PRESENTATION ON INVESTMENT ADVISORY SERVICES

1. PRESENTATION ON INVESTMENT ADVISORY SERVICES By ULTIMATE INVESTMENTS Nurturing Wealth SHANTHA KUMAR T.S

2. INVESTMENT AVENUE • FINANCIAL ASSETS • DEBT (Bank Deposits,Postoffice Schemes, Debentures, Bonds, Debt MF’s) • EQUITY Shares, Equity MF’s) • NON-FINANCIAL ASSETS • Real Estate • Gold

4. DEBT EQUITY Return is subject to tax. Dividend is completely free from tax. No capital gain tax is applicable. It is applicable (short & long). No ownership on the company. Ownership is available. Governing body is RBI. Governing body is SEBI. No capital growth possible. Capital growth is possible. Difference between Debt & Equity,Contd..

5. DEBT EQUITY Tenure of investment is always fixed. Not applicable. Quantum of returns is always fixed. Not applicable. Coupon rate & YTM are always variables. Not applicable. Frequency of return is possible. Not applicable. Nomenclature for the return is called Interest. The return in equity is called Dividend. Difference between Debt & Equity

7. STOCK MARKET

8. TOTAL 23 STOCKS EXCHANGES IN INDIA Interconnected National Stock Exch OTC Exchange of India

9. Bombay Stock Exchange History 1830's Business on corporate stocks and shares In Bank and Cotton presses started in Bombay. 1860-1865 Cotton price bubble as a result of the American Civil War 1870 - 90's Sharp increase in share prices of jute industries followed by a boom in tea stocks and coal 1900s 1978-79 Base year of Sensex, defined to be 100. 1986 Sensex first compiled using a market Capitalization -Weighted methodology for 30 component stocks representing well-established companies across key sectors.

10. The voting machine & the weighing scales(short term volatility & long term returns)

12. PRIMARY MARKET INITIAL PUBLIC OFFERING(IPO's)

13. Company's • Lead manager • Syndicate member • Broker • Registrar

14. Lead Manager The commercial or investment bank which has primary responsibility for organizing a given credit or bond issuance. This bank will find other lending organizations or underwriters to create the syndicate, negotiate terms with the issuer, and assess market conditions. also called syndicate manager, managing underwriter or lead underwriter.

15. Syndicate Member An investment bank, brokerage, or bank which participates in a syndicate.

16. BROKER An individual or firm which acts as an intermediary between a buyer and seller, usually charging a commission. For securities and most other products, a license is required.

17. Registrar The organization, usually a bank or a trust company, that maintains a registry of the share owners and number of shares held for a Mutual fund, bond or stock, and makes sure that more shares are not issued than are authorized.

18. What are the eligibility for on unlisted company for making a public issue? An unlisted company has to satisfy the following criteria to be eligible to make a public issue. Networth of the co. should not be less than Rs.1 crore in last 3 out of last 5 years with minimum networth to be met during immediately preceding 2 years and track record of distributable profits for at least 3 Year out of immediately preceding 5 years and the issue size (i.e. offer through offer document + firm allotment + promoters’ contribution through the offer document) shall not exceed five (5) times its pre-issue networth. In case an unlisted company does not satisfy any of the above criterion, it can come out with a public issue only through the Book-Building process. In the Book Building process the company has to compulsorily allot at least sixty percent (60%) of the issue size to the Qualified Institutional Buyers (QIBs), failing which the full subscription monies shall be refunded.

19. Within how many days an investor should receive the refund order/allotment advise? Dispatch of refund orders / allotment advice is to be within 2 working days of finalization of the basis of allotment. Companies are required to finalize the basis of allotment within 30 days from the closure of the issue in case of a fixed price issue and within 15 days from the closure of the issue in case of a book building issue or else they are liable to pay interest @ 15% p.a.

20. What is a Green-shoe Option? Green Shoe option means an option of allocating shares in excess of the shares included in the public issue and operating a post-listing price stabilizing mechanism for a period not exceeding 30 days in accordance with the provisions of Chapter VIIIA of DIP Guidelines, which is granted to a company to be exercised through a Stabilizing Agent. This is an arrangement wherein the issue would be over allotted to the extent of a maximum of 15% of the issue size. From an investor's perspective, an issue with green shoe option provides more probability of getting shares and also that post listing price may show relatively more stability as compared to market.

21. What is a Rights Issue? Rights Issue (RI) is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date. The rights are normally offered in a particular ratio to the number of securities held prior to the issue. This route is best suited for companies who would like to raise capital without diluting stake of its existing shareholders unless they do not intend to subscribe to their entitlements

22. MUTUAL FUND

23. What is a Mutual Fund? Mutual Fund is a mechanism of pooling resources (Money) from investors & invest in securities (stocks & bonds) which will be managed by professional people called the Fund Managers also known as portfolio managers. The investment proceeds (loss or profits) are then passed on to the respective individual.

24. MUTUAL FUND BIRTH PLACE UNITED KINGDOM

25. First mutual fund in India Unit Trust of India Year 1963 First Schemes US 64

26. First Private mutual fund in India Kothari Pioneer Year 1994

27. SPONSOR APPOINTS • Trustees • Asset management company • Custodians • Registrars • Banks • Distributors

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

29. Mutual Fund Operation Flow Chart

30. Organization of a Mutual Fund

31. Advantages of Mutual Funds • Professional Management • Diversification • Return Potential • Liquidity • Transparency • Flexibility • Choice of schemes • Tax benefits • Well regulated

32. Disadvantages of Mutual Funds • Choice of Stocks • Tailor made Portfolio • Management Fees • No Guaranteed Returns • Management risk • Discretion of fund manager • Tax on profit made

33. PARAMETERS OF INVESTMENT PROFILE OF INVESTOR Safety Age Liquidity (tenure) Present income Flexibility Present expenses Tax implication Future capital expenditure Return Future capital aspiration Tax bracket Existing portfolio Investment Parameters

35. OPEN ENDED CLOSE ENDED Open for all the time Open for Fixed Period No Duration Duration 3,5and 7 years Repurchased all the time Repurchase fixed time. As Repurchased so not listed Stock ex. listed at stock ex. Switchover Allowed Switchover Allowed MUTUAL FUND .

36. Types of Schemes • By Structure • Open Ended Schemes • Close Ended Schemes • Interval Schemes • ByInvestment Objectives • Growth Schemes • Income Schemes • Balance Schemes • Money Market Schemes • Other Schemes • Tax Saving Schemes • Special Schemes • Index Schemes • Sector Specific Schemes

37. Frequently Used Terms Net Asset Value (NAV)Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date. Sale PriceIs the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales load. Repurchase Price Is the price at which a close-ended scheme repurchases its units and it may include a back-end load. This is also called Bid Price.

38. Sectoral Funds Equity Fund Balanced Fund Index Fund Income Fund Gilt Fund Floating Fund Short-Term Fund Liquid Fund Risk & Safety of a Mutual Fund Risk Medium Risk Low Risk

39. What is Sector fund ? They are the riskiest among equity funds, as they invest only in specific sectors or industries. The performance of sector funds is married to the fortunes of the specific sector or industry. This can work both ways for sector funds. One way to maximize your returns from sector funds is to get into the sector when it is expected to zoom and get out before it falls. However, it is easier said than done. Since you have managed a nodding acquaintance with various equity funds, how do you choose the right one for you? First, identify the category of equity funds you want to invest in. Next, evaluate the performance record of the fund. Find out how it has performed over the years compared to its competitors. Also, check out the reputation, transparency in operations, etc.Make sure your fund has a diversified portfolio. Avoid funds that have exposure to a few sectors or stocks, as the performance of the fund will be tied to the performance of only these stocks and not to the entire market performance. Also make sure that the fund has a diversified investor base. A fund with a few large investors will be forced to take orders from them, which may not be in your interest.

40. What is Equity Scheme ? Equity schemes are those that invest predominantly in equity shares of companies. Although an equity scheme seeks to provide returns by way of capital appreciation, these schemes are exposed to higher risks and hence the returns may fluctuate. They invest only in stocks, and hence, are the riskiest among mutual fund schemes. However, these funds offer the possibility of superior returns since equities have historically outperformed all other asset classes. At present, there are four types of equity funds available in the market.

41. What is Balanced Schemes ? Balanced schemes invest both in equity shares and in income-bearing instruments in such a proportion that the portfolio is balanced. They aim to reduce the risks of investing in stocks by having a stake in the debt markets. Thus debt and balanced schemes offer a reasonable return with a moderate risk exposure.

42. What is index fund ? These funds track a key stock market index, like the Bombay Stock Exchange Sensex or the National Stock Exchange S & P CNX Nifty. They invest only in stocks that form the market index, as per the individual stock weight ages. The idea is to replicate the performance of the benchmarked index to near accuracy. Index funds are considered a passive investment vehicle, as the performance of the fund will be almost the same as the index concerned, except for few minor points.

43. What is Gilt fund ? Funds that invest only in government securities and treasury bills. Such funds generally provide marginally higher returns than a money market fund, and are a good option for investors who seek protection of principal. Gilt funds can also be volatile due to increase or decrease in interest rates. Gilt schemes invest in government bonds, money market securities or some combination of these. They have medium to long-term maturities, typically of over one year and have moderate returns. Since the issuer is the central or state Governments, these funds have reduced risk of default and hence offer better protection of principal.

44. What is MIPs ? MONTHLY INCOME PLANS are basically debt schemes, which make marginal investments in the range of 10-25 percent in equity to boost the scheme's returns. MIP schemes are ideal for investors who seek a slightly higher return than pure long-term debt scheme at a marginally higher risk. Declining returns from income funds and improved equity market performance are two main reasons, which have given an opportunity to launch these funds.

45. What is Debt Scheme ? Debt schemes invest mainly in income-bearing instruments like bonds, debentures, government securities, commercial paper, etc. These instruments are much less volatile than equity schemes. Their volatility depends essentially on the health of the economy e.g., rupee depreciation, fiscal deficit, and inflationary pressure. Performance of such schemes also depends on bond ratings. These schemes provide returns generally between 7 to 12% per annum. These funds invest in fixed-income securities like bonds, Government of India securities, debentures, commercial paper, call money, etc. There are three types of debt funds.

46. What is Money Market Fund Money Market Mutual Funds (MMMFs) : Such funds have an objective of taking advantage of the volatility in interest rates in the money market instruments. The funds are invested in certificate of deposits (CDs), interbank call money market, commercial papers, T-bills and short-term securities with a maturity horizon of less than one year. Investors can participate indirectly in the money market through MMMFs. E.g. Money Market Fund. Its objective is to preserve principal while yielding a moderate return. MMMF's are favoured by investors seeking low-risk investment avenues that offer instant liquidity.

47. WHAT IS ELSS EQUITY LINKED SAVINGS SAVINGS SCHEMEwhere investor is eligible to get tax benefits U/s 80 C of Income Tax Act, 1961 up to Rs. 1 Lakh in a financial year. It has a lock in period of 3 years from the date of investment which is minimum among any tax saving instrument available in India & with the highest returns on investments. The fund manager selects value stocks to invest in ELSS which gives good returns in 3 years

48. OPTIONS UNDER SECTION 80C Investment Non-investment oriented The Investment options would comprise of the following • Employee Provident Fund (EPF) and General Provident Fund(GPF) • Public Provident Fund (PPF) • National saving certificates (NSC) • Bank deposits • Life insurance premiums • Equity linked saving schemes (ELSS) • Pension policy premiums • Pension schemes of mutual funds • Senior citizens’ savings schemes (SCSS) The non-investment options would include: • Home loan principal payout • Children’s school and college fees

49. WHAT IS SIP SYSTAMATIC INVESTMENT PLAN • FIXED DATE • FIXED AMOUNT • FIXED TENOUR

50. Systamatic investment plan