Franklin Templeton Mutual Fund

Transcription

1 Franklin Templeton Mutual Fund Trustee Report to Investors Dear Investor, The Directors of the Trustee Company have the pleasure of presenting before you the Fourteenth Annual Report of Franklin Templeton Mutual Fund ( Mutual Fund/FTMF ) for the year Along with the general information on the background/highlights of the Mutual Fund, investor services, significant regulatory changes, etc. the Trustees have specifically provided information on the schemes of the Mutual Fund. Brief background of Trust, Sponsor, Trustee Company and Asset Management Company: Franklin Templeton Mutual Fund FTMF has been constituted as a Trust on January 4, 1996 in accordance with the provisions of the Indian Trusts Act, 1882 and the Deed of Trust is duly registered under the Indian Registration Act, FTMF has been sponsored by Templeton International Inc. (liability restricted to the seed corpus of Rs.l lakh) with Franklin Templeton Trustee Services Pvt. Ltd. ( Trustee ) as the Trustee. The Trustee has entered into an Investment Management Agreement dated January 5, 1996 with Franklin Templeton Asset Management (India) Pvt. Ltd. ( AMC ) appointing the AMC as the Investment Manager for all the schemes of FTMF. FTMF is registered with SEBI on February 19, 1996 vide Registration No. MF/026/96/8. Templeton International Inc. Templeton International Inc. is a part of the Franklin Templeton Group, which is one of the largest Investment Management Company with US$ billion (approximately Rs.26,77,510 crore) in assets under management as on April 30, 2010 and more than 22 million Shareholder Accounts. Franklin Templeton has offices in over 30 countries including the United States of America, Bahamas, Canada, Argentina, France, Germany, Italy, Luxembourg, Poland, Russia, the United Kingdom, Hong Kong, Singapore, Korea, India, China, Australia and South Africa. Franklin Templeton Trustee Services Pvt. Ltd. Franklin Templeton Trustee Services Pvt. Ltd., a company incorporated under the Companies Act, 1956 and having its Registered Office at Level 4, Wockhardt Towers, Bandra Kurla Complex, Bandra (East), Mumbai , is the Trustee to FTMF. The Trustee ensures that FTMF and the schemes floated there under are managed by the AMC in accordance with the Trust Deed, the regulations, directions and guidelines issued by SEBI, the stock exchanges and other regulatory agencies. Board of Directors of the Trustee Company: Mr. Gregory E. McGowan*, Executive Vice President, Director and General Counsel for International Development, Templeton Worldwide Inc. Mr. Stephen Dover*, International Chief Investment Officer, Franklin Templeton Investments Mr. Anand J. Vashi, Chartered Accountant Mr. Percy J. Pardiwalla, Advocate Dr. Indu Shahani, Principal - H.R. College of Commerce & Economics * These Directors represent Sponsors of the Trustee Company and are associates of the Sponsor. Franklin Templeton Asset Management (India) Pvt. Ltd. Franklin Templeton Asset Management (India) Pvt. Ltd., a company incorporated under the Companies Act, 1956 and having its Registered Office at Level 4, Wockhardt Towers, Bandra

2 Kurla Complex, Bandra (East), Mumbai is the Investment Manager of FTMF. The entire paid up capital of the Investment Manager is held by Franklin Templeton Holding Ltd., Mauritius and its nominees. Franklin Templeton Holding Ltd. is a wholly owned subsidiary of Templeton Asset Management Ltd., Singapore, which is a wholly owned subsidiary of Templeton International Inc., a wholly owned subsidiary of Templeton Worldwide Inc., which in turn is a wholly owned subsidiary of Franklin Resources Inc. The Investment Manager was approved by SEBI to act as the AMC of FTMF vide their letter No.IIMARP/406/96 dated February 19, Board of Directors of the AMC: Mr. Vijay C. Advani*, Executive Vice President, Global Advisory Services, Franklin Resources Inc. Dr. J. Mark Mobius*, Executive Chairman, Templeton Asset Management Ltd. Mr. Jed Plafker*, Executive Managing Director, Franklin Templeton International Advisor Services (Alternate Director to Dr. J. Mark Mobius) Mr. Vivek Kudva*, Managing Director, India and CEEMEA (Central and Eastern Europe, Middle East and Africa) Mr. Deepak M. Satwalekar, former Managing Director and CEO, HDFC Standard Life Insurance Co. Ltd. Mr. Navroz Seervai, Advocate Mr. M.B.N. Rao, former Chairman and Managing Director, Canara Bank * These Directors represent Sponsors of the AMC and are associates of the Sponsor. Review of activities of Franklin Templeton Mutual Fund: During the year under review, the Mutual Fund continued to be one of the leading private sector mutual funds in India*. The Mutual Fund continued to focus on launching meaningful products with investment objectives that are relevant to investors. The Mutual Fund launched Franklin Build India Fund in July 2009, which collected over Rs.200 crore. In December 2009, the Mutual Fund launched Templeton India Income Opportunities Fund, which collected over Rs.300 crore. Further, the Mutual Fund launched few closed end income funds (Fixed Maturity Plans FMPs) mobilising over Rs.1,100 crore. During the year under review, Templeton Monthly Income Plan Half Yearly Dividend Plan and Growth Plan merged into FT India Monthly Income Plan effective March 19, Franklin India International Fund was wound on April 30, The average Assets Under Management (AUM) of the Mutual Fund for the month March 2010 was Rs.33,290 crore as compared to Rs.19,205 crore for the month March 2009 up by more than 72%. *Source: AMFI website Scheme performance, future outlook and operations of the schemes: Brief commentary on the schemes, one year and since inception performance vis-à-vis benchmarks, future outlook of the Fund and operations of the schemes are given in Annexure I to this Report. Investor Services: As on March 31, 2010, the Mutual Fund served more than 23 lakh active investors through its 34 branches spread across India, 82 offices of Computer Age Management Services Private Limited (CAMS) and Karvy Computershare Private Limited. To further increase the network and enhance the service levels to investors, Franklin Templeton Mutual Fund also provides a facility to subscribe and redeem units for six of its funds through the stock exchange infrastructures. Effective March 12, 2010, we have established relationship with both National Stock Exchange of India Ltd. ( NSE ) and Bombay Stock Exchange Ltd. ( BSE ) to offer this service to our investors. Further, the investors have unrestricted access to FTMF for any matter. 2

3 With our continuous focus on investor satisfaction, various technology based facilities have been introduced: Online account access registration Enabling investors to transact online and access various self servicing features Increased mail back options for distributors to enable better servicing to their investors Redemption and dividend payments are also increasingly being processed electronically to ensure faster credit in investor s bank accounts. We have a robust business continuity plan for the Transfer Agency and operate from Chennai and Hyderabad with adequate infrastructure to support expansion and growth. Further, in the interest of all stakeholders, various initiatives were taken to reduce cost through effective utilisation of infrastructure and resources. Significant regulatory changes: During the year under review, the regulatory environment witnessed many changes aimed at broadening the capital markets and improving transparency. Securities and Exchange Board of India ( SEBI ) continued to demonstrate its commitment in upholding its reputation for a professional approach by enhancing regulations governing the capital markets aimed at furthering the interest of investors, including the mutual fund industry. SEBI has barred mutual funds from charging entry load on any investment effective August 1, Upfront commission to distributors can be paid by investors directly to distributors, based on their assessment of various factors including the service rendered by distributors. The distributors are required to disclose to investors all material information including all commissions received for different competing schemes of various mutual funds from amongst which a scheme is being recommended to investors. Further, mutual funds cannot make distinction among unit holders based on the amount of subscription while charging exit loads. SEBI has vide circular dated March 15, 2010 announced certain important changes such as disclosure of brokerage and commission paid to associates in half-yearly financials, scheme wise abridged annual reports and statement of additional information, extension of Applications Supported by Blocked Amount ( ASBA ) facility to mutual fund investors, reduction in the duration of NFOs and time taken for allotment of units, dispatch of account statements and refund of money, role of mutual funds in corporate governance of listed companies, etc. With an objective to enable investors to take more informed decisions on their investments, SEBI has mandated additional disclosures in the Key Information Memorandum Comparison with the existing schemes, number of folios and AUM, risk mitigating factors and investment strategy. For the benefit of investors, SEBI has mandated disclosure of details of investor complaints received in respect of mutual funds on their websites and in the Trustee Report forming part of annual report. In accordance with the same, Investor Complaints Report for FY is given in Annexure II to this Report. Investors are requested to note: As you may be aware, completion of KYC procedures and PAN have been made mandatory for investments in mutual funds. CDSL Ventures Limited ( CVL ) has been appointed by all mutual funds, including FTMF, to complete KYC and PAN verification formalities together on their behalf and hence investors need to submit their details only once for completion of these formalities across all mutual funds. Investors are advised to complete KYC/PAN formalities with CVL at the earliest. Responsibility of the Trustees: The Trustees are the exclusive owner of the Trust Fund and holds the same in trust for the benefit of the unitholders. The Trustees have been discharging their duties and carrying out the responsibilities as provided in the Regulations and the Trust Deed. The Trustees seek to ensure 3

4 that the Mutual Fund and the schemes floated there under are managed by the AMC in accordance with the Trust Deed, the Regulations, directions and guidelines issued by the SEBI, the stock exchanges, the Association of Mutual Funds in India, other regulatory agencies and the Scheme Information Documents of the respective schemes. The Balance Sheet as on March 31, 2010, the Revenue Account for the period ended March 31, 2010 and the Auditors Report thereon are annexed to this Abridged Annual Report. As mentioned in the Auditors Report the accounting policies are in accordance with SEBI (Mutual Funds) Regulations, In view of the fact that the amounts collected under the various schemes are deployed in securities markets, the price and redemption value of the units, and income from them, can go up as well as down with the fluctuations in the market value of its underlying investments. Full Annual Report is available on the website of the Mutual Fund and shall be made available for inspection at its Head Office. Present and prospective investors can request for copies of the SAI/SID of schemes; and copies of the Trust Deed, detailed annual accounts of the schemes and of the AMC upon payment of the prescribed fee. Investment objectives of the schemes: The investment objectives of the schemes and risk factors are given in Annexure III to this Report. Unclaimed dividends and redemptions as on March 31, 2010: The data on unclaimed dividends and redemptions for more than 90 days as on March 31, 2010 is given in Annexure IV to this Report. Statutory Information: The Sponsor, Templeton International Inc. is not responsible or liable for any loss resulting from the operation of the schemes of the Mutual Fund beyond its initial contribution of Rs.1 lac for setting up the Mutual Fund, and such other accretions/additions to the same. Acknowledgments: The Trustees express their satisfaction with the overall functioning of the business and particularly with respect to risk management, corporate governance and compliance. The Trustees wish to place on record their appreciation for the dedication and sincerity of the employees of the AMC. The Trustees thank the Government of India, the Securities and Exchange Board of India, the Reserve Bank of India and the Association of Mutual Funds in India for their ongoing support, co-operation and guidance during the year under review. The Trustees take this opportunity to thank its family of investors for their confidence and wholehearted faith reposed in the Mutual Fund. In addition, the Trustees would also like to thank the Auditors, Custodian, Bankers, Registrar, and all other service providers for their valuable support. We look forward to your continued support and assure you of our commitment to quality products and services from the Mutual Fund. Yours sincerely, for Franklin Templeton Trustee Services Private Limited (Trustee of Franklin Templeton Mutual Fund) Gregory McGowan Chairman Date: July 7,

5 Annexure I Scheme performance, future outlook and operations of the schemes Templeton India Growth Fund Templeton India Growth Fund (TIGF) follows the value investing philosophy, which is based on the tenets of intrinsic value, bargain hunting and long-term orientation, as a result of which the fund typically has a low portfolio churn rate. The investment team seeks to identify investments by looking at the company s assets and long-term earnings profile. Since inception in September 1996, the fund has delivered returns of 20.63% as against 12.77% gain in BSE Sensex. During the period under review, the portfolio value increased by % compared with 80.54% gain in BSE Sensex and 93.83% gain in MSCI Value index. As of March 2010, our top portfolio holdings were Tata Chemicals (9.36%), Tata Investment Corporation (6.18%) and Usha Martin (6.07%). Looking ahead, we will continue to scan the investment universe for undervalued opportunities mainly in the large-cap space. Templeton India Equity Income Fund Launched in May 2006, Templeton India Equity Income Fund (TIEIF) is an open-end diversified equity fund that follows the value investing philosophy, which is based on the tenets of intrinsic value, bargain hunting and long-term orientation. The fund does this by investing in Indian and foreign equities that have a current or potentially attractive dividend yield (dividend as a percentage of market price). Since inception, the fund has returned 17.23% on a compounded annualized basis as against benchmark returns of 12.22%. During the period under review, the portfolio value increased by % compared with a 92.87% gain in BSE 200. At end of March 2010, about 26.5% of total assets were invested in foreign securities and the fund s top sectoral exposures - fertilizers, finance and oil aggregated about 34% of assets. Looking ahead, we will continue to closely scan the investment universe for attractive bargains in both domestic and overseas markets. Franklin India Bluechip Fund Launched in 1993, Franklin India Bluechip Fund (FIBCF), which primarily invests in large-cap stocks, has given compounded annual returns of 26.51% as against benchmark (BSE Sensex) returns of 10.78% over the same period. Amidst the sharp rebound witnessed in equity markets over the last one year, the fund returned 90.74% vs. benchmark (BSE Sensex) returns of 80.54%. During the market turmoil in FY09, we stayed fully invested and used the market declines to gain exposure to attractively valued companies. This helped us benefit from the sharp rally witnessed during FY10. At year-end, our top sector exposures included banks (15.82%), software (9.42%) and industrial capital goods (9.37%). Our portfolio strategy remains focused on identifying well-managed companies with the ability to deliver sustainable growth in earnings. The evaluation of businesses is not restricted to only quantitative parameters but we also look at qualitative factors such as competitive strategy, business objectives etc. From a style perspective, the aim is to have a portfolio with a mix of growth and value stocks provided they meet our investment criteria. 5

6 Franklin Build India Fund Franklin Build India Fund (FBIF) is an open-end equity fund which seeks to achieve capital appreciation through investments in companies engaged either directly or indirectly in the infrastructure-related activities. India is one of the fastest growing economies worldwide and to sustain high economic growth rates, India s infrastructural framework needs to be enhanced in key areas. Broadly defined, infrastructure-related activities include development, operations, management and maintenance of various infrastructure systems such as transportation, energy, resources, communication and also services such as housing, financing, healthcare, education and social infrastructure. In line with the fund s investment mandate, the top portfolio allocations (as of March 31, 2010) are to companies in the capital goods, power and financial services space. Since inception in September 2009, the fund has delivered returns of 17.38% as against benchmark (S&P CNX 500) returns of 12.39%. Franklin India Opportunities Fund Franklin India Opportunities Fund (FIOF) is an open-end equity fund that adopts a bottom-up approach to stock-picking and focuses on four themes (a) Companies that operate in the space where India has a strong advantage (b) Globally competitive Indian companies that have the potential to participate in global opportunities as well (c) Companies that are under valued (d) Companies that are best positioned to take advantage of the opportunities thrown up by the growing economy. Since inception in 2000, the fund has delivered compounded annualized returns of 11.26%. This compares well with the benchmark (BSE ) returns of -4.16% during the same timeframe. During the year ended March 2010, the fund gained 76.46% as against benchmark (BSE 200*) returns of 92.87%. The relative underperformance to benchmark has been primarily on account of the relative underweight position in mid-cap stocks over the review period. In line with our macro views, we currently have significant portion of our portfolio invested in financial services (banks, diversified financials), investment (power, capital goods) and consumption-related industries (pharma, media). We will continue to look to take concentrated exposure to sectors benefiting from the various opportunities being thrown up by a fast growing economy and also turnaround/value stories with good fundamentals and long term growth prospects. Compared to the past, our exposure to a sector however be spread across a larger number of stocks. Franklin India Flexi Cap Fund Franklin India Flexi Cap Fund (FIFCF) is an open-end equity fund that invests in stocks across the market capitalization range. Since inception in 2005, the fund has returned 23.60% on a compounded, annualized basis vis-à-vis benchmark (S&P CNX 500) returns of 18.44%. For the year ended March 2010, the fund yielded returns of 99.39% as against benchmark returns of 87.95%. The fund particularly benefited from gains in banking, capital goods and material sector holdings. While we remained invested across market capitalization categories, we increased our exposure to mid cap stocks benefiting from the broad-based improvement in macro-economic conditions. Broadly, stock selection was focused on investing in companies with identifiable drivers of growth, strong management capabilities, healthy balance sheet and attractive valuations. Indian economy is likely to remain one of the fastest growing economies in the world this year as well as over the medium to long term. This growth will boost demand for goods and services, and quality companies can benefit from such growth opportunities. We believe our bottom-up stock selection process that focuses on companies with strong fundamentals should help discover 1 Index adjusted for the period February 21, 2000 to March 10, 2004 with the performance of ET Mindex. 6

7 stocks that perform well and take advantage of the macro-economic themes over the medium-tolong term. Franklin India Index Tax Fund Franklin India Index Tax Fund (FIITF) is an open end index linked growth scheme tracking the S&P CNX Nifty. The fund s performance is summarized below: Last 1 Year Since Inception* FITF 70.86% 16.51% S&P CNX Nifty 73.76% 16.46% *Compounded annualized basis. Inception Date: February 26, 2001 Franklin India Index Fund During the period since inception and over the last one year, Franklin India Index Fund (FIIF), which is a passively-managed open-end fund, performed in line with the chosen underlying index (BSE Sensex in case of the FIIF BSE Sensex Plan and S&P CNX Nifty in case of FIIF NSE Nifty Plan). Last 1 Year Since Inception* FIIF NSE Nifty Plan 72.98% 15.77% S&P CNX Nifty 73.76% 15.37% FIIF - BSE Sensex Plan 79.28% 20.34% BSE Sensex 80.54% 21.36% *Compounded and annualized basis. Inception Date: NSE Nifty Plan August 4, 2000; BSE Sensex Plan: August 27, 2001 Franklin FMCG Fund Launched in March 1999, Franklin FMCG Fund (FFF) is an open-end equity fund investing exclusively in companies operating in the fast moving consumer goods space. During the fiscal year ended 2010, portfolio value rose by 68.57% compared to 38.37% increase in the benchmark index (ET Brandex). Since inception, the fund has delivered returns of 16.34% on a compounded annualized basis. This compares well with benchmark returns of 7.66% over the same timeframe. The top holdings at end of March 2010 were Nestle India (15.46%), ITC (12.92%) and Asian Paints (10.03%). India has witnessed a sustained rise in per capita income over the last five years and this alongside changing lifestyles and a relatively younger population is increasing domestic demand for varied consumer goods/services. The large share of working age population and low level of penetration of varied products/ services vis-à-vis peer markets are other strong reasons for the secular growth in Indian consumer spending. A bottom-up investment approach with focus on well managed companies in the segments benefiting from these economic drivers can serve well in such an investment environment. Franklin Pharma Fund Launched in March 1999, Franklin Pharma Fund (FPF) is an open-end equity fund investing exclusively in companies operating in the life-sciences sector. During the fiscal year ended 2010, the fund delivered returns of % compared to 96.33% increase in the benchmark (ET Pharma) index. Since inception, the fund has delivered returns of 16.59% on a compounded annualized basis. This compares well with benchmark returns of 13.43% over the same timeframe. Our primary investment focus remains on pharmaceutical companies with sizeable exposure to the domestic market top exposures as of March 2010 were Cadila Healthcare, Torrent Pharmaceuticals and Dr. Reddy s. In order to counteract impact of legal issues in the generics markets and slowdown in exports on earnings, some of the major companies have started 7

8 focusing on novel drug delivery systems/improved chemical entities and drug discovery research as well over the last few years. Cheap, world class, chemistry capabilities is the single biggest factor in favour of India with respect to contract manufacturing and clinical research. The long term potential for healthcare facilities remains strong given the low per capita healthcare spending. In addition, medical tourism and lifestyle changes have also given a boost to organized healthcare and hospitals have benefited from the same. Franklin Infotech Fund Launched in August 1998, Franklin Infotech Fund (FIF) is an open-end equity fund investing exclusively in companies operating in the information technology (IT) space. During the fiscal year ended 2010, the fund returned %, in line with benchmark (BSE IT Index) returns of %. Since inception, the fund has delivered returns of 22.99% on a compounded annualized basis. The benchmark return over the said period is unavailable. The fund remained in favour of large-cap IT companies Infosys Technologies, Tata Consultancy Services and Wipro. These companies are some of India s well-managed and leading software companies and offer good exposure, given the strength of their balance sheets and management quality. During the course of the year, the companies leadership position and ability to curb costs helped tide through the downturn well. The outlook for business spending has improved in recent quarters and is reflected in the positive guidance shared by companies in the sector. Franklin Templeton Dynamic PE Ratio Fund of Funds Franklin Templeton Dynamic PE Ratio Fund of Funds (FTDPEF) is an open-end hybrid fund of fund. The fund determines its asset allocation mix based on the weighted average PE ratio of the NSE Nifty Index. The equity portion is invested in Franklin India Bluechip Fund (FIBCF) and the debt assets in Templeton India Income Fund (TIIF). The fund comes with an automatic rebalancing mechanism that ensures that the scheme holds less equity when the markets are overvalued and vice-versa, using the PE levels of the market as a barometer. This approach ensures that the scheme pares its equity exposure when the markets are ruling high. At lower PE levels (i.e when markets are down), the fund increases its equity exposure to take advantage of the attractive valuations. Thus, when the markets rise, a fully invested portfolio is well positioned to turn in a good performance. Since inception in October 2003, the fund has delivered returns of 22.80% on a compounded annualized basis. This compares well with a 21.94% gain in BSE Sensex and 15.58% rise in the Crisil Balanced Fund Index. During the period under review, the portfolio value increased by 56.37% as compared to 80.54% rise in BSE Sensex and 47.31% gain in Crisil Balanced Fund index. In June 2009, we reduced the minimum investment amount under the Systematic Investment Plan (SIP) facility to Rs.12,000 per annum from Rs.24,000 per annum to enable wider participation. The asset allocation strategy adopted by FTDPEF reduces volatility significantly. While the fund may not outperform a pure equity product during a bull run, but over market cycles, it has the potential to deliver attractive risk-adjusted returns. FT India Life Stage Fund of Funds Since inception and over the last one year, FT India Life Stage Fund of Funds (FTLF) has performed reasonably well. The performance of each of the Plans within the scheme is encapsulated below: Last 1 Year Since Inception# The 20s Plan 77.46% 21.29% Benchmark* 64.58% 18.54% The 30s Plan 53.04% 16.19% Benchmark* 44.31% 14.72% The 40s Plan 45.90% 13.02% Benchmark* 29.51% 11.34% 8

9 Last 1 Year Since Inception# The 50s Plus Plan 30.02% 9.44% Benchmark* 18.47% 8.61% The 50s Plus Floating Rate Plan 20.82% 11.15% Benchmark* 16.93% 10.23% #Compounded annualized returns. *Benchmark: The 20s Plan - 65% BSE Sensex + 15% S&P CNX % Crisil Composite Bond Fund Index; The 30s Plan - 45% BSE Sensex + 10% S&P CNX % Crisil Composite Bond Fund Index; The 40s Plan - 25% BSE Sensex + 10% S&P CNX % 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. Inception Date: 50s Plus Floating Rate Plan: July 9, 2004; All other Plans: December 1, 2003 The scheme invests in a combination of Franklin Templeton India s equity and fixed income schemes, with a pre-determined steady state allocation based on risk profiles of investors. The debt and equity allocations are rebalanced every six months to revert to the steady state levels. Also, based on market conditions, we make a tactical allocation of 10% on either side of the steady state asset allocation. Franklin India Taxshield Launched in April 1999, Franklin India Taxshield (FIT) is an equity linked savings scheme with the objective to provide medium to long term capital appreciation along with income tax rebate. Since inception, the fund has consistently performed well and delivered compounded, annualized returns of 30.56% as against benchmark (S&P CNX 500) returns of 18.10%. During the last year, portfolio value increased by 91.30%, outperforming the benchmark, which gained 87.95%. The fund follows a diversified strategy with respect to industry as well as market capitalization. Hence the approach to portfolio construction is to build a core large-cap exposure and follow a cherry-picking approach to mid & small cap segment. Growth and Value style blends into our stock picking, with the advantage of willingness and ability to wait a little-longer for investments to yield results. Over the last year, we remained focus on companies that are strategically positioned to take advantage of India s macro-growth drivers consumption and investment. Our top sector exposures included banks (17.63%), telecom services (7.64%) and software (7.50%). FT India Balanced Fund FT India Balanced Fund (FTIBF) is an open end hybrid fund that seeks to provide long term capital growth along side current income by investing in a judicious mix of equity and debt instruments. The fund maintains an optimum balance between growth and stability by investing in a diversified portfolio of equities, typically well-established, large-caps which typically experience low volatility. The fixed income portfolio is actively managed to minimize credit risks and capitalize on various opportunities in corporate and government debt. Since inception in December 1999, the fund has given returns of 15.77% on a compounded annualized basis. The benchmark return over the said period is unavailable. During the period under review, the fund delivered returns of 55.20% compared with a 47.31% gain in benchmark (Crisil Balanced Fund Index). The out performance was driven by gains in equity holdings top sectoral exposures included banks (20.64%), software (11.30%) and consumer non-durables (10.36%). At the close of year, equity constituted 70.49% of portfolio and debt exposure stood at 29.73%. Franklin India Smaller Companies Fund Launched in January 2006, Franklin India Smaller Companies Fund (FISCF) is a 5-year closed-end fund with over 75% of investments in mid- and small-sized companies. Since inception, the portfolio value has increased by 6.74% on a compounded annualized basis 9

10 compared with benchmark (CNX Midcap) returns of 15.41% over the same period. The fund s relative underperformance since inception may be attributed to the longer gestational period required for investments in emerging companies to bear fruit, as the bulk of returns may accrue only after the companies have managed to substantially scale up business operations and thus their earnings, leading to unlocking of value in the stock price. Over the last one year, the fund gained %, as against % increase in the benchmark. The fund s primary exposures have been to companies that are either already benefiting from domestic drivers such as consumption and investment or expected to do so over the medium-to long term period. In line with this, the fund s top sectoral exposures at year-end were industrial capital goods (11.57%), banks (9.63%) and media & entertainment (8.53%). Going forward, we will continue to focus on domestic plays that are likely to benefit from the macro themes of rising consumption and investment levels in the country. The economic environment remains positive and is likely to result in better earnings performance from wellmanaged companies within this segment. Templeton India Pension Plan Templeton India Pension Plan (TIPP) is an open-end hybrid product designed to cater to pension needs of investors. The fund has a predominantly debt portfolio with some exposure to equities that helps enhance returns over the longer timeframe. Since inception in March 1997, the fund has delivered compounded annualized returns of 13.97%. The benchmark return over the said period is unavailable. During the last financial year, portfolio value gained by 29.44% as against a 35.04% gain in benchmark (40% S&P CNX % CRISIL Composite Bond Fund Index) over the same timeframe. As of March 31, 2010, about 51% of fund assets were invested in debt and about 37% in equity. Equity allocations were in favour of companies from banks (20.67%), consumer non-durables (10.47%) and software (10.34%). The allocations are in line with our belief that two of the main trends driving India s economy are rising consumer spending and physical & social infrastructure development. Franklin India Prima Plus Launched in September 1994, Franklin India Prima Plus (FIPP) is a diversified equity fund that has higher exposure to large-cap stocks with some allocation to mid-sized companies. The overall strategy has been to build a diversified portfolio of wealth-creating companies that are best positioned to take advantage of Indian economic growth. One of the key stock selection parameters is the ability of businesses to generate higher return on capital employed (RoCE). Since inception, the fund has delivered compounded annualized returns of 21.35% vis-à-vis benchmark (S&P CNX 500) returns of 9.28%. During the financial year ended March 2010, the fund yielded returns of 84.21% as against benchmark (S&P CNX 500) returns of 87.95%. The performance needs to be seen in the context of the fund s relatively low allocation to the mid cap space, which witnessed a sharper rally during the last course of the year. At end-march 2010, the fund s top three sectoral exposures were banks (14.96%), telecom - services (8.63%) and finance (8.26%). Looking ahead, our investment focus will continue to be on fundamentally strong companies that have the potential to take advantage of the opportunities arising out of India's long term growth. Franklin Asian Equity Fund Launched in January 2008, Franklin Asian Equity Fund (FAEF) focuses on investing in companies domiciled in the Asia ex Japan region. The fund seeks to take advantage of the growth being witnessed in the Asia ex Japan region. Since inception, the fund has delivered returns of 0.22% as against benchmark returns of -0.70%. The returns need to be seen in the context of the sharp 10

11 volatility witnessed in regional markets following the outbreak of global financial and economic crisis. The region has however demonstrated resilience amidst the recent global downturn and economic growth bounced back sharply on the back of stimulus efforts and improvement in global trade conditions. High global liquidity levels and better growth prospects for regional economies resulted in increased capital inflows and helped markets outperform their developed counterparts. During the last fiscal, the fund delivered returns of 42.35% vis-à-vis 49.37% gain in benchmark (MSCI Asia ex Japan). The relative underperformance was primarily on account of relative overweight to Greater China markets which witnessed increased volatility on concerns of policy tightening during the last quarter. As of March 2010, the fund had majority exposure to banks & finance, hardware and consumer non-durables aggregating to about 48.6% of assets. Given the current macro-economic environment, we have positioned ourselves in sectors/ companies that seem well-positioned to benefit from the structural growth drivers in regional economies mainly rising consumer spending and infrastructure development. Looking ahead, the long term fundamentals continue to be strong for Asia and the region is expected to witness expansion in the times to come due to positive demographics, high saving rates and intra-regional trade. The risks that could manifest over the short term are - rise in global risk aversion leading to portfolio outflows and uneven growth in developed economies. Franklin India Prima Fund Launched in December 1993, Franklin India Prima Fund (FIPF) is an open-end equity fund focused on mid- and small-cap stocks. Its investment style is a dynamic blend of growth and value styles of investing. Stock-picking is focused on merits of individual businesses and with an eye on long-term performance rather than short-term gains. We prefer companies that exhibit leadership potential and present optimal investment opportunities on fundamental as well as liquidity/ valuation parameters. At present, our top sectoral exposures are to companies in capital goods, banking and pharmaceutical sectors. During the year under review, the fund benefited from the sharp rally in equity markets the increase in risk appetite helped mid and small cap segment post steeper gains compared to largecap stocks. The portfolio value increased by % vis-à-vis an 87.95% gain in benchmark (S&P CNX 500) and a 126.1% gain in the CNX Midcap index. Last 1 Year Since Inception* FIPF (G) % 21.96% FIPF (D) % 21.96% S&P CNX % 10.50% *compounded & annualized returns. We remain positive on the India growth story and believe that our bottom-up stock selection approach is likely to help us deliver superior risk adjusted returns over the medium-to-long term. Franklin India High Growth Companies Fund Launched in June 2007, Franklin India High Growth Companies Fund (FIHGCF) is an open-end equity fund investing in companies that appear well-placed to deliver high growth rates by capturing the growth potential across various macro themes over the medium to long-term. The fund adopts a growth style of investing and combines bottom-up stock selection with top-down industry themes to identify such companies. As high growth rates are often characteristic of emerging companies/ sectors mid to small cap market capitalization the portfolio tends to have a bias towards lower capitalization. Since inception, the fund has delivered returns of 7.79% (compounded annualized) compared with benchmark (S&P CNX 500) returns of 4.34%. During the year under review, the portfolio 11

12 value increased by % compared to an 87.95% gain in benchmark. Despite the sharp declines witnessed in 2008/09, we had remained fully invested and maintained exposure to high growth sectors like infrastructure, banking and capital goods companies. This helped fund performance, as risk appetite returned in second half of 2009 and the portfolio was well positioned for such an event and the anticipated recovery of earnings growth. We remain positive about the medium to long term direction of the markets, as India s growth momentum increases and companies benefit from the higher demand for goods/ services. In line with the same, we will continue to remain focused on domestic plays. Templeton India Income Opportunities Fund Templeton India Income Opportunities Fund (TIIOF) is an open-end income fund that looks to provide regular income and capital appreciation by investing in fixed income securities across the yield curve. The fund is positioned as a flexi debt fund that can switch across different asset categories based on macro views. Based on the analysis of market conditions around the time of the launch, we had indicated that the fund would focus primarily on securitized debt and high accrual securities to take advantage of the yield premiums. The relatively high exit loads and a cap on maximum investment per folio provided the fund with a retail investor focus. In terms of flows, the fund attracted over Rs. 300 crore during the NFO period and since then it has grown steadily to around Rs.1,720 crore as of March The portfolio value has increased 3.20% since inception in December 2009 as against an increase of 1.45% in the Crisil Short Term Bond Fund Index (benchmark) during the same timeframe. As of March 2010, the average maturity stood at 1.53 years and the yield to maturity (YTM) was 7.49%. Going forward, we will continue to manage the fund with a view to capture the yield premium available in quality corporate debt securities and securitized debt. Pass Through Certificates (securitized debt instruments) have been an important part of our portfolios for the past few years and we should be able to leverage our expertise in terms of evaluating and using these securities in our portfolios. Templeton India Income Fund Launched in March 1997, Templeton India Income Fund (TIIF) is an open-end fixed income fund that seeks to deliver steady returns by actively managing interest rate and credit risks. Since inception, the fund has delivered returns of 9.30% (compounded annualized basis). The benchmark return over the said period is unavailable. During the last fiscal ended March 2010, the fund registered gains of 5.57% as against benchmark (Crisil Composite Bond Fund Index) returns of 5.41%. During the course of the year, we reduced the portfolio maturity to mitigate impact from rate hikes. Consequently, at the end of year, the fund s YTM (yield-to-maturity) and average maturity stood at 5.68% (pre-fund expenses) and 0.94 years respectively. The fund had pre-dominant exposure to debt issued by public sector undertakings/ public financial institutions and corporates. As of March 30, 2010, all fund assets were invested in high quality paper (AAAequivalent rating). Going forward, the fund will continue to focus on investing in quality fixed income instruments and monitor economic and policy developments to yield superior risk adjusted returns. Templeton India Ultra-Short Bond Fund Launched in December 2007, Templeton India Ultra-Short Bond Fund (TIUBF) invests in a mix of short-term debt and money market instruments. The fund has outperformed the benchmark since inception and during the year ended March Last 1 Year Since Inception* TIUBF Regular 4.81% 7.27% TIUBF Institutional 5.02% 7.49% 12

13 Last 1 Year Since Inception* TIUBF Super Institutional 5.23% 7.70% Crisil Liquid Fund Index 3.69% 6.35% * Compounded & annualized returns. Our focus on high quality corporate debt, including securitized debt, helped the fund deliver strong returns during the period under review. At year-end, corporate debt (including securitized debt) constituted over 19% of the portfolio whereas the allocation to money market securities was about 60%, up from 21% last year. Bank deposits and cash, call and other assets comprised about 20% of portfolio. In terms of credit rating, over 92% of the assets were invested in AAAequivalent paper. As of March 31, 2010, average maturity of the portfolio stood at 0.24 years and the yield to maturity stood at 5.38%. Looking ahead, we will continue to manage the fund with a focus on optimizing the trade-off between safety, liquidity and returns. Templeton India Short-term Income Plan Templeton India Short-term Income Plan (TISTIP), as the name suggests, is a fund focused on delivering steady returns by investing in shorter-dated fixed income securities. By investing in shorter-dated debt instruments the fund minimizes impact of interest rate changes and bears low market risk compared to a fund with higher maturity. The fund s performance is summarized below: Last 1 Year Since Inception* TISTIP - Retail Plan 10.89% 7.82% Crisil Short-Term Bond Fund Index 5.88% N.A TISTIP - Institutional Plan 11.03% 9.01% Crisil Short-Term Bond Fund Index 5.88% 6.91% *Compounded & annualized returns. Inception Date: Retail Plan: January 31, 2002 ; Institutional Plan September 6, 2005 During the last fiscal year, the fund delivered returns of 10.89% (retail plan), outperforming the benchmark (Crisil Short-term Bond Fund Index) returns of 5.88%. The relatively superior performance was mainly on account of our majority exposure to the corporate debt space, particularly issuances from non-banking financial companies and securitized debt. During the peak of the financial crisis in FY09, corporate spreads over gilts had widened sharply and this in our view was overdone. As risk appetite returned in FY10 and corporates turned in better earnings performance, credit spreads have contracted. Given the various opportunities in corporate debt, majority of the fund assets continue to be invested in this segment. As of March 2010, about 62% of the fund s assets are invested in AAA equivalent corporate paper and about 24% in AA equivalent. The fund had an average maturity of 1.26 years and yield to maturity of 7.41%. Templeton India Income Builder Account Launched in June 1997, Templeton India Income Builder Account (TIIBA) has an active management style that emphasizes on high credit quality while tapping opportunities from interest rate changes and deriving maximum value by targeting undervalued sectors. The product typically has higher average maturity period and whilst exhibiting higher volatility, has the potential to deliver higher returns. During the period under review, portfolio value increased by 6.67% as against benchmark (Crisil Composite Bond Fund Index) returns of 5.41%. For the period since inception, the fund has delivered compounded annualized returns of 9.14%. The benchmark return over the said period is unavailable. At the close of financial year, majority exposure was to debt issued by private and 13

14 public sector companies. The fund s average maturity and YTM (yield to maturity) stood at 2.01 years and 6.93% (pre-fund expenses) respectively. Over 85% of the assets were invested in high grade investment paper (AAA-equivalent rating). Going forward, we intend to remain focused on minimizing credit risk while adjusting the maturity profile in line with our views on macro and policy developments. Templeton Monthly Income Plan Templeton Monthly Income Plan (TMIP) is a pure debt offering focused on earning steady returns by actively managing interest rate and credit risks. Since inception in February 2000, the fund has yielded compounded annualized returns of 7.01% & 7.03% in its monthly and quarterly dividend plans respectively. In the fiscal year ended March 2010, the fund underperformed the benchmark, delivering returns of 6.46% as against benchmark (Crisil MIP Blended Index) returns of 14.25%. However, these need to be seen in the context of the composition of the fund s portfolio which is a pure debt offering as against the benchmark, which has some allocation to equity as well. At the close of year, the fund had an average maturity of 1.10 years and YTM (yield to maturity) of 5.99% (prefund expenses). About 45% of the portfolio was invested in debt issued by public and private sector undertakings while the remaining assets were held in money market instruments and call, cash & other assets. FT India Monthly Income Plan FT India Monthly Income Plan (FTIMIP) is a debt-oriented fund with marginal exposure to equity - not exceeding 20%. The fund s exposure to equity helps enhance returns over a longer timeframe while the debt portion helps provide stability to portfolio. Since inception in September 2000, the fund has posted compounded annualized returns of 10.86%. The benchmark return over the said period is unavailable. In the fiscal year ended March 2010, the broad-based rally in equity markets helped the fund deliver returns of 19.7% as against benchmark (Crisil MIP Blended Index) returns of 14.25%. With effect from March 19, 2010, Templeton Monthly Income Plan - Half Yearly Dividend Plan and Growth Plan have been merged into FTIMIP Plan B. Templeton Government Securities Fund Templeton Government Securities Fund (TGSF), as the name suggests, is a pure government debt oriented fund and therefore is not exposed to credit risk. It bears market risks based on changes in interest rate environment and monetary policy expectations. Based on one s investment tenure and risk profile, the fund has various plans for investors to choose from. The fund s performance over the last one year and since inception is summarized below: Last 1 Year Since Inception* TGSF Composite Plan (Growth) 0.72% 11.59% TGSF - Composite Plan (Dividend) 0.72% 11.33% I-Sec Composite Index 4.33% N.A. TGSF - PF Plan 0.72% 6.29% I-Sec Composite Index 4.33% 5.92% TGSF Treasury Plan (Growth) 2.87% 6.22% TGSF - Treasury Plan (Dividend) 2.87% 6.24% I-Sec Si-BEX 6.10% N.A. TGSF Long Term Plan 1.62% 10.43% I Sec Libex 2.77% N.A. 14

15 * Compounded & annualized returns. Inception Date: June 21, 1999 (CP); May 7, 2004 (PF); February 11, 2002 (CP); December 7, 2001 (LT) Key portfolio characteristics at end of March 2010 for the various plans were: Average Maturity (in years) Yield-to- Maturity* As of March 31, 2010 TGSF CP/ PF % TGSF TP % TGSF LT % *pre-fund expenses Templeton India Children s Asset Plan Launched in June 1998, Templeton India Children s Asset Plan (TICAP) is designed to provide financial solutions for children s future by investing in a prudent mix of debt and equity, based on the choice of plan. Due to increasing demand for increasing the equity allocation in the Gift Plan, the overall asset allocation pattern was modified w.e.f. January 5, 2007: Instruments Profile Debentures (investment grade, privately placed etc.), Bonds issued by public sector units, other fixed income instruments* and Money market instruments Equities and Equity Linked instruments Risk Profile % of corpus Education Plan Gift Plan Medium to Low 80%-100% 40%-60% High to Medium 0%-20% 40%-75% In the Education Plan the fund s equity exposure stood at 21.03% at March 31, 2010 (23.08% on March 31, 2009). The remaining assets were invested in fixed income instruments including call, cash & other assets. In the Gift Plan, we maintained the fund s equity exposure in excess of 65%. The equity exposure is largely concentrated in well-established, large-cap companies. Last 1 Year Since Inception* TICAP - Education Plan 14.76% 9.98% Crisil MIP Blended Index 14.25% N.A. TICAP - Gift Plan 58.08% 12.74% Crisil Balanced Fund Index 47.31% N.A. * Compounded & annualized returns Templeton India Money Market Account Templeton India Money Market Account (TIMMA) is an open end liquid fund with a mandate to invest in high quality money market instruments. During the fiscal year under review, the fund delivered returns of 4.31% as against benchmark (Crisil Liquid Fund Index) returns of 3.69%. Since inception in March 1997, the fund has given compounded & annualized returns of 5.41%. The benchmark return over the said period is unavailable. At the close of year, the fund s portfolio composition was 96.80% in money market instruments and remaining in call, cash & other assets. 15

16 Templeton India Cash Management Account Templeton India Cash Management Account (TICMA), formerly known as Templeton India Liquid Plus, invests in a portfolio comprising of money market and debt instruments. The fund maintains a shorter duration strategy to be able to provide stable income and high liquidity. The fund s performance since inception in April 2001 and during the last year is summarized below: Last 1 Year Since Inception* TICMA 2.60% 5.33% Crisil Liquid Fund Index 3.69% N.A * compounded & annualized returns Templeton India Treasury Management Account Templeton India Treasury Management Account (TITMA) strives to strike an optimum balance between stable income and high liquidity by investing in a mix of fixed and floating rate debt instruments. As of March 31, 2010, the assets under management stood at Rs.1, crore. Last 1 Year Since Inception* TITMA - Regular Plan 4.13% 7.10% Crisil Liquid Fund Index 3.69% N.A TITMA - Institutional Plan 4.39% 6.48% Crisil Liquid Fund Index 3.69% 5.96% TITMA - Liquid Plan 3.87% 6.04% Crisil Liquid Fund Index 3.69% 6.06% TITMA - Super Institutional 4.63% 7.07% Crisil Liquid Fund Index 3.69% 6.37% *Compounded annualized returns. Inception Date: April 29, 1998 (Regular); September 17, 2004 (Liquid); June 22, 2004 (Institutional); September 2, 2005 (Super Institutional) Looking ahead, we will continue to actively monitor the market developments and tune the maturity profiles of our funds to reflect changes in market environment consistent with the portfolio s investment objective. In line with our broad investment philosophy we remain committed to minimizing credit risks and liquidity risks. Franklin India International Fund Franklin India International Fund (FINTF) invests in units of overseas mutual fund that primarily invest in government backed securities such as GNMAs issued by Ginnie Mae. While GNMA s enjoy premium status due to their explicit government guarantee, these are not equivalent to treasury bills. As of March 2010, 84% of fund assets were invested in the units of Franklin US Government Fund and the remaining were held in cash, call & other current assets. Over the last one year, the sharp increase in foreign capital flows into India helped the rupee gain against the US dollar. This however impacted fund performance and portfolio value declined by 7.15% as against 10.58% decline in the value of the benchmark. The fund s performance since inception and in the last one year is summarized below: Last 1 Year Since inception* FINTF -7.15% 2.16% Lehman Intermediate Govt. (US) Index** % 3.14% * Compounded & annualized returns. **Adjusted in rupee terms. Inception Date: December 20, 2002 Strengthening of Indian Rupee against the US dollar since the scheme s launch together with the scheme s performance profile resulted in the sharp reduction in demand for the product. Hence, as part of the ongoing product rationalization exercise, the scheme was wound up on April 30,

17 Franklin Templeton Capital Safety Fund Franklin Templeton Capital Safety Fund (FTCSF) invests in a mix of equity and debt, and endeavors to protect the capital by investing in high quality fixed income securities and enhance returns by investing a part of the capital in equity and equity related instruments. The fund has performed well in the year under review as well as since inception. Last 1 Year Since Inception* FTCSF - 5Y Plan 17.22% 8.08% Crisil MIP Blended Index 14.25% 7.59% * Compounded & annualized returns. Inception December 2006 In line with the fund s objective, 77% of fund assets were invested in high quality debt instruments issued by varied banks and non-banking financial companies, as of March 31, On the equity side, the portfolio has a bias towards large-cap, well-established firms as typically large-cap stocks are known to be less volatile compared to mid- and small- cap stocks and this works well with the relatively low risk profile of the fund. The units issued under the Scheme are listed on the National Stock Exchange of India Limited (NSE), Exchange Plaza, Bandra-Kurla Complex, Bandra (East), Mumbai and the listing fee for the year has been paid to NSE. Franklin Templeton Capital Protection Oriented Fund Launched in June 2007, Franklin Templeton Capital Protection Oriented Fund (FTCPOF) invests in a mix of equity and debt securities to protect capital as well as deliver enhanced returns through exposure to equity. The fund s performance is summarized below: Last 1 Year Since Inception* FTCPOF - 3Y Plan FTCPOF - 5Y Plan Crisil MIP Blended Index * compounded & annualized returns FTCPOF 3 Years Plan matured on June 14, The fund s equity exposure is based on the investment horizon, i.e. the three year plan has relatively lower equity exposure as compared to that in the five-year plan. At year-end, in the five-year plan, allocations to equity and debt stood at 21.46% and 70.67% respectively. Overall, on the fixed income side, the strategy has been to invest in high quality debt instruments so as to minimize credit risk, while on the equity front the investments are largely in large-cap stocks which typically bear low volatility and thereby should enhance fund returns over the 3-5 year timeframe. The units issued under the Scheme are listed on the National Stock Exchange of India Limited (NSE), Exchange Plaza, Bandra-Kurla Complex, Bandra (East), Mumbai and the listing fee for the year has been paid to NSE. Templeton Floating Rate Income Fund Short term Plan Templeton Floating Rate Income Fund (TFIF) Short Term Plan is an open-end liquid plan with the primary objective to provide income consistent with the prudent risk from a portfolio comprising substantially of floating rate debt instruments, fixed rate debt instruments swapped for floating rate returns, and also fixed rate instrument and money market instruments. As 17

18 indicated in the table below, the fund has performed well during the year under review and the period since inception. Last 1 Year Since Inception* Short-Term Plan 4.28% 6.47% Crisil Liquid Fund Index 3.69% N.A Short-Term Institutional Plan 4.59% 7.22% Crisil Liquid Fund Index 3.69% 6.37% * compounded & annualized returns. Inception Date: Short-Term Plan February 11, 2002; Short-Term Institutional Plan September 2, 2005 As of March 2010, the fund had an average maturity of 0.11 years and yield to maturity of 5.06%. Going forward, the fund will continue to be managed in line with its stated objective. Templeton Floating Rate Income Fund Long term Plan Templeton Floating Rate Income Fund (TFIF) Long Term Plan is an open end income plan with the primary objective to provide income consistent with the prudent risk from a portfolio comprising substantially of floating rate debt instruments, fixed rate debt instruments swapped for floating rate returns, and also fixed rate instrument and money market instruments. The fund has outperformed the benchmark during the year under review and the period since inception. Last 1 Year Since Inception* Long-Term Plan 5.78% 6.62% Crisil Liquid Fund Index 3.69% N.A Long-Term Institutional Plan 6.18% 7.61% Crisil Liquid Fund Index 3.69% 6.38% Long-Term Super Institutional 6.50% 8.35% Crisil Liquid Fund Index 3.69% 6.42% * compounded & annualized returns. Inception Date: Long-Term Plan February 11, 2002; Long-Term Institutional Plan September 6, 2005; Long-Term Super Institutional Plan May 9, 2007 The scheme has been maintaining maturity of around 6 months. A large proportion of assets are invested in high rated debt instruments about 85% assets were allocated to AAA equivalents (as of March 2010). Templeton Quarterly Interval Plan - Plan A Templeton Quarterly Interval Plan - Plan A is an interval income fund that seeks to generate returns through investment in a portfolio of fixed income securities having a maturity profile of about 3 months. The performance of the fund is summarized below: winding up Since Inception * on June 5, 2009 Retail 0.57% 7.50% Institutional# 0.61% 7.87% Crisil Liquid Fund Index 1.19% (R), 1.12% (I)# 7.84% (R), 7.91% (I)# *Compounded & annualized returns. # The Institutional Plan returns have been calculated up to May 26, Inception Date: April 23, Templeton Quarterly Interval Plan - Plan B Templeton Quarterly Interval Plan - Plan B is an interval income fund that seeks to generate returns through investment in a portfolio of fixed income securities having a maturity profile of about 3 months. The performance of the fund since inception is summarized below: 18

19 winding up Since Inception * on June 29, 2009 Retail 0.39% 7.41% Crisil Liquid Fund Index 1.38% 7.60% *Compounded & annualized returns. Inception Date: May 21, 2007 Templeton Quarterly Interval Plan - Plan C Templeton Quarterly Interval Plan - Plan C is an interval income fund that seeks to generate returns through investment in a portfolio of fixed income securities having a maturity profile of about 3 months. The performance of the fund since inception is summarized below: winding Since Inception * up on May 15, 2009 Retail 0.30% 7.50% Institutional (Dividend) 0.31% 7.76% Crisil Liquid Fund Index 1.02% 7.89% *Compounded & annualized returns. Inception Date: June 29, 2007 Franklin Templeton Fixed Tenure Fund Series I Franklin Templeton Fixed Tenure Fund Series I is a closed end fund investing in high quality fixed income securities in line with portfolio duration alongside taking marginal exposure to equities. Both the debt and equity portfolios are conservatively managed. On the equities front, the closed end nature of the fund helps the fund managers take a long term view on investments. Typically, the fund holds the debt investments till maturity, in order to reduce/minimize interest rate risks. During the period ended March 2010, the surge in equity markets resulted in a gain in portfolio value by 22.61% as against 23.21% increase in benchmark*. Since inception in May 2005, the fund has delivered returns of 12.39% on a compounded annualized basis, compared with benchmark returns of 10.32%. * 25% S&P CNX % Crisil Composite Bond Fund Index + 10% Crisil Liquid Fund Index Franklin Templeton Fixed Tenure Fund Series II Franklin Templeton Fixed Tenure Fund Series II is a closed end fund investing in high quality fixed income securities in line with portfolio duration alongside taking marginal exposure to equities. Both the debt and equity portfolios are conservatively managed. On the equities front, the closed end nature of the fund helps the fund managers take a long term view on investments. Typically, the fund holds the debt investments till maturity, in order to reduce/minimize interest rate risks. During the period ended March 2010, the surge in equity markets resulted in a gain in portfolio value by 30.11% as against 23.21% increase in benchmark*. Since inception in September 2005, the fund has delivered returns of 12.10% on a compounded annualized basis, compared with benchmark returns of 9.44%. * 25% S&P CNX % Crisil Composite Bond Fund Index + 10% Crisil Liquid Fund Index Franklin Templeton Fixed Tenure Funds Series IV Franklin Templeton Fixed Tenure Fund Series IV is a closed end fund investing in high quality fixed income securities in line with portfolio duration alongside taking marginal exposure to equities. Both the debt and equity portfolios are conservatively managed. On the equities front, the closed end nature of the fund helps the fund managers take a long term view on investments. Typically, the fund holds the debt investments till maturity, in order to reduce/minimize interest rate risks. 19

20 During the period ended March 2010, the surge in equity markets resulted in a gain in portfolio value by 23.59% as against 23.21% increase in benchmark*. Since inception in March 2006, the fund has delivered returns of 9.36% on a compounded annualized basis, compared with benchmark returns of 8.80%. * 25% S&P CNX % Crisil Composite Bond Fund Index + 10% Crisil Liquid Fund Index Franklin Templeton Fixed Tenure Fund Series VI Franklin Templeton Fixed Tenure Fund Series VI is a closed end fund investing in high quality fixed income securities in line with portfolio duration alongside taking marginal exposure to equities. Both the debt and equity portfolios are conservatively managed. On the equities front, the closed end nature of the fund helps the fund managers take a long term view on investments. Typically, the fund holds the debt investments till maturity, in order to reduce/minimize interest rate risks. During the period ended March 2010, the surge in equity markets resulted in a gain in portfolio value by 25.24% as against 23.21% increase in benchmark*. Since inception in August 2006, the fund has delivered returns of 9.88% on a compounded annualized basis, compared with benchmark returns of 9.25%. * 25% S&P CNX % Crisil Composite Bond Fund Index + 10% Crisil Liquid Fund Index Franklin Templeton Fixed Tenure Fund Series VIII Franklin Templeton Fixed Tenure Fund Series VIII is a closed end fund investing in high quality fixed income securities in line with portfolio duration alongside taking marginal exposure to equities. Both the debt and equity portfolios are conservatively managed. On the equities front, the closed end nature of the fund helps the fund managers take a long term view on investments. Typically, the fund holds the debt investments till maturity, in order to reduce/minimize interest rate risks. During the period ended March 2010, the surge in equity markets resulted in a gain in portfolio value by 24.55% as against 23.21% increase in benchmark*. Since inception in May 2007, the fund has delivered returns of 9.51% on a compounded annualized basis, compared with benchmark returns of 8.82%. * 25% S&P CNX % Crisil Composite Bond Fund Index + 10% Crisil Liquid Fund Index Franklin Templeton Fixed Tenure Fund Series IX - Plan A Franklin Templeton Fixed Tenure Fund Series IX - Plan A is a closed end fund investing in high quality fixed income securities in line with portfolio duration alongside taking marginal exposure to equities. Both the debt and equity portfolios are conservatively managed. On the equities front, the closed end nature of the fund helps the fund managers take a long term view on investments. Typically, the fund holds the debt investments till maturity, in order to reduce/minimize interest rate risks. During the period ended March 2010, the surge in equity markets resulted in a gain in portfolio value by 17.42% as against 19.48% increase in benchmark*. Since inception in May 2008, the fund has delivered returns of 7.56% on a compounded annualized basis, compared with benchmark returns of 6.91%. *20% S&P CNX % Crisil Composite Bond Fund Index + 10% Crisil Liquid Fund Index Franklin Templeton Fixed Tenure Fund Series IX - Plan B Franklin Templeton Fixed Tenure Fund Series IX - Plan B is a closed end fund investing in high quality fixed income securities in line with portfolio duration alongside taking marginal exposure to equities. Both the debt and equity portfolios are conservatively managed. On the equities front, 20