On December 13, 2006, the Audit Committee of the Board of Directors (the “Board”) of Franklin Resources, Inc. (the “Company”) approved the engagement of Perry-Smith LLP as the independent auditor of the Franklin Templeton Profit Sharing 401(k) Plan (the “Plan”). Accordingly, as of the same date, PricewaterhouseCoopers LLP (“PwC”) ceased to be the independent auditor of the Plan.

The reports of PwC on the financial statements of the Plan for the fiscal years ended September 30, 2005 and 2004 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.

During the fiscal years ended September 30, 2005 and 2004, and through December 13, 2006, there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have caused PwC to make reference thereto in its reports on the Plan’s financial statements for such years.

During the fiscal years ended September 30, 2005 and 2004, and through December 13, 2006, there were no “reportable events” with respect to the Plan as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

During the fiscal years ended September 30, 2005 and 2004, and through December 13, 2006, neither the Company nor persons on behalf of the Company or the Plan consulted with Perry-Smith LLP with respect to the Plan regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

A copy of the foregoing disclosures was provided to PwC prior to the date of the filing of this report and PwC was requested to furnish a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with such statements. A copy of the letter PwC furnished in response to that request is filed as Exhibit 16.1 to this report.

(a) On December 13, 2006, the Board approved the amendment and restatement of the Company’s Amended and Restated By-Laws (the “By-Laws”), effective as of the same date. The amendment and restatement, among other things, makes express the Company’s ability to issue shares of the Company’s securities in uncertificated form. By doing so, the Company has clarified its ability to meet the Direct Registration System (“DRS”) requirements of the New York Stock Exchange. DRS allows shares of the Company’ stock to be owned, reported and transferred electronically in uncertificated form and without the need for physical stock certificates.

The amendment and restatement of the By-Laws also makes express the authority to take certain corporate actions through electronic transmissions, as permitted under Delaware corporate law, rather than in paper form. Accordingly, for example, such actions may include, but are not limited to, the Board or any committee thereof acting by unanimous consent pursuant to electronic transmissions, such as through electronic mail, or giving notice to stockholders with respect to an annual or special meeting of stockholders by electronic transmission.

Previously, the Company’s By-Laws were silent with respect to the Company’s ability to issue shares in uncertificated form and the Company’s ability to take corporate actions through electronic transmission.

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