Charitable and Religious Trusts

Investments and You

Your Purpose
You are usually involved in charitable or religious or educational or social activities for the benefit of the society at large As a trustee managing such an organisation, you have a highly responsible position in the society

Your Needs
To execute your responsibility, you need: A team of dynamic and committed people, who believe in your cause Support from various sections of society To manage your finances well

Your current financial management strategy(1)

You may have two kinds of projects
Those which have a low gestation period (funds are utilized immediately) Those which are executed over a period of time (funds can be invested)

You have two sources of income

Donations, grants, aids, contribution from government, local institutions and the public Returns from the investment of your current corpus

Your current financial management strategy(2)

Based on your income needs, you normally deploy your investment surplus in avenues that either generate regular income, or grow the value of your investment over time.

You try and match the maturity of your investment with your fund requirements for your various projects
Bank Fixed investments Deposits are one of the preferred

Bank FDs
+ves Capital safety Upto Rs.1 lakh per account under Deposit Insurance and Credit Guarantee Corporation of India Returns Guaranteed Different maturity buckets for different investment horizons

Bank FDs
-ves Liquidity Normally, premature withdrawal attracts penal interest

Renewal required Dont renew, and you lose interest Money locked-in at current interest rates In a rising interest rate environment, you may not benefit as your investment is locked in at prevailing market rates

Some Concerns
Overall reduction in the interest rates in the economy over the last two years has reduced earnings from traditional investment avenues The interest earned accrued every year is considered as an income, even though the same might be received only at maturity

The Alternative
Mutual Funds Religious and Charitable Trusts can invest in mutual fund units u/s 11 (5) of the Income Tax Act, 1961 read with Rule 17 C of the Income Tax Rules, 1962.

In certain states like Maharashtra, Madhya Pradesh, Andhra Pradesh, Gujarat and Rajasthan, separate approval as a Public Security is required to qualify as investments under the said provision.

Benefits of a mutual fund?

Professional Management

Transparency
Liquidity & Convenience Access to investment in certain select asset categories Wide range of scheme more choice Tax Efficiency

Tax efficiency
As per Section 11 of the Income Tax Act, 1961, "the income derived by a religious or charitable trust is exempt from income tax if at least 75% of the income is applied to charitable or religious purposes in the same financial year in which the income is derived.

The trust has the option of setting apart the income (for a maximum period of 10 years) for future application to charitable or religious purpose and still claim the tax exemption in the year in which the income is derived provided that the amount so accumulated in invested in investments specified u/s 11(5) of the Income Tax Act, 1961 read with Rule 17C of the Income Tax Rules, 1962.

What are the types of mutual fund schemes?

Growth schemes: Invest in shares of companies. Have the potential to deliver better returns over the long term. Income schemes: Invest in fixed income securities such as bonds issued by corporates and other government agencies Balanced schemes: Invest in both shares and bonds, thereby receiving income that can moderate the effects of price fluctuations due to stocks Money market schemes: Invest in short term instruments such as certificates of deposits and short term bonds

Mutual Funds

R e t u r n s

Sector Equity Diversified Equity Balanced

Income
Liquid

Risk

Franklin India Bluechip Fund(1)

Diversified Equity Funds
Invests in large cap, well-established companies Asset size : Rs.1708 crores (as on June 30, 2004)

Steady and consistent performance

Performance Track Record

1 year FIBCF 65.4%

3 years* 33.4%

5 years* 27.9%

Inception* 25.7%

BSE Sensex 32.9% 11.5% 3.0% 3.6% Past performance may or may not be sustained in future.
* Annualised & Compounded returns based on 30.6.2004 Growth Plan NAV of Rs.47.04; Inception date: December 1, 1993. Dividend assumed to be reinvested and bonus is adjusted. Sales Load has not been taken into consideration.

Franklin India Bluechip Fund (2)

Diversified Equity Funds

Dividend Track Record

20.00% - Jan 1997 (Rs.2.00 per unit, Record Date : 01.01.1997, NAV Rs.12.03) 35.00% - Jul 1999 (Rs.3.50 per unit, Record Date : 30.07.1999, NAV Rs.30.17) 65.00% and (1:1 bonus ) - Mar 2000
(Rs.6.50 per unit, Record Date : 14.03.2000, NAV Rs.50.38)

25.00% - Nov 2000 (Rs.2.50 per unit, Record Date : 10.11.2001, NAV Rs.16.85) 22.50% - Mar 2001 (Rs.2.25 per unit, Record Date : 09.03.2001, NAV Rs.14.08) 10.00% - Mar 2002 (Rs.1.0 per unit, Record Date : 18.03.2002, NAV Rs.12.93) 20.00% - Jul 2003 (Rs.2.0 per unit, Record Date : 30.7.2003, NAV Rs.15.45) 20.00% - Feb 2004 (Rs.2.0 per unit, Record Date : 3.2.2004, NAV Rs.22.43)
Face Value: Rs.10

Past performance may or may not be sustained in future.

dividend, the NAV falls to the extent of dividend

Please note that after the payment of

Templeton India Growth Fund..(1)

Diversified Equity Funds
Well-diversified equity fund with a Value Bias Disciplined stock selection approach with low portfolio turnover

Consistently outperformed the benchmark index-Sensex, while maintaining lower volatility than the Sensex.
Asset Size: Rs.354 crores (as on June 30, 2004)

Templeton India Growth Fund..(2)

Diversified Equity Funds
Performance Track Record 1 year TIGF BSE Sensex MSCI India Value 64.1% 32.9% 29.4% 3 years* 31.7% 11.5% 14.1% 5 years* 25.9% 3.0% 6.6% Inception* 14.8% 4.4% N.A

Past performance may or may not be sustained in future.

* Annualised & Compounded returns based on 30.6.2004 Dividend Plan NAV of Rs.26.30; Allotment date : Sept. 10, 1996. Dividends declared are assumed to be reinvested. Sales Load has not been taken into consideration.

Dividend Track Record 15.00% - Apr 2000 (Rs.1.50 per unit, Record Date : 28.04.2000, NAV Rs.14.45)
20.00% - Sep 2003 30.00% - Feb 2004
(Rs.2.00 per unit, Record Date : 16.09.2003, NAV Rs.20.48) (Rs.3.00 per unit, Record Date : 24.02.2004, NAV Rs.27.16) Face Value: Rs.10
Please note that after the payment of

Past performance may or may not be sustained in future.

dividend, the NAV falls to the extent of dividend

FT India Balanced Fund

Hybrid Funds

Steady state allocation of 70% to equities and 30% to debt growth + stability Asset size Rs.112 crores (As on June 29, 2004)

Performance Track Record

1 year Balanced Fund Crisil Balanced Fund Index 43.4% 24.9% 3 years* 25.2% N.A Inception* 9.8% N.A

Past performance may or may not be sustained in future. * Annualised &

Compounded returns based on 29.6.2004 Growth Plan NAV of Rs.15.33; Inception date : Dec 10, 1999. Sales Load has not been taken into consideration.

FT India Monthly Income Plan @

Debt Funds

An open end income scheme. Income is not assured, and is subject to the availability of distributable surplus

A debt oriented portfolio with a marginal equity allocation of upto 20% Twin benefits of stability from debt, and growth potential from equities Asset size : Rs.1699 crores (As on June 29, 2004) Steady and Consistent performance
1 year FTIMIP@ Crisil MIP Blended Index 13.2% 8.7% 3 years* 12.2% N.A Inception* 12.8% N.A

Past performance may or may not be sustained in future. * Annualised &

Compounded returns based on 29.6.2004 Growth Plan NAV of Rs.15.7008; Inception date : Sep 28, 2000. Sales Load has not been taken into consideration.

Fixed Income Funds(1)

Risk Profiles
Templeton India Government Securities Fund

Templeton India Income Builder Account Templeton India Income Fund

Templeton Floating Rate Income Fund (Long Term) Templeton India Short Term Income Plan

Templeton Floating Rate Income Fund (Short Term)

Templeton India Treasury Management Account

RISK

Fixed Income Funds(2)

Scheme Name Templeton India Treasury Management Account Templeton India Short-Term Income Plan Asset Size (Rs. in Crs) 3939 572 Recommended Investment Horizon 3 days to 3 months 3 months and above

Templeton Floating Rate Income Fund Short Term

Templeton India Income Fund Templeton Floating Rate Income Fund Long Term Templeton India Income Builder Account Templeton India Government Securities Fund

2067
1024 572 869 441

3 to 6 months
1 year and above 6 months and above 1 year and above 1 year and above

Plans
Systematic Withdrawal Plan For meeting regular

expenses by systematically withdrawing a fixed amount or capital appreciation

Growth option For accumulating assets to meet future commitments Dividend option * For meeting recurring expenses

* As per the latest Union Budget the dividend distribution tax has been increased to 20% from 12.5%, for debt oriented funds.

Investment Manager
What do you look for in a Money Manager Someone you can trust Someone with experience and discipline Someone who is dedicated to take care of your money Someone with an investment philosophy that matches your comfort level and who has the flexibility to meet your changing needs. The Franklin Templeton team possesses the experience and resources to be an effective partner to help you build and protect capital over time.

About Franklin Templeton

Franklin Templeton Worldwide

More than 50 years of experience in global investing Third largest independent fund management group in the US. First and only mutual fund company added to the S&P 500 Over US$ 350 billion assets under management; over 10 million investor accounts worldwide

As of June 30, 2004

FRANKLIN TEMPLETON WORLDWIDE

50 Offices, 28 Countries, 6 Continents
Africa Johannesburg Asia Abu Dhabi | Beijing | Chennai | Hong Kong | Mumbai | Seoul | Shanghai | Singapore | Taipei | Tokyo Australia

Melbourne
Europe Amsterdam | Brussels | Dublin | Edinburgh | Frankfurt | Geneva | Istanbul | London | Luxembourg | Madrid | Milan | Moscow | Paris | Stockholm | Warsaw | Zurich North America Calgary | Edmonton | Ft. Lauderdale | Fort Lee | Los Angeles | Miami | Montreal | Nassau | New York City | Rancho Cordova | Salt Lake City | San Mateo | Short Hills | St. Petersburg | Toronto | Vancouver | Washington DC | Wilmington | Winnipeg South America Buenos Aires | Rio De Janeiro | Sao Paulo

FT India A snapshot
Started Operations in 1996

Indias largest# private sector fund house in terms of assets (Over Rs.17,342 crores) *
Largest investor base in the private sector (Over 900,000 investor accounts)* Widest range of products to cater to all investor needs (39 schemes) Sizeable footprint in the country 33 branches

* As on 30.6.2004 # Source: AMFI Site (as on June 30, 2004)

BS- Fund Manager of the Year- 2003

R

Sukumar CIO ( Franklin Equity)

Manages over Rs 3,870 crores across 25 schemes

Past performance may or may not be sustained in the future

Please see slide 32 for methodology and other details.

Crisil Best Funds Awards - 2003

Best Performing Open End Funds In 5 out of 6 Categories

Equity - Franklin India Prima Fund Balanced - Franklin India Balanced Fund Income - Templeton India Income Builder Account Gilt - Templeton India Government Securities Fund

Liquid - Templeton India Treasury Management Account

Past performance may or may not be sustained in the future

Please see slide 32 for methodology and other details.

Thank You
Investment Objectives and Risk Factors: Franklin India Bluechip Fund (FIBCF) is an open ended growth scheme with an objective to primarily provide medium to long term capital appreciation. Franklin India Prima Fund (FIPF) is an open ended growth scheme with an objective to provide medium to long term capital appreciation as a primary objective and income as a secondary objective. Franklin India Prima Plus (FIPP) is an open end growth scheme with an objective to provide growth of capital plus regular dividend through a diversified portfolio of equities, fixed income securities and money market instruments. Franklin India Taxshield (FIT) is an open ended Equity Linked Savings scheme with an objective to provide medium to long term growth of capital along with income tax rebate. Templeton India Growth Fund (TIGF) is an open ended growth scheme with the objective to provide long-term capital growth. Templeton India Income Fund (TIIF) is an open end income scheme with the objective to generate a steady stream of income through investment in fixed income securities. Templeton India Income Builder Account (TIIBA) is an open ended scheme with an objective to provide investors regular income under the Dividend Plan and Capital appreciation under the Growth Plan. FT India Balanced Fund (FTIBF) is an open ended balanced scheme with an objective to provide long term growth of capital and current income. FT India Gilt Fund (FTIGF) is an open ended dedicated gilt scheme with an objective to provide steady returns by investing in securities issued by the Central/State Government securities and/or securities unconditionally guaranteed by the Central/State Government for repayment of principal and interest. Templeton Floating Rate Income Fund (TFIF) is an open ended income scheme with the objective to provide income consistent with the prudent risk from a portfolio comprising substantially of floating rate debt instruments, fixed rate debt instruments swapped for floating rate returns, and also fixed rate instrument and money market instruments. The floating rate investments are subject to risks pertaining to Interest rate movement, Spread Movement, Settlement and Liquidity. FT India Monthly Income Plan* (FTIMIP) is an open ended income scheme with an objective to provide regular income from a portfolio that is invested in predominantly high quality fixed income securities with a maximum exposure of 20% to equities. Templeton India Short-Term Income Plan (TISTIP) is an open ended income scheme with an objective to provide stable returns by investing in fixed income securities having a shorter maturity periods. Templeton India Pension Plan (TIPP) is an open ended tax saving scheme whose objective is to provide investors regular income under the Dividend Plan and capital appreciation under the Growth Plan. Templeton India Childrens Asset Plan (TICAP) is an open ended income scheme, whose objective is to provide regular income under the Education Plan and Dividend option of Gift Plan and capital appreciation under the Growth option of Gift Plan. Templeton Government Securities Fund (TGSF) is an open ended income scheme with the objective to generate credit risk-free return through investments in sovereign securities issued by the Central Government and/or State Government and/or any security unconditionally guaranteed by the Central Government and/or State Government for repayment of Principal and Interest. Templeton India Money Market Account (TIMMA) objective to provide investors with a high degree of liquidity combined with current income. Templeton India Treasury Management Account (TITMA) is an open end Liquid scheme with an objective to provide current income with high liquidity. Templeton India Liquid Fund (TILF) is an open ended liquid scheme with the objective of providing income and liquidity consistent with prudent risk from a portfolio comprising of money market and debt instruments.

Risk Factors : All investments in mutual funds and securities are subject to market risks and the NAV 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 a 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. The above are only the names of the scheme and do not in any manner indicate the quality of the schemes, their future prospects or returns. 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 distributions under the dividend plans of the schemes though it has every intention of doing so. All dividend distributions are subject to the investment performance of the schemes. The investments made by the schemes are subject to external risks. Franklin India Bluechip Fund, Franklin India Prima Fund, Franklin India Prima Plus, Templeton India Growth Fund : Load Structure: Entry load: 2.25%; Exit load: Nil. Templeton India Pension Plan: Entry Load:1%, Exit Load: 3%, if redeemed before the age of 58 years (subject to a 3 year lock-in period) & Nil, if redeemed after the age of 58 years. FT India Balanced Fund: Entry: 1.5%, Exit- Nil. FIT: Entry: 2%, Exit Nil. Templeton India Income Fund: Entry: Nil Load, Exit Load: Rs.10 lakhs & below - 0.5% (if redeemed within 6 months of allotment) - Above Rs.10 lakhs - 0.25%, if redeemed within 3 months of allotment. TIIBA: Entry Load: Plan A & Plan B Nil, Exit Load: Plan A Nil, Plan B Rs.10 lakhs & below 0.5% (if redeemed within 6 months of allotment). Above Rs.10 lakhs 0.25% (if redeemed within 3 months of allotment). FTIBF: Entry: 1.5%, Exit Nil. TICAP/TITMA/TILF/TIMMA/FTIGF Entry : Nil, Exit Nil. TGSF-TP: Entry Nil, Exit: 0.35% (If redemption is made within 6 months of allotment). TISTIP: Entry: Nil, Exit: Nil. FTIMIP: Plan A: Entry & Exit : Nil, Plan B: Entry Above Rs.10 lakhs 0.5%, Upto Rs.10 lakhs Nil. Exit Rs.10 lakhs & below : 1% (if redeemed within 1 year of allotment). Above Rs.10 lakhs Nil. TFIF: Short-Term Plan Entry & Exit Nil. Long-Term Plan Entry - Nil, Exit Rs.10 lakhs & below 0.30% (if redeemed within 6 months of allotment). Above Rs.10 lakhs 0.25% (if redeemed within 30 days of allotment). The units are being offered at par value of Rs.10 per unit during the initial offer period and at NAV based prices upon reopening, subject to prevailing load. Investors are requested to study the Offer Document before investing. Please go through the offer documents before investing. Statutory Details : 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 NAVs, purchases and redemptions on all business days except during the days when there is a book closure.

Ranking Methodology Business Standard Mutual fund schemes are ranked on the basis of the weighted average of their 2-year and 1-year returns. Like in the previous years, the Business Standard Fund Manager seeks to rank schemes and also rate the best Fund Manager of the Year. The process of ranking starts with defining the universe of schemes. While we provide data on all schemes, we rank only those schemes which have been operating for at least two years and have a minimum corpus of Rs.40 crore. There is, therefore, a time and a corpus cut-off for ranking purpose only. The equity and debt schemes, which have been impacted by a change in management, the 12 months prior to June 30, 2003, have not been considering for the rankings. For rankings, the principle, followed in the earliest issues, is to use a time-weighted rate of returns based on the net asset values (NAVs). The rate of return is calculated on the NAVs on a point-to-point basis for two years and one year. The schemes then get ranked on the basis for two year and one year. The schemes then get ranked on the basis of a weighted average of their 2-year and 1-year returns. The weights assigned to the current years return is 0.67, while the 2-year performance of the scheme gets a weight of 0.33. The higher weightage given to the current years performance is justified on the basis that the Fund Manager essentially tracks the annual performance of schemes. The ranking is done separately for equity (diversified), equity (special focus), debt, gilt and balanced funds. The return-based ranking makes on attempt to compare the performance of schemes across these categories. The ranks thus assigned are strictly within the category of funds to which they belong. However, to arrive at the Fund Manager of the Year, we have to make an exception to the rule. It is erroneous to compare a debt scheme with an equity scheme on the basis of return alone. In order to compare them, there has to be some standardization. Also, working on the well-accepted premise that fund management is not all about returns, we not only look at returns, but also the risks. What we have done is to calculate the risk-weighted returns across all schemes. An attempt has been made to estimate the return per unit of risk for the schemes. There is a small statistical issue which needs to be noted. Conventionally, at least 30 observations are needed to generate statistically significant results. However, we tried sensitivity of results to time period and found that the results are not sensitive. We continue to use the NAV-based rate of return over two years but go further and factor in the risks by calculating the excess returns over benchmark and accounting for volatility. This has been done by calculating the Sharpe ratio. The benchmark varies for different categories of funds. The benchmark for rating equity schemes is the Sensex, for debt schemes it is the return on risk-free paper and, for balanced schemes, it is 50:50 of sensex and risk-free return. The number of schemes considered in each category were Equity-72; Balanced-34; Gilt-49 and Debt-52. Once all the schemes are rated, the fund manager whose funds have got the maximum ranks across all categories is declared the Fund Manager of the Year. Normally, there is only one chief investment officer (CIO) for a fund. However, in the case of the fund that emerges at the top in our risk-adjusted ratings, there are two CIOs-one managing debt funds, and the other equity funds. Since the overall performance of these funds have been determined taking an aggregate of the performance of both types, it was decided that the two will share of the Fund Manager of the Year honour.

CRISIL Best Fund Awards: CRISIL Best Fund Awards 2003 are based on consistency of quarterly CRISIL CPR rankings released during the year ended June 03 and are published by CRISIL. Funds appearing in all the rankings periods are considered for the Award. The individual CPR parameter scores averaged for the four quarters multiplied by the parameter weight as per the CPR methodology helps arrive at the final scores. A minimum of two** funds in each category receive the award. A detailed methodology of the CRISILCPR is available at www.crisil.com.1 The number of schemes considered in each category were: Open end equity diversified funds: 33; Open end income funds: 19; Open end balanced funds: 17; Open end long term gilt funds: 11 and Open end liquid funds: 18. Sales load was not considered in the computation of returns. **Three for Equity Diversified category