Templeton India Treasury Management Account An Open end Scheme

Transcription

1 CONTINUOUS OFFER OFFER DOCUMENT Templeton India Treasury Management Account An Open end Scheme Sale of units on an ongoing basis at a Net Asset Value (NAV) related price Asset Management Company : Templeton Asset Management (India) Pvt. Ltd Mutual Fund : Templeton Mutual Fund Trustee Company : Templeton Trust Services Pvt. Ltd. The particulars of Templeton India Treasury Management Account 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 August 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 79 2

3 01. HIGHLIGHTS An open-end Templeton India Treasury Management Account 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.13,37,137 crores) as on 31 st July % investments in debt and money market instruments to generate current income with high liquidity. No load fund with no charges for entry / exit. Units allotted on the same day for investors at major location (subject to applicable rules). Overnight redemption facility for investors at major locations (subject to applicable rules). Bank type convenience - can invest or withdraw anyday (subject to applicable rules). Daily dividend plan. RISK FACTORS Mutual funds and securities investments are subject to market risks and there is no assurance or guarantee that the objective of the Scheme 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 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. Templeton India Treasury Management Account 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. The investors in the Scheme are not being offered any guaranteed / assured returns. SCHEME SPECIFIC RISK FACTORS AND SPECIAL CONSIDERATION 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 macro economic factors and creates price changes in the value of debt instruments. Consequently, the Net Asset Value of the plans under the scheme may be subject to fluctuation. 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 the debt markets. 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 3

4 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 eve nt 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 bee n 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 Templeton India Treasury Management Account is an open end liquid scheme which invests in money market instruments and debentures for current income and high liquidity. Investors have a choice of Growth Plan, Bonus Plan and Dividend Plan. The offer The offer is being made for subscription to Templeton India Treasury Management Account, an open end scheme from Templeton Mutual Fund. The face value of the unit is Rs.1,000/ - (Rupees One Thousand). Minimum amount of investment is Rs.1,00,000/- and in multiples of Rs.1,000/-. The additional purchases can be made by investing a minimum of Rs.1 lac and and in multiples of Rs.1,000/-. Dividend Plan Under this plan, investors can choose to receive tax-free dividends. Investors also have the option to reinvest their dividend for additional units. There is no assurance on the frequency of dividends as they depend on the availability of distributable profits. Daily Dividend Plan The plan would be termed as Templeton India Treasury Management Account Daily Dividend Plan. The dividend declared in the plan would be compulsorily reinvested back into the plan at the exdividend NAV and additional units would be allotted to the investor. The applicable NAVs will be subject to the applicable load structure. The plan is expected to declare a daily dividend subject to the availability of the distributable surplus. However, the Trustee is entitled to alter this period or may not declare a dividend at all in the event of inadequacy of distributable income. There is no assurance or guarantee to Unitholders as to the rate of dividend distribution nor that dividends will be regularly paid. The daily dividend Plan will have the same portfolio and hence the same investment objectives and investment pattern as that of the existing scheme. 4

5 Bonus Plan Under this plan, distributable profits will be capitalized in the form of bonus units. Growth Plan Under this plan, the growth in NAV will reflect the appreciation of the value of investment. Investors have the benefits of indexation of cost and favourable long term capital gains. 03. DEFINITIONS In this Offer Document the following definitions have been used: AMC / Asset Management Company/ Investment Manager 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 Custodians Entry Load / Sales Load A pplicable NAV for Subscriptions is the Net Asset Value per unit of the business day on which the application for subscription is accepted. The face value of the unit is Rs.1,000/- (Rs.One thousand). 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 422, Dr. D.N. Road, Fort, Mumbai Load on ongoing purchases. 5

6 Exit Load / Redemption Load Investment Management Agreement or IMA ISC Money Market Instruments Mutual Fund NAV Offer Document Public Offering Price (POP) / Sale Price RBI Registrars Repo / Reverse Repo Scheme SEBI SEBI Regulations Sponsor Trust Deed Load on redemption other than CDSC. Investment Management Agreement (IMA) dated January 5, 1996 executed between Templeton Trust Services Pvt. Ltd. and 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 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. 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 Templeton India Treasury Management Account. The document issued by Templeton Mutual Fund offering units of Templeton India Treasury Management Account. 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, 1934 Registrar for the time being of the Mutual Fund, which is in-house, 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. Templeton India Treasury Management Account (TITMA) Securities and Exchange Board of India established under Securities and Exchange Board of India Act, 1992 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. 6

7 Trustee Unit Unitholder 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. The interest of an investor which consists of one undivided share in the Net Assets of Templeton India Treasury Management Account. A person holding Units in Templeton India Treasury Management Account. TEMPLETON INDIA TREASURY MANAGEMENT ACCOUNT Templeton India Treasury Management Account is an open-end scheme with an objective to provide investors current income with high liquidity in debt and money market instruments. 7

8 04. DUE DILIGENCE CERTIFICATE Templeton India Treasury Management Account 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: August 30, 2003 Place: Mumbai Signature: Sd/- Name: Vivek Pai 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 Templeton India Treasury Management Account (TITMA) An Open-end scheme. The investment objective of Treasury Management Account is to provide income along with high liquidity. Redemptions will be done at the Applicable NAV for redemptions*. The redemption cheque will be despatc hed 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 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. UNITHOLDER TRANSACTION EXPENSES OR SALES LOAD As a % of NAV Present charge Maximum charge I Maximum sales Load imposed on NIL NIL purchase II Sales Load, if any, on issue of NIL NIL units in lieu of dividends III Redemption / Repurchase load NIL NIL At present, no load is payable either on sale or repurchase. 9

10 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 conditions/volatility, expenses of liquidating the securities, impact cost due to liquidating the securities etc. 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 CDSC shall be maintained in a separate account and may be utilised towards meeting the se lling and distribution expenses. Any surplus in this account may be credited to the scheme, whenever felt appropriate by the AMC. 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 A 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 a FOF scheme can charge a load, if the underlying schemes too also charges 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) will be 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 Investment Management and Advisory fees not exceeding 1.25% on the first 100 crores of the Daily / Weekly Average Net Assets and 1% of the amount in excess of Rs.100 crores. 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 crore Next Rs.300 crore Next Rs.300 crore Over Rs.700 crore 2.25% 2.00% 1.75% 1.50% Any excess over these specified ceilings will be borne by the Asset Management Company. The AMC has estimated the following recurring expenses for the first Rs.100 crores of Average Daily / Weekly Net Assets. 10

11 Investment Management Fees 1.25% Custodial Fees 0.50% Shareholder Servicing Fee/Investor Communication Expenses 0.45% Trustee Remuneration+, Audit Fees etc 0.05% 2.25%* + Trustee Remuneration: 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 2.25 %. 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 mana gement 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). 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) (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

12 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 FTIMIP Date of launch Information as at the end of Mar 2001 Mar 2002 Mar 2003 NAV at the beginning of the year (GP) a (MP) a (QP) a (GP) (MP) (QP) (GP) (MP) (QP) Net Income per unit (Rs.) Dividends (Rs.) / Bonus Ratio 0.36 (MP) 0.27 (QP) 0.90 (MP) 0.90 (QP) 0.88 (MP) (QP) 75.5 : 1000 (Bonus) Transfer to Reserves NIL NIL NIL NAV at the end of the year (Rs.) (GP) (MP) (QP) (GP) (MP) (QP) (GP) (MP) (QP) (Bonus) Annualised compounded return%@ 6.20% b 13.65% 11.89% Benchmark Index Crisil MIP Crisil MIP Blended Blended Crisil MIP Index Blended Index Index Benchmark Annualised compounded return%@ N.A N.A N.A Net Assets (End of period) (Rs. in crores) Ratio of Recurring Expenses to Net Assets 2.25% 2.25% 2.25% 12

13 Name of the Scheme FTIIF TISTIP Date of launch Information as at the end of Mar 2002 Mar 2003 Mar 2002 Mar 2003 NAV at the beginning of the (B) year 10.83(N) Net Income per unit (Rs.) a (B) a (N) 0.86 (B) 1.09 (N) (0.05) (B) (0.36) (N) a (GP) a (WP) a (MP) a (QP) (GP) (WP) (MP) (QP) Dividends (Rs.) / Bonus Ratio 5.7 (WP) 72 (MP) NIL NIL 5.7 (MP) 79 (QP) 5.7 (QP) : 1000 (Bonus) Transfer to Reserves NIL NIL NIL NIL NAV at the end of the year (Rs.) Annualised compounded return%@ Benchmark Index Benchmark Annualised compounded return%@ Net Assets (End of period) (Rs. in crores) Ratio of Recurring Expenses to Net Assets (B) (N) 5.50% b (B) 7.40% b (N) BSE Sensex, S&P CNX Nifty 4.55% b (BSE Sensex) 5.31% b (S&P CNX Nifty) 4.63 (B) 7.98 (N) 1.48% (B) 1.40% (N) (B) (N) (5.17%) (B) (2.27%) (N) BSE Sensex, S&P CNX Nifty (5.18%) (BSE Sensex) (5.62%) (S&P CNX Nifty) 5.91 (B) 8.68 (N) 1.50% (B) 1.50% (N) (GP) (WP) (MP) (QP) (GP) (WP) (MP) (QP) (Bonus) 1.10% b 8.26% Crisil Liquid Fund Index N.A Crisil Liquid Fund Index N.A % 0.90% 13

14 Name of the Scheme FTIGF FIIF Date of launch Information as at the end of Mar Mar 2002 Mar Mar 2002 Mar 2003 NAV at the beginning of the year Net Income per un it (Rs.) Dividends (Rs.) / Bonus (I - GP) a (I - QP) a (L - GP) a (L - MP) a 0.92 (I) 1.32 (L) 0.30 (I - QP) (L - MP) (I - GP) (I - QP) (L - GP) (L - MP) a (I) 0.58 (L) 1.30 (I QP) 0.60 (L MP) 65 : 1000 (I Bonus) (1.09) 0.32 (0.68) Nil Nil Nil Transfer to Reserves NIL NIL Nil Nil NIL NAV at the end of the year (Rs.) Annualised compounded return%@ Benchmark Index Benchmark Annualised compounded return%@ Net Assets (End of period) (Rs. in crores) Ratio of Recurring Expenses to Net Assets (I - GP) (I - QP) (L - GP) (L MP) 6.40% b (I) 4.10% b (L) I-Sec Libex N.A % (I) 0.98% (L) (I - GP) (I - QP) (L - GP) (L - MP) (I Bonus) 19.38% (I) 8.61% (L) I-Sec Libex N.A (I) 2.36 (L) 1.24% (I) 1.00% (L) (13.70% ) b (8.89%) (10.25%) S&P S&P CNX S&P CNX CNX Nifty Nifty Nifty (25.19% b ) (14.72%) (14.19%) % 1.50% 1.50% 14

15 Name of the FITF FIBF Scheme Date of Allotment Financial Year Mar 2001 Mar 2002 Mar 2003 Mar 2001 Mar 2002 Mar 2003 NAV at the beginning of the year Net Income per Unit a a (GP) a (DP) 8.27 (GP) 8.13 (DP) 9.88 (GP) 9.50 (DP) (1.07) 0.16 (0.92) (1.79) Dividends NIL NIL NIL NIL NIL NIL Transfer to Reserves NIL NIL NIL NIL NIL NIL NAV at the end of 8.38 (GP) 9.83 (GP) the year (DP) 9.45 (DP) Annualised Returns from the date of Benchmark Index Benchmark Net Asset at the end of the period (Rs. crores) Ratio of Recurring Expenses to Net Assets (12.30%) b (12.17%) S&P CNX Nifty S&P CNX Nifty (12.51% ) b (12.95%) (12.10 %) S&P CNX Nifty (13.12 %) (16.20%) b (GP) (17.70%) b (DP) Crisil Balanced Fund Index (1.00%) (GP) (3.28%) (DP) Crisil Balanced Fund Index (GP) 9.82 (DP) 0.84% (GP) (0.67%) (DP) Crisil Balanced Fund Index N.A N.A N.A % 1.50% 1.50% 1.91% 2.25% 2.25% Name of the Scheme FTIPERF TGSF-TP Date of launch Information as at the end of Mar 2002 Mar 2003 Mar 2002 Mar 2003 NAV at the beginning of the year a a (GP) (DP) Net Income per unit (Rs.) 0.04 (0.37) Dividends (Rs.) NIL NIL NIL 0.85 (DP) Transfer to Reserves NIL NIL NIL NIL NAV at the end of the year (Rs.) Annualised compounded return%@ (GP) (DP) (GP) (DP) (3.30%) b b (11.41%) 0.94% 11.84% (GP) 11.97% (DP) Benchmark Index - - 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 % 2.50% % 15

16 Name of the Scheme Date of Allotment Financial Year NAV at the beginning of the year Net Income per Unit Dividends Transfer to Reserves NAV at the end of the year Annualised Returns from the date of Benchmark Index Benchmark Net Asset at the end of the period (Rs. crores) Ratio of Recurring Expenses to Net Assets TILP TFIF FTIAAF Mar a (GP) a (DP) Mar (GP) (DP) (DP) Mar 2002 Mar 2003 Mar 2002 Mar a (ST - GP) a (LT- GP) a (ST - DP) a (LT - DP) (ST) 0.08 (LT) (ST-DP) NIL (LT-DP) (ST- GP) (LT -GP) (ST - DP) (LT -DP) a (PG) a (SG) a (BG) a (CG) a (IH) 9.68 (PG) 9.70 (SG) 9.76 (BG) 9.75 (CG) 9.81 (IH) (ST) 0.56 (LT) (ST-DP) (LT-DP) NIL NIL NIL NIL NIL NIL NIL NIL (GP) (DP) (GP) (DP) 6.87% b 6.46% (GP) 5.40% (DP) (ST- GP) (LT-GP) (ST- DP) (LT-DP) 1.18% b (ST- GP) 1.10% b (LT - GP) 1.24% b (ST- DP) 1.10% b (LT - DP) Crisil Liquid Fund Index (ST- GP) (LT- GP) (ST- DP) (LT- DP) 7.24% (LT) 7.17% (ST) Crisil Liquid Fund Index 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) N.A N.A % 1.37% (ST) (LT) 0.19% (ST) 1.1% (LT) (LT) (ST) 1.49% (LT) 0.91% (ST) % 2.25% 16

17 Name of the Scheme FINTF FISIP Date of Inception Dec 20, 2002 Mar 28, 2003 * Mar 31, 2003 # Information as at the end of Mar 2003 Mar 2003 NAV at the beginning of the year (Rs.) a a * a # Net Income per unit (Rs.) * 0.00 # Dividends (Rs.) NIL NIL Transfer to Reserves NIL NIL NAV at the end of the year (Rs.) * # Annualised compounded return Benchmark Index - - Benchmark Returns - - Net Assets (Rs. in crores) * # Ratio of recurring expenses to net assets (0.21%) b 0.02% b * 0.29% b # 0.91% 0.85% * 0.30% # NAV and Returns as of July 31, 2003 with the Benchmarks NAV as on July 31, 2003 Annualised Returns from the date of Benchmark Returns@ Benchmark Indices used Net Assets as on July 31, 2003 (Rs. in Crores) FTIMIP FTIIF TISTIP FTIGF FIIF (B) (GP/DP) (GP) (MP) (QP) (Bonus) 12.98% N.A. Crisil MIP Blended Index (N) (GP/DP) 5.66% (B) 8.71% (N) 7.18% (B) 5.35% (N) BSE Sensex / S&P CNX Nifty 5.28 (B) 8.16 (N) (GP) (WP) (MP) (QP) (Bonus) 8.29% (I- GP) (I-QP) (Bonus) (L-GP) (L-MP) 20.62% (I) 8.28% (L) (2.97%) N.A. N.A. (7.03%) CRISIL Short- Term Bond Fund Index I Sec Libex (I) 3.26 (L) S&P CNX Nifty

18 NAV as on July 31, 2003 Annualised Returns from the date of Benchmark Benchmark Indices used Net Assets as on July 31, 2003 (Rs in Crores) NAV as on July 31, 2003 Annualised Returns from the date of Benchmark Benchmark Indices used Net Assets as on July 31, 2003 (Rs in Crores) FITF FIBF FTIPERF TGSF-TP TILP (GP) (GP) (GP) (DP) (GP/DP) (DP) (DP) (2.76%) 8.49% (GP) 7.05% (DP) 3.68% 11.00% (GP) 11.10% (DP) (4.10%) N.A. - N.A. - S&P CNX Nifty Crisil Balanced Fund Index 6.20 % (GP) 5.31% (DP) - I Sec Si-BEX TFIF FTIAAF FINTF FISIP (PG) * (SG) # (BG) (CG) (IH) ( ST-GP) (ST -DP) (LT -GP) (LT -DP) 6.91% (ST) 11.91% (PG) 7.05% (LT) 10.62% (SG) 9.81% (BG) 9.01% (CG) 7.13% (IH) N.A (4.85%) b 2.13% * b Crisil Liquid Fund Index (ST) * (LT) # 4.69% # b Note: 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, N NSE Nifty 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. * Plan A I Long- Term Growth (25-Apr-2005), # Plan A I Basic (04-Apr-2004). 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 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 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. 18

19 THE ABOVE INFORMATIO N 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) 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 Templeton Trust 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 Trustee has appointed Templeton Asset Management (India) Private Ltd. as the Investment Manager. The Sponsor is represented by Directors on the Board of the Trustee and the Investment Manager in accordance with the Regulations. The Sponsor shall be responsible for discharging its functions and responsibilities towards the Fund in accordance with Regulations and the various constitutive documents of the Fund. Templeton Asset Management (India) Pvt. Ltd. (TAMIL)/Nominees and Templeton Trust Services Pvt. Ltd. (TTSL)/Nominees had acquired 100% shares in Pioneer ITI AMC Ltd. and Pioneer ITI Mutual Fund Pvt. Ltd. respectively, in July 2002 after obtaining the approval from SEBI. Subsequently the license of Pioneer ITI Mutual Fund was surrendered to SEBI for cancellation. SEBI vide its letter dated February 17, 2003 cancelled the same. 19

20 FINANCIAL PERFORMANCE OF THE SPONSOR (All figures are in Rupees million exc ept per share data) (US $= Rs.48.00) YEAR ENDING Total income 120, , , Profit After Tax 20, , , Net Worth 204, , , Equity Capital , , Earnings per Share Book Value per Share Dividend per Share THE FRANKLIN TEMPLETON GROUP Franklin Resources Inc. is a diversified financial services company based in San Mateo, California, USA. Through its operating subsidiaries it provides a wide range of investment products and services to worldwide clients. Templeton International Inc., the sponsor of the Templeton Mutual Fund, is a wholly owned subsidiary of Templeton Worldwide Inc., which in turn is a wholly owned subsidiary of Franklin Resources Inc. The Franklin Templeton Group is one of the world s largest investment management companies. Following are some of the key data relating to Franklin Templeton s Global Operations. 1. Assets Under Management US$ billion as at 31 st July, 2003 (Rs.13,37,137/- crores approximately) 2. Number of Shareholder Accounts More than 10 million worldwide. 3. Number of Schemes Managed Globally About 225 Open End Mutual Funds, Separately Managed Accounts and Other Investment Vehicles. 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 Res ources, 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. 20

21 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 123. Templeton Asset Management (India) Pvt. Ltd. (TAMIL) / Nominees and Templeton Trust Services Pvt. Ltd. (TTSL) / Nominees had acquired 100% shares in Pioneer ITI AMC Ltd. and Pioneer ITI Mutual Fund Pvt. Ltd. respectively, in July 2002 after obtaining the approval from SEBI. Subsequently the license of Pioneer ITI Mutual Fund was surrendered to SEBI for cancellation. SEBI vide its letter dated February 17, 2003 cancelled the same. THE TRUSTEE Templeton Trust Services Private Limited (the Trustee ), through its Board of Directors, shall discharge its obligations to the Templeton Mutual Fund as the Trustee of the Mutual Fund. The Trustee ensures that the transactions entered into by the AMC are in accordance with the SEBI Regulations and reviews the activities carried on by the AMC on a quarterly basis. The Board of Directors of Templeton Trust Services Private Limited held seven meetings during the year In accordance with Regulation 18(15) of SEBI Regulations, the Trustees shall obtain the consent of the unitholders - a) whenever required to do so by SEBI in the interest of the unitholders; or b) whenever required to so on the requisition made by three -fourths of the unitholders of any 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 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: 21

22 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 , 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 Franklin Templeton Investments (Asia) Ltd. Templeton Worldwide, Inc. Name Franklin Templeton Management Luxembourg SA 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. Franklin Templeton International Services Franklin Templeton Italia SIM SpA S.A. Templeton Global Holdings Ltd. Franklin Templeton France S.A. Franklin Templeton Investme nts AustraliaFranklin Templeton Asset Management S.A. Ltd. Franklin Templeton Holding Limited Happy Dragon Holdings Ltd. Templeton Trust Services Private Ltd. TRFI Investments Limited Templeton Research Poland SP. z.o.o. 22

23 Anand J. Vashi, Chartered Accountant Kalpataru Heritage, 5 th Floor, 127 M G Road Mumbai 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 A.J. Patel Investment & Trading Co. Pvt. Ltd. Lucid Technologies Pvt Ltd. Millars India Ltd. Millars Mach Co. Pvt. Ltd. Pedershaab Millars India Pvt Ltd. Details Director Director Director Director Director Percy Jal Pardiwalla, Advocate 16, Vishnu Mahal, 'D' Road, Churchgate, Mumbai Bharat Doshi, Company Executive 8, St. Helen's Court, Dr. Gopalrao Deshmukh Marg, Mumbai 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 Maste r'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 Programme 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 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 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 23

24 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 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 Franklin Resources, San Mateo Details Managing Director * These Directors represent sponsors of the Trustee Company and are associates of the sponsor. RESPONSIBILITIES AND DUTIES OF THE TRUSTEE (Substantial Provisions of the Trust Deed and the Regulations) Pursuant to the Deed of Trust constituting the Mutual Fund and SEBI (MF) Regulations, the Trustee, inter alia, has the following responsibilities and duties: Pursuant to the Deed of Trust constituting the Mutual Fund and SEBI (MF) Regulations, the Trustee, inter alia, has the following responsibilities and duties: a) The Trustee shall ensure before the launch of any scheme that the asset management company has: i) systems in place for its back office, dealing room and accounting, ii) appointed all key personnel including fund manager(s) for the scheme(s) and market, to the Trustee, within fifteen days of their appointment, submitted their bio-data, which shall contain the educational qualifications, past experience in the securities iii) appointed auditors to audit the accounts, iv) appointed a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions etc. issued by SEBI or the Central Government and for redressal of investor s grievances, 24