NAME OF REGISTRANT Franklin Custodian Funds File No. 811-00537 EXHIBIT ITEM No. 77q1(g): Exhibits AGREEMENT AND PLAN OF REORGANIZATION ? THIS AGREEMENT AND PLAN OF REORGANIZATION (the ?Plan?), is made as of this 1st day of December, 2008, by and...

NAME OF REGISTRANT
Xxxxxxxx Custodian Funds
File No. 811-00537

EXHIBIT ITEM No. 77q1(g): Exhibits


AGREEMENT AND PLAN OF REORGANIZATION
?
    THIS AGREEMENT AND PLAN OF REORGANIZATION (the ?Plan?), is made as of this
1st day of December, 2008, by and between Franklin Custodian Funds, a statutory
trust created under the laws of the State of Delaware (?Acquiring Trust?), with
its principal place of business at Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx,
XX 00000-1906, on behalf of one of its series, Franklin DynaTech Fund
(?Acquiring Fund?), and Franklin Strategic Series, a statutory trust created
under the laws of the State of Delaware (?Target Trust?), with its principal
place of business at Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, XX 00000-1906, on behalf
of its series, Franklin Technology Fund (?Target Fund?).
?
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the ?Plan of Reorganization?)
will consist of the following: (i)?the acquisition by Acquiring Trust,
on behalf of Acquiring Fund, of substantially all of the property,
assets and goodwill of
Target Fund in exchange solely for full and fractional
Class?A, Class B, Class C,
Class R, and Advisor Class shares of beneficial interest, with
no par value, of
Acquiring Fund (?Acquiring Fund Shares?); (ii)?the
 distribution of Acquiring Fund
 Shares to the holders of Class?A, Class B, Class C,
Class R, and Advisor Class
shares of beneficial interest of Target Fund
 (the ?Target Fund Shares?),
respectively, according to their respective
interests in Target Fund in complete
liquidation of Target Fund; and (iii)?the dissolution of Target
 Fund as soon as is
practicable after the closing (as defined in Section?3, hereinafter
called the ?Closing?), all upon and subject to the terms and conditions of the
Plan hereinafter set forth.

AGREEMENT

 In order to consummate the Plan of Reorganization and in consideration of
the premises and of the covenants and agreements hereinafter set forth,
and intending to be legally bound, the parties hereto covenant and agree
as follows:

1. Sale and Transfer of Assets, Liquidation and Dissolution of
 Target Fund.

    (a) Subject to the terms and conditions of the Plan, and in reliance
on the representations and warranties of Acquiring Trust, on behalf of
Acquiring Fund, herein contained, and in consideration of the delivery
by Acquiring Trust of the number of Acquiring Fund Shares hereinafter
 provided, Target Trust on behalf of Target Fund agrees that, at the
time of Closing, it will convey, transfer and deliver to Acquiring Trust,
 for the benefit of Acquiring Fund, all of Target Fund?s then existing
assets, including any interest in pending or future legal claims in
connection with past or present portfolio holdings, whether in the
form of class action claims, opt-out or other direct litigation
claims, or regulator or government-established investor recovery
fund claims, and any and all resulting recoveries, free and clear
of all liens, encumbrances, and claims whatsoever (other than
shareholders? rights of redemption), except for cash,
 bank deposits, or cash equivalent securities in an estimated amount
 necessary to: (i)?pay 25% of the costs and expenses of carrying out
the Plan (including, but not limited to, fees of counsel and accountants,
and expenses of its liquidation and dissolution contemplated hereunder),
 in accordance with
Section 9 of the Plan, which costs and expenses shall be established on
Target Fund?s books as liability
reserves; (ii)?discharge its unpaid liabilities
on its books at the closing date (as defined in Section?3, hereinafter
called the ?Closing Date?),
including, but not limited to, its income
dividends and capital gains distributions,
if any, payable for the period prior to, and through, the Closing Date; and
(iii)?pay such contingent liabilities as the Board of Trustees of Target Trust
 shall reasonably deem to exist against
 Target Fund, if any, at the Closing Date,
for which contingent and other
appropriate liability reserves shall be established
on Target Fund?s books (hereinafter ?Net Assets?).? Neither Acquiring Trust nor
 Acquiring Fund shall assume any liability of Target Fund or Target Trust, and
Target Fund shall use its reasonable best efforts to discharge all of its known
liabilities, so far as may be possible, from the cash, bank deposits and cash
equivalent securities described above.?
?
    (b) Subject to the terms and conditions of the Plan, and in reliance on the
 representations and warranties of Target Trust, on behalf of Target Fund,
herein contained, and in consideration of such sale, conveyance, transfer,
 and delivery, Acquiring Trust agrees at the Closing to deliver to Target Trust
 the number of Acquiring Fund Shares, determined by dividing the net asset
value per share of Class?A, Class B, Class C, Class R, and Advisor Class shares
 of Target Fund by the net asset value per share of Class?A, Class B, Class C,
 Class R, and Advisor Class shares of Acquiring Fund, respectively, and
separately multiplying the result thereof by the number of outstanding
Class?A, Class B, Class C, Class R, and Advisor Class shares of Target
Fund as of 1:00 p.m., Pacific Time, on the Closing Date.? Acquiring
Fund Shares delivered to Target Trust at the Closing shall have an aggregate
net asset value equal to the value of Target Fund?s Net Assets, all
determined as provided in Section?2 of the Plan and as of the date and time
specified herein.
?
    (c) Immediately following the Closing, Target Trust shall dissolve
Target Fund and distribute
pro rata to Target Fund?s shareholders
of record, as of the close of business on the Closing Date, Acquiring
Fund Shares received by Target Fund pursuant to this Section?1.?
Such dissolution and distribution shall be accomplished by the establishment of
accounts on the share records of Acquiring Fund in
the amounts due such shareholders based on their respective holdings
 as of the close of business on the
Closing Date.? Fractional Acquiring Fund
 Shares shall be carried to the third decimal place.? As promptly as
practicable after the Closing, each holder of any outstanding certificate or
certificates representing shares of beneficial
interest of Target Fund shall be entitled to surrender the same to the
transfer agent for Acquiring Fund in exchange for the number of
Acquiring Fund Shares into which Target Fund Shares theretofore
represented by the certificate or certificates so surrendered shall have
 been converted.? Certificates for Acquiring Fund Shares shall
not be issued, unless specifically requested by the shareholders.?
 Until so surrendered, each outstanding certificate which, prior
to the Closing, represented shares of beneficial interest of Target
 Fund shall be deemed for all Acquiring Fund purposes to evidence
ownership of the number of Acquiring Fund Shares into which Target
 Fund Shares (which prior to the Closing were represented thereby)
have been converted.
?
    (d) At the Closing, each shareholder of record of Target Fund as
 of the record date (the ?Distribution Record Date?) with respect to
any unpaid dividends and other distributions that were declared prior
to the Closing,
 including any dividend or distribution declared pursuant to
Section?8(e) hereof, shall have the right to receive such unpaid dividends
 and distributions with respect to the shares of
Target Fund that such person had on the Distribution Record Date.
?
    (e) All books and records relating to Target Fund, including all
books and records required to be maintained under the Investment
Company Act of 1940, as amended (the ?1940 Act?), and the rules and
regulations thereunder,
shall be available to Acquiring Trust from and after the date of
 the Plan, and shall be turned over to Acquiring Trust on or prior to the
Closing.
?
2. Valuation.
?
    (a) The net asset value of Acquiring Fund Shares and Target
 Fund Shares and the value of Target Fund?s Net Assets to
 be acquired by Acquiring Fund hereunder shall in each case be
 computed as of 1:00 p.m., Pacific Time, on
the Closing Date, unless on such date: (a)?the New York Stock
Exchange (?NYSE?) is not open for unrestricted trading; or (b)?the
reporting of trading on the NYSE or elsewhere
is disrupted; or (c)?any other extraordinary financial event or
market condition occurs (all such events described in (a), (b)?or (c)?are
 each referred to as
 a ?Market Disruption?).  The net asset value per share of Acquiring
Fund Shares and Target Fund Shares and the value of Target Fund?s
Net Assets shall be computed in accordance with
the valuation procedures set forth in the most recent respective
prospectuses of Acquiring Fund and Target Fund, or amendments thereto.
?
    (b) In the event of a Market Disruption on the proposed
Closing Date, so that an accurate appraisal of the net asset
value of Acquiring Fund Shares or Target Fund Shares or the value of
Target Fund?s Net Assets is impracticable,
 the Closing Date shall be postponed until the first business day
when regular trading on the NYSE shall have been fully resumed
and reporting shall have been restored
and other trading markets are otherwise stabilized.
?
3. Closing and Closing Date.
?
    The Closing Date shall be December 3, 2008 or such later date
as the parties may mutually agree.? The Closing shall take place
at the principal office of Acquiring Trust at 2:00 p.m., Pacific Time,
on the Closing Date.? Target
 Trust on behalf of Target Fund shall have provided for delivery
as of the Closing of those Net Assets of Target Fund to be transferred
 to the account of Acquiring Fund?s
Custodian, Bank of New York Mellon, Mutual Funds Division, 000
Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000.? Also, Target Trust, on behalf of
 Target Fund, shall deliver at the
 Closing a list of names and addresses of the shareholders of record
of Target Fund Shares and the number of full and fractional shares of
beneficial interest owned
by each such shareholder, indicating thereon which such shares are
represented by outstanding certificates and which by book-entry
accounts, all as of 1:00 p.m.,
Pacific Time, on the Closing Date, certified by its transfer agent or
by its President to the best of its or his knowledge and belief.?
Acquiring Trust on behalf of Acquiring
Fund shall provide evidence satisfactory to Target Trust that such
Acquiring Fund Shares have been registered in an account on the
books of Acquiring Fund in such
manner as the officers of Target Trust on behalf of Target Fund
may reasonably request.
?
4. Representations and Warranties by Acquiring Trust on
behalf of Acquiring Fund.
?
    Acquiring Trust, on behalf of Acquiring Fund, represents and
warrants to Target Trust that:
?
    (a) Acquiring Fund is a series of Acquiring Trust, a statutory
trust organized originally as a Delaware corporation in
September 1947,
 reincorporated as a Maryland corporation in 1979, and converted
into a Delaware statutory trust
effective February 1, 2008.? Acquiring Trust is duly registered under
the 1940 Act as an open-end, management investment company
and all of Acquiring Fund Shares
sold were sold pursuant to an effective registration statement filed
under the Securities Act of 1933, as amended (the ?1933 Act?),
except for those shares sold pursuant
 to the private offering exemption for the purposes of raising initial
capital or obtaining any required initial shareholder approvals.
?
    (b) Acquiring Trust is authorized to issue an unlimited number
shares of beneficial interest, without par value, of Acquiring Fund,
 each outstanding share of which is, and each share of which when
 issued pursuant to and in accordance
with the Plan will be, fully paid, non-assessable, and has or will have
full voting rights.? Acquiring Trust currently issues shares of five (5)?
series, including Acquiring
 Fund.? Acquiring Fund issues five classes of shares: Class?A, Class B,
Class C, Class R, and Advisor Class shares.? No shareholder of Acquiring
Trust shall have any
preemptive or other right to subscribe for Acquiring Fund Shares.
?
    (c) The financial statements appearing in Acquiring Fund?s Annual
 Report to Shareholders for the fiscal year ended September 30, 2007,
 audited by PricewaterhouseCoopers LLP, and unaudited Semi-Annual
Report to Shareholders for the period ended March 31, 2008, copies of
which have been delivered to Target Trust, and any interim unaudited
financial statements, copies of which
 may be furnished to Target Trust, fairly present the financial position of
Acquiring Fund as of their respective dates and the results of Acquiring
 Fund?s operations for
 the periods indicated in conformity with Generally Accepted Accounting
 Principles applied on a consistent basis.
?
    (d) The books and records of Acquiring Fund accurately summarize
the accounting data represented and contain no material omissions with
respect to the business and operations of Acquiring Fund.

    (e) Acquiring Trust, on behalf of Acquiring Fund, is not a party to or
obligated under any provision of its Agreement and Declaration of Trust
 or By-laws, or any contract or any other commitment or obligation and is
not subject to
any order or decree that would be violated by its execution of or
 performance under the Plan, and no consent, approval, authorization or
order of any court or governmental
 authority is required for the consummation by Acquiring Fund or
Acquiring Trust of the transactions contemplated by the Plan, except for
the registration
 of Acquiring Fund Shares under the 1933 Act, the 1940 Act, or as
may otherwise be required under the federal and state securities laws or
 the rules and regulations thereunder.
?
    (f) Acquiring Trust has elected to treat Acquiring Fund as a regulated
investment company (?RIC?) for federal income tax purposes under
Part I of Subchapter M of the Internal Revenue Code of 1986, as
amended (the ?Code?). Acquiring
 Fund is a ?fund? as defined in
 Section?851(g)(2) of the
 Code, has qualified as a RIC
for each taxable year since its inception, and
intends to continue to qualify as a RIC
 as of the Closing Date, and consummation
 of the transactions
 contemplated by the Plan will not cause it to fail to be qualified
as a RIC as of the Closing Date.
?
    (g) Acquiring Fund is not under jurisdiction of a Court in a
Title 11 or similar case within the meaning of Section?368(a)(3)(A)
 of the Code.

    (h) Acquiring Fund does not have
 any unamortized or unpaid
organizational fees or expenses.
?
    (i) Acquiring Fund does not have any known liabilities, costs or
 expenses of a material amount, contingent or otherwise, other
 than those incurred in the ordinary course of business as an
investment company.
?
    (j) There is no intercorporate indebtedness existing between
 Target Fund and Acquiring Fund that was issued, acquired, or
will be settled at a discount.
?
    (k) Acquiring Fund does not own, directly or indirectly, nor has
 it owned during the past five (5)?years, directly or indirectly,
any shares of Target Fund.
?
    (l) Acquiring Trust has no plan or intention to issue additional
shares of Acquiring Fund following the Plan of Reorganization
except for shares issued in the ordinary course of Acquiring Fund?s
 business as a series of an open-end
investment company; nor does Acquiring Trust have any plan or
intention to redeem or otherwise reacquire any shares of Acquiring
 Fund issued pursuant to the
Plan of Reorganization, either directly or through any transaction,
agreement, or arrangement with any other person, other than in
the ordinary course of its business or to
the extent necessary to comply with its legal obligation under
Section?22(e) of the 1940 Act.
?
    (m) Acquiring Fund is in the same line of business as Target Fund
before the Plan of Reorganization and did not enter into such line of
 business as part of the Plan of Reorganization. Acquiring Fund will
actively continue Target Fund?s
 business in substantially the same manner that Target Fund
conducted that business immediately before the Plan of Reorganization
and has no plan or intention to
change such business. On the Closing Date, Acquiring Fund expects
that at least 33?1/3% of Target Fund?s portfolio assets will meet
 the investment objectives, strategies, policies, risks and restrictions
 of Acquiring Fund. Acquiring Fund has no plan or intention to change
any of its investment objectives, strategies, policies,
risks and restrictions after the Plan of Reorganization. Acquiring
 Fund has no plan or intention to sell or otherwise dispose of any of the
 former assets of Target Fund,
except for dispositions made in the ordinary course of its business
or dispositions necessary to maintain its qualification as a RIC, although
in the ordinary course of its business, Acquiring Fund will continuously
review its investment portfolio (as Target Fund did before the Closing)
to determine whether to
retain or dispose of particular securities, including those included among
the former assets of Target Fund.
?
    (n) The registration statement on Form N-14 referred to in
Section?7(g) hereof (the ?Registration Statement?), and any
prospectus or statement of additional information of Acquiring Fund contained
or incorporated therein by
reference, and any supplement or amendment to the Registration
Statement or any such prospectus or statement of additional information, on the
effective and clearance
 dates of the Registration Statement, on the date of the
Special Meeting of Target Fund shareholders, and on the Closing
Date: (i)?shall comply in all material respects with the provisions
of the 1933 Act, the Securities Exchange Act of 1934, as amended
(the ?1934 Act?),
the 1940 Act, the rules and regulations thereunder,
and all applicable state securities laws and the rules and regulations
 thereunder; and (ii)?shall not contain any untrue statement of a material
 fact or omit to state any material
 fact required to be stated therein or necessary to make the
 statements therein, in light of the circumstances under which the
statements were made,
not misleading.

5. Representations and Warranties by Target Trust on
behalf of Target Fund.
?
    Target Trust, on behalf of Target Fund, represents and
warrants to Acquiring Trust that:
?
    (a) Target Fund is series of Target Trust, a statutory trust
 originally organized under the laws of Delaware on January 25, 1991.
??Target Trust is duly registered under the 1940 Act as an open-end,
management investment company and
 all of Target Fund Shares sold were sold pursuant to an effective
registration statement filed under the 1933 Act, except for those
shares sold pursuant to the private
offering exemption for the purpose of raising the required initial
capital or obtaining any required initial shareholder approvals.
?
    (b) Target Trust is authorized to issue an unlimited number of
 shares of beneficial interest, without par value, of Target Fund,
 each outstanding share of which is fully paid, non-assessable, and has
full voting rights.  Target Trust
 issues shares of eleven (11)?series, including Target Fund.?
Target Fund has five classes of shares (Class?A, Class B, Class C,
Class R, and Advisor Class) and an
 unlimited number of shares of beneficial interest of Target
Trust have been allocated and designated to each share class
of Target Fund.? No shareholder of Target
Trust has or will have any option, warrant, or preemptive rights
of subscription or purchase with respect to Target Fund Shares.
?
    (c) The financial statements appearing in Target Fund?s
Annual Report to Shareholders for the fiscal year ended
April 30, 2008, audited by PricewaterhouseCoopers LLP, copies
 of which have been delivered to Acquiring Trust,
 and any interim financial statements for Target Fund that may
be furnished to Acquiring Trust, fairly present the financial position
 of Target Fund as of their respective
 dates and the results of Target Fund?s operations for the periods
 indicated in conformity with generally accepted accounting
principles applied on a
 consistent basis.

    (d) Target Trust, on behalf of Target Fund, is not a party to or
 obligated under any provision of its Agreement and Declaration
of Trust or Bylaws, as amended, or any contract or any other
 commitment or obligation, and is not
subject to any order or decree, that would be violated by its
 execution of or performance under the Plan.? Target Fund has
 no material contracts or other commitments
 (other than the Plan or agreements for the purchase of
securities entered into in the ordinary course of business and
consistent with its obligations under the Plan)
 which will not be terminated by Target Fund in accordance
with their terms at or prior to the Closing Date, or which will
 result in a penalty or additional fee to be due or
 payable by Target Fund.
?
    (e) Target Trust has elected to treat Target Fund as a RIC
 for federal income tax purposes under Part I of Subchapter
M of the Code.? Target Fund is a ?fund? as defined in
 Section?851(g)(2) of the Code, has qualified as a
 RIC for each taxable year since its inception, and will qualify
as a RIC as of the Closing Date, and consummation of the
transactions contemplated by the Plan
will not cause it to fail to be qualified as a RIC as of the
Closing Date.
?
    (f) Target Fund is not under jurisdiction of a Court in a Title
11 or similar case within the meaning of Section?368(a)(3)(A)
of the Code.
?
    (g) Target Fund does not have any unamortized or unpaid
organization fees or expenses.
?
    (h) Target Fund does not have any known liabilities, costs
 or expenses of a material amount, contingent or otherwise,
 other than those reflected in the financial statements referred
to in Section?5(c) hereof and those
 incurred in the ordinary course of business as an investment
company and of a nature and amount similar to, and consistent
with, those shown in such financial statements
since the dates of those financial statements.
?
    (i) Since April 30, 2008, there has not been any material
 adv
erse change in Target Fund?s financial condition, assets,
liabilities,
 or business other than changes occurring in the ordinary course
 of its business.
?
    (j) No consent, approval, authorization, or order of any court or
 governmental authority is required for the consummation by Target
Fund or Target Trust of the transactions contemplated by the Plan,
except the necessary Target
 Fund shareholder approval, or as may otherwise be required under
the federal or state securities laws or the rules and regulations
 thereunder.
?
    (k) There is no intercorporate indebtedness existing between
Target Fund and Acquiring Fund that was issued, acquired, or
 will be settled at a discount.
?
    (l) During the five-year period ending on the Closing Date,
 (i)?Target Fund has not acquired, and will not acquire, Target
 Fund Shares with consideration other than Acquiring Fund
Shares or Target Fund Shares, except for
redemptions in the ordinary course of Target Fund?s business
 or to the extent necessary to comply with its legal obligation
under Section?22(e) of the 1940 Act, and (ii)?no
distributions have been made with respect to Target Fund
Shares (other than regular, normal dividend distributions
made pursuant to Target Fund?s historic
dividend paying practice), either directly or through any
transaction, agreement, or arrangement with any other person,
 except for distributions described in Sections 852
and 4982 of the Code.
?
    (m) As of the Closing Date, Target Fund will not have
outstanding any warrants, options, convertible securities,
or any other type of rights pursuant to which any person could
 acquire shares of Target Fund, except for th
e right of investors to acquire its shares at the applicable
 stated offering price in the normal course of its business
as an open-end management investment company
 operating under the 1940 Act.
?
    (n) Throughout the five year period ending on the
Closing Date, Target Fund will have conducted its
 historic business within the meaning of Section?1.368-1(d)
of the Income Tax Regulations under the Code.?
Target Fund did
not enter into (or expand) a line of business as part of the
Plan of Reorganization.? Target Fund will not alter its
investment portfolio in connection with the Plan of
 Reorganization.
?
6. Representations and Warranties by Target Trust and
 Acquiring Trust.
?
    Target Trust, on behalf of Target Fund, and Acquiring
Trust, on behalf of Acquiring Fund, each represents and
 warrants to the other that:
?
    (a) The statement of assets and liabilities to be furnished
 by it as of 1:00 p.m., Pacific Time, on the Closing Date
for the purpose of determining the number of Acquiring Fund
Shares to be issued pursuant to Section?1
of the Plan, will accurately reflect Target Fund?s Net Assets
 and outstanding shares, as of such date, in conformity with
generally accepted accounting principles
 applied on a consistent basis.

    (b) At the Closing, it will have good and marketable
 title to all of the securities and other assets shown on
 the statement of assets and liabilities referred to in (a)
above, free and clear of all liens or encumbrances of
any nature whatsoever, except such imperfections of
title or encumbrances as do not materially detract from
the value or use of the assets subject thereto, or
 materially affect title thereto.
?
    (c) Except as disclosed in its currently effective
prospectus relating to Target Fund, in the case of
Target Trust, and Acquiring Fund, in the case of
Acquiring Trust, there is no material suit, judicial action,
or legal
or administrative proceeding pending or threatened
 against it.? Neither Acquiring Trust nor Target Trust
 is a party to or subject to the provisions of any order,
decree or
judgment of any court or governmental body which
 materially and adversely affects Acquiring Fund?s
or Target Fund?s business or their ability to
 consummate the transactions herein contemplated.
?
    (d) There are no known actual or proposed
deficiency assessments with respect to any taxes
 payable by it.
?
    (e) The execution, delivery, and performance
of the Plan have been duly authorized by all necessary
action of its Board of Trustees and the Plan, subject to
the approval of Target Fund?s shareholders in the case
of Target Trust, constitutes a valid and binding
obligation enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency,
reorganization
arrangement, moratorium, and other similar laws of
general applicability relating to or affecting creditors?
 rights and to general equity principles.
?
    (f) It anticipates that consummation of the Plan
will not cause either Target Fund, in the case of
Target Trust, or Acquiring Fund, in the case of
 Acquiring Trust, to fail to conform to the requirements
of Subchapter
M of the Code for federal income taxation
qualification as a RIC at the end their respective
fiscal years.

7. Covenants of Target Trust and Acquiring Trust.
?
    (a) Target Trust, on behalf of Target Fund,
and Acquiring Trust, on behalf of Acquiring Fund,
 each covenants to operate its respective business
 as presently conducted between the date hereof and
the Closing, it being
understood that such ordinary course of business
 will include the distribution of customary dividends
 and distributions and any other distribution
necessary or desirable to
 minimize federal income or excise taxes.
?
    (b) Target Trust, on behalf of Target Fund,
undertakes that it will not acquire Acquiring Fund
Shares for the purpose of making distributions
thereof to anyone other than Target Fund?s
shareholders.
?
    (c) Target Trust, on behalf of Target Fund,
undertakes that, if the Plan is consummated,
it will liquidate and dissolve Target Fund.
?
    (d) Target Trust, on behalf of Target Fund,
and Acquiring Trust, on behalf of Acquiring Fund, each
agree that, by the Closing, all of their federal and other
tax returns and reports required by law to be filed on or
before such
date shall have been filed, and all federal and other taxes
shown as due on said returns shall have either been paid or
 adequate liability reserves shall have been provided for the
 payment of such taxes, and to the best of their
 knowledge no such tax return is currently under audit
and no tax deficiency or liability has been asserted with
respect to such tax returns or reports by the Internal
Revenue Service or any state or local tax authority.
?
    (e) At the Closing, Target Trust, on behalf of Target
Fund, will provide Acquiring Fund with a copy of the
shareholder ledger accounts, certified by Target Fund?s
transfer agent or its President to the best of its or his
 knowledge and belief, for all the shareholders of record
of Target Fund Shares as of 1:00 p.m., Pacific Time, on
 the Closing Date who are to become shareholders of
Acquiring Fund as a result of the transfer of assets
that is the subject of the Plan.
?
    (f)?As of the Closing, the Board of Target Trust
shall have called, and Target Trust shall have held,
a Special Meeting of Target Fund?s shareholders
 to consider and vote upon the Plan (the "Special Meeting")
and Target
 Trust shall have taken all other actions reasonably
necessary to obtain approval of the transactions
contemplated herein.  Target Trust shall have mailed to each
shareholder of record of Target Fund entitled to
 vote at the Special Meeting at which action on
the Plan is to be considered, in sufficient time to comply with
requirements as to notice thereof, a combined
 Prospectus/Proxy Statement that complies in
all material respects with the applicable provisions
 of the 1933 Act,
Section?14(a) of the 1934 Act and Section?20(a)
of the 1940 Act, and the rules and regulations thereunder.
?
    (g) Acquiring Trust has filed the Registration
Statement with the SEC and used its best efforts
 to provide that the Registration Statement became
 effective as promptly as practicable.? At the time
it became effective, the Registration Statement:
(i)?complied in all material respects with the
applicable provisions of the 1933 Act and the rules and regulations
promulgated thereunder;
 and (ii) did?not contain any untrue statement of material
 fact or omit to state a material fact required to be stated therein
 or necessary to make the statements
therein not misleading.? At the time the Registration
Statement became effective, at the time of the Special Meeting,
 and at the Closing Date, the prospectus and
 statement of additional information included in the
Registration Statement did not and will not contain any untrue
 statement of a material fact or omit to state a material
 fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
?
    (h) Subject to the provisions of the Plan, Acquiring Trust
and Target Trust each shall take, or cause to be taken, all
action, and do or cause to be done, all things reasonably
necessary, proper or advisable to consummate
 the transactions contemplated by the Plan.
?
    (i) Target Trust shall deliver to Acquiring Trust at the
 Closing Date confirmation or other adequate evidence as
to the tax costs and holding periods of the assets and property
of Target Fund transferred to Acquiring Trust in
 accordance with the terms of the Plan.
?
8. Conditions Precedent to be Fulfilled by Target Trust and
 Acquiring Trust.
?
    The consummation of the Plan hereunder shall be
subject to the following respective conditions:
?
    (a) That: (i)?all the representations and warranties of
the other party contained herein shall be true and correct
 as of the Closing with the same effect as though made as of
 and at such date; (ii)?the other party shall have
 performed all obligations required by the Plan to be
 performed by it prior to the Closing; and (iii)?the other party
 shall have delivered to such party a certificate signed
by the President and by the Secretary or equivalent
officer to the foregoing effect.
?
    (b) That each party shall have delivered to the other
 party a copy of the resolutions approving the Plan
adopted and approved by the appropriate action of the Board
of Trustees certified by its Secretary or equivalent office
r of each of the Trusts.
?
    (c) That the SEC shall have declared effective the
Registration Statement and not have issued an
unfavorable management report under Section?25(b)
of the 1940 Act or instituted or threatened to institute any
 proceeding
 seeking to enjoin consummation of the Plan under
Section?25(c) of the 1940 Act.? And, further, no other legal,
 administrative or other proceeding shall have been
 instituted or threatened that would materially affect the
 financial condition of either party or would prohibit the
 transactions contemplated hereby.
?
    (d) That the Plan and the Plan of Reorganization
contemplated hereby shall have been adopted and
approved by the appropriate action of the shareholders
of Target Fund at a meeting or any adjournment thereof.

    (e) That a distribution or distributions shall have
 been declared for Target Fund prior to the Closing Date
that, together with all previous distributions, shall
have the effect of distributing to its shareholders: (i)?all of its
ordinary income and all of its capital gain net income,
 if any, for the period from the close of its last fiscal
year to 1:00 p.m. Pacific Time on the Closing Date; and (ii)?
any undistributed ordinary income and capital gain net
income from any prior period to the extent not otherwise
declared for distribution. Capital gain net income has the
meaning given such term by Section?1222(9) of the Code.
?
    (f) That all required consents of other parties and all other
consents, orders, and permits of federal, state and local
authorities (including those of the SEC and of state Blue Sky
securities authorities, including any necessary
?no-action? positions or exemptive orders from such federal
 and state authorities) to permit consummation of the transaction
contemplated hereby shall have been
obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of material adverse
effect on the assets and properties of Target
Fund or Acquiring Fund.
?
    (g) That there shall be delivered to Target Trust, on
 behalf of Target Fund, and Acquiring Trust, on behalf
of Acquiring Fund, an opinion in form and substance satisfactory
 to them from the law firm of Xxxxxxxx
Ronon Xxxxxxx?& Xxxxx, LLP, counsel to Acquiring
Trust and Target Trust, to the effect that, provided
the transaction contemplated hereby is carried out in accordance
 with
 the Plan, the laws of the State of Delaware, and based
upon certificates of the officers of Target Trust and Acquiring
Trust with regard to matters of fact:
?
    (1) The acquisition by Acquiring Fund of substantially
all the assets of Target Fund, as provided for herein, in
 exchange for Acquiring Fund Shares followed by the distribution
 by Target Fund to its shareholders of
 Acquiring Fund Shares in complete liquidation of Target
 Fund will qualify as a reorganization within the meaning of
 Section?368(a)(1) of the Code, and Target Fund and Acquiring
Fund will each be a ?party to the reorganization? within the
meaning of Section?368(b) of the Code;
?
    (2) No gain or loss will be recognized by Target Fund upon
the transfer of substantially all of its assets to Acquiring Fund
 in exchange solely for voting shares of Acquiring Fund
(Sections 361(a) and 357(a) of the Code);
?
    (3) Acquiring Fund will recognize no gain or loss upon the
 receipt of substantially all of the assets of Target Fund in
 exchange solely for voting shares of Acquiring Fund
(Section 1032(a) of the Code);
?
    (4) No gain or loss will be recognized by Target Fund upon
the distribution of Acquiring Fund Shares to its shareholders
in liquidation of Target Fund, in pursuance of the Plan
 (Section 361(c)(1) of the Code);
?
    (5) The basis of the assets of Target Fund received by
Acquiring Fund will be the same as the basis of such assets
to Target Fund immediately prior to the Plan of Reorganization
 (Section 362(b) of the Code);
?
    (6) The holding period of the assets of Target Fund
received by Acquiring Fund will include the period during
which such assets were held by Target Fund
(Section 1223(2) of the Code);
?
    (7) No gain or loss will be recognized by the shareholders
of Target Fund upon the exchange of their shares in Target
 Fund for voting shares of Acquiring Fund including fractional
shares to which they may be entitled
(Section 354(a) of the Code);
?
    (8) The basis of Acquiring Fund Shares received by the
shareholders of Target Fund shall be the same as the basis
 of Target Fund Shares exchanged therefor
 (Section 358(a)(1) of the Code);
?
    (9) The holding period of Acquiring Fund Shares received
 by shareholders of Target Fund (including fractional shares
to which they may be entitled) will include the holding period of
Target Fund Shares surrendered in exchange
 therefor, provided that Target Fund Shares were held as a capital
 asset on the effective date of the exchange
(Section 1223(1) of the Code); and
?
    (10) Acquiring Fund will succeed to and take into account
 as of the date of the
transfer (as defined in Section?1.381(b)-1(b) of
 the regulations issued by the United States Treasury
(?Treasury Regulations?)) the items of Target Fund
described in Section?381(c) of the Code, subject to the
conditions
 and limitations specified in Sections 381, 382, 383
and 384 of the Code and the Treasury
Regulations.
?
    (h) That there shall be delivered to Acquiring Trust, on
behalf of Acquiring Fund, an opinion in form and substance
satisfactory to it from Xxxxxxxx Ronon Xxxxxxx?& Xxxxx, LLP,
counsel to Target Trust, on behalf of Target
Fund, to the effect that, subject in all respects to the effects
of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other laws now or
hereafter affecting generally the enforcement of creditors? rights:
?
    (1) Target Fund is a series of Target Trust and that Target
 Trust is a validly existing statutory trust in good standing under
 the laws of the State of Delaware;
?
    (2) Target Trust is an open-end investment company of the
 management type registered as such under the 1940 Act;
?
    (3) The execution and delivery of the Plan and the consumm
ation of the transactions contemplated hereby have been duly
authorized by all necessary statutory trust action on the part of
Target Trust on behalf of Target Fund; and
?
    (4) The Plan is the legal, valid and binding obligation of Target
Trust, on behalf of Target Fund, and is enforceable against Target
Trust, on behalf of Target Fund, in accordance with its terms.
?
    In giving the opinions set forth above, this counsel may state
that it is relying on certificates of the officers of Target Trust with
regard to matters of fact, and certain certifications and written
 statements of governmental
officials with respect to the good standing of Target Trust.
?
    (i) That there shall be delivered to Target Trust, on behalf of
 Target Fund, an opinion in form and substance satisfactory to it
from the law firm of Xxxxxxxx Ronon Xxxxxxx?& Xxxxx, LLP, counsel
to Acquiring Trust, on behalf of
 Acquiring Fund, to the effect that, subject in all respects to the
effects of bankruptcy, insolvency, reorganization, moratorium,
 fraudulent conveyance and other
laws now or hereafter affecting generally the enforcement of
creditors? rights:
?
    (1) Acquiring Fund is a series of Acquiring Trust and Acquiring
Trust is a validly existing statutory trust in good standing under
 the laws of the State of Delaware;
?
    (2) Acquiring Trust is authorized to issue an unlimited number
 of shares of beneficial interest, without par value, of Acquiring
 Fund;
?
    (3) Acquiring Trust is an open-end investment company of the
 management type registered as such under the 1940 Act;
?
    (4) Acquiring Fund Shares to be issued pursuant to the terms
of the Plan have been duly authorized and, when issued and
delivered as provided in the Plan and the Registration Statement,
 will have been validly issued and fully
paid and will be non-assessable by Acquiring Trust, on behalf
 of Acquiring Fund;
?
    (5) The execution and delivery of the Plan and the consummation
 of the transactions contemplated hereby have been duly a
uthorized by all necessary statutory trust action on the part of
 Acquiring Trust, on behalf of Acquiring Fund;
?
    (6) The Plan is the legal, valid and binding obligation of
Acquiring Trust, on behalf of Acquiring Fund, and is
enforceable against Acquiring Trust, on behalf of Acquiring
Fund, in accordance with its terms; and
?
    (7) The registration statement of Acquiring Trust,
of which the prospectus dated November?1, 2007 of
 Acquiring Fund is a part (the ?Prospectus?), is, at the
 time of the signing of the Plan, effective under the 1933 Act,
and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of such registration
statement has been issued, and no proceedings for such
purpose have been instituted or are pending before or
threatened by the SEC under the 1933 Act.
?
    In giving the opinions set forth above, this counsel may
 state that it is relying on certificates of the officers of
Acquiring Trust with regard to matters of fact, and certain
 certifications and written statements of
governmental officials with respect to the good
standing of Acquiring Trust.
?
    (j) That Acquiring Trust?s prospectus contained in the Registration
Statement with respect to Acquiring Fund Shares delivered to Target
Fund?s shareholders in accordance with the Plan shall be effective,
and no stop order
suspending the effectiveness of the Registration Statement or
any amendment or supplement thereto shall have been issued prior
to the Closing Date or shall be in effect
at Closing, and no proceedings for the issuance of such an
order shall be pending or threatened on that date.
?
    (k) That Acquiring Fund Shares to be delivered hereunder
 shall be eligible for sale with each state commission or agency with
 which such eligibility is required in order to permit Acquiring Fund
Shares lawfully to be delivered to each holder of Target Fund Shares.
?
    (l) That, at the Closing, there shall be transferred to Acquiring Trust,
on behalf of Acquiring Fund, aggregate Net Assets of Target Fund
comprising at least 90% in fair market value of the total net
assets and 70% of the fair market
value of the total gross assets recorded on the books of Target
Fund on the Closing Date.
?
    (m) That there be delivered to Acquiring Trust, on behalf of
Acquiring Fund, information concerning the tax basis of Target
Fund in all securities transferred to Acquiring Fund, together with
 shareholder information including:
the names, addresses, and taxpayer identification numbers
of the shareholders of Target Fund as of the Closing Date; the
 number of shares held by each shareholder;
the dividend reinvestment elections applicable to each shareholder;
and the backup withholding and nonresident alien withholding
certifications, notices or records on
file with Target Fund with respect to each shareholder.
??
9. Expenses.
?
    The expenses of entering into and carrying out the provisions of
the Plan shall be borne as follows: each of Target Trust, on behalf
 of Target Fund, and Acquiring Trust, on behalf of Acquiring Fund,
 will pay 25% of the costs of the
 Plan of Reorganization, and Franklin Advisers, Inc., the investment
 manager for both Acquiring Fund and Target Fund, will pay 50% of
the costs of the Plan of
 Reorganization.
?
10. Termination; Postponement; Waiver; Order.
?
    (a) Anything contained in the Plan to the contrary
notwithstanding, the Plan may be terminated and the Plan
of Reorganization abandoned at any time (whether before or after
 approval thereof by shareholders of Target Fund)
prior to the Closing, or the Closing may be postponed as follows:
?
    (1) by mutual consent of Target Trust, on behalf of
Target Fund, and Acquiring Trust, on behalf of Acquiring Fund;
?
    (2) by Acquiring Trust, on behalf of Acquiring Fund, if any
condition of its obligations set forth in Section?8 has not been
fulfilled or waived and it reasonably appears that such condition or
 obligation will not or cannot be met; or
?
    (3) by Target Trust, on behalf of Target Fund, if any conditions
 of its obligations set forth in Section?8 has not been fulfilled or
waived and it reasonably appears that such condition or obligation
will not or cannot be met.
?
    (b) If the transactions contemplated by the Plan have not been
 consummated by July 30, 2009, the Plan shall automatically
terminate on that date, unless a later date is agreed to by both
 Acquiring Trust and Target Trust.
?
    (c) In the event of termination of the Plan prior to its
consummation, pursuant to the provisions hereof, the Plan
shall become void and have no further effect, and neither Target
Trust, Acquiring Trust, Target Fund nor
 Acquiring Fund, nor their trustees, officers, or agents or
 the shareholders of Target Fund or Acquiring Fund shall have any
 liability in respect of the Plan, but all expenses
incidental to the preparation and carrying out of the Plan
 shall be paid as provided in Section?9 hereof.
?
    (d) At any time prior to the Closing, any of the terms or
 conditions of the Plan may be waived by the party who is
entitled to the benefit thereof if, in the judgment of such party,
 such action or waiver will not have a material
adverse effect on the benefits intended under the Plan to
 its shareholders, on behalf of whom such action is taken.
?
    (e) The respective representations and warranties
contained in Sections 4 to 6 hereof shall expire with
and be terminated by the Plan on the Closing Date, and neither
 Target Trust nor Acquiring Trust, nor any of their o
fficers, trustees, agents or shareholders shall have any
 liability with respect to such representations or warranties
after the Closing Date.
?
    (f) If any order or orders of the SEC with respect to
the Plan shall be issued prior to the Closing and shall
impose any terms or conditions that are determined by
 action of the Board of Trustees of Target Trust, on behalf of
Target Fund, or the Board of Trustees of Acquiring Trust,
 on behalf of Acquiring Fund, to be acceptable, such terms and
 conditions shall be binding as if a part of the
Plan without a vote or approval of the shareholders of
 Target Fund, unless such terms and conditions shall result in a
change in the method of computing the number of
Acquiring Fund Shares to be issued to Target Fund in which event,
unless such terms and conditions shall have been included in the
 proxy solicitation material furnished to the shareholders of
Target Fund prior to the meeting at which
the transactions contemplated by the Plan shall have been approved,
the Plan shall not be consummated and shall terminate unless
Target Trust shall promptly call a special
 meeting of the shareholders of Target Fund at which such conditions
 so imposed shall be submitted for approval.
    ?
11. Liability of Acquiring Trust and Target Trust.
?
    (a) Each party acknowledges and agrees that all obligations of
 Acquiring Trust under the Plan are binding only with respect to
 Acquiring Fund; that any liability of Acquiring Trust under the
 Plan with respect to Acquiring Trust,
or in connection with the transactions contemplated herein with
 respect to Acquiring Fund, shall be discharged only out of the
assets of Acquiring Fund; that no other
 series of Acquiring Trust shall be liable with respect to the Plan or
 in connection with the transactions contemplated herein; and
 that neither Target Trust nor Target
 Fund shall seek satisfaction of any such obligation or liability
from the shareholders of Acquiring Trust, the trustees, officers,
 employees or agents of Acquiring Trust,
or any of them.
?
    (b) Each party acknowledges and agrees that all obligations of
Target Trust under the Plan are binding only with respect to
Target Fund; that any liability of Target Trust under the Plan with
 respect to Target Fund, or in
connection with the transactions contemplated herein with
respect to Target Fund, shall be discharged only out of the assets of
Target Fund; that no other series of Target
Trust shall be liable with respect to the Plan or in connection
with the transactions contemplated herein; and that neither
 Acquiring Trust nor Acquiring Fund shall seek
satisfaction of any such obligation or liability from the
shareholders of Target Trust, the trustees, officers,
employees or agents of Target Trust, or any of them.
?
12. Entire Agreement and Amendments.
?
    The Plan embodies the entire agreement between the
parties and there are no agreements, understandings,
restrictions, or warranties relating to the transactions
contemplated by the Plan other than those set forth
herein or herein provided for. The Plan may be
 amended only by mutual consent of the parties in
 writing. Neither the Plan nor any interest herein
 may be assigned without
 the prior written consent of the other party.

?13. Counterparts.
?
    The Plan may be executed in any number of
counterparts, each of which shall be deemed to
be an original, but all such counterparts together
shall constitute but one instrument.

?14. Notices.

    Any notice, report, or demand required or
permitted by any provision of the Plan shall be in
writing and shall be deemed to have been given if
delivered or mailed, first class postage prepaid, addressed to
Xxxxxxxx XxxxXxxx Fund, at Franklin Custodian Funds,
Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, XX 00000-0000,
 Attention: Secretary, or Franklin Technology Fund, at
 Franklin Strategic Series,
 Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, XX 00000-1906,
Attention: Secretary, as the case may be.

15. Governing Law.

    The Plan shall be governed by and carried out in
 accordance with the laws of the State of Delaware.
?
    IN WITNESS WHEREOF, Target Trust, on behalf of
Target Fund, and Acquiring Trust, on behalf of
Acquiring Fund, have each caused the Plan to be
 executed on its behalf by its duly authorized officers,
all as of the
 date and year first-above written.
?


XXXXXXXX CUSTODIAN FUNDS, on behalf of
XXXXXXXX XXXXXXXX FUND


By:
?/s/Xxxxx X. Xxxx
?
?
Xxxxx X. Xxxx, Vice President
?


FRANKLIN STRATEGIC SERIES, on behalf of
 FRANKLIN TECHNOLOGY FUND


By:
?/s/Xxxxx X. Xxxx?
?
?
Xxxxx X. Xxxx, Vice President
AGREEMENT AND PLAN OF REORGANIZATION
?
    THIS AGREEMENT AND PLAN OF REORGANIZATION
 (the ?Plan?), is made as of this 1st day of
December, 2008, by and between Franklin Custodian
Funds, a statutory trust created under the laws of the State of Delaware
 (?Acquiring Trust?), with its principal place of business
at Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, XX 00000-1906, on behalf of
one of its series, Franklin DynaTech Fund
 (?Acquiring Fund?), and Franklin Strategic Series, a
statutory trust created under the laws of the State of Delaware
(?Target Trust?), with its principal place of
 business at Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, XX
 00000-1906, on behalf of its series, Franklin
 Global Health Care Fund (?Target Fund?).
?
PLAN OF REORGANIZATION
    The reorganization (hereinafter referred to as
the ?Plan of Reorganization?) will consist of the following:
 (i)?the acquisition by Acquiring Trust, on behalf of
Acquiring Fund, of substantially all of the property,
assets and goodwill
of Target Fund in exchange solely for full and fractional
Class?A, Class B, and Class C shares of beneficial interest,
with no par value, of Acquiring Fund
(?Acquiring Fund Shares?); (ii)?the distribution of
Acquiring Fund Shares to the holders of Class?A,
 Class B, and Class C shares of beneficial interest of Target Fund
(the ?Target Fund Shares?), respectively,
according to their respective interests in
Target Fund in complete liquidation of Target Fund;
and (iii)?the dissolution of
 Target Fund as soon as is practicable after
 the closing (as defined in Section?3, hereinafter
called the ?Closing?), all upon and subject to the terms
 and conditions of the Plan
hereinafter set forth.

AGREEMENT

    In order to consummate the Plan of Reorganization
 and in consideration of the premises and of the
 covenants and agreements hereinafter set forth,
 and intending to be legally bound, the parties hereto covenant and
agree as follows:

1. Sale and Transfer of Assets, Liquidation and
Dissolution of Target Fund.

    ?(a) Subject to the terms and conditions of the
 Plan, and in reliance on the representations and
warranties of Acquiring Trust, on behalf of
 Acquiring Fund, herein contained, and in consideration of the delivery by
 Acquiring Trust of the number of Acquiring Fund
Shares hereinafter provided, Target Trust on
behalf of Target Fund agrees that, at the time of Closing, it will convey,
 transfer and deliver to Acquiring Trust, for the
 benefit of Acquiring Fund, all of Target Fund?s
then existing assets, including any interest in pending or future legal
 claims in connection with past or present portfolio
holdings, whether in the form of class action claims,
 opt-out or other direct litigation claims, or regulator or
government-established investor recovery
fund claims, and any and all resulting recoveries,
 free and clear of all liens, encumbrances, and claims whatsoever
(other than shareholders? rights of redemption),
except for cash, bank deposits, or cash equivalent
 securities in an estimated amount necessary to: (i)?pay 25% of the costs and
expenses of carrying out the Plan (including, but
 not limited to, fees of counsel and accountants,
and expenses of its liquidation and dissolution contemplated hereunder),
 in accordance with Section 9 of the Plan, which costs
 and expenses shall be established on Target Fund?s
 books as liability reserves; (ii)?discharge its unpaid liabilities
on its books at the closing date (as defined in Section?3,
 hereinafter called the ?Closing Date?), including,
but not limited to, its income dividends and capital gains
distributions, if any, payable for the period prior to,
 and through, the Closing Date; and (iii)?pay such
 contingent liabilities as the Board of Trustees of Target Trust
shall reasonably deem to exist against
Target Fund, if any, at the
Closing Date, for which contingent
 and other appropriate liability reserves shall be established on
 Target Fund?s books (hereinafter ?Net Assets?).?
Neither Acquiring Trust nor Acquiring Fund shall
assume any liability of Target Fund or Target Trust, and Target Fund
shall use its reasonable best efforts to discharge
all of its known liabilities, so far as may be possible,
 from the cash, bank deposits and cash equivalent securities
described above.?
?
    (b) Subject to the terms and conditions of the Plan,
 and in reliance on the representations and warranties
 of Target Trust, on behalf of Target Fund, herein
contained, and in consideration
of such sale, conveyance,
 transfer, and delivery, Acquiring Trust agrees
at the Closing to deliver to Target Trust the
number of Acquiring Fund Shares, determined by dividing the net asset value
 per share Class?A, Class B, and Class C shares of
Target Fund by the net asset value per share of
Class?A, Class B, and Class C shares of Acquiring Fund, respectively,
and separately multiplying the result thereof by
the number of outstanding Class?A, Class B, and
Class C shares of Target Fund as of 1:00 p.m., Pacific Time, on the
Closing Date.? Acquiring Fund Shares delivered
to Target Trust at the Closing shall have an
aggregate net asset value equal to the value of Target Fund?s Net Assets, all
determined as provided in Section?2 of the
Plan and as of the date and time specified herein.
?
    (c) Immediately following the Closing, Target
Trust shall dissolve Target Fund and distribute pro
rata to Target Fund?s shareholders of record, as
 of the close of business on the
Closing Date, Acquiring Fund Shares
 received by Target Fund pursuant to this
Section?1.? Such dissolution and distribution
shall be accomplished by the establishment of accounts on the share records
 of Acquiring Fund in the amounts due such
 shareholders based on their respective holdings
as of the close of business on the Closing Date.?
Fractional Acquiring Fund Shares
 shall be carried to the third decimal place.?
 As promptly as practicable after the Closing,
 each holder of any outstanding certificate or certificates representing
shares of beneficial interest of Target Fund shall be
 entitled to surrender the same to the transfer agent
for Acquiring Fund in exchange for the number of Acquiring Fund
 Shares into which Target Fund Shares theretofore
represented by the certificate or certificates so
surrendered shall have been converted.? Certificates for Acquiring
Fund Shares shall not be issued, unless specifically
requested by the shareholders.? Until so surrendered,
 each outstanding certificate which, prior to the Closing,
 represented shares of beneficial interest of Target
 Fund shall be deemed for all Acquiring Fund purposes
to evidence ownership of the number of Acquiring Fund Shares into
 which Target Fund Shares (which prior to the
Closing were represented thereby) have been converted.
?
    (d) At the Closing, each shareholder of record of
Target Fund as of the record date (the ?Distribution
 Record Date?) with respect to any unpaid dividends
 and other distributions that were declared prior to
the Closing, including any dividend or distribution
declared pursuant to Section?8(e) hereof, shall have
the right to receive such unpaid dividends and distributions with respect to
the shares of Target Fund that such person had on
the Distribution Record Date.
?
    (e) All books and records relating to Target Fund,
including all books and records required to be
maintained under the Investment Company Act
 of 1940, as amended (the ?1940 Act?), and the rules and regulations
thereunder, shall be available to Acquiring Trust from
and after the date of the Plan, and shall be turned
 over to Acquiring Trust on or prior to the Closing.
?
2. Valuation.
?
    (a) The net asset value of Acquiring Fund Shares
and Target Fund Shares and the value of Target Fund?s
Net Assets to be acquired by Acquiring Fund hereunder
 shall in each case be computed as of 1:00 p.m., Pacific Time,
 on the Closing Date, unless on such date: (a)?the New
 York Stock Exchange (?NYSE?) is not open for unrestricted
trading; or (b)?the reporting of trading on the
NYSE or elsewhere is disrupted; or (c)?any other
extraordinary financial event or market condition
occurs (all such events described in (a), (b)?or
 (c)?are each referred to as a ?Market Disruption?).
 The net asset value per share of Acquiring Fund
Shares and Target Fund Shares and the value of Target Fund?s
 Net Assets shall be computed in
 accordance with the valuation procedures set
forth in the most recent respective prospectuses
of Acquiring Fund and Target Fund, or amendments thereto.
?
    (b) In the event of a Market Disruption on the
proposed Closing Date, so that an accurate appraisal
 of the net asset value of Acquiring Fund Shares or
Target Fund Shares or the value of Target Fund?s Net Assets is
impracticable, the Closing Date shall be postponed
until the first business day when regular trading
on the NYSE shall have been fully resumed and reporting shall have
 been restored and other trading markets are
otherwise stabilized.
?
3. Closing and Closing Date.
?
    The Closing Date shall be December 3, 2008 or
such later date as the parties may mutually agree.?
The Closing shall take place at the principal office
of Acquiring Trust at 2:00 p.m., Pacific Time, on
the Closing Date.?
Target Trust on behalf of Target Fund shall have provided
for delivery as of the Closing of those Net Assets of
Target Fund to be transferred to the account of Acquiring
Fund?s Custodian, Bank of New York Mellon, Mutual Funds
Division, 000 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000.? Also,
 Target Trust, on behalf of Target Fund, shall deliver
 at the Closing a list of names and addresses of the
shareholders of record of Target Fund Shares and the
number of full and fractional shares of beneficial interest
 owned by each such shareholder, indicating thereon which
 such shares are represented by outstanding certificates
 and which by book-entry accounts, all as
of 1:00 p.m., Pacific Time, on the Closing Date,
 certified by its transfer agent or by its President to
the best of its or his knowledge and belief.? Acquiring
Trust on behalf
of Acquiring Fund shall provide evidence satisfactory to
Target Trust that such Acquiring Fund Shares have been
 registered in an account on the books of Acquiring Fund
 in such manner as the officers of Target Trust on behalf
of Target Fund may reasonably request.
?
4. Representations and Warranties by Acquiring Trust
 on behalf of Acquiring Fund.
?
    Acquiring Trust, on behalf of Acquiring Fund, represents
 and warrants to Target Trust that:
?
    (a) Acquiring Fund is a series of Acquiring Trust, a
statutory trust organized originally as a Delaware corporation
 in September 1947, reincorporated as a Maryland corporation
in 1979, and converted into a Delaware statutory
trust effective February 1, 2008.? Acquiring Trust is duly
 registered under the 1940 Act as an open-end, management
investment company and all of Acquiring Fund
Shares sold were sold pursuant to an effective registration
statement filed under the Securities Act of 1933, as amended
(the ?1933 Act?), except for those shares sold
pursuant to the private offering exemption for the purposes
 of raising initial capital or obtaining any required initial
shareholder approvals.
?
    (b) Acquiring Trust is authorized to issue an unlimited
 number shares of beneficial interest, without par value,
of Acquiring Fund, each outstanding share of which is, and
each share of which when issued pursuant to and in
accordance with the Plan will be, fully paid, non-assessable,
 and has or will have full voting rights.? Acquiring Trust
currently issues shares of five (5)?series, including
 Acquiring Fund.? Acquiring Fund issues five classes of shares:
 Class?A, Class B, Class C, Class R, and Advisor Class shares.?
No shareholder of Acquiring Trust shall have
any preemptive or other right to subscribe for Acquiring
Fund Shares.
?
    (c) The financial statements appearing in Acquiring Fund?s
 Annual Report to Shareholders for the fiscal year ended
 September 30, 2007, audited by
PricewaterhouseCoopers LLP, and unaudited
 Semi-Annual Report to Shareholders for the period
ended March 31, 2008, copies of which have been
delivered to Target Trust, and any interim unaudited
financial statements,
copies of which may be furnished to Target Trust,
fairly present the financial position of Acquiring Fund
as of their respective dates and the results of Acquiring
Fund?s operations for the periods indicated in conformity
 with Generally Accepted Accounting Principles applied
 on a consistent basis.
?
    (d) The books and records of Acquiring Fund accurately
 summarize the accounting data represented and contain
 no material omissions with respect to the business and
operations of Acquiring Fund.

    (e) Acquiring Trust, on behalf of Acquiring Fund,
is not a party to or obligated under any provision of
its Agreement and Declaration of Trust or By-laws, or any
 contract or any other commitment or obligation
and is not subject to any order or decree that would be
 violated by its execution of or performance under the Plan,
 and no consent, approval, authorization or order of any court or
governmental authority is required for the consummation
 by Acquiring Fund or Acquiring Trust of the transactions
contemplated by the Plan, except for the registration
 of Acquiring Fund Shares under the 1933 Act, the
1940 Act, or as
 may otherwise be required under the federal and
 state securities laws or the rules and regulations
thereunder.
?
    (f) Acquiring Trust has elected to treat Acquiring
 Fund as a regulated investment company (?RIC?) for
federal income tax
purposes under Part I of Subchapter M of the Internal
Revenue Code of 1986, as amended (the ?Code?).
Acquiring Fund is a ?fund? as defined
in Section?851(g)(2) of the Code,
has qualified as a RIC for each taxable year
since its inception, and intends to continue to qualify
 as a RIC as of the Closing Date, and consummation of
 the
 transactions contemplated by the Plan will not cause
it to fail to be qualified as a RIC as of the Closing Date.
?
    (g) Acquiring Fund is not under jurisdiction of a
Court in a
Title 11 or similar case within the meaning of
Section?368(a)(3)(A) of the Code.

    (h) Acquiring Fund does not have any unamortized or
 unpaid organizational fees or expenses.
?
    (i) Acquiring Fund does not have any known liabilities,
 costs or expenses of a material amount, contingent or
otherwise, other than those incurred in the ordinary
 course of business as an investment company.
?
    (j) There is no intercorporate indebtedness existing
between Target Fund and Acquiring Fund that was issued,
 acquired, or will be settled at a discount.
?
    (k) Acquiring Fund does not own, directly or indirectly,
nor has it owned during the past five (5)?years, directly or
indirectly, any shares of Target Fund.
?
    (l) Acquiring Trust has no plan or intention to issue
additional shares of Acquiring Fund following the Plan
of Reorganization except for shares issued in the ordinary
course of Acquiring Fund?s business as a series of an
open-end investment company; nor does Acquiring Trust
have any plan or intention to redeem or otherwise reacquire any
shares of Acquiring Fund issued pursuant to
the Plan of Reorganization, either directly or through any transaction,
 agreement, or arrangement with any other person, other than in
the ordinary course of its business or to
 the extent necessary to comply with its legal obligation under
 Section?22(e) of the 1940 Act.
?
    (m) Acquiring Fund is in the same line of business as Target
 Fund before the Plan of Reorganization and did not enter into
such line of business as part of the Plan of Reorganization.
Acquiring Fund will actively continue Target
Fund?s business in substantially the same manner that Target
 Fund conducted that business immediately before the Plan of
 Reorganization and has no plan or intention
 to change such business. On the Closing Date, Acquiring Fund
expects that at least 33?1/3% of Target Fund?s portfolio assets
 will meet the investment objectives,
strategies, policies, risks and restrictions of Acquiring Fund.
Acquiring Fund has no plan or intention to change any of its
 investment objectives, strategies, policies,
 risks and restrictions after the Plan of Reorganization.
Acquiring Fund has no plan or intention to sell or otherwise
dispose of any of the former assets of Target Fund,
 except for dispositions made in the ordinary course of its
 business or dispositions necessary to maintain its qualification
 as a RIC, although in the ordinary course of
 its business, Acquiring Fund will continuously review its
investment portfolio (as Target Fund did before the Closing) to
determine whether to retain or dispose of particular
 stocks or securities, including those included among the former
assets of Target Fund.
?
    (n) The registration statement on Form N-14 referred to in
 Section?7(g) hereof (the ?Registration Statement?), and any
prospectus or statement of additional information of Acquiring
Fund contained or incorporated
therein by reference, and any supplement or amendment
 to the Registration Statement or any such prospectus or statement
of additional information, on the effective
and clearance dates of the Registration Statement, on the
 date of the Special Meeting of Target Fund shareholders, and on the
 Closing Date: (i)?shall comply in
 all material respects with the provisions of the 1933 Act,
the Securities Exchange Act of 1934, as amended (the ?1934 Act?),
 the 1940 Act, the rules and regulations
thereunder, and all applicable state securities laws
and the rules and regulations thereunder; and (ii)?shall not contain
any untrue statement of a material fact or omit to
state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which the statements were made,
not misleading.

5. Representations and Warranties by Target Trust on
 behalf of Target Fund.
?
    Target Trust, on behalf of Target Fund, represents
and warrants to Acquiring Trust that:
?
    (a) Target Fund is series of Target Trust, a statutory
 trust originally organized under the laws of Delaware on
January 25, 1991.??Target Trust is duly registered under the
 1940 Act as an open-end, management investment
company and all of Target Fund Shares sold were sold
pursuant to an effective registration statement filed under the
1933 Act, except for those shares sold pursuant to
the private offering exemption for the purpose of

raising the required initial capital or obtaining any required
initial shareholder approvals.
?
    (b) Target Trust is authorized to issue an unlimited number
 of shares of beneficial interest, without par value, of Target
 Fund, each outstanding share of which is fully paid,
 non-assessable, and has full voting rights.  Target Trust
 issues shares of eleven (11)?series, including Target Fund.?
Target Fund has three classes of shares (Class?A, Class B,
and Class C) and an unlimited number of shares
 of beneficial interest of Target Trust have been allocated and
 designated to each share class of Target Fund.? No shareholder
of Target Trust has or will have any option
, warrant, or preemptive rights of subscription or purchase with
respect to Target Fund Shares.
?
    (c) The financial statements appearing in Target Fund?s Annual
 Report to Shareholders for the fiscal year ended April 30, 2008,
 audited by PricewaterhouseCoopers LLP, copies of which have been
delivered to Acquiring Trust, and
any interim financial statements for Target Fund that may be
 furnished to Acquiring Trust, fairly present the financial position
 of Target Fund as of their respective
dates and the results of Target Fund?s operations for the periods
indicated in conformity with generally accepted accounting principles
applied on a consistent basis.

    (d) Target Trust, on behalf of Target Fund, is not a party to or
 obligated under any provision of its Agreement and Declaration of
Trust or Bylaws, as amended, or any contract or any other
commitment or obligation, and is not subject
to any order or decree, that would be violated by its execution of or
 performance under the Plan.? Target Fund has no material contracts
 or other commitments (other
 than the Plan or agreements for the purchase of securities entered
into in the ordinary course of business and consistent with its obligations
 under the Plan) which will
not be terminated by Target Fund in accordance with their terms at or
 prior to the Closing Date, or which will result in a penalty or additional
fee to be due or payable
by Target Fund.
?
    (e) Target Trust has elected to treat Target Fund as a RIC for federal
 income tax purposes under Part I of Subchapter M of the Code.? Target
 Fund is a ?fund? as defined in Section?851(g)(2)
of the Code, has qualified as a RIC for each
 taxable year since its inception, and will qualify as a RIC as of the
Closing Date, and consummation
 of the transactions contemplated by the Plan will not cause
it to fail to be qualified as a RIC as of the Closing Date.
?
    (f) Target Fund is not under jurisdiction of a Court in a Title 11 or
similar case within the meaning of Section?368(a)(3)(A) of the Code.
?
    (g) Target Fund does not have any unamortized or unpaid organization
 fees or expenses.
?
    (h) Target Fund does not have any known liabilities, costs or expenses
of a material amount, contingent or otherwise, other than those reflected
 in the financial statements referred to in Section?5(c)
hereof and those incurred in the
ordinary course of business as an investment company and of a nature
 and amount similar to, and consistent with, those shown in such
financial statements since the
dates of those financial statements.
?
    (i) Since April 30, 2008, there has not been any material adverse
 change in Target Fund?s financial condition, assets, liabilities, or
business other than changes occurring in the ordinary course of its business.
?
    (j) No consent, approval, authorization, or order of any court or
 governmental authority is required for the consummation by
 Target Fund or Target Trust of the transactions contemplated by the Plan,
 except the necessary
Target Fund shareholder approval, or as may otherwise be
required under the federal or state securities laws or the rules and
regulations thereunder.
?
    (k) There is no intercorporate indebtedness existing between
 Target Fund and Acquiring Fund that was issued, acquired, or
will be settled at a discount.
?
    (l) During the five-year period ending on the Closing Date,
(i)?Target Fund has not acquired, and will not acquire, Target
 Fund Shares with consideration other than Acquiring Fund Shares or
Target Fund Shares, except for
redemptions in the ordinary course of Target Fund?s business
 or to the extent necessary to comply with its legal obligation under
 Section?22(e) of the 1940 Act, and (ii)?no
 distributions have been made with respect to Target Fund
Shares (other than regular, normal dividend distributions made
pursuant to Target Fund?s historic
dividend paying practice), either directly or through any
transaction, agreement, or arrangement with any other person,
 except for distributions described in Sections 852
and 4982 of the Code.
?
    (m) As of the Closing Date, Target Fund will not have outstanding
 any warrants, options, convertible securities, or any other type of
rights pursuant to which any person could acquire shares of Target Fund,
 except for the right of
 investors to acquire its shares at the applicable stated offering price
 in the normal course of its business as an open-end management
investment company operating
 under the 1940 Act.
?
    (n) Throughout the five year period ending on the Closing Date,
 Target Fund will have conducted its historic business within the
 meaning of Section?1.368-1(d) of the Income
Tax Regulations under the Code.? Target Fund did not enter
 into (or expand) a line of business as part of the Plan of Reorganization.?
Target Fund will not alter its investment portfolio
 in connection with the Plan of Reorganization.
?
6. Representations and Warranties by Target Trust and Acquiring Trust.
?
    Target Trust, on behalf of Target Fund, and Acquiring
Trust, on behalf of Acquiring Fund, each represents and warrants
 to the other that:
?
    (a) The statement of assets and liabilities to be furnished by it as
of 1:00 p.m., Pacific Time, on the Closing Date for the purpose of
determining the number of Acquiring Fund Shares to be issued pursuant to
Section?1 of the Plan,
will accurately reflect Target Fund?s Net Assets and outstanding shares,
 as of such date, in conformity with generally accepted accounting principles
applied on a consistent basis.

    (b) At the Closing, it will have good and marketable title to all of the
 securities and other assets shown on the statement of assets and
 liabilities referred to in (a) above, free and clear of all liens
or encumbrances of any nature
 whatsoever, except such imperfections of title or encumbrances as
do not materially detract from the value or use of the assets subject thereto,
or materially affect title thereto.
?
    (c) Except as disclosed in its currently effective prospectus relating
 to Target Fund, in the case of Target Trust, and Acquiring Fund, in the
case of Acquiring Trust, there is no material suit, judicial action, or
legal or administrative
 proceeding pending or threatened against it.? Neither Acquiring
Trust nor Target Trust is a party to or subject to the provisions of any order,
decree or judgment of any
 court or governmental body which materially and adversely affects
Acquiring Fund?s or Target Fund?s business or their ability to consummate
 the transactions herein
 contemplated.
?
    (d) There are no known actual or proposed deficiency assessments
 with respect to any taxes payable by it.
?
    (e) The execution, delivery, and performance of the Plan have
 been duly authorized by all necessary action of its Board of
Trustees and the Plan, subject to the approval of Target Fund?s shareholders in
the case of Target
Trust, constitutes a valid and binding obligation enforceable
 in accordance with its terms, subject as to enforcement to bankruptcy,
 insolvency, reorganization
arrangement, moratorium, and other similar laws of general
applicability relating to or affecting creditors? rights and to general
equity principles.
?
    (f) It anticipates that consummation of the Plan will not
 cause either Target Fund, in the case of Target Trust, or
 Acquiring Fund, in the case of Acquiring Trust, to fail to conform
to the requirements of Subchapter M of the
 Code for federal income taxation qualification as a RIC
at the end their respective fiscal years.

7. Covenants of Target Trust and Acquiring Trust.
?
    (a) Target Trust, on behalf of Target Fund, and Acquiring Trust,
on behalf of Acquiring Fund, each covenants to operate its
 respective business as presently conducted between the date hereof and
the Closing, it being understood
that such ordinary course of business will include the
distribution of customary dividends and distributions and any other
distribution necessary or desirable to
 minimize federal income or excise taxes.
?
    (b) Target Trust, on behalf of Target Fund,
 undertakes that it will not acquire Acquiring Fund
Shares for the purpose of making distributions
thereof to anyone other than Target Fund?s shareholders.
?
    (c) Target Trust, on behalf of Target Fund, undertakes that,
if the Plan is consummated, it will liquidate and dissolve Target Fund.
?
    (d) Target Trust, on behalf of Target Fund, and
Acquiring Trust, on behalf of Acquiring Fund, each
agree that, by the Closing, all of their federal and
other tax returns and reports required by law to be filed on or before such
date shall have been filed, and all federal and other taxes
shown as due on said returns shall have either been paid or adequate
 liability reserves shall have been provided
for the payment of such taxes, and to the best of their
 knowledge no such tax return is currently under audit and no tax
deficiency or liability has been asserted with
 respect to such tax returns or reports by the Internal
 Revenue Service or any state or local tax authority.
?
    (e) At the Closing, Target Trust, on behalf of Target
Fund, will provide Acquiring Fund with a copy of the
shareholder ledger accounts, certified by Target Fund?s transfer
agent or its President to the best of its or
 his knowledge and belief, for all the shareholders of
record of Target Fund Shares as of 1:00 p.m., Pacific
Time, on the Closing Date who are to become shareholders of
Acquiring Fund as a result of the transfer of assets
that is the subject of the Plan.
?
    (f)?As of the Closing, the Board of Target
 Trust shall have called,
 and Target Trust shall have held, a Special Meeting
of Target Fund?s
 shareholders to consider and vote upon the Plan
(the "Special Meeting") and Target Trust shall have
 taken all other actions reasonably necessary to obtain
 approval of the
 transactions contemplated herein.  Target Trust shall
 have mailed to each shareholder of record of
Target Fund entitled to vote at the Special Meeting at which action on
 the Plan is to be considered, in sufficient time to comply with
requirements as to notice
thereof, a combined Prospectus/Proxy Statement that complies in all
material respects with the applicable provisions of the 1933 Act,
 Section?14(a) of the 1934 Act
and Section?20(a) of the 1940 Act, and the rules and regulations thereunder.
?
    (g) Acquiring Trust has filed the Registration Statement with the
SEC and used its best efforts to provide that the Registration
Statement became effective as promptly as is practicable.?
At the time it became effective,
 the Registration Statement: (i)?complied in all material
 respects with the applicable provisions of the 1933 Act and the rules
and regulations promulgated thereunder;
and (ii)?did not contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or
 necessary to make the statements therein
not misleading.? At the time the Registration Statement
became effective, at the time of the Special Meeting, and at the
 Closing Date, the prospectus and statement
of additional information included in the Registration Statement
did not and will not contain any untrue statement of a material fact
 or omit to state a material fact
 necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
?
    (h) Subject to the provisions of the Plan, Acquiring Trust and
Target Trust each shall take, or cause to be taken, all action,
and do or cause to be done, all things reasonably necessary, proper or
 advisable to consummate the
transactions contemplated by the Plan.
?
    (i) Target Trust shall deliver to Acquiring Trust at the Closing
Date confirmation or other adequate evidence as to the tax costs
and holding periods of the assets and property of Target Fund
transferred to Acquiring Trust in
 accordance with the terms of the Plan.
?
8. Conditions Precedent to be Fulfilled by Target Trust
 and Acquiring Trust.
?
    The consummation of the Plan hereunder shall be subject
 to the following respective conditions:
?
    (a) That: (i)?all the representations and warranties of the
other party contained herein shall be true and correct as of the
Closing with the same effect as though made as of and at such date;
(ii)?the other party shall have performed
 all obligations required by the Plan to be performed by it prior to
 the Closing; and (iii)?the other party shall have delivered to such
party a certificate signed by the
 President and by the Secretary or equivalent officer to the
 foregoing effect.
?
    (b) That each party shall have delivered to the other party a
 copy of the resolutions approving the Plan adopted and approved
 by the appropriate action of the Board of Trustees certified by its
Secretary or equivalent officer of
each of the Trusts.
?
    (c) That the SEC shall have declared effective the Registration
Statement and not have issued an unfavorable management report
 under Section?25(b) of the 1940 Act or instituted or threatened to
 institute any proceeding seeking to
 enjoin consummation of the Plan under Section?25(c) of the
 1940 Act.? And, further, no other legal, administrative or other
proceeding shall have been instituted
or threatened that would materially affect the financial condition
 of either party or would prohibit the transactions contemplated hereby.

?
    (d) That the Plan and the Plan of Reorganization contemplated
hereby shall have been adopted and approved by the appropriate
action of the shareholders of Target Fund at a meeting or any
 adjournment thereof.

    (e) That a distribution or distributions shall have been declared
for Target Fund prior to the Closing Date that, together with all
 previous distributions, shall have the effect of distributing to its
 shareholders: (i)?all of its ordinary
income and all of its capital gain net income, if any, for the
period from the close of its last fiscal year to 1:00 p.m. Pacific
Time on the Closing Date; and (ii)?any
 undistributed ordinary income and capital gain net income
from any prior period to the extent not otherwise declared for
distribution. Capital gain net income has the
meaning given such term by Section?1222(9) of the Code.
?
    (f) That all required consents of other parties and all other
consents, orders, and permits of federal, state and local authorities
 (including those of the SEC and of state Blue Sky securities authorities,
 including any
necessary ?no-action? positions or exemptive orders from
such federal and state authorities) to permit consummation of the
transaction contemplated hereby shall have been obtained,
 except where failure to obtain any such consent, order, or permit
would not involve a risk of material adverse effect on the assets
and properties of Target Fund or
Acquiring Fund.
?
    (g) That there shall be delivered to Target Trust, on behalf of
Target Fund, and Acquiring Trust, on behalf of Acquiring Fund,
an opinion in form and substance satisfactory to them from the
 law firm of Xxxxxxxx Ronon
 Xxxxxxx?& Xxxxx, LLP, counsel to Acquiring Trust and Target
Trust, to the effect that, provided the transaction contemplated
hereby is carried out in accordance with the Plan,
 the laws of the State of Delaware, and based upon certificates
of the officers of Target Trust and Acquiring Trust with regard
to matters of fact:
?
    (1) The acquisition by Acquiring Fund of substantially all the
assets of Target Fund, as provided for herein, in exchange for
 Acquiring Fund Shares followed by the distribution by Target
Fund to its shareholders of Acquiring
Fund Shares in complete liquidation of Target Fund will qualify
as a reorganization within the meaning of Section?368(a)(1)
 of the Code, and Target Fund and Acquiring
Fund will each be a ?party to the reorganization? within the
meaning of Section?368(b) of the Code;
?
    (2) No gain or loss will be recognized by Target Fund upon the
 transfer of substantially all of its assets to Acquiring Fund in
 exchange solely for voting shares of Acquiring Fund
(Sections 361(a) and 357(a) of the Code);
?
    (3) Acquiring Fund will recognize no gain or loss upon the
 receipt of substantially all of the assets of Target Fund in
exchange solely for voting shares of Acquiring Fund
 (Section 1032(a) of the Code);
?
    (4) No gain or loss will be recognized by Target Fund upon
 the distribution of Acquiring Fund Shares to its shareholders
in liquidation of Target Fund, in pursuance of the Plan
(Section 361(c)(1) of the Code);
?
    (5) The basis of the assets of Target Fund received by
Acquiring Fund will be the same as the basis of such assets to
Target Fund immediately prior to the Plan of Reorganization
 (Section 362(b) of the Code);
?
    (6) The holding period of the assets of Target Fund received by
 Acquiring Fund will include the period during which such assets
 were held by Target Fund (Section 1223(2) of the Code);
?
    (7) No gain or loss will be recognized by the shareholders of
Target Fund upon the exchange of their shares in Target Fund
for voting shares of Acquiring Fund including fractional
shares to which they may be entitled
(Section 354(a) of the Code);
?
    (8) The basis of Acquiring Fund Shares received by the
shareholders of Target Fund shall be the same as the basis
of Target Fund Shares exchanged therefor
 (Section 358(a)(1) of the Code);
?
    (9) The holding period of Acquiring Fund Shares received
by shareholders of Target Fund (including fractional shares
to which they may be entitled) will include the holding
 period of Target Fund Shares surrendered in
exchange therefor, provided that Target Fund Shares
were held as a capital asset on the effective date of the
exchange (Section 1223(1) of the Code); and
?
    (10) Acquiring Fund will succeed to and take into account
as of the date of the transfer (as defined in Section?1.381(b)-1(b)
 of the regulations issued by the United States Treasury
 (?Treasury Regulations?)) the items of Target Fund
described in Section?381(c) of the Code, subject to the
 conditions
and limitations specified in Sections 381, 382, 383 and 384
 of the Code and the Treasury
Regulations.
?
    (h) That there shall be delivered to Acquiring Trust, on behalf
of Acquiring Fund, an opinion in form and substance satisfactory
to it from Xxxxxxxx Ronon Xxxxxxx?& Xxxxx, LLP, counsel to
 Target Trust, on behalf of Target Fund,
to the effect that, subject in all respects to the effects of
 bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other laws now o
r hereafter affecting generally the enforcement of creditors? rights:
?
    (1) Target Fund is a series of Target Trust and that Target
Trust is a validly existing statutory trust in good standing under
 the laws of the State of Delaware;
?
    (2) Target Trust is an open-end investment company of the
 management type registered as such under the 1940 Act;
?
    (3) The execution and delivery of the Plan and the consummation
 of the transactions contemplated hereby have been duly authorized
by all necessary statutory trust action on the part of Target
Trust on behalf of Target Fund; and
?
    (4) The Plan is the legal, valid and binding obligation of Target
Trust, on behalf of Target Fund, and is enforceable against Target
Trust, on behalf of Target Fund, in accordance with its terms.
?
    In giving the opinions set forth above, this counsel may state
that it is relying on certificates of the officers of Target Trust
with regard to matters of fact, and certain certifications and
written statements of governmental
officials with respect to the good standing of Target Trust.
?
    (i) That there shall be delivered to Target Trust, on behalf of
Target Fund, an opinion in form and substance satisfactory to it
 from the law firm of Xxxxxxxx Ronon Xxxxxxx?& Xxxxx, LLP, counsel to
 Acquiring Trust, on behalf of
Acquiring Fund, to the effect that, subject in all respects to the
 effects of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other
laws now or hereafter affecting generally the enforcement of
creditors? rights:
?
    (1) Acquiring Fund is a series of Acquiring Trust and Acquiring
Trust is a validly existing statutory trust in good standing under
 the laws of the State of Delaware;
?
    (2) Acquiring Trust is authorized to issue an unlimited number
 of shares of beneficial interest, without par value, of Acquiring Fund;
?
    (3) Acquiring Trust is an open-end investment company of the
 management type registered as such under the 1940 Act;
?
    (4) Acquiring Fund Shares to be issued pursuant to the terms of
the Plan have been duly authorized and, when issued and delivered
as provided in the Plan and the Registration Statement, will have been
 validly issued and fully paid
and will be non-assessable by Acquiring Trust, on behalf of Acquiring Fund;
?
    (5) The execution and delivery of the Plan and the consummation
of the transactions contemplated hereby have been duly authorized
by all necessary statutory trust action on the part of Acquiring Trust, on
behalf of Acquiring Fund;
?
    (6) The Plan is the legal, valid and binding obligation of Acquiring
Trust, on behalf of Acquiring Fund, and is enforceable against
Acquiring Trust, on behalf of Acquiring Fund, in accordance with its terms; and
?
    (7) The registration statement of Acquiring Trust, of which the
 prospectus dated November?1, 2007 of Acquiring Fund is a part
 (the ?Prospectus?), is, at the time of the signing of the Plan, effective
 under the 1933 Act, and, to the best
 knowledge of such counsel, no stop order suspending the
 effectiveness of such registration statement has been issued, and no
 proceedings for such
 purpose have been instituted or are pending before or
 threatened by the SEC under the 1933 Act.
?
    In giving the opinions set forth above, this counsel may
state that it is relying on certificates of the officers of
Acquiring Trust with regard to matters of fact, and certain certifications
and written statements of governmental
 officials with respect to the good standing of Acquiring Trust.
?
    (j) That Acquiring Trust?s prospectus contained in the
 Registration Statement with respect to Acquiring Fund
Shares to be delivered to Target Fund?s shareholders in accordance with
 the Plan shall be effective, and no stop
 order suspending the effectiveness of the Registration
Statement or any amendment or supplement thereto shall have been issued
prior to the Closing Date or shall be in
 effect at Closing, and no proceedings for the issuance of
such an order shall be pending or threatened on that date.
?
    (k) That Acquiring Fund Shares to be delivered hereunder
shall be eligible for sale with each state commission or agency
 with which such eligibility is required in order to permit Acquiring Fund
 Shares lawfully to be delivered
to each holder of Target Fund Shares.
?
    (l) That, at the Closing, there shall be transferred
 to Acquiring Trust, on behalf of Acquiring Fund, aggregate
 Net Assets of Target Fund comprising at least 90% in fair market
value of the total net assets and 70% of the fair
 market value of the total gross assets recorded on the
books of Target Fund on the Closing Date.
?
    (m) That there be delivered to Acquiring Trust, on
 behalf of Acquiring Fund, information concerning the
 tax basis of Target Fund in all securities transferred to Acquiring
Fund, together with shareholder information
including: the names, addresses, and taxpayer
 identification numbers of the shareholders of
 Target Fund as of the Closing Date; the number of shares held
by each
shareholder; the dividend reinvestment elections
applicable to each shareholder; and the backup withholding and
nonresident alien withholding certifications,
notices or records on file with Target Fund
 with respect to each shareholder.
??
9. Expenses.
?
    The expenses of entering into and carrying out the
provisions of the Plan shall be borne as follows: each
of Target Trust, on behalf of Target Fund, and Acquiring Trust, on
 behalf of Acquiring Fund, will pay 25% of the
costs of the Plan of Reorganization, and Franklin
 Advisers, Inc., the investment manager for both
Acquiring Fund and Target Fund, will pay 50% of the costs of the
 Plan of Reorganization.
?
10. Termination; Postponement; Waiver; Order.
?
    (a) Anything contained in the Plan to the contrary
 notwithstanding, the Plan may be terminated and the
 Plan of Reorganization abandoned at any time (whether before or
 after approval thereof by shareholders of Target Fund)
 prior to the Closing, or the Closing may be postponed as follows:
?
    (1) by mutual consent of Target Trust, on behalf of
 Target Fund, and Acquiring Trust, on behalf of Acquiring Fund;
?
    (2) by Acquiring Trust, on behalf of Acquiring Fund,
 if any condition of its obligations set forth in Section?8
 has not been fulfilled or waived and it reasonably appears that such
condition or obligation will not or cannot be met; or
?
    (3) by Target Trust, on behalf of Target Fund, if any
 conditions of its obligations set forth in Section?8 has
not been fulfilled or waived and it reasonably appears that such
condition or obligation will not or cannot be met.
?
    (b) If the transactions contemplated by the Plan have
 not been consummated by July 30, 2009, the Plan shall
automatically terminate on that date, unless a later date is
agreed to by both Acquiring Trust and Target Trust.
?
    (c) In the event of termination of the Plan prior to its
 consummation, pursuant to the provisions hereof, the
Plan shall become void and have no further effect, and
 neither Target Trust, Acquiring Trust, Target Fund nor
Acquiring Fund, nor their trustees, officers, or agents or
the shareholders of Target Fund or Acquiring Fund shall
have any liability in respect of the Plan, but all expenses
incidental to the preparation and carrying out of the Plan
shall be paid as provided in Section?9 hereof.
?
    (d) At any time prior to the Closing, any of the terms
 or conditions of the Plan may be waived by the party who
 is entitled to the benefit thereof if, in the judgment of
such party, such action or waiver will not have a material
adverse effect on the benefits intended under the Plan to
 its shareholders, on behalf of whom such action is taken.
?
    (e) The respective representations and warranties contained
in Sections 4 to 6 hereof shall expire with and be terminated by
the Plan on the Closing Date, and neither Target Trust nor
 Acquiring Trust, nor any of their officers,
trustees, agents or shareholders shall have any liability with
 respect to such representations or warranties after the Closing Date.
?
    (f) If any order or orders of the SEC with respect to the
Plan shall be issued prior to the Closing and shall impose a
ny terms or conditions that are determined by action of the Board
of Trustees of Target Trust, on behalf of
Target Fund, or the Board of Trustees of Acquiring Trust,
 on behalf of Acquiring Fund, to be acceptable, such terms and
conditions shall be binding as if a part of the Plan
without a vote or approval of the shareholders of Target Fund,
unless such terms and conditions shall result in a change in the
 method of computing the number of Acquiring
Fund Shares to be issued to Target Fund in which event, unless
such terms and conditions shall have been included in the proxy
solicitation material furnished to the
shareholders of Target Fund prior to the meeting at which the
 transactions contemplated by the Plan shall have been approved,
the Plan shall not be consummated and
shall terminate unless Target Trust shall promptly call a
special meeting of the shareholders of Target Fund at which such
 conditions so imposed shall be submitted for approval.
    ?

11. Liability of Acquiring Trust and Target Trust.
?
    (a) Each party acknowledges and agrees that all obligations of
Acquiring Trust under the Plan are binding only with respect to
Acquiring Fund; that any liability of Acquiring Trust under the Plan
with respect to Acquiring Trust,
or in connection with the transactions contemplated herein with
respect to Acquiring Fund, shall be discharged only out of the
assets of Acquiring Fund; that no other
series of Acquiring Trust shall be liable with respect to the Plan or
 in connection with the transactions contemplated herein; and
that neither Target Trust nor Target
Fund shall seek satisfaction of any such obligation or liability
 from the shareholders of Acquiring Trust, the trustees, officers,
employees or agents of Acquiring Trust,
 or any of them.
?
    (b) Each party acknowledges and agrees that all obligations of
Target Trust under the Plan are binding only with respect to
Target Fund; that any liability of Target Trust under the Plan
 with respect to Target Fund, or in connection
 with the transactions contemplated herein with respect to
Target Fund, shall be discharged only out of the assets of
 Target Fund; that no other series of Target
 Trust shall be liable with respect to the Plan or in
connection with the transactions contemplated herein; and
 that neither Acquiring Trust nor Acquiring Fund shall seek
 satisfaction of any such obligation or liability from the
shareholders of Target Trust, the trustees, officers, employees
 or agents of Target Trust, or any of them.
?
12. Entire Agreement and Amendments.
?
    The Plan embodies the entire agreement between the
 parties and there are no agreements, understandings,
restrictions, or warranties relating to the transactions
contemplated by the Plan other than those set forth
 herein or herein provided for. The Plan may be amended
only by mutual consent of the parties in writing. Neither
the Plan nor any interest herein may be assigned without the
prior written consent of the other party.

?13. Counterparts.
?
    The Plan may be executed in any number of counterparts,
 each of which shall be deemed to be an original, but all such
counterparts together shall constitute but one instrument.

?14. Notices.

    Any notice, report, or demand required or permitted by any
 provision of the Plan shall be in writing and shall be deemed to
have been given if delivered or mailed, first class postage prepaid,
 addressed to Xxxxxxxx XxxxXxxx Fund,
at Franklin Custodian Funds, Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx,
 XX 00000-0000, Attention: Secretary, or Franklin Global Health
Care Fund, at Franklin Strategic Series,
Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, XX 00000-0000, Attention:
 Secretary, as the case may be.

15. Governing Law.

    The Plan shall be governed by and carried out in accordance
 with the laws of the State of Delaware.
?
    IN WITNESS WHEREOF, Target Trust, on behalf of Target Fund
, and Acquiring Trust, on behalf of Acquiring Fund, have each
 caused the Plan to be executed on its behalf by its
duly authorized officers, all as of the date and
year first-above written.
?


XXXXXXXX CUSTODIAN FUNDS, on behalf of XXXXXXXX
XXXXXXXX FUND


By:
?/s/Xxxxx X. Xxxx
?
?
Xxxxx X. Xxxx, Vice President
?


FRANKLIN STRATEGIC SERIES, on behalf of FRANKLIN
 GLOBAL HEALTH CARE FUND


By:
?/s/Xxxxx X. Xxxx?
?
?
Xxxxx X. Xxxx, Vice President
AGREEMENT AND PLAN OF REORGANIZATION
?
    THIS AGREEMENT AND PLAN OF REORGANIZATION
(the ?Plan?), is made as of this 1st day of December, 2008,
 by and between Franklin Custodian Funds, a statutory
 trust created under the laws of the State of Delaware
(?Acquiring Trust?), with its principal place of business
at Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, XX 00000-1906,
on behalf of one of its series, Franklin DynaTech Fund
(?Acquiring Fund?), and Franklin Strategic Series, a
 statutory trust created under the laws of the
xxxx of Delaware (?Target Trust?), with its principal place of business at
 Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, XX 00000-1906, on
 behalf of its series, Franklin Global Communications Fund (?Target Fund?).
?
PLAN OF REORGANIZATION
    The reorganization (hereinafter referred to as the ?Plan
of Reorganization?) will consist of the following: (i)?the
acquisition by Acquiring Trust, on behalf of Acquiring Fund,
of substantially all of the property, assets and goodwill
of Target Fund in exchange solely for full and fractional Class?A,
 Class B, and Class C shares of beneficial interest, with
no par value, of Acquiring Fund (?Acquiring Fund
Shares?); (ii)?the distribution of Acquiring Fund Shares to the
holders of Class?A, Class B, and Class C shares of beneficial
interest of Target Fund (the ?Target Fund Shares?), respectively, according
 to their respective interests in Target Fund in complete
liquidation of Target Fund; and
(iii)?the dissolution of Target Fund as soon as is practicable
 after the closing (as defined in Section?3, hereinafter c
alled the ?Closing?), all upon and subject to the
terms and conditions of the Plan hereinafter set forth.

AGREEMENT

      In order to consummate the Plan of Reorganization and in
 consideration of the premises and of the covenants and
agreements hereinafter set forth, and intending to be legally bound,
 the parties hereto covenant and agree as follows:

1. Sale and Transfer of Assets, Liquidation and Dissolution of
Target Fund.

    ?(a) Subject to the terms and conditions of the Plan, and in
 reliance on the representations and warranties of Acquiring
 Trust, on behalf of Acquiring Fund, herein contained, and in
 consideration of the delivery by Acquiring
Trust of the number of Acquiring Fund Shares hereinafter
 provided, Target Trust on behalf of Target Fund agrees that,
at the time of Closing, it will convey, transfer
and deliver to Acquiring Trust, for the benefit of Acquiring Fund,
all of Target Fund?s then existing assets, including any interest
 in pending or future legal claims in connection
 with past or present portfolio holdings, whether in the form
of class action claims, opt-out or other direct litigation claims,
 or regulator or government-established
 investor recovery fund claims, and any and all resulting
recoveries, free and clear of all liens, encumbrances, and claims whatsoever
(other than shareholders? rights of redemption),
except for cash, bank deposits, or cash equivalent
securities in an estimated amount necessary to: (i)?pay 25% of the costs and
expenses of carrying out the Plan (including, but
 not limited to, fees of counsel and accountants,
and expenses of its liquidation and dissolution contemplated hereunder),
in accordance with Section 9 of the Plan, which costs
and expenses shall be established on Target Fund?s books as liability reserves;
 (ii)?discharge its unpaid liabilities on
 its books at the closing date (as defined in Section?3,
 hereinafter called the ?Closing Date?), including, but not limited to,
its income dividends and capital gains
 distributions, if any, payable for the period prior
to, and through, the Closing Date; and (iii)?pay
 such contingent liabilities as the Board of Trustees of Target Trust
shall reasonably deem to exist against Target Fund,
if any, at the Closing Date, for which
contingent and other appropriate
 liability reserves shall be established on
Target Fund?s books (hereinafter ?Net Assets?).?
 Neither Acquiring Trust nor Acquiring Fund shall assume
 any liability of Target Fund or Target Trust, and Target Fund
 shall use its reasonable best efforts to discharge
all of its known liabilities, so far as may be possible, from the cash1,
 bank deposits and cash equivalent securities described above.?
?
    (b) Subject to the terms and conditions of the Plan, and in reliance
on the representations and warranties of Target Trust, on behalf of
Target Fund, herein contained, and in consideration
of such sale, conveyance, transfer, and delivery,
 Acquiring Trust agrees at the Closing
to deliver to Target Trust
the number of Acquiring Fund
Shares, determined by dividing the
net asset value per share of
Class?A, Class B, and Class C shares of Target Fund by the
net asset value per share of Class?A, Class B, and Class C shares
of Acquiring Fund, respectively, and
separately multiplying the result thereof by the number of
 outstanding Class?A, Class B, and Class C shares of Target
Fund as of 1:00 p.m., Pacific Time, on the
Closing Date.? Acquiring Fund Shares delivered to
 Target Trust at the Closing shall have an
aggregate net asset value equal to the value of
Target Fund?s Net Assets, all determined as
provided in Section?2 of the Plan and as of the date and time specified herein.
?
    (c) Immediately following the Closing, Target Trust shall
dissolve Target Fund and distribute pro rata to Target Fund?s
shareholders of record, as of the close of business on the Closing Date,
Acquiring Fund Shares received
 by Target Fund pursuant to this Section?1.? Such dissolution
and distribution shall be accomplished by the establishment of accounts
 on the share records of Acquiring
 Fund in the amounts due such shareholders based on their
 respective holdings as of the close
of business on the Closing Date.?
Fractional Acquiring Fund Shares shall be
 carried to the third decimal place.? As promptly as
practicable after the Closing, each holder of any outstanding certificate or
certificates representing shares
of beneficial interest of Target Fund shall be entitled to
surrender the same to the transfer agent for Acquiring Fund in exchange for the
number of Acquiring Fund Shares
 into which Target Fund Shares theretofore represented
 by the certificate or certificates so surrendered shall have been converted.?
Certificates for Acquiring Fund
Shares shall not be issued, unless specifically requested
 by the shareholders.? Until so surrendered, each outstanding certificate which,
 prior to the Closing,
 represented shares of beneficial interest of Target
 Fund shall be deemed for all Acquiring Fund purposes to evidence ownership of
the number of Acquiring Fund Shares
 into which Target Fund Shares (which prior to the
Closing were represented thereby) have been converted.
?
    (d) At the Closing, each shareholder of record of
Target Fund as of the record date (the ?Distribution
Record Date?) with respect to any unpaid dividends and other distributions that
were declared prior to the Closing,
including any dividend or distribution declared pursuant
 to Section?8(e) hereof, shall have the
 right to receive such unpaid dividends and
distributions with respect to the
shares of Target Fund that such person had on the
 Distribution Record Date.
?
    (e) All books and records relating to Target Fund, including
 all books and records required to be maintained under the
Investment Company Act of 1940, as amended (the ?1940 Act?), and the rules and
regulations thereunder, shall be available to Acquiring Trust from and after the
 date of the Plan, and shall be turned over to
Acquiring Trust on or prior to the Closing.
?
2. Valuation.
?
    (a) The net asset value of Acquiring Fund Shares and Target Fund Shares and
the value of Target Fund?s Net Assets to be
 acquired by Acquiring Fund hereunder shall
 in each case be computed as of 1:00 p.m., Pacific Time, on the Closing Date,
unless on such date: (a)?the New York Stock Exchange (?NYSE?) is not open for
unrestricted trading; or (b)?the reporting of trading on the
NYSE or elsewhere is disrupted; or
 (c)?any other extraordinary financial event or market condition occurs
(all such events described in (a), (b)?or (c)?are
each referred to as a ?Market Disruption?).  The
 net asset value per share of Acquiring Fund Shares and Target Fund
Shares and the value of Target Fund?s Net Assets shall be computed
 in accordance with the valuation
procedures set forth in the most recent respective prospectuses of
Acquiring Fund and Target Fund, or amendments thereto.
?
    (b) In the event of a Market Disruption on the proposed
Closing Date, so that an
accurate appraisal of the net asset value of Acquiring Fund Shares or
Target Fund Shares or the value of Target Fund?s Net Assets is
 impracticable, the Closing Date
shall be postponed until the first business day when regular trading on
 the NYSE shall have been fully resumed and reporting shall
 have been restored and other trading
markets are otherwise stabilized.
?
3. Closing and Closing Date.
?
    The Closing Date shall be December 3, 2008 or
such later date as the parties may
mutually agree.? The Closing shall take place at the principal office of
 Acquiring Trust at 2:00 p.m., Pacific Time, on the Closing Date.?
 Target Trust on behalf of
Target Fund shall have provided for delivery as of the
Closing of those Net Assets of
 Target Fund to be transferred to the account of
Acquiring Fund?s Custodian, Bank
of New York Mellon, Mutual Funds Division, 000
Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000.?
 Also, Target Trust, on behalf of Target Fund,
shall deliver at the Closing a list of
 names and addresses of the shareholders of
record of Target Fund Shares and the
number of full and fractional shares of
 beneficial interest owned by each such
shareholder, indicating thereon which such
 shares are represented by outstanding
 certificates and which by book-entry accounts,
 all as of 1:00 p.m., Pacific Time,
 on the Closing Date, certified by its transfer
 agent or by its President to the best
of its or his knowledge and belief.? Acquiring
Trust on behalf of Acquiring Fund shall
provide evidence satisfactory to Target Trust
 that such Acquiring Fund Shares have
 been registered in an account on the books
of Acquiring Fund in such manner as the
officers of Target Trust on behalf of Target
Fund may reasonably request.
?
4. Representations and Warranties by
Acquiring Trust on behalf of Acquiring Fund.
?
    Acquiring Trust, on behalf of Acquiring
 Fund, represents and warrants to Target
 Trust that:
?
    (a) Acquiring Fund is a series of Acquiring
Trust, a statutory trust organized
originally as a Delaware corporation in
September 1947, reincorporated as a Maryland
 corporation in 1979, and converted into a
Delaware statutory trust effective
February 1, 2008.? Acquiring Trust is duly
registered under the 1940 Act as an open-end,
management investment company and all
of Acquiring Fund Shares sold were
sold pursuant to an effective registration
statement filed under the Securities Act of 1933,
 as amended (the ?1933 Act?), except for those
shares sold pursuant to the
private offering exemption for the purposes of
raising initial capital or obtaining any
required initial shareholder approvals.
?
    (b) Acquiring Trust is authorized to issue an
 unlimited number shares
of beneficial interest, without par value, of
 Acquiring Fund, each outstanding share of
which is, and each share of which when issued
 pursuant to and in accordance with t
he Plan will be, fully paid, non-assessable, and
 has or will have full voting rights.?
 Acquiring Trust currently issues
shares of five (5)?series, including Acquiring Fund.?
 Acquiring Fund issues five classes of
 shares: Class?A, Class B, Class C, Class R,
and Advisor Class shares.? No shareholder of
Acquiring Trust shall have any preemptive
or other right to subscribe for Acquiring Fund Shares.
?
    (c) The financial statements appearing in Acquiring Fund?s Annual Report to
 Shareholders for the fiscal year ended September 30, 2007, audited by
 PricewaterhouseCoopers LLP, and
unaudited Semi-Annual Report to Shareholders
for the period ended March 31, 2008, copies of which have been deliver
ed to Target Trust, and any interim unaudited
financial statements, copies of which may be
furnished to Target Trust, fairly present the financial position of Acquiring
 Fund as of their respective dates and the results
 of Acquiring Fund?s operations for the periods
indicated in conformity with Generally Accepted Accounting Principles
 applied on a consistent basis.
?
    (d) The books and records of Acquiring Fund accurately summarize
the accounting
 data represented and contain no material omissions with respect to the
 business and operations of Acquiring Fund.

    (e) Acquiring Trust, on behalf of Acquiring Fund, is not a party to or
obligated under
any provision of its Agreement and Declaration
of Trust or By-laws, or any
contract or any other commitment or obligation
and is not subject to any order or decree
that would be violated by its execution of or
 performance under the Plan,
and no consent, approval, authorization or order of any court or governmental
authority is required for the consummation by
 Acquiring Fund or Acquiring Trust of the
 transactions contemplated by the Plan, except for the registration of
Acquiring Fund Shares under the 1933 Act, the 1940 Act, or
 as may otherwise be required under
the federal and state securities laws or the rules
and regulations thereunder.
?
    (f) Acquiring Trust has elected to treat Acquiring
Fund as a regulated investment
company (?RIC?) for federal income tax purposes under Part I of
Subchapter M of the Internal Revenue Code of 1986, as amended (the ?Code?).
 Acquiring Fund is a ?fund?
as defined in Section?851(g)(2) of the Code, has
qualified as a RIC for each
taxable year since its inception, and intends to continue
to qualify as a RIC as of the Closing
Date, and consummation of the transactions
contemplated by the Plan will
not cause it to fail to be qualified as a RIC as of the Closing Date.
?
    (g) Acquiring Fund is not under jurisdiction of a
 Court in a Title 11 or similar case
within the meaning of Section?368(a)(3)(A) of the Code.

    (h) Acquiring Fund does not have any unamortized or
 unpaid organizational fees or
 expenses.
?
    (i) Acquiring Fund does not have any known
 liabilities, costs or expenses of a
material amount, contingent or otherwise, other than those incurred in
 the ordinary course of business as an investment company.
?
    (j) There is no intercorporate indebtedness
existing between Target Fund and
 Acquiring Fund that was issued, acquired,
 or will be settled at a discount.
?
    (k) Acquiring Fund does not own, directly or
indirectly, nor has it owned during
the past five (5)?years, directly or indirectly,
any shares of Target Fund.
?
    (l) Acquiring Trust has no plan or intention to
 issue additional shares of Acquiring
Fund following the Plan of Reorganization except
for shares issued in the
 ordinary course of Acquiring Fund?s business as
a series of an open-end
investment company;
nor does Acquiring Trust have any plan or intention to
redeem or otherwise
 reacquire any shares of Acquiring
Fund issued pursuant to the Plan of Reorganization,
 either directly or through any transaction, agreement,
 or arrangement with
any other person, other than in the ordinary course of
 its business or to the extent
necessary to comply with its legal
obligation under Section?22(e) of the 1940 Act.
?
    (m) Acquiring Fund is in the same line of business as
 Target Fund before the
 Plan of Reorganization and did not enter into such line of
 business as part of
the Plan of Reorganization. Acquiring Fund will actively
 continue Target Fund?s
 business in
 substantially the same manner that Target Fund conducted
 that business
immediately before the Plan of Reorganization and has
 no plan or intention to change such business.
On the Closing Date, Acquiring Fund expects
 that at least 33?1/3% of Target
Fund?s portfolio assets will meet the investment
objectives, strategies, policies,
 risks and restrictions of Acquiring Fund.
Acquiring Fund has no plan or intention
to change any of its investment
objectives, strategies, policies, risks and restrictions
after the Plan of Reorganization.
 Acquiring Fund has no plan or intention to sell or
otherwise dispose of any of the former assets of
Target Fund, except for dispositions
 made in the ordinary course of its business or
dispositions necessary to maintain its
qualification as a RIC, although in the ordinary
course of its business, Acquiring
 Fund will continuously review its investment portfolio
(as Target Fund did before the Closing) to determine whether
to retain or dispose of particular stocks or securities,
 including those included among the former assets of Target Fund.
?
    (n) The registration statement on Form N-14 referred
to in Section?7(g) hereof
(the ?Registration Statement?), and any
prospectus or statement of additional
information of Acquiring Fund contained
or incorporated therein by reference,
and any supplement or amendment to the
 Registration Statement or any such
prospectus or statement of additional
information, on the effective and clearance dates of
the Registration Statement, on the date
of the Special Meeting of Target
 Fund shareholders, and on the
 Closing Date: (i)?shall comply in all material respects with
 the provisions of the 1933 Act, the Securities
Exchange Act of 1934, as amended
 (the ?1934 Act?), the 1940 Act, the rules
and regulations thereunder, and all applicable
state securities laws and the rules and
 regulations thereunder; and (ii)?shall not
 contain any untrue statement of a material
fact or omit to state any material fact required
to be stated therein or necessary to make
the statements therein, in light of the
 circumstances under which the statements
 were made, not misleading.

5. Representations and Warranties by
Target Trust on behalf of Target Fund.
?
    Target Trust, on behalf of Target
Fund, represents and warrants to Acquiring
Trust that:
?
    (a) Target Fund is series of Target
Trust, a statutory trust originally organized
 under the laws of Delaware on January 25, 1991.??Target
 Trust is duly registered
under the 1940 Act as an open-end,
 management investment company and all of Target
Fund Shares sold were sold pursuant
 to an effective registration statement filed
under the 1933 Act, except for those
shares sold pursuant to the private offering exemption
 for the purpose of raising the required initial
capital or obtaining any required
initial shareholder approvals.
?
    (b) Target Trust is authorized to issue an unlimited number of shares of
 beneficial interest, without par value, of
Target Fund, each outstanding share of
which is fully paid, non-assessable, and has
full voting rights.  Target Trust issues shares of
 eleven (11)?series, including Target Fund.? Target
 Fund has three classes of shares
 (Class?A, Class B, and Class C) and an unlimited
number of shares of beneficial
interest of Target Trust have been allocated and
designated to each share class of
Target Fund.? No shareholder of Target Trust has
or will have any option, warrant, or
 preemptive rights of subscription or purchase with
respect to Target Fund Shares.
?
    (c) The financial statements appearing in
Target Fund?s Annual Report to
Shareholders for the fiscal year ended
 April 30, 2008, audited by PricewaterhouseCoopers LLP,
 copies of which have been delivered to
Acquiring Trust, and any interim
financial statements for Target Fund that
 may be furnished to Acquiring Trust, fairly present
 the financial position of Target Fund as of
their respective dates and
 the results of Target Fund?s operations for
 the periods indicated in conformity with
 generally accepted accounting principles
applied on a consistent basis.

    (d) Target Trust, on behalf of Target Fund, is
not a party to or obligated under
 any provision of its Agreement and Declaration
of Trust or Bylaws, as amended, or any
contract or any other commitment or obligation, and
 is not subject to any order
or decree, that would be violated by its execution of
or performance under the Plan.?
Target Fund has no material contracts or other
commitments (other than the Plan
or agreements for the purchase of securities
entered into in the ordinary course of
business and consistent with its
obligations under the Plan) which will not be
 terminated by Target Fund in accordance
with their terms at or prior to the Closing Date
, or which will result in a penalty or additional
 fee to be due or payable by Target Fund.
?
    (e) Target Trust has elected to treat
Target Fund as a RIC for federal income
tax purposes under Part I of Subchapter
 M of the Code.? Target Fund is a ?fund? as
defined in Section?851(g)(2) of the Code,
 has qualified as a RIC for each taxable
year since its inception, and will qualify as
 a RIC as of the Closing Date, and
consummation of the transactions
contemplated by the Plan will not cause it to
 fail to be qualified as a RIC as of the Closing Date.
?
    (f) Target Fund is not under
jurisdiction of a Court in a Title 11 or similar cas
e
 within the meaning of Section?368(a)(3)(A) of the Code.
?
    (g) Target Fund does not have any
 unamortized or unpaid organization fees
or expenses.
?
    (h) Target Fund does not have any
known liabilities, costs or expenses of a
 material amount, contingent or otherwise, other
 than those reflected in the financial
statements referred to in Section?5(c) hereof
 and those incurred in the ordinary
course of business as an investment company
and of a nature and amount similar to,
 and consistent with, those shown in such
financial statements since the dates of those
financial statements.
?
    (i) Since April 30, 2008, there has not been
any material adverse change in
Target Fund?s financial condition, assets,
 liabilities, or business other than changes
 occurring in the ordinary course of its business.
?
    (j) No consent, approval, authorization, or
order of any court or governmental
authority is required for the consummation by
Target Fund or Target Trust of the
transactions contemplated by the Plan, except
the necessary Target Fund shareholder
approval, or as may otherwise be required under
 the federal or state securities
 laws or the rules and regulations thereunder.
?
    (k) There is no intercorporate indebtedness
existing between Target Fund and
 Acquiring Fund that was issued, acquired, or
 will be settled at a discount.
?
    (l) During the five-year period ending on the
 Closing Date, (i)?Target Fund has not
 acquired, and will not acquire, Target Fund Shares
 with consideration other than
 Acquiring Fund Shares or Target Fund Shares, except
 for redemptions in the ordinary
course of Target Fund?s business or to the extent
 necessary to comply with its
 legal obligation under Section?22(e) of the
1940 Act, and (ii)?no distributions have been made
with respect to Target Fund Shares (other than
regular, normal dividend distributions
 made pursuant to Target Fund?s historic dividend
 paying practice), either
 directly or through any transaction, agreement,
or arrangement with any other
 person, except for distributions described in
Sections 852 and 4982 of the Code.
?
    (m) As of the Closing Date, Target Fund will
 not have outstanding any warrants,
 options, convertible securities, or any other type
of rights pursuant to which any
 person could acquire shares of Target Fund, except
for the right of investors to
 acquire its shares at the applicable stated offering
price in the normal course of
its business as an open-end management investment
company operating under the 1940 Act.
?
    (n) Throughout the five year period ending on
the Closing Date, Target Fund will
have conducted its historic business within the
 meaning of Section?1.368-1(d) of
 the Income Tax Regulations under the Code.?
Target Fund did not enter into (or expand)
a line of business as part of the Plan of
Reorganization.? Target Fund will not
alter its investment portfolio in connection
 with the Plan of Reorganization.
?
6. Representations and Warranties by Target
 Trust and Acquiring Trust.
?
    Target Trust, on behalf of Target Fund, and
 Acquiring Trust, on behalf of Acquiring
Fund, each represents and warrants to the other that:
?
    (a) The statement of assets and liabilities to be
 furnished by it as of 1:00 p.m.,
Pacific Time, on the Closing Date for the purpose
 of determining the number of
Acquiring Fund Shares to be issued pursuant to Section?1
of the Plan, will accurately
reflect Target Fund?s Net Assets and
outstanding shares, as of such date,
in conformity with generally accepted accounting
principles applied on a consistent basis.

    (b) At the Closing, it will have good and
marketable title to all of the securities
and other assets shown on the statement of
assets and liabilities referred to in
(a) above, free and clear of all liens or
 encumbrances of any nature whatsoever, except
such imperfections of title or encumbrances
as do not materially detract from
 the value or use of the assets subject
thereto, or materially affect title thereto.
?
    (c) Except as disclosed in its currently effective
prospectus relating to Target Fund,
 in the case of Target Trust, and Acquiring
Fund, in the case of Acquiring Trust,
 there is no material suit, judicial action, or
legal or administrative proceeding pending
 or threatened against it.? Neither Acquiring
Trust nor Target Trust is a party to
or subject to the provisions of any order,
decree or judgment of any court or governmental
 body which materially and adversely affects
Acquiring Fund?s or Target Fund?s
business or their ability to consummate the
transactions herein contemplated.
?
    (d) There are no known actual or proposed
 deficiency assessments with respect
 to any taxes payable by it.
?
    (e) The execution, delivery, and performance
of the Plan have been duly authorized
by all necessary action of its Board of Trustees
 and the Plan, subject to the approval
of Target Fund?s shareholders in the case of
 Target Trust, constitutes a valid
and binding obligation enforceable in accordance
 with its terms, subject as to
enforcement to bankruptcy, insolvency,
 reorganization arrangement, moratorium, and
other similar laws of general applicability
 relating to or affecting creditors?
rights and to general equity principles.
?
    (f) It anticipates that consummation of the Plan
 will not cause either Target Fund,
in the case of Target Trust, or Acquiring Fund,
 in the case of Acquiring Trust,
to fail to conform to the requirements of
Subchapter M of the Code for federal income
 taxation qualification as a RIC at the end
their respective fiscal years.

7. Covenants of Target Trust and Acquiring Trust.
?

    (a) Target Trust, on behalf of
 Target Fund, and Acquiring Trust,
on behalf of Acquiring
 Fund, each covenants to operate its
respective business as presently
 conducted between the date hereof and the
 Closing, it being understood that
 such ordinary course
of business will include the distribution
 of customary dividends and distributions
and any other distribution necessary or
 desirable to minimize federal income or excise taxes.
?
    (b) Target Trust, on behalf of Target Fund,
undertakes that it will not acquire
 Acquiring Fund Shares for the purpose of
making distributions thereof to anyone
 other than Target Fund?s shareholders.
?
    (c) Target Trust, on behalf of Target Fund,
 undertakes that,
if the Plan is consummated,
 it will liquidate and dissolve Target Fund.
?
    (d) Target Trust, on behalf of Target Fund, and
Acquiring Trust, on behalf of
 Acquiring Fund, each agree that, by the Closing,
all of their federal
and other tax returns and reports required by law
 to be filed on or before
such date shall have been filed,
and all federal and other taxes shown as due on said
returns shall have either
 been paid or adequate liability reserves shall have been
provided for the payment of such
taxes, and to the best of their knowledge no such
 tax return is currently under
 audit and no tax deficiency or liability has been
asserted with respect to such tax returns
or reports by the Internal Revenue Service or any
 state or local tax authority.
?
    (e) At the Closing, Target Trust, on behalf of
Target Fund, will provide Acquiring
Fund with a copy of the shareholder ledger accounts,
 certified by Target Fund?s
transfer agent or its President to the best of its or
 his knowledge and belief, for all
the shareholders of record of Target Fund Shares
as of 1:00 p.m., Pacific Time,
 on the Closing Date who are to become
 shareholders of Acquiring Fund as a result of
the transfer of assets that is the subject of the Plan.
?
    (f)?As of the Closing, the Board of Target Trust
shall have called, and Target
 Trust shall have held, a Special Meeting of Target
Fund?s shareholders to consider
 and vote upon the Plan (the "Special Meeting") and
 Target Trust shall have taken all
other actions reasonably necessary to obtain approval
of the transactions
contemplated herein.  Target Trust shall have mailed
to each shareholder of record of Target
Fund entitled to vote at the Special Meeting at which
action on the Plan is to be
 considered, in sufficient time to comply with
 requirements as to notice thereof,
a combined Prospectus/Proxy Statement that
 complies in all material respects
with the applicable provisions of the 1933 Act,
Section?14(a) of the 1934 Act and Section?20(a)
 of the 1940 Act, and the rules and regulations thereunder.
?
    (g) Acquiring Trust has filed the Registration Statement
with the SEC and used
its best efforts to provide that the Registration Statement
became effective as promptly
as is practicable.? At the time it
 became effective, the Registration
Statement: (i)?complied in all material respects with the
applicable provisions of the
1933 Act and the rules and regulations promulgated
thereunder; and (ii)?did not contain
any untrue statement of material fact or omit to
state a material fact required to be
 stated therein or necessary to make the
 statements therein not misleading.?
At the time the Registration Statement
 became effective, at the time of the Special
Meeting, and at the Closing Date, the prospectus
and statement of additional
information included in the Registration Statement
did not and will not contain
any untrue statement of a material fact or omit to
state a material fact necessary to
 make
the statements therein, in the light of the
 circumstances under which they were made,
not misleading.
?
    (h) Subject to the provisions of the Plan,
Acquiring Trust and Target Trust each
shall take, or cause to be taken, all action, and
do or cause to be done, all things reasonably
 necessary, proper or advisable to consummate the
 transactions
 contemplated by the Plan.
?
    (i) Target Trust shall deliver to Acquiring Trust
at the Closing Date confirmation
or other adequate evidence as to the tax costs and
holding periods of the assets and
property of Target Fund transferred to Acquiring
Trust in accordance with the terms
of the Plan.
?
8. Conditions Precedent to be Fulfilled by Target
Trust and Acquiring Trust.
?
    The consummation of the Plan hereunder shall
be subject to the following
respective conditions:
?
    (a) That: (i)?all the representations and
warranties of the other party contained
herein shall be true and correct as of the
Closing with the same effect as though made
as of and at such date; (ii)?the other party
shall have performed all obligations
required by the Plan to be performed by it prior
to the Closing; and (iii)?the other party
shall have delivered to such party a certificate
signed by the President and by the
Secretary or equivalent officer to the foregoing effect.
?
    (b) That each party shall have delivered to the
other party a copy of the resolutions
approving the Plan adopted and approved by the
appropriate action of the Board of
Trustees certified by its Secretary or equivalent
officer of each of the Trusts.
?
    (c) That the SEC shall have declared effective
 the Registration Statement and no
t
 have issued an unfavorable management report
 under Section?25(b) of the 1940 Act
or instituted or threatened to institute any
 proceeding seeking to enjoin consummation
 of the Plan under Section?25(c) of the 1940 Act.?
And, further, no other legal,
 administrative or other proceeding shall have been
instituted or threatened that would
 materially affect the financial condition of either
 party or would prohibit the
transactions contemplated hereby.
?
    (d) That the Plan and the Plan of Reorganization
contemplated hereby shall have been
 adopted and approved by the appropriate action
of the shareholders of Target Fund
 at a meeting or any adjournment thereof.

    (e) That a distribution or distributions shall have
been declared for Target Fund prior
 to the Closing Date that, together with all previous
 distributions, shall have the effect
of distributing to its shareholders: (i)?all of its ordinary
income and all of its capital
 gain net income, if any, for the period from the close
 of its last fiscal year to 1:00 p.m.
 Pacific Time on the Closing Date; and (ii)?any
 undistributed ordinary income and
capital gain net income from any prior period to
 the extent not otherwise declared for
 distribution. Capital gain net income has the
 meaning given such term by
Section?1222(9) of the Code.
?
    (f) That all required consents of other parties
 and all other consents, orders, and
permits of federal, state and local authorities
 (including those of the SEC and of state
Blue Sky securities authorities, including any
 necessary ?no-action? positions or
 exemptive orders from such federal and state authorities)
 to permit consummation of
 the transaction contemplated hereby shall
 have been obtained, except where
failure to obtain any such consent, order, or
permit would not involve a risk of material
adverse effect on the assets and properties
of Target Fund or Acquiring Fund.
?
    (g) That there shall be delivered to Target Trust,
 on behalf of Target Fund,
and Acquiring Trust, on behalf of Acquiring Fund, an
 opinion in form and substance
satisfactory to them from the law firm of Xxxxxxxx
 Ronon Xxxxxxx?& Xxxxx, LLP,
 counsel to Acquiring Trust and Target Trust, to the
effect that, provided the transaction
 contemplated hereby is carried out in accordance
with the Plan, the laws of the
State of Delaware, and based upon certificates of
the officers of Target Trust and
Acquiring Trust with regard to matters of fact:
?
    (1) The acquisition by Acquiring Fund of substantially
all the assets of Target Fund,
 as provided for herein, in exchange for Acquiring Fund
Shares followed by the
distribution by Target Fund to its shareholders of
Acquiring Fund Shares in complete
liquidation of Target Fund will qualify as a
reorganization within the meaning of
Section?368(a)(1) of the Code, and Target Fund and
 Acquiring Fund will each be a ?
party to the reorganization? within the
 meaning of Section?368(b) of the Code;
?
    (2) No gain or loss will be recognized by Target
 Fund upon the transfer of
 substantially all of its assets to Acquiring Fund in
 exchange solely for voting shares
 of Acquiring Fund (Sections 361(a) and 357(a) of the Code);
?
    (3) Acquiring Fund will recognize no gain
or loss upon the receipt of substantially
 all of the assets of Target Fund in exchange solely
for voting shares of
Acquiring Fund (Section 1032(a) of the Code);
?
    (4) No gain or loss will be recognized by
Target Fund upon the distribution of
 Acquiring Fund Shares to its shareholders
in liquidation of Target Fund, in
 pursuance of the Plan
(Section 361(c)(1) of the Code);
?
    (5) The basis of the assets of Target
 Fund received by Acquiring Fund will be the
 same as the basis of such assets to Target
 Fund immediately prior to the
Plan of Reorganization (Section 362(b) of the Code);
?
    (6) The holding period of the assets of Target
 Fund received by Acquiring Fund
will include the period during which such assets
were held by Target Fund
(Section 1223(2) of the Code);
?
    (7) No gain or loss will be recognized by the
shareholders of Target Fund upon the
 exchange of their shares in Target Fund for
 voting shares of Acquiring Fund
including fractional shares to which they may
 be entitled (Section 354(a) of the Code);
?
    (8) The basis of Acquiring Fund Shares
 received by the shareholders of Target Fund
shall be the same as the basis of Target Fund
 Shares exchanged therefor
(Section 358(a)(1) of the Code);
?
    (9) The holding period of Acquiring Fund
 Shares received by shareholders of Target
 Fund (including fractional shares to which
they may be entitled) will include
the holding period of Target Fund Shares
 surrendered in exchange therefor, provided that
Target Fund Shares were held as a capital
asset on the effective date of the
exchange (Section 1223(1) of the Code); and
?
    (10) Acquiring Fund will succeed to and
take into account as of the date of the transfer
(as defined in Section?1.381(b)-1(b) of the
 regulations issued by the United
 States Treasury (?Treasury Regulations?))
 the items of Target Fund described in
Section?381(c) of the Code, subject to the
conditions and limitations specified
in Sections 381, 382, 383 and 384 of the
Code and the Treasury Regulations.
?
    (h) That there shall be delivered to
Acquiring Trust, on behalf of Acquiring Fund,
 an opinion in form and substance satisfactory to it from
Xxxxxxxx Ronon Xxxxxxx?& Xxxxx, LLP,
counsel to Target Trust, on behalf of Target Fund,
to the effect that,
 subject in all respects to the effects of
 bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and
 other laws now or hereafter affecting
generally the enforcement of creditors? rights:
?
    (1) Target Fund is a series of Target
 Trust and that Target Trust is a validly
existing statutory trust in good standing
under the laws of the State of Delaware;
?
    (2) Target Trust is an open-end investment
 company of the management type
registered as such under the 1940 Act;
?
    (3) The execution and delivery of the Plan
and the consummation of the transactions
contemplated hereby have been duly
authorized by all necessary statutory trust action
on the part of Target Trust on behalf of Target Fund; and
?
    (4) The Plan is the legal, valid and binding
obligation of Target Trust, on behalf of
Target Fund, and is enforceable against Target
Trust, on behalf of Target Fund,
in accordance with its terms.
?
    In giving the opinions set forth above, this
counsel may state that it is relying on
 certificates of the officers of Target Trust with
regard to matters of fact, and certain
certifications and written statements of
governmental officials with respect to
the good standing of Target Trust.
?
    (i) That there shall be delivered to Target
Trust, on behalf of Target Fund, an opinion
 in form and substance satisfactory to it from
 the law firm of
Xxxxxxxx Ronon Xxxxxxx?& Xxxxx, LLP, counsel to
Acquiring Trust,
 on behalf of Acquiring Fund, to the
 effect that, subject in all respects to the
effects of bankruptcy, insolvency, reorganization,
 moratorium, fraudulent conveyance and
 other laws now or hereafter
affecting generally the
enforcement of creditors? rights:
?
    (1) Acquiring Fund is a series of
Acquiring Trust and Acquiring Trust is a validly
 existing statutory trust in good standing
 under the laws of the State of Delaware;
?
    (2) Acquiring Trust is authorized to
 issue an unlimited number of shares of
 beneficial interest, without par value, of Acquiring Fund;
?
    (3) Acquiring Trust is an open-end
investment company of the management
type registered as such under the 1940 Act;
?
    (4) Acquiring Fund Shares to be issued
pursuant to the terms of the Plan have
been duly authorized and, when issued
and delivered as provided in the Plan and the
Registration Statement, will have been
validly issued and fully paid and will be
non-assessable by Acquiring Trust, on
 behalf of Acquiring Fund;
?
    (5) The execution and delivery of the
Plan and the consummation of the
 transactions contemplated hereby have
 been duly authorized by all necessary statutory
 trust action on the part of Acquiring
Trust, on behalf of Acquiring Fund;
?
    (6) The Plan is the legal, valid and
 binding obligation of Acquiring Trust,
 on behalf of Acquiring Fund, and is enforceable
 against Acquiring Trust, on behalf of
 Acquiring Fund, in accordance with its terms; and
?
    (7) The registration statement
of Acquiring Trust, of which the prospectus
 dated November?1, 2007 of Acquiring Fund
is a part (the ?Prospectus?), is, at the time
 of the signing of the Plan, effective under
the 1933 Act, and, to the best knowledge
of such counsel, no stop order suspending the
 effectiveness of such registration
statement has been issued, and no proceedings
 for such purpose have been instituted
or are pending before or threatened by the
SEC under the 1933 Act.
?
    In giving the opinions set forth above, this
 counsel may state that it is relying
 on certificates of the officers of Acquiring
 Trust with regard to matters of fact, and
certain certifications and written statements
of governmental officials with respect
to the good standing of Acquiring Trust.
?
    (j) That Acquiring Trust?s prospectus
 contained in the Registration Statement
with respect to Acquiring Fund Shares
 delivered to Target Fund?s shareholders in
accordance with the Plan shall be
 effective, and no stop order suspending the
effectiveness of the Registration
Statement or any amendment or supplement
thereto shall have been issued prior to the Closing Date or
 shall be in effect at Closing, and
no proceedings for the issuance of such an
order shall be pending or threatened on that date.
?
    (k) That Acquiring Fund Shares to be delivered
 hereunder shall be eligible for
sale with each state commission or agency with which
such eligibility is required in
 order to permit Acquiring Fund Shares lawfully to be
 delivered to each holder of Target Fund Shares.
?
    (l) That, at the Closing, there shall be transferred to Acquiring Trust,
 on behalf of Acquiring Fund, aggregate Net Assets of Target Fund comprising
at least 90% in fair market value of the total net assets and 70% of the fair
 market value of the total gross assets recorded on the books of
 Target Fund on the Closing Date.
?
    (m) That there be delivered to Acquiring
Trust, on behalf of Acquiring Fund,
information concerning the tax basis of Target Fund in
 all securities transferred to
 Acquiring Fund, together with shareholder information including: the names,
addresses, and taxpayer identification numbers of the shareholders
of Target Fund as of the Closing Date; the
 number of shares held by each shareholder; the
dividend reinvestment elections applicable to each shareholder;
 and the backup withholding and nonresident alien withholding certifications,
notices or records on file
 with Target Fund with respect to each shareholder.
??
9. Expenses.
?
    The expenses of entering into and carrying out the provisions of the
 Plan shall be borne as follows: each of Target Trust, on behalf of Target
 Fund, and Acquiring Trust, on behalf of Acquiring Fund, will pay 25% of the
costs of the Plan
 of Reorganization, and Franklin Advisers, Inc., the investment manager
 for both Acquiring Fund and Target Fund, will pay 50% of the costs of the
 Plan of Reorganization.
?
10. Termination; Postponement; Waiver; Order.
?
    (a) Anything contained in the Plan to the contrary notwithstanding, the
 Plan may be terminated and the Plan of Reorganization abandoned at any
time (whether before or after approval thereof by shareholders of Target Fund)
 prior to the
 Closing, or the Closing may be postponed as follows:
?
    (1) by mutual consent of Target Trust, on behalf of Target Fund, and
 Acquiring Trust, on behalf of Acquiring Fund;
?
    (2) by Acquiring Trust, on behalf of Acquiring Fund, if any condition of
its obligations set forth in Section?8 has not been fulfilled or waived and
 it reasonably appears that such
condition or obligation
will not or cannot be met; or
?
    (3) by Target Trust, on behalf of Target Fund, if any conditions of its
 obligations set forth in Section?8 has not been fulfilled or waived and it
 reasonably appears that such
 condition or obligation will not or cannot be met.
?
    (b) If the transactions contemplated by the Plan have not been
consummated by July 30, 2009, the Plan shall automatically terminate
on that date, unless a later date is agreed to by both Acquiring Trust and
Target Trust.
?
    (c) In the event of termination of the Plan prior to its consummation,
 pursuant to the provisions hereof, the Plan shall become void and have
 no further effect, and neither Target Trust, Acquiring Trust, Target
Fund nor Acquiring Fund,
 nor their trustees, officers, or agents or the shareholders of Target
 Fund or Acquiring Fund shall have any liability in respect of the Plan,
but all expenses incidental to
the preparation and carrying out of the Plan shall be paid as provided
in Section?9 hereof.
?
    (d) At any time prior to the Closing, any of the terms or conditions
 of the Plan may be waived by the party who is entitled to the benefit
thereof if, in the judgment of such party, such action or waiver will
 not have a material adverse
effect on the benefits intended under the Plan to its shareholders,
on behalf of whom such action is taken.
?
    (e) The respective representations and warranties contained in
Sections 4 to 6 hereof shall expire with and be terminated by the
 Plan on the Closing Date, and neither Target Trust nor Acquiring Trust,
 nor any of their officers, trustees,
agents or shareholders shall have any liability with respect to such
 representations or warranties after the Closing Date.
?
    (f) If any order or orders of the SEC with respect to the Plan shall be
 issued prior to the Closing and shall impose any terms or conditions
that are determined by action of the Board of Trustees of Target Trust,
on behalf of Target Fund, or
 the Board of Trustees of Acquiring Trust, on behalf of Acquiring Fund,
 to be acceptable, such terms and conditions shall be binding as if a part
 of the Plan without a
 vote or approval of the shareholders of Target Fund, unless such terms
 and conditions shall result in a change in the method of computing the
number of Acquiring Fund
 Shares to be issued to Target Fund in which event, unless such terms
and conditions shall have been included in the proxy solicitation material
furnished to the shareholders
of Target Fund prior to the meeting at which the transactions contemplated
by the Plan shall have been approved, the Plan shall not be consummated
and shall terminate
unless Target Trust shall promptly call a special meeting of the shareholders
 of Target Fund at which such
conditions so imposed shall be submitted for approval.
    ?
11. Liability of Acquiring Trust and Target Trust.
?
    (a) Each party acknowledges and agrees that all obligations of Acquiring
 Trust under the Plan are binding only with respect to Acquiring Fund; that any
 liability of Acquiring Trust under
the Plan with respect to Acquiring Trust, or in connection with
the transactions contemplated herein with respect to Acquiring Fund,
shall be discharged only out of the assets of Acquiring Fund; that no
other series of Acquiring
Trust shall be liable with respect to the Plan or in connection with the
 transactions contemplated herein; and that neither Target Trust nor
Target Fund shall seek
satisfaction of any such
obligation or liability from the shareholders of Acquiring
Trust, the trustees, officers, employees or
agents of Acquiring Trust, or any of them.
?
    (b) Each party acknowledges and agrees that all obligations of Target Trust
 under the Plan are binding only with
respect to Target Fund; that any liability of
Target Trust under the Plan with
respect to Target Fund, or in connection with the
transactions contemplated herein with respect to Target Fund, shall be
discharged only out of the assets of
Target Fund; that no other series of Target Trust shall be
 liable with respect to the Plan
or in connection with the transactions contemplated
herein; and that neither Acquiring
Trust nor Acquiring Fund shall seek satisfaction
 of any such obligation or liability from
 the shareholders of Target Trust, the trustees,
 officers, employees or
 agents of Target Trust, or any of them.
?
12. Entire Agreement and Amendments.
?
    The Plan embodies the entire agreement
 between the parties and there are no agreements,
understandings, restrictions, or warranties relating to
 the transactions contemplated by the Plan other than those
 set forth herein or herein provided for.
 The Plan may be amended only by mutual consent of
 the parties in writing. Neither the Plan nor any interest herein may
be assigned without the prior written consent of the other party.

?13. Counterparts.
?
    The Plan may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts together
shall constitute but one instrument.

?14. Notices.

    Any notice, report, or demand required or permitted by any provision of the
Plan shall be in writing and shall be deemed to have been given if delivered or
 mailed, first class postage
 prepaid, addressed to Xxxxxxxx XxxxXxxx Fund, at Franklin
Custodian Funds, Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, XX 00000-0000, Attention:
 Secretary, or Franklin Global
Communications Fund, at Franklin Strategic Series,
Xxx Xxxxxxxx Xxxxxxx, Xxx Xxxxx, XX 00000-0000, Attention: Secretary,
 as the case may be.

15. Governing Law.

    The Plan shall be governed by and carried out in accordance with the
laws of the State of Delaware.
?
    IN WITNESS WHEREOF, Target Trust, on behalf of Target Fund,
and Acquiring Trust, on behalf of Acquiring Fund, have each caused
 the Plan to be executed on its behalf by its duly authorized officers,
 all as of the date and year
 first-above written.
?
XXXXXXXX CUSTODIAN FUNDS, on behalf of XXXXXXXX XXXXXXXX FUND
By:?/s/Xxxxx X. Xxxx
? ?Xxxxx X. Xxxx, Vice President
?


FRANKLIN STRATEGIC SERIES, on behalf of FRANKLIN GLOBAL
 COMMUNICATIONS FUND
By:?/s/Xxxxx X. Xxxx
? ?Xxxxx X. Xxxx, Vice President
3