FOR PROFESSIONAL INTERMEDIARIES

Mutual Funds and Systematic Investing : A Perspective August 2010

When I was young, I used to think that money is everything in life Now that Im old, I know it is.

Why Invest?
Retirement Daughters Marriage Childrens Education Buy House Buy Automobile Marriage Start Career

AGE
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Why are investment decisions difficult?

Selection of appropriate investments What if I need the money before the targeted date? What paper work is needed? How often do I monitor these investments? How do I ensure safety? Who will inform me on the progress regularly? What are the tax implications Can I keep the return or will the tax-man keep it? What if I lose the proof of investments?

What investment is appropriate?

Debt: PPF, Post Office Scheme, Fixed Deposits, Debentures, Bonds, Income Funds Equity: Individual Stocks, Growth Funds, Sectoral Funds Banks: Bank Deposits, Liquid Funds

Or a mix of the above

A good investment is one that helps you maximise your total returns, net of taxes and inflation over the time period you invest for!
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Basics of Mutual Funds

Mutual Funds
A pool of money, collected from investors, invested according to certain investment objectives Ownership in hands of investors whove pooled in their funds. Managed by a team of investment professionals The pool of funds invested in portfolio of marketable investments. Investors share denominated by Units that have a Net Asset Value (NAV) which changes everyday The portfolio is created according to stated investment objectives Investors make money through Capital appreciation and Income distribution

What are the advantages of Mutual Funds?

Portfolio diversification Professional Management Reduction in Risk Service Affordability Reduction in Transaction costs Liquidity Convenience and Flexibility Tax Efficiency

Three Basic Types

Mutual funds come in three basic types
Equity or stock funds Bond or income funds and Money market or cash funds.

Other classifications
Growth/ Value/ Income Options- Growth/ Dividend/ Reinvestment Sectoral Funds Specialty Funds Offshore Funds Open ended/ Close ended Diversified Equity ELSS Funds Index Funds Hybrid/ Balanced Funds

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How to choose the right scheme

Determine your financial goals and your time horizon Determine your tolerance for risk Study the objectives of the funds available and match them with your need

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Evaluating a Funds Performance

Performance against Benchmark Performance against that of peer group (similar funds) Consistency in performance over Benchmark and against peer group Stable Fund Management Time frame considered- Ideally 3-5 years Sectoral Diversification- Whether portfolio is evenly diversified

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Fund Suitability Risk vs Return

Sector

Diversified

Returns
Balanced

Income

Liquid

Risk
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March is a particularly risky month to invest in the stock market, the others are.

July, February, January, April, September, August, May, June, December, October & November.

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The intelligent way of investing?

When they say time is money, they must mean Systematic Investment Planning

Life is a roller coaster ride- full of ups and downs. We all know we have to save for many responsibilities life brings along with it. But no matter how much you save- Its Never Enough!

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Did you know ?

If your current monthly expenses are Rs. 30,000/- per month, then after 20 years you will require Rs. 80,000/- a month to just maintain the same lifestyle!

An education degree for your child which currently costs Rs. 20 lakh could cost over Rs. 34 lakh after 11 years!

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At inflation of 5%

Individual Investor Needs: Investment Goals

All individuals need to save for Retirement Childs education / marriage Medical emergency Other family obligations

Every individual has one or more of the above goals

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Individual Investor: Life Stages

Earnings (Consumption + Savings) Consumption Savings

22 Young Independent

27 Young Married

40 Middle Age

60 Retirement

All individuals have a finite period to save for their investment goals
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Value of Money over time

Impact of inflation on monthly expenses of Rs. 30,000 today
100,000 79,599 62,368 38,288 30,000 48,102 37,689 78,353

Value of Rs. 100,000 over time

Today

5 years

15 years

20 years

Today

5 years

15 years

20 years

Investors need to beat inflation

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All figures in Rs.; At inflation of 5%; Hypothetical numbers meant only for illustration purpose

Performance of Various Asset Classes

Cumulative annualised returns 1982 to 2010
16.97%

9.71% 8.87% 6.62% 2.11%

WPI Inflation Growth

Bank FDs* Real Growth

BSE Sensex^

Equities outperform other asset classes over the long term

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Source: IIFL, Internal; *1-3 year maturity; ^excluding dividends; data as at end FY2010

Individual investors are scared of

The Downside Risk in Equities The Risk of Market Volatility The Risk of Market Timing

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What else makes a material impact on investments in equity ?

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Investing in the BSE Sensex

Returns are from Jan 1980- Aug 2010 17.60% 16.19% 16.91%

Fixed investment at lowest sensex value every year

Fixed investment at highest sensex value every year

Fixed investment on 1st day of every month

Market timing does not matter over the long term

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Source: Internal; Returns have been calculated as on Aug 19, 2010

The Power of Compounding

Saving a small sum of money regularly in equity mutual funds can make your money work with greater power and can have a significant impact on wealth accumulation. BSE Sensex Scenario A Number of years Monthly investment Total investment Assumed annualised return Final corpus 15 Rs 5000 Rs 9 lakh 18% Rs. 45.96 lakh BSE Sensex Scenario B 20 Rs 5000 Rs 12 lakh 18% Rs. 1.17 crore

The above illustration above is merely indicative in nature and does not in any manner indicate the performance of any of the schemes of DSP BlackRock Mutual Fund. Please read the SID and SAI carefully before investing.

Even a seemingly small 5 year delay can cost you the CROREPATI tag
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Time Period of 25 years; Hypothetical numbers meant only for illustration purpose

Summary
Investors needs to save regularly and invest those savings in higher return assets to create wealth

Long Term Systematic Monthly Investment In equity schemes is ideal for this !
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How Do You Achieve Your Financial Goals

Retirement Childs education Family commitments - medical emergency, etc

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Retirement Planning
Monthly Household Expenses
Corpus required per month Rs 83,579

Rs 30,000

Inflation 5% 21 Yrs

Retirement corpus required to meet post retirement expenses (if invested at 7%) : Rs 1.4 cr

Monthly investment needed to achieve this corpus in 21 years at 12% at 15% Rs 12,583 Rs 8,083 Rs 5,090

Today
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At the time of retirement

at 18%

Retirement Planning
Educational Degree for Child

Corpus required Rs 34,20,000

Rs 20,00,000

Inflation 5% 11 Yrs

Monthly investment needed to achieve this corpus in 11 years at 12% at 15% at 18% Rs 12,456 Rs 10,166 Rs 8,237

Present
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When your Child actually goes for this degree

Retirement Planning
Childs Marriage
Corpus required Rs 43,70,000

Rs 20,00,000

Inflation 5% 16 Yrs

Monthly investment needed to achieve this corpus in 16 years at 12% at 15% at 18% Rs 7,509 Rs 5,466 Rs 3,925

Present
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When your Child actually gets married

So What Are The Benefits Of Investing Through A Systematic Investment Plan?

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Benefits of Investing Systematically

The Benefit of Long Term Equity Investment
Equities give superior returns among all asset classes over the long term DSP BlackRock Mutual Fund has a track record of consistent good performance relative to its peers

The Benefits of Systematic Monthly Investment

Takes out the risk of market timing Adds the benefits of the rupee cost averaging and the power of compounding

RUPEE COST AVERAGING

One doesnt have to worry about when to invest, how much to invest etc considering daily market

movements, as systematic investing reduces the risks significantly

Eliminates the need to time your investments in equities Smoothens the impact of market fluctuations and hence reduces risks of investing in volatile markets The risk of market volatility gets negated with more units being purchased when the Price is low and

fewer units being bought when the Price is high

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Benefits of Investing Systematically: Rupee Cost Averaging

Time (Months) 1 2 3 4 5 6 7 8 9 10 11 12 Total Amount invested 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 NAV per Unit (Rs) 23 21 22 19 16 17 17 20 21 19 25 24 Units purchased 43 48 45 53 63 59 59 50 48 53 40 42 601

Average NAV per Unit over 12 months =

(23+21+22+!9+16+17+17+20+21+19+25+24)/12

or Rs 20.34 Average Cost per Unit over 12 months =

12,000/601

or Rs 19.96

Average Cost per Unit will always be lesser than the Average NAV per Unit, regardless of the market movements
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Source: Internal; Hypothetical numbers meant only for illustration purpose

Benefits of Investing Systematically (contd)

Flexibility
You can choose from a wide array of schemes You can decide to keep invested amounts in an earlier scheme & invest future SIP installments into a new scheme

Added Convenience
Auto debit facility across over 25 locations in India Regular account statements Redemption request directly credited into your bank account

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The First 4 Steps To Potential Wealth Creation

Step 4

Decide the length of the investment period

Step 3

Decide on the frequency with which you will invest

Step 2

Select the amount you can afford to invest every month

Step 1

Select a mutual fund scheme of your choice

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The Power of Compounding

Table Illustrating the power of compounding (12% CAGR)
Monthly Investments for a period of
2,000 5,000 10,000 15,000 20,000 25,000 50,000

12% return per annum 5 years

1.65 Lacs 4.12 Lacs 8.25 Lacs 12.37 Lacs 16.50 Lacs 20.62 Lacs 41.24 Lacs

10 years
4.65 Lacs 11.62 Lacs 23.23 Lacs 34.85 Lacs 46.47 Lacs 58.08 Lacs 1.16 Crore

15 years
10.09 Lacs 25.23 Lacs 50.46 Lacs 75.69 Lacs 1.01 Crore 1.26 Crore 2.52 Crore

20 years
19.98 Lacs 49.96 Lacs 99.91 Lacs 1.50 Crore 2.00 Crore 2.50 Crore 5.00 Crore

25 years
37.95 Lacs 94.88 Lacs 1.90 Crore 2.85 Crore 3.80 Crore 4.74 Crore 9.49 Crore

Source: Internal; Hypothetical numbers meant only for illustration purpose

Invest Systematically to Benefit from the Power of Compounding

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The Power of Compounding

Table Illustrating the power of compounding (15% CAGR)
Monthly Investments for a period of
2,000 5,000 10,000 15,000 20,000 25,000 50,000

15% return per annum 5 years

1.79 Lacs 4.48 Lacs 8.97 Lacs 13.45 Lacs 17.94 Lacs 22.42 Lacs 44.84 Lacs

10 years
5.57 Lacs 13.93 Lacs 27.87 Lacs 41.80 Lacs 55.73 Lacs 69.66 Lacs 1.39 Crore

15 years
13.54 Lacs 33.84 Lacs 67.69 Lacs 1.02 Crore 1.35 Crore 1.69 Crore 3.38 Crore

20 years
30.32 Lacs 75.80 Lacs 1.52 Crore 2.27 Crore 3.03 Crore 3.79 Crore 7.58 Crore

25 years
65.68 Lacs 1.64 Crore 3.28 Crore 4.93 Crore 6.57 Crore 8.21 Crore 16.42 Crore

Source: Internal; Hypothetical numbers meant only for illustration purpose

Invest Systematically to Benefit from the Power of Compounding

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The Power of Compounding

Table Illustrating the power of compounding (20% CAGR)
Monthly Investments for a period of
2,000 5,000 10,000 15,000 20,000 25,000 50,000

20% return per annum 5 years

2.07 Lacs 5.17 Lacs 10.35 Lacs 15.52 Lacs 20.69 Lacs 25.86 Lacs 51.73 Lacs

10 years
7.65 Lacs 19.12 Lacs 38.24 Lacs 57.35 Lacs 76.47 Lacs 95.59 Lacs 1.91 Crore

15 years
22.69 Lacs 56.71 Lacs 1.13 Crore 1.70 Crore 2.27 Crore 2.84 Crore 5.67 Crore

20 years
63.23 Lacs 1.58 Crore 3.16 Crore 4.74 Crore 6.32 Crore 7.90 Crore 15.81 Crore

25 years
1.73 Crore 4.31 Crore 8.63 Crore 12.94 Crore 17.25 Crore 21.57 Crore 43.13 Crore

Source: Internal; Hypothetical numbers meant only for illustration purpose

Invest Systematically to Benefit from the Power of Compounding

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DSP BlackRock Mutual Fund: Schemes SIP Performance

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SIP returns as on Jul 30, 2010

DSP BlackRock Equity Fund (Date of allotment: Apr 29, 1997)
Time Period
1 Year 3 Year 5 Year Inception

SIP Investment (Rs.)

12000 36000 60000 159000

DSPBREF Value (Rs.)

13854 52380 106007 1194435

S&P CNX Nifty^ Value (Rs.)

12915 44810 84421 522294

SIP CAGR(%)
29.70 25.89 22.93 27.44

SIP CAGR (%)

14.37 14.72 13.61 16.57

DSP BlackRock Top 100 Equity Fund (Date of allotment: Mar 10, 2003)
Time Period
1 Year 3 Year 5 Year Inception

SIP Investment (Rs.)

12000 36000 60000 88000

DSPBRTEF Value (Rs.)

13091 48075 98137 240312

BSE 100^ Value (Rs.)

12967 45880 86196 188731

SIP CAGR(%)
17.2 19.68 19.75 26.8

SIP CAGR (%)

15.21 16.37 14.45 20.34

^Benchmark.' Since inception returns are calculated on Rs. 10/- invested at inception, viz. date of allotment. All Returns and scheme NAVs are for Regular Plan- Growth Option. Returns and NAV only for DSPBREF are for Regular Plan - Dividend Option assuming reinvestment of dividend. As on Jul 30, 2010, NAV of DSPBREF: 50.246, value of S&P CNX Nifty: 5,367.60. As on Jul 30, 2010, NAV of DSPBRTEF: 94.086, value of BSE 100: 9,556.67. SIP investment returns table assumes an investment of Rs. 1000/- per month. 'Since inception returns calculated from the 'Start date of SIP' (Considered to be the Date of Allotment). Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.
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Source: Internal; Data as on Jul 30, 2010

SIP returns as on Jul 30, 2010

DSP BlackRock Opportunities Fund (Date of allotment: May 16, 2000)
Time Period
1 Year 3 Year 5 Year Inception

SIP Investment (Rs.)

12000 36000 60000 122000

DSPBROF Value (Rs.)

14014 51083 96305 608190

S&P CNX Nifty^ Value (Rs.)

12915 44810 84421 342128

SIP CAGR(%)
32.37 24.06 18.97 29.64

SIP CAGR (%)

14.37 14.72 13.61 19.21

DSP BlackRock India T.I.G.E.R.* Fund

Time Period
1 Year 3 Year 5 Year Inception

(Date of allotment: Jun 11, 2004)

SIP Investment (Rs.)

12000 36000 60000 73000

DSPBRITF Value (Rs.)

13446 46820 92090 142085

BSE 100^ Value (Rs.)

12967 45880 86196 124593

SIP CAGR(%)
22.97 17.80 17.14 21.74

SIP CAGR (%)

15.21 16.37 14.45 17.41

* The Infrastructure Growth and Economic Reforms Fund ^Benchmark.' Since inception returns are calculated on Rs. 10/- invested at inception, viz. date of allotment. All Returns and scheme NAVs are for Regular Plan- Growth Option. As on Jul 30, 2010, NAV of DSPBROF: 83.931, value of S&P CNX Nifty: 5,367.60. As on Jul 30, 2010, NAV of DSPBRITF: 47.796, value of BSE 100: 9,556.67. SIP investment returns table assumes an investment of Rs. 1000/- per month. 'Since inception returns calculated from the 'Start date of SIP' (Considered to be the Date of Allotment). Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.
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Source: Internal; Data as on Jul 30, 2010

SIP returns as on Jul 30, 2010

DSP BlackRock Small and Mid Cap Fund (Date of allotment: Nov 14, 2006)
Time Period
1 Year 3 Year Inception

SIP Investment (Rs.)

12000 36000 44000

DSPBRSMF Value (Rs.)

14936 59743 72940

CNX Mid Cap^ Value (Rs.)

14187 53765 66585

SIP CAGR(%)
48.05 35.77 28.49

SIP CAGR (%)

35.28 27.81 23.11

DSP BlackRock Tax Saver Fund

Time Period
1 Year 3 Year Inception

(Date of allotment: Jan 18, 2007)

SIP Investment (Rs.)

12000 36000 42000

DSPBRTSF Value (Rs.)

14100 51660 61612

S&P CNX 500^ Value (Rs.)

13013 46393 54396

SIP CAGR(%)
33.81 24.88 22.40

SIP CAGR (%)

15.95 17.15 14.88

^Benchmark.' Since inception returns are calculated on Rs. 10/- invested at inception, viz. date of allotment. All Returns and scheme NAVs are for Regular Plan- Growth Option. As on Jul 30, 2010, NAV of DSPBRSMF: 17.293, value of CNX Mid Cap: 8,415.30. As on Jul 30, 2010, NAV of DSPBRTSF: 17.036, value of S&P CNX 500: 4,475.15. SIP investment returns table assumes an investment of Rs. 1000/- per month. 'Since inception returns calculated from the 'Start date of SIP' (Considered to be the Date of Allotment). Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.

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Source: Internal; Data as on Jul 30, 2010

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A Rupee Saved Is A Rupee Earned A Long Journey Begins With A Small Step

Disclaimer
DSP BlackRock Equity Fund (DSPBREF) is an open ended growth Scheme, seeking to generate long term capital appreciation, from a portfolio that is substantially constituted of equity securities and equity related securities of issuers domiciled in India. DSP BlackRock India T.I.G.E.R Fund (The Infrastructure Growth and Economic Reforms Fund) (DSPBRITF) is an open ended diversified equity Scheme, seeking to generate capital appreciation, from a portfolio that is substantially constituted of equity securities and equity related securities of corporates, which could benefit from structural changes brought about by continuing liberalization in economic policies by the Government and/or from continuing investments in infrastructure, both by the public and private sector. DSP BlackRock Opportunities Fund (DSPBROF) is an open ended growth Scheme, seeking to generate long term capital appreciation and whose secondary objective is income generation and the distribution of dividend from a portfolio constituted of equity and equity related securities concentrating on the Investment Focus of the Scheme. DSP BlackRock Top 100 Equity Fund (DSPBRTEF) is an open ended growth Scheme, seeking to generate capital appreciation, from a portfolio that is substantially constituted of equity securities and equity related securities of the 100 largest corporates, by market capitalisation, listed in India. DSP BlackRock Small and Mid Cap fund (DSPBRSMF) is an open ended equity growth scheme, primarily seeking to generate long term capital appreciation from a portfolio substantially constituted of equity and equity related securities, which are not part of top 100 stocks by market capitalization. Asset Allocations: DSPBREF - Equity & equity related securities: 90%-100%; Debt & money market securities: 0%-10% (Debt securities/instruments are deemed to include securitised debts). DSPBRITF - Equity & equity related securities: 90%-100%; Debt, securitised debt & money market securities 0%-10%; ADR, GDR & foreign securities: 0%-25%. DSPBROF - Equity and equity related securities: 80%-100%; Fixed income securities (Debt & money market securities): 0%-20% (Debt securities/instruments are deemed to include securitised debts). DSPBRTEF - Equity & equity related securities: 90%100%; Debt, securitised debt & money market securities: 0%-10%. DSPBRSMF - Equity and equity related securities which are-(A) not part of top 100 stocks by market cap: 65% - 100%, (B) in the top 100 stocks by market cap: 0% - 35%; Of (A) & (B), investments in ADRs, GDRs & foreign securities: 0% - 25%; Debt and Money Market Securities: 0% - 10%. Common Features: Nomination facility available, subject to applicable conditions as per the Statement of Additional Information (SAI) and Scheme Information Document (SID). Declaration of NAV on all Business Days. Redemption normally within 3 Business Days. Sale and Redemption of Units on all Business Days at Purchase Price and Redemption Price respectively. SIP only in Regular Plan of the schemes which offer Regular and Institutional Plans. SWP and STP available in each plan of the schemes. Minimum Investment: Regular Plan Rs. 5,000/- ; Institutional Plan Rs. 1 crore. Entry Load: NIL. Exit Load Holding Period < 12 months: 1%, Holding period >= 12 months: NIL. Statutory Details: DSP BlackRock Mutual Fund was set up as a Trust and the settlors/sponsors are DSP ADIKO Holdings Pvt. Ltd. & DSP HMK Holdings Pvt. Ltd. (collectively) and BlackRock Inc. (Combined liability restricted to Rs. 1 lakh). Trustee: DSP BlackRock Trustee Company Pvt. Ltd. Investment Manager: DSP BlackRock Investment Managers Pvt. Ltd. Risk Factors: Mutual funds, like securities investments, are subject to market and other risks and there can be no assurance that the Schemes objectives will be achieved. As with any investment in securities, the NAV of Units issued under the Schemes can go up or down depending on the factors and forces affecting capital markets. Past performance of the sponsor/AMC/mutual fund does not indicate the future performance of the Schemes. Investors in the Schemes are not being offered a guaranteed or assured rate of return. Each Scheme/Plan is required to have (i) minimum 20 investors and (ii) no single investor holding>25% of corpus. If the aforesaid point (i) is not fulfilled within the prescribed time, the Scheme/Plan concerned will be wound up and in case of breach of the aforesaid point (ii) at the end of the prescribed period, the investors holding in excess of 25% of the corpus will be redeemed as per SEBI guidelines. The names of the Scheme do not in any manner indicate the quality of the Scheme, its future prospects or returns. For scheme specific risk factors, please refer the relevant Scheme Information Document. For more details, please refer the Key Information Memorandum cum Application Forms, which are available on the website, www.dspblackrock.com, and at the ISCs/Distributors. Please read the Scheme Information Document and Statement of Additional Information carefully before investing.
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