<DOCUMENT>
<TYPE>EX-99.77E LEGAL
<SEQUENCE>4
<FILENAME>legal.txt
<DESCRIPTION>LEGAL ATTACHMENT
<TEXT>
                                1
  REGULATORY MATTERS

  Massachusetts Administrative Proceeding
  On September 20, 2004, Franklin Resources, Inc.
  (Franklin Resources, Inc. and its subsidiaries
  are referred to collectively as the "Company")
  announced that an agreement has been reached by
  two of its subsidiaries, Franklin Advisers, Inc.
  ("Franklin Advisers") and Franklin Templeton
  Alternative Strategies, Inc. ("FTAS"), with the
  Securities Division of the Office of the
  Secretary of the Commonwealth of Massachusetts
  (the "State of Massachusetts") related to an
  administrative complaint filed on February 4,
  2004. The administrative complaint addressed one
  instance of market timing that was also a subject
  of the August 2, 2004 settlement that Franklin
  Advisers reached with the SEC, as described
  below.

  Under the terms of the settlement consent order
  issued by the State of Massachusetts, Franklin
  Advisers and FTAS have consented to the entry of
  a cease-and-desist order and agreed to pay a $5
  million administrative fine to the State of
  Massachusetts. The consent order has multiple
  sections, including "Statements of Fact" and
  "Violations of Massachusetts Securities Laws."
  The Company admitted the "Statements of Fact."
  The Company did not admit or deny the "Violations
  of the Massachusetts Securities Laws." While
  Franklin Advisers and FTAS did not admit or deny
  engaging in any wrongdoing, the Company believes
  that it is in its best interest and the interests
  of its funds' shareholders to settle this issue
  now and move forward.

  U.S. Securities and Exchange Commission (SEC)
  Settlement
  On August 2, 2004, the Company announced that an
  agreement has been reached by Franklin Advisers
  with the SEC that resolves the issues resulting
  from the SEC's investigation of market timing
  activity and the SEC issued an "Order instituting
  administrative and cease-and-desist proceedings
  pursuant to sections 203(e) and 203(k) of the
  Investment Advisers Act of 1940 and sections 9(b)
  and 9(f) of the Investment Company Act of 1940,
  making findings and imposing remedial sanctions
  and a cease-and-desist order" (the "Order"). The
  SEC's Order concerns the activities of a limited
  number of third parties that ended in 2000 and
  those that are the subject of the Massachusetts
  administrative complaint described above.

  Under the terms of the SEC's Order, pursuant to
  which Franklin Advisers neither admits nor denies
  any wrongdoing, Franklin Advisers has agreed to
  pay $50 million, of which $20 million is a civil
  penalty, to be distributed to shareholders of
  certain funds in accordance with a plan to be
  developed by an Independent Distribution
  Consultant. At this time, it is unclear which
  funds will receive distributions or which
  shareholders of any particular fund will receive
  distributions. The SEC Order also requires
  Franklin Advisers to, among other things, enhance
  and periodically review compliance policies and
  procedures.

  Other Governmental Investigations
  As part of ongoing investigations by the SEC, the
  U.S. Attorney for the Northern District of
  California, the New York Attorney General, the
  California Attorney General, the U.S. Attorney
  for the District of Massachusetts, the Florida
  Department of Financial Services and the
  Commissioner of Securities, the West Virginia
  Attorney General, the Vermont Department of
  Banking, Insurance, Securities, and Health Care
  Administration and the National Association of
  Securities Dealers, relating to certain practices
  in the mutual fund industry, including late
  trading, market timing and payments to securities
  dealers who sell fund shares, the Company and its
  subsidiaries, as well as certain current or
  former executives and employees of the Company,
  have received requests for information and/or
  subpoenas to testify or produce documents. The
  Company and its current employees have been
  providing documents and information in response
  to these requests and subpoenas. In addition, the
  Company has responded to requests for similar
  kinds of information from regulatory authorities
  in some of the foreign countries where the
  Company conducts its global asset management
  business.



  The staff of the SEC has also informed the
  Company that it is considering recommending a
  civil action or proceeding against Franklin
  Advisers and Franklin Templeton Distributors,
  Inc. ("FTDI") concerning payments to securities
  dealers who sell fund shares (commonly referred
  to as "revenue sharing"). The staff of the
  California Attorney General's Office ("CAGO")
  also has advised the Company that the California
  Attorney General is authorized to bring a civil
  action against the Company and FTDI arising from
  the same events. Even though the Company
  currently believes that the charges the SEC staff
  and CAGO staff are contemplating are unwarranted,
  it also believes that it is in the best interest
  of the Company's and funds' shareholders to
  resolve these issues voluntarily, to the extent
  the Company can reasonably do so. The Company
  continues to have discussions towards resolving
  these governmental investigations.

  Other Legal Proceedings
  The Company, in addition to other entities within
  Franklin Templeton Investments, including certain
  of its subsidiaries, other funds, and current and
  former officers, employees, and directors have
  been named in multiple lawsuits in different
  federal courts in Nevada, California, Illinois,
  New York and Florida, alleging violations of
  various federal securities laws and seeking,
  among other things, monetary damages 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 funds managed
  by Company subsidiaries, resulting in alleged
  market timing activity. The majority of these
  lawsuits duplicate, in whole or in part, the
  allegations asserted in the Massachusetts
  administrative complaint described above. The
  lawsuits are styled as class actions or
  derivative actions on behalf of either the named
  funds or the Company.

  Various subsidiaries of the Company have also
  been named in multiple lawsuits filed in state
  courts in Illinois alleging breach of duty with
  respect to valuation of the portfolio securities
  of certain funds managed by such subsidiaries.

  In addition, the Company and certain of its
  subsidiaries, 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
  directed brokerage payments and/or payment of
  allegedly excessive advisory, commission, and
  distribution fees. These lawsuits are styled as
  class actions and derivative actions brought on
  behalf of certain funds.

  The Company's management strongly believes that
  the claims made in each of these lawsuits are
  without merit and intends to vigorously defend
  against them.

  The Company cannot predict with certainty the
  eventual outcome of the foregoing  governmental
  investigations or class actions or other
  lawsuits. If the Company finds that it bears
  responsibility for any unlawful or inappropriate
  conduct that caused losses to the Trust, it is
  committed to making the Trust or its shareholders
  whole, as appropriate.




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