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What is investment fund?
It is an investment tool where the investors' savings are professionally managed using various capital market instruments. The investment funds manage the portfolios comprised of such capital market instruments like securities, treasury bonds and government bonds against the moneys collected from public. Each investor shares the fund by receiving the participation certificate, which represents a part of the portfolio of the fund.

What is the Legal Basis of the Investment Funds
Funds are established according to the provisions of the Capital Market Law and the official communiqué, which is issued by Capital Market Board based on that law. All issues regarding establishment and operation of funds are depicted in detail in the Fund's Bylaw.

What are the fundamental characteristics of investment funds?
The fund has a bylaw, which describes its founder, manager, capital, what investment instruments will be used to evaluate and its overall characteristics. It is audited by Capital Market Board. Participation Certificates are kept in custody at Takasbank on the name of investors. The fund evaluates the savings in different fields and markets in the most efficient manner according to the investors' expectations.

How is the investment funds audited?
The founder of the investment fund must appoint at least one auditor for each fund, having certain qualifications. Investment funds are also audited by external independent auditing companies under a contract signed for 6 months or one year. Annual audit report is forwarded to Capital Market Board. The Board has the authority to audit the investment funds at any time it deems appropriate.

History of Investment Funds
A new period started in Turkey with the decisions taken on 24th January 1980 and it was started to pursue privatization policies in all sectors of economy. 1980's were spent with the structuring of legal and corporate infrastructure of the new framework when the market dynamics would have been defined. After the Capital Market Law was passed in 1981 within this framework, Capital Market Board (SPK) was instituted in 1982. Then Istanbul Stock Exchange Market started its operations in 1986. The first mutual fund commenced its operations in 1987 following the issue of the "Official Communiqué pertaining to the issue and public offer of Mutual Fund Participation Certificates" on 12.12.1986.

Who can found an investment fund?
The banks, brokerage houses, insurance companies as well as the Retirement Funds and Provident Funds, having no legal obstacles, which comply with the standards defined by SPK can found and manage funds by receiving permission from the board.

To which instruments could the investment fund invest?
Repurchasing, Government Bonds, Treasury Bonds, Securities, Private Sector Bills and Finance Bills, Foreign Currency Bills, Investment Fund, Precious Metals, Futures and Options.

What are the advantages of investment funds?
The most important advantage of investment fund is to offer the opportunity to get use of professional management. Other advantages are: 1. Risk could be reduced by diversified portfolio
2. Every investor may hold and sell out the Investment Fund Participation Certificates for and in any period he wishes; therefore the funds provide the investor flexible maturity and liquidity.
3. Any sum, from the smallest to the biggest, could be invested in the fund. Because small sums make out a single portfolio by merging with others, small investors could take advantage of investment fund in the same manner as big investors.

How are assets evaluated at Investment Funds?
All assets in the portfolio of investment funds are evaluated with the average prices, which are quoted in the markets they are transacted every evening. Only index funds are evaluated on closing market prices.

Performance of Investment Funds?
Performance of investment funds in Turkey are generally assessed on the basis of quarterly or annual income. But, the risk based income analyses, which are very frequently used in the global literature should also be taken into account. In Turkey, while investors are making their investment decisions, the funds, which are managed with lowest risk in order to yield the highest income, are favored. The performance assessment, based on risk and which is not affected by market risks, is one of the methods used in testing the management skills of investment fund managers and the accuracy of the management strategies that they implement. The most widely used performance measurements, with adjusted income according to risk, is SHARPE RATIO.

Sharpe Ratio:
The performance measurement, developed by William Sharpe, known as Reward Ratio according to variation or shortly Reward Ratio, compares the portfolio's surplus income with standard deviation.
The surplus income (Risk Premium) of the portfolio is calculated by subtracting risk-free interest rate from the quarterly average portfolio set income. Standard deviation represents total risk. Hence;

SHARPE RATIO = (Portfolio Income - Risk-Free Portfolio Income) / Total Risk (Standard Deviation)

Higher ratio means that the investment performance is good in terms of risk-based income; low ratio means the investment performance is weak.

While choosing a fund?
1. Investors should review their own age, income and risk situations before they make a choice between funds.
2. Investors should make clear what income they expect from the investment taking into account the market expectations in near future.
3. At this point the portfolio managers or companies should take an active role and analyze the attainability of the defined target of income; and display to the attention of the investors the risk that must be taken in order to attain the target.

The issues that investors must be cautious
1. It is not easy for investors to schedule out the market. Investors must absolutely define the maturity before they make any investment.
2. Investors must absolutely take into consideration the past performances of the corporation managing the fund, the managers of the fund, the fund or its administrators, as well as size of the fund. Investors must investigate the instruments that the fund could invests according to its bylaw and find out on what criteria they must assess the fund performance (if the fund is going to be compared with another fund, funds with similar size and features must be compared).
3. Before an investment is made to the fund, its past performance must be investigated. But the performance should not be measured for a short period of time and the income per unit risk assumed must be taken into account in addition to the income alone. For instance, if, beside a fund with 70% securities in average annually, yielding an income of 150%, there is another fund with 50% securities in average but still yielding an income of 150%, the 2nd fund must be preferred by investors because the 2nd fund has exhibited a better performance and has yielded the same income with lower risk.
4. Instruments, which can be invested in the investment fund market, in a fairly wide spectrum and which are absolutely suitable for investors under any market condition, may be found. What is important is that correct investment fund must have been chosen by the correct person with correct timing.

How is investment funds taxed?
Pursuant to the new Tax Law, which became into effect on 1st October 2006, the 10% withholding tax, deducted from the investment funds has been abolished. As from that date, 10% withholding tax is levied on the profit earned from investment fund trading for fully accountable tax payer real or legal persons. In this practice, first in - first out principle is implemented. For the investors, having had investment funds in their portfolio before the law became into effect, the price as of 1st October 2006 will be taken as the cost. The earnings deriving from the trading of investment fund participation certificates, incorporating permanently at least 51% securities shall not be subject to withholding tax in the event.

Where and how I can buy TEB Funds?
You can acquire the funds, managed by TEB Portföy, at TEB branches all over Turkey, the Head Office of TEB Yatýrým, at internet site www.teb.com.tr and at telephone 444 0 666, TEB Telephone Banking Head Office.

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