Here is a note sent by Mr. Sanjay Sapre of Franklin Templeton…I have edited it partially, that is all….

Here is a factual update on the latest developments related to the six fixed income schemes under winding-up. You may have also read with some concern, media reports pertaining to a First Information Report (FIR) filed with the Economic Offences Wing (EOW), Chennai.

The Hon’ble Karnataka High Court has completed hearing the arguments on matters related to the six schemes under winding-up.  We await the judgment from the Hon’ble High Court. Our focus should remain on maximizing value for unitholders in these schemes and returning monies as soon as possible in accordance with the applicable regulations, subject to the decision of the Hon’ble Karnataka High Court.

un-substantiated rumours and baseless accusations. While we cannot comment on the First Information Report (FIR) as we have not seen its contents, it may be noted that filing of an FIR is simply the preliminary step in an investigation.  Since the business has been carried out in compliance with the applicable laws and all decisions were taken in the best interest of our unit holders, we are confident about the outcome of any true and fair investigation conducted in this regard. We have the utmost respect for all statutory authorities including EOW, however we believe that Securities and Exchange Board of India (SEBI), the specialized regulator for the securities market, is best placed to handle any issues related to mutual fund investments.  

We are not aware of the antecedents of CFMA and as admitted by them in their original complaint, none of their members were unitholders in the six impacted schemes.

Mutual Funds are well regulated, and assets of these schemes are held with independent SEBI registered custodians. Portfolios of these schemes retain value according to their respective NAVs, which are published daily based on the valuation of two reputed independent valuation agencies. We have already communicated the reasons for winding up (specifically the impact of the Covid-19 pandemic) and request you not to be swayed by unverified or speculative reports in the media.

The books of the six impacted schemes are regularly audited by internal auditors, statutory auditors, auditors appointed by the regulators etc. and none of them have ever made any observation regarding misutilization of funds by the schemes.

I would like to remind you that since April 24, 2020, the schemes under winding up have received over INR 7,184 crore from maturities, pre-payments, and coupons. Four out of the six schemes are already cash positive. As a reminder, these amounts have been generated without the ability to efficiently monetize the portfolio. I hope the above helps assuage initial concerns some of you may have had based on incorrect reporting that took place around large hair-cuts that investors may face in these funds.

We wish to assure our unitholders that we continue to follow due process, both in making investment decisions and in the winding up of these schemes. We have acted in the best interest of our unitholders and in accordance with all regulations in this regard. Our focus remains on maximizing value for unitholders in these schemes and returning monies as soon as possible in accordance with the applicable regulations, subject to the decision of the Hon’ble Karnataka High Court.

We continue to receive monies from coupons, maturities, and pre-payments in all the six schemes. These details are also published on our website every fortnight as well as communicated to our unitholders. We continue to follow due process, both in making investment decisions and in the winding up of these schemes. We continue to cooperate fully with all regulatory authorities.

As I end this message, I want to re-affirm our focus on returning the maximum possible value to all investors in the shortest possible time. Thank you once again for your continued patience and co-operation.

Please note that a similar communication has also been sent to all impacted investors.

Please stay indoors, stay safe, and stay healthy.

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