<DOCUMENT>
<TYPE>EX-99.77E LEGAL
<SEQUENCE>3
<FILENAME>legal.txt
<DESCRIPTION>REGULATORY MATTERS
<TEXT>
REGULATORY MATTERS

As part of various investigations by a number of
federal, state, and foreign regulators and
governmental entities, 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
(collectively, the "Company"), entered into
settlements with certain of those regulators.

Specifically, the Company entered into settlements
with the Securities and Exchange Commission ("SEC")
concerning market timing (the "August 2, 2004 SEC
Order") and marketing support payments to securities
dealers who sell fund shares (the "December 13, 2004
SEC Order") and with the California Attorney General's
Office ("CAGO") concerning marketing support payments
to securities dealers who sell fund shares (the "CAGO
Settlement"). Under the terms of the settlements with
the SEC and the CAGO, the Company retained an
Independent Distribution Consultant ("IDC") to develop
a plan for distribution of the respective settlement
monies. The CAGO approved the distribution plan under
the CAGO Settlement and, in accordance with the terms
and conditions of that settlement, the monies were
disbursed to the relevant funds in March, 2005. The SEC
has not yet approved the distribution plan pertaining
to the December 13, 2004 SEC Order. When approved,
disbursements of settlement monies will be made promptly
to the relevant funds, in accordance with the terms and
conditions of that order. The IDC has also prepared and
submitted to the SEC for its approval a plan of
distribution under the August 2, 2004 SEC Order that
resolved the SEC's market timing investigation.

In addition, the Company, as well as most of the mutual
funds within Franklin Templeton Investments and certain
current or former officers, directors, and/or employees,
have been named in private lawsuits (styled as shareholder
class actions, or as derivative actions on behalf of
either the named funds or Franklin Resources, Inc.)
relating to the industry practices referenced above, as
well as to allegedly excessive advisory fees, commissions,
and/or 12b-1 fees. The lawsuits were filed in different
courts throughout the country. Many of those suits are now
pending in a multi-district litigation in the United States
District Court for the District of Maryland.

The Company and fund management strongly believe that the
claims made in each of the private lawsuits referenced above
are without merit and intend 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. 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.

</TEXT>
</DOCUMENT>
