HDFC Cash Management Fund - Sep 30, 2011 - HDFC Mutual Fund

PresentingHDFC Cash Management FundSavings Plan and Call Plan(Open - Ended High Liquidity Income Scheme)As on September 30, 20111

Table of ContentsProduct Rationale and PositioningProduct Features, Fund Manager Profile, Tax Consequences & Asset AllocationPatternInvestment Strategy and Model Portfolio AllocationPortfolio CompositionFund Suitability and RatingDisclaimer2

Product RationalePositioned at the lowest end of the risk return scaleProvide returns commensurate with low risk while providing a high level ofliquidityProduct offering with negligible interest rate risk and NAV volatilityInvestment option for overnight to ultra short term investment horizons3

Positioning of HDFC Cash ManagementFund – Savings Plan & Call PlanRETURNGilt FundsIncome FundsShort Term PlansUltra Short Term FundsLiquid FundsRISK4

Product Features, Asset AllocationPattern, Tax Consequence & FundManager Profile5

Product FeaturesType of SchemeAn Open ended High Liquidity Income SchemeInception Date Savings Plan: November 18, 1999Call Plan: February 6, 2002Investment ObjectiveInvestment Plan / OptionsMinimum Application AmountSavings and Call Plan: To generate optimal returns while maintaining safety and high liquiditySavings and Call Plan: Growth Option and Daily Dividend Option (with Reinvestment facility only).Savings Plan also offers Weekly Dividend Option (with payout and Reinvestment facility)Savings Plan: (Purchase and Additional Purchase)(Growth Option): ` 10,000 and any amount thereafter(Dividend Option): ` 1,00,000 and any amount thereafterCall Plan: (Purchase and Additional Purchase)(Under Each Option): ` 1,00,000 and any amount thereafterLoad StructureEntry Load: Not ApplicableUpfront commission shall be paid directly by the investor to the ARN Holder (AMFI registeredDistributor) based on the investors’ assessment of various factors including the servicerendered by the ARN Holder.Exit Load: NilNo Entry / Exit Load shall be levied on bonus units and units allotted on dividend reinvestmentBenchmarkCRISIL Liquid Fund Index6

Asset Allocation PatternUnder normal circumstances, the asset allocation (% of net assets) will be as follows:Types of InstrumentsNormal Allocation(% of Net Assets)Savings PlanRisk ProfileDebt instrumentsUpto 100Low to Medium(including Securitised Debt**)Money Market Instruments Upto 100 Very Low*Call PlanDebt and Money Market instruments(including MIBOR linked instrumentswith daily put and call option)Upto 100Low to MediumThe 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.**Investment in Securitised debt, if undertaken, can be undertaken upto 100% of the net assets of the Scheme.The respective Plan(s) under the scheme may seek investment opportunity in overseas market in Foreign Debt Securities and MutualFunds (max. 20% of net assets of the respective Plan(s)) subject to SEBI (Mutual Funds) Regulations, 1996. The scheme may usederivatives mainly for the purpose of hedging and portfolio balancing (max. 25% of net assets including cash of the respective Plan(s))based on the opportunities available subject to SEBI (Mutual Funds) Regulations, 1996.*The ‘risk’ as mentioned above pertains to the risk of erosion in the value of principle amount only. Although the risk of capital erosionis not normally envisaged in money market instruments, such investments would be subjected to the risk associated with the volatilityin interest rates.7

Tax ConsequenceIncome distributed by the scheme will be exempt from Income-tax in the handsof investorsOn income distribution, if any, made by the respective plans, additional incometax is payable under section 115R of the Income tax Act, 1961, at the rate of27.0375%$ for individuals and HUF & at the rate of 32.445% for otherinvestors.$ 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 taxposition may continue indefinatelyIn view of the individual nature of tax consequences, each investor is advised to consult his / her professional tax advisor8

Fund Manager Profile $(HDFC Cash Management Fund – Savings & Call Plan)Name and DesignationEducational QualificationsMr. Bharat Pareek – Fund Manager – Fixed IncomeSavings Plan (wef October 1, 2009)Call Plan (wef May 23, 2008)B. ComA.C.A.Completed CFA-USA awaiting membershipExperienceCollectively over 10 years of experience, of which 7 years in treasury operations and dealingin debt market and 3 years in Fund Management.Assignments HeldFebruary 2001 till dateHDFC Asset Management Company Limited$ Dedicated Fund Manager for Overseas Investments: Miten Lathia since August 5, 2010.9

Investment Strategy10

Savings PlanShall have a average portfolio maturity below 3 monthsTarget higher current yields with focus on risk – adjusted returns11

Call PlanInvestments would be made predominantly in money market instruments,overnight reverse repos in government securities and fixed income securitieswith overnight maturity / liquidityTargets returns which would be in line with the overnight call rates; interest raterisk in this plan will be almost nil12

Portfolio Composition(As on September 30, 2011)13

Portfolio Composition(As on September 30, 2011)Portfolio Classification by Asset Class (%)Savings PlanCall PlanCommercial Papers (CP) / Certificate ofDeposit (CD) / Bills RediscountingCash, Cash Equivalents and Net CurrentAssets79.47 N.A.20.53 100Additional InformationAverage Portfolio Maturity 75 days 3 daysModified Duration 69 days 3 daysNet Assets (` In Crore) ** 3,423.30 12.74** Average AUM for the quarter ended September 30, 2011N.A. – Not Applicable14

Portfolio Composition(As on September 30, 2011)Portfolio Classification by Rating Class (%)Savings PlanAAA / AAA(SO) / P1+ / P1+(SO) & Equivalent 104.09Cash, Cash Equivalents and Net Current Assets -4.09Call PlanCash, Cash Equivalents and Net Current Assets 100.0015

Fund Suitability & Rating16

Why HDFC Cash Management Fund?No exit loadNegligible interest rate risk and NAV volatilityMaintains a high credit qualityHigh liquidityAn ideal avenue for parking of surplus funds for a short period17

HDFC Cash Management Fund issuitable for investors:Desiring a high degree of safety and liquidityHaving a short / ultra short term investment horizonAs an alternative to a traditional savings / current bank account for parking ofshort term surplusesUsing it as a conduit to transfer funds systematically to other schemes such asdiversified equity funds18

AwardsCNBC TV18 - CRISIL Mutual Fund Awards 2011HDFC Cash Management Fund - Savings Plan won the “Best Performing MutualFund of the Year - Liquid Funds - Retail” Award# during the calendar year 2010(from amongst 19 schemes) at the CNBC TV18 - CRISIL Mutual Fund Awards 2011.# Past performance is no guarantee of future results.Please refer to the slide: 23 on Award /Ranking/Rating Methodology .19

Fund RatingHDFC Cash Management Fund – Savings Plan – Growth Option was assigned‘CRISIL Mutual Fund Rank 2’# in the ‘Open End liquid Schemes’ Category (out of27 schemes) for the 1 year period ending September 30, 2011 by CRISIL. CRISIL Mutual Fund Rank “2” means that the composite performance of the Scheme is “Goodperformance” and ranks within the 11th to 30th percentile in the category.# Past performance is no guarantee of future results.Please refer to the slide: 23 on Award /Ranking/Rating Methodology .20

Fund RatingHDFC Cash Management Fund – Savings Plan - Growth option has been ratedFive Stars by Morningstar in the Morningstar India Open Ended liquid category (fromamongst 269 schemes) for the overall (3/5/10 year- as applicable) period endingSeptember 30, 2011#Five Stars indicate that the fund is in the top 10 percent of its category in terms of historical risk – adjustedreturns# Past performance is no guarantee of future results.Please refer to the slide: 23 on Award /Ranking/Rating Methodology .21

Fund RatingHDFC Cash Management Fund – Savings Plan has been assigned ‘Credit RiskRating mfA1+’ by ICRA Limited – Highest credit-quality short-term ratingassigned by ICRA to debt funds.#“Credit Risk Rating mfA1” signifies the highest-credit-quality short-term rating assigned by ICRA todebt funds. The rated fund carries the lowest credit risk, similar to that associated with short-term debtobligations rated in the highest-credit-quality category. Within this category, certain funds are assignedthe rating of mfA1+ to reflect their relatively stronger credit quality.# Past performance is no guarantee of future results.Please refer to the slide: 23 on Award /Ranking/Rating Methodology .22

Award/Ranking/Rating MethodologyCNBC TV18 - CRISIL Mutual Fund Awards 2011HDFC Cash Management Fund - Savings Plan won the “Best Performing Mutual Fund of the Year - Liquid Funds - Retail” Award# during the calendaryear 2010 at the CNBC TV18 - CRISIL Mutual Fund Awards 2011. Total 19 schemes were eligible for the award universe. Schemes present in all four quarterlyCRISIL Mutual Fund Ranking were considered for the award. The award is based on consistency of the scheme’s performance in the four quarterly CRISIL MutualFund Rankings released during the calendar year 2010. The individual CRISIL Mutual Fund Ranking parameter scores averaged for the four quarters were furthermultiplied by the parameter weights as per the CRISIL Mutual Fund Ranking methodology to arrive at the final scores. A detailed methodology of the CRISIL MutualFund Ranking is available at www.crisil.com. Past performance is no guarantee of future resultsCRISIL MUTUAL FUND RANKING METHODOLOGY AND DISCLAIMERThe criteria used in computing the CRISIL Mutual Fund Rank are Superior Return Score based on NAVs over the 1 year period ended 30 th September 2011, Sectoralconcentration, Company concentration and Liquidity of the scheme. The methodology does not take into account the entry and exit loads levied by the scheme. TheCRISIL Mutual Fund Rank is no indication of the performance that can be expected from the scheme in future.Ranking Source: CRISIL FundServices, CRISIL LimitedMorning Star Rating – Rating Methodology: The Morningstar fund rating methodology is based on a fund’s risk-adjusted return within a given Morningstarcategory. For each fund with at least a three-year history, Morningstar ratings are calculated every month for the 3 year, 5 year and 10 year period. The OverallMorningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three, five and 10 year (if applicable) MorningstarRating metrics. Within each rating period, the top 10% funds receive a five star rating, the next 22.5% earn a four star rating, the next 35% get three stars, the next22.5% receive two stars, and the bottom 10% get one star. Loads are not considered for the rating purpose. The rating is based on NAV provided by respectivefunds. The current fund rating is for the overall / 3 year / 5 year/ 10 year period as of September 30, 2011. HDFC Cash Management Fund- Savings Plan -Growth Option has been rated 5-Star by Morningstar in the Morningstar India Open Ended Liquid Ccategory. 269 funds which completed 3 years of performancewere considered for rating. Rating Source and Publisher: Morningstar. The ratings are subject to change every month. Please refer www.morningstar.co.in fordetailed information on the Rating Methodology.ICRA Rating Disclaimer: ICRA Rating Disclaimer: The rating assigned by ICRA Ltd. should not be treated as a recommendation to buy, sell or hold the unitsissued by the Scheme. ICRA Ltd. does not assume any responsibility on its part, for any liability, that may arise consequent to HDFC Mutual Fund not complying withany guidelines or directives issued by SEBI or any other mutual fund regulatory body. The Rating should not be construed as an indication of the performance of theScheme or of volatility of its return. ICRA reserves the right to suspend, withdraw or revise the rating at any time on the basis of new information or unavailability ofinformation or such circumstances, which ICRA believes, may have an impact on the rating assigned to the Scheme.23

Disclaimers & Risk FactorsDISCLAIMER: This presentation has been prepared and issued 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 and not a complete disclosure of every material fact and terms and conditions and features ofHDFC Cash Management Fund- Savings and Call Plan. The information/ data herein alone is not sufficient and shouldn’t be used for the development or implementationof an investment strategy. It should not be construed as investment advice to any party. The statements contained herein may include statements of futureexpectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties thatcould cause actual results, performance or events to differ materially from those expressed or implied in such statements. The recipient alone shall be fully responsible /liable for any decision taken on the basis of this presentation. The content of this presentation is confidential and intended solely for the use of the addressee. If you arenot the addressee, or the person responsible for delivering it to the addressee, any disclosure, copying, distribution or any action taken or omitted to be taken inreliance on it is prohibited and may be unlawful. No part of this document may be duplicated in whole or in part in any form and/or redistributed without prior writtenconsent of the HDFC Mutual Fund/ HDFC Asset Management Company Limited. The recipient(s) should before investing in the Scheme(s) make his/their owninvestigation and seek appropriate professional advice.Risk Factors: All mutual funds and securities investments are subject to market risks and there can be no assurance that the Scheme’s objectiveswill be achieved and the NAV of the Scheme may go up or down depending upon the factors and forces affecting the securities market. Pastperformance of the Sponsors and their affiliates / AMC / Mutual Fund and its Scheme(s) do not indicate the future performance of the Scheme of the Mutual Fund.There is no assurance or guarantee to unit holders as to the rate of dividend distribution nor that dividends will be paid regularly. The NAV of the units issued under theScheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities.The NAV will inter-alia be exposed to Price / Interest Rate Risk and Credit Risk. HDFC Cash Management Fund - Savings Plan and Call Plan, open ended highliquidity income schemes is only the name of the Schemes and does not in any manner indicate either the quality of the scheme, its future prospectsand returns. Please read the Scheme Information Document and Statement of Additional Information before investing. Investment Objective: Theobjective of the scheme is to generate optimal returns while maintaining safety and high liquidity. Asset Allocation: Savings Plan: Debt Instruments: upto 100% andMoney Market Instruments: Upto 100%. (Investment in Securitised Debt upto 100% of the net assets. Call Plan: Debt and Money Market Instruments (including Miborlinked instruments with daily put and call option): Upto 100%. Load Structure: Entry Load: Not Applicable. Upfront commission shall be paid directly by the investorto 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 divided reinvestment. Statutory Details: HDFC Mutual Fund has been set up as a trustsponsored by Housing Development Finance Corporation Limited and Standard Life Investments Limited (liability restricted to their contribution of ` 1 lakh each to thecorpus) with HDFC Trustee Company Limited as the Trustee (Trustee under the Indian Trusts Act, 1882) and with HDFC Asset Management Company Limited as theInvestment Manager.24

Thank You25