Focused Fund 1

CAPITAL PROTECTED FUND

Capital Protection Fund

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• This is a fund wherein a fund manager’s major focus is to protect the capital of an investor. Hence, it is known as Capital Protection Fund.

• It is a closed ended Fund, which comes with duration - post completion of closed end duration, it automatically expires and investor gets the money as per the current value of the investment.

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How it Functions?• Here, the fund manager invests major portion of investment in Debt market (approx.

70% - 80%) and remaining is invested in Equity.

• This 70% - 80% is invested in AAA rated bonds and can be kept on hold for the desired period, so that it converts to 100% and remaining portion is invested in equity, which in return generates income for the fund.

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Example

• If a fund manager has Rs.1000 in the NFO of 3 years capital protection fund, he will invest Rs.800 in AAA bonds for 3 years, so that it converts to Rs.1000 after 3 years. The remaining Rs.200 can be invested in equity and whatever returns are generated will be the returns of the fund. Even if the equity market doesn’t perform, the investor will not lose his capital, as it is gets covered through Debt market exposure.

Please have a look at CAP-PRO calculator

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How a CAP-PRO is better than Equity?

• Equity is always a best investment asset for long run, but for a period of 3 years, it is too volatile.

• Here’s when CAP-PRO comes into the picture, which clarifies Debt & Equity. It is not as volatile as equity and loosening of capital is NIL in this fund, however if equity market performs well, it gets the benefit of it, as it has approx. 30% equity exposure.

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How a CAP-PRO is better than Fixed Deposit?

• Even though FD has a fixed interest rate, CAP-PRO has the potential to earn higher return with least risk of capital loss. Hence, CAP-PRO is anytime better than FD.

• The taxation part supports CAP-PRO vis-a-vis FD.

• In FD, the taxation is as per the tax slab of investor, however in CAP-PRO, maximum tax an investor should pay is 10%, if the tenure of 5 years in CAP-PRO, the returns is tax free because of indexation benefit.

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Above example proves how a CAPPRO is more beneficial than FD.

Calculation & Comparison of returns generated by 3 years CAP-PRO

CAP-PRO Fixed Deposit

A Purchase Price 100,000.00 100,000.00

B % returns 9.30% 9.00%

C Maturity Amount 129,502.90 129,502.90

H Tax 2,357 9,574

I Post Tax Gains = D-H 27,145.97 19,929.21

JPost Tax Annualized Returns = (I/A) * no.

of years9.05% 6.64%

Combined Comparison of CAP-PRO, Equity & FD

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Market Cap range in Cr.

% of Investment

Investment Amount

Expected Returns

Market Value after 3 years

Post Tax returns Returns

CAPPRO3 years CAP-PRO At least 65%

100,000 9% 131,420 129,063 9%Debt Rest 25%

Equity 10%

Equity3 year returns of

Equity Market -100,000 9% 129,503 129,503 9%

Equity 100%

FD3 years FD -

100,000 9% 129,503 119,829 6.64%Interest Rate

9% -

Common sales pitch of CAP-PRO

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A product which offers investor to invest in Debt & Equity. Most safe fund in Mutual Fund, as it gives capital protection assured. Invest 80% in AAA bonds (which are safest product), it will appreciate and convert to Rs.100 - capital is

protected. Another 20% investment in large cap stocks in equity like ITC, Infosys, Tata etc, its value at the time of maturity will give you the profit.

In current scenario, Debt market is trading at all time high and equity is at low, which is an ideal situation to invest in CAP-PRO.

This is a least volatile fund, so if investors are investing in equity, he/she should invest small amount of investment to make few part of his/hers portfolio secured.

If an investor invests in Fixed Deposits and/or bonds, he/she should invest in CAP-PRO, as CAP-PRO has equity exposure, hence will have better return than FD & Bonds.

From taxation point of view, CAP-PRO gets the benefit of indexation. However in FD, investor has to pay as per his/hers tax slab.

Investment Options

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As it is a closed end fund, SIP is not possible.

Dividend is taxable as DDT @ 24%. (No advisable to take dividend options in this fund).

The scheme will be redeemed by default in investors’ account.

CAP-PRO LumpsumGrowth

Dividend

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DISCLOSUREMotilal Oswal Securities Ltd. (MOSL) Member of NSE, BSE & MSEI - CIN no.: U65990MH1994PLC079418Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Registration Nos.: NSE (Cash): INB231041238; NSE (F&O): INF231041238; NSE (CD): INE231041238; BSE (Cash): INB011041257; BSE (F&O): INF011041257; BSE (CD); MSEI (Cash): INB261041231; MSEI (F&O): INF261041231; MSEI (CD): INE261041231; CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS & Mutual Funds are offered through MOAMC which is group company of MOSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML which is a group company of MOSL. Motilal Oswal Securities Ltd is a distributor of Mutual Fund & IPOs. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. Investment in Securities is subject to market risk and there is no assurance or guarantee of the returns. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com , Contact No.:022-30801085