NFO: LIC Fixed Maturity Plan Series 34

Fund House: Life Insurance Corporation of India set up LIC Mutual Fund in June 1989. LIC Mutual Fund was constituted as a Trust in accordance with the provisions the Indian Trust Act, 1882. This trust has appointed Jeevan Bima Sahayog Assets Management Company Ltd. as the Investment Managers for LIC Mutual Fund in April 1994. The fund house manages assets worth Rs. 13437.66 crore at end of November 2007.

Scheme: LIC Fixed Maturity Plan Series 34 is a close-ended income scheme. The NFO price for the fund is Rs 10 per unit. The issue will open for subscription from 17 December and close on 24 December 2007.

Plans: It will mature after 16 months, which is called 16 months plan.

Investment Options: The scheme provides dividend and growth option. Under dividend option investors can choose either dividend reinvestment or dividend payout.

Minimum Investment Amount: The minimum investment is of Rs.10,000 and in multiple of Rs. 1000 thereafter.

Loads: As it is a close-ended scheme no entry load can be levied. But there will an exit load of 1.50% if the investment is redeemed on or before 180 days. The exit load will come down to 1.00% if the investment is redeemed after 180 days but before maturity. No exit load will be charged upon maturity of the scheme.

Corpus: Rs 50 lakh.

Investment Objective: The scheme aims to minimize interest rate risk by investing in a portfolio of fixed income securities normally maturing in line with the time profile of the scheme.

Investment Strategy: The proportion of investment in various securities will be decided after considering the prevailing political conditions, the economic environment (including interest rates and inflation), the performance of the corporate sector and general liquidity and other considerations in the economy and markets so as to have a liquid portfolio providing optimum returns.

Asset Allocation: Under 15 months plan the fund would invest up to 100% in debt instruments having residual maturity of more than 16 months. It can also invest up to 100% in money market instruments. Investment in debt instruments includes securitised debt up to 100%.

Performance of other schemes: There is no single fixed maturity plan of LIC mutual fund that has posted returns in 1-year period. If we glance through performance of fixed maturity schemes of LIC Mutual Fund in 6 months period we can see LIC MF Fixed Maturity Plans: Series 19 - 13 Month (G) topping the chart with 5.64% returns in 6 months period. LIC MF Fixed Maturity Plans: Series 20 - 14 Month (G) follows this scheme with 5.34% in 6 months period.

Performance of other fund houses: If glance through the performance of top ten close ended fixed maturity plans in 1 year period, we can see Principal PNB Fixed Maturity Plans 3 Years - Series 1 (G) tops the chart with 13.72% returns in 1-year period. Grindlays Fixed Maturity Plus Plan III - A (G) follows it at sixth position with 10.69% returns in 1-year span.

Outlook: LIC Mutual Fund has launched LIC Fixed Maturity Plan Series 34 with 16 months maturity. This close-ended scheme seek to minimize interest risk by investing in fixed income securities, debt, and money market instruments normally maturing in line with the duration of the scheme.

Overall fixed maturity plans are good options for investors wanting to block their money for a fixed time frame. Though the returns are not assured, investors can expect a return in tune with the current interest rate scenario.