Presenting HDFC Liquid Fund (An Open - Ended Liquid Income Scheme) (December 2012) 1
Table of Contents Product Rationale and Positioning Product Features, Fund Manager Profile, Tax Consequences & Asset Allocation Pattern Investment Strategy and Model Portfolio Allocation Portfolio Composition Fund Suitability Disclaimer 2
Product Rationale Positioned at the lowest end of the risk return scale Provide returns commensurate with low risk while providing a high level of liquidity Product offering with minimal interest rate risk Investment option for overnight to ultra short term investment horizons 3
Positioning of HDFC Liquid Fund RE ETURN Gilt Funds Income Funds Short Term Plans Ultra Short Term Funds Liquid Funds RISK (Maturity) 4
Product Features, Asset Allocation Pattern, Tax Consequence & Fund Manager Profile 5
Product Features Type of Scheme Open-ended Liquid Income Scheme Inception Date HDFC Liquid Fund : October 17, 2000 HDFC Liquid Fund Premium Plan & Premium Plus Plan: February 24, 2003* Investment Objective Investment Plan / Options To enhance income consistent with a high level of liquidity, through a judicious portfolio mix comprising money market and debt instruments HDFC Liquid Fund offers Growth and Dividend Option. The dividend option offers daily dividend option (reinvestment facility only) and weekly and monthly dividend option (with payout and reinvestment facility). Minimum Application Amount (Under Each Option) Load Structure Benchmark HDFC Liquid Fund (Purchase and Additional Purchase) Purchase: ` 10,000 and any amount thereafter Additional Purchase: ` 5,000 and any amount thereafter Entry Load: Not Applicable. Upfront commission shall be paid directly by the investor to the ARN Holder (AMFI registered Distributor) based on the investors assessment of various factors including the service rendered by the ARN Holder. Exit Load: Nil No Entry / Exit Load shall be levied on bonus units and units allotted on dividend reinvestment CRISIL Liquid Fund Index * Fresh subscriptions are not accepted under HDFC Liquid Fund Premium & Premium Plus Plan w.e.f. October 1, 2012. 6
Asset Allocation Pattern Under normal circumstances, the asset allocation of the scheme s portfolio will be as follows: Types of Instruments Normal Allocation (% of Net Assets) Normal Deviation (% of Normal Allocation) Risk Profile Money Market Instruments (including cash / CBLO/ Reverse Repo) 50-90 50 Low Debt Instruments (Including securitised debt) 10-50 50 Low to Medium The scheme may seek investment opportunity in Foreign Debt Securities (max. 50% of net assets) subject to SEBI (Mutual Funds) Regulations, 1996. The scheme may use derivatives mainly for the purpose of hedging and portfolio balancing (max. 20% of net assets including cash) based on the opportunities available subject to SEBI (Mutual Funds) Regulations, 1996. The portfolio of the Scheme will comply with the following additional investment restrictions in accordance with the SEBI/ IMD/CIR No. 13/ 150975/ 09 dated January 19, 2009: (i) The Scheme shall make investment in/ purchase debt and money market securities with maturity of upto 91 days only. (ii)in case of securities with put and call options (daily or otherwise) the residual maturity shall not be greater than 91 days. 7
Tax Consequence Income distributed by the Scheme will be exempt from Income-tax in the hands of investors On income distribution if any made by the Scheme, additional income tax is payable under section 115 R of the Income - tax Act, 1961, at the following rates Category of Investors Dividend Distribution Tax (%) Individuals / HUF 27.0375%$ Others 32.445%$ $ including applicable surcharge, education cess and secondary and higher education cess. Investors should be aware that the fiscal rules / tax laws may change and there can be no guarantee that the current tax position may continue indefinitely. In view of the individual nature of tax consequences, each investor is advised to consult his / her professional tax advisor 8
Fund Manager Profile $ Name and Designation Educational Qualifications Mr. Shobhit Mehrotra - Senior Fund Manager - Fixed Income and Head of Credit (Fund Manager of HDFC Liquid Fund since February 16, 2004) B. Text M.S. MBA (Clemson University, SC, USA) Experience Collectively over 19 years of work experience in Fixed Income Markets, credit rating etc. Assignments Held Feb 16, 2004 till Date HDFC Asset Management Company Limited Feb 1997 to Feb 2004 Templeton Asset Management (India) Pvt. Ltd. Last Position Held AVP and Portfolio Manager (Fixed Income) July 1992 to January 1997 ICRA Ltd. Last Position Held Business / Investment Analyst, Member Executive Rating Committee $ Dedicated Fund Manager for Overseas Investments: Mr. Rakesh Vyas since May 10, 2012. 9
Investment Strategy The fund seeks to maintain an optimal balance of: Low Risk Liquidity and Return in that order of priority Preservation of capital on an overnight basis Cash is an active part of the strategy 10
Portfolio Composition (As on November 30, 2012) 11
Portfolio Composition (As on November 30, 2012) Portfolio Classification by Asset Class (%) Commercial Papers (CP) / Certificate of Deposit (CD) 58.60 Cash, Cash Equivalents and Net Current Assets 41.40 Average Portfolio Maturity*: 28 days Modified Duration*: 26 days Yield to Maturity*: 8.36% Net Assets (` in Crores): 9,616.14** ** Average AUM for the quarter ended September 30, 2012 * Computed on the invested amount 12
Portfolio Composition (As on November 30, 2012) Portfolio Classification by Rating Class (%) AAA / AAA(SO) / A1+ / A1+(SO) & Equivalent 77.39 Cash, Cash Equivalents and Net Current Assets 22.61 13
Fund Suitability 14
Why HDFC Liquid Fund? No exit load Minimal interest rate risk Maintains a high credit quality High liquidity An avenue for parking of surplus funds for the ultra short term Availability of institutional plans / options 15
HDFC Liquid Fund is suitable for investors: Desiring a high degree of liquidity and minimum interest rate risk Having a short / ultra short term investment horizon As an alternate to a traditional savings / current bank account for parking of short term surpluses Using it as a conduit to transfer funds systematically to other schemes such as diversified equity funds 16
Disclaimer & Risk Factors DISCLAIMER: This presentation has been prepared by HDFC Asset Management Company Limited ( HDFC AMC ) on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this document is for general purposes only. The document is given in summary form and does not purport to be complete. The document does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. The information/ data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy. The same should not be construed as investment advice to any party. Neither HDFC AMC and HDFC Mutual Fund (the Fund) nor any person connected with them, accepts any liability arising from the use of this document. The recipient(s) before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein. MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. 17
Thank You 18