You look for options in everying you do. Why not when it comes to your tax-saving instruments? Before you invest, #AskWhatELSS November 2015
Few Questions That Boer Investors??Ÿ Tax saving avenues: Traditional or New? * Ÿ Is ELSS a prudent avenue? Ÿ When, how and which ELSS to invest in? Ÿ How important is market timing while investing? Ÿ What additional benefits does ELSS offer? * Equity linked tax saving schemes 1
Tax Saving Or Tax Planning: What Really Matters? WHERE ONE INVESTS In options which offer only Regular Income or Grow Potential also WHY ONE INVESTS Only Tax Savings or Weal Creation also WHAT TIME PERIOD ONE INVESTS Fixed Horizon or based on Risk Appetite and Cash Flow Requirements How ONE INVESTS One Time or Systematically Equity Linked Savings Schemes (ELSS) can be a one-stop solution for all ese questions 2
Key Features: ELSS vs Traditional Tax Saving Avenues Avenues Characteristics Lock in period (in years) ELSS PPF NSC Bank FD 3 15^ 5/10 5 Nature of gains Capital gains & Dividends Interest Interest Interest Tax treatment of gains^^ Capital gains & Dividends are Tax-free Interest is Taxfree Interest is Taxable Interest is Taxable Type of returns Market Linked** Fixed Fixed Fixed ^Partial widrawals are allowed from 7 financial year and subject to conditions. However, full amount can only be widrawn after 15 years. Source: www.indiapost.gov.in for PPF and NSC and www.sbi.co.in for Bank FD. ^^ The information provided is for general information purpose only and e disclosures in respect of e tax implications are in accordance wi prevailing tax laws and ere can be no assurance or guarantee at e tax implications prevailing at e time of investment in e scheme will endure indefinitely. Furer, statements wi regard to tax implications mentioned herein are mere expressions of opinion and are not representations of e mutual fund to induce any investor to acquire units of e schemes of e mutual fund. In view of e individual nature of e implications, each investor is advised to consult wi his or her own tax advisors/auorised dealers wi respect to e specific tax and oer implications arising out of his or her participation in e schemes. **Returns are subject to market risks. 3
How Much Tax Can You Save? Under section 80C, 80CCC and 80 CCD (1) of Income Tax Act 1961, an Individual / HUF is entitled to an aggregate amount of deduction from Gross Total Income upto Rs. 1.5 Lacs (from AY 2016-17) on specified qualifying investments / contributions / deposits / payments. Investments / Contributions / Deposits / Payments of Rs. 1,50,000 Tax savings upto Rs. 51,912* *Assuming maximum marginal tax rate of 34.61% (including 30% income tax, 12% surcharge, 2% education cess and 1% secondary and higher education cess) 4
ELSS: Investment Rationale BETTER INFLATION ADJUSTED RETURNS Equities have e potential to generate Real Positive Returns (adjusted for inflation) WEALTH GENERATION OVER LONG TERM Equities may help in Generating Weal over long term PROFESSIONAL MANAGEMENT Active portfolio management wi an objective to Reduce Volatility and Generate Alpha 5
Inflation Can Eat Into Your Returns MILK Loaf of Bread 1 Litre Milk 1 Litre Petrol Higher Education 2000 10 25 28 3 lakhs 2015 20 45 69 17 lakhs 2020 29* 60* 92* 23 lakhs* 2030 48* 108* 165* 41 lakhs* *Assuming Inflation @ 6% for years 2020 and 2030. However, Equities may generate real positive > returns (adjusted for inflation) Average 3 year Average rolling return** for 11.9% 8.2% Inflation^ S&P BSE Sensex Past performance may or may not be sustained in future. **Returns: Compounded Annualized, 3 year rolling (wi 1 mon shift) over a 11 year period from 30-Sep-2004 to 30-Oct-2015. ^Inflation taken for period between 30-Sep-2004 & 30-Oct-2015. Upto Dec 2011 CPI IW data is taken. From Jan 2012 CPI Combined data (new series) is taken. 6
Equities (S&P BSE Sensex): Long Term Potential 70.0% 60.0% 62.2% Historical instances of +ve Performance Historical instances of -ve Performance 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% 47.2% 85.5% 98.0% 100% 100% 14.5% 2.0% 29.3% 0% 0% 21.1% 15.0% 16.1% 16.1% 16.3% 10.5% 3.7% 3 Year 5 Year -1.5% 7 Year 10 Year -18.5% Maximum Returns Minimum Returns Average Returns Equities may help in generating weal over long term Past performance may or may not be sustained in future. Period 10.04.1999 to 30.10.2015. Returns greater an 1 year period are compounded annualized. Note: The above graph shows e performance on a daily rolling return basis to compute returns for respective periods (3,5,7 and 10 years) 7
ELSS: Key Benefits LOWER LOCK-IN PERIOD ELSS currently has lowest lock-in period (3 years) among all tax saving investment avenues under section 80C of Income Tax Act,1961 TAX-FREE GAINS Gains (eier dividends or long term capital gains) are tax free as per current tax laws OPERATIONAL EASE Investment can be made eier in lumpsum or systematically (SIPs) POWER OF TWO Tax Saving + Potential for Long Term Weal Creation 8
PRESENTING FRANKLIN INDIA TAXSHIELD (FIT) An open end equity linked savings scheme at is eligible for tax benefits on investments up to Rs. 1.5 Lac under section 80C of e Income Tax Act, 1961 Investing in an ELSS gives you e double advantage of saving tax and benefiting from e grow potential of equities. What s more, it has a lock-in period of only 3 years. 9
About The Fund FRANKLIN INDIA TAXSHIELD Blend Of Grow And Value Identifies Opportunities Across Market Cap Resilient Across Market Cycles Long Term Dividend Track Record 10
Investment Style Across market caps Blend of grow and value Grow Blend Value Size (Market Cap) Large Medium Small 11
Capitalizing On Opportunities Across Market Cap Franklin India Taxshield (FIT) (Allocation to Large Cap, Mid Cap & Small Cap) 100% 80% 60% 40% 20% 0% Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Large Cap (%) Mid Cap (%) Small Cap (%) Focused on identifying opportunities irrespective of market cap Past performance may or may not be sustained in future. Information is historical and may not reflect current or future portfolio characteristics. Portfolio holdings are subject to change. Source: As per e internal classification. Data is as on Oct 30, 2015. Equity allocation in e fund is rebased to 100%. 12
Stock Picking Remains Key 5 Years (ending Oct 30, 15) Attribution Analysis Allocation Effect (A) Selection Effect (B) Interaction Effect (C) Total Alpha* (A+B+C) Franklin India Taxshield 1.35 11.78-1.34 11.79 Ÿ Stock selection clearly e key contributor to performance Ÿ Stock picking ability has ensured performance holds up well over e medium to long term, irrespective of how allocation decisions fared Allocation Effect: Sectoral overweight or underweight position in e fund wi respect to benchmark. Selection Effect: Wiin e selected sectors, e fund manager s endeavour would be to buy/sell securities at may optimize return compared to e benchmark. Interaction: It measures e combined impact of e fund manager s stock selection and asset allocation decisions. Past performance may or may not be sustained in future. Information is historical and may not reflect current or future portfolio characteristics. Portfolio holdings are subject to change. Source: Factset Data is as on Oct 30, 2015.*Alpha is represented in percentage. 13
Contributors / Detractors In The Last 3 Years Sector Average Weight (%) Portfolio Total Return (%) Benchmark Index Average Weight (%) Total Return (%) Allocation Effect(A) Selection/ Interaction Effect (B) Total Effect (A+B) Top 3 Contributors Industrials 11.03 41.32 8.54 17.49 0.82 2.76 3.58 Financials 27.60 23.33 27.38 16.80 0.20 2.49 2.68 Consumer Discretionary 10.08 42.69 10.90 23.04 0.11 2.27 2.38 Detractors Information Technology 9.43 27.56 12.27 28.30-0.16 0.05-0.11 Indicates high contribution to e total effect Past performance may or may not be sustained in future. Source: Factset as on Oct 30, 2015. Information is historical and may not reflect current or future portfolio characteristics. Portfolio holdings are subject to change. 14
Fund Facts: Long Term Dividend Track Record Year Record Date Record Date NAV Dividend Per Record Date NAV (Rs.) Dividend Yield* (Rs) Direct Unit (Rs.) (A) Dividend Plan (B) (A/B) Dividend Plan 2015 January 30 3.00 47.2441 47.9514 6% 2014 January 24 3.00 31.1896 31.3999 10% 2013 January 18 2.00 32.2527 32.2617 6% 2012 February 03 3.00 30.3111 NA 10% 2011 January 14 4.00 34.0334 NA 12% 2010 January 15 3.00 33.0523 NA 9% 2008 December 17 3.00 20.6681 NA 15% 2007 November 14 8.00 46.8922 NA 17% January 10 8.00 39.43 NA 20% 2006 February 15 3.50 38.01 NA 9% 2005 March 18 3.00 27.25 NA 11% 2004 February 24 4.00 24.01 NA 17% 2001 March 30 1.25 11.57 NA 11% 2000 May 24 6.00 19.82 NA 30% March 31 8.00 31.02 NA 26% Past performance may or may not be sustained in future. Dividends on face value of Rs.10/-. Pursuant to payment of dividend, e NAVs of e schemes would fall to e extent of payout and statutory levies (as applicable). *Dividend yield is mentioned for Dividend option. 15
Fund Facts: Scheme Performance Scheme NAV as on Sep 30, 2015 Sep 30, 2014 to Sep 30, 2015 Discrete Returns (%) Sep 30, 2013 to Sep 30, 2014 Sep 28, 2012 to Sep 30, 2013 Since inception till Sep 30, 2015 Value of Investment of Rs.10,000 since inception NAV* Returns NAV* Returns NAV* Returns NAV* Returns Franklin India Taxshield (FIT) - Grow 420.7988 362.2352 16.17% 227.6271 59.14% 227.1513 0.21% 10 25.46% 420,799 10.04.1999 B:CNX 500 - - 3.59% - 46.08% - -2.49% - 14.69% 95,728 AB:CNX NIFTY - - -0.20% - 38.87% - 0.56% - 13.45% 80,017 Performance of Top 3 and bottom 3 schemes managed by e fund managers of e scheme Franklin India Bluechip Fund (FIBCF) - Grow 346.7231 314.2892 10.32% 222.2478 41.41% 223.6095-0.61% 10 22.43% 831,721 1.12.1993 B:S&P BSE SENSEX - - -1.79% - 37.41% - 3.29% - 9.95% 79,429 AB:CNX NIFTY - - -0.20% - 38.87% - 0.56% - 9.92% 78,861 Franklin Infotech Fund (FIF) - Grow 118.9714 109.7392 8.41% 81.6113 34.47% 63.9488 27.62% 10 20.34% 237,975 22.8.1998 B: S&P BSE Information Technology # - - 8.33% - 36.33% - 32.36% - N.A. N.A. AB:CNX NIFTY - - -0.20% - 38.87% - 0.56% - 13.91% 92,921 Franklin India Prima Plus (FIPP) - Grow 437.7350 375.2566 16.65% 236.0835 58.95% 235.1855 0.38% 10 19.70% 437,735 29.9.1994 B:CNX 500 - - 3.59% - 46.08% - -2.49% - 8.99% 61,074 AB:CNX Nifty - - -0.20% - 38.87% - 0.56% - 8.95% 60,612 Franklin India Life Stage Fund of Funds (FILSF)- Past performance may or may not be sustained in future. Fund Managers: FIBCF: Anand Radhakrishnan & Anand Vasudevan, FIT: Anand Radhakrishnan & Anil Prabhudas, FIPP: Anand Radhakrishnan & R. Janakiraman, FIF: Anand Radhakrishnan, 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). $Benchmark: The 50s Plus Plan - 20% S&P BSE Sensex+ 80% Crisil Composite Bond Fund Index; The 50s Plus Floating Rate Plan - 20% S&P BSE Sensex + 80% Crisil Liquid Fund Index. FIFTF XVII : 20% CNX 500 + 80% Crisil Short-Term Bond Fund Index. Discrete 12 mons performance is absolute and since inception returns are compounded annualized. Load is not taken into consideration. Dividends assumed to be reinvested and Bonus is adjusted. The top ree and bottom ree funds managed by e fund manager(s) have been derived on e basis of e since inception returns. On account of difference in e type/category, asset allocation or investment strategy, inception dates, performances of ese funds are not strictly comparable. Please refer to www.franklintempletonindia.com for details on performance of all schemes (including Direct Plans). # Index adjusted for e period September 16, 2005 to April 15, 2015 wi e performance of S&P BSE IT Index. * The fund matured on November 4, 2015. 16 Inception Date 29.0311 26.6347 9.00% 22.9798 15.90% 21.6267 6.26% 10 9.95% 29,031 9.7.2004 The 50s Plus Floating Rate Plan Grow Benchmark$ - - 6.56% - 14.75% - 7.59% - 9.30% 27,141 Additional Benchmark - - N.A - N.A - N.A - N.A N.A Franklin India Fixed Tenure Fund Series XVII 13.0661 12.0392 8.53% 10.3948 15.82% N.A N.A 10 9.63% 13,066 2.11.2012 (FIFTF XVII)* - Grow Benchmark$ - - 8.73% - 16.76% - N.A - 10.42% 13,345 AB: Crisil 10 Year Gilt Index - - 13.76% - 6.85% - N.A - 7.66% 12,397 FILSF - The 50s Plus Plan - Grow 27.5826 24.9554 10.53% 21.3279 17.01% 20.7591 2.74% 10 8.95% 27,583 1.12.2003 Benchmark$ - - 9.68% - 16.49% - 3.53% - 8.45% 26,127 Additional Benchmark - - N.A - N.A - N.A - N.A N.A
Fund Facts: Market Resilience 250.00% 200.00% 150.00% 100.00% 50.00% 0.00% -50.00% -100.00% Tech bubble peak Tech Crash & 9/11 Recovery post 9/11 India Re-rating 2008 Peak Global crisis Post-Crisis Peak Current Returns since inception Tech Bubble Peak: 10 Apr 99 11 Feb 00. Tech Crash and 9/11: st 11 Feb 00 21 Sep 01. Recovery Post 9/11: st 21 Sep 01 14 Jan 04. India Re-rating: 14 Jan 04-10 May 06. 2008 Peak: 10 May 06-8 Jan 08. Global Crisis Lows: 8 Jan 08-9 Mar 09. Post Crisis Peak: 9 Mar 09 9 Nov 10. FIT-Grow B: CNX 500 AB: CNX Nifty Current: 9 Nov 10 30 Sep 15. Past performance may or may not be sustained in future. Returns are calculated for grow plan and are compounded annualized for more an 1 year period. Inception Date: April 10 1999. Dividends are assumed to be reinvested and bonus is adjusted. Load is not taken into consideration. B: Benchmark, AB: Additional Benchmark. 17
Fund Facts: Performance Over Time 500000 Movement of Rs. 10,000 invested in FIT, CNX 500 & CNX Nifty 450000 400000 FIT: Rs. 420,799 350000 Rupees 300000 250000 200000 150000 100000 50000 B: CNX 500 - Rs. 95,728 AB: CNX Nifty- Rs. 80,017 0 Apr-99 Mar-00 Feb-01 Jan-02 Dec-02 Oct-03 Sep-04 Aug-05 Jul-06 Jun-07 May-08 Apr-09 Mar-10 Feb-11 Jan-12 Dec-12 Nov-13 Oct-14 Sep-15 FIT B: CNX 500 AB: CNX Nifty Calendar year Past performance may or may not be sustained in future. The graph shows e movement of Rs. 10,000 invested in FIT Grow Plan, CNX 500 and CNX Nifty since inception of e fund as on Sep 30, 2015. B: Benchmark and AB: Additional Benchmark. Inception Date: April 10, 1999. Please refer www.franklintempletonindia.com for details on performance of all schemes (including Direct Plans). 18
Fund Facts: Rolling Returns Franklin India Taxshield 80.0% 70.0% 74.3% Historical instances of +ve Performance Historical instances of -ve Performance 60.0% 50.0% 40.0% 30.0% 23.1% 93.7% 6.3% 53.7% 100% 0% 23.6% 44.7% 100% 0% 22.6% 31.4% 100% 0% 22.9% 20.0% 16.3% 10.0% 3.7% 8.9% 0.0% -10.0% -20.0% 3 Year 5 Year 7 Year 10 Year -12.9% Maximum Returns Minimum Returns Average Returns Though past performance may or may not be sustained in future, historically, ere have been no instances of loss for investments held for over 5 years Past performance may or may not be sustained in future. Period 10.04.1999 to 30.09.2015. Load is not taken into consideration. Dividends are assumed to be reinvested. Returns greater an 1 year period are compounded annualized. Note: The above graph shows e performance on a daily rolling return basis to compute returns for respective periods (3,5,7 and 10 years). 19
Rolling Returns: Benchmark & Additional Benchmark B: CNX 500 AB: CNX Nifty 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 65.2% 48.1% 82.8% 97.8% 100% 100% 17.2% 2.2% 30.2% 0% 22.5% 0% 15.9% 16.7% 16.3% 16.5% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 58.6% 85.6% 14.4% 14.6% 44.5% 98.6% 1.4% 15.7% 28.4% 100% 0% 15.6% 20.6% 100% 0% 15.8% 10.0% 0.0% -10.0% -20.0% -30.0% 2.7% 9.4% 3 Year 5 Year 7 Year 10 Year -2.6% -23.5% 10.0% 0.0% -10.0% -20.0% -30.0% 3.7% 10.6% 3 Year 5 Year 7 Year 10 Year -1.2% -16.4% Maximum Returns Minimum Returns Average Returns Historical instances of +ve Performance Historical instances of -ve Performance Past performance may or may not be sustained in future. B: Benchmark, AB: Additional Benchmark for Franklin India Taxshield. Returns: Compounded Annualized. Period 10.04.1999 to 30.09.2015 Returns greater an 1 year period are compounded annualized. Note: The above graph shows e performance on a daily rolling return basis to compute returns for respective periods (3,5,7 and 10 years). 20
Why Invest In Franklin India Taxshield? 1 Avail dual benefits Tax Saving + Grow potential (rough equities) 2 3 Benefit from Blend Investment style (combination of Grow and Value) Market Cap agnostic portfolio wi focus on Bottom up stock selection 4 Long term Performance + Dividend track record of over 15 years 21
Risk Factors This presentation is dated November 2015. The information contained in is presentation is not a complete representation of every material fact regarding any industry, security or e fund and is neier an offer for units nor an invitation to invest. This communication is meant for use by e recipient and not for circulation/reproduction wiout prior approval. The views expressed by e portfolio managers are based on current market conditions and information available to em and do not constitute investment advice. Regulatory/ taxation details mentioned in e article are provided on a best effort basis and are as per e existing laws and subject to change from time to time. The recipient is advised to consult its advisor/ tax consultant prior to arriving at any investment decision. Scheme Classification and Objective: Franklin India Taxshield (FIT): An open-ended Equity Linked Savings Scheme wi an objective to provide medium to long term grow of capital along wi income tax rebate. Load Structure: FIT Entry Load: Nil: Exit Load: Nil. All subscriptions in FIT are subject to a lock in period of 3 years from e date of allotment and e unit holder cannot redeem, transfer, assign or pledge e during e period. The Trustee, AMC, eir directors or eir employees shall not be liable for any of e tax consequences at may arise, in e event at e schemes are wound up before e completion of e lock-in period. Investors are requested to review e prospectus carefully and obtain expert professional advice wi regard to specific legal, tax and financial implications of e investment/participation in e scheme. The NAVs of e schemes may go up or down depending upon e factors and forces affecting e securities market. The Mutual Fund is not guaranteeing or assuring any dividend under any of e schemes and e same is subject to e availability and adequacy of distributable surplus. The past performance of e mutual funds managed by e Franklin Templeton Group and its affiliates is not necessarily indicative of future performance of e schemes. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Franklin Templeton Asset Management (India) Pvt. Ltd. Indiabulls Finance Centre, Tower 2, 12 and 13 floor, Senapati Bapat Marg, Elphinstone (W), Mumbai 400013 Tel (91-22) 6751 9100 Fax (91-22) 6639 1281 www.franklintempletonindia.com