13. Even though there is no distribution of income, what yield one can expect?

Before we answer that question, please note that the scheme is divided into two separate plans. The two plans are (a) Savings Plan; and (b) Investment Plan. Each plan will have a separate NAV. 70% of the money collected under the saving plan will be invested in Government securities with maturity less than one year.

Balance money will be invested in Government securities with maturity more than one year. If one uses the market rates of Government securities prevailing during most of October 98, the average yield can be expected to be around 8.5% p.a. after expenses which is far better than what one gets in a savings bank account or comparable to short term bank deposits without the penalty on premature withdrawal. In Investment Plan

70% of the money collected will be invested in Government securities with maturity of more than 1 year. 30% will be invested in maturity of less than 1 year. The average yield works out to about 10% p.a. after expenses based on prices available during October 98. Yields in both cases will be available as capital gains.

For investors who hold the units for a period longer than one year, will be entitled to pay long term capital gains tax with indexation benefit. Assuming inflation rate is 8%, the effective pre-tax yields for tax brackets of 30% is tabulated below.