The scheme will invest in a portfolio of equity shares offering tax rebate on such investments made in the scheme under Section 88 of the Income Tax Act, 1961. The fund also seeks to distribute income periodically depending on distributable surplus.

The broad investment pattern of the scheme would encompass investing 80-100 per cent of the portfolio in equities, cumulative convertible preference shares, and fully convertible debentures & bonds and upto 20 per cent of the fund in money market instruments.

The fund offers tax benefits on subscriptions up to Rs 10,000 under Section 88 of the Income Tax Act, 1961 for fiscal 1999-2000. UnderSection 88 of the Income Tax Act, 1961, any eligible applicant who has invested in Magnum Taxgain Scheme will be eligible for a maximum tax rebate of Rs 2,000 i.e, 20 per cent of Rs 10,000.

Interestingly, the minimun amount per application is Rs 500 and the scheme plans to offer dividends depending on distributable profits of the scheme. Such dividends will be tax free for investors.

There is statutory lock-in-period of three years for claiming rebate under Section 88. Investors can seek exemption from tax on capital gains under section 54EA or 54EB of the Income-tax Act, 1961. If investor opts for this, the funds would see a lock-in funds for three years and seven years respectively in the plan opted for.

As per provisions of Finance Act, 1999, income from mutual fund is fully exempt in the hands of investors. Also, tax benefits are available under Sections 48 & 112 on capital gains for resident Indians.

According to the details provided by the mutual fund in its draft propectus to Sebi, it statesthat till date SBI Mutual Fund has redeemed 8 schemes. The scheme MRIS 87 was redeemed in June 1993 with a simple yield of 21.50 per cent. Another scheme by the fund MTSS 88-89 was redeemed in March 1994 giving a simple yield of 33.80 per cent. The other schemes like MRIS 89 was redeemed in March 1994, MTSS 90 in March 1995, MRIS 90 in July 1995, MMIS 89 in Dec 1996, MEX 91 in November 1997 and MTPL 91 in May 1999.