franklin asian equity fund

8/9/2019 Franklin Asian Equity Fund

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Abridged Annual Report For 2009 - 2010

Trustee Report to Investors

Dear Franklin Asian Equity Fund 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 2009-0. Along with the general

information on the background/highlights of the Mutual Fund, investor

services, signicant regulatory changes, etc. the Trustees have specically

provided information on the scheme.

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, 996 in accordance with

the provisions of the Indian Trusts Act, 882 and the Deed of Trust is duly

registered under the Indian Registration Act, 908. FTMF has been sponsoredby 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, 996 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 9, 996 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$602.50

billion (approximately Rs.26,77,50 crore) in assets under management as

on April 30, 200 and more than 22 million Shareholder Accounts. Franklin

Templeton has ofces 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 Ofce at Level

4, Wockhardt Towers, Bandra Kurla Complex, Bandra (East), Mumbai 400

05, is the Trustee to FTMF. The Trustee ensures that FTMF and the schemes

oated 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 Ofcer, 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, 956 and having its Registered

Ofce at Level 4, Wockhardt Towers, Bandra Kurla Complex, Bandra

(East), Mumbai 400 05 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 9, 996.

Board of Directors of the AMC:

Mr. Vijay C. Advani*, Executive Vice President, Global AdvisoryServices, 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.,00crore. 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 9, 200. Franklin India International Fund was

wound on April 30, 200.

The average Assets Under Management (AUM) of the Mutual Fund for the

month March 200 was Rs.33,290 crore as compared to Rs.9,205 crore for the

month March 2009 up by more than 72%.

*Source: AMFI website

FRANKLIN TEMPLETON MUTUAL FUND - Franklin Asian Equity Fund

Head Ofce : Level - 4, Wockhardt Towers, Bandra Kurla Complex, Bandra (East), Mumbai - 400 05

07_12083_FRANKLIN ASIAN EQUITY F1 1 7/13/2010 1


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Scheme performance, future outlook and operations of the scheme:

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 volatility witnessed in regional markets following the outbreak of

global nancial and economic crisis.

The region has however demonstrated resilience amidst the recent global

downturn and economic growth bounced back sharply on the back of stimulusefforts and improvement in global trade conditions. High global liquidity

levels and better growth prospects for regional economies resulted in increased

capital inows and helped markets outperform their developed counterparts.

During the last scal, the fund delivered returns of 42.35% vis--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 200, the fund had majority exposure to banks &

nance, 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 benet 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 dueto 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 outows and uneven growth in developed economies.

Investor Services:

As on March 3, 200, the Mutual Fund served more than 23 lakh active

investors through its 34 branches spread across India, 82 ofces 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 2, 200, 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.

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 investors 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 andresources.

Signicant 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 , 2009. 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 5, 200 announced certain importantchanges such as disclosure of brokerage and commission paid to associates

in half-yearly nancials, 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 benet 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 FY2009-0 is given in Annexure 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 verication 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 benet 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 that the

Mutual Fund and the schemes oated there under are managed by the AMCin 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 3, 200, the Revenue Account for the period

ended March 3, 200 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,

996.

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 uctuations in the

market value of its underlying investments.

Full Annual Report is available on the website of the Mutual Fund www.

franklintempletonindia.com and shall be made available for inspection atits Head Ofce. Present and prospective investors can request for copies of

the Statement of Additional Information / Scheme Information Documents

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 scheme:

FAEF is an open end diversied equity fund that seeks to provide

medium to long term appreciation through investments primarily in Asian

Companies / sectors (excluding Japan) with long term potential across

market capitalisation.



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Unclaimed dividends and redemptions of more than 90 days as on March

31, 2010:

Unclaimed Dividends Unclaimed Redemptions

Amount (Rs.)No. of

InvestorsAmount (Rs.) No. of Investors

- - 2,532.00 34

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. 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 condence 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)

Sd/-

Gregory McGowan

Chairman

Date: July 7, 200

Annexure to the Trustee Report

FRANKLIN TEMPLETON MUTUAL FUND

INVESTOR COMPLAINTS REPORT FOR THE FINANCIAL YEAR 2009-10

Total number of folios 23,33,614

Com-plaintCode

Type of complaint #

(a) No. ofcomplaintspending at

thebeginningof the year

Action on (a) and (b)

(b) No. ofcom-

plaintsreceived

during theyear

Resolved

NonAction-able*

Pending

Within30

days

30-60days

60-180

days

Be-yond180

days

0 - 3mths

3 - 6mths

6 -9mths

9 - 12mths

I A Non receipt of Dividend on units 73 523 4497 36 0 2 2 404 8 2 0

I B Interest on delayed payment ofDividend

6 54 42 9 4 0 0 2 2 0

I C Non receipt of Redemptionproceeds

32 647 5488 286 57 7 6 326 3 4 2

I D Interest on delayed payment ofRedemption

5 47 3 6 0 2 0 9 0

II A Non receipt of Statement ofAccount/Unit Certicate

2350 2337 9 0 0 0 5 0 0 0

II B Discrepancy in Statement ofAccount

0 2 9 0 0 0 0 0 2 0 0

II C Non receipt of Annual Report/Abridged Summary

0 0 0 0 0 0 0 0 0 0 0

III A Wrong switch between Schemes 23 200 4 0 0 6 0 0

III B Unauthorized switch betweenSchemes

2 62 53 3 6 0 0 2 0 0 0

III C Deviation from Scheme attributes 0 0 0 0 0 0 0 0 0 0 0

III D Wrong or excess charges/load 2 20 95 3 5 0 0 7 2 0 0

III E Non updation of changesviz. address, PAN, bank details,nomination, etc

2 74 36 5 7 0 0 8 0 0 0

IV Others 40 4407 3337 560 52 7 8 445 0 2 6TOTAL 364 28926 2637 286 352 28 6 234 28 2 8

# including against its authorized persons/ distributors/ employees. etc.

*Non actionable means the complaint that are incomplete / outside the scope of the mutual fund

Notes:

) The time shown above is the average time for resolution of complaints from receipt of initial complaint till eventual closure. Delays could be caused by avariety of factors including the need to receive information from clients, due process followed by banks in cases where payment instruments have beenlost and delays due to verication of certain facts received from clients. The majority of cases have been resolved within the 30 day time frame.

2) This Report has been approved by the Board of Franklin Templeton Trustee Services Private Limited at its Meeting held on June 9, 200.



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Report of the Auditors

To the Board of Directors of Trustees of

FRANKLIN TEMPLETON MUTUAL FUND FRANKLIN ASIAN EQUITYFUND:

We have examined the abridged balance sheet of FRANKLIN TEMPLETONMUTUAL FUND FRANKLIN ASIAN EQUITY FUND (the Scheme) as atMarch 3, 200 and the abridged revenue account for the year ended March 3,

2010, together with the notes thereon, annexed thereto. The abridged nancialstatements have been prepared by Franklin Templeton Asset Management(India) Private Limited, the Schemes asset manager (the AMC) pursuant toRegulation 56 () of Securities and Exchange Board of India (Mutual Funds)Regulations, 996 (the SEBI Regulations), as per the format prescribed bySEBI circular number SEBI/IMD/CIR No.8/32968/2008 dated July 24, 2008and are based on the accounts of the Scheme for the year ended, prepared inaccordance with the accounting policies and standards specied in the NinthSchedule to the SEBI Regulations and covered by our report of even date tothe Board of Directors of Trustees of Franklin Templeton Mutual Fund whichreport is attached. The abridged nancial statements are the responsibilityof the AMC. Our responsibility is to express an opinion on these abridgednancial statements based on our audit.

We conducted our audit in accordance with auditing standards generallyaccepted in India. Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the abridged nancialstatements are free of material misstatements. An audit includes examining,

on a test basis, evidence supporting the amounts and disclosures in theabridged nancial statements. An audit also includes assessing the accountingprinciples used and signicant estimates made by management, as well asevaluating the overall abridged nancial statements presentation. We believethat our audit provides a reasonable basis for our opinion.

We report that:

i. We have obtained all the information and explanations, which to thebest of our knowledge and belief were necessary for the purposes of ouraudit.

ii. The abridged balance sheet and abridged revenue account, dealt with bythis report are in agreement with the books of account.

iii. In our opinion, the abridged balance sheet and the abridged revenueaccount dealt with by this report have been prepared as per the formatprescribed by SEBI circular number SEBI/IMD/CIR No. 8/32968/2008dated July 24, 2008 and are based on the accounts of the Scheme for the

year ended, prepared in accordance with the accounting policies andstandards specied in the Ninth Schedule to the SEBI Regulations;

iv. In our opinion, and on the basis of information and explanations givento us, the methods used to value non traded securities, where applicable,as at March 3, 200, are in accordance with the SEBI Regulations andother guidelines issued by the Securities and Exchange Board of India, asapplicable and approved by the Board of Directors of Franklin TempletonTrustee Services Private Limited, and are fair and reasonable.

v. In our opinion, and to the best of our information and according to theexplanations given to us, the said abridged nancial statements give theinformation required by the SEBI Regulations as applicable and give atrue and fair view in conformity with the accounting principles generallyaccepted in India:

a) in the case of the abridged balance sheet, of the state of affairs of theScheme as at March 3, 200; and

b) in the case of the abridged revenue account, of the surplus for theyear ended on that date.

For S.R. Batliboi & Co.Firm Registration Number - 30003EChartered Accountantsper Shrawan JalanPartnerMembership No.: 0202Mumbai.

Date: July 7, 200

Abridged Balance Sheet as at March 31, 2010

Rupees in Lakhs

As atMarch 31,

2010

As atMarch 31,

2009

LIABILITIES

1 Unit Capital 37,060.22 48,946.39

2 Reserves and Surplus

2. Unit Premium Reserve ,936.8 643.54

2.2 Unrealised Appreciation Reserve 4,08.84 2,47.76

2.3 Retained Surplus (5,772.27) (7,452.9)

3 Current Liabilities and Provisions

3. Current Liabilities 404.57 926.96

TOTAL 37,648.17 35,482.46

ASSETS

1 Investments

1.1. Listed Securities

.. Equity Shares 5,404.73 6,358.52

1.2 Foreign Securities 3,53.84 26,923.46

2 Other Current Assets

2. Cash and Bank Balances .29 4.03

2.2 CBLO/ Reverse Repo Lending 605.96 ,59.77

2.3 Others 22.35 ,036.68

TOTAL 37,648.17 35,482.46

Notes to Accounts - Annexure I



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Abridged Revenue Account For the Year Ended March 31, 2010

Rupees in Lakhs

Year endedMarch 31,

2010

Year endedMarch 31,

2009

1 INCOME

. Dividend 878.6 899.6

.2 Interest 22.57 22.88

.3 Realised Gain / (Loss) on ForeignExchange Transactions (233.7) (9.76)

.4 Realised Gains / (Losses) onInterscheme sale of investments 73.43 -

.5 Realised Gains / (Losses) onExternal sale / redemption ofinvestments 6,632.26 (0,25.92)

.6 Realised Gains / (Losses) onDerivative Transactions - -

.7 Other Income -* -

( A ) 7,373.70 (9,222.19)

2 EXPENSES

2. Management Fees 434.8 46.6

2.2 Service Tax on Management Fees 44.72 50.782.3 Transfer Agents Fees and Expenses 9.08 92.63

2.4 Custodian Fees 8.72 24.72

2.5 Trusteeship Fees .23 .8

2.6 Commission to Agents 242.87 239.42

2.7 Marketing and DistributionExpenses 52.90 62.92

2.8 Audit Fees .26 .36

2.9 Other Operating Expenses 54.29 6.57

( B ) 941.25 906.19

3 NET REALISED GAINS / (LOSSES) FORTHE YEAR (A -B = C) 6,432.45 (10,128.38)

4 Change in UnrealisedDepreciation in value ofinvestments ( D ) (6,253.32) 1,821.48

a) Value of Investments (6,253.32) ,82.48

b) Foreign Exchange Fluctuation - -

5 NET GAINS / (LOSSES) FORTHE YEAR (C-D = E) 12,685.77 (11,949.86)

6 Change in UnrealisedAppreciation in the value ofInvestments ( F ) 1,601.08 2,201.92

7 NET SURPLUS / (DEFICIT) FORTHE YEAR (E + F = G) 14,286.85 (9,747.94)

7. Add: Balance Transfer fromUnreal ised Appreciation Reserve 2,47.76 25.84

7.2 Less: Balance Transfer toUnrealised Appreciation Reserve 4,08.84 2,47.76

7.3 Add / (Less): EqualisationCredit/(Debit) (,005.85) (0.02)

8 Total 11,679.92 (11,949.88)

9 Retained Surplus / (Decit)carried forward to Balance sheet 11,679.92 (11,949.88)

*:- Amount is less than rupees one thousand.

Notes to Accounts - Annexure I

Key Statistics for the year ended March 31, 2010

Year endedMarch 31,

2010

Year endedMarch 31,

2009

1 NAV per unit (Rs.) :

Open:

Growth Option 7.0599 8.96

Dividend Option 7.0599 8.96

High:



Low:



End:



2 Closing Assets UnderManagement (Rs in Lakhs)

End 37,298.8 34,565.05

Average (AAuM) 40,969.3 39,473.73

3 Gross income as % of AAuM( Gross Income = (A) in RevenueAccount): 18.00% -23.36%

4 Expense Ratio:

a. Total Expense as % of AAuM 2.30% 2.30%

b. Management Fee as % of AAuM .7% .8%

5 Net Income as a percentage ofAAuM (Net Income = (C) inRevenue Account): 15.70% -25.66%

6 Portfolio turnover ratio: 81.41% 207.16%

7 Total Dividend per unitdistributed during the year: NIL NIL

8 Returns:

a. Last One Year

Scheme

Growth Plan: 42.35% -2.22%

Dividend Plan: 42.35% -2.22%

Benchmark 49.37% -30.72%

b. Since Inception

Scheme

Growth Plan: 0.22% -25.08%

Dividend Plan: 0.22% -25.08%

Benchmark -0.70% -29.22%



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Notes to Accounts - Annexure I to the Abridged Balance Sheet and Revenue Account for the Year ended March 31, 2010.

Particulars 2010 2009

1 Investments:

1.1 Investments of the Scheme are held in trust by the trustees for the benets of the Schemes Unitholders.

.2 Exposure to Derivative Instruments: NIL NIL

.3 Investments in Associates and Group Companies:

IssuerNature of

Instrument

AmountAggregate investments

by all schemes (includesEquity,debentures and bonds )

2010 2009 2010 2009

Asian Paints Limited Equity - - 3,50.56 ,489.90

Housing Development Finance CorporationLimited

Equity - 65.37 09,267.3 57,99.94

Infosys Technologies Limited Equity - 640.97 37,764.37 60,574.28

.4 Securities Borrowed and/or Lend by the scheme: NIL NIL

.5 Non performing assets (NPA): NIL NIL

.6 Aggregate Unrealised Gain / Loss as at the end of the Financial Year and percentage to net assets.

Listed Securities / Securities Awaited Listing / Unlisted Securities / Foreign Securities:

(Equity shares / Preference shares / Foreign securities)

- appreciation 680.6 72.05

- depreciation 70.97 982.45

- Net Unrealised Gain/Loss as a percentage of Net assets as on March 3, 200 .63 (2.63)Foreign Securities

- appreciation 4,46.63 424.59

- depreciation ,030.37 5,767.5

- Net Unrealised Gain/Loss as a percentage of Net assets as on March 3, 200 9.08 (5.46)

Foreign Securities (due to foreign exchange uctuation)

- appreciation 672.26 2,733.83

- depreciation 649.32 36.07

- Net Unrealised Gain/Loss as a percentage of Net assets as on March 3, 200 0.06 6.99

.7 Aggregate Value of Purchase and Sale with Percentage to average assets.

Purchases

- amount 33,352.24 8,855.44

- as a percentage of average daily net assets 8.4 207.37

Sales- amount 44,276.22 8,773.7

- as a percentage of average daily net assets 08.07 207.6

.8 Aggregate value of Non-Traded securities and percentage to Net assets:

Equity - -

Debt - -

Money Market Instruments - -

Total - -

Percentage of Non Traded securities to Net Assets as on March 3, 200 - -

2 Details of Transaction with Associates under regulation 25(8) :

- Brokerage Paid to Associates/Related Parties/Group companies of Sponsor/AMC - NIL

- Commission Paid to Associates/Related Parties/Group companies of Sponsor/AMC

Name of Associate/RelatedParties/Group Companies ofSponsor/AMC

Nature ofAssociation/

RelationPeriod

Business Given# Commission Paid $

Amount (Rs.CR)

% of totalbusiness

received by theFund

Amount (Rs.)% of Total

commission paidby the Fund

ITI Capital Markets LtdAssociateCompany

2009-200 - - - -

Integrated Enterprises (India)Limited

N.A^ 2009-200 - - - -

Mahindra & Mahindra FinancialServices Ltd

AssociateCompany

2009-200 - - 24,920.02 0.%



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Name of Associate/RelatedParties/Group Companies ofSponsor/AMC

Nature ofAssociation/

RelationPeriod

Business Given# Commission Paid $

Amount (Rs.CR)

% of totalbusiness

received by theFund

Amount (Rs.)% of Total

commission paidby the Fund

ITI Capital Markets Ltd AssociateCompany

2008-2009 - - - -

Integrated Enterprises (India)Limited

AssociateCompany

2008-2009 0.07 0.83% 307,428.53 .2%

Mahindra & Mahindra FinancialServices Ltd

N.A^ 2008-2009 - - - -

# Only fresh mobilization received during the period is considered$ Commission paid details reported includes all types of commission that have been paid during the period^ Not ApplicableIntegrated Enterprises (India) Limited has ceased to be related party w.e.f March 2,2009

3 Large Holdings (over 25% of the NAV of the Scheme) : NIL NIL

4 Unit Capital movement during the year ended :

Units of Rs 0 each fully paid up

Quantity Amount

2010 2009 2010 2009

Growth Plan

Outstanding, beginning of year 332,26,537.77 345,227,750.77 33,22.65 34,522.78Issued during the year 3,94,323.43 37,846,789.40 ,39.43 3,784.68

Redeemed during the year (0,952,663.09) (50,858,002.40) (0,95.26) (5,085.8)

Outstanding, end of year 243,458,98. 332,26,537.77 24,345.82 33,22.65

Dividend Plan

Outstanding, beginning of year 57,247,364.26 70,32,63.50 5,724.74 7,03.22

Issued during the year 9,44,397.68 5,347,60.23 ,94.44 534.76

Redeemed during the year (49,247,807.50) (8,42,409.47) (4,924.78) (,84.24)

Outstanding, end of year 27,43,954.43 57,247,364.26 2,74.40 5,724.74

5 Prior year amounts have been reclassied, wherever applicable, to conform to the current years presentation.

6 Contingent Liability NIL NIL

7 Change in method of equalisation

The purpose of equalization account is to maintain per unit amount of a Plans/Options share of the Schemes undistributed income, so that continuingunit holders share of undistributed income remains unchanged on issue or redemption of units under that Plan/Option.

Prior to March 5, 200, when units were issued or redeemed, the total undistributed income from the beginning of the accounting year to the date of thetransaction was determined. Based on the number of units outstanding on the transaction date, the undistributed income associated with each unit wascomputed. The per unit amount so determined was credited and debited to the equalization account on issue and redemption of each unit respectively.

Pursuant to SEBI circular dated March 5, 200, the Trustee/AMC has changed the method of calculating equalization per unit w.e.f. that date viz:

a) When the sale price is higher than the face value of the unit, the total accumulated undistributed income (including realized gains) till the date ofthe transaction is determined. Based on the number of units outstanding on the transaction date, the undistributed income (including realized gains)associated with each unit is computed. The per unit amount so determined is credited and debited to the equalization account on issue and redemptionof each unit respectively.

b) When the sale price is lower than the face value of the unit, the difference between the Net asset value and the par value is debited and credited to theequalization account on issue and redemption of unit respectively.

Pursuant to SEBI circular dated March 5, 200, an appropriate amount of the realized / unrealized gain has been reallocated between the plans of theScheme, based on the plans AUM as on March 5, 200.

On account of the above change in accounting policy, the impact to the equalisation account is Rs ,96.

However, the above change does not affect the NAV of the Scheme.

8 Expenses other than management fee is inclusive of service tax where applicable.



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The contents of this document are only for informative purposes and are not to be used or considered to be an offer to sell or buy units of Franklin Templeton MutualFund schemes Risk Factors : All investments in mutual funds and securities are subject to market risks and the NAV of the scheme may go up or down dependingupon the factors and forces affecting the securities market including the uctuations in the interest rates. There can be no assurance that the schemes investmentobjectives will be achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its afliates is not necessarily indicative offuture performance of the scheme. The above is only the name of the scheme and does not in any manner indicate the quality of the scheme, its future prospectsor returns. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy ofdistribution surplus. The investments made by the scheme are subject to external risks. Investment in overseas nancial assets are subject to risks associated withcurrency movements, restrictions on repatriation, transaction procedures in overseas markets and country related risks. Please read the Statement of AdditionalInformation (SAI) and Scheme Information Document (SID) carefully before investing. Statutory Details : Franklin Templeton Mutual Fund in India has beenset up as a trust by Templeton International Inc. (liability restricted to the seed corpus of Rs. lac) with Franklin Templeton Trustee Services Pvt. Ltd. as the Trustee(Trustee under the Indian Trusts Act, 882) and Franklin Templeton Asset Management (India) Pvt. Ltd. as the Investment Manager.

If undelivered, please return to :

FRANKLIN TEMPLETON ASSET MANAGEMENT (INDIA) PVT. LTD.

C/o. Bhavish Graphics, Old No. 38, New No. 6, McNichols Road, Chetput, Chennai - 600 03.