Systematic Investment Plan

1. Systematic Investment Plan The Smart Investor’s Choice

2. Why Systematic Investing • The Goal of Most Investors it to Buy when the prices are Low, and Sell when the prices are High • Sounds simple, but trying to time the market like this is: • Time Consuming • Risky • and Almost Impossible • A more successful strategy is to adopt Rupee Cost Averaging

3. What is Rupee Cost Averaging • The Markets are volatile: they move up and down in an unpredictable manner • Invest a fixed amount, at regular, predetermined intervals and use the market fluctuations to your benefit • How does it help you: • You buy more more when the market is down • You buy less when the market is up • Over time the market fluctuations are averaged • Most likely you will realise a saving on the cost per unit • This leads to HIGHER RETURNS

4. Systematic Investing, An Example Lets compare Systematic Investing with a Lumpsum Investment SYSTEMATIC INVESTMENT • You invest Rs. 1000 on the 10th of every month in the HDFC Growth Fund, in 2001 LUMPSUM INVESTMENT • Rajesh invests Rs. 12000 in January of 2001 in HDFC Growth Fund

5. Systematic Investing, An Example

6. Systematic Investing, An Example When the price is highest, you buy the least number of units 106.39 units 154.75 units When the price is lowest, you buy the highest number of units NAV Movement in 2001

7. Systematic Investing, An Example Rajesh’s Average Cost Price Your Average Cost Price Actual Price Movement Your average unit price = 12000/1616.13 = Rs. 7.425 Rajesh’s average unit price = Rs. 9.345 Your Saving = Rs. 1.92 per unit Your Systematic Investing helps you purchase 332.03 units more at price which is Rs. 1.92 lower than Rajesh’s

8. Now lets look at the returns Lets assume both you and Rajesh decide to redeem all your holdings on Jan 10, 2002 (NAV on Jan 10, 2002 - Rs. 7.505) You Rajesh Number of Units 1,616.13 1,284.11 Amount Received Rs.12129.09Rs. 9,367.24 Returns (%age) 1.99% -19.69%

9. Why an SIP is the Smart Investor’s choice • Difficult to predict the market and know when to “Buy Low, Sell High”, hence invest Systematically • Takes advantage of Rupee Cost Averaging: buy more when the price is low and buy less when its high • Low maintenance, payments are made automatically • Contribute as little as Rs.1000 every month • Instills investing discipline: no temptation to time the market

10. Systematic Investment Plan (SIP) • SIP dates are the 1st, 10th, 15th and 25th of every month. • Minimum amount is Rs.1000 and multiples of Rs.100 thereof for the Growth option. • Minimum amount under Dividend option is Rs.5000 to start a folio and Rs.1000 and multiples of Rs.100 thereof for an SIP unless a folio of the same scheme and option is available

11. Systematic Investment Plan (SIP) • Applicable entry load originally waived will be levied if units are redeemed on or before expiration of 365 days from the date of allotment. • Units will be allotted on the SIP dates of the 1st, the 10th, 15th and 25th. If the date falls on a Non-Business day, the immediate next business day will be considered for the applicability of the NAV subject to the realization of the cheques. • The 1st cheque can be of any date and the subsequent cheques should be of the SIP dates.

12. Systematic Investment Plan (SIP) • For discontinuing a written request must be received at the ISC at least 7 days prior to the due date of the next cheque. • The SIP Enrolment Form should be completed in English and in Block Letters only. • SEBI has now made it mandatory for applicants to mention his/her Permanent Account Number (PAN) in case of application amount of and above Rs.50,000.

13. Snapshot of SIP returns of various schemes as of Nov.30, 2004 All returns annualised

14. Remember a little every month goes a long way!!!Start a SIP Today

15. ..or atleast a STP A Systematic Transfer Plan

16. What is an STP ?????…. A systematic transfer of money from one investment to another.It is like having a continuous switch.

17. Systematic Transfer Plan (STP) • FSTP – Monthly interval, unit holders will be eligible to transfer fixed amounts (minimum Rs.1000 and in multiples of Rs.100 thereof) • Under FSTP – Quarterly Interval, unit holders will be eligible to transfer fixed amounts (minimum Rs.3,000 and in multiples of Re.100 thereof) by way of capital appreciation on the 1st or 15th of the first month of each quarter. • CASTP – Monthly interval, unit holders will be eligible to transfer fixed amounts (minimum Rs.300 and in multiples of Re.1 thereof) • Under CASTP – Quarterly Interval, unit holders will be eligible to transfer fixed amounts (minimum Rs.1,000 and in multiples of Re.1 thereof) by way of capital appreciation on the 1st or 15th of the first month of each quarter

18. Systematic Transfer Plan (STP) • There should be a minimum of 6 installments for enrolment under Monthly FSTP and CASTP. • Minimum account balance at the time of enrollment should be Rs. 25000 • Amount transferred under the STP from the transferor scheme to the transferee scheme shall be without payment of exit load and subscribing to the Transferee scheme without payment of entry.

19. Systematic Transfer Plan (STP) • The provision of ‘Minimum Redemption Amount’ of the transferor scheme and the ‘Minimum Application Amount’ of the transferee scheme will not be applicable for STP. • Unit holders can discontinue the STP facility by sending a written application to the ISC 7 days prior to the due date of the next transfer date. • PAN is a must for all holders for Investments above Rs 50,000.

20. ISC Operation’s • Handling of financial transactions. • Verifying financial transactions. • Most important aspects- Cut off times • High Value cut off- 10:30 • Transfer Cases- 12:00 • Normal Cut of- 3: 00 • Fund utilization Concept. • T+ 0 Redemptions. • Recon of items.

21. Transaction Rejections • PAN Number is case of a purchase amount greater or equal to Rs. 50,000. • Bank details mandatory. • Applicants signature not available. • Amounts need to be above minimum applications amounts and in multiplies of Rs. 100. • Right Scheme Right cheque.

22. ISC Activities. • Customer Services Desk. • Takes care of all investor related queries. • Co-ordinates for picking up application form distributors locations. • Provided details to the investors of their present value of investment. • Provides details of investors purchase price, sales price. • Informs customers of any reject of transactions that has been happened and what is the reason for reject. • Co-ordinates sending of application form and other sales material to all distributors. • General Information on mutual funds. • TAT for resolution of queries/complaints is 24hrs.

23. Minimum Application Amounts • Most schemes start with a minimum application amount of Rs 5000 and multiplies Rs. 100 thereof for a new investor. • For an existing investor the minimum application amount of Rs 1000 and multiplies of Rs. 100 thereof. • The exceptions are as follows: • Rs 500 for a new investors into the Tax plans i.e. Tax plan 2000 and Tax Saver. • Monthly Income plan monthly dividend options starts with Rs 25,000. • The liquid plan i.e. HDFC Liquid plan, HDFC Cash Management start with Rs 10,000 for the growth option and Rs. 1,00,000 for the dividend option.

24. Loads for the funds • 2.25% for Equity Based Schemes less than Rs. 5 crores. Greater than Rs. 5 Crores nil entry load. • Index Fund- Upto Rs 5 Lakhs 1% above that nil. • MIP- Upto and including Rs 10 lakhs .5% for 6 months above Rs 10 lakhs 0.25% for 3 months. • Income and High Interest Fund- Upto and including Rs 10 lakhs .5% for 6 months above Rs 10 lakhs nil • Liquid, High Interest- STP, Gilt, Soverign Gilt, Floating -STP, Cash Management- Entry Load nil. • Short Term Plan- Above Rs 25 crores 0.25% within 15 days. • Floating- LTP- Upto and including Rs 10 lakhs .5% for 6 months above Rs 10 lakhs nil

25. Thank You