Union KBC TRIGGER FUND - SERIES 2 A Close-ended Equity Scheme In case the predetermined growth is not achieved during the 3 year period, the scheme would mature at the end of 3 years at the then prevailing NAV. Automatically redeems your investment once the predetermined growth is achieved. # New Fund Offer Opens: 18th February, 2015. Closes: 4th March, 2015. # The scheme maturity would be on the 10th business day from the NAV of the Direct Plan of This product is suitable for investors who are seeking*: the Scheme crossing the trigger level as per the scheme documents or at the end of 3 years • Capital Appreciation during the tenure of the Scheme from the date of allotment, whichever is earlier. The redemption, on maturity of the scheme, • Investment predominantly in Equity and Equity related portfolio constituting would be at the applicable NAV of the respective Plan on the aforesaid 10th business day or at S&P BSE 200 Index** Companies. the end of the aforesaid 3 year period, as the case may be. • High Risk (Brown) This product is neither a guaranteed return product nor a guaranteed capital protection product. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. ** Disclaimer: The "Index" viz. "S&P BSE 200", is a product of Asia Index Private Limited (AIPL), Note: Risk is represented as: which is a joint venture of S&P Dow Jones Indices LLC or its affiliates ("SPDJI") and BSE (BLUE) investors understand that their principal will be at low risk Limited, and has been licensed for use by Union KBC Asset Management Company Private (YELLOW) investors understand that their principal will be at medium risk Limited. For the detailed disclaimer in this regard please refer to the Scheme Information (BROWN) investors understand that their principal will be at high risk Document (SID) of the Scheme. 1800 200 2268 investorcare@unionkbc.com www.unionkbcmf.com
Turnaround of India story during Calendar Year (CY) 2014 - A Snapshot 2
Events during CY 2014 that helped in positive market sentiments Historical outcome of General Elections 2014; after 30 years, a ✔ Parliament in session single political party forming the Central Government The new Central Government announced an elongated list of ✔ policy measures and reforms to enhance the economic growth, such as: • Emphasis on infrastructure development to reduce bottlenecks faced by the Industries. ‘Make in India’ initiative • Reducing and simplifying the process for doing business in India. • ‘Make in India’, an initiative to develop India as a global manufacturing base. • Opening of key sectors for public investment, both, domestic as well as foreign. • ‘Pradhan Mantri Jan Dhan yojana’, an initiative to bring the whole country under the banking net. 3
Global commodity prices from January 2014 – January 2015 Major global commodity prices declined on the 120 back of lower global demand. 110 Approximately 75% of India's crude oil requirements are met through imports. The crude 100 oil price at the current level, helps India in multiple ways, such as 90 Reduction in Current Account Deficit (CAD). ✔ 80 ✔ Lower Inflation Level. 70 ✔ To conserve Foreign Exchange. 60 50 40 Jan-14 Feb-14 Mar-14 Apr-14 May-14 June-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Brent Crude Gold Silver Data Source: Bloomberg 4
S&P BSE 200 Index** movement from January 2014 till January 2015. Post General Election Period Pre General Election Period 3700 Post election rally primarily led by fall in Post election rally led crude price by ‘feel good’ factor 3500 Start and end of 3300 General Election 2014 process 3100 2900 2700 2500 Decline in Crude Oil Prices 2300 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Equity market rally during CY 2014 can be broken into two periods: ✔ Period till May 16, 2014 – Markets rallied on the back of Pre General Election expectation. Period post May 16, 2014 – Markets rallied on the back of historical election results that boosted positive sentiments, further ✔ supported by favorable commodity prices and enhanced confidence of both Foreign as well as domestic investors. Data Source: Bloomberg ** Note: For the detailed Benchmark disclaimer please refer the last page. 5
CY 2014 was a strong year for the Equity Markets. Will it continue further? 6
Factors that may keep the BALL ROLLING…….. Interest EPS Credit P/E Inflation Rate Growth Growth Valuation Lower inflation may kick start interest rate cut cycle. ✔ ✔ Lower interest rate may further boost Credit Growth. ✔ Credit Growth may prompt business expansion. ✔ Business expansion may help in improving Earnings Per Share (EPS). EPS growth may lead to Price Earning (P/E) ratio re-rating. ✔ The above sequence is well connected and may help the market scale up further, fundamentally. 7
Are there reasons to believe that the party is not over yet? 8
Improving factors that could support the market further……. Reducing CPI (YoY) inflation level……… Much needed reduction in inflation level due to: 12.00% soft food article prices ✓ 11.00% 10.00% ✓ lower crude oil prices 9.00% 8.00% ✓ higher base effect 7.00% 6.00% Lower Inflation level has set the stage for lower interest 5.00% rate regime. 4.00% Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 Softer Interest Rates may be a reality going forward………. Inflation level reaching under Reserve Bank of India’s (RBI) target level, created the headroom for reducing the 11.00% 10.00% Interest Rate. RBI reduced the benchmark rates by 0.25% 9.00% 8.00% on 15th January 2015. RBI maintained status quo on rates 7.00% in the monetary policy review meeting held on 3rd 6.00% 5.00% February 2015. 4.00% 3.00% Rate cut after a long pause Feb-01 Jan-11 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-12 Jan-13 Jan-14 Jan-15 In CY 2015, RBI may cut rates further to support economic growth and boost credit growth. Repo Reverse Repo Bank Rate (Marginal Standing Facility) Data Source: Bloomberg, Reserve Bank of India 9
Improving factors that could support the market further……. (continued) Credit Growth at lowest level……… Reducing Interest Rate regime could fuel credit offtake, which is at a multi year low. 35% 32% 32% 31% 30% 26% 26% Rise in Credit Growth will lead to higher business 23% 25% expansion which may in turn support rise in Earning Per 19% 16% 18% 23% 20% Share (EPS). 15% 14% 15% 16% 16% 17% 12% 11% 11% 11% 10% CY 1996 CY 1997 CY 1998 CY 1999 CY 2000 CY 2001 CY 2002 CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 CY 2011 CY 2012 CY 2013 CY 2014 EPS Growth Trend……… As the economic trend picks up, EPS growth could be well supported by positive trend in corporate sales leading to 1600 1400 higher corporate profit margins. Trend line depicts the 1200 moving average In Rupees 1000 The trend line depicts the moving average of EPS over a 800 1462 1181 1109 600 long term period. Growth in EPS in CY 2014, higher than 942 871 780 780 400 736 606 the average may be an indicator of improving EPS going 505 387 200 272 312 253 231 231 253 195 196 210 forward. 0 CY 1995 CY 1996 CY 1997 CY 1998 CY 1999 CY 2000 CY 2001 CY 2002 CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 CY 2011 CY 2012 CY 2013 CY 2014 Data Source: Bloomberg, Reserve Bank of India Note: EPS of S&P BSE SENSEX Index is used to depict broader market. 10
Improving factors that could support the market further…….. (continued) Current P/E level still closer to the long term average… Historically the P/E ratio of S&P BSE SENSEX Index has touched 32.24x on the higher side. 32 Historical long term average P/E ratio of S&P BSE 32.34 SENSEX Index has been around 18.11x (18.11 times 27 earnings). P/E (X times) 22 19.67 Current market P/E ratio at 19.67x, is anyway close to 17 the long term average level and the expected EPS 18.11 expansion should bring back the P/E level further 12 down to the long term average level; making the market more attractive for further investments. 7 Jan-95 Jan-96 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Higheest Sensex P/E Average P/E Sensex P/E Improving macro economic factors are creating a compelling reason for investing in equities now. Data Source: Bloomberg Note: P/E ratio of S&P BSE SENSEX Index is used to depict broader market. 11
Revisiting the Union KBC Trigger Fund as a Concept… 12
Typical dilemma an investor faces Is it a good time Sir, Time horizon? to invest? I have a solution that will answer Will I really all your make money? concerns When to exit? Often investors are well advised on all aspects related to investing, but very rarely somebody advises them on when to exit and book profit. 13
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