Franklin India Prima Fund An Open End Growth Scheme

Transcription

1 CONTINUOUS OFFER OFFER DOCUMENT Franklin India Prima Fund 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 Pvt. Ltd. The particulars of Franklin India Prima 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 May 31, 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 CONTENTS S. No. CHAPTER PAGE NO. 01. HIGHLIGHTS & RISK FACTORS INTRODUCTION DEFINITIONS DUE DILIGENCE CERTIFICATE SUMMARY OF THE SCHEME SUMMARY OF EXPENSES AND FINANCIAL INFORMATION CONDENSED FINANCIAL INFORMATION CONSTITUTION / MANAGEMENT OF THE MUTUAL FUND INVESTMENT OBJECTIVES AND POLICIES HOW TO INVEST VALUATION OF ASSETS AND NET ASSET VALUE HOW TO REDEEM UNITS OF THE SCHEME ASSOCIATE TRANSACTIONS UNITHOLDER INFORMATION TAX BENEFITS INVESTOR SERVICES GENERAL INFORMATION PENDING LITIGATION OR PROCEEDINGS 92 2

3 01. HIGHLIGHTS An open-end Franklin India Prima Fund 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$ billion in assets (approximately Rs.15,25,441 crores) as on 30 th April Open end growth scheme investing in relatively smaller companies. 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 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 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. 3

4 The scheme may invest in non-publicly offered debt securities and unlisted equities. This may expose the scheme to liquidity risks. 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 Fund is an open-end growth scheme investing for growth of capital primarily through a diversified portfolio of relatively smaller companies. Dynamic and well-managed, small and medium sized enterprises usually experience higher growth rates than their well-established larger counterparts. If identified early, investments is such companies have the potential to deliver substantial capital appreciation as they transition into becoming tomorrow s well-established large size companies. Such companies have the advantages of nimbleness and entrepreneurial culture that can lead to long term growth. Investors have the option of investing in the Growth Plan and Dividend Plan. 4

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 an 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 In the month of April, trading volume has been on a lower level by Rs.2,115/- crores, compared to the average trading volume of March 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 securities 4.39% -5.82% Very high 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. 5

6 03. DEFINITIONS In this Offer Document the following definitions have been used: AMC / Asset Management Company/ Investment Manager Franklin Templeton Asset Management (India) Pvt. Ltd. (formerly Templeton Asset Management (India) Pvt. Ltd.), the asset management company, set up under the Companies Act, 1956 and authorized by SEBI to act as Asset Management Company to the schemes of Templeton Mutual Fund. Applicable NAV for Subscriptions Applicable NAV for Redemptions Business Day Custodian Entry Load / Sales Load Exit Load / Redemption Load Investment Management Agreement or IMA ISC Money Market Instruments Applicable NAV for Subscriptions is the Net Asset Value per unit of the business day on which the application for subscription is accepted. Applicable NAV for Redemptions is the Net Asset Value per unit of the business day on which the application for redemption is accepted. 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. A custodian appointed for holding the securities and other assets of the scheme which for the time being is Deutsche Bank, Mumbai branch. Load on ongoing purchases. Load on redemption other than CDSC. Investment Management Agreement (IMA) dated January 5, 1996 executed between Franklin Templeton Trustee Services Private Limited. Ltd. and Franklin Templeton Asset Management (India) Pvt. Ltd. Investor Service Centre of the Asset Management Company. Commercial papers, commercial bills, treasury bills, Government securities having an unexpired maturity upto one year, call or notice money, certificate of deposit, usance bills, (repos / reverse repos), and any 6

7 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 NAV Offer Document Public Offering Price (POP) / Sale Price RBI Registrars Repo / Reverse Repo Scheme SEBI SEBI Regulations Sponsor Trust Deed Trustee Unit Unitholder 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. Net Asset Value of the Units of Franklin India Prima Fund. The document issued by Templeton Mutual Fund offering units of Franklin India Prima Fund. POP or the Sale Price is the price at which the units are proposed to be sold on an ongoing basis and may include permissible load amount as and when an entry load is introduced. (see Section Public Offering Price ). Reserve Bank of India, established under the Reserve Bank of India Act, Registrar for the time being of the Mutual Fund, which is in-house, Franklin Templeton Asset Management (India) Pvt. Ltd. Sale / Purchase of Government Securities as may be allowed by RBI from time to time with simultaneous agreement to repurchase / resell them at a later date. Franklin India Prima Fund (FIPF). Securities and Exchange Board of India established under Securities and Exchange Board of India Act, SEBI (Mutual Funds) Regulations, 1996, as amended from time to time, for the operation and management of Mutual Funds. Templeton International Inc, a subsidiary of Franklin Resources Inc., based in San Mateo, California, USA. The Trust Deed dated January 4, 1996 of Templeton Mutual Fund. Franklin Templeton Trustee 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. The interest of an investor which consists of one undivided share in the Net Assets of Franklin India Prima Fund. A person holding Units in Franklin India Prima Fund. 7

8 04. DUE DILIGENCE CERTIFICATE Franklin India Prima Fund 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 Place: Mumbai Signature: Sd/- Name: Pranita Gramopadhye Compliance Officer 8

9 05. SUMMARY OF THE SCHEME Name of the Scheme Nature of the Scheme Investment Objective Redemption Price Liquidity Transparency Tax Benefits Franklin India Prima Fund (FIPF) An Open-end growth scheme. The investment objective of Prima Fund is to provide medium to long-term capital appreciation as a primary objective and income as a secondary objective. Redemptions will be done at the Applicable NAV for redemptions*. 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. 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. 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 UNITHOLDER TRANSACTION EXPENSES OR SALES LOAD i Maximum sales load imposed on purchase (as % of NAV) ii Sales Load, if any, on issue of units in lieu of dividends (as % of NAV) iii Contingent Deferred Sales Load ( CDSC ) (based on any period of holding) (as % of NAV) iv Redemption / Repurchase Load (as % of amount redeemed NAV) v Switchover / Exchange Fee (as % of NAV) Present charge Maximum charge 2.25 % 6% 0% 0% N.A. N.A. Nil 3% Nil 3% 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. 10

11 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 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 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 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 The Trustee will be entitled to a remuneration of upto % 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-ofpocket 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 Plan A-LT FISIP Series-1 Plan A-Basic Brokerage fees & Commission Nil Marketing & Advertising Nil Nil Printing & Distribution Banker s fees 0.38 Nil Nil Other expenses 7.95 Nil Nil Total Expenses

13 Nature of expenses FISIP-Series 1 Plan A-MT FT India Dynamic PE Ratio Fund of Funds FT India Life Stage Fund of Funds Brokerage fees & Commission Nil Marketing & Advertising Nil Printing & Distribution Nil Banker s fees Nil Nil 0.00 Other expenses Nil Total Expenses Nil 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 Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year a (GP) (DP) Net Income per unit (Rs.) Dividends (Rs.) / Bonus NIL NIL NIL Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) (GP) (DP) Annualised compounded return%@ % Benchmark Index BSE Sensex BSE Sensex BSE Sensex Benchmark Annualised 22.27% compounded return%@ Net Assets (End of period) (Rs. in crores) Ratio of Recurring Expenses to Net Assets 1.49% 1.49%

14 Name of the Scheme FTIGF Date of launch Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year (I - GP) a (I - QP) a (I - GP) (I - QP) (I - GP) (I - QP) (L - GP) a (L - GP) (L - GP) (L - MP) a (L MP) (L MP) (I - B) Net Income per unit (Rs.) 0.97 (I) 1.47 (L) 1.33 (I) 0.58 (L) 1.38 (I) 0.75 (L) Dividends (Rs.) / Bonus 0.30 (I - QP) (L - MP) 1.30 (I QP) (L MP) 65 : 1000 (I 1.02 (I QP) 0.51 (L MP) 79:1000 (I - B) Bonus) Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) Annualised compounded return%@ (I - GP) (I - QP) (L - GP) (L MP) 6.40% b (I) 4.10% b (L) (I - GP) (I - QP) (L - GP) (L - MP) (I Bonus) 19.38% (I) 8.61% (L) (I - GP) (I - QP) (L - GP) (L MP) (B) 18.95% (I) 7.14% (L) Benchmark Index I-Sec Libex I-Sec Libex I-Sec Libex Benchmark Annualised compounded return%@ Net Assets (End of period) (Rs. in crores) Ratio of Recurring Expenses to Net Assets N.A N.A N.A (I) (L) 1.23% (I) 0.98% (L) (I) 2.36 (L) 1.24% (I) 0.99% (L) (I) 2.45 (L) 1.24% (I) 0.95 (L) 14

15 Name of the Scheme TISTIP Date of launch Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year a (GP) a (WP) (GP) (WP) (GP) (WP) a (MP) (MP) (MP) a (QP) (QP) (QP) (B) Net Income per unit (Rs.) Dividends (Rs.) / Bonus 5.7 (WP) 5.7 (MP) 5.7 (QP) 72 (MP) 79 (QP) : 1000 (Bonus) (WP) (MP) (QP) 60:1000 (B) Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) (GP) (WP) (MP) (GP) (WP) (MP) (GP) (WP) (MP) (QP) (QP) (QP) (Bonus) (B) Annualised compounded return%@ 1.13% b 8.26% 7.42% Benchmark Index Benchmark Annualised compounded return%@ Net Assets (End of period) (Rs. in crores) Ratio of Recurring Expenses to Net Assets CRISIL Short Term Bond Fund Index CRISIL Short Term Bond Fund Index CRISIL Short Term Bond Fund Index N.A N.A N.A % 0.94% 0.90% 15

16 Name of the Scheme TGSF TP Date of launch Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year a (GP) a (DP) (GP) (DP) (GP) (DP) Net Income per unit (Rs.) Dividends (Rs.) / Bonus NIL 0.85 (DP) 0.51 Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) (GP) (DP) (GP) (DP) (GP) (DP) Annualised compounded return%@ b 11.84% (GP) 9.62% (GP) 0.92% 11.97% (DP) 9.67% (DP) Benchmark Index I-Sec Si-BEX I-Sec Si-BEX I-Sec Si-BEX Benchmark Annualised compounded return%@ Net Assets (End of period) (Rs. in crores) Ratio of Recurring Expenses to Net Assets N.A N.A N.A %

17 Name of the Scheme TFIF Date of launch Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year a (ST - GP) (ST-GP) (ST - GP) a (LT- GP) (LT-GP) (LT - GP) a (ST -DP) (ST-DP) (ST - DP) a (LT -DP) (LT-DP) (LT - DP) Net Income per unit (Rs.) 0.18 (ST) 0.08 (LT) 0.28 (ST) 0.58 (LT) 0.25 (ST) 0.50 (LT) Dividends (Rs.) / Bonus 0.11 (ST-DP) NIL (LT-DP) 0.69 (ST-DP) 0.73 (LT-DP) 0.45 (ST) 0.45 (LT) Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) (ST-GP) (LT-GP) (ST-DP) (LT-DP) (ST-GP) (LT-GP) (ST-DP) (LT-DP) (ST - GP) (LT - GP) (ST - DP) (LT - DP) Annualised compounded return%@ 1.12% b (ST-GP) 7.24% (LT) 6.28% (ST) Benchmark Index Benchmark Annualised compounded return%@ Net Assets (End of period) (Rs. in crores) Ratio of Recurring Expenses to Net Assets 1.00% b (LT-GP) Crisil Liquid Fund Index 7.17% (ST) Crisil Liquid Fund Index 6.40% (LT) Crisil Liquid Fund Index N.A N.A N.A (ST) (LT) 0.19% (ST) 1.10% (LT) (LT) (ST) 1.49% (LT) 0.91% (ST) (LT) (ST) 1.42% (LT) 1.00% (ST) 17

18 Name of the Scheme FTIPERF Date of launch Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year a 8.76 (GP) (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.) (GP) (DP) Annualised compounded return%@ (3.30%) b (11.41%) 21.54% Benchmark Index Benchmark Annualised compounded return%@ Net Assets (End of period) (Rs. in crores) Ratio of Recurring Expenses to Net Assets % 2.49% 2.48% 18

19 Name of the Scheme FTIAAF Date of launch Information as at the end of Mar 2002 Mar 2003 Mar 2004 NAV at the beginning of the year a (PG) a (SG) a (BG) a (CG) a (IH) 9.63 (PG) 9.69 (SG) 9.74 (BG) 9.78 (CG) 9.81 (IH) (PG GP & DP) (SG GP & DP) (BG GP & DP) (CG GP & DP) (IH GP & DP) Net Income per unit (Rs.) Dividends (Rs.) / Bonus NIL NIL 3.50 (PG) 3.00 (SG) 2.50 (BG) 2.00 (CG) 1.50 (IH) Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) Annualised compounded return%@ 9.63 (PG) 9.69 (SG) 9.74 (BG) 9.78 (CG) 9.81 (IH) (3.70%) b (PG) (3.10%) b (SG) (2.60%) b (BG) (2.20%) b (CG) (1.90%) b (IH) (PG) (SG) (BG) (CG) (IH) (4.47%) (PG) (2.13%) (SG) (0.22%) (BG) 1.75% (CG) 4.34% (IH) (PG GP) (PG DP) (SG GP) (SG DP) (BG GP) (BG DP) (CG GP) (CG - DP) (IH GP) (IH DP) 30.03% (PG) 25.74% (SG) 20.75% (BG) 15.69% (CG) 9.85% (IH) Benchmark Index Benchmark Annualised compounded return%@ Net Assets (End of period) (Rs. in crores) Ratio of Recurring Expenses to Net Assets 1.81% 2.24% 2.23% 19

20 Name of the Scheme FINTF FISIP# Date of Inception Information as at the end of Mar 2003 Mar 2004 Mar 2004 NAV at the beginning of the year a a Net Income per unit (Rs.) (0.01) Dividends (Rs.) / Bonus NIL N.A. N.A. Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) Annualised compounded return%@ (0.21%) b -5.03% 1.75% * Benchmark Index Lehman Intermediate Govt Lehman Intermediate Govt - (US) Index (US) Index Benchmark Annualised compounded return%@ Net Assets (End of period) (Rs. in crores) Ratio of Recurring Expenses to Net Assets 0.90% 0.85% 0.31% 20

21 Name of the Scheme FTDPEF FTLF Date of Inception Information as at the end of Mar 2004 Mar 2004 NAV at the beginning of the year a a Net Income per unit (Rs.) Dividends (Rs.) / Bonus N.A N.A Transfer to Reserves Nil Nil NAV at the end of the year (Rs.) (GP) (DP) (The 20s Plan GP & DP) (The 30s Plan GP & DP) (The 40s Plan GP & DP) (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) Ratio of Recurring Expenses to Net Assets

22 Unaudited Half yearly financials as on September 30, NAV and Returns as of April 30, 2003 with the Benchmarks FIIF FTIGF NAV at the beginning of the year (Mar. 31, (I - GP) 2003) (I - QP) (GP) (B) (DP) (L - GP) (L - MP) Net Income per unit (Rs.) (I) (L) 0.47 Dividends (Rs.) / Bonus 0.52% (I-QP) Nil 40 (per 1000 units) (I- MB) %(L-MP) Transfer to Reserves (Rs. in Crores) Nil Nil NAV as on September 30, 2003 (Rs.) (I - GP) ^ (I - QP) ^ (GP) (B) ^ (DP) (L - GP) ^ (L MP) ^ Annualised Returns from the date of 13.25% 21.49% (I) 8.10% (L) Benchmark Returns@ 15.09% N.A. Net Assets as on September 30, 2003 (Rs. in (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, (GP) (DP) (I-GP) (I-QP) (L-GP) (L-MP) (I-Bonus) 19.82% 18.62% (I) 7.01% (L) Annualised Returns from the date of Benchmark 22.04% N.A Benchmark Indices used BSE Sensex I Sec Libex Net Assets as on April 30, 2004 (Rs. in Crores) (I) 2.45 (L) 22

23 TISTIP TGSF TP NAV at the beginning of the year (Mar. 31, 2003) (GP) (WP) (MP) (QP) (GP) (DP) (B) Net Income per unit (Rs.) Dividends (Rs.) / Bonus %(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.) Annualised Returns from the date of (GP) (WP) (MP) (QP) (B) 8.22% (GP) ^ (DP) ^ 11.34% (GP) 11.42% (DP) Benchmark Returns@ N.A. N.A. Net Assets as on September 30, 2003 (Rs. in Crores) Ratio of recurring expenses to net assets 0.90% 1.25% NAV as on April 30, (GP) (WP) (MP) (QP) (B) (GP) (DP) Annualised Returns from the date of 7.38% 9.45% (GP) 9.50% (DP) Benchmark 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 Crores)

24 TFIF FTIPERF NAV at the beginning of the year (Mar. 31, (LT - GP) 8.76 (GP) 2003) (LT - DP) 8.76 (DP) (ST - GP) (ST - DP) Net Income per unit (Rs.) 0.27(ST) (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.) (LT - GP) ^ (LT - DP) ^ (GP) (ST - GP) (DP) (ST - DP) Annualised Returns from the date of inception 6.75% (ST) 6.83% (LT) Benchmark Returns@ N.A Ratio of recurring expenses to net assets 1.49% (LT) 2.49% Net Assets as on September 30, 2003 (Rs. in (ST) Crores) (LT) NAV as on April 30, % (ST) (LT - GP) (LT - DP) (ST - GP) (ST - DP) (GP) (DP) Annualised Returns from the date of 6.23% (ST) 6.37% (LT) Benchmark N.A - Benchmark Indices used Crisil Liquid Fund - Index Net Assets as on April 30, 2004 (Rs. in (ST) Crores) (LT) 21.34% (GP) 21.36% (DP) 24

25 FTIAAF FISIP NAV at the beginning of the year (Mar. 31, 2003) (PG GP & DP) (SG GP & DP) (BG GP & DP) N.A (CG GP & DP) (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.) (PG GP & DP) ^ (SG GP & DP) ^ (BG GP & DP) ^ (CG GP & DP) ^ N.A Annualised Returns from the date of (IH GP & DP) ^ 21.32% (PG) 18.33% (SG) 14.99% (BG) 13.13% (CG) 9.10% (IH) Benchmark Returns@ - - Net Assets as on September 30, 2003 (Rs. in Crores) N.A Ratio of recurring expenses to net assets 2.24% N.A NAV as on April 30, (PG GP) (PG DP) (SG GP) (SG DP) (BG GP) (BG DP) (CG GP) (CG - DP) (IH GP) (IH DP) Annualised Returns from the date of 28.47% (PG GP & DP) 2.08% * 24.61% (SG GP & DP) 20.12% (BG GP & DP) 15.73% (CG GP & DP) 9.49% (IH GP & DP) Benchmark - - Benchmark Indices used - - Net Assets as on April 30, 2004 (Rs. in Crores) N.A 25

26 FTDPEF FINTF NAV at the beginning of the year (Mar. 31, 2003) N.A 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 ^ Annualised Returns from the date of N.A -3.48% * Benchmark Returns@ N.A Net Assets as on September 30, 2003 (Rs. in Crores) N.A 2.71 Ratio of recurring expenses to net assets N.A 0.90% NAV as on April 30, (GP) (DP) Annualised Returns from the date of 20.87% * -4.40% Benchmark % Benchmark Indices used - Lehman Intermediate Govt. (US) Index Net Assets as on April 30, 2004 (Rs. in Crores) NAV at the beginning of the year (Mar. 31, 2003) Net Income per unit (Rs.) Dividends (Rs.) / Bonus Transfer to Reserves (Rs. in Crores) NAV as on September 30, 2003 (Rs.) Annualised Returns from the date of Benchmark Returns@ Net Assets as on September 30, 2003 (Rs. in Crores) Ratio of recurring expenses to net assets NAV as on April 30, 2004 Annualised Returns from the date of FTLF N.A N.A N.A N.A N.A N.A N.A N.A N.A (The 20s Plan GP & DP) (The 30s Plan GP & DP) (The 40s Plan GP & DP) (The 50s Plus Plan GP & DP) 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 - Benchmark Indices used - Net Assets as on April 30, 2004 (Rs. in Crores) 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 26

27 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, 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, TGSF (TP) was launched on February 11, FINTF was launched on December 20, Returns for schemes/plans with dividend distribution are computer assuming re-investing of all payouts at exdividend 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 launched on Nov 29, 2003, hence data for the previous year and half-year is not available. Returns for schemes/plans with dividend distribution are computed assuming re-investment of all payouts at exdividend 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, The Mutual Fund was registered with SEBI on February 19, 1996 under Registration Code MF 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, The Mutual Fund was registered with SEBI on February 19, 1996 under Registration Code MF 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 27

28 Trustee has appointed Franklin 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. 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 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, , , Profit After Tax 22, , , Net Worth 195, , , Equity Capital 1, , , Earnings per Share Book Value per Share Dividend per Share 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$ billion as at 30 th 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 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 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