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Franklin Templeton Asset Management (India) Private Limited

Level 4, Wockhardt Towers, Bandra - Kurla Complex, Bandra (East), Mumbai 400 051.

PORTFOLIO MANAGEMENT SERVICES

DISCLOSURE DOCUMENT

[As required under Regulation 14 of SEBI (Portfolio Managers) Regulations, 1993]

(i) The Document has been filed with the Board along with the certificate in the prescribed format in terms of Regulation 14 of the SEBI (PortfolioManagers) Regulations, 1993.

(ii) The purpose of the Document is to provide essential information about the portfolio services only in respect of FT Selectand FT Opportunitiesin a manner to assist and enable the investors in making informed decision for engaging a Portfolio Manager.

(iii) The Disclosure Document is dated June 30, 2008 The document contains necessary information about the Portfolio Manager and FT SelectandFT Opportunities as required by an investor before investing, and the investor may also be advised to retain the document for future reference.

(iv) All the intermediaries involved in the scheme are registered with SEBI as on the date of the document.

(v) Name of Principal Officer : Mr. Vivek Kudva

Address : Level 4, East Wing, Wockhardt Towers

Bandra - Kurla Complex, Bandra (East), Mumbai 400 051.

Telephone No. : +91 22 6751 9100

Fax No. : +91 22 6649 0622

E-mail address : [email protected]

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CONTENTS

1.0 Disclaimer 3

2.0 Definitions 3

3.0 The Portfolio Manager 3

4.0 Penalties, pending litigation or proceedings, findings of inspection or investigations for which action may have been taken or initiated by anyregulatory authority against the Portfolio Manager. 5

5.0 Services offered 66.0 Risk Factors 6

7.0 Client Representation 7

8.0 Performance of the Portfolio Manager 8

9.0 Portfolio Management performance of the Portfolio Manager in the last 3 years 8

10.0 Fees and service Charges 8

11.0 Agreement 8

12.0 Rights and Liabilities of the Client 9

13.0 Rights, Duties and Liability of the Portfolio Manager 9

14.0 Prevention of Money Laundering and Client Information 10

15.0 Custody of securities 10

16.0 Taxation 11

17.0 Accounting Policies 14

18.0 Termination of agreement 14

19.0 Investor Services 15

20.0 Grievances / Dispute handling mechanism 15

21.0 Dispute Settlement Mechanism 15

Annexure - I 16

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1.0 Disclaimer

This Disclosure Document has been prepared in accordance with the Securities and Exchange Board of India (Portfolio Managers) Regulations,1993, as amended from time to time and filed with SEBI. This Document has neither been approved nor disapproved by SEBI nor has SEBI certifiedthe accuracy or adequacy of the contents of the Document.

2.0 Denitions

2.1 Act means the Securities and Exchange Board of India Act, 1992 (15 of 1992) as amended from time to time.

2.2 Agreement includes contract entered between the Portfolio Manager and the client for the management of funds or securities of the clientand shall be read in conjunction with the Application Form.

2.3 AML Laws shall mean Prevention of Money Laundering Act, 2002, the Rules issued thereunder and the guidelines/circulars issued by SEBIthereto, as amended from time to time.

2.4 Cash Account means the account in which the funds handed over by the client shall be held by the Portfolio Manager on behalf of theClient.

2.5 Client means any body corporate, partnership firm, individual, HUF, association of person, body of individuals, trust, statutory authority,or any other person who enters into agreement with the Portfolio Manager for the managing of his portfolio.

2.6 Discretionary portfolio manager means a portfolio manager who exercises or may, under a contract relating to portfolio management,exercise any degree of discretion as to the investments or management of the portfolio of securities or the funds of the client, as the case maybe;

2.7 Non Discretionary portfolio manager means a portfolio manager who manages the funds in accordance with the directions of theclient.

2.8 Fund Manager (FM) means the individual/s appointed by the Portfolio Manager who manages, advises or directs or undertakes on behalfof the Client (whether as a discretionary portfolio manager or otherwise) the management or administration of a portfolio of securities or thefunds of the client, as the case may be.

2.9 Person directly or indirectly connected means any person being an associate, subsidiary, inter connected company or a company underthe same management within the meaning of section 370(1B) of the Companies Act, 1956 or in the same group.

2.10 Portfolio means the total holdings of securities belonging to the client.

2.11 Portfolio Manager (PM) means Franklin Templeton Asset Management (India) Pvt. Ltd. (FTAMIL), who has obtained certificate from SEBIto act as a Portfolio Manager under Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993, vide registration no.INP000000464.

2.12 Principal Ofcer means an employee of the Portfolio Manager who has been designated as such by the Portfolio Manager.

2.13 Regulations means the Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993 including any modification oramendment thereof.

2.14 SEBI means the Securities and Exchange Board of India

2.15 Securities means and include bonds and debentures (convertible or non-convertible), shares (equity or preference), stocks, warrants,notes, certificates of deposit, commercial papers and other money market instruments issued by companies or bodies corporate, units,magnums and other instruments of mutual funds or units trusts, futures, options, swaps and other derivative instruments, securitised debts,treasury bills, call or notice money, repos/reverse repos, government and trust securities, bank deposits, company deposits, foreign exchangecontracts, or other securities and instruments, and rights or property which may at any time accrue or be offered (whether by way of rights,bonus, redemption, dividends, conversion, option or otherwise) in respect of any of the foregoing, and any certificates, options, receipts,warrants or other instruments (whether in registered or unregistered form) representing rights to receive, purchase or subscribe for any of theforegoing or evidencing or representing any other rights or interests therein (including, without limitation, any of the foregoing constituted,evidenced or represented by an entry in the records of the issuer or a depository) and other eligible modes of investment and/or forms ofdeployment within the meaning of the Regulation and those approved by SEBI from time to time.

2.16 Securities lending means the securities lending as per the Securities Lending Scheme, 1997 specified by SEBI.

2.17 Chartered Accountant means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants

Act, 1949 (38 of 1949) and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;

3.0 The Portfolio Manager

3.1 Historical background/Present business:

Franklin Templeton Asset Management (India) Private Limited (FTAMIL) is a company incorporated under the Companies Act, 1956 onOctober 6, 1995, having its Registered Office at Level 4, Wockhardt Towers, Bandra - Kurla Complex, Bandra (East), Mumbai 400051.FTAMIL has offices in 33 cities across India

FTAMIL had obtained a certificate from SEBI dated November 8, 2000 to act as a Portfolio Manager under Securities and Exchange Boardof India (Portfolio Managers) Regulations, 1993 vide registration no. INP000000464. Further, a renewal of the registration certificate wasgranted up to November 15, 2009 vide SEBI letter no. IMD/SP/79741/2003 dated November 14, 2006. FTAMIL has also obtained aNo-Objection letter from SEBI under Regulation 24(2) of Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 forcommencing the Portfolio Managers activity, vide letter dated January 16, 2002.

FTAMIL has been appointed the Asset Management Company / Investment Manager of Franklin Templeton Mutual Fund (Mutual Fund) by

Franklin Templeton Trustee Services Pvt. Ltd, the Trustee of the Mutual Fund vide Investment Management Agreement (IMA) dated January5, 1996, executed between the Trustee and FTAMIL, as amended by the Supplemental Investment Management Agreement dated August26, 2005. FTAMIL was approved by SEBI to act as the Asset Management Company for the Mutual Fund vide their letter no. IIMARP/406/96dated February 19, 1996. Franklin Templeton Mutual Fund has over Rs.23,500 crores of assets under management (as of June 30, 2008).

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SEBI has accorded its no objection for providing non-binding investment advisory services to the group/ subsidiaries of the sponsor companyfor Franklin Templeton group, which are established outside India and invest in securities as FIIs or sub-accounts.

3.2 Promoters/Share holders:

Shareholding pattern: Entire (100%) of the paid up capital of the Portfolio Manager is held by Franklin Templeton Holding Ltd., Mauritius.Templeton Asset Management Ltd., Singapore, the sponsor of the Franklin Templeton Holding Ltd., Mauritius, is a wholly owned subsidiary ofTempleton International Inc. a wholly owned subsidiary of Templeton Worldwide Inc., which in turn is a wholly owned subsidiary of FranklinResources Inc. Franklin Resources Inc., which together with its subsidiaries operates as Franklin Templeton Investments, is one of the worldslargest investment management organisations.

3.3 Directors of the Portfolio Manager:

Sr. No. Background of the Directors

1 Mr. Vijay C. Advani

484 Walsh Road, Atherton, CA 94027, U.S.A

Vijay C. Advani is Executive Vice President, Global Advisor Services, Franklin Templeton Investments. He is responsible forFranklin Templetons retail strategy and initiatives in markets in Latin America, Europe, Africa, Middle East and Asia. He is alsoresponsible for the groups global initiative in the alternative asset class, which includes hedge funds, private equity funds andfund of funds. Mr. Advani also serves on the Franklin Resources, Inc. Executive Committee.

2 Dr. J. Mark Mobius

Block 11, Waterside Apartments, No. 06-02, Panjorg Rhu Road, Singapore.

Dr. Mobius joined Templeton in 1987 and is the President of Templeton Emerging Markets Fund Inc. Dr. Mobius has spent over30 years living in Asia and working in emerging markets, and has extensive experience in economic research and analysis. He

also oversees research offices in Russia, Vietnam, Argentina, South Africa and Poland.

3 Mr. Deepak Satwalekar

9 Nutan Alka Society, Relief Road, Santacruz (W), Mumbai 400 054

Mr. Satwalekar is currently, the Managing Director and CEO of HDFC Standard Life Insurance Co. Ltd. Mr. Satwalekar obtaineda Bachelors Degree in Technology with a Major in Mechanical Engineering from the Indian Institute Technology, Mumbai. Hehas completed a Masters Degree in Business Administration from the American University, Washington D.C.

4 Mr. P. Vaidyanathan

7 AB, Block III, Kences Enclave No. 1, Chari Street, T. Nagar, Chennai 400 017

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

5 Mr. Navroz Seervai

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

Mr. Navroz H. Seervai is a leading Advocate in Mumbai. He is actively involved in public interest litigation in the field ofEnvironmental Law and Civil Liberties and Human Rights. He started practice in the Bombay High Court in the Chambersof R. J. Joshi and A. M. Setalvad, specialised in Constitutional and Administrative Law, Company and Corporate Law, andEnvironmental Law. He completed his B.A. (Hons) from Elphinstone College in 1977 and earned his Law degree from theGovernment Law College, Mumbai in 1981. While studying law, Navroz won many awards - the Kinloch Forbes Gold Medal forJurisprudence & 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.

3.4 Key Personnel of the Portfolio Manager:

Name Age

(years)

Qualications Functions & Experience (past 10 years)

Vivek Kudva

Total Experience:

20 years

49 B. Tech(Electrical) &PGDM

President, Franklin Templeton Asset Management (India) Pvt. Ltd. (based atMumbai)

Responsible for building the AMCs business in India (2006 to date).

Prior Assignments:

National Bank of Oman, General Manager - Banking (2004-2006). Responsible forall business lines.

HSBC India, Head - Personal Financial Services (2001-2004). Responsible for theBanks Consumer Banking business in India

HSBC India, Head - Credit Cards (1997-2000). Responsible for the Banks creditcards business in India

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K P Singaravelu

Total Experience:

17 years

42 B.E., M.B.A., Portfolio Manager PMS (based at Chennai)

Responsible for managing funds under the Portfolio Management Services (2006 todate).

Prior Assignments:

Kotak Securities Ltd (2005 2006), Vice President (Fund Manager) in PortfolioManagement Services

Sahara Asset Management (P) Ltd (1997- 2005), Equity Fund Manager.

Sahara Asset Management (P) Ltd (1995 1997), Equity Research Analyst.

Sandeep Singh

Total Experience:

13 years

40 B.E., MBA Senior Vice President & National Sales Director (based at Mumbai)

Responsible for Sales and distribution for Franklin Templetons India Office. Responsiblefor Retail Sales and Distribution for Franklin Templetons India Office (2003 onwards).Regional Head North (2000-2003), responsible for business development inNorthern India. Regional Sales Manager East (1998-2000), responsible for businessdevelopment in Eastern India.

Prior assignments:

Cholamadalam Cazenove AMC Ltd. Senior Manager Sales & Marketing (1996-1998), responsible for Sales and Marketing

Vivek Pai

Total Experience

12 years

37

B.Com, ACA Director - FTS India AMC (based at Mumbai)

Having joined Templeton in 2000, his role largely involves general management ofseveral functions within the operations department such as Fund Accounting, Custodyand Cash Management for Mutual Fund and PMS activities.

Prior to this he was the Compliance Officer and was responsible to Trustees forCompliance and Internal Audit of the Mutual Fund. (2000-2003).

Prior Assignments:

He was acting as a Consultant for setting up back office operations for a newcompany.

Birla Sun Life Asset management Company Limited from (1996-2000) as Head ofFund Accounting.

Apollo Finvest (India) Ltd as Asst. Manager, Corporate Finance handling Lease & HPfinancing (1994-1996).

Shilpa Shetty

Total Experience:

8 years

32 B.Com, C.A. Compliance Ofcer (based at Mumbai)

Having joined Franklin Templeton in October 2004, she is currently responsible toTrustees for Compliance and Internal Audit of the Mutual Fund. She is also responsiblefor compliance of PMS activities and as the Principal Officer under the Prevention ofMoney Laundering laws.

Franklin Templeton Asset Management (India) Pvt. Ltd. Senior Manager - Fund Accounting (2006-2007), responsible for managing the activities related to fundaccounting; Manager Fund Accounting (2004-2006), responsible for handling thedaily activities related to NAV calculation.

Prior assignments:

She was a Consultant for a Transfer Pricing related project for a Bank (2003-2004).

Alliance Capital Asset Management (P) Ltd. (1999-2003), Manager, FundAccounting.

3.5 Top 10 Group companies/ Companies under same management as per section 370(1B) of Companies Act 1956, of the PortfolioManager in India:

1. Franklin Templeton Trustee Service Pvt. Ltd.

2. Franklin Templeton International Services (India) Pvt. Ltd.

3. ITI Capital Markets Ltd.

3.6 Details of services being offered:

Discretionary portfolio management, Non-discretionary portfolio management and Advisory services (as per the individual agreement withthe client)

4.0 Penalties, pending litigation or proceedings, ndings of inspection or investigations for which action may have been taken or initiated byany regulatory authority against the Portfolio Manager.

(i) All cases of penalties imposed by the Board or the directions issued by the Board under the Act or Rules or Regulations made thereunder:

SEBI had in January 2000 referred to adjudication certain allegations relating to non-disclosure of three items in the abridged offer documentsof Balanced Fund, Pharma Fund, FMCG Fund and Taxshield and non-filing of the abridged offer document of Balanced Fund of erstwhilePioneer ITI Mutual Fund (a mutual fund which was acquired by the Portfolio Manager in the financial year 2002-03). The adjudicating officerby his order dated 14th June 2001 levied a penalty of Rs.2 lakhs against the then Asset Management Company (Pioneer ITI AMC Ltd.) andthe same was paid.

(ii) The nature of the penalty/direction - As mentioned above

(iii) Penalties imposed for any economic offence and/or for violation of any securities laws - NIL for the Portfolio Manager.

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(iv) Any pending material litigation/legal proceedings against the portfolio manager / key personnel with separate disclosure regarding pendingcriminal cases, if any:

OneoftheinvestorsunderTempletonIndiaGrowthFundhadmadeinvestmenttothetuneofRs.1,00,00,001/-underSection54EBofthe Income Tax Act, 1961. In accordance with the legal opinion of the counsel of the Mutual Fund, the Mutual Fund is of the view thatinvestments under Section 54EB of the Income Tax Act, 1961 read with CBDT Notification No.10247 dated December 19, 1996, theunits had to be locked-in for a period of seven years from the date of investment. However, the investor had disputed this stand andhad filed a writ petition in the High Court of Delhi seeking the direction of the court for premature redemption of units, with FranklinTempleton Mutual Fund as one of the respondents. The Honourable Delhi High Court vide its order dated 3rd August 2000 directedSEBI to dispose off the representation filed by the investor. The investor then filed a representation with SEBI. After hearing the petitionerand 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 orderdated September 4, 2000. The Tribunal dismissed the appeal vide its order dated February 15, 2001 and upheld the stand of theMutual Fund. The investor has filed a petition in the Delhi High Court challenging the order of the Securities Appellate Tribunal andchallenging the Central Board of Direct Taxes (CBDT) order.

ThePortfolioManagerisinvolvedfromtimetotimeinlitigationrelatingtoclaimsarisinginthenormalcourseofbusiness.ThePortfolioManager is of the opinion that the ultimate resolution of such claims will not materially affect its business or financial position.

(v) Any deficiency in the systems and operations of the Portfolio Manager observed by the Board or any regulatory agency - NIL

(vi) Any enquiry/adjudication proceedings initiated by the Board against the Portfolio Manager or its directors, principal officer or employee orany person directly or indirectly connected with the portfolio manager or its directors, principal officer or employee, under the Act or Rulesor Regulations made thereunder -NIL

5.0 Services offered

The Portfolio Manager offers to its clients the following three types of services:

5.1 Discretionary: The portfolio account of the Client is managed at the full discretion and liberty of the Portfolio Manager. An agreementoutlining the details of services including the objectives, rights and responsibilities, fees and expenses, etc. is entered into with each Clientseparately.

Currently, the Portfolio Manager offers following portfolios under Discretionary services:

(a) FT Select

(b) FT Opportunities

(c) Franklin Templeton Private Equity Strategy

5.2 Non Discretionary: The portfolio which the Portfolio Manager manages in accordance with the directions and permission of the Client.

5.3 Advisory: The Client is advised on buy/sell decision within the overall risk profile without any back-office responsibility for trade execution,custody or accounting functions.

5.4 Investment objective: The general objective is to formulate and device the investment philosophy to achieve long-term growth of capital byinvesting in assets, which generates reasonable return and to ensure liquidity. The actual portfolio management style will vary in line witheach client profile with regard to his risk tolerance levels and specific preferences or concerns (the specific objective will be as mentioned inthe agreement with the client).

The general investment objectives of FT Select and FT Opportunities will be as follows:

FT Select: The investment philosophy of FT Select will be based on a bottom up approach to stock picking. The focus would be to invest incompanies, which have displayed efficient and profitable usage of capital or where re-structuring or favourable industry dynamics will result inimproved capital usage and returns in the future. FT Select may have a large cap orientation.

FT Opportunities: The investment process will be focused more on individual companies and the wealth they are creating for their shareholdersand less on macroeconomic indicators or taking views on the markets based on short term events. While broad analysis of the economy andvarious sectors will be used as a starting point, the investment team will stress on a deeper search for businesses and managements creatingwealth. FT Opportunities will follow a bottom up approach to stock picking and choose the best companies across sectors, some of which could

even be in out-of-favour sectors. The aim will be to build a solid portfolio of stocks, which will have the ability to outperform the markets througheconomic cycles. FT Opportunities will invest in stocks across the entire market capitalisation range.

5.5 Types of securities: The Portfolio Manager/Fund Manager shall invest in all such types of Securities as defined (kindly refer to the definition)and in all such securities / instruments as permissible from time to time.

5.6 Investment in group/associate companies: The Portfolio Manager/Fund Manager may invest in Securities of the associate/group companies.These investments will be carried out to achieve the investment objectives and strategies and in the normal course of investment activitysubject to the applicable laws/regulations.

The Portfolio Manager/Fund Manager shall not make any investments in any unlisted securities of associate/group companies of thepromoter. The Portfolio Manager/Fund Manager will also not make investment in privately placed securities issued by Associate/groupcompanies of the promoter. The PM may invest not more than 25% of the portfolio of an individual client in listed securities of Groupcompanies.

5.7 The Portfolio Manager may not accept from the fresh client, funds less than Rupees Fifty Lakhs or as specified in the agreement with thePortfolio Manager.

6.0 Risk Factors

i. Securities investments are subject to market risk and there is no assurance or guarantee that the objectives of the investment will beachieved.

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ii. The investment value of portfolio may go up or down depending on the factors and forces affecting stock markets.

iii. Past performance of the Portfolio Manager/Fund Manager does not indicate the future performance of the same scheme in future or anyother future schemes of the Portfolio Manager.

iv. The past performance of the sponsor/FTAMIL/schemes of Mutual fund does not indicate the future performance of the Portfolios managedunder the Portfolio Management Services.

v. The Portfolio Manager is neither responsible nor liable for any losses resulting from the operations of the Portfolio schemes.

vi. The investments made by the Portfolio Manager are subject to risks arising from the investment objective, investment strategy and assetallocation.

vii. The investment made by the Portfolio Manager is subject to risk arising out of non-diversification.

viii. The investments of the fund and resultant investment are subject to a very wide range of risks which include amongst others and by way ofillustration loss in value of investments due to, inter alia:

a. Overall economic slowdown, unanticipated bad corporate performance, environmental or political problems, changes in monetary orfiscal policies (including changes in tax laws and rates), changes in government policies and regulations with regards to industry andexports;

b. Act of state, sovereign action, Acts of God, Acts of war, civil disturbance;

c. Delisting or market closure, relatively small number of scrips accounting for a large proportion of trading volume;

ix. Limited liquidity in the market, settlement risk, impeding readjustment of portfolio composition, highly volatile stock markets in India. Thereis also risk of total loss of value of an Asset, possibilities of recovery of loss in investments only through expensive legal process. Such losscould arise due to factors which by way of illustration, include, default or non-performance of a third party, companys refusal to register asecurity due to legal stay or otherwise, disputes raised by third parties. Mis-judgment by the Portfolio Manager or his incapacitation due toany reason, however remote, is also a risk. Thus the investment in Indian Capital Market involves above average risk for investors comparedwith other types of investment opportunities. Investments will be of a longer duration compared to trading in securities. There is a possibilityof the value of investment and the income there from falling as well as rising depending upon the market situation.

ix. The Portfolio Manager is not guaranteeing or assuring any return on investment.

7.0 Client Representation

(i) As on March 31, 2006

Category of clients No. of clients Funds managed(in Rs. cr)

Discretionary /Non Discretionary

(if available)

Associates/group companies Nil Nil N. A.

Others 152 108.17 Discretionary

Others 2 N.A Advisory services

Total 154 108.17

As on March 31, 2007

Category of clients No. of clients Funds managed(in Rs. cr)

Discretionary /Non Discretionary

(if available)




Total 250 141.28

As on March 31, 2008

Category of clients No. of clients Funds managed(if available)

Discretionary/Non Discretionary

(in Rs. cr)




Total 871 345.64

ii) Complete disclosure in respect of transactions with related parties as per the standards specied by the Institute of CharteredAccountants of India:

Please refer to Annexure 1 (as per last audited financials of September 30, 2007).

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8.0 Performance of the Portfolio Manager

Financial performance of the Portfolio Manager/Audited financial statements of the Portfolio Manager for the preceding 3 financial years areattached in Annexure 2.

9.0 Portfolio Management performance of the Portfolio Manager in the last 3 years

Average Returns to the clients:

Period Individual Client Corporate Client

Resident Non-Resident Resident Non-Resident

For the year ended March 31, 2006 27.54% 16.38% 30.51% N. A.

For the year ended March 31, 2007 13.68% 7.49% 17.76% N. A.

For the year ended March 31, 2008 -10.51% 1.25% -9.12% N. A.

10.0 Fees, expenses and service Charges

10.1 Various types of fees/expenses/costs chargeable to the Client are

10.1.1 Investment management and advisory fees

10.1.2 Custodian fee and demat account charges

10.1.3 Fund accounting fee, audit fee and legal charges

10.1.4 Brokerage and transaction cost

(all individual expenses above 5% should be separately disclosed)

The actual fees and expenses payable by the Client to the Portfolio Manager for the Services will be as mentioned in the agreement with theclient.

TDS on Fees

The fees, which are charged to the client for the portfolio management service, comes under the ambit of fees for technical services under Section194J of the Income Tax Act 1961. Section 194J calls for deduction of tax at source (TDS) on the fees payable by the Client to the Portfolio Managerand payment of the same to the government treasury, if the Client falls under the following two categories:

1. An individual or a HUF specified in Section 194J of the Income Tax Act, 1961 i.e. having total sales, gross receipts or turnover from businessexceeding Rs.40 Lakhs or gross receipts from profession exceeding Rs.10 Lakhs during the last financial year.

2. Any person other than an individual and a HUF.

As an extension to its services, the Portfolio Manager may carry out the following on the Client s behalf:

1. Deduct tax at source on the fees payable by the Client to the Portfolio Manager, and

2. Make payment of the same to the government treasury.

For this purpose, the Portfolio Manager takes the Permanent Account Number (PAN), the Tax Deduction at Source Account Number (TAN) and TaxDeduction Certificate (Form No. 16A) from the client towards the TDS.

The Portfolio Manager is entitled to deduct directly from the Client Portfolio all the fees specified above. Other expenses, which could be attributableto the management of the Portfolio, may also be charged to the Client.

The fees charged for rendering portfolio management services do not guarantee or assure, either directly or indirectly, any return on the investmentmade by the Client.

10.2 Periodicity of billing: Charged on the basis of Daily AUM of the client.

10.3 The Portfolio Manager shall deduct directly from the cash account of the client all the fees/costs specified above. Other expenses which couldbe attributable to the Portfolio Management would also be directly deducted and the Client would be sent a Statement about the same.

10.4 The fees charged for rendering portfolio management services do not guarantee or assure, either directly or indirectly, any return on theinvestment made by the client.

10.5 The fee so charged may be a fixed fee or a return based fee or a combination of both, as agreed in the agreement.

11.0 Agreement

11.1 The Portfolio Manager before taking up an assignment of management of funds or portfolio of securities on behalf of a client, enters into anagreement in writing with such client clearly defining the inter se relationship and setting out their mutual rights, liabilities and obligationsrelating to the management of funds or portfolio of securities, containing such details as per the regulations.

11.2 The money or securities accepted by the Portfolio Manager is not invested or managed by the Portfolio Manager except in terms of theagreement between the Portfolio Manager and the Client.

11.3 The Portfolio Manager shall not change any terms of the agreement without prior consent of the Client

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12.0 Rights and Liabilities of the Client

12.1 Rights

12.1.1 Obtain Information The Client has a right to obtain a copy of Disclosure Document at least 2 days before signing of theagreement along with Form C.

12.1.2 Reports - The Client shall obtain reports for a period not exceeding six months containing details as specified under Regulation21(1) and as agreed in the agreement with the Portfolio Manager. Such reports shall be made available on the web site of thePortfolio Manager with restricted access to each client.

12.1.3 The Portfolio Manager shall provide the client with a transaction statement once in a month or as agreed in the agreement with the

client.

12.1.4 The client shall be provided with a statement reflecting the portfolio status and a statement of Profit & Loss on a monthly basis.

12.1.5 Audit by clients - The client may appoint a chartered accountant to audit the books and accounts of the Portfolio Manager relatingto his transactions and the Portfolio Manager shall co-operate with such chartered accountant in course of the audit.

12.2 Liabilities

12.2.1 The Liability of the client shall be to the extent of his investments

12.2.2 The Client shall be liable for payment of all services and other charges payable by the Client to the Portfolio Manager as per theterms of the agreement.

13.0 Rights, Duties and Liability of the Portfolio Manager

13.1 Rights

13.1.1 At the time of entering into an agreement, the Portfolio Manager shall obtain in writing from the client, his interest in variouscorporate bodies which enables him to obtain unpublished price-sensitive information of the body corporate.

13.1.2 Discretionary portfolio manager has a right to exercise any degree of discretion as to the investments or management of theportfolio of securities or the funds of the client, as the case may be.

13.2 Duties and Responsibilities

13.2.1 The Portfolio Manager shall invest funds of his clients in securities as specified in the agreement.

13.2.2 The Portfolio Manager shall not deploy the clients funds in bill discounting, badla financing or for the purpose of lending orplacement with corporate or non- corporate bodies. The Portfolio Manager shall not indulge in leveraging in respect of investmentin derivatives.

13.2.3 The Portfolio Manager shall not, while dealing with clients funds, indulge in speculative transactions

13.2.4 The Portfolio Manager shall have a mechanism to segregate each clients funds and portfolio of securities and keep them separatelyfrom his own funds and securities and be responsible for safekeeping of clients funds and securities.

13.2.5 The Portfolio Manager may hold the securities belonging to the portfolio account in its own name on behalf of its clients only if theagreement so provides and in such an event the records of the Portfolio Manager and its report to the client should clearly indicatethat the securities are held by it on behalf of the portfolio account.

13.2.6 A Portfolio Manager shall not disclose to any clients, or press any confidential information about its client, which has come to itsknowledge.

13.2.7 The Portfolio Manager shall where necessary and in the interest of the client take adequate steps for registration of the transfer ofthe clients securities and for claiming and receiving dividends, interest payments and other rights accruing to the client. It shallalso take necessary action for conversion of securities and subscription/renunciation of/or rights in accordance with the clientsinstruction.

13.2.8 The discretionary portfolio manager shall individually and independently manage the funds of each client in accordance withthe needs of the client in a manner which does not partake character of a Mutual Fund, whereas the non- discretionary Portfolio

Manager shall manage the funds in accordance with the directions of the client.

13.2.9 The Portfolio Manager shall act in a fiduciary capacity with regard to the clients funds.

13.2.10 The Portfolio Manager shall keep the funds of all clients in a separate account to be maintained by it in a Scheduled CommercialBank. Explanation: - For the purposes of this sub-regulation, the expression Scheduled Commercial Bank means any bankincluded in the Second Schedule to the Reserve Bank of India Act, 1934.

13.2.11 The Portfolio Manager shall transact in securities within the limitation placed by the client himself with regard to dealing in securitiesunder the provisions of the Reserve Bank of India Act, 1934;

13.2.12 The Portfolio Manager shall not derive any direct or indirect benefit out of the clients funds or securities.

13.2.13 The Portfolio Manager shall not borrow funds or securities on behalf of the client.

13.2.14 The Portfolio Manager shall not lend securities held on behalf of clients to a third person except as provided under theregulations.

13.2.15 The Portfolio Manager shall ensure proper and timely handling of complaints from its clients and take appropriate actionimmediately.

13.2.16 The Portfolio Manager may, subject to authorisation by the client in writing, participate in securities lending.

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13.2.17 The Portfolio Manager shall preserve the books of account and other records and documents for a minimum period of five years.

The Portfolio Manager shall provide to the client, this Disclosure Document as specified in Schedule V, along with a certificate in Form C as specifiedin Schedule I, at least two days prior to entering into an agreement with the client as referred to in sub- regulation (1).

13.3 Liabilities

The Portfolio Manager shall not be liable for acts done in good faith to give effect to the agreement.

14.0 Prevention of Money Laundering and Client Information

14.1 Prevention of Money Laundering

Prevention of Money Laundering Act, 2002 (PML Act) came into effect from July 1, 2005 vide Notification No. GSR 436(E) dated July 1, 2005issued by Department of Revenue, Ministry of Finance, Government of India. Further, SEBI vide its circular No. ISD/CIR/RR/AML/1/06 datedJanuary 18, 2006 mandated that all intermediaries including Portfolio Managers should formulate and implement a proper policy frameworkas per the guidelines on anti money laundering measures and also to adopt a Know Your Customer (KYC) policy. The intermediaries may,according to their requirements specify additional disclosures to be made by clients for the purpose of identifying, monitoring and reportingincidents of money laundering and suspicious transactions undertaken by clients. SEBI has further issued circular no. ISD/CIR/RR/AML/2/06dated March 20, 2006 advising all intermediaries to take necessary steps to ensure compliance with the requirement of section 12 of the PML

Act requiring inter alia maintenance and preservation of records and reporting of information relating to cash and suspicious transactions toFinancial Intelligence Unit-India (FIU-IND). The PML Act, the Rules issued thereunder and the guidelines/circulars issued by SEBI thereto, asamended from time to time, are hereinafter collectively referred to as AML Laws.

The Client(s), including guardian(s) where Client is a minor, should ensure that the amount invested through the services offered by thePortfolio Manager is through legitimate sources only and does not involve and is not designated for the purpose of any contravention orevasion of the provisions of the Income Tax Act, AML Laws, Prevention of Corruption Act and/or any other applicable law in force and alsoany laws enacted by the Government of India from time to time or any rules, regulations, notifications or directions issued there under.

To ensure appropriate identification of the Client(s) under its KYC policy and with a view to monitor transactions in order to preventmoney laundering, the Portfolio Manager reserves the right to seek information, record investors telephonic calls and/or obtain and retaindocumentation for establishing the identity of the investor, proof of residence, source of funds, etc. It may re-verify identity and obtain anyincomplete or additional information for this purpose, including through the use of third party databases, personal visits, or any other meansas may be required for the Portfolio Manager to satisfy themselves of the investor(s) identity, address and other personal information.

The Client(s) and their attorney(ies), if any, shall produce reliable, independent source documents such as photographs, certified copies ofration card/passport/driving license/PAN card, etc. and/or such other documents or produce such information as may be required from timeto time for verification of the personal details of the Client(s) including inter alia identity, residential address(es), occupation and financialinformation by the Portfolio Manager. If the Client(s), their attorney(ies) or the person making payment on behalf of the Client(s), refuses/fails to provide the required documents/information within the period specified by the Portfolio Manager then the Portfolio Manager shallhave absolute discretion to freeze the Account of the Client(s), reject any application(s) and effect mandatory repayment/returning of Assetsof the Account of the Client(s) subject to the fees payable to the Portfolio Manager, if any. The Portfolio Manager shall also, after applicationof appropriate due diligence measures, have absolute discretion to report any transactions to FIU-IND that it believes are suspicious innature within the purview of the AML Laws and/or on account of deficiencies in the documentation provided by the Client(s) and the Portfolio

Manager shall have no obligation to advise investors or distributors of such reporting. The KYC documentation requirements shall also becomplied with by the persons becoming the client by virtue of operation of law e.g. transmission, etc.

The Portfolio Manager, and its Directors, employees, agents and service providers shall not be liable in any manner for any claims arisingwhatsoever on account of freezing the Account/rejection of any application or mandatory repayment/returning of funds/Asset of the Accountdue to non-compliance with the provisions of the AML Laws and KYC policy and/or where the Portfolio Manager believes that transaction issuspicious in nature within the purview of the AML Laws and/or for reporting the same to FIU-IND.

14.2 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 othercommunications received from the Client will constitute good and full discharge of the obligation of the Portfolio Manager.

In cases of copies of the documents / other details such as list of authorised signatories, that are submitted by a limited company, bodycorporate, registered society, trust or partnership, if the same are not specifically authenticated to be certified true copies but are attached tothe application form and / or submitted to the Fund, the onus for authentication of the documents so submitted shall be on such investorsand the Portfolio Manager will accept and act on these in good faith wherever the documents are not expressly authenticated. Submission ofthese documents / details by such investors shall be full and final proof of the corporate Clients authority to invest and the Portfolio Managershall not be liable under any circumstances for any defects in the documents so submitted.

In cases where there is a change in the name of such Client, such a change will be effected by the Portfolio Manager only upon receiving theduly certified copy of the revised Certificate of Incorporation issued by the relevant Registrar of Companies / registering authority. In caseswhere the changed PAN Number reflecting the name change is not submitted, such transactions accompanied by duly certified copy of therevised Certificate of Incorporation with a copy of the Old Pan Card and confirmation of application made for new PAN Card will be requiredas a documentary proof.

14.3 Client Information

The Portfolio Manager shall presume that the identity of the Client and the information disclosed by him is true and correct. It will also bepresumed that the funds invested by the Client through the services of the Portfolio Manager come from legitimate sources / manner and theinvestor is duly entitled to invest the said funds.

Where the funds invested are for the benefit of a person (beneficiary) other than the person in whose name the investments are made and/or

registered, the Portfolio Manager shall assume that the Client holding the funds/Securities in his name is legally authorised/entitled to investthe said funds through the services of the Portfolio Manager, for the benefit of the beneficiaries.

15.0 Custody of securities

15.1 Custody of all the securities of the client shall be with the custodian who shall be appointed by the Portfolio Manager. Currently, the Portfolio

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Manager has appointed Deutsche Bank, Mumbai as the custodian for its portfolio management services.

15.2 The custodian shall act on the instruction of the Portfolio Manager.

15.3 All such custodian fees, charged by the custodian, shall be payable by the client.

15.4 The Portfolio Manager shall not be liable for any act of the custodian done with or without the instruction of the Portfolio Manager, which maycause or is likely to cause any loss or damage to the client.

16.0 Taxation

The following summary outlines the key tax implications to Clients investing through the services offered by the Portfolio Manager based on theprevailing taxation laws, taking into account the amendments made by the Finance Act, 2008.

THE INFORMATION PROVIDED BELOW IS FOR GENERAL INFORMATION PURPOSE ONLY AND IS BASED ON THE ADVICE OBTAINED BYFRANKLIN TEMPLETON. THE DISCLOSURES IN RESPECT OF THE TAX IMPLICATIONS ARE IN ACCORDANCE WITH THE PREVAILING TAX LAWS

AND THERE CAN BE NO ASSURANCE OR GUARANTEE THAT THE TAX IMPLICATIONS PREVAILING AT THE TIME OF INVESTMENT THROUGHTHE PORTFOLIO MANAGEMENT SERVCIES WILL ENDURE INDEFINITELY.

FURTHER STATEMENTS WITH REGARD TO TAX IMPLICATIONS MENTIONED HEREIN BELOW ARE MERE EXPRESSIONS OF OPINION AND ARENOT REPRESENTATIONS OF THE PORTFOLIO MANAGER TO INDUCE ANY INVESTOR TO INVEST THROUGH THE SERVICES OFFERED BYTHE PORTFOLIO MANAGER. THE PROSPECTIVE CLIENTS SHOULD NOT TREAT THIS INFORMATION AS ADVICE RELATING TO TAXATIONOR INVESTMENT OR ANY OTHER MATTER. IN VIEW OF THE INDIVIDUAL NATURE OF THE IMPLICATIONS, EACH INVESTOR IS ADVISED TOCONSULT 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 THROUGH THE PORTFOLIO MANAGEMENT SERVICES.

Dividend

Dividends declared, distributed or paid will be exempt in the hands of the shareholder recipient and a tax on distributed profits will be payableby the domestic company at the rate of 16.995 percent. However, the income distribution tax payable by the Mutual Fund (other than on incomedistributed to unitholders of equity oriented funds) will be as follows:

- at 28.325 percent (including a surcharge of 10 percent and an additional surcharge by way of education cess of 3 percent on the amountof tax plus surcharge) on dividend distributed by a money market mutual fund or a liquid fund;

- at 14.1625 percent (including a surcharge of 10 percent and an additional surcharge by way of education cess of 3 percent on the amountof tax plus surcharge) on dividend distributed to any person being an individual or a Hindu Undivided Family by a fund other then a moneymarket mutual fund or a liquid fund; and

- at 22.66 percent (including a surcharge of 10 percent and an additional surcharge by way of education cess of 3 percent on the amountof tax plus surcharge) on dividend distributed by a fund other than a money market mutual fund or a liquid fund, to any persons other thanindividuals and HUFs, for instance, corporates.

Interest

Income by way of interest on securities will be charged under the head Income from Other Sources.

Capital Gains Tax

Profit on sale of investments [being shares in a company or any other securities listed on a recognised stock exchange in India or units of the UnitTrust of India established under the Unit Trust of India Act, 1963 (52 of 1963) or a units of a Mutual Fund specified under Section 10(23D) or zerocoupon bonds as defined] held for a period of more than 12 months (36 months in case of any other investments) immediately preceding the dateof transfer, will be treated as long-term capital gains.

In all other cases, that is, where such investments are held for 12 months or less, profits on the sale of such investments would be treated as short-term capital gains.

The taxability of long-term and short-term capital gains is discussed below:

Taxable securities transactions:

Long term capital gains on sale of an equity share in a company or a unit of an equity oriented fund is exempt from tax, provided such transactionis chargeable to securities transaction tax (STT).

Short term capital gains on sale of an equity share in a company on a recognized stock exchange or sale or redemption of a unit of an equityoriented fund on a recognized stock exchange or to a Mutual Fund, is taxable at 15 percent (tax rate upto 31 March 2008 is 10 per cent) (plusapplicable surcharge see note), provided the transaction is chargeable to STT (For NRIs/PIOs, full tax will have to be paid on the short termcapital gains even if the total income as reduced by the short term capital gains is below the maximum amount not chargeable to tax).

STT is payable on a taxable securities transaction as follows:

Sr.No

Taxable securities transaction Tax rate(percent)

Payable by

1 Purchase of an equity share in a company or a unit of an equity oriented fund, where

(a) the transaction of such purchase is entered into in a recognised stock exchange; and

(b) the contract for the purchase of such share or unit is settled by the actual delivery or transfer of suchshare or unit

0.125 Purchaser

2 Sale of an equity share in a company or a unit of an equity oriented fund, where -

(a) the transaction of such sale is entered into in a recognised stock exchange; and

(b) the contract for the sale of such share or unit is settled by the actual delivery or transfer of suchshare or unit

0.125 Seller

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3 Effective 1 June 2008^, sale of a derivative, where the transaction of such sale is entered into in arecognised stock exchange is taxable as under:

- Sale of an Option in securities

- Sale of an option in securities, where the option is exercised

- Sale of a future in securities

0.017

0.125

0.017

Seller

Purchaser

Seller

4 Sale of unit of an equity oriented fund to the Mutual Fund 0.25 Seller

^ Up to 31 May 2008, all transactions in derivatives are subject to STT at a uniform rate of 0.017 per cent, in the hands of the seller. Further,the value of a taxable securities transaction with respect to option in securities up to such date shall be the aggregate of the strike price and the

option premium of such option in securities.

The value of a taxable securities transaction will be as follows:

inthecaseofataxablesecuritiestransactionrelatingtooptioninsecurities,theoptionpremiumofsuchoptioninsecurities;

inthecaseofataxablesecuritiestransactionrelatingtooptioninsecurities,wheretheoptionisexercised,thesettlementprice;

inthecaseoftaxablesecuritiestransactionrelatingtofutures,thepriceatwhichsuchfuturesaretraded;and

inthecaseofanyothertaxablesecuritiestransaction,thepriceatwhichsuchsecuritiesarepurchasedorsold.

Rebate of securities transaction tax paid

Effective 1 April 2008, the STT paid in respect of taxable securities transactions entered into the course of business shall be allowed as deductionin computing business income in respect of such taxable securities transactions.

STT paid in respect of taxable securities shall, henceforth, not be allowed as a rebate under section 88E of the Act.

Transactions other than taxable securities transactions

(a) Tax on Long Term Gain:

For Residents (including Indian Corporates)

Long-term Capital Gains will be chargeable under Section 112 of the Act, at a rate of 20 percent (plus applicable surcharge see note) withindexation, where applicable. Alternatively, the tax rate may be reduced to 10 percent without indexation (plus applicable surcharge seenote) in respect of listed securities or units or zero coupon bonds.

For Resident Individuals and HUFs only

Where the taxable income as reduced by long term capital gains is below the exemption limit, the long term capital gains will be reduced tothe extent of the shortfall and only the balance long term capital gains will be charged at a rate of 20 percent (plus applicable surcharge

see note)with indexation, where applicable. Alternatively, the tax rate may be reduced to 10 percent (plus applicable surcharge see note)without indexation in respect of listed securities or units or zero coupon bonds as defined.

For NRIs/PIOs only

Where the investment is eligible for indexation benefits, then the rate of tax would be 20 percent (plus applicable surcharge see note) withindexation or 10 percent (plus applicable surcharge see note) without indexation.

(b) Tax on Short Term Capital Gain

Short-term capital gains are chargeable to tax as per the relevant slab rates (discussed in Notes 1 and 2 below).

Set of Capital Losses

Long-term capital loss of a tax year cannot be set off against short-term capital gains arising in that year. On the other hand, short-term capitalloss in a year can be set off against both short-term and long-term capital gains of the same year.

Unabsorbed short term and long-term capital loss of prior years shall be separately carried forward. However, short-term capital loss shall beeligible for set off against long term capital gains.

It may be noted that capital losses cannot be set off against the securities transaction tax payable.

Whether losses on taxable securities transactions can be set off against other capital gains or not, is not clear. The investor may obtain specificadvice from his or her tax advisor in this regard.

Provisions regarding Dividend

Losses arising from the sale/transfer (including redemption) of securities including units purchased up to 3 months prior to the record date (forentitlement of dividends) and sold within 9 months (in case of units) or 3 months (in case of any other securities) after such date, will be disallowedto the extent of income distribution (excluding redemptions) on such units claimed as tax exempt by the unitholder.

Provisions regarding Bonus

In case of securities (including units) purchased within a period of 3 months prior to the record date (for entitlement of bonus) and sold/transferred

(including redeemed) within 9 months after such date, the loss arising on transfer of original securities shall be ignored for the purpose ofcomputing the income chargeable to tax. The loss so ignored shall be treated as cost of acquisition of such bonus securities.

Certain deductions available under Chapter VI-A of the Act

Individuals and Hindu Undivided Families would be allowed deduction in computing total income, inter alia, under section 80C of the Act for an

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amount not exceeding Rs. 100,000 with respect to sums paid or deposited in the previous year out of income chargeable to tax, in certain specifiedschemes.

Taxability of Foreign Institutional Investors (FIIs) and sub-accounts

Dividend

There will be no income distribution tax payable on any income distributed by an equity oriented Mutual Fund.

The income distribution tax payable by the Mutual Fund (other than on income distributed to unitholders of equity oriented funds) will be asfollows:

- at 28.325 percent (including a surcharge of 10 percent and an additional surcharge by way of education cess of 3 percent on the amount

of tax plus surcharge) on dividend distributed by a money market mutual fund or a liquid fund to corporate and non-corporate FIIs- at 22.66 percent (including a surcharge of 10 percent and an additional surcharge by way of education cess of 3 percent on the amount of

tax plus surcharge) on dividend distributed to corporate and non-corporate FIIs.

Interest

Income by way of interest on securities will be charged under section 115AD of the Act at the rate of 20 percent. The said tax rate shall beincreased by applicable surcharge and an additional surcharge by way of education cess as applicable in case of non-corporate investors andforeign companies (see note).

Capital Gains Tax

Taxable securities transactions

Long term capital gains on sale of an equity share in a company or a unit of an equity oriented fund is exempt from tax, provided the transactionof sale of such equity share or unit is chargeable to securities transaction tax (STT).

Short term capital gains on sale an equity share in a company on a recognised stock exchange or sale or redemption of a unit of an equity orientedfund on a recognised stock exchange or to a Mutual Fund, is to be taxed at 15 percent (plus applicable surcharge and education cess see note),provided the transaction is chargeable to STT.

Transactions other than taxable securities transactions

(a) Tax on Long Term Gain:

Long-term capital gains arising on sale of securities (other than as referred to above), shall be taxed at the rate of 10 percent under Section115AD of the Act. The said tax rate shall be increased by applicable surcharge and additional surcharge in the form of an education cessas applicable in case of non-corporate investors and foreign companies (see note). Such gains shall be calculated without inflation indexand currency fluctuation adjustment.

(b) Tax on Short Term Capital Gain

Short-term capital gains arising on sale of securities (other than as referred to above), shall be taxed at the rate of 30 percent under Section115AD of the Act. The said tax rate shall be increased by applicable surcharge and additional surcharge in the form of an education cessas applicable in case of non-corporate investors and foreign companies (see note).

In order to avail the benefit of the provisions of section 115AD of the Act , the FIIs and sub-accounts should be notified by the Central Government in the OfficialGazette.

Taxability under the India-Mauritius Treaty (the treaty)

Interest

As per Article 11 of the Treaty, interest income arising to a resident of Mauritius would be taxable in the India as per the domestic laws of India(Income Tax Act, 1961). Hence, interest income arising to a resident of Mauritius will be taxable in India at the rate of 20 per cent plus applicablesurcharge and additional surcharge in the form of education cess as applicable in case of non-corporate investors and foreign companies (seenote).

Capital Gains

As per Article 13(4) of the Treaty, any capital gains arising on the transfer of mutual funds units by a resident of Mauritius would be taxable onlyin Mauritius and not in India.

Note 1:

For Resident Individuals, NRIs, PIOs and Hindu Undivided Families only

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 up to Rs.1,50,000# Nil

More than Rs.150,000# but up to Rs.300,000 10 percent of excess over Rs.150,000

More than Rs.300,000 but up to Rs.500,000 20 percent of excess over Rs.300,000 + Rs.15,000$

Exceeding Rs.500,000 30 percent of excess over Rs.500,000 + Rs.55,000$

* plus surcharge and education cess as may be applicable (refer Note 2).

# for resident females below sixty-five years of age, Rs. 150,000 has to be read as Rs. 180,000 and for resident senior citizens above sixty-fiveyears of age, Rs. 150,000 has to be read as Rs. 225,000.

$ for resident females below sixty-five years of age, Rs. 15,000 has to be read as Rs. 12,000 and Rs 55,000 has to be read as Rs 52,000.Similarly for resident senior citizens above sixty-five years of age, Rs. 15,000 has to be read as 7,500 and Rs.55,000 has to be read as Rs.47,500.

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Partnership Firms &Indian Companies

The tax rates applicable would be 30 percent (plus 10 percent surcharge, if applicable and an additional surcharge by way of education cess of3 percent on the amount of tax plus surcharge).

Note 2:

Assessee Rate of surcharge applicable

Individuals (including NRIS/ PIOs), HUFs, Non-Corporate FIIs wherethe taxable income is up to Rs. 1,000,000 per annum

A surcharge by way of education cess of 3 per cent is payable on thetotal amount of tax

Individuals (including NRIs/ PIOs), HUFs and Non-corporate FIIswhere the taxable income is in excess of Rs.1,000,000 per annum

10 percent basic surcharge. An additional surcharge by way ofeducation cess of 3 percent is payable on the total amount of taxplus surcharge.

Domestic companies and partnership firms having taxable incomeequal to or less then Rs.1,00,00,000 per annum

No basic surcharge. A surcharge by way of education cess of 3percent is payable on the total amount of tax

Domestic companies and partnership firms having taxable incomemore then Rs.1,00,00,000 per annum

10 percent basic surcharge. An additional surcharge by way ofeducation cess of 3 percent is payable on the total amount of taxplus surcharge.

Foreign Companies (including corporate FII) having taxable incomeequal to or less then Rs.1,00,00,000 per annum

No basic surcharge. An additional surcharge by way of educationcess of 3 percent is payable on the total amount of tax plussurcharge.

Foreign Companies (including corporate FII) having taxable income

more then Rs.1,00,00,000 per annum

2.5 percent basic surcharge. An additional surcharge by way of

education cess of 3 percent is payable on the total amount of taxplus surcharge.

Note 3:

Money market mutual fund is defined to mean a money market mutual fund as defined in sub-clause (p) of clause (2) of the Securities andExchange Board of India (Mutual Funds) Regulations, 1996.

Liquid fund is defined to mean a scheme or plan of a mutual fund which is classified by the Securities and Exchange Board of India as a liquidfund in accordance with the guidelines issued by it in this behalf under the Securities and Exchange Board of India Act, 1992 (15 of 1992) orregulations made thereunder.]

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 equityoriented fund, entered into in a recognized stock exchange; or sale of a unit of an equity oriented fund to the Mutual Fund.

Equity oriented fund is defined to mean a fund -

(a) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than sixty five percent of thetotal proceeds of such fund; and

(b) which has been set up under a scheme of a Mutual Fund specified in section 10 (23D) of the Act.

However, the client would be best advised to consult his or her tax advisor/consultant for appropriate counsel on tax treatment of the natureof income indicated herein.

17.0 Accounting Policies

17.1 Following are the key accounting policies

17.1.1 All investments will be marked to market.

17.1.2 Transactions for purchase or sale of investments would be recognized as of the trade date and not as of the settlement date, sothat the effect of all investments traded during a financial year are recorded and reflected in the individual client account for thatyear.

17.1.3 The cost of investments acquired or purchased would include brokerage, stamp charges and any charge customarily included inthe brokers contract note or levied by any Statute.

17.2 Books of accounts would be separately maintained in the name of the client as are necessary to account for the assets and any additions,income, receipts and disbursements in connection therewith, as provided under SEBI (Portfolio Managers) Regulations, 1993.

17.3 Audit

17.3.1 The portfolio accounts of the Portfolio Manager shall be audited annually by an independent chartered accountant and a copy ofthe certificate issued by the chartered accountant shall be given to the client.

17.3.2 The client may appoint a chartered accountant to audit the books and accounts of the Portfolio Manager relating to his transactionsand the Portfolio Manager shall co-operate with such chartered accountant in course of the audit.

18.0 Termination of agreement

18.1 Notwithstanding anything contained above, the funds or securities can be withdrawn or taken back by the client before the maturity of thecontract under the following circumstances, namely -

18.1.1 voluntary or compulsory termination of portfolio management services by the Portfolio Manager or the client.

18.1.2 suspension or cancellation of the certificate of registration of the Portfolio Manager by the Board.

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18.1.3 bankruptcy or liquidation of the Portfolio Manager.

18.2 There shall be written intimation about such termination by the terminating party.

18.3 On termination of the agreement, the Portfolio Manager shall give a detailed statement of accounts to the client and settle the account withthe client as agreed in the agreement.

19.0 Investor Services

Name of Officer : Mr. Sandeep Nair

Address : Level 4, East Wing, Wockhardt Towers

Bandra - Kurla Complex, Bandra (East), Mumbai 400 051

Telephone Number : +91 - 22 6751 9100

Fax No. : +91 - 22 6649 0622

20.0 Grievances / Dispute handling mechanism

The Portfolio Manager shall attend to and address any client query or concern as soon as possible to mutual satisfaction. The above mentionedofficer shall attend to the grievances of the client.

The complaints by investors should be sent to the above mentioned address.

21.0 Dispute Settlement Mechanism

All disputes, differences, claims and questions whatsoever which shall arise either during the subsistence of the agreement with a client orafterwards with regard to the terms thereof or any clause or thing contained therein or otherwise in any way relating to or arising therefrom or

the interpretation of any provision therein shall be, in the first place settled by mutual discussions, failing which the same shall be referred to andsettled by arbitration in accordance with and subject to the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modificationor re-enactment thereof for the time being in force. The arbitration shall be held in Mumbai and be conducted in English language.

The agreement with the client shall be governed by, construed and enforced in accordance with the laws of India. Any action or suit involving theagreement with a client or the performance of the agreement by the either party of its obligations will be conducted exclusively in courts locatedwithin the city of Mumbai in the State of Maharashtra.

For Franklin Templeton Asset Management (India) Pvt. Ltd.

Sd/-

Vijay C. AdvaniDirector

Dr. J. Mark MobiusDirector

Deepak SatwalekarDirector

P. VaidyanathanDirector

Navroz Seervai

Director

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Annexure 1: Related Party Disclosure

(as per last audited financials of September 30, 2007)

(i) Related parties (During the year):

Nature of Relationship Name of Related Party

Ultimate holding company Franklin Resources Inc., USA

Holding company Franklin Templeton Holding Limited, Mauritius

Subsidiary company

Franklin Templeton AMC Limited

ITI Capital Markets Limited

Fellow subsidiary companies Franklin Templeton International Services (India) Private Limited

Franklin Templeton Trustee Services Private Limited

Franklin Templeton Companies, LLC

Franklin Templeton Services, LLC

Templeton Asset Management Limited (Singapore)

Franklin Templeton Investor Serivces, LLC

Franklin Templeton Investments (Asia) Limited (Hong Kong)

Franklin Templeton Investment Corporation (Canada)

Franklin Templeton Investment Manangement Limited (United Kingdom)

Franklin Advisers, Inc.

Franklin Templeton Investment Trust Management Company Limited

Party with significant influence Hathway Investments Private Limited

Key management personnel Vivek Kudva

S. Jayaram

Mutual Fund managed by the Company Franklin Templeton Mutual Fund

(ii) The following transactions were carried out with the related parties in the ordinary course of business (Amount in Rupees):

Nature ofTransactions

Ultimateholding

company

Holdingcompany

Subsidiarycompanies

Fellowsubsidiarycompanies

Party withsignicantinuence

Keymanagement

personnel

Mutual Fundmanaged bythe Company

Total

ShareApplicationMoney Received

Nil 300,000,000 Nil Nil Nil Nil Nil 300,000,000

Previous year

FranklinTempletonHolding Limited,Mauritius


Previous year

Allotmentof EquityShares againstthe ShareApplicationMoney


Previous year

FranklinTempletonHolding Limited,

Mauritius


Previous year

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Ultimateholding

company

Holdingcompany

Subsidiarycompanies



Keymanagement

personnel


Total

Redemptionof 0.05%OptionallyConvertibleNon-CumulativeRedeemablePreference

Shares

Nil Nil Nil Nil 125,000,000 Nil Nil 125,000,000

Previous year

HathwayInvestmentsPrivate Limitedand its nominees

Nil Nil Nil Nil 125,000,000 Nil Nil 125,000,000

Previous year

Conversionof 0.05%OptionallyConvertibleNon-Cumulative

RedeemablePreferenceshares intoEquity Shares


Previous year



Previous year

Redemption of0.1% Non-

CumulativeRedeemablePreferenceShares


Previous year



Previous year

Capitalisationof SecuritiesPremium

Nil 1,125,000,000 Nil Nil Nil Nil Nil 1,125,000,000

Previous year


Nil 1,125,000,000 Nil Nil Nil Nil Nil 1,125,000,000

Previous year

Transfer in ofEmployee Loans

Nil Nil 2,530,426 Nil Nil Nil Nil 2,530,426

Previous year

Franklin

Templeton AMCLimited

Nil Nil 2,379,778 Nil Nil Nil Nil 2,379,778

Previous year

8/8/2019 Dealer FT 06

18/23

18


Ultimateholding

company

Holdingcompany

Subsidiarycompanies



Keymanagement

personnel


Total

ITI CapitalMarkets Limited

Nil Nil 150,648 Nil Nil Nil Nil 150,648

Previous year

Amount Receivedfor Payment on

behalf of FellowSubsidiaryCompany

Nil Nil Nil 130,048,626 Nil Nil Nil 130,048,626

Previous year

Templeton AssetManagementLimited(Singapore)


Previous year

Fixed assetPurchased /(Retired)

Nil Nil 226,400 466,670 Nil Nil Nil 693,070

Previous year


Nil Nil Nil (37,140) Nil Nil Nil (37,140)

Previous year

FranklinTempleton AMCLimited


Previous year

Franklin

TempletonCompanies LLC,USA

Nil Nil Nil 503,810 Nil Nil Nil 503,810

Previous year

Other IncomeReceived


Previous year



Previous year

ContingentDeferred SalesCharge Received

Nil Nil Nil Nil Nil Nil 81,187,165 81,187,165

Previous year

FranklinTempleton MutualFund


Previous year

Transfer AgencyFees Received


Previous year 194,716,255 194,716,255

8/8/2019 Dealer FT 06

19/23

19


Ultimateholding

company

Holdingcompany

Subsidiarycompanies



Keymanagement

personnel


Total



Previous year 194,716,255 194,716,255

Sub Advisory

Fees Received


Previous year 40,845,332 40,845,332



Previous year 20,383,756 20,383,756

Franklin Advisers,Inc. USA


Previous year 20,461,576 20,461,576

Management

Fees Received

Nil Nil Nil Nil Nil Nil 2,236,964,603 2,236,964,603

Previous year 1,686,680,858 1,686,680,858



Previous year 1,686,680,858 1,686,680,858

Investments inMutual Fund

Purchase of Unitsof Schemes


Previous year 381,542,076 381,542,076



Previous year 381,542,076 381,542,076

Sale /Redemption ofUnits of Schemes

Nil Nil Nil Nil Nil Nil (1,983,907,072) (1,983,907,072)

Previous year (509,183,282) (509,183,282)


Nil Nil Nil Nil Nil Nil (1,983,907,072) (1,983,907,072)

Previous year (509,183,282) (509,183,282)

DividendReceived / ProtEarned


Previous year 89,453,413 89,453,413



Previous year 89,453,413 89,453,413

Purchase ofUnits of Schemes(on behalf ofemployees)


Previous year

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20/23

20


Ultimateholding

company

Holdingcompany

Subsidiarycompanies



Keymanagement

personnel


Total



Previous year

Reimbursement

of Expenses Paid

Nil Nil 298,378 735,089 Nil Nil Nil 1,033,467

Previous year 294,392 294,392

FranklinTempletonCompanies LLC,USA



FranklinTempletonInvestments (Asia)Limited (HongKong)


Previous year

FranklinTempletonInvestmentCorporation(Canada)


Previous year

FranklinTempletonInvestmentManangementLimited (UnitedKingdom)

Nil Nil Nil Nil Nil Nil Nil Nil





Franklin Advisers,Inc.



Franklin

TempletonInvestment TrustManagementCompany Limited


Previous year

FranklinTempleton AMCLimited


Previous year

Reimbursementof ExpensesReceived

Nil Nil Nil 622,997 Nil Nil 13,695,760 14,318,757


8/8/2019 Dealer FT 06

21/23

21


Ultimateholding

company

Holdingcompany

Subsidiarycompanies



Keymanagement

personnel


Total

FranklinTempletonInternationalServices (India)Private Limited



FranklinTempleton TrusteeServices PrivateLimited





Previous year

EmployeeAdvancesTransferred


Previous year



Previous year

InsurancePremium Paid


Previous year 2,730,827 2,730,827

FranklinTempletonCompanies, LLC

Nil Nil Nil Nil Nil Nil Nil

Previous year 2,730,827 2,730,827



Previous year

InformationSystems and

Technology,General andAdministrative,Marketing andInvestmentOperationsExpenses


Previous year 33,928,041 33,928,041



Previous year 33,928,041 33,928,041

8/8/2019 Dealer FT 06

22/23

22


Ultimateholding

company

Holdingcompany

Subsidiarycompanies



Keymanagement

personnel


Total

Balance outstanding at year end

Balance Payable/(Receivable)

129,237,750 (500) Nil 22,585,096 Nil Nil (200,289,577) (48,467,231)

Previous year 71,888,542 (500) 55,245,410 (80,533,931) 46,599,521

FranklinResources Inc.,

USA

129,237,750 Nil Nil Nil Nil Nil Nil 129,237,750

Previous year 71,888,542 71,888,542



Previous year 63,440,009 63,440,009

FranklinTempletonInvestor Services,LLC



FranklinTempleton

Services, LLC




Nil (500) Nil Nil Nil Nil Nil (500)

Previous year (500) (500)

Templeton AssetManagement,Limited(Singapore)

Nil Nil Nil (2,230,787) Nil Nil Nil (2,230,787)

Previous year (5,051,491) (5,051,491)

Franklin Adviser,Inc. Nil Nil Nil (23,253,534) Nil Nil Nil (23,253,534)

Previous year (3,173,913) (3,173,913)

FranklinTempletonInvestment TrustManagementCompany Limited


Previous year


Nil Nil Nil Nil Nil Nil (200,289,577) (200,289,577)

Previous year (80,533,931) (80,533,931)

Investments inUnits of Schemes


Previous year 634,330,909 634,330,909



Previous year 634,330,909 634,330,909

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23/23

FORM C

SECURITIES AND EXCHANGE BOARD OF INDIA

(PORTFOLIO MANAGERS) REGULATIONS, 1993

(Regulation 14)

FRANKLIN TEMPLETON ASSET MANAGEMENT (INDIA) PVT. LTD.

Level 4, Wockhardt Towers, Bandra Kurla complex, Bandra (East), Mumbai 400051

Telephone No: +91 22 6751 9100, Fax: +91 22 6649 0622

We confirm that:

i) the updated Disclosure Document forwarded to the Board is in accordance with the SEBI (Portfolio Managers) Regulations, 1993 and the guidelinesand directives issued by the Board from time to time;

ii) the disclosures made in the document are true, fair and adequate to enable the investors to make a well informed decision regarding entrusting themanagement of the portfolio to us / investment in the Portfolio Management Scheme;

iii) the updated Disclosure Document has been duly certified by an independent chartered accountant (Mr. Sudhir Nair, Partner, Nipun Sudhir &Associates, 505, Tulsiani Chambers, Free Press Journal Marg, Nariman Point, Mumbai 400021 Membership No. 45893) on August 11, 2008.

Sd/- Vivek Kudva

Principal Ofcer

Date : August 12, 2008

Place : Mumbai

dealer ft 06

Documents