SYSTEMATIC OPERATING

8/7/2019 SYSTEMATIC OPERATING

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CHAPTER-1

INTRODUCTION


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SYSTEMATIC OPERATING EFFICIENCY

INTRODUCTION:

The market condition that exists when participants can executetransactions and receive services at a price that equates fairly to theactual costs required to provide them. An operationally-efficientmarket allows investors to make transactions that move the marketfurther toward the overall goal of prudent capital allocation, withoutbeing chiseled down by excessive frictional costs, which wouldreduce the risk/reward profile of the transaction.

Also known as an "internally efficient market".

Consider the hypothetical example where all brokers charged aminimum commission of rs.100 per trade. If you were a huge mutualfund trading 20,000 share blocks at a time, this fee may not limit yourability to be operationally efficient in your trading. But if you were asmall investor looking to trade 10 or 20 shares, this fee would keepyou from trading almost entirely, making the market (as you saw it)

extremely inefficient.

In the case of trading costs, the advent of electronic trade andincreased competition have pushed fees low enough to be fair toinvestors while still allowing brokers to earn a profit.

In other areas of the market, certain structural or regulatory changescan serve to make participation more operationally efficient. In 2000,the Commodity Futures Trading Commission (CFTC) passed a

resolution allowing money market funds to be considered eligiblemargin requirements, where before only cash was eligible. This minorchange reduced unnecessary costs of trading in and out of moneymarket funds, making the futures markets much more operationalefficient.


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when considering transaction costs (including commissions andspreads). Thus, any one person can be wrong about the marketindeed, everyone can bebut the market as a whole is always right.There are three common forms in which the efficient-markethypothesis is commonly statedweak-form efficiency, semi-strong-form efficiency and strong-form efficiency, each of whichhas different implications for how markets work.

NEED FOR THE STUDY:

The main purpose of doing this project was to know about mutualfund and its performance measuring. This helps to know in detailsabout mutual fund industry right from its inception stage, growth andfuture prospects.It also helps in understanding different schemes of operatingefficiency mutual funds. Because my study depends upon prominentfunds in India and their schemes like equity, income, balance as wellas the returns associated with those schemes.The project study was done to ascertain the asset allocation, entry

load, exit load, associated with the mutual funds. Ultimately thiswould help in understanding the benefits of mutual funds to investorsin operating efficiency.

PROBLEM OF THE STUDY:


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Variation in funds performance due to its change inmanagement/objective.

The funds performance can slip in comparision to similar funds There may be increase in various cost associated with funds Beta a technical measure of the risk associated may be surge The funds rating may go down in various lists published by the

independent rating agencies. It can merge into another fund or could b acquired by another

fund house.

OBJECTIVE OF THE STUDY :

To give a brief idea about the benefits available from Mutual Fundinvestment

To give an idea of the types of schemes available.

To discuss about the market trends of Mutual Fund investment.

To study some of the mutual fund schemes and analyse them

Observe the fund management process of mutual funds

Explore the recent developments in the mutual funds in India

To give an idea about the regulations of mutual funds


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CHAPTER- 2

INDUSTRY PROFILE

INDUSTRY PROFILE:

FINANCIAL:

ECS Financial Services (India) Pvt. Ltd. is the Premier FinancialAdvisory Services providers started in the year 1996 with the aim ofproviding support to Individuals in creating wealth through Efficient


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service with Careful suggestions and leading the Investors forSafeinvestments.

ECS is promoted by Mr. E. Chandrasekaran a professional with 23years of experience in Financial Services Sector and also known forhis integrity and services by the investors. Over the years Mr. E.Chandrasekaran has developed a strong reputation for navigating itsinvestors through all the Ups & Downs in the market.

Financial Planning: We offer comprehensive financial planningservices that help to meet your life goals. We do this by helping youassess your goals, plan for them and finally implement them.

HUMAN RESOURCES:

Ecs Team: ECS has a vast network of 21 branches all over SouthIndia and Kolkata. Our team of over 110 plus well-trained, qualified &motivated professionals includes financial analyst, Insurance &Investment Experts.

Aim: The main aim ofECS is to Serve our clients plan and organize

their financial affairs to achieve their long & short -term financial,Personal goals and guiding investing simpler, more understandableand profitable for the investors. It is our continuous endeavor to betrustworthy advisor to our clients.Software: In our efforts to improve the technology, we havedeveloped our own Software successfully and continuously focusingto enhance the same with innovative techniques.

MARKETING:

Service:

Portfolio Management: ECS helps in creating portfoliofor its clients in framing an ideal investment strategy.


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Tax planning: By planning your taxes we help you reachyour personal goals by identifying how to increase yourincome by saving taxes and by helping you investing taxsaving instruments to fit your personal portfolio and

situation.

Retirement planning: Planning your income forretirement is one of the most important financial decisionsyou will ever make. You have to plan your finances sothat you may maintain the same standard of living whenyou are no longer working. In order to ensure that youenjoy your retirement without financial hardships we urgeyou to make your own pension plans like PPF with ourhelp.

Financial Planning: We offer comprehensive financialplanning services that help to meet your life goals. We dothis by helping you assess your goals, plan for them andfinally implement them.

Value Added Services: We keep you updated on the latest opportunities in

the world of investment.

Our advice is all Need Based we give youcustomized advice only after understanding yourfinancial goals risk tolerance and other priorities inlife.

Our professional Research Team will help you withadvice i.e. thoroughly based on the analysis ofmarket dynamics government policies & closemonitoring of global developments.

We have a vast network of Branches all over south India, Helping youto get service at your doorsteps


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ORGANISED STRUCTURE:

The detailed organizational structure of functional area of research FINANCE. ECS has a vast network of 21 branches all over SouthIndia and Kolkata. Our team of over 110 plus well-trained, qualified &motivated professionals includes financial analyst, Insurance &Investment Experts.

Ecs branches are located in places whereretail investors can come in touch with investment opportunities in anatmosphere of convenience & comfort. Each branch comprises oftrained and qualified investment advisor to take care of the needs ofthe customer.

PRODUCTS :

ECS Financial Services (India) Pvt. Ltd. brings a comprehensiverange of products and services under one roof.

1. Mutual Fund: With Mutual Fund emerging as a distinct assetclass ECS has made a strategic choice to leverage the power


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of latest technology to provide a cutting edge to its service. Wedeal with the schemes of all top reputed asset managementcompanies.

2. Insurance: we provide insurance packages of reputedinstitutions like LIC, ICICI PRU life, HDFC SLI insurance etccovering life, medical, general etc.

3. Bonds & Debentures: ECS deals with government of Indiarelief bonds, Infrastructure bonds, capital gain bonds and bondsfrom central & state government institutions.

4. Small Saving schemes: Fixed returns with govt. guarantee.ECS provides a wide opportunity in opting the best scheme forinvestors

5. Tax saving schemes: ECS makes people to be best in their

tax planning by guiding good tax saving Schemes.6. Initial public offerings: Investing in IPO is a wealth to the

investors. ECS enable the investors to opt for right IPOs anddoes all kinds of services related to the same

7. Company fixed deposits: We offer selected FD Schemes ofreputed companies, which have a better return than bankdeposits with minimum, lock in period.

8. PAN: ECShas been authorized as PSA (Pan Service Agent). It

enables the investors to utilize the pan services that are beingoffered.

9. Trading (Selling / Buying): ECS has a separate wing that isengaged in a buying/Selling of shares, Opening of dmataccount & other related services.


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CHAPTER-3

RESEARCH

METHODOLOGY

RETAIL DESCRIPTION OF THE FUNCTIONAL AREA:

METHODOLOGY:

Methodology can be considered as the backbone of any project

work. Methodology refers to the scientific methods used in theproject for the purpose of investigation and research

INTRODUCTION:

Any organization whether big or small, private or public need differenttypes of information are to known its popularity. I have gathered


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secondary data and primary data and collected information from thecombination of these two data:

(1)PRIMARY DATA:

Primary data is the new or fresh data collected from the respodantthrough structured scheduled questionnaire

(2)SECONDARY DATA:

I will collect secondary data from the internet portals (and all othersimilar portals related to broking industry) Newspapers (The

Economic Times, Business Standard, The business line etc.Magazines( Business world, Business Today etc.) Journals etc( Ihave mentioned tentative references)

(3) SAMPLE SIZE:

I have taken sample size of 50 respondents,because the populationis too large so it is difficult to survey.

PRIMARY DATA:

DATA ANALYSIS:

SECONDARY DATA:

MUTUAL FUND EFFICIENCY AND PERFORMANCE:

The primary purpose for which mutual funds are acquired and held isfor their expected good performance. Mutual funds are said to have


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"professional" managements which, presumably, provide the potentialfor investment results better than those that the layman might achieveby selecting his own individual securities and subsequently managinghis portfolio himself.

Mutual funds, however, are saddled with two burdens which offsetsome, all, or more than, the performance benefits derived from the"professionalism" of their managements. The lesser of these twoburdens is routinely measured in a mutual fund's "expense ratio"which includes its management fees, administration and operationalexpenses, and 12b-1 marketing fees.

ALLOCATIONAL EFFICIENCY :

A characteristic of an efficient market in which capital is allocated in away that benefits all participants. Allocational efficiency occurs whenorganizations in the public and private sectors can obtain funding forthe projects that will be the most profitable, thereby promotingeconomic growth.

In order to be allocationally efficient, a market mustmeet the prerequisites of being both informationally efficient (wheremuch is known by all), and transactionally or operationally efficient(where transaction costs are reasonable and fair). If all conditions are

met, capital flows will direct themselves to the places where they willbe the most effective, providing an optimal risk/reward scenario forinvestors

PERFORMANCE MEASURES OF MUTUAL FUNDS:

Mutual Fund industry today, with about 34 players and more than fivehundred schemes, is one of the most preferred investment avenues

in India. However, with a plethora of schemes to choose from, theretail investor faces problems in selecting funds. Factors such asinvestment strategy and management style are qualitative, but thefunds record is an important indicator too. Though past performancealone can not be indicative of future performance, it is, frankly, theonly quantitative way to judge how good a fund is at present.


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Therefore, there is a need to correctly assess the past performanceof different mutual funds.

Worldwide, good mutual fund companies over are known by theirAMCs and this fame is directly linked to their superior stock selectionskills. For mutual funds to grow, AMCs must be held accountable fortheir selection of stocks. In other words, there must be someperformance indicator that will reveal the quality of stock selection ofvarious AMCs.

Return alone should not be considered as the basis of measurementof the performance of a mutual fund scheme, it should also includethe risk taken by the fund manager because different funds will havedifferent levels of risk attached to them. Risk associated with a fund,

in a general, can be defined as variability or fluctuations in the returnsgenerated by it. The higher the fluctuations in the returns of a fundduring a given period, higher will be the risk associated with it. Thesefluctuations in the returns generated by a fund are resultant of twoguiding forces. First, general market fluctuations, which affect all thesecurities present in the market, called market risk or systematic riskand second, fluctuations due to specific securities present in theportfolio of the fund, called unsystematic risk. The Total Risk of agiven fund is sum of these two and is measured in terms of standarddeviation of returns of the fund. Systematic risk, on the other hand, is

measured in terms of Beta, which represents fluctuations in the NAVof the fund vis--vis market. The more responsive the NAV of amutual fund is to the changes in the market; higher will be its beta.Beta is calculated by relating the returns on a mutual fund with thereturns in the market. While unsystematic risk can be diversifiedthrough investments in a number of instruments, systematic risk cannot. By using the risk return relationship, we try to assess thecompetitive strength of the mutual funds vis--vis one another in abetter way.

In order to determine the risk-adjusted returns of investmentportfolios, several eminent authors have worked since 1960s todevelop composite performance indices to evaluate a portfolio bycomparing alternative portfolios within a particular risk class. Themost important and widely used measures of performance are:


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The Treynor Measure

The Sharpe Measure

Jenson Model

Fama Model

The Treynor Measure

Developed by Jack Treynor, this performance measure evaluatesfunds on the basis of Treynor's Index. This Index is a ratio of returngenerated by the fund over and above risk free rate of return(generally taken to be the return on securities backed by thegovernment, as there is no credit risk associated), during a givenperiod and systematic risk associated with it (beta). Symbolically, itcan be represented as:

Treynor's Index (Ti) = (Ri - Rf)/Bi.

Where, Ri represents return on fund, Rfis risk free rate of return andBiis beta of the fund.

The Sharpe Measure

In this model, performance of a fund is evaluated on the basis ofSharpe Ratio, which is a ratio of returns generated by the fund overand above risk free rate of return and the total risk associated with it.According to Sharpe, it is the total risk of the fund that the investorsare concerned about. So, the model evaluates funds on the basis ofreward per unit of total risk. Symbolically, it can be written as:

Sharpe Index (Si) = (Ri - Rf)/Si

Where, Si is standard deviation of the fund.


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While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a fund, a low and negative Sharpe Ratio isan indication of unfavorable performance

Comparison of Sharpe and Treynor

Sharpe and Treynor measures are similar in a way, since they bothdivide the risk premium by a numerical risk measure. The total risk isappropriate when we are evaluating the risk return relationship forwell-diversified portfolios. On the other hand, the systematic risk isthe relevant measure of risk when we are evaluating less than fullydiversified portfolios or individual stocks. For a well-diversifiedportfolio the total risk is equal to systematic risk. Rankings based ontotal risk (Sharpe measure) and systematic risk (Treynor measure)

should be identical for a well-diversified portfolio, as the total risk isreduced to systematic risk. Therefore, a poorly diversified fund thatranks higheron Treynor measure, compared with another fund that ishighly diversified, will rank lower on Sharpe Measure.

Jenson Model

Jenson's model proposes another risk adjusted performancemeasure. This measure was developed by Michael Jenson and issometimes referred to as the Differential Return Method. This

measure involves evaluation of the returns that the fund hasgenerated vs. the returns actually expected out of the fund given thelevel of its systematic risk. The surplus between the two returns iscalled Alpha, which measures the performance of a fund comparedwith the actual returns over the period. Required return of a fund at agiven level of risk (Bi) can be calculated as:

Ri = Rf + Bi (Rm - Rf)

Where, Rm is average market return during the given period. After

calculating it, alpha can be obtained by subtracting required returnfrom the actual return of the fund.

Higher alpha represents superior performance of the fund and viceversa. Limitation of this model is that it considers only systematic risknot the entire risk associated with the fund and an ordinary investor


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can not mitigate unsystematic risk, as his knowledge of market isprimitive.

Fama Model

The Eugene Fama model is an extension of Jenson model. Thismodel compares the performance, measured in terms of returns, of afund with the required return commensurate with the total riskassociated with it. The difference between these two is taken as ameasure of the performance of the fund and is called net selectivity.

The net selectivity represents the stock selection skill of the fundmanager, as it is the excess return over and above the returnrequired to compensate for the total risk taken by the fund manager.

Higher value of which indicates that fund manager has earned returnswell above the return commensurate with the level of risk taken byhim.

Required return can be calculated as: Ri = Rf + Si/Sm*(Rm - Rf)

Where, Sm is standard deviation of market returns. The netselectivity is then calculated by subtracting this required return fromthe actual return of the fund.

The Mutual Fund Performance Jinx:

There are purported to be over 10,000 mutual funds available to thepublic for purchase. There are also many hundreds of sponsors, each

with a stable of these funds. Each of a sponsor's funds pursues adifferent investment strategy.

At any point in time, and over varying periods of time, merelyby the laws of random chance, it is inevitable that some funds will


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have delivered higher returns than others. Those funds which havedelivered the highest returns are given the greatest visibility by themany mutual fund rating services; and they are also the specificfunds that their sponsors most heavily merchandise. As a result,massive amounts of money pour into them.

Measurements of Value Added and Efficiency Shortfalls:

It goes without saying that, by employing the services of a mutualfund, an investor hopes to achieve a level of performance superior towhat he would achieve by selecting securities at random and thennever managing his list. To the extent that a mutual fund provides an"above-the-market" level of performance, its professionalmanagement is said to "add value."4 To the extent that a mutual fundfails to provide such performance, it may be said to suffer an"efficiency shortfall."

Unlike its other expenses, a mutual fund'smarket impact costs cannot be measured with precision, and so theyare not reported in the institution's prospectus or sales literature.

Their magnitude can, however, be inferred collectively for mutualfunds in general from tabulations such as the following

Average Annual Total Return(for periods ending December 31, 1997)

Series 1 Year 3 Years 5 Years 10 Years

Standard& Poor's500 Index

33.35%/yr. 31.13%/yr. 20.25%/yr. 18.04%/yr.

DomesticStock

24.30%/yr. 24.78%/yr. 16.69%/yr. 15.78%/yr.


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stock market again generates only the 10% returns it has averagedover the past two-hundred years (or generates negative returns, as ithas in many years in the past), a 6% (or 9%) built-in performanceshortfall may prove more discomforting.7

NET ASSET VALUE:

Net asset value (NAV) is a term used to describe the value of anentity's assetsless the value of its liabilities. The term is mostcommonly used in relation to open-ended ormutual funds becauseshares of such funds registered with the U.S. Securities andExchange Commission are redeemed at their net asset value.

However, the term may also be used as a synonym forbook value orthe equity value of a business. Net asset value may represent thevalue of the total equity, or it may be divided by the number ofsharesoutstanding held by investors and, thereby, represent the net assetvalueper share.

Net asset values and other accounting and recordkeeping activitiesare the result of the process of Fund Accounting, sometimes calledsecurities accounting, investment accounting and/or portfolioaccounting. Fund Accounting systems are sophisticated

computerized systems used to account for investor capital flows inand out of a fund, purchases and sales of inoperating expenses ofthe fund. The fund's investments and other assets are valued on aregular basis such as daily, weekly or monthly, depending on the fundand associated regulatory or sponsor requirements. There is nouniversal method or basis ofvaluing assets and liabilities for thepurposes of calculating net asset value used throughout the world,and the criteria used for the valuation will depend upon thecircumstances, the purposes of the valuation and any regulatoryand/or accounting principles that may apply. For example, for USregistered open-ended funds, investments are commonly valuedeach day the New York Stock Exchange is open, using closing prices(meant to represent fair value) typically 4:00 PM Eastern Time. ForUS registered money market funds, investments are often carried orvalued at 'amortized cost' as opposed to market value for expedience
http://en.wikipedia.org/wiki/Assethttp://en.wiktionary.org/wiki/less#Prepositionhttp://en.wikipedia.org/wiki/Liability_(financial_accounting)http://en.wikipedia.org/wiki/Open-ended_fundhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Securities_and_Exchange_Commissionhttp://en.wikipedia.org/wiki/Securities_and_Exchange_Commissionhttp://en.wikipedia.org/wiki/Book_valuehttp://en.wikipedia.org/wiki/Shareholders'_equityhttp://en.wikipedia.org/wiki/Shares_outstandinghttp://en.wikipedia.org/wiki/Shares_outstandinghttp://en.wikipedia.org/wiki/Valuation_(finance)http://en.wikipedia.org/wiki/Assethttp://en.wiktionary.org/wiki/less#Prepositionhttp://en.wikipedia.org/wiki/Liability_(financial_accounting)http://en.wikipedia.org/wiki/Open-ended_fundhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Securities_and_Exchange_Commissionhttp://en.wikipedia.org/wiki/Securities_and_Exchange_Commissionhttp://en.wikipedia.org/wiki/Book_valuehttp://en.wikipedia.org/wiki/Shareholders'_equityhttp://en.wikipedia.org/wiki/Shares_outstandinghttp://en.wikipedia.org/wiki/Shares_outstandinghttp://en.wikipedia.org/wiki/Valuation_(finance)


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and other purposes, provided various requirements are continuallymet.

TYPES OF MUTUAL FUNDS:

Mutual funds can be classified based on the structure and investmentobjective. By Structure

CLOSED-END FUND :

A closed-end fund looks much like a stock of a publically tradedcompany: it's traded on some stock exchange, you buy or sell sharesin the fund through a broker just like a stock (including paying acommission), the price fluctuates in response to the fund'sperformance and (very important) what people are willing to pay for it.Also like a publically traded company, only a fixed number of sharesare available.

These funds have a stipulated maturity period generally ranging from3 to 15 years. The fund is open for subscription only during aspecified period. Investors can invest in the scheme at the time of theinitial public issue and thereafter they can buy or sell the units of the

scheme on the stock exchanges where they are listed.

The market price of closed-end funds is determined by supply anddemand and not by net-asset value (NAV), as is the case in open-endfunds. Usually closed mutual funds trade at discounts to theirunderlying asset value.

OPEN-END FUND

An open-end fund is the most common variety of mutual fund. Both

existing and new investors may add any amount of money they wantto the fund. In other words, there is no limit to the number of shares inthe fund. Investors buy and sell shares usually by dealing directly withthe fund company, not with any exchange. The price fluctuates inresponse to the value of the investments made by the fund, but thefund company values the shares on its own; investor sentiment aboutthe fund is not considered.


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Open-end funds keep some portion of their assets in short-term andmoney market securities to provide available funds for redemptions.A large portion of most open mutual funds is invested in highly liquidsecurities, which enables the fund to raise money by selling securitiesat prices very close to those used for valuations.

BY INVESTMENT OBJECTIVE :

GROWTH FUNDS

The aim of growth funds is to provide capital appreciation over themedium to long term. Such schemes normally invest a majority oftheir corpus in equities. Growth schemes are ideal for investors whohave a long-term outlook and are seeking growth over a period of

time.

INCOME FUNDS :

The aim of Income Funds is to provide regular and steady income toinvestors. Such schemes generally invest in fixed income securitiessuch as bonds, corporate debentures and Government securities.

Income Funds are ideal for capital stability and regular income.Capital appreciation in such funds may be limited, though risks are

typically lower than that in a growth fund.

BALANCED FUNDS :

The aim of Balanced Funds is to provide both growth and regularincome. Such schemes periodically distribute a part of their earningand invest both in equities and fixed income securities in theproportion indicated in their offer documents. This proportion affectsthe risks and the returns associated with the balanced fund - in caseequities are allocated a higher proportion, investors would be

exposed to risks similar to that of the equity market.

Balanced funds with equal allocation to equities and fixed incomesecurities are ideal for investors looking for a combination of incomeand moderate growth.


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MONEY MARKET FUNDS :

The aim of Money Market Funds is to provide easy liquidity,preservation of capital and moderate income. These schemes

generally invest in safer short-term instruments such as TreasuryBills, Certificates of Deposit, Commercial Paper and Inter-Bank CallMoney. Returns on these schemes may fluctuate depending upon theinterest rates prevailing in the market.

These are ideal for corporate and individual investors as a means topark their surplus funds for short periods.

TAX SAVING SCHEMES

These schemes offer tax rebates to the investors under specificprovisions of the Indian Income Tax laws, as the Government offerstax incentives for investment in specified avenues.

Investments made in Equity Linked Savings Schemes (ELSS) andPension Schemes are allowed as deduction under Section 88 of theIndian Income Tax Act, 1961.

INDEX SCHEMES

Index Funds attempt to replicate the performance of a particular indexsuch as the BSE Sensex or the NSE S&P CNX 50.

SECTORAL SCHEMES

Sectoral Funds are those which invest exclusively in specified sectorsuch as FMCG, Information Technology, Pharmaceuticals, etc. These

schemes carry higher risk as compared to general equity schemes asthe portfolio is less diversified, i.e. restricted to specific sector/industry

DIFFERENT PLANS THAT MUTUAL FUNDS OFFER:


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To cater to different investment needs, Mutual Funds offer variousinvestment options. Some of the important investment optionsinclude:

GROWTH OPTION :

Dividend is not paid-out under a Growth Option and the investorrealises only the capital appreciation on the investment (by anincrease in NAV).

DIVIDEND PAYOUT OPTION :

Dividends are paid-out to investors under the Dividend PayoutOption. However, the NAV of the mutual fund scheme falls to theextent of the dividend payout.

DIVIDEND RE-INVESTMENT OPTION :

Here the dividend accrued on mutual funds is automatically re-invested in purchasing additional units in open-ended funds. In mostcases mutual funds offer the investor an option of collecting dividendsor re-investing the same.

RETIREMENT PENSION OPTION :

Some schemes are linked with retirement pension. Individualsparticipate in these options for themselves, and corporates participatefor their employees.

INSURANCE OPTION :

Certain Mutual Funds offer schemes that provide insurance cover toinvestors as an added benefit.

SYSTEMATIC INVESTMENT PLAN (SIP) :


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Here the investor is given the option of preparing a pre-determinednumber of post-dated cheques in favour of the fund. The investor isallotted units on a predetermined date specified in the offer documentat the applicable NAV.

SYSTEMATIC WITHDRAWAL PLAN (SWP) :

As opposed to the Systematic Investment Plan, the SystematicWithdrawal Plan allows the investor the facility to withdraw a pre-determined amount / units from his fund at a pre-determined interval.The investor's units will be redeemed at the applicable NAV as onthat day.

ARE RETURNS FROM MUTUAL FUNDS GUARANTEED?

Generally, Mutual Funds do not offer guaranteed returns to investors.Although, SEBI regulations allow Mutual Funds to offer guaranteedreturns subject to the Fund meeting certain conditions, most Fundsdo not offer such guarantees. In case of a guaranteed return scheme,the sponsor or the AMC, guarantees a minimum level of return andmakes good the difference if the actual returns are less than theguaranteed minimum. The name of the guarantor and the manner inwhich the guarantee shall be met must be disclosed in the offerdocument by the Mutual Fund. Investments in mutual funds are not

guaranteed by the Government of India, the Reserve Bank of India orany other government body.

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SYSTEMATIC OPERATING

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