MUTUAL FUNDS 21 Sep 2016

RETAIL RESEARCH
Equity Linked Savings Schemes (ELSS)
Schemes from ELSS Category:
Equity portfolio M-cap Rolling
Trailing Returns (%) Annualised
Latest Exp Break-up (%) Returns (%)
Scheme's Standard
Scheme Name ISIN Corpus Benchmark Ratio 3 5 7 3 5
Age (Yrs) Large Mid Small Deviation
(Rs Crs) (%) Year Year Year Year Year
Cap(%) Cap(%) Cap(%) (%)
CAGR CAGR CAGR CAGR CAGR
AXIS Long Term Equity Fund (G) INF846K01131 7 10,290 S&P BSE 200 2.49 83 16 0 31.12 21.93 - 22.81 20.88 14.71
DSP BR Tax Saver Fund (G) INF740K01185 10 1,416 Nifty 500 2.63 75 25 0 28.49 20.03 15.67 14.70 12.61 16.28
Franklin India Taxshield - (G) INF090I01775 17 2,400 Nifty 500 2.45 89 11 0 26.74 18.37 16.53 15.81 15.30 13.97
Benchmark:
Average of ELSS Category 2.66 77 22 1 25.04 16.47 12.94 12.79 11.80 15.93
Nifty 50 - - - - 14.54 11.53 8.50 9.40 10.48 -
S&P BSE 200 - - - - 17.75 12.44 9.13 9.65 10.36 -
Nifty 500 - - - - 19.00 12.76 9.29 9.52 9.95 -
Note: NAV values are as of Sep 16, 2016. Rolling Returns are calculated from the 7 years NAV history. Annualized Standard Deviation is calculated from last 3 years data from monthly returns.

Key Facts:

Equity Linked Saving Schemes (ELSS) are mutual fund schemes providing tax benefit to the investors for investments up to overall limit of Rs. 1,50,000 under
Section 80 C of the Income tax Act. Investors get a deduction of the amount invested from their taxable income. The tax payer straightaway saves to the extent
of tax applicable on the invested amount. Depending on the applicable tax rate, the returns earned can be calculated on the net-of-tax-benefit investment and
hence ELSS is a superior instrument (though with equity risks).

ELSS are equity linked products which allow investors to participate in equity markets and provide higher return potential (on the flip side, risk is also higher
but the tax benefit acts as a buffer).

The deduction limit under section 80C of the Income-Tax Act, 1961 is at Rs 1,50,000 (Rs 1,00,000 earlier). The investors can enjoy the tax exemption upto Rs.
1,50,000 in the taxable income by investing in the ELSS schemes.

Equity Linked Savings Schemes (ELSS) offer multiple advantages of providing equity returns along with tax benefit on investment in a short lock in period of 3
years. The lock-in period applicable to ELSS is 3 years, while it is 6 years in the case of National Savings Certificates and 15 years in the case of PPF. Opting for
the dividend option in the ELSS allows investors to realize some gains even during the lock-in period.

Since the investments in equity over long-term delivers better returns, the lock-in period of 3 years allows the fund managers of ELSS to build a portfolio for
the long term without worrying about early redemptions. This helps the schemes to outperform frontline indices with a considerable margin.

Currently, there are 43 open ended ELSS schemes offered by the domestic MFs.

RETAIL RESEARCH Page |1

 RETAIL RESEARCH

How are ELSS better than other tax saving options?

Among the many tax saving options, investment in ELSS is considered as one of the better options as they provide better returns along with tax benefit and
with a short lock in period of 3 years. Equity Linked Saving Schemes (ELSS) are mutual fund schemes providing tax benefit to the investors for investments up to
overall limit of Rs. 1,50,000 under Section 80 C of the Income tax Act.

Some of other options that one can invest in to avail section 80C benefits (within the overall limit of Rs. 1,50,000) are Employees Provident Fund (EPF), Public
Provident Fund (PPF), Five-year fixed deposits with Banks, National Savings Certificate (NSC), Life insurance premiums, Pension policy premium, Senior Citizens
Savings Scheme etc.

Please note that, recently, the finance ministry has decided to reset the rates of the centrally sponsored savings schemes such as PPF, NSE, SCSS, Bank
deposits, etc on periodical basis to align with the interest rates in the domestic economy. This will further reduce the yields that are generated from these
saving schemes. Here, ELSS scores over these saving schemes on generating higher returns.

ELSS are equity-diversified schemes which invest primarily in equity and equity related instruments across market capitalization. These have a lock in period of
3 years and hence eligible for tax benefit. Investors cannot redeem the units that have been invested in the ELSS schemes before end of 3 years.

The top performing tax planning schemes have managed to deliver good returns over the long run compared to other tax saving options available for
investments.

Comparison of some of investment products qualifying under Section 80C:

Particulars ELSS PPF NSE 5 Yr FD

Return Market linked return ( 10% - 15% p.a)*** 8.10% p.a^ 8.10%^ Ranging 7.25% to 9.5%^

Lock in 3 Yrs 15 Yrs 5 Yrs 5 Yrs

Risk Market linked. Returns are not guaranteed. Guaranteed Return Guaranteed Return Guaranteed Return

Maximum Investment Rs. 1,50,000 Rs. 1,50,000 Rs. 1,50,000 Rs. 1,50,000

Dividends are tax free. Only STT chargeable Interest earned is tax free. No tax Interest earned is taxable. No tax Interest earned is taxable. No tax
Tax on Interest / Exit
on exit. No Capital Gain Tax. on Capital withdrawal. on Capital withdrawal. on Capital withdrawal.
*** - approx. ^- will be reset periodically.

RETAIL RESEARCH Page |2

 RETAIL RESEARCH

Benefits of investing in ELSS:

By investing in ELSS schemes, an investor can get benefits like tax saving, decent returns and option to invest for a longer period.

Dividends that are declared by ELSS are tax-free in the hands of investors.
Freedom to Fund Manager to invest without redemption pressure: As the amount invested in ELSS is meant to be locked in for 3 years, the fund manager of
the scheme has the leeway to take calls without having any redemption pressure. He may take calls on companies where he believes that there is potential for
value to be unlocked in the medium to longer term. This helps in outperforming the frontline indices by a margin.

Investing through SIP in ELSS:

Systematic investment plan (SIP) is a disciplined way of investing in mutual funds which enables the investors making regular and equal payments at regular
intervals for periods to accumulate wealth over long run. An SIP is a planned approach towards investments and helps you inculcate the habit of saving and
building wealth for the future.

Investing through SIP route in ELSS is an optimal way to accumulate corpus and can be better option for all tax paying investors who have scope to invest u/s
80C of the Income tax Act. SIP option helps start tax planning from the beginning of the financial year. Investments through SIP mode have grown firmly and
given significantly higher returns over the longer term. Investors can prefer monthly or quarterly frequency to invest in ELSS schemes. SIP works well across
market cycles and helps to average out the cost of investment that are done in different periods.

Features of SIP:

Simple and disciplined approach towards investment.

Investment possible with small sum of money invested regularly to accumulate wealth.

Based on concept of Rupee Cost Averaging.

Flexibility in terms of amount or quantity based SIP.

Flexible intervals like Daily/ Weekly/ Fortnightly/ Monthly/ Yearly basis

Benefits of investing through SIP:

Reduces Risk because of Rupee Cost Averaging.

SIP can be started with very small amount of money.

RETAIL RESEARCH Page |3

 RETAIL RESEARCH

Timing the market is not necessary.

Long term financial goal can be aligned with SIP.

Disciplined approach towards Investment helps in controlling the emotions

Benefits of investing in ELSS through SIP:

Investors can start and continue investing with small amount of minimum of Rs. 500 through SIP.

Better option for investors for all tax paying investors who have scope to invest u/s 80C of the Income tax Act.

Helps start tax planning from the beginning of the financial year.

Investments through SIP mode have grown firmly and given significantly higher returns over the longer term.

Investors can prefer monthly or quarterly frequency to invest.

SIP works well across market cycles and helps to average out the cost of investment that are done in different periods.

But investors have to keep in mind that every SIP installment is meant to be locked in for 3 years.

RETAIL RESEARCH Page |4

 RETAIL RESEARCH

AXIS Long Term Equity Fund: Basic & Investment Details

RETAIL RESEARCH Page |5

 RETAIL RESEARCH

DSP BR Tax Saver Fund: Basic & Investment Details

RETAIL RESEARCH Page |6

 RETAIL RESEARCH

Franklin India Taxshield: Basic & Investment Details

RETAIL RESEARCH Page |7

 RETAIL RESEARCH

Analyst: DhuraivelGunasekaran (dhuraivel.gunasekaran@hdfcsec.com) Source: NAVIndia.com & ACEMF

RETAIL RESEARCH Tel: (022) 3075 3400 Fax: (022) 2496 5066 Corporate Office

HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Website: www.hdfcsec.com Email:
hdfcsecretailresearch@hdfcsec.com.

Disclaimer: Mutual Funds investments are subject to risk. Past performance is no guarantee for future performance.This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This document is not to be reported or
copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as
such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended for non-Institutional
Clients.

This report has been prepared by the Retail Research team of HDFC Securities Ltd. The views, opinions, estimates, ratings, target price, entry prices and/or other parameters mentioned in this document may or may not match or may be contrary with those of the other Research teams
(Institutional, PCG) of HDFC Securities Ltd. HDFC Securities Ltd. is a SEBI Registered Research Analyst having registration no. INH000002475.

RETAIL RESEARCH Page |8