It is probably the first instance in the domestic mutual fund industry where a scheme is being winded up prematurely. The unitholders of Swarna Pushpa have approved the proposal to wind up the scheme. Being an assured return fund, it means that investors have decided to forego an assured income payout of two years.

``The only other instance which, if at all, can be compared to Swarna Puspha is that of Canstar where Canara Bank has purchased units from the unitholders at a price of Rs 23 even though the redemption was due at Rs 40 in September 2000. However, the fund has technically not being redeemed since the AMC has not repurchased the units although more than 95 per cent of the units are nowwith the parent, Canara Bank,'' said an analyst.

``Owing to the depressed state of the securities market, a situation has arisen where the scheme is not able to project in advance any surplus for the year 1999-2000,'' said a communique from IndBank. It may be recalled that Swarna Pushpa was rolled over in 1995 and promised to announce dividend for each year at the end of the preceding year. ``The investors of Swarna Puspha scheme have approved the proposal of premature winding up,'' the communique adds. Even AMCs like LIC and SBI have stopped schemes that assure payout on a year-to-year basis due to a high volatility in interest rates.Swarna Pushpa was launched in 1990 and collected an initial unit capital of Rs 59 crore. The scheme assured an income of 12 per cent in the monthly option and 12.68 per cent in the yearly option. Even though the fund offered repurchase option, it was able to retain a corpus of Rs 53 crore as on March 31, 1995.

The fund, due for redmption between February 1995 and 1996, wasrolled over in December, 1995 and its tenure was extended till 2001. However, the rollover saw major redemption and the unit capital currently stands at Rs 11 crore. In the first year, post-rollover, the fund assured a payout of 13 per cent in the monthly option and 13.8 per cent in the annual option. Although an income scheme, Swarna Pushpa has maintained a conservative balance portfolio with around 30 per cent of investments in equities.