MULTIPLE -STRATEGY TREND RATED

AUTOMATIC TRADING SYSTEM

Portfolio Management Services (PMS)

Performance Update

28 February 2011

Vivek Mavani – Vice President and Senior Portfolio Manager

BRICS Growth Synopsis

BRICS Growth is a Long only Diversified Equity Product aimed at generating Absolute Returns

The Objective is :

To generate Steady & Consistent returns over medium to long term

Maintain Low Volatility

Margin of Safety

The Focus is therefore on Stock Picking with a Buy and Hold philosophy

Invest in high quality and high growth companies at reasonable valuations and hold them

over a period of time. (Not trade in & out frequently)

Our conservative approach to managing investments, (especially during periods of volatility) is

reflected in our superior performance.

Portfolio Update and Outlook

The corrective phase of November-December 2010 continued into January and February 2011. If the fall

in January was ferocious, February was exceptionally volatile. While Sensex & Nifty lost ~13% during

January-February 2011, individual stocks lost anywhere between 20-50%

Excess global liquidity drove the markets in 2009 and 2010 that came into the Indian markets (via the

FII’s), saw sharp withdrawals. FII’s were significant sellers across the board. On the other hand, the buying

interest on the domestic investors side (both Institutional and non-institutional) was very limited, thus

driving a sharp correction

Although the sharp erosion in stock prices makes it look like a bear market, the fall so far is a correction

and not the beginning of a bear market, not as yet

The accompanying table shows the correction of various indices YTD 2011, as well as their correction from

the peak levels achieved in November 2010

Limiting the downside in the portfolio in such a scenario is always a huge challenge. We have managed to

limit the downside to a very large extent

Index Fall from Peak Fall YTD 2011 Index Fall from Peak Fall YTD 2011

Nifty -15.51% -13.06% Sensex -15.15% -13.31%

Bank Nifty -21.35% -11.50% BSE Auto -20.77% -19.37%

S&P 500 -18.30% -14.04% BSE Capital Goods -25.76% -19.56%

CNX Mid Cap -24.66% -16.79% BSE FMCG -9.51% -6.83%

CNX IT -11.66% -11.01% BSE Metals -14.54% -12.77%

CNX Realty -50.54% -30.81% BSE Oil & Gas -15.41% -10.77%

Portfolio Update and Outlook (Cont’d)

Dilemma during the corrective phase in the markets:

Sell the portfolio and stay liquid and attempt to re-enter at lower levels

Stay put holding the portfolio and see a temporary erosion in value

We did both selectively

During the month:

Starting the month with ~30% cash levels, we selectively started deploying the funds in February

2011, on declines. The significant cash balances helped us limit the large downsides as well as

helped us to bottom fishing at lower levels

We continue to stay put in stocks/sectors where we continue to have a high degree of conviction,

namely Technology sector (Infosys & TCS), Auto (Bajaj Auto) and Capital Goods Sectors (BHEL).

Although they have also corrected sharply, we would stay invested

Selectively mid-caps continue to be an attractive space as individual performances are likely to shine

in the medium-long term. We added marginally to our mid-cap holdings where risk return scenario from the

medium terms is favourable

Markets in 2011 are more likely to test Conviction & Patience. Stock picking is likely to be the key in

generating superior returns

However, Credo of Sticking to Quality will always remain and will never be compromised

Absolute Performance – 28 February 2011

Inception Date: 1 October, 2009 Portfolio returns are audited and after deducting

fees (including performance fees) & other expenses

Weekly Monthly Quarterly Half Yearly AnnualSince

Inception

BRICS Growth -2.20% -2.78% -8.21% -6.73% 24.04% 33.10%

NIFTY -3.36% -3.25% -7.28% -1.39% 8.35% 4.92%

SENSEX -3.33% -3.11% -6.86% -0.97% 8.48% 4.01%

S&P CNX 500 -3.54% -4.07% -9.20% -6.67% 2.90% 3.11%

S&P CNX MIDCAP -4.96% -6.48% -15.19% -15.85% 2.83% 10.03%

Performance ahead / at least keeping pace with Indices

Month BRICS Growth Nifty Sensex S&P CNX 500 CNX Mid Cap

Oct-09 -0.67% -7.31% -7.23% -6.46% -1.77%

Nov-09 2.79% 6.81% 6.48% 7.59% 8.65%

Dec-09 6.27% 3.35% 3.18% 4.43% 3.97%

Jan-10 -1.84% -6.13% -6.34% -4.00% -3.11%

Feb-10 0.75% 0.82% 0.44% -0.69% -0.48%

Mar-10 6.24% 6.64% 6.68% 4.50% 7.50%

Apr-10 3.77% 0.55% 0.18% 1.27% 4.62%

May-10 1.86% -3.63% -3.50% -3.24% -3.79%

Jun-10 5.81% 4.45% 3.83% 4.59% 4.83%

Jul-10 3.84% 1.04% 1.56% 1.23% 3.50%

Aug-10 7.25% 0.65% 0.58% 1.39% 3.14%

Sep-10 4.13% 11.35% 11.30% 8.06% 4.88%

Oct-10 4.03% 0.44% 0.38% 0.95% 1.68%

Nov-10 -4.26% -2.58% -2.55% -3.85% -4.84%

Dec-10 2.02% 4.64% 5.06% 3.34% -0.56%

Jan-11 -9.47% -10.25% -10.64% -10.45% -10.55%

Feb-11 -2.78% -3.14% -2.75% -4.01% -6.97%

The comparison includes 250 Diversified Equity Funds across all Fund Houses

Ranked on 1 year returns

Compared to Top 20 Mutual Funds as of 28 Feb. 2011

Rank Scheme Name Performance

6 Months % 1 Year %

1 BRICS Growth -6.73 24.04

2 Canara Robeco FORCE Fund - Ret - Growth -7.65 21.23

3 Escorts High Yield Equity Plan - Growth -4.51 20.71

4 Quantum Long-Term Equity Fund - Growth -2.94 17.25

5 HDFC Equity Fund - Growth -4.74 16.87

6 ICICI Prudential Focused Bluechip Equity Fund - IP I - Growth 0.32 16.83

7 Canara Robeco Emerging Equities - Growth -10.25 16.33

8 Fidelity Equity Fund - Growth -3.42 16.20

9 ICICI Prudential Focused Bluechip Equity Fund - Ret - Growth -0.13 15.93

10 HDFC Growth Fund - Growth -5.48 15.79

11 Fidelity India Growth Fund - Growth -2.55 15.42

12 Kotak Lifestyle Fund - Growth -9.78 15.24

13 Reliance Equity Opportunities Fund - Growth -8.86 15.14

14 Reliance Quant Plus Fund - Ret - Growth 1.58 15.13

15 Templeton India Equity Income Fund - Growth 2.37 15.01

16 SBI Magnum Sector Umbrella - Emerging Businesses - Growth -9.84 14.94

17 Canara Robeco Multicap Fund - Growth -6.21 14.82

18 ING Dividend Yield Fund - Growth -8.02 14.75

19 HDFC Capital Builder Fund - Growth -4.72 14.49

20 Tata Dividend Yield Fund - Growth -4.83 14.44

Performance has been a result of our:

Stock Picking

Low churn in the portfolio, and

Conservative attitude (not taking

excessive risks)

Our Strategy has been to :

Buy during panics/declines

Use sharp rallies to partially book

profits

Opportunistically ride the momentum

for a part of the portfolio (<15%)

Remain adequately liquid at all times

Adequate liquidity helps :

Protect against volatility

Provides enough courage and

conviction to buy into panics

Current cash/liquid balances ~ at 19.12%

of the Portfolio

BRICS Growth NAV Trend

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100

105

110

115

120

125

130

135

140

145

150

155

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BRICS Growth Nifty Sensex

S&P 500 CNX Midcap

BRICS Growth NAV v/s Indices (normalised)

Date1 October 2009 ─

25 May 2010

25 May 2010 ─

5 November 2010

5 November 2010 ─

28 February 2011

Market ScenarioRange bound

Market

Sharp rally across

the board Fall from the Peak

BRICS Growth 15.70% 36.73% -15.87%

Nifty -5.44% 31.32% -15.51%

Sensex -6.50% 31.10% -15.15%

S&P 500 -2.84% 29.86% -18.28%

CNX Mid-Cap 10.32% 31.54% -24.18%

Bank Nifty -0.10% 49.90% -21.35%

BRICS Growth has delivered absolute & consistent returns across different market phases

Significant out-performance in a range bound volatile market, (Stock Picking was the Key)

Kept pace even during the sharp rally (Buy and Hold, Profit booking at higher levels)

The fall in NAV during the corrective phase was in line with the Indices (in spite of having

several high beta stocks in the portfolio, banking, mid-caps etc.), large cash balances

helped limit the downside)

BRICS Growth Outperformance Trend

How did we do during periods of Volatility – 12 Biggest Falls between Oct.-’09 – Jan.-’11

How much a portfolio falls during a

correction / sharp downturn is as

important as how much it gains in a

bull market

Protecting capital is often more

important during periods of volatility

Downside protection equally

contributes to superior returns over a

period of time

We have managed to fall less than

the indices during each of the sharp

falls / panics since our inception

Large liquidity during periods of

volatility & a low beta portfolio helped.

*Beta measures the volatility of the

portfolio relative to the index

Against Nifty SensexCNX

Midcap

Beta * 0.5150 0.5158 0.5147

Date

Points

Fall -

Nifty

% Fall -

Nifty

Points

Fall -

Sensex

% Fall -

Sensex

% Fall -

BRICS

Growth

24-Feb-2011 -174.65 -3.21% -545.92 -3.00% -2.01%

27-Jan-2010 -159.65 -3.19% -490.64 -2.92% -2.29%

03-Nov-2009 -147.80 -3.14% -491.34 -3.09% -0.36%

19-May-2010 -146.55 -2.89% -467.27 -2.77% -0.84%

25-May-2010 -137.20 -2.78% -447.07 -2.71% -1.62%

05-Feb-2010 -126.70 -2.61% -434.02 -2.68% -0.47%

27-Oct-2009 -124.20 -2.50% -387.10 -2.31% -0.65%

21-Jan-2010 -127.55 -2.44% -423.35 -2.42% -1.32%

10-Jan-2011 -141.75 -2.40% -467.69 -2.38% -1.92%

07-Jan-2011 -143.65 -2.38% -492.93 -2.44% -1.48%

04-Feb-2011 -131.00 -2.37% -441.16 -2.39% -1.18%

09-Dec-2010 -137.20 -2.32% -454.12 -2.31% -2.18%

Portfolio Breakup

Large Cap. More than Rs 5,000 crores

Mid-Cap. Rs 1,000 - 5,000 crores

Small Cap. Less than Rs 1,000 crores

Large Cap49.40%

Mid Cap9.87%

Small Cap21.61%

Cash19.12%

Market Cap Breakup

Automobiles 6.15%

Banking & Finance 6.70%

Branded Garments &

Retail 13.82%

Cash 19.12%FMCG 13.01%

Information Technology

12.54%

Infrastructure & Capital Goods 17.27%

Oil & Gas 11.39%

Sectoral Allocation

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11

Portfolio Turnover

Portfolio Turnover

Turnover increased as

we partly booked

profits at higher levels

Turnover increased as

we partly booked

profits at higher levels

Re-deployed part of

liquid balances by

buying on declines

Low Portfolio Turnover (Buy & Hold at work)

Market Outlook

Global macro economic risks and higher commodity prices will continue to weigh on the markets. Will

definitely have repercussions on India

Concerns on macro economic front, (Inflation on back of high commodity prices) threaten to slowdown the

“India Growth Story.” The Union Budget of 2011-12 seeks to address some of the growth concerns

Persistent high Inflation necessitates tightening liquidity and higher interest rate cycle. We feel that there is

still some way to go before the interest rate cycle peaks out this year

Excess global liquidity was the primary reason for the sharp rallies across all emerging markets in 2009 and

2010. However, we are already seeing the impact of marginal withdrawal of liquidity as FII’s turned sellers

in January-February 2011

Although Valuations have corrected significantly in the last four months, they are now beginning to look

reasonable and cheap when seen in light of growth outlook going forward

As long as earnings don’t disappoint going forward, its going to be a market of buying opportunities on

declines. However, one would have to be careful about earnings slowing down due to:

Increasing interest rates and tight liquidity, making capital raising both difficult and expensive

Higher commodity prices across the board, pressure already beginning to be felt

Little flexibility increases the end product prices, thus putting pressure on margins

If any the above three factors play out, earnings estimates for FY12 could be revised down especially for

sectors/stocks that are sensitive to interest rates and commodities cycle

Market Outlook (cont’d)

The key Investment Theme in 2011

Focus on stocks/sectors where growth in sales and earnings is not sensitive to:

Interest rates (both for themselves as well as their end customers)

They have reasonable the pricing power to pass on higher costs as a result of higher commodity

prices, and thus protect margins

Valuations v/s growth favour bottom up stock picking across the spectrum (large and mid-cap), rather than

top-down approach as individual performances could have a wide variance among the peer group.

Stocks/Sectors to avoid are those where growth is dependent on fresh issue of capital (both debt and

equity) as tight liquidity would make raising capital both difficult and expensive having serious implications

on growth

Pockets of opportunities are where growth is steady, are adequately funded and valuations leave room for

upside

It is quite possible, that in 2011 will see indices in a broad range but individual stocks could give excellent

returns. Stock picking will be the key

It is a good time to build a high quality long term portfolio by Buying on Declines

However, Markets in 2011 are likely to Test Conviction & Patience as returns may not come fast and

easy

Our Strategy

“Time” in the markets is more important than “Timing” the markets

Superior long-term sustainable returns are not made by timing the markets in terms of selling at

the peaks. They are a result of purchase prices that are attractive in terms of valuations with

adequate Margin of Safety

Our strategy going ahead would continue to be, bottom up stock picking and be extremely

selective:

Buy on declines

Use sharp rallies to partially book profits

Opportunistically ride the momentum for only a small part of the portfolio

Remain adequately liquid at all times

The sectors that we are bullish and continue to be over weight are:

Technology (Software Services),

Capital Goods and Infrastructure Construction

Oil and Gas including Gas Transportation & Distribution,

Domestic Consumption themes like Consumer Goods, Paints, Branded Garments, etc.

Thank You

Vivek Mavani – Vice President & Senior Portfolio Manager

vivek.mavani@bricssecurities.com

BRICS SECURITIES LIMITED

1st Floor, Sadhana House,

570, P. B. Marg,

Behind Mahindra Towers,

Worli, Mumbai – 400 018.

Tel: 91-22-6636 0000.

Happy Investing