September 2011

Indepth
The Investment Newsletter

S t r i c t l y f o r i n t e r n a l c i r c u l a t i o n o n l y.

Indepth

September 2011

Politicians don't know how to rock and roll. That song by Remo was taken to its extreme in the US. After taking the US to the brink of a potential default, the Republican dominated US Congress still managed to do lasting damage to the country, and the global financial system. S&P cut the sovereign debt rating for U.S.A. by to AA+ and kept its outlook at negative. Congress agreed to raise the nation's debt ceiling but put in place a plan to enforce $2.4 Tln in spending reductions over the next 10 years, less than the $4 Tln proposed by the President, and which S&P had said it preferred. S&P also changed its assumption that the tax cuts enacted under George Bush would expire by the end of 2012, as Republicans in Congress continue to resist any measure that would raise revenues. Shockingly, these tax cuts affected the richest 1% of the county's population which controls 24% of its wealth. May be the rock star can pen another song It happens only in America. On the other side of the Atlantic, policy makers are finding it difficult to get out of the mess they have got themselves into. The crisis which started in Greece, and engulfed much of peripheral Europe, is now threatening to creep to the core as well. Despite several bail out attempts, credit spreads on Greek bonds are nearing all time highs and liquidity is drying up in the interbank market, eerily reminiscent of the Lehman crisis. As risk aversion runs high, its effects are being felt in financial markets across the globe with the Nifty down 8.5% during the month. Central banks are trying to help with the Fed declaring its intention to keep interest rates low till 2013 and also hinting at another round of quantitative easing. After much reticence, the ECB, which had ceased buying the bonds of distressed euro- area governments a few months back, has decided to re-enter the market. The ECB will also lend euro-area banks as much money as they need for six months and extend its existing liquidity measures through the end of the year. The political shenanigans in the US and Europe have made a fairly huge dent in both consumer and business confidence across the globe. These have led to a negative feedback loop into the real economy. Throughout the month, PMI (a leading indicator of economic growth), data from one country after another come in disappointingly low and manufacturing worldwide is on the verge of shrinking. That is true even for China, one which many have hopes of being the new global growth engine. To India, however, the problem continues to be that of inflation. While growth has clearly slowed, inflation continues to rule at levels much higher than what the country or its policy makers would like to stay. While global events would lead one to expect RBI to turn less hawkish, we expect RBI to hike interest rates by 25 bps in the policy review in September and maintain its hawkish stance. Not only is extant inflation in double digits way too high for sustainable growth, inflationary

pressures from still high commodity prices also continues. If the ultra loose monetary policies followed by the US and Europe lead an asset price inflation in the commodity markets as is widely expected, RBI might have to curtail demand even further to control inflation. However on the flip side, even after most analysts have brought down FY 11 and FY 12 GDP growth estimates to between 7 and 7.5%, India would be amongst the fastest growth economies of the world, growing at twice the global average. Cutting the noise, the policy prescription for India remains the same. Increase the proportion of investment in the GDP to build the foundations of an economy that can grow at 9% in a sustainable noninflationary manner. Two years of growth at 7-7.5% are just the opportunity to effect the change. With major parts of the global economy going through major structural changes, that will take a long time to fructify, India would continue to be a favorable destination for growth seeking investments, and we are lucky to be Indians in this age and not in Europe or US or Japan.

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Indepth

September 2011

Fund Managers
Fixed Income and Hybrid Funds
Mr. Imran Sayed
Qualification Experience : : Awarded CFA charter by CFA Institute 2006 FRM - 2005 10 years

Equity
Mr. Jyoti Prakash Qualification Experience : : CFA-1993 PGDRM (IRMA) 25 years

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September 2011

Enhanced Equity Fund

Fund Manager Investment Objective : Mr. Jyoti Prakash : This fund will aim to invest in a well-diversified portfolio of equity instruments, and generate attractive returns in the long term.

Asset Profile
Equity Shares CD Cash / Cash Equivalents
86.54% 6.01% 7.45%

Top 10 Holdings as a Percentage of AUM

ITC Ltd. Reliance Industries Ltd. ICICI Bank HDFC Bank Ltd. Housing Development Finance Corpn Ltd. Larsen & Toubro Ltd. Bharati Airtel Ltd. Infosys Ltd. Tata Consultancy Services Ltd. Hindustan Unilever Ltd. 9.02 6.25 5.52 5.00 4.75 4.21 3.63 3.44 3.29 3.25

0.00

2.00

4.00

6.00

8.00

10.00

Industry Distribution as a Percentage of AUM

Financials Consumer Staples Energy Industrials IT Health Care Consumer Discretionary Materials Utilities Telecom Others 22.13 13.72 10.01 7.68 7.41 6.37 5.57 5.04 4.44 4.17 13.46
0 2 4 6 8 10 12 14 16 18 20 22 24

Returns
6 months (abs) Enhanced Equity Fund Nifty -3.02% -6.23% 1 Year (abs) -5.71% -7.43% Since inception (abs) +21.35% +12.80% Figures as of 30th August 2011

"Strictly for internal circulation only"

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Indepth

September 2011

Balanced Fund
Fund Manager Investment Objective : Mr. Imran Sayed : This fund will aim to maintain a balance between equity and debt exposure so as to generate stable and attractive long term returns.

Asset Profile
Asset Mix
Govt Bonds

Debt Asset Profile

16.21%

Debt Equity

NCD Bank Deposits

38.02%

10.24% 30.97%

21.48%
6.33%

Cash / Cash Total

45.77%

Cash & Cash Equivalents CP & CDs

33.48% 30.97%

Top 10 Equity Holdings as a Percentage of Assets Under Management (AUM)

Reliance Industries Ltd. Infosys Ltd. ITC Ltd. ICICI Bank Housing Development Finance Corpn Ltd. Larsen & Toubro Ltd. HDFC Bank Ltd. Tata Consultancy Services Ltd. State Bank of India Ltd. Bharati Airtel Ltd. 4.03 3.45 3.26 3.07 2.68 2.63 2.58 1.61 1.55 1.49
0.00 1.00 2.00 3.00 4.00 5.00 6.00

Industry Distribution as a Percentage of Assets Under Management (AUM)

Financials IT Energy Industrials Consumer Staples Materials Consumer Discretionary Utilities Health Care Telecom 12.37 5.89 5.69 4.72 4.26 4.19 2.72 2.49 1.79 1.65
0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00

Returns
6 months (abs) Balanced Fund -1.36% 1 Year (abs) -1.15% Since inception (abs) +21.75% Figures as of 30th August 2011

"Strictly for internal circulation only"

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Indepth

September 2011

Debt Fund
Fund Manager Investment Objective : Mr. Imran Sayed : This fund will aim to generate attractive returns by investing in a diversified portfolio of government debt, corporate debt, money market instruments and other fixed income securities of varying maturities.

Asset Profile

Govt. Bonds NCDs Bank Deposits CP & CDs Cash & Cash Equivalents
29.89%

4.77% 9.71%

25.57%

30.06%

Maturity Period
4.92%

0 - 5 years 5 - 10 years More than 10 years

17.55%

77.52%

Rating Profile

AAA Deposit with Bank Sovereign CP & CDs Cash & Cash Equivalents

4.77% 29.89% 25.57% 30.06% 9.71%

Returns
6 months (ann) Debt Fund +8.70% 1 Year (ann) +7.31% Since inception (ann) +13.35% Figures as of 30th August 2011

"Strictly for internal circulation only"

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Indepth

September 2011

Secure Fund
Fund Manager Investment Objective : Mr. Imran Sayed : This fund aims to invest in a diversified portfolio of money market instruments and other fixed income securities of short to medium term maturities. The main objective will be to generate reasonable returns with very low valuation risks.

Asset Profile
Bank Deposits CP & CDs Cash and Cash Equivalent
33% 13% 54%

Maturity Period

More than 6 Months

100%

Rating Profile
Deposits with Bank

CP & CDs
Cash & Cash Equivalent

13% 33% 54%

Returns
6 months (ann) Secure Fund +8.90% 1 Year (ann) +7.62% Since inception (ann) +8.10% Figures as of 30th August 2011

"Strictly for internal circulation only"

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Indepth

September 2011

Accelerator Fund
Fund Manager Investment Objective : Mr. Jyoti Prakash : This fund will aim at investing in equities of various sectors to diversify the portfolio and to generate attractive returns in long-term. This fund will also have the flexibility to invest in fixed interest assets and money market instruments upto 20%

Asset Profile
Equity Shares
CD
6.04% 5.92%

Cash / Cash Equivalents

88.04%

Top 10 Holdings as a Percentage of AUM

ITC Ltd. ICICI Bank Reliance Industries Ltd. HDFC Bank Ltd. Housing Development Finance Corpn Ltd. Larsen & Toubro Ltd. Bharati Airtel Ltd. Tata Consultancy Services Ltd. Mahindra & Mahindra Ltd. Infosys Ltd. 9.18 4.89 4.73 4.62 4.32 4.20 3.12 3.12 3.07 2.97
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

Industry Distribution as a Percentage of AUM

Financials Consumer Staples Industrials Energy Health Care IT Materials Consumer Discretionary Utilities Telecom Others 21.32 13.78 8.84 8.42 7.17 6.68 6.41 6.27 4.80 4.35 11.96
0 2 4 6 8 10 12 14 16 18 20 22

Returns
6 months (ann) Accelerator Fund BSE100 "Strictly for internal circulation only" -3.26% -5.74% Since inception (ann) -13.07% -15.61% Figures as of 30th August 2011

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September 2011

Stable Fund
Fund Manager Investment Objective : Mr. Imran Sayed : This fund will aim to maintain a balance between equity and debt exposure so that the client has a stable and attractive long term return. The fund will also shift allocation between debt and equity to gain from asset price movements over medium to long term.

Asset Profile
Asset Mix
Debt Equity
45.57%
16.35%

Debt Asset Profile

Govt. Bonds

38.08%

Cash / Cash Equivalents

Bank Deposits CD

22.23%

33.66%

13.85%

Cash / Cash Equivalents

30.26%

Top 10 Equity Holdings as a Percentage of Assets Under Management (AUM)

Reliance Industries Ltd. Infosys Ltd. ITC Ltd. ICICI Bank Housing Development Finance Corpn Ltd. Larsen & Toubro Ltd. HDFC Bank Ltd. Tata Consultancy Services Ltd. State Bank of India Ltd. Bharati Airtel Ltd. 4.01 3.43 3.24 3.06 2.62 2.62 2.56 1.61 1.55 1.48
0.00 1.00 2.00 3.00 4.00 5.00

Industry Distribution as a Percentage of Assets Under Management (AUM)

Financials IT Energy Industrials Consumer Staples Materials Consumer Discretionary Utilities Health Care Telecom 12.24 5.86 5.67 4.70 4.24 4.22 2.71 2.50 1.79 1.64
0 5 10 15

Returns
6 months (ann) Stable Fund "Strictly for internal circulation only" -1.25% Since inception (ann) -6.93% Figures as of 30th August 2011

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Indepth

September 2011

Pension Enhanced Equity Fund

Fund Manager Investment Objective : Mr. Jyoti Prakash : This fund will aim at investing in equities of various sectors to diversify the portfolio and generate attractive returns in the long term. The fund will also have the flexibility to invest in money market instruments and other short term Fixed Income Securities up to 20%.

Asset Profile
Equity Shares CD Cash / Cash Equivalents
87.18% 5.96% 6.85%

Top 10 Equity Holdings as a Percentage of (AUM)

ITC Ltd. Reliance Industries Ltd. ICICI Bank HDFC Bank Ltd. Housing Development Finance Corpn Ltd. Larsen & Toubro Ltd. Bharati Airtel Ltd. Infosys Ltd. Tata Consultancy Services Ltd. Hindustan Unilever Ltd. 9.00 6.24 5.51 4.99 4.74 4.20 3.62 3.44 3.28 3.24
0.00 2.00 4.00 6.00 8.00 10.00 12.00

Industry Distribution as a Percentage of AUM

Financials Consumer Staples Energy Industrials IT Health Care Consumer Discretionary Materials Utilities Telecom Others 22.08 13.69 9.99 7.67 7.39 6.21 6.02 5.28 4.69 4.16 12.82
0 1.5 3 4.5 6 7.5 9 10.5 12 13.5 15 16.5 18 19.5 21 22.5

Returns
6 months (abs) Pension Enhanced Equity Fund Nifty "Strictly for internal circulation only" -2.96% -6.23% 1 Year (abs) -5.80% -7.43% Since inception (abs) +92.96% +75.71% Figures as of 30th August 2011

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Indepth

September 2011

Pension Index Fund

Fund Manager Investment Objective : Mr. Jyoti Prakash : This fund aims at investing in equities but does not take stock-specific risks. Replicating the market performance at low cost. The fund is indexed to Nifty 50.

Asset Profile
Equity Shares Cash / Cash Equivalents
0.92% 99.08%

Top 10 Holdings as a Percentage of AUM

Reliance Industries Ltd. Infosys Ltd. ITC Ltd. ICICI Bank Housing Development Finance Corpn Ltd. Larsen & Toubro Ltd. HDFC Bank Ltd. Tata Consultancy Services Ltd. State Bank of India Ltd. Bharati Airtel Ltd. 8.73 7.47 7.06 6.65 5.81 5.71 5.59 3.49 3.36 3.21
0.00 2.00 4.00 6.00 8.00 10.00 12.00

Industry Distribution as a Percentage of AUM

Financials IT Energy Industrials Consumer Staples Materials Consumer Discretionary Utilities Health Care Telecom Others 26.78 12.75 12.31 10.22 9.22 9.09 5.88 5.40 3.87 3.56 0.92
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

Returns
6 months (abs) Pension Index Equity Fund Nifty "Strictly for internal circulation only" -5.78% -6.23% 1 Year (abs) -7.45% -7.43% Since inception (abs) +82.09% +84.28% Figures as of 30th August 2011

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Indepth

September 2011

Pension Balanced Fund

Fund Manager Investment Objective : Mr. Imran Sayed : This fund will aim to protect the capital value of the fund and provide attractive returns to the policyholder in the long run.

Asset Profile
Asset Mix
Debt Equity
14.52% 46.65%
Govt Bonds NCD

Debt Asset Profile

10% 12% 28% 7%

Cash / Cash Equivalents

38.84%

Bank Deposits Cash & Cash Equivalent CD

43%

Top 10 Holdings as a Percentage of AUM

Reliance Industries Ltd. Infosys Ltd. ITC Ltd. ICICI Bank Housing Development Finance Corpn Ltd. Larsen & Toubro Ltd. HDFC Bank Ltd. Tata Consultancy Services Ltd. State Bank of India Ltd. Bharati Airtel Ltd. 4.11 3.52 3.32 3.13 2.68 2.68 2.62 1.65 1.59 1.52
0.00 1.00 2.00 3.00 4.00 5.00

Industry Distribution as a Percentage of AUM

Financials IT Energy Industrials Consumer Staples Materials Consumer Discretionary Utilities Health Care Telecom 12.54 6.00 5.81 4.81 4.34 4.32 2.76 2.56 1.83 1.68
0 2 4 6 8 10 12 14

Returns
6 months (abs) Pension Balanced Fund "Strictly for internal circulation only" -1.27% 1 Year (abs) -0.79% Since inception (abs) +30.01% Figures as of 30th August 2011

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September 2011

Pension Debt Fund

Fund Manager Investment Objective : Mr. Imran Sayed : This fund aims at generating attractive investment income by taking interest rate views and investing in a diversified portfolio of government debt, corporate debt and money market instruments of varying maturities.

Asset Profile
11% 31% 27%

Govt. Bonds NCDs Bank Deposits CP & CDs Cash & Cash Equivalents
16%

15%

Maturity Period

0 - 5 years 5 - 10 years 10 & Above

20%

7% 73%

Rating Profile

AAA Sovereign Deposit with Bank CP & CDs Cash & Cash Equivalents

14.80% 15.99% 26.67% 31.02% 11.51%

Returns
6 months (ann) Pension Debt Fund "Strictly for internal circulation only" +7.71% 1 Year (ann) +6.33% Since inception (ann) +7.19% Figures as of 30th August 2011

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September 2011

Pension Secure Fund

Fund Manager Investment Objective : Imran Sayed : This fund aims at investing in a diversified portfolio of debt and money market instruments of short to medium term maturities. The main objective will be to generate investment income with very low volatility risk since asset durations would be reasonably small.

Asset Profile
15% 33%

Bank Deposits CP & CDs Cash / Cash Equivalent

52%

Maturity Period

More than 6 Months

100%

Rating Profile

Deposits with Bank CP & CDs Cash/Cash Equivalent

15% 33% 52%

Returns
6 months (ann) Pension Secure Fund "Strictly for internal circulation only" +8.94% 1 Year (ann) +7.53% Since inception (ann) +7.58% Figures as of 30th August 2011

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September 2011

NAVPF Fund
Fund Manager Investment Objective : Mr. Imran Sayed : This fund aims at restricting the fall in NAV at any point of time below 80% of the highest NAV recorded from the date of inception of this fund.

Asset Profile
Asset Mix
Debt Equity
15.68%

Debt Asset Profile

Bank Deposits
17.85%
4.57%

35.92%

T Bills

4.69%

Cash / Cash Equivalents

48.40%

CD Cash / Cash Equivalents

72.90%

Top 10 Equity Holdings as a Percentage of Assets Under Management (AUM)

Reliance Industries Ltd. Infosys Ltd. ITC Ltd. ICICI Bank Housing Development Finance Corpn Ltd. Larsen & Toubro Ltd. HDFC Bank Ltd. Tata Consultancy Services Ltd. State Bank of India Ltd. Bharati Airtel Ltd. 3.16 2.70 2.56 2.41 2.10 2.07 2.03 1.27 1.22 1.17
0.00 1.00 2.00 3.00 4.00 5.00 6.00

Industry Distribution as a Percentage of Assets Under Management (AUM)

Financials IT Energy Industrials Consumer Staples Materials Consumer Discretionary Utilities Health Care Telecom 9.71 4.62 4.46 3.70 3.34 3.29 2.14 1.96 1.41 1.29
0 5 10 15

Current NAV as on 30th August, 2011 = Rs. 10.55 per unit. 80% of the highest NAV since inception (9th September, 2009) = 9.59 per unit
Returns
6 months (abs) NAVPF Fund "Strictly for internal circulation only" -2.29% 1 Year (ann) -0.94% Since inception (abs) +5.55% Figures as of 30th August 2011

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Indepth

September 2011

AEGON, an international life insurance, pension and investment company, Religare, a global financial services group and Bennett, Coleman & Company, Indias largest media house, have come together to launch AEGON Religare Life Insurance Company Limited (ARLI). ARLI launched its pan-India operations in July, 2008 following a multi-channel distribution strategy with a vision to help people plan their life better. In an industry first, we offer policy servicing on the phone via Interactive Voice Response System (IVR).

East, Europe and the Americas. The group offers a wide array of products and services ranging from insurance, asset management, broking and lending solutions to investment banking and wealth management. With over 10,000 employees across multiple geographies, Religare serves over a million clients, including corporates and institutions, high net worth families and individuals, and retail investors. REL holds 44% equity in our Company. www.religare.in

About AEGON
As an international life insurance, pension and investment company, AEGON has businesses in over twenty markets in the Americas, Europe and Asia. With headquarters in The Hague, The Netherlands, AEGON companies employ approximately 28,000 people and serve over 40 million customers across the globe. AEGON has more than 160 years of experience with its roots going back to 1844 and holds 26% equity in our Company . www.aegon.com

About Bennett, Coleman & Company Limited

Bennett, Coleman & Company Limited (BCCL), part of the mammoth Times Group, is Indias largest media house. It reaches out to 2,468 cities and towns all over India. BCCL owns some of the prominent entertainment brands such as Times of India, Economic Times, Times Now, Radio Mirchi, Zoom Femina and Indiatimes.com. BCCL holds 30% equity in our Company.

About Religare
Religare Enterprises Limited (REL) is a global financial services group with a presence across Asia, Africa, Middle

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September 2011

Disclaimers
This document is issued by AEGON Religare Life Insurance Company Limited. While reasonable care has been taken in preparing this document, no responsibility or liability is accepted for errors of fact or for any opinion expressed herein. This document is for information purposes only. It does not constitute any offer, recommendation or solicitation to any person to enter into any transaction or adopt any investment strategy, nor does it constitute any prediction of likely future movements in NAVs. Past performance is not necessarily indicative of future performance. We have reviewed the report, and insofar as it includes current or historical information, it is believed to be reliable though its accuracy or completeness cannot be guaranteed. Neither AEGON Religare Life Insurance Company Limited, nor any person connected with it, accepts any liability arising from the use of this document. You are advised to make your own independent judgment with respect to any matter contained herein.

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