Franklin India Opportunities Fund
An Open – end Growth Scheme
Sale of units on an ongoing basis at a Net Asset Value (NAV) related price
Asset Management Company : Templeton Asset Management (India) Pvt. Ltd
Mutual Fund : Templeton Mutual Fund
Trustee Company : Templeton Trust Services Pvt. Ltd.
The particulars of Templeton Floating Rate Income Fund have been prepared in
accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations
1993 as amended till date, and filed with SEBI, the units being offered for public
subscription have not been approved or disapproved by the Securities and Exchange Board
of India nor has the Securities and Exchange Board of India certified the accuracy or
adequacy of the Offer Document.
The Offer Document sets forth concisely the information about the scheme that a prospective
investor ought to know before investing. Please retain this Offer Document for future reference.
The date of this revised Offer Document is March 10, 2004.
This Offer Document shall remain effective until a 'material change' (other than a change in
fundamental attributes and within the purview of the Offer Document) occurs and thereafter
changes shall be filed with SEBI and circulated to the unitholders along with the quarterly / half
In this Offer Document all references to “U.S.$” or “$” are to United States of America Dollars
and “Rs.” are to Indian Rupees.
The Offer Document should be retained for future reference. Before investing, investors should
also ascertain about any further changes in this Offer Document after the date of Offer Document
From the Mutual Fund / Investor Service Centres / Website / Distributors or Brokers.
S. No. CHAPTER PAGE NO.
I. DEFINITIONS 3
II. HIGHLIGHTS & RISK FACTORS 5
III. INTRODUCTION 6
IV. CONSTITUTION / MANAGEMENT OF THE MUTUAL FUND 6
V. INVESTMENT OBJECTIVES AND POLICIES 29
VI. MANAGEMENT OF THE FUND 36
VII. HOW TO INVEST 37
VIII. HOW TO REDEEM 39
IX. INFORMATION ABOUT UNITS OF THE SCHEME 41
X. TAX BENEFITS 54
XI. NAV AND VALUATION OF ASSETS OF THE SCHEME 59
XII. EXPENSES 64
XIII. ASSOCIATE TRANSACTIONS 66
XIV. CONDENSED FINANCIAL INFORMATION 71
XV. INVESTOR RIGHTS AND SERVICES 86
XVI. PENDING LITIGATION OR PROCEEDINGS 94
XVII. DUE DILIGENCE CERTIFICATE 97
In this Offer Document the following definitions have been used:
AMC / Asset Templeton Asset Management (India) Pvt. Ltd., the asset
Management management company, set up under the Companies Act, 1956 and
Company/ authorized by SEBI to act as Asset Management Company to the
Investment schemes of Templeton Mutual Fund.
Applicable NAV “Applicable NAV for Subscriptions” is the Net Asset Value per unit of
for Subscriptions the business day on which the application for subscription is accepted.
Applicable NAV “Applicable NAV for Redemptions” is the Net Asset Value per unit of
for Redemptions the business day on which the application for redemption is accepted.
Business Day A day other than:
(i) Saturday and Sunday.
(ii) a day on which the banks in Mumbai and/or RBI are closed for
business / clearing.
(iii) a day which is a public and/or bank holiday at a collection
centre where the application is received.
(iv) a day on which sale and repurchase of units is suspended by the
(v) a day on which normal business could not be transacted due to
storms, floods, bandhs, strikes or such other events as the AMC
may specify from time to time.
(vi) A day on which register of unitholders is closed.
(vii) A day on which the underlying scheme/s is closed for
Subscription/Redemption or determination of the NAV of the
The AMC reserves the right to declare any day as a Business Day or
otherwise at any or all collection centres.
Custodian A custodian appointed for holding the securities and other assets of the
scheme which for the time being is Citibank N.A., Mumbai branch.
Entry Load / Sales Load on ongoing purchases.
Exit Load / Load on redemption other than CDSC.
Investment Investment Management Agreement (IMA) dated January 5, 1996
Management executed between Templeton Trust Services Pvt. Ltd. and Templeton
Agreement or IMA Asset Management (India) Pvt. Ltd.
ISC Investor Service Centre of the Asset Management Company.
Money Market Commercial papers, commercial bills, treasury bills, Government
Instruments securities having an unexpired maturity upto one year, call or notice
money, certificate of deposit, usance bills, (repos / reverse repos), and any
other like instruments as specified by the Reserve Bank of India from
time to time including mibor linked securities, fixed deposits, call
products having unexpired maturity upto one year.
Mutual Fund Templeton Mutual Fund, a trust set up under the provisions of Indian
Trusts Act 1882, and registered with SEBI vides Registration No.
NAV Net Asset Value of the Units of Templeton Floating Rate Income Fund.
Offer Document The document issued by Templeton Mutual Fund offering units of
Franklin India Opportunities Fund.
Public Offering ‘POP’ or the Sale Price is the price at which the units are proposed to
Price (POP) / Sale be sold on an ongoing basis and may include permissible load amount
Price as and when an entry load is introduced. (see Section “Public Offering
RBI Reserve Bank of India, established under the Reserve Bank of India
Registrars Registrar for the time being of the Mutual Fund, which is in-house,
Templeton Asset Management (India) Pvt. Ltd.
Scheme Franklin India Opportunities Fund (FIOF)
SEBI Securities and Exchange Board of India established under Securities
and Exchange Board of India Act, 1992
SEBI Regulations SEBI (Mutual Funds) Regulations, 1996, as amended from time to
time, for the operation and management of Mutual Funds
Sponsor Templeton International Inc, a subsidiary of Franklin Resources Inc.,
based in San Mateo, California, USA.
Trust Deed The Trust Deed dated January 4, 1996 of Templeton Mutual Fund.
Trustee Templeton Trust Services Pvt. Ltd., a company set up under the
Companies Act 1956, and approved by SEBI to act as the Trustee to
the schemes of Templeton Mutual Fund.
Unit The interest of an investor which consists of one undivided share in the
Net Assets of Templeton Floating Rate Income Fund
Net Assets of Templeton Floating Rate Income Fund.
Unitholder A person holding Units in Templeton Floating Rate Income Fund.
II HIGHLIGHTS & RISK FACTORS
• Open end growth scheme.
• Option of Growth Plan and Dividend Plan.
• Dividend Plan offers Payout and Reinvestment Options.
• Favourable long term capital gains tax with indexation benefit.
• Sponsors are Templeton International Inc, a subsidiary of Franklin Resources Inc.,
based in San Mateo, California, USA.
• Tax benefits under Section 48 & Section 112 of the Income Tax Act, 1961.
RISK FACTORS AND SPECIAL CONSIDERATIONS
• Mutual funds and securities investments are subject to market risks and there is no
assurance or guarantee that the objective of the mutual fund will be achieved.
• As with any investment in securities, the Net Asset Value (NAV) of the units issued
under the scheme can go up or down depending on the factors and forces affecting the
• Past performance of the sponsors/the asset management company/mutual fund does not
indicate the future performance of the scheme of the mutual fund.
• Franklin India Opportunities Fund is the name of the scheme and does not in any manner
indicate either the quality of the scheme or its future prospects and returns.
• The performance of the scheme may be affected by changes in Government policies,
general levels of interest rates and risk associated with trading volumes, liquidity and
settlement systems in equity and debt markets.
• Engaging in securities lending is subject to risks related to fluctuations in collateral
The Sponsor is not responsible or liable for any loss resulting from the operation of the
Scheme beyond the initial contribution of Rs.1 lakh made by it towards setting up the Fund.
• The scheme may invest upto 5% of its net assets in unlisted equity and equity related
instruments, which could affect the liquidity of the scheme.
• Engaging in securities lending is subject to risks related to fluctuations in collateral value
and settlement/liquidity and counter party risks.
• To the extent the assets of the scheme are invested in overseas financial assets, there may
be risks associated with currency movements, restrictions on repatriation and transaction
procedures in overseas market.
• Derivatives are high risk, high return instruments. As they are highly leveraged, even a
small price movement in the underlying security could have a large impact on their value
and may also result in a loss. Also, the market for derivative instruments is nascent in
Franklin India Opportunities Fund (FIOF) is an open-end growth scheme designed to generate
capital appreciation by capitalizing on the long-term growth opportunities in the Indian
Investors have the option of investing in the Growth Plan and Dividend Plan.
Under this plan, the growth in NAV will reflect the appreciation of the value of investment.
Investors have the benefits of indexation of cost and favourable long-term capital gains tax.
Under this plan, it is proposed to distribute the returns to the investors in the form of dividends
out of distributable profits. Investors have the option of reinvesting the dividend or receiving
cash payouts. As the scheme is an open-end equity scheme, dividends are totally tax-free in the
hands of the investor.
IV CONSTITUTION / MANAGEMENT OF THE MUTUAL FUND
Templeton Mutual Fund (the “Mutual Fund”) has been constituted as a trust on January 4, 1996
in accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882) with Templeton
International Inc., as the Sponsor and Templeton Trust Services Private Limited as the Trustee.
The Trust Deed and the Supplementary Trust Deed have been registered under the Indian
Registration Act, 1908. The Mutual Fund was registered with SEBI on February 19, 1996 under
Registration Code MF-026-96-8.
Templeton Mutual Fund is sponsored by Templeton International, Inc. Templeton International
Inc., is a wholly owned subsidiary of Templeton worldwide Inc., which in turn is a wholly
owned subsidiary of Franklin Resources Inc. The sponsor was responsible for setting up and
establishing the Templeton Mutual Fund. The Sponsor is the Settler of the Mutual Fund Trust.
The Sponsor has entrusted a sum of Rs.1 lakh to the Trustee as the initial contribution towards
the corpus of the Mutual Fund. The Trustee has appointed Templeton Asset Management (India)
Private Ltd. as the Investment Manager.
The Sponsor is represented by Directors on the Board of the Trustee and the Investment Manager
in accordance with the Regulations. The Sponsor shall be responsible for discharging its
functions and responsibilities towards the Fund in accordance with Regulations and the various
constitutive documents of the Fund.
Templeton Asset Management (India) Pvt. Ltd. (TAMIL)/Nominees and Templeton Trust
Services Pvt. Ltd. (TTSL)/Nominees had acquired 100% shares in Pioneer ITI AMC Ltd. and
Pioneer ITI Mutual Fund Pvt. Ltd. respectively, in July 2002 after obtaining the approval from
SEBI. Subsequently the license of Pioneer ITI Mutual Fund was surrendered to SEBI for
cancellation. SEBI vide its letter dated February 17, 2003 cancelled the same.
FINANCIAL PERFORMANCE OF THE SPONSOR
(All figures are in Rupees million except per share data) (US$ = Rs.45.41 on January 14, 2004)
9/30/2003 9/30/2002 9/30/2001
(Rs. in millions) (Rs. in millions) (Rs. in millions)
Total income 119,174.00 114,365.09 106,931.47
Profit After Tax 22,832.15 19,648.91 22,010.23
Net Worth 195,721.64 193,759.93 180,636.44
Equity Capital 1,116.78 1,174.10 1,184.29
Earnings per Share 89.91 75.38 87.19
Book Value per Share 796.04 749.27 692.50
Dividend per Share 13.62 12.71 11.81
THE FRANKLIN TEMPLETON GROUP
Franklin Resources Inc. is a diversified financial services company based in San Mateo,
California, USA. Through its operating subsidiaries it provides a wide range of investment
products and services to worldwide clients. Templeton International Inc., the sponsor of the
Templeton Mutual Fund, is a wholly owned subsidiary of Templeton Worldwide Inc., which in
turn is a wholly owned subsidiary of Franklin Resources Inc. The Franklin Templeton Group is
one of the world’s largest investment management companies. Following are some of the key
data relating to Franklin Templeton’s Global Operations.
1. Assets Under Management
US$351.20 billion as at 27th February 2004 (Rs.15,89,531/- crores approximately)
2. Number of Shareholder Accounts
More than 10 million worldwide.
3. Number of Schemes Managed Globally
About 240 Open End Mutual Funds, Separately Managed Accounts and Other Investment
4. Global Offices
There are offices all over the world in over 28 countries including The United States of
America, Bahamas, Canada, Argentina, France, Germany, Italy, Luxembourg, Poland, Russia,
United Kingdom, Hong Kong, Singapore, Korea, India, China, Australia & South Africa.
THE FRANKLIN TEMPLETON EDGE
The Franklin Templeton Group is one the world’s largest investment management groups.
Created from the merger of Franklin Resources, Inc., Mutual Fund Series and Templeton
Worldwide, Inc., this group offers a wide range of investment products and services to
worldwide clients. The group’s equity funds are largely driven by the following two
First, the group manages a large number of global funds following the firm’s well known
‘bottom-up value investing’ approach. One of the most prominent tenets of this approach is:
“Never follow the crowd. Superior performance is possible only if you invest differently from
the crowd.” This is reflected in Templeton’s time tested strategy of buying bargains wherever
Second, the group manages a number of funds following a growth-oriented style of equity
investing. This includes funds like Franklin Growth Fund, Franklin Blue Chip Fund, and
Franklin Dynatech Fund (focused on technology stocks). These funds take a more top-down
approach and may be focused on a country, industry or sector. Funds following this approach
essentially seek investment opportunities in those companies that are geared towards growth or
are experiencing a turn-around in their operations.
FRANKLIN TEMPLETON IN INDIA: A LONG TERM COMMITMENT
As part of Franklin Templeton’s major thrust on investing in emerging markets around the
world, Franklin Templeton has been investing in India for the past several years. These
investments are based on original research and first hand understanding of the forces those
influence the economic environment. Franklin Templeton has established offices at more than
33 places in India including Ahmedabad, Bangalore, Calcutta, Chennai, Hyderabad, Kochi,
Lucknow, Mangalore, Mumbai, New Delhi and Pune with the current total staff numbers at 123.
Templeton Trust Services Private Limited (the “Trustee”), through its Board of Directors, shall
discharge its obligations to the Templeton Mutual Fund as the Trustee of the Mutual Fund. The
Trustee ensures that the transactions entered into by the AMC are in accordance with the SEBI
Regulations and reviews the activities carried on by the AMC on a quarterly basis. The Board of
Directors of Templeton Trust Services Private Limited held seven meetings during the year
In accordance with Regulation 18(15) of SEBI Regulations, the Trustees shall obtain the consent
of the unitholders -
a) whenever required to do so by SEBI in the interest of the unitholders; or
b) whenever required to so on the requisition made by three-fourths of the unitholders of any
c) When the majority of the trustees decide to wind up or prematurely redeem the units.
In accordance with Regulation 18(15A) of SEBI Regulations, the trustees shall ensure that no
change in the fundamental attributes of any scheme or the trust or fees and expenses payable or
any other change which would modify the scheme and affects the interest of unitholders, shall be
carried out unless,-
i a written communication about the proposed change is sent to each unitholder and an
advertisement is given in one English daily newspaper having nation wide circulation as
well as a newspaper published in the language of the region where the head office of the
mutual fund is situated; and
ii the unitholders are given an option to exit at the prevailing Net Asset Value without any
Explanation: In terms of SEBI Regulations and circular dated February 4, 1998, “Fundamental
Attributes” means and includes the following:
i. Type of a Scheme
• An Open end Scheme
• Sectoral Fund-Equity Fund-Balance Fund-Income Fund-Index Fund-Fund of Funds,
any other type of Fund.
ii. Investment Objective
• Main Objective - Growth-Income-Both
• Investment pattern - The tentative Equity-Debt-Money Market portfolio break-up
with minimum and maximum asset allocation, while retaining the option to alter
the asset allocation for a Institutional period on defensive considerations.
iii. Terms of Issue
• Liquidity provisions such as listing, repurchase, redemption
• Aggregate fees and expenses charged to the Scheme
• Any safety net or guarantee provided
The members of the Board of Directors of the Trustee (“the Board of the Trustee”) are: -
• Gregory E. McGowan*
Templeton Worldwide, Inc., 500 East Broward Boulevard, Suite 2100, Fort Lauderdale, FL -
Gregory E. McGowan is Executive Vice President, Director and General Counsel for
International Development of Templeton Worldwide, Inc. Mr. McGowan serves on various
Templeton Boards of Directors and also serves as Executive Vice President and General Counsel
of Templeton International Inc., the Organisation responsible for the expansion and operation of
Templeton business outside of North America. Prior to joining the Templeton organisation in
1986, Mr. McGowan was a senior attorney for the United States Securities and Exchange
Commission. He holds a B.A. Degree in Economics/International Affairs from the University of
Pennsylvania, an M.A. Degree from the University of Paris and a Juris Doctor from Georgetown
University Law Centre.
Details of other Directorships are as under:
Franklin Templeton Investments (Asia) Ltd.Franklin Templeton Management Luxembourg
Templeton Worldwide, Inc. Templeton Asian Direct Investments Ltd.
Templeton International, Inc. Templeton Franklin Global Distributors Ltd.
Templeton Global Advisors Limited Templeton Research & Management Venezuela,
Franklin Templeton Asset Management S.A. Franklin Templeton Services Ltd.
Franklin Templeton International Services Franklin Templeton Italia SIM SpA
Templeton Global Holdings Ltd. Franklin Templeton France S.A.
Franklin Templeton Investments Australia Franklin Templeton Asset Management S.A.
Franklin Templeton Holding Limited Happy Dragon Holdings Ltd.
Templeton Trust Services Private Ltd. Templeton Research Poland SP. z.o.o.
TRFI Investments Limited
• Anand J. Vashi, Chartered Accountant
Kalpataru Heritage, 5th Floor, 127 M G Road, Mumbai 400 023.
Anand Vashi is practicing Chartered Accountant and is Senior Partner of a firm of Chartered
Accountants and is a fellow member of the Institute of Chartered Accountants of India. He is
also on the board of various companies and is a trustee of several charitable trusts.
Details of other Directorships are as under:
A.J. Patel Investment & Trading Co. Pvt. Ltd. Director
Lucid Technologies Pvt Ltd. Director
Millars India Ltd. Director
Millars Mach Co. Pvt. Ltd. Director
Pedershaab Millars India Pvt Ltd. Director
• Percy Jal Pardiwalla, Advocate
16, Vishnu Mahal, 'D' Road, Churchgate, Mumbai 400 020.
• Bharat Doshi, Company Executive
8, St. Helen's Court, Dr. Gopalrao Deshmukh Marg, Mumbai 400 026
Mr. Bharat Doshi is presently the Executive Director - Finance & Corporate Affairs and
President - Trade & Financial Services Sector of Mahindra & Mahindra Ltd. Mr. Doshi holds a
Bachelor's Degree in Commerce and Master's Degree in Law from Mumbai University, and is a
Fellow Member of the Institute of Chartered Accountants of India and the Institute of Company
Secretaries of India. He has also attended the Program for Management Development (PMD) at
the Harvard Business School. Mr. Doshi joined Mahindra & Mahindra in 1973 and has held
various managerial positions over the past 27 years and was elevated to the Company's Board in
1992. Mr. Doshi serves on the Boards of several subsidiaries and associate companies in the
Mahindra Group, including Ford India Ltd. and Mahindra British Telecom Ltd. and is a member
of the Board of Governors of The Mahindra United World College of India and the Indian
Institute of Management, Kozhikode.
Details of other Directorships are as under:
Mahindra Intertrade Limited Director
Mahindra & Mahindra Financial services Limited Director
Mahindra Steel Service Centre Limited Director
Mahindra & Mahindra Limited Director
Mahindra Information Technology Services Limited Director
Mahindra Consulting Limited Director
Mahindra Holdings & Finance Limited Director
Ford India Limited Director
Mahindra British Telecom Limited Director
Godrej Consumer Product Limited Director
NSE.IT Limited Director
Mahindra Consulting Inc. Director
• Stephen Dover*, International Chief Investment Officer, Franklin Templeton Advisors, 336,
Royal Oaks, Vacaville, CA 95687, USA
Stephen H. Dover, CFA, is responsible for overseeing the investment functions of the locally
managed and distributed products outside of the United States and Canada. Currently he is
overseeing the investment areas of Franklin Templeton’s local asset management companies in:
South Korea, Japan, China, Taiwan, France, Italy, Hong Kong, Singapore, India, and Brazil. Mr.
Dover is a member of the Boards of Directors of Franklin Templeton’s Italian asset management
company, Indian Asset Management Company, South African joint venture, and the Brazilian
joint venture. Prior to serving in his current role, Mr. Dover was a founder and Chief Investment
Officer of Bradesco Templeton Asset Management (BTAM), in San Paulo, Brazil. BTAM, a
joint venture formed to serve the institutional market in Brazil, was sold to Bradesco in May
2001. While there Mr. Dover specialized in the management of Corporate Governance Funds.
Prior to joining Franklin Templeton in 1997, Mr. Dover was a portfolio manager and principle at
Newell Associates in Palo Alto, CA. Newell Associates is a subadvisor for the Vanguard Equity
Income Fund well as other institutional assets. Previously, Mr. Dover worked for Towers Perrin
Consulting in New York, London and San Francisco. Prior to graduate school, Mr. Dover was
vice president of Financial Planning at Lefcourt Financial Group, a Palo Alto, CA, based money
management and venture capital firm. Mr. Dover earned a B.A. in business administration from
Lewis and Clark College in Portland, OR and a M.B.A in Finance from The Wharton School of
the University of Pennsylvania. He is a Chartered Financial Analyst (CFA) as well as a Certified
Financial Planner (CFP). Stephen has worked or studied in: China, Costa Rica, England, Brazil
and the United States.
Details of other Directorships are as under:
Franklin Resources, San Mateo Managing Director
* These Directors represent sponsors of the Trustee Company and are associates of the sponsor.
RESPONSIBILITIES AND DUTIES OF THE TRUSTEE
(Substantial Provisions of the Trust Deed and the Regulations)
Pursuant to the Deed of Trust constituting the Mutual Fund and SEBI (MF) Regulations, the
Trustee, inter alia, has the following responsibilities and duties:
Pursuant to the Deed of Trust constituting the Mutual Fund and SEBI (MF) Regulations, the
Trustee, inter alia, has the following responsibilities and duties:
a) The Trustee shall ensure before the launch of any scheme that the asset management
i) systems in place for its back office, dealing room and accounting.
ii) appointed all key personnel including fund manager(s) for the scheme(s) and market,
to the Trustee, within fifteen days of their appointment, submitted their bio-data,
which shall contain the educational qualifications, past experience in the securities.
iii) appointed auditors to audit the accounts.
iv) appointed a compliance officer who shall be responsible for monitoring the
compliance of the Act, rules and regulations, notifications, guidelines, instructions
etc. issued by SEBI or the Central Government and for redressal of investor’s
v) appointed registrars and laid down parameters for their supervision.
vi) prepared a compliance manual and designed internal control mechanisms including
internal audit systems.
vii) specified norms for empanelment of brokers and marketing agents.
b) The Trustee shall obtain consent of the unit holders of the Scheme(s):
i) When the Trustee is required to do so by SEBI in the interests of the unitholders; or
ii) Upon the request of three-fourths of the unit holders of any scheme(s) under the
Mutual Fund; or
iii) If a majority of the directors of the Trustee company decide to wind up the scheme(s)
or prematurely redeem the units
c) In carrying out his / her responsibilities as a member of the Board of Trustee each Trustee
shall maintain an arms' length relationship with other companies, or institutions or
financial intermediaries or any body corporate with which he may be associated in any
transaction also involving the Mutual Fund.
d) No Trustee shall participate in the meetings of the Board of Trustee when any decisions
for investments in which he / she may be interested are taken.
e) All the Trustee shall furnish to the Board of Trustee, particulars of interest which he/she
may have in any other company, or institution or financial intermediary or any corporate
by virtue of his/her position as director, partner or with which he-she may be associated
in any other capacity.
f) The Trustee shall have the right to obtain from the AMC such information as is
considered necessary by the Trustee.
g) The Trustee shall ensure that the AMC has been diligent in empanelling brokers, in
monitoring securities transactions with brokers and avoiding undue concentration of
business with any broker.
h) The Trustee shall ensure that the AMC has not given any undue or unfair advantage to
any associates or dealt with any of the associates of the AMC in any manner detrimental
to the interest of unitholders.
i) The Trustee shall ensure that the transactions entered into by the AMC are in accordance
with the SEBI Regulations and the Scheme.
j) The Trustee shall ensure that the AMC has been managing the Scheme independently of
other activities and have taken adequate steps to ensure that the interest of the Scheme are
not being compromised with those of any other Scheme or of other activities of the AMC.
k) The Trustee shall ensure that all the activities of the AMC are in accordance with the
provisions of SEBI Regulations.
l) Where the Trustee have reason to believe that the conduct of business of the Mutual Fund
is not in accordance with SEBI Regulations, they shall forthwith take remedial steps as
are considered necessary by them and shall inform the SEBI of the violation and the
action taken by them.
m) Each Trustee shall file the details of his/her transactions in securities on a quarterly basis
with the trust.
n) The Trustee shall be accountable for, and be the custodian of, the funds and property of
the Scheme and shall hold the same in trust for the benefit of the unitholders in
accordance with SEBI Regulations and the provisions of the trust deed.
o) The Trustee shall take steps to ensure that the transactions of the Mutual Fund are in
accordance with the trust deed.
p) The Trustee shall be responsible for the calculation of any income due to be paid to the
Mutual Fund and also of any income received in the Mutual Fund for the holders of the
units of the Scheme in accordance with the SEBI Regulations and the trust deed.
q) The Trustee shall call for the transactions in securities of the key personnel of the AMC
in his own name or on behalf of the AMC and shall report to SEBI as and when required.
r) The Trustee shall review, on a quarterly basis, all transactions carried out between the
Mutual Fund, AMC and its associates.
s) The Trustee shall review the net worth of the AMC on a quarterly basis and in case of
any shortfall, ensure that the AMC make up for the shortfall as per clause (f) of sub-
regulation (1) of regulation 21 of the SEBI Regulations.
t) The Trustee shall periodically review all service contracts such as custody arrangements,
transfer agency and satisfy itself that such contracts are executed in the interest of the
u) The Trustee shall ensure that there is no conflict of interest between the manner of
deployment of its net worth by the AMC and the interests of the unitholders.
v) The Trustee shall periodically review the investor complaints received and the redressal
of the same by the AMC.
w) The Trust Deed can be amended only with the prior approval of SEBI and Unitholders,
where it affects the interests of the unitholders.
Modifications, if any, in the rights and/or obligations and duties of the Trustee are on account of
amendments to the Regulations and the Regulations supersede/override the provisions of the
Trust Deed, wherever the two are in conflict.
Trustee shall exercise due diligence as under:
A. General Due Diligence:
i) The Trustee shall be discerning in the appointment of the directors on the Board of
the asset management company.
ii) Trustee shall review the desirability of continuance of the asset management
company if substantial irregularities are observed in any of the schemes and shall not
allow the asset management company to float new scheme.
iii) The trustee shall ensure that the trust property is properly protected, held and
administered by proper persons and by proper number of such persons.
iv) The trustee shall ensure that all service providers are holding appropriate registrations
from the Board of concerned regulatory authority.
v) The Trustee shall arrange for test checks of service contracts.
vi) Trustee shall immediately report to Board of any special developments in the Mutual
B. Specific Due Diligence:
i) Obtain internal audit reports at regular intervals from independent auditors appointed
in writing to the asset management company of the deficiencies and checking by the
ii) Obtain compliance certificates at regular intervals from the asset management
iii) Hold meeting of Trustee more frequently.
iv) Consider the reports of the independent auditor and compliance reports of Asset
Management Company at the meetings of Trustee for appropriate action.
v) Maintain records of the decisions of the Trustee at their meetings and of the minutes of
vi) Prescribe and adhere to a code of ethics by the Trustee, Asset Management Company
and its personnel.
vii) Communicate on the rectification of deficiencies.
The Trustee shall not be held liable for acts done in good faith if they have exercised adequate
due diligence honestly.
The independent directors of the Trustee or asset management company shall pay specific
attention to the following, as may be applicable, namely:
i) the Investment Management Agreement and the compensation paid under the
ii) service contracts with affiliates – whether the asset management company has
charged higher fees than outside contractors for the same services.
iii) selection of the asset management company’s independent directors.
iv) securities transactions involving affiliates to the extent such transactions are
v) selecting and nominating individuals to fill independent directors vacancies.
vi) code of ethics must be designed to prevent fraudulent, deceptive or manipulative
practices by insiders in connection with personal securities transactions.
vii) the reasonableness of fees paid to sponsors, asset management company and any
others for services provided.
viii) principal underwriting contracts and their renewals.
ix) any service contract with the associates of the asset management company.
Pursuant to the Deed of Trust constituting the Mutual Fund, the Mutual Fund is authorized to pay
to the Trustee, which in turn pays to its individual directors, a fee for their services in such
The Trustee shall charge the Fund a Trusteeship Fee of 0.01% (or at such other percentage as
may be agreed upon) of the daily average asset value of the Fund.
Mr. McGowan and Mr. Stephen Dover, however, will not receive any fees to act as Directors of
The Trustee has appointed Templeton Asset Management (India) Private Ltd. as the Investment
Manager and the Investment Manager has appointed Citibank, N.A. Mumbai as the Custodians.
RIGHTS OF UNITHOLDERS
1) Unitholders under the Scheme have a proportionate right in the beneficial ownership of the
assets of and to the dividend declared, if any, by the scheme under the Fund.
2) The Unitholders shall have right to ask the Trustee about any information, which may have
an adverse bearing on their investments, and the Trustee shall be bound to disclose such
information to the Unitholders.
3) In case the Mutual Fund declares a dividend under the Scheme, the Unitholders are entitled
to receive dividend warrants within 30 days of the date of declaration of the dividend and in
case of redemptions, unitholders are entitled to receive redemption proceeds within 10
working days subject to certain limitations as described under “Right to Limit Redemptions”.
4) The appointment of an AMC for the Fund may, with the prior approval of SEBI, be
terminated by 75% of the Unitholders or by a majority of the Board of Directors of the
5) Unitholders have the right to inspect all the documents listed under the heading “Documents
Available for Inspection”.
PROCEDURE FOR UNITHOLDER APPROVALS
The Trustee will call for a meeting of the Unitholders of the Scheme or adopt postal ballot or any
other appropriate method whenever it is required to do so in the interest of the Unitholders, or as
required by the SEBI Regulations for the time being in force or if the Trustee determines to
modify the Scheme or prematurely redeem the Units or wind up the Scheme.
Templeton Asset Management (India) Private Ltd. is a private limited company incorporated
under the Companies Act, 1956 on October 6, 1995, having its Registered Office at 1st Floor,
Sakhar Bhavan, 230 Backbay Reclamation, Nariman Point, Mumbai 400 021. Templeton Asset
Management (India) Private Ltd. has been appointed as the Asset Management Company of the
Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated January 5,
1996, executed between Templeton Trust Services Pvt. Ltd and Templeton Asset Management
(India) Pvt. Ltd. Out of the Investment Manager’s total equity paid-up capital of Rs.59.33 cr.,
75% is held by Franklin Templeton Holding Ltd., Mauritius with the balance of about 25% being
held by Hathway Investments Pvt. Ltd. Hathway Investments is an Indian investment company, a
member of the Rajan Raheja group of companies. The Investment Manager was approved by
SEBI to act as the AMC for the Mutual Fund vide their letter No.IIMARP/406/96 dated February
As per SEBI Regulations currently in force, the Investment Manager is entitled to charge a
Management Fee of 0.25 % within the overall fees of 0.75% of the daily / weekly average NAV,
for the services rendered by it to the Scheme
DUTIES AND OBLIGATIONS OF THE INVESTMENT MANAGER
Under the IMA, the Investment Manager has, inter alia, the following duties and obligations:
a) To manage the acquisition, holding and disposal of the assets of the Mutual Fund
and the various schemes framed thereunder in accordance with the investment
objectives, policies and restrictions set out in each Scheme’s offer document and
with the SEBI Regulations.
b) To act as the Investment Manager of the Mutual Fund with respect to the
investment and reinvestment of the cash, securities and other properties
comprising the assets of each Scheme organized under the Mutual Fund with full
discretionary authority in accordance with the investment policies set forth in the
Deed of Trust and by the SEBI Regulations from time to time.
c) To provide the Trustee or any party designated by the Trustee with:-
• evaluation of current economic conditions;
• evaluation of particular prospects in the securities markets;
• investment research and advice for the assets of the Mutual Fund consistent
with the provisions of the Deed of Trust and the investment policies and
guidelines adopted and declared by the Trustee; and
• any other activities as may be directed by the Trustee.
d) To assume day to day investment management of the Mutual Fund and, in that
capacity, make investment decisions and manage the Mutual Fund in accordance
with the Scheme Objectives, the Deed of Trust and provisions of the SEBI
e) To ensure that the delivery of scrips purchased is taken and that delivery is given
in the case of scrips sold and that the Mutual Fund in no case engages in short
selling or carry-forward transactions or badla finance.
f) To ensure that no Offer Document of a Scheme, Key Information Memorandum,
abridged half yearly results and annual results is issued or published without the
prior approval of the Trustee.
g) To report all investments to the Trustee and the Custodian of the Mutual Fund.
h) To hold all assets of the Mutual Fund separate from its own assets, free and clear
of all liens, claims and encumbrances of any party, except as provided in the IMA
and segregate the assets under its management, Scheme-wise.
i) To submit such quarterly reports to the Trustee regarding the Investment
Manager’s activities as specified in the IMA as the Trustee or SEBI may prescribe
from time to time.
j) To maintain books and registers about the operation of various schemes of the
Mutual Fund under its management to ensure compliance with the SEBI
Regulations, and demonstrate that such compliance by it has been achieved.
k) To report market prices of the securities in which the Mutual Fund’s assets are
invested to the Trustee and Custodian(s) of the Mutual Fund, as required for the
purpose of determining the NAV of the Mutual Fund.
l) To disclose the basis of calculating the re-purchase price and NAV of the various
schemes in the Scheme particulars and to disclose the same to investors at such
intervals as may be specified by the Trustee and SEBI.
m) To obtain from the Custodian(s) of the Mutual Fund, from time to time, such
financial reports, proxy statements and other information relating to the business
and affairs of the Mutual Fund as the Investment Manager may reasonably require
in order to discharge its duties and obligations as specified in the IMA, or to
comply with the SEBI Regulations, or any applicable law, rules and regulations.
Modifications, if any, in the rights and/or obligations and duties of the Investment Manager are
on account of amendments to the Regulations and the Regulations supercede/override the
provisions of the IMA, wherever the two are in conflict.
The AMC had obtained a certificate from SEBI dated November 8, 2000 to act as a Portfolio
Manager under Securities and Exchange Board of India (Portfolio Managers) Rules and
Regulations, 1993, vide registration No.INP000000464 and commenced the activity. Further, a
renewal of the registration certificate was granted upto November 15, 2006 vide SEBI letter
No.IMD/SD/22901/2003 dated December 4, 2003. The AMC has also obtained a No-Objection
letter from SEBI under Regulation 24(2) of Securities and Exchange Board of India (Mutual
Funds) Regulations, 1996 for commencing the Portfolio Managers activity. The Asset
Management Company certifies that the key personnel of the asset management company, the
systems, back office, bank and securities accounts are segregated activity wise and there exists a
system to prohibit access to inside information of various activities.
BOARD OF DIRECTORS
The Board of Directors of the Investment Manager is: -
Gregory E Johnson* (Chairman of Board of Director of Templeton Asset Management (India)
Franklin Resources Inc. 920 Park Place, 4th Floor, San Mateo, CA 94403, U.S.A.
Mr. Gregory Johnson is a president of Franklin Templeton USA, a member of the office of
the President of Franklin Resources, Inc., chairman of Franklin Templeton Distributors, Inc.,
President of Templeton/Franklin Investment Services, Inc., and Vice President of Franklin
Advisers, Inc. Mr. Johnson is responsible for the retail, institutional, private client, and strategic
alliance businesses as well as domestic shareholder services and human resources. Mr. Johnson
joined Franklin in 1986, after working as a senior accountant for Coopers & Lybrad. Mr.
Johnson received his Bachelor of Science degree in accounting and business administration in
1983 from Washington and Lee University and his Certified Public Accountant certificate in
1985. He is the past vice-chairman of the Mutual Fund Forum, is past chairman of the Western
district of the Securities Industry Association and is a past president of the San Francisco Bond
Club. He is also a board member of Command Audio Corporation.
• Vijay C. Advani (Alternate Director to Mr. Gregory E. Johnson) *
62 Swiss View, # 09-02 La Suisse 1, Singapore.
Mr. Vijay C. Advani is the Alternate Director for Mr. Gregory E. Johnson. Mr. Advani is
currently Executive Managing Director, International Retail Development, Franklin Templeton
Investments. He joined the Templeton organisation in 1995 and was responsible for developing
Templeton's activities in India. Prior to joining the Templeton organisation, Mr. Advani was
employed by the International Finance Corporation (IFC), the private sector arm of the World
Bank Group, where his primary responsibility was in providing advisory and technical assistance
to government authorities on the development of securities and financial markets, structuring,
establishing and financing specialised financial institutions; and mobilising equity, quasi-equity
and debt financing. During his ten-year career with the IFC, Mr. Advani worked on several
emerging economies in the former Soviet Union, Asia, Middle East and Africa. Mr. Advani
received an MBA from the University of Massachusetts, Amherst, where he graduated as a
Foreign Student Scholar and received a Bachelor's Degree in Accounting and Finance from the
University of Mumbai, India.
• Dr. J. Mark Mobius *
Block 11, Waterside Apartments, No. 06-02, Panjorg Rhu Road, Singapore.
Mark Mobius joined the Templeton organization in 1987 as president of Templeton Emerging
Markets Fund Inc. in Hong Kong. He currently directs the analysts based in Templeton’s eleven
emerging markets offices and manages the emerging markets portfolios. Dr. Mobius has spent
over thirty years working in Asia and other parts of the emerging markets world. As a result of
his experience, in 1999 Dr. Mobius was appointed joint chairman of the World Bank and
Organization for Economic Cooperation and Development (OECD) Global Corporate
Governance Forum’s Investor Responsibility Taskforce. In 2001, Dr. Mobius was awarded
“Emerging Markets Equity Manager of the Year 2001” by International Money Marketing in the
United Kingdom. In 1999, Dr. Mobius was named one of the “Ten Top Money Managers of the
20th Century” in a survey by the Carson Group, a leading global capital markets intelligence-
consulting firm. In the 1998 Reuters Survey, Dr. Mobius was named the number one global
emerging market fund manager. CNBC named him “1994 First in Business Money Manager of
the Year.” Morningstar in the United States awarded Dr. Mobius the “Closed-End Fund
Manager of the Year” for 1993. In 1992, Dr. Mobius was named “Investment Trust Manager of
the Year” by The Sunday Telegraph in the United Kingdom.
Prior to joining Templeton, he was President of International Investment Trust Company Ltd. in
Taipei, Taiwan, the country's first and largest investment management firm. Prior to that, he
served at Vickers-da-Costa, an international securities firm, which later merged with Citibank.
Before joining Vickers, for ten years, Dr. Mobius operated his own regional economics and
research-consulting firm in Hong Kong.
Dr. Mobius holds Bachelors and Masters Degrees from Boston University, and received his
Ph.D. in Economics and Political Science in 1964 from the Massachusetts Institute of
Technology. Dr. Mark Mobius is the author of ‘The Investor's Guide to Emerging Markets'.
• Rajan Raheja *
"Rahejas", 87/1, Gangadhar Baskar Marg, Juhu, Mumbai 400 049.
Mr. Raheja is a renowned businessman, who has been involved in the construction business for
the past 25 years. The Raheja group is diversified into other business areas that include cement,
petrochemicals, hotels, automotive batteries, ceramic tiles and cable TV network.
• Deepak Satwalekar
9, Nutan Alka Co-op. Hsg. Society Ltd. Relief Road, Santacruz (West), Mumbai – 400 054.
Mr. Satwalekar obtained a Bachelors Degree in Technology with a Major in Mechanical
Engineering from the Indian Institute Technology, Mumbai. He has completed a Masters Degree
in Business Administration from the American University, Washington D. C. and has worked in
the Operations Department of a major U.S. headquartered multinational bank. Mr. Satwalekar is
currently, the Managing Director and CEO of HDFC Standard Life Insurance Co. Ltd. Until
recently, he was the Managing Director of Housing Development Finance Corporation Ltd. He
has been a consultant to the World Bank, the United States Agency for International
Development (USAID) and the United Nations Centre for Human Settlements (HABITAT). Mr.
Satwalekar is actively involved in various committees of the Bombay Chamber of Commerce &
Industries as well as the Confederation of Indian Industries. Recipient of the “Distinguished
Alumnus Award” from IIT, Mumbai. He is also a Director on the boards of several Companies.
• P. Vaidyanathan
7 AB, 3rd Block. 7th Floor, Kences Enclave, No. 1 Ramakrishna Street, T. Nagar, Chennai
Mr. Vaidyanathan, B. Com., FCA, AICWA, ACS, started his career as a practising Chartered
Accountant in his family Chartered Accountancy firm. After a few years of practice, he chose to
enter into the line of investment consultancy. He took up marketing and distribution of financial
products and promoted the concept to various investors and companies. Today, this has grown
into a venture now known as “Integrated Enterprises (India) Ltd.” which is acting as a Total
Financial Service Provider for investors who constitute the bottom end of the income pyramid.
• Narvoz Seervai,
8, Shiv Shanti Bhavan, M. Karve Marg, Mumbai 400 020.
Mr. Navroz H. Seervai is a leading Advocate in Mumbai. He is actively involved in public
interest litigation in the field of Environmental Law and Civil Liberties and Human Rights. He
started practice in the Bombay High Court in the Chambers of R. J. Joshi and A. M. Setalvad,
specialised in Constitutional and Administrative Law, Company and Corporate Law, and
Environmental Law. He completed his B.A. (Hons) from Elphinstone College in 1977 and
earned his Law degree from the Government Law College, Mumbai in 1981. While studying
law, Navroz won many awards - the Kinloch Forbes Gold Medal for Jurisprudence & the Telang
Memorial Gold Medal. Navroz also dedicates a lot of his time and energy to various social
activities. He is a member of the Peoples’ Union for Civil Liberties & the Bombay
Environmental Action Group since 1981.
* These Directors are associated with the sponsor or its associates.
1st Floor, Sakhar Bhavan
230 Backbay Reclamation
Nariman Point, Mumbai 400 021, India.
INFORMATION ON KEY PERSONNEL
Name Qualifications Functions & Experience
Rajiv Vij 36 B. Tech. (IIT- Managing Director, Asia (based at Mumbai)
Total Experience Delhi), PGDM Responsible for growing the firm’s retail businesses in
14 years (IIM-Calcutta) India, Singapore, Hong Kong and South Korea. Franklin
Templeton Asia offices currently have assets of over US$
• Regional Head, India & Middle East (2001-2002)
• Country Head and Chief Executive Officer of the
India office (1999-2001)
• Vice President for Sales and Marketing (1995-1999), a
member of the key start-up team.
• He joined Franklin Templeton from Hindustan Lever
Limited where he worked across the sales and
marketing functions for 6 years
• He is a Member of the SEBI Mutual Fund Advisory
Committee and on Board of Association of Mutual
Funds in India (AMFI).
Ravi Mehrotra 42 B.Com, President - Templeton Asset Management (India) Pvt.
Total Experience PGDBM Ltd. (based at Mumbai)
18 years (XLRI, Responsible for Sales, Marketing, Investment
Jamshedpur) management, Portfolio risk management, Human
Resources and Corporate Accounting functions of the
• Senior Vice President and Chief Investment officer-
Pioneer ITI AMC Ltd. (1993-2002). He managed
Taxshield 95, Taxshield 98, Taxshield 99 and
Taxshield (open end)
• Executive Vice President, Prime Securities (1991-
• AVP, Bank of America- Investment Banking and
Treasury Group (1985-1991).
Sanjay Sapre 34 M.B.A (USA) Head TA Operations & Customer Service - India
Total Experience (based at Mumbai)
10 years Responsible for the company’s Transfer Agency
Operations and Customer Service functions in India (2003
Franklin Templeton International Services (India) Pvt.
Ltd. (2002 – 2003) Manager, Global Enterprise
Consulting (Asia) (2002-2003), Templeton Asset
Management (India) Pvt. Ltd (2001 – 2002) eBusiness
• Various Management positions at Thomas Cook
(India) Limited (1997 – 2001) including responsibilities
in the areas of Technology, Marketing support, Special
projects and Vendor Management Operations
Manager with Pinnacle Data Systems, Inc. in the USA
(1993 – 1995) handling the purchase and operations
functions of the company.
• Purchasing Manager / Director with Henkel Chemicals
(India) Limited (1990 – 1992).
Name Qualifications Functions & Experience
Vivek Pai 32 B. Com, ACA Vice President - FA Operations and Compliance
Total Experience (based in Mumbai)
9 years Having joined Templeton in 2000, his role largely
involves general management of several functions within
the operations department such as Fund Accounting,
Custody and Cash Management. He also oversees Legal
• Prior to this he was the Compliance Officer and was
responsible to Trustees for Compliance and Internal
Audit of the Mutual Fund. (2000-2003).
• He was acting as a Consultant for setting up back office
operations for a new company.
• Birla Sun Life Asset management Company Limited
from (1996-2000) as Head of Fund Accounting.
• Apollo Finvest (India) Ltd as Asst. Manager, Corporate
Finance handling Lease & HP financing (1994-1996).
Pranita 31 B. Com, ACA Compliance Officer (based at Mumbai)
Gramopadhye Templeton Trust Services Private Ltd.
Total Experience: • Having joined Templeton in July 2000, she is
7 years responsible to Trustees for Compliance and Internal
Audit of the Mutual Fund. She is also responsible for
compliance of Portfolio Management Services.
• Templeton Asset Management (India) Pvt. Ltd. (2001-
2003), Manager Compliance and was handling
compliance of mutual fund regulations and other
• Prior to this she was managing back office cash
operations and custody services (2000-2001).
• Reliance Industries Ltd. (1997-2000)-Manager,
Management Information, Business Analysis and Cost
• P.C Hansotia & Associates (affiliated to Deloitte
Haskins & Sells) (1996 -1997)-Manager, Auditing of
Franklin Equity Team
R. Sukumar 39 B.E (Univ. of Senior Vice President and Chief Investment Officer
Total Experience Roorkee); (Franklin Equity) (based at Chennai)
15 years PGDM (IIM Manages FIT, FIGF, FIF, FPF, FIPP, TIPP – Equity
Bangalore) • Vice President and Fund Manager - Pioneer ITI AMC
• Asst. Vice President - Indbank Merchant Banking
Services Ltd. (1990-1994) advising Indian
• Decision Support Systems Group, Tata Steel (1986 –
K.N. Siva 41 BE (REC Senior Vice President and Portfolio Manager – Equity
Subramanian Jaipur); PGDM – Based at Chennai
Total Experience (IIM Calcutta) Manages FTIAAF - Equity, FIBCF, FFF, FIPF, FIVF,
15 years FIOF
• Vice President and Fund Manager – Pioneer ITI AMC
Ltd. (1993 – 2002)
• Industrial Finance Officer, Industrial Development
Bank of India (1988 – 1993)
Name Qualifications Functions & Experience
Deepesh Pandey 31 B. Tech. (IIT- Asst. Vice President & Portfolio Manager (Equity) –
Total Experience Delhi), PGDM Based at Mumbai
8 years (IIM-Calcutta) Responsible for Balanced Funds, Nifty, Sensex & PE
Ratio Funds, equity portion of Monthly Income Plan.
Schemes managed: FIIF, FTIIF, FTIPERF, TMIP-H, G
equity portion, FTIMIP- Equity portion, FTIBF – Equity
portion, FIBF – Equity portion, FITF, TICAP – Equity,
FIT97, FIT99, FIT95, FIT98, FIT96
• He managed the Franklin India Growth Fund and
equity components of Franklin India Balanced Fund
and Templeton Monthly Income Plan. He also oversees
the Franklin India Index Fund and Franklin India Index
Tax Fund (2000-2002)
• His previous assignment for around 4.5 years was with
the Offshore Funds Group of SBI Funds Management
Ltd. where he worked as an Investment analyst on 2 of
their offshore funds, one of which was set up in
collaboration with Morgan Stanley Asset Management,
S. Chellappa 44 MBA, (Madras Assistant Vice President and Senior Research Analyst
Total Experience Univ.), (based at Chennai)- Provides Research support on
22 years Diploma in Software, Cement, Metals, Banking Sectors
Computer • Asst. Vice President– Pioneer ITI AMC Ltd. (1994-
(NITIE) • Industrial Finance Corporation of India Ltd. (1986-
• Kothari Industrial Corporation Ltd (1981 – 1986)
Anil Prabhudas 42 CA Assistant Vice President and Senior Research Analyst
Total Experience (based at Chennai)
17 years • Asst. Vice President – Investments – Pioneer ITI
AMC Ltd. (Since 1993)
• Petrosil Oil Co. Ltd.
• L. U. Krishnan & Co.
Provides Research support on Oil & Gas, Petrochemicals,
Engineering, Power and Hotel sectors.
B Sashikanth 36 B. Com., C.A. AVP & Senior Research Analyst (based at Chennai)
Total Experience Responsible for Research coverage of Pharma, Auto,
12 years Media and Power sectors
• 1991-1993, SBI Mutual Fund – Investment Analyst.
• 1993-1996, ITC Peregrine / Peregrine Capital India –
Research Analyst for Basic Industries (Designation :
• 1997-1999, Socgen Crosby Securities, Research of
Basic Industries including Cement, Metals, Capital
goods (Designation Vice President)
• 2000-2003, ABN Amro Asia Equities, Research of
Basic Industries including, Oil & Gas, Capital Goods,
Power Utilities, Metals (Designation: Assistant
Name Qualifications Functions & Experience
Templeton Equity Team
Chetan Sehgal 34 B.E. (Mech), Director – Research India and is part of the team
Total Experience PGDBA (IIM- managing TIGF, based at Mumbai
12 years Bangalore), • He joined Templeton in 1995 as Investment
CFA Analyst with the emerging markets group and is
currently a Portfolio Manager.
• As a Portfolio Manager and Analyst, Chetan
analyses stocks across a wide gamut of sectors,
industries and geographies within the emerging
markets group which invests in about 40 countries
under the direct supervision of Dr. Mark Mobius.
• Before joining Templeton, he had a 3-year stint at
CRISIL, India’s largest rating agency currently
affiliated with Standard & Poor. He has experience
in rating corporate securities across various
industries and was also involved in structuring debt
instruments including securitisation assignments.
Rakesh Parekh 39 MBA-Finance Investment Analyst with the Emerging Markets
Total Experience from Group, under Dr. Mark Mobius. Based at Mumbai
17 years University of He identifies and evaluates investment opportunities
Stirling (UK), for the global funds as well as TIGF, and looks after
Associate of Israel and India markets. He joined Templeton in Nov
Insurance • Worked with B & K Securities India as a Senior
Institute (UK), Analyst from (1998-1999) focusing mainly on the
Business pharmaceutical and auto sectors.
Administration • Caspian Securities as a Senior Analyst (1996-
with Honours 1998) again covering the pharmaceutical and auto
University of • Oppenhiemer India as an Investment Analyst
Dundee (UK). from (1993-1996)
• Rakesh Parekh has been involved in various roles
primarily as an insurance underwriter with
General Accident Plc and Commercial Union Plc
in the UK (1986-1992).
Name Qualifications Functions & Experience
Fixed Income/Debt Team
Nilesh Shah 34 ACA, Grad. Director and Chief Investment Officer – (Fixed
Total Experience CWA, Income) – Based at Mumbai
13 years completed Responsible for investment strategy and asset
GFM-25 allocation for all fixed income funds. He manages
program at JP TIIF, FINTF, TFIF-ST, TILF, TITMA, TIMMA,
Morgan, New TISTIP, FISIP, & TILP.
York, USA • Handling Templeton Debt Funds and Franklin
Equity Funds in India (1999-2002).
• Portfolio Manager – Fixed Income (1997-1999).
• Prior to joining Franklin Templeton, Mr. Nilesh
worked as Head of structured products group at
ICICI Securities & Finance Co. Ltd. for over 5
He has worked in ICICI merchant banking division
managing public issues and corporate advisory
Name Qualifications Functions & Experience
Sameer Kulkarni 34 BE (Mech), Asst. Vice President & Portfolio Manager - Fixed
Total Experience Asst. Vice Income, Based at Mumbai
10 years President - Joined Templeton in February 2002. . He is
Fixed responsible for Government Securities Portfolio
Income across all the funds. Sameer also manages the Swap
and other derivative products exposure across all the
funds. He also supports the group in managing the
Liquidity Risk and Interest Rate Risk of all the
Schemes managed: TGSF, FTIGF and Government
Securities portfolio of other schemes.
• Head of Money Markets and Investments in
IndusInd Bank) (1997-2002).
• Chescor Ltd. in London, building models for
index funds (1995-1996).
• Mukesh Babu Securities Ltd. as Senior Dealer
• National Stock Exchange as a member of the key
start-up team responsible for setting up the
• Executive Assistant to the Head of International
Sales Group in Larsen & Toubro (1993-1994).
Rahul Goswami 31 B.Sc. Asst. Vice President – Fixed Income - Based at
Total Experience (Mathematics) Mumbai
8 years M.B.A Schemes managed: TIIBA, FIMF, TIGIP, TFIF-LT,
(Finance) Debt portions of FIBF, FTIBF, TMIP, FTIAAF,
TICAP, TIPP and FTIMIP.
• UTI Bank Limited, Mumbai - Fund Management.
Part of the Team Managing SLR & Non-SLR
Investment and Trading Portfolio of the Bank (Jan
2000 - October 2002).
• SMIFS Securities Limited, Mumbai Senior
Dealer (Debt Placement) (Jun 1998 - Dec 1999)
• Khandwala Finances Limited, Mumbai Senior
Dealer (Debt Placement) (Oct 1997 - May 1998)
• RR Financial Consultants Limited, Mumbai
Manager (Debt Placement) (Dec 1995 - Oct 1997)
Name Qualifications Functions & Experience
S Rajagopalan 38 Bsc (Maths) Senior Manager- Transfer Agency and Customer
Total Experience Services (based in Chennai)
16 years • Oversees the operations and customer services of
• From 1999- May 2003-Karvy Consultants-
Heading the Templeton MF unit and supervising all
process related activities. Client co-ordination,
regular review meetings with the internal auditors,
internal teams and visiting distributor houses.
• From 1993-1999-MCS Ltd. Mumbai.
• Handling close ended Mutual Fund schemes and
investor services. Maintaining relationship with
client and co-ordinating with internal
PROCEDURE FOR INVESTING
The main aim of the investment process is to meet Fund specific investment objectives and to
develop a well-diversified, high credit portfolio that minimises liquidity risk and credit risk. The
Investment committee comprising of International CIO, CIO and Portfolio Managers meets
every month for a review of performance and risk reports. The performance review includes
portfolio holding, peer group review, policy deviation, performance vis-à-vis peers and
benchmark indices etc. The Investment team comprising of CIO and Portfolio Managers meets
every day to discuss market movement and analyse events and news. Trading strategy and asset
allocations are firmed in the daily meetings. Daily meetings are formal in nature and form the
basis for maintaining investment records as per SEBI regulations. There is a weekly call with the
international CIO for market update, asset allocation and interaction for global information. The
CIO makes presentations to the Board of the AMC and the Trustees periodically, indicating the
performance of the scheme(s). The Investment process is intensely research oriented. It
comprises of qualitative as well as quantitative measures. It is approved by the Boards of the
AMC and the Trustee Company and forms the basis for approach to the Investment management
process. It has critical insights from the rich experience gathered by Franklin Templeton
Investments over 50 years across various markets and asset classes.
Citibank, N.A. Mumbai branch has been appointed as the custodian (the “Custodian”). The
approval for appointing Citibank as Custodian has been granted by SEBI vide Regn.
No.IN/CUS/004 dated April 07, 1998.
The Custodian will keep in safe custody all the securities and other such instruments belonging
to the Fund, ensure smooth inflow-outflow of securities and such other instruments as and when
necessary in the best interest of the investors, and ensure that the benefits due to the holdings are
recovered. The Custodian will charge the Fund a fee as per the custodial service agreement. The
Trustee has the right to change the Custodian, if it deems.
REGISTRARS AND TRANSFER AGENTS
Sale/Repurchase/transfer/transmission of the scheme units will be processed in-house and at
competitive rates. The fees will be charged to the scheme as a part of annual ongoing expenses
and shall confirm to sub-clause 15 of Regulation 25 of SEBI (Mutual Funds) Regulations, 1996.
S.R. Batliboi & Co. 18th Floor, Express Towers, Nariman Point, Mumbai 400 021, is the
Auditor for this Scheme of the Mutual Fund. The Trustee shall appoint auditors for each Scheme
of the Mutual Fund. Further, the Trustee has the right to change the Auditors. S.R. Batliboi &
Co. have however, not performed any services in connection with this Offer Document.
INVESTOR RELATION OFFICER
S. Rajagopalan, Sr. Manager, Transfer Agency and Customer Service, Century Centre, 75, T.T.K
Road, Alwarpet, Chennai 600 018.
The Trustee is satisfied that the investor services division has adequate capacity and systems to
discharge the various obligations relating to investor servicing as provided in the regulations and
to handle investor complaints.
V INVESTMENT OBJECTIVES AND POLICIES
The investment objective of Franklin India Opportunities Fund is to generate capital appreciation
by capitalizing on the long-term growth opportunities in the Indian economy
The fund managers will follow an active investment strategy taking defensive/aggressive
postures depending on opportunities available at various points in time. On defensive
considerations, the scheme may invest substantially in money market instruments to protect the
interest of the investors in the schemes.
The scheme’s investment strategy will include investing in shares of Indian companies listed on
Indian stock exchanges/overseas stock exchanges. The scheme will invest in securities of
Indian/foreign companies listed overseas as per guidelines issued by the Central Government,
RBI and SEBI from time to time.
The policies to achieve the investment objectives are in conformity with the Memorandum &
Articles of Association of the Asset Management Company (AMC), Investment Management
Agreement executed between the Asset Management Company & Board of Trustees and the
The investment policies shall be in accordance with SEBI [Mutual Funds] Regulations, 1996 and
within the following guidelines:-
Under normal market circumstances, the investment range would be as follows:
Instruments Risk Profile %
Equities Medium to high Upto 100%
Money Market instruments Low to Medium Upto 35%
• Under normal circumstances at least 65% of the scheme’s assets will be invested in
equities. Upon defensive consideration the AMC may reduce the allocation to below 65%
and correspondingly increase allocation to money market instruments.
• The asset allocation pattern described above may alter from time to time on a short term
basis on defensive considerations, keeping in view market conditions, market
opportunities, applicable regulations and political and economic factors. However, if the
asset allocation pattern is to be altered for other reasons, as this is a fundamental attribute,
the procedure outlined in the paragraph on fundamental attributes below, shall be
In pursuance of the Regulations, the following restrictions are currently applicable to the scheme:
• Investment in securities from Franklin India Opportunities Fund corpus would be only in
transferable securities in accordance with Regulation 43 of Chapter VI of SEBI [Mutual
Funds] Regulations, 1996.
• The scheme shall buy and sell securities on the basis of deliveries and shall in all cases of
purchases, take delivery of relative securities and in all cases of sale, deliver the securities
and shall in no case put itself in a position whereby it has to make short sale or carry
forward transaction or engage in badla finance.
• The aggregate inter scheme investment made by all schemes under the same management
or in schemes under the management of any other AMC having similar investment
objectives shall not exceed 5% of the NAV of the mutual fund. No fees shall be charged
for investing in other schemes of the fund or any other mutual fund. The fund, under all
its schemes shall not own more than 10% of any company’s voting rights.
• SEBI vide it’s circular dated November 7, 2002, has clarified that Clause 4 of Seventh
Schedule of the SEBI (Mutual Funds) Regulations 1996 which restricts investments in
mutual fund units upto 5% of net assets and prohibits charging of fees, shall not be
applicable to investments in mutual funds in foreign countries made in accordance with
guidelines. However, the management fees and other expenses charged by the mutual
fund(s) in foreign countries along with the management fee and recurring expenses
charged to the domestic mutual fund scheme shall not exceed the total limits on expenses
as prescribed under Regulation 52(6).
• The scheme can invest a maximum of 5% of the net assets in unlisted equity and equity
related instruments. The exit route in such cases is usually through an offer to the public
at a later date.
• Transfers of investments from one scheme to another will be done as follows:
- such transfers will be done at the prevailing market price for quoted instruments on spot
- the securities so transferred shall be in conformity with the investment objective of the
scheme to which such transfer has been made.
• No investment shall be made in any unlisted security of an associate or group company of
the sponsor; any security issued by way of private placement by an associate or group
company of the sponsor and that investment in listed securities of group companies of the
sponsor shall not exceed 1% of the net assets of all the schemes of the fund
• The investment in single scrip will not exceed the weightage of the scrip in the
representative sectoral index/sub index, or 10% of the NAV of the scheme which ever is
To reflect the investment universe in line with the investment objective, the scheme uses a
specific benchmark index viz., BSE 200.
• The scheme has identified “BSE 200” as the benchmark.
Investment in the equity/ equity related instruments of any of the companies will not exceed
the weightage of the scrips in the index “BSE 200” or 10% of the NAV of the scheme,
whichever is higher.
The AMC / Trustee reserve the right to change / modify the index after giving an advance
notice of 15 days through an addendum. The addendum will be published in the website/
offices of AMC and the offices of the distributors / agents.
• Pending deployment of funds of the scheme in securities in terms of investment
objectives of the scheme, the scheme can invest the funds in short term deposits of
scheduled commercial banks.
• The scheme may invest in other investment avenues/instruments as allowed/permitted
under SEBI regulations, from time to time.
• SEBI has permitted investments by schemes of mutual funds in ADRs/GDRs of Indian
companies listed on overseas stock exchanges. Investments in ADRs/GDRs shall be
made to the extent and in the manner approved by RBI. The scheme will employ
necessary measures to manage foreign exchange movements arising out of such
investments. Service of custodian and other intermediaries /advisors of international
repute will be used for safe custody, advice, settlement and reporting of trades done in
overseas stock exchanges.
The investment restrictions specified as a percentage of net assets will be computed at the time of
making the investment and it is clarified that changes need not be effected, merely by reason of
appreciation or depreciation in value or by reason of factors beyond the control of the scheme
(such as receipt of any corporate or capital benefits or amalgamations). In case the limits are
exceeded due to reasons beyond its control, the AMC shall adopt necessary measures of
prudence to reset the situation having regard to the interest of the investors.
The scheme may also engage in scrip lending as provided under Securities Lending scheme
1997, and other applicable guidelines/regulations. Scrip lending means lending a security to
another person or entity for a fixed period of time, at a negotiated compensation. The security
lent will be returned by the borrower on expiry of the stipulated period.
The AMC will comply with the required reporting obligations and the Trustee will carry out the
reviews required under SEBI/RBI guidelines. Further a maximum of 40% of net assets will be
deployed in securities lending and the maximum single party exposure will be restricted to 10%
of net assets outstanding at any point of time.
Engaging in scrip lending is subject to risks related to fluctuations in the collateral
Use of Derivatives
Investments in Derivative Instruments
Brief note on investment in derivative instruments
As part of the Fund Management process, the Trustee may permit the use of derivative
instruments such as index futures, stock futures and options contracts, warrants, convertible
securities, swap agreements or any other derivative instruments that are permissible or may be
permissible in future under applicable regulations and such investments shall be in accordance
with the investment objectives of the scheme.
Index futures/options are meant to be an efficient way of buying/selling an index compared to
buying/selling a portfolio of physical shares representing an index for ease of execution and
settlement. Index futures/options can be an efficient way of achieving the scheme’s investment
In case of investments in index futures/options, the risk/reward would be the same as
investments in portfolio of shares representing an index. On the fixed income side, an interest
rate swap agreement from fixed rate to floating rate is an example of how derivatives can be an
effective hedge for the portfolio in a rising interest rate environment.
Purpose of investment:
− Trading in derivatives by the scheme shall be restricted to hedging and portfolio balancing
− The scheme shall fully cover its positions in the derivatives market by holding underlying
securities/cash or cash equivalents/option and/or obligation for acquiring underlying assets to
honour the obligations contracted in the derivatives market.
− Separate records shall be maintained for holding the cash and cash equivalents/securities for
− The securities held shall be marked to market by the AMC to ensure full coverage of
investments made in derivative products at all time.
− The traded derivatives shall be valued at market price in conformity with the stipulations of
sub clauses (i) to (v) of clause 1 of the Eighth Schedule to the Securities and Exchange Board
of India (Mutual Funds) Regulations, 1996.
− The valuation of untraded derivatives shall be done in accordance with the valuation method
for untraded investments prescribed in sub clauses (i) and (ii) of clause 2 of the Eighth
Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.
The AMC shall cover the following aspects in their reports to the Trustees periodically, as
provided for in the Regulations:
− Transactions in derivatives, both in volume and value terms.
− Market value of cash or cash equivalents/securities held to cover the exposure.
− Any breach of the exposure limit laid down in the scheme offer document.
− Short-fall, if any, in the assets covering investment in derivative products and the manner of
The Trustee shall offer their comments on the above aspects in the report filed with SEBI
under sub regulation (23) (a) of regulation 18 of Securities and Exchange Board of India
(Mutual Funds) Regulations, 1996.
• The scheme may enter into derivatives for hedging/portfolio balancing purposes and in line
with the guidelines prescribed by SEBI vide circular number MFD/CIR/011/061/2000 dated
• The scheme may take exposure in derivatives upto a maximum of 50% of its spot exposure.
The Stock Exchange, Mumbai and the National Stock Exchange have introduced Index futures
on BSE Sensex (BSE 30) and Nifty (NSE-50). For example, in say month 1, three futures of
month 2, month 3 and month 4, will be traded. These futures will expire on the last working
Thursday of the respective month.
Let us assume the Nifty Index is 1475 on the last working day of month 1 and three future
indexes are available as under:
Month Bid Price Offer Price
Month 2 1480 1485
Month 3 1500 1515
Month 4 1510 1530
The Fund can buy an Index of month 2 as on last working day of month 1 at the offer price of
The following is a hypothetical example of a typical likely index future trade and the associated
costs. (All figures in Rs.)
Particulars Index Future Actual Purchase
Index as on last working day of Month 1 1475 1475
Month 2 Futures Cost 1485
A. Execution Cost 10 Nil
Carry and other Index Future
B. Brokerage Cost 3.71 7.38
Assumed at 0.25% for Index
Future and 0.50% for spot
(0.25% of 1485)
(0.50% of 1475)
C. Gains on Surplus Funds 9.82 Nil
(assumed 9% return on 90%
of the money left after paying
Total Cost (A+B-C) 3.89 7.38
In this example, the Index Future trade has resulted in better profitability compared to an actual
purchase of the underlying index stocks. Typically, the relative attractiveness of an Index Future
vis-à-vis individual securities will depend upon the carrying cost, the interest available on
surplus funds and the transaction cost.
Let us look at an example of an interest rate swap:
Entity A has a Rs.20 crores, 3 month asset which is being funded through call. Entity B, on the
other hand, has deployed in overnight call money market a Rs.20 crores, 3 month liability. Both
the entities are taking on an interest rate risk.
To hedge against the interest rate risk, both the entities can enter into a 3 month swap agreement
based on say MIBOR (Mumbai Inter Bank Offered Rate). Through this swap, entity B will
receive a fixed preagreed rate (say 8%) and pay NSE MIBOR (“the benchmark rate”) which will
neutralize the interest rate risk of lending in call. Similarly, entity A will neutralize its interest
rate risk from call borrowing as it will pay 8% and receive interest at the benchmark rate.
Assuming the swap is for Rs.20 crores 1 September to 1 December, Entity A is a floating rate
receiver at the overnight compounded rate and Entity B is a fixed rate receiver. On a daily basis,
the benchmark rate fixed by NSE will be tracked by them.
On December 1, they will calculate as explained below:
Entity A is entitled to receive daily compounded call rate for 92 days and pay 8% fixed.
Entity B is entitled to receive interest on Rs.20 crores @ 8% i.e. Rs.40.33 lakhs, and pay the
compounded benchmark rate.
Thus on December 1, if the total interest on the daily overnight compounded benchmark rate is
higher than Rs.40.33 lakhs, entity B will pay entity A the difference and vice versa.
As is clear from the above examples, engaging in derivatives has the potential to help the scheme
in minimising the portfolio risk and/or improve the overall portfolio returns.
Please note these examples are given for illustration purposes only and the actual returns may
vary depending on the market conditions.
Derivatives are high risk, high return instruments. As they are highly leveraged, even a small
price movement in the underlying security could have a large impact on their value and may also
result in a loss.
The scheme may accept underwriting obligations consistent with its investment objective and
asset allocation subject to the fund obtaining the necessary approval/registration under SEBI
(underwriters) Regulations, 1993 and the capital adequacy norms as prescribed by SEBI. The
total underwriting obligations will not exceed the scheme’s total net asset value.