Apples and Oranges...

Equity Market

World Markets

• For the month ended 16th July 2012, equity indices world-wide ended on flat to positive note as European indices witnessed a strong recovery as compared to American and Asian Indices which saw muted recovery.

• Sentiments in the Euro Region witnessed improvement after Greek pro-austerity parties winning the general elections raising hopes of its continuity in the Euro-Region. This was coupled with stronger policy decisions by European leaders to support Spanish banking woes by expressing their support for a Spanish bank rescue package and also towards releasing €30bn of the €100bn aid by end of July. Spanish government has also unveiled its plans to save €65bn through tax increases and spending cuts.

• Global GDP growth concerns continue to linger, with IMF revising its global forecast to 3.5% for 2012 as against its previous estimate at 3.6% in April. For 2013, the growth has also been revised from 4.1% to 3.9% mainly on the assumption of decline in GDP growth rate especially among the Asian majors. However market players continue to hold on to the expectation that the major Central Banks would initiate steps towards providing a boost to the economic growth.

• Crude continues to remain range bound on account of weakness in the economic activity affecting the general demand for fuel. Crude made gains on the back of expectations of supply shortages in view of the increasing geo-political tensions in the Middle-East and disruption in the Norwegian oil supply due to the employee unrest in the region.

Indian Markets:

• Indian bellwether indices ended on a flat note for the month ended 16th July 2012, on the back of mixed investor sentiments across the world with SENSEX & NIFTY closing higher by 0.91% and 1.13% respectively during the monthÛ Û

M F P O I N T E RIssue - 80

July, 2012

For Private Circulation only

Global Indices

Bench Mark Closing 15-Jun-12

to 16-Jul-12

Bovespa 54,331 -3.16

CAC 40 3,181 3.02

DAX 6,557 5.26

Dow Jones 12,777 0.08

FTSE 100 5,666 3.42

Hang Seng 19,093 -0.73

Nikkei 225 8,720 1.76

Shanghai Composite 2,148 -6.89

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

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Brent Crude

2 July 2012

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Smart investing starts here

• Index of Industrial Production for May 2012 grew marginally by 2.4% as compared to 6.2% a year earlier. The slowdown in growth could be attributed to continuing de-growth in capital goods industry in account of lower investment activities in the country in view of high financing costs that prevails in the financial system as well as slowing demand for goods.

• RBI at present can be considered to be in a quandary as, they are unable to increase the money supply into the system which could ease the financing cost but would risk its attempts to control inflationary situation that would threaten the overall economic growth.

• The ongoing earning season could throw some indication to the market however, the dismal results posted by some of the industry major is expected to the weigh down any upward rally unless there are any significant improvements.

• Rupee continued to trade weak against dollar, closing at `55.33 per USD on 16th July 2012 gaining marginally as against 55.50 per USD a month earlier. Depreciation in rupee has however, enabled improving country's export competitiveness and increasing contribution of exports to the overall economic growth. While net export contributions to GDP have remained small or negative, gross contribution has increased from 12% at end of 2000 to 25% in Fy12.

Debt Market

• Despite hardening of yields during the month ended 16th July 2012 yield on 10-year benchmark paper closed at 8.05% same at its previous close a month earlier.

• Post the declaration of no rate change stance by RBI yields had harden as fresh of auction of ̀ 15000crores resulted in an over supply of dated securities. The prices however recovered later on hopes that RBI would continue to buy debt via Open Market Operations.

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Top 5/Bottom 5

Equity Schemes

Top Performers Under Performers

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

Escorts Leading Sectors 9.29 Birla SL CEF-Global Prec Metal -9.87

SBI Magnum Pharma 8.15 AIG World Gold -9.00

Sundaram - STF - Enter Oppor 7.75 DSPBR World Gold -8.65

HSBC Small Cap 7.50 SBI Magnum IT -8.53

Escorts Power & Energy 7.36 Franklin Infotech -8.07

Debt Schemes

Top Performers Under Performers

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

L&T Gilt - Investment 20.44 BNP Paribas Income & Gold Fund 0.93

FT India Life Stage FOFs-40 19.08 ING Gilt-PF-Dynamic 3.22

ING Income Gth Multi FoF-30%-A 18.83 Templeton India G-Sec-Treasury 3.33

Tata Gilt RIP 16.68 Tata FIPF A1 3.39

Sundaram Gilt Fund 16.10 Templeton India G-Sec-Comp 3.76

* Returns as on 16th-Jul-12

Category Returns: For the month ended 16th July 2012, except for gold funds and global funds, all fund categories delivered a positive returns with Pharma funds being among the highest gainers delivering an average return of 7.56% (absolute) during the period followed by Banking funds delivering 5.67% absolute returns. Gold funds declined with the easing on the international gold prices coupled in view of the improved investor sentiments. Impact of the depreciation of rupee against dollar has begun to reflect in the performance of global funds on account of the higher base effect. This category declined by 2.07% (absolute) during the month.

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3July 2012 Smart investing starts here

th*Returns as on 16 July 2012.

We are extremely careful when we go to purchase any accessories for ourselves, especially when it comes to clothes. We ensure not only that it fits us properly, we also ensure that we get a good deal & value for money. We will check for discounts & deals and will go to the outlet which offers the best price. Now would you compare the discount on a shirt at one outlet with the discount on pants? We do not right! Why? Because that is something like comparing apples and oranges. They have no relation to each other. However when it comes to investing, we just let this skill of ours to rest and completely depend on our emotions and advise & experience of others to decide.

Through this issue of MF-Pointer we attempt to emphasis on the 3 most common mistakes made by investors in comparing returns in debt instruments: 1. Rating 2. Tenure and 3. Taxation.

Rating: Rating denotes the credit quality especially of bonds. When it comes to investing into fixed income securities, as an investor, we only look for any issuer who provides us with the highest rate of interest for a specific term. We tend to compare the product rather than the entity. And have firmed our notion of there being same risk while investing into a fixed Income instrument especially fixed deposit. Knowing the rating of the investment enables in determining where ones risk – return tradeoff could converge. Eg: HDFC Fixed Deposit for 3 years is 9.15% p.a. while Diwan Housing (DHFL) for 3 years is 10.30% p.a. The main reason DHFL offers a higher rate is because their rating is AA+ while HDFC has been rated AAA. Ideally one should check the credit rating and if the rating is same then choose the interest rate which is higher. Consider Mahindra & Mahindra Financial Services which offers 10.25% for the same tenure and is rated AAA.

Tenure: This is the most common mistake made by investors, we will compare a bank FD offering 9% pa for 5 years with a Fixed Deposit of 10% pa for 3 years. There is a tendency to put the funds for 3 years rather than 5 years as we are getting more, not realizing that after 3 years we may not be able to park the funds back at 10% and the rate could also be lower. A classic case can be where in the short-term say for 1 month you get 13% pa return and for 1 year if you get 11% return, we are normally attracted towards the 1 month instrument. However, if the funds remain idle for 60 days our returns would be less, had we invested the funds @ 11% pa.

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Apples and Oranges...Apples and Oranges...

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Taxation: As mentioned earlier not all fixed income bearing securities are the same in all aspects, they differ from each other especially when it comes to tax implications on the returns. This makes understanding tax implications on such investments important and critical.

a. Taxable & Tax Free Interest: It is to be noted that, interest income earned from the any fixed income security like Savings Account, Fixed Deposits, Bonds, NCDs, Government Bonds, etc. is taxable, at a rate as applicable under income tax. So for an investor in the 30% tax bracket if you are earning an interest rate of 10% p.a. from an investment the post-tax return would be 7% pa. However, there are bonds which are specifically issued under the tax-free category, where the interest income earned is exempt from tax. An example to this kind of bond would be tax-free bonds issued by National Highway Authority of India last December which had offered a coupon rate 8.20% for 10 years. The true comparison here will be 8.2% v/s 7% and not with 10%.

b. Fixed Income securities and Debt mutual fund: The tax implication of investing a fixed income security individually is significantly different from investing in a portfolio of Debt securities via Debt Mutual Funds. For a detailed implication, please refer to our MF Pointer – “MMFs - Saving Redefined” June 2012. The instrument is extremely tax efficient but least understood. Consider the following cases:

i. Money lying in a savings bank a/c will give you interest @ 4% pa which will be 2.7% p.a. post tax for a 30% tax bracket investor. An equivalent return in a liquid fund would give a 7% pa post tax. The funds are an apple to apple comparison as these funds are available for use in 1 day.

ii. FMP is the best alternative to an FD: Assuming both instruments gives a return of say 10% for 365 days. Post tax returns incase of the FMP could be 8.65% (by opting for dividend option) while FD's would have yielded a little less than 7%.

5July 2012 Smart investing starts here

TYPE OF SCHEME

Open-Ended Equity Scheme

DATE OF INCEPTION 26-Feb-03

FUND MANAGER Nishit Dholakia

FUND SIZE

Jun, 2012 `1,224

Mar, 2012 `1,163

Dec, 2012 `1,073

Sep, 2012 `944

LATEST NAV

NAV-Growth(G) `83.70(16-Jul-12)

NAV-Dividend(D) `12.55(16-Jul-12)

52 WEEK HIGH 52 WEEK LOW

`87.43 `72.12

FUND STATISTICS

Standard Deviation 23.21

Beta 0.97

Sharpe Ratio 0.46

R Squared 0.94

Portfolio T/O N.A

Expense Ratio 2.02

BENCHAMRKS&P CNX 500

MINIMUM INVESTMENT`5,000/- in multiples of `1,000/- thereafter

LOAD STRUCTUREEntry Load NILExit Load Upto 1 year from

allotment -1 % of applicable NAV, more than 1 Year-Nil

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

Birla SL Dividend Yield Plus

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6 July 2012Smart investing starts here

Fund focus: The fund aims to provide capital growth and income by investing in well diversified portfolio of dividend paying companies. To achieve its slated objectives, the fund invests in companies which have high dividend yield (Dividend Yield - how much a company pays out in dividends each year as a proportion to its share price). High dividend yields help the portfolio in two ways – first, it enables reducing the overall volatility of the investment and secondly, indicates that the underlying companies are sufficiently cash rich. This advantage gives a defensive look to the overall portfolio.

Portfolio: Since majority of high dividend yielding stocks are part midcap or small cap companies, they traditionally formed a major part of the fund's portfolio. However with increased volatility in this space, exposure of large cap stocks has been increasing steadily which at present constitutes to 45.16% from what used to be just about 20%-25% during 2008-09. The fund manager maintains a broad portfolio of 75 stocks to avoid larger individual exposure, enabling him to stay with his investments without having to take too much impact on his overall portfolio. This can be validated by the fact that the average individual stock exposure in the fund is only 1.33% as on June 2012 with the largest exposure being in ITC Ltd with 4.24% and the top 10 stocks comprises of only 27.15% of the total portfolio. The portfolio has exposure into almost 16 sectors with 21.18% being comprised by Banking & Finance sector followed by FMCG with 10.93%. The diverse sectoral exposure also enables the fund to shield itself from any kind of sector specific volatilities

AUM Change: The AUM of the fund has increased by `341Crores ( 38.71%) to `1,224crores in June 2012 from `883crores a year ago. The increase in AUM has been predominantly on account of steady inflows into the fund amounting `360crores ( 40.80%) even though market value declined by ̀ 19crores ( -2.10%).

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7July 2012 Smart investing starts here

Performance: During the one year ended 16th July 2012, when the BSE CNX 500 declined by 8.37%, Birla Dividend Yield Plus Fund declined only by 3.44%. The outperformance can be attributed to the funds significant exposure into sectors like FMCG, Banking, Auto sectors which enabled the fund in the protecting its downside in comparison to the benchmark. This outperformance can also be observed on a point-to-point scale across all time horizons. Of the 15 previous quarters the fund has outperformed its benchmark for 10 times by a significant margin however during times when the fund has underperformed, the underperformance has been only marginal.

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Top 5 Companies Holding (%) Top 5 Sectors Holding (%)

Company % N.A. Sector % N.A.

ITC Ltd. 4.24 Banking & Finance 21.18

Oil & Natural Gas Corpn. Ltd. 3.22 Diversified 13.48

Tata Motors Ltd. 2.99 FMCG 10.93

Bajaj Auto Ltd 2.76 Oil & Gas 10.10

Hero MotoCorp Ltd. 2.68 Auto 9.40

Total 15.88 Total 65.07

Total No. of Companies 75 Total No. of Sectors 16

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 yr

Income Funds

Birla SL Dynamic Bond Fund 8,659 18.53 10.56

HDFC High Interest-STP 1,275 21.67 10.60

Ultra Short Term Plan

HDFC Cash Mgmt-TA 15,566 23.78 10.10

Reliance Money Manager 8,407 1,485.55 1,015.16

Tata Floater 3,480 1,653.19 1,048.88

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9.34 9.79 9.84 9.94

9.96 9.30 9.11 9.11

8.55 8.80 9.39 9.11

8.95 9.57 9.60 9.38

9.28 9.87 9.88 9.79

*Returns for less than 1 year is absolute (in case of MIP, it is annualized) and more than 1 year are compounded annualized as on 16th July 2012.#Corpus as on June 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 5,879 24.75 12.84Reliance MIP Fund 3,618 23.73 10.85Balanced FundHDFC Prudence 6,041 215.06 25.80Equity – Large CapDSPBR Top 100 Equity 3,338 97.05 19.51Franklin India Bluechip 4,876 209.63 34.49HDFC Top 200 11,190 198.65 38.99ICICI Pru Dynamic 3,999 104.88 17.18ICICI Pru Focused Blue Chip Equity 3,841 16.01 15.28Equity – Multi capBirla SL Dividend Yield Plus 1,224 18.53 10.56HDFC Equity 9,718 258.21 39.65IDFC Premier Equity-A 2,821 33.32 21.95Reliance Equity Oppor 3,473 37.64 22.78UTI Dividend Yield 3,541 31.18 12.98Equity – MidCapDSPBR Small & Mid Cap 1,147 16.70 13.02HDFC Mid-Cap Oppor 2,021 16.46 14.92ICICI Pru Discovery 1,829 50.07 19.10SBI Magnum Emerging Businesses 641 48.47 15.63Sundaram Select Midcap 1,925 145.41 16.46Equity - Thematic HDFC Infrastructure 682 10.00 10.00Reliance Banking 1,671 98.43 35.71Reliance Pharma 584 59.77 40.46Tax Saving Scheme (ELSS)Fidelity Tax Advt N.A 20.76 16.25HDFC TaxSaver 3,150 216.71 49.25ICICI Pru Tax Plan 1,295 136.45 17.34Fund Of FundsDSPBR World Gold 804 16.30 13.34Sensex 17,103.31Nifty 5,197.25

12.41 5.19 9.34 9.5213.21 7.21 9.76 11.07

9.87 16.75 10.75

7.51 10.09 7.477.38 11.86 7.049.15 11.28 9.709.95 14.48 7.686.80 14.26

4.90 9.93 7.65 9.5210.29 14.51 8.4910.50 0.53 19.54 13.4517.22 1.15 23.86 9.216.78 14.29 11.05

11.19 18.70 6.8316.14 23.05 10.0617.18 0.24 21.68 11.1316.99 9.07 25.61 6.7811.02 15.15 6.96

10.70 5.4019.00 19.42 14.9310.80 31.48 16.76

7.63 13.54 7.037.04 13.91 6.23

10.61 16.66 7.08

8.355.65 6.27 2.246.63 7.09 2.87

-1.52

-4.66-2.71-6.00-3.39-3.30

-8.10

-3.75

-8.99-1.42

-7.89

-13.97-5.63-0.41

-5.82-8.34-4.15

-15.45 -12.19-7.82-6.84

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8 July 2012Smart investing starts here

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