Money Market Mutual Funds

GROUP MEMBERS
Sidrat Zahra Syed Rabia Rana Mufarrah Ejaz Saleha Ehsan Zarish Zulfi ar F10BA148 F10BA153 F10BA158 F10BA150 F10BA131

INTRODUCTION

Mutual Funds ! An in"est#ent "ehi$le that is #ade u% &f a %&&l &f funds $&lle$ted fr&# #any in"est&rs f&r the %ur%&se &f in"estin' in se$urities su$h as st&$(s) b&nds) #&ney #ar(et instru#ents and si#ilar assets*

TYPES OF MUTUAL FUNDS:

! Close Ended Mutual Fund: A $l&sed+end fund is a %ubli$ally traded in"est#ent $&#%any that raises a fi,ed a#&unt &f $a%ital thr&u'h an initial %ubli$ &fferin' -./01* 2he fund is then stru$tured) listed and traded li(e a st&$( &n a st&$( e,$han'e* Open Ended Mutual Fund: A ty%e &f #utual fund that d&es n&t ha"e restri$ti&ns &n the a#&unt &f shares the fund 3ill issue* .f de#and is hi'h en&u'h) the fund 3ill $&ntinue t& issue shares n& #atter h&3 #any in"est&rs there are* 0%en+end funds als& buy ba$( shares 3hen in"est&rs 3ish t& sell*

MONEY MARKET MUTUAL FUNDS

! A money market fund -als& (n&3n as money market mutual fund1 is an &%en+ended #utual fund that in"ests in sh&rt+ter# debt se$urities su$h as 4S 2reasury bills and $&##er$ial %a%er*

MONEY MARKET MUTUAL FUNDS

! ! M&ney #ar(et funds are i#%&rtant %r&"iders &f li uidity t& finan$ial inter#ediaries .n"est&rs interested in the #&ney #ar(et $an a$$ess it #&st easily thr&u'h #&ney #ar(et #utual funds

.t5s i#%&rtant t& re#e#ber t3& %&ints) th&u'h6 ! M&ney #ar(et funds are n&t $ash and $an suffer l&sses) alth&u'h they rarely ha"e* ! 4nli(e a ban( de%&sit) #&ney #ar(et funds are n&t insured by the federal '&"ern#ent*

Purpose of Money Mar e! Mu!ua" Fun#s for In$es!ors

2here are three instan$es 3hen #&ney #ar(et #utual funds) be$ause &f their li uidity) are %arti$ularly suitable in"est#ents* 1* M&ney #ar(et #utual funds &ffer a $&n"enient %ar(in' %la$e f&r $ash reser"es 3hen an in"est&r is n&t uite ready t& #a(e an in"est#ent &r is anti$i%atin' a near+ter# $ash &utlay f&r a n&n+ in"est#ent %ur%&se*

R%s s%!ua!%ons %n "e!!er&of&'re#%! Purpose of Money Mar e! Mu!ua" !ransa'!%ons Fun#s for In$es!ors
The payment will be obtained for nonexistent or worthless merchandise against presentation by the beneficiary of h&ldin' forged or falsified documents. 9* An in"est&r a bas(et &f #utual funds fr&# a sin'le fund

Fraud Risks

$&#%any &$$asi&nally 3ant t& transfer assets fr&# &ne fund t& Credit itself #ay may be fake. an&ther* .f) h&3e"er) the in"est&r 3ants t& sell a fund bef&re de$idin' Sovereign and &n an&ther fundRegulatory t& %ur$hase) aRisks #&ney #ar(et #utual fund &ffered by the sa#e fund $&#%any #ay be a '&&d %la$e t& %ar( the %r&$eeds &f sale* ! /erf&r#an$e &f the 7&$u#entary 8redit #ay be %re"ented by '&"ern#ent a$ti&n &utside
the $&ntr&l &f the %arties*

Purpose of Money Mar e! Mu!ua" Fun#s for In$es!ors

3* 2& benefit their $lients) br&(era'e fir#s re'ularly use #&ney #ar(et #utual funds t& %r&"ide $ash #ana'e#ent ser"i$es* /uttin' a $lient5s d&r#ant $ash int& #&ney #ar(et #utual funds 3ill earn the $lient an e,tra %er$enta'e %&int -&r t3&1 in annual returns ab&"e th&se earned by &ther %&ssible in"est#ents*

R%s s%!ua!%ons %n of "e!!er&of&'re#%! Opera!%ona" De!a%"s Money !ransa'!%ons Mar e! Mu!ua" Fun#s Fraud Risks
needs of small investors
Credit itself may be fake.

market mutual are designed Money The payment will be obtained funds for nonexistent or worthless to merchandise against presentation by the offer features that are particularly suited to the beneficiary of forged or falsified documents.

Sovereign and Regulatory Risks :&u $an %ur$hase #&ney #ar(et #utual funds dire$tly fr&#
!

br&(era'e $&#%anies &r #utual fund fir#s) just as y&u 3&uld /erf&r#an$e 7&$u#entary 8redit #ay be %re"ented by '&"ern#ent a$ti&n &utside %ur$hase&f a the st&$( &r e uity #utual*
the $&ntr&l &f the %arties*

M&ney #ar(et #utual funds als& &ffer s&#e si#%lified 3ithdra3al features that are #&re ty%i$ally ass&$iated 3ith ban( &r trust a$$&unts*

R%s s%!ua!%ons %n "e!!er&of&'re#%! Ca!e(or%es of Money Mar e! !ransa'!%ons Mu!ua" Fun#s Fraud Risks
Money market mutual funds may contain a specific type of money %arti$ular ty%e &f fund li#its its asset %ur$hases t& 4*S* 2reasury 0ne Credit itself may be fake. se$urities*

The payment will be obtained for nonexistent or worthless merchandise against market security or a combination of securities across a wide spectrum: presentation by the beneficiary of forged or falsified documents.

Sovereign and Regulatory Risks

An&ther $lass &f #&ney #ar(et funds %ur$hases b&th 4*S* '&"ern#ent and in "ari&us '&"ern#ent+s%&ns&red enter%rises ! se$urities /erf&r#an$e &f in"est#ents the 7&$u#entary 8redit #ay be %re"ented by '&"ern#ent a$ti&n &utside -;SEs1* the $&ntr&l &f the %arties* 2he third and lar'est $lass &f #&ney #ar(et #utual funds in"ests in a "ariety &f #&ney #ar(et se$urities that &ffer the hi'hest de'ree &f se$urity*

R%s s%!ua!%ons %n "e!!er&of&'re#%! Ca!e(or%es of Money Mar e! !ransa'!%ons Mu!ua" Fun#s Fraud Risks
%a%er) 3h&se interest in$&#e is subje$t t& federal ta,ati&n*
Credit itself may be fake.

The payment will be obtained for nonexistent or worthless merchandise against presentation by the 2a,able funds in"est in se$urities su$h as 2reasury bills and $&##er$ial beneficiary of forged or falsified documents.

2a,+e,e#%t funds in"est e,$lusi"ely in se$urities that are issued by state Sovereign and Regulatory Risks and l&$al '&"ern#ents and are e,e#%t fr&# federal ta,ati&n* 2a,+e,e#%t funds 'enerally a%%eal t& in"est&rs in hi'her federal ta, bra$(ets 3h& are see(in' ta, sa"in's &n the &"erall interest in$&#e 'enerated by their ! /erf&r#an$e &f the 7&$u#entary 8redit #ay be %re"ented by '&"ern#ent a$ti&n &utside %&rtf&li&s* the $&ntr&l &f the %arties*

R%s s%!ua!%ons %n "e!!er&of&'re#%! Types of Money Mar e! !ransa'!%ons Mu!ua" Fun#s Fraud Risks
Types of Mutual Funds Growth Fund
gro$th stoc#s.. Credit itself may be fake.

The payment will be obtained for nonexistent or funds worthless merchandise against Each mutual fund has specific investment objectives that mould the assets, investment presentation by theAt the most basic level, there are three types of mutual funds: options and strategy. beneficiary of forged falsified documents. (i) Equity funds, ii) i!edor income funds, and iii) "oney "ar#et funds

A mutual fund $hose focal aim is to achieve Risks capital appreciation primarily by investing in Sovereign and Regulatory !Asset /erf&r#an$e &f theFund 7&$u#entary 8redit #ay be %re"ented by '&"ern#ent a$ti&n &utside Allocation the type $&ntr&l &f the fund %arties* %his of mutual invests in a variety of securities in multiple asset classes $ith the objective of carrying out asset allocation typically by itself.

R%s s%!ua!%ons %n "e!!er&of&'re#%! Types of Money Mar e! !ransa'!%ons Mu!ua" Fun#s Money Fraud Risks Market Funds
Tracker Fund %his type of fund, as its name suggests, follo$s the performance of a particular inde!. Sovereign and Regulatory Risks %heoretically, these types of funds are as volatile as the mar#et $ith a correlation of unity.
! /erf&r#an$e &f the 7&$u#entary 8redit #ay be %re"ented by '&"ern#ent a$ti&n &utside Fund of Funds the $&ntr&l &f the %arties* A type of mutual fund $hich invests in other mutual funds, also #no$n as (multi management) funds. %hese types of funds enable investors to achieve a broad diversification and an appropriate asset allocation $ith investments in a variety of fund categories that all are $rapped up into one fund Credit itself may be fake.

The will be obtained for nonexistent or worthless merchandise against A mutual fundpayment $hich invests in lo$ ris# securities, for the most part in government presentation by the securities, &o's, commercial paper of companies and other highly liquid and lo$ ris# beneficiary of forged or falsified documents. securities

 ncome Fund

R%s s%!ua!%ons %n "e!!er&of&'re#%! Types of Money Mar e! !ransa'!%ons Mu!ua" Fun#s Fraud Risks

The payment will be obtained for nonexistent or worthless merchandise against A ty%e &f #utual fund that e#%hasizes $urrent in$&#e) either &n a #&nthly &r presentation by the uarterly basis) as di"er'ent fr&# tar'etin' $a%ital a%%re$iati&n* beneficiary of forged or falsified documents.

!alanced Fund Credit itself may be fake.

Mutual funds that $&#bine in"est#ents in shares) sh&rtter# and l&n'ter# b&nds in %ursuit &f in$&#e 'ainsRegulatory and $a%ital a%%re$iati&n 3hile a"&idin' e,$essi"e ris(* Sovereign and Risks

E"uity Fund

/erf&r#an$e &fin"ests the 7&$u#entary 8redit #ay be %re"ented by '&"ern#ent a$ti&n &utside A !#utual fund that %rin$i%ally in st&$(s is $alled e uity fund* .t is als& (n&3n $&ntr&l &f the %arties* as athe <st&$( fund=* 2his ty%e &f fund $an be further $ate'&rized int& t3& $ate'&ries) i*e* d&#esti$ and internati&nal) de%endin' &n the nature &f in"est#ents &f the fund* ;enerally) these funds are "ery "&latile 3ith str&n' $&rrelati&n 3ith the #ar(et*

 The payment will be obtained for nonexistent or worthless merchandise against presentation by the *Sector Fund beneficiary of forged or falsified documents. A mutual fund that invests entirely or predominantly in a specified (single) sector is a sector fund. %hese usually e!ist in energy, gold, and other precious metals sectors. specific Credit itself mayfunds be fake. %he ris# associated $ith these funds depends on the specified sector. %hese types of funds are less diversified. %he volatility and correlation $ith mar#et also depends on the specified Sovereign and Regulatory Risks sector. ! /erf&r#an$e &f the 7&$u#entary 8redit #ay be %re"ented by '&"ern#ent a$ti&n &utside A type of fund $hich entirely invests in +hariah compliant instruments. ,slamic funds e!ist in the $&ntr&l &f the %arties* almost all the forms discussed earlier. Each fund invests in its respective areas of interest #eeping in vie$ the rules of shariah compliance. %he volatility of each #ind of ,slamic fund depends on its category and also the relationship $ith the mar#et in $hich it operates.

R%s s%!ua!%ons %n "e!!er&of&'re#%! Types of Money Mar e! !ransa'!%ons Mu!ua" Fun#s Fraud Risks

*Islamic

Funds

Re(u"a!%ons for )u!ua" fun#s

2he in"est#ent $&#%any a$t &f 1>406 ocus on disclosures and information about investment objectives, investment company structure and operations. 2he se$urities a$t &f 1>336 ,f investors receiving certain significant information about securities being offered for sale in public mar#ets. 2he se$urities a$t &f 1>346 %his act created +E& and empo$ers it $ith securities of mutual funds.

Ru"es (o$ern )u!ua" fun#s %n Pa %s!an#

.n"est#ent 8&#%anies and in"est#ent Ad"is&r?s Rules) 1>@1* - '&"ern $l&se+end #utual funds1 Asset #ana'e#ent $&#%anies rules 1>>5 -'&"erns &%en+end #utual funds1*

Re(u"a!%ons pro$%#e# safe!y !o !*e %n$es!ors %n !er)s of :

%ransparency: %he holdings of mutual funds are publically available. -iquidity: +hares of mutual funds are redeemed by the fund company $hich insures its daily liquidity. Audited trac# .ecords: "utual funds must #eep their performance trac# records and have to follo$ auditing. +afety: ,n case of liquidity shareholders can receive portion equal to their shares. $ithout any loss.

In$es!ors 'an earn )oney %n !*ree +ays

7i"idend %ay#ents 8a%ital 'ain distributi&n .n$reased AAB

Mu!ua" fun#s %n Pa %s!an are:

! ! ! ! ! ! ! ! ! Arif Cabib .n"est#ent D /a(istan St&$( Mar(et Fund -AR.F/SM1 As(ari Asset All&$ati&n Fund -ASEAAFB1 Faysal .n$&#e F ;r&3th Fund -FA:.A;R1 CBG .sla#i$ M&ney Mar(et Fund -CBG.MME1 EASB .n$&#e 0%%&rtunity Fund -EASG.H41 Meezan Balan$ed Fund -MBF1 /a( 0#an .sla#i$ Asset All&$ati&n Fund -/AE0A.S1 /.8.8 ;r&3th Fund -/;F1 4BG Sa"in's .n$&#e Fund -4BGSA.A1

R%s s

Its not true that money market mutual funds are 100% safe. - Federal Reserve Chairman Ben Bernanke, March 2, 2012 Congressional testimony.

R%s s,Con!- .
! S&#e #&ney #ar(et funds in"est &nly in sh&rt+ter# 2reasury se$urities) 3hile &thers in$lude $&##er$ial %a%er D 3hi$h is the sh&rt+ter# debt issued by $&r%&rati&ns* 2he sh&rt+ter# nature &f the in"est#ents e uates t& l&3er ris() f&r the si#%le reas&n that there is less ti#e f&r the issuer t& e,%erien$e finan$ial diffi$ulty that 3&uld $ause the# t& default &n their debt* Ihile the $han$e that sh&rt+ter# debt 3&n?t be re%aid is s#all) it e,ists n&netheless*

R%s s,Con!- .
! nflation: $he %nseen Risk
/erha%s the lar'est ris( 3ith #&ney #ar(et funds is n&t the safety &f y&ur %rin$i%al) but the funds? inability t& (ee% u% 3ith the rate &f inflati&n* .f a #&ney #ar(et fund is %ayin' y&u 0*95J 3hen inflati&n is at 3J) f&r e,a#%le) y&u?re a$tually l&sin' #&ney in the sense that y&ur %ur$hasin' %&3er is de$linin'* As a result) in"est&rs need t& ta(e $are that they d&n?t ha"e #&re $ash all&$ated t& #&ney #ar(et funds than is a%%r&%riate f&r their situati&n*

A#$an!a(es
! A Great Place to Park Money
Ihen the st&$( #ar(et is e,tre#ely "&latile and in"est&rs aren5t sure 3here t& in"est their #&ney) the #&ney #ar(et $an be a terrifi$ san$tuary* M&ney #ar(et a$$&unts and funds are &ften $&nsidered t& ha"e less ris( than their st&$( and b&nd $&unter%arts* .n additi&n) the #&ney #ar(et &ften 'enerates a l&3 sin'le+di'it return f&r in"est&rs) 3hi$h in a d&3n #ar(et $an still be uite attra$ti"e*

A#$an!a(es,Con!-.
! L !u d ty Isn"t #sually an Issue M&ney #ar(et funds d&n5t 'enerally in"est in se$urities that trade #inus$ule "&lu#es &r that tend t& ha"e little f&ll&3in'* Rather) they 'enerally trade in entities andK&r se$urities that are in fairly hi'h de#and -su$h as 2+bills1* 2his #eans that they tend t& be #&re li uid) and that in"est&rs $an buy int& the# and sell the# 3ith $&#%arati"e ease*

A#$an!a(es,Con!-.
! &ield: M&ney #ar(et funds %ay a yield based &n the
h&ldin's &f the underlyin' fund* 2he yield is 'enerally aut&#ati$ally rein"ested int& the fund "ia %ur$hase &f additi&nal shares in the fund* 2his yield #a(es #&ney #ar(et funds an attra$ti"e alternati"e t& the #attress*

D%sa#$an!a(es
! $%I& Insurance M&ney funds %ur$hased at a ban( are ty%i$ally insured by the Federal 7e%&sit .nsuran$e 8&r%&rati&n -F7.81 C&3e"er) #&ney #ar(et #utual funds are n&t usually '&"ern#ent insured* 2his #eans that alth&u'h #&ney #ar(et #utual funds #ay still be $&nsidered a $&#%arati"ely safe %la$e t& in"est #&ney) there is still an ele#ent &f ris( that all in"est&rs sh&uld be a3are &f*

D%sa#$an!a(es,Con!-.
! 'eturns May (ary
Re#e#ber) the return a fund has %&sted in a %re"i&us year is n&t ne$essarily an indi$ati&n &f 3hat it #ay 'enerate in a future year* F&r e,a#%le) ha"in' di"idends &r %r&$eeds fr&# a st&$( sale sent dire$tly t& y&u -the in"est&r1 #ay n&t all&3 y&u t& $a%ture the sa#e rate &f return* .n additi&n) rein"estin' di"idends in e uities #ay &nly a''re'ate return %r&ble#s in a d&3n #ar(et*

D%sa#$an!a(es,Con!-.
! )**ortun ty Lost
0"er ti#e) $&##&n st&$(s ha"e returned ab&ut 8+10J &n a"era'e + $&untin' re$essi&nary %eri&ds* By in"estin' in a #&ney #ar(et #utual fund) 3hi$h #ay &ften yield just 9J &r 3J) the in"est&r #ay be #issin' &ut &n an &%%&rtunity f&r a better rate &f return* 2his $an ha"e a tre#end&us i#%a$t &n an indi"idual5s ability t& build 3ealth*

D%sa#$an!a(es,Con!-.
! Maturity of 'oldings: M&ney #ar(et funds
$ann&t h&ld in"est#ents 3ith a #aturity &f 'reater than 3>@ days* 2he 3ei'hted a"era'e #aturity &f the %&rtf&li& $ann&t e,$eed >0 days*