Investments under the scheme will be made only in government securities including treasury bills, government bonds, real rate bonds, etc. It is eligible for investments by provident, pension, gratuity and super annuation funds. There are two plans offered under the scheme. The dividend plan is drafted for investors requiring regular income, while the appreciation plan is for investors interested in long-term investment. The minimum investment amount is Rs 5,000 and in multiples of Rs 500 thereafter. Joseph said the scheme offered recurringinvestment facility as well as recurring withdrawal facility. Units could be purchased or redeemed at NAV related prices, which would be determined on all business days. There would also be a quarterly declaration of full investment portfolio.

Liquidity would not be a problem, said Joseph, as redemption requests would be processed daily. The fund would endeavour to dispatch cheques within three business days of the receipt of a redemption request. According to Joseph, the scheme has received RBI approval for investments by non-resident Indians, overseas corporate bodies and foreign institutional investors on fully repatriable basis. The scheme may invest in government securities of G-7 countries once foreign content for mutual funds is permitted.

The initial price of units offered is Rs 10 per unit. Thereafter, the price would be based on NAV. The initial offer, which opened today, would close on July 15, 1999. The earliest closing date is June 7, 1999. Investors would get several tax benefits includingbenefits under Sections 54EA and 54EB of the Income Tax Act. All dividend income from mutual funds would be exempt from income tax in the hands of the investor.

Dundee Liquidity Fund has already collected a corpus of Rs 10.5 crore and has given an annualised yield of 10.73 per cent since inception.