As filed with the Securities and Exchange Commission on January
28, 2000
File Nos.
02-94222
811-4149
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 28 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 29 (X)
FRANKLIN TAX-FREE TRUST
(Exact Name of Registrant as Specified in Charter)
777 MARINERS ISLAND BLVD., SAN MATEO, CA 94404 (Address of Principal
Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (650)312-2000
HARMON E. BURNS, 777 MARINERS ISLAND BLVD., SAN MATEO, CA 94404 (Name and
Address of Agent for Service of Process)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[x] on February 1, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant's prospectus dated July 1, 1999, and Statement of Additional
Information dated July 1, 1999, as amended January 1, 2000, as filed with the
Securities and Exchange Commission under Form Type 497 on April 29, 1999 and
December 20, 1999, respectively (File Nos. 02-94222 and 811-4149), are hereby
incorporated by reference.
O TF1 P-2
SUPPLEMENT DATED FEBRUARY 1, 2000
TO THE PROSPECTUS OF
FRANKLIN TAX-FREE TRUST
(TF1 - FRANKLIN ARIZONA INSURED, FLORIDA INSURED, INSURED, MASSACHUSETTS
INSURED, MICHIGAN INSURED, MINNESOTA INSURED AND OHIO INSURED TAX-FREE
INCOME FUNDS)
DATED JULY 1, 1999
The prospectus is amended as follows:
I. As of February 1, 2000, the Insured, Michigan and Ohio Funds offer three
classes of shares: Class A, Class B and Class C.
II. The section "Performance", which begins on page 7, is replaced with the
following:
[Insert graphic of bull and bear] PERFORMANCE
- --------------------------------------------------------------------------------
The bar charts and tables below show the volatility of each fund's returns,
which is one indicator of the risks of investing in a fund. The bar charts show
changes in each fund's returns from year to year over the calendar years shown.
The tables show how each fund's average annual total returns compare to those of
a broad-based securities market index. Of course, past performance cannot
predict or guarantee future results.
ARIZONA FUND ANNUAL TOTAL RETURNS1
[Begin callout]
BEST QUARTER:
Q1 '95
9.53%
WORST QUARTER:
Q1 '94
- -7.89%
[End callout]
[Insert bar graph]
-8.26% 21.20% 8.69% 4.59% 6.31% -5.33%
- -------------------------------------------------------------------
94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
SINCE
INCEPTION
1 YEAR 5 YEARS (4/30/93)
- --------------------------------------------------------------------------------
Arizona Fund 2 -9.34% 5.83% 4.21%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 5.40%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
FLORIDA FUND ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
9.30%
WORST QUARTER:
Q1 '94
- -8.79%
[End callout]
[Insert bar graph]
-9.85% 21.24% 8.00% 5.02% 6.67% -4.59%
- -------------------------------------------------------------------
94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
SINCE
INCEPTION
1 YEAR 5 YEARS (4/30/93)
- --------------------------------------------------------------------------------
Florida Fund 2 -8.65% 6.04% 3.89%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 5.40%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
INSURED FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
5.63%
WORST QUARTER:
Q1 '94
- -4.22%
[End callout]
[Insert bar graph]
6.57% 11.35% 9.38% 11.83% -3.59% 13.60% 4.18% 8.11% 6.04% -3.40%
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Insured Fund - Class A 2 -7.53% 4.65% 5.80%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- --------------------------------------------------------------------------------
Insured Fund - Class C 2 -5.75% 3.98%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
MASSACHUSETTS FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
5.87%
WORST QUARTER:
Q1 '97
- -4.53%
[End callout]
[Insert bar graph]
5.10% 11.46% 8.98% 11.79% -3.63% 14.06% 8.53% 4.21% 5.39% -3.72
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Massachusetts Fund - Class A 2 -7.81% 4.62% 5.60%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- --------------------------------------------------------------------------------
Massachusetts Fund - Class C 2 -6.11% 3.85%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
MICHIGAN FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
5.70%
WORST QUARTER:
Q1 '97
- -4.60%
[End callout]
[Insert bar graph]
6.10% 10.96% 9.45% 12.09% -3.93% 13.83% 8.87% 3.58% 6.47% -2.27%
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Michigan Fund - Class A 2 -6.46% 5.05% 5.90%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- --------------------------------------------------------------------------------
Michigan Fund - Class C2 -4.75% 4.37%
Lehman Brothers Municipal Bond Index3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
MINNESOTA FUND - CLASS A ANNUAL TOTAL RETURNS 1
[End callout]
BEST QUARTER:
Q1 '95
5.70%
WORST QUARTER:
Q1 '94
- -3.83%
[End callout]
[Insert bar graph]
5.82% 10.86% 8.62% 10.98% -3.55% 13.31% 3.49% 7.69% 5.68% -3.74%
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Minnesota Fund - Class A 2 -7.82% 4.22% 5.31%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- --------------------------------------------------------------------------------
Minnesota Fund - Class C 2 -6.18% 3.48%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
OHIO FUND - CLASS A ANNUAL TOTAL RETURNS1
[Begin callout]
BEST QUARTER:
Q1 '95
6.09%
WORST QUARTER:
Q1 '94
- -4.75%
[End callout]
[Insert bar graph]
6.64% 10.95% 8.98% 12.47% -4.48% 14.34% 4.47% 8.16% 5.94% -3.00%
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Ohio Fund - Class A 2 -7.15% 4.91% 5.82%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- --------------------------------------------------------------------------------
Ohio Fund - Class C 2 -5.35% 4.18%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
III. The section "Fees and Expenses", which begins on page 14, is replaced with
the following:
This table describes the fees and expenses that you may pay if you buy and hold
shares of a fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
MASSA-
ARIZONA FLORIDA INSURED CHUSETTS MICHIGAN MINNESOTA OHIO
CLASS A FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Maximum sales charge (load)
as a percentage of offering price 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% 4.25%
Load imposed on purchases 4.25% 4.25% 4.25% 4.25% 4.25% 4.25% 4.25%
Maximum deferred sales charge (load) 1 NONE NONE NONE NONE NONE NONE NONE
Exchange fee NONE NONE $5.00 2 NONE NONE NONE NONE
CLASS B 3
- -----------------------------------------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price - - 4.00% - 4.00% - 4.00%
Load imposed on purchases - - NONE - NONE - NONE
Maximum deferred sales charge (load) 4 - - 4.00% - 4.00% - 4.00%
Exchange fee - - $5.00 2 - NONE - NONE
CLASS C
- -----------------------------------------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price - - 1.99% 1.99% 1.99% 1.99% 1.99%
Load imposed on purchases - - 1.00% 1.00% 1.00% 1.00% 1.00%
Maximum deferred sales charge (load) 5 - - 0.99% 0.99% 0.99% 0.99% 0.99%
Exchange fee - - $5.00 2 NONE NONE NONE NONE
Please see "Choosing a Share Class" on page 27 for an explanation of how and
when these sales charges apply.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
MASSA-
ARIZONA FLORIDA INSURED CHUSETTS MICHIGAN MINNESOTA OHIO
CLASS A FUND FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 0.66% 6 0.62% 6 0.47% 0.52% 0.47% 0.50% 0.48%
Distribution and service (12b-1) fees 0.10% 0.10% 0.09% 0.09% 0.09% 0.09% 0.09%
Other expenses 0.08% 0.07% 0.06% 0.07% 0.07% 0.08% 0.08%
- -------------------------------------------------------------------------------------------------------
Total annual fund operating expenses 0.84%6 0.79% 6 0.62% 0.68% 0.63% 0.67% 0.65%
- -------------------------------------------------------------------------------------------------------
CLASS B 3
- -------------------------------------------------------------------------------------------------------
Management fees - - 0.47% - 0.47% - 0.48%
Distribution and service (12b-1) fees - - 0.65% - 0.65% - 0.65%
Other expenses - - 0.06% - 0.07% - 0.08%
- -------------------------------------------------------------------------------------------------------
Total annual fund operating expenses - - 1.18% - 1.19% - 1.21%
- -------------------------------------------------------------------------------------------------------
MASSA-
ARIZONA FLORIDA INSURED CHUSETTS MICHIGAN MINNESOTA OHIO
CLASS C FUND FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees - - 0.47% 0.52% 0.47% 0.50% 0.48%
Distribution and service (12b-1 fees) - - 0.65% 0.65% 0.65% 0.65% 0.65%
Other expenses - - 0.06% 0.07% 0.07% 0.08% 0.08%
- -------------------------------------------------------------------------------------------------------
Total annual fund operating expenses - - 1.18% 1.24% 1.19% 1.23% 1.21%
- -------------------------------------------------------------------------------------------------------
</TABLE>
1. Except for investments of $1 million or more (see page 27).
2. This fee is only for market timers (see page 38).
3. The funds began offering Class B shares on February 1, 2000. Annual fund
operating expenses are based on the expenses for Class A and C for the fiscal
year ended February 28, 1999. The distribution and service (12b-1) fees are
based on the maximum fees allowed under Class B's Rule 12b-1 plan.
4. Declines to zero after six years.
5. This is equivalent to a charge of 1% based on net asset value.
6. For the fiscal year ended February 28, 1999, the manager had agreed in
advance to limit its management fees. With this reduction, management fees were
0.19% for the Arizona Fund and 0.25% for the Florida Fund, and total annual fund
operating expenses were 0.37% for the Arizona Fund and 0.42% for the Florida
Fund. The manager may end this arrangement at any time upon notice to the fund's
Board of Trustees.
EXAMPLE
This example can help you compare the cost of investing in a fund with the cost
of investing in other mutual funds. It assumes:
o You invest $10,000 for the periods shown;
o Your investment has a 5% return each year; and
o The fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
MASSA-
ARIZONA FLORIDA INSURED CHUSETTS MICHIGAN MINNESOTA OHIO
FUND FUND FUND FUND FUND FUND FUND
- --------------------------------------------------------------------------------
If you sell your shares at the
end of the period:
CLASS A
1 Year 1 $507 $502 $486 $492 $487 $491 $489
3 Years $682 $667 $615 $633 $618 $630 $624
5 Years $871 $845 $756 $788 $761 $782 $772
10 Years $1,418 $1,361 $1,166 $1,236 $1,178 $1,224 $1,201
CLASS B
1 Year - - $520 - $521 - $523
3 Years - - $675 - $678 - $684
5 Years - - $849 - $854 - $865
10 Years 2 - - $1,276 - $1,287 - $1,310
CLASS C
1 Year - - $317 $323 $318 $322 $320
3 Years - - $471 $489 $474 $486 $480
5 Years - - $743 $774 $748 $769 $758
10 Years - - $1,517 $1,585 $1,529 $1,574 $1,551
MASSA-
ARIZONA FLORIDA INSURED CHUSETTS MICHIGAN MINNESOTA OHIO
FUND FUND FUND FUND FUND FUND FUND
- --------------------------------------------------------------------------------
If you do not sell your shares:
CLASS B
1 Year - - $120 - $121 - $123
3 Years - - $375 - $378 - $384
5 Years - - $649 - $654 - $665
10 Years 2 - - $1,276 - $1,287 - $1,310
CLASS C
1 Year - - $219 $225 $220 $224 $222
3 Years - - $471 $489 $474 $486 $480
5 Years - - $743 $774 $748 $769 $758
10 Years - - $1,517 $1,585 $1,529 $1,574 $1,551
1. Assumes a contingent deferred sales charge (CDSC) will not apply.
2. Assumes conversion of Class B shares to Class A shares after eight years,
lowering your annual expenses from that time on.
IV. The management team on page 17 is replaced with the following:
The team responsible for the funds' management is:
SHEILA AMOROSO, SENIOR VICE PRESIDENT OF ADVISERS
Ms. Amoroso has been an analyst or portfolio manager of the Arizona and Florida
Funds since their inception and the Insured, Massachusetts, Michigan, Minnesota
and Ohio Funds since 1987. She is the co-Director of Franklin's Municipal Bond
Department. She joined the Franklin Templeton Group in 1986.
JAMES PATRICK CONN, VICE PRESIDENT OF ADVISERS
Mr. Conn has been an analyst or portfolio manager of the Insured, Massachusetts,
Michigan, Minnesota and Ohio Funds since December 1999. He joined the Franklin
Templeton Group in 1996. Previously, he was a portfolio manager with California
Investment Trust.
CARRIE HIGGINS, VICE PRESIDENT OF ADVISERS
Ms. Higgins has been an analyst or portfolio manager of the Arizona Fund since
its inception. She joined the Franklin Templeton Group in 1990.
JOHN POMEROY, VICE PRESIDENT OF ADVISERS
Mr. Pomeroy has been an analyst or portfolio manager of the Arizona and Florida
Funds since their inception and the Insured, Massachusetts, Michigan, Minnesota
and Ohio Funds since 1989. He joined the Franklin Templeton Group in 1986.
FRANCISCO RIVERA, PORTFOLIO MANAGER OF ADVISERS
Mr. Rivera has been an analyst or portfolio manager of the Massachusetts Fund
since 1996. He joined the Franklin Templeton Group in 1994.
STELLA WONG, VICE PRESIDENT OF ADVISERS
Ms. Wong has been an analyst or portfolio manager of the Florida Fund since its
inception and the Ohio Fund since 1986. She joined the Franklin Templeton Group
in 1986.
V. The following information is added to the section "Financial Highlights",
which begins on page 21:
ARIZONA FUND SIX MONTHS ENDED
AUGUST 31, 1999
(UNAUDITED) 1
- --------------------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 10.84
Net investment income .24
Net realized and unrealized
gains (losses) (.61)
Total from investment operations (.37)
Distributions from net investment
income (.25) 2
Net asset value, end of period 10.22
Total return (%) 3 (3.45)
Ratios/supplemental data
Net assets, end of period ($ x 1,000) 84,095
Ratios to average net assets: (%)
Expenses .80 4
Expenses excluding waiver and
payments by affiliate .80 4
Net investment income 4.48 4
Portfolio turnover rate (%) 12.96
FLORIDA FUND SIX MONTHS ENDED
AUGUST 31, 1999
(UNAUDITED)1
- --------------------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 10.53
Net investment income .24
Net realized and unrealized
gains (losses) (.54)
Total from investment operations (.30)
Distributions from net investment
income (.25) 2
Net asset value, end of period 9.98
Total return (%) 3 (2.92)
Ratios/supplemental data
Net assets, end of period ($ x 1,000) 120,590
Ratios to average net assets: (%)
Expenses .75 4
Expenses excluding waiver and
payments by affiliate .77 4
Net investment income 4.60 4
Portfolio turnover rate (%) 9.32
INSURED FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- --------------------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.26
Net investment income .30
Net realized and unrealized
gains (losses) (.58)
Total from investment operations (.28)
Distributions from net investment
income (.30)
In excess of net investment income (.01)
Distributions from net realized gains (.02)
Total distributions (.33)
Net asset value, end of period 11.65
Total return (%) 3 (2.39)
Ratios/supplemental data
Net assets, end of period ($ x 1 million) 1,614
Ratios to average net assets: (%)
Expenses .62 4
Net investment income 5.08 4
Portfolio turnover rate (%) 11.56
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- --------------------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.33
Net investment income .27
Net realized and unrealized
gains (losses) (.58)
Total from investment operations (.31)
Distributions from net investment
income (.27)
In excess of net investment income (.01)
Distributions from net realized gains (.02)
Total distributions (.30)
Net asset value, end of period 11.72
Total return (%) 3 (2.58)
Ratios/supplemental data
Net assets, end of period ($ x 1,000) 65,137
Ratios to average net assets: (%)
Expenses 1.18 4
Net investment income 4.52 4
Portfolio turnover rate (%) 11.56
MASSACHUSETTS FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- --------------------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.71
Net investment income .29
Net realized and unrealized
gains (losses) (.59)
Total from investment operations (.30)
Distributions from net investment
income (.29) 2
Net asset value, end of period 11.12
Total return (%) 3 (2.59)
Ratios/supplemental data
Net assets, end of period ($ x 1,000) 331,351
Ratios to average net assets: (%)
Expenses .69 4
Net investment income 5.01 4
Portfolio turnover rate (%) 13.05
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- --------------------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.76
Net investment income .26
Net realized and unrealized
gains (losses) (.58)
Total from investment operations (.32)
Distributions from net investment
income (.26) 5
Net asset value, end of period 11.18
Total return (%) 3 (2.77)
Ratios/supplemental data
Net assets, end of period ($ x 1,000) 27,969
Ratios to average net assets: (%)
Expenses 1.25 4
Net investment income 4.44 4
Portfolio turnover rate (%) 13.05
MICHIGAN FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- --------------------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.28
Net investment income .30
Net realized and unrealized
gains (losses) (.56)
Total from investment operations (.26)
Distributions from net investment
income (.30) 2
Net asset value, end of period 11.72
Total return (%) 3 (2.11)
Ratios/supplemental data
Net assets, end of period ($ x 1 million) 1,152
Ratios to average net assets: (%)
Expenses .64 4
Net investment income 4.98 4
Portfolio turnover rate (%) 3.87
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- --------------------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.36
Net investment income .27
Net realized and unrealized
gains (losses) (.56)
Total from investment operations (.29)
Distributions from net investment
income (.27) 2
Net asset value, end of period 11.80
Total return (%) 3 (2.40)
Ratios/supplemental data
Net assets, end of period ($ x 1,000) 53,635
Ratios to average net assets: (%)
Expenses 1.20 4
Net investment income 4.42 4
Portfolio turnover rate (%) 3.87
MINNESOTA FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- --------------------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.14
Net investment income .29
Net realized and unrealized
gains (losses) (.58)
Total from investment operations (.29)
Distributions from net investment
income (.29)
In excess of net investment income (.01)
Distributions from net realized gains (.02)
Total distributions (.32)
Net asset value, end of period 11.53
Total return (%) 3 (2.37)
Ratios/supplemental data
Net assets, end of period ($ x 1,000) 490,291
Ratios to average net assets: (%)
Expenses .67 4
Net investment income 4.88 4
Portfolio turnover rate (%) 6.29
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- --------------------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.19
Net investment income .26
Net realized and unrealized
gains (losses) (.58)
Total from investment operations (.32)
Distributions from net investment
income (.26)
In excess of net investment income (.01)
Distributions from net realized gains (.02)
Total distributions (.29)
Net asset value, end of period 11.58
Total return (%) 3 (2.64)
Ratios/supplemental data
Net assets, end of period ($ x 1,000) 23,217
Ratios to average net assets: (%)
Expenses 1.23 4
Net investment income 4.32 4
Portfolio turnover rate (%) 6.29
OHIO FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- --------------------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.49
Net investment income .30
Net realized and unrealized
gains (losses) (.58)
Total from investment operations (.28)
Distributions from net investment
income (.30)
In excess of net investment income (.01)
Distributions from net realized gains (.02)
Total distributions (.33)
Net asset value, end of period 11.88
Total return (%) 3 (2.31)
Ratios/supplemental data
Net assets, end of period ($ x 1,000) 754,531
Ratios to average net assets: (%)
Expenses .65 4
Net investment income 4.93 4
Portfolio turnover rate (%) 5.79
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- --------------------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.56
Net investment income .27
Net realized and unrealized
gains (losses) (.58)
Total from investment operations (.31)
Distributions from net investment
income (.27)
In excess of net investment income (.01)
Distributions from net realized gains (.02)
Total distributions (.30)
Net asset value, end of period 11.95
Total return (%) 3 (2.57)
Ratios/supplemental data
Net assets, end of period ($ x 1,000) 43,655
Ratios to average net assets: (%)
Expenses 1.21 4
Net investment income 4.37 4
Portfolio turnover rate (%) 5.79
1. Based on average shares outstanding.
2. Includes distributions in excess of net investment income in the amount of
$.004.
3. Total return does not include sales charges, and is not annualized.
4. Annualized.
5. Includes distributions in excess of net investment income in the amount of
$.003.
VI. In the section "Choosing a Share Class", which begins on page 27, the
following changes are made:
(a) The first chart on page 27 is replaced with the following:
CLASS B (INSURED, CLASS C (ALL FUNDS
MICHIGAN AND OHIO FUNDS EXCEPT ARIZONA AND
CLASS A ONLY) FLORIDA)
- --------------------------------------------------------------------------------
o Initial sales charge of o No initial sales charge o Initial sales charge
4.25% or less of 1%
o Deferred sales charge of o Deferred sales charge o Deferred sales charge
1% on purchases of $1 of 4% on shares you of 1% on shares you
million or more sold sell within the first sell within 18 months
within 12 months year, declining to 1%
within six years and
eliminated after that
o Lower annual expenses o Higher annual expenses o Higher annual expenses
than Class B or C due than Class A (same as than Class A (same as
to lower distribution Class C) due to higher Class B) due to
fees distribution fees. higher distribution
Automatic conversion to fees. No conversion
Class A shares after to Class A shares, so
eight years, reducing annual expenses do
future annual expenses. not decrease.
THE INSURED, MICHIGAN AND OHIO FUNDS BEGAN OFFERING CLASS B SHARES ON FEBRUARY
1, 2000.
(b) The following is added before the discussion of Class C sales charges on
page 28:
SALES CHARGES - CLASS B
IF YOU SELL YOUR SHARES THIS % IS DEDUCTED FROM YOUR
WITHIN THIS MANY YEARS AFTER BUYING THEM PROCEEDS AS A CDSC
- --------------------------------------------------------------------------------
1 Year 4
2 Years 4
3 Years 3
4 Years 3
5 Years 2
6 Years 1
7 Years 0
With Class B shares, there is no initial sales charge. However, there is a CDSC
if you sell your shares within six years, as described in the table above. The
way we calculate the CDSC is the same for each class (please see page 28). After
8 years, your Class B shares automatically convert to Class A shares, lowering
your annual expenses from that time on.
MAXIMUM PURCHASE AMOUNT The maximum amount you may invest in Class B shares at
one time is $249,999. We invest any investment of $250,000 or more in Class A
shares, since a reduced initial sales charge is available and Class A's annual
expenses are lower.
DISTRIBUTION AND SERVICE (12B-1) FEES Class B has a distribution plan, sometimes
known as a Rule 12b-1 plan, that allows the fund to pay distribution and other
fees of up to 0.65% per year for the sale of Class B shares and for services
provided to shareholders. Because these fees are paid out of Class B's assets on
an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
(c) The section "Contingent Deferred Sales Charge (CDSC) - Class A & C" on page
28 is renamed "Contingent Deferred Sales Charge (CDSC) - Class A, B & C."
VII. The section "Sales Charge Waivers" on page 30 is replaced with the
following:
SALES CHARGE WAIVERS Class A shares may be purchased without an initial sales
charge or CDSC by various individuals and institutions or by investors who
reinvest certain distributions and proceeds within 365 days. Certain investors
also may buy Class C shares without an initial sales charge. The CDSC for each
class may be waived for certain redemptions and distributions. If you would like
information about available sales charge waivers, call your investment
representative or call Shareholder Services at 1-800/632-2301. A list of
available sales charge waivers also may be found in the Statement of Additional
Information (SAI).
VIII. The following sentence is added after the minimum investments table on
page 31:
Please note that you may only buy shares of a fund eligible for sale in your
state or jurisdiction.
IX. The footnote in the section "Distribution Options" on page 33 is replaced
with the following:
*Class B and C shareholders may reinvest their distributions in Class A shares
of any Franklin Templeton money fund.
X. The following is added after the second paragraph in the section "Exchange
Privilege" on page 34:
If you exchange your Class B shares for the same class of shares of another
Franklin Templeton Fund, the time your shares are held in that fund will count
towards the eight year period for automatic conversion to Class A shares.
XI. The second paragraph of the "By Mail" section in the Selling Shares chart on
page 36 is replaced with the following:
Specify the fund, the account number and the dollar value or number of shares
you wish to sell. If you own both Class A and B shares, also specify the class
of shares, otherwise we will sell your Class A shares first. Be sure to include
all necessary signatures and any additional documents, as well as signature
guarantees if required.
XII. In the Selling Shares table on page 36 the section "By Wire" is replaced
with the following:
- --------------------------------------------------------------------------------
[INSERT GRAPHIC OF THREE You can call or write to have redemption proceeds
LIGHTNING BOLTS] sent to a bank account. See the policies above for
BY ELECTRONIC FUNDS selling shares by mail or phone.
TRANSFER (ACH)
Before requesting to have redemption proceeds sent
to a bank account, please make sure we have your
bank account information on file. If we do not
have this information, you will need to send
written instructions with your bank's name and
address, a voided check or savings account deposit
slip, and a signature guarantee if the ownership
of the bank and fund accounts is different.
If we receive your request in proper form by 1:00
p.m. Pacific time, proceeds sent by ACH generally
will be available within two to three business
days.
- --------------------------------------------------------------------------------
XIII. The section "Statements and Reports" on page 37 is replaced with the
following:
STATEMENTS AND REPORTS You will receive quarterly account statements that show
all your account transactions during the quarter. You also will receive written
notification after each transaction affecting your account (except for
distributions and transactions made through automatic investment or withdrawal
programs, which will be reported on your quarterly statement). You also will
receive the fund's financial reports every six months. To reduce fund expenses,
we try to identify related shareholders in a household and send only one copy of
the financial reports. If you need additional copies, please call 1-800/DIAL
BEN.
If there is a dealer or other investment representative of record on your
account, he or she also will receive copies of all notifications and statements
and other information about your account directly from the fund.
XIV. The section "Dealer compensation" on page 39 is replaced with the
following:
DEALER COMPENSATION Qualifying dealers who sell fund shares may receive sales
commissions and other payments. These are paid by Franklin Templeton
Distributors, Inc. (Distributors) from sales charges, distribution and service
(12b-1) fees and its other resources.
CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
COMMISSION (%) - 3.00 2.00
Investment under $100,000 4.00 - -
$100,000 but under $250,000 3.25 - -
$250,000 but under $500,000 2.25 - -
$500,000 but under $1 million 1.85 - -
$1 million or more up to 0.75 1 - -
12b-1 fee to dealer 0.15 (Arizona 0.15 2 0.65 3
and Florida
Funds)
0.10 (all other funds)
A dealer commission of up to 1% may be paid on Class C NAV purchases. A dealer
commission of up to 0.25% may be paid on Class A NAV purchases by certain trust
companies and bank trust departments, eligible governmental authorities, and
broker-dealers or others on behalf of clients participating in comprehensive fee
programs.
1. During the first year after purchase, dealers may not be eligible to receive
the 12b-1 fee.
2. Dealers may be eligible to receive up to 0.15% from the date of purchase.
After 8 years, Class B shares convert to Class A shares and dealers may then
receive the 12b-1 fee applicable to Class A.
3. Dealers may be eligible to receive up to 0.15% during the first year after
purchase and may be eligible to receive the full 12b-1 fee starting in the 13th
month.
Please keep this supplement for future reference.
O TF2 P-2
SUPPLEMENT DATED FEBRUARY 1, 2000
TO THE PROSPECTUS OF
FRANKLIN TAX-FREE TRUST
(TF2 - FRANKLIN ALABAMA, FLORIDA, GEORGIA, KENTUCKY, LOUISIANA,
MARYLAND,
MISSOURI, NORTH CAROLINA, TEXAS AND VIRGINIA TAX-FREE INCOME
FUNDS)
DATED JULY 1, 1999
The prospectus is amended as follows:
I. As of February 1, 2000, the Florida Fund offers three classes of shares:
Class A, Class B and Class C.
II. The section "Performance", which begins on page 7, is replaced with the
following:
[Insert graphic of bull and bear] PERFORMANCE
- -------------------------------------------------------------------
The bar charts and tables below show the volatility of each fund's returns,
which is one indicator of the risks of investing in a fund. The bar charts show
changes in each fund's returns from year to year over the calendar years shown.
The tables show how each fund's average annual total returns compare to those of
a broad-based securities market index. Of course, past performance cannot
predict or guarantee future results.
ALABAMA FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST
QUARTER:
Q1 '95
6.25%
WORST QUARTER:
Q1 '94
- -4.36%
[End callout]
[Insert bar graph]
5.29% 12.40% 8.79% 12.24% -4.44% 15.28% 4.95% 9.03% 3.42% -3.60%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
Alabama Fund - Class A 2 -7.70% 4.72% 5.69%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- -------------------------------------------------------------------
Alabama Fund - Class C 2 -6.01% 3.85%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
FLORIDA FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
5.93%
WORST QUARTER:
Q1 '94
- -3.84%
[End callout]
[Insert bar graph]
6.08% 12.56% 8.81% 12.01% -3.34% 14.67% 4.39% 8.11% 6.34% -3.31%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
Florida Fund - Class A 2 -7.42% 4.97% 6.01%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- -------------------------------------------------------------------
Florida Fund - Class C 2 -5.60 4.27%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
GEORGIA FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
5.84%
WORST QUARTER:
Q1 '94
- -4.26%
[End callout]
[Insert bar graph]
5.65% 12.23% 8.82% 11.89% -3.74% 14.06% 4.66% 7.84% 5.63% -3.82%
- ----------------------------------------------------------------------
91 92 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
Georgia Fund - Class A 2 -7.92% 4.61% 5.69%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- -------------------------------------------------------------------
Georgia Fund - Class C 2 -6.19% 3.85%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
KENTUCKY FUND ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
8.79%
WORST QUARTER:
Q1 '94
- -7.34%
[End callout]
[Insert bar graph]
10.48% 13.90% -8.52% 19.86% 4.26% 9.35% 6.09% -4.23%
- -----------------------------------------------------------------
92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
SINCE
INCEPTION
1 YEAR 5 YEARS (10/12/91)
- -------------------------------------------------------------------
Kentucky Fund 2 -8.29% 5.86% 5.60%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.42%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, the fund implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
LOUISIANA FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
5.84%
WORST QUARTER:
Q1 '94
- -4.47%
[End callout]
[Insert bar graph]
6.50% 12.23% 8.98% 11.13% -4.80% 14.59% 4.83% 8.79% 5.39% -3.87%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
Louisiana Fund - Class A 2 -7.98% 4.86% 5.74%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- -------------------------------------------------------------------
Louisiana Fund - Class C 2 -6.18% 4.14%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
MARYLAND FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
7.25%
WORST QUARTER:
Q1 '94
- -4.78%
[End callout]
[Insert bar graph]
5.41% 12.06% 8.87% 12.15% -5.09% 17.27% 3.96% 8.54% 5.88% -3.81%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
Maryland Fund - Class A 2 -7.91% 5.23% 5.86%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- -------------------------------------------------------------------
Maryland Fund - Class C 2 -6.19% 4.33%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
MISSOURI FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
6.44%
WORST QUARTER:
Q1 '94
- -4.84%
[End callout]
[Insert bar graph]
6.66% 11.97% 9.02% 13.28% -5.09% 15.68% 4.70% 9.14% 5.76% -4.31%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
Missouri Fund - Class A 2 -8.36% 5.07% 6.02%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- -------------------------------------------------------------------
Missouri Fund - Class C 2 -6.66% 4.16%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
NORTH CAROLINA FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
7.28%
WORST QUARTER:
Q1 '94
- -4.97%
[End callout]
[Insert bar graph]
6.33% 11.50% 9.12% 11.67% -5.73% 16.12% 4.08% 8.91% 5.94% -4.23%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
North Carolina Fund - Class A 2 -8.29% 5.04% 5.70%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- -------------------------------------------------------------------
North Carolina Fund - Class C 2 -6.65% 4.07%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
TEXAS FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
4.96%
WORST QUARTER:
Q1 '94
- -3.48%
[End callout]
[Insert bar graph]
6.04% 12.14% 8.56% 11.59% -2.79% 13.32% 5.17% 9.10% 5.10% -4.50%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
Texas Fund - Class A 2 -8.57% 4.56% 5.75%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- -------------------------------------------------------------------
Texas Fund - Class C 2 -6.85% 4.14%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
VIRGINIA FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
6.53%
WORST QUARTER:
Q1 '94
- -4.30%
[End callout]
[Insert bar graph]
5.91% 12.53% 8.95% 12.40% -4.64% 15.45% 4.17% 8.50% 5.83% -4.09%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- -------------------------------------------------------------------
Virginia Fund - Class A 2 -8.18% 4.87% 5.85%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- -------------------------------------------------------------------
Virginia Fund - Class C 2 -6.53% 4.03%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
III. In the section "Fees and Expenses", which begins on page 17, the following
changes are made:
(a) The information for the Florida Fund in the Shareholder Fees table and in
the Annual Fund Operating Expenses Table is revised to read as follows:
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
FLORIDA
CLASS A FUND
- -------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 4.25%
Load imposed on purchases 4.25%
Maximum deferred sales charge (load) 1 NONE
Exchange fee NONE
CLASS B 2
- -------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 4.00%
Load imposed on purchases NONE
Maximum deferred sales charge (load) 3 4.00%
Exchange fee NONE
CLASS C
- -------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 1.99%
Load imposed on purchases 1.00%
Maximum deferred sales charge (load) 4 0.99%
Exchange fee NONE
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND
ASSETS)
FLORIDA
CLASS A FUND
- -------------------------------------------------------------------
Management fees 0.47%
Distribution and service (12b-1) fees 0.09%
Other expenses 0.05%
Total annual fund operating expenses 0.61%
CLASS B 2
- -------------------------------------------------------------------
Management fees 0.47%
Distribution and service (12b-1) fees 0.65%
Other expenses 0.05%
Total annual fund operating expenses 1.17%
CLASS C
- -------------------------------------------------------------------
Management fees 0.47%
Distribution and service (12b-1 fees) 0.65%
Other expenses 0.05%
Total annual fund operating expenses 1.17%
1. Except for investments of $1 million or more (see page 35).
2. The fund began offering Class B shares on February 1, 2000. Annual fund
operating expenses are based on the expenses for Class A and C for the fiscal
year ended February 28, 1999. The distribution and service (12b-1) fees are
based on the maximum fees allowed under Class B's Rule 12b-1 plan.
3. Declines to zero after six years.
4. This is equivalent to a charge of 1% based on net asset value.
(b) The information for the Florida Fund in the Example table on page 19 is
revised to read as follows:
FLORIDA
FUND
- -------------------------------------------------------------------
If you sell your shares at the end of the period:
CLASS A
1 Year 1 $485
3 Years $612
5 Years $751
10 Years $1,155
CLASS B
1 Year $519
3 Years $672
5 Years $844
10 Years 2 $1,264
CLASS C
1 Year $316
3 Years $468
5 Years $737
10 Years $1,506
If you do not sell your shares:
CLASS B
1 Year $119
3 Years $372
5 Years $644
10 Years 2 $1,264
CLASS C
1 Year $218
3 Years $468
5 Years $737
10 Years $1,506
1. Assumes a contingent deferred sales charge (CDSC) will not apply.
2. Assumes conversion of Class B shares to Class A shares after eight years,
lowering your annual expenses from that time on.
IV. The management team on pages 20 and 21 is replaced with the following:
The team responsible for the funds' management is:
SHEILA AMOROSO, SENIOR VICE PRESIDENT OF ADVISERS
Ms. Amoroso has been an analyst or portfolio manager of each fund
since its inception. She is the co-Director of Franklin's
Municipal Bond Department. She joined the Franklin Templeton
Group in 1986.
JAMES PATRICK CONN, VICE PRESIDENT OF ADVISERS
Mr. Conn has been an analyst or portfolio manager of the Alabama
and Maryland Funds since December 1999. He joined the Franklin
Templeton Group in 1996. Previously, he was a portfolio manager
with California Investment Trust.
CARRIE HIGGINS, VICE PRESIDENT OF ADVISERS
Ms. Higgins has been an analyst or portfolio manager of the
Missouri Fund since 1992. She joined the Franklin Templeton Group
in 1990.
MARK ORSI, VICE PRESIDENT OF ADVISERS
Mr. Orsi has been an analyst or portfolio manager of the Kentucky Fund since its
inception and the North Carolina and Virginia Funds since 1991. He joined the
Franklin Templeton Group in 1990.
JOHN POMEROY, VICE PRESIDENT OF ADVISERS
Mr. Pomeroy has been an analyst or portfolio manager of the
Alabama, Florida, Georgia and Maryland Funds since 1989. He
joined the Franklin Templeton Group in 1986.
FRANCISCO RIVERA, PORTFOLIO MANAGER OF ADVISERS
Mr. Rivera has been an analyst or portfolio manager of the
Georgia, Kentucky, Louisiana and Texas Funds since 1996. He
joined the Franklin Templeton Group in 1994.
JOHN WILEY, VICE PRESIDENT OF ADVISERS
Mr. Wiley has been an analyst or portfolio manager of the
Louisiana and Texas Funds since 1991. He joined the Franklin
Templeton Group in 1989.
STELLA WONG, VICE PRESIDENT OF ADVISERS
Ms. Wong has been an analyst or portfolio manager of the Florida, Maryland,
Missouri, North Carolina and Virginia Funds since their inception. She joined
the Franklin Templeton Group in 1986.
V. The following information is added to the section "Financial Highlights",
which begins on page 25:
ALABAMA FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.68
Net investment income .30
Net realized and unrealized
gains (losses) (.56)
Total from investment operations (.26)
Distributions from net investment
income (.30) 2
Distributions from net realized gains (.01)
Total distributions (.31)
Net asset value, end of period 11.11
Total return (%) 3 (2.24)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 225,818
Ratios to average net assets: (%)
Expenses .72 4
Net investment income 5.30 4
Portfolio turnover rate (%) 12.37
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.74
Net investment income .27
Net realized and unrealized
gains (losses) (.56)
Total from investment operations (.29)
Distributions from net investment
income (.27) 2
Distributions from net realized gains (.01)
Total distributions (.28)
Net asset value, end of period 11.17
Total return (%) 3 (2.52)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 16,250
Ratios to average net assets: (%)
Expenses 1.26 4
Net investment income 4.74 4
Portfolio turnover rate (%) 12.37
FLORIDA FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.91
Net investment income .31
Net realized and unrealized
gains (losses) (.56)
Total from investment operations (.25)
Distributions from net investment
income (.31) 5
Distributions from net realized gains -6
Total distributions (.31)
Net asset value, end of period 11.35
Total return (%) 3 (2.16)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1 million) 1,663
Ratios to average net assets: (%)
Expenses .62 4
Net investment income 5.22 4
Portfolio turnover rate (%) 12.12
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.01
Net investment income .27
Net realized and unrealized
gains (losses) (.57)
Total from investment operations (.30)
Distributions from net investment
income (.27)
Distributions from net realized gains -6
Total distributions (.27)
Net asset value, end of period 11.44
Total return (%) 3 (2.51)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 82,528
Ratios to average net assets: (%)
Expenses 1.18 4
Net investment income 4.70 4
Portfolio turnover rate (%) 12.12
GEORGIA FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.07
Net investment income .30
Net realized and unrealized
gains (losses) (.58)
Total from investment operations (.28)
Distributions from net investment
income (.30)
In excess of net investment income (.01)
Distributions from net realized gains -7
Total distributions (.31)
Net asset value, end of period 11.48
Total return (%) 3 (2.39)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 158,065
Ratios to average net assets: (%)
Expenses .76 4
Net investment income 4.98 4
Portfolio turnover rate (%) 22.14
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.15
Net investment income .26
Net realized and unrealized
gains (losses) (.59)
Total from investment operations (.33)
Distributions from net investment
income (.26)
In excess of net investment income (.01)
Distributions from net realized gains -7
Total distributions (.27)
Net asset value, end of period 11.55
Total return (%) 3 (2.73)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 18,235
Ratios to average net assets: (%)
Expenses 1.32 4
Net investment income 4.44 4
Portfolio turnover rate (%) 22.14
KENTUCKY FUND SIX MONTHS ENDED
AUGUST 31, 1999
(UNAUDITED)1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.47
Net investment income .29
Net realized and unrealized
gains (losses) (.59)
Total from investment operations (.30)
Distributions from net investment
income (.30)8
Net asset value, end of period 10.87
Total return (%) 3 (2.69)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 66,957
Ratios to average net assets: (%)
Expenses .46 4
Expenses excluding waiver and
payments by affiliates .80 4
Net investment income 5.14
Portfolio turnover rate (%) 4.83
LOUSIANA FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.59
Net investment income .29
Net realized and unrealized
gains (losses) (.59)
Total from investment operations (.30)
Distributions from net investment
income (.30)9
Net asset value, end of period 10.99
Total return (%) 3 (2.64)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 155,071
Ratios to average net assets: (%)
Expenses .74 4
Net investment income 5.14 4
Portfolio turnover rate (%) 13.54
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.66
Net investment income .26
Net realized and unrealized
gains (losses) (.60)
Total from investment operations (.34)
Distributions from net investment
income (.26)9
Net asset value, end of period 11.06
Total return (%) 3 (2.91)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 12,377
Ratios to average net assets: (%)
Expenses 1.30 4
Net investment income 4.58 4
Portfolio turnover rate (%) 13.54
MARYLAND FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.66
Net investment income .28
Net realized and unrealized
gains (losses) (.58)
Total from investment operations (.30)
Distributions from net investment
income (.28) 10
Distributions from net realized gains (.03)
Total distributions (.31)
Net asset value, end of period 11.05
Total return (%) 3 (2.61)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 248,211
Ratios to average net assets: (%)
Expenses .72 4
Net investment income 4.88 4
Portfolio turnover rate (%) 1.01
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.75
Net investment income .25
Net realized and unrealized
gains (losses) (.58)
Total from investment operations (.33)
Distributions from net investment
income (.25) 10
Distributions from net realized gains (.03)
Total distributions (.28)
Net asset value, end of period 11.14
Total return (%) 3 (2.86)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 18,474
Ratios to average net assets: (%)
Expenses 1.28 4
Net investment income 4.34 4
Portfolio turnover rate (%) 1.01
MISSOURI FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.19
Net investment income .30
Net realized and unrealized
gains (losses) (.66)
Total from investment operations (.35)
Distributions from net investment
income (.30) 11
Distributions from net realized gains (.01)
Total distributions (.31)
Net asset value, end of period 11.52
Total return (%) 3 (2.92)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 383,809
Ratios to average net assets: (%)
Expenses .68 4
Net investment income 4.98 4
Portfolio turnover rate (%) 10.22
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.24
Net investment income .27
Net realized and unrealized
gains (losses) (.66)
Total from investment operations (.39)
Distributions from net investment
income (.27) 11
Distributions from net realized gains (.01)
Total distributions (.28)
Net asset value, end of period 11.57
Total return (%) 3 (3.18)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 25,343
Ratios to average net assets: (%)
Expenses 1.24 4
Net investment income 4.42 4
Portfolio turnover rate (%) 10.22
NORTH CAROLINA FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.16
Net investment income .30
Net realized and unrealized
gains (losses) (.63)
Total from investment operations (.33)
Distributions from net investment
income (.30)2
Net asset value, end of period 11.53
Total return (%) 3 (2.73)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 346,559
Ratios to average net assets: (%)
Expenses .68 4
Net investment income 5.00 4
Portfolio turnover rate (%) 4.56
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.24
Net investment income .27
Net realized and unrealized
gains (losses) (.64)
Total from investment operations (.37)
Distributions from net investment
income (.27) 2
Net asset value, end of period 11.60
Total return (%) 3 (3.08)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 42,286
Ratios to average net assets: (%)
Expenses 1.24 4
Net investment income 4.44 4
Portfolio turnover rate (%) 4.56
TEXAS FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.42
Net investment income .29
Net realized and unrealized
gains (losses) (.54)
Total from investment operations (.25)
Distributions from net investment
income (.30) 12
Distributions from net realized gains (.04)
Total distributions (.34)
Net asset value, end of period 10.83
Total return (%) 3 (2.28)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 117,632
Ratios to average net assets: (%)
Expenses .79 4
Net investment income 5.17 4
Portfolio turnover rate (%) 13.64
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.57
Net investment income .26
Net realized and unrealized
gains (losses) (.56)
Total from investment operations (.30)
Distributions from net investment
income (.26) 12
Distributions from net realized gains (.04)
Total distributions (.30)
Net asset value, end of period 10.97
Total return (%) 3 (2.63)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 4,911
Ratios to average net assets: (%)
Expenses 1.35 4
Net investment income 4.61 4
Portfolio turnover rate (%) 13.64
VIRGINIA FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.88
Net investment income .29
Net realized and unrealized
gains (losses) (.62)
Total from investment operations (.33)
Distributions from net investment
income (.30) 13
Net asset value, end of period 11.25
Total return (%) 3 (2.85)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 363,263
Ratios to average net assets: (%)
Expenses .68 4
Net investment income 5.02 4
Portfolio turnover rate (%) 8.55
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.95
Net investment income .26
Net realized and unrealized
gains (losses) (.62)
Total from investment operations (.36)
Distributions from net investment
income (.26) 13
Net asset value, end of period 11.33
Total return (%) 3 (3.02)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 23,673
Ratios to average net assets: (%)
Expenses 1.24 4
Net investment income 4.46 4
Portfolio turnover rate (%) 8.55
1. Based on average shares outstanding.
2. Includes distributions in excess of net investment income in the amount of
$.002.
3. Total return does not include sales charges, and is not annualized.
4. Annualized.
5. Includes distributions in excess of net investment income in the amount of
$.001.
6. Includes distributions of net realized gains in the amount of $.001.
7. Includes distributions of net realized gains in the amount of $.002.
8. Includes distributions in excess of net investment income in the amount of
$.008.
9. Includes distributions in excess of net investment income in the amount of
$.008 and $.007 for Class A and C, respectively.
10. Includes distributions in excess of net investment income in the amount of
$.002 and $.001 for Class A and C, respectively.
11. Includes distributions in excess of net investment income in the amount of
$.0001.
12. Includes distributions in excess of net investment income in the amount of
$.006 and $.005 for Class A and Class C, respectively.
13. Includes distributions in excess of net investment income in the amount of
$.005 and $.004 for Class A and C, respectively.
VI. In the section "Choosing a Share Class", which begins on page 35, the
following changes are made:
(a) The first chart on page 35 is replaced with the following:
CLASS B (FLORIDA FUND CLASS C (ALL FUNDS
CLASS A ONLY) EXCEPT KENTUCKY)
- ----------------------------------------------------------------------
o Initial sales charge o No initial sales o Initial sales
of 4.25% or less charge charge of 1%
o Deferred sales o Deferred sales o Deferred sales
charge of 1% on charge of 4% on charge of 1% on
purchases of $1 shares you sell shares you sell
million or more sold within the first within 18 months
within 12 months year, declining to
1% within six years
and eliminated
after that
o Lower annual o Higher annual o Higher annual
expenses than Class expenses than Class expenses than Class
B or C due to lower A (same as Class C) A (same as Class B)
distribution fees due to higher due to higher
distribution fees. distribution fees.
Automatic No conversion to
conversion to Class Class A shares, so
A shares after annual expenses do
eight years, not decrease.
reducing future
annual expenses.
THE FLORIDA FUND BEGAN OFFERING CLASS B SHARES ON
FEBRUARY 1, 2000.
(b) The following is added before the discussion of Class C sales charges on
page 36:
SALES CHARGES - CLASS B
IF YOU SELL YOUR SHARES THIS % IS DEDUCTED FROM
WITHIN THIS MANY YEARS AFTER BUYING THEM YOUR PROCEEDS AS A CDSC
- -------------------------------------------------------------------------
1 Year 4
2 Years 4
3 Years 3
4 Years 3
5 Years 2
6 Years 1
7 Years 0
With Class B shares, there is no initial sales charge. However, there is a CDSC
if you sell your shares within six years, as described in the table above. The
way we calculate the CDSC is the same for each class (please see page 36). After
8 years, your Class B shares automatically convert to Class A shares, lowering
your annual expenses from that time on.
MAXIMUM PURCHASE AMOUNT The maximum amount you may invest in Class B shares at
one time is $249,999. We invest any investment of $250,000 or more in Class A
shares, since a reduced initial sales charge is available and Class A's annual
expenses are lower.
DISTRIBUTION AND SERVICE (12B-1) FEES Class B has a distribution plan, sometimes
known as a Rule 12b-1 plan, that allows the fund to pay distribution and other
fees of up to 0.65% per year for the sale of Class B shares and for services
provided to shareholders. Because these fees are paid out of Class B's assets on
an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
(c) The section "Contingent Deferred Sales Charge (CDSC) - Class A & C" on page
36 is renamed "Contingent Deferred Sales Charge (CDSC) - Class A, B & C."
VII. The section "Sales Charge Waivers" on page 38 is replaced with the
following:
SALES CHARGE WAIVERS Class A shares may be purchased without an initial sales
charge or CDSC by various individuals and institutions or by investors who
reinvest certain distributions and proceeds within 365 days. Certain investors
also may buy Class C shares without an initial sales charge. The CDSC for each
class may be waived for certain redemptions and distributions. If you would like
information about available sales charge waivers, call your investment
representative or call Shareholder Services at 1-800/632-2301. A list of
available sales charge waivers also may be found in the Statement of Additional
Information (SAI).
VIII. The following sentence is added after the minimum investments table on
page 38:
Please note that you may only buy shares of a fund eligible for sale in your
state or jurisdiction.
IX. The footnote in the section "Distribution Options" on page 40 is replaced
with the following:
*Class B and C shareholders may reinvest their distributions in Class A shares
of any Franklin Templeton money fund.
X. The following is added after the second paragraph in the section "Exchange
Privilege" on page 41:
If you exchange your Class B shares for the same class of shares of another
Franklin Templeton Fund, the time your shares are held in that fund will count
towards the eight year period for automatic conversion to Class A shares.
XI. The second paragraph of the "By Mail" section in the Selling Shares chart on
page 43 is replaced with the following:
Specify the fund, the account number and the dollar value or number of shares
you wish to sell. If you own both Class A and B shares, also specify the class
of shares, otherwise we will sell your Class A shares first. Be sure to include
all necessary signatures and any additional documents, as well as signature
guarantees if required.
XII. In the Selling Shares table on page 43 the section "By Wire" is replaced
with the following:
- ----------------------------------------------------------------------
[Insert graphic of You can call or write to have redemption
three lightning bolts] proceeds sent to a bank account. See the
BY ELECTRONIC FUNDS policies above for selling shares by mail
TRANSFER (ACH) or phone.
Before requesting to have redemption proceeds sent to a
bank account, please make sure we have your bank
account information on file. If we do not have this
information, you will need to send written instructions
with your bank's name and address, a voided check or
savings account deposit slip, and a signature guarantee
if the ownership of the bank and fund accounts is
different.
If we receive your request in proper form by 1:00 p.m.
Pacific time, proceeds sent by ACH generally will be
available within two to three business days.
- -------------------------------------------------------------------------
XIII. The section "Statements and Reports" on page 44 is replaced with the
following:
STATEMENTS AND REPORTS You will receive quarterly account statements that show
all your account transactions during the quarter. You also will receive written
notification after each transaction affecting your account (except for
distributions and transactions made through automatic investment or withdrawal
programs, which will be reported on your quarterly statement). You also will
receive the fund's financial reports every six months. To reduce fund expenses,
we try to identify related shareholders in a household and send only one copy of
the financial reports. If you need additional copies, please call 1-800/DIAL
BEN.
If there is a dealer or other investment representative of record on your
account, he or she also will receive copies of all notifications and statements
and other information about your account directly from the fund.
XIV. The section "Dealer compensation" on page 46 is replaced with the
following:
DEALER COMPENSATION Qualifying dealers who sell fund shares may receive sales
commissions and other payments. These are paid by Franklin Templeton
Distributors, Inc. (Distributors) from sales charges, distribution and service
(12b-1) fees and its other
resources.
CLASS A CLASS B CLASS C
- -----------------------------------------------------------------
COMMISSION (%) - 3.00 2.00
Investment under $100,000 4.00 - -
$100,000 but under $250,000 3.25 - -
$250,000 but under $500,000 2.25 - -
$500,000 but under $1 million 1.85 - -
$1 million or more up to 0.75 1 - -
12B-1 FEE TO DEALER 0.10 0.15 2 0.65 3
A dealer commission of up to 1% may be paid on Class C NAV purchases. A dealer
commission of up to 0.25% may be paid on Class A NAV purchases by certain trust
companies and bank trust departments, eligible governmental authorities, and
broker-dealers or others on behalf of clients participating in comprehensive fee
programs.
1. During the first year after purchase, dealers may not be eligible to receive
the 12b-1 fee.
2. Dealers may be eligible to receive up to 0.15% from the date of purchase.
After 8 years, Class B shares convert to Class A shares and dealers may then
receive the 12b-1 fee applicable to Class A.
3. Dealers may be eligible to receive up to 0.15% during the first year after
purchase and may be eligible to receive the full 12b-1 fee starting in the 13th
month.
Please keep this supplement for future reference.
O TF3 P-2
SUPPLEMENT DATED FEBRUARY 1, 2000
TO THE PROSPECTUS OF
FRANKLIN TAX-FREE TRUST
(TF3 - FRANKLIN ARIZONA, COLORADO, CONNECTICUT, FEDERAL
INTERMEDIATE-TERM, HIGH YIELD, INDIANA,
MICHIGAN, NEW JERSEY, OREGON, PENNSYLVANIA, AND PUERTO RICO
TAX-FREE INCOME FUNDS)
DATED JULY 1, 1999
The prospectus is amended as follows:
I. As of February 1, 2000, the Arizona, New Jersey and Pennsylvania Funds offer
three classes of shares: Class A, Class B and Class C.
II. On June 23, 1999, shareholders of the Franklin Indiana Tax-Free Income Fund
approved a proposal to merge the Indiana Fund into the Franklin Federal Tax-Free
Income Fund, and shareholders of the Franklin Michigan Tax-Free Income Fund
approved a proposal to merge the Michigan Fund into the Franklin Michigan
Insured Tax-Free Income Fund. The merger of the Franklin Indiana Tax-Free Income
Fund was completed on June 24, 1999. The merger of the Franklin Michigan
Tax-Free Income Fund was completed on August 26, 1999. Please see below for
additional details.
FRANKLIN INDIANA TAX-FREE INCOME FUND
On June 24, 1999, Franklin Federal Tax-Free Income Fund acquired the assets of
Franklin Indiana Tax-Free Income Fund. In exchange, Franklin Indiana Tax-Free
Income Fund received shares of Franklin Federal Tax-Free Income Fund, which it
distributed to its shareholders. All references to the Franklin Indiana Tax-Free
Income Fund in the prospectus are deleted.
FRANKLIN MICHIGAN TAX-FREE INCOME FUND
On August 26, 1999, Franklin Michigan Insured Tax-Free Income Fund acquired the
assets of Franklin Michigan Tax-Free Income Fund. In exchange, Franklin Michigan
Tax-Free Income Fund received shares of Franklin Michigan Insured Tax-Free
Income Fund, which it distributed to its shareholders. All references to the
Franklin Michigan Tax-Free Income Fund in the prospectus are deleted.
III. The section "Performance", which begins on page 9, is replaced with the
following:
[Insert graphic of bull and bear] PERFORMANCE
- -------------------------------------------------------------------
The bar charts and tables below show the volatility of each fund's returns,
which is one indicator of the risks of investing in a fund. The bar charts show
changes in each fund's returns from year to year over the calendar years shown.
The tables show how each fund's average annual total returns compare to those of
a broad-based securities market index. Of course, past performance cannot
predict or guarantee future results.
ARIZONA FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
5.83%
WORST QUARTER:
Q1 '94
- -4.32%
[End callout]
[Insert bar graph]
5.80% 12.24% 10.02% 11.18% -4.03% 14.59% 4.21% 8.23% 5.44% -3.83%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- ----------------------------------------------------------------------
Arizona Fund - Class A 2 -7.95% 4.63% 5.75%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- ----------------------------------------------------------------------
Arizona Fund - Class C 2 -6.23% 3.92%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains. May 1,
1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
COLORADO FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
6.62%
WORST QUARTER:
Q1 '94
- -5.02%
[End callout]
[Insert bar graph]
5.78% 12.35% 10.00% 12.74% -5.43% 16.07% 4.76% 8.82% 5.73% -4.43
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- ----------------------------------------------------------------------
Colorado Fund - Class A 2 -8.52% 5.07% 5.96%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- ---------------------------------------------------------------------
Colorado Fund - Class C 2 -6.77% 4.18%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains. May 1,
1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
CONNECTICUT FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
5.54%
WORST QUARTER:
Q1 '94
- -4.73%
[End callout]
[Insert bar graph]
4.93% 10.77% 8.33% 12.32% -5.40% 14.32% 4.48% 8.50% 5.96% -4.82%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- ----------------------------------------------------------------------
Connecticut Fund - Class A 2 -8.86% 4.60% 5.29%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- ---------------------------------------------------------------------
Connecticut Fund - Class C 2 -7.15% 3.84%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
FEDERAL INTERMEDIATE FUND ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
5.19%
WORST QUARTER:
Q1 '94
- -3.76%
[End callout]
[Insert bar graph]
12.68% -2.71% 14.42% 6.68% 5.27% 5.80% -1.84%
- ---------------------------------------------------------------
93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
SINCE
INCEPTION
1 YEAR 5 YEARS (9/21/92)
- ----------------------------------------------------------------------
Federal Intermediate Fund 2 -4.05% 5.47% 5.40%
Lehman Brothers 10-Year Municipal Bond -1.25% 7.12% 6.19%
Index 3
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers 10-Year
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least 10
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
HIGH YIELD FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
6.38%
WORST QUARTER:
Q1 '94
- -3.02%
[End callout]
[Insert bar graph]
5.11% 12.40% 9.25% 13.27% -2.59% 16.29% 6.16% 10.60% 4.81% -3.13%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- ----------------------------------------------------------------------
High Yield Fund - Class A 2 -7.24% 5.83% 6.57%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (01/01/99)
- --------------------------------------------------------------------
High Yield Fund - Class B 2 -6.99% -6.99%
Lehman Brothers Municipal Bond Index 3 -2.06% -2.06%
SINCE
INCEPTION
1 YEAR (5/1/95)
- --------------------------------------------------------------------
High Yield Fund - Class C 2 -5.55% 5.01%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
NEW JERSEY FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
6.44%
WORST QUARTER:
Q1 '94
- -4.79%
[End callout]
[Insert bar graph]
6.56% 12.46% 9.19% 10.97% -5.21% 15.58% 4.04% 8.34% 6.11% -3.36%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- ----------------------------------------------------------------------
New Jersey Fund - Class A 2 -7.44% 5.05% 5.82%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- --------------------------------------------------------------------
New Jersey Fund - Class C 2 -5.74% 4.23%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
OREGON FUND - CLASS A ANNUAL TOTAL RETURNS
[Begin callout]
BEST QUARTER:
Q1 '95
6.54%
WORST QUARTER:
Q1 '94
- -4.55%
[End callout]
[Insert bar graph]
5.55% 12.63% 8.66% 10.91% -4.93% 15.08% 4.32% 8.24% 5.44% -3.87%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- ----------------------------------------------------------------------
Oregon Fund - Class A -7.98% 4.74% 5.56%
Lehman Brothers Municipal Bond Index -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- ---------------------------------------------------------------------
Oregon Fund - Class C 2 -6.16% 3.93%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1.Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
PENNSYLVANIA FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
5.81%
WORST QUARTER:
Q1 '94
- -3.64%
[End callout]
[Insert bar graph]
3.87% 13.48% 9.83% 11.66% -3.29% 14.34% 4.50% 8.94% 5.48% -4.08%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- ----------------------------------------------------------------------
Pennsylvania Fund - Class A 2 -8.18% 4.76% 5.84%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- --------------------------------------------------------------------
Pennsylvania Fund - Class C 2 -6.48% 4.03%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
PUERTO RICO FUND - CLASS A ANNUAL TOTAL RETURNS 1
[Begin callout]
BEST QUARTER:
Q1 '95
5.95%
WORST QUARTER:
Q1 '94
- -4.27%
[End callout]
[Insert bar graph]
5.38% 12.27% 9.12% 10.99% -4.28% 14.49% 5.08% 8.75% 5.74% -2.34%
- ----------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
YEAR
AVERAGE ANNUAL TOTAL RETURNS
For the periods ended December 31, 1999
1 YEAR 5 YEARS 10 YEARS
- ----------------------------------------------------------------------
Puerto Rico Fund - Class A 2 -6.51% 5.29% 5.90%
Lehman Brothers Municipal Bond Index 3 -2.06% 6.91% 6.89%
SINCE
INCEPTION
1 YEAR (5/1/95)
- ---------------------------------------------------------------------
Puerto Rico Fund - Class C 2 -4.77% 4.45%
Lehman Brothers Municipal Bond Index 3 -2.06% 5.84%
1. Figures do not reflect sales charges. If they did, returns would be lower.
2. Figures reflect sales charges.
All fund performance assumes reinvestment of dividends and capital gains.
May 1, 1994, Class A implemented a Rule 12b-1 plan, which affects subsequent
performance.
3. Source: Standard & Poor's(R) Micropal. The unmanaged Lehman Brothers
Municipal Bond Index includes investment grade bonds issued within the last five
years as part of a deal of over $50 million and with a maturity of at least two
years. It includes reinvested interest. One cannot invest directly in an index,
nor is an index representative of the fund's portfolio.
IV. In the section "Fees and Expenses", which begins on page 20, the following
changes are made:
(a) The information for the Arizona, New Jersey and Pennsylvania Funds in the
Shareholder Fees table and in the Annual Fund Operating Expenses table is
revised to read as follows:
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
ARIZONA NEW JERSEY PENNSYLVANIA
CLASS A FUND FUND FUND
- -------------------------------------------------------------------
Maximum sales charge (load) as a percentage of offering price
4.25% 4.25% 4.25%
Load imposed on purchases 4.25% 4.25% 4.25%
Maximum deferred sales charge (load) 1 NONE NONE NONE
Exchange fee NONE NONE NONE
CLASS B 2
- -------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 4.00% 4.00% 4.00%
Load imposed on purchases NONE NONE NONE
Maximum deferred sales charge (load) 3 4.00% 4.00% 4.00%
Exchange fee NONE NONE NONE
CLASS C
- -------------------------------------------------------------------
Maximum sales charge (load)
as a percentage of offering price 1.99% 1.99% 1.99%
Load imposed on purchases 1.00% 1.00% 1.00%
Maximum deferred sales charge (load) 4 0.99% 0.99% 0.99%
Exchange fee NONE NONE NONE
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND
ASSETS)
ARIZONA NEW JERSEY PENNSYLVANIA
CLASS A FUND FUND FUND
- -------------------------------------------------------------------
Management fees 0.48% 0.49% 0.48%
Distribution and service (12b-1) fees 0.09% 0.09% 0.09%
Other expenses 0.06% 0.07% 0.08%
Total annual fund operating expenses 0.63% 0.65% 0.65%
CLASS B 2
- -------------------------------------------------------------------
Management fees 0.48% 0.49% 0.48%
Distribution and service (12b-1) fees 0.65% 0.65% 0.65%
Other expenses 0.06% 0.07% 0.08%
Total annual fund operating expenses 1.19% 1.21% 1.21%
CLASS C
- -------------------------------------------------------------------
Management fees 0.48% 0.49% 0.48%
Distribution and service (12b-1 fees) 0.65% 0.65% 0.65%
Other expenses 0.06% 0.07% 0.08%
Total annual fund operating expenses 1.19% 1.21% 1.21%
1. Except for investments of $1 million or more (see page 44).
2. The funds began offering Class B shares on February 1, 2000. Annual fund
operating expenses are based on the expenses for Class A and C for the fiscal
year ended February 28, 1999. The distribution and service (12b-1) fees are
based on the maximum fees allowed under Class B's Rule 12b-1 plan.
3. Declines to zero after six years.
4. This is equivalent to a charge of 1% based on net asset value.
(b) The information for the Arizona, New Jersey and Pennsylvania Funds in the
Example table on pages 24 and 25 is revised to read as follows:
ARIZONA NEW JERSEY PENNSYLVANIA
FUND FUND FUND
- -------------------------------------------------------------------
If you sell your shares at the end of the period:
CLASS A
1 Year 1 $487 $489 $489
3 Years $618 $624 $624
5 Years $761 $772 $772
10 Years $1,178 $1,201 $1,201
CLASS B
1 Year $521 $523 $523
3 Years $678 $684 $684
5 Years $854 $865 $865
10 Years 2 $1,287 $1,310 $1,310
CLASS C
1 Year $318 $320 $320
3 Years $474 $480 $480
5 Years $748 $758 $758
10 Years $1,529 $1,551 $1,551
If you do not sell your shares:
CLASS B
1 Year $121 $123 $123
3 Years $378 $384 $384
5 Years $654 $665 $665
10 Years 2 $1,287 $1,310 $1,310
CLASS C
1 Year $220 $222 $222
3 Years $474 $480 $480
5 Years $748 $758 $758
10 Years $1,529 $1,551 $1,551
1. Assumes a contingent deferred sales charge (CDSC) will not apply.
2. Assumes conversion of Class B shares to Class A shares after eight years,
lowering your annual expenses from that time on.
V. The management team on pages 26 and 27 is replaced with the following:
The team responsible for the funds' management is:
SHEILA AMOROSO, SENIOR VICE PRESIDENT OF ADVISERS
Ms. Amoroso has been an analyst or portfolio manager of the
Arizona, Colorado, Connecticut, Federal Intermediate, New Jersey
and Oregon Funds since their inception and the High Yield,
Pennsylvania and Puerto Rico Funds since 1987. She is the
co-Director of Franklin's Municipal Bond Department. She joined
the Franklin Templeton Group in 1986.
JAMES PATRICK CONN, VICE PRESIDENT OF ADVISERS
Mr. Conn has been an analyst or portfolio manager of the Federal
Intermediate Fund since December 1999. He joined the Franklin
Templeton Group in 1996. Previously, he was a portfolio manager
with California Investment Trust.
CARRIE HIGGINS, VICE PRESIDENT OF ADVISERS
Ms. Higgins has been an analyst or portfolio manager of the Arizona, Colorado,
New Jersey, Oregon and Puerto Rico Funds since 1992. She joined the Franklin
Templeton Group in 1990.
JOHN HOPP, VICE PRESIDENT OF ADVISERS
Mr. Hopp has been an analyst or portfolio manager of the High
Yield Fund since 1993. He joined the Franklin Templeton Group in
1991.
MARK ORSI, VICE PRESIDENT OF ADVISERS
Mr. Orsi has been an analyst or portfolio manager of the Federal Intermediate
Fund since its inception and the High Yield Fund since 1991. He joined the
Franklin Templeton Group in 1990.
JOHN POMEROY, VICE PRESIDENT OF ADVISERS
Mr. Pomeroy has been an analyst or portfolio manager of the
Federal Intermediate Fund since its inception and the Connecticut
Fund since 1989. He joined the Franklin Templeton Group in 1986.
JOHN WILEY, VICE PRESIDENT OF ADVISERS
Mr. Wiley has been an analyst or portfolio manager of the
Arizona, Oregon and Pennsylvania Funds since 1991. He joined the
Franklin Templeton Group in 1989.
STELLA WONG, VICE PRESIDENT OF ADVISERS
Ms. Wong has been an analyst or portfolio manager of the
Colorado, Connecticut, New Jersey and Pennsylvania Funds since
their inception and the Puerto Rico Fund since 1986. She joined
the Franklin Templeton Group in 1986.
VI. The following information is added to the section "Financial Highlights",
which begins on page 31:
ARIZONA FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.38
Net investment income .29
Net realized and unrealized
gains (losses) (.55)
Total from investment operations (.26)
Distributions from net investment
income (.29) 2
Distributions from net realized gains (.04)
Total distributions (.33)
Net asset value, end of period 10.79
Total return (%) 3 (2.36)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 832,231
Ratios to average net assets: (%)
Expenses .64 4
Net investment income 5.12 4
Portfolio turnover rate (%) 13.62
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.45
Net investment income .26
Net realized and unrealized
gains (losses) (.55)
Total from investment operations (.29)
Distributions from net investment
income (.26) 5
Distributions from net realized gains (.04)
Total distributions (.30)
Net asset value, end of period 10.86
Total return (%) 3 (2.61)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 24,808
Ratios to average net assets: (%)
Expenses 1.20 4
Net investment income 4.56 4
Portfolio turnover rate (%) 13.62
COLORADO FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.05
Net investment income .29
Net realized and unrealized
gains (losses) (.63)
Total from investment operations (.34)
Distributions from net investment
income (.30) 6
Distributions from net realized gains (.01)
Total distributions (.31)
Net asset value, end of period 11.40
Total return (%) 3 (2.82)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 288,952
Ratios to average net assets: (%)
Expenses .69 4
Net investment income 4.96 4
Portfolio turnover rate (%) 14.07
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.11
Net investment income .26
Net realized and unrealized
gains (losses) (.63)
Total from investment operations (.37)
Distributions from net investment
income (.27) 7
Distributions from net realized gains (.01)
Total distributions (.28)
Net asset value, end of period 11.46
Total return (%) 3 (3.08)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 22,497
Ratios to average net assets: (%)
Expenses 1.24 4
Net investment income 4.41 4
Portfolio turnover rate (%) 14.07
CONNECTICUT FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.27
Net investment income .28
Net realized and unrealized
gains (losses) (.63)
Total from investment operations (.35)
Distributions from net investment
income (.28)
Net asset value, end of period 10.64
Total return (%) 3 (3.02)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 239,180
Ratios to average net assets: (%)
Expenses .70 4
Net investment income 5.03 4
Portfolio turnover rate (%) 15.38
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.30
Net investment income .25
Net realized and unrealized
gains (losses) (.62)
Total from investment operations (.37)
Distributions from net investment
income (.25)
Net asset value, end of period 10.68
Total return (%) 3 (3.26)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 26,841
Ratios to average net assets: (%)
Expenses 1.25 4
Net investment income 4.48 4
Portfolio turnover rate (%) 15.38
FEDERAL INTERMEDIATE FUND SIX MONTHS ENDED
AUGUST 31, 1999
(UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.30
Net investment income .26
Net realized and unrealized
gains (losses) (.43)
Total from investment operations (.17)
Distributions from net investment
income (.26)
Net asset value, end of period 10.87
Total return (%) 3 (1.57)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 182,057
Ratios to average net assets: (%)
Expenses .75 4
Expenses excluding waiver and
payments by affiliate .76 4
Net investment income 4.56 4
Portfolio turnover rate (%) 12.08
HIGH YIELD FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.49
Net investment income .32
Net realized and unrealized
gains (losses) (.48)
Total from investment operations (.16)
Distributions from net investment
income (.33) 5
Distributions from net realized gains -8
Total distributions (.33)
Net asset value, end of period 11.00
Total return (%) 3 (1.40)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1 million) 5,719
Ratios to average net assets: (%)
Expenses .61 4
Net investment income 5.70 4
Portfolio turnover rate (%) 11.92
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS B (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.52
Net investment income .29
Net realized and unrealized losses (.47)
Total from investment operations (.18)
Distributions from net investment
income (.30) 5
Distributions from net realized gains -8
Net asset value, end of period 11.04
Total return (%) 3 (1.60)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 72,071
Ratios to average net assets: (%)
Expenses 1.17 4
Net investment income 5.18 4
Portfolio turnover rate (%) 11.92
HIGH YIELD FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.56
Net investment income .29
Net realized and unrealized
gains (losses) (.48)
Total from investment operations (.19)
Distributions from net investment
income (.30) 5
Distributions from net realized gains -8
Total distributions (.30)
Net asset value, end of period 11.07
Total return (%) 3 (1.76)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 631,669
Ratios to average net assets: (%)
Expenses 1.17 4
Net investment income 5.14 4
Portfolio turnover rate (%) 11.92
NEW JERSEY FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.96
Net investment income .30
Net realized and unrealized
gains (losses) (.54)
Total from investment operations (.24)
Distributions from net investment
income (.31) 9
Distributions from net realized gains -8
Net asset value, end of period 11.41
Total return (%) 3 (2.05)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 677,939
Ratios to average net assets: (%)
Expenses .66 4
Net investment income 5.06 4
Portfolio turnover rate (%) 5.59
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 12.03
Net investment income .26
Net realized and unrealized
gains (losses) (.55)
Total from investment operations (.29)
Distributions from net investment
income (.27) 2
Distributions from net realized gains -8
Net asset value, end of period 11.47
Total return (%) 3 (2.40)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 51,770
Ratios to average net assets: (%)
Expenses 1.22 4
Net investment income 4.50 4
Portfolio turnover rate (%) 5.59
OREGON FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.83
Net investment income .29
Net realized and unrealized
gains (losses) (.59)
Total from investment operations (.30)
Distributions from net investment
income (.30)
Net asset value, end of period 11.23
Total return (%) 3 (2.62)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 471,951
Ratios to average net assets: (%)
Expenses .66 4
Net investment income 4.98 4
Portfolio turnover rate (%) 15.60
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.90
Net investment income .26
Net realized and unrealized
gains (losses) (.59)
Total from investment operations (.33)
Distributions from net investment
income (.26)
Net asset value, end of period 11.31
Total return (%) 3 (2.88)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 36,911
Ratios to average net assets: (%)
Expenses 1.22 4
Net investment income 4.44 4
Portfolio turnover rate (%) 15.60
PENNSYLVANIA FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 10.52
Net investment income .27
Net realized and unrealized
gains (losses) (.53)
Total from investment operations (.26)
Distributions from net investment
income (.28) 5
Net asset value, end of period 9.98
Total return (%) 3 (2.61)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 707,102
Ratios to average net assets: (%)
Expenses .66 4
Net investment income 5.16 4
Portfolio turnover rate (%) 12.92
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 10.57
Net investment income .24
Net realized and unrealized
gains (losses) (.54)
Total from investment operations (.30)
Distributions from net investment
income (.24) 10
Net asset value, end of period 10.03
Total return (%) 3 (2.87)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 44,774
Ratios to average net assets: (%)
Expenses 1.22 4
Net investment income 4.60 4
Portfolio turnover rate (%) 12.92
PUERTO RICO FUND SIX MONTHS ENDED
AUGUST 31, 1999
CLASS A (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.88
Net investment income .29
Net realized and unrealized
gains (losses) (.49)
Total from investment operations (.20)
Distributions from net investment
income (.29) 11
Distributions from net realized gains (.02)
Total distributions (.31)
Net asset value, end of period 11.37
Total return (%) 3 (1.74)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 211,036
Ratios to average net assets: (%)
Expenses .76 4
Net investment income 4.98 4
Portfolio turnover rate (%) 6.14
SIX MONTHS ENDED
AUGUST 31, 1999
CLASS C (UNAUDITED) 1
- -------------------------------------------------------------------
PER SHARE DATA ($)
Net asset value, beginning of period 11.89
Net investment income .26
Net realized and unrealized
gains (losses) (.48)
Total from investment operations (.22)
Distributions from net investment
income (.26) 11
Distributions from net realized gains (.02)
Total distributions (.28)
Net asset value, end of period 11.39
Total return (%) 3 (1.94)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period ($ x 1,000) 8,002
Ratios to average net assets: (%)
Expenses 1.32 4
Net investment income 4.42 4
Portfolio turnover rate (%) 6.14
1. Based on average shares outstanding.
2. Includes distributions in excess of net investment income in the amount of
$.006.
3. Total return does not include sales charges, and is not annualized.
4. Annualized.
5. Includes distributions in excess of net investment income in the amount of
$.005.
6. Includes distributions in excess of net investment income in the amount of
$.009.
7. Includes distributions in excess of net investment income in the amount of
$.008.
8. Includes distributions of net realized capital gains in the amount of $.003.
9. Includes distributions of net realized capital gains in the amount of $.007.
10. Includes distributions in excess of net investment income in the amount of
$.004.
11. Includes distributions in excess of net investment income in the amount of
$.001.
VII. In the section "Choosing a Share Class", which begins on page 43, the
following changes are made:
(a) The first chart on page 43 is replaced with the following:
CLASS B (ARIZONA, CLASS C (ALL FUNDS
HIGH YIELD, NEW EXCEPT FEDERAL
JERSEY AND INTERMEDIATE)
CLASS A PENNSYLVANIA FUNDS
ONLY)
- ----------------------------------------------------------------------
o Initial sales charge o No initial sales o Initial sales
of 2.25% or less charge charge of 1%
(Federal
Intermediate Fund)
or 4.25% or less
(all other funds)
o Deferred sales o Deferred sales o Deferred sales
charge of 1% on charge of 4% on charge of 1% on
purchases of $1 shares you sell shares you sell
million or more sold within the first within 18 months
within 12 months year, declining to
1% within six
years and
eliminated after
that
CLASS B (ARIZONA, CLASS C (ALL FUNDS
HIGH YIELD, NEW EXCEPT FEDERAL
JERSEY AND INTERMEDIATE)
CLASS A PENNSYLVANIA FUNDS
ONLY)
- ----------------------------------------------------------------------
o Lower annual o Higher annual o Higher annual
expenses than Class expenses than expenses than Class
B or C due to lower Class A (same as A (same as Class B)
distribution fees Class C) due to due to higher
higher distribution fees.
distribution fees. No conversion to
Automatic Class A shares, so
conversion to annual expenses do
Class A shares not decrease.
after eight years,
reducing future
annual expenses.
THE ARIZONA, NEW JERSEY AND PENNSYLVANIA FUNDS BEGAN OFFERING CLASS
B SHARES ON FEBRUARY 1, 2000.
(b) The section "Sales Charges - Class B (High Yield Fund Only)" is renamed
"Sales Charges - Class B".
VIII. The section "Sales Charge Waivers" on page 48 is replaced with the
following:
SALES CHARGE WAIVERS Class A shares may be purchased without an initial sales
charge or CDSC by various individuals and institutions or by investors who
reinvest certain distributions and proceeds within 365 days. Certain investors
also may buy Class C shares without an initial sales charge. The CDSC for each
class may be waived for certain redemptions and distributions. If you would like
information about available sales charge waivers, call your investment
representative or call Shareholder Services at 1-800/632-2301. A list of
available sales charge waivers also may be found in the Statement of Additional
Information (SAI).
IX. The following sentence is added after the minimum investments table on page
48:
Please note that you may only buy shares of a fund eligible for sale in your
state or jurisdiction.
X. In the Selling Shares table on page 54 the section "By Wire" is replaced with
the following:
- ----------------------------------------------------------------------
[Insert graphic of You can call or write to have redemption
three lightning proceeds sent to a bank account. See the
bolts] BY ELECTRONIC policies above for selling shares by mail or
FUNDS phone.
TRANSFER (ACH)
Before requesting to have redemption proceeds sent to a
bank account, please make sure we have your bank account
information on file. If we do not have this information,
you will need to send written instructions with your
bank's name and address, a voided check or savings
account deposit slip, and a signature guarantee if the
ownership of the bank and fund accounts is different.
If we receive your request in proper form by
1:00 p.m. Pacific time, proceeds sent by ACH
generally will be available within two to
three business days.
- ----------------------------------------------------------------------
XI. The section "Statements and Reports" on page 55 is replaced with the
following:
STATEMENTS AND REPORTS You will receive quarterly account statements that show
all your account transactions during the quarter. You also will receive written
notification after each transaction affecting your account (except for
distributions and transactions made through automatic investment or withdrawal
programs, which will be reported on your quarterly statement). You also will
receive the fund's financial reports every six months. To reduce fund expenses,
we try to identify related shareholders in a household and send only one copy of
the financial reports. If you need additional copies, please call 1-800/DIAL
BEN.
If there is a dealer or other investment representative of record on your
account, he or she also will receive copies of all notifications and statements
and other information about your account directly from the fund.
XII. The section "Dealer Compensation" on page 57 is replaced with the
following:
DEALER COMPENSATION Qualifying dealers who sell fund shares may receive sales
commissions and other payments. These are paid by Franklin Templeton
Distributors, Inc. (Distributors) from sales charges, distribution and service
(12b-1) fees and its other resources.
ALL FUNDS (EXCEPT FEDERAL INTERMEDIATE) CLASS A CLASS B CLASS C
- -------------------------------------------------------------------
COMMISSION (%) - 3.00 2.00
Investment under $100,000 4.00 - -
$100,000 but under $250,000 3.25 - -
$250,000 but under $500,000 2.25 - -
$500,000 but under $1 million 1.85 - -
$1 million or more up to 0.75 1 - -
12B-1 FEE TO DEALER 0.10 0.15 2 0.65 3
FEDERAL INTERMEDIATE FUND
- -------------------------------------------------------------------
COMMISSION (%) -
Investment under $100,000 2.00
$100,000 but under $250,000 1.50
$250,000 but under $500,000 1.00
$500,000 but under $1 million 0.85
$1 million or more up to 0.75 1
12B-1 FEE TO DEALER 0.10
A dealer commission of up to 1% may be paid on Class C NAV purchases. A dealer
commission of up to 0.25% may be paid on Class A NAV purchases by certain trust
companies and bank trust departments, eligible governmental authorities, and
broker-dealers or others on behalf of clients participating in comprehensive fee
programs.
1. During the first year after purchase, dealers may not be eligible to receive
the 12b-1 fee.
2. Dealers may be eligible to receive up to 0.15% from the date of purchase.
After 8 years, Class B shares convert to Class A shares and dealers may then
receive the 12b-1 fee applicable to Class A.
3. Dealers may be eligible to receive up to 0.15% during the first year after
purchase and may be eligible to receive the full 12b-1 fee starting in the 13th
month.
Please keep this supplement for future reference.
o TF1 SA-2
SUPPLEMENT DATED FEBRUARY 1, 2000
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN TAX-FREE TRUST
(TF1 - FRANKLIN ARIZONA INSURED, FLORIDA INSURED, INSURED,
MASSACHUSETTS INSURED,
MICHIGAN INSURED, MINNESOTA INSURED AND OHIO INSURED TAX-FREE
INCOME FUNDS)
DATED JULY 1, 1999, AS AMENDED JANUARY 1, 2000
The Statement of Additional Information is amended as follows:
I. As of February 1, 2000, the Insured, Michigan and Ohio Funds offer three
classes of shares: Class A, Class B and Class C.
II. The following is added at the end of the second paragraph on page 1:
The unaudited financial statements in the funds' Semiannual Report to
Shareholders, for the six-month period ended August 31, 1999, also are
incorporated by reference.
III. The third paragraph in the section "Organization, Voting Rights and
Principal Holders" is replaced with the following:
The Insured, Michigan and Ohio Funds currently offer three classes of shares,
Class A, Class B and Class C. The funds began offering Class B shares on
February 1, 2000. The Massachusetts and Minnesota Funds currently offer two
classes of shares, Class A and Class C. The full title of each class is:
o Franklin Insured Tax-Free Income Fund - Class A
o Franklin Insured Tax-Free Income Fund - Class B
o Franklin Insured Tax-Free Income Fund - Class C
o Franklin Massachusetts Insured Tax-Free Income Fund - Class A
o Franklin Massachusetts Insured Tax-Free Income Fund - Class C
o Franklin Michigan Insured Tax-Free Income Fund - Class A
o Franklin Michigan Insured Tax-Free Income Fund - Class B
o Franklin Michigan Insured Tax-Free Income Fund - Class C
o Franklin Minnesota Insured Tax-Free Income Fund - Class A
o Franklin Minnesota Insured Tax-Free Income Fund - Class C
o Franklin Ohio Insured Tax-Free Income Fund - Class A
o Franklin Ohio Insured Tax-Free Income Fund - Class B
o Franklin Ohio Insured Tax-Free Income Fund - Class C
IV. The following is added to the section "Organization, Voting Rights and
Principal Holders":
As of January 3, 2000, the officers and board members, as a group, owned of
record and beneficially less than 1% of the outstanding shares of each fund and
class.
V. The first sentence of the section "Initial sales charges" on page 17 is
revised to read:
The maximum initial sales charge is 4.25% for Class A and 1% for Class C. There
is no initial sales charge for Class B.
VI. The last sentence of the first waiver category in the section "Waivers for
investments from certain payments" on page 18 is revised to read:
This waiver category also applies to Class B and C shares.
VII. The following is added after the first paragraph in the section "Contingent
deferred sales charge (CDSC)" on page 20:
For Class B shares, there is a CDSC if you sell your shares within six years, as
described in the table below. The charge is based on the value of the shares
sold or the net asset value at the time of purchase, whichever is less.
IF YOU SELL YOUR CLASS B SHARES THIS % IS DEDUCTED FROM
WITHIN THIS MANY YEARS AFTER BUYING THEM YOUR PROCEEDS AS A CDSC
- ----------------------------------------------------------------------
1 Year 4
2 Years 4
3 Years 3
4 Years 3
5 Years 2
6 Years 1
7 Years 0
VIII. The section "The Class C Plan", found on page 24 under "Distribution and
service (12b-1) fees", is replaced with the following:
The Class B and C plans. Under the Class B and C plans, each fund pays
Distributors up to 0.50% per year of the class's average daily net assets,
payable monthly for Class B and quarterly for Class C, to pay Distributors or
others for providing distribution and related services and bearing certain
expenses. All distribution expenses over this amount will be borne by those who
have incurred them. The fund also may pay a servicing fee of up to 0.15% per
year of the class's average daily net assets, payable monthly for Class B and
quarterly for Class C. This fee may be used to pay securities dealers or others
for, among other things, helping to establish and maintain customer accounts and
records, helping with requests to buy and sell shares, receiving and answering
correspondence, monitoring dividend payments from the fund on behalf of
customers, and similar servicing and account maintenance activities.
The expenses relating to each of the Class B and C plans also are used to pay
Distributors for advancing the commission costs to securities dealers with
respect to the initial sale of Class B and C shares. Further, the expenses
relating to the Class B plan may be used by Distributors to pay third party
financing entities that have provided financing to Distributors in connection
with advancing commission costs to securities dealers.
IX. The section "The Class A and C Plans," found on page 24 under "Distribution
and service (12b-1) fees", is renamed "The Class A, B and C Plans."
X. The following information is added to the applicable sections under
"Performance", which begins on page 25:
Average annual total return
The average annual total returns for the indicated periods ended August 31,
1999, were:
SINCE
INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION
DATE (%) (%) (%) (%)
- -------------------------------------------------------------------
CLASS A
Arizona Fund 4/30/93 -5.56 5.52 - 4.85
Florida Fund 4/30/93 -4.89 5.65 - 4.45
Insured Fund 4/03/85 -4.54 4.58 6.23 7.50
Massachusetts Fund 4/03/85 -4.88 4.60 6.05 6.84
Michigan Fund 4/03/85 -3.84 4.82 6.27 7.25
Minnesota Fund 4/03/85 -4.58 4.15 5.76 7.11
Ohio Fund 4/03/85 -4.06 4.69 6.21 7.22
SINCE
INCEPTION
1 YEAR (5/1/95)
(%) (%)
- -------------------------------------------------------------------
CLASS C
Insured Fund -2.72 4.73
Massachusetts Fund -3.08 4.64
Michigan Fund -1.99 5.01
Minnesota Fund -2.83 4.23
Ohio Fund -2.37 4.86
CUMULATIVE TOTAL RETURN
The cumulative total returns for the indicated periods ended August 31, 1999,
were:
SINCE
INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION
DATE (%) (%) (%) (%)
- -------------------------------------------------------------------
CLASS A
Arizona Fund 4/30/93 -5.56 30.85 - 34.97
Florida Fund 4/30/93 -4.89 31.64 - 31.78
Insured Fund 4/03/85 -4.54 25.08 83.01 183.67
Massachusetts Fund 4/03/85 -4.88 25.19 79.90 159.35
Michigan Fund 4/03/85 -3.84 26.53 83.70 174.05
Minnesota Fund 4/03/85 -4.58 22.56 75.08 168.94
Ohio Fund 4/03/85 -4.06 25.73 82.67 173.14
SINCE
INCEPTION
1 YEAR (5/1/95)
(%) (%)
- -------------------------------------------------------------------
CLASS C
Insured Fund -2.72 22.19
Massachusetts Fund -3.08 21.73
Michigan Fund -1.99 23.59
Minnesota Fund -2.83 19.66
Ohio Fund -2.37 22.88
CURRENT YIELD
The yields for the 30-day period ended August 31, 1999, were:
CLASS A CLASS C
(%) (%)
- -------------------------------------------------------------------
Arizona Fund 4.36 -
Florida Fund 4.42 -
Insured Fund 4.49 4.08
Massachusetts Fund 4.37 3.94
Michigan Fund 4.33 3.90
Minnesota Fund 4.44 4.03
Ohio Fund 4.45 4.02
TAXABLE-EQUIVALENT YIELD
The taxable-equivalent yields for the 30-day period ended August 31, 1999, were:
CLASS A CLASS C
(%) (%)
- -------------------------------------------------------------------
Arizona Fund 7.60 -
Florida Fund 7.32 -
Insured Fund 7.43 6.75
Massachusetts Fund 7.69 6.94
Michigan Fund 7.50 6.75
Minnesota Fund 8.03 7.29
Ohio Fund 7.91 7.14
CURRENT DISTRIBUTION RATE
The current distribution rates for the 30-day period ended August 31, 1999,
were:
CLASS A CLASS C
(%) (%)
- -------------------------------------------------------------------
Arizona Fund 4.50 -
Florida Fund 4.55 -
Insured Fund 4.98 4.59
Massachusetts Fund 4.91 4.50
Michigan Fund 4.85 4.44
Minnesota Fund 4.83 4.41
Ohio Fund 4.83 4.41
The taxable-equivalent distribution rates for the 30-day period ended August 31,
1999, were:
CLASS A CLASS C
(%) (%)
- -------------------------------------------------------------------
Arizona Fund 7.85 -
Florida Fund 7.53 -
Insured Fund 8.25 7.60
Massachusetts Fund 8.64 7.92
Michigan Fund 8.40 7.69
Minnesota Fund 8.74 7.98
Ohio Fund 8.58 7.83
Please keep this supplement for future reference.
O TF2 SA-2
SUPPLEMENT DATED FEBRUARY 1, 2000
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN TAX-FREE TRUST
(TF2 - FRANKLIN ALABAMA, FLORIDA, GEORGIA, KENTUCKY, LOUISIANA,
MARYLAND,MISSOURI, NORTH CAROLINA, TEXAS AND VIRGINIA TAX-FREE
INCOME FUNDS)
DATED JULY 1, 1999, AS AMENDED JANUARY 1, 2000
The Statement of Additional Information is amended as follows:
I. As of February 1, 2000, the Florida Fund offers three classes of shares:
Class A, Class B and Class C.
II. The following is added at the end of the second paragraph on page 1:
The unaudited financial statements in the funds' Semiannual Report to
Shareholders, for the six-month period ended August 31, 1999, also are
incorporated by reference.
III. The third paragraph in the section "Organization, Voting Rights and
Principal Holders" is replaced with the following:
Each fund, except the Florida and Kentucky Funds, currently offers two classes
of shares, Class A and Class C. The Florida Fund currently offers three classes
of shares, Class A, Class B and Class C. The Florida Fund began offering Class B
shares on February 1, 2000. The full title of each class is:
o Franklin Alabama Tax-Free Income Fund - Class A
o Franklin Alabama Tax-Free Income Fund - Class C
o Franklin Florida Tax-Free Income Fund - Class A
o Franklin Florida Tax-Free Income Fund - Class B
o Franklin Florida Tax-Free Income Fund - Class C
o Franklin Georgia Tax-Free Income Fund - Class A
o Franklin Georgia Tax-Free Income Fund - Class C
o Franklin Louisiana Tax-Free Income Fund - Class A
o Franklin Louisiana Tax-Free Income Fund - Class C
o Franklin Maryland Tax-Free Income Fund - Class A
o Franklin Maryland Tax-Free Income Fund - Class C
o Franklin Missouri Tax-Free Income Fund - Class A
o Franklin Missouri Tax-Free Income Fund - Class C
o Franklin North Carolina Tax-Free Income Fund - Class A
o Franklin North Carolina Tax-Free Income Fund - Class C
o Franklin Texas Tax-Free Income Fund - Class A
o Franklin Texas Tax-Free Income Fund - Class C
o Franklin Virginia Tax-Free Income Fund - Class A
o Franklin Virginia Tax-Free Income Fund - Class C
IV. The following is added to the section "Organization, Voting Rights and
Principal Holders":
As of January 3, 2000, the principal shareholders of the funds, beneficial or of
record, were:
PERCENTAGE
NAME AND ADDRESS SHARE CLASS (%)
- -------------------------------------------------------------------
TEXAS FUND
Family Ltd. Partnership Class C 6.64
Alo Family Limited
4512 Teas St.
Bellaire, TX 77401-4223
PaineWebber For the Benefit of
Timothy A. Costello Class C 6.45
9501 Bell Mountain Dr.
Austin, TX 78730-2712
As of January 3, 2000, the officers and board members, as a group, owned of
record and beneficially less than 1% of the outstanding shares of each fund and
class.
V. The first sentence of the section "Initial sales charges" on page 17 is
revised to read:
The maximum initial sales charge is 4.25% for Class A and 1% for Class C. There
is no initial sales charge for Class B.
VI. The last sentence of the first waiver category in the section "Waivers for
investments from certain payments" on page 18 is revised to read:
This waiver category also applies to Class B and C shares.
VII. The following is added after the first paragraph in the section "Contingent
deferred sales charge (CDSC)" on page 20:
For Class B shares, there is a CDSC if you sell your shares within six years, as
described in the table below. The charge is based on the value of the shares
sold or the net asset value at the time of purchase, whichever is less.
IF YOU SELL YOUR CLASS B SHARES THIS % IS DEDUCTED FROM
WITHIN THIS MANY YEARS AFTER BUYING THEM YOUR PROCEEDS AS A CDSC
- ----------------------------------------------------------------------
1 Year 4
2 Years 4
3 Years 3
4 Years 3
5 Years 2
6 Years 1
7 Years 0
VIII. The section "The Class C Plan", found on page 24 under "Distribution and
service (12b-1) fees", is replaced with the following:
THE CLASS B AND C PLANS. Under the Class B and C plans, each fund pays
Distributors up to 0.50% per year of the class's average daily net assets,
payable monthly for Class B and quarterly for Class C, to pay Distributors or
others for providing distribution and related services and bearing certain
expenses. All distribution expenses over this amount will be borne by those who
have incurred them. The fund also may pay a servicing fee of up to 0.15% per
year of the class's average daily net assets, payable monthly for Class B and
quarterly for Class C. This fee may be used to pay securities dealers or others
for, among other things, helping to establish and maintain customer accounts and
records, helping with requests to buy and sell shares, receiving and answering
correspondence, monitoring dividend payments from the fund on behalf of
customers, and similar servicing and account maintenance activities.
The expenses relating to each of the Class B and C plans also are used to pay
Distributors for advancing the commission costs to securities dealers with
respect to the initial sale of Class B and C shares. Further, the expenses
relating to the Class B plan may be used by Distributors to pay third party
financing entities that have provided financing to Distributors in connection
with advancing commission costs to securities dealers.
IX. The section "The Class A and C Plans," found on page 24 under "Distribution
and service (12b-1) fees", is renamed "The Class A, B and C Plans."
X. The following information is added to the applicable sections under
"Performance", which begins on page 25:
AVERAGE ANNUAL TOTAL RETURN
The average annual total returns for the indicated periods ended August 31,
1999, were:
SINCE
INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION
DATE (%) (%) (%) (%)
- -------------------------------------------------------------------
CLASS A
Alabama Fund 09/01/87 -4.48 4.54 6.21 6.76
Florida Fund 09/01/87 -4.08 4.90 6.52 7.14
Georgia Fund 09/01/87 -4.61 4.55 6.23 6.83
Kentucky Fund 10/12/91 -5.05 5.27 - 6.11
Louisiana Fund 09/01/87 -4.87 4.65 6.23 6.79
Maryland Fund 10/03/88 -4.80 4.98 6.34 6.47
Missouri Fund 09/01/87 -5.07 4.89 6.51 6.93
North Carolina Fund 09/01/87 -4.86 4.73 6.19 6.87
Texas Fund 09/01/87 -4.73 4.74 6.36 7.03
Virginia Fund 09/01/87 -5.16 4.67 6.34 6.90
SINCE
INCEPTION
1 YEAR (5/1/95)
(%) (%)
- -------------------------------------------------------------------
CLASS C
Alabama Fund -2.76 4.68
Florida Fund -2.39 5.06
Georgia Fund -2.81 4.65
Louisiana Fund -3.12 4.93
Maryland Fund -3.05 5.14
Missouri Fund -3.33 5.04
North Carolina Fund -3.17 4.92
Texas Fund -3.02 5.18
Virginia Fund -3.33 4.86
CUMULATIVE TOTAL RETURN
The cumulative total returns for the indicated periods ended August 31, 1999,
were:
SINCE
INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION
DATE (%) (%) (%) (%)
- -------------------------------------------------------------------
CLASS A
Alabama Fund 09/01/87 -4.48 24.85 82.62 119.24
Florida Fund 09/01/87 -4.08 27.05 88.08 128.84
Georgia Fund 09/01/87 -4.61 24.89 83.01 121.07
Kentucky Fund 10/12/91 -5.05 29.29 - 59.62
Louisiana Fund 09/01/87 -4.87 25.49 83.01 119.90
Maryland Fund 10/03/88 -4.80 27.49 84.99 98.28
Missouri Fund 09/01/87 5.07 26.94 87.83 123.55
North Carolina Fund 09/01/87 -4.86 25.97 82.32 122.03
Texas Fund 09/01/87 -4.73 26.04 85.29 125.87
Virginia Fund 09/01/87 -5.16 25.64 84.84 122.76
SINCE
INCEPTION
1 YEAR (5/1/95)
(%) (%)
- -------------------------------------------------------------------
CLASS C
Alabama Fund -2.76 21.94
Florida Fund -2.39 23.85
Georgia Fund -2.81 21.80
Louisiana Fund -3.12 23.23
Maryland Fund -3.05 24.28
Missouri Fund -3.33 23.77
North Carolina Fund -3.17 23.15
Texas Fund -3.02 24.47
Virginia Fund -3.33 22.83
CURRENT YIELD
The yields for the 30-day period ended August 31, 1999, were:
CLASS A CLASS C
(%) (%)
- -------------------------------------------------------------------
Alabama Fund 4.78 4.39
Florida Fund 4.47 4.08
Georgia Fund 4.48 4.08
Kentucky Fund 4.85 -
Louisiana Fund 4.71 4.32
Maryland Fund 4.57 4.17
Missouri Fund 4.61 4.23
North Carolina Fund 4.55 4.16
Texas Fund 4.59 4.20
Virginia Fund 4.55 4.15
TAXABLE-EQUIVALENT YIELD
The taxable-equivalent yields for the 30-day period ended August 31, 1999, were:
CLASS A CLASS C
(%) (%)
- -------------------------------------------------------------------
Alabama Fund 8.33 7.65
Florida Fund 7.40 6.75
Georgia Fund 7.89 7.19
Kentucky Fund 8.54 -
Louisiana Fund 8.30 7.61
Maryland Fund 8.20 7.49
Missouri Fund 8.12 7.45
North Carolina Fund 8.17 7.47
Texas Fund 7.60 6.95
Virginia Fund 7.99 7.29
CURRENT DISTRIBUTION RATE
The current distribution rates for the 30-day period ended August 31, 1999,
were:
CLASS A CLASS C
(%) (%)
- -------------------------------------------------------------------
Alabama Fund 5.17 4.76
Florida Fund 5.06 4.65
Georgia Fund 4.95 4.43
Kentucky Fund 5.10 -
Louisiana Fund 5.12 4.74
Maryland Fund 4.78 4.35
Missouri Fund 4.99 4.59
North Carolina Fund 4.93 4.52
Texas Fund 5.09 4.71
Virginia Fund 4.95 4.54
The taxable-equivalent distribution rates for the 30-day period ended August 31,
1999, were:
CLASS A CLASS C
(%) (%)
- -------------------------------------------------------------------
Alabama Fund 9.01 8.30
Florida Fund 8.38 7.70
Georgia Fund 8.72 7.80
Kentucky Fund 8.98 -
Louisiana Fund 9.02 8.35
Maryland Fund 8.58 7.81
Missouri Fund 8.79 8.08
North Carolina Fund 8.85 8.11
Texas Fund 8.43 7.80
Virginia Fund 8.70 7.98
Please keep this supplement for future reference.
O TF3 SA-2
SUPPLEMENT DATED FEBRUARY 1, 2000
TO THE STATEMENT OF ADDITIONAL INFORMATION OF
FRANKLIN TAX-FREE TRUST
(TF3 - FRANKLIN ARIZONA, COLORADO, CONNECTICUT, FEDERAL
INTERMEDIATE-TERM, HIGH YIELD, INDIANA, MICHIGAN,
NEW JERSEY, OREGON, PENNSYLVANIA, AND PUERTO RICO TAX-FREE INCOME
FUNDS)
DATED JULY 1, 1999, AS AMENDED JANUARY 1, 2000
The Statement of Additional Information is amended as follows:
I. As of February 1, 2000, the Arizona, New Jersey and Pennsylvania Funds offer
three classes of shares: Class A, Class B and Class C.
II. The following is added at the end of the second paragraph on page 1:
The unaudited financial statements in the funds' Semiannual Report to
Shareholders, for the six-month period ended August 31, 1999, also are
incorporated by reference.
III. The third paragraph in the section "Organization, Voting Rights and
Principal Holders" is replaced with the following:
The Arizona, High Yield, New Jersey and Pennsylvania Funds currently offer three
classes of shares, Class A, Class B and Class C. The Arizona, New Jersey and
Pennsylvania Funds began offering Class B shares on February 1, 2000. The
Colorado, Connecticut, Oregon and Puerto Rico Funds currently offer two classes
of shares, Class A and Class C. The full title of each class is:
o Franklin Arizona Tax-Free Income Fund - Class A
o Franklin Arizona Tax-Free Income Fund - Class B
o Franklin Arizona Tax-Free Income Fund - Class C
o Franklin Colorado Tax-Free Income Fund - Class A
o Franklin Colorado Tax-Free Income Fund - Class C
o Franklin Connecticut Tax-Free Income Fund - Class A
o Franklin Connecticut Tax-Free Income Fund - Class C
o Franklin High Yield Tax-Free Income Fund - Class A
o Franklin High Yield Tax-Free Income Fund - Class B
o Franklin High Yield Tax-Free Income Fund - Class C
o Franklin New Jersey Tax-Free Income Fund - Class A
o Franklin New Jersey Tax-Free Income Fund - Class B
o Franklin New Jersey Tax-Free Income Fund - Class C
o Franklin Oregon Tax-Free Income Fund - Class A
o Franklin Oregon Tax-Free Income Fund - Class C
o Franklin Pennsylvania Tax-Free Income Fund - Class A
o Franklin Pennsylvania Tax-Free Income Fund - Class B
o Franklin Pennsylvania Tax-Free Income Fund - Class C
o Franklin Puerto Rico Tax-Free Income Fund - Class A
o Franklin Puerto Rico Tax-Free Income Fund - Class C
IV. The following is added to the section "Organization, Voting Rights and
Principal Holders":
As of January 3, 2000, the principal shareholder of the funds, beneficial or of
record, was:
PERCENTAGE
NAME AND ADDRESS SHARE CLASS (%)
- -------------------------------------------------------------------
ARIZONA FUND
NFSC FEBO Apr-574678 Class A 6.62
Valley Concrete Materials
P. O. Box 634
Cottonwood, AZ 86326
As of January 3, 2000, the officers and board members, as a group, owned of
record and beneficially less than 1% of the outstanding shares of each fund and
class.
V. The first paragraph of the section "Initial sales charges" on page 18 is
revised to read:
The maximum initial sales charge is 2.25% for the Federal Intermediate Fund. For
each of the other funds, the maximum initial sales charge is 4.25% for Class A
and 1% for Class C. There is no initial sales charge for Class B.
VI. The second paragraph in the section "Contingent deferred sales charge
(CDSC)" on page 20 is revised to read as follows:
For Class B shares, there is a CDSC if you sell your shares within six years, as
described in the table below. The charge is based on the value of the shares
sold or the net asset value at the time of purchase, whichever is less.
VII. The section "The Class B (High Yield Fund only) and C Plans", found on page
24 under "Distribution and service (12b-1) fees", is renamed "The Class B and C
Plans."
VIII. The following information is added to the applicable sections under
"Performance", which begins on page 25:
Average annual total return
The average annual total returns for the indicated periods ended August 31,
1999, were:
SINCE
INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION
DATE (%) (%) (%) (%)
- -------------------------------------------------------------------
CLASS A
Arizona Fund 9/01/87 -4.47 4.60 6.25 6.72
Colorado Fund 9/01/87 -5.16 4.93 6.46 6.97
Connecticut Fund 10/03/88 -5.02 4.53 5.84 6.07
Federal
Intermediate Fund 9/21/92 -1.68 5.23 - 5.81
High Yield Fund 3/18/86 -4.56 5.93 7.11 7.63
New Jersey Fund 5/12/88 -4.13 4.82 6.32 6.90
Oregon Fund 9/01/87 -4.89 4.56 6.00 6.40
Pennsylvania Fund 12/01/86 -4.76 4.78 6.36 6.27
Puerto Rico Fund 4/03/85 -3.76 5.04 6.31 7.13
SINCE
INCEPTION
1 YEAR (5/1/95)
(%) (%)
- -------------------------------------------------------------------
CLASS C
Arizona Fund -2.73 4.79
Colorado Fund -3.38 5.07
Connecticut Fund -3.26 4.82
High Yield Fund -2.81 6.06
New Jersey Fund -2.39 5.03
Oregon Fund -3.04 4.73
Pennsylvania Fund -3.04 4.92
Puerto Rico Fund -1.98 5.19
CUMULATIVE TOTAL RETURN
The cumulative total returns for the indicated periods ended August 31, 1999,
were:
SINCE
INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION
DATE (%) (%) (%) (%)
- -------------------------------------------------------------------
CLASS A
Arizona Fund 9/01/87 -4.47 25.22 83.44 118.20
Colorado Fund 9/01/87 -5.16 27.22 86.95 124.42
Connecticut Fund 10/03/88 -5.02 24.77 76.37 90.35
Federal
Intermediate Fund 9/21/92 -1.68 29.01 - 48.01
High Yield Fund 3/18/86 -4.56 33.39 98.72 168.95
New Jersey Fund 5/12/88 -4.13 26.57 84.55 112.59
Oregon Fund 9/01/87 -4.89 24.99 79.16 110.42
Pennsylvania Fund 12/01/86 -4.76 26.31 85.28 117.21
Puerto Rico Fund 4/03/85 -3.76 27.90 84.33 169.81
SINCE
INCEPTION
(1/1/99)
(%)
- -------------------------------------------------------------------
CLASS B
High Yield Fund -4.50
SINCE
INCEPTION
1 YEAR (5/1/95)
(%) (%)
- -------------------------------------------------------------------
CLASS C
Arizona Fund -2.73 22.50
Colorado Fund -3.38 23.91
Connecticut Fund -3.26 22.64
High Yield Fund -2.81 29.08
New Jersey Fund -2.39 23.72
Oregon Fund -3.04 22.21
Pennsylvania Fund -3.04 23.14
Puerto Rico Fund -1.98 24.56
CURRENT YIELD
The yields for the 30-day period ended August 31, 1999, were:
CLASS A CLASS B CLASS C
(%) (%) (%)
- -------------------------------------------------------------------
Arizona Fund 4.48 - 4.06
Colorado Fund 4.62 - 4.22
Connecticut Fund 4.47 - 4.07
Federal Intermediate Fund 4.10 - -
High Yield Fund 5.28 4.95 4.90
New Jersey Fund 4.46 - 4.06
Oregon Fund 4.49 - 4.10
Pennsylvania Fund 4.68 - 4.27
Puerto Rico Fund 4.41 - 4.00
TAXABLE-EQUIVALENT YIELD
The taxable-equivalent yields for the 30-day period ended August 31, 1999, were:
CLASS A CLASS B CLASS C
(%) (%) (%)
- -------------------------------------------------------------------
Arizona Fund 7.81 - 7.08
Colorado Fund 8.05 - 7.35
Connecticut Fund 7.75 - 7.06
Federal Intermediate Fund 6.79 - -
High Yield Fund 8.74 8.20 8.11
New Jersey Fund 7.89 - 7.18
Oregon Fund 8.17 - 7.46
Pennsylvania Fund 7.97 - 7.27
Puerto Rico Fund 7.30 - 6.62
CURRENT DISTRIBUTION RATE
The current distribution rates for the 30-day period ended August 31, 1999,
were:
CLASS A CLASS B CLASS C
(%) (%) (%)
- -------------------------------------------------------------------
Arizona Fund 5.06 - 4.63
Colorado Fund 4.99 - 4.58
Connecticut Fund 5.00 - 4.60
Federal Intermediate Fund 4.59 - -
High Yield Fund 5.64 5.28 5.28
New Jersey Fund 5.03 - 4.63
Oregon Fund 4.91 - 4.50
Pennsylvania Fund 5.07 - 4.67
Puerto Rico Fund 4.80 - 4.39
The taxable-equivalent distribution rates for the 30-day period ended August 31,
1999, were:
CLASS A CLASS B CLASS C
(%) (%) (%)
- -------------------------------------------------------------------
Arizona Fund 8.82 - 8.07
Colorado Fund 8.70 - 7.98
Connecticut Fund 8.67 - 7.97
Federal Intermediate Fund 7.60 - -
High Yield Fund 9.34 8.74 8.74
New Jersey Fund 8.89 - 8.19
Oregon Fund 8.93 - 8.19
Pennsylvania Fund 8.64 - 7.95
Puerto Rico Fund 7.95 - 7.27
Please keep this supplement for future reference.
FRANKLIN TAX-FREE TRUST
FILE NOS. 02-94222
& 811-4149
FORM N-1A
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS.
The following exhibits are incorporated by reference to the previously
filed document indicated below, except as noted:
(a) Agreement and Declaration of Trust
(i) Restated Agreement and Declaration of Trust dated
October 26, 1984
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(ii) Certificate of Amendment of Agreement and
Declaration of Trust dated July 16, 1991
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(iii)Certificate of Amendment of Agreement and
Declaration of Trust dated April 21, 1992
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(iv) Certificate of Amendment of Agreement and
Declaration of Trust dated December 14, 1993
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(v) Certificate of Amendment of Agreement and
Declaration of Trust dated March 21, 1995
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(vi) Certificate of Secretary
Amendment of Agreement and Declaration
of Trust dated August 31, 1999
(b) By-laws
(i) By-Laws
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(ii) Certificate of Amendment of By-Laws dated December 8, 1987
Filing: Post-Effective Amendment No. 21 to Registration
Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(iii)Amendment to By-Laws dated April 21, 1992
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(iv) Certificate of Amendment of By-Laws dated December
14, 1993
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(v) Amendment to By-Laws dated January 18, 1994
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(c) Instruments Defining Rights of Security Holders
Not Applicable
(d) Investment Advisory Contracts
(i) Management Agreement between Registrant and
Franklin Investment Advisory Services, Inc. on
behalf of Franklin Connecticut Tax-Free Income
Fund dated October 1, 1996
Filing: Post-Effective Amendment No. 24 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: June 27, 1997
(ii) Management Agreement between Registrant and
Franklin Advisers, Inc. dated December 1, 1986
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(iii)Amendment to Management Agreement between
Registrant and Franklin Advisers, Inc. dated
August 1, 1995
Filing: Post-Effective Amendment No. 22 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: March 14, 1996
(iv) Management Agreement between Registrant and
Franklin Advisors on behalf of Franklin
Connecticut Tax-Free Income Fund dated October 1,
1998
(e) Underwriting Contracts
(i) Amended and Restated Distribution Agreement
between Registrant and Franklin/Templeton
Distributors, Inc. dated March 29, 1995
Filing: Post-Effective Amendment No. 22 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: March 14, 1996
(ii) Form of Dealer Agreements effective as of March 1,
1998 between Franklin/Templeton Distributors, Inc.
and Securities Dealers
Filing: Post-Effective Amendment No. 26 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: December 23, 1998
(f) Bonus or Profit Sharing Contracts
Not Applicable
(g) Custodian Agreements
(i) Master Custody Agreement between Registrant and
Bank of New York dated February 16, 1996
Filing: Post-Effective Amendment No. 22 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: March 14, 1996
(ii) Terminal Link Agreement between Registrant and
Bank of New York dated February 16, 1996
Filing: Post-Effective Amendment No. 22 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: March 14, 1996
(iii)Amendment dated May 7, 1997 to Master Custody
Agreement between Registrant and Bank of New York
dated February 16, 1996
Filing: Post-Effective Amendment No. 25 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 29, 1998
(iv) Amendment dated February 27, 1998 to Master
Custody Agreement between Registrant and Bank of
New York dated February 16, 1996
Filing: Post-Effective Amendment No. 26 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: December 23, 1998
(v) Foreign Custody Manager Agreement made as of July
30, 1998, effective as of February 27, 1998 on
behalf of each Investment Company listed on
Schedule 1
Filing: Post-Effective Amendment No. 26 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: December 23, 1998
(vi) Amendment dated September 16, 1999, to Exhibit A of the Master
Custody Agreement between Registrant and the bank of New York
dated February 16, 1996
(h) Other Material Contracts
(i) Agreement between Registrant and Financial
Guaranty Insurance Company dated March 8, 1985
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(ii) Amendment to Agreement between Registrant and
Financial Guaranty Insurance Company dated
November 24, 1992
Registrant: Franklin New York Tax-Free Trust
Filing: Post-Effective Amendment No. 12
to Registration Statement on Form N-1A
File No. 33-7785
Filing Date: April 25, 1995
(iii)Mutual Fund Agreement between Registrant and
Financial Guaranty Insurance Company dated April
30, 1993
Filing: Post-Effective Amendment No. 25 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 29, 1998
(iv) Subcontract for Fund Administrative Services dated
October 1, 1996 and Amendment thereto dated March
11, 1998 between Franklin Advisers, Inc. and
Franklin Templeton Services Inc.
Filing: Post-Effective Amendment No. 25 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 29, 1998
(v) Subcontract for Fund Administrative Services dated
October 1, 1996 and Amendment thereto dated July
1, 1997 between Franklin Investment Advisory
Services, Inc. and Franklin Templeton Services,
Inc.
Filing: Post-Effective Amendment No. 25 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 29, 1998
(i) Legal Opinion
(i) Opinion and Consent of Counsel dated April 17, 1998
Filing: Post-Effective Amendment No. 25 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 29, 1998
(j) Other Opinions
(i) Consent of Independent Auditors
(k) Omitted Financial Statements
Not Applicable
(l) Initial Capital Agreements
(i) Letter of Understanding dated September 21, 1992
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(ii) Letter of Understanding dated April 12, 1995
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(m) Rule 12b-1 Plan
(i) Class I shares Distribution Plans pursuant to Rule 12b-1 on
behalf of the following fund:
Dated June 1, 1996
Franklin Michigan Tax-Free Income Fund
Filing: Post-Effective Amendment No. 24 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: June 27, 1997
(ii) Class I shares Distribution Plans pursuant to Rule 12b-1 on
behalf of the following funds:
Dated July 1, 1993:
Franklin Arizona Insured Tax-Free Income Fund
Franklin Federal Intermediate-Term Tax-Free Income
Fund
Franklin Florida Insured Tax-Free Income Fund
Dated May 1, 1994:
Franklin Alabama Tax-Free Income Fund
Franklin Arizona Tax-Free Income Fund
Franklin Colorado Tax-Free Income Fund
Franklin Connecticut Tax-Free Income Fund
Franklin Florida Tax-Free Income Fund
Franklin Georgia Tax-Free Income Fund
Franklin High Yield Tax-Free Income Fund
Franklin Indiana Tax-Free Income Fund
Franklin Insured Tax-Free Income Fund
Franklin Kentucky Tax-Free Income Fund
Franklin Louisiana Tax-Free Income Fund
Franklin Maryland Tax-Free Income Fund
Franklin Massachusetts Insured Tax-Free Income Fund
Franklin Michigan Insured Tax-Free Income Fund
Franklin Minnesota Insured Tax-Free Income Fund
Franklin Missouri Tax-Free Income Fund
Franklin New Jersey Tax-Free Income Fund
Franklin North Carolina Tax-Free Income Fund
Franklin Ohio Insured Tax-Free Income Fund
Franklin Oregon Tax-Free Income Fund
Franklin Pennsylvania Tax-Free Income Fund
Franklin Puerto Rico Tax-Free Income Fund
Franklin Texas Tax-Free Income Fund
Franklin Virginia Tax-Free Income Fund
Filing: Post-Effective Amendment No. 21 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 28, 1995
(iii)Class II shares Distribution Plan pursuant to Rule 12b-1 on
behalf of the following funds:
Dated March 30, 1995:
Franklin Alabama Tax-Free Income Fund - Class II
Franklin Arizona Tax-Free Income Fund - Class II
Franklin Colorado Tax-Free Income Fund - Class II
Franklin Connecticut Tax-Free Income Fund - Class II
Franklin Florida Tax-Free Income Fund - Class II
Franklin Georgia Tax-Free Income Fund - Class II
Franklin High Yield Tax-Free Income Fund - Class II
Franklin Insured Tax-Free Income Fund - Class II
Franklin Louisiana Tax-Free Income Fund - Class II
Franklin Maryland Tax-Free Income Fund- Class II
Franklin Massachusetts Insured Tax-Free Income Fund -
Class II
Franklin Michigan Insured Tax-Free Income Fund - Class II
Franklin Minnesota Insured Tax-Free Income Fund - Class
II
Franklin Missouri Tax-Free Income Fund - Class II
Franklin New Jersey Tax-Free Income Fund - Class II
Franklin North Carolina Tax-Free Income Fund - Class II
Franklin Ohio Insured Tax-Free Income Fund - Class II
Franklin Oregon Tax-Free Income Fund - Class II
Franklin Pennsylvania Tax-Free Income Fund - Class II
Franklin Puerto Rico Tax-Free Income Fund - Class II
Franklin Texas Tax-Free Income Fund - Class II
Franklin Virginia Tax-Free Income Fund - Class II
Filing: Post-Effective Amendment No. 22 to Registration
Statement on Form N-1A
File No. 2-94222
Filing Date: March 14, 1996
(iv) Distribution Plan dated October 16, 1998 pursuant
to Rule 12b-1 between the Registrant on behalf of
Franklin High Yield Tax-Free Income Fund - Class B
and Franklin/Templeton Distributors, Inc.
Filing: Post-Effective Amendment No. 26 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: December 23, 1998
(v) Form of Class B Distribution Plan pursuant to Rule 12b-1 on
behalf of the following funds:
Franklin Arizona Tax-Free Income Fund - Class B
Franklin Florida Tax-Free Income Fund - Class B
Franklin Insured Tax-Free Income Fund - Class B
Franklin Michigan Inured Tax-Free Income Fund - Class B
Franklin New Jersey Tax-Free Income Fund - Class B
Franklin Ohio Insured Tax-Free Income Fund - Class B
Franklin Pennsylvania Tax-Free Income Fund - Class B
((o) Rule 18f-3 Plan
(i) Multiple Class Plan dated October 19, 1995
Filing: Post-Effective Amendment No. 25 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 29, 1998
(ii) Multiple Class Plan dated March 19, 1998 on behalf
of Franklin High Yield Tax-Free Income Fund
Filing: Post-Effective Amendment No. 27 to
Registration Statement on Form N-1A
File No. 2-94222
Filing Date: April 29, 1999
(iii)Form of Multiple Class Plan on behalf of Franklin
Arizona Tax-Free Income Fund
(iv) Form of Multiple Class Plan on behalf of Franklin
Florida Tax-Free Income Fund
(v) Form of Multiple Class Plan on behalf of Franklin
Insured Tax-Free Income Fund
(vi) Form of Multiple Class Plan on behalf of Franklin
Michigan Insured Tax-Free Income Fund
(vii)Form of Multiple Class Plan on behalf of Franklin
New Jersey Tax-Free Income Fund
(viii)Form of Multiple Class Plan on behalf of Franklin
Ohio Insured Tax-Free Income Fund
(ix) Form of Multiple Class Plan on behalf of Franklin
Pennsylvania Tax-Free Income Fund
(p) Power of Attorney
(i) Power of Attorney dated January 20, 2000
(ii) Certificate of Secretary dated January 27, 2000
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
FUND
None
ITEM 25. INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
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 Registrant of expenses incurred
or paid by a trustee, officer or controlling person of the Registrant 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 Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a Court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
The officers and trustees of the Registrant's managers also serve as officers
and/or trustees for (1) the manager's corporate parent, Franklin Resources,
Inc., and/or (2) other investment companies in the Franklin Templeton Group of
Funds. In addition Mr. Charles B. Johnson was formerly a director of General
Host Corporation. For additional information please see Part B and Schedules A
and D of Form ADV of the Funds' Investment Managers, Franklin Advisers, Inc.
(SEC File 801-26292) and Franklin Investment Advisory Services, Inc. (SEC File
801-52152), incorporated herein by reference, which sets forth the officers and
trustees of the investment managers and information as to any business,
profession, vocation or employment of a substantial nature engaged in by those
officers and trustees during the past two years.
ITEM 27. PRINCIPAL UNDERWRITERS
a) Franklin/Templeton Distributors, Inc., (Distributors) also acts as principal
underwriter of shares of:
Franklin Asset Allocation Fund
Franklin California Tax-Free Income Fund, Inc.
Franklin California Tax-Free Trust
Franklin Custodian Funds, Inc. Franklin Equity Fund Franklin Federal Money Fund
Franklin Federal Tax-Free Income Fund Franklin Floating Rate Trust Franklin Gold
Fund Franklin High Income Trust Franklin Investors Securities Trust Franklin
Managed Trust Franklin Money Fund Franklin Mutual Series Fund Inc. Franklin
Municipal Securities Trust Franklin New York Tax-Free Income Fund Franklin New
York Tax-Free Trust Franklin Real Estate Securities Trust Franklin Strategic
Mortgage Portfolio Franklin Strategic Series Franklin Tax-Exempt Money Fund
Franklin Templeton Fund Allocator Series
Franklin Templeton Global Trust
Franklin Templeton International Trust
Franklin Templeton Money Fund Trust
Franklin Value Investors Trust
Franklin Templeton Variable Insurance Products Trust
(formerly Franklin Valuemark Funds)
Institutional Fiduciary Trust
Templeton Capital Accumulator Fund, Inc.
Templeton Developing Markets Trust
Templeton Funds, Inc.
Templeton Global Investment Trust
Templeton Global Opportunities Trust
Templeton Global Real Estate Fund
Templeton Global Smaller Companies Fund, Inc.
Templeton Growth Fund, Inc.
Templeton Income Trust
Templeton Institutional Funds, Inc.
Templeton Variable Products Series Fund
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books or other documents required to be maintained by Section 31
(a) of the Investment Company Act of 1940 are kept by the Registrant or its
shareholder services agent, Franklin/Templeton Investors Services, Inc., both of
whose address is 777 Mariners Island Blvd., San Mateo, CA. 94404.
ITEM 29. MANAGEMENT SERVICES
There are no management-related service contracts not discussed in Part A or
Part B.
ITEM 30. UNDERTAKINGS
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Mateo and the State of California, on the 27th day
of January, 2000.
FRANKLIN TAX-FREE TRUST
By: RUPERT H. JOHNSON, JR.*
Rupert H. Johnson, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Amendment has been signed below by the following persons in the capacities and
on the dates indicated:
RUPERT H. JOHNSON, JR.* Trustee and Principal
Rupert H. Johnson, Jr. Executive Officer
Dated: January 27, 2000
MARTIN L. FLANAGAN* Principal Financial Officer
Martin L. Flanagan Dated: January 27, 2000
KIMBERLEY H. MONASTERIO* Principal Accounting Officer
Kimberley H. Monasterio Dated: January 27, 2000
FRANK H. ABBOTT, III* Trustee
Frank H. Abbott, III Dated: January 27, 2000
HARRIS J. ASHTON* Trustee
Harris J. Ashton Dated: January 27, 2000
S. JOSEPH FORTUNATO* Trustee
S. Joseph Fortunato Dated: January 27, 2000
EDITH E. HOLIDAY* Trustee
Edith E. Holiday Dated: January 27, 2000
CHARLES B. JOHNSON* Trustee
Charles B. Johnson Dated: January 27, 2000
FRANK W. T. LAHAYE* Trustee
Frank W. T. LaHaye Dated: January 27, 2000
GORDON S. MACKLIN* Trustee
Gordon S. Macklin Dated: January 27, 2000
*By /S/DAVID P. GOSS
David P. Goss, Attorney-in-Fact
(Pursuant to Power of Attorney filed herewith)
FRANKLIN TAX-FREE TRUST
REGISTRATION STATEMENT
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION LOCATION
EX-99.a(i) Restated Agreement and Declaration of *
Trust dated October 26, 1984
EX-99.a(ii) Certificate of Amendment of Agreement and *
Declaration of Trust dated July 16, 1991
EX-99.a(iii) Certificate of Amendment of Agreement and *
Declaration of Trust dated April 21, 1992
EX-99.a(iv) Certificate of Amendment of Agreement and *
Declaration of Trust dated December 14,
1993
EX-99.a(v) Certificate of Amendment of Agreement and *
Declaration of Trust dated March 21, 1995
EX-99.a(vi) Certificate of Secretary Amendment of Attached
Agreement and Declaration of Trust dated
August 31, 1999
EX-99.b(i) By-Laws *
EX-99.b(ii) Certificate of Amendment of By-Laws dated *
December 8,1987
EX-99.b(iii) Amendment to By-Laws dated April 21, 1992 *
EX.99.b(iv) Certificate of Amendment of By-Laws dated *
December 14, 1993
EX-99.b(v) Amendment to By-Laws dated January 18, *
1994
EX-99.d(i) Management Agreement between Registrant *
and Franklin Investment Advisory
Services, Inc. on behalf of Franklin
Connecticut Tax-Free Income Fund dated
October 1, 1996
EX-99.d(ii) Management Agreement between Registrant *
and Franklin Advisers, Inc. dated
December 1, 1986
EX-99.d(iii) Amendment to Management Agreement between *
Registrant and Franklin Advisers, Inc.
dated August 1, 1995
EX-99.d(iv) Management Agreement between Registrant Attached
and Franklin Advisors on behalf of
Franklin Connecticut Tax-Free Income Fund
dated October 1, 1998
EX-99.e(i) Amended and Restated Distribution *
Agreement between Registrant and
Franklin/Templeton Distributors, Inc.
dated March 29, 1995
EX-99.e(ii) Dealer Agreements Effective as of March *
1, 1998 between Franklin/Templeton
Distributors, Inc. and securities dealers
EX-99.g(i) Master Custody Agreement between *
Registrant and Bank of New York dated
February 16, 1996
EX-99.g(ii) Terminal Link Agreement between *
Registrant and Bank of New York dated
February 16, 1996
EX-99.g(iii) Amendment dated May 7, 1997 to Master *
Custody Agreement between Registrant
and Bank of New York dated February 16,
1996
EX-99.g(iv) Amendment dated February 27, 1998 to *
Master Custody Agreement between
Registrant and Bank of New York dated
February 16, 1996
EX-99.g(v) Foreign Custody Manager Agreement made as *
of July 30, 1998, effective as of February
27, 1998 on behalf of each Investment
Company listed on Schedule 1
EX-99.g(vi) Amendment dated September 16, 1999, to Attached
Exhibit A of the Master Custody Agreement
between Registrant and the bank
of New York dated February 16, 1996
EX-99.h(i) Agreement between Registrant and *
Financial Guaranty Insurance Company
dated March 8, 1985
EX-99.h(ii) Amendment to Agreement between *
Registrant and Financial Guaranty
Insurance Company dated November 24, 1992
EX-99.h(iii) Mutual Fund Agreement between Registrant *
and Financial Guaranty Insurance Company
dated April 30, 1993
EX-99.h(iv) Subcontract for Fund Administrative *
Services dated October 1, 1996 and
Amendment thereto dated March 11, 1998
between Franklin Advisers, Inc. and
Franklin Templeton Services Inc.
EX-99.h(v) Subcontract for Fund Administrative *
Services dated October 1, 1996 and
Amendment thereto dated July 1, 1997
between Franklin Investment Advisory
Services, Inc. and Franklin Templeton
Services, Inc.
EX-99.i(i) Opinion and Consent of Counsel dated *
April 17, 1998
EX-99.j(i) Consent of Independent Auditors Attached
EX-99.l(i) Letter of Understanding dated *
September 21, 1992
EX-99.l(ii) Letter of Understanding dated April 12, *
1994
EX-99.m(i) Class I Shares Distribution Plan pursuant *
to Rule 12b-1 on behalf of Franklin
Michigan Tax-Free Income Fund dated June
1, 1996
EX-99.m(ii) Class I Shares Distribution Plans *
pursuant to Rule 12b-1 dated July 1, 1993
and May 1, 1994
EX-99.m(iii) Class II Shares Distribution Plan *
pursuant to Rule 12b-1 dated March 30,
1995
EX-99.m(iv) Distribution Plan pursuant to Rule 12b-1 *
between the Registrant on behalf of
Franklin High Yield Tax-Free Income
Fund - Class B and Franklin/Templeton
Distributors, Inc.
EX-99.m(v) Form of Class B Distribution Plan Attached
pursuant to Rule 12b-1
EX-99.o(i) Multiple Class Plan dated October 19, 1995 *
EX-99.o(ii) Multiple Class Plan on behalf of Franklin *
High Yield Tax-Free Income Fund
EX-99.o(iii) Form of Multiple Class Plan on behalf of Attached
Franklin Arizona Tax-Free Income Fund
EX-99.o(iv) Form of Multiple Class Plan on behalf of Attached
Franklin Florida Tax-Free Income Fund
EX-99.o(v) Form of Multiple Class Plan on behalf of Attached
Franklin Insured Tax-Free Income Fund
EX-99.o(vi) Form of Multiple Class Plan on behalf of Attached
Franklin Michigan Insured Tax-Free Income
Fund
EX-99.o(vii) Form of Multiple Class Plan on behalf of Attached
Franklin New Jersey Tax-Free Income Fund
EX-99.o(viii) Form of Multiple Class Plan on behalf of Attached
Franklin Ohio Insured Tax-Free Income Fund
EX-99.o(ix) Form of Multiple Class Plan on behalf of Attached
Franklin Pennsylvania Tax-Free Income Fund
EX-99.p(i) Power of Attorney dated January 20, 2000 Attached
EX-99.p(ii) Certificate of Secretary dated January Attached
27, 2000
*Incorporated by Reference
FRANKLIN TAX-FREE TRUST
CERTIFICATE OF SECRETARY
I, Deborah R. Gatzek, Secretary of Franklin Tax-Free Trust (the "Trust"),
a business trust organized under the laws of the State of Massachusetts, do
hereby certify that the following preambles and resolutions were adopted by a
majority of the trustees present at a meeting held at the offices of the Trust
at 777 Mariners Island Boulevard, San Mateo, California, on September 13, 1994.
WHEREAS, the Board of Trustees of the Trust has reviewed the information
provided by Advisers and Distributors relating to the establishment of a
Multiple Class Distribution System and in the exercise of reasonable
business judgment, has concluded that it is in the best interest of the
Trust to establish a Multiple Class Distribution System for the present
and future series of the Trust;
NOW THEREFORE BE IT RESOLVED, that the establishment of a Multiple Class
Distribution System for the Trust is hereby approved in principle; and
FURTHER RESOLVED, that the proper officers of the Trust are hereby
authorized and directed to prepare, execute and file, with the assistance
of counsel, an Application with the U.S. Securities and Exchange
Commission for an Order of Exemption from Sections 2(a)(32), 2(a)35,
18(f), 18(g), 18(i), 22(c) and 22(d) of the Investment Company Act of
1940, as amended, and Rule 22c-1 thereunder, to permit the Trust to
establish two or more classes or sub-classes of shares within each
existing or future series of the Trust, and to do any and all things
necessary to accomplish the same, including the filing of any and all
amendments thereto, the retention of a qualified expert and the payment of
such fees and expenses as may be required; and
FURTHER RESOLVED, that the proper officers of the Trust are authorized and
directed to prepare, execute and file a request for a private letter
ruling with the Internal Revenue Service with respect to the addition of a
second class of shares as further described at this meeting; and
WHEREAS, the Board of Trustees has determined that the approval of the
shareholders of the Trust is not required by the Investment Company Act of
1940, as amended, or other applicable law in order to amend Section 1 of
Article III of the Agreement and Declaration of Trust of the Trust, it is
RESOLVED, that Article III, Section 1 of the Agreement and Declaration of
Trust of the Trust, be, and hereby is, amended by deleting in its entirety
the Section of the Agreement and Declaration of Trust entitled "SECTION 1.
DIVISION OF BENEFICIAL INTEREST." and replacing such Section of Article
III with the following:
"SECTION 1. DIVISION OF BENEFICIAL INTEREST. The beneficial interest in
the Trust shall at all times be divided into an unlimited number of
Shares, without par value. The Trustees may authorize the division of
the Shares into separate Series and the division of Series into
separate classes or sub-series of Shares (subject to any applicable
rule, regulation or order of the Commission or other applicable law or
regulation). The different Series and classes shall be established and
designated and shall have such preference, conversion or other rights,
voting powers, restrictions, limitations as to dividends,
qualifications, terms and conditions of redemption and other
characteristics as the Trustees may determine.
Notwithstanding the provisions of Section 6(d) of this Article III or
any other provision of this Agreement and Declaration of Trust, if any
matter submitted to shareholders for a vote affects only the interests
of one class of a Series then only such affected class shall be
entitled to vote on the matter. Each Share of a Series shall have equal
rights with each other Share of that Series with respect to the assets
of the Trust pertaining to that Series. Notwithstanding any other
provision of this Agreement and Declaration of Trust, the dividends
payable to the holders of any Series (or class) (subject to any
applicable rule, regulation or order of the Commission or any other
applicable law or regulation) shall be determined by the Trustees and
need not be individually declared, but may be declared and paid in
accordance with a formula adopted by the Trustees. Except as otherwise
provided herein, all references in this Agreement and Declaration of
Trust to Shares or Series of Shares shall apply without discrimination
to the Shares of each Series.
Shareholders shall have no preemptive or other right to subscribe to
any additional Shares or other securities issued by the Trust or any
Series or class. The Trustees may from time to time divide or combine
the Shares of any particular Series or class into a greater or lesser
number of Shares of that Series or class without thereby changing the
proportionate beneficial interest of the Shares of that Series or class
in the assets belonging to that Series or class or in any way affecting
the rights of Shares of any other Series or class."; and
FURTHER RESOLVED, that the form of the Certificate of Amendment of
Agreement and Declaration of Trust of the Trust, which includes the text
of the amendment authorizing the establishment of multiple classes, is
hereby approved in the form presented, with such changes as the officers,
in consultation with counsel, shall deem necessary, and are found to be in
the best interests of the shareholders; and
FURTHER RESOLVED, that the appropriate officers of the Trust be, and
hereby are, authorized to file a Certificate of Amendment of Agreement and
Declaration of Trust relating to the foregoing amendment with the Office
of the Secretary of State of the Commonwealth of Massachusetts; and
FURTHER RESOLVED, that a second class of shares of the Proposed Class II
Series of the Trust is hereby established and designated as "Class II"
shares of such Proposed Class II Series of the Trust as distinguished from
the currently authorized shares of the Proposed Class II Series of the
Trust which shall heretofore be referred to as "Class I" shares, and an
unlimited number of shares are hereby classified and allocated to such
Class II shares of the Proposed Class II Series of the Trust; and
FURTHER RESOLVED, that each Class II share shall have the rights and
limitations as set forth in the governing instrument of the Trust, except
that dividends paid on the Class II shares of the Proposed Class II Series
of the Trust shall reflect reductions for payments of fees under the
Trust's distribution plan relating to the Class II shares adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended (the
"Plan") and, provided further, that only the Class II shares shall be
entitled to vote upon or with respect to any matter relating to or arising
from the Plan relating to such class; and
FURTHER RESOLVED, that the Board of Trustees hereby determines that there
is a reasonable likelihood that the proposed Rule 12b-1 Plan for Class II
shares will benefit the Trust, and each of the Proposed Class II Series
and its shareholders and, consequently, hereby approves the proposed Rule
12b-1 Plan relating to the Class II shares; and
FURTHER RESOLVED, that the form of Administration and Service Agreement,
which provides for the payment of administrative and servicing fees to
brokers and others in accordance with the provisions of the proposed Rule
12b-1 Plan, as presented to this meeting is hereby approved; and
FURTHER RESOLVED, that the Proposed Class II Series shall make an initial
non-public offering of its Class II shares to Franklin Resources, Inc., at
net asset value, for a purchase price which may equal or exceed the
minimum investment required for the Trust; and
FURTHER RESOLVED, that the officers are authorized to present the proposed
Rule 12b-1 Plan relating to Class II of the Proposed Class II Series of
the Trust to the sole initial shareholder of Class II of the Proposed
Class II Series of the Trust for approval in advance of the commencement
of the public offering of shares of Class II; and
FURTHER RESOLVED, that the officers are authorized to make any necessary
revisions to the Trust's existing Distribution Agreement with
Franklin/Templeton Distributors, Inc. to reflect the addition of a second
class of shares of the Proposed Class II Series of the Trust and to
present such revised Distribution Agreement to the trustees for approval
at the next meeting at which the annual review of the Distribution
Agreement will take place; and
FURTHER RESOLVED, that the proper officers are authorized to take whatever
actions are necessary to revise the Trust's registration statement to
reflect the creation of the Class II shares of the Proposed Class II
Series; and
FURTHER RESOLVED, that it is desirable and in the best interest of this
Trust that its securities be qualified or registered for sale in various
states; that the President, any Vice President or any Assistant Vice
President and the Secretary or any Assistant Secretary hereby are
authorized to determine the states in which appropriate action shall be
taken to qualify or register for sale all or such part of the securities
of this Trust, including the Class II shares of the Proposed Class II
Series of the Trust, as said officers may deem advisable; that said
officers are hereby authorized to perform on behalf of this Trust any and
all such acts as they may deem necessary or advisable in order to comply
with the applicable laws of any such states, and in connection therewith
to execute and file all requisite papers and documents, including, but not
limited to, applications, reports, surety bonds, irrevocable consents and
appointments of attorneys for service of process; and the execution by
such officers of any such papers or documents or the doing by them of any
act in connection with the foregoing matters shall conclusively establish
their authority therefor from this Trust and the approval and ratification
by this Trust of the papers and documents so executed and the action so
taken; and
FURTHER RESOLVED, that the proper officers of the Trust are hereby
authorized to take such additional actions necessary to implement the
above resolutions.
IN WITNESS WHEREOF, I have subscribed my name this 31ST day of August
1999.
/S/ DEBORAH R. GATZEK
Deborah R. Gatzek
Secretary
FRANKLIN TAX-FREE TRUST
on behalf of
FRANKLIN CONNECTICUT TAX-FREE INCOME FUND
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made between FRANKLIN TAX-FREE TRUST, a
Massachusetts business trust, hereinafter called the "Trust" on behalf of the
FRANKLIN CONNECTICUT TAX-FREE INCOME FUND, hereinafter called the "Fund", a
series of Franklin Tax-Free Trust, and FRANKLIN ADVISERS, INC., a California
Corporation, hereinafter called the "Manager."
WHEREAS, the Trust has been organized and operates as an investment
company registered under the Investment Company Act of 1940 for the purpose of
investing and reinvesting its assets in securities, as set forth in its
Agreement and Declaration of Trust, its By-Laws and its Registration Statements
under the Investment Company Act of 1940 and the Securities Act of 1933, all as
heretofore amended and supplemented; and the Trust desires to avail itself of
the services, information, advice, assistance and facilities of an investment
manager and to have an investment manager perform various management,
statistical,research, investment advisory and other services for the Fund; and,
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisor's Act of 1940, is engaged in the business of rendering
management, investment advisory, counseling and supervisory services to
investment companies and other investment counseling clients, and desires to
provide these services to the Fund.
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1.EMPLOYMENT OF THE MANAGER. The Trust hereby employs the Manager to manage the
investment and reinvestment of the Fund's assets and to administer its affairs,
subject to the direction of the Board of Trustees and the officers of the Trust,
for the period and on the terms hereinafter set forth. The Manager hereby
accepts such employment and agrees during such period to render the services and
to assume the obligations herein set forth for the compensation herein provided.
The Manager shall for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or authorized (whether herein
or otherwise), have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Fund or the Trust.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE MANAGER. The Manager
undertakes to provide the services hereinafter set forth and to assume the
following obligations:
A. OFFICE SPACE, FURNISHINGS, FACILITIES, EQUIPMENT, AND PERSONNEL. The
Manager shall furnish to the Trust and the Fund adequate (i) office space, which
may be space within the offices of the Manager or in such other place as may be
agreed upon from time to time, (ii) office furnishings, facilities and equipment
as may be reasonably required for managing the affairs and conducting the
business of the Trust and the Fund, including complying with the securities
reporting requirements of the United States and the various states in which the
Trust does business, conducting correspondence and other communications with the
shareholders of the Fund, maintaining all internal bookkeeping, accounting and
auditing services and records in connection with the Fund's investment and
business activities, and computing net asset value. The Manager shall employ or
provide and compensate the executive, secretarial and clerical personnel
necessary to provide such services. The Manager shall also compensate all
officers and employees of the Trust who are officers or employees of the
Manager.
B. INVESTMENT MANAGEMENT SERVICES.
(a) The Manager shall manage the assets of the Fund subject to
and in accordance with the investment objectives and policies of the Fund and
any directions which the Trust's Board of Trustees may issue from time to time.
In pursuance of the foregoing, the Manager shall make all determinations with
respect to the investment of the assets of the Fund and the purchase and sale of
its portfolio securities, and shall take such steps as may be necessary to
implement the same. Such determinations and services shall also include
determining the manner in which voting rights, rights to consent to corporate
action and any other rights pertaining to the Fund's portfolio securities shall
be exercised. The Manager shall render regular reports to the Trust, at regular
meetings of the Board of Trustees and at such other times as may be reasonably
requested by the Trust's Board of Trustees, of (i) the decisions which it has
made with respect to the investment of the assets of the Fund and the purchase
and sale of its portfolio securities, (ii) the reasons for such decisions and
(iii) the extent to which those decisions have been implemented.
(b) The Manager, subject to and in accordance with any
directions which the Trust's Board of Trustees may issue from time to time,
shall place, in the name of the Fund, orders for the execution of the Fund's
portfolio transactions. When placing such orders, the Manager shall seek to
obtain the best net price and execution for the Fund, but this requirement shall
not be deemed to obligate the Manager to place any order solely on the basis of
obtaining the lowest commission rate if the other standards set forth in this
section have been satisfied. The parties recognize that there are likely to be
many cases in which different brokers are equally able to provide such best
price and execution and that, in selecting among such brokers with respect to
particular trades, it is desirable to choose those brokers who furnish research,
statistical quotations and other information to the Fund and the Manager in
accord with the standards set forth below. Moreover, to the extent that it
continues to be lawful to do so and so long as the Board determines that the
Fund will benefit, directly or indirectly, by doing so, the Manager may place
orders with a broker who charges a commission for that transaction which is in
excess of the amount of commission that another broker would have charged for
effecting that transaction, provided that the excess commission is reasonable in
relation to the value of "brokerage and research services" (as defined in
Section 28(e)(3) of the Securities Exchange Act of 1934) provided by that
broker.
Accordingly, the Trust and the Manager agree that the Manager shall select
brokers for the execution of the Fund's portfolio transactions from among:
(i) Those brokers and dealers who provide
quotations and other services to the Fund, specifically including the quotations
necessary to determine the Fund's net assets, in such amount of total brokerage
as may reasonably be required in light of such services;
(ii) Those brokers and dealers who supply research,
statistical and other data to the Manager or its affiliates which the Manager or
its affiliates may lawfully and appropriately use in their investment advisory
capacities, which relate directly to portfolio securities, actual or potential,
of the Fund or which place the Manager in a better position to make decisions in
connection with the management of the Fund's assets and portfolios, whether or
not such data may also be useful to the Manager and its affiliates in managing
other portfolios or advising other clients, in such amount of total brokerage as
may reasonably be required.
Provided that the Trust's officers are satisfied that the best execution is
obtained, the sale of shares of the Fund may also be considered as a factor in
the selection of broker-dealers to execute the Fund's portfolio transactions.
(c) When the Manager has determined that the Fund should tender
securities pursuant to a "tender offer solicitation," Franklin/Templeton
Distributors, Inc. ("Distributors") shall be designated as the "tendering
dealer" so long as it is legally permitted to act in such capacity under the
Federal securities laws and rules thereunder and the rules of any securities
exchange or association of which it may be a member. Neither the Manager nor
Distributors shall be obligated to make any additional commitments of capital,
expense or personnel beyond that already committed (other than normal periodic
fees or payments necessary to maintain its corporate existence and membership in
the National Association of Securities Dealers, Inc.) as of the date of this
Agreement and this Agreement shall not obligate the Manager or Distributors (i)
to act pursuant to the foregoing requirement under any circumstances in which
they might reasonably believe that liability might be imposed upon them as a
result of so acting, or (ii) to institute legal or other proceedings to collect
fees which may be considered to be due from others to it as a result of such a
tender, unless the Trust shall enter into an agreement with the Manager to
reimburse them for all expenses connected with attempting to collect such fees
including legal fees and expenses and that portion of the compensation due to
their employees which is attributable to the time involved in attempting to
collect such fees .
(d) The Manager shall render regular reports to the Trust , not
more frequently than quarterly, of how much total brokerage business has been
placed, by the Manager with brokers falling into each of the foregoing
categories and the manner in which the allocation has been accomplished.
(e) The Manager agrees that no investment decision will be made
or influenced by a desire to provide brokerage for allocation in accordance with
the foregoing, and that the right to make such allocation of brokerage shall not
interfere with the Manager's paramount duty to obtain the best net price and
execution for the Fund.
C. PROVISION OF INFORMATION NECESSARY FOR PREPARATION OF SECURITIES
REGISTRATION STATEMENTS, AMENDMENTS AND OTHER MATERIALS. The Manager, its
officers and employees will make available and provide accounting and
statistical information required by the Underwriter of the Fund in the
preparation of registration statements, reports and other documents required by
Federal and state securities laws and with such information as the Underwriter
may reasonably request for use in the preparation of such documents or of other
materials necessary or helpful for the underwriting and distribution of the
Fund's shares.
D. OTHER OBLIGATIONS AND SERVICES. The Manager shall make available its
officers and employees to the Board of Trustees and officers of the Trust for
consultation and discussions regarding the administrative management of the Fund
and its investment activities.
3. EXPENSES OF THE FUND. It is understood that the Fund will pay all of its own
expenses other than those expressly assumed by the Manager herein, which
expenses payable by the Fund shall include:
A. Fees to the Manager as provided herein;
B. Expenses of all audits by independent public accountants;
C. Expenses of transfer agent, registrar, custodian, dividend disbursing
agent and shareholder record-keeping services;
D. Expenses of obtaining quotations for calculating the value of
the Fund's net assets;
E. Salaries and other compensation of any of its executive officers who
are not officers, trustees, stockholders or employees of the Manager;
F. Taxes levied against the Trust or the Fund;
G. Brokerage fees and commissions in connection with the purchase and sale
of portfolio securities for the Fund;
H. Costs, including the interest expense, of borrowing money;
I. Costs incident to meetings of the Board of Trustees, reports to the
Trust to its shareholders, the filing of reports with regulatory bodies and the
maintenance of the Trust's legal existence;
J. Legal fees, including the legal fees related to the
registration and continued qualification of the Fund's shares for sale;
K. Costs of printing share certificates representing shares of
the Fund;
L. Trustees' fees and expenses to trustees who are not directors,
officers, employees or stockholders of the Manager or any of its affiliates;
M. Trade association dues; and
N. Its pro rata portion of the fidelity bond insurance premium.
4. COMPENSATION OF THE MANAGER. The Fund shall pay a monthly management fee in
cash to the Manager based upon a percentage of the value of the Fund's net
assets, calculated as set forth below, on the first business day of each month
in each year as compensation for the services rendered and obligations assumed
by the Manager during the preceding month. The initial management fee under this
Agreement shall be payable on the first business day of the first month
following the effective date of this Agreement, and shall be reduced by the
amount of any advance payments made by the Trust relating to the previous month.
A . For purposes of calculating such fee, the value of the net assets of
the Fund shall be the net assets computed as of the close of business on the
last business day of the month preceding the month in which the payment is being
made, determined in the same manner as such Fund uses to compute the value of
its net assets in connection with the determination of the net asset value of
such Fund's shares, all as set forth more fully in such Fund's current
prospectus. The rate of the monthly management fee payable by the Fund shall be
as follows:
5/96 of 1% of the value of its net assets up to and including
$100,000,000; and
1/24 of 1% of the value of its net assets over $100,000,000
up to and including $250,000,000; and
9/240 of 1% of the value of its net assets in excess of
$250,000,000.
B. The Management fee payable by the Fund shall be reduced or eliminated
to the extent that Distributors has actually received cash payments of tender
offer solicitation fees less certain costs and expenses incurred in connection
therewith; and to the extent necessary to comply with the limitations on
expenses which may be borne by the Fund as set forth in the laws, regulations
and administrative interpretations of those states in which the Fund's shares
are registered. The Manager may waive all or a portion of its fees provided for
hereunder and such waiver shall be treated as a reduction in purchase price of
its services. The Manager shall be contractually bound hereunder by the terms of
any publicly announced waiver of its fee, or any limitation of the Fund's
expenses, as if such waiver or limitation were fully set forth herein.
C. If this Agreement is terminated prior to the end of any month for the
Fund, the monthly management fee for such Fund shall be prorated for the portion
of any month in which this Agreement is in effect which is not a complete month
according to the proportion which the number of calendar days in the fiscal
quarter during which the Agreement is in effect bears to the number of calendar
days in the month, and shall be payable within 10 days after the date of
termination.
5. ACTIVITIES OF THE MANAGER. The services of the Manager to the Fund hereunder
are not to be deemed exclusive, and the Manager and any of its affiliates shall
be free to render similar services to others. Subject to and in accordance with
the Agreement and Declaration of Trust and By-Laws of the Trust and to Section
10(a) of the Investment Company Act of 1940, it is understood that Trustees,
officers, agents and shareholders of the Trust are or may be interested in the
Manager or its affiliates as trustees, directors, officers, agents or
stockholders, and that directors, officers, agents or stockholders of the
Manager or its affiliates are or may be interested in the Trust as Trustees,
officers, agents, shareholders or otherwise, that the Manager or its affiliates
may be interested in the Fund as shareholders or otherwise; and that the effect
of any such interests shall be governed by said Agreement and Declaration of
Trust, the By-Laws and the Investment Company Act of 1940.
6. LIABILITIES OF THE MANAGER.
A. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder on the part of the
Manager, the Manager shall not be subject to liability to the Trust or of the
Fund or to any shareholder of the Fund for any act or omission in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security by the Fund.
B. Notwithstanding the foregoing, the Manager agrees to reimburse the
Fund for any and all costs, expenses, and counsel and trustees' fees reasonably
incurred by the Fund in the preparation, printing and distribution of proxy
statements, amendments to its Registration Statement, holdings of meetings of
its shareholders or Trustees, the conduct of factual investigations, any legal
or administrative proceedings (including any applications for exemptions or
determinations by the Securities and Exchange Commission) which the Fund incur
as the result of action or inaction of the Manager or any of its affiliates or
any of their officers, directors, employees or shareholders where the action or
inaction necessitating such expenditures (i) is directly or indirectly related
to any transactions or proposed transaction in the shares or control of the
Manager or its affiliates (or litigation related to any pending or proposed or
future transaction in such shares or control) which shall have been undertaken
without the prior, express approval of the Trust's Board of Trustees; or, (ii)
is within the control of the Manager or any of its affiliates or any of their
officers, trustees, employees or shareholders. The Manager shall not be
obligated pursuant to the provisions of this Subsection 6(B), to reimburse the
Fund for any expenditures related to the institution of an administrative
proceeding or civil litigation by the Trust or the Fund's shareholders seeking
to recover all or a portion of the proceeds derived by any shareholder of the
Manager or any of its affiliates from the sale of his shares of the Manager, or
similar matters. So long as this Agreement is in effect the Manager shall pay to
the Fund the amount due for expenses subject to this Subsection 6(B) Agreement
within 30 days after a bill or statement has been received by the Manager
therefor. This provision shall not be deemed to be a waiver of any claim the
Fund may have or may assert against the Manager or others for costs, expenses or
damages heretofore incurred by the Fund or for costs, expenses or damages the
Fund may hereafter incur which are not reimbursable to it hereunder.
C. No provision of this Agreement shall be construed to protect any Trustee
or officer of the Trust, or director or officer of the Manager, from liability
in violation of Sections 17(h) and (i) of the Investment Company Act of 1940.
7. RENEWAL AND TERMINATION.
A. This Agreement shall become effective on the date written below and
shall continue in effect for two (2) years. The Agreement is renewable annually
thereafter for the Fund for successive periods not to exceed one (1) year (i) by
a vote of a majority of the outstanding voting securities of the Fund or by a
vote of the Board of Trustees of the Trust, and (ii) by a vote of a majority of
the Trustees of the Trust who are not parties to the Agreement or interested
persons of any parties to the Agreement (other than as Trustees of the Trust)
cast in person at a meeting called for the purpose of voting on the Agreement.
B. This Agreement.
(i) may at anytime be terminated with respect to the Fund without the
payment of any penalty either by vote of the Board of Trustees of the Trust or
by vote of a majority of the outstanding voting securities of the Fund seeking
to terminate the Agreement, on 30 days' written notice to the Manager;
(ii) shall immediately terminate with respect to the Fund in the
event of its assignment; and
(iii)may at any time be terminated by the Manager with respect to the
Fund on 30 days' written notice to the Fund.
C. As used in this Section the terms "assignment," "interested person" and
"vote of a majority of the outstanding voting securities" shall have the
meanings set forth for any such terms in the Investment Company Act of 1940, as
amended.
D. Any notice under this Agreement shall be given in writing addressed and
delivered, or mailed post-paid, to the other party at any office of such party.
8. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
10. LIMITATION OF LIABILITY. The Manager acknowledges that it has received
notice of and accepts the limitations of the Trust's liability as set forth in
Article VIII of its Agreement and Declaration of Trust. The Manager agrees that
the Trust's obligations hereunder shall be limited to the assets of the Fund,
and that the Manager shall not seek satisfaction of any such obligation from any
shareholder of the Fund nor from any trustee, officer, employee or agent of the
Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and effective on the 1st day of October, 1998.
FRANKLIN TAX-FREE TRUST on behalf of
FRANKLIN CONNECTICUT TAX-FREE INCOME FUND
By /S/ DEBORAH R. GATZEK
Deborah R. Gatzek
Vice President & Secretary
FRANKLIN ADVISERS, INC.
By /S/ HARMON E. BURNS
Harmon E. Burns
Executive Vice President
TERMINATION OF AGREEMENT
Franklin Tax-Free Trust and Franklin Investment Advisory Services, Inc., hereby
agree that the Management Agreement between them dated October 1, 1996 is
terminated with respect to the Franklin Connecticut Tax-Free Income Fund,
effective as of the date of the Management Agreement above.
FRANKLIN TAX-FREE TRUST
By /S/ HARMON E. BURNS
Harmon E. Burns
Vice President
FRANKLIN INVESTMENT ADVISORY SERVICES, INC.
By /S/ DEBORAH R. GATZEK
Deborah R. Gatzek
Vice President &
Assistant Secretary
MASTER CUSTODY AGREEMENT
EXHIBIT A
The following is a list of the Investment Companies and their respective Series
for which the Custodian shall serve under the Master Custody Agreement dated as
of February 16, 1996.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
- -----------------------------------------------------------------------------------------------
Adjustable Rate Securities Delaware Business U.S. Government Adjustable Rate Mortgage
Portfolios Trust Portfolio
Franklin Asset Allocation Fund Delaware Business
Trust
Franklin California Tax-Free Maryland Corporation
Income
Fund, Inc.
Franklin California Tax-Free Massachusetts Franklin California Insured Tax-Free
Trust Business Trust Income Fund
Franklin California Tax-Exempt Money Fund
Franklin California Intermediate-Term
Tax-Free
Income Fund
Franklin Custodian Funds, Inc. Maryland Corporation Growth Series
Utilities Series
Dynatech Series
Income Series
U.S. Government Securities Series
Franklin Equity Fund California
Corporation
Franklin Federal Money Fund California
Corporation
Franklin Federal Tax- Free California
Income Fund Corporation
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
- -----------------------------------------------------------------------------------------------
Franklin Gold Fund California
Corporation
Franklin High Income Trust Delaware Business AGE High Income Fund
Trust
Franklin Investors Securities Massachusetts Franklin Global Government Income Fund
Trust Business Trust Franklin Short-Intermediate U.S. Govt
Securities Fund
Franklin Convertible Securities Fund
Franklin Adjustable U.S. Government
Securities Fund
Franklin Equity Income Fund
Franklin Bond Fund
Franklin Managed Trust Delaware Business Franklin Rising Dividends Fund
Trust
Franklin Money Fund California
Corporation
Franklin Municipal Securities Delaware Business Franklin California High Yield Municipal
Trust Trust Fund
Franklin Tennessee Municipal Bond Fund
Franklin Mutual Series Fund Maryland Corporation Mutual Shares Fund
Inc. Mutual Beacon Fund
Mutual Qualified Fund
Mutual Discovery Fund
Mutual European Fund
Mutual Financial Services Fund
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
Franklin New York Tax-Free Delaware Business
Income Fund Trust
Franklin New York Tax-Free Massachusetts Franklin New York Tax-Exempt Money Fund
Trust Business Trust Franklin New York Intermediate-Term
Tax-Free
Income Fund
Franklin New York Insured Tax-Free
Income Fund
Franklin Real Estate Delaware Business Franklin Real Estate Securities Fund
Securities Trust Trust
Franklin Strategic Mortgage Delaware Business
Portfolio Trust
Franklin Strategic Series Delaware Business Franklin California Growth Fund
Trust Franklin Strategic Income Fund
Franklin MidCap Growth Fund
Franklin Global Utilities Fund
Franklin Small Cap Growth Fund
Franklin Global Health Care Fund
Franklin Natural Resources Fund
Franklin Blue Chip Fund
Franklin Biotechnology Discovery Fund
Franklin U.S. Long-Short Fund
Franklin Large Cap Growth Fund
Franklin Aggressive Growth Fund
Franklin Tax-Exempt Money Fund California
Corporation
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES---(IF APPLICABLE)
Franklin Tax-Free Trust Massachusetts Franklin Massachusetts Insured Tax-Free
Business Trust Income Fund
Franklin Michigan Insured
Tax-Free Income Fund
Franklin Minnesota Insured
Tax-Free Income Fund
Franklin Insured Tax-Free
Income Fund Franklin Ohio
Insured Tax-Free Income
Fund Franklin Puerto Rico
Tax-Free Income Fund
Franklin Arizona Tax-Free
Income Fund Franklin
Colorado Tax-Free Income
Fund Franklin Georgia
Tax-Free Income Fund
Franklin Pennsylvania
Tax-Free Income Fund
Franklin High Yield
Tax-Free Income Fund
Franklin Missouri Tax-Free
Income Fund Franklin Oregon
Tax-Free Income Fund
Franklin Texas Tax-Free
Income Fund Franklin
Virginia Tax-Free Income
Fund Franklin Alabama
Tax-Free Income Fund
Franklin Florida Tax-Free
Income Fund Franklin
Connecticut Tax-Free Income
Fund Franklin Louisiana
Tax-Free Income Fund
Franklin Maryland Tax-Free
Income Fund Franklin North
Carolina Tax-Free Income
Fund Franklin New Jersey
Tax-Free Income Fund
Franklin Kentucky Tax-Free
Income Fund Franklin
Federal Intermediate-Term
Tax-Free Income
Fund
Franklin Arizona Insured Tax-Free Income
Fund
Franklin Florida Insured Tax-Free Income
fund
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
Franklin Templeton Fund Delaware Business Franklin Templeton Conservative Target
Allocator Series Trust Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Global Trust Delaware Business Franklin Templeton Global Currency Fund
Trust Franklin Templeton Hard Currency Fund
Franklin Templeton Delaware Business Templeton Pacific Growth Fund
International Trust Trust Templeton Foreign Smaller Companies Fund
Franklin Templeton Money Fund Delaware Business Franklin Templeton Money Fund
Trust Trust
Franklin Value Investors Trust Massachusetts Franklin Balance Sheet Investment Fund
Business Trust Franklin MicroCap Value Fund
Franklin Value Fund
Franklin Templeton Variable Massachusetts Franklin Money Market Fund
Insurance Products Trust Business Trust Franklin Growth and Income Fund
Franklin Natural Resources
Securities Fund Franklin
Real Estate Fund Franklin
Global Communications
Securities Fund Franklin
High Income Fund Templeton
Global Income Securities
Fund Franklin Income
Securities Fund Franklin
U.S. Government Fund Zero
Coupon Fund - 2000 Zero
Coupon Fund - 2005 Zero
Coupon Fund - 2010 Franklin
Rising Dividends Securities
Fund
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES ---(IF APPLICABLE)
Franklin Templeton Variable Massachusetts Templeton Pacific Growth Fund
Insurance Products Trust Business Trust Templeton International Equity Fund
(cont.) Templeton Developing Markets Equity Fund
Templeton Global Growth
Fund Templeton Global Asset
Allocation Fund Franklin
Small Cap Fund Franklin
Large Cap Growth Securities
Fund Templeton
International Smaller
Companies Fund Mutual
Discovery Securities Fund
Mutual Shares Securities
Fund Franklin Global Health
Care Securities Fund
Franklin Value Securities
Fund Franklin Aggressive
Growth Securities Fund
- -----------------------------------------------------------------------------------------------
Institutional Fiduciary Trust Massachusetts Money Market Portfolio
Business Trust Franklin U.S. Government Securities
Money Market
Portfolio
Franklin Cash Reserves Fund
The Money Market Portfolios Delaware Business The Money Market Portfolio
Trust The U.S. Government Securities Money
Market Portfolio
Templeton Variable Products Franklin Growth Investments Fund
Series Fund Mutual Shares Investments Fund
Mutual Discovery Investments Fund
Franklin Small Cap Investments Fund
- -----------------------------------------------------------------------------------------------
INVESTMENT COMPANY ORGANIZATION SERIES---(IF APPLICABLE)
- -----------------------------------------------------------------------------------------------
CLOSED END FUNDS:
Franklin Multi-Income Trust Massachusetts
Business Trust
Franklin Universal Trust Massachusetts
Business Trust
Franklin Floating Rate Trust Delaware Business
Trust
- -----------------------------------------------------------------------------------------------
</TABLE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Post-Effective Amendment No. 28
to the Registration Statement of Franklin Tax-Free Trust on Form N-1A (File No.
2-94222) of our report dated April 2, 1999 on our audit of the financial
statements and financial highlights of Franklin Tax-Free Trust, which report is
included in the Annual Report to Shareholders for the year ended February 28,
1999 filed with the Securities and Exchange Commission pursuant to section 30(d)
of the Investment Company Act of 1940, which is incorporated by reference in the
Registration Statement. We also consent to the reference to our firm under the
captions "Financial Highlights" and "Auditor."
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Francisco, California
January 26, 2000
CLASS B DISTRIBUTION PLAN
I. Investment Company: FRANKLIN TAX-FREE TRUST
II. Fund: FRANKLIN ARIZONA TAX-FREE INCOME FUND - CLASS B
FRANKLIN FLORIDA TAX-FREE INCOME FUND - CLASS B
FRANKLIN INSURED TAX-FREE INCOME FUND - CLASS B
FRANKLIN MICHIGAN INSURED TAX-FREE
INCOME FUND - CLASS B
FRANKLIN NEW JERSEY TAX-FREE INCOME FUND - CLASS B
FRANKLIN OHIO INSURED TAX-FREE INCOME FUND - CLASS B
FRANKLIN PENNSYLVANIA TAX-FREE INCOME FUND - CLASS B
III. Maximum Per Annum Rule 12b-1 Fees for Class B Shares (as a percentage of
average daily net assets of the class)
A. Distribution Fee: 0.50%
B. Service Fee: 0.15%
PREAMBLE TO CLASS B DISTRIBUTION PLAN
The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Act") by the
Investment Company named above ("Investment Company") for the class B shares
(the "Class") of each Fund named above ("Fund"), which Plan shall take effect as
of the date Class B shares are first offered (the "Effective Date of the Plan").
The Plan has been approved by a majority of the Board of Trustees of the
Investment Company (the "Board"), including a majority of the Board members who
are not interested persons of the Investment Company and who have no direct, or
indirect financial interest in the operation of the Plan (the "non-interested
Board members"), cast in person at a meeting called for the purpose of voting on
such Plan.
In reviewing the Plan, the Board considered the schedule and nature of
payments and terms of the Management Agreement between the Investment Company
and Franklin Advisers, Inc. and the terms of the Underwriting Agreement between
the Investment Company and Franklin/Templeton Distributors, Inc.
("Distributors"). The Board concluded that the compensation of Advisers, under
the Management Agreement, and of Distributors, under the Underwriting Agreement,
was fair and not excessive. The approval of the Plan included a determination
that in the exercise of their reasonable business judgment and in light of their
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Funds and its shareholders.
The Board recognizes that Distributors has entered into an arrangement
with a third party in order to finance the distribution activities of the Class
pursuant to which Distributors may assign its rights to the fees payable
hereunder to such third party. The Board further recognizes that it has an
obligation to act in good faith and in the best interests of the Fund and its
shareholders when considering the continuation or termination of the Plan and
any payments to be made thereunder.
DISTRIBUTION PLAN
1. (a) The Fund shall pay to Distributors a monthly fee not to exceed the
above-stated maximum distribution fee per annum of the Class' average daily net
assets represented by shares of the Class, as may be determined by the Board
from time to time.
(b) In addition to the amounts described in (a) above, the Fund shall
pay (i) to Distributors for payment to dealers or others, or (ii) directly to
others, an amount not to exceed the above-stated maximum service fee per annum
of the Class' average daily net assets represented by shares of the Class, as
may be determined by the Investment Company's Board from time to time, as a
service fee pursuant to servicing agreements which have been approved from time
to time by the Board, including the non-interested Board members.
2. (a) The monies paid to Distributors pursuant to Paragraph 1(a) above
shall be treated as compensation for Distributors' distribution-related services
including compensation for amounts advanced to securities dealers or their firms
or others selling shares of the Class who have executed an agreement with the
Investment Company, Distributors or its affiliates, which form of agreement has
been approved from time to time by the Board, including the non-interested Board
members, with respect to the sale of Class shares. In addition, such monies may
be used to compensate Distributors for other expenses incurred to assist in the
distribution and promotion of shares of the Class. Payments made to Distributors
under the Plan may be used for, among other things, the printing of prospectuses
and reports used for sales purposes, expenses of preparing and distributing
sales literature and related expenses, advertisements, and other
distribution-related expenses, including a pro-rated portion of Distributors'
overhead expenses attributable to the distribution of Class shares, as well as
for additional distribution fees paid to securities dealers or their firms or
others who have executed agreements with the Investment Company, Distributors or
its affiliates, or for certain promotional distribution charges paid to
broker-dealer firms or others, or for participation in certain distribution
channels. None of such payments are the legal obligation of Distributors or its
designee.
(b) The monies to be paid pursuant to paragraph 1(b) above shall be
used to pay dealers or others for, among other things, furnishing personal
services and maintaining shareholder accounts, which services include, among
other things, assisting in establishing and maintaining customer accounts and
records; assisting with purchase and redemption requests; arranging for bank
wires; monitoring dividend payments from the Fund on behalf of customers;
forwarding certain shareholder communications from the Fund to customers;
receiving and answering correspondence; and aiding in maintaining the investment
of their respective customers in the Class. Any amounts paid under this
paragraph 2(b) shall be paid pursuant to a servicing or other agreement, which
form of agreement has been approved from time to time by the Board. None of such
payments are the legal obligation of Distributors or its designee.
3. In addition to the payments which the Fund is authorized to make
pursuant to paragraphs 1 and 2 hereof, to the extent that the Fund, Advisers,
Distributors or other parties on behalf of the Fund, Advisers or Distributors
make payments that are deemed to be payments by the Fund for the financing of
any activity primarily intended to result in the sale of Class shares issued by
the Fund within the context of Rule 12b-1 under the Act, then such payments
shall be deemed to have been made pursuant to the Plan.
In no event shall the aggregate asset-based sales charges which include
payments specified in paragraphs 1 and 2, plus any other payments deemed to be
made pursuant to the Plan under this paragraph, exceed the amount permitted to
be paid pursuant to Rule 2830(d) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
4. Distributors shall furnish to the Board, for its review, on a quarterly
basis, a written report of the monies paid to it and to others under the Plan,
and shall furnish the Board with such other information as the Board may
reasonably request in connection with the payments made under the Plan in order
to enable the Board to make an informed determination of whether the Plan should
be continued.
5. (a) Distributors may assign, transfer or pledge ("Transfer") to one or
more designees (each an "Assignee"), its rights to all or a designated portion
of the fees to which it is entitled under paragraph 1 of this Plan from time to
time (but not Distributors' duties and obligations pursuant hereto or pursuant
to any distribution agreement in effect from time to time, if any, between
Distributors and the Fund), free and clear of any offsets or claims the Fund may
have against Distributors. Each such Assignee's ownership interest in a Transfer
of a specific designated portion of the fees to which Distributors is entitled
is hereafter referred to as an "Assignee's 12b-1 Portion." A Transfer pursuant
to this Section 5(a) shall not reduce or extinguish any claims of the Fund
against Distributors.
(b) Distributors shall promptly notify the Fund in writing of each
such Transfer by providing the Fund with the name and address of each such
Assignee.
(c) Distributors may direct the Fund to pay any Assignee's 12b-1
Portion directly to each Assignee. In such event, Distributors shall provide the
Fund with a monthly calculation of the amount to which each Assignee is entitled
(the "Monthly Calculation"). In such event, the Fund shall, upon receipt of such
notice and Monthly Calculation from Distributors, make all payments required
directly to the Assignee in accordance with the information provided in such
notice and Monthly Calculation upon the same terms and conditions as if such
payments were to be paid to Distributors.
(d) Alternatively, in connection with a Transfer, Distributors may
direct the Fund to pay all or a portion of the fees to which Distributors is
entitled from time to time to a depository or collection agent designated by any
Assignee, which depository or collection agent may be delegated the duty of
dividing such fees between the Assignee's 12b-1 Portion and the balance (such
balance, when distributed to Distributors by the depository or collection agent,
the "Distributors' 12b-1 Portion"), in which case only Distributors' 12b-1
Portion may be subject to offsets or claims the Fund may have against
Distributors.
6. The Plan shall continue in effect for a period of more than one year
only so long as such continuance is specifically approved at least annually by
the Board, including the non-interested Board members, cast in person at a
meeting called for the purpose of voting on the Plan. In determining whether
there is a reasonable likelihood that the continuation of the Plan will benefit
the Fund and its shareholders, the Board may, but is not obligated to, consider
that Distributors has incurred substantial cost and has entered into an
arrangement with a third party in order to finance the distribution activities
for the Class.
7. This Plan and any agreements entered into pursuant to this Plan may be
terminated with respect to the shares of the Class, without penalty, at any time
by vote of a majority of the non-interested Board members of the Investment
Company, or by vote of a majority of outstanding Shares of such Class. Upon
termination of this Plan with respect to the Class, the obligation of the Fund
to make payments pursuant to this Plan with respect to such Class shall
terminate, and the Fund shall not be required to make payments hereunder beyond
such termination date with respect to expenses incurred in connection with Class
shares sold prior to such termination date, provided, in each case that each of
the requirements of a Complete Termination of this Plan in respect of such
Class, as defined below, are met. For purposes of this Section 7, a "Complete
Termination" of this Plan in respect of the Class shall mean a termination of
this Plan in respect of such Class, provided that: (i) the non-interested Board
members of the Investment Company shall have acted in good faith and shall have
determined that such termination is in the best interest of the Investment
Company and the shareholders of the Fund and the Class; (ii) and the Investment
Company does not alter the terms of the contingent deferred sales charges
applicable to Class shares outstanding at the time of such termination; and
(iii) unless Distributors at the time of such termination was in material breach
under the distribution agreement in respect of the Fund, the Fund shall not, in
respect of such Fund, pay to any person or entity, other than Distributors or
its designee, either the payments described in paragraph 1(a) or 1(b) or in
respect of the Class shares sold by Distributors prior to such termination.
8. The Plan, and any agreements entered into pursuant to this Plan, may
not be amended to increase materially the amount to be spent for distribution
pursuant to Paragraph 1 hereof without approval by a majority of the outstanding
voting securities of the Class of the Fund.
9. All material amendments to the Plan, or any agreements entered into
pursuant to this Plan, shall be approved by the non-interested Board members
cast in person at a meeting called for the purpose of voting on any such
amendment.
10. So long as the Plan is in effect, the selection and nomination of the
Fund's non-interested Board members shall be committed to the discretion of such
non-interested Board members.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Investment Company and Distributors as evidenced by their
execution hereof.
Date: _________________
FRANKLIN TAX-FREE TRUST
By:_________________________
FRANKLIN/TEMPLETON DISTRIBUTORS, INC.
By:_________________________
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN ARIZONA TAX-FREE INCOME FUND
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Trustees of FRANKLIN TAX-FREE TRUST (the "Investment Company") for
its series, FRANKLIN ARIZONA TAX-FREE INCOME FUND (the "Fund"). The Board has
determined that the Plan, including the expense allocation, is in the best
interests of each class of the Fund and the Investment Company as a whole. The
Plan sets forth the provisions relating to the establishment of multiple classes
of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer three classes of shares, to be known as Class A
Shares, Class B Shares and Class C Shares.
2. Class A Shares shall carry a front-end sales charge ranging from 0% -
4.25%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B
Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales
charge ("CDSC"), except in the following limited circumstances. On investments
of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser
of the then-current net asset value or the original net asset value at the time
of purchase applies to redemptions of those investments within the contingency
period of 12 months from the calendar month following their purchase. The CDSC
is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be
assessed a CDSC of 4% on the lesser of the then-current net asset value or the
original net asset value at the time of purchase; (b) Class B Shares redeemed
within the third and fourth years of their purchase shall be assessed a CDSC of
3% on the lesser of the then-current net asset value or the original net asset
value at the time of purchase; (c) Class B Shares redeemed within 5 years of
their purchase shall be assessed a CDSC of 2% on the lesser of the then-current
net asset value or the original net asset value at the time of purchase; and (d)
Class B Shares redeemed within 6 years of their purchase shall be assessed a
CDSC of 1% on the lesser of the then-current net asset value or the original net
asset value at the time of purchase. The CDSC is waived in certain circumstances
described in the Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
4. The distribution plan adopted by the Investment Company pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule
12b-1 Plan") associated with the Class A Shares may be used to reimburse
Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses
incurred in the promotion and distribution of the Class A Shares. Such expenses
include, but are not limited to, the printing of prospectuses and reports used
for sales purposes, expenses of preparing and distributing sales literature and
related expenses, advertisements, and other distribution-related expenses,
including a prorated portion of the Distributor's overhead expenses attributable
to the distribution of the Class A Shares, as well as any distribution or
service fees paid to securities dealers or their firms or others who have
executed a servicing agreement with the Investment Company for the Class A
Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components.
The first component is an asset-based sales charge to be retained by Distributor
to compensate Distributor for amounts advanced to securities dealers or their
firms or others with respect to the sale of Class B Shares. In addition, such
payments may be retained by the Distributor to be used in the promotion and
distribution of Class B Shares in a manner similar to that described above for
Class A Shares. The second component is a shareholder servicing fee to be paid
to securities dealers or others who provide personal assistance to shareholders
in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two components.
The first component is a shareholder servicing fee, to be paid to
broker-dealers, banks, trust companies and others who maintain shareholder
accounts or provide personal assistance to shareholders in servicing their
accounts. The second component is an asset-based sales charge to be retained by
the Distributor during the first year after the sale of shares and, in
subsequent years, to be paid to dealers or retained by the Distributor to be
used in the promotion and distribution of Class C Shares, in a manner similar to
that described above for Class A Shares.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with Rule 2830(d) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B and Class C
Shares shall relate to differences in Rule 12b-1 plan expenses, as described in
the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan
expenses of one Class are the same as the Rule 12b-1 Plan expenses of another
Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A and
Class C Shares. Each Class B Share, however, shall be converted automatically,
and without any action or choice on the part of the holder of the Class B
Shares, into Class A Shares on the conversion date specified, and in accordance
with the terms and conditions approved by the Franklin Tax-Free Trust's Board of
Trustees and as described, in each fund's prospectus relating to the Class B
Shares, as such prospectus may be amended from time to time; provided, however,
that the Class B Shares shall be converted automatically into Class A Shares to
the extent and on the terms permitted by the Investment Company Act of 1940 and
the rules and regulations adopted thereunder.
7. Shares of Class A, Class B and Class C may be exchanged for shares of
another investment company within the Franklin Templeton Group of Funds
according to the terms and conditions stated in each fund's prospectus, as it
may be amended from time to time, to the extent permitted by the Investment
Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan
related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary
responsibilities under the Investment Company Act of 1940 and otherwise, will
monitor the Fund for the existence of any material conflicts between the Board
members interests of the various classes of shares. The Board members, including
a majority of the independent Board members, shall take such action as is
reasonably necessary to eliminate any such conflict that may develop. Franklin
Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible
for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of
the Board members, including a majority of the Board members who are not
interested persons of the Investment Company.
11. I, Deborah R. Gatzek, Secretary of the Franklin Group of Funds, do
hereby certify that this Multiple Class Plan was adopted by FRANKLIN TAX-FREE
TRUST, on behalf of its series FRANKLIN ARIZONA TAX-FREE INCOME FUND, by a
majority of the Trustees of the Trust on
- ------------------.
-------------------------------
Deborah R. Gatzek
Secretary
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN FLORIDA TAX-FREE INCOME FUND
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Trustees of FRANKLIN TAX-FREE TRUST (the "Investment Company") for
its series, FRANKLIN FLORIDA TAX-FREE INCOME FUND (the "Fund"). The Board has
determined that the Plan, including the expense allocation, is in the best
interests of each class of the Fund and the Investment Company as a whole. The
Plan sets forth the provisions relating to the establishment of multiple classes
of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer three classes of shares, to be known as Class A
Shares, Class B Shares and Class C Shares.
2. Class A Shares shall carry a front-end sales charge ranging from 0% -
4.25%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B
Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales
charge ("CDSC"), except in the following limited circumstances. On investments
of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser
of the then-current net asset value or the original net asset value at the time
of purchase applies to redemptions of those investments within the contingency
period of 12 months from the calendar month following their purchase. The CDSC
is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be
assessed a CDSC of 4% on the lesser of the then-current net asset value or the
original net asset value at the time of purchase; (b) Class B Shares redeemed
within the third and fourth years of their purchase shall be assessed a CDSC of
3% on the lesser of the then-current net asset value or the original net asset
value at the time of purchase; (c) Class B Shares redeemed within 5 years of
their purchase shall be assessed a CDSC of 2% on the lesser of the then-current
net asset value or the original net asset value at the time of purchase; and (d)
Class B Shares redeemed within 6 years of their purchase shall be assessed a
CDSC of 1% on the lesser of the then-current net asset value or the original net
asset value at the time of purchase. The CDSC is waived in certain circumstances
described in the Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
4. The distribution plan adopted by the Investment Company pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule
12b-1 Plan") associated with the Class A Shares may be used to reimburse
Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses
incurred in the promotion and distribution of the Class A Shares. Such expenses
include, but are not limited to, the printing of prospectuses and reports used
for sales purposes, expenses of preparing and distributing sales literature and
related expenses, advertisements, and other distribution-related expenses,
including a prorated portion of the Distributor's overhead expenses attributable
to the distribution of the Class A Shares, as well as any distribution or
service fees paid to securities dealers or their firms or others who have
executed a servicing agreement with the Investment Company for the Class A
Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components.
The first component is an asset-based sales charge to be retained by Distributor
to compensate Distributor for amounts advanced to securities dealers or their
firms or others with respect to the sale of Class B Shares. In addition, such
payments may be retained by the Distributor to be used in the promotion and
distribution of Class B Shares in a manner similar to that described above for
Class A Shares. The second component is a shareholder servicing fee to be paid
to securities dealers or others who provide personal assistance to shareholders
in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two components.
The first component is a shareholder servicing fee, to be paid to
broker-dealers, banks, trust companies and others who maintain shareholder
accounts or provide personal assistance to shareholders in servicing their
accounts. The second component is an asset-based sales charge to be retained by
the Distributor during the first year after the sale of shares and, in
subsequent years, to be paid to dealers or retained by the Distributor to be
used in the promotion and distribution of Class C Shares, in a manner similar to
that described above for Class A Shares.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with Rule 2830(d) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B and Class C
Shares shall relate to differences in Rule 12b-1 plan expenses, as described in
the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan
expenses of one Class are the same as the Rule 12b-1 Plan expenses of another
Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A and
Class C Shares. Each Class B Share, however, shall be converted automatically,
and without any action or choice on the part of the holder of the Class B
Shares, into Class A Shares on the conversion date specified, and in accordance
with the terms and conditions approved by the Franklin Tax-Free Trust's Board of
Trustees and as described, in each fund's prospectus relating to the Class B
Shares, as such prospectus may be amended from time to time; provided, however,
that the Class B Shares shall be converted automatically into Class A Shares to
the extent and on the terms permitted by the Investment Company Act of 1940 and
the rules and regulations adopted thereunder.
7. Shares of Class A, Class B and Class C may be exchanged for shares of
another investment company within the Franklin Templeton Group of Funds
according to the terms and conditions stated in each fund's prospectus, as it
may be amended from time to time, to the extent permitted by the Investment
Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan
related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary
responsibilities under the Investment Company Act of 1940 and otherwise, will
monitor the Fund for the existence of any material conflicts between the Board
members interests of the various classes of shares. The Board members, including
a majority of the independent Board members, shall take such action as is
reasonably necessary to eliminate any such conflict that may develop. Franklin
Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible
for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of
the Board members, including a majority of the Board members who are not
interested persons of the Investment Company.
11. I, Deborah R. Gatzek, Secretary of the Franklin Group of Funds, do
hereby certify that this Multiple Class Plan was adopted by FRANKLIN TAX-FREE
TRUST, on behalf of its series FRANKLIN FLORIDA TAX-FREE INCOME FUND, by a
majority of the Trustees of the Trust on
- ------------------.
-------------------------------
Deborah R. Gatzek
Secretary
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN INSURED TAX-FREE INCOME FUND
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Trustees of FRANKLIN TAX-FREE TRUST (the "Investment Company") for
its series, FRANKLIN INSURED TAX-FREE INCOME FUND (the "Fund"). The Board has
determined that the Plan, including the expense allocation, is in the best
interests of each class of the Fund and the Investment Company as a whole. The
Plan sets forth the provisions relating to the establishment of multiple classes
of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer three classes of shares, to be known as Class A
Shares, Class B Shares and Class C Shares.
2. Class A Shares shall carry a front-end sales charge ranging from 0% -
4.25%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B
Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales
charge ("CDSC"), except in the following limited circumstances. On investments
of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser
of the then-current net asset value or the original net asset value at the time
of purchase applies to redemptions of those investments within the contingency
period of 12 months from the calendar month following their purchase. The CDSC
is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be
assessed a CDSC of 4% on the lesser of the then-current net asset value or the
original net asset value at the time of purchase; (b) Class B Shares redeemed
within the third and fourth years of their purchase shall be assessed a CDSC of
3% on the lesser of the then-current net asset value or the original net asset
value at the time of purchase; (c) Class B Shares redeemed within 5 years of
their purchase shall be assessed a CDSC of 2% on the lesser of the then-current
net asset value or the original net asset value at the time of purchase; and (d)
Class B Shares redeemed within 6 years of their purchase shall be assessed a
CDSC of 1% on the lesser of the then-current net asset value or the original net
asset value at the time of purchase. The CDSC is waived in certain circumstances
described in the Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
4. The distribution plan adopted by the Investment Company pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule
12b-1 Plan") associated with the Class A Shares may be used to reimburse
Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses
incurred in the promotion and distribution of the Class A Shares. Such expenses
include, but are not limited to, the printing of prospectuses and reports used
for sales purposes, expenses of preparing and distributing sales literature and
related expenses, advertisements, and other distribution-related expenses,
including a prorated portion of the Distributor's overhead expenses attributable
to the distribution of the Class A Shares, as well as any distribution or
service fees paid to securities dealers or their firms or others who have
executed a servicing agreement with the Investment Company for the Class A
Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components.
The first component is an asset-based sales charge to be retained by Distributor
to compensate Distributor for amounts advanced to securities dealers or their
firms or others with respect to the sale of Class B Shares. In addition, such
payments may be retained by the Distributor to be used in the promotion and
distribution of Class B Shares in a manner similar to that described above for
Class A Shares. The second component is a shareholder servicing fee to be paid
to securities dealers or others who provide personal assistance to shareholders
in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two components.
The first component is a shareholder servicing fee, to be paid to
broker-dealers, banks, trust companies and others who maintain shareholder
accounts or provide personal assistance to shareholders in servicing their
accounts. The second component is an asset-based sales charge to be retained by
the Distributor during the first year after the sale of shares and, in
subsequent years, to be paid to dealers or retained by the Distributor to be
used in the promotion and distribution of Class C Shares, in a manner similar to
that described above for Class A Shares.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with Rule 2830(d) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B and Class C
Shares shall relate to differences in Rule 12b-1 plan expenses, as described in
the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan
expenses of one Class are the same as the Rule 12b-1 Plan expenses of another
Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A and
Class C Shares. Each Class B Share, however, shall be converted automatically,
and without any action or choice on the part of the holder of the Class B
Shares, into Class A Shares on the conversion date specified, and in accordance
with the terms and conditions approved by the Franklin Tax-Free Trust's Board of
Trustees and as described, in each fund's prospectus relating to the Class B
Shares, as such prospectus may be amended from time to time; provided, however,
that the Class B Shares shall be converted automatically into Class A Shares to
the extent and on the terms permitted by the Investment Company Act of 1940 and
the rules and regulations adopted thereunder.
7. Shares of Class A, Class B and Class C may be exchanged for shares of
another investment company within the Franklin Templeton Group of Funds
according to the terms and conditions stated in each fund's prospectus, as it
may be amended from time to time, to the extent permitted by the Investment
Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan
related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary
responsibilities under the Investment Company Act of 1940 and otherwise, will
monitor the Fund for the existence of any material conflicts between the Board
members interests of the various classes of shares. The Board members, including
a majority of the independent Board members, shall take such action as is
reasonably necessary to eliminate any such conflict that may develop. Franklin
Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible
for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of
the Board members, including a majority of the Board members who are not
interested persons of the Investment Company.
11. I, Deborah R. Gatzek, Secretary of the Franklin Group of Funds, do
hereby certify that this Multiple Class Plan was adopted by FRANKLIN TAX-FREE
TRUST, on behalf of its series FRANKLIN INSURED TAX-FREE INCOME FUND, by a
majority of the Trustees of the Trust on
- ------------------.
-------------------------------
Deborah R. Gatzek
Secretary
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN MICHIGAN INSURED TAX-FREE INCOME FUND
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Trustees of FRANKLIN TAX-FREE TRUST (the "Investment Company") for
its series, FRANKLIN MICHIGAN INSURED TAX-FREE INCOME FUND (the "Fund"). The
Board has determined that the Plan, including the expense allocation, is in the
best interests of each class of the Fund and the Investment Company as a whole.
The Plan sets forth the provisions relating to the establishment of multiple
classes of shares of the Fund, and supersedes any Plan previously adopted for
the Fund.
1. The Fund shall offer three classes of shares, to be known as Class A
Shares, Class B Shares and Class C Shares.
2. Class A Shares shall carry a front-end sales charge ranging from 0% -
4.25%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B
Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales
charge ("CDSC"), except in the following limited circumstances. On investments
of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser
of the then-current net asset value or the original net asset value at the time
of purchase applies to redemptions of those investments within the contingency
period of 12 months from the calendar month following their purchase. The CDSC
is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be
assessed a CDSC of 4% on the lesser of the then-current net asset value or the
original net asset value at the time of purchase; (b) Class B Shares redeemed
within the third and fourth years of their purchase shall be assessed a CDSC of
3% on the lesser of the then-current net asset value or the original net asset
value at the time of purchase; (c) Class B Shares redeemed within 5 years of
their purchase shall be assessed a CDSC of 2% on the lesser of the then-current
net asset value or the original net asset value at the time of purchase; and (d)
Class B Shares redeemed within 6 years of their purchase shall be assessed a
CDSC of 1% on the lesser of the then-current net asset value or the original net
asset value at the time of purchase. The CDSC is waived in certain circumstances
described in the Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
4. The distribution plan adopted by the Investment Company pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule
12b-1 Plan") associated with the Class A Shares may be used to reimburse
Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses
incurred in the promotion and distribution of the Class A Shares. Such expenses
include, but are not limited to, the printing of prospectuses and reports used
for sales purposes, expenses of preparing and distributing sales literature and
related expenses, advertisements, and other distribution-related expenses,
including a prorated portion of the Distributor's overhead expenses attributable
to the distribution of the Class A Shares, as well as any distribution or
service fees paid to securities dealers or their firms or others who have
executed a servicing agreement with the Investment Company for the Class A
Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components.
The first component is an asset-based sales charge to be retained by Distributor
to compensate Distributor for amounts advanced to securities dealers or their
firms or others with respect to the sale of Class B Shares. In addition, such
payments may be retained by the Distributor to be used in the promotion and
distribution of Class B Shares in a manner similar to that described above for
Class A Shares. The second component is a shareholder servicing fee to be paid
to securities dealers or others who provide personal assistance to shareholders
in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two components.
The first component is a shareholder servicing fee, to be paid to
broker-dealers, banks, trust companies and others who maintain shareholder
accounts or provide personal assistance to shareholders in servicing their
accounts. The second component is an asset-based sales charge to be retained by
the Distributor during the first year after the sale of shares and, in
subsequent years, to be paid to dealers or retained by the Distributor to be
used in the promotion and distribution of Class C Shares, in a manner similar to
that described above for Class A Shares.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with Rule 2830(d) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B and Class C
Shares shall relate to differences in Rule 12b-1 plan expenses, as described in
the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan
expenses of one Class are the same as the Rule 12b-1 Plan expenses of another
Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A and
Class C Shares. Each Class B Share, however, shall be converted automatically,
and without any action or choice on the part of the holder of the Class B
Shares, into Class A Shares on the conversion date specified, and in accordance
with the terms and conditions approved by the Franklin Tax-Free Trust's Board of
Trustees and as described, in each fund's prospectus relating to the Class B
Shares, as such prospectus may be amended from time to time; provided, however,
that the Class B Shares shall be converted automatically into Class A Shares to
the extent and on the terms permitted by the Investment Company Act of 1940 and
the rules and regulations adopted thereunder.
7. Shares of Class A, Class B and Class C may be exchanged for shares of
another investment company within the Franklin Templeton Group of Funds
according to the terms and conditions stated in each fund's prospectus, as it
may be amended from time to time, to the extent permitted by the Investment
Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan
related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary
responsibilities under the Investment Company Act of 1940 and otherwise, will
monitor the Fund for the existence of any material conflicts between the Board
members interests of the various classes of shares. The Board members, including
a majority of the independent Board members, shall take such action as is
reasonably necessary to eliminate any such conflict that may develop. Franklin
Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible
for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of
the Board members, including a majority of the Board members who are not
interested persons of the Investment Company.
11. I, Deborah R. Gatzek, Secretary of the Franklin Group of Funds, do
hereby certify that this Multiple Class Plan was adopted by FRANKLIN TAX-FREE
TRUST, on behalf of its series FRANKLIN MICHIGAN INSURED TAX-FREE INCOME FUND,
by a majority of the Trustees of the Trust on __________________.
-------------------------------
Deborah R. Gatzek
Secretary
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN NEW JERSEY TAX-FREE INCOME FUND
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Trustees of FRANKLIN TAX-FREE TRUST (the "Investment Company") for
its series, FRANKLIN NEW JERSEY TAX-FREE INCOME FUND (the "Fund"). The Board has
determined that the Plan, including the expense allocation, is in the best
interests of each class of the Fund and the Investment Company as a whole. The
Plan sets forth the provisions relating to the establishment of multiple classes
of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer three classes of shares, to be known as Class A
Shares, Class B Shares and Class C Shares.
2. Class A Shares shall carry a front-end sales charge ranging from 0% -
4.25%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B
Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales
charge ("CDSC"), except in the following limited circumstances. On investments
of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser
of the then-current net asset value or the original net asset value at the time
of purchase applies to redemptions of those investments within the contingency
period of 12 months from the calendar month following their purchase. The CDSC
is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be
assessed a CDSC of 4% on the lesser of the then-current net asset value or the
original net asset value at the time of purchase; (b) Class B Shares redeemed
within the third and fourth years of their purchase shall be assessed a CDSC of
3% on the lesser of the then-current net asset value or the original net asset
value at the time of purchase; (c) Class B Shares redeemed within 5 years of
their purchase shall be assessed a CDSC of 2% on the lesser of the then-current
net asset value or the original net asset value at the time of purchase; and (d)
Class B Shares redeemed within 6 years of their purchase shall be assessed a
CDSC of 1% on the lesser of the then-current net asset value or the original net
asset value at the time of purchase. The CDSC is waived in certain circumstances
described in the Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
4. The distribution plan adopted by the Investment Company pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule
12b-1 Plan") associated with the Class A Shares may be used to reimburse
Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses
incurred in the promotion and distribution of the Class A Shares. Such expenses
include, but are not limited to, the printing of prospectuses and reports used
for sales purposes, expenses of preparing and distributing sales literature and
related expenses, advertisements, and other distribution-related expenses,
including a prorated portion of the Distributor's overhead expenses attributable
to the distribution of the Class A Shares, as well as any distribution or
service fees paid to securities dealers or their firms or others who have
executed a servicing agreement with the Investment Company for the Class A
Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components.
The first component is an asset-based sales charge to be retained by Distributor
to compensate Distributor for amounts advanced to securities dealers or their
firms or others with respect to the sale of Class B Shares. In addition, such
payments may be retained by the Distributor to be used in the promotion and
distribution of Class B Shares in a manner similar to that described above for
Class A Shares. The second component is a shareholder servicing fee to be paid
to securities dealers or others who provide personal assistance to shareholders
in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two components.
The first component is a shareholder servicing fee, to be paid to
broker-dealers, banks, trust companies and others who maintain shareholder
accounts or provide personal assistance to shareholders in servicing their
accounts. The second component is an asset-based sales charge to be retained by
the Distributor during the first year after the sale of shares and, in
subsequent years, to be paid to dealers or retained by the Distributor to be
used in the promotion and distribution of Class C Shares, in a manner similar to
that described above for Class A Shares.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with Rule 2830(d) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B and Class C
Shares shall relate to differences in Rule 12b-1 plan expenses, as described in
the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan
expenses of one Class are the same as the Rule 12b-1 Plan expenses of another
Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A and
Class C Shares. Each Class B Share, however, shall be converted automatically,
and without any action or choice on the part of the holder of the Class B
Shares, into Class A Shares on the conversion date specified, and in accordance
with the terms and conditions approved by the Franklin Tax-Free Trust's Board of
Trustees and as described, in each fund's prospectus relating to the Class B
Shares, as such prospectus may be amended from time to time; provided, however,
that the Class B Shares shall be converted automatically into Class A Shares to
the extent and on the terms permitted by the Investment Company Act of 1940 and
the rules and regulations adopted thereunder.
7. Shares of Class A, Class B and Class C may be exchanged for shares of
another investment company within the Franklin Templeton Group of Funds
according to the terms and conditions stated in each fund's prospectus, as it
may be amended from time to time, to the extent permitted by the Investment
Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan
related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary
responsibilities under the Investment Company Act of 1940 and otherwise, will
monitor the Fund for the existence of any material conflicts between the Board
members interests of the various classes of shares. The Board members, including
a majority of the independent Board members, shall take such action as is
reasonably necessary to eliminate any such conflict that may develop. Franklin
Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible
for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of
the Board members, including a majority of the Board members who are not
interested persons of the Investment Company.
11. I, Deborah R. Gatzek, Secretary of the Franklin Group of Funds, do
hereby certify that this Multiple Class Plan was adopted by FRANKLIN TAX-FREE
TRUST, on behalf of its series FRANKLIN NEW JERSEY TAX-FREE INCOME FUND, by a
majority of the Trustees of the Trust on
- ------------------.
-------------------------------
Deborah R. Gatzek
Secretary
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN OHIO INSURED TAX-FREE INCOME FUND
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Trustees of FRANKLIN TAX-FREE TRUST (the "Investment Company") for
its series, FRANKLIN OHIO INUSRED TAX-FREE INCOME FUND (the "Fund"). The Board
has determined that the Plan, including the expense allocation, is in the best
interests of each class of the Fund and the Investment Company as a whole. The
Plan sets forth the provisions relating to the establishment of multiple classes
of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer three classes of shares, to be known as Class A
Shares, Class B Shares and Class C Shares.
2. Class A Shares shall carry a front-end sales charge ranging from 0% -
4.25%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B
Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales
charge ("CDSC"), except in the following limited circumstances. On investments
of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser
of the then-current net asset value or the original net asset value at the time
of purchase applies to redemptions of those investments within the contingency
period of 12 months from the calendar month following their purchase. The CDSC
is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be
assessed a CDSC of 4% on the lesser of the then-current net asset value or the
original net asset value at the time of purchase; (b) Class B Shares redeemed
within the third and fourth years of their purchase shall be assessed a CDSC of
3% on the lesser of the then-current net asset value or the original net asset
value at the time of purchase; (c) Class B Shares redeemed within 5 years of
their purchase shall be assessed a CDSC of 2% on the lesser of the then-current
net asset value or the original net asset value at the time of purchase; and (d)
Class B Shares redeemed within 6 years of their purchase shall be assessed a
CDSC of 1% on the lesser of the then-current net asset value or the original net
asset value at the time of purchase. The CDSC is waived in certain circumstances
described in the Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
4. The distribution plan adopted by the Investment Company pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule
12b-1 Plan") associated with the Class A Shares may be used to reimburse
Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses
incurred in the promotion and distribution of the Class A Shares. Such expenses
include, but are not limited to, the printing of prospectuses and reports used
for sales purposes, expenses of preparing and distributing sales literature and
related expenses, advertisements, and other distribution-related expenses,
including a prorated portion of the Distributor's overhead expenses attributable
to the distribution of the Class A Shares, as well as any distribution or
service fees paid to securities dealers or their firms or others who have
executed a servicing agreement with the Investment Company for the Class A
Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components.
The first component is an asset-based sales charge to be retained by Distributor
to compensate Distributor for amounts advanced to securities dealers or their
firms or others with respect to the sale of Class B Shares. In addition, such
payments may be retained by the Distributor to be used in the promotion and
distribution of Class B Shares in a manner similar to that described above for
Class A Shares. The second component is a shareholder servicing fee to be paid
to securities dealers or others who provide personal assistance to shareholders
in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two components.
The first component is a shareholder servicing fee, to be paid to
broker-dealers, banks, trust companies and others who maintain shareholder
accounts or provide personal assistance to shareholders in servicing their
accounts. The second component is an asset-based sales charge to be retained by
the Distributor during the first year after the sale of shares and, in
subsequent years, to be paid to dealers or retained by the Distributor to be
used in the promotion and distribution of Class C Shares, in a manner similar to
that described above for Class A Shares.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with Rule 2830(d) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B and Class C
Shares shall relate to differences in Rule 12b-1 plan expenses, as described in
the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan
expenses of one Class are the same as the Rule 12b-1 Plan expenses of another
Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A and
Class C Shares. Each Class B Share, however, shall be converted automatically,
and without any action or choice on the part of the holder of the Class B
Shares, into Class A Shares on the conversion date specified, and in accordance
with the terms and conditions approved by the Franklin Tax-Free Trust's Board of
Trustees and as described, in each fund's prospectus relating to the Class B
Shares, as such prospectus may be amended from time to time; provided, however,
that the Class B Shares shall be converted automatically into Class A Shares to
the extent and on the terms permitted by the Investment Company Act of 1940 and
the rules and regulations adopted thereunder.
7. Shares of Class A, Class B and Class C may be exchanged for shares of
another investment company within the Franklin Templeton Group of Funds
according to the terms and conditions stated in each fund's prospectus, as it
may be amended from time to time, to the extent permitted by the Investment
Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan
related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary
responsibilities under the Investment Company Act of 1940 and otherwise, will
monitor the Fund for the existence of any material conflicts between the Board
members interests of the various classes of shares. The Board members, including
a majority of the independent Board members, shall take such action as is
reasonably necessary to eliminate any such conflict that may develop. Franklin
Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible
for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of
the Board members, including a majority of the Board members who are not
interested persons of the Investment Company.
11. I, Deborah R. Gatzek, Secretary of the Franklin Group of Funds, do
hereby certify that this Multiple Class Plan was adopted by FRANKLIN TAX-FREE
TRUST, on behalf of its series FRANKLIN OHIO INSURED TAX-FREE INCOME FUND, by a
majority of the Trustees of the Trust on __________________.
-------------------------------
Deborah R. Gatzek
Secretary
MULTIPLE CLASS PLAN
ON BEHALF OF
FRANKLIN PENNSYLVANIA TAX-FREE INCOME FUND
This Multiple Class Plan (the "Plan") has been adopted by a majority of
the Board of Trustees of FRANKLIN TAX-FREE TRUST (the "Investment Company") for
its series, FRANKLIN PENNSYLVANIA TAX-FREE INCOME FUND (the "Fund"). The Board
has determined that the Plan, including the expense allocation, is in the best
interests of each class of the Fund and the Investment Company as a whole. The
Plan sets forth the provisions relating to the establishment of multiple classes
of shares of the Fund, and supersedes any Plan previously adopted for the Fund.
1. The Fund shall offer three classes of shares, to be known as Class A
Shares, Class B Shares and Class C Shares.
2. Class A Shares shall carry a front-end sales charge ranging from 0% -
4.25%, and Class C Shares shall carry a front-end sales charge of 1.00%. Class B
Shares shall not be subject to any front-end sales charges.
3. Class A Shares shall not be subject to a contingent deferred sales
charge ("CDSC"), except in the following limited circumstances. On investments
of $1 million or more, a contingent deferred sales charge of 1.00% of the lesser
of the then-current net asset value or the original net asset value at the time
of purchase applies to redemptions of those investments within the contingency
period of 12 months from the calendar month following their purchase. The CDSC
is waived in certain circumstances, as described in the Fund's prospectus.
Class B Shares shall be subject to a CDSC with the following CDSC
schedule: (a) Class B Shares redeemed within 2 years of their purchase shall be
assessed a CDSC of 4% on the lesser of the then-current net asset value or the
original net asset value at the time of purchase; (b) Class B Shares redeemed
within the third and fourth years of their purchase shall be assessed a CDSC of
3% on the lesser of the then-current net asset value or the original net asset
value at the time of purchase; (c) Class B Shares redeemed within 5 years of
their purchase shall be assessed a CDSC of 2% on the lesser of the then-current
net asset value or the original net asset value at the time of purchase; and (d)
Class B Shares redeemed within 6 years of their purchase shall be assessed a
CDSC of 1% on the lesser of the then-current net asset value or the original net
asset value at the time of purchase. The CDSC is waived in certain circumstances
described in the Fund's prospectus.
Class C Shares redeemed within 18 months of their purchase shall be
assessed a CDSC of 1.00% on the lesser of the then-current net asset value or
the original net asset value at the time of purchase. The CDSC is waived in
certain circumstances as described in the Fund's prospectus.
4. The distribution plan adopted by the Investment Company pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, (the "Rule
12b-1 Plan") associated with the Class A Shares may be used to reimburse
Franklin/Templeton Distributors, Inc. (the "Distributor") or others for expenses
incurred in the promotion and distribution of the Class A Shares. Such expenses
include, but are not limited to, the printing of prospectuses and reports used
for sales purposes, expenses of preparing and distributing sales literature and
related expenses, advertisements, and other distribution-related expenses,
including a prorated portion of the Distributor's overhead expenses attributable
to the distribution of the Class A Shares, as well as any distribution or
service fees paid to securities dealers or their firms or others who have
executed a servicing agreement with the Investment Company for the Class A
Shares, the Distributor or its affiliates.
The Rule 12b-1 Plan associated with the Class B Shares has two components.
The first component is an asset-based sales charge to be retained by Distributor
to compensate Distributor for amounts advanced to securities dealers or their
firms or others with respect to the sale of Class B Shares. In addition, such
payments may be retained by the Distributor to be used in the promotion and
distribution of Class B Shares in a manner similar to that described above for
Class A Shares. The second component is a shareholder servicing fee to be paid
to securities dealers or others who provide personal assistance to shareholders
in servicing their accounts.
The Rule 12b-1 Plan associated with the Class C Shares has two components.
The first component is a shareholder servicing fee, to be paid to
broker-dealers, banks, trust companies and others who maintain shareholder
accounts or provide personal assistance to shareholders in servicing their
accounts. The second component is an asset-based sales charge to be retained by
the Distributor during the first year after the sale of shares and, in
subsequent years, to be paid to dealers or retained by the Distributor to be
used in the promotion and distribution of Class C Shares, in a manner similar to
that described above for Class A Shares.
The Rule 12b-1 Plans for the Class A, Class B and Class C Shares shall
operate in accordance with Rule 2830(d) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
5. The only difference in expenses as between Class A, Class B and Class C
Shares shall relate to differences in Rule 12b-1 plan expenses, as described in
the applicable Rule 12b-1 Plans; however, to the extent that the Rule 12b-1 Plan
expenses of one Class are the same as the Rule 12b-1 Plan expenses of another
Class, such classes shall be subject to the same expenses.
6. There shall be no conversion features associated with the Class A and
Class C Shares. Each Class B Share, however, shall be converted automatically,
and without any action or choice on the part of the holder of the Class B
Shares, into Class A Shares on the conversion date specified, and in accordance
with the terms and conditions approved by the Franklin Tax-Free Trust's Board of
Trustees and as described, in each fund's prospectus relating to the Class B
Shares, as such prospectus may be amended from time to time; provided, however,
that the Class B Shares shall be converted automatically into Class A Shares to
the extent and on the terms permitted by the Investment Company Act of 1940 and
the rules and regulations adopted thereunder.
7. Shares of Class A, Class B and Class C may be exchanged for shares of
another investment company within the Franklin Templeton Group of Funds
according to the terms and conditions stated in each fund's prospectus, as it
may be amended from time to time, to the extent permitted by the Investment
Company Act of 1940 and the rules and regulations adopted thereunder.
8. Each class will vote separately with respect to any Rule 12b-1 Plan
related to, or which now or in the future may affect, that class.
9. On an ongoing basis, the Board members, pursuant to their fiduciary
responsibilities under the Investment Company Act of 1940 and otherwise, will
monitor the Fund for the existence of any material conflicts between the Board
members interests of the various classes of shares. The Board members, including
a majority of the independent Board members, shall take such action as is
reasonably necessary to eliminate any such conflict that may develop. Franklin
Advisers, Inc. and Franklin/Templeton Distributors, Inc. shall be responsible
for alerting the Board to any material conflicts that arise.
10. All material amendments to this Plan must be approved by a majority of
the Board members, including a majority of the Board members who are not
interested persons of the Investment Company.
11. I, Deborah R. Gatzek, Secretary of the Franklin Group of Funds, do
hereby certify that this Multiple Class Plan was adopted by FRANKLIN TAX-FREE
TRUST, on behalf of its series FRANKLIN PENNSYLVANIA TAX-FREE INCOME FUND, by a
majority of the Trustees of the Trust on __________________.
-------------------------------
Deborah R. Gatzek
Secretary
POWER OF ATTORNEY
The undersigned officers and trustees of FRANKLIN TAX-FREE TRUST (the
"Registrant") hereby appoint MARK H. PLAFKER, HARMON E. BURNS, DEBORAH R.
GATZEK, KAREN L. SKIDMORE, LEIANN NUZUM, Murray L. Simpson, Barbara J. Green and
David P. Goss (with full power to each of them to act alone) his
attorney-in-fact and agent, in all capacities, to execute, deliver and file in
the names of the undersigned, any and all instruments that said attorneys and
agents may deem necessary or advisable to enable the Registrant to comply with
or register any security issued by the Registrant under the Securities Act of
1933, as amended, and/or the Investment Company Act of 1940, as amended, and the
rules, regulations and interpretations thereunder, including but not limited to,
any registration statement, including any and all pre- and post-effective
amendments thereto, any other document to be filed with the U.S. Securities and
Exchange Commission and any and all documents required to be filed with respect
thereto with any other regulatory authority. Each of the undersigned grants to
each of said attorneys, full authority to do every act necessary to be done in
order to effectuate the same as fully, to all intents and purposes, as he could
do if personally present, thereby ratifying all that said attorneys-in-fact and
agents may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in one or more counterparts, each
of which shall be deemed to be an original, and all of which shall be deemed to
be a single document.
The undersigned officers and trustees hereby execute this Power of
Attorney as of the 20th day of January, 2000.
/S/ RUPERT H. JOHNSON, JR. /S/ FRANK H. ABBOTT, III
Rupert H. Johnson, Jr., Frank H. Abbott,III,
Principal Executive Officer and Trustee Trustee
/S/HARRIS J. ASHTON /S/ S. JOSEPH FORTUNATO
Harris J. Ashton, S. Joseph Fortunato,
Trustee Trustee
/S/ EDITH E. HOLIDAY /S/ CHARLES B. JOHNSON
Edith E. Holiday, Charles B. Johnson,
Trustee Trustee
/S/FRANK W.T. LAHAYE /S/GORDON S. MACKLIN
Frank W.T. LaHaye, Gordon S. Macklin,
Trustee Trustee
/S/MARTIN L. FLANAGAN /S/KIMBERLEY H. MONASTERIO
Martin L. Flanagan, Kimberley H. Monasterio,
Principal Financial Officer Principal
Accounting Officer
CERTIFICATE OF SECRETARY
I, David P. Goss, certify that I am Assistant Secretary of
FRANKLIN TAX-FREE TRUST the "Trust").
As Assistant Secretary of the Trust, I further certify that the following
resolution was adopted by a majority of the Trustees of the Trust present at a
meeting held at 777 Mariners Island Boulevard, San Mateo, California 94404, on
January 20, 2000.
RESOLVED, that a Power of Attorney, substantially in
the form of the Power of Attorney presented to this
Board, appointing Harmon E. Burns, Deborah R. Gatzek,
Mark H. Plafker, Karen L. Skidmore, Leiann Nuzum,
Murray L. Simpson, Barbara J. Green and David P. Goss
as attorneys-in-fact for the purpose of filing
documents with the Securities and Exchange Commission,
be executed by each Trustee and designated officer.
I declare under penalty of perjury that the matters set forth in this
certificate are true and correct of my own knowledge.
/s/David P. Goss
Dated: JANUARY 27, 2000 David P. Goss
---------------- Assistant Secretary
