UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                  SCHEDULE 14A
           Proxy Statement Pursuant to Section 14(a) of the Securities
                      Exchange Act of 1934 (Amendment No. )


Filed by the Registrant [X] 
Filed by a Party other than the Registrant [ ] 

Check the appropriate box:

[X]  Preliminary Proxy Statement
[ ]  Confidential, for Use of the Commission Only (as permitted by Rule 
     14a-6(e)(2))
[ ]  Definitive Proxy Statement
[ ]  Definitive Additional Materials
[ ]  Soliciting Material Pursuant to Section 240.14a-12

       ...................................................................
                            FRANKLIN RESOURCES, INC.
      ...................................................................
                (Name of Registrant as Specified In Its Charter)


       ...................................................................
     (Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box): 
[X]  No fee required.
[ ]  Fee computed on table below per Exchange Act Rules  14a-6(i)(1) and 0-11. 

     1)   Title of each class of securities to which transaction applies:
          ..............................................................

     2)   Aggregate number of securities to which transaction applies:
          ..............................................................

     3)   Per unit  price  or other  underlying  value of  transaction  computed
          pursuant to Exchange  Act Rule 0-11 (Set forth the amount on which the
          filing fee is calculated and state how it was determined):
          ..............................................................

     4)   Proposed maximum aggregate value of transaction:
          ..............................................................

     5)   Total fee paid:
          ..............................................................

[ ]  Fee paid previously with preliminary materials.

[ ]  Check box if any part of the fee is offset as provided  by  Exchange  Act
     Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was
     paid previously.

     Identify the previous filing by registration  statement number, or the Form
     or Schedule and the date of its filing.

     1) Amount Previously Paid:
     ..............................................................

     2) Form, Schedule or Registration Statement No.:
     ..............................................................

     3) Filing Party:
     ..............................................................

     4) Date Filed: [ ]
     ..............................................................


                                                                PRELIMINARY COPY
                                                                ----------------

                            FRANKLIN RESOURCES, INC.
                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS



DEAR STOCKHOLDER:

The Board of Directors of Franklin  Resources,  Inc. (the "Company") invites you
to attend the annual meeting of stockholders (the "Annual Meeting").  The Annual
Meeting will be held on January 25, 2005 at 10:00 a.m.,  Pacific  Standard Time,
in the H. L. Jamieson  Auditorium,  at One Franklin  Parkway,  Building 920, San
Mateo, California, for the following purposes:

1.   To elect eleven (11)  Directors to the Board of  Directors.  Each  Director
     will hold office  until the next Annual  Meeting of  Stockholders  or until
     that person's successor is elected and qualified;

2.   To ratify the  appointment of  PricewaterhouseCoopers  LLP as the Company's
     independent  registered  public accounting firm for the current fiscal year
     ending September 30, 2005;

3.   To approve the amendment and  restatement of the Franklin  Resources,  Inc.
     2002 Universal Stock Incentive Plan;

4.   To approve the amendment of the Company's Certificate of Incorporation,  as
     amended,  to increase the number of shares of common stock, par value $0.10
     per share, from 500,000,000  shares to 1,000,000,000  shares authorized for
     issuance by the Company; and

5.   To transact such other business that may be raised at the Annual Meeting or
     any adjournments or postponements of the Annual Meeting.

You must have owned  shares at the close of business on November  30, 2004 to be
entitled  to receive  notice of, and to vote on, all  matters  presented  at the
Annual  Meeting.  Your vote is very  important.  Even if you think that you will
attend the Annual  Meeting,  we ask you to please return the proxy card. You can
vote by  telephone,  over the  Internet,  or by using  the  proxy  card  that is
enclosed.

By order of the Board of Directors,

BARBARA J. GREEN
SECRETARY

JANUARY 3, 2005
SAN MATEO, CALIFORNIA


PLEASE VOTE BY TELEPHONE OR BY USING THE INTERNET AS  INSTRUCTED ON THE ENCLOSED
PROXY CARD OR COMPLETE, SIGN AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE.







                                TABLE OF CONTENTS

SECTION                                                                   PAGE
------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS                            COVER PAGE
PROXY STATEMENT                                                              1
VOTING INFORMATION                                                           1
PROPOSAL NO. 1:  ELECTION OF DIRECTORS                                       3
   NOMINEES                                                                  3
   INFORMATION ABOUT THE BOARD AND ITS COMMITTEES                            8
   SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS                             12
   SECURITY OWNERSHIP OF MANAGEMENT                                         13
   EXECUTIVE COMPENSATION                                                   15
      SUMMARY COMPENSATION TABLE                                            15
      OPTION GRANTS IN LAST FISCAL YEAR                                     18
      AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
         FISCAL YEAR-END OPTION VALUES                                      18
      LONG-TERM INCENTIVE PLAN AWARDS                                       19
      EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL 
         ARRANGEMENTS                                                       19
      COMPENSATION COMMITTEE REPORT ON EXECUTIVE 
         COMPENSATION                                                       20
      COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
         PARTICIPATION                                                      23
      EQUITY COMPENSATION PLAN INFORMATION                                  24
      PERFORMANCE GRAPH                                                     25
   REPORT OF THE AUDIT COMMITTEE                                            26
   FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               27
   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                           28
   SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE                  29
PROPOSAL NO. 2:  RATIFICATION OF THE APPOINTMENT OF 
                  INDEPENDENT REGISTERED PUBLIC ACCOUNTING 
                  FIRM                                                      30
PROPOSAL NO. 3:  APPROVAL OF THE AMENDMENT AND RESTATEMENT 
                  OF THE FRANKLIN RESOURCES, INC. 2002 UNIVERSAL
                  STOCK INCENTIVE PLAN                                      31
PROPOSAL NO. 4:  APPROVAL OF THE AMENDMENT OF THE CERTIFICATE 
                  OF INCORPORATION, AS AMENDED, TO INCREASE THE 
                  NUMBER OF SHARES OF COMMON STOCK 
                  AUTHORIZED FOR ISSUANCE                                   36
STOCKHOLDER PROPOSALS                                                       38
CONTACT THE BOARD OF DIRECTORS                                              38
THE ANNUAL REPORT                                                           39
FORM 10-K                                                                   39





SECTION                                                                   PAGE
------------------------------------------------------------------------------
APPENDIX A:  AUDIT COMMITTEE CHARTER                                       A-1
APPENDIX B:  COMPENSATION COMMITTEE CHARTER                                B-1
APPENDIX C:  CORPORATE GOVERNANCE COMMITTEE CHARTER                        C-1
APPENDIX D:  CORPORATE GOVERNANCE GUIDELINES                               D-1
APPENDIX E:  FRANKLIN RESOURCES, INC. 2002 UNIVERAL STOCK
             INCENTIVE PLAN                                                E-1
APPENDIX F:  PROPOSED TEXT OF ARTICLE FOURTH OF FRANKLIN 
             RESOURCES, INC. CERTIFICATE OF INCORPORATION, AS 
             AMENDED                                                       F-1



                            FRANKLIN RESOURCES, INC.
                              ONE FRANKLIN PARKWAY
                           SAN MATEO, CALIFORNIA 94403

                                 PROXY STATEMENT
                                 JANUARY 3, 2005

This  Proxy  Statement  and  the  accompanying   Notice  of  Annual  Meeting  of
Stockholders  are furnished in connection with the  solicitation by the Board of
Directors of Franklin Resources, Inc., a Delaware corporation ("Franklin" or the
"Company"),  of the  accompanying  proxy to be voted at the  Annual  Meeting  of
Stockholders (the "Annual Meeting"),  which will be held on January 25, 2005, at
10:00  a.m.,  Pacific  Standard  Time,  in the H. L.  Jamieson  Auditorium,  One
Franklin Parkway, Building 920, San Mateo, California. We expect that this Proxy
Statement  and the enclosed  proxy will be mailed on or about January 3, 2005 to
each stockholder entitled to vote.

All materials  filed by the Company with the Securities and Exchange  Commission
(the  "SEC") can be  obtained at the SEC's  Public  Reference  Room at 450 Fifth
Street,  N.W.,   Washington,   D.C.  20549  or  through  the  SEC's  website  at
www.sec.gov. You may obtain information on the operation of the Public Reference
Room by calling 1-800-SEC-0330.

                               VOTING INFORMATION

WHO CAN VOTE?

You may vote if you held  shares of the  Company's  common  stock  directly as a
stockholder of record or  beneficially  in street name, at the close of business
on November 30, 2004 (the "Record Date").  You are entitled to one vote for each
share owned on that date on each matter  presented  in person or by proxy at the
meeting. As of the Record Date, Franklin had 251,352,866 shares outstanding.

HOW MANY VOTES ARE NEEDED TO HOLD THE MEETING?

In order to take any action at the Annual  Meeting,  a  majority  of  Franklin's
outstanding shares as of the Record Date must be present at the meeting. This is
called a quorum.

WHO COUNTS THE VOTES?

The final voting results will be tallied by our Transfer Agent,  The Bank of New
York, and the Inspector of Elections, and published in our next quarterly report
on Form 10-Q.

WHAT IS A PROXY?

A "proxy" allows  someone else (the "proxy  holder") to vote your shares on your
behalf.  The Board of Directors of Franklin ("Board of Directors" or "Board") is
asking  you to allow any of the  persons  named on the proxy  card  (Charles  B.
Johnson,  Chairman of the Board;  Martin L.  Flanagan,  President  and  Co-Chief
Executive Officer;  and Barbara J. Green,  Secretary) to vote your shares at the
Annual Meeting.

HOW DO I VOTE BY PROXY?

Whether you hold shares  directly as a stockholder of record or  beneficially in
street name, you may vote without attending the Annual Meeting.  You may vote by
granting  a proxy or, for  shares  held in street  name,  by  submitting  voting
instructions  to your  stockbroker  or  nominee.  You will be able to do this by
telephone,  using the Internet or by mail.  The deadline for voting by telephone
or by using the Internet is 11:59 p.m.,  Eastern  Standard  Time, on January 24,
2005. Please see your proxy card or the information your bank,  broker, or other
holder of record provided to you for more  information on these options.  Unless
you  indicate  otherwise  on your proxy card,  

                                       1
--------------------------------------------------------------------------------



the persons  named as your proxy holders on the proxy card will vote your shares
FOR  all  nominees  to the  Board  of  Directors,  FOR the  ratification  of the
appointment of  PricewaterhouseCoopers  LLP as the independent registered public
accounting  firm  (the  "independent  auditors")  for  the  fiscal  year  ending
September 30, 2005,  FOR the approval of the amendment  and  restatement  of the
Franklin  Resources,  Inc. 2002  Universal  Stock  Incentive  Plan,  and FOR the
approval of the  amendment of the Company's  Certificate  of  Incorporation,  as
amended,  ("Certificate of  Incorporation")  to increase the number of shares of
common  stock  authorized  for  issuance.  If any other  matters come before the
Annual  Meeting to be voted on, the persons  named as your proxy  holders on the
proxy card will vote, act and consent on those matters in their discretion.

CAN I CHANGE OR REVOKE MY VOTE AFTER I RETURN MY PROXY CARD?

Yes.  You can change or revoke  your proxy by  submitting  another  proxy with a
later date before the beginning of the Annual Meeting.  You may also revoke your
proxy by attending the Annual Meeting and voting in person.

CAN I VOTE IN PERSON AT THE ANNUAL MEETING INSTEAD OF VOTING BY PROXY?

Yes. However, we encourage you to complete and return the enclosed proxy card to
ensure that your shares are represented and voted.

HOW ARE VOTES COUNTED?

To be counted as "represented",  either a proxy card must have been returned for
those shares, or the stockholder must be present at the meeting.  Under New York
Stock Exchange ("NYSE") rules, the proposals to elect Directors (Proposal No. 1)
and to ratify the appointment of the independent  auditors  (Proposal No. 2) are
considered  routine items.  This means that brokers may vote in their discretion
on  these  matters  on  behalf  of  clients  who  have  not   furnished   voting
instructions.  The  proposal to approve the  amendment  and  restatement  of the
Franklin  Resources,  Inc. 2002 Universal  Stock Incentive Plan (Proposal No. 3)
and to approve the amendment of the Company's  Certificate of Incorporation,  as
amended,  to  increase  the  number of shares of  common  stock  authorized  for
issuance (Proposal No. 4) are considered "non-routine" items. This means brokers
that have not received  voting  instructions  from their clients may not vote on
this proposal.  Broker "non-votes" are considered as represented for purposes of
determining  a  quorum,  but will not be  considered  as  entitled  to vote with
respect to  Proposal  No. 3. Broker  "non-votes"  will have the same effect as a
vote  against  Proposal  No. 4 to increase  the number of shares of common stock
that the Company may issue.

WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?

For the  election  of  Directors,  a  plurality  of the votes  cast is  required
(Proposal  No. 1).  This means that the eleven (11)  candidates  who receive the
most votes will be elected to the eleven (11) available  positions on the Board.
An affirmative vote of the holders of shares of common stock,  having a majority
of the votes present in person or represented by proxy at the Annual Meeting and
entitled to vote on the  matters,  are  necessary to ratify the  appointment  of
PricewaterhouseCoopers  LLP  (Proposal  No. 2), as  amended,  and to approve the
amendment and restatement of the Franklin  Resources,  Inc. 2002 Universal Stock
Incentive  Plan  (Proposal  No. 3). In order to  approve  the  amendment  of the
Company's  Certificate  of  Incorporation  to  increase  the number of shares of
common  stock  authorized  for  issuance  (Proposal  No. 4), a  majority  of the
outstanding common stock of the Company will be required to vote in favor of the
amendment. Shares properly voted "ABSTAIN" on a particular matter are considered
as shares present at the meeting for quorum purposes,  but are treated as having
voted against the matter,  although such  abstentions will have no effect on the
voting for the election of directors (Proposal No. 1).

WHO PAYS FOR THIS PROXY SOLICITATION?

Your proxy is being  solicited by the Board of  Directors of Franklin.  Franklin
pays the cost of soliciting your proxy and reimburses  brokerage costs and other
fees for forwarding proxy materials to you.


                                       2
--------------------------------------------------------------------------------



                                 PROPOSAL NO. 1

                              ELECTION OF DIRECTORS

GENERAL

The  Corporate  Governance  Committee  of the Board  recommended,  and the Board
approved,  the  nominees  named  below for  election  as members of the Board of
Directors of Franklin  Resources,  Inc.  The  Chairman of the Board  recommended
Samuel H. Armacost for consideration by the Corporate  Governance Committee as a
nominee  for  director.  Mr.  Armacost  was elected as member of the Board as of
December 21, 2004. All nominees are currently directors; however Mr. Armacost is
standing  for  election by  stockholders  of the Company for the first time.  If
elected,  each director will serve until the next Annual Meeting of Stockholders
and until that  person's  successor is elected and  qualified  or until  his/her
earlier resignation, retirement, disqualification or removal. In accordance with
the  Company's   Director   Independence   Standards,   as  amended   ("Director
Independence   Standards"),   described   more  fully   below,   the  Board  has
affirmatively  determined that the Board is currently  composed of a majority of
independent  directors,  and that the director  nominee,  Mr. Armacost,  and the
following  current members  standing for re-election are independent  within the
meaning of the Company's Director Independence  Standards and under the rules in
the listing  standards of the NYSE and do not have a material  relationship with
the Company:  Samuel H. Armacost,  Charles Crocker,  Robert D. Joffe,  Thomas H.
Kean, Chutta Ratnathicam,  and Louis E. Woodworth.  Unless you mark "Exceptions"
on your proxy card to withhold  authority to vote for one or all of the director
nominees,  the persons  named as proxy  holders  intend to vote for all of these
nominees.  Listed below are the names,  ages, and principal  occupations for the
past five years of the director nominees.

RECOMMENDATION OF THE BOARD

The Board of  Directors  recommends a vote FOR the election to the Board of each
of the  following  nominees.  The  voting  requirements  for this  proposal  are
described in the "Voting Information" section.


                                    NOMINEES

SAMUEL H. ARMACOST
AGE 65
DIRECTOR SINCE DECEMBER 21, 2004

Chairman  of the Board of  Directors  of SRI  International,  formerly  Stanford
Research  Institute,   an  independent  technology  development  and  consulting
organization for more than the past five (5) years.  Managing  Director,  Weiss,
Peck & Greer LLC from 1990 until 1998 and Merrill  Lynch  Capital  Markets  from
1987 until 1990.  President,  Director and Chief Executive Officer,  BankAmerica
Corporation from 1981 until 1986. Director, ChevronTexaco Corp., Del Monte Foods
Company, Exponent, Inc. and Callaway Golf Company.

HARMON E. BURNS
AGE 59
DIRECTOR SINCE 1991

Vice  Chairman  and Member - Office of the  Chairman of the  Company;  formerly,
Executive  Vice  President of the Company for more than the past five (5) years;
officer and/or director of many Company subsidiaries; officer and/or director or
trustee of 49 investment  companies  managed or advised by  subsidiaries  of the
Company.


                                       3
--------------------------------------------------------------------------------



CHARLES CROCKER
AGE 65
DIRECTOR SINCE 2003

Chairman,  Chief Executive Officer and director of BEI Technologies,  Inc. since
October 1997; President of BEI Technologies, Inc. from October 1997 to May 2000.
Director,  Pope & Talbot, Inc., Teledyne Technologies,  Inc. and Fiduciary Trust
Company International, a subsidiary of the Company.

ROBERT D. JOFFE
AGE 61
DIRECTOR SINCE 2003

Presiding Partner and partner of Cravath,  Swaine & Moore, LLP for more than the
past five (5) years.  Director  of  Fiduciary  Trust  Company  International,  a
subsidiary of the Company.

CHARLES B. JOHNSON
AGE 71
DIRECTOR SINCE 1969

Chairman  of the  Board  and  Member - Office of the  Chairman  of the  Company;
formerly,  Chief  Executive  Officer of the Company;  officer and/or director of
many Company  subsidiaries;  officer and/or director or trustee of 46 investment
companies managed or advised by subsidiaries of the Company.

RUPERT H. JOHNSON, JR.
AGE 64
DIRECTOR SINCE 1969

Vice  Chairman  and Member - Office of the  Chairman of the  Company;  formerly,
Executive  Vice  President of the Company for more than the past five (5) years;
officer and/or director of many Company subsidiaries; officer and/or director or
trustee of 49 investment  companies  managed or advised by  subsidiaries  of the
Company.

THOMAS H. KEAN
AGE 69
DIRECTOR SINCE 2003

President,  Drew University since 1990;  formerly,  Governor of the State of New
Jersey from 1982 to 1990. Director, Aramark Corporation, Amerada Hess Corp., The
CIT Group,  Inc.,  Fiduciary  Trust Company  International,  a subsidiary of the
Company, The Pepsi Bottling Group and UnitedHealth Group Incorporated.

CHUTTA RATNATHICAM
AGE 57
DIRECTOR SINCE 2003

Senior Vice  President  and Chief  Financial  Officer of CNF Inc.  (formerly CNF
Transportation Inc.) since 1997; formerly,  Chief Executive Officer of the Emery
Worldwide  reporting  segment of CNF from September 2000 to December 2001;  Vice
President-International  of Emery  for five (5) years  prior to 1997.  Chartered
Accountant  (Sri Lanka).  Member,  American  Institute  of Certified  Management
Accountants.


                                       4
--------------------------------------------------------------------------------



PETER M. SACERDOTE
AGE 67
DIRECTOR SINCE 1993

Advisory  director and  Chairman of the  Investment  Committee of the  principal
investment  area of Goldman,  Sachs & Co.  (investment  banking) since May 1999;
formerly,  a general  partner and then a limited  partner of the  Goldman  Sachs
Group,  L.P.  for five (5) years prior to 1999.  Director,  Qualcomm,  Inc.  and
Hexcel Corporation.

ANNE M. TATLOCK
AGE 65
DIRECTOR SINCE DECEMBER 21, 2004 AND FROM JANUARY 2001 TO DECEMBER 2004

Vice  Chairman  and Member - Office of the  Chairman of the Company  since 2001;
director of the Company from January 2001 to early  December 2004 and re-elected
in late December 2004;  Chairman of the Board,  Chief  Executive  Officer (since
2000),  and director of Fiduciary Trust Company  International,  a subsidiary of
the Company;  formerly  President of Fiduciary Trust Company  International  for
more than the past five (5) years;  officer  and/or  director  of certain  other
Company subsidiaries. Director, Fortune Brands, Inc. and Merck & Co., Inc.

LOUIS E. WOODWORTH
AGE 71
DIRECTOR SINCE 1981

Private investor. President, Alpine Corp., a private investment company, for the
past five (5) years.

FAMILY RELATIONS.  Charles B. Johnson, the Chairman of the Board and director of
the Company,  and Rupert H. Johnson,  Jr., the Vice Chairman and director of the
Company,  are  brothers.  Peter M.  Sacerdote,  a director of the Company,  is a
brother-in-law  of Charles B.  Johnson  and Rupert H.  Johnson,  Jr.  Gregory E.
Johnson, a President and Co-Chief  Executive Officer of the Company,  is the son
of  Charles  B.  Johnson,  the  nephew of Rupert H.  Johnson,  Jr.  and Peter M.
Sacerdote and the brother of Jennifer J. Bolt, a Senior Vice President and Chief
Information Officer of the Company.  Jennifer J. Bolt is the daughter of Charles
B. Johnson,  the niece of Rupert H. Johnson,  Jr. and Peter M. Sacerdote and the
sister of Gregory E. Johnson.

CORPORATE GOVERNANCE

The Company regularly monitors regulatory developments and reviews its policies,
processes and procedures in the area of corporate  governance to respond to such
developments.  As part of  those  efforts,  we  review  federal  laws  affecting
corporate  governance,  such as the Sarbanes-Oxley Act of 2002, as well as rules
adopted by the Securities and Exchange Commission and the NYSE.

CORPORATE  GOVERNANCE  GUIDELINES.  The Board has adopted  Corporate  Governance
Guidelines, as amended ("Corporate Governance Guidelines") which are attached as
Appendix D. The  Corporate  Governance  Guidelines  are posted in the  corporate
governance  section of the Company's website at  WWW.FRANKLINTEMPLETON.COM  (the
"Company's  website") and are available in print to  stockholders  who request a
copy from the Company's  Secretary at the Company's principal executive offices.
The Corporate  Governance  Guidelines  set forth the practices the Board follows
with respect to the composition of the Board, director  responsibilities,  Board
committees,  director access to officers,  employees and  independent  advisors,
director compensation, director orientation and continuing education, management
succession and performance evaluation of the Board.

CODE OF ETHICS AND BUSINESS CONDUCT.  The Board has adopted a Code of Ethics and
Business Conduct, as amended (the "Code of Ethics"),  which is applicable to all
employees,  directors and officers of the Company.  The Code of Ethics is posted
in the corporate governance section of the Company's website and is available in
print to  stockholders  who request a copy from the  Company's  Secretary at the
Company's principal executive offices. The Company also established a Compliance
and Ethics Hotline, where employees can report a violation 


                                       5
--------------------------------------------------------------------------------


of the Code of Ethics or anonymously submit a complaint  concerning  auditing or
accounting  matters.  Interested  parties  may  address a written  request for a
printed copy of the Code of Ethics to: Secretary,  Franklin Resources, Inc., One
Franklin Parkway,  San Mateo,  California  94403-1906.  We intend to satisfy the
disclosure  requirement  regarding any amendment to, or a waiver of, a provision
of the  Code  of  Ethics  for  the  Registrant's  principal  executive  officer,
principal  financial officer,  principal  accounting  officer or controller,  or
persons performing similar functions by posting such information on our website.

DIRECTOR   INDEPENDENCE   STANDARDS.   The  Board  has  adopted  guidelines  for
determining whether a director is independent. The Board will monitor and review
as necessary,  but at least once annually,  commercial,  charitable,  family and
other  relationships  that directors have with the Company to determine  whether
the Company's directors are independent.

For  a  director  to  be  considered  independent,   the  Board  must  determine
affirmatively  that the director does not have material  relationships  with the
Company  either  directly  or  as  a  partner,  shareholder  or  officer  of  an
organization that has a relationship with the Company.  Such  determination will
be made and disclosed pursuant to applicable NYSE rules. A material relationship
can include, but is not limited to, commercial, industrial, banking, consulting,
legal,   accounting,   charitable  and  family  relationships.   The  Board  has
established  the  following  guidelines  to assist it in  determining  whether a
director  does  not  have  material   relationships  and  thereby  qualifies  as
independent:

A.   A director  will not be  independent  if, at any time within the  preceding
     three years (unless otherwise specified below):

     1.   (a) the director was employed by the Company; or

          (b) an immediate family member /1/ of the director was employed by the
          Company as an executive officer /2/ of the Company;

     2.   the director (or an immediate family member of the director who in the
          capacity  of an  executive  officer of the  Company)  received  direct
          compensation  from the  Company  (other  than for prior  service  as a
          director,  or as  pension  or  deferred  compensation)  of  more  than
          $100,000 in any 12-month period;

     3.   (a) the  director or an  immediate  family  member of the  director is
          currently  a partner of the  Company's  internal  auditor or  external
          independent auditor;

          (b) the  director  is  currently  employed by the  Company's  internal
          auditor or external independent auditor;

          (c) an immediate  family member of the director is currently  employed
          by the Company's internal auditor or external  independent auditor and
          participates  in the auditor's  audit assurance or tax compliance (but
          not tax planning) practice; or

          (d) the director or an  independent  family member of the director was
          formerly employed by or a partner of the Company's internal auditor or
          external  independent  auditor and personally  worked on the Company's
          audit;

     4.   the  director or an  immediate  family  member of the  director was an
          executive  officer of another company and an executive  officer of the
          Company served on the compensation committee of such other company; or

     5.   (a) the director is an employee of a company that made  payments to or
          received  payments  from the 

----------------------------------
/1/  An immediate  family  member  includes a spouse,  parent,  child,  sibling,
     father-  and  mother-in-law,   son-  and   daughter-in-law,   brother-  and
     sister-in-law  and anyone  (other  than a domestic  employee)  sharing  the
     director's home.

/2/  An  executive  officer  means a  Section  16  reporting  person  under  the
     Securities Exchange Act of 1934, as amended.

                                       6
--------------------------------------------------------------------------------


          Company for property or services,  in any single  fiscal year, of more
          than  the  greater  of  $1  million  or  2%  of  the  other  company's
          consolidated gross revenues;

          (b) an immediate family member of the director is an executive officer
          of a company  that made  payments  to or  received  payments  from the
          Company for property or services,  in any single  fiscal year, of more
          than the  greater of $1 million  or 2% of the  Company's  consolidated
          gross revenues; or

          (c) the director or an immediate  family member of the director serves
          as an officer,  director or trustee of a tax exempt organization,  and
          the Company's contributions to the organization,  in any single fiscal
          year,  are  more  than  the  greater  of $3  million  or  5%  of  that
          organization's consolidated gross revenues.

B.   The following relationships are not by themselves considered to be material
     and would not by themselves impair a director's independence:

     1.   a director (or an immediate  family member of the director)  serves as
          an executive  officer,  employee,  partner or significant  owner (more
          than 10%) of a company that made payments to or received payments from
          the Company, in any single fiscal year, of less than the greater of $1
          million or 2% of the consolidated gross revenues of the other entity;

     2.   a  director  is an  executive  officer of  another  company,  which is
          indebted to the Company, or to which the Company is indebted,  and the
          total amount of either  company's  indebtedness  to the other,  in any
          single fiscal year, is less than 2% of the total  consolidated  assets
          of the other company;

     3.   a director (or an immediate  family member of a director) serves as an
          officer,  director  or trustee of a tax exempt  organization,  and the
          Company's  contributions  to the  organization,  in any single  fiscal
          year,  are  more  than  the  greater  of $1  million  or  2%  of  that
          organization's   consolidated  gross  revenues,   provided  that  such
          contributions  do not exceed the limits set forth in Paragraph  A.5(c)
          above  and  that  disclosure  is made in the  Company's  annual  proxy
          statement; or

     4.   a director serves or served as a director of a subsidiary,  which is a
          privately  held,  wholly-owned,  direct or indirect  subsidiary of the
          Company.

C.   For  all  relationships  not  specifically  and  clearly  addressed  by the
     guidelines  above,  the  determination  of whether or not a director  has a
     material relationship,  and therefore whether or not the director qualifies
     as  independent or not, shall be made by the Board based on the totality of
     circumstances.


                                       7
--------------------------------------------------------------------------------



                 INFORMATION ABOUT THE BOARD AND ITS COMMITTEES

BOARD MEETINGS AND ANNUAL MEETING OF STOCKHOLDERS

The Board held in the fiscal year ended  September 30, 2004 ("fiscal year 2004")
nine (9) meetings (not including committee meetings). For fiscal year 2004, each
director  attended at least  seventy-five  percent (75%) of the aggregate of the
total number of meetings held by the Board and the total number of meetings held
by all  committees  of the  Board on which he  served.  The  Board  has an Audit
Committee,  a Compensation  Committee and a Corporate Governance  Committee.  To
promote open discussion among the non-management  directors (those directors who
are not officers or  employees of the  Company),  the  non-management  directors
generally meet in executive  session after  regularly  scheduled  Board meetings
without  management.  The  independent  directors  (as  defined  below)  meet in
executive  session  a  minimum  of two  times  per  year.  Charles  Crocker,  an
independent director, has been appointed to preside at the executive sessions of
the non-management and the independent directors. The Board encourages directors
to attend the annual  meeting of  stockholders.  All of the Company's  directors
standing for  re-election,  other than Mr. Armacost who was elected to the Board
as of December 21, 2004, attended last year's annual meeting.

COMMITTEE MEMBERSHIP AND MEETINGS

The  current  standing  committees  of the Board are the  Audit  Committee,  the
Compensation  Committee and the Corporate Governance Committee.  The table below
provides current membership and meeting information.


                                             AUDIT                      COMPENSATION               CORPORATE GOVERNANCE
-------------------------------- ------------------------------ ------------------------------ -----------------------------
                                                                                                   
CHARLES CROCKER                                M                              C

ROBERT D. JOFFE                                                                                             C

THOMAS H. KEAN                                                                M                             M

CHUTTA RATNATHICAM                             C

LOUIS E. WOODWORTH                             M                              M                             M

2004 Meetings                                 10                              7                             6

M - Member
C - Chairman


Below is a description  of each standing  committee of the Board.  The Board has
affirmatively  determined  that each  standing  committee  consists  entirely of
independent  directors pursuant to rules established by the NYSE and promulgated
under  the  Securities  Exchange  Act of  1934,  as  amended,  and the  Director
Independence Standards established by the Board. See also "Director Independence
Standards" above.

The Board has also determined that each current member of the Audit Committee is
independent  under the  criteria  established  by the NYSE and the SEC for audit
committee members.

THE AUDIT COMMITTEE

The Audit  Committee  currently  consists  of  Messrs.  Ratnathicam  (Chairman),
Crocker and Woodworth.  The primary  purpose of the Audit Committee is to assist
the  Board in  fulfilling  its  responsibility  to  oversee:  (1) the  Company's
financial  reporting,  auditing and internal control  activities,  including the
integrity of the Company's financial  statements;  (2) the Company's  compliance
with  legal  and  regulatory   requirements;   (3)  the  independent   auditors'
qualifications  and  independence;  and (4)  the  performance  of the  Company's
internal  audit  function and  independent  auditors.  The Audit  Committee also
prepares the report the Audit  Committee is required to include in the Company's
proxy  statement.  In  addition,  the Audit  Committee  is  responsible  for the
appointment,


                                       8
--------------------------------------------------------------------------------


compensation,  retention and oversight of the work of the independent  auditors,
including  approval of all services and fees of the  independent  auditors.  The
Audit  Committee meets with the Company's  independent  auditors and reviews the
scope of their audit, the related reports and any recommendations they may make.
The Audit Committee also reviews the annual audited financial statements for the
Company.

The Audit Committee  operates under a written charter adopted by the Board.  The
Audit  Committee met ten (10) times during fiscal year 2004. The Audit Committee
Charter,  as amended,  is  attached  as  Appendix A and posted in the  corporate
governance  section of the Company's  website. A written copy of the Charter may
also be obtained by making a written  request to the Company's  Secretary at the
Company's principal  executive offices.  The Board has determined that all Audit
Committee members are financially  literate under the NYSE listing standards and
that Mr. Chutta  Ratnathicam is an audit committee  financial  expert within the
meaning of the rules and regulations of the SEC.

THE COMPENSATION COMMITTEE

The Compensation  Committee  currently consists of Messrs.  Crocker  (Chairman),
Kean and Woodworth.  The  Compensation  Committee has the  responsibilities  set
forth  in its  charter  and  reviews  and  sets  compensation  for the  Co-Chief
Executive   Officers,   determines  the  general  policies  and  guidelines  for
compensating  other  executive  officers,  and performs other duties as assigned
from time to time by the Board. The Compensation  Committee also administers the
2002 Universal Stock  Incentive Plan, as amended and restated,  (the "2002 Stock
Plan"),  the Amended and Restated Annual  Incentive  Compensation  Plan, and the
2004 Key Executive Incentive  Compensation Plan. The Compensation  Committee met
seven (7) times during fiscal year 2004. The Compensation  Committee Charter, as
amended,  is  attached  as  Appendix  B and posted in the  corporate  governance
section of the  Company's  website.  A written  copy of the  Charter may also be
obtained by making a written request to the Company's Secretary at the Company's
principal executive offices.

THE CORPORATE GOVERNANCE COMMITTEE

The  Corporate   Governance   Committee  currently  consists  of  Messrs.  Joffe
(Chairman),  Kean and  Woodworth.  The  Corporate  Governance  Committee has the
responsibilities  set forth in its charter and provides  counsel to the Board of
Directors  with respect to the  organization,  function and  composition  of the
Board and committees, and oversees the evaluation of the Board and management of
the  Company.  The  Corporate  Governance  Committee  is  also  responsible  for
developing  and  recommending  to the Board  corporate  governance  policies and
procedures  applicable to Franklin.  The Corporate  Governance Committee met six
(6) times during fiscal year 2004. The Corporate  Governance  Committee Charter,
as amended,  is attached  as Appendix C and posted in the  corporate  governance
section of the  Company's  website.  A written  copy of the  Charter may also be
obtained by making a written request to the Company's Secretary at the Company's
principal executive offices.

The Corporate Governance Committee is responsible for identifying candidates for
election to the Board at the annual meeting of  stockholders  and uses a variety
of  means  as  it   determines   are   necessary   or   appropriate,   including
recommendations of stockholders.  The Corporate Governance Committee has adopted
policies  regarding  nominations  and  qualifications  of Directors.  Under such
policy,  the Corporate  Governance  Committee may solicit  recommendations  from
current and former  directors,  management  or others who may be  familiar  with
qualified candidates, and may consider current directors for re-nomination.  The
Corporate Governance Committee may, in its sole discretion, retain and terminate
any search firm (and approve such search firm's fees and other retention  terms)
to assist in the identification of candidates.


                                       9
--------------------------------------------------------------------------------



The Corporate Governance Committee believes there are certain minimum skills and
qualifications that each director nominee must possess or satisfy, including:

     *    high personal and professional integrity and ethical character;
     *    significant   accomplishments   in  business,   finance,   government,
          education,  law, technology or other fields important to the operation
          of the Company;
     *    the ability to exercise  sound  business  judgment on a broad range of
          issues;
     *    sufficiently   broad   experience  and  professional  and  educational
          background to have a general  appreciation  of the major issues facing
          public companies;
     *    the  willingness  and  ability to devote the  necessary  time to Board
          duties,  including  preparing for and attending  meetings of the Board
          and its Committees; and
     *    being  prepared to represent the best interests of the Company and its
          stockholders and committed to enhancing stockholder value.

The Corporate  Governance  Committee  also  believes  there are other skills and
qualifications  that at least one or more  directors  must  possess or  satisfy,
including:

     *    experience  and knowledge of the industry  sector in which the Company
          operates its businesses;
     *    a  majority  of  the  directors  being   "independent"   directors  in
          accordance  with the  corporate  governance  listing  standards of the
          NYSE;
     *    at  least  three   directors   meeting  the  additional   independence
          requirements  for  members  of the  Audit  Committee  of the  Board in
          accordance with the applicable rules of the NYSE and the SEC;
     *    at least  three  directors  who are  eligible  to  serve on the  Audit
          Committee  of the Board  being  "financially  literate"  or capable of
          becoming  "financially  literate" within a reasonable  period of time;
          and
     *    at least one director who is eligible to serve on the Audit  Committee
          of the Board being an "audit committee financial expert" in accordance
          with applicable rules of the SEC.

In  considering  candidates  for  director  nominee,  the  Corporate  Governance
Committee generally assembles all information regarding a candidate's background
and qualifications, evaluates a candidate's mix of skills and qualifications and
determines  the  contribution  the  candidate  could be  expected to make to the
overall  functioning of the Board, giving due consideration to the overall Board
balance of diversity of perspectives,  backgrounds and experiences. With respect
to  current  directors,   the  Corporate  Governance  Committee  considers  past
attendance at meetings and assesses the  participation  in and  contributions to
the  activities  of  the  Board.  The  Corporate  Governance  Committee,  in its
discretion, may designate one or more of its members to interview any candidate.
In  addition,  the  Corporate  Governance  Committee  may  seek  input  from the
Company's  management  or the  Board,  who  may  interview  any  candidate.  The
Corporate  Governance  Committee recommends director nominees to the Board based
on its  assessment  of overall  suitability  to serve on the Board in accordance
with the Company's policies.

The Corporate  Governance  Committee will consider  candidates  recommended  for
nomination to the Board by  stockholders of the Company.  Stockholders  may make
such a recommendation by submitting a completed Director  Nomination Form, which
is posted in the  corporate  governance  section  of the  Company's  website  at
WWW.FRANKLINTEMPLETON.COM,  at least 120 days prior to the one-year  anniversary
of the date of the proxy statement for the preceding  annual meeting.  Completed
Director  Nomination  Forms shall be sent to:  Corporate  Governance  Committee,
Franklin Resources, Inc., c/o Barbara J. Green, Secretary, One Franklin Parkway,
San Mateo,  CA 94403.  This year our proxy  statement is dated  January 3, 2005;
therefore we must receive any notice of recommendation by September 5, 2005.

The manner in which the  Corporate  Governance  Committee  evaluates  candidates
recommended  by  stockholders  is  generally  the same as any  other  candidate.
However,  the  Corporate  Governance  Committee  will  also  seek  and  consider
information   concerning  any  relationship  between  the  stockholder  and  the
candidate to determine if the  candidate  can  represent the interests of all of
the  stockholders.  The  Corporate  Governance  Committee  will not  


                                       10
--------------------------------------------------------------------------------


evaluate a candidate recommended by a stockholder unless the Director Nomination
Form provides that the potential  candidate has indicated a willingness to serve
as a  director,  to comply  with the  expectations  and  requirements  for Board
service  as  publicly  disclosed  by  the  Company  and  to  provide  all of the
information necessary to conduct an evaluation.

NON-EMPLOYEE DIRECTOR FEES

PAYMENTS TO  DIRECTORS.  In fiscal year 2004,  directors  who were not  Franklin
employees were paid $10,000 per quarter, plus $3,000 per meeting attended. These
directors  received a grant of restricted stock valued at $25,000 in December of
2003, and a stock grant valued at $40,000 in January of 2004. In addition to the
per  committee  meeting  fee of  $1,500  paid to  directors  who  serve on Board
committees,  Chairpersons  of  the  Compensation  Committee  and  the  Corporate
Governance Committee receive $1,250 per quarter and the Chairperson of the Audit
Committee receives $2,500 per quarter.  Effective January 1, 2005, directors who
are not Franklin  employees  will be paid  $12,500 per quarter,  plus $3,000 per
meeting and will  receive an annual stock grant valued at $75,000 on the date of
grant on January 25, 2005 and on the date of the annual  organizational  meeting
of the Board in subsequent  fiscal years. In addition,  the Company has a policy
of reimbursing  certain health insurance  coverage for a director who is retired
from other  employment and is not otherwise  eligible for group health  coverage
under Franklin's group health plan or any other company's health plan.  Franklin
will reimburse the cost of health insurance coverage comparable to that provided
to Franklin employees.  During the fiscal year 2004, Mr. Woodworth,  a director,
was reimbursed $15,904 for health insurance  expenses.  In connection with their
service  as  members  of the  Board of  Directors  of  Fiduciary  Trust  Company
International ("Fiduciary Trust"), a subsidiary of the Company, Messrs. Crocker,
Joffe and Kean also received  from  Fiduciary  Trust an annual  retainer fee for
Board  services  of $25,000  (paid  quarterly)  and an annual  retainer  fee for
committee services of $5,000 (paid quarterly).  Mr. Crocker also received $4,000
for his service as the Chairman of a committee.

DEFERRED DIRECTOR FEES. Franklin also allows directors to defer payment of their
directors' fees, and to treat the deferred  amounts as hypothetical  investments
in Franklin common stock. Upon  termination,  the number of shares of stock that
the director hypothetically  purchased are added together, and Franklin must pay
the  director  an  amount  equal to the  value of the  hypothetical  investment,
including dividend reinvestment.  Either Franklin or the individual director can
terminate  the fee  deferral  with  ninety  (90) days  notice.  Pursuant  to the
Deferred  Compensation  Agreement for Directors Fees, as amended,  Mr. Woodworth
elected to defer all of his director's fees. Mr. Crocker elected to defer all of
his director's fees relating to his service as a director of Fiduciary Trust and
50% of his  directors  fees related to his service as a director of the Company.
Mr.  Joffe  elected to defer  fifty  percent  (50%) of his  director's  fees and
receive the remainder in cash. Mr.  McCarthy,  a former  director of the Company
during  fiscal  year 2004,  elected  to defer his  quarterly  director's  fee of
$10,000 and receive all meeting fees and Chairman fees in cash.


                                       11
--------------------------------------------------------------------------------


                  SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS

The  following  table  sets forth the common  stock  beneficially  owned by each
stockholder  known to us to  beneficially  own more  than five  percent  (5%) of
Franklin's total outstanding common stock as of November 30, 2004:


                                                            AMOUNT AND NATURE OF                      PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER (a)                  BENEFICIAL OWNERSHIP(f)                       CLASS
---------------------------------------------------- ----------------------------------- -----------------------------------
                                                                                                     
CHARLES B. JOHNSON                                           44,859,416(b)(c)                           17.84%
RUPERT H. JOHNSON, JR.                                       37,842,496(b)(d)                           15.06%
ELIZABETH S. WISKEMANN                                       15,812,201(e)                               6.29%


(a)  The addresses of Messrs.  C. Johnson and R. Johnson,  Jr. are: c/o Franklin
     Resources,  Inc., One Franklin Parkway, San Mateo, CA 94403. The address of
     Ms. Elizabeth S. Wiskemann is: c/o Mr. John Bessolo,  7 Mount Lassen Drive,
     Suite B-156, San Rafael, CA 94905.

(b)  Excludes  403,174  shares  held as of  November  30,  2004 by the  Franklin
     Templeton Profit Sharing/401(k) Plan (the "Profit Sharing Plan"), for which
     Messrs. C. Johnson and R. Johnson, Jr. serve on the investment committee.

(c)  Includes  37,245,352 shares held directly,  3,563,675 shares held in an IRA
     account and 3,000,000 shares held in a limited partnership for which Mr. C.
     Johnson  holds sole  voting and  investment  power.  Also  includes  45,059
     shares,  which may be purchased pursuant to currently  exercisable options.
     Also includes 1,005,330 shares of which Mr. C. Johnson disclaims beneficial
     ownership,  held by a  private  foundation  of which Mr.  C.  Johnson  is a
     trustee.

(d)  Includes  35,252,145  shares held directly and 2,205,245  shares held in an
     IRA account for which Mr. R. Johnson,  Jr. holds sole voting and investment
     power. Also includes 381,734 shares of which Mr. R. Johnson,  Jr. disclaims
     beneficial ownership, held by a private foundation of which Mr. R. Johnson,
     Jr. is a trustee.  Also  includes  3,372  shares held by a member of Mr. R.
     Johnson,  Jr.'s immediate  family,  of which Mr. R. Johnson,  Jr. disclaims
     beneficial ownership.

(e)  Includes  (i)  6,815,698  shares held by Ms.  Wiskemann,  as trustee of the
     Elizabeth S.  Wiskemann  Family Trust,  (ii)  7,713,349  shares held by Ms.
     Wiskemann as trustee of the  Wiskemann  Family  Non-Exempt  Marital  Trust,
     (iii)  10,416  shares held by Ms.  Wiskemann,  as trustee of the  Wiskemann
     Family Exempt Trust,  and (iv) 1,015,000  shares held in an IRA account for
     which Ms. Wiskemann holds sole voting and investment  power.  Also includes
     257,738 shares of which Ms. Wiskemann disclaims beneficial ownership,  held
     by a private foundation, of which Ms. Wiskemann is a trustee.

(f)  Except  as  described  otherwise  in the  footnotes  to  this  table,  each
     beneficial  owner in the table has sole  voting and  investment  power with
     regard to the shares beneficially owned by such owner.


                                       12
--------------------------------------------------------------------------------


                        SECURITY OWNERSHIP OF MANAGEMENT

The following table lists the common stock  beneficially owned by each director,
each executive officer named in the Summary Compensation Table, each nominee for
director and all  directors,  nominees and  executive  officers as a group.  The
stock holdings are listed as of November 30, 2004:


                                                                   AMOUNT AND NATURE OF
NAME                                                              BENEFICIAL OWNERSHIP(a)           PERCENT OF CLASS
-------------------------------------------------------------- ----------------------------- -------------------------------
                                                                                                      
SAMUEL H. ARMACOST                                                          2,000                             *
JAMES R. BAIO                                                              66,461(b)                          *
JENNIFER J. BOLT                                                          611,919(c)                          *
HARMON E. BURNS                                                         1,703,996(d)                          *
CHARLES CROCKER                                                             7,503(e)(f)                       *
MARTIN L. FLANAGAN                                                      1,169,834(g)                          *
ROBERT D. JOFFE                                                             3,916(f)(h)                       *
CHARLES B. JOHNSON                                                     44,859,416(i)                        17.84%
GREGORY E. JOHNSON                                                        917,283(j)                          *
RUPERT H. JOHNSON, JR.                                                 37,842,496(k)                        15.06%
THOMAS H. KEAN                                                              8,873(l)                          *
CHUTTA RATNATHICAM                                                          2,417(m)                          *
PETER M. SACERDOTE                                                         27,417(n)                          *
MURRAY L. SIMPSON                                                          91,348(o)                          *
ANNE M. TATLOCK                                                           304,868(p)                          *
LOUIS E. WOODWORTH                                                      1,778,339(f)(q)                       *

DIRECTORS, DIRECTOR NOMINEES AND EXECUTIVE 
  OFFICERS AS A GROUP (CONSISTING OF 24 PERSONS)                       89,960,586(r)                        35.56%


* Represents less than 1% of class

(a)  Excludes  403,174 shares held as of November 30, 2004 by the Profit Sharing
     Plan, for which Ms. Bolt, Mr. Burns, Mr. Flanagan,  Mr. C. Johnson,  Mr. G.
     Johnson,  Mr. R.  Johnson,  Jr.  and Ms.  Tatlock  serve on the  investment
     committee.  Except as described  otherwise in the  footnotes to this table,
     each  beneficial  owner in the table has sole voting and  investment  power
     with regard to the shares beneficially owned by such owner.

(b)  Includes  26,462 shares held directly for which Mr. Baio holds sole vesting
     and  investment  power,  and  which  includes  a total of 9,752  shares  of
     unvested restricted stock of which 601, 1,544 and 7,607 shares were granted
     in November 2002, November 2003 and November 2004, respectively,  under the
     2002  Stock  Plan.  Also  includes  39,999  shares  which may be  purchased
     pursuant to currently exercisable options.

(c)  Includes  469,227 shares held directly for which Ms. Bolt holds sole voting
     and  investment  power,  and which  includes  a total of  11,948  shares of
     unvested  restricted  stock of which  1,127,  2,058 and 8,763  shares  were
     granted in November 2002,  November 2003 and November  2004,  respectively,
     under the 2002  Stock  Plan.  Also  includes  103,511  shares  which may be
     purchased pursuant to currently  exercisable options.  Also includes 11,000
     shares for which Ms. Bolt serves as an investment trustee of a subtrust for
     her brother,  who is  beneficiary  under such trust.  Also includes  39,181
     shares held by Ms.  Bolt's  immediate  family of which Ms.  Bolt  disclaims
     beneficial ownership.

(d)  Includes  1,131,994  shares held directly and 500,002 shares held in an IRA
     account for which Mr. Burns holds sole voting and  investment  power.  Also
     includes 72,000 shares of which Mr. Burns disclaims  beneficial  ownership,
     held by a private foundation of which Mr. Burns is a trustee.

(e)  Includes 7,503 shares held directly for which Mr. Crocker holds sole voting
     and investment  power, and which includes a total of 340 shares of unvested
     restricted stock granted in December 2003 under the 2002 Stock Plan.

(f)  Does not include any  hypothetical  shares described under "Proposal No. 1,
     Election of Directors - Deferred Director Fees".


                                       13
--------------------------------------------------------------------------------



(g)  Includes  656,496  shares held directly for which Mr.  Flanagan  holds sole
     voting and investment power, and which includes a total of 57,507 shares of
     unvested  restricted  stock, of which 4,698,  15,436 and 37,373 shares were
     granted in November 2002,  November 2003 and November  2004,  respectively,
     under the 2002 Stock  Plan.  Also  includes  513,338  shares,  which may be
     purchased pursuant to currently exercisable options.

(h)  Includes  3,916 shares held  directly for which Mr. Joffe holds sole voting
     and  investment  power and which includes a total of 340 shares of unvested
     restricted stock granted in December 2003 under the 2002 Stock Plan.

(i)  See footnote (c) under "Security Ownership of Principal Stockholders".

(j)  Includes  483,632  shares held directly for which Mr. G. Johnson holds sole
     voting and investment power, and which includes a total of 57,507 shares of
     unvested  restricted  stock, of which 4,698,  15,436 and 37,373 shares were
     granted in November 2002,  November 2003 and November  2004,  respectively,
     under the 2002 Stock  Plan.  Also  includes  415,931  shares,  which may be
     purchased pursuant to currently  exercisable options.  Also includes 17,720
     shares held by members of Mr. G. Johnson's  immediate  family, of which Mr.
     G. Johnson disclaims beneficial ownership.

(k)  See footnote (d) under "Security Ownership of Principal Stockholders".

(l)  Includes  8,873  shares held  directly for which Mr. Kean holds sole voting
     and investment  power, and which includes a total of 340 shares of unvested
     restricted stock granted in December 2003 under the 2002 Stock Plan.

(m)  Includes  2,417 shares held directly for which Mr.  Ratnathicam  holds sole
     voting and  investment  power,  and which includes a total of 340 shares of
     unvested  restricted  stock  granted in December  2003 under the 2002 Stock
     Plan.

(n)  Includes  27,417  shares held directly for which Mr.  Sacerdote  holds sole
     voting and  investment  power,  and which includes a total of 340 shares of
     unvested  restricted  stock  granted in December  2003 under the 2002 Stock
     Plan.

(o)  Includes  28,014  shares held  directly  for which Mr.  Simpson  holds sole
     voting and investment  power, and which includes a total of 9,605 shares of
     unvested  restricted  stock,  of which  1,127,  2,058 and 6,420 shares were
     granted in November 2002,  November 2003 and November  2004,  respectively,
     under the 2002 Stock Plan. Also includes a total of 63,334 shares which may
     be purchased pursuant to currently exercisable options.

(p)  Includes  193,502  shares held  directly for which Ms.  Tatlock  holds sole
     voting and investment power, and which includes a total of 18,218 shares of
     unvested  restricted stock, of which 2,931,  2,514,  2,333, 4,168 and 6,272
     shares were  granted in  December  2001,  September  2002,  November  2002,
     November 2003 and November 2004,  respectively,  under the 2002 Stock Plan.
     Also includes 70,252 shares,  which may be purchased  pursuant to currently
     exercisable  options.  Also  includes  38,493  shares  held in an  employee
     benefit plan in effect prior to the  acquisition of Fiduciary Trust Company
     International  by the Company.  Also includes 2,621 shares held by a member
     of  Ms.  Tatlock's   immediate  family,  of  which  Ms.  Tatlock  disclaims
     beneficial ownership.

(q)  Includes  1,080,251 shares held directly for which Mr. Woodworth holds sole
     voting and  investment  power,  and which includes a total of 340 shares of
     unvested  restricted  stock  granted in December  2003 under the 2002 Stock
     Plan.  Also  includes  478,088  shares held in an IRA account for which Mr.
     Woodworth  holds sole voting and investment  power.  Also includes  220,000
     shares held by a member of Mr.  Woodworth's  immediate family, of which Mr.
     Woodworth disclaims beneficial ownership.

(r)  Includes  1,616,390  shares,  which may be purchased  pursuant to currently
     exercisable options.


                                       14
--------------------------------------------------------------------------------



                             EXECUTIVE COMPENSATION

The following table provides compensation information for the Company's Co-Chief
Executive Officers and each of the four highest  compensated  executive officers
of the  Company  (the  "Named  Executive  Officers")  for the fiscal  year ended
September 30 during the last three fiscal years.



                           SUMMARY COMPENSATION TABLE

                                                                                         LONG-TERM
                                             ANNUAL COMPENSATION                    COMPENSATION AWARDS
                                             -------------------                    -------------------
                                                                                                 SECURITIES
                                FISCAL                           OTHER ANNUAL     RESTRICTED     UNDERLYING     ALL OTHER
NAME AND PRINCIPAL POSITION       YEAR     SALARY     BONUS(a)   COMPENSATION    STOCK AWARDS    OPTIONS(h)    COMPENSATION
----------------------------------------------------------------------------------------------------------------------------

                                                                                                    
MARTIN L. FLANAGAN                2004   $789,138   $2,650,000   $ 50,094(b)   $2,350,014(e)         45,000    $   11,476(i)
PRESIDENT AND CO-CHIEF            2003   $785,758   $1,050,000        -        $1,134,132(f)        100,000    $    8,754
EXECUTIVE OFFICER                 2002   $728,119   $  812,500        -        $  463,726(g)        100,000    $    1,082

GREGORY E. JOHNSON                2004   $789,137   $2,650,000        -        $2,350,014(e)         45,000    $    5,476(i)
PRESIDENT AND CO-CHIEF            2003   $783,303   $1,050,000        -        $1,134,132(f)        100,000    $    2,214
EXECUTIVE OFFICER                 2002   $728,123   $  812,500        -        $  463,726(g)        100,000    $    1,082

ANNE M. TATLOCK                   2004   $596,535   $  650,000        -        $  383,909(e)         25,000    $  442,107(i)
VICE CHAIRMAN, MEMBER-            2003   $596,690   $  526,500        -        $  306,223(f)         45,000    $  434,402
OFFICE OF THE CHAIRMAN            2002   $555,583   $  296,500        -        $  775,016(g)              0    $  427,000

MURRAY L. SIMPSON                 2004   $671,344   $  406,250        -        $  399,943(e)         15,000    $   17,794(i)
EXECUTIVE VICE PRESIDENT          2003   $671,098   $  260,000        -        $  151,250(f)         20,000    $   14,593
AND GENERAL COUNSEL               2002   $627,350   $  195,000        -        $  111,301(g)         25,000    $   37,564
 
JENNIFER J. BOLT                  2004   $401,782   $  390,000        -        $  550,333(e)         17,500    $   11,464(i)
SENIOR VICE PRESIDENT             2003   $372,042   $  260,000        -        $  151,250(f)         20,000    $    8,238
AND CHIEF INFORMATION OFFICER     2002   $233,811   $  195,000        -        $  111,301(g)         30,000    $    5,452

JAMES R. BAIO                     2004   $401,169   $  373,750   $ 63,991(c)   $  476,784(e)         15,000    $   33,843(i)
SENIOR VICE PRESIDENT             2003   $350,874   $  195,000   $ 65,598(c)   $  113,438(f)         15,000    $  205,967(j)
AND CHIEF FINANCIAL OFFICER       2002   $253,054   $  104,000         -       $   59,385(g)         25,000    $  119,883(j)

CHARLES B. JOHNSON                2004   $594,330   $        0   $296,008(d)   $        0                 0    $    9,880(i)
CHAIRMAN OF THE BOARD, MEMBER-    2003   $594,330   $2,000,000   $296,560(d)   $        0                 0    $    7,557
OFFICE OF THE CHAIRMAN            2002   $554,707   $        0   $172,169(d)   $        0                 0    $    7,400
----------------------------------------------------------------------------------------------------------------------------


(a)  Includes  bonuses  earned  in the  fiscal  year and paid in the  subsequent
     fiscal year.

(b)  Includes  $50,094  representing  the  incremental  cost of personal  use of
     Company  aircraft by Mr.  Flanagan  during  fiscal year 2004,  based upon a
     personal  rate per  nautical  mile of use as  generally  used by  corporate
     aviation  operators  for cost and budget  estimation  purposes as published
     from  time to  time  by  Conklin  &  deDecker  Associates,  Inc.  for  each
     particular aircraft type utilized by the Company.

(c)  Includes  $62,731  representing  relocation costs reimbursed to Mr. Baio in
     fiscal 2004 in connection  with his relocation  from Florida to California.
     Also includes  $59,923  representing  household and  automobile  relocation
     costs reimbursed to Mr. Baio in connection with his relocation from Florida
     to California during fiscal 2003.

(d)  Includes $259,124,  $293,380 and $144,001 representing the incremental cost
     of personal use of Company  aircraft by Mr. C. Johnson  during fiscal years
     2004, 2003 and 2002, respectively,  based upon a personal rate per nautical
     mile of use as generally used by corporate  aviation operators for cost and
     budget  estimation  purposes  as  published  from time to time by Conklin &
     deDecker

                                       15
--------------------------------------------------------------------------------

     Associates, Inc. for each particular aircraft type utilized by the Company.
     Also includes $30,642  representing  the incremental  costs associated with
     the personal use of  Company-owned  housing during fiscal year 2004. Mr. C.
     Johnson served as Chief Executive Officer of the Company during fiscal year
     2004 until his  resignation on December 31, 2003. Mr. C. Johnson  continues
     to serve as Chairman of the Board.

(e)  Recipients of restricted stock are entitled to vote such shares and receive
     dividends.

     The amounts in the Summary  Compensation  Table  reflect  restricted  stock
     awards   granted  on  November  8,  2004  and  November  24,  2004  by  the
     Compensation  Committee,  which were earned in fiscal year 2004 and awarded
     in fiscal year 2005.  The following  were the number of shares and value on
     the grant date of the fiscal year 2004  restricted  stock awards granted on
     November 8, 2004 considered attributable to: Ms. Tatlock, 6,272 ($383,909);
     Mr. Simpson,  3,920 ($239,943);  Mr. Baio, 3,607 ($220,784);  and Ms. Bolt,
     3,763 ($230,333).  The following were the number of shares and value of the
     fiscal year 2004 restricted  stock awards granted on November 24, 2004: Mr.
     Flanagan,  37,373 ($2,350,014);  Mr. G. Johnson,  37,373 ($2,350,014).  The
     fiscal  2004  restricted  stock  awards vest in  approximately  three equal
     installments  on September  30, 2005,  September 29, 2006 and September 28,
     2007.

     The amounts in the Summary Compensation Table also reflect restricted stock
     awards  granted on November 15, 2004 by the  Compensation  Committee  which
     were  earned in fiscal  year 2004 and  awarded  in fiscal  year  2005.  The
     following  were the  number of shares  and value on the grant date of these
     fiscal year 2004 restricted  stock awards  considered  attributable to: Mr.
     Simpson:  2,500 shares ($160,000);  Mr. Baio: 4,000 shares ($256,000);  Ms.
     Bolt:  5,000 shares  ($320,000).  The shares of common stock of the Company
     (the "Stock") granted to the executive  officers listed above shall vest in
     full  on  September  28,  2007  unless  subject  to  earlier  vesting.   An
     accelerated  vesting  of the  Stock  will  occur if  either  or both of the
     following performance goals (the "Performance Goals") are achieved:

          One-third  of the number of shares of Stock  granted  pursuant  to the
          award (the "First  Vesting  Shares") shall vest (the "2005 Fiscal Year
          Operating Income Goal") if Operating Income (as defined below) for the
          fiscal year of the Company ending September 30, 2005 (the "2005 Fiscal
          Year") is at least 15% greater  than  Operating  Income for the fiscal
          year of the Company ended September 30, 2004 (the "2004 Fiscal Year").
          This  accelerated  vesting,  if any, will be effective on the later of
          December 15, 2005 or ten (10)  business  days after the release of the
          annual financial statements included in the Company's Annual Report on
          Form 10-K for the 2005 Fiscal Year (the "First Vesting Date").  If the
          2005 Fiscal Year Operating Income Goal is not met by the First Vesting
          Date,  there  shall be no  acceleration  of the  vesting  of the First
          Vesting Shares,  even if the 2005 Fiscal Year Operating Income Goal is
          later  achieved  and such Stock  shall vest in  accordance  with their
          terms on September 28, 2007.

          One-third  of the number of shares of Stock  granted  pursuant  to the
          award (the "Second Vesting  Shares") shall vest (the "2006 Fiscal Year
          Operating Income Goal") if Operating Income for the fiscal year of the
          Company ending September 30, 2006 (the "2006 Fiscal Year") is at least
          32.25%  greater than Operating  Income for the 2004 Fiscal Year.  This
          accelerated  vesting,  if  any,  will be  effective  on the  later  of
          December 15, 2006 or ten (10)  business  days after the release of the
          annual financial statements included in the Company's Annual Report on
          Form 10-K for the 2006 Fiscal Year (the "Second Vesting Date"). If the
          2006  Fiscal  Year  Operating  Income  Goal is not  met by the  Second
          Vesting  Date,  there shall be no  acceleration  of the vesting of the
          Second Vesting Shares,  even if the 2006 Fiscal Year Operating  Income
          Goal is later  achieved and such Stock shall vest in  accordance  with
          their terms on September 28, 2007.

          "Operating Income" with respect to any fiscal year is defined as total
          operating  revenues  less total  operating  expenses  determined  on a
          consolidated  basis  reported  in  the  annual  financial   statements
          included in the  Company's  Annual Report on Form 10-K for such fiscal
          year.

     At the end of the fiscal  year ended  September  30,  2004,  the  aggregate
     number and value of restricted  stock holdings for the persons named in the
     Summary Compensation Table were:

     NAME                             NUMBER OF SHARES                VALUE 
     ---------------------------------------------------------------------------
     M. FLANAGAN                           20,134                     $1,122,672
     G. JOHNSON                            20,134                     $1,122,672
     A. TATLOCK                            11,946                     $  666,109
     M. SIMPSON                             3,185                     $  177,596
     J. BOLT                                3,185                     $  177,596
     J. BAIO                                2,145                     $  119,605
     C.B. JOHNSON                               0                     $        0
                                          
     The above  amounts  exclude  any  restricted  stock  grants on  November 8,
     November 15 and November 24, 2004, as described above.

(f)  In fiscal year 2003,  the  Compensation  Committee  granted  the  following
     number of shares of  restricted  stock to the persons  named in the Summary
     Compensation  Table:  Mr. Flanagan,  23,155;  Mr. G. Johnson,  23,155;  Ms.
     Tatlock,  6,252; Mr. Simpson,  3,088; Mr. Baio, 2,316; and Ms. Bolt, 3,088.
     The fiscal 2003 restricted stock vested or will vest in approximately three
     equal installments on September 30, 2004, September 30, 2005, and September
     29, 2006.

(g)  In fiscal year 2002,  the  Compensation  Committee  granted  the  following
     number of shares of  restricted  stock to the persons  named in the Summary
     Compensation  Table:  Mr. Flanagan,  14,095;  Mr. G. Johnson,  14,095;  Ms.
     Tatlock,  14,543; Mr. Simpson, 3,383; Mr. 

                                       16
--------------------------------------------------------------------------------


     Baio,  1,805; and Ms. Bolt,  3,383. The fiscal 2003 restricted stock vested
     or will vest in  approximately  three equal  installments  on September 30,
     2003, September 30, 2004, and September 30, 2005. In addition,  Ms. Tatlock
     received a  restricted  stock grant of 8,793  shares,  which vested or will
     vest in  approximately  three  equal  installments  on December  31,  2002,
     December 31, 2003, and December 31, 2004.

(h)  Represents options granted November 12, 2003, which vest in equal one-third
     increments  over a 3-year  period.  There  were no  options  granted  after
     November 2003 to the Named Executive Officers.

(i)  The amounts in the Summary Compensation Table reflect the following amounts
     paid or  contributed  by the Company in fiscal year 2004 to: Mr.  Flanagan:
     $4,936 for the  combined  Profit  Sharing/401(k)  Plan  (collectively,  the
     "Profit  Sharing Plan") and $4,944 for premium  payments under the Franklin
     Templeton  Companies,  Inc.  Employee Welfare Plan (the "EW Plan");  Mr. G.
     Johnson:  $10,935 for the Profit Sharing Plan and $540 for premium payments
     under the EW Plan; Ms. Tatlock: $10,936 for the Profit Sharing Plan, $6,172
     for premium  payments  under the EW Plan,  and $425,000,  which  represents
     annual cash  payments,  which Ms. Tatlock was entitled to receive under her
     employment  agreement with the Company (see the  "Employment  Contracts and
     Change-In  Control  Arrangements"  section);  Mr. Simpson:  $10,936 for the
     Profit Sharing Plan and $6,858 for premium  payments under the EW Plan; Ms.
     Bolt:  $10,936 for the Profit  Sharing  Plan and $529 for premium  payments
     under the EW Plan; Mr. Baio:  $10,936 for the Profit  Sharing Plan;  $1,152
     for premium  payments under the EW Plan, and $21,756,  which  represent the
     value of matching shares under the Employee Stock  Investment Plan; and Mr.
     C.  Johnson:  $4,936 for the  Profit  Sharing  Plan and $4,944 for  premium
     payments under the EW Plan.

(j)  Also includes a relocation  cash bonus of $170,000 and $100,000,  which Mr.
     Baio was  entitled  to  receive  under his  relocation  agreement  from the
     Company in fiscal years 2003 and 2002, respectively.

                                       17
--------------------------------------------------------------------------------


                        OPTION GRANTS IN LAST FISCAL YEAR

During the last fiscal year ended  September  30, 2004,  options were granted to
the persons listed in the Summary  Compensation  Table as indicated in the table
below. No stock appreciation rights were awarded.


                                                    INDIVIDUAL GRANTS
                                                    -----------------
                                                                                                       POTENTIAL
                                                                                                  REALIZABLE VALUE AT
                                                  % OF TOTAL                                    ASSUMED ANNUAL RATES OF
                                  NUMBER OF         OPTIONS                                     STOCK PRICE APPRECIATION
                                 SECURITIES       GRANTED TO                                        FOR OPTION TERM
                                 UNDERLYING      EMPLOYEES IN     EXERCISE OR                             (d)
                               OPTIONS GRANTED    FISCAL YEAR      BASE PRICE    EXPIRATION
NAME                                 (a)              (c)          ($/SHARE)        DATE         5% ($)         10% ($)
----------------------------------------------------------------------------------------------------------------------------
                                                                                                   
MARTIN L. FLANAGAN                 45,000(b)          2.5%          $48.98        11/11/13     $1,386,147     $3,512,768
GREGORY E. JOHNSON                 45,000(b)          2.5%          $48.98        11/11/13     $1,386,147     $3,512,768
ANNE M. TATLOCK                    25,000(b)          1.8%          $48.98        11/11/13      $ 770,081     $1,951,538
MURRAY L. SIMPSON                  15,000(b)          0.8%          $48.98        11/11/13      $ 462,049     $1,170,923
JENNIFER J. BOLT                   17,500(b)          1.0%          $48.98        11/11/13      $ 539,057     $1,366,076
JAMES R. BAIO                      15,000(b)          0.8%          $48.98        11/11/13      $ 462,049     $1,170,923
CHARLES B. JOHNSON                      0               0%              -            -              -              -
----------------------------------------------------------------------------------------------------------------------------


(a)  All options in this  column were  granted  under our 2002  Universal  Stock
     Incentive Plan. All options have an exercise price equal to the fair market
     value of the underlying common stock on the date of grant.

(b)  Represents  options granted on November 12, 2003, which become  exercisable
     in equal one-third increments over a 3-year period.

(c)  Represents the aggregate percentage granted to each Named Executive Officer
     of the total  options  awarded to employees  of 1,824,244  shares in fiscal
     year 2004.

(d)  We are required by the SEC to use a 5% and 10% assumed rate of appreciation
     over the  applicable  option term.  This does not represent our estimate or
     projection  of the future common stock price.  If  Franklin's  common stock
     does not  appreciate  in value from the grant  price,  the Named  Executive
     Officers will receive no benefit from the options.


                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES

The following table provides information on option exercises in fiscal year 2004
by the persons listed in the Summary  Compensation  Table and the value of their
unexercised options at September 30, 2004.


                                                                        NUMBER OF SECURITIES
                                                                       UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED
                                SHARES ACQUIRED                              OPTIONS AT              IN-THE-MONEY OPTIONS AT
                                  ON EXERCISE       VALUE REALIZED        FISCAL YEAR-END                FISCAL YEAR-END
NAME                                  (#)               ($)           EXERCISABLE/UNEXERCISABLE    EXERCISABLE/UNEXERCISABLE(a)
------------------------------ ------------------- ------------------ -------------------------    ----------------------------
                                                                                               
MARTIN L. FLANAGAN                   82,800            $1,198,058         513,338/63,333           $9,854,414/$868,727
GREGORY E. JOHNSON                  100,000            $1,489,645         415,931/63,333           $8,044,505/$868,727
ANNE M. TATLOCK                           0                 $0.00          70,252/63,584           $1,311,667/$1,025,258
MURRAY L. SIMPSON                    20,000              $437,914          63,334/16,666           $1,145,815/$220,185
JENNIFER J. BOLT                     35,500              $501,800         103,511/18,332           $1,987,848/$231,480
JAMES R. BAIO                             0                 $0.00          39,999/15,000           $  713,649/$182,100
CHARLES B. JOHNSON                        0                 $0.00          45,059/0                $1,022,550/$0


(a)  The market value of underlying  securities is based on the closing price of
     Franklin's  common  stock on the NYSE on  September  30, 2004 of $55.76 per
     share minus the exercise price.


                                       18
--------------------------------------------------------------------------------


                         LONG-TERM INCENTIVE PLAN AWARDS

On December 15, 2004, after the fiscal year 2004, the Compensation  Committee of
the Board of Directors  approved the grant of restricted  stock awards under the
2002 Stock Plan to the  Co-Chief  Executive  Officers.  The  following  were the
numbers of shares and value of the restricted  stock awards that were granted to
Mr. Flanagan:  15,625 shares,  ($1,000,000)  and Mr. G. Johnson:  15,625 shares,
($1,000,000).  The restricted  stock awards vest upon the achievement of certain
increases  in pre-tax  operating  income for a fiscal  year of the  Corporation.
Pre-tax  operating  income is  defined  as total  operating  revenue  less total
operating  expenses  determined on a  consolidated  basis and is reported in the
Corporation's annual financial statements as operating income.  One-third of the
shares of restricted stock shall vest if pre-tax  operating income for the 2005,
2006 or 2007 fiscal year is at least 15% greater than pre-tax  operating  income
for the 2004 fiscal year.  Two-thirds  of the shares of  restricted  stock shall
vest if pre-tax  operating  income for the 2005,  2006 or 2007 fiscal year is at
least 32.25% greater than pre-tax operating income for the 2004 fiscal year. All
of the shares of restricted stock shall vest if pre-tax operating income for the
2005, 2006 or 2007 fiscal year is at least 52.09% greater than pre-tax operating
income for the 2004 fiscal year.  After the  conclusion of the 2007 fiscal year,
any shares of restricted  stock that do not vest based upon the  achievement  of
the foregoing performance goals related to increases in pre-tax operating income
shall be forfeited  back to the  Corporation.  These awards  differ in structure
from those  granted to other top  contributing  employees  and  officers  of the
Company,  in that  specific  installments  of  restricted  stock are  subject to
company-related  performance  metrics  in order to be vested  over a  three-year
period.  Should those  performance  metrics not be achieved,  the awards will be
forfeited  either  in  whole  or in part  at the end of the  performance-vesting
period. The Compensation Committee intended that the design and structure of the
Co-Chief  Executive  Officer  performance  share  awards be  aligned  wholly and
clearly  with  the  Company's  performance,  and  therefore,  the  stockholders'
interests.


             EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS

During the first  quarter of fiscal  year 2004,  Mr.  Charles B.  Johnson had an
employment  contract  with  Franklin,  which  terminated  on December  31, 2003,
pursuant to which the Company was  obligated,  in the event of Mr. C.  Johnson's
death or permanent disability, to pay one year's salary to his estate. Under the
contract,  Mr. C.  Johnson  was  employed as the  Chairman  of the Board,  Chief
Executive  Officer,  and Member - Office of the Chairman at a salary  determined
from time to time by the Board,  which  assigned the review of Mr. C.  Johnson's
compensation arrangements to the Compensation Committee.


Ms. Anne M.  Tatlock has a five year  employment  agreement  with  Franklin  and
Fiduciary Trust, which commenced in April 2001. Under the employment  agreement,
Ms.  Tatlock was  entitled to a base salary  equal to a minimum of $590,000  per
year,  which is subject to review by the Chief Executive  Officer and Franklin's
Compensation  Committee  (which  shall  not  result in a  decrease  in such base
salary). Ms. Tatlock was also entitled to, at a minimum, the following bonus and
incentive  compensation:  (a) a bonus for each period (i) commencing  January 1,
2001 and ending December 31, 2001 and (ii) commencing January 1, 2002 and ending
September 30, 2002, on an annualized basis, of not less than $609,281,  of which
Ms.  Tatlock is entitled to receive an annualized  short-term  bonus of $296,500
payable in cash and an annualized  long-term  bonus of $312,781 to be granted in
the form of restricted  stock that vests over 3 years;  (b) after  September 30,
2002, awards,  grants or payments that may be awarded under Franklin's incentive
compensation  plan;  (c)  additional  services  compensation,  in the  amount of
$2,125,000, which is payable in equal annual cash payments of $425,000 over five
years,  subject  to  certain  conditions  relating  to Ms.  Tatlock's  continued
employment;  (d) stock  options  representing  38,836  shares of common stock of
Franklin,  50% of which were  exercisable on April 10, 2004 and 50% of which are
exercisable on April 10, 2005,  subject to Ms.  Tatlock's  continued  employment
with Franklin;  (e) an allowance for financial and tax planning of up to $15,000
for fiscal year 2001 and $5,000 for each subsequent  fiscal year during the term
of the employment  agreement;  and (f) such luncheon club  memberships and other
memberships in accordance with Fiduciary Trust's policy and practices.


                                       19
--------------------------------------------------------------------------------



NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF FRANKLIN'S PREVIOUS
OR  FUTURE  FILINGS  UNDER  THE  SECURITIES  ACT OF  1933,  AS  AMENDED,  OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FILINGS MADE
BY FRANKLIN UNDER THOSE STATUTES, THE FOLLOWING REPORT SHALL NOT BE DEEMED TO BE
INCORPORATED  BY  REFERENCE  INTO ANY PRIOR  FILINGS NOR FUTURE  FILINGS MADE BY
FRANKLIN UNDER THOSE STATUTES.

             COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The  Compensation  Committee of the Board of  Directors is composed  entirely of
non-employee directors who are independent,  as defined under the New York Stock
Exchange listing standards. The role of the Compensation Committee is to oversee
our  compensation  plans  and  policies,  review  and set  compensation  for the
Company's  Co-Chief  Executive  Officers,  determine  the general  policies  and
guidelines for compensating other executive  officers,  and perform other duties
as assigned  from time to time by the Board of  Directors  of the  Company.  The
Compensation  Committee  also  administers  the  Company's  Amended and Restated
Annual  Incentive  Compensation  Plan  (the  "Incentive  Plan"),  the  2004  Key
Executive  Incentive  Compensation Plan ("Key Executive Incentive Plan") and the
2002  Universal  Stock  Incentive  Plan (the  "2002  Stock  Plan")  which is the
successor to the Amended and Restated 1998 Universal  Stock  Incentive Plan. The
Compensation  Committee's charter reflects these various  responsibilities,  and
the  Committee  and the Board  periodically  review and revise the charter.  The
current  Compensation  Committee  charter is posted in the corporate  governance
section of the Company's website.

This report  discusses  the  Committee's  overall  objectives  in designing  the
Company's  compensation  programs. It also reviews the Compensation  Committee's
compensation  determinations in 2004 for the Co-Chief Executive Officers and the
Company's  executive  officers,  including other  executive  officers named (the
"Named Executive  Officers") in the Summary Compensation Table elsewhere in this
Proxy Statement.

COMPENSATION PHILOSOPHY AND POLICIES

The Compensation Committee believes that total compensation should vary with the
Company's  performance in achieving  financial and non-financial  objectives and
that compensation should be aligned with the interests of the stockholders.  The
Committee  further  believes  that at least a  portion  of  compensation  should
encourage  executive  officers to focus on the Company's  long-range  growth and
development.   The  Company's   compensation   program  for  executive  officers
(including the Co-Chief  Executive  Officers)  consists  primarily of salary and
annual  cash and equity  incentive  bonuses  based upon  individual  and Company
performance.

In its  review  of  executive  officer  compensation,  and,  in  particular,  in
determining  the  amount  and form of  awards  under  the  Incentive  Plan,  Key
Executive  Incentive  Plan and  2002  Stock  Plan,  the  Compensation  Committee
generally considers,  among other things: market survey information with respect
to cash and long-term compensation for comparable companies; amounts paid to the
executive officer in prior years as salary,  bonus and other  compensation;  the
officer's   responsibilities  and  performance  during  the  fiscal  year  ended
September 30, 2004; and the Company's  overall  performance  during prior fiscal
years and its future objectives and challenges.

The Company  generally  uses a  combination  of employee  benefit plans to award
bonuses to employees  including  executive  officers.  The overall bonus pool is
determined  pursuant to the Incentive Plan, which allows for both cash and stock
awards to Company employees,  including executive  officers.  Bonuses awarded to
the Co-Chief  Executive  Officers  are  generally  made under the Key  Executive
Incentive Plan,  which was ratified and approved by stockholders in fiscal 2004.
A component of such awards may be in the form of equity  securities,  as was the
case in fiscal 2004,  which awards are granted through the 2002 Stock Plan. As a
general  matter,  the size of the award pool  available for bonus  payments is a
percentage of the Company's net operating  income,  exclusive of passive  income
and calculated before interest, taxes,  extraordinary and certain special items,
and before  the  accrual of awards  under  both the  Incentive  Plan and the Key
Executive  Incentive  Plan  (referred  to as  "Pre-Tax  Operating  Income").  In
determining the percentage of the Pre-Tax Operating Income that will go into the
award pool, the Compensation Committee considers a variety of factors, including
the  performance of the Company's stock compared to the indices set forth in the
performance  graph included in this Proxy Statement and the increase or decrease
in market price of the Company's common stock.


                                       20
--------------------------------------------------------------------------------



In 2004, the Compensation Committee directly engaged a third-party  compensation
consultant  to provide  independent  analyses of, and counsel on, the  Company's
executive  compensation  program  and  practices.  The  role of the  independent
consultant  is to  objectively  assess all  comparative  elements  of  executive
officer compensation,  including market competitiveness and the judiciousness of
base, variable and long-term compensation.

SALARIES

Base salaries are evaluated annually for all executive  officers,  including the
Co-Chief Executive  Officers.  In connection with a Company-wide  review of base
salaries,  the Compensation  Committee determined that employees,  including the
Named  Executive  Officers  (Messrs.  C. Johnson,  M. Flanagan,  G. Johnson,  M.
Simpson,  and J. Baio and Mmes.  A. Tatlock,  and J. Bolt),  whose salary levels
were in excess of a  pre-determined  amount  would not be eligible to receive an
increase to base salary for fiscal  2004.  This  decision was based upon several
considerations, including the desire to limit base salary increases to executive
officers who, the Committee believes,  should have a majority component of their
annual  pay  in  variable  compensation  tied  to  Company  performance,   while
judiciously managing the Company's compensation expenses. Consequently, the base
salaries of each of the Named  Executive  Officers were not increased for fiscal
2004.

INCENTIVE COMPENSATION

The Compensation Committee determined that each of the Named Executive Officers,
including the Co-Chief Executive  Officers,  warranted incentive bonus awards in
respect  of  fiscal  2004  performance.  Each  bonus  award was  comprised  of a
combination  of cash and  restricted  stock.  In contrast to past years,  and in
light of pending  accounting  treatment  of stock  options,  there were no stock
options  granted in fiscal 2004.  In the  compensation  tables  included in this
Proxy  Statement,  stock options  reported  reflect the prior fiscal year grant,
consistent with the Company's past practice. In particular,  the Company reports
the cash and  restricted  stock  portion  of any  bonus  award  earned  during a
particular  fiscal  year by a Named  Executive  Officer,  and  reports the stock
option  related  portion of any bonus awarded for a particular  fiscal year only
after it has actually  been awarded,  which  normally  occurs in the  subsequent
fiscal year.

In making the awards to the Named Executive Officers, the Compensation Committee
considers,  as discussed  above,  a number of different  individual  and Company
performance factors. In particular,  the Committee considered the following: the
54.4% increase to Pre-Tax  Operating  Income between the end of fiscal year 2003
through  fiscal year 2004;  the 26.1%  increase in the Company's  simple monthly
average  assets  under  management;  and the 26.1%  increase in the value of the
Company's  common  stock  from  the  end of  fiscal  year  2003.  The  foregoing
performance  factors were taken into  consideration  in  determining to increase
both the award pool and size of awards granted to employees.

The  Compensation  Committee  notes  that Ms. A.  Tatlock,  in  addition  to her
incentive  bonus award,  received the third of five equal annual  $425,000  cash
payments pursuant to the terms of her 2001 employment agreement, in respect of a
previously agreed upon integration services cash bonus.

For fiscal  year 2004,  the  Compensation  Committee  awarded  other  employees,
including other executive  officers,  bonuses  consisting of cash and restricted
stock.  Consistent  with the practice  established in fiscal year 2000,  bonuses
awarded were comprised of 65% cash and 35% deferred  vesting  restricted  stock.
Certain non-executive officer Company employees,  whose awards were in excess of
$1.0  million,  were awarded those amounts in excess of $1.0 million in the form
of 50%  cash  and 50% of  such  restricted  stock.  The  Compensation  Committee
determined that the bonuses awarded to Messrs. G. Johnson and M. Flanagan should
be  treated  in  a  consistent  manner  as  that  of  other  highly  compensated
non-executive officer employees.

In addition,  in cases where special recognition of contributions was warranted,
additional  performance-based restricted stock awards were granted to employees,
including  executive  officers.  While these awards have an established  vesting
date of September  28, 2007, a  performance  feature was designed to  accelerate
vesting of a portion of shares  should  corporate  performance  measures  exceed
established target levels.


                                       21
--------------------------------------------------------------------------------



CO-CEO COMPENSATION

On January 1, 2004, Messrs. G. Johnson and M. Flanagan became Co-Chief Executive
Officers of the Company.  In determining  incentive  compensation for Messrs. G.
Johnson and M.  Flanagan,  the  Compensation  Committee  considered  a number of
individual and Company  performance  factors,  as described in the Key Executive
Incentive  Plan. In light of the Company's very strong  performance  this fiscal
year, the Compensation Committee awarded Messrs. G. Johnson and M. Flanagan cash
and restricted  stock incentive  bonuses valued at $5 million each under the Key
Executive  Incentive  Plan. The  Compensation  Committee also determined that an
additional  performance-based  restricted  stock  award would be granted to each
Co-Chief  Executive  Officer  under the 2002 Stock Plan.  These awards differ in
structure from those granted to other top contributing employees and officers of
the Company,  in that specific  installments of restricted  stock are subject to
company-related  performance  metrics  in order to be vested  over a  three-year
period.  Should those  performance  metrics not be achieved,  the awards will be
forfeited  either  in  whole  or in part  at the end of the  performance-vesting
period. The Compensation Committee intended that the design and structure of the
Co-Chief  Executive  Officer  performance  share  awards be  aligned  wholly and
clearly with the Company's performance and therefore the stockholders interests.

The  compensation  of Mr. C.  Johnson,  who was Chief  Executive  Officer of the
Company  until  January 1, 2004,  at which time he assumed his  current  role as
Chairman,  reflects his status as a principal stockholder of the Company. Mr. C.
Johnson's  compensation  is  significantly  lower  than that  received  by chief
executive  officers  or  chairmen  of  comparable  companies.  The  Compensation
Committee  considers a number of  individual  factors  and  Company  performance
factors in determining incentive  compensation for Mr. C. Johnson, as they would
with the other executive  officers of the company.  The  Compensation  Committee
also took into account Mr. C. Johnson's  position as a principal  stockholder of
the Company,  and the dividends  received on those holdings,  in determining his
compensation and bonus. The Compensation  Committee believes that because of his
large share  holdings of Company  common  stock,  Mr. C.  Johnson is  materially
impacted by changes in the Company's stock price.  Therefore,  the  Compensation
Committee  determined  not to award an  incentive  bonus to Mr. C.  Johnson  for
fiscal 2004.

OTHER BENEFITS AND PERQUISITES

All  executive  officers are entitled to receive  medical,  life and  disability
insurance  coverage and other corporate  benefits available to most employees of
the  Company.   All  executive   officers   participate  in  a  combined  Profit
Sharing/401(k) Plan. The Board determines contributions to this Plan.

TAX DEDUCTIBILITY OF COMPENSATION

In evaluating  compensation  program  alternatives,  the Compensation  Committee
considers  the  potential  impact on the  Company of Section  162(m) of the U.S.
Internal  Revenue Code of 1986, as amended.  Section 162(m) limits to $1 million
the amount that a publicly traded corporation,  such as the Company,  may deduct
for compensation paid in any year to its chief executive officer or any other of
its four most highly compensated executive officers. However, compensation which
qualifies as  "performance-based"  is excluded from the $1 million per executive
officer limit if, among other  requirements,  the  compensation  is payable only
upon attainment of  pre-established,  objective  performance  goals under a plan
approved by the Company's stockholders.

The Compensation  Committee endeavors to maximize  deductibility of compensation
under Section 162(m) to the extent  practicable  while  maintaining  competitive
compensation.  The Company expects that  performance-based  awards either in the
form  of cash or  restricted  stock  should  qualify  for the  performance-based
compensation exception to Section 162(m). The Compensation  Committee,  however,
believes that it is important for it to retain maximum  flexibility in designing
compensation  programs  that are in the best  interests  of the  Company and its
stockholders.  Therefore,  the  Compensation  Committee,  while  considering tax
deductibility  as  a  factor  in  determining   compensation,   will  not  limit
compensation to those levels or types of compensation that will be


                                       22
--------------------------------------------------------------------------------



deductible  if it  believes  that  the  compensation  is  commensurate  with the
performance  of the covered  employee and is necessary and  appropriate  to meet
competitive requirements.

Respectfully Submitted:

COMPENSATION COMMITTEE
Charles Crocker
Thomas H. Kean
Louis E. Woodworth

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The  members  of the  Compensation  Committee  are set  forth  in the  preceding
section.  No member of the Compensation  Committee was an officer or employee of
the Company or any of its  subsidiaries  during  fiscal  year 2004.  None of the
executive officers of the Company has served on the board of directors or on the
compensation  committee of any other entity that has or had  executive  officers
serving as a member of the Board of Directors or  Compensation  Committee of the
Company.

In fiscal year 2004, Michael P. McCarthy,  a senior vice president and portfolio
manager of Franklin Advisers,  Inc., a subsidiary of the Company, and the son of
James  A.  McCarthy,  a  former  director  of  the  Company  and  member  of the
Compensation  Committee during the 2004 fiscal year, was paid $1,083,402,  which
included a cash bonus of $825,000. Mr. M. McCarthy also received 9,408 shares of
restricted  stock.  Mr.  M.  McCarthy's  base  salary  for  fiscal  year 2005 is
$325,001.  Mr. M. McCarthy is entitled to receive  medical,  life and disability
insurance  coverage and other benefits  available  generally to employees of the
Company.


                                       23
--------------------------------------------------------------------------------



                    EQUITY COMPENSATION PLAN INFORMATION /1/

The following table sets forth certain information as of September 30, 2004 with
respect to the shares of the Company's common stock that may be issued under the
Company's  existing  compensation  plans that have been approved by stockholders
and plans that have not been approved by stockholders.


                                                                                                     NUMBER OF SECURITIES
                                                                                                      REMAINING AVAILABLE
                                                                                                      FOR FUTURE ISSUANCE
                                         NUMBER OF SECURITIES                                            UNDER EQUITY
                                           TO BE ISSUED UPON        WEIGHTED-AVERAGE EXERCISE         COMPENSATION PLANS
                                              EXERCISE OF              PRICE OF OUTSTANDING          (EXCLUDING SECURITIES
                                         OUTSTANDING OPTIONS,         OPTIONS, WARRANTS AND               REFLECTED IN 
                                          WARRANTS AND RIGHTS                 RIGHTS                      COLUMN (a))
 PLAN CATEGORY                                    (a)                          (b)                            (c)
 ------------------------------------ -- ---------------------- --- --------------------------- --- ------------------------
                                                                                                 
 Equity compensation plans approved           
  by security holders /2/                      11,268,840 /3/                 $38.16                      9,977,018 /4/

 Equity compensation plans not
  approved by security holders                          0                          0                              0
 ------------------------------------ -- ---------------------- --- --------------------------- --- ------------------------
 TOTAL                                         11,268,840                     $38.16                      9,977,018
 ------------------------------------ -- ---------------------- --- --------------------------- --- ------------------------


(1)  The table includes information for equity compensation plans assumed by the
     Company in connection  with  acquisitions  of the companies that originally
     established those plans.

(2)  Consists of the 2002 Stock Plan and the 1998 Employee Stock Investment Plan
     (the "Purchase Plan").  Equity securities granted under the 2002 Stock Plan
     may  include  awards  contemplated  by  the  Amended  and  Restated  Annual
     Incentive   Compensation   Plan  and  the  2004  Key  Executive   Incentive
     Compensation Plan.

(3)  Excludes  options to purchase  accruing under the Company's  Purchase Plan.
     Under the Purchase Plan each eligible employee is granted a separate option
     to purchase up to 2,000  shares of common  stock each  semi-annual  accrual
     period on January 31 and July 31 at a purchase price per share equal to 90%
     of the fair market value of the common stock on the enrollment  date or the
     exercise date, whichever is lower.

(4)  Includes  shares  available for future issuance under the Purchase Plan. As
     of September 30, 2004,  1,436,376 of shares of common stock were  available
     for issuance under the Purchase Plan.


                                       24
--------------------------------------------------------------------------------


                                PERFORMANCE GRAPH

The following  performance  graph  compares the  performance of an investment in
Franklin's  common  stock  for the  last  five (5)  fiscal  years to that of the
Standard & Poor's 500  Composite  Stock  Price Index (the "S&P 500  Index"),  an
index to which the Company was added in April 1998, and to the Standard & Poor's
500  Financials  Index  (the  "S&P 500  Financials  Index").  The S&P 500  Index
consists of 500 stocks  chosen for market size,  liquidity,  and industry  group
representation. It is a market-value weighted index (stock price times number of
shares outstanding),  with each stock's weight in the index proportionate to its
market  value.  The S&P 500 Index is one of the most widely used  benchmarks  of
U.S.    equity    performance.    The   S&P   500   Financials    Index   is   a
capitalization-weighted  index of the stocks of  approximately 70 companies that
are in the S&P 500 Index and whose  primary  business is in a sub-sector  of the
financial  industry.  It is designed to measure the performance of the financial
sector of the S&P 500 Index.  The graph assumes that the value of the investment
in the Company's  common stock and each index was $100 on September 30, 1999 and
that all dividends were reinvested.




                                           COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN

               Sep       Oct        Nov      Dec        Jan        Feb        Mar       Apr        May       Jun      Jul       Aug
                                                                                             
FY99
Franklin
Resources:  $100.00    114.52     102.86   105.10     116.99      89.12     109.81    105.91      98.52     99.95   118.05    125.04
S&P 500:    $100.00    106.33     108.49   114.87     109.10     107.04     117.50    113.97     111.63    114.38   112.60    119.59
Fin. Index  $100.00    116.67     110.95   108.76     105.31      93.92     111.31    107.82     115.04    108.07   119.24    130.68

FY00
Franklin
Resources:   146.39    141.15     119.31   125.75     154.33     137.76     129.30    144.31     147.12    151.32   142.84    135.85
S&P 500:     113.27    112.79     103.91   104.42     108.12      98.27      92.04     99.19      99.86     97.43    96.47     90.44
Fin. Index   133.78    133.19     125.34   136.67     136.29     127.34     123.50    128.09     133.25    133.20   131.05    123.07

FY01
Franklin
Resources:   114.79    106.50     118.61   117.25     124.49     135.83     139.59    139.52     144.95    141.98   114.55    116.78
S&P 500:      83.13     84.72      91.22    92.02      90.67      88.92      92.27     86.68      86.04     79.92    73.69     74.17
Fin. Index   115.80    113.66     121.77   124.43     122.49     120.70     128.73    125.29     125.09    119.15   109.71    111.95

FY02
Franklin
Resources:   103.77    110.31     123.55   114.20     111.72     109.48     110.54    117.15     125.52    131.48   146.22    145.34
S&P 500:      66.12     71.93      76.16    71.69      69.81      68.76      69.43     75.15      79.10     80.11    81.53     83.11
Fin. Index    98.87    107.80     112.23   106.22     104.45     101.19     100.79    113.13     119.10    119.40   124.88    123.62

FY03
Franklin
Resources    148.77    159.83     161.21   175.75     195.03     190.74     188.26    185.39     170.00    169.33   163.43    180.43
S&P 500       82.23     86.88      87.65    92.24      93.93      95.24      93.80     92.33      93.59     95.41    92.25     92.62
Fin. Index   124.44    133.01     132.64   139.15     143.58     147.38     145.93    139.20     141.76    142.46   139.51    144.20

FY04
Franklin
Resources:   189.15
S&P 500:      93.62
Fin. Index   142.96



                                 1999            2000            2001            2002            2003            2004
                                 ----            ----            ----            ----            ----            ----
                                                                                                
Franklin Resources, Inc.        100.0           146.4           114.8           103.8           148.8           189.2
S&P 500 Index                   100.0           113.3            83.1            66.1            82.2            93.6
S&P 500 Financials Index        100.0           133.8           115.8            98.9           124.4           143.0


                                       25
--------------------------------------------------------------------------------


NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF FRANKLIN'S PREVIOUS
OR  FUTURE  FILINGS  UNDER  THE  SECURITIES  ACT OF  1933,  AS  AMENDED,  OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FILINGS MADE
BY US UNDER  THOSE  STATUTES,  THE  FOLLOWING  REPORT  SHALL NOT BE DEEMED TO BE
INCORPORATED  BY  REFERENCE  INTO ANY PRIOR  FILINGS NOR FUTURE  FILINGS MADE BY
FRANKLIN UNDER THOSE STATUTES.

                          REPORT OF THE AUDIT COMMITTEE

MEMBERSHIP AND ROLE OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors of Franklin  Resources,  Inc. (the
"Company")  consists  of  Chutta  Ratnathicam,  Charles  Crocker  and  Louis  E.
Woodworth.  Each of the members of the Audit Committee is independent as defined
under the New York Stock Exchange ("NYSE") rules and applicable law. The primary
purpose of the Audit Committee is to assist the Board of Directors in fulfilling
its responsibility to oversee the Company's financial reporting activities.  The
Audit Committee's function is more fully described in the written charter, which
is attached as Appendix A to this Proxy Statement.  Chutta Ratnathicam serves as
the Chairman.

REVIEW OF THE COMPANY'S AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2004

The Audit Committee has reviewed and discussed the audited financial  statements
of the Company for the fiscal year ended  September  30, 2004 with the Company's
management.

The Audit Committee has discussed with  PricewaterhouseCoopers  LLP ("PwC"), the
Company's independent registered public accounting firm, the matters required to
be discussed by the Statement on Auditing  Standards No. 61 (Communication  with
Audit Committees).

The Audit  Committee  has also received the written  disclosures  and the letter
from PwC required by  Independence  Standards Board Standard No. 1 (Independence
Discussion  with Audit  Committees),  and has discussed the  independence of PwC
with that firm.

Based on the Audit  Committee's  review and discussions  noted above,  the Audit
Committee  recommended  to the Board of  Directors  that the  Company's  audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 2004, for filing with the SEC.

Respectfully Submitted:

AUDIT COMMITTEE
Chutta Ratnathicam, Chairman
Charles Crocker
Louis E. Woodworth


                                       26
--------------------------------------------------------------------------------


           FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The   Board,    with   the   ratification   of   the    stockholders,    engaged
PricewaterhouseCoopers  LLP ("PwC") to perform an annual audit of the  Company's
financial statements for the fiscal year 2004.

The following table sets forth the approximate aggregate fees billed or expected
to be billed to the Company for fiscal  years 2004 and 2003 by PwC for the audit
of the Company's annual financial statements and services rendered by PwC.

(in thousands)                                    FISCAL YEARS ENDED
------------------------------ -------------------------------------------------
                                        2004                               2003
------------------------------ -------------------------------------------------
AUDIT FEES                           $ 1,800                            $ 1,500
AUDIT RELATED FEES (a)               $   700                            $   500
TAX FEES (b)                         $   700                            $ 1,000
ALL OTHER FEES (c)                   $   200                            $ 1,100
------------------------------ -------------------------------------------------
TOTAL FEES                           $ 3,400                            $ 4,100
------------------------------ -------------------------------------------------

(a)  Audit  Related  Fees  consist of assurance  and related  services  that are
     reasonably  related  to the  performance  of the  audit  or  review  of the
     Company's financial statements. Such services related primarily to internal
     control  examinations  pursuant to the Statement of Auditing  Standards No.
     70, audits of employee benefit plans and other attestation services.

(b)  Tax Fees consist of tax  preparation  and compliance  services  rendered by
     PwC.

(c)  All Other Fees consist  principally of services rendered in connection with
     assistance in regulatory reporting in various  jurisdictions and tax advice
     and tax planning.

NOTE: 2.0% of the fees for services described under Audit Related Fees, Tax Fees
and All  Other  Fees  were  approved  by the  Audit  Committee  pursuant  to the
pre-approval  waiver  requirements under 17 CFR  210.2-01(c)(7)(i)(C),  of which
1.9% represented Tax Fees and 0.1% represented All Other Fees.

PRE-APPROVAL PROCESS AND POLICY

The audit and non-audit services provided to the Company and its subsidiaries by
PwC, the independent auditors,  during fiscal year 2004 were pre-approved by the
Audit  Committee.  The Audit  Committee has adopted  policies and procedures for
pre-approving  all audit and  non-audit  services  provided by PwC.  This policy
describes the permitted  audit,  audit-related,  tax and other services that the
independent auditors may perform.

Any requests for audit, audit-related,  tax and other services must initially be
submitted to the Company's  Chief  Financial  Officer (the "CFO").  Any requests
preliminarily  approved by the CFO are then submitted to the Audit Committee for
final  and  specific  pre-approval.  Normally,  pre-approval  is  considered  at
regularly  scheduled  meetings.   However,   the  authority  to  grant  specific
pre-approval  between meetings up to a designated approval amount (the "Chairman
Approval  Amount"),  has been delegated to the Chairman of the Audit  Committee.
The decision of the Chairman to grant specific  pre-approval  of a service shall
be  presented  to the Audit  Committee  at its next  scheduled  meeting.  If the
estimated  fees for  proposed  services  exceed the  Chairman  Approval  Amount,
specific pre-approval by the entire Audit Committee shall be required.


                                       27
--------------------------------------------------------------------------------



                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Prior to the time that  Franklin  acquired  substantially  all of the  assets of
Templeton,  Galbraith & Hansberger Ltd.  ("Templeton") in 1992, Templeton made a
loan to Mr. Martin L. Flanagan secured by a deed of trust on Mr. Flanagan's then
residence in Nassau,  Bahamas.  Such loan was outstanding to a subsidiary of the
Company and bore  interest at the annual  rate of 5.98%.  The largest  aggregate
amount outstanding during fiscal year 2004 was $330,380. On or about December 4,
2004, Mr. Flanagan paid off the outstanding amount of the loan.

In October 1997,  prior to the time that Mr. Charles R. Sims became an executive
officer  of  Franklin,   in  connection  with  his  relocation  from  Canada  to
California,  Franklin  made a loan to Mr.  Sims,  which is  secured by a deed of
trust on his residence and bears  interest at the annual rate of 5%. The largest
amount  outstanding  on the loan during  fiscal year 2004 was $586,203 and as of
November 30, 2004, $573,355 was outstanding.

In accordance  with the  Sarbanes-Oxley  Act of 2002, the Company will not enter
into  any  similar  such  loan  transactions  with  its  executive  officers  or
directors.

During fiscal year 2004,  Franklin  Templeton Bank & Trust,  F.S.B., and various
bank related subsidiaries of Fiduciary Trust, a subsidiary of Franklin,  entered
into various  transactions in the ordinary course of their business with certain
directors  or  executive  officers  of Franklin  and members of their  immediate
families.  In particular,  these transactions involved loans, deposits and sales
of commercial paper,  certificates of deposit and other money market instruments
and certain other banking transactions,  including, among others, a loan made in
March 2002 to Harmon E. Burns,  Vice  Chairman and  Director of the Company.  As
transactions made in the ordinary course of business, all such transactions were
made on substantially the same terms,  including  interest rates and collateral,
that  prevailed at the time for comparable  transactions  with other persons and
did not involve  more than the normal risk of  collectibility  or present  other
unfavorable features.

In fiscal year 2004,  Robert Dean, a vice  president and  portfolio  manager for
Franklin Advisers,  Inc., a subsidiary of the Company, and the son-in-law of Mr.
Burns,  a Vice Chairman and director of the Company,  was paid  $300,976,  which
included  a cash bonus of  $162,500.  Mr.  Dean also  received  1,568  shares of
restricted  stock. Mr. Dean's base salary for fiscal year 2005 is $152,500.  Mr.
Dean is entitled to receive medical,  life and disability insurance coverage and
other benefits available generally to employees of the Company.

Under a stock  repurchase  program first authorized by the Board of Directors of
the Company in  September  of 1985,  the Company  can  repurchase  shares of its
common stock from time to time on the open market and in private transactions in
accordance with applicable  securities  laws.  Pursuant to this stock repurchase
program,  the Company  repurchased  shares of the  Company's  common stock from,
among  others,  certain  directors,  executive  officers  and greater  than five
percent  (5%)  beneficial  owners of the  Company's  common  stock,  and certain
members of the  immediate  family of the foregoing  persons,  during fiscal year
2004 and in the current fiscal year. In particular,  Mr. Charles B. Johnson, the
Company's Chairman of the Board,  Member-Office of the Chairman,  and a director
of the Company,  sold back to the Company  123,000 shares of common stock for an
aggregate  amount of $8,372,610 on December 15, 2004. On September 7, 2004,  Mr.
C. B. Johnson also sold back to the Company  300,000  shares of common stock for
an  aggregate  amount  of  $16,104,000.  Mr.  Burns,  a Company  Vice  Chairman,
Member-Office of the Chairman,  and a director of the Company,  sold back to the
Company  50,000 shares of common stock for an aggregate  amount of $3,403,500 on
December 15, 2004.  Similarly,  on the same date, Mr. Rupert H. Johnson,  Jr., a
Company Vice  Chairman,  Member-Office  of the  Chairman,  and a director of the
Company, sold back to the Company 50,000 shares of common stock for an aggregate
amount of $3,403,500. On December 15, 2004, Mr. Flanagan, President and Co-Chief
Executive  Officer of the  Company,  sold back to the  Company  7,975  shares of
common stock for an aggregate amount of $542,858.  On the same date, Mr. Greg E.
Johnson,  President and Co-Chief Executive Officer of the Company,  sold back to
the Company  11,981 shares of common stock for an aggregate  amount of $815,547.
On December 15, 2004, Mr. Sims, a Vice President of the Company,  also sold back
to the Company 6,000 shares of common stock for an aggregate amount of $408,420.
On the same date,  Mr.  Kenneth A. Lewis,  a Vice President and Treasurer of the
Company,  sold back to the Company 3,000 shares of common stock for an aggregate
amount of $204,120.  On February 11, 2004, 


                                       28
--------------------------------------------------------------------------------



Penelope Alexander, Vice President,  Human Resources - U.S. of the Company, sold
back to the Company  11,014  shares of common stock for an  aggregate  amount of
$638,041.  The price per share paid by the Company for each  repurchase  was the
average of the high and low price of the  Company's  common stock on the NYSE on
the repurchase date.

Separately,  each of Elizabeth S.  Wiskemann,  for the benefit of the  Elizabeth
Wiskemann Rollover Individual  Retirement  Account,  and The Esther B. Wiskemann
Trust  under  agreement  dated  04/19/02  amended  11/13/02,  The  Christine  Y.
Wiskemann Trust under agreement dated 5/7/03,  and Kim D. Wiskemann sold back to
the Company 226,000 shares,  350,000 shares, 370,000 shares, and 354,000 shares,
for  an  aggregate  amount  of  $15,383,820,   $23,824,500,   $25,185,900,   and
$24,096,780,  respectively, on December 15, 2004. Esther B. Wiskemann, Christine
Y.  Wiskemann and Kim D. Wiskemann are children of Elizabeth S.  Wiskemann.  The
price per share paid by the Company for each  repurchase  was the average of the
high and low price of the Company's  common stock on the NYSE on the  repurchase
date.  

The Company also makes  purchases of the Company's  common stock from  employees
and  executive  officers  on the same terms and  conditions  to pay taxes due in
connection  with the vesting of  restricted  stock awards and  matching  grants,
which the Company  provides under the Employee Stock  Incentive Plan. On January
2, 2004 and in connection with the vesting of certain  restricted  stock awards,
the Company  purchased  1,205  shares  from Ms. Anne M.  Tatlock at the price of
$52.05 per  share.  On October  1, 2004 and in  connection  with the  vesting on
September 30, 2004 of certain  restricted  stock awards,  the Company  purchased
4,442 shares from Mr. Flanagan,  1,112 shares from Mr. Murray L. Simpson,  2,737
shares  from Ms.  Tatlock,  and 691  shares  from Mr.  James  R.  Baio  (each an
executive  officer of the  Company) at the price of $55.55 per share.  The price
per share paid by the Company for each  purchase was the average of the high and
low price of the Company's common stock on the NYSE on the vesting date.

Additional  information  regarding a former director of the Company is described
under "Compensation Committee Interlocks and Insider Information".


             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section  16(a)  of the  Securities  Exchange  Act  of  1934  requires  officers,
directors and persons who  beneficially  own more than 10% of Franklin's  common
stock (the  "Reporting  Persons") to file  reports of  ownership  and changes in
ownership with the SEC. Based solely on review of copies of such report received
or written  representations  from the Reporting Persons,  except in one instance
where  Ms.  Jennifer  J.  Bolt did not  timely  file one Form 4  disclosing  one
transaction,  and one instance  where Mr. Rupert H. Johnson,  Jr. did not timely
file one Form 4  disclosing  one  transaction,  the Company  believes  that with
respect to the fiscal  year 2004,  all other  Reporting  Persons  complied  with
applicable filing requirements.


                                       29
--------------------------------------------------------------------------------


                                 PROPOSAL NO. 2

                       RATIFICATION OF THE APPOINTMENT OF
                  INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

GENERAL

The Audit Committee of the Board has appointed PricewaterhouseCoopers LLP as the
independent registered public accounting firm to audit the books and accounts of
Franklin  for its current  fiscal year ending  September  30,  2005.  During the
fiscal  year ended  September  30,  2004,  PricewaterhouseCoopers  LLP  rendered
opinions  on  the   financial   statements   of  Franklin  and  certain  of  its
subsidiaries,  as  well  as  many  of the  open-end  and  closed-end  investment
companies  managed  and  advised by the  Company's  subsidiaries.  In  addition,
PricewaterhouseCoopers   LLP  provides  the  Company  with  tax  consulting  and
compliance  services,  accounting and financial reporting advice on transactions
and regulatory filings and certain other consulting services permitted under the
Sarbanes-Oxley Act of 2002.  Representatives of  PricewaterhouseCoopers  LLP are
expected to be present at the Annual  Meeting and will have the  opportunity  to
make a statement if they desire to do so. It is also  expected that they will be
available to respond to appropriate questions.

BOARD RECOMMENDATION

The  Board  of  Directors  recommends  a  vote  "FOR"  the  ratification  of the
appointment  of   PricewaterhouseCoopers   LLP  as  the  Company's   independent
registered  public  accounting firm for the current fiscal year ending September
30, 2005. The voting requirements for this proposal are described in the "Voting
Information" section.


                                       30
--------------------------------------------------------------------------------


                                 PROPOSAL NO. 3

                    APPROVAL OF THE AMENDMENT AND RESTATEMENT
                         OF THE FRANKLIN RESOURCES, INC.
                       2002 UNIVERSAL STOCK INCENTIVE PLAN

Franklin's  stockholders are being asked to approve an amendment and restatement
of the 2002 Universal Stock Incentive Plan (the "2002 Stock Plan").  The primary
purpose of the amendment and  restatement is to (a) add  additional  performance
measures applicable to the grant of awards under the 2002 Stock Plan intended to
qualify as "performance-based compensation" under Section 162(m) of the Internal
Revenue Code of 1986,  as amended (the "Code") and (b) expand the ability of the
administrator  of the 2002 Stock  Plan to adjust  awards  issued  under the 2002
Stock Plan in connection with various changes in the capitalization of Franklin.

The Board of Directors  approved the 2002 Stock Plan on October 10, 2002 and the
2002 Stock Plan was approved by the  stockholders  in January 2003. The Board of
Directors  approved  the  amendment  and  restatement  of the 2002 Stock Plan on
December 16, 2004.  Stockholder approval of the amendment and restatement of the
2002 Stock Plan  requires  the  affirmative  vote of a majority of the shares of
Franklin's  common stock present in person or  represented by proxy and entitled
to vote on the  proposal.  It is the  intention  of the  persons  named as proxy
holders to vote to approve the amendment and restatement of the 2002 Stock Plan.
If stockholder approval is not received, the 2002 Stock Plan will not be amended
and restated.

GENERAL DESCRIPTION OF THE 2002 STOCK PLAN, AS AMENDED AND RESTATED.

The following summary describes the material features of the 2002 Stock Plan, as
amended and restated, but is not intended to be complete and is qualified in its
entirety by  reference  to the 2002 Stock  Plan,  a copy of which is attached as
Appendix E to this Proxy  Statement.  In  Appendix E the  locations  of proposed
deletions  are  indicated by carets "^" and proposed  additions are indicated as
bracketed.  Capitalized terms not otherwise defined are used as set forth in the
2002 Stock Plan.

PURPOSE.

The 2002 Stock Plan is intended to (i)  attract and retain  persons  eligible to
participate  in the  plan;  (ii)  motivate  employees,  by means of  appropriate
incentives,  to achieve  long-range  performance  goals; (iii) provide incentive
compensation  opportunities  that are  competitive  with those of other  similar
companies;  and (iv) further align employees' interests with those of Franklin's
other  stockholders  through  compensation  that is based on  Franklin's  common
stock.

ADMINISTRATION OF 2002 STOCK PLAN.

The  Compensation  Committee,  as the  administrator  of the  2002  Stock  Plan,
determines  and  approves the grant of incentive  stock  options,  non-qualified
stock  options,  stock  appreciation  rights,  stock  units,  restricted  stock,
restricted  stock units and performance  shares to employees.  The  Compensation
Committee will, with regard to each stock option, determine the number of shares
subject to the option, the manner and time of the option's exercise and vesting,
and the exercise  price per share of stock  subject to the option.  The exercise
price for  incentive  stock options may not be less than 100% of the fair market
value of the common  stock on the date the option is  granted  (or 110%,  in the
case of an  incentive  stock  option  granted  to any  employee  who owns  stock
representing  more than 10% of the  combined  voting  power of  Franklin  or any
parent or subsidiary of Franklin). In the case of all other awards granted under
the 2002 Stock Plan,  the exercise or purchase  price shall be determined by the
Compensation Committee.

SHARES AUTHORIZED.

The 2002 Stock Plan  authorizes  30,000,000  shares of common stock for issuance
under the 2002 Stock Plan.


                                       31
--------------------------------------------------------------------------------


ELIGIBILITY AND PARTICIPATION.

As of  November  30,  2004,  approximately  1,100  employees  were  eligible  to
participate  in the 2002  Stock  Plan.  Under  the  terms of the  plan,  any key
executive or other employee of Franklin or any of its  subsidiaries  is eligible
to participate.

TERM OF AWARDS.

The term of any  incentive  stock  option may not be for more than ten years (or
five years in the case of an incentive  stock option granted to any  participant
who owns  stock  representing  more  than 10% of the  combined  voting  power of
Franklin  or any parent or  subsidiary  of the  Company).  The term of all other
awards shall be determined by the Compensation Committee.

TRANSFERABILITY.

An employee's rights under the 2002 Stock Plan may not be assigned, transferred,
pledged or  otherwise  disposed  of,  except by will or the laws of descent  and
distribution.

PERFORMANCE BASED COMPENSATION.

The  maximum   number  of  shares  with  respect  to  which  options  and  stock
appreciation  rights may be granted to a  participant  during a calendar year is
400,000 shares.  The foregoing  limitation shall be adjusted  proportionately by
the  Compensation   Committee  in  connection  with  any  change  in  Franklin's
capitalization  due to a stock split,  stock dividend or similar event affecting
the common stock of Franklin.  Under Code Section 162(m) no deduction is allowed
in any taxable year of Franklin for compensation in excess of $1 million paid to
Franklin's  chief executive  officer and the four other most highly  compensated
officers of Franklin.  An exception to this rule applies to compensation that is
paid  pursuant  to a stock  incentive  plan  approved by  stockholders  and that
specifies,  among other  things,  the maximum  number of shares with  respect to
which  options  and  stock  appreciation  rights  may  be  granted  to  eligible
participants  under  such plan  during a  specified  period.  Compensation  paid
pursuant to options or stock  appreciation  rights granted under such a plan and
with an exercise price equal to the fair market value of Franklin's common stock
on the date of grant is deemed to be  inherently  performance-based,  since such
awards provide value to participants only if the stock price appreciates.

For  awards  of stock  units,  restricted  stock,  restricted  stock  units  and
performance shares that are intended to be performance-based  compensation under
Section  162(m) of the Code, the maximum number of shares subject to such awards
that may be granted to a participant  during a calendar year is 1,000,000 shares
(regardless of when such shares are  deliverable to the  participant).  In order
for such awards to qualify as performance-based  compensation,  the Compensation
Committee  must  establish  a  performance  goal with  respect  to such award in
writing not later than 90 days after the  commencement  of the services to which
it relates and while the outcome is substantially  uncertain.  In addition,  the
performance  goal must be stated in terms of an  objective  formula or standard.
Under the current version of the 2002 Stock Plan, the Compensation Committee may
use the following performance criteria when granting  performance-based  awards:
earnings per share,  pre-tax  operating  income and the value of Franklin  stock
(i.e.,  stock price). If the amendment and restatement of the 2002 Stock Plan is
approved by the stockholders of Franklin, the Compensation Committee may use the
following  additional  performance  criteria  when  granting   performance-based
awards:  annual  revenue,  budget  comparisons,  controllable  profits,  expense
management, improvements in capital structure, operating income, net income, net
sales,  profit  margins,  profitability  of an  identifiable  business  unit  or
product, return on investments, return on sales, return on stockholders' equity,
total return to  stockholders  and  performance  of Franklin  relative to a peer
group of companies on any of the foregoing  measures.  The performance  criteria
may be applicable to Franklin  and/or any of its  individual  business units and
may differ from participant to participant.

CHANGES IN CAPITALIZATION.

As amended,  the 2002 Stock Plan provides that subject to any required action by
the stockholders of Franklin,  (a) 


                                       32
--------------------------------------------------------------------------------


the number and/or class of securities covered by each outstanding award, (b) the
price per share covered by each such  outstanding  award,  (c) the number and/or
class of securities which have been authorized for issuance under the 2002 Stock
Plan but as to which no awards have yet been granted or which have been returned
to the 2002 Stock Plan upon  cancellation or expiration of an award, and (d) the
maximum  number of  options,  stock  appreciation  rights,  stock  unit  awards,
restricted  stock awards,  restricted  stock unit awards and  performance  share
awards which may be granted to any participant in any  one-calendar-year  period
shall be proportionately  adjusted for any increase or decrease in the number of
issued shares of common stock resulting from a stock split, reverse stock split,
stock  dividend,  combination or  reclassification  of the common stock,  or any
other  increase  or  decrease  in the  number of issued  shares of common  stock
effected without receipt of  consideration by Franklin.  Such adjustment will be
made by the Compensation Committee. The Compensation Committee may also make, in
its  discretion,  adjustments  described  in  (a)-(d)  above in the event of any
distribution of cash or other assets to stockholders other than an ordinary cash
dividend.

In determining  adjustments to be made, the Compensation Committee may take into
account such factors as it deems appropriate,  including (i) the restrictions of
applicable law, (ii) the potential tax,  accounting or other  consequences of an
adjustment and (iii) the  possibility  that some  participants  might receive an
adjustment and a distribution or other unintended benefit,  and in light of such
factors  or  circumstances   may  make  adjustments  that  are  not  uniform  or
proportionate among outstanding awards, modify vesting dates, defer the delivery
of stock certificates or make other equitable adjustments.  Any such adjustments
to  outstanding  awards  will  be  effected  in  a  manner  that  precludes  the
enlargement  of  rights  and  benefits  under  such  awards.   Any  adjustments,
determinations or  interpretations  made by the Compensation  Committee shall be
final, binding and conclusive.

AMENDMENT AND TERMINATION.

The Board of Directors  of Franklin may at any time  terminate or amend the 2002
Stock Plan.  However,  no such termination may affect awards previously granted,
nor may an  amendment  make any  change in any award  previously  granted  which
adversely  affects the rights of any  participant.  In  addition,  to the extent
necessary  to  comply  with  securities  and  tax  laws,  Franklin  will  obtain
stockholder approval of such termination or such amendments.

FEDERAL INCOME TAX CONSEQUENCES.

The following discussion  summarizes certain tax considerations for participants
and certain tax effects to Franklin.  The statements in the following paragraphs
of the principal U.S. federal income tax consequences of benefits under the 2002
Stock Plan are based on statutory  authority  and  judicial  and  administrative
interpretations,  as of the date of this Proxy  Statement,  which are subject to
change at any time (possibly with retroactive  effect). The law is technical and
complex, and the discussion below represents only a general summary.

INCENTIVE STOCK OPTIONS.

Incentive stock options  ("ISOs") granted under the 2002 Stock Plan are intended
to meet  the  definitional  requirements  of  Section  422(b)  of the  Code  for
"incentive  stock  options".  An employee who receives an ISO does not recognize
any taxable income upon the grant of such ISO. Similarly, the exercise of an ISO
generally  does not give rise to federal  income tax to the  employee,  provided
that (i) the federal  "alternative minimum tax", which depends on the employee's
particular  tax  situation,  does not apply and (ii) the employee is employed by
Franklin  from the date of the grant of the option  until three  months prior to
the exercise  thereof,  except  where such  employment  terminates  by reason of
disability  (where  the three  month  period is  extended  to one year) or death
(where this requirement does not apply). If any employee  exercises an ISO after
the requisite  periods referred to in clause (ii) above, the ISO will be treated
as an NSO (as  defined  below) and will be subject to the rules set forth  below
under the caption  "Non-Qualified Stock Options and Stock Appreciation  Rights".
Further, if after exercising an ISO, an employee disposes of the common stock so
acquired  more than two years from the date of grant and more than one year from
the date of transfer of the common  stock  pursuant to the  exercise of such ISO
(the "applicable holding period"), the employee will generally recognize capital
gain or loss equal to the  


                                       33
--------------------------------------------------------------------------------



difference,  if any, between the amount received for the shares and the exercise
price.

If,  however,  any  employee  does not  hold  the  shares  so  acquired  for the
applicable  holding period,  thereby making a "disqualifying  disposition",  the
employee would recognize  ordinary income equal to the excess of the fair market
value of the shares at the time the ISO was  exercised  over the exercise  price
and the balance,  if any,  would  generally be treated as capital  gain.  If the
disqualifying  disposition  is a sale or exchange that would permit a loss to be
recognized  under the Code (were a loss in fact to be  realized),  and the sales
proceeds  are less  than  the fair  market  value of the  shares  on the date of
exercise,  the employee's  ordinary income would be limited to the gain (if any)
realized on the sale.  An employee  who  exercises an ISO by  delivering  common
stock previously  acquired pursuant to the exercise of another ISO is treated as
making a  "disqualifying  disposition"  of such common  stock if such shares are
delivered  before the expiration of their  applicable  holding period.  Upon the
exercise of an ISO with previously  acquired shares as to which no disqualifying
disposition occurs, despite some uncertainty, it appears that the employee would
not recognize gain or loss with respect to such previously acquired shares.

Franklin will not be allowed a federal  income tax  deduction  upon the grant or
exercise of an ISO or the disposition,  after the applicable  holding period, of
the  common  stock  acquired  upon  exercise  of  an  ISO.  In  the  event  of a
disqualifying disposition, Franklin generally will be entitled to a deduction in
an amount equal to the ordinary income  included by the employee,  provided that
such amount  constitutes an ordinary and necessary  business expense to Franklin
and is reasonable and the  limitations of Section 162(m) of the Code  (discussed
above) do not apply.

NON-QUALIFIED STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.

Non-qualified  stock  options  ("NSOs")  granted  under the 2002  Stock Plan are
options  that do not qualify as ISOs.  An employee  who receives an NSO or Stock
Appreciation  Right ("SAR") will not recognize any taxable income upon the grant
of such NSO or SAR.  However,  the employee  generally will  recognize  ordinary
income  upon  exercise  of an NSO in an amount  equal to the  excess of the fair
market  value of the  shares of common  stock at the time of  exercise  over the
exercise  price.  Similarly,  upon the receipt of cash or shares pursuant to the
exercise of an SAR, the individual  generally will recognize  ordinary income in
an amount  equal to the sum of the cash and the fair market  value of the shares
received.  Under certain circumstances,  the timing of income recognition may be
deferred for any individual who is an executive  officer or director of Franklin
or a  beneficial  owner of more  than ten  percent  (10%) of any class of equity
securities  of Franklin.  The  ordinary  income  recognized  with respect to the
receipt  of shares or cash upon  exercise  of an NSO or an SAR  (whether  or not
deferred) will be subject to both wage withholding and other  employment  taxes.
In  addition  to  the  customary  methods  of  satisfying  the  withholding  tax
liabilities  that  arise  upon the  exercise  of an SAR for  shares  or upon the
exercise of an NSO,  Franklin may satisfy the minimum tax withholding  liability
in whole or in part by  withholding  shares  of common  stock  from  those  that
otherwise would be issuable to the individual or by the employee tendering other
shares  owned by him or her,  valued at their fair  market  value as of the date
that the tax  withholding  obligation  arises.  A federal  income tax  deduction
generally will be allowed to Franklin in an amount equal to the ordinary  income
included by the  individual  with  respect to the  exercise of his or her NSO or
SAR,  provided that such amount  constitutes an ordinary and necessary  business
expense to Franklin and is reasonable  and the  limitations of Section 162(m) of
the Code do not apply. If an individual exercises an NSO by delivering shares of
common stock, other than shares previously  acquired pursuant to the exercise of
an ISO which is treated as a "disqualifying disposition" as described above, the
individual  will not recognize gain or loss with respect to the exchange of such
shares,  even if their then fair market value is different from the individual's
tax  basis.  The  individual,  however,  will be taxed as  described  above with
respect to the exercise of the NSO as if he or she had paid the  exercise  price
in cash,  and the Company  likewise  generally will be entitled to an equivalent
tax deduction.

RESTRICTED STOCK AWARDS.

Restricted  Stock Awards  granted by Franklin fall within the Code's  guidelines
for awards that are restricted as to transferability or subject to a substantial
risk of forfeiture and, absent a written  election  pursuant to Section 83(b) of
the Code filed with the Internal  Revenue  Service within 30 days after the date
of transfer of such shares  


                                       34
--------------------------------------------------------------------------------



pursuant to the award (a "Section 83(b) election"), an individual will recognize
ordinary  income  at the  earlier  of the time at which  (i) the  shares  become
transferable  or  (ii)  the  restrictions  that  impose  a  substantial  risk of
forfeiture  of such shares  lapse,  in an amount equal to the excess of the fair
market value (on such date) of such shares over the price paid for the award, if
any.

If a Section 83(b)  election is made, the  individual  will  recognize  ordinary
income,  as of the transfer  date,  in an amount equal to the excess of the fair
market  value of the  common  stock as of that date over the price paid for such
award,  if any. The ordinary  income  recognized  with respect to the receipt of
cash, shares of common stock or other property under the 2002 Stock Plan will be
subject to both wage withholding and other employment taxes.  Franklin generally
will be allowed a deduction  for federal  income tax purposes in an amount equal
to the ordinary  income  recognized by the  employee,  provided that such amount
constitutes an ordinary and necessary business expense and is reasonable and the
limitations of Section 162(m) of the Code do not apply.

Individuals  will  recognize gain upon the  disposition  of any shares  received
equal to the excess of (i) the amount realized on such disposition over (ii) the
ordinary income  recognized with respect to such shares under the principles set
forth  above.  That gain will be  taxable  as long or  short-term  capital  gain
depending on whether the shares were held for more than one year.

RESTRICTED STOCK UNITS.

Recipients of restricted stock units generally should not recognize income until
such units are converted into cash or shares of common stock.  Upon  conversion,
the individual  will normally  recognize  ordinary income equal to the amount of
cash and fair market value the shares,  if any,  received upon such  conversion.
The ordinary income  recognized with respect to the receipt of cash or shares of
common  stock  will be  subject to both wage  withholding  and other  employment
taxes.  Franklin  generally  will be allowed a deduction for federal  income tax
purposes in an amount equal to the ordinary  income  recognized by the employee,
provided that such amount constitutes an ordinary and necessary business expense
and is  reasonable  and the  limitations  of  Section  162(m) of the Code do not
apply.

Individuals will recognize gain upon the disposition of any shares received upon
conversion of the  restricted  stock units equal to the excess of (i) the amount
realized on such  disposition  over (ii) the  ordinary  income  recognized  with
respect to such shares under the principles  set forth above.  That gain will be
taxable as long or short-term  capital gain depending on whether the shares were
held for more than one year.

DIVIDENDS AND DIVIDEND EQUIVALENTS.

To the extent  unvested and/or  unexercised  shares subject to such awards under
the 2002  Stock  Plan earn  dividends  or  dividend  equivalents,  whether  paid
currently or credited to an account  established  under the 2002 Stock Plan,  an
individual  generally will recognize ordinary income, which income is subject to
both wage withholding and other  employment  taxes.  Franklin  generally will be
allowed a deduction  for federal  income tax  purposes in an amount equal to the
ordinary  income   recognized  by  the  employee,   provided  that  such  amount
constitutes an ordinary and necessary business expense and is reasonable and the
limitations of Section 162(m) of the Code do not apply.

NEW PLAN BENEFITS.

Since no awards  have yet been made under the 2002 Stock  Plan,  as amended  and
restated by the Board on December 16, 2004,  it is not possible to determine the
benefits that will be received by executive  officers and other employees if the
amendment  and   restatement   of  the  2002  Stock  Plan  is  approved  by  the
stockholders.

BOARD OF DIRECTORS RECOMMENDATION.

The Board of Directors recommends a vote "FOR" the approval of the amendment and
restatement of the Franklin Resources, Inc. 2002 Universal Stock Incentive Plan.
The  voting  requirements  for  this  proposal  are  described  in  the  "Voting
Information" section.


                                       35
--------------------------------------------------------------------------------


                                 PROPOSAL NO. 4

                 APPROVAL OF THE AMENDMENT OF THE CERTIFICATE OF
              INCORPORATION, AS AMENDED, TO INCREASE THE NUMBER OF
                 SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE

GENERAL

The Board of Directors by unanimous  vote of all  directors on December 16, 2004
adopted  resolutions  approving and  recommending  that the  stockholders of the
Company  approve an amendment to Article Fourth of the Company's  Certificate of
Incorporation  ("Article  Fourth"),  to increase  the total  number of shares of
stock that the  Company is  authorized  to issue from Five  Hundred  One Million
(501,000,000)  shares to One Billion One Million  (1,001,000,000)  by increasing
the number of shares of common  stock (the  "Common  Stock")  from Five  Hundred
Million (500,000,000) shares to One Billion (1,000,000,000) shares. The proposed
amendment does not change the provisions of Article Fourth  permitting the Board
to adopt resolutions  authorizing the issuance of up to One Million  (1,000,000)
shares of $1.00 par value preferred stock (the "Preferred Stock") upon terms and
conditions  approved by the Board.  The relative  rights and  limitations of the
Common  Stock and  Preferred  Stock would  remain  unchanged  under the proposed
amendment  and the  additional  shares of Common Stock would be identical to the
shares of Common Stock  presently  authorized.  The Common  Stock and  Preferred
Stock do not have preemptive rights.

Under  Article  Fourth,  the  Board  of  Directors  has the  authority  to issue
authorized  shares  of the  Preferred  Stock in  series  and to fix the  number,
designation,  relative rights, preferences and limitations of the shares of each
series,  subject to applicable  law and the  provisions of Article  Fourth.  The
authority  of the Board  includes  the right to fix for each series the dividend
rate,  redemption price,  liquidation  rights,  cumulation rights,  sinking fund
provisions, conversion rights, and voting rights.

The full  text of the  proposed  amendment  to  Article  Fourth  is set forth as
Appendix F to this Proxy Statement.

REASONS FOR THE PROPOSED AMENDMENT

The proposed increase in the authorized Common Stock has been recommended by the
Board to  assure  that an  adequate  supply  of  authorized  unissued  shares is
available for valid  corporate  purposes,  including  future stock  dividends or
stock splits, acquisitions,  financings and incentive compensation.  Such Common
Stock and the  presently  authorized  Preferred  Stock  would be  available  for
issuance  without  further action by the  stockholders,  unless  required by the
Company's  Certificate of Incorporation,  its Amended and Restated  By-Laws,  by
applicable law or stock exchange listing standard.

As of the  Record  Date,  251,352,866  shares of Common  Stock  were  issued and
outstanding  and no shares of Preferred  Stock were issued and  outstanding.  In
addition,  approximately  17,623,490 shares were reserved for issuance (i) under
existing employee benefit plans and (ii) upon conversion of the Company's Liquid
Yield  Option Notes  ("LYONs") at the rate of 9.3604  shares of common stock per
$1,000  principal amount at maturity of the LYONs.  Authorized  shares of Common
Stock, outstanding shares and reserved shares are as summarized in


                                       36
--------------------------------------------------------------------------------


the approximate amounts set forth in the table below:

          Presently Authorized Common Shares                   500,000,000

          Outstanding Shares                                   251,352,866

          Reserved Shares:

              Liquid Yield Option Notes                          8,209,071

              Universal Stock Incentive Plan                     7,204,400

              Employee Stock Investment Plan                     1,436,376

              Universal Stock Plan                                 773,164
                                                            --------------

          Subtotal Reserved                                     17,623,011
                                                              ------------

          REMAINING AUTHORIZED SHARES                          231,024,123
                                                               ===========

The issuance of  additional  shares of Common Stock could,  among other  things,
have a dilutive  effect on earnings per share and on the equity and voting power
of existing holders of Common Stock. The issuance of additional shares of Common
Stock by the Company also may potentially have an anti-takeover effect by making
it more difficult to obtain stockholder  approval of various actions,  such as a
merger or removal of management.

If approved, the increase in authorized shares would become effective as soon as
reasonably  practicable  after the  meeting  by our filing an  Amendment  to our
Certificate of Incorporation with the Delaware Secretary of State.

BOARD RECOMMENDATION

The Board has  unanimously  approved the proposed  amendment and has  determined
that the increase in  authorized  Common  Stock is in the best  interests of the
Company and its stockholders.  The Board recommends a vote "FOR" the approval of
the amendment to the Company's  Certificate  of  Incorporation,  as amended,  to
increase the authorized shares of common stock from 500,000,000 to 1,000,000,000
shares.  The voting  requirements for this proposal are described in the "Voting
Information" section.


                                       37
--------------------------------------------------------------------------------


                              STOCKHOLDER PROPOSALS

If a stockholder  intends to present any proposal in accordance  with Rule 14a-8
under the  Securities  Exchange Act of 1934, as amended,  for  consideration  at
Franklin's  next Annual  Meeting of  Stockholders  in 2006, the proposal must be
received by the  Secretary of the Company by September  5, 2005.  Such  proposal
must  also  meet the  other  requirements  of the  rules of the  Securities  and
Exchange Commission relating to stockholders' proposals.

If a stockholder  submits a proposal  outside of Rule 14a-8 for Franklin's  next
Annual Meeting of  Stockholders  in 2006 and if such proposal is not received by
November 19, 2005, then Franklin's proxy may confer  discretionary  authority on
persons  being  appointed  as  proxies  on  behalf of  Franklin  to vote on such
proposal.

All proposals  should be addressed  to:  Barbara J. Green,  Secretary,  Franklin
Resources, Inc., One Franklin Parkway, Building 920, San Mateo, CA 94403.


                         CONTACT THE BOARD OF DIRECTORS

Stockholders or others may contact the Board,  the  non-management  directors or
any  individual  director  by  sending  a  written  communication  appropriately
addressed to:

     Board of Directors
     Franklin Resources, Inc.
     c/o Barbara J. Green, Secretary
     One Franklin Parkway
     San Mateo, CA 94403-1906

You may specify  whether you would  prefer to direct your  communication  to the
full  Board  of  Directors,  only the  non-management  directors  or  particular
individual directors.  Stockholders making such communications are encouraged to
state that they are  stockholders and provide the exact name in which the shares
are held and the number of shares held.

In addition,  the Company has established  separate procedures for its employees
to submit concerns on a confidential basis regarding questionable  accounting or
auditing matters, which are available on the Company's Intranet.

Non-employees may submit any complaint regarding accounting, internal accounting
controls or auditing matters directly to the Audit Committee of the Board of the
Directors by sending a written communication appropriately addressed to:

     Audit Committee
     Franklin Resources, Inc.
     One Franklin Parkway
     San Mateo, CA 94403-1906


                                       38
--------------------------------------------------------------------------------


                                THE ANNUAL REPORT

Franklin's  Annual  Report  for  the  fiscal  year  2004,   including  financial
statements,  has been sent, or is being sent together with this Proxy Statement,
and is available  for viewing on the  Internet,  to all  stockholders  as of the
record date.  The Company is legally  required to send you this  information  to
help you decide how to vote your proxy. Please read it carefully.  However,  the
financial  statements and the Annual Report do not legally form any part of this
proxy soliciting material.


                                    FORM 10-K

The Company filed an annual  report on Form 10-K for the fiscal year 2004,  with
the Securities and Exchange  Commission.  Stockholders  may obtain a copy of the
annual  report  on Form  10-K,  including  financial  statements  and  schedules
included in the annual  report on Form 10-K,  without  charge,  by visiting  the
Company's  website at  www.franklintempleton.com  or by writing to the Company's
Secretary,  Barbara J. Green,  at the  Company's  principal  executive  offices,
Franklin  Resources,  Inc., One Franklin  Parkway,  Building 920, San Mateo,  CA
94403.  Upon written request to the Company's  Secretary,  at the address of the
Company's  principal  executive  offices,  the exhibits set forth on the exhibit
index of the  Company's  annual  report  on Form 10-K may be made  available  at
reasonable  charge  (which  will  be  limited  to  our  reasonable  expenses  in
furnishing such exhibits).


                                       39
--------------------------------------------------------------------------------


                                   APPENDIX A

                            FRANKLIN RESOURCES, INC.

                             AUDIT COMMITTEE CHARTER

This Audit  Committee  Charter (the  "Charter") has been adopted by the Board of
Directors  (the  "Board")  of  Franklin  Resources,   Inc.  (the  "Company")  in
connection  with its  oversight  of the  Company's  management  and the business
affairs of the Company.

1.   PURPOSE. The purpose of the Audit Committee (the "Committee") is to:

     (a)  Assist the Board in fulfilling its  responsibility  to oversee (i) the
          Company's   financial   reporting,   auditing  and  internal   control
          activities,   including  the  integrity  of  the  Company's  financial
          statements,  (ii) the Company's  compliance  with legal and regulatory
          requirements,  (iii)  the  independent  auditor's  qualifications  and
          independence, and (iv) the performance of the Company's internal audit
          function and independent auditor.

     (b)  Prepare  the  report  the  Committee  is  required  by  United  States
          Securities and Exchange Commission (the "SEC") rules to include in the
          Company's annual proxy statement.

2.   MEMBERSHIP.

     (a)  NUMBER.  The  Committee  shall be  comprised  of not less  than  three
          members of the Board.

     (b)  QUALIFICATIONS.

          (i)  Each member of the Committee shall be an  "independent"  director
               in accordance with the corporate  governance listing standards of
               the New York Stock  Exchange  (the  "NYSE").  Each  member of the
               Committee   must  also   satisfy  the   additional   independence
               requirements under the applicable rules of the SEC.

          (ii) Each member of the Committee  shall, in the view of the Board, be
               financially  literate or shall become financially literate within
               a reasonable  period of time after  appointment to the Committee.
               In  addition,  at least one member of the  Committee  shall be an
               "audit   committee   financial   expert"  as  defined  under  the
               applicable  rules of the SEC,  who shall,  in the judgment of the
               Board, have accounting or related financial  management expertise
               in accordance with the corporate  governance listing standards of
               the NYSE.

          (iii) No member of the  Committee  may serve on the audit committee of
               more than three public companies,  including the Company,  unless
               the Board has determined that such simultaneous service would not
               impair the  ability of such  member to  effectively  serve on the
               Committee.

          (iv) The  Committee's  composition  shall meet such  other  regulatory
               requirements  relating to audit committees  established from time
               to  time  by  the  NYSE,   the  SEC  and  any  other   applicable
               governmental or self-regulatory organization.

     (c)  APPOINTMENT  AND  REMOVAL.  The  members  of the  Committee  shall  be
          appointed and may be removed by the Board.

     (d)  TERM.  Each  member  of the  Committee  shall  serve  until his or her
          successor is duly appointed and qualified, or until his or her earlier
          removal or  resignation  or such time as he or she no longer meets the
          qualifications to serve on the Committee.

                                      A-1
--------------------------------------------------------------------------------


     (e)  CHAIRMAN.  The Committee  shall  designate a Chairman of the Committee
          from among its members from time to time.

3.   MEETINGS AND OPERATIONS.

     (a)  MEETINGS.  The Committee  shall meet on a regular basis,  but not less
          frequently than quarterly,  and hold special meetings as circumstances
          require.  The  timing  of the  meetings  shall  be  determined  by the
          Chairman of the Committee,  in  consultation  with the other Committee
          members.

     (b)  MEETINGS WITH OTHERS.  The Committee shall  periodically meet with the
          internal  auditor and the  independent  auditor in separate  executive
          sessions  to provide  the  opportunity  for full and frank  discussion
          without members of senior management present. The Committee shall also
          periodically meet separately with management.

     (c)  QUORUM.  At all Committee  meetings,  a majority of the members of the
          Committee shall constitute a quorum for the transaction of business.

     (d)  ACTIONS. A majority of the members of the Committee shall be empowered
          to act on behalf of the Committee, and the action of a majority of the
          members of the  Committee  shall be the action of the  Committee.  The
          Committee shall keep a record of its actions and proceedings.

     (e)  REPORTING TO THE BOARD.  The Committee shall  regularly  report to the
          Board actions taken by the Committee.

4.   AUTHORITY AND RESPONSIBILITIES. The Committee's function is essentially one
     of oversight  only and shall not relieve the  Company's  management  of its
     responsibility  for preparing  financial  statements,  which accurately and
     fairly  present  the  Company's  financial  results and  condition,  or the
     responsibilities of the independent auditor relating to the audit or review
     of  financial  statements.  The Audit  Committee  shall have the  following
     authority and responsibilities:

     INDEPENDENT AUDITOR OVERSIGHT.

     (a)  The  Committee  shall be  directly  responsible  for the  appointment,
          compensation,  retention and oversight of the work of the  independent
          auditor  engaged  for the  purpose  of  preparing  or issuing an audit
          report or related work or  performing  other  audit,  review or attest
          services  for  the  Company.  The  independent  auditor  shall  report
          directly to and may only be terminated by the Committee.

     (b)  The Committee  shall  pre-approve  the  engagement of the  independent
          auditor to provide any audit or  permitted  non-audit  services to the
          Company.  The  Committee  may  establish   pre-approval  policies  and
          procedures  pursuant to which audit and permitted  non-audit  services
          may be pre-approved. The Committee may delegate the authority to grant
          pre-approvals to one or more designated members of the Committee.  The
          decisions  of  any  member  (to  whom   authority  is   delegated)  to
          pre-approve any such non-audit  service shall be presented to the full
          Committee at its scheduled meetings.

     (c)  The Committee shall establish hiring policies for employees and former
          employees of independent auditors.

     (d)  The Committee  shall annually review an independent  auditor's  report
          including (i) the independent  auditor's  quality control  procedures,
          (ii) any material  issues raised by the most recent  internal  quality
          control review, or peer review, of the independent  auditor, or by any
          inquiry or investigation by governmental or professional  authorities,
          within the preceding five years,  respecting  one or more  independent
          audits carried out by the independent  auditor, and any 


                                      A-2
--------------------------------------------------------------------------------


          steps taken to deal with any such issues,  and (iii) all relationships
          between  the  independent  auditor  and the  Company  consistent  with
          Independence  Standards Board Standard Number 1, such as disclosure of
          any other  relationships  with the  Company  or  management  and their
          impact on the outside auditor's independence.

     (e)  The Committee shall evaluate the independent auditor's qualifications,
          performance  and  independence  based on a review  of the  independent
          auditor's  report  described  above and a review of the auditor's work
          throughout the year. As part of such  evaluation,  the Committee shall
          (i)  review  and  evaluate  all  senior  members  of  the  independent
          auditor's  team,  (ii)  consider  whether  the audit  engagement  team
          partners should be rotated more frequently than is required by law, so
          as to assure continuing auditor  independence,  (iii) consider whether
          the independent  auditor should be rotated, so as to assure continuing
          auditor  independence,  and (iv) obtain the opinion of management  and
          the internal auditor of the independent auditor's performance.

     INTERNAL AUDITOR OVERSIGHT.

     (f)  The Committee shall oversee the Company's  internal audit function and
          meet separately with the internal  auditor to review any audit related
          issues. As part of such oversight, the Committee shall:

          (i)  Annually review internal audit plans, responsibilities,  staffing
               and  budget of the  Company's  internal  audit  function  and the
               adequacy of funding to carry out the proposed work scope.

          (ii) Review and concur in the appointment, replacement or dismissal of
               the internal audit director.

          (iii) Discuss  significant  internal  audit  findings  in  appropriate
                detail as well as the status of past audit recommendations.

     FINANCIAL REPORTING OVERSIGHT.

     (g)  The Committee shall meet to review and discuss with management and the
          independent auditor: (i) the audited financial  statements,  including
          the Company's specific disclosures under "Management's  Discussion and
          Analysis of Financial  Condition and Results of Operations"  ("MD&A"),
          to be included  in the  Company's  Annual  Report on Form 10-K (or the
          Annual Report to  Shareholders  if distributed  prior to the filing of
          the Form 10-K);  (ii) the Company's  interim  financial  results to be
          included in the Company's  quarterly  reports on Form 10-Q,  including
          the specific  disclosures under MD & A; and (iii) the matters required
          to be discussed by  Statement  of Auditing  Standards  Nos. 61, 90 and
          100,  as may be  modified  or  supplemented  from time to time;  which
          review  shall  occur  prior to the  filing of Form 10-K or Form  10-Q,
          whichever is applicable.

     (h)  The  Committee  shall  review  and  generally  discuss  the  Company's
          policies and procedures relating to earnings press releases, including
          the type and  presentation of information to be included  therein,  as
          well as  financial  information  and  earnings  guidance  provided  to
          analysts and rating agencies.

     (i)  The Committee  shall review and discuss with Company's  management and
          the  independent  auditor prior to the filing of any audit report with
          the SEC: (i) all accounting  policies,  practices and judgments  which
          may be  viewed  as  critical;  (ii)  any  significant  changes  in the
          Company's accounting policies; (iii) any analyses of management and/or
          the independent  auditor setting forth  significant  issues  regarding
          accounting  principals,  financial reporting issues and judgments made
          in connection with the preparation of the financial  statements;  (iv)
          all alternative  treatments of financial  information within generally
          accepted accounting  principles that have been discussed by 


                                      A-3
--------------------------------------------------------------------------------


          management and the independent  auditor,  ramifications  of the use of
          such  alternative  disclosures  and  treatments,   and  the  treatment
          preferred by the independent auditor; (v) the effect of regulatory and
          accounting  initiatives,  as well as off-balance sheet structures,  on
          the   financial   statements;   and  (vi)   other   material   written
          communications between the independent auditor and management, such as
          any  management   letter   comments  or  the  schedule  of  unadjusted
          differences.

     (j)  The Committee shall review with management and the independent auditor
          the  quality  and  adequacy  of  the  Company's   internal   controls,
          disclosure  controls  and  procedures,   and  accounting   procedures,
          including reports of material  weaknesses or significant  deficiencies
          in the design or operation of internal  controls and/or any fraud that
          involves  personnel having a significant role in internal control over
          financial  reporting,  as  required  to  be  disclosed  by  the  Chief
          Executive Officer(s) and/or Chief Financial Officer in connection with
          their  certifications  for the  annual  or  quarterly  reports  of the
          Company and/or presented in the independent  auditor's written report,
          a report of management or internal audit, or otherwise.

     (k)  The  Committee  shall  provide  oversight  and  discuss  policies  and
          procedures with respect to Company enterprise risk assessment and risk
          management.

     (l)  The  Committee  shall  review with the  independent  auditor any audit
          problems and/or  difficulties and management's  response,  and resolve
          any disagreements  regarding  financial  reporting arising between the
          Company's  management  and any  independent  auditor  employed  by the
          Company.   The  review   shall   also   include   discussion   of  the
          responsibilities, budget and staffing of the internal auditor.

     AUDIT COMMITTEE REPORT.

     (m)  The Committee shall prepare the annual report of the Committee,  which
          shall be included in the Company's annual proxy statement.

     LEGAL AND REGULATORY COMPLIANCE OVERSIGHT.

     (n)  The Committee shall assist the Board in overseeing the Company's legal
          and regulatory compliance.

     (o)  The Committee shall establish  procedures for the receipt,  retention,
          and  treatment  of  complaints   received  by  the  Company  regarding
          accounting,  internal controls, or auditing matters,  which procedures
          shall include a process for the confidential,  anonymous submission by
          Company  employees of concerns  regarding  questionable  accounting or
          auditing matters.  In addition,  the Committee shall review complaints
          received  directly by the Committee under those procedures or received
          through the Compliance and Ethics Hot-Line  established by the Company
          to permit anonymous  reporting of violations of the Code of Ethics and
          Business Conduct.

     OTHER.

     (p)  In  discharging  its  oversight  role,  the Committee is authorized to
          investigate  any matter that the  Committee  deems  appropriate,  with
          access to all books, records, facilities and personnel of the Company.

     (q)  The Committee shall have the authority to perform any other activities
          it deems are appropriate, consistent with this Charter.

     (r)  The Committee shall have the authority to retain independent advisors,
          including, but not limited to, independent counsel,  auditors or other
          experts,  at the expense of the  Company,  to assist in  carrying  out
          Committee responsibilities, as the Committee may deem appropriate.

                                      A-4
--------------------------------------------------------------------------------


5.   ANNUAL PERFORMANCE EVALUATION.  The Committee shall annually review its own
     performance in such manner as it deems appropriate.

6.   ANNUAL REVIEW OF COMMITTEE CHARTER. The Committee shall annually review and
     reassess the adequacy of this Charter and recommend any proposed changes to
     the Board for approval.

7.   GENERAL.  This Charter is intended as a component of the flexible framework
     within which the Board, assisted by its committees,  directs the affairs of
     the Company.  While it should be  interpreted  in the context of applicable
     laws,  regulations and listing  requirements,  as well as in the context of
     the  Company's  Articles  of  Incorporation,  as  amended,  and Amended and
     Restated  By-Laws,  it is not  intended to  establish  by its own force any
     legally binding obligations.




Last revised as of December 16, 2004


                                      A-5
--------------------------------------------------------------------------------


                                   APPENDIX B

                            FRANKLIN RESOURCES, INC.

                         COMPENSATION COMMITTEE CHARTER

This  Compensation  Committee  Charter (the  "Charter")  has been adopted by the
Board of Directors (the "Board") of Franklin  Resources,  Inc. (the "Company" or
"Franklin") in connection with its oversight of the Company's management and the
business affairs of the Company.

1.   PURPOSE. The purpose of the Compensation Committee (the "Committee") is to:

     (a)  Oversee the  establishment  of goals and  objectives  related to Chief
          Executive Officer  compensation,  and determine the compensation level
          of the Chief Executive Officer(s).

     (b)  Assist the Board in fulfilling its responsibility  relating to (i) the
          compensation (and related  benefits) of the executive  officers of the
          Company,  and  (ii)  the  administration  of the  Company's  incentive
          compensation  and  equity-based   plans  that  are  subject  to  Board
          approval.

     (c)  Prepare the annual report on executive  officer  compensation  for the
          Company's proxy statement.

2.   MEMBERSHIP.

     (a)  NUMBER.  The Committee shall consist of no fewer than three members of
          the Board.

     (b)  QUALIFICATIONS. Each member of the Committee shall be an "independent"
          director in accordance with the corporate governance listing standards
          of the New York Stock Exchange. In addition, each member shall qualify
          as an  "outside  director"  for  purposes  of  Section  162(m)  of the
          Internal  Revenue  Code of 1986,  as amended,  and as a  "non-employee
          director" for purposes of Rule 16b-3  promulgated under the Securities
          Exchange Act of 1934, as amended.

     (c)  APPOINTMENT  AND  REMOVAL.  The  members  of the  Committee  shall  be
          appointed and may be removed by the Board.

     (d)  TERM.  Each  member  of the  Committee  shall  serve  until his or her
          successor is duly appointed and qualified, or until his or her earlier
          removal  or  resignation  or such  time as he or she is no  longer  an
          "independent" director of the Board.

     (e)  CHAIRMAN.  The Committee  shall  designate a Chairman of the Committee
          from among its members from time to time.

3.   MEETINGS AND OPERATIONS.

     (a)  MEETINGS.  The Committee  shall meet on a regular basis,  but not less
          frequently  than  quarterly,   and  will  hold  special   meetings  as
          circumstances  require.  The Committee may meet in executive  sessions
          and invite one or more members of management,  independent advisors or
          other third parties to attend as it deems  appropriate.  The timing of
          the meetings shall be determined by the Chairman of the Committee,  in
          consultation with the other Committee members.

     (b)  QUORUM.  At all Committee  meetings,  a majority of the members of the
          Committee shall constitute a quorum for the transaction of business.

     (c)  ACTIONS.  The action of a majority of those  present at a meeting,  at
          which a quorum is present,  shall be the action of the Committee.  The
          Committee shall keep a record of its actions and proceedings.

                                      B-1
--------------------------------------------------------------------------------

     (d)  REPORTING TO THE BOARD.  The Committee shall  regularly  report to the
          Board actions taken by the Committee.

     (e)  DELEGATION.  In discharging its duties,  the Committee shall have full
          authority to form  subcommittees and delegate any or all of its duties
          to such subcommittees as the Committee deems appropriate.

     (f)  EXECUTIVE  ATTENDANCE AT MEETINGS.  No executive officer should attend
          that  portion  of any  meeting  of the  Committee  during  which  such
          executive officer's  performance or compensation is discussed,  unless
          specifically invited by the Committee.

4.   AUTHORITY  AND  RESPONSIBILITIES.  The  Committee  shall have the following
     authority and responsibilities:

     CEO EVALUATION AND COMPENSATION.

     (a)  The  Committee  shall  (i)  review  and  approve  corporate  goals and
          objectives  relevant  to  the  compensation  of  the  Chief  Executive
          Officer(s),  (ii)  evaluate  the  performance  of the Chief  Executive
          Officer(s) in light of those goals and objectives, and (iii) determine
          and approve the compensation of the Chief Executive  Officer(s) as the
          Committee  determines is in the best interests of the Company based on
          this evaluation and any other factors the Committee deems appropriate.

     (b)  In setting the long-term  incentive  component of the  compensation of
          the Chief Executive  Officer(s) as the Committee  determines is in the
          best interests of the Company, the Committee may consider, among other
          factors,  the Company's  performance and relative  shareholder return,
          the value of similar  incentive awards to Chief Executive  Officers at
          comparable  companies,   the  awards  given  to  the  Company's  Chief
          Executive Officer(s) in past years and any other factors the Committee
          deems appropriate.

     (c)  The Committee shall meet annually with the Chief Executive  Officer(s)
          to  discuss  the  recommendations  of the Chief  Executive  Officer(s)
          concerning performance goals and the evaluation of the Chief Executive
          Officer(s) of the Company's progress toward meeting those goals.

     OTHER COMPENSATION RELATED RESPONSIBILITIES.

     (d)  The Committee  shall review and make  recommendations  to the Board on
          the overriding compensation philosophy for the Company.

     (e)  The  Committee  shall  review  and  approve  the  compensation  of the
          executive  officers  of the Company  (other  than the Chief  Executive
          Officer(s)).

     (f)  The Committee  shall review and approve:  (i)  employment  agreements,
          severance arrangements and change in control agreements or provisions;
          and (ii) any special or supplemental benefits for, the Chief Executive
          Officer(s)  and  the  executive   officers  of  the  Company  and  its
          subsidiaries   where  the  amounts  exceed  certain  threshold  levels
          determined by the Committee from time to time.

     (g)  The Committee shall at least annually review and make  recommendations
          to the Board on the compensation (including equity-based compensation)
          of the Company's directors. In so reviewing and making recommendations
          on director  compensation,  the Committee shall consider,  among other
          things, the following policies and principles:

                                      B-2
--------------------------------------------------------------------------------



          (i)  that the  compensation  should  fairly pay the  directors for the
               work,  time  commitment  and efforts  required by  directors of a
               company  of  Franklin's  size and scope of  business  activities,
               including service on Board committees;

          (ii) that a component of the compensation  should be designed to align
               the  directors'  interest  with the  long-term  interests  of the
               Company's shareholders; and

          (iii) that directors' independence  may be compromised or impaired for
                Board or  committee  purposes  if director compensation  exceeds
                customary levels.

     INCENTIVE PLANS.

     (h)  The Committee shall make  recommendations to the Board with respect to
          incentive  compensation  and  equity-based  plans that are  subject to
          Board   approval.   The   Committee   shall   also   review  and  make
          recommendations  with respect to  performance  or operating  goals for
          participants in the Company's incentive plans.

     (i)  The Committee shall grant, administer, approve and ratify awards under
          incentive compensation and stock incentive plans, including amendments
          to the awards made under any such plans, and review and monitor awards
          under  such  plans.  The  Committee  shall  also  serve  as  the  plan
          administrator for such incentive  compensation  plans, stock incentive
          plans and stock purchase plans as the Committee, from time to time, is
          so designated or as required by the Board or the plan documents.

     EXECUTIVE COMPENSATION REPORT.

     (j)  The  Committee   shall   prepare  the  report  on  executive   officer
          compensation that the United States Securities and Exchange Commission
          rules require to be included in the Company's annual proxy statement.

     OTHER.

     (k)  The Committee shall have the authority to perform any other activities
          it deems are appropriate, consistent with this Charter.

     (l)  The Committee shall have the sole authority to retain,  at the expense
          of the Company,  and terminate  any  compensation  consulting  firm to
          assist in the  evaluation  of  director,  Chief  Executive  Officer or
          executive  compensation,   including  the  authority  to  approve  the
          consulting  firm's fees and other retention  terms. The Committee also
          shall  have  the  authority  to  retain  other  independent  advisors,
          including,  but not limited to, independent  counsel or other experts,
          at the expense of the  Company,  to assist in carrying  out  Committee
          responsibilities, as the Committee may deem appropriate.

5.   ANNUAL PERFORMANCE EVALUATION.  The Committee shall annually review its own
     performance in such manner as it deems appropriate.

6.   ANNUAL REVIEW OF COMMITTEE CHARTER. The Committee shall annually review and
     reassess the adequacy of this Charter and recommend any proposed changes to
     the Board for approval.

7.   GENERAL.  This Charter is intended as a component of the flexible framework
     within which the Board, assisted by its committees,  directs the affairs of
     the Company.  While it should be  interpreted  in the context of applicable
     laws,  regulations and listing  requirements,  as well as in the context of
     the  Company's  Articles  of  Incorporation,  as  amended,  and Amended and
     Restated  By-Laws,  it is not  intended to  establish  by its own force any
     legally binding obligations.




Last revised as of December 16, 2004


                                      B-3
--------------------------------------------------------------------------------


                                   APPENDIX C

                            FRANKLIN RESOURCES, INC.

                     CORPORATE GOVERNANCE COMMITTEE CHARTER

This Corporate  Governance Committee Charter (the "Charter") has been adopted by
the Board of Directors (the "Board") of Franklin Resources, Inc. (the "Company")
in connection  with its oversight of the Company's  management  and the business
affairs of the Company.

1.   PURPOSE.   The  purpose  of  the  Corporate   Governance   Committee   (the
     "Committee") is to:

     (a)  Provide  counsel  to the  Board  with  respect  to  the  organization,
          function and composition of the Board and its committees.

     (b)  Oversee the evaluation of the Board and management of the Company.

     (c)  Develop and recommend to the Board corporate  governance  policies and
          procedures applicable to the Company.

     (d)  Identify and recommend to the Board potential director  candidates for
          nomination.

2.   MEMBERSHIP.

     (a)  NUMBER.  The  Committee  shall be  comprised  of not less  than  three
          members of the Board.

     (b)  QUALIFICATIONS. Each member of the Committee shall be an "independent"
          director in accordance with the corporate governance listing standards
          of the New York Stock Exchange.

     (c)  APPOINTMENT  AND  REMOVAL.  The  members  of the  Committee  shall  be
          appointed and may be removed by the Board.

     (d)  TERM.  Each  member  of the  Committee  shall  serve  until his or her
          successor is duly appointed and qualified, or until his or her earlier
          removal  or  resignation  or such  time as he or she is no  longer  an
          "independent" director of the Board.

     (e)  CHAIRMAN.  The Committee  shall  designate a Chairman of the Committee
          from among its members from time to time.

3.   MEETINGS AND OPERATIONS.

     (a)  MEETINGS.  The Committee  shall meet on a regular basis,  but not less
          frequently than quarterly,  and hold special meetings as circumstances
          require.  The Committee may meet in executive  sessions and invite one
          or more  members of  management,  independent  advisors or other third
          parties to attend as it deems appropriate.  The timing of the meetings
          shall be determined by the Chairman of the Committee,  in consultation
          with the other Committee members.

     (b)  QUORUM.  At all Committee  meetings,  a majority of the members of the
          Committee shall constitute a quorum for the transaction of business.

     (c)  ACTIONS.  The action of a majority of those  present at a meeting,  at
          which a quorum is present,  shall be the action of the Committee.  The
          Committee shall keep a record of its actions and proceedings.

     (d)  REPORTING TO THE BOARD.  The Committee shall  regularly  report to the
          Board actions taken by the Committee.

                                      C-1
--------------------------------------------------------------------------------


     (e)  DELEGATION.  In discharging its duties,  the Committee shall have full
          authority to form  subcommittees and delegate any or all of its duties
          to such subcommittees as the Committee deems appropriate.

4.   AUTHORITY  AND  RESPONSIBILITIES.  The  Committee  shall have the following
     authority and responsibilities:

     DIRECTOR NOMINATIONS.

     (a)  The  Committee  shall  develop and recommend to the Board for adoption
          specific,  minimum  qualifications that the Committee believes must be
          met by a  potential  nominee  for  director,  including  any  specific
          qualities or skills that the Committee  believes are necessary for one
          or more of the directors to possess.

     (b)  The  Committee  shall  develop and recommend to the Board for adoption
          director independence standards.

     (c)  The  Committee  shall  develop and recommend to the Board for adoption
          procedures  by  which   stockholders  of  the  Company  can  recommend
          candidates for nomination to the Board.

     (d)  The  Committee  shall  develop and recommend to the Board for adoption
          procedures by which director  nominees are identified and evaluated by
          the Committee.

     (e)  The  Committee  shall  identify and evaluate  candidates  qualified to
          become  potential  director  nominees,  including any such  candidates
          recommended   by   stockholders,   in  accordance   with  the  minimum
          qualifications  and  procedures  approved by the Board.  The Committee
          shall  recommend to the Board  candidates  or nominees for election as
          members of the Board.

     (f)  The  Committee  shall have the sole  authority to retain and terminate
          any  search  firm  to  assist  in  identifying   director  candidates,
          including  the  authority to approve the search  firm's fees and other
          retention terms.

     (g)  The Committee  shall  recommend to the Board directors for appointment
          to the  various  committees  of the  Board.  At  least  annually,  the
          Committee shall review the composition of each committee of the Board,
          including   the   qualifications   of  its  members,   and  make  such
          recommendations  to the Board for rotation of the committee members as
          the Committee deems appropriate.

     CORPORATE GOVERNANCE.

     (h)  The Committee  shall develop and recommend to the Board for adoption a
          set of Corporate  Governance  Guidelines,  which shall comply with the
          corporate governance listing standards of the New York Stock Exchange.
          The Committee shall assess such guidelines,  and make  recommendations
          to the Board for changes to such guidelines,  from time to time as the
          Committee deems appropriate.

     (i)  The Committee  shall develop and recommend to the Board for adoption a
          Code of Ethics  and  Business  Conduct  for the  Company's  directors,
          officers  and  employees,   which  shall  comply  with  the  corporate
          governance  listing  standards of the New York Stock  Exchange and the
          rules of the United States  Securities  and Exchange  Commission.  The
          Committee  shall  assess such code,  and make  recommendations  to the
          Board for  changes  to such code,  from time to time as the  Committee
          deems appropriate.

     (j)  The  Committee  shall  review  the  anti-money   laundering  policies,
          procedures  and  operations of the Company on a periodic  basis as the
          Committee deems appropriate.

                                      C-2
--------------------------------------------------------------------------------

     (k)  The  Committee  shall  develop and recommend to the Board for adoption
          such other policies or procedures  regarding the corporate  governance
          of the Company from time to time as the Committee deems appropriate.

     (l)  The  Committee  shall make  recommendations  to the Board from time to
          time as the Committee deems appropriate regarding the structure of the
          various   committees   of  the  Board,   including   responsibilities,
          qualifications of the members and delegation authority.

     OVERSIGHT AND EVALUATIONS.

     (m)  The  Committee  shall  oversee the  evaluation  of  management  of the
          Company and make recommendations to the Board as appropriate.

     (n)  The  Committee  shall  oversee  the  Company's  orientation  for newly
          elected members of the Board and continuing  education process for the
          Board and assist the Board in its implementation.

     (o)  The Committee  shall oversee the Board's  annual  self-evaluation.  In
          addition,  the Committee shall obtain  comments  regarding the Board's
          performance  from all directors and shall report annually to the Board
          with an assessment of the Board's performance.

     (p)  The  Committee  shall  oversee  the  annual  self-evaluation  of  each
          committee of the Board.  In  addition,  the  Committee  shall at least
          annually review each committee's performance,  including its reporting
          to the full Board, and make such  recommendations  to the Board as the
          Committee deems appropriate.

     OTHER.

     (q)  The Committee shall have the authority to perform any other activities
          it deems are appropriate, consistent with this Charter.

     (r)  The Committee shall have the authority to retain independent advisors,
          at the expense of the  Company,  to assist in carrying  out  Committee
          responsibilities, as the Committee may deem appropriate.

5.   ANNUAL PERFORMANCE EVALUATION.  The Committee shall annually review its own
     performance in such manner as it deems appropriate.

6.   ANNUAL REVIEW OF COMMITTEE CHARTER. The Committee shall annually review and
     reassess the adequacy of this Charter and recommend any proposed changes to
     the Board for approval.

7.   GENERAL.  This Charter is intended as a component of the flexible framework
     within which the Board, assisted by its committees,  directs the affairs of
     the Company.  While it should be  interpreted  in the context of applicable
     laws,  regulations and listing  requirements,  as well as in the context of
     the Company's  Certificate of  Incorporation,  as amended,  and Amended and
     Restated  By-Laws,  it is not  intended to  establish  by its own force any
     legally binding obligations.




Last revised as of December 16, 2004


                                      C-3
--------------------------------------------------------------------------------


                                   APPENDIX D

                            FRANKLIN RESOURCES, INC.

                         CORPORATE GOVERNANCE GUIDELINES

These Corporate  Governance  Guidelines (the  "Guidelines") have been adopted by
the Board of Directors (the "Board") of Franklin Resources, Inc. (the "Company")
in  connection  with its  oversight  of the  Company's  management  and business
affairs.

1.   COMPOSITION OF BOARD OF DIRECTORS.

     (a)  INDEPENDENCE   OF   DIRECTORS.   A  majority  of  directors   must  be
          "independent"  directors in accordance  with the corporate  governance
          listing  standards of the New York Stock  Exchange (the  "Independence
          Rules").  In addition,  at least three directors must also satisfy the
          additional independence requirements for audit committee members under
          the  Independence  Rules and the applicable rules of the United States
          Securities and Exchange Commission (the "SEC").

     (b)  DIRECTOR  QUALIFICATIONS  AND  SELECTION.   The  Corporate  Governance
          Committee  of the  Board  is  responsible  for  establishing  a policy
          setting forth the specific,  minimum qualifications that the Corporate
          Governance  Committee believes must be met by a nominee recommended by
          the Corporate  Governance  Committee for a position on the Board,  and
          describing  any  specific  qualities  or  skills  that  the  Corporate
          Governance  Committee  believes are  necessary  for one or more of the
          directors  to  possess.   Such   qualifications   shall   include  the
          requirements  under the Independence Rules as well as consideration of
          the  individual  skills,  experience and  perspectives  that will help
          create an effective  Board. The Corporate  Governance  Committee shall
          establish  a policy  setting  forth the process  for  identifying  and
          evaluating nominees for directors,  including the consideration of any
          director candidates  recommended by stockholders,  and shall recommend
          to the Board  candidates  for election as  directors.  The Board shall
          nominate  such  candidates  for election as directors by the Company's
          stockholders or fill vacancies that may arise.

     (c)  SIZE OF BOARD. The Board shall  periodically  evaluate the size of the
          Board and make any changes it deems appropriate in accordance with the
          Amended and Restated By-Laws of the Company (the "By-Laws").

     (d)  TERM LIMITS.  The Board does not believe that it should establish term
          limits for its members.  The Board  recognizes the value of continuity
          of directors who have  experience with the Company and who have gained
          over a period of time a level of  understanding  about the Company and
          its  operations  that  enable  the  director  to  make  a  significant
          contribution to the deliberations of the Board.

     (e)  RETIREMENT.  Persons are not eligible to be recommended for nomination
          as a director for a term  commencing on or after their 75th  birthday,
          except  for  any  person  who  beneficially  owns  5% or  more  of the
          outstanding  shares of the Company.  Incumbent  directors reaching the
          age of 75 during their term may complete such term.

                                      D-1
--------------------------------------------------------------------------------

          
2.   CONFLICTS OF INTEREST AND OTHER COMMITMENTS.

     (a)  With respect to any matter under  discussion  by the Board,  directors
          must  disclose to the Board any  potential  conflicts of interest they
          may have and, if appropriate, refrain from voting on a matter in which
          they may have a conflict.

     (b)  Each director is  responsible  for ensuring that other  commitments do
          not   conflict   or   materially   interfere   with   the   director's
          responsibilities  to the Company. To ensure that serving as a director
          of  another  company  or any  other  change in  circumstances  such as
          employment,  business or "immediate family"  relationships (as defined
          under  the  Independence  Rules)  would not  conflict  with his or her
          duties to the Company,  and to evaluate whether disclosure needs to be
          made in the Company's proxy  statement or the director's  status under
          the  Independence  Rules is changed,  the director  should consult the
          Chairman  of the Board  and the  Corporate  Secretary  in  advance  of
          accepting an invitation to serve on another company's board and should
          report any change in  circumstances  to the Corporate  Secretary.  The
          Chairman of the Board and the Corporate Secretary should report to the
          Corporate   Governance  Committee  in  writing  the  results  of  such
          consultation.

3.   DIRECTOR RESPONSIBILITIES.

     (a)  DUTIES. The directors are responsible for exercising care, loyalty and
          good faith;  acting in a manner they reasonably believe is in the best
          interests  of  the  Company  and  its  stockholders  and  in a  manner
          consistent  with  their   fiduciary   duties.   In  fulfilling   their
          responsibilities,  directors  may ask such  questions and conduct such
          investigations  as they deem  appropriate,  and may reasonably rely on
          the information  provided to them by the Company's  senior  executives
          and its outside advisors and auditors. The directors shall be entitled
          to have  the  Company  purchase  directors'  and  officers'  liability
          insurance on their behalf and receive the benefits of  indemnification
          and exculpation to the fullest extent  permitted by law, the Company's
          Certificate  of  Incorporation,  as amended (the  "Certificate"),  and
          By-Laws and any indemnification agreements, as applicable.

     (b)  MEETINGS AND  PREPARATION.  Directors are expected to regularly attend
          Board  meetings and  meetings of  committees  on which they serve,  to
          spend the time needed in preparation  for such meetings and to meet as
          frequently  as  they  deem  necessary  to  properly   discharge  their
          responsibilities.  In addition,  directors  should stay abreast of the
          Company's  business  and  markets.  To the  fullest  extent  possible,
          directors should review agendas and other meeting materials in advance
          of any Board or committee meetings.

     (c)  MEETING AGENDAS. The Chairman of the Board and the Corporate Secretary
          will establish and disseminate the agenda for each Board meeting. Each
          Board member is free to suggest the  inclusion of items on the agenda.
          Each Board member is free to raise at any Board meeting  subjects that
          are not on the agenda for that meeting.

     (d)  COMPANY REPRESENTATION.  The Board believes that management speaks for
          the Company.  Individual  directors may, from time to time,  expressly
          represent  the  Company in  meetings  or  otherwise  communicate  with
          various third parties on the Company's  behalf.  When representing the
          Company, it is generally expected that directors will do this with the
          knowledge of management and, unless warranted by unusual circumstances
          or as contemplated by the committee  charters,  only at the request of
          management.

4.   EXECUTIVE SESSIONS.  The non-management  directors (i.e., directors who are
     not Company  officers) will meet separately  without  management in regular
     executive  sessions.   The  "independent"   directors  as  defined  in  the
     Independence Rules will meet at least twice a year in executive session.

                                      D-2
--------------------------------------------------------------------------------

5.   BOARD COMMITTEES.

     (a)  COMMITTEES.  The Board shall have an Audit  Committee,  a Compensation
          Committee and a Corporate Governance  Committee.  All members of these
          committees  will  be  "independent"   directors,  as  defined  in  the
          Independence Rules. In addition, Audit Committee members shall satisfy
          the additional  independence  requirements for audit committee members
          under the Independence Rules and the applicable rules of the SEC.

     (b)  APPOINTMENT,  REMOVAL AND TERM.  Committee  members shall be appointed
          and may be removed  by the Board.  Each  member of a  committee  shall
          serve until his or her successor is duly appointed and  qualified,  or
          until his or her earlier  removal or resignation or such time as he or
          she no longer meets the qualifications to serve on the committee.

     (c)  CHAIRMAN.  Each committee  shall designate a Chairman of the committee
          from among its members from time to time.

     (d)  CHARTERS.  Each  committee  shall have its own  written  charter.  The
          charters will set forth the purpose, authority and responsibilities of
          the  committees as well as  qualifications  for committee  membership,
          procedures for committee  member  appointment  and removal,  committee
          structure  and  operations,   reporting  to  the  Board,   and  annual
          performance  evaluations  of  the  committee.  The  charters  of  each
          committee will be reviewed  periodically with a view toward delegating
          to the standing  committees the full authority of the Board concerning
          specified matters appropriate to such committee.

     (e)  MEETINGS.  Each committee shall meet on a regular basis,  but not less
          frequently than quarterly,  and hold special meetings as circumstances
          require.  The  timing  of the  meetings  shall  be  determined  by the
          Chairman of the committee,  in  consultation  with the other committee
          members.  The Chairman of each  committee,  in  consultation  with the
          appropriate members of the committee and management,  will develop the
          committee's agenda.

     (f)  ADDITIONAL COMMITTEES.  The Board may, from time to time, establish or
          maintain additional committees as it deems appropriate and delegate to
          such  committees  such authority  permitted by applicable laws and the
          By-Laws as the Board sees fit.

6.   DIRECTOR ACCESS TO OFFICERS, EMPLOYEES AND INDEPENDENT ADVISORS.

     (a)  OFFICERS AND EMPLOYEES.  Directors  shall have full and free access to
          officers and employees of the Company. Any meetings or contacts that a
          director  wishes to initiate may be arranged  directly by the director
          or through the Chief Executive Officer(s) or the Corporate Secretary.

     (b)  INDEPENDENT  ADVISORS.  The Board and each Board  committee shall have
          full and free access to the  Company's  independent  advisors and each
          shall have the power to retain legal,  accounting,  financial or other
          advisors as they may deem  appropriate  at the expense of the Company,
          without  the need to obtain the prior  approval  of any officer of the
          Company.  The  Corporate  Secretary  of the Company  will  arrange for
          payment of the invoices of any such third party advisors.

7.   DIRECTOR COMPENSATION. The form and amount of director compensation will be
     determined by the  Compensation  Committee in accordance  with the policies
     and principles  set forth in its charter,  and the  Compensation  Committee
     will conduct an annual review of director compensation.

8.   DIRECTOR ORIENTATION AND CONTINUING EDUCATION.

     (a)  ORIENTATION.   The  Board,   with  the  assistance  of  the  Corporate
          Governance Committee,  shall establish, or identify and provide access
          to, appropriate  orientation programs,  sessions or material for newly
          elected  directors of the Company for their benefit either prior to or
          within a reasonable  period of time after their nomination or election
          as a director.  This  orientation may include  


                                      D-3
--------------------------------------------------------------------------------

          presentations  by senior  management to familiarize new directors with
          the Company's strategic plans, its significant  financial,  accounting
          and risk management issues, its compliance program, its Code of Ethics
          and Business Conduct and these Guidelines, its principal officers, and
          its internal and independent  auditors.  In addition,  the orientation
          will  include  visits  to  Company  headquarters  and,  to the  extent
          appropriate,  other of the Company's significant facilities. All other
          directors are also invited to attend orientation.

     (b)  EDUCATION.  The Board, with the assistance of the Corporate Governance
          Committee,  shall also identify  and/or develop  continuing  education
          opportunities  for the  directors.  Directors are encouraged to attend
          continuing   education  programs  sponsored  by  universities,   stock
          exchanges  or other  organizations.  The Company  will  reimburse  the
          reasonable costs and expenses associated with such programs.

9.   MANAGEMENT SUCCESSION.  The Board shall oversee the succession planning for
     the  management of the Company,  including  policies and principles for the
     selection and performance review of the Chief Executive Officer(s), as well
     as  policies  regarding  succession  in the  event of an  emergency  or the
     retirement of the Chief Executive Officer(s).

10.  COMPANY'S  LONG-TERM  STRATEGIC PLANS. The Board will  periodically  review
     with management the Company's long-term strategic plans.

11.  ANNUAL  PERFORMANCE  EVALUATION.  The  Board,  with the  assistance  of the
     Corporate Governance  Committee,  shall annually review its own performance
     in such manner as it deems  appropriate to determine  whether the Board and
     its committees are functioning effectively. The full Board will discuss the
     evaluation  to  determine  what action,  if any,  could  improve  Board and
     committee performance.

12.  REVIEW  OF  CORPORATE  GOVERNANCE  GUIDELINES.   The  Corporate  Governance
     Committee,  as  appropriate,  shall  periodically  review and  reassess the
     adequacy  of  these  Guidelines  to  determine   whether  any  changes  are
     appropriate  and  recommend  to the Board any such  changes for the Board's
     approval.

13.  GENERAL.  These  Guidelines  are  intended as a component  of the  flexible
     framework within which the Board,  assisted by its committees,  directs the
     affairs of the Company.  While they should be interpreted in the context of
     applicable laws,  regulations and listing  requirements,  as well as in the
     context of the Company's  Certificate and By-Laws, they are not intended to
     establish by their own force any legally binding obligations.



                                      D-4
--------------------------------------------------------------------------------

E-10

                                   APPENDIX E

                            FRANKLIN RESOURCES, INC.

                       2002 UNIVERSAL STOCK INCENTIVE PLAN

                  [(as amended and restated December 16, 2004)]

1.   GENERAL
     -------

     1.1  PURPOSE.  The Franklin Resources,  Inc. 2002 Universal Stock Incentive
Plan (the "2002 Stock Plan") has been established by Franklin Resources, Inc., a
Delaware  corporation (the "Company") to (i) attract and retain persons eligible
to  participate  in the 2002 Stock Plan;  (ii) motivate  employees,  by means of
appropriate  incentives,  to achieve long-range performance goals; (iii) provide
incentive  compensation  opportunities  that are competitive with those of other
similar companies;  and (iv) further identify employees' interests with those of
the  Company's  other  stockholders  through  compensation  that is based on the
Company's common stock; and thereby promote the long-term  financial interest of
the Company and the Subsidiaries.

     1.2  PARTICIPATION.  Subject to the terms and  conditions of the 2002 Stock
Plan, the Committee shall determine and designate, from time to time, from among
the Participants, those persons who will be granted one or more Awards under the
2002 Stock Plan.  In the  discretion  of the  Committee,  a  Participant  may be
granted any Award  permitted  under the  provisions of the 2002 Stock Plan,  and
more than one Award may be  granted to a  Participant.  Awards may be granted as
alternatives to or replacement of awards  outstanding under the 2002 Stock Plan,
or any other plan or  arrangement  of the Company or a  Subsidiary  (including a
plan or  arrangement  of a  business  or  entity,  all or a portion  of which is
acquired by the Company or a Subsidiary).

     1.3  OPERATION,   ADMINISTRATION,   AND  DEFINITIONS.   The  operation  and
administration of the 2002 Stock Plan,  including the Awards made under the 2002
Stock  Plan,  shall be  subject to the  provisions  of  Section 4  (relating  to
operation and administration). Capitalized terms in the 2002 Stock Plan shall be
defined as set forth in the 2002 Stock Plan (including the definition provisions
of Section 8 of the 2002 Stock Plan).

     1.4  STOCK  SUBJECT  TO 2002  STOCK  PLAN;  SHARE  COUNTING. Subject to the
provisions  of this  Section 1.4 and  Section  6.1 of the 2002 Stock  Plan,  the
maximum  aggregate  number of shares which may be delivered  pursuant to Awards,
including  without  limitation,  Options and SAR's  granted under the 2002 Stock
Plan, is 30,000,000.  The shares may be authorized,  but unissued, or reacquired
Common Stock.

          (a) To the extent any Shares  covered by an Award are not delivered to
a Participant or beneficiary because the Award is forfeited or canceled,  or the
Shares are not delivered because the Award is settled in cash, such Shares shall
not be deemed to have been  delivered  for purposes of  determining  the maximum
number of Shares  available  for delivery  pursuant to Awards  granted under the
2002 Stock Plan.

          (b) If the exercise  price of any Option  granted under the 2002 Stock
Plan is satisfied by tendering  Shares to the Company (by either actual delivery
or by attestation),  only the number of Shares issued net of the Shares tendered
shall be deemed  delivered  for purposes of  determining  the maximum  number of
Shares  available for delivery  pursuant to Awards (other than Options)  granted
under the 2002 Stock Plan.

          (c) Subject to adjustment under Section 6.1, (i) the maximum number of
shares that may be granted to any one individual pursuant to Section 2 (relating
to Options and SARs) shall be 400,000 Shares during any one-calendar-year period
and (ii) the maximum  number of Shares that may be granted to any one individual
subject to Section 3 (relating to Stock Unit Awards,  Restricted  Stock  Awards,
Restricted  Stock Unit Awards and  Performance  Share Awards) shall be 1,000,000
Shares during any  one-calendar-year  period (regardless of when such Shares are
deliverable).

                                      E-1
--------------------------------------------------------------------------------


2.   OPTIONS AND SARS
     ----------------

        2.1    OPTIONS.

          (a) An Option is a grant of rights to  purchase  Shares at an Exercise
Price established by the Committee.  Options granted under this Section 2 may be
either Incentive Stock Options ("ISO") or Nonstatutory Stock Options ("NSO"), as
determined in the discretion of the Committee.

          (b) Each Option shall be designated in the written option agreement as
either an  Incentive  Stock  Option or a  Nonstatutory  Stock  Option.  However,
notwithstanding such designations,  to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options  designated as Incentive Stock
Options are  exercisable  for the first time by any Optionee during any calendar
year  (under  all plans of the  Company  or any  Parent or  Subsidiary)  exceeds
$100,000,  such excess Options shall be  automatically  treated as  Nonstatutory
Stock Options.  For purposes of this paragraph  2.1(b),  Incentive Stock Options
shall be taken into  account in the order in which  they were  granted,  and the
Fair Market Value of the Shares shall be  determined as of the original date the
Option with respect to such Shares is granted.

          (c) The term of each  Option  shall be the term  stated in the  Option
Agreement;  provided,  however,  that in the case of any Incentive Stock Option,
the term shall be no more than ten (10) years from the date of grant  thereof or
such shorter term as may be provided in the Option  Agreement.  However,  in the
case of an Incentive  Stock Option  granted to an Optionee  who, at the time the
Option is granted,  owns stock  representing  more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.

          (d) The date of grant of an Option  shall,  for all  purposes,  be the
date on which the Committee  makes the  determination  granting such Option,  or
such other date as is determined by the Board. Notice of the determination shall
be given to each Participant to whom an Option is so granted within a reasonable
time after the date of such grant.

     2.2  STOCK APPRECIATION RIGHTS. A "Stock  Appreciation  Right" ("SAR") is a
grant of rights to receive,  in cash or Stock (as determined by the  Committee),
value equal to (or otherwise  based on) the excess of: (a) the Fair Market Value
of a specified  number of Shares at the time of  exercise;  over (b) an Exercise
Price established by the Committee.

     2.3  EXERCISE  PRICE.  The  Exercise  Price of each Option and SAR shall be
established  by the Committee or shall be determined by a method  established by
the Committee at the time the Option or SAR is granted; provided that:

          (a) In the case of an ISO,

               (i) granted to an employee  who, at the time of the grant of such
Incentive Stock Option,  owns stock  representing more than ten percent (10%) of
the  voting  power of all  classes  of stock of the  Company  or any  Parent  or
Subsidiary,  the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

               (ii) granted to any employee,  the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.

     2.4  TIME AND MANNER OF EXERCISE.  Options and SARs shall be exercisable in
accordance  with such terms and  conditions  and during  such  periods as may be
established by the Committee; subject to the following terms regarding Options:

          (a)  TERMINATION  OF  EMPLOYMENT.  In the event of  termination  of an
Optionee's Continuous Status as an employee with the Company, such Optionee may,
but only  within  ninety (90) days after the date of such  termination  (or such
other period as is set out by the Committee in the Option  Agreement,  but in no
event 


                                      E-2
--------------------------------------------------------------------------------



later than the  expiration  date of the term of such  Option as set forth in the
Option Agreement),  exercise the Option to the extent that Optionee was entitled
to exercise it at the date of such termination.  To the extent that Optionee was
not  entitled  to  exercise  the Option at the date of such  termination,  or if
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.

          (b)  DISABILITY  OF  OPTIONEE.   Notwithstanding   the  provisions  of
paragraph 2.4(a) above, in the event of termination of an Optionee's  Continuous
Status as an employee as a result of disability  (as  determined by the Board in
accordance with the policies of the Company),  Optionee may, but only within six
(6) months from the date of such termination (or such other period as is set out
by the  Committee  in the  Option  Agreement,  but in no  event  later  than the
expiration  date  of the  term  of  such  Option  as  set  forth  in the  Option
Agreement),  exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such  Option to the extent so entitled  within the time  specified  herein,  the
Option shall terminate.

          (c) DEATH OF OPTIONEE.  In the event of the death of an Optionee,  the
Option may be  exercised,  at any time within  twelve (12) months  following the
date of death (or such other period as is set out by the Committee in the Option
Agreement,  but in no event later than the  expiration  date of the term of such
Option as set forth in the Option  Agreement),  by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or  inheritance,
but only to the extent the  Optionee  was entitled to exercise the Option at the
date of death.  To the extent that  Optionee  was not  entitled to exercise  the
Option at the date of termination,  or if Optionee does not exercise such Option
to the extent so entitled  within the time  specified  herein,  the Option shall
terminate.

     2.5  PAYMENT OF EXERCISE  PRICE. Payment of the Exercise Price of an Option
shall be subject to the following:

          (a) The full Exercise Price for Shares  purchased upon the exercise of
any Option shall be paid at the time of such exercise  (except that, in the case
of an exercise  arrangement approved by the Committee and described in paragraph
2.5(b), payment may be made as soon as practicable after the exercise).

          (b) The  consideration  to be paid for the  Shares to be  issued  upon
exercise of an Option,  including the method of payment,  shall be determined by
the  Committee  (and,  in the  case  of an  Incentive  Stock  Option,  shall  be
determined  at the time of grant) and may  consist  entirely  of (i) cash,  (ii)
check, (iii) other Shares (by delivery of certificates or attestation) which (x)
either have been owned by the  Optionee  for more than six months on the date of
surrender or were not acquired,  directly or indirectly,  from the Company,  and
(y) have a Fair Market  Value on the date of  surrender  equal to the  aggregate
exercise  price of the Shares as to which said Option shall be  exercised,  (iv)
delivery of  authorization  for the  Company to retain from the total  number of
Shares as to which the Option is exercised  that number of Shares  having a Fair
Market Value on the date of exercise  equal to the exercise  price for the total
number of Shares as to which the Option is exercised, (v) delivery of a properly
executed  exercise notice together with irrevocable  instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds  required to
pay the  exercise  price,  (vi)  irrevocably  authorizing  a third party to sell
Shares (or a sufficient  portion of the shares)  acquired  upon  exercise of the
Option and remit to the Company a sufficient portion of the sale proceeds to pay
the entire Exercise Price and any tax withholding  resulting from such exercise,
(vii) any combination of the foregoing methods of payment,  (viii) or such other
consideration  and method of payment  for the  issuance  of Shares to the extent
permitted under Applicable Laws.

     2.6  SETTLEMENT OF AWARD.  Shares delivered  pursuant to the exercise of an
Option  or  SAR  shall  be  subject  to  such   conditions,   restrictions   and
contingencies  as the Committee may establish in the applicable  Award Agreement
at the time of grant.  Settlement of SARs may be made in Shares (valued at their
Fair  Market  Value  at the time of  exercise),  in  cash,  or in a  combination
thereof, as determined in the discretion of the Committee. The Committee, in its
discretion,  may impose such  conditions,  restrictions and  contingencies  with
respect to Shares  acquired  pursuant to the  exercise of an Option or an SAR as
the Committee determines to be desirable.


                                      E-3
--------------------------------------------------------------------------------


3.   OTHER STOCK AWARDS
     ------------------

     3.1  DEFINITIONS.

          (a) A "Stock Unit" Award is the grant of a right to receive  Shares in
the future.

          (b) A  "Performance  Share"  Award is a grant  of a right  to  receive
Shares or Stock Units which is contingent on the  achievement  of performance or
other objectives during a specified period.

          (c) A "Restricted Stock" Award is a grant of Shares, and a "Restricted
Stock Unit" Award is the grant of a right to receive Shares in the future,  with
such  Shares or right to future  delivery  of such  Shares  subject to a risk of
forfeiture or other  restrictions that will lapse upon the achievement of one or
more goals relating to completion of service by the Participant,  or achievement
of performance or other objectives, as determined by the Committee.

     3.2  RESTRICTIONS ON STOCK AWARDS.  Each Stock Unit Award, Restricted Stock
Award,  Restricted Stock Unit Award and Performance Share Award shall be subject
to the following:

          (a) Any such Award shall be subject to such  conditions,  restrictions
and contingencies as the Committee shall determine.

          (b) The Committee  may designate  whether any such Award being granted
to any Participant are intended to be  "performance-based  compensation" as that
term is used in  Section  162(m)  of the Code.  Any such  Awards  designated  as
intended to be  "performance-based  compensation"  shall be  conditioned  on the
achievement of one or more Performance  Measures.  The Performance Measures that
may be used by the  Committee  for such Awards shall be based on any one or more
of the  criteria  attached  hereto on  Attachment  I, as selected  [and  further
defined] by the Committee.  [The  Performance  Measures may be applicable to the
Company  and/or  any of its  individual  business  units  and  may  differ  from
Participant  to  Participant.]  For  Awards  intended  to be  "performance-based
compensation,"  the grant of the Awards and the establishment of the Performance
Measures  shall be made during the period  required  under Section 162(m) of the
Code and shall be  subject  to the  individual  share  limit set out in  Section
1.4(c) above.

4.   OPERATION AND ADMINISTRATION
     ----------------------------

     4.1  EFFECTIVE  DATE.  ^[The]  2002 Stock Plan  ^[became]  effective  as of
October 10,  2002^.  The 2002 Stock Plan shall be unlimited in duration  and, in
the event of [the] 2002 Stock Plan  termination,  shall remain in effect as long
as any Awards under it are outstanding;  provided,  however, that, to the extent
required  by the Code,  no ISO may be granted  under the 2002 Stock Plan ^[after
October 9, 2012].

     4.2  GENERAL RESTRICTIONS.  Delivery of Shares or other  amounts  under the
2002 Stock Plan shall be subject to the following:

          (a)  Notwithstanding  any other  provision of the 2002 Stock Plan, the
Company  shall have no liability to deliver any Shares under the 2002 Stock Plan
or make any other distribution of benefits under the 2002 Stock Plan unless such
delivery or  distribution  would  comply with all  applicable  laws  (including,
without  limitation,  the  requirements of the Securities Act of 1933),  and the
applicable requirements of any securities exchange or similar entity.

          (b) To the extent that the 2002 Stock Plan  provides  for  issuance of
stock  certificates  to reflect the  issuance  of Shares,  the  issuance  may be
effected on a non-certificated basis, to the extent not prohibited by applicable
law or the applicable rules of any stock exchange.

     4.3  TAX WITHHOLDING.  All  distributions  under  the 2002  Stock  Plan are
subject to withholding of all applicable  taxes, and the Committee may condition
the  delivery  of any  shares or other  benefits  under the 2002  Stock  Plan on
satisfaction of the applicable withholding  obligations.  The Committee,  in its
discretion,  and subject to such  requirements as the Committee may impose prior
to the occurrence of such withholding,  may permit such 


                                      E-4
--------------------------------------------------------------------------------



withholding obligations to be satisfied through cash payment by the Participant,
through the surrender of Shares which the  Participant  already owns, or through
the surrender of Shares to which the Participant is otherwise entitled under the
2002  Stock  Plan,  provided;  however,  that in either  case only the number of
Shares  sufficient to satisfy the  Company's  minimum  required tax  withholding
obligations may be surrendered to the Company.

     4.4  USE OF  SHARES.  Subject to the  overall  limitation  on the number of
Shares that may be delivered  under the 2002 Stock Plan,  the  Committee may use
available  Shares  as the form of  payment  for  compensation,  grants or rights
earned or due under any other  compensation plans or arrangements of the Company
or a  Subsidiary,  including  the plans and  arrangements  of the  Company  or a
Subsidiary assumed in business combinations.

     4.5  DIVIDENDS  AND  DIVIDEND  EQUIVALENTS.  An  Award  (including  without
limitation an Option or SAR Award) may provide the Participant with the right to
receive dividend payments or dividend  equivalent payments with respect to Stock
subject to the Award  (both  before and after the Stock  subject to the Award is
earned,  vested,  or acquired),  which  payments may be either made currently or
credited to an account for the Participant,  and may be settled in cash or Stock
as determined by the Committee. Any such settlements,  and any such crediting of
dividends or dividend  equivalents or reinvestment in Shares,  may be subject to
such  conditions,   restrictions  and   contingencies  as  the  Committee  shall
establish,  including  the  reinvestment  of  such  credited  amounts  in  Stock
equivalents.

     4.6  PAYMENTS. Awards may be settled through cash payments, the delivery of
Shares,  the  granting of  replacement  Awards,  or  combination  thereof as the
Committee shall determine.  Any Award settlement,  including payment  deferrals,
may be  subject  to  such  conditions,  restrictions  and  contingencies  as the
Committee shall  determine.  The Committee may permit or require the deferral of
any Award  payment,  subject to such rules and  procedures as it may  establish,
which may  include  provisions  for the payment or  crediting  of  interest,  or
dividend  equivalents,  including  converting  such credits into deferred  Stock
equivalents.  Each Subsidiary  shall be liable for payment of cash due under the
2002 Stock Plan with respect to any Participant to the extent that such benefits
are   attributable  to  the  services   rendered  for  that  Subsidiary  by  the
Participant.  Any  disputes  relating  to  liability  of a  Subsidiary  for cash
payments shall be resolved by the Committee.

     4.7  TRANSFERABILITY. Unless specifically  provided by the Committee in the
Award Agreement,  Awards under the 2002 Stock Plan are nontransferable except as
designated  by  the   Participant  by  will  or  by  the  laws  of  descent  and
distribution.

     4.8  FORM AND TIME OF ELECTIONS. Unless otherwise  specified  herein,  each
election  required or  permitted to be made by any  Participant  or other person
entitled to benefits under the 2002 Stock Plan, and any permitted  modification,
or  revocation  thereof,  shall be in writing  filed with the  Committee at such
times,  in such form,  and subject to such  restrictions  and  limitations,  not
inconsistent  with the terms of the 2002  Stock  Plan,  as the  Committee  shall
require.

     4.9  AGREEMENT  WITH  COMPANY.  An Award under the 2002 Stock Plan shall be
subject to such terms and conditions, not inconsistent with the 2002 Stock Plan,
as the  Committee  shall,  in its sole  discretion,  prescribe.  The  terms  and
conditions  of any Award to any  Participant  shall be reflected in such form of
written  document as is  determined  by the  Committee.  A copy of such document
shall be  provided  to the  Participant,  and the  Committee  may,  but need not
require that the Participant  shall sign a copy of such document.  Such document
is  referred  to in the 2002 Stock Plan as an "Award  Agreement"  regardless  of
whether any Participant signature is required.

     4.10 ACTION BY COMPANY OR SUBSIDIARY.  Any action  required or permitted to
be taken by the Company or any Parent or  Subsidiary  shall be by  resolution of
its  board of  directors,  or by  action  of one or more  members  of the  board
(including  a  committee  of the board) who are duly  authorized  to act for the
board, or (except to the extent prohibited by applicable law or applicable rules
of any stock exchange) by a duly authorized officer of the Company.

                                      E-5
--------------------------------------------------------------------------------


     4.11 GENDER AND NUMBER. Where the context admits, words in any gender shall
include any other gender, words in the singular shall include the plural and the
plural shall include the singular.

     4.12 LIMITATION OF IMPLIED RIGHTS.

          (a) Neither a  Participant  nor any other person  shall,  by reason of
participation  in the 2002  Stock  Plan,  acquire  any  right in or title to any
assets, funds or property of the Company or any Parent or Subsidiary whatsoever,
including,  without  limitation,  any specific funds,  assets, or other property
which the Company or any Parent or Subsidiary, in their sole discretion, may set
aside in  anticipation  of a liability  under the 2002 Stock Plan. A Participant
shall have only a  contractual  right to the Stock or amounts,  if any,  payable
under the 2002 Stock Plan,  unsecured by any assets of the Company or any Parent
or Subsidiary,  and nothing  contained in the 2002 Stock Plan shall constitute a
guarantee  that the assets of the Company or any Parent or  Subsidiary  shall be
sufficient to pay any benefits to any person.

          (b) The 2002 Stock Plan does not  constitute a contract of employment,
and selection as a  Participant  will not give any  Participant  the right to be
retained in the employ of the Company or any Subsidiary,  nor any right or claim
to any  benefit  under  the 2002  Stock  Plan,  unless  such  right or claim has
specifically accrued under the terms of the 2002 Stock Plan. Except as otherwise
provided in the 2002 Stock Plan, no Award under the 2002 Stock Plan shall confer
upon the holder  thereof any rights as a stockholder of the Company prior to the
date on which the individual fulfills all conditions for receipt of such rights.

5.   COMMITTEE
     ---------

     5.1  COMMITTEE.  The  authority  to control  and manage the  operation  and
administration  of the 2002  Stock  Plan  shall be  vested in a  committee  (the
"Committee")  in accordance with this Section 5. The Committee shall be selected
by the Board,  and shall be  comprised[,]  unless  otherwise  determined  by the
Board, solely of not less than two members [of the Board] who shall be "outside"
directors within the meaning of Treasury Regulation Section 1.162-27(e)(3) under
Section 162(m) of the Code^.  [With] respect to Awards granted  ^[under the 2002
Stock  Plan  that  are  not   intended]   to  [qualify   as   "performance-based
compensation" under] Section 162(m) of the Code, the Committee shall be composed
of two or more members of the Board who are not employees of the Company. If the
Committee does not exist, or for any other reason  determined by the Board,  the
Board may take any action under the 2002 Stock Plan that would  otherwise be the
responsibility of the Committee.

     5.2  POWERS OF COMMITTEE.  The Committee's administration of the 2002 Stock
Plan shall be subject to the following:

          (a) Subject to the  provisions  of the 2002 Stock Plan,  the Committee
will have the  authority and  discretion  to select from among the  Participants
those  persons  who shall  receive  Awards,  to  determine  the time or times of
receipt,  to determine  the types of Awards and the number of shares  covered by
the Awards,  to establish the terms,  conditions,  performance  criteria (except
that for purposes of Section 162(m) of the Code,  performance  measures shall be
based  on one or  more  of the  criteria  set  out on  Attachment  I  hereto)  ,
restrictions, and other provisions of such Awards, and (subject to Section 7) to
cancel or suspend Awards.

          (b) To the extent that the Committee  determines that the restrictions
imposed by the 2002 Stock Plan preclude the achievement of the material purposes
of the Awards in  jurisdictions  outside the United  States,  the Committee will
have the authority and discretion to modify those  restrictions as the Committee
determines to be necessary or appropriate to conform to applicable  requirements
or practices of jurisdictions outside of the United States.

          (c) The Committee may grant Awards to Participants  who are subject to
the tax laws of  nations  other than the United  States,  which  Awards may have
terms and  conditions as determined by the Committee as necessary to comply with
applicable  foreign  laws.  The  Committee  may take any  action  which it deems
advisable  to  obtain  approval  of  such  Awards  by  the  appropriate  foreign
government  entity;  provided  however that no such Awards may be granted  under
this  2002  Stock  Plan and no  action  may be taken  which  would  result  in a
violation of the Exchange Act, the Code or any other applicable law.


                                      E-6
--------------------------------------------------------------------------------


          (d) The Committee  will have the authority and discretion to interpret
the 2002 Stock Plan, to establish,  amend, and rescind any rules and regulations
relating to the 2002 Stock Plan,  to determine  the terms and  provisions of any
Award  Agreement  made  pursuant to the 2002 Stock  Plan,  and to make all other
determinations  that may be necessary or advisable for the administration of the
2002 Stock Plan.

          (e) Any interpretation of the 2002 Stock Plan by the Committee and any
decision  made by it under  the 2002  Stock  Plan is final  and  binding  on all
persons.

          (f) In controlling  and managing the operation and  administration  of
the 2002 Stock Plan,  the Committee  shall take action in a manner that conforms
to the articles and by-laws of the Company, and applicable state corporate law.

     5.3  DELEGATION BY COMMITTEE. Except to the extent prohibited by Applicable
Law or the applicable rules of a stock exchange,  the Committee may allocate all
or any  portion  of its  responsibilities  and  powers to any one or more of its
members and may  delegate  all or any part of its  administrative  duties to any
person or persons  selected  by it. Any such  allocation  or  delegation  may be
revoked by the Committee at any time.

     5.4  INFORMATION  TO BE FURNISHED TO COMMITTEE.  The Company and its Parent
and  Subsidiaries  shall furnish the Committee with such data and information as
it determines may be required for it to discharge its duties. The records of the
Company  and its  Parent  and  Subsidiaries  as to a  Participant's  employment,
termination of employment, leave of absence, reemployment and compensation shall
be conclusive  on all persons  unless  determined to be incorrect.  Participants
entitled to benefits  under the 2002 Stock Plan must furnish the Committee  such
evidence,  data or information as the Committee considers desirable to carry out
the terms of the 2002 Stock Plan.

6.   ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR CORPORATE TRANSACTION
     -------------------------------------------------------------------

     6.1  CHANGES  IN  CAPITALIZATION.  Subject  to any  required  action by the
stockholders  of the Company,  [(a)] the number [and/or class] of  ^[securities]
covered by each  outstanding  Award,  [(b)] the price per share  covered by each
such  outstanding  Award,  [(c)] the number ^[and/or class of securities]  which
have been  authorized  for issuance under the 2002 Stock Plan but as to which no
Awards have yet been granted or which have been  returned to the 2002 Stock Plan
upon  cancellation  or expiration of an Award,  and [(d)] the maximum  number of
Options,  SARs,  Stock Unit Awards,  Restricted  Stock Awards,  Restricted Stock
Units  Awards  and  Performance  Share  Awards  which  may  be  granted  to  any
Participant in any  one-calendar-year  period shall be proportionately  adjusted
for any  increase  or decrease  in the number of issued  shares of Common  Stock
resulting from a stock split,  reverse stock split, stock dividend,  combination
or  reclassification  of the Common Stock,  or any other increase or decrease in
the  number  of issued  shares  of Common  Stock  effected  without  receipt  of
consideration  by  the  Company;  provided,  however,  that  conversion  of  any
convertible securities of the Company shall not be deemed to have been "effected
without  receipt  of  consideration."  Such  adjustment  shall  be  made  by the
^[Committee.  The  Committee  may  also  make,  in its  discretion,  adjustments
described  in (a)-(d) of this  Section 6.1 in the event of any  distribution  of
cash or other assets to  stockholders  other than an ordinary cash dividend.  In
determining  adjustments  to be made under this Section 6.1, the  Committee  may
take into  account  such  factors  as it deems  appropriate,  including  (i) the
restrictions  of applicable  law, (ii) the  potential  tax,  accounting or other
consequences of an adjustment and (iii) the possibility  that some  Participants
might receive an adjustment and a distribution or other unintended benefit,  and
in light of such  factors or  circumstances  may make  adjustments  that are not
uniform or proportionate among outstanding  Awards,  modify vesting dates, defer
the delivery of stock certificates or make other equitable adjustments. Any such
adjustments  to  outstanding  Awards will be effected in a manner that precludes
the enlargement of rights and benefits under such Awards.  Adjustments,  if any,
and any  determinations  or  interpretations,  including  any  determination  of
whether a  distribution  is other than an ordinary  cash  dividend,  made by the
Committee] shall be final, binding and conclusive.  Except as expressly provided
herein,  no  issuance  by the  Company  of Shares of any  class,  or  securities
convertible into Shares of any class,  shall affect, and no adjustment by reason
thereof  shall be made with  respect to, the number or price of shares of Common
Stock subject to an Award.

                                      E-7
--------------------------------------------------------------------------------


     6.2  TRANSACTIONS.  In the event of the proposed dissolution or liquidation
of the Company or of a merger or  corporate  combination  (a  "Transaction")  in
which the successor corporation does not agree to assume the Award or substitute
an  equivalent  Award,  the  Committee  shall make a  determination  (subject to
Section 7) as to the equitable  treatment of  outstanding  Awards under the 2002
Stock Plan and shall  notify  Participants  of such  treatment no later than ten
(10) days  prior to such  proposed  Transaction.  To the  extent it has not been
previously  exercised,   an  Award  will  terminate  immediately  prior  to  the
consummation of such proposed Transaction.

7.   AMENDMENT AND TERMINATION
     -------------------------

The Board may, at any time,  amend or  terminate  the 2002 Stock Plan,  provided
that no amendment or termination  may, in the absence of written  consent to the
change by the affected  Participant  (or, if the Participant is not then living,
the affected  beneficiary),  adversely  affect the rights of any  Participant or
beneficiary  under any Award granted under the 2002 Stock Plan prior to the date
such amendment is adopted by the Board;  provided that  adjustments  pursuant to
^Section  6.2 shall in no event be deemed to have an  adverse  ^[effect]  on any
Award.

8.   DEFINED TERMS
     -------------

In addition to the other definitions contained herein, the following definitions
shall apply:

          (a) APPLICABLE  LAW  means  the  corporate,  securities  and tax laws
(including,  without  limitation,  the Delaware corporate law, the Exchange Act,
the Securities  Act of 1933 and the Code)  applicable to the  establishment  and
administration of an employee stock incentive plans.

          (b) AWARD.  The term "Award"  shall mean any award or benefit  granted
under the 2002 Stock Plan, including,  without limitation, the grant of Options,
SARs, Stock Unit Awards,  Restricted Stock Awards,  Restricted Stock Unit Awards
and Performance Share Awards.

          (c) BOARD.  The term "Board"  shall mean the Board of Directors of the
Company.

          (d) CODE. The term "Code" means the Internal  Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include reference to any
successor provision of the Code.

          (e) COMMON  STOCK  shall mean the common  stock,  par value,  $.10 per
share, of the Company.

          (f) CONTINUOUS  STATUS  AS AN  EMPLOYEE  means  the  absence  of  any
interruption or termination of the employment relationship by the Company or any
Subsidiary. Continuous Status as an employee shall not be considered interrupted
in the case of: (i) sick  leave,  military  leave or any other  leave of absence
approved by the Board, provided that such leave is for a period of not more than
ninety  (90) days,  unless  reemployment  upon the  expiration  of such leave is
guaranteed  by contract or statute,  or unless  provided  otherwise  pursuant to
Company  policy  adopted  from  time to time;  or (ii) in the case of  transfers
between locations of the Company or between the Company, its Subsidiaries or its
successor.

          (g) EXCHANGE  ACT  means  the  Securities  Exchange  Act of 1934,  as
amended.

          (h) FAIR MARKET VALUE.  For purposes of  determining  the "Fair Market
Value" of a share of Stock  granted  pursuant  to Section 2 as of any date,  the
following rules shall apply:

              (i) If the  principal  market for the Stock is the New York Stock
Exchange  ("NYSE"),  then the "Fair  Market  Value" as of that date shall be the
closing price of the stock on the NYSE  composite  tape on that date as reported
in the Wall Street Journal for such date;

             (ii) If the  principal  market  for  the  Stock  is the  another
national  securities  exchange or the NASDAQ stock market, then the "Fair Market
Value" as of that date shall be the mean between the lowest and highest reported
composite sale prices of the Stock on that date on such exchange for such date;


                                      E-8
--------------------------------------------------------------------------------


            (iii) If sale prices are not available or if the principal market
for the Stock is not the NYSE or another  national  securities  exchange and the
Stock is not quoted on the NASDAQ stock market,  the average between the highest
bid and lowest  asked prices for the Stock on such day as reported on the NASDAQ
OTC Bulletin Board Service or by the National Quotation Bureau,  Incorporated or
a comparable service.

             (iv) If  the  day  is  not a  business  day,  and  as a  result,
paragraphs  (i),  (ii) and (iii) next above are  inapplicable,  the Fair  Market
Value of the Stock shall be determined as of the last preceding business day. If
paragraphs (i), (ii) and (iii) next above are otherwise  inapplicable,  then the
Fair  Market  Value  of the  Stock  shall  be  determined  in good  faith by the
Committee.

          (i) INCENTIVE  STOCK OPTION means an Option  intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

          (j) NONSTATUTORY  STOCK OPTION means an Option not intended to qualify
as an Incentive Stock Option.

          (k) OPTIONEE means a Participant who receives an Option.

          (l) PARENT  means a "parent  corporation",  whether  now or  hereafter
existing, as defined in Section 424(e) of the Code.

          (m) PARTICIPANTS. The term "Participant" shall mean any key executive,
employee or director of the Company,  its Parent or Subsidiary.  An Award may be
granted to an employee, in connection with hiring, retention or otherwise, prior
to the date the employee first  performs  services for the Company or its Parent
or Subsidiaries,  provided that such Awards shall not become vested prior to the
date the employee  first  performs such services.  The term  "Participant"  also
includes any non-employee director of the Company, its Parent or Subsidiary.

          (n) SHARE means a share of the Common Stock, as adjusted in accordance
with Section 6 of the 2002 Stock Plan.

          (o) STOCK.  The term "Stock"  shall mean shares of Common Stock of the
Company.

          (p) SUBSIDIARY   or   SUBSIDIARIES.   The   term   "Subsidiary"   or
"Subsidiaries"  mean any company  during any period in which it is a "subsidiary
corporation"  (as that term is defined in Code  section  424(f)) with respect to
the Company.

[9.  PLAN HISTORY
     ------------

The 2002 Stock Plan became effective as of October 10, 2002. The 2002 Stock Plan
was originally  approved by the stockholders of the Company on January 30, 2003.
The Board  approved  an  amendment  and  restatement  of the 2002  Stock Plan on
December 16, 2004 to (a) include additional  Performance  Measures applicable to
the grant of Awards  intended  to  qualify as  "performance-based  compensation"
under Section 162(m) of the Code and (b) amend Section 6.1 to increase the scope
of adjustments that may be made as a result of changes in  capitalization of the
Company,  which  amendment  and  restatement  is subject to the  approval of the
stockholders of the Company.]


                                      E-9
--------------------------------------------------------------------------------


                                  ATTACHMENT I

                             PERFORMANCE ^[MEASURES]


The Committee shall grant  performance-based  compensation Awards tied to one or
more of the following business criteria:

     1. ^earnings per share
     2. ^pre-tax operating income
     3. ^value of [Company] stock (i.e., stock price)
     [4. annual revenue
     5. budget comparisons
     6. controllable profits
     7. expense management
     8. improvements in capital structure
     9. operating income
     10. net income
     11. net sales
     12. profit margins
     13. profitability of an identifiable business unit or product
     14. return on investments
     15. return on sales
     16. return on stockholders' equity
     17. total return to stockholders
     18. performance  of the Company  relative to a peer group of  companies on
         any of the foregoing measures]


                                      E-10
--------------------------------------------------------------------------------


                                   APPENDIX F

                       PROPOSED TEXT OF ARTICLE FOURTH OF
                            FRANKLIN RESOURCES, INC.
                    CERTIFICATE OF INCORPORATION, AS AMENDED

The text of the  proposed  amendment  to Article  Fourth of the  Certificate  of
Incorporation, as amended, of Franklin Resources, Inc., is as follows:

     "FOURTH:  The total number of shares of stock which the  corporation  shall
     have authority to issue is One Billion One Million  (1,001,000,000) shares,
     of which One Billion  (1,000,000,000)  shares  shall be common stock of the
     par value of ten cents ($0.10), and One Million (1,000,000) shares shall be
     preferred stock of the par value of one dollar ($1.00). The preferred stock
     shall be  issuable  from time to time in one or more  series of equal  rank
     with  such  different  series,  designations,   preferences  and  relative,
     participating,  optional  or  other  special  rights,  and  qualifications,
     limitations or restrictions  thereof, and shall be subject to redemption at
     such time or times and at such  price or  prices,  and  shall  entitle  the
     holders to receive  dividends at such rates, on such conditions and at such
     times,  and cumulative or non cumulative,  and shall entitle the holders to
     such rates upon the dissolution of, or upon any  distribution of the assets
     of, the corporation,  and shall be convertible  into, or exchangeable  for,
     shares of any class or classes or any other series, at such price or prices
     or at such rate or rates of exchange and with such adjustments, as shall be
     stated in the  resolution  or  resolutions  providing for the issue of such
     stock adopted by the Board of Directors."


                                      F-1
--------------------------------------------------------------------------------

                                                                PRELIMINARY COPY
                                                                ----------------

                            FRANKLIN RESOURCES, INC.
                                      PROXY
           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

     With this proxy, the stockholder signing below appoints Charles B. Johnson,
Martin L. Flanagan,  and Barbara J. Green (the "proxy  holders"),  or any one of
them,  as the  stockholder's  proxies  with  full  power  of  substitution.  The
stockholder appoints the proxy holders collectively and as individuals,  to vote
all the stockholder's  shares of Franklin  Resources,  Inc.  ("Franklin") common
stock at the Annual Meeting of Stockholders,  and at any and all adjournments or
postponements  of the  meeting,  on the matters set forth on the reverse side of
this card. The Annual Meeting of Stockholders  will be held on January 25, 2005,
at 10:00 a.m.,  Pacific  Standard  Time, in the H. L. Jamieson  Auditorium,  One
Franklin Parkway, Building 920, San Mateo, California.

     THE BOARD OF  DIRECTORS  HAS  SOLICITED  THIS PROXY AND IT WILL BE VOTED AS
SPECIFIED ON THIS PROXY CARD ON THE FOLLOWING PROPOSALS PROPOSED BY FRANKLIN. IF
YOU DO NOT MARK ANY  VOTES OR  ABSTENTIONS,  THIS  PROXY  WILL BE VOTED  FOR ALL
NOMINEES TO THE BOARD OF  DIRECTORS,  FOR  RATIFICATION  OF THE  APPOINTMENT  OF
PRICEWATERHOUSECOOPERS  LLP AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2005, FOR APPROVAL OF THE AMENDMENT AND
RESTATEMENT OF THE FRANKLIN RESOURCES, INC. 2002 UNIVERSAL STOCK INCENTIVE PLAN,
AND FOR  APPROVAL  OF THE  AMENDMENT  OF THE  CERTIFICATE  OF  INCORPORATION  TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK  AUTHORIZED  FOR ISSUANCE.  IF ANY
OTHER MATTERS COME BEFORE THE MEETING TO BE VOTED ON, THE PROXY HOLDERS NAMED IN
THIS PROXY WILL VOTE, ACT AND CONSENT ON THOSE MATTERS IN THEIR DISCRETION.

Continued on the reverse side. Must be signed and dated on 
the reverse side.
                                                        FRANKLIN RESOURCES, INC.
                                                        P.O. BOX 11121
To change your address, please mark this box [ ]        NEW YORK, NY 10203-0121



Please  complete,  sign and date this  proxy on the  reverse  side and return it
promptly in the accompanying envelope.










--------------------
     FRANKLIN                          YOUR VOTE IS IMPORTANT
  RESOURCES, INC.                   VOTE BY INTERNET / TELEPHONE
                                   24 HOURS A DAY, 7 DAYS A WEEK
--------------------


             INTERNET                                TELEPHONE                              MAIL
HTTPS://WWW.PROXYVOTENOW.COM/BEN                   1-866-214-3728
                                                                        
*  Go to the website address         OR     *  Use any touch-tone        OR     *  Mark, sign and date your
   listed above.                               telephone.                          proxy card.
*  HAVE YOUR PROXY CARD READY.              *  HAVE YOUR PROXY CARD             *  Detach your proxy card.
*  Follow the simple instructions              READY.                           *  Return your proxy card in
   that appear on your computer             *  Follow the simple                   the postage-paid envelope
   screen.                                     recorded instructions.              provided.


                                    --------------------------------------------
                                    Your telephone or Internet vote  authorizes 
                                    the proxy holders named in the proxy to vote
                                    your shares in the manner as if you  marked,
                                    signed and  returned the proxy card.  If you
                                    have  submitted your proxy by  telephone or 
                                    the  Internet,  there is no need for you to 
                                    mail back your proxy card. The deadline for 
                                    voting by telephone or by using the Internet
                                    is at 11:59 p.m., Eastern Standard Time,  
                                    January 24, 2005.
                                    --------------------------------------------


                                    --------------------------------------------
                                                 [CONTROL NUMBER FOR
                                            TELEPHONE OR INTERNET VOTING]
                                    --------------------------------------------

                          PLEASE DETACH PROXY CARD HERE 
--------------------------------------------------------------------------------
MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

[X]
VOTES MUST BE INDICATED (X) IN BLACK OR BLUE INK

1.   ELECTION OF DIRECTORS:

FOR                   WITHHOLD
ALL    [    ]         FOR ALL    [    ]         EXCEPTIONS*    [    ]

Nominees:  01-Samuel  H.  Armacost,  02-Harmon  E.  Burns,  03-Charles  Crocker,
04-Robert D. Joffe, 05-Charles B. Johnson,  06-Rupert H. Johnson, Jr., 07-Thomas
H. Kean,  08-Chutta  Ratnathicam,  09-Peter M.  Sacerdote,  10-Anne M.  Tatlock,
11-Louis E. Woodworth

(INSTRUCTIONS:  TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL  NOMINEE,  MARK
THE  "EXCEPTIONS*"  BOX AND WRITE THAT  NOMINEE'S  NAME ON THE  FOLLOWING  BLANK
LINE.)

EXCEPTIONS*______________________________________________



                                              FOR           AGAINST              ABSTAIN
                                                                                    
2. Ratification of the appointment of        [   ]            [   ]                [   ]
   PricewaterhouseCoopers LLP as the
   independent registered public accounting
   firm for the fiscal year ending September
   30, 2005.

3. Approval of the amendment and             [   ]            [   ]                [   ]
   restatement of the Franklin Resources,
   Inc. 2002 Universal Stock Incentive Plan.

4. Approval of the amendment of the          [   ]            [   ]                [   ]
   Certificate of Incorporation, as amended,
   to increase the number of shares of
   common stock authorized for issuance.


5. In their  discretion,  the  proxy  holders  are  authorized  to vote on other
   business matters that are properly brought at the meeting or any adjournments
   or postponements thereof.

Note:  Please  sign  exactly as your name  appears on the proxy.  If signing for
estates,  trusts or corporations,  title or capacity should be stated. If shares
are held jointly, each holder should sign.



[SCAN LINE]


Date                  Share Owner sign here             Co-Owner sign here

---------------       ----------------------            ---------------------