Templeton Mutual Fund

Transcription

1 Templeton Mutual Fund Key Information Memorandum and Application Form FT INDIA LIFE STAGE FUND OF FUNDS THE 50 s PLUS FLOATING RATE PLAN An open end fund of funds, offering a choice of asset allocation plans The particulars of the scheme have been prepared in accordance with Securities and Exchange Board of India (Mutual Funds) Regulations 1996, as amended till date and filed with SEBI and the units being offered for public subscription have neither been approved or disapproved by Securities and Exchange Board of India nor has Securities and Exchange Board of India certified the accuracy or adequacy of the Offer Document. The memorandum is dated December 31, The Abridged Offer Document sets forth concisely the information about the scheme that a prospective investor ought to know before investing. Please retain this document for future reference. For further details please refer to the Offer Document. Investors are advised to ascertain any further changes in the Offer Document from the mutual fund/investor service centres/distributors/website before investing. Sponsor: Templeton International Inc., Florida, USA. Asset Management Company: Templeton Asset Management (India) Pvt. Ltd.

2 Contents Introduction 3 Franklin Templeton Group 4 Investment Objective 4 Risk Factors and Special Considerations 6 Investment Restrictions and Other Considerations 6 The Fund 8 The Sponsors 8 The Trustee 8 Substantial Provision of the Trust Deed 8 Summary of the Duties of the Trustee as per the Trust Deed and SEBI (MF) Regulations 8 Management of the Fund 8 Initial Issue Expenses 11 Expenses 11 Condensed Financial Information 12 Who Can Buy 12 Redemption Procedure 13 Franklin Templeton Branch Offices Exchanges 14 Nomination Facility 14 Transfer 14 Unclaimed Dividend/Redemption 14 Winding Up 14 Determination of Net Asset Value 14 Services 14 Valuation of Assets 14 Accounting Policy 15 Investor Information 15 Associate Transaction 15 Tax Benefi ts 15 Investor Rights and Services 16 Pending Litigation or Proceedings 17 Other Information 18 Instructions 18 Application Form 20 Mumbai 72/73 Free Press House, 7th Floor, Free Press Journal Marg Nariman Point, Mumbai Tel : , Fax : (022) Ahmedabad 1001 Abhijit-II, Mithakhali Six Roads, Navrangpura Ahmedabad Tel : Fax : (079) Bangalore Niton Compound 11, Palace Road, Bangalore Tel : /13/14 Fax : (080) Baroda 306, Dwarkesh Complex, R.C. Dutt Road, Alkapuri, Baroda Tel : /37 Telefax : (0265) Bhubaneswar 77, Kharavel Nagar, Unit III, Janpath Bhubaneswar Tel : , Fax : (0674) Chandigarh S.C.O , I Floor Sector 35 - B (above HDFC Bank) Chandigarh Tel : , , Fax : (0172) / Chennai Century Centre, 75 TTK Road, Chennai Tel : Fax : (044) Cochin 36/1696-A, II Floor, N.H.Road, Kaloor, Ernakulam Cochin Tel : , Fax : (0484) Coimbatore 424-C Red Rose Towers, II floor, D. B. Road R.S.Puram, Coimbatore Tel : Telefax : (0422) Dehradun Shop no. 44, Meedo Arcade, 28 Rajpur Road Dehradun Tel : / Fax : (0135) Hyderabad 501 Regency House, Somajiguda, Hyderabad Tel : / Fax : (040) Indore 303, Silver Sanchore Castle, 7, RNT Marg Indore Tel : Telefax : (0731) Jaipur 250 Ganpati Plaza, M I Road, Jaipur Tel : (0141) , Fax : (0141) Jalandhar Rachnaa Chambers, Next to Hotel Centre Point BMC Chowk, G.T. Road, Jalandhar Tel : , Telefax : (0181) Kanpur Room No 307, Third Floor, 15/63 Krishna Tower, Kanpur Tel : (0512) , Kolkatta 2D & 2E Landmark Building, 228-A A.J.C. Bose Road, Calcutta Tel : , Fax: (033) Lucknow 2 Uttam Palace, I Floor, 3 Sapru Marg, Lucknow Tel : Telefax : (0522) Ludhiana SCO-37, II Floor, Feroze Gandhi Market Ludhiana Tel : Telefax : (0161) AHMEDABAD ABHIJEET II, GROUND FLORR MEETAKALI, 6TH ROAD AHMEDABAD BANGLORE 26TH FLOOR, WEST WING RAHEJA TOWER, M.G ROAD BANGLORE BARODA GOKULESH, R C DUTT ROAD,VADODARA CHANDIGARH SCO, SECTOR - 9C, MADHYA MARG, CHANDIGARH. CHENNAI 19, RAJAJI SALAI, CHENNAI COCHIN XXIV/ 1633, KPK MENON ROAD, WILLINGDON ISLAND, COCHIN COIMBATORE 509, D. B. ROAD, R.S.PURAM, COIMBATORE HYDERABAD RAJ BHAVAN ROAD SOMAJIGUDA, HYDERABAD Madurai 24 A Pechiamman Padithurai Road, Madurai Tel : (0452) , Mangalore IV Floor, Sanu Palace, Kodialbail, Mangalore Tel : Telefax : (0824) Nagpur 126, FarmLand, Ramdas Peth, Opp SBI Bank, Nagpur Tel : Telefax : (0712) Nasik S-6, Suyojit Trade Centre, Opp Rajiv Gandhi Bhavan Sharanpur Road, Nasik Tel: Telefax : (0253) New Delhi 123 Himalaya House 12th Floor, Kasturba Gandhi Marg, New Delhi Tel : , Telefax : (011) Patna 505 Ashiana Hariniwas Apartments, Dak Bungalow Road, Patna Tel : Fax: (0612) Pune 1306, Kamalja, Shivajinagar, Rokdoba Mandir Path, Near MSEB office, Off Jangli Maharaj Road, Pune Tel : / / Telefax : (020) Investor Service Centre for IPO: Collection Bank - Standard Chartered Bank Rajkot 5th Floor, Star Plaza, Phulchhab Chowk, Rajkot Tel: Telefax : (0281) Raipur Office No.244, Second Floor, Rishabh Complex, M.G. Road, Raipur Tel : Telefax: (0771) Salem 1/31-A Anna Salai, I Floor, Swarnapuri, Salem Tel : , Fax : (0427) Surat , Lalbhai Contractor Complex, Opp. Library, Nanpura, Surat Tel : Telefax : (0261) Trichy Jenne Plaza Ground Floor 5/C, 28 Bharathiar Salai Cantonment, Trichy Tel : Fax : (0431) Varanasi IV Floor, Kuber Complex, Rathyatra crossing, Varanasi Tel : Telefax : (0542) Vijayawada White House I Floor, Room # 2 M.G.Road, Vijayawada Tel : , Fax : (0866) Visakhapatnam C-9 Pavan Palace, Dwaraka Nagar. Visakhapatnam Tel : , Fax : (0891) JAIPUR H8, SHOWROOM NO.1, BHAGWAT BHAWAN, MI ROAD, JAIPUR JALANDHAR PLOT NO. 34, G. T. ROADJALANDHAR KANPUR 16/105, M.G. ROAD, KANPUR KOLKATA 19 NETAJI SUBHAS ROAD KOLKATA MUMBAI 270 D.N.ROAD, FORT MUMBAI NEW DELHI H2 CONNAUGHT CIRCLE NEW DELHI PUNE SHRIRANG HOUSE, , JUNGLEE MAHARAJ ROAD SHIVAJI NAGAR, PUNE SURAT MANAV MANDIR,UG4 & FF, PARLE POINT,SURAT

3 Introduction Mutual Funds are for everyone. Around the world, millions of investors are investing in mutual funds because of their safety, ease of investing and the many advantages they offer. As you read on, you will get a flavour of what mutual funds are and how they can help you achieve your financial goals. But before that, here are some basics of investing. Investments and You Investing is never an easy process. However, a sound understanding of some basic concepts makes the process of investment decision-making much easier and the experience much more enjoyable. The following steps can help you get started on your path to becoming a successful investor: 1. Identify your financial needs and goals The first step is to get a clear understanding of your own financial needs and goals. Ask yourself the question - When do I need money and for what purpose? List down your financial goals and when they will materialise (daughter s higher education after 6 years, purchase of a house after 10 years), and how much money you will need for the same. The answer will help you arrive at the time frame for your investment - short term, medium term or long term. Financial Amount Years to Investment Goals Required achieve horizon (At today s your goal prices) Retirement Rs.25 lakhs 20 years Long Term Daughter s higher education Rs.2 lakhs 6 years Long Term Buying a car Rs. 4 lakhs 2 years Medium Term Son s computer course Rs lakhs 6 months Short Term 2. Understand your tolerance to risk Before making an investment decision, it is important to ascertain your feelings about risk. Will you be comfortable with fluctuations in the value of your investment? Or would you prefer to settle for lower returns, without ups and downs? for illustrative purposes only Equities Debt 3. Estimate your required rate of return Your required rate of return depends on your financial goals and the time you have to achieve them, as can be seen from the illustration below: If your retirement goal at 58 years is Rs.20 lakhs and your monthly savings is Rs.5000, your required rate of return depending on your current age would be: Present Age Returns 43 years 9.5% 48 years 21.2% As you can see, the later you start, the higher will be your required rate of return... in other words, as your investment horizon reduces, for the same level of savings, you may need to take on a higher risk. Alternatively, if you were not willing to take a higher risk, you would have to save a higher amount every month - Rs. 9800, almost twice the original savings required to achieve your target accumulation. Once you are comfortable with these basics, the next step is to understand your investment choices, and draw up an investment plan relevant to your requirements. While the following section provides you more details on these choices, we would urge you to consult your investment advisor to understand these better before investing. Mutual Funds and You What is a mutual fund? A mutual fund pools the money of people with similar investment goals. The money in turn is invested in various securities depending on the objectives of the mutual fund scheme, and the profits (or loss) are shared among investors in proportion to their investments. Mutual fund schemes are usually open end (perpetually open for investments and redemptions) or closed end (with a fixed term). A mutual fund scheme issues units that are normally priced at Rs.10 during the initial offer. Thus, the number of units you own as against the total number of units issued by the mutual fund scheme determines your share in the profits or loss of a scheme. In the case of open end schemes, units can be purchased from or sold back to the fund at a Net Asset Value (NAV) based price on all working days. The NAV is the actual value of a unit of the fund on a given day. Thus, when you invest in a mutual fund scheme, you normally get an account statement mentioning the number of units that have been allotted to you and the NAV based price at which the units have been allotted. The account statement is similar to your bank passbook... when you buy more units or redeem your units in part or full, you get an updated account statement, reflecting your transaction. Where do mutual funds invest? Broadly, mutual funds invest basically in three types of asset classes: Stocks: Stocks represent ownership or equity in a company, popularly known as shares Bonds: These represent debt from companies, financial institutions or government agencies. Money market instruments: These include short-term debt instruments such as treasury bills, certificate of deposits and inter-bank call money. What are the types of mutual funds? Mutual funds can be classified based on their objectives as: Sector Equity Schemes: These schemes invest in shares of companies in a specific sector. Diversified Equity Schemes: These schemes invest in shares of companies across different sectors of the economy. Hybrid Schemes: These schemes invest in a mix of shares and fixed income instruments. Income Schemes: These schemes invest in fixed income instruments such as bonds issued by corporates and financial institutions, and government securities. Money Market Schemes: These schemes invest in short term instruments such as certificate of deposits, treasury bills and short term bonds. Growth Schemes: Capital Growth Risk: Medium to High Recommended Investment Horizon: 5 years and above Hybrid Schemes: Growth and Income Risk: Medium to High Recommended Investment Horizon: 3 years to 5 years Income Schemes: Income Risk: Low to Medium Recommended Investment Horizon: 1 year to 3 years Liquid / Money Market Schemes: Capital Preservation Risk: Low Recommended Investment Horizon: Upto 1 year 3

4 What are the benefits of investing in mutual funds? As opposed to investing directly in the three asset classes, accessing them through a mutual fund has several advantages: Professional Management: Your money is managed by professionals who have the experience and resources to thoroughly analyse the economy and financial markets, and spot good opportunities. Diversification: With smaller amounts, you can achieve a higher degree of diversification and reduce your risk. Liquidity and Convenience: Investing and getting back your money is easy. Also, there is very little paper work, and it is very easy to track and monitor your investments. Tax Benefits: Some mutual fund schemes offer you tax rebates under Section 88. In addition, your returns from mutual funds (dividends and capital appreciation) are also eligible for favourable tax treatment. To sum up, the key to investment success is determining your needs and selecting and allocating your savings across appropriate asset classes that can help you achieve them. Mutual funds offer you a low cost, convenient and professional investment vehicle to access different asset classes. Franklin Templeton is one of the largest mutual funds in India and offers a range of mutual fund schemes to cater to the diverse needs of investors. The Franklin Templeton Group The Franklin Templeton Group is one of the world s largest Investment Management Companies, with over US$ billion equivalent to Rs.15,35,685 crores approximately in assets under management as on December 31, 2003 including more than 250 Open End Mutual Funds, Separately Managed Accounts and other investment vehicles. The Franklin Templeton Group has over 50 years of experience in Investment Management. The Group has over 28 offices world-wide. In India, Franklin Templeton started its operations in 1996, with the constitution of Templeton Mutual Fund as a Trust and Templeton Asset Management (India) Pvt. Ltd. as a Asset Management Company. In 2002, it acquired Pioneer ITI Mutual Fund Pvt. Ltd. and Pioneer ITI AMC Ltd., to emerge as one of the largest private sector mutual fund in terms of assets and investor base, and also the range of mutual fund schemes that it had to offer to investors. Investment Objectives FT India Life Stage Fund of Fund (FTLF) FT India Life Stage Fund of Funds scheme is a open-end Fund of Funds Scheme. The primary objective of the scheme is to generate superior risk adjusted retur

5 unitholders. Templeton portfolio managers use the widely known philosophy of value investing and aim to seek out securities with the most promising potential for long-term growth rather than looking at hot markets or day-to-day trends. Investors have the choice of investing in the Growth Plan and Dividend Plan. Asset Allocation Instruments Risk Profile % Equity & Equity Linked Medium to High 85% Debt/Money Market instruments Low to Medium 15% Franklin India Prima Fund (FIPF) To provide medium to long term capital appreciation as a primary objective and income as a secondary objective. Asset Allocation Instruments Risk Profile % Equities Medium to High Above 60% Debt Low to Medium Upto 40% Money Market Instruments Low Upto 15% FIPF invests in relatively smaller, fast growing companies to provide a high degree of capital appreciation. Investors have the choice of investing in the Growth Plan and Dividend Plan. Templeton India Income Fund (TIIF) TIIF is an open-end income scheme, whose primary objective is to generate a steady stream of income through investments in fixed income securities. TIIF fund managers strive to earn steady returns in the fixed income market by actively managing the fund s portfolio on interest rate movements and credit risk. They search through the entire gamut of available fixed income instruments like Government securities, PSU bonds, corporate debentures and structured products to optimize returns on investments. Asset Allocation Instruments Risk Profile % of corpus Debt instruments including Corporate debt, PSU Bonds, Gilts and Securitised Debt Low to Medium Upto 100% Money Market instruments & Cash & Deposits (including - Money at Call, Mibor Linked Instruments and Fixed Deposits) Low to Medium Upto 25% Investors have the choice of investing in the Growth Plan and Dividend Plan. Templeton India Income Builder Account (TIIBA) To provide investors regular income under the Dividend Plan and capital appreciation under the Growth Plan Asset Allocation Instruments Risk Profile % Debentures * (investment Medium to Low Upto 100% grade, privately placed etc.), Bonds issued by public sector Low Upto 20% units & other fixed income instruments Money market instruments Shares High to Medium Upto 20% * Includes securitised debt upto 40% An open end income scheme, TIIBA seeks to deliver consistent and sustainable returns while avoiding undue risk on the credit and maturity side. The scheme offers a choice of Growth Plan, Bonus Plan, Dividend Plan and Institutional Plan. Under the dividend plan, investors can choose to receive monthly, quarterly, half-yearly or annual dividends. Investors also have the option to reinvest their dividend for additional units. Investors can choose from the following plans - Plan A - The no load plan, with a minimum investment of Rs.20,000 in Half-yearly/Annual Dividend, Bonus and Growth Plan, and Rs.40,000 in Monthly and Quarterly Dividend Plan. Plan B - The no entry load plan, with a 0.5% exit load for redemptions within 6 months of allotment for Rs.10 lakhs & below and 0.25% for redemptions within 3 months of allotment for above Rs.10 lakhs. Templeton Floating Rate Income Fund (TFIF) TFIF is an open end income scheme whose primary objective is to provide income consistent with the prudent risk from a portfolio comprising substantially of floating rate debt instruments, fixed rate debt instruments swapped for floating rate return, and also fixed rate instruments and money market instruments. Asset Allocation Allocation as Risk % of Corpus Profile Type of Security Min. Max. Fixed Rate debt instruments: Money market 0% 35% Low instruments (including money at call, CPs, to Medium CDs, treasury bills, gilts less than 1 year, Repos/Reverse Repos or any other instrument permitted by RBI/SEBI) Non-Money market instruments (including bonds & debentures issued by corporates or PSUs, gilts, securitised debt*, fixed deposits or any other instrument permitted by RBI/SEBI) Floating Rate debt instruments **: 65% 100% Low Money market instruments (Money at to Medium call, mibor linked debentures, floatingrate CPs, CDs, floating rate bonds < 182 days or any other instrument permitted by RBI/SEBI) Non-Money market instruments (including floating rate bonds & debentures issued by corporates or PSUs, floating rate gilts, fixed rate debentures/bonds with swap or any other instrument permitted by RBI/SEBI) * Includes securitised debt upto 35% ** Floating rate debt instruments include fixed rate instruments swapped for floating rate returns. The scheme offers a choice of Short Term and Long Term plans. The Short Term Plan has a portfolio skewed towards short-term maturity instruments and offers a choice of growth and dividend reinvestment option. The long term plan offers a choice of growth, dividend payout and reinvestment options, and will have a portfolio skewed towards longer maturity instruments. The scheme retains the option to alter the asset allocation in the interest of unitholders on a short-term basis on defensive considerations. However, if the investment pattern is changed for any other reasons, the procedure outlined in the paragraph Fundamental Attributes under the section Investment Restrictions shall be followed. Portfolio Turnover Portfolio turnover will be a function of market opportunities. The economic environment changes on a continuous basis and exposes debt and equity portfolios to systematic as well as non-systematic risk. The AMC will endeavour to optimize portfolio turnover to maximize gains and minimize risks keeping in mind the cost associated with it. The portfolio turnover will be on account of rebalancing of portfolio on account of new subscriptions, redemptions, dividend payouts and change in the market conditions. The debt and equity allocation will be automatically rebalanced every 6 months to revert to the steady state levels. A higher portfolio turnover will result in higher transaction and brokerage costs including custodian fees and consequently may impact the Net Asset Value adversely. Debt and Money Markets The Indian debt markets are one of the largest such 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 money markets in India essentially consist of call money market, repo transactions, commercial papers, certificate of deposits and Treasury 5

6 Bills. A predominantly institutional market, the key money market players are banks, financial institutions, insurance companies, mutual funds, primary dealers and corporates. Please refer to the Offer Document for more details on debt/money market instruments. Risk Factors and Special Considerations Standard Risk Factors - Mutual funds and securities investments are subject to market risks and there is no assurance or guarantee that the objective of the schemes will be achieved. - As with any investment in securities, the Net Asset Value (NAV) of the units issued under the schemes 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 necessarily indicate the future performance of the schemes of the mutual fund. - FT India Lifestage Fund of Funds (FTLF) is only 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 operations of the Schemes beyond the initial contribution of Rs. 1 lakh made by it towards setting up the Fund. - Investors in the scheme are not being offered any guaranteed/assured returns Special Consideration : - The performance of the scheme may be affected by changes in Government policies, general levels of interest rates and risks associated with trading volumes, liquidity and settlement systems in equity and debt markets. - Investments in underlying debt schemes 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 the debt instruments. Consequently, the Net Asset Value of the scheme may be subject to fluctuation. - Investments in underlying debt schemes 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. - To the extent the equity/debt schemes invest in overseas financial assets, there may be risks associated with currency movements, restrictions on repatriation and transaction procedures in overseas markets. - The underlying schemes may invest in non-publicly offered debt securities and unlisted equities. This may expose the scheme to liquidity risks. - Investors should study the Offer Document carefully in its entirety and should not construe the contents hereof as advise relating to legal, taxation, investment or any other matters. Investors may, if they wish, consult their legal, tax, investment and other professional advisors to determine possible legal, tax, financial or other considerations of subscribing to or redeeming units, before making a decision to invest / redeem Units. - No person has been authorized to give any information or to make any representations not confirmed in this Document in connection with the offers 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 Abridged Offer Document nor any sale made hereunder shall, under any circumstances, create any implication that the information contained herein is correct. - From time to time and subject to Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the Sponsor, investment companies of the Sponsor, funds managed by the Sponsor, their affiliates, associate companies, subsidiaries, the AMC and the Trustee Company may invest either directly or indirectly in the Scheme. These entities may acquire a substantial portion of the Scheme Units and collectively constitute a major investor in the Scheme. Accordingly, Redemption of Units by these entities may have an adverse impact on the Units of the Scheme because the timing of such Redemption may impact the ability of other Unit holders to redeem their Units. - Neither the Offer Document/Abridged Offer Document nor the Units have been registered in any jurisdiction. The distribution of the Offer Document/Abridged Offer Document in certain jurisdictions may be restricted or totally prohibited to registration requirements and accordingly, persons who come into possession of the Offer Document /Abridged Offer Document are required to inform themselves about and to observe any such restrictions and / or legal compliance requirements. As FTLF will invest primarily in a combination of FT India s equity and income schemes, movement in Net Asset Value, investment policies or fundamental attribute may impact the performance of the scheme. - To the extent the underlying Debt/Equity schemes engage in security lending, FT India Life Stage Fund of Funds will be subject to risks related to fluctuations in collateral value/settlement/liquidity/ counter party. - To the extent the underlying Debt/Equity schemes are permitted to invest in derivative instruments, FT India Life Stage Fund of Funds is exposed to the high risk, high return derivative instruments. - Half-yearly rebalancing could result in higher transaction costs. - The expenses of FTLF are over and above the expenses charged by the underlying schemes. For more special considerations, please refer the respective underlying schemes Unabridged Offer Document. Due diligence Templeton Asset Management (India) Pvt. Ltd. has exercised due diligence while preparing the Offer Documents and has submitted a due diligence certificate to SEBI in the prescribed format. Investors may refer to the appropriate Offer Document for the contents of the due diligence certificate. Investment Restrictions and Other Considerations All the investments by the Fund and the Scheme will be within the investment restrictions and other limitations as prescribed under the Regulations and as amended from time to time. Pursuant to the Regulations, some of the investment and other limitations as presently applicable to the scheme are mentioned hereunder. 1. No term loans for any purpose will be advanced by the Scheme. 2. The Mutual Fund under all its Schemes taken together will not own more than 10% of any Company s paid up capital carrying voting rights. 3. The scheme may invest in another scheme under the same asset management company or any other Mutual Fund without charging any fees, provided that aggregate interscheme investment made by all the schemes under the same management or in schemes under the management of any other asset management company shall not exceed 5% of the net asset value of the Mutual Fund. SEBI vide it s circular dated November 7, 2002, has clarified that Clause 4 of Seventh Schedule of the SEBI (Mutual Funds) Regulations 1996 which restricts investments in mutual fund units upto 5% of net assets and prohibits charging of fees, shall not be applicable to investments in mutual funds in foreign countries made in accordance with guidelines. However, the management fees and other expenses charged by the mutual fund(s) in foreign countries along with the management fee and recurring expenses charged to the domestic mutual fund scheme shall not exceed the total limits on expenses as prescribed under Regulation 52(6) 4. Transfers of investments from one Scheme to another scheme in the Mutual Fund shall be allowed only if: a. Such transfers are done at the prevailing market price for quoted instruments on spot basis b. The securities so transferred shall be in conformity with the investment objective of the scheme to which such transfer has been made 6

7 c. The registration and accounting of the transactions is completed and is ratified in the next meeting of the Board of Trustee, if the regulations so require 5. The investment manager may invest in the scheme from time to time. The percentage of such investments to the total net assets may vary from time to time and can be upto 100% of the net assets of the scheme. However the investment manager shall not charge any fees on its investments in the scheme in accordance with sub-clause (3) of Regulation 24 of the Regulations. 6. The Mutual Fund may borrow to meet liquidity needs, for the purpose of repurchase, redemption of units or payment of interest or dividend to the unitholders and such borrowings shall not exceed 20% of the net assets of the scheme and duration of the borrowing shall not exceed 6 months. The fund may borrow from permissible entities at prevailing market rates and may offer the assets of the Fund as collateral for such borrowing. 7. A Scheme shall not invest more than 15% of its NAV in debt instruments issued by a single issuer which are rated not below investment grade by a credit rating agency authorised to carry out such activity under the Act. Such investment limit may be extended to 20% of the NAV of the scheme with the prior approval of the Board of Trustees and the Board of Asset Management Company. Provided that such limit shall not be applicable for investments in government securities and money market instruments. Provided further that investment within such limit can be made in mortgaged backed securitised debt which are rated not below investment grade by a credit rating agency registered with SEBI. 8. A Mutual Fund scheme shall not invest more than 10% of its NAV in unrated debt instruments issued by a single issuer and the total investment in such instruments shall not exceed 25% of the NAV of the scheme. All such investments shall be made with the prior approval of the Boards of Trustee and the Investment Manager, or the committee constituted by the Boards of the Trustee Company and Investment Manager for approval of such instruments. 9. The Mutual Fund will buy and sell securities on the basis of deliveries and will in all cases of purchase, take delivery of relative securities and in all cases of sale, deliver the securities and will in no case put itself in a position whereby it has to make short sales or carry forward transactions or engage in badla finance (carry forward). Provided that the Mutual Fund shall enter into derivatives transactions in a recognized stock exchange for the purpose of hedging and portfolio balancing, in accordance with the guidelines issued by SEBI. 10. The Mutual Fund shall get the securities purchased transferred in the name of the Fund on account of the Schemes, wherever investments are intended to be of a long-term nature. 11. Pending investment of the funds of the Scheme in the required manner, the AMC may invest the funds of the Scheme in short-term money market instruments of Scheduled Commercial Banks or other liquid instruments or both. 12. The Scheme shall not make any investment in: a) any unlisted security of an associate or group company of the sponsor; b) any security issued by way of private placement by an associate or group company of the Sponsor; c) the listed securities of group companies of the Sponsor which is in excess of 25% of the net assets. 13. The underlying schemes shall not invest more than 5 percent of its NAV in the unlisted equity shares or equity related securities. 14. The underlying schemes may invest in ADRs/GDRs of Indian companies listed on overseas stock exchanges to the extent and in the manner approved by RBI. The fund will employ necessary measures to manage foreign exchange movements arising out of such investments. The underlying schemes may invest in other investment avenues / instruments as allowed to/permitted under SEBI regulations, from time to time. 15. The scheme will comply with any other Regulations applicable to the investments of Mutual Funds from time to time. The Trustee of the Mutual Fund may alter these limitations / objectives from time to time to the extent the SEBI Regulations. All investments of the Scheme will be made in accordance with the SEBI Regulations. Procedure for investment FT India Life Stage Fund of Funds FT India Life Stage Fund of Funds is an open-end fund investing predominantly in Franklin Templeton s Equity and Income Funds. The CIOs of Franklin Equity and Franklin Debt schemes, will decide on the allocation within equity and debt schemes respectively. The Investment Managers for the underlying Schemes are: FIBCF and FIPF: K.N. Siva Subramanian TIGF : Dr. Mark Mobius TIIF : Nilesh Shah TIIBA : Rahul Goswami The debt and equity allocation will be automatically rebalanced once in every 6 months to revert to the steady state levels. The CIOs of Franklin Equity and Franklin Debt funds will decide on the allocation within equity and debt funds respectively in consultation with the International CIO. Trading in Derivatives The scheme may use derivatives with respect to equities/debt in accordance with SEBI Regulations. Policy for Borrowing A scheme may borrow upto a maximum of 20% of the net assets of the scheme for a maximum duration of 6 months in order to meet redemption of units/dividends or interest payouts as a temporary liquidity measure as per Regulation 44[2] of Chapter VI of SEBI [Mutual Funds] Regulations, 1996, on such terms (as to creation of charge on the properties, rate of interest, margins etc.) as the Trustee/AMC considers to be in the interest of investors. As of November 29, 2003 the borrowing is Rs.4.19 crores. Securities Lending A scheme may also engage in scrip lending as provided under Securities Lending scheme 1997, and other applicable guidelines/regulations. Scrip lending means lending a security to another person or entity for a fixed period of time, at a negotiated compensation. The security lent will be returned by the borrower on expiry of the stipulated period. The AMC will comply with the required reporting obligations and the Trustee will carry out the reviews required under SEBI/RBI guidelines. Further, a maximum of 40% of net assets under each plan will be deployed in securities lending and the maximum single party exposure will be restricted to 10% of net assets under each plan outstanding at any point of time. Engaging in scrip lending is subject to risks related to fluctuations in the collateral value and settlement/liquidity/ counterparty. The investment restrictions specified as a percentage of net assets will be computed at the time of making the investment and it is clarified that changes need not be effected, merely by reason of appreciation or depreciation in value or by reason of factors beyond the control of the scheme (such as receipt of any corporate or capital benefits or amalgamations). In case the limits are exceeded due to reasons beyond its control, the AMC shall adopt necessary measures of prudence to reset the situation having regard to the interest of the investors. Underwriting A scheme may accept underwriting obligations consistent with its investment objective and asset allocation subject to the fund obtaining the necessary approval/registration under SEBI (underwriters) Regulations, 1993 and the capital adequacy norms as prescribed by SEBI. The total underwriting obligations will not exceed the scheme s total net asset value. Fundamental Attributes Fundamental attributes cannot be changed without the consent of less than 75% of the unitholders. Please note that the following are the fundamental attributes of the scheme : - Type of scheme - Investment objective - Investment pattern, minimum and maximum asset allocation. The fund retains the option to alter the asset allocation on a short term basis in the interest of unitholders on defensive considerations 7

8 - Liquidity provisions such as repurchase or redemption - Aggregate fees and expenses charged to the scheme The Trustee can change the fundamental attributes of the scheme provided that a. the unitholders are informed about the proposed change in fundamental attributes by sending an individual communication and an advertisement is given in one English newspaper having nation wide circulation and one newspaper published in the language of the region where the head office is situated, and b. the unitholders are given an option to exit at the prevailing Net Asset Value without any exit load. The Fund Templeton Mutual Fund (the Mutual Fund ) has been constituted as a trust under the Indian Trusts Act, 1882 and registered with SEBI bearing registration No. MF/026/96/8 dated February 19, The Sponsor The sponsor of Templeton Mutual Fund is Templeton International, Inc., 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 sponsor has delegated the trustee functions to the Trustee. 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. The Trustee Company (The Trustee) Templeton Trust Services Private Limited is a company incorporated with limited liability under the Companies Act, The Registered Office of the Trustee is situated at 1st Floor, Sakhar Bhavan, Nariman Point, Mumbai Following are the details of the Directors of the Trustee Company: Gregory E. McGowan*, Templeton Worldwide, Inc., 500 East Broward Boulevard, Suite 2100, Fort Lauderdale, FL , U.S.A., Executive Vice- for International Development of Templeton Worldwide Inc. Other Directorships - Franklin Templeton Asset Management S.A, Franklin Templeton Asset Strategies, LLC, Franklin Templeton France S.A., Franklin Templeton Holding Limited, Franklin Templeton International Services S.A., Franklin Templeton Italia SIM SpA, Franklin Templeton Investments (Australia) Ltd., Franklin Templeton Investment Services GmbH, Franklin Templeton Management (Lux) SA, Franklin Templeton Services Limited, Happy Dragon Holdings Ltd., TRFI Investments Limited, Templeton Asian Direct Investments Ltd., Templeton Asset Management Limited, Templeton Franklin Global Distributors Ltd, Templeton Global Advisors Limited, Templeton Global Holdings Ltd., Templeton International Inc., Templeton Investment Counsel, LLC., Templeton Research & Management Venezuela, C.A., Templeton Research Poland SP.z.o.o., Templeton Worldwide Inc. Anand Vashi Kalpataru Heritage, 5th Floor, 127 M G Road, Mumbai Practising Chartered Accountant and Senior Partner of a firm of Chartered Accountants. Other Directorships - 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. Percy Jal Pardiwalla, 16, Vishnu Mahal, D Road, Churchgate, Mumbai , Advocate. Bharat Doshi, 8, St. Helen s Court, Dr. Gopalrao Deshmukh Marg, Mumbai , Executive Director-Finance & Corporate Affairs and - Trade & Financial Services Sector of Mahindra & Mahindra Ltd. Other Directorships - Ford India Ltd., Godrej Consumer Product Limited, Mahindra British Telecom Limited, Mahindra Consulting Inc., Mahindra Consulting Limited, Mahindra & Mahindra Financial services Limited, Mahindra Holdings & Finance Limited, Mahindra Information Technology Services Limited, Mahindra Intertrade Limited, Mahindra & Mahindra Limited, Mahindra Steel Service Centre Limited, NSE.IT Limited. Stephen Dover*, Franklin Resources Inc. San Mateo, One Franklin Parkway, San Mateo, CA 94403, U.S.A., International Chief Investment Officer Franklin Templeton Advisors. * These directors represent sponsors of the Trustee Company and are associates of the sponsor. Pursuant to the Deed of Trust constituting the Mutual Fund, the Mutual Fund is authorised to pay to the Trustee, which in turn pays to its individual directors, a fee for their services in such capacity. The Trustee shall charge the Fund a Trusteeship Fee at such percentage as may be agreed upon of the weekly/daily average asset value of the Fund. The Trustee has appointed Templeton Asset Management (India) Private Ltd. as the Investment Manager. Substantial Provisions of the Trust Deed - To invest the funds collected through the scheme effectively so as to provide a fair return to the unitholders - The Trustee shall, in discharging their duties, act in the interest of the unitholders - The monitoring of the fund will be carried out by the Trustee on a continuous basis. When the AMC is engaged by the Trustee for managing the fund, the Trustee shall obtain such periodical reports as it may require from the AMC. Such periodical reports shall be analysed with an object to recognise the need for corrective actions early enough in order to avoid or minimize losses to the unitholders - To do all such other acts, deeds, things as may be incidental or necessary for the advancement or fulfillment of the above objects - No amendment in the trust deed shall be carried out without the prior approval of SEBI and unitholders approval would be obtained where it affects the interests of unitholder. Summary of the Duties of the Trustee as per the Trust Deed and SEBI (MF) Regulations The Trustee shall obtain consent of the unitholders of the Scheme: a. When the Trustee is required to do so by SEBI in the interests of the unitholders; or b. Upon the request of three-fourths of the unitholders of any Scheme under the Mutual Fund; or c. If a majority of the directors of the Trustee company decide to wind up the Scheme or prematurely redeem the units; or d. When a change in the fundamental attributes (viz. the investment objective and the terms of the scheme) of the Scheme or the Trust or the fees and expenses payable or any other change which would modify the Scheme or affect the interest of the unitholders is proposed to be carried out the trustee will ensure that, (i.) a written communication about the proposed change is sent to each unitholder and an advertisement is given in one English daily newspaper having nationwide circulation as well as in 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. The Trustee shall ensure that the AMC has not given any undue or unfair advantage to any associates or dealt with any of the associates of the AMC in any manner detrimental to the interest of unitholders. The Trustee shall be accountable for and be the custodian of the property of the respective Scheme and shall hold the same in trust for the benefit of the unitholders in accordance with Regulations and the provisions of the Trust Deed. The Board of Directors of Templeton Trust Services Private Limited held seven meetings during the year Procedure for Unitholder Approvals The Trustee will call for a meeting of the Unitholders of the Scheme or adopt postal ballot or any other appropriate method whenever it is required to do so in the interest of the Unitholders, or as required by the SEBI Regulations for the time being in force or if the Trustee determines to modify the Scheme or prematurely redeem the Units or wind up the Scheme. Management of The Fund Templeton Asset Management (India) Pvt. Ltd. (The Investment Manager) 8

9 Templeton Asset Management (India) Private Ltd. is a private limited company incorporated under the Companies Act, 1956 on October 6, 1995, having its Registered Office at 1st Floor, Sakhar Bhavan, 230 Backbay Reclamation, Nariman Point, Mumbai Templeton Asset Management (India) Private Ltd., has been appointed the Asset Management Company of the Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated January 5, 1996, executed between Templeton Trust Services Pvt. Ltd and Templeton Asset Management (India) Pvt. Ltd. Board of Directors Gregory E. Johnson*, Chairman of the Board of Director of Templeton Asset Management (India)Pvt. Ltd. Vijay C. Advani * (Alternate Director to G. E. Johnson) - Executive Managing Director, International Retail Development Dr. J. Mark Mobius*, - Templeton Emerging Markets Fund Inc. Rajan Raheja*, Industrialist. Deepak M. Satwalekar, Managing Director and CEO - HDFC Standard Life Insurance Company Ltd. P. Vaidyanathan, Managing Director - Integrated Enterprises (India) Ltd. Narvoz Seervai, Advocate * These Directors are associated with the sponsor or its associates. Compliance Officer Pranita Gramopadhye, 1st Floor, Sakhar Bhavan, 230 Backbay Reclamation, Nariman Point, Mumbai , India. Share holding Pattern Out of the Investment Manager s total equity paid-up capital of Rs cr., 75% is held by Franklin Templeton Holding Ltd., Mauritius with the balance of about 25% being held by Hathway Investments Pvt. Ltd. Hathway Investments is an Indian investment company, a member of the Rajan Raheja group of companies. Porfolio Management Services The AMC had obtained a certificate from SEBI dated November 8, 2000 to act as a Portfolio Manager under Securities and Exchange Board of India (Portfolio Managers) Rules and Regulations, 1993, vide registration No.INP and commenced the activity. Further, a renewal of the registration certificate was granted upto November 15, 2006 vide SEBI letter no. IMD/SD/22901/2003 dated December 4, 2003.The AMC has also obtained a No-Objection letter from SEBI under Regulation 24(2) of Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 for commencing the Portfolio Managers activity. The asset management company certifies that the key personnel of the asset management company, the systems, back office, bank and securities accounts are segregated activity wise and there exists a system to prohibit access to inside information of various activities. REGISTRARS AND TRANSFER AGENTS Sale/Repurchase/transfer/transmission of the scheme units will be processed in-house and at competitive rates. The fees will be charged to the scheme as a part of annual ongoing expenses and shall confirm to subclause 15 of Regulation 25 of SEBI (Mutual Funds) Regulations, AUDITORS S.R Batliboi & Co. 18th Floor, Express Towers, Nariman Point, Mumbai , is the Auditor for this Scheme of the Mutual Fund. The Trustee shall appoint auditors for each Scheme of the Mutual Fund. Further, the Trustee has the right to change the Auditors. S.R Batliboi & Co. have however, not provided any services in connection with this Offer Document. INVESTOR RELATION OFFICER S Rajagopalan, Transfer Agency and Customer Service - Century Centre, 75, T.T.K Road, Alwarpet, Chennai Ph No The Trustee is satisfied that the investor services division has adequate capacity and systems to discharge the various obligations relating to investor servicing as provided in the regulations and to handle investor complaints. Investor Service Centres (ISCs) Please refer to the list of Investor Service Centres (ISCs) on page 2. Information on Key Personnel Rajiv Vij - Managing Director Asia -(since 2003) Total experience : 14 years, Age: 36 years Qualifications: B. Tech. (IIT-Delhi), PGDM (IIM-Calcutta) Current Responsibilities: Responsible for expanding Franklin Templeton s business interests in Asia. Assignments held upto 10 years or less: Sales and Marketing functions TAMIL, Hindustan Lever Ltd. - -Templeton Asset Management (India) Pvt. Ltd. Total experience: 18 years, Age: 41 years Qualifications: B.Com, PGDBM (XLRI, Jamshedpur) Current Responsibilities: Overall responsibility of Sales and marketing, Fixed-income portfolio management, Franklin equity team, Risk management, Human Resources and Corporate Accounts. Assignments held upto 10 years or less: Senior Vice and Chief Investment officer - Pioneer ITI AMC Ltd. Vivek Pai Total Experience: 9 years, Age: 33 years Qualifications: B. Com, ACA Current Responsibilities: Vice - FA Operations and Compliance His role largely involves general management of several functions within the operations department such as Fund Accounting, Custody and Cash Management along with overseeing the Legal Affairs. Assignments held upto 10 years or less: Joined Templeton in October 2000, and with the responsibility to the Trustees for Compliance and Internal Audit of the Mutual Fund. Prior to this he was acting as a Consultant for setting up back office operations for a new company, Birla Sun Life Mutual Fund- Head of Fund Accounting. Sanjay Sapre - Head TA Operations & Customer Service- India (based at Mumbai) Total Experience: 11 years, Age: 34 years Qualifications: M.B.A (USA) Current Responsibilities: Head TA Operations & Customer Service- India, Responsible for the company s Transfer Agency Operations and Customer Service functions in India Assignments held upto 10 years or less: Franklin Templeton International Services (India) Pvt. Ltd.-Manager, Global Enterprise Consulting (Asia), Templeton Asset Management (India) Pvt LtdeBusiness Manager (Asia).Various Management positions at Thomas Cook (India) Limited including responsibilities in the areas of Technology, Marketing support, Special projects and Vendor Management Operations Manager with Pinnacle Data Systems, Inc. in the USA handling the purchase and operations functions of the company. Purchasing Manager / Director with Henkel Chemicals (India) Limited. S Rajgopalan - Senior Manager- Transfer Agency and Customer Services Total experience: 16 years, Age: 38 years (based at Chennai) Qualifications: BSc (Maths) Current Responsibilities: Senior Manager- Transfer Agency and Customer Services. Oversees the operations and customer services of the company. Assignments held upto 10 years or less: From May 2003-Karvy Consultants- Heading the Templeton MF unit and supervising all process related activities. Client co-ordination, regular review meetings with the internal auditors, internal teams and visiting distributor houses. From MCS Ltd. Mumbai Handling close ended Mutual Fund schemes and investor services. Maintaining relationship with client and co-ordinating with internal auditors/distributors etc. Pranita Gramopadhye Total Experience: 7 years, Age: 31 years Qualifications: B. Com, ACA Current Responsibilities: Compliance Officer (based at Mumbai) Templeton Trust Services Private Ltd. Having joined Templeton in July 2000, she is responsible to The Trustees for Compliance and Internal Audit of the Mutual Fund. She is also responsible for compliance of Portfolio Management Services. 9