Q&A: FAROOQ AHMED - HEAD OF RETAIL AT UBL FUND

May 3 - 16, 2010

Q: WE HAVE HEARD THAT A CAPITAL PROTECTED FUND IS SOON GOING TO BE LAUNCHED, WHICH IS PART OF THE SERIES OF THE PREVIOUS FUND, CAN YOU ELABORATE ON THE DETAILS OF THIS UPCOMING FUND.

A: Firstly I'll explain what Capital Protected Fund is Capital Protected Fund is a fund type that ensures that an investor gets at least the initial investment, plus any capital gains, if the investment is held till maturity. The idea behind this type of fund is that investor will be exposed to market returns because the fund is able to invest in the high yielding assets such as equities, while ensuring that they will at least get their initial investment amount back at the maturity of the fund.

The recent bear market has left investors concerned about securing their principal investment rather than chasing returns. In an environment of falling interest rates and ongoing market volatility, protected investments has become need of the hour.

In the last 2 years, UBL Funds have launched 4 Capital Protected Products.

Despite being exposed to tough financial and economic conditions they have performed relatively well.

UCPF-II is a capital protected fund that endeavors to protect the principal investment of investors by placing a major portion (at least 70%) in a AA Rated Bank Term Deposit. The remaining portion will be invested in High Yielding Asset such as Equities to provide investors with a competitive return compared to similar products over the life of the Fund.

Q: HOW IS THIS FUND ANY DIFFERENT FROM THE CAPITAL PROTECTED FUND YOU HAD LAUNCHED EARLIER?

A: UCPF - II has following different features as compared to UCPF - I

* UCPF - II is open end fund whereas UCPF - I was closed end fund

* Duration of UCPF - II is 2 years where as the duration of UCPF - I was 3 years.

* UCPF - II will not be traded on stock exchange (i.e. Investors can liquidate their investments anytime via UBL Fund Managers) where as UCPF - I trades on Islamabad Stock Exchange (Can only liquidate through the exchange)

Q: WHAT IS THE TARGET MARKET OF THIS FUND?

A: UCPF - II would be ideal for

* People who need safety of their capital and want to save money for medium term.

* People who intend to participate in equity returns while securing their principal amount

* Preferably people who do not require their capital back over the life of the fund (2years)

Q: HOW WOULD THIS FUND BENEFIT AN INDIVIDUAL INVESTOR?

A: Considering the present economic situation, investors do not want to risk their hard earned money. The primary need of investors is the protection of their investment and to earn potentially higher returns. In retrospective to that, UCPF - II would benefit them through the following ways.

* Backing of the trusted UBL brand name

* Professional fund management by UBL Fund Managers

* 100% Protection of Capital on maturity

* Higher expected returns (through equity exposure) compared to similar fixed deposit schemes allowing investors to save up for future expenses.

* Dual Tax Benefit i.e. Tax Free Returns till June 30th 2010 and Income Tax Rebate on investments of up to Rs. 300K.

* Liquidity facility (for emergency needs) due to its open end structure.

* Units in the Fund can be used as collateral for availing Bank Financing

* Exemption from Zakat on submission of Affidavit.

Q: SINCE THIS FUND INVESTS IN EQUITIES, HOW DOES THIS FUND INTEND TO PROTECT THE INVESTMENTS OF THE INVESTORS?

A: Well this fund will primarily be investing in Term Deposits (Min 70%) with AA rated bank for capital protection segment which will ensure protection of capital at maturity and the remaining amount will be invested in Blue Chip Stock as the investment segment for investing in Equities for enhancing returns.

Q: SO FOR HOW LONG SHOULD AN INVESTOR REMAIN INVESTED IN THIS FUND TO REALIZE THE CAPITAL PROTECTION?

A: Investors will be required to hold their investment for 2 years starting after close of subscription period for the purpose of capital protection.

Q: HOW IS INVESTING IN UCPF-II BETTER THAN INVESTING DIRECTLY IN THE STOCK MARKET?

A: Investing in UCPF II will benefit investors in many ways

* 100% principal protection even with equity exposure which is not possible for investors if they invest directly in Equities.

* Professional fund management by UBL Fund Managers

* Expertise/service of Professional Fund Managers

* Diversification in blue chip stocks even with minimum investment amount.

* Better rates because being corporate UBL Funds will be able to negotiate better rates on TDR segment.

* Low cost and convenience as compared to direct equity investing.

Q: HOW ARE THE RETURNS OF UCPF-II BETTER IN COMPARISON TO BANKS' CURRENT ACCOUNTS AND SAVINGS ACCOUNT?

A: As explained above UCPF - II has the potential of offering higher returns as compared to similar investment avenues like Current Account and Savings Account because UCPF - II will be investing in high-yielding assets such as Equities. Further, being a mutual fund it offers other benefits such as Income Tax Rebate facility.

Q: WHAT IS THE MINIMUM INVESTMENT AMOUNT TO INVEST IN UCPF-II?

A: The minimum investment amount to invest in UCPF - II is as low as Rs 10,000/-.