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<TYPE>EX-99.77E LEGAL
<SEQUENCE>3
<FILENAME>legal.txt
<DESCRIPTION>REGULATORY MATTERS
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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 and are recorded as other income in the current
period.  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.
Defendants have since removed the matter to the United States
District Court for the Northern District of West Virginia. 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, in addition to certain 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 and state 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,
allegedly resulting in 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.

The Company, in addition to certain funds, and 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 named 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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