Principal FMP - Securing your returns

What are Fixed Maturity Plans?

Fixed Maturity Plans are schemes offered by mutual funds that have a pre-specified tenure. The basic objective is to generate steady returns over a fixed duration.

Advantages of Fixed Maturity Plans

1 Low credit risk: FMPs normally invest in high credit rated fixed income instruments

2 Indexation Benefit: Indexation benefit helps in lowering capital gains so the tax outflow is lower. In certain scenarios by staying invested for little more than a year, the investor is able to get inflation indexation benefit for two financial years and can bring down his tax outflow substantially

Currently Available Options

AMC Name	Indicative Yield	Time	Opening Date	Closing Date	Minimum Investment	Post Tax Yield (Dividend option)	Post Tax Yield (Growth option)
Principal Mutual Fund	7.8-7.85%*	91 Days	16-Nov-10	18-Nov-10	Rs. 5000	6.70%*	5.46%*

* The indicative yield is not a guarantee of returns. It is just an indicator of returns.

Formerly known as IDBI-PRINCIPAL Mutual Fund, Principal Mutual Fund was established by IDBI bank in 1994. The mutual fund is sponsored by Principal Financial Services Inc. USA through its subsidiary Principal Financial Group (Mauritius) Limited. The fund house offers innovative mutual fund products to its wide customer base.

The company has come out with Fixed Maturity Plan – Principal Pnb FMP - 91 Days - Series XXVI. The investment objective of the scheme is to generate income by investing in a portfolio of debt and money market instruments maturing before the maturity of the scheme. The scheme offers both growth and dividend options.

We recommend the FMP series with dividend option as it provides better post tax yield. The plans are ideal for investors looking for decent returns with a low to medium risk.

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