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At September 30, 2009, the banking/finance segment had issued financial standby letters of credittotaling $6.3 million which beneficiaries would be able to draw upon in the event of non-performance by itscustomers, primarily in relation to lease and lien obligations of these banking customers. These standbyletters of credit were secured by marketable securities with a fair value of $8.3 million as of September 30,2009.Legal ProceedingsAs previously reported, between 2003 and 2006, following industry-wide market timing and latetrading investigations by U.S. and Canadian regulators, and U.S. state government offices, Franklin andcertain related parties were named in civil lawsuits in the U.S. and one of Franklin’s adviser subsidiarieswas named in civil lawsuits in Canada.In the U.S., the lawsuits were filed against Franklin and certain of its adviser and distributor affiliates,individual Franklin officers and directors, a former Franklin employee, and trustees of certain FranklinTempleton Investments mutual funds (the “Funds”). In 2004, the lawsuits were consolidated for coordinatedproceedings with similar lawsuits against numerous other mutual fund complexes in a multi-districtlitigation titled “In re Mutual Funds Investment Litigation,” pending in the U.S. District Court for theDistrict of Maryland, Case No. 04-md-15862 (the “MDL”). Plaintiffs filed consolidated amendedcomplaints in the MDL on September 29, 2004. The three consolidated lawsuits involving the Companyinclude a class action (Sharkey IRO/IRA v. Franklin Resources, Inc., et al., Case No. 04-cv-01310), aderivative action on behalf of the Funds (McAlvey v. Franklin Resources, Inc., et al., CaseNo. 04-cv-01274), and a derivative action on behalf of Franklin (Hertz v. Burns, et al., CaseNo. 04-cv-01624) and seek, among other forms of relief, one or more of: unspecified monetary damages;punitive damages; removal of Fund trustees, directors, advisers, administrators, and distributors; rescissionof management contracts and distribution plans under Rule 12b-1 promulgated under the InvestmentCompany Act of 1940; and attorneys’ fees and costs.On February 25, 2005, the Company-related parties filed motions to dismiss the consolidated amendedclass action and Fund derivative action complaints. On June 26, 2008, the court issued its order granting inpart and denying in part the Company’s motion to dismiss the consolidated amended class action complaint.In its order, the court dismissed certain claims, while allowing others under Sections 10(b) and 20(a) of theSecurities Exchange Act of 1934 and under Sections 36(b) and 48(a) of the Investment Company Act of1940 to remain, and dismissed all class action claims against the named Funds. Pursuant to stipulation, thecourt also dismissed all claims against certain individual defendants, including the independent trustees tothe named Funds, and a former Franklin executive. On September 4, 2009, the court entered as its order theparties’ stipulation to dismiss without prejudice the remaining Fund trustee defendants named in theconsolidated amended class action complaint. On October 22, 2009, the court granted in part and denied inpart lead plaintiff’s motion for leave to amend the consolidated amended class action complaint, grantinglead plaintiff’s request to amend the complaint to reflect the court’s June 2008 order, referenced above(dismissing certain claims and defendants), and to add certain detail to existing allegations, while denyinglead plaintiff’s request to introduce a new theory of liability. The Company’s motion to dismiss theconsolidated fund derivative action remains under submission with the court. In addition, pursuant tostipulation, the derivative action brought on behalf of Franklin has been stayed since 2004.In Canada, Franklin Templeton Investments Corp. (“FTIC”), a Franklin subsidiary and the manager ofFranklin Templeton Investments’ Canadian mutual funds, is named (along with several other non-Franklinaffiliated manager defendants) in two market timing lawsuits that are styled as class actions (Huneault v.AGF Funds, Inc., et al., Case No. 500-06-00256-046, filed in the Superior Court for the Province ofQuebec, District of Montreal on October 25, 2004, and Fischer v. IG Investment Management Ltd., et al.,Case No. 06-CV-307599CP, filed in the Ontario Superior Court of Justice on March 9, 2006). The lawsuits100