Docstoc

CONTINUOUS OFFER OFFER DOCUMENT Franklin India Prima Plus

Document Sample
CONTINUOUS OFFER OFFER DOCUMENT Franklin India Prima Plus Powered By Docstoc
					                                          CONTINUOUS OFFER

                                          OFFER DOCUMENT



                          Franklin India Prima Plus
                          An Open – End Growth Scheme
Sale of units on an ongoing basis at a Net Asset Value (NAV) related price

       Asset Management Company :            Franklin Templeton Asset Management (India) Pvt. Ltd.
                                             (Formerly Templeton Asset Management (India) Pvt Ltd)
       Mutual Fund                    :      Templeton Mutual Fund
       Trustee Company                :      Franklin Templeton Trustee Services Private Limited
                                             (Formerly Templeton Trust Services Pvt. Ltd.)

The particulars of Franklin India Prima Plus have been prepared in accordance with the
Securities and Exchange Board of India (Mutual Funds) Regulations 1993 as amended till date,
and filed with SEBI, the units being offered for public subscription have not been approved or
disapproved by the Securities and Exchange Board of India nor has the Securities and Exchange
Board of India certified the accuracy or adequacy of the Offer Document.


The Offer Document sets forth concisely the information about the scheme that a prospective investor
ought to know before investing. Please retain this Offer Document for future reference. The date of
this revised Offer Document is May 31, 2004.


This Offer Document shall remain effective until a 'material change' (other than a change in
fundamental attributes and within the purview of the Offer Document) occurs and thereafter changes
shall be filed with SEBI and circulated to the unitholders along with the quarterly / half yearly report.


In this Offer Document all references to “U.S.$” or “$” are to United States of America Dollars and
“Rs.” are to Indian Rupees.


The Offer Document should be retained for future reference. Before investing, investors should also
ascertain about any further changes in this Offer Document after the date of Offer Document From the
Mutual Fund / Investor Service Centres / Website / Distributors or Brokers.




                                                                                                    1
                                     CONTENTS


S. No.                   CHAPTER                        PAGE NO.


01.      HIGHLIGHTS & RISK FACTORS                           03

02.      INTRODUCTION                                        04

03.      DEFINITIONS                                         06

04.      DUE DILIGENCE CERTIFICATE                           08

05.      SUMMARY OF THE SCHEME                               09

06.      SUMMARY OF EXPENSES AND FINANCIAL INFORMATION       09

07.      CONDENSED FINANCIAL INFORMATION                     13

08.      CONSTITUTION / MANAGEMENT OF THE MUTUAL FUND        27

09.      INVESTMENT OBJECTIVES AND POLICIES                  46

10.      HOW TO INVEST                                       52

11.      VALUATION OF ASSETS AND NET ASSET VALUE             58

12.      HOW TO REDEEM UNITS OF THE SCHEME                   65

13.      ASSOCIATE TRANSACTIONS                              70

14.      UNITHOLDER INFORMATION                              71

15.      TAX BENEFITS                                        78

16.      INVESTOR SERVICES                                   82

17.      GENERAL INFORMATION                                 84

18.      PENDING LITIGATION OR PROCEEDINGS                  92




                                                                   2
01. HIGHLIGHTS


     An open-end Franklin India Prima Plus scheme sponsored by the Franklin Templeton Group,
      one of the world‟s largest investment management companies, which has over 50 years of
      experience in international investment management and manages US$343.80 billion in assets
      (approximately Rs.15,25,441 crores) as on 30th April 2004.
     Open end growth scheme investing in wealth creating companies across market cap ranges.
     Option of Growth Plan and Dividend Plan.
     Dividend Plan offers Payout and Reinvestment Options.
     Favourable long-term capital gains tax with indexation benefits.
     Dividends tax-free in the hands of investors (the scheme will not pay any distribution tax if
      50% or more of the investible funds of the scheme are invested in equity shares of domestic
      companies)

RISK FACTORS

     Mutual funds and securities investments are subject to market risks and there is no assurance or
      guarantee that the objective of the mutual fund will be achieved.
     As with any investment in securities, the Net Asset Value (NAV) of the units issued under the
      scheme can go up or down depending on the factors and forces affecting the capital/debt
      markets.
     Past performance of the sponsors/the Asset Management Company/mutual fund does not
      indicate the future performance of the scheme of the mutual fund.
     Franklin India Prima Plus is the name of the scheme and does not in any manner indicate either
      the quality of the scheme or its future prospects and returns.
     The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme
      beyond the initial contribution of Rs.1 lakh made by it towards setting up the Fund.
     There is no guarantee or assurance on the frequency or quantum of dividends (which shall
      depend on the availability of adequate distributable surplus) although there is every intention to
      declare dividends.
     Investors in the Scheme are not being offered any guaranteed / assured returns.


SCHEME SPECIFIC RISK FACTORS AND SPECIAL CONSIDERATION

     The performance of the scheme may be affected by changes in Government policies, general
      levels of interest rates and risk associated with trading volumes, liquidity and settlement
      systems in equity and debt markets.
     The scheme may invest upto 5% of its net assets in unlisted equity and equity related
      instruments, which could affect the liquidity of the scheme.
     Investments in debt instruments are subject to default risk and interest rate risk. Interest rate
      risk results from changes in demand and supply for money and other macroeconomic factors
      and creates price changes in the value of debt instruments. Consequently, the Net Asset Value
      of the scheme may be subject to fluctuation.
     Investments in debt instruments are subject to reinvestment risks as interest rates prevailing on
      interest or maturity due dates may differ from the original coupon of the bond, which might
      result in the proceeds being invested at a lower rate.
     The scheme may invest in non-publicly offered debt securities and unlisted equities. This may
      expose the scheme to liquidity risks.

                                                                                                   3
      Engaging in securities lending is subject to risks related to fluctuations in collateral value and
       settlement/liquidity and counterparty risks.
      To the extent the assets of the scheme are invested in overseas financial assets, there may be
       risks associated with currency movements, restrictions on repatriation and transaction
       procedures in overseas market.
      Derivatives are high risk, high return instruments as they may be highly leveraged. A small
       price movement in the underlying security could have a large impact on their value and may
       also result in a loss.
      Prospective investors should review / study this Offer carefully and in its entirety and shall not
       construe the contents hereof or regard the summaries contained herein as advice relating to
       legal, taxation, or financial/ investment matters and are advised to consult their own
       professional advisor(s) as to the legal or any other requirements or restrictions relating to the
       subscription, gifting, acquisition, holding, disposal (sale, transfer, switch or redemption or
       conversion into money) of Units and to the treatment of income (if any), capitalization, capital
       gains, any distribution, and other tax consequences relevant to their subscription, acquisition,
       holding, capitalization, disposal (sale, transfer, switch or redemption or conversion into money)
       of Units within their jurisdiction / of nationality, residence, domicile etc. or under the laws of
       any jurisdiction to which they or any managed Funds to be used to purchase/gift Units are
       subject, and (also) to determine possible legal, tax, financial or other consequences of
       subscribing / gifting to, purchasing or holding Units before making an application for Units.
      Neither this Offer Document nor the units have been registered in any jurisdiction. The
       distribution of this Offer Document in certain jurisdictions may be restricted or subject to
       registration requirements and, accordingly, persons who come into possession of this Offer
       Document in certain jurisdictions are required to inform themselves about, and to observe, any
       such restrictions. No person receiving a copy of this offer document or any accompanying
       application form in such jurisdiction may treat this Offer Document or such application form as
       constituting an invitation to them to subscribe for Units, nor should they in any event use any
       such application form, unless in the relevant jurisdiction such an invitation could lawfully be
       made to them and such application form could lawfully be used without compliance with any
       registration or other legal requirements.
      No person has been authorized to give any information or to make any representations not
       confirmed in this Offer Document in connection with this Offer or the issue of Units, and any
       information or representations not contained herein must not be relied upon as having been
       authorized by the Mutual Fund, the Investment Manager. Neither the delivery of this Offer
       Document nor any sale made hereunder shall, under any circumstances, create any implication
       that the information contained herein is correct as of any time subsequent to the close of the
       Initial Offering Period.


02. INTRODUCTION

Franklin India Prima Plus is an open-end growth scheme investing for growth of capital primarily
through a diversified portfolio of wealth creating companies across market capitalisation ranges.

Wealth creating companies are defined as those, which have the potential to produce returns
consistently in excess of their cost of capital. The ability to achieve this is derived from sustainable
competitive advantages emanating from intellectual property rights, proprietary technologies, well
known brands, sound business strategies, management quality and so on. The intrinsic value of these
companies rises with time. The stock market sooner or later acknowledges their unique contribution
and rewards investors in such companies.

Investors have the option of investing in the Growth Plan and Dividend Plan.

                                                                                                    4
Growth Plan

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

Dividend Plan

Under the Dividend Plan, it is proposed to distribute the returns to the investors in the form of
dividends (net of TDS) out of distributable profits. Investors have the option of reinvesting the
dividend or receiving cash payouts.

DEBT MARKETS

The Indian debt markets are one of the largest markets in Asia. Government and Public Sector
enterprises are predominant borrowers in the market. While interest rates were regulated till a few
years back, there has been a rapid deregulation and currently both the lending and deposit rates are
market determined.

The bond markets are developing fast with the rapid introduction of new instruments including
derivatives. Foreign Institutional Investors are also allowed to invest in Indian debt markets now.
There has been a increase in the trading volumes in the market with the average daily trading volumes
of Rs.6,067/- crores in the month of April 2004 compared to Rs.3,952/- crores in the month of March
2004. In the month of April, trading volume has been on a higher level by Rs.2,115/- crores,
compared to the average trading volume of March 2004. The trading volumes are largely concentrated
in the Government of India securities which contribute about 90% to 95% of the daily trades.

The various debt instruments currently available for investments are:

          Instruments                            Current Yields         Liquidity
          Central/State Government               4.39% -5.82%           Very high
          securities
          PSU Bonds/Corporate debentures         4.60%-6.10%            Medium - High
          Securitised debt                       5.25%-6.50%            Low - Medium
          Commercial Papers/Certificate of       4.40%-5.15%            High
          deposits
          Call/Notice Money                      4.00%-4.50%            Very high
          Repo                                   3.50%-4.30%            Very high

The securities above could be listed and (subject to SEBI regulations), unlisted, privately placed,
secured, unsecured and of any maturity. The securities may be acquired through initial public
offerings, secondary market operations, private placement etc. The scheme may also invest in other
fixed income instruments that may be available from time to time.

The actual yields will, however, vary in line with general levels of interest rates and debt/money
market conditions prevailing from time to time.

The scheme may also invest in other fixed income instruments that may be available from time to time.
The securities above, subject to applicable SEBI regulations, could be listed, unlisted, privately placed,
secured, unsecured and of any maturity. The securities may be acquired through initial public
offerings, secondary market operations, private placement etc.

The equity component of the scheme will primarily focus on companies that have demonstrated
characteristics such as market leadership, strong financials and quality management, and have the


                                                                                                     5
potential to create wealth for their shareholders by delivering steady performance through the ups and
downs of the market.


03. DEFINITIONS

In this Offer Document the following definitions have been used:
AMC     /  Asset      Franklin Templeton Asset Management (India) Pvt. Ltd. (formerly
Management            Templeton Asset Management (India) Pvt. Ltd.), the asset
Company/              management company, set up under the Companies Act, 1956 and
Investment            authorized by SEBI to act as Asset Management Company to the
Manager               schemes of Templeton Mutual Fund.

Applicable    NAV “Applicable NAV for Subscriptions” is the Net Asset Value per unit of
for Subscriptions the business day on which the application for subscription is accepted.

Applicable   NAV “Applicable NAV for Redemptions” is the Net Asset Value per unit of
for Redemptions  the business day on which the application for redemption is accepted.

Business Day          A day other than:
                      (i)    Saturday and Sunday.
                      (ii)   a day on which the banks in Mumbai and/or RBI are closed for
                             business / clearing.
                      (iii) a day which is a public and/or bank holiday at a collection
                             centre where the application is received.
                      (iv)   a day on which sale and repurchase of units is suspended by the
                             AMC.
                      (v)    a day on which normal business could not be transacted due to
                             storms, floods, bandhs, strikes or such other events as the AMC
                             may specify from time to time.
                      (vi)   A day on which register of unitholders is closed.
                      (vii) A day on which the underlying scheme/s is closed for
                             Subscription/Redemption or determination of the NAV of the
                             fund.
                      The AMC reserves the right to declare any day as a Business Day or
                      otherwise at any or all collection centres.

Custodian             A custodian appointed for holding the securities and other assets of the
                      scheme which for the time being is Deutsche Bank Mumbai branch.

Entry Load / Sales    Load on ongoing purchases.
Load

Exit Load /           Load on redemption other than CDSC.
Redemption Load

Investment            Investment Management Agreement (IMA) dated January 5, 1996
Management            executed between Franklin Templeton Trustee Services Pvt. Ltd. and
Agreement or          Franklin Templeton Asset Management (India) Pvt. Ltd.
IMA

ISC                   Investor Service Centre of the Asset Management Company.


                                                                                                 6
Money     Market Commercial papers, commercial bills, treasury bills, Government
Instruments      securities having an unexpired maturity upto one year, call or notice
                 money, certificate of deposit, usance bills, (repos / reverse repos), and any
                 other like instruments as specified by the Reserve Bank of India from
                 time to time including mibor linked securities, fixed deposits, call
                 products having unexpired maturity upto one year.

Mutual Fund           Templeton Mutual Fund, a trust set up under the provisions of Indian
                      Trusts Act 1882, and registered with SEBI vides Registration No.
                      MF/026/96/8.

NAV                   Net Asset Value of the Units of Franklin India Prima Plus.

Offer Document        The document issued by Templeton Mutual Fund offering units of
                      Franklin India Prima Plus.

Public   Offering „POP‟ or the Sale Price is the price at which the units are proposed to
Price (POP) / Sale be sold on an ongoing basis and may include permissible load amount
Price              as and when an entry load is introduced. (see Section “Public Offering
                   Price”).

RBI                   Reserve Bank of India, established under the Reserve Bank of India
                      Act, 1934

Registrars            Registrar for the time being of the Mutual Fund, which is in-house,
                      Franklin Templeton Asset Management (India) Pvt. Ltd.

Repo / Reverse        Sale / Purchase of Government Securities as may be allowed by RBI
Repo                  from time to time with simultaneous agreement to repurchase / resell
                      them at a later date.

Scheme                Franklin India Prima Plus (FIPP).

SEBI                  Securities and Exchange Board of India established under Securities
                      and Exchange Board of India Act, 1992.

SEBI Regulations      SEBI (Mutual Funds) Regulations, 1996, as amended from time to
                      time, for the operation and management of Mutual Funds.

Sponsor               Templeton International Inc, a subsidiary of Franklin Resources Inc.,
                      based in San Mateo, California, USA.

Trust Deed            The Trust Deed dated January 4, 1996 of Templeton Mutual Fund.

Trustee               Franklin Templeton Trustee Services Private Limited (formerly
                      Templeton Trust Services Pvt. Ltd.), a company set up under the
                      Companies Act 1956, and approved by SEBI to act as the Trustee to
                      the schemes of Templeton Mutual Fund.

Unit                  The interest of an investor, which consists of, one undivided shares in
                      the Net Assets of Franklin India Prima Plus.

Unitholder            A person holding Units in Franklin India Prima Plus.


                                                                                                 7
04. DUE DILIGENCE CERTIFICATE




                                    Franklin India Prima Plus



It is confirmed that:


i.     The Offer Document forwarded to SEBI is in accordance with the SEBI (Mutual Funds)
       Regulations, 1996 and the guidelines and directives issued by SEBI from time to time.
ii.    All legal requirements connected with the launching of the scheme as also the guidelines,
       instructions, etc, issued by the Government and any other competent authority in this behalf,
       have been duly complied with.
iii.   The disclosures made in the Offer Document are true, fair and adequate to enable the investors
       to make a well informed decision regarding investment in the proposed scheme.
iv.    The intermediaries named in the Offer Document are registered with SEBI and till date such
       registrations is valid.




Date: May 31, 2004                                               Signature: Sd/-
Place: Mumbai                                                    Name: Pranita Gramopadhye
                                                                 Compliance Officer




                                                                                                8
05. SUMMARY OF THE SCHEME


Name of the Scheme          Franklin India Prima Plus (FIPP)
Nature of the Scheme        An Open-end growth scheme
Investment Objective        The investment objective of Prima Plus is to provide growth
                            of capital plus regular dividend through a diversified portfolio
                            of equities, fixed income securities and money market
                            instruments.
Redemption Price            Redemptions will be done at the Applicable NAV for
                            redemptions*.
Liquidity                   The redemption cheque will be despatched to the unitholders
                            within the statutory time limit of 10 business days prescribed
                            by SEBI. However, on a best effort basis the Fund will
                            endeavour to despatch the redemption cheque within 4
                            working days after a valid redemption request is received at
                            the Registrar‟s office.
Transparency                 NAV will be normally determined for all business days
                                and released to the press.
                             NAV will be calculated upto 4 decimal places.
                             The Fund would publish the half-yearly and annual
                                results as per the SEBI Regulations.
                             Full Portfolio disclosure every half-year as per the SEBI
                                regulations.
Tax Benefits                There are certain tax benefits available to the investors under
                            the Scheme. (Please refer to Section on Taxation).

* AMC reserve the right to introduce/increase/decrease the entry/exit load on a prospective basis.


06. SUMMARY OF EXPENSES AND FINANCIAL INFORMATION

EXPENSES OF THE SCHEME

FEE AND EXPENSES

The information that is provided under this section seeks to assist the investor in understanding the
following: -
a) The expense structure of the current Scheme and types of different fees and their percentage the
    investor is likely to incur on purchasing and selling the units of the Scheme.
b) The financial information (condensed) relating to the previous schemes launched by the Fund.




                                                                                                     9
UNITHOLDER TRANSACTION EXPENSES OR SALES LOAD

                                                        Present charge           Maximum charge
   i      Maximum sales load imposed                        2.25 %                    6%
          on purchase (as % of NAV)
   ii     Sales Load, if any, on issue of units in             0%                        0%
          lieu of dividends (as % of NAV)
   iii    Contingent Deferred Sales Load                      N.A.                      N.A.
          („CDSC‟) (based on any period of
          holding) (as % of NAV)
   iv     Redemption / Repurchase Load (as %                   Nil                       3%
          of amount redeemed NAV)
   v      Switchover / Exchange Fee (as % of                   Nil                       3%
          NAV)

The AMC/Trustee reserve the right to change the Contingent Deferred Sales Charge (CDSC) or
introduce a load and change the load structure of the scheme if it so deems fit in the interest of and for
the smooth and efficient functioning of the scheme. A load structure, introduced by the Trustee/AMC
may comprise of an entry load, exit load, spread or level load or any other load as may be permissible
under the regulations.

Any load that may be levied will be applicable on a prospective basis and will be applied for
transactions after the introduction of the load. Load will be charged at rates applicable at the time of
the transaction (purchase, redemption, exchange, dividend reinvestment etc.) details of which will be
provided in our offices/Web site/addendum to the offer document.

All loads including Contingent Deferred Sales Charge shall be credited to the scheme. Such loads may
be maintained in a separate account and may be utilised towards meeting the selling and distribution
expenses. Any surplus in this account may be credited to the scheme, whenever felt appropriate by the
AMC.

No switchover/exchange fee will be charged for any switch/exchange.

All the switches / exchanges will be treated as redemption in one scheme and subscription in the other
scheme with the entry load / exit load as may be applicable.

The Trustee reserves the right to introduce / increase / decrease a Load / Fee for the items (i) to (v)
above at any time in future on a prospective basis. However, such increase / decrease / introduction
would be subject to the limits prescribed under the Regulations. The addendum detailing the changes
may be attached to offer documents and abridged offer documents. The addendum may be circulated
to all the distributors / brokers so that the same can be attached to all offer documents and abridged
offer documents already in stock.

The AMC/Trustee reserves the right to introduce a load and change the load structure of the scheme if
it so deems fit in the interest of and for the smooth and efficient functioning of the scheme. A load
structure, introduced by the Trustee/AMC may comprise of an entry load, exit load, spread or level
load or any other load represents a low flat charge to buy the fund with an equal charge upon
redemption, whenever it occurs.

The AMC/Trustee reserve the right to levy the exit load with a view to protect the interests of existing
unitholders and the same will be levied having regard to such relevant factors such as market
conditions/volatility, expenses of liquidating the securities, impact cost due to liquidating the securities
etc.
                                                                                                     10
As per SEBI circular MFD/CIR.No.04/11488 /2003 dated June 12, 2003; Mutual Funds are permitted
to launch Fund of Funds (FOF) schemes. The FOF scheme will invest in other mutual fund schemes,
which will be treated as underlying schemes.

Load in case of Fund-of-Funds scheme: As the FOF scheme can charge a load, if the underlying
schemes too also charge a load, there would be a double incidence of load for the investors at the FOF
level and at the underlying scheme level. Hence, there will not be any no load (entry/exit) charged by
the underlying schemes on the investments made by Franklin Templeton Fund- of- Funds schemes in
an underlying the scheme.

Trail Fees: In the FOF scheme, the underlying schemes get the subscription through the vehicle of
FOF. Hence, the distributor who mobilizes the investment in Franklin Templeton Fund of Fund
schemes is entitled to trail fees, which the underlying scheme would have normally paid to a
distributor. Accordingly, the trail fees will be paid out of the underlying scheme.


Total Expenses


Annual Scheme Recurring Expenses

The maximum annual recurring expenses that can be charged to the scheme shall be within the limits
stated in Regulations 52 (6) and subject to a percentage limit of Daily / Weekly Average Net Assets as
in the table below:

      First Rs.100      Next Rs.300 crore     Next Rs.300 crore      Over Rs.700 crore
          crore
         2.50%               2.25%                   2.00%                 1.75%

Any excess over these specified ceilings would be borne by the Asset Management Company.

The Trustee/AMC reserves the right to charge higher operating expenses in relation to investing
overseas as and when SEBI permits.

The AMC has estimated the following recurring expenses for the first Rs.100 crores of Average Daily
/ Weekly Net Assets.

Investment Management Fees                  1.25%
Custodial Fees                              0.35%
Shareholder Servicing Fee/Investor
Communication Expenses                      0.75%
Trustee Remuneration+, Audit Fees etc       0.15%
                                            2.50%*

+ Trustee Remuneration:


These estimates have been made in good faith as per the information available to the Investment
Manager based on past experience and are subject to change inter-se and types of the expenses
charged shall be as per the Regulations.



                                                                                                11
The Trustee will be entitled to a remuneration of upto 0.0025% of the daily / weekly average net assets
of all schemes taken together and such remuneration shall be paid quarterly in arrears.

Trusteeship fee shall be distributed equitably across all schemes of Templeton Mutual Fund. Out-of-
pocket expenses incurred for attending meetings of the Trustee shall be paid separately and shall be
charged to the fund.

* The above heads and percentages are estimates and may vary in practice in line with actuals and
amendment to SEBI regulations but will be subject to the overall ceiling of 2.50%. The AMC will
bear any expenses in excess of the ceiling.

The tables given above relating to Unitholder Transaction Expenses, Initial Issue Expenses and Annual
Scheme Recurring Expenses have been given to the investor to assist him/her in understanding the
various costs and expenses that an investor of the scheme will bear directly or indirectly.

Investment management fees are payable in arrears. The direct expenses incurred by each scheme of
Templeton Mutual Fund shall be chargeable to that scheme. The common expenses incurred on
various schemes will be charged on the basis of number of unitholders, the size of corpus of the
scheme and in conformity with generally accepted accounting principles.

The total expenses of the scheme including the investment management and advisory fee (together
with additional management fee wherever applicable) shall not exceed the limit stated in Regulation
52(6).

An addendum detailing the changes in loads will be circulated to all intermediaries/offices of the AMC
for display in their place of business.

The AMC reserves the right to revise these charges as specified under the paragraph pertaining to
fundamental attributes of the scheme.

PAST SCHEMES (LAUNCHED DURING THE PAST ONE FISCAL YEAR)

The details of initial issue expenses borne by Franklin India International Fund (FINTF), Franklin
India Strategic Investment Plan (FISIP), FT India Dynamic PE Ratio Fund of Funds and FT India Life
Stage Fund of Funds (Schemes launched during the last one fiscal year) are given below:


                                                           (Rs. in Lakhs)
 Nature of expenses                              FINTF            FISIP-Series 1      FISIP Series-1
                                                                    Plan A-LT          Plan A-Basic
 Brokerage fees & Commission                       2.63                17.85                Nil
 Marketing & Advertising                         103.80                 Nil                 Nil
 Printing & Distribution                          14.98                 0.03               0.02
 Banker‟s fees                                     0.38                 Nil                 Nil
 Other expenses                                    7.95                 Nil                 Nil
 Total Expenses                                  129.74                17.88               0.02




                                                                                                 12
 Nature of expenses                 FISIP-Series 1        FT India Dynamic PE        FT India Life Stage
                                     Plan A-MT            Ratio Fund of Funds          Fund of Funds
 Brokerage fees & Commission             Nil                     236.52                    143.38
 Marketing & Advertising                 Nil                      6.09                      1.77
 Printing & Distribution                 Nil                      2.27                      1.79
 Banker‟s fees                           Nil                       Nil                      0.00
 Other expenses                          Nil                      0.25                      1.00
 Total Expenses                          Nil                     245.13                    147.94

None of the expenses in any of the schemes above have exceeded 6% of initial resources mobilized
and are borne by the AMC.

The initial issue expenses are borne by AMC.




07. CONDENSED FINANCIAL INFORMATION



a) HISTORICAL PER UNIT STATISTICS



      Name of the Scheme                                    FIIF – BSE Sensex Plan
      Date of launch                                              27.08.2001
      Information as at the end of             Mar 2002             Mar 2003           Mar 2004
      NAV at the beginning of the year                                               9.1896 (GP)
                                                10.00 a              10.55
                                                                                     9.1896 (DP)
      Net Income per unit (Rs.)                  1.40                -0.49               17.5
      Dividends (Rs.) / Bonus                    NIL                  NIL                NIL
      Transfer to Reserves                       NIL                  NIL                NIL
      NAV at the end of the year (Rs.)                                               16.1727 (GP)
                                                10.55               9.1896
                                                                                     16.1727 (DP)
      Annualised compounded return%@           5.50                  -5.17              20.36%
      Benchmark Index                       BSE Sensex            BSE Sensex          BSE Sensex

      Benchmark Annualised                                                              22.27%
                                                 4.55                -5.18
      compounded return%@
      Net Assets (End of period)
                                                 4.66                5.91                3.06
      (Rs. in crores)
      Ratio of Recurring Expenses to Net
                                                1.49%               1.49%                1.49
      Assets




                                                                                                    13
Name of the Scheme                                      FTIGF
Date of launch                                         07.12.2001
Information as at the end of          Mar 2002           Mar 2003            Mar 2004
NAV at the beginning of the year   10.00 (I - GP) a    10.64 (I - GP)     12.6169 (I - GP)
                                   10.00 (I - QP) a    10.31 (I - QP)     10.8840 (I - QP)
                                   10.00 (L - GP) a   10.41 (L - GP)     11.1444 (L - GP)
                                   10.00 (L - MP) a   10.16 (L – MP)     10.2611 (L – MP)
                                                                           11.8193 (I - B)

Net Income per unit (Rs.)              0.97 (I)            1.33 (I)           1.38 (I)
                                      1.47 (L)             0.58 (L)           0.75 (L)
Dividends (Rs.) / Bonus             0.30 (I - QP)       1.30 (I – QP)      1.02 (I – QP)
                                   0.225 (L - MP)      0.600 (L – MP)     0.51 (L – MP)
                                                        65 : 1000 (I –    79:1000 (I - B)
                                                           Bonus)
Transfer to Reserves                    NIL                  NIL                NIL
NAV at the end of the year (Rs.)    10.64 (I - GP)    12.6169 (I - GP)    14.9452 (I - GP)
                                    10.31 (I - QP)    10.8840 (I - QP)    11.6857 (I - QP)
                                   10.41 (L - GP)     11.1444 (L - GP)   11.7309 (L - GP)
                                   10.16 (L – MP)     10.2611 (L - MP)   10.2102 (L – MP)
                                                         11.8193 (I –       12.9405 (B)
                                                           Bonus)
Annualised compounded                6.40% b (I)          19.38% (I)        18.95% (I)
return%@                             4.10% b (L)          8.61% (L)         7.14% (L)
Benchmark Index                      I-Sec Libex        I-Sec Libex        I-Sec Libex
Benchmark Annualised
                                        N.A                 N.A                N.A
compounded return%@
Net Assets (End of period)           32.0189 (I)          38.18 (I)         113.33 (I)
(Rs. in crores)                       3.9064 (L)          2.36 (L)           2.45 (L)
Ratio of Recurring Expenses to        1.23% (I)          1.24% (I)          1.24% (I)
Net Assets                           0.98% (L)           0.99% (L)           0.95 (L)




                                                                                             14
Name of the Scheme                                        TISTIP
Date of launch                                           31.01.2002
Information as at the end of           Mar 2002           Mar 2003            Mar 2004
NAV at the beginning of the year     1000.00 a (GP)     1010.99 (GP)      1096.5752 (GP)
                                     1000.00 a (WP)     1004.70 (WP)      1089.7646 (WP)
                                     1000.00 a (MP)     1004.70 (MP)      1015.7615 (MP)
                                     1000.00 a (QP)     1004.70 (QP)      1008.9605 (QP)
                                                                           1039.0168 (B)
Net Income per unit (Rs.)                 22.78             102.55             102.79
Dividends (Rs.) / Bonus                 5.7 (WP)           72 (MP)          59.12 (WP)
                                        5.7 (MP)           79 (QP)          52.20 (MP)
                                        5.7 (QP)         54.95 : 1000        53.00 (QP)
                                                           (Bonus)          60:1000 (B)
Transfer to Reserves                      NIL                NIL                NIL
NAV at the end of the year (Rs.)      1010.99 (GP)     1096.5752 (GP)     1167.5766 (GP)
                                      1004.70 (WP)     1089.7646 (WP)     1090.9852 (WP)
                                      1004.70 (MP)     1015.7615 (MP)     1021.1029 (MP)
                                      1004.70 (QP)     1008.9605 (QP)     1013.2624 (QP)
                                                      1039.0168 (Bonus)    1040.8668 (B)
Annualised compounded return%@           1.13% b            8.26%              7.42%
Benchmark Index                       CRISIL Short      CRISIL Short       CRISIL Short
                                     Term Bond Fund    Term Bond Fund     Term Bond Fund
                                          Index             Index              Index
Benchmark Annualised
                                          N.A               N.A                N.A
compounded return%@
Net Assets (End of period)
                                        73.4431            467.63             808.12
(Rs. in crores)
Ratio of Recurring Expenses to Net
                                         0.83%             0.94%              0.90%
Assets




                                                                                           15
Name of the Scheme                                  TGSF – TP
Date of launch                                      11.02.2002
Information as at the end of          Mar 2002        Mar 2003       Mar 2004
NAV at the beginning of the year     10.00 a (GP)   10.0960 (GP)   11.3499 (GP)
                                     10.00 a (DP)   10.0960 (DP)   10.4679 (DP)
Net Income per unit (Rs.)                0.15           0.880          0.65
Dividends (Rs.) / Bonus                  NIL         0.85 (DP)         0.51
Transfer to Reserves                     NIL            NIL             NIL
NAV at the end of the year (Rs.)     10.0960 (GP)   11.3499 (GP)   12.1661 (GP)
                                     10.0960 (DP)   10.4679 (DP)   10.6312 (DP)
Annualised compounded return%@                      11.84% (GP)     9.62% (GP)
                                       0.92% b
                                                    11.97% (DP)     9.67% (DP)
Benchmark Index                      I-Sec Si-BEX   I-Sec Si-BEX   I-Sec Si-BEX
Benchmark Annualised
                                         N.A            N.A            N.A
compounded return%@
Net Assets (End of period)
                                         2.06          11.85           21.02
(Rs. in crores)
Ratio of Recurring Expenses to Net
                                         1.23          1.25%           1.13
Assets




                                                                                  16
Name of the Scheme                                            TFIF
Date of launch                                              2.02.2002
Information as at the end of             Mar 2002           Mar 2003             Mar 2004
                                            a
NAV at the beginning of the year     10.00 (ST - GP) 10.1181 (ST-GP)         10.8332 (ST - GP)
                                     10.00 a (LT- GP)    10.11 (LT-GP)       10.8419 (LT - GP)
                                     10.00 a (ST -DP) 10.0002 (ST-DP)        10.0028 (ST - DP)
                                     10.00 a (LT -DP)    10.11 (LT-DP)       10.1042 (LT - DP)
Net Income per unit (Rs.)                 0.18 (ST)          0.28 (ST)            0.25 (ST)
                                         0.08 (LT)          0.58 (LT)            0.50 (LT)
Dividends (Rs.) / Bonus                0.11 (ST-DP)       0.69 (ST-DP)            0.45 (ST)
                                       NIL (LT-DP)        0.73 (LT-DP)           0.45 (LT)
Transfer to Reserves                         NIL                NIL                  NIL
NAV at the end of the year (Rs.)     10.1181 (ST-GP) 10.8333 (ST-GP)         11.4060 (ST - GP)
                                      10.11 (LT-GP)     10.8419 (LT-GP)      11.4327 (LT - GP)
                                     10.0002 (ST-DP) 10.0028 (ST-DP)         10.0069 (ST - DP)
                                      10.11 (LT-DP)     10.1042 (LT-DP)      10.1392 (LT - DP)
Annualised compounded return%@       1.12% b (ST-GP)       7.24% (LT)           6.28% (ST)
                                              b
                                     1.00% (LT-GP)         7.17% (ST)           6.40% (LT)
Benchmark Index                      Crisil Liquid Fund Crisil Liquid Fund   Crisil Liquid Fund
                                            Index              Index                Index
Benchmark Annualised
                                           N.A                 N.A                 N.A
compounded return%@
Net Assets (End of period)              95.15 (ST)         189.07 (LT)           205.99 (LT)
(Rs. in crores)                         94.10 (LT)         486.18 (ST)          1266.53 (ST)

Ratio of Recurring Expenses to Net      0.19% (ST)         1.49% (LT)           1.42% (LT)
Assets                                  1.10% (LT)         0.91% (ST)           1.00% (ST)




                                                                                                  17
Name of the Scheme                                  FTIPERF
Date of launch                                      25.02.2002
Information as at the end of         Mar 2002       Mar 2003      Mar 2004
NAV at the beginning of the year                                 8.76 (GP)
                                      10.00 a         9.67
                                                                 8.76 (DP)
Net Income per unit (Rs.)            (0.1300)        (1.3300)       8.79
Dividends (Rs.) / Bonus                NIL             NIL          2.50
Transfer to Reserves                   NIL             NIL          NIL
NAV at the end of the year (Rs.)                                 15.05 (GP)
                                       9.67           8.76
                                                                 12.50 (DP)
                                                b
Annualised compounded return%@       (3.30%)        (11.41%)      21.54%
Benchmark Index                          -              -            -
Benchmark Annualised
                                         -              -            -
compounded return%@
Net Assets (End of period) (Rs. in
                                     48.3115          31.76        19.31
crores)
Ratio of Recurring Expenses to Net
                                      1.84%           2.49%        2.48%
Assets




                                                                              18
Name of the Scheme                                          FTIAAF
Date of launch                                             25.02.2002
Information as at the end of           Mar 2002        Mar 2003             Mar 2004
NAV at the beginning of the year      10.00 a (PG)     9.63 (PG)      9.5126 (PG – GP & DP)
                                      10.00 a (SG)     9.69 (SG)      9.7671 (SG – GP & DP)
                                      10.00 a (BG)     9.74 (BG)      9.9756 (BG – GP & DP)
                                      10.00 a (CG)     9.78 (CG)     10.1918 (CG – GP & DP)
                                      10.00 a (IH)     9.81 (IH)     10.4758 (IH – GP & DP)
Net Income per unit (Rs.)                 0.03            0.24                  2.19
Dividends (Rs.) / Bonus                                                      3.50 (PG)
                                                                             3.00 (SG)
                                          NIL             NIL                2.50 (BG)
                                                                             2.00 (CG)
                                                                             1.50 (IH)
Transfer to Reserves                      NIL             NIL                   NIL
NAV at the end of the year (Rs.)                                        17.3393 (PG – GP)
                                                                        13.7395 (PG – DP)
                                       9.63 (PG)                        16.1613 (SG – GP)
                                                       9.5126 (PG)
                                       9.69 (SG)                        13.0849 (SG – DP)
                                                       9.7671 (SG)
                                                                        14.8478 (BG – GP)
                                       9.74 (BG)       9.9756 (BG)
                                                                        12.2996 (BG – DP)
                                       9.78 (CG)      10.1918 (CG)
                                                                        13.5729 (CG – GP)
                                       9.81 (IH)      10.4758 (IH)
                                                                        11.2988 (CG - DP)
                                                                        12.1764 (IH – GP)
                                                                        10.4810 (IH – DP)
Annualised compounded                (3.70%) b (PG)   (4.47%) (PG)         30.03% (PG)
return%@                             (3.10%) b (SG)   (2.13%) (SG)         25.74% (SG)
                                     (2.60%) b (BG)   (0.22%) (BG)         20.75% (BG)
                                     (2.20%) b (CG)    1.75% (CG)          15.69% (CG)
                                     (1.90%) b (IH)    4.34% (IH)           9.85% (IH)
Benchmark Index                            -                -                     -
Benchmark Annualised
                                           -               -                    -
compounded return%@
Net Assets (End of period) (Rs. in
                                         16.65           10.80                31.00
crores)
Ratio of Recurring Expenses to
                                         1.81%           2.24%               2.23%
Net Assets




                                                                                              19
       Name of the Scheme
                                     FINTF                                 FISIP#
Date of Inception                                20.12.2002                   31.10.2003
Information as at the end of            Mar 2003           Mar 2004            Mar 2004
                                               a
NAV at the beginning of the year         10.00              9.9790              10.00 a
Net Income per unit (Rs.)                 (0.01)            -1.08                0.17
Dividends (Rs.) / Bonus                    NIL              N.A.                N.A.
Transfer to Reserves                       NIL               NIL                 NIL
NAV at the end of the year (Rs.)          9.9790            9.3611             10.1746
                                                   b
Annualised compounded return%@            (0.21%)            -5.03%            1.75% *
Benchmark Index                            Lehman           Lehman
                                     Intermediate Govt Intermediate Govt             -
                                         (US) Index        (US) Index
Benchmark Annualised
                                           0.35              -3.96                   -
compounded return%@
Net Assets (End of period) (Rs. in         5.84               1.68                  6.10
crores)
Ratio of Recurring Expenses to Net        0.90%             0.85%               0.31%
Assets




                                                                                           20
               Name of the Scheme              FTDPEF                FTLF
Date of Inception                             31.10.2003          29.11.2003
Information as at the end of                   Mar 2004            Mar 2004
NAV at the beginning of the year                10.00 a             10.00 a
Net Income per unit (Rs.)                        1.41                 0.74
Dividends (Rs.) / Bonus                          N.A                  N.A
Transfer to Reserves                              Nil                 Nil
NAV at the end of the year (Rs.)             11.8435 (GP)    10.9294 (The 20s Plan
                                             11.8435 (DP)         – GP & DP)
                                                             10.7121 (The 30s Plan
                                                                  – GP & DP)
                                                             10.5444 (The 40s Plan
                                                                  – GP & DP)
                                                             10.4021 (The 50s Plus
                                                               Plan – GP & DP)
Annualised compounded return%@                18.44% *      9.29% (The 20s Plan –
                                                                   GP & DP)
                                                            7.12% (The 30s Plan –
                                                                   GP & DP)
                                                            5.44% (The 40s Plan –
                                                                   GP & DP)
                                                            4.02% (The 50s Plus
                                                            Plan – GP & DP)
Benchmark Index                                  N.A                  N.A

Benchmark Annualised compounded return%@         N.A                 N.A

Net Assets (End of period) (Rs. in crores)      252.01              204.43

Ratio of Recurring Expenses to Net Assets        0.09                0.97




                                                                                     21
Unaudited Half yearly financials as on September 30, 2003. NAV and Returns as of April 30, 2003 with
the Benchmarks


                                                         FIIF                    FTIGF
     NAV at the beginning of the year (Mar. 31,                             12.6169 (I - GP)
     2003)                                                                  10.8840 (I - QP)
                                                      9.1896 (GP)
                                                                               11.8193 (B)
                                                      9.1896 (DP)
                                                                            11.1444 (L - GP)
                                                                           10.2611 (L - MP)
     Net Income per unit (Rs.)                                                    (I) 1.14
                                                         6.28
                                                                                 (L) 0.47
     Dividends (Rs.) / Bonus                                                  0.52% (I-QP)
                                                                         40 (per 1000 units) (I-
                                                          Nil
                                                                                   MB)
                                                                            0.263 %(L-MP)
     Transfer to Reserves (Rs. in Crores)                 Nil                       Nil
     NAV as on September 30, 2003 (Rs.)                                    14.2347 (I - GP) ^
                                                                           11.6739 (I - QP) ^
                                                     12.9742 (GP)
                                                                              12.8139 (B) ^
                                                     12.9742 (DP)
                                                                          11.5168 (L - GP) ^
                                                                          10.3028 (L – MP) ^
     Annualised Returns from the date of inception                              21.49% (I)
                                                        13.25%
     @                                                                          8.10% (L)
     Benchmark Returns@                                 15.09%                     N.A.
     Net Assets as on September 30, 2003 (Rs. in                                 73.35 (I)
                                                         5.04
     Crores)                                                                     2.32 (L)
     Ratio of recurring expenses to net assets                                  1.25% (I)
                                                         1.49%
                                                                                1.00% (L)
     NAV as on April 30, 2004                        16.2239 (GP)            15.0595 (I-GP)
                                                     16.2239 (DP)            11.7750 (I-QP)
                                                                            11.7635 (L-GP)
                                                                            10.2386 (L-MP)
                                                                           13.0394 (I-Bonus)
     Annualised Returns from the date of inception      19.82%                  18.62% (I)
     @                                                                          7.01% (L)
     Benchmark Returns @                               22.04%                       N.A
     Benchmark Indices used                           BSE Sensex               I Sec Libex
     Net Assets as on April 30, 2004 (Rs. in             3.54                   113.33 (I)
     Crores)                                                                     2.45 (L)




                                                                                                   22
                                                     TISTIP          TGSF – TP
NAV at the beginning of the year (Mar. 31,       1096.5752 (GP)
2003)                                            1089.7646 (WP)
                                                 1015.7615 (MP)     11.3499 (GP)
                                                 1008.9605 (QP)     10.4679 (DP)
                                                  1039.0168 (B)
Net Income per unit (Rs.)                             32.02             0.68

Dividends (Rs.) / Bonus                          35.1656%(WD)
                                                  26:1000(WB)           0.26%
                                                   27.2%(MD)
                                                   28.0%(QP)
Transfer to Reserves (Rs. in Crores)                   Nil               Nil
NAV as on September 30, 2003 (Rs.)               1140.3636 (GP)
                                                 1092.2722 (WP)
                                                                    11.9175 (GP) ^
                                                 1025.1689 (MP)
                                                                    10.6938 (DP) ^
                                                 1017.3715 (QP)
                                                  1051.7376 (B)
Annualised Returns from the date of inception                       11.34% (GP)
@                                                    8.22%
                                                                    11.42% (DP)
Benchmark Returns@                                    N.A.              N.A.
Net Assets as on September 30, 2003 (Rs. in
                                                     1338.54            14.19
Crores)
Ratio of recurring expenses to net assets            0.90%             1.25%
NAV as on April 30, 2004                         1173.3584 (GP)     12.2153 (GP)
                                                 1090.6091 (WP)     10.6742 (DP)
                                                 1026.1593 (MP)
                                                 1018.2800 (QP)
                                                  1040.2886 (B)
Annualised Returns from the date of inception        7.38%           9.45% (GP)
@                                                                    9.50% (DP)
Benchmark Returns @                                   N.A                N.A
Benchmark Indices used                          CRISIL Short-Term   I Sec Si-BEX
                                                 Bond Fund Index
Net Assets as on April 30, 2004 (Rs. in              808.12             20.97
Crores)




                                                                                     23
                                                        TFIF           FTIPERF
NAV at the beginning of the year (Mar. 31,       10.8419 (LT - GP)
                                                                       8.76 (GP)
2003)                                            10.1042 (LT - DP)
                                                                       8.76 (DP)
                                                 10.8332 (ST - GP)
                                                 10.0028 (ST - DP)
Net Income per unit (Rs.)                             0.27(ST)
                                                                         5.51
                                                      0.46(LT)
Dividends (Rs.) / Bonus                               0.25 (ST)
                                                                         NIL
                                                     0.23 (LT)
Transfer to Reserves (Rs. in Crores)                     Nil              Nil
NAV as on September 30, 2003 (Rs.)              11.1576 (LT - GP) ^
                                                10.1446 (LT - DP) ^   12.40 (GP)
                                                 11.1436 (ST - GP)    12.40 (DP)
                                                 10.0061 (ST - DP)
Annualised Returns from the date of inception       6.75% (ST)
                                                                        14.44%
@                                                   6.83% (LT)
Benchmark Returns@                                       N.A.              -
Net Assets as on September 30, 2003 (Rs. in         470.71 (ST)
                                                                         19.73
Crores)                                             138.24 (LT)
Ratio of recurring expenses to net assets           1.49% (LT)
                                                                        2.49%
                                                    1.00% (ST)
NAV as on April 30, 2004                         11.4845 (LT - GP)    15.24 (GP)
                                                 10.1850 (LT - DP)    12.66 (DP)
                                                 11.4499 (ST - GP)
                                                 10.0079 (ST - DP)
Annualised Returns from the date of inception       6.23% (ST)        21.34% (GP)
@                                                   6.37% (LT)        21.36% (DP)
Benchmark Returns @                                      N.A               -
Benchmark Indices used                           Crisil Liquid Fund        -
                                                        Index
Net Assets as on April 30, 2004 (Rs. in            1516.78 (ST)          25.07
Crores)                                             286.06 (LT)




                                                                                    24
                                                      FTIAAF           FISIP
NAV at the beginning of the year (Mar. 31,    9.5126 (PG – GP & DP)
2003)                                         9.7671 (SG – GP & DP)
                                             9.9756 (BG – GP & DP)      N.A
                                             10.1918 (CG – GP & DP)
                                             10.4758 (IH – GP & DP)
Net Income per unit (Rs.)                                1.39           N.A
Dividends (Rs.) / Bonus                                  NIL            N.A
Transfer to Reserves (Rs. in Crores)                     Nil            Nil
NAV as on September 30, 2003 (Rs.)          13.6097 (PG – GP & DP) ^
                                            13.0775 (SG – GP & DP) ^
                                            12.4946 (BG – GP & DP) ^    N.A
                                            12.1733 (CG – GP & DP) ^
                                            11.4904 (IH – GP & DP) ^
Annualised Returns from the date of                 21.32% (PG)
inception @                                         18.33% (SG)
                                                    14.99% (BG)         N.A
                                                    13.13% (CG)
                                                     9.10% (IH)
Benchmark Returns@                                         -              -
Net Assets as on September 30, 2003 (Rs. in
                                                        22.26           N.A
Crores)
Ratio of recurring expenses to net assets              2.24%             N.A
NAV as on April 30, 2004                         17.2580 (PG – GP)     10.2084
                                                 13.6751 (PG – DP)
                                                 16.1489 (SG – GP)
                                                 13.0748 (SG – DP)
                                                14.9065 (BG – GP)
                                                12.3482 (BG – DP)
                                                13.7477 (CG – GP)
                                                 11.4443 (CG - DP)
                                                 12.1831 (IH – GP)
                                                 10.4868 (IH – DP)
Annualised Returns from the date of 28.47% (PG – GP & DP)              2.08% *
inception @                                  24.61% (SG – GP & DP)
                                             20.12% (BG – GP & DP)
                                             15.73% (CG – GP & DP)
                                              9.49% (IH – GP & DP)
Benchmark Returns @                                        -              -
Benchmark Indices used                                     -              -
Net Assets as on April 30, 2004 (Rs. in                 32.68           6.13
Crores)




                                                                                 25
                                                           FTDPEF                    FINTF
   NAV at the beginning of the year (Mar. 31, 2003)          N.A                     9.9790
   Net Income per unit (Rs.)                                 N.A                      (0.49)
   Dividends (Rs.) / Bonus                                   N.A                       Nil
   Transfer to Reserves (Rs. in Crores)                      N.A                       Nil
   NAV as on September 30, 2003 (Rs.)                        N.A                    9.6518 ^
   Annualised Returns from the date of inception @           N.A                    -3.48% *
   Benchmark Returns@                                        N.A                      -1.63
   Net Assets as on September 30, 2003 (Rs. in
                                                             N.A                      2.71
   Crores)
   Ratio of recurring expenses to net assets                 N.A                     0.90%
   NAV as on April 30, 2004                              12.0866 (GP)                9.4056
                                                         12.0866 (DP)
   Annualised Returns from the date of inception @         20.87% *                  -4.40%

   Benchmark Returns @                                        -                     -3.75%
   Benchmark Indices used                                     -                Lehman Intermediate
                                                                                Govt. (US) Index
   Net Assets as on April 30, 2004 (Rs. in Crores)         264.73                     1.63


                                                                        FTLF
      NAV at the beginning of the year (Mar. 31, 2003)                   N.A
      Net Income per unit (Rs.)                                          N.A
      Dividends (Rs.) / Bonus                                            N.A
      Transfer to Reserves (Rs. in Crores)                               N.A
      NAV as on September 30, 2003 (Rs.)                                 N.A
      Annualised Returns from the date of inception @                    N.A
      Benchmark Returns@                                                 N.A
      Net Assets as on September 30, 2003 (Rs. in
                                                                         N.A
      Crores)
      Ratio of recurring expenses to net assets                           N.A
      NAV as on April 30, 2004                              11.2742 (The 20s Plan – GP & DP)
                                                            10.9591 (The 30s Plan – GP & DP)
                                                            10.7333 (The 40s Plan – GP & DP)
                                                         10.4983 (The 50s Plus Plan – GP & DP)
      Annualised Returns from the date of inception @       12.74% (The 20s Plan – GP & DP)
                                                             9.59% (The 30s Plan – GP & DP)
                                                             7.33% (The 40s Plan – GP & DP)
                                                          4.98% (The 50s Plus Plan – GP & DP)
      Benchmark Returns @                                                   -
      Benchmark Indices used                                                -
      Net Assets as on April 30, 2004 (Rs. in Crores)                    210.60

Note: @ Returns for periods less than one year have been given in absolute terms without annualizing
the same. Returns for periods greater than one year are on compounded annualized basis. a
Inception/Allotment date NAV, b Absolute Returns, GP – Growth Plan, DP - Dividend Plan, WP –
Weekly Dividend Plan, MP – Monthly Dividend Plan, QP – Quarterly Dividend Plan, B – BSE Sensex
Plan, I – Investment Plan, L – Liquid Plan, PG – Pure Growth, SG – Steady Growth, BG – Balanced
Growth, CG – Conservative Growth, IH – Inflation Hedge, ST – Short Term, LT – Long Term, TP –
                                                                                                     26
Treasury Plan. * Inception Date of the series: March 28, 2003, # Plan A Medium Term Growth 19-
Nov-04 (Inception Date of the series: Oct 31, 2003). The NAV as of September 30, 2003 for FTIMIP,
FTIGF, TGSF-TP, TILP, TFIF (Long Term), FINTF, FISIP are Non-business day NAVs. Dividends
declared from June 1999 to March 2002 are tax exempt for investors.). TFIF was launched on
February 11, 2002. TGSF (TP) was launched on February 11, 2002. FINTF was launched on
December 20, 2002. Returns for schemes/plans with dividend distribution are computer assuming re-investing of all payouts at ex-
dividend NAV. FTDPEF Fund of Funds was launched on October 31, 2003, hence data for the previous year and half-year is not available.
                                                                                       Returns for
FTLF Fund of Funds was launched on Nov 29, 2003, hence data for the previous year and half-year is not available.
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 schemes).

THE ABOVE INFORMATION IS PRESENTED SCHEME WISE FOR ALL SCHEMES LAUNCHED
BY THE MUTUAL FUND DURING THE LAST THREE FISCAL YEARS (EXCLUDING REDEEMED
SCHEMES)

The scheme abbreviations used in this offer document are as follows:

Templeton India Growth Fund - (TIGF), Franklin India Index Fund - (FIIF), Franklin India Index Tax Fund-
(FITF), Franklin India Balanced Fund -(FIBF), FT India PE Ratio Fund- (FTIPERF), FT India Balanced Fund-
(FTIBF), FT India Index Fund- (FTIIF), Templeton Monthly Income Plan- (TMIP), FT India Monthly Income
Plan - (FTIMIP), Franklin FMCG Fund - (FFF), FT India Asset Allocation Fund - (FTIAAF), Franklin India
Bluechip Fund - (FIBCF), Franklin India Prima Fund-(FIPF), Franklin India Vista Fund-(FIVF), Franklin India
Taxshield 96-(FIT96), Templeton Floating Rate Income Fund- LT, Templeton Floating Rate Income Fund-ST-
(TFIF), Templeton India Income Fund-(TIIF), Templeton India Children‟s Asset Plan-(TICAP), Templeton India
Income Builder Account-(TIIBA), Franklin India Maxima Fund-(FIMF), Templeton India Guaranteed Income
Plan (TIGIP), Franklin India Growth Fund -(FIGF), Franklin Internet Opportunities Fund-(FIOF), Franklin
Pharma Fund-(FPF), Franklin Infotech Fund-(FIF), Franklin India Prima Plus-(FIPP), Templeton India Pension
Plan-(TIPP), Franklin India Taxshield 97-(FIT97), Franklin India Taxshield-(FIT), Franklin India Taxshield 99 -
(FIT99), Franklin India Taxshield 98-(FIT98), Franklin India Taxshield 95-(FIT95), Templeton India
Government Securities Fund-(TGSF), FT India Gilt Fund-(FTIGF), Templeton India Liquid Plus -(TILP),
Templeton India Liquid Fund-(TILF), Templeton India Treasury Management Account-(TITMA), Templeton
India Money Market Account-(TIMMA), Templeton India Short-Term Income Plan-(TISTIP), Franklin India
Strategic Investment Plan-(FISIP), FT India Dynamic PE Ratio Fund of Funds (FTDPEF), FT India Life Stage
Fund of Funds (FTLF). Trust Deed have been registered under the Indian Registration Act, 1908. The Mutual
Fund was registered with SEBI on February 19, 1996 under Registration Code MF-026-96-8.

08. CONSTITUTION / MANAGEMENT OF THE MUTUAL FUND

Templeton Mutual Fund (the “Mutual Fund”) has been constituted as a trust on January 4, 1996 in
accordance with the provisions of the Indian Trusts Act, 1882 (2 of 1882) with Templeton
International Inc., as the Sponsor and Franklin Templeton Trustee Services Private Limited as the
Trustee. The Trust Deed and the Supplementary Trust Deed have been registered under the Indian
Registration Act, 1908. The Mutual Fund was registered with SEBI on February 19, 1996 under
Registration Code MF-026-96-8.

THE SPONSOR

Templeton Mutual Fund is sponsored by Templeton International, Inc. Templeton International Inc., is
a wholly owned subsidiary of Templeton worldwide Inc., which in turn is a wholly owned subsidiary
of Franklin Resources Inc. The sponsor was responsible for setting up and establishing the Templeton
Mutual Fund. The Sponsor is the Settler of the Mutual Fund Trust. The Sponsor has entrusted a sum
of Rs.1 lakh to the Trustee as the initial contribution towards the corpus of the Mutual Fund. The
Trustee has appointed Franklin Templeton Asset Management (India) Private Ltd. as the Investment
Manager.

                                                                                                                             27
The Sponsor is represented by Directors on the Board of the Trustee and the Investment Manager in
accordance with the Regulations. The Sponsor shall be responsible for discharging its functions and
responsibilities towards the Fund in accordance with Regulations and the various constitutive
documents of the Fund.

Franklin Templeton Asset Management (India) Pvt. Ltd. (FTAMIL)/Nominees and Franklin
Templeton Trustee Services Pvt. Ltd. (FTTSL) / Nominees had acquired 100% shares in Pioneer ITI
AMC Ltd. and Pioneer ITI Mutual Fund Pvt. Ltd. respectively, in July 2002 after obtaining the
approval from SEBI. Subsequently the license of Pioneer ITI Mutual Fund was surrendered to SEBI
for cancellation. SEBI vide its letter dated February 17, 2003 cancelled the same.


FINANCIAL PERFORMANCE OF THE SPONSOR

(All figures are in Rupees million except per share data) (US$ = Rs.45.41 on January 14, 2004)

                             9/30/2003              9/30/2002           9/30/2001
                          (Rs. in millions)      (Rs. in millions)   (Rs. in millions)
Total income                      119,174.00             114,365.09         106,931.47
Profit After Tax                   22,832.15              19,648.91          22,010.23
Net Worth                         195,721.64             193,759.93         180,636.44
Equity Capital                       1,116.78               1,174.10          1,184.29
Earnings per Share                      89.91                  75.38             87.19
Book Value per Share                   796.04                 749.27            692.50
Dividend per Share                      13.62                  12.71             11.81


THE FRANKLIN TEMPLETON GROUP


Franklin Resources Inc. is a diversified financial services company based in San Mateo, California,
USA. Through its operating subsidiaries it provides a wide range of investment products and services
to worldwide clients. Templeton International Inc., the sponsor of the Templeton Mutual Fund, is a
wholly owned subsidiary of Templeton Worldwide Inc., which in turn is a wholly owned subsidiary of
Franklin Resources Inc. The Franklin Templeton Group is one of the world‟s largest investment
management companies. Following are some of the key data relating to Franklin Templeton‟s Global
Operations.

1. Assets Under Management

  US$343.80 billion as at 30th April, 2004 (Rs.15,25,441/- crores approximately)

2. Number of Shareholder Accounts

  More than 10 million worldwide.

3. Number of Schemes Managed Globally

  About 240 Open End Mutual Funds, Separately Managed Accounts and Other Investment Vehicles.

                                                                                                 28
4. Global Offices

  There are offices all over the world in over 28 countries including The United States of America,
  Bahamas, Canada, Argentina, France, Germany, Italy, Luxembourg, Poland, Russia, United
  Kingdom, Hong Kong, Singapore, Korea, India, China, Australia & South Africa.

THE FRANKLIN TEMPLETON EDGE

The Franklin Templeton Group is one the world‟s largest investment management groups. Created
from the merger of Franklin Resources, Inc., Mutual Fund Series and Templeton Worldwide, Inc., this
group offers a wide range of investment products and services to worldwide clients. The group‟s equity
funds are largely driven by the following two philosophies.

First, the group manages a large number of global funds following the firm‟s well known „bottom-up
value investing‟ approach. One of the most prominent tenets of this approach is: “Never follow the
crowd. Superior performance is possible only if you invest differently from the crowd.” This is
reflected in Templeton‟s time tested strategy of buying bargains wherever they exist.

Second, the group manages a number of funds following a growth-oriented style of equity investing.
This includes funds like Franklin Growth Fund, Franklin Blue Chip Fund, and Franklin Dynatech Fund
(focused on technology stocks). These funds take a more top-down approach and may be focused on a
country, industry or sector. Funds following this approach essentially seek investment opportunities in
those companies that are geared towards growth or are experiencing a turn-around in their operations.

FRANKLIN TEMPLETON IN INDIA: A LONG TERM COMMITMENT

As part of Franklin Templeton‟s major thrust on investing in emerging markets around the world,
Franklin Templeton has been investing in India for the past several years. These investments are based
on original research and first hand understanding of the forces those influence the economic
environment. Franklin Templeton has established offices at more than 33 places in India including
Ahmedabad, Bangalore, Calcutta, Chennai, Hyderabad, Kochi, Lucknow, Mangalore, Mumbai, New
Delhi and Pune with the current total staff numbers at 220.

THE TRUSTEE

Franklin Templeton Trustee Services Private Limited (the “Trustee”), through its Board of Directors,
shall discharge its obligations to the Templeton Mutual Fund as the Trustee of the Mutual Fund. The
Trustee ensures that the transactions entered into by the AMC are in accordance with the SEBI
Regulations and reviews the activities carried on by the AMC on a quarterly basis. The Board of
Directors of Franklin Templeton Trustee Services Private Limited held seven meetings during the year
2003-2004.

In accordance with Regulation 18(15) of SEBI Regulations, the Trustees shall obtain the consent of the
unitholders -
    a) whenever required to do so by SEBI in the interest of the unitholders; or
    b) whenever required to so on the requisition made by three-fourths of the unitholders of any
       Scheme; or
    c) When the majority of the trustees decide to wind up or prematurely redeem the units.

In accordance with Regulation 18(15A) of SEBI Regulations, the trustees shall ensure that no change
in the fundamental attributes of any scheme or the trust or fees and expenses payable or any other

                                                                                                 29
change which would modify the scheme and affects the interest of unitholders, shall be carried out
unless, -
i     a written communication about the proposed change is sent to each unitholder and an
      advertisement is given in one English daily newspaper having nation wide circulation as well as a
      newspaper published in the language of the region where the head office of the mutual fund is
      situated; and
ii    the unitholders are given an option to exit at the prevailing Net Asset Value without any exit
      load.
 Explanation: In terms of SEBI Regulations and circular dated February 4, 1998, “Fundamental
Attributes” means and includes the following:

i.     Type of a Scheme
           An Open end Scheme
           Sectoral Fund-Equity Fund-Balance Fund-Income Fund-Index Fund-Fund of Funds, any
              other type of Fund.
ii.    Investment Objective
           Main Objective - Growth-Income-Both
           Investment pattern - The tentative Equity-Debt-Money Market portfolio break-up with
              minimum and maximum asset allocation, while retaining the option to alter the asset
              allocation for a Institutional period on defensive considerations.
iii.   Terms of Issue
           Liquidity provisions such as listing, repurchase, redemption
           Aggregate fees and expenses charged to the Scheme
           Any safety net or guarantee provided

The members of the Board of Directors of the Trustee (“the Board of the Trustee”) are: -

• Gregory E. McGowan*
Templeton Worldwide, Inc., 500 East Broward Boulevard, Suite 2100, Fort Lauderdale, FL - 33394,
U.S.A.

Gregory E. McGowan is Executive Vice President, Director and General Counsel for International
Development of Templeton Worldwide, Inc. Mr. McGowan serves on various Templeton Boards of
Directors and also serves as Executive Vice President and General Counsel of Templeton International
Inc., the Organisation responsible for the expansion and operation of Templeton business outside of
North America. Prior to joining the Templeton organisation in 1986, Mr. McGowan was a senior
attorney for the United States Securities and Exchange Commission. He holds a B.A. Degree in
Economics/International Affairs from the University of Pennsylvania, an M.A. Degree from the
University of Paris and a Juris Doctor from Georgetown University Law Centre.

Details of other Directorships are as under:

Name                                     Name
                                         Franklin Templeton Management Luxembourg
Franklin Templeton Investments (Asia) Ltd.
                                         SA
Templeton Worldwide, Inc.                Templeton Asian Direct Investments Ltd.
Templeton International, Inc.            Templeton Franklin Global Distributors Ltd.
Templeton Global Advisors Limited        Templeton Research & Management Venezuela,
                                         C.A.
Franklin Templeton Asset Management S.A. Franklin Templeton Services Ltd.

                                                                                                 30
Franklin Templeton International Services Franklin Templeton Italia SIM SpA
S.A.
Templeton Global Holdings Ltd.              Franklin Templeton France S.A.
Franklin Templeton Investments Australia Franklin Templeton Asset Management S.A.
Ltd.
Franklin Templeton Holding Limited          Happy Dragon Holdings Ltd.
Franklin Templeton Trustee Services Private Templeton Research Poland SP. z.o.o.
Ltd.
TRFI Investments Limited


• Anand J. Vashi, Chartered Accountant
Kalpataru Heritage, 5th Floor, 127 M G Road, Mumbai 400 023.

Anand Vashi is practicing Chartered Accountant and is Senior Partner of a firm of Chartered
Accountants and is a fellow member of the Institute of Chartered Accountants of India. He is also on
the board of various companies and is a trustee of several charitable trusts.

Details of other Directorships are as under:

Name                                               Details
A.J. Patel Investment & Trading Co. Pvt. Ltd.      Director
Lucid Technologies Pvt Ltd.                        Director
Millars India Ltd.                                 Director
Millars Mach Co. Pvt. Ltd.                         Director
Pedershaab Millars India Pvt Ltd.                  Director

• Percy Jal Pardiwalla, Advocate
  16, Vishnu Mahal, 'D' Road, Churchgate, Mumbai 400 020

• Bharat Doshi, Company Executive
  8, St. Helen's Court, Dr. Gopalrao Deshmukh Marg, Mumbai 400 026

Mr. Bharat Doshi is presently the Executive Director - Finance & Corporate Affairs and President -
Trade & Financial Services Sector of Mahindra & Mahindra Ltd. Mr. Doshi holds a Bachelor's Degree
in Commerce and Master's Degree in Law from Mumbai University, and is a Fellow Member of the
Institute of Chartered Accountants of India and the Institute of Company Secretaries of India. He has
also attended the Program for Management Development (PMD) at the Harvard Business School. Mr.
Doshi joined Mahindra & Mahindra in 1973 and has held various managerial positions over the past 27
years and was elevated to the Company's Board in 1992. Mr Doshi serves on the Boards of several
subsidiaries and associate companies in the Mahindra Group, including Ford India Ltd. and Mahindra
British Telecom Ltd. and is a member of the Board of Governors of The Mahindra United World
College of India and the Indian Institute of Management, Kozhikode.

Details of other Directorships are as under:

Name                                                 Details
Mahindra Intertrade Limited                          Director
Mahindra & Mahindra Financial services Limited       Director
Mahindra Steel Service Centre Limited                Director
Mahindra & Mahindra Limited                          Director

                                                                                               31
Mahindra Information Technology Services Limited      Director
Mahindra Consulting Limited                           Director
Mahindra Holdings & Finance Limited                   Director
Ford India Limited                                    Director
Mahindra British Telecom Limited                      Director
Godrej Consumer Product Limited                       Director
NSE.IT Limited                                        Director
Mahindra Consulting Inc.                              Director



• Stephen Dover*, International Chief Investment Officer, Franklin Templeton Advisors, 336, Royal
  Oaks, Vacaville, CA 95687, USA.

Stephen H. Dover, CFA, is responsible for overseeing the investment functions of the locally managed
and distributed products outside of the United States and Canada. Currently he is overseeing the
investment areas of Franklin Templeton‟s local asset management companies in: South Korea, Japan,
China, Taiwan, France, Italy, Hong Kong, Singapore, India, and Brazil. Mr. Dover is a member of the
Boards of Directors of Franklin Templeton‟s Italian asset management company, Indian Asset
Management Company, South African joint venture, and the Brazilian joint venture. Prior to serving in
his current role, Mr. Dover was a founder and Chief Investment Officer of Bradesco Templeton Asset
Management (BTAM), in San Paulo, Brazil. BTAM, a joint venture formed to serve the institutional
market in Brazil, was sold to Bradesco in May 2001. While there Mr. Dover specialized in the
management of Corporate Governance Funds. Prior to joining Franklin Templeton in 1997, Mr. Dover
was a portfolio manager and principle at Newell Associates in Palo Alto, CA. Newell Associates is a
subadvisor for the Vanguard Equity Income Fund well as other institutional assets. Previously, Mr.
Dover worked for Towers Perrin Consulting in New York, London and San Francisco. Prior to
graduate school, Mr. Dover was vice president of Financial Planning at Lefcourt Financial Group, a
Palo Alto, CA, based money management and venture capital firm. Mr. Dover earned a B.A. in
business administration from Lewis and Clark College in Portland, OR and a M.B.A in Finance from
The Wharton School of the University of Pennsylvania. He is a Chartered Financial Analyst (CFA) as
well as a Certified Financial Planner (CFP). Stephen has worked or studied in: China, Costa Rica,
England, Brazil and the United States.

Details of other Directorships are as under:

Name                                                  Details
Franklin Resources, San Mateo                         Managing Director

* These Directors represent sponsors of the Trustee Company and are associates of the sponsor.

RESPONSIBILITIES AND DUTIES OF THE TRUSTEE

(Substantial Provisions of the Trust Deed and the Regulations)

Pursuant to the Deed of Trust constituting the Mutual Fund and SEBI (MF) Regulations, the Trustee,
inter alia, has the following responsibilities and duties:

   a) The Trustee shall ensure before the launch of any scheme that the asset management company
      has:

      i)   systems in place for its back office, dealing room and accounting.
                                                                                                 32
  ii) appointed all key personnel including fund manager(s) for the scheme(s) and market, to the
       Trustee, within fifteen days of their appointment, submitted their bio-data, which shall
       contain the educational qualifications, past experience in the securities.
  iii) appointed auditors to audit the accounts.
  iv) appointed a compliance officer who shall be responsible for monitoring the compliance of
       the Act, rules and regulations, notifications, guidelines, instructions etc. issued by SEBI or
       the Central Government and for redressal of investor‟s grievances.
  v) appointed registrars and laid down parameters for their supervision.
  vi) prepared a compliance manual and designed internal control mechanisms including internal
       audit systems.
  vii) specified norms for empanelment of brokers and marketing agents.

b) The Trustee shall obtain consent of the unit holders of the Scheme(s):

   i) When the Trustee is required to do so by SEBI in the interests of the unitholders; or
   ii) Upon the request of three-fourths of the unit holders of any scheme(s) under the Mutual
        Fund; or
   iii) If a majority of the directors of the Trustee company decide to wind up the scheme(s) or
        prematurely redeem the units
c) In carrying out his / her responsibilities as a member of the Board of Trustee each Trustee shall
    maintain an arms' length relationship with other companies, or institutions or financial
    intermediaries or any body corporate with which he may be associated in any transaction also
    involving the Mutual Fund.
d) No Trustee shall participate in the meetings of the Board of Trustee when any decisions for
    investments in which he / she may be interested are taken.
e) All the Trustee shall furnish to the Board of Trustee, particulars of interest which he/she may
    have in any other company, or institution or financial intermediary or any corporate by virtue
    of his/her position as director, partner or with which he-she may be associated in any other
    capacity.
f) The Trustee shall have the right to obtain from the AMC such information as is considered
    necessary by the Trustee.
g) The Trustee shall ensure that the AMC has been diligent in empanelling brokers, in monitoring
    securities transactions with brokers and avoiding undue concentration of business with any
    broker.
h) The Trustee shall ensure that the AMC has not given any undue or unfair advantage to any
    associates or dealt with any of the associates of the AMC in any manner detrimental to the
    interest of unitholders.
i) The Trustee shall ensure that the transactions entered into by the AMC are in accordance with
    the SEBI Regulations and the Scheme.
j) The Trustee shall ensure that the AMC has been managing the Scheme independently of other
    activities and have taken adequate steps to ensure that the interest of the Scheme are not being
    compromised with those of any other Scheme or of other activities of the AMC.
k) The Trustee shall ensure that all the activities of the AMC are in accordance with the
    provisions of SEBI Regulations.
l) Where the Trustee have reason to believe that the conduct of business of the Mutual Fund is
    not in accordance with SEBI Regulations, they shall forthwith take remedial steps as are
    considered necessary by them and shall inform the SEBI of the violation and the action taken
    by them.
m) Each Trustee shall file the details of his/her transactions in securities on a quarterly basis with
    the trust.

                                                                                                33
      n) The Trustee shall be accountable for, and be the custodian of, the funds and property of the
         Scheme and shall hold the same in trust for the benefit of the unitholders in accordance with
         SEBI Regulations and the provisions of the trust deed.
      o) The Trustee shall take steps to ensure that the transactions of the Mutual Fund are in
         accordance with the trust deed.
      p) The Trustee shall be responsible for the calculation of any income due to be paid to the Mutual
         Fund and also of any income received in the Mutual Fund for the holders of the units of the
         Scheme in accordance with the SEBI Regulations and the trust deed.
      q) The Trustee shall call for the transactions in securities of the key personnel of the AMC in his
         own name or on behalf of the AMC and shall report to SEBI as and when required.
      r) The Trustee shall review, on a quarterly basis, all transactions carried out between the Mutual
         Fund, AMC and its associates.
      s) The Trustee shall review the net worth of the AMC on a quarterly basis and in case of any
         shortfall, ensure that the AMC make up for the shortfall as per clause (f) of sub-regulation (1)
         of regulation 21 of the SEBI Regulations.
      t) The Trustee shall periodically review all service contracts such as custody arrangements,
         transfer agency and satisfy itself that such contracts are executed in the interest of the
         unitholders.
      u) The Trustee shall ensure that there is no conflict of interest between the manner of deployment
         of its net worth by the AMC and the interests of the unitholders.
      v) The Trustee shall periodically review the investor complaints received and the redressal of the
         same by the AMC.
      w) The Trust Deed can be amended only with the prior approval of SEBI and Unitholders, where
         it affects the interests of the unitholders.

Modifications, if any, in the rights and/or obligations and duties of the Trustee are on account of
amendments to the Regulations and the Regulations supersede/override the provisions of the Trust
Deed, wherever the two are in conflict.

Trustee shall exercise due diligence as under:


A.         General Due Diligence:

      i)        The Trustee shall be discerning in the appointment of the directors on the Board of the asset
                management company.
      ii)       Trustee shall review the desirability of continuance of the asset management company if
                substantial irregularities are observed in any of the schemes and shall not allow the asset
                management company to float new scheme.
      iii)      The trustee shall ensure that the trust property is properly protected, held and administered
                by proper persons and by proper number of such persons.
      iv)       The trustee shall ensure that all service providers are holding appropriate registrations from
                the Board of concerned regulatory authority.
      v)        The Trustee shall arrange for test checks of service contracts.
      vi)       Trustee shall immediately report to Board of any special developments in the Mutual Fund.

B.         Specific Due Diligence:

     i)        Obtain internal audit reports at regular intervals from independent auditors appointed by the
               Trustee.
     ii)       Obtain compliance certificates at regular intervals from the asset management company.
     iii)      Hold meeting of Trustee more frequently.
                                                                                                        34
  iv)      Consider the reports of the independent auditor and compliance reports of Asset
           Management Company at the meetings of Trustee for appropriate action.
  v)       Maintain records of the decisions of the Trustee at their meetings and of the minutes of the
           meetings.
  vi)      Prescribe and adhere to a code of ethics by the Trustee, Asset Management Company and its
           personnel.
  vii)     Communicate in writing to the asset management company of the deficiencies and checking
           on the rectification of deficiencies.

The Trustee shall not be held liable for acts done in good faith if they have exercised adequate due
diligence honestly.

The independent directors of the Trustee or asset management company shall pay specific attention to
the following, as may be applicable, namely:

   i)      the Investment Management Agreement and the compensation paid under the agreement.
   ii)     service contracts with affiliates – whether the asset management company has charged
           higher fees than outside contractors for the same services.
   iii)    selection of the asset management company‟s independent directors.
   iv)     securities transactions involving affiliates to the extent such transactions are permitted.
   v)      selecting and nominating individuals to fill independent directors vacancies.
   vi)     code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices
           by insiders in connection with personal securities transactions.
   vii)    the reasonableness of fees paid to sponsors, asset management company and any others for
           services provided.
   viii)   principal underwriting contracts and their renewals.
   ix)     any service contract with the associates of the asset management company.

Pursuant to the Deed of Trust constituting the Mutual Fund, the Mutual Fund is authorized 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 of 0.01% (or at such other percentage as may be
agreed upon) of the daily average asset value of the Fund.

Mr. McGowan and Mr. Stephen Dover, however, will not receive any fees to act as Directors of the
Trustee.

The Trustee has appointed Franklin Templeton Asset Management (India) Private Ltd. as the
Investment Manager and the Investment Manager has appointed Deutsche Bank, Mumbai as the
Custodians.

RIGHTS OF UNITHOLDERS

1) Unitholders under the Scheme have a proportionate right in the beneficial ownership of the assets
   of and to the dividend declared, if any, by the scheme under the Fund.
2) The Unitholders shall have right to ask the Trustee about any information, which may have an
   adverse bearing on their investments, and the Trustee shall be bound to disclose such information
   to the Unitholders.
3) In case the Mutual Fund declares a dividend under the Scheme, the Unitholders are entitled to
   receive dividend warrants within 30 days of the date of declaration of the dividend and in case of
   redemptions, unitholders are entitled to receive redemption proceeds within 10 working days
   subject to certain limitations as described under “Right to Limit Redemptions”.

                                                                                                 35
4) The appointment of an AMC for the Fund may, with the prior approval of SEBI, be terminated by
   75% of the Unitholders or by a majority of the Board of Directors of the Trustee.
5) Unitholders have the right to inspect all the documents listed under the heading “Documents
   Available for Inspection”.


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.

INVESTMENT MANAGER

Franklin 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 400 021. Franklin Templeton Asset
Management (India) Private Ltd. has been appointed as the Asset Management Company of the
Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated January 5, 1996,
executed between Franklin Templeton Trustee Services Pvt. Ltd and Franklin Templeton Asset
Management (India) Pvt. Ltd. Out of the Investment Manager‟s total equity paid-up capital of
Rs.59.33 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. The Investment Manager was approved
by SEBI to act as the AMC for the Mutual Fund vide their letter No.IIMARP/406/96 dated February
19, 1996.

As per SEBI Regulations currently in force, the Investment Manager is entitled to charge a
Management Fee of 0.25 % within the overall fees of 0.75% of the daily / weekly average NAV, for
the services rendered by it to the Scheme.

DUTIES AND OBLIGATIONS OF THE INVESTMENT MANAGER

Under the IMA, the Investment Manager has, inter alia, the following duties and obligations:
           a) To manage the acquisition, holding and disposal of the assets of the Mutual Fund and
              the various schemes framed thereunder in accordance with the investment objectives,
              policies and restrictions set out in each Scheme‟s offer document and with the SEBI
              Regulations.
           b) To act as the Investment Manager of the Mutual Fund with respect to the investment
              and reinvestment of the cash, securities and other properties comprising the assets of
              each Scheme organized under the Mutual Fund with full discretionary authority in
              accordance with the investment policies set forth in the Deed of Trust and by the SEBI
              Regulations from time to time.
           c) To provide the Trustee or any party designated by the Trustee with: -
               evaluation of current economic conditions;
               evaluation of particular prospects in the securities markets;
               investment research and advice for the assets of the Mutual Fund consistent with the
                  provisions of the Deed of Trust and the investment policies and guidelines adopted
                  and declared by the Trustee; and

                                                                                                   36
                 any other activities as may be directed by the Trustee.
           d)   To assume day to day investment management of the Mutual Fund and, in that capacity,
                make investment decisions and manage the Mutual Fund in accordance with the
                Scheme Objectives, the Deed of Trust and provisions of the SEBI Regulations.
           e)   To ensure that the delivery of scrips purchased is taken and that delivery is given in the
                case of scrips sold and that the Mutual Fund in no case engages in short selling or carry-
                forward transactions or badla finance.
           f)   To ensure that no Offer Document of a Scheme, Key Information Memorandum,
                abridged half yearly results and annual results is issued or published without the prior
                approval of the Trustee.
           g)   To report all investments to the Trustee and the Custodian of the Mutual Fund.
           h)   To hold all assets of the Mutual Fund separate from its own assets, free and clear of all
                liens, claims and encumbrances of any party, except as provided in the IMA and
                segregate the assets under its management, Scheme-wise.
           i)   To submit such quarterly reports to the Trustee regarding the Investment Manager‟s
                activities as specified in the IMA as the Trustee or SEBI may prescribe from time to
                time.
           j)   To maintain books and registers about the operation of various schemes of the Mutual
                Fund under its management to ensure compliance with the SEBI Regulations, and
                demonstrate that such compliance by it has been achieved.
           k)   To report market prices of the securities in which the Mutual Fund‟s assets are invested
                to the Trustee and Custodian(s) of the Mutual Fund, as required for the purpose of
                determining the NAV of the Mutual Fund.
           l)   To disclose the basis of calculating the re-purchase price and NAV of the various
                schemes in the Scheme particulars and to disclose the same to investors at such
                intervals as may be specified by the Trustee and SEBI.
           m)   To obtain from the Custodian(s) of the Mutual Fund, from time to time, such financial
                reports, proxy statements and other information relating to the business and affairs of
                the Mutual Fund as the Investment Manager may reasonably require in order to
                discharge its duties and obligations as specified in the IMA, or to comply with the SEBI
                Regulations, or any applicable law, rules and regulations.

Modifications, if any, in the rights and/or obligations and duties of the Investment Manager are on
account of amendments to the Regulations and the Regulations supercede/override the provisions of
the IMA, wherever the two are in conflict.

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.INP000000464 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.

BOARD OF DIRECTORS

The Board of Directors of the Investment Manager is: -

Gregory E Johnson* (Chairman of Board of Director of Franklin Templeton Asset Management
(India) Pvt. Ltd.
Franklin Resources Inc. 920 Park Place, 4th Floor, San Mateo, CA 94403, U.S.A.
                                                                                                    37
Mr. Gregory Johnson is a president of Franklin Templeton USA, a member of the office of the
President of Franklin Resources, Inc., chairman of Franklin Templeton Distributors, Inc., President of
Templeton/Franklin Investment Services, Inc., and Vice President of Franklin Advisers, Inc. Mr.
Johnson is responsible for the retail, institutional, private client, and strategic alliance businesses as
well as domestic shareholder services and human resources. Mr. Johnson joined Franklin in 1986,
after working as a senior accountant for Coopers & Lybrad. Mr. Johnson received his Bachelor of
Science degree in accounting and business administration in 1983 from Washington and Lee
University and his Certified Public Accountant certificate in 1985. He is the past vice-chairman of the
Mutual Fund Forum, is past chairman of the Western district of the Securities Industry Association and
is a past president of the San Francisco Bond Club. He is also a board member of Command Audio
Corporation.

• Vijay C. Advani (Alternate Director to Mr. Gregory E. Johnson) *
484 Walsh Road, Atherton, CA 94027

Mr. Vijay C. Advani is the Alternate Director for Mr. Gregory E. Johnson. Mr. Advani is currently
Executive Managing Director, International Retail Development, Franklin Templeton Investments. He
joined the Templeton organisation in 1995 and was responsible for developing Templeton's activities
in India. Prior to joining the Templeton organisation, Mr. Advani was employed by the International
Finance Corporation (IFC), the private sector arm of the World Bank Group, where his primary
responsibility was in providing advisory and technical assistance to government authorities on the
development of securities and financial markets, structuring, establishing and financing specialized
financial institutions; and mobilizing equity, quasi-equity and debt financing. During his ten-year
career with the IFC, Mr. Advani worked on several emerging economies in the former Soviet Union,
Asia, Middle East and Africa. Mr. Advani received an MBA from the University of Massachusetts,
Amherst, where he graduated as a Foreign Student Scholar and received a Bachelor's Degree in
Accounting and Finance from the University of Mumbai, India.

• Dr. J. Mark Mobius *
Block 11, Waterside Apartments, No. 06-02 Tanjong Rhu Road, Singapore.

J.B. Mark Mobius, born in 1936, joined Templeton in 1987 and is Managing Director of Registrant.
He is also a Director and Executive Vice President of Templeton Global Advisors Limited and an
officer or Director of various Templeton investment companies. Prior to joining Templeton, he was
the President of International Investment Trust, Taiwan (1/85-2/87); Director of Research for Vickers
da Costa, Hong Kong / Taiwan (2/80-1/85) and President of Mobius Consultants (6/69-2/80). He
holds a BA in Fine Arts, an MBA in Mass Communications from Boston University and a Ph.D. in
Economics from Massachusetts Institute of Technology. He also studied at the University of
Wisconsin, University of New Mexico, and Kyoto University in Japan.

• Rajan Raheja *
"Rahejas", 87/1, Gangadhar Baskar Marg, Juhu, Mumbai 400 049.

Mr. Raheja is a renowned businessman, who has been involved in the construction business for the
past 30 years. The Raheja group is diversified into other business areas that include cement,
petrochemicals, hotels, automotive batteries, ceramic tiles and cable TV network.

• Deepak Satwalekar
9, Nutan Alka Co-op. Hsg. Society Ltd. Relief Road, Santacruz (West), Mumbai – 400 054.

Mr. Satwalekar obtained a Bachelors Degree in Technology with a Major in Mechanical Engineering
from the Indian Institute Technology, Mumbai. He has completed a Masters Degree in Business

                                                                                                    38
Administration from the American University, Washington D. C. and has worked in the Operations
Department of a major U.S. headquartered multinational bank. Mr. Satwalekar is currently, the
Managing Director and CEO of HDFC Standard Life Insurance Co. Ltd. Until recently, he was the
Managing Director of Housing Development Finance Corporation Ltd. He has been a consultant to the
World Bank, the United States Agency for International Development (USAID) and the United
Nations Centre for Human Settlements (HABITAT). Mr. Satwalekar is actively involved in various
committees of the Bombay Chamber of Commerce & Industries as well as the Confederation of Indian
Industries. Recipient of the “Distinguished Alumnus Award” from IIT, Mumbai. He is also a Director
on the boards of several Companies.

• P. Vaidyanathan

7 AB, 3rd Block, 7th Floor, Kences Enclave, No. 1 Ramakrishna Street, T. Nagar, Chennai 600 017.

Mr. Vaidyanathan, B. Com., FCA, AICWA, ACS, started his career as a practising Chartered
Accountant in his family Chartered Accountancy firm. After a few years of practice, he chose to enter
into the line of investment consultancy. He took up marketing and distribution of financial products
and promoted the concept to various investors and companies. Today, this has grown into a venture
now known as “Integrated Enterprises (India) Ltd.” which is acting as a Total Financial Service
Provider for investors who constitute the bottom end of the income pyramid.

   Narvoz Seervai,
    8, Shiv Shanti Bhavan, M. Karve Marg, Mumbai 400 020.

Mr. Navroz H. Seervai is a leading Advocate in Mumbai. He is actively involved in public interest
litigation in the field of Environmental Law and Civil Liberties and Human Rights. He started practice
in the Bombay High Court in the Chambers of R. J. Joshi and A. M. Setalvad, specialised in
Constitutional and Administrative Law, Company and Corporate Law, and Environmental Law.

He completed his B.A. (Hons) from Elphinstone College in 1977 and earned his Law degree from the
Government Law College, Mumbai in 1981. While studying law, Navroz won many awards - the
Kinloch Forbes Gold Medal for Jurisprudence & the Telang Memorial Gold Medal. Navroz also
dedicates a lot of his time and energy to various social activities. He is a member of the Peoples‟
Union for Civil Liberties & the Bombay Environmental Action Group since 1981.

* These Directors are associated with the sponsor or its associates.

Compliance Officer:

Pranita Gramopadhye
Compliance Officer
1st Floor, Sakhar Bhavan,
230 Backbay Reclamation,
Nariman Point, Mumbai 400 021 India.




                                                                                                39
INFORMATION ON KEY PERSONNEL:

                   Age
Name                         Qualifications   Functions & Experience
                   (years)
Rajiv Vij          36        B. Tech. (IIT-   Managing Director, Asia (based at Mumbai)
Total Experience             Delhi), PGDM     Responsible for growing the firm‟s retail businesses in
14 years                     (IIM-Calcutta)   India, Singapore, Hong Kong and South Korea. Franklin
                                              Templeton Asia offices currently have assets of over US$
                                              6.5 billion.
                                               Regional Head, India & Middle East (2001-2002)
                                               Country Head and Chief Executive Officer of the India
                                                  office (1999-2001)
                                               Vice President for Sales and Marketing (1995-1999), a
                                                  member of the key start-up team.
                                               He joined Franklin Templeton from Hindustan Lever
                                                  Limited where he worked across the sales and marketing
                                                  functions for 6 years
                                               He is a Member of the SEBI Mutual Fund Advisory
                                                 Committee and on Board of Association of Mutual
                                                 Funds in India (AMFI).
Ravi Mehrotra      42        B.Com,           President – Franklin Templeton Asset Management
Total Experience             PGDBM            (India) Pvt. Ltd. (based at Mumbai)
18 years                     (XLRI,           Responsible for Sales, Marketing, Investment management,
                             Jamshedpur)      Portfolio risk management, Human Resources and
                                              Corporate Accounting functions of the business.
                                               Senior Vice President and Chief Investment officer-
                                                   Pioneer ITI AMC Ltd. (1993-2002). He managed
                                                   Taxshield 95, Taxshield 98, Taxshield 99 and Taxshield
                                                   (open end)
                                               Executive Vice President, Prime Securities (1991-1993)
                                               AVP, Bank of America- Investment Banking and
                                                   Treasury Group (1985-1991).
Sanjay Sapre       34        M.B.A (USA)      Head TA Operations & Customer Service - India (based
Total Experience                              at Mumbai)
10 years                                      Responsible for the company‟s Transfer Agency Operations
                                              and Customer Service functions in India (2003 to date).
                                              Franklin Templeton International Services (India) Pvt. Ltd.
                                              (2002 – 2003) Manager, Global Enterprise Consulting
                                              (Asia) (2002-2003), Franklin Templeton Asset Management
                                              (India) Pvt. Ltd (2001 – 2002) eBusiness Manager (Asia).
                                              Prior Assignments:
                                                Various Management positions at Thomas Cook (India)
                                                 Limited (1997 – 2001) including responsibilities in the
                                                 areas of Technology, Marketing support, Special projects
                                                 and Vendor Management          Operations Manager with
                                                 Pinnacle Data Systems, Inc. in the USA (1993 – 1995)
                                                 handling the purchase and operations functions of the
                                                 company.
                                                Purchasing Manager / Director with Henkel Chemicals
                                                 (India) Limited (1990 – 1992).




                                                                                                    40
                   Age
Name                         Qualifications   Functions & Experience
                   (years)
Vivek Pai          32        B. Com, ACA      Vice President - FA Operations and Compliance (based
Total Experience                              in Mumbai)
9 years                                       Having joined Templeton in 2000, his role largely involves
                                              general management of several functions within the
                                              operations department such as Fund Accounting, Custody
                                              and Cash Management. He also oversees Legal Affairs.
                                                Prior to this he was the Compliance Officer and was
                                                 responsible to Trustees for Compliance and Internal Audit
                                                 of the Mutual Fund. (2000-2003).
                                                He was acting as a Consultant for setting up back office
                                                 operations for a new company.
                                                Birla Sun Life Asset management Company Limited from
                                                 (1996-2000) as Head of Fund Accounting.
                                                Apollo Finvest (India) Ltd as Asst. Manager, Corporate
                                                 Finance handling Lease & HP financing (1994-1996).
Pranita           31         B. Com, ACA      Compliance Officer (based at Mumbai)
Gramopadhye                                   Franklin Templeton Trustee Services Private Ltd.
Total Experience:                               Having joined Templeton in July 2000, she is responsible
7 years                                          to Trustees for Compliance and Internal Audit of the
                                                 Mutual Fund. She is also responsible for compliance of
                                                 Portfolio Management Services.
                                                Franklin Templeton Asset Management (India) Pvt. Ltd.
                                                 (2001-2003), Manager Compliance and was handling
                                                 compliance of mutual fund regulations and other
                                                 applicable laws.
                                                Prior to this she was managing back office cash
                                                 operations and custody services (2000-2001).
                                                Reliance     Industries     Ltd.   (1997-2000)-Manager,
                                                 Management Information, Business Analysis and Cost
                                                 Control.
                                                P.C Hansotia & Associates (affiliated to Deloitte Haskins
                                                 & Sells) (1996 -1997)-Manager, Auditing of corporate
                                                 clients.
Franklin Equity Team
R. Sukumar         39        B.E (Univ. of    Chief Investment Officer – Franklin Equity Funds
Total Experience             Roorkee);        (based at Chennai)
15 years                     PGDM (IIM        Manages FIT, FIGF, FIF, FPF, FIPP, TIPP – Equity
                             Bangalore)       He is also a co-fund manager for FIBF, FTIBF, TMIP,
                                              FTIMIP, TICAP, FIT95, FIT 96, FIT97, FIT98 & FIT 99
                                               Vice President and Fund Manager - Pioneer ITI AMC
                                                 Ltd. (1994-2002)
                                               Asst. Vice President - Indbank Merchant Banking
                                                 Services Ltd. (1990-1994) advising Indian Opportunities
                                                 Fund
                                               Decision Support Systems Group, Tata Steel (1986 –
                                                 1988)
K.N. Siva          41        BE (REC          Senior Vice President and Portfolio Manager – Equity –
Subramanian                  Jaipur); PGDM    Based at Chennai
Total Experience             (IIM Calcutta)   Manages FTIAAF - Equity, FIBCF, FFF, FIPF, FIVF, FIOF
15 years                                        Vice President and Fund Manager – Pioneer ITI AMC
                                                 Ltd. (1993 – 2002)
                                                Industrial Finance Officer, Industrial Development Bank
                                                 of India (1988 – 1993)


                                                                                                     41
                   Age
Name                         Qualifications   Functions & Experience
                   (years)
S. Chellappa       44        MBA, (Madras     Assistant Vice President and Senior Research
Total Experience             Univ.),          Analyst (based at Chennai) - Provides Research
22 years                     Diploma in       support on Software, Cement, Metals, Banking
                             Computer         Sectors
                             Applications     He is a co-fund manager for FIBF, FTIBF, TMIP,
                             (NITIE)          FTIMIP & TICAP
                                               Asst. Vice President– Pioneer ITI AMC Ltd.
                                                 (1994- 2002)
                                               Industrial Finance Corporation of India Ltd.
                                                 (1986-1994)
                                               Kothari Industrial Corporation Ltd (1981 – 1986)
Anil Prabhudas     42        CA               Assistant Vice President and Senior Research
Total Experience                              Analyst (based at Chennai)
17 years                                      Manages FIIF, FTIIF, FITF & FTIPERF,
                                               Asst. Vice President – Investments – Pioneer ITI
                                                  AMC Ltd. (Since 1993)
                                               Petrosil Oil Co. Ltd.
                                               L. U. Krishnan & Co.
                                              Provides Research support on Oil & Gas,
                                              Petrochemicals, Engineering, Power and Hotel
                                              sectors.
B Sashikanth       36        B. Com., C.A.    Assistant Vice President and Senior Research
Total Experience                              Analyst (based at Chennai)
12 years                                      Responsible for Research coverage of Pharma, Auto,
                                              Media and Power sectors.
                                              He is a co-fund manager for FIT95, FIT96, FIT97,
                                              FIT98 & FIT99
                                               1991-1993, SBI Mutual Fund – Investment
                                                 Analyst.
                                               1993-1996, ITC Peregrine / Peregrine Capital India
                                                 – Research Analyst for Basic Industries
                                                 (Designation: General Manager)
                                               1997-1999, Socgen Crosby Securities, Research of
                                                 Basic Industries including Cement, Metals, Capital
                                                 goods (Designation Vice President)
                                               2000-2003, ABN Amro Asia Equities, Research of
                                                 Basic Industries including, Oil & Gas, Capital
                                                 Goods, Power Utilities, Metals (Designation:
                                                 Assistant Director)
Satish             38        B. Tech., MBA    Vice President / Portfolio Manager / Research
Ramanathan                                    Analyst (based at Chennai)
Total Experience                              Responsible for analyzing some of the key sectors
10 years                                      including auto and will also be co-portfolio manager
                                              of Franklin India Prima Fund (FIPF).
                                               1993-1995, Asst. Manager – ICRA Limited.
                                               1995-1996, Birla Marlin and Daewoo Securities
                                               1997-2000, Senior Analyst – Sundaram Mutual
                                                   Fund
                                               2000-2004, Vice President – ICICI Securities
                                                                                              42
Templeton Equity Team
Chetan Sehgal        34   B.E. (Mech),      Director – Research India and is part of the team
Total Experience          PGDBA (IIM-       managing TIGF, based at Mumbai
12 years                  Bangalore),        He joined Templeton in 1995 as Investment
                          CFA                  Analyst with the emerging markets group and is
                                               currently a Portfolio Manager.
                                             As a Portfolio Manager and Analyst, Chetan
                                               analyses stocks across a wide gamut of sectors,
                                               industries and geographies within the emerging
                                               markets group which invests in about 40 countries
                                               under the direct supervision of Dr. Mark Mobius.
                                             Before joining Templeton, he had a 3-year stint at
                                               CRISIL, India‟s largest rating agency currently
                                               affiliated with Standard & Poor. He has experience
                                               in rating corporate securities across various
                                               industries and was also involved in structuring debt
                                               instruments including securitisation assignments.
Rakesh Parekh       39    MBA-Finance       Investment Analyst with the Emerging Markets
Total Experience          from              Group, under Dr. Mark Mobius. Based at Mumbai
17 years                  University of     He identifies and evaluates investment opportunities
                          Stirling (UK),    for the global funds as well as TIGF, and looks after
                          Associate of      Israel and India markets. He joined Templeton in Nov
                          Chartered         1999.
                          Insurance          Worked with B & K Securities India as a Senior
                          Institute (UK),       Analyst from (1998-1999) focusing mainly on the
                          Business              pharmaceutical and auto sectors.
                          Administration     Caspian Securities as a Senior Analyst (1996-
                          with Honours          1998) again covering the pharmaceutical and auto
                          from                  sectors.
                          University of      Oppenhiemer India as an Investment Analyst from
                          Dundee (UK).          (1993-1996)
                                             Rakesh Parekh has been involved in various roles
                                                primarily as an insurance underwriter with
                                                General Accident Plc and Commercial Union Plc
                                                in the UK (1986-1992).




                                                                                              43
Fixed Income/Debt Team
Sameer Kulkarni      34     BE (Mech),      Head of Fixed Income, Based at Mumbai
Total Experience            Asst. Vice      Joined Templeton in February 2002. He is responsible
10 years                    President -     for Government Securities Portfolio across all the
                            Fixed Income    funds. Sameer also manages the Swap and other
                                            derivative products exposure across all the funds.
                                            He also supports the group in managing the Liquidity
                                            Risk and Interest Rate Risk of all the portfolios.
                                            Schemes managed: TFIF-ST, TILF, TITMA,
                                            TIMMA, TISTIP, FISIP, TILP, FTLF, FINTF, TIIF,
                                            TGSF, FTIGF and Government Securities portfolio of
                                            other schemes.
                                             Head of Money Markets and Investments in
                                                IndusInd Bank) (1997-2002).
                                             Chescor Ltd. in London, building models for
                                                index funds (1995-1996).
                                             Mukesh Babu Securities Ltd. as Senior Dealer
                                                (1994-1995).
                                             National Stock Exchange as a member of the key
                                                start-up team responsible for setting up the
                                                exchange (1994).
                                             Executive Assistant to the Head of International
                                                Sales Group in Larsen & Toubro (1993-1994).
Rahul Goswami       31      B.Sc.           Asst. Vice President – Fixed Income - Based at
Total Experience            (Mathematics)   Mumbai
8 years                     M.B.A           Schemes managed: TIIBA, FIMF, TIGIP, TFIF-LT,
                            (Finance)       Debt portions of FIBF, FTIBF, TMIP, FTIAAF,
                                            TICAP, TIPP, TIIF and FTIMIP.
                                             UTI Bank Limited, Mumbai - Fund Management.
                                                Part of the Team Managing SLR & Non-SLR
                                                Investment and Trading Portfolio of the Bank (Jan
                                                2000 - October 2002).
                                             SMIFS Securities Limited, Mumbai Senior Dealer
                                                (Debt Placement) (Jun 1998 - Dec 1999)
                                             Khandwala Finances Limited, Mumbai Senior
                                                Dealer (Debt Placement) (Oct 1997 - May 1998)
                                             RR Financial Consultants Limited, Mumbai
                                                Manager (Debt Placement) (Dec 1995 - Oct 1997)
S Rajagopalan       38      Bsc (Maths)
                                            Senior Manager- Transfer Agency and Customer
Total Experience
                                            Services (based in Chennai)
16 years
                                             Oversees the operations and customer services of
                                              the company.
                                             From 1999- 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 1993-1999-MCS Ltd. Mumbai.
                                             Handling close ended Mutual Fund schemes and
                                              investor services. Maintaining relationship with
                                              client     and     co-ordinating     with    internal
                                              auditors/distributors etc.

Fund Manager: Mr. Sukumar Rajah



                                                                                              44
PROCEDURE FOR INVESTING

The main aim of the investment process is to meet Fund specific investment objectives and to develop
a well-diversified, high credit portfolio that minimises liquidity risk and credit risk. The Investment
committee comprising of International CIO, CIO and Portfolio Managers meets every month for a
review of performance and risk reports. The performance review includes portfolio holding, peer
group review, policy deviation, performance vis-à-vis peers and benchmark indices etc. The
Investment team comprising of CIO and Portfolio Managers meets every day to discuss market
movement and analyse events and news. Trading strategy and asset allocations are firmed in the daily
meetings. Daily meetings are formal in nature and form the basis for maintaining investment records
as per SEBI regulations. There is a weekly call with the international CIO for market update, asset
allocation and interaction for global information. The CIO makes presentations to the Board of the
AMC and the Trustees periodically, indicating the performance of the scheme(s). The Investment
process is intensely research oriented. It comprises of qualitative as well as quantitative measures. It is
approved by the Boards of the AMC and the Trustee Company and forms the basis for approach to the
Investment management process. It has critical insights from the rich experience gathered by Franklin
Templeton Investments over 50 years across various markets and asset classes.

CUSTODIAN

Deutsche Bank 422, Dr. D.N. Road, Fort, Mumbai 400 001 has been appointed the custodian (the
“Custodian”). The approval for appointing Deutsche Bank as Custodian has been granted by SEBI
vide their letter No.IN/CUS/003 dated March 20, 1998.

The Custodian will keep in safe custody all the securities and other such instruments belonging to the
Fund, ensure smooth inflow-outflow of securities and such other instruments as and when necessary in
the best interest of the investors, and ensure that the benefits due to the holdings are recovered. The
Custodian will charge the Fund a fee as per the custodial service agreement. The Trustee has the right
to change the Custodian, if it deems.

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 sub-clause 15 of Regulation 25 of SEBI (Mutual Funds) Regulations, 1996.

AUDITORS

S.R. Batliboi & Co. 18th Floor, Express Towers, Nariman Point, Mumbai 400 021, 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 performed any services in connection with this Offer Document.

INVESTOR RELATION OFFICER

S. Rajagopalan, Sr. Manager, Transfer Agency and Customer Service, Century Centre, 75, T.T.K
Road, Alwarpet, Chennai 600 018.

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.


                                                                                                    45
09. INVESTMENT OBJECTIVES AND POLICIES


Investment Objective

The investment objective of Prima Plus is to provide growth of capital plus regular dividend through a
diversified portfolio of equities, fixed income securities and money market instruments.

The investment policies of the scheme shall be as per SEBI (Mutual Funds) Regulations, 1996, and
within the following guidelines in conformity with Investment Management Agreement and Trust
Deed:

Under normal market circumstances, the investment range would be as follows:

Asset Allocation:

                Instruments                         Risk Profile                 %
Equities                                         Medium to High          At least 40%
Debt                                             Low to Medium           Upto 40%
Money Market Instruments                         Low                     Upto 20%

       The fund managers will follow an active investment strategy taking defensive/aggressive
        postures depending on opportunities available at various points in time.
       The asset allocation pattern described above may alter from time to time on a short term basis
        on defensive considerations, keeping in view market conditions, market opportunities,
        applicable regulations and political and economic factors. However, if the asset allocation
        pattern is to be altered for other reasons, as this is a fundamental attribute, the procedure
        outlined in the paragraph on fundamental attributes below, shall be followed.

INVESTMENT RESTRICTIONS

In pursuance of the Regulations, the following restrictions are currently applicable to the
scheme:

   Investment in securities from the scheme‟s corpus would be only in transferable securities in
    accordance with Regulation 43 of Chapter VI of SEBI [Mutual Funds] Regulations, 1996.
   The scheme shall buy and sell securities on the basis of deliveries and shall in all cases of
    purchases, take delivery of relative securities and in all cases of sale, deliver the securities and shall
    in no case put itself in a position whereby it has to make short sale or carry forward transaction or
    engage in badla finance.
   Franklin India Prima Plus may invest in any other scheme with similar investment objectives
    without charging any fees, provided that aggregate interscheme investment made by all schemes
    under the management of Franklin Templeton Asset Management (India) Private Limited or in
    schemes under the management of any other AMC shall not exceed 5% of the net asset value of the
    mutual fund.
   The scheme may invest in State/Central Government Securities which are supported by the
    State/Central Government upto the extent of its debt/money market allocation.
   The scheme may invest upto 40% of its corpus in securitised debt.
   Templeton Mutual Fund, under all its schemes shall not own more than 10% of any company‟s
    voting rights.

                                                                                                       46
   No term loans for any purpose will be advanced by the scheme.
   The 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. Such investment
    limit may be extended to 20% of the NAV with prior approval of the Trustee or the Board of the
    AMC, provided that such limit shall not be applicable for investment in government securities and
    money market instruments.
   The 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 investment shall be made with the prior approval of the Trustee and the Board of
    the AMC.
    Further, investment within such limit can be made in mortgage backed securitized debt which are
    rated not below investment grade.
   Transfers of investments from one Templeton Mutual Fund scheme to another will be done as
    follows:
            - such transfers will be done at the prevailing market price for quoted instruments on spot
                basis.
            - the securities so transferred shall be in conformity with the investment objective of the
                scheme to which such transfer has been made.

   The scheme has identified “S&P CNX 500” as the benchmark.

    The AMC / Trustee reserve the right to change / modify the index after giving an advance notice of
    15 days through an addendum. The addendum will be published in the website/ offices of AMC
    and the offices of the distributors / agents.
   No investment shall be made in any unlisted security of an associate or group company of the
    sponsor; any security issued by way of private placement by an associate or group company of the
    sponsor and that investment in listed securities of group companies of the sponsor shall not exceed
    1% of the net assets of all the schemes of the fund.
   The scheme can invest a maximum of 5% of the net assets in unlisted equity and equity related
    instruments. The exit route in such cases is usually through an offer to the public at a later date.
    The scheme shall not invest more than 10% of its net assets in the equity or equity related
    instruments of any company.
   Pending deployment of funds in securities in terms of investment objectives of the scheme is to
    invest the funds in short term deposits of scheduled commercial banks.
   The scheme may invest in ADRs/GDRs of Indian companies listed on overseas stock exchanges.
    Investments in ADRs/GDRs shall be made to the extent and in the manner approved by RBI/SEBI.
    The scheme will employ necessary measures to manage foreign exchange movements arising out
    of such investments. Service of custodian and other intermediaries/advisors of international repute
    will be used for safe custody, advise settlement and reporting of trades done in overseas stock
    exchanges.
   The scheme may consider investment in other financial market investments as per guidelines
    issued by the Central Government/RBI/SEBI from time to time.

The AMC/Trustee may alter these investment restrictions from time to time to the extent SEBI
regulations/applicable rules change/permit so as to achieve the investment objective of the scheme.
Such alterations will be made in conformity with SEBI regulations.

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.
                                                                                                  47
The AMC / Trustee may alter these investment restrictions from time to time to the extent SEBI
regulations/applicable rules change/permit so as to achieve the investment objective of the scheme.
Such alterations will be made in conformity with SEBI regulations.

INVESTMENT BY AMC IN THE SCHEME

Franklin Templeton Asset Management (India) Private Limited, the asset management company may
invest in Franklin India Prima Plus. However, as per SEBI (Mutual Funds) Regulations, 1996,
Franklin Templeton Asset Management (India) Private Limited will not charge any Investment
Management Fee for its investment in Franklin India Prima Plus. In addition, the funds managed by
the sponsors, Templeton Group may invest in the Franklin India Prima Plus.

PORTFOLIO TURNOVER

Portfolio turnover in the scheme will be a function of market opportunities. The economic
environment changes on a continuous basis and exposes debt portfolio to systematic as well as non-
systematic risk. The scheme is an open-ended scheme. It is expected that there would be a number of
subscriptions and repurchases on a daily basis. Consequently it is difficult to estimate with any
reasonable measure of accuracy, the likely turnover in the portfolio. The AMC will endeavour to
optimize portfolio turnover to optimize risk adjusted return keeping in mind the cost associated with it.
A high portfolio turnover rate is not necessarily a drag on portfolio performance and may be
representative of arbitrage opportunities that exist for scrips / securities held in the portfolio rather
than an indication of change in AMC‟s view on a scrip etc.

SECURITIES LENDING

The 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 will be
deployed in securities lending and the maximum single party exposure will be restricted to 10% of net
assets outstanding at any point of time.

Engaging in scrip lending is subject to risks related to fluctuations in the collateral
value/settlement/liquidity/counter party.

INVESTMENTS IN DERIVATIVE INSTRUMENTS

Brief note on investment in derivative instruments

As part of the Fund Management process, the Trustee may permit the use of derivative instruments
such as index futures, stock futures and options contracts, warrants, convertible securities, swap
agreements or any other derivative instruments that are permissible or may be permissible in future
under applicable regulations and such investments shall be in accordance with the investment
objectives of the scheme.

Index futures/options are meant to be an efficient way of buying/selling an index compared to
buying/selling a portfolio of physical shares representing an index for ease of execution and
settlement. Index futures/options can be an efficient way of achieving the scheme‟s investment
objective.

                                                                                                   48
In case of investments in index futures/options, the risk/reward would be the same as investments in
portfolio of shares representing an index. On the fixed income side, an interest rate swap agreement
from fixed rate to floating rate is an example of how derivatives can be an effective hedge for the
portfolio in a rising interest rate environment.

Purpose of investment:
 Trading in derivatives by the scheme shall be restricted to hedging and portfolio balancing
  purposes.
 The scheme shall fully cover its positions in the derivatives market by holding underlying
  securities/cash or cash equivalents/option and/or obligation for acquiring underlying assets to
  honour the obligations contracted in the derivatives market.
 Separate records shall be maintained for holding the cash and cash equivalents/securities for this
  purpose.
 The securities held shall be marked to market by the AMC to ensure full coverage of investments
  made in derivative products at all time.

Valuation:
 The traded derivatives shall be valued at market price in conformity with the stipulations of sub
  clauses (i) to (v) of clause 1 of the Eighth Schedule to the Securities and Exchange Board of India
  (Mutual Funds) Regulations, 1996.
 The valuation of untraded derivatives shall be done in accordance with the valuation method for
  untraded investments prescribed in sub clauses (i) and (ii) of clause 2 of the Eighth Schedule to the
  Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.

Reporting requirements:
The AMC shall cover the following aspects in their reports to the Trustees periodically, as provided for
in the Regulations:
   Transactions in derivatives, both in volume and value terms.
   Market value of cash or cash equivalents/securities held to cover the exposure.
   Any breach of the exposure limit laid down in the scheme offer document.
   Short-fall, if any, in the assets covering investment in derivative products and the manner of
    bridging it.
    The Trustee shall offer their comments on the above aspects in the report filed with SEBI under
    sub regulation (23) (a) of regulation 18 of Securities and Exchange Board of India (Mutual Funds)
    Regulations, 1996.

   The scheme may enter into derivatives for hedging/portfolio balancing purposes and in line with
    the guidelines prescribed by SEBI vide circular number MFD/CIR/011/061/2000 dated 01/02/2000
    and SEBI /MD/CIR 4/ 2627/2004 dated February 6, 2004.
   The scheme may take exposure in derivatives upto a maximum of 50% of its spot exposure.

The Stock Exchange, Mumbai and the National Stock Exchange have introduced Index futures on BSE
Sensex (BSE 30) and Nifty (NSE-50). For example, in say month 1, three futures of month 2, month 3
and month 4, will be traded. These futures will expire on the last working Thursday of the respective
month.


Let us assume the Nifty Index is 1475 on the last working day of month 1 and three future indexes
are available as under:


                                                                                                  49
                   Month          Bid Price         Offer Price
                 Month 2         1480              1485
                 Month 3         1500              1515
                 Month 4         1510              1530

The Fund can buy an Index of month 2 as on last working day of month 1 at the offer price of 1485.
The following is a hypothetical example of a typical likely index future trade and the associated costs.
(All figures in Rs.)

               Particulars                    Index Future        Actual Purchase
                                                                     of Stocks
Index as on last working day of Month 1     1475                  1475
Month 2 Futures Cost                        1485

A. Execution Cost                           10                    Nil
   Carry and other Index Future
   costs (1485-1475)

B. Brokerage Cost                           3.71                  7.38
  Assumed at 0.25% for Index
  Future and 0.50% for spot
  Stocks
  (0.25% of 1485)
  (0.50% of 1475)

C. Gains on Surplus Funds                   9.82                  Nil
  (assumed 9% return on 90%
  of the money left after paying
  10% margin)
  (9%*1475*90%*30 days/365)
Total Cost (A+B-C)                          3.89                  7.38

In this example, the Index Future trade has resulted in better profitability compared to an actual
purchase of the underlying index stocks. Typically, the relative attractiveness of an Index Future vis-à-
vis individual securities will depend upon the carrying cost, the interest available on surplus funds and
the transaction cost.

Let us look at an example of an interest rate swap:

Entity A has a Rs.20 crores, 3 month asset which is being funded through call. Entity B, on the other
hand, has deployed in overnight call money market a Rs.20 crores, 3 month liability. Both the entities
are taking on an interest rate risk.

To hedge against the interest rate risk, both the entities can enter into a 3 month swap agreement based
on say MIBOR (Mumbai Inter Bank Offered Rate). Through this swap, entity B will receive a fixed
preagreed rate (say 8%) and pay NSE MIBOR (“the benchmark rate”) which will neutralize the
interest rate risk of lending in call. Similarly, entity A will neutralize its interest rate risk from call
borrowing as it will pay 8% and receive interest at the benchmark rate.

Assuming the swap is for Rs.20 crores 1 September to 1 December, Entity A is a floating rate receiver
at the overnight compounded rate and Entity B is a fixed rate receiver. On a daily basis, the benchmark
rate fixed by NSE will be tracked by them.
                                                                                                     50
On December 1, they will calculate as explained below:

Entity A is entitled to receive daily compounded call rate for 92 days and pay 8% fixed.

Entity B is entitled to receive interest on Rs.20 crores @ 8% i.e. Rs.40.33 lakhs, and pay the
compounded benchmark rate.

Thus on December 1, if the total interest on the daily overnight compounded benchmark rate is higher
than Rs.40.33 lakhs, entity B will pay entity A the difference and vice versa.

As is clear from the above examples, engaging in derivatives has the potential to help the scheme in
minimising the portfolio risk and/or improve the overall portfolio returns.

Please note these examples are given for illustration purposes only and the actual returns may vary
depending on the market conditions.

Derivatives are high risk, high return instruments. As they are highly leveraged, even a small price
movement in the underlying security could have a large impact on their value and may also result in a
loss.

FUNDAMENTAL ATTRIBUTES

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
   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

              the unitholders are informed about the proposed change in fundamental attribute by
               sending individual communication and an advertisement is given in one national
               English newspaper and in a newspaper published in the language of the region where
               the Head Office of the mutual funds is situated, and
              the unitholders are given an option to exit at the prevailing Net Asset Value without any
               exit load.

Policy for borrowing

The 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 of the scheme, rate of interest, margins etc.) as
the Trustee/AMC considers to be in the interest of investors. Such borrowings if made may result in
interest cost. The limit of 20% may be revised at the discretion of the Fund and to the extent the
Regulations hereafter permit.

As of April 30, 2004 the fund had no borrowing.


                                                                                                    51
10. HOW TO INVEST

WHO CAN BUY

The scheme units can be purchased by the following entities (subject to the applicable
legislation/regulation governing such entities):

   1. Adult individuals, either singly or jointly (not exceeding three), resident in India.
   2. Parents/Guardian on behalf of minors.
   3. Companies / Domestic Corporate Bodies / Societies / Association of Persons / Body of
       individuals / Clubs / Public Sector Undertakings registered in India.
   4. Charitable or Religious Trusts* authorized to invest in units of mutual funds.
   5. Banks, Financial Institutions and Investment Institutions.
   6. Non-Resident Indians, persons of Indian origin residing abroad (NRIs) on full repatriation basis
       and on non-repatriation basis.
   7. Foreign institutional investors on full repatriation basis (subject to RBI approval).
   8. Hindu Undivided Family (HUF), in the name of Karta.
   9. Wakf Boards or endowments and Registered Societies (including registered co-operative
       societies) and private trusts authorized to invest in units of mutual funds.
   10. Partnership firms in the names of their partners.
   11. An association of persons or body of individuals whether incorporated or not.
   12. Army/Air Force/Navy/Para-military funds and other eligible institutions.
   13. Scientific and/or industrial research organizations.
   14. Other Associations, Institutions, Bodies etc. authorized to invest in the units of mutual funds.
   15. Such other individuals/institutions/body corporate etc., as may be decided by the AMC from
       time to time, so long as wherever applicable they are in conformity with SEBI Regulations.
   16. The Mutual Fund Schemes can also invest in Franklin India Prima Plus subject to SEBI
       regulations applicable from time to time.


   * Templeton Mutual Fund is notified under Sec 10 [23 D] of the Income Tax Act 1961 and the
   units of the scheme are approved security under Sec 11[5] of the Income Tax Act read with Rule
   17C of the Income Tax Rules, 1962.

Note:

   1. NRIs/PIOs/FIIs have been granted a general permission by RBI [Schedule 5 of the Foreign
      Exchange Management (Transfer or Issue of Security by a Person Resident Outside India)
      Regulations, 2000] for investing in /redeeming units of the schemes subject to conditions set
      out in the aforesaid regulations.
   2. In case of application under a Power of Attorney or by a limited company or a corporate body
      or an eligible institution or a registered society or a trust fund, the original Power of Attorney
      or a certified true copy duly notarized or the relevant resolution or authority to make the
      application / redemption as the case may be, or duly notarized copy thereof, along with a
      certified copy of the Memorandum and Articles of Association and/or bye laws and/or trust
      deed and/or partnership deed and Certificate of Registration should be submitted. The officials
      should sign the application under their official designation. In case of a Trust / Fund it shall
      submit a certified true copy of the resolution from the Trustee(s) authorizing such purchases /
      redemption.
   3. Returned cheques are liable not to be presented again for collection, and the accompanying
      Application Forms are liable to be rejected. In case the returned cheques are presented again,
      the necessary charges are liable to be debited to the investor.

                                                                                                  52
FROM WHOM

The scheme units are being offered for subscription through AMFI registered Agents/Stock Exchanges
Brokers and can also be purchased directly from the Fund through various Branches/District
Representative Centres of Templeton Mutual Fund excepting during the period when there is a book
closure.

PROCEDURE FOR PURCHASE OF UNITS

Duly completed Account Applications along with full payment must be remitted at Templeton Mutual
Fund Branches/District Representative Centres or may be routed through an Agent/Stock Exchange
Broker. Outstation cheques/drafts, money orders, postal orders/stock invests and post dated cheques
will not be accepted.

The Franklin India Prima Plus units are being offered for sale on all working days at NAV based
Public Offering Price (POP) applicable on the date when the application form or additional purchase
request is received at any of the Templeton Mutual Fund branches.

While determining the price of units, the fund shall ensure that the repurchase price is not lower than
93% of the Net Asset Value (NAV) and the sale price is not higher than 107% of the NAV. Provided
further, that the difference between the repurchase price and the sale price of the units shall not exceed
7% calculated on the sale price.

The Public Offering Price (POP) includes a 3% maximum sales charge on the Net Asset Value (NAV)
and is calculated as given below:

POP    =       NAV * (1+ sales charge)


To illustrate : Amount of investment                 = Rs.10,000
               NAV                                   = Rs.12.00
               Sales charge                          = 3%
               POP     =       12.00 * (1+0.03)      = Rs.12.36

               The number of units allotted          = Rs.10,000 = 809.061
                                                       Rs.12.36

All investment requests submitted through an agent/broker or Templeton District Representative
Centres will be processed at the POP applicable on the date of their receipt at the Customer Service
Department in Chennai or branches of Templeton Mutual Fund. The Trustee/AMC reserves the right
to waive the load wholly or in part in cases where no significant selling or distribution expenses are
involved.


MINIMUM AMOUNT

The minimum investment for subscribing to Prima Plus is Rs.5,000/- and in multiples of Rs.1,000/-
thereafter.

                                                                                                    53
The Trustee reserves the right to vary these limits from time to time, in the interest of investors.

All applications/additional purchase requests received before 3.00 p.m. on a business day will be
processed at that day's POP. Applications/additional purchase requests received after 3.00 p.m. will be
processed at the next working day's POP. The number of Franklin India Prima Plus units so allotted,
shall be added to the unitholder's designated account and a statement to this effect shall be issued to the
unitholders. The Trustee reserves the right to change the cut-off time on a prospective basis. All
allotments are subject to realisation of the payment instrument.

In case of investments of Rs.50,000/- and above, income tax P.A.N./G.I.R. number and I.T. circle
office address are to be furnished.

Payment Details

All cheques and drafts should be made out in favour of “Franklin India Prima Plus” and crossed
“A/c Payee only”. The investors may also use credit card for their investments subject to the
conditions prescribed by AMC from time to time. The applications will be accepted at the designated
Bank Collection Centres. No outstation cheques / stock invest or post dated cheques will be accepted.

The Investor Service Centres will not accept cash.

As per the directives issued by SEBI, it is mandatory for applicants to mention their bank
account numbers in their applications and therefore, investors are requested to fill-up the
appropriate box in the application form.

Mode of Payment: Resident Investors

Payment may be made by cheque or bank draft and crossed “A/c Payee Only” drawn on any bank,
which is situated at and is a member of the Bankers‟ Clearing House, located at any of the Investor
Service Centres. Bank charges for demand drafts will be borne by the Fund/AMC and will be limited
to the bank charges stipulated by the Indian Banks Association. The AMC will not accept any request
for refund of demand draft charges.

JOINT APPLICANTS

In the event an Account has more than one registered owner, the first-named holder shall receive the
Account Statements, all notices and correspondence with respect to the Account, as well as the
proceeds of any Redemption requests or dividends or other distributions. In addition, such Unit holders
shall have the voting rights, as permitted, associated with such Units, as per the applicable guidelines.

Applicants can specify the „mode of holding‟ in the application form as „Joint‟ or „Anyone or
Survivor‟. In the case of holding specified as „Joint‟, Redemptions would have to be signed by all joint
holders in the same order as registered with the Mutual Fund. However, in cases of holding specified
as „Anyone or Survivor‟, any one of the Unit holder will have the power to make Redemption requests,
without it being necessary for all the Unit holders to sign. However, in all cases, the proceeds of the
Redemption will be paid only to the first-named holder.

COMPANIES/CORPORATE BODIES ETC.

In case of an application under a Power of Attorney or by a limited company, body corporate,
registered society, trust or partnership, the relevant Power of Attorney or the relevant resolution or
authority to make the application or the Trust Deed or the Partnership Deed as the case may be, or duly
certified copy thereof, along with a certified copy of the Memorandum and Articles of Association
and-or bye-laws must be lodged at the any ISC within three days from the date of investments.
                                                                                                       54
PUBLIC OFFERING PRICE (POP) / SALE PRICE FOR ONGOING PURCHASES

For on-going subscriptions, units will be offered to investors at “Public Offering Price” (POP). POP is
the price at which the units are proposed to be sold. POP is calculated based on the “Applicable NAV
for subscriptions” and will additionally include the permissible load in terms of the SEBI Circular No.
MFD/CIR/08/514/2002 September 22, 2002 (computed in the manner described hereunder) depending
on the amount invested, as explained under the head Expenses.

The sales load shall be charged as a percentage of Net Assets Value (NAV) i.e. applicable load as a
percentage of NAV will be added to NAV to calculate POP / sale price.

To further elaborate, the POP is calculated by multiplying the “Applicable NAV” by (1+ Sales Load).
For example, if the NAV is Rs.14/- and the sales load applied is 1%, the POP / Sale Price will be
calculated as follows:

                           NAV * (1+            14 * (1+0.01) =
 Public Offering Price:                    =                          Rs. 14.14
                           Sales Load)
       (POP)

As per Regulations, while determining the prices of the Units, the Mutual Fund will ensure that the
repurchase (i.e. redemption) price is not lower than 93% of the Net Asset Value and the sale price (i.e.
POP) is not higher than 107% of the Net Asset Value, provided that the difference between the
repurchase price and sale price shall not exceed 7% calculated on the sale price.

APPLICABLE NAV FOR SUBSCRIPTIONS

“Applicable NAV for Subscriptions” is the Net Asset Value per unit of the business day on which the
application for subscription is accepted on or before the cut off time which is currently 3.00 p.m.

Pursuant to SEBI Circulars SEBI/ IMD/CIR No. 8/5611/ 2004 dated March 19, 2004 and SEBI/
IMD/CIR No.9/6016/2004 dated March 25, 2004, with effect from March 30, 2004 the cut off timings
and the applicability of Net Asset Value of the scheme is under:

In respect of valid applications received upto 3.00 p.m. by the Mutual Fund along with a local cheque
or a demand draft payable at par at the place where the application is received, the closing NAV of the
day on which application is received shall be applicable.

In respect of valid applications received after 3.00 p.m. by the Mutual Fund along with a local cheque
or a demand draft payable at par at the place where the application is received, the closing NAV of the
next business day shall be applicable.

However, in respect of valid applications with outstation cheques / demand drafts not payable at par at
the place where the application is received, closing NAV of the day on which cheque / demand draft is
credited to the account of Templeton Mutual Fund shall be applicable.

As per SEBI Circular SEBI/ IMD/CIR No. 8/5611/ 2004 dated March 19, 2004, TMF hereby declare
all it‟s 33 branches (Franklin Templeton Branch Offices) as the Official points of acceptance of
transactions. The “cut off time” mentioned in the Offer Document shall be reckoned at these official
points. All purchase / switch applications must be demonstrably received by the Mutual Fund at these
“official" points of acceptance of transactions.



                                                                                                  55
USE OF SALES LOAD

The sales load collected on on-going sales of units shall be retained in the Fund and would strictly and
fully be used by the Investment Manager in providing distribution related services to the Mutual Fund
relating to the sale, promotion, advertising and marketing of Units of the Scheme, including payments
to brokers/registrars for their services in connection with the distribution of the Units.

FRACTIONAL UNITS

Investors may have Account Statements that show an issuance of fractional Units. Fractional Units in
no way will affect an investor‟s ability to redeem Units. Fractional Units will be computed and
accounted for upto four decimal places.

AVAILABILITY OF FORMS

Application Forms and copies of this Offer Document are available from the Investor Service Centres
at their respective locations set forth in the Application Forms or on the reverse of this Offer
Document, in addition to the Head Officer of the Mutual Fund. Application Forms are also available
with the approved intermediaries of the Mutual Fund as well as on the website of the mutual fund
www.franklintempletonindia.com.

ISSUANCE OF UNITS

For continuous purchase, an Account Statement bearing the details such as number of units allotted,
amount invested, etc. will be mailed to the registered address of the investor, within 4 days from the
date of the submission of Application Form at any ISC.

SYSTEMATIC INVESTMENT PLAN (SIP)

Mutual Fund Investors can benefit by investing specified rupee amounts periodically for a continuous
period. This concept is called Rupee Cost Averaging.

This savings program allows investors to save a fixed amount of rupees every month by purchasing
additional units of the Fund. Therefore, the average unit cost will always be less than the average sale
price per unit irrespective of the market being rising, falling or fluctuating.

By investing a fixed amount of Rupees at regular intervals, investors can take advantage of the benefits
of Rupee Cost Averaging, at the same time, saving a fixed amount each month.

Templeton Mutual Fund will accept minimum of 12 cheques of Rs.500/- each or minimum of 6
cheques of Rs.1,000/- each to avail this facility. When scheme levies an entry load, it will not be
charged for SIP investors. However, if the units are redeemed within one year from the date of
allotment, an exit load will be levied which will be same percentage of entry load uncharged at the
time of investment.

    Templeton Mutual Fund will accept minimum of 12 cheques of Rs. 500 or more each or a
     minimum of 6 cheques of Rs. 1,000 or more each for any SIP investor.
    All the SIP cheques (except the first one) must be uniformly dated either the 1st, 7th, 10th or 20th of
     a month. Investors can invest at a Monthly or Quarterly interval by providing post-dated cheques.
     All cheques should be for the same amount.
    In schemes that have an entry load, the same will currently be waived for SIP investors. Such
     investments will however be charged an exit load equivalent to the waived entry load, if
     redeemed with in one year of the allotment date. The AMC reserves to right to reintroduce the
                                                                                                     56
     entry load through issue of a notice at its investor service centers / distributor offices.
    The AMC reserves the right to discontinue the SIP in case of cheque return, and debit the cheque
     return charges to the investors‟ account.

Here is an illustration using hypothetical figures to show how a Systematic Investment Plan can
benefit an investor. Let us assume that Mr. ABC would like to invest Rs.1,000/- as a quarterly
investment for a period of four quarters, i.e. a total of Rs.4,000/-.

       Quarter       Amount           Public Offering Price       No. of Units
                   Invested (Rs.)         (POP) (Rs.)             purchased
         1                  1000                  12               83.333
         2                  1000                  15               66.667
         3                  1000                   9              111.111
         4                  1000                  12               83.333
       TOTAL                4000                  48              344.444

Average price (per unit) per quarter (quarters)=Rs.12.00 (i.e. Rs. 48/4).

Average cost per unit = Rs.11.61 (i.e. Rs. 4000/344.444 units).

As can be seen from the example above, the average cost per unit is always lower than the average
market price per unit, irrespective of a rise, fall or fluctuations in the market. A greater number of units
were purchased when the per-unit cost was low; fewer units were purchased when the per-unit cost
was high. Thus, Mr. ABC automatically gains without having to monitor prices (NAV) on a day-to-
day basis.

However, an investor should note that the market value of the Scheme's units is subject to fluctuations.
Before undertaking any plan for Systematic Investment, the investor should keep in mind that
such a program does not assure a profit or protect against a loss.


TRANSFER FACILITY


As the Fund stands ready to buy-back (redeem) its units at any time the transfer facility is found
redundant. However, if a transferee becomes a holder of the Units by operation of law or upon
enforcement of a pledge, then the AMC shall, subject to production of such evidence, which in their
opinion is sufficient, proceed to effect the transfer, if the intended transferee is otherwise eligible to
hold the Units.

A person becoming entitled to hold the Units in consequence of the death, insolvency, or winding up of
the sole holder or the survivors of joint holders, upon producing evidence to the satisfaction of the
Fund, shall be registered as a holder.

PLEDGE OF UNITS

The Units under the Scheme may be offered as security by way of a pledge/charge in favour of
scheduled banks, financial institutions, non-banking finance companies (NBFC‟s), or any other body.
The AMC and/or the ISC will note and record such Pledged Units. A standard form for this purpose is
available on request from any ISC. Disbursement of such loans will be at the entire discretion of the
bank/financial institution/NBFC or any other body concerned and the Mutual Fund assumes no
responsibility thereof.
                                                                                                     57
The Pledgor will not be able to redeem Units that are pledged until the entity to which the Units are
pledged provides written authorisation to the Mutual Fund that the pledge/lien charge may be
removed. As long as Units are pledged, the pledgee will have complete authority to redeem such Units.

11. VALUATION OF ASSETS AND NET ASSET VALUE

NET ASSET VALUE CALCULATION

NAV is the actual value of a Unit on any Business Day and is computed as shown below:
  NAV =             (Market Value of the Scheme‟s Investments + Other Assets (including
  (Rs. Per         accrued interest) + Unamortized Issue Expenses - All Liabilities except
    unit)                                 Unit Capital & Reserves)
                              Number of Units Outstanding at the end of the day

Valuation of Scheme‟s assets and calculation of the Scheme‟s NAV will be subject to such rules or
regulations that SEBI may prescribe from time to time and shall be subject to audit on an annual basis.

The disclosure on valuation norms, computation and publication of NAV, repurchase and sale price,
accounting policies and publication of half yearly accounts shall conform to the relevant provisions of
SEBI (Mutual Funds) Regulations, 1996. Accordingly, the following principles will be adopted:

1. Traded Securities:

- The securities shall be valued at the last quoted closing price on the Bombay Stock Exchange.
- When the securities are traded on more than one recognized stock exchange, the securities shall be
  valued at the last quoted closing price on the stock exchange where the security is principally traded.
  It would be left to the AMC to select the appropriate stock exchange, but the reasons for the selection
  would be recorded in writing.
- Once a stock exchange has been selected for valuation of a particular security, reasons for change of
  the exchange shall be recorded in writing by the AMC.
  - When a security (other than debt securities) is not traded on any stock exchange on a particular
  valuation day, the value at which it was traded on the selected stock exchange, as the case may be,
  on the earliest previous day may be used provided such date is not more than thirty days prior to
  valuation date.
- When a debt security (other than Government Securities) is not traded on any stock exchange on any
  particular valuation day, the value at which it was traded on the principal stock exchange or any
  other stock exchange, as the case may be, on the earliest previous day may be used provided such
  date is not more than fifteen days prior to valuation date. When a debt security (other than
  Government Securities) is purchased by way of private placement, the value at which it was bought
  may be used for a period of fifteen days beginning from the date of purchase


(i) Thinly Traded Equity / Equity Related Securities:

   When trading in an equity / equity related security (such as convertible debentures, equity
   warrants, etc.) in a month is less than Rs.5 lakh and the total volume is less than 50,000 shares, it
   shall be considered as a thinly traded security and valued as per the valuation principles laid down
   in the SEBI circular No.MFD/CIR/8/92/2000 dated September 18, 2000 and MFD/CIR/14/088/
   201 dated March 28, 2001.
   For example, if the volume of trade is 1,00,000 and value is Rs.4,00,000/- the share does not
   qualify as thinly traded. Also if the volume traded is 40,000, but the value of trades is
   Rs.6,00,000/- the share does not qualify as thinly traded.
                                                                                                   58
   In order to determine whether a security is thinly traded or not, the volumes traded in all
   recognised stock exchanges in India may be taken into account.

   Where a stock exchange identifies the “thinly traded” securities by applying the above parameters
   for the preceding calendar month and publishes/provides the required information along with the
   daily quotations, the same may be used by the mutual fund.

   If the share is not listed on the stock exchanges which provide such information, then it will be
   obligatory on the part of the mutual fund to make its own analysis in line with the above criteria to
   check whether such securities are thinly traded which would then be valued accordingly. In case
   trading in an equity security is suspended upto 30 days, then the last traded price would be
   considered for valuation of that security. If an equity security is suspended for more than 30 days,
   then the Asset Management Company/Trustees will decide the valuation norms to be followed and
   such norms would be documented and recorded.

(ii) Thinly Traded Debt Securities:

   A debt security (other than Government Securities) shall be considered as a thinly traded security if
   on the valuation date, there are no individual trades in that security in marketable lots (currently
   Rs.5 crores) on the principal stock exchange or any other stock exchange.

   A thinly traded debt security as defined above would be valued as per the norms set for non-traded
   debt security in the SEBI circular No.MFD/CIR/8/92/2000 dated September 18, 2000,
   MFD/CIR/14/088/201 dated March 28, 2001 and MFD/CIR No.14/442/2002 dated February 20,
   2002.

 Non-Traded Securities:

 When a security (other than Government Securities) is not traded in a marketable lot of Rs.5 crores
 on any stock exchange for a period of Fifteen days prior to the valuation date, the scrip must be
 treated as a 'non traded' security. Non traded / thinly traded securities shall be valued "in good faith"
 by the asset management company on the basis of the valuation principles laid down in the SEBI
 circular No.MFD/CIR/8/92/2000 dated September 18, 2000, MFD/CIR/14/088/201 dated March 28,
 2001 and MFD/CIR No.14/442/2002 dated February 20, 2002.

 Valuation of Non-Traded / Thinly Traded Securities

 Non traded/ thinly traded securities shall be valued “in good faith” by the Asset Management
 Company on the basis of the valuation principles laid down below:

 (i) Non-traded / thinly traded equity securities:

 (a) Based on the latest available Balance Sheet, net worth shall be calculated as follows:
 Net Worth per share = [share capital + reserves (excluding revaluation reserves) - Misc. expenditure
 and Debit Balance in P&L A/c] Divided by No. of Paid up Shares.

 (b) Average capitalisation rate (P/E ratio) for the industry based upon either BSE or NSE data (which
 should be followed consistently and changes, if any noted with proper justification thereof) shall be
 taken and discounted by 75% i.e. only 25% of the Industry average P/E shall be taken as
 capitalisation rate (P/E ratio). Earnings per share of the latest audited annual accounts will be
 considered for this purpose.

                                                                                                   59
 (c) The value as per the net worth value per share and the capital earning value calculated as above
 shall be averaged and further discounted by 10% for ill-liquidity so as to arrive at the fair value per
 share.


 (d) In case the EPS is negative, EPS value for that year shall be taken as zero for arriving at
 capitalised earning.

 (e) In case where the latest balance sheet of the company is not available within nine months from
 the close of the year, unless the accounting year is changed, the shares of such companies shall be
 valued at zero.

 (f) In case an individual security accounts for more than 5% of the total assets of the scheme, an
 independent valuer shall be appointed for the valuation of the said security.

 To determine if a security accounts for more than 5% of the total assets of the scheme, it would be
 valued by the procedure above and the proportion which it bears to the total net assets of the scheme
 to which it belongs would be compared on the date of valuation.

 (ii) Non Traded /Thinly Traded Debt Securities of Upto 182 Days to maturity:

 “As the money market securities are valued on the basis of amortisation (cost plus accrued interest
 till the beginning of the day plus the difference between the redemption value and the cost spread
 uniformly over the remaining maturity period of the instruments) a similar process should be adopted
 for non-traded debt securities with residual maturity of upto 182 days, in the absence of any other
 standard benchmarks in the market. Debt securities purchased with residual maturity of upto 182
 days are to be valued at cost (including accrued interest till the beginning of the day) plus the
 difference between the redemption value (inclusive of interest) and cost spread uniformly over the
 remaining maturity period of the instrument. In case of a debt security with maturity greater than 182
 days at the time of purchase, the last valuation price plus accrued interest should be used instead of
 purchase cost. All other non-traded Non Government debt instruments shall be valued using the
 method suggested in (ii)(b) hereof”.

 Non-traded/thinly traded debt securities will be valued in the following manner:

(iii) Non Traded/ Thinly Traded Debt Securities of Over 182 Days to Maturity.

For the purpose of valuation, all Non Traded Debt Securities would be classified into “Investment
grade” and “Non Investment grade” securities based on their credit ratings. The non-investment grade
securities would further be classified as “Performing” and “Non Performing” assets.

• All Non Government investment grade debt securities, classified as not traded, shall be valued on
yield to maturity basis as described below.
• All Non Government non investment grade performing debt securities would be valued at a discount
of 25% to the face value.
• All Non Government non investment grade non performing debt securities would be valued based on
the provisioning norms.

The approach in valuation of non traded debt securities is based on the concept of using spreads over
the benchmark rate to arrive at the yields for pricing the non traded security.



                                                                                                  60
The Yields for pricing the non traded debt security would be arrived at using the process as defined
below.


Step A - A Risk Free Benchmark Yield is built using the government securities (GOI Sec) as the base.
GOI Securities are used as the benchmarks as they are traded regularly; free of credit risk; and traded
across different maturity spectrums every week.
Step B - A Matrix of spreads (based on the credit risk) are built for marking up the benchmark yields.
The matrix is built based on traded corporate paper on the wholesale debt segment of an appropriate
stock exchange and the primary market issuance. The matrix is restricted only to investment grade
corporate paper.
Step C - The yields as calculated above are Marked-up/Marked-down for ill-liquidity risk.
Step D - The Yields so arrived are used to price the portfolio.

      Where instruments have been bought on „repo‟ basis, the instrument would be valued at the
       resale price after deduction of applicable interest upto date of resale. Where an instrument has
       been sold on a „repo‟ basis, adjustment would be made for the difference between the
       repurchase price (after deduction of applicable interest upto date of repurchase) and the value
       of the instrument. If the repurchase price exceeds the value, the depreciation will be provided
       for and if the repurchase price is lower than the value, credit will be taken for the appreciation.
      Until they are traded, the value of the “rights” shares should be calculated as:

    Vr = n/m x (Pex - Pof)
    Where
    Vr        = Value of rights
    n         = no. of rights offered
    m         = no. of original shares held
    Pex       = Ex-rights price
    Pof       = Rights Offer Price


Valuation of securities with Put/Call Options

The option embedded securities would be valued as follows:

Securities with Call option:

The securities with call option shall be valued at the lower of the value as obtained by valuing the
security to final maturity and valuing the security to call option.

In case there are multiple call options, the lowest value obtained by valuing to the various call dates
and valuing to the maturity date is to be taken as the value of the instrument.

Securities with Put option:

The securities with put option shall be valued at the higher of the value as obtained by valuing the
security to final maturity and valuing the security to put option.

In case there are multiple put options, the highest value obtained by valuing to the various put dates
and valuing to the maturity date is to be taken as the value of the instruments.

Securities with both Put and Call option on the same day.

                                                                                                    61
The securities with both Put and Call option on the same day would be deemed to mature on the
Put/Call day and would be valued accordingly.

Valuation of Government Securities

For valuation of government securities, all the mutual funds are advised to use the prices for
Government Securities released by an agency suggested by AMFI for the sake of uniformity in
calculation of NAVs in accordance with SEBI Circular No.MFD/CIR No.14/442/2002 dated
February 20, 2002.

Valuation of non-traded/thinly traded debt securities with floating rate of interest

The non-traded / thinly traded floating rate debt securities with upto 182 days to the next reset date will
be valued at amortization (cost plus accrued interest till the beginning of the day plus the difference
between the redemption value and the cost spread uniformly over the remaining interest reset period of
the instruments) in the absence of any other standard benchmarks in the market.

Non Traded/ Thinly Traded Floating rate Debt Securities of over 182 Days to Maturity/Interest
Reset Date: Non-traded/ Thinly traded Floating rate debt securities over 182 Days to the next reset
date shall be first classified into 'Investment grade' and 'Non-Investment grade' securities based on
their credit ratings. The non-investment grade securities shall be further classified as 'Performing' and
'Non-Performing' assets. The securities shall be valued on the basis of the valuation principles laid
down in the SEBI circular No.MFD/CIR/8/92/2000 dated September 18, 2000, MFD/ CIR/ 14/ 088/
201 dated March 28, 2001 and MFD/CIR No.14/442/2002 dated February 20, 2002 as amended
from time to time in the absence of any other guidelines from SEBI for the valuation of such floating
rate debt instruments.

All such floating rate Non Government investment grade debt securities, classified as not traded/thinly
traded, shall be valued on yield to next reset date basis based on the yield to maturity basis as
described in the SEBI circular No.MFD/CIR/8/92/2000 dated September 18, 2000, MFD/ CIR/ 14/
088/ 201 dated March 28, 2001 and MFD/CIR No.14/442/2002 dated February 20, 2002.

All Non Government non investment grade performing floating rate debt securities would be valued at
a discount of 25% to the face value.

All Non Government non investment grade non performing floating rate debt securities would be
valued based on the provisioning norms.

Floating Rate Debt Securities with Put/Call options

The floating rate debt securities with put /call options shall be valued in terms of the Valuation
Guidelines specified above taking into consideration the next interest rate reset date instead of the final
maturity date, in the absence of any other guidelines from SEBI.

Floating Rate Government securities shall be valued at yield to next interest reset date based on the
prevailing market rate or such norms as may be prescribed by SEBI from time to time.


Valuation of Derivative Products

i) The traded derivative shall be valued at market price in conformity with the stipulations of sub
clauses (i) to (v) of clause 1 of the Eighth Schedule to the SEBI Regulations.


                                                                                                    62
ii) The valuation of untraded derivatives shall be done in accordance with the valuation method for
untraded investments prescribed in sub clauses (i) and (ii) of clause 2 of the Eighth Schedule to the
SEBI Regulations and the guidelines/instructions issued by SEBI from time to time.


Valuation of Repo

Where instruments have been bought on "repo" basis, the instrument would be valued at the resale
price after deduction of applicable interest upto date of resale. Where an instrument has been sold on a
'repo' basis, adjustment must be made for the difference between the repurchase price (after deduction
of applicable interest upto date of repurchase) and the value of the instrument. If the repurchase price
exceeds the value, the depreciation would be provided for and if the repurchase price is lower than the
value, credit would be taken for the appreciation.

      All expenses and incomes accrued upto the valuation date shall be considered for computation
       of net asset value. For this purpose, major expenses like management fees and other periodic
       expenses would be accrued on a day-to-day basis. The other minor expenses and income will
       be accrued on a periodic basis, provided the non-accrual does not affect the NAV calculations
       by more than 1%.
      Any changes in securities and in the number of Units will be recorded in the books not later
       than the first valuation date following the date of transaction. If this is not possible given the
       frequency of the Net Asset Value disclosure, the recording may be delayed upto a period of
       seven days following the date of the transaction, provided that as a result of the non-recording,
       the Net Asset Value calculations shall not be affected by more than 2%.

Valuation Unlisted equity shares

Unlisted equity shares of a company shall be valued "in good faith" on the basis of the valuation
principles laid down below:
a. Based on the latest available audited balance sheet, net worth shall be calculated as lower of (i) and
   (ii) below:
i. Net worth per share = [share capital plus free reserves (excluding revaluation reserves) minus
   Miscellaneous expenditure not written off or deferred revenue expenditure, intangible assets and
   accumulated losses] divided by Number of Paid up Shares.
ii.       After taking into account the outstanding warrants and options, Net worth per share shall again
   be calculated and shall be = [share capital plus consideration on exercise of Option/Warrants
   received/receivable by the Company plus free reserves(excluding revaluation reserves) minus
   Miscellaneous expenditure not written off or deferred revenue expenditure, intangible assets and
   accumulated losses] divided by {Number of Paid up Shares plus Number of Shares that would be
   obtained on conversion/exercise of Outstanding Warrants and Options}
The lower of (i) and (ii) above shall be used for calculation of net worth per share and for further
calculation in (c) below.
(b) Average capitalisation rate (P/E ratio) for the industry based upon either BSE or NSE data (which
   should be followed consistently and changes, if any, noted with proper justification thereof) shall be
   taken and discounted by 75% i.e. only 25% of the Industry average P/E shall be taken as
   capitalisation rate (P/E ratio). Earnings per share of the latest audited annual accounts will be
   considered for this purpose.
(c) The value as per the net worth value per share and the capital earning value calculated as above
   shall be averaged and further discounted by 15% for illiquidity so as to arrive at the fair value per
   share.
The above methodology for valuation shall be subject to the following conditions:
i. All calculations as aforesaid shall be based on audited accounts.

                                                                                                   63
ii. In case where the latest balance sheet of the company is not available within nine months from
     the close of the year, unless the accounting year is changed, the shares of such companies shall be
     valued at zero.
iii. If the net worth of the company is negative, the share would be marked down to zero.
iv. In case the EPS is negative, EPS value for that year shall be taken as zero for arriving at capitalised
     earning.
v. In case an individual security accounts for more than 5% of the total assets of the scheme, an
     independent valuer shall be appointed for the valuation of the said security. To determine if a
     security accounts for more than 5% of the total assets of the scheme, it should be valued in
     accordance with the procedure as mentioned above on the date of valuation.

    At the discretion of the AMC and with the approval of the trustees, an unlisted equity share may
   be valued at a price lower than the value derived using the aforesaid methodology.

The valuation guidelines as outlined above are as per SEBI Regulations and are subject to change
from time to time in conformity with changes made by SEBI.


ACCOUNTING POLICIES AND STANDARDS

In accordance with Regulation 50 read with Ninth Schedule to SEBI Regulations, the Fund shall follow
the following accounting policies:
a) AMC for each Scheme shall keep and maintain proper books of accounts, records and documents,
   for each Scheme so as to explain its transactions and to disclose at any point of time the financial
   position of each Scheme and in particular give a true and fair view of the state of affairs of the
   Fund.
b) For the purposes of the financial statements, Mutual Funds shall mark all investments to market and
   carry investments in the balance sheet at market value. However, since the unrealized gain arising
   out of appreciation on investments cannot be distributed, provisions shall be made for exclusion of
   this item when arriving at distributable income.
c) Dividend income earned by the scheme shall be recognized, not on the date the dividend is
   declared, but on the date the share is quoted on an ex-dividend basis. For investments, which are
   not quoted on the stock exchanges, dividend income would be recognized on the date of
   declaration.
d) In respect of all interest-bearing investments, income would be accrued on a day to day basis as it is
   earned. Therefore when such investments are purchased, interest paid for the period from the last
   interest due date upto the date of purchase shall not be treated as a cost of purchase but shall be
   debited to Interest Recoverable Account. Similarly, interest received at the time of sale for the
   period from the last interest due date upto the date of sale shall not be treated as an addition to sale
   value but shall be credited to Interest Recoverable Account.
e) In determining the holding cost of investments and the gains or loss on sale of investments, the
   “average cost” method shall be followed.
f) Transactions for purchase or sale of investments would be recognized as of the trade date and not as
   of the settlement date, so that the effect of all investments traded during a financial year are
   recorded and reflected in the financial statements for that year. Where investment transactions take
   place outside the market, for example, acquisitions through private placement or purchases or sales
   through private treaty, the transaction would be recorded, in the event of a purchase, as of the date
   on which the Scheme obtains an enforceable obligation to pay the price or, in the event of a sale,
   when the Scheme obtains an enforceable right to collect the proceeds of sale or an enforceable
   obligation to deliver the instruments sold.

                                                                                                    64
g) Bonus shares to which the scheme becomes entitled shall be recognized only when the original
   shares on which the bonus entitlement accrues are traded on the stock exchange on an ex-bonus
   basis. Similarly, rights entitlements shall be recognized only when the original shares on which the
   right entitlement accrues are traded on the stock exchange on an ex-rights basis.
h) Where income receivable on investments has been accrued and has not been received for period of
   12 months beyond the due date, provision shall be made by debit to the revenue account for the
   income so accrued and no further accrual of income shall be made in respect of such investment.
i) When in the case of an Open-ended Scheme units are sold, the difference between the sale price
   and the face value of the unit, if positive, shall be credited to reserves and if negative is debited to
   reserve, the face value being credited to Capital Account. Similarly, when in respect of such a
   Scheme, units are repurchased, the difference between the purchase price and face value of the unit,
   if positive, shall be debited to reserves and, if negative, shall be credited to reserves, the face value
   being debited to the capital account.
j) In the case of an Open- ended Scheme, when units are sold, an appropriate part of the sale proceeds
   shall be credited to an Equalization Account and when units are repurchased an appropriate amount
   would be debited to Equalization Account. The net balance on this account shall be credited or
   debited to the Revenue Account. The balance on the Equalization Account debited or credited to
   the Revenue Account shall not decrease or increase the net income of the Fund but is only an
   adjustment to the distributable surplus. It shall therefore, be reflected in the Revenue Account only
   after the net income of the Fund is determined.
k) The cost of investments acquired or purchased would include inter-alia brokerage, stamp charges
   and any charge customarily included in the broker‟s bought note. In respect of privately placed
   debt instruments any front-end discount offered shall be reduced from the cost of the investment.
l)   Underwriting commission shall be recognized as revenue only when there is no devolvement on the
     Scheme. Where there is devolvement on the Scheme, the full underwriting commission received
     and not merely the portion applicable to the devolvement shall be reduced from the cost of the
     investment.

The accounting policies and standards as outlined above are as per the SEBI Regulations extant at this
time and, hence, are subject to change as per any changes in the SEBI Regulations.

12. HOW TO REDEEM UNITS OF THE SCHEME

REDEMPTION OF UNITS

HOW TO REDEEM UNITS

Notice for redemption can be sent to the Fund at its ISCs. Redemption of the Units will be made on
any Business Day at the Applicable NAV.

The Fund, however, may limit the right to make redemptions. See “Right to Limit Redemptions”
below. In order to redeem units, investors must submit a redemption request by filling-up the pre-
printed forms and mail the same to the Investor Service Centres ISC. All redemption request forms
must contain the investor‟s Folio Number and be duly signed by all of the Unitholders on record or
their Power of Attorney holders. Redemption requests by telephone, telegram, fax or other means or
that lack valid signatures may not be accepted.

REDEMPTION PRICE

If a redemption request is received before the specified cut-off time which is currently 3.00 p.m. on
any business day the redemption will be on the “Applicable NAV for Redemptions” (See “Applicable
                                                                                                     65
NAV for Redemptions”) adjusted for exit load, if any. All redemption requests received after the
prescribed time will be treated as having been received on the next business day and the units will be
redeemed accordingly. Investors may note that the Trustee has a right to introduce an exit load or a
combination of entry and exit loads subject to the Regulations.

APPLICABLE NAV FOR REDEMPTIONS

“Applicable NAV for Redemptions” is the Net Asset Value per unit of the business day on which the
application for redemption is accepted on or before the cut of time which is currently 3.00 p.m.

Pursuant to SEBI Circulars SEBI/IMD/CIR No.8/5611/2004 dated March 19, 2004 and SEBI/
IMD/CIR No.9/6016/2004 dated March 25, 2004, with effect from March 30, 2004 the cut off timings
and the applicability of Net Asset Value of the scheme is under:

In respect of valid applications received upto 3.00 p.m. by the Mutual Fund, same day‟s closing NAV
shall be applicable.

In respect of valid applications received after 3.00 p.m. by the Mutual Fund, the closing NAV of the
next business day shall be applicable.
As per SEBI Circular SEBI/ IMD/CIR No. 8/5611/ 2004 dated March 19, 2004, TMF hereby declare
all it‟s 33 branches (Franklin Templeton Branch Offices) as the Official points of acceptance of
transactions. The “cut off time” mentioned in the Offer Document shall be reckoned at these official
points. All redemption / switch applications must be demonstrably received by the Mutual Fund at
these “official" points of acceptance of transactions.
REDEMPTION AMOUNT

Unitholder may request the redemption of a certain specified Rupee amount or of a certain number of
Units. If a redemption request is for both a specified Rupee amount and a specified number of Units,
the specified number of Units will be considered the definitive request. In the case where a Rupee
amount is specified or deemed to be specified for redemption, the number of Units redeemed will be
the amount redeemed divided by the applicable NAV. Redemption requests will be honored to the
extent permitted by the credit balance in the Unitholder‟s account. The number of Units so redeemed
will be subtracted from the Unitholder‟s account and a statement to this effect will be issued to the
Unitholder. If the redemption request exceeds the Balance in the account then the account would be
closed and balance sent to the investors.

To further elaborate, the redemption amount is calculated by deducting from the “Applicable NAV for
Redemptions”, the exit load, if any. For example, if the “Applicable NAV for Redemption” is Rs.14/-
and the exit load applied is 1%, the redemption amount will be calculated as follows:

 Redemption           (Applicable NAV
 Amount         =    for Redemptions) *     = 14 *(1-1%)     = 14 * (1 - 0.01)     = Rs. 13.86
                       (1- Exit Load%)

PAYMENT OF REDEMPTION PROCEEDS
Redemption proceeds will be paid by cheque and payments will be made in favour of the Unitholder‟s
registered name and bank account number unless the unitholder instructs otherwise. Redemption
cheques will be sent to the Unitholder‟s address (or, if there is more than one holder of record, the
address of the first-named holder on the original application for Units) or the credit the redemption
proceeds to the bank account of the investor if the investor so instructs, subject to the AMC having
necessary arrangements with the bank. All redemption payments will be made, in favour of the
registered holder of the Units (unless the Unitholder instructs otherwise) or, if there is more than one
                                                                                                  66
registered holder, of the first registered holder on the original application for Units. Units purchased
can be redeemed only after realization of cheques.

The redemption cheque will be dispatched to the unitholders within the statutory time limit of 10
business days prescribed by SEBI. However, on a best effort basis the Fund will endeavor to dispatch
the redemption cheque within 4 working days after a valid redemption request is received at Chennai,
subject to the Fund‟s right to limit redemption as described in “Right to Limit Redemptions”.

To safeguard the interests of the Unitholders from loss or theft of their redemption cheques, SEBI has
made it mandatory for applicants to mention their bank account numbers in their application
for purchase or redemption of Units. Investors are required to provide the name of their bank,
branch address and account number in the Application. Redemption cheques will be sent in
accordance with such information.

EXCHANGES/SWITCH

Investors can, subject to any applicable restriction (such as lien/lock-in) exchange investments from
one scheme of Templeton to another (e.g. Franklin India Opportunities Fund to Franklin India Prima
Fund), and one plan to another (i.e. from Dividend plan to Growth plan) at the applicable public
offering price provided that

a.     there is no book closure in either of the schemes/plans.
b.     the investment sought to be exchanged is not under any lock-in period.
c.     the amount sought to be exchanged is equal to or higher than minimum investment amount
       required for opening an account in the other scheme/plan.

However such increase/decrease/introduction would be subject to the limits prescribed under the
Regulations. The addendum detailing the changes may be attached to offer documents and abridged
offer documents. The addendum may be circulated to the distributors/brokers so that the same can be
attached to all offer documents and abridged offer documents already in stock and the same can be
uploaded on the website.

For this purpose the units of that scheme/plan will be redeemed at the applicable repurchase price and
the amount shall be invested in the other scheme/plan at the applicable public offering price.

In the event of book closure in any of the schemes, the relevant exchange will be effected on the
working day immediately following the end of the book closure period.

The Trustee/AMC reserve the right to alter/vary the terms of exchanges.

REINSTATEMENT PRIVILEGE:

Unitholders who have redeemed their units and wish to re-enter the scheme within a period of 30 days
from the date of redemption, shall be reinstated to the extent of redeemed amount in the scheme at the
applicable NAV (without sale load) and subject to completion of other related formalities related to
purchase. The number of reinstatement privileges is limited to once a calendar year per account based
on the date of reinvestment.

The AMC/Trustee reserve the right to change the terms of these features. Details of such changes will
be made available at all the offices of the AMC.

SYSTEMATIC WITHDRAWAL PLAN (SWP)


                                                                                                  67
A Unitholder may establish a Systematic Withdrawal Plan in any scheme and receive regular/
quarterly payments from the account. The Unitholder can opt to withdraw a fixed amount subject to a
prescribed minimum amount per month or per quarter. The Unitholder may avail of SWP by filling up
the relevant portion of the transaction statement or by completing an Application Form and sending it
to any of the ISCs mentioned at the reverse of this Offer Document.

The amount thus withdrawn by redemption shall be converted into Units at the applicable NAV (which
is generally the first business day of the month in which the payment is scheduled), and such Units will
be subtracted from the unit balance of that Unit holder.

Unitholders may change the amount by giving appropriate written notice to the Registrars. A
Systematic Withdrawal Plan may be terminated on written notice by the unitholder of the Fund, and it
will terminate automatically if all Units are liquidated or withdrawn from the account, or upon the
Fund's receipt of notification of death or incapacity of the Unitholder.

     In order to start the SWP facility, the minimum account balance should be Rs.25,000/-.
     The frequency can be Monthly or Quarterly.
     There are two options available:
        (a) Fixed amount: A fixed amount can be withdrawn either on the 15th or the last business day
             of every month/quarter.
        (b) Capital Appreciation: The capital appreciation as on the last business day of the month
             can be withdrawn.
      Load: In schemes that currently have exit load, the same will be waived till further notice.
      Minimum withdrawal: Under the Fixed amount option, the minimum withdrawal will be
       Rs.1,000/-.
      An investor cannot simultaneously participate in an SIP and SWP in the same scheme.
      This facility is not available for investments under lock-in period
Here is an illustration using hypothetical figures to explain the concept of a Systematic Withdrawal
Plan. Let us assume that Mr. ABC has invested Rs.10,000/- and been allotted 1000 units during the
initial offer. Subsequently he would like to receive Rs.1,000/- for a period of four months,
commencing from the beginning of the next month.

Month     Opening              Amount            Applicable     No. of units Closing
          Balance of       Withdrawn (RS.)       NAV (RS.)      redeemed     Balance
          Units                                                              of Units
  1.          1000.000                   1000              12        83.333     916.667
  2.           916.667                   1000              15        66.667     850.000
  3.           850.000                   1000               9       111.111     738.889
  4.           738.889                   1000              12        83.333     655.556
Total                                    4000                       344.444

Note: The Fund may close an investor‟s account if the balance falls below the prescribed minimum
balance (based on applicable NAV) due to redemptions or SWP, and the investor fails to invest
sufficient funds to bring the value of the account to the prescribed minimum (based on applicable
NAV) after a written intimation in this regard is sent to the Unitholder.

SWITCH FACILITY:

Unitholders will have an option to switch all or part of their investment in one scheme plan to another
scheme plan established by the Fund that is available for investment at that time. The switch will be
                                                                                                  68
effected by way of redemption of units (with appropriate exit load) and a re-investment (with
appropriate entry load) of the redemption proceeds in another scheme(s)/plan(s). To effect the switch a
unit holder must provide clear instruction to the fund such instructions may be provided by completing
a form and lodging the same on any business day with any of the ISCs. An account statement
reflecting new holdings will be dispatched to the unit holder.

RIGHT TO CLOSE AN INVESTOR’S ACCOUNT

The Mutual Fund may close out an investor‟s account whenever, due to redemptions, the value of the
account falls below the minimum account balance of Rs.1,000/-, and the investor fails to purchase
sufficient Units to bring the value of the Account upto the minimum amount or more, after written
notice is sent by the Mutual Fund.

RIGHT TO LIMIT REDEMPTIONS

The Trustee may, in its sole discretion in response to unforeseen circumstances or unusual market
conditions, limit the total number of Units which may be redeemed on any Business day to 5% of the
total number of Units then in issue (or such higher percentage as the Trustee may determine in any
particular case). In addition, the Trustee reserves the right, in its sole discretion, to limit redemptions
with respect to any single account to an amount of Rs.1 crore in a single day. Any Units which, by
virtue of these limitations, are not redeemed on a particular Business Day will be carried forward for
redemption on the next following Business Day in order of receipt. Redemptions carried forward will
be made at the NAV in effect on the subsequent Business Day(s) on which the condition for
redemption request is fulfilled. To the extent multiple redemptions are being satisfied in a single day
under these circumstances, such payments will be made pro-rata based on the size of each redemption
request. Under such circumstances, redemption cheques may be mailed out to investors within a
reasonable period of time and will not be subject to the normal response time for redemption cheque
mailing.

SUSPENSION OF SALE OR REDEMPTION OF UNITS

With the approval of the Boards of Directors of the Trustee and the Asset Management Company, the
sale or redemption of Units may be suspended temporarily or indefinitely when any of the following
conditions exist:
    i. The equity / debt market stops functioning or trading is restricted;
    ii. Periods of extreme volatility in the equity /debt market, which, in the opinion of the Investment
         Manager, is prejudicial to the interest of the investors;
    iii. When there is a strike by the banking community or trading is restricted by RBI or other
         authority
    iv. Period of extreme volatility in the equity / debt/money market, which in the opinion of the
         Board of Directors of AMC and Trustee is prejudicial to the interest of the scheme‟s investors.
    v. As and when directed by the Government of India or RBI or SEBI to do so or conditions
         relating to natural calamity/external aggression/internal disturbances etc. arises, so as to cause
         volatile movements in the money or debt market, which in the opinion of the AMC, will be
         prejudicial to the interest of the unitholders, if further trading in the scheme is continued.
    vi. Break down in the information processing/communication systems affecting the valuation of
         investments/processing of sale/repurchase request
    vii. Natural calamity;
    viii.SEBI, by order, so directs.
    ix. Any other circumstances which in the opinion of the Board of Directors of AMC and Trustee is
         prejudicial to the interest of the scheme‟s investors.



                                                                                                    69
The approval from the Boards of AMC / Trustee giving details of circumstances and justification for
the proposed action shall also be informed to SEBI.

The Trustee also reserves the right in its sole discretion to withdraw sale of Units in the Scheme
temporarily or indefinitely, if the Trustee views that increasing the Scheme‟s size further may prove
detrimental to the existing Unitholders of the Scheme.

UNCLAIMED REDEMPTION / DIVIDEND AMOUNT

The unclaimed redemption and dividend amount may be deployed by the mutual fund in call money
market or money market instruments only and the investors who claim these amounts during a period
of three years from the due date shall be paid at the prevailing Net Asset Value. After a period of three
years, this amount may be transferred to a pool account and the investor can claim the amount at NAV
prevailing at the end of the third year. The income earned on such funds may be used for the purpose
of investor education. The AMC would make a continuous effort to remind the investors through
letters to take their unclaimed amounts. The investment management fees charged by the AMC for
managing unclaimed amounts will not exceed 50 basis points.


13. ASSOCIATE TRANSACTIONS

1. The Schemes of Templeton Mutual Fund, from the date of their inception, till the date of this offer
   document, have not underwritten any issue lead managed by the associate companies.
2. Templeton Mutual Fund has not utilized the services of associate companies for purchase-sale of
   securities.
3. Templeton Mutual Fund has utilized the services of the associates as given below:
                                                          (Rs. in millions)
                                                  For the year ended
            Associate Company
                                    31-03-2002       31-03-2003        31-03-2004

        Spur Cable and Datacom             0.91             0.82             0.60
        TIGF
        *The Investment Trust Of           0.04               -                -
        India Ltd. (ITI)
        *ITI Capital Markets               7.18             2.36             4.12
       ITI Financial Services             0.16        0.20              -
   *An associate of Pioneer ITI AMC Ltd. prior to August 30, 2002, ITI have been replaced by ITI
   Financial Services since August 30, 2002.

4. The AMC may, subject to SEBI regulations, utilize the services of the associate companies for the
   following:
           Purchase or sale of securities;
           Marketing, sale and distribution of the units of the Schemes of Templeton Mutual Fund.

   However, the AMC shall ensure that brokerage paid to affiliate broker will be in line with what
   will be paid to non-affiliate broker and the quantum of business shall be subject to the limits
   prescribed by SEBI.

   The AMC shall also ensure that the brokerage - trail fee paid to the affiliate brokers for the sale and
   distribution of units is at the same rates offered to the other distributors.

                                                                                                    70
5. The AMC may, subject to the regulations, may subscribe on behalf of the Schemes in the
   Government securities issued and lead managed by any of the associate. The AMC shall ensure
   that investments in such issues will be in line with the investment objectives of the Scheme.
6. No investment shall be made in any unlisted security of an associate or group company of the
   sponsor; or any security issued by way of private placement by an associate or group company of
   the sponsor. The Scheme may however invest in the listed securities of group companies of the
   sponsor provided that such investments are not in excess of 25% of the net assets of all the
   Schemes of the Fund.
7. From time to time, subject to the Regulations, the Sponsors, the Mutual Funds managed by them,
   their affiliates-associates, the Sponsors and the AMC may acquire a substantial portion of the
   Scheme‟s units and collectively constitute a majority investor in the Scheme.


14. UNITHOLDER INFORMATION


ACCOUNT NUMBER


Every investor will have an Account number. The number of Units issued to an investor or redeemed
by an investor will be reflected in his or her Account and a statement to this effect will be issued to the
Unitholder.


JOINT NAME APPLICANTS


In the event an Account has more than one registered owner, the first-named holder (as determined by
reference to the original Application Form) shall receive all notices and correspondence with respect to
the Account, as well as the proceeds of any redemption requests or dividends or other distributions.
The Fund shall have no liability in this regard to any Account Owner other than the first named holder
of Units. See “Redemption of Units”. In addition, such holder shall have the voting rights, if any,
associated with such Units. Such holder shall also have the power to make redemption requests and
requests to choose, or to revoke a choice of, automatic reinvestment of dividends with respect to Units,
provided however that, such requests are signed by all joint holders. All the joint holders should
necessarily sign the requisite documentation needed to fulfill the above requests.


ACCOUNT STATEMENTS

Each Unitholder will receive an Account Statement each time additional purchases or redemptions of
Units are made, or dividends or other distributions in respect of Units are declared and paid. The
Unitholders can also obtain an Account Statement on request from any of the ISCs.

Investors may note that while account statements will be issued for purchases / redemptions, the
account statements for Bonus units if any will be issued once in six months / at the time of
redemptions. The entry/exit load may be disclosed in the account statement issued after the
introduction of such load.

The Account Statement is a record of the transaction in the scheme of Templeton Mutual Fund.
Investors are requested to review the account statement carefully and contact their nearest Investor
Service Centre in case of any discrepancy. The contents of the statement will be considered to be
correct if no error is reported within 30 days from the date of the statement.
                                                                                                     71
DUPLICATE ACCOUNT STATEMENT

The Asset Management Company may, subject to compliance with such requirements as it deems
necessary, issue duplicate Account Statement/Unit Certificate(s) should it be lost, stolen, destroyed,
defaced etc.

RESPONSE TIMES

The fund will endeavor to adhere to the following response times with regard to various investor
services from the time of receipt of correct and complete request at Chennai.

Activity                      From date of receipt                  Regulatory limits

Account Statement Mailing     4 working days                        6 weeks
Redemption cheque mailing     4 working days                        10 working days
Address change                3 working days                        -
Ownership transmission        4 weeks                               30 days

These response times do not include postal delivery time, acts of God or disruptions beyond the
control of the AMC.

NAV, REDEMPTION AND ISSUE PRICES

The disclosure on valuation norms, computation and publication of NAV, repurchase and sale price,
accounting policies, investment restrictions and publication of half yearly accounts shall conform to
the relevant provisions of SEBI (Mutual Funds) Regulations, 1996, and are subject to change from
time to time in conformity with changes made by SEBI.

Following are the statutory provisions governing the repurchase and resale prices of units of Mutual
Funds:

a) The Mutual Fund, in case of open-ended scheme, shall publish in two daily newspapers of all India
   circulation, the NAV, sale and repurchase price of units on a daily basis.

b) While determining the prices of the units, the scheme shall ensure that the repurchase price is not
   lower that 93% of the Net Asset Value and the sale price is not higher that 107% of the Net Asset
   Value.
   Provided further that the difference between the repurchase price and the sale price of the unit shall
   not exceed 7% calculated on the sale price.
c) The price of units shall be determined with reference to the last determined Net Asset Value
   unless,
    the scheme announces the Net Asset Value on a daily basis; and
    the sale price is determined with or without a fixed premium added to the future NAV.

The Scheme shall comply with Regulations 48 and 49 of SEBI Regulations regarding computation and
publication of NAV, redemption and re-sale prices.

Notwithstanding what is contained in the foregoing paragraph the Fund would compute NAV,
redemption and issue prices daily and make press releases every day to newspapers widely circulated
for publication.


                                                                                                   72
The publishing of NAV and redemption and Issue Prices as outlined above are as per the extant SEBI
Regulations and are subject to change from time to time.

ANNUAL FINANCIAL REPORTS

As required by the SEBI Regulations, the Fund will publish, as soon as practical after 31 st March each
year but not later than six months thereafter, as the Trustee may decide, accounts relating to its affairs
for the period ending 31st March. The Fund will also mail an abridged scheme-wise annual report to all
the unitholders. The full annual report of the Fund will be furnished to the Unitholders upon a written
request and will be available at the Head Office of the Investment Manager for inspection. The Fund
will make all disclosures required by the SEBI Regulations, including information about the entire
portfolio held by the Fund under this Scheme.

HALF YEARLY DISCLOSURES

The Fund shall before the expiry of one month from the close of each half year that is on 31 st March
and 30th September, publish its unaudited financial results, containing details specified in Regulation
59 read with Twelfth Schedule of SEBI Regulations, in one English newspaper circulating in the whole
of India and in one regional newspaper circulating in the region where the head office of the Fund is
situated. In addition, the Scheme shall mail or publish the complete portfolio to the investors before
the expiry of one month from March 31 and September 30 each year. These shall also be displayed on
the web site of the mutual fund and that of AMFI.

DISCLOSURE UNDER REGULATION 25(11) OF SEBI (MF) REGULATIONS, 1996

Details of investments in companies which have invested more than 5% of NAV of schemes
managed by the AMC, as on April 30, 2004:

Disclosure as to whether any company has invested more than 5% of the NAV of any Templeton
Mutual Fund scheme and investment made by that scheme or any other Templeton Mutual Fund
scheme in that company or its subsidiaries (as on April 30, 2004).

Templeton Mutual Fund made the following investments in Companies which hold /have held units in
excess of 5% of the Net Assets of any scheme of the Fund
                                                                           Total


                                                                               Aggregate
                                                                            investment made Outstanding# as
                                                Franklin Templeton's
                                                                            during the period at 30-Apr-2004 at
                                                 scheme/s which have
 Investor Company       Scheme/s invested in                                01-April- 2004 to    Market /Fair
                                               invested in the Investor
                                                                           30-April-2004 @ at       Value
                                                      Company
                                                                                   cost        (Rs. in Crores)
                                                                             (Rs. in Crores)

                                            FIBCF, FIPP, TIPP, FIIF -
                      TISTIP,     TITMA,
Bharti   Televentures                       BSE Sensex, FIOF, TISTIP,
                      TIIBA - Institutional                                        1.07            205.75
Ltd.                                        TIIBA - Institutional Plan,
                      Plan
                                            TILP, TFIF - S & TFIF - L
                                            FTIAAF - Equity, FTIBF,
                                            FIBCF FTMIP, FTIPERF,
                                            FIOF, FTIMIP, FIIF - Nse
Grasim     Industries TFIF - S, TFIF - L &
                                            Nifty, FIPP, FIIF - Bse                0.13            229.43
Ltd.                  TGSF
                                            Sensex, TISTIP, TIPP, FIT95,
                                            FIT96, FIT98, FIT99, FIT
                                            Open, FIBF, FIIF, FITF,

                                                                                                            73
                                             TMIP-E




                                         FIBCF, FIPP, FIT 95, FIT 96,
                                         TIPP, FIT98, FIF, FIT99, FIT
                                         open, FTIBF, FIOF, FTIMIP,
HCL       Technologies TFIF - S, TISTIP,
                                         FIIF - Nse Nifty, FIIF - Bse          4.97    115.16
Ltd.                   TITMA
                                         Sensex, FTIPERF, FTIAAF -
                                         Equity, TIGF, FIGF FIIF,
                                         FITF

                                             FTIBF, TIIBA, TIIBA -
                                             Institutional Plan, FTIMIP,
                                             FTIPERF, FIPP, FIIF - Nse
HDFC Ltd.                       TILF         Nifty, FIIF - Bse Sensex,         25.54   169.74
                                             TISTIP, TITMA, FIT Open,
                                             FIVF, FIGF, FIIF, FITF, TIIF,
                                             TILF, TILP

                                             FIPP, FIBCF, TIPP, FIT
                                             Open, FIOF, FIIF - Bse
HDFC Bank Ltd.                  TILF         Sensex     Plan, FTIMIP,          0.68    82.44
                                             FTIAAF, FIIF - Nse Nifty
                                             Plan, FTIPERF
                        TMIP, TGSF, TILF,
                                                FIIF - Nse Nifty, FIIF - Bse
Hero Honda Motors TFIF - S TITMA,
                                                Sensex, FTIPERF, TIGF FIIF,    0.09    117.08
Ltd.                    TIIBA - Institutional
                                                FITF
                        Plan
                                                FIBCF, FIPP, FIT 95, FIT 96,
                                                FIT 97, FIT98, FIT99, FIT
                                                open, TIPP, FTIBF, FTIMIP,
                                                FIIF - Nse Nifty, FTIAAF -
Hindalco     Industries TFIF - S, TIIBA -
                                                Equity, FIIF - Bse Sensex,     0.14    275.22
Ltd.                    Institutional Plan
                                                FTIPERF, TISTIP, TIIBA,
                                                TIIBA - Institutional Plan,
                                                FIBF, FIIF, FITF, TMIP-
                                                Equity
                                                FIBCF, FIPP, TIPP, FIVF,
                        TILF, TFIF - S,
                                                FFF, FIT open, FTIBF, FIIF-
                        TITMA, TIIBA -
Hindustan Lever Ltd.                            Nse Nifty, FTIAAF - Equity,    0.31    36.34
                        Institutional     Plan,
                                                FIIF - Bse Sensex, FTIPERF,
                        TISTIP
                                                TISTIP, FIGF, FIIF, FITF
                                                TITMA, TISTIP, FIBCF,
                                                FIPP, TIPP, FIT Open, FIOF,
                                                FIIF - Nse Nifty, FIIF - Bse
                                                Sensex, FIT 97, FIT99, FIVF,
ICICI Bank Ltd.                   TILF          FTIAAF - Equity, FTIPERF,      67.38   272.56
                                                TIIBA - Institutional Plan,
                                                TIMMA, FISIP 25/4/2005
                                                TIGF, FIGF, FIIF, FITF,
                                                TFIF-S, TFIF-L, TILF
                                                TITMA,      TISTIP,    TIPP,
                                                FTIAAF - Debt, FTIBF,
                        TGSF, TILF, TFIF-
                                                TIIBA, TIIBA - Institutional
                        S, TISTIP, TITMA,
IDBI                                            Plan, FTIMIP, TIGF, FIGF,      45.50   471.81
                        TIIBA - Institutional
                                                FIIF, FITF, TFIF-S, TFIF-L,
                        Plan
                                                TITMA, TIIF, TFIF-S, TFIF-
                                                L, TILF, TMIP - E
                                                TIGIP, TISTIP, TIPP, TIIBA,
Indian     Rayon     &
                          TITMA, TFIF - S FIGF, FIPF, FIPP, FIT Open,          11.96   93.96
Industries Ltd.
                                                FTIBF

                                                                                                74
                                            FIBCF, FIPP, FIVF, FIT 95,
                                            FIT 96, FIT 97, TIPP, FIT 98,
                       TILF, TFIF - S, TFIF
                                            FFF, FIT 99, FIT Open, FIIF-
                       - L, TITMA, TISTIP,
ITC Ltd.                                    NSE Nifty, FIIF-BSE Sensex,            0.96               198.07
                       TIIF,      TIIBA   -
                                            FTIPERF, FTIBF, FTIMIP,
                       Institutional Plan
                                            FTIAAF - Equity, FIBF, FIGF
                                            FIIF, FITF, TMIP - E
Power       Trading
                               TILP                TIGF, FIGF, FIBF                0.02                 0.42
Corporation
                                         FIBCF, FIPP, FIIF - NSE
Tata Power Co. Ltd.            TILF      Nifty, FTIPERF, FIGF, FIIF,               0.09                77.66
                                         FITF
Tata Sons Ltd.                TILF                  TITMA                          29.02               57.52
Videsh        Sanchar TISTIP,     TITMA, FIIF - NSE Nifty, FTIPERF,
                                                                                   0.03                 0.34
Nigam Ltd.            TIIBA, TFIF - S    FIIF, FITF
                                         FIF, FIT99, FIOF, FIIF - NSE
                      TILF,       TITMA,
WIPRO LTD.                               Nifty, FIIF - Bse Sensex,                 6.96                35.15
                      TISTIP, TFIF - S
                                         FTIPERF, FIIF, FITF

@ This is the aggregate of all investments made during the period ended 30-April-2004 in accordance with
Regulation 25(11) without considering sale/redemptions and interscheme transactions, which might have occurred.
# Outstanding value of investments indicate the current value of all the investments in the company. These
investments have been made because of their value at these prices in case of equity shares and for high credit quality
for comparable yield for the investment in fixed income instruments, the investments made are in accordance with
the investment objectives of the scheme.

NOMINATION & TRANSFER FACILITY

SEBI has inserted a new Regulation 29A in the SEBI (Mutual Fund) Regulations 1996 vide its circular
MFD/CIR/ 07/213/2002 dated July 2, 2002 and SEBI/IMD/CIR.No.5/265/2004 dated February 16,
2004 (gazette notification dated January 15, 2004) permitting the Asset Management Company to
provide an option to the investor for nomination as follows:

a) The unit holder may nominate a person in whom the units held by him shall vest in the event of his
    death.

b) In case where more than one person holds the units jointly, the joint unit holders may together
   nominate a person in whom all the rights in the units shall vest in the event of death of all the joint
   unit holders.

Further the following regulations have to be complied with by the unit holder/joint unit holders who
wish to nominate a person in whom the units held by him/them shall vest in the event of his/their
death:

    1. The nomination can be made only by individuals applying for/holding units on their own behalf
       singly or jointly. Non-individuals including society, trust, body corporate, partnership firm,
       Karta of Hindu Undivided Family, holder of Power of Attorney cannot nominate. If the units
       are held jointly, all joint holders will sign the nomination form.
    2. A minor can be nominated and in that event, the name and address of the guardian of the minor
       nominee shall be provided by the unit holder. Nomination can also be in favour of the Central
       Government, State Government, a local authority, any person designated by virtue of his office
       or a religious or charitable trust.
    3. The Nominee shall not be a trust, other than a religious or charitable trust, society, body
       corporate, partnership firm, Karat of Hindu Undivided Family or a Power of Attorney holder A
       non-resident Indian can be a Nominee subject to the exchange controls in force, from time to
       time.
                                                                                                               75
   4. Nomination in respect of the units stands rescinded upon the transfer of units.
   5. Transfer of units in favour of a Nominee shall be valid discharge by the asset management
      company against the legal heir.
   6. The cancellation of nomination can be made only by those individuals who hold units on their
      own behalf singly or jointly and who made the original nomination.
   7. On cancellation of the nomination, the nomination shall stand rescinded and the asset
      management company shall not be under any obligation to transfer the units in favour of the
      Nominee.

However, the investors should be aware that the nominee may not acquire title or beneficial interest in
the property by virtue of the nomination and that neither the Mutual Fund or the Investment Manager
or the Registrar and Transfer Agent of the Fund will be bound to transfer the units to the nominee in
the event of any dispute in relation to the nominee‟s entitlement to the units.


If the Mutual Fund or the Investment Manager or the Trustee were to incur, suffer or any claim,
demand, liabilities, proceedings or actions are filed or made or initiated against any of them in respect
of or in connection with the nomination, they shall be entitled to be indemnified absolutely for any
loss, expenses, costs, and charges that any of them may suffer or incur absolutely from the investor‟s
estate.


The following documents are required in the case of Death:

           a.   Death certificate
           b.   Identity of the nominee
           c.   Proof of guardianship in case the nominee is a minor and or an unsound person
           d.   Indemnity in the prescribed format

Receiving Account Statement / Unit Certificates / Correspondence by e-mail


The Mutual Fund will encourage the Unit holder to provide their e-mail addresses for all
correspondence. The Mutual Fund‟s Website would facilitate request for Account Statement by Unit
holders. The Mutual Fund will endeavor to send Account Statement and any other correspondence
using e-mail as the mode of communication.

The Unit holder will be required to download and print the Account Statement after receiving e-mail
from the Mutual Fund. Should the Unit holder experience any difficulty in accessing the electronically
delivered Account Statement, the Unit holder shall promptly advise the Mutual Fund to enable the
Mutual Fund to make the delivery through alternate means. Failure to advise Templeton Mutual Fund
or the Registrar of such difficulty within 24 hours after receiving the e-mail, will serve as an
affirmation regarding the acceptance by the Unit holder of the Account Statement.

It is deemed that the Unit holder is aware of all security risks including possible third party
interception of the Account Statement and content of the Account Statement becoming known to third
parties.

Subject to the consent of the Unitholder, the mutual fund will endeavour to send the account statement,
annual report, half yearly portfolio statement to the unitholder by e-mail. Alternately, the AMC may
also send an e-mail to the investor giving the link to the website of the Mutual Fund for the aforesaid
statements.
                                                                                                   76
INVESTMENTS BY NRIS, PIOS, FIIS


The following summary outlines the various provisions related to investments by Non-Resident
Indians ('NRIs'), Persons of Indian Origin ('PIOs') and Foreign Institutional Investors ('FIIs') in the
Schemes of the Mutual Fund and is based on the relevant provisions of the Income-tax Act, 1961 ('the
Act'), regulations issued under the Foreign Exchange Management Act, 1999 and the Wealth-tax Act,
1957 (collectively called 'the relevant provisions'), as they stand on the date of this abridged Offer
Document.

THE FOLLOWING INFORMATION IS PROVIDED FOR GENERAL INFORMATION
ONLY. HOWEVER, IN VIEW OF THE INDIVIDUAL NATURE OF THE IMPLICATIONS,
EACH INVESTOR IS ADVISED TO CONSULT WITH HIS OR HER OWN TAX
ADVISORS/AUTHORISED DEALERS WITH RESPECT TO THE SPECIFIC TAX AND
OTHER IMPLICATIONS ARISING OUT OF HIS OR HER PARTICIPATION IN THE
SCHEMES.

PURCHASE APPLICATIONS:

NRIs and other overseas investors can invest in Templeton Schemes on Repatriable/Non-Repatriable
basis as per the provisions of Schedule 5 of the Foreign Exchange Management (Transfer or issue of
Security by a Person Resident Outside India) Regulations, 2000 ('the Regulations') as explained below.
A Common Application Form duly completed together with cheques or bank drafts should be remitted
through Investor Service Centres ('ISC'). All cheques/demand drafts accompanying the application
form must be made in favour of "Franklin India Prima Plus" and crossed "A/c payee" only and
should be made payable at a city where the application is accepted by any Templeton ISC.

REPATRIABLE BASIS - NRIS, PIOS

In case of NRIs and PIOs seeking to apply for purchase of units on a repatriable basis, payments may
be made by way of inward remittances, or by way of cheques drawn on the NRE/FCNR Account of
the investor [Clause 3(2) of the Regulations] payable at the city where the application form is accepted
by any Templeton ISC.

NON-REPATRIABLE BASIS - NRIS, PIOS

In case of NRIs/PIOs seeking to apply for units on a non-repatriable basis, payments may be made by
way of inward remittances, or by way of cheques/demand drafts drawn on the
NRE/FCNR/NRO/NRSR account of the investor [Clause 3(3) of the Regulations], payable at the city
where the application form is accepted by any Templeton ISC.

FII INVESTORS

FIIs may pay for their subscription amounts out of funds held in Foreign Currency Account or Non-
resident Rupee Account maintained in a designated branch of an authorised dealer [Clause 3(1) of the
Regulations]. Payments may be made by way of cheques payable at a city where the application is
accepted by any Templeton ISC.



                                                                                                  77
Similarly, in case of an application under a Power of Attorney or by an FII, the original Power of
Attorney or the relevant resolution/authority to make the application (or a duly notarised certified true
copy thereof), along with a certified copy of the Memorandum and Articles of Association and/or bye
laws and Certificate of Registration should be submitted to the Mumbai ISC within 7 days from the
date of the application. The officials should sign the application under their official designation.

The NRIs/PIOs/FIIs shall also be required to furnish such other documents as may be desired by the
Fund in connection with the investment in the Schemes.



REDEMPTIONS & INCOME DISTRIBUTION

Redemption proceeds/repurchase price and/or dividend or income earned (if any) will be payable in
Indian Rupees only. The Scheme will not be liable for any loss on account of exchange fluctuations,
while converting the rupee amount in US Dollar or any other currency.

INVESTMENTS MADE ON REPATRIABLE BASIS

The investments shall carry the right of repatriation of capital invested and capital appreciation so long
as the investor continues to be a resident outside India. In the case of an FII, the designated branch of
the authorised dealer may allow remittance of net sale/maturity proceeds (after payment of taxes) or
credit the amount to the Foreign Currency account or Non-resident Rupee account of the FII
maintained in accordance with the approval granted to it by the RBI [Clause 5(i) of the Regulations].
In any other case, where the investment is made out of inward remittance or from funds held in
NRE/FCNR account of the investor, the maturity proceeds/repurchase price of units (after payment of
taxes) may be credited to NRE/FCNR/NRO/NRSR account of the non-resident investor maintained
with an authorised dealer in India [Clause 5(ii) of the Regulations].

INVESTMENTS MADE ON NON-REPATRIABLE BASIS

Where the purchase of units is made on a non-repatriable basis, the maturity proceeds/repurchase price
of units (after payment of taxes) will not qualify for repatriation out of India and the same may be
credited to the NRO/NRSR account of the non-resident investor [Clause 5(ii) of the Regulations].

Where the investment is made out of funds held in a NRSR account, the maturity proceeds/ repurchase
price of units (after payment of taxes) may be credited to the NRSR account maintained by the
investor with an authorised dealer in India [Clause 5(ii) of the Regulations].

Similarly, investments in units purchased in Rupees while the investor was resident of India and
becomes non-resident subsequently will not qualify for repatriation of repurchase proceeds of units.

The entire income distribution on investment will however qualify for full repatriation. Investors are
advised to contact their banks/tax consultants if they desire remittance of the income distribution on
units abroad.

15. TAX BENEFITS

(As per laws currently in force)

TAX IMPLICATIONS TO NON-RESIDENT UNITHOLDERS

The following summary outlines the key tax implications applicable to Non-resident Indian („NRI‟) /
Persons of Indian origin („PIO‟) / Foreign Institutional Investor („FII‟) based on the relevant provisions
                                                                                                    78
under the Income-tax Act, 1961 („Act‟) and Wealth-tax Act, 1957 (collectively called „the relevant
provisions‟), subsequent to the amendments enacted by the Finance Act 2003.

THE FOLLOWING INFORMATION IS PROVIDED FOR GENERAL INFORMATION ONLY.
HOWEVER, IN VIEW OF THE INDIVIDUAL NATURE OF THE IMPLICATIONS, EACH
INVESTOR IS ADVISED TO CONSULT WITH HIS OR HER OWN TAX
ADVISORS/AUTHORISED DEALERS WITH RESPECT TO THE SPECIFIC TAX AND OTHER
IMPLICATIONS ARISING OUT OF HIS OR HER PARTICIPATION IN THE SCHEMES.



TAX ON INCOME IN RESPECT OF UNITS

As per the provisions of Section 10(35) of the Act, income received in respect of units of a mutual fund
specified under Section 10(23D) of the Act is exempt from income tax in the hands of the recipient
unitholders.

TAX ON CAPITAL GAINS

As per section 2(42a) of the act, units of the scheme held as a capital asset, for a period of more than
12 months immediately preceding the date of transfer, will be treated as a long-term capital asset for
the computation of capital gains; in all other cases, it would be treated as a short-term capital asset.

Also, sub-section 7 of section 94 of the act provides that losses arising from the sale/transfer of units
(including redemption) purchased up to 3 months prior to the record date and sold within 3 months
after such date, will be disallowed to the extent of income distribution (excluding redemptions) on
such units claimed as tax exempt by the unitholder.

NRIs/ PIOs

Long-term and short-term capital gains arising to NRIs/PIOs from the transfer of units of the Scheme,
will be taxable at the following rates:

   Nature of income                                   Tax rate*
Short-term capital gains   Rate applicable as per the prescribed slabs in the case of
                           NRIs/PIOs (refer Note 1)
Long-term capital gains 20 percent with the cost inflation index benefit or 10 percent
                           without the cost inflation index benefit, whichever is
                           beneficial
* plus surcharge as may be applicable (refer Note 2).

FIIs

As per the provisions of Section 115AD of the Act, long-term capital gains on sale of units would be
taxed at 10(plus surcharge as applicable) percent and short-term capital gains would be taxed at
30(plus surcharge as applicable) percent. The said rates would be subject to applicable tax treaty relief.
The gains, in either case, would be calculated without indexation of cost of acquisition.

TAX DEDUCTED AT SOURCE
Income in respect of units

As per the proviso to Section 196A(1) of the Act, no tax shall be deducted at source from any income
credited or paid to non-resident unitholders in respect of units of a mutual fund specified under Section
10(23D) of the Act.
                                                                                                    79
CAPITAL GAINS

As per the provisions of Section 195 of the Act, in respect of short-term capital gains, tax is required to
be deducted at source at the rate of 30(plus surcharge as applicable) percent if the payee is a NRI/PIO.
In respect of long-term capital gains, tax is required to be deducted under Section 195 of the Act at the
rate of 20(plus surcharge as applicable) percent in case of NRIs/PIOs.

No tax would be deductible at source from the capital gains (whether long-term or short-term) arising
to an FII on repurchase/redemption of units in view of the provisions of Section 196D(2) of the Act.
The above rates would be subject to applicable tax treaty relief.

Note 1:
Currently, NRIs/PIOs are liable to tax in respect of their total income at the following rates:

                   Slab                                       Tax rate *
Total income not exceeding Rs 50,000           Nil
Rs 50,001- not exceeding Rs 60,000            10 percent of excess over Rs 50,000
Rs 60,001 - not exceeding Rs 150,000          20 percent of excess over Rs 60,000
                                              + Rs 1,000
Exceeding Rs 150,000                          30 percent of excess over Rs 150,000
                                              + Rs 19,000
* plus surcharge as may be applicable (refer Note 2).

Note 2:
            ASSESSEE                          RATE OF SURCHARGE APPLICABLE
NRIS/ PIOS/ NON-CORPORATE FIIS                             NIL
WHERE THE TAXABLE INCOME IS
UP TO RS 850,000 PER ANNUM
NRIS/ PIOS/ NON-CORPORATE FIIS                                10 PERCENT
WHERE THE TAXABLE INCOME IS
IN EXCESS OF RS 850,000 PER
ANNUM
CORPORATE FIIS                                               2.5 PERCENT

WEALTH TAX BENEFITS

Units are not to be treated as assets as defined under Section 2(ea) of the Wealth-Tax Act, 1957 and
hence will not be liable to wealth-tax.

TAX IMPLICATIONS TO RESIDENT UNITHOLDERS

The following summary outlines the tax implications to resident unitholders of the Schemes and is
based on relevant provisions under the Income-tax Act, 1961 („the Act‟) and Wealth-tax Act, 1957
(collectively called „the relevant provisions‟), subsequent to the amendments enacted by the Finance
Act 2003.

TAX ON INCOME IN RESPECT OF UNITS AND TAX ON CAPITAL GAINS (SAME AS
MENTIONED IN THE SECTION OF NON-RESIDENT UNITHOLDERS)

Long-term and short-term capital gains arising to resident unitholders from the transfer of the units of
the Scheme will be taxable at the following rates:

                                                                                                     80
Nature of income            Tax rate*
Short-term capital gains    Rate applicable as per the prescribed slabs in the case of resident
                            individuals (refer Note 3) and at 35 percent in the case of resident
                            corporates
Long-term capital gains     20 percent with the cost inflation index benefit or 10 percent without
                            the cost inflation index benefit, whichever is beneficial

* plus surcharge as may be applicable (refer Note 4)

TAX DEDUCTED AT SOURCE

As per the provisions of Section 194K of the Act, no tax should be withheld or deducted at source,
where any income is credited or paid by a mutual fund.

Further, no tax is required to be deducted at source from capital gains arising at the time of repurchase
or redemption of the units.

Note 3:
 Currently, resident individuals are liable to tax in respect of their total income at the following rates:

                 Slab                                       Tax rate *
Total income not exceeding Rs 50,000      Nil
Rs 50,001 ~ not exceeding Rs 60,000       10 percent of excess over Rs 50,000
Rs 60,001 ~ not exceeding Rs 150,000      20 percent of excess over Rs 60,000 + Rs.
                                          1,000
Exceeding Rs 150,000                      30 percent of excess over Rs 150,000 + Rs.
                                          19,000
* plus surcharge as may be applicable (refer Note 4)


Note 4:
                    Assessee                   Rate Of Surcharge Applicable
Resident Individuals Where The Taxable Income Nil
Up To Rs 850,000 per annum

Resident Individuals Where The Taxable Income 10 Percent
In Excess Of Rs 850,000 per annum
Resident Corporates                           2.5 Percent

TAX IMPLICATIONS ON MUTUAL FUND

Templeton Mutual Fund is registered with SEBI and as such, the entire income of the Fund is exempt
from income tax under Section 10(23D) of the Act. In view of the provisions of Section 196(iv) of the
Act, no income tax is deductible at source on the income earned by the mutual fund.

DISTRIBUTION TAX

As per Section 115R of the Income Tax Act, 1961 any amount of income distributed by a Mutual Fund
to its unit holders shall be chargeable to tax and such Mutual Fund shall be liable to pay income tax at
the rate of 12.8125 percent (including a surcharge of 2.5 percent).


                                                                                                      81
However, these provisions will not be applicable to any income distributed by an open-ended equity
oriented fund (where more than 50 percent of total proceeds of the mutual fund are invested in equity
shares of domestic companies as defined in Section 115T of the Act) for a period of one year
commencing from April 1, 2003.

RELIGIOUS AND CHARITABLE TRUSTS

Investments in the units of the Fund by Religious and Charitable Trusts is an eligible investment under
Section 11(5) of the Act, read with Rule 17C of the Income-tax Rules, 1962.


16. INVESTOR SERVICES

To resolve investor queries, the fund has set up an Investor Service Cell that ensures prompt response
to all investors complaints. The number of complaints received and redressed for the last two financial
years are detailed below:

 Scheme                                       01.04.2004 to 30.04.2004
                           Received                Redressed                   Pending
 TIGF                          9                        9                        NIL
 FIGF                          3                        3                        NIL
 FIIF                          3                        3                        NIL
 FIBF                          0                        0                        NIL
 TIIF                          6                        6                        NIL
 TMIP                          2                        2                        NIL
 TGSF                          1                        1                        NIL
 TILF                          0                        0                        NIL
 FITF                          0                        0                        NIL
 TILP                          0                        0                        NIL
 TFIF                          0                        0                        NIL
 FIPF                         21                       21                        NIL
 FIPP                         11                       11                        NIL
 FIT95                         8                        8                        NIL
 FIT96                         5                        5                        NIL
 FIT97                         1                        1                        NIL
 FIT98                         0                        0                        NIL
 FIT99                         0                        0                        NIL
 FIT                          18                       18                        NIL
 FIBCF                        22                       22                        NIL
 TIGIP                         0                        0                        NIL
 TIMMA                         0                        0                        NIL
 TIPP                          4                        4                        NIL
 TIIBA                        11                       11                        NIL
 TICAP                         0                        0                        NIL
 TITMA                         0                        0                        NIL
 FIVF                          0                        0                        NIL

                                                                                                 82
FIF                    16                       16                     NIL
FPF                     1                        1                     NIL
FFF                     1                        1                     NIL
FIMF                    0                        0                     NIL
FTIBF                   5                        5                     NIL
FIOF                   22                       22                     NIL
FTIMIP                 12                       12                     NIL
FISIP                   0                        0                     NIL
FTIIF                   0                        0                     NIL
FTIGF                   3                        3                     NIL
TISTIP                  0                        0                     NIL
FTIPERF                 0                        0                     NIL
FTIAAF                  1                        1                     NIL
FINTF                   0                        0                     NIL
FTDPEF                  0                        0                     NIL
FTLF                    0                        0                     NIL
Others (*)             23                       23                     NIL

Scheme            01.04.2002 to 31.03.2003             01.04.2003 to 31.03.2004
             Received     Redressed Pending      Received     Redressed     Pending
TIGF            53            52           1        64            64           Nil
FIGF             6             6          Nil       36            36           Nil
FIIF             6             6          Nil       35            35           Nil
FIBF             9             9          Nil       54            54           Nil
TIIF           568           566           2        61            61           Nil
TMIP           195           194           1        26            26           Nil
TGSF           191           190           1        54            54           Nil
TILF             2             2          Nil      120           120           Nil
FITF             3             3          Nil        2             2           Nil
TILP             0             0          Nil        0             0           Nil
TFIF            13            13          Nil        6             6           Nil
FINTF            0             0          Nil                                  Nil
FIPF           26            26           Nil      206          206            Nil
FIPP            65            65          Nil      424           424           Nil
FIT95           55            55          Nil      217           217           Nil
FIT96           20            20          Nil      106           106           Nil
FIT97            5             5          Nil       33            33           Nil
FIT98            0             0          Nil        7             7           Nil
FIT99            6             6          Nil       79            79           Nil
FIT             84            84          Nil      444           444           Nil
FIBCF           56            56          Nil      495           495           Nil
TIGIP            1             1          Nil        1             1           Nil

                                                                                      83
 TIMMA                  1            1           Nil          10            10          Nil
 TIPP                   5            5           Nil          82            82          Nil
 TIIBA                 59           59           Nil         308           308          Nil
 TICAP                 10           10           Nil          15            15          Nil
 TITMA                  0            0           Nil          13            13          Nil
 FIVF                   2            2           Nil           1             1          Nil
 FIF                   68           68           Nil         352           352          Nil
 FPF                    9            9           Nil          91            91          Nil
 FFF                    3            3           Nil          46            46          Nil
 FIMF                   0            0           Nil           1             1          Nil
 FTIBF                 17           17           Nil         103           103          Nil
 FIOF                  55           55           Nil         444           444          Nil
 FTIMIP                11           11           Nil          60            60          Nil
 FISIP                  0            0           Nil           0             0          Nil
 FTIIF                  1            1           Nil          12            12          Nil
 FTIGF                  4            4           Nil          33            33          Nil
 TISTIP                 0            0           Nil           1             1          Nil
 FTIPERF                7            7           Nil          13            13          Nil
 FTIAAF                 4            4           Nil           8             8          Nil
 FINTF                  0            0           Nil           1             1          Nil
 FTDPEF               N.A.         N.A.          N.A.          1             1          Nil
 FTLF – 20s           N.A.         N.A.          N.A.          2             2          Nil
 Plan
 Others (*)                                                  168           168          Nil
(*) : Inlcudes investors who have not furnished their account numbers / scheme names.
As on April 30, 2004 there are no SEBI complaints pending.

Investor Relations Officer: Mr. S. Rajagopalan
Investor Services
“Century Centre”
75, TTK Road, Alwarpet
Chennai 600 018
Ph : 2467 9200, Fax : 2498 7790
Email : services@templeton.com

Most queries were related to general / additional information on the fund.

Complaints regarding non-receipt of certificates were resolved by issuing duplicate certificates and
arranging for duplicate cheques/DDs in cases where redemptions were not received.




                                                                                              84
17. GENERAL INFORMATION

DECLARATION OF DIVIDENDS / REINVESTMENT FACILITY

DIVIDENDS AND DISTRIBUTION

The Trustee may declare dividends in the scheme at any time though there is no assurance or guarantee
to the Unitholders as to the rate of dividend distribution nor that the dividend will be regularly paid.
The Trustees may declare dividends at any periodicity as it deems fit to Unitholders, whose names
appear on the Unitholders‟ register on the record date. Dividends will be paid by cheque, net of taxes
as may be applicable, and payments will be in favour of the Unitholder‟s registered name and, if
provided, bank account number. Dividend cheques will be sent to the Unitholder‟s address stated on
the Application Form. All dividend payments will be made in favour of the registered holder of Units
or, if there is more than one registered holder, of the first-named registered holder on the original
Application Form. To safeguard the interest of Unitholders from loss or theft of dividend cheques,
investors are encouraged to provide the details of their bank account in the Application Form.
Dividend cheques will be sent in accordance with such information. The Trustee 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 periodicity of dividend; rate of dividends distribution nor that dividend will be
regularly paid. Dividend so declared may be reinvested in the Schemes at the first ex-dividend NAV.
The dividends so reinvested shall be constructive payment of dividends to the Unitholders and
constructive receipt of the same amount from each Unitholder for reinvestment in Units.


RECORD DATES FOR DECLARATION OF DIVIDEND

The record date for the dividends will normally be last working Friday of the month / quarter / half
year / annual as may be applicable; further if the same is a non-business day then the previous working
day will be considered as a record date. All unitholders in the respective plans, whose names appear in
the Register of Unitholders on the record date, will be eligible to receive the dividend. However, the
AMC reserves the right to vary this day or the period.

The Trustee may declare dividends in the scheme from time to time though there is no assurance or
guarantee to the Unitholders as to the rate or frequency of dividend distribution. The Trustees may
declare dividends at any periodicity as it deems fit.

DIVIDEND OPTION

The Trustee may, at their discretion, approve the distribution of dividends out of distributable profits to
unit holders in the Dividend Option whose names appear in the Register of Unit holders on the record
date. The date of declaration of any such dividend shall be the record date.

The scheme reserves the right to suspend sale of units for such period of time as it deems necessary
before the record date to ensure proper processing.

Dividends will be distributed within 30 days of the declaration of the dividends and payments will be
sent to the unit holder‟s registered name and if provided, bank account number.

As per current provisions of Income Tax Act, any income received from the scheme by the investors is
exempt from tax. The dividend amount whether paid out or reinvested will accordingly be exempt
from tax in the hands of the investor. Moreover, the scheme shall not be charged any distribution tax if
the investible funds to the extent of more than 50% of the total proceeds of the scheme are invested in
equity shares of domestic companies.
                                                                                                     85
The Trustee may consider providing returns to the investors by way of dividends. The Trustee may
consider interim dividends during the financial year subject to the availability of sufficient profits in
the fund and in conformity with SEBI Regulation in this regards

DIVIDEND REINVESTMENT OPTION

A unit holder opting for the Dividend Option may choose to reinvest the dividend to be received in
additional units of the scheme. The dividend due and payable to the unit holder will be automatically
reinvested at the first ex-dividend NAV prevailing after the dividend is declared. The dividend so
reinvested shall be construed as payment of dividends to the unit holder and construed as receipt of the
same amount from each unit holder for reinvestment in units.

On reinvestment of dividends, the number of units to the credit of unit holder will increase to the
extent of the dividend reinvested divided by the NAV applicable on the day of reinvestment, as
explained above.


The AMC has been advised that such reinvested dividends being similar to dividend payout, will be
tax exempt in the hands of the unit holder.

GROWTH OPTION

There will be no dividend declaration under this option. Instead the growth in NAV will reflect the
appreciation of the value of investment.

DEFAULT PLAN/OPTION

The investors must clearly indicate the option (Growth or Dividend) in the relevant space provided for
in the Application Form. In the absence of such instruction, it will be assumed that the investor has
opted for the Dividend Reinvestment Option. The Trustee/AMC reserve the right to alter/vary the
default plan/option, after giving notice.

UNDERWRITING

Subject to Templeton Mutual Fund obtaining the necessary approval-registration under the Securities
and Exchange Board of India (Underwriters) Regulations, 1993 and the Securities and Exchange
Board of India (Underwriters) Rules, 1993, the Scheme may accept obligations for underwriting issue
of Securities consistent with its investment objectives. The total underwriting obligations will not
exceed the scheme‟s total net asset value.

POLICY ON OFFSHORE INVESTMENTS BY THE SCHEMES

SEBI vide Circulars No.MFD/CIR/04/052/99 dated September 1, 1999 and MFD/CIR/17/419/02 dated
March 30, 2002, MFD/CIR/18/21826/2002 dated November 7, 2002 and SEBI/MFD/CIR
No.2/6855/2003 dated April 4, 2003, has permitted Mutual Funds to invest in ADR/GDR, However, a
minimum of US$ 5 million and maximum of US$ 50 million is permissible to each mutual fund
irrespective of size of assets.

Further SEBI vide circular No.SEBI/MD/CIR 7/5573/04 dated March 19, 2004 has permitted the
mutual funds to invest in foreign securities upto 10% of their net assets as on 31st January of each
relevant year.


                                                                                                   86
Templeton Mutual Fund has obtained the                  approval from        RBI, vide its letter
EC.CO.OID.MF.1394/19.20.253/2002-2003 dated             September 16,        2002, to invest in
ADR/GDR/Foreign Securities under its schemes.

Advantages offered to the investor and thereby resulting in furthering of investment objectives of the
respective schemes are:

      Foreign investments have the potential to offer a superior risk return equation given normal
       trend in the Indian Rupee-US Dollar exchange rate.
      By investing in securities of different countries, interest rate risk can be diversified and
       relatively favourable interest rates moves in different countries can be taken advantage of.
      This avenue increases the universe of investment options.

All such investments will always be in accordance with the investment objectives of the Scheme. The
investments will be in accordance with the Trustee approval.

POWER TO MAKE RULES

Subject to the prior approval of SEBI, if required, the Trustee may, from time to time, prescribe such
terms and make such rules for the purpose of giving effect to the provisions of this Scheme with power
to the Investment Manager to add to, alter or amend all or any of the terms and rules that may be
framed from time to time.

POWER TO REMOVE DIFFICULTIES

If any difficulty arises in giving effect to the provisions of this Scheme, the Trustee may do anything
not inconsistent with such provisions, which appear to them to be necessary, desirable or expedient, for
the purpose of removing the difficulty.

SCHEME TO BE BINDING ON THE UNITHOLDERS

The Trustee may, from time to time, add to or otherwise vary or alter all or any of the features,
investment plans and terms of this Scheme after obtaining the prior approval of SEBI and the
Government of India where necessary and the Unitholders in accordance with the SEBI Regulations,
and the same shall be binding on each Unitholder and any person or persons claiming through or under
him as if each Unitholder or such person expressly agreed that such features, plans and terms should be
so binding.

DURATION OF THE SCHEME

The duration of the Scheme is perpetual. However, in terms of the SEBI Regulations, the Scheme may
be wound up if:
i. There are changes in the capital markets, fiscal laws or legal system, or any event or series of
     events occurs, which, in the opinion of the Trustee, requires the Scheme to be wound up; or
ii. 75% of the Unitholders of the Scheme pass a resolution that the Scheme be wound up;
iii. SEBI directs the Scheme to be wound up in the interests of the Unitholders; or

Where a Scheme is to be wound up pursuant to the above, the Trustee shall give notice of the
circumstances leading to the winding up of the Scheme -
i.     to SEBI; and
ii.    in two daily newspapers having circulation all over India and also in a vernacular newspaper
       circulating at the place where the Fund is established.

                                                                                                  87
FOR OPEN ENDED SCHEMES

As    per     SEBI   circular  dated    December 12,  2003   ref   SEBI/IMD/CIR   No.
10/22701/03, each scheme and individual plan(s) under the schemes should
have a minimum of 20 investors and no single investor should account for
more      than   25%     of   the    corpus   of such  scheme/plan(s).  In   case  of
non-fulfillment with either of the above two conditions in a three months
time period or the end of succeeding calendar quarter, whichever is earlier,
from the close of the Initial Public Offering (IPO) of open ended schemes or
on an ongoing basis for each calendar quarter, the schemes /plans shall be
wound up by following the guidelines prescribed by SEBI and the investor‟s
money would be redeemed at applicable NAV.

PROCEDURE AND MANNER OF WINDING UP

i) The Trustee shall call a meeting of the Unitholders to consider and pass necessary resolutions by
   simple majority of the Unitholders present and voting at the meeting for authorizing the Trustees or
   any other person to take steps for winding up the Scheme/plan.
ii) a) The Trustee or the person authorized as above, shall dispose off the assets of the Scheme
        concerned in the best interest of the Unitholders of that Scheme.
     b) The proceeds of the sale made in pursuance of the above, shall, in the first instance be utilized
         towards discharge of such liabilities as are properly due under the Scheme and after making
         appropriate provision for meeting the expenses connected with such winding up, the balance
         shall be paid to the Unitholders in proportion to their respective interest in the assets of the
         Scheme as on the date when the decision for the winding up was taken.
iii) On the completion of the winding up, the Trustee shall forward to the Board and the Unitholders, a
     report on the winding up containing particulars such as circumstances leading to the winding up,
     the steps taken for disposal of assets of the Fund before winding up, expenses of the Fund for
     winding up, net assets available for distribution to the Unitholders and a certificate from the
     Auditors of the Fund.

iv) Notwithstanding anything contained herein, the application of the provisions of the SEBI
    Regulations in respect of disclosures of half-yearly reports and annual reports shall continue to
    apply.

After the receipt of the report referred to above under „Procedure and Manner of Winding Up‟, if SEBI
is satisfied that all measures for winding up of the Scheme have been completed, the Scheme shall
cease to exist.

UNITS WITH DEPOSITORY

Units of the respective Plans may, if decided by the AMC, be held with a Depository. Under such
circumstances, Units will be transferable in accordance with the provisions of Depositories Act, 1996
and the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 as
may be amended from time to time.

ELECTRONIC CLEARING SERVICE (ECS)

ECS is a facility offered by RBI, for facilitating better customer service by direct credit of
dividend/redemption to an investor‟s bank account through electronic credit. This helps in avoiding
loss of dividend/redemption warrant in transit or fraudulent encashment. The Mutual Fund will
endeavour to arrange such facility for payment of dividend/redemption proceeds to the Unit holders.
However, this facility is optional for the investors.
                                                                                                   88
It may be noted that there is no commitment from the Mutual Fund that this facility will be made
available to the Unit holders for payment of dividend/redemption proceeds. While the Mutual Fund
will endeavour in arranging the facility it will be dependent on various factors including sufficient
demand for the facility from Unit holders at any centre, as required by the authorities. In places where
such a facility is not available or if the facility is discontinued by the Scheme for any reason, the AMC
shall despatch to the Unit holders the dividend warrants within 30 days of the declaration of the
dividend and the redemption proceeds within 10 business days.

CLIENT INFORMATION

The Mutual Fund shall presume that the identity of the investor and the information disclosed by him
is true and correct. It will also be presumed that the Funds invested by the investor in the schemes of
the Mutual Fund come from legitimate sources/ manner and the investor is duly entitled to invest the
said funds.

The Mutual Fund is not, in any way, responsible for correctness of the information provided by the
investor to the Mutual Fund, as to his identity or any other information, and also his sources of income.
The Mutual Fund is not under any obligation to carry out any investigation/ inquiry as to the identity of
the investor and the sources of the moneys invested by the investor into the schemes of the Mutual
Fund. The Fund shall not undertake any such investigation/ inquiry since it does not possess adequate
resources to undertake such activity.

Where the funds invested are for the benefit of a person (beneficiary) other than the person in whose
name the units are issued and registered, the Mutual Fund shall assume that the investor holding the
Units in his name is legally authorized / entitled to invest the said funds in the Units of the Mutual
Fund, on behalf of the beneficiaries.

Units of the schemes are not offered, nor is the Fund managed or intended to serve as, a vehicle for
frequent trading that seeks to take advantage of short-term fluctuations in the securities market. This
type of trading activity is often referred to as “market timing” and could result in actual or potential
harm to the unit holders. Accordingly, the Mutual Fund (MF) at it‟s sole discretion may reject any
purchase or exchange of units that the MF reasonably believes may represent a pattern of market
timing activity involving the Funds of the MF.

WEBSITE

The website of Templeton Mutual Fund is intended solely for the use of Resident Indians, Non
Resident Indians, persons of Indian Origin and Foreign Institutional Investors registered with
Securities and Exchange Board of India. It should not be regarded as a solicitation for business in any
jurisdiction other than India. In particular the information is not for distribution and does not constitute
an offer to sell or the solicitation of an offer to buy securities in any jurisdiction where such activity is
prohibited including the United States of America. Any persons resident outside India who
nevertheless intend to respond to this material must first satisfy themselves that they are not subject to
any local requirements, which restrict or prohibit them from so doing.

Information other than that relating specifically to Franklin Templeton Asset Management (India) Pvt.
Ltd., Templeton Mutual Fund and its products, is for information purposes only and should not be
relied upon as a basis for investment decisions. Franklin Templeton Asset Management (India) Pvt.
Ltd. cannot be responsible for any information contained in any website linked from this website.

Franklin Templeton makes no representations whatsoever about any such website which the user may
access through this site. A link to a non-Franklin Templeton website does not mean that Franklin
                                                                                                      89
Templeton endorses or accepts any responsibility for the content, or the use, of such website. It is the
responsibility of the user to take precautions to ensure that whatever is selected for use is free of such
items as viruses and other items of a destructive nature.

The investors are requested to read the Terms and Conditions given on the website carefully before
using the website. By using the site, the investor will be deemed to have agreed that the Terms and
Conditions specified apply to the use of the investor of the site, any information obtained from the site,
and our products and services. If the investor does not agree to the specified Terms, the investor may
not use the site or download content from it.

WEB TRANSACTIONS

In the new era of liberalization and modernization, the Fund wishes to take optimum advantage of the
modern techniques of communication and transactions to serve its investors in a more efficient
manner.

As a step towards the same, the Fund has introduced and is allowing online subscription and
redemption/repurchase of the Units of the Fund or any other transaction such as change in address,
change in bank details, change in mode of payment etc. An investor availing this facility will be able to
subscribe for and redeem Units of the Fund or carry out other transactions through web-based
transaction links. Online transactions will save cost & time of the investor and will also enable the
Fund to serve its clients in a faster and efficient way.

However investors intending to take benefit of the web-based transaction facility should note that the
investor may use this service at their own risk. The Fund, the AMC, the Trustee, along with its
directors, employees and representatives shall not be liable for any damages or injuries arising out of
or in connection with the use of the website or its non-use including non-availability or failure of
performance, loss or corruption of data, loss of or damage to property (including profit and goodwill),
work stoppage, computer failure or malfunctioning, or interruption of business; error, omission,
interruption, deletion, defect, delay in operation or transmission, computer virus, communication line
failure, unauthorised access or use of information.

PERSONAL IDENTIFICATION NUMBER (PIN)

The PIN facility will be made available to every unitholder to facilitate transactions through the
website of the Fund. The Fund will despatch to the Unitholder, the Unitholder's HPIN by post to
his/her address recorded with the Fund, entirely at the risk of the Unitholder. The Unitholder shall use
the HPIN first to generate a user name and password with which to carry out transactions over the
Internet at a future date. The web transactions shall be carried out against his bank account, the details
of which are provided by the unitholder to the Fund. The unitholder shall be required to generate his
user name and password, using his HPIN, within 30 days of the receipt of the HPIN. In case the
unitholder fails to generate the same, the HPIN will be disabled/inactivated automatically by the Fund
or its registrars.

It may be noted that it shall be the Unitholder's responsibility to confirm receipt of the HPIN to the
Fund, forthwith notify the Fund in the event of evidence of tampering with the HPIN in the course of
post, or non-receipt of the HPIN, as the case may be, and to ensure adequate protection and the
confidentiality of the user name and password as well as the HPIN and any disclosure thereof to any
other person shall be entirely at the Unitholders risk including for the service of viewing a family
portfolio. The norms prescribed by the Fund to issue an HPIN will have to be adhered to from time to
time.

In the interest of the unitholder, the Unitholder will be asked to enter his/her/its user name and
                                                                                                    90
password and any other transaction specific details before any instructions are accepted on behalf of
Fund. Further, the Registrar may request a fax confirmation of the instructions and any additional
information the Fund may require. The Fund shall not be bound to act on instructions received until the
said fax confirmation and additional information is received from the Unitholder.

The Registrar may, in its discretion decide not to carry out any such transaction where the Registrar or
the Fund has reason to believe that the instructions are not genuine or are unclear or such as to raise a
doubt or are otherwise improper and cannot be put into effect. The decision of the Registrar on this
matter will be final.

The Unitholder shall be fully and solely liable to the Fund for every transaction entered into using the
Facility, whether with or without the knowledge of the Unitholder. Although the Fund agrees to take
best efforts to protect security of the data placed on the Internet, neither the Fund nor the Registrar
shall be liable at all for any misuse if any, of any data placed on the Internet, by third parties "hacking"
or unauthorized accessing the server. The Fund/Registrar will not be liable for any failure to act upon
instructions or to provide any facility for any cause that is beyond the Fund/Registrars‟ control.

TRANSACTION BY DISTRIBUTOR

Franklin Templeton may introduce a facility for distributors to transact on the web on behalf of their
clients, provided the client has authorised the distributors to do so by executing a Power of Attorney
(PoA) in favour of the distributor for this purpose. In such event, the Power of Attorney should be
submitted to the Fund.

BROKERS

The Fund intends to utilize the services of select financial intermediaries for distribution and may pay
brokerage depending upon the efficiency and other factors as may be decided by the AMC. The
Investment manager is the sole authority to select such financial intermediary/intermediaries who
would distribute the product. Further, the AMC may appoint one or more exclusive distributors, at its
discretion, based on the parameters decided by the AMC.

The Fund may use the services of associate brokers or take the sale of its units into account when
allocating brokerage. However, the brokerage paid to Associate Brokers shall be at the same rate
offered to any other broker who procures subscription.

BOOKS AND RECORDS

The books and records of the Fund will be maintained at the Registered Office of the Investment
Manager. The fiscal year of the Fund ends on 31st March in each year. The Register of Unitholders of
the Scheme shall be maintained at the Registered office of the Investment Manager along with that of
the Registrars at their office at Century Centre 75, TTK Road, Chennai 600 018 and such other places
as the Trustees may decide.

DOCUMENTS AVAILABLE FOR INSPECTION

The following documents will be available for inspection by the prospective investors between 11.00
a.m. and 1.00 p.m. on any day (excluding Saturdays, Sundays and public holidays), at the office of the
Fund: -

   Copy of Registration Certificate from SEBI
   Copy of the Trust Deed and Supplementary Trust Deed
   Copy of Investment Management Agreement
                                                                                                     91
   Copy of Memorandum & Articles of Association of Trustee
   Copy of Memorandum & Articles of Association of the Investment Manager
   Copy of the Custodian Agreement
   Consent of Registrar and Transfer Agents to act in the said capacity
   Consent of Auditors to act in the said capacity
   A copy of this Offer Document
   SEBI (Mutual Funds) Regulations, 1996
   Copy of Indian Trust Act, 1882
   Annual Report of the Asset Management Company

18. PENDING LITIGATION OR PROCEEDINGS


   All cases of penalties awarded by SEBI under the SEBI Act or any of its regulations against the
    Sponsor of the Mutual Fund or any company associated with the Sponsor in any capacity including
    the Asset Management Company, Trustee Company/Board of Trustees, or any of the directors or
    key personnel specifically the fund managers) of the Asset Management Company and Trustee
    Company. The nature of the penalty must be disclosed. For Sponsor and its associates, other than
    the penalties as mentioned above, the penalties awarded by any financial regulatory body,
    including stock exchanges, for defaults in respect of shareholders, debentureholders and depositors
    shall also be disclosed. Additionally, penalties awarded for any economic offence and violation of
    any securities laws shall be disclosed:

    SEBI had in January 2000 referred to adjudication certain allegations relating to non-disclosure of
    three items in the abridged offer documents of Balanced Fund, Pharma Fund, FMCG Fund and
    Taxshield and non-filing of the abridged offer document of Balanced Fund.

    The adjudicating officer by his order dated 14th June 2001 levied a penalty of Rs.2 lakhs against the
    Asset Management Company (erstwhile Pioneer ITI AMC Ltd.) and the same was paid.

   Any pending material litigation proceedings incidental to the business of the Mutual Fund to which
    the Sponsor of the Mutual Fund or any company associated with the Sponsor in any capacity
    including the AMC, Board of Trustees / Trustee Company or any of the directors or key personnel
    is a party. Any pending criminal cases against the Sponsor or any company associated with the
    Sponsor in any capacity including the AMC, Board of Trustees/Trustee Company or any of the
    directors or key personnel should also be disclosed separately:

INTERNATIONAL OPERATIONS

   Three individual plaintiffs filed a consolidated class action and derivative complaint captioned, In
    re: Templeton Securities Litigation (Civil Action No. 98-6059), in the U.S. District Court for the
    Southern District of Florida, against Templeton Vietnam Opportunities Fund, Inc. (now known as
    Templeton Vietnam and Southeast Asia Fund, Inc.) (hereafter, the “Fund”); Templeton Asset
    Management, Ltd., an indirect wholly-owned subsidiary of Franklin Resources, Inc. (“FRI”) and
    the investment manager of the closed-end investment company; certain of the fund‟s officers and
    directors; FRI; and Templeton Worldwide, Inc., an FRI subsidiary. On April 3, 2002, the Court
    provided final approval of a settlement agreement entered into among the parties, which had been
    preliminarily approved by the Court on November 15, 2001. Under the terms of the settlement
    agreement, the plaintiffs and defendants agreed to resolve all claims for $6.5 million, including
    plaintiffs‟ attorneys fees and the costs of administering the settlement; it is expected that the Fund
    will receive a minimum of $2 million, which has been reflected in the Fund's net asset value as of
    April 3, 2002. The defendants have agreed to the settlement to avoid the expense and
    inconvenience of further proceedings. The settlement does not contain, and specifically denies, any
    admission of wrongdoing or violation of law by any of the defendants.
                                                                                                    92
    Templeton International Inc. is involved from time to time in litigation relating to claims arising in
     the normal course of business. Management is of the opinion that the ultimate resolution of such
     claims will not materially affect Franklin Templeton Investments' business or financial position.

INDIAN OPERATIONS

  One of the investors under Templeton India Growth Fund had made investment to the tune of
   Rs.1,00,00,001/- under Section 54EB of the Income Tax Act, 1961. In accordance with the legal
   opinion of the counsel of the Fund, the Fund is of the view that investments under Section 54EB of
   the Income Tax Act, 1961 read with CBDT Notification No. 10247 dated December 19, 1996, the
   units had to be locked-in for a period of seven years from the date of investment. However, the
   investor had disputed this stand and had filed a writ petition in the High Court of Delhi seeking the
   direction of the court for premature redemption of units, with Templeton Mutual Fund as one of
   the respondents. The Honourable Delhi High Court vide its order dated 3rd August 2000 directed
   SEBI to dispose off the representation filed by the investor. The investor then filed a
   representation with SEBI. After hearing the petitioner and the respondents, SEBI rejected the
   representation vide order dated September 4, 2000 upholding the stand of the Mutual Fund.

  Subsequently, the investor had filed a Memorandum of Appeal with the Securities Appellate
   Tribunal, Mumbai against the SEBI order dated September 4, 2000. The Tribunal dismissed the
   appeal vide its order dated February 15, 2001 and upheld the stand of the Mutual Fund. The
   investor has now filed a petition in the Delhi High Court challenging the order of the Securities
   Appellate Tribunal and challenging the Central Board of Direct Taxes (CBDT) order.

  Cases of penalties awarded by SEBI under the SEBI Act or any of its regulations against the
   Sponsor of the Mutual Fund or any company associated with the Sponsor in any capacity including
   the Asset Management Company, Trustee, or any of the directors or key personnel (specifically the
   fund managers) of the Asset Management Company and the Trustee Company. Penalties awarded
   against the Sponsors and its associates by any financial regulatory body, including stock
   exchanges, for defaults in respect of shareholders, debentureholders and depositors, penalties
   awarded for any economic offence and violation of any securities laws.

     One of the investor under Templeton India Income Builder Account (TIIBA) has filed a compliant
     against Franklin Templeton Asset Management (India) Private Limited (AMC) regarding wrongful
     withdrawal of funds from its investment accounts. The AMC has filed a compliant in this regard
     against an ex-employee of the company and others before the Sub Divisional Judicial Magistrate at
     Bhubaneshwar. The Honourable Court has given direction to the Police to register and investigate
     the case. The investigation is in progress.

     The investor had also filed a Writ Petition against AMC / SEBI and other Government agencies at
     the High Court of Orissa at Cuttack.

     The above litigation, including the complaint by the investor with SEBI, and the Writ Petition arise
     out of the wrongful redemption made to third parties aggregating the sum of Rs. 46 lacs. Since
     these wrongful redemptions pertain to the ex-Pioneer ITI mutual fund schemes, and most of these
     transactions were done before the acquisition of the said fund by Franklin Templeton, the AMC
     has retained sufficient amount (from the ex-shareholders of Pioneer ITI AMC Ltd.) in an escrow
     account to meet such contingencies. Under no circumstances, will the loss be passed on to the
     fund.

  Any deficiency in the systems and operations of the Sponsor of the Mutual Fund or any company
   associated with the sponsor in any capacity including the AMC or the Trustee Company which
   SEBI has specifically advised to be disclosed in the offer document, or which has been notified by
                                                                                                     93
   any other regulatory agency, shall be disclosed: Nil

  Any enquiry/adjudication proceedings under the SEBI Act and the Regulations made thereunder,
   that are in progress against the Sponsor of the Mutual Fund or any company associated with the
   Sponsor in any capacity including the AMC, Board of Trustees/Trustee Company or any of the
   Directors or key personnel of the Asset Management Company shall be disclosed: Nil

The above information has been disclosed in good faith as per the information available to the AMC.

Notwithstanding anything contained in the offer document, the provisions of the SEBI (Mutual Funds)
Regulations, 1996 and the Guidelines thereunder shall be applicable.

This Offer Document is an updated version of the same in line with the current laws / regulations and
other developments.

FOR FRANKLIN TEMPLETON ASSET MANAGEMENT (INDIA) PVT. LTD.
INVSETMENT MANAGER: TEMPLETON MUTUAL FUND




Ravi Mehrotra
President


Date: May 31, 2004
Place: Mumbai




                                                                                               94
Franklin Templeton Branch Offices

1.     Mumbai
      72/73 Free Press House, 7th Floor
      Free Press Journal Marg Nariman Point
      Mumbai - 400 021. Tel : 56325820-29
      56325830-36. Fax : (022) 22810923

2.    Ahmedabad
      1001 Abhijit-II, Mithakhali Six Roads
      Navrangpura Ahmedabad 380 009
      Tel: 6470057 Fax: (079) 6401945

3.    Bangalore
      Niton Compound 11, Palace Road
      Bangalore 560052 Tel : 2385612/13/14
      Fax : (080) 2385886

4.    Baroda
      103, 1st floor, Paradise Complex
      Sayajigunj Vadodara 390 005. Tel: 2225426
      Telefax: (0265) 2225427

5.    Bhubaneswar
      77, Kharavel Nagar, Unit III, Janpath
      Bhubaneswar 751 001. Tel: 2535141 / 2531745
      Fax: (0674) 2531026

6.    Chandigarh
      S.C.O. 371-372, I Floor Sector 35 - B
      (Above HDFC Bank) Chandigarh 160 022
      Tel: 662136, 622341, 613371
      Fax: (0172) 622341

7.    Chennai
      Century Centre, 75 TTK Road
      Chennai 600 018 Tel : 24679200
      Fax: (044) 24987790

8.    Cochin
      36/1696-A, II Floor, N.H.Road, Kaloor
      Ernakulam, Cochin 682 017. Tel: 2334824 / 2335096
      Fax: (0484) 2334865

9.    Coimbatore
      424-C Red Rose Towers, II Floor
      D. B. Road R.S.Puram, Coimbatore 641 002
      Tel: 2474616 Telefax: (0422) 2470277

10.   Dehradun
      Shop no. 44, Meedo Arcade
      28 Rajpur Road Dehradun 248 001
      Tel: 2743268/2748306
      Fax: (0135) 2748306
                                                          95
11.   Hyderabad
      501 Regency House, Somajiguda
      Hyderabad 500 082. Tel: 55665915 / 55665916
      Fax: (040) 55665770

12.   Indore
      303, Silver Sanchore Castle
      7, RNT Marg Indore 452 001
      Tel: 2526710 Telefax: (0731) 2526711

13.   Jaipur
      250 Ganpati Plaza, M I Road
      Jaipur 302 001. Tel: (0141) 2377904 / 2377905
      Fax: (0141) 2388737

14.   Jalandhar
      Rachnaa Chambers, Next to Hotel Centre
      Point BMC Chowk, G.T. Road
      Jalandhar – 144 001 Tel: 5080784, 2456033
      Telefax: (0181) 5080783

15.   Kanpur
      Room No 307, Third Floor
      15/63 Krishna Tower, Kanpur 208 001
      Tel: (0512) 305367

16.   Kolkatta
      2D & 2E Landmark Building
      228-A A.J.C. Bose Road, Calcutta 700 020
      Tel: 22826517, 22824171

17.   Lucknow
      2 Uttam Palace, I Floor
      3 Sapru Marg, Lucknow 226 001
      Tel: 285301 Telefax: (0522) 285172

18.   Ludhiana
      SCO-37, II Floor, Feroze Gandhi Market
      Ludhiana 141 001 Tel: 406198
      Telefax: (0161) 406191

19.   Madurai
      24 A Pechiamman Padithurai Road
      Madurai 625 001
      Tel : (0452) 2343008, 2350144

20.   Mangalore
      IV Floor, Sanu Palace, Kodialbail
      Mangalore 575 003
      Tel: 2492796 Telefax: (0824) 2493749



                                                      96
21.   Nagpur
      126, FarmLand, Ramdas Peth
      Opp SBI Bank, Nagpur 440 010
      Tel: 2555074
      Telefax: (0712) 2553794

22.   Nasik
      S-4, Suyojit Trade Centre
      Opp Rajiv Gandhi Bhavan
      Sharanpur Road, Nasik 422 002
      Tel: 2574329 Telefax: (0253) 2574327

23.   New Delhi
      93-D Himalaya House
      IX Floor, 23 Kasturba Gandhi Marg
      New Delhi 110 001
      Tel: 3722786, 3752017
      Telefax: (011) 3353213

24.   Patna
      505 Ashiana Hariniwas Apartments
      Dak Bungalow Road, Patna 800 001
      Tel: 2212277 Fax: (0612) 2213170

25.   Pune
      1306, „Kamalja‟, Shivajinagar
      Rokdoba Mandir Path, Near MSEB Office
      Off Jangli Maharaj Road
      Pune 411 005
      Tel: 5533140/5533141/5513660
      Telefax: (020) 5513661

26.   Rajkot
      5th Floor, Star Plaza, Phulchhab Chowk
      Rajkot - 360 001 Tel: 2471395
      Telefax: (0281) 2294204

27.   Raipur
      Office No.244, Second Floor
      Rishabh Complex, M.G. Road
      Raipur 492 001. Tel: 5033244
      Telefax: (0771) 5033614

28.   Salem
      1/31-A Anna Salai, I Floor
      Swarnapuri, Salem 636004
      Tel: 2446854, 2430506
      Fax: (0427) 2446854

29.   Surat
      404-405, Lalbhai Contractor Complex
      Opp. Library, Nanpura
      Surat - 395 001. Tel: 2473766
      Telefax: (0261) 2473744

                                               97
30.   Trichy
      Jenne Plaza Ground Floor 5/C
      28 Bharathiar Salai Cantonment
      Trichy 620001. Tel: 2464022
      Fax: (0431) 2414691

31.   Varanasi
      IV Floor, Kuber Complex
      Rathyatra crossing, Varanasi 221 010
      Tel: 403584 Telefax: (0542) 403255

32.   Vijayawada
      White House I Floor, Room # 2
      M.G. Road, Vijayawada 520 010
      Tel: 2472594, 5561301
      Fax: (0866) 2472594

33.   Visakhapatnam
      C-9 Pavan Palace, Dwaraka Nagar
      Visakhapatnam 530 016
      Tel: 5565351, 2704705
      Fax: (0891) 5566806




                                             98

				
DOCUMENT INFO
Description: Franklin Templeton Investments Fund Bradesco document sample