FRANKLIN TEMPLETON INVESTMENTS NEWSLETTER VOL. 35 - JUNE 2005

Franklin Templeton PERSPECTIVES

From the President’s Desk

July 12, 2005 D ear Investor, The global economy and capital markets are going through an interesting phase, as optimism over economic growth and corporate profits is being tempered by concerns over rising oil prices and structural imbalances. Among the developed countries, while the US economy continues to grow, those in Europe and Asia are exhibiting sluggishness. As a result of this, and a steady rise in interest rates by the Federal Reserve, the world’s de facto reserve currency - the US dollar, has belied expectations and made substantial ground in recent times. The global interest rate direction does not seem to be uniform across regions and some countries have actually chosen to cut interest rates to boost economic growth. A growing number of investors, especially in the Asian region have exhibited increased interest in the Indian markets. This has resulted in the domestic equity markets crossing record highs, making the second quarter of 2005, a historic one. While the quarter started off on a contemplative note about the direction of the markets, they picked up pace on the back of strong buying by domestic financial institutions (in May) and by FIIs (in June). The cumulative FII flows in the first half of 2005 stand at around $4.7 billion. The sentiment was positive in the debt markets as well, due to the easing of global bond yields, good response to the scheduled auctions and continued fall in inflation. The quarterly reviews by RBI should help investors in understanding the central bank’s views on the macro-economic situation and gauging the policy direction in an accurate manner. Given the recent rally in equity markets, some of the typical questions that investors have been posing are - Is this the peak? Should I book profits? Can I invest at these levels? Before we think about the possible answers, let us look at few facts that have made Indian markets an attractive destination for global investors. India - A perspective We continue to believe that the long term story for Indian economy and the markets remains positive, and some of the key drivers are - 8 Positive demographics: India’s population is young, with 50% under age 25 and 80% under age 45, which compares favourably to developed economies as well as countries like China. This, alongside growing urbanization and disposable income levels is changing consumption habits and helping to fuel the retail boom. These numbers also mean that the dependency ratio is low in India and the economy will have a sustained supply of labour. 8 Structural Reforms: Since the liberalization of the economy in early 90s, India has made steady progress on the reforms front, which has transformed the corporate landscape and resulted in sustained high economic growth. The past few years have clearly indicated that reforms enjoy support across a wide section of the political spectrum and are unlikely to falter due to a change in government. 8 Revival of manufacturing: The manufacturing sector is expected to benefit from the rise in domestic demand for various goods as the robust economic growth increases disposable incomes, aspirations and affordability, and also from outsourcing. This coincides with an uptick in capital expenditure as overcapacities have diminished and companies are generating free cash flow and seem well placed to invest in new assets to drive growth 8 Growth in the services sector: The strengthening offshoring trend the world over has already contributed to a strong growth in the domestic IT and ITES (IT enabled services) sectors. The structure of the developed economies bodes well for the sector. For example, China has been able to create a huge export basket by playing in the 19% part (manufacturing) of the US economy, while India is going to play in the 79% (services) and is currently the best placed in terms of skill sets and cost advantages. Moreover, the rapid domestic economic growth is resulting in increasing demand in services such as telecom, retailing, travel and healthcare, which augurs well for the sector. In that sense, the point is that in a growing economy like India market levels are meaningless. One needs to keep in mind that similar questions about index levels were asked last year as well, when the Sensex crossed 6000. The bottom line is that it does not matter whether the BSE Sensex is at 7,000 or 15,000 - these are merely numbers and do not in themselves reflect anything. The important factors to be considered are - a) economic and corporate fundamentals, which continue to be strong and b) valuations, that appear to be at reasonable from a long term perspective. And as always, investment decisions need to be made based on one’s financial goals, risk profile and time frame, and not based on short term movements in the markets. The next few quarters should witness the launch of new service initiatives from Franklin Templeton such as - Common Customer Folio and a National Call Centre. These initiatives reflect our continued use of technology to enhance existing processes and provide value- added services, in order to enhance your investment experience. Details on these services as well as our Online Account Access facility are provided on Page no. 6 & 7. As always, we look forward to your suggestions and feedback, that will help us in understanding your expectations and serve you better. Warm Regards

Ravi Mehrotra Investment Review

As of June 30, 2005

4Templeton India Growth Fund 4Equity Market Snap Shot Dr. J. Mark Mobius, Principal Portfolio Manager R. Sukumar, Chief Investment Officer - Franklin Equity

Market Overview The second quarter of 2005 saw a mixed trend in the global markets with After a correction in the first quarter of 2005, the market turned around in European and select Asian markets moving up, while those in the US came the second quarter with the MSCI India index returning 12.0% in US$ under pressure on concerns about the impact of interest rate increases & terms. Thus allowing the index to end the first half of the year up 9.3%. oil prices on corporate profits and the economy. As a result, the MSCI May was a particularly strong month for the market seeing a record World Index lost ground by 0.21%. The quarter saw the US dollar rally domestic institutional inflow of US$747 million during the month, up from sharply on expectations that it is likely to benefit from the widening rate a previous high of US$353 million. Despite a falling market in the first differential between US & Europe, relative economic strength and possible three months of the year, foreign institutional investment (FII) remained inflows into US due to the Homeland Investment Act. With exception of strong at US$3.8 billion. While FII flows were negative in April and May, the Japanese markets, major Asian markets notched up gains during the numbers have turned positive in June. quarter, as the weakening yen reduced concerns about exports. However, The Congress-led alliance, which formed the new government, completed regional economic data continued to be mixed. Hong Kong’s Hang Seng one year in office. Key policies that have been implemented by the Index was one of the strongest movers with a 5.06% gain, but the broader government included reducing foreign investment limits, partial MSCI Asia Pacific Index moved down by 0.82%, due to the weakness in implementation of the State-level Value Added Tax (SVAT) and approved Japan. European markets continued their northward march due to a the new Special Economic Zone (SEZ) law. confluence of factors such as - M&A activity and weakening of the Euro. The SVAT was partially implemented on April 1, 2005 with some major This helped investors overcome concerns over higher oil prices and states and union territories not implementing the regime. These states political uncertainty that followed the referendums on EU constitution. account for about 34% of India’s GDP. Thus the effectiveness of this partial One of the biggest cross-border M&A deals-saw Italy’s Unicredito taking implementation is questionable considering the tax complications it could over Germany’s HVB. The FTSE Eurotop 100 registered gains of 5.20%. create for inter-state trade. The US markets exhibited mixed trends as blue chip stocks came under pressure due to mixed economic signals. As widely expected the Federal The government has increased the FDI limit for the aviation and Reserve increased rates by 25 bps, and maintained its “measured pace” telecommunications sector to 49% from 40% and to 74% from 49%, language, disappointing investors expecting a change in stance. M&A respectively. Additionally, the government has announced its intention to activity continued to be high during the quarter with deals such as Bank of increase FDI limits for insurance to 49% from 26%. However, the America - MBNA, Citigroup -Legg Mason and Ameritrade - TD government has not been able to accelerate its efforts on this front due to Waterhouse. Meanwhile China’s CNOOC has bid for Unocal and a increasing pressure from the Left. consortium led by Haier, Bain Capital and Blackstone has put in a bid for The United Progressive Alliance (UPA) government is continuing with the Maytag The Dow Jones closed the quarter with a 2.18% loss, while Nasdaq National democratic Alliance’s (NDA) plan to increase investments in the and S&P 500 rose by 2.89% and 0.91% respectively. road sector. The government plans spend US$38 billion over the next eight After the consolidation witnessed during the first quarter of 2005, stock years on roads. However, funding remains uncertain. The government is markets moved up sharply in the second quarter with major indices scaling expected to target the private sector for a majority of the investment. new heights in the process. The markets lost ground in April inspite of a Moreover, the government is also trying to increase investments in the steady performance from corporate India during the quarterly results. airport, funded by a private-public partnership. However, the bourses bounced back sharply in the last two months of the The government approved the much-awaited new Special Economic Zone quarters as first, domestic institutions (especially mutual funds) stepped (SEZ) law in May 2005. Although existing laws do permit the setting up up buying, which was followed by a strong surge in FII flows in June. The of SEZs, this new comprehensive law further eases the setting up of SEZs BSE Sensex crossed historic highs and closed with gains of 10.8%, while by providing a larger tax incentive package. However, a restrictive labor Nifty moved up by 9.09%. The end of the quarter saw mid cap stocks lose law, the possibility that the size of SEZs may not to be large enough even some steam on profit booking and as a result gains in the CNX Midcap 200 to generate viable benefits and lastly the scheme’s dependence on the were relatively lower at 7.54%. After the outflow witnessed in April & May, private sector for funding could result in slow progress, could limit success the strong inflows of around $1.33 billion in June resulted in the quarterly in this area. flows being around $900 million. To ensure that the economy continues to record strong growth, investment Valuations in the mid cap segment had re-rated substantially relative to levels need to be raised. India’s investment levels are relative low when large caps in the last year or so and further movement in stock prices will compared to the likes of China for example. Infrastructure is a key area, depend on performance and profit growth of individual companies. Given which needs greater spending. India’s strengths of a huge work force, that the universe of companies in the segment is vast, it is difficult to assess strong expertise and natural resources are not being efficiently utilized the sustainability of the current rally in mid caps, but investors need to be because of a lack of infrastructure. To unlock this hidden value, aware of the volatility in the segment. One needs to keep in mind that on government expenditure must be accelerated. Another area, which a bottom-up basis there are quite a few companies across sectors with good continues to draw attention, is the growing fiscal deficit. The most effective fundamentals that have long term potential, but at the same time the rally manner to tackle this would be to accelerate privatization efforts. While the has also seen not-so-good companies benefiting from the increased interest new government has continued with the divestment of the government in the segment. Going ahead, the mid & small cap segment is unlikely to companies’ stake in the secondary market, the process is very slow. repeat the performance of recent years given that the valuation gap vis-à- Outlook vis large caps has reduced. Within this environment, we continue to pursue our value-driven The positive news flow on the economic front continued with various investment approach, taking into account country and industry specific macro indicators sustaining a positive trend and the infrastructure sector themes. We are confident that our strict stock selection which includes but bounced back, easing concerns on that front. The latest data showed that is not restricted to studying company fundamentals, relative valuations, the GDP grew by 7% during the quarter ending March 05, exceeding growth outlook/momentum and management ability to create maximum expectations and as a result the overall GDP growth for FY 05 was 6.9%. wealth for our shareholders will guide us well over the long-term. The high growth rate has been due to the better than expected growth in

4 Investment Review

As of June 30, 2005

farm output, which grew by 1.8%. The other major constituents of the the previous two months. The government is running a surplus of around economy viz., industry grew by 7.1% and services grew by a robust 9.3%. Rs.20,000 crores (As of June 25, 2005) with RBI and its borrowings under The strong growth in services despite last year’s high base is encouraging WMA account have been nil upto May in FY06. The money supply (M3) and the buoyant trend in manufacturing continued with an 8.6% growth. growth was at 14.2% as on June 10. The Balance of Payments (BOP) showed a surplus of $12.63 billion for the The rupee touched a multi-month high in May on speculation about quarter ending March, despite a widening trade deficit due to higher revaluation of the Chinese yuan, only to lose ground on the strength in the growth in invisibles due to software exports & increased remittances and capital flows. This helped the current account show a marginal surplus of US dollar overseas and widening trade deficit. The Federal Reserve’s Major $159 billion during the same period after two quarters of deficits, largely Currencies Dollar Index rose by 4.58% during the quarter. The rupee due to the positive invisible surplus. closed at 43.5125/5175 per dollar. Forex reserves fell during the quarter and were at $138.890 billion as on June 24th. RBI’s data indicated that After the 59% deficiency in rainfall during the first two weeks of June, the robust capital flows led by rise in ECBs and foreign investment lead to an monsoons appear to be gathering momentum, with the IMD reporting that rainfall deficiency in June has reduced to 15%. We will have to wait and see accretion of $12.6 billion in the quarter ending March 05. The overall if the current trend continues given that the month of July is key for accretion for FY 05 was $26.2 billion (excluding valuation). sowing. However, given the metamorphosis, the GDP composition has The quarter saw the central bank impose restrictions on usage of undergone over the years, we continue to believe that the current macro benchmarks (only MIFOR to be used) for interest rate derivatives (IRDs). economic drivers will help sustain the robust trend in non-farm growth. RBI relaxed the forward contract rules and as per the latest notification, While we continue to be positive about the long term prospects of the one can cancel and rebook forward currency contracts maturing beyond domestic markets, the near term dampeners could be the decline in one year for all current account transactions. Earlier only up to 1-year commodity prices, fiscal deficit and impact of rising US rates on global forward contracts that were booked to cover import exposures, could be liquidity. From a global perspective, markets such as India continue to rebooked and this relaxation should help importers in hedging better. It remain attractive from a long term horizon, given the strong economic and has also put out the report of the Internal Technical Group on the gilt corporate fundamentals. Another factor to keep in mind is that equity markets, which have given recommendations for strengthening OMO ownership in India continues to be very low as a percentage of household (Open Market Operations) framework, given that under FRBM RBI’s savings and even a 1% shift would result in substantial inflows into the equity markets. participation in primary issues of government securities will stand withdrawn from April 2006. Some of the recommendations include - a) Fixed Income Market Snap Shot Flexibility for RBI to participate in the secondary market to contain 4 volatility b) Primary Dealers (PDs) can underwrite the entire amount for Sameer Kulkarni, Head - Fixed Income an auction, could be vested with market making obligations and banks to After touching 5.5% in April, wholesale Inflation numbers eased steadily directly undertake PD activity. c) Improvement of secondary markets by during the quarter largely due to the base effect and were close to the 4% active consolidation of securities and introduction of short selling of gilts mark towards the end of the quarter. The wholesale price index fell in the in a phased manner & a securities borrowing window for PDs. week ending June 18th, largely due to a fall in textile prices and last year’s As widely expected the US Federal Reserve raised interest rates and high base. The annual rate of inflation, stood at 4.10%. The less widely maintained its ‘measured pace’ stance. There are increasing expectations tracked consumer price index (CPI) fell in May to 3.74% from 4.96% in that the current cycle of rising rates might come to a halt in few quarters. April. While the government had finally announced hike in domestic fuel Global bond markets are pricing in a possible slowdown in the leading prices, the quantum of rise is widely expected to be non-inflationary and the fall in global commodity prices should have a positive effect. The recent economies due to the current rise in oil prices and as a result yields have rise in oil prices has direct implication for Asian economies, given that been touching multi-decade lows in Europe & US long term yields Dubai crude oil prices have been moving up sharply along with West Texas continue to remain low despite the rate hikes. The weakness in the Euro Intermediate (WTI) and Brent prices. was exacerbated by the combination of a 50 bps cut by Sweden’s Riksbank During the quarter, RBI conducted auctions to the tune of Rs.42,000 crores and news that two of nine members Bank of England’s monetary policy as part of the scheduled government borrowing programme, Rs.6000 committee had preferred a reduction in rates, which increased expectations crores through T-bill issuances and also conducted state loan auctions. All of rate cuts in the region. the auctions met with good response and the cut-off yields were largely in Recent price cuts announced in commodities are likely to have a positive line with expectations. The fiscal deficit for the month of May fell to effect on the inflation level. And in anticipation of a slowdown, the Baltic Rs.19,197 crores and the cumulative deficit ending May was up at freight index and CRB index have corrected sharply in recent times. Base Rs.47,603 crores, representing 31.5% of the budgeted estimate. Overall, the effect of last year’s higher inflation in June to August period will also lower fiscal deficit was up by 22.1% yoy for the period April-May. The revenue the inflation in coming months. Clearly, marginal fuel price hike may not deficit for the same period was Rs.44,154 crores which is 0.78% higher have an adverse impact on the market sentiment now, as it may not push compared to last year and amounts to around 46.3% of the target for FY 06. up the inflation significantly. However, one needs to keep in mind that We will have to wait and see if the government manages to keep things in check so as to stick to its Fiscal Responsibility and Budget Management Act given India’s rising imports, global inflationary prices could get priced-in (FRBM) goals. on that front. Stabilizing or even reducing interest rates globally will lower the uncertainty about the direction of interest rate movements in India. In Non-food credit in the system continued to show a steady increase that case, we feel 10-year yields may not go above 7.5%. Even if repo rate throughout the quarter. Gross bank credit in the system was at Rs. 58,099 crores, during the current financial year, compared to Rs. 27,218 crores is hiked by 50 bps to 5.5%, the spread of 200 bps over repo is sustainable. during the same period last year, as on June 10th. Majority of the increase Bad monsoon and slippage on revenue collections can be sentiment has been due to non-food credit of Rs 53,471 crores, while food credit grew dampeners. We feel any reduction of government borrowing on account of by Rs. 4,628 crores. Liquidity tightened towards the end of the quarter on expenditure control, no increase in repo rate and a decline in oil prices, the back of advance tax outflows and the scheduled auctions. This was could be the positive triggers going forward. The central bank has already reflected in the amount placed under RBI’s reverse repos, which averaged given reassuring signals on the liquidity front, by reducing the amount of over Rs.13,665 crores in June, after averaging well over Rs.20,000 crores market stabilization bonds in recent times.

5 Web Services

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Services & Subscriptions >> Go. This section provides you information on our various services You can now view the details on all your accounts, and also lets you register to receive various details like transaction history and also conduct transactions portfolio and account related information by email. (possible only if you have submitted a copy of your Learning & Planning PAN along with the HPIN application form). This detailed section has a wealth of information and articles Once registered, future access to the site is as easy as on financial & fund basics along with FAQs for NRIs, and a entering your User ID and password. glossary. It also has a selection of tools/calculators that will If you require more information, write to us at help in your financial planning process. [email protected] Literature & Documents Here you can access the offer documents, various forms and statutory reports. This section also has the archive of our quarterly newsletter, monthly fact sheet and literature, with an option to download the same.

News & Commentary You can view the latest insights from your fund managers and also access various press articles. Apart from these sections, you can locate an office nearest to you using the ‘Contact Us’ section and provide your views & suggestions through the ‘Feedback’ section. Last but not the least.... the Online Account Access facility, which provides you access to information on your accounts and conduct transactions through the convenience of the internet.

6 Service Initiatives

4Common Customer Folio

We understand that two of the key factors essential for a pleasant investment experience are - getting a complete picture of your investments and the ability to carry out transactions in an easy manner. With the launch of our Common Customer Folio, Franklin Templeton will now be able to offer you exactly the same.

What is Common Customer Folio (CCF)?

Our existing system is based on the investor account model under which an investor can hold only a single fund in each account. Whenever a fresh investment is made in a new fund, a separate account is created with a new account number. This has resulted in multiple accounts for a single investor and the inability of the investors to get a consolidated view of all their investments. This could also result in wastage of communication. The Common Customer Folio is a transition from the current account based registry to a customer-based folio. Under CCF, a unique Customer Folio Number will be created for multiple investments of the same legal entity.

Advantage CCF

> You can view a consolidated summary of all your investments

> Supports enhanced self service capabilities via the phone & website 4National Call Centre > Removes duplication of communication, thereby The next quarter should also see the launch of the Franklin reducing costs. Templeton National Call Centre. You would be able to contact The Common Customer Folio initiative is likely to be Franklin Templeton’s service executives during all 7 days of completed in the next quarter. Investors whose accounts are the week, from 7 a.m to 11 p.m. Once the call centre is consolidated (same legal entity), will receive a communication operational, you can get information on investments & regarding the same with the new folio number and a dividends, request account statements and access the NAVs of consolidated account statement. Once you get back to us on Franklin Templeton funds. any changes required from your side, the process will be We believe that these facilities will help you experience a completed. whole new world of convenience.

7 Franklin India Bluechip Fund

Fund Manager: K.N. Siva Subramanian As of June 30, 2005 FIBCF

Portfolio Portfolio Composition and Performance

Company Name No. of Market Value % of Fund Manager’s Commentary shares Rs. Lakhs Assets Auto The equity exposure of the fund has reduced to 96.39% from 97.36% during the quarter, as we exited stocks where our target prices were met. The main additions ✓ NAV Performance Hero Honda 1000000 5783.00 3.59 to the portfolio were Bharti Televentures, Zee Telefilms and Tata Tea. The exposure Ashok Leyland 17642136 4172.37 2.59 to technology, finance and cement sectors has come down, while that to auto and FMCG sectors has gone up. Tata Motors 974968 4144.10 2.57 Maruti Udyog 705051 3279.19 2.04 NAV Performance Mahindra & Mahindra 192000 1072.51 0.67 Last Last Last Last Last Since Banks 1 year 3 years* 5 years* 7 years* 10 years* inception* NAV Performance ✓ SBI 1685000 11484.12 7.13 FIBCF (G) 42.86% 45.06% 22.21% 34.43% 24.29% 27.12% ✓ ICICI Bank 1770202 7462.29 4.64 FIBCF (D) 42.85% 45.04% 22.21% 34.43% 24.29% 27.12% Cement BSE Sensex 50.01% 30.30% 8.66% 12.01% 8.27% 6.98% Grasim 412734 4370.65 2.72 Past performance may or may not be sustained in future. *Compounded and annualised Dividends/Bonus declared assumed to be reinvested ACC 867500 3278.28 2.04 Consumer Non Durables Latest NAV ✓ ITC 550000 9071.70 5.64 Growth Plan Rs. 67.20 Dividend Plan Rs. 24.38 Tata Tea 650000 4030.32 2.50 Fertilisers Tata Chemicals 1262449 2084.93 1.30 Volatility Measures (3 years)

Finance StandarNAV Perd Deviationformance 6.80 Beta 0.97 HDFC 290509 2567.95 1.60 R-squared 0.89 Sharpe Ratio* 0.40

Industrial Capital Goods * Risk-free rate assumed to be 5.10% (based on JP Morgan 3 month T-Bill Index) ✓ L&T 627965 7120.81 4.42 Industrial Products Sector Allocation - Total Assets Cummins India 188259 247.18 0.15 Media & Entertainment Zee Telefilms 3512000 5464.67 3.39 Non - Ferrous Metals ✓ Hindalco 795513 9552.52 5.93 Oil ONGC 458106 4676.12 2.91 Petroleum Products ✓ Reliance Industries 2000000 12838.00 7.98

BPCL 1449201 5322.19 3.31 HPCL 892641 2735.94 1.70 Software ✓ Infosys 500000 11788.25 7.32 Rs. 10000 invested at inception in FIBCF & BSE Sensex ✓ HCL Tech. 2360902 9181.55 5.70

✓ TCS 427125 5774.30 3.59 Rs. 161,228 Telecom - Services ✓ Bharti Televentures 3000000 7285.50 4.53 Textile Products Indian Rayon 1000000 4252.50 2.64 Transportation GE Shipping 2729975 3621.31 2.25 Rs. 21,843 CONCOR 270985 2493.06 1.55

Total equity holdings 155155.31 96.39 Other current assets 5811.21 3.61 ____ FIBCF ____ BSE Sensex Total assets 160966.52 100.00 NAV is adjusted for dividend/bonus

✓ Top 10 holdings 8 Templeton India Growth Fund

Fund Manager: Dr. J. Mark Mobius As of June 30, 2005 TIGF

Portfolio Portfolio Composition and Performance

Company Name No. of Market Value % of Fund Manager’s Commentary shares Rs. Lakhs Assets Auto The equity allocation of the fund has decreased from 95.88% to 91.94% during the quarter, as we reshuffled our portfolio based on relative Tata Motors 350000 1487.68 4.20 NAV Performance valuations. We added to our holdings in Tata Motors, ING Vysya Bank Ashok Leyland 4985568 1179.09 3.33 and Tata Investment. The exposure to the finance and auto sectors has Bajaj Auto 22542 309.61 0.87 gone up, while that to the shipping and FMCG sectors has come down.

Auto Ancillaries

MICO 30000 631.46 1.78 NAV Performance Last Last Last Last Since Banks 1 year 3 years* 5 years* 7 years* inception* ✓ NAV SBI 420000 2862.51 8.08 TIGF 45.65% 42.89% 23.31% 26.00% 17.92% ✓ ING Vysya Bank 1199041 1739.21 4.91 BSE Sensex 50.01% 30.30% 8.66% 12.01% 8.76% MSCI India Value 48.12% 30.51% 12.32% 10.01% N.A Cement Past performance may or may not be sustained in future. ✓ Grasim 207500 2197.32 6.20 *Compounded and annualised Dividends declared assumed to be reinvested

Consumer Non Durables Latest NAV ✓ Tata Tea 300000 1860.15 5.25 Growth Plan Rs. 38.31 Dividend Plan Rs. 27.79 ICI India 323132 853.55 2.41

ITC 50000 824.70 2.33 Volatility Measures (3 years)

GSK Consumer Healthcare 172500 662.57 1.87 StandarNAV Perd Deviationformance7.09 R-squared 0.85** 0.89# # Hindustan Lever 300000 490.80 1.38 Sharpe Ratio* 0.37 Beta 0.98** 0.97

** BSE Sensex # MSCI India Value Ferrous Metals * Risk-free rate assumed to be 5.10% (based on JP Morgan 3 month T-Bill Index) TISCO 450000 1530.45 4.32 Sector Allocation - Total Assets Finance

✓ Tata Investment 611186 2473.47 6.98

Gas

✓ GAIL 800000 1822.80 5.14

Gujarat Gas 59591 512.72 1.45

Non - Ferrous Metals

Hindalco 120928 1452.10 4.10

Oil

✓ ONGC 179000 1827.14 5.15

Petroleum Products

✓ Reliance Industries 286500 1839.04 5.19

✓ HPCL 600000 1839.00 5.19 Rs. 10000 invested at inception in TIGF & BSE Sensex

Indian Oil Corporation 200000 848.50 2.39 Rs. 42,709 BPCL 175000 642.69 1.81

Software

✓ Satyam Computer 337500 1712.81 4.83 Rs. 20,944 Transportation

CONCOR 100000 920.00 2.60

Shipping Corporation of India 49725 70.51 0.20

Total equity holdings 32589.88 91.94 Other current assets 2855.91 8.06 ____ TIGF ____ BSE Sensex Total assets 35445.79 100.00 NAV is adjusted for dividend ✓ Top 10 holdings 9 Franklin India Prima Plus

Fund Manager: R. Sukumar As of June 30, 2005 FIPP

Portfolio Portfolio Composition and Performance

Company Name No. of Market Value % of Fund Manager’s Commentary shares Rs. Lakhs Assets

Auto The equity exposure of the fund has increased to 99.13% from ✓ Bajaj Auto 129699 1781.42 3.78 NAV Performance Maruti Udyog 229508 1067.44 2.27 98.26% during the quarter. The main additions to the portfolio have Eicher Motors 127535 396.83 0.84 Ashok Leyland 1449439 342.79 0.73 been I-Flex, Zee Telefilms and Jet Airways. Auto Ancillaries ✓ MICO 87678 1845.49 3.92 Banks ✓ Kotak Mahindra Bank 478332 1873.39 3.98 ICICI Bank 344834 1453.65 3.09 NAV Performance Federal Bank 287456 455.91 0.97 Cement Last Last Last Last Last Since ✓ Grasim 172225 1823.78 3.87 1 year 3 years* 5 years* 7 years* 10 years* inception* ACC 414605 1566.79 3.33 Madras Cements 92265 926.25 1.97 FIPP (G) 49.60% 44.57% 23.25% 34.28% 22.97% 19.68% Construction Jaiprakash Associates 260500 475.93 1.01 FIPP (D) 49.59% 44.58% 23.26% 34.28% 22.97% 19.68% Consumer Non Durables ✓ Nestle India 251704 1798.55 3.82 S&P CNX 500 52.74% 35.00% 12.16% 17.27% 9.96% 5.35% Asian Paints 291961 1199.96 2.55 Tata Tea 158860 985.01 2.09 Past performance may or may not be sustained in future. Marico 302953 757.08 1.61 *Compounded and annualised Dividends declared assumed to be reinvested Goodlass Nerolac 86980 513.18 1.09 Pidilite 39109 199.46 0.42 Ferrous Metals Latest NAV JSW Steel 130000 326.56 0.69 Finance HDFC 61000 539.21 1.14 Growth Plan Rs. 69.07 Dividend Plan Rs. 24.90 Tata Investment 96721 391.43 0.83 Eicher 54219 72.84 0.15 Birla Global Finance 52014 44.78 0.10 Industrial Capital Goods Volatility Measures (3 years) L&T 95857 1086.97 2.31 BHEL 58117 502.71 1.07 StandarNAV Perd Deviationformance 5.94 Beta 0.76 ABB 29465 390.13 0.83 R-squared 0.91 Sharpe Ratio* 0.45 Industrial Products Cummins India 486708 639.05 1.36 Media & Entertainment * Risk-free rate assumed to be 5.10% (based on JP Morgan 3 month T-Bill Index) ✓ NDTV 1084951 2463.92 5.23 Television Eighteen 493896 1601.21 3.40 TV Today Network 1437694 1176.75 2.50 Sector Allocation - Total Assets Zee Telefilms 290000 451.24 0.96 Deccan Chronicle 100000 203.25 0.43 Non - Ferrous Metals ✓ Hindalco 173848 2087.57 4.43 Oil ✓ ONGC 169653 1731.73 3.68 Paper JK Paper 1486000 797.24 1.69 Petroleum Products Reliance Industries 80000 513.52 1.09 Pharmaceuticals Dr Reddy’s 121604 915.92 1.94 Ranbaxy 59309 627.28 1.33 Strides Arcolab 98581 242.71 0.52 Matrix Labs 122000 236.07 0.50 Lupin 5869 40.80 0.09 Power Neyveli Lignite 348205 257.85 0.55 Software ✓ Infosys 125198 2951.73 6.26 ✓ TCS 120492 1628.93 3.46 Flextronics Software 208330 1243.31 2.64 I-Flex Solutions 115800 909.61 1.93 HCL Tech. 162925 633.62 1.34 Telecom - Equipment &Accessories Avaya Globalconnect 113855 419.73 0.89 Movement of Rs. 10000 invested in FIPP & S&P CNX 500 Textile Products Indian Rayon 159845 679.74 1.44 Transportation Rs. 69,070 Jet Airways 34000 429.20 0.91 GE Shipping 169000 224.18 0.48 Gateway Distriparks 515768 697.06 1.48 Warrants Television Eighteen A 45434 32.71 0.07 Television Eighteen B 45434 10.13 0.02 Awaiting Listing Yes Bank 42.86 0.09 Unlisted equity holdings Rs. 17,517 Quantum Info. 0.31 0.00 Numero Uno 0.01 0.00 Debt holdings Rating Market Value % of Rs. Lakhs Assets Television Eighteen ZCB’s BBB- 10.79 0.02

Total equity holdings 46706.78 99.13 Debt holdings 10.79 0.02 Other current assets 399.23 0.85 ______Total assets 47116.80 100.00 FIPP S&P CNX 500

✓ Top 10 holdings

10 Franklin India Prima Fund

Fund Manager: K. N. Siva Subramanian / Satish Ramanathan As of June 30, 2005 FIPF

Portfolio Portfolio Composition and Performance

Company Name No. of Market Value % of Fund Manager’s Commentary shares Rs. Lakhs Assets Auto The equity exposure of the scheme decreased to 90.10% from 92.05% ✓ Eicher Motors 1888165 5875.03 3.63 Ashok Leyland 16885696 3993.47 2.47 towards the end of the quarter. The main additions to the portfolio have NAV Performance Auto Ancillaries been ING Vysya Bank, Karnataka Bank and Matrix Labs. The exposure ✓ MICO 251417 5291.95 3.27 Ucal Fuel 1201560 3023.73 1.87 to auto, engineering and finance sectors has come down, while that to Denso India 2030286 1786.65 1.10 Amtek Auto 874409 1485.62 0.92 software, healthcare and shipping has gone up. PRICOL 2578200 1378.05 0.85 LG Balakrishna & Brothers 2410164 938.76 0.58 Sundaram Fasteners 715610 902.74 0.56 Rane Holdings 425261 838.40 0.52 NAV Performance Automotive Axles 83000 315.40 0.20 Banks Last Last Last Last Last Since ING Vysya Bank 1766723 2562.63 1.58 Karnataka Bank 2175000 1927.05 1.19 1 year 3 years* 5 years* 7 years* 10 years* inception* Cement Birla Corporation 2000000 3467.00 2.14 FIPF (G) 74.83% 61.43% 40.54% 43.25% 22.14% 24.18% Chemicals FIPF (D) 74.80% 61.40% 40.53% 43.24% 22.14% 24.17% Clariant 500000 1303.00 0.81 Construction S&P CNX 500 52.74% 35.00% 12.16% 17.27% 9.96% 7.28% ✓ Hindustan Construction Company 809728 4257.14 2.63 Jaiprakash Associates 1640000 2996.28 1.85 Past performance may or may not be sustained in future. Consumer Durables *Compounded and annualised Dividends declared assumed to be reinvested Voltas 500000 1147.75 0.71 Consumer Non Durables ✓ Goodlass Nerolac 1100835 6494.93 4.02 Latest NAV Marico 1259204 3146.75 1.95 NAV Performance EID Parry 2622345 3022.25 1.87 Growth Plan Rs. 122.89 Dividend Plan Rs. 44.19 Kajaria Ceramic 1154224 2302.68 1.42 Titan 226869 859.61 0.53 Shaw Wallace 397952 619.21 0.38 Hindustan Sanitaryware 292608 441.69 0.27 Volatility Measures (3 years) McDowell 124983 375.45 0.23 Emami 605710 441.26 0.27 StandarNAV Perd Deviationformance7.69 Beta 0.89 Dredging Dredging Corporation 175000 840.96 0.52 R-squared 0.73 Sharpe Ratio* 0.48 Finance LIC Housing Finance 1875734 3885.58 2.40 * Risk-free rate assumed to be 5.10% (based on JP Morgan 3 month T-Bill Index) Eicher 726151 975.58 0.60 Sundaram Finance 203774 614.58 0.38 Gas ✓ Gujarat Gas 602407 5183.11 3.20 Sector Allocation - Total Assets Indraprastha Gas 3141431 3141.43 1.94 Industrial Capital Goods HONDA Siel 228034 401.45 0.25 Industrial Products Fag Bearings 1297334 2822.35 1.74 Vesuvius India 559940 1139.48 0.70 Sintex Industries 143200 743.85 0.46 Cummins India 724667 951.49 0.59 Media & Entertainment TV Today Network 3053413 2499.22 1.55 Paper JK Paper 3218951 1726.97 1.07 Pesticides Monsanto India 62220 927.58 0.57 Pharmaceuticals ✓ IPCA Labs 1658742 5976.45 3.70 Torrent Pharma 618468 3065.44 1.90 Strides Arcolab 1018599 2507.79 1.55 Matrix Labs 1000000 1935.00 1.20 Panacea Biotech 1000000 1675.00 1.04 Abbott India 81039 487.53 0.30 Unichem Labs 999999 1942.00 1.20 Power Torrent Power - Surat Electricity 6977 19.65 0.01 Software ✓ I-Flex Solutions 941823 7398.02 4.57 Rs. 10000 invested at inception in FIPF & S&P CNX 500 Flextronics Software 440000 2625.92 1.62 Patni Computer 645290 2237.87 1.38 Telecom - Services Rs. 122,890 Tata Teleservices Maharashtra 5895000 1526.81 0.94 Textile Products ✓ Indian Rayon 2200000 9355.50 5.78 Raymond 1100000 3647.05 2.25 Gokaldas Export 14716 84.70 0.05 Textiles - Synthetic ✓ SRF 2459133 4198.97 2.60 Transportation ✓ GE Shipping 5595385 7422.28 4.59 Gateway Distriparks 1479386 1999.39 1.24 Rs. 22,584 Awaiting Listing Yes Bank 156.26 0.10 Unlisted equity holdings Rane Madras 393.58 0.24 Control & Switch Gears 21.50 0.01 HIM Technoforge 0.02 0.00 Total equity holdings 145724.84 90.10 Other current assets 16016.03 9.90 Total assets 161740.87 100.00 ____ FIPF ____ S&P CNX 500

✓ Top 10 holdings

11 Franklin India Flexi Cap Fund

Fund Manager: K.N. Siva Subramanian / R. Sukumar As of June 30, 2005 FIFCF

Portfolio Portfolio

Company Name No. of Market Value % of Company Name No. of Market Value % of shares Rs. Lakhs Assets shares Rs. Lakhs Assets

Auto Software ✓ Bajaj Auto 795430 10925.23 5.81 ✓ Infosys 600000 14145.90 7.52 ✓ Maruti Udyog 1480072 6883.81 3.66 TCS 223703 3024.24 1.61 ✓ Tata Motors 1199983 5100.53 2.71 HCL Tech. 671200 2610.30 1.39 Eicher Motors 469065 1459.50 0.78 Polaris 1429500 1635.35 0.87 Ashok Leyland 2384834 564.01 0.30 Flextronics Software 226827 1353.70 0.72 Auto Ancillaries Scandent Solutions 980000 2119.25 1.13 MICO 195484 4114.64 2.19 Telecom - Equipment PRICOL 2661487 1422.56 0.76 & Accessories LG Balakrishna & Brothers 2407788 937.83 0.50 Avaya Globalconnect 337910 1245.71 0.66 Banks Textile Products ✓ SBI 2200000 14994.10 7.97 Indian Rayon 373459 1588.13 0.84 ✓ ICICI Bank 1762014 7427.77 3.95 Gokaldas Export 26274 151.22 0.08 Textiles - Cotton Federal Bank 2421667 3840.76 2.04 Mahavir Spinning 325749 1289.80 0.69 Kotak Mahindra Bank 824487 3229.10 1.72 Textiles - Synthetic Punjab National Bank 715363 2717.66 1.44 SRF 1000000 1707.50 0.91 ING Vysya Bank 445166 645.71 0.34 Transportation Cement CONCOR 531563 4890.38 2.60 Grasim 273485 2896.07 1.54 Gateway Distriparks 2635959 3562.50 1.89 ACC 403463 1524.69 0.81 Warrants Chemicals JSW Steel 44642 46.27 0.02 Micro Inks 135766 794.23 0.42 Awaiting Listing Clariant 97910 255.15 0.14 Yes Bank 181.31 0.10 Excel Industries 348033 233.53 0.12 Consumer Durables Total equity holdings 185455.46 98.59 Voltas 503903 1156.71 0.61 Other current assets 2642.99 1.41 Consumer Non Durables Total assets 188098.45 100.00 ✓ Tata Tea 963616 5974.90 3.18 ✓ Top 10 holdings Goodlass Nerolac 386750 2281.82 1.21 Nestle 146883 1049.55 0.56 Portfolio Composition and Performance ICI India 369220 975.29 0.52 JK Investo Trading 167026 147.23 0.08 Fund Manager’s Commentary Emami 20770 15.13 0.01 Navneet Publications 70339 173.07 0.09 The equity exposure has gone up from 79.92% to 98.59% as we Ferrous Metals JSW Steel 388821 976.72 0.52 deployed the assets in companies across market capitalisations and Fertilisers sectors. The main additions to the portfolio have been HDFC, Scandent Tata Chemicals 1282508 2118.06 1.13 Finance Solutions and Mahavir Spinning. HDFC 521271 4607.78 2.45 Birla Global Finance 622392 535.88 0.28 Gas Gujarat Gas 82376 708.76 0.38 NAV Performance Hotels Indian Hotels 216682 1352.64 0.72 Last 1 Month Last 3 Months Since Inception Industrial Capital Goods NAV Performance ✓ L&T 632206 7168.90 3.81 FIFCF 4.24% 9.65% 5.70% BHEL 350000 3027.50 1.61 S&P CNX 500 3.89% 7.52% 4.43% Bharat Electronics 397958 2795.06 1.49 Bharati Shipyard 790364 1230.99 0.65 Past performance may or may not be sustained in future. *Absolute ABB 14598 193.28 0.10 Alstom Projects 19527 40.85 0.02 Industrial Products Latest NAV SKF Bearings 281670 520.95 0.28 NAV Performance Cummins India 188219 247.13 0.13 Growth Plan Rs. 10.57 Dividend Plan Rs. 10.57 Media & Entertainment NDTV 1930691 4384.60 2.33 Zee Telefilms 1000000 1556.00 0.83 Deccan Chronicle Holdings 299200 608.12 0.32 Sector Allocation - Equity Holdings Non - Ferrous Metals Hindalco 416074 4996.22 2.66 NALCO 1277693 1784.94 0.95 Oil ✓ ONGC 950000 9697.13 5.16 Pesticides Monsanto India 7471 111.38 0.06 Petroleum Products ✓ Reliance Industries 1362089 8743.25 4.65 Castrol 200000 444.00 0.24 Pharmaceuticals Dr Reddy’s 276000 2078.83 1.11 IPCA Labs 320000 1152.96 0.61 Unichem Labs 700000 1359.40 0.72 Power Neyveli Lignite 2212892 1638.65 0.87 Calcutta Electric Supply Corporation 41700 83.34 0.04

12 Franklin India Opportunities Fund

Fund Manager: K.N. Siva Subramanian As of June 30, 2005 FIOF

Portfolio Portfolio Composition and Performance

Company Name No. of Market Value % of Fund Manager’s Commentary shares Rs. Lakhs Assets

Auto The equity exposure of the scheme has increased to 96.57% from 95.52% ✓ Maruti Udyog 305041 1418.75 6.56 at the end of last quarter. The main additions to the portfolio have been Reliance Industries, Century Textiles, SBI and Rajasthan Spinning. The ✓ Tata Motors 251933 1070.84 4.95 exposure to technology, metals and transportation has come down, while Auto Ancillaries that to pharmaceuticals and FMCG has gone up. Kesoram Industries 797568 915.21 4.23 MICO 30000 631.46 2.92 Banks NAV Performance ✓ ICICI Bank 240000 1011.72 4.68 Last Last Last Last Since SBI 118000 804.23 3.72 * * * NAV Performance3 months 1 year 3 years 5 years inception Cement ✓ Century Textiles & Industries 600000 1663.20 7.69 FIOF 14.88% 56.88% 39.51% 7.89% 4.50% Construction BSE 200 # 6.40% 47.70% 14.75% -10.17% -21.51% Jaiprakash Associates 300000 548.10 2.54 Past performance may or may not be sustained in future. Consumer Non Durables *Compounded and annualised. The scheme was launched as an open end sector equity scheme and CCL Products 300000 565.35 2.62 has been repositioned in its new form with effect from March 10, 2004. #Index adjusted for the Murudeshwar Ceramics 393485 282.52 1.31 period February 21, 2000 to March 10, 2004 with the performance of ET Mindex. Tata Coffee 84901 249.82 1.16 Volatility Measures (3 years) Finance StandarNAV Perd Deviationformance 6.89 Beta 0.73 India Infoline 600000 425.10 1.97 Industrial Capital Goods R-squared 0.88 Sharpe Ratio* 0.35

Manugraph India 53746 268.89 1.24 * Risk-free rate assumed to be 5.10% (based on JP Morgan 3 month T-Bill Index) Industrial Products Fag Bearings 295968 643.88 2.98 Media & Entertainment Latest NAV Television Eighteen 220000 713.24 3.30 NAV Performance Pesticides Growth Plan Rs. 12.66 Dividend Plan Rs. 12.66 Rallis India 13025 33.12 0.15 Petroleum Products ✓ Reliance Industries 289500 1858.30 8.60 Sector Allocation - Total Assets Pharmaceuticals ✓ Strides Arcolab 500000 1231.00 5.69 ✓ IPCA Labs 311712 1123.10 5.20 Aurobindo Pharma 250000 762.88 3.53 Matrix Labs 200000 387.00 1.79 Power ✓ Calcutta Electric Supply Corporation 694904 1388.77 6.42 Software ✓ HCL Tech. 241523 939.28 4.35 Textiles – Cotton ✓ Mahavir Spinning 297282 1177.09 5.45 Textiles - Synthetic Rajasthan Spinning & Weaving Mills 592874 689.22 3.19 Warrants Rs. 10000 invested at inception in FIOF & BSE 200 Television Eighteen A 55163 39.72 0.18 Television Eighteen B 55163 12.30 0.06 Rs. 12.660 Awaiting Listing Yes Bank 20.49 0.09 Unlisted equity holdings Planetasia 0.88 0.00 Quantum Info. 0.36 0.00 Numero Uno 0.01 0.00 Rs. 2,732 Debt holdings Rating Market Value % of Rs. Lakhs Assets Television Eighteen ZCB’s BBB- 35.04 0.16 Total equity holdings 20875.83 96.57 Debt holdings 35.04 0.16 Other current assets 705.94 3.27 ______# Total assets 21616.81 100.00 FIOF BSE 200

✓ Top 10 holdings

13 Franklin India Taxshield

Fund Manager: R. Sukumar As of June 30, 2005 FIT

Portfolio Portfolio Composition and Performance

Company Name No. of Market Value % of Fund Manager’s Commentary shares Rs. Lakhs Assets Auto The equity exposure of the scheme has marginally come down to 97.58% Maruti Udyog 61381 285.48 2.05 Eicher Motors 52058 161.98 1.16 frNAomV 97.88%Perfor manceat the end of last quarter. The main additions to the Ashok Leyland 414111 97.94 0.70 portfolio have been Karnataka Bank, Polaris Software and Ashok Bajaj Auto 5500 75.54 0.54 Leyland. The exposure to FMCG and cement sectors has come down, Auto Ancillaries MICO 9252 194.74 1.40 while that to media and pharmaceuticals has gone up Banks ✓ Kotak Mahindra Bank 127274 498.47 3.58 ✓ ICICI Bank 101717 428.79 3.08 HDFC Bank 36843 233.62 1.68 NAV Performance Karnataka Bank 230000 203.78 1.46 SBI 28219 192.33 1.38 Last Last Last Last Since Cement 3 Months 1 Year 3 Years* 5 Years* Inception* Grasim 38646 409.24 2.94 NAV Performance ACC 71498 270.19 1.94 FIT (G) 8.19% 54.86% 44.05% 19.82% 37.74% Madras Cements 9917 99.56 0.72 Chemicals FIT (D) 8.18% 54.84% 44.07% 19.83% 37.74% Clariant 24215 63.10 0.45 S&P CNX 500 7.52% 52.74% 35.00% 12.16% 17.61% Godrej Industries 2390 5.47 0.04 Construction Past performance may or may not be sustained in future. Jaiprakash Associates 136005 248.48 1.78 *Compounded and annualised Dividends declared assumed to be reinvested Consumer Non Durables ✓ Nestle 77925 556.81 4.00 Latest NAV ✓ Marico 196727 491.62 3.53 ✓ Asian Paints 119247 490.11 3.52 NAV Performance ✓ Goodlass Nerolac 75000 442.50 3.18 Growth Plan Rs. 73.45 Dividend Plan Rs. 25.53 Tata Tea 24093 149.39 1.07 Ferrous Metals JSW Steel 38500 96.71 0.69 Volatility Measures (3 years) Finance HDFC 17500 154.69 1.11 StandarNAV Perd Deviationformance 6.36 Beta 0.83 Eicher 58755 78.94 0.57 Industrial Capital Goods R-squared 0.93 Sharpe Ratio* 0.42 ✓ L&T 48748 552.78 3.97 BHEL 18723 161.95 1.16 * Risk-free rate assumed to be 5.10% (based on JP Morgan 3 month T-Bill Index) Alstom Projects 50000 104.60 0.75 Industrial Products Cummins India 206407 271.01 1.95 Media & Entertainment Sector Allocation - Total Assets ✓ NDTV 266371 604.93 4.35 Television Eighteen 112501 364.73 2.62 TV Today Network 360567 295.12 2.12 Non - Ferrous Metals ✓ Hindalco 56578 679.39 4.88 Hindustan Zinc 151000 225.52 1.62 Oil ONGC 14861 151.69 1.09 Paper JK Paper 364500 195.55 1.40 Pesticides Monsanto India 22566 336.41 2.42 Petroleum Products Reliance Industries 31882 204.65 1.47 BPCL 42336 155.48 1.12 Pharmaceuticals Dr Reddy’s 45816 345.09 2.48 Matrix Labs 34605 66.96 0.48 Strides Arcolab 27109 66.74 0.48 IPCA Labs 17799 64.13 0.46 Power Neyveli Lignite 81795 60.57 0.44 Software ✓ Infosys 48400 1141.10 8.20 Rs. 10000 invested at inception in FIT & S&P CNX 500 TCS 28470 384.89 2.76 Satyam Computer 61052 309.84 2.23 Polaris Software 112000 128.13 0.92 Rs. 73,450 Textile Products Indian Rayon 77952 331.49 2.38 Gokaldas Export 1701 9.79 0.07 Textiles - Synthetic SRF 230120 392.93 2.82 Transportation Rs.27,456 Gateway Distriparks 18886 25.52 0.18 Warrants Television Eighteen A 12501 9.00 0.06 Television Eighteen B 12501 2.79 0.02 Awaiting Listing Yes Bank 12.45 0.09 Unlisted equity holdings Quantum Info. 0.03 0.00

Total equity holdings 13584.74 97.58 Other current assets 336.48 2.42 ______Total assets 13921.22 100.00 FIT S&P CNX 500

✓ Top 10 holdings 14 Franklin Infotech Fund

Fund Manager: R. Sukumar As of June 30, 2005 FIF

Portfolio Portfolio Composition and Performance

Company Name No. of Market Value % of Fund Manager’s Commentary shares Rs. Lakhs Assets Technology stocks bounced back during the quarter after the sharp fall witnessed in the Infosys 226782 5346.73 35.65 previous quarter on improved guidance from some of the leading companies across TCS 199400 2695.69 17.98 regions. This was reflected in the 2.89% gain in the Nasdaq, despite weakness in the broader US markets. Back home, results from the technology sector were in line with Wipro 220000 1684.21 11.23 expectations, barring few companies. And after a lackluster April, technology stocks rallied sharply in May and June. For the quarter, the BSE IT index added 7.26%. HCL Tech. 350000 1361.15 9.08 As per the recent NASSCOM survey, the Indian IT-ITES industry has recorded 34.5% Flextronics Software 215432 1285.70 8.57 growth in exports ($17.2 billion) in FY 2004-05 and is expected to grow by 30-32% in the next fiscal year to clock revenues of $22.5 billion. The technology sector is growing I-Flex Solutions 138467 1087.66 7.25 at a relatively higher rate compared to most sectors India and has the potential to outperform the broad markets, but a lot will depend on the macro-economic environment, Satyam Computer 120000 609.00 4.06 both on the domestic and international fronts. Any slowdown in the developed economies could result in more aggressive cost cutting and offshore outsourcing, while higher CMC 61885 305.12 2.03 interest rates in US may extend prevailing greenback strength. Patni Computer 60000 208.08 1.39 NAV Performance Scandent Solutions 75500 163.27 1.09 3 months 1 year 3 years* 5 years* Inception* Unlisted equity holdings NAV Performance FIF (G) 7.32% 53.99% 31.96% -0.90% 29.80% Planetasia 1.75 0.01 FIF (D) 7.32% 54.10% 31.95% -0.89% 29.80% Total equity holdings 14748.36 98.35 BSE IT Index 7.26% 56.87% 25.20% -5.48% N.A Other current assets 247.50 1.65 Past performance may or may not be sustained in future. *Compounded and annualised Dividends declared assumed to be reinvested Total assets 14995.86 100.00 Volatility Measures (3 years) Latest NAV StandarNAV Perd Deviationformance 8.41 Beta 0.81 NAV Performance Growth Plan Rs. 29.92 Dividend Plan Rs. 17.29 R-squared 0.97 Sharpe Ratio* 0.23 * Risk-free rate assumed to be 5.10% (based on JP Morgan 3 month T-Bill Index)

Franklin Pharma Fund

Fund Manager: R. Sukumar As of June 30, 2005 FPF

Portfolio Portfolio Composition and Performance

Company Name No. of Market Value % of Fund Manager’s Commentary shares Rs. Lakhs Assets Ranbaxy 76871 813.03 10.31 In recent times, the pharmaceutical sector has been witnessing the manifestation of structural risks such as aggressive legal challenges by patent holders and the advent of authorised Cipla 257013 805.99 10.22 generics (often pushed by the innovators). Our talks with various companies and analysts Sun Pharma 133760 771.86 9.79 indicated that domestic companies are now concentrating on R&D and outsourcing deals. Falling R&D productivity, looming patent expiries and the patent challenges have underlined Dr Reddy’s 100929 760.20 9.64 the need of collaboration and the advantages of contract research and manufacturing for Glaxo 85063 684.12 8.68 global pharma majors. Indian pharmaceutical sector is well poised to take advantage of this need due to - (i) a large pool of scientists especially strong in chemistry based skills (ii) Pfizer 71497 570.08 7.23 globally approved manufacturing plants and (iii) growing knowledge base of intellectual IPCA Labs 154804 557.76 7.07 capital within many companies. Aventis Pharma 43025 549.45 6.97 These advantages help Indian companies in positioning themselves as key partners at each stage of the sector life cycle. On the pre-clinical and discovery stages, the chemistry based Lupin 75117 522.14 6.62 skills as well as development of novel targets can be leveraged. During clinical Matrix Labs 152550 295.18 3.74 development, the large patient population enables faster results, which lowers overall R&D costs and ensures quicker reach to the markets. The growing number of skilled clinical Wockhardt 75509 289.73 3.67 investigators in Indian companies can ensure that global protocols are adhered to in the Cadila Health 48482 230.00 2.92 clinical development program. And the large number of FDA approved plants provides the Excel Industries 337860 226.70 2.87 capability to undertake contract manufacturing. Aurobindo Pharma 68694 209.62 2.66 NAV Performance Unichem Labs 100791 195.74 2.48 Strides Arcolab 70000 172.34 2.19 Last 3 months Last 1 year Last 3 years* Last 5 years* Since inception* Monsanto India 8220 122.54 1.55 FPFNA (G)V Per11.41%formance 33.08% 29.67% 15.77% 12.42% Torrent Pharma 14988 74.29 0.94 FPF (D) 11.48% 33.13% 29.68% 15.77% 12.43% ET Lifex 9.72% 31.95% 27.59% 16.12% 11.54% Total equity holdings 7850.77 99.56 Other current assets 35.09 0.44 Past performance may or may not be sustained in future. *Compounded and annualised Dividends declared assumed to be reinvested Total assets 7885.86 100.00 Volatility Measures (3 years) Latest NAV StandarNAV Perd Deviationformance 6.59 Beta 0.90 NAV Performance Growth Plan Rs.20.80 Dividend Plan Rs.17.68 R-squared 0.90 Sharpe Ratio* 0.27 * Risk-free rate assumed to be 5.10% (based on JP Morgan 3 month T-Bill Index) 15 FT India Dynamic PE Ratio Fund of Funds FTDPEF Fund Manager: R. Sukumar & Sameer Kulkarni As of June 30, 2005

Portfolio Composition and Performance

How does the scheme work? NAV Performance

The scheme changes its asset allocation based on the weighted Last Last Last Last Since 1 month 3 months 6 months 1 year inception* average PE ratio of the NSE NIFTY Index. At higher PE levels, it reduces allocation to equities in order to minimise downside risk. FTDPEF 3.67% 5.90% 4.49% 34.91% 26.38% Similarly at lower PE levels, it increases allocation to equities to BSE Sensex 7.13% 10.80% 8.95% 48.59% 25.82% capitalise on their upside potential. Historically, such a strategy of Crisil Balanced Fund Index 4.12% 6.05% 5.38% 26.05% 16.16% varying the allocation of equity and debt/money market instruments based on the PE ratio has delivered superior risk- Past performance may or may not be sustained in future. NAV Performance *Compounded and annualised adjusted returns over the long term, although there is no guarantee that will be repeated in the future. The equity FTDPEF’s Investment Strategy component of the scheme is invested in Franklin India Bluechip If weighted average ...the equity ...and the debt Fund (FIBCF), an open end diversified equity scheme investing PE ratio of NSE component component predominantly in large cap stocks and the debt/money market Nifty falls in this band... will be...(%) will be ... (%) component is invested in Templeton India Income Fund (TIIF), an Upto 12 90 - 100 0 - 10 open end income scheme investing in government securities, PSU 12 - 16 70 - 90 10 - 30 bonds and corporate debt. 16 - 20 50 - 70 30 - 50 20 - 24 30 - 50 50 - 70 Asset Allocation for July 2005 24 - 28 10 - 30 70 - 90 Above 28 0 - 10 90 - 100 The weighted average PE ratio of NSE Nifty as on 30.6.2005 was 14.27. Hence, the asset allocation for the scheme in July 2005 will be... Latest NAV Franklin India Bluechip Fund - 75% Templeton India Income Fund - 25% Growth Plan Rs. 14.7697 Dividend Plan Rs. 14.7697

FT India Life Stage Fund of Funds

Fund Manager: R. Sukumar & Sameer Kulkarni As of June 30, 2005 FTLF

Portfolio Composition and Performance

How does the scheme work? NAV Performance Last Last Last Last Since The scheme invests in a combination of Franklin Templeton India’s 1 month 3 months 6 months 1year inception** equityNAV Perandfor incomemance schemes, with a steady state allocation as The 20s Plan 2.61% 6.00% 4.85% 38.03% 23.33% shown below. The debt and equity allocation is automatically Benchmark* 5.37% 8.49% 7.34% 39.03% 19.91% rebalanced every 6 months to revert to the steady state levels. The 30s Plan 1.95% 4.53% 4.05% 25.70% 16.30% Benchmark*NAV Performance3.95% 6.34% 6.06% 27.00% 14.60% FTLF’s Investment Strategy The 40s Plan 1.16% 3.44% 3.77% 18.25% 12.06% Benchmark* 2.68% 4.47% 4.84% 18.05% 10.39% Steady State Asset Allocation The 50s Plus Plan 1.18% 2.52% 2.89% 10.08% 6.68% Plans Equity Debt Benchmark* 2.05% 3.38% 4.23% 11.39% 6.84% The 20s Plan 80% 20% The 50s Plus The 30s Plan 55% 45% Floating Rate Plan 1.15% 2.45% 2.77% N.A 11.13%*** Benchmark* 1.72% 3.14% 3.73% N.A 11.75%*** The 40s Plan 35% 65% The 50s Plus Plan 20% 80% Past performance may or may not be sustained in future. ** Compounded and annualised *** Absolute *Benchmark: The 20s Plan - 65% BSE Sensex + 15% S&P CNX 500 + 20% Crisil Composite The 50s Plus Floating Rate Plan 20% 80% Bond Fund Index; The 30s Plan - 45% BSE Sensex + 10% S&P CNX 500 + 45% Crisil Composite Bond Fund Index; The 40s Plan - 25% BSE Sensex + 10% S&P CNX 500 + 65% Crisil Composite Bond Fund Steady State Asset Allocation to the underlying schemes 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. FIBCF FIPF TIGF TIIF TIIBA TFIF(LT) Latest NAV The 20s Plan 50% 15% 15% 10% 10% - Growth Dividend The 30s Plan 35% 10% 10% 25% 20% - The 20s Plan Rs. 13.9298 Rs. 13.9298 The 40s Plan 15% 10% 10% 35% 30% - The 30s Plan Rs. 12.6953 Rs. 12.6953 The 50s Plus Plan 10% 0% 10% 40% 40% - The 40s Plan Rs. 11.9720 Rs. 11.9720 The 50s Floating The 50s Plus Plan Rs. 11.0756 Rs. 10.6983 Rate Plan 10% 0% 10% 0% 0% 80% The 50s Plus FloatingRate Plan Rs. 11.1128 Rs. 10.7567

16 FT India Balanced Fund

Fund Manager: R. Sukumar, Chellappa, Gaurav Dangwal & Ninad Deshpande As of June 30, 2005 FTIBF

Portfolio Portfolio Composition and Performance

Company Name No. of Market Value % of Fund Manager’s Commentary shares Rs. Lakhs Assets Equity holdings The equity allocation of the scheme increased to 69.12% from 67.23% Auto ✓ Bajaj Auto 38000 521.93 3.09 duringNAV Perthe forquarmanceter. On the equity side, the main additions have been I- Maruti Udyog 110000 511.61 3.03 Flex, Zee Telefilms and Mangalam Cements. On the debt side, we added Eicher Motors 40796 126.94 0.75 Ashok Leyland 527432 124.74 0.74 securities of Citibank and EXIM Bank. Auto Ancillaries ✓ MICO 28000 589.36 3.49 Exide 230901 391.61 2.32 Kesoram Industries 200000 229.50 1.36 NAV Performance Banks Last Last Last Last Since ✓ Kotak Mahindra Bank 171071 670.00 3.97 3 months 1 year 3 years* 5 years* inception* ✓ ICICI Bank 140000 590.17 3.50 SBI 29239 199.28 1.18 FTIBFNA V(G) Performance5.29% 31.05% 29.88% 16.82% 13.37% Federal Bank 93000 147.50 0.87 FTIBF (D) 5.30% 31.09% 29.88% 16.82% 13.37% Cement Grasim 45000 476.53 2.83 Crisil Balanced ACC 70000 264.53 1.57 Fund Index 6.05% 26.05% 19.94% N.A N.A Madras Cements 26074 261.76 1.55 Past performance may or may not be sustained in future. *Compounded and annualised Ultratech Cement 59075 208.21 1.23 Dividends declared assumed to be reinvested. Mangalam Cements 200000 136.10 0.81 Consumer Non Durables Pidilite 83217 424.41 2.52 Latest NAV Asian Paints 64787 266.27 1.58 Finance Growth Plan Rs. 20.09 Dividend Plan Rs. 15.95 Tata Investment 34543 139.80 0.83 HDFC 10000 88.39 0.52 Eicher 61194 82.21 0.49 Industrial Capital Goods Thermax 78730 475.96 2.82 Bond Portfolio L&T 25590 290.18 1.72 Average Maturity Yield to Maturity Media & Entertainment NDTV 225000 510.98 3.03 2.73 years 6.12% Zee Telefilms 100000 155.60 0.92 TV Today Network 140000 114.59 0.68 Non - Ferrous Metals ✓ Hindalco 69000 828.55 4.91 Oil Composition by Assets ONGC 46000 469.55 2.78 Petroleum Products Indian Oil Corporation 20000 84.85 0.50 Pharmaceuticals Lupin 20000 139.02 0.82 Software ✓ Infosys 25911 610.89 3.62 ✓ TCS 42610 576.04 3.42 Flextronics Software 49052 292.74 1.74 Satyam Computer 50000 253.75 1.50 I-Flex Solutions 26000 204.23 1.21 Textiles - Synthetic SRF 100000 170.75 1.01 ■ Equity 69.12% ■ Other current assets 2.91% Transportation ■ Debt 27.96% Gateway Distriparks 14505 19.60 0.12 Awaiting Listing Yes Bank 9.50 0.06 Unlisted equity holdings Globsyn Tech. 0.03 0.00 Debt holdings Rating Market Value % of Sector Allocation - Equity Holdings Rs.Lakhs Assets ✓ Citicorp Finance Fleet Trust - PTC AAA (SO) 1055.87 6.26 ✓ M&M Financial Services AA+ 907.74 5.38 Citifinancial Consumer Finance AAA 499.20 2.96 Citibank N.A AAA 399.22 2.37 EXIM Bank P1+ 190.61 1.13 Power Grid Corporation AAA 160.05 0.95 Government Securities ✓ GOI Floating Rate Bond 2013 SOV 1001.50 5.94 GOI 11.99% 2009 SOV 236.03 1.40 GOI 06.96% 2009 SOV 151.23 0.90 GOI 12.00% 2008 SOV 114.75 0.68 Total equity holdings 11657.66 69.12 Total debt holdings 4716.20 27.96 Call, Cash & Other Assets 491.19 2.91 Net Assets 16865.05 100.00

✓ Top 10 holdings 17 Templeton India Pension Plan

Fund Manager: R. Sukumar & Gaurav Dangwal As of June 30, 2005 TIPP

Portfolio Portfolio Composition and Performance

Company Name No. of Market Value % of Fund Manager’s Commentary shares Rs. Lakhs Assets Equity holdings The equity exposure of the scheme has increased to 34.74% from Auto 33.98% and the debt allocation has increased to 60.26%. On the equity Eicher Motors 23896 74.35 0.86 NAV Performance Bajaj Auto 5000 68.67 0.80 side, the main additions have been HDFC, I-Flex and HDFC Bank. On the Auto Ancillaries debt side, we added debentures of IOC. MICO 9000 189.44 2.20 Banks ICICI Bank 36000 151.76 1.76 Kotak Mahindra Bank 36094 141.36 1.64 HDFC Bank 12000 76.09 0.88 NAV Performance SBI 7310 49.82 0.58 Last Last Last Last Since Federal Bank 18000 28.55 0.33 3 months 1 year 3 years* 5 years* inception* Cement NAV Performance Grasim 15000 158.84 1.84 Pension Plan (G) 3.07% 21.49% 21.48% 15.61% 15.66% ACC 15000 56.69 0.66 Pension Plan (D) 3.07% 21.52% 21.51% 15.63% 15.67% Ultratech Cement 9846 34.70 0.40 Consumer Non Durables Benchmark** 3.96% 21.04% 17.93% N.A N.A Asian Paints 30000 123.30 1.43 Past performance may or may not be sustained in future. Pidilite 21392 109.10 1.27 Dividends declared assumed to be reinvested. Emami 51193 37.29 0.43 *Compounded and annualised ** 40% S&P CNX 500 + 60% Crisil Composite Bond Fund Index. Dredging Dredging Corporation 24000 115.33 1.34 Latest NAV Finance HDFC 11000 97.23 1.13 Growth Plan Rs. 33.24 Dividend Plan Rs. 16.09 Eicher 35844 48.16 0.56 Industrial Capital Goods L&T 13000 147.41 1.71 Media & Entertainment Bond Portfolio NDTV 63521 144.26 1.67 TV Today Network 60649 49.64 0.58 NAV PerAverageformance Maturity Yield to Maturity Non - Ferrous Metals Hindalco 15316 183.91 2.13 1.94 years 5.81% Oil ONGC 5000 51.04 0.59 Paper JK Paper 146500 78.60 0.91 Composition by Assets Software ✓ Infosys 12781 301.33 3.50 TCS 15380 207.92 2.41 I-Flex Solutions 12000 94.26 1.09 Satyam Computer 12825 65.09 0.76 Flextronics Software 9757 58.23 0.68 Transportation Gateway Distriparks 36327 49.10 0.57 Awaiting Listing Yes Bank 3.12 0.04 Debt holdings Rating Market Value % of ■ ■ Rs. Lakhs Assets Equity 34.74% Other current assets 5.00% ■ Debt 60.26% ✓ M&M Financial Services AA+ 605.16 7.02 ✓ SBI AAA 565.05 6.56 ✓ Reliance Industries AAA 520.75 6.04 ✓ Neyveli Lignite Corporation AAA 520.55 6.04 ✓ Indian Oil Corporation AAA 501.72 5.82 Sector Allocation - Equity Holdings ✓ ICICI Bank AAA 405.20 4.70 ✓ Lakshmi General Finances AAA 401.58 4.66 ✓ Indian Rayon AAA 309.63 3.59 GE Shipping AAA 209.07 2.43 Indian Railways Finance Corporation AAA 207.04 2.40 IDBI AA+ 123.82 1.44 Power Grid Corporation AAA 57.16 0.66 Government Securities ✓ GOI 07.55% 2010 SOV 674.89 7.83 GOI 12.00% 2008 SOV 91.80 1.07

Total equity holdings 2994.59 34.74 Total debt holdings 5193.42 60.26 Other current assets 430.97 5.00 Total assets 8618.98 100.00

$ Inclusive of bank deposit ✓ Top 10 holdings 18 Templeton India Income Fund

Fund Manager: Sameer Kulkarni / Sachin Padwal - Desai As of June 30, 2005 TIIF

Portfolio Portfolio Composition and Performance

Company Name Rating Market Value % of Fund Manager’s Commentary Rs. Lakhs Assets The maturity period of the scheme was increased during the quarter to 4.22 years ✓ Hindalco Industries AAA 2498.00 9.53 frNAomV 2.41 Per years.for manceThe exposur e to gilts has increased to 28.57% from 6.82% during the last quarter, while the exposure to corporate debt decreased to 41.72% from ✓ Citifinancial Consumer Finance AAA 2473.00 9.44 45.38%. We added debentures of Indian Oil Corporation and HDFC Bank pass through certificates.

✓ Loan Securitisation Trust - NAV Performance Reliance Industries PTC1 AAA (SO) 1565.76 5.98 Last Last Last Last Since 3 months 1 year 3 years* 5 years* inception* ✓ Reliance Industries AAA 1144.21 4.37 TIIF(G)NAV Performance1.48% 3.30% 6.92% 9.54% 11.20% TIIF (D) 1.48% 3.31% 6.91% 9.66% 11.38% HDFC Bank Retail Trust Crisil Composite Bond Fund Index 1.48% 3.28% 6.37% N.A N.A PTC Series A33 MAAA (SO) 787.96 3.01 Past performance may or may not be sustained in future. *Compounded and annualised Dividends declared assumed to be reinvested Citibank N.A AAA 593.66 2.27 Latest NAV

IIDL AA (SO) 553.45 2.11 Growth Plan Rs. 24.2056 Dividend Plan Rs. 10.6058

RPS Securitisation Trust - Average Maturity Yield to Maturity Modified Duration Tata Teleservices-PTC2 LAAA (SO) 528.50 2.02 Bond 3.20 years 6.64% - Fund 4.22 years 6.54%* 2.93 years Loan Securitisation Trust - *Pre fund expenses Bajaj Auto PTC1 AAA (SO) 481.28 1.84 Composition by Assets HDFC AAA 199.10 0.76

PFSL PTC - Citibank (MBS)4 AAA (SO) 106.46 0.41

Total Corporate Debt 10931.38 41.72

✓ Indian Oil Corporation AAA 2508.62 9.57 ■ Corporate Debt 41.72% ■ PSU/PFI Bonds 23.74% ■ Gilts 28.57% ■ Call, Cash & Other Assets 5.97% ✓ Neyveli Lignite Corporation AAA 1561.65 5.96 Composition by Rating ✓ Power Finance Corporation AAA 1525.65 5.82

Indian Railways

Finance Corporation AAA 624.68 2.38

Total PSU/PFI Bonds 6220.60 23.74

■ AAA/P1+/PR1+/A1+/SOV 97.89% ■ AA/AA+/AA- 2.11% ✓ GOI 07.37 %2014 SOV 4128.40 15.76

NAV Movement (since inception) ✓ GOI 06.85% 2012 SOV 2010.40 7.67

✓ GOI 11.99% 2009 SOV 826.11 3.15

GOI 07.55% 2010 SOV 519.46 1.98

Total Gilts 7484.37 28.57

Call, Cash & Other Assets 1563.52 5.97

Net Assets 26199.87 100.00

Originator: 1 ICICI Bank; 2 Goldman Agent Pvt. Ltd. and First HNS Mauritius Ltd; 3. HDFC Bank; 4. Citibank N.A ✓ Top 10 holdings 19 Templeton India Income Builder Account

Fund Manager: Gaurav Dangwal / Sachin Padwal - Desai As of June 30, 2005 TIIBA

Portfolio Portfolio Composition and Performance

Company Name Rating Market Value % of Fund Manager’s Commentary Rs. Lakhs Assets We have increased the maturity period of the scheme to 4.98 years from 2.44 years ✓ Citifinancial Consumer Finance AAA 1483.80 7.63 during the quarter based on market conditions. We increased exposure to gilts (up NAV Performance to 39.34% from 4.86%). On the other hand, the exposure to corporate debt has decreased to 27.84% as spreads contracted. We added debentures of Indian Oil ✓ Hongkong Bank N.R 1076.67 5.54 Corporation and Tata Teleservices to the portfolio.

✓ Loan Securitisation Trust - NAV Performance Last Last Last Last Since Reliance Industries PTC1 AAA (SO) 626.30 3.22 3 months 1 year 3 years* 5 years* inception*

TIIBANA V(G) Performance1.33% 2.64% 7.24% 10.07% 11.35% ✓ HDFC AAA 603.21 3.10 TIIBA (D) 1.33% 2.64% 7.25% 10.04% 11.33% Crisil Composite Bond Fund Index 1.48% 3.28% 6.37% N.A N.A RPS Securitisation Trust - Past performance may or may not be sustained in future. *Compounded and annualised Dividends declared assumed to be reinvested Tata Teleservices-PTC2 LAAA (SO) 528.50 2.72 Latest NAV

Hindalco Industries AAA 488.40 2.51 Growth Plan Rs. 23.7039 Quarterly Plan Rs. 14.2190 Dividend Plan Rs. 10.4022 Half-yearly Plan Rs. 14.4097 Monthly Plan Rs. 14.3986 Bonus Rs. 19.6534 The Lakshmi Vilas Bank N.R 400.06 2.06

Average Maturity Yield to Maturity Modified Duration Loan Securitisation Trust - Bond 3.70 years 7.08% - Bajaj Auto PTC1 AAA (SO) 206.26 1.06 Fund 4.98 years 6.76%* 3.59 years * Pre fund expenses

Total Corporate Debt 5413.20 27.84 Composition by Assets

✓ Indian Oil Corporation AAA 2006.89 10.32

✓ Hudco N.R 1510.05 7.77

✓ Power Finance Corporation AAA 1497.15 7.70 ■ Corporate Debt 27.84% ■ Gilts 39.34% ■ PSU/PFI Bonds 25.93% ■ Call, Cash & Other Assets 6.89%

Power Grid Corporation AAA 27.05 0.14 Composition by Rating

Total PSU/PFI Bonds 5041.14 25.93

✓ GOI 07.37% 2014 SOV 4644.45 23.89

✓ GOI 06.85% 2012 SOV 1507.80 7.76 ■ AAA/P1+/SOV 84.64% ■ N.R. 15.36% ✓ GOI 06.20% UTI Special NAV Movement (since inception) Bonds 2010 SOV 976.77 5.02

GOI 07.55% 2010 SOV 519.15 2.67

Total Gilts 7648.17 39.34

Call, Cash & Other Assets 1339.86 6.89

Net Assets 19442.37 100.00

Originator: 1 ICICI Bank; 2 Goldman Agent Pvt. Ltd. and First HNS Mauritius Ltd. N.R. Non Rated ✓ Top 10 holdings 20 Templeton Monthly Income Plan @ An open end income scheme. Income is not assured, and is subject to the availability of distributable surplus Fund Manager: R. Sukumar/Chellappa & Sachin Padwal - Desai As of June 30, 2005 TMIP

Portfolio - Monthly & Quarterly Dividend Plan (Pure Debt Portfolio) Portfolio Composition and Performance

Company Name Rating Market Value % of Fund Manager’s Commentary Rs. Lakhs Assets The maturity period of the fund was at 2.55 years compared to 1.25 years during the ICICI Bank AAA 310.98 10.85 lastNA quarV Perter. Wfore havemance added gilts to the portfolio during the quarter (24.58%) while that to money market instruments has gone down to10.29%. We added debentures of Power Finance Corporation to the portfolio. Oscar Investments LAA (SO) 299.43 10.44

NAV Performance

Last Last Last Last Since JUS Trust PTC - Jet Airways1 AAA (SO) 222.94 7.78 3 months 1 year 3 years* 5 years* inception* NAV Performance TMIP - Monthly 1.31% 3.56% 5.22% 7.82% 7.84% TMIP - Quarterly 1.31% 3.56% 5.26% 7.80% 7.88% Crisil MIP Blended Index 2.62% 8.65% 9.79% N.A N.A Reliance Industries AAA 207.02 7.22 Past performance may or may not be sustained in future. *Compounded and annualised Dividends declared assumed to be reinvested

Latest NAV Total Corporate Debt 1040.37 36.29 Monthly Plan Rs. 10.2269 Quarterly Plan Rs. 10.1956

Power Finance Corporation AAA 293.48 10.24 Average Maturity Yield to Maturity Modified Duration

Bond 3.15 years 6.85% - Fund 2.55 years 6.36%* 1.76 years Neyveli Lignite Corporation AAA 104.11 3.63 * Pre fund expenses Composition by Assets

Power Grid Corporation AAA 45.73 1.60

Total PSU/PFI Bonds 443.32 15.46

■ Corporate Debt 36.29% ■ Money Market Instruments 10.29% ■ Gilt 24.58% ■ Call, Cash & Other Assets 13.38% GOI 11.99% 2009 SOV 590.08 20.58 ■ PSU/PFI Bonds 15.46%

Composition by Rating

GOI 12.00% 2008 SOV 114.75 4.00

Total Gilts 704.83 24.58

■ AAA/P1+/PR1+/A1+/SOV 89.56% ■ AA/AA+/AA- 10.44% Standard Chartered Investments & Loans P1+ 294.89 10.29 NAV Movement (since inception)

Quarterly Dividend Plan Total Money Market Instruments 294.89 10.29

Call, Cash & Other Assets 383.63 13.38

Net Assets 2867.04 100.00 Dividends assumed reinvested at ex-dividend NAV

Originator: 1 UTI Bank 21 Templeton Monthly Income Plan @ An open end income scheme. Income is not assured, and is subject to the availability of distributable surplus Fund Manager: R. Sukumar/Chellappa & Sachin Padwal - Desai As of June 30, 2005 TMIP

Portfolio - Half Yearly Dividend & Growth Plan (Marginal Equity Allocation) Portfolio Composition and Performance

Company Name Rating Market Value % of Fund Manager’s Commentary Rs. Lakhs Assets The equity allocation to the portfolio at the end of the quarter was at 15.06%, down Equity holdings marginally from 15.21% at the end of last quarter. On the equity side, the main NAV Performance Kotak Mahindra Bank 60000 234.99 1.38 addition was HDFC and on the debt side, we added debentures of Citibank and Hindalco 18000 216.14 1.27 Citifinancial Consumer Finance. The exposure to gilts has increased to 15.06% from Infosys 7304 172.20 1.01 2.35% during the last quarter. Maruti Udyog 35000 162.79 0.96 Asian Paints 38024 156.28 0.92 NAV Performance MICO 7000 147.34 0.87 Last Last Last Last Since Exide 84000 142.46 0.84 3 months 1 year 3 years* 5 years* inception* NAV Performance ICICI Bank 30000 126.47 0.74 TMIP - Growth 2.37% 9.94% 10.80% 10.64% 10.51% ONGC 11000 112.28 0.66 TMIP - Halfyearly 2.37% 9.94% 10.91% 10.63% 10.41% Bajaj Auto 8000 109.88 0.65 Crisil MIP Blended Index 2.62% 8.65% 9.79% N.A N.A TCS 8000 108.15 0.64 Past performance may or may not be sustained in future. Grasim 10000 105.90 0.62 *Compounded and annualised Dividends declared assumed to be reinvested Thermax 17000 102.77 0.60 Latest NAV NDTV 45000 102.19 0.60 Flextronics Software 14635 87.34 0.51 Growth Plan Rs. 17.1521 Half-Yearly Plan Rs. 11.7463 Indian Rayon 20000 85.05 0.50 TV Today Network 99942 81.80 0.48 Average Maturity* Yield to Maturity* Modified Duration* SBI 11696 79.71 0.47 Bond 2.98 years 6.46% - Satyam Computer 13419 68.10 0.40 # ACC 18000 68.02 0.40 Fund 2.95 years 6.72% 1.87 years HDFC 4000 35.36 0.21 # Pre fund expenses * based on debt portfolios only Indian Oil Corporation 7500 31.82 0.19 Composition by Assets Federal Bank 9000 14.27 0.08 Gateway Distriparks 4403 5.95 0.04 Equity holdings Awaiting listing Yes Bank 2.38 0.01 Total equity holdings 2559.64 15.06 Debt holdings ✓ Hindalco Industries AAA 1499.83 8.82 ■ Corporate Debt 36.78% ■ PSU/PFI Bonds 29.88% ✓ Indian Rayon AAA 1032.10 6.07 ■ Equity 15.06% ■ Call, Cash & ✓ M&M Financial Services AA+ 1003.10 5.90 ■ Gilts 15.06% Other Assets 3.22% ✓ Reliance Industries AAA 623.04 3.67 ✓ Citifinancial Consumer Finance AAA 503.89 2.96 Composition by Rating - Debt Portfolio Oscar Investments LAA (SO) 499.05 2.94 Citibank SME Revolving Trust PTC A21 AAA(SO) 499.02 2.94 HDFC Bank AAA 269.06 1.58 JUS Trust PTC - Jet Airways2 AAA (SO) 222.94 1.31 Citibank SME Revolving Trust PTC A11 AAA(SO) 99.81 0.59 ■ ■ Total Corporate Debt 6251.84 36.78 AAA/P1+/PR1+/A1+/SOV78.72% AA/AA+/AA- 21.28% ✓ Power Finance Corporation AAA 1735.55 10.21 ✓ Indian Railways NAV Movement (since inception) Finance Corporation AAA 1658.05 9.76 ✓ IDBI AA+ 1570.40 9.24 Growth Plan Power Grid Corporation AAA 114.32 0.67 Total PSU/PFI Bonds 5078.32 29.88 ✓ GOI 07.55% 2010 SOV 1713.19 10.08 ✓ GOI 07.37% 2014 SOV 516.05 3.04 GOI 12.00% 2008 SOV 229.50 1.35 GOI 06.96% 2009 SOV 100.82 0.59 Total Gilts 2559.56 15.06 Call, Cash & Other Assets 547.30 3.22 Total Assets 16996.66 100.00

Originator: 1 Citibank N.A; 2 UTI Bank ✓ Top 10 holdings 22 FT India Monthly Income Plan @ An open end income scheme. Income is not assured, and is subject to the availability of distributable surplus Fund Manager: R. Sukumar/Chellappa & Sachin Padwal - Desai As of June 30, 2005 FTIMIP

Portfolio Portfolio Composition and Performance

Company Name No. of Market Value % of Assets Fund Manager’s Commentary shares Rs. Lakhs Equity holdings The equity allocation has reduced marginally to 20.03% and the main Hindalco 120000 1440.96 1.90 Kotak Mahindra Bank 319358 1250.77 1.65 additions were HDFC. On the debt side, the main additions were Citicorp TCS 92000 1243.75 1.64 Finance and pass through certificates of Citibank Mobile Trust. We have Infosys 52039 1226.90 1.61 MICO 51000 1073.47 1.41 added gilts to the portfolio. ICICI Bank 240000 1011.72 1.33 Maruti Udyog 198712 924.21 1.22 Grasim 85000 900.11 1.18 NAV Performance NDTV 340000 772.14 1.02 Asian Paints 182598 750.48 0.99 Last 3 months Last 1 year Last 3 years* Since inception* Exide 407931 691.85 0.91 NAV Performance ONGC 56000 571.62 0.75 FTIMIP 2.35% 12.26% 12.95% 12.66% Thermax 93651 566.17 0.74 Crisil MIP Blended Index 2.62% 8.65% 9.79% N.A Bajaj Auto 32000 439.52 0.58 ACC 110000 415.69 0.55 *Compounded and annualised SBI 51167 348.73 0.46 Please note that past performance is not an indicator of future performance TV Today Network 414159 338.99 0.45 Indian Rayon 73598 312.98 0.41 Latest NAV HDFC 31000 274.02 0.36 Flextronics Software 39027 232.91 0.31 Growth Plan Rs. 17.6258 Quarterly Plan Rs. 11.8455 Satyam Computer 40000 203.00 0.27 Monthly Plan Rs. 11.9028 Bonus Rs. 14.2089 Indian Oil Corporation 25000 106.06 0.14 Federal Bank 50000 79.30 0.10 Gateway Distriparks 24636 33.30 0.04 Awaiting Listing Average Maturity# Yield to Maturity# Modified Duration# Yes Bank 14.18 0.02 Total equity holdings 15222.83 20.03 Bond 1.82 years 6.37% - Debt holdings Rating Market Value % of Fund 2.39 years 6.26%* 1.97 years (Rs. Lakhs ) Assets ✓ Citifinancial Consumer Finance AAA 5679.60 7.47 #Based on debt portfolios * Pre fund expenses ✓ Loan Securitisation 1 Trust - Bajaj Auto PTC AAA (SO) 5156.56 6.78 Composition by Rating - Debt Portfolio ✓ Hindalco Industries AAA 5144.79 6.77 ✓ Ultratech Cement AA+ 5035.45 6.62 ✓ Citicorp Finance AAA 2500.00 3.29 ✓ Citibank Mobile Trust PTC2 AAA (SO) 1670.71 2.20 Tata Power Company AA+ 1540.50 2.03 JUS Trust PTC - Jet Airways3 AAA (SO) 1337.63 1.76 HDFC Bank Retail Trust PTC Series A34 MAAA (SO) 1181.94 1.56 TISCO AAA 1047.52 1.38 Panatone Finvest AAA (SO) 998.60 1.31 HDFC AAA 995.30 1.31 M&M Financial Services ■ AAA/P1+/SOV 85.30% ■ N.R. 0.20% 5 VE Trust PTC Series A6 AAA (SO) 810.93 1.07 ■ AA/AA+/AA- 14.50% Grasim Industries AAA 514.70 0.68 LIC Housing Finance PTC (MBS) Series A16 AAA (SO) 220.54 0.29 Indian Rayon AAA 206.42 0.27 Oscar Investments LAA (SO) 199.62 0.26 ICICI Bank AAA 156.39 0.21 Hongkong Bank N.R 119.63 0.16 NAV Movement (since inception) GE Capital Transportation Financial Services - PTC Series C7 AAA (SO) 59.34 0.08 Total Corporate Debt 34576.17 45.49 ✓ Neyveli Lignite Corporation AAA 8120.58 10.68 ✓ Power Finance Corporation AAA 6489.51 8.54 ✓ IDFC AAA 2987.29 3.93 ✓ IDBI AA+ 2042.18 2.69 National Thermal Power Corporation AAA 1035.60 1.36 Power Grid Corporation AAA 331.54 0.44 Total PSU/PFI Bonds 21006.70 27.64 GOI 12.00% 2008 SOV 906.52 1.19 GOI 07.55% 2010 SOV 726.81 0.96 GOI 11.99% 2009 SOV 708.10 0.93 GOI 07.37% 2014 SOV 516.05 0.68 Total Gilts 2857.48 3.76 Call, Cash & Other Assets 2345.68 3.09 Net Assets 76008.86 100.00

Originator: 1 ICICI Bank; 2. Citibank N.A; 3. UTI Bank; 4. HDFC Bank; 5. Mahindra & Mahindra Financial Services Limited; 6. LIC Housing Finance Ltd; 7. GE Capital Transportion Fiancial Services Ltd N.R. Non Rated ✓ Top 10 holdings 23 Templeton India Government Securities Fund

Fund Manager: Sameer Kulkarni / Sachin Padwal - Desai As of June 30, 2005 TGSF

Portfolio Portfolio Composition and Performance

Company Name Rating Market Value % of NAV Performance Rs. Lakhs Assets Last 3 months Last 1 year Last 3 year* Last 5 year* Since inception* Composite Plan & PF Plan TGSF - CP (G) 1.23% 2.23% 10.02% 14.28% 14.54% GOI 07.37% 2014 SOV 11353.10 32.43 TGSF - CP (D) 1.23% 2.23% 10.02% 13.88% 14.05% GOI 09.39% 2011 SOV 6212.25 17.74 I-Sec Composite Index 1.75% 3.52% 8.26% N.A N.A GOI 12.00% 2008 SOV 4073.63 11.63 TGSF - PF Plan 1.23% 2.23% N.A N.A -0.40% GOI 07.55% 2010 SOV 3634.05 10.38 NAV Performance I-Sec Composite Index 1.75% 3.52% N.A N.A 0.63% GOI 06.85% 2012 SOV 3015.60 8.61 GOI 10.95% 2011 SOV 1800.33 5.14 TGSF - TP (G) 1.69% 5.11% 7.36% N.A 7.75% TGSF - TP (D) 1.74% 5.16% 7.41% N.A 7.80% GOI 10.25% 2021 SOV 954.75 2.73 I-Sec Si-BEX 1.34% 3.93% 6.10% N.A N.A GOI 12.32% 2011 SOV 625.07 1.79 GOI 11.99% 2009 SOV 590.08 1.69 TGSF - LT Plan 2.35% 4.50% 12.93% N.A 12.90% GOI 08.07% 2017 SOV 544.50 1.56 I Sec Libex 2.32% 4.04% 10.11% N.A N.A Total Gilts 32803.36 93.69 Past performance may or may not be sustained in future. Call, Cash & Other Assets 2209.37 6.31 *Compounded and annualised ** Absolute Dividends declared assumed to be reinvested Net Assets 35012.73 100.00 Latest NAV Long Term Plan GOI 10.25% 2021 SOV 2227.75 34.78 TGSF - CP TGSF - PF Plan GOI 07.37 %2014 SOV 2064.20 32.23 Growth Plan Rs. 22.6756 Growth Plan Rs. 9.9546 GOI 10.95% 2011 SOV 1200.22 18.74 Dividend Plan Rs. 10.9270 Dividend Plan Rs. 9.9546 GOI 12.32% 2011 SOV 625.07 9.76 TGSF - LT TGSF - TP Total Gilts 6117.24 95.51 Growth Plan Rs. 15.4124 Growth Plan Rs. 12.8744 Call, Cash & Other Assets 287.63 4.49 Dividend Plan Rs. 11.2421 Dividend Plan Rs. 10.7134 Net Assets 6404.87 100.00 Bonus Plan Rs. 12.6323 Treasury Plan Average maturity Yield to maturity Modified Duration GOI 12.00% 2008 SOV 2409.75 47.40 GOI 06.96% 2009 SOV 1260.25 24.79 TGSF - CP/PF Plan GOI 11.99% 2009 SOV 944.13 18.57 G-Sec 6.85 years 6.73% - Fund 6.42 years 6.57%* 4.73 years Total Gilts 4614.13 90.77 TGSF - LT Call, Cash & Other Assets 469.47 9.23 G-Sec 10.50 years 7.02% - Net Assets 5083.60 100.00 Fund 10.02 years 6.88%* 6.96 years TGSF - TP Fund Manager’s Commentary G-Sec 3.28 years 6.42% - Fund 2.98 years 6.18%* 2.52 years NAV Performance The maturity period of the composite plan has increased to 6.42 years from 1.94 *Pre fund expenses years, while that of the long term plan increased from 0.80 years to 10.02 years.

Templeton India Short-Term Income Plan

Fund Manager: Sameer Kulkarni As of June 30, 2005 TISTIP

Portfolio Portfolio Composition and Performance

Company Name Rating Market Value % of Fund Manager’s Commentary Rs. Lakhs Assets

✓ Hindalco Industries AAA 3077.28 6.86 The maturity period of the fund increased to 1.88 years from 1.68 years during ✓ M&M Financial Services AA+ 2503.39 5.58 the last quarter. The exposure to corporate debt has decreased to 38.87% and ✓ Citifinancial Consumer Finance AAA 2296.27 5.12 ✓ HDFC AAA 2223.49 4.96 that to PSU bonds has gone up to 29.42%. We have added gilts to the portfolio. Grasim Industries AAA 1544.10 3.44 Reliance Industries AAA 1515.64 3.38 1 HDFC Bank- Retail Trust PTC Series A1 AAA (SO) 1387.28 3.09 NAV Performance ICICI Bank AAA 1055.20 2.35 Panatone Finvest AAA (SO) 1003.40 2.24 Last Last Last Last Since 2 Citicorp Finance Fleet Trust - PTC Series A2 AAA (SO) 833.66 1.86 1 month 3 months 6 months 1 year inception* Total Corporate Debt 17439.71 38.87 NAV Performance ✓ NTPC AAA 2677.40 5.97 TISTIP 0.59% 1.82% 3.39% 5.48% 6.52% ✓ Power Finance Corporation AAA 2566.50 5.72 Crisil Short-Term ✓ IDFC AAA 2544.92 5.67 Bond Fund Index 0.44% 1.26% 2.62% 4.23% N.A ✓ Neyveli Lignite Corporation AAA 2082.20 4.64 Indian Railways Finance Corporation AAA 1978.10 4.41 Past performance may or may not be sustained in future. *Compounded and annualised SBI AAA 1130.10 2.52 IDBI AA+ 219.30 0.49 Total PSU/PFI Bonds 13198.52 29.42 Latest NAV ✓ GOI 11.99% 2009 SOV 2596.35 5.79 GOI 12.00% 2008 SOV 1721.25 3.84 Growth Plan Rs. 1240.6692 Quarterly Plan Rs. 1014.4939 Total Gilts 4317.60 9.62 Weekly Plan Rs. 1090.6787 Bonus Rs. 1039.5855 ✓ EXIM Bank P1+ 3512.03 7.83 Sundaram Finance P1+ 1893.42 4.22 Monthly Plan Rs. 1020.5801 UTI Bank A1+ 946.63 2.11 Total Money Market Instruments 6352.08 14.16 Average Maturity# Yield to Maturity# Modified Duration# Call, Cash & Other Assets 3556.08 7.93 Net Assets 44863.99 100.00 Bond 2.13 years 6.36% - Originator: 1 HDFC Bank; 2. Citicorp Finance (India) Ltd. & Citibank N.A * Top 10 holdings Fund 1.88 years 6.18%* 1.54 years 24 * Pre fund expenses Templeton Floating Rate Income Fund - Long Term

Fund Manager: Sameer Kulkarni / Ninad Deshpande As of June 30, 2005 TFIF

Portfolio Portfolio Composition and Performance

Company Name Rating Market Value % of Fund Manager’s Commentary Rs. Lakhs Assets The maturity period for the long-term plan decreased to 1.23 years from ✓ HDFC AAA 7024.48 5.82 ✓ M&M Financial Services AA+ 6504.65 5.39 1.34 years and the main additions were Citifinancial Consumer Finance, ✓ Indian Retail ABS HDFC Bank and GOI 12.00% 2008. The exposure to money market Trust Series XVIII A21 AAA (SO) 5920.42 4.90 instruments has increased to 22.60% from 17.53% during the last quarter. ✓ Rabo India Finance AAA 5000.00 4.14 Citifinancial Consumer Finance AAA 2500.83 2.07 HDFC Bank Retail Trust 2 NAV Performance PTC Series A3 MAAA (SO) 2363.88 1.96 Indus Ind Bank Securitisation Last Last Last Last Since Trust PTC Series A23 AAA (SO) 2066.55 1.71 NAV Performance1 month 3 months 6 months 1 year inception* GE Capital Services AAA 2000.00 1.66 Long-Term Plan 0.43% 1.32% 2.60% 5.06% 5.93% Ultratech Cement AA+ 1500.00 1.24 Crisil Liquid Fund Index 0.37% 1.16% 2.29% 4.36% N.A ICICI Bank AAA 1323.98 1.10 *Compounded and annualised Past performance may or may not be sustained in future. Standard Chartered Investments & Loans AAA 1004.73 0.83 Sundaram Finance MAAA 1003.80 0.83 Latest NAV Panatone Finvest AAA (SO) 1003.40 0.83 Growth Plan Rs. 12.1526 Dividend Plan Rs. 10.2562 LIC Housing Finance - UBL Trust PTC MBS Series A1 P1+ (SO) 861.77 0.71 M&M Financial Services VE Trust PTC Series A74 AAA (SO) 622.76 0.52 Modified Duration Yield to Maturity* 5 Fleet Trust PTC (Series A3) AAA (SO) 568.29 0.47 Long-Term Plan 0.47 years 6.08% ACC AA+ 501.80 0.42 Tata Motors AA+ 500.00 0.41 * Pre fund expenses Indian Retail ABS Trust Series XV A21 AAA (SO) 499.98 0.41 Fleet Trust PTC (Series A6)6 AAA (SO) 381.25 0.32 Average Maturity Standard Chartered Bank - Bond Fund Mumbai Auto Receivables 7 Long-Term Plan 1.42 years 1.23 years Trust - PTC Series A2 AAA (SO) 262.09 0.22 PFSL - PTC - Citibank N.A8 AAA (SO) 7.85 0.01 Total Corporate Debt 43422.51 35.97 ✓ IDBI AA+ 13721.74 11.37 Composition by Assets ✓ National Housing Bank AAA 5557.39 4.60 EXIM Bank AAA 1001.13 0.83 SBI AAA 520.55 0.43 NTPC AAA 511.45 0.42 Power Finance Corporation AAA 510.35 0.42 NABARD AAA 499.70 0.41 Total PSU/PFI Bonds 22322.31 18.49 ✓ GOI 12.00% 2008 SOV 3442.50 2.85

GOI Floating Rate Bond 2013 SOV 1902.85 1.58 ■ Corporate Debt 35.97% Total Gilts 5345.35 4.43 ■ Mibor Linked Instruments 10.10% ✓ LIC Housing Finance AAA 4000.00 3.31 ■ PSU/PFI Bonds 18.49% M&M Financial Services AA+ 3000.00 2.49 ■ Money Market Instruments 22.60% GE Capital Services AAA 3000.00 2.49 ■ Call, Cash & Other Assets 4.43% 1 Indian Retail ABS Trust PTC Series A2 AAA (SO) 1498.67 1.24 ■ Gilts 8.41% Citifinancial Consumer Finance AAA 500.00 0.41 Citicorp Finance AAA 200.00 0.17 Total Mibor Linked Instruments 12198.67 10.10 NAV Movement (since inception) ✓ ICICI Bank P1+ 7360.92 6.10 ✓ ICICI Bank A1+ 4940.31 4.09 Panatone Finvest P1+ 2454.76 2.03 IL&FS P1+ 2427.47 2.01 Federal Bank P1+ 2400.13 1.99 M&M Financial Services P1+ 2385.96 1.98 Reliance Energy P1+ 1921.73 1.59 Standard Chartered Bank P1+ 1474.44 1.22 Indus Ind Bank P1+ 959.91 0.80 EXIM Bank P1+ 953.03 0.79 Total Money Market Instruments 27278.66 22.60 Bank Deposit ICICI Bank 1290.00 1.07 Call, Cash & Other Assets$ 10153.79 8.41 Net Assets 120721.29 100.00

Originator: 1 ICICI Bank; 2. HDFC Bank; 3. Indus Ind Bank; 4. Mahindra & Mahindra Financial Services Ltd; 5. Citicorp Finance (India) Ltd; 6. Citicorp Finance (India) Ltd. & Citibank N.A. 7. Standard Chartered Bank; 8. Citibank N.A $ Inclusive of Bank Deposits ✓ Top 10 holdings 25 Templeton Floating Rate Income Fund - Short Term

Fund Manager: Sameer Kulkarni / Ninad Deshpande As of June 30, 2005 TFIF

Portfolio Portfolio Composition and Performance

Company Name Rating Market Value % of Fund Manager’s Commentary Rs. Lakhs Assets

✓ HDFC AAA 11034.14 4.01 The maturity period for the short-term plan decreased to 1.03 years from Indian Retail ABS Trust 1.08 years. The allocation to corporate debt decreased to 16.66%, and PTC Series A21 AAA (SO) 5821.81 2.12 M&M Financial Services AA+ 5000.00 1.82 that to money market instruments has gone up to 34.40%. Rabo India Finance AAA 5000.00 1.82 Retail Trust PTC Series A4 - 12 AAA 4157.00 1.51 Indian Retail ABS Trust PTC Series XV A21 AAA (SO) 2999.91 1.09 NAV Performance Retail Trust PTC Series A42 AAA (SO) 1584.08 0.58 Last Last Last Last Since Panatone Finvest AAA (SO) 1505.10 0.55 1 month 3 months 6 months 1 year inception* Citicorp Finance Fleet Trust - Series A53 AAA (SO) 1270.66 0.46 NAV Performance Citicorp Finance Fleet Short-Term Plan 0.43% 1.35% 2.63% 5.14% 5.86% 3 Trust - Series A6 AAA (SO) 1262.33 0.46 Crisil Liquid Fund Index 0.37% 1.16% 2.29% 4.35% N.A Fleet Trust PTC Series A63 AAA (SO) 1143.74 0.42 *Compounded and annualised Past performance may or may not be sustained in future. Reliance Industries AAA 1142.16 0.42 ICICI Bank AAA 962.35 0.35 Fleet Trust PTC Series A23 AAA (SO) 766.07 0.28 Latest NAV Indian Retail ABS Trust PTC Series A21 AAA (SO) 592.83 0.22 Reliance Industries AAA 517.05 0.19 Growth Plan Rs. 12.1255 Dividend Plan Rs. 10.0266 ACC AA+ 500.50 0.18 M&M Financial Services VE Trust PTC Series A44 AAA (SO) 362.23 0.13 Modified Duration Yield to Maturity* Fleet Trust PTC Series A13 AAA (SO) 162.94 0.06 PFSL PTC - Citibank5 AAA (SO) 60.05 0.02 Short-Term Plan 0.39 years 5.91% PFSL PTC - Tata Motors6 AAA (SO) 3.09 0.00 Total Corporate Debt 45848.04 16.66 * Pre fund expenses ✓ IDBI AA+ 27452.06 9.98 ✓ National Housing Bank AAA 24156.53 8.78 Average Maturity SBI AAA 2810.97 1.02 Bond Fund EXIM Bank AAA 2002.61 0.73 NABARD AAA 1499.10 0.54 Short-Term Plan 1.35 years 1.03 years IDFC AAA 870.21 0.32 Power Finance Corporation AAA 510.35 0.19 Total PSU/PFI Bonds 59301.83 21.55 Composition by Assets GOI Floating Rate Bond 2013 SOV 5908.85 2.15 Total Gilts 5908.85 2.15 ✓ Indian Retail ABS Trust PTC Series A21 AAA (SO) 17484.44 6.35 ✓ LIC Housing Finance AAA 13500.00 4.91 Citifinancial Consumer Finance AAA 3000.00 1.09 Sundaram Finance MAAA 2500.00 0.91 M&M Financial Services AA+ 2000.00 0.73 Total Mibor Linked Instruments 38484.44 13.99 ✓ UTI Bank P1+ 11776.54 4.28 ✓ ICICI Bank P1+ 10854.84 3.94 ■ Corporate Debt 16.66% ✓ ICICI Bank A1+ 9269.69 3.37 ■ Mibor Linked Instruments 13.99% ✓ Standard Chartered Bank P1+ 8322.59 3.02 ■ PSU/PFI Bonds 21.55% EXIM Bank P1+ 7394.69 2.69 ■ Money Market Instruments 34.40% Citicorp Finance P1+ 6743.49 2.45 ■ Call, Cash & Other Assets 11.25% ING Vysya Bank P1+ 5856.61 2.13 ■ Gilts 2.15% Panatone Finvest P1+ 5460.51 1.98 GE Capital Services P1+ 4894.96 1.78 Kotak Mahindra Bank P1+ 3902.51 1.42 Sundaram Finance A1+ 3792.82 1.38 NAV Movement (since inception) Rabo India Finance P1+ 2449.94 0.89 M&M Financial Services P1+ 2398.28 0.87 SBI P1+ 2372.75 0.86 Yes Bank A1+ 1952.53 0.71 Sundaram Finance P1+ 1897.43 0.69 Power Finance Corporation AAA 1493.56 0.54 Indus Ind Bank P1+ 1439.86 0.52 364 Day Treasury Bill SOV 1430.52 0.52 Federal Bank P1+ 960.05 0.35 Total Money Market Instruments 94664.17 34.40 Bank Deposit ✓ ICICI Bank 11770.00 4.28 Syndicate Bank 2500.00 0.91 Indus Ind Bank 2500.00 0.91 Call, Cash & Other Assets $ 30957.45 11.25 Net Assets 275164.78 100.00

Originator: 1 ICICI Bank; 2. HDFC Bank; 3. Citicorp Finance (India) Ltd. & Citibank N.A; 4. Mahindra & Mahindra Financial Services Ltd; 5. Citibank N.A; 6. Tata Motors 26 $ Inclusive of Bank Deposits ✓ Top 10 holdings Templeton India Treasury Management Account

Fund Manager: Sameer Kulkarni As of June 30, 2005 TITMA

Portfolio Portfolio Composition and Performance

Company Name Rating Market Value % of Fund Manager’s Commentary Rs. Lakhs Assets

✓ Indian Retail - PTC Series A2 XV1 AAA (SO) 6499.81 2.56 The maturity period of the fund has decreased marginally to 0.37 years Panatone Finvest AAA (SO) 4515.30 1.78 Retail Trust PTC Series A52 AAA (SO) 3653.63 1.44 and the cash exposure has come down to 8.87%. M & M Financial Services VE Trust PTC Series A73 AAA (SO) 2902.62 1.15 Retail Trust PTC Series A42 AAA (SO) 2851.35 1.13 Indian Retail - PTC Series XVIII A21 AAA (SO) 2181.21 0.86 NAV Performance Indus Ind Bank Securitisation Trust PTC Series A1 4 P1+ (SO) 1964.77 0.78 Last Last Last Last Since ICICI Bank AAA 1858.86 0.73 7 days 15 days 1 month** 3 months** inception* Indian Retail - ABS Trust PTC Series A21 AAA (SO) 1833.62 0.72 TITMA - Regular Plan (G) 0.10% 0.21% 5.01% 5.02% 7.48% M&M Financial Services AA+ 1508.95 0.60 Cholamandalam Investment AA+ 1505.36 0.59 CrisilNA LiquidV Per Fundfor Indexmance 0.08% 0.19% 4.51% 4.66% N.A Maruti Udyog LAAA 1505.25 0.59 HDFC Bank - Retail Trust PTC Series A12 AAA (SO) 1387.28 0.55 TITMA - I Plan (G) 0.10% 0.22% 5.26% 5.27% 4.99% Reliance Industries AAA 1012.10 0.40 Crisil Liquid Fund Index 0.08% 0.19% 4.51% 4.66% 4.34% Rabo India Finance AAA 1001.70 0.40 Citicorp Maruti Finance AAA 1000.40 0.39 TITMA - Liquid Plan (G) 0.09% 0.20% 4.76% 4.77% 4.65%** Citicorp Finance Crisil Liquid Fund Index 0.08% 0.19% 4.51% 4.66% 4.48%** Fleet Trust - PTC Series A75 AAA (SO) 880.76 0.35 Citicorp Finance Past performance may or may not be sustained in future. Fleet Trust - PTC Series A35 AAA (SO) 844.85 0.33 *Compounded and annualised **Annualised ***Absolute Citicorp Finance Fleet Trust - PTC AAA (SO) 823.30 0.32 Indian Retail ABS Trust PTC Series A21 MAAA (SO) 675.24 0.27 Lakshmi General Finance AAA 602.37 0.24 Latest NAV Citicorp Finance Fleet Trust - PTC Series A16 AAA (SO) 527.15 0.21 TITMA - R Plan TITMA - L Plan HDFC AAA 500.40 0.20 Growth Plan Rs. 1677.7268 Growth Plan Rs. 1036.4127 Indus Ind Bank Securitisation Weekly Plan Rs. 1244.9437 Dividend Plan Rs. 1000.9773 Trust PTC Series A24 AAA (SO) 469.67 0.19 Daily Dividend Rs. 1511.9801 Daily Dividend Rs. 1000.0115 Citicorp Finance Fleet Trust - PTC Series A26 AAA (SO) 443.37 0.17 TITMA - I Plan PFSL PTC - Cholamandlam Series A27 MAAA (SO) 441.31 0.17 Growth Plan Rs. 1051.0523 Indian Retail ABS Trust Weekly Plan Rs. 1001.0522 PTC Series XVI A11 P1+ (SO) 401.47 0.16 Daily Dividend Rs. 1000.0115 GE Capital Transportation Financial Services - PTC Series B8 AAA (SO) 238.97 0.09 HDFC Bank - Retail Trust PTC2 AAA (SO) 204.89 0.08 Average Maturity Yield to Maturity Modified Duration ACC AA+ 200.74 0.08 Standard Chartered Bank - Mumbai Auto Receivables Bond 0.51 years 6.08% - 9 Trust - PTC Series A2 AAA (SO) 105.67 0.04 Fund 0.37 years 5.85%* 0.29years Total Corporate Debt 44542.36 17.58 Nabard AAA 3497.89 1.38 * Pre fund expenses Power Finance Corporation AAA 1533.90 0.61 IDFC AAA 870.21 0.34 SBI AAA 832.88 0.33 Composition by Assets Total PSU/PFI Bonds 6734.88 2.66 GOI 06.18% 2005 SOV 2503.60 0.99 Total Gilts 2503.60 0.99 ✓ Indus Ind Bank P1+ 20220.24 7.98 ✓ ING Vysya Bank P1+ 17555.44 6.93 ✓ UTI Bank P1+ 16668.91 6.58 ✓ EXIM Bank P1+ 12904.71 5.09 ✓ ICICI Bank A1+ 12832.56 5.06 ✓ ICICI Bank P1+ 12364.40 4.88 ✓ IDBI P1+ 9780.11 3.86 ✓ Kotak Mahindra Bank P1+ 8758.78 3.46 ✓ IL&FS P1+ 7338.04 2.90 ■ Money Market Instruments 69.91% ■ PSU/PFI Bonds 2.66% Federal Bank P1+ 6240.34 2.46 ■ Corporate Debt 17.58% ■ Gilts 0.99% GE Capital Services P1+ 5935.22 2.34 ■ Yes Bank A1+ 5905.90 2.33 Call, Cash & Other Assets 8.87% GE Countrywide P1+ 5851.11 2.31 Citicorp Finance P1+ 4854.50 1.92 364 Day Treasury Bills SOV 4814.25 1.90 NAV Movement (since inception) Panatone Finvest P1+ 3954.30 1.56 UTI Bank A1+ 3409.55 1.35 Reliance Energy P1+ 3363.42 1.33 Power Finance Corporation AAA 2489.27 0.98 Rabo India Finance P1+ 2442.26 0.96 Apollo Tyres P1+ 1989.89 0.79 IDBI Home Finance A1+ 1988.09 0.78 AMEX A1+ 1931.37 0.76 Sundaram Finance P1+ 1897.72 0.75 Dabur P1+ 997.93 0.39 HDFC P1+ 497.79 0.20 91 Day Treasury Bill SOV 182.38 0.07 Total Money Market Instruments 177168.48 69.91 Bank Deposit Syndicate Bank 2500.00 0.99 Indus Ind Bank 2500.00 0.99 Call, Cash & Other Assets$ 22483.64 8.87 Net Assets 253432.96 100.00

Originator: 1 ICICI Bank; 2. HDFC Bank; 3. Mahindra & Mahindra Financial Services Ltd; 4. Indus Ind Bank; 5. Citicorp Finance (India) Ltd. & Citibank N.A; 6. Citicorp Finance India Ltd; 7. Cholamandalam Investment & Finance Company Ltd; 8. GE Capital Transportion Fiancial Services Ltd; 9. Standard Chartered Bank 27 $ Inclusive of Bank Deposits ✓ Top 10 holdings Other Information

IMPORTANT PAN AND BANK DETAILS: It is mandatory for the applicants to give their PAN and bank account details such as type of account, account number, name of bank and branch. In case of investments of Rs.50,000/- and above, income tax P.A.N. is to be furnished. The applications may get rejected in case of non-submission of the same. Please provide a copy of your PAN card for verification failing which transactions will not be processed. Investors not having a PAN are required to submit Form 60/61 along with necessary proof of address for each transaction of Rs. 50,000 and above. We request you to provide the PAN & Bank Account details, if not provided earlier.

UNCLAIMED DIVIDENDS AND REDEMPTIONS: This is a reminder to the unitholders to check whether they have received all the dividends/redemptions paid by the fund. Please contact your nearest ISC for queries relating to non-receipt of such pay-outs.

For more information please contact:

Ahmedabad Banashree (079) 26470056, 26470057 Lucknow Manish (0522) 2285301, 2231785 Bangalore Deepthi (080) 22385612/14 Ludhiana Manish (0161) 2406191, 2406198 Baroda Prasad (0265) 2356036/37 Madurai Cholai (0452) 2343008, 98942 63298 Bhubaneswar Sujata (0674) 2535141, 2531745 Mangalore Poornima (0824) 2492796, 98456 82135 Chandigarh Ranjan (0172) 2613371, 2622341 Mumbai Sameera (022) 56325820-36 Chennai Chitra (044) 24679203, 24679204 Nagpur Bhawani (0712) 2555074, 2553794 Cochin Bertram (0484) 2373078/2370380 Nashik Evellyn (0253) 2574327/2574329 Coimbatore Sheshadri (0422) 2474616, 2470277 Patna Alok Trivedi (0612) 2212277/2213170 Dehradun Ajeet (0135) 2743268, 2748306 Pune Nilima (020) 25533140/1, 25513660/1 Delhi Reetu (011) 51510535 / 23738670 (D) Raipur Sharique (0771) 5033614/5033244 Hyderabad Pooja (040) 55665915, 55665916 Rajkot Alpa (0281) 2294204/2471395 Indore Ashish Jain 98930 28690 Salem Balaji (0427) 2446854/9894246854 Bhavna (0731) 2436324, 5201507 Jaipur Rohit Singh 98290 66345 Surat Nimesh (0261) 2473766 Heera (0141) 2377904, 2377905 Trichy Senthi Kumar (0431) 2464022, 98942 14691 Jalandhar Anu Jindal (0181) 5080783, 5080784 Varanasi Pradeep (0542) 2226684 Kanpur Vineet (0512) 2303131, 2330767 Vijayawada Srinivas (0866) 2472594/5561301 Kolkata Sujata (033) 22824171 / 22826517 Visakhapatnam Sujatha (0891) 5565351/2704705

For further information you can mail us at [email protected]

Risk Factors: All investments in mutual funds and securities are subject to market risks and the NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. There can be no assurance that schemes’ investment objectives will be achieved. The past performance of the mutual funds managed by the Franklin Templeton Group and its affiliates is not necessarily indicative of future performance of the schemes. Templeton India Growth Fund, Franklin India Index Fund, Franklin India Flexi Cap Fund, Templeton India Income Fund, Templeton Monthly Income Plan@, Templeton India Government Securities Fund, Templeton Floating Rate Income Fund, Franklin India Bluechip Fund, Franklin India Prima Plus, Franklin India Prima Fund, Franklin India Taxshield, Franklin Infotech Fund, Franklin FMCG Fund, Franklin Pharma Fund, Franklin India Opportunities Fund, FT India Balanced Fund, FT India Life Stage Fund of Funds, Templeton India Pension Plan, Franklin India International Fund, Templeton India Income Builder Account, FT India Monthly Income Plan@, FT India Dynamic PE Ratio Fund of Funds, Templeton India Short-Term Income Plan, Templeton India Treasury Management Account, Templeton India Money Market Account, are only the names of the schemes and do not in any manner indicate the quality of the schemes, their future prospects or returns. In Franklin India International Fund, the investments made by the scheme in the US Fund are subject to external risks including currency risk, downgrade risk of US Government debt. The investment in the US fund will be restricted to the statutory limits. In Franklin Infotech Fund, Franklin FMCG Fund, Franklin Pharma Fund, the diversification is restricted to the respective sectors as a result of which, the movement in the NAV may be more volatile compared to schemes with a more diversified portfolio. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes. The Mutual Fund is also not assuring that it will make any dividend/bonus distributions under the dividend/bonus plans of the schemes though it has every intention of doing so. All dividend/bonus distributions are subject to the investment performance of the schemes. The investments made by the schemes are subject to external risks. The schemes may invest in various derivative instruments including Index futures, which are untested instruments in Indian Markets and may carry high risk return ratio and may also invest in overseas instruments which is subject to forex fluctuation risks. The floating rate investments are subject to risks pertaining to Interest rate movement, Spread Movement, Settlement and Liquidity. FTDPEF/FTLF being fund of funds schemes, investors are bearing the recurring expenses of the schemes in addition to the expenses of the underlying schemes. In the cases of Franklin India Index Fund, the existence, accuracy and performance of the S&P CNX Nifty Index will directly affect the schemes performance and tracking errors are inherent in any Index Fund. All subscriptions in Franklin India Taxshield and Templeton India Pension Plan are subject to a lock-in-period of 3 financial years and the unitholder cannot redeem, transfer, assign or pledge the units from the date of allotment. The Trustee, AMC, their directors or their employees shall not be liable for any of the tax consequences that may arise, in the event that the Scheme is wound up before the completion of the lock-in period. In the case of hybrid funds, in the event that the investible funds of more than 50% of the total proceeds of the scheme are not invested in equity shares, then tax exemption on income distribution may not be available to the fund. Investors are requested to consult tax professionals for specific tax, legal and financial implications of the investment/participation/disinvestment in the schemes. All returns are computed without considering sales charge. Please call the Templeton Investor Service Centre numbers to obtain a copy of the offer document and go through the same before investing. Statutory Details: Franklin Templeton Mutual Fund in India has been set up as a trust by Templeton International Inc. (liability restricted to the seed corpus of Rs.1 lac) with Franklin Templeton Trustee Services Pvt. Ltd. as the Trustee (Trustee under the Indian Trust Act 1882) and with Franklin Templeton Asset Management (India) Pvt. Ltd. as the Investment Manager. The Fund offers NAV’s, purchases and redemptions on all business days except during the period when there is a book closure. Corporate Office: Franklin Templeton Asset Management (India) Pvt. Ltd. Bandra Kurla Complex, 4th Floor, Wockhardt Towers, Bandra (East), Mumbai 400 051 www. franklintempletonindia.com