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We have examined management's assertion, included in the accompanying
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Management Statement Regarding Compliance with Certain Provisions of the
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Investment Company Act of 1940, that the funds (see Attachment I),
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(hereafter referred to as the “Funds”) complied with the requirements of
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subsections (b) and (c) of Rule 17f-2 under the Investment Company Act of
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1940 (“the Act”) as of December 31, 2012.
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Management is responsible for the
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Funds' compliance with those requirements.
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Our responsibility is to express
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an opinion on management's assertion about the Funds' compliance based on
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our examination.
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Our examination was conducted in accordance with the standards of the Public
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Company Accounting Oversight Board (United States) and, accordingly,
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included examining, on a test basis, evidence about the Funds' compliance
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with those requirements and performing such other procedures as we
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considered necessary in the circumstances.
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Included among our procedures
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were the following tests performed as of December 31, 2012 and with respect
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to agreement of security purchases and sales, for the periods indicated in
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Attachment I:
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•
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Without prior notice to management, confirmation of all securities
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held by Franklin Templeton Investors Services, Inc., transfer agent,
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as they pertain to the security positions owned by the Funds and held
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in book entry form.
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•
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Reconciliation of such security positions to the books and records of
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the Funds.
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•
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Agreement of 100 security purchases and 100 security sales, since our
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last report, from the books and records of the Funds to the records of
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the transfer agent.
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We believe that our examination provides a reasonable basis for our opinion.
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Our examination does not provide a legal determination on the Funds'
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compliance with specified requirements.
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In our opinion, management's assertion that the Funds were in compliance
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with the requirements of subsections (b) and (c) of Rule 17f-2 of the
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Investment Company Act of 1940 as of December 31, 2012 with respect to
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securities reflected in the investment accounts of the Funds is fairly
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stated, in all material respects.
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This report is intended solely for the information and use of, management,
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the Board of Trustees and Board of Directors and the Securities and Exchange
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Commission and is not intended to be and should not be used by anyone other
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than these specified parties.
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/s/PRICEWATERHOUSECOOPERS, LLP
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PricewaterhouseCoopers, LLP
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March 8, 2013
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