Investment Company Act of 1940 — Section 17(d) and Rule 17d-1
Franklin Templeton Investments

November 21, 2008

RESPONSE OF THE OFFICE OF CHIEF COUNSEL DIVISION OF INVESTMENT MANAGEMENT

Our Ref. No. 20081120178 Franklin Templeton Investments, et al. File No. 132-3

Your letter dated November 20, 2008 requests assurance that we would not recommend enforcement action to the Commission, under section 17(d) of the Investment Company Act of 1940 (the “Act”) and rule 17d-1 thereunder, against Franklin Templeton Investments (“Franklin”) or direct and indirect subsidiaries of Franklin that provide investment advisory services (“Investment Adviser Affiliates”) to U.S. open-end investment companies registered under the Act (“U.S. Funds”) and certain foreign open-end investment funds (“Foreign Funds,” and together with the U.S. Funds, “Funds”),¹ and the Funds, if the Funds enter into the arrangement described in your letter. Specifically, the Funds would enter into a global, unsecured, senior committed line of credit (“Global Credit Facility”) with a syndicate of global banks for which each Fund would pay a portion of the associated fees. You state that the line of credit would provide the Funds with a source of cash for temporary and emergency purposes to meet unanticipated or unusually large redemption requests by shareholders.

You state that the structure of the Global Credit Facility will be closely modeled after and be in all material respects the same as the credit facilities that are described in two no-action letters that we issued in the 1990s, except for the inclusion of the Foreign Funds in the Global Credit Facility.² In the most recent of those letters, we stated, “[h]aving stated our views with respect to committed line of credit arrangements under section 17(d) and rule 17d-1 thereunder, we will no longer respond to requests for no-action relief in this area unless they present novel or unusual issues.”³ The inclusion of the Foreign Funds in the Global Credit Facility arguably presents a novel issue in this area. This inclusion, however, does not change materially the analysis of the Global Credit Facility under section 17(d) and rule 17d-1 thereunder. Accordingly, you assert that similar assurances as were provided in the No-Action Letters are appropriate here. In support of your view, you make certain representations that relate specifically to the inclusion of the Foreign Funds in the Global Credit Facility. In particular, you represent that:

• In making its initial and annual best interest determinations about a U.S. Fund’s participation in the Global Credit Facility, the U.S. Fund’s board of trustees, including a majority of the independent trustees, will consider any unique issues presented by participating in the facility with the Foreign Funds.
• Regardless of whether the law of any foreign jurisdiction would impose any limits on borrowing by a Foreign Fund, at a minimum, none of the Foreign Funds would be permitted to borrow more than the amount permitted for a U.S. Fund under section 18 of the Act.

Based on the facts and representations in your letter, we would not recommend enforcement action to the Commission under section 17(d) or rule 17d-1 thereunder against Franklin, the Investment Adviser Affiliates, and the Funds if the Funds enter into the Global Credit Facility and pay the commitment and other fees as described in your letter. This response represents our views on enforcement action only, and does not express any legal conclusion on the issues presented. You should note that any different facts or representations might require a different conclusion. Having stated our views with respect to committed line of credit arrangements under section 17(d) and rule 17d-1 thereunder, we will no longer respond to requests for no-action relief in this area unless they present novel or unusual issues.

Brian P. Murphy
Senior Counsel

Endnotes

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¹ The Foreign Funds will be organized and regulated under the laws of Ireland, Luxembourg, and the United Kingdom.

² See The T. Rowe Price Funds (pub. avail. July 31, 1995) (“T. Rowe Letter”); and Alliance Capital Management L.P. (pub. avail. Apr. 25, 1997) (“Alliance Letter”, and together with the T. Rowe Letter, “No-Action Letters”).

³ See Alliance Letter.

Incoming Letter

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The Incoming Letter is in Acrobat format.