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<TYPE>EX-99.77E LEGAL
<SEQUENCE>4
<FILENAME>legal.txt
<DESCRIPTION>REGULATORY MATTERS
<TEXT>
REGULATORY MATTERS
Investigations and settlements
As part of various investigations by a number of federal,
state, and foreign regulators and governmental entities,
including the Securities and Exchange Commission ("SEC"),
the California Attorney General's Office ("CAGO"), and the
National Association of Securities Dealers, Inc. ("NASD"),
relating to certain practices in the mutual fund industry,
including late trading, market timing and marketing support
payments to securities dealers who sell fund shares,
Franklin Resources, Inc. and certain of its subsidiaries (as
used in this section, together, the "Company"), as well as
certain current or former executives and employees of the
Company, provided documents and information in response to
subpoenas and/or requests for documents, information and/or
testimony. Beginning in August 2004, the Company entered
into settlements with certain of the regulators and a
governmental entity investigating the mutual fund industry
practices noted above. The Company believes that settlement
of each of the matters is in the best interest of the
Company and shareholders of the Franklin, Templeton, and
Mutual Series mutual funds (the "funds").

Two of the settlement agreements, those with the SEC and the
CAGO concerning marketing support payments, provide that the
distribution of settlement monies are to be made to the
relevant funds, not to individual shareholders. The CAGO has
approved the distribution plan pertaining to the
distribution of the monies owed under the CAGO settlement
agreement and, in accordance with the terms and conditions
of that settlement, the monies were disbursed to the
participating funds. The Fund did not participate in the
CAGO settlement. The SEC has not yet approved the
distribution plan pertaining to the SEC settlement. When
approved, disbursements of settlement monies under the SEC's
settlement will be made promptly in accordance with the
terms and conditions of that order.

Other Legal Proceedings

On April 12, 2005, the Attorney General of West Virginia
filed a complaint in the Circuit Court of Marshall County,
West Virginia against a number of companies engaged in the
mutual fund industry, including Franklin Resources, Inc. and
its subsidiary, Franklin Advisers, Inc., and certain other
parties alleging violations of the West Virginia Consumer
Credit and Protection Act and seeking, among other things,
civil penalties and attorneys' fees and costs. To the extent
applicable to the Company, the complaint arises from
activity that occurred in 2001 and duplicates, in whole or
in part, the allegations asserted in the February 4, 2004
Massachusetts Administrative Complaint concerning one
instance of market timing (the "Administrative Complaint")
and the SEC's findings regarding market timing in its August
2, 2004 Order (the "SEC Order"), both of which matters were
previously reported.

The Company, and other funds, and certain current and former
officers, employees, and directors have been named in
multiple lawsuits in different courts alleging violations of
various federal securities laws and seeking, among other
relief, monetary damages, restitution, removal of fund
trustees, directors, advisers, administrators, and
distributors, rescission of management contracts and 12b-1
plans, and/or attorneys' fees and costs. Specifically, the
lawsuits claim breach of duty with respect to alleged
arrangements to permit market timing and/or late trading
activity, or breach of duty with respect to the valuation of
the portfolio securities of certain Templeton funds managed
by Franklin Resources, Inc. subsidiaries, resulting in
alleged market timing activity. The majority of these
lawsuits duplicate, in whole or in part, the allegations
asserted in the Administrative Complaint and the SEC's
findings regarding market timing in the SEC Order. The
lawsuits are styled as class actions, or derivative actions
on behalf of either the named funds or Franklin Resources,
Inc.

In addition, the Company, as well as certain current and
former officers, employees, and directors, have been named
in multiple lawsuits alleging violations of various
securities laws and pendent state law claims relating to the
disclosure of marketing support payments and/or payment of
allegedly excessive commissions and/or advisory or
distribution fees, and seeking, among other relief, monetary
damages, restitution, rescission of advisory contracts,
including recovery of all fees paid pursuant to those
contracts, an accounting of all monies paid to the named
advisers, declaratory relief, injunctive relief, and/or
attorneys' fees and costs. These lawsuits are styled as
class actions or derivative actions brought on behalf of the
Fund and other funds.





The Company and fund management strongly believe that the
claims made in each of the lawsuits described above are
without merit and intends to defend against them vigorously.
The Company cannot predict with certainty the eventual
outcome of these lawsuits, nor whether they will have a
material negative impact on the Company. Public trust and
confidence are critical to the Company's business and any
material loss of investor and/or client confidence could
result in a significant decline in assets under management
by the Company, which would have an adverse effect on future
financial results. If it is determined that the Company
bears responsibility for any unlawful or inappropriate
conduct that caused losses to the Fund, it is committed to
making the Fund or its shareholders whole, as appropriate.
The Company is committed to taking all appropriate actions
to protect the interests of its funds' shareholders.




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