hdfc mutual fund prudence fund april 2011

PresentingHDFC Prudence Fund

(An Open-Ended Balanced Scheme)As on April 30, 2011

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Table of Contents

Definition and Positioning

Product Rationale and Investment Strategy

Portfolio Composition

Product Features and Asset Allocation Pattern

Performance and Fund Rating

Fund Suitability

Disclaimer

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What is a balanced fund?

A balanced fund is one that has a portfolio comprising debtinstruments, convertible securities, preference and equity shares

Assets are generally held in predefined proportion of debt / money marketsecurities and equities

Broadly, balanced funds target returns greater than debt schemes with lowerBroadly, balanced funds target returns greater than debt schemes with lowervolatility than equity schemes

Balanced funds provide investors with the best of both worlds; the returns ofequity with the safety of debt

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Positioning of balanced fundsRETURN

Monthly Income Plans

Balanced Funds

Index Funds

Equity Funds

Sectoral Funds

RISK

RETURN

Liquid Funds

Income Funds

Gilt Funds

Monthly Income Plans

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Product Rationale

Hassle free investing Investors save time, effort and costs. No need to constantly monitor the portfolioto maintain the target asset allocation

Buy low Sell High A constant asset allocation results in buying more equities when markets fallsharply (selling bonds) and selling equities when markets rally sharply (buyingbonds)

Cost effective Cheaper and tax efficient alternative to maintain constant asset allocation

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Investment Strategy

In the long term, the mix between equity and debt instruments is targetedbetween 40:75 and 60:25 respectively

In such times when the interest rates are high and equities areexpensive, investments in debt would be generally more attractive versusequities and accordingly the fund would increase the debt component in theportfolio

Similarly in times when the interest rates are low and equity valuations arecheap, the fund would increase equity exposure while lowering its debtcomponent in the portfolio

The exact mix of the portfolio will be a function of interestrates, equity valuations and outlook for growth of earnings

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Investment Strategy(Equities)

Maintains an effectively diversified portfolio

No cap / style bias

Focus is on:

Sound quality companiesSound quality companies

Companies that enjoy Leadership / near leadership position

Companies / businesses with superior growth prospects available at a reasonable price

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Investment Strategy(Fixed Income)

The fund would invest in debt instruments such as governmentsecurities, securitised debts, corporate debentures and bonds, preferenceshares, quasi government bonds and money market instruments

Preference for high quality assets

Actively managed debt portfolio based on interest rate outlook; investmentActively managed debt portfolio based on interest rate outlook; investmentopportunity is assessed with regard to credit, interest rate and liquidity risk

The exact proportion in money market instruments will be a function of theliquidity needs and the attractiveness of the debt/equity markets

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Managing and Controlling Risk

The key to building wealth in the long run is not to earn very high returnsoccasionally, but to earn reasonable returns with higher consistency and toavoid large losses that reduce wealth significantly

Best illustration of this strategy was the reduction in exposure to IT stocks inlate 1999 ahead of the ‘IT meltdown’. Subsequently in CY 2000 and CY2001, most IT stocks lost between 50%-90% in value. In the same period HDFCPrudence Fund lost around 14% *Prudence Fund lost around 14% *

* Past performance may or may not be sustained in the future. Please refer relative performance table on slide 16.

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Portfolio Composition(As on April 30, 2011)(As on April 30, 2011)

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Industry Allocation - % of Net Assets(Equity)

(As at April 30, 2011)

Chemicals

Minerals/Mining

Media & Entertainment

Textile Products

Others

Oil

Petroleum Products

Pharmaceuticals

Consumer Non Durables

Software

Banks

2.39

2.91

2.97

3.10

3.13

3.43

4.20

5.35

8.18

8.20

14.47

Gas

Consumer Durables

Auto

Paper

Trading

Industrial Products

Auto Ancillaries

Telecom - Services

Ferrous Metals

Industrial Capital Goods

Chemicals

1.10

1.351.41

1.45

1.52

1.53

1.66

1.86

1.97

2.342.39

Others include: Power (1.06%), Construction (0.64%), Finance (0.58%), Construction Project (0.40%),Retailing (0.22%), Textiles - Synthetic (0.16%), Cement (0.07%).

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Portfolio Composition(As at April 30, 2011)

% to Net Assets

Total of Top 10 equity holdings 30.76

Total Equity & Equity Related Holdings 74.52

Total Government Securities, Money Market Instruments and Other CreditExposures

20.32

Cash Margin 0.17Cash Margin 0.17

Other Cash, Cash Equivalents and Net Current Assets 4.98

Grand Total 100.00

Net Assets (`̀̀̀ In crore) 6,125.00

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Product Features

Type of Scheme An Open-ended Balanced Scheme

Inception Date (Date of allotment) February 1, 1994

Investment Objective To provide periodic returns and capital appreciation over a long period of time from a judicious mix ofequity and debt investments with an aim to prevent / minimise any capital erosion

Fund Manager $ Prashant Jain (Since June 19, 2003)*

Plans / Options Growth and Dividend – The Dividend Option offers Dividend Payout and Reinvestment facility

Minimum Application Amount

(Under Each Option)

Purchase: ` 5,000 and any amount thereafter

Additional Purchase: ` 1,000 and any amount thereafter

Load Structure Entry Load:Load Structure 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 includingthe service rendered by the ARN Holder.

Exit Load:

In respect of each purchase / switch-in of units, an exit load of 1.00% is payable if units areredeemed / switched – out within 1 year from the date of allotment.

No exit load is payable if units are redeemed / switched – out after 1 year from the date ofallotment.

Entry / Exit load shall not be levied on bonus units and units allotted on dividend reinvestment.

Benchmark CRISIL Balanced Fund Index

* Date of migration from Zurich India Mutual Fund.$ Dedicated Fund Manager for Overseas Investments: Miten Lathia

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Asset Allocation Pattern

Type of the Instruments Minimum Allocation

(% of Net Assets)

Maximum Allocation

(% of Net Assets)

Risk Profile of the Instrument

Equity & Equity linkedinstruments

40 75 High

Debt Securities andmoney marketinstruments*

25 60 Low to Medium

*Investment in Securitised debt, if undertaken, would not exceed 10% 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 netassets) subject to SEBI (Mutual Funds) Regulations, 1996. The scheme may use derivatives mainly for the purpose ofhedging and portfolio balancing (max 25% of net assets) based on the opportunities available subject to SEBI (MutualFunds) Regulations, 1996. 14

Performance & Fund Rating& Fund Rating(As on April 29, 2011)

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Relative Performance –HDFC Prudence Fund (Growth Option)

(As on April 29, 2011)

Period Returns (%) $$ ^ CRISIL Balanced Fund Index Returns (%) #

Last 1 Year (365 Days) 15.18 8.09

Last 3 Years (1095 Days) 17.33 5.64

Last 5 Years (1827 Days) 17.63 9.91

Last 10 Years (3654 Days) 28.93 N.A.

Last 15 Years (5481 Days) 24.70 N.A.

Since Inception $ (6296 Days) 21.30 N.A.

^ Past performance may or may not be sustained in the futurePerformance of the Dividend Option for the investor would be net of Distribution Tax as applicable.Above returns are compounded annualized (CAGR.# Benchmark Index $$ 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 then prevailing NAV ( ex-dividend NAV) .N.A. – Not available$ Inception Date: February 1, 1994

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Systematic Investment Plan Returns(As on April 29, 2011)

SIP Investments

Since Inception $

SIP

15 Year

SIP

10 Year

SIP

5 Year

SIP

3 Year

SIP

1 Year

SIP

Total Amount Invested (`)(`)(`)(`)

207,000 180,000 120,000 60,000 36,000 12,000

Market Value (`)(`) 23,39,440 16,32,970 5,08,150 99,520 54,880 12,530

This is how your investments would have grown if you had invested say `̀̀̀ 1,000 systematically on the first

business day of every month over a period of time.

Market Value (`)(`)(`)(`) 23,39,440 16,32,970 5,08,150 99,520 54,880 12,530

Returns (annualised) (%) * ^ $$

24.40 26.05 27.22 20.40 29.54 8.43

Benchmark Returns (annualised) (%) #

N.A N.A N.A 10.71 14.39 6.18

^Past Performance may or may not be sustained in the future.# CRISIL Balanced Fund Index $ Inception Date: February 1, 1994 .*Load is not taken into consideration and the Returns are of Growth Option.Investors are advised to refer to Relative Performance table on slide 17 for Non – SIP Returns$$ All dividends declared prior to the splitting of the Scheme into Dividend & Growth Options are assumed to be reinvested in the units of the Schemeat the then prevailing NAV( ex- dividend NAV).Disclaimer: The above investment simulation is for illustrative purpose only and should not be construed as a promise onMinimum returns and safeguard of capital. HDFC Mutual Fund / HDFC Asset Management Company Ltd. is not guaranteeingor promising or forecasting any returns. SIP does not assure a profit or guarantee protection against loss in a declining market.Please refer to the SIP enrolment form or contact the nearest ISC for SIP load structure.

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Dividend History(Since 1999)

Record Date Cum Dividend

NAV per Unit (`)(`)(`)(`)

Dividend ^

Per Unit (`)(`)(`)(`)

November 29,1999 17.730 2.00

April 07, 2000 15.200 1.50

March 09, 2001 12.700 0.90

March 15, 2002 13.900 1.00

July 15, 2003 18.737 2.00

December 26, 2003 23.711 3.00

March 15, 2004 20.247 1.50

^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 falls to the extent of the

payout and statutory levy (if applicable)

March 15, 2004 20.247 1.50

March 18, 2005 25.265 5.00

March 03, 2006 30.543 5.00

February 21, 2007 32.483 5.00

February 21, 2008 33.503 5.00

March 19, 2009 17.393 2.50

March 18, 2010 31.238 3.50

March 17, 2011 31.286 3.50

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Recent Awards won by HDFC Prudence Fund

HDFC Prudence Fund has been ranked a “Seven Star Fund”# and has been awarded Gold Awardfor 'Best Performance' in the category of Open Ended Balanced for one year period ending December31, 2010 (from amongst 28 schemes) at ICRA Mutual Fund Awards 2011.

HDFC Prudence Fund has been ranked a “Seven Star Fund”# and has been awarded Gold Awardfor 'Best Performance' in the category of Open Ended Balanced for three year period endingDecember 31, 2010 (from amongst 27 schemes) at ICRA Mutual Fund Awards 2011.

� “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 providedit'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 slide: 27 on Award /Ranking / Rating methodology

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Awards

CNBC TV18 - CRISIL Mutual Fund Awards 2011

HDFC Prudence Fund won the “Best Performing Mutual Fund of the Year - BalancedFund” Award# for the calendar year 2010 (from amongst 18 schemes) at the CNBC TV18 - CRISILMutual Fund Awards 2011.


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Awards

HDFC Prudence Fund - Growth has been adjudged the runner-up for “Best ModerateAllocation Fund” award # by Morningstar India for its one and three-year performanceending December 31, 2010, (from amongst 22 share classes).


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Fund Rating and Awards

HDFC Prudence Fund – Growth Option was assigned ‘CRISIL Mutual FundRank 1’# in the ‘Open End Balanced Schemes’ Category (out of 17 schemes) forthe 2 year period ending March 31, 2011 by CRISIL.

HDFC Prudence Fund was assigned ‘CRISIL Mutual Fund Rank 1’# in the ‘OpenEnd Consistent Balanced’ Category (out of 14 schemes) for the 5 year periodending March 31, 2011 by CRISIL.

� CRISIL Mutual Fund Rank “1” means that the composite performance of the Scheme is“Very Good performance “and ranks within the Top 10 percentile in the category.


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Fund Rating and Awards

HDFC Prudence Fund has been rated Five Stars by Morningstar in the Morningstar IndiaOpen Ended Moderate Allocation Category (from amongst 74 schemes) for the overall(3/5/10 year- as applicable) period ending April 30, 2011#

� Five Stars indicate that the fund is in the top 10 percent of its category in terms of historical risk –

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� 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 - * * * * * (Five Stars) in Hybrid Equity – Oriented Category

(23 schemes) for period ending April 30, 2011#

� Five – stars indicate that fund is in the top 10 per cent of its category in terms of historical risk –adjusted returns


Fund Suitability

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Why HDFC Prudence Fund?

One of the oldest and best performing* balanced funds in the industry, with anestablished track record of over 16 years

Strong emphasis on managing and controlling portfolio risk

Targets to assume higher risk only when justified by potentially higher returns

Helps investors maintain their asset allocation discipline at all times and not getcarried away by the cycle of fear and greed as a result of market swings

*Past performance may or may not be sustained in the futureThe targets / objectives of the scheme may or may not be achieved.

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HDFC Prudence Fund is suitable for investors:

As a building block for their mutual fund portfolio

Looking for a well diversified portfolio across asset classes

Desiring a mixture of income and capital appreciation

Looking to maintain their asset allocation in a convenient, tax efficient andLooking to maintain their asset allocation in a convenient, tax efficient andtimely manner

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ICRA Ranking Methodology and Disclaimer: For a Mutual Fund (MF) scheme to be eligible for the ICRA Online (ICRON) MF Ranking, it must havefulfilled the following criteria: The MF scheme should have declared a minimum 222 Net Asset Values (NAVs) for one year and 666 NAVs for the threeyear 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 Prudence Fund has been ranked as a Seven Star Fund in the category of ‘Open Ended Balanced’ schemes for its 1 year and 3 YearPerformance till December 31, 2010. The rank is an outcome of an objective and comparative analysis against various parameters, including: riskadjusted return, fund size, company concentration and portfolio turnover. The ranking methodology did not take into account loads imposed by theFund. There were 28 & 27 schemes considered in ‘Open Ended Balanced category for the ranking exercise for the period ending 1 year and 3year respectively. The rank is neither a certificate of statutory compliance nor any guarantee on the future performance of HDFC Mutual Fund.

CNBC TV18 - CRISIL Mutual Fund Awards 2011HDFC Prudence Fund won the CNBC TV18 - CRISIL Mutual Fund Awards 2011 in the Balanced Funds category. In total 18 schemes were eligible forthe award universe. Schemes present in all four quarterly CRISIL Mutual Fund Ranking were considered for the award. The award is based onconsistency of the scheme’s performance in the four quarterly CRISIL Mutual Fund Rankings released during the calendar year 2010. The individual

Award/Ranking/Rating Methodology

consistency of the scheme’s performance in the four quarterly CRISIL Mutual Fund Rankings released during the calendar year 2010. The individualCRISIL Mutual Fund Ranking parameter scores averaged for the four quarters were further multiplied by the parameter weights as per the CRISIL MutualFund Ranking methodology to arrive at the final scores. A detailed methodology of the CRISIL Mutual Fund Ranking is available at www.crisil.com. Pastperformance is no guarantee of future results.

Morningstar India Fund Awards 2011- Disclaimer: Runner-up - Best Moderate Allocation Fund”#: HDFC Prudence Fund – Growth beenadjudged the runner-up for “Best Moderate Allocation Fund”#” award by Morningstar India for its one and three-year performance endingDecember 31, 2010.

The methodology eliminates funds based on size and below-median calendar year ranks. Scores are calculated using a combination of return ranks forone-year and three-year periods, and the risk rank for the three-year period. Loads are not considered while calculating returns. The methodology alsoincludes qualitative checks like the fund’s accessibility to retail investors and adherence to investment mandate, among others. 22 share classes wereconsidered for this award. The award should not be construed as investment advice, an offer, the solicitation of an offer to buy or sell securities byMorningstar. It is neither a certificate of statutory compliance nor a guarantee of future performance.

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CRISIL MUTUAL FUND RANKING METHODOLOGY AND DISCLAIMER

HDFC Prudence Fund – Growth has been assigned “CRISIL Mutual Fund Rank 1’’ in the Open End Balanced Schemes Category for period endingMarch 31, 2011 denoting that the composite performance HDFC Prudence Fund – Growth is “Very Good performance" performance in the the Open EndBalanced Schemes Category , and ranks within the Top 10 percentile of the 17 schemes ranked in this category.

HDFC Prudence Fund has also been assigned “CRISIL Mutual Fund Rank 1’’ in the Open End Consistent Balanced Scheme, Category for period endingMarch 31, 2011 denoting that the composite performance HDFC Prudence Fund is “Very Good performance" performance in the the Open End ConsistentBalanced Scheme, Category and ranks within the Top 10 percentile of the 14 schemes ranked in this category.

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 31 March 2011respectively, Sectoral concentration, Company concentration and Liquidity of the scheme. The methodology does not take into account the entry and exit loadslevied by the scheme. The CRISIL Mutual Fund Rank is no indication of the performance that can be expected from the scheme in future.

Ranking Source: CRISIL FundServices, CRISIL Limited.

Morning 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, thenext 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 bynext 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 byrespective funds. The current fund rating is for the overall / 3 year / 5 year/ 10 year period as of April 30, 2011. HDFC Prudence Fund has been rated 5-Star byMorningstar in the Morningstar India Open Ended Moderate Allocation Category. 74 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 www.morningstar.co.in for detailed information on theRating Methodology.

Value Research Fund Ratings – Ranking MethodologyValue Research Fund Ratings are a composite measure of historical risk-adjusted returns. In the case of equity and hybrid funds this rating is based on theweighted 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 aminimum 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 averageAUM in the past six months will not be eligible for rating.

Five-stars indicate that a fund is in the top 10% of its category in terms of historical risk-adjusted returns. Four stars indicate that a fund is in the next22.5%, middle 35% receive three stars, the next 22.5% are assigned two stars while the bottom 10% receive one star. The number of schemes in each category ismentioned in Hybrid Equity Oriented category are 23. These Fund Ratings are as on April 30, 2011. The Value Research Ratings are published in Monthly MutualFund Performance Report and Mutual Fund Insight. The Ratings are subject to change every month. The Rating is based on primary data provided by respectivefunds, Value Research does not guarantee the accuracy.

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DISCLAIMER: This presentation has been prepared and issued on the basis of internal data, publicly available information and other sources believed tobe reliable. The information contained in this document is for general purposes only and not a complete disclosure of every material fact and terms andconditions and features of HDFC Prudence Fund. The information/ data herein alone is not sufficient and shouldn’t be used for the development orimplementation of an investment strategy. It should not be construed as investment advice to any party. The statements contained herein may includestatements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known andunknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in suchstatements. The recipient alone shall be fully responsible / liable for any decision taken on the basis of this presentation. The content of this presentation isconfidential 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, anydisclosure, 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 documentmay be duplicated in whole or in part in any form and/or redistributed without prior written consent of the HDFC Mutual Fund/ HDFC Asset ManagementCompany 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’sobjectives will be achieved and the NAV of the Scheme may go up or down depending upon the factors and forces affecting the securitiesmarket. Past performance of the Sponsors and their affiliates / AMC / Mutual Fund and its Scheme(s) do not indicate the future performance of theScheme 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 paidScheme 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 paidregularly. Investors in the Scheme 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 willinter-alia be exposed to Price / Interest Rate Risk and Credit Risk. Investors should be aware that the fiscal rules/ tax laws may change and there can be noguarantee that the current tax position may continue indefinitely. In view of individual nature of tax consequences, each investor is advised to consult his/her own professional tax advisor. HDFC Prudence Fund, an open-ended balanced scheme, is only the name of the Scheme and does not in anymanner indicate either the quality of the Scheme, its future prospects and returns. Please read the Scheme Information Document andStatement of Additional Information before investing. Investment Objective : To provide periodic returns and capital appreciation over a longperiod of time from a judicious mix of equity and debt instruments with an aim to prevent / minimize any capital erosion. Asset Allocation Pattern:Equity and Equity linked instruments (40%-75%); Debt and Money Market Instruments (25%-60%) Investment in securitised debt, if undertaken, not toexceed 10% of the net assets of the Scheme. Load Structure: Entry Load: Not Applicable. Exit Load: In respect of each purchase / switch-in of units,an exit load of 1.00% is payable if units are redeemed / switched – out within 1 year from the date of allotment. No exit load is payable if units areredeemed / switched – out after 1 year from the date of allotment. Statutory Details: HDFC Mutual Fund has been set up as a trust sponsored byHousing 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 CompanyLimited as the Investment Manager.

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Thank You

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hdfc mutual fund prudence fund april 2011

Economy & Finance