analysis of investment decisions karvy.doc

8/10/2019 ANALYSIS OF INVESTMENT DECISIONS karvy.doc

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ANALYSIS OF INVESTMENT DECISIONS

SubmittedBy

T.DINESH

(HT.NO. 011060128)

Project submitted in !rti!" #u"#i""ment #or t$e !%!rd o# de&ree o#

' STE O* +,SINESS D'INIST TION

+-

I E/ N ND S HOO O* P ST,DIESOS' NI ,NI E SIT3

2006 - 2008

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DE TION

I he eby de!"# e th#t thi$ % &'e!t e%& t tit"edN 3SIS O* IN EST'ENT DE ISIONS

$ubmitted by me t& the De%# tme(t &) I E/ N ND S HOO O* POST D, TE

ST,DIES i$ # b&(#)ide *& + u(de t#+e( by me #(d it i$ (&t $ubmitted t& #(y &the ,(i e $ity

& I($tituti&( )& the #*# d &) #(y de. ee di%"&m# / !e ti)i!#te & %ub"i$hed #(y time be)& e

T .DINESH

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ABST ACT

The % &'e!t ANANLYSIS OF INVESTMENT O3TIONS4 .i e$ the b ie) ide# e.# di(. the

# i&u$ i( e$tme(t &%ti&($ th#t # e % e #i"i(. i( the )i(#(!i#" m# +et$ i( I(di# 5ith "&t$ &)

i( e$tme(t &%ti&($ "i+e b#(+$ Fi7ed De%&$it$ & e (me(t b&(d$ $t&!+ m# +et e#" e$t#te

.&"d #(d mutu#" )u(d$ the !&mm&( i( e$t& e(d$ u% m& e !&()u$ed th#( e e E#!h #(d e e y

i( e$tme(t &%ti&( h#$ it$ &*( me it$ #(d deme it$ Thi$ % &'e!t I h# e di$!u$$ed #b&ut )e*

i( e$tme(t &%ti&($ # #i"#b"e

A(y i( e$t& be)& e i( e$ti(. $h&u"d t#+e i(t& !&($ide #ti&( t#e $#)ety "i9uidity etu ($

e(t y/e7it b# ie $ #(d t#7 e))i!ie(!y %# #mete $ 5e (eed t& e #"u#te e#!h i( e$tme(t &%ti&( &(

the #b& e-me(ti&(ed b#$i$ #(d the( i( e$t m&(ey T&d#y i( e$t& )#!e$ t&& mu!h !&()u$i&( i(

#(#"y:i(. the # i&u$ i( e$tme(t &%ti&($ # #i"#b"e #(d the( $e"e!ti(. the be$t $uit#b"e &(e I( the

% e$e(t % &'e!t i( e$tme(t &%ti&($ # e !&m%# ed &( the b#$i$ &) etu ($ #$ *e"" #$ &( the

%# #mete $ "i+e $#)ety "i9uidity te m h&"di(. et! thu$ #$$i$ti(. the i( e$t& #$ # .uide )&

i( e$tme(t %u %&$e

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AC


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TABLE OF CONTENETS

CONTENTS 3A E NO

Li$t &) t#b"e$ 6

Li$t &) Fi.u e$ ?

C=A3TE -1

1 INT OD,CTION 8

2 OB@ECTIVE OF T=E ST,DY

; MET=ODOLO Y 10

> LIMITATIONS OF T=E ST,DY 11

C=A3TE -2

INT OD,CTION TO INVESTMENT DECISIONS 12

6 TY3ES OF INVESTMENT OF O3TIONS 1;

C=A3TE -;

? ALL ABO,T E ,ITY INVESTMENT 1

8 ALL ABO,T BONDS INVESTMENT 21

ALL ABO,T OLD INVESTMENT 2?

10 ALL ABO,T M,T,ALF,ND INVESTMENT ;1

11 ALL ABO,T EAL ESTATE INVESTMENT ;?

12 ALL ABO,T LIFE INS, ANCE INVESTMENT >1C=A3TE ->

1; 3E FO MANCE ANALYSIS OF ET, NS >?

C=A3TE -

1> FINDIN S OF T=E ST,DY ?

1 CONCL,SION 62

16 BIBLIO A3=Y 6>


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LIST OF TABLES

TABLE 3A E NO

1 B&(d #ti(. 2;

2 A$$et id

; 3# #mete $ T#b"e 61

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LIST OF FI , ESFI , ES 3A E NO

1 Se($e7 Ch# t >?

2 BSE 100 Ch# t >8

; BSE 200 Ch# t >

> BSE 00 Ch# t 0

&"d Ch# t 1

6 E9uity T#7 S# i(. Ch# t 2

? E9uity B#"#(!ed Ch# t ;

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INT OD,CTION TO INVESTMENTS

The e # e m#(y di))e e(t de)i(iti&($ &) *h#t i( e$tme(t #(d i( e$ti(. #!tu#""y me#($ O(e &)

the $im%"e$t *#y$ &) de$! ibi(. it i$ u$i(. y&u m&(ey t& t y #(d m#+e m& e m&(ey Thi$ !#(

h#%%e( i( m#(y di))e e(t *#y$

A"" i( e$t& $ # e di))e e(t The !&mm&( )#!t& i$ th#t y&u *&u"d "i+e t& i( e$t m&(ey t& #im t&

m#+e it . &* & t& e!ei e # e.u"# i(!&me ) &m it 5e *&u"d "i+e t& $h&* y&u th#t !h&&$i(. the

m&$t $uit#b"e i( e$tme(t )& y&u d&e$ (&t (eed t& be di))i!u"t A"" y&u (eed i$ the i.ht he"%

#"&(. the *#y

The #!t !&mmitti(. m&(ey & !#%it#" t& #( e(de# & *ith the e7%e!t#ti&( &) &bt#i(i(. #(#dditi&(#" i(!&me & % &)it i$ +(&*( #$ i( e$tme(t I( e$ti(. me#($ %utti(. y&u m&(ey t& *& +

)& y&u

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OB@ECTIVE OF T=E ST,DY

The % im# y &b'e!ti e &) the % &'e!t i$ t& m#+e #( #(#"y$i$ &) # i&u$ i( e$tme(t de!i$i&( The

#im i$ t& !&m%# e the etu ($ .i e( by # i&u$ i( e$tme(t de!i$i&( T& !#te the di))e e(t (eed$

&) i( e$t& the$e &%ti&($ # e #"$& !&m%# ed &( the b#$i$ &) # i&u$ %# #mete $ "i+e $#)e

"i9uidity i$+ e(t y/e7it b# ie $ et!

The % &'e!t *& + *#$ u(de t#+e( i( & de t& h# e # e#$&(#b"e u(de $t#(di(. #b&ut the

i( e$tme(t i(du$t y The % &'e!t *& + i(!"ude$ +(&*i(. #b&ut the i( e$tme(t DECISIONS "i+e

e9uity b&(d e#" e$t#te .&"d #(d mutu#" )u(d A"" i( e$tme(t DECISIONS # e di$!u$$ed *ith

thei ty%e$ *& +i(.$ #(d etu ($


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MET=ODOLO Y

E9uitie$ B&(d$ e#" E$t#te &"d Mutu#" Fu(d$ #(d Li)e I($u #(!e *e e ide(ti)ied #$ m#'&

ty%e$ &) i( e$tme(t de!i$i&(

The % im# y d#t# )& the % &'e!t e.# di(. i( e$tme(t #(d # i&u$ i( e$tme(t DECISIONS *e e

!&""e!ted th &u.h i(te #!ti&($ h#d *ith M #.hu(#dh Si

The $e!&(d# y d#te )& the % &'e!t e.# di(. i( e$tme(t #(d # i&u$ i( e$tme(t DECISIONS

*e e !&""e!ted ) &m *eb$ite$ te7tb&&+$ #(d m#.#:i(e$

The( the # e #.e$ &) etu ($ & e # %e i&d &) ye# $ # e !&($ide ed )& the %u %&$e &

!&m%# i$&( &) i( e$tme(t &%ti&($ The( ! iti!#" #(#"y$i$ i$ m#de &( !e t#i( %# #mete $ "i+e

etu ($ $#)ety "i9uidity et! i i(. *ei.ht#.e t& the di))e e(t ty%e &) (eed$ &) the i( e$t& $ #(d

the( mu"ti%"yi(. the $#me *ith the #"ue$ #$$i.(ed d&e$ thi$

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LIMITATIONS OF T=E ST,DY

The $tudy *#$ "imited t& &("y $i7 i( e$tme(t &%ti&($

M&$t &) the i()& m#ti&( !&""e!ted i$ $e!&(d# y d#t#

The d#t# i$ !&m%# ed #(d #(#"y:ed &( the b#$i$ &) %e )& m#(!e &) the i( e$tme(t &%ti&($

& e the %#$t )i e ye# $

5hi"e !&($ide i(. the etu ($ ) &m mutu#" )u(d$ &("y t&% %e )& mi(. $!heme$ *e e

#(#"y:ed

It *#$ e y di))i!u"t t& &bt#i( the d#te e.# di(. the etu ($ yie"ded by e#" e$t#te #(d

he(!e # e #.e$ *e e t#+e(

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INVESTMENT DECISIONS

I(t &du!ti&(

The$e d#y$ #"m&$t e e y&(e i$ i( e$ti(. i( $&methi(. e e( i) it $ # $# i(.$ #!!&u(t #t the "&!#"

b#(+ & # !he!+i(. #!!&u(t the e# ($ i(te e$t & the h&me they b&u.ht t& "i e i(

=&*e e m#(y %e&%"e # e & e *he"med *he( they bei(. t& !&($ide the !&(!e%t &) i( e$ti(.

"et #"&(e the "#u(d y "i$t &) !h&i!e$ )& i( e$tme(t ehi!"e$ E e( th&u.h it m#y $eem the

e e y&(e #(d thei b &the $ +(&*$ e7#!t"y *h& *h#t #(d *he( t& i( e$t i( $& they !#( m#+e

+i""i(. %"e#$e d&( t be )&&"ed M#'& itie$ &) i( e$t& ty%i!#""y 'um% &( the "#te$t i( e$tme(t

b#(d*#.&( #(d % &b#b"y d&( t +(&* #$ mu!h #b&ut *h#t $ &ut the e #$ y&u thi(+

Be)& e y&u !#( !&()ide(t"y !h&&$e #( i( e$tme(t %#th th#t *i"" he"% y&u #!hie e y&u %e $&(#"

."$ #(d &b'e!ti e$ it $ it#""y im%& t#(t th#t y&u u(de $t#(d the b#$i!$ #b&ut the ty%e$ &)

i( e$tme(t$ # #i"#b"e


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TY3ES OF INVESTMENT O3TIONS

A b ie) % e ie* &) di))e e(t i( e$tme(t &%ti&($ i$ .i e( be"&*G

E9uitie$G I( e$tme(t i( $h# e$ &) !&m%#(ie$ i$ i( e$ti(. i( e9uitie$

St&!+$ !#( be b &u.ht/$&"d ) &m the e7!h#(.e$ H$e!&(d# y m# +et & i# I3O $ J I(iti#" 3ub"i!

O))e i(.$ H% im# y m# +et St&!+$ # e the be$t "&(.-te m i( e$tme(t &%ti&($ *he ei( the m# +et

&"#ti"ity #(d the e$u"t#(t i$+ &) "&$$e$ i) .i e( e(&u.h time # e miti.#ted by the .e(e #"

u%*# d m&me(tum &) the e!&(&my The e # e t*& $t e#m$ &) e e(ue .e(e #ti&( ) &m thi$ ) &m

&) i( e$tme(t

1 Di ide(dG 3e i&di! %#yme(t$ m#de &ut &) the !&m%#(y $ % &)it$ # e te med #$ di ide(d$

2 &*thG The % i!e &) the $t&!+ #%% e!i#te$ !&mme($u #te t& the . &*th %&$ted by the!&m%#(y e$u"ti(. i( !#%it#" #%% e!i#ti&(

O( #( # e #.e #( i( e$tme(t i( e9uitie$ i( I(di# h#$ # etu ( &) 2 K &&d %& t)&"i&

m#(#.eme(t % e!i$e timi(. m#y e($u e # etu ( &) >0K & m& e 3i!+i(. the i.ht $t&!+ #t the

i.ht time *&u"d .u# #(tee th#t y&u !#%it#" .#i($ i e . &*th i( m# +et #"ue &) $t&!+

%&$$e$$i&($ *i"" i$e

B&(d$G It i$ # )i7ed i(!&me Hdebt i($t ume(t i$$ued )& # %e i&d &) m& e th#( &(e ye# *ith the %u %&$e &) #i$i(. !#%it#" The !e(t #" & $t#te .& e (me(t !& %& #ti&($ #(d $imi"# i($tituti&($

$e"" b&(d$ A b&(d i$ .e(e #""y # % &mi$e t& e%#y the % i(!i%#" #"&(. *ith )i7ed #te &) i(te e$t

&( # $%e!i)ied d#te !#""ed #$ the m#tu ity d#te Othe )i7ed i(!&me i($t ume(t$ i(!"ude b#(+

de%&$it$ debe(tu e$ % e)e e(!e $h# e$ et!

The # e #.e #te &) etu ( &( b&(d #(d $e!u itie$ i( I(di# h#$ bee( # &u(d 10-1;K % #

Mutu#" Fu(dG The$e # e &%e( #(d !"&$e-e(ded )u(d$ &%e #ted by #( i( e$tme(t !&m%#(y

*hi!h #i$e$ m&(ey ) &m the %ub"i! #(d i( e$t$ i( # . &u% &) #$$et$ i( #!!& d#(!e *ith # $t#ted

$et &) &b'e!ti e$ It i$ # $ub$titute )& th&$e *h& # e u(#b"e t& i( e$t di e!t"y i( e9uitie$ & debt

be!#u$e &) e$&u !e time & +(&*"ed.e !&($t #i(t$ Be(e)it$ i(!"ude di e $i)i!#ti&( #(d

% &)e$$i&(#" m&(ey m#(#.eme(t Sh# e$ # e i$$ued #(d edeemed &( dem#(d b#$ed &( the )u($

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(et #$$et #"ue *hi!h i$ dete mi(ed #t the e(d &) e#!h t #di(. $e$$i&( The # e #.e #te &)

etu ( #$ # !&mbi(#ti&( &) #"" mutu#" )u(d$ %ut t&.ethe i$ (&t )i7ed but i$ .e(e #""y m& e th#(

*h#t e# ( i$ )i7ed de%&$it$ =&*e e e#!h mutu#" )u(d *i"" h# e it$ &*( # e #.e #te &) etu (

b#$ed &( $e e #" $!heme$ th#t they h# e )"ted I( the e!e(t %#$t Mutu#" Fu($ h# e .i e( #

etu ( &) 18 J ; K

e#" E$t#teG F& the bu"+ &) i( e$t& $ the m&$t im%& t#(t #$$et i( thei %& t)&"i& i$ # e$ide(ti#

h&u$e I( #dditi&( t& # e$ide(ti#" h&u$e the m& e #))"ue(t i( e$t& $ # e "i+e"y t& be i(te e$ted i(

eithe #. i!u"tu #" "#(d & m#y be i( $emi-u b#( "#(d #(d the !&mme !i#" % &%e ty

3 e!i&u$ 3 &'e!t$G 3 e!i&u$ &b'e!t$ # e item$ th#t # e .e(e #""y $m#"" i( $i:e but hi.h"y#"u#b"e i( m&(et# y te m$ S&me im%& t#(t % e!i&u$ &b'e!t$ # e "i+e the .&"d $i" e % e!i&u

$t&(e$ #(d #"$& the u(i9ue # t &b'e!t$

Li)e i($u #(!e G I( b d $e($e "i)e i($u #(!e m#y be e ie*ed #$ #( i( e$tme(t I($u #(!e % emium$ e% e$e(t the $#! i)i!e #(d the #$$u ed the $um the be(e)it$ The im%& t#(t ty%e$ &)

i($u #(!e %&"i!ie$ i( I(di# # eG

E(d&*me(t #$$u #(!e %&"i!yM&(ey b#!+ %&"i!y

5h&"e "i)e %&"i!y

Te m #$$u #(!e %&"i!y

,(it-"i(+ed i($u #(!e %"#(

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ALL ABO,T E ,ITY INVESTMENT

St&!+$ # e i( e$tme(t$ th#t e% e$e(t &*(e $hi% --- & e9uity --- i( # !& %& #ti&( 5he( y&u buy

$t&!+$ y&u h# e #( &*(e $hi% $h# e --- h&*e e $m#"" --- i( th#t !& %& #ti&( #(d # e e(tit"ed t&

%# t &) th#t !& %& #ti&( $ e# (i(.$ #(d #$$et$ St&!+ i( e$t& $ --- !#""ed $h# eh&"de $ &

$t&!+h&"de $ --- m#+e m&(ey *he( the $t&!+ i(! e#$e$ i( #"ue & *he( the !&m%#(y the i$$ued

the $t&!+ %#y$ di ide(d$ & # %& ti&( &) it$ % &)it$ t& it$ $h# eh&"de $

S&me !&m%#(ie$ # e % i #te"y he"d *hi!h me#($ the $h# e$ # e # #i"#b"e t& # "imited (umbe &)

%e&%"e $u!h #$ the !&m%#(y $ )&u(de $ it$ em%"&yee$ #(d i( e$t& $ *h& )u(d it$ de e"&%me(t

Othe !&m%#(ie$ # e %ub"i!"y t #ded *hi!h me#($ thei $h# e$ # e # #i"#b"e t& #(y i( e$t& *h&

*#(t$ t& buy them

The I3OA !&m%#(y m#y de!ided t& $e"" $t&!+ t& the %ub"i! )& # (umbe &) e#$&($ $u!h #$ % & idi(.

"i9uidity )& it$ & i.i(#" i( e$t& & #i$i(. m&(ey The )i $t time # !&m%#(y i$$ue$ $t&!+ i$ the

i(iti#" %ub"i! &))e i(. HI3O #(d the !&m%#(y e!ei e$ the % &!eed$ ) &m th#t $#"e A)te th#t

$h# e$ &) the $t&!+ # e t e#ded & b &u.ht #(d $&"d &( the $e!u itie$ m# +et$ #m&(. i( e$t& $

but the !& %& #ti&( .et$ (& #dditi&(#" i(!&me The % i!e &) the $t&!+ m& e$ u% & d&*(

de%e(di(. &( h&* mu!h i( e$t& $ # e *i""i(. t& %#y )& itO!!#$i&(#""y # !&m%#(y *i"" i$$ue #dditi&(#" $h# e$ &) it$ $t&!+$ !#""ed # $e!&(d# y &))e i(. t&

#i$e #dditi&(#" !#%it#"

Ty%e$ O) St&!+$

5ith th&u$#(d$ &) di))e e(t $t&!+$ t #di(. &( , S #(d i(te (#ti&(#" $e!u itie$ m# +et$ the e # e

$t&!+$ t& $uit e e y i( e$t& #(d t& !&m%"eme(t e e y %& t)&"i&

F& e7#m%"e $&me $t&!+$ $t e$$ . &*th *hi"e &the $ % & ide i(!&me S&me $t&!+$ )"&u i$h

du i(. b&&m time *hi"e &the $ m#y he"% i($u"#te y&u %& t)&"i& $ #"ue #.#i($t tu bu"e(t &

de% e$$ed m# +et$ S&me $t&!+$ # e % i!ey *hi"e &the $ # e !&m%# #ti e"y i(e7%e($i e A(

$&me $t&!+$ # e i(he e(t"y &"#ti"e *hi"e &the $ te(d t& be m& e $t#b"e i( #"ue

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&*th I(!&me

S&me $t&!+$ # e !&($ide ed . &*th i( e$tme(t$ *hi"e &the $ # e !&($ide ed #"ue i( e$tme(t$

F &m #( i( e$ti(. %e $%e!ti e the be$t e ide(!e &) . &*th i$ #( i(! e#$i(. % i!e & e timeSt&!+$ &) !&m%#(ie$ th#t ei( e$t thei e# (i(.$ #the th#( %#yi(. them &ut #$ di ide(d$ # e

&)te( !&($ide ed %&te(ti#" . &*th i( e$tme(t$ S& # e $t&!+$ &) y&u(. 9ui!+"y e7%#(di(.

!&m%#(ie$ V#"ue $t&!+$ i( !&(t #$t # e the $t&!+$ &) !&m%#(ie$ th#t % &b"em$ h# e bee( u(de

%e )& mi(. thei %&te(ti#" & # e &ut &) )# & *ith i( e$t& $ A$ e$u"t thei % i!e$ te(d t&

"&*e th#( $eem$ 'u$ti)ied th&u.h they m#y $ti"" be %#yi(. di ide(d$ I( e$t& $ *h& $ee+ &ut

#"ue $t&!+$ e7%e!t them t& $t#.e # !&meb#!+

M# +et C#%it#"i:#ti&(

O(e &) the m#i( *#y$ t& !#te.& i:e $t&!+$ i$ by thei m# +et !#%it#"i:#ti&( $&metime$ +(&*( #$

m# +et #"ue M# +et !#%it#"i:#ti&( Hm# +et !#% i$ !#"!u"#ted by mu"ti%"yi(. # !&m%#(y $

!u e(t $t&!+ % i!e by the (umbe &) it$ e7i$ti(. $h# e$ F& e7#m%"e # $t&!+ *ith # !u e(t

m# +et #"ue &) ;0 # $h# e #(d # hu(d ed mi""i&( $h# e$ &) e7i$ti(. $t&!+ *&u"d h# e # m# +et

!#% &) ; bi""i&(

3/E #ti&

A %&%u"# i(di!#t& &) # $t&!+ $ . &*th %&te(ti#" i$ it$ % i!e-t&-e# (i(.$ #ti& & 3/E J &

mu"ti%"e J !#( he"% y&u .#u.e the % i!e &) # $t&!+ i( e"#ti&( t& it$ e# (i(.$ F& i($t#(!e # $t&!+

*ith # 3/E &) 20 i$ t #di(. #t # % i!e 20 time$ hi.he th#( it$ e# (i(.$

A "&* 3/E m#y be # $i.( th#t # !&m%#(y i$ # %&& i( e$tme(t i$+ #(d th#t it$ e# (i(.$ # e d&*(

But it m#y #"$& i(di!#te th#t the m# +et u(de #"ue$ # !&m%#(y be!#u$e it$ $t&!+ % i!e d&e$( t

e)"e!t it$ e# (i(.$ %&te(ti#" Simi"# "y # $t&!+ *ith # hi.h 3/E m#y "i e u% t& i( e$t& e7%e!t#ti&($ &) !&(ti(ui(. . &*th & it m#y be & e #"ued

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I( e$t& dem#(d

3e&%"e buy # $t&!+ *he( they be"ie e it $ # .&&d i( e$tme(t d i i(. the $t&!+ % i!e u% But i)

%e&%"e thi(+ # !&m%#(y $ &ut"&&+ i$ %&& #(d eithe d&( t i( e$t & $e"" $h# e$ they #" e#dy &*

the $t&!+ % i!e *i"" )#"" I( e))e!t i( e$t& e7%e!t#ti&($ dete mi(e the % i!e &) # $t&!+

F& e7#m%"e i) "&t$ &) i( e$t& $ buy $t&!+ A it$ % i!e *i"" be d i e( u% The $t&!+ be!&me$ m&

#"u#b"e be!#u$e the e i$ dem#(d )& it But the e e $e i$ #"$& t ue I) # "&t &) i( e$t& $ $e"" $t&!+

it$ % i!e *i"" %"ummet The )u the the $t&!+ % i!e )#""$ the m& e i( e$t& $ $e"" it &)) d i i(

the % i!e d&*( e e( m& e

The Di ide(d$

The i$i(. $t&!+ % i!e #(d e.u"# di ide(d$ th#t e*# d i( e$t& $ #(d .i e them !&()ide(!e # e

tied di e!t"y t& the )i(#(!i#" he#"th &) the !&m%#(y

Di ide(d$ "i+e e# (i(.$ &)te( h# e # di e!t i()"ue(!e &( $t&!+ % i!e$ 5he( di ide(d$ # e

i(! e#$ed the me$$#.e i$ th#t the !&m%#(y i$ % &$%e i(. Thi$ i( tu ( $timu"#te$ . e#te

e(thu$i#$m )& the $t&!+ e(!&u #.i(. m& e i( e$t& $ t& buy #(d i i(. the $t&!+ $ % i!e u%*# d

5he( di ide(d$ # e !ut i( e$t& $ e!ei e the &%%&$ite me$$#.e #(d !&(!"ude th#t the !&m%#(y $

)utu e % &$%e!t$ h# e dimmed O(e ty%i!#" !&($e9ue(!e i$ #( immedi#te d &% i( the $t&!+ $

% i!e

C&m%#(ie$ +(&*( #$ "e#de $ i( thei i(du$t ie$ *ith $i.(i)i!#(t m# +et $h# e #(d (#mee!&.(iti&( te(d t& m#i(t#i( m& e $t#b"e #"ue$ th#( (e*e y&u(.e $m#""e & e.i&(#"

!&m%etit& $

E# (i(.$ #(d 3e )& m#(!e

I( e$t& e(thu$i#$m )& # $t&!+ !#( $&metime$ t#+e &( # m&me(tum &) it$ &*( d i i(. % i!e$ u%

i(de%e(de(t &) # !&m%#(y $ #!tu#" )i(#(!i#" &ut"&&+ Simi"# "y di$i(te e$t !#( d i e % i!e$

d&*( But t& # "# .e e7te(t i( e$t& $ b#$e thei e7%e!t#ti&($ &( # !&m%#(y $ $#"e$ #(d e# (i(.$#$ e ide(!e &) it$ !u e(t $t e(.th #(d )utu e %&te(ti#"

5he( # !&m%#(y $ e# (i(.$ # e u% i( e$t& !&()ide(!e i(! e#$e$ #(d the % i!e &) the $t&!+

u$u#""y i$e$ I) the !&m%#(y i$ "i $i( . m&(ey & (&t m#+i(. #$ mu!h #$ #(ti!i%#ted -- the

$t&!+ % i!e u$u#""y )#""$ $&metime$ #%id"y

1?


18/81

I(t i($i! V#"ue

A !&m%#(y $ i(t i($i! #"ue & u(de "yi(. #"ue i$ !"&$e"y tied t& it$ % &$%e!t$ )& )utu e

$u!!e$$ #(d i(! e#$ed e# (i(.$ F& th#t e#$&( # !&m%#(y $ )utu e #$ *e"" #$ it$ !u e(t #$$et$

!&(t ibute$ t& the #"ue &) it$ $t&!+

Y&u !#( !#"!u"#te i(t i($i! #"ue by )i.u i(. the #$$et$ # !&m%#(y e7%e!t$ t& e!ei e i( the )utu e

#(d $ubt #!ti(. it$ "&(.-te m debt The$e #$$et$ m#y i(!"ude % &)it$ the %&te(ti#" )& i(! e#$ed

e))i!ie(!y #(d the % &!eed$ ) &m the $#"e &) (e* !&m%#(y $t&!+ The %&te(ti#" )& (e* $h# e$

#))e!t$ # !&m%#(y $ i(t i($i! #"ue be!#u$e &))e i(. (e* $h# e$ #""&*$ the !&m%#(y t& #i$e

m& e m&(ey

A(#"y$t$ "&&+i(. #t i(t i($i! #"ue di ide # !&m%#(y $ e$tim#ted )utu e e# (i(.$ by the (umbe

&) it $ e7i$ti(. $h# e$ t& dete mi(e *hethe # $t&!+ $ !u e(t % i!e i$ # b# .#i( Thi$ me#$u e

#""&*$ i( e$t& $ t& m#+e de!i$i&($ b#$ed &( # !&m%#(y $ )utu e %&te(ti#" i(de%e(de(t &) $h& t-

te m e(thu$i#$m & m# +et hy%e

St&!+ S%"it$

I) # $t&!+ $ % i!e i(! e#$e$ d #m#ti!#""y the i$$ui(. !&m%#(y m#y $%"it the $t&!+ t& b i(. the

% i!e %e $h# e d&*( t& # "e e" th#t $timu"#te$ m& e t #di(. F& e7#m%"e # $t&!+ $e""i(. #t 100

# $h# e m#y be $%"it 2 )& 1 d&ub"i(. the (umbe &) e7i$ti(. $h# e$ #(d !utti(. the % i!e i( h#")The $%"it d&e$( t !h#(.e the #"ue &) y&u i( e$tme(t #t "e#$t i(iti#""y I) y&u h#d 100 $h# e$

*he( the % i!e *#$ 100 # $h# e y&u "" h# e 200 $h# e$ *& th 0 # $h# e #)te the $%"it Eithe

*#y th#t $ 10000 But i) the % i!e %e $h# e m& e$ b#!+ t&*# d the % e-$%"it % i!e #$ it m#y d&

y&u i( e$tme(t *i"" i(! e#$e i( #"ue F& e7#m%"e i) the % i!e .&e$ u% t& ? # $h# e y&u

$t&!+ *i"" be *& th 1 000 # 0K i(! e#$e

I( e$t& $ *h& h&"d # $t&!+ & e m#(y ye# $ th &u.h # (umbe &) $%"it$ m#y e(d u% *ith #

$ub$t#(ti#" i( e$tme(t e e( i) the % i!e %e $h# e d &%$ )& # time

A $t&!+ m#y be $%"it 2 )& 1 ; )& 1 & e e( 10 )& 1 i) the !&m%#(y *i$he$ th&u.h 2 )& 1 i$ the

m&$t !&mm&(

18


19/81

St&!+ e$e# !h #(d E #"u#ti&(

Be)& e i( e$ti(. i( # $t&!+ it$ im%& t#(t t& e$e# !h the i$$ui(. !&m%#(y #(d u(de $t#(d h&*

the i( e$tme(t i$ "i+e"y t& %e )& m )& e7#m%"e y&u "" *#(t t& +(&* #he#d &) time *hethe y&u

$h&u"d #(ti!i%#te # hi.h de. ee &) &"#ti"ity & m& e $t#b"e $"&*e . &*th

A .&&d %"#!e t& $t# t i$ the !&m%#(y $ 10 + e%& t *hi!h it mu$t )i"e *ith the Se!u itie$ #(d

E7!h#(.e C&mmi$$i&( HSEC e#!h ye# It$ e7t eme"y det#i"ed #(d 9uite d y but it i$ th &u.h

Y&u "" *#(t t& %#y #tte(ti&( t& the )&&t(&te$ #$ *e"" #$ the m#i( te7t $i(!e they &)te( % & ide

hi(t$ &) %&te(ti#" % &b"em$

C&m%#(y Ne*$ #(d e%& t$

C&m%#(ie$ # e e9ui ed by "#* t& +ee% $h# eh&"de $ u% t& d#te &( h&* the bu$i(e$$ i$ d&i(.

S&me &) th#t i()& m#ti&( i$ % & ided i( the )i m $ #((u#" e%& t *hi!h $umm# i:e$ the

!&m%#(y $ &%e #ti&($ )& i(di idu#" i( e$t& $ A $umm# y &) !u e(t %e )& m#(!e i$ #"$

% & ided i( the !&m%#(y $ 9u# te "y e%& t$

Buyi(. #(d Se""i(. St&!+

T& buy & $e"" # $t&!+ y&u u$u#""y h# e t& .& th &u.h # b &+e e(e #""y the m& e .uid#(!e y&u

*#(t ) &m y&u b &+e the hi.he the b &+e $ )ee S&me b &+e $ u$u#""y !#""ed )u""-$e i!e

b &+e $ % & ide # #(.e &) $e i!e bey&(d )i""i(. buy #(d $e"" & de $ )& !"ie(t$ $u!h #$

e$e# !hi(. i( e$tme(t$ #(d he"%i(. y&u de e"&% "&(. #(d $h& t-te m i( e$tme(t ."$

Di$!&u(t b &+e $ !# y &ut t #($#!ti&($ )& !"ie(t$ #t "&*e )ee$ th#( )u""-$e i!e b &+e $ but

ty%i!#""y &))e m& e "imited $e i!e$ A(d )& e7%e ie(!ed i( e$t& $ *h& t #de &)te( #(d i( "# .e

b"&!+$ &) $t&!+ the e # e dee%-di$!&u(t b &+e $ *h&$e !&mmi$$i&($ # e e e( "&*e

O("i(e T #di(. i$ the !he#%e$t *#y t& t #de $t&!+$ O("i(e b &+e #.e )i m$ &))e $ub$t#(ti#"

di$!&u(t$ *hi"e .i i(. y&u )#$t #!!e$$ t& y&u #!!&u(t$ th &u.h thei 5eb Site$ Y&u !#(

e$e# !h $t&!+$ t #!+ i( e$tme(t$ #(d y&u t& t #de be)& e #(d #)te (& m#" m# +et h&u $ M&$t &) t&d#y $ "e#di(. )u""-$e i!e #(d di$!&u(t b &+e #.e )i m m#+e &("i(e t #di(. # #i"#b"e t& thei

!u$t&me $ O("i(e t #di(. i$ #( e7t eme"y !&$t-e))e!ti e &%ti&( )& i(de%e(de(t i( e$t& $ *ith #

$&"id $t #te.y *h& # e *i""i(. t& u(de t#+e thei &*( e$e# !h =&*e e the e#$e &) m#+i(.

t #de$ #(d the #b$e(!e &) #d i!e m#y tem%t $&me i( e$t& $ t& t #de i( #(d &ut &) $t&!+$ t&&

9ui!+"y #(d m#.(i)y the %&$$ibi"ity &) "&!+i(. i( $h& t-te m "&$$e$

1


20/81

V&"#ti"ity

O(e &) the i$+$ y&u "" (eed t& %"#( )& #$ # $t&!+ i( e$t& i$ &"#ti"ity V&"#ti"ity i$ the $%eed *ith

*hi!h #( i( e$tme(t .#i($ & "&$e$ #"ue The m& e &"#ti"e #( i( e$tme(t i$ the m& e y&u !#(

%&te(ti#""y m#+e & "&$e i( the $h& t te m

M#(#.i(. i$+

O(e thi(. )& !e t#i(G Y&u $t&!+ i( e$tme(t *i"" d &% i( #"ue #t $&me %&i(t Th#t $ *h#t i$+ i$

#"" #b&ut


21/81


22/81

5h#t !&()u$e$ m#(y %e&%"e i$ th#t the %# #"ue i$ (&t the % i!e &) the b&(d A b&(d $ % i!e

)"u!tu#te$ th &u.h&ut it$ "i)e i( e$%&($e t& # (umbe &) # i#b"e$ Hm& e &( thi$ "#te 5he( #

b&(d t #de$ #t # % i!e #b& e the )#!e #"ue it i$ $#id t& be $e""i(. # % emium 5he( # b&(d $e""$

be"&* )#!e #"ue it i$ $#id t& be $e""i(. #t # di$!&u(t

C&u%&( HThe I(te e$t #te

The !&u%&( i$ the #m&u(t the b&(dh&"de *i"" e!ei e #$ i(te e$t %#yme(t$ It $ !#""ed # !&u%&(

be!#u$e $&metime$ the e # e %hy$i!#" !&u%&($ &( the b&(d th#t y&u te# &)) #(d edeem )&

i(te e$t =&*e e thi$ *#$ m& e !&mm&( i( the %#$t N&*#d#y$ e!& d$ # e m& e "i+e"y t& +e%t

e"e!t &(i!#""y

A$ % e i&u$"y me(ti&(ed m&$t b&(d$ %#y i(te e$t e e y $i7 m&(th$ but it $ %&$$ib"e )& them t&

%#y m&(th"y 9u# te "y & #((u#""y The !&u%&( i$ e7% e$$ed #$ # %e !e(t#.e &) the %# #"ue I

# b&(d %#y$ # !&u%&( &) 10K #(d it$ %# #"ue i$ 1000 the( it "" %#y K100 &) i(te e$t # ye# A

#te th#t $t#y$ #$ # )i7ed %e !e(t#.e &) the %# #"ue "i+e thi$ i$ # )i7ed- #te b&(d A(&the

%&$$ibi"ity i$ #( #d'u$t#b"e i(te e$t %#yme(t +(&*( #$ # )"ti(.- #te b&(d I( thi$ !#$e the

i(te e$t #te i$ tied t& m# +et #te$ th &u.h #( i(de7 $u!h #$ the #te &( T e#$u y bi""$

Y&u mi.ht thi(+ i( e$t& $ *i"" %#y m& e )& # hi.h !&u%&( th#( )& # "&* !&u%&( A"" thi(.$

bei(. e9u#" # "&*e !&u%&( me#($ th#t the % i!e &) the b&(d *i"" )"u!tu#te m& e

M#tu ity

The m#tu ity d#te i$ the d#te i( the )utu e &( *hi!h the i( e$t& $ % i(!i%#" *i"" be e%#id

M#tu itie$ !#( #(.e ) &m #$ "itt"e #$ &(e d#y t& #$ "&(. #$ 20 ye# $ Hth&u.h te m$ &) 100 ye# $

h# e bee( i$$ued

A b&(d th#t m#tu e$ i( &(e ye# i$ mu!h m& e % edi!t#b"e #(d thu$ "e$$ i$+y th#( # b&(d th#t

m#tu e$ i( 20 ye# $ The e)& e i( .e(e #" the "&(.e the time t& m#tu ity the hi.he the i(te e$t

#te A"$& #"" thi(.$ bei(. e9u#" # "&(.e -te m b&(d *i"" )"u!tu#te m& e th#( # $h& te -te m b&(d

I$$ue

The i$$ue &) # b&(d i$ # ! u!i#" )#!t& t& !&($ide #$ the i$$ue $ $t#bi"ity i$ y&u m#i( #$$u #(!e

&) .etti(. %#id b#!+ F& e7#m%"e the , S .& e (me(t i$ )# m& e $e!u e th#( #(y !& %& #ti&(

It$ de)#u"t i$+ Hthe !h#(!e &) the debt (&t bei(. %#id b#!+ i$ e7t eme"y $m#"" J $& $m#"" th#t , S

22


23/81

.& e (me(t $e!u itie$ # e +(&*( #$ i$+-) ee #$$et$ The e#$&( behi(d thi$ i$ th#t # .& e (me(t

*i"" #"*#y$ be b#"e t& b i(. i( )utu e e e(ue th &u.h t#7#ti&( A !&m%#(y &( the &the h#(d

mu$t !&(ti(ue t& m#+e % &)it$ *hi!h i$ )# ) &m .u# #(teed Thi$ #dded i$+ me#($ !& %& #te

b&(d mu$t &))e # hi.he yie"d i( & de t& e(ti e i( e$t& $ J thi$ i$ the i$+ / etu ( t #de&)) i(

#!ti&(

The b&(d #ti(. $y$tem he"%$ i( e$t& $ dete mi(e # !&m%#(y $ ! edit i$+ Thi(+ &) # b&(d

#ti(. #$ the e%& t !# d )& # !&m%#(y $ ! edit #ti(. B"ue-!hi% )i m$ *hi!h # e $#)e

i( e$tme(t$ h# e # hi.h #ti(. *hi"e i$+y !&m%#(ie$ h# e t& "&* #ti(. The !h# t be"&*

i""u$t #te$ the di))e e(t b&(d #ti(. $!#"e$ ) &m the m#'& #ti(. #.e(!ie$ i( the , S

M&&dy $ St#(d# d #(d 3&& $ #(d Fit!h #ti(.$

B&(d #ti(. #de i$+ M&&dy $ S 3 / Fit!hA## AAA I( e$tme(t =i.he$t u#"ityA# AA I( e$tme(t =i.h u#"ityA A I( e$tme(t St &(.B## BBB I( e$tme(t Medium #deB# B BB B @u(+ S%e!u"#ti e

C##/C#/C CCC/CC/C @u(+ =i.h"y S%e!u"#ti eC D @u(+ I( De)#u"t

N&ti!e th#t i) the !&m%#(y )#""$ be"&* # !e t#i( ! edit #ti(. it$ . #de !h#(.e$ ) &m i( e$tme(t

9u#"ity t& 'u(+ $t#tu$ @u(+ b&(d$ # e #%t"y (#medG they # e the debt &) !&m%#(ie$ i( $&me $& t

&) )i(#(!i#" di))i!u"ty Be!#u$e they # e $& i$+y they h# e t& &))e mu!h hi.he yie"d$ th#( #(y

&the debt Thi$ b i(.$ u% #( im%& t#(t %&i(tG (&t #"" b&(d$ # e i(he e(t"y $#)e th#( $t&!+$

Ce t#i( ty%e$ &) b&(d$ !#( be 'u$t i$+y i) (&t i$+ie th#( $t&!+$

Yie"d t& M#tu ity

O) !&u $e the$e m#tte $ # e #"*#y$ m& e !&m%"i!#ted i( e#" "i)e 5he( b&(d i( e$t& e)e $ t&

yie"d m#tu ity HYMT YTM i$ m& e #d #(!ed yie"d !#"!u"#ti&( th#t $h&* the i(te e$t %#yme(t

y&u *i"" e!ei e H#(d #$$ume$ th#t y&u *i"" ei( e$t the i(te e$t %#yme(t #t the $#me #te #$ the

2;


24/81

!u e(t yie"d &( the b&(d %"u$ #(y .#i( Hi) y&u %u !h#$ed #t di$!&u(t & "&$$ Hi) y&u %u !h#$ed

#t # % emium


25/81

N&te$ J debt $e!u itie$ m#tu i(. i( &(e t& 10 ye# $

B&(d$ - debt $e!u itie$ m#tu i(. i( m& e th#( 10 ye# $

Mu(i!i%#" B&(d$Mu(i!i%#" b&(d$ +(&*( #$ mu(i$4 # e the (e7t % &. e$$i&( i( te m$ &) i$+ Citie$ d&( t .&

b#(+ u%t th#t &)te( but it !#( h#%%e( The m#'& #d #(t#.e t& mu(i$ i$ th#t the etu ($ # e ) ee

) &m )ede #" t#7 Fu the m& e "&!#" .& e (me(t$ *i"" $&metime$ m#+e thei debt (&(-t#7#b"e )&

e$ide(t$ thu$ m#+i(. $&me mu(i!i%#" b&(d$ !&m%"ete"y t#7-) ee Be!#u$e &) the$e t#7 $# i(.$

the yie"d &( # mu(i # u$u#""y "&*e th#( th#t &) # t#7#b"e b&(d De%e(di(. &( y&u %e $&(#"

$itu#ti&( # mu(i !#( be . e#t i( e$tme(t &( #( i( e$tme(t &( #( #)te -t#7 b#$i$

C& %& #te B&(d$

A !&m%#(y !#( i$$ued b&(d$ 'u$t #$ it !#( i$$ue $t&!+ L# .e !& %& #ti&($ h# e # "&t &) )"e7ibi"ity

#$ t& h&* mu!h debt they !#( i$$ueG the "imit i$ *h#te e the m# +et *i"" be# e(e #""y #

$h& t-te m !& %& #te b&(d i$ "e$$ th#( )i e ye# $R i(te medi#te i$ )i e t& 12 ye# $ #(d "&(. te m

i$ & e 12 ye# $

C& %& #te b&(d$ # e !h# #!te i:ed by hi.he yi8e"d be!#u$e the e i$ # hi.he i$+ &) # !&m%#(y

de)#u"ti(. th#( # .& e (me(t The u%$ide i$ th#t they !#( #"$& be the m&$t e*# di(. )i7ed-

i(!&me i( e$tme(t$ be!#u$e &) the i$+ the i( e$t& mu$t t#+e &( The !&m%#(y $ ! edit 9u#"ity

i$ e y im%& t#(tG the hi.he the 9u#"ity the "&*e the i(te e$t #te the i( e$t& e!ei e$

Othe # i#ti&($ &( !& %& #te b&(d$ i(!"ude !&( e tib"e b&(d$ *hi!h the h&"de !#( !&( e t i(t&

$t&!+ #(d !#""#b"e b&(d$ *hi!h #""&* the !&m%#(y t& edeem #( i$$ue % i& t& m#tu ity

i$+$

A$ *ith #(y i( e$tme(t the e # e i$+$ i(he e(t i( buyi(. e e( the m&$t hi.h"y e"#ted b&(d$

F& e7#m%"e y&u b&(d i( e$tme(t m#y be !#""ed & edeemed by the i$$ue be)& e the m#tu ity

d#te E!&(&mi! d&*(tu ($ #(d %&& m#(#.eme(t &( the %# t &) the b&(d i$$ue !#( #"$&

(e.#ti e"y #))e!t y&u b&(d i( e$tme(t The$e i$+$ !#( be di))i!u"t t& #(ti!i%#te but "e# (i(.

h&* t& bette e!&.(i:e the *# (i(. $i.($ #(d +(&*i(. h&* t& e$%&(d *i"" he"% y&u $u!!eed #$

# b&(d i( e$t&

2


26/81

ALL ABO,T OLD INVESTMENT

&"d i$ the &"de$t % e!i&u$ met#" +(&*( t& m#( The e)& e it i$ # time"y $ub'e!t )& $e e #"

e#$&($ It i$ the &%i(i&( &) the m& e &b'e!ti e m# +et e7%e t$ th#t the t #diti&(#" i( e$tme(t

ehi!"e$ &) $t&!+$ #(d b&(d$ # e i( the # e#$ &) thei #""-time hi.h$ #(d m#y due )& # $e e e

!& e!ti&(

5hy .&"d i$ .&&d #$ &"d4 i$ #( i(t i.ui(. 9ue$ti&( =&*e e *e thi(+ th#t the m& e % #.m#ti!

#(!ie(t E.y%ti#($ *e e %e h#%$ m& e #!!u #te i( &b$e i(. th#t .&"d $ #"ue *#$ # )u(!ti&( &)

it$ %"e#$i(. %hy$i!#" !h# #!te i$ti!$ it$ $!# !ity

5O LD ODL IND,ST Y &"d i$ % im# i"y m&(et# y #$$et #(d %# t"y # !&mm&dity

The &"d m# +et i$ hi.h"y "i9uid #(d .&"d he"d by !e(t #" b#(+$ &the m#'& i($tituti&($

#(d et#i" @e*e"e +ee% !&mi(. b#!+ t& the m# +et

E!&(&mi! )& !e$ th#t dete mi(e the % i!e &) .&"d # e di))e e(t ) &m #(d i( m#(y !#$e$

&%%&$ed t& the )& !e$ th#t i()"ue(!e m&$t )i(#(!i#" #$$et$

I(di#( i$ the *& "d $ "# .e$t .&"d !&($ume *ith #( #((u#" dem#(d &) 800 t&($

5& "d &"d M# +et$3hy$i!#" - L&(d&( u i!h I$t#(bu" Dub#i Si(.#%& e =&(.


27/81

D&me$ti! !&($um%ti&( i$ di!t#ted by m&($&&( h# e$t #(d m# i#.e $e#$&( I(di#(

'e*e""e y &)) t#+e$ i$ $e($iti e t& % i!e i(! e#$e #(d e e( m& e $& t& &"#ti"ity

I( the !itie$ .&"d i$ )#!i(. !&m%etiti&( ) &m the $t&!+ m# +et #(d # *ide #(.e &)

!&($ume .&&d$

F#!i"itie$ )& e)i(i(. #$$#yi(. m#+i(. them i(t& $t#(d# d b# $ i( I(di# #$ !&m%# ed t&

the e$t &) the *& "d # e i($i.(i)i!#(t b&th 9u#"it#ti e"y

=&* .&"d $t#!+$ u% #$ i( e$tme(t &%ti&(

&"d #(d $i" e h# e bee( %&%u"# i( I(di# be!#u$e hi$t& i!#""y the$e #!ted #$ # .&&d hed.e

#.#i($t i()"#ti&( I( th#t $e($e the$e met#"$ h# e bee( m& e #tt #!ti e th#( b#(+ de%&$it$ & .i"t-

ed.ed $e!u itie$

De$%ite e!e(t hi!!u%$ .&"d i$ #( im%& t#(t #(d %&%u"# i( e$tme(t )& m#(y e#$&($G

I( m#(y !&u(t ie$ .&"d em#i($ #( i(te. #" %# t &) $&!i#" #(d e"i.i&u$ !u$t&m$ be$ide$

bei(. the b#$i! )& m &) $# i(. Sh#+e$%e# e !#""ed it the $#i(t-$edu!i(. .&"d

Su%e $titi&( #b&ut the he#"i(. %&*e $ &) .&"d %e $i$t$ Ayu edi! medi!i(e i( I(di#

e!&mme(d$ .&"d %&*de #(d %i""$ )& m#(y #i"me(t$

&"d i$ i(de$t u!tib"e It d&e$ (&t t# (i$h #(d i$ #"$& (&t !& &ded by #!id-e7!e%t by #

mi7tu e &) (it i! #(d hyd &!h"& i! #!id$

&"d i$ $& m#""e#b"e th#t &(e &u(!e &) the met#" !#( be be#te( i(t& # $heet !& e i(.

(e# "y # hu(d ed $9u# e )eet

&"d i$ $& du!ti"e th#t &(e &u(!e &) it !#( be d #*( i(t& )i)ty mi"e$ &) thi( .&"d *i e

&"d i$ #( e7!e""e(t !&(du!t& &) e"e!t i!ityR # mi! &$!&%i! !i !uit &) "i9uid .&"d % i(ted

&( # !e #mi! $t i% $# e$ mi"e$ &) *i i(. i( # !&m%ute

&"d i$ $& hi.h"y #"ued th#t # $i(."e $mu.."e !#( !# y .&"d *& th $ 0 "#+h

u(de (e#th hi$ $hi t

&"d i$ $& de($e th#t #"" the 0 000 t&(e$ e$tim#ted t& h# e bee( mi(ed th &u.h hi$t& y

!&u"d be t #($%& ted by &(e $i(."e m&de ( $u%e t#(+e

Fi(#""y .&"d i$ $!#m-) ee S& )# the e h# e bee( (& Mu(d #-ty%e & Meht#-ty%e $!#m$

i( .&"d

2?


28/81

Thu$ the "u e &) thi$ ye""&* met#" !&(ti(ue$

O(e the &the h#(d it i$ i(te e$ti(. t& (&te th#t #%# t ) &m it$ #e$theti! #%%e#" .&"d h#$ (&

i(t i($i! #"ue Y&u !#((&t e#t it d i(+ it & e e( $me"" it Thi$ #$%e!t &) .&"d !&m%e""ed =e( y

F& d the )&u(de &) F& d M&t& $ t& !&(!"ude th#t .&"d i$ the m&$t u$e"e$$ thi(. i( the *& "d

5hy 3e&%"e Buy &"d

HA I(du$t i#" #%%"i!#ti&($ t#+e #d #(t#.e &) .&"d $ hi.h e$i$t#(!e t& !& &$i&( it$

m#""e#bi"ity hi.h e"e!t i!#" !&(du!ti ity #(d it$ #bi"ity t& #dhe e )i m"y t& &the met#"$

The e i$ # *ide #(.e &) i(du$t ie$ ) &m e"e!t &(i! !&m%&(e(t$ t& %& !e"#i( *hi!h u$e

.&"d De(ti$t y i$ #( im%& t#(t u$e &) .&"d The 'e*e""e y i(du$t y i$ #(&the

HB A!9ui$iti&( &) .&"d be!#u$e &) it$ "&(.-% & e( #bi"ity t& et#i( #"ue #(d t& #%% e!i#te i(

#"ue

HC 3u !h#$e$ by the !e(t #" b#(+$ #(d i(te (#ti&(#" m&(et# y & .#(i:#ti&($ "i+e the

I(te (#ti&(#" M&(et# y Fu(d HIMF

I( e$tme(t O%ti&($

The e h#$ bee( # $hi)t i( dem#(d ) &m 'e*e""e y H& (#me(t#ti&( t& !&i($ #(d b# $

Hi( e$tme(t$ C&i($ !&$t "e$$ *he( !&m%# ed t& 'e*e""e y H*hi!h h#$ #dditi&(#" m#+i(.

!h# .e$ A$$#yed !e ti)ied !&i($ #(d b# $ # e # #i"#b"e th &u.h #uth& i:ed b#(+$ Dem#(d )& 'e*e""e y em#i($ $t &(. i( t #diti&(#" !i !"e$ th&u.h .&"d-%"#ted 'e*e""e y i$ #"$& be!&mi(.

%&%u"#

&"d )utu e$G i.ht (&* ? K &) I(di#($ dem#(d i$ )& 'e*e""e y the e$t i$ )& !&i($ #(d b# $

I( e$t& $ !#( #"$& d#bb"e i( .&"d )utu e$R *ith dem#t de"i e y &( $t&!+ e7!h#(.e$ Thi$ i$ "&*

!&$t #(d %hy$i!#" de"i e y i$ #t 0 %u ity &"d )utu e$ t #di(. !"&!+ed # e!e(t tu (& e &)

$> ;00 ! & e

&"d ETF$G M& e $&%hi$ti!#ted i( e$tme(t % &du!t$ *i"" !&me O(e %&$$ibi"ity i$ e7!h#(.e

t #ded )u(d$ HETF$ *he e .&"d i$ the u(de "yi(. #$$et I( e$t& $ !#( t #de ETF u(it$ *ith e#"

time 9u&te$ &"d ETF i$ "&(. & e due $#y$ N# ee(


29/81

5& "d*ide m& e th#( 600 e7!h#(.e "i$ted $t u!tu ed % &du!t$ b#$ed &( .&"d # e # #i"#b"e St eet

t #!+ #( ETF &*(ed by the 5& "d &"d C&u(!i" i$ "i$ted &( the NYSE C&mm&dity b &+e $ "i+e


30/81

ALL ABO,T M,T,AL F,ND INVESTMENT

A Mutu#" Fu(d i$ #( e(tity th#t %&&"$ the m&(ey &) m#(y i( e$t& $ it$ ,(it-=&"de $ -- t& i( e$t

i( di))e e(t $e!u itie$ I( e$tme(t$ m#y be i( $h# e$ debt $e!u itie$ m&(ey m# +et $e!u itie$ &

# !&mbi(#ti&( &) the$e Th&$e $e!u itie$ # e % &)e$$i&(#""y m#(#.ed &( beh#") &) the ,(it-=&"de

#(d e#!h i( e$t& h&"d # % &- #t# $h# e &) the %& t)&"i& i e e(tit"ed t& #(y % &)it$ *he( th

$e!u itie$ # e $&"d but $ub'e!t t& #(y "&$$e$ i( #"ue #$ *e""

Mutu#" Fu(d$ #(d $e"" $t&!+$ b&(d$ & &the $e!u itie$ A Fu(d #i$e$ m&(ey t& m#+e it$

%u !h#$e$ +(&*( #$ it$ u(de "yi(. i( e$tme(t$ by $e""i(. $h# e$ i( the )u(d E# (i(.$ the )u(d

e#"i:e$ &( it$ i( e$tme(t %& t)&"i& #)te the t #di(. !&$t$ #(d e7%e($e$ &) m#(#.i(. #(d

#dmi(i$te i(. the )u(d # e $ubt #!ted # e %#id &ut t& the )u(d$ $h# eh&"de $

Mutu#" Fu(d Set ,%

A Mutu#" Fu(d i$ $et u% i( the )& m &) # t u$t *hi!h h#$ S%&($& T u$tee$ A$$et M#(#.eme(t

C&m%#(y HAMC #(d !u$t&di#( The t u$t i$ e$t#b"i$hed by # $%&($& & m& e th#( &(e $%&($&

*h& i$ "i+e % &m&te &) # !&m%#(y The t u$tee$ &) the mutu#" )u(d h&"d it$ % &%e ty )& th

be(e)it &) the u(it h&"de $ A$$et M#(#.eme(t C&m%#(y HAMC #%% & ed by SEBI m#(#.e$ the

)u(d$ by m#+i(. i( e$tme(t$ i( # i&u$ ty%e$ &) $e!u itie$ Cu$t&di#( *h& i$ e.i$te ed *ith

SEBI h&"d$ the $e!u itie$ &) # i&u$ $!heme$ &) the )u(d i( it$ !u$t&dy The t u$tee$ # e i( e$ted*ith the .e(e #" %&*e &) $u%e i(te(de(!e #(d di e!ti&( & e AMC They m&(it& the

%e )& m#(!e #(d !&m%"i#(!e &) SEBI e.u"#ti&($ by the mutu#" )u(d

SEBI e.u"#ti&($ e9ui e th#t #t "e#$t t*& thi d$ &) the di e!t& $ &) T u$tee C&m%#(y & b d &)

t u$tee mu$t be i(de%e(de(t I e they $h&u"d (&t be #$$&!i#ted *ith the $%&($& $ A"$& 0K &)

the di e!t& $ &) ANC mu$t be i(de%e(de(t A"" mutu#" )u(d$ # e e9ui ed t& be e.i$te ed *ith

SEBI be)& e they "#u(!h #(y $!heme =&*e e ,(it T u$t &) I(di# H,TI i$ (&t e.i$te ed *ith

SEBI H#$ &( @#(u# y 1 2002

Ty%e$ &) Fu(d$ St&!+ )u(d$ #"$& !#""ed e9uity )u(d$- i( e$t % im# i"y i( $t&!+$

B&(d )u(d$ i( e$t % im# i"y i( !& %& #te & .& e (me(t b&(d$

;0


31/81

B#"#(!ed )u(d$ i( e$t i( b&th $t&!+$ #(d b&(d$

M&(ey m# +et )u(d$ m#+e $h& t-te m i( e$tme(t #(d t y t& +ee% thei $h# e #"ue )i7ed

#t 1 # $h# e

E e y )u(d i( e#!h !#te.& y h#$ # % i!e +(&*( #$ it$ (et #$$et #"ue HNAV #(d e#!h NAV di))e $

b#$ed &( the #"ue &) the )u(d$ h&"di(.$ #(d the (umbe &) $h# e$ i( e$t& $ &*( The % i!e

!h#(.e$ &(!e # d#y #t # > %m EST *he( the m# +et$ !"&$e )& the d#y A"" t #($#!ti&($ )& the

d#y J buy$ #(d $e""$ J# e e7e!uted #t th#t % i!e

S!heme$ A!!& di(. t& M#tu ity 3e i&d

A mutu#" )u(d $!heme !#( be !"#$$i)ied i(t& &%e(-e(ded $!heme & !"&$e-e(ded $!heme

de%e(di(. &( it$ m#tu ity %e i&d

O%e( JE(ded Fu(d/S!heme

A( &%e(-e(ded )u(d & $!heme i$ &(e th#t i$ # #i"#b"e )& $ub$! i%ti&( #(d e%u !h#$e &(e

!&(ti(u&u$ b#$i$ The$e $!heme$ d& (&t h# e # )i7ed m#tu ity %e i&d I( e$t& $ !#( !&( e(ie(t"y

buy #(d $e"" u(it$ #t Net A$$et V#"ue HNAV e"#ted % i!e$ *hi!h # e de!"# ed &( # d#i"y b#$i$

The +ey )e#tu e &) O%e(-E(d S!heme$ i$ "i9uidity

C"&$e-E(ded Fu(d / S!heme

A C"&$e-E(ded Fu(d & S!heme h#$ # $ti%u"#ted m#tu ity %e i&d e . -? ye# $ The )u(d i$ &%e(

)& $ub$! i%ti&( &("y du i(. # $%e!i)ied %e i&d #t the time &) "#u(!h &) the $!heme I( e$t& $ !#(

i( e$t i( the $!heme #t the time &) the i(iti#" %ub"i! i$$ue #(d the e#)te they !#( buy & $e"" the

u(it$ &) the $!heme &( the $t&!+ e7!h#(.e$ *he e the u(it$ # e "i$ted I( & de t& % & ide #( e7it

&ute t& the i( e$t& $ $&me !"&$e-e(ded )u(d$ .i e #( &%ti&( &) $e""i(. b#!+ the u(it$ t& the

mutu#" )u(d th &u.h %e i&di! e%u !h#$e #t NAV e"#ted % i!e$ SEBI e.u"#ti&($ $ti%u"#te th#t

#t "e#$t &(e &) the t*& e7it &ute$ i$ % & ided t& the i( e$t& i e eithe e%u !h#$e )#!i"ity &th &u.h "i$ti(. &( $t&!+ e7!h#(.e$ The$e mutu#" )u(d$ $!heme$ di$!"&$e NAV .e(e #""y &(

*ee+"y b#$i$

;1


32/81

S!heme$ #!!& di(. t& I( e$tme(t Ob'e!ti e

A S!heme !#( #"$& be !"#$$i)ied # . &*th $!heme i(!&me $!heme & b#"#(!ed $!heme

!&($ide i(. it$ i( e$tme(t &b'e!ti e Su!h $!heme$ m#y be &%e(-e(ded & !"&$e-e(ded $!heme$

#$ de$! ibed e# "ie Su!h $!heme$ m#y be !"#$$i)ied m#i("y #$ )&""&*$

&*th / E9uity O ie(ted S!heme

The #im &) . &*th )u(d$ i$ t& % & ide !#%it#" #%% e!i#ti&( & e the medium t& "&(.-te m Su!h

$!heme$ (& m#""y i( e$t # m#'& %# t &) thei !& %u$ i( e9uitie$ Su!h )u(d$ h# e !&m%# #ti e"y

hi.h i$+$ The$e $!heme$ % & ide di))e e(t &%ti&($ t& the i( e$t& $ "i+e di ide(d &%ti&( !#%it#"

#%% e!i#ti&( et! A(d the i( e$t& $ m#y !h&&$e #( &%ti&( de%e(di(. &( thei % e)e e(!e The

i( e$t& $ mu$t i(di!#te the &%ti&( i( the #%%"i!#ti&( )& m The mutu#" )u(d$ #"$& #""&* the

i( e$t& $ t& !h#(.e the &%ti&($ #t # "#te d#te &*th $!heme$ # e .&&d )& i( e$t& $ h# i(. #

"&(.-te m &ut"&&+ $ee+i(. #%% e!i#ti&( & e # %e i&d &) time

I(!&me /Debt O ie(ted S!heme

The #im &) i(!&me )u(d$ i$ t& % & ide e.u"# #(d $te#dy i(!&me t& i( e$t& $ Su!h $!heme$

.e(e #""y i( e$t i( )i7ed i(!&me $e!u itie$ $u!h #$ b&(d$ !& %& #te debe(tu e$ & e (me(t

$e!u itie$ #(d m&(ey m# +et i($t ume(t$ Su!h )u(d$ # e "e$$ i$+y !&m%# ed t& e9uity $!heme$

The$e )u(d$ # e (&t #))e!ted be!#u$e &) )"u!tu#ti&($ i( e9uity m# +et$ =&*e e &%%& tu(itie$ &)

!#%it#" #%% e!i#ti&( # e #"$& "imited i( $u!h )u(d$ The NAV$ &) $u!h )u(d$ # e #))e!ted be!#u$e

&) !h#(.e i( i(te e$t #te$ i( the !&u(t y I) the i(te e$t #te$ )#"" NAV$ &) $u!h )u(d$ # e "i+e"y

t& i(! e#$e i( the $h& t u( #(d i!e e $# =&*e e "&(. te m i( e$t& $ m#y (&t b&the #b&ut

the$e )"u!tu#ti&($

B#"#(!ed Fu(d

The #im &) b#"#(!ed )u(d$ i$ t& % & ide b&th . &*th #(d e.u"# i(!&me #$ $u!h $!heme$ i( e$t

b&th i( e9uitie$ #(d )i7ed i(!&me $e!u itie$ i( the % &%& ti&( i(di!#ted i( thei &))e d&!ume(t$

The$e # e #%% &% i#te )& i( e$t& $ "&&+i(. )& m&de #te . &*th They .e(e #""y i( e$t >0K-

60K i( e9uity #(d debt i($t ume(t$ The$e )u(d$ # e #"$& #))e!ted be!#u$e &) )"u!tu#ti&($ i(

;2


33/81

$h# e % i!e$ i( the $t&!+ m# +et$ =&*e e NAV$ &) $u!h )u(d$ # e "i+e"y t& be "e$$ &"#ti"e

!&m%# ed t& %u e e9uity )u(d$

Se!t& $%e!i)i! Fu(d$/ $!heme$

The$e # e the )u(d$/$!heme$ *hi!h i( e$t i( the $e!u itie$ &) &("y th&$e $e!t& $ & i(du$t ie$ #$

$%e!i)ied i( the &))e d&!ume(t$ E . 3h# m#!euti!#"$ S&)t*# e F#$t M& i(. C&($ume &&d$

HFMC 3et &"eum $t&!+$ et! the etu ($ i( the$e )u(d$ # e de%e(de(t &( the %e )& m#(!e &)

the e$%e!ti e $e!t& $/i(du$t ie$ 5hi"e the$e )u(d$ m#y .i e hi.he etu ($ they # e m& e i$+y

!&m%# ed t& di e $i)ied )u(d$ I( e$t& $ (eed t& +ee% # *#t!h &( the %e )& m#(!e &) th&$e

$e!t& $/i(du$t ie$ #(d mu$t e7it #t #( #%% &% i#te time They m#y #"$& $ee+ #d i!e &) #( e7%e t

T#7 S# i(. S!heme$

The$e $!heme$ &))e t#7 eb#te$ t& the i( e$t& $ u(de $%e!i)i! % & i$i&($ &) the I(!&me T#7 A!t

1 61 #$ the & e (me(t O))e $ T#7 I(!e(ti e$ )& i( e$tme(t i( $%e!i)ied # e(ue$ E . E9uity

Li(+ed S# i(.$ S!heme$ HELSS 3e($i&( $!heme$ "#u(!hed by the mutu#" )u(d$ #"$& &))e t#7

be(e)it The$e $!heme$ # e . &*th & ie(ted #(d i( e$t % e-d&mi(#(t"y i( e9uitie$ Thei . &*th

&%%& tu(itie$ #(d i$+$ #$$&!i#ted # e "i+e #(y e9uity-& ie(ted $!heme

The A%%e#" &) Mutu#" Fu(d$Mutu#" Fu(d$ $im%"i)y *h#t y&u m#y )i(d m&$t !&m%"i!#ted #b&ut i( e$ti(. )i.u i(. &ut *h#t

t& buy #(d *he( t& $e"" t& meet y&u %# ti!u"# ."$ & &b'e!ti e$ F& e7#m%"e i) y&u #

$ee+i(. . &*th by i( e$ti(. i( b"ue !hi% $t&!+$ the e # e # *ide # iety &) )u(d$ t& !h&$e ) &m

th#t %u $ui(. % e!i$e"y thi$ $t #te.y

T& !h&$e the )u(d th#t *i"" he"% y&u meet # $%e!i)i! ." y&u !#( !&m%# e it$ "&(.-te m

%e )& m#(!e J & e & 10 ye# $ J t& &the )u(d$ *ith $imi"# &b'e!ti e$ "e# ( #b&ut *h&m the

m#(#.e i$ #(d h&* the )u(d i$ u( #(d !he!+ &ut it$ )ee $t u!tu e Y&u !#( u$e the )u(d$ % &$%e!tu$ i()& m#ti&( &( the )u(d !&m%#(y $ 5eb Site$ #(d % &)e$$i0&(#" #d i!e Mutu#"

)u(d$ !#( he"% y&u di e $i)y y&u %& t)&"i& & $% e#d &ut the m&(ey y&u h# e t& i( e$t t& mee

di))e e(t ."$ O(e *#y t& di e $i)y i$ t& !h&$e )u(d$ *ith di))e e(t &b'e!ti e$ #"i.(ed *ith y&u

&*( & e% e$e(ti(. di))e e(t $e.me(t$ &) the m# +et F& e7#m%"e y&u mi.ht buy # b"ue-!hi%

)u(d # $m#"" !&m%#(y . &*th )u(d #( i(te (#ti&(#" $t&!+ )u(d #(d # .& e (me(t )u(d

;;


34/81

Di e $i)i!#ti&(

M&$t e7%e t #. ee$ th#t it $ m& e e))e!ti e t& i( e$t i( # # iety &) $t&!+$ #(d b&(d$ th#( t&

de%e(d &( # $t &(. %e )& m#(!e &) 'u$t &(e & t*& $e!u itie$ But di e $i)yi(. !#( be # !h#""e(.e

be!#u$e buyi(. # %& t)&"i& &) i(di idu#" $t&!+$ #(d b&(d$ !#( be e7%e($i e A(d +(&*i(. *h#t

t& buy J #(d *he( J t#+e( time #(d !&(!e(t #ti&(

Mutu#" )u(d$ !#( &))e $&"uti&( 5he( y&u %ut m&(ey i( t& # )u(d it $ %&&"ed *ith m&(ey ) &m

&the i( e$t& $ t& ! e#te mu!h . e#te buyi(. %&*e th#( y&u bui"d # di e $i)ied %& t)&"i& Si(!e

# )u(d m#y &*( hu(d ed$ &) di))e e(t $e!u itie$ it$ $u!!e$$ i$( t de%e(de(t &( h&* &(e & t*&

h&"di(. d&

I( e$tme(t &b'e!ti e$

T& #!hie e it$ i( e$tme(t &b'e!ti e J *hethe it i$ "&(. J te m . &*th & !#%it#" % e$e #ti&( &

#(ythi(. i( bet*ee( J the )u(d $ m#(#.e i( e$t$ i( $e!u itie$ he & $he be"ie e$ *i"" % & ide the

e$u"t the )u(d $ee+$ T& ide(ti)y th&$e $e!u itie$ # )u(d $ e$e# !h $t#)) &)te( u$e$ *h#t $ +(&*(

#$ # b&tt&m J u% $ty"e *hi!h i( &" e$ # det#i"ed #(#"y$i$ &) the i(di idu#" !&m%#(ie$ i$$ui(. the

$e!u itie$ 5he( the &b'e!t i$ $m#""J !&m%#(y . &*th & the )&!u$ i$ &( eme .i(. m# +et$ the

% &!e$$ !#( be m& e di))i!u"t be!#u$e the e $ "imited i()& m#ti&( # #i"#b"e

Y&u m#y !h&&$e mutu#" )u(d$ *ith $%e!i)i! i( e$tme(t &b'e!ti e$ t& &u(d &ut y&u %& t)&"i& &) i(di idu#" h&"di(.$ O y&u m#y !h&&$e # (umbe &) mutu#" )u(d$ *ith di))e e(t &b'e!ti e$

! e#ti(. # di e $i)ied %& t)&"i& i( th#t *#y

3 &)e$$i&(#" m#(#.eme(t

A(&the e#$&( i( e$t& $ # e #tt #!ted t& mutu#" )u(d$ i$ th#t e#!h )u(d h#$ # % &)e$$i&(#"

m#(#.e *h& $et$ it$ i( e$tme(t buyi(. $ty"e #(d di e!t$ the +ey buy #(d $e"" de!i$i&($

A buyi(. $ty"e de)i(e$ the %# ti!u"# i( e$tme(t$ & ty%e$ &) i( e$tme(t$ # )u(d m#+e$ ) &m the %&&" th#t m#y be #%% &% i#te )& meeti(. it$ &b'e!ti e F& e7#m%"e i( $ee+i(. "&(.-te m !#%it#"

#%% e!i#ti&( $&me e9uity )u(d m#(#.e $ $t e$$ #"ue i( e$tme(t$ *hi!h me#( they buy $t&!+$

*h&$e % i!e$ # e "&*e th#( mi.ht be e7%e!ted Othe $ $t e$$ . &*th i( e$tme(t$R &)te( y&u(.e

dy(#mi! !&m%#(ie$ the m#(#.e be"ie e$ *i"" be!&me m#'& %"#ye $ i( thei i(du$t y & i( the

e!&(&my #$ # *h&"e

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35/81

S&me e7%e t$ be"ie e th#t # )u(d $ m#(#.e h#$ # m#'& &"e i( dete mi(i(. the e$u"t$ # )u(d

#!hie e$ They #d i$e th#t y&u !&()i m th#t # $u!!e$$)u" m#(#.e i$ $ti"" *ith the )u(d be)& e y&u

i( e$t #(d th#t y&u !&($ide $e""i(. y&u $h# e$ i) th#t m#(#.e "e# e$

ei( e$tme(t

Bei(. #b"e t& ei( e$t y&u di$t ibuti&($ t& buy #dditi&(#" $h# e$ i$ #(&the #d #(t#.e &)

i( e$ti(. i( mutu#" )u(d$ Y&u !#( !h&&$e th#t &%ti&( *he( y&u &%e( # (e* #!!&u(t & #t #(y

time *hi"e y&u &*( $h# e$ A(d &) !&u $e y&u #"$& h# e the &%ti&( t& e!ei e y&u di$t ibuti&($

i) y&u (eed the i(!&me the )u(d *&u"d % & ide

By i( e$ti(. e.u"# "y y&u bui"d the i( e$tme(t b#$e &( *hi!h )utu e e# (i(.$ *i"" be #b"e t&

#!!umu"#te # % &!e$$ +(&*( #$ !&m%&u(di(. The m& e y&u h# e i( e$ted the . e#te y&u e

%&te(ti#" )& )utu e . &*th A(d be!#u$e the )u(d h#(d"e$ the % &!e$$ &""i(. & e di$t ibuti&($

i(t& (e* $h# e$ #$ they # e %#id y&u d&( t h# e t& bud.et )& i( e$ti(. & emembe t& * ite the

!he!+

i$+

The e i$ #"*#y$ the i$+ th#t # mutu#" )u(d *&(t meet it$ i( e$tme(t &b'e!ti e & % & ide the

etu ( y&u # e $ee+i(. A(d $&me )u(d$ # e by de)i(iti&( i$+ie th#( &the $ F& e7#m%"e # )u(d

th#t i( e$t$ i( $m#"" (e* !&m%#(ie$-*hethe )& . &*th & #"ue Je7%&$e$ y&u t& the i$+ th#tthe !&m%#(ie$ *i"" (&t %e )& m #$ *e"" #$ the )u(d m#(#.e e7%e!t$ A(d i( m# +et d&*(tu ($

)#""i(. % i!e$ )& # )u(d$ u(de "yi(. i( e$tme(t m#y % &du!e # "&$$ #the th#( # .#i( )& the

)u(d

Sh& t-Te m #i($

E#!h time # mutu#" )u(d $e""$ #( i( e$tme(t )& m& e th#( the )u(d %#id t& buy it the )u(d

e#"i:e$ # !#%it#" .#i( A(d th&$e .#i($ # e %#$$ed #"&(. t& the )u(d$ i( e$t& $ i( % &%& ti&( t&

the (umbe &) $h# e$ i( the )u(d th#t i( e$t& &*($M&$t #!ti e"y m#(#.ed )u(d$ d&( t *#it m& e th#( # ye# be)& e $e""i(. i( e$tme(t$ Th#t me#($

th#t #(y % &)it &( the $#"e i$ # $h& t-te m !#%it#" .#i( *hi!h i$ t#7ed #t y&u e.u"# t#7 #te A(d

$i(!e # )u(d ty%i!#""y d&e$( t *ithh&"d t#7ed &( y&u beh#") #$ #( em%"&ye d&e$ y&u mu$t

!&me u% *ith the #m&u(t y&u &*e ) &m &the $&u !e$ i) y&u d&( t *#(t t& $e"" $h# e$-#t #

%&te(ti#" #dditi&(#" .#i( J t& #i$e the m&(ey y&u &*e

;


36/81

ALL ABO,T EAL ESTAES INVESTMENT

Be)& e the $t&!+ m# +et #(d mutu#" )u(d$ be!#me %&%u"# %"#!e$ )& %e&%"e t& %ut thei

i( e$tme(t d&""# $ i( e$ti(. i( e#" e$t#te *#$ e7t eme"y %&%u"# 5e $ti"" m#i(t#i( th#t

i( e$ti(. i( e#" e$t#te i$ (&t 'u$t )& "#(d b# &($ & the i!h #(d )#m&u$ A$ # m#tte &) )#!t the

h&me *e buy #(d "i e i( i$ &)te( &u bi..e$t i( e$tme(t

F"yi(. hi.h &( the *i(.$ &) b&&mi(. e#" e$t#te % &%e ty i( I(di# h#$ be!&me # d e#m )& e e y

%&te(ti#" i( e$t& "&&+i(. )& *# d t& di. % &)it$ A"" # e eyei(. I(di#( % &%e ty m# +et )& # *ide

# iety &) e#$&($ It $ e e . &*i(. e!&(&my *hi!h i$ &( # !&(ti(u&u$ i$e *ith 8 1 %e !e(t

i(! e#$e *it(e$$ed i( the "#$t )i(#(!i#" ye# The b&&m i( e!&(&my i(! e#$e$ %u !h#$i(. %&*e

&) it$ %e&%"e #(d ! e#te$ dem#(d )& e#" e$t#te $e!t&

O(!e y&u h# e m#de the de!i$i&( t& be!&me # h&me&*(e it u$u#""y me#($ y&u *i"" h# e t&

b& &* the "# .e$t #m&u(t y&u h# e e e b& &*ed t& %u !h#$e $&methi(. Thi$ e#"i:#ti&( m#y

m#+e y&u *#(t t& bu y y&u he#d i( the $#(d #(d $i.( &( the d&tted "i(e but y&u $h&u"d( t F&

m&$t %e&%"e thi$ i$ the "# .e$t %u !h#$e they *i"" e e m#+e du i(. thei "i)etime #(d thi$ m#+e$

it #"" the m& e im%& t#(t t& .#the #$ mu!h +(&*"ed.e #$ %&$$ib"e #b&ut *h#t they e .etti(.

i(t&

5e .i e y&u the i()& m#ti&( y&u (eed i(!"udi(. m#+i(. the de!i$i&( &( *hethe *he( #(d

*h#t y&u $h&u"d %u !h#$eR )i(di(. the ty%e$ &) m& t.#.e$ #(d )i(#(!i(. # #i"#b"eR h#(d"i(. the

!"&$i(.R #(d +(&*i(. *h#t y&u "" (eed *he( it$ time t& $e"" y&u h&me 5e #"$& e7%"#i( the

i(!&me t#7 !&($e9ue(!e$ #(d #$$et % &te!ti&( #d #(t#.e$ &) h&me &*(e $hi%

Y&u !#( #"$& u$e e#" e$t#te *hethe "#(d & bui"di(. $t i!t"y #$ i( e$tme(t ehi!"e$ #(d

de%e(di(. &( y&u i(di idu#" $itu#ti&( y&u !#( d& it &( # . #(d & $m#""e $!#"e Let $ "&&+ #t

the *& "d &) e#" e$t#te #(d the i( e$ti(. &%ti&($ # #i"#b"e

;6


37/81

=&me #$ #( I( e$tme(t G O*i(. # h&me i$ the m&$t !&mm&( )& m &) e#" e$t#te i( e$ti(.

Let u$ $h&* y&u h&* y&u h&me i$ (&t 'u$t the %"#!e y&u "i e but it$ #"$& %e h#%$ y&u

"# .e$t #(d $#)e$t i( e$tme(t #$ *e""

I( e$tme(t e#" E$t#te G The i( #(d &ut$ &) i( e$ti(. i( e#" e$t#te #(d *hethe it $ thei.ht i( e$tme(t ehi!"e )& y&u 5hethe y&u # e thi(+i(. i( te m$ &) e(ti(. &ut y&u )i $t

h&me *he( y&u m& e &( t& # bi..e &(e & i( e$ti(. i( # bui"di(. )u"" &) #%# tme(t$ *e *i""

e7%"#i( *h#t y&u (eed t& +(&*

e#" E$t#te 3 &%e ty

,$u#""y the )i $t thi(. y&u "&&+ #t *he( y&u %u !h#$e # h&me i$ the de$i.( #(d the "#y&ut But i)

y&u "&&+ #t the h&u$e #$ #( i( e$tme(t it !&u"d % & e e y "u! #ti e ye# $ d&*( the d F& them#'& ity &) u$ buyi(. # h&me *i"" be the "# .e$t $i(."e i( e$tme(t *e m#+e i( &u "i)etime e#"

e$t#te i( e$ti(. d&e$( t 'u$t me#( %u !h#$i(. # h&u$e- it !#( i(!"ude #!#ti&( h&me$

!&mme !i#" % &$%e itie$ "#(d Hb&th de e"&%ed #(d u(de e"&%ed !&(d&mi(ium$ #(d m#(y &the

%&$$ibi"itie$

5he( buyi(. % &%e ty )& the %u %&$e &) i( e$ti(. the m&$t im%& t#(t )#!t& t& !&($ide i$ the

"&!#ti&( ,("i+e &the i( e$tme(t$ e#" e$t#te i$ d #m#ti!#""y #))e!ted by the !&(diti&( &) the

immedi#te # e# $u &u(di(. the % &%e ty #(d &the "&!#" )#!t& $ Se e #" )#!t& $ (eed t& be

!&($ide ed *he( #$$e$$i(. the #"ue &) e#" e$t#te Thi$ i(!"ude$ the #.e #(d !&(diti&( &) the

h&me im% & eme(t$ th#t h# e bee( m#de e!e(t $#"e$ i( the (ei.hb& h&&d !h#(.e$ t& :&(i(.

e.u"#ti&($ et! Y&u h# e t& "&&+ #t the %&te(ti#" i(!&me # h&u$e !#( % &du!e #(d h&* it

!&m%# e$ t& &the $ h&u$e$ i( the # e#

Ob'e!ti e$ #(d i$+$

e#" e$t#te i( e$ti(. #""&*$ the i( e$t& t& t# .et hi$ & he &b'e!ti e$ F& e7#m%"e i) y&u

&b'e!ti e i$ !#%it#" #%% e!i#ti&( the( buyi(. # % &mi$i(. %ie!e &) % &%e ty i( # (ei.hb& h&&d

*ith . e#t %&te(ti#" *i"" he"% y&u #!hie e thi$ O( the &the h#(d i) *h#t y&u $ee+ i$ i(!&me the(

buyi(. # e(t#" % &%e ty !#( he"% % & ide e.u"# i(!&me

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38/81

The e # e $i.(i)i!#(t i$+$ i( &" ed i( h&"di(. e#" e$t#te 3 &%e ty t#7e$ m#i(te(#(!e e7%e($e$

#(d e%#i !&$t$ # e 'u$t $&me &) the !&$t$ &) h&"di(. the #$$et Fu the m& e e#" e$t#te i$

!&($ide ed t& be e y i""i9uid J it !#( $&metime$ be h# d t& )i(d # buye i) y&u (eed t& $e"" the

% &%e ty 9ui!+"y

=&* t& Buy & Se"" it

e#" e$t#te i$ #"m&$t e7!"u$i e"y b&u.ht th &u.h e#" e$t#te #.e(t$ & b &+e $ thei !&m%e($#ti&(

u$u#""y i$ # %e !e(t#.e &) the %u !h#$e % i!e &) the % &%e ty e#" e$t#te !#( #"$& be %u !h#$ed

di e!t"y? ) &m the &*(e *ith&ut the #$$i$t#(!e &) # thi d %# ty I) y&u )i(d buyi(. % &%e ty t&&

e7%e($i e the( !&($ide i( e$ti(. i( e#" e$t#te i( e$tme(t t u$t$ H EIT$ *hi!h # e di$!u$$ed i(

the (e7t $e!ti&(

Let $ t#+e # "&&+ #t the di))e e(t ty%e$ &) i( e$tme(t e#" e$t#te y&u mi.ht !&(tem%"#te &*i(.

Fi7e -,%%e $

Y&u !#( m#+e m&(ey th &u.h i( e$ti(. i( e#" e$t#te i) y&u buy h&u$e$ !&(d&mi(ium$

bui"di(.$ et! *hi!h (eed $&me *& + #t # b# .#i( % i!e #(d )i7 them u% Y&u !#( % &b#b"y $e""

the e#" e$t#te )& # hi.he % i!e th#( y&u %#id #(d m#+e # % &)it =&*e e d&( t u(de e$tim#te

the *& + time #(d m&(ey th#t .&e$ i(t& buyi(. e%#i i(. #(d $e""i(. # h&me *he( y&u # e

dete mi(i(. *hethe it *i"" be % &)it#b"e )& y&u t& i( e$t A"$& emembe th#t di))e e(t t#7 u"e$

*i"" #%%"y t& the %u !h#$e #(d $#"e &) # h&me i) it i$ (&t y&u % i(!i%#" e$ide(!e

e(t#" 3 &%e ty

Y&u !#( buy e#" e$t#te )& e(t#" %u %&$e$ #(d e!ei e #( i(!&me $t e#m ) &m e(te $ Y&u m#y

#"$& be #b"e t& e e(tu#""y $e"" the % &%e ty )& m& e th#( y&u b&u.ht it )& #(d m#+e # .&&d

% &)it A"th&u.h d&( t )& .et th#t y&u *i"" (&* be # "#(d"& d *h& m#y h# e t& de#" *ith

(&(%#yi(. te(#(t$ #(d de$t u!ti e te(#(t$ E e( i) y&u h# e the *& "d$ be$t te(#(t$ y&u $ti""

h# e t& de#" *ith u%+ee% &) the % &%e ty #(d #(y % &b"em$ th#t !&me u% S&me i( e$t& $ hi e

% &%e ty m#(#.e & m#(#.eme(t !&m%#(y t& m#(#.e thei i( e$tme(t e#" e$t#te Thi$ i$ )i(e

but d&( t )& .et t& )#!t& i( the m#(#.eme(t )ee$ *he( y&u # e !#"!u"#ti(. y&u % &)it ) &m the

i( e$tme(t

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39/81

3"e#$e emembe th#t e(t#" e#" e$t#te i$ $ub'e!t t& di))e e(t t#7 u"e$ th#( the h&me y&u e$ide

i( y&u m#y be #b"e t& t#+e t#7 dedu!ti&($ )& "&$$e$ !#%it#" e7%e(ditu e #(d de% e!i#ti&( i) y&u

meet !e t#i( e9ui eme(t$ but &the dedu!ti&($ $%e!i)i! t& % i(!i%"e e$ide(!e m#y (&t be

# #i"#b"e t& y&u

,(im% & ed L#(d

,(im% & ed "#(d i$ di))i!u"t i( e$tme(t t& m#+e # % &)it i( ,("e$$ y&u m#(#.e t& buy # %ie!e &)

"#(d th#t i$ e7t eme"y de$i #b"e #t # .&&d % i!e #(d # e !e t#i( th#t it i$ (&t b# ed ) &m % &)it#b"e

u$e )& the (ei.hb& h&&d it i$ "&!#ted i( Hbe!#u$e &) :&(i(. & &the i$$ue$ it *i"" % &b#b"y !&$t

y&u m& e t& &*( the % &%e ty th#( y&u *i"" e e m#+e $e""i(. it H emembe y&u *i"" $ti"" h# e

t& %#y % &%e ty t#7e$ #(d *i"" #"$& "i+e"y i(!u &the u%+ee% !&$t$ &( the "#(d #(d y&u *&( t be

e!ei i(. #(y i(!&me ) &m e(t$

I) y&u h# e $&me $& t &) i($ide $!&&% &( # %ie!e &) "#(d H)& e7#m%"e the %e $&( i( the h&u$e &

the "&t (e7t t& the "#(d i$ # *e#"thy e!"u$e #(d d&e$ (&t *#(t the % &%e ty bui"t u%&( $& y&u !#(

(#me y&u % i!e t& $e"" it t& him & %"#( &( de e"&%i(. it y&u $e") Hbui"di(. y&u h&me &( # %ie!e

&) % &%e ty (e7t t& # "#+e i( th#t !#$e it m#y be # .&&d i( e$tme(t

Se!&(d =&me$

Se!&(d =&me$ & #!#ti&( h&me$ $h&u"d be %u !h#$ed % im# i"y )& #!#ti&( %u %&$e$ (&

i( e$tme(t %u %&$e$ M&$t %e&%"e e(d u% *ith # "&$$ &( thei #!#ti&( h&me % &%e tie$ be!#u$

e e( i) y&u !#( m#(#.e t& e(t the h&me the !&$t$ &) &*(i(. the h&me #"m&$t #"*#y$ e7!eed the

e(t#" i(!&me it b i(. i(

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40/81

ALL ABO,T LIFE INS, ANCE INVESTMENT

Li)e I($u #(!e i$ i(!&me % &te!ti&( i( the e e(t &) y&u de#th The %e $&( y&u (#me #$ y&u

be(e)i!i# y *i"" e!ei e % &!eed$ ) &m #( i($u #(!e !&m%#(y t& &))$et the i(!&me "&$t #$ # e$u"t&) y&u de#th Y&u !#( thi(+ &) "i)e i($u #(!e #$ # m& bid ) &m &) .#mb"i(.G i) y&u "i ed "&(.e

th#( the i($u #(!e !&m%#(y e7%e!ted y&u t& the( y&u *&u"d "&$e4 the bet But i) y&u died e# "y

the( y&u *&u"d *i(4 be!#u$e the i($u #(!e !&m%#(y *&u"d h# e t& %#y &ut y&u be(e)i!i# y

I($u e $ H& u(de * ite $ "&&+ !# e)u""y #t de!#de$ *& th &) d#t# t& t y t& % edi!t e7#!t"y h&*

"&(. y&u *i"" "i e I($u #(!e u(de * ite $ !"#$$i)y i(di idu#"$ b#$ed &( thei hei.ht *ei.ht

"i)e$ty"e Hi e *hethe & & (&t they $m&+e #(d medi!#" hi$t& y Hi e i) they h# e h#d #(y $e i&u$

he#"th !&m%"i!#ti&($ A"" the$e # i#b"e$ *i"" dete mi(e *h#t #te !"#$$ !#te.& y # %e $&( )it$

i(t& Thi$ d&e$( t me#( th#t $m&+e $ #(d %e&%"e *h& h# e h#d $e i&u$ he#"th % &b"em$ !#( t be

i($u ed it 'u$t me#($ they "" %#y di))e e(t % emium$

The e # e t*& e y !&mm&( +i(d$ &) "i)e i($u #(!e te m "i)e #(d %e m#(e(t "i)e Te m "i)e

i($u #(!e i$ u$u#""y )& # e"#ti e"y $h& t %e i&d &) time *he e#$ # %e m#(e(t "i)e %&"i!y i$ &(e

th#t y&u %#y i(t& th &u.h&ut y&u e(ti e "i)e The$e %#yme(t$ # e u$u#""y )i7ed ) &m the time y&u

%u !h#$e y&u %&"i!y B#$i!#""y the y&u(.e y&u # e *he( y&u $i.(-u% )& thi$ ty%e &) i($u #(!e the !he#%e y&u m&(th"y %#yme(t$ *i"" be

Need )& "i)e i($u #(!e

i$+$ #(d u(!e t#i(tie$ # e %# t &) "i)e $ . e#t #d e(tu e J #!!ide(t i""(e$$ the)t (#tu #" di$#$te

J they e #"" bui"t i(t& the *& +i(. &) the ,(i e $e *#iti(. t& h#%%e( I($u #(!e the( i$ m#( $

#($*e t& the #.# ie$ &) "i)e I) y&u !#((&t be#t m#(-m#de #(d (#tu #" !#"#mitie$ *e"" #t "e#$t

be % e%# ed )& them #(d thei #)te m#th

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Ty%e$ &) "i)e I($u #(!e

M&$t &) the % &du!t$ &))e ed by I(di#( Li)e i($u e $ # e de e"&%ed #(d $t u!tu ed # &u(d the$e

b#$i!4 %&"i!ie$ #(d # e u$u#""y #( e7te($i&( & # !&mbi(#ti&( &) the$e %&"i!ie$ S& the di))e e(t

ty%e$ &) i($u #(!e %&"i!ie$ # e

Te m I($u #(!e 3&"i!y A te m i($u #(!e %&"i!y i$ # %u e i$+ !& e )& # $%e!i)ied %e i&d &) time 5h#t thi$

me#($ i$ th#t the $um #$$u ed i$ %#y#b"e &("y i) the %&"i!yh&"de ide$ *ithi( the %&"i!y

te m F& i($t#(!e i) # %e $&( buy$ $ 2 "#+h %&"i!y )& 10-ye# $ %e i&dP 5e"" the( he i$

(&t e(tit"ed t& #(y %#yme(tR the i($u #(!e !&m%#(y +ee%$ the e(ti e % emium %#id du i(.

the 10-ye# %e i&d

5h#t i) he $u i e$ the 10-ye# %e i&dP 5e"" the( he i$ (&t e(tit"ed t& #(y %#yme(tR the

i($u #(!e !&m%#(y +ee%$ the e(ti e % emium %#id du i(. the 10-ye# %e i&d

S& the e i$ (& e"eme(t &) $# i(.$ & i( e$tme(t i( $u!h # %&"i!y It i$ # 100 %e !e(t i$+

!& e It $im%"y me#($ th#t # %e $&( %#y$ # !e t#i( % emium t& % &te!t hi$ )#mi"y #.#i($t

hi$ $udde( de#th =e )& )eit$ the #m&u(t i) he &ut"i e$ the %e i&d &) the %&"i!y Thi$

e7%"#i($ *hy the Te m I($u #(!e 3&"i!y !&me$ #t the "&*e$t !&$t

E(d&*me(t 3&"i!y

C&mbi(i(. i$+ !& e *ith )i(#(!i#" $# i(.$ #( e(d&*me(t %&"i!y i$ the m&$t %&%u"# %&"i!ie$

i( the *& "d &) "i)e i($u #(!e

I( #( E(d&*me(t 3&"i!y the $um #$$u ed i$ %#y#b"e e e( i) the i($u ed $u i e$ the

%&"i!y te m

I) the i($u ed die$ du i(. the te(u e &) the %&"i!y the i($u #(!e )i m h#$ t& %#y the $um

#$$u ed 'u$t #$ #(y &the %u e i$+ !& e

A %u e e(d&*me(t %&"i!y i$ #"$& # )& m &) )i(#(!i#" $# i(. *he eby i) the %e $&(

!& e ed em#i($ #"i e bey&(d the te(u e &) the %&"i!yR he .et$ b#!+ the $um #$$u ed *ith

$&me &the i( e$tme(t be(e)it$

>1


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I( #dditi&( t& the b#$i! %&"i!y i($u e $ &))e # i&u$ be(e)it$ $u!h #$ d&ub"e e(d&*me(t #(d

m# i#.e / edu!#ti&( e(d&*me(t %"#($ The !&$t &) $u!h # %&"i!y i$ $"i.ht"y hi.he but *& th it$

#"ue

5h&"e Li)e 3&"i!y A$ the (#me $u..e$t$ # 5h&"e Li)e 3&"i!y i$ #( i($u #(!e !& e #.#i($t de#th

i e$%e!ti e &) *he( it h#%%e($

,(de thi$ %"#( the %&"i!yh&"de %#y$ e.u"# % emium$ u(ti" hi$ de#th )&""&*i(. *hi!h

the m&(ey i$ h#(ded & e t& hi$ )#mi"y

Thi$ %&"i!y h&*e e )#i"$ t& #dd e$$ the #dditi&(#" (eed$ &) the i($u ed du i(. hi$ %&$t-

eti eme(t ye# $ It d&e$( t t#+e i(t& #!!&u(t # %e $&( $ i(! e#$i(. (eed$ eithe 5hi"e the

i($u ed buy$ the %&"i!y #t y&u(. #.e hi$ e9ui eme(t$ i(! e#$e & e time By the time he die$

the #"ue &) the $um #$$u ed i$ t&& "&* t& meet hi$ )#mi"y $ (eed$ A$ # e$u"t &) the$e

d #*b#!+$ i($u #(!e )i m$ (&* &))e eithe # m&di)ied 5h&"e Li)e 3&"i!y & !&mbi(e i( *ith

#(&the ty%e %&"i!y

M&(ey B#!+ 3&"i!y The$e %&"i!ie$ # e $t u!tu ed t& % & ide $um$ e9ui ed #$ #(ti!i%#ted e7%e($e$ Hm# i#.e

edu!#ti&( et! & e # $ti%u"#ted %e i&d &) time 5ith i()"#ti&( be!&mi(. # bi. i$$ue

!&m%#(ie$ h# e e#"i:ed th#t $&metime$ the m&(ey #"ue &) the %&"i!y i$ e &ded Th#t i$

*hy *ith J% &)it %&"i!ie$ # e #"$& bei(. i(t &du!ed t& &))$et $&me &) the "&$$e$ i(!u ed

&( #!!&u(t &) i()"#ti&(

A %& ti&( &) the $um #$$u ed i$ %#y#b"e #t e.u"# i(te #"$ O( $u i #" the em#i(de &)

the $um #$$u ed i$ %#y#b"e

I( !#$e &) de#th the )u"" $um #$$u ed i$ %#y#b"e t& the i($u ed The % emium i$ %#y#b"e )& # %# ti!u"# %e i&d &) time

>2


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>>


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A((uitie$ #(d 3e($i&(

I( #((uity the i($u e #. ee$ t& %#y the i($u ed # $ti%u"#ted $um &) m&(ey %e i&di!#""y The

%u %&$e &) #( #((uity i$ t& % &te!t #.#i($t i$+ #$ *e"" #$ % & ide m&(ey i( the )& m &) %e($i&(

#t e.u"# i(te #"$

O e the ye# $ i($u e $ h# e #dded # i&u$ )e#tu e$ t& b#$i! i($u #(!e %&"i!ie$ i( & de t&

#dd e$$ $%e!i)i! (eed$ &) # ! &$$ $e!ti&( &) %e&%"e

Ob'e!ti e$ #(d i$+$

N& m#tte *h& y&u # e &(e be(e)it &) "i)e i($u #(!e i$ the %e#!e &) mi(d it .i e$ y&u I)

#(ythi(. h#%%e($ t& y&u y&u be(e)i!i# y *i"" e!ei e # !he!+ i( # m#tte &) d#y$ Li)e

I($u #(!e !#( #"$& be u$ed t& !& e #(y debt$ & "i#bi"itie$ y&u "e# e behi(d The b#(+ d&e$( t

'u$t * ite &)) y&u m& t.#.e &(!e y&u %#$$ #*#y J the$e %#yme(t$ mu$t be m#de & y&u h&u$e

m#y be "i9uid#ted Li)e I($u #(!e !#( #"$& ! e#te #( i(he it#(!e )& y&u hei $ & it !#( be u$ed

t& "e# e # "e.#!y i) it $ %ut t&*# d d&(#ti&($ t& !h# it#b"e & .#(i:#ti&($

M&$t "i)e i($u #(!e %&"i!ie$ !# y e"#ti e"y "itt"e i$+ be!#u$e i($u #(!e !&m%#(ie$ # e u$u#""y

$t#b"e #(d he# i"y e.u"#ted by the .& e (me(t I( !#$h #"ue4 %&"i!ie$ y&u # e #""&*ed t&

i( e$t y&u %&"i!y i( $t&!+ b&(d & m&(ey m# +et )u(d$ I( the$e ty%e$ &) %&"i!ie$ the #"ue &)

y&u i($u #(!e de%e(d$ &( the %e )& m#(!e &) th&$e )u(d$

=&* t& Buy & Se"" it

The e # e th&u$#(d$ &) i($u #(!e b &+e $ #(d b#(+$ #! &$$ N& th Ame i!#


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5e#+(e$$e$ I) y&u "i e # "&(. "i)e y&u )#mi"y "i+e"y *&( t .et the )u"" #"ue &ut &) y&u %&"i!y

C#$h #"ue )u(d$ !#( )"u!tu#te de%e(di(. &( the )i(#(!i#" m# +et$

Th ee M#i( ,$e$ I(!&me 3 &te!ti&(

C#%it#" A%% e!i#ti&(

T#7-De)e ed S# i(.$

e#"ity Che!+

5h#t $ the e di!tP D& y&u h# e the time di$!i%"i(e #(d )i(#(!i#" #*# e(e$$ t& t#+e !h# .e &)

y&u )i(#(!e$ #(d (&t !&u(t &( the "&*"y etu ($ ) &m e(d&*me(t %"#($P D& y&u *#(t

#b$&"ute"y !e t#i(ty i( y&u i( e$tme(t$P I) the #($*e t& the )i $t 9ue$ti&( i$ # (& #(d the

$e!&(d # ye$ y&u &%ti&($ *i"" be $e e e"y "imited The e # e # )e* e(d&*me(t %"#($ th#t &))e

.u# #(teed etu ($ #(d the be$t it .et$ i$ #b&ut 6 %e !e(t I) &( the &the h#(d y&u # e *i""i(. t&

t#+e !#"!u"#ted i$+$ y&u !#( !e t#i("y d& bette th#( th#t *ith # mi7 &) %&$t &))i!e $!heme$ #(d

b#(+ de%&$it$ #t the e y "&*- i$+ e(d &) the $%e!t um t& e9uity )u(d$ #(d $t&!+ $ #t the &the

e(d *ith debt )u(d$ #(d b#"#(!ed )u(d$ )e#tu i(. $&me*he e i( the midd"e Fi(e y&u !&m)& t"e e" #(d y&u *i"" +(&* i) i($u #(!e %"#($ !#( d&ub"e u% y&u i( e$tme(t$ )& y&u

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Introduction to the Organisation

Karvy Stock Broking Limited

KARVY is a premier integrated financial services provider and ranked among the top

five in the country in all its business segments. It services over 16 million individual

investors in various capacities and provides investor services to over !! corporate.

It is a member of all three"#

$ational %tock &'change ($%&) *ombay %tock &'change (*%&)

+yderabad %tock &'change (+%&)

Karvy utili,ed its e'perience and superlative e'pertise to capitali,e on its strengths and

better its service- innovate and provide ne ones. It diversified in the process and thus

evolved as India/s premier integrated financial service enterprise.

Karvy has been a customer centric company since its inception. It offers a single

platform servicing multiple financial instruments in its bid to offer complete financial

solutions to the varying needs of both corporate and retail investors- here an e'tensive

range of services are provided ith great volume#management capability.

KARVY covers the entire spectrum of financial services such as %tock broking-

0epository articipants- 0istribution of financial products # mutual funds-bonds- fi'ed

deposit- e2uities- Insurance *roking- 3ommodities *roking- ersonal 4inance Advisory

%ervices- 5erchant *anking 3orporate 4inance- placement of e2uity- I 7s- among

others. Karvy has a professional management team and ranks among the best in

technology- operations and research of various industrial segments.

>?


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BACKGROUND

8he flagship company- Karvy 3onsultants 9imited as found ith the vision and

enterprise of a group of practicing 3hartered Accountants on a modest scale in 1:;1 in

+yderabad- here it no has 1 branches . 8he name KARVY is actually the Initials of

their names.

K !r" Kutum# Rao

A !r A$ay Kumar

R !r" Ramas%amy

& !r" &enkat Naidu

' !r" 'ugandhar

It initiated ith 8


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handled over 6>? issues as Registrars to public issues- processed over ?= million

applications and is servicing over 16 million investors from various locations spread

over =!? cities .

+o!rd o# Directors

!r" C (arthasarathy - a leader in the financial services industry in India is responsible

for building Karvy as one of India@s truly integrated 4inancial %ervices rovider he is a

fello member of the Institute of 3ompany %ecretaries of India- a 4ello 5ember of the

Institute of 3hartered Accountants of India and a graduate in la . As 3hairman- he

oversees the group@s operations and renders vision and business direction. +is passionand vision for achieving leadership in the business made KARVY a leading financial

intermediary ranking them as number one in the registrar- %hare 8ransfer and I 7

0istribution businesses. +e also holds directorship in Karvy %tock *roking 9imited-

>


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Karvy Investor %ervices 9imited- Karvy 3omputershare rivate 9imited- Karvy 3omtrade

9imited- Karvy Insurance *roking vt 9td "

!r" ! 'ugandhar - 5anaging 0irector- founder member of Karvy 3onsultants 9imited-

has varied e'perience in the field of financial services spanning over =! years. +e is a

4ello 5ember of the Institute of 3hartered Accountants of India and as involved in

the statutory and branch audit of banks for =6 years.

!r" ! S Ramakrishna - 0irector- founder member of Karvy 3onsultants 9imited is

orchestrator of technology initiatives such as the call center in the service of the

customer. 5r. Ramakrishna is a member of the +yderabad %tock &'change and is the

director of Karvy %tock *roking 9imited- Karvy Investor %ervices 9imited- Karvy

0


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3omputershare rivate 9imited- Karvy 3omtrade 9imited- Karvy Insurance *roking vt

9td. +e has helped Karvy diversify into the field of medical transcription leveraging on

the company@s core competency of transaction processing. +e has more than =! years

of e'perience in the financial services arena.

!r" (rasad & (ot)uri - 0irector- is an entrepreneur of repute in the I8 professionalservices arena. In Bune 1::6- he founded C roconC building the organi,ation into

one of the fastest gro ing I8 services players in the D% ith ==? employees and

revenues of E==m in => months. +e successfully merged the company ith R35 for

E =m in $ovember 1::;. In =!!!- he founded @ Albion 7rion 3ompany@- a roll up in

I8 services sector in the D%.

1


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Karvy*s !ission+

7ur mission is to be a leading and preferred service provider to our customers- and

e aim to achieve this leadership position by building an innovative- enterprising- andtechnology driven organi,ation hich ill set the highest standards of service and

business ethics F.

&ision o, Karvy+

8o achieve sustain market leadership- Karvy shall aim for complete customer

satisfaction- by combining its human and technological resources- to provide orld class

2uality services. In the process Karvy shall strive to meet and e'ceed customer@s

satisfaction and set industry standards.

-UALI.' (OLIC'+8o achieve and retain leadership- Karvy aims for complete customer satisfaction- by

combining its human and technological resources- to provide superior 2uality financial

services. In the process- Karvy strives to e'ceed 3ustomer@s e'pectations.

As /er the -ua)ity (o)icy0 Karvy %i))+ *uild in#house processes that ill ensure transparent and harmonious

relationships ith its clients and investors to provide high 2uality of services. &stablish a partner relationship ith its investor service agents and vendors

that ill help it in keeping up to its commitments to the customers. rovide high 2uality of ork life for all its employees and e2uip them ith

ade2uate kno ledge skills so as to respond to customer@s needs. 3ontinue to uphold the values of honesty integrity and strive to establish

unparalleled standards in business ethics.

2


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Dse state#of#the art information technology in developing ne and innovative

financial products and services to meet the changing needs of investors and

clients. %trive to be a reliable source of value#added financial products- services and

constantly guide the individuals and institutions in making a


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services and e'pertise in this industry has helped it gain the status it en


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3448 %et up investor service centers

344; 4inancial roducts 0istribution

344< &ntry into 5utual 4und %ervices

3449 3orporate 4inance and Investment banking

3445 4irst Registrar in the country to be a arded I%7 :!!=

3444 I8 enabled service # * 7

8777 & *usiness .karvy.com

8773 Insurance and 9aunch of retail arm Karvy the4inapolis Your ersonal 4inance Advisor

8778 9aunch of 3J

877; 3ommencement of %econdary 0ebt and 05 trading

877< BV ith 3omputer share 9imited - Australia9aunch of Karvy Jlobal %ervice

Karvy 3omtrade

8779 Karvy Insurance *roking vt. 9td.

877: Karvy Realty %ervices (India) 9imited KR%9

8775 Karvy 4ortune - 4unding by I3I3I Ventures 9td.-*arings Asia


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8776 Karvy rivate ealth

8774 Karvy 0ata 5anagement %ervices 9td

Karvy 4inancial %ervices 9td

!i)estones to #e achieved in ,uture+

8o set up its o n Asset 5anagement 3ompany

8o set up its o n *ank by =!1=

Karvy Grou/ o, Com/anies

As discussed earlier- KARVY offers a single platform servicing multiple financial

instruments in its bid to offer complete financial solutions to the varying needs of both

corporate and retail investors. 8he range of products and services are provided by thefollo ing ings.

3= Karvy Consu)tants Limited+

6


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8his is the flagship company of Karvy Jroup and it controls the organi,ational affairs-

channels of progress- ork affairs and pioneering business policies. 8his as the first

business the KARVY group ventured into- but no they have transferred it into a

8/10/2019

analysis of investment decisions karvy.doc

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