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P.O. Box 30202
College Station, TX 77842-9909

Franklin Templeton Investments: Statement on PetroChina

Several groups that are trying to effect change in the Darfur region of Sudan have asked individual investors and asset managers, such as Franklin Templeton, to sell holdings of companies identified as having business ties to Sudan. Among the companies being targeted for divestment is PetroChina, which is currently a holding in several of our emerging market funds. PetroChina, which has stated that they do not conduct business in Sudan itself, is being targeted because its parent company, CNPC, has business interests there.

The conditions in the Darfur region of Sudan are deplorable, and we support efforts toward positive and meaningful reform there. We also recognize and are respectful of the fact that there are many different perspectives and opinions on the best way to approach this issue. However, identifying the best way to achieve change continues to be a matter of serious debate. Some have questioned whether divestment will prove effective and others believe that corporate investment in troubled regions can lead to improved economic growth and reform for the local populace over the long term. In our more than 25 years of experience investing in emerging markets, we have seen that fostering economic and business development through investment can often help in achieving reforms.

Our investment professionals actively engage company managements when they have any concerns with company management or company activities, and PetroChina is no exception to this approach. As an investment adviser, our fiduciary responsibility to our fund shareholders is to make investment decisions that are consistent with the guidelines in each fund's prospectus. To achieve this, our investment teams consider all risk factors, including those related to social and political issues, when evaluating a potential holding or making other investment decisions for a given fund.

We appreciate the views of those favoring and opposing divestiture, and our investment groups continue to consider social and political issues in their risk assessment of individual fund holdings