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

REGULATORY AND LITIGATION MATTERS

As part of various investigations by a number of federal, state, and
foreign regulators and governmental entities, including the
Securities and Exchange Commission ("SEC"), 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 ("marketing support"), Franklin Resources, Inc. and
certain of its subsidiaries (collectively, the "Company"), entered
into settlements with certain of those regulators and governmental
entities. Specifically, the Company entered into settlements with the
SEC, among others, concerning market timing and marketing support.

On June 23, 2006, the SEC approved the proposed plan of distribution
for the marketing support settlement, and disbursement of the
settlement monies to the designated funds, in accordance with the
terms and conditions of that settlement and plan, was completed in
September 2006 and was recorded as other income.

 The plan of distribution for the market timing settlement is
currently under review by the SEC staff. After publication of notice
of the plan and a 30-day comment period, the proposed plan of
distribution will be submitted to the SEC for approval. Following the
SEC's approval of the plan of distribution, with modifications as
appropriate, distribution of the settlement monies will begin in
accordance with the terms and conditions of the settlement and plan.

In addition, the Company, as well as most of the mutual funds within
Franklin Templeton Investments and certain current or former
officers, Company directors, fund directors, and 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.). The lawsuits relate to the industry practices
referenced above, as well as to allegedly excessive commissions and
advisory and distribution fees.

The Company and fund management 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 Trust,  it is
committed to making the Trust or its shareholders whole, as
appropriate.
</TEXT>
</DOCUMENT>
