SCHEDULE 14A INFORMATION
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:
/ / Preliminary proxy statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Sec. 240.14a-12

TEMPLETON RUSSIA AND EAST EUROPEAN FUND, 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)(4) and 0-11.

(1) Title of each class of securities to which transactions applies:

(2) Aggregate number of securities to which transactions 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:

[LOGO]
FRANKLIN/R/ TEMPLETON/R/
INVESTMENTS

TEMPLETON RUSSIA AND EAST EUROPEAN FUND, INC.

IMPORTANT SHAREHOLDER INFORMATION

These materials are for the Annual Meeting of Shareholders scheduled for
August 25, 2006 at 12 Noon, Eastern time. The enclosed materials discuss the
proposal (the "Proposal") to be voted on at the meeting, and contain the Notice
of Meeting, proxy statement and proxy card. A proxy card is, in essence, a
ballot. When you vote your proxy, it tells us how you wish to vote on important
issues relating to Templeton Russia and East European Fund, Inc. (the "Fund").
If you specify a vote on the Proposal, your proxy will be voted as you
indicate. If you simply sign and date the proxy card, but do not specify a vote
on the Proposal, your proxy will be voted FOR the Proposal.

We urge you to spend a few minutes reviewing the Proposal in the proxy
statement. Then, please fill out and sign the proxy card and return it to us so
that we know how you would like to vote. When shareholders return their proxies
promptly, the Fund may be able to save money by not having to conduct
additional mailings.

We welcome your comments. If you have any questions, call Fund Information
at 1-800/DIAL BEN(R) (1-800-342-5236).

TELEPHONE AND INTERNET VOTING

For your convenience, you may be able to vote by telephone or through the
Internet, 24 hours a day. If your account is eligible, separate instructions
are enclosed.

[LOGO]
FRANKLIN/R/ TEMPLETON/R/
INVESTMENTS

TEMPLETON RUSSIA AND EAST EUROPEAN FUND, INC.

NOTICE OF 2006 ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders (the "Meeting") of Templeton Russia and
East European Fund, Inc. (the "Fund") will be held at the Fund's offices, 500
East Broward Boulevard, 12th Floor, Fort Lauderdale, Florida 33394-3091 on
August 25, 2006 at 12 Noon, Eastern time.

During the Meeting, shareholders of the Fund will vote on the following
Proposal:

. The election of six Directors of the Fund to hold office for the
terms specified.

By Order of the Board of Directors,

Robert C. Rosselot
Secretary

July 13, 2006

Please sign and promptly return the proxy card in the enclosed self-addressed
envelope regardless of the number of shares you own.

TEMPLETON RUSSIA AND EAST EUROPEAN FUND, INC.

PROXY STATEMENT

..INFORMATION ABOUT VOTING

Who is asking for my vote?

The Directors of Templeton Russia and East European Fund, Inc. (the "Fund"),
in connection with the Fund's Annual Meeting of Shareholders, have requested
your vote.

Who is eligible to vote?

Shareholders of record at the close of business on June 23, 2006 are
entitled to be present and to vote at the Meeting or any adjourned Meeting.
Each share of record is entitled to one vote (and a proportionate fractional
vote for each fractional share) on each matter presented at the Meeting. The
Notice of Meeting, the proxy card, and the proxy statement were first mailed to
shareholders of record on or about July 13, 2006.

On what issue am I being asked to vote?

You are being asked to vote on the election of six nominees to the position
of Director.

How do the Fund's Directors recommend that I vote?

The Directors unanimously recommend that you vote FOR the election of the
six nominees.

How do I ensure that my vote is accurately recorded?

You may attend the Meeting and vote in person or you may complete and return
the enclosed proxy card. If you are eligible to vote by telephone or through
the Internet, separate instructions are enclosed.

Proxy cards that are properly signed, dated and received at or prior to the
Meeting will be voted as specified. If you specify a vote on the Proposal, your
proxy will be voted as you indicate. If you simply sign, date and return the
proxy card, but do not specify a vote on the Proposal, your shares will be
voted FOR the election of all nominees as Director.

May I revoke my proxy?

You may revoke your proxy at any time before it is voted by forwarding a
written revocation or a later-dated proxy to the Fund that is received by the
Fund at or prior to the Meeting, or by attending the Meeting and voting in
person.

What if my shares are held in a brokerage account?

If your shares are held by your broker, then in order to vote in person at
the Meeting, you will need to obtain a "Legal Proxy" from your broker and
present it to the Inspector of Election at the Meeting.

..THE PROPOSAL: ELECTION OF DIRECTORS

How are nominees selected?

The Board of Directors of the Fund (the "Board" or the "Directors") has a
Nominating Committee consisting of Edith E. Holiday (Chairman), Frank J.
Crothers, Gordon S. Macklin and Frank A. Olson, none of whom is an "interested
person" of the Fund as defined by the Investment Company Act of 1940, as
amended (the "1940 Act"). Directors who are not interested persons of the Fund
are referred to as the "Independent Directors" and Directors who are interested
persons of the Fund are referred to as the "Interested Directors."

The Nominating Committee is responsible for selecting candidates to serve as
Directors and recommending such candidates (a) for selection and nomination as
Independent Directors by the incumbent Independent Directors and the full
Board; and (b) for selection and nomination as Interested Directors by the full
Board. In considering a candidate's qualifications, the Nominating Committee
generally considers the potential candidate's educational background, business
or professional experience, and reputation. In addition, the Nominating
Committee has established as minimum qualifications for Board membership as an
Independent Director (1) that such candidate be independent from relationships
with the Fund's investment manager and other principal service providers both
within the terms and the spirit of the statutory independence requirements
specified under the 1940 Act and the rules thereunder, (2) that such candidate
demonstrate an ability and willingness to make the considerable time
commitment, including personal attendance at Board meetings, believed necessary
to his or her function as an effective Board member, and (3) that such
candidate have no continuing relationship as a director, officer or board
member of any investment company other than those within the Franklin Templeton
Investments fund complex.

When the Board has or expects to have a vacancy, the Nominating Committee
receives and reviews information on individuals qualified to be recommended as
nominees for election as Directors, including any recommendations by
"Qualifying Fund Shareholders" (as defined below). Such individuals are
evaluated based upon the criteria described above. To date, the Nominating
Committee has been able to identify, and expects to continue to be able to
identify, from its own resources an ample number of qualified candidates. The
Nominating Committee, however, will review recommendations from Qualifying Fund
Shareholders to fill vacancies on the Board if these recommendations are
submitted in writing and addressed to the Nominating Committee at the Fund's
offices and are presented with appropriate background material concerning the
candidate that demonstrates his or her ability to serve as a Director,
including as an Independent Director, of the Fund. A Qualifying Fund
Shareholder is a shareholder who (i) has continuously owned of record, or
beneficially through a financial intermediary, shares of the Fund having a net
asset value of not less than two hundred fifty thousand dollars ($250,000)
during the twenty-four month period prior to submitting the recommendation; and
(ii) provides a written notice to the Nominating Committee containing the
following information: (a) the name and address of the Qualifying Fund
Shareholder making the recommendation; (b) the number of shares of the Fund
which are owned of record and beneficially by such Qualifying Fund Shareholder
and the length of time that such shares have been so owned by the Qualifying
Fund Shareholder; (c) a description of all arrangements and understandings
between such Qualifying Fund Shareholder and any other person or persons
(naming such person or persons) pursuant to which the recommendation is being
made; (d) the name, age, date of birth, business address and residence address
of the person or persons being recommended; (e) such other information
regarding each person recommended by such Qualifying Fund Shareholder as would
be required to be included in a proxy statement filed pursuant to the proxy
rules of the U.S. Securities and Exchange Commission ("SEC") had the nominee
been nominated by the Board; (f) whether the shareholder making the
recommendation believes the person recommended would or would not be an
"interested person" of the Fund, as defined in the 1940 Act; and (g) the
written consent of each person recommended to serve as a Director of the Fund
if so nominated and elected/appointed.

The Nominating Committee may amend these procedures from time to time,
including the procedures relating to the evaluation of nominees and the process
for submitting recommendations to the Nominating Committee.

The Board has adopted and approved a formal written charter for the
Nominating Committee. A copy of the charter was included in the Fund's proxy
statement for its 2005 Annual Meeting of Shareholders.

Who are the nominees and Directors?

The Board is divided into three classes. Each class has a term of three
years. Each year the term of office of one class expires. This year, the terms
of four Directors expire. Harmon E. Burns, Frank J. Crothers, Gordon S. Macklin
and David W. Niemiec have been nominated for three-year terms, set to expire at
the 2009 Annual Meeting of Shareholders. Robert E. Wade has been nominated for
a one-year term, set to expire at the 2007 Annual Meeting of Shareholders and
Larry D. Thompson has been nominated for a two-year term, set to expire at the
2008 Annual Meeting of Shareholders. These terms continue, however, until
successors are duly elected and qualified. All of the nominees are currently
members of the Board. Among these nominees, only Harmon E. Burns is deemed to
be an Interested Director. Messrs. Niemiec, Thompson and Wade are standing for
election by shareholders of the Fund for the first time. A former Interested
Director and employee of an affiliate of the Investment Manager, an incumbent
Independent Director and an Interested Director recommended Messrs. Niemiec,
Thompson and Wade, respectively, for consideration by the Nominating Committee
as nominees for Director. In addition, all of the current nominees and
Directors are also directors or trustees of other Franklin(R) funds and/or
Templeton(R) funds.

Certain Directors of the Fund hold director and/or officer positions with
Franklin Resources, Inc. ("Resources") and its affiliates. Resources is a
publicly owned holding company, the principal shareholders of which are Charles
B. Johnson and Rupert H. Johnson, Jr., who owned approximately 17.15% and
14.62%, respectively, of its outstanding shares as of March 31, 2006.
Resources, a global investment management organization operating as Franklin
Templeton Investments, is primarily engaged, through various subsidiaries, in
providing investment management, share distribution, transfer agent and
administrative services to a family of investment companies. Resources is a New
York Stock Exchange, Inc. ("NYSE") listed holding company (NYSE: BEN). Charles
B. Johnson, Chairman of the Board, Director and Vice President of the Fund, and
Rupert H. Johnson, Jr., Vice President of the Fund, are brothers. There are no
family relationships among any of the Directors or nominees for Director.

Each nominee currently is available and has consented to serve if elected.
If any of the nominees should become unavailable, the designated proxy holders
will vote in their discretion for another person or persons who may be
nominated as Directors.

Listed below, for the nominees and Directors, are their names, ages and
addresses, as well as their positions and length of service with the Fund,
principal occupations during the past five years, the number of portfolios in
the Franklin Templeton Investments fund complex that they oversee, and other
directorships held by the nominee or Director.

Nominees for Independent Director to serve until 2009 Annual Meeting of
Shareholders:

Number of
Portfolios in
Franklin
Templeton
Investments
Fund Complex
Length of Overseen by
Name, Age and Address Position Time Served Director* Other Directorships Held
- --------------------------------------------------------------------------------------------------------------

Frank J. Crothers (61) Director Since 1998 21 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Chairman, Island Corporate Holding Ltd.; Director and Vice Chairman, Caribbean Utilities Co. Limited;
Director, Provo Power Company Ltd.; director of various other business and nonprofit organizations; and
formerly, Chairman, Atlantic Equipment & Power Ltd. (1977-2003).
- --------------------------------------------------------------------------------------------------------------
Gordon S. Macklin (78) Director Since 1994 141 Director, Martek Biosciences
500 East Broward Blvd. Corporation, MedImmune, Inc.
Suite 2100 (biotechnology) and
Fort Lauderdale, FL 33394-3091 Overstock.com (Internet services);
and formerly, Director, MCI
Communication Corporation
(subsequently known as MCI
WorldCom, Inc. and WorldCom,
Inc.) (communications services)
(1988-2002), White Mountains
Insurance Group, Ltd. (holding
company) (1987-2004) and
Spacehab, Inc. (aerospace
services) (1994-2003).

Principal Occupation During Past 5 Years:
Director of various companies; and formerly, Deputy Chairman, White Mountains Insurance Group, Ltd.
(2001-2004); Chairman, White River Corporation (financial services) (1993-1998) and Hambrecht & Quist Group
(investment banking) (1987-1992); and President, National Association of Securities Dealers, Inc. (1970-1987).
- --------------------------------------------------------------------------------------------------------------
David W. Niemiec (56) Director Since 21 Director, Emeritus Corporation
500 East Broward Blvd. October (assisted living) and OSI
Suite 2100 2005 Pharmaceuticals, Inc.
Fort Lauderdale, FL 33394-3091 (pharmaceutical products).

Principal Occupation During Past 5 Years:
Advisor, Saratoga Partners (private equity fund); Director, various private companies; and formerly, Managing
Director, Saratoga Partners (1998-2001) and SBC Warburg Dillon Read (investment banking) (1997-1998);
Vice Chairman, Dillon, Read & Co. Inc. (investment banking) (1991-1997); and Chief Financial Officer, Dillon,
Read & Co. Inc. (1982-1997).
- --------------------------------------------------------------------------------------------------------------

Nominee for Interested Director to serve until 2009 Annual Meeting of
Shareholders:

**Harmon E. Burns (61) Director and Director 22 None
One Franklin Parkway Vice President since 1994 and
San Mateo, CA 94403-1906 Vice President
since 1996

Principal Occupation During Past 5 Years:
Vice Chairman, Member--Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and
Director, Franklin Templeton Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; and officer
and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of
45 of the investment companies in Franklin Templeton Investments.
- --------------------------------------------------------------------------------------------------------------------

Nominee for Independent Director to serve until 2008 Annual Meeting of Shareholders:
Larry D. Thompson (60) Director Since October 21 None
500 East Broward Blvd. 2005
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Senior Vice President--Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (consumer products);
and formerly, Director, Delta Airlines (aviation) (2003-2005) and Providian Financial Corp. (1997-2001);
Senior Fellow of The Brookings Institution (2003-2004); Visiting Professor, University of Georgia School of
Law (2004); and Deputy Attorney General, U.S. Department of Justice (2001-2003).
- --------------------------------------------------------------------------------------------------------------------

Nominee for Independent Director to serve until 2007 Annual Meeting of Shareholders:
Robert E. Wade (60) Director Since March 30 Director, El Oro and
500 East Broward Blvd. 2006 Exploration Co., p.l.c.
Suite 2100 (investments) and ARC
Fort Lauderdale, FL 33394-3091 Wireless Solutions, Inc.
(wireless components and
network products).

Principal Occupation During Past 5 Years:
Practicing attorney.
- --------------------------------------------------------------------------------------------------------------------

Independent Directors serving until 2008 Annual Meeting of Shareholders:
Number of
Portfolios in
Franklin
Templeton
Investments
Fund Complex
Length of Overseen by
Name, Age and Address Position Time Served Director* Other Directorships Held
- ----------------------------------------------------------------------------------------------------------------
Harris J. Ashton (74) Director Since 1994 142 Director, Bar-S Foods
500 East Broward Blvd. (meat packing company).
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Director of various companies; and formerly, Director, RBC Holdings, Inc. (bank holding company) (until
2002); and President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery
and craft centers) (until 1998).
- ----------------------------------------------------------------------------------------------------------------
S. Joseph Fortunato (73) Director Since 1994 142 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Attorney; and formerly, member of the law firm of Pitney, Hardin, Kipp & Szuch (until 2002) (Consultant (2003)).
- ----------------------------------------------------------------------------------------------------------------
Constantine D. Tseretopoulos (52) Director Since 1997 21 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Physician, Lyford Cay Hospital (1987-present); director of various nonprofit organizations; and formerly,
Cardiology Fellow, University of Maryland (1985-1987) and Internal Medicine Resident, Greater Baltimore
Medical Center (1982-1985).
- ----------------------------------------------------------------------------------------------------------------

Independent Directors serving until 2007 Annual Meeting of Shareholders:

Edith E. Holiday (54) Director Since 1996 137 Director, Hess Corporation
500 East Broward Blvd. (formerly, Amerada Hess
Suite 2100 Corporation) (exploration and
Fort Lauderdale, FL 33394-3091 refining of oil and gas), H.J.
Heinz Company (processed foods
and allied products), RTI
International Metals, Inc.
(manufacture and distribution of
titanium), Canadian National
Railway (railroad), and White
Mountains Insurance Group, Ltd.
(holding company).

Principal Occupation During Past 5 Years:
Director or Trustee of various companies and trusts; and formerly, Assistant to the President of the United States
and Secretary of the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-
1990); and Counselor to the Secretary and Assistant Secretary for Public Affairs and Public Liaison-United
States Treasury Department (1988-1989).
- ------------------------------------------------------------------------------------------------------------------
Frank A. Olson (73) Director Since 2003 104 Director, Hess Corporation
500 East Broward Blvd. (formerly, Amerada Hess
Suite 2100 Corporation) (exploration and
Fort Lauderdale, FL 33394-3091 refining of oil and gas) and Sentient
Jet (private jet service); and
formerly, Director, Becton
Dickinson and Company (medical
technology), Cooper Industries, Inc.
(electrical products and tools and
hardware), Health Net, Inc.
(formerly, Foundation Health)
(integrated managed care), The
Hertz Corporation (car rental),
Pacific Southwest Airlines, The
RCA Corporation, Unicom
(formerly, Commonwealth Edison),
UAL Corporation (airlines) and
White Mountains Insurance Group,
Ltd. (holding company).

Principal Occupation During Past 5 Years:
Chairman Emeritus, The Hertz Corporation (since 2000) (Chairman of the Board (1980-2000) and Chief
Executive Officer (1977-1999)); and formerly, Chairman of the Board, President and Chief Executive Officer,
UAL Corporation.
- ------------------------------------------------------------------------------------------------------------------

Interested Director serving until 2007 Annual Meeting of Shareholders:

**Charles B. Johnson (73) Chairman of Director and 141 None
One Franklin Parkway the Board, Vice President
San Mateo, CA 94403-1906 Director and since 1994 and
Vice President Chairman of
the Board
since 1995

Principal Occupation During Past 5 Years:
Chairman of the Board, Member--Office of the Chairman and Director, Franklin Resources, Inc.; Vice
President, Franklin Templeton Distributors, Inc.; Director, Fiduciary Trust Company International; and officer
and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of
42 of the investment companies in Franklin Templeton Investments.
- --------------------------------------------------------------------------------------------------------------------

* We base the number of portfolios on each separate series of the U.S.
registered investment companies within the Franklin Templeton Investments
fund complex. These portfolios have a common investment manager or
affiliated investment managers, and also may share a common underwriter.

** Harmon E. Burns and Charles B. Johnson are "interested persons" of the Fund
as defined by the 1940 Act. The 1940 Act limits the percentage of interested
persons that can comprise a fund's board of directors. Mr. Johnson is
considered an interested person of the Fund due to his position as an
officer and director and major shareholder of Resources, which is the parent
company of the Fund's Investment Manager, and his position with the Fund.
Mr. Burns is considered as an interested person of the Fund due to his
position as an officer and director of Resources and his position with the
Fund. The remaining nominees and Directors of the Fund are Independent
Directors.

The following tables provide the dollar range of the equity securities of
the Fund and of all U.S. registered funds in the Franklin Templeton Investments
fund complex beneficially owned by the Directors as of May 31, 2006.

Aggregate Dollar Range of Equity
Independent Directors: Dollar Range of Equity Securities in all Funds in the
Securities in the Fund Franklin Templeton
Name of Director (Number of Shares)* Investments Fund Complex
- ---------------------------------------------------------------------------------------

Harris J. Ashton............ $1--$10,000 (1,000) Over $100,000
Frank J. Crothers........... None Over $100,000
S. Joseph Fortunato......... $1--$50,000 (1,000) Over $100,000
Edith E. Holiday............ $1--$10,000 (100) Over $100,000
Gordon S. Macklin........... $10,001--$100,000 (2,500) Over $100,000
David W. Niemiec............ None Over $100,000
Frank A. Olson.............. None Over $100,000
Larry D. Thompson........... None Over $100,000
Constantine D. Tseretopoulos None Over $100,000
Robert E. Wade.............. None Over $100,000

Aggregate Dollar Range of Equity
Interested Directors: Dollar Range of Equity Securities in all Funds in the
Securities in the Fund Franklin Templeton
Name of Director (Number of Shares)* Investments Fund Complex
- ---------------------------------------------------------------------------------------
Harmon E. Burns............. None Over $100,000
Charles B. Johnson.......... Over $100,000 (50,000) Over $100,000

- --------
* To the knowledge of the Fund's management, as of May 31, 2006, no nominee or
Director of the Fund, or officer of the Fund, owned 1% or more of the
outstanding shares of the Fund. No officers of the Fund, other than
Mr. Charles B. Johnson, owned shares of the Fund. As of this date, the
Directors and officers of the Fund owned, as a group, 1.007% of the Fund's
outstanding shares. In addition, Templeton Asset Management Ltd., the Fund's
investment manager, owns directly 1,445 shares of the Fund, and Templeton
Worldwide, Inc. ("TWI"), an affiliate of Templeton Asset Management Ltd.,
owns directly 9,597 shares of the Fund. Certain officers and Interested
Directors of the Fund are also officers and/or directors of Templeton Asset
Management, Ltd. and/or TWI, and in such capacity may participate in the
voting of such shares. However, such officers and Interested Directors
disclaim beneficial ownership of any such shares of the Fund owned by
Templeton Asset Management Ltd. and TWI.

How often do the Directors meet and what are they paid?

The role of the Directors is to provide general oversight of the Fund's
business, and to ensure that the Fund is operated for the benefit of all
shareholders. The Directors anticipate meeting at least five times during the
current fiscal year to review the operations of the Fund and the Fund's
investment performance. The Directors also oversee the services furnished to
the Fund by Templeton Asset Management Ltd., the Fund's investment manager (the
"Investment Manager"), and various other service providers. The Fund currently
pays the Independent Directors an annual retainer of $2,250 and a fee of $100
per Board meeting attended. Directors serving on the Audit Committee of the
Fund and other investment companies in Franklin Templeton Investments receive a
flat fee of $2,000 per Audit Committee meeting attended, a portion of which is
allocated to the Fund. Members of a committee are not compensated for any
committee meeting held on the day of a Board meeting.

During the fiscal year ended March 31, 2006, there were five meetings of the
Board, three meetings of the Audit Committee, and four meetings of the
Nominating Committee. Each Director then in office attended at least 75% of the
aggregate of the total number of meetings of the Board and the total number of
meetings held by all committees of the Board on which the Director served. The
Fund does not currently have a formal policy regarding Directors' attendance at
the annual shareholders' meeting. No Directors attended the Fund's last annual
meeting held on August 26, 2005.

Certain Directors and officers of the Fund are shareholders of Resources and
may receive indirect remuneration due to their participation in management fees
and other fees received by the Investment Manager and its affiliates from the
funds in Franklin Templeton Investments. The Investment Manager or its
affiliates pay the salaries and expenses of the officers. No pension or
retirement benefits are accrued as part of Fund expenses.

The table below indicates the total fees paid to Independent Directors by
the Fund individually and by all of the funds in Franklin Templeton
Investments. These Directors also serve as directors or trustees of other funds
in Franklin Templeton Investments, many of which hold meetings at different
dates and times. The Directors and the Fund's management believe that having
the same individuals serving on the boards of many of the funds in Franklin
Templeton Investments enhances the ability of each fund to obtain, at a
relatively modest cost to each separate fund, the services of high caliber,
experienced and knowledgeable Independent Directors who can more effectively
oversee the management of the funds.

Number of Boards within
Aggregate Total Compensation from Franklin Templeton
Compensation Franklin Templeton Investments Fund Complex
Name of Director from the Fund/(1)/ Investments Fund Complex/(2)/ on which Director Serves/(3)/
- -----------------------------------------------------------------------------------------------------------

Harris J. Ashton............ $2,617 $404,038 42
Frank J. Crothers........... 2,756 151,466 14
S. Joseph Fortunato......... 2,730 406,036 43
Edith E. Holiday............ 2,730 403,749 41
Gordon S. Macklin........... 2,630 379,002 42
Fred R. Millsaps/(4)/....... 2,087 225,466 0
David W. Niemiec/(5)/....... 1,432 42,687 14
Frank A. Olson.............. 2,756 231,486 29
Larry D. Thompson/(5)/...... 1,325 35,187 14
Constantine D. Tseretopoulos 2,756 151,466 14
Robert E. Wade/(6)/......... 187 220,234 17

- --------
/(1) /Compensation received for the fiscal year ended March 31, 2006.
/(2) /Compensation received for the calendar year ended December 31, 2005.
/(3) /We base the number of boards on the number of U.S. registered investment
companies in the Franklin Templeton Investments fund complex. This number
does not include the total number of series or funds within each
investment company for which the Board members are responsible. Franklin
Templeton Investments currently includes 47 U.S. registered investment
companies, with approximately 154 U.S. based funds or series.
/(4) /Mr. Millsaps retired effective December 31, 2005.
/(5) /Messrs. Niemiec and Thompson were appointed to the Board in October 2005.
/(6) /Mr. Wade was appointed to the Board effective March 1, 2006.

Board members historically have followed a policy of having substantial
investments in one or more of the funds in Franklin Templeton Investments, as
is consistent with their individual financial goals. In February 1998, this
policy was formalized through adoption of a requirement that each board member
invest one-third of the fees received for serving as a director or trustee of a
Templeton fund in shares of one or more Templeton funds and one-third of the
fees received for serving as a director or trustee of a Franklin fund in shares
of one or more Franklin funds until the value of such investments equals or
exceeds five times the annual fees paid to such board member. Investments in
the name of family members or entities controlled by a board member constitute
fund holdings of such board member for purposes of this policy, and a
three-year phase-in period applies to such investment requirements for newly
elected board members.

Who are the Executive Officers of the Fund?

Officers of the Fund are appointed by the Directors and serve at the
pleasure of the Board. Listed below, for the Executive Officers, are their
names, ages and addresses, as well as their positions and length of service
with the Fund, and principal occupations during the past five years.

Name, Age and Address Position Length of Time Served
- ------------------------------------------------------------------------------------------------------------------

Charles B. Johnson Chairman of the Board, Director and Vice President
Director and since 1994 and Chairman of the
Vice President Board since 1995
Please refer to the table "Interested Director serving until 2007 Annual Meeting of Shareholders" for additional
information about Mr. Charles B. Johnson.
- ------------------------------------------------------------------------------------------------------------------
Harmon E. Burns Director and Director since 1994 and
Vice President Vice President since 1996
Please refer to the table "Nominee for Interested Director to serve until 2009 Annual Meeting of Shareholders"
for additional information about Mr. Harmon E. Burns.
- ------------------------------------------------------------------------------------------------------------------
Mark Mobius (69) President and Chief President since 1994 and Chief
17th Floor, The Chater House Executive Officer-- Executive Officer--Investment
8 Connaught Road Investment Management Management since 2002
Central Hong Kong

Principal Occupation During Past 5 Years:
Portfolio Manager of various Templeton advisory affiliates; Managing Director, Templeton Asset Management Ltd.;
Executive Vice President and Director, Templeton Global Advisors Limited; and officer and/or director, as the case
may be, of some of the subsidiaries of Franklin Resources, Inc. and of six of the investment companies in Franklin
Templeton Investments; and formerly, President, International Investment Trust Company Limited (investment
manager of Taiwan R.O.C. Fund) (1986-1987); and Director, Vickers da Costa, Hong Kong (1983-1986).
- ------------------------------------------------------------------------------------------------------------------

Name, Age and Address Position Length of Time Served
- ---------------------------------------------------------------------------------------------------------------------

Rupert H. Johnson, Jr. (65) Vice President Since 1996
One Franklin Parkway
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
Vice Chairman, Member--Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and
Director, Franklin Templeton Distributors, Inc.; Director, Franklin Advisers, Inc.; Senior Vice President, Franklin
Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries
of Franklin Resources, Inc. and of 45 of the investment companies in Franklin Templeton Investments.
- ---------------------------------------------------------------------------------------------------------------------
Jimmy D. Gambill (58) Senior Vice President and Since 2002
500 East Broward Blvd. Chief Executive Officer--
Suite 2100 Finance and Administration
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of
47 of the investment companies in Franklin Templeton Investments.
- ---------------------------------------------------------------------------------------------------------------------
Jeffrey A. Everett (42) Vice President Since 2001
P. O. Box N-7759
Lyford Cay, Nassau
Bahamas

Principal Occupation During Past 5 Years:
President and Director, Templeton Global Advisors Limited; and officer of 14 of the investment companies in
Franklin Templeton Investments.
- ---------------------------------------------------------------------------------------------------------------------
John R. Kay (65) Vice President Since 1994
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Vice President, Templeton Worldwide, Inc.; Assistant Vice President, Franklin Templeton Distributors, Inc.;
Senior Vice President, Franklin Templeton Services, LLC; and officer of some of the other subsidiaries of
Franklin Resources, Inc. and of 32 of the investment companies in Franklin Templeton Investments; and
formerly, Vice President and Controller, Keystone Group, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Craig S. Tyle (45) Vice President and Since October 2005
One Franklin Parkway Assistant Secretary
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of 47 of the investment
companies in Franklin Templeton Investments; and formerly, Partner, Shearman & Sterling, LLP (2004-2005);
and General Counsel, Investment Company Institute (ICI) (1997-2004).
- ---------------------------------------------------------------------------------------------------------------------

Name, Age and Address Position Length of Time Served
- -------------------------------------------------------------------------------------------------------------

Barbara J. Green (58) Vice President and Vice President since 2000 and
One Franklin Parkway Assistant Secretary Assistant Secretary since 2004
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
Vice President, Deputy General Counsel and Secretary, Franklin Resources, Inc.; Secretary and Senior Vice
President, Templeton Worldwide, Inc.; Secretary, Franklin Advisers, Inc., Franklin Advisory Services, LLC,
Franklin Investment Advisory Services, LLC, Franklin Mutual Advisers, LLC, Franklin Templeton Alternative
Strategies, Inc., Franklin Templeton Investor Services, LLC, Franklin Templeton Services, LLC, Franklin
Templeton Distributors, Inc., Templeton Investment Counsel, LLC and Templeton/Franklin Investment Services,
Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 47 of the investment
companies in Franklin Templeton Investments; and formerly, Deputy Director, Division of Investment
Management, Executive Assistant and Senior Advisor to the Chairman, Counselor to the Chairman, Special
Counsel and Attorney Fellow, U.S. Securities and Exchange Commission (1986-1995); Attorney, Rogers & Wells
(until 1986); and Judicial Clerk, U.S. District Court (District of Massachusetts) (until 1979).
- -------------------------------------------------------------------------------------------------------------
David P. Goss (59) Vice President and Since 2000
One Franklin Parkway Assistant Secretary
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; officer and director of one of the
subsidiaries of Franklin Resources, Inc.; and officer of 47 of the investment companies in Franklin Templeton
Investments.
- -------------------------------------------------------------------------------------------------------------
Robert C. Rosselot (45) Secretary Since 2004
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.;
Vice President and Assistant Secretary, Templeton Investment Counsel, LLC; Vice President, Secretary and
Trust Officer, Fiduciary Trust International of the South; and officer of 14 of the investment companies in
Franklin Templeton Investments.
- -------------------------------------------------------------------------------------------------------------
Galen G. Vetter (54) Chief Financial Officer and Since 2004
500 East Broward Blvd. Chief Accounting Officer
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Senior Vice President, Franklin Templeton Services, LLC; officer of 47 of the investment companies in Franklin
Templeton Investments; and formerly, Managing Director, RSM McGladrey, Inc. (1999-2004); and Partner,
McGladrey & Pullen, LLP (1979-1987 and 1991-2004).
- --------------------------------------------------------------------------------------------------------------

Name, Age and Address Position Length of Time Served
- ------------------------------------------------------------------------------------------------------------

Gregory R. Seward (49) Treasurer Since 2004
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Vice President, Franklin Templeton Services, LLC; officer of 16 of the investment companies in Franklin
Templeton Investments; and formerly, Vice President, JPMorgan Chase (2000-2004) and American General
Financial Group (1991-2000).
- ------------------------------------------------------------------------------------------------------------
James M. Davis (53) Chief Compliance Officer Chief Compliance Officer
One Franklin Parkway and Vice President-- since 2004 and Vice President--
San Mateo, CA 94403-1906 AML Compliance AML Compliance
since February 2006

Principal Occupation During Past 5 Years:
Director, Global Compliance, Franklin Resources, Inc.; officer of 47 of the investment companies in Franklin
Templeton Investments; and formerly, Director of Compliance, Franklin Resources, Inc. (1994-2001).
- ------------------------------------------------------------------------------------------------------------

..ADDITIONAL INFORMATION ABOUT THE FUND

The Investment Manager. The Investment Manager of the Fund is Templeton
Asset Management Ltd., a Singapore company with an office at 7 Temasek Blvd.,
Suntee Tower One, #38-03, Singapore 03987. Pursuant to an investment management
agreement, the Investment Manager manages the investment and reinvestment of
Fund assets. The Investment Manager is an indirect, wholly owned subsidiary of
Resources.

The Administrator. The administrator of the Fund is Franklin Templeton
Services, LLC ("FT Services"), with offices at 500 East Broward Boulevard,
Suite 2100, Fort Lauderdale, Florida 33394-3091. FT Services is an indirect,
wholly owned subsidiary of Resources and an affiliate of the Investment
Manager. Pursuant to an administration agreement, FT Services performs certain
administrative functions for the Fund. In addition, FT Services and the Fund
have entered into a sub-administration agreement with Princeton Administrators,
L.P. ("Princeton"), pursuant to which Princeton, subject to FT Services'
supervision, is responsible for various administrative functions for the Fund.
Princeton is an affiliate of Merrill Lynch, Pierce, Fenner & Smith, Inc., an
initial underwriter of the Fund's shares. Princeton's address is P.O. Box 9011,
Princeton, New Jersey 08543-9011.

The Transfer Agent. The transfer agent, registrar and dividend disbursement
agent for the Fund is Mellon Investor Services LLC, 480 Washington Boulevard,
Jersey City, New Jersey 07310.

The Custodian. The custodian for the Fund is JPMorgan Chase Bank, MetroTech
Center, Brooklyn, New York 11245.

Other Matters. The Fund's last audited financial statements and annual
report for the fiscal year ended March 31, 2006, are available free of charge.
To obtain a copy, please call 1-800/DIAL BEN(R) (1-800-342-5236) or forward a
written request to Franklin Templeton Investor Services, LLC, P.O. Box 33030,
St. Petersburg, Florida 33733-8030.

Principal Shareholders. As of June 23, 2006, the Fund had 5,440,195 shares
outstanding and total net assets of $262,019,423.35. The Fund's shares are
listed on the NYSE (NYSE: TRF). From time to time, the number of shares held in
"street name" accounts of various securities dealers for the benefit of their
clients may exceed 5% of the total shares outstanding. To the knowledge of the
Fund's management, as of June 23, 2006, there were no other entities holding
beneficially or of record more than 5% of the Fund's outstanding shares.

Contacting the Board of Directors. If a shareholder wishes to send a
communication to the Board, such correspondence should be in writing and
addressed to the Board of Directors at the Fund's offices, 500 East Broward
Boulevard, Suite 2100, Fort Lauderdale, FL 33394-3091, Attention: Secretary.
The correspondence will be given to the Board for review and consideration.

..AUDIT COMMITTEE

Audit Committee and Independent Registered Public Accounting Firm. The
Fund's Audit Committee is responsible for the appointment, compensation and
retention of the Fund's independent registered public accounting firm
(auditors), including evaluating their independence, recommending the selection
of the Fund's auditors to the full Board, and meeting with such auditors to
consider and review matters relating to the Fund's financial reports and
internal auditing. The Audit Committee is currently comprised of Messrs.
Crothers, Niemiec, Olson and Tseretopoulos, all of whom are Independent
Directors and also are considered to be "independent" as that term is defined
by the NYSE's listing standards.

Selection of Auditors. The Audit Committee and the Board have selected the
firm of PricewaterhouseCoopers LLP ("PwC") as auditors of the Fund for the
current fiscal year. Representatives of PwC are not expected to be present at
the Meeting, but will have the opportunity to make a statement if they wish,
and will be available should any matter arise requiring their presence.

Audit Fees. The aggregate fees paid to PwC for professional services
rendered by PwC for the audit of the Fund's annual financial statements or for
services that are normally provided by PwC in connection with statutory and
regulatory filings or engagements were $85,488 for the fiscal year ended
March 31, 2006 and $71,500 for the fiscal year ended March 31, 2005.

Audit-Related Fees. For the fiscal years ended March 31, 2006 and March 31,
2005, there were no fees paid to PwC for assurance and related services by PwC
that are reasonably related to the performance of the audit or review of the
Fund's financial statements and not reported under "Audit Fees" above.

In addition, the Audit Committee pre-approves PwC's engagement for
audit-related services to be provided to the Investment Manager and certain
entities controlling, controlled by, or under common control with the
Investment Manager that provide ongoing services to the Fund, which engagements
relate directly to the operations and financial reporting of the Fund. There
were no fees paid to PwC for services for the fiscal year ended March 31, 2006
or for the fiscal year ended March 31, 2005.

Tax Fees. PwC did not render any tax compliance, tax advice or tax planning
services ("tax services") to the Fund for the fiscal year ended March 31, 2006
or for the fiscal year ended March 31, 2005.

In addition, the Audit Committee pre-approves PwC's engagement for tax
services to be provided to the Investment Manager and certain entities
controlling, controlled by, or under common control with the Investment

Manager that provide ongoing services to the Fund, which engagements relate
directly to the operations and financial reporting of the Fund. The fees for
these services were $4,955 for the fiscal year ended March 31, 2006 and $7,027
for the fiscal year ended March 31, 2005. The services for which these fees
were paid included tax compliance and advice.

All Other Fees. There were no fees paid to PwC for products and services
provided by PwC to the Fund, other than the services reported above, for the
fiscal year ended March 31, 2006 or for the fiscal year ended March 31, 2005.

In addition, the Audit Committee pre-approves PwC's engagement for other
services with the Investment Manager and certain entities controlling,
controlled by, or under common control with the Investment Manager that provide
ongoing services to the Fund, which engagements relate directly to the
operations and financial reporting of the Fund. The aggregate fees paid to PwC
for such other services and not reported above were $652 for the fiscal year
ended March 31, 2006 and $295 for the fiscal year ended March 31, 2005. The
services for which these fees were paid included seminars.

Aggregate Non-Audit Fees. The aggregate fees for non-audit services
provided by PwC to the Fund, to the Investment Manager or to any entity
controlling, controlled by, or under common control with the Investment Manager
that provide ongoing services to the Fund were $5,607 for the fiscal year ended
March 31, 2006 and $7,322 for the fiscal year ended March 31, 2005.

The Audit Committee has determined that the provision of the non-audit
services that were rendered to the Investment Manager and to any entities
controlling, controlled by, or under common control with the Investment Manager
that provide ongoing services to the Fund is compatible with maintaining PwC's
independence.

Audit Committee Pre-Approval Policies and Procedures. As of the date of
this proxy statement, the Audit Committee has not adopted written pre-approval
policies and procedures. As a result, all such services described above and
provided by PwC must be directly pre-approved by the Audit Committee.

Audit Committee Report. The Board has adopted and approved a formal written
charter for the Audit Committee, which sets forth the Audit Committee's
responsibilities. A copy of the charter was included in the Fund's proxy
statement for its 2005 Annual Meeting of Shareholders.

As required by the charter, the Audit Committee reviewed the Fund's audited
financial statements and met with management, as well as with PwC, the Fund's
auditors, to discuss the financial statements.

The Audit Committee received the written disclosures and the letter from PwC
required by Independence Standards Board Standard No. 1. The Audit Committee
also received the report of PwC regarding the results of their audit. In
connection with their review of the financial statements and the auditors'
report, the members of the Audit Committee discussed with a representative of
PwC, PwC's independence, as well as the following: the auditors'
responsibilities in accordance with generally accepted auditing standards; the
auditors' responsibilities for information prepared by management that
accompanies the Fund's audited financial statements and any procedures
performed and the results; the initial selection of, and whether there were any
changes in, significant accounting policies or their application; management's
judgments and accounting estimates; whether there were any significant audit
adjustments; whether there were any disagreements with management; whether
there was any consultation with other accountants; whether there were any major
issues discussed with management prior

to the auditors' retention; whether the auditors encountered any difficulties
in dealing with management in performing the audit; and the auditors' judgments
about the quality of the Fund's accounting principles.

Based on its review and discussions with management and the Fund's auditors,
the Audit Committee did not become aware of any material misstatements or
omissions in the financial statements. Accordingly, the Audit Committee
recommended to the Board that the audited financial statements be included in
the Fund's Annual Report to Shareholders for the fiscal year ended March 31,
2006 for filing with the U.S. Securities and Exchange Commission.

AUDIT COMMITTEE

Frank A. Olson, Chairman
Frank J. Crothers
David W. Niemiec
Constantine D. Tseretopoulos

..FURTHER INFORMATION ABOUT VOTING AND THE MEETING

Solicitation of Proxies. Your vote is being solicited by the Directors. The
cost of soliciting proxies, including the fees of a proxy soliciting agent, is
borne by the Fund. The Fund reimburses brokerage firms and others for their
expenses in forwarding proxy material to the beneficial owners and soliciting
them to execute proxies. In addition, the Fund may retain a professional proxy
solicitation firm to assist with any necessary solicitation of proxies. The
Fund expects that the solicitation would be primarily by mail, but may also
include telephone, facsimile, electronic or other means of communication. If
the Fund does not receive your proxy by a certain time you may receive a
telephone call from a proxy soliciting agent asking you to vote. If
professional proxy solicitors are retained, it is expected that soliciting fees
would be approximately $5,000, plus expenses. The Fund does not reimburse
Directors and officers of the Fund, or regular employees and agents of the
Investment Manager involved in the solicitation of proxies. The Fund intends to
pay all costs associated with the solicitation and the Meeting.

Voting by Broker-Dealers. The Fund expects that, before the Meeting,
broker-dealer firms holding shares of the Fund in "street name" for their
customers will request voting instructions from their customers and beneficial
owners. If these instructions are not received by the date specified in the
broker-dealer firms' proxy solicitation materials, the Fund understands that
NYSE Rules permit the broker-dealers to vote on the Proposal on behalf of their
customers and beneficial owners. Certain broker-dealers may exercise discretion
over shares held in their name for which no instructions are received by voting
these shares in the same proportion as they vote shares for which they received
instructions.

Quorum. A majority of the shares entitled to vote--present in person or
represented by proxy--constitutes a quorum at the Meeting. The shares over
which broker-dealers have discretionary voting power, the shares that represent
"broker non-votes" (i.e., shares held by brokers or nominees as to which
(i) instructions have not been received from the beneficial owners or persons
entitled to vote and (ii) the broker or nominee does not have discretionary
voting power on a particular matter), and the shares whose proxies reflect an
abstention on any item will all be counted as shares present and entitled to
vote for purposes of determining whether the required quorum of shares exists.

Method of Tabulation. The Proposal to elect Directors requires the
affirmative vote of the holders of a plurality of the Fund's shares present and
voting on the Proposal at the Meeting. Abstentions and broker non-votes will be
treated as votes present at the Meeting, but will not be treated as votes cast.
Abstentions and broker non-votes, therefore, will have no effect on the
Proposal.

Adjournment. The holders of a majority of shares entitled to vote at the
Meeting and present in person or by proxy, whether or not sufficient to
constitute a quorum, or any officer present entitled to preside or act as
Secretary of the Meeting may adjourn the Meeting. Such authority to adjourn the
Meeting may be used in the event that a quorum is not present at the Meeting or
in the event that a quorum is present but sufficient votes have not been
received to approve the Proposal or to permit further solicitation of proxies
or for any other reason consistent with Maryland law and the Fund's Articles of
Incorporation and By-Laws. Unless otherwise instructed by a shareholder
granting a proxy, the persons designated as proxies may use their discretionary
authority to vote as instructed by management of the Fund on questions of
adjournment and on any other proposals raised at the Meeting to the extent
permitted by the SEC's proxy rules, including proposals for which management of
the Fund did not have timely notice, as set forth in the SEC's proxy rules and
the Fund's proxy statement for the 2005 annual meeting.

Shareholder Proposals. The Fund anticipates that its 2007 Annual Meeting of
Shareholders will be held on or about August 24, 2007. A shareholder who wishes
to submit a proposal for consideration for inclusion in the Fund's proxy
statement for the 2007 Annual Meeting of Shareholders must send such written
proposal to the Fund's offices, at 500 East Broward Boulevard, Suite 2100, Fort
Lauderdale, Florida 33394-3091, Attention: Secretary, so that it is received no
later than March 15, 2007 in order to be included in the Fund's proxy statement
and proxy card relating to that meeting and presented at the meeting.

A shareholder of the Fund who has not submitted a written proposal for
inclusion in the Fund's proxy statement by March 15, 2007, as described above,
may nonetheless present a proposal at the Fund's 2007 Annual Meeting of
Shareholders if such shareholder notifies the Fund in writing, at the Fund's
offices, of such proposal by May 29, 2007. If a shareholder fails to give
notice by this date, then the persons designated as proxies for the 2007 Annual
Meeting of Shareholders may exercise discretionary voting power with respect to
any such proposal.

Submission of a proposal by a shareholder does not guarantee that the
proposal will be included in the Fund's proxy statement or presented at the
meeting.

A shareholder proposal may be presented at the 2007 Annual Meeting of
Shareholders only if such proposal concerns a matter that may be properly
brought before the meeting under applicable federal proxy rules and state law.

By Order of the Board of Directors,

Robert C. Rosselot
Secretary

July 13, 2006

TLTRF PROXY 07/06

The Board of Directors unanimously recommends a vote FOR the Proposal.

Please
mark here
if address |_|
change or
comment
noted on proxy

Proposal - Election of Directors.

WITHHOLD
FOR all nominees AUTHORITY
listed (except as to vote for
marked to the right) all nominees listed

|_| |_|

Nominees: 01 Harmon E. Burns, 02 Frank J. Crothers,
03 Gordon S. Macklin, 04 David W. Niemiec,
05 Larry D. Thompson and 06 Robert E. Wade

To withhold authority to vote for any individual nominee, write that nominee's
name on the line below.

________________________________________________________________________________

YES NO
I PLAN TO ATTEND THE MEETING. |_| |_|

Signature(s):_________________________________________Dated______________, 2006
Please sign exactly as your name appears on this Proxy. If signing for estates,
trusts or corporations, title or capacity should be stated. If shares are held
jointly, each holder should sign.
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\

TEMPLETON RUSSIA AND EAST EUROPEAN FUND, INC.

ANNUAL MEETING OF SHAREHOLDERS - AUGUST 25, 2006

The undersigned hereby revokes all previous proxies for his/her shares and
appoints SHEILA M. BARRY, ROBERT C. ROSSELOT and LORI A. WEBER, and each of
them, proxies of the undersigned with full power of substitution to vote all
shares of Templeton Russia and East European Fund, Inc. (the "Fund") that the
undersigned is entitled to vote at the Fund's Annual Meeting of Shareholders
(the "Meeting") to be held at 500 East Broward Boulevard, 12th Floor, Fort
Lauderdale, Florida 33394 at 12 Noon Eastern time, on August 25, 2006, including
any postponements or adjournments thereof, upon the matter set forth below and
instructs them to vote upon any other matters that may properly be acted upon at
the Meeting.

This Proxy is solicited on behalf of the Board of Directors. It will be
voted as specified. If no specification is made, this Proxy shall be voted FOR
the Proposal (including all nominees for director). If any other matters
properly come before the Meeting to be voted on, the proxy holders will vote,
act and consent on those matters in accordance with the views of management.

(Continued and to be signed on the other side)

- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\

You can now access your Templeton Russia and East
European Fund, Inc. account online.

Access your Fund account online via Investor ServiceDirect(R) (ISD).

Mellon Investor Services LLC, Transfer Agent for the Fund, now makes it easy and
convenient to get current information on your shareholder account.

o View account status o Make address changes
o View certificate history o Obtain a duplicate 1099 tax form
o View book-entry information o Establish/change your PIN
o View payment history for dividends

Visit us on the web at http://www.melloninvestor.com

For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time

Investor ServiceDirect(R) is a registered trademark of Mellon
Investor Services LLC