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GIC D'Mat

Dhirendra Kumar

GIC D'Mat was launched in April '99. Th objective of the fund was to invest predominantly in companies whose shares are in the dematerialised (demat) mode. The fund also offered units in exchange for select demat shares held by investors in physical form in market lot or odd lot. The fund carries a 2 per cent entry load while redemption is at NAV. The scheme has till date offered two dividends @ 15% in August'99 (4 months since launch) and @ 7.5% in January '2000.

The fund has since its launch lost 5 per cent against a 24 per ecnt gain by the Sensex. Today the fund is well diversified across sectors -- Pharma (28 per cent), FMCG (19 per cent), Software (12 per cent), Petrochemicals (8 per cent), Cement (7.5 per cent), Automobiles (7 per cent) and Financial and Banking Institutions (6 per cent). The fund has been a loser on account of its ill structured stock swap pricing. The fund values the select stocks held in physical or demat form at the average of the previous week's closing prices on the BSE. This provides an opportunity to to investors to avoid the discount on their physical holdings and on occasion also provides an opportunity to realise units worth more than their prevailing market value. Hence a fresh investor would stand to gain at the cost of existing investors. The fund was a novel concept to help small shareholders in demat shares to convert into easily tradeable units. But the unfair pricing method hurts the interest of long-term investors in the fund.

The fund can only be considered as a short-term arbitrage opportunity or for convenience of liquidating demat stocks held in physical form.

Fund Basics
Objective	Size (Rs cr)	NAV:15/5/2000	Exit Price	Entry Price	Total Returns
Growth	19.36	8.16	8.16	8.32	-5.00%
Benchmark Comparisons (%)					30/4/2000
	1M	3M	6M	1Yr	3Yr
Fund	-6.9	-18.8	-19.7	—	—
Sensex	-9.7	-12.7	1.4	42.3	6.8
Nat. Index	-21.3	-18.9	11.0	68.5	13.5
Obj. Avg.	-23.4	-22.5	10.3	68.7	21.4
Top holdings (31/3/2000)					Net Asset (%)
Ranbaxy					3.03
HLL					2.37
Reliance Industries					1.33
L & T					0.81
Indian Hotels					0.56
TELCO					0.54
TISCO					0.53
Reliance Petroleum					0.49
Satyam Computer					0.44
N I I T					0.41
State Bank Of India					0.32
Dr. Reddy's					0.31
Pfizer					0.27
Nicholas Piramal					0.23
ACC					0.22
Glaxo					0.22
I T C Bhadrachalam Paperboards					0.19
Hero Honda Motors					0.18
Grasim Industries					0.17
H D F C Bank					0.16

Source: Value Research

Mutual Funds

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