Save Taxes Wisely. November 30, 2011

Transcription

1 Save Taxes Wisely November 30,

2 Background Salient Features of Section 80C of the Income tax Act, 1961 Section 80C of Income Tax Act, 1961 w.e.f. April 1, 2005 (A.Y ) provides for deduction from gross total income in respect of specified sums paid or deposited Aggregate amount of deductions under Section 80C shall not exceed ` 100,000 Section 80C generally has no sectoral limits Eligible investments u/s 80C, inter alia, include: 1. Life Insurance Premiums 2. Unit Linked Insurance Plans (ULIP) 3. Public Provident Fund (PPF) 4. National Saving Certificate (NSC) 5. Subscription to eligible issue of capital 6. Equity Linked Saving Schemes (ELSS) 2

3 Popular Options Parameter PPF NSC ELSS Tenure 15 years 6 years Open-ended (Infinite), Closeended (10 years) Lock-in period: 3 years Returns (As applicable presently) 8% p.a. 8% p.a. Compounded (half-yearly) Not Assured Min. Investments * ` 500 ` 100 ` 500 Max. Investments * ` 70,000 $ No limit No limit Amount eligible for deduction u / s 80C * Whether income received is tax-free u / s 10 of The Income tax Act, 1961 * ` 70,000 $ ` 1,00,000 ` 1,00,000 Yes. Interest u/s 10(11) No Yes. Dividend u/s 10 (35) & LTCG^ u/s 10 (38) * In a financial year ^ LTCG Long Term Capital Gains $ W.e.f. December 1, 2011 the limit for investment in PPF has been increased to Rs. 1,00,000. Hence, amount eligible for deduction u / s 80C will also be Rs. 1,00,000 3

4 Presenting HDFC TaxSaver (An Open-ended Equity Linked Savings Scheme with a lock-in period of 3 years) 4

5 The following example illustrates: Assume Gross Total Income for the year is ` 10,00,000 Investment in HDFC Taxsaver ` 100,000 Income on which tax will be paid ` 900,000 Tax Saved on `. 100,000/- (Tax Rate assumed: 30%) ` 30,900* *Including education 2% and secondary and higher education 1% This implies that you can avail benefit of ` 30,900 in tax savings itself on investment. This is along with the returns your investment would possibly earn in the fund 5

6 Why HDFC TaxSaver? This is how an amount of ` 10,000 invested on March 31, 1996 would have performed on March 31, 2011 Year Ended PPF NSC S&P CNX 500 (`) # HDFC TaxSaver * (`) $$ ,000 10,000 10,000 10, ,200 11,240 9,018 9, ,544 12,630 10,220 12, ,049 14,190 10,830 23, ,735 15,940 18,895 62, ,466 17,910 10,772 39, ,125 20,150 11,076 50, ,846 22,003 10,017 47, ,514 24,028 20,817 1,01, ,315 26,239 25,321 1,70, ,261 28,653 41,569 3,31, ,362 31,291 44,925 3,37, ,631 34,170 54,645 3,83, ,081 35,815 32, , ,585 37,459 61,606 5,18, ,672 39,103 66,080 5,87,527 *Past performance may or may not be sustained in the future. Please also refer to the relative performance table on slide 15. # Benchmark Index of HDFC Tax Saver $$ All dividends declared prior to the splitting of the Scheme into Dividend & Growth Options are assumed to be reinvested in the units of the Scheme at the then prevailing NAV ( ex-dividend Year end balances have been arrived at by adding interest at the rates notified by the competent authorities from time to time. Maturity amount of NSC is reinvested on the maturity date at the prevailing interest rate The above simulation is for illustration purposes only and is not an investment advice. Unlike PPF and NSC, investments in Mutual Funds are subject to market risks. Hence, the performances are not strictly comparable. 6

7 Public Provident Fund v/s HDFC TaxSaver A comparison of ` 10,000 invested every financial year on the specified date Period Ended Amount invested (`) Balance in PPF a/c ( Outstanding value of HDFC TaxSaver units (`)* $$ 29-Mar-96 10,000 10,000 10, Mar-97 10,000 21,200 19, Mar-98 10,000 33,744 36, Mar-99 10,000 47,793 77, Mar-00 10,000 63, , Mar-01 10,000 79, , Mar-02 10,000 96, , Mar-03 10, , , Mar-04 10, , , Mar-05 10, , , Mar-06 10, ,878 1,441, Mar-07 10, ,948 1,481, Mar-08 10, ,944 1,691, Mar-09 10, ,019 1,090, Mar-10 10,000 2,84,341 2,320, Mar-11 10,000 3,17,088 26,37, Nov ,000 3,33,999 22,87,562 * Past performance may or may not be sustained in future. The above simulation is for illustration purpose only. Please also refer to the relative performance table on slide Year end balance has been arrived at by adding interest at the rates notified by the Competent authorities from time to time. $$ All dividends declared prior to the splitting of the Scheme into Dividend & Growth Options are assumed to be reinvested in the units of the Scheme at the then prevailing NAV ( ex-dividend NAV). Unlike PPF, investments in Mutual Funds are subject to market risks. Hence, the performances are not strictly comparable. 7

8 Portfolio Strategy In order to provide long term capital appreciation, the scheme will invest mainly in growth companies The companies selected under this portfolio would as far as practicable consist of medium to large sized companies which: Are likely to achieve above average growth than the industry Enjoy distinct competitive advantages; and Have superior financial strengths The aim will be to create a portfolio, which represents a cross-section of strong growth companies in the prevailing market In order to reduce the risk, the portfolio will target reasonable diversification 8

9 Portfolio Composition (As on November 30, 2011) 9

10 Industry Allocation - % of Net Assets (As at November 30, 2011) Others include: Non - Ferrous Metals (0.70%), Paper (0.42%), Consumer Durables (0.34%), Chemicals (0.33%), Engineering Services (0.03%). 10

11 Portfolio Composition (As at November 30, 2011) % to Net Assets Top 10 equity holdings Total Equity & Equity Related Holdings Cash margin 0.48 Other Cash, Cash Equivalents and Net Current Assets 9.13 Grand Total Net Assets (` In crore) ** 3, ** Average AUM for the quarter ended September 30,

12 Product Features Type of Scheme Open-ended Equity Linked Savings Scheme with a lock-in period of 3 years Inception Date (Date of allotment) March 31, 1996 Investment Objective To achieve long term growth of capital Fund Manager $ Vinay Kulkarni (Since November 21, 2006) Options Minimum Application Amount (Under Each Option) Load Structure Growth and Dividend The Dividend Option offers Dividend Payout and Reinvestment facility Purchase & Additional Purchase: ` 500 and in multiples of ` 500 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. Lock-in period Tax Benefit 3 Years from the date of allotment of the respective units U/s 80C of the Income-tax Act, 1961, an individual / HUF is entitled to a deduction upto ` 1 Lakh (along with other prescribed investments) for amounts invested in HDFC TaxSaver while computing the total income Benchmark S&P CNX 500 Additional Benchmark S&P CNX Nifty $ Miten lathia (Dedicated Fund Manager for Overseas Investments. 12

13 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) Risk Profile Equities & Equity related instruments Minimum 80 Medium to High Debt and money market instruments* Maximum 20 Low to medium *Investment in Securitised debt, if undertaken, would not exceed 20% of the net assets of the Scheme. The scheme may seek investment opportunity in the ADR / GDR / Foreign Equity and Debt Securities (max. 40% of net assets) subject to SEBI (Mutual Funds) Regulations, The scheme may use derivatives mainly for the purpose of hedging and portfolio balancing (max 25% of net assets) based on the opportunities available subject to SEBI (Mutual Funds) Regulations,

14 Performance (As on September 30, 2011) 14

15 SCHEME PERFORMANCE SUMMARY For schemes managed by Vinay Kulkarni ^ Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR). N.A: Not Available $$ All dividends declared prior to the splitting of the Scheme into Dividend & Growth Options are assumed to be reinvested in the units of the Scheme at the then prevaling NAV(ex-Dividend NAV). # Benchmark of the Scheme. ## Additional Benchmark of the the current value of ` 10,000/- invested at the beginning of a given period. Performance of dividend option under the schemes for the investors would be net of distribution tax applicable. 15

16 SCHEME PERFORMANCE SUMMARY For schemes managed by Vinay Kulkarni ^ Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR). # Benchmark of the Scheme. ## Additional Benchmark of the the current value of ` 10,000/- invested at the beginning of a given period. Performance of dividend option under the schemes for the investors would be net of distribution tax applicable. 16

17 SCHEME PERFORMANCE SUMMARY For schemes managed by Vinay Kulkarni ^ Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR). # Benchmark of the Scheme. ## Additional Benchmark of the the current value of ` 10,000/- invested at the beginning of a given period. Performance of dividend option under the schemes for the investors would be net of distribution tax applicable. 17

18 SCHEME PERFORMANCE SUMMARY For schemes managed by Vinay Kulkarni ^ Past performance may or may not be sustained in the future. Returns greater than 1 year period are compounded annualised (CAGR). HDFC MF MIP Short Term Plan: The scheme is co-managed by Vinay Kulkarni (equities) & Shobhit Mehrotra (Debt) HDFC Multiple Yield Fund : The scheme is co-managed by Vinay Kulkarni (equities) & Anil Bamboli (Debt) # Benchmark of the Scheme. ## Additional Benchmark of the shows the current value of ` 10,000/- invested at the beginning of a given period. Performance of dividend option under the schemes for the investors would be net of distribution tax applicable. ** Scheme performance may not strictly be comparable with that of its Additional Benchmark in view of hybrid nature of the scheme where a portion of scheme s investments are made in equity instruments. 18

19 Dividend History (Since 1999) Record Date Cum Dividend NAV per Unit (`)^ Dividend Per Unit (`)^ August 6, November 29, April 3, March 30, March 15, July 15, February 27, March 15, February 17, March 17, March 7, March 7, March 5, March 4, March 3, ^Past performance may or may not be sustained in the future. All dividends are on face value of `. 10 per unit. After payment of the dividend, the per Unit NAV will fall to the extent of the payout and statutory levy (if applicable) 19

20 Fund Awards HDFC TaxSaver has been ranked a "Seven Star Fund"# and has been awarded Gold Award for 'Best Performance' in the category of Open Ended Equity Linked Savings Schemes (ELSS) for one year period ending December 31,2010 (from amongst 34 schemes) at ICRA Mutual Fund Awards Seven Star Fund Ranking denotes Best Performance amongst 5 Star Funds in the respective Category. ICRA 7-Star Gold Award: The best performing fund amongst the 5-Stars is ranked as a 7-Star Fund provided it's fund size is greater than the average of the respective category or ` 100 crores, whichever is lower. #Past performance is no guarantee of future results. Please refer to the slide: 28 on Award /Ranking / Rating methodology. 20

21 Fund Awards HDFC TaxSaver Growth has been adjudged the runner up for Best ELSS (Tax Savings) Fund award# by Morningstar India for its one and three-year performance ending December 31, # Past performance is no guarantee of future results. Please refer to the slide: 28 on Award /Ranking / Rating methodology. 21

22 Fund Ranking HDFC TaxSaver Dividend Option has been ranked World s No. 1 by Morningstar# out of 3993 open-ended equity funds / share classes for the 15 year period ending December 31, # Past Performance is no guarantee of future results.. Please refer to the slide:28 on Award /Ranking / Rating methodology. 22

23 Fund Rating HDFC TaxSaver Growth Option was assigned CRISIL Mutual Fund Rank 2 # in the Open End Equity Linked Savings Schemes (ELSS) Category (out of 28 schemes) for the 2 year period ending September 30, 2011 by CRISIL. CRISIL Mutual Fund Rank 2 means that the composite performance of the Scheme is Good performance and ranks within the 11th to 30th percentile in the category. # Past performance is no guarantee of future results. Please refer to the slide: 29 on Award /Ranking / Rating methodology. 23

24 Fund Rating HDFC TaxSaver Growth Option has been rated Five Stars by Morningstar in the Morningstar India Open Ended ELSS (Tax Savings) category (from amongst 54 schemes) for the overall (3/5/10 year- as applicable) period ending November 30, 2011# Five Stars indicate that the fund is in the top 10 percent of its category in terms of historical risk adjusted returns Value Research Rating - * * * * (Four Stars) in Equity Tax Planning Category (from amongst 28 schemes) for period ending November 30, 2011# Four stars indicate that the fund is in the 11 to 32.5% of its category in terms of historical risk adjusted returns # Past performance is no guarantee of future results. Please refer to the slide: 29 on Award /Ranking / Rating methodology. 24

25 Fund Suitability 25

26 Why HDFC TaxSaver? Well diversified equity fund Well established track record of consistently outperforming its benchmark for over 13 years* Gives investors the twin advantage of availing of a tax deduction under section 80C of the Income-tax Act, 1961 along with the prospect of long term growth of capital through equity investments Has given investors a superior post tax return as compared to traditional tax saving instruments *Past performance may or may not be sustained in the future. 26

27 HDFC TaxSaver is suitable for investors: Considering to invest for tax planning and avail benefit of tax deduction u/s 80C of the Income Tax Act, 1961 Looking for an alternate to traditional tax saving instruments Willing to invest in a diversified equity fund with a consistent track record* for a minimum period of at least three years *Past performance may or may not be sustained in the future. 27

28 Award/Ranking/Rating Methodology ICRA Ranking Methodology and Disclaimer: For a Mutual Fund (MF) scheme to be eligible for the ICRA Online (ICRON) MF Ranking, it must have fulfilled the following criteria: The MF scheme should have declared a minimum 222 Net Asset Values (NAVs) for one year and 666 NAVs for the three year period. A scheme is required to have made full portfolio disclosures (monthly/quarterly) during the ranking horizon and its fund size should be larger than 10% of the category's median average assets under management (AUM), except for Liquid and Ultra Short Term schemes where the cut off is set at 20%. HDFC TaxSaver has been ranked as a Seven Star Fund in the category of Open Ended Equity Linked Savings Schemes schemes for its 1 year performance till December 31, The rank is an outcome of an objective and comparative analysis against various parameters, including: risk adjusted return, fund size, company concentration and portfolio turnover. The ranking methodology did not take into account loads imposed by the Fund. There were 34 schemes considered in Open Ended Equity Linked Savings Schemes category for the ranking exercise. The rank is neither a certificate of statutory compliance nor any guarantee on the future performance of HDFC Mutual Fund. Morningstar India Fund Awards Disclaimer: Runner-up - Best ELSS (Tax Savings) Fund: HDFC TaxSaver - Growth has been adjudged the runner-up for Best ELSS (Tax Savings) Fund award by Morningstar India for its one and three-year performance ending December 31, The methodology eliminates funds based on size and below-median calendar year ranks. Scores are calculated using a combination of return ranks for one-year and three-year periods, and the risk rank for the three-year period. Loads are not considered while calculating returns. The methodology also includes qualitative checks like the fund s accessibility to retail investors and adherence to investment mandate, among others. 18 share classes were considered for this award. The award should not be construed as investment advice, an offer, the solicitation of an offer to buy or sell securities by Morningstar. It is neither a certificate of statutory compliance nor a guarantee of future performance. Morningstar Ranking Methodology For World No 1 Rank: The oldest share class of all open-end equity funds in the Morningstar global database has been considered for the rankings. ETFs and closed end funds have not been considered. The ranking analysis has been done over 15 years ending December 31, All performance is in the fund s base currency, and returns greater than one year are compounded annualized. The qualifying share classes are 3,993 over 15 years. Load and taxes have not been considered in the performance. Ranking Source & Publisher: Morningstar Morningstar Disclaimer: The data and analyses provided by Morningstar do not constitute investment advice offered by Morningstar and are provided only for informational purposes. It should not be construed as an offer or the solicitation of an offer, to buy or sell securities. Morningstar is not responsible for any error or omission in the data. Reproduction or transcription of the ranking report by any means, in whole or in part, without the prior written consent of Morningstar, Inc., is prohibited. 28

29 Award/Ranking/Rating Methodology Crisil Mutual Fund Ranks Ranking Methodology The criteria used in computing the CRISIL Mutual Fund Rank are Superior Return Score based on NAVs over the 2-year & 5 year period ended 30 th September 2011 respectively, Sectoral concentration, Company concentration and Liquidity of the scheme. The methodology does not take into account the entry and exit loads levied by the scheme. The CRISIL Mutual Fund Rank is no indication of the performance that can be expected from the scheme in future. Morning Star Rating Rating Methodology: The Morningstar fund rating methodology is based on a fund s risk-adjusted return within a given Morningstar category. 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 Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three, five and 10 year (if applicable) Morningstar Rating 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 next 22.5% 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 respective funds. The current fund rating is for the overall / 3 year / 5 year/ 10 year period as of November 30, HDFC TaxSaver Growth Option has been rated 5-Star by Morningstar in the Morningstar India (India Open Ended ELSS ( Tax Savings). 54 funds which completed 3 years of performance were considered for rating. Rating Source and Publisher: Morningstar. The ratings are subject to change every month. Please refer for detailed information on the Rating Methodology. Value Research Ranking Methodology: Value Research Fund Ratings are a composite measure of historical risk-adjusted returns. In the case of equity funds, this rating is based on the weighted average monthly returns for the last 3 and 5-year periods. These ratings do not take into consideration any entry or exit load. Each category must have a minimum of 10 funds for it to be rated. Effective, July 2008, an additional qualifying criteria has been included, whereby a fund with less than ` 5 crore of average AUM in the past six months will not be eligible for rating. Five stars indicate that a fund is in the top 10 per cent of its category in terms of historical risk-adjusted returns. Four stars indicate that a fund is in the next 22.5 per cent of its category based on the weighted average monthly returns for the last 3 and 5- year periods ending November 30, The number of schemes in the Equity- Tax Planning Category is 28. The Value Research Ratings are published in Monthly Mutual Fund Performance Report and Mutual Fund Insight. The Ratings are subject to change every month. The Rating is based on primary data provided by respective funds, Value Research does not guarantee the accuracy. 29

30 Disclaimer & Risk Factors DISCLAIMER: 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 of HDFC Balanced Fund. The information/ data herein alone is not sufficient and shouldn t be used for the development or implementation of an investment strategy. It should not be construed as investment advice to any party. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could 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 are not 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 in reliance 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 written consent of the HDFC Mutual Fund/ HDFC Asset Management Company Limited. The recipient(s) should before investing in the Scheme(s) make his/their own investigation 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 objectives will be achieved and the NAV of the Scheme may go up or down depending upon the factors and forces affecting the securities market. Past performance 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. Investors in the Scheme(s) are not being offered any guaranteed / assured returns. The NAV of the units issued under the Scheme 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. The name(s) of the Scheme(s) do(es) not in any manner indicate either the quality of the Scheme(s), its(their) future prospects and returns. Please read the Scheme Information Document and Statement of Additional Information before investing. Statutory Details: HDFC Mutual Fund has been set up as a trust sponsored by Housing Development Finance Corporation Limited and Standard Life Investments Limited (liability restricted to their contribution of ` 1 lakh each to the corpus) with HDFC Trustee Company Limited as the Trustee (Trustee under the Indian Trusts Act, 1882) and with HDFC Asset Management Company Limited as the Investment Manager. 30

31 Thank You 31