Offer FFF

CONTINUOUS OFFER
OFFER DOCUMENT
Franklin FMCG Fund

An Open – end Growth Scheme
Sale of units on an ongoing basis at a Net Asset Value (NAV) related price
Asset Management Company : Franklin Templeton Asset Management (India) Pvt. Ltd
Mutual Fund : Franklin Templeton Mutual Fund
Trustee Company : Franklin Templeton Trustee Services Pvt. Ltd.
The particulars of Franklin FMCG Fund have been prepared in accordance with the
Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended till
date, and filed with SEBI, the units being offered for public subscription have not been
approved or disapproved by the Securities and Exchange Board of India nor has the
Securities and Exchange Board of India certified the accuracy or adequacy of the Offer
Document.
The Offer Document sets forth concisely the information about the scheme that a prospective
investor ought to know before investing. Please retain this Offer Document for future reference.
The date of this revised Offer Document is August 24, 2005
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 05
03. DEFINITIONS 05
04. DUE DILIGENCE CERTIFICATE 08
05. SUMMARY OF THE SCHEME 09
06. SUMMARY OF EXPENSES AND FINANCIAL INFORMATION 09
07. CONDENSED FINANCIAL INFORMATION 12
08. CONSTITUTION / MANAGEMENT OF THE MUTUAL FUND 16
09. INVESTMENT OBJECTIVES AND POLICIES 34
10. HOW TO INVEST 44
11. VALUATION OF ASSETS AND NET ASSET VALUE 53
12. HOW TO REDEEM UNITS OF THE SCHEME 66
13. ASSOCIATE TRANSACTIONS 72
14. UNITHOLDER INFORMATION 72
15. TAX BENEFITS 79
16. INVESTOR SERVICES 83
17. GENERAL INFORMATION 85
18. PENDING LITIGATION OR PROCEEDINGS 92
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01. HIGHLIGHTS
• Franklin FMCG Fund, an open-end 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$ 438.7 billion in assets
(approximately Rs.19,05,713 crores) as on July 31, 2005.
• An open-end sector fund investing primarily in the Fast Moving Consumer Goods (FMCG)
industry.
• India's FMCG sector is poised for robust growth on account of increased spending,
penetration of rural markets, shift in demographic pattern favouring consumption of
consumer goods etc. In addition, investment in brands and cost reduction is expected to
continue the process of wealth creation in this sector.
• Choice of Dividend Plan and Growth Plan.
• The dividend option also offers reinvestment facility.
• Minimum investment amount - Rs. 5,000/-.
• Long term capital gains benefits.
• Dividend 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).
• No tax deduction at source on redemption irrespective of the amount redeemed for resident
investors.
RISK FACTORS
• Mutual funds and securities investments are subject to market risks and there is no
assurance or guarantee that the objective of the Scheme will be achieved.
• As with any investment in securities, the Net Asset Value (NAV) of the units issued
under the scheme can go up or down depending on the factors and forces affecting the
capital markets.
• Past performance of the sponsors/the asset management company/mutual fund does not
indicate the future performance of the scheme of the mutual fund.
• Franklin FMCG Fund is the name of the scheme and does not in any manner indicate
either the quality of the scheme or its future prospects and returns.
• Franklin FMCG Fund will invest primarily in the Fast Moving Consumer Goods (FMCG)
industry thereby restricting the diversification of the scheme. Therefore, the performance
of the scheme would be dependent upon the performance and market price movements of
companies in the Fast Moving Consumer Goods (FMCG) industry. Hence, movements in
the Net Asset Value (NAV) of Franklin FMCG Fund will be more volatile compared to
the NAV of a scheme with a more diversified portfolio.
• The Sponsor is not responsible or liable for any loss resulting from the operation of the
Scheme beyond the initial contribution of Rs.1 lakh made by it towards setting up the
Fund.
• The investors in the Scheme are not being offered any guaranteed/assured returns.
SCHEME SPECIFIC RISK FACTORS AND SPECIAL CONSIDERATION
• 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 markets.
• 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.
3
• The scheme may invest in unlisted equities. This may expose the scheme to liquidity
risks.
• Engaging in securities lending is subject to risks related to fluctuations in collateral
value/settlement/liquidity/counter party.
• 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 Money market markets.
• As per SEBI circular No. SEBI/IMD/Cir-10/22701/03 dated December 12, 2003 read
with Circular No. SEBI/IMD/Cir-1/42529/05 dated June 14, 2005, each portfolio under a
scheme should have a minimum of 20 investors and no single investor should account for
more than 25% of the corpus of such portfolio. Determining the breach of the 25 % limit
by an Investor – The average net assets of the scheme would be calculated daily and any
breach of the 25% holding limit by an investor would be determined. At the end of the
quarter, the average of daily holding by each such investor is computed to determine
whether that investor has breached the 25 % limit over the quarter. If there is a breach of
limit by any investor over the quarter, a rebalancing period of one month would be
allowed and thereafter the investor who is in breach of the rule shall be given 15 days
notice to redeem his exposure over the 25 % limit. Failure on the part of the said investor
to redeem his exposure over the 25 % limit within the aforesaid 15 days would lead to
automatic redemption by the Mutual Fund on the applicable Net Asset Value on the 15th
day of the notice period.
In each calendar quarter, on an average basis, each portfolio under an open end scheme
shall meet with the above condition of minimum 20 investors, failing which the
provisions of Regulation 39(2)(c) of SEBI (Mutual Funds) Regulations, 1996 would
become applicable automatically without any reference from SEBI and accordingly, the
portfolio shall be wound up by following the guidelines laid down by SEBI.
• 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),
capitalisation, capital gains, any distribution, and other tax consequences relevant to their
subscription, acquisition, holding, capitalisation, 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.
The Investor is requested to check the credentials of the individual/firm he/she is
entrusting his/her application form and payment to, for any transaction with the Fund.
4
The Fund/Trustee/AMC shall not be responsible for any acts done by the intermediaries
representing or purportedly representing such investor.
• No person has been authorised 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 authorised 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 FMCG Fund is an open-end growth scheme, which invests primarily in the Fast Moving
Consumer Goods (FMCG) industry and seeks to provide long- term capital appreciation.
Investors have a choice of Growth Plan and Dividend Plan.
Dividend Plan
Under this plan, investors can choose to receive tax-free dividends. Investors also have the option
to reinvest their dividend for additional units. There is no assurance on the frequency of
dividends as they depend on the availability of distributable profits.
Growth Plan
Under this plan, the growth in NAV will reflect the appreciation of the value of investment.
Investors have the benefits of indexation of cost and favourable long term capital gains.
03. DEFINITIONS
In this Offer Document the following definitions have been used:
AMC/Asset Franklin Templeton Asset Management (India) Pvt. Ltd., the

Management asset management company, set up under the Companies Act, 1956
Company/ and authorized by SEBI to act as Asset Management Company to
Investment the schemes of Franklin Templeton Mutual Fund.
Manager
Applicable NAV “Applicable NAV for Subscriptions” is the Net Asset Value per
for Subscriptions unit of the business day on which the application for subscription is
accepted.
Applicable NAV “Applicable NAV for Redemptions” is the Net Asset Value per
for Redemptions unit of 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,
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(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.
Custodians A custodian appointed for holding the securities and other assets of
the scheme, which for the time being is Deutsche Bank, Kodak
House, 422, Dr. D. N. Road, Fort, Mumbai 400 001.
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.
Agreement or and Franklin Templeton Asset Management (India) Pvt. Ltd.
IMA
ISC Investor Service Centre of the Asset Management Company
Collection Centre The location that is declared as an official point of acceptance for
all transactions but where no Investor or Distributor services are
offered. These locations would only accept and acknowledge
transactions as per SEBI guidelines.
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 Franklin 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 FMCG Fund.
Offer Document The document issued by Franklin Templeton Mutual Fund offering
units of Franklin FMCG Fund.
Public Offering ‘POP’ or the Sale Price is the price at which the units are proposed
Price (POP) / Sale to be sold on an ongoing basis and may include permissible load
Price amount 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 FMCG Fund (FFF)
6
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, U.S.A.
Trust Deed The Trust Deed dated January 4, 1996 of Franklin Templeton
Mutual Fund, as amended by the Supplemental Deed of Trust
dated May 30, 1996.
Trustee Franklin Templeton Trustee Services Pvt. Ltd., a company set
up under the Companies Act 1956, and approved by SEBI to act as
the Trustee to the schemes of Franklin Templeton Mutual Fund.
Unit The interest of an investor, which consists of one undivided share
in the Net Assets of Franklin FMCG Fund.
Unitholder A person holding Units in Franklin FMCG Fund.
FRANKLIN FMCG FUND
Franklin FMCG Fund is an open-end growth scheme with an objective to provide long-term
capital appreciation by investing primarily in shares of companies operating in the Fast Moving
Consumer Goods (FMCG) industry.
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04. DUE DILIGENCE CERTIFICATE
Franklin FMCG Fund
It is confirmed that:
i. The updated and revised Offer Document forwarded to SEBI is in accordance with the
Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 and the
guidelines and directives issued by SEBI from time to time.
ii. 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
iii. The intermediaries named in the Offer Document are registered with SEBI and till date
such registrations is valid.
Pranita Gramopadhye
Compliance Officer
Date: August 24, 2005

Place: Mumbai
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05. SUMMARY OF THE SCHEME
Name of the Scheme Franklin FMCG Fund (FFF)

Nature of the Scheme An Open-end growth scheme.
Investment Objective The investment objective of Franklin FMCG Fund is to provide
long- term capital appreciation by investing in shares of companies
operating in the Fast Moving Consumer Goods (FMCG) industry.
Pricing for on going On going subscription will be at Public Officering Price* (POP)
subscription
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 2 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
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.
a) The financial information (condensed) relating to the previous schemes launched by the
Fund.
Unitholder Transaction Expenses or Sales Load:

As a % of NAV Present charge Maximum charge
I Maximum sales Load imposed on purchase 2.25% 3%
(for normal
purchases#)
II Sales Load, if any, on issue of units in lieu of dividends NIL NIL
III Redemption / Repurchase load NIL 3%
IV Switchover/Exchange Fee* NIL NIL
# normal purchases are purchases at the minimum subscription amount specified for each respective
scheme, other than purchases through SIP, STP(in), DTP(in) or Exchange/ Switch(in)
9
*In case of exchanges:
If Entry Load paid for Scheme I is greater than the No entry load will be charged by Scheme II
entry load for Scheme II
If Entry Load paid for Scheme I is lower than the The differential load will be charged by Scheme II
entry load for Scheme II
If Entry Load paid for Scheme I is same as the An exchange fee of 0.25% will be charged by
entry load for Scheme II Scheme II
For all Systematic Investment Plan (SIP), Systematic Transfer Plan (STP) and Dividend Transfer
Plan (DTP) purchase transactions, following entry and exit load shall be applicable:
Description Entry Load Exit Load*
If the entry load for normal 1% Equal to the entry load applicable
purchases# exceeds 1% to normal purchases#, as reduced
by 1%
If the entry load for normal 50% of the entry load applicable Equal to 50% of the entry load
purchases# is equal to or less for normal purchases# applicable for normal purchases#
than 1%
* if redeemed within 2 years (730 calendar days) of the allotment date applying ‘First in First Out’
basis, or in case the SIP/STP is prematurely terminated before completion of the minimum term for
any reason, as the AMC may deem fit..
It is clarified that the load applicable in case of a SIP, STP and DTP shall be the load prevailing
on the date of the first instalment.
The investors may please note the exchanges/switches in the tax savings schemes will be subject
to the applicable lock-in-periods.
The Trustee/AMC reserves the right to increase/decrease/introduce a Load/Fee at any time in

future 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. 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. However, such increase/decrease/introduction would be subject
to the limits prescribed under the Regulations.
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.
All loads including CDSC shall 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.
As per SEBI circular MFD/CIR.No 04/11488 /2003 dated June 12, 2003; Mutual Funds are
permitted to launch Fund of Funds (FOF) schemes. The A FOF scheme will invest in other
mutual fund schemes, which will be treated as underlying schemes.
10
Load in case of Fund-of-Funds scheme: As the FOF scheme can charge a load, if the
underlying schemes too 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, no load (entry/exit) will be charged
by the underlying open-end schemes of Franklin Templeton Mutual Fund on the investments
made by any Fund of Funds scheme of a Mutual Fund.
Trail Fees: In the FOF scheme, the underlying schemes get the subscription through the vehicle
of FOF. Hence, the distributor who mobilizes the investment in Franklin Templeton Fund of
Fund schemes is entitled to trail fees, which the underlying scheme would have normally paid to
a distributor. Accordingly, the trail fees will be paid out of the underlying scheme.
Total Expenses:
• Investment Management and Advisory fees not exceeding 1.25% on the first 100 crores of
the Daily/Weekly Average Net Assets and 1% of the amount in excess of Rs.100 crores.
• The maximum annual recurring expenses that can be charged to the scheme shall be within
the limits stated in Regulations 52(6) and subject to a percentage limit of Daily/Weekly
Average Net Assets as in the table below:
First Rs.100 crore Next Rs.300 crore Next Rs.300 crore Over Rs.700 crore
2.50% 2.25% 2.00% 1.75%
Any excess over these specified ceilings will be borne by the Asset Management Company. The
Trustee/AMC reserves the right to charge higher operating expenses in relation to overseas
investment 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:
Nature of fees and expenses % of Average
Weekly Net Assets
Investment Management Fees 1.25
Custodial Fees 0.50
Shareholder Servicing Fee/Investor Communication Expenses 0.50
Trustee Remuneration, Audit Fees etc 0.25
Total Annual Recurring Expenses 2.25*
Trusteeship fee shall be distributed equitably across all schemes of Franklin 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 Franklin 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.
11
The total expenses of the scheme including the investment management and advisory fee
(together with additional management fee wherever applicable) shall not exceed the limit stated
in Regulation 52(6).
The AMC reserves the right to revise these charges as specified under the paragraph pertaining to
fundamental attributes of the scheme.
Past schemes (launched during the past one fiscal year):
The details of initial issue expenses of Franklin India Flexi Cap Fund (FIFCF) and Franklin
Templeton Fixed Tenure Fund – Series I – 60 Month Plan (FTFTF-I) (schemes launched during
the last one fiscal year) are given below:
(Rs. in Lakhs)
Nature of expenses FIFCF FTFTF-I
(No Load
Scheme)
Brokerage fees & Commission 5,410.89 183.68
Marketing & Advertising 331.37 27.31
Printing & Distribution 81.92 17.30
Banker’s fees 6.70 --
Other expenses 0.25 -
Total Expenses 5,831.13 228.29
None of the expenses in any of the schemes above have exceeded 6% of initial resources
mobilised. The initial issue expenses in case of FTFTF-I are currently borne by the AMC. In case
of FIFCF, the amount in excess of the entry load has been borne by the AMC.
07. CONDENSED FINANCIAL INFORMATION
a) HISTORICAL PER UNIT STATISTICS
Name of the Scheme FINTF FIFCF

Date of launch 20.12.2002 02.03.2005
Information as at the end of Mar 2003 Mar 2004 March 2005^ March 2005^
NAV at the beginning of the year 10.00 a 9.9790 9.3611 10.00 a
Net Income per unit (Rs.) (0.01) -1.08 0.36 (0.35)
Dividends (Rs.) / Bonus NIL Nil Nil Nil
Transfer to Reserves NIL NIL Nil Nil
NAV at the end of the year (Rs.) 9.9790 9.3611 9.5602 9.64
Annualised compounded return%@ (0.21%)* -5.03% -1.95% -3.60%*
Benchmark Index Lehman Intermediate Govt (US) Index S&P CNX 500
Benchmark Annualised compounded 0.35%# * -3.96%# -2.13%# -2.87%*
return%@
Net Assets (End of period) (Rs. in crores) 5.84 1.68 1.18 1949.72
Ratio of Recurring Expenses to Net Assets 0.90% 0.85% 0.85% 1.97%
Name of the Scheme FTDPEF TIGF - Growth Plan FTLF

Date of Inception 31.10.2003 05.09.2003 29.11.2003
12
Information as at the end Mar 2004 Mar 2005^ Mar 2004 Mar 2005^ Mar 2004 Mar 2005^
of
NAV at the beginning of 10.00 a 11.8435 20.59 29.20 10.00a 10.9294 (20s
the year (GP) Plan)
11.8435 10.7121 (30s
(DP) Plan)
10.5444 (40s
Plan)
10.4021 (50s
Plus Plan)
10.00 a (50s
Plus Floating
Rate Plan)
Net Income per unit (Rs.) 1.37 3.91 12.15 6.25 0.75 3.26
(20s Plan) (20s Plan)
0.40 2.28
0.30 1.28
0.29 0.21
(50s Plus (50s Plus
Plan) Plan)
N. A. 0.71
(50s Plus (50s Plus
Floating Floating
Rate Plan) Rate Plan)
Dividends (Rs.) / Bonus Nil Nil N.A. N.A Nil 0.2564 (I),
0.2398 (O) –
50s Plus
Plan
0.2211 (I) –
50s Plus
Floating
Rate Plan
0.2067 (O) –
50s Plus
Floating
Rate Plan
Transfer to Reserves Nil Nil Nil Nil Nil Nil
NAV at the end of the 11.8435 13.9462 29.20 35.61 10.9294 13.1409 (20s
year (Rs.) (GP) (GP) (20s Plan) Plan)
11.8435 13.9462 10.7121 12.1450 (30s
(DP) (DP) (30s Plan) Plan)
10.5444 11.5734 (40s
(40s Plan) Plan)
10.4021 10.8030 (50s
(50s Plus Plus Plan-
Plan) GP)
10.5131 (50s
Plus Plan-
DP)
10.8471 (50s
Plus Floating
Rate Plan-
GP)
10.5971 (50s
Plus Floating
Rate Plan-
DP)
Annualised compounded 18.44%* 26.47% 41.82 %* 41.76% 9.29%* 22.77% (20s
return%@ (20s Plan) Plan)
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7.12%* 15.71% (30s
(30s Plan) Plan)
5.44%* 11.60% (40s
(40s Plan) Plan)
4.02%* 5.97% (50s
(50s Plus Plus Plan)
Plan) 8.47% (50s
Plus Floating
Rate Plan)
Benchmark Index N.A BSE BSE Sensex / MSCI India N.A Benchmark
Sensex/ Value ***
Crisil
Balanced
Fund Index
Benchmark Annualised N.A 21.86%/ 26.96%*/ 28.70%/ N.A 16.69% (20s
compounded return%@ 14.42% 33.30%* 25.79% Plan)
12.25% (30s
Plan)
8.81% (40s
Plan)
5.50% (50s
Plus Plan)
8.35% (50s
Plus Floating
Rate Plan)
Net Assets (End of 252.01 93.82 72.92 89.70 204.43 406.66
period) (Rs. in crores)
Ratio of Recurring Nil Nil 2.33 2.29 0.75% 0.75% (20s
Expenses to Net Assets (20s Plan) Plan)
0.75% 0.75% (30s
(30s Plan) Plan)
0.50% 0.50% (40s
(40s Plan) Plan)
0.25% 0.25% (50s
(50s Plus Plus Plan)
Plan) 0.25% (50s
Plus Floating
Rate Plan)
Name of the Scheme TGSF - PF Plan TITMA – Institutional Plan (I-

Plan) & Liquid Plan (LP)
Date of launch 7.5.2004 22.6.2004 (I Plan)
17.9.2004 (L Plan)
Information as at the end of Mar 2005^ March 2005^
NAV at the beginning of the year 10.00 a 1000.0000 a (I Plan, LP)
Net Income per unit (Rs.) (0.25) 83.05
Dividends (Rs.) / Bonus Nil LP:
Rs.18.86 O (WP)
Rs.20.17 I (WP)
Rs.19.80 O (DDP)
Rs.21.18 I (DDP)
I Plan:
Rs.28.36 O (WP)
Rs.30.33 I (WP)
Rs.28.75 O (DDP)
Rs.27.45 I (DDP)
Transfer to Reserves NIL Nil
NAV at the end of the year (Rs.) 9.8335 1037.4229 (GP - I Plan)
1001.2360 (WP - I Plan)
14
1000.0142 (DDP - I Plan)
1024.2429 (GP - LP)
1001.1692 (WP - LP)
1000.0142 (DDP - LP)
Annualised compounded return%@ -1.66% * 4.84% & (I Plan)
4.54% & (LP)
Benchmark Index I-Sec Composite Index Crisil Liquid Fund Index
Benchmark Annualised compounded -1.02% * 4.20% & (I Plan)
return%@ 4.35% & (LP)*
Net Assets (End of period) (Rs. in crores) 96.40 972.86 (I Plan)
198.73 (LP)
Ratio of Recurring Expenses to Net Assets 1.25% 0.65% (I Plan)
1.00% (LP)
NAV & Returns as of July 29, 2005 with the Benchmarks:

Name of the Scheme TIGF - Growth FINTF FTDPEF
Plan
NAV as on July 29, 2005 40.79 9.5930 15.7486 (GP/DP)
Annualised Returns from the date of 43.34 -1.58 29.72%
inception @
Benchmark Returns @ 34.18% / 33.84% -1.55%# 28.83% (BSE
Sensex ), 17.12%
(Crisil Balanced
fund Index)
Benchmark Indices used BSE Sensex / MSCI Lehman BSE Sensex and
India Value Intermediate Govt. Crisil Balanced fund
(US) Index Index
Net Assets as on July 29, 2005 (Rs. in 89.65 1.03 67.64
Crores)
Name of the Scheme TGSF - PF Plan FIFCF FTFTF-I

NAV as on July 29, 2005 10.0035 11.51 10.5908
Annualised Returns from the date of 0.03% 15.10%* 5.91%*
inception @
Benchmark Returns @ 0.78% 11.07%* 4.82%*
Benchmark Indices used I Sec Composite S&P CNX 500 25% S&P CNX 500
Index + 65% Crisil
Composite Bond
Fund Index + 10%
Crisil Liquid Fund
Index
Net Assets as on July 29, 2005 (Rs. in 78.43 1938.47 88.81
Crores)
Name of the Scheme TITMA – Institutional Plan (IP) FTLF

& Liquid Plan (LP)
NAV as on July 29, 2005 (July 31, 2005 1055.7254 (GP-IP) 14.9123 - 20s Plan
in case of TITMA) 1000.5536 (WP-IP) 13.3266 - 30s Plan
1000.0378 (DDP-IP) 12.3684 - 40s Plan
1040.5764 (GP-LP) 11.2775 (GP)/10.8934 (DP) - 50s
1000.5259 (WP-LP) Plus Plan
1000.0378 (DDP-LP) 11.3176 (GP)/10.9549 (DP) - 50s
Plus Floating Rate Plan
Annualised Returns from the date of 5.02% (IP)& 27.21% - 20s Plan
inception @ 4.67% (LP)& 18.88% - 30s Plan
13.66% - 40s Plan
7.51% - 50s Plus Plan
12.45%- 50s Plus Floating Rate
Plan
Benchmark Returns @ 4.36% (IP)& 22.43% - 20s Plan
15
Name of the Scheme TITMA – Institutional Plan (IP) FTLF
& Liquid Plan (LP)
4.49% (LP)& 16.30% - 30s Plan
11.48% - 40s Plan
7.50% - 50s Plus Plan
12.70% - 50s Plus Floating Rate
Plan
Benchmark Indices used Crisil Liquid Fund Index Benchmark***
Net Assets as on July 29, 2005 (July 31, 1240.75 (IP) 22.45 - 20s Plan
2005 in case of TITMA) (Rs. in Crores) 201.93 (LP) 16.21 - 30s Plan
27.51 - 40s Plan
22.15 - 50s Plan
292.99 - 50s Plus Floating Rate
Plan
As of March 31, 2005 the fund had no borrowing.

Note: @ Returns for periods less than one year have been given in absolute terms without annualising the same.
Returns for periods greater than one year are on compounded annualised basis but in case of TITMA less than one
year period is annualised. a - Inception/Allotment date NAV, * - Absolute Returns, & - Annualised Return, GP -
Growth Plan, DP - Dividend Plan, WP - Weekly Dividend Plan, MP - Monthly Dividend Plan, DDP - Daily
Dividend Plan, I Plan - Institutional Plan, LP – Liquid, I – Individuals & HUF, O – Other than Individuals & HUF;
FISIP was launched on 31.10.2003. However, all the plans under the scheme have matured and redeemed. The
schemes FIFCF and FTFTF-I have been launched during March 2, 2005 and May 18, 2005 and hence NAVs are not
declared. Returns for schemes/plans with dividend distribution are computed assuming re-investing 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). *** Benchmark: The 20s Plan - 65% BSE Sensex +
15% S&P CNX 500 + 20% Crisil Composite Bond Fund Index; The 30s Plan - 45% BSE Sensex + 10% S&P CNX
500 + 45% Crisil Composite Bond Fund Index; The 40s Plan - 25% BSE Sensex + 10% S&P CNX 500 + 65% Crisil
Composite Bond Fund Index; The 50s Plus Plan - 20% BSE Sensex + 80% Crisil Composite Bond Fund Index; The
50s Plus Floating Rate Plan - 20% BSE Sensex + 80% Crisil Liquid Fund Index. # - adjusted in rupee terms; ^ -
Unaudited figures.
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),
FT India Balanced Fund- (FTIBF), Templeton Monthly Income Plan- (TMIP), FT India Monthly Income Plan -
(FTIMIP), Franklin FMCG Fund - (FFF), Franklin India Bluechip Fund - (FIBCF), Franklin India Prima Fund-
(FIPF), 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), Franklin India Growth
Fund -(FIGF), Franklin India 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), Franklin India International
Fund (FINTF) 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), Franklin India Flexi Cap Fund (FIFCF),
Franklin Templeton Fixed Tenure Fund (FTFTF).
08. CONSTITUTION / MANAGEMENT OF THE MUTUAL FUND
Franklin 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
16
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
Franklin 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 Franklin 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.
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.43.58 on December 31, 2004)
30-Sep-04 30-Sep-03 30-Sep-02
(Rs. in million) (Rs. in million) (Rs. in million)
Total income 149,836.76 114,706.92 109,947.98
Profit After Tax 30,797.99 21,912.02 18,857.07
Net Worth 222,554.34 187,834.16 185,951.50
Equity Capital 1,088.11 1,071.76 1,126.80
Earnings per Share 123.77 86.29 72.34
Book Value per Share 891.21 763.96 719.07
Dividend per Share 14.82 13.07 12.20
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
Franklin 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$ 438.7 billion as at July 31, 2005 (Rs. 19,05,713 crores approximately)
17
2. Number of Shareholder Accounts
More than 15 million worldwide.
3. Number of Schemes Managed Globally

About 240 Open End Mutual Funds, Separately Managed Accounts and Other Investment
Vehicles.
4. Global Offices
There are offices all over the world in over 30 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
Franklin Templeton Investments offers more than 200 investment products under the Franklin,
Templeton, Mutual Series, Bissett and Fiduciary Trust names globally, providing investors with
the flexibility to choose from a great variety of goals-from value to growth and sector-specific to
international-to meet their individual investment objectives.
Franklin offers investors both, ‘growth’ and ‘value’ style equity products, as well as several
focused sector portfolios. Franklin's growth team looks for companies with distinct and
sustainable competitive advantages in rapidly growing markets, while value-driven analysts
search for bargains and a catalyst that might unlock the companies' hidden worth for
shareholders. This group also offers a line of fixed-income funds whose focus is on income,
without speculating on interest rates or buying exotic derivatives. Due to Franklin's size and
presence in the bond market, portfolio managers receive competitive offerings, which can reduce
costs and help boost yields and returns. In fact, among tax-free fund managers, Franklin is the
largest in the nation. The municipal bond team's success can be attributed to a conservative,
straightforward investment philosophy that emphasizes high, current tax-free income, while
seeking preservation of capital. Franklin also offers a variety of money funds.
Templeton has more than 45 years of experience in global mutual fund management. Templeton
managers are bargain hunters, employing a bottom-up, value-oriented approach to stock
selection. They focus on identifying stocks of companies throughout the world that they believe
are selling at the greatest discount to their five-year potential. They buy at the point of maximum
pessimism and sell at the point of maximum optimism.
The Mutual Series group of global and domestic equity value funds focus on three types of
investment opportunities: stocks trading at a deep discount to asset value; companies in the midst
of change such as mergers, reorganizations, restructuring, division sales or purchases, or
management changes; and securities that are distressed or in bankruptcy. While many money
managers avoid these situations, Mutual Series' managers believe careful research can uncover
exceptional opportunities.
Fiduciary Trust employs an active, disciplined approach to investment management based on

thorough research and evaluation of world financial markets. Fiduciary Trust believes a global
perspective is essential to determine domestic and international investment strategy. Its objective
is to achieve long-term growth of income and capital appreciation while managing risk.
Bissett offers a family of Canada-focused equity and fixed-income funds, as well as some global
funds.
18
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 33 places in India with
staff strength of 275.
THE TRUSTEE
Franklin Templeton Trustee Services Private Limited (the “Trustee”), through its Board of
Directors, shall discharge its obligations to the Franklin 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 eight meetings during the year 2004-05.
In accordance with Regulation 18(15) of SEBI Regulations, the Trustees shall obtain the consent
of the unitholders -
a) whenever required to do so by SEBI in the interest of the unitholders; or
b) whenever required to so on the requisition made by three-fourths of the unitholders of any
Scheme; or
c) When the majority of the trustees decide to wind up or prematurely redeem the units.
In accordance with Regulation 18(15A) of SEBI Regulations, the trustees shall ensure that no
change in the fundamental attributes of any scheme or the trust or fees and expenses payable or
any other change which would modify the scheme and affects the interest of unitholders, shall be
carried out unless,-
i a written communication about the proposed change is sent to each unitholder and an
advertisement is given in one English daily newspaper having nation wide circulation as
well as a newspaper published in the language of the region where the head office of the
mutual fund is situated; and
ii the unitholders are given an option to exit at the prevailing Net Asset Value without any
exit load.
Explanation: In terms of SEBI Regulations and circular dated February 4, 1998, “Fundamental
Attributes” means and includes the following:
i. Type of a Scheme
• An Open end/ Closed end Scheme
• Sector Fund/ Equity Fund/ Balanced 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
19
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 Investments (Asia) Ltd. Franklin Templeton Management Luxembourg 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.
Franklin Templeton International Services S.A. Franklin Templeton Italia SIM SpA
Templeton Global Holdings Ltd. Franklin Templeton France S.A.
Franklin Templeton Investments Australia Ltd. Franklin Templeton Asset Management S.A.
Franklin Templeton Holding Limited Happy Dragon Holdings Ltd.
Franklin Templeton Trustee Services Private Ltd. Templeton Research Poland SP. z.o.o.
TRFI Investments Limited
• Anand J. Vashi, Chartered Accountant

5th Floor, Kalpataru Heritage, 127 M. G. Road, Fort, Mumbai 400023
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.

Name Details
Lucid Technologies Pvt. Ltd. Director
Millars India Ltd. Director
Millars Machinery Co. Pvt. Ltd. Director
Pedershaab Millars India Pvt. Ltd. Director
Uttarak Enterprises Pvt. Ltd. Director
• Percy Jal Pardiwalla, Advocate

16, Vishnu Mahal, 'D' Road, Churchgate, Mumbai 400 020
20
• 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.

Name Details
Mahindra Intertrade Limited Director
Mahindra & Mahindra Financial services Limited Director
Mahindra Steel Service Centre Limited Director
Mahindra & Mahindra Limited Director
Mahindra Holdings & Finance Limited Director
Mahindra (China) Tractor Co. Ltd. Director
Mahindra British Telecom Limited Director
Godrej Consumer Product Limited Director
NSE.IT Limited Director
Bristlecone Limited Director
• Stephen Dover*, International Chief Investment Officer, Franklin Templeton Advisors

431 Hurlingham Avenue, San Mateo, CA 94402, 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.
21
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,
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.
22
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.
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.
The Trustee may also consolidate/merge the scheme/plan as per SEBI Circular
SEBI/MFD/CIR.No.05/12031/03 dated June 23, 2003 and directions issues by SEBI from time to
time.
The Trustee, in discharge of its duties, and in exercise of all discretionary powers, may engage,
appoint, employ, retain, or authorise the AMC to engage, appoint, employ or retain any solicitors,
23
advocates, bankers, brokers, accountants, professional advisors and consultants as it may deem
appropriate.
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.
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.
24
Pursuant to the Deed of Trust constituting the Mutual Fund, the Mutual Fund is authorised to pay
to the Trustee, which in turn pays to its individual directors, a fee for their services in such
capacity.
The Trustee shall charge the Fund a Trusteeship Fee 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 Deutsche Bank, Mumbai as the Custodian.
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”.
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 Corporate Office at
4th Floor, Wockhardt Towers, Bandra Kurla Complex, Bandra (East), Mumbai 400 051. Franklin
Templeton Asset Management (India) Private Ltd., has been appointed the Asset Management
Company of the Mutual Fund by the Trustee vide Investment Management Agreement (IMA)
dated January 5, 1996, executed between 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.
25
DUTIES AND OBLIGATIONS OF THE INVESTMENT MANAGER
Under the IMA, the Investment Manager has, inter alia, the following duties and obligations:
) 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.
) 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.
) 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
• any other activities as may be directed by the Trustee.
) 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.
) 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.
) 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.
) To report all investments to the Trustee and the Custodian of the Mutual Fund.
) 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.
) 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.
) 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.
) 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.
) 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.
) 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.
26
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.
Further, SEBI vide it’s letter IMD/SG/8567/2004 dated August 23, 2004 has accorded it’s no
objection for providing non-binding investment advisory services to Franklin Templeton Asset
Management Ltd. for Hagstromer & Qviberg Fond I Fond AB (H&Q)
BOARD OF DIRECTORS
The Board of Directors of the Investment Manager is: -
• Gregory E Johnson* (Chairman of the Board of Director of Franklin Templeton Asset

Management (India) Pvt. Ltd.)
Franklin Resources, Inc. Building 920, 4th Floor, San Mateo, CA 94403, USA
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 9402, USA
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 Franklin Templeton organisation in 1995 and was responsible for
developing Franklin Templeton's activities in India. Prior to joining the Franklin 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 specialised financial institutions; and
mobilising 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
27
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, Panjorg Rhu Road, Singapore
Mark Mobius joined the Templeton organisation in 1987 as president of Templeton Emerging
Markets Fund Inc. in Hong Kong. He currently directs the analysts based in Templeton’s eleven
emerging markets offices and manages the emerging markets portfolios. Dr. Mobius has spent
over thirty years working in Asia and other parts of the emerging markets world. As a result of
his experience, in 1999 Dr. Mobius was appointed joint chairman of the World Bank and
Organization for Economic Cooperation and Development (OECD) Global Corporate
Governance Forum’s Investor Responsibility Taskforce.In 2001, Dr. Mobius was awarded
“Emerging Markets Equity Manager of the Year 2001” by International Money Marketing in the
United Kingdom. In 1999, Dr. Mobius was named one of the “Ten Top Money Managers of the
20th Century” in a survey by the Carson Group, a leading global capital markets intelligence-
consulting firm. In the 1998 Reuters Survey, Dr. Mobius was named the number one global
emerging market fund manager. CNBC named him “1994 First in Business Money Manager of
the Year.” Morningstar in the United States awarded Dr. Mobius the “Closed-End Fund Manager
of the Year” for 1993. In 1992, Dr. Mobius was named “Investment Trust Manager of the Year”
by The Sunday Telegraph in the United Kingdom.
Prior to joining Templeton, he was President of International Investment Trust Company Ltd. in
Taipei, Taiwan, the country's first and largest investment management firm. Prior to that, he
served at Vickers-da-Costa, an international securities firm, which later merged with Citibank.
Before joining Vickers, for ten years, Dr. Mobius operated his own regional economics and
research-consulting firm in Hong Kong.
Dr. Mobius holds Bachelors and Masters Degrees from Boston University, and received his
Ph.D. in Economics and Political Science in 1964 from the Massachusetts Institute of
Technology. Dr. Mark Mobius is the author of ‘The Investor's Guide to Emerging Markets'.
• 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 25 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 Administration from the American University, Washington D.C. 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 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.
28
• P. Vaidyanathan
7AB, 3rd Block, 7th Floor, Kences Enclave, No. 1 Ramakrishna Street, T. Nagar, Chennai 600017
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, Churchgate, 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
4th Floor, Wockhardt Towers
Bandra Kurla Complex
Bandra (East), Mumbai 400 051, India
KEY INFORMATION ON KEY PERSONNEL:
Name Age Qualifications Functions & Experience

(years)
Ravi Mehrotra 43 B.Com, President, Franklin Templeton Asset Management
Total Experience PGDBM (India) Pvt. Ltd. (based at Mumbai)
18 years (XLRI, Responsible for Sales, Marketing, Investment
Jamshedpur) management, 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).
29
(years)
Sanjay Sapre 35 M.B.A (USA) Head, TA Operations & Customer Service - India
Total Experience (based 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).
Vivek Pai 34 B. Com, ACA Vice President, FA Operations and Compliance
Total Experience (based in Mumbai)
9 years Having joined Franklin 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 32 B. Com, ACA Compliance Officer (based at Mumbai)
Gramopadhye Franklin Templeton Trustee Services Private Ltd.
Total Experience: 7 • Having joined Franklin Templeton in July 2000,
years she is responsible 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.
30
(years)
• P.C Hansotia & Associates (affiliated to Deloitte
Haskins & Sells) (1996 -1997)-Manager, Auditing
of corporate clients.
S. Rajagopalan 39 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 Franklin 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.
Franklin Equity Team

R. Sukumar 40 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 and Equity
Bangalore) Portion of TIPP. He is also a co-fund manager for
FIFCF, FIT96, FIT97, FIT98, FIT 99 & FIBF and
Equity Portions of FTIBF, TMIP, FTIMIP, TICAP,
• 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 42 BE (REC Senior Vice President and Portfolio Manager,
Subramanian Jaipur); PGDM Equity (based at Chennai)
Total Experience (IIM Calcutta) Manages FIBCF, FFF, FIPF, FIOF, FIFCF
15 years • Vice President and Fund Manager – Pioneer ITI
AMC Ltd. (1993 – 2002)
• Industrial Finance Officer, Industrial Development
Bank of India (1988 – 1993)
S. Chellappa 45 MBA, (Madras Vice President and Portfolio Manager (based at
Total Experience Univ.), Chennai) - Provides Research support on Software,
22 years Diploma in Cement, Metals, Banking Sectors
Computer He is a co-fund manager for FIBF and Equity Portions
Applications of FTIBF, TMIP, FTIMIP & TICAP
(NITIE) • 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 43 CA Assistant Vice President and Portfolio Manager
Total Experience (based at Chennai)
17 years Manages FIIF & FITF
• Asst. Vice President – Investments – Pioneer ITI
31
AMC Ltd. (Since 1993)
• Petrosil Oil Co. Ltd.
• L. U. Krishnan & Co.
Provides Research support on Oil & Gas,
Petrochemicals, Engineering, Power and Hotel
sectors.
Satish Ramanathan 38 B. Tech., MBA Vice President and Portfolio Manager (based at
Total Experience Chennai)
10 years Manages FIT96, FIT97, FIT98, FIT99 and equity
portion of FTFTF-I, FTFTF-II.
Responsible for analysing some of the key sectors
including auto and will also be co-portfolio manager
of Franklin India Prima Fund (FIPF).
• 2000-2004, Vice President – ICICI Securities
• 1997-2000, Senior Analyst – Sundaram
Mutual Fund
• 1995-1996, Birla Marlin and Daewoo Securities
• 1993-1995, Asst. Manager – ICRA Limited.
Templeton Equity Team

Chetan Sehgal 36 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 Franklin Templeton in 1995 as
CFA Investment 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 Franklin 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.
Fixed Income/ Debt Team

Sameer Kulkarni 35 BE (Mech), Head of Fixed Income (based at Mumbai)
Total Experience M.Sc. (Eco), Schemes managed: TFIF, TITMA, TIMMA, TISTIP,
10 years MMS, CFA, FISIP, TILP, FTLF, FINTF, TIIF, TGSF, TIIBA and
FRM Government Securities portfolio of other schemes.
• Joined Franklin Templeton in February 2002 as
Asst. Vice President - Fixed Income (2002-2004)
• 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).
32
Sachin Padwal-Desai 31 B.E., PGDM Assistant Vice President, Fixed Income (based at
Total Experience (IIM-Banglore) Mumbai).
7 years Responsible for Investments and Fund Management
Schemes managed: Debt Portions of TMIP and
FTIMIP. Also co-fund manager to TIIF, TIIBA and
TGSF – Composite Plan
• ICICI Bank Ltd - Balance sheet Management,
Interest rate risk management, SLR maintenance,
liquidity management
• Infosys Technologies Ltd – Software Engineer
• Thermax Ltd – Designing, testing and approval of
weldments on boilers and other pressure vessels.
Gaurav Dangwal 29 B.Sc., PGDBM Assistant Vice President, Fixed Income (based at
Total Experience (S.P. Jain) Mumbai).
7 years Responsible for Investments and Fund Management
Schemes managed: Debt Portions of FTFTF-I,
FTFTF-II, TIPP and TICAP. Also co-fund manager to
Debt Portions of FTIBF and TIIBA
• ICICI Bank Ltd - Derivatives Trader for Market
Making desk of the bank, ALM, trading Govt. of
India securities, Fixed Income, Retail Banking.
Ninad Deshpande 27 B.E., MMS Senior Manager, Fixed Income (based at Mumbai).
Total Experience (JBIMS) Responsible for Investments and Fund Management.
4 years Co-fund manager to FTIBF Debt Portion and TFIF
• Bank of Bahrain & Kuwait BSC- Deputy
Manager managing the SLR book as well as
trading in government bonds and non-SLR bonds,
Maintaining CRR and ALM for the Bank. SBI
Gilts Ltd- Dealer, trading in G-Secs, managing the
funding requirement, handling research on debt
market.
Fund Manager for the Scheme: Mr. K. N. Siva Subramanian
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.
33
CUSTODIAN
Deutsche Bank, Kodak House, 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., 6th 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.
09. INVESTMENT OBJECTIVES AND POLICIES
The investment objective of Franklin FMCG Fund is to provide long-term capital appreciation by
investing primarily in shares of companies operating in the Fast Moving Consumer Goods
(FMCG) industry.
The Indian FMCG Industry - An Overview
The Indian FMCG (Fast Moving Consumer Goods) sector appears to hold potential for steady
growth over the long term. The growing Indian consumer class, changing Indian demographic
pattern with more households enjoying greater personal incomes, lower per capita consumption
compared to other developing nations, and the vast untapped rural market will all contribute to
robust revenue and profit increases in the foreseeable future.
The FMCG sector has done better than most industries, regularly showing revenue and profit
increases even in the worst recessionary conditions. Therefore, this sector has gained allure with
investors as a defensive play in troubled economic conditions, as well as for its healthy growth in
34
those years when the economy is an expansionary mode.
In addition to bright prospects for the sector, individual companies are well-positioned to take
full advantage of the growth in the industry by:
− Streamlining operations and lowering cost of product
− Investing in advertising and promotions to build strong, enduring brands
− Consolidating their dominance in their product categories (in fact, in most product segments,
the top two companies command more than 60% share of the market).
− Companies are making their physical assets work harder through third party processing
facilities and a tight control on working capital requirements, leading to greater returns on
capital employed.
Overall, the FMCG sector in India has created and is expected to continue creating wealth by
investing in brands, lowering costs, and penetrating new markets. Long-term investors in this
fund have the opportunity to earn good returns based upon the growth being exhibited by this
thriving industry.
A representative list of investible stocks in the FMCG sector is given below. Besides, personal
care products and processed foods companies the list includes companies, which are in
consumables, retailing and media.
Company Name Market Cap. (Rs. In Crores)

As of 31st July 2005
3M India Ltd. 895

Agro Tech Foods Ltd. 210
Archies Ltd. 89
Bata India Ltd. 677
Britania Industries Ltd. 2,401
Colgate Palmolive (I) Ltd. 3,069
Dabur India Ltd. 4,180
Eveready Industries Ltd. 508
Gillette India Ltd. 2,167
Glaxosmithkline Consumers Healthcare Ltd 1,908
Godfrey Phillips India Ltd. 806
Godrej Consumers Products Ltd. 2,259
Godrej Industries Ltd. 1,137
Henkel Spic India Ltd. 317
Hindustan Lever Ltd. 36,750
ITC Ltd. 41,925
Jagatjit Industries Ltd. 337
Kothari Products Ltd. 217
Marico Industries Ltd. 1,556
McDowell & Company Ltd. 1,682
Nestle India Ltd. 7,461
Nirma Ltd. 3,275
Procter & Gamble Hygiene & Health Care Ltd. 2,211
Rayban Sun Optics India Ltd. 182
Pidilite Industries Ltd 1,352
Shaw Wallace & Company Ltd. 842
Tata Tea Ltd. 3,800
35
United Breweries Holdings Ltd. 1,038
Venky's (I) Ltd. 173
Asian Paints Ltd 4,399
Goodlass Nerolac India Ltd 1,495
ICI India Ltd 1,267
Pantaloon (India) Ltd 2,888
Shoppers' Stop Ltd 1,221
Trent Ltd 905
Tata Coffee Ltd 378
CCL Products (India) Ltd 390
Zee Telefilms 7802
NDTV 1306
TV Today Network 620
Television 18 577
In selecting individual stocks in this industry, the fund managers will consider the following
factors:
Brand power, product innovation, managerial talent, consistent growth, return on capital
employed, strong cash flows and any initiatives to restructure operations.
The policies to achieve the investment objectives are in conformity with the Memorandum &
Articles of Association of the Asset Management Company (AMC), Investment Management
Agreement executed between the Asset Management Company & Board of Trustees and the
Trust Deed.
The investment policies shall be in accordance with SEBI [Mutual Funds] Regulations, 1996 and
within the following guidelines: -
Asset Allocation
Instruments Risk Profile % of Assets

Equities/Equity related instruments High - Medium Upto 100%
Money market instruments Low Upto 35%
Under normal circumstances at least 65% of the total assets will be invested in the equities of the
FMCG industry. However, upon defensive consideration the AMC has the right to reduce the
allocation to below 65% and correspondingly increase allocation to money market instruments.
The fund managers will follow an active investment strategy taking defensive/aggressive
postures depending on opportunities available at various points in time. However, on defensive
considerations, the scheme may invest substantially in money market instruments as explained
above to protect the interest of the investors in the scheme.
The asset allocation pattern described above may alter from time to time on a short-term basis on
defensive considerations, keeping in view of 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 the “fundamental attributes” shall be followed.
36
INVESTMENT RESTRICTIONS
As per 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
• Franklin FMCG Fund may consider investment in other financial market instruments as per
guidelines issued by the Central Government and SEBI from time to time. Investments in
overseas markets shall be as per guidelines issued by SEBI/Government authorities/RBI. The
FMCG Fund will employ necessary measures to manage foreign exchange movements
arising out of such investments.
• Franklin FMCG Fund will not invest more than 5% of its NAV in the unlisted equity shares
or equity related investment. Subject to this restriction, not more than 10% of the equity
investments shall be made in securities, which are not listed and traded on any stock
exchange. The exit route in the case of privately placed equity would be to the public at a
later date.
• Franklin Templeton Mutual Fund under all its schemes, shall not own more than ten per cent
of any company’s paid up capital carrying voting rights.
• Transfers of investments from one Franklin 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 “ET-Brandex” as the benchmark.
Investment in the equity / equity related instruments of any of the companies will not exceed
the weightage of the scrips in the index “ET-Brandex” or 10% of the NAV of the scheme,
whichever is higher.
The AMC/Trustee reserve the right to modify/change 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.
• Franklin FMCG Fund 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.
• Franklin FMCG Fund 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. Provided that mutual funds shall enter
into derivatives transactions in a recognised stock exchange for the purpose of hedging and
portfolio balancing, in accordance with the guidelines issued by the Board.
• Every mutual fund shall, get the securities purchased or transferred in the name of the mutual
fund on account of the concerned scheme, wherever investments are intended to be of long
term nature.
• Franklin FMCG Fund may invest in listed securities issued by group companies of the
sponsor. The aggregate of investments in the listed securities of the group companies of the
sponsor shall not exceed 25% of the aggregate net assets of all the schemes. Further, the
scheme shall not invest in any unlisted securities of an associate or group company of the
sponsor and in any privately placed securities issued by associate or group company of the
sponsor.
37
• Pending deployment of funds of a scheme in securities in terms of investment objectives of
the scheme, the fund can invest the funds in short term deposits of scheduled commercial
banks.
• 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.
• The scheme shall not make any investment in any fund of funds scheme
• 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 FMCG Fund. 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 FMCG Fund. In addition, the funds managed by
the sponsors, Franklin Templeton Group may invest in the Franklin FMCG Fund.
PORTFOLIO TURNOVER
The portfolio turnover is expected to be between 50% to 100%. A higher portfolio turnover will
result in higher transactions and brokerage costs including custodian fees and consequently will
impact the Net Asset Value adversely.
UNDERWRITING
The scheme may accept underwriting obligations consistent with its investment objective and
asset allocation subject to the fund obtaining the necessary approval/registration under SEBI
(underwriters) Regulations, 1993 and the capital adequacy norms as prescribed by SEBI. The
total underwriting obligations will not exceed the scheme’s total net asset value.
STOCK LENDING BY THE MUTUAL FUND
Subject to the SEBI Regulations, the Mutual Fund may, if the Trustee permits, engage in Stock
Lending. Stock Lending means the lending of stock to another person or entity for a fixed period
of time, at a negotiated compensation in order to enhance returns of the portfolio. The securities
lent will be returned by the borrower on the expiry of the stipulated period. The AMC will adhere
to strict limits should it engage in Stock Lending.
Not more than 40% of the net assets of the Scheme shall generally be deployed in Stock Lending.
The Scheme would limit its exposure, with regard to securities lending, for a single intermediary,
to the extent of 10% of the total net assets of the scheme at the time of lending. Collateral would
be obtained by the approved intermediary for the lending for the lending transactions and this
collateral must exceed in value, the value of the securities lent. The collateral can be in the form
of cash, bank guarantee, government securities or certificate of deposits or other securities as
may be agreed upon with the approved intermediary.
As with other modes of extensions of credit, there are risks inherent to securities lending,
including the risk of failure of the other party, in this case the approved intermediary, to comply
with the terms of the agreement entered into between the lender of securities i.e. the Scheme and
the approved intermediary. Such failure can result in the possible loss of rights to the collateral
put up by the borrower of the securities, the inability of the approved intermediary to return the
38
securities deposited by the lender and the possible loss of any corporate benefits accruing to the
lender from the securities deposited with the approved intermediary.
The Mutual Fund may not be able to sell such lent out securities and this can lead to temporary
illiquidity.
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/options, stock futures/options, warrants, convertible securities,
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.
• 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.
− Shortfall, 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 /IMD/CIR 4/ 2627/2004 dated February 6, 2004.
39
• Derivative instruments offer unique advantages like security exposures without the attendant
execution and settlement risk, e.g. index futures can be an efficient way of buying/selling an
index compared to buying/selling a portfolio of physical securities representing an index. It is
an effective tool to reduce/mitigate risks. For example, a put option can be used to reduce the
downside risk of a security and is an effective tool to hedge portfolio risks. Furthermore, a
put option on an index could effectively mitigate downside risk of securities which may not
be part of an index but may have a high degree of correlation with an index.
• The scheme may take exposure in derivatives upto a maximum of 50% of its corpus. Within
the overall limits of a maximum derivatives net position of 50% of the portfolio, the limits
per scrip/instrument shall be as follows:
Sr. Derivative Action Description Limit
No.
1 Index futures Buy Buy futures against cash to To the extent of cash/
protect against rising market equivalents in the portfolio.
Max. limit (50%) of portfolio
2 Index futures Sell Hedging of portfolio against Up to (50%) of equity portion
expected market downturn of the fund
3 Index Options – Call Buy Buy index calls against cash To the extent of cash /
(existing /expected) to protect equivalents in the portfolio.
against rising market Max. limit (50%) of portfolio
4 Index Options – Call Sell Covered Call Sale- against Up to (50%) of equity portion
existing portfolio of the fund
5 Index Options – Put Buy Buy index puts to hedge Up to (50%) of equity portion
existing portfolio of the fund
6 Index Options – Put Sell Covered Put Sale- Possible top To the extent of cash /
sell index puts against existing equivalents in the portfolio.
/ expected cash Max. limit (50%) of portfolio
7 Stock futures Buy Buy against cash to protect To the extent of cash /
against rising share prices equivalents in the portfolio.
Max. limit (50%) of portfolio;
per scrip limit (10% of
portfolio)
8 Stock futures Sell Sell against existing stock – To the extent of the particular
Hedging against downside on scrip holding in the portfolio)
existing stock in the face of
expected volatility in the stock
price
9 Stock options – Call Buy Buy against cash to protect To the extent of cash/
against rising share prices equivalents in the portfolio.
portfolio)
10 Stock options – Call Sell Sell against existing stock To the extent of the particular
scrip holding in the portfolio
11 Stock options – Put Buy Purchase against existing To the extent of the particular
stock. Hedging against scrip holding in the portfolio;
downside on existing stock in per scrip limit (10% of
the face of expected volatility portfolio)
in the stock price
12 Stock options – Put Sell Covered Put Sale against cash To the extent of cash/
equivalents in the portfolio.
portfolio)
40
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:
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: Carry and other Index Future 10 Nil

costs (1485-1475)
B. Brokerage Cost: Assumed at 0.25% for Index

Future and 0.50% for spot Stocks
(0.25% of 1485) 3.71
(0.50% of 1475) 7.38
C. Gains on Surplus Funds: (assumed 9% return on 90%

of the money left after paying
10% margin)
(9%*1475*90%*30 days/365) 9.82 Nil
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
41
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.
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.
Stock and Index Options:

Option contracts are of two types - Call and Put; the former being the right, but not obligation, to
purchase a prescribed number of shares at a specified price before or on a specific expiration date
and the latter being the right, but not obligation, to sell a prescribed number of shares at a
specified price before or on a specific expiration date. The price at which the shares are
contracted to be purchased or sold is called the strike price. Options that can be exercised on or
before the expiration date are called American Options, while those that can be exercised only on
the expiration date are called European Options. In India, all individual stock options are
American Options, whereas all index options are European Options. Option contracts are
designated by the type of option, name of the underlying, expiry month and the strike price.
Example for Options:

Buying a Call Option: Let us assume that the Fund buys a call option of XYZ Ltd. with strike
price of Rs. 1000, at a premium of Rs. 25. If the market price of ABC Ltd on the expiration date
is more than Rs. 1000, the option will be exercised. The Fund will earn profits once the share
price crosses Rs. 1025 (Strike Price + Premium i.e. 1000+25). Suppose the price of the stock is
Rs. 1100, the option will be exercised and the Fund will buy 1 share of XYZ Ltd. from the seller
of the option at Rs 1000 and sell it in the market at Rs. 1100, making a profit of Rs. 75. In
another scenario, if on the expiration date the stock price falls below Rs. 1000, say it touches Rs.
900, the Fund will choose not to exercise the option. In this case the Fund loses the premium (Rs.
25), which will be the profit earned by the seller of the call option.
Buying a Put Option. Let us assume the Fund owns the shares of XYZ Ltd, which is trading at
Rs. 500. The fund wishes to hedge this position in the short-term as it perceives some downside
to the stock in the short-term. It can buy a Put Option at Rs. 500 by paying a premium of say Rs,
10/- In case the stock goes down to Rs. 450/- the fund has protected its downside to only the
42
premium i.e Rs 10 instead of Rs. 50. On the contrary if the stock moves up to say Rs. 550/- the
fund may let the Option expire and forego the premium thereby capturing Rs. 40/- upside. The
strategy is useful for downside protection at cost of foregoing some upside.
Writing a Call Option: Let us assume that the Fund owns shares of XYZ Ltd., which are trading
at Rs. 1000. The Fund wishes to sell these shares at Rs.1100. It can write call option at Rs. 1100
and earn a premium of, say, Rs. 20. If the option is not exercised, the Fund earns a premium and
if the stock price does reach Rs. 1100, the premium adds to the profits that the Fund would have
booked by selling at that price. In this case, if the stock price of XYZ Ltd. is less then Rs. 1100,
the Fund earns Rs 20 and if it closes above Rs. 1100 and the option gets exercised by the buyer,
the Fund gets the strike price of Rs. 1100 plus a premium of Rs. 20, i.e. effectively Rs. 1120. Any
loss because of stock price movement beyond Rs. 1120 is an opportunity loss, as the Fund would
otherwise have sold the shares at Rs. 1100.
Writing a Put Option: Let us assume that the fund wants to buy a share of ABC @ 100, the
current price of the stock being Rs. 120/- The fund can choose to write a Put Option with the
strike price @ Rs. 100/- and earn a small premium of say Rs. 2/- In case the stock comes below
Rs. 100/- the buyer of the Put option will exercise it and the fund can enter the stock at its desired
price (In this case Rs. 100- Rs. 1 = Rs 99). In case the stock trades @ Rs. 120/- the option-holder
will not exercise the option and let it expire. In this case the fund will earn the premium income
of Rs. 2/-
For an option buyer, loss is limited to the premium that he has paid and gains are unlimited. The
risk of an option writer i.e. the seller of the option, is unlimited while his gains are limited to the
premiums earned. However, in the case of the Fund, all option positions will have underlying
assets and therefore all losses due to price-movement beyond the strike price will actually be an
opportunity loss as illustrated in the example below.
The above example is hypothetical in nature and all figures are assumed for the purpose of
illustrating the use of call options in individual stocks. Similar analogy can be used for Index
Options too when the fund wishes to hedge a part of the total portfolio or cash.
Stock Futures:
Individual stock futures are also widely used derivative instruments for enhancing portfolio
returns. Stock futures trade either at a premium or at discount to the spot prices, usually the level
of premium reflective of the cost of carry. Many a times the stock-specific sentiments too have a
bearing on Futures as speculators may find futures as a cost-effective way of executing their view
on the stock. However such executions usually increase the premium/discount to the spot
significantly, thereby giving rise to clean arbitrage opportunities for a fund.
Sell Spot Buy Future: To illustrate, let us assume the fund holds the stock XYZ Ltd., which is
trading @ Rs. 100/- at the spot market. If for some reasons the stock trades at Rs. 98 in the
futures, the fund may sell the stock and buy the futures. On the date of expiry, the fund may
reverse the transactions (i.e. Buy Spot & Sell futures) and earn a risk-free Rs. 2/- (2% absolute)
on its holdings. Since this is done without diluting the fund’s view on the underlying stock, the
fund will benefit from any upside move i.e. if on the date of futures expiry, the stock is trading at
Rs. 110/- the futures too will be trading at Rs. 110- and the fund will capture the 10% upside the
stock provided and along with it the 2% arbitrage too, thereby enhancing returns to 12%
Buy Spot Sell Future: If the fund holds a stock XYZ Ltd which trades @ Rs 100/- at the spot
market and is trading at Rs. 102/- in the futures market. The fund may buy the spot and sell the
futures and earn the premium of Rs.2 /- which is risk-free. However this strategy can be used
only when the fund is sitting in cash and is looking at enhancing the returns on the cash.
43
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
a. the unitholders are informed about the proposed change in fundamental attribute by
sending 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 funs is situated, and
b. 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.
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 and Overseas Corporate Bodies/Societies/Association of Persons/Body
of individuals/Clubs/Public Sector Undertakings registered in India
4. Charitable or Religious Trusts* authorised 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 but not United States Persons within the meaning of
Regulation S under the United States Securities Act of 1933, as amended from time to time.
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
44
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. Other schemes of Mutual Funds registered with SEBI subject to conditions and limits
prescribed in SEBI Regulations.
16. 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.
*Franklin 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/OCBs/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 OCBs, NRIs/PIOs shall hold (irrevocably) at least 60% of the beneficial interest
directly or indirectly in the said body/firm/society/trust. OCB investors should submit an
auditors certificate in original in Form OAC/OAC-1 to the ISC where the Application Form
is submitted.
3. 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 notarised or the relevant resolution or authority to make the
application / redemption as the case may be, or duly notarised copy thereof, alongwith 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) authorising such
purchases / redemption.
4. 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.
From Whom
The scheme units are being offered for subscription through AMFI registered Agents and can
also be purchased directly from the Fund through various Branches/Agency Manager Centres of
Franklin 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 Franklin
Templeton Mutual Fund Branches [Investor Service Centres (ISC)]/ Agency Manager Centres/
specified Karvy Collection Centres or may be routed through an AMFI registered Agent.
Outstation cheques/drafts, money orders, postal orders/stock invests and post dated cheques will
not be accepted.
For on-going subscriptions, purchases by a new applicant can be made for a minimum amount of
Rs. 5,000/- or any amount in multiple of Re.1/- thereafter. Once an investor has opened an
account he may purchase additional units by filling-up the pre-printed forms or simply fill in the
account number in the application form and mail the same to the Investor Service Centres (ISC)
45
along with the payment, by a local cheque or draft. Additional purchases of Units by existing
unitholders can be made for a minimum of Rs.1,000/- or any amount in multiple of Re.1/-
thereafter.
In case of investments of Rs. 50,000/- and above, Income Tax Permanent Account
Number(s) (PAN) (for all unit holders including joint holders irrespective of the mode of
holding) are to be furnished. The applications are liable to be rejected in case of non-
submission of the same. Please provide a legible copy of either (i) your PAN card or (ii) letter
from the Income tax authorities intimating PAN or (iii) Income Tax refund order clearly
displaying your PAN or (iv) any other document sent by the Income Tax authorities clearly
depicting the PAN, for verification failing which transactions will not be processed. Investors not
having a PAN are required to submit Form 60/61 along with necessary proof of address for each
transaction of Rs. 50,000/- and above.
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.
The Franklin FMCG Fund units are being offered for sale on all working days at NAV based
Public Offering Price (POP). The POP will be calculated based on the “Applicable NAV for
Subscription”. Please refer to the section on “Applicable NAV for Subscriptions”. However, the
Trustees reserve the right to introduce an entry/exit load any time thereafter.
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 Franklin FMCG Fund units is Rs. 5,000/- and any
amount in multiples of Re. 1/- thereafter. There is no upper limit. However, Trustee may vary
these limits on a prospective basis.
Payment Details
All cheques and drafts should be made out in favour of “Franklin FMCG Fund” 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. No outstation cheques / stock invest or post
dated cheques will be accepted.
Payments will be accepted only by cheques/drafts. The Investor Service Centres/Karvy

Collection Centres will not accept cash. All allotments are subject to realisation of the payment
instrument.
The investors should ensure that the amount invested in the scheme is through legitimate sources
only and does not involve and are not designed for the purpose of any contravention or evasion
of any Act, Rules, Regulations, Notifications or Directions of the provisions of Income Tax Act,
Anti Money Laundering Act, Anti Corruption Act and or any other applicable laws enacted by
the Government of India from time to time.
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/ Karvy Collection Centres. Applicants from places where there is no
Investor Service Centre/ Karvy Collection Centre can deduct DD charges from the application
46
amount provided these drafts are payable at Chennai only. However, the DD charges shall be
limited to the bank charges stipulated by the State Bank of India. 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.
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:
Public Offering Price (POP) = NAV * (1+ Sales Load)

14 * (1+0.01)
=
= Rs. 14.14
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
47
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 Franklin Templeton Mutual Fund shall be
applicable.
As per SEBI Circular SEBI/ IMD/CIR No. 8/5611/ 2004 dated March 19, 2004, FTMF hereby
declare all it’s 33 branches [Investor Service Centres (ISC)] and the designated branch offices of
Karvy Computershare Pvt. Ltd. (Collection Centres) 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”.
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 three 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
48
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/Collection Centre.
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. The
investment under SIP has to be for a minimum prescribed amount.
Highlights:
• Franklin 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.
• Only one instalment per month/quarter is allowed under one SIP registration. e.g., if for a
monthly SIP the first instalment is in the month July, say 2nd July, then the second instalment
should be in August.
• If during the currency of a SIP, the unitholder changes the plan or option in which he/she had
invested, the same would be treated as termination of existing SIP and re-registration of a
new SIP and all the terms and conditions of the SIP like minimum term/amount etc. shall
apply in both plans/options.
• Load: For all SIP purchase transactions, the entry and exit load as mentioned in the Section
“Expenses of the Scheme” under the heading “Unitholder Transaction Expenses or Sales
Load” shall be applicable.
• 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
49
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.
SYSTEMATIC TRANSFER PLAN (STP)
A unitholder may establish a Systematic Transfer Plan and choose to transfer on a monthly or
quarterly basis from the Scheme to another Franklin Templeton scheme. The transfer will be
effected by way of redemption of units (with appropriate exit load, if any) and a reinvestment
(with appropriate entry load, if any) of the redemption proceeds in another Scheme(s).
Unitholders may change the amount (but not below the specified minimum) by giving written
notice to the registrars.
The unitholder may avail of this plan by completing the enclosed Application Form or by filling
up the relevant portion of the transaction statements. A systematic transfer plan may be
terminated on appropriate written notice by the unitholder of the fund, and it will terminate
automatically if all the units are liquidated or withdrawn from the account, or upon the Fund's
receipt of notification of death or incapacity of the unitholder. The Investment Manager may
change rules relating to the plan from time to time.
This facility is available in the following schemes/plans (“Source Schemes”): Templeton India
Income Fund (TIIF), Templeton India Income Builder Account (TIIBA), Templeton Monthly
Income Plan (TMIP), FT India Monthly Income Plan (FTIMIP), Templeton India Government
Securities Fund (except PF Plan) (TGSF), Templeton Floating Rate Income Fund (TFIF),
Templeton India Short-Term Income Plan (TISTIP) and Templeton India Treasury Management
Account (TITMA).
• In order to start the STP facility, the minimum account balance should be Rs. 12,000 except
in TITMA – Institutional Plan where the same should be Rs. 1,00,00,000.
• Destination Scheme: The investors may choose Franklin FMCG Fund for transferring the
amount from the Source Scheme.
• Options: There are two options available, Fixed Amount Option and Capital Appreciation
Option. The Capital Appreciation option will be available only under the growth plans of the
Source schemes.
• Frequency: The frequency can be
( ) Under Fixed Amount Option – Weekly, Monthly or Quarterly.
( ) Under Capital Appreciation Option – Monthly or Quarterly.
• Transfer of Funds:
Transfer of Funds Fixed Amount Option Capital Appreciation Option

Weekly STP A fixed amount can be transferred Not Applicable
on the 7th, 14th, 21st and 28th day of
50
Transfer of Funds Fixed Amount Option Capital Appreciation Option
every month to the specified
Destination Scheme
Monthly STP/ A fixed amount can be transferred The capital appreciation as on the
Quarterly STP on a pre-specified date (to be last business day of every
chosen by the investor) of every month/quarter can be transferred to
month/every quarter to the the specified Destination Scheme
specified Destination Scheme
• In case the specified date is a non-business day for either the Source Scheme or the
Destination Scheme, the STP will be processed on the following business day for both the
schemes. The STP will be applicable subject to the terms of the destination scheme.
• Minimum Amount and Term:
(a) Under the Fixed amount option
) with Weekly frequency, the minimum transfer will be Rs. 500 per week for 6 months.
) with Monthly frequency, the minimum transfer will be Rs. 1,000 per month for 6
months or Rs. 500 per month for 12 months.
) with Quarterly frequency, the minimum transfer will be Rs. 1,000 per quarter for 6
quarters or Rs. 500 per quarter for 12 quarters.
(b) Under Capital Appreciation Option, the minimum terms shall be 6 months.
• Load: For all STP purchase transactions, the entry and exit load as mentioned in the Section
• At least 7 days’ prior intimation should be given to the Mutual Fund for commencement of a
fresh STP or cancellation/termination of an existing STP.
• If during the currency of a STP, the unitholder changes the plan or option in which he/she had
invested, the same would be treated as termination of existing STP and re-registration of a
new STP and all the terms and conditions of the STP like minimum term/amount etc. shall
apply in both plans/options.
• If in case of a monthly/quarterly STP with Fixed Amount Option, if the unitholder specifies
30th or 31st of the month (28th/29th in case of February) as the “Specified Date” for the STP
transaction, then the STP shall be processed on the day, which is the last business day in that
month for both the schemes.
• Where the Start Date of the STP is not mentioned, then for an STP under Monthly/Quarterly
option, the Start Date shall be deemed to be 15th day of the month in which the STP is
submitted, if submitted before 8th day of the month, else the same shall be deemed to be the
last business day of the month for both the schemes, provided it is submitted before 23rd of
the month. If the STP is submitted after 23rd of the month, the Start Date shall be deemed to
be 15th day of the next month. For STP under Weekly option, the Start Date shall be deemed
to be the first available STP date under Weekly Option after a period of 7 days after the date
of submission of the STP request.
• An investor cannot simultaneously participate in a Systematic Investment Plan (SIP) and STP
(out) or Systematic Withdrawal Plan (SWP) and STP (in) in the same scheme.
• This facility is not available for investments under lock-in period or on which any lien or
encumbrances is marked or in respect of which the status of realisation of cheque is not
available to the AMC.
• It shall be the responsibility of the investor to ensure that sufficient balance (free from any
Lock-in or encumbrances) is available in the account on the date of transfer, failing which the
transfer will not be effected.
• The AMC/ Trustees reserve the right to discontinue or modify the STP facility at any time in
future on a prospective basis.
51
Here is an illustration using hypothetical figures to explain the concept of a Systematic Transfer
Plan. Let us assume that Mr. ABC would like to transfer Rs.1000/- every month from TIGF to
FIIF for a period of four months, i.e. a total of Rs.4000/-.
TIGF
Month Opening Applicable Amount No. of Closing
Balance NAV Redeemed Units Balance
of Units (Rs.) (Rs.) Redeemed of Units
(a) (b) (c) (d) (e)
[c-b] [a-d]
1 5,000.000 11.00 1,000.00 90.909 4,909.091
2 4,909.091 11.08 1,000.00 90.253 4,818.838
3 4,818.838 11.15 1,000.00 89.686 4,729.152
4 4,729.152 11.20 1,000.00 89.286 4,639.866
FIIF
Month Amount Applicable No. of Closing
Invested NAV Units Balance
(Rs.) (Rs.) Allotted of Units
(f) (g) (h) (i)
[f-g]
1 1000.00 11.000 90.909 90.909
2 1000.00 11.092 90.155 181.064
3 1000.00 11.129 89.855 270.919
4 1000.00 11.222 89.111 360.030
Note:
The Fund may close an investor's account if the balance falls below the minimum prescribed
balance (based on applicable NAV) in the Schemes from which Transfer is proposed to be done
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.
DIVIDEND TRANSFER PLAN (DTP)
This facility is available to the investors of various dividend plans of the Templeton India Income
Fund (TIIF), Templeton Monthly Income Plan (TMIP), Templeton India Short-Term Income
Plan (TISTIP), Templeton India Government Securities Fund (TGSF), Templeton India Treasury
Management Account (TITMA), Templeton Floating Rate Income Fund (TFIF), FT India
Monthly Income Plan (FTIMIP), Templeton India Income Builder Account (TIIBA).
An investor can select this facility whereby the dividend declared will be automatically invested
into selected Franklin Templeton Open-ended Equity or Hybrid schemes.
Highlights:
In order to avail the DTP facility, the minimum account balance should be Rs. 25,000/-,
except in TISTIP, TILF, TITMA and Short Term Plan of TFIF where the same should be Rs.
100,000/-
The frequency of transfer will be dependent on the dividends declared by the plan in which
the investment has been made.
52
The amount, to the extent of the distribution, will be automatically invested on the ex-
dividend date into Franklin FMCG Fund at the NAV of the scheme and equivalent units will
be allotted, subject to the terms of the scheme.
For example: If the dividend record day is a Friday and the ex-dividend day is Tuesday, the
investor will be allotted units at NAV of same day i.e. Tuesday in FFF. In case of non-business
day in FFF, the NAV of immediate next business day will be allotted.
Load: For all DTP purchase transactions, the entry and exit load as mentioned in the Section
This facility is not available under Daily Dividend Plans and Weekly Dividend Plans of the
above schemes.
The Trustee/AMC reserves the right to modify the facilities at any time in future on a prospective
basis.
A dividend transfer plan may be terminated on appropriate written notice by the unitholder of the
fund. The Investment Manager may change rules relating to the plan from time to time.
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.
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 unit) accrued interest) + Unamortised Issue Expenses - All Liabilities except Unit
Capital & Reserves)
Number of Units Outstanding at the end of the day
53
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:
I. VALUATION OF ASSETS & NAV
Valuation of Assets:
The Fund shall value its investments according to the valuation norms, as specified in Schedule
VIII of the Regulations, or such norms as may be prescribed by SEBI from time to time. The
broad valuation norms are detailed below. These norms are indicated based on the current
Regulations and the Guidelines issued by SEBI.
A. Traded Securities:
• The securities shall be traded at the last quoted closing price on the Mumbai Stock exchange.
• When the securities are traded on more than one recognised stock exchange, the securities
shall be valued at the last quoting price on the stock exchange where the security is
principally traded. The AMC will select the appropriate stock exchange, but the reasons for
the selection would be recorded in writing. All scrips may be valued at the price quoted on
the stock exchange where a majority in value of the investments is principally traded. 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 on a particular valuation day, a security has not been traded on the selected stock
exchange; the value at which it is traded on another stock exchange may be used.
• 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) of a marketable lot of Rs. 5 crores
and above is 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 that day only will be used traded price in accordance with the AMFI recommendation
dated March 10, 2003.
• 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.
B. Thinly Traded Securities:

(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 100,000 and value is Rs. 400,000, the share does
not qualify as thinly traded. Also if the volume traded is 40,000, but the value of trades is
Rs. 600,000, the share does not qualify as thinly traded.
54
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 crore) 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.
C. Non-Traded Securities:
When a security (other than Government Securities) is not traded 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 and 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.
(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.
55
(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) 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:
. 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.
. Net worth per share shall again be calculated after taking into account the outstanding
warrants and options, 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.
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.
56
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.
Due Diligence
The mutual funds shall not make investment in unlisted equity shares at a price higher than
the price obtained by using the aforesaid methodology. However, it is clarified that this will
not be applicable for investment made in the Initial Public Offers of the companies (IPOs) or
firm allotment in public issues where all the regulatory requirements and formalities
pertaining to public issues have been complied with by the companies and where the mutual
funds are required to pay just before the date of public issue.
The boards of AMCs and trustees of mutual funds shall lay down the parameters for investing
in unlisted equity shares. They shall pay specific attention that due diligence was exercised
while making such investments and shall review their performance in their periodical
meetings as advised in SEBI Circular no. MFD/CIR/6/73/2000 dated July 27, 2000.
(ii) (a) 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”.
(ii) (b) 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.
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
57
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
METHODOLOGY
A. Construction of Risk Free Benchmark

Using Government of India dated securities, the Benchmark shall be constructed as below:
• GOI dated securities will be grouped into various duration buckets such as 0.5-1 years, 1-2
years, 2-3 years, 3-4 years, 4-5 years, 5-6 years and 6 years and the volume weighted yield
would be computed for each bucket. These duration buckets may be changed to reflect the
market value more closely by any agency suggested by AMFI giving benchmark
yield/matrix of spreads over benchmark yield.
The benchmark as calculated above will be set at least weekly, and in the event of any
significant movement in prices of Government Securities on account of any event impacting
interest rates on any day such as a change in the Reserve Bank of India (RBI) policies, the
benchmark will be reset to reflect any change in the market conditions.
Note: The concept of duration over tenor has been chosen in order to capture the
reinvestment risk. It is intended to gradually move towards a methodology that incorporates
the continuous curve approach for valuation of such securities. However, in view of the
current lack of liquidity in the corporate bond markets, a continuous curve approach to
valuation would be necessarily based on limited data points, and this would result in out of
line valuations. As an interim methodology therefore it is proposed that the Duration Bucket
approach be adopted and continuously tracked in order to fine-tune the duration buckets on a
periodic basis. Over the next few years it is expected that with the deepening of the secondary
market trading, it would be possible to make a gradual move from the Duration Bucket
approach towards a continuous curve approach.
B. Building a Matrix of Spreads for Marking-up the Benchmark Yield

Mark up for credit risk over the risk free benchmark YTM as calculated in step A, will be
determined using the trades of corporate debentures/bonds of different ratings. All trades on
appropriate stock exchange during the fortnight prior to the benchmark date will be used in
building the corporate YTM and spread matrices. Initially these matrices will be built only
for corporate securities of investment grade. The matrices are dynamic and the spreads will
be computed every week. The matrix will be built for all duration buckets for which the
benchmark GOI matrix is built to effectively link the corporate matrix with the GOI securities
matrix. Accordingly:
• All traded paper (with minimum traded value of Rs. 1 crore) will be classified by their
ratings and grouped into 7 duration buckets; for rated securities, the most conservative
publicly available rating will be used;
• For each rating category, average volume weighted yield will be obtained both from trades
on the appropriate stock exchange and from the primary market issuance
• Where there are no secondary trades on the appropriate stock exchange in a particular rating
category and no primary market issuance during the fortnight under consideration, then trades
on appropriate stock exchange during the 30 day period prior to the benchmark date will be
considered for computing the average YTM for such rating category;
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• If the matrix cannot be populated using any or all of the above steps, then credit spreads
from trades on appropriate stock exchange of the relevant rating category over the AAA
trades will be used to populate the matrix;
• In each rating category, all outliers will be removed for smoothening the YTM matrix;
• Spreads will be obtained by deducting the YTM in each duration category from the
respective YTM of the GOI securities;
• In the event of lack of trades in the secondary market and the primary market the gaps in the
matrix would be filled by extrapolation. If the spreads cannot be extrapolated for the reason
of practicality, the gaps in the matrix will be filled by carrying the spreads from the last
matrix.
C. Mark-up/Mark-down Yield
The Yields calculated would be marked-up/marked –down to account for the ill-liquidity risk,
promoter background, finance company risk and the issuer class risk. As the level of ill-
liquidity risk would be higher for non rated securities the marking process for rated and non
rated securities would be differentiated as follows
(I) Adjustments for Securities rated by external rating agencies

• The Yields so derived out of the above methodology could be adjusted to account for risk
mentioned above.
• A Discretionary discount/premium of upto +100 /-50 Basis Points for securities having a
duration of upto 2 years and upto +75/- 25 Basis Points for securities having duration higher
than 2 years will be permitted to be provided for the above mentioned types of risks. The
rationale for the above discount structure is to take cognisance of the differential interest rate
risk of the securities. This structure will be reviewed periodically.
(II) Adjustments for Internally Rated Securities

To value an unrated security, the fund manager has to assign an internal credit rating, which
will be used for valuation. Since unrated instruments tend to be more illiquid than rated
securities, the yields would be marked up by adding +50 basis point for securities having
duration of upto two years and +25 basis point for securities having duration of higher than
two years to account for the illiquidity risk.
(III) Application of Benchmark yield for valuation on the date of its release by any
agency suggested by AMFI
The benchmark yield/matrix of spreads over benchmark yield obtained from any agency
suggested by AMFI as a provider of benchmark yield/matrix of spreads over benchmark yield
to mutual funds, must be applied for valuation of securities on the day on which the bench
mark yield/matrix of spreads over benchmark yield is released by the aforesaid agency.
Valuation of securities with Options (Put or Call or Put and Call)

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.
59
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
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.
Government securities
The Government securities, held by the scheme will be valued based on the prices for
Government Securities released by an agency suggested by AMFI for the sake of uniformity
in calculation of NAVs.
Illiquid Securities:
(a) Aggregate value of “illiquid securities” of scheme, which are defined as non-traded, thinly
traded and unlisted equity shares, shall not exceed 15% of the total assets of the scheme and
any illiquid securities held above 15% of the total assets shall be assigned zero value.
Provided that in case any scheme has illiquid securities in excess of 15% of total assets as on
September 30, 2000 then such a scheme shall within a period of two years bring down the
ratio of illiquid securities within the prescribed limit of 15% in the following time frame:
(i) all the illiquid securities above 20% of total assets of the scheme shall be assigned zero
value on September 30, 2001.
(ii) All the illiquid securities above 15% of total assets of the scheme shall be assigned zero
value on September 30, 2002.
(b) All funds shall disclose as on March 31 and September 30 the scheme-wise total illiquid
securities in value and percentage of the net assets while making disclosures of half yearly
portfolios to the unitholders. In the list of investments, an asterisk mark shall also be given
against all such investments, which are recognised as illiquid securities.
(c) Mutual Funds shall not be allowed to transfer illiquid securities among their schemes
w.e.f. October 1, 2000
(d) In respect of closed ended funds, for the purposes of valuation of illiquid securities, the
limits of 15% and 20% applicable to open-ended funds should be increased to 20% and 25%
respectively.
(e) Where a scheme has illiquid securities as at September 30, 2001 not exceeding 15% in the
case of an open-ended
fund and 20% in the case of closed fund, the concessions of giving time period for reducing
the illiquid security to the prescribed limits would not be applicable and at all time the excess
over 15% or 20% shall be assigned nil value.
Fixed Income and Money Market Securities

a) Debt instruments shall generally be valued on a yield to maturity basis recommended by
the AMC and reviewed periodically by the Trustee on the basis of the capitalization factor for
comparable traded securities and with an appropriate discount for a lower liquidity.
b) While investments in call money, bills purchased under rediscounting scheme and short
term deposits with banks shall be valued at cost plus accrual; other money market instruments
shall be valued at the yield at which they are traded. For this purpose, instruments not traded
for a period of seven days will either be valued at cost plus interest accrued 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 or valued on the basis recommended by
the AMC, which will be reviewed by the Trustees periodically.
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Value of “Rights” entitlement
a) Until they are traded, the value of the “rights” entitlement would be calculated as:
Vr = n/m x (P ex – P of)
where
Vr = Value of rights
n = no. of rights Offered
m = no. of original shares held
P ex = Ex-Rights price
P of = Rights Offer price
b) Where the rights are not traded pari-passu with the existing shares, suitable adjustments
would be made to the value of rights. Where it is decided not to subscribe for the rights but to
renounce them and renunciations are being traded, the rights would be valued at the
renunciation value.
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.
61
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.
D. 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.
(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.
E. 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.
F. Expenses and Incomes Accrued:

All expenses and incomes accrued up to the valuation date shall be considered for
computation of NAV. For this purpose, major expenses like management fees and other
periodic expenses would be accrued on a day-to-day basis. The minor expenses and income
will be accrued on a periodic basis, provided the non-daily accrual does not affect the NAV
calculations by more than 1%.
G. Changes in securities and in number of units:

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 NAV disclosure, the recording may be delayed up to a period of seven days
following the date of the transaction, provided as a result of such non-recording, the NAV
calculation shall not be affected by more than 1%.
The valuation guidelines as outlined above are as per prevailing Regulations and are subject
to change from time to time in conformity with changes made by SEBI.
SEBI has issued vide circular no. MFD / CIR / 8 / 92 / 2000 dated September 18, 2000 and
MFD/ CIR/ 14/ 088/ 201 dated March 28, 2001 (i) Guidelines for Valuation of Securities and
(ii) Guidelines for Identification and Provisioning for Non-Performing Assets (NPAs). These
Guidelines are supplementary to the provisions specified in SEBI Regulations.
These Guidelines are effective as follows (SEBI circular no. MFD/CIR/8(a)/104/2000 dated
October 3, 2000):
(i) Guidelines for identification and provisioning of NPAs and Valuation of non-traded and
thinly traded equity shares:-October 16. 2000.
(ii) Guidelines for Valuation of non-traded and thinly traded debt securities:- December 1, 2000.
Guidelines for Identification and Provisioning for Non Performing Assets (Debt Securities)
For Mutual Funds:
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(A) Definition of a Non Performing Asset (NPA)
An ‘asset’ shall be classified as non performing, if the interest and/or principal amount have
not been received or remained outstanding for one quarter from the day such income/
instalment has fallen due.
(B) Effective date for classification and provisioning of NPAs:
The definition of NPA may be applied after a quarter past due date of the interest. For e.g. if
the due date for interest is 30.06.2000, it will be classified as NPA from 01.10.2000.
(C) Treatment of income accrued on the NPA and further accruals
• After the expiry of the 1st quarter from the date the income has fallen due, there will be no
further interest accrual on the asset i.e. if the due date for interest falls on 30.06.2000 and if
the interest is not received, accrual will continue till 30.09.2000 after which there will be no
further accrual of income. In short, taking the above example, from the beginning of the 2nd
quarter there will be no further accrual on income.
• On classification of the asset as NPA from a quarter past due date of interest, all interest
accrued and recognized in the books of accounts of the Fund till the date, should be provided
for. For e.g. if interest income falls due on 30.06.2000, accrual will continue till 30.09.2000
even if the income as on 30.06.2000 has not been received. Further, no accrual will be done
from 01.10.2000 onwards. Full provision will also be made for interest accrued and
outstanding as on 30.06.2000.
(D) Provision for NPAs – Debt Securities.
Both secured and unsecured investments once they are recognised as NPAs call for
provisioning in the same manner and where these are related to close ended scheme the
phasing would be such that to ensure full provisioning prior to the closure of the scheme or
the scheduled phasing which ever is earlier. The value of the asset must be provided in the
following manner or earlier at the discretion of the fund. Fund will not have discretion to
extend the period of provisioning. The provisioning against the principal amount or
instalments should be made at the following rates irrespective of whether the principal is due
for repayment or not.
• 10% of the book value of the asset should be provided for after 6 months past due date of
interest i.e. 3 months form the date of classification of the asset as NPA.
• 20% of the book value of the asset should be provided for after 9 months past due date of
interest i.e. 6 months from the date of classification of the asset as NPA.
• Another 20% of the book value of the assets should be provided for after 12 months past
due date of interest i.e. 9 months form the date of classification of the asset as NPA.
• Another 25% of the book value of the assets should be provided for after 15 months past
due date of interest i.e. 12 months from the date of classification of the asset as NPA.
• The balance 25% of the book value of the asset should be provided for after 18 months past
due date of the interest i.e. 15 months form the date of classification of the assets as NPA.
Book value for the purpose of provisioning for NPAs shall be taken as a value determined as
per the prescribed valuation method.
This can be explained by an illustration:
Let us consider that interest income is due on a half yearly basis and the due date falls on
30.06.2000 and the interest is not received till 1st quarter after due date i.e. 30.09.2000. This
provisioning will be done in following phased manner:
10% provision 01.01.2001 6 months past due date of interest i.e. 3 months form the date of
classification of asset as NPA (01.10.2000)
20% provision 01.04.2001
20% provision 01.07.2001
25% provision 01.10.2001
25% provision 01.01.2002
Thus, 1 1/2; years past the due date of income or 1 1/4; year from the date of classification of
the ‘asset’ as an NPA, the ‘asset’ will be fully provided for. If any installment is fallen due,
63
during the period of interest default, the amount of provision should be installment amount or
above provision amount, whichever is higher.
(E) Reclassification of assets:
Upon reclassification of assets as ‘performing assets’:
1. In case a company has fully cleared all the arrears of interest, the interest provisions can be
written back in full.
2. The asset will be reclassified as performing on clearance of all interest arrears and if the
debt is regularly serviced over the next two quarters.
3. In case the company has fully cleared all the arrears of interest, the interest not credited on
accrual basis would be credited at the time of receipt.
4. The provision made for the principal amount can be written back in the following manner:
100% of the asset provided for in the books will be written back at the end of the 2nd quarter
where the provision of principal was made due to the interest defaults only.
• 50% of the asset provided for in the books will be written back at the end of the 2nd quarter
and 25% after every subsequent quarter where both instalments and interest were in default
earlier.
5. An asset is reclassified as ‘standard asset’ only when both overdue interest and overdue
instalments are paid in full and there is satisfactory performance for a subsequent period of 6
months.
(F) Receipt of past dues:
When the fund has received income/principal amount after their classifications as NPAs;
• For the next 2 quarters, income should be recognised on cash basis and thereafter on accrual
basis. The asset will be continued to be classified as NPA for these two quarters.
• During this period of two quarters although the asset is classified as NPA no provision
needs to be made for the principal if the same is not due and outstanding
• If part payment is received towards principal, the asset continues to be classified as NPA
and provisions are continued as per the norms set at (D) above. Any excess provision will be
written back.
(G) Classification of Deep Discount Bonds as NPAs :
Investments in Deep Discount Bonds can be classified as NPAs, if any two of the following
conditions are satisfied:
• If the rating of the Bond comes down to grade ‘BB’ or below.
• If the company is defaulting in their commitments in respect of other assets, if available.
• Full Net worth erosion.
Provision should be made as per the norms set at (D) above as soon as the asset is classified
as NPA.
Full provision can be made if the rating comes down to grade ‘D’
(H) Reschedulement of an asset:
In case any company defaults either interest or principal amount and the fund has accepted a
Reschedulement of the schedule of payments, then the following practice may be adhered to:
(i) In case it is a first Reschedulement and only interest is in default, the status of the asset
namely, ‘NPA’ may be continued and existing provisions should not be written back. This
practice should be continued for two quarters of regular servicing of the debt. Thereafter, this
be classified as ‘performing asset’ and the interest provided may be written back.
(ii) If the Reschedulement is done due to default in interest and principal amount, the asset
should be continued as non-performing for a period of 4 quarters, even though the asset is
continued to be serviced during these 4 quarters regularly.
Thereafter, this can be classified as ‘performing asset’ and all the interest provided till such
date should be written back.
(iii) If the Reschedulement is done for a second/third time or thereafter, the characteristic of
NPA should be continued for eight quarters of regular servicing of the debt. The provision
should be written back only after it is reclassified as ‘performing asset’.
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(I) Disclosure in the Half Yearly Portfolio Reports:
The mutual funds shall make scripwise disclosures of NPAs on half yearly basis along with
the half yearly portfolio disclosure. The total amount of provisions made against the NPAs
shall be disclosed in addition to the total quantum of NPAs and their proportion of the assets
of the mutual fund scheme. In the list of investments an asterisk mark shall be given against
such investments which are recognised as NPAs. Where the date of redemption of an
investment has lapsed, the amount not redeemed shall be shown as ‘Sundry Debtors’ and not
investment provided that where an investment is redeemable by instalments that will be
shown as an investment until all instalments have become overdue.
(J) Effective date for implementation / switchover to the current norms:
The above norms are being implemented by the mutual Fund with effect from 01.10.2000.
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) 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.
d) In determining the holding cost of investments and the gains or loss on sale of investments,
the “average cost” method shall be followed.
e) 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.
f) 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.
g) 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.
65
h) 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.
i) 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.
j) 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/Collection Centre. 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 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 NAV for Redemptions”) adjusted for exit load, if any and securities transaction tax
(STT). 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.
66
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, FTMF hereby
declare all it’s 33 branches [Investor Service Centres (ISC)] and the designated branch offices of
Karvy Computershare Pvt. Ltd. (Collection Centres) 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 honoured 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
pay the investor the redemption amount requested for (in Rupees), Franklin Templeton will
redeem that many units as would give the investor the net redemption amount requested for, after
deducting securities transaction tax and exit load as applicable from time to time.
To further elaborate, the redemption amount is calculated by deducting from the “Applicable
NAV for Redemptions”, the exit load, if any and the securities transaction tax (STT) which is
0.15% at present. 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 Amount = [NAV * (1- Exit Load)] – STT
= [14 * (1-0.01)] – STT
= Rs. 13.86 – STT
Calculation of STT:
i) In case the investor asks for the redemption in terms of no. of units (or for all units
outstanding in his account), the computation of STT would be {[Unit * (NAV less Exit Load,
if any)] * STT rate}
ii) If the investor asks for a Rupee amount as redemption, the STT would be calculated as
[(Rupee amount less exit Load, if any) / (1 – STT rate) – Rupee amount less Exit load, if any]
67
Example:
Unit Redemption Amount Redemption

No. of units 10,000 -
Amount - 1,00,000
NAV 15.00 20.00
Exit load 1% 1%
STT 0.15% 0.15%
Outstanding units 50,000 40,000
Unit redemption STT on NAV at redemption price:

Price : 14.85
Amount : 1,48,500.00
STT : 222.75
STT rounded up to Rupee : 223.00
Net amount to investors : 1,48,277.00
Balance units : 40,000
Unit redemption STT on NAV at redemption price:

Price : 19.80
Gross Amount with STT : 1,00,150.23
STT : 150.23
STT rounded up to Rupee : 150.00
No. of units : 5,058.092
Balance units : 39,941.908
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. 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 redemption proceeds may be credited to the
bank account of the investor if the investor so instructs, subject to the AMC having necessary
arrangements with the bank. Further redemption proceeds may also be paid through Electronic
Clearing System (ECS), which is subject to applicable policies of the Reserve Bank of India and
working of the banking system. All redemption payments will be made, in favour of the
registered holder of the Units or, if there is more than one registered holder, of the first registered
holder on the original application for Units. Units purchased can be redeemed only after
realisation 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 the Registrar’s Office 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 failing which applications are liable to be
rejected. Investors are required to provide the name of their bank, branch address and account
number in the Application. Redemption cheques will be sent to the investor with reference to the
data submitted in the application for Units at the investor’s risk. Dispatch of redemption cheque
shall be made by ordinary mail or registered mail or courier, as may be deemed appropriate by
68
the AMC unless otherwise required under any applicable regulations, at the risk of the investor.
Such payments will constitute adequate discharge of the obligation of the Fund, Trustee and the
AMC. The Fund, the AMC or the Trustee will not be responsible for any delay/non-receipt of
redemption proceeds where it is attributable to any incorrect/incomplete information provided by
the investor. The Fund / AMC will also not be liable for any loss on account of fraudulent
encashment of the redemption cheque.
Exchanges/Switch
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 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.
Investors can, subject to any applicable restriction (such as lien/lock-in) exchange investments
from one scheme of Franklin 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 (POP) 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
For this purpose the units of that scheme/plan will be redeemed at the applicable redemption
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.
SYSTEMATIC WITHDRAWAL PLAN (SWP)
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 or
capital appreciation, 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.
69
• 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/-.
• Where the Start Date of the SWP is not mentioned, then the same shall be deemed to be the
first available SWP date depending upon the option chosen by the unitholder, after a period
of 7 days after the date of submission of the SWP request.
• 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.
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
70
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. When one or more stock exchanges or markets, which provides the basis of valuation for
substantial portion on the assets of the scheme is closed otherwise than for holidays
ii. The Capital / debt / money market stops functioning or trading is restricted;
iii. Periods of extreme volatility in the capital /debt / money markets, which, in the opinion of the
Investment Manager, is prejudicial to the interest of the investors;
iv. When there is a strike by the banking community or trading is restricted by RBI or other
authority
v. Period of extreme volatility in the capital /debt / money markets, which in the opinion of the
Board of Directors of AMC and Trustee is prejudicial to the interest of the scheme’s
investors.
vi. 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 capital 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.
vii. Break down in the information processing/communication systems affecting the valuation of
investments/processing of sale/repurchase request.
viii.Natural calamity;
ix. SEBI, by order, so directs.
x. 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.
The approvals from the Boards of the AMC and the Trustee giving details of circumstances and
justification for the proposed action shall also be informed to SEBI in advance.
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
71
management fees charged by the AMC for managing unclaimed amounts will not exceed 50 basis
points.
13. ASSOCIATE TRANSACTIONS
1. The Schemes of Franklin 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. Franklin Templeton Mutual Fund has not utilised the services of associate companies for
purchase-sale of securities.
3. Franklin Templeton Mutual Fund has utilised the services of the associates as given below:
(Rs. in millions)
Associate Company For the year ended
31-03-2003 31-03-2004 31-03-2005
Spur Cable and Datacom 0.82 0.60 -

ITI Capital Markets 2.36 4.12 2.73
*ITI Financial Services 0.20 - -
*An associate of Pioneer ITI AMC Ltd. prior to 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 Franklin 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.
1. 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.
2. 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.
3. 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.
72
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.
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.
Receiving Account Statement / 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. Subject to the consent of the Unitholder, the mutual fund will endeavour to send the
account statement, annual report, half yearly portfolio statement and any other correspondence to
the unitholder by e-mail as the mode of communication. Alternately, the AMC may also send an
73
e-mail to the investor giving the link to the website of the Mutual Fund for the aforesaid
statements, wherever applicable.
The Unit holder may download and print the Account Statement and other communication 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 Franklin 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.
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.
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 31st 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
74
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 31st
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 July 29, 2005:
Disclosure as to whether any company has invested more than 5% of the NAV of any Franklin
Templeton Mutual Fund scheme and investment made by that scheme or any other Franklin
Templeton Mutual Fund scheme in that company or its subsidiaries (as on July 29, 2005).
Franklin 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:
Investor Company Scheme/s invested in Franklin Templeton's Aggregate Outstanding# as
scheme/s which have investment made at 29-July-2005 at
invested in the Investor during the period Market /Fair
Company 01-April- 2005 to 29- Value
July-2005 @ at cost (Rs. in Crores)
(Rs. In Crores)
Bharti Televentures Ltd. TISTIP FIBCF, FIIF-BSE Sensex, 69.07 73.46
FIIF-NSE Nifty, FTFTF-
SeriesI-60 Month Plan
Dabur India Ltd. TFIF-L FIIF-NSE Sensex, FITF, 9.96 1.00
TITMA
Grasim Industries Ltd. TISTIP FIPP, FIIF-NSE Nifty, 40.54 211.79
FIIF-BSE Sensex, FIFCF,
FITF
Hindalco Industries Ltd. TIIBA-Institutional FIBCF, TIIBA, FTFTF- 36.31 359.71
Plan, TITMA, TGSF- SeriesI-60 Month Plan,
Composite Plan FIIF-BSE Sensex,
FTIMIP, FIFCF, TMIP-
Half yearly Dividend and
Growth Plan
IL&FS TITMA FIPP, FTIBF, FIOF, 159.82 105.64
TIPP, FIPF, FTFTF-
SeriesI-60 month Plan,
FIT96, FIT97, FIT98,
FIT99, FIT, TITMA,
TFIF-L, TFIF-S
IDBI TIIBA-Institutional FIOF, TFIF-S, TITMA, 96.57 573.56
Plan, TITMA, TFIF-S, TILP, FTFTF-SeriesI-60
TISTIP Month Plan
ITC Ltd. TILF, TFIF-S, TITMA, FIIF-NSE, FITF, FIIF- 3.95 109.81
TISTIP BSE, FMCG, FTFTF-
SeriesI-60 Month Plan
Maruti Udyog Ltd. TISTIP,TFIF-S,TFIF-L FIBCF, FIIF-BSE Sensex, 63.45 175.91
FIIF-NSE Sensex, FIFCF,
75
Investor Company Scheme/s invested in
Franklin Templeton's Aggregate Outstanding# as
scheme/s which have investment made at 29-July-2005 at
invested in the Investor during the period Market /Fair
Company 01-April- 2005 to 29- Value
July-2005 @ at cost (Rs. in Crores)
(Rs. In Crores)
FIOF, FTFTF-SeriesI-60
Month Plan, FITF
Reliance Industries Ltd. TITMA FIPP, FIBCF, FIIF-BSE 99.13 391.00
Sensex, FIFCF, FIOF,
FTFTF-SeriesI-60 Month
Plan, TITMA, FIIF-NSE
Sensex, TISTIP,
Videsh Sanchar Nigam Ltd. TITMA, TFIF-S FIIF-NSE Sensex, FITF 0.14 0.36
Wipro Ltd. TIIBA-Institutional FIIF-BSE Sensex, FIIF- 7.48 18.08
Plan, TITMA, TFIF-S, NSE Nifty, FIF, FITF
TISTIP
@ This is the aggregate of all investments made during the period ended 29-July-2005 in accordance with
Regulation 25(11) without considering sale/redemptions and interscheme transactions, which might have occurred.
# Outstanding value of investments indicates 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 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, Karta 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.
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.
76
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:

. Death certificate
. Identity of the nominee
. Proof of guardianship in case the nominee is a minor and or an unsound person
. Indemnity in the prescribed format
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 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 Franklin 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. An Application Form duly completed together with cheques or
bank drafts should be remitted through Franklin Templeton Investor Service Centres ('ISC')
/specified Karvy Collection Centres. All cheques/demand drafts accompanying the application
form must be made in favour of "Franklin FMCG Fund" and crossed “A/c payee only” and
should be made payable at a city where the application is accepted by any Franklin Templeton
ISC/Karvy Collection Centres.
77
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 wire transfer/inward remittances to Franklin Templeton Mutual Fund’s
account with Citibank, Fort, Mumbai, or by way of cheques drawn on the NRE/NRO Account of
the investor [Clause 3(2) of the Regulations] payable at the city where the application form is
accepted by any Franklin Templeton ISC/Karvy Collection Centres, or Rupee draft purchased
abroad payable at Chennai. Please provide a photocopy of the cheque along with the application
form if investment is made through a NRE/NRO account.
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 wire transfer/inward remittances to Franklin Templeton Mutual Fund’s account
with Citibank, Fort, Mumbai, or by way of cheques drawn on the NRE//NRO account of the
investor [Clause 3(3) of the Regulations], payable at the city where the application form is
abroad payable at Chennai. Please provide a photocopy of the cheque along with the application
form if investment is made through a NRE/NRO account.
FII INVESTORS
FIIs may pay for their subscription amounts by way of wire transfer/inward remittances to
Franklin Templeton Mutual Fund’s account with Citibank, Fort, Mumbai, or out of funds held in
special Non-resident Rupee Account maintained in a designated branch of an authorised dealer
[Clause 3(1) of the Regulations] by way of cheques payable at a city where the application is
abroad payable at Chennai.
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/Collection Centres within 7 days from the date of the application. The officials should sign
the application under their official designation.
FIIs/Trusts must also provide the Overseas Auditor’s Certificate. 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].
78
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)
A) TAX IMPLICATIONS TO UNITHOLDERS
The following summary outlines the key tax implications applicable to unit holders based on the
relevant provisions under the Income-tax Act, 1961 (‘Act’), the Wealth-tax Act, 1957 and the
Finance (No 2) Act 2004 (collectively called ‘the relevant provisions’), subsequent to the
amendments made by the Finance Act, 2005.
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.
1.0 UNDER THE INCOME-TAX ACT, 1961
The following summary outlines the key tax implications applicable to unit holders based on the
relevant provisions under the Act subsequent to the amendments made by the Finance Act, 2005.
The tax implications of the following income received by the investors are discussed below:
i) Income on units (other than sale/redemption);
ii) Income on sale/redemption of the units.
15.1.1 Taxability of income on units (other than sale):

The income received by an investor (other than income on sale/redemption) in respect of units of
a mutual fund specified under Section 10(23D) of the Act is exempt under the Act.
As the income is exempt from tax, no tax is withheld by the Mutual Fund upon distribution of
such income.
79
15.1.2 Taxability of income on sale/redemption of units:
The taxability of the income on sale/redemption of units and the rates at which such income is
taxed is discussed below:
If the units are held as stock-in-trade:

If the units are held by an investor as stock-in-trade of a business, the said income will be taxed
at the rates at which the normal income of that investor is taxed. The rates applicable to different
investors are discussed at length in Note 1.
On sale of the units of an equity oriented fund (as defined below) on a recognised stock exchange
or to the Mutual Fund, the investor will also be charged with securities transaction tax (‘STT’) as
per the rates specified in para 15.5, provided the transaction is also considered as a taxable
securities transaction. In other cases, STT is not levied.
Further, the investor is not allowed any deduction of STT paid for the purposes of computing his
business income. However, a rebate under section 88E of the Act is available in respect of STT
paid. The rebate is available in form of a deduction of the STT paid from the tax payable on the
income from the taxable securities transaction. The tax payable on the income from taxable
securities transaction is computed by applying the average rate of income-tax on the total
income. The rebate in respect of STT paid cannot, however, exceed the tax payable. Also, this
rebate can be claimed by an investor only if appropriate evidences are furnished in Form No.
10DB along with the Return of Income.
Note: “Equity oriented fund” is defined as -

• a fund where the investible funds are invested by way of equity shares in domestic
companies to the extent of more than fifty percent of the total proceeds of such fund; and
• which has been set up under a scheme of a Mutual Fund specified in section 10 (23D) of
the Act
FFF is an equity oriented fund.
“Taxable securities transaction” means a transaction of –

• purchase or sale of an equity share in a company or a derivative or a unit of an equity
oriented fund, entered into in a recognised stock exchange; or
• sale or an equity oriented fund to the Mutual Fund
If the units are held as investments:

If the units are held as investments, the tax rates applicable will depend on whether the gain on
sale of units is classified as a short term capital gain or a long term capital gain. 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 long-term capital assets for
the computation of capital gains; in all other cases, they would be treated as short-term capital
assets.
The tax rates applicable on short term or long term capital gains arising on transfer of units of an
equity oriented fund are stated in the following table:
Nature of income Tax rate$

Short-term capital gains on sale Capital gains tax payable at 10 percent* [applicable to all
either to the Mutual Fund or on investors including Foreign Institutional Investors (FII)]
a recognized stock exchange
Long- term capital gains on sale No capital gains tax payable by any investor.
either to the Mutual Fund or on
a recognized stock exchange
80
* plus surcharge and education cess as may be applicable (refer Note 2). In case of non-resident investors,
the above rates would be subject to applicable treaty relief.
$
Additionally, STT would be payable at the rates specified in para 15.5
The tax rates applicable on short term or long term capital gain arising on transfer of units of a
scheme not dealt with above are stated in the following table:
Nature of income Tax rate

Short-term capital gains In case of FIIs, 30 percent*
For others, taxed at normal tax rates (as explained in Note 1).
Long-term capital gains In case of FII’s, 10 percent* (without indexation)
In case of others, 20 percent* (with indexation#) or, 10
percent* (without indexation), whichever less.
* plus surcharge and education cess as may be applicable (refer Note 2). In case of non-resident
investors, the above rates would be subject to applicable treaty relief.
#
no indexation benefit for non-resident investors if investment made is in foreign currency.
The withholding tax implication (i.e. TDS) in respect of the capital gains explained above is
discussed below:
(a) Resident Investors:

No tax is required to be deducted at source from capital gains arising to resident investors at
the time of repurchase or redemption of the units.
(b) Non-Resident Investors:

As per the provisions of Act [Section 195], tax is required to be deducted at source from the
sale proceeds or redemption proceeds paid to non-resident investors. This withholding is in
addition to the STT payable, if any, by the investor. The rates are:
(i) Foreign Institutional Investors: No tax has to be deducted on redemption/sale proceeds
[Section 196D(2)].
(ii) Non-Resident Indian (‘NRI’) / Person of Indian origin (‘PIO’): Tax, on short term capital
gains arising out of redemption of units is deducted at the rate of 10% (plus surcharge) for
an equity oriented fund and at 30% (plus surcharge) for a non equity oriented fund. Tax,
on long term capital gains is deducted at the rate of 20% (plus surcharge). However, in
case of long term capital gains on redemption of units of an equity oriented fund, no tax
would be deducted. For administrative purpose the Fund will deduct 10% surcharge.
(iii)Non-Resident Corporates: Tax is deducted at the rate of 40 percent on short term capital
gains and 20 percent on long-term capital gains. The said rates at which capital gains are
charged to tax would be further increased by the applicable surcharge and education cess
stated in Note 2 below. No tax would, however, be deducted in case of long term capital
gains on redemption of units of an equity oriented fund.
All the above non-resident investors may also claim the tax treaty benefits available, if any.
For details of applicability and eligibility of such benefits, the investors are requested to
consult their tax advisors.
Provisions regarding Dividend income and Bonus

According to the provisions of Section 94(7) of the Act, losses arising from the sale/redemption
of units purchased within 3 months prior to the record date (for entitlement of dividends) and
sold within 9 months after such date, is disallowed to the extent of income on such units (other
than on sale/redemption) claimed as tax exempt.
According to the provisions of Section 94(8) of the Act, if an investor purchases units within 3
months before the record date (for entitlement of bonus) and sells/redeems the units within 9
months after that date, and by virtue of holding the original units, he becomes entitled to bonus
81
units, then the loss arising on transfer of original units shall be ignored for the purpose of
computing his income chargeable to tax. In fact, the loss so ignored will be treated as cost of
acquisition of such bonus units.
Note 1:
The individuals (including NRIs/PIOs) and HUFs, are proposed to be taxed in respect of their
total income at the following rates:
Slab Tax rate *
Total income upto Rs.1,00,000# Nil
More than Rs.100,000# but upto Rs.150,000 10 percent of excess over Rs.100,000
More than Rs.150,000 but upto Rs.250,000 20 percent of excess over Rs. 150,000
+ Rs.5,000$
Exceeding Rs.250,000 30 percent of excess over Rs 250,000
+ Rs.25,000$.
* plus surcharge and education cess as may be applicable (refer Note 2).
#
for females below sixty-five years of age, Rs. 100,000 has to be read as Rs. 1,35,000 and for senior
citizens above sixty-five years of age, Rs. 100,000 has to be read as Rs. 1,85,000.
$
for females below sixty-five years of age, Rs. 5,000 has to be read as Rs. 1,500 and Rs 25,000 has to be
read as Rs 21,500. Similarly for senior citizens above sixty-five years of age, Rs. 5,000 has to be read as
nil and Rs 25,000 has to be read as Rs. 13,000.
The corporate tax rate for domestic companies is 30 per cent (plus applicable surcharge (as per note 2) and
education cess). However, the tax rate applicable to foreign companies is 40 per cent [plus applicable
surcharge (as per note 2) and education cess].
Note 2:
Assessee Rate of surcharge applicable
Individuals (including NRIs/ PIOs), HUFs, A surcharge by way of education cess of 2 percent
Non-Corporate FIIs where the taxable is payable on the total amount of tax
income is up to Rs. 1,000,000 per annum
Individuals (including NRIs/ PIOs), HUFs 10 percent basic surcharge. An additional
and Non-corporate FIIs where the taxable surcharge by way of education cess of 2 percent is
income is in excess of Rs. 1,000,000 per payable on the total amount of tax plus surcharge.
annum
Domestic Companies 10 percent basic surcharge. An additional
surcharge by way of education cess of 2 percent is
payable on the total amount of tax plus surcharge.
Foreign Companies (including corporate FII) 2.5 percent basic surcharge. An additional
surcharge by way of education cess of 2 percent is
payable on the total amount of tax plus surcharge.
2.0 UNDER THE WEALTH TAX ACT, 1957
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.
B) TAX IMPLICATIONS ON MUTUAL FUND
3.0 INCOME EARNED OR RECEIVED BY THE MUTUAL FUND

Franklin 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.
82
4.0 INCOME DISTRIBUTED BY THE MUTUAL FUND
As per provisions of the Act (Section 115R), Franklin Templeton Mutual Fund will be required
to pay dividend distribution tax (‘DDT’) as follows:
No DDT to be paid on open-ended equity oriented funds;
DDT to be paid on other funds at the following rates:
- at 14.025 percent (including a surcharge of 10 percent and an additional surcharge by way
of education cess of 2 percent on the amount of tax plus surcharge) on dividend
distributed to individuals and HUFs; and
- at 22.44 percent (including a surcharge of 10 percent and an additional surcharge by way
of education cess of 2 percent on the amount of tax plus surcharge) on dividend
distributed to persons other than individuals and HUFs, for instance, corporates.
5.0 SECURITIES TRANSACTION TAX
Franklin Templeton Mutual Fund, is liable to pay a securities transaction tax as follows:
Sr. Taxable securities transaction Rate
No (per cent)
1 Purchase of an equity share in a company or a unit of an equity 0.10
oriented fund, where
(a) the transaction of such purchase is entered into in a recognized
stock exchange; and
(b) the contract for the purchase of such share or unit is settled by
the actual delivery or transfer of such share or unit
2 Sale of an equity share in a company or a unit of an equity oriented 0.10
fund, where -
(a) the transaction of such sale is entered into in a recognized
stock exchange; and
(b) the contract for the sale of such share or unit is settled by the
actual delivery or transfer of such share or unit
3 Sale of a derivative, where the transaction of such sale is entered into 0.0133
in a recognized stock exchange
4 Sale of unit of an equity oriented fund to the Mutual Fund 0.20
The value of a taxable securities transaction will be as follows:
• in the case of a taxable securities transaction relating to “option in securities”, the
aggregate of the strike price and the option premium of such “option in securities”;
• in the case of taxable securities transaction relating to “futures”, the price at which such
“futures” are traded; and
• in the case of any other taxable securities transaction, the price at which such securities
are purchased or sold.
“Taxable securities transaction” has been defined as a purchase or sale of an equity share in a
company or a derivative or a unit of an equity oriented fund, entered into in a recognized stock
exchange; or sale of a unit of an equity oriented fund to the Mutual Fund.
6.0 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.
83
16. INVESTOR SERVICES
The Scheme is not registered in the United States of America under the Investment Company Act
of 1940. The Units of the Scheme have not been registered in the United States of America under
the Securities Act of 1933. The units made available under this offer may not be directly or
indirectly offered or sold in the United States of America or any of its territories or possessions
or areas subject to its jurisdiction or to or for the benefit of nationals or residents thereof, unless
pursuant to an exemption from registration requirements available under the U.S. law, any
applicable statute, rule or interpretation. Applicants for Units may be required to declare that they
are not a U.S. Person and are not applying for Units on behalf of any U.S. Person. Hence, the units
of the scheme can be purchased by persons other than “U. S. Person”.
The term “U.S. Person” shall mean any person that is a United States Person within the meaning
of Regulation S under the United States Securities Act of 1933, as the definition of such term
may be changed from time to time by legislation, rules, regulations or judicial or administrative
agency interpretations.
To resolve investor queries, the fund has set up an Investor Service Cell that ensures prompt
response to all investor complaints. The number of complaints received and redressed for the last
three financial years are detailed below:
Scheme 01.04.2002 to 31.03.2003 01.04.2003 to 31.03.2004 01.04.2004 to 31.03.2005
Received Redressed Pending Received Redressed Pending Received Redressed Pending
TIGF 53 52 1 64 64 Nil 28 28 Nil
FIGF 6 6 Nil 36 36 Nil 11 11 Nil
FIIF 6 6 Nil 35 35 Nil 7 7 Nil
FIBF 9 9 Nil 54 54 Nil 4 4 Nil
TIIF 568 566 2 61 61 Nil 36 36 Nil
TMIP 195 194 1 26 26 Nil 9 9 Nil
TGSF 191 190 1 54 54 Nil 22 22 Nil
TILF 2 2 Nil 120 120 Nil 11 11 Nil
FITF 3 3 Nil 2 2 Nil 1 1 Nil
TILP 0 0 Nil 0 0 Nil 0 0 Nil
TFIF 13 13 Nil 6 6 Nil 23 23 Nil
FIPF 26 26 Nil 206 206 Nil 125 125 Nil
FIPP 65 65 Nil 424 424 Nil 93 93 Nil
FIT95 55 55 Nil 217 217 Nil 51 51 Nil
FIT96 20 20 Nil 106 106 Nil 29 29 Nil
FIT97 5 5 Nil 33 33 Nil 9 9 Nil
FIT98 0 0 Nil 7 7 Nil 0 0 Nil
FIT99 6 6 Nil 79 79 Nil 22 22 Nil
FIT 84 84 Nil 444 444 Nil 166 166 Nil
FIBCF 56 56 Nil 495 495 Nil 182 182 Nil
TIGIP 1 1 Nil 1 1 Nil 4 4 Nil
TIMMA 1 1 Nil 10 10 Nil 14 14 Nil
TIPP 5 5 Nil 82 82 Nil 49 49 Nil
TIIBA 59 59 Nil 308 308 Nil 60 60 Nil
TICAP 10 10 Nil 15 15 Nil 0 0 Nil
TITMA 0 0 Nil 13 13 Nil 10 10 Nil
FIVF 2 2 Nil 1 1 Nil 0 0 Nil
FIF 68 68 Nil 352 352 Nil 92 92 Nil
FPF 9 9 Nil 91 91 Nil 11 11 Nil
FFF 3 3 Nil 46 46 Nil 5 5 Nil
FIMF 0 0 Nil 1 1 Nil 0 0 Nil
FTIBF 17 17 Nil 103 103 Nil 31 31 Nil
FIOF 55 55 Nil 444 444 Nil 149 149 Nil
FTIMIP 11 11 Nil 60 60 Nil 53 53 Nil
FISIP 0 0 Nil 0 0 Nil 0 0 Nil
FTIIF 1 1 Nil 12 12 Nil 3 3 Nil
FTIGF 4 4 Nil 33 33 Nil 7 7 Nil
TISTIP 0 0 Nil 1 1 Nil 0 0 Nil
84
Scheme 01.04.2002 to 31.03.2003 01.04.2003 to 31.03.2004 01.04.2004 to 31.03.2005
Received Redressed Pending Received Redressed Pending Received Redressed Pending
FTIPERF 7 7 Nil 13 13 Nil 0 0 Nil
FTIAAF 4 4 Nil 8 8 Nil 4 4 Nil
FINTF 0 0 Nil 1 1 Nil 0 0 Nil
FTDPEF N.A. N.A. N.A. 1 1 Nil 0 0 NIL
FTLF N.A. N.A. N.A. 2 2 Nil 9 9 Nil
FIFCF N.A. N.A. N.A. N.A. N.A. N.A. 757 757 Nil
Others (*) -- -- -- 168 168 Nil 24 24 Nil
Scheme 01.04.2005 to 31.07.2005

Received Redressed Pending
TIGF 17 17 Nil
FIGF 3 3 Nil
FIIF 3 3 Nil
FIBF 2 2 Nil
FITF 3 3 Nil
TIIF 10 10 Nil
TMIP 10 10 Nil
TGSF 2 2 Nil
TFIF 43 43 Nil
FIPF 305 305 Nil
FIPP 92 92 Nil
FIT95 6 6 Nil
FIT96 10 10 Nil
FIT 108 108 Nil
FIBCF 199 199 Nil
TIPP 16 16 Nil
TIIBA 33 33 Nil
TICAP 3 3 Nil
TIMMA 2 2 Nil
TITMA 18 18 Nil
FIVF 6 6 Nil
FIF 28 28 Nil
FPF 28 28 Nil
FFF 12 12 Nil
FTIBF 27 27 Nil
FIOF 99 99 Nil
FTIMIP 41 41 Nil
TISTIP 1 1 Nil
FTFTF – I 9 9 Nil
FTIPERF 2 2 Nil
FTDPEF 5 5 Nil
FTLF 14 14 Nil
FIFCF 1,649 1,649 Nil
Others (*) 41 41 Nil
(*): Inlcudes investors who have not furnished their account numbers / scheme names.
There were no SEBI Complaints pending as on July 31, 2005.
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 Account Statement were resolved by issuing duplicate
Account Statement and arranging for duplicate cheques/DDs in cases where redemptions were
not received.
85
17. GENERAL INFORMATION
DECLARATION OF DIVIDENDS/ REINVESTMENT FACILITY
The Trustee may declare dividends in the scheme 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 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. The dividend may also be credited to the bank account of the investor if the
investor so instructs, subject to the AMC having necessary arrangements with the bank or may
also be paid through Electronic Clearing System (ECS), which is subject to applicable policies of
the Reserve Bank of India and working of the banking system. 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 to the
investor with reference to the data submitted in the application for Units at the investor’s risk.
Dispatch of dividend cheque shall be made by ordinary mail or registered mail or courier, as may
be deemed appropriate by the AMC unless otherwise required under any applicable regulations,
at the risk of the investor. Such payments will constitute adequate discharge of the obligation of
the Fund, Trustee and the AMC. The Fund, Trustee or the AMC will not be responsible for any
delay/non-receipt of dividend proceeds where it is attributable to any incorrect/incomplete
information provided by the investor. The Fund/Trustee/the AMC will also not be liable for any
loss on account of fraudulent encashment of the dividend cheque. 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.
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.
86
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.
Revocation of the option for dividend reinvestment must be signed by the investors and reach the
Fund’s office at Chennai at least seven working days prior to the Record Date fixed for dividend.
Growth Plan
There will be no dividend declaration under this plan. 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. The Trustee/AMC reserve the right to
alter/vary the default plan/option, after giving notice.
UNAMBIGUOUS AND UNCONDITIONAL REQUESTS
Any application for redemption, purchase or exchange or any other instruction must be correct,
complete, clear and unambiguous in all respects and should conform to the prescribed
procedure/documentation requirements, failing which the Trustee/AMC reserve the right to reject
the same and in such a case the Trustee/AMC will not be responsible for any consequence
therefrom. The Investor shall ensure that any overwriting or correction shall be countersigned by
the investor, failing which the Fund/Trustee/AMC may at its sole discretion reject such
transaction request. Further, any requests for purchase/redemption/switch or other transactions
must be unconditional. The Fund/Trustee/AMC shall not be bound to take cognizance of any
conditions placed on the transaction request and may at its sole discretion, reject such transaction
request, or process the same as if the condition were not mentioned.
UNDERWRITING
Subject to Franklin 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.
87
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.
ACTS DONE IN GOOD FAITH
Any act, thing or deed done in good faith in pursuance of or with reference to the information
provided in the application or other communications received from the investor/ unit holder will
constitute good and full discharge of the obligation of the Fund, Trustee and the AMC.
LIEN
The fund will have a first and paramount right of lien/set-off with respect to every unit/dividend
under any scheme of the Fund for any money that may be owed by the unit holder, to it.
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.
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.
88
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.
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
89
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.
WEBSITE
The website of Franklin Templeton Mutual Fund (the said Website) 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 doing so.
Information other than that relating specifically to Franklin Templeton Asset Management
(India) Pvt. Ltd., Franklin 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. shall not be responsible, nor be held liable, for any
information contained in any website linked from the said Website.
Franklin Templeton makes no representations whatsoever about any such website which the user
may access through the said Website. A link to a non-Franklin Templeton website does not mean
that Franklin 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 said Website carefully
before using the said Website. By using the said Website, the investor will be deemed to have
agreed that the Terms and Conditions specified apply to the use of the investor of the said
Website, 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 said Website or download any
content from it.
WEB TRANSACTIONS AND HPIN FACILITY

In the new era of liberalisation and modernisation, 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 certain online transactions,
including 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., as
may be specified by the Mutual Fund from time to time, through use of the HPIN facility as
described below. 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 shall use this service at their own risk. The Fund, the AMC, the Trustee, along with
90
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, without limitation,
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.
Household Personal Identification Number (HPIN)

As stated above, the Fund is currently offering a facility for conducting certain transactions
through the Fund’s website on the Internet (“Online Transactions”), and is offering each
unitholder access to a unique Household Personal Identification Number (HPIN) for purposes of
conducting such Online Transactions (hereinafter referred to as the “HPIN Facility”).
Upon execution of necessary documentation by the Unitholder, including the signing of an

agreement in a form and manner as specified by the Fund, the terms and conditions of which
shall bind the Unitholder, as is required by the Fund for subscription to this facility, the Fund will
dispatch to the Unitholder, an HPIN by post or courier entirely at the risk of the Unitholder. The
Unitholder shall use the HPIN to generate a user name and password to carry out Online
Transactions and shall keep the HPIN, User ID and Password confidential at all times.
The Unitholder shall be solely responsible for confidentiality of the user name and password as
well as the HPIN and shall not disclose his user name, password or the HPIN to any third party
and shall take all possible care to prevent discovery of the user name, password or HPIN by any
person.
The Online Transactions shall be carried out against his bank account, the details of which are
provided by the Unitholder to, and are accordingly recorded with, the Fund.
All other norms prescribed by the Fund to issue an HPIN will have to be adhered to from time to
time.
The Fund shall not be liable for any misuse of data placed on the Internet, by third parties
"hacking" or unauthorized accessing of the server. The Fund will not be liable for any failure to
act upon electronic instructions or to provide any facility for any cause that is beyond the control
of the Fund.
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 utilis 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
91
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
Corporate Office of the Fund at Mumbai: -
• Copy of Registration Certificate from SEBI
• Copy of the Trust Deed and Supplementary Trust Deed
• Copy of Investment Management Agreement
• 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 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.
• On August 2, 2004, Franklin Resources, Inc. (Franklin Templeton Investments) (NYSE:
BEN) announced that an agreement has been reached by its subsidiary, Franklin Advisers,
Inc. (Franklin Advisers), with the U.S. Securities and Exchange Commission (SEC) that
resolves the issues resulting from the SEC's investigation of market timing activity.
Under the terms of an Order issued by the SEC, pursuant to which Franklin Advisers
neither admits nor denies any wrongdoing, the Company has agreed to pay US $50 million
to be distributed to Franklin Templeton fund shareholders, of which US$20 million is a
92
civil penalty. The settlement had been accrued by the Company in its fiscal quarter ended
March 31, 2004 and will not result in an additional charge to income. In the Order, the SEC
recognized that Franklin Templeton has generally sought to detect, discourage and prevent
market timing in its funds and began to increase its efforts to control market timing in
1999.
• On September 20, 2004, Franklin Resources, Inc. announced that an agreement has been
reached by two of its subsidiaries, Franklin Advisers, Inc. and Franklin Templeton
Alternative Strategies, Inc.(“FTAS”), with the Securities Division of the Office of the
Secretary of the Commonwealth of Massachusetts (the “State of Massachusetts”) related to
an administrative complaint filed February 4, 2004, concerning one instance of market
timing.
Under the terms of the settlement consent order issued by the State of Massachusetts,
Franklin Advisers and FTAS have consented to the entry of a cease and desist order and
agreed to pay a $5 million administrative fine to the State of Massachusetts. The consent
order has multiple sections, including “Statements of Fact” and “Violation of
Massachusetts Securities Laws.” Franklin admitted the facts in the Statement of Fact but
did not admit or deny that those facts constituted violations of Massachusetts securities
laws.
• On November 17, 2004, Franklin Resources announced that Company subsidiary Franklin
Templeton Distributors, Inc. ("FTDI") has reached an agreement with the California
Attorney General's Office ("CAGO"), resolving the issues resulting from the CAGO's
investigation concerning marketing support payments to securities dealers who sell fund
shares. Under the terms of the settlement with the CAGO, in which FTDI neither admitted
nor denied the allegations in the complaint, it agreed to pay $2 million as a civil penalty,
$14 million to Franklin Templeton funds and $2 million to the CAGO.
• On December 13, 2004, Franklin Resources, Inc. announced that Company subsidiaries
Franklin Templeton Distributors, Inc. ("FTDI") and Franklin Advisers, Inc. ("Franklin
Advisers") reached a settlement with the Securities and Exchange Commission ("SEC")
that resolves the issues resulting from the SEC's investigation concerning marketing
support payments to securities dealers who sell fund shares. Under the terms of the
settlement, in which FTDI and Franklin Advisers neither admitted nor denied the findings
contained in the SEC's Order issued on that date, they agreed to pay a total penalty of $20
million and $1.00 (one dollar) in disgorgement to certain Franklin Templeton funds.
• On March 3, 2005, Franklin Templeton Investments Corp. ("FTIC-Canada"), a Canadian,
indirect, wholly-owned investment management subsidiary of Franklin Resources,
announced that a panel of the Ontario Securities Commission ("OSC") approved FTIC-
Canada's agreement with the Staff of the OSC resolving the issues resulting from the OSC's
investigation concerning frequent trading market timing activity. In settlement, FTIC-
Canada will pay the U.S. dollar equivalent (including related distribution costs)
approximating $42 million. The settlement monies will be distributed to investors who held
the relevant funds during the time period outlined in the agreement in accordance with a
plan to be developed by FTIC-Canada and overseen by an independent distribution
consultant to be retained by FTIC-Canada. FTIC-Canada is one of a group of five
companies to reach agreements with the OSC concerning frequent trading market timing
activity.
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:
93
INTERNATIONAL OPERATIONS
• Three individual plaintiffs filed a consolidated class action and derivative complaint in the
U.S. District Court for the Southern District of Florida, against Templeton Vietnam
Opportunities Fund, Inc. (later known as Templeton Vietnam and Southeast Asia Fund,
Inc.); 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. The plaintiffs in that action, captioned In re: Templeton Securities
Litigation (Civil Action No. 98-6059) moved to certify a class with respect to certain claims
raised in the consolidated complaint. The District Court denied the plaintiffs' motion to
certify a class with respect to their claims. Plaintiffs then filed a petition to the Eleventh
Circuit Court of Appeals to hear an interlocutory appeal of that decision of the District
Court.
Thereafter, while the petition was pending, an agreement was reached in writing settling the
action. 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. On April 3, 2002, the settlement was approved by the District
Court. The Fund received $2 million in the settlement, which was reflected in the Fund's
net asset value as of April 3, 2002. The defendants agreed to the settlement to avoid the
further expense, inconvenience and distraction of the proceedings in this protracted case.
The settlement did not contain, and specifically denies, any admission of wrongdoing or
violation of law by any of the defendants.
• 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 Franklin Templeton Mutual Fund as one of the respondents. The Honourable
Delhi High Court vide its order dated 3rd August 2000 directed SEBI to dispose of 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 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.
• Xavier Institute of Management, Bhubaneshwar (XIM) had filed a suit against the AMC
before the Hon’ble Court of Civil Judge, Sr. Division, Bhubaneswar, and subsequently
transferred to the Fast Track Court at Bhubaneshwar, alleging wrongful non-redemption of
units, and had claimed an aggregate sum of Rs. 5,60,685/- inclusive of interest and
damages. The said matter has been settled by the AMC in December 2004, and XIM has
accepted the amounts in full and final settlement of its claims. XIM has filed an application
94
for withdrawal of its suit against the AMC. This litigation was in connection with wrongful
redemption made to third parties pertaining to the ex-Pioneer ITI mutual fund schemes.
The AMC has filed an FIR in this regard against an ex-employee of the company.
• The AMC is involved from time to time in litigation relating to claims arising in the normal
course of business. The Company is of the opinion that the ultimate resolution of such
claims will not materially affect its business or financial position.
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 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 OF FRANKLIN TEMPLETON MUTUAL FUND
Ravi Mehrotra
President
Date : August 24, 2005

Place : Mumbai
95
DIRECTORY
Sponsor Investment Manager Trustee

Templeton International, Inc. Franklin Templeton Asset Franklin Templeton Trustee
500 East Broward Boulevard, Management (India) Pvt. Ltd. Services Pvt. Ltd.
Suite 2100, Fort Lauderdale, 4th Floor, Wockhardt Towers, 4th Floor, Wockhardt Towers,
Florida 33394 – 3091, USA. Bandra Kurla Complex, Bandra Kurla Complex,
Bandra (East), Bandra (East),
Mumbai 400 051 Mumbai 400 051
Registrars Custodians Auditors

Franklin Templeton Asset Citibank, N.A. S. R. Batliboi & Co.
Management (India) Pvt. Ltd. Plot C/61, 17th Floor, Express Towers,
Century Centre, Bandra Kurla Complex, Nariman Point,
75 T.T.K. Road, ‘G’ Block, Bandra (East) Mumbai 400 021
Alwarpet, Mumbai 400 051
Chennai 600018
Legal Advisors
Little & Co.
Central Bank Building
M.G. Road,
Mumbai 400 001
Franklin Templeton Branch Offices/Investor Service Centres
1. Mumbai
(a) 1st Floor, Sakhar Bhavan
230 Backbay Reclamation
Nariman Point, Mumbai 400 021
Tel: 56325820-36; Fax: (022) 2281 0923/5632 5837
(b) 4th Floor, Wockhardt Towers

Next to NSE, Bandra Kurla Complex
Bandra (East), Mumbai 400 051
Tel: 55519100; Fax: (022) 56490624
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 560 052 Tel: 2385612/13/14
Fax: (080) 2385886
4. Baroda
103, 1st floor, Paradise Complex
Sayajigunj Vadodara 390 005. Tel: 2225426
Telefax: (0265) 2225427
96
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
41/418–C, Chicago Plaza, 1st floor,
Rajaji Road, Ernakulam,
Cochin 682035
Ph: (0484) 2370380, 2373078, 2373081, 2373082, 3949466
Fax: (0484) 2373076
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
11. Hyderabad
501 Regency House, Somajiguda
Hyderabad 500 082. Tel: 55665915 / 55665916
Fax: (040) 55665770
12. Indore
101, Starlit Towers, Opp State Bank Of Indore Head Office
29/1 Y.N Road, Indore 452001
Tel: (0731) 2436324, 5201507
13. Jaipur
250 Ganpati Plaza, M I Road
Jaipur 302 001. Tel: (0141) 2377904 / 2377905
Fax: (0141) 2388737
97
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: 285301,2231785 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
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
98
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 636 004
Tel: 2446854, 2430506
Fax: (0427) 2446854
29. Surat
404-405, Lalbhai Contractor Complex
Opp. Library, Nanpura
Surat - 395 001. Tel: 2473766
Telefax: (0261) 2473744
30. Trichy
Jenne Plaza Ground Floor 5/C
28 Bharathiar Salai Cantonment
Trichy 620 001. Tel: 2464022
Fax: (0431) 2414691
31. Varanasi
IV Floor, Kuber Complex
Rathyatra crossing, Varanasi 221 010
Tel: 403584 Telefax: (0542) 403255
99
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
Karvy Collection Centres:
Following Branch Offices of Karvy Computershare Pvt. Ltd. -

Name of the Address Name of the Address
Branch Branch
Amritsar 72-A, Taylor's Road, Durgapur Dutta Automobile Building
(Punjab) Aga Heritage Gandhi Ground (West Bengal) 1st Floor, Benachity
Amritsar 143 001 Durgapur 700 013
Bhopal Kay Kay Business Centre Faridabad 1A/268, Neelam Bata Road
(Madhya 133, Zone 1, M. P. Nagar (Uttar Pradesh) NIT, Faridabad 121 001
Pradesh) Bhopal 462 011
Goa No.7 & 8, EL. Dorado Plaza Ghaziabad C-7, Lohia Nagar, 1st Floor
Heliodoro Salgado Road (Uttar Pradesh) Ghaziavad 201 001
Panjim 403 001
Gwalior 37/38, Near Nadi Gate Pul, MLB Hubli Giriraja House
(Madhya Road (Karnataka) No. 451/B, Ward No.1, Club Road
Pradesh) Shinde ki Chhawani , Lashkar Hubli 580 029
Gwalior 474 001
Agra 17/2/4, Deepak Wasan Plaza, 2nd Jalgaon 1, Shresta Apartments
(Uttar Floor, (Maharashstra) Balirampeth, Jalgaon 425 001
Pradesh) Sanjay Place (Behind Holiday Inn),
Agra 282 002
Allahabad 1st Floor, Meena Bazar Pondicherry First Floor, No.7, Thiayagaraja
(Uttar 10, Sardar Patel Marg Civil Lines Street
Pradesh) Allahabad 211 001 Pondicherry 605 001.
Guwahati 2nd Floor, Ram Kumar Plaza Rajahmundry D No: 7-27-8 First Floor
(Assam) Chatribari Road (Andhra Vygram Road, T Nagar
Near Himatshinga Petrol Pump Pradesh) Rajahmundry 533 101
Guwahati 781 001
Jamshedpur 45, Kamani Centre, 2nd Floor Shimla Triveni Building
(Jharkhand) Kamani Centre, Bistupur (Himachal By Pas Chowk, Khallini
Jamshedpur 831 001 Pradesh) Shimla 171 002
Ranchi 3rd Floor, Commerce Towers, Siliguri 1st Floor, Sanat Trade Centre
(Jharkhand) Beside Mahabir Towers Main Road (West Bengal) Near Sunny Tower, Sevoke Road
Ranchi 834 001 Siliguri 734 401
Trivandrum 2nd Floor, Akshaya Towers Ajmer 12, Ajmer Tower, 2nd Floor
(Kerala) Sasthamangalam (Rajasthan) Kutchary Road
Trivandrum 695 010 Ajmer 305 001
Bhilai Shop No.114&115, Ground Floor, Moradabad First Floor, Singh Bhawan,
Dhillon Complex Taari khana chowk,
(Chattisgarh) (Uttar Pradesh)
Akash Ganga, Supela, G M D Road, Moradabad 244001
Bhilai 605001
100
Name of the Address Name of the Address
Branch Branch
Asansol 18 GT Road, 1st floor, Aurangabad Shop No. 214/215
(West Bengal) Asansol 713301 (Maharashtra) Tapadiya City Centre
Nirala Bazar
Aurangabad 431001
Bareilly 1st Floor, 165 Civil Lines Bhavnagar 134/135 Madhav Darshan
(Uttar Opp.Hotel Bareilly Palace (Gujarat) Waghawadi Road
Pradesh) Near Rly Station Bhavnagar 364001
Bareilly 243001
Calicut P S Building, P T Usha Road, Dharwad G-7/8, Sri Banashankari Avenue
(Kerala) Opp. Amalapuri Colony (Karnataka) Ramnagara
Calicut 673001 Dharward 580 001
Erode No. 4, KMY Salai Guntur Door No. 6- 10-18
(Tamil Nadu) Veerappan Traders Complex (Andhra Pradesh) Chunduri House
Opp. Erode Bus Stand 10/1 Arundelpet
Sathy Road, Erode 638003 Guntur 522002
Kota 2nd Floor, AL-HATMI complex Kottayam 1st Floor, CSI Ascension Church
(Rajasthan) 257 Shopping Centre (Kerala) Complex,
Kota 324007 Kottayam 686 001
Mysore L-350, Silver Tower Tirunelveli Jeney Building, 55/18 S N Road
(Karnataka) Clock Tower (Tamil Nadu) Near Arvind Eye Hospital
Mysore 570001 Tirunelveli 627 001
Tirupur RCR Complex, 254, II Floor Trichur Delma Complex (I Floor)
(Tamil Nadu) Avanashi Road (Kerala) Opp. Co-op Hospital
Tirupur 641 603 Shornur Road, Naikkanal
Trichur 680 001
Anand F-6, Chitrangana Complex Patiala SCO 27 D, Chhoti Baradari
(Gujarat) Opp. Motikaka Chawl (Punjab) Patiala 147001
Vidyanagar Road
Anand 388 001
Jodhpur 203, Modi Arcade Karur No.6, old No.1304
(Rajasthan) Chupasni Road (Tamilnadu) Thiru-vi-ka Road
Jodhpur 342001 Karur 639001
101
Mandatory Statement
Applicable to an Offer or Sale of Units of a Foreign Fund in or from the Dubai

International Financial Centre
This Prospectus relates to a Fund which is not subject to any form of regulation or
approval by the Dubai Financial Services Authority ("DFSA").
The DFSA has no responsibility for reviewing or verifying any Prospectus or other
documents in connection with this Fund. Accordingly, the DFSA has not approved this
Prospectus or any other associated documents nor taken any steps to verify the
information set out in this Prospectus, and has no responsibility for it.
The Units to which this Prospectus relates may be illiquid and/or subject to restrictions
on their resale. Prospective purchasers should conduct their own due diligence on the
Units.
If you do not understand the contents of this document you should consult an
authorised financial adviser.

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CONTINUOUS OFFER

Franklin FMCG Fund

S. No. CHAPTER PAGE NO.

01. HIGHLIGHTS & RISK FACTORS 03

04. DUE DILIGENCE CERTIFICATE 08

05. SUMMARY OF THE SCHEME 09

06. SUMMARY OF EXPENSES AND FINANCIAL INFORMATION 09

07. CONDENSED FINANCIAL INFORMATION 12

08. CONSTITUTION / MANAGEMENT OF THE MUTUAL FUND 16

09. INVESTMENT OBJECTIVES AND POLICIES 34

10. HOW TO INVEST 44

11. VALUATION OF ASSETS AND NET ASSET VALUE 53

12. HOW TO REDEEM UNITS OF THE SCHEME 66

13. ASSOCIATE TRANSACTIONS 72

14. UNITHOLDER INFORMATION 72

15. TAX BENEFITS 79

16. INVESTOR SERVICES 83

17. GENERAL INFORMATION 85

18. PENDING LITIGATION OR PROCEEDINGS 92

SCHEME SPECIFIC RISK FACTORS AND SPECIAL CONSIDERATION

Investors have a choice of Growth Plan and Dividend Plan.

In this Offer Document the following definitions have been used:

AMC/Asset Franklin Templeton Asset Management (India) Pvt. Ltd., the

FRANKLIN FMCG FUND

Franklin FMCG Fund

Date: August 24, 2005

Name of the Scheme Franklin FMCG Fund (FFF)

06. SUMMARY OF EXPENSES AND FINANCIAL INFORMATION

EXPENSES OF THE SCHEME

Unitholder Transaction Expenses or Sales Load:

The Trustee/AMC reserves the right to increase/decrease/introduce a Load/Fee at any time in

Past schemes (launched during the past one fiscal year):

07. CONDENSED FINANCIAL INFORMATION

a) HISTORICAL PER UNIT STATISTICS

Name of the Scheme FINTF FIFCF

Name of the Scheme FTDPEF TIGF - Growth Plan FTLF

Name of the Scheme TGSF - PF Plan TITMA – Institutional Plan (I-

NAV & Returns as of July 29, 2005 with the Benchmarks:

Name of the Scheme TGSF - PF Plan FIFCF FTFTF-I

Name of the Scheme TITMA – Institutional Plan (IP) FTLF

As of March 31, 2005 the fund had no borrowing.

THE ABOVE INFORMATION IS PRESENTED SCHEME WISE FOR ALL SCHEMES

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

08. CONSTITUTION / MANAGEMENT OF THE MUTUAL FUND

Franklin Templeton Mutual Fund is sponsored by Templeton International, Inc. Templeton

FINANCIAL PERFORMANCE OF THE SPONSOR

THE FRANKLIN TEMPLETON GROUP

1. Assets Under Management

3. Number of Schemes Managed Globally

THE FRANKLIN TEMPLETON EDGE

Fiduciary Trust employs an active, disciplined approach to investment management based on

Details of other Directorships are as under:

• Anand J. Vashi, Chartered Accountant

Details of other Directorships are as under:

• Percy Jal Pardiwalla, Advocate

Details of other Directorships are as under:

• Stephen Dover*, International Chief Investment Officer, Franklin Templeton Advisors

RESPONSIBILITIES AND DUTIES OF THE TRUSTEE