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Templeton India Income Fund

Dhirendra Kumar

Templeton India Income Fund (TIIF), launched in February 1997, is an open-ended intermediate-term debt fund. The fund is fully invested in debt instruments and money market securities. The fund provides two plans - growth and dividend.

The dividend plan has given an annual dividend of 15 per cent in April 1998 and 13 per cent in April 1999. The fund paid a 5 per cent half-yearly dividend in September 1999. Investment in the fund is without any load. The fund charges an exit load of half per cent for redemptions within six months.

Templeton India Income Fund has been a steady performer with a quality debt portfolio. The growth plan has given an annualised total return of 14.40 per cent since its launch. The fund has effectively managed the interest rate volatility to its advantage.

In January 1998, TIIF guarded its portfolio value in an interest rate hike with increased shift to short term securities. And with the interest rate cut in March 1999 and April 2000, the fund gained due to its increased allocation to long tenure debts.

Over the past one year ending as on March 2000, the fund has given a 14.65 per cent return and ranks second among 20 open-ended income funds. The fund is attractive for its credit quality, consistent yield, active management and stability given its asset base of almost Rs 900 crore.

Since early 1999, the fund has steadily increased its exposure to the government securities. The exposure to these instruments has been consistently maintained at 50 per cent from the third quarter of 1999. Today 50 per cent of the fund is invested in gilts, 30 per cent in corporate debt, 8 per cent in PSU bonds and 12 per cent in cash and short-term securities.

Barring few corporate debt issues, the fund's portfolio has a strong credit profile with 90 per cent invested in AAA and sovereign guaranteed debt. And even these weak issues are guaranteed by their parent companies. These include, ITC Bhadrachalam guaranteed by ITC, Search Chem Industries by United Phosphorus and Raymond Synthetics by Raymond.

Fund Basics
Objective	Size (Rs cr)	NAV (Rs) 24/4/2000	Exit Price	Entry Price	Total Returns
Tax planning	890.82	15.25	15.25	15.25	14.40%
Benchmark Comparisons (%)					31/3/2000
	1M	3M	6M	1Yr	3Yr
Fund	0.3	4.0	7.3	14.6	14.2
I-BEX Total	-0.7	4.3	8.7	16.8	16.1
Obj. Avg.	-0.3	3.8	7.6	13.1	13.3
Top holdings (29/2/2000)			Value (Rs cr)		% of assets
GOI 2009			98.29		11.22
GOI 2014			83.24		9.51
GOI 2007			64.99		7.42
GOI 2008			49.03		5.60
GOI 2011			35.65		4.07
Citicorp Finance			33.21		3.79
Reliance			30.50		3.48
GOI 2004			22.77		2.60
GOI 2015			21.12		2.41
GOI 2005			20.95		2.39
Gujarat Ambuja			20.35		2.32
India Infrastructure Developers			16.11		1.84
HDFC			15.48		1.77
Tata Finance			15.00		1.71
Reliance Capital			13.82		1.58

Source: Value Research

Mutual Funds

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