INDEPENDENT AUDITOR S REPORT. To the Trustees of FRANKLIN TEMPLETON MUTUAL FUND - TEMPLETON INDIA EQUITY INCOME FUND

INDEPENDENT AUDITOR S REPORT To the Trustees of FRANKLIN TEMPLETON MUTUAL FUND TEMPLETON INDIA EQUITY INCOME FUND Report on the Financial Statements We have audited the accompanying financial statements of FRANKLIN TEMPLETON MUTUAL FUND TEMPLETON INDIA EQUITY INCOME FUND ( the Scheme ) which comprise the Balance Sheet as at March 31, 2014, and also the Revenue Account and Cash Flow Statement for the year ended March 31, 2014, and a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management of Franklin Templeton Asset Management (India) Private Limited ( the Company ), the scheme s asset manager, is responsible for the preparation of the financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Scheme in accordance with accounting principles generally accepted in India, including 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 ). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Scheme s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the SEBI Regulations in the manner so required 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 the March 31, 2014; (b) in the case of the Revenue Account, of the surplus for the year ended March 31, 2014; and (c) in the case of the Cash Flow Statement, of the cash flows for the year ended March 31, 2014. Report on Other Legal and Regulatory Requirements 1. 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. 2. The balance sheet, revenue account and cash flow statement dealt with by this report are in agreement with the books of account. 3. In our opinion, the balance sheet and revenue account dealt with by this report have been prepared in conformity with the accounting policies and standards specified in the Ninth Schedule to the SEBI Regulations. 4. In our opinion, and on the basis of information and explanations given to us, the methods used to value nontraded securities as at 31 March 2014 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 Trustees, and are fair and reasonable. For S.R. BATLIBOI & CO. LLP Chartered Accountants ICAI Firm Registration Number: 301003E Sd/ per Shrawan Jalan Partner Membership Number: 102102 Place: Mumbai Date: 27 June 2014

BALANCE SHEET AS AT MARCH 31, 2014 (All amounts in thousands of Rupees) SOURCES OF FUNDS Schedules TEMPLETON INDIA EQUITY INCOME FUND As at As at March 31, 2014 March 31, 2013 1 Unit Capital 2(b) & 3 5,121,584 5,666,646 2 Reserves and Surplus 4 2.1 Unrealised Appreciation Reserve 3,170,711 2,434,149 2.2 Retained Surplus 3,354,154 3,777,063 3 Current Liabilities and Provisions 5 3.1 Current Liabilities 115,825 72,093 TOTAL 11,762,274 11,949,951 APPLICATION OF FUNDS 1 Investments 2(c), 6 & 16 1.1 Listed Securities 1.1.1 Equity Shares 6,667,413 6,328,839 1.2 Foreign Securities 2,210,187 2,876,236 2 Other Current Assets 7 2.1 Cash and Bank Balances 30,252 7,774 2.2 CBLO/ Reverse Repo Lending 182,032 148,960 2.3 Others 75,471 20,066 3 Accumulated Unit Discount, Net 8 2,596,919 2,568,076 TOTAL 11,762,274 11,949,951 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 S.R. Batliboi & Co. LLP For Franklin Templeton Trustee For Franklin Templeton Asset Management ICAI Firm Registration No.: 301003E Services Private Limited (India) Private Limited Chartered Accountants Sd/ Sd/ Sd/ Sd/ per Shrawan Jalan Anand J. Vashi Deepak Satwalekar Vivek Kudva Partner Director Director Director Membership No. 102102 Sd/ Sd/ Sd/ Percy J. Pardiwalla Harshendu Bindal Vivek Pai Director President Vice President Mumbai Sd/ Chetan Sehgal Chief Investment Officer / India Templeton Emerging Markets Sd/ Vikas Chiranewal Senior Vice President Templeton Emerging Markets

REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2014 (All amounts in thousands of Rupees) Schedules TEMPLETON INDIA EQUITY INCOME FUND Year ended Period ended March 31, 2014 March 31, 2013 1 INCOME 1.1 Dividend (Net of tax deducted on foreign securities for Templeton India Equity Income Fund: Rs 14,444 (March 31, 2013:Rs14,920)) 2(d) 231,821 243,650 1.2 Interest 2(d) & 9 15,959 11,486 1.3 Realised Gain on External Sale / Redemption of Investments, net 2(d) 357,587 568,239 1.4 Change in Unrealised Appreciation in the value of Investments 736,562 534,163 1.5 Other Income 1,137 412 1,343,066 1,357,950 2 EXPENSES 2.1 Realised Loss on Foreign Exchange Transactions, net 2(c) 6,807 803 2.2 Change in unrealised (appreciation)/depreciation on translation of other assets and liabilities denominated in foreign currencies 467 (204) 2.3 Management Fees 10 135,826 120,228 2.4 Service Tax on Management Fees 10 16,788 14,860 2.5 Transfer Agents Fees and Expenses 15,914 17,311 2.6 Custodian Fees 1,926 2,270 2.7 Trusteeship Fees 10 273 293 2.8 Commission to Agents 39,562 48,475 2.9 Marketing and Distribution Expenses 7,179 8,866 2.10 Investor Education Expense 2(g) 1,822 992 2.11 Audit Fees 360 382 2.12 Change in Unrealised Depreciation in value of Investments 2(c) & 6(ii) 204 184 2.13 Other Operating Expenses 4,278 3,802 231,406 218,262 2.14 Expenses Written Back pertaining to previous year (1) (41) 231,405 218,221 3 NET INCOME AS PER REVENUE ACCOUNT 1,111,661 1,139,729 4 Transfer from Retained Surplus 4 3,777,063 4,213,590 5 Add: Balance Transfer from Unrealised Appreciation Reserve 4 2,434,149 1,899,986 6 Less: Balance Transfer to Unrealised Appreciation Reserve 4 3,170,711 2,434,149 7 Add / (Less): Equalisation Credit/(Debit) 2(e) (373,819) (585,476) 8 Total 3,778,343 4,233,680 9 Dividend Appropriation 9.1 Income Distributed during the Year 14 (424,189) (456,617) 10 NET SURPLUS/(DEFICIT) FOR THE YEAR TRANSFERRED TO 3,354,154 3,777,063 (8+9) 4 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 S.R. Batliboi & Co. LLP For Franklin Templeton Trustee For Franklin Templeton Asset Management ICAI Firm Registration No.: 301003E Services Private Limited (India) Private Limited Chartered Accountants Sd/ Sd/ Sd/ Sd/ per Shrawan Jalan Anand J. Vashi Deepak Satwalekar Vivek Kudva Partner Director Director Director Membership No. 102102 Sd/ Sd/ Sd/ Percy J. Pardiwalla Harshendu Bindal Vivek Pai Director President Vice President Mumbai Sd/ Chetan Sehgal Chief Investment Officer / India Templeton Emerging Markets Sd/ Vikas Chiranewal Senior Vice President Templeton Emerging Markets

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2014 (All amounts in thousands of Rupees) TEMPLETON INDIA EQUITY INCOME FUND From April 1, 2013 to From April 1, 2012 to March 31, 2014 March 31, 2013 A. Cashflow from Operating Activities Surplus for the year before equalisation and income distribution 1,111,661 1,139,729 Add / (Less) : Change in provision for net unrealised depreciation in value of investments 204 184 Add / (Less) :Change in Unrealised Apreciation in value of Investments (736,562) (534,163) Add / (Less) : Change in the Unrealized Appreciation / (Depreciation) due totranslation of other assets and liabilities denominated in foreign currencies 467 (204) Add / (Less) : Expenses Written Back pertaining to previous year (1) (41) Add / (Less) : Loss on foreign exchange fluctuation Add / (Less) :Amortization of premium / discount on investment cost (55) Adjustments for: (Increase)/Decrease in Investments at Cost 1,017,490 1,291,094 (Increase)/Decrease in Other Current Assets (33,023) (106,082) Increase/(Decrease) in Current Liabilities (1,565) 12,224 Net Cash Generated from/(used in) Operations ( A ) 1,358,617 1,802,741 B Cashflow from Financing Activities Increase/(Decrease) in Unit Capital (659,085) (864,880) Increase/(Decrease) in Unit Premium (425,618) (947,311) Adjustments for: Increase/(Decrease) in Sundry Creditors for Units Redeemed by Investors 19,551 1,566 (Increase)/Decrease in Sundry Debtors for Units Issued to Investors 769 (2,742) Dividend paid during the year (including dividend tax) (272,171) 567 Increase/(Decrease) in units pending allotment 416 290 Net Cash (used in)/generated from Financing Activities ( B ) (1,336,139) (1,812,510) Net Increase/(Decrease) in Cash and Cash Equivalents (A+B) 22,478 (9,769) Cash and Cash Equivalents as at the beginning of the Year 7,774 17,543 Cash and Cash Equivalents as at the end of the Year 30,252 7,774 Components of Cash and Cash Equivalents Balances with Banks in Current Accounts* 30,252 7,774 30,252 7,774 *Includes balances in unclaimed redemption / dividend bank account held towards unclaimed redemption / dividend liabilities of the Scheme As per our attached report of even date For S.R. Batliboi & Co. LLP For Franklin Templeton Trustee For Franklin Templeton Asset Management ICAI Firm Registration No.: 301003E Services Private Limited (India) Private Limited Chartered Accountants Sd/ Sd/ Sd/ Sd/ per Shrawan Jalan Anand J. Vashi Deepak Satwalekar Vivek Kudva Partner Director Director Director Membership No. 102102 Mumbai Sd/ Chetan Sehgal Chief Investment Officer / India Templeton Emerging Markets Sd/ Sd/ Sd/ Percy J. Pardiwalla Vivek Pai Harshendu Bindal Director Vice President President Sd/ Vikas Chiranewal Senior Vice President Templeton Emerging Markets

SCHEDULES TO THE BALANCE SHEET AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2014 (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: Scheme Name Nature of the Scheme Date of Allotment Scheme Objective Plans Offered Templeton India Equity Income Fund Open ended mutual March 22, 2006 The primary objective of the The Scheme offers its investors two plans: the Dividend Plan fund scheme Scheme is to provide a and the Growth Plan ( the Plans ). Effective January 1, 2013, in combination of regular income and accordance with SEBI Circular no. CIR/IMD/DF/21/2012 dated longterm capital appreciation by September 13, 2012, the Scheme introduced a new Plan under investing in stocks that have a each of the Existing plan / option, termed as Direct. current or potentially attractive dividend yield. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements are prepared on the accrual basis of accounting, under the historical cost convention, as modified for investments, which are markedtomarket. 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) 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 including the respective unit capital and reserves and surplus, and reducing net deficit and accumulated discount, if any. (b) For reporting the net asset values, the daily income earned, including realised profit or loss and unrealised gain 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.. Commission expenses are not allocated to the Direct Plans/ Options. Unit capital Unit capital represents the net outstanding units at the balance sheet date, thereby reflecting all transactions relating to the period 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. (c) Investments Accounting for investment transactions Purchase and sale of investments are 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. Effective October 1, 2012, in terms of SEBI circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, brokerage and transaction costs (including all taxes) incurred for the purpose of execution of trade in excess of 0.12% in case of cash market transaction is charged to the Total Expense Ratio of the fund. Right entitlements are recognised as investments on the exrights date. Bonus entitlements are recognised as investments on the exbonus date. Other Corporate Action entitlements are recognised on the ex date. Foreign currency transactions Initial recognition Conversion Exchange differences Valuation of investments Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Foreign currency monetary items are reported using an exchange rate prevalent on the valuation date / date of the transaction. Exchange differences arising on the settlement of monetary items or on reporting monetary items of the scheme at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expenses in the year in which they arise. 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 acquired 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, Nontraded and unlisted Equity are valued "in good faith" as determined, in accordance with the SEBI Regulations. Foreign securities are valued at the last closing price / last available traded or quoted price on the valuation day on the relevant stock exchange around the time of closure of Indian stock markets, as applicable, provided such date is not more than thirty days prior to the valuation date and are translated in to Indian rupees by applying an exchange rate prevalent on the day of valuation/balance sheet. Unrealised foreign exchange gain or loss on account of exchange rate fluctuation is credited / debited to Reserves & Surplus / Profit & Loss account respectively on the date of valuation. In respect of non traded/ thinly traded Foreign securities, the valuation is stated at fair value as determined In good faith by the AMC.

Effective from October 7, 2013, Investment in Government Securities with residual maturity up to 60 days on the date of valuation, which are traded on the valuation date, are valued at the weighted average traded price available on the public platform namely CCIL provided there are at least three trades aggregating to Rs. 100 crores or more. When such securities are not traded on a particular valuation day, they are valued on amortisation basis. The amortised price is used as long as it is within plus/ minus 0.10% of the reference price. In case the variance exceeds plus/ minus 0.10%, the reference price is considered for valuation. Reference price is the price derived from risk free benchmark yield plus/ minus spread. Prior to October 7,2013 Investments in Government securities with residual maturity up to 60 days on the date of valuation were valued based on the average of the prices provided by the CRISIL and ICRA (agencies entrusted for the said purpose by Association of Mutual Funds of India {AMFI}). Investment in Government Securities with residual maturity greater than 60 days on the date of valuation are valued based on the average of the prices provided by the CRISIL and ICRA(agencies entrusted for the said purpose by AMFI). Effective from November 5, 2013, all Debt securities (except for Government Securities and Treasury Bills), with residual maturity greater than 365 days on the valuation date are valued at the weighted average price obtained from CRISIL and ICRA (agencies appointed/ designated for the said purpose by AMFI). If price for New security purchased is not available from CRISIL and ICRA, the security will be valued at weighted average traded price available on public platform (namely FIMMDA, NSE WDM and BSE ICDM), provided there are at least two trades aggregating to Rs. 25 crores or more. Prior to November 5, 2013 and effective July 3, 2012, all Debt securities (except for Government Securities and Treasury Bills), with residual maturity greater than 365 days, which are traded on the valuation date, are valued at the weighted average traded price available on the public platform (namely FIMMDA, NSE WDM and BSE ICDM), provided there are at least two trades aggregating to Rs. 25 crores or more as against the earlier practice (i.e prior to July 3, 2012) of valuing at the weighted average traded price, if the same security is traded in the NSE WDM segment and the aggregate value of the trade is greater than or equal to Rs. 5 crores. Prior to November 5, 2013, if such securities are not traded on a particular valuation day, they are valued at the average benchmark yield/ matrix of spread over risk free benchmark yield obtained from CRISIL and ICRA. Effective from November 5,2013, all Debt securities (except for Government Securities and Treasury Bills) with residual maturity greater than 60 days and less than or equal to 365 days on the date of valuation are valued at the weighted average price obtained from CRISIL and ICRA (agencies appointed/ designated for the said purpose by AMFI). If price for New security purchased is not available from CRISIL and ICRA, the security will be valued at weighted average traded price available on public platform (namely FIMMDA, NSE WDM and BSE ICDM), provided there are at least three trades aggregating to Rs. 100 crores or more. Prior to November 5, 2013 and effective July 3, 2012, all Debt and Money Market securities (except for Government Securities and Treasury Bills), with residual maturity greater than 60 days (91 days prior to September 30, 2012) and less than or equal to 365 days on the date of valuation, which are traded on the valuation date, are valued at the weighted average traded price available on the public platform (namely FIMMDA, NSE WDM and BSE ICDM), provided there are at least three trades aggregating to Rs. 100 crores or more, as against the earlier practice (i.e. prior to July 3, 2012) of valuing at the weighted average traded price, if the same security is traded in the NSE WDM segment and the aggregate value of the trade is greater than or equal to Rs. 5 crores. Prior to November 5, 2013, if such securities are not traded on a particular valuation day they are valued at the average benchmark yield/ matrix of spread over risk free benchmark yield obtained from CRISIL and ICRA. 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. Effective from July 3,2012, all Debt securities (except for Government Securities and Treasury Bills), with residual maturity upto 60 days (91 days prior to September 30, 2012) on the date of valuation, which are traded on the valuation date, are valued at the weighted average traded price available on the public platform (namely FIMMDA, NSE WDM and BSE ICDM), provided there are at least three trades aggregating to Rs. 100 crores or more, as against the earlier practice of valuing at the weighted average traded price, if the same security is traded in the NSE WDM segment and the aggregate value of the trade is greater than or equal to Rs. 5 crores. When such securities are not traded on a particular valuation day, they are valued on amortisation basis. The amortised price is used as long as it is within plus/ minus 0.10% of the reference price. In case the variance exceeds plus/ minus 0.10%, the reference price is considered for valuation. Reference price is the price derived from risk free benchmark yields plus/ minus spread. The securities with call option are valued at the lower of the value as obtained by valuing the security to final maturity and valuing the security to call option. In case there are multiple call options, the lowest value obtained by valuing to the various call dates and valuing to the maturity date is taken as the value of the instrument. The securities with put option are valued at the higher of the value as obtained by valuing the security to final maturity and valuing the security to put option. In case there are multiple put options, the highest value obtained by valuing to the various put dates and valuing to the maturity date is taken as the value of the instruments. Effective from August 13, 2010, Treasury Bills with residual maturity over 60 days (91 days prior to September 30, 2012) on the date of valuation, are valued based on the average of the prices provided by the CRISIL and ICRA. Effective form October 7, 2013, Treasury Bills with residual maturity up to 60 days on the date of valuation, which are traded on the valuation date, are valued at the weighted average traded price available on the public platform, namely CCIL, provided there are at least three trades aggregating to Rs. 100 crores or more. If such securities are not traded on a particular valuation day, they are valued at the amortisation basis. The amortised price is used as long as it is within plus/ minus 0.10% of the reference price. In case the variance exceeds plus/ minus 0.10%, the reference price is considered for valuation. Reference price is the price derived from risk free benchmark yields plus/ minus spread. Prior to October 7, 2013, Treasury Bills with residual maturity up to 60 days (91 days prior to September 30, 2012) on the date of valuation, are valued based on the average of the prices provided by the CRISIL and ICRA on the valuation date. The net unrealised gain or loss in the value of investments is determined separately for each category of investments. The change in the net unrealised gain or loss, if any, between two balance sheet dates is recognised in the revenue account and thereafter net unrealised gain, if any, is transferred to unrealised appreciation reserve. The loss on investments sold/transferred during the period is charged to the revenue account. (d) Revenue recognition Dividend income is recognised on the exdividend date except in case of dividend on investments in Korean Companies, where such income is recognized on the actual dividend rate announcement date. Dividend income on foreign securities are recognised net of applicable taxes withheld in the respective countries. Dividend income on foreign securities is translated into Indian rupees at the rate of exchange prevalent on exdividend 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) Equalisation account The purpose of equalisation account is to maintain per 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. 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 till the date of the transaction is determined. Based on the number of units outstanding on the transaction date, the undistributed income associated with each unit is computed. The per unit amount so determined is credited and debited to the equalisation account on issue and redemption of each unit respectively. b) When the sale price is lower than the face value of the unit, the difference between the Net asset value and the par value is debited and credited to the equalisation account on issue and redemption of unit respectively. (f) Load charges All load, charged at the time of sale of units, is being utilised towards meeting distribution and marketing expenses. Effective October 1, 2012, in accordance with the SEBI Circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, entire amount of Exit load collected is credited to the respective scheme net of taxes to the respective schemes as "Other Income", as against the earlier practice of crediting any amount more than 1% of the exit load to the respective schemes as "Other Income" and balance towards marketing and selling expenses. 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. (g) Investor education and awareness initiatives Effective October 01, 2012, in accordance with SEBI Circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, the fund is accruing 0.02% p.a. on daily net assets towards investor education and awareness initiatives. Unutilised amount is carried forward to the subsequent period. (THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK)

SCHEDULE TO THE BALANCE SHEET AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2014 TEMPLETON INDIA EQUITY INCOME FUND Quantity Amount Schedules March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 3 UNIT CAPITAL Units of Rs 10 each fully paid up Growth Plan Outstanding, beginning of year 240,447,791.454 292,126,096.649 2,404,478 2,921,261 Issued during the year 19,279,810.332 20,510,811.109 192,798 205,108 Redeemed during the year (45,943,539.729) (72,189,116.304) (459,435) (721,891) Outstanding, end of year 213,784,062.057 240,447,791.454 2,137,841 2,404,478 Dividend Plan Outstanding, beginning of year 323,979,325.802 349,236,378.309 3,239,794 3,492,364 Issued during the year 33,570,017.965 30,650,292.163 335,700 306,503 Redeemed during the year (65,606,579.371) (55,907,344.670) (656,066) (559,073) Outstanding, end of year 291,942,764.396 323,979,325.802 2,919,428 3,239,794 Direct Growth Plan Outstanding, beginning of year 1,346,803.440 13,468 Issued during the year 2,532,477.131 1,354,136.210 25,325 13,541 Redeemed during the year (232,606.782) (7,332.770) (2,327) (73) Outstanding, end of year 3,646,673.789 1,346,803.440 36,466 13,468 Direct Dividend Plan Outstanding, beginning of year 890,647.440 8,906 Issued during the year 2,050,111.900 904,102.500 20,501 9,041 Redeemed during the year (155,828.885) (13,455.060) (1,558) (135) Outstanding, end of year 2,784,930.455 890,647.440 27,849 8,906 Total Outstanding, beginning of year 566,664,568.136 641,362,474.958 5,666,646 6,413,625 Issued during the year 57,432,417.328 53,419,341.982 574,324 534,193 Redeemed during the year (111,938,554.767) (128,117,248.804) (1,119,386) (1,281,172) Outstanding, end of year 512,158,430.697 566,664,568.136 5,121,584 5,666,646 (THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK)

SCHEDULES TO THE BALANCE SHEET AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2014 TEMPLETON INDIA EQUITY INCOME FUND Schedules March 31, 2014 March 31, 2013 4. RESERVES AND SURPLUS Unrealised appreciation reserve Balance, beginning of year 2,434,149 1,899,986 Change in net unrealised appreciation in value of investments 736,562 534,163 Balance, end of year 3,170,711 2,434,149 Retained surplus Balance, beginning of year 3,777,063 4,213,590 Transfer to Revenue Account (3,777,063) (4,213,590) Net surplus transferred from revenue account 3,354,154 3,777,063 Balance, end of year 3,354,154 3,777,063 Total reserves and surplus 6,524,865 6,211,212 5. CURRENT LIABILITIES AND PROVISIONS Current Liabilities Management fees 17,098 19,559 Trusteeship fees 23 24 Registrar service charges 1,315 1,414 Load pending utilisation 14,081 19,145 Sundry creditors for units redeemed by investors 32,148 12,597 Contracts for purchase of investments 9,825 Dividend payable 1,449 3 Unclaimed distributed income 15,946 2,354 Investor Education Liability 1,434 892 Unclaimed redemption payable 9,277 330 Pending unit allotment 706 290 Other current liabilities 12,523 15,485 115,825 72,093 6. 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 Equity shares / Awaiting listing on Stock Exchanges Listed Securities / Securities Awaited Listing / Unlisted Securities : (Equity shares / Preference shares) appreciation 2,441,633 2,387,476 depreciation 10,895 456,203 Foreign Securities appreciation 446,473 543,428 depreciation 274,522 502,180 Foreign Securities (due to foreign exchange fluctuation) appreciation 569,282 486,948 depreciation 1,649 25,505 (iii) The aggregate value of investments purchased and sold by the Scheme during the year and these amounts as a percentage of average daily net assets are as follows: Purchases amount 1,169,000 250,033 as a percentage of average daily net assets 12.83 2.56 Sales amount 2,611,981 2,099,709 as a percentage of average daily net assets 28.66 21.48 (iv) 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 investments in these companies (except for investments in subsidiaries of these companies) as at March 31, 2014 are provided in Annexure 1. These investments have been made on account of their value at the related prices and are in accordance with the investment objectives of the Scheme.

SCHEDULES TO THE BALANCE SHEET AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2014 TEMPLETON INDIA EQUITY INCOME FUND Schedules March 31, 2014 March 31, 2013 7. OTHER CURRENT ASSETS Cash and Bank Balance Balances with banks in current accounts 5,029 5,090 Unclaimed dividend bank account 15,946 2,354 Unclaimed redemption bank account 9,277 330 30,252 7,774 CBLO/ Reverse Repo Lending Collateralised lending/reverse repo 182,032 148,960 182,032 148,960 Others Sundry debtors for units issued to investors 2,820 3,589 Outstanding and accrued income 11,268 14,457 Contracts for sale of investments 56,223 Advances and deposits Margin money 5,160 2,020 75,471 20,066 TOTAL 287,755 176,800 8. ACCUMULATED UNIT DISCOUNT, NET Balance, beginning of year 2,568,076 2,544,958 Net premium on ( issue) / redemption of units 28,843 23,118 Balance, end of year 2,596,919 2,568,076 9. INTEREST On Debentures and bonds 55 84 On Collateralised lending / Reverse repo 15,904 11,402 15,959 11,486 10. INCOME AND EXPENDITURE The total income and expenditure and these amounts as a percentage of the Scheme s average daily net assets on an annualised basis are provided below: Income amount 599,697 822,984 as a percentage of average daily net assets 6.58 8.42 Expenditure amount 223,927 217,438 as a percentage of average daily net assets Regular Plan 2.46 2.22 Direct Plan 1.94 1.79 Management Fees (including service tax) amount 152,614 135,088 as a percentage of average daily net assets Regular Plan 1.68 1.38 Direct Plan 1.58 1.75 Trusteeship Fees (including service tax) amount 273 293 as a percentage of average daily net assets 0.003 0.003

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 Where control exists Description of relationship Franklin Resources Inc Ultimate holding Company of the sponsor. Templeton Worldwide Inc (TWI) USA Templeton International Inc, USA Franklin Templeton Capital Holdings Pte Limited (Singapore) Franklin Templeton Asia Holdings Pte Limited (Singapore) Franklin Templeton Holding Limited, Mauritius Franklin Templeton Asset Management (India) Private Limited Franklin Templeton Trustee Services Private Limited Holding Company of the Sponsor Sponsor of the Fund. Subsidiary of the Sponsor. SubSubsidiary of the Sponsor Holding Company of the Scheme's Asset Manager./ SubSubsidiary of the Sponsor Scheme's asset manager./ Subsubsidiary of the Sponsor Trustee of the Fund. Schemes of the Fund, under common control of the Sponsor Templeton India Low Duration Fund Templeton India Pension Plan Templeton India Treasury Management Account Templeton India ShortTerm Income Plan 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 Templeton India Income Opportunities Fund FT India Life Stage Fund of Funds Templeton India Income Builder Account Franklin Asian Equity Fund Franklin Templeton Capital Protection Oriented Fund 5 Years Plan FT India Feeder Franklin U.S. Opportunities Fund Templeton India Corporate Bond Opportunities Fund Franklin Templeton Fixed Tenure Fund Series X Plan D Franklin Templeton Fixed Tenure Fund Series IX Plan B Franklin Templeton Fixed Tenure Fund Series XV Franklin Templeton Fixed Tenure Fund Series XVII Franklin India Opportunities Fund Franklin Infotech Fund Franklin Build India Fund Franklin IndiaTaxshield Franklin India Bluechip Fund Franklin India Prima Plus Franklin India Prima Fund Franklin Templeton Fixed Tenure Fund Series XVI Franklin India Index Fund FT India Dynamic PE Ratio Fund of Funds Franklin India Smaller Companies Fund Franklin India High Growth Companies Fund Templeton India Ultrashort Bond Fund Franklin Templeton Fixed Tenure Fund Series VIII 60 Months Plan Plan A 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 Franklin Templeton Fixed Tenure Fund Series XII Plan A Franklin Templeton Fixed Tenure Fund Series XIII Plan A Franklin Templeton Fixed Tenure Fund Series X Plan C Franklin Templeton Fixed Tenure Fund Series XIV Plan A (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 Templeton India Equity Income Fund Name of related party Nature of transactions Year Ended 2014 Balance as at March 31, 2014 Year Ended 2013 Balance as at March 31, 2013 Schemes under common control Franklin Templeton Asset Management (India) Private Limited Investment in the Plan Direct Growth Plan Subscriptions (No. of units in '000) ** Redemptions (No. of units in '000) ** Net asset value of investment at balance sheet date 5 Investment in the Plan Direct Dividend Plan Subscriptions (No. of units in '000) 14 Redemptions (No. of units in '000) 14 Net asset value of investment at balance sheet date 178 Franklin Templeton Trustee Services Private Limited Fees for trusteeship services 273 23 293 24 Franklin Templeton Asset Management (India) Private Limited Registrar service charges 15,914 1,315 17,311 1,414 Fees for management services 152,614 17,098 135,088 19,559 **Amount is less than rupees one thousand

SCHEDULES TO THE BALANCE SHEET AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2014 TEMPLETON INDIA EQUITY INCOME FUND Schedules March 31, 2014 March 31, 2013 12. NET ASSET VALUE Net asset value of each unit of Rs. 10 of the Scheme Growth Plan (Rs) 24.6340 21.8120* Direct Growth Plan (Rs) 24.8026 21.8440* Dividend Plan (Rs) 12.5284 12.4225* Direct Dividend Plan (Rs) 12.6235 12.4418* The net asset value of the Scheme's unit is determined after including unit capital and any reserves and surplus, and reducing net deficit and accumulated unit discount, if any. *Nonbusiness day NAV computed for disclosure purposes only. 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 where the Surplus / (Deficit) for the year (after adjustment of income equalisation) is lower than the amount of distributed income (including tax on income distributed), the income has been distributed by the Scheme to its unitholders out of the distributable surplus available with the Scheme, which consists of the Surplus / (Deficit) for the year (after adjustment of income equalisation) and the retained earnings / accumulated reserves of earlier year(s). 15. PRIOR YEAR COMPARATIVES Prior year amounts have been reclassified, wherever applicable, to conform to the current year's presentation. (THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK)

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 at March 31, 2014 are presented below. The industry and company exposures are stated as a percentage of the Scheme's net assets as at March 31, 2014, as well as the aggregate investments in each investment category. Templeton India Equity Income Fund Industry and Company Particulars Quantity Market Value Percentage to Net Assets Percentage to investment Category Equity & Equity Related Listed/Awaiting listing on Stock Exchanges Auto 750,682 152,013 1.68 2.28 Tata Motors Limited 750,682 152,013 1.68 2.28 Banks 1,310,853 1,125,808 12.44 16.88 ICICI Bank Limited 490,000 610,271 6.74 9.15 ING Vysya Bank Limited 820,853 515,537 5.70 7.73 Cement 1,586,158 791,179 8.74 11.87 Grasim Industries Limited 155,000 447,415 4.94 6.71 JK Cements Limited 1,431,158 343,764 3.80 5.16 Chemicals 3,200,000 917,920 10.14 13.77 Tata Chemicals Limited 3,200,000 917,920 10.14 13.77 Fertilisers 665,896 89,463 0.99 1.34 E.I.D.Parry (India) Limited 665,896 89,463 0.99 1.34 Finance 3,095,609 2,166,579 23.94 32.48 Bajaj Holdings and Investment Limited 795,121 807,048 8.92 12.09 Sundaram Finance Limited 1,522,625 1,004,476 11.10 15.06 Tata Investment Corporation Limited 777,863 355,055 3.92 5.33 Gas 300,000 112,725 1.25 1.68 GAIL India Limited 300,000 112,725 1.25 1.68 Minerals/Mining 280,000 77,656 0.86 1.16 Coal India Limited 200,000 57,580 0.64 0.86 MOIL Limited 80,000 20,076 0.22 0.30 Oil 1,450,000 462,115 5.11 6.93 Oil & Natural Gas Corporation Limited 1,450,000 462,115 5.11 6.93 Petroleum Products 340,000 316,030 3.50 4.75 Reliance Industries Limited 340,000 316,030 3.50 4.75 Pharmaceuticals 50,000 128,040 1.41 1.93 Dr. Reddy's Laboratories Limited 50,000 128,040 1.41 1.93 Software 100,000 327,885 3.62 4.93 Infosys Limited 100,000 327,885 3.62 4.93 Total 6,667,413 73.68 100.00

Industry and Company Particulars Quantity Market Value Percentage to Net Assets Percentage to investment Category Foreign Equity Securities Consumer Non Durables 841,300 101,722 1.13 4.61 Embotelladora Andina SA, pfd., A 200,000 34,861 0.39 1.58 UniPresident Enterprises Corporation 641,300 66,861 0.74 3.03 Finance 328,520 11,065 0.12 0.50 IS Yatirim Menkul Degerler AS 328,520 11,065 0.12 0.50 Industrial Capital Goods 18,780,000 149,452 1.65 6.76 Chongqing Machinery and Electric Company Limited, H 18,780,000 149,452 1.65 6.76 Industrial Products 14,955,200 1,601,450 17.69 72.45 Shanghai Prime Machinery Company Limited, H 14,955,200 144,435 1.60 6.53 Oil 130,000 425,730 4.70 19.26 LUKOIL Holdings ADR 130,000 425,730 4.70 19.26 Power 1,000,000 33,842 0.37 1.53 China Coal Energy Company Limited, H 1,000,000 33,842 0.37 1.53 Retailing 70,000 345,292 3.82 15.62 GS Home Shopping Inc. 20,000 266,778 2.95 12.07 LG Fashion Corp. 50,000 78,514 0.87 3.55 Semiconductors 3,677,438 261,733 2.89 11.85 Novatek Microelectronics Corporation Limited 677,438 185,900 2.05 8.41 United Microelectronics Corporation 3,000,000 75,833 0.84 3.44 Software7,334,000 390,418 4.31 17.66 Travelsky Technology Limited, H 7,334,000 390,418 4.31 17.66 Transportation 4,534,552 346,498 3.83 15.68 COSCO Pacific Limited 4,534,552 346,498 3.83 15.68 Total 2,210,187 24.42 100.00 OTHER CURRENT ASSETS 287,755 3.18 TOTAL ASSETS 9,165,355 101.28 LESS: CURRENT LIABILITIES 115,825 1.28 NET ASSETS 9,049,530 100.00

SCHEDULES TO THE BALANCE SHEET AND REVENUE ACCOUNT FOR THE YEAR ENDED MARCH 31, 2014 TEMPLETON INDIA EQUITY INCOME FUND March 31, 2014 March 31, 2013 Annexure 1 Hindalco Industries Limited 292,800 Infosys Limited 327,885 Reliance Industries Limited 316,030 263,058 Tata Motors Limited 152,013 # 795,928 555,858 The aggregate purchases (other than by interscheme 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: Hindalco Industries Limited 157,000 Infosys Limited 287,806 Tata Motors Limited 119,740 # 407,546 157,000 # Cease to be an associate of the AMC w.e.f. November 13, 2013.