Franklin templeton multi caps synergies of scale

0

January 2015

Multi-caps: Synergies of Scale & Scope (Scale of Large Caps + Scope of Midcaps)

Outline

1

Improving Fundamentals 1

Multi-Caps: Advantages Galore

3

How to participate in equities 2

Franklin Templeton Multi-cap Offerings: A snapshot

4

CLICK HERE TO INVEST NOW

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Outline

2


3

How can one participate in equities

2


4




Reducing twin deficits and rising inflows

3

Source: Budget Documents, Citi Research, November‟ and December „14,

*Estimated Fiscal Deficit by RBI and Estimated CAD by Citi Research

Fiscal Deficit and Current Account Deficit – likely to be kept under control FII Flows robust ($16.1 bn in 2014 )and DIIs return (Aug’14, Oct’14 & Dec ‘14)

Source: RBI, Citi Research, December‟ 14

Trend in Fiscal Deficit and Current account Deficit (% of GDP)

FII & DII Investments

2.3 2.8 2.7

4.2 4.8

1.7 1.6

6 6.5

4.8

5.7

4.8 4.5

4.1

0

1

2

3

4

5

6

7

FY09 FY10 FY11 FY12 FY13 FY14 FY15E*

Current Account Deficit Fiscal Deficit

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

No

v-13

De

c-13

Jan-

14

Feb

-14

Ma

r-1

4

Apr

-14

Ma

y-1

4

Jun-

14

Jul-1

4

Aug

-14

Sep

-14

Oct

-14

No

v-14

De

c-14

Net FII (USD Million) Net DII (USD Million)



Growth – inflation dynamics

4

Based on historical data, low growth, low inflation – seem supportive for lower interest rates

WPI & CPI Inflation: GDP: Repo Rate:

CPI Inflation: WPI Inflation:

GDP: Repo Rate:

CPI Inflation: WPI Inflation:

GDP: Repo Rate:

Source(latest available data): As on December „14. RBI. *Jan-2002 to Dec-2011: Consumer Price Index (CPI) – Industrial Workers, while Jan-2012 onwards: Consumer Price Index (CPI) combined data (new series). For CPI – Industrial Workers, inflation data is not available for the months of Jan 2006 to Dec 2006, as the base year 2001 index series started from Jan 2006, and therefore YoY comparison is not possible for the mentioned months. ^ WPI = Wholesale Price Index

-2

0

2

4

6

8

10

12

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

Jan-

02

Jun-

02

No

v-02

Apr

-03

Sep

-03

Feb

-04

Jul-0

4

De

c-04

Ma

y-0

5

Oct

-05

Ma

r-0

6

Aug

-06

Jan-

07

Jun-

07

No

v-07

Apr

-08

Sep

-08

Feb

-09

Jul-0

9

De

c-09

Ma

y-1

0

Oct

-10

Ma

r-1

1

Aug

-11

Jan-

12

Jun-

12

No

v-12

Apr

-13

Sep

-13

Feb

-14

Jul-1

4

De

c-14

GDP Growth (%) - RHS CPI Inflation* (YoY %) - LHS WPI Inflation^ (YoY %) - RHS Repo Rate - RHS



Corporate earnings – expected to improve

Nifty Profit After Tax Growth (%)

Source: Motilal Oswal Research, December‟ 2014. E= Estimated figure as per Motilal Oswal. Up to 2QFY08 two companies viz. BPCL and HPCL were not included in the Nifty companies from 3QFY08 till date only one company BPCL has not been included.*LPA refers to Long Period Average.

Nifty EBITDA Margins (%)

PAT is expected to bottom out in 3QFY15 (December ’14) Margins and Profitability – Expected to improve in coming quarters

5

PAT bottoming out



Supportive structural factors

6

Source(latest available data): @ Economic Census 2011, $RBI statistics for FY13 and ^Ministry of Urban Development, RBI, Barclays Research estimates as on March „14.

Political stability Stable government at centre

Demographic dividend 65%@of population below 35 years

Saver’s nation Savings to GDP ratio at 30%$

Urbanisation Urban India to contribute ~70% -75% of India’s GDP by 2020^

India appears well placed




z Risks 3

4 Franklin Templeton Multi-cap Offerings: A snapshot

Outline

7

How to participate in equities 2



Convinced about equities but.. Concerned regarding what to choose

8 CLICK HERE TO INVEST NOW


Large Caps are essential

Capital efficiency

Leverage at competitive costs

Large scale operations Low marginal cost

Large balance sheets

Exposure to capital intensive businesses

Matured businesses Stability and visibility

High floating stock High liquidity

Diversified shareholder base Resilience during extreme

market movements

Generally have good corporate governance Trustworthy managements

Well researched Less surprises

Large Caps



10

What do Large Caps Offer

Characteristic Large Caps

Diversification

Stock Level 50 stocks

Sector Level* 12 sectors

Market Cap Range** (INR) 13k crs – 501k crs

Return Potential^ Bull Market Moderate

Downside Risk^ Bear Market Relatively Lower

Volatility^ As per standard deviation Relatively Lower

Source: Large Caps are represented by CNX Nifty. *http://www.nseindia.com/content/indices/ind_cnx_nifty.pdf, **Market Cap for CNX Nifty taken as on December‟14. ̂ Return potential, downside risk and volatility is given in comparison to other market caps.



Midcaps provide variety

Small fish in big pond Grow by increasing

market share

Big fish in growing pond Grow with the sector growth

Different fish in different

pond Grow initially due to

unique proposition and later as per sector

growth

Medium size businesses in large sectors

participate in the growth phase of company

Leaders in their space Opportunity to invest in market

leaders in smaller sectors

Entrepreneurship led businesses Giving opportunity to participate in promising prospects at an early stage

Innovating and creating distinct businesses Exposure to new business ideas viz. Internet led business, Retail/Consumption Sector

Mid Caps



12

What do Midcaps offer?

Characteristic Mid Caps

Diversification

Stock Level 100 stocks

Sector Level* 17 sectors

Market Cap Range** (INR) 0.49k cr – 72k cr

Return Potential^ Bull Market Relatively higher

Downside Risk^ Bear Market Relatively Higher

Volatility^ As per standard deviation Relatively Higher

Source: Midcaps are represented by CNX Midcap. *http://www.nseindia.com/content/indices/ind_cnx_midcap.pdf, **Market Cap for CNX Nifty taken as on December‟14. ^Return potential, downside risk and volatility is given in comparison to other market caps.



Thematic/Sectoral Investing

Concentrated bets

Focus on specific sectors/stocks

Time sensitive Identifying the trend at right time is important

Function of fundamental

change Led by changing

landscape of economy/sector

Take high conviction bets

by investing in the appropriate theme/sector

Certain themes can be direct beneficiaries of economic landscape changes

Possibility of higher potential returns if the opportunity is explored at the right time

Thematic/ Sectoral



14

What do thematics offer?

Characteristic Thematic/Sector based

Diversification

Stock Level

Different Indices have different characteristics

Sector Level

Market Cap Range (INR)

Return Potential^ Bull Market Relatively higher

Downside Risk^ Bear Market Relatively Higher

Volatility^ As per standard deviation Relatively Higher

Source: ^Return potential, downside risk and volatility is given in comparison to other market caps.



15

Weighing all the options available

Characteristic Large Caps (CNX Nifty)

Mid Caps (CNX Midcap)

Thematic/Sector based

Diversification

Stock Level 50 stocks 100 stocks

Different Indices have different characteristics

Sector Level 12 sectors 17 sectors

Market Cap Level

13K cr – 501k cr 0.49K cr – 72K cr

Return Potential^ Bull Market Moderate Relatively higher Relatively higher

Downside Risk^ Bear Market Relatively lower Relatively higher Relatively higher

Volatility^ As per standard deviation

Relatively lower Relatively higher Relatively higher

How about a combination to benefit from all characteristics? Source: ^Return potential, downside risk and volatility of large caps, midcaps and thematics/sectoral is given as compared to other market caps excluding the respective category.



16

Multi caps provide the diversified basket which includes both large caps and mid caps

Large Caps

Mid Caps

Multi Caps



How to participate in equities? 2 Improving Fundamentals 1

4 Franklin Templeton Multi-cap Offerings: A snapshot

Outline

17

Multi-caps: Advantages Galore 3



18

Multi-caps: largest equity category as per AUM*

% of Share in Total Equity AUM as on December 2014

Source: Crisil Fund Analyser. *AUM taken is as on December 2014. AUM includes all equity mutual funds. The classification of large, mid, multi –cap and other equity is done as per internal criteria. ^Other equity includes thematic, sectoral, index based funds and ETFs. Historic data is provided and the same is subject to change in future.

Well accepted equity fund category across investors segments

15%

18%

50%

16%

Large Cap Midcaps Multi-Caps Other Equity



19

Multi-Caps offer diversification across

Mid Caps Large Caps Multi Caps

Sectors Stocks Market Cap



Diversify your portfolio across SECTORS*

Multi Caps Mid Caps Large Caps

CNX Nifty +CNX Midcap = Exposure to 17 Sectors (12 sectors common & 5 different sectors in CNX Midcap)

But.. CNX 500 = Exposure to 18 Sectors Source(latest available data): As on December „14. *For sector data - http://www.nseindia.com/content/indices/ind_cnx_nifty.pdf , http://www.nseindia.com/content/indices/ind_cnx_midcap.pdf and http://www.nseindia.com/content/indices/ind_cnx_500.pdf . Large Caps, Multi-Caps and Midcaps are represented by CNX Nifty, CNX 500 and CNX Midcap respectively.

> < 12 17 18



21

Diversify your portfolio across SECTORS*

Niche

Advantage

For eg. companies in Fertilizers, Chemicals,

Services, Textiles etc. sectors

Size Advantage

Large companies in large sectors, eg. Financial services,

Information Technology etc.

Size & Niche Advantage

+

Exposure to new businesses

Large Caps Multi-Caps Midcaps



However, CNX 500 is the most diversified index with exposure across 500 stocks

CNX Nifty + CNX Midcap = 150 stocks

Source: Bloomberg, as on December„14. Large Caps, Multi-Caps and Midcaps are represented by CNX Nifty, CNX 500 and CNX Midcap respectively.

> <

22

Multi Caps

Mid Caps Large Caps

50 100 500

Diversify your portfolio across STOCKS



Diversify your portfolio across MARKET CAP

Multi –caps cover a very wide market cap range

Source: Bloomberg for Market Cap range. Data is as on December „14. Large Caps, Multi-Caps and Midcaps are represented by CNX Nifty, CNX 500 and CNX Midcap respectively. 23

Large Caps

20 30 40 50 60 70 80 90 100 520 10

Market Cap in INR Thousand Crores (K Crs)

510

13K cr – 501K cr

Multi-Caps

20 30 40 50 60 70 80 90 100 520 10


510

0.11K cr – 501K cr

Midcaps

20 30 40 50 60 70 80 90 100 520 10


510

0.49K cr – 72K cr

Market Cap range as on December 2014



Lower downside risk

Index CY’02 CY’03 CY’04 CY’05 CY’06 CY’07 CY’08 CY’09 CY’10 CY’11 CY’12 CY’13 CY’14

Large Caps 3 72 11 36 40 55 -52 76 18 -25 28 7 31

Multi-Caps 10 98 18 36 34 63 -57 89 14 -27 32 4 38

Midcaps 24 138 25 35 29 77 -59 99 19 -31 39 -5 56

Calendar year returns for Large Caps, Multi Caps and Mid Caps (%)

Past Performance may or may not be sustained in future. Source: Bloomberg. Absolute returns are shown here. Large Caps, Multi-Caps and Midcaps are represented by CNX Nifty, CNX 500 and CNX Midcap respectively.

Balanced performance

Multi Caps have generally been the balanced performers While there is opportunity to benefit from upside, the downside appears limited

24

Market resilience

Past Performance may or may not be sustained in future. Source: Bloomberg. Returns are compounded annualised for period over 1 year and as on end of December „14. Midcap, Large Cap and Multi Cap are represented by CNX Midcap, CNX Nifty and CNX 500. Data for CNX Midcap is not available for tech crash & 9/11 and Recovery post 9/11 as the inception date for index is January 1, 2003.

Historically Multi caps have displayed balanced performance

25

Tech Crash and 9/11: 11th Feb ‟00 – 21st Sep „01.

Recovery Post 9/11: 21st Sep „01 – 14th Jan ‟04.

India Re-rating: 14th Jan „04- 10th May „06.

2008 Peak: 10th May „06- 8th Jan „08.

Global Crisis Lows: 8th Jan‟08- 9th Mar „09.

Post Crisis Peak: 9th Mar „09 – 9th Nov „10.

Current: 9th Nov „10 – 31st Dec „14

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

Tech Crash & 9/11 Recovery post 9/11 India Re-rating 2008 Peak Global crisis lows Post-Crisis Peak Current

CNX Nifty CNX 500 CNX Midcap

Volatility*

Past Performance may or may not be sustained in future. Source: Morningstar. Data is taken as on December 31,2014. Large Caps, Multi-Caps and Midcaps are represented by CNX Nifty, CNX 500 and CNX Midcap respectively. * Volatility is based on standard deviation. Standard deviation is calculated on rolling returns which are taken in monthly steps for the period Feb 2001 till December 2014 for both 3 and 5 year period.

Historically Multi – caps have generally been less volatile than Midcaps

26

14.61

11.15

16.97

13.16

20.67

15.4

0

5

10

15

20

25

3 year volatility 5 year volatility

Large Cap Multi - Cap Midcap



Multi-Cap Investing: 3 different approaches

Fix your large cap and mid cap allocation

Flex your allocation to large and mid caps

Find opportunities in a selected theme



Multi-Cap Investing: What do we offer?

Franklin India Prima Plus(FIPP) •Primarily a large cap fund with some allocation to small/mid cap stocks

Franklin India Flexi Cap Fund(FIFCF) • Invests across market cap wherein allocations to large, mid and small cap

are dynamically managed

Franklin India High Growth Companies Fund(FIHGCF) • With underlying theme for investment as „growth‟, identifies opportunities

irrespective of market cap

28 Please refer slide no. 30, 41 and 52 for the product labels of FIPP, FIFCF and FIHGCF.



Outline

29

How to participate in equities 2 Improving Fundamentals 1


3


4



Presenting Franklin India Prima Plus

Benefit from FIX IT approach

Product Label

This product is suitable for investors who are seeking*

• Long term capital appreciation

• Primarily a large cap fund with some allocation to small/mid cap stocks

*Investors should consult their financial advisors if in doubt about whether the product is suitable for them. ** Note: Risk may be represented as:

BROWN: Investors understand that their principal will be at high risk

YELLOW: Investors understand that their principal will be at medium risk

BLUE: Investors understand that their principal will be at low risk

(BROWN)

High Risk**



About the fund

31

Benefits from Stock selection

Blend of Growth and Value

Large Cap biased fund

Rolling Returns

Resilient over market cycles

Franklin India

Prima Plus



Fund type

32




Rolling Returns


Franklin India

Prima Plus



True to the label

33

Franklin India Prima Plus(FIPP)- (Allocation to Large Cap, Mid Cap & Small Cap)

Average Allocation to large caps on a monthly basis

has been over 64% for last 10 years

Source: Internal calculations for large, mid and small cap classification. Data is as on December 31, 2014. Information is historical and may not reflect current or future portfolio characteristics. Portfolio holdings are subject to change.




Rolling Returns


Franklin India

Prima Plus

0%10%20%30%40%50%60%70%80%90%

100%

Jun-

05

De

c-05

Jun-

06

De

c-06

Jun-

07

De

c-07

Jun-

08

De

c-08

Jun-

09

De

c-09

Jun-

10

De

c-10

Jun-

11

De

c-11

Jun-

12

De

c-12

Jun-

13

De

c-13

Jun-

14

De

c-14

Large Cap Mid Cap Small Cap



Stock selection is the key

34

5 Years (ending Dec 31, ‘14) Attribution Analysis

Allocation Effect

(A)

Selection Effect

(B)

Interaction Effect (C )

Total Alpha

(A+B+C)

Franklin India Prima Plus 2.21 10.80 -1.92 11.08

Stock selection clearly the key contributor to performance

Stock picking ability has ensured performance holds up well over the medium to long term, irrespective of how allocation decisions fared

Allocation Effect: Sectoral overweight or underweight position in the fund with respect to benchmark. Selection Effect: Within the selected sectors, the fund manager‟s endeavour would be to buy/sell securities that may optimize return compared to the benchmark. Interaction Effect: It measures the combined impact of the fund manager‟s stock selection and asset allocation decisions.

Past performance may or may not be sustained in future Source: Factset.




Rolling Returns


Franklin India

Prima Plus



Contributors/detractors in last 3 years

35

Sector

Portfolio Benchmark Index Allocation Effect(A)

Selection/ Interaction Effect (B)

Total Effect (A+B) Average

Weight (%) Total

Return (%) Average

Weight (%) Total

Return (%)

Top 3 Contributors

Industrials 10.81 68.45 8.49 29.08 0.32 4.70 5.02

Financials 25.23 43.21 26.90 32.22 -0.30 3.43 3.13

Healthcare 10.94 44.21 6.36 35.06 0.67 1.40 2.07

Top 3 Detractors

Telecommunication Services 7.12 4.59 2.23 7.80 -1.50 -0.01 -1.51

Consumer Discretionary 8.48 29.63 10.24 34.08 0.02 -0.61 -0.59

Information Technology 9.95 22.48 11.69 25.80 -0.17 0.01 -0.15

Past performance may or may not be sustained in future. Source: Factset as on December 31, 2014. Information is historical and may not reflect current or future portfolio characteristics. Portfolio holdings are subject to change.

Indicates high contribution to the total effect.



36

Scheme Performance As on Dec 31, 2014

Scheme

NAV as on Dec 31, 2014

Discrete Returns (%)

Since inception till Dec 31, 2014

Value of Investment

of Rs.10,000

since inception

Inception Date

Dec 31, 2013 to Dec 31, 2014

Dec 31, 2012 to Dec 31, 2013

Dec 30, 2011 to Dec 31, 2012

NAV* Returns NAV* Returns NAV* Returns NAV* Returns

Franklin India Prima Plus (FIPP) - Growth 417.6007 266.3419 56.79% 252.3438 5.55% 192.5737 31.04% 10 20.22% 417,601 29.9.1994

B:CNX 500 - - 37.82% - 3.61% - 31.84% - 9.44% 62,246 AB:CNX Nifty - - 31.39% - 6.76% - 27.70% - 9.52% 63,157

Performance of Top 3 and bottom 3 schemes managed by the fund managers of the scheme

Franklin India Taxshield (FIT)-Growth 401.9406 256.1355 56.92% 241.325 6.14% 186.5202 29.38% 10 26.45% 414,372 10.04.1999

B:CNX 500 - - 37.82% - 3.61% - 31.84% - 15.58% 97,558 AB:CNX NIFTY - - 31.39% - 6.76% - 27.70% - 14.43% 82,976

Franklin India Bluechip Fund (FIBCF) - Growth 338.0004 246.3181 37.22% 236.6664 4.08% 186.6626 26.79% 10 23.17% 810,939 1.12.1993

B:S&P BSE SENSEX - - 29.89% - 8.98% - 25.70% - 10.58% 83,513 AB:CNX Nifty - - 31.39% - 6.76% - 27.70% - 10.50% 82,173

Franklin India Prima Fund (FIPF)-Growth 632.4058 354.9962 78.14% 330.5324 7.40% 228.8636 44.42% 10 21.72% 632,406 1.12.1993

B:CNX 500 - - 37.82% - 3.61% - 31.84% - 10.38% 80,252 B:CNX Midcap - - 55.91% - -5.10% - 39.16% - N.A N.A AB:CNX Nifty - - 31.39% - 6.76% - 27.70% - 10.50% 82,173 Franklin India Life Stage Fund of Funds (FILSF) - The 50s Plus Floating Rate Plan - Growth

27.5055 23.9664 14.77% 22.2535 7.70% 19.7294 12.79% 10 10.13% 27,506 9.7.2004

Benchmark$ - - 13.21% - 9.28% - 11.97% - 9.58% 26,097 Additional Benchmark - - N.A - N.A - N.A - N.A N.A Franklin India Fixed Tenure Fund – Series XII C (FIFTF XII C) - Growth

15.1031 12.4984 20.84% 11.7301 6.55% 10.2733 14.18% 10 9.18% 15,103 23.4.2010

Benchmark$ - - 19.42% - 4.52% - 14.76% - 8.67% 14,772 AB: Crisil 10 Year Gilt Index - - 14.14% - -0.68% - 10.67% - 6.27% 13,300

FILSF - The 50s Plus Plan - Growth 26.0729 22.0775 17.28% 19.9931 3.86% 19.0068 14.33% 10 9.03% 26,073 1.12.2003

Benchmark$ - - 17.40% - 5.03% - 12.66% - 8.61% 24,981 Additional Benchmark - - N.A - N.A - N.A - N.A N.A

Past performance may or may not be sustained in future. Fund Managers: FIPP: Anand Radhakrishnan & R. Janakiraman, FIT: Anand Radhakrishnan & Anil Prabhudas, FIBCF: Anand Radhakrishnan & Anand Vasudevan, FIPF: Roshi Jain & R. Janakiraman, FILSF: Equity-Anand Radhakrishnan; Debt-Sachin Padwal-Desai, Pallab Roy, FIFTF: Equity-Anand Radhakrishnan, Anil Prabhudas; Debt-Umesh Sharma, Pallab Roy. B: Benchmark. AB: Additional Benchmark. N.A.: Not Applicable. *NAV (beginning of period). ** Sep 30, 2011 to Sep 28, 2012. $Benchmark: The 50s Plus Plan - 20% S&P BSE Sensex+ 80% Crisil Composite Bond Fund Index; The 50s Plus Floating Rate Plan - 20% S&P BSE Sensex + 80% Crisil Liquid Fund Index. FIFTF XII C: 25% CNX 500 + 65% Crisil Composite Bond Fund Index + 10% Crisil Liquid Fund Index. Discrete 12 months performance is absolute and since inception returns are compounded annualized. Load is not taken into consideration. Dividends assumed to be reinvested and Bonus is adjusted. The top three and bottom three funds managed by the fund manager(s) have been derived on the basis of the since inception returns. On account of difference in the type/category, asset allocation or investment strategy, inception dates, performances of these funds are not strictly comparable. Please refer to www.franklintempletonindia.com for details on performance of all schemes (including Direct Plans).

The advantage of long term investing

37

Franklin India Prima Plus – Growth Option

Past performance may or may not be sustained in future. Period – 29.9.1994 to 31.12.2014. Load is not taken into consideration. Dividends assumed to be reinvested and Bonus is adjusted. Returns greater than 1 year period are compounded annualized.

Note: The above graph shows the performance on a daily rolling return basis to compute returns for respective periods (3,5,7 and 10 years). Please turn overleaf for performance data of Benchmark and Additional Benchmark

76.9%

56.8%

39.9% 41.1%

-14.0%

3.2% 6.9%

17.5%

24.5% 24.9% 25.0% 26.8%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

3 Year 5 Year 7 Year 10 Year

Maximum Returns Minimum Returns Average Returns

93.7%

6.3%

100%

0%

100%

0%

100%

0%

Historical instances of +ve performance

Historical instances of –ve performance




38

Past performance may or may not be sustained in future. Period – 29.9.1994 to 31.12.2014. Load is not taken into consideration. Dividends assumed to be reinvested and Bonus is adjusted. Returns greater than 1 year period are compounded annualized. *Benchmark. **Additional Benchmark. Note: The above graph shows the performance on a daily rolling return basis to compute returns for respective periods (3,5,7 and 10 years)

CNX 500* CNX Nifty**



65.2%

48.1%

30.2%

23.9%

-23.5%

-3.6% -8.6%

3.0%

13.1% 13.8% 14.2% 16.1%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%



78.4%

21.6%

92.4%

7.6%

93.8%

6.2%

100%

0%

58.6%

44.5%

28.4%

20.6%

-16.4%

-5.6% -5.1%

2.8%

12.0% 12.7% 13.0% 14.7%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%



82.3%

17.7%

92.6%

7.4%

95.7%

4.3%

100%

0%



Market resilience

39

Past performance may or may not be sustained in future. FIPP – growth option is taken for calculations. Returns are compounded and annualized for more than 1 year period. Inception Date: September 29,1994. Dividends are assumed to be reinvested and bonus is adjusted. Load is not taken into consideration. B: Benchmark, AB: Additional Benchmark.

Market resilience (as of Dec 31, 2014)

Mid 90s Crash: 29th Sep‟94-4th Dec‟96.

Tech Bubble Peak: 4th Dec ‟96 – 11th Feb „00.

Tech Crash and 9/11: 11th Feb ‟00 – 21st Sep „01.


Current: 9th Nov „10 – 31st Dec „14.

Recovery Post 9/11: 21st Sep „01 – 14th Jan ‟04.

India Re-rating: 14th Jan „04- 10th May „06.

2008 Peak: 10th May „06- 8th Jan „08.


-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

Mid-90scrash

Tech bubblepeak

Tech Crash& 9/11

Recoverypost 9/11

India Re-rating

2008 Peak Global crisislows

Post-CrisisPeak

Current Returnssince

inception

FIPP B: CNX 500 AB: CNX Nifty



Over 20 years of wealth creation

40

Past performance may or may not be sustained in future. The graph shows the movement of Rs. 10,000 invested in FIPP – Growth option , CNX 500 and CNX Nifty since inception of the fund. B: Benchmark and AB: Additional Benchmark. Inception Date: September 29,1994. Period: Sep 29, 1994 to Dec 31, 2014. Dividends are assumed to be reinvested and bonus is adjusted. Load is not taken into consideration.

Movement of Rs. 10,000 invested in FIPP – Growth option, CNX 500 & CNX Nifty

FIPP: Rs. 417,601

Ru

pee

s

B:CNX 500: Rs.62,246

AB:CNX Nifty: Rs.63,157

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Dec

-94

Dec

-95

Dec

-96

Dec

-97

Dec

-98

Dec

-99

Dec

-00

Dec

-01

Dec

-02

Dec

-03

Dec

-04

Dec

-05

Dec

-06

Dec

-07

Dec

-08

Dec

-09

Dec

-10

Dec

-11

Dec

-12

Dec

-13

Dec

-14

FIPP B: CNX 500 AB: CNX Nifty



Presenting Franklin India Flexi Cap Fund

Benefit from FLEX IT approach

Product Label



• A fund that invests in stocks of companies across the market cap range





(BROWN)

High Risk**



About the fund

42



Invests across market cap

Rolling Returns


Franklin India

Flexi Cap Fund



Fund type

43




Rolling Returns


Franklin India

Flexi Cap Fund



True to the label

44

Franklin India Flexi Cap Fund(FIFCF)- (Allocation to Large Cap, Mid Cap & Small Cap)

As per the allocation since April 2005 on a monthly basis Large Cap range: 46% - 81%

Mid Cap range : 9% - 45% Small Cap range : 2% - 13%

Source: Internal calculations for large, mid and small cap classification. Data is as on December 31, 2014. Information is historical and may not reflect current or future portfolio characteristics. Portfolio holdings are subject to change.

Allocation varies across market cap depending on markets and fund manager view




Rolling Returns


Franklin India

Flexi Cap Fund

0%10%20%30%40%50%60%70%80%90%

100%

Large Cap Mid Cap Small Cap



Stock Selection is the key

45


Allocation Effect

(A)

Selection Effect

(B)


Total Alpha

(A+B+C)

Franklin India Flexi Cap Fund

1.11 10.17 -2.47 8.81








Rolling Returns


Franklin India

Flexi Cap Fund




46

Sector




Weight (%) Total

Return (%) Average

Weight (%) Total

Return (%)

Top 3 Contributors

Industrials 10.82 60.08 8.49 29.08 0.93 3.34 4.27

Financials 23.96 42.15 26.90 32.22 -0.12 3.56 3.44

Healthcare 11.77 48.16 6.36 35.06 1.15 1.77 2.92

Detractors

Telecommunication Services 8.77 4.72 2.23 7.80 -1.24 -0.16 -1.40

Utilities 6.73 9.71 4.11 6.79 -0.76 0.11 -0.65





47


Scheme

NAV as on Dec 31, 2014

Discrete Returns (%) Since inception till

Dec 31, 2014

Value of Investment

of Rs.10,000

since inception

Inception Date

Dec 31, 2013 to Dec 31, 2014

Dec 31, 2012 to Dec 31, 2013

Dec 30, 2011 to Dec 31, 2012

NAV* Returns NAV* Returns NAV* Returns NAV* Returns

Franklin India Flexi Cap Fund (FIFCF) - Growth

59.1550 37.9448 55.90% 35.4381 7.07% 26.9604 31.45% 10 19.80% 59,155 2.3.2005

B:CNX 500 - - 37.82% - 3.61% - 31.84% - 14.26% 37,110 AB:CNX Nifty - - 31.39% - 6.76% - 27.70% - 15.00% 39,569

Performance of Top 3 and bottom 3 schemes managed by the fund managers of the scheme Franklin India Feeder - Franklin U. S. Opportunities Fund (FIF-FUSOF) - Growth

18.9964 17.5284 8.37% 11.2913 55.24% N.A N.A 10 24.94% 18,996 13.2.2012

B:Russell 3000 Growth - - 14.71% - 50.84% - N.A - 27.86% 20,306 Additional Benchmark - - N.A - N.A - N.A - N.A N.A Franklin India Bluechip Fund (FIBCF) - Growth

338.0004 246.3181 37.22% 236.6664 4.08% 186.6626 26.79% 10 23.17% 810,939 1.12.1993

B:S&P BSE SENSEX - - 29.89% - 8.98% - 25.70% - 10.58% 83,513 AB:CNX Nifty - - 31.39% - 6.76% - 27.70% - 10.50% 82,173 Franklin India Prima Fund (FIPF)-Growth 632.4058 354.9962 78.14% 330.5324 7.40% 228.8636 44.42% 10 21.72% 632,406 1.12.1993 B:CNX 500 - - 37.82% - 3.61% - 31.84% - 10.38% 80,252 B:CNX Midcap - - 55.91% - -5.10% - 39.16% - N.A N.A AB:CNX Nifty - - 31.39% - 6.76% - 27.70% - 10.50% 82,173 Franklin India High Growth Companies Fund (FIHGCF) - Growth

28.4834 15.8615 79.58% 14.5227 9.22% 10.1883 42.54% 10 15.11% 28,483 26.7.2007

B:CNX 500 - - 37.82% - 3.61% - 31.84% - 7.90% 17,599 AB:CNX Nifty - - 31.39% - 6.76% - 27.70% - 8.16% 17,929 Franklin India Opportunities Fund (FIOF) - Growth

53.6789 33.8503 58.58% 33.1418 2.14% 25.9909 27.51% 10 11.97% 53,679 21.2.2000

B:S&P BSE 200# - - 35.47% - 4.38% - 30.98% - 0.10% 10,145 AB:CNX Nifty - - 31.39% - 6.76% - 27.70% - 11.01% 47,235 Franklin Asian Equity Fund (FAEF) - Growth

16.0615 14.7110 9.18% 13.0929 12.36% 10.9755 19.29% 10 7.04% 16,062 16.1.2008

B: MSCI Asia (ex Japan) Standard Index - - 4.28% - 13.14% - 23.77% - 6.90% 15,910 AB: CNX Nifty - - 31.39% - 6.76% - 27.70% - 4.90% 13,954

Past performance may or may not be sustained in future. Fund Managers: FIFCF: Anand Vasudevan, Roshi Jain & R. Janakiraman, FIF-FUSOF: Roshi Jain, FIBCF: Anand Radhakrishnan & Anand Vasudevan, FIPF: Roshi Jain and R. Janakiraman, FIHGCF: Roshi Jain & R. Janakiraman, FIOF: R. Janakiraman & Anil Prabhudas, FAEF: Roshi Jain. # Scheme benchmark, index adjusted for the period February 21, 2000 to March 10, 2004 with the performance of ET Mindex. *NAV (beginning of period). B: Benchmark. AB: Additional Benchmark. N.A.: Not Applicable. Discrete 12 months performance is absolute and since inception returns are compounded annualized. Dividends assumed to be reinvested and Bonus is adjusted. Load is not taken into consideration. The top three and bottom three funds managed by the fund manager(s) have been derived on the basis of the since inception returns. On account of difference in the type/category, asset allocation or investment strategy, inception dates, performances of these funds are not strictly comparable. Please refer to www.franklintempletonindia.com for details on performance of all schemes (including Direct Plans).


48

Franklin India Flexi Cap Fund – Growth Option

Past performance may or may not be sustained in future. Period – 2.3.2005 to 31.12.2014. Load is not taken into consideration. Dividends assumed to be reinvested and Bonus is adjusted. Returns greater than 1 year period are compounded annualized.

Note: The above graph shows the performance on a daily rolling return basis to compute returns for respective periods (3,5 and 7 years). Please turn overleaf for performance data of Benchmark and Additional Benchmark



37.9%

26.2%

18.8%

-10.4%

2.2%

7.5%

11.7% 13.6%

11.7%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

3 Year 5 Year 7 Year


91.9%

8.1%

100%

0%

100%

0%




49

Past performance may or may not be sustained in future. Period – 2.3.2005 to 31.12.2014. Load is not taken into consideration. Dividends assumed to be reinvested and Bonus is adjusted. Returns greater than 1 year period are compounded annualized. *Benchmark. **Additional Benchmark Note: The above graph shows the performance on a daily rolling return basis to compute returns for respective periods (3,5 and 7 years)

CNX 500* CNX Nifty**



36.1%

20.9%

14.1%

-10.3%

-2.6%

3.2%

8.1% 9.4% 8.2%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%



83.4%

16.6%

94.8%

5.2%

100%

0%

39.7%

22.6%

15.8%

-6.4%

-1.2%

4.2%

9.2% 10.2% 9.3%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%



91.6%

8.4%

96.6%

3.4%

100%

0%



Market resilience

50

Past performance may or may not be sustained in future. FIFCF- Growth option is taken for calculations. Returns are compounded and annualized for more than 1 year period. Inception Date: March 2, 2005. Dividends are assumed to be reinvested and bonus is adjusted. Load is not taken into consideration. B: Benchmark, AB: Additional Benchmark.

Market resilience (as of Dec 31, 2014)


Current: 9th Nov „10 – 31st Dec „14.

India Re-rating: 2nd Mar‟„05- 10th May „06.

2008 Peak: 10th May „06- 8th Jan „08.


-80.00%

-60.00%

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

India Re-rating 2008 Peak Global crisis lows Post-Crisis Peak Current Returns sinceinception

FIFCF B: CNX 500 AB: CNX Nifty




51

Past performance may or may not be sustained in future. The graph shows the movement of Rs. 10,000 invested in FIFCF – Growth Option, CNX 500 and CNX Nifty since inception of the fund. B: Benchmark, AB: Additional Benchmark. Inception Date: March 2, 2005. Period: March 2, 2005 to Dec 31, 2014. Dividends are assumed to be reinvested and bonus is adjusted. Load is not taken into consideration.

Movement of Rs. 10,000 invested in FIFCF – Growth option, CNX 500 & CNX Nifty

FIFCF: Rs.59,155

Ru

pe

es

B:CNX 500: Rs. 37,110

AB:CNX Nifty: Rs. 39,569

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Mar

-05

Dec

-05

Sep

-06

Jun

-07

Mar

-08

Dec

-08

Sep

-09

Jun

-10

Mar

-11

Dec

-11

Sep

-12

Jun

-13

Mar

-14

Dec

-14

FIFCF B: CNX 500 AB: CNX Nifty



Presenting

Franklin India High Growth Companies Fund

Benefit from FIND IT approach

Product Label



• A fund that invests in stocks of companies/sectors with high growth rates or above average potential





(BROWN)

High Risk**



About the fund

53

Blend of Top Down & Bottom Up

A ‘Growth’ oriented fund

Identifies opportunities across Market Cap


Franklin India

High Growth Companies

Fund



Fund type

54





Franklin India


Fund



Investing across market caps

55

Source: Internal calculations for large, mid and small cap classification. Data is as on Dec 31, 2014. Information is historical and may not reflect current or future portfolio characteristics. Portfolio holdings are subject to change.

Franklin India Higher Growth Companies Fund (FIHGCF)- (Allocation to Large Cap, Mid Cap & Small Cap)

Focused on identifying ‘Growth’ opportunities irrespective of market cap





Franklin India


Fund

0

10

20

30

40

50

60

70

80

90

100

Dec-07

Jun-08

Dec-08

Jun-09

Dec-09

Jun-10

Dec-10

Jun-11

Dec-11

Jun-12

Dec-12

Jun-13

Dec-13

Jun-14

Dec-14

La rge Ca p (%) Mid Ca p (%) Sma ll Ca p (%)



Investment process

56

• Domestic & global economic drivers • Interest rates, inflation, liquidity, regulation, politics • Relative valuation

• Sustainable above average growth • Competitive advantage & business strength • Financial strength

Macro analysis - identify sectors

HIGH GROWTH COMPANIES FUND Diversified equity fund that seeks to achieve capital appreciation

through investments in Indian

companies/sectors with high growth rates or

potential Micro analysis-

stock picking





Franklin India


Fund



57

Max Underweight (UW)

Max UW as on Sectors Max Overweight

(OW) Max OW as on

-12.71 Jun-11 Financials 14.09 Jan-09

-2.16 Feb-14 Industrials 21.55 Oct-07

-13.89 Oct-07 Materials 7.57 Mar-11

-8.49 Feb-14 Information Technology 5.18 Sep-07

-2.40 Nov-10 Health Care 10.90 Apr-13

-3.90 Aug-13 Consumer Discretionary 10.36 Sep-09

-1.34 Jul-09 Telecommunication Services 10.78 Jul-11

-16.06 Apr-08 Energy -4.42* Mar-14

-10.96 May-13 Consumer Staples 1.40 Apr-09

-10.44 Feb-09 Utilities 1.13 May-12

Top Down Approach Active management through sector allocation

Past performance may or may not be sustained in future

Source: FactSet as on December,2014. The data is taken from Sep „07 to Dec ‟14 (as on month ends ).The overweight and underweight position is taken with respect to the index CNX 500 and the maximum underweight and maximum overweight position has been highlighted for the given period. Information is historical. Portfolio holdings and sector allocation are subject to change. * Shows net underweight position.

The above table indicates the active sector allocation followed by the fund manager. There can be times when the fund manager might be significantly underweight/overweight on a particular sector, based on macroeconomic conditions coupled with her/his views.



The importance of stock selection

58


Allocation Effect

(A)

Selection Effect

(B)


Total Alpha (A+B+C)

Franklin India Higher Growth Companies Fund

4.03 11.62 0.74 16.39









Franklin India


Fund




59

Sector




Weight (%) Total

Return (%) Average

Weight (%) Total

Return (%)

Top 3 Contributors

Materials 12.02 76.37 9.53 16.86 0.23 8.24 8.47

Industrials 11.94 69.17 8.49 29.08 0.12 6.14 6.26

Information Technology 10.33 50.11 11.69 25.80 0.36 3.96 4.32

Detractor

Telecommunication Services 7.85 7.26 2.23 7.80 -0.94 0.64 -0.30





60


Scheme

NAV as on Dec 31,

2014

Discrete Returns (%) Since inception till

Dec 31, 2014

Value of Investment of Rs.10,000 since

inception

Inception Date

Dec 31, 2013 to Dec 31,

2014 Dec 31, 2012 to Dec

31, 2013 Dec 30, 2011 to Dec

31, 2012

NAV* Returns NAV* Returns NAV* Returns NAV* Returns Franklin India High Growth Companies Fund (FIHGCF) – Growth

28.4834 15.8615 79.58% 14.5227 9.22% 10.1883 42.54% 10 15.11% 28,483 26.7.2007

B:CNX 500 - - 37.82% - 3.61% - 31.84% - 7.90% 17,599 AB:CNX NIFTY - - 31.39% - 6.76% - 27.70% - 8.16% 17,929

Performance of Top 3 and bottom 3 schemes managed by the fund managers of the scheme Franklin India Feeder - Franklin U. S. Opportunities Fund (FIF-FUSOF) - Growth

18.9964 17.5284 8.37% 11.2913 55.24% N.A N.A 10 24.94% 18,996 13.2.2012

B:Russell 3000 Growth - - 14.71% - 50.84% - N.A - 27.86% 20,306

Additional Benchmark - - N.A - N.A - N.A - N.A N.A

Franklin India Prima Fund (FIPF)-Growth 632.4058 354.9962 78.14% 330.5324 7.40% 228.8636 44.42% 10 21.72% 632,406 1.12.1993

B:CNX 500 - - 37.82% - 3.61% - 31.84% - 10.38% 80,252 B:CNX Midcap - - 55.91% - -5.10% - 39.16% - N.A N.A AB:CNX Nifty - - 31.39% - 6.76% - 27.70% - 10.50% 82,173 Franklin Build India Fund (FBIF) - Growth

27.8689 14.3806 93.80% 13.5587 6.06% 9.6912 39.91% 10 21.22% 27,869 4.9.2009

B:CNX 500 - - 37.82% - 3.61% - 31.84% - 11.26% 17,650 AB:CNX NIFTY - - 31.39% - 6.76% - 27.70% - 11.31% 17,697 Franklin India Smaller Companies Fund (FISCF) - Growth

36.6957 19.3219 89.92% 17.0651 13.22% 11.2492 51.70% 10 15.60% 36,696 13.1.2006

B:CNX Midcap - - 55.91% - -5.10% - 39.16% - 12.98% 29,875 AB:CNX Nifty - - 31.39% - 6.76% - 27.70% - 12.63% 29,056 Franklin India Opportunities Fund (FIOF)

- Growth 53.6789 33.8503 58.58% 33.1418 2.14% 25.9909 27.51% 10 11.97% 53,679 21.2.2000

B:S&P BSE 200# - - 35.47% - 4.38% - 30.98% - 0.10% 10,145

AB:CNX Nifty - - 31.39% - 6.76% - 27.70% - 11.01% 47,235 Franklin Asian Equity Fund (FAEF) - Growth

16.0615 14.7110 9.18% 13.0929 12.36% 10.9755 19.29% 10 7.04% 16,062 16.1.2008

B: MSCI Asia (ex Japan) Standard Index - - 4.28% - 13.14% - 23.77% - 6.90% 15,910 AB: CNX Nifty - - 31.39% - 6.76% - 27.70% - 4.90% 13,954

Past performance may or may not be sustained in future. Fund Managers: FIHGCF: Roshi Jain & R. Janakiraman, FIPF: Roshi Jain and R. Janakiraman, FIF-FUSOF: Roshi Jain, FIPP: Anand Radhakrishnan & R. Janakiraman, FISCF: Roshi Jain & R. Janakiraman, FAEF: Roshi Jain, FIOF: R. Janakiraman, Anil Prabhudas. # Scheme benchmark, index adjusted for the period February 21, 2000 to March 10, 2004 with the performance of ET Mindex. *NAV(beginning of period). B: Benchmark, AB: Additional Benchmark, N.A.: Not Applicable. Dividends assumed to be reinvested and Bonus is adjusted. Discrete 12 months performance is absolute and since inception returns are compounded annualized. Dividends assumed to be reinvested and Bonus is adjusted. Load is not taken into consideration. The top three and bottom three funds managed by the fund manager(s) have been derived on the basis of the since inception returns. On account of difference in the type/category, asset allocation or investment strategy, inception dates, performances of these funds are not strictly comparable. Please refer to www.franklintempletonindia.com for details on performance of all schemes (including Direct Plans).

61

Past performance may or may not be sustained in future. The graph shows the movement of Rs. 10,000 invested in FIHGCF – Growth Plan, CNX 500 and CNX Nifty since inception of the fund. B: Benchmark and AB: Additional Benchmark. Inception Date: July 26, 2007. Period July 26,2007 – December 31,2014.Dividends are assumed to be reinvested and bonus is adjusted. Load is not taken into consideration.

Movement of Rs. 10,000 invested in FIHGCF, CNX 500 & CNX Nifty

FIHGCF: Rs. 28,483

B: CNX 500 - Rs. 17,599

AB: CNX Nifty - Rs. 17,929

Rup

ees

Calendar year

0

5,000

10,000

15,000

20,000

25,000

30,000J

ul-

07

No

v-0

7

Ma

r-0

8

Ju

l-0

8

No

v-0

8

Ma

r-0

9

Ju

l-0

9

No

v-0

9

Ma

r-1

0

Ju

l-1

0

No

v-1

0

Ma

r-1

1

Ju

l-1

1

No

v-1

1

Ma

r-1

2

Ju

l-1

2

No

v-1

2

Ma

r-1

3

Ju

l-1

3

No

v-1

3

Ma

r-1

4

Ju

l-1

4

No

v-1

4

FIHGCF B: CNX 500 AB: CNX Nifty




The information contained in this presentation is not a complete representation of every material fact regarding any industry, security or the fund. This communication is meant for use by the recipient and not for circulation/reproduction without prior approval. The views expressed by the portfolio managers are based on current market conditions and information available to them.

Risk Factors

62

Scheme Classification and Objective: Franklin India Prima Plus(FIPP): An open-end growth scheme with an objective to provide growth of capital plus regular dividend through a diversified portfolio of equities, fixed income securities and money market instruments. Franklin India Flexi Cap Fund(FIFCF): An open-end diversified equity fund that seeks to provide medium to long term capital appreciation by investing in stocks across the market capitalisation range. Franklin India High Growth Companies Fund(FIHGCF): An open-end diversified equity fund that seeks to achieve capital appreciation through investment in Indian companies/sectors with high growth potential. Please refer to website for latest load structure of respective schemes. Risk Factors: Mutual Fund investments are subject to market risks, read all scheme related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus. The past performance of the mutual funds managed by the Franklin Templeton Group and its affiliates is not necessarily indicative of future performance of the schemes. Investors are requested to review the prospectus carefully and obtain expert professional advice with regard to specific legal, tax and financial implications of the investment/participation in the scheme.

Statements / opinions / recommendations in this document, which contain words, or phrases such as “will”, “expect”, “should”, “believe” and similar expressions or variations of such expressions, are “forward looking statements”. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and / or investments.

© 2014 Franklin Templeton Investments. All rights reserved.

Franklin Templeton Asset Management (India) Pvt. Ltd. Indiabulls Finance Centre, Tower 2, 12th and 13th floor, Senapati Bapat Marg, Elphinstone (W) Mumbai 400013 Tel (91-22) 6751 9100 Fax (91-22) 6639 1281 www.franklintempletonindia.com

63

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Economy & Finance

Franklin templeton multi caps synergies of scale