[Federal Register Volume 59, Number 106 (Friday, June 3, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13516]


[[Page Unknown]]

[Federal Register: June 3, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Rel. No. 20321; 811-5827]

 

Templeton Tax Free Trust; Notice of Application

May 27, 1994.
Agency: Securities and Exchange Commission (``SEC'').

Action: Notice of Application for Exemption under the Investment 
Company Act of 1940 (``Act'').

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Applicant: Templeton Tax Free Trust.

Relevant Act Section: Section 8(f).

Summary of Application: Applicant seeks an order declaring that it has 
ceased to be an investment company.

Filing Date: The application was filed on March 31, 1994, and amended 
on May 20, 1994.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicant with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on June 22, 1994, 
and should be accompanied by proof of service on applicant, in the form 
of an affidavit or, for lawyers, a certificate of service. Hearing 
requests should state the nature of the writer's interest, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request such notification by writing to the 
SEC's Secretary.

Addresses: Secetary, SEC, 450 Fifth Street NW., Washington, DC 20549. 
Applicant, 700 Central Avenue, St. Petersburg, Florida 33701-3628.

For Further Information Contact: Courtney S. Thornton, Senior Attorney, 
at (202) 942-0583, or C. David Messman, Branch Chief, at (202) 942-0564 
(Division of Investment Management, Office of Investment Company 
Regulation).

Supplementary Information: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the SEC's Public Reference Branch.

Applicant's Representations

    1. Applicant, an open-end non-diversified management investment 
company, is organized as a business trust under the laws of the 
Commonwealth of Massachusetts. On July 19, 1989, applicant filed a 
notification of registration on Form N-8A under section 8(a) of the 
Act, and a registration statement on Form N-1A under section 8(b) of 
the Act and the Securities Act of 1933. The registration statement 
became effective on September 15, 1989, and the public offering of 
applicant's shares commenced on that date.
    2. At a meeting held on February 27, 1993, applicant's board of 
trustees approved agreements and plans of reorganization providing for 
the transfer of all of the assets of applicant's two series to two 
other investment companies. These agreements provided for the transfer 
of all of the assets of (1) Templeton Insured Tax Free Fund 
(``Templeton Insured'') to Franklin Insured Tax-Free Income Fund 
(``Franklin Insured''), a series of Franklin Tax-Free Trust, in 
exchange for shares of Franklin Insured, and (2) Templeton Tax Free 
Money Fund (``Templeton Money'') to Franklin Tax-Exempt Money Fund 
(``Franklin Money'') in exchange for shares of Franklin Money.
    3. The trustees determined that the proposed reorganizations were 
in the best interests of the shareholders of each series because they 
would permit shareholders to pursue their investment goals in larger 
funds, which would have enhanced ability to effect portfolio 
transactions on more favorable terms and should have greater investment 
flexibility. The trustees also decided that the reorganizations would 
enable shareholders to obtain the benefits of economies of scale.
    4. Templeton Global Bond Managers (``Templeton Global''), a 
division of Templeton Investment Counsel, Inc. (``TICI''), is the 
investment adviser for Templeton Insured and Templeton Money. Franklin 
Advisers, Inc. is the investment adviser for Franklin Insured and 
Franklin Money. TICI and Franklin Advisers, Inc. are wholly owned 
subsidiaries of Franklin Resources, Inc. Accordingly, Templeton Insured 
and Franklin Insured, and Templeton Money and Franklin Money, may be 
deemed to be affiliated persons by reason of being under the control of 
investment advisers that are themselves under common control. Applicant 
therefore relied on the exemption provided by rule 17a-8 under the Act 
to effect the transaction.\1\ Consequently, the trustees determined, in 
accordance with rule 17a-8, that the purchase of the assets of the two 
series by Franklin Insured and Franklin Money was in the best interests 
of the shareholders of the series, and that such purchases would not 
result in any dilution to the interests of the existing shareholders of 
the series.
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    \1\Rule 17a-8 provides relief from the affiliated transaction 
prohibition of section 17(a) of the Act for a merger of investment 
companies that may be affiliated persons of each other solely by 
reason of having a common investment adviser, common directors, and/
or common officers. The staff of the Division of Investment 
Management has stated that it would not recommend that the 
Commission take enforcement action under section 17(a) of the Act if 
investment companies that are affiliated persons solely by reason of 
having investment advisers that are under common control rely on 
rule 17a-8. See, e.g., Capitol Mutual Funds and Nations Fund Trust 
(pub. avail. Feb. 24, 1994).
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    5. A registration statement on Form N-14 was filed with the SEC on 
May 28, 1993, and the proxy statement/prospectus contained therein was 
furnished to applicant's shareholders on or about July 15, 1993. The 
holders of a majority of the outstanding voting shares of each of 
Templeton Insured and Templeton Money approved agreements and plans of 
reorganization with Franklin Insured and Franklin Money, respectively, 
at a special meeting of shareholders held on August 27, 1993.
    6. On August 27, 1993, there were 18,793,312 shares with a net 
asset value of $1 per share of Templeton Money. On that date, Franklin 
Money acquired all of the assets of Templeton Money in exchange for 
shares of Franklin Money. The number of full and fractional shares that 
were exchanged for the assets of Templeton Money was determined by 
dividing the net asset value per share of Templeton Money as of that 
date by the net asset value per share of Franklin Money. The result was 
then multiplied by the number of outstanding shares of Templeton Money. 
Immediately following the acquisition, Templeton Money dissolved and 
distributed the shares of Franklin Money pro rata to its shareholders 
of record.
    7. On August 27, 1993, there were 2,773,418 shares with a net asset 
value of $11.7566 per share of Templeton Insured, which had aggregate 
net assets of $32,605,919. On that date, Templeton Insured distributed 
to its shareholders $.085 per share of net investment income and $.03 
per share of net realized capital gains. Shortly thereafter, Franklin 
Insured acquired all of the assets of Templeton Insured in exchange for 
shares of Franklin Insured. The number of full and fractional shares of 
Franklin Insured that were exchanged for the assets of Templeton 
Insured was determined by dividing the net asset value per share of 
Templeton Insured as of that date by the net asset value per share of 
Franklin Insured. The result was then multiplied by the number of 
outstanding shares of Templeton Insured. Immediately following the 
acquisition, Templeton Insured dissolved and distributed the shares of 
Franklin Insured pro rata to its shareholders of record.
    8. The expenses attributable to the acquisition of Templeton 
Insured by Franklin Insured, including printing and mailing costs for 
proxy statements and related documents, amounted to $12,565.77. 
Templeton Global, Franklin Advisers, Inc., Templeton Insured, and 
Franklin Insured each paid one quarter of this amount. The expenses 
attributable to the acquisition of Templeton Money by Franklin Money, 
including printing and mailing costs for proxy statements and related 
documents, amounted to $16,860.82. Templeton Global, Franklin Advisers, 
Inc., Templeton Money, and Franklin Money each paid one quarter of this 
amount.
    9. At the time of the application, applicant had no shareholders, 
assets, or liabilities, nor was it a party to any litigation or 
administrative proceedings. Applicant is not engaged in, nor does it 
propose to engage in, any business activities other than those 
necessary for the winding-up of its affairs.
    10. Applicant intends to file a certificate of dissolution in 
accordance with the laws of the Commonwealth of Massachusetts.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-13516 Filed 6-2-94; 8:45 am]
BILLING CODE 8010-01-M