OCTOBER 2011 - According to the Notice:
Securities and Time Period: If you purchased and/or held shares in the following Franklin Funds: Templeton Foreign Fund; Templeton Developing Markets Trust; Templeton Global Smaller Companies Fund; Templeton Global Opportunities Trust; Franklin California Growth Fund (effective 9/1/02, name changed to Franklin Flex Cap Growth Fund); Templeton Greater European Fund (effective 8/1/99, name changed to Templeton International Fund; effective 8/1/01, name changed to Templeton International (Ex EM) Fund; and effective 4/25/07, merged into Templeton Foreign Fund); Franklin Small Cap Growth Fund (effective 9/1/01, name changed to Franklin Small-Mid Cap Growth Fund); Templeton World Fund; Templeton Growth Fund, Inc.; Franklin California Tax-Free Income Fund; Franklin Federal Tax-Free Income Fund; or Templeton Pacific Growth Fund (effective 5/8/03, merged into Templeton Foreign Fund), at any time during the period from February 6, 1999 through February 4, 2004, inclusive (the “Class Period”), you may be entitled to a payment from the proceeds of the proposed settlements with the Third Party Settling Defendants described herein (the “Settlements”).

Settlement Amount and Statement of Recovery: As more fully described in Question 9 below, the proposed Settlements collectively provide for payment of $4,437,368 in cash (the “Settlement Fund”). The Settlement Fund is comprised of (i) $4,074,000 in cash paid on behalf of Bear Stearns & Co. Inc. and certain of its affiliates and successor entities (“Bear Stearns”); (ii) $185,783 in cash, plus $37,700 contributed toward the costs of notice and administration of the Settlement Fund, paid on behalf of Banc of America Securities LLC (“BAS”); (iii) $45,000 paid on behalf of Canary Capital Partners, LLC and certain affiliated entities and Edward Stern (collectively, “Canary”), and (iv) $94,885 paid on behalf of Security Brokerage, Inc., DCIP, L.P., RCIP, L.P., the Security Brokerage, Inc. Profit Sharing Trust, now known as the Calugar Corporation Profit Sharing Trust, and any successors to, and Daniel G. Calugar (“Calugar”) (collectively, “Security Brokerage”) (together with Bear Stearns, BAS, and Canary, the “Third Party Settling Defendants”). The Class (and to the extent applicable, as provided below, the Class Funds themselves) will also receive interest accrued on the Settlement Fund (the “Gross Settlement Fund”). In addition, the Franklin Defendants (as defined
below) have agreed to contribute the sum of $2.75 million in cash toward the costs of distribution (including costs of notice and settlement administration) of the Settlements (the “Franklin Contribution”), pursuant to the Stipulation and Releases dated March 14, 2011 (the “Stipulation”) entered in the above-captioned action, subject to certain limitations and the Court’s approval, representing an additional benefit to the Class (the Franklin Contribution, together with the Gross Settlement Fund, are referred to herein as the “Class Benefit”). Because the Franklin Defendants will pay for all or most of the notice and administration costs, a higher percentage of the Gross Settlement Fund will be disbursed to Class Members with valid claims.1

The average recovery per share represented by the Class Benefit will vary significantly depending on the specific Class Fund(s) in which a given Class Member owned shares, and the time period during which such shares were owned. The following table illustrates the estimated average recovery per share for each Fund (before deduction of Court-awarded attorneys’ fees and expenses and other Court-approved deductions described in this Notice):

Class Funds (2/6/99 - 2/4/04) Approximate Average Per Share Recovery (¢)
Templeton Foreign Fund 0.231¢
Templeton Developing Markets Trust 0.650¢
Templeton Global Smaller Companies Fund 0.357¢
Templeton Global Opportunities Trust 1.193¢
Franklin California Growth Fund 0.229¢
Templeton Pacific Growth Fund 4.363¢
Templeton Greater European Fund 1.715¢
Franklin Small Cap Growth (a/k/a Franklin Small-Mid Cap Growth) Fund 0.154¢
Templeton World Fund 0.173¢
Templeton Growth Fund, Inc. 0.035¢
Franklin California Tax-Free Income Fund 0.004¢
Franklin Federal Tax-Free Income Fund 0.012¢

The amounts shown for certain Funds reflect that most shareholders in such Funds have already been allocated compensation from settlements with government regulators (which amounts have been or will be distributed to the Funds’ shareholders with more than de minimis alleged damages, and the Franklin Funds themselves) that reduced the amount of recoverable alleged damages for shareholders of these Funds in this lawsuit. However, Plaintiff’s damages consultant
has set a minimum allocation of 1% of the Settlement Fund to each Fund, recognizing that certain types of alleged harm, such as certain types of transaction costs from market timing, allegedly borne by long-term shareholders, may not have been fully compensated by the regulatory settlements.