.MJ'l ______,____1 C~ 

SECTI01J I S (a. ") 

RUL 

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MT,ATT.AR ~ / ?-/cri i 

JUL 2 3 1997
 

Our Ref. No. 97-240
 

Franklin Templeton


RESPONSE OF THE OFFICE OF CHIEF COUNSEL
 Group of Funds
 DIVISION OF INVSTMNT MAAGEMNT File Nos. 811-730. et al.
 

Your letter of July 16, 1997 requests our assurance that the
 

staff will not recommend enforcement action to the Commission
 

under Section 15(a) ,of the Investment Company Act 
 of 1940 if
 certain funds (the "Funds") advised by Franklin Advisers, Inc.,
 

Franklin Advisory Services, Inc., Franklin Investment Advisory
 

Services, Inc., Templeton Asset Management Ltd., Templeton Global
 Advisors Limited, or Franklin Mutual Advisers, Inc. (the 

"Advisers") amend their investment management agreements without
 

shareholder approval to remove certain fund administration
 

responsibilities and transfer them to separate fund
 

administration agreements with one or more affiliated
 

administrators ("Administrators"), as described below.,'
 

Facts 

Under existing investment management agreements, the
 

Advisers are responsible for providing both investment advisory
 

and certain administration services to the Funds. In most cases,
 

a Fund's Adviser provides both types of services directly, but
 

for some Funds the Adviser deleg~tes the performnce of
 

administration services to an Administrator pursuant to a sub-


administration agreement. For providing advisory and
 

administration services, a Fund's Adviser receives a single
 

management fee, payable monthly, based on a percentage of the
 

Fund's average daily net assets.
 

You propose that each Fund enter into a new agreement with
 

its current Adviser substantially identical to' the existing
 

management agreement except that the new agreement ("Advisory
 

Agreement") would not require the Adviser to provide
 

administration services. At or about the same time, the Fund
 

would enter into an agreement (n Administration Agreement")
 

directly with an Administrator to provide the administration
 

services for which the Adviser formerly was responsible. i/
 

Although the contractual relationships will be adjusted so
 

that a different entity will be responsible for providing fund
 

.administration services, you represent that the individuals
 

performing those services will remain the same. You state that
 

the proposed arrangement is intended to more clearly delineate
 

i/ For a Fund whose Adviser currently delegates the provision of


administration services to an Administrator, the sub-


administration agreement would be terminated.
 
- 2 ­

the nature of payments made by the Funds for various services and
 

may result in táx advantages and operational efficiencies for the


Advisers. 

You represent that each Fund will determine the portion of
 

the existing investment management fee, calculated as a
 

percentage of assets under management, attributable to
 

administration services. This amount will be the fee initially
 

payable to the Administrator under the Fund's new _ Administration
 

Agreement. The Advisory Agreement will provide for advisory fees
 

equal to the total management fee assessed under the existing ­

investment management agreement, reduced by the fee payable under
 

the Administration Agreement. As a result, the combined fees
 

payable by a Fund un~er the -proposed Advisory and Administration
 

Agreements (the "New Agreements") will not exceed the fee payable
 

under its existing management agreement.
 

You represent that the New Agreements will be approved by
 

the board of directors or trustees of each Fund, inClUding a
 

maj ority of directors or trustees who are not parties to the New
 

Agreements or interested persons of a party. . Each Fund will
 

provide written notice of the New Agreements to its existing
 

shareholders no later than the mailing of the Fund's next
 

periodic (annual or semi-annual) report, and will include this
 

notice in any prospectus delivered to prospective shareholders,
 

until such time as the prospectus is amended to reflect the
 

existence of the New Agreements. a/ For the reasons discussed
 

below, you believe that shareholder approval of the new
 

Agreements is not required.
 

Analysis 

Section 15 (a) of the Investment Company Act provides
 

generally that no person may serve as an investment adviser to a
 

registered fund except pursuant to a written contract that, among


other things, has been approved by the vote of a maj ori ty of the 

fund's outstanding 
 voting securities. l/ Ány material change in
 

an advisory agreement creates a new contract that must be
 

approved in accordance with Section 15 (a) . .
 

You maintain that shareholder approval of a Fund's Advisory
 

Agreement is unnecessary and would impose a significant expense
 

2/ Telephone conversation of July 23, 1997 between Sarah A.


Wagmn and Michael P. 0' Hare, counsel to the Advisers. 

l/ Section 15 (a) does not apply to agreements for the provision


of non-advisory services. See,~, Washingtori Mutual Investors
 

Fund, Inc. (pub. avail. May 14, 1993). Shareholder approval of
 

the Administration Agreements therefore is not required.
 
¡ 

- 3 ­

on Fund shareholders, while serving no useful purpose. ~/ You
 

state that 
 structuring each Advisory Agreement so that total.
 

management fees will be reduced by the exact amount of fees
 

payable by a Fund under its Administration Agreement will ensure
 

that the total advisory and administration services fees payable
 

by a Fund may not be increased without amending the Advisory
 

Agreement, which would require shareholder approval. You
 

represent that the proposed restructuring of the existing
 

investment management agreements into separate Advisory and
 

Administration Agreements will not result in any decrease in the
 

nature or level of the advisory or administration services
 

provided to the Funds. 5/ In addition, you assert that, because
 

the same Franklin Templeton personnel will provide the same
 

administratión services to the Funds as they currently provide
 

under the existing management agreements, the New Agreements
 

represent only a contractual 
 change in the entity providing fund
 

administration services, and will not result in substantive
 

changes to the administration services provided to the Funds.
 

On the basis of the facts and representations set. forth in your letter, we would not recommend enforcement action to the
 

Commission under Section 15 (a) if the Funds' existing investment
 

management agreements are amended without shareholder approval,
 

as described in your letter. Our position is based particularly
 

on your representations that the proposed changes would not
 

reduce or modify in any way the 
 nature or level of advisory or


administration services provided to a Fund, and that the total
 

advisory and administration services fees payable by a Fund under
 

the New Agreements would not exceed the fees payable by the Fund
 

4/ You assert that shareholder approval of each Advisory
 

Agreement is unnecessary because the amendments relate to the
 

provision of administration services, rather than advisory
 

services. We acknowledge that, if each of the existing
 

investment management agreements had been structured instead as
 

two separate agreements - - an administration agreement and an
 

advisory agreement ~ - it would not be necessary to obtain
 shareholder approval to amend the administration agreement. This 

arguent alone, however, does not support the 
 conclusion that a
 

shareholder vote is not required in this case. See American
 

Odyssey Funds, Inc. (pub. avail. Oct. 7, 1996) at n.4.
 

2/ We note that any future material amendment to a Fund's
 

Advisory Agreement, including any 
 ,amendment to increase total
 advisory and administration services fees paid by a Fund, or to
 

modify the nature or level of services provided to a Fund, would
 

require approval by the Fund's shareholders in aècordance with


Section 15 (a) . 
- 4 ­

under its existing investment management agreement ~ QI You
 

should note that any different facts or circumstances might
 

require a different conclusion.


~.~~ 

At torney 

6 I See American Odyssey Funds, Inc., supra note 4 ¡Washington
 

Mutual Investors Fund, . Inc., supra note 3 i Limited Term Municipal
 

Fund, Inc. (pub. avail. Nov. 17, 1992).
 
Andr B. Youn Bret S. Gore John C. Hook Robe D. Cagn S. Goon El Ha JJ. O'Nei James E. O'Nei, m M. Alda Davi Dael S. Kot Wi S. Pi, m Br s. Varo Ke P. Kun Pre C. Aldndge, Jr. Stehen R. Ha Al R. Gech Wi E. Maoney, Jr. STLE . Ge S. Poid,Jr. Todd C. Vanet Da T. Fit Nan lier Maroli

HenG, Hager Arold s, moc Mer R. Steer JoshJ. McH RONG)lN	 .Her G, KceJr. Ed R. Boton Jona P. Bloom Tyo H.E. Sw. Ma, H. Pler Un An Gate Cr Rus BI Dae Ba jç..aåHodn,Jr, De M. Scwa Joa L. Dr Midi P. Bonn "JÒhil'. Douger. Jr. Stehen C. Baer Ma B. Maer Ro S. CaraDael &5~G,IL siii W. KI. P.C. David C. Frace, Jr. Timy J. Capbell Midi V. Par Beet G. Pi Sadr A. Glco Chophe E. Cum Us M. Ki ATTORNEYS	 Davi S. Hope James F. Podei Thoma G. Ha Andr S. Lawrce

John P. O'D Ga P. Sc Rob F. Hect . Vanes L. Caes

Andn L. Dcni Zacl P. Alexder John F. Ua Aln T. Fia 

David R. Ladr John). Murhy, m Wii P. Zier Ma A. Herey Lae Taylor, Jr. Elen Rose Rogoff An Mae Janus Michel p, O'Ha ThomaJ, Reneha, Jr. Audr C. Taley Timothy P. Leon Er D. Scoern WiU R. Sa Jdf A. Lutsky Doy M. Aln Patrci Capen 

260 One Commerce Square Rich K. Hc:. WI G, Scroug 'Paul A. Pan Josh D. Cr. Ki A. Hendr An CudyRod Nila De . David H, Josh.

~hldclphia. Pennlyaa 19¡~3;,(098;. . James M, Pa~da m Saue). Ar Jr. Us A.,Du . . . Jc:er R..Beft . Jai ii Be .. . . JosIiV; De Ra Ma Joli : . . ..' Ma Ma, iiei (215) 56-8 ' St M. Pd . Dad M. Looo Do J. McG Midi D~ O'Ma JohJ. Hunter Gtory J. NoW Mi J. Ml RuJ. Reler 

Fax (215) 564-8120	 Da E. Be St A. Scbr Sthe B. NoIa Mel Len Wal Da P. Scton Kev R. Boyle Ma A. Po . Le A. Ro Ke R. Du Brt Roin m- . UC IN DElWAR ONLY 

Brua: G, Leo	 Jan Lade Fo	 Ma P. An .. UaN INWASN.DCONLY

-UCEED IN NEl'RK ONLY
 

July 16, 1997	 1940 Act/15(a) 

Offce of Chief Counsel
 

Division of Investment Management 

U.S. Securities and Exchange Commission
 

450 Fifth Street, N. W.
 

Washington, D.C. 20549 

Re: Franklin Templeton Group of Funds
 

Ladies and Gentleman, 

On behalf of the following investment advisers registered under the Investment 

Advisers Act of 1940: Fraklin Advisers, Inc.; Franklin Advisory Services, Inc.; Fraklin 

Investment Advisory Services, Inc.; Templeton Asset Management Ltd., Templeton Global 

Advisors Limited and Fraklin Mutual Advisers, Inc. (each an "Adviser" and collectively, 

the "Advisers"); as well as the 60 registered investment companies (including their 167 

separte series) within the Fraklin Templeton Group of Funds for which one of the Advisers 

serves as investment adviser (collectively, the "Funds"), i we hereby request confirmation by 

the staff of the Division of Investment Management that it would not recmmend 

enforcement action under section lS(a) of the Investment Company Act of 1940, as amended 

(the" 1940 Act"), if, at the request of the Advisers, the existing investment management 

agreements for the Funds (the "Existing Management Agreements") are amended without 

lExhibit A to this letter contains a complete listing of each of the registered investment 

companies (and series thereof) within the Franklin Templeton Group of Funds for which one 

of the Advisers serves as investment adviser. The Franklin Templeton Group of Funds is 

made up of the registered investment 	 companies within both the Franklin Group of Funds4i
 

and the Templeton Group. 

Malvern, Pennsylvania Wilmington, Delaware Cherry Hil: New Jersey 
Office of Chief Counsel 

July 16, 1997
 

Page 2 

obtaning shareholder approval, to remove certn fund administrtion responsibilties of the 

Advisers from the Existing Management Agreements. Under the proposed argements, the 

Advisers would continue to provide investment advisory services under amended versions of 

the Existig Management Agreements (each, a "Proposed Advisory Agreement," and 

collectively, the "Proposed Advisory Agreements"), and the fund administrtion servce 

previously provided by the Advisers would be performed by a separte company, or 

companies, affiliated with the Advisers (the "Fund Administrtor"), under separte fund 

administrtion agreements (each, a "Proposed Administration Agreement," and collectively, 

the "Proposed Administrtion Agreements").
 

Although the proposed argements involve changes in the entities that wil 

provide Fund administrtion services to the Funds, the Fraklin Templeton personnel 

performing such services wil remain the same. Furthermore, the proposed changes wil not

result in any increase in the amount of fees paid by any Fund for investment advisory or 

administrtion services, nor any decreae in the nature or quality of the investment advisory 

or administrtion services recived by any Fund. For the reasons outlined below, we do not
 

believe that shareholder approval of the terms of each Proposed Advisory or Administrtion 

Agreement is required under section IS(a) of the 1940 Act, becuse the amendments relate 

solely to the fund administration, and not the investment advisory, aspects of such 

agreements. 

Background 

Under the Existing Management Agreements, the Advisers are responsible for 

providing both investment advisory and certn fund administration services to the Funds. In 

the case of most of the Funds, the Adviser and its employees directly provide al of the
 

service caled for under the Existing Management Agreements. For other Funds, the 

performance of fund administrtion services required by the Existing Management 

Agreements is delegated by the Adviser to an affiiated company pursuant to a sub-" 

administrtion agreement. 2
 

Fund management believes that the fund administrtion servces descnbed in 

and required to be performed under the Existing Management Agreements should, from a 

contrctual stadpoint, be provided by the Fund Administrator, whose exclusive business
 

would involve the provision of fund administration services to the Funds. The proposed 

argements are expected to more clealy delineate the nature of payments by the Funds for 

2In a number of cases, fund administration services are currently provided to Funds 

pursuant to business management agreements directly between the registrnt and an affilated
 

company. Funds with such arangements are not the subject of this request. 
Office of Chief Counsel 

July 16, 1997
 

Page 3
 

varous services and may result in ta advantages and operational effciencies for the 

Advisers. Therefore, Fund management proposes to recmmend to the Boards of Directors 

or Trustee of each registrt that the Existing Management Agreements be amended to 

remove references to the provision of fund administrtion services, and to recmmend that 

the Boards approve the Propose Administrtion Agreements directly between the registrts,
 

on behalf of the Funds, and the Fund Administrator to provide for the furnishing of fund 3 As a result of the proposed arangements, the Advisers wil no administration services. 


longer themselves provide fund administrtion services and there wil be no nee for the
 

Advisers to delegate fund administrtion responsibilties through sub-administrtion 

argements. Any such existing sub-administration agreements wil be terminated. 

A. Exising Agreements
 

The Existing Management Agreements are each substatially identica to each 

other with respet to the provision of investment advisory and fund administrtion service 

relevant to this request, but var in other respects such as fee rates and their effective and
 

termination dates. The investment advisory services called for under the Existing 

Management Agreements include the management of the investment and reinvestment of each 

Fund's assets subject to the supervision of Fund management, the placing of orders for the 

purchase and sae of each Fund's portfolio securities, the selection of brokers and deaers to 

effect portfolio trasactions and the provision of regular reports regarding its activities to 

Fund management as appropriate. With respet to fund administrtion services, the Existing 

Management Agreements require the Advisers to furnish office space, furnishings, facilities 

and equipment reaonably required to manage the Funds' businesses. Under the Existig
 

Management Agreements, the Advisers also provide internal bookkeeping, accunting and 

auditing services and maintan recrds in connection with the Funds' investment and business 

activities. The Advisers are also required to employ or compensate the executive, secretaal 

and clerica personnel necssa to provide such services. 

The Advisers currently recive monthly fees for performing the investment 

advisory and fund administration services caled for under the Existing Management 

Agreements, which are caculated based on a percentage of the average daily net assets of 

each Fund on an annualize basis. The fee rates var with respect to the parcular Funds, 

and many of the fee rates contan breaints resulting in reduce fee rates at higher asset 

levels. 

\ 

, 

ì 3Porms of the Existing Management Agreement, the Proposed Advisory Agreement and 

the Proposed Administration Agreement are included with this request as Exhibits B, C and 

D, respetively. 
Office of Chief Counsel 

July 16, 1997
 

Page 4 

B. Proposed Agrements
 

Under the propose argements, each Fund wil make a determation as to 

what porton of the current tota fee are attbutable to advisory services and what porton
 

are attbutable to fund administrtion services. The fee strcture of the Proposed Advisory
 

and Administrtion Agreements wil reflect the determined split of advisory and 

administration fees which, taen together, wil equal the amount of the current tota fees. 

The Proposed Advisory and Administrtion Agreements would each be approved by a 

majority of the directors or trstees of the registrat who are not paries to such agreements 

or interested persons of any such pares. 

The Proposed Advisory and Administrtion Agreements wil also be strctured 

so that the tota combined fees may not be increaed without approval of the shareholders of 

the relevant Funds. Each Propose Advisory Agreement wil contan contrctUal fee rates 

identica to the current rates contaned in the corresponding Existing Management 

Agreement, except that each Proposed Advisory Agreement wil provide that the advisory fee 

shall be reduce by the exact amount of fees payable by the parcular Fund under its 

Proposed Administration Agreement. This argement wil allow flexibility for the Funds 

to maintan stadardized administrtion fee .structures within the fund complex, and to adjust 

such fee strctures, if appropriate, without increasing the overal combined advisory and 

administrtive fees for any Fund. Any change in the tota amount of the combined fees wil 

require approval by shareholders of an amendment to the Proposed Advisory Agreement. 

The advisory and administrtion services to be provided under the new 

agreements wil be at least identica to the services currently being provided, and the nature 

and quality of such services shall not be reduce without shareholder approval of such a 

change. Although the contractual relationships wil be adjusted so that a different entity is 

responsible for fund ad~inistrtion services, the changes wil not result in substative
 

differences for the Funds becuse the Fraklin Templeton personnel presently penorming 

such service for the Advisers wil continue to provide the same services for the Fund
 

Administrtor. 

For the reasons described below, we believe that the registrts and Advisers
 

should be permitted to amend and split up the Existing Management Agreements as 

proposed, without obtaning the approval of the shareholders of each Fund. The Funds are 

generaly not required to hold shareholder meetings, and a requirement to obtan shareholder 

approval under these circumstaces would serve no useful purpose and would involve a 

significat, neeless expense. Each Fund would, however, provide written notice of the new 

argements to its existing shareholders no later than the mailng of its next periodic (annual 

or semi-annual) shareholder report. 
Office of Chief Counsel 

July 16, 1997 

Page 5 

. Furtermore, we believe that our position is consistent with previous
 

statements of policy and positions taen by the U.S. Securities and Exchange Commission 

(the "Commission") and its staff. Such precent support the position that there is no nee

for shareholder approval of fund administrtion argements and suggests that there should 

be no nee for shareholders to approve the proposed amendments to the Existing
 

Management Agreements under section 15(a) 'of the 1940 Act. 

Discussion 

Section 15(a) of the 1940 Act provides generaly that no person may serve as 

an investment adviser to a registered investment company except pursuant to a written 

contrct that, among other things, has been approved by the vote of a majority of the
 

company's outstading seurities. The purpse of Section 15(a) is to protect fu~d 

shareholders against conflcts of interest or overreaching or otherwise detrmerita investment 

advisory .argements,by allowing shareholders the opportunity to approve the terms of 

investment advisory agreements. Generaly, any material change in an investment advisory 

contrct creates a new contract that must be approved by shareholders in accordance with
 

Section 15(a). Each of the Existing Management Agreements has been approved by 

shareholders of the relevant Fund either initially or subsequently as such agreements were 

changed in any material manner. 

The Commission and its staff have indicated that argements or agreements 

with investment companies for the provision of administrtion or other similar non-advisory 

service, are not the typ of service argements or agreements requiring shareholder
 

approval under section 15(a) or any other section of the 1940 Act.4 However, the fund 

administrtion services in question comprise a portion of the Existing Management 

Agreements which, as a practica matter, normally are subject to the shareholder approval 

requirements under section 15(a) of the 1940 Act. With respet to administrtion services
 

contaned in advisory agreements, the Commission has stated that: 

the provisions of investment advisory contrcts subject to Section 15 . . . 

include only those which directly provide for investment advice, portfolio 

management, and correlative matters such as the compensation for or duration 

and termination of investment advisory agreements and the execution of 

portfolio trasactions. Other provisions of such contracts, which dea with 

4 See Washington Mutual Investors Fund, Inc., SEC No-Action Letter (publicly 

available May 14, 1993)(staff declined to respond to no-action request under setion 15(a) 

involving a proposed fee reduction of an administrative agreement, stating that section l5(a) 

does not require shareholder approval of such agreements).
 
Office of Chief Counsel 

July 16, 1997
 

Page 6 

housekeeping functions for the investment company, such as trsfer agent
 

servces or other non"'investment advisory matters are not included with the 

ambit of Section 15 . . .. s 

In addition to the Commission and staff positions described above regarding 

the lack of a requirement of shareholder approval of administration argements, the 

Commission and its staff have issued a number of exemptive orders and no-action letters 

interpreting section 15(a) which allow investment companies to amend investment advisory 

agreements without obtaning shareholder approval in number of relevant circumstaces 

which we believe support our asserton that the proposed amendments to the Existig 

Management Agreements should not require shareholder approval. The circumstaces under 

which such relief was provided generaly involved situations where shareholders ,would not 

be disadvantaged by the changes, and a shareholder approval requirement wouid serve no 

useful purpse and involve unnecssa costs. 

Initially, funds which sought to establish breaoints for reductions in advisory 

fees at higher asset levels recived assurace that their advisory agreements could be 

amended to establish such breaoints, pending later shareholder approval of the amended. 

6 In later no-action
 agreements at upcming regular or annual shareholder meetings. 


correspondence, the Commission staff agree to allow amendments to advisory agreements to 

reduce advisory fees by establishing breaoints without ever obtaining shareholder approval 7 The staf position in these later letters was bas of the terms of the amended agreements. 


on the fact that the investment advisers for the funds would not reduce the quantity or qualty 

of the services provided to the funds and that it was proper to assume, without requiring any 

S Notice of Proposa to Amend Rule 17d-l under the Investment Company Act of 1940 

to Provide an Exemption from the Rule for Affiliated Persons with Respet to Certn 

Service Agreements with Investment Companies, Investment Company Act Releae No. 8245 

(1973-1974 Trasfer Binder) Fed. Sec. L. Rep. (CCH) 179,667 (Feb. 25, 1974). 

6See USAA Mutual Fund, Inc., SEC No-Action Letter (publicly available Januar 30, 

1990); Lord, Abbett &Company, SEC No-Action Letter (1977-1978 Trasfer Binder) Fed. 

Sec. L. Rep. (CCH) 181,261 (May 16, 1977); In the matter of Wellngton Fund, Inc. and 

Wellngton Corporation, Investment Company Act Release No. 1455 (Decmber 15, 1965); 

In the matter of Viking Growth Fund, Inc., Investment Company Act Releae No. 4442 

(December 15, 1965). 

7See Washington Mutual Investors Fund, Inc., SEC No-Action Letter (publicly available 

May 14, 1993); Limited Term Municipal Fund, Inc., SEC No-Action Letter (publicly 

available November 18, 1992). 
Office of Chief Counsel 

July 16, 1997
 

Page 7 

shareholder vote, that a majonty of the shareholders of such funds would approve a fee 

reduction. The staf also recgniz in the letters that a requirement of a shareholder 

meeting to approve such amendments would involve neeless expenses. 

Most recntly, the staff allowed amendments to an advisory agreement without 

shareholder approval under Section 15(a) in the context of a mutual fund restrctunng. In
 

the Pnncipal Preservation Portfolios, Inc. and Prospet Hil Trust no-action lettr (publicly
 

available Januar 11, 1996), three separte money market funds involved in a master feeer 

argement were reorganize into a single fund with two classes. At the time of the noaction request, the assets of two separte feeer funds were invested in a single master fund 

and the adviser managed the assets at the master fund level pursuant to an advisory 

agreement with the master fund. Under the restrctunng, the assets of the two feeer funds
 

were invested in two separte classes of one of the feeer funds, and the master fund as well
 

as the other feeer fund went out of existence. Thereater, the adviser continued to manage
 

the sae assets in the same manner under identica contrct terms except that the identity of 

the investment company that was a pary to the advisory agreement changed from the master 

fund to the surviving feeer fund. 

The Commission staff took a no-action position under Section 15(a), allowing 

the pares to proc with the restrctunng without obtaning shareholder approval of 
 the 

amended advisory agreement. The staff reasoned that shareholder approval of the amended 

advisory agreement should not be required under Section 15(a) where the terms of the 

onginal and amended agreements were "identica with respect to the identity of the adviser 

and advisory personnel, the management services to be provided, the assets to be managed 

and the rate of compensation to be paid. " 

Conclusion 

The precent descnbed above clealy supports the proposition that an 

advisory contrct may be amended without shareholder approval to reduce advisory fee 

where there is no other change in the nature and quality of the services provided. The 

Pnncipal Preservation no-action lettr further demonstrates the staffs willngness to alow 

other tys of amendments to advisory contracts without shareholder approval; namely for 

restrctunngs or under other circumstaces when the advisory services and fees associate 

with such services remain the same, and the proposed amendments are beneficial to 

shareholders. The conversion of the Existing Management Agreements into the Proposed 

Advisory and Administration Agreements wil not involve any change in the Advisers, their 

personnel, or the investment advisory services provided to the Funds; or any change in the 

nature or quality of administration services provided to the Funds. In addition, unless 

shareholders of a Fund approve an amendment to its Proposed Advisory Agreement, once 

adopted, the tota combined fees payable under the Proposed Advisory and Administrtion 
16994.9 

Office of Chief Counsel 

July 16, 1997
 

Page 8
 

Agreements wil never exce the amounts that would be payable under the corresponding. 

E~s~g. ~anagei.el1t. ~greement. . '. d
 

For the reåons outlined above, we hereby request that the staf of the Division. 

of Investment Management confirm that it would not recmmend enforcement action under 

section 15(a) of the 1940 Act, if the Existing Management Agreements are amended, as 

proposed, without obtaning shareholder approval of the amendments. If you have any 

questions regarding this request, please contact me at (215) 564-8198 or, in my absence, 

Bruce G. Leto, Esquire at (215) 564-8115. 

Very trly yours,
 

vJ r. Ok
 

Michael P. O'Hare 

cc: Debora R. Gatzk, Esquire
 

Mark H. Plafker, Esquire
 

Bruce G. Leto, Esquire
 
EXHIT A
 

FRKLIN TEMPLETON GROUP OF FUS 

LIST OF FUS (AN SERI) 

Frankln Gold Fud 

Frankl Asset Aloction Fud 

Franin Equity Fud

Fran ffgh Income Tr 

AGE High Income Fund 

Franklin Custodian Funds, Inc. 

Growt Series 

Utilties Series
 

Dynatech Series
 

Income Series
 

U. S. Governent Securities Series 

Frann Money Fund
 

Frann Templeton Money Fud Tr
 

Frain Templeton Money Fund IT
 

Frankn California Tax-Free Income Fund, Inc. 

Franklin Federal Money Fund 

Franklin Tax-Exempt Money Fud 

Franklin New York Tax-Free Income Fund 

Franklin Federal Tax-Free Income Fund 

Frankin Tax-Free Trus 

Franlin Alabama Tax-Free Income Fund
 

Franklin Anzona Insured Tax-Free Income Fund 

Franin Anzona Tax-Free Income Fund
 

Frain Colorado Tax-Free Income Fund
 

Frankin Connecticut Tax-Free Income
 

Franin Florida Tax-Free Income Fund
 

Frankin Florida Insured Tax-Free Income Fund
 

Franklin Georgia Tax-Free Income Fund
 

Frankin Indiana Tax-Free Income Fund
 

Frankin Kentucky Tax-Free Income Fund
 

Frankin Louisian Tax-Free Income Fund
 

Frankin Maryland Tax':Free Income Fund
 

Frankin Massachusett Insured Tax-Free Income Fund
 

Franklin Michigan Tax-Free Income Fund
 

Frankin Michigan Insured Tax-Free Income Fund
 

Frankin Minnesota Insured Tax-Free Income Fund
 

Franklin Missouri Tax-Free Income Fund
 

Franklin New Jersey Tax-Free Income Fund
 

A-I 
Franin Nort Carolin Tax-Free Income Fund
 

Franin Ohio Insured Tax-Free Income Fund
 

Frankin Oregon Tax-Free Income Fund
 

Franin Pennylvana Tax-Free Income Fund
 

Frankin Puerto Rico Tax-Free Income Fund
 

Frankin Texas Tax-Free Income Fund
 

Frankin Virgina Tax-Free Income Fund
 

Franin Federal Intermediate-Term Tax-Free Income Fund
 

Frain High Yield Tax-Free Income Fund
 

Franin Insured Tax-Free Income Fund
 

Frankin California Tax-Free Tr
 

Frankin Californa Insured Tax-Free Income Fund
 

Franin Californa Tax-Exempt Money Fund
 

Franin Californa Intermediate-Term Tax-Free Income Fund
 

Franklin New York Tax-Free Trust
 

Frankin New York Tax-Exempt Money Fund 

Franin New York Insured Tax-Free Income Fund
 

Franin New York Intermediate-Term Tax-Free Income Fund 

Fran Invesors Securities Trus 

Franin Global Governent Income Fund
 

Franin Short-Intermediate U.S. Governent Securities Fund
 

Frankin Convertible Securities Fund 

Frankin Adjustable U.S. Governent Securities Fund 

Franklin Equity Income Fund 

Frankin Adjustable Rate Securities Fund 

Institutional Fiduciary Trust 

Money Market Portfolio 

. Frankin U.S. Governent Securities Money Market Portfolio 

Frankin U.S. Treasury Money Market Portfolio 

Frankin Institutional Adjustable U.S. Governent Securities Fund 

Franin Institutional Adjustable Rate Securities Fund 

Frankin U.S. Governent Agency Money Market Fund
 

Frankin Cash Reserves Fund
 

Frankln Value Invesors Trust
 

Frankin Balance Sheet Investment Fund
 

Franin MicroCap Value Fund
 

Frankin Value Fund
 

Fran Strategic Mortgage Portfolio
 

Franin Municipal Securities Trust
 

Franklin Hawaii Municipal Bond Fund 

Frankin California High Yield Municipal Fund
 

Frankin Washington Municipal Bond Fund
 

Frankin Tennessee Municipal Bond Fund 

) Franklin Arkansas Municipal Bond Fund
 

A-2
 
Fran Managed Tr 

Frain Corporate Qualified Dividend Fund
 

Frankin Rising Dividends Funds
 

Frain Investment Grade Income Fund
 

Franin Strategic Series 

Frankin Californa Growt Fund 

Frain Biotechnology discovery Fund
 

Frain Strtegic Income Fund
 

Franin MidCap Securities Fund 

Frain MidCap Growt Fund
 

Frain Global Utilties Fund
 

Franin Small Cap Growt Fund
 

Frain Global Health Care Fund
 

Franin Natural Resources Fund
 

Frankin Blue Chip Fund
 

Adjusble Rate Securities Portfolios 

U.S. Governent Adjustable Mortgage Portolio 

Adjustable Rate Securties Portolio
 

The Money Market Portfolios 

The Money Market Portolio 

The U.S. Governent Securities Money Market Portolio 

MidCap Growth Portfolio 

The Portfolios Trus 

The Rising Dividends Portfolio 

Franin Templeton International' 
 Trust
 

Templeton Pacific Growt Fund
 

Templeton Foreign Smaller Companes Fund
 

Frann Rea Estate Securities Trust 

Franin Real Estate Securities Fund 

Frann Templeton Global Trust 

Frain Templeton German Governent Bond Fund
 

Frain Templeton Global Currency Fund
 

Frain Templeton Hard Currency Fund
 

Frain Templeton High Income Currency Fund
 

Fran Valuemark Funds
 

Money Market Fund
 

Growt and Income Fund
 

Natul Resources Securities Fund
 

Real Estate Securities Fund 

Utilty Equity Fund
 

High Income Fund
 

Templeton Global Income Securities Fund
 

Income Securities Fund
 

Mutual Discovery Securities Fund
 

A-3
 
Mutual Shares Securities Fund 

U.S. Governent Secunties Fund
 

Zero Coupon Fund - 200 

Zero Coupon Fund -.2005 

Zero Coupon Fund - 2010 

Rising Dividends Fund 

Templeton Pacific Growt Fund 

Templeton Interntional Equity Fund 

Templeton Developing Markets Equity Fund 

Templeton Global Growt Fund 

Templeton Global Asset Alloction Fund
 

Small Cap Fund 

Capital Growth Fund 

Templeton Interntional Smaller Companies Fund 

Natural Resources Fund 

Frankl Government Securities Trust 

Franin Universal Trust
 

Frann Principal Maturity Trus 

Fran Multi-Income Trus
 

Fran Mutual Series Fund Inc. 

Mutual Shares Fund
 

Mutual Qualified Fund
 

Mutual Beacon Fund
 

Mutual European Fund
 

Mutual Discovery Fund
 

Mutual Financial Services Fund
 

Franklin Templeton Fund Allocator Series 

Frankin Templeton Conservative Target Fund
 

Frankin Templeton Moderate Target Fund
 

Frankin Templeton Growt Target Fund 

Templeton Growth Fund, Inc. 

Templeton Funds, Inc. 

Templeton World Fund 

Templeton Foreign Fund 

Templeton Global Smaller Companies Fund, Inc. 

Templeton Income Trust
 

Templeton Global Bond. Fund 

Templeton Global Rea Estate Fud 

Templeton Capita Accumulator Fund, Inc. 

Templeton Capita Accumulation Plans
 

Templeton Global Opportunities Trust 

Templeton America Trust, Inc. 

Templeton Institutional Funds, Inc. 

Foreign Equity Series 

A-4 
Growt Series
 

Emerging Markets Series
 

Emerging Fixed Income Market Series
 

Templeton Developing Markets Trus 

Templeton Global Invesent Trus
 

Templeton Growt and Income Fund
 

Templeton Global Infrastrcture Fund 

Templeton Americas Governent Securities Fund 

Templeton Greater Europen Fund 

Templeton Latin America Fund 

Fran Templeton Japan Fund
 

Templeton Emergig Markets Fund, Inc. 

Templeton Global Income Fund, Inc. 

Templeton Global Governments Income Trus
 

Templeton Emerging Markets Income Fund, Inc.
 

Templeton China World Fund, Inc.
 

Templeton Emergig Markets Appreciation Fund, Inc.
 

Templeton Dragon Fud, Inc.
 

Templeton Vietnam Opportunities Fud, Inc.
 

Templeton Russia Fund, Inc. 

Templeton Variable Products Series Fund 

Templeton Money Market Fund 

Templeton Bond Fund 

Templeton Stock Fund 

Templeton Asset Allocation Fund 

Templeton International Fund 

Templeton Developing Markets Fund 

Franin Growt Investments Fund
 

Mutual Discovery Investments Fund 

Mutual Shares Investments Fund 

Templeton Variable Annuity Fund 

A-5
 
EXHIT B
 

FORM OF EXISTIG MAAGEM AGREEMT 

(NAME OF TRUST) 

on behalf of 

(NAME OF FUN - SINGLE SERIES ONL YJ
 

MAAGEMENT AGREEMENT
 

THS MANAGEMNT AGREEMENT made between (NAME OF TRUST), a 

(Delaware) business trst (the "Trust"), on behalf of (NAME OF FUN) (the "Fund"), a

series of the Trust, and FRANKIN ADVISERS, INC., a California corpration, (the 

"Manager"). 

WHEREAS, the Trust has been organized and intends to operate as an investment 

company registered under the Investment Company Act of 1940 (the "1940 Act") for the 

purpse of investing and reinvesting its assets in securities, as set forth in its Agreement and 

Declartion of Trust, its By-Laws and its Registrtion Statements under the 1940 Act and the 

Securities Act of 1933, all as heretofore and hereafter amended and supplemented; and the 

Trust desires to avail itself of the services, information, advice, assistace and facilties of an 

investment manager and to have an investment manager perform varous management, 

statistica, reseach, investment advisory and other services for the Fund; and, 

WHEREAS, the Manager is registered as an investment adviser under the Investment 

Advisers Act of 1940, is engaged in the business of rendering management, investment 

advisory, counseling and supervisory services to investment companies and other investment 

counseling clients, and desires to provide these services to the Fund. 

NOW THREFORE, in consideration of the terms and conditions hereinafter set 

fort, it is mutually agree as follows:
 

1. Employment of the Manager. The Trust hereby employs the Manager to manage
 

the investment and reinvestment of the Fund's assets and to administer its affais, subject to 

the direction of the Board of Trustee and the officers of the Trust, for the period and on the 

terms hereinafer set forth. The Manager hereby accpts such employment and agree durig 

such period to render the services and to assume the obligations herein set fort for the
 

compensation herein provided. The Manager shall for all purposes herein be deemed to be 

an independent contrctor and shall, except as expressly provided or authorize (whether 

herein or otherwise), have no authority to act for or represent the Fund or the Trust in any 

way or otherwise be deemed an agent of the Fund or the Trust. 

B-1
 
2. Obligations of and Servces to be Provided by the Manager. The Manager
 

undertes to provide the service hereinafer set forth and to assume the following 

obligations: 

A. Administrtive Services. The Manager shall furnish to the Fund 

adequate (i) office space, which may be space within the offices of the Manager or in such 

other place as may be agree upon from time to time, (ii) office furnishings, facilties and 

and conducting the 

business of the Fund, including conducting correspondence and other communications with 

equipment as may be reaonably required for managing the affairs 


the shareholders of the Fund, maintaning all internal bookkeeping, accuntig and auditig 

service and recrds in connection with the Fund's investment and business activities. The
 

Manager shall employ or provide and compensate the executive, secretaal and clerica 

personnel necssa to provide such services. The Manager shall also compensate all 

officers and employees of the Trust who are offcers or employees of the Manager or its 

affiliates. 

B. Investment Management Services.
 

(a) The Manager shall manage the Fund's assets subject to and in 

accrdance with the investment objectives and policies of the Fund and ~y directions which 

the Trust's Board of Trustees may issue from time to time. In pursuance of the foregoing, 

the Manager shall make al determinations with respet to the investment of the Fund's assets 

and the purchase and sae of its investment securities, and shall tae such steps as may be 

necssa to implement the same. Such determinations and services shall include 

determining the manner in which any voting rights, rights to consent to corprate action and 

any other rights pertning to the Fund's investment securities shall be exercised. The
 

Manager shall render or cause to be rendered regular reports to the Trust, at regular 

meetings of its Board of Trustees and at such other times as may be reaonably requested by 

the Trust's Board of Trustees, of (i) the decisions made with respect to the investment of the 

Fund's assets and the purchase and sae of its investment securities, (ii) the reaons for such 

decisions and (ii) the extent to which those decisions have been implemented. 

(b) The Manager, subject to and in accordance with any
 

directions which the Trust's Board of Trustees may issue from time to time, shall place, in 

the name of the Fund, orders for the execution of the Fund's securities trsactions. When 

placing such orders, the Manager shall seek to obtan thè best net price and execution for the 

Fund, but this requirement shall not be deemed to obligate the Manager to place any order 

solely on the basis of obtaning the lowest commission rate if the other stadards set fort in
 

this setion have been satisfied. The paries recognize that there are likely to be many caes 

in which different brokers are equally able to provide such best price and execution and that, 

in selecting among such brokers with respect to particular trades, it is desirable to choose 

those brokers who furnish reseach, statistica, quotations and other information to the Fund 

and the Manager in accrdance with the stadards set' forth below. Moreover, to the extent 

that it continues to be lawful to do so and so long as the Board of Trustees determines that 

B-2
 
the Fund wi benefit, directly or indirectly, by doing so, the Manager may place orders with 

a broker who charges a commission for that trsaction which is in exces of the amount of
 

commission that another broker would have charged for effecting that trsaction, provided
 

that the exces commission is reaonable in relation to the value of "brokerage and resch 

service" (as defined in Section 28(e) (3) of the Securities Exchange Act of 1934) provided 

by that broker. 

Accrdingly, the Trust and the Manager agree that the Manager shall 

select brokers for the execution of the Fund's trsactions from among: 

(i) Those brokers and deaers who provide quotations and other
 

services to the Fund, speificaly including the quotations necssa to 

determine the Fund's net assets, in such amount of tota brokerage as 

may reaonably be required in light of such services; and 

(ii) Those brokers and deaers who supply reseach, statistica
 

. and other data to the Manager or its affiiates which the Manager or 

its affiliates may lawfully and appropriately use in their. investment 

advisory capacities, which relate directly to securities, actual or 

potential, of the Fund, or which place the Manager in a better position 

to make decisions in connection with the management of the Fund's 

assets and securities, whether or not such data may also be useful to 

the Manager and its affiiates in managing other portfolios or advising 

other clients, in such amount of tota brokerage as may reasonably be 

required. Provided that the Trust's offcers are satisfied that the best 

execution is obtaned, the sae of shares of the Fund may also be 

considered as a factor in the selection of broker-deaers to execute the 

Fund's portfolio trasactions. 

(c) When the Manager has determined that the Fund should
 

tender securities pursuant to a "tender offer solicitation," Fraklin/Templeton Distrbutors, 

Inc. ("Distrbutors") shall be designated as the "tendering deaer" so long as it is legally 

permitted to act in such capacity under the federa securities laws and rules thereunder and 

the rules of any securities exchange or association of which Distrbutors may be a member. 

Neither the Manager nor Distributors shall be obligated to make any additional commitments 

of capita, expense or personnel beyond that already committed (other than normal periodic
 

fees or payments necssa to maintan its corporate existence and membership in the 

National Association of Securities Deaers, Inc.) as of the date of this Agreement. This 

Agreement shall not obligate the Manager or Distributors (i) to act pursuant to the foregoing 

requirement under any circumstaces in which they might reasonably believe that liabilty 

might be imposed upon them as a 
 result of so acting, or (ii) to institute legal or other 

procings to collect fees which may be considered to be due from others to it as a result of 

) such a tender, unless the Trust on behalf of the Fund shall enter into an agreement with the 

B-3
 
Manager and/or Distrbutors to reimburse them for all such expenses connected with 

attempting to collect such fees, including legal fees and expenses and that porton of the 

compensation due to their employees which is attrbutable to the time involved in attemptig

to collect such fee. .
 

(d) The Manager shall render regular report to the Trust,. not 

more frequently than quarrly, of how much tota brokerage business has been place by the 

Manager, on behalf of the Fund, with brokers falling into each of the categories referred to 

above and the maner in which the alloction has been accmplished. 

(e) The Manager agrees that no investment decision wil be made 

or influence by a desire to provide brokerage for alloction in accordance with the 

foregoing, and that the right to make such alloction of brokerage shall not intedere with the 

Manager's parmount duty to obtan the best net price and execution for the Fund. 

c. Provision of Information Necssary for Preparation of Securities
 

Registration Statements. Amendments and Other Materials. The Manager, its officers and 

employees wil make available and provide accunting and statistica informatiQn.required by the 

Fund in the prepartion of registrtion statements, report and other documents- required by
 

federa and state securities laws and with such information as the Fund may reaonably request 

for use in the prepartion of such documents or of other materials necssa or helpful for the
 

underwriting and distrbution of the Fund's shares. 

D. Other Obligations and Services. The Manager shall make its officers and 

employees available to the Board of Trustees and officers of the Trust for consultation and 

discussions regarding the administrtion and management of the Fund and its investment 

activities. 

3. Expenses of the Fund. It is understood that the Fund wil pay all of its own 

expenses other than those expressly assumed by the Manager herein, which expenses payable by 

the Fund shall include: 

A. Fees and expenses paid to the Manager as provided herein;
 

B. Expenses of all audits by independent public accuntats;
 

c. Expenses of trsfer agent, registr, custodian, dividend disbursing agent 

and shareholder recrd-keeping services, including the expenses of issue, repurchase or 

redemption of its shares; 

D. Ex~nses of obtaning quotations for calculating the value of the Fund's net assets;
 

B-4 
E. Salares and other còmpensations of executive officers of the Trust who
 

are not offcers, directors, stockholders or employees of the Manager or its affliates; 

F.Taxes levied against the Fund; 

G. Brokerage fees and commissions in connection with the purchas and sae
 

of seurities for the Fund; 

H. Costs, including the interest expense, of borrowing 

money; 

i. Costs incident to meetings of the Board of Trustees and shareholders
 

of the Fund, report to the Fund's shareholders, the filing of report with regulatory bodies
 

and the maintenance of the Fund's and the Trust's legal existence; 

J. Legal fees, including the legal fees related to the registration and
 

continued qualification of the Fund's shares for sale; 

K. Trustes' fees and expenses to trstees who are not directors, officers, 

employees or stockholders of the Manager or any of its affiiates; 

L.' Costs and expense of registering and maintaning the registration of 

the Fund and its shares under federal and any applicable state laws; including the printing 

and mailing of prospetuses to its shareholders; 

M. Trade association dues; and 

N. The Fund's pro rata portion of fidelity bond, errorsand omissions, 

and trstees and offcer liabilty insurace premiums. 

4. Compensation of the Manager. The Fund shall pay a management. 
 fee in cah 

to the Manager based upon a percentage of the value of the Fund's 
 net assets, caculated as 

set fort below, as compensation for the seiyices rendered and obligations assumed by the
 

Manager, during the precing month, on the first business day 
 of the month in each yea. 

A. For purpses of caculating such fee, the value of the net assets of the 

Fund shall be determined in the sae manner as that Fund uses to compute the value of its 

net assets in connection with the determination of the net asset value of its shares, all as set 

fort more fully in the Fund's current prospectus and statement of additional information. 

The rate of the management fee payable by the Fund shall be caculated daily at the 

following annual rates: 

.625 of 1 % of the value of net assets up to and including $100,00,00; 

B-5
 
.50 of 1 % of the value of net assets over $100,00,00 up to and 

including $250,00,00; 

.45 of 1 % of the value of net assets over $250,00,00 up to and 

including $10,00,00,00; 

.44 of 1 % of the value of net assets over $10,00,00,00 up to and 

including $12,500,00,00; 

.42 of 1 % of the value of net assets over $12,500,00,00 up to and including $15,00,00,00; and . 

.40 of 1 % of the value of net assets in excess of $15,000,00,00. 

B. The management fee payable by the Fund shall be reduce or
 

eliminated to the extent that Distrbutors has actually recived cash payments of tender offer 

solicitation fee less certn costs and expenses incurred in connection therewitl and to the
 

extent necsa to comply with the limitations on expenses which may be borne by the Fund
 

as set fort in the laws, regulations and administrative interpretations of those states in which
 

the Fund's shares are registered. The Manager may waive all or a portion of its fees 

provided for hereunder and such waiver shall be treated as a reduction in purchase price of 

its services. The Manager shall be contractually bound hereunder by the terms of any 

publicly announce waiver of its fee, or any limitation of the Fund's expenses, as if such 

waiver or limitation were full set forth herein. 

c. If this Agreement is terminated prior to the end of any month, the
 

accrued management fee shall be paid to the date of termination. 

5. Activities of the Manager. The services of the Manager to the Fund hereunder
 

are not to be deemed exclusive, and the Manager and any of its affiliates shall be free to 

render similar service to others. Subject to and in accrdance with the Agreement and 

Declartion of Trust and By-Laws of the Trust and Section lO(a) of the 1940 Act, it is 

understoo that trstees, officers, agents and shareholders of the Trust are or may be
 

interested in the Manager or its affiliates as directors, offcers, agents or stockholders; that 

directors, officers, agents or stockholders of the Manager or its affiliates are or may be 

interested in the Trust as trstes, offcers, agents, shareholders or otherwise; that the
 

Manager or its affiliates may be interested in the Fund as shareholders or otherwise; and that 

the effect of any such interests shall be governed by said Agreement and Declartion of 

Trust, By-Laws and the 1940 Act. 

B-6
 
6. Liabilties of the Manager.
 

A. In the absence of wilful misfeasace, bad faith, gross negligence, or 

reckless disregard of obligations or duties hereunder on the par of the Manager, the 

Manager shall not be subject to liabilty to the Trust or the Fund or to any shareholder of the 

Fund for any act or omission in the course of, or connected with, rendering services 

hereunder or for any losses that may be sustaned in the purchase, holding or sae of any 

security by the Fund. 

B. Notwithstading the foregoing, the Manager agree to reimburse the
 

Trust for any and all costs, expenses, and counsel and trstees' fee reaonably incurred by 

the Trust in the prepartion, printing. and distribution of proxy statements, amendments to its 

Registrtion Statement, holdings of meetings of its shareholders or trstee, the conduct of
 

factual investigations, any legal or administrtive proceeings (including any applications for 

exemptions or determinations by the Securities and Exchange Commission) which the Trust 

incurs as the result of action or inaction of the Manager or any of its affiliates or any of their 

officers, directors, employees or stockholders where the action or inaction necssitatig such 

expenditures (i) is directly or indirectly related to any trsactions or proposed .trsaction in 

the stock or control of the Manager or its affiliates (or litigation related to any pending or 

proposed or future trsaction in such shares or control) which shall have been underten 

without the prior, express approval of the Trust's Board of Trustees; or, (ii) is within the 

control of the Manager or any of its affliates or any of their offcers, directors, employee 

or stockholders. The Manager shall not be obligated pursuant to the provisions of this 

Subpargraph 6(B), to reimburse the Trust for any expenditures related to the institution of 

an administrtive procing or civil litigation by the Trust or a shareholder seeking to 

recver all or a portion of the procs derived by any stockholder of the Manager or any of
 

its 'affiiates from the sae of his shares of the Manager, or similar matters. So long as ths 

Agreement is in effect, the Manager shall pay to the Trust the amount due for expenses 

subject to this Subpargraph 6(B) within 30 days after a bil or statement has been recived 

by the Manager therefor. This provision shall not be deemed to be a waiver of any claim the 

Trust may have or may assert against the Manager or others for costs, expenses or damages 

heretofore incurred by the Trust or for costs, expenses or damages the Trust may herear 

incur which are not reimbursable to it hereunder. . 

c. No provision of this Agreement shall be constred to protect any 

trstee or officer of the Trust, or director or offcer of the Manager, from liabilty in 

violation of Sections 17(h) and (i) of the 1940 Act. 

7. Renewal and Termination.
 

A. This Agreement shall become effective on the date written below and
 

shall continue in effect for two (2) yeas thereafter, unless sooner terminated as hereinafer 

provided and shall continue in effect thereafter for periods not exceeing one (1) yea so long 

as such continuation is approved at least annually (i) by a vote of a majority of the 

B-7
 
outstading votig securities of each Fund or by a vote of the Board of Trustees of the Trust, 

and (ü) by a vote of a majority of the Trustee of the Trust who are not pares to the 

Agreement (other than as Trustees of the Trust), cast in person at a meeting caled for the 

purpse of voting on the Agreement.
 

B. This Agreement:
 

(i) may at any time be terminated without the payment of any
 

penalty either by vote of the Board of Trustes of the Trust or by vote of a majority of the

outstading voting securities of the Fund on 60 days' written notice to the Manager; 

(ii) shall immediately terminate with respet to the Fund in the
 

event of its assignment; and 

(ii) may be terminated by the Manager on 60 days' written notice
 

to the Fund. 

c. As used in this Pargraph the terms "assignme~t, ~l "interested
 

person" and "vote of a majority of the outstading voting securities" shall have the meaings 

set fort for any such terms in the 1940 Act.
 

D. Any notice under this Agreement shall be given in writing
 

addressed and delivered, or mailed post-paid, to the other party at any office of such pary. 

8. Severabilty. If any provision of this Agreement shall be held or made invalid
 

by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be 

affected thereby.
 

9. Governing Law. This Agreement shall be governed by and constred in
 

accrdance with the laws of the State of California. 

IN WIS WHREOF, the paries hereto have caused this Agreement to be executed and 

effective on the _ day of 

(NAM OF TRUST) 

By: 

FRANKIN ADVISERS, INC. 

\ 

) By:
 

B-8
 
EXHmlT C
 

FORM OF PROPOSED ADVISORY AGREEMT 

(NAME OF TRUST)
 

on behalf of
 

(NAME OF FUN -- SINGLE SERIES ONLY)
 

AMNDED AND RETATED MANAGEMENT AGREEME 

THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT made 

between (NAME OF TRUST), a (Delaware) business trst (the "Trust"), on behalf of 

(NAME OF FUN) (the "Fund"), a series of the Trust, and FRANKIN ADVISERS, INC., 

a California corporation, (the "Manager"). 

. WHREAS, the Trust has been organize and intends to operate as an investment 

company registered under the Investment Company Act of 1940 (the "1940 Açt") for the 

purpse of investing and reinvesting its assets in securities, as set forth in its Agreement and 

Declartion of Trust, its By-Laws and its Registration Statements under the 1940 Act and the 

Securities Act of 1933, all as heretofore and hereafter amended and supplemented; and the 

Trust desires to avail itself of the services, information, advice, assistace and facilities of an 

investment manager and to have an investment manager perform varous management, . 

statistica, reseach, investment advisory and other services for the Fund; and, 

WHEREAS, the Manager is registered as an investment adviser under the Investment 

Advisers Act of 1940, is engaged in the business of rendering management, investment 

advisory, counseling and supervisory services to investment companies and other investment 

counseling clients, and desires to provide these services to the Fund; and 

WHEREAS, the Trust and the Manager wish to amend and restate the Management 

Agreement previously in effect between them solely in order to relieve the Manager of its 

previous obligation to perform certn administrative services to the Fund, and to reduce the 

Manager's fee by the amount each Fund has agree to pay its Fund Administrtor; 

NOW THEREFORE, in consideration of the terms and conditions hereinafer set forth, it is mutually agree as follows: . 

1. Employment of the Manager. The Trust hereby employs the Manager to manage
 

the investment and reinvestment of the Fund's assets and to administer its affairs, subject to 

the direction of the Board of Trustees and the officers of the Trust, for the period and on the 

terms hereinafter set forth~ The Manager hereby accepts such employment and agrees during 

such period to render the services and to assume the obligations herein set forth for the 

compensation herein provided. The Manager shall for all purposes herein be deemed to be 

C-l 
an independent contrctor and shall, except as expressly provided or authorize (whether 

herein or otherwise), have no authority to act for or represent the Fund or the Trust in any 

way or otherwise be deemed an agent of the Fund or the Trust. .
 

2. Obligations of and Services to be Provided by the Manager. The Manager
 

undertes to provide the services hereinafter set fort and to assume the following 

obligations: 

A. Investment Management Services.
 

(a) The Manager shall manage the Fund's aSsets subject to and in accrdance with the investment objectives and policies of the Fund and any directions which 

the Trust's Board of Trustees may issue from time to time. In pursuance of the foregoing, 

the Manager shall make all determinations with respet to the investment of the Fund's assets 

and the purchase and sae of its investment securities, and shall tae such steps as may be 

necssa to implement the same. Such determinations and services shall include 

determining the manner in which any voting rights, rights to consent to corprate action and 

any other rights pertning to the Fund's investment securities shall be exercised.. The 

Manager shall render or cause to be rendered regular reports to the Trust, at regular 

meetings of its Board of Trustees and at such other times as may be reaonably requeste by 

the Trust's Board of Trustees, of (i) the decisions made with respect to the investment of the 

Fund's assets and the purchase and sale of its investment securities, (ii) the reasons for such 

decisions and (iii) the extent to which those decisions have been implemented. 

(b) The Manager, subject to and in accordance with any 

directions which the Trust's Board of Trustees may issue from time to time, shal place, in 

the name of the Fund, orders for the execution of the Fund's securities trsactions. When 

placing such orders, the Manager shall seek to obtan the best net price and execution for the 

Fund, but this requirement shall not be deemed to obligate the Manager to place any order 

solely on the basis of obtaning the lowest commission rate if the other stadards set fort in
 

this section have been satisfied. The pares recgnize that there are likely to be many caes 

in which different brokers are equally able to provide such best price and execution and that, 

in selecting among such brokers with respet to paricular trdes, it is desirable to choose 

those brokers who furnish reseach, statistica, quotations and other information to the Fund 

and the Manager in accrdance with the stadards set forth below. Moreover, to the extent 

that it continues to be lawful to do so and so long as the Board of Trustee determes that 

the Fund wil benefit, directly or indirectly, by doing so, the Manager may place orders with 

a broker who charges a commission for that trsaction which is in excess of the amount of 

commission that another broker would have charged for effecting that trasaction, provided 

that the excess commission is reaonable in relation to the value of "brokerage and reseach 

services" (as defined in Section 28(e) (3) of the Securities Exchange Act of 1934) provided 

by that broker. 

C-2 
) Accrdingly, the Trust and the Manager agree that the Manager shal
 

select brokers for the execution of the Fund's trsactions from among: 

(i) Those brokers and deaers who provide quotations and other
 

services to the Fund, specificaly including the quotations necsa to 

determine the Fund's net assets, in such amount of tota brokerage as 

may reaonably be required in light of such service; and 

(ü) Those brokers and deaers who supply reseach, statistica
 

and other data to the Manager or its affiliates which the Manager or 

its affiliates may lawfully and appropriately use il their investment 

advisory capacities, which relate directly to securities, actual or 

potential, of the Fund, or which place the Manager in a better position 

to make decisions in connection with the management of the Fund's 

assets and securities, whether or not such data may also be useful to 

the Manager and its affliates in managing other portfolios or advising 

other clients, in such amount of tota brokerage as may reaonably be 

required. Provided that the Trust's officers are satisfied. that the best 

execution is obtaned, the sae of shares of the Fund may also be 

considered as a factor in the selection of broker-deaers to execute the 

Fund's portfolio transactions. 

(c) When the Manager has determined that the Fund should
 

tender seurities pursuant to a "tender offer solicitation," Franklin/Templeton Distributors, 

Inc. ("Distnbutors") shall be designated as the "tendering deaer" so long as it is legally 

permitted to act in such capacity under the federa securities laws and rules thereunder and 

the rules of any securities exchange or association of which Distributors may be a member. 

Neither the Manager nor Distnbutors shall be obligated to make any additional commitments 

of capita, expense or personnel beyond that already committed (other than normal periodic
 

fee or payments necssa to maintan its corprate existence and membership in the
 

National Association of Securities Deaers, Inc.) 
 as of the date of this Agreement. Ths Agreement shall not obligate the Manager or Distributors (i) to 
 act pursuant to the foregoing 

requirement under any circumstaces in which they might reaonably believe that liabilty 

might be imposed upon them as a result of so acting, or (ii) to institute legal or other 

procings to collect fees which may be considered to be due from others to it as a result of 

such a tender, unless the Trust on behalf of the Fund shall enter into an agreement with the 

Manager and/or Distributors to reimburse them for all such expenses connected with 

attempting to collect such fees, including legal fees and expenses and that portion of the 

compensation due to their employees which is attributable to the time involved in attempting 

to collect such fees. 

(d) The Manager shall render regular reports to the Trust, not more frequently than quarerly, of how much tota brokerage business has been place by the 

C-3
 
Manager, on behalf of the Fund, with brokers falling into each of the categories referred to 

above and the manner in which the alloction has been accomplished. 

(e) . The Manager agrees that no investment decision wil be made
 

or influence by a desìre to provide brokerage for alloction in accrdance with the 

. foregoing, and tPat the right to make such ,alloction 'of.brokeragt shall.not intedere with .the 

", ~ . A1anager':s parmount:dnty .to.oP,tan the .be~t net pri~..~Ø~xëcutiQ~ .for,.tPe. .Fnnd......... ~..:.,
 

"'. ."
 

B. Provision of lnformation NeCssary for Preparation of Securities
 

Registrtion Statements. Amendments and Other Materials. The Manager, its officers and 

employees wil make available and provide accounting and statistica information required by the 

Fund in the prepartion of registrtion statements, reports and other documents required by
 

. federa and state securities laws and with such information as the Fund may reaonably request 

for use in the prepartion of such documents or of other materials necssa or helpful for the
 

underwriting and distrbution of the Fund's shares. 

C. Other Obligations and Services. The Manager shall make its officers and
 

employees available to the Board of Trustees and offcers of the Trust for consultation and 

discussions regarding the administrtion and management of the Fund and its investment 

activities. 

3. Expenses of the Fund. It is understood that the Fund wil pay all of its own
 

expenses other than those expressly assumed by the Manager herein, which expenses payable by 

the Fund shall include: 

A. Fees and expenses paid to the Manager as provided herein;
 

B. Expenses of all audits by independent public accountats;
 

C. Expenses of trasfer agent, registrar, custodian, dividend disbursing agent 

and shareholder recrd-keeping services, including the expenses of issue, repurchase or 

redemption of its shares; 

D. Expenses of obtaning quotations for calculating the value of the Fund's 

net assets;
 

E. Salares and other compensations of executive officers of the Trust who
 

are not offcers, directors, stockholders or employees of the Manager or its affiiates; 

F. Taxes levied against the Fund;
 

G. Brokerage fees and commissions in connection with the purchase and sae
 

of securities for the Fund; 

C-4 
H. Costs, including the interest expense, of borrowing
 

money;
 

i. 'Costs incident to meetings of the Board of Trus"tees and shareholders
 

of the Fund, report to the Fund's 'shareholders,. the filing of report. with regulatory bodies 

and the 'maitenance of the Fund's and th~ Trust's legal existence;, ". .:' . 

'. .... '. . . ":., .". "." . . . 

.' :".." . .. . . " . . ....... .... ", ," ,".\.:".. " . . ,"' "," .l:
 

:J. . Legal fees, including .the legal fees related to' 
 the .registrtion and continued qualfication of the 
 Fund's shares for sae;' . .
 

K. Trustees' fees and expenses to trstees who are not directors, officers, 

employees or stockholders of the Manager or any of its affiiates; 

L. Costs and expense of registering and maintaning the registrtion of
 

the Fund and its shares under federa and any applicable state laws; including the printing 

and mailing of prospetu~es to its shareholders; 

M. Trade association dues; and 

N. The Fund's pro rata portion of fidelity bond, errors and omissions,
 

and trustees and offcer liability insurace premiums.
 

4. Compensation of the Manager. The Fund shall pay a management fee in cah
 

to the Manager based upon a percentage of the value of the Fund's net assets, caculated as 

set forth below, as compensation for the services rendered and obligations assumed by the 

Manager, during the precing month, on the first business day of the month in each yea. 

A. For purpses of caculating such fee, the value of the net assets of the 

Fund shall be determined in the same manner as that Fund uses to compute the value of its 

net assets in connection with the determination of the net asset value of its shares, al as set 

fort more fully in the Fund's current prospetus and statement of additional information.
 

The rate of the management fee payable by the Fund shall be caculated at the annua rates 

set fort in subsection (1) below, and shall be reduced by the amount of fees payable by the
 

Fund under its administration agreement, which fees are caculated at the annual rates set 

fort in subsection (2) below:
 

(1) .625 of 1 % of the value of net assets up to and including
 

$100,00,00; 

.50 of 1 % of the value of net assets over $100,00,00 up to 

and including $250,000,000; 

.45 of i % of the value of net assets over $250,00,000 up to 

and including $10,000,000,000; 

C-5 
.1 

.44 of 1 % of the value of net assets over $10,00,00,00 up 

to and including $12,500,000,00; 

A2 of 1 % of the value of net assets over $12,500,00,00 up 

to and including $15,00,00,000; and 

~ :. l. ._. . . ..... .' . . . :.40.of l:%.ofthe.v.åIue'of,n~tassetsin elCcess.of... ....;,..,'. .........
 . .. .
 ~ . ,." " 

'$15,00;00;00. .' 

(2) .15 of 1 % of the value of net assets up to and inCluding


$200,00,00; 

.135 of 1 % of the value of net assets over $200,00,00 up to 

and including $700,000,000; 

.10 of 1 % of the value of net assets over $700,000,000 up to 

and including $1,200,00,000; 

.075 of 1 % of the value of ,net assets in excess of
 

\ $1,200,00,00.
 

B. The Manager shall waive all or a portion of its fees, or make 

payments to limit the expenses of the Fund, or both, to the extent necssar to reduce the 

annual management fees payable under this agreement, combined with the tota annual 

administrative fees payable under the (Fund Administration Agreement) between the Fund 

and (the Fund Administrator), to levels that do not excee the amount of tota management 

fees that were payable under this agreement prior to its amendment to reflect the trsfer of
 

the responsibility to provide administrtive services to the (Fund Administrtor) pursuant to 

the (Fund Administrtion Agreement). 

C. The management fee payable by the Fund shall be reduce or 

eliminated to the extent that Distrbutors has actually recived cash payments of tender offer 

solicitation fee less certn costs and expenses incurred in connection therewith and to the 

extent necsa to comply with the limitations on expenses which may be borne by the Fund
 

as set fort in the laws, regulations and administrative interpretations of those state in which
 

the Fund's shares are registered. The Manager may waive all or a porton of its fee 

provided for hereunder and such waiver shall be treated as a reduction in purchase price of 

its services. The Manager shall be contractually bound hereunder by the terms of any 

publicly announce waiver of its fee, or any limitation of the Fund's expenses, as if such 

waiver or limitation were full set forth herein. 

C-6 
D. If this Agreement is terminated pnor to the end of any month, the
 

accrued management fee shall be paid to the date of termination.
 

5. Activities of the Manager. The services of the Manager to the Fund hereunder
 

are not to be 9eemed exclusive, and the Manager and any öf its affilia.tes shal be free to 

. render' simiar service to others. Subject to 
 and in accordance with the Agreement ana . 

...Declartion of Trust.and B,y-Laws.of .the Trust and Section. '¡O(~)'.of the. J940 Act~'..t is. '..~..: :". :". 

shareholders of the Trust.areor måy be. 

. interested in the Manåger or its affiliates'as directors, offcers, agents or stockholders; that 

directors, officers, agents or stockholders of the Manager or its affiliates are or may be 

understoO that.trstee, officers, agents and. 


interested in the Trust as trstees, officers, agents, shareholders or otherwise; that the
 

Manager or its affiliates may be interested in the Fund as shareholders or otherwise; and that 

the effect of any such interests shall be governed by said Agreement and Declartion of 

Trust, By-Laws and the 1940 Act. 

6. Liabilities of the Manager.
 

A. In the absence of wilful misfeasance, bad faith, gross negligence, or 

reckless disregard of obligations or duties hereunder on the par of the Manager, the 

Manager shall not be subject to liabilty to the Trust or the Fund or to any shareholder of the 

Fund for any act or omission in the course of, or connected with, rendenng services 

hereunder or for any losses that may be sustaned in the purchase, holding or sae of any 

secunty by the Fund. 

B. Notwithstading the foregoing, the Manager agrees to reimburse the
 

Trust for any and all costs, expenses, and counsel and trustees' fees reaonably incurred by 

the Trust in the prepartion, pnnting and distnbution of proxy statements, amendments to its 

Registration Statement, holdings of meetings of its shareholders or trstees, the conduct of
 

factual investigations, any legal or administrative proceeings (including any applications for 

exemptions or determinations by the Secunties and Exchange Commission) which the Trust 

incurs as the result of action or inaction of the Manager or any of its affiliates or any of their 

officers, directors, employees or stockholders where the action or inaction necssitating such 

expenditures (i) is directly or indirectly related to any transactions or proposed trsaction in 

the stock or control of the Manager or its affiiates (or litigation related to any pending or 

proposed or future trsaction in such shares or control) which shall have been underten 

without the pnor, express approval of the Trust's Board of Trustees; or, (ii) is within the
 

control of the Manager or any of its affiliates or any of their offcers, directors, employee
 

or stockholders. The Manager shall not be obligated pursuant to the provisions of ths
 

Subpargraph 6(B), to reimburse the Trust for any expenditures related to the institution of 

an administrative procing or civil litigation by the Trust or a shareholder seeking to 

recover all or a portion of the proces denved by any stockholder of the Manager or any of 

its affliates from the sae of his shares of the Manager, or similar matters. So long as ths 

Agreement is in effect, the Manager shall pay to the Trust the amount due for expenses 

subject to this Subparagraph 6(B) within 30 days after a bil or statement has been recived 

C-7
 
by the Manager therefor. Ths provision shal not be deemed to be a waiver of any, claim the 

Trust may have or may assert against the Manager or others for costs, expenses or damages 

heretofore incurred by the Trust or for costs, expenses or damages the Trust may hereaer 

incur which are not reimbursable to it hereunder. 

C.' No. provision of this Agreement shall 'be constned .to protec any
 

. tnstee~.oi:officér.of tne Tn.st, or.drector.çr .officer .of .the Manager,. fro'm .1iåbilty m. 

'violation of Sections 1 7 (h) and (i) of the 1940 Act. 

7. Renewal and Termination.
 

A. This Agreement shall become effective on the date written below and
 

shall continue in effect for two (2) yeas thereafter, unless sooner terminated as hereinafter 

provided and shall continue in effect thereafter for periods not exceing one (1) yea so long 

as such continuation is approved at least annually (i) by a vote of a majority of the 

outstading voting securities of each Fund or by a vote of the Board of Trustees of the Trust, 

and (ii) by a vote of a majority of the Trustees of the Trust who are not pares to the 

Agreement (other than as Trustees of the Trust), cast in person at a meeting ca1~ for the purpse of voting on the Agreement. ' 

B. This Agreement: 

(i) may at any time be terminated without the payment of any
 

penalty either by vote of the Board of Trustees of the Trust or by vote of a majority of the

outstading voting securities of the Fund on 60 days' written notice to the Manager; 

(ii) shall immediately terminate with respect to the Fund in the
 

event of its assignment; and 

(iii) may be terminated by the Manager on 60 days' written notice
 

to the Fund. 

C. As used in this Paragraph the terms "assignment," "intereste
 

person" and "vote of a majority of the outstanding voting securities" shall have the meaings 

set forth for any such terms in the 1940 Act. 

D. Any notice under this Agreement shall be given in writig 

addressed and delivered, or mailed post-paid, to the other pary at any office of such par.
 

8. Severability. If any provision of this Agreement shall be held or made invald
 

by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be 

affected thereby.
 

C-8
 
9. Governing Law. This Agreement shall be governed by and constred in
 

accrdance with the laws of the State of Caifornia. 

IN WINES WHEREOF, the paries hereto have caused this Agreement to be executed and effective on the -- day of . .
 

(NAME OF TRUST) 

By: 

FRANKIN ADVISERS, INC. 

By: 

)
 

C-9
 
EXHIBIT D 

FORM OF PROPOSED ADMIISTRATION AGREEMT 

(NAME OF REGISTRANT 

ON BEHALF OF 

(NAME OF SERIES) 

AND 

(NAME OF FRANKLIN FUND ADMINISTRATOR) 

AGREEMENT dated as of (DATE), between (Name of Registrt), a 

(Massachusetts\Delaware) business trst (the "Trust"), on behalf of the (Name of Seri~s) (the
 

"Fund"), a separte series of the Trust, and (Name of Fraklin Fund administrtor) (the 

"Administrtor"). 

In consideration of the mutual promises herein made, the pares hereby agree 

as follows:
 

(1) The Administrator agrees, during the life of this Agreement, to provide the 

following services to the Fund, to the extent required under the Agreement: 

(a) providing office space, telephone, office equipment and supplies for 

the Fund; 

(b) paying compensation of the Fund's officers for services rendered as 

such; 

(c) authorizing expenditures and approving bils for payment on behalf of 

the Fund; 

(d) supervising prepartion of periodic report to Shareholders, notice of
 

dividends, capita gains distrbutions and ta credits, and attending to routine correspondence
 

and other communications with individual Shareholders; 

(e) daily pricing of the Fund's investment portfolio and preparng and
 

supervising publication of daily quotations of the bid and asked prices of the Fund's Shares, 

eaings reports and other financial data; 

(f) monitoring relationships with organizations serving the Fund,
 

including custodians, trsfer agents, public accounting firms, law firms, printers and other
 

third pary service providers;
 

(g) providing trading desk facilities for the Fund;
 

D-l 
(h) supervising compliance by the Fund with recrdkeeping reuirements
 

under the Investment Company Act of 1940, as amended (the" 1940 Act") and the rules and 

regulations thereunder, supervising compliance with recrdkeeping requIiements imposed by 

state laws or regulations, and maintaning books and recrds for the Fund (other than those 

maintaned by the custodian and trsfer agent);
 

(i) prepanng and filig of ta report including the Fund's income ta
 

returns, and monitoring the Fund's compliance with subchapter M of the Internal Revenue 

Code and other applicable ta laws and regulations; 

CD monitoring the Fund's compliance with: the 1940 Act and rules and regulations. thereunder; state and foreign law~ and regulations applicable to the ~peration of . 

investment companies; the Fund's investment objectives, policies and restrctions; and the .
 

Code of Ethics and other policies adopted by the Fund's Board of Trustee or by the Adviser 

and applicable to the Fund; 

(k) providing executive, clerica and secretaal personnel neeed to ca
 

out the above responsibilties; and 

(1) prepanng regulatory report, including without limitation NSARs,
 

proxy statements and U.S. and foreign ownership reports. 

(2) The Trust agrees, during the life of this Agreement, to pay to Administrator as 

compensation for the foregoing a monthly fee equal on an annual basis to 

.15 of 1 % of the value of net assets up to and including $200,00,00; 

.135 of 1 % of the value of net assets over $200,00,00 up to and 

including $700,00,00; 

.10 of 1 % of the value of net assets over $700,00,00 up to and 

including $1,200,00,00; 

.075 of 1 % of the value of net assets in excess of $1,200,00,00. 

(3) This Agreement shall remain in full force and effect through (DATE) (or for 

one yea after its execution) and thereater from yea to yea to the extent contiuance is 

approved annually by the Board of Trustee of the Trust. 

(4) This Agreement may be terminated by the Trust at any time on sixty (60) 

days' written notice without payment of penalty, provided that sUch termination by the Trust 

shal be directed or approved by the vote of a majority of the Trustees of the Trust in office 

at the time or by the vote of a majority of the outstanding voting securities of the Trust (as 

D-2
 
defined by the 1940 Act); and shall automaticaly and immediately terminate in the event of 

its assignment (as defined by the 1940 Act). 

(5) In the absence of wilful misfeasace, bad faith or gross negligence on the par
 

of Administrtor, or of reckless disregard of its duties and obligations hereunder, 

Administrtor shal not be subject to liabilty for any act or omission in the course of, or 

connected with, rendering services hereunder. 

IN WIS WHEREOF, the pares hereto have cause this Agreement to 

be duly executed by their duly authorize 
 officers and their respetive corprate seas to be

hereunto duly affixed and attested. 

(NAME OF TRUS11
 

on behalf of 

(NAME OF SERIES) 

.. 

By: 

(NAME OF FRANKLIN FUND ADMINISTRATOR) 

By: 

D-3
 
of Proposa to Amend Rule 17d- 1 under the Investment Company Act of 1940 to 

Provide an Exemption from the Rule for Affiliated Persons with Respet to Cert Servce 

See Notice 


Agreements with Investment Companes, Investment Company Act Relea No. 8245 (1973­

1974 Trasfer Binder) Fed. Sec. L. Rep. (CCH) , 79,667 (Feb. 25, 1974) (the "Proposing 

Release") . 

See Investment Company Contrcts for Service with Affiiated Persons - Withdrawal of 

Propose Rule Amendment, Investment Company Act Releae No. 10822 (1979 Trasfer
 

Binder) Fed. Sec. L. Rep. (CCH) '82,172 (August 8, 1979). 

See Lindner Fund for Income, Incorprate, SEe No-Action Letter (publicly available May 

10, 1984)(provision of trsfer agency service by affiliate); Cntenon Funds, Inc., SEC NoAction Letter (publicly available Januar 9, 1984)(Provision of bookkeeping and accuntig 

services by affiliate); Lindner Fund, Incorprated, SEC No-Action Letter (publicly avaiable 

June 17, 1983)(provision of trsfer agency and dividend disbursing services by affiiate); 

Boston Safe Deposit and Trust Company, SEC No-Action Letter (publicly available March 

30, 1983)(provision of custodian and trsfer agency services by affiliate); The Harord 

Money Market Fund, Inc., SEe No-Action Letter, (1982-1983 Trasfer Binder) Fed. Sec. L. 

Rep. (CCH) '77,393 (Feb. 14, 1983)(Provision of administrtive services by affiate). 

See also Mernll Lynch Capita Fund, Incorprated, SEC No-Action Letter (publicly available 

Decmber 21, 1990) (use of affiliated pnnter without shareholder approval allowed under 

rule 17d-l); Washington Square Cash Fund, Incorprated, SEC No-Action Letter (publicly 

available July 9, 1990) (use of affiiated custodian without shareholder approval allowed 

under Rule 17d-l); Unified Growth Fund, Inc., See No-Action Letter (publicly available 

June 28, 1990) (use of affliated pnnter without shareholder approval allowed under Rule'
 

17d-l); Diversified Secunties,Incorporated, SEC No-Action Letter (publicly available 

Januar 22, 1985) (use of affiliated transfer agent without shareholder approval allowed 

under Rule 17d-1); Federated Seeunties Corp.; SEC No-Action Letter, (1983-1984 Trasfer 

Binder) Fed. Sec. L. Rep. (CCH) '77,548 (Oct. 21, 1983)(Provision of fidelity insurace by 

affiate without stadard approval allowed under Rule 17d-l). 

D-4