MOST of us have an inner rebel. That’s why often fall for the guy mother warned us against. Or continue smoking even when told not to.

So, it’s no wonder that when mutual fund advertisements worth millions of dollars, tell us to ‘Please read the offer document (OD) carefully before investing’, we still don’t! This is understandable; after all it’s a 100-page document filled with jargon. But in the long run, you will be the loser, if you don’t.

The Securities and Exchange Board of India (SEBI) have even come out with an abridged version called the Key Information Memorandum, which stipulates standard sections and disclosures in all ODs.

An OD is critical because it tells you whether your money is in the right hands, at the right place and at the right time. Your financial advisor will have a copy, and the company web site should have it online, too.

If you still don’t want to read the whole document, take the easy way out. wealth scopes out 10 must-reads in the OD.

1. Date of issue

Verify that you have the latest edition of the OD (an OD must be updated once a year, at least).

2. The minimum investment

Mutual funds differ both in the minimum initial investment required, and the minimum for subsequent investments.

For example, equity funds may stipulate Rs 5,000, while institutional premium liquid plans may stipulate Rs 10,000,000 (Rs 10 crore) as the minimum amount.
3. Why invest

The goal of each fund must be clearly defined, from income to long-term capital appreciation. You, the investor, must be sure that the fund’s objective matches with your’s.

4. Investment policy

An OD will outline general strategies implemented by the fund managers. You will learn what types of investments will be included, such as government bonds (with ratings) or stocks, considered appropriate. Be sure to check if it offers adequate diversification.

5. Risk factors

Every investment involves some level of risk. Look for descriptions of the risks associated with investments in the fund (like credit risk, market risk or interest-rate risk) and decide if it matches your risk appetite.

For example, a mutual fund Monthly Income Plan (MIP) invests mainly in bonds and gilts (up to 90 per cent) with a sprinkling of equity(10 per cent) to generate capital appreciation. This is passed on to customers as monthly income.

But remember: it is subject to availability of distributable surplus. In 2004, many mutual fund customers underestimated this market risk and were caught by surprise when the MIPs gave low/negative returns.

They may have been better off with a a Post Office MIP that assures an 8 per cent monthly income payment for its six-year tenure.
6. Past record

ODs contain selected per-share data, which includes the net asset value and total return for different time periods, since the fund’s inception.

Performance data listed in an OD are based on standard formulae established by the SEBI and enable investors to make comparisons with other funds. So investors should check track records over a period of time that matches their own investment horizon but always remember that ‘past performance is not an indication of future performance’.

Additionally, investors must check that the benchmark chosen by the fund to compare its relative performance is appropriate. In addition, investors should keep in mind that many of the returns presented in historical data don’t account for tax. They must look at any fine print in these sections, as they should say whether or not taxes have been taken into account.

BANKS today offer a slew of services to the customer, which only seem to increase by the day. However, remember this: there’s no such thing as a free lunch. Let’s take stock of what you pay to avail of services for a typical savings bank account.

1. Non-maintenance of minimum balance
You must maintain a stipulated minimum balance in your account (Rs 1,000 for a nationalised bank, Rs 5000 for a private bank).

If you fail to maintain this average quarterly minimum balance, you attract a bank charge of Rs 750-1,500 respectively. You could also face fines for cash transactions at branches and ATMs.

2. Cheque book charges
Most nationalised banks provide chequebooks free as per your requirement. Many private ones, on the other hand, charge you Rs 50-200 per chequebook, if you use up more than 2-3 per quarter.

3. Account closure charges
Some banks charge Rs 50-200 if the account is closed before six months elapse.

4. Charges for certificates
Unlike most nationalised banks, private banks charge Rs 50-Rs 250 for documents such as balance certificate, interest certificate, address confirmation, signature attestation, photo attestation.

5. Cheque return charges
Nationalised banks fine you Rs 50-Rs 200 in case of cheque return (due to insufficient funds, signature mismatch etc) but private ones charge you Rs 100-Rs 500.

6. Cash transaction at other branches
In case of a cash transaction at a branch other than where your account is opened, 1-3 transactions are free per quarter. Beyond that, be prepared to be charged at the rate of Rs 5 per for every Rs 1000 transacted.

7. ATM charges
If you use the ATM of another back for balance enquiry or cash, you could be charged anything from Rs 10-100 per transaction.

8. Account statement
RBI directs that all banks must send free quarterly statements to their customers. Should you require more statements (in case of loss etc), you may have to pay Rs 50-500 per statement.

9. ATM or Debit Card fees
Most banks offer ATM cards free of cost but some do charge their customers for debit cards. For example, ICICI Bank provides a combo ATM/ Debit card, for which it charges Rs 99 per annum.

Over and above these, there are several other charges, such as outstation clearing charge (Rs 50- 500), pay order/ demand draft charge (based on amount), standing instruction charges, home cash delivery charges, old records retrieval charges, activation of dormant account charge etc.

Note: Visit the bank’s web site or any of the branches, for a copy of these expenses. It is mandatory for every bank to give it to you.

There are basically two categories of applicants:
1. Individuals / HUFs
2. Others.

1. Individuals and HUFs

This form is 12 pages long. But don’t get alarmed. Out of the 12 pages, six pages are only by way of guidance notes. The actual form is only six pages long.

ITR 3

2. Others

ITR 5
This form is to be used by Firms/ AOPs/ BOIs to file their returns. It is a 22-page Form with 30 schedules to it. In addition, there are 10 pages of guidance notes to help taxpayers fill up the form. Apart from the details of the income and tax, this form requires the taxpayer to fill in details of the FBT. ( Fringe Benefit Tax)

ITR 6
This form is to be used by companies to file their returns. It is a 24-page form with 34 Schedules to it. This form replaces the earlier Form no 1. In addition to 24 pages, there are nine pages of guidance notes to help taxpayers in filling up the form. Apart from the details of the income and the tax, this form also requires the taxpayer to fill in details of the FBT.

ITR 7

ITR 8
This form is to be used by those who are liable to file returns for fringe benefits and not the Return of Income. It is a four page form with three additional pages of guidance notes.

So, Am I succeeded in confusing or clarifying? If it’s the latter then my is done. The above should help you to select the form which is most appropriate for you and that is half the battle won for paying your tax. The other half of course is finding creative ways to save your tax! Lets leave that for another article.

Disclaimer: While I have made efforts to ensure the accuracy of my content neither this website nor the author shall be held responsible for any losses/ incidents suffered by people accessing, using or is supplied with the content.

ING MF has unveiled a new fund called ING Latin America Equity Fund and it is a an open-ended fund of fund scheme. The primary investment objective of the scheme is to seek capital appreciation by investing predominantly in ING (L) Invest Latin America Fund. The scheme may, at the discretion of the Investment Manager, also invest in the units of other similar overseas mutual fund schemes, which may constitute a significant part of its corpus. The Scheme may also invest a certain portion of its corpus in money market securities, in order to meet liquidity requirements from time to time.

Birla Sun Life Mutual Fund announced to declare dividend under institutional plan with dividend reinvestment option of both the Birla Sun Life Interval Income Fund-Quarterly Plan-Series II and - Birla Sun Life Interval Income Fund-Quarterly Plan-Series III.

The fund house fixed 30 June 2008 as the record date for the declaration of dividend under both the schemes.

The NAV of Birla Sun Life Interval Income Fund-Quarterly Plan-Series II was Rs 10.0940 and that of under Birla Sun Life Interval Income Fund-Quarterly Plan-Series III was Rs 10.0790 as on 24 June 2008. Both the schemes are is an open-ended interval income schemes.

The primary objective of the scheme is to generate regular income through investment in debt and money market instruments.

ABN Amro mutual fund announced that ABN Amro Asset Management (India) Limited, a public limited company is converted to a private limited company ABN Amro Asset Management (India) Private Limited.