MMF's - Saving Redefined

Equity Market

World Markets

• Global equity indices ended on a mixed note for the month thended 15 June 2012. Amid weakness being experienced in

the global growth rates & mounting speculation about the outcome of the Greek Elections on one side and expectation that several major banks would initiate steps which would spur economic growth.

• Europe continued to be the major sentiment driver during the month. Poor regional economic data coupled with rising borrowing costs in Spain, increased fears about the possible contagion effect in Europe. Spain's borrowing costs rose to its highest rate since the launch of the euro in 1999. Spanish banks borrowing reached a record high of €324.6 billion from the European Central Bank in May, up from €316.9 billion in April. Some part of this could be related to significant decline in the inter bank funding as banks stayed away from lending to each other in the worsening euro zone crisis scenario.

• On the commodity front, crude oil prices declined on the concerns that demand for energy would weaken as recovery

thslows. For the month ended 15 June 2012, crude closed at USD 97.61 per barrel in comparison to USD 110.83 per barrel a month earlier.

• The increased pessimism has increased demand for gold as a safe haven pushing its prices to touch USD 1628 per ounce

thon 15 June 2012 from USD 1559 per ounce a month earlier, at a time when several major economies have been struggling to grow. Increased steps by Central Banks to spur their economies would boost the demand for gold as an inflation hedge.

Domestic markets:

• After two consecutive monthly declines, Indian bellwether equity indices SENSEX and NIFTY gained by 3.81% and

th3.97% respectively for the month ended 15 June 2012. Û

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M F P O I N T E RIssue - 79

June, 2012

For Private Circulation only

Global Indices

Bench Mark Closing 15-May-12

to 15-June-12

Bovespa 56,105 -0.24

CAC 40 3,088 1.59

DAX 6,229 -2.68

Dow Jones 12,767 1.07

FTSE 100 5,479 0.76

Hang Seng 19,234 -3.32

Nikkei 225 8,569 -3.72

Shanghai Composite 2,307 -2.86

1June 2012 Smart investing starts here(continued on page 2)

2 June 2012

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Smart investing starts here

• The gains can be considered to be driven mainly by the expectation that RBI would reduce its policy rates between 25-50 basis points during its Review Meet on 17th June, in an attempt to stoke slowing economic growth. However, the RBI surprised the market by leaving the rates unchanged in view of the rising inflation levels.

• Index of Industrial production rose only by a marginal 0.1% rise in month of April 2012 much lower than market

expectations. The drop in the growth rate could be attributed to negative growth in Capital Goods which contracted by 16.3% as against 6.6% a year back, also indicating towards slowdown in the investment activity.

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• Wholesale Price Index (WPI) for the month of May rose by 7.55% in comparison to 7.23% in April as food prices increased by 10.74% in May. However, some moderation was witnessed in the core inflation (i.e. price rise excluding food and fuels) which has remained stable at around 5%.

• Rupee depreciation continues to maintain wholesale crude prices higher even though crude has declined significantly in the international markets since April.

• FII's were net sellers in equity to the extent of the `1,121cr during the month while Domestic Mutual funds were net buyers to the extent of ̀ 477cr .

Debt Markets:

• The Yield on the benchmark paper witnessed a steep fall to th8.05% as on 15 June 2012 from 8.51% a month earlier.

• The rise in the bond prices could be attributed to the strong expectation of a rate cut by RBI and also towards steps to increase liquidity in the system, considering the slowdown in the domestic economic activity. However, RBI refrained from adopting rate cuts as such a measure could result in a rise in inflation which would have serious repercussions on the growth.

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Gold INR

Gold INR

Top 5/Bottom 5

Equity Schemes

Top Performers Under Performers

Absolute Absolute Scheme Name Return(%)* Scheme Name Return(%)*

AIG World Gold 19.26 Tata Life Science & Tech -3.19

Birla SL CEF-Global Prec Metal 16.08 SBI Magnum Pharma -2.81

DSPBR World Gold 13.11 UTI Pharma & Healthcare -2.61

UTI Banking Sector 9.32 Sundaram-STF-Enter Oppor -2.43

Reliance Banking 8.05 UTI Transportation & Logistics -2.23

Debt Schemes

Top Performers Under Performers

Annualised AnnualisedScheme Name Return(%)* Scheme Name Return(%)*

Templeton India G-Sec-LTP 37.93 Tata FIPF A1 1.49

Templeton India G-Sec-Comp 37.37 Taurus Gilt 4.70

Kotak Gilt-Invest 32.95 GS Liquid BeES 5.64

Reliance Gilt Securities 32.10 Morgan Stanley Active Bond 5.73

Canara Robeco InDiGo 31.62 Religare Gilt-Long Dur 5.96th

*Returns as on 15 June 2012

Category Returns: For the one month ended 15 June 2012, except for pharma sector funds( 0.15%), all equity categories ended in the positive territory. Overseas fund of funds gained significantly( 7.59% absolute) during the month on account of the depreciation of the rupee against dollar which led to magnification of returns posted by such funds. Returns from money market funds improved on account of tighter liquidity situations and also on the expectation that RBI would reduce its Repo rates in the range of 25-50 bps.

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3June 2012 Smart investing starts here

th*Returns as on 15 June 2012.

Let's face it… Equity markets have put up a disappointing performance and going forward, they are likely to be volatile in the short term. This uncertainty has made investors averse to making additional investments until such time there is some sign of market stability. In such a scenario, where do you park your funds? Well, logically there are only two options, you either satisfy some your needs now, which you feel you cannot live without or you save. Traditionally, any individual would have preferred to keep these saving or contingency funds (as the case maybe depending on the requirement) in their respective saving bank account and would have been happy to earn interest which these days would be in the range of 4–7% p.a. depending on the bank, amount and tenure. Through this article we focus our attention on Money Market Funds (MMF’s) which can be an alternative to your bank account and by MMF's we are focusing on Ultra Short term fund as a category for investing.

So what are MMF’s

A money market fund is an open-ended mutual fund investing only into cash/cash equivalent securities with less than one year maturity. The portfolio of these funds contains investment that are extremely short-term and with high credit rating (AAA rated), providing investors with a safe place to invest in easily accessible cash-equivalent assets which can be characterized as a low-risk, low-return investment.

Comparing MMF's with Deposits in Banks

Maintaining surplus amount in your bank account is logical as it provides the flexibility to withdraw whenever required. However, several factors are being overlooked which makes this option unfavorable.

• Tenure: Savings accounts do not have any specific tenure. Fixed deposits could be kept for a long tenure. However short tenures of up to a week are generally not possible for FDs (allowed normally only for higher amounts), whereas MMF’s have options with very short tenure which could even be as low as 3 days or just parking over the weekend or in between salary date and the EMI payment date, especially incase of Home Loan EMI's which forms a major part of the outflow in case of most households.

• Returns: Fixed returns plus principal is guaranteed in FDs and Savings Account. Though the rates differ on the basis of the tenure of the deposits, savings account has a fixed base rate at 4.5% p.a. (post tax would be apprx. between 3.15-4.05% p.a. depending on the tax slab – see below). On the other hand, in case of MMF’s, the returns are not guaranteed and it entirely depends on market movements. However, if the table alongside is the being observed (which represents average returns from investing into Ultra-short term fund for duration of 3 months on any day during the last 3 years), in all reported case the returns have been more than 4% p.a. and in 51% of the cases it gave a return in excess of 6% p.a., i.e. additional 50% returns. In addition the funds deployed in MMF’s give a return even on holidays and the NAVs of these funds are declared even on Sundays, thereby ensuring that there is no loss of earning.

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MMF's - Saving RedefinedMMF's - Saving Redefined

Return Range(% p.a.) % of Observation

10-11 0.41

9-10 5.50

8-9 33.70

7-8 5.36

6-7 6.33

5-6 14.99

4-5 33.70

Total 100.00

MF POINTER• Taxation: In FDs and Savings Account, interest is taxed as income. There is also a Tax Deduction

at Source on the interest earned; this becomes a pinch especially for an individual in the highest tax bracket, wherein nearly 30% of the income goes away in the form of tax. In MMF’s, there is Capital Gains tax and Dividend Distribution Tax on the income earned. Based on the tenure for which the investment is being made, dividend or growth option can be considered which makes the category more tax efficient. As a thumb rule, while investing into Ultra Short Term Debt Funds any individual can considered the following:

o Investment tenure less than one year: Dividend option should be considered as any gains from the investment would be subject to dividend distribution tax (DDT) at the rate of 13.52%.

o Investment tenure more than one year: Growth option can be considered as any gains arising on redemption shall be treated as long term capital gains incase of which lower of 10% on the gain or 20% of gains after indexation is charged.

Instruments

Comparison Savings deposit Fixed Deposit MMF

Return range* 4.0%-6.0% 6.5%-8.0% 7.3%-10.7%

Post-Tax Returns# 2.6%-4.6% 4.3%-5.3% 6.3%-9.2%

*Interest Rate mentioned is as applicable for an investment for a period of 180 days in a PSU bank.#Tax calculations at highest applicable rates on Individual income. In case of MMF's, DDT is being applied.

• Liquidity: Investors can make a minimum investment of `1,000/-. Not only does it allow Investors can liquidate these funds any time it also allows the facility of any amount of withdrawal as compared to bank fixed deposits where it is allowed with a penalty. Funds are directly credited to the bank account of the investor on the next working day. Some funds also offer ATM/debit card access for withdrawal thereby providing more liquidity options.

MMF's with corpus more than ̀ 1000 crores without any applicable loads or lock-in are listed below:

5June 2012 Smart investing starts here

st th*Corpus as on 31 March 2012. Returns are annualized and as on 15 June 2012. Schemes with exposure less than 90% of total AUM into AAA & equivalent and Cash assets has been ignored for the purpose of Comparison.

Scheme Name AUM(Cr.)* 1 M 3 M 6 M 1Y

HDFC Cash Mgmt-TA 15,232 8.90 10.03 9.37 9.11

ICICI Pru Flexible Income-Prem 8,684 9.73 10.31 9.91 9.02

Birla SL Savings 3,931 10.49 10.62 9.88 9.65

Birla SL Cash Mgr 3,856 9.96 10.35 9.40 9.28

IDFC Money Mgr-TP-A 2,742 9.05 9.36 8.92 8.90

DWS Ultra ST 2,266 10.15 10.51 9.80 9.64

Kotak Floater-LT 2,130 9.85 10.29 9.54 9.59

Tata Floater 2,109 10.11 10.50 9.88 9.77

Templeton India Ultra Short Bond 1,672 9.77 10.51 9.91 9.68

ICICI Pru FRF-Option 1,412 9.25 9.78 9.06 8.83

DSPBR Money Mgr 1,252 9.59 9.71 9.17 9.02

Axis Treasury Advantage 1,114 9.90 10.32 9.97 9.14

TYPE OF SCHEME

Open-Ended Debt Scheme

DATE OF INCEPTION 06-Sep-05

FUND MANAGER Marzaban Irani

FUND SIZE

Feb, 2012 `2921

Mar, 2012 `2109

Apr, 2012 `2594

May, 2012 `2949

LATEST NAV

NAV-Growth(G) `16.40(15-Jun-12)

NAV-Dividend(D) `10.41(15-Jun-12)

52 WEEK HIGH 52 WEEK LOW` 16.40 ` 14.94

STANDARD DEVIATION `0.57

MATURITY & YIELD

Avg Mat. YTM

Fund(May 2012) 55.5 -

MODIFIED DURATION -

EXPENSE RATIO 0.24

BENCHAMRK

Crisil Liquid Fund Index

MINIMUM INVESTMENT

` 10,000/- in multiples of

` 1,000/- thereafter

LOAD STRUCTURE

Entry Load NIL

Exit Load NIL

*Ratios are calculated on annualised basis using 3 yrs history of half yearly data; Risk free return: 8%

Tata Floater Fund

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Fund focus: Floating rate bonds are a type of bonds that does not have a fixed coupon rate like regular bonds, the rates instead keeps fluctuating from time to time, with reference to a benchmark rate. These types of bonds enable faster replication of interest rate movements; alternatively can also be referred to be interest rate sensitive. The prime advantage of investing into a floater fund is, during times of the tighter liquidity scenario or volatile markets, the portfolio would automatically adjust itself to the changed environment without requiring drastic adjustments to the portfolio. Tata floater fund focuses on the building a portfolio predominantly containing floating rate bonds and also fixed rate bonds with the flexibility of even converting them into floating rate ones.

Portfolio: As on May 2012, the average maturity (the average amount of time until the debt securities mature) days of the fund is at 55 days indicating towards higher composition of the shorter tenure papers. Of the total portfolio, 87.70% of the fund is constituted by papers that have been accorded with the highest rating by various rating agencies, while 9.75% is comprised of cash & cash equivalents. The reducing maturity profile and the portfolio composition could be interpreted as the fund manager's strategy towards having a portfolio that would not be significantly impacted by drastic changes in interest rate scenario nor is subject to possible credit risk on the papers being held as underlying. He further seems to be trying to reduce the overall portfolio risk and capitalize on the tight liquidity situation which has been pushing up short term interest rates in the money market while shielding the fund from the high volatility experienced in the longer duration papers.

AUM Change: Being an ultra-short term fund, the size of the funds is always bound to be more fluctuating and hence may not be much comparable. During the last 12 months, AUM of the fund has decreased by `2,417 crores to ̀ 2,949 crores in May 2012 from ̀ 5,365 crores a year ago.

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7June 2012 Smart investing starts here

Performance: The funds one year return as on 15 June 2012 has been 9.77% annualized outperforming its benchmark (Crisil Liquid Fund Index) which gave a return of 8.67% during the period. Even on a point-to-point scale, the fund has been outperforming its benchmark on all time scales, as can be observed from the figure below. The floating rate instrument portfolio profile of the fund enables the fund in the replicating the changing interest rate scenario more efficiently in comparsion to some of its fixed rate instrument peers.

th

Top 10 Holdings

Company Name Sector Name Asset Rating % Net Assets

UCO Bank Banking & Finance Certificate of Deposit A1+ 14.32

IDBI Bank Ltd Banking & Finance Certificate of Deposit A1+ 13.37

Cash & Cash Equivalent Other Cash & Cash Equivalents Cash & Equi 9.75

HDFC Bank Ltd. Bank - Private Certificate of Deposit A1+ 8.24

Punjab National Bank Banking & Finance Certificate of Deposit A1+ 6.07

ICICI Bank Ltd. Bank - Private Certificate of Deposit A1+ 5.49

Corporation Bank Banking & Finance Certificate of Deposit A1+ 4.91

Canara Bank Banking & Finance Certificate of Deposit A1+ 4.42

Federal Bank Ltd. Bank - Private Certificate of Deposit A1+ 4.38

Allahabad Bank Banking & Finance Certificate of Deposit A1+ 4.21

Others - - 24.84

Rolling return Analysis: As represented alongside, the fund can be considered to be a good option for temporary investment require-ments as more than 50% of the time the fund has delivered a return of the more the 6% p.a. The analysis alongside indicates annualised returns earned from investing into the fund on any day during the last three years and the investment has been held for 1 year.

Returns (in CAGR %) % of observation

9-10 6%

8-9 16%

7-8 25%

6-7 8%

5-6 9%

4-5 6%

3-4 13%

2-3 18%

Total 100.00

Corporate Office Address : Website :

A1, Kailash Industrial Complex, Park Site, Off LBS Marg, Vikhroli West, Mumbai - 400 079. Tel: +91-22-6754 7000 • E mail : mutualfunds@ventura1.com • www.ventura1.com

This document is solely for private circulation only. Mutual funds like securities investments are subject to market risks and other risks. Investors are advised to read the offer document before investing.

Performing Mutual Fund Plans

Scheme Name Corpus NAV (`) Annualised %

(` Crs)# Gr Div 1 mth 3 mths 6 mths 1 yrIncome Funds

Birla SL Dynamic Bond Fund 5,348 18.38 10.58

HDFC High Interest-STP 1,410 21.49 10.60

Ultra Short Term Plan

HDFC Cash Mgmt-TA 15,232 23.61 10.03

Reliance Money Manager 7,279 1,474.34 1,001.12

Tata Floater 2,109 16.40 10.41

9.30 10.04 9.04 9.64

9.21 9.10 8.15 8.63

7.35 9.00 8.62 8.45

8.66 9.36 8.90 8.75

9.25 10.21 9.42 8.68

*Returns for less than 1 year is absolute (in case of MIP, it is annualized) and more than 1 year are compounded annualized as thon 15 June 2012.

#Corpus as on March 2012 as AMFI has mandated for quarterly AUM declaration.

Scheme Name* Corpus NAV (`) 6 mths 1 yr 3 yrs 5 yrs

(` Crs)# Gr Div (%) (%) (%) (%)Hybrid - Monthly Income Plans (MIPs)HDFC MIP-LTP Fund 6,636 24.37 12.71Reliance MIP Fund 4,142 23.47 10.80Balanced FundHDFC Prudence 6,248 210.31 25.24Equity – Large CapDSPBR Top 100 Equity-Reg 3,274 95.69 19.24Franklin India Bluechip 4,625 203.62 33.50HDFC Top 200 11,381 194.16 38.11ICICI Pru Dynamic 4,119 102.45 16.78ICICI Pru Focused Blue Chip Equity-Ret 3,805 15.80 15.08Equity – Multi capBirla SL Dividend Yield Plus 1,163 81.39 12.21HDFC Equity 9,916 250.75 38.50IDFC Premier Equity-A 2,561 32.44 21.37Reliance Equity Oppor-Ret 3,340 36.08 21.84UTI Dividend Yield 3,713 30.30 13.01Equity – MidCapDSPBR Small & Mid Cap-Reg 1,201 16.04 12.50HDFC Mid-Cap Oppor 1,860 15.60 14.14ICICI Pru Discovery 1,779 47.62 18.17SBI Magnum Emerging Businesses 561 45.49 14.67Sundaram Select Midcap 2,062 137.18 15.53Equity - Thematic HDFC Infrastructure 746 9.59 9.59Reliance Banking 1,731 93.51 33.92Reliance Pharma 564 55.70 37.70Tax Saving Scheme (ELSS)Fidelity Tax Advt 1,199 20.36 15.94HDFC TaxSaver 3,114 210.98 47.95ICICI Pru Tax Plan 1,278 132.12 16.79Fund Of FundsDSPBR World Gold-Reg 865 17.84 14.61Sensex 16,949.83Nifty 5,139.05

6.67 4.95 8.84 9.197.60 7.28 8.82 10.15

13.18 16.32 11.40

9.88 9.78 8.468.82 11.14 8.03

12.51 11.03 10.3414.18 14.22 7.97

7.67 14.30 -

12.52 16.71 12.0014.44 14.02 9.0412.68 3.50 18.88 14.2319.46 2.22 22.15 9.57

6.72 14.39 11.39

13.99 16.67 7.0618.24 21.70 9.5820.29 0.85 21.13 11.0916.04 8.23 22.67 6.4410.66 12.56 7.39

17.11 4.32 20.94 16.33 15.6511.56 0.40 30.14 17.36

9.03 13.44 7.669.11 13.32 6.44

14.11 15.93 7.78

3.46 11.38 7.27 5.57 3.108.50 6.43 3.72

-0.75

-2.97-3.19-5.83-2.29-2.24

-1.76-7.82

-4.44

-5.95-0.04

-6.18

-14.02-6.39

-4.99-8.27-3.68

-6.75-7.45-6.52

8 June 2012Smart investing starts here

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