AUDITORS REPORT. To the Board of Directors of Trustees of FRANKLIN TEMPLETON MUTUAL FUND FRANKLIN INDIA BLUECHIP FUND

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1 AUDITORS REPORT To the Board of Directors of Trustees of FRANKLIN TEMPLETON MUTUAL FUND 1. We have audited the attached balance sheet of FRANKLIN TEMPLETON MUTUAL FUND (the Scheme ) as at March 31, 2011 and also the revenue account and cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the management of Franklin Templeton Asset Management (India) Private Limited, the Scheme s asset managers. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We report that: i. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; ii. The balance sheet, revenue account and cash flow statement dealt with by this report are in agreement with the books of account; iii. In our opinion, the balance sheet, revenue account and cash flow statement dealt with by this report have been prepared in conformity with the accounting policies and standards specified in the Ninth Schedule to the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 (the SEBI Regulations ); iv. In our opinion, and on the basis of information and explanations given to us, the methods used to value non traded securities as at March 31, 2011 are in accordance with the SEBI Regulations and other guidelines issued by the Securities and Exchange Board of India as applicable and approved by the Board of Directors of Franklin Templeton Trustee Services Private Limited, and are fair and reasonable;

2 v. In our opinion, and to the best of our information and according to the explanations given to us, the said financial statements give the information required by the SEBI Regulations as applicable and give a true and fair view in conformity with the accounting principles generally accepted in India: a) in the case of the balance sheet, of the state of affairs of the Scheme as at March 31, 2011; b) in the case of the revenue account, of the surplus, for the year ended on that date; and c) in the case of cash flow statement, of the cash flows for the year ended on that date. For S.R. Batliboi & Co. Firm Registration Number E Chartered Accountants per Shrawan Jalan Partner Membership No.: Mumbai, July 8, 2011

3 BALANCE SHEET AS AT MARCH 31, 2011 (All amounts in thousands of Rupees) SOURCES OF FUNDS Schedules As at As at March 31, 2011 March 31, Unit Capital 2(b) & 3 4,851,505 4,339,442 2 Reserves and Surplus Unrealised Appreciation Reserve 5,174,104 6,897, Retained Surplus 30,880,731 20,074,283 3 Current Liabilities and Provisions Current Liabilities 401, ,042 TOTAL 41,307,763 31,568,017 APPLICATION OF FUNDS 1 Investments 2(c), 6 & Listed Securities Equity Shares 34,672,410 27,305, Other Debentures and Bonds 10,486-2 Other Current Assets Cash and Bank Balances 115,458 94, CBLO/ Reverse Repo Lending 2,876,974 2,205, Others 802, ,855 3 Accumulated Unit Discount, Net 8 2,830,039 1,787,379 TOTAL 41,307,763 31,568,017 Notes to Accounts 1 to 16 The accompanying schedules are an integral part of this Balance Sheet. As per our attached report of even date For Franklin Templeton Asset Management (India) Private Limited For S.R. Batliboi and Co. For Franklin Templeton Trustee Firm Registration no E Services Private Limited Navroz Seervai Vivek Kudva Chartered Accountants Director Director July 8, 2011 Mumbai Murali Krishna Yerram Asst. Vice President Anand J. Vashi Harshendu Bindal Anand Vasudevan Director President Senior Vice President and Portfolio Manager Anand Radhakrishnan Vivek Pai per Shrawan Jalan Indu Shahani Senior Vice President and Vice President Partner Director Portfolio Manager Membership No Rajat Malhotra Asst. Vice President

4 REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2011 (All amounts in thousands of Rupees) Schedules Year ended Year ended March 31, 2011 March 31, INCOME 1.1 Dividend 2(d) 370, , Interest 2(d) & 9 120,059 45, Realised Gain on External Sale / Redemption of Investments, net 2(d) 6,076,825 5,886, Other Income ,568,010 6,194,087 2 EXPENSES 2.1 Management Fees , , Service Tax on Management Fees 10 33,659 25, Transfer Agents Fees and Expenses 48,401 37, Custodian Fees 4,737 3, Trusteeship Fees Commission to Agents 146, , Marketing and Distribution Expenses 21,965 20, Audit Fees Other Operating Expenses 13,993 17, , , Expenses Written Back pertaining to previous year (1,619) - 596, ,516 3 NET REALISED GAINS / (LOSSES) FOR THE YEAR 5,972,004 5,739,571 4 Change in Unrealised Depreciation in value of Investments 2(c) & 6(ii) - (1,141,717) 5 NET GAINS / (LOSSES) FOR THE YEAR (3-4) 5,972,004 6,881,288 6 Change in Unrealised Appreciation in the value of Investments (1,723,146) 6,897,250 7 NET GAINS / (LOSSES) FOR THE YEAR AFTER CHANGE IN UNREALISED APPRECIATION (5+6) 4,248,858 13,778, Add: Balance Transfer from Unrealised Appreciation Reserve 4 6,897, Less: Balance Transfer to Unrealised Appreciation Reserve 4 5,174,104 6,897, Add / (Less): Equalisation Credit/(Debit) 2(e) 6,382, ,635 8 Total 12,354,539 7,237,923 9 Dividend Appropriation 9.1 Income Distributed During the Year 14 (1,548,091) (1,179,281) 10 NET SURPLUS / (DEFICIT) FOR THE YEAR 4 10,806,448 6,058,642 (8+9) TRANSFERRED TO BALANCE SHEET Notes to Accounts 1 to 16 The accompanying schedules are an integral part of this Revenue Account. As per our attached report of even date For Franklin Templeton Asset Management (India) Private Limited For S.R. Batliboi and Co. For Franklin Templeton Trustee Firm Registration no E Services Private Limited Navroz Seervai Vivek Kudva Chartered Accountants Director Director Anand J. Vashi Harshendu Bindal Anand Vasudevan Director President Senior Vice President and Portfolio Manager Anand Radhakrishnan Vivek Pai per Shrawan Jalan Indu Shahani Senior Vice President and Vice President Partner Director Portfolio Manager Membership No July 8, 2011 Murali Krishna Yerram Rajat Malhotra Mumbai Asst. Vice President Asst. Vice President

5 CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2011 (All amounts in thousands of Rupees) March 31, 2011 March 31, 2010 A. Cashflow from Operating Activities Net Gains / (Losses) for the Year 5,972,004 6,881,288 Add / (Less) : Change in Unrealised Appreciation in the value of Investments - (1,141,717) Adjustments for:- (Increase)/Decrease in Investments at Cost (9,653,611) (5,888,877) (Increase)/Decrease in Other Current Assets (669,241) (667,681) Increase/(Decrease) in Current Liabilities 51,703 44,594 Net Cash Generated from/(used in) Operations ( A ) (4,299,145) (772,393) B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital 361, ,496 Increase/(Decrease) in Unit Premium 4,905, ,106 Adjustments for:- Increase/(Decrease) in Sundry Creditors for Units Redeemed by Investors 45,182 61,186 (Increase)/Decrease in Sundry Debtors for Units Issued to Investors (28,533) (101,866) Dividend paid during the year (including tax on income distributed during the year) (963,093) (917) Net Cash (used in)/generated from Financing Activities ( B ) 4,320, ,005 Net Increase/(Decrease) in Cash and Cash Equivalents (A+B) 21,024 71,612 Cash and Cash Equivalents as at the beginning of the Year 94,434 22,822 Cash and Cash Equivalents as at the end of the Year 115,458 94,434 Components of Cash and Cash Equivalents Balances with Banks in Current Accounts and Unclaimed dividend bank account 115,458 94, ,458 94,434 As per our attached report of even date For Franklin Templeton Asset Management (India) Private Limited For S.R. Batliboi and Co. For Franklin Templeton Trustee Firm Registration no E Services Private Limited Navroz Seervai Vivek Kudva Chartered Accountants Director Director Anand J. Vashi Harshendu Bindal Anand Vasudevan Director President Senior Vice President and Portfolio Manager per Shrawan Jalan Partner Indu Shahani Anand Radhakrishnan Vivek Pai Membership No Director Senior Vice President and Vice President Portfolio Manager Murali Krishna Yerram Rajat Malhotra July 8, 2011 Asst. Vice President Asst. Vice President Mumbai

6 SCHEDULES TO THE BALANCE SHEET AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2011 (All amounts in thousands of Rupees unless specified otherwise) 1. BACKGROUND Franklin Templeton Mutual Fund ( the Fund ) was established as a trust under the Indian Trusts Act, 1882, by way of a trust deed dated January 4, 1996, a supplementary trust deed dated March 30, 1996 and August 26, 2005 executed by Templeton International Inc. USA, the sponsor of the Fund. Templeton International Inc. is a part of the Franklin Templeton Investments group. In accordance with the Securities and Exchange Board of India ( SEBI ) (Mutual Funds) Regulations, 1996 ( the SEBI Regulations ), the Board of Directors of Franklin Templeton Trustee Services Private Limited ( the Trustee ) has appointed Franklin Templeton Asset Management (India) Private Limited ('the AMC') to manage the Fund s affairs and operate its Schemes. The objective and other feature of the schemes covered in the financial statement are as under: Nature of the Scheme Name Date of Allotment Scheme Objective Plans Offered Scheme Franklin India Blue Chip Fund Open ended mutual fund scheme December 1, 1993 The primaryobjective of the Scheme is to provide The Scheme offers its investors two plans: the long term capital appreciation from a portfolio Dividend Plan and the Growth Plan ( the Plans ). invested predominantly in value oriented equity securities. The Scheme aims to generate a regular flow of income for investors under the Dividend Plan, and to achieve capital appreciation for long term investors under the Growth Plan. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financialstatements are prepared on the accrual basis of accounting, under the historical cost convention, as modifiedfor investments, which are marked-to-market. The significant accounting policies, which are in accordance with the SEBI Regulations and have been approved by the Board of Directors of the AMC and the Trustee, are stated below. (a) (b) Determination of net asset value - The net asset value of the units of the Scheme is determined separately for units issued under the Plans after includingthe respective unit capital and reserves and surplus, and reducing net deficit and accumulated discount, if any. - For reporting the net asset values, the dailyincome earned, includingrealised profit or loss and unrealisedgain or loss in the value of investments, and expenses incurred by the Scheme, are allocated to the Plans in proportion to their respective daily net assets as at the end of the immediately preceding day. Unit capital - Unit capital represents the net outstanding units at the balance sheet date, thereby reflecting all transactions relating to the year ended on that date. - Upon issue and redemption of units, the net premium or discount to the face value of units is adjusted against the unit premium reserve of the Scheme, after an appropriate portion of the issue proceeds and redemption payouts is credited or debited respectively to the equalisation account, a mandatory requirement for open ended mutual fund Schemes. Prior to March 15, 2010, the Unit Premium Reserve was available for dividend distribution except to the extent it is represented by unrealised net appreciation in value of investments. (c) Investments Accounting for investment transactions - Purchase and sale of investmentsare recorded on the date of the transaction, at cost and sale price respectively, after considering brokerage, commission,securities transaction tax and fees payable or receivable, if any. The front end fee receivable, if any, is reduced from the cost of investment. - Right entitlements are recognised as investments on the ex-rights date. - Bonus entitlements are recognised as investments on the ex-bonus date. - Other Corporate Action entitlements are recognised on the ex date. - Initial Margin paid against equity derivatives is accounted as current assets. Realised gain / loss on closure / expiry of Exchange Traded Equity Derivative (ETED) are accounted as realised gain / loss on investments. Valuation of investments - Traded Equity and Equity related Securities are valued at the last quoted closing price on the Bombay Stock Exchange (BSE). If a security is not traded on BSE, it will be valued at the last quoted closing price on National Stock Exchange of India Limited (NSE) or any other stock exchange (in that order). - If a security is not traded on any stock exchange on a particular valuation day, the last quoted closing price on BSE or NSE or other recognised stock exchange (in that order) on the earliest previous day would be used, provided such day is not more than thirty days prior to the valuation day. - Investments in Equity shares under Qualified Institutional Placement (QIP) are valued at cost or market value, whichever is lower, till the date of listing of the security. - Thinly Traded, Non-traded and unlisted Equity are valued "in good faith" as determined, in accordance with the SEBI Regulations. - In respect of non traded/ thinly traded Foreign securities, the valuation is stated at fair value as determined In good faith by the AMC. - Open position of exchange traded equity derivatives (ETED) are marked-to-market on daily basis at the closing prices provided by the respective stock exchanges. - Investment in Mutual Fund Units are valued at the last declared NAV per unit. - All other investments are stated at their fair value as determined in good faith by the AMC in accordance with the SEBI Regulations and reviewed by the Trustee. - Pursuant to SEBI Circular no. SEBI/IMD/CIR No.16/ /2010 dated February 02, 2010, w.e.f July 1, 2010 Traded Debt Securities (other than Government Securities) are valued at the weighted average traded price as on the date of valuation with effect from July 01, 2010 as against the earlier practice of valuingit at the closing market price as on the date of valuation, provided there is an individual trade in that security in marketable lot. Non-traded / thinlytraded / unlisted debt securities over 91days to maturity, if not traded on the valuation day, are valued using average of benchmarkyields/matrixof spreads over risk free benchmark yieldobtained from the CRISIL and ICRA as against the earlier practice of valuingnon-traded / thinlytraded / unlisted debt securities over 182 days to maturity, if not traded on the valuation day, are valued using average of benchmark yields/matrixof spreads over risk free benchmark yield obtained from the CRISIL and ICRA. The net unrealised gain or loss in the value of investmentsis determined separately for each category of investments. The change in the net unrealisedloss, if any, between two balance sheet dates is recognised in the revenue account and the change in net unrealised gain, if any, is adjusted in an unrealised appreciation reserve. The loss on investments sold/transferred during the year is charged to the revenue account.

7 (d) Revenue recognition - Dividend income is recognised on the ex-dividend date. - Interest income is recognised on an accrual basis. - Profit or loss on sale of investments is determined on the basis of the weighted average cost method. (e) - The discount or premium, if any, to the redemption value of debt securities is amortised and recognised as interest income or expense, as the case may be, over the period to redemption. Equalisation account - - The purpose of equalization account is to maintainper unit amount of a Plan s/option s share of the Scheme s undistributed income, so that continuing unit holders share of undistributed income remains unchanged on issue or redemption of units under that Plan/Option. Prior to March 15, 2010, when units were issued or redeemed, the total undistributed income from the beginning of the accounting year to the date of the transaction was determined. Based on the number of units outstanding on the transaction date, the undistributed income associated with each unit was computed. The per unit amount so determined was credited and debited to the equalization account on issue and redemption of each unit respectively. - Pursuant to SEBI circular dated March 15, 2010, the Trustee/AMC has changed the method of calculating equalization per unit w.e.f. that date viz: a) When the sale price is higher than the face value of the unit, the total accumulated undistributed income (including realized gains) till the date of the transaction is determined. Based on the number of units outstanding on the transaction date, the undistributed income (includingrealized gains) associated with each unit is computed. The per unit amount so determined is credited and debited to the equalization account on issue and redemption of each unit respectively. b) When the sale price is lower than the face value of the unit, the differencebetween the Net asset value and the par value is debited and credited to the equalization account on issue and redemption of unit respectively. - Pursuant to SEBI circular dated March 15, 2010, an appropriate amount of the realized / unrealized gain has been reallocated between the plans of the Scheme, based on the plans AUM as on March 15, (f) Load charges All load, including Contingent and Deferred Sales Charges, charged at the time of purchase and sale of units, is being utilised towards meeting distribution and marketing expenses. The utilizationfrom the balances as at July 31, 2009 is restricted to a maximumof one third of the load balancesas at July 31, 2009 as required by the SEBI Circular no. CIR/IMD/DF/4/2011 dated March 09, With effect from August 01, 2009, exit load upto 1% charged at the time of sale of units, is being utilised towards meeting distribution and marketing expenses. Exit load charged in excess of 1% is credited to the respective Schemes immediately as Other Income. Unutilised amount of load is carried forward to subsequent period. If the amount is considered in excess by the AMC / Trustees, then such excess amount is credited to the respective Schemes as Other Income. (THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK)

8 SCHEDULE TO THE BALANCE SHEET AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2011 Schedules March 31, 2011 March 31, 2010 March 31, 2011 March 31, UNIT CAPITAL Units of Rs 10 each fully paid up Growth Plan Outstanding, beginning of year 81,373, ,592, , ,922 Issued during the year 72,284, ,816, , ,163 Redeemed during the year (47,942, ) (32,035, ) (479,421) (320,352) Outstanding, end of year 105,715, ,373, ,057, ,733 Dividend Plan Quantity Amount Outstanding, beginning of year 352,570, ,991, ,525,709 3,249,917 Issued during the year 102,643, ,007, ,026,431 1,330,073 Redeemed during the year (75,779, ) (105,428, ) (757,791) (1,054,281) Outstanding, end of year 379,434, ,570, ,794,349 3,525,709 Total Outstanding, beginning of year 433,944, ,583, ,339,442 3,995,839 Issued during the year 174,927, ,823, ,749,275 1,718,236 Redeemed during the year (123,721, ) (137,463, ) (1,237,212) (1,374,633) Outstanding, end of year 485,150, ,944, ,851,505 4,339,442

9 SCHEDULES TO THE BALANCE SHEET AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010 Schedules March 31, 2011 March 31, RESERVES AND SURPLUS Unrealised appreciation reserve Balance, beginning of year 6,897,250 - Change in net unrealised appreciation in value of investments (1,723,146) 6,897,250 Balance, end of year 5,174,104 6,897,250 Retained surplus Balance, beginning of year 20,074,283 14,015,641 Net surplus / (Deficit) transferred from revenue account 10,806,448 6,058,642 Balance, end of year 30,880,731 20,074,283 Total reserves and surplus 36,054,835 26,971, CURRENT LIABILITIES AND PROVISIONS Current Liabilities Management fees 33,726 27,297 Trusteeship fees Registrar service charges 4,490 3,699 Load pending utilisation 65,769 42,431 Sundry creditors for units redeemed by investors 149, ,343 Contracts for purchase of investments 48, Dividend payable - 2 Unclaimed distributed income 6,062 6,389 Unclaimed redemption payable Other current liabilities 93,284 72, , , INVESTMENTS (i) (ii) The investments of the Scheme are registered in the name of the Fund for the benefit of the Scheme's unitholders. Aggregate appreciation and depreciation in the value of investments are as follows: Listed Securities / Securities Awaited Listing / Unlisted Securities / Foreign Securities: (Equity shares / Preference shares / Foreign securities) - appreciation 5,967,155 6,939,997 (iii) - depreciation 803,537 42,747 Listed Securities / Securities Awaited Listing (Equity linked debentures / Other debentures and bonds / Securitised debt securities) - appreciation 10, depreciation - - The aggregate value of investments purchased and sold / redeemed by the Scheme during the year and these amounts as a percentage of average daily net assets are as follows: Purchases - amount 29,035,203 26,509,372 - as a percentage of average daily net assets Sales / redemptions - amount 25,999,742 26,666,966 - as a percentage of average daily net assets (iv) Amount of Debentures and bonds Listed/ Awaiting listing on Stock Exchanges not traded as on the date of financial statement. 10,486 - (v) During the year, the Scheme has invested in the equity shares / debentures and bonds of certain companies, which have invested in some of the schemes of the Fund in excess of five percent of those schemes' Net Assets. The Scheme's investmentsin these companies (except for investmentsin subsidiaries of these companies) as at March 31, 2011 are provided in Annexure OTHER CURRENT ASSETS Cash and Bank Balance Balances with banks in current accounts 98,378 76,911 Unclaimed dividend bank account 17,080 17, ,458 94,434 CBLO/ Reverse Repo Lending Collateralised securities lending 2,876,974 2,205,092 2,876,974 2,205,092 Others Sundry debtors for units issued to investors 162, ,026 Outstanding and accrued income 2, Contracts for sale of investments 601, Advances and deposits Margin money 34,690 39,980 Other current assets , ,855 TOTAL 3,794,828 2,475,381

10 SCHEDULES TO THE BALANCE SHEET AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010 Schedules March 31, 2011 March 31, ACCUMULATED UNIT DISCOUNT, NET Balance, beginning of year 1,787,379 3,152,379 Net premiumon ( issue) / redemption of units 1,042,660 (1,365,000) Balance, end of year 2,830,039 1,787, INTEREST Collateralised lending / Reverse repo 120,059 45, ,059 45, INCOME AND EXPENDITURE The total incomeand expenditureand these amounts as a percentageof the Scheme saverage daily net assets on an annualised basis are provided below Income - amount 6,568,010 6,194,087 - as a percentage of average daily net assets Expenditure - amount 596, ,516 - as a percentage of average daily net assets Management fees (including service tax) - amount 360, ,322 - as a percentage of average daily net assets Trusteeship fees (including service tax) - amount as a percentage of average daily net assets

11 SCHEDULES TO THE BALANCE SHEET AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010 Schedules March 31, 2011 March 31, NET ASSET VALUE Net asset value of each unit of Rs. 10 of the Scheme Growth Plan (Rs) Dividend Plan (Rs) The net asset value of the Scheme'sunit is determinedafter includingunit capital and any reserves and surplus, and reducing net deficit and accumulated unit discount, if any. 13. SEGMENT REPORTING The scheme operates only in one segment viz. to primarily generate returns, based on schemes' investment objective 14. INCOME DISTRIBUTION In case the Schemehaving Net Gain / Losses for the period after adjustmentof incomeequalisation lower than the amount of distributed income, the income is distributed to its unitholdersout of the distributable surplus available with the respective Schemes, which consists of the net gain / losses for the period after adjustment of income equalisation and the retained earnings / accumulated reserves of earlier periods 15. PRIOR YEAR COMPARATIVES Prior year amounts have been reclassified, wherever applicable, to conform to the current year's presentation.

12 11. RELATED PARTY DISCLOSURES The Scheme has entered into transactions with certain related parties. The information required in this regard in accordance with Accounting Standard 18 on Related Party Disclosures issued by the ICAI and Regulation 25(8) of the SEBI Regulations, is provided below. (i) Related party relationships Name Templeton International Inc, USA Franklin Templeton Trustee Services Private Limited Franklin Templeton Asset Management (India) Private Limited Franklin Templeton AMC Limited Franklin Templeton International Services (India) Private Limited Templeton Asset Management Ltd - India Darby Asia Investors (India) Private Limited Franklin Resources Inc Franklin Templeton Holding Limited, Mauritius ITI Capital Markets Limited Mahindra & Mahindra Financial Services Limited (ceased to be an Associate w.e.f October 08,2010) Schemes of the Fund, under common control of the Sponsor Templeton India Low Duration Fund (Formerly Known As Templeton Monthly Income Plan - Debt) Templeton India Pension Plan Templeton India Treasury Management Account Templeton India Short-Term Income Plan Templeton India Money Market Account (merged with Templeton India Treasury Management Account w.e.f October 22, 2010) Templeton India Cash Management Account Templeton India Income Fund Templeton India Government Securities Fund Templeton India Children s Asset Plan Templeton Floating Rate Income Fund Templeton India Growth Fund FT India Monthly Income Plan Franklin India Flexicap Fund FT India Balanced Fund Franklin FMCG Fund FT India Life Stage Fund of Funds Templeton India Income Builder Account Franklin Templeton Fixed Tenure Fund Series I - 60 Month Plan Franklin Templeton Fixed Tenure Fund Series II - 60 Months Plan Franklin Templeton Fixed Tenure Fund Series III - 36 Months Plan Franklin Templeton Fixed Tenure Fund Series IV - 60 Month Plan Franklin Templeton Fixed Tenure Fund Series VI - 60 Months Plan Franklin Templeton Fixed Tenure Fund Series VIII - 60 Months Plan - Plan A Franklin Templeton Capital Safety Fund - 3 Years Plan Franklin Templeton Capital Safety Fund - 5 Years Plan Templeton Fixed Horizon Fund - 13 Months Plan Templeton Fixed Horizon Fund - 15 Months Plan Templeton India Equity Income Fund Franklin Templeton Capital Protection Oriented Fund - 3 Years Plan Franklin Templeton Capital Protection Oriented Fund - 5 Years Plan Franklin Templeton Fixed Tenure Fund Series IX - Plan A Franklin Templeton Fixed Tenure Fund Series IX - Plan B Franklin Templeton Fixed Tenure Fund Series X - Plan A Franklin Templeton Fixed Tenure Fund Series X - Plan B Franklin Templeton Fixed Tenure Fund Series X - Plan C Franklin Templeton Fixed Tenure Fund Series X - Plan D Templeton Fixed Horizon Fund - Series IX - Plan A Templeton Fixed Horizon Fund - Series IX - Plan B Templeton Fixed Horizon Fund - Series IX - Plan C Templeton Fixed Horizon Fund - Series IX - Plan D Templeton Fixed Horizon Fund - Series IX - Plan E Templeton Fixed Horizon Fund Series VIII - Plan A Franklin Pharma Fund Franklin Templeton Fixed Tenure Fund - Series XII - Plan A Franklin Templeton Fixed Tenure Fund - Series XIII- Plan A Templeton India Income Opportunities Fund Franklin Templeton Fixed Tenure Fund - Series XIV- Plan A Franklin Templeton Fixed Tenure Fund - Series XV Description of relationship Sponsor of the Fund Trustee of the Fund Subsidiary of the Sponsor and the Scheme's asset manager Subsidiary of the Scheme's asset manager Subsidiary of the Sponsor. Subsidiary of the Sponsor. Subsidiary of the Sponsor. Ultimate holding Company of the sponsor. Holding company of the scheme's asset manager. ITI Capital Markets Limited is a wholly owned subsidiary of Franklin Templeton Asset Management (India) Private Limited Associate of Franklin Templeton Asset Management (India) Private Limited (in terms of Regulation 25 (8) of SEBI Regulation) Franklin India Opportunities Fund Franklin Infotech Fund Franklin India Build Fund Franklin IndiaTaxshield Franklin India Prima Plus Franklin India Prima Fund Franklin India Bluechip Fund Franklin India International Fund Franklin India Index Tax Fund Franklin India Index Fund Franklin India Growth Fund Franklin India Balanced Fund FT India Dynamic PE Ratio Fund of Funds Franklin India Smaller Companies Fund Franklin India High Growth Companies Fund Templeton Fixed Horizon Fund - Series II - Plan A Templeton Fixed Horizon Fund - Series II - Plan B Templeton Fixed Horizon Fund - Series III - Plan A Templeton Fixed Horizon Fund - Series IV - Plan A Templeton Quarterly Interval Plan - Plan A Templeton Quarterly Interval Plan - Plan B Templeton Quarterly Interval Plan - Plan C Templeton India Ultra-short Bond Fund Franklin Asian Equity Fund Templeton Fixed Horizon Fund - Series VII - Plan A Templeton Fixed Horizon Fund - Series VII - Plan B Templeton Fixed Horizon Fund - Series VII - Plan C Templeton Fixed Horizon Fund - Series VII - Plan D Templeton Fixed Horizon Fund Series VIII - Plan B Templeton Fixed Horizon Fund Series VIII - Plan C Templeton Fixed Horizon Fund Series VIII - Plan D Templeton Fixed Horizon Fund Series VIII - Plan E Templeton Fixed Horizon Fund Series VIII - Plan F Templeton Fixed Horizon Fund - Series X - Plan A Templeton Fixed Horizon Fund - Series X - Plan B Templeton Fixed Horizon Fund - Series X - Plan C Templeton Fixed Horizon Fund - Series X - Plan D Templeton Fixed Horizon Fund - Series X - Plan E Templeton Fixed Horizon Fund - Series XI - Plan G Templeton Fixed Horizon Fund - Series XI- Plan A Templeton Fixed Horizon Fund - Series XI- Plan B Templeton Fixed Horizon Fund - Series XI- Plan C Templeton Fixed Horizon Fund - Series XI- Plan H Templeton Fixed Horizon Fund - Series XI- Plan D Franklin Templeton Fixed Tenure Fund - Series XII- Plan B Franklin Templeton Fixed Tenure Fund - Series XII- Plan C Franklin Templeton Fixed Tenure Fund Series XIV - Plan B

13 (ii) Transactions, if any, with the above mentioned related parties as defined under Accounting Standard 18 and Regulation 25(8) of the SEBI Regulations are provided below: Franklin India Blue Chip Fund Name of related party Nature of transactions Year ended 2011 Balance as at March 31, 2011 Year ended 2010 Balance as at March 31, 2010 Schemes under common control Purchase of investments 5, Franklin Templeton Fixed Tenure Fund - Series XIV- Plan A 5, Sale of investments Franklin Templeton Trustee Services Private Limited Fees for trusteeship services Franklin Templeton Asset Management (India) Private Limited Registrar service charges 48,401 4,490 37,711 3,699 Fees for management services 360,448 33, ,322 27,297 Schemes under common control Investment in the Plan Franklin Templeton India Life Stage FOF Subscriptions (No. of units in '000) Redemptions (No. of units in '000) Net asset value of investment at balance sheet date 62,425 81,830 Franklin Templeton India Life Stage FOF Subscriptions (No. of units in '000) Redemptions (No. of units in '000) Net asset value of investment at balance sheet date 27,040 34,138 Franklin Templeton India Life Stage FOF Subscriptions (No. of units in '000) Redemptions (No. of units in '000) Net asset value of investment at balance sheet date 25,091 36,810 Franklin Templeton India Life Stage FOF Plan Subscriptions (No. of units in '000) Redemptions (No. of units in '000) Net asset value of investment at balance sheet date 42,734 26,864 Franklin Templeton India Life Stage FOF floating Plan Subscriptions (No. of units in '000) 525-1,236 - Redemptions (No. of units in '000) 953-1,096 - Net asset value of investment at balance sheet date 212, ,652 Franklin Templeton India Dynamic PE Ratio FOF Subscriptions (No. of units in '000) 48,947-18,041 - Redemptions (No. of units in '000) 28,231-7,753 - Net asset value of investment at balance sheet date - 7,392,344-2,530,295 Templeton India Treasury Management Account - Super Institutional Plan - Growth Subscriptions (No. of units in '000) Redemptions (No. of units in '000) Net asset value of investment at balance sheet date - - ITI Capital Markets Limited Commission for distribution of the Scheme's units ( # ) 741* - 714* - Mahindra & Mahindra Financial Services Limited Commission for distribution of the Scheme's units ( # ) 3* - 7* - # The commission is at rates similar to those offered to other distributors by the scheme. * This represents the amount paid / payable for the period and does not necessarily reflect the amount charged to the Scheme's Revenue Account.

14 16. SUPPLEMENTARY INVESTMENT PORTFOLIO INFORMATION AND INDUSTRYWISE CLASSIFICATION Details of investment portfolio and industrywise classification of the Scheme's investments in each category of investments as at March 31, 2011 are presented below. The industry and company exposure are stated as a percentage of the Scheme's net assets as at March 31, 2011, as well as the aggregate investments in each investment category. Franklin India Bluechip Fund Industry and Company Particulars Quantity Amount Percentage to Net Assets Percentage to Investment Category Equity and Equity Related Listed/Awaiting listing on Stock Exchanges Auto 1,540,000 1,448, Mahindra & Mahindra Limited 1,050, , Bajaj Auto Limited 490, , Auto Ancillaries 50, , Bosch Limited 50, , Banks 7,226,333 6,194, ICICI Bank Limited 1,900,000 2,114, Kotak Mahindra Bank Limited 3,156,333 1,441, HDFC Bank Limited 520,000 1,218, State Bank of India 350, , Union Bank of India Limited 1,300, , Cement 5,600,000 1,954, Grasim Industries Limited 600,000 1,476, India Cements Limited 5,000, , Construction Project 370, , Larsen & Toubro Limited 370, , Consumer Non Durables 4,275,000 1,079, Asian Paints Limited 275, , Dabur India Limited 4,000, , Diversified 2,600, , Hindustan Unilever Limited 2,600, , Ferrous Metals 4,900,000 1,147, Steel Authority of India Limited 4,200, , Tata Steel Limited 700, , Finance 1,201, , Rural Electrification Corporation Limited 1,000, , Bajaj Holdings and Investment Limited 200, , Housing Development Finance Corporation Limited (Warrants) 1, * Gas 2,200,000 1,023, GAIL (India) Limited 2,200,000 1,023, Industrial Capital Goods 4,700,000 2,479, Bharat Heavy Electricals Limited 550,000 1,133, Crompton Greaves Limited 3,800,000 1,037, Siemens India Limited 350, , Industrial Products 1,300, , Cummins India Limited 1,300, , Minerals/Mining 2,200, , Coal India Limited 2,200, , Non - Ferrous Metals 9,400,000 1,379, Hindustan Zinc Limited 7,000, , Sterlite Industries (India) Limited 2,400, , Oil 3,694,399 1,144, Oil & Natural Gas Corporation Limited 2,500, , Cairn India Limited 1,194, , Petroleum Products 3,430,000 2,419, Reliance Industries Limited 1,500,000 1,571, Bharat Petroleum Corporation Limited 730, , Indian Oil Corporation Limited 1,200, , Pharmaceuticals 1,800,959 1,308, Dr. Reddy's Laboratories Limited 350, , Lupin Limited 1,100, , Cadila Healthcare Limited 350, , Power 26,600,000 2,516, NTPC Limited 4,500, , Power Grid Corporation of India Limited 6,500, , Torrent Power Limited 2,600, , GVK Power & Infrastructures Limited 13,000, , Software 1,260,000 3,236, Infosys Technologies Limited 850,000 2,751, Tata Consultancy Services Limited 410, , Telecom - Services 13,322,837 3,248, Bharti Airtel Limited 8,100,000 2,895, Idea Cellular Limited 5,222, ,

15 Industry and Company Particulars Quantity Amount Percentage to Net Assets Percentage to Investment Category Transportation 1,300, , Great Eastern Shipping Co. Limited 1,300, , Total 34,672, Debt Instruments (a) Listed/Awaiting listing on Stock Exchanges Non-Traded/Thinly Traded Scrips 2,100,000 10, Dr Reddy's Laboratories Limited 2,100,000 10, , OTHER CURRENT ASSETS 3,794, TOTAL ASSETS 38,477, LESS : CURRENT LIABILITIES 401, NET ASSETS 38,076, Less than 0.01%

16 SCHEDULES TO THE BALANCE SHEET AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2011 March 31, 2011 March 31, 2010 Annexure 1 Asian Paints Limited 694,911 - Bharti Airtel Limited 2,895,750 1,731,045 Bosch Limited - 336,042 Cairn India Limited 419,533 - Cummins India Limited - 924,480 Dabur India Limited 384,200 - Grasim Industries Limited - 928,538 Great Eastern Shipping Co. Limited - 514,500 HDFC Bank Limited - 1,932,500 Hero Honda Motors Limited - 582,765 Hindustan Unilever Limited - 381,920 Idea Cellular Limited - 425,425 Larsen and Toubro Limited 611, ,493 Mahindra & Mahindra Limited - 35,416 Reliance Industries Limited 1,571,700 1,826,905 Tata Consultancy Services Limited - 624,640 Tata Steel Limited 434,350-7,012,147 11,138,669 The aggregate purchases (other than by inter-scheme transfer/sale and those already disclosed earlier) made by the Scheme in these companies, during a period of one year before or after the date of the companies' investment are as follows: Asian Paints Limited 686,196 - Bharti Airtel Limited 453, ,278 Cairn India Limited 931,782 - Cummins India Limited - 97,447 EXIDE INDUSTRIES Limited 206,427 - Grasim Industries Limited - 185,185 HDFC Bank Limited - 266,244 Hindalco Industries Limited - 410,895 Hindustan Unilever Limited - 342,626 Hindustan Zinc Limited - 342,627 Infrastructure Development Finance Company Limited - 26,630 ITC Limited - 66,505 Larsen and Toubro Limited 289, ,065 Mahindra & Mahindra Limited - 493,725 Piramal Healthcare Limited 111,176 - Reliance Industries Limited 1,170, ,390 Tata Consultancy Services Limited - 517,053 Tata Steel Limited 474, ,973 Wipro Limited - 75,522 4,322,782 4,716,165

17 PER UNIT STATISTICS (a) Net Asset value, per unit Year ended Year ended Year ended March 31, 2011 March 31, 2010 March 31, 2009 Growth Dividend (b) Gross Income: i) Income other than profit on sale of investment, per unit ii) Loss on interscheme sale/transfer of investment, per unit iii) Profit on sale of investment to third party, per unit (0.14) (c) (d) Aggregate of expense, write offs, amortisation and charges, per unit (1.23) (1.05) (0.87) Net unrealised appreciation/(depreciation) in value of investments (2.86) (e) Net Income, per unit (including appreciation / depreciation) (3.09) (f) i) Highest traded price N.A. N.A. N.A. ii) Lowest traded price N.A. N.A. N.A. iii) Highest repurchase price/nav * Growth Dividend iv) Highest resale price * Growth Dividend v) Lowest repurchase price/nav * Growth Dividend vi) Lowest resale price * Growth Dividend Ratio of Expenses to Average Net Assets Ratio of Gross Income to Average Net Assets (g) P.E. Ratio N.A. N.A. N.A. * Per unit calculation is based on number of units at the end of the year. The highest and lowest resale pricce has been determined, after adding to the NAV, the maximum entry load applicable. Per unit statistics are disclosed for schemes/plans in existence at the end of respective years less than 0.01 per unit