As filed with the Securities and Exchange Commission on June 22, 2009
File No. 333-159216
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 2 [X]
Post-Effective Amendment No. [ ]
Franklin Tax-Exempt Money Fund
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(Exact Name of Registrant as Specified in Charter)
(650) 312-2000
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(Registrant's Area Code and Telephone Number)
One Franklin Parkway, San Mateo, CA 94403-1906
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(Address of Principal Executive Offices: Number, Street, City, State, and Zip
Code)
Craig S. Tyle, One Franklin Parkway, San Mateo, Ca 94403-1906
(Name and Address of Agent for Service)
Copies to:
Bruce G. Leto, Esquire
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement becomes effective under the Securities Act of
1933, as amended.
Title of the securities being registered: Shares of beneficial interest, with
no par value, of Franklin Tax-Exempt Money Fund. No filing fee is due
because Registrant is relying on Section 24(f) of the Investment Company Act
of 1940, as amended.
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to
such Section 8(a), shall determine.
[PG NUMBER]
FRANKLIN TEMPLETON LOGO
FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND
IMPORTANT SHAREHOLDER INFORMATION
These materials are for a Special Meeting of Shareholders of
Franklin New York Tax-Exempt Money Fund, a series of Franklin New
York Tax-Free Trust, scheduled for August 10, 2009 at 2:00 p.m.,
Pacific Time. They discuss a proposal to be voted on at the
meeting and contain a Notice of Special Meeting of Shareholders,
a Prospectus/Proxy Statement and proxy card. A proxy card is, in
essence, a ballot. When you complete the proxy card, it tells us
how you wish the individual(s) named on your proxy to vote on
important issues relating to your Fund. If you complete, sign
and return the proxy card, we'll vote it exactly as you tell us.
If you simply sign the proxy card, we'll vote it in accordance
with the Board of Trustees' recommendations on page 11 of the
Prospectus/Proxy Statement.
WE URGE YOU TO SPEND A FEW MINUTES REVIEWING THE PROPOSAL IN
THE PROSPECTUS/PROXY STATEMENT. THEN, FILL OUT THE PROXY CARD AND
RETURN IT TO US SO THAT WE KNOW HOW YOU WOULD LIKE TO VOTE.
WE WELCOME YOUR COMMENTS. IF YOU HAVE ANY QUESTIONS, CALL FUND
INFORMATION AT (800) DIAL BEN(R) OR (800) 342-5236.
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TELEPHONE AND INTERNET VOTING
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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.
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FRANKLIN TEMPLETON LOGO
FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND
(A SERIES OF FRANKLIN NEW YORK TAX-FREE TRUST)
ONE FRANKLIN PARKWAY
SAN MATEO, CA 94403-1906
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 10, 2009
To the Shareholders of Franklin New York Tax-Exempt Money Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders
(the "Meeting") of Franklin New York Tax-Exempt Money Fund ("New
York Fund"), a series of Franklin New York Tax-Free Trust (the
"Trust"), will be held at the Trust's offices, One Franklin
Parkway, San Mateo, California, 94403-1906, on August 10, 2009 at
2:00 p.m., Pacific Time. The Meeting is being called for the
following purpose:
To approve an Agreement and Plan of Reorganization (the "Plan")
between the Trust, on behalf of New York Fund, and Franklin
Tax-Exempt Money Fund ("Tax-Exempt Fund"), that provides for: (i)
the acquisition of substantially all of the assets of New York
Fund by Tax-Exempt Fund in exchange solely for shares of
Tax-Exempt Fund, (ii) the distribution of such shares to the
shareholders of New York Fund, and (iii) the complete liquidation
and dissolution of New York Fund. Shareholders of New York Fund
will receive a number of shares of Tax-Exempt Fund that is equal
to the number of such shareholders' shares of New York Fund.
A copy of the Plan, which describes the transaction more
completely, is attached as Exhibit A to the Prospectus/Proxy
Statement.
Shareholders of record as of the close of business on June 2,
2009 are entitled to notice of, and to vote at, the Meeting or
any adjourned Meeting.
By Order of the Board of
Trustees,
Karen L.
Skidmore
SECRETARY
June 23, 2009
YOU ARE INVITED TO ATTEND THE MEETING, BUT IF YOU CANNOT DO SO,
THE BOARD OF TRUSTEES OF THE TRUST URGES YOU TO COMPLETE, DATE,
SIGN, AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
POSTAGE-PAID RETURN ENVELOPE. IT IS IMPORTANT THAT YOU RETURN
YOUR SIGNED PROXY CARD PROMPTLY SO THAT A QUORUM MAY BE ENSURED
AT THE MEETING. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT
IS EXERCISED BY THE SUBSEQUENT EXECUTION AND SUBMISSION OF A
REVISED PROXY, BY GIVING WRITTEN NOTICE OF REVOCATION TO NEW YORK
FUND AT ANY TIME BEFORE THE PROXY IS EXERCISED OR BY VOTING IN
PERSON AT THE MEETING.
PROSPECTUS/PROXY STATEMENT
When reading this Prospectus/Proxy Statement, you will notice
that certain terms are capitalized. This means the term is
explained in our glossary section.
TABLE OF CONTENTS
PAGE
COVER PAGE Cover
SUMMARY 2
What proposal will be voted on? 2
How will the Transaction affect me? 3
How will the shareholder voting be handled? 4
COMPARISONS OF SOME IMPORTANT FEATURES 5
How do the investment goals, strategies and policies of 5
the Funds compare?
What are the risks of an investment in the Funds? 5
What are the distribution and purchase procedures of the 6
Funds?
What are the redemption procedures and exchange privileges 6
of the Funds?
Who manages the Funds? 6
What are the fees and expenses of each of the Funds and 7
what might they be after the Transaction?
How do the performance records of the Funds compare? 9
Where can I find more financial and performance 10
information about the Funds?
What are other key features of the Funds? 10
REASONS FOR THE TRANSACTION 11
INFORMATION ABOUT THE TRANSACTION 13
How will the Transaction be carried out? 13
Who will pay the expenses of the Transaction? 14
What are the tax consequences of the Transaction? 14
What should I know about the shares of Tax-Exempt Fund? 15
What are the capitalizations of the Funds and what might 15
the capitalization be after the Transaction?
COMPARISON OF INVESTMENT GOALS, STRATEGIES, POLICIES AND RISKS 16
Are there any significant differences between the 16
investment goals, strategies, policies and risks of the
Funds?
How do the investment restrictions of the Funds differ? 17
What are the principal risk factors associated with 17
investments in the Funds?
INFORMATION ABOUT TAX-EXEMPT FUND 19
INFORMATION ABOUT NEW YORK FUND 20
FURTHER INFORMATION ABOUT THE FUNDS 22
VOTING INFORMATION 22
How many votes are necessary to approve the Plan? 22
How do I ensure my vote is accurately recorded? 22
May I revoke my proxy? 23
What other matters will be voted upon at the Meeting? 23
Who is entitled to vote? 23
How will proxies be solicited? 23
What other solicitations will be made? 24
Are there dissenters' rights? 24
PRINCIPAL HOLDERS OF SHARES 24
SHAREHOLDER PROPOSALS 24
ADJOURNMENT 25
GLOSSARY--USEFUL TERMS AND DEFINITIONS 26
EXHIBITS TO PROSPECTUS/PROXY STATEMENT 27
EXHIBIT A - FORM OF AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN FRANKLIN NEW YORK TAX-FREE TRUST, ON
BEHALF OF FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND, AND
FRANKLIN TAX-EXEMPT MONEY FUND A-1
EXHIBIT B - PROSPECTUS OF FRANKLIN TAX-EXEMPT MONEY FUND,
DATED DECEMBER 1, 2008, AS AMENDED TO DATE (ENCLOSED)
EXHIBIT C - SEMI-ANNUAL REPORT TO SHAREHOLDERS OF FRANKLIN
TAX-EXEMPT MONEY FUND DATED JANUARY 31, 2009 (ENCLOSED)
PROSPECTUS/PROXY STATEMENT
DATED JUNE 23, 2009
ACQUISITION OF SUBSTANTIALLY ALL OF THE ASSETS OF
FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND
(A SERIES OF FRANKLIN NEW YORK TAX-FREE TRUST)
BY AND IN EXCHANGE FOR SHARES OF
FRANKLIN TAX-EXEMPT MONEY FUND
This Prospectus/Proxy Statement solicits proxies to be voted
at a Special Meeting of Shareholders (the "Meeting") of Franklin
New York Tax-Exempt Money Fund ("New York Fund"), which is a
series of Franklin New York Tax-Free Trust (the "Trust"). At the
Meeting, shareholders of New York Fund will be asked to approve
or disapprove an Agreement and Plan of Reorganization (the
"Plan"). If shareholders of New York Fund vote to approve the
Plan, substantially all of the assets of New York Fund will be
acquired by Franklin Tax-Exempt Money Fund ("Tax-Exempt Fund"), a
series of Franklin Tax-Free Trust, in exchange for shares of
Tax-Exempt Fund. Tax-Exempt Fund and New York Tax-Exempt Fund
are referred to individually as a "Fund" and collectively, as the
"Funds" throughout this Prospectus/Proxy Statement. The
principal offices of the Trust and Tax-Exempt Fund are located at
One Franklin Parkway, San Mateo, CA 94403-1906. You can reach
the offices of the Trust and Tax-Exempt Fund by calling (800)
342-5236.
The Meeting will be held at the Trust's office, One Franklin
Parkway, San Mateo, California, on August 10, 2009 at 2:00 p.m.,
Pacific Time. The Board of Trustees of the Trust, on behalf of
New York Fund, is soliciting these proxies. This
Prospectus/Proxy Statement will first be sent to shareholders on
or about June 15, 2009.
If New York Fund shareholders vote to approve the Plan, you
will become the holder of Tax-Exempt Fund shares of an equivalent
number and net asset value ("NAV") to your investment in the New
York Fund. Because both Funds strive to maintain a stable NAV of
$1.00 per share, New York Fund shareholders should receive the
same number of Tax-Exempt Fund shares as they held in New York
Fund immediately prior to completion of this proposed
transaction. No sales charges or redemption fees will be imposed
upon the exchange of your New York Fund shares for shares of
Tax-Exempt Fund in connection with this transaction. New York
Fund will then be liquidated and dissolved. (This proposed
transaction is referred to in this Prospectus/Proxy Statement as
the "Transaction").
The investment goals of New York Fund and Tax-Exempt Fund are
somewhat similar. Tax-Exempt Fund's investment goal is to provide
as high a level of income exempt from federal income taxes as is
consistent with prudent investment management and the
preservation of shareholders' capital. New York Fund's
investment goal is to provide investors with as high a level of
income exempt from federal income taxes and New York State and
New York City personal income taxes as is consistent with prudent
investment management, the preservation of shareholders' capital
and liquidity in its investments. Tax-Exempt Fund also seeks
liquidity in its investments and both Funds try to maintain a
stable $1 share price.
This Prospectus/Proxy Statement gives the information about
the proposed Transaction and about Tax-Exempt Fund that you
should know before voting on the Plan. You should retain it for
future reference. Additional information about Tax-Exempt Fund
and the proposed Transaction has been filed with the SEC and can
be found in the following documents:
o The Prospectus of Tax-Exempt Fund, dated December 1, 2008 as
supplemented to date (the "Tax-Exempt Fund Prospectus"), is
enclosed with and considered a part of this Prospectus/Proxy
Statement.
o A Statement of Additional Information ("SAI") dated June 23,
2009 relating to this Prospectus/Proxy Statement has been filed
with the SEC and is considered a part of this Prospectus/Proxy
Statement.
You may request a free copy of the SAI relating to this
Prospectus/Proxy Statement or the Tax-Exempt Fund Prospectus by
calling (800) DIAL BEN(R) or by writing to Franklin Templeton
Investments at P.O. Box 33030, St. Petersburg, FL 33733-8030.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR
PASSED UPON THE ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER U.S. GOVERNMENT AGENCY. ALTHOUGH EACH FUND TRIES TO
MAINTAIN A $1 SHARE PRICE, IT IS POSSIBLE TO LOSE MONEY BY
INVESTING IN NEW YORK FUND OR TAX-EXEMPT FUND.
[PG NUMBER]
SUMMARY
This is only a summary of certain information contained in
this Prospectus/Proxy Statement. You should read the more
complete information in the rest of this Prospectus/Proxy
Statement, including the form of the Plan (attached as Exhibit
A) and the Tax-Exempt Fund Prospectus (enclosed as Exhibit B).
WHAT PROPOSAL WILL BE VOTED ON?
At a meeting held on April 14, 2009, the Board of Trustees of
the Trust, on behalf of New York Fund, and the Board of Trustees
of Tax-Exempt Fund considered a proposal to reorganize New York
Fund with and into Tax-Exempt Fund and approved the Plan. The
Board of Trustees of the Trust voted to recommend that
shareholders of New York Fund vote to approve the Plan.
If shareholders of New York Fund approve the Plan, it will
result in the exchange of all of New York Fund shares held by a
shareholder for Tax-Exempt Fund shares of equivalent number and
aggregate NAV. Because both Funds strive to maintain a stable
NAV of $1.00 per share, New York Fund shareholders should
continue to hold the same number of Tax-Exempt Fund shares
immediately after the Transaction as they hold of New York Fund
shares immediately prior to the Transaction. Shareholders of New
York Fund will receive any dividends declared and paid by New
York Fund on the date that the Transaction is effective. No sales
charges or redemption fees will be imposed upon Tax-Exempt Fund
shares you receive in connection with the Transaction. As a
result of the Transaction, you will cease to be a shareholder of
New York Fund and will become a shareholder of Tax-Exempt Fund.
The Transaction, if approved by shareholders, is expected to
occur on or about August 26, 2009.
Franklin Advisers, Inc. ("FAI") serves as investment manager
to both New York Fund and Tax-Exempt Fund. While the investment
goals, policies and strategies of New York Fund and Tax-Exempt
Fund are somewhat similar, New York Fund has some investment
goals and policies that are different from those of Tax-Exempt
Fund. For the reasons set forth in the "Reasons for the
Transaction" section of this Prospectus/Proxy Statement, the
Board of Trustees of the Trust, including the Trustees who are
not "interested persons" (the "Independent Trustees"), as such
term is defined in the Investment Company Act of 1940, as amended
(the "1940 Act"), on behalf of New York Fund, has determined that
the Transaction is in the best interests of New York Fund and its
shareholders. The Boards of Trustees of both the Trust and
Tax-Exempt Fund have also concluded that no dilution in value
would result to the shareholders of New York Fund or Tax-Exempt
Fund, respectively, as a result of the Transaction. It is
expected that New York Fund shareholders will not recognize any
gain or loss for federal income tax purposes as a result of the
exchange of their shares for Tax-Exempt Fund shares. You should,
however, consult your tax adviser regarding the effect, if any,
of the Transaction, in light of your individual circumstances.
You should also consult your tax adviser about state and local
tax consequences. For more information about the tax
consequences of the Transaction, please see the section
"Information about the Transaction--WHAT ARE THE TAX CONSEQUENCES
OF THE TRANSACTION?"
THE BOARD OF TRUSTEES OF THE TRUST
RECOMMENDS THAT YOU VOTE TO APPROVE THE PLAN.
HOW WILL THE TRANSACTION AFFECT ME?
If the Transaction is completed, you will cease to be a
shareholder of New York Fund and become a shareholder of
Tax-Exempt Fund. It is anticipated that the Transaction will
benefit you as follows:
o Operating Efficiencies: Upon the reorganization of New York
Fund into Tax-Exempt Fund, New York Fund shareholders will
become shareholders of a larger fund that may be able to
achieve greater operating efficiencies, including the
possible reduction of management fees due to achievement of
certain breakpoints. As of February 28, 2009, New York
Fund's total net assets were approximately $82.3 million,
and Tax-Exempt Fund's total net assets were approximately
$194.4 million.
o Greater Diversification: Because New York Fund invests
predominantly in municipal securities of the state of New
York and its agencies and instrumentalities, New York Fund
shareholders may benefit from the greater geographic
diversification and reduced state specific risks of
Tax-Exempt Fund, which does not focus on securities of a
single state.
It is anticipated that the Transaction may disadvantage you as
follows:
o Loss of State and City Income Tax Benefits: Shareholders of
New York Fund would lose the New York State and New York
City income tax benefits of New York Fund's investment in
New York municipal securities.
o Fund Expenses: After the Transaction, the pro forma net
expense ratio of Tax-Exempt Fund (0.75%) is expected to be
higher than the current net expense ratio for New York Fund
(0.66%) due to New York Fund's contractual fee waiver (which
extends through January 31, 2010). However, New York Fund's
net expense ratio before the contractual fee waiver is 0.81%.
o Costs of the Transaction: The Trust, on behalf of New York
Fund, will pay 25% of the expenses of the Transaction,
including proxy solicitation costs. Tax-Exempt Fund will pay
25% of such expenses. FAI will pay the remaining 50% of such
expenses. The total amount of such expenses for the
Transaction is estimated to be $69,202.
HOW WILL THE SHAREHOLDER VOTING BE HANDLED?
Shareholders who own shares of New York Fund at the close of
business on June 2, 2009 will be entitled to vote at the
Meeting, and will be entitled to one vote for each full share
and a proportionate fractional vote for each fractional share
that they hold. Approval of the Transaction requires the
affirmative vote of the lesser of: (i) a majority of the
outstanding shares of New York Fund, or (ii) 67% or more of the
outstanding shares of New York Fund present at or represented by
proxy at the Meeting if the holders of more than 50% of the
outstanding shares of New York Fund are present or represented
by proxy ("Affirmative Majority Vote"). Computershare Fund
Services, Inc. has been retained by New York Fund to collect and
tabulate shareholder votes.
Please vote by proxy as soon as you receive this
Prospectus/Proxy Statement. You may place your vote by
completing, signing, and mailing the enclosed proxy card, by
calling the number on the enclosed proxy card, or via the
Internet by following the instructions on the enclosed proxy
card. If you vote by any of these methods, the persons appointed
as proxies will officially cast your votes at the Meeting.
You can revoke your proxy or change your voting instructions at
any time until the vote is taken at the Meeting. You may also
attend the Meeting and cast your vote in person. For more details
about shareholder voting, see the "Voting Information" section of
this Prospectus/Proxy Statement.
COMPARISONS OF SOME IMPORTANT FEATURES
HOW DO THE INVESTMENT GOALS, STRATEGIES AND POLICIES OF THE FUNDS
COMPARE?
There are some differences in the goals and strategies used by
each Fund. The investment goal of New York Fund is to provide
investors with as high a level of income exempt from federal
income taxes and New York State and New York City personal income
taxes as is consistent with prudent investment management, the
preservation of shareholders' capital and liquidity in its
investments. The investment goal of Tax-Exempt Fund is to
provide investors with as high a level of income exempt from
federal income taxes as is consistent with prudent investment
management and the preservation of shareholders' capital.
Tax-Exempt Fund also seeks liquidity in its investments and each
Fund also tries to maintain a stable $1 share price.
Under normal market conditions, New York Fund invests at least
80% of its total assets in securities whose interest is free from
federal income taxes, including the federal alternative minimum
tax ("AMT"), and from New York State personal income taxes. As a
non-fundamental policy, New York Fund also normally invests at
least 80% of its total assets in securities that pay interest
free from the personal income taxes of New York City. Tax-Exempt
Fund invests at least 80% of its total assets in municipal
securities that pay interest free from federal income taxes,
including AMT. Each Fund invests predominantly in high-quality,
short-term, municipal securities and maintains a dollar-weighted
average portfolio maturity of 90 days or less.
For more information about the investment goals, strategies
and policies of New York Fund and Tax-Exempt Fund, please see the
section "Comparison of Investment Goals, Strategies, Policies and
Risks" in this Prospectus/Proxy Statement.
WHAT ARE THE PRINCIPAL RISKS OF AN INVESTMENT IN A FUND?
Investments in New York Fund and Tax-Exempt Fund involve risks
common to most money market mutual funds. There is no guarantee
against losses resulting from an investment in either Fund, or
that either Fund will achieve its investment goal.
The risks associated with an investment in each Fund are
generally similar with respect to the type of portfolio
securities held by each Fund. These risks include those
associated with income, interest rate, credit, market, and other
risks common to short-term municipal securities. However,
Tax-Exempt Fund may have less risk than New York Fund because
Tax-Exempt Fund has a broader scope of investments. Because New
York Fund invests predominantly in New York municipal securities,
events in New York are likely to affect the Fund's investments
and its performance to a greater extent than they would
Tax-Exempt Fund's investments. These events may include economic
or political policy change, tax base erosion, state
constitutional limits on tax increases, budget deficits and other
financial difficulties, and changes in credit ratings assigned to
the state's municipal issuers to meet their obligations.
For more information about the risks of the Funds, see the
section "WHAT ARE THE PRINCIPAL RISK FACTORS ASSOCIATED WITH
INVESTMENTS IN THE FUNDS?" under the heading "Comparison of
Investment Goals, Strategies, Policies and Risks" in this
Prospectus/Proxy Statement.
WHAT ARE THE DISTRIBUTION AND PURCHASE PROCEDURES OF THE FUNDS?
Shares of each Fund are sold on a continuous basis by Franklin
Templeton Distributors, Inc. ("Distributors"). Shares of each
Fund are sold at NAV. New York Fund shareholders will not be
assessed a sales charge on their receipt of Tax-Exempt Fund
shares in connection with the Transaction.
Tax-Exempt Fund shares are offered on a continuous basis and
may be purchased at their NAV in accordance with the terms stated
in the Tax-Exempt Fund Prospectus. Tax-Exempt Fund requires a
minimum initial investment of $1,000 for regular accounts and
lesser amounts for certain retirement accounts, certain accounts
opened as gifts to minors or broker-dealer sponsored wrap
accounts. For more information, please see the section "Your
Account--Buying Shares" in the Tax-Exempt Fund Prospectus.
WHAT ARE THE REDEMPTION PROCEDURES AND EXCHANGE PRIVILEGES OF THE
FUNDS?
Each Fund offers the same redemption features pursuant to
which redemption proceeds are remitted by check after prompt
receipt of proper documents, including signature guarantees under
certain circumstances. Each Fund has the same exchange
privileges. You may refer to the Tax-Exempt Fund Prospectus under
the section entitled "About Your Account" for the purchase,
exchange, and redemption procedures applicable to the purchases,
exchanges and redemptions of Tax-Exempt Fund's shares.
WHO MANAGES THE FUNDS?
The management of the business and affairs of the Funds is the
responsibility of their respective Boards of Trustees. Each Fund
is either an open-end, registered management investment company,
or a series thereof, which are commonly referred to as "mutual
funds." The Trust was initially organized as a Massachusetts
business trust on July 17, 1986, and was reorganized to a
Delaware statutory trust effective February 1, 2008. Tax-Exempt
Fund was initially organized as a California corporation on March
17, 1980, and was reorganized to a Delaware statutory trust
effective December 1, 2007.
Franklin Advisers, Inc. ("FAI") manages both Funds. FAI is a
direct, wholly owned subsidiary of Franklin Resources, Inc.
("Resources"). Resources is a publicly owned global investment
organization operating as Franklin Templeton Investments.
Franklin Templeton Investments provides global and domestic
investment management services through its Franklin, Templeton,
Mutual Series and Fiduciary Trust subsidiaries. Together, FAI and
its affiliates serve as investment manager or administrator to 46
registered investment companies, with approximately 110
U.S.-based funds or series. Resources has over $448 billion in
assets under management as of May 31, 2009. The principal
shareholders of Resources are Charles B. Johnson and Rupert H.
Johnson, Jr., each of whom is a trustee and/or officer of the
Funds.
The terms of each Fund's investment management agreement with
FAI are substantially similar. The following table shows the
investment management fees for the Funds:
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INVESTMENT MANAGEMENT FEE
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o 0.625% of the value of net assets up to and including $100
million;
o 0.500% of the value of net assets over $100 million and not
over $250 million;
o 0.450% of the value of net assets over $250 million and not
over $7.5 billion;
o 0.440% of the value of net assets over $7.5 billion and not
over $10 billion;
o 0.430% of the value of net assets over $10 billion and not over
$12.5 billion;
o 0.420% of the value of net assets over $12.5 billion and not
over $15 billion;
o 0.400% of the value of net assets over $15 billion and not over
$17.5 billion;
o 0.380% of the value of net assets over $17.5 billion and not
over $20 billion; and
o 0.360% of the value of net assets in excess of $20 billion.
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Each Fund has a "bundled" investment management arrangement,
whereby FAI pays Franklin Templeton Services, LLC ("FT Services")
for providing administrative services to the Fund out of the
investment management fee it receives from the Fund, at the
following rate schedule:
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FUND ADMINISTRATION FEE (PAID BY FAI)
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The Funds' current administrative services fees are paid out of the
investment management fee:
o 0.15% of the Fund's average daily net assets up to and
including $200 million;
o 0.135% of average daily net assets over $200 million up to and
including $700 million;
o 0.10% of average daily net assets over $700 million up to an
including $1.2 billion; and
o 0.075% of average daily net assets over $1.2 billion.
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WHAT ARE THE FEES AND EXPENSES OF EACH FUND AND WHAT MIGHT THEY
BE AFTER THE TRANSACTION?
The table below describes the fees and expenses that you may
pay if you buy and hold shares of the Funds. The table also shows
the estimated fees and expenses for Tax-Exempt Fund, assuming
that New York Fund approves the Plan and that the Transaction had
been completed as of the beginning of Tax-Exempt Fund's last
completed fiscal year. The purpose of the table is to assist you
in understanding the various costs and expenses that you will
bear directly or indirectly as a shareholder of Tax-Exempt Fund.
FEE TABLE FOR SHARES OF
NEW YORK FUND AND TAX-EXEMPT FUND
ACTUAL PRO FORMA
TAX-EXEMPT PRO FORMA
NEW YORK FUND FUND TAX-EXEMPT
(AUDITED) (AUDITED) FUND
AFTER
TRANSACTION(3)
(UNAUDITED)
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SHAREHOLDER FEES
(fees paid directly from your
investment)
Maximum sales charge (load) None None None
as a percentage of offering
price
ANNUAL FUND OPERATING
Expenses(1)
Management fees 0.62% 0.56% 0.55%
Distribution and service None None None
(12b-1) fees
Other expenses 0.21% 0.25% 0.20%
TOTAL ANNUAL FUND OPERATING
EXPENSES 0.83% 0.81% 0.75%
Management fee reduction(2) (0.17)% - -
NET ANNUAL FUND OPERATING
EXPENSES 0.66% 0.81% 0.75%
1. Expense ratios reflect annual fund operating expenses for the
most recent fiscal year of each Fund, except that "Other
expenses" and "Total annual Fund operating expenses" of the Funds
have been restated to reflect fees relating to the Funds'
participation in the Treasury's Temporary Guarantee Program for
Money Market Funds through April 30, 2009.
2. FAI, New York Fund's investment manager, has contractually
agreed to limit its fees and to assume as its own expense certain
expenses otherwise payable by the Fund so that total annual Fund
operating expenses do not exceed 0.64% (other than certain
non-routine expenses or costs, including those relating to
litigation, indemnification, reorganizations, liquidations and
Treasury Guarantee Program fees). Assuming completion of the
Transaction, this waiver will be discontinued by FAI. For New
York Fund and Tax-Exempt Fund, FAI has agreed in advance to
voluntarily waive a portion of its management fees to avoid a
negative yield.
3. Pro Forma expenses are based on current and anticipated
Tax-Exempt Fund expenses as if the Transaction had been effective
as of February 1, 2008 and do not include the estimated costs of
the transaction of approximately $17,301 to be borne by
Tax-Exempt Fund.
EXAMPLE
This example can help you compare the cost of investing in New
York Fund shares with the cost of investing in Tax-Exempt Fund
shares, both before and after the Transaction. It assumes:
o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year;
o The Fund's operating expenses remain the same, taking into
account any contractual waivers for the applicable period;
and
o You sell your shares at the end of the period.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------
If you sell your shares at the
end of the period:
New York Fund $67(1) $244 $435 $988
Tax-Exempt Fund $83(1) $254 $441 $980
Pro Forma Tax-Exempt Fund $77(1) $235 $408 $908
1. The first year of the expense examples of the Funds have been
restated to reflect fees relating to the Funds' participation in
the Treasury's Temporary Guarantee Program for Money Market Funds
through April 30, 2009.
HOW DO THE PERFORMANCE RECORDS OF THE FUNDS COMPARE?
The performance of the Funds, before taxes, as of March 31,
2009, is shown below.
AVERAGE ANNUAL TOTAL RETURNS(1)
INCEPTION
DATE 1 YEAR 5 YEAR 10 YEAR
----------------------------------------------
New York Fund 10/10/86 0.93% 1.89% 1.82%
Tax-Exempt Fund 2/18/82 0.81% 1.80% 1.75%
New York and Tax-Exempt have similar 7-day yields, as shown
below. Please note that the current low interest rate environment
has presented challenges for each Fund. In order to avoid a
negative yield, FAI, FT Services and Distributors have
voluntarily agreed to waive or limit their respective fees,
assume as their own expense certain expenses otherwise payable by
each Fund, and if necessary, make a capital infusion into a Fund.
These waivers, expense reimbursements and capital infusions are
voluntary and may be modified or discontinued by the investment
manager, fund administrator or distributor at any time. There is
no guarantee that either Fund will be able to avoid a negative
yield.
----------------------------------------------------------------------
TAXABLE TAXABLE
EQUIVALENT EQUIVALENT
7-DAY 7-DAY 7-DAY 7-DAY
EFFECTIVE EFFECTIVE EFFECTIVE EFFECTIVE
YIELD YIELD YIELD YIELD
7-DAY SEC YIELD (WITH (WITHOUT TAX (WITH (WITHOUT
AS OF 3/31/09 WAIVER) WAIVER) RATE WAIVER) WAIVER)
----------------------------------------------------------------------
New York Fund
(New York State
Residents)(2) 0% 0% 39.45% 0% 0%
----------------------------------------------------------------------
New York Fund
(New York City
Residents)(3) 0% 0% 41.82% 0% 0%
----------------------------------------------------------------------
Tax-Exempt Fund(4) 0% 0% 35.00% 0% 0%
----------------------------------------------------------------------
1. FAI has agreed in advance to waive a portion or all of its
management fees, which has the effect of reducing expenses and
increasing total returns to shareholders.
2. Taxable equivalent yield is based on the maximum combined
federal regular and New York State personal income tax rate of
39.45% in effect on December 29, 2008.
3. Taxable equivalent yield is based on the maximum combined
federal regular, New York State and New York City personal income
tax rate of 41.82% in effect on December 29, 2008.
4. Taxable equivalent yield is based on the maximum federal
regular income tax rate of 35.00% in effect on December 29, 2008.
WHERE CAN I FIND MORE FINANCIAL AND PERFORMANCE INFORMATION
ABOUT THE FUNDS?
The Tax-Exempt Fund Prospectus dated December 1, 2008, as
supplemented to date (enclosed as Exhibit B), the current Annual
Report to Shareholders of Tax-Exempt Fund for the year ended July
31, 2008, and the semi-annual report to shareholders of
Tax-Exempt Fund for the period ended January 31, 2009 contain
additional financial information about Tax-Exempt Fund, including
Tax-Exempt Fund's financial performance for the past five years
under the heading "Financial Highlights." Additional performance
information as of the Fund's calendar year ended December 31,
2007, including after tax return information, is contained in the
Tax-Exempt Fund Prospectus under the heading "Performance."
The Prospectus of New York Fund dated February 1, 2009, as
supplemented to date (the "New York Fund Prospectus"), the Annual
Report to Shareholders of New York Fund for the year ended
September 30, 2008, and the semi-annual report to shareholders of
New York Fund for the period ended March 31, 2009 contain more
financial information about New York Fund, including New York
Fund's financial performance for the past five years under the
heading "Financial Highlights." Additional performance
information as of the calendar year ended December 31, 2008,
including after-tax return information, is contained in the New
York Fund Prospectus under the heading "Performance." These
documents are available free of charge upon request (see the
section "Information about New York Fund").
WHAT ARE OTHER KEY FEATURES OF THE FUNDS?
The Funds use the same service providers for the following
services:
TRANSFER AGENCY SERVICES. Investor Services, an indirect
wholly owned subsidiary of Resources, is the shareholder
servicing and transfer agent and dividend-paying agent for New
York Fund and Tax-Exempt Fund.
ADMINISTRATIVE SERVICES. FT Services, an indirect wholly owned
subsidiary of Resources, provides certain administrative
facilities and services to New York Fund and Tax-Exempt Fund
under the same terms and conditions.
CUSTODY SERVICES. Bank of New York Mellon, Mutual Funds
Division, 100 Church Street, New York, NY 10286, acts as
custodian of the securities and other assets of New York Fund and
Tax-Exempt Fund.
DISTRIBUTION SERVICES. Distributors acts as the principal
underwriter in the continuous public offering of the Funds'
shares under the same terms and conditions.
PURCHASES AND REDEMPTIONS. Neither Fund imposes a front-end
sales charge on purchases of shares. Tax-Exempt Fund shares are
offered on a continuous basis and may be purchased at their NAV
in accordance with the terms stated in the Tax-Exempt Fund
Prospectus. Tax-Exempt Fund requires a minimum initial investment
of $1,000 for regular accounts and lesser amounts for certain
accounts opened as gifts to minors or broker-dealer sponsored
wrap accounts. For more information, please see the section "Your
Account--Buying Shares" in the Tax-Exempt Fund Prospectus.
No sales charges or redemption fees will be applicable to
Tax-Exempt Fund shares received by New York Fund shareholders in
connection with the Transaction.
Shares of each Fund may be exchanged for shares of other funds
within the Franklin Templeton funds, subject to certain
limitations, as provided in the applicable prospectus. Shares of
each Fund may be exchanged for Class A shares of other Franklin
Templeton funds generally on any day the Funds are open for
business.
You may sell (redeem) your shares at any time. Shares of a Fund
may be redeemed at the NAV per share next determined after
receipt of a proper request for redemption in accordance with the
terms stated in the respective Fund's Prospectus.
Additional information and specific instructions explaining how
to buy, sell, and exchange shares of Tax-Exempt Fund, and
information regarding market timing restrictions on such shares,
are outlined in the Tax-Exempt Fund Prospectus under the heading
"Your Account." The accompanying Tax-Exempt Fund Prospectus also
lists phone numbers for you to call if you have any questions
about your account under the heading "Questions." These
instructions and phone numbers are the same for each Fund.
DIVIDENDS AND DISTRIBUTIONS. Each Fund typically declares
daily and pays income dividends monthly from its net investment
income. Your account begins to receive dividends on the day after
the Fund receives your investment and continues to receive
dividends through the day it received a request to redeem your
shares. The amount of any distributions will vary, and there is
no guarantee the Fund will pay dividends. Your income dividends
will be automatically reinvested in additional shares at NAV
unless you elect to receive cash payments.
For more information on each Fund's reinvestment program, see
"Distribution Options" in the respective Prospectus.
The tax implications of an investment in each Fund are
generally the same. For more information about the tax
implications of investments in a Fund, see the respective
Prospectus under the heading "Distributions and Taxes."
REASONS FOR THE TRANSACTION
The Board of Trustees of the Trust (the "Trust's Board"), on
behalf of New York Fund, has recommended that New York Fund
shareholders approve the Transaction in order to combine New York
Fund with a larger fund that has somewhat similar goals,
investment policies, strategies and risks. Shareholders of New
York Fund will benefit from the broader geographic
diversification of Tax-Exempt Fund.
A meeting of the Trust's Board was held on April 14, 2009 to
consider the proposed Transaction. The Independent Trustees have
been advised on this matter by independent counsel to the
Independent Trustees.
The Trust's Board requested and received from FAI written
materials containing relevant information about Tax-Exempt Fund
and the proposed Transaction, including fee and expense
information on an actual and future estimated basis, and
comparative performance data.
The Trust's Board considered the potential benefits and costs
of the Transaction to New York Fund shareholders. The Trust's
Board reviewed detailed information about: (1) the investment
goal, strategies and policies of Tax-Exempt Fund; (2) the
portfolio management of Tax-Exempt Fund; (3) the comparability of
the investment goals, policies, restrictions and investments of
New York Fund with those of Tax-Exempt Fund; (4) the comparative
short-term and long-term investment performance of New York Fund
and Tax-Exempt Fund (including the current low yield environment
for both Funds); (5) the current expense ratios of New York Fund
and Tax-Exempt Fund; (6) the relative asset size of each Fund,
including the benefits of New York Fund joining with a larger
fund such as potentially lower management fees per share; (7) the
agreement by FAI to pay a portion of the expenses related to the
Transaction; (8) the tax consequences of the Transaction to New
York Fund and its shareholders; and (9) the general
characteristics of New York Fund.
The Trust's Board also considered that: (a) New York Fund
shareholders could benefit by expanded investment opportunities
in Tax-Exempt Fund and the federal tax-free nature of shareholder
investments, notwithstanding New York Fund shareholders' loss of
certain New York State and/or City income tax benefits; (b) there
are differences between the goals and strategies used by each
Fund; (c) the relatively small asset size of New York Fund had
prevented it from realizing significant economies of scale in
reducing its expense ratio; (d) based on New York Fund's
historical asset growth and projected sales activity, its assets
were unlikely to grow sufficiently in the foreseeable future to
result in significant economies of scale; (e) benefits to
shareholders, including operating efficiencies and potentially
enhanced ability to effect portfolio transactions, may be
achieved from combining the Funds; and (f) alternatives were
available to shareholders of New York Fund, including the ability
to redeem their shares.
Based upon their evaluation of the relevant information
presented to them, and in light of their fiduciary duties under
federal and state law, the Trust's Board, including all of the
Independent Trustees, concluded that the Transaction is in the
best interests of the shareholders of New York Fund and that no
dilution of value would result to the shareholders of New York
Fund from the Transaction. The Trust's Board approved the Plan on
April 14, 2009 and recommended that shareholders of New York Fund
vote to approve the Transaction.
FOR THE REASONS DISCUSSED ABOVE, THE TRUST'S BOARD UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR THE PLAN.
INFORMATION ABOUT THE TRANSACTION
This is only a summary of the Plan. You should read the
actual Plan, which is attached as Exhibit A, for complete
information about the Transaction.
HOW WILL THE TRANSACTION BE CARRIED OUT?
If the shareholders of New York Fund approve the Plan, the
Transaction will take place after various conditions are
satisfied, including the preparation of certain documents. The
Trust will determine a specific date, called the "closing date,"
for the actual Transaction to take place. If the shareholders of
New York Fund do not approve the Plan, the Transaction will not
take place, and New York Fund will continue to operate as it does
currently.
Until the close of business on the day of the Meeting, you may
continue to add to your existing account, subject to your
applicable minimum additional investment amount, or buy
additional shares through the reinvestment of dividend and
capital gain distributions (if any). If shareholders of New York
Fund approve the Plan at the Meeting, shares of New York Fund
will no longer be offered for sale to existing shareholders,
except for the reinvestment of dividend and capital gain
distributions or through established automatic investment plans.
If the shareholders of New York Fund approve the Plan, New York
Fund and Tax-Exempt Fund will determine the closing date, for the
actual Transaction to take place. New York Fund will transfer
substantially all of its assets, free and clear of all liens,
encumbrances, and claims whatsoever (other than shareholders'
rights of redemption), to Tax-Exempt Fund on the closing date,
which is scheduled to occur on or about August 26, 2009, but
which may occur on an earlier or later date as New York Fund and
Tax-Exempt Fund may agree. Tax-Exempt Fund shall not assume any
liability of New York Fund. In exchange, Tax-Exempt Fund will
issue shares that have an aggregate NAV equal to the dollar value
of the assets delivered to Tax-Exempt Fund by New York Fund. New
York Fund will distribute to its shareholders the Tax-Exempt Fund
shares it receives. Both Funds strive to maintain a stable NAV of
$1.00 per share, so that shareholders of New York Fund should
receive the same number of Tax-Exempt Fund shares as they hold of
New York Fund shares immediately prior to the effective date and
time of the Transaction. Shareholders of New York Fund will
receive any dividends declared and paid by New York Fund on the
date that the Transaction is effective. The share transfer books
of New York Fund will be permanently closed as of 3:00 p.m.,
Pacific Time, on the closing date. New York Fund will accept
requests for redemptions only if received in proper form before
3:00 p.m., Pacific Time, on the closing date. Requests received
after that time will be considered requests to redeem Tax-Exempt
Fund shares. Prior to the closing date, New York Fund will pay or
make provision for payment of all its remaining liabilities, if
any. At the closing, each shareholder of record of New York Fund
shall have the right to receive any unpaid dividends or
distributions declared prior to the closing, including any
declared dividend or distribution, with respect to shares of New
York Fund that such shareholder had on the distribution record
date. New York Fund will then terminate its existence, liquidate,
and dissolve.
To the extent permitted by law, the Trust may agree to
amend the Plan without shareholder approval. If any amendment
is made to the Plan that would have a material adverse effect
on New York Fund shareholders, such change will be submitted
to the affected shareholders for their approval.
Tax-Exempt Fund and the Trust each have made representations
and warranties in the Plan that are customary in matters such as
the Transaction. The obligations of the Trust, with respect to
New York Fund, or of Tax-Exempt Fund, respectively, under the
Plan are subject to various conditions, including:
o Tax-Exempt Fund's Registration Statement on Form N-14
under the Securities Act of 1933, of which this
Prospectus/Proxy Statement is a part, shall have been
filed with the SEC and such Registration Statement shall
have become effective, and no stop-order suspending the
effectiveness of the Registration Statement shall have
been issued, and no proceeding for that purpose shall have
been initiated or threatened by the SEC (and not withdrawn
or terminated);
o the shareholders of New York Fund shall have approved the
Transaction; and
o each Fund shall have received the tax opinions described
below that the consummation of the Transaction will not
result in the recognition of gain or loss for federal
income tax purposes for New York Fund, Tax-Exempt Fund or
their respective shareholders.
If the Trust agrees, the Plan may be terminated or abandoned
at any time before or after the approval of the shareholders of
New York Fund.
Following the closing date, until outstanding certificates for
shares of New York Fund are surrendered, certificates for shares
of New York Fund shall be deemed, for all Tax-Exempt Fund
purposes, to evidence ownership of the appropriate number of
Tax-Exempt Fund shares into which the shares of New York Fund
have been converted.
WHO WILL PAY THE EXPENSES OF THE TRANSACTION?
The total estimated cost of the Transaction is $69,202. Each
Fund will pay 25% and FAI will pay 50% of the expenses resulting
from the Transaction, including the costs of the proxy
solicitation.
WHAT ARE THE TAX CONSEQUENCES OF THE TRANSACTION?
The Transaction is intended to qualify as a tax-free
reorganization for federal income tax purposes under Section
368(a)(1) of the Internal Revenue Code of 1986, as amended
("Code"). Based on certain assumptions and representations
received from the Trust, on behalf of New York Fund, and
Tax-Exempt Fund, it is the opinion of Stradley Ronon Stevens &
Young, LLP, counsel to Tax-Exempt Fund and New York Fund (i) that
shareholders of New York Fund will not recognize any gain or loss
for federal income tax purposes as a result of the exchange of
their shares of New York Fund for shares of Tax-Exempt Fund and
(ii) that neither Tax-Exempt Fund nor its shareholders will
recognize any gain or loss upon Tax-Exempt Fund's receipt of the
assets of New York Fund. In addition, the holding period and
aggregate tax basis for the Tax-Exempt Fund shares that are
received by a New York Fund shareholder will be the same as the
holding period and aggregate tax basis of the shares of New York
Fund previously held by such shareholder.
Opinions of counsel are not binding upon the Internal Revenue
Service or the courts. If the Transaction is consummated but
does not qualify as a tax-free reorganization under the Code, New
York Fund would recognize gain or loss on the transfer of its
assets to Tax-Exempt Fund and each shareholder of New York Fund
would recognize a taxable gain or loss equal to the difference
between its tax basis in its New York Fund shares and the fair
market value of the shares of Tax-Exempt Fund it received. Even
if the Transaction did not qualify as a tax-free reorganization,
there should be no material adverse federal income tax
consequences to shareholders of New York Fund because New York
Fund is a money market fund that strives to maintain a stable net
asset value of $1.00 per share.
You should consult your tax adviser regarding the effect, if
any, of the Transaction in light of your particular
circumstances, as well as the state and local tax consequences,
if any, of the Transaction because this discussion only relates
to the federal income tax consequences.
WHAT SHOULD I KNOW ABOUT THE SHARES OF TAX-EXEMPT FUND?
Shares of Tax-Exempt Fund will be distributed to shareholders
of New York Fund and generally will have the same legal
characteristics as the shares of New York Fund with respect to
such matters as voting rights, accessibility, conversion rights,
and transferability. Tax-Exempt Fund was converted to a Delaware
statutory trust, effective December 1, 2007.
WHAT ARE THE CAPITALIZATIONS OF THE FUNDS AND WHAT MIGHT THE
CAPITALIZATION BE AFTER THE TRANSACTION?
The following table sets forth, as of January 31, 2009, the
capitalization of New York Fund and Tax-Exempt Fund. The table
also shows the pro forma capitalization of Tax-Exempt Fund as
adjusted to give effect to the proposed Transaction. The
capitalization of Tax-Exempt Fund is likely to be different when
the Transaction is consummated.
TAX-EXEMPT PRO FORMA TAX-EXEMPT
NEW YORK FUND ADJUSTMENTS FUND -PRO
FUND (UNAUDITED) TO FORMA
(UNAUDITED) CAPITALIZATION (assuming
(1) the
(UNAUDITED) Transaction
is
completed)(2)
(UNAUDITED)
---------------------------------------------------
Net assets 84,836,715 205,705,220 (34,601) 290,507,334
Total shares 84,890,688 205,791,640 N/A 290,682,328
outstanding
Net asset value per 1.00 1.00 N/A 1.00
share
1. Adjustments reflect the costs of the Transaction incurred by
the Funds.
2. Numbers are pro forma after the Transaction.
Because each of the Funds is a money market fund, each
values its portfolio securities using the amortized cost method
as permitted by Rule 2a-7 under the 1940 Act. As a result, the
Funds will use amortized cost to value their respective
securities in connection with the Transaction. In order to
ensure that shareholders' interests are not diluted, the Board of
Trustees of both the Trust and Tax-Exempt Fund currently require
that the Transaction be postponed in the event that the NAV per
share of either Fund calculated using market value deviates by
more than 0.25 of 1% from the NAV per share calculated using
amortized cost.
COMPARISON OF INVESTMENT GOALS, STRATEGIES, POLICIES AND RISKS
This section describes and compares the key differences between
the investment goals, strategies and principal policies of the
Funds, as well as the risks associated with such goals,
strategies and policies. The investment goal and most of the
investment restrictions of each Fund are fundamental, which means
that they cannot be changed without the Affirmative Majority
Vote, as defined herein, of that Fund's outstanding voting
securities. Unless otherwise noted, the investment policies of
each Fund are non-fundamental and may be changed without
shareholder approval. For a complete description of Tax-Exempt
Fund's investment policies and risks, you should read the
Tax-Exempt Fund Prospectus, which accompanies this
Prospectus/Proxy Statement as Exhibit B, and the SAI relating to
this Prospectus/Proxy Statement, which is incorporated by
reference into this Prospectus/Proxy Statement and is available
upon request.
ARE THERE ANY SIGNIFICANT DIFFERENCES BETWEEN THE INVESTMENT
GOALS, STRATEGIES, POLICIES AND RISKS OF THE FUNDS?
New York Fund and Tax-Exempt Fund have somewhat similar
investment goals and strategies. The investment goal of New York
Fund is to provide investors with as high a level of income
exempt from federal income taxes and New York State and New York
City personal income taxes as is consistent with prudent
investment management, the preservation of shareholders' capital
and liquidity in its investments. The investment goal of
Tax-Exempt Fund is to provide investors with as high a level of
income exempt from federal income taxes as is consistent with
prudent investment management and the preservation of
shareholders' capital. Tax-Exempt Fund also seeks liquidity in
its investments, and each Fund tries to maintain a stable $1
share price.
Under normal market conditions, New York Fund invests at least
80% of its total assets in securities whose interest is free from
federal income taxes, including the federal alternative minimum
tax ("AMT"), and from New York State personal income taxes. As a
non-fundamental policy, New York Fund also normally invests at
least 80% of its total assets in securities that pay interest
free from the personal income taxes of New York City. Tax-Exempt
Fund invests at least 80% of its total assets in municipal
securities that pay interest free from federal income taxes,
including AMT. Each Fund invests predominantly in high-quality,
short-term, municipal securities and maintains a dollar-weighted
average portfolio maturity of 90 days or less.
Each Fund only buys securities with remaining maturities of 397
days or less, and that the manager determines present minimal
credit risks and that are rated in the top two short-term ratings
by independent rating services, such as Standard & Poor's
("S&P(R)") and Moody's Investors Service ("Moody's") or securities
that are unrated and deemed to be of similar quality.
As of March 31, 2009, Tax-Exempt Fund's portfolio is comprised
of 58% in investments in weekly variable rate demand notes, 33%
in daily variable rate demand notes, 1% in cash and 8% in notes
and bonds. Also as of March 31, 2009, New York Fund's portfolio
is comprised of 68% in investments in weekly variable rate demand
notes, 28% in daily variable rate demand notes, less than 1% in
cash and 4% in notes and bonds.
HOW DO THE INVESTMENT RESTRICTIONS OF THE FUNDS DIFFER?
The Funds' fundamental investment policies or restrictions are
somewhat similar. However, New York Fund invests at least 80% of
its total assets in securities that pay interest free from the
personal income taxes for New York State and New York City
residents.
WHAT ARE THE PRINCIPAL RISK FACTORS ASSOCIATED WITH INVESTMENTS
IN THE FUNDS?
An investment in either Fund involve risks common to most
money market mutual funds. There is no guarantee against losses
resulting from an investment in either Fund, or that either Fund
will achieve its investment goals.
INTEREST RATE When interest rates rise, municipal security
prices fall. The opposite is also true: municipal security prices
rise when interest rates fall. In general, securities with longer
maturities are more sensitive to these price changes.
CREDIT An issuer of municipal securities may be unable to make
interest payments and repay principal. Changes in an issuer's
financial strength or in a security's credit rating may affect a
security's value.
Many of each Fund's portfolio securities may be supported by
credit enhancements, which may be provided by either U.S. or
foreign entities. These securities have the credit risk of the
entity providing the credit support. Credit support provided by a
foreign entity may be less certain because of the possibility of
adverse foreign economic, political or legal developments that
may affect the ability of that entity to meet its obligations. To
the extent a Fund holds insured securities, a change in the
credit rating of any one or more of the municipal bond insurers
that insure securities in the Fund's portfolio may affect the
value of the securities they insure and Fund performance. The
Fund might also be adversely impacted by the inability of an
insurer to meet its insurance obligations. A Fund's ability to
maintain a stable share price may depend on these credit
supports, which are not backed by federal deposit insurance.
INCOME Since each Fund can only distribute what it earns, the
Fund's distributions to shareholders may decline when interest
rates fall. Because each Fund limits its investments to
high-quality, short-term securities, its portfolio generally will
earn lower yields than a portfolio with lower-quality,
longer-term securities subject to more risk.
TAX-EXEMPT SECURITIES While each Fund endeavors to purchase
only bona fide tax-exempt securities, there are risks that: (a) a
security issued as tax-exempt may be reclassified by the Internal
Revenue Service, or a state tax authority, as taxable and/or (b)
future legislative, administrative or court actions could
adversely impact the qualification of income from a tax-exempt
security as tax-free. Such reclassifications or actions could
cause interest from a security to become taxable, possibly
retroactively, subjecting you to increased tax liability. In
addition, such reclassifications or actions may affect the Fund's
ability to maintain a stable share price.
STATE When a Fund, such as New York Fund, invests
predominantly in municipal securities in a specific state, events
in that state are likely to affect the Fund's investments and its
performance. These events may include economic or political
policy changes, tax base erosion, state constitutional limits on
tax increases, budget deficits and other financial difficulties,
and changes in the credit ratings assigned to the state's
municipal issuers. A negative change in any one of these or
other areas could affect the ability of a state's municipal
issuers to meet their obligations. It is important to remember
that economic, budget and other conditions within a particular
state can be unpredictable and can change at any time.
In addition, the events of September 11, 2001 have affected
and will continue to affect New York State and New York City and
several public agencies located in the city and state including
the New York/New Jersey Port Authority, the Metropolitan
Transportation Authority and the Battery Park City Authority, all
of which issue municipal bonds. The federal government has
committed $21.5 billion to the New York area to reimburse costs
as well as spur redevelopment. Redevelopment of the lower
Manhattan area is expected to take several more years and the
effects on the New York economy as a result of the disaster could
slow its ability to fully recover from the national recession.
U.S. TERRITORIES As with state municipal securities, events in
any of the territories where a Fund is invested may affect the
Fund's investments and its performance.
MARKET A security's value may be reduced by market activity or
the results of supply and demand. This is a basic risk associated
with all securities. When there are more sellers than buyers,
prices tend to fall. Likewise, when there are more buyers than
sellers, prices tend to rise.
Each Fund may invest more than 25% of its assets in municipal
securities that finance similar types of projects, such as
hospitals, housing, industrial development, and transportation or
pollution control. A change that affects one project, such as
proposed legislation on the financing of the project, a shortage
of the materials needed for the project, or a declining need for
the project, would likely affect all similar projects, thereby
increasing market risk.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS Municipal
securities may be issued on a when-issued or delayed delivery
basis, where payment and delivery take place at a future date.
Because the market price of the security may fluctuate during the
time before payment and delivery, the Funds assume the risk that
the value of the security at delivery may be more or less than
the purchase price.
INFORMATION ABOUT TAX-EXEMPT FUND
Information about Tax-Exempt Fund is included in the Tax-Exempt
Fund Prospectus, which is enclosed with and incorporated by
reference into (is considered a part of) this Prospectus/Proxy
Statement. Additional information about Tax-Exempt Fund is
included in the Tax-Exempt Fund SAI, which is incorporated into
the Tax-Exempt Fund Prospectus and into the SAI dated June 23,
2009 relating to this Prospectus/Proxy Statement, which has been
filed with the SEC and is considered part of this
Prospectus/Proxy Statement. You may request a free copy of the
Tax-Exempt Fund SAI, Tax-Exempt Fund's Annual Report to
Shareholders for the fiscal year ended July 31, 2008, Tax-Exempt
Fund's semi-annual report to shareholders for the period ended
January 31, 2009, the SAI relating to this Prospectus/Proxy
Statement, and other information by calling (800) DIAL BEN or by
writing to Tax-Exempt Fund at P.O. Box 33030, St. Petersburg, FL
33733-8030.
Tax-Exempt Fund files proxy materials, reports and other
information with the SEC in accordance with the informational
requirements of the Securities Exchange Act of 1934 and the 1940
Act. These materials can be inspected and copied at the public
reference facilities maintained by the SEC, 100 F Street, N.E.,
Room 1580, Washington, D.C. You can also obtain copies of this
information, after paying a duplicating fee at prescribed rates,
by writing to the SEC's Public Reference Branch, Office of
Consumer Affairs and Information Services, Washington, DC 20549
or from the SEC's Internet site at http://www.sec.gov or by
electronic request at the following email address:
publicinfo@sec.gov.
INFORMATION ABOUT NEW YORK FUND
Information about New York Fund is included in the current New
York Fund Prospectus, which is incorporated into this
Prospectus/Proxy Statement by reference, as well as New York
Fund's SAI dated February 1, 2009, the Trust's Annual Report to
Shareholders for the fiscal year ended September 30, 2008 and
semi-annual report to shareholders for the period ended March 31,
2009. These documents have been filed with the SEC. You may
request free copies of these documents and other information
relating to New York Fund by calling (800) DIAL BEN or by writing
to New York Fund at P.O. Box 33030, St. Petersburg, FL
33733-8030. Reports and other information filed by the Trust can
be inspected and copied at the public reference facilities
maintained by the SEC, 100 F Street, N.E., Room 1580, Washington,
D.C. You can also obtain copies of this information, after
paying a duplicating fee at prescribed rates, by writing to the
SEC's Public Reference Branch, Office of Consumer Affairs and
Information Services, Washington, DC 20549 or from the SEC's
Internet site at http://www.sec.gov or by electronic request at
the following email address: publicinfo@sec.gov.
FURTHER INFORMATION ABOUT THE FUNDS
The following is a discussion of the organization of each
Fund. More detailed information about each Fund's current
corporate structure is contained in each Fund's SAI.
CAPITAL STRUCTURE. New York Fund is a series of the Trust,
which was initially organized as a Massachusetts business trust
on July 17, 1986 and was reorganized to a Delaware statutory trust
effective February 1, 2008. Tax-Exempt Fund was initially
organized as a California corporation on March 17, 1980 and was
reorganized to a Delaware statutory trust effective December 1,
2007. The number of shares of each Fund is unlimited, each share
without a par value. Each Fund may issue fractional shares.
Shares of each Fund are fully paid and nonassessable and have
no preference, preemptive or subscription rights. Fund
shareholders have no appraisal rights.
COMPARISON OF VOTING RIGHTS. For each Fund, each whole share
is entitled to one vote as to any matter on which it is entitled
to vote and each fractional share carries a proportionate
fractional vote. Shareholders of the Funds are not entitled to
cumulative voting in the election of Trustees. Quorum for a
shareholders' meeting of either Fund is generally 40% of the
shares entitled to vote, which are present in person or by
proxy.
The 1940 Act provides that shareholders of the Funds have the
power to vote with respect to certain matters: specifically, for
the election of Trustees, the selection of auditors (under
certain circumstances), approval of investment management
agreements and plans of distribution, and amendments to policies,
goals or restrictions deemed to be fundamental.
In addition, shareholders of each Fund are granted the power to
vote on certain matters by the laws governing Delaware statutory
trusts and by their Agreements and Declarations of Trust ("Trust
Instruments"). The rights to vote on these matters are the same
for New York Fund and Tax-Exempt Fund. For example, the Trust
Instruments and bylaws for both the Trust and Tax-Exempt Fund
give shareholders the power to vote: (1) for the election of
Trustees at a meeting called for the purpose of electing
Trustees, (2) with respect to certain amendments to the Trust
Instrument as required by the Trust Instrument, the 1940 Act or
the requirements of any securities exchanges on which shares are
listed for trading, and (3) on such matters as required by the
Trust Instrument, the bylaws and any registration statement filed
with the SEC or any state, or as the Trustees may consider
necessary or desirable.
Under the Trust Instruments of the Trust and Tax-Exempt Fund,
to the extent a larger vote is not required by applicable law, a
majority of the votes cast at a meeting at which a quorum is
present generally shall decide any questions, with the exception
that Trustees are elected by not less than a plurality of the
votes cast at such a meeting.
The Trust Instruments for each Fund establish the maximum
number of days prior to a shareholders' meeting during which a
record date may be set by that Fund's Board. The maximum number
of days is 120 for both the Trust and Tax-Exempt Fund.
LEGAL STRUCTURES. Mutual funds formed under the Delaware
Statutory Trust Act, such as the Trust and Tax-Exempt Fund, are
granted a significant amount of operational flexibility with
respect to features, rights and obligations of the statutory
trust and its trustees and shareholders in their organizational
instruments. Mutual funds organized as Delaware statutory trusts
have benefited from this flexibility to streamline their
operations and minimize expenses. For example, mutual funds
organized as Delaware statutory trusts are not required to hold
annual shareholders' meetings if meetings are not otherwise
required by the federal securities laws or their declarations of
trust or bylaws, and such funds may create new classes or series
of shares without having to obtain the approval of shareholders.
In addition, a fund may provide in its governing documents that
certain fund transactions, such as certain mergers,
reorganizations and liquidations, may go forward with only
trustee approval and not a shareholder vote; such funds are still
subject, however, to the voting requirements of the 1940 Act.
LIMITED LIABILITY FOR SHAREHOLDERS. Under the Delaware
Statutory Trust Act, shareholders of the Funds are entitled to
the same limitation of personal liability as is extended to
shareholders of a corporation organized for profit under the
Delaware General Corporation Law.
BOARDS OF TRUSTEES. Pursuant to the Delaware Statutory Trust
Act and the Trust's and Tax-Exempt Fund's Trust Instruments, the
responsibility for the management of each of New York Fund and
Tax-Exempt Fund is vested in its respective Board of Trustees,
which, among other things, is empowered by the Trust Instrument
to elect officers and provide for the compensation of agents,
consultants and other professionals to assist and advise in such
management. Pursuant to the Trust Instruments, no Trustee shall
be liable for any act or omission or any conduct whatsoever in
his capacity as Trustee, except for an act or omission that
constitutes a bad faith violation of the implied contractual
covenant of good faith and fair dealing, willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.
INSPECTION RIGHTS. Each Fund provides shareholders certain
inspection rights of its books and records, to at least the
extent required by applicable law.
LEGAL PROCEEDINGS. For information about material pending
legal proceedings and regulatory matters, please see the section
entitled "Management" in each Fund's Prospectus.
VOTING INFORMATION
HOW MANY VOTES ARE NECESSARY TO APPROVE NEW YORK FUND'S PLAN?
An Affirmative Majority Vote, as defined herein, of the
outstanding shares of New York Fund is required to approve the
Plan. Each shareholder will be entitled to one vote for each
full share, and a proportionate fractional vote for each
fractional share of New York Fund held at the close of business
on June 2, 2009 (the "Record Date"). If sufficient votes to
approve the Plan are not received by the date of the Meeting, the
Meeting may be adjourned to permit further solicitations of
proxies.
Forty percent (40%) of New York Fund's outstanding shares
entitled to vote in person or by proxy as of the Record Date
shall be a quorum for the transaction of business at the Meeting.
Under relevant state law and New York Fund's Trust Instrument,
abstentions and broker non-votes (that is, proxies from brokers
or nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled
to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will be
treated as votes present at the Meeting; abstentions and broker
non-votes, however, will not be treated as votes cast at such
Meeting. Abstentions and broker non-votes, therefore, will be
included for purposes of determining whether a quorum is present
but will have the same effect as a vote AGAINST the Plan.
HOW DO I ENSURE MY VOTE IS ACCURATELY RECORDED?
You can vote in any one of four ways:
o By mail, with the enclosed proxy card;
o In person at the Meeting;
o By telephone; or
o Through the Internet.
If your account is eligible for voting by telephone or through
the Internet, separate instructions are enclosed.
A proxy card is, in essence, a ballot. When you vote your
proxy, it tells us how you want to vote on important issues
relating to New York Fund. If you simply sign, date and return
the proxy card but give no voting instructions, your shares will
be voted in favor of the Plan and in accordance with the views of
management upon any unexpected matters that come before the
Meeting or adjournment of the Meeting.
MAY I REVOKE MY PROXY?
You may revoke your proxy at any time before it is voted by
sending a written notice to the Trust expressly revoking your
proxy, by signing and forwarding to the Trust a later-dated proxy
card that is received at or prior to the Meeting, or by attending
the Meeting and voting in person.
WHAT OTHER MATTERS WILL BE VOTED UPON AT THE MEETING?
The Board of Trustees of the Trust does not intend to bring
any matters before the Meeting other than those described in this
Prospectus/Proxy Statement. It is not aware of any other matters
to be brought before the Meeting by others. If any other matter
legally comes before the Meeting, proxies for which discretion
has been granted will be voted in accordance with the views of
management.
WHO IS ENTITLED TO VOTE?
Shareholders of record of New York Fund on the Record Date
will be entitled to vote at the Meeting. On the Record Date,
there were 67,724,239.261 outstanding shares of New York Fund.
HOW WILL PROXIES BE SOLICITED?
Computershare Fund Services, Inc., a professional proxy
solicitation firm (the "Solicitor"), has been engaged to assist
in the solicitation of proxies, at an estimated cost of
approximately $10,000. New York Fund expects that the
solicitation will be primarily by mail. As the date of the
Meeting approaches, however, certain New York Fund shareholders
may receive a telephone call from a representative of the
Solicitor if their votes have not yet been received.
Authorization to permit the Solicitor to execute proxies may be
obtained by telephonic instructions from shareholders of New York
Fund. Proxies that are obtained telephonically will be recorded
in accordance with the procedures set forth below.
In all cases where a telephonic proxy is solicited, the
Solicitor representative is required to ask for each
shareholder's full name and address and to confirm that the
shareholder has received the proxy materials in the mail. If the
shareholder is a corporation or other entity, the Solicitor
representative is required to ask for the person's title and for
confirmation that the person is authorized to direct the voting
of the shares. If the information elicited corresponds with the
information provided to the Solicitor, then the Solicitor
representative may ask for the shareholder's instructions on the
proposal described in this Prospectus/Proxy Statement. Although
the Solicitor representative is permitted to answer questions
about the process, he or she is not permitted to recommend to the
shareholder how to vote, other than by reading any recommendation
set forth in this Prospectus/Proxy Statement. The Solicitor
representative will record the shareholder's instructions on the
card. Within 72 hours, the shareholder will be sent a letter or
mailgram to confirm his or her vote and asking the shareholder to
call the Solicitor immediately if his or her instructions are not
correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting, but does
not wish to give a proxy by telephone or over the Internet, the
shareholder may submit the proxy card originally sent with this
Prospectus/Proxy Statement or attend in person.
WHAT OTHER SOLICITATIONS WILL BE MADE?
New York Fund will request broker-dealer firms, custodians,
nominees, and fiduciaries to forward proxy material to the
beneficial owners of the shares of record. New York Fund may
reimburse broker-dealer firms, custodians, nominees, and
fiduciaries for their reasonable expenses incurred in connection
with such proxy solicitation. In addition, certain officers and
representatives of the Trust or its affiliates, who will receive
no extra compensation for their services, may solicit proxies by
telephone, telegram or personally.
ARE THERE DISSENTERS' RIGHTS?
Shareholders of New York Fund will not be entitled to any
"dissenters' rights" because the proposed Transaction involves two
open-end investment companies registered under the 1940 Act
(commonly called mutual funds). Although no dissenters' rights
may be available, you have the right to redeem your shares at NAV
until the closing date. After the closing date, you may redeem
your Tax-Exempt Fund shares or exchange them for shares of
certain other funds in Franklin Templeton Investments.
Redemptions are subject to the terms in the prospectus of the
respective Fund.
PRINCIPAL HOLDERS OF SHARES
As of the Record Date, the officers and trustees of the
Trust, as a group, owned of record and beneficially less than 1%
of the outstanding shares of New York Fund. In addition, as of
the Record Date, the officers and trustees of Tax-Exempt Fund,
as a group, owned of record and beneficially less than 1% of the
outstanding shares of Tax-Exempt Fund.
From time to time, the number of Fund shares held in the
"street name" accounts of various Securities Dealers for the
benefit of their clients or in centralized securities
depositories may exceed 5% of the total shares outstanding. To
the best knowledge of either Fund, no other person holds
beneficially or of record more than 5% of the outstanding shares
of any class.
SHAREHOLDER PROPOSALS
The Trust is not required and does not intend to hold regular
annual meetings of shareholders. A shareholder who wishes to
submit a proposal for consideration for inclusion in the Trust's
proxy statement for the next meeting of shareholders should send
his or her written proposal to the Trust's offices at One
Franklin Parkway, San Mateo, California 94403-1906, Attention:
Secretary, so that it is received within a reasonable time in
advance of such meeting in order to be included in the Trust's
proxy statement and proxy card relating to that meeting and
presented at the meeting. A shareholder proposal may be presented
at a meeting of shareholders only if such proposal concerns a
matter that may be properly brought before the meeting under
applicable federal proxy rules, state law, and other governing
instruments.
Submission of a proposal by a shareholder does not guarantee
that the proposal will be included in the Trust's proxy statement
or presented at the meeting.
ADJOURNMENT
The holders of a majority of the shares present (in person or
by proxy) and entitled to vote at the Meeting, whether or not a
quorum is present, or the chairperson of the Board, the president
of the Trust, in the absence of the chairperson of the Board, or
any vice president or other authorized officer of the Trust, in
the absence of the president, may adjourn the Meeting. Such
authority to adjourn the Meeting may be used for any reason
whatsoever, including to allow for the further solicitation of
proxies. The persons designated as proxies may use their
discretionary authority to vote as instructed by management of
the Trust on questions of adjournment.
By Order of the Board of
Trustees,
Karen L.
Skidmore
SECRETARY
June 23, 2009
GLOSSARY
USEFUL TERMS AND DEFINITIONS
AFFIRMATIVE MAJORITY VOTE-- the affirmative vote of the lesser
of: (i) a majority of the outstanding shares of New York Fund,
or (ii) 67% or more of the outstanding shares of New York Fund
present at or represented by proxy at the Meeting if the
holders of more than 50% of the outstanding shares of New York
Fund are present or represented by proxy.
1940 ACT--Investment Company Act of 1940, as amended.
DISTRIBUTORS--Franklin Templeton Distributors, Inc., One
Franklin Parkway, San Mateo, CA 94403-1906, the principal
underwriter for the Funds.
FAI--Franklin Advisers, Inc., the investment manager for New
York Fund and Tax-Exempt Fund.
FRANKLIN TEMPLETON FUNDS--The U.S. registered mutual funds in
Franklin Templeton Investments except Franklin Templeton
Variable Insurance Products Trust and Franklin Mutual Recovery
Fund.
FRANKLIN TEMPLETON INVESTMENTS-- Resources is a publicly owned
global investment management organization operating as Franklin
Templeton Investments. Franklin Templeton Investments provides
global and domestic investment management services through its
Franklin, Templeton, Mutual Series and Fiduciary Trust
subsidiaries.
FT SERVICES--Franklin Templeton Services, LLC, the
administrator for the Funds. FT Services is an indirect, wholly
owned subsidiary of Resources and is an affiliate of the Funds'
investment manager and principal underwriter.
INVESTOR SERVICES--Franklin Templeton Investor Services, LLC,
3344 Quality Drive, Rancho Cordova, CA 95670-7313, the
shareholder servicing, transfer agent and dividend-paying agent
for the Funds.
NET ASSET VALUE (NAV)--The value of a mutual fund is determined
by deducting a fund's liabilities from the total assets of the
portfolio. The net asset value per share is determined by
dividing the net asset value of the fund by the number of shares
outstanding.
RESOURCES--Franklin Resources, Inc., One Franklin Parkway, San
Mateo, CA 94403-1906.
SAI--Statement of Additional Information.
SEC--U.S. Securities and Exchange Commission.
SECURITIES DEALER--A financial institution that, either
directly or through affiliates, has an agreement with
Distributors to handle customer orders and accounts with the
Funds. This reference is for convenience only and does not
indicate a legal conclusion of capacity.
EXHIBITS TO PROSPECTUS/PROXY STATEMENT
EXHIBIT
A. Form of Agreement and Plan of Reorganization by and between
Franklin New York Tax-Free Trust, on behalf of Franklin New
York Tax-Exempt Money Fund, and Franklin Tax-Exempt Money
Fund (attached)
B. Prospectus of Franklin Tax-Exempt Money Fund dated December
1, 2008, as supplemented to date (enclosed)
C. Semi-Annual Report to Shareholders for Franklin Tax-Exempt
Money Fund dated January 31, 2009 (enclosed)
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Plan"), is
made as of this __ day of _______, 2009, by and between Franklin
Tax-Exempt Money Fund, a statutory trust created under the laws
of the State of Delaware, with its principal place of business at
One Franklin Parkway, San Mateo, CA 94403-1906 ("Acquiring
Fund"), and Franklin New York Tax-Free Trust, a statutory trust
created under the laws of the State of Delaware, with its
principal place of business at One Franklin Parkway, San Mateo,
CA 94403-1906 ("Target Trust"), on behalf of its series, Franklin
New York Tax-Exempt Money Fund ("Target Fund").
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the
"Reorganization") will consist of (i) the acquisition by Acquiring
Fund of substantially all of the property, assets and goodwill of
Target Fund in exchange solely for full and fractional shares of
beneficial interest, with no par value, of Acquiring Fund
("Acquiring Fund Shares"); (ii) the distribution of Acquiring Fund
Shares to the holders of shares of beneficial interest of Target
Fund (the "Target Fund Shares") according to their respective
interests in Target Fund in complete liquidation of Target Fund;
and (iii) the dissolution of Target Fund as soon as is
practicable after the closing (as described in Section 3,
hereinafter called the "Closing"), all upon and subject to the
terms and conditions of the Plan hereinafter set forth.
AGREEMENT
In order to consummate the Reorganization and in consideration
of the premises and of the covenants and agreements hereinafter
set forth, and intending to be legally bound, the parties hereto
covenant and agree as follows:
1. SALE AND TRANSFER OF ASSETS, LIQUIDATION AND DISSOLUTION OF
TARGET FUND.
(a) Subject to the terms and conditions of the Plan, and in
reliance on the representations and warranties of Acquiring Fund
herein contained, and in consideration of the delivery by
Acquiring Fund of the number of Acquiring Fund Shares hereinafter
provided, Target Trust, on behalf of Target Fund, agrees that, at
the time of Closing, it will convey, transfer and deliver to
Acquiring Fund all of Target Fund's then existing assets,
including any interest in pending or future legal claims in
connection with past or present portfolio holdings, whether in
the form of class action claims, opt-out or other direct
litigation claims, or regulator or government-established
investor recovery fund claims, and any and all resulting
recoveries, free and clear of all liens, encumbrances, and claims
whatsoever (other than shareholders' rights of redemption),
except for cash, bank deposits, or cash equivalent securities in
an estimated amount necessary to: (i) pay 25% of the costs and
expenses of carrying out the Reorganization (including, but not
limited to, fees of counsel and accountants, and expenses of its
liquidation and dissolution contemplated hereunder), in
accordance with Section 9 of the Plan, which costs and expenses
shall be established on Target Fund's books as liability
reserves; (ii) discharge its unpaid liabilities on its books at
the Closing Date (as such term is defined in Section 3),
including, but not limited to, its income dividends and capital
gains distributions, if any, payable for the period prior to, and
through, the Closing Date; and (iii) pay such contingent
liabilities, if any, as the officers of Target Trust, on behalf
of Target Fund, shall reasonably deem to exist against Target
Fund at the Closing Date, for which contingent and other
appropriate liability reserves shall be established on Target
Fund's books (such assets hereinafter "Net Assets"). Acquiring
Fund shall not assume any liability of Target Trust or Target
Fund, and Target Trust, on behalf of Target Fund, shall use its
reasonable best efforts to discharge all of the known liabilities
of Target Fund, so far as may be possible, from the cash, bank
deposits and cash equivalent securities described above.
(b) Subject to the terms and conditions of the Plan, and in
reliance on the representations and warranties of Target Trust,
on behalf of Target Fund, herein contained, and in consideration
of such sale, conveyance, transfer, and delivery, Acquiring Fund
agrees to deliver to Target Trust, on behalf of Target Fund, at
the Closing the number of Acquiring Fund Shares equal to the
number of outstanding Target Fund Shares as of 3:00 p.m., Pacific
Time, on the Closing Date. Acquiring Fund Shares delivered to
Target Trust, on behalf of Target Fund, at the Closing shall have
an aggregate net asset value equal to the value of Target Fund's
Net Assets, all determined as provided in Section 2 of the Plan
and as of the date and time specified herein.
(c) Immediately following the Closing, Target Fund shall be
dissolved and shall distribute the Acquiring Fund Shares received
by Target Fund pursuant to this Section 1 pro rata to Target
Fund's shareholders of record as of the close of business on the
Closing Date. Such distribution shall be accomplished by the
establishment of accounts on the share records of Acquiring Fund
in the amounts due such shareholders based on their respective
holdings in Target Fund as of the close of business on the
Closing Date. Fractional Acquiring Fund Shares shall be carried
to the third decimal place. Certificates for Acquiring Fund
Shares shall not be issued, unless specifically requested by a
shareholder. After the distribution, Target Fund shall be
dissolved.
(d) At the Closing, each shareholder of record of Target Fund
as of the record date (the "Distribution Record Date") with
respect to any unpaid dividends and other distributions that were
declared prior to the Closing, including any dividend or
distribution declared pursuant to Section 8(e) hereof, shall have
the right to receive such unpaid dividends and distributions with
respect to the shares of Target Fund that such person had on the
Distribution Record Date.
(e) All books and records relating to Target Fund, including
all books and records required to be maintained under the
Investment Company Act of 1940, as amended (the "1940 Act"), and
the rules and regulations thereunder, shall be available to
Acquiring Fund from and after the date of the Plan, and shall be
turned over to Acquiring Fund on or prior to the Closing.
2. VALUATION.
(a) The net asset value of Acquiring Fund Shares and Target
Fund Shares and the value of Target Fund's Net Assets to be
acquired by Acquiring Fund hereunder shall in each case be
computed as of 3:00 p.m., Pacific Time, on the Closing Date,
unless on such date: (a) the New York Stock Exchange ("NYSE") is
not open for unrestricted trading; or (b) the reporting of
trading on the NYSE is disrupted; or (c) any other extraordinary
financial event or market condition occurs (each of the events
described in (a), (b) or (c), a "Market Disruption"). The net
asset value per share of Acquiring Fund Shares and Target Fund
Shares and the value of Target Fund's Net Assets shall be
computed in accordance with the valuation procedures set forth in
the most recent respective prospectuses of Acquiring Fund and
Target Fund, as amended or supplemented.
(b) In the event of a Market Disruption on the proposed
Closing Date, so that an accurate appraisal of the net asset
value of Acquiring Fund Shares or Target Fund Shares or the value
of Target Fund's Net Assets is impracticable, the Closing Date
shall be postponed until the first business day when regular
trading on the NYSE shall have been fully resumed and reporting
shall have been restored and other trading markets are otherwise
stabilized.
(c) In the event that the net asset value per share of either
Target Fund Shares or Acquiring Fund Shares calculated using
market value deviates by more than 0.25 of 1% from the net asset
value per share calculated using amortized cost, the Closing Date
shall be postponed until the net asset value using market value
and amortized cost for both Target Fund Shares and Acquiring
Shares are within the range of 0.25 of 1%.
3. CLOSING AND CLOSING DATE.
The Closing shall take place at the principal office of
Acquiring Fund at 4:00 p.m., Pacific Time, on August 26, 2009 or
such later date as the parties may mutually agree (the "Closing
Date"). Target Trust, on behalf of Target Fund, shall have
provided for delivery as of the Closing of those Net Assets of
Target Fund to be transferred to the account of Acquiring Fund's
Custodian, The Bank of New York Mellon, Mutual Funds Division,
100 Church Street, New York, NY 10286. Target Trust, on behalf
of Target Fund, shall deliver at the Closing a list of names and
addresses of the shareholders of record of Target Fund Shares and
the number of full and fractional shares of beneficial interest
owned by each such shareholder as of 3:00 p.m., Pacific Time, on
the Closing Date, certified by its transfer agent or by its
President to the best of its or his knowledge and belief.
Acquiring Fund shall provide evidence satisfactory to Target
Trust, on behalf of Target Fund, that such Acquiring Fund Shares
have been registered in an account on the books of Acquiring Fund
in such manner as the officers of Target Trust may reasonably
request.
4. REPRESENTATIONS AND WARRANTIES BY ACQUIRING FUND.
Acquiring Fund represents and warrants to Target Trust, on
behalf of Target Fund, that:
(a) Acquiring Fund was originally organized as a California
corporation on March 17, 1980, and converted to a Delaware
statutory trust effective December 1, 2007. Acquiring Fund is
duly registered under the 1940 Act as an open-end, management
investment company and all of Acquiring Fund Shares sold were
sold pursuant to an effective registration statement filed under
the Securities Act of 1933, as amended (the "1933 Act"), except
for those shares sold pursuant to the private offering exemption
for the purpose of raising initial capital or obtaining any
required initial shareholder approvals.
(b) Acquiring Fund is authorized to issue an unlimited number
of shares of beneficial interest, without par value, each
outstanding share of which is, and each share of which when
issued pursuant to and in accordance with the Plan will be, fully
paid, non-assessable, and has or will have full voting rights.
Acquiring Fund issues one class of shares and an unlimited number
of shares of beneficial interest of Acquiring Fund have been
allocated and designated to such class. No shareholder of
Acquiring Fund has or will have any option, warrant, or
preemptive rights of subscription or purchase with respect to
Acquiring Fund Shares.
(c) The financial statements appearing in Acquiring Fund's
Annual Report to Shareholders for the fiscal year ended July 31,
2008, audited by PricewaterhouseCoopers LLP, and in Acquiring
Fund's unaudited Semi-Annual Report to Shareholders for the period
ended January 31, 2009, copies of which have been delivered to
Target Trust, on behalf of Target Fund, and any interim unaudited
financial statements, copies of which may be furnished to Target
Trust, on behalf of Target Fund, fairly present the financial
position of Acquiring Fund as of their respective dates and the
results of Acquiring Fund's operations for the periods indicated
in conformity with Generally Accepted Accounting Principles
applied on a consistent basis.
(d) The books and records of Acquiring Fund accurately
summarize the accounting data represented and contain no material
omissions with respect to the business and operations of
Acquiring Fund.
(e) Acquiring Fund is not a party to or obligated under any
provision of its Agreement and Declaration of Trust, By-laws, any
contract or any other commitment or obligation, and is not
subject to any order or decree, that would be violated by its
execution of or performance under the Plan, and no consent,
approval, authorization or order of any court or governmental
authority is required for the consummation by Acquiring Fund of
the transactions contemplated by the Plan, except for the
registration of Acquiring Fund Shares under the 1933 Act, the
1940 Act, or as may otherwise be required under the federal and
state securities laws or the rules and regulations thereunder.
(f) Acquiring Fund has elected to be treated as a regulated
investment company ("RIC") for federal income tax purposes under
Part I of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). Acquiring Fund is a "fund" as defined in
Section 851(g)(2) of the Code, has qualified as a RIC for each
taxable year since its inception, and intends to continue to
qualify as a RIC as of the Closing Date. Consummation of the
transactions contemplated by the Plan will not cause Acquiring
Fund to fail to be qualified as a RIC as of the Closing Date.
(g) Acquiring Fund is not under jurisdiction of a court in a
Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code.
(h) Acquiring Fund does not have any unamortized or unpaid
organizational fees or expenses.
(i) Acquiring Fund does not have any known liabilities, costs
or expenses of a material amount, contingent or otherwise, other
than those incurred in the ordinary course of business as an
investment company.
(j) There is no intercorporate indebtedness existing between
Target Fund and Acquiring Fund that was issued, acquired, or will
be settled at a discount.
(k) Acquiring Fund does not own, directly or indirectly, nor
has it owned during the past five (5) years, directly or
indirectly, any shares of Target Fund.
(l) Acquiring Fund has no plan or intention to issue
additional shares following the Reorganization except for shares
issued in the ordinary course of Acquiring Fund's business as an
open-end investment company; nor does Acquiring Fund have any
plan or intention to redeem or otherwise reacquire any shares of
Acquiring Fund issued pursuant to the Plan, either directly or
through any transaction, agreement, or arrangement with any other
person, other than in the ordinary course of its business or to
the extent necessary to comply with its legal obligation under
Section 22(e) of the 1940 Act.
(m) Acquiring Fund is in the same line of business as Target
Fund before the Reorganization and did not enter into such line
of business as part of the Reorganization. Acquiring Fund will
actively continue Target Fund's business in substantially the
same manner that Target Trust, on behalf of Target Fund,
conducted that business immediately before the Reorganization and
has no plan or intention to change such business. On the Closing
Date, Acquiring Fund expects that at least 33 (1)/3% of Target
Fund's portfolio assets will meet the investment objectives,
strategies, policies, risks and restrictions of Acquiring Fund.
Acquiring Fund has no plan or intention to change any of its
investment objectives, strategies, policies, risks and
restrictions after the Reorganization. Acquiring Fund has no plan
or intention to sell or otherwise dispose of any of the former
assets of Target Fund, except for dispositions made in the
ordinary course of its business or dispositions necessary to
maintain its qualification as a RIC, although in the ordinary
course of its business, Acquiring Fund will continuously review
its investment portfolio (as Target Trust, on behalf of Target
Fund, did before the Closing) to determine whether to retain or
dispose of particular securities, including those included among
the former assets of Target Fund.
(n) The registration statement on Form N-14 referred to in
Section 7(g) hereof (the "Registration Statement"), and any
prospectus or statement of additional information of Acquiring
Fund contained or incorporated therein by reference, and any
supplement or amendment to the Registration Statement or any such
prospectus or statement of additional information, on the
effective and clearance dates of the Registration Statement, on
the date of the Special Meeting of Target Fund shareholders, and
on the Closing Date: (i) shall comply in all material respects
with the provisions of the 1933 Act, the Securities Exchange Act
of 1934, as amended (the "1934 Act"), the 1940 Act, the rules and
regulations thereunder, and all applicable state securities laws
and the rules and regulations thereunder; and (ii) shall not
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which the statements were made, not misleading.
5. REPRESENTATIONS AND WARRANTIES BY TARGET TRUST, ON BEHALF OF
TARGET FUND.
Target Trust, on behalf of Target Fund, represents and
warrants to Acquiring Fund that:
(a) Target Fund is a series of Target Trust, which was
organized originally as a Massachusetts business trust on July
17, 1986, and converted to a Delaware statutory trust effective
February 1, 2008. Target Trust is duly registered under the 1940
Act as an open-end, management investment company and all Target
Fund Shares sold were sold pursuant to an effective registration
statement filed under the 1933 Act, except for those shares sold
pursuant to the private offering exemption for the purposes of
raising the required initial capital or obtaining any required
initial shareholder approvals.
(b) Target Trust is authorized to issue an unlimited number of
shares of beneficial interest, without par value, of Target Fund,
each outstanding share of which is fully paid, non-assessable,
and has full voting rights. Target Fund issues one class of
shares. Target Trust currently issues shares of three (3)
series, including Target Fund. No shareholder of Target Trust
has or will have any option, warrant, or preemptive rights of
subscription or purchase with respect to Target Fund Shares.
(c) The financial statements appearing in Target Trust's
Annual Report to Shareholders for the fiscal year ended September
30, 2008, audited by PricewaterhouseCoopers LLP, and unaudited
Semi-Annual Report to Shareholders for the period ended March 31,
2009, copies of which have been delivered to Acquiring Fund, and
any interim financial statements for Target Fund that may be
furnished to Acquiring Fund, fairly present the financial
position of Target Fund as of their respective dates and the
results of Target Fund's operations for the periods indicated in
conformity with generally accepted accounting principles applied
on a consistent basis.
(d) Target Fund is not a party to or obligated under any
provision of its Agreement and Declaration of Trust or By-laws,
as amended, or any contract or any other commitment or
obligation, and is not subject to any order or decree that would
be violated by its execution of or performance under the Plan.
Target Fund has no material contracts or other commitments (other
than the Plan or agreements for the purchase of securities
entered into in the ordinary course of business and consistent
with its obligations under the Plan) which will not be terminated
by Target Fund in accordance with their terms at or prior to the
Closing Date, or which will result in a penalty or additional fee
to be due or payable by Target Fund.
(e) Target Trust has elected to be treat Target Fund as a RIC
for federal income tax purposes under Part I of Subchapter M of
the Code. Target Fund is a "fund" as defined in
Section 851(g)(2) of the Code, has qualified as a RIC for each
taxable year since its inception, and will qualify as a RIC as of
the Closing Date. Consummation of the transactions contemplated
by the Plan will not cause Target Fund to fail to be qualified as
a RIC as of the Closing Date.
(f) Target Fund is not under jurisdiction of a court in a
Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code.
(g) Target Fund does not have any unamortized or unpaid
organization fees or expenses.
(h) Target Fund does not have any known liabilities, costs or
expenses of a material amount, contingent or otherwise, other
than those reflected in the financial statements referred to in
Section 5(c) hereof and those incurred in the ordinary course of
business as an investment company and of a nature and amount
similar to, and consistent with, those shown in such financial
statements since the dates of those financial statements.
(i) Since March 31, 2009, there has not been any material
adverse change in Target Fund's financial condition, assets,
liabilities, or business other than changes occurring in the
ordinary course of its business.
(j) No consent, approval, authorization, or order of any court
or governmental authority is required for the consummation by
Target Trust, on behalf of Target Fund, of the transactions
contemplated by the Plan, except the necessary Target Fund
shareholder approval, or as may otherwise be required under the
federal or state securities laws or the rules and regulations
thereunder.
(k) There is no intercorporate indebtedness existing between
Target Fund and Acquiring Fund that was issued, acquired, or will
be settled at a discount.
(l) During the five-year period ending on the Closing Date,
(i) Target Trust, on behalf of Target Fund, has not acquired, and
will not acquire, Target Fund Shares with consideration other
than Acquiring Fund Shares or Target Fund Shares, except for
redemptions in the ordinary course of Target Fund's business or
to the extent necessary to comply with its legal obligation under
Section 22(e) of the 1940 Act, and (ii) no distributions will
have been made with respect to Target Fund Shares (other than
regular, normal dividend distributions made pursuant to Target
Fund's historic dividend paying practice), either directly or
through any transaction, agreement, or arrangement with any other
person, except for distributions described in Sections 852 and
4982 of the Code.
(m) As of the Closing Date, Target Fund will not have
outstanding any warrants, options, convertible securities, or any
other type of rights pursuant to which any person could acquire
shares of Target Fund, except for the right of investors to
acquire its shares at the applicable stated offering price in the
normal course of its business as an open-end management
investment company operating under the 1940 Act.
(n) Throughout the five year period ending on the Closing
Date, Target Trust, on behalf of Target Fund, will have conducted
its historic business within the meaning of Section 1.368-1(d) of
the Income Tax Regulations under the Code. Target Trust, on
behalf of Target Fund, did not enter into (or expand) a line of
business as part of the Reorganization. Target Trust, on behalf
of Target Fund, will not alter its investment portfolio in
connection with the Reorganization.
6. REPRESENTATIONS AND WARRANTIES BY TARGET TRUST AND ACQUIRING
FUND.
Target Trust, on behalf of Target Fund, and Acquiring Fund
each represents and warrants to the other that:
(a) The statement of assets and liabilities to be furnished by
it as of 3:00 p.m., Pacific Time, on the Closing Date for the
purpose of determining the number of Acquiring Fund Shares to be
issued pursuant to Section 1 of the Plan, will accurately reflect
Target Fund's Net Assets and outstanding shares, as of such date,
in conformity with generally accepted accounting principles
applied on a consistent basis.
(b) At the Closing, it will have good and marketable title to
all of the securities and other assets shown on the statement of
assets and liabilities referred to in (a) above, free and clear
of all liens or encumbrances of any nature whatsoever, except
such imperfections of title or encumbrances as do not materially
detract from the value or use of the assets subject thereto, or
materially affect title thereto.
(c) Except as disclosed in its currently effective prospectus
relating to Target Fund or Acquiring Fund, as applicable, there
is no material suit, judicial action, or legal or administrative
proceeding pending or threatened against it. It is not a party
to or subject to the provisions of any order, decree or judgment
of any court or governmental body which materially and adversely
affects its business or its ability to consummate the
transactions herein contemplated.
(d) There are no known actual or proposed deficiency
assessments with respect to any taxes payable by it.
(e) The execution, delivery, and performance of the Plan have
been duly authorized by all necessary action of its Board of
Trustees and the Plan, subject with respect to Target Trust to
the approval of Target Fund's shareholders, constitutes a valid
and binding obligation enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization arrangement,
moratorium, and other similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(f) It anticipates that consummation of the Plan will not
cause Target Fund or Acquiring Fund, as applicable, to fail to
conform to the requirements of Subchapter M of the Code for
federal income taxation qualification as a RIC at the end its
fiscal year.
7. COVENANTS OF TARGET TRUST AND ACQUIRING FUND.
(a) Target Trust, on behalf of Target Fund, and Acquiring Fund
each covenants to operate its respective business as presently
conducted between the date hereof and the Closing, it being
understood that such ordinary course of business will include the
distribution of customary dividends and distributions and any
other distribution necessary or desirable to minimize federal
income or excise taxes.
(b) Target Trust, on behalf of Target Fund, undertakes that it
will not acquire Acquiring Fund Shares for the purpose of making
distributions thereof to anyone other than Target Fund's
shareholders.
(c) Target Trust, on behalf of Target Fund, undertakes that,
if the Plan is consummated, Target Fund will liquidate and
dissolve.
(d) Target Trust, on behalf of Target Fund, and Acquiring Fund
each agree that, by the Closing, all of their federal and other
tax returns and reports required by law to be filed on or before
such date shall have been filed, and either all federal and other
taxes shown as due on said returns shall have been paid, or
adequate liability reserves shall have been provided for the
payment of such taxes, and to the best of their knowledge no such
tax return is currently under audit and no tax deficiency or
liability has been asserted with respect to such tax returns or
reports by the Internal Revenue Service or any state or local tax
authority.
(e) At the Closing, Target Trust, on behalf of Target Fund,
will provide Acquiring Fund with a copy of the shareholder ledger
accounts, certified by Target Trust's transfer agent or its
President to the best of its or his knowledge and belief, for all
the holders of record of Target Fund Shares as of 3:00 p.m.,
Pacific Time, on the Closing Date who are to become shareholders
of Acquiring Fund as a result of the transfer of assets that is
the subject of the Plan.
(f) As of the Closing, the Board of Trustees of Target Trust
shall have called, and Target Trust shall have held, a Special
Meeting of Target Fund's shareholders to consider and vote upon
the Plan (the "Special Meeting") and Target Trust, on behalf of
Target Fund, shall have taken all other actions reasonably
necessary to obtain approval of the transactions contemplated
herein. Target Trust, on behalf of Target Fund, shall have
mailed to each shareholder of record of Target Fund entitled to
vote at the Special Meeting at which action on the Plan is to be
considered, in sufficient time to comply with requirements as to
notice thereof, a combined Prospectus/Proxy Statement that
complies in all material respects with the applicable provisions
of the 1933 Act, Section 14(a) of the 1934 Act and Section 20(a)
of the 1940 Act, and the rules and regulations thereunder (the
"Prospectus/Proxy Statement").
(g) Acquiring Fund has filed the Registration Statement with
the SEC and used its best efforts to provide that the
Registration Statement became effective as promptly as
practicable. At the time it became effective, the Registration
Statement: (i) complied in all material respects with the
applicable provisions of the 1933 Act and the rules and
regulations promulgated thereunder; and (ii) did not contain any
untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading. At the time the Registration
Statement became effective, at the time of the Special Meeting,
and at the Closing Date, the prospectus and statement of
additional information included in the Registration Statement did
not and will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
(h) Subject to the provisions of the Plan, Acquiring Fund and
Target Trust, on behalf of Target Fund, each shall take, or cause
to be taken, all action, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate the
transactions contemplated by the Plan.
(i) Target Trust, on behalf of Target Fund, shall deliver to
Acquiring Fund at the Closing Date confirmation or other adequate
evidence as to the tax costs and holding periods of the assets
and property of Target Fund transferred to Acquiring Fund in
accordance with the terms of the Plan.
8. CONDITIONS PRECEDENT TO BE FULFILLED BY TARGET TRUST AND
ACQUIRING FUND.
The consummation of the Plan hereunder shall be subject to the
following respective conditions:
(a) That: (i) all the representations and warranties of the
other party contained herein shall be true and correct as of the
Closing with the same effect as though made as of and at such
date; (ii) the other party shall have performed all obligations
required by the Plan to be performed by it prior to the Closing;
and (iii) the other party shall have delivered to such party a
certificate signed by the President and by the Secretary or
equivalent officer to the foregoing effect.
(b) That each party shall have delivered to the other party a
copy of the resolutions approving the Plan adopted and approved
by the appropriate action of the Board of Trustees, certified by
its Secretary or equivalent officer of such party.
(c) That the SEC shall have declared effective the
Registration Statement and not have issued an unfavorable
management report under Section 25(b) of the 1940 Act or
instituted or threatened to institute any proceeding seeking to
enjoin consummation of the Plan under Section 25(c) of the 1940
Act. And, further, no other legal, administrative or other
proceeding shall have been instituted or threatened that would
materially affect the financial condition of either party or
would prohibit the transactions contemplated hereby.
(d) That the Plan and the Reorganization contemplated hereby
shall have been adopted and approved by the appropriate action of
the shareholders of Target Fund at a meeting or any adjournment
thereof.
(e) That a distribution or distributions shall have been
declared for Target Fund prior to the Closing Date that, together
with all previous distributions, shall have the effect of
distributing to its shareholders: (i) all of its ordinary income
and all of its capital gain net income, if any, for the period
from the close of its last fiscal year to 3:00 p.m., Pacific
Time, on the Closing Date; and (ii) any undistributed ordinary
income and capital gain net income from any prior period to the
extent not otherwise declared for distribution. Capital gain net
income has the meaning given such term by Section 1222(9) of the
Code.
(f) That all required consents of other parties and all other
consents, orders, and permits of federal, state and local
authorities (including those of the SEC and of state Blue Sky
securities authorities, including any necessary "no-action"
positions or exemptive orders from such federal and state
authorities) to permit consummation of the transaction
contemplated hereby shall have been obtained, except where
failure to obtain any such consent, order, or permit would not
involve a risk of material adverse effect on the assets and
properties of Target Fund or Acquiring Fund.
(g) That there shall be delivered to Target Trust, on behalf
of Target Fund, and Acquiring Fund, an opinion in form and
substance satisfactory to them from the law firm of Stradley
Ronon Stevens & Young, LLP, counsel to Acquiring Fund and Target
Trust, to the effect that, provided the transaction contemplated
hereby is carried out in accordance with the Plan and the laws of
the State of Delaware, and based upon certificates of the
officers of Target Trust and Acquiring Fund with regard to
matters of fact:
(1) The acquisition by Acquiring Fund of substantially all
the assets of Target Fund, as provided for herein, in exchange
for Acquiring Fund Shares, followed by the distribution by
Target Fund to its shareholders of Acquiring Fund Shares in
complete liquidation of Target Fund, will qualify as a
reorganization within the meaning of Section 368(a)(1) of the
Code, and Target Fund and Acquiring Fund will each be a "party
to the reorganization" within the meaning of Section 368(b) of
the Code;
(2) No gain or loss will be recognized by Target Fund upon
the transfer of substantially all of its assets to Acquiring
Fund in exchange solely for voting shares of Acquiring Fund
(Sections 361(a) and 357(a) of the Code);
(3) Acquiring Fund will recognize no gain or loss upon the
receipt of substantially all of the assets of Target Fund in
exchange solely for voting shares of Acquiring Fund (Section
1032(a) of the Code);
(4) No gain or loss will be recognized by Target Fund upon
the distribution of Acquiring Fund Shares to its shareholders
in liquidation of Target Fund, in pursuance of the Plan
(Section 361(c)(1) of the Code);
(5) The basis of the assets of Target Fund received by
Acquiring Fund will be the same as the basis of such assets to
Target Fund immediately prior to the Reorganization (Section
362(b) of the Code);
(6) The holding period of the assets of Target Fund
received by Acquiring Fund will include the period during
which such assets were held by Target Fund (Section 1223(2) of
the Code);
(7) No gain or loss will be recognized by the shareholders
of Target Fund upon the exchange of their shares in Target
Fund for voting shares of Acquiring Fund including fractional
shares to which they may be entitled (Section 354(a) of the
Code);
(8) The basis of Acquiring Fund Shares received by the
shareholders of Target Fund shall be the same as the basis of
Target Fund Shares exchanged therefor (Section 358(a)(1) of
the Code);
(9) The holding period of Acquiring Fund Shares received
by shareholders of Target Fund (including fractional shares to
which they may be entitled) will include the holding period of
Target Fund Shares surrendered in exchange therefor, provided
that Target Fund Shares were held as a capital asset on the
effective date of the exchange (Section 1223(1) of the Code);
and
(10) Acquiring Fund will succeed to and take into account
as of the date of the transfer (as defined in
Section 1.381(b)-1(b) of the regulations issued by the United
States Treasury ("Treasury Regulations")) the items of Target
Fund described in Section 381(c) of the Code, subject to the
conditions and limitations specified in Sections 381, 382, 383
and 384 of the Code and the Treasury Regulations.
(h) That there shall be delivered to Acquiring Fund, an
opinion in form and substance satisfactory to it from Stradley
Ronon Stevens & Young, LLP, counsel to Target Trust, on behalf of
Target Fund, to the effect that, subject in all respects to the
effects of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws now or hereafter affecting
generally the enforcement of creditors' rights:
(1) Target Fund is a series of Target Trust, and Target
Trust is a validly existing statutory trust in good standing
under the laws of the State of Delaware;
(2) Target Trust is an open-end investment company of the
management type registered as such under the 1940 Act;
(3) The execution and delivery of the Plan and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary statutory trust action on the
part of Target Trust, on behalf of Target Fund; and
(4) The Plan is the legal, valid and binding obligation of
Target Trust, on behalf of Target Fund, and is enforceable
against Target Trust, on behalf of Target Fund, in accordance
with its terms.
In giving the opinions set forth above, counsel may state that
it is relying on certificates of the officers of Target Trust,
with regard to matters of fact, and certain certifications and
written statements of governmental officials with respect to the
good standing of Target Fund.
(i) That there shall be delivered to Target Trust, on behalf
of Target Fund, an opinion in form and substance satisfactory to
it from the law firm of Stradley Ronon Stevens & Young, LLP,
counsel to Acquiring Fund, to the effect that, subject in all
respects to the effects of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other laws
now or hereafter affecting generally the enforcement of
creditors' rights:
(1) Acquiring Fund is a validly existing statutory trust
in good standing under the laws of the State of Delaware;
(2) Acquiring Fund is authorized to issue an unlimited
number of shares of beneficial interest, without par value;
(3) Acquiring Fund is an open-end investment company of
the management type registered as such under the 1940 Act;
(4) Acquiring Fund Shares to be issued pursuant to the
terms of the Plan have been duly authorized and, when issued
and delivered as provided in the Plan and the Registration
Statement, will have been validly issued and fully paid and
will be non-assessable by Acquiring Fund;
(5) The execution and delivery of the Plan and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary statutory trust action on the
part of Acquiring Fund;
(6) The Plan is the legal, valid and binding obligation of
Acquiring Fund, and is enforceable against Acquiring Fund, in
accordance with its terms; and
(7) The registration statement on Form N-1A of Acquiring
Fund, of which the prospectus dated December 1, 2008 is a part
(the "Prospectus"), is, at the time of the signing of the
Plan, effective under the 1933 Act, and, to the best knowledge
of such counsel, no stop order suspending the effectiveness of
such registration statement has been issued, and no
proceedings for such purpose have been instituted or are
pending before or threatened by the SEC under the 1933 Act.
In giving the opinions set forth above, counsel may state that
it is relying on certificates of the officers of Acquiring Fund
with regard to matters of fact, and certain certifications and
written statements of governmental officials with respect to the
good standing of Acquiring Fund.
(j) That Acquiring Fund's prospectus contained in the
Registration Statement with respect to Acquiring Fund Shares to
be delivered to Target Fund's shareholders in accordance with the
Plan shall be effective, and no stop order suspending the
effectiveness of the Registration Statement or any amendment or
supplement thereto shall have been issued prior to the Closing
Date or shall be in effect at Closing, and no proceedings for the
issuance of such an order shall be pending or threatened on that
date.
(k) That Acquiring Fund Shares to be delivered hereunder shall
be eligible for sale with each state commission or agency with
which such eligibility is required in order to permit Acquiring
Fund Shares lawfully to be delivered to each holder of Target
Fund Shares.
(l) That, at the Closing, there shall be transferred to
Acquiring Fund, aggregate Net Assets of Target Fund comprising at
least 90% in fair market value of the total net assets and 70% of
the fair market value of the total gross assets recorded on the
books of Target Fund on the Closing Date.
(m) That there be delivered to Acquiring Fund information
concerning the tax basis of Target Fund in all securities
transferred to Acquiring Fund, together with shareholder
information including: the names, addresses, and taxpayer
identification numbers of the shareholders of Target Fund as of
the Closing Date; the number of shares held by each shareholder;
the dividend reinvestment elections applicable to each
shareholder; and the backup withholding and nonresident alien
withholding certifications, notices or records on file with
Target Trust, on behalf of Target Fund, with respect to each
shareholder.
9. EXPENSES.
The expenses of entering into and carrying out the provisions
of the Plan shall be borne as follows: each of Target Trust, on
behalf of Target Fund, and Acquiring Fund will pay 25% of the
costs of the Reorganization, and Franklin Advisers, Inc., the
investment manager for both Acquiring Fund and Target Fund, will
pay 50% of the costs of the Reorganization.
10. TERMINATION; POSTPONEMENT; WAIVER; ORDER.
(a) Anything contained in the Plan to the contrary
notwithstanding, the Plan may be terminated and the
Reorganization abandoned at any time prior (whether before or
after approval thereof by the shareholders of Target Fund) to the
Closing, or the Closing may be postponed, as follows:
(1) by mutual consent of Target Trust, on behalf of Target
Fund, and Acquiring Fund;
(2) by Acquiring Fund if any condition of its obligations
set forth in Section 8 has not been fulfilled or waived and it
reasonably appears that such condition or obligation will not
or cannot be met; or
(3) by Target Trust, on behalf of Target Fund, if any
condition of its obligations set forth in Section 8 has not
been fulfilled or waived and it reasonably appears that such
condition or obligation will not or cannot be met.
(b) If the transactions contemplated by the Plan have not been
consummated by June 30, 2010, the Plan shall automatically
terminate on that date, unless a later date is agreed to by both
Acquiring Fund and Target Trust.
(c) In the event of termination of the Plan prior to its
consummation, pursuant to the provisions hereof, the Plan shall
become void and have no further effect, and neither Target Trust,
Target Fund, nor Acquiring Fund, nor their trustees, officers, or
agents or the shareholders of Target Fund or Acquiring Fund shall
have any liability in respect of the Plan, but all expenses
incidental to the preparation and carrying out of the Plan shall
be paid as provided in Section 9 hereof.
(d) At any time prior to the Closing, any of the terms or
conditions of the Plan may be waived by the party who is entitled
to the benefit thereof if, in the judgment of such party, such
action or waiver will not have a material adverse effect on the
benefits intended under the Plan to its shareholders, on behalf
of whom such action is taken.
(e) The respective representations and warranties contained in
Sections 4 to 6 hereof shall expire with and be terminated by the
Plan on the Closing Date, and neither Target Trust nor Acquiring
Fund, nor any of their officers, trustees, agents or shareholders
shall have any liability with respect to such representations or
warranties after the Closing Date.
(f) If any order of the SEC with respect to the Plan shall be
issued prior to the Closing that imposes any term or condition
that is determined by the Board of Trustees of Target Trust, on
behalf of Target Fund, or the Board of Trustees of Acquiring
Fund, to be acceptable, such term or condition shall be binding
as if it were a part of the Plan without a vote or approval of
the shareholders of Target Fund; provided that, if such term or
condition would result in a change in the method of computing the
number of Acquiring Fund Shares to be issued to Target Fund, and
such term or condition had not been included in the
Prospectus/Proxy Statement or other proxy solicitation material
furnished to the shareholders of Target Fund prior to the Special
Meeting, the Plan shall not be consummated and shall terminate
unless Target Fund promptly calls a special meeting of the
shareholders of Target Fund at which such condition shall be
submitted for approval.
11. LIABILITY OF ACQUIRING FUND AND TARGET TRUST.
(a) Each party acknowledges and agrees that all obligations of
Acquiring Fund under the Plan are binding only with respect to
Acquiring Fund; that any liability of Acquiring Fund under the
Plan with respect to Acquiring Fund, or in connection with the
transactions contemplated herein with respect to Acquiring Fund,
shall be discharged only out of the assets of Acquiring Fund; and
that Target Fund shall not seek satisfaction of any such
obligation or liability from the shareholders of Acquiring Fund,
the trustees, officers, or the employees or agents of Acquiring
Fund.
(b) Each party acknowledges and agrees that all obligations of
Target Trust under the Plan are binding only with respect to
Target Fund; that any liability of Target Trust under the Plan
with respect to Target Fund in connection with the transactions
contemplated herein, shall be discharged only out of the assets
of Target Fund; that no other series of Target Trust shall be
liable with respect to the Plan or in connection with the
transactions contemplated herein; and that Acquiring Fund shall
not seek satisfaction of any such obligation or liability from
the shareholders of Target Trust or Target Fund, or the trustees,
officers, or the employees or agents of Target Trust.
12. ENTIRE AGREEMENT AND AMENDMENTS.
The Plan embodies the entire agreement between the parties and
there are no agreements, understandings, restrictions, or
warranties relating to the transactions contemplated by the Plan
other than those set forth herein or herein provided for. The
Plan may be amended only by mutual consent of the parties in
writing. Neither the Plan nor any interest herein may be assigned
without the prior written consent of the other party.
13. COUNTERPARTS.
The Plan may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all such
counterparts together shall constitute but one instrument.
14. NOTICES.
Any notice, report, or demand required or permitted by any
provision of the Plan shall be in writing and shall be deemed to
have been given if delivered or mailed, first class postage
prepaid, addressed to Franklin Tax-Exempt Money Fund, One
Franklin Parkway, San Mateo, CA 94403-1906, Attention: Secretary,
or Franklin New York Tax-Exempt Money Fund, at Franklin New York
Tax-Free Trust, One Franklin Parkway, San Mateo, CA 94403-1906,
Attention: Secretary, as the case may be.
15. GOVERNING LAW.
The Plan shall be governed by and carried out in accordance
with the laws of the State of Delaware.
IN WITNESS WHEREOF, Target Trust, on behalf of Target Fund,
and Acquiring Fund have each caused the Plan to be executed on
its behalf by its duly authorized officers, all as of the date
and year first-above written.
FRANKLIN TAX-EXEMPT MONEY FUND
By:
-------------------------------
(Name) (Title)
FRANKLIN NEW YORK TAX-FREE TRUST,
on behalf of FRANKLIN NEW YORK
TAX-EXEMPT MONEY FUND
By:
-------------------------------
(Name) (Title)
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
Please detach at perforation before mailing.
PROXY FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND PROXY
SPECIAL MEETING OF SHAREHOLDERS
AUGUST 10, 2009
The undersigned hereby revokes all previous proxies for his/her
shares of Franklin New York Tax-Exempt Money Fund ("New York
Fund") and appoints Craig S. Tyle, Steven J. Gray, David P. Goss
and Karen L. Skidmore, and each of them, proxies of the
undersigned with full power of substitution to vote all shares of
New York Fund that the undersigned is entitled to vote at New
York Fund's Special Meeting of Shareholders ("Special Meeting")
to be held at One Franklin Parkway, San Mateo, California
94403-1906, at 2:00 p.m., Pacific time, on August 10, 2009,
including any postponements or adjournments thereof, upon the
matter set forth on the reverse side and instructs them to vote
upon any other matters that may properly be acted upon at the
Special Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF
FRANKLIN NEW YORK TAX-FREE TRUST (THE "TRUST"), ON BEHALF OF NEW
YORK FUND. IT WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS
MADE, THIS PROXY SHALL BE VOTED FOR THE PROPOSAL REGARDING THE
REORGANIZATION OF NEW YORK FUND PURSUANT TO THE AGREEMENT AND
PLAN OF REORGANIZATION WITH AND INTO FRANKLIN TAX-EXEMPT MONEY
FUND. IF ANY OTHER MATTERS PROPERLY COME BEFORE THE SPECIAL
MEETING TO BE VOTED ON, THE PROXY HOLDERS WILL VOTE, ACT AND
CONSENT ON THOSE MATTERS IN ACCORDANCE WITH THE VIEWS OF
MANAGEMENT.
IMPORTANT: PLEASE SEND IN YOUR PROXY TODAY.
YOU ARE URGED TO DATE AND SIGN THIS PROXY AND RETURN IT
PROMPTLY. THIS WILL SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO
SHAREHOLDERS WHO HAVE NOT RESPONDED.
VOTE VIA THE INTERNET: WWW.FRANKLINTEMPLETON.COM
VOTE VIA THE TELEPHONE: 1-866-241-6192
----------------------------- ------------
999 9999 9999 999
------------------------------ ------------
YES NO
I PLAN TO ATTEND THE MEETING. [ ] [ ]
(Continued on the other side)
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE FRANKLIN
NEW YORK TAX-EXEMPT MONEY FUND
SHAREHOLDER SPECIAL MEETING TO BE HELD ON AUGUST 10, 2009
THE PROXY STATEMENT FOR THIS MEETING IS AVAILABLE AT:
HTTPS://WWW.PROXY-DIRECT.COM/FTF20256
Please detach at perforation before mailing.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN
FAVOR OF PROPOSAL 1.
PLEASE MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS.
EXAMPLE: [ ]
1. To approve an Agreement and Plan of Reorganization FOR AGAINST ABSTAIN
between the Trust, on behalf of New York Fund, and [ ] [ ] [ ]
Franklin Tax-Exempt Money Fund ("Tax-Exempt Fund"),
that provides for (i) the acquisition of substantially
all of the assets of New York Fund by Tax-Exempt Fund
in exchange solely for shares of beneficial interest
of Tax-Exempt Fund, (ii) the distribution of such
shares to the shareholders of New York Fund, and (iii)
the complete liquidation and dissolution of New York
Fund. Shareholders of New York Fund will receive shares
of Tax-Exempt Fund with an aggregate new asset value
equal to the dollar value of the shareholders' shares in
New York Fund.
IMPORTANT: PLEASE SIGN AND MAIL IN YOUR PROXY.....TODAY
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE U.S.
EXHIBIT B
FRANKLIN TAX-EXEMPT MONEY FUND
PROSPECTUS DATED DECEMBER 1, 2008, AS SUPPLEMENTED TO DATE
The prospectus of Franklin Tax-Exempt Money Fund dated December 1, 2008, as
supplemented to date is part of this Prospectus/Proxy Statement and will be
included in the Prospectus/Proxy Statement mailing to all shareholders of
record of Franklin New York Tax-Exempt Money Fund. For purposes of this
EDGAR filing, the prospectus of Franklin Tax-Exempt Money Fund dated
December 1, 2008, is incorporated by reference to the electronic filing on
Form N-1A on November 26, 2008, under Accession No. 0000353316-08-000018.
For purposes of this EDGAR filing, the supplements to the prospectus of
Franklin Tax-Exempt Money Fund dated December 1, 2008, dated December 5,
2008, April 17, 2009 and May 19, 2009 are incorporated by reference to the
electronic filings on Form 497, under Accession Nos. 0000773478-08-000040,
0000773478-09-000006, and 0000225375-09-000010 respectively.
EXHIBIT C
FRANKLIN TAX-EXEMPT MONEY FUND,
SEMI-ANNUAL REPORT DATED JANUARY 31, 2009
The Semi-Annual Report to Shareholders of Franklin Tax-Exempt Money Fund
dated January 31, 2009, is part of this Prospectus/Proxy Statement and will
be included in the Prospectus/Proxy Statement mailing to all shareholders of
record of Franklin Tax-Exempt Money Fund. For purposes of this EDGAR
filing, the Semi-Annual Report to Shareholders of Franklin Tax-Exempt Money
Fund dated January 31, 2009, is incorporated by reference to the electronic
filing on Form N-CSRS on April 1, 2009, under Accession No.
0000353316-09-000008.
PART B
STATEMENT OF ADDITIONAL INFORMATION
FOR
FRANKLIN TAX-EXEMPT MONEY FUND
DATED JUNE 23, 2009
Acquisition of Substantially All of the Assets of
FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND,
a series of Franklin New York Tax-Free Trust
By and in exchange for shares of
FRANKLIN TAX-EXEMPT MONEY FUND
This Statement of Additional Information (SAI) relates specifically to
the proposed acquisition of substantially all of the assets of Franklin New
York Tax-Exempt Money Fund in exchange for shares of beneficial interest,
without par value, of Franklin Tax-Exempt Money Fund.
This SAI consists of this Cover Page and the following documents. Each
of these documents is attached to and is legally considered to be a part of
this SAI:
1. The Statement of Additional Information of Franklin Tax-Exempt Money
Fund dated December 1, 2008, as supplemented to date.
2. Annual Report of Franklin Tax-Exempt Money Fund for the fiscal year
ended July 31, 2008.
3. Semi-Annual Report of Franklin Tax-Exempt Money Fund for the period
ended January 31, 2009.
4. Annual Report of Franklin New York Tax-Exempt Money Fund for the fiscal
year ended September 30, 2008.
5. Semi-Annual Report of Franklin New York Tax-Exempt Money Fund for the
period ended March 31, 2009.
6. Pro Forma Financial Statements for the reorganization of Franklin New
York Tax-Exempt Money Fund with and into Franklin Tax-Exempt
Money Fund.
This SAI is not a Prospectus; you should read this SAI in conjunction with
the Prospectus/Proxy Statement dated June 23, 2009, relating to the
above-referenced transaction. You can request a copy of the Prospectus/Proxy
Statement by calling 1-800/DIAL BEN or by writing to Franklin Tax-Exempt
Money Fund, P.O. Box 997151, Sacramento, CA 95899-7151.
----------------------------------------------------------
The Statement of Additional Information of Franklin Tax-Exempt Money Fund
dated December 1, 2008, is part of this SAI and will be provided to all
shareholders of Franklin New York Tax-Exempt Money Fund requesting this SAI.
For purposes of this EDGAR filing, the Statement of Additional Information
for Franklin Tax-Exempt Money Fund dated December 1, 2008, is incorporated
by reference to the electronic filing made on November 27, 2008, under
Accession No. 0000353316-07-000016.
The Annual Report to Shareholders of Franklin Tax-Exempt Money Fund for the
fiscal year ended July 31, 2008, is part of this SAI and will be provided to
all shareholders of Franklin New York Tax-Exempt Money Fund requesting this
SAI. For purposes of this EDGAR filing, the Annual Report to Shareholders of
Franklin Tax-Exempt Money Fund for the fiscal year ended July 31, 2008, is
incorporated by reference to the electronic filing on form N-CSR made on
September 30, 2008, under Accession No. 0000353316-08-000014.
The Semi-Annual Report to Shareholders of Franklin Tax-Exempt Money Fund for
the period ended January 31, 2009, is part of this SAI and will be provided
to all shareholders of Franklin New York Tax-Exempt Money Fund requesting
this SAI. For purposes of this EDGAR filing, the Semi-Annual Report to
Shareholders of Franklin Tax-Exempt Money Fund ended on January 31, 2009, is
incorporated by reference to the electronic filing on form N-CSRS made on
April 1, 2009, under Accession No. 0000353316-09-000008.
The Annual Report to Shareholders of Franklin New York Tax-Exempt Money Fund
for the fiscal year ended September 30, 2008, is part of this SAI and will
be provided to all shareholders requesting this SAI. For purposes of this
EDGAR filing, the Annual Report to Shareholders of Franklin New York
Tax-Exempt Money Fund for the fiscal year ended September 30, 2008, is
incorporated by reference to the electronic filing on form N-CSR made on
December 2, 2008, under Accession No. 0000798523-08-000038.
The Semi-Annual Report to Shareholders of Franklin New York Tax-Exempt Money
Fund for the period ended March 31, 2009, is part of this SAI and will be
provided to all shareholders of Franklin New York Tax-Exempt Money Fund
requesting this SAI. For purposes of this EDGAR filing, the Semi-Annual
Report to Shareholders of Franklin New York Tax-Exempt Money Fund ended on
March 31, 2009, is incorporated by reference to the electronic filing on
form N-CSRS made on May 29, 2009, under Accession No. 0000798523-09-000012.
FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND
FRANKLIN TAX-EXEMPT MONEY FUND
PRO FORMA COMBINING STATEMENTS, January 31, 2009
(UNAUDITED)
The following unaudited Pro Forma Combining Statements gives effect to the
proposed reorganization, accounted as if the reorganization had occurred as of
February 1, 2008. In addition, each Pro Forma Combining Statement has been
prepared based upon the proposed fee and expense structure after the
combination, as discussed in the combined Proxy Statement/Prospectus.
The Pro Forma Combining Statements should be read in conjunction with the
historical financial statements and notes thereto of the Franklin New York
Tax-Exempt Money Fund and the Franklin Tax-Exempt Money Fund which are
incorporated by reference in this Statement of Additional Information. The
combination will be accounted for as a tax-free reorganization.
Franklin New York Tax-Exempt Money Fund
Franklin Tax-Exempt Money Fund
Pro forma combining Statements of Investments, January 31, 2009
(unaudited)
Franklin Tax-Exempt
Franklin Franklin New York Money Fund
Tax-Exempt Money Fund Tax-Exempt Money Fund Pro forma combined
------------------------- ------------------------ -------------------------
Principal Principal Principal
Amount Value Amount Value Amount Value
---------- ------------ ---------- ----------- ---------- ------------
Investments 100.2%
Municipal Bonds 100.2%
California 1.5%
(a) California State GO,
Kindergarten-University,
Refunding, Series A-3, Daily
VRDN and Put, 0.35%, 5/01/34 $3,300,000 $ 3,300,000 $ -- $ -- $3,300,000 $ 3,300,000
(a) San Francisco City and County
RDAR, CFD No. 4, Weekly VRDN
and Put, 0.33%, 8/01/31 1,185,000 1,185,000 1,185,000 1,185,000
------------ ------------
4,485,000 4,485,000
------------ ------------
Colorado 12.6%
(a) Colorado Educational and Cultural
Facilities Authority Revenue,
Clyford Still Museum
Project, Weekly VRDN and Put,
0.47%, 12/01/38 2,000,000 2,000,000 2,000,000 2,000,000
National Jewish Federation
Bond Program, Refunding,
Series D-1, Daily VRDN and
Put, 0.65%, 7/01/36 6,450,000 6,450,000 6,450,000 6,450,000
National Jewish Federation
Bond Program, Series A-12,
Daily VRDN and Put, 0.65%,
2/01/38 1,045,000 1,045,000 1,045,000 1,045,000
National Jewish Federation
Bond Program, Series A-4,
Daily VRDN and Put, 0.65%,
2/01/34 5,350,000 5,350,000 5,350,000 5,350,000
National Jewish Federation
Bond Program, Series A-10,
Daily VRDN and Put, 0.65%,
9/01/37 3,100,000 3,100,000 3,100,000 3,100,000
National Jewish Federation
Bond Program, Series C-4,
Daily VRDN and Put, 0.65%,
6/01/37 3,500,000 3,500,000 3,500,000 3,500,000
(a) Colorado Health Facilities
Authority Revenue, Exempla
Inc., Series B, Weekly VRDN
and Put, 0.45%, 1/01/33 1,800,000 1,800,000 1,800,000 1,800,000
(a) Colorado HFAR, MF,
Central Park, Refunding,
Weekly VRDN and Put, 0.35%,
10/15/16 4,200,000 4,200,000 4,200,000 4,200,000
St. Moritz, Refunding,
Series H, Weekly VRDN and Put,
0.35%, 10/15/16 8,015,000 8,015,000 8,015,000 8,015,000
(a) Pitkin County IDR, Aspen Skiing
Co. Project, Refunding, Series
A, Daily VRDN and Put, 0.65%,
4/01/16 1,000,000 1,000,000 1,000,000 1,000,000
------------ ------------
36,460,000 36,460,000
------------ ------------
Connecticut 3.7%
Connecticut State GO, Series A,
5.00%, 3/01/09 3,685,000 3,694,229 3,685,000 3,694,229
(a) Connecticut State Health and
Educational Facilities
Authority Revenue, Yale
University, Series V-1, Daily
VRDN and Put, 0.40%, 7/01/36 7,100,000 7,100,000 7,100,000 7,100,000
------------ ------------
10,794,229 10,794,229
------------ ------------
Florida 5.7%
(a) Broward County Educational
Facilities Authority Revenue,
Nova Southeastern University,
Series A, Daily VRDN and Put,
0.40%, 4/01/38 2,000,000 2,000,000 2,000,000 2,000,000
(a) Collier County Health Facilities
Authority Hospital Revenue,
Cleveland Clinic Health,
Refunding, Series C-1, Daily
VRDN and Put, 0.60%, 1/01/35 2,100,000 2,100,000 2,100,000 2,100,000
(a) Florida State Department of
Environmental Protection
Preservation Revenue,
Everglades Restoration, Series
A, Assured Guaranty, Weekly
VRDN and Put, 0.80%, 7/01/27 8,830,000 8,830,000 8,830,000 8,830,000
(a) Lakeland Energy System Revenue,
Refunding, Series A, Weekly
VRDN and Put, 0.25%, 10/01/37 1,000,000 1,000,000 1,000,000 1,000,000
Palm Beach County Revenue, TECP,
0.85%, 3/03/09 2,500,000 2,500,000 2,500,000 2,500,000
------------ ------------
16,430,000 16,430,000
------------ ------------
Georgia 2.7%
(a) Cobb County Housing Authority
MFHR, Tamarron Apartments
Project, Weekly VRDN and Put,
0.45%, 3/01/24 3,740,000 3,740,000 3,740,000 3,740,000
(a) Roswell Housing Authority MFR,
Azalea Park Apartments,
Refunding, Weekly VRDN and
Put, 0.55%, 6/15/25 4,200,000 4,200,000 4,200,000 4,200,000
------------ ------------
7,940,000 7,940,000
------------ ------------
Illinois 2.1%
(a) Illinois Health Facilities
Authority Revenue, Revolving
Fund Pooled, Series C, Weekly
VRDN and Put, 0.50%, 8/01/15 6,200,000 6,200,000 6,200,000 6,200,000
------------ ------------
Kentucky 1.3%
(a) Lexington-Fayette Urban County
Airport Board General Airport
Revenue, Refunding, Series B,
Daily VRDN and Put, 0.65%,
7/01/38 1,700,000 1,700,000 1,700,000 1,700,000
(a) Shelby County Lease Revenue,
Series A, Daily VRDN and Put,
0.60%, 9/01/34 2,010,000 2,010,000 2,010,000 2,010,000
------------ ------------
3,710,000 3,710,000
------------ ------------
Louisiana 0.9%
(a) Louisiana Public Facilities
Authority Revenue, Christus
Health, Refunding, Series D-2,
Weekly VRDN and Put, 0.35%,
7/01/31 2,705,000 2,705,000 2,705,000 2,705,000
------------ ------------
Maryland 0.9%
(a) Frederick MFHR, Brookside
Apartments, Refunding, Weekly
VRDN and Put, 0.30%, 11/01/20 2,525,000 2,525,000 2,525,000 2,525,000
------------ ------------
Michigan 1.2%
(a) Michigan Higher Education
Facilities Authority Revenue,
Limited Obligation, University
of Detroit, Refunding, Daily
VRDN and Put, 0.65%, 11/01/36 1,400,000 1,400,000 1,400,000 1,400,000
(a) Michigan State University
Revenues, General, Refunding,
Series B, Weekly VRDN and Put,
0.40%, 2/15/26 2,200,000 2,200,000 2,200,000 2,200,000
------------ ------------
3,600,000 3,600,000
------------ ------------
Minnesota 2.2%
(a) Brown County Purchase Revenue,
Martin Luther College Project,
Weekly VRDN and Put, 0.42%,
9/01/24 1,200,000 1,200,000 1,200,000 1,200,000
(a) Mendota Heights Housing Mortgage
Revenue, MF, Series A, Weekly
VRDN and Put, 0.42%, 11/01/31 1,015,000 1,015,000 1,015,000 1,015,000
(a) Minneapolis Health Care System
Revenue, Fairview Health
Services, Series E, Weekly
VRDN and Put, 0.23%, 11/15/47 4,000,000 4,000,000 4,000,000 4,000,000
(a) Minneapolis MFR, Seven Corners
Apartments Project, Weekly
VRDN and Put, 0.42%, 11/01/31 150,000 150,000 150,000 150,000
------------ ------------
6,365,000 6,365,000
------------ ------------
Missouri 4.1%
(a) Missouri State Health and
Educational Facilities
Authority Educational
Facilities Revenue, St. Louis
University, Refunding, Series
A-1, Daily VRDN and Put,
0.60%, 10/01/35 3,965,000 3,965,000 3,965,000 3,965,000
(a) Missouri State Health and
Educational Facilities
Authority Health Facilities
Revenue, Sister Mercy Health,
Series D, Weekly VRDN and Put,
0.45%, 6/01/39 5,000,000 5,000,000 5,000,000 5,000,000
St. Louis General Fund Revenue,
TRAN, 3.25%, 6/30/09 3,000,000 3,017,806 3,000,000 3,017,806
------------ ------------
11,982,806 11,982,806
------------ ------------
New York 31.3%
(a) Albany IDA Civic Facilities
Revenue, Albany Medical Center
Hospital Project, Series A,
Weekly VRDN and Put, 1.25%,
5/01/27 1,000,000 1,000,000 1,000,000 1,000,000
(a) Buffalo Municipal Water Finance
Authority Water System
Revenue, Refunding, Weekly
VRDN and Put, 0.63%, 7/01/35 2,475,000 2,475,000 2,475,000 2,475,000
Kenmore-Tonawanda Union Free
School District GO, Refunding,
Assured Guaranty, 2.875%,
2/15/09 689,000 689,293 689,000 689,293
(a) Liberty Development Corp.
Revenue, 377 Greenwich LLC,
Weekly VRDN and Put, 0.95%,
12/01/39 3,600,000 3,600,000 3,600,000 3,600,000
MTA Commuter Facilities Revenue,
Series A, Pre-Refunded, 6.00%,
7/01/24 1,000,000 1,030,060 1,000,000 1,030,060
(a) MTA Revenue, Transportation,
Refunding, Series G1, Weekly
VRDN and Put, 0.45%, 11/01/26 3,000,000 3,000,000 3,000,000 3,000,000
Series G, Sub Series G-2,
Daily VRDN and Put, 0.40%,
11/01/26 2,300,000 2,300,000 2,300,000 2,300,000
(a) New York City GO,
Refunding, Series E, Sub
Series E-5, Daily VRDN and
Put, 0.30%, 8/01/15 300,000 300,000 300,000 300,000
Series A, Sub Series A-3,
Weekly VRDN and Put, 0.51%,
8/01/31 1,300,000 1,300,000 1,300,000 1,300,000
Series A, Sub Series A-6,
Weekly VRDN and Put, 0.40%,
8/01/19 3,300,000 3,300,000 3,300,000 3,300,000
Series E, Sub Series E-2,
Daily VRDN and Put, 0.45%,
8/01/34 3,300,000 3,300,000 3,300,000 3,300,000
Series L, Sub Series L-4,
Daily VRDN and Put, 0.30%,
4/01/38 4,600,000 4,600,000 4,600,000 4,600,000
(a) New York City HDC,
MF Rental Housing Revenue,
90 Washington Street, Series
A, FNMA Insured, Weekly VRDN
and Put, 0.45%, 2/15/35 1,700,000 1,700,000 1,700,000 1,700,000
MF Rental Housing Revenue,
Carnegie Park, Series A,
Weekly VRDN and Put, 0.43%,
11/15/19 4,750,000 4,750,000 4,750,000 4,750,000
MF Rental Housing Revenue,
One Columbus Place
Development, Series A, FNMA
Insured, Weekly VRDN and Put,
0.55%, 11/15/28 1,000,000 1,000,000 1,000,000 1,000,000
MFMR, 245 East 124th Street,
Weekly VRDN and Put, 0.45%,
11/01/46 2,500,000 2,500,000 2,500,000 2,500,000
(a) New York City Health and Hospital
Corp. Revenue, Health System,
Refunding, Series C, Weekly
VRDN and Put, 0.60%, 2/15/31 1,000,000 1,000,000 1,000,000 1,000,000
(a) New York City IDA Civic Facility
Revenue, Center for Jewish
History Project, Weekly VRDN
and Put, 1.10%, 9/01/31 5,250,000 5,250,000 5,250,000 5,250,000
(a) New York City Municipal Water
Finance Authority Water and
Sewer System Revenue, Second
General Resolution, Refunding,
Series CC-1, Sub Series CC-1,
Daily VRDN and Put, 0.95%,
6/15/38 2,200,000 2,200,000 2,200,000 2,200,000
New York City Transitional
Finance Authority Revenue,
(a)Future Tax Secured, Series
A, Weekly VRDN and Put, 0.35%,
2/15/30 800,000 800,000 800,000 800,000
(a)New York City Recovery,
Series 1, Sub Series 1D, Daily
VRDN and Put, 0.55%, 11/01/22 1,075,000 1,075,000 1,075,000 1,075,000
Series C, ETM, 0.20%, 2/15/09 2,000,000 2,002,408 2,000,000 2,002,408
(a) New York City Trust for Cultural
Resources Revenue,
Lincoln Center for the
Performing Arts Inc., Series
B-1, Weekly VRDN and Put,
0.35%, 11/01/38 3,000,000 3,000,000 3,000,000 3,000,000
Solomon R. Guggenheim
Foundation, Series B, Weekly
VRDN and Put, 0.53%, 12/01/15 1,505,000 1,505,000 1,505,000 1,505,000
(a) New York State Dormitory
Authority Revenues,
Cornell University, Series
B, Weekly VRDN and Put, 0.30%,
7/01/30 1,800,000 1,800,000 1,800,000 1,800,000
State Supported Debt, City
University of New York,
Consolidated 5th, Refunding,
Series D, Weekly VRDN and Put,
0.48%, 7/01/31 4,000,000 4,000,000 4,000,000 4,000,000
State Supported Debt, New
York Library, Series A, Weekly
VRDN and Put, 0.35%, 7/01/28 3,000,000 3,000,000 3,000,000 3,000,000
(a) New York State Energy Research
and Development Authority PCR,
New York State Electric and
Gas Corp. Project, Refunding,
Series C, Weekly VRDN and
Put, 0.50%, 6/01/29 3,000,000 3,000,000 3,000,000 3,000,000
Series D2, Weekly VRDN and
Put, 0.55%, 10/01/29 3,000,000 3,000,000 3,000,000 3,000,000
(a) New York State HFAR, Housing,
College ARMs, Series A, Weekly
VRDN and Put, 0.70%, 5/01/48 3,795,000 3,795,000 3,795,000 3,795,000
(a) New York State Local Government
Assistance Corp. Revenue,
Series G, Weekly VRDN and Put,
0.60%, 4/01/25 2,600,000 2,600,000 2,600,000 2,600,000
New York State Thruway Authority
State Personal Income Tax
Revenue, Transportation,
Series A, 3.00%, 3/15/09 2,000,000 2,003,360 2,000,000 2,003,360
(a) Triborough Bridge and Tunnel
Authority Revenues, Refunding,
Series B, Sub Series B-3,
Weekly VRDN and Put, 1.05%,
1/01/32 1,200,000 1,200,000 1,200,000 1,200,000
Ithaca City GO, BAN, Series A,
3.25%, 1/15/10 1,400,000 1,409,757 1,400,000 1,409,757
(a) MTA Revenue, Transportation,
Refunding, Series G1, Weekly
VRDN and Put, 0.25%, 11/01/26 2,500,000 2,500,000 2,500,000 2,500,000
Series G, Daily VRDN and
Put, 0.35%, 11/01/26 3,600,000 3,600,000 3,600,000 3,600,000
Series G, Sub Series G-2,
Daily VRDN and Put, 0.35%,
11/01/26 1,000,000 1,000,000 1,000,000 1,000,000
(a) New York State Dormitory
Authority Revenues, State
Supported Debt, City
University of New York,
Consolidated 5th Refunding,
Series D, Weekly VRDN and Put,
0.43%, 7/01/31 1,000,000 1,000,000 1,000,000 1,000,000
(a) New York State Energy Research
and Development Authority PCR,
New York State Electric and
Gas Corp. Project, Refunding,
Series D2, Weekly VRDN and
Put, 0.35%, 10/01/29 2,700,000 2,700,000 2,700,000 2,700,000
(a) New York State HFAR, 10 Liberty,
Series A, Weekly VRDN and Put,
0.22%, 5/1/35 600,000 600,000 600,000 600,000
------------ ----------- ------------
7,200,000 83,684,878 90,884,878
------------ ----------- ------------
North Carolina 3.5%
(a) New Hanover County Hospital
Revenue, New Hanover Regional
Medical Center, Series A,
Weekly VRDN and Put, 0.45%,
10/01/38 5,000,000 5,000,000 5,000,000 5,000,000
(a) North Carolina State GO,
Public Improvement, Series
D, Weekly VRDN and Put, 0.45%,
5/01/21 4,135,000 4,135,000 4,135,000 4,135,000
Series G, Weekly VRDN and
Put, 0.45%, 5/01/21 900,000 900,000 900,000 900,000
------------ ------------
10,035,000 10,035,000
------------ ------------
Ohio 1.1%
(a) Allen County Hospital Facilities
Revenue, Catholic Healthcare,
Series A, Daily VRDN and Put,
0.35%, 10/01/31 600,000 600,000 600,000 600,000
(a) Cleveland-Cuyahoga County Port
Authority Revenue, Carnegie,
89th Garage Project,
Refunding, Weekly VRDN and
Put, 0.35%, 1/01/37 1,655,000 1,655,000 1,655,000 1,655,000
Columbus GO, Refunding, Series B,
5.00%, 7/01/09 1,000,000 1,013,659 1,000,000 1,013,659
------------ ------------
3,268,659 3,268,659
------------ ------------
Oregon 5.0%
(a) Medford Hospital Facilities
Authority Revenue, Rogue
Valley Manor Project, Daily
VRDN and Put, 0.65%, 8/15/37 4,000,000 4,000,000 4,000,000 4,000,000
Oregon State GO,
(a)Series 73G, Weekly VRDN and
Put, 0.30%, 12/01/18 4,100,000 4,100,000 4,100,000 4,100,000
State Board Higher
Education, Refunding, Series
A, 5.00%, 8/01/09 1,445,000 1,468,983 1,445,000 1,468,983
TAN, Series A, 3.00%, 6/30/09 5,000,000 5,026,075 5,000,000 5,026,075
------------ ------------
14,595,058 14,595,058
------------ ------------
Pennsylvania 1.7%
(a) Bucks County IDA Hospital
Revenue, Grand View Hospital,
Series A, Weekly VRDN and Put,
0.45%, 7/01/34 2,000,000 2,000,000 2,000,000 2,000,000
(a) Emmaus General Authority Revenue,
Local Government, Series B-29,
Weekly VRDN and Put, 0.38%,
3/01/24 1,000,000 1,000,000 1,000,000 1,000,000
(a) Pennsylvania State Higher
Educational Facilities
Authority Revenue, Holy Family
University Project, Weekly
VRDN and Put, 0.48%, 8/01/38 2,000,000 2,000,000 2,000,000 2,000,000
------------ ------------
5,000,000 5,000,000
------------ ------------
Tennessee 0.1%
(a) Clarksville PBA Revenue, Pooled
Financing, Tennessee Municipal
Bond Fund, Daily VRDN and Put,
0.40%, 7/01/31 300,000 300,000 300,000 300,000
------------ ------------
Texas 10.9%
(a) Bexar County HFA, MFR, Altamonte
Apartments Project, Refunding,
Weekly VRDN and Put, 0.46%,
9/15/26 5,100,000 5,100,000 5,100,000 5,100,000
(a) Dallas Performing Arts Cultural
Facilities Corp. Cultural
Revenue, Dallas Arts Center
Foundation, Refunding, Series
B, Daily VRDN and Put, 0.60%,
9/01/41 4,400,000 4,400,000 4,400,000 4,400,000
(a) Harris County Cultural Education
Facilities Finance Corp.
Special Facilities Revenue,
Texas Medical Center,
Refunding, Series B, Sub
Series B-1, Daily VRDN and
Put, 0.60%, 9/01/31 4,875,000 4,875,000 4,875,000 4,875,000
(a) Metropolitan Higher Education
Authority Inc. Higher
Education Revenue, University
of Dallas Project, Weekly VRDN
and Put, 0.45%, 8/01/38 8,100,000 8,100,000 8,100,000 8,100,000
Texas State TRAN, 3.00%, 8/28/09 5,000,000 5,038,694 5,000,000 5,038,694
(a) University of Texas Permanent
University Fund Revenue,
System, Series A, Weekly VRDN
and Put, 0.20%, 7/01/38 4,000,000 4,000,000 4,000,000 4,000,000
------------ ------------
31,513,694 31,513,694
------------ ------------
Virginia 0.4%
(a) Hanover County EDA Revenue, Bon
Secours Health, Refunding,
Series D-2, Weekly VRDN and
Put, 0.42%, 11/01/25 1,055,000 1,055,000 1,055,000 1,055,000
------------ ------------
Washington 2.1%
(a) Vancouver Housing Authority
Revenue, Pooled Housing,
Refunding, Weekly VRDN and
Put, 0.52%, 12/01/38 3,000,000 3,000,000 3,000,000 3,000,000
(a) Washington State Housing Finance
Commission Nonprofit Housing
Revenue, Rockwood Retirement
Program, Series A, Daily VRDN
and Put, 0.80%, 1/01/30 2,000,000 2,000,000 2,000,000 2,000,000
(a) Washington State Housing Finance
Commission Nonprofit Revenue,
St. Vincent de Paul Project,
Series A, Weekly VRDN and Put,
0.44%, 2/01/31 1,200,000 1,200,000 1,200,000 1,200,000
------------ ------------
6,200,000 6,200,000
------------ ------------
Wisconsin 4.9%
(a) University Hospitals and Clinics
Authority Revenue, Refunding,
Series B, Daily VRDN and Put,
0.60%, 4/01/34 4,000,000 4,000,000 4,000,000 4,000,000
(a) Wisconsin State Health and
Educational Facilities
Authority Revenue,
Goodwill Industries Inc., Weekly
VRDN and Put, 0.47%, 6/01/28 4,085,000 4,085,000 4,085,000 4,085,000
Meriter Hospital Inc., Series B,
Daily VRDN and Put, 0.55%,
12/01/26 6,000,000 6,000,000 6,000,000 6,000,000
------------ ------------
14,085,000 14,085,000
------------ ------------
U.S. Territories 0.3%
Puerto Rico 0.3%
Puerto Rico Commonwealth TRAN,
Series A, Sub Series A2,
3.00%, 7/30/09 1,000,000 1,006,576 1,000,000 1,006,576
----------- ------------
Total Investments (Cost
$291,140,900) 100.2% 206,449,446 84,691,454 291,140,900
Other Assets, less Liabilities
(0.2)% (744,226) 145,261 (34,601) (633,566)
------------ ----------- ------------
Net Assets 100.0% $205,705,220 $84,836,715 $290,507,334
============ =========== ============
FOOTNOTE LEGEND
(a) Variable rate demand notes (VRDNs) are tax-exempt obligations which contain
a floating or variable interest rate adjustment formula and an
unconditional right of demand to receive payment of the principal balance
plus accrued interest at specified dates.
ABBREVIATION LEGEND
ARM - Adjustable Rate Mortgage
BAN - Bond Anticipation Note
CFD - Community Facilities District
EDA - Economic Development Authority
ETM - Escrow to Maturity
FNMA - Federal National Mortgage Association
GO - General Obligation
HDC - Housing Development Corp.
HFA - Housing Finance Authority/Agency
HFAR - Housing Finance Authority Revenue
IDA - Industrial Development Authority/Agency
IDR - Industrial Development Revenue
MF - Multi-Family
MFHR - Multi-Family Housing Revenue
MFMR - Multi-Family Mortgage Revenue
MFR - Multi-Family Revenue
MTA - Metropolitan Transit Authority
PBA - Public Building Authority
PCR - Pollution Control Revenue
RDAR - Redevelopment Agency Revenue
TAN - Tax Anticipation Note
TECP - Tax-Exempt Commercial Paper
TRAN - Tax and Revenue Anticipation Note
See notes to Pro Forma combining statements.
FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND
FRANKLIN TAX-EXEMPT MONEY FUND
FINANCIAL STATEMENTS
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
AS OF JANUARY 31, 2009 (UNAUDITED)
FRANKLIN NEW YORK FRANKLIN TAX-EXEMPT
TAX-EXEMPT MONEY FRANKLIN TAX-EXEMPT PRO FORMA MONEY FUND PRO
FUND MONEY FUND ADJUSTMENTS FORMA COMBINED
----------------- ------------------- ------------ -------------------
Assets:
Investments in securities, at amortized cost $84,691,454 $206,449,446 $ -- $291,140,900
Cash (38,652) 166,203 127,551
Receivables:
Investment securities purchased 100,012 -- 100,012
Capital shares sold -- 994,437 994,437
Interest 131,802 397,407 529,209
Prepaid expense 6,914 18,464 25,378
----------- ------------ ------------
Total assets 84,891,530 208,025,957 292,917,487
----------- ------------ ------------
Liabilities:
Payables:
Capital shares redeemed -- 2,164,790 2,164,790
Affiliates 28,127 71,882 100,009
Distributions to shareholders 197 27,524 27,721
Accrued expenses and other liabilities 26,491 56,541 34,601(a) 117,633
----------- ------------ --------- ------------
Total liabilities 54,815 2,320,737 34,601 2,410,153
----------- ------------ --------- ------------
Net assets, at value $84,836,715 $205,705,220 $290,507,334
=========== ============ ============
Net assets consist of:
Paid-in capital $84,890,687 $205,786,212 $ (34,601)(a) $290,642,298
Accumulated net realized gain (loss) (53,972) (80,992) (134,964)
----------- ------------ --------- ------------
Net assets, at value $84,836,715 $205,705,220 $ (34,601) $290,507,334
=========== ============ ========= ============
Shares outstanding(b) 84,890,688 205,791,640 -- 290,682,328
=========== ============ ========= ============
Net asset value per share(c) $ 1.00 $ 1.00 $ 1.00
=========== ============ ============
(a) Reorganization costs.
(b) See note 2 in the accompanying notes to pro forma combining financial
statements.
(c) Redemption price is equal to the net asset value less contingent sales
charges, if applicable.
See notes to Pro Forma financial statements.
FRANKLIN NEW YORK TAX-EXEMPT MONEY FUND
FRANKLIN TAX-EXEMPT MONEY FUND
FINANCIAL STATEMENTS
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JANUARY 31, 2009 (UNAUDITED)
FRANKLIN
FRANKLIN NEW YORK FRANKLIN TAX-EXEMPT MONEY
TAX-EXEMPT MONEY TAX-EXEMPT PRO FORMA FUND PRO FORMA
FUND MONEY FUND ADJUSTMENTS** COMBINED
----------------- ---------- ------------- ----------------
Investment Income:
Interest: $1,380,708 $3,866,137 $ -- $5,246,845
---------- ---------- ----------- ----------
Expenses:
Management fees 475,086 1,134,007 (96,809)(a) 1,512,284
Transfer agent fees 56,073 207,513 263,586
Custodian fees 1,087 3,057 4,144
Reports to shareholders 9,821 30,606 (1,800)(b) 38,627
Registration and filing fees 11,198 127,606 138,804
Professional fees 31,875 47,155 (19,215)(c) 59,815
Trustees' fees and expenses 4,258 4,826 (1,640)(d) 7,444
Temporary Guarantee Program fee 10,306 27,523 37,829
Other 21,683 20,797 (10,628)(e) 31,852
---------- ---------- ---------- ----------
Total expenses 621,387 1,603,090 (130,092) 2,094,385
Expense waived/paid by affiliates* (138,853) (39,471) 130,092 (48,232)
---------- ---------- ---------- ----------
Net expenses 482,534 1,563,619 -- 2,046,153
---------- ---------- ---------- ----------
Net investment income 898,174 2,302,518 3,200,692
---------- ---------- ----------
Realized and unrealized gains (losses):
Net realized gain (loss) from investments (35,990) (24,103) (60,093)
---------- ---------- ----------
Net increase (decrease) in net assets resulting from operations $ 862,184 $2,278,415 $3,140,599
---------- ---------- ----------
* The Franklin New York Tax-Exempt Money Fund's common expenses are capped at
0.64% on an annualized basis. After merger date, this waiver will be
discontinued by the manager. For the Franklin New York Tax-Exempt Money
Fund and the Franklin Tax-Exempt Money Fund, the manager agreed in advance
to voluntarily waive a portion of its management fees to avoid a negative
yield.
** Pro Forma Expenses are based on current and anticipated expenses and do not
include the estimated costs of the transaction of approximately $34,601 to
be borne by the Funds.
(a) Pro Forma adjustment for increase in average net assets in the calculation
of management fees.
(b) Pro Forma adjustment for removal of duplicative printing fees.
(c) Pro Forma adjustment for removal of duplicative professional fees.
(d) Pro Forma adjustment for removal of duplicative trustees' fees and
expenses.
(e) Pro Forma adjustment for removal of duplicative Lipper, Moody, and Risk
Vote expenses.
See notes to Pro Forma financial statements.
NOTES TO PRO FORMA COMBINING STATEMENTS (UNAUDITED)
1. BASIS OF COMBINATION
Subject to approval of the proposed Agreement and Plan of Reorganization (the
"Agreement and Plan") by the shareholders of the Franklin New York Tax-Exempt
Money Fund, the Franklin Tax-Exempt Money Fund will acquire substantially all
the net assets of the Franklin New York Tax-Exempt Money Fund in exchange for
the shares of the Franklin Tax-Exempt Money Fund. The reorganization will be
accounted for by the method of accounting for tax-free business combinations of
investment companies.
The accompanying Pro Forma Combining Statements are presented to show the effect
of the proposed reorganization as if such reorganization had occurred on
February 1, 2008.
The Pro Forma Combining Statement of Assets and Liabilities and Statement of
Investments for the Franklin Tax-Exempt Money Fund and the Franklin New York
Tax-Exempt Money Fund have been combined to reflect balances as of January 31,
2009. The Pro Forma Combining Statement of Operations for the Franklin
Tax-Exempt Money Fund and the Franklin New York Tax-Exempt Money Fund have been
combined to reflect twelve months ended January 31, 2009. The Pro Forma
Combining Statements are presented for the information of the reader, and should
be read in conjunction with the historical financial statements of the funds.
2. SHARES OF BENEFICIAL INTEREST
Shareholders of the Franklin New York Tax-Exempt Money Fund will receive shares
of the Franklin Tax-Exempt Money Fund in connection with the Reorganization.
Both Funds strive to maintain a stable net asset value of $1.00 per share, so
that shareholders of the Franklin New York Tax-Exempt Money Fund should receive
the same number of Franklin Tax-Exempt Money Fund shares as they hold of
Franklin New York Tax-Exempt Money Fund shares immediately prior to the
effective date and time of the reorganization.
At the actual closing of the reorganization, shareholders of the Franklin New
York Tax-Exempt Money Fund will receive shares of the Franklin Tax-Exempt Money
Fund based on the relative shares outstanding of the funds at $1.00 per share as
of 1:00 p.m., Pacific Time, of the closing date.
3. INVESTMENT RESTRICTIONS
None of the securities held by the Franklin New York Tax-Exempt Money Fund as of
the closing date will violate the investment restrictions of the Franklin
Tax-Exempt Money Fund. Therefore, the Franklin Tax-Exempt Money Fund will not be
required to sell any securities held by the Franklin New York Tax-Exempt Money
Fund at the time of the reorganization.
4. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expenses during the reporting period. Actual results could differ from those
estimates.
5. SECURITY VALUATION
Securities are valued at amortized cost which approximates market value. This
method involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium. All security
valuation procedures are approved by each fund's Board of Trustees.
6. FAIR VALUE MEASUREMENTS
SFAS 157 establishes a fair value hierarchy that distinguishes between market
data obtained from independent sources (observable inputs) and the fund's own
market assumptions (unobservable inputs). These inputs are used in determining
the value of the fund's investments and are summarized in the following fair
value hierarchy:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speed, credit risk, etc.)
- Level 3 - significant unobservable inputs (including the fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities. Money market securities
may be valued using amortized cost, in accordance with the 1940 Act. Generally,
amortized cost reflects the current fair value of a security, but since the
value is not obtained from a quoted price in an active market, such securities
are reflected as a Level 2.
At January 31, 2009, all of each of the fund's investments in securities carried
at fair value were in Level 2 inputs.
7. REORGANIZATION COSTS
Franklin New York Tax-Exempt Money Fund and Franklin Tax-Exempt Money Fund each
will pay 25% of the expenses of the Transaction, including proxy solicitation
costs. Franklin Advisers, Inc. will pay the remaining 50% of such expenses. The
total amount of such expenses for the Transaction is estimated to be $69,202.
PART C
OTHER INFORMATION
Item 15. Indemnification. The Agreement and Declaration of
Trust (the "Declaration") of Franklin Tax-Exempt Money
Fund (the "Trust") provides that any person who is or
was a Trustee, officer, employee or other agent,
including the underwriter, of such Trust shall be
liable to such Trust and its shareholders only for (1)
any act or omission that constitutes a bad faith
violation of the implied contractual covenant of good
faith and fair dealing, or (2) the person's own willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such
person (such conduct referred to herein as
"Disqualifying Conduct") and for nothing else. Except
in these instances, these persons shall not be
responsible or liable for any act or omission of any
other agent of such Trust or its investment adviser or
principal underwriter to the fullest extent that
limitations of liability are permitted by the Delaware
Statutory Trust Act (the "Delaware Act"). Moreover,
except in these instances, none of these persons, when
acting in their respective capacity as such, shall be
personally liable to any other person, other than such
Trust or its shareholders, for any act, omission or
obligation of such Trust or any trustee thereof.
The Trust shall indemnify, out of its assets, to the
fullest extent permitted under applicable law, any of
these persons who was or is a party, or is threatened
to be made a party, to any Proceeding (as defined in
the Declaration) because the person is or was an agent
of such Trust. These persons shall be indemnified
against any expenses, judgments, fines, settlements and
other amounts actually and reasonably incurred in
connection with the Proceeding if the person acted in
good faith or, in the case of a criminal proceeding,
had no reasonable cause to believe that the conduct was
unlawful. The termination of any proceeding by
judgment, settlement or its equivalent shall not in
itself create a presumption that the person did not act
in good faith or that the person had reasonable cause
to believe that the person's conduct was unlawful.
There shall nonetheless be no indemnification for a
person's own Disqualifying Conduct.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended (the "1933
Act" or "Securities Act"), may be permitted to
Trustees, officers and controlling persons of the Trust
pursuant to the foregoing provisions, or otherwise, the
Trust has been advised that in the opinion of the
Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other
than the payment by the Trust of expenses incurred or
paid by a Trustee, officer or controlling person of the
Trust in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or
controlling person in connection with securities being
registered, the Trust may be required, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court or appropriate
jurisdiction the question whether such indemnification
is against public policy as expressed in the Act and
will be governed by the final adjudication of such
issue.
Item 16. Exhibits. The following exhibits are incorporated by
reference to the Registrant's previously filed
registration statements on Form N-1A indicated below,
except as noted:
(1) Copies of the charter of the Registrant as now in
effect;
(a) Agreement and Declaration of Trust of
Franklin Tax-Exempt Money Fund, a Delaware
statutory trust dated October 18, 2006
Filing: Post-Effective Amendment No. 27 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 27, 2007
(b) Certificate of Trust of Franklin Tax-Exempt
Money Fund, a Delaware Statutory Trust, dated
October 18, 2006
Filing: Post-Effective Amendment No. 27 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 27, 2007
(c) Certificate of Amendment dated October 21,
2008 of
Agreement and Declaration of Trust dated
October 18, 2006
Filing: Post-Effective Amendment No. 28 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 26, 2008
(2) By-laws
(a) By-Laws of Franklin Tax-Exempt Money Fund, a
Delaware statutory Trust, effective as of October 18,
2006
Filing: Post-Effective Amendment No. 27 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 27, 2007
(3) Copies of any voting trust agreement affecting more
than 5 percent of any class of equity securities of
the Registrant;
Not applicable.
(4) Copies of the agreement of acquisition,
reorganization, merger, liquidation and any
amendments to it;
(a) Form of Agreement and Plan of Reorganization
between the Registrant and Franklin New York
Tax-Free Trust, on behalf of Franklin New
York Tax-Exempt Money Fund, is filed herewith
as Exhibit A to the Prospectus/Proxy
Statement.
(5) Instruments defining the rights of holders of
the securities being registered including copies,
where applicable of the relevant portion of the
articles of incorporation or by-laws of the
registrant.
(6) Copies of all investment advisory contracts
relating to the management of the assets of the
Registrant;
(a) Investment Management Agreement between
Registrant and Franklin/Advisers, Inc. dated
December 1, 2007
Filing: Post-Effective Amendment No. 28 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 26, 2008
(b) Addendum dated January 1, 2008 to Investment
Management Agreement between Registrant and
Franklin/Advisers, Inc. dated December 1, 2007
Filing: Post-Effective Amendment No. 28 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 26, 2008
(7) Copies of each underwriting or distribution
contract between the Registrant and a principal
underwriter, and specimens or copies of all
agreements between principal underwriters and
dealers;
(a) Distribution Agreement between Registrant and
Franklin/Templeton Distributors, Inc. dated
December 1, 2007
Filing: Post-Effective Amendment No. 28 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 26, 2008
(b) Forms of Selling Agreements between
Franklin/Templeton Distributors, Inc. and
Securities Dealers dated November 1, 2003
Filing: Post-Effective Amendment No. 24 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 24, 2004
(c) Amendment dated May 15, 2006, to Forms of
Selling Agreements between Franklin/Templeton
Distributors, Inc. and Securities Dealers
dated November 1, 2003
Filing: Post-Effective Amendment No. 27 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 27, 2007
(8) Copies of all bonus, profit sharing, pension, or
other similar contracts or arrangements wholly or
partly for the benefit of trustees or officers of
the Registrant in their capacity as such. Furnish
a reasonably detailed description of any plan that
is not set forth in a formal document;
Not applicable.
(9) Copies of all custodian agreements and depository
contracts under Section 17(f) of the Investment
Company Act of 1940, as amended (the "1940 Act")
for securities and similar investments of the
Registrant, including the schedule of remuneration;
(a) Master Custody Agreement between Registrant
and The Bank of New York Mellon dated February 16,
1996
Filing: Post-Effective Amendment No. 16 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 27, 1996
(b) Terminal Link Agreement between Registrant
and The Bank of New York Mellon dated
February 16, 1996
Filing: Post-Effective Amendment No. 16 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 27, 1996
(c) Amendment dated May 7, 1997 to the Master
Custody Agreement dated February 16, 1996 between
Registrant and The Bank of New York Mellon
Filing: Post-Effective Amendment No. 17 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 25, 1997
(d) Amendment dated February 27, 1998 to the
Master Custody Agreement dated February 16, 1996
between Registrant and The Bank of New York Mellon
Filing: Post-Effective Amendment No. 19 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: September 30, 1998
(e) Amendment dated June 3, 2008 to Exhibit A of
Master Custody Agreement between Registrant
and The Bank of New York Mellon dated February
16, 1996
Filing: Post-Effective Amendment No. 28 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 26, 2008
(10) An opinion and consent of counsel as to the
legality of the securities being
registered, indicating whether they will,
when sold, be legally issued, fully paid and
nonassessable;
(a) Opinion and Consent of Counsel dated May 13, 2009
Filing: Form N-14
File No. 333-159216
Filing Date: May 13, 2009
(11) An opinion, and consent to their use, of
counsel or, in lieu of an opinion, a copy of the
revenue ruling from the Internal Revenue
Service, supporting the tax matters and
consequences to shareholders discussed in
the prospectus - - To be filed by
amendment
(12) Copies of all material contracts of the
Registrant not made in the ordinary course
of business which are to be performed in
whole or in part on or after the date of
filing the registration statement;
(a) Subcontract for Fund Administrative Service
between Franklin Advisers, Inc. and Franklin
Templeton Services LLC dated March 1, 2008
Filing: Post-Effective Amendment No. 28 to
Registration Statement on Form N-1A
File No. 002-72614
Filing Date: November 26, 2008
(13) Copies of any other opinions, appraisals, or
rulings, and consents to their use, relied on in
preparing the registration statement and
required by Section 7 of the 1933 Act;
(a) Consent of Independent Registered Public
Accounting Firm
(14) All financial statements omitted pursuant to Item
14(a)(1);
Not applicable.
(15) Manually signed copies of any power of attorney
pursuant to which the name of any person has been
signed to the registration statement; and
(a) Power of Attorney dated April 14, 2009
Filing: Form N-14
File No. 333-159216
Filing Date: May 13, 2009
(16) Any additional exhibits which the Registrant may
wish to file.
(a) Code of Ethics dated May, 2008
Filing: Post-Effective Amendment No. 93 to
Registration Statement on Form N-1A
File No. 002-11346
Filing Date: July 14, 2008
Item 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to
any public reoffering of the securities registered
through the use of a prospectus which is part of
this registration statement by any person or party
who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information
called for by the applicable registration form for
reofferings by persons who may be deemed
underwriters, in addition to the information
called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every
prospectus that is filed under paragraph (1) above
will be filed as part of an amendment to the
registration statement and will not be used until
the amendment is effective, and that, in
determining any liability under the 1933 Act, each
post-effective amendment shall be deemed to be a
new registration statement for the securities
offered therein, and the offering of the
securities at that time shall be deemed to be the
initial bona fide offering of them.
(3) The undersigned Registrant agrees to file by
Post-Effective Amendment the opinions and consents
of counsel regarding the tax consequences of the
proposed reorganizations required by Item 16(12)
of Form N-14 within a reasonable time after
receipt of such opinions.
SIGNATURES
As required by the Securities Act of 1933, as amended, (the
"1933 Act"), this Registration Statement has been signed on
behalf of the Registrant in the City of San Mateo and the State
of California on the 19th day of June, 2009.
FRANKLIN TAX-EXEMPT
MONEY FUND
a Delaware statutory trust
(Registrant)
By: /s/ DAVID P. GOSS
David P. Goss
Vice President
As required by the 1933 Act, this Registration Statement has
been signed by the following persons in the capacities and on the
dates indicated:
CHARLES B. JOHNSON* Chief Executive Officer-
Charles B. Johnson Investment Management and
Trustee
Dated: June 19, 2009
LAURA F. FERGERSON* Chief Executive Officer-
Laura F. Fergerson Finance and Administration
Dated: June 19, 2009
GASTON GARDEY* Chief Financial Officer and
Gaston Gardey Chief Accounting Officer
Dated: June 19, 2009
HARRIS J. ASHTON* Trustee
Harris J. Ashton Dated: June 19, 2009
ROBERT F. CARLSON* Trustee
Robert F. Carlson Dated: June 19, 2009
SAM GINN* Trustee
Sam Ginn Dated: June 19, 2009
EDITH E. HOLIDAY* Trustee
Edith E. Holiday Dated: June 19, 2009
RUPERT H. JOHNSON, JR.* Trustee
Rupert H. Johnson, Jr. Dated: June 19, 2009
FRANK W.T. LAHAYE* Trustee
Frank W.T. LaHaye Dated: June 19, 2009
FRANK A. OLSON* Trustee
Frank A. Olson Dated: June 19, 2009
LARRY D. THOMPSON* Trustee
Larry D. Thompson Dated: June 19, 2009
JOHN B WILSON* Trustee
John B. Wilson Dated: June 19, 2009
*By /s/ DAVID P. GOSS
David P. Goss, Attorney-in-Fact
(Pursuant to Power of Attorney filed herewith)
FRANKLIN TAX-EXEMPT MONEY FUND
REGISTRATION STATEMENT
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION LOCATION
EX-99.(1)(a) Agreements and Declaration of *
Trust of Franklin Tax-Exempt
Money Fund, a
Delaware Statutory Trust, dated
October 18, 2006
EX-99.(1)(b) Certificate of Trust of Franklin *
Tax-Exempt Money Fund dated
October 18, 2006
EX-99.(1)(c) Certificate of Amendment dated *
October 21, 2008 of Agreement
and Declaration of Trust dated
October 18, 2006
EX-99.(2)(a) By-Laws of Franklin Tax-Exempt *
Money Fund, a Delaware statutory
trust, dated October 18, 2006
EX-99.(6)(a) Investment Management Agreement *
between the Registrant and
Franklin Advisers, Inc. dated
December 1, 2007
EX-99.(6)(b) Addendum dated January 1, 2008 *
to Investment Management
Agreement between the Registrant
and Franklin Advisers, Inc.
dated December 1, 2007
EX-99.(7)(a) Distribution Agreement between *
Registrant and
Franklin/Templeton Distributors,
Inc. dated December 1, 2007
EX-99.(7)(b) Forms of Selling Agreements *
between Franklin/Templeton
Distributors, Inc. and
Securities Dealers dated
November 1, 2003
EX-99.(7)(c) Amendment dated May 15, 2006 to *
form of Selling Agreements
between Franklin/Templeton
Distributors, Inc. and
Securities Dealers dated
November 1, 2003
EX-99.(9)(a) Master Custody Agreement between *
Registrant and The Bank of New
York Mellon dated February 16,
1996
EX-99.(9)(b) Terminal Link Agreement between *
Registrant and The Bank of New
York Mellon dated February 16,
1996
EX-99.(9)(c) Amendment dated May 7, 1997 to *
the Master Custody Agreement
dated February 16, 1996 between
the Registrant and The Bank of
New York Mellon
EX-99.(9)(d) Amendment dated February 27, *
1998 to the Master Custody
Agreement dated February 16,
1996 between the Registrant and
The Bank of New York Mellon
EX-99.(9)(e) Amendment dated June 3, 2008 to *
Exhibit A of the Master Custody
Agreement between Registrant and
The Bank of New York Mellon made
as of February 16, 1996
EX-99.(10)(a) Opinion and Consent of Counsel *
dated May 13, 2009
EX-99.(12)(a) Subcontract for Fund *
Administrative Service between
Franklin Advisers, Inc. and
Franklin Templeton Services LLC
dated March 1, 2008
EX-99.(13)(a) Consent of Independent Attached
Registered Public Accounting Firm
EX-99.(15)(a) Power of Attorney dated April *
14, 2009
EX-99.(16)(a) Code of Ethics dated May, 2008 *
*Incorporated By Reference