DBS Chola Contra Fund (G) Underperforms - Dec 19, 2008

Background: DBS Cholamandalam AMC Limited is an assets management company, which offers mutual funds to retail and institutional investors. The company was set up in 1996, as a joint ventura with Cazenove Investment management of the UK. In 2001, the Muragappa Group acquired Cazenove's stake in the company; today CAMC is a subsidiary of Cholamandalam Investment & Finance Company Limited (CIFCL). CAMC is known for its prudent philosophy in fund management. DBS Chola Triple Ace, India's first AAA-rated mutual fund scheme, has not only retained its rating since inception, but also has a consistent track record of dividend payments. Based in Mumbai, the fund house manages Rs 1121.47 crore of assets as on November 2008.

DBS Chola Contra Fund (G) an open-ended equity scheme launched in January 2006. The objective of the scheme is to generate capital appreciation by investing in equity and equity related instruments by using a contrarian strategy. Contrarian investing refers to buying into fundamentally sound scripts which have underperformed / not performed to their full potential in their recent past. The minimum investment amount is Rs.5000 and in multiples of Rs.1 thereafter. The unit NAV of the scheme was Rs 5.88 as on 18 December 2008.

Portfolio: The total net assets of the scheme decreased by Rs 2.79 crore to Rs 6.48 crore in November 2008.

DBS Chola Contra Fund (G) took fresh exposure to four new stocks in November 2008. The scheme has purchased 24,914 units (1.81%) of Idea Cellular, 9993 units (1.25%) United Phosphorus, 1252 units (1.14%) Financial Technologies (India) and 353 units (0.66%) Divis Laboratories among others in November 2008.

The scheme completely exited from Jaiprakash Hydro-Power by selling 1.50 lakh units (4.46%), Visaka Industries by selling 50748 units (2.27%), Great Offshore by selling 5998 units (2.14%) and Infosys Technologies by selling 1005 units (1.50%) among others in November 2008.

Sector-wise, the scheme took fresh exposures to Pesticides / Agrochemicals – Indian at 1.25% and Computers - Software - Medium / Small at 1.14% among others in November 2008.

Sector-wise, the scheme exited completely from Cement Products at 2.27%, Shipping at 2.14%, Sugar at 1.71% and Computers - Software – Large at 1.50% among others in November 2008.

The scheme had highest exposure to Reliance Industries 2506 lakh units (4.38% of portfolio), Reliance Communication 10,005 units (3.02%), Housing Development Finance Corporation 1254 units (2.83%) and ITC 10074 units (2.70%) among others in November 2008.

It reduced its exposure to ICICI Bank by selling 6981 units to 3503 units (by 0.2.62%), Reliance Communication by selling 4951 units to 10005 units (by 0.54%), and Reliance Industries by selling 805 units to 2506 units (by 0.52%) among others in November 2008.

Sector-wise, the scheme had highest exposure to Construction at 7.27% (from 7.61% in October 2008), Power Generation and Supply at 6.74% (8.90%), Refineries at 5.51% (5.83%) and Telecommunications – Service Provider at 4.83% (3.56%) among others in November 2008.

Sector wise, the scheme had reduced exposure to Banks - Private Sector to 3.71% (by 2.81%), Power Generation and Supply to 6.74% (by 2.16%) and Banks - Public Sector to 1.68% (by 0.90%) among others in November 2008.

Performance: The scheme underperformed the category average over all time periods. It has underperformed the Sensex over all time periods.

Over three-month period ended as on 18 December 2008, the scheme posted negative return of 31.33% underperforming the category average that posted negative returns of 25.53%. It underperformed the Sensex that posted negative returns of 26.75% during the same period.

Since inception, the scheme posted negative returns of 42.80% underperforming the category average of 75.39%.