pes =f Mutual ,unds ;etermine 9our #nvestment =b3ectives and Understanding 9our %isk <rofile Ho% does one earn returns in a mutual funds After investing our mone in a mutual fund, ou can earn returns in two forms7 1! #n the form of dividends declared b the scheme "! Through capital appreciation - meaning an increase in the value of our investments. Contact &s Athrough 'uery Form in right hand sideB to learn more about Mutual ,unds. More (rticles to enhance our knowledge for better investment7

)etermine *our Investment +,-ectives and &nderstandin. *our /is0 1rofile
Cike an

purchase decision, our selection of a mutual fund scheme should be based on our e!pectations and the funds' abilit to fulfill these goals. #t is important to be clear about our investment ob3ective before ou enter into a bu ing decision. #f ou are planning to build a mutual fund portfolio, the first step is to e!amine our current situation. Ask ourself .uestions like7 1! 8h am # investing in a mutual fund: "! 8hat kind of returns do # e!pect: 3! 8hat portion of m net worth would # like to set aside for investments: #! 8hat do # intend to use the gains for: Dow man $! 8hat is m investment ob3ective: a. "apital Appreciation b. "apital <reservation c. Achieving sustainable long term growth d. "ombination of #ncome and "apital growth 6! 8hat kind of risk am # willing to take in the long run: 2e Clear (,out *our Investment +,-ectives #nvestment ob3ectives can be broadl classified into7 1! $enerating an additional source of income "! ,inancing future needs a. &u ing a home b. &uilding a retirement corpus c. "hild's education and marriage d. Cegac <lanning 3! #ncreasing savingsE #nducing savings #! %educing ta! liabilit $! <rotecting our savings from inflation Evaluate *our /is0 (ppetite To fulfill an investment ob3ective, investors should first evaluate their risk appetite. 8hile some investors are satisfied b investing in a low-risk : low-return scheme, others are willing to endure short-term loss for long-term potential gains. A risk profile offers ou suggestions about the investment options that best suit our needs and lifest le. Factors 3hat )etermine *our /is0 (ppetite 1! Current 4cenario - 9our age, financial dependents, assets and liabilities, sources of income, ears do # have:

level of engagement (active or passive investor) and investible capital "! 1ast E5perience - ?nowledge about investment products, inclination to learn, nature and composition of the last held portfolio and its performance 3! Future +utloo0 - Time hori4on available to fulfill the investment ob3ectives, li.uidit re.uirements in the near future, importance of ta! savings vis-a-vis return on investment #! Investment (ttitude - 8illingness towards risk taking, abilit to withstand short-term notional losses in return for long-term high returns &ased on our responses, an e!perienced M, advisor can determine our risk appetite and classif ou as a conservative, assertive or an aggressive investor (there could be as man as five to seven investor classifications suggesting different debt-e.uit allocations). Mutual Fund 3ypes 2ased on /is0 1rofile 9our risk appetite is an important factor while choosing the mutual funds schemeEs that fits our goals of growth, stabilit and timeframe. 1! A conservative investor6s primar ob3ective is to preserve the capital and receive regular income. The have a low tolerance for risk and hence a ma3or chunk of their investment should be allocated to debt or mone market mutual funds like income schemes, ,M<s, etc. "! A moderately a..ressive investor is the one who is willing to take controlled risk for moderate returns. +uch investors are generall recommended a mi! of balanced, income, and inde! schemes so that the can benefit from a balanced portfolio. 3! (..ressive investors consider risk as an opportunit and leverage their e!perience and knowledge to take intelligent financial decisions. The ma3or share of their investment, therefore, goes to growth and e.uit schemes. ,or most investment schemes, risk and returns are directl proportional. #t is important to create the right balance between the two based on our ob3ectives and risk appetite. Contact &s Athrough the 'uery form in top right hand sideB to learn more about planning our investments and for determining our risk appetite. More (rticles to enhance our knowledge for better investment7

Why 4hould *ou Invest in Mutual Funds
8hen considering investment opportunities, the first challenge that almost ever investor faces is a plethora of options. ,rom stocks, bonds, shares, mone market securities, to the right combination of two or more of these, however, ever option presents its own set of challenges and benefits.

+o wh should investors consider mutual funds over others to achieve their investment goals: Mutual funds allow investors to pool in their mone for a diversified selection of securities, managed b a professional fund manager. #t offers an arra of innovative products like fund of funds, e!change-traded funds, ,i!ed Maturit <lans, +ectoral ,unds and man more. 8hether the ob3ective is financial gains or convenience,mutual funds offer man benefits to its investors. 2eat Inflation Mutual ,unds help investors generate better inflation-ad3usted returns, without spending a lot of time and energ on it.8hile most people consider letting their savings 'grow' in a bank, the don't consider that inflation ma be nibbling awa its value. +uppose ou have %s. '66 as savings in our bank toda . These can bu about '6 bottles of water. 9our bank offers 5F interest per annum, so b ne!t ear ou will have %s. '65 in our bank. Dowever, inflation that ear rose b '6F. Therefore, one bottle of water costs %s. ''. & the end of the ear, with %s. '65, ou will not be able to afford '6 bottles of water an more. Mutual ,unds provide an ideal investment option to place our savings for a long-term inflation ad3usted growth, so that the purchasing power of our hard earned mone does not plummet over the ears. E5pert Mana.ers &acked b a dedicated research team, investors are provided with the services of an e!perienced fund manager who handles the financial decisions based on the performance and prospects available in the market to achieve the ob3ectives of the mutual fund scheme. Convenience Mutual funds are an ideal investment option when ou are looking at convenience and timesaving opportunit . 8ith low investment amount alternatives, the abilit to bu or sell them on an business da and a multitude of choices based on an individual's goal and investment need, investors are free to pursue their course of life while their investments earn for them. 7o% Cost <robabl the biggest advantage for an investor is the low cost of investment that mutual funds offer, as compared to investing directl in capital markets. Most stock options re.uire significant capital, which ma not be possible for oung investors who are 3ust starting out. Mutual funds, on the other hand, are relativel less e!pensive. The benefit of scale in brokerage and fees translates to lower costs for investors. =ne can start with as low as %s. 566 and get the advantage of long term e.uit investment. )iversification $oing b the adage, 'Do not put all your eggs in one basket', mutual funds help mitigate risks to a large e!tent b distributing our investment across a diverse range of assets. Mutual funds offer a

great investment opportunit to investors who have a limited investment capital. 7i8uidity #nvestors have the advantage of getting their mone back promptl , in case of open-ended schemes based on the >et Asset Galue (>AG) at that time. #n case our investment is close-ended, it can be traded in the stock e!change, as offered b some schemes. Hi.her /eturn 1otential &ased on medium or long-term investment, mutual funds have the potential to generate a higher return, as ou can invest on a diverse range of sectors and industries. 4afety 93ransparency ,und managers provide regular information about the current value of the investment, along with their strateg and outlook, to give a clear picture of how our investments are doing. Moreover, since ever mutual fund is regulated b +0&#, ou can be assured that our investments are managed in a disciplined and regulated manner and are in safe hands. 0ver form of investment involves risk. Dowever, skilful management, selection of fundamentall sound securities and diversification can help reduce the risk, while increasing the chances of higher returns over time. Contact &s Athrough the 'uery form in right hand sideB to learn more about the benefits of investing in mutual funds.

Why 4hould *ou Invest in Mutual Funds
8hen considering investment opportunities, the first challenge that almost ever investor faces is a plethora of options. ,rom stocks, bonds, shares, mone market securities, to the right combination of two or more of these, however, ever option presents its own set of challenges and benefits. +o wh should investors consider mutual funds over others to achieve their investment goals: Mutual funds allow investors to pool in their mone for a diversified selection of securities, managed b a professional fund manager. #t offers an arra of innovative products like fund of funds, e!changetraded funds, ,i!ed Maturit <lans, +ectoral ,unds and man more. 8hether the ob3ective is financial gains or convenience,mutual funds offer man benefits to its investors. 2eat Inflation Mutual ,unds help investors generate better inflation-ad3usted returns, without spending a lot of

time and energ on it.8hile most people consider letting their savings 'grow' in a bank, the don't consider that inflation ma be nibbling awa its value. +uppose ou have %s. '66 as savings in our bank toda . These can bu about '6 bottles of water. 9our bank offers 5F interest per annum, so b ne!t ear ou will have %s. '65 in our bank. Dowever, inflation that ear rose b '6F. Therefore, one bottle of water costs %s. ''. & the end of the ear, with %s. '65, ou will not be able to afford '6 bottles of water an more. Mutual ,unds provide an ideal investment option to place our savings for a long-term inflation ad3usted growth, so that the purchasing power of our hard earned mone does not plummet over the ears. E5pert Mana.ers &acked b a dedicated research team, investors are provided with the services of an e!perienced fund manager who handles the financial decisions based on the performance and prospects available in the market to achieve the ob3ectives of the mutual fund scheme. Convenience Mutual funds are an ideal investment option when ou are looking at convenience and timesaving opportunit . 8ith low investment amount alternatives, the abilit to bu or sell them on an business da and a multitude of choices based on an individual's goal and investment need, investors are free to pursue their course of life while their investments earn for them. 7o% Cost <robabl the biggest advantage for an investor is the low cost of investment that mutual funds offer, as compared to investing directl in capital markets. Most stock options re.uire significant capital, which ma not be possible for oung investors who are 3ust starting out. Mutual funds, on the other hand, are relativel less e!pensive. The benefit of scale in brokerage and fees translates to lower costs for investors. =ne can start with as low as %s. 566 and get the advantage of long term e.uit investment. )iversification $oing b the adage, 'Do not put all your eggs in one basket', mutual funds help mitigate risks to a large e!tent b distributing our investment across a diverse range of assets. Mutual funds offer a great investment opportunit to investors who have a limited investment capital. 7i8uidity #nvestors have the advantage of getting their mone back promptl , in case of open-ended schemes based on the >et Asset Galue (>AG) at that time. #n case our investment is close-ended, it can be traded in the stock e!change, as offered b some schemes. Hi.her /eturn 1otential &ased on medium or long-term investment, mutual funds have the potential to generate a higher return, as ou can invest on a diverse range of sectors and industries.

4afety 93ransparency ,und managers provide regular information about the current value of the investment, along with their strateg and outlook, to give a clear picture of how our investments are doing. Moreover, since ever mutual fund is regulated b +0&#, ou can be assured that our investments are managed in a disciplined and regulated manner and are in safe hands. 0ver form of investment involves risk. Dowever, skilful management, selection of fundamentall sound securities and diversification can help reduce the risk, while increasing the chances of higher returns over time. Contact &s Athrough the 'uery form in right hand sideB to learn more about the benefits of investing in mutual funds.

)ifferent 1eople )ifferent 4olutions
%ahul and %a3 have known each other for twent ears. The are close friends, but their attitude towards mone and investments is poles apart. 8hile %ahul is ver conservative and is onl comfortable investing in safe avenues, %a3 on the other hand is an aggressive investor and is keen on e!ploring varied investment opportunities. After graduating from the same college both of them received 3ob offers and soon started making a decent living. #n a few months, both of them had similar amount of savings in their bank accounts. %ahul being a conservative investor, decided to invest through traditional routes like &ank ,i!ed ;eposits, <ostal +avings, etc. but %a3 being an aggressive investor, carried out some research, he got in touch with an e!perienced financial planner and clearl understood his #nvestment goals, risk profile and li.uidit position. &ased on %a3's oung age and high risk tolerance abilit he decided to diversif his investment into different asset classes and follow an aggressive asset allocation strateg to generate the best returns. De implemented this strateg b selecting a few mutual fund schemes that invested in good companies across sectors and also allocated some mone towards $overnment &onds. Fe% *ears 7ater =ver the ears, the average return of %a3's portfolio was significantl better than that of %ahul's. An aggressive asset allocation has a higher e!posure to e.uities which tend to perform better than other asset classes over a long term. As a result of aggressive asset allocation strateg , %a3 received handsome gains on his overall portfolio and %ahul earned a stead ear-on- ear return as interest. ;uring this period, the rising rate of inflation had eroded some part of their gains. +ince %a3's portfolio was activel managed, he could easil outperform inflation. =n the other hand since %ahul continued with his traditional investments route he could generate consistent returns but could not beat inflation and was now heavil rel ing on his salar income for all ma3or e!penses and eventualities. %a3 had gained significantl from his astute financial planning and b following an asset allocation strateg . De regularl made planned and s stematic investments and continued to reinvest his gains. %a3 is well on track to achieve his financial ob3ectives.

(nalysis : 3raditional 4ources of Investments vs! 1lanned Investments Dere is a macro level anal sis of %a3's approach. H 7o% /is0s )ue to )iversification - %a3's investment in mutual funds has presented him the opportunit of diversif ing his portfolio over various sectors, geographies and investment ob3ectives. H Hi.h 1articipation at 7o% costs - As a small investor, it might not have been possible for %a3 to bu too man stocks of top blue-chip companies. Dowever, the mutual funds route gave him an indirect access to several large companies. This allowed him to diversif his portfolio, hedge risk and even beat inflation at a lower cost. H 7i8uidity : Unlike investments such as fi!ed deposits, mutual funds provide convenient entr and e!it opportunities. ,or most funds, one can easil e!it b selling their units. H E5pertise of a Fund Mana.er- %a3 was pleased to learn about the credibilit of his fund managers and the professional approach adopted b the Asset Management "ompanies. A fund manager is responsible for activel managing the portfolio. De strives to beat the corresponding benchmark indices while adhere to the scheme's ob3ectives. H 3ypes of Mutual Funds - After considering aspects like %a3's propensit to save, his liabilities, his risk tolerance and age, an e!perienced investment advisor suggested him different t pes of schemes for his different financial goals. An investor can choose from a wide range of mutual fund schemes based on structure, holdings and investment ob3ective. An informed investor can also invest in special schemes such as 0!changeTraded ,unds (0T,s), sector specific funds, fi!ed maturit plans, fund of funds, etc %a3 learnt earl that in order to create long-term wealth, one has to ensure that the savings are invested 3udiciousl . Contact &s Athrough the 'uery form in right hand sideB to know how ou can make our savings work for ouI More (rticles to enhance our knowledge for better investment7

What is a 4ystematic Investment 1lan Ho% does it %or0
What is a Systematic Investment Plan? A + stematic #nvestment <lan or +#< is a smart and hassle free mode for investing mone in mutual funds. +#< allows ou to invest a certain predetermined amount at a regular interval (weekl , monthl , .uarterl , etc.). A +#< is a planned approach towards investments and helps ou inculcate the habit of saving and building wealth for the future. How oes it work? A +#< is a fle!ible and eas investment plan. 9our

mone is auto-debited from our bank account and invested into a specific mutual fund scheme.9ou are allocated certain number of units based on the ongoing market rate (called >AG or net asset value) for the da . 0ver time ou invest mone , additional units of the scheme are purchased at the market rate and added to our account. Dence, units are bought at different rates and investors benefit from %upee"ost Averaging and the <ower of "ompounding. /upee:Cost (vera.in. 8ith volatile markets, most investors remain skeptical about the best time to invest and tr to 'time' their entr into the market. %upee-cost averaging allows ou to opt out of the guessing game. +ince ou are a regular investor, your money fetches more units %hen the price is lo% and lesser %hen the price is hi.h. ;uring volatile period, it ma allow ou to achieve a lower average cost per unit. 1o%er of Compoundin. Albert 0instein once said, !"ompoun interest is the eighth won er o# the worl $ He who un erstan s it% earns it$$$ he who oesn't$$$ pays it$! The rule for compounding is simple - the sooner ou start investing, the more time our mone has to grow. &'ample #f ou started investing %s. '6666 a month on our J6th birthda , in 16 ears time ou would have put aside %s. 1J lakhs. #f that investment grew b an average of *F a ear, it would be worth %s. 51.J lakhs when ou reach 26. Dowever, if ou started investing '6 ears earlier, our %s. '6666 each month would add up to %s. /2 lakh over /6 ears. Assuming the same average annual growth of *F, ou would have %s. '.11 "r on our 26th birthda - more than double the amount ou would have received if ou had started ten ears laterI +ther 2enefits of 4ystematic Investment 1lans H )isciplined 4avin. - ;iscipline is the ke to successful investments. 8hen ou invest through +#<, ou commit ourself to save regularl . 0ver investment is a step towards attaining our financial ob3ectives. H Fle5i,ility - 8hile it is advisable to continue +#< investments with a long-term perspective, there is no compulsion. #nvestors can discontinue the plan at an time. =ne can also increaseE decrease the amount being invested. H 7on.:3erm Gains - ;ue to rupee-cost averaging and the power of compounding +#<s have the potential to deliver attractive returns over a long investment hori4on. H Convenience - +#< is a hassle-free mode of investment. 9ou can issue a standing instruction to our bank to facilitate auto-debits from our bank account. +#<s have proved to be an ideal mode of investment for retail investors who do not have the resources to pursue active investments. Contact &s Athrough the 'uery form in right hand sideB to learn more about + stematic #nvestment <lans and to start saving toda I More (rticles to enhance our knowledge for better investment7

What are MI1s and 2alanced Funds
Achieving the right balance of debt and e.uit in an investor's portfolio is alwa s a challenging task. These decisions are largel influenced b the phase of the investors' life7 1hases in the investors6 life

;ifferent phases as per the principles of financial planning7 '. Allocation to e.uit , as an asset class, should be higher vis-a-vis debt during the %ealth creation phase. 1. As an individual proceeds into the %ealth consolidation phase; the e.uit allocation should graduall come down and debt allocation should increase. /. The e.uit allocation should be considerabl low while approaching the retirement a.e. J. #nvestors should refrain from investing into e.uities during the %ealth distri,ution phase to ensure that the can keep from outliving their assets while maintaining their desired lifest le. ,or e!ample, while planning for retirement, one should ideall start with a higher e!posure to e.uities (vis-a-vis debt). Dowever, along with investments into e.uities one should also diversif b investing in M#<s and &alanced funds. What are MI1s M#<s or Monthl #ncome <lans are funds that are inclined towards debt. #f ou are sceptical about schemes that involve high risk and are looking to park our career's worth of savings, M#<'s are a safe medium term optionK with ver limited e!posure to risk and more or less stable returns through dividends. M#< funds offer the following features7 '. The income is not limited to a monthl planK ou can choose to receive it .uarterl , semi-annuall or annuall 1. A ta! efficient fund, the dividends declared b M#<'s are ta!-free in the hands of the investor /. These usuall have a debt7 e.uit ratio of *5715 or )57'5 What are 2alanced Funds As the name suggests, balanced funds invests in debt and e.uit in almost e.ual proportions. &ased on the market trends our fund manager ma tweak the allocations slightl . These are ideal for investors looking to retire in the near future and have a moderate risk appetite. "ompared to M#<s, balanced funds have a greater e!posure to e.uit .

+ome of the features of balanced funds are7 '. <rovides diversification in its truest sense b investing in bonds and e.uities 1. #nvests a si4able proportion in e.uities, hence the returns ou receive are decent /. <rovides automatic portfolio rebalancingK an added cushion during volatile markets. Therefore, when markets are positive, the fund manager sells e.uit to maintain its ma!imum level and vice versa +ther Factors #nvestors should bear in mind that M#<s and balanced funds are sub3ect to market risks as both invest in e.uities. >either scheme can guarantee income or returns and one should opt for a fund in line with their risk profile and investment ob3ectives. Contact &s Athrough the 'uery form in right hand sideB to know more about M#<s and balanced funds. More (rticles to enhance our knowledge for better investment7

Mutual Funds for 3a5 4avin.s
"ome ,ebruar and ou see some frantic activit for 'ta!-saving'. This is because, as the financial ear draws to a close, the ta!man comes knocking at our door to collect his dues. #n an effort to cut down the ta! liabilit b as much as possible, some of us end-up making hast investment decisions, sometimes with long-term repercussions. This is true for most of us. 8e tend to leave our ta!saving investment decisions for the last few weeks. Dowever, it is imperative that one carefull plans and e!ecutes his or her investments well in advance. 8hile it is important to have ade.uate knowledge about the various ta!-saving provisions under the #ncome Ta! Act, it is also critical to learn about the ma3or ta! saving instruments that let ou benefit from these provisions. 4ection <=C at a Glance =ne of the ke sections under which individuals can save ta! is the +ection )6E" of the #ndian #ncome Ta! Act. Under this section, investments up to L. ',66,666 per annum are eligible for deduction from our ta!able income. =ne should plan to utili4e this section to the fullest b investing in some of the instruments shown alongside. =f course, the ideal ta! saving investments depends upon factors such as our financial needs and goals, our risk appetite, etc. Introduction to E8uity 7in0ed 4avin.s 4cheme >E744? 0C++ is a dedicated mutual fund scheme that allows investors to save ta!. #t also provides an opportunit for long term capital appreciation. An 0C++ fund manager invests in a diversified portfolio, predominantl consisting of e.uit and e.uit related instruments that carr high-risk and

have the potential to deliver high-returns. +ince it is an e.uit fund, the returns from this scheme are market determined. Features of E744 Funds '. Ta!-saving 1. Three- ear lock-in period /. "an be held even after the completion of three ears J. =ffers dividend as well as growth options 5. Ta! +aving instrument 3a5 3reatment The returns from an 0C++ fund are ta! free in our hands. The long term capital gains from an 0C++ are ta! free as well. This is because no ta! is levied on e.uities that are held for more than a ear. +ince an 0C++ falls under section )6", ou can claim up to %s. ', 66,666 from our investment as a deduction from our gross total income. (dvanta.es of E744 over other ta5 savin. schemes H 7o%er 7oc0:in 1eriod@ An 0C++ has a lower lock-in period as compared to other ta! saving instruments. #.e. while a Ta! +aving ,i!ed ;eposit needs to be locked in for five ears and a >"+ for si! ears, an 0C++ has a lock-in period of onl three ears. <<, investments have the highest lock-in period of '5 ears. H +pportunity for 7on. 3erm Capital Gains@ +ince an 0C++ fund invests in e.uities, and is d namicall managed b a professional fund manager, it has the potential to provide long term capital gains compared to other passivel managed asset classes. H 4ystematic 4avin.s@ 9ou no longer have to worr about making hast last-minute lump-sum investments for saving ta!. =ne can plan effectivel and invest in 0C++ through the +#< (+ stematic #nvestments <lans) route. Challen.es =ne needs to bear in mind that the returns of the 0C++ schemes are determined b the performance of the e.uit market. "ontact Us (through the 'uery form in the right hand side) to know more about 0.uit Cinked +aving +chemes. More (rticles to enhance our knowledge for better investment7

4marter /etirement 1lannin. %ith 7on. 3erm Investments in Mutual Funds
=ut living our investments and not being able to

maintain the desired lifest le is a concern for ever retiring investor. The ke to this problem is to start investing earl . %etirement planning helps ou determine how much ou need to save toda to en3o a stress-free retirement. 8hile creating a retirement plan, ou evaluate several potential asset classes. +ome of the popular choices are <ension ,unds, 0ndowment <olicies, investments in fi!ed assets like %eal 0state, and ,i!ed ;eposits. 8hile it is good to know the various options in the market, it is also important to know the characteristics of an ideal retirement plan that will help ou make the most of these options. A good retirement plan takes into consideration various factors like7 '. >o. of ears to retirement and the no. of ears in retirement 1. 9our current risk profile /. 9our financial goals and ob3ectives post-retirement J. Achieves a health diversification across asset classes Ho% can mutual funds help H 7on. term capital appreciation@ 0.uit -based mutual funds have the potential to provide health long term capital appreciation. #n addition, some funds offer ta! benefits based on the investment hori4on. H Aarious 4chemes Mutual funds offer various schemes depending on our risk appetite and financial goals. There are e.uit schemes that provide ou with capital appreciation and debt schemes that give ou a regular income. Then there are D brid schemes that let ou reap the benefits of both debt and e.uit and also +ectoral and $lobal funds that give ou the opportunit to leverage specific macro and micro developments, even at a global level. H 4ystematic Investment 1lan >4I1? Mutual ,unds allow ou to start with a small corpus and also give ou the fle!ibilit to invest regularl through +#<s. This is an ideal mode to build our retirement corpus. Most of us tend to underestimate the power of these small regular investments. A +#< helps ou get organi4ed and disciplined. The sooner ou start investing, the more time our mone will have to compound. H (,ility to 4%itch As a oung investor, ou might be able to take higher risks for higher returns. Dence ou might invest in an e.uit -based portfolio. Dowever, as ou near our retirement age, it is advisable to graduall shift our investments into safer avenues, which can offer a stead return with lesser risks. =nce ou retire, our risk appetite is nil and our funds should move into '66F safe asset classes that also offer li.uidit . A mutual fund offers ou the facilit to switch between funds of the same fund house. A + stematic Transfer <lan (+T<) allows ou to s stematicall move specific amounts from one scheme to another, in this case from e.uit towards debt. H Income throu.h 4ystematic Withdra%al 1lan >4W1?

+ stematic 8ithdrawal <lan (+8<) is an option under mutual funds that allows ou to automaticall withdraw specific amounts (or units) on a monthl E.uarterl Ehalf earl E earl basis. #t provides ou with a regular income while the balance amount fetches ou modest returns for lesser risk. H Fle5i,ility to /edeem lump sum amounts Mutual funds also offer ou the fle!ibilit to redeem lump sum amounts as and when re.uired (e!cept in case of those having fi!ed tenure). This feature allows ou to use mutual funds for planning for lump sum e!penses after retirement - a world tour, a retirement villa or a recreational get-a-wa perhapsI 1itfalls@ +ince mutual funds invest in e.uities, the are sub3ect to market risks. Also, ou need the services of an e!perienced financial advisor who can keep ou abreast with the latest developments and assist ou in making informed investment decisions. Contact &s (through the 'uery form on the right hand side) to know more about how mutual funds can help with retirement planning.

Investin. in &ncertain 3imes
?unal is in his late twenties and draws a good pa check. De manages to save a decent amount ever month. &ased on the advice of his financial planner, he started investing a fi!ed amount in an e.uit -based mutual fund, through a + stematic #nvestment <lan (+#<). 8hile ?unal does not activel follow the market, he has heard news reports about volatilit in the econom and uncertain times ahead. De is mulling over his finances and wondering if he should stop his +#<s or increase the amount and accumulate units. De thinks it is time to review his financial plan. 4tic0 to the 2asics Cong-term anal sis indicates that markets tend to follow a c clic pattern of ups and downs and of bulls and bears. Golatilit should be considered as a part of the big picture. #t is natural that uncertaint creates doubts and investment decisions are no different. The ke to successfull weathering the storm is to be e!tra cautious and to carefull scrutini4e all investment opportunities. +trong fundamentals, robust business models and time-tested business strategies all indicate good value. +#<s are likel to work well during volatile times. Mutual Funds as a 4mart Investment +ption@ 1! 7o% /is0; 7o% return@ #f ou are a risk-averse investor, mutual funds offer ou debt schemes such as Monthl #ncome <lans (M#<), ,i!ed Maturit <lans (,M<) and more. "! Hi.h /is0; Hi.h /eturn@ #n a rising market, a good fund manager will t picall sell e.uities to book profits as per scheme ob3ectives and re-invest in avenues that have the potential of further growth. &ased on our risk appetite, ou can consider investing in e.uit -oriented funds such as "!i! #nde! ,unds

"!ii! ;iversified Carge "ap funds "!iii! Mid "ap ,unds 8hen the market revives, e.uit -based mutual funds could be among the first asset classes to bounce back and post good returns. 3! (,ility to )iversify@ =ne of the ke strategies to make the most of uncertain times is 'diversification' and mutual funds offer ou the options ou need7 3!i! 4ectoral Funds-0ven during bearish times, certain sectors might have the potential to outperform. Mutual funds offer ou sector specific schemes that allow ou to invest in these sectors and reap rich dividends. 3!ii! Glo,al Funds-=utlooks are rarel same for all markets across the globe. #f domestic markets are e!periencing volatilit , one can hedge the risks b investing in global markets through the global fund-of-funds or feeder funds that Asset Management "ompanies (AM"s) offer. 3he Fund Mana.ers 3ools A mutual fund manager uses proven investment strategies and in-depth anal sis for managing portfolios during uncertain markets. Their tools comprise of comprehensive stock anal sis reports like7 1! Fundamental (nalysis- where the thrust is on evaluating data from financial statements, economic reports, compan assets and market position "! 3echnical (nalysis- that focuses on the stud of past market action to predict future price movement Beed for Financial 1lannin. Daving a sound financial plan is the first step to financial securit . Active monitoring, discipline and regular investing can help one achieve their goals while allowing them to make the most of the opportunities offered b uncertain markets. <eriodic review of the financial plan ensures that ou remain true to our risk appetite and our changing financial ob3ectives. Contact &s (through the 'uery form on the right hand side) to know more about how mutual funds can help in uncertain times. More (rticles to enhance our knowledge for better investment7

Importance of a 2alanced 1ortfolio and Ho% Mutual Funds Can Help
,inancial planning is an ongoing process. #t is like aiming at a moving target. #t cannot be a onetime activit simpl because its sole ob3ective is to provide ou an optimal route to our desired goals - which are alwa s fluid. 8e know that a financial plan should be practical and has to be customi4ed for ever individual because there are too man variables that make it impossible that one si4e would fit all. Features of a sound financial plan@

1! Adapts to changing macroeconomics conditions "! ,le!ible enough to accomodate our changing goals, aspirations and lifest le 3! +hould insure our primar goals and build towards our aspirational goals #! +hould be able to support ou even when our income d namics change There are certain factors that can throw off even the most comprehensive financial plans. A loss of 3ob, slack periods in business, changes in 0M#'s due to rate changes, and prolonged critical illness can all affect budgets. ( Case for 2alanced 1ortfolios %egardless of our age and earning capacit , during times of uncertaint , one can do well to not have all the eggs in the same basket. Dence, sound financial planning is also about diversification. A balanced portfolio is almost alwa s better e.uipped to cushion a fall while allowing ou to get a fair share of the rallies. An ideal balanced portfolio gives ou a health mi! of debt and e.uit while tr ing to achieve our financial goals. =ne of the ke asset classes that allows ou to achieve a balanced portfolio is a balanced mutual fund scheme from an Asset Management "ompan . Features of a 2alanced Fund@ a? 1ortfolio )iversification - &alanced funds provide ou the diversification without having to invest in different asset classes. The debt 7 e.uit ratio is almost the same in such funds but a fund manager might tweak the allocation at times to capitali4e on the changing market trends. ,? (utomatic 1ortfolio /e,alancin. - ;uring volatile markets, our fund manager might rebalance the fund portfolio as per changes in the market. Therefore, when the market is positive, he or she might sell e.uit to maintain the ma!imum level and vice versa. c? 1eace of Mind - &alanced funds can save ou the hassles of managing multiple investments across e.uit and debt, while giving ou a decent chance of achieving good returns. +uch funds are activel managed b a team of e!pert financial anal sts who aim to achieve a pre-determined scheme ob3ective. Dence, balanced funds provide ou an e!cellent opportunit to diversif , manage and achieve a balanced portfolio. +ther Considerations@ 8hen planning our investments, ou must guard against becoming too conservative too soonK else ou might lose out on some great opportunities. 9ou must also bear in mind that e.uities are sub3ect to market-related risks. 9ou should balance our portfolio in accordance with our own risk appetite and financial goals. #n order to shortlist the correct fund for our portfolio, ou might need the assistance of our financial planner. Also, constant monitoring is re.uired if ou wish to maintain a balanced portfolio. Most of us waver here due to lack of discipline and knowledge. Contact &s (through the 'uery Form on the right hand side) to know more about the importance of a balanced portfolio and how mutual funds can help.

More (rticles to enhance our knowledge for better investment7

6 Cey 'uestions that Mutual Fund Investors should (s0
=nce ou have identified 'mutual funds' as our investment class, the ne!t important task is to select a scheme or set of schemes that can help ou meet our goals. Dere are a few things to consider7 1! Match *our +,-ectives - 8hen it comes to investments, knowledge is the ke . ,und performance is important, but simpl picking up last ear's top performing funds is not the right approach because these are ever-changing set. &efore arriving at a decision it is necessar to consider ke micro and macro economic trends, and to align our investment ob3ectives with those of the scheme. #n case of e.uit investments, it is ideal to remain invested for a long term. "! Char.es and Fees - 0ver investment comes with its own set of e!penses - like transaction cost, advisor fees, sales and purchase fees and the fund manager's e!penses. &ased on this information, one can calculate the e!pected return on investment. 0nsure that our fund house is efficient and does not impose unreasonable chargesE barriers. 3! /is0 vDs /e%ard - 9our mutual fund scheme should have an allocation as per our risk appetite (conservative, assertive, aggressive, etc.). %emember, if ou are prepared to take more risks, the scheme should have the potential to provide better returns over the longer term. #! 3a5 3reatment - Must like stocks and bonds, mutual funds' ta! liabilities are based on short-term and long-term capital gains. #n fact, as an investor, ou should consider the 'post-ta! returns' while calculating the absolute returns from a scheme. Ask .uestions like7 : #s the invested amount ta! e!empted: : #s there a lock-in period to avail the said ta! benefit: : Are the returns ta! e!empted: 8hat about the dividends and pa outs: $! Evaluate lon.:term performance - The best metric to evaluate a scheme is its long-term performance. Along with the average rate of return, see if the scheme has been able to meet its investment ob3ectives. 0valuate its long-term performance vis-a-vis similar funds in the market. Also consider ke portfolio parameters to ascertain if the fund is taking undue risks, etc. 6! Fund Mana.er6s Capa,ilities and Investment 1rocesses - Must like an other investment, the performance of a mutual fund scheme largel depends upon the e!perience and e!pertise of the fund manager and the processes it adheres to while managing our funds. &efore handing over our hard-earned mone to them, learn about their credentials and their abilities to achieve the scheme ob3ectives even in challenging market conditions. /is0s (ssociated %ith MF investments

'(utual #un s investments are sub)ect to market risks% please rea the o##er ocument care#ully be#ore investing' is a much repeated, but crucial advice. Market risks can be in the form of economic, financial and political factors that might affect our investments. Market risks are broadl classified into two t pes -s stemic and non-s stemic risks. E 4ystemic ris0s are the ones that affect the entire market. #t includes volatilit in the stock market (e.uit risk), interest rates (interest risk), foreign e!change rates (currenc risk), changes in commodit prices (commodit risk), political factors prevailing in a countr and even e!treme changes in weather. The most effective wa to counter s stemic risks is to look for investment ideas that can counter volatilit of the markets. E Bon:systemic ris0s affect investments of a particular sector or industr . 8hile s stemic risks are usuall une!pected and unavoidable, a diversified portfolio can reduce the impact of non-s stemic risks. An investment in mutual funds, like an other, re.uires a thorough understanding of how various markets operate. #nvestors should understand that risk and reward go hand in hand and are a part of ever investment. Contact &s Athrough the 'uery form in right hand sideB to learn more about Mutual ,unds. More (rticles to enhance our knowledge for better investment7

In 3he Current Mar0et; Consider Investin. In &ltra 4hort 3erm 2ond Funds
+ound financial planning is all about fle!ibilit and active management of one's e!isting and future investments. Dowever, var ing market d namics and changing micro and macro environment can sometimes derail these plans. #n order to sta on course to achieve our financial goals, ou sometimes need to be able to balance aggression with caution and discount optimism and brace up for volatilit . Cower interest rates and spikes in retail inflation suggest tightening of the monetar polic . The fall in the rupee and surge in the bond ield means that a rate hike is on the cards. "onsidering the current debt market scenario, investors can throw caution to the wind and re-direct some part of their valuable e.uit investments in relativel safer avenues where their principal will be at lower risk. 0!ample, consider that ( ears ago, ou started investing towards bu ing a house after '6 ears. >ow, ou have done all the hard work and built a corpus ou plan to redeem soon. Dowever, the current volatile market scenario threatens to eat into our investments in the ne!t one ear. Dence, the need of the hour is to be cautious and tread safel . &ltra 4hort 3erm 2ond Fund These are low volatilit ultra short term debt schemes that offer investors an opportunit to participate at the shorter end of the ield curve.

An Ultra +hort Term fund invests in fi!ed-income instruments that have ver short-term maturities. #deall , these instruments mature in one ear. 8hile the fund manager endeavors to maintain the overall portfolio modified duration to 2-'1 months, it ma undergo changes in accordance with interest rate movements. =wing to the ver low durations, the rate of interest volatilit has ver little effect on the returns of these funds, vis-a-vis a medium or long-term bond fund. Why 4hould +ne Consider &ltra 4hort 3erm 2ond Funds #n the current markets, an Ultra-short bond fund could be good option for investing our short-term surplus. These funds are also an ideal vehicle for investing towards our short-term goals. As compared to li.uid funds, the Ultra +hort Team &ond ,unds offer the fund manger the e!tra fle!ibilit in constructing the portfolio without significantl altering the capital risk proposition. Features of an &ltra 4hort 3erm 2ond Fund 1! An open-ended scheme "! =b3ective is to provide a high degree of li.uidit 3! Underl ing portfolio consists of a range of short-term debt and rated mone market instruments that provide moderate ield #! Aims to generate reasonable returns $! #deal for investors with short term investment hori4ons +ther Factors The risk-return tradeoff for an Ultra +hort Term &ond ,und would be higher than li.uid funds but lower than a traditional ;ebt-+T< scheme. #n addition, here, the <rincipal will be at low risk. Dence, investors should consult their financial advisers about the applicabilit of this investment strateg vis-a-vis their financial plans and short and long-term goals. Contact &s (through the 'uery form on the right hand side) to know more about Ultra +hort Term &ond ,unds.

Inde5ed Funds vs! (ctively Mana.ed Funds
=ne of the ke reasons for investing ou mone through mutual funds is to benefit from the e!pertise and e!perience of professional fund managers, who are responsible for making wise investments based on market movements and trend anal sis. Dowever, if ou do not wish to avail the services of a fund manager, inde! funds could be a good alternative. Here is ho% it %or0s@ *or an actively manage #un , the fund manager handpicks the best stocks, bonds and other securities that have the potential to fulfill the scheme's ob3ectives. The fund manager closel monitors his portfolio and takes timel decisions to ensure best returns. Dowever, this comes at a cost and some amount of risk associated with the fund manager himself. =n the other hand, inde! funds (also called passive funds) are e.uit funds that mirror a particular

inde! (e.g. &+0, >+0, etc.) and invest in the same stocks (in the same proportion) as that inde!. ,or e!ample, if ou invest in an inde! fund that mirrors the &+0 inde!, ou will indirectl invest in the /6 underl ing scripts that make up the &+0 inde!. #nde! funds have no fund manager or a scheme ob3ective. ( Comparative 4tudy 1! Cost of Investments : The cost associated with the management of an inde! fund is much lesser than that of a managed fund, which re.uires active trading (churn). Dence, inde! funds save on e!penses like brokerage and transaction costs. Moreover, since a fund manager is not involved, the fund management charges are lower and hence the e!pense ratio is lower. The average e!pense ratio of activel managed fund is 1-1.5F, while it is '-'.5F in case of inde! funds. "! Mana.ement 4tyle : An e!perienced fund manager, following a structured investment approach is like a visionar leader marshalling his resources. &ased on the real-time developments and trend anal sis, he or she can take strategic decisions that can lead the fund towards outperformance. This aspect is missing for a passive fund. 3! 7imited do%nside : Unlike inde! funds that mirror the market, managed funds invest in handpicked securities. A fund manager has the freedom to limit the downside b holding onl performing securities. #n case of inde! funds, the fall as the market falls. #! Fund Mana.er /is0 : There is a chance our fund manager might make a poor decision. De might have an in-favourable fund picking st le, or might be sub3ect to some form of s stemic pressures or might end-up invest in an underperforming stock. There is a chance of him .uitting the fund too. These situations can affect our investments. #nde! funds negate this risk b passivel investing onl in securities that represent a particular inde!. $! 3raded on e5chan.es : Most mutual funds can be traded onl on >AG (i.e. the net asset value declared at the end of the da ). Dowever, since inde! funds are traded on e!changes, one can bu and sell them at an time and take advantage of the real-time prices. 1erformance 8hile inde! funds offer the above-mentioned benefits, perhaps the onl statistic that interests investors would be the fund's performance and net-returns. And activel managed funds are known to consistentl outperform inde! funds. =n the other hand, activel managed funds are also known to be more risk as compared to the inde! funds, which do not face losses due to the fund manager's wrong calls. #nde! funds can be considered if ou wish to invest in e.uities but want to minimi4e some risks. #nvestors must be mindful that while inde! funds can sidestep the fund manager related risks, the do face the market risks. Contact &s (through the 'uery form on the right hand side) to know more about #nde! and Managed ,unds and to identif the one that meets our financial goals.

)ifferent 3ypes and Cinds of Mutual Funds
The mutual fund industr of #ndia is continuousl evolving. Along the wa , several industr bodies

are also investing towards investor education. 9et, according to a report b &oston Anal tics, less than '6F of our households consider mutual funds as an investment avenue. #t is still considered as a high-risk option. #n fact, a basic in.uir about the t pes of mutual funds reveals that these are perhaps one of the most fle!ible, comprehensive and hassle free modes of investments that can accommodate various t pes of investor needs. Garious t pes of mutual funds categories are designed to allow investors to choose a scheme based on the risk the are willing to take, the investable amount, their goals, the investment term, etc. 7et us have a loo0 at some important mutual fund schemes under the follo%in. three cate.ories ,ased on maturity period of investment@ I! +pen:Ended - This scheme allows investors to bu or sell units at an point in time. This does not have a fi!ed maturit date. 1! )e,tD Income - #n a debtEincome scheme, a ma3or part of the investable fund are channeli4ed towards debentures, government securities, and other debt instruments. Although capital appreciation is low (compared to the e.uit mutual funds), this is a relativel low risk-low return investment avenue which is ideal for investors seeing a stead income. "! Money Mar0etD 7i8uid - This is ideal for investors looking to utili4e their surplus funds in short term instruments while awaiting better options. These schemes invest in short-term debt instruments and seek to provide reasonable returns for the investors. 3! E8uityD Gro%th - 0.uities are a popular mutual fund categor amongst retail investors. Although it could be a high-risk investment in the short term, investors can e!pect capital appreciation in the long run. #f ou are at our prime earning stage and looking for long-term benefits, growth schemes could be an ideal investment. 3!i! Inde5 4cheme - #nde! schemes is a widel popular concept in the west. These follow a passive investment strateg where our investments replicate the movements of benchmark indices like >ift , +ense!, etc. 3!ii! 4ectoral 4cheme - +ectoral funds are invested in a specific sector like infrastructure, #T, pharmaceuticals, etc. or segments of the capital market like large caps, mid caps, etc. This scheme provides a relativel high risk-high return opportunit within the e.uit space. 3!iii! 3a5 4avin. - As the name suggests, this scheme offers ta! benefits to its investors. The funds are invested in e.uities thereb offering long-term growth opportunities. Ta! saving mutual funds (called 0.uit Cinked +avings +chemes) has a /- ear lock-in period. #! 2alanced - This scheme allows investors to en3o growth and income at regular intervals. ,unds are invested in both e.uities and fi!ed income securitiesK the proportion is pre-determined and disclosed in the scheme related offer document. These are ideal for the cautiousl aggressive

investors. II! Closed:Ended - #n #ndia, this t pe of scheme has a stipulated maturit period and investors can invest onl during the initial launch period known as the >,= (>ew ,und =ffer) period. 1! Capital 1rotection - The primar ob3ective of this scheme is to safeguard the principal amount while tr ing to deliver reasonable returns. These invest in high-.ualit fi!ed income securities with marginal e!posure to e.uities and mature along with the maturit period of the scheme. "! Fi5ed Maturity 1lans >FM1s? - ,M<s, as the name suggests, are mutual fund schemes with a defined maturit period. These schemes normall comprise of debt instruments which mature in line with the maturit of the scheme, thereb earning through the interest component (also called coupons) of the securities in the portfolio. ,M<s are normall passivel managed, i.e. there is no active trading of debt instruments in the portfolio. The e!penses which are charged to the scheme, are hence, generall lower than activel managed schemes. III! Interval - =perating as a combination of open and closed ended schemes, it allows investors to trade units at pre-defined intervals. Which scheme should I invest in 8hen it comes to selecting a scheme to invest in, one should look for customi4ed advice. 9our best bet are the schemes that provide the right combination of growth, stabilit and income, keeping our risk appetite in mind. Contact &s Athrough the 'uery form in right hand sideB to know more about t pes of mutual funds More (rticles to enhance our knowledge for better investment7

3he 2enefits of 4tayin. Invested
#f ou are planning to invest ou mone into the market, or have alread invested with a goal to achieve capital appreciation, sta ing invested makes more sense than moving in and out of the market. 0ver good financial advisor preaches and practices the mantra - Ntime in the market is more important than timing the marketN. A lot of investors make the mistake of abandoning their financial plans at the first sign of bad news. #nstead, one would do well to take a macro perspective and reali4e that over the ears, bull markets have lasted longer than bear markets. #t is also interesting to note that on most occasions, the upward rallies have easil made up for short-term declines. More /easons for 4tayin. Invested@ H 4ense of )iscipline@ +ta ing true to our financial plan inculcates a sense of discipline towards long-term goals. %egular investing is probabl one of the most critical aspects for wealth-creation. H 2enefits from Compoundin.@ The mathematical reason for sta ing invested was well articulated b Albert 0instein, who said, N"ompound interest is the eighth wonder of the world. De who understands it, earns it ... he who doesn't ... pa s it.N $ive our mone the time to grow. Cet it work as hard as ou do. H 2enefits from a Full Mar0et Cycle@ Understanding the markets is eas , timing them isn't. 8e do

know that markets tend to follow a c cle of ups and downs and bulls and bears. +ta ing invested allows ou to participate in the rallies. This is an opportunit to bu low and sell high because in the long-term, the good schemes have alwa s delivered positive returns. H 7evera.e 7on.:3erm 4trate.ies@ 8hen ou agree to sta invested for a longer duration, ou give ourself the opportunit to benefit from the long-term strateg and vision of an e!perienced mone manager or mutual fund manager. H 3a5 2enefits@ Cong-term capital gains arising on the transfer of units of an 'e.uit oriented' mutual fund is e!empt from income ta!. Moreover, investments in 0.uit Cinked +aving +chemes from mutual fund houses are e!empt uEs )6E" of the #T Act. 3he MF /oute to 7on.:3erm Investments A d namicall managed mutual fund is one of the best investment vehicles for retail investors looking to gain from long-term investments. An Asset Management "ompan offers various schemes that pursue different ob3ectives. These schemes are activel managed b e!perienced fund managers who follow a well-defined investment st le and proven processes. + stematic #nvestment <lan is the best mode of long-term investment for a retail investor. An +#< allows ou to make the most of a bearish market as ou gain from rupee cost averaging. It is all a,out the Mindset +ta ing invested and periodicall reviewing our financial plan has proven to be one of the surest wa s of creating long-term wealth. 8hen investing in uncertain times, following the basics is the best wa forward. 8hen the outlook is pessimistic, it is natural to be worried about ones hard-earned mone . 8harton professor Merem +iegel once said, NGolatilit scares enough people out of the market to generate superior returns for those who sta inIN Man will ignore that advice. Dowever, the fact about the market is that it is impossible to predict when a bull market will begin. #f ou sta invested, ou never miss the part and usuall reap good returns. #t is better than missing out b waiting on the sidelines. Contact &s (through the 'uery form on the right hand side) to know more about the basics of financial planning and to learn about the long-term investment opportunities that meets our financial goals.

3en Cey Mantras for Mutual Fund Investors
Mutual fund investing is for ever one. Asset Management "ompanies (AM"s) offer multiple schemes with var ing combinations of risk-return, investment hori4on, e!posure, asset classes and ta!-treatment. The trick is to choose wisel . 8hether ou are new to investing through mutual funds or a seasoned investor, following these ten ke mantras will ensure that ou make the most of our investments. 3en Cey Mantras for Mutual Fund Investors 1! 4tay true to your ris0 appetite - &ased on the investment ob3ective, underl ing securities and

investment methodolog , ever mutual fund scheme carries different amount of risks. 8hile e.uit funds have the highest risk, li.uid funds carr the least. "hoose a scheme that matches our own risk appetite. "! Have clear .oals and invest accordin.ly - %ead the scheme related documents to learn about the ob3ectives of a scheme, past performance and the time hori4on. 0nsure that ou invest in a scheme that is likel to offer the best return, in time for our goals. 0.uit based mutual funds ma be preferred for goals which are at least five ears awa . 3! 2e disciplined - At the onset, make a financial plan and invest accordingl . #n the long-term, small but regular investments have proven to generate better returns. Take the + stematic #nvestment <lan (+#<) route and start investing ever month. This also allows ou to benefit from %upee-"ost Averaging. $raduall , as our investible surplus increases, start investing more. #! 4tay invested and do not try to time the mar0et - 0ver bod knows that one should 'bu at low levels and sell at a high'. Dowever, nobod knows what these levels are. #t is not possible to time our entr in the market. Dence, it is ideal to invest earl (and regularl ) and sta invested so that our mone has enough time to grow through compounding. Also, avoid churning the portfolio unless necessar . $! )iversify - Mutual funds offer ou several opportunities to diversif our investments. ;ifferent t pes of funds include diversified e.uit (large-cap, mid-cap, small-cap), sectoral funds, commodit -related funds, global fund of funds, inde! funds, etc. and the entire gamut of debt-based funds. There are ample baskets for all our eggs. "hoose wisel . 6! )o not ,e lured ,y B(As - Unlike stock prices, the absolute value of a mutual >AG does not suggest an thing about the .ualit or performance of the scheme. A >AG is simpl the function of the total asset under management and the no. of outstanding units. Dence, a scheme with a >AG of %s. '66 is not necessaril better than a scheme with an >AG of %s. '6. "onse.uentl , investing during a >ew ,und =ffer (>,=) does not mean that ou are bu ing low. F! )ividends are not ,onuses - Mutual fund schemes offer dividend plans. ;o not get lured to a scheme simpl because it has declared a dividend. =nce a scheme pa s out a dividend, its >AG reduces accordingl . This means that dividends are paid from our own holdings. Unless it is imperative to receive dividends, invest in growth plans, which are ideal for long-term capital appreciation. <! Include 2alanced Funds and Inde5 Funds - #f ou have a predominantl e.uit -based portfolio, consider balanced funds to lend some amount of cushioning. These are ideal for meeting challenges like inflation, interest rates, market volatilit and for achieving diversification. At the same time, consider inde! funds as cost-effective mutual funds that ma help mitigate fund house and fund manager related risks. 9! +ther Investment Aehicles - 8hile investing through mutual funds is great, one must also consider other investment avenues like real estate, direct e.uit , government bonds and other fi!ed income assets. 1=! /e.ular Monitorin. - =ne of the most crucial aspects, that most investors ignore, is about monitoring their investments and e!amining its performance vis-a-vis their investment ob3ectives. <eriodic monitoring allows one to take corrective actions and sta on track. Contact &s (through the 'uery Form on the right hand side) to know more about the basics of

mutual fund investing. More (rticles to enhance our knowledge for better investment7

What is a Mutual Fund 2enchmar0 Why is it important
#nvestors often receive mutual fund advertisements and marketing communications claiming that a particular fund has delivered OF return or that investors in a particular scheme have become richer b %s. 9. 8hile these claims sound good, one must compare the performance of these funds with that of the broader market to understand the significance of such claims. This is where a mutual fund benchmark is highl useful. What is a 2enchmar0 A benchmark, as the name suggests, is a point of reference that tells ou how a mutual fund has performed vis-a-vis its peers and the market. #n the ear 16'1, +0&# made it mandator for fund houses to declare a benchmark inde!. This benchmark is independent and is based on the ob3ectives of our fund. #n #ndia, the &+0 +ense! and the >ift are the most widel followed benchmarks for large-cap funds. =ther benchmarks are ">O Midcap, ">O +mallcap, ">O #T, ">O 566, &+0 166, &+0 '66, etc. Dence, if ou invest in a diversified e.uit fund that is benchmarked against the &+0 +ense!, its return is compared with that of &+0 +ense!. &nderstandin. 1erformance %!r!t the 2enchmar0 #f our fund delivers higher returns than the benchmark, it is said to have outperformed and vice versa. =n the other hand, if the benchmark inde! falls over a period of time and during the same time, our fund's >AG falls lesser (in percentage terms), our fund can still be said to have outperformed the benchmark. =ne must note that if an activel managed fund delivers returns in-line with the benchmark, it should be considered as underperformance. This is because a professional fund manager has charged ou a fee and onl delivered returns e.ual to an inde! fund (a passivel managed scheme that does not engage a fund manager). Dence, ,und <erformance .reater than &enchmark is =utperformance ,und <erformance less than &enchmark is Underperformance ,und <erformance e8uals to &enchmark is Underperformance Measurin. 1erformance Ascertaining whether a fund has outperformed is an important criterion while selecting a mutual fund. 9ou can determine this looking over our fund's historical returns. The performance of our fund vis-a-vis its benchmark is measured b a unit termed &eta. #t is the measure of the volatilit of our fund compared to its benchmark. #f the beta of our fund is '.'6, ou can e!pect '6F higher returns than the benchmark in an upward market, and '6F lower returns than the benchmark in a downward market. A beta of ' implies that our fund will fluctuate in s nc with its benchmark.

Importance of 7on.:3erm 1erformance 8hen comparing a scheme with its benchmark, ensure that ou consider the performance of the fund over ' ear, / ear, 5 ear and even '6 ear returns (if the data is available). A funds abilit to consistentl outperform its benchmark is a highl desirable trait. Dowever, the benchmark performance is not the onl ardstick for finali4ing a fund to invest in. >ote that past performance does not guarantee future returns. Dence, it is imperative to consult our financial provider and evaluate our risk appetite before making an investment. Contact &s (through the 'uery Form on the right hand side) to know more about mutual fund benchmark and its importance. More (rticles to enhance our knowledge for better investment7

Will 3he G/eal /eturnH 1lease 4tand &p
8hen Arun saw a newspaper advertisement about a bank offering (.5F p.a returns on a fi!ed income scheme, he got interested. De felt that it was a decent return for what appeared to be a '+ero risk' investment. #t also seemed lucrative as the 'capital was protecte '$ Dowever, a closer look reveals that the devil is in the detail. #ncome ta! and #nflation are the biggest dampeners for an investor's spirit. The need of the hour is to learn about the various e!ternal factors that eat into the actual returns one receives on all t pes of investments. 8hat is advertised is probabl the '>ominal %eturn' and what one needs to reall consider is the '%eal %eturn'. )ifference ,et%een Bominal /eturn and /eal /eturn The mathematical rate at which our investment grows is known as the ,ominal -eturn. Dence, for the advertisement that Arun saw, (.5F p.a is the >ominal %ate of %eturn - i.e. if he invests %s. '66, at the end of the ear, the corpus would grow to %s. '6(.5 (a nominal gain of %s. (.5). >ow, here is the painful part. =ut of the gain of %s. (.5, Arun will have to pa /6F as #ncome Ta! (assuming the highest ta! bracket). Dence, he is left with %s. 2.25. ,urther, #nflation decreases the purchasing power of the mone . &nderstandin. Inflation #nflation can be e!plained as the rate at which the level of prices for goods and services rise during a given period. The current rate of inflation in #ndia is 3ust under *F. This means that the purchasing power is falling. Dence, a good or service that could be bought for %s. '66 a ear ago, costs %s. '6* this ear. #n common terminolog , one ma refer to it as the Nincrease in cost of living.N Dence, Arun's #ncome ta! ad3usted return of %s. 2.25 will further need to be corrected b %s. *. This leaves him with %s. -6./5. This means that after a ear of investing, Arun has actuall turned poorer b /5 paise. >ow, this is the N%eal %eturnN. The above e!ample clearl illustrates that one needs to do a lot of running even to sta in the same place. Dence, the obvious strateg for Arun is to achieve returns averaging more than the inflation rate (understand that not investing at all is also a bad strateg as the inflation is still applicable). De

probabl needs to look at an investment portfolio that includes stocks or bonds that can at least beat the inflation and are ta! efficient. +o ever one wants to know the answer to - N8hat is the best strateg to beat inflation:N 4trate.ies to Hed.e a.ainst Inflation and 3a5es 0conomic theor proves that a moderate amount of inflation is ideal for a developing econom . This is because rising prices provide an impetus to businesses for investing and thereb leading growth and overall development. Dence, as a thumb-rule, one should be able to beat inflation b investing in these businesses - which means investing via e.uit and debt routes. Mutual Funds Can Help Mutual ,unds present a wide arra of schemes that can let one participate in the stock market and the mone market. &alanced funds, inde! funds and ta!-saving funds are other t pes of funds that can help one build a smart investment portfolio. #n the current market scenario, one can consider investing in ultra short bond funds also. Dowever, before ou take an investment decision, ensure that factors like our ta! bracket, investment hori4on, risk appetite, financial plan, etc. are favourable. Contact &s (through the 'uery Form on the right hand side) to know more about investing for beating inflation.

/edeemin. Mutual Funds I Why; When and Ho%
As an informed mutual fund investor, Garun sta ed up to date with his investments. De kept track of the market and managed his investments activel . Dowever, when the long-term outlook seemed negative, he started seriousl considering about selling off his mutual fund units (redemption). ;uring his research about the Nright time to redeemN he reali4ed that the decision should be based on several factors. %edemption involves meticulous research about the performance of the fund and clarit about the reasons for redemption. #nvestors often make such decisions based on sentiment. #f the market is uncertain or their fund is underperforming, a refle! action is to redeem units. This might not be the best thing to do. =ne must understand that even uncertain markets can present opportunities for earning good returns. #n addition, unlike inde! funds, other mutual funds do not alwa s follow the benchmark inde!. #n fact, their performance is a function of the specific underl ing securities. #n addition, mutual funds are managed b professional fund managers who take proactive decisions and tr to factor-in the perceived market movements. Dowever, if a mutual fund scheme is consistentl underperforming for a ver long period (vis-a-vis its benchmark) one ma choose e!it. =nce the reason for redemption is clear, here are a few points to make the process straightforward. 1! /edemption if purchased throu.h the (MC or )istri,utors The most common route for investing in mutual funds is through the AM" (direct) or through a distributor. #n order to redeem funds through offline modes, ou need to send a dul signed redemption re.uest to the AM"'s or the distributor's office. A standard redemption form asks for details like our name, folio number, plan and scheme details,

and number of units ou wish to redeem. #n addition, all the holders have to sign the slip. The proceeds from the redemption will be credited to the registered bank account. "! /edemption if ,ou.ht online Mutual funds can also be purchased online. +uch units can be redeemed online through a trading account or the AM"s website. 9ou simpl have to log in, select the fund and the number of units ou wish to redeem and confirm our order. #n addition, central service providers like "AM+ ("omputer Age Management +ervices <vt. Ctd.), ?arv , etc. offer the option of redeeming mutual fund bought from several AM"s. 9ou can download the form online or visit the nearest office. <lease note that these agencies might not service all the AM"s. 1oints 3o /emem,er@ 1! (pplica,le B(A The time of the da when our redemption re.uest is received is crucial because the >AG (>et Asset Galue) for each da is declared after the close of trading on that da . Dowever, the >AG will be applicable onl for redemption re.uests received up to / pm on an da . "! 3urnaround 3ime =nce the redemption re.uest is successfull received and verified, it takes up to three working da s for the proceeds to be credited to the registered bank account. 3! Funds With 7oc0:In 1eriod Unlike the units of a close-ended scheme, open-ended schemes can be redeemed an time. +chemes like 0.uit Cinked +avings +cheme (0C++) cannot be redeemed up to / ears from the date of investment. #! E5it 7oads and (pplica,le 3a5es &ased on the duration after which ou are redeeming the funds, our transaction might attract certain amount of ta!es and e!it loads. #n.uire about the same before finali4ing a transaction. Cike ever investment decision, it is advisable to consult our financial advisor beforehand. +ta true to our financial plan and ensure that ou are redeeming for the right reasons. %emember, redeeming from one scheme and investing into another scheme of the similar kind is called 'churning' and is not advisable unless backed b sound logic. Contact &s (through the 'uery Form on the right hand side) to know more about redemption of mutual funds.

Mutual Funds I Bot (ll 4chemes (re (li0e
0ver investor has different investment needs and financial ob3ectives. #t is impossible to appl a one-si4e-fits-all approach. #n order to cater to a wide range of investor re.uirements, mutual funds offer several options for diversification. 8hile a oung investor might be able to take more risks and opt for an e.uit -based mutual fund, a retired investor might do well b channeli4ing his funds towards a debt-based mutual fund with onl a small or 4ero e!posure to e.uit . +imilarl , while a long-term investor might take the + stematic #nvestments route and reap the benefits of sta ing invested, an institutional investor might 3ust park e!cess funds in a li.uid fund

for 3ust a few da s and earn handsome returns. Mutual funds allow investors to spread their investments across various asset classes based on risk profile, investment needs, and hori4on. &ased on their structure and ob3ective, mutual funds can be classified into7 2ased on the 4tructure@ 1! +pen:Ended 4chemes@ =pen-ended schemes are the most common t pes of mutual funds. +uch schemes are open for subscription throughout the ear and can be activel traded. The ke feature of open-ended schemes is high li.uidit . "! Closed:Ended 4chemes@ As the name suggests, close-ended schemes are closed to an investor after the >,= (>ew ,und =ffer). These do not have an e!it option but have a fi!ed corpus and maturit period. 3! Interval 4chemes@ 8ith characteristics of both open ended and close-ended schemes, the allow investors to trade units at pre-determined intervals. 2ased on the Investment +,-ective@ 1! Gro%thDE8uity 4chemes@ $rowth schemes invest largel in e.uities. 8hile the are considered a high-risk investment in the short term, investors can e!pect capital appreciation in the long run. $rowth schemes are ideal for investors who are at the prime of their earning stage and can afford to take higher risks for gaining higher returns. "! IncomeD)e,t 4chemes@ 8ith income schemes, the ma3or proportion of investments is directed toward debt. The are safe investments that work the low risk-low return principle. +uch schemes are apt for conservative investors having a low risk appetite. ,or e!ample, for a retired investor who needs a stead income, debt schemes are an advisable investment avenue. 3! 2alanced 4chemes@ &alanced funds invest in both growth and income schemes. The let an investor en3o returns from e.uities while using debt as a cushion. The debt e.uit ratio for such funds is pre-determined and disclosed in the offer document. +uch schemes are a good choice for investors having a moderate risk appetite. #! Money Mar0etD7i8uid 4chemes@ These schemes are ideal for investors who want to park their surplus mone for the short term. These invest in debt instruments like treasur bills and certificates of deposit. 8ith short-term maturit periods, these schemes offer high li.uidit . &esides these, mutual fund houses also offer global funds that let investors diversif their portfolio across international markets and reduce countr -specific risk. #n order to meet our specific financial goals, it is best to opt for a scheme that has the potential to provide the highest returns for our risk appetite. #t is also advisable to consult our financial planner before making an investment decision. Contact &s Athrough the 'uery form in the right hand sideB to know more about the t pes of mutual funds. More (rticles to enhance our knowledge for better investment7

What Ma0es ( Complete Financial 1lanner
,inancial planning is a continuous process that re.uires two parties - an investor (individual or a famil ) and a financial planner. &oth the parties need to work collectivel and determine the best course of action. A good financial planner is the one who has a professional approach and inspires confidence. De or she should be able to take the investor along and co-create a financial plan. Identifyin. a .ood Financial 1lanner A good financial planner must possess the technical skills that allow him to read the cues, anal 4e the numbers, leverage professional insights and pre-empt the trends in the econom for providing timel solutions. Dowever, knowledge and e!perience are not the onl attributes that investors should look for. 8e need our financial planners to listen and not 3ust hear. 3he Be% (.e Financial 1lanner Most financial planners are pragmatic and number-driven and have an anal tical bent of mind. Dowever, the need of the hour is also empath , intuition and innovation. That is wh new age financial planners need to be good, not 3ust at logical reasoning and anal sis, but also with emotions, values and relationships. A financial planner needs to develop the capabilit to read his clients well and the abilit to lead them with innovation and not instruction. 'ualities of a Good Financial 1lanner@ H Clarity@ "lients usuall demand to know how each piece fits in the bigger picture, and new age financial planners establish the conte!t right at the beginning. This brings a level of clarit in their plans and decisions. H 3ransparency@ A noteworth trait of a good financial planner is openness to communication. De will help ou avoid an hidden charges and stop ou from taking uninformed decisions that could impair our financial plan. An ideal financial planner will construct a road map with ou not 3ust for ou. H Fle5i,le@ >ew age financial planners are creative and the welcome change. The are also fle!ible and accommodating towards our changing goals. This approach allows them to give ou innovative solutions. H Empathy@ The abilit to e!press and read emotions is one of the most important .ualities a financial planner can have. An empathetic professional is intuitive about our needs and in a better position to decide the t pe of investments our plan re.uires. H 1atience@ $ood financial planners are also good listeners. The possess the knack to e!plain numbers and figures in a simple manner. +ince the are empathetic towards their clients, the understand their need to pose .uestions and e!pect straightforward answers. Mutual funds are d namic and most investors invest with long-term goals. 8ith several schemes available, it can get challenging for an investor to choose the right one. A good financial planner has the skills to 3udge whether our investment ob3ective is growth or safet or both. Contact &s (through the 'uery Form on the right hand side) to know more about financial

planning for the new age. More (rticles to enhance our knowledge for better investment7

Mutual Funds@ Ho% Many (re Enou.h
Abhinav came across a series of informative articles about mutual funds and got interested. De liked the idea of investing in mutual fund and wanted to get started with a small amount that he had saved. De knew about the various t pes of mutual fund schemes and had also learnt about the different wa s in which he could invest in them. Dowever, he reali4ed that there were lots of mutual fund houses and too man schemes to choose from. De was not sure how man should he invest in. More a,out Mutual Funds =ne must understand that Mutual funds are diverse. 0ach scheme has its own set of variables, performance indices, ob3ectives and risks. +imilarl , ever investor has his or her own set of goals, ob3ectives and aspirations. 8ith such widespread choices, one si4e does not fit all. 8hile there is no thumb rule to .uantif the number of mutual funds one should invest in. #nvestment decisions should be based on ones7 '. %isk Appetite 1. #nvestment =b3ectives /. #nvestible +urplus ,or e!ample7 A oung investor with a higher disposable income and long-term ob3ectives might be able to take a higher risk and opt for a large-cap e.uit fundK while a retired individual with limited means of income and ongoing e!penses, might feel comfortable with instruments such as income schemes. +pportunities for )iversification 0ven within a risk t pe, one has the opportunit to diversif . ,or e!ample within e.uities, one can opt for diversified funds, sectoral funds, midcap, large cap, small cap, commodit , etc. There are global funds that provide ou with diversification across global markets. &ased on the ob3ectives and investment hori4on, one can consider 0.uit Cinked +avings +cheme (0C++) that helps ou save ta! but have a / ear lock-in. 1itfalls of )iversifyin. 3oo Much 8hile putting all our eggs in the same basket is not advisable, one should also not diversif too much as it can lead to the following pitfalls7 '. /eplication@ +imilar funds might have the same underl ing stocks, defeating the purpose of diversification. Dence, one needs to be able to identif the underl ing securities that the schemes invest in and ensure that the assets are well differentiated. 1. Fund Mana.ement Char.es@ Mutual funds are activel managed b professional fund managers who charge a fee. 0!tra schemes

mean additional charges. These can be avoided b limiting diversification. /. Ceepin. 3rac0 of your Investments@ Too man mutual fund investments can be difficult to manage. ?eeping a track of various amounts, lock-in periods, fund documents, statements and folio details can mean a lot of paperwork. Also, in case of an emergenc , it might be cumbersome to li.uidate all the schemes at once. 4ervices of an E5pert Financial 1lanner 8hile there are no guidelines for deciding the e!act allocation among different mutual fund schemes, a financial planner can help ou arrive at the right fund for the given set of ob3ectives, risk appetite and investment hori4on. The complete financial planner will be able to 3udge whether our investment aim is growth, safet or both. #n addition, he or she can guide ou about the right investment route. #t could be a combination of lump sum investments and s stematic investment plans that encourage regular savings while offering the advantage of rupee-cost averaging. Contact &s (through the 'uery Form on the right hand side) to know more about investing in mutual funds. More (rticles to enhance our knowledge for better investment7

3en Cey Mantras for Mutual Fund Investors
Mutual fund investing is for ever one. Asset Management "ompanies (AM"s) offer multiple schemes with var ing combinations of risk-return, investment hori4on, e!posure, asset classes and ta!-treatment. The trick is to choose wisel . 8hether ou are new to investing through mutual funds or a seasoned investor, following these ten ke mantras will ensure that ou make the most of our investments. 3en Cey Mantras for Mutual Fund Investors 1! 4tay true to your ris0 appetite - &ased on the investment ob3ective, underl ing securities and investment methodolog , ever mutual fund scheme carries different amount of risks. 8hile e.uit funds have the highest risk, li.uid funds carr the least. "hoose a scheme that matches our own risk appetite. "! Have clear .oals and invest accordin.ly - %ead the scheme related documents to learn about the ob3ectives of a scheme, past performance and the time hori4on. 0nsure that ou invest in a scheme that is likel to offer the best return, in time for our goals. 0.uit based mutual funds ma be preferred for goals which are at least five ears awa . 3! 2e disciplined - At the onset, make a financial plan and invest accordingl . #n the long-term, small but regular investments have proven to generate better returns. Take the + stematic #nvestment <lan (+#<) route and start investing ever month. This also allows ou to benefit from %upee-"ost Averaging. $raduall , as our investible surplus increases, start investing more. #! 4tay invested and do not try to time the mar0et - 0ver bod knows that one should 'bu at low levels and sell at a high'. Dowever, nobod knows what these levels are. #t is not possible to time our entr in the market. Dence, it is ideal to invest earl (and regularl ) and sta invested so that our mone has enough time to grow through compounding. Also, avoid churning the portfolio unless necessar .

$! )iversify - Mutual funds offer ou several opportunities to diversif our investments. ;ifferent t pes of funds include diversified e.uit (large-cap, mid-cap, small-cap), sectoral funds, commodit -related funds, global fund of funds, inde! funds, etc. and the entire gamut of debt-based funds. There are ample baskets for all our eggs. "hoose wisel . 6! )o not ,e lured ,y B(As - Unlike stock prices, the absolute value of a mutual >AG does not suggest an thing about the .ualit or performance of the scheme. A >AG is simpl the function of the total asset under management and the no. of outstanding units. Dence, a scheme with a >AG of %s. '66 is not necessaril better than a scheme with an >AG of %s. '6. "onse.uentl , investing during a >ew ,und =ffer (>,=) does not mean that ou are bu ing low. F! )ividends are not ,onuses - Mutual fund schemes offer dividend plans. ;o not get lured to a scheme simpl because it has declared a dividend. =nce a scheme pa s out a dividend, its >AG reduces accordingl . This means that dividends are paid from our own holdings. Unless it is imperative to receive dividends, invest in growth plans, which are ideal for long-term capital appreciation. <! Include 2alanced Funds and Inde5 Funds - #f ou have a predominantl e.uit -based portfolio, consider balanced funds to lend some amount of cushioning. These are ideal for meeting challenges like inflation, interest rates, market volatilit and for achieving diversification. At the same time, consider inde! funds as cost-effective mutual funds that ma help mitigate fund house and fund manager related risks. 9! +ther Investment Aehicles - 8hile investing through mutual funds is great, one must also consider other investment avenues like real estate, direct e.uit , government bonds and other fi!ed income assets. 1=! /e.ular Monitorin. - =ne of the most crucial aspects, that most investors ignore, is about monitoring their investments and e!amining its performance vis-a-vis their investment ob3ectives. <eriodic monitoring allows one to take corrective actions and sta on track. Contact &s (through the 'uery Form on the right hand side) to know more about the basics of mutual fund investing. More (rticles to enhance our knowledge for better investment7

Hi.h B(A vs! 7o% B(A I 3he 3ale of 3%o Bum,ers
The >et Asset Galue or the >AG is the price at which a single unit of a particular mutual fund is traded. #t is calculated b dividing the total net value o# the assets held b the fund, to the number o# outstan ing units$ B(A J Bet (ssets D +utstandin. &nits Ho% B(A differs from 4toc0 1rice 8hile the >AG might seem to be similar to stock price, the two differ a lot. +ince the >AG is based on a bunch of underl ing assets, its value is declared onl once (at the end of a da ), once the trading in those underl ing assets is completed. #n comparison, a stock price (although fluctuating) is available throughout trading hours. Moreover, unlike a stock price, the >AG does not give ou an idea about the performance of mutual fund scheme.

B(As : 3he Hi.hs and 7o%s of it #f ou are planning to invest our mone in a mutual fund, do not let the high and low >AG values influence our decision about short-listing a fund. As discussed, unlike shares, the absolute value of a mutual fund >AG does not sa much about the performance of the fund. H 7o% B(A : 8hen a fund house launches a new fund (>ew ,und =ffer - >,=), the units of the fund are available for a standard >AG of %s. '6 - this shouldn't be a deterrent. ,urther, as the formula above states, a fund could have a lower >AG because its net assets are low or the no. of outstanding units is high (due to a temporar transition like >AG split, etc). Also, a fund's >AG decreases proportionatel , whenever it pa s out dividends. H Hi.h B(A : +imilarl , a high >AG could be because of a good performance over the ears. &ut then, with mutual funds, the past performance is never a guarantee for future performance. Myth 1 : 7o% B(A means More &nits J More )ividends #nvestors should refrain from being attracted to low >AG funds 3ust because ou reali4e that our mone can fetch ou more units and that this might be beneficial when the fund declares a dividend. Dere, the investor will not reall benefit because a dividend is nothing but their own mone being paid out. #n fact, after the dividend is paid out, the >AG is ad3usted accordingl I Myth " : Fund %ith Hi.h B(A have reached their potential Another common m th is that mutual funds with a high >AG have ma!ed out their potential and that the are no longer as lucrative. >ow, one must remember that mutual funds have an underl ing portfolio of stocks, which are chosen b an e!perienced fund manager who has a well-thought strateg for entering and e!iting stocks. As soon as a particular stock has met its ob3ective, the fund manager sells the stock and bu s newer ones that are likel to provide returns in line with the scheme ob3ectives. =ne must understand that at the end, it is the fund performance that should matter and not the absolute value of the >AG. The mone growth will depend on how the fund is performing and not on the >AG value. Dence, a 16F growth with >AG of 16 is the same as 16F growth with >AG of 166. Contact &s (through the 'uery Form in the right hand side) to know more about >et Asset Galue. 4ector:4pecific Fund 4chemes These are the fundsEschemes that invest in the securities of onl those sectors or industries as specified in the offer documents. ,or e.g. <harmaceuticals, +oftware, ,ast Moving "onsumer $oods (,M"$), <etroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectorsEindustries. 8hile these funds ma give higher returns, the are more risk compared to diversified funds. #nvestors need to keep a watch on the performance of those sectorsEindustries and must e!it at an appropriate time. The ma also seek advice of an e!pert. 3a5 4avin. 4chemes These schemes offer ta! rebates to the investors under specific provisions of the #ncome Ta! Act, '(2' as the $overnment offers ta! incentives for investment in specified avenues. 0.g. 0.uit Cinked +avings +chemes (0C++). <ension schemes launched b the mutual funds also offer ta! benefits. These schemes are growth oriented and invest predominantl in e.uities. Their growth opportunities and risks associated are like an e.uit -oriented scheme.

7oad or Bo:7oad Fund A Coad ,und is one that charges a percentage of >AG for entr or e!it. That is, each time one bu s or sells units in the fund, a charge will be pa able. This charge is used b the mutual fund for marketing and distribution e!penses. +uppose the >AG per unit is %s.'6. #f the entr as well as e!it load charged is 'F, then the investors who bu would be re.uired to pa %s.'6.'6 and those who offer their units for repurchase to the mutual fund will get onl %s.(.(6 per unit. The investors should take the loads into consideration while making investment as these affect their ieldsEreturns. Dowever, the investors should also consider the performance track record and service standards of the mutual fund which are more important. 0fficient funds ma give higher returns in spite of loads. A no-load fund is one that does not charge for entr or e!it. #t means the investors can enter the fundEscheme at >AG and no additional charges are pa able on purchase or sale of units. 4ale or /e:1urchase /edemption Guide The price or >AG a unit holder is charged while investing in an open-ended scheme is called sales price. #t ma include sales load, if applicable. %epurchase or redemption price is the price or >AG at which an open-ended scheme purchases or redeems its units from the unit holders. #t ma include e!it load, if applicable. (ssured /eturn 4cheme Assured return schemes are those schemes that assure a specific return to the unit holders irrespective of performance of the scheme. A scheme cannot promise returns unless such returns are full guaranteed b the sponsor or AM" and this is re.uired to be disclosed in the offer document. #nvestors should carefull read the offer document to ascertain whether return is assured for the entire period of the scheme or onl for a certain period. +ome schemes assure returns one ear at a time and the review and change it at the beginning of the ne!t ear. +pen:Ended FundD4cheme An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fi!ed maturit period. #nvestors can convenientl bu and sell units at >et Asset Galue (>AG) related prices, which are declared on a dail basis. The ke feature of open-ended schemes is li.uidit . Close:Ended FundD4cheme A close-ended fund or scheme has a stipulated maturit period e.g. 5-* ears. The fund is open for subscription onl during a specified period at the time of launch of the scheme. #nvestors can invest in the scheme at the time of the initial public issue and thereafter the can bu or sell the units of the scheme on the stock e!changes where the units are listed. #n order to provide an e!it route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at >AG related prices. +0&# %egulations stipulate that at least one of the two e!it routes is provided to the investor i.e. either repurchase facilit or through listing on stock e!changes. These mutual funds schemes disclose >AG generall on weekl basis.

What is a mutual fund

These da s ou are hearing more and more about mutual funds as a means of investment. #f ou are like most people, ou probabl have most of our mone in a bank savings account and our biggest investment ma be our home. Apart from that, investing is probabl something ou simpl do not have the time or knowledge to get involved in. 9ou are not the onl one. This is wh investing through mutual funds has become such a popular wa of investing.

What is a Mutual Fund
A mutual fund is a pool of mone from numerous investors who wish to save or make mone 3ust like ou. #nvesting in a mutual fund can be a lot easier than bu ing and selling individual stocks and bonds on our own. #nvestors can sell their shares when the want. 1rofessional Mana.ement! 0ach fund's investments are chosen and monitored b .ualified professionals who use this mone to create a portfolio. That portfolio could consist of stocks, bonds, mone market instruments or a combination of those. Fund +%nership! As an investor, ou own shares of the mutual fund, not the individual securities. Mutual funds permit ou to invest small amounts of mone , however much ou would like, but even so, ou can benefit from being involved in a large pool of cash invested b other people. All shareholders share in the fund' s gains and losses on an e.ual basis, proportionatel to the amount the 've invested. Mutual Funds are )iversified & investing in mutual funds, ou could diversif our portfolio across a large number of securities so as to minimise risk. & spreading our mone over numerous securities, which is what a mutual fund does, ou need not worr about the fluctuation of the individual securities in the fund's portfolio. Mutual Fund +,-ectives There are man different t pes of mutual funds, each with its own set of goals. The investment ob3ective is the goal that the fund manager sets for the mutual fund when deciding which stocks and bonds should be in the fund's portfolio. ,or e!ample, an ob3ective of a growth stock fund might be7 This fund invests primaril in the e.uit markets with the ob3ective of providing long-term capital appreciation towards meeting our longterm financial needs such as retirement or a child' s education. ;epending on investment ob3ectives, funds can be broadl classified in the following 5 t pes7 • Aggressive growth means that ou will be bu ing into stocks which have a chance for dramatic growth and ma gain value rapidl . This t pe of investing carries a high element of risk with it since stocks with dramatic price appreciation potential often lose value .uickl during downturns in the econom . #t is a great option for investors who do not need their mone within the ne!t five ears, but have a more long-term perspective. ;o not choose this option when ou are looking to conserve capital but rather when ou can afford to potentiall lose the value of our investment.

• As with aggressive .ro%th, growth seeks to achieve high returnsK however, the portfolios will consist of a mi!ture of large-, medium- and small-si4ed companies. The fund portfolio chooses to invest in stable, well established, blue-chip companies together with a small portion in small and new businesses. The fund manager will pick, growth stocks which will use their profits grow, rather than to pa out dividends. #t is a medium - long-term commitment, however, looking at past figures, sticking to growth funds for the long-term will almost alwa s benefit ou. The will be relativel volatile over the ears so ou need to be able to assume some risk and be patient. • A combination of .ro%th and income funds, also known as ,alanced funds, are those that have a mi! of goals. The seek to provide investors with current income while still offering the potential for growth. +ome funds bu stocks and bonds so that the portfolio will generate income whilst still keeping ahead of inflation. The are able to achieve multiple ob3ectives which ma be e!actl what ou are looking for. 0.uities provide the growth potential, while the e!posure to fi!ed income securities provide stabilit to the portfolio during volatile times in the e.uit markets. $rowth and income funds have a low-to-moderate stabilit along with a moderate potential for current income and growth. 9ou need to be able to assume some risk to be comfortable with this t pe of fund ob3ective. • That brings us to income funds. These funds will generall invest in a number of fi!edincome securities. This will provide ou with regular income. %etired investors could benefit from this t pe of fund because the would receive regular dividends. The fund manager will choose to bu debentures, compan fi!ed deposits etc. in order to provide ou with a stead income. 0ven though this is a stable option, it does not go without some risk. As interestrates go up or down, the prices of income fund shares, particularl bonds, will move in the opposite direction. This makes income funds interest rate sensitive. +ome conservative bond funds ma not even be able to maintain our investments' bu ing power due to inflation. • The most cautious investor should opt for the money mar0et mutual fund which aims at maintaining capital preservation. The word preservation alread indicates that gains will not be an option even though the interest rates given on mone market mutual funds could be higher than that of bank deposits. These funds will pose ver little risk but will also not protect our initial investments' bu ing power. #nflation will eat up the bu ing power over the ears when our mone is not keeping up with inflation rates. The are, however, highl li.uid so ou would alwa s be able to alter our investment strateg .

Closed:End Funds
A closed-end fund has a fi!ed number of shares outstanding and operates for a fi!ed duration (generall ranging from / to '5 ears). The fund would be open for subscription onl during a specified period and there is an even balance of bu ers and sellers, so someone would have to be selling in order for ou to be able to bu it. "losed-end funds are also listed on the stock e!change so it is traded 3ust like other stocks on an e!change or over the counter. Usuall the redemption is also specified which means that the terminate on specified dates when the investors can redeem their units.

+pen:End Funds
An open-end fund is one that is available for subscription all through the ear and is not listed on the stock e!changes. The ma3orit of mutual funds are open-end funds. #nvestors have the fle!ibilit to bu or sell an part of their investment at an time at a price linked to the fund's >et Asset Galue.

Gettin. 4tarted
.he ol a age% !Don't put all your eggs in one basket% !isn't )ust a clich/$ 0ut with so many investment options% where o you start? 4tart %ith your financial needs <eople have different investment needs depending on their financial goals, tolerance for risk and time framePwhen the need the mone the invested. =ur mutual funds are created with these needs in mind-we start with ou. &efore ou choose investments, think about our financial goals, risk tolerance and time frame. Then choose investments that match them. ,or more information about these topics, see the %elevant Cinks bo! to the right. 3he investment pyramid At ,ranklin Templeton we offer a wide variet of mutual fund options to meet the e.uall wide variet of investment needs of our investors. The investment p ramid below shows fund categories that are suitable for different time frames, with the longest time frames at the top and the shortest at the base of the p ramid. #nvestment e!perts recommend growth investments such as stocks and stock funds for long-term goals, where ou won t need to sell our investment for 5 ears or more. ,or short-term goals, where ou might sell our investment in ' ear or less, the recommend fi!ed income funds and other li.uid investments. =f course , their specific recommendations will depend on our comfort with risk. 2enefits of mutual funds +tocks, bonds, mone market instruments-as an investor, ou have a wide variet of choices, and it would be difficult to find one t pe of investment vehicle that effectivel takes advantage of all of to da investment options. That's wh ou ma want to consider diversif ing our portfolio over a variet of investment vehicles as mutual funds do for ou. #n addition to providing ou with the fle!ibilit to create an investment plan based on our individual goals, mutual funds offer man other advantages such as professional management, affordabilit and diversification.

2enefits of investin. in a mutual fund
As an investor, ou would like to get ma!imum returns on our investments, but ou ma not have the time to continuousl stud the stock market to keep track of them. 9ou need a lot of time and knowledge to decide what to bu or when to sell. A lot of people take a chance and speculate, some get luck , most don t. This is where mutual funds come in. Mutual funds offer ou the following advantages 7 1rofessional mana.ement! Qualified professionals manage our mone , but the are not alone. The have a research team that continuousl anal ses the performance and prospects of companies. The also select suitable investments to achieve the ob3ectives of the scheme. #t is a continuous

process that takes time and e!pertise which will add value to our investment. ,und managers are in a better position to manage our investments and get higher returns. )iversification! The clichR, Ndon't put all our eggs in one basketN reall applies to the concept of intelligent investing. ;iversification lowers our risk of loss b spreading our mone across various industries and geographic regions. #t is a rare occasion when all stocks decline at the same time and in the same proportion. +ector funds spread our investment across onl one industr so the are less diversified and therefore generall more volatile. More choice! Mutual funds offer a variet of schemes that will suit our needs over a lifetime. 8hen ou enter a new stage in our life, all ou need to do is sit down with our financial advisor who will help ou to rearrange our portfolio to suit our altered lifest le. (fforda,ility! As a small investor, ou ma find that it is not possible to bu shares of larger corporations. Mutual funds generall bu and sell securities in large volumes which allow investors to benefit from lower trading costs. The smallest investor can get started on mutual funds because of the minimal investment re.uirements. 9ou can invest with a minimum of %s.566 in a + stematic #nvestment <lan on a regular basis. 3a5 ,enefits! #nvestments held b investors for a period of '1 months or more .ualif for capital gains and will be ta!ed accordingl . These investments also get the benefit of inde!ation. 7i8uidity! 8ith open-end funds, ou can redeem all or part of our investment an time ou wish and receive the current value of the shares. ,unds are more li.uid than most investments in shares, deposits and bonds. Moreover, the process is standardised, making it .uick and efficient so that ou can get our cash in hand as soon as possible. /upee:cost avera.in.! 8ith rupee-cost averaging, ou invest a specific rupee amount at regular intervals regardless of the investment's unit price. As a result, our mone bu s more units when the price is low and fewer units when the price is high, which can mean a lower average cost per unit over time. %upee-cost averaging allows ou to discipline ourself b investing ever month or .uarter rather than making sporadic investments. 3ransparency! The performance of a mutual fund is reviewed b various publications and rating agencies, making it eas for investors to compare fund to another. As a unitholder, ou are provided with regular updates, for e!ample dail >AGs, as well as information on the fund's holdings and the fund manager's strateg . /e.ulations! All mutual funds are re.uired to register with +0&# (+ecurities 0!change &oard of #ndia). The are obliged to follow strict regulations designed to protect investors. All operations are also regularl monitored b the +0&#.

Investin. In E8uities
The following common investment approach runs through our diversified and sector e.uit funds.

2ottom:&p (pproach
8e follow a bottom-up approach to stock picking. =ur goal is to pick the best companies regardless of the sector. And once our fund managers are confident about a compan 's prospects, the full back their decision, investing heavil into that compan . That's wh t picall the top 5 to '6 companies in a portfolio account for a substantial portion of the fund's total assets'. Dowever, we do

keep a close watch on sector e!posure in diversified funds and individual stock e!posure in sector funds to ensure that the e!posure does not tilt too much towards one sector or stock.

Fundamental Investors
8e are fundamental investors. 8e rel on in-house research as the basis for our investment decision-making. =ur research is not restricted to looking at the financial numbers - it goes much be ond the published reports. =ur fund managers and research anal sts meet as man people in a compan as possible to get a much better overall perspective, and to discover the not-so-obvious pieces and trends that can turn into big opportunities over time.

Focus on 'uality
8e focus on '.ualit '. "ompanies where we have the slightest doubts on management or the .ualit of their financials and business models are ignored. =ur focus on .ualit and an aversion to e!cessivel speculative companies ma result in giving up short-term gains as happens when markets overheat, but this strateg gives our funds superior performance over market c cles.

7on.:3erm Investors
8e are patient investors and do not get perturbed b market volatilit . =nce we have identified 'value' in a stock and invested, we stick to it as long as there is no fundamental 'negative' changes even if the particular stock goes out-of-favour in the market. #n fact, we use volatilit as an opportunit to bu more as we believe that sooner or later, the market will recognise the inherent value and the stock will bounce back.

Methodical and )eli,erate
8e are also methodical and deliberate in our investment st le. 8e focus more on emerging themes, the big picture and the long term-ignoring rumours, 'hot tips' and 'whisper estimates'.

7oo0 for 3rends
8e believe spotting changes and trends earl can be rewarding. +o we tr to understand not 3ust how companies and industries are toda but also how the will be tomorrow. As a result, we make substantial investments to ensure that we have a grasp on significant changes.

We put &nitholder First
8e take our responsibilit as custodians of our investors' mone seriousl . 8hile we are proud of our industr -leading performance, we understand that 3ust resting on our laurels is not enough. Teamwork and a disciplined approach, rather than flambo ance, are the ke s to investing success.

What are e8uity assets
"orporations can raise mone in 1 wa s 7 b either borrowing (debt instruments) or issuing stocks (e.uit instruments) that represent ownership and a share of residual profits. The e.uit instruments are in turn t picall of 1 t pesPcommon stock and preferred stocks. "ommon stock represents an ownership position and provides voting rights. <referred stock is a Nh bridN instrument since it has features of both common stock and bonds.

<referred-stock holders get paid dividends which are stated in either percentage-of-par (the value at which the stock is issued) or rupee terms. #f the preferred stock had a %s.'66 par value, then a %s.2 preferred stock would mean that a %s.2 per share per annum in dividends will be paid out. This fi!ed dividend gives a bond-like characteristic to the preferred stock. Top

Ho% does an investor in e8uities ma0e money
#nvestors get returns on their investments in two wa sPdividends and capital gains. The former depends on earning levels of the particular compan and the decision of its management. The latter happens when the market price of the shares rises above the level at which the investment was made. +a , ou invested %s.'6,666 b bu ing '66 shares of O compan at a price of %s.56 and sold all the '66 shares later at a price of %s.'66, ou would have made a capital gain of %s.5666.

+ale value of +hares (%s.'66 ! '66)

%s.'6,666

Galue of original investment (%s.56 ! %s.5,666 '66) Capital .ain /s!$;=== Top

Why do stoc0 prices move up and do%n
The market price of a particular share is dependent on the suppl and demand for that particular compan . #f the pla ers in the market feel that a particular compan has a track record of good performance or has the potential to do well in the future, the demand for the shares of the compan increases and pla ers are willing to pa higher prices to bu the shares. And since the number of shares issued b the compan is constant at a given point in time, an increase in demand would onl increase the market price. ,luctuations in a stock's price occur partl because companies make or lose mone . &ut that is not the onl reason. There are man other factors not directl related to the compan or its sectorP #nterest rates, for instance. 8hen interest rates on deposits or bonds are high, stock prices generall go down. Mone suppl ma also affect stock prices. #f there is more mone floating around, some of it ma flow into stocks, pushing up their prices. =ther factors that cause price fluctuations are the time of ear and public sentiments. +ome stocks are seasonal, i.e. c clical stocksK the do well onl during certain parts of the ear and worse during other parts. <ublicit also affects stock prices. #f a newspaper stor reports that Oee Television has bought a stake in Moon Television, odds are that the price of Oee's stock will rise if the market thinks its a good decision. =therwise it will fall. The price of Moon Television stocks ma also go up because investors ma feel that it is now in better hands. Thus, man factors affect the price of a stock. Top

What tools are used for stoc0 analysis and forecastin.
The behaviour of the price movement of a stock is said to predict its future movement. =ne such approach is called technical analysis and is based on the historical movements of the individual stocks as well as the indices. Their belief is that b plotting the price movements over time, the can discern certain patterns which will help them to predict the future price movements of the stocks. =n the other hand we have !#un amental analysis!, where the forecasting is done on the basis of economic, industr and compan data. Technical anal sis is used more as a supplement to fundamental anal sis rather than in isolation. Top

What are e8uity mar0ets
These are markets for financial assets that have long or indefinite maturit i.e., stocks. T picall such markets have two segmentsPprimar and secondar markets. >ew issues are floated in the primar market and outstanding issues are traded in the secondar market (i.e., the various stock e!changes). There are / wa s a compan can raise capital in the primar market7 • <ublic #ssue7 +ale of fresh securities to the public. • %ights #ssue7 This is a method of raising capital e!isting shareholders b offering additional securities to them on a pre-emptive basis. • <rivate <lacement7 #ssuers make direct sales to investor groups (i.e., there is no public issue.) Top

What are ,onus issues and stoc0 splits What is their impact
2onus issues. #nstead of cash dividends, investors receive dividends in the form of a stock. The investor receives more shares when a bonus issue is announced. ,or e!ample, when there is a bonus issue in the ratio of '7', the number of shares owned b an investor would double in number. Dowever, the market price of the share would decrease as well. At times the decrease might not be proportionate to the e!tent of the bonus because market pla ers might push the price up if the view the bonus issue as a positive development. +ome companies might announce bonus issues to bring the market price of their share to a more popular range and also promote active trading b increasing the number of outstanding shares. 4toc0 splits. 8henever a stock split occurs, the compan ends up with more outstanding shares which will not onl have a lower market price but also lower par value. +tock splits are prompted when the compan thinks its stock price has risen to a level that is out of the Npopular trading rangeN. ,or e!ample, O corporation has ' million outstanding shares. The par value is %s.'6 and the current market price is %s.'666 per share. #f the management feels this price is resulting in a decrease in trading volumes, the can declare a '-for-' split. & doing this, there will be 1 million outstanding shares with a par value of %s.5 and a theoretical market price of %s.566 per share. +ometimes when the market price is ver low, the compan might announce a Nreverse splitN which has the opposite

effect of the normal stock split. #n the case of splits, there is no change in the reserves and surplus of the compan unlike the bonus issue. Top

What are ()/s and G)/s
American ;epositar %eceipt (A;%). A securit issued b a compan outside the U.+. which ph sicall remains in the countr of issue, usuall in the custod of a bank, but is traded on U.+. stock e!changes. A;%s are issued to offer investment routes that avoid the e!pensive and cumbersome laws that appl sometimes to non-citi4ens bu ing shares on local e!changes. The first A;% was issued in '(1*. A;%s are listed on the >9+0, AM0O, or >A+;AQ. $lobal ;epositor %eceipt ($;%). +imilar to the A;% described above, e!cept the $;% is usuall listed on e!changes outside the U.+., such as Cu!embourg or Condon. ;ividends are usuall paid in U.+. dollars. The first $;% was issued in '((6. The are shares without voting rights. The ratio of one depositor receipt to the number of shares is fi!ed per scrip but the .uoted prices ma not have strict correlation with the ratio. An foreigner ma purchase these securities whereas shares in #ndia can be purchased on #ndian +tock 0!changes onl b >%#s or <#=s or ,##s. The purchaser has a theoretical right to e!change the receipt without voting rights for the shares with voting rights (%&# permission re.uired), but in practice no one appears to be interested in e!ercising this right. Top

What are derivatives
A derivative is an instrument whose value is derived from the value of one or more underl ing securities, which can be commodities, precious metals, currenc , bonds, stocks, stock-indices, etc. The most common e!amples of derivative instruments are forwards, futures, options and swaps. Top

What are inde5 futures
#n a forward contract, two parties irrevocabl agree to settle a trade at a future date, for a stated price and .uantit . >o mone changes hands at the time the trade is agreed upon. "urrentl in #ndia, inde! futures are allowed. These are nothing but future contracts with the underl ing securit being the cash market inde!. #nde! futures of different maturities would trade simultaneousl on the e!changes. ,or instance, &+0 ma introduce three contracts on &+0 sensitive inde! for ', 1 and / months maturities. These contracts of different maturities ma be called near month (' month), middle month (1 months) and far month (/ months) contracts. The month in which a contract will e!pire is called the contract month. ,or e!ample, the contract month of N>ov. 166J contractN will be >ovember, 166J. All these contracts will e!pire on a specific da of the month (e!piration da for the contract). This would be defined in the contract specification before introduction of trading.

Top

What are options
=ptions give a bu er the right to bu a scrip and the seller the right to sell a scrip at a predetermined price on a particular date. Unlike futures contract, there is no obligation onl a NrightN There are 1 t pes of options7 Call +ption. Dere, the bu er decides to bu a scrip at a particular price on a particular date. ,or e.g. the bu er takes a call =ption on See T%s.'56 after / months. ,or this, he pa s a premium which is determined b the demand-suppl e.uation. ,or e.g., if a particular stock is in favour with investors, there would be more people willing to bu the stock at a future date, resulting in a higher premium. #n this e!ample, let us assume the premium is %s.'6. At the end of / months, the bu er has two choices 7 • =ne, if the price of See goes up to sa %s.'*5, he decides to NcallN his option and stands to gain %s.15. De 3ust encashes his gain. • Two, if the stock price goes down to sa %s.'16, he does not NcallN his option and gets out. #n the process, he onl loses %s.'6 (the premium paid). The option writer pockets the premium. 1ut +ption. This is used to manage downside risk. A seller toda agrees to sell T#+"= T%s.'/6 after / months and pa s the re.uired premium. #f the price of T#+"= is in e!cess of %s.'/6, he decides not to sell and loses the premium (which is the profit of the =ption 8riter). Dowever, if the price is below %s.'/6, he NcallsN his right and cushions his loss. The option bu er has the right to e!ercise his choice of bu ing or selling the call and put options respectivel . The option writer or seller has to meet his commitment based on the choice e!ercised b the option bu er. =ptions have finite maturities. The e!pir date of the option is the last da (which is predetermined) when the owner can e!ercise his option. Top

What are the main differences ,et%een options and futures
• 8ith futures, both parties are obligated to perform. 8ith options onl the seller (writer) is obligated to perform. • 8ith options, the bu er pa s the seller (writer) a premium. 8ith futures, no premium is paid b either part . • 8ith futures, the holder of the contract is e!posed to the entire spectrum of downside risk and has the potential for all the upside return. 8ith options, the bu er limits the downside risk to the option premium but retains the upside potential. • The parties to a futures contract must perform at the settlement date. The are not obligated to perform before that date. The bu er of an options contract can e!ercise an time prior to the e!piration date.

Investin. in de,t
=ur approach to fi!ed-income investing emphasises a single-minded focus on delivering stead returns while carefull controlling risk factors. • 8e believe that safet is of paramount importance and do not hesitate to give up short term speculative gains. • 8e manage default risk through a careful selection process including anal sis of the rating, the integrit and efficienc of management, the general finances of the compan , and an indepth stud of the specific borrowing program. (8h is the mone needed: #s the e!pansion necessar : 8ill it generate sufficient revenues to interest and principal: • 8e manage interest-rate risk b maintaining the portfolio maturit of the fund at intermediate levels and do not believe in timing the market interest rates. • 8e maintain a prudent balance between government securities and corporate bonds, and ensure ade.uate diversification through strict limits on single compan e!posures. • 8e take advantage of our strong and proprietar e.uit research, to help identif the strongest issuers of debt and discover undervalued sectors. • 8e have stringent li.uidit norms to ensure that the portfolio can be li.uidated at an time to meet redemptions.

What are Money Mar0ets and money mar0et instruments
Mone markets allow banks to manage their li.uidit as well as provide the central bank means to conduct monetar polic . Mone markets are markets for debt instruments with a maturit up to one ear. The most active part of the mone market is the call mone market (i.e. market for overnight and term mone between banks and institutions) and the market for repo transactions. The former is in the form of loans and the latter are sale and bu back agreements - both are obviousl not traded. The main traded instruments are commercial papers ("<s), certificates of deposit (";s) and treasur bills (T-&ills). Commercial 1aper A "ommercial <aper is a short term unsecured promissor note issued b the raiser of debt to the investor. #n #ndia corporates, primar dealers (<;), satellite dealers (+;) and financial institutions (,#s) can issue these notes. #t is generall companies with ver good ratings which are active in the "< market, though %&# permits a minimum credit rating of "risil-<1. The tenure of "<s can be an thing between '5 da s to one ear, though the most popular duration is (6 da s. "ompanies use "<s to save interest costs. Certificates of )eposit These are issued b banks in denominations of %s.5 lakhs and have maturit ranging from /6 da s to / ears. &anks are allowed to issue ";s with a maturit of less than one ear while financial institutions are allowed to issue ";s with a maturit of at least one ear. 3reasury 2ills Treasur &ills are instruments issued b %&# at a discount to the face value and form an integral part of the mone market. #n #ndia treasur bills are issued in four different maturitiesP'J da s, (6

da s, ')1 da s and /2J da s. Apart from the above mone market instruments, certain other short-term instruments are also in vogue with investors. These include short-term corporate debentures, bills of e!change and promissor notes. Top

What are de,t mar0et instruments
;ebt instruments t picall have maturities of more than one ear. The main t pes are government securities called $-secs or $ilts. Cike T-bills, $ilts are issued b %&# on behalf of the $overnment. These instruments form a part of the borrowing program approved b <arliament in the ,inance &ill each ear (Union &udget). T picall , the have a maturit ranging from ' ear to 16 ears. Cike T-&ills, $ilts are issued through auctions but %&# can sellEbu securities in its =pen Market =perations (=M=). =M=s cover repos as well and are used b %&# to manipulate short-term li.uidit and thereb the interest rates to desired levels7 =ther t pes of government securities include7 • #nflation-linked bonds • Sero-coupon bonds • +tate government securities (state loans)

What is the difference ,et%een ,onds and de,entures
A debenture is a debt securit issued b a corporation that is not secured b specific assets, but rather b the general credit of the corporation. +tated assets secure a corporate bond, unlike a debenture, but in #ndia these are used interchangeabl . &onds are l=Us between a borrower and a lender. The borrowers include public financial institutions and corporations. The lender is the bond fund, or an investor when an individual bu s a bond. #n return for the loan, the issuer of the bond agrees to pa a specified rate of interest over a specified period of time. T picall bonds are issued b <+Us, public financial institutions and corporates. Another distinction is +C% (+tatutor li.uidit ratio) and non-+C% bonds. +C% bonds are those bonds which are approved securities b %&# which fall under the +C% limits of banks. +tatutor li.uidit ratio (+C%) 7 #t is the percentage of its total deposits a bank has to keep in approved securities Top

What affects ,ond prices
&ond prices are primaril affected b 1 factors7 • 3he current interest rate! The price of a bond, and therefore the value of our investment

fluctuates with changes in interest rates. ,or e!ample, ou bu a bond for %s.',666 that pa s 5F interest. #f ou hold the bond until maturit , ou get our %s.',666 back plus the 5F interest pa ments ou've received from the issuer. Dowever, between the time ou bought the bond and the date it matures, the bond won't alwa s be worth %s.',666. #f interest rates rise, our bond is worth less than %s.' 666. #f interest rates fall, our bond is worth more than %s.',666. • 3he credit 8uality of the issuer! #f the rating agencies change the credit rating of the issuer while ou hold the bond, the value of our bond will be affected. #f the credit rating declines, the value of our bond will also decline. Dowever, if ou hold the bond to maturit and the issuer doesn't default, ou will get our entire %s.',666 back. 8hen the bonds are initiall priced, the maturit also helps determine the price. Conger maturities tend to pa higher interest rates than shorter maturities. That's because our investment is e!posed to interest-rate risk for a longer period of time. Top

What affects interest rates
The factors affecting interest rates are largel macro-economic in nature7 • )emandDsupply of money. 8hen economic growth is high, demand for mone increases, pushing the interest rates up and vice versa. • Government ,orro%in. and fiscal deficit. +ince the government is the biggest borrower in the debt market, the level of borrowing also determines the interest rates. =n the other hand, suppl of mone is controlled b the central bank b either printing more notes or through its =pen Market =perations (=M=). • /2I. %&# can change the ke rates ("%%, +C% and bank rates) depending on the state of the econom or to combat inflation. %&# fi!es the bank rate which forms the basis of the structure of interest rates and the "ash %eserve %atio ("%%) and +tatutor Ci.uidit %atio (+C%), which determine the availabilit of credit @ the level of mone suppl in the econom . "-- is the percentage of its total deposits a bank has to keep with %&# in cash or near cash assets and +C% is the percentage of its total deposits a bank has to keep in approved securities. The purpose of "%% and +C% is to keep a bank li.uid at an point of time. 8hen banks have to keep low "%% or +C%, it increases the mone available for credit in the s stem. This eases the pressure on interest rates and these move down. T picall a higher inflation rate means higher interest rates. The interest rates prevailing in an econom at an point of time are nominal interest rates, i.e., real interest rates plus a premium for e!pected inflation. ;ue to inflation, there is a decrease in purchasing power of ever rupee earnedK therefore the interest rates must include a premium for e!pected inflation. Top

What is the yield curve
The relationship between time and ield on securities is called the ield curve. The relationship represents the time value of mone -showing that people demand a positive rate of return on the mone the are willing to part-with toda for a pa back into the future. A ield curve can be positive, neutral or flat. • A positive ield curve, which is most natural, is when the ield at the longer end is higher than that at the shorter end of the time a!is. This is because people demand higher returns for longer term investments. • A neutral ield curve has a 4ero slope, i.e. is flat across time. This occurs when people are willing to accept more or less the same returns across maturities. • The negative ield curve (also called an inverted ield curve) occurs when the long-term ield is lower than the short-term ield. #t is not often that this happens and has important economic ramifications when it does. #t generall represents an impending downturn in the econom , where people are anticipating lower interest rates in the future. Top

What is yield to maturity
9ield to maturit is the annualised return an investor would get b holding a fi!ed-income instrument until maturit . #t is the composite rate of return of all pa outs and coupon.. Top

What is the avera.e maturity period
#t is a weighted average of the maturities of all the debt instruments in a portfolio. Top

What are 7I2+/ 9 MI2+/
• 7I2+/! +tands for the Condon #nter &ank =ffered %ate. This is a ver popular benchmark and is issued for U+ ;ollar, $& <ound, 0uro, +wiss ,ranc, "anadian ;ollar and the Mapanese 9en. The &ritish &ankers Association (&&A) asks '2 banks to contribute the C#&=% for each maturit and for each currenc . The &&A weeds out the best four and the worst J, calculates the average of the remaining ) and the value is published as C#&=%. • MI2+/! +tands for Mumbai #nter &ank =ffered %ate and is closel modeled on the C#&=%. "urrentl there are 1 calculating agents for the benchmark-%euters and the >ational +tock 0!change (>+0). The >+0 M#&=% benchmark is the more popular of the two and is based on rates polled b >+0 from a representative panel of /' banksEinstitutionsEprimar dealers. Top

What is a credit ratin.
%ating organisations evaluate the credit worthiness of an issuer with respect to debt instruments or its general abilit to pa back debt over the specified period of time. The rating is given as an alphanumeric code that represents a graded structure or creditworthiness. T picall the highest credit rating is AAA and the lowest is ; (for default). 8ithin the same alphabet class, the rating agenc might have different grades like A, AA, and AAA and within the same grade AAU, AAwhere the NUN denotes better than AA and N-N indicates the opposite. ,or short-term instruments of less than one ear, the rating s mbol would be t picall N<N (varies depending on the rating agenc ). #n #ndia, we have J rating agencies7 • • • • "%#+#C #"%A "A%0 ,itch

What is the K4+K in a ratin.
+ometimes, debt instruments are so structured that in case the issuer is unable to meet repa ment obligations, another entit steps in to fulfill these obligations. A bond backed b the guarantee of the $overnment of #ndia ma be rated AAA (+=) with the += standing for structured obligation. Top

Ho% is a currency valued
The floating e!change rate s stem is a confluence of various demand and suppl factors prevalent in an econom such as7 • Current account ,alance! The trade balance is the difference between the value of e!ports and imports. #f #ndia is e!porting more than it is importing, it would have a positive trade balance with U+A, leading to a higher demand for the home currenc . As a result, the demand will translate into appreciation of the currenc and vice versa. • Inflation rate! Theoreticall , the rate of change in e!change rate is e.ual to the difference in inflation rates prevailing in the 1 countries. +o, whenever, inflation in one countr increases relative to the other countr , its currenc falls. • Interest rates! The funds will flow to that econom where the interest rates are higher resulting in more demand for that currenc . • 4peculation! Another important factor is the speculative and arbitrage activities of big pla ers in the market which determines the direction of a currenc . #n the event of global turmoil, investors flock towards perceived safe haven currencies like the U+ dollar resulting in a demand for that currenc . Top

What are the implications of currency fluctuations on de,t mar0ets
;epreciation of a currenc affects an econom in 1 wa s, which are in a wa counter to each other. =n the one hand, it makes the e!ports of a countr more competitive, thereb leading to an increase in e!ports. =n the other hand, it decreases the value of a currenc relative to other currencies, and hence imports like oil become dearer resulting in higher deficits. Top

What is /eal Effective E5chan.e /ate >/EE/? and currency over valuation
8hen %&# sa s that the rupee is overvalued, the mean that it has been appreciating against other ma3or currencies as the weaken against the dollar, which might impact the competitiveness of #ndia's e!ports. %00% is the change in the e!ternal value of the currenc in relation to its main trading partners. #t is rupee's value on a trade-weighted basis. #t takes into account the rupee's value not onl in terms of ma3or currencies such as the U+ dollar, euro, en and pound sterling. The e!change rates versus other ma3or currencies are average weighted b the value of #ndia's trade with the respective countries and are then converted into a single inde! using a base period which is called the nominal effective e!change rate. &ut the relative competitiveness of #ndian goods increases even when the nominal effective e!change rate remains unchanged when the rate of price increases of the trading partner surpasses that of #ndia's. Taking this into account, prices are ad3usted for the nominal effective e!change rate and this rate is called the Nreal effective e!change rate.N

What are money mar0et funds
Mone funds provide investors with current income and are managed to maintain a stable share price. &ecause of their stabilit , mone funds are often used for cash reserves or mone that might be needed right awa . Mone funds t picall invest in short-term, high-.ualit , fi!ed-income securities, such as Treasur bills, short-term bank certificates of deposit (";s), banker's acceptances and commercial paper issued b corporations. The average maturit of a mone fund's portfolio must be (6 da s or less to help protect against interest rate risk. The income mone funds provide is generall determined b short-term interest rates.

Ho% to select a fund
&efore looking at the mutual funds available to ou, it ma be best to decide the mi! of stock, bond, and mone market funds ou prefer. +ome e!perts believe this is the most important decision in investing. Dere are some general points to keep in mind when deciding what our investment strateg should be. )iversify! #t is a good idea to spread our investment among mutual funds that invest in different t pes of securities. +tocks, bonds, and mone market securities work differentl . 0ach offers different advantages and disadvantages. 9ou ma also want to diversif within the same class of securities. ;iversif ing can keep ou from putting all our eggs in one basket and therefore, ma increase our returns over a long period of time. Consider the effects of inflation! +ince the mone ou set aside toda ma be intended to be used several ears down the road, ou need to look at inflation. #nflation measures the increase of general prices over time. "onservative investments like mone market funds often ma be popular because the are managed to keep a stead value. &ut their return after accounting for the inflation rate can be ver low, perhaps even negative. ,or e!ample, a JF inflation rate over a period of man ears could erase a mone market fund's /F ield over the same period of time. +o even though such an investment ma give some safet of principal, it ma not be able to grow enough in value over the ears or even keep up with the rate of inflation. 1atience is a virtue! #t's no secretPthe prices of common stocks can change .uite a bit from da to da . Therefore, the part of our account invested in stock funds would likel fluctuate in value much the same wa . #f ou don't need our mone right awa (for at least 5 ears), ou probabl don't need to panic if the stock market declines or ou find that our .uarterl statement shows the value of our investment has fallen. #n the past, the stock market has regained lost value over time. Although ou are not assured it will do so in the future, tr to be patient and allow our stock funds time to recover. %emember the sa ing, Nbu low, sell high.N +witching out of a stock mutual fund when prices are low is usuall not the wa to make the most of our investment. =f course, if a fund continues to under-perform over time as well as our other fund choices, ou ma want to consider changing funds. 7oo0 at your a.e! 9ounger investors ma be more at ease with stock funds, because the have time to wait out the short-term ups and downs of stock prices. & investing in a stock fund, the might be able to receive high returns over the long-term. =n the other hand, people who are closer to retirement ma be more interested in protecting their mone from possible drops in prices, since the 'll need to use it soon. #n this case, it ma be wise to place a greater percentage of mone in bond andE or mone market funds, which ma not have such large changes in value. Ho% can you determine an investment mi5 appropriate for your a.e =ne wa is to subtract

our age from '66. The answer ou come up with ma be a good number to start with in deciding what portion of our total investments to put into stock mutual funds. /is0! 8hen ou are choosing funds, be sure to consider how much risk ou are comfortable with and how close ou are to retirement. #f retirement is around the corner, ou ma want a portfolio with ver little risk. =n the other hand, if ou are ounger, and have the time to weather the market's ups and downs, ou ma want to choose a more aggressive investment strateg .

Important documents to read
9our primar source of data concerning the mutual fund will be the prospectus. #t is a legal document illustrating the rules and regulations that a mutual fund must follow and contains information on the fund's goal and strateg , risks, performance, financial highlights fees and e!penses, and a wide variet of information that ou should know before investing.

What are the fund6 s .oal and strate.y
$oals var from fund to fund, and the 're important to understand so ou can decide if the match our personal ob3ectives. +ome funds generate income for their shareholders, while others concentrate on capital appreciation. +ome focus on a combination of the two, and others are oriented towards ta! benefits or preservation of capital. ,unds also implement differing strategies to help accomplish their goals. The $oals and +trategies section of a prospectus details the t pes of securities in which fund managers can invest and how managers anal 4e them ,unds can be limited to domestic investments, focus on a certain countr or region, or invest an where in the world. #n addition, some funds invest onl in specific industries or in particular t pes of companies. =thers invest in large-, medium- or small-capitali4ation companies.

What are the ris0s
As with all investments, each fund, whether domestic, international or sector specific, carries different risks. The Main %isks section of a prospectus e!plains which ones are associated with the securities in that particular fund, which ma help ou decide what level of risk ou're comfortable having in our investment portfolio.

Ho% has a fund performed
8hile historical performance doesn't predict how a fund will do in the future, ou ma be interested in how it performed in past market environments. ;epending on the age of the fund, a prospectus will provide its '- 5- and '6- ear average annual returns, including a comparison to its benchmark inde! over the same period.

What are financial hi.hli.hts
#n this section a prospectus lists 5 ears of annual financial information , if a fund is less than 5 ears old, provides data since inception. #nformation includes net asset values at the beginning and

end of each ear, and details the gains or losses, dividends and distributions that account for an changes. ,inancial Dighlights also show fund asset information such as net assets ratios to average net assets for e!penses and net investment income, and portfolio turnover rates.

What are the e5penses of a fund
=perating a fund entails some costs ou should be aware of. The ,ees and 0!penses section breaks out these costs and who pa s them. #n addition, an e!ample of fund e!penses is provided to help ou compare the cost of investing in one fund versus another.

Who6s mana.in. the fund
#n the Management section, a prospectus gives a brief biograph of a fund' s managers, including how long the 've worked on the fund and their overall industr e!perience. To view or print a prospectus for an of the ,ranklin Templeton mutual funds, please visit the =ffer ;ocuments area of our website.

Why should I invest in mutual funds
These da s between work, famil , and friends, most of us do not have the time to make or monitor personal investment decisions on a regular basis. Mutual funds have .ualified professionals who do all this for ou. This is the reason wh , the world over, the have become the most popular means of investing. Mutual funds minimise risk b creating a diversified portfolio while providing the necessar li.uidit . Additionall , ou benefit from the convenience of not having to bother with too much paperwork or repeat transactions. #t is our belief that investors differ in their investment needs based on their personal financial goals. #t is recommended that ou should, at the ver beginning, identif our own financial goals, be it planning for a comfortable retired life or children's education. After defining the financial goals, ou need to plan for them in an organised manner and look at investments that help achieve these goals. Mutual funds var in their investment ob3ectives, thus providing ou with the fle!ibilit to create an investment plan based on individual financial goals. #nvestment e!perts recommend growth investments such as e.uit funds and stocks as a good choice for funding needs that are five ears or more awa , income funds to meet medium-term needs and li.uid funds for short-term re.uirements. Top

Why should I invest in Fran0lin 3empleton Mutual Funds
,ranklin Templeton is one of the largest financial services groups in the world, based in +an Mateo, "alifornia, U+A. ,ranklin Templeton has over 56 ears of e!perience in investment management and with offices in over 1) countries, it provides investment management and advisor services to a client base of over '6 million shareholder accounts.

#t is our belief that investors differ in their investment needs based on their personal financial goals. #t is recommended that ou should, at the ver beginning, identif our own financial goals, be it planning for a comfortable retired life or children's education. After defining the financial goals, ou need to plan for them in an organised manner and look at investments that help achieve these goals. ,ranklin Templeton has a wide range of mutual funds that can help ou towards fulfilling our investment ob3ectives. Top

Is there a .uaranteed return on the mutual funds
>o, we do not give an guarantees on the returns on an of our funds. +ee Assured return schemes for additional information. Top

(re mutual funds insured
>o. Mutual fund units are not insured b the government, or an government agenc , and do not have an other t pe of insurance, unlike certain t pes of checking or savings accounts and certificates of deposit. There is no guarantee that when ou sell our shares, ou will receive what ou paid for them. Dowever, because mutual fund investments are more risk than insured investments, the generall offer potential for higher long-term returns. Top

What should I loo0 for in an investment (re the investments I have no% the ri.ht ones for me
#nvestors differ in their investment needs based on their personal financial goals. #t is recommended that ou should, at the ver beginning, identif our own financial goals, be it planning for a comfortable retired life or children's education. After defining the financial goals, ou need to plan for them in an organised manner and look at investments that help achieve these goals. To build a successful investment strateg , ou should carefull structure our investment plan so that ou can achieve our goals without taking more risk than ou can afford or are comfortable with. 9ou also need to consider how much time ou have to reach our different goals and our personal circumstances. #nvestment e!perts recommend that growth investments, such as e.uit funds and stocks, are a good choice for funding needs that are 5 ears or more awa , income funds to meet medium-term needs, and li.uid funds for short-term re.uirements. +ee $etting started for additional information. Top

Ho% do I enrol in the 4ystematic Investment 1lan
9ou can participate in the + stematic #nvestment <lan (+#<) of ,ranklin Templeton ,unds b

investing a minimum of %s.566E- or more either on a monthl or .uarterl basis b providing us with post-dated che.ues (dated the 'st or the *th of each month) for at least one ear. The che.ues ma be made pa able an where in #ndia. 9ou ma also give che.ues in 1 lots of 2 che.ues each. 8e would present the che.ues at the dates mentioned and add units to ou account (sub3ect to the realisation of che.ues) at the prices prevailing either on the 'st or the *th as ma be applicable. 9ou would receive a statement of account for each such transaction. 0!isting investors of ,ranklin Templeton ,unds keen to start with +#< should 3ust fill in the appropriate bo! on their Account +tatement and mail it along with the post-dated che.ues to their #nvestor +ervice "entre. 9ou will receive a letter confirming that our name has been included in the +#<. Top

Ho% do I enrol in the 4ystematic Withdra%al 1lan
,ranklin Templeton offers ou a facilit to plan for our retirement and other regular monthl income needs through the + stematic 8ithdrawal <lan (+8<). ;epending on our needs for monthl or .uarterl income, ou can then choose to withdraw wither a fi!ed sum per month or .uarter, or the capital appreciation in the >et Asset Galue of our investment. Top

When is the ri.ht time to invest in e8uities
>o matter how hard we tr , it is rarel possible to predict the short-term movements in the e.uit market and therefore it is difficult to determine the right time to invest. Dowever, N%upee-"ost AveragingN could help ou even out our investment costs and hence use the short-term market fluctuations to our advantage. Top

What is the procedure for B/Is %ho %ish to invest
"lick here for information concerning >%#s. Top

What is the procedure for redeemin. fund units
All ,ranklin Templeton funds are open-ended, which means that ou can get our mone back an time ou wish. All ou need to do is fill in the detachable redemption re.uest on the account statement and deposit it with an of our #nvestor +ervice "enters. The redemption price per unit is the net asset value per unit on the relevant da , without an discount. 8e provide ou with .uick service. 9our redemption che.ues will normall be mailed within J)

hours of receiving our re.uest at an of our #nvestor +ervice "entres. Top

What are ta5 implications to resident unitholders
(As per laws currentl in force) (? 3a5 Implications 3o &nitholders The following summar outlines the ke ta! implications applicable to unit holders based on the relevant provisions under the #ncome-ta! Act, '(2' ('Act'), the 8ealth-ta! Act, '(5* and the ,inance Act, 1662 (collectivel called 'the relevant provisions'). .he #ollowing in#ormation is provi e #or general in#ormation only$ However% in view o# the in ivi ual nature o# the implications% each investor is a vise to consult with his or her own ta' 1 visors21uthorise ealers with respect to the speci#ic ta' an other implications arising out o# his or her participation in the schemes$ &nder 3he Income:3a5 (ct; 1961 The following summar outlines the ke ta! implications applicable to unit holders based on the relevant provisions under the Act, taking into account the amendments made b the ,inance Act, 1662. The ta! implications of the following income received b the investors are discussed below7 • #ncome on units (other than saleEredemption)K • #ncome on saleEredemption of the units 3a5a,ility of income on units >other than sale?! The income received b an investor (other than income on saleEredemption) in respect of units of a mutual fund specified under +ection '6(1/;) of the Act, is e!empt under the Act. As the income is e!empt from ta!, no ta! is withheld b the Mutual ,und upon distribution of such income. 3a5a,ility of income on saleDredemption of units! The ta!abilit of the income on saleEredemption of units and the rates at which such income is ta!ed is discussed below7 If the units are held as stoc0:in:trade! #f the units are held b an investor as stock-in-trade of a business, the said income will be ta!ed at the rates at which the normal income of that investor is ta!ed. The rates applicable to different investors are discussed at length in >ote '. =n sale of the units of an e.uit oriented fund (as defined below) on a recognised stock e!change or to the Mutual ,und, the investor will also be charged with securities transaction ta! ('+TT') as per the rates specified in para '5.5, provided the transaction is also considered as a ta!able securities transaction. #n other cases, +TT is not levied. ,urther, the investor is not allowed an deduction of +TT paid for the purposes of computing his business income. Dowever, a rebate under section ))0 of the Act is available in respect of +TT paid. The rebate is available in form of a deduction of the +TT paid from the ta! pa able on the income from the ta!able securities transaction. The ta! pa able on the income from ta!able securities transaction is computed b appl ing the average rate of income-ta! on the total income. The rebate in respect of +TT paid cannot, however, e!ceed the ta! pa able. Also, this rebate can be claimed b an investor onl if appropriate evidences are furnished in ,orm >o. '6;& along with the %eturn of #ncome. If the units are held as investments@

#f the units are held as investments, the ta! rates applicable will depend on whether the gain on sale of units is classified as a short term capital gain or a long term capital gain. As per section 1(J1A) of the Act, units of the scheme held as a capital asset, for a period of more than '1 months immediatel preceding the date of transfer, will be treated as long-term capital assets for the computation of capital gainsK in all other cases, the would be treated as short-term capital assets. The ta! rates applicable on short term or long term capital gains arising on transfer of units of a scheme, being an e3uity oriente #un are stated in the following table7 Bature of income 3a5 rate L +hort-term capital gains on sale either to the "apital gains ta! pa able at '6 percentV Aapplicable to Mutual ,und or on a recognised stock all investors including ,oreign #nstitutional #nvestors e!change (,##)B Cong- term capital gains on sale either to the Mutual ,und or on a recognised stock >o capital gains ta! pa able b an investor. e!change V plus surcharge and education cess as ma be applicable (refer >ote 1). #n case of non-resident investors, the above rates would be sub3ect to applicable treat relief. W Additionall , +TT would be pa able at the rates specified in para +ecurities Transaction Ta!. N0.uit oriented fundN is defined to mean a fund • 8here the investible funds are invested b wa of e.uit shares in domestic companies to the e!tent of more than si!t five percent of the total proceeds of such fundK and • 8hich has been set up under a scheme of a Mutual ,und specified in section '6 (1/;) of the Act. The ta! rates applicable on short term or long term capital gain arising on transfer of units of a scheme% not being an e3uity oriente #un as discussed above are stated in the following table7 Bature of 3a5 rate income +hort-term #n case of ,##s, /6 percentV ,or others, ta!ed at normal ta! rates (as e!plained in capital gains >ote '). Cong-term #n case of ,##'s, '6 percentV (without inde!ation) #n case of others, 16 percentV capital gains (with inde!ation) or, '6 percentV (without inde!ation), whichever less. V plus surcharge and education cess as ma be applicable (refer >ote 1). #n case of non-resident investors, the above rates would be sub3ect to applicable treat relief. X no inde!ation benefit for non-resident investors if investment made is in foreign currenc . The withholding ta! implication (i.e. T;+) in respect of the capital gains e!plained above is discussed below • /esident Investors@ >o ta! is re.uired to be deducted at source from capital gains arising to resident investors at the time of repurchase or redemption of the units. • Bon:/esident Investors@ As per the provisions of Act A+ection '(5B, ta! is re.uired to be deducted at source from the sale proceeds or redemption proceeds paid to non-resident investors. This withholding is in addition to the +TT pa able, if an , b the investor. The rates are7 1! Forei.n Institutional Investors@ >o ta! has to be deducted on redemptionEsale proceeds A+ection '(2;(1)B. "! Bon:/esident Indian >6B/I6? D 1erson of Indian ori.in >61I+6?@ Ta! on short term capital gains arising out of redemption of units is deducted at the rate of '6F (plus surcharge) for an e.uit oriented fund and at /6F (plus surcharge) for a non e.uit oriented fund. Ta!, on long term capital gains is deducted at the rate of 16F (plus surcharge).

Dowever, in case of long term capital gains on redemption of units of an e.uit oriented fund, no ta! would be deducted. ,or administrative purpose the ,und will deduct '6F surcharge. 3! Bon:/esident Corporates@ Ta! is deducted at the rate of J6 percent on short term capital gains and 16 percent on long-term capital gains. The said rates at which capital gains are charged to ta! would be further increased b the applicable surcharge and education cess stated in >ote 1 below. >o ta! would, however, be deducted in case of long term capital gains on redemption of units of an e.uit oriented fund. All the above non-resident investors ma also claim the ta! treat benefits available, if an . ,or details of applicabilit and eligibilit of such benefits, the investors are re.uested to consult their ta! advisors. 1rovisions re.ardin. )ividend income and 2onus! According to the provisions of +ection (J(*) of the Act, losses arising from the saleEredemption of units purchased within / months prior to the record date (for entitlement of dividends) and sold within ( months after such date, is disallowed to the e!tent of income on such units (other than on saleEredemption) claimed as ta! e!empt. According to the provisions of +ection (J()) of the Act, if an investor purchases units within / months before the record date (for entitlement of bonus) and sellsEredeems the units within ( months after that date, and b virtue of holding the original units, he becomes entitled to bonus units, then the loss arising on transfer of original units shall be ignored for the purpose of computing his income chargeable to ta!. #n fact, the loss so ignored will be treated as cost of ac.uisition of such bonus units. Bote 1! The individuals (including >%#sE<#=s) and DU,s, are proposed to be ta!ed in respect of their total income at the following rates7 4la, Total income upto %s.',66,666X More than %s.'66,666X but upto %s.'56,666 More than %s.'56,666 but upto %s.156,666 >il '6 percent of e!cess over %s.'66,666 3a5 rate M

16 percent of e!cess over %s. '56,666 U %s.5,666W 0!ceeding %s.156,666 /6 percent of e!cess over %s 156,666 U %s.15,666W. V plus surcharge and education cess as ma be applicable (refer >ote 1). X for females below si!t five ears of age, %s. '66,666 has to be read as %s. '/5,666 and for senior citi4ens above si!t -five ears of age, %s. '66,666 has to be read as %s. ')5,666. Wfor females below si!t -five ears of age, %s. 5,666 has to be read as %s. ',566 and %s 15,666 has to be read as %s 1',566. +imilarl for senior citi4ens above si!t -five ears of age, %s. 5,666 has to be read as nil and %s 15,666 has to be read as %s. '/,666. The corporate ta! rate for domestic companies is /6 per cent Aplus applicable surcharge (as per note 1) and education cessB. Dowever, the ta! rate applicable to foreign companies is J6 per cent Aplus applicable surcharge and education cess (as per note 1)B. Bote " (ssessee /ate of 4urchar.e (pplica,le #ndividuals (including >%#+E <#=s), DU,s, >onA surcharge b wa of education cess of 1 percent "orporate ,##s where the ta!able income is up to is pa able on the total amount of ta! %s. ',666,666 per annum #ndividuals (including >%#sE <#=s), DU,s and '6 percent basic surcharge. An additional >on-corporate ,##s where the ta!able income is surcharge b wa of education cess of 1 percent is in e!cess of %s. ',666,666 per annum pa able on the total amount of ta! plus surcharge. ;omestic "ompanies '6 percent basic surcharge. An additional

,oreign "ompanies (including corporate ,##) Under The 8ealth-Ta! Act, '(5*

surcharge b wa of education cess of 1 percent is pa able on the total amount of ta! plus surcharge. 1.5 percent basic surcharge. An additional surcharge b wa of education cess of 1 percent is pa able on the total amount of ta! plus surcharge.

Units are not to be treated as assets as defined under +ection 1(ea) of the 8ealth-Ta! Act, '(5* and hence will not be liable to wealth-ta!. 2? 3a5 Implications +n Mutual Fund Income Earned +r /eceived 2y 3he Mutual Fund! ,ranklin Templeton Mutual ,und is registered with +0&# and as such, the entire income of the ,und is e!empt from income ta! under +ection '6(1/;) of the Act. #n view of the provisions of +ection '(2(iv) of the Act, no income ta! is deductible at source on the income earned b the mutual fund. Income )istri,uted 2y 3he Mutual Fund! As per provisions of the Act (+ection ''5%), ,ranklin Templeton Mutual ,und will be re.uired to pa dividend distribution ta! (';;T') as follows7 • >o ;;T to be paid on e.uit oriented funds • ;;T to be paid on other funds at the following rates7 1! at 'J.615 percent (including a surcharge of '6 percent and an additional surcharge b wa of education cess of 1 percent on the amount of ta! plus surcharge) on dividend distributed to individuals and DU,sK and "! at 11.JJ percent (including a surcharge of '6 percent and an additional surcharge b wa of education cess of 1 percent on the amount of ta! plus surcharge) on dividend distributed to persons other than individuals and DU,s, for instance, corporates. +ecurities Transaction Ta!. ,ranklin Templeton Mutual ,und, is liable to pa a securities transaction ta! as follows7 4r!Bo 3a5a,le securities transaction /ate >per cent?

<urchase of an e.uit share in a compan or a unit of an e.uit oriented fund, where (a) the transaction of such purchase is entered into in a recognised stock ' e!changeK and (b) the contract for the purchase of such share or unit is settled b the actual deliver or transfer of such share or unit +ale of an e.uit share in a compan or a unit of an e.uit oriented fund, where (a) the transaction of such sale is entered into in a recogni4ed stock e!changeK 1 and (b) the contract for the sale of such share or unit is settled b the actual deliver or transfer of such share or unit +ale of a derivative, where the transaction of such sale is entered into in a / recogni4ed stock e!change J +ale of unit of an e.uit oriented fund to the Mutual ,und The value of a ta!able securities transaction will be as follows7

6.'15

6.'15

6.6'* 6.15

• in the case of a ta!able securities transaction relating to Noption in securitiesN, the aggregate of the strike price and the option premium of such Noption in securitiesN • in the case of ta!able securities transaction relating to NfuturesN, the price at which such NfuturesN are tradedK and • in the case of an other ta!able securities transaction, the price at which such securities are

purchased or sold NTa!able securities transactionN means a transaction of • purchase or sale of an e.uit share in a compan or a derivative or a unit of an e.uit oriented fund, entered into in a recognised stock e!changeK or • sale or an e.uit oriented fund to the Mutual ,und Top

What is net asset value
>et asset value (>AG) represents the market value of all assets per unit, held b the fund. ,or an investor, it simpl signifies the current value of his or her investment in the fund. The >AGs of all the Templeton ,unds are determined at the end of ever business da . The >AG is computed b dividing the fund's net assets b the number of units outstanding on the validation date and is illustrated below7 Mar0et value of the fund6s investment N +ther current assets N )eposits : (ll Current 7ia,ilities e5cept &nit Capital; /eserves and 1rofit 9 7oss (ccount Bo! of &nits outstandin. +ince the value of the various securities keep changing, the >AG also changes on a dail basis. >AGs are updated dail on our website and are available from an of the #nvestor +ervice "entres or ou can +ubscribe to receive dail >AGs through e-mail. #n-person purchase or redemption re.uests received up to / p.m on an business da will be priced on the basis of the same da 's closing >AG. %e.uests received after / p.m will be treated as having been received on the ne!t business da , and will therefore be priced based on the ne!t business da 's >AG. <urchase or redemption re.uests received b mail will be priced based on the closing >AG of the da on which the re.uest was received. Top

What do I .et as proof of my holdin.s
9ou get an Naccount statementN which is similar to a bank passbook. The account statement is a non-transferable document which shows details of all purchases and sales, along with the price at which the purchase or sale was made. #t will also show the, amount invested and redeemed to date and the number of units held, helping ou track our investments. A fresh account statement will be sent to ou reflecting the updated holdings of the unitholder after ever transaction. Under normal circumstances, the account statement will be sent to ou within / working da s after the date of receipt of the purchase or redemption re.uest at an of the #nvestor +ervice "entres. #f an applicant so desires, the Asset Management "ompan can issue a nontransferable unit certificate to the applicant within 2 weeks of the receipt of re.uest for the "ertificate. Top

Can I follo% my investments in the daily paper
9es. Most mutual funds and publicl traded stocks are listed in the business section of our local newspaper or in financial publications such as the &conomic .imes. Mutual funds are listed in a separate section and are categorised b the stock e!change on which the trade (e.g. the &+0 +ense!). Top

Will I have a s%itchin. facility ,et%een funds
Unitholders will have an option to switch all or part of their investment in one fund to another which is available for investment at that time. The Asset Management "ompan would currentl not charge an fees for such switching. To process a switch, a unitholder must provide clear instructions. +uch instructions ma be provided b completing a form and lodging it on an business da with an of the #nvestor +ervice "entres or the office of the %egistrar and Transfer Agent. The form ma also be sent b post. An account statement reflecting the new holdings will be sent to the unitholder within / da s of completion of the transaction. Top

3a5 implications for the mutual fund
<lease refer the +ection YTa!ationZ in the +tatement of Additional #nformation of ,ranklin Templeton Mutual ,und for the summar of ke ta! implications to unitholders based on prevailing ta! laws. <lease note that the information provided therein is for general information purpose onl and the prospective investors should not treat this information as advice relating to ta!ation or investment or an other matter. #n view of the individual nature of the implications, each investor is advised to consult with his or her own ta! advisorsEauthorised dealers with respect to the specific ta! and other implications arising out of his or her participation in the schemes. Top

Who do I contact %ith 8uestions
9ou ma want to write about our feedbackE"hat click here. ,irst <ublished7 Thu, Mun 1* 16'/. 6/ 6' <M #+T +arvesh +harmaEMint Also %ead • • • • +mall, medium or large: #t doesnZt matter M, industr -too earl to be morose ;o ou own orphaned M, schemes: T pes of funds

• Dow funds work What is a mutual fund #t is a pool of mone collected from a large number of investors b a professional entit with an aim to invest in different avenues for a variet of investment purposes. These avenues could be e.uit , debt, gold, commodities, real estate and so on. At present in #ndia, mutual funds are not allowed to invest in real estate directl , though the can invest in e.uit shares or bonds of real estate companies. 0.uit , debt and gold are the most popular asset classes that #ndian mutual funds invest in. The purpose of investment will var according to the asset class chosen. 0.uit is usuall a vehicle for long-term wealth creation. ;ebt is used for capital protection and shorter term mone management goals. $old is used as an inflation hedge and for li.uidit . #nvestors can look at where the fund manager aims to invest and then match personal financial needs to choose a fund. Why is mutual fund needed Managing mone is a speciali4ed task and a mutual fund can be viewed as a public transport to take people, who do not want to drive their own cars (that is, take their own investment calls), to their investment destinations. <eople who drive their own cars (invest on their own) end up going faster if the are good at choosing their investments. =r can end up badl hurt with a crashed car, losing mone due to poor investment choices. 8hile mutual funds give an option to invest in several asset classes such as e.uit , debt and gold, retail investors find e.uit investing one of the biggest attractions of owning a mutual fund, as it is safer due to the diversification offered b a mutual fund. =f course, investors can diversif using stocks themselves, but will have to activel manage their stock portfolio that re.uires knowledge and time. Mutual funds are for those who donZt have time to make mone decisions ever da but will do so, sa , twice a ear to e!amine their mutual fund choices and changed personal financial needs. 0.uit mutual funds are useful for la investors since stock selection is not eas for an average investor and can be fairl full of risk. %eading balance sheets is a speciali4ed task and knowing when to bu and sell needs active monitoring of markets and events. Most people are bus with their 3obs and families and have no time to spend on managing an active portfolio. Additionall , small investors run the risk of over-concentrating their portfolios in a few stocks and seeing their mone erode due to the risk of a tight portfolio. ,unds hire professional mone managers to make investment calls and monitor the portfolio on a dail basis. The mutual fund route reduces volatilit b diversif ing the portfolio. The risk of having all our mone in 3ust one or two stocks is much bigger than bu ing a basket of stocks that are diversified across market and across sectors. 17&4 (B) MIB&4 1lus points +mall amounts can be invested. To start with, ou can invest 3ust Rs.5,666 to bu a mutual fund scheme that invests across 56 companies. Dowever, a s stematic investment plan can be started with as low as Rs.566. &ut tr and bu stocks ourself and ou will find that Rs.5,666 does not go ver far. 9ou will be forced into 3ust one or two companies and ver few stocks. ,or instance, with Rs.5,666 ou could bu 3ust about, sa , two e.uit shares of +tate &ank of #ndia, #ndiaZs largest public sector bank. &ut with a mutual fund, ou can own tin bits of man large companies. All, or some, mone can be taken back .uickl . Mutual funds are eas to redeem. ,unds will bu back an .uantit of units at the given price as denoted in the net asset value (>AG), or the price of each unit of a mutual fund. 9ou can redeem our li.uid fund within 1J hours and debt funds upto three da s. There are some mutual funds that come with a lock in, such as e.uit -linked savings schemes, but the impose a lock in for a purposeK the currentl give ta! deduction benefits at the time of investing. ,ew others come with lock-in, but the give redemption windows at regular intervals. Minus points #nvestors have to pa the fund manager irrespective of profit or loss. As the fund managerZs sole 3ob is to manage our mone , the charge ou ever ear, in addition to certain costs the incur,

such as brokerage costs to bu and sell scrips, marketing, administration and selling costs that the charge, to a permissible e!tent. >othing wrong in pa ing them, but the catch is that even if our fund manager underperforms the market or even if markets do badl in some ears, like in 166), and ou lose mone , ou have to pa the annual charge called the e!pense ratio. #nvestors have no control in stock selection. 8hen ou give mone to our fund manager, it is his decision which stocks to bu or sell and when. #tZs a double-edged sword. Dis calls ma go right. Dis call ma also go wrong. #tZs not in our control. #f his calls go wrong, ou obviousl lose mone . There are no guarantees, as there arenZt an when ou invest directl in the markets. What is an e5pense ratio 0ver time ou invest in a mutual fund, the mutual fund incurs some e!penses. The are on account of marketing and advertising, brokerages paid to brokers to bu and sell scrips, administrative charges and so on. The capital markets regulator, +ecurities and 0!change &oard of #ndia (+ebi), limits the charges that our mutual fund can impose on ou to about /.66F for e.uit funds and about 1.*5F for debt funds. These figures were raised in 16'1, which were 1.56F for e.uit funds and 1.15F for debt funds then, after +ebi allowed mutual funds to charge more for penetrating towns be ond the usuall classified top '5 cities of #ndia. An e!penses incurred b the fund over and above these limits are to be borne b the fund house. )id you 0no%@ mutual funds cannot assure returns The capital markets regulator, +ebi, has banned mutual funds from assuring an incomePdividend or principalPto investors. DereZs wh 7 <rices of e.uit and debt scrips go up and down depending on their demand and suppl . 9our mutual fund schemeZs net asset value also moves accordingl since the mone is invested in individual stocks and debt products. 0ven li.uid funds are prone to market swings. $ood .ualit e.uit shares and high-rated debt scrips limit the chances of our fundZs value going down to 4ero. Dowever, the too fall in bad markets. #n the 166) market crash, the >ift inde! (56 most li.uid scrips on the >ational +tock 0!change) lost 51F. Carge-cap funds also lost 5/.'1F on average. Qualit scrips limit our losses, but the donZt eliminate losses completel . 0ven in 16'', the >ift fell b 15F and e.uit mutual funds fell b about 1JF on average. "apital protection-oriented funds aim to protect, and not guarantee, our mone . These are compulsoril closed-end and t picall invest in a mi! of e.uit and debt scrips in a wa that ou get our principalPwith some gains from the marketPat the end of the term. Usuall , these funds have a tenor of three-five ears. These funds, though, come with a lock-in and mandate that ou sta invested throughout the tenor to get the benefits of capital protection. These schemes are listed on stock e!changes where ou can sell our units and e!it, but the trading volumes of such funds are ver low. #t is best to sta invested over the tenor of the product.

&nderstandin. /eturns From Mutual Funds
9ou'll be surprised how eas it is to understand and calculate our returnsI "alculating returns on m mutual fund units There are man wa s to calculate our returns, though the two most popular methods are Absolute returns and Annualised returns. &nderstandin. (,solute returns Absolute return is the simple increase (or decrease) in our investment in terms of percentage. #t does not take into account the time taken for this change. +o if an investmentZs current market value is %s. 5,15,666 and our invested amount was %s. 1,*5,666 then our absolute

return will be7 O>$;"$;===:";F$;===?D";F$;===P J 9=!9Q >otice how irrelevant the date of investment or date of redemption is. #deall , ou should use the absolute returns method if the tenure of our investment is less than ' ear. ,or periods of more than ' ear, ou need to annualise returnsK which means ou need to find out what the rate of return is per annum. &nderstandin. (nnualised returns A compound annual growth rate ("A$%) is what measures the rate of return over an investment period. #t is a smoothened rate because it measures the growth of an investment as if it had grown at a stead rate, on an annuall compounded basis. "A$% [ A("urrent Galue E &eginning Galue) \ ('EX of 9ears)B-' Ho% can I find the C(G/ usin. the computer To calculate a "A$%, use the O#%% function in M+ 0!cel. )-Man-62 /'-;ec-'1 ',66,6660nter the date and the investment value 0nter the current value and the current 1,66,666 date

O#%% '6.J/F formula <lease remember to put a negative sign as the O#%% formula calculates the return on cash flows. Thus to find returns there has to be a cash inflow and cash outflow, which should be indicated with the use of positive and negative signs.

Ceepin. 3rac0 1ost Investment
#f #nvesting in M,s is good, keeping track is even better. Understanding fund fact sheets and keeping track of our investments Investing is only the first step. It is what you do with your investment that matters. Once you have invested, you need to keep track of theactual performance. The fill-it and shut-it approach is hardly going to get the desired results. Not that you need to fret over the performance on a daily basis in cases of investment horizons of more than a year, but keeping a check and being aware of the progress of your investment is a good practice. fter all, everything from your car to your body needs to undergo periodic health check-ups. fund fact sheet is the one such useful document that will help you monitor your investments. It is literally like a report card that indicates the health of the scheme. Understanding fund fact sheets and keeping track of our investments

8hat is a fund fact sheet:

But what exactly is a Fund Fact Sheet? fund fact sheet is a document published by a fund house. It lists details of each of the schemes managed by the fund house. !ach scheme generally has "ust one page so it is not too heavy and easy to digest. #ublished on a monthly basis, here are some of the things a fund fact sheet covers$ %. The portfolio depicts how the money that you invested in a scheme has been deployed in various securities. &. The performance of the scheme ' as depicted by (some of the terms that you cam across earlier) * +,, -eta, .tandard /eviation 0 .harpe ratio. 1. The size and investment details of the scheme. vailable on the website of the company, it is a vital document and is useful to ascertain important information on the scheme. 2ou should periodically refer to this document to ensure the well-being of your investments. 3ost people assume that the answer to this 4uestion is more likely to be complicated. 5ardly6 In reality withdrawing or ,edemption as it is known is 3utual 7und terms, is very simple. ll one has to do is fill out a redemption re4uest form (generally the perforated part at the end of your account statement). 2ou can either mention the amount or the number of units that you want to redeem. The re4uest then needs to be signed by the relevant account holders and submitted to a designated investor centre of your concerned fund house. There are also pre-designated cut-off times for each type of scheme and based on these cut-off times, you can get your redemption proceeds. In case your re4uest is received post the cut-off times, your application will automatically get processed on the ne8t business day. .ome fund houses permit you to redeem online on their websites or one can even call them up for redemptions. s per prevalent .!-I regulations, a 3utual 7und is re4uired to dispatch dividend proceeds within 19 days of dividend declaration and within %9 business days from the date of redemption. 7ailure to do so and the fund house is liable to compensate the investor :%;<. A +#< in time makes our mone fineI

4ystematic Investment 1lans and /upee cost avera.in. "ommon sense suggests that ]&u ing low and selling high^ is perhaps the best wa to make mone on our investments. &ut this is easier said than done, even for the most e!perienced investors. There are man factors at pla when it comes to an market - debt or e.uit , and all of them are ine!tricabl linked. A simpler approach to long term investing is disciplining and committing to a fi!ed sum for a fi!ed period and sticking to this schedule regardless of the conditions of the market. %upee cost averaging, as this practice is called, in a wa ensures that ou automaticall bu more units when the >AG is low and fewer when the >AG is high. ,or 0g. a %s. '666 +#< gets ou 56 units when the >AG is %s. 16 but gets ou '66 units when the >AG is %s.'6. The average cost for bu ing those '56 units would be %s. 1666E'56 units i.e. %s. '/.//. This discipline in turn suppresses the natural instinct to stop investing in a falling or a depressed

market or investing a lot when markets are rising and buo ant. Dowever, ou should remember that the %upee cost averaging does not assure a profit, nor does it protect ou against investment losses in declining markets. #t ensures that b disciplining our entr into markets, ou override sentiments therefore reducing the risk of committing a fi!ed sum when markets are higher. + stematic #nvestment <lans offered b mutual funds are easil the best wa to enter the world of investments over the long term. bout Mutual ,unds

A mutual fund is a common pool of mone in to which investors with common investment ob3ective place their contributions that are to be invested in accordance with the stated investment ob3ective of the scheme. The investment manager would invest the mone collected from the investor in to assets that are definedE permitted b the stated ob3ective of the scheme. ,or e!ample, an e.uit fund would invest e.uit and e.uit related instruments and a debt fund would invest in bonds, debentures, gilts etc. #nvestment =ptions Apart from illi.uid avenues like real estate, 3eweller there are four ma3or investment avenues available to ou, namel 7 • • • • ;ebt #nstruments 0.uit Mone Market #nstruments Mutual ,unds

;ebt #nstruments Traditionall debt instruments are known for generating a predetermined income for a given period of time, other than in cases of default. Dence the are also known as fi!ed income instruments. +ome e!amples include 7 • • • • • • >&," ;eposits "ompan ;eposits &onds ;ebentures &ank ;eposits (,;s and savings accounts) $overnment +mall +avings +chemes (0.g. <<,)

The introduction of ,loating %ate securities moves awa from the concept of receiving a fi!ed rate of interest but suggests a variable rate of interest based on an underl ing factor such as Condon #nterbank =ffer %ate (]C#&=%^) or Mumbai #nterbank =ffer %ate (]M#&=%^). An e!ample of such a securit is a ,loating %ate &ond whose interest rate is M#&=% plus 56 basis points, where M#&=% is variable. A preference share is a h brid instrument, which can be categori4ed as a fi!ed income instrument

since the investors receive a fi!ed dividend before the regular e.uit holders receive their dividend. Top 0.uit #s a share in the ownership of a compan Zs assets and earnings. "ompanies usuall issue e.uit when the re.uire addition capital to fund their e!isting business or e!pand. At this point of time the compan sells part of the ownership of the compan to the public. Cisted e.uities are generall highl li.uid since the are traded in the stock e!change. An investor makes mone from e.uit through dividends paid out b the compan (from its profits) on a periodic basis as well as capital appreciation as reflected in the stock price, which fluctuates in the market. Dence an investors returns are directl related to the performance of the compan Zs business. 0.uities do not offer an assured returns, but historicall promise the highest return in the long run, as depicted b the graph below. #nvestment %eturns ("A$% '()6 _ '(())

Top Mone Market #nstruments These are the short-term version of debt instruments, which t picall have a maturit of less than one ear. 9ields are slightl above that of the savings account rate in the &anks. These usuall tend to preserve the investorZs initial investment and are usuall the least risk asset class from the four described here. Top Mutual ,unds A mutual fund is a common pool of mone in to which investors with common investment ob3ective place their contributions that are to be invested in accordance with the stated investment ob3ective of the scheme. The investment manager would invest the mone collected from the investor in to assets that are definedE permitted b the stated ob3ective of the scheme. ,or e!ample, an e.uit fund would invest e.uit and e.uit related instruments and a debt fund would invest in bonds, debentures, gilts etc 8h Mutual ,unds: &enefits of Mutual ,unds There are numerous benefits of investing in mutual funds and one of the ke reasons for its phenomenal success in the developed markets like U+ and U? is the range of benefits the offer, which are unmatched b most other investment avenues. 8e have e!plained the ke benefits in this section. The benefits have been broadl split into universal benefits, applicable to all schemes, and benefits applicable specificall to open-ended schemes. Universal &enefits • (fforda,ility

A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon the investment ob3ective of the scheme. An investor can bu in to a portfolio of e.uities, which would otherwise be e!tremel e!pensive. 0ach unit holder thus gets an e!posure to such portfolios with an investment as modest as %s.566E-. This amount toda would get ou less than .uarter of an #nfos s shareI Thus it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directl in the stock market. • )iversification The nuclear weapon in our arsenal for our fight against %isk. #t simpl means that ou must spread our investment across different securities (stocks, bonds, mone market instruments, real estate, fi!ed deposits etc.) and different sectors (auto, te!tile, information technolog etc.). This kind of a diversification ma add to the stabilit of our returns, for e!ample during one period of time e.uities might underperform but bonds and mone market instruments might do well enough to offset the effect of a slump in the e.uit markets. +imilarl the information technolog sector might be faring poorl but the auto and te!tile sectors might do well and ma protect our principal investment as well as help ou meet our return ob3ectives. • Aariety Mutual funds offer a tremendous variet of schemes. This variet is beneficial in two wa s7 first, it offers different t pes of schemes to investors with different needs and risk appetitesK secondl , it offers an opportunit to an investor to invest sums across a variet of schemes, both debt and e.uit . ,or e!ample, an investor can invest his mone in a $rowth ,und (e.uit scheme) and #ncome ,und (debt scheme) depending on his risk appetite and thus create a balanced portfolio easil or simpl 3ust bu a &alanced +cheme. • 1rofessional Mana.ement Qualified investment professionals who seek to ma!imise returns and minimise risk monitor investor's mone . 8hen ou bu in to a mutual fund, ou are handing our mone to an investment professional who has e!perience in making investment decisions. #t is the ,und Manager's 3ob to (a) find the best securities for the fund, given the fund's stated investment ob3ectivesK and (b) keep track of investments and changes in market conditions and ad3ust the mi! of the portfolio, as and when re.uired. • 3a5 2enefits An income distributed after March /', 1661 will be sub3ect to ta! in the assessment of all Unit holders. Dowever, as a measure of concession to Unit holders of open-ended e.uit oriented funds, income distributions for the ear ending March /', 166/, will be ta!ed at a concessional rate of '6.5F. #n case of #ndividuals and Dindu Undivided ,amilies a deduction upto %s. (,666 from the Total #ncome will be admissible in respect of income from investments specified in +ection )6C, including income from Units of the Mutual ,und. Units of the schemes are not sub3ect to 8ealth-Ta! and $ift-Ta!. • /e.ulations +ecurities 0!change &oard of #ndia (]+0&#^), the mutual funds regulator has clearl defined rules, which govern mutual funds. These rules relate to the formation, administration and management of mutual funds and also prescribe disclosure and accounting re.uirements.

+uch a high level of regulation seeks to protect the interest of investors &enefits of =pen-ended +chemes • 7i8uidity #n open-ended mutual funds, ou can redeem all or part of our units an time ou wish. +ome schemes do have a lock-in period where an investor cannot return the units until the completion of such a lock-in period. • Convenience An investor can purchase or sell fund units directl from a fund, through a broker or a financial planner. The investor ma opt for a + stematic #nvestment <lan (]+#<^) or a + stematic 8ithdrawal Advantage <lan (]+8A<^). #n addition to this an investor receives account statements and portfolios of the schemes. • Fle5i,ility Mutual ,unds offering multiple schemes allow investors to switch easil between various schemes. This fle!ibilit gives the investor a convenient wa to change the mi! of his portfolio over time. • 3ransparency =pen-ended mutual funds disclose their >et Asset Galue (]>AG^) dail and the entire portfolio monthl . This level of transparenc , where the investor himself sees the underl ing assets bought with his mone , is unmatched b an other financial instrument. Thus the investor is in the know of the .ualit of the portfolio and can invest further or redeem depending on the kind of the portfolio that has been constructed b the investment manager. <lan for our child's education

9ou alwa s dream of a bright future for our child and thatZs wh ou start saving for hisEher education. &ut as higher education is getting e!pensive, our investments in traditional instruments might not live up to our e!pectations. Therefore, ou should plan for our child's higher education toda b investing in Mutual ,unds. The offer a wide range of schemes that meet our re.uirements based on our risk appetite, investment hori4on and ta! planning re.uirement. 2enefits of Investin. in Mutual Funds • • • • • ;iversified portfolio Ta! efficient returns <rofessional management Cow minimum investment amount "onvenience of investing s stematicall at periodic intervals (+#<)

/a-iv Gandhi E8uity 4avin.s 4cheme "=13
1ream,le

8ith an ob3ective to encourage flow of savings and to improve the depth of the domestic capital market, the $overnment of #ndia announced a ta! _saving scheme in the Union &udget 16'1-'/ named %a3iv $andhi 0.uit +avings +cheme, 16'1. The +cheme aims at widening the retail investor base in the #ndian securities markets and also furthers the goal of financial stabilit and financial inclusion. A ta! benefit uEs )6 ""$ of #ncome-ta! Act is available to the investors under this scheme. ,urther, vide ,inance Act, 16'/, certain conditions under %a3iv $andhi 0.uit +avings +cheme (%$0++) were liberali4ed. Ministr of ,inance thereafter vide >otification no. (JE16'/ ,. >o. 'J1E/5E16'1 -T<C dated ;ecember '), 16'/ notified %$0++, 16'/ i.e. the amended %$0++. 4alient Features • =nl a >ew %etail #nvestor can avail deduction b investing in 0ligible +ecurities in demat form under this scheme. A new retail investor would mean a person (resident #ndian) not having a demat account or having a demat account but not having done an trades in the e.uit or derivative segment • The gross total income of the >ew %etail #nvestor should not e!ceed %s '1 lacs p.a. • 0ligible +ecurities are from a universe of top '66 companies from +@< &+0 '66 or ">O '66, Maharatna, Miniratna, >avratna or securities of <+U, 0T,s and Mutual ,und units • 0ligible +ecurities would be sub3ect to a lock in of / ears as e!plained in the %$0++ 16'/ notification • Ta! ;eduction can be availed for investments made in a block of three consecutive financial ears 2enefits • An investment of %s 56,666 is eligible for a ta! deduction uEs )6 ""$ of the #ncome Ta! Act, '(2' for each financial ear. 56F of the amount invested from his total income sub3ect to a ma!imum of %s 15,666 will be permitted for ta! deduction • This deduction uEs )6""$ is over and above the deduction available uEs )6" • ;ividends earned from e.uities shares and mutual funds are ta! free • 0!posure to e.uities gives a potential of capital appreciation over three ears. • ,le!ible lock in offers some amount of li.uidit in investments when compared with other ta! saving instruments. ,or understanding the features and procedures of the %$0++ 16'/ please refer to the detailed ,AQs and the responses given below.

Fre8uently (s0ed 'uestions >F('s? on /GE44:"=13
1! What is the ta5 ,enefit under /GE44 As per +ection )6""$ of the #ncome Ta! Act, '(2', a resident individual who ac.uires listed e.uit shares or listed units of e.uit oriented mutual fund in accordance with the %$0++, is entitled to a deduction of 56F of the amount invested from his total income to the e!tent the deduction does not e!ceed %s.15,666E-. The deduction under +ection )6""$ of the #ncome Ta! Act, '(2' is in addition to the deduction available under +ection )6" of the #ncome Ta! Act, '(2'. A >ew %etail #nvestor shall be eligible for the ta! benefit under %$0++ for a block of three consecutive financial ears beginning with the #nitial 9ear (as defined in %$0++), in respect of the investment made in each financial ear. The deduction shall be sub3ect to following conditions7 • The gross total income of the investor for the relevant ear does not e!ceed %s.'1 lakhs (increased from %s.'6 Cakhs (,9 16'1-'/) to %s.'1 Cakhs (,9 16'/-'J))K

• The investor is a '>ew %etail #nvestor' as specified in %$0++K • The investment is made in such listed e.uit shares or listed units of e.uit oriented mutual fund as specified in %$0++K • The investment is locked-in for a / ear period as provided in %$0++K and • +uch other conditions as ma be prescribed b the Ministr of ,inance #f an investor, in a subse.uent ear fails to compl with an of the above conditions, the ta!abilit would be as provided under %$0++. "! What is initial year #nitial 9ear means7 (a) the financial ear in which the investor designates his demat account as %$0++ account and makes investment in the 0ligible +ecurities for availing deduction under %$0++K or (b) the financial ear in which the investor makes investment in 0ligible +ecurities for availing deduction under %$0++ for the first time, if the investor does not make an investment in 0ligible +ecurities in the financial ear in which the account is so designated. ,or e.g. ;ate of designating demat account as %$0++ account7 ;ate of %$0++ investment7 Therefore initial ear will be7 /. 8ho is a Y>ew %etail #nvestorZ: Manuar ', 16'/ i.e. in financial ear 16'1-'/ Mune ', 16'/ i.e in financial ear 16'/-'J. ,inancial ear 16'/-'J

(a) who has not opened a demat account and has not made an transactions in the derivative segment before the date of opening of a demat account or the first da of the #nitial 9ear, whichever is later7 <rovided that an individual who is not the first account holder of an e!isting 3oint demat account shall be deemed to have not opened a demat account for the purposes of %$0++K or (b) who has opened a demat account but has not made an transactions in the e.uit segment or the derivative segment before the date he designates his e!isting demat account for the purpose of availing the benefit under %$0++ or the first da of the #nitial 9ear, whichever is later #n case of 3oint accounts, onl the first account holder will be considered as the e!isting retail investor. All those e!isting account holders other than the first demat account holder (eg. second E third account holders or other 3oint holders) or nominees of the e!isting account holders will be considered as new retail investors for the purpose of opening of a fresh %$0++ account, if otherwise eligible. #n case the demat account is opened as a first holder, but there are no transactions in the e.uit or derivate segment, still in such case the first account holder can be considered eligible for Y>ew %etail #nvestorZ. #! What is the procedure for investment under /GE44 A new retail investor can invest in one or more financial ears in a block of three consecutive financial ears beginning with the initial ear as defined above. The new retail investor shall be eligible for ta! benefits under %$0++ onl for three consecutive financial ears beginning with the initial ear, in respect of the investment made in each financial ear. #f the new retail investor does not invest in an financial ear following the initial ear, he ma invest in the subse.uent financial ear, within a block of three consecutive financial ears beginning with the initial ear, in accordance with %$0++.

,or e.g. 7 #n the block of / ears, if an investor invests first time in 0ligible +ecurities under %$0++ in the first ear i.e. ,9 16'1-'/ and avails deduction. +uppose, he does not make an investment in the second ear, i.e. ,9 16'/-'J then he can claim ta! deduction uEs )6 ""$ onl for investments made in the third ear i.e. ,9 16'J-'5. $! I possess some physical sharesR (m I eli.i,le under /GE44 9es. 9ou will be considered as a new retail investor, if otherwise eligible. Dowever, ou need to make fresh investments in %$0++ eligible securities to avail of the benefits under %$0++. 9ou will not be eligible to claim benefits under %$0++ in case the shares held in ph sical are converted into dematerialisation prior to designating our demat account as %$0++ demat account. 6! I am already havin. units of mutual fund and D or E5chan.e 3raded FundsR (m I eli.i,le for the /GE44 9es. <rior investments in mutual funds and 0!change Traded ,unds do not make an investor ineligible for %$0++. Dowever, ou need to invest afresh in %$0++ eligible mutual fund E0T, schemes and hold them in a demat account as per the conditions laid down under %$0++ to avail the benefits. F! What are Eli.i,le 4ecurities under /GE44 "=13 The eligible +ecurities are as follows7 a. e.uit shares, on the da of purchase, falling in the list of e.uit declared as ]&+0-'66: or ^ ">O-'66: b the &omba +tock 0!change or the >ational +tock 0!change, as the case ma beK b. e.uit shares of public sector enterprises which are categorised as Maharatna, >avratna or Miniratna b the "entral $overnmentK c. Units of 0!change Traded ,unds or Mutual ,und schemes or e.uit oriented funds, which have eligible securities specified in sub-clause (a) or sub-clause (b) as underl ing securities, provided the are listed and traded on a stock e!change and settled through a depositor mechanismK d. ,ollow on <ublic =ffer of sub-clauses (a) and (b)K e. >ew ,und =ffers of sub-clause (c)K f. #nitial <ublic =ffer of a public sector undertaking wherein the $overnment shareholding is at least fift -one per cent. which is scheduled for getting listed in the relevant previous ear and whose annual turnover is not less than four thousand crore rupees during each of the preceding three ears. <! Is there any loc0:in period on the investment under /GE44 "=13 for claimin. ta5 deduction 9es. 0ligible securities under %$0++ 16'/ as declaredEdesignated for availing ta! benefits shall be sub3ect to lock-in-periods vi4. fi!ed lock-in and fle!ible lock-in as specified under the notified %$0++. The total lock-in period for investments under %$0++ would be three ears including the fi!ed lock-in period and the fle!ible lock in period. The fi5ed loc0:in period will commence from the date of purchase of 0ligible +ecurities under %$0++ in the relevant financial ear till March /' of the ear immediatel following the relevant financial ear. ,or e.g. #f 0ligible +ecurities are purchased on 6'.65.16'J, the fi!ed lock-in period will be from 6'.65.16'J to /'.6/.16'2 and the fle!ible lock-in period will be from 6'.6J.16'2 to /'.6/.16'). The fle5i,le loc0:in period shall be the period of two ears beginning immediatel after the end of the fi!ed lock-in period. Dowever, the investor is permitted to trade in eligible securities during this period. Dowever, he needs to compl with the re.uirements mentioned in the %$0++ >otification issued b Ministr of ,inance. 3he )epositories %ill ,e re8uired to ensure the enforcement of the loc0:in on &nits under

/GE44! 9! Ho% to open /GE44 demat account %ith a )epository 1articipant >)1? 9ou ma approach an registered ;< to open a demat account under %$0++. The list of ;<s registered with >+;C and ";+C is available on the >+;C website, www.nsdl.co.in and ";+C website, www.cdslindia.com 9ou are re.uired to fulfill the ?now our client (?9") norms prescribed b +0&# b submitting proof of identit , proof of address, etc. and provide <A> to the ;< with whom ou wish to open a demat account along with a declaration in prescribed format (i.e., Y,orm AZ) for availing %$0++ benefits. ,or more details see the ,AQ given b >+;C and ";+C on their respective website. 1=! Ho% does the Be% /etail Investor claim ta5 ,enefit under /GE44 The >ew %etail #nvestor will have to submit a declaration, as in Form S(T, to the ;epositor <articipant (;<) at the time of account opening or designating his e!isting demat account for taking the benefits under %$0++. 0ligible securities, which are brought thereafter into such an account, will be automaticall sub3ect to lock-in upto a value of %s. 56,666, unless the investor specifies otherwise through the Form S2T specified in this regard. 11! What is Form ( under /GE44 ,orm A is declaration to be submitted b the investors to ;< for availing the benefits under %$0++. 1"! What is Form 2 under /GE44 ,orm & is a declaration to be submitted b >ew %etail #nvestor to a ;< on purchase of eligible securities which are not to be included as %$0++ investment. This will ensure that these securities are not locked in b the depositor . This form has to be submitted within ' month from the date of purchase Eallotment of eligible securities to the ;<. 13! Can I claim ta5 deduction in respect of the amount invested in eli.i,le securities %hich are specified in Form 2 >o. 1#! What %ill ,e the mode of holdin. eli.i,le securities for availin. ta5 ,enefit under /GE44 The mode of holding eligible securities under %$0++ will be in a Y;emat accountZ. 9ou cannot hold securities in ph sical form to avail the benefits of %$0++. 1$! Can I desi.nate or open more than one demat account for /GE44 >o. 9ou can have onl one demat account under %$0++, across depositories (i.e., >+;C E ";+C). 16! If the investor invests on the last day of the financial year in eli.i,le securities under /GE44 "=13 %ill the person ,e eli.i,le to ta0e ta5 ,enefit uDs <= CCG of the Income 3a5 (ct; 1961 The new retail investor shall be permitted a grace period of seven trading da s from the end of the financial ear so that the eligible securities purchased on the last trading da of the financial ear also get credited in the demat account and such securities shall be deemed to have been ac.uired Epurchased in the financial ear itself. 1F! Is the ta5 ,enefit for investment in /GE44 over and a,ove of /s 1 la0h deduction currently availa,le under section <=C of the Income: ta5 (ct; 1961 9es, the ta! deduction for %$0++ is uEs )6""$ and it is over and above the %s. ' lakh limit specified uEs )6" of the #ncome-ta! Act, '(2'.

1<! Ho% much ta5 deduction %ill I ,e eli.i,le for under /GE44 9ou will be eligible to get ta! deduction uEs )6""$ on 56F of the amount invested. Cet us sa , ou invest %s.56, 666 under %$0++, the amount eligible for ta! deduction will be %s.15, 666 from our ta!able income. Cet us sa , ou invest %s.J6, 666 under %$0++, the amount eligible for ta! deduction will be %s.16,666 from our ta!able income. This deduction is over and above %s. ' lakh limit specified under +ection )6". 19! If I ma0e a onetime investment of /s $=;=== under /GE44 "=13; can I claim the deduction for the same investments in each of the three financial years for /s $=;=== >o, the new retail investor, who has once claimed a deduction under sub- section (') of section )6""$ of the Act, in an assessment ear, shall not be allowed an deduction under %$0++ for the same investment for an other subse.uent assessment ear. "=! Ho% many times can I invest in /GE44 securities to avail ta5 ,enefits under section <=CCG of the Income 3a5 (ct; 1961 The investor ma invest in one or more financial ears in a block of three consecutive financial ears beginning with the #nitial 9ear. #f the investor does not invest in an financial ear following the #nitial 9ear, he ma invest in the subse.uent financial ear, within the three consecutive financial ears beginning with the #nitial 9ear. The investor shall be eligible for the ta! benefit under %$0++ in respect of the investment made in each financial ear. ,or e.g.7 #f an investor invests first time in 0ligible +ecurities under %$0++ in ,9 16'/-'J and avails deduction, he ma also invest in either or both of ,9 16'J-'5 and ,9 16'5-'2 and avail deduction for the relevant ear(s). "1! Will I .et ta5 deduction every year for investment in /GE44 9es. ;eduction can be claimed for investments made in each of the three financial ears. ,or each ear, the ma!imum permissible #nvestment for claiming deduction under %$0++ is %s.56, 666 and the investor would get a 56F deduction of the amount invested from the ta!able income. ""! Can I invest more than /s!$=; === and claim ta5 ,enefit under /GE44 9ou ma invest an amount in a demat account designated under %$0++, but the ta! benefit under %$0++ can be claimed onl on investment up to %s. 56,666 in each financial ear. "3! If a person has invested under the /GE44 "=1"; is he eli.i,le to invest under the ne% notification 9es. #nvestors who invested under %$0++ 16'1 are also eligible to invest in ,inancial 9ears 16'/'J and 16'J-'5 and avail benefits under %$0++ 16'/. #nvestments made under %$0++ 16'1 will be governed b the provisions of %$0++ 16'1 onl to the e!tent the provisions of %$0++ 16'1 are not in contravention of %$0++ 16'/. "#! If the investor %ho desi.nated his demat account under /GE44 "=1" and claimed ta5 ,enefit uDs <= CCG does any e8uity share tradin. su,se8uently %ill he ,e eli.i,le to invest under /GE44 "=13 9es. The investor will be eligible to make an investment under %$0++ 16'/ in the same demat account which has been designated as %$0++ demat account in 16'/ sub3ect to the terms and conditions mentioned under the relevant notification. 3o 0no% more a,out /GE44 read : >i? /GE44 Botification a) ;ated >ovember 1/, 16'1 b) ;ated ;ecember '), 16'/

>ii? +ection )6""$ of the #ncome-ta! Act, '(2' >iii? F('s on /GE44 availa,le at I a) >+;C website b) ";+C website )isclaimer@The information provided herein is solel for creating awareness and educating investors E potential investors about %a3iv $andhi 0.uit +avings +cheme and for their general understanding. 8hilst D;," Mutual ,und has taken reasonable steps to ensure the accurac of all information, it does not guarantee the completeness, efficac , accurac or timeliness of such information. %eaders are advised not to act purel on the basis of information provided herein but also to seek professional advice from e!perts before taking an investment decisions. >either, the Mutual ,und, the Trustees, AM" nor an person connected with it accepts an liabilit arising from the use of this information. In vie% of individual nature of ta5 conse8uences; each investor is advised to consult hisD her o%n professional ta5 advisor for availin. ta5 deductions under 4ection <=CCG of the Income: ta5 (ct; 1961! To know more, contact our financial advisor toda for %$0++ - ,AQs or write to us at investoreducationThdfcfund.com 0&# #nvestor 0ducation <rogramme +0"U%#T#0+ A>; 0O"DA>$0 &=A%; =, #>;#A +0&# #>G0+T=% 0;U"AT#=> <%=$%AMM0 (#>G0+TM0>T+ #> MUTUAC ,U>;+) #ntroduction ;ifferent investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Cike all investments, the also carr certain risks. The investors should compare the risks and e!pected ields after ad3ustment of ta! on various instruments while taking investment decisions. The investors ma seek advice from e!perts and consultants including agents and distributors of mutual funds schemes while making investment decisions. 8ith an ob3ective to make the investors aware of functioning of mutual funds, an attempt has been made to provide information in .uestion-answer format which ma help the investors in taking investment decisions. • What is a Mutual Fund Mutual fund is a mechanism for pooling the resources b issuing units to the investors and investing funds in securities in accordance with ob3ectives as disclosed in offer document. #nvestments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. ;iversification reduces the risk because all stocks ma not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with .uantum of mone invested b them. #nvestors of mutual funds are known as unitholders. The profits or losses are shared b the investors in proportion to their investments. The mutual funds normall come out with a number of schemes with different investment ob3ectives which are launched from time to time. A mutual fund is re.uired to be registered with +ecurities and 0!change &oard of #ndia (+0&#) which regulates securities markets

before it can collect funds from the public. • What is the history of Mutual Funds in India and role of 4E2I in mutual funds industry Unit Trust of #ndia was the first mutual fund set up in #ndia in the ear '(2/. #n earl '((6s, $overnment allowed public sector banks and institutions to set up mutual funds. #n the ear '((1, +ecurities and e!change &oard of #ndia (+0&#) Act was passed. The ob3ectives of +0&# 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, +0&# formulates policies and regulates the mutual funds to protect the interest of the investors. +0&# notified regulations for the mutual funds in '((/. Thereafter, mutual funds sponsored b private sector entities were allowed to enter the capital market. The regulations were full revised in '((2 and have been amended thereafter from time to time. +0&# has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted b public sector or private sector entities including those promoted b foreign entities are governed b the same set of %egulations. There is no distinction in regulator re.uirements for these mutual funds and all are sub3ect to monitoring and inspections b +0&#. The risks associated with the schemes launched b the mutual funds sponsored b these entities are of similar t pe. • Ho% is a mutual fund set up A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset management compan (AM") and custodian. The trust is established b a sponsor or more than one sponsor who is like promoter of a compan . The trustees of the mutual fund hold its propert for the benefit of the unitholders. Asset Management "ompan (AM") approved b +0&# manages the funds b making investments in various t pes of securities. "ustodian, who is registered with +0&#, holds the securities of various schemes of the fund in its custod . The trustees are vested with the general power of superintendence and direction over AM". The monitor the performance and compliance of +0&# %egulations b the mutual fund. +0&# %egulations re.uire that at least two thirds of the directors of trustee compan or board of trustees must be independent i.e. the should not be associated with the sponsors. Also, 56F of the directors of AM" must be independent. All mutual funds are re.uired to be registered with +0&# before the launch an scheme. • What is Bet (sset Aalue >B(A? of a scheme The performance of a particular scheme of a mutual fund is denoted b >et Asset Galue (>AG). Mutual funds invest the mone collected from the investors in securities markets. #n simple words, >et Asset Galue is the market value of the securities held b the scheme. +ince market value of securities changes ever da , >AG of a scheme also varies on da to da basis. The >AG per unit is the market value of securities of a scheme divided b the total number of units of the scheme on an particular date. ,or e!ample, if the market value of securities of a mutual fund scheme is %s 166 lakhs and the mutual fund has issued '6 lakhs units of %s. '6 each to the investors, then the >AG per unit of the fund is %s.16. >AG is re.uired to be disclosed b the mutual funds on a regular basis - dail or weekl - depending

on the t pe of scheme. • What are the different types of mutual fund schemes • 4chemes accordin. to Maturity 1eriod@ A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturit period. +pen:ended FundD 4cheme An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fi!ed maturit period. #nvestors can convenientl bu and sell units at >et Asset Galue (>AG) related prices which are declared on a dail basis. The ke feature of open-end schemes is li.uidit . Close:ended FundD 4cheme A close-ended fund or scheme has a stipulated maturit period e.g. 5-* ears. The fund is open for subscription onl during a specified period at the time of launch of the scheme. #nvestors can invest in the scheme at the time of the initial public issue and thereafter the can bu or sell the units of the scheme on the stock e!changes where the units are listed. #n order to provide an e!it route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at >AG related prices. +0&# %egulations stipulate that at least one of the two e!it routes is provided to the investor i.e. either repurchase facilit or through listing on stock e!changes. These mutual funds schemes disclose >AG generall on weekl basis. • 4chemes accordin. to Investment +,-ective@ A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment ob3ective. +uch schemes ma be open-ended or close-ended schemes as described earlier. +uch schemes ma be classified mainl as follows7 Gro%th D E8uity +riented 4cheme The aim of growth funds is to provide capital appreciation over the medium to longterm. +uch schemes normall invest a ma3or part of their corpus in e.uities. +uch funds have comparativel high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors ma choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. $rowth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. Income D )e,t +riented 4cheme The aim of income funds is to provide regular and stead income to investors. +uch schemes generall invest in fi!ed income securities such as bonds, corporate debentures, $overnment securities and mone market instruments. +uch funds are

less risk compared to e.uit schemes. These funds are not affected because of fluctuations in e.uit markets. Dowever, opportunities of capital appreciation are also limited in such funds. The >AGs of such funds are affected because of change in interest rates in the countr . #f the interest rates fall, >AGs of such funds are likel to increase in the short run and vice versa. Dowever, long term investors ma not bother about these fluctuations. 2alanced Fund The aim of balanced funds is to provide both growth and regular income as such schemes invest both in e.uities and fi!ed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. The generall invest J6-26F in e.uit and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. Dowever, >AGs of such funds are likel to be less volatile compared to pure e.uit funds. Money Mar0et or 7i8uid Fund These funds are also income funds and their aim is to provide eas li.uidit , preservation of capital and moderate income. These schemes invest e!clusivel in safer short-term instruments such as treasur bills, certificates of deposit, commercial paper and inter-bank call mone , government securities, etc. %eturns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. Gilt Fund These funds invest e!clusivel in government securities. $overnment securities have no default risk. >AGs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. Inde5 Funds #nde! ,unds replicate the portfolio of a particular inde! such as the &+0 +ensitive inde!, +@< >+0 56 inde! (>ift ), etc These schemes invest in the securities in the same weightage comprising of an inde!. >AGs of such schemes would rise or fall in accordance with the rise or fall in the inde!, though not e!actl b the same percentage due to some factors known as Ntracking errorN in technical terms. >ecessar disclosures in this regard are made in the offer document of the mutual fund scheme. There are also e!change traded inde! funds launched b the mutual funds which are traded on the stock e!changes. • What are sector specific fundsDschemes These are the fundsEschemes which invest in the securities of onl those sectors or industries as specified in the offer documents. e.g. <harmaceuticals, +oftware, ,ast Moving "onsumer $oods (,M"$), <etroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectorsEindustries. 8hile these funds ma give higher returns, the are more risk compared to diversified funds. #nvestors need to keep a watch on the

performance of those sectorsEindustries and must e!it at an appropriate time. The ma also seek advice of an e!pert. • What are 3a5 4avin. 4chemes These schemes offer ta! rebates to the investors under specific provisions of the #ncome Ta! Act, '(2' as the $overnment offers ta! incentives for investment in specified avenues. e.g. 0.uit Cinked +avings +chemes (0C++). <ension schemes launched b the mutual funds also offer ta! benefits. These schemes are growth oriented and invest pre-dominantl in e.uities. Their growth opportunities and risks associated are like an e.uit -oriented scheme. • What is a Fund of Funds >FoF? scheme A scheme that invests primaril in other schemes of the same mutual fund or other mutual funds is known as a ,o, scheme. An ,o, scheme enables the investors to achieve greater diversification through one scheme. #t spreads risks across a greater universe. • What is a 7oad or no:load Fund A Coad ,und is one that charges a percentage of >AG for entr or e!it. That is, each time one bu s or sells units in the fund, a charge will be pa able. This charge is used b the mutual fund for marketing and distribution e!penses. +uppose the >AG per unit is %s.'6. #f the entr as well as e!it load charged is 'F, then the investors who bu would be re.uired to pa %s.'6.'6 and those who offer their units for repurchase to the mutual fund will get onl %s.(.(6 per unit. The investors should take the loads into consideration while making investment as these affect their ieldsEreturns. Dowever, the investors should also consider the performance track record and service standards of the mutual fund which are more important. 0fficient funds ma give higher returns in spite of loads. A no-load fund is one that does not charge for entr or e!it. #t means the investors can enter the fundEscheme at >AG and no additional charges are pa able on purchase or sale of units. • Can a mutual fund impose fresh load or increase the load ,eyond the level mentioned in the offer documents Mutual funds cannot increase the load be ond the level mentioned in the offer document. An change in the load will be applicable onl to prospective investments and not to the original investments. #n case of imposition of fresh loads or increase in e!isting loads, the mutual funds are re.uired to amend their offer documents so that the new investors are aware of loads at the time of investments. • What is a sales or repurchaseDredemption price The price or >AG a unitholder is charged while investing in an open-ended scheme is called sales price. #t ma include sales load, if applicable. %epurchase or redemption price is the price or >AG at which an open-ended scheme purchases or redeems its units from the unitholders. #t ma include e!it load, if applicable. • What is an assured return scheme Assured return schemes are those schemes that assure a specific return to the unitholders irrespective of performance of the scheme. A scheme cannot promise returns unless such returns are full guaranteed b the sponsor or AM" and this is re.uired to be disclosed in the offer document.

#nvestors should carefull read the offer document whether return is assured for the entire period of the scheme or onl for a certain period. +ome schemes assure returns one ear at a time and the review and change it at the beginning of the ne!t ear. • Can a mutual fund chan.e the asset allocation %hile deployin. funds of investors "onsidering the market trends, an prudent fund managers can change the asset allocation i.e. he can invest higher or lower percentage of the fund in e.uit or debt instruments compared to what is disclosed in the offer document. #t can be done on a short term basis on defensive considerations i.e. to protect the >AG. Dence the fund managers are allowed certain fle!ibilit in altering the asset allocation considering the interest of the investors. #n case the mutual fund wants to change the asset allocation on a permanent basis, the are re.uired to inform the unitholders and giving them option to e!it the scheme at prevailing >AG without an load. • Ho% to invest in a scheme of a mutual fund Mutual funds normall come out with an advertisement in newspapers publishing the date of launch of the new schemes. #nvestors can also contact the agents and distributors of mutual funds who are spread all over the countr for necessar information and application forms. ,orms can be deposited with mutual funds through the agents and distributors who provide such services. >ow a da s, the post offices and banks also distribute the units of mutual funds. Dowever, the investors ma please note that the mutual funds schemes being marketed b banks and post offices should not be taken as their own schemes and no assurance of returns is given b them. The onl role of banks and post offices is to help in distribution of mutual funds schemes to the investors. #nvestors should not be carried awa b commissionEgifts given b agentsEdistributors for investing in a particular scheme. =n the other hand the must consider the track record of the mutual fund and should take ob3ective decisions. • Can non:resident Indians >B/Is? invest in mutual funds 9es, non-resident #ndians can also invest in mutual funds. >ecessar details in this respect are given in the offer documents of the schemes. • Ho% much should one invest in de,t or e8uity oriented schemes An investor should take into account his risk taking capacit , age factor, financial position, etc. As alread mentioned, the schemes invest in different t pe of securities as disclosed in the offer documents and offer different returns and risks. #nvestors ma also consult financial e!perts before taking decisions. Agents and distributors ma also help in this regard. • Ho% to fill up the application form of a mutual fund scheme An investor must mention clearl his name, address, number of units applied for and such other information as re.uired in the application form. De must give his bank account number so as to avoid an fraudulent encashment of an che.ueEdraft issued b the mutual fund at a later date for the purpose of dividend or repurchase. An changes in the address, bank account number, etc at a later date should be informed to the mutual fund immediatel . • What should an investor loo0 into an offer document An abridged offer document, which contains ver useful information, is re.uired to be given to the prospective investor b the mutual fund. The application form for subscription to a

scheme is an integral part of the offer document. +0&# has prescribed minimum disclosures in the offer document. An investor, before investing in a scheme, should carefull read the offer document. ;ue care must be given to portions relating to main features of the scheme, risk factors, initial issue e!penses and recurring e!penses to be charged to the scheme, entr or e!it loads, sponsorZs track record, educational .ualification and work e!perience of ke personnel including fund managers, performance of other schemes launched b the mutual fund in the past, pending litigations and penalties imposed, etc. • When %ill the investor .et certificate or statement of account after investin. in a mutual fund Mutual funds are re.uired to despatch certificates or statements of accounts within si! weeks from the date of closure of the initial subscription of the scheme. #n case of close-ended schemes, the investors would get either a demat account statement or unit certificates as these are traded in the stock e!changes. #n case of open-ended schemes, a statement of account is issued b the mutual fund within /6 da s from the date of closure of initial public offer of the scheme. The procedure of repurchase is mentioned in the offer document. • Ho% lon. %ill it ta0e for transfer of units after purchase from stoc0 mar0ets in case of close:ended schemes According to +0&# %egulations, transfer of units is re.uired to be done within thirt da s from the date of lodgment of certificates with the mutual fund. • (s a unitholder; ho% much time %ill it ta0e to receive dividendsDrepurchase proceeds A mutual fund is re.uired to despatch to the unitholders the dividend warrants within /6 da s of the declaration of the dividend and the redemption or repurchase proceeds within '6 working da s from the date of redemption or repurchase re.uest made b the unitholder. #n case of failures to despatch the redemptionErepurchase proceeds within the stipulated time period, Asset Management "ompan is liable to pa interest as specified b +0&# from time to time ('5F at present). • Can a mutual fund chan.e the nature of the scheme from the one specified in the offer document 9es. Dowever, no change in the nature or terms of the scheme, known as fundamental attributes of the scheme e.g.structure, investment pattern, etc. can be carried out unless a written communication is sent to each unitholder and an advertisement is given in one 0nglish dail having nationwide circulation and in a newspaper published in the language of the region where the head office of the mutual fund is situated. The unitholders have the right to e!it the scheme at the prevailing >AG without an e!it load if the do not want to continue with the scheme. The mutual funds are also re.uired to follow similar procedure while converting the scheme form close-ended to open-ended scheme and in case of change in sponsor. • Ho% %ill an investor come to 0no% a,out the chan.es; if any; %hich may occur in the mutual fund There ma be changes from time to time in a mutual fund. The mutual funds are re.uired to inform an material changes to their unitholders. Apart from it, man mutual funds send .uarterl newsletters to their investors. At present, offer documents are re.uired to be revised and updated at least once in two ears. #n the meantime, new investors are informed about the material changes b wa of

addendum to the offer document till the time offer document is revised and reprinted. • Ho% to 0no% the performance of a mutual fund scheme The performance of a scheme is reflected in its net asset value (>AG) which is disclosed on dail basis in case of open-ended schemes and on weekl basis in case of close-ended schemes. The >AGs of mutual funds are re.uired to be published in newspapers. The >AGs are also available on the web sites of mutual funds. All mutual funds are also re.uired to put their >AGs on the web site of Association of Mutual ,unds in #ndia (AM,#) www.amfiindia.com and thus the investors can access >AGs of all mutual funds at one place The mutual funds are also re.uired to publish their performance in the form of half- earl results which also include their returnsE ields over a period of time i.e. last si! months, ' ear, / ears, 5 ears and since inception of schemes. #nvestors can also look into other details like percentage of e!penses of total assets as these have an affect on the ield and other useful information in the same half- earl format. The mutual funds are also re.uired to send annual report or abridged annual report to the unitholders at the end of the ear. Garious studies on mutual fund schemes including ields of different schemes are being published b the financial newspapers on a weekl basis. Apart from these, man research agencies also publish research reports on performance of mutual funds including the ranking of various schemes in terms of their performance. #nvestors should stud these reports and keep themselves informed about the performance of various schemes of different mutual funds. #nvestors can compare the performance of their schemes with those of other mutual funds under the same categor . The can also compare the performance of e.uit oriented schemes with the benchmarks like &+0 +ensitive #nde!, +@< ">O >ift , etc. =n the basis of performance of the mutual funds, the investors should decide when to enter or e!it from a mutual fund scheme. • Ho% to 0no% %here the mutual fund scheme has invested money mo,ilised from the investors The mutual funds are re.uired to disclose full portfolios of all of their schemes on halfearl basis which are published in the newspapers. +ome mutual funds send the portfolios to their unitholders. The scheme portfolio shows investment made in each securit i.e. e.uit , debentures, mone market instruments, government securities, etc. and their .uantit , market value and F to >AG. These portfolio statements also re.uired to disclose illi.uid securities in the portfolio, investment made in rated and unrated debt securities, non-performing assets (><As), etc. +ome of the mutual funds send newsletters to the unitholders on .uarterl basis which also contain portfolios of the schemes. • Is there any difference ,et%een investin. in a mutual fund and in an initial pu,lic offerin. >I1+? of a company 9es, there is a difference. #<=s of companies ma open at lower or higher price than the issue price depending on market sentiment and perception of investors. Dowever, in the case of mutual funds, the par value of the units ma not rise or fall immediatel after allotment. A

mutual fund scheme takes some time to make investment in securities. >AG of the scheme depends on the value of securities in which the funds have been deplo ed. • If schemes in the same cate.ory of different mutual funds are availa,le; should one choose a scheme %ith lo%er B(A +ome of the investors have the tendenc to prefer a scheme that is available at lower >AG compared to the one available at higher >AG. +ometimes, the prefer a new scheme which is issuing units at %s. '6 whereas the e!isting schemes in the same categor are available at much higher >AGs. #nvestors ma please note that in case of mutual funds schemes, lower or higher >AGs of similar t pe schemes of different mutual funds have no relevance. =n the other hand, investors should choose a scheme based on its merit considering performance track record of the mutual fund, service standards, professional management, etc. This is e!plained in an e!ample given below. +uppose scheme A is available at a >AG of %s.'5 and another scheme & at %s.(6. &oth schemes are diversified e.uit oriented schemes. #nvestor has put %s. (,666 in each of the two schemes. De would get 266 units ((666E'5) in scheme A and '66 units ((666E(6) in scheme &. Assuming that the markets go up b '6 per cent and both the schemes perform e.uall good and it is reflected in their >AGs. >AG of scheme A would go up to %s. '2.56 and that of scheme & to %s. ((. Thus, the market value of investments would be %s. (,(66 (266V '2.56) in scheme A and it would be the same amount of %s. ((66 in scheme & ('66V((). The investor would get the same return of '6F on his investment in each of the schemes. Thus, lower or higher >AG of the schemes and allotment of higher or lower number of units within the amount an investor is willing to invest, should not be the factors for making investment decision. Cikewise, if a new e.uit oriented scheme is being offered at %s.'6 and an e!isting scheme is available for %s. (6, should not be a factor for decision making b the investor. +imilar is the case with income or debt-oriented schemes. =n the other hand, it is likel that the better managed scheme with higher >AG ma give higher returns compared to a scheme which is available at lower >AG but is not managed efficientl . +imilar is the case of fall in >AGs. 0fficientl managed scheme at higher >AG ma not fall as much as inefficientl managed scheme with lower >AG. Therefore, the investor should give more weightage to the professional management of a scheme instead of lower >AG of an scheme. De ma get much higher number of units at lower >AG, but the scheme ma not give higher returns if it is not managed efficientl . • Ho% to choose a scheme for investment from a num,er of schemes availa,le As alread mentioned, the investors must read the offer document of the mutual fund scheme ver carefull . The ma also look into the past track record of performance of the scheme or other schemes of the same mutual fund. The ma also compare the performance with other schemes having similar investment ob3ectives. Though past performance of a scheme is not an indicator of its future performance and good performance in the past ma or ma not be sustained in the future, this is one of the important factors for making investment decision. #n case of debt oriented schemes, apart from looking into past returns, the investors should also see the .ualit of debt instruments which is reflected in their rating. A scheme with lower rate of return but having investments in better rated instruments ma be safer. +imilarl , in e.uities schemes also, investors ma look for .ualit of portfolio. The ma also seek advice of e!perts. • (re the companies havin. names li0e mutual ,enefit the same as mutual funds schemes #nvestors should not assume some companies having the name Nmutual benefitN as mutual

funds. These companies do not come under the purview of +0&#. =n the other hand, mutual funds can mobilise funds from the investors b launching schemes onl after getting registered with +0&# as mutual funds. • Is the hi.her net %orth of the sponsor a .uarantee for ,etter returns #n the offer document of an mutual fund scheme, financial performance including the net worth of the sponsor for a period of three ears is re.uired to be given. The onl purpose is that the investors should know the track record of the compan which has sponsored the mutual fund. Dowever, higher net worth of the sponsor does not mean that the scheme would give better returns or the sponsor would compensate in case the >AG falls. • Where can an investor loo0 out for information on mutual funds Almost all the mutual funds have their own web sites. #nvestors can also access the >AGs, half- earl results and portfolios of all mutual funds at the web site of Association of mutual funds in #ndia (AM,#) www.amfiindia.com. AM,# has also published useful literature for the investors. #nvestors can log on to the web site of +0&# www.sebi.gov.in and go to NMutual ,undsN section for information on +0&# regulations and guidelines, data on mutual funds, draft offer documents filed b mutual funds, addresses of mutual funds, etc. Also, in the annual reports of +0&# available on the web site, a lot of information on mutual funds is given. There are a number of other web sites which give a lot of information of various schemes of mutual funds including ields over a period of time. Man newspapers also publish useful information on mutual funds on dail and weekl basis. #nvestors ma approach their agents and distributors to guide them in this regard. • Can an investor appoint a nominee for his investment in units of a mutual fund 9es. The nomination can be made b individuals appl ing for E holding units on their own behalf singl or 3ointl . >on-individuals including societ , trust, bod corporate, partnership firm, ?arta of Dindu Undivided ,amil , holder of <ower of Attorne cannot nominate. • If mutual fund scheme is %ound up; %hat happens to money invested #n case of winding up of a scheme, the mutual funds pa a sum based on prevailing >AG after ad3ustment of e!penses. Unitholders are entitled to receive a report on winding up from the mutual funds which gives all necessar details. • Ho% can the investors redress their complaints #nvestors would find the name of contact person in the offer document of the mutual fund scheme whom the ma approach in case of an .uer , complaints or grievances. Trustees of a mutual fund monitor the activities of the mutual fund. The names of the directors of asset management compan and trustees are also given in the offer documents. #nvestors should approach the concerned Mutual ,und E #nvestor +ervice "entre of the Mutual ,und with their complaints, #f the complaints remain unresolved, the investors ma approach +0&# for facilitating redressal of their complaints. =n receipt of complaints, +0&# takes up the matter with the concerned mutual fund and follows up with it regularl . #nvestors ma send their complaints to7 +ecurities and 0!change &oard of #ndia

=ffice of #nvestor Assistance and 0ducation (=#A0) <lot >o."J-A , ]$^ &lock, 'st ,loor, &andra-?urla "omple!, &andra (0), Mumbai _ J66 65'. <hone7 12JJ('(( - )) - ** • What is the procedure for re.isterin. a mutual fund %ith 4E2I An applicant proposing to sponsor a mutual fund in #ndia must submit an application in ,orm A along with a fee of %s.15,666. The application is e!amined and once the sponsor satisfies certain conditions such as being in the financial services business and possessing positive net worth for the last five ears, having net profit in three out of the last five ears and possessing the general reputation of fairness and integrit in all business transactions, it is re.uired to complete the remaining formalities for setting up a mutual fund. These include inter alia, e!ecuting the trust deed and investment management agreement, setting up a trustee compan Eboard of trustees comprising two- thirds independent trustees, incorporating the asset management compan (AM"), contributing to at least J6F of the net worth of the AM" and appointing a custodian. Upon satisf ing these conditions, the registration certificate is issued sub3ect to the pa ment of registration fees of %s.15.66 lacs. ,or details, see the +0&# (Mutual ,unds) %egulations, '((2.

1rashant Uain@ 2e .reedy; invest more in e8uities
<osted b Muthu on March *, 16'J ]The sense! closed at 1',5'JPan all-time high-Pon Thursda . This news will be met with optimism b some, who will think that things are improving, confusion b some who will wonder wh is the market rall ing when the econom is not doing so well and when elections are 3ust round the corner and denial b the rest who will take it as an opportunit to sell whatever little e.uit ownership is left with them. The ma3orit , in m opinion will 3udge this as unsustainable, will look to sell and will be wrong, et again, at least in the medium- to long-term. 8h is the ma3orit seldom right in e.uities: It is so ,ecause the ma-ority .uesses the future ,y loo0in. at the past! 8hen the returns of the past few ears are high as was the case in '((1, '((( and in 166*, most simpl e!trapolate and invest large amounts. =n the other hand, when the returns over the past few ears are poor as is the case toda (the sense! is where it was 2 ears ago), the same is also e!trapolated and the ma3orit either does not invest or sell at ever rall as is being observed nowada s. 3he simple; sensi,le and profita,le approach to participate in e8uities is to do the -ust the opposite of %hat the past su..ests! When the past returns of e8uities are hi.h; one should ,e cautious and %hen the past returns are lo% as is the case today; one should ,e .reedy; one should ,e optimistic a,out the future and one should invest more in e8uities! The reason for recommending this approach to investing is simple. E8uities over lon. periods .ive returns in line %ith the .ro%th rates of the economy! 3hatTs %hy; %hen the past returns are hi.h; the future returns tend to ,e lo% and vice versa! It needs to ,e realiVed; that despite the slo%er .ro%th periods once in a %hile li0e present; India is a ,asically a hi.h .ro%th economy and its economy has ,een .ro%in. at nearly 1$Q in nominal G)1 terms for several decades! Is it a surprise then that the sense5 has compounded at nearly 1$Q over lon. periods Compound interest is the ei.hth %onder in this %orld; said Einstein! 3he sense5 has .ro%n from 1== in 19F9 to "1;=== in "=1#; an astoundin. "1= times; simply ,y compoundin. at nearly 16Q; in line %ith the nominal G)1 .ro%th of India! 3his su..ests that despite ,ein. at historic hi.hs; mar0ets are not overvalued! In fact; .iven the nearly nil returns of the sense5

over last 6 years; a period in %hich economy has nearly dou,led in rupee terms; .iven the ,elo% avera.e 1DE multiples that the mar0ets are tradin. at and .iven the improvin. economic outloo0 as su..ested ,y improvin. current account; inflation and G)1 .ro%th num,ers etc; this is a time to loo0 at e8uities favoura,ly and not other%ise! ,inall , given the volatilit in e.uities in the short run, it is recommended to participate in e.uities in a phased manner, ideall though +#<s in mutual funds.^ (+ource7 http7EEepaper.timesofindia.comE;efaultE+criptingEArticle8in.asp: ,rom[Archive@+ource[<age@+kin[T=#>08@&aseDref[T=#ME16'JE6/E6*@<ageCabel[1'@0n tit #d[Ar61'6 ) <osted in $eneral, Mutual ,unds, +tock Market ` Ceave a "omment a

Be% 7aunches
<osted b Muthu on Manuar '/, 16'J This is a season of >,=s (>ew ,und =ffer). #n our profession (business would be the apt word for asset gathering)K we never learn an lessons from the past. >,=s, that too closed ended ones, have burnt the fingers of the investors severel in the past. Though given the e.uit market valuations this time, it ma not end up badl for investors, still what is being done b some fund houses and the distributors are unethical. There is nothing new in these new fund offers which cannot be done through their e!isting funds. #f these new funds perform well, the do4ens of e!isting ones ma do e.uall well or even better as the have proven track record. The argument fund houses and distributors provide is that it is difficult to mobili4e mone in e!isting schemes and it is easier to collect the same through >,=s. There are advisors E distributors like us who never do >,=s. There are some ethical fund houses that donZt come with >,=s on flims grounds. #t is not that we or the are not able to survive. 0ducating investors about merits of e.uit investing in e!isting schemes ma be a time consuming e!ercise. &ut that is something which the fund houses and distributors should learn to live with. +ome amount of pain and sacrifice need to be undergone to mobili4e long term mone which is in the interest of investors. The histor of closed ended >,=s suggests that the managers have less incentive to perform when the mone is locked with them for few ears. The fund house is also assured of income through management fees for few ears. Advisors are paid phenomenal brokerage of /.5F to *F ( es, ou read it right) instead of a 6.5F or 6.*5F trail the ma get through the e!isting performing funds. >,=s are reall good- for fund houses and distributors- in terms of assured assets for few ears and good revenue. #t has nothing good to offer to investors. #n fact most >,=s ma be riskier than the e!isting diversified e.uit schemes as the operate on a particular theme or premise. +ome fund houses have now started launching series of >,=s. The best wa to punish them is >=T to provide the eas mone the are seeking for. Cet fund houses and distributors work hard and sacrifice immediate gratification to educate ou and then claim a share of our wallet. 8e are not against an one making mone . 8e also e!ist in profession to make mone . +ince we deal with our mone , we have more fiduciar responsibilit than other professions. ]?nowingl do no harm^ is e!tremel important. Ho% %e ma0e money is as important as ho% much %e ma0e! Dope it reaches the ears of fund houses and distributors. <osted in $eneral, Muthu's Musings, Mutual ,unds ` Ceave a "omment a

Interestin. Insi.ht
<osted b Muthu on Mul '1, 16'/ &eing in this profession, # get access to various promotional and learning materials. # found one such material received from #;," mutual fund esterda ver interesting and thought of sharing the same with ou. The have done a stud with past +ense! data for the period '((6 to March 16'/. #n the following table, the have calculated when the past 5 ear +ense! +#< returns is the range of b[6F to 16FU, what has been the corresponding su,se8uent $ year 4ense5 4I1 returns! 1ast $ year 4I1 returns Be5t $ years 4I1 returns ran.e Ma 5i mu m J) F /* F 1J F ') F

Minimum

b[6 =:1= >We are here no%? '6-16 16U

1*F '5F -'F 'F

To e!plain, if the last 5 ear +ense! +#< returns falls between 6F to '6F range (which is the current scenario), the ne!t 5 ear +ense! returns has been in the range of '5F to /*F. #n the scenario of last 5 ear returns being the range of '6F to 16F, the ne!t 5 ear returns falls an where between -'F to 1JF. #nference7 #f ou wish to make an investment for 5 ears, then the range of +#< returns that ou are likel to e!perience over 5 ears depends on how +#<s have done in the last 5 ears. #t is alwa s beneficial to invest in markets when markets are cheap, past returns have been poor and nobod wants to invest (range of returns could be an where between '5F and J)F). #nvesting when markets are ine!pensive is the secret to making better than market returns. +o it is recommended to invest for a '6 ear period, if the past 5 ear +#< returns have been good and the markets have become e!pensive. 9ou all know that we suggest e.uit +#<s usuall for a period not less than '6 ears. #n the following table, the have calculated when the past 5 ear +ense! +#< returns is the range of b[6F to 16FU, what has been the corresponding su,se8uent 1= year 4ense5 4I1 returns! 1ast $ year 4I1 returns Be5t 1= years 4I1 returns ran.e Minimum b[6 =:1= >We are here no%? '1F 19Q Ma5i mum 11F ""Q

'6-16 16U

16F >A

1'F >A

#nference7 #n all the scenarios, an investor has made a double digit returns if the +#< investment tenure has been '6 ears. If you plan to invest in 4I1 for the lon. term >a 1= year period? it can ,e o,served that investor could ma0e .ood returns no matter %hen they invest >i!e! %hen the past 4I1 returns have ,een hi.h or lo%?! The range of returns for +#< has been reasonabl high when investing for a '6 ear period (an where between '1F and 11F) <oints to remember7 ') #f ou wish to invest through +#< for 5 ears, one should look at the returns in the last 5 ears. &ad returns in the past will make good returns more likel in the future and vice versa. "? If you %ish to invest throu.h 4I1 for 1= years; past returns have no ,earin. on future returns and therefore one can enter a 1= year 4I1 at anytime! /) Though range of returns indicated what one can e!pect, it doesnZt mean that returns at an point of time will not fall out of range. #t 3ust means that returns at the end of the time period have a high likelihood of l ing in that range. $ood returns come to those who wait. And better returns to those who wait and invest regularl . A longer period is essential to realise the full potential of compounding. #n the above calculations, data of +ense! returns has been taken. There are good number of activel managed funds which have done better than +ense!. +o far, in #ndia, active management scores over passive management. #f ou are investing '6 ear or more through +#<, across market c cles, there is no need to time the market in an sense. #nvesting regularl in a good portfolio of funds would help ou reach our financial goals. <lease consider +#< as a wa of investing our mone ever month like an installment. #n home loan, the monthl installments give ou a house. #n +#<s, monthl installments create financial asset to fulfill our financial goals _ be it retirement or our childZs education. <lease do sta the course and never forget +#<s pa 8orking >otes7 ') 1) +ource7 #;," mutual fund learning material +ense! data considers value from '((6 till March 16'/ ou back ver well over long term.

/) ,rom '((6, we have taken 5 ear +#< returns for the +ense! as on ever month end. All returns are classified into buckets (b[6, 6-'6, '6-16, 16U). ,or each return value of past 5 ear +#<, the corresponding 5 ear E '6 ear +#< return value received is calculated to arrive at minimum E ma!imum values for a particular bucket. J) +o far no data series e!ists, where past 5 ear +#< returns have been 16U along with a corresponding '6 ear +#< returns. 5) All numbers have been rounded off to their nearest whole number.

<osted in Mutual ,unds, +#< ` 1 "omments a

(n evenin. %ith 1rashant Uain
<osted b Muthu on Mune '', 16'/

<rashant Main is one of the well respected names in the fund management industr . De is the "#= ("hief #nvestment =fficer) of D;," mutual fund. Ger few can boast of long term track record as he has. De is intelligent, soft spoken, balanced and share good insights. +ome of the #,As (#ndependent ,inancial Advisors) in "hennai had the opportunit to listen to and interact with him for close to 1 hours last week. # was one among them. # want to share few things below based on this meeting. This piece is based on what # know and have been sharing with ou, what perspectives <rashant shared with us plus m own understandings and observations on the points discussed. +o itZs a mi!ture or muesli or kitchidi7-) ') 8hatZs important is to take a broad view for long term. This ensures that weZre not blinded b da to news and events. Media focuses on negative news because it sells. "onsistent, da to da growth which increases the earnings do not make interesting read and hence ignored. 0ven in these tough times, earnings have been growing at '5F. 1) At current levels markets are trading at less than 'J <0 (for ,9'J). This is lesser than long term averages. Though +ense! is at similar level to 166*, when <0 was 1), the <0 is now 'J, implies earnings have doubled in the last 5 tough ears. At '5F annuali4ed growth, the +ense! earnings ma cross 1666 in ne!t few ears. +o it would not be surprise if market touches new highs in the ears to come. /) Markets are heavil polari4ed with some large cap and high .ualit companies being ver e!pensive and the broader markets being cheap. As interest ratings are peaking, lower rates would be supportive of higher <0s. 0arnings growth and higher <0s would lead to good results for investors. J) # was surprised to know that the land under agriculture in #ndia is higher than that of "hina. 8e are self sufficient in food, vegetables, minerals etc. This is one of the few places where one gets sunshine through out the ear. Till few centuries back, #ndia contributed to 15F of the world $;<. 8eZve been growing despite politicians and corruption. 8e have more number of entrepreneurs in the world. 5) 0ver decade after independence, the $;< is growing. ;espite volatilit in growth rates, it has been in the secular, sustainable, high growth trend. $rowth will continue till we get saturated with higher base. ,or e!ample, in 166', /F of our households owned a car. >ow it has trebled to (F of household. #t is e!pected to touch 16F of house holds in 1616. Till '66F of households owns a car (there are countries which have more cars than households), the high growth tra3ector can be maintained b an econom . +o it looks like we would have good growth rate in the decades to come. 2) 8hen the econom is in such a growth tra3ector , it is wiser to own e.uities. "ompanies, hence e.uities, will do well in such economies. $;< growth is followed b earnings growth which is followed b e.uit valuations. #ndians missing out a lot b under owning e.uit . Mutual funds own /.JF of the total e.uit which is down from *F ten ears ago. <ublic shareholding has come down to 'J.1F from 11.*F during the same period. ,##s have alwa s been net bu ers (e!cept two ears- <okhran nuclear test @ 166) Cehman crisis) and the are the ones who are benefiting the most b our growth stor . *) 0.uities are less risk and volatile over long term. Dence it makes sense to invest regularl and also when <0 levels are lower. Cump sum investments ma be avoided at higher <0s, which is where most investors come and invest. The saving grace is that because of our growth in earnings, even those who invest at higher <0s donZt loose out in the long run, though their returns would be muted. The best option is regular and disciplined investing. )) The slowing of growth rate is actuall good as it reduces inflation which would reduce interest rates which would increase investments which would increase growth and so on. +lowing consumption is necessar to fi! the imbalances in the econom and will overtime result in higher

and better .ualit of growth. As alwa s, these things would continue to be c clical. As we are in the secular long term uptrend, for an investors who invest regularl and for long term, these c cles donZt matter and in fact can even be helpful. () $old has had a strong bull run over a decade and medium to long term outlook for it look weak. >orth AmericaZs growing strength in h dro carbon and shale gas ma stabili4e or lower the oil prices in the medium term. A weak gold and oil prices can do wonders to our deficit and econom . Ce us hope for the bestM '6) #n tough times, we tend to think good times never come and in good times, we tend to think it would last forever. >othing is farther from truth. The truth is things are c clical and ou would do well if ou are disciplined in investing and asset allocation. #ndia and its e.uit markets offer a great scope for building long term wealth. Make use of it to reach our goals and fulfill our aspirations. <osted in $eneral, Mutual ,unds ` ) "omments a

4imple ,ut very po%erful
<osted b Muthu on ;ecember ', 16'1 =ur clients (with a small e!ception7-)) are ver disciplined and committed towards regular monthl investing for a long term. 8h this statement: &ecause we ma forget how powerful is above, in an econom which is in the structural long term growth. # was doing some simulations based on the period #, some of m friends and colleague started our career in a meaningful wa , in terms of salar 7-) #Zve not taken high end income from our group but based on what is called average in the industr we belonged to and the roles we did. 8hat this average gu would have invested: Cet us call him Mani.'5 ears agoK he had the abilit to invest /? per month. #t became *?, '1 ears ago, '*? for last '6 ears and /6? for last 5 ears. +o starting with /? per month, over a period of '5 ears he has increased it to /6? per month. +ince we also top up once in a while, for ease of calculation, #Zve taken one time top up of %s./ lakh '6 ears ago. A one time lump sum of %s./ lakh was not impossible for a manager and above in the industr # worked. ,or e!ample, '1 ears ago, # was offered a retention bonus of %s.'.5 lakh for not .uitting the compan . %esult: # still .uit because the new compan offered '66F hike in m salar . 8ith in ) months, another compan offered 26F more than what the '66F one offered. $od bless competition7-) The salar increase was not due to an increased competence or responsibilities but pure demand. An market, including 3ob market, man a times is irrational, which is good if ou are on the right side. "oming back to Mani, from /? to /6? per month, ma3or sum added onl in the last 5 ears of his '5 ear investment tenure, with one time top up of /C '6 ears ago, he will have /s!1!$# crore as on date. This is despite pa ing home loan 0M# and an urban middle class life st le like having a +edan, going to #no! or 0scape in the weekends. Time is ver powerful in e.uit markets because of compounding at a higher rate. # pla ed around with this e!ample in some of the funds in our recommended list. ,inall # chose a diversified e.uit fund to illustrate above and not a mid or small cap fund. Cikewise # completel ignored thematic and sectoral funds, which ou know we rarel recommend.

0ven in the fund houses we like, we recommend onl the funds we like. After all anal sis, data, discussion with the AM" officials and lot of reading, the ke .uestion # ask is will # invest in this: #f it is no, it is never recommended to ou though the fund ma look good. #s the process sub3ective: 9es. &ut it has helped me and ou and lot. This #Zm sa ing based on the performance of our portfolios, especiall limiting the down side risk as the markets have been in a chopp phase for last 5 ears. 8eZre sincere and honest but cannot be ob3ective. All # can tell ou is that m sub3ectivit impacts m wealth in the same wa as ours. +eeing the 5 ear portfolio of our clients, despite market (+ense!) being lower than itZs 5 ear high, #Zm satisfied with the performance. # see returns in double digit or in some cases higher single digit. The return ma not look appealing per se. &ut in the conte!t of market conditions in the last 5 ears, it immediatel looks better. ;espite bear market, the returns are mostl better than fi!ed income instruments, with 4ero ta!ation. As #Zve written before, #Zve strong conviction about e.uit doing well in this decade and ne!t. A long bear market c cle would be followed a good bull market as the earnings are growing and "A<0O c cle is likel to pick up soon. %eversion to the mean is the rule of the markets and so what has gone down will rise again. <lease ignore the market conditions and 3ust keep doing our +#<. Cike Mani, make it a point to increase our +#< amount, preferabl ever ear, atleast b '6F. &udgeting would rarel work like dieting. +o make it a point spend onl what is left after investing. The industr likes to make simple things comple!. +o there are man variants of +#<- dail weekl , fle!ic. The current issue of Mutual ,und #nsight mentions that the difference between doing a dail and monthl +#< in +ense! over last /1 ears is 3ust 6.6/F.>ot worth it. Man tr to promote value averaging. >ot a bad concept. &ut ver cumber some. Cong term studies ('5 to 16 ears) show an advantage of onl 6.5F to 'F. Ma work unfavorabl in a prolonged bull market. Cike our salar or rent is fi!ed and paid monthl , do the same for +#<. As salar and rent is revised periodicall , again do the same for +#<. 9ou might have seen market going up b more than )66 points in the last J trading da s. This is ver normal. The rise or fall mostl happens in spurts and not in a methodical wa . ThatZs wh we again and again and againc reiterate the importance of sta ing invested for a long run and not coming in and going our periodicall . The kind of increase ou saw this week is called as Y,est daysT in the Market. As per this stud b ,idelit , Cet us take an 0leven ear period _ =ctober 166' to =ctober 16'1. %emember this period contains the most spectacular rise and fall in the stock markets. Cet us assume ouZve invested in +ense! during the above '' ear period. =f course good diversified e.uit funds have provided far superior returns than +ense!. 9ou ma visit our Y+#< "rorepathiZ page for more details. )urin. the last eleven year period; if an investor %ould have missed out -ust ten ,est days in the stoc0 mar0et; a sum of /s! 1==;=== %ould have returned only /s! ";$=;"F= as opposed to /s! $;33;1<= had he stayed fully invested! For stayin. invested; the a,solute return is $33Q! For missin. ,est ten days; the a,solute return is "$=Q! Missin. -ust ,est ten days costin. you a difference of "<3QW Can you ,elieve it An amount of %s.',66,666 invested eleven ears before in +ense! is worth following7 %emain #nvested _ %s.5,//,')6 ('2.J/F "A$%) Missed best '6 da s _ %s.1,56,1*6 ().2(F "A$%)

Missed best 16 da s- %s.',J*,//6 (/.5)F "A$%) Missed best /6 da s- %s.(/,J(6 (>egative returns) Missed best J6 da s _ %s.2/,JJ6 (>egative returns) 3he cost of missin. ,est 1= days is /s!";<";91= >rou.hly 3 times your capital? %here as cost of missin. ,est #= days is /s!#;69;3"= >#!F times your capital?! Infact your capital %ould have .ot si.nificantly eroded if youTve missed the ,est 3= and #= days! For missin. -ust ,est "= days; you %ould have merely received closer to savin.s ,an0 interest! 3ell me honestly; in hindsi.ht; ho% many of us %ould have ,een a,le to predict the ,est 1= days durin. the last 1= years leave alone predictin. the ,est #= days Ho% many of us 0ne% last %ee0 that this %ee0 mar0et %ould .ain more than <== points Mar0ets can .ain or lose even 1=Q in a sin.le day! 3he myth is that; timin. is essential to .enerate hi.h returns! 3he /eality is that; it is the time and not the timin. that matters 0ven if it is a repetition, # donZt mind sa ing simple and powerful things again and again. Must continue our +#<s, increase when possible and 3ust see where ou stand at the end of the current decade. 9ouZll be impressed with the results. 0ven for M#<s, some lose patience with in a ear or so. Alwa s look for 5 ear averages. 0ven now, despite interest rate c cle et to go firml in to the downward trend, the 5 ears performance of our recommended list looks good. 8e can advice, monitor our investments, periodicall review and discuss our life and financial situation and service ou. These would not be of an use with out patience and discipline from ou. This determines whether ou achieve the financial success or otherwise. 9ou can be absolutel convinced we would tell ou what we consider appropriate and what we do or will do with our own mone . There can be a possibilit of error in 3udgement but never ever in intent. +ince #Zve mentioned about past returns, donZt forget to read the disclaimer. 8h the character is named Mani: #tZs one of the common names in this part of the countr and sounds like mone 7-) <osted in &asics, Muthu's Musings, Mutual ,unds ` / "omments a

Ho% a hi.h school dropout ,ecame a multi: millionaire entrepreneur
0y Willis Wee 4 .ech in 1sia 5 67 hours ago

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/elated Content
• Giew <hoto Dow a high school dropout became a multi-millionaire entrepreneur &orn in '()6, Daruhisa =kamura (pictured above) is the founder and "0= of Adwa s, one of the largest tech companies in Mapan that focuses on online advertising. Adwa s also has its own ad network, internet services, and mobile games. Toda , it emplo s more than a thousand emplo ees worldwide and recorded revenue of over M<9 11.2 billion (U+W11' million) last ear. 8hatZs most impressive, however, is that =kamura is one of the oungest founders to bring a compan from 4ero to #<= in Mapan. Dis success is onl possible because =kamura started his career earl . At age '2, oung =kamura decided he was too cool for school. De opted to drop out of high school to 3oin a compan as a salesperson. ]# couldnZt make friends in school so # chose to work earl ,^ he sa s. >4ee@ %a4er "0= tells students itZs oka to waste time, get an Y,Z? =kamuraZs sales performance saw him rise through the ranks. De was so good at selling door-todoor that he became the compan Zs top salesperson on man occasions. At '2, =kamura was alread displa ing signs of a good entrepreneur. De had at least proven that he understood the art of sales.

Intri.ued ,y internet fever
#n 1666, Mapan was hit b the internet cra4e, which saw man internet companies go public. =kamura was fascinated b the industr and wanted to be a part of it. ]# saw the "0= of " berAgent AMr. +usumu ,u3itaB on TG and # was ver inspired,^ he sa s. De didnZt know much about the internet back then and laughed, sa ing he thought ]" berAgent was the internet.^ =kamura tried to appl for a 3ob at " berAgent but was re3ected. 8ith few other options left, =kamura was determined to start his ver own online marketing compan . #n ,ebruar 166', Adwa s was born. 8ith 3ust one million en (U+W'6,666), =kamura spent his first M<9 /66,666 (U+W/,666) on a computer. The rest of the mone was to be invested to build an email marketing software. #n search of talented developers, he went to engineering colleges distributing fl ers and randoml pitching to students to convince them to build him the s stem. De eventuall found one who did it for 566,666 en (U+W5,666), but the product turned out to be unusable. =kamura didnZt give up despite hitting the bump. %ather, he went to a top engineering universit and continued pitching to students. De was almost broke. +o instead of offering straight cash, he offered /6 percent of Adwa sZ sales margin if the engineer could deliver the software he wanted.

8ith some luck, =kamura met +anki >ishiguchi, a talented engineer who agreed to help Adwa s. >ishiguchi later became Adwa s first "T=. ]# was so determined to find good talent to work with that # even go to AtheB bookstore searching AforB and stalking good engineers,^ he sa s.

Xero to I1+

Under the leadership of =kamura together with >ishiguchiZs technical talent, Adwa s grew .uickl and went public in 1662. The #<= made =kamura one of the oungest entrepreneurs to list a compan in Mapan at that time. 8hen asked what made the compan grow so .uickl , =kamura told .ech in 1sia three ke points7 '. Adwa s started with an affiliate model, which means clients onl pa for actual results. Man clients felt more comfortable with this model and were therefore willing to pa . 1. ;espite starting out targeting the <" market, Adwa s switched to mobile marketing after four months to catch up with the trend. #t turned out to be a good choice. /. Adwa s alwa s insists on hiring the best engineers in the compan , which helped to build the backbone of all its products. =kamura, now //, has grown Adwa s from a small startup to an international corporation with over a thousand emplo ees around the world. =utside of Mapan, Adwa s has offices in "hina, Taiwan, the <hilippines, #ndonesia, Thailand, ?orea, Dong ?ong, the U+, and +ingapore. %evenue outside of Mapan makes up '6 percent of the compan Zs revenue, but the figure has grown over 56 percent in the last few ears. Apparentl , =kamura doesnZt 3ust want to be successful in Mapan. De is hungr for success across the globe, too. ]>ow in Mapan, we are the biggest in ad network business and we want to e!pand all over the world, especiall in Asia. 8e want to be the top smartphone ad network in the region and we also want to build more new AservicesB for mobile users.^ Adwa s also invests in other promising and interesting tech companies. #ts latest investment was $umi, the social mobile gaming compan behind the popular 0rave *rontier mobile game. >4ee@ Daving struggled through a tough ear, $umi bounces back stronger? ]8e are in a good position as mobile marketing compan throughout Asia and we want to be number one in this field. &ut it is impossible to do this b ourselves so we are alwa s looking for partners to work together. 8e are willing to make investments to achieve our target,^ sa s >obu >oda, head of global business development group at Adwa s. =kamura is encouraging the new generation of entrepreneurs to be bold, especiall in the internet industr . 8alking the talk, =kamura shared that more than 26 percent of Adwa sZ sales revenue generated now comes from businesses it created three ears ago.

]8e have to read the trend in the internet industr . 0ver thing is fast and going up and down. 0ntrepreneurs need to go with the flow,^ sa s =kamura. The post Dow a high school dropout became a multi-millionaire entrepreneur appeared first on Tech in Asia.