CONTINUOUS OFFER

                                          OFFER DOCUMENT



                          Franklin India Pri...
CONTENTS


S. No.                   CHAPTER                        PAGE NO.


01.      HIGHLIGHTS & RISK FACTORS          ...
01. HIGHLIGHTS


  •   An open-end Franklin India Prima Plus scheme sponsored by the Franklin Templeton Group,
      one o...
•   Engaging in securities lending is subject to risks related to fluctuations in collateral value and
       settlement/l...
Growth Plan

Under the Growth Plan, the returns to investors will be available in the form of capital appreciation.

Divid...
potential to create wealth for their shareholders by delivering steady performance through the ups and
downs of the market...
Money     Market Commercial papers, commercial bills, treasury bills, Government
Instruments      securities having an une...
04. DUE DILIGENCE CERTIFICATE




                                    Franklin India Prima Plus



It is confirmed that:

...
05. SUMMARY OF THE SCHEME


Name of the Scheme          Franklin India Prima Plus (FIPP)
Nature of the Scheme        An Op...
UNITHOLDER TRANSACTION EXPENSES OR SALES LOAD

                                                       Present charge      ...
conditions/volatility, expenses of liquidating the securities, impact cost due to liquidating the securities
etc.

As per ...
The Trustee will be entitled to a remuneration of upto 0.0025% of the daily / weekly average net assets
of all schemes tak...
Nature of expenses                 FISIP-Series 1        FT India Dynamic PE        FT India Life Stage
                  ...
Name of the Scheme                                       FTIGF
Date of launch                                         07.1...
Name of the Scheme                                         TISTIP
Date of launch                                          ...
Name of the Scheme                                   TGSF – TP
Date of launch                                        11.02...
Name of the Scheme                                             TFIF
Date of launch                                        ...
Name of the Scheme                               FTIPERF
Date of launch                                   25.02.2002
Infor...
Name of the Scheme                                            FTIAAF
Date of launch                                       ...
Name of the Scheme
                                     FINTF                                  FISIP#
Date of Inception   ...
Name of the Scheme              FTDPEF                FTLF
Date of Inception                             31.10.2003       ...
Unaudited Half yearly financials as on September 30, 2003. NAV and Returns as of April 30, 2003 with
the Benchmarks


    ...
TISTIP          TGSF – TP
NAV at the beginning of the year (Mar. 31,       1096.5752 (GP)
2003)                           ...
TFIF           FTIPERF
NAV at the beginning of the year (Mar. 31,       10.8419 (LT - GP)
                                ...
FTIAAF           FISIP
NAV at the beginning of the year (Mar. 31,    9.5126 (PG – GP & DP)
2003)                          ...
FTDPEF                     FINTF
   NAV at the beginning of the year (Mar. 31, 2003)          N.A                      9.9...
TGSF-TP, TILP, TFIF (Long Term), FINTF, FISIP are Non-business day NAVs. Dividends declared
from June 1999 to March 2002 a...
The Sponsor is represented by Directors on the Board of the Trustee and the Investment Manager in
accordance with the Regu...
4. Global Offices

  There are offices all over the world in over 28 countries including The United States of America,
  B...
change which would modify the scheme and affects the interest of unitholders, shall be carried out
unless, -
i     a writt...
Franklin Templeton International Services Franklin Templeton Italia SIM SpA
S.A.
Templeton Global Holdings Ltd.           ...
Mahindra Information Technology Services Limited     Director
Mahindra Consulting Limited                          Directo...
ii)     appointed all key personnel including fund manager(s) for the scheme(s) and market, to
          the Trustee, with...
n) The Trustee shall be accountable for, and be the custodian of, the funds and property of the
         Scheme and shall ...
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01. HIGHLIGHTS

  1. 1. CONTINUOUS OFFER OFFER DOCUMENT Franklin India Prima Plus An Open – End Growth Scheme Sale of units on an ongoing basis at a Net Asset Value (NAV) related price Asset Management Company : Franklin Templeton Asset Management (India) Pvt. Ltd. (Formerly Templeton Asset Management (India) Pvt Ltd) Mutual Fund : Templeton Mutual Fund Trustee Company : Franklin Templeton Trustee Services Private Limited (Formerly Templeton Trust Services Pvt. Ltd.) The particulars of Franklin India Prima Plus 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 May 31, 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 yearly report. 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. 1
  2. 2. CONTENTS S. No. CHAPTER PAGE NO. 01. HIGHLIGHTS & RISK FACTORS 03 02. INTRODUCTION 04 03. DEFINITIONS 06 04. DUE DILIGENCE CERTIFICATE 08 05. SUMMARY OF THE SCHEME 09 06. SUMMARY OF EXPENSES AND FINANCIAL INFORMATION 09 07. CONDENSED FINANCIAL INFORMATION 13 08. CONSTITUTION / MANAGEMENT OF THE MUTUAL FUND 27 09. INVESTMENT OBJECTIVES AND POLICIES 46 10. HOW TO INVEST 52 11. VALUATION OF ASSETS AND NET ASSET VALUE 58 12. HOW TO REDEEM UNITS OF THE SCHEME 65 13. ASSOCIATE TRANSACTIONS 70 14. UNITHOLDER INFORMATION 71 15. TAX BENEFITS 78 16. INVESTOR SERVICES 82 17. GENERAL INFORMATION 84 18. PENDING LITIGATION OR PROCEEDINGS 92 2
  3. 3. 01. HIGHLIGHTS • An open-end Franklin India Prima Plus scheme sponsored by the Franklin Templeton Group, one of the world’s largest investment management companies, which has over 50 years of experience in international investment management and manages US$343.80 billion in assets (approximately Rs.15,25,441 crores) as on 30th April 2004. • Open end growth scheme investing in wealth creating companies across market cap ranges. • Option of Growth Plan and Dividend Plan. • Dividend Plan offers Payout and Reinvestment Options. • Favourable long-term capital gains tax with indexation benefits. • Dividends tax-free in the hands of investors (the scheme will not pay any distribution tax if 50% or more of the investible funds of the scheme are invested in equity shares of domestic companies) RISK FACTORS • 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 capital/debt markets. • 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 Prima Plus 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 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. • There is no guarantee or assurance on the frequency or quantum of dividends (which shall depend on the availability of adequate distributable surplus) although there is every intention to declare dividends. • Investors in the Scheme are not being offered any guaranteed / assured returns. SCHEME SPECIFIC RISK FACTORS AND SPECIAL CONSIDERATION • 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. • 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. • Investments in debt instruments are subject to default risk and interest rate risk. Interest rate risk results from changes in demand and supply for money and other macroeconomic factors and creates price changes in the value of debt instruments. Consequently, the Net Asset Value of the scheme may be subject to fluctuation. • Investments in debt instruments are subject to reinvestment risks as interest rates prevailing on interest or maturity due dates may differ from the original coupon of the bond, which might result in the proceeds being invested at a lower rate. • The scheme may invest in non-publicly offered debt securities and unlisted equities. This may expose the scheme to liquidity risks. 3
  4. 4. • Engaging in securities lending is subject to risks related to fluctuations in collateral value and settlement/liquidity and counterparty 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 may be highly leveraged. A small price movement in the underlying security could have a large impact on their value and may also result in a loss. • Prospective investors should review / study this Offer carefully and in its entirety and shall not construe the contents hereof or regard the summaries contained herein as advice relating to legal, taxation, or financial/ investment matters and are advised to consult their own professional advisor(s) as to the legal or any other requirements or restrictions relating to the subscription, gifting, acquisition, holding, disposal (sale, transfer, switch or redemption or conversion into money) of Units and to the treatment of income (if any), capitalization, capital gains, any distribution, and other tax consequences relevant to their subscription, acquisition, holding, capitalization, disposal (sale, transfer, switch or redemption or conversion into money) of Units within their jurisdiction / of nationality, residence, domicile etc. or under the laws of any jurisdiction to which they or any managed Funds to be used to purchase/gift Units are subject, and (also) to determine possible legal, tax, financial or other consequences of subscribing / gifting to, purchasing or holding Units before making an application for Units. • Neither this Offer Document nor the units have been registered in any jurisdiction. The distribution of this Offer Document in certain jurisdictions may be restricted or subject to registration requirements and, accordingly, persons who come into possession of this Offer Document in certain jurisdictions are required to inform themselves about, and to observe, any such restrictions. No person receiving a copy of this offer document or any accompanying application form in such jurisdiction may treat this Offer Document or such application form as constituting an invitation to them to subscribe for Units, nor should they in any event use any such application form, unless in the relevant jurisdiction such an invitation could lawfully be made to them and such application form could lawfully be used without compliance with any registration or other legal requirements. • No person has been authorized to give any information or to make any representations not confirmed in this Offer Document in connection with this Offer or the issue of Units, and any information or representations not contained herein must not be relied upon as having been authorized by the Mutual Fund, the Investment Manager. Neither the delivery of this Offer Document nor any sale made hereunder shall, under any circumstances, create any implication that the information contained herein is correct as of any time subsequent to the close of the Initial Offering Period. 02. INTRODUCTION Franklin India Prima Plus is an open-end growth scheme investing for growth of capital primarily through a diversified portfolio of wealth creating companies across market capitalisation ranges. Wealth creating companies are defined as those, which have the potential to produce returns consistently in excess of their cost of capital. The ability to achieve this is derived from sustainable competitive advantages emanating from intellectual property rights, proprietary technologies, well known brands, sound business strategies, management quality and so on. The intrinsic value of these companies rises with time. The stock market sooner or later acknowledges their unique contribution and rewards investors in such companies. Investors have the option of investing in the Growth Plan and Dividend Plan. 4
  5. 5. Growth Plan Under the Growth Plan, the returns to investors will be available in the form of capital appreciation. Dividend Plan Under the Dividend Plan, it is proposed to distribute the returns to the investors in the form of dividends (net of TDS) out of distributable profits. Investors have the option of reinvesting the dividend or receiving cash payouts. DEBT MARKETS The Indian debt markets are one of the largest markets in Asia. Government and Public Sector enterprises are predominant borrowers in the market. While interest rates were regulated till a few years back, there has been a rapid deregulation and currently both the lending and deposit rates are market determined. The bond markets are developing fast with the rapid introduction of new instruments including derivatives. Foreign Institutional Investors are also allowed to invest in Indian debt markets now. There has been a increase in the trading volumes in the market with the average daily trading volumes of Rs.6,067/- crores in the month of April 2004 compared to Rs.3,952/- crores in the month of March 2004. In the month of April, trading volume has been on a higher level by Rs.2,115/- crores, compared to the average trading volume of March 2004. The trading volumes are largely concentrated in the Government of India securities which contribute about 90% to 95% of the daily trades. The various debt instruments currently available for investments are: Instruments Current Yields Liquidity Central/State Government 4.39% -5.82% Very high securities PSU Bonds/Corporate debentures 4.60%-6.10% Medium - High Securitised debt 5.25%-6.50% Low - Medium Commercial Papers/Certificate of 4.40%-5.15% High deposits Call/Notice Money 4.00%-4.50% Very high Repo 3.50%-4.30% Very high The securities above could be listed and (subject to SEBI regulations), unlisted, privately placed, secured, unsecured and of any maturity. The securities may be acquired through initial public offerings, secondary market operations, private placement etc. The scheme may also invest in other fixed income instruments that may be available from time to time. The actual yields will, however, vary in line with general levels of interest rates and debt/money market conditions prevailing from time to time. The scheme may also invest in other fixed income instruments that may be available from time to time. The securities above, subject to applicable SEBI regulations, could be listed, unlisted, privately placed, secured, unsecured and of any maturity. The securities may be acquired through initial public offerings, secondary market operations, private placement etc. The equity component of the scheme will primarily focus on companies that have demonstrated characteristics such as market leadership, strong financials and quality management, and have the 5
  6. 6. potential to create wealth for their shareholders by delivering steady performance through the ups and downs of the market. 03. DEFINITIONS In this Offer Document the following definitions have been used: AMC / Asset Franklin Templeton Asset Management (India) Pvt. Ltd. (formerly Management Templeton Asset Management (India) Pvt. Ltd.), the asset Company/ management company, set up under the Companies Act, 1956 and Investment authorized by SEBI to act as Asset Management Company to the Manager 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 AMC. (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 fund. 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 Deutsche Bank Mumbai branch. Entry Load / Sales Load on ongoing purchases. Load Exit Load / Load on redemption other than CDSC. Redemption Load Investment Investment Management Agreement (IMA) dated January 5, 1996 Management executed between Franklin Templeton Trustee Services Pvt. Ltd. and Agreement or Franklin Templeton Asset Management (India) Pvt. Ltd. IMA ISC Investor Service Centre of the Asset Management Company. 6
  7. 7. 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. MF/026/96/8. NAV Net Asset Value of the Units of Franklin India Prima Plus. Offer Document The document issued by Templeton Mutual Fund offering units of Franklin India Prima Plus. 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 Price”). RBI Reserve Bank of India, established under the Reserve Bank of India Act, 1934 Registrars Registrar for the time being of the Mutual Fund, which is in-house, Franklin Templeton Asset Management (India) Pvt. Ltd. Repo / Reverse Sale / Purchase of Government Securities as may be allowed by RBI Repo from time to time with simultaneous agreement to repurchase / resell them at a later date. Scheme Franklin India Prima Plus (FIPP). 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 Franklin Templeton Trustee Services Private Limited (formerly 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 shares in the Net Assets of Franklin India Prima Plus. Unitholder A person holding Units in Franklin India Prima Plus. 7
  8. 8. 04. DUE DILIGENCE CERTIFICATE Franklin India Prima Plus It is confirmed that: i. The Offer Document forwarded to SEBI is in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the guidelines and directives issued by SEBI from time to time. ii. All legal requirements connected with the launching of the scheme as also the guidelines, instructions, etc, issued by the Government and any other competent authority in this behalf, have been duly complied with. iii. The disclosures made in the Offer Document are true, fair and adequate to enable the investors to make a well informed decision regarding investment in the proposed scheme. iv. The intermediaries named in the Offer Document are registered with SEBI and till date such registrations is valid. Date: May 31, 2004 Signature: Sd/- Place: Mumbai Name: Pranita Gramopadhye Compliance Officer 8
  9. 9. 05. SUMMARY OF THE SCHEME Name of the Scheme Franklin India Prima Plus (FIPP) Nature of the Scheme An Open-end growth scheme Investment Objective The investment objective of Prima Plus is to provide growth of capital plus regular dividend through a diversified portfolio of equities, fixed income securities and money market instruments. Redemption Price Redemptions will be done at the Applicable NAV for redemptions*. Liquidity The redemption cheque will be despatched to the unitholders within the statutory time limit of 10 business days prescribed by SEBI. However, on a best effort basis the Fund will endeavour to despatch the redemption cheque within 4 working days after a valid redemption request is received at the Registrar’s office. Transparency • NAV will be normally determined for all business days and released to the press. • NAV will be calculated upto 4 decimal places. • The Fund would publish the half-yearly and annual results as per the SEBI Regulations. • Full Portfolio disclosure every half-year as per the SEBI regulations. Tax Benefits There are certain tax benefits available to the investors under the Scheme. (Please refer to Section on Taxation). * AMC reserve the right to introduce/increase/decrease the entry/exit load on a prospective basis. 06. SUMMARY OF EXPENSES AND FINANCIAL INFORMATION EXPENSES OF THE SCHEME FEE AND EXPENSES The information that is provided under this section seeks to assist the investor in understanding the following: - a) The expense structure of the current Scheme and types of different fees and their percentage the investor is likely to incur on purchasing and selling the units of the Scheme. b) The financial information (condensed) relating to the previous schemes launched by the Fund. 9
  10. 10. UNITHOLDER TRANSACTION EXPENSES OR SALES LOAD Present charge Maximum charge i Maximum sales load imposed 2.25 % 6% on purchase (as % of NAV) ii Sales Load, if any, on issue of units in 0% 0% lieu of dividends (as % of NAV) iii Contingent Deferred Sales Load N.A. N.A. (‘CDSC’) (based on any period of holding) (as % of NAV) iv Redemption / Repurchase Load (as % Nil 3% of amount redeemed NAV) v Switchover / Exchange Fee (as % of Nil 3% NAV) The AMC/Trustee reserve the right to change the Contingent Deferred Sales Charge (CDSC) or introduce a load and change the load structure of the scheme if it so deems fit in the interest of and for the smooth and efficient functioning of the scheme. A load structure, introduced by the Trustee/AMC may comprise of an entry load, exit load, spread or level load or any other load as may be permissible under the regulations. Any load that may be levied will be applicable on a prospective basis and will be applied for transactions after the introduction of the load. Load will be charged at rates applicable at the time of the transaction (purchase, redemption, exchange, dividend reinvestment etc.) details of which will be provided in our offices/Web site/addendum to the offer document. All loads including Contingent Deferred Sales Charge shall be credited to the scheme. Such loads may be maintained in a separate account and may be utilised towards meeting the selling and distribution expenses. Any surplus in this account may be credited to the scheme, whenever felt appropriate by the AMC. No switchover/exchange fee will be charged for any switch/exchange. All the switches / exchanges will be treated as redemption in one scheme and subscription in the other scheme with the entry load / exit load as may be applicable. The Trustee reserves the right to introduce / increase / decrease a Load / Fee for the items (i) to (v) above at any time in future on a prospective basis. However, such increase / decrease / introduction would be subject to the limits prescribed under the Regulations. The addendum detailing the changes may be attached to offer documents and abridged offer documents. The addendum may be circulated to all the distributors / brokers so that the same can be attached to all offer documents and abridged offer documents already in stock. The AMC/Trustee reserves the right to introduce a load and change the load structure of the scheme if it so deems fit in the interest of and for the smooth and efficient functioning of the scheme. A load structure, introduced by the Trustee/AMC may comprise of an entry load, exit load, spread or level load or any other load represents a low flat charge to buy the fund with an equal charge upon redemption, whenever it occurs. The AMC/Trustee reserve the right to levy the exit load with a view to protect the interests of existing unitholders and the same will be levied having regard to such relevant factors such as market 10
  11. 11. conditions/volatility, expenses of liquidating the securities, impact cost due to liquidating the securities etc. As per SEBI circular MFD/CIR.No.04/11488 /2003 dated June 12, 2003; Mutual Funds are permitted to launch Fund of Funds (FOF) schemes. The FOF scheme will invest in other mutual fund schemes, which will be treated as underlying schemes. Load in case of Fund-of-Funds scheme: As the FOF scheme can charge a load, if the underlying schemes too also charge a load, there would be a double incidence of load for the investors at the FOF level and at the underlying scheme level. Hence, there will not be any no load (entry/exit) charged by the underlying schemes on the investments made by Franklin Templeton Fund- of- Funds schemes in an underlying the scheme. Trail Fees: In the FOF scheme, the underlying schemes get the subscription through the vehicle of FOF. Hence, the distributor who mobilizes the investment in Franklin Templeton Fund of Fund schemes is entitled to trail fees, which the underlying scheme would have normally paid to a distributor. Accordingly, the trail fees will be paid out of the underlying scheme. Total Expenses Annual Scheme Recurring Expenses The maximum annual recurring expenses that can be charged to the scheme shall be within the limits stated in Regulations 52 (6) and subject to a percentage limit of Daily / Weekly Average Net Assets as in the table below: First Rs.100 Next Rs.300 crore Next Rs.300 crore Over Rs.700 crore crore 2.50% 2.25% 2.00% 1.75% Any excess over these specified ceilings would be borne by the Asset Management Company. The Trustee/AMC reserves the right to charge higher operating expenses in relation to investing overseas as and when SEBI permits. The AMC has estimated the following recurring expenses for the first Rs.100 crores of Average Daily / Weekly Net Assets. Investment Management Fees 1.25% Custodial Fees 0.35% Shareholder Servicing Fee/Investor Communication Expenses 0.75% Trustee Remuneration+, Audit Fees etc 0.15% 2.50%* + Trustee Remuneration: These estimates have been made in good faith as per the information available to the Investment Manager based on past experience and are subject to change inter-se and types of the expenses charged shall be as per the Regulations. 11
  12. 12. The Trustee will be entitled to a remuneration of upto 0.0025% of the daily / weekly average net assets of all schemes taken together and such remuneration shall be paid quarterly in arrears. Trusteeship fee shall be distributed equitably across all schemes of Templeton Mutual Fund. Out-of- pocket expenses incurred for attending meetings of the Trustee shall be paid separately and shall be charged to the fund. * The above heads and percentages are estimates and may vary in practice in line with actuals and amendment to SEBI regulations but will be subject to the overall ceiling of 2.50%. The AMC will bear any expenses in excess of the ceiling. The tables given above relating to Unitholder Transaction Expenses, Initial Issue Expenses and Annual Scheme Recurring Expenses have been given to the investor to assist him/her in understanding the various costs and expenses that an investor of the scheme will bear directly or indirectly. Investment management fees are payable in arrears. The direct expenses incurred by each scheme of Templeton Mutual Fund shall be chargeable to that scheme. The common expenses incurred on various schemes will be charged on the basis of number of unitholders, the size of corpus of the scheme and in conformity with generally accepted accounting principles. The total expenses of the scheme including the investment management and advisory fee (together with additional management fee wherever applicable) shall not exceed the limit stated in Regulation 52(6). An addendum detailing the changes in loads will be circulated to all intermediaries/offices of the AMC for display in their place of business. The AMC reserves the right to revise these charges as specified under the paragraph pertaining to fundamental attributes of the scheme. PAST SCHEMES (LAUNCHED DURING THE PAST ONE FISCAL YEAR) The details of initial issue expenses borne by Franklin India International Fund (FINTF), Franklin India Strategic Investment Plan (FISIP), FT India Dynamic PE Ratio Fund of Funds and FT India Life Stage Fund of Funds (Schemes launched during the last one fiscal year) are given below: (Rs. in Lakhs) Nature of expenses FINTF FISIP-Series 1 FISIP Series-1 Plan A-LT Plan A-Basic Brokerage fees & Commission 2.63 17.85 Nil Marketing & Advertising 103.80 Nil Nil Printing & Distribution 14.98 0.03 0.02 Banker’s fees 0.38 Nil Nil Other expenses 7.95 Nil Nil Total Expenses 129.74 17.88 0.02 12
  13. 13. Nature of expenses FISIP-Series 1 FT India Dynamic PE FT India Life Stage Plan A-MT Ratio Fund of Funds Fund of Funds Brokerage fees & Commission Nil 236.52 143.38 Marketing & Advertising Nil 6.09 1.77 Printing & Distribution Nil 2.27 1.79 Banker’s fees Nil Nil 0.00 Other expenses Nil 0.25 1.00 Total Expenses Nil 245.13 147.94 None of the expenses in any of the schemes above have exceeded 6% of initial resources mobilized and are borne by the AMC. The initial issue expenses are borne by AMC. 07. CONDENSED FINANCIAL INFORMATION a) HISTORICAL PER UNIT STATISTICS Name of the Scheme FIIF – BSE Sensex Plan Date of launch 27.08.2001 Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year 10.55 9.1896 (GP) 10.00 a 9.1896 (DP) Net Income per unit (Rs.) 1.40 -0.49 17.5 Dividends (Rs.) / Bonus NIL NIL NIL Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) 16.1727 (GP) 10.55 9.1896 16.1727 (DP) Annualised compounded return%@ 5.50 -5.17 20.36% Benchmark Index BSE Sensex BSE Sensex BSE Sensex Benchmark Annualised 22.27% 4.55 -5.18 compounded return%@ Net Assets (End of period) 4.66 5.91 3.06 (Rs. in crores) Ratio of Recurring Expenses to Net 1.49% 1.49% 1.49 Assets 13
  14. 14. Name of the Scheme FTIGF Date of launch 07.12.2001 Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year 10.00 (I - GP) a 10.64 (I - GP) 12.6169 (I - GP) 10.00 (I - QP) a 10.31 (I - QP) 10.8840 (I - QP) 10.00 (L - GP) a 10.41 (L - GP) 11.1444 (L - GP) 10.00 (L - MP) a 10.16 (L – MP) 10.2611 (L – MP) 11.8193 (I - B) Net Income per unit (Rs.) 0.97 (I) 1.33 (I) 1.38 (I) 1.47 (L) 0.58 (L) 0.75 (L) Dividends (Rs.) / Bonus 0.30 (I - QP) 1.30 (I – QP) 1.02 (I – QP) 0.225 (L - MP) 0.600 (L – MP) 0.51 (L – MP) 65 : 1000 (I – 79:1000 (I - B) Bonus) Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) 10.64 (I - GP) 12.6169 (I - GP) 14.9452 (I - GP) 10.31 (I - QP) 10.8840 (I - QP) 11.6857 (I - QP) 10.41 (L - GP) 11.1444 (L - GP) 11.7309 (L - GP) 10.16 (L – MP) 10.2611 (L - MP) 10.2102 (L – MP) 11.8193 (I – 12.9405 (B) Bonus) Annualised compounded return 6.40% b (I) 19.38% (I) 18.95% (I) %@ 4.10% b (L) 8.61% (L) 7.14% (L) Benchmark Index I-Sec Libex I-Sec Libex I-Sec Libex Benchmark Annualised N.A N.A N.A compounded return%@ Net Assets (End of period) 32.0189 (I) 38.18 (I) 113.33 (I) (Rs. in crores) 3.9064 (L) 2.36 (L) 2.45 (L) Ratio of Recurring Expenses to 1.23% (I) 1.24% (I) 1.24% (I) Net Assets 0.98% (L) 0.99% (L) 0.95 (L) 14
  15. 15. Name of the Scheme TISTIP Date of launch 31.01.2002 Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year 1000.00 a (GP) 1010.99 (GP) 1096.5752 (GP) 1000.00 a (WP) 1004.70 (WP) 1089.7646 (WP) 1000.00 a (MP) 1004.70 (MP) 1015.7615 (MP) 1000.00 a (QP) 1004.70 (QP) 1008.9605 (QP) 1039.0168 (B) Net Income per unit (Rs.) 22.78 102.55 102.79 Dividends (Rs.) / Bonus 5.7 (WP) 72 (MP) 59.12 (WP) 5.7 (MP) 79 (QP) 52.20 (MP) 5.7 (QP) 54.95 : 1000 53.00 (QP) (Bonus) 60:1000 (B) Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) 1010.99 (GP) 1096.5752 (GP) 1167.5766 (GP) 1004.70 (WP) 1089.7646 (WP) 1090.9852 (WP) 1004.70 (MP) 1015.7615 (MP) 1021.1029 (MP) 1004.70 (QP) 1008.9605 (QP) 1013.2624 (QP) 1039.0168 (Bonus) 1040.8668 (B) Annualised compounded return%@ 1.13% b 8.26% 7.42% Benchmark Index CRISIL Short CRISIL Short CRISIL Short Term Bond Fund Term Bond Fund Term Bond Fund Index Index Index Benchmark Annualised N.A N.A N.A compounded return%@ Net Assets (End of period) 73.4431 467.63 808.12 (Rs. in crores) Ratio of Recurring Expenses to Net 0.83% 0.94% 0.90% Assets 15
  16. 16. Name of the Scheme TGSF – TP Date of launch 11.02.2002 Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year 10.00 a (GP) 10.0960 (GP) 11.3499 (GP) 10.00 a (DP) 10.0960 (DP) 10.4679 (DP) Net Income per unit (Rs.) 0.15 0.880 0.65 Dividends (Rs.) / Bonus NIL 0.85 (DP) 0.51 Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) 10.0960 (GP) 11.3499 (GP) 12.1661 (GP) 10.0960 (DP) 10.4679 (DP) 10.6312 (DP) Annualised compounded return%@ 11.84% (GP) 9.62% (GP) 0.92% b 11.97% (DP) 9.67% (DP) Benchmark Index I-Sec Si-BEX I-Sec Si-BEX I-Sec Si-BEX Benchmark Annualised N.A N.A N.A compounded return%@ Net Assets (End of period) 2.06 11.85 21.02 (Rs. in crores) Ratio of Recurring Expenses to Net 1.23 1.25% 1.13 Assets 16
  17. 17. Name of the Scheme TFIF Date of launch 2.02.2002 Information as at the end of Mar 2002 Mar 2003 Mar 2004 a NAV at the beginning of the year 10.00 (ST - GP) 10.1181 (ST-GP) 10.8332 (ST - GP) 10.00 a (LT- GP) 10.11 (LT-GP) 10.8419 (LT - GP) 10.00 a (ST -DP) 10.0002 (ST-DP) 10.0028 (ST - DP) 10.00 a (LT -DP) 10.11 (LT-DP) 10.1042 (LT - DP) Net Income per unit (Rs.) 0.18 (ST) 0.28 (ST) 0.25 (ST) 0.08 (LT) 0.58 (LT) 0.50 (LT) Dividends (Rs.) / Bonus 0.11 (ST-DP) 0.69 (ST-DP) 0.45 (ST) NIL (LT-DP) 0.73 (LT-DP) 0.45 (LT) Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) 10.1181 (ST-GP) 10.8333 (ST-GP) 11.4060 (ST - GP) 10.11 (LT-GP) 10.8419 (LT-GP) 11.4327 (LT - GP) 10.0002 (ST-DP) 10.0028 (ST-DP) 10.0069 (ST - DP) 10.11 (LT-DP) 10.1042 (LT-DP) 10.1392 (LT - DP) b Annualised compounded return%@ 1.12% (ST-GP) 7.24% (LT) 6.28% (ST) 1.00% b (LT-GP) 7.17% (ST) 6.40% (LT) Benchmark Index Crisil Liquid Fund Crisil Liquid Fund Crisil Liquid Fund Index Index Index Benchmark Annualised N.A N.A N.A compounded return%@ Net Assets (End of period) 95.15 (ST) 189.07 (LT) 205.99 (LT) (Rs. in crores) 94.10 (LT) 486.18 (ST) 1266.53 (ST) Ratio of Recurring Expenses to Net 0.19% (ST) 1.49% (LT) 1.42% (LT) Assets 1.10% (LT) 0.91% (ST) 1.00% (ST) 17
  18. 18. Name of the Scheme FTIPERF Date of launch 25.02.2002 Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year 8.76 (GP) 10.00 a 9.67 8.76 (DP) Net Income per unit (Rs.) (0.1300) (1.3300) 8.79 Dividends (Rs.) / Bonus NIL NIL 2.50 Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) 15.05 (GP) 9.67 8.76 12.50 (DP) Annualised compounded return%@ (3.30%) b (11.41%) 21.54% Benchmark Index - - - Benchmark Annualised - - - compounded return%@ Net Assets (End of period) (Rs. in 48.3115 31.76 19.31 crores) Ratio of Recurring Expenses to Net 1.84% 2.49% 2.48% Assets 18
  19. 19. Name of the Scheme FTIAAF Date of launch 25.02.2002 Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year 10.00 a (PG) 9.63 (PG) 9.5126 (PG – GP & DP) 10.00 a (SG) 9.69 (SG) 9.7671 (SG – GP & DP) 10.00 a (BG) 9.74 (BG) 9.9756 (BG – GP & DP) 10.00 a (CG) 9.78 (CG) 10.1918 (CG – GP & DP) 10.00 a (IH) 9.81 (IH) 10.4758 (IH – GP & DP) Net Income per unit (Rs.) 0.03 0.24 2.19 Dividends (Rs.) / Bonus 3.50 (PG) 3.00 (SG) NIL NIL 2.50 (BG) 2.00 (CG) 1.50 (IH) Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) 17.3393 (PG – GP) 13.7395 (PG – DP) 9.63 (PG) 16.1613 (SG – GP) 9.5126 (PG) 9.69 (SG) 13.0849 (SG – DP) 9.7671 (SG) 14.8478 (BG – GP) 9.74 (BG) 9.9756 (BG) 12.2996 (BG – DP) 9.78 (CG) 10.1918 (CG) 13.5729 (CG – GP) 9.81 (IH) 10.4758 (IH) 11.2988 (CG - DP) 12.1764 (IH – GP) 10.4810 (IH – DP) Annualised compounded return (3.70%) b (PG) (4.47%) (PG) 30.03% (PG) %@ (3.10%) b (SG) (2.13%) (SG) 25.74% (SG) (2.60%) b (BG) (0.22%) (BG) 20.75% (BG) (2.20%) b (CG) 1.75% (CG) 15.69% (CG) (1.90%) b (IH) 4.34% (IH) 9.85% (IH) Benchmark Index - - - Benchmark Annualised - - - compounded return%@ Net Assets (End of period) (Rs. in 16.65 10.80 31.00 crores) Ratio of Recurring Expenses to 1.81% 2.24% 2.23% Net Assets 19
  20. 20. Name of the Scheme FINTF FISIP# Date of Inception 20.12.2002 31.10.2003 Information as at the end of Mar 2003 Mar 2004 Mar 2004 NAV at the beginning of the year 10.00 a 9.9790 10.00 a Net Income per unit (Rs.) (0.01) -1.08 0.17 Dividends (Rs.) / Bonus NIL N.A. N.A. Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) 9.9790 9.3611 10.1746 Annualised compounded return%@ (0.21%) b -5.03% 1.75% * Benchmark Index Lehman Lehman Intermediate Govt Intermediate Govt - (US) Index (US) Index Benchmark Annualised 0.35 -3.96 - compounded return%@ Net Assets (End of period) (Rs. in 5.84 1.68 6.10 crores) Ratio of Recurring Expenses to Net 0.90% 0.85% 0.31% Assets 20
  21. 21. Name of the Scheme FTDPEF FTLF Date of Inception 31.10.2003 29.11.2003 Information as at the end of Mar 2004 Mar 2004 NAV at the beginning of the year 10.00 a 10.00 a Net Income per unit (Rs.) 1.41 0.74 Dividends (Rs.) / Bonus N.A N.A Transfer to Reserves Nil Nil NAV at the end of the year (Rs.) 11.8435 (GP) 10.9294 (The 20s Plan 11.8435 (DP) – GP & DP) 10.7121 (The 30s Plan – GP & DP) 10.5444 (The 40s Plan – GP & DP) 10.4021 (The 50s Plus Plan – GP & DP) Annualised compounded return%@ 18.44% * 9.29% (The 20s Plan – GP & DP) 7.12% (The 30s Plan – GP & DP) 5.44% (The 40s Plan – GP & DP) 4.02% (The 50s Plus Plan – GP & DP) Benchmark Index N.A N.A Benchmark Annualised compounded return%@ N.A N.A Net Assets (End of period) (Rs. in crores) 252.01 204.43 Ratio of Recurring Expenses to Net Assets 0.09 0.97 21
  22. 22. Unaudited Half yearly financials as on September 30, 2003. NAV and Returns as of April 30, 2003 with the Benchmarks FIIF FTIGF NAV at the beginning of the year (Mar. 31, 12.6169 (I - GP) 2003) 10.8840 (I - QP) 9.1896 (GP) 11.8193 (B) 9.1896 (DP) 11.1444 (L - GP) 10.2611 (L - MP) Net Income per unit (Rs.) (I) 1.14 6.28 (L) 0.47 Dividends (Rs.) / Bonus 0.52% (I-QP) 40 (per 1000 units) (I- Nil MB) 0.263 %(L-MP) Transfer to Reserves (Rs. in Crores) Nil Nil NAV as on September 30, 2003 (Rs.) 14.2347 (I - GP) ^ 11.6739 (I - QP) ^ 12.9742 (GP) 12.8139 (B) ^ 12.9742 (DP) 11.5168 (L - GP) ^ 10.3028 (L – MP) ^ Annualised Returns from the date of inception 21.49% (I) 13.25% @ 8.10% (L) Benchmark Returns@ 15.09% N.A. Net Assets as on September 30, 2003 (Rs. in 73.35 (I) 5.04 Crores) 2.32 (L) Ratio of recurring expenses to net assets 1.25% (I) 1.49% 1.00% (L) NAV as on April 30, 2004 16.2239 (GP) 15.0595 (I-GP) 16.2239 (DP) 11.7750 (I-QP) 11.7635 (L-GP) 10.2386 (L-MP) 13.0394 (I-Bonus) Annualised Returns from the date of inception 19.82% 18.62% (I) @ 7.01% (L) Benchmark Returns @ 22.04% N.A Benchmark Indices used BSE Sensex I Sec Libex Net Assets as on April 30, 2004 (Rs. in 3.54 113.33 (I) Crores) 2.45 (L) 22
  23. 23. TISTIP TGSF – TP NAV at the beginning of the year (Mar. 31, 1096.5752 (GP) 2003) 1089.7646 (WP) 1015.7615 (MP) 11.3499 (GP) 1008.9605 (QP) 10.4679 (DP) 1039.0168 (B) Net Income per unit (Rs.) 32.02 0.68 Dividends (Rs.) / Bonus 35.1656%(WD) 26:1000(WB) 0.26% 27.2%(MD) 28.0%(QP) Transfer to Reserves (Rs. in Crores) Nil Nil NAV as on September 30, 2003 (Rs.) 1140.3636 (GP) 1092.2722 (WP) 11.9175 (GP) ^ 1025.1689 (MP) 10.6938 (DP) ^ 1017.3715 (QP) 1051.7376 (B) Annualised Returns from the date of inception 11.34% (GP) @ 8.22% 11.42% (DP) Benchmark Returns@ N.A. N.A. Net Assets as on September 30, 2003 (Rs. in 1338.54 14.19 Crores) Ratio of recurring expenses to net assets 0.90% 1.25% NAV as on April 30, 2004 1173.3584 (GP) 12.2153 (GP) 1090.6091 (WP) 10.6742 (DP) 1026.1593 (MP) 1018.2800 (QP) 1040.2886 (B) Annualised Returns from the date of inception 7.38% 9.45% (GP) @ 9.50% (DP) Benchmark Returns @ N.A N.A Benchmark Indices used CRISIL Short-Term I Sec Si-BEX Bond Fund Index Net Assets as on April 30, 2004 (Rs. in 808.12 20.97 Crores) 23
  24. 24. TFIF FTIPERF NAV at the beginning of the year (Mar. 31, 10.8419 (LT - GP) 8.76 (GP) 2003) 10.1042 (LT - DP) 8.76 (DP) 10.8332 (ST - GP) 10.0028 (ST - DP) Net Income per unit (Rs.) 0.27(ST) 5.51 0.46(LT) Dividends (Rs.) / Bonus 0.25 (ST) NIL 0.23 (LT) Transfer to Reserves (Rs. in Crores) Nil Nil NAV as on September 30, 2003 (Rs.) 11.1576 (LT - GP) ^ 10.1446 (LT - DP) ^ 12.40 (GP) 11.1436 (ST - GP) 12.40 (DP) 10.0061 (ST - DP) Annualised Returns from the date of inception 6.75% (ST) 14.44% @ 6.83% (LT) Benchmark Returns@ N.A. - Net Assets as on September 30, 2003 (Rs. in 470.71 (ST) 19.73 Crores) 138.24 (LT) Ratio of recurring expenses to net assets 1.49% (LT) 2.49% 1.00% (ST) NAV as on April 30, 2004 11.4845 (LT - GP) 15.24 (GP) 10.1850 (LT - DP) 12.66 (DP) 11.4499 (ST - GP) 10.0079 (ST - DP) Annualised Returns from the date of inception 6.23% (ST) 21.34% (GP) @ 6.37% (LT) 21.36% (DP) Benchmark Returns @ N.A - Benchmark Indices used Crisil Liquid Fund - Index Net Assets as on April 30, 2004 (Rs. in 1516.78 (ST) 25.07 Crores) 286.06 (LT) 24
  25. 25. FTIAAF FISIP NAV at the beginning of the year (Mar. 31, 9.5126 (PG – GP & DP) 2003) 9.7671 (SG – GP & DP) 9.9756 (BG – GP & DP) N.A 10.1918 (CG – GP & DP) 10.4758 (IH – GP & DP) Net Income per unit (Rs.) 1.39 N.A Dividends (Rs.) / Bonus NIL N.A Transfer to Reserves (Rs. in Crores) Nil Nil NAV as on September 30, 2003 (Rs.) 13.6097 (PG – GP & DP) ^ 13.0775 (SG – GP & DP) ^ 12.4946 (BG – GP & DP) ^ N.A 12.1733 (CG – GP & DP) ^ 11.4904 (IH – GP & DP) ^ Annualised Returns from the date of 21.32% (PG) inception @ 18.33% (SG) 14.99% (BG) N.A 13.13% (CG) 9.10% (IH) Benchmark Returns@ - - Net Assets as on September 30, 2003 (Rs. in 22.26 N.A Crores) Ratio of recurring expenses to net assets 2.24% N.A NAV as on April 30, 2004 17.2580 (PG – GP) 10.2084 13.6751 (PG – DP) 16.1489 (SG – GP) 13.0748 (SG – DP) 14.9065 (BG – GP) 12.3482 (BG – DP) 13.7477 (CG – GP) 11.4443 (CG - DP) 12.1831 (IH – GP) 10.4868 (IH – DP) Annualised Returns from the date of 28.47% (PG – GP & DP) 2.08% * inception @ 24.61% (SG – GP & DP) 20.12% (BG – GP & DP) 15.73% (CG – GP & DP) 9.49% (IH – GP & DP) Benchmark Returns @ - - Benchmark Indices used - - Net Assets as on April 30, 2004 (Rs. in 32.68 6.13 Crores) 25
  26. 26. FTDPEF FINTF NAV at the beginning of the year (Mar. 31, 2003) N.A 9.9790 Net Income per unit (Rs.) N.A (0.49) Dividends (Rs.) / Bonus N.A Nil Transfer to Reserves (Rs. in Crores) N.A Nil NAV as on September 30, 2003 (Rs.) N.A 9.6518 ^ Annualised Returns from the date of inception @ N.A -3.48% * Benchmark Returns@ N.A -1.63 Net Assets as on September 30, 2003 (Rs. in N.A 2.71 Crores) Ratio of recurring expenses to net assets N.A 0.90% NAV as on April 30, 2004 12.0866 (GP) 9.4056 12.0866 (DP) Annualised Returns from the date of inception @ 20.87% * -4.40% Benchmark Returns @ - -3.75% Benchmark Indices used - Lehman Intermediate Govt. (US) Index Net Assets as on April 30, 2004 (Rs. in Crores) 264.73 1.63 FTLF NAV at the beginning of the year (Mar. 31, 2003) N.A Net Income per unit (Rs.) N.A Dividends (Rs.) / Bonus N.A Transfer to Reserves (Rs. in Crores) N.A NAV as on September 30, 2003 (Rs.) N.A Annualised Returns from the date of inception @ N.A Benchmark Returns@ N.A Net Assets as on September 30, 2003 (Rs. in N.A Crores) Ratio of recurring expenses to net assets N.A NAV as on April 30, 2004 11.2742 (The 20s Plan – GP & DP) 10.9591 (The 30s Plan – GP & DP) 10.7333 (The 40s Plan – GP & DP) 10.4983 (The 50s Plus Plan – GP & DP) Annualised Returns from the date of inception @ 12.74% (The 20s Plan – GP & DP) 9.59% (The 30s Plan – GP & DP) 7.33% (The 40s Plan – GP & DP) 4.98% (The 50s Plus Plan – GP & DP) Benchmark Returns @ - Benchmark Indices used - Net Assets as on April 30, 2004 (Rs. in Crores) 210.60 Note: @ Returns for periods less than one year have been given in absolute terms without annualizing the same. Returns for periods greater than one year are on compounded annualized basis. a Inception/ Allotment date NAV, b Absolute Returns, GP – Growth Plan, DP - Dividend Plan, WP – Weekly Dividend Plan, MP – Monthly Dividend Plan, QP – Quarterly Dividend Plan, B – BSE Sensex Plan, I – Investment Plan, L – Liquid Plan, PG – Pure Growth, SG – Steady Growth, BG – Balanced Growth, CG – Conservative Growth, IH – Inflation Hedge, ST – Short Term, LT – Long Term, TP – Treasury Plan. * Inception Date of the series: March 28, 2003, # Plan A Medium Term Growth 19-Nov-04 (Inception Date of the series: Oct 31, 2003). The NAV as of September 30, 2003 for FTIMIP, FTIGF, 26
  27. 27. TGSF-TP, TILP, TFIF (Long Term), FINTF, FISIP are Non-business day NAVs. Dividends declared from June 1999 to March 2002 are tax exempt for investors.). TFIF was launched on February 11, 2002. TGSF (TP) was launched on February 11, 2002. FINTF was launched on December 20, 2002. Returns for schemes/plans with dividend distribution are computer assuming re-investing of all payouts at ex-dividend NAV. FTDPEF Fund of Funds was launched on October 31, 2003, hence data for the previous year and half-year is not available. FTLF Fund of Funds was Returns for schemes/plans with launched on Nov 29, 2003, hence data for the previous year and half-year is not available. dividend distribution are computed assuming re-investment of all payouts at ex-dividend NAV. The above information is presented scheme wise for all schemes launched by the mutual fund during the last three fiscal years (excluding redeemed schemes). THE ABOVE INFORMATION IS PRESENTED SCHEME WISE FOR ALL SCHEMES LAUNCHED BY THE MUTUAL FUND DURING THE LAST THREE FISCAL YEARS (EXCLUDING REDEEMED SCHEMES) The scheme abbreviations used in this offer document are as follows: Templeton India Growth Fund - (TIGF), Franklin India Index Fund - (FIIF), Franklin India Index Tax Fund- (FITF), Franklin India Balanced Fund -(FIBF), FT India PE Ratio Fund- (FTIPERF), FT India Balanced Fund- (FTIBF), FT India Index Fund- (FTIIF), Templeton Monthly Income Plan- (TMIP), FT India Monthly Income Plan - (FTIMIP), Franklin FMCG Fund - (FFF), FT India Asset Allocation Fund - (FTIAAF), Franklin India Bluechip Fund - (FIBCF), Franklin India Prima Fund-(FIPF), Franklin India Vista Fund-(FIVF), Franklin India Taxshield 96-(FIT96), Templeton Floating Rate Income Fund- LT, Templeton Floating Rate Income Fund-ST- (TFIF), Templeton India Income Fund-(TIIF), Templeton India Children’s Asset Plan-(TICAP), Templeton India Income Builder Account-(TIIBA), Franklin India Maxima Fund-(FIMF), Templeton India Guaranteed Income Plan (TIGIP), Franklin India Growth Fund -(FIGF), Franklin Internet Opportunities Fund-(FIOF), Franklin Pharma Fund-(FPF), Franklin Infotech Fund-(FIF), Franklin India Prima Plus-(FIPP), Templeton India Pension Plan-(TIPP), Franklin India Taxshield 97-(FIT97), Franklin India Taxshield-(FIT), Franklin India Taxshield 99 - (FIT99), Franklin India Taxshield 98-(FIT98), Franklin India Taxshield 95-(FIT95), Templeton India Government Securities Fund-(TGSF), FT India Gilt Fund-(FTIGF), Templeton India Liquid Plus -(TILP), Templeton India Liquid Fund-(TILF), Templeton India Treasury Management Account-(TITMA), Templeton India Money Market Account-(TIMMA), Templeton India Short-Term Income Plan-(TISTIP), Franklin India Strategic Investment Plan-(FISIP), FT India Dynamic PE Ratio Fund of Funds (FTDPEF), FT India Life Stage Fund of Funds (FTLF). 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. 08. 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 Franklin Templeton Trustee 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. THE SPONSOR 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 Franklin Templeton Asset Management (India) Private Ltd. as the Investment Manager. 27
  28. 28. 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. Franklin Templeton Asset Management (India) Pvt. Ltd. (FTAMIL)/Nominees and Franklin Templeton Trustee Services Pvt. Ltd. (FTTSL) / 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$343.80 billion as at 30th April, 2004 (Rs.15,25,441/- 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 Vehicles. 28
  29. 29. 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 philosophies. 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 they exist. 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 220. THE TRUSTEE Franklin Templeton Trustee 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 Franklin Templeton Trustee Services Private Limited held seven meetings during the year 2003-2004. 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 Scheme; or 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 29
  30. 30. 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 exit load. 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 - 33394, U.S.A. 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: Name Name Franklin Templeton Investments (Asia) Ltd. Franklin Templeton Management Luxembourg SA Templeton Worldwide, Inc. Templeton Asian Direct Investments Ltd. Templeton International, Inc. Templeton Franklin Global Distributors Ltd. Templeton Global Advisors Limited Templeton Research & Management Venezuela, C.A. Franklin Templeton Asset Management S.A. Franklin Templeton Services Ltd. 30
  31. 31. Franklin Templeton International Services Franklin Templeton Italia SIM SpA S.A. Templeton Global Holdings Ltd. Franklin Templeton France S.A. Franklin Templeton Investments Australia Franklin Templeton Asset Management S.A. Ltd. Franklin Templeton Holding Limited Happy Dragon Holdings Ltd. Franklin Templeton Trustee Services Private Templeton Research Poland SP. z.o.o. Ltd. 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: Name Details 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: Name Details Mahindra Intertrade Limited Director Mahindra & Mahindra Financial services Limited Director Mahindra Steel Service Centre Limited Director Mahindra & Mahindra Limited Director 31
  32. 32. 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: Name Details 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: a) The Trustee shall ensure before the launch of any scheme that the asset management company has: i) systems in place for its back office, dealing room and accounting. 32
  33. 33. 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 grievances. 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. 33
  34. 34. 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 unitholders. 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 Fund. B. Specific Due Diligence: i) Obtain internal audit reports at regular intervals from independent auditors appointed by the Trustee. ii) Obtain compliance certificates at regular intervals from the asset management company. iii) Hold meeting of Trustee more frequently. 34

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