Composition by Assets

Composition by Rating

*ICRA has assigned a credit rating of (ICRA)A1+mfs to Franklin India Liquid Fund (FILF). ICRA’s mutual fund rating methodology is based on evaluating the inherent credit quality of the funds portfolio. As a measure of the credit quality of a debt fund’s assets. ICRA uses the concept of ‘credit scores’. These scores are based on ICRA’s estimates of credit risk associated with each exposure of the portfolio taking into account its maturity. To quantify the credit risk scores, ICRA uses its database of historical default rates for various rating categories for various maturity buckets. The credit risk Rating incorporate ICRA’s assessment of a debt fund’s published investment objectives and policies, its management characteristics, and the creditworthiness of its investment portfolio. ICRA reviews relevant fund information on an ongoing basis to support its published rating opinions. If the portfolio credit score meets the benchmark of the assigned rating during the review, the rating is retained. In an event that the benchmark credit score is breached, ICRA gives a month’s time to the debt fund manager to bring the portfolio credit score within the benchmark credit score. If the debt fund manager is able to reduce the portfolio credit score within the benchmark credit score, the rating is retained. If the portfolio still continues to breach the benchmark credit score, the rating is revised to reflect the change in credit quality.

CRISIL Ratings’ assessment of a rated fund’s credit quality is based on the creditworthiness of the fund’s portfolio. CRISIL Ratings has developed a credit quality matrix to assess the aggregate credit quality of a fund’s underlying portfolio. The matrix is a set of credit factors and credit scores derived scientifically from the default and transition rates of CRISIL Ratings’ long-term ratings. The credit factors reflect the expected default behaviour of the respective securities in the portfolio, and the expected deterioration in their credit quality. The lower the credit factor for each security, the higher would be its inherent credit quality. The credit factors are applied to the proportion of securities held in each rating category to arrive at the credit score for the portfolio. The rating on the fund is assigned on the basis of the fund’s total credit score. A rated fund needs to maintain, at all times, a credit score consistent with its assigned rating. An evaluation of the portfolio investments done for the last six months indicates that Franklin India Liquid Fund has maintained its credit score consistently. The assigned rating is valid only for 'Franklin India Liquid Fund'. The rating of CRISIL Ratings is not an opinion of the AMCs willingness or ability to make timely payments to the investor. The rating is also not an opinion on the stability of the NAV of the Fund, which could vary with market developments.

All investments in debt funds are subject to various types of risks including credit risk, interest rate risk, liquidity risk etc. Some fixed income schemes may have a higher concentration to securities rated below AA and therefore may be exposed to relatively higher risk of downgrade or default and the associated volatility in prices which could impact NAV of the scheme. Credit rating issued by SEBI registered entities is an opinion of the rating agency and should not be considered as an assurance of repayment by issuer. There is no assurance or guarantee of principal or returns in any of the mutual fund scheme.

This scheme has exposure to floating rate instruments . The duration of these instruments is linked to the interest rate reset period. The interest rate risk in a floating rate instrument or in a fixed rate instrument hedged with derivatives is likely to be lesser than that in an equivalent maturity fixed rate instrument. Under some market circumstances the volatility may be of an order greater than what may ordinarily be expected considering only its duration. Hence investors are recommended to consider the unadjusted portfolio maturity of the scheme as well and exercise adequate due diligence when deciding to make their investments.