Mutual Fund Fixed Deposit

Composition? Part of an investment pool of cash Your cash only

Where held? Mutual fund company or your custody account Financial institutions on their balance sheet

How held? Units/shares Cash

How is return calculated? Depends on performance of underlying securities Mathematical interest calculation based

in fund on prevailing interest rates

Is return varied or absolute

guaranteed? Return varies with market valuations No, return is fixed. What you see is what

you get

Is there a lock up period? Generally, no - many funds trade every day Yes, limited to maturity date for

redemption

Early redemption penalty? Generally, no, but depends upon type of fund Yes, almost always

Separate from financial

institution assets? Yes, each fund is a segregated separate entity No, listed on financial institution balance

sheet

Can it lose principal? Yes, in a recessionary market Generally, no

Can the principal appreciate

above dividend return? Yes, shares can appreciate in value No

independently of dividends