Dec 05, 2003
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Informal Guidance
December 5, 2003
The Securities and Exchange Board of India
Mutual Fund Division
4th Floor, NSE Building
Near Exchange Plaza
Bandra Kurla Complex
Bandra (East)
Mumbai 400051
Dear Sir,
Re: Request for interpretative letter under SEBI (Informal Guidance) Scheme, 2003
Templeton Mutual Fund is registered with SEBI bearing registration No. MF/026/96/8 dated February 19, 1996. Presently TMF manages 43 schemes and has presence in 33 locations spread all over India.
SEBI Circular MFD/CIR.No 04/11488 /2003 dated June 12, 2003, allowed the Mutual Funds to launch a Fund of Funds (FOF) scheme which can invest in other schemes of same mutual fund or other mutual funds thereby giving the investors a flavor of investing in equity/fixed income schemes in a single scheme. TMF was one of the first MFs to launch such schemes, we have two such schemes namely, FT India Dynamic PE Ratio Fund of Funds and FT India Life Stage Fund Of Funds.
As per the above-mentioned Circular, a FOF scheme will invest in other mutual fund schemes (underlying schemes).
Load in case of Fund-of-Funds scheme: As a FOF scheme can charge a load, if the underlying schemes too charge a load, there would be a double incidence of load for investors at the FOF level and at the underlying scheme level. Hence, no load (entry/exit) will be charged by the underlying schemes on the investments made by Fund of Funds schemes in an underlying scheme.
We have also issued an addendum to give effect of above in our two FOF schemes. TMF now is exploring a new Offshore Feeder Fund, which plans to invest in schemes of TMF. Since the Feeder Fund is a kind of Fund Of Funds we would like to extend the above-mentioned logic on load.
We seek your advice and clarification on the same and request you to issue an interpretative letter on the abovementioned issue. As prescribed in the circular, we have made a payment towards fees of Rs. 25,000/- for the same to the Treasury and Accounts Division, SEBI on December 5, 2003. A copy of the receipt issued is enclosed for your reference.
Thanking You,
Yours faithfully,
For Templeton Asset Management (India) Pvt. Ltd.
Pranita Gramopadhye
Sr. Manager, Compliance
Encl: As above