Abridged Annual Report For

Transcription

1 Abridged Annual Report For FRANKLIN TEMPLETON MUTUAL FUND - Templeton India Pension Plan Head Office : Level - 4, Wockhardt Towers, Bandra Kurla Complex, Bandra (East), Mumbai Trustee Report to Investors Dear Templeton India Pension Plan Investor, The Directors of the Trustee Company have the pleasure of presenting before you the Fourteenth Annual Report of Franklin Templeton Mutual Fund ( Mutual Fund/FTMF ) for the year Along with the general information on the background/highlights of the Mutual Fund, investor services, significant regulatory changes, etc. the Trustees have specifically provided information on the scheme. Brief background of Trust, Sponsor, Trustee Company and Asset Management Company: Franklin Templeton Mutual Fund FTMF has been constituted as a Trust on January 4, 1996 in accordance with the provisions of the Indian Trusts Act, 1882 and the Deed of Trust is duly registered under the Indian Registration Act, FTMF has been sponsored by Templeton International Inc. (liability restricted to the seed corpus of Rs.l lakh) with Franklin Templeton Trustee Services Pvt. Ltd. ( Trustee ) as the Trustee. The Trustee has entered into an Investment Management Agreement dated January 5, 1996 with Franklin Templeton Asset Management (India) Pvt. Ltd. ( AMC ) appointing the AMC as the Investment Manager for all the schemes of FTMF. FTMF is registered with SEBI on February 19, 1996 vide Registration No. MF/026/96/8. Templeton International Inc. Templeton International Inc. is a part of the Franklin Templeton Group, which is one of the largest Investment Management Company with US$ billion (approximately Rs.26,77,510 crore) in assets under management as on April 30, 2010 and more than 22 million Shareholder Accounts. Franklin Templeton has offices in over 30 countries including the United States of America, Bahamas, Canada, Argentina, France, Germany, Italy, Luxembourg, Poland, Russia, the United Kingdom, Hong Kong, Singapore, Korea, India, China, Australia and South Africa. Franklin Templeton Trustee Services Pvt. Ltd. Franklin Templeton Trustee Services Pvt. Ltd., a company incorporated under the Companies Act, 1956 and having its Registered Office at Level 4, Wockhardt Towers, Bandra Kurla Complex, Bandra (East), Mumbai , is the Trustee to FTMF. The Trustee ensures that FTMF and the schemes floated there under are managed by the AMC in accordance with the Trust Deed, the regulations, directions and guidelines issued by SEBI, the stock exchanges and other regulatory agencies. Board of Directors of the Trustee Company: Mr. Gregory E. McGowan*, Executive Vice President, Director and General Counsel for International Development, Templeton Worldwide Inc. Mr. Stephen Dover*, International Chief Investment Officer, Franklin Templeton Investments Mr. Anand J. Vashi, Chartered Accountant Mr. Percy J. Pardiwalla, Advocate Dr. Indu Shahani, Principal - H.R. College of Commerce & Economics * These Directors represent Sponsors of the Trustee Company and are associates of the Sponsor. Franklin Templeton Asset Management (India) Pvt. Ltd. Franklin Templeton Asset Management (India) Pvt. Ltd., a company incorporated under the Companies Act, 1956 and having its Registered Office at Level 4, Wockhardt Towers, Bandra Kurla Complex, Bandra (East), Mumbai is the Investment Manager of FTMF. The entire paid up capital of the Investment Manager is held by Franklin Templeton Holding Ltd., Mauritius and its nominees. Franklin Templeton Holding Ltd. is a wholly owned subsidiary of Templeton Asset Management Ltd., Singapore, which is a wholly owned subsidiary of Templeton International Inc., a wholly owned subsidiary of Templeton Worldwide Inc., which in turn is a wholly owned subsidiary of Franklin Resources Inc. The Investment Manager was approved by SEBI to act as the AMC of FTMF vide their letter No.IIMARP/406/96 dated February 19, Board of Directors of the AMC: Mr. Vijay C. Advani*, Executive Vice President, Global Advisory Services, Franklin Resources Inc. Dr. J. Mark Mobius*, Executive Chairman, Templeton Asset Management Ltd. Mr. Jed Plafker*, Executive Managing Director, Franklin Templeton International Advisor Services (Alternate Director to Dr. J. Mark Mobius) Mr. Vivek Kudva*, Managing Director, India and CEEMEA (Central and Eastern Europe, Middle East and Africa) Mr. Deepak M. Satwalekar, former Managing Director and CEO, HDFC Standard Life Insurance Co. Ltd. Mr. Navroz Seervai, Advocate Mr. M.B.N. Rao, former Chairman and Managing Director, Canara Bank * These Directors represent Sponsors of the AMC and are associates of the Sponsor. Review of activities of Franklin Templeton Mutual Fund: During the year under review, the Mutual Fund continued to be one of the leading private sector mutual funds in India*. The Mutual Fund continued to focus on launching meaningful products with investment objectives that are relevant to investors. The Mutual Fund launched Franklin Build India Fund in July 2009, which collected over Rs.200 crore. In December 2009, the Mutual Fund launched Templeton India Income Opportunities Fund, which collected over Rs.300 crore. Further, the Mutual Fund launched few closed end income funds (Fixed Maturity Plans FMPs) mobilising over Rs.1,100 crore. During the year under review, Templeton Monthly Income Plan Half Yearly Dividend Plan and Growth Plan merged into FT India Monthly Income Plan effective March 19, Franklin India International Fund was wound on April 30, The average Assets Under Management (AUM) of the Mutual Fund for the month March 2010 was Rs.33,290 crore as compared to Rs.19,205 crore for the month March 2009 up by more than 72%. *Source: AMFI website Page - 14_4626_Templeton India Pension 1 1

2 Scheme performance, future outlook and operations of the scheme: Templeton India Pension Plan (TIPP) is an open-end hybrid product designed to cater to pension needs of investors. The fund has a predominantly debt portfolio with some exposure to equities that helps enhance returns over the longer timeframe. Since inception in March 1997, the fund has delivered compounded annualized returns of 13.97%. The benchmark return over the said period is unavailable. During the last financial year, portfolio value gained by 29.44% as against a 35.04% gain in benchmark (40% S&P CNX % CRISIL Composite Bond Fund Index) over the same timeframe. As of 2010, about 51% of fund assets were invested in debt and about 37% in equity. Equity allocations were in favour of companies from banks (20.67%), consumer non-durables (10.47%) and software (10.34%). The allocations are in line with our belief that two of the main trends driving India s economy are rising consumer spending and physical & social infrastructure development. Investor Services: As on 2010, the Mutual Fund served more than 23 lakh active investors through its 34 branches spread across India, 82 offices of Computer Age Management Services Private Limited (CAMS) and Karvy Computershare Private Limited. To further increase the network and enhance the service levels to investors, Franklin Templeton Mutual Fund also provides a facility to subscribe and redeem units for six of its funds through the stock exchange infrastructures. Effective March 12, 2010, we have established relationship with both National Stock Exchange of India Ltd. ( NSE ) and Bombay Stock Exchange Ltd. ( BSE ) to offer this service to our investors. Further, the investors have unrestricted access to FTMF for any matter. With our continuous focus on investor satisfaction, various technology based facilities have been introduced: Online account access registration Enabling investors to transact online and access various self servicing features Increased mail back options for distributors to enable better servicing to their investors Redemption and dividend payments are also increasingly being processed electronically to ensure faster credit in investor s bank accounts. We have a robust business continuity plan for the Transfer Agency and operate from Chennai and Hyderabad with adequate infrastructure to support expansion and growth. Further, in the interest of all stakeholders, various initiatives were taken to reduce cost through effective utilisation of infrastructure and resources. Significant regulatory changes: During the year under review, the regulatory environment witnessed many changes aimed at broadening the capital markets and improving transparency. Securities and Exchange Board of India ( SEBI ) continued to demonstrate its commitment in upholding its reputation for a professional approach by enhancing regulations governing the capital markets aimed at furthering the interest of investors, including the mutual fund industry. SEBI has barred mutual funds from charging entry load on any investment effective August 1, Upfront commission to distributors can be paid by investors directly to distributors, based on their assessment of various factors including the service rendered by distributors. The distributors are required to disclose to investors all material information including all commissions received for different competing schemes of various mutual funds from amongst which a scheme is being recommended to investors. Further, mutual funds cannot make distinction among unit holders based on the amount of subscription while charging exit loads. SEBI has vide circular dated March 15, 2010 announced certain important changes such as disclosure of brokerage and commission paid to associates in half-yearly financials, scheme wise abridged annual reports and statement of additional information, extension of Applications Supported by Blocked Amount ( ASBA ) facility to mutual fund investors, reduction in the duration of NFOs and time taken for allotment of units, dispatch of account statements and refund of money, role of mutual funds in corporate governance of listed companies, etc. With an objective to enable investors to take more informed decisions on their investments, SEBI has mandated additional disclosures in the Key Information Memorandum Comparison with the existing schemes, number of folios and AUM, risk mitigating factors and investment strategy. For the benefit of investors, SEBI has mandated disclosure of details of investor complaints received in respect of mutual funds on their websites and in the Trustee Report forming part of annual report. In accordance with the same, Investor Complaints Report for FY is given in Annexure to this Report. Investors are requested to note: As you may be aware, completion of KYC procedures and PAN have been made mandatory for investments in mutual funds. CDSL Ventures Limited ( CVL ) has been appointed by all mutual funds, including FTMF, to complete KYC and PAN verification formalities together on their behalf and hence investors need to submit their details only once for completion of these formalities across all mutual funds. Investors are advised to complete KYC/ PAN formalities with CVL at the earliest. Responsibility of the Trustees: The Trustees are the exclusive owner of the Trust Fund and holds the same in trust for the benefit of the unitholders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the Regulations and the Trust Deed. The Trustees seek to ensure that the Mutual Fund and the schemes floated there under are managed by the AMC in accordance with the Trust Deed, the Regulations, directions and guidelines issued by the SEBI, the stock exchanges, the Association of Mutual Funds in India, other regulatory agencies and the Scheme Information Documents of the respective schemes. The Balance Sheet as on 2010, the Revenue Account for the period ended 2010 and the Auditors Report thereon are annexed to this Abridged Annual Report. As mentioned in the Auditors Report the accounting policies are in accordance with SEBI (Mutual Funds) Regulations, In view of the fact that the amounts collected under the various schemes are deployed in securities markets, the price and redemption value of the units, and income from them, can go up as well as down with the fluctuations in the market value of its underlying investments. Full Annual Report is available on the website of the Mutual Fund www. franklintempletonindia.com and shall be made available for inspection at its Head Office. Present and prospective investors can request for copies of the Statement of Additional Information / Scheme Information Documents of schemes; and copies of the Trust Deed, detailed annual accounts of the schemes and of the AMC upon payment of the prescribed fee. Investment objectives of the scheme: TIPP is an open end tax saving scheme whose objective is to provide investors regular income under the Dividend Plan and capital appreciation under the Growth Plan. Unclaimed dividends and redemptions of more than 90 days as on March 31, 2010: Unclaimed Dividends Unclaimed Redemptions Amount (Rs.) No. of Investors Amount (Rs.) No. of Investors 81, , Page _4626_Templeton India Pension 2 2

3 Statutory Information: The Sponsor, Templeton International Inc. is not responsible or liable for any loss resulting from the operation of the schemes of the Mutual Fund beyond its initial contribution of Rs.1 lac for setting up the Mutual Fund, and such other accretions/additions to the same. Acknowledgments: The Trustees express their satisfaction with the overall functioning of the business and particularly with respect to risk management, corporate governance and compliance. The Trustees wish to place on record their appreciation for the dedication and sincerity of the employees of the AMC. The Trustees thank the Government of India, the Securities and Exchange Board of India, the Reserve Bank of India and the Association of Mutual Funds in India for their ongoing support, co-operation and guidance during the year under review. The Trustees take this opportunity to thank its family of investors for their confidence and wholehearted faith reposed in the Mutual Fund. In addition, the Trustees would also like to thank the Auditors, Custodian, Bankers, Registrar, and all other service providers for their valuable support. We look forward to your continued support and assure you of our commitment to quality products and services from the Mutual Fund. Yours sincerely, for Franklin Templeton Trustee Services Private Limited (Trustee of Franklin Templeton Mutual Fund) Sd/- Gregory McGowan Chairman Date: July 7, 2010 Annexure to the Trustee Report FRANKLIN TEMPLETON MUTUAL FUND INVESTOR COMPLAINTS REPORT FOR THE FINANCIAL YEAR Total number of folios 23,33,614 Complaint Code Type of complaint # (a) No. of complaints pending at the beginning of the year (b) No. of complaints received during the year Within 30 days Action on (a) and (b) Resolved days Non Actionable* days Beyond 180 days 0-3 mths Pending I A Non receipt of Dividend on units I B Interest on delayed payment of Dividend I C Non receipt of Redemption proceeds I D Interest on delayed payment of Redemption II A Non receipt of Statement of Account/Unit Certificate II B Discrepancy in Statement of Account II C Non receipt of Annual Report/ Abridged Summary III A Wrong switch between Schemes III B Unauthorized switch between Schemes III C Deviation from Scheme attributes III D Wrong or excess charges/load III E Non updation of changes viz. address, PAN, bank details, nomination, etc IV Others TOTAL # including against its authorized persons/ distributors/ employees. etc. *Non actionable means the complaint that are incomplete / outside the scope of the mutual fund Notes: 1) The time shown above is the average time for resolution of complaints from receipt of initial complaint till eventual closure. Delays could be caused by a variety of factors including the need to receive information from clients, due process followed by banks in cases where payment instruments have been lost and delays due to verification of certain facts received from clients. The majority of cases have been resolved within the 30 day time frame. 3-6 mths 6-9 mths 9-12 mths 2) This Report has been approved by the Board of Franklin Templeton Trustee Services Private Limited at its Meeting held on June 19, Page _4626_Templeton India Pension 3 3

4 Report of the Auditors To the Board of Directors of Trustees of FRANKLIN TEMPLETON MUTUAL FUND TEMPLETON INDIA PENSION PLAN: We have examined the abridged balance sheet of FRANKLIN TEMPLETON MUTUAL FUND TEMPLETON INDIA PENSION PLAN (the Scheme ) as at 2010 and the abridged revenue account for the year ended 2010, together with the notes thereon, annexed thereto. The abridged financial statements have been prepared by Franklin Templeton Asset Management (India) Private Limited, the Schemes asset manager (the AMC ) pursuant to Regulation 56 (1) of Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 ( the SEBI Regulations ), as per the format prescribed by SEBI circular number SEBI/IMD/CIR No.8/132968/2008 dated July 24, 2008 and are based on the accounts of the Scheme for the year ended, prepared in accordance with the accounting policies and standards specified in the Ninth Schedule to the SEBI Regulations and covered by our report of even date to the Board of Directors of Trustees of Franklin Templeton Mutual Fund, which report is attached. The abridged financial statements are the responsibility of the AMC. Our responsibility is to express an opinion on these abridged financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the abridged financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the abridged financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall abridged financial statements presentation. We believe that our audit provides a reasonable basis for our opinion. We report that: i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. ii. The abridged balance sheet and abridged revenue account, dealt with by this report are in agreement with the books of account. iii. In our opinion, the abridged balance sheet and the abridged revenue account dealt with by this report have been prepared as per the format prescribed by SEBI circular number SEBI/IMD/CIR No. 8/132968/2008 dated July 24, 2008 and are based on the accounts of the Scheme for the year ended, prepared in accordance with the accounting policies and standards specified in the Ninth Schedule to the SEBI Regulations; iv. In our opinion, and on the basis of information and explanations given to us, the methods used to value non traded securities, where applicable, as at 2010, are in accordance with the SEBI Regulations and other guidelines issued by the Securities and Exchange Board of India, as applicable and approved by the Board of Directors of Franklin Templeton Trustee Services Private Limited, and are fair and reasonable. v. In our opinion, and to the best of our information and according to the explanations given to us, the said abridged financial statements give the information required by the SEBI Regulations as applicable and give a true and fair view in conformity with the accounting principles generally accepted in India: a) in the case of the abridged balance sheet, of the state of affairs of the Scheme as at 2010; and b) in the case of the abridged revenue account, of the surplus for the year ended on that date. For S.R. Batliboi & Co. Firm Registration Number E Chartered Accountants per Shrawan Jalan Partner Membership No.: Mumbai. Date: July 7, 2010 Abridged Balance Sheet as at 2010 LIABILITIES As at 2010 Rupees in Lakhs As at Unit Capital 6, , Reserves and Surplus 2.1 Unit Premium Reserve 5, , Unrealised Appreciation Reserve 3, Retained Surplus 5, , Current Liabilities and Provisions 3.1 Current Liabilities TOTAL 20, , ASSETS 1 Investments 1.1. Listed Securities Equity Shares 7, , Other Debentures and Bonds 6, , Unlisted Securities Equity Shares Other Debentures and Bonds Securitised Debt Securities - 1, Government Securities - 1, Commercial Papers Certificate of Deposits 3, Other Current Assets 2.1 Cash and Bank Balances CBLO/ Reverse Repo Lending 2, Others TOTAL 20, , Notes to Accounts - Annexure I Page _4626_Templeton India Pension 4 4

5 Abridged Revenue Account For the Year Ended INCOME Year ended 2010 Rupees in Lakhs Year ended Dividend Interest Realised Gains / (Losses) on Interscheme sale of investments (582.56) 1.4 Realised Gains / (Losses) on External sale / redemption of investments (533.00) 1.5 Other Income EXPENSES ( A ) 1, (95.11) 2.1 Management Fees Service Tax on Management Fees Transfer Agents Fees and Expenses Custodian Fees Trusteeship Fees Commission to Agents Marketing and Distribution Expenses Audit Fees Other Operating Expenses Expenses Written Back during the Year - (0.24) ( B ) NET REALISED GAINS / (LOSSES) FOR THE YEAR (A -B = C) 1, (429.02) 4 Change in Unrealised Depreciation in value of Investments ( D ) (11.86) (296.25) 5 NET GAINS / (LOSSES) FOR THE YEAR (C-D = E) 1, (132.77) 6 Change in Unrealised Appreciation in the value of Investments ( F ) 3, (2,002.08) 7 NET SURPLUS / (DEFICIT) FOR THE YEAR (E + F = G) 4, (2,134.85) 7.1 Add: Balance Transfer from Unrealised Appreciation Reserve , Less: Balance Transfer to Unrealised Appreciation Reserve 3, Add / (Less): Equalisation Credit/(Debit) Total 1, (132.77) 9 Dividend Appropriation 9.1 Income Distributed during the Year (395.20) (371.27) 9.2 Tax on Income Distributed during the Year (55.99) (52.60) 10 Retained Surplus / (Deficit) carried forward to Balance sheet (556.64) Key Statistics for the year ended NAV per unit (Rs.): Open: Year ended 2010 Year ended 2009 Growth Option Dividend Option High: Growth Option Dividend Option Low: Growth Option Dividend Option End: Growth Option Dividend Option Closing Assets Under Management (Rs in Lakhs) End 19, , Average (AAuM) 18, , Gross income as % of AAuM ( Gross Income = (A) in Revenue Account): 8.14% -0.62% 4 Expense Ratio: a. Total Expense as % of AAuM 2.13% 2.16% b. Management Fee as % of AAuM 1.24% 1.16% 5 Net Income as a percentage of AAuM (Net Income = (C) in Revenue Account): 6.00% -2.78% 6 Portfolio turnover ratio: % % 7 Total Dividend per unit distributed during the year *** Individual/HUF Others Returns: a. Last One Year Scheme Growth Plan: 29.44% % Dividend Plan: 29.44% % Benchmark 35.03% % b. Since Inception Scheme Growth Plan: 13.97% 12.77% Dividend Plan: 13.97% 12.77% Benchmark Not Available Not Available *** Net of Dividend Distribution tax, if any. Page _4626_Templeton India Pension 5 5

6 Notes to Accounts - Annexure I to the Abridged Balance Sheet and Revenue Account for the Year ended Rupees in Lakhs Particulars Investments: 1.1 Investments of the Scheme are held in trust by the trustees for the benefits of the Schemes Unitholders. 1.2 Exposure to Derivative Instruments: NIL NIL 1.3 Investments in Associates and Group Companies: Issuer Nature of Instrument Amount Aggregate investments by all schemes (includes Equity,debentures and bonds ) Asian Paints Limited Equity , , Housing Development Finance Corporation Limited Equity , , Infosys Technologies Limited Equity , , Piramal Healthcare Limited Equity , Taj GVK Hotels & Resorts Limited Equity , Securities Borrowed and/or Lend by the scheme: NIL NIL 1.5 Non performing assets (NPA): NIL NIL 1.6 Aggregate Unrealised Gain / Loss as at the end of the Financial Year and percentage to net assets. Listed Securities / Securities Awaited Listing / Unlisted Securities / Foreign Securities: (Equity shares / Preference shares / Foreign securities) - appreciation 3, depreciation Net Unrealised Gain/Loss as a percentage of Net assets as on Listed Securities / Securities Awaited Listing: (Equity linked debentures / Other debentures and bonds / Securitised debt securities) - appreciation depreciation Net Unrealised Gain/Loss as a percentage of Net assets as on (0.03) Unlisted Securities (Equity linked debentures / Privately placed debentures and bonds / Securitised debt securities) - appreciation depreciation Net Unrealised Gain/Loss as a percentage of Net assets as on (0.04) Money Market Instruments (Commercial papers / Certificate of deposits) - appreciation depreciation Net Unrealised Gain/Loss as a percentage of Net assets as on * -* Government Securities (Government securities / Treasury Bills) - appreciation depreciation Net Unrealised Gain/Loss as a percentage of Net assets as on * Less than 0.01% 1.7 Aggregate Value of Purchase and Sale with Percentage to average assets. Purchases - amount 83, , as a percentage of average daily net assets Sales - amount 84, , as a percentage of average daily net assets Aggregate value of Non-Traded securities and percentage to Net assets: Equity Debt 6, , Money Market Instruments 3, Total 10, , Percentage of Non Traded securities to Net Assets as on Page _4626_Templeton India Pension 6 6

7 2 Details of Transaction with Associates under regulation 25(8) : - Brokerage Paid to Associates/Related Parties/Group companies of Sponsor/AMC - NIL - Commission Paid to Associates/Related Parties/Group companies of Sponsor/AMC Name of Associate/Related Parties/Group Companies of Sponsor/AMC ITI Capital Markets Ltd Integrated Enterprises (India) Limited Mahindra & Mahindra Financial Services Ltd Nature of Association/ Relation Associate Company Period Amount (Rs.CR) Business Given# Commission Paid $ % of total business received by the Fund Amount (Rs.) % of Total commission paid by the Fund ,230.51* 0.49% N.A^ Associate Company % Name of Associate/Related Parties/Group Companies of Sponsor/AMC ITI Capital Markets Ltd Integrated Enterprises (India) Limited Mahindra & Mahindra Financial Services Ltd Nature of Association/ Relation Associate Company Associate Company Period Amount (Rs.CR) Business Given# Commission Paid $ % of total business received by the Fund Amount (Rs.) % of Total commission paid by the Fund ,637.12* 0.49% % 58, % N.A^ * Commission is paid for the business mobilized prior to April 1, 2008 # Only fresh mobilization received during the period is considered $ Commission paid details reported includes all types of commission that have been paid during the period ^ Not Applicable Integrated Enterprises (India) Limited has ceased to be related party w.e.f March 21, Large Holdings (over 25% of the NAV of the Scheme) : NIL NIL 4 Unit Capital movement during the year ended : Units of Rs 10 each fully paid up Growth Plan Quantity Amount Outstanding, beginning of year 25,678, ,178, , , Issued during the year 2,704, ,993, Redeemed during the year (1,771,513.80) (1,493,625.20) (177.15) (149.37) Outstanding, end of year 26,611, ,678, , , Dividend Plan Outstanding, beginning of year 33,926, ,194, , , Issued during the year 5,576, ,103, Redeemed during the year (3,420,300.81) (2,372,033.52) (342.03) (237.20) Outstanding, end of year 36,082, ,926, , , Prior year figures have been reclassified, wherever applicable, to conform to current years presentation. 6 Contingent Liability NIL NIL 7 Change in method of equalisation The purpose of equalization account is to maintain per unit amount of a Plan s/option s share of the Scheme s undistributed income, so that continuing unit holders share of undistributed income remains unchanged on issue or redemption of units under that Plan/Option. Prior to March 15, 2010, when units were issued or redeemed, the total undistributed income from the beginning of the accounting year to the date of the transaction was determined. Based on the number of units outstanding on the transaction date, the undistributed income associated with each unit was computed. The per unit amount so determined was credited and debited to the equalization account on issue and redemption of each unit respectively. Pursuant to SEBI circular dated March 15, 2010, the Trustee/AMC has changed the method of calculating equalization per unit w.e.f. that date viz: a) When the sale price is higher than the face value of the unit, the total accumulated undistributed income (including realized gains) till the date of the transaction is determined. Based on the number of units outstanding on the transaction date, the undistributed income (including realized gains) associated with each unit is computed. The per unit amount so determined is credited and debited to the equalization account on issue and redemption of each unit respectively. b) When the sale price is lower than the face value of the unit, the difference between the Net asset value and the par value is debited and credited to the equalization account on issue and redemption of unit respectively Pursuant to SEBI circular dated March 15, 2010, an appropriate amount of the realized / unrealized gain has been reallocated between the plans of the Scheme, based on the plans AUM as on March 15, On account of the above change in accounting policy, the impact to the equalisation account is Rs 914 in Templeton India Pension Plan. However, the above change does not affect the NAV of the Scheme. 8 Expenses other than management fee is inclusive of service tax where applicable. 9 In respect of Schemes having Net Gain / Losses for the period after adjustment of income equalisation lower than the amount of distributed income, the income is distributed to its unitholders out of the distributable surplus available with the respective Schemes, which consists of the net gain / losses for the period after adjustment of income equalisation and the retained earnings / accumulated reserves of earlier periods. Page _4626_Templeton India Pension 7 7 7/13/ :25:30 AM

8 Book -Post If undelivered, please return to : FRANKLIN TEMPLETON ASSET MANAGEMENT (INDIA) PVT. LTD. C/o. Bhavish Graphics, Old No. 38, New No. 6, McNichols Road, Chetput, Chennai The contents of this document are only for informative purposes and are not to be used or considered to be an offer to sell or buy units of Franklin Templeton Mutual Fund schemes Risk Factors : All investments in mutual funds and securities are subject to market risks and the NAV of the scheme may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. There can be no assurance that the schemes investment objectives will be achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its affiliates is not necessarily indicative of future performance of the scheme. The above is only the name of the scheme and does not in any manner indicate the quality of the scheme, it s future prospects or returns. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distribution surplus. The investments made by the scheme are subject to external risks. All investments in TIPP are subject to a lock-in for a period of 3 financial years. The Trustee, AMC, their directors or their employees shall not be liable for any of the tax consequences that may arise, in the event that the Scheme is wound up before the completion of the lock-in period. Investors are requested to review the prospectus carefully and obtain expert professional advice with regard to specific legal, tax and financial implications of the investment/participation in the scheme. Please read the Statement of Additional Information (SAI) and Scheme Information Document (SID) carefully before investing. Statutory Details : Franklin Templeton Mutual Fund in India has been set up as a trust by Templeton International Inc. (liability restricted to the seed corpus of Rs.1 lac) with Franklin Templeton Trustee Services Pvt. Ltd. as the Trustee (Trustee under the Indian Trusts Act, 1882) and Franklin Templeton Asset Management (India) Pvt. Ltd. as the Investment Manager. Page _4626_Templeton India Pension 8 8 7/13/ :25:30 AM