FAS STKP1
SUPPLEMENT DATED JULY 6, 1998
TO THE PROSPECTUS OF
FRANKLIN TEMPLETON FUND ALLOCATOR SERIES
DATED DECEMBER 1, 1997
The prospectus is amended as follows:
I. Mutual European Fund of Franklin Mutual Series Fund Inc. ("European") is
added to the list of Underlying Funds in which the Funds may invest. The
Funds will invest in Class Z shares of European.
The principal investment goal of European is capital appreciation, which may
occasionally be short term. The secondary goal is income. European invests
in the same types of securities and follows the same investment policies and
strategies as those of Mutual Shares, except that at least 65% of European's
total assets will be invested in the securities of issuers (i) organized
under the laws of, (ii) whose principal business operations are located in,
or (iii) at least 50% of whose revenue is earned from, European countries.
For purposes of the fund's investments, European countries means all of the
countries that are members of the European Union, the United Kingdom,
Scandinavia, Eastern and Western Europe and those regions of Russia and the
former Soviet Union that are considered part of Europe. European may also
invest up to 35% of its total assets in securities of U.S. issuers as well as
in securities of issuers from the Levant, the Middle East and the remaining
regions of the world.
It is currently anticipated that European will invest primarily in securities
of issuers in Western Europe and Scandinavia. European will normally invest
in securities from at least five different countries although, from time to
time, it may invest all of its assets in a single country. Under normal
circumstances, European, at the close of each taxable year, will have at
least 50% of its assets invested in securities of foreign issuers.
See "Mutual Shares Fund of Franklin Mutual Series Fund Inc." under "How Do
the Underlying Funds Invest their Assets?" for additional information about
the types of securities in which European may invest and the investment
strategies it may follow.
II. Franklin Templeton Japan Fund is no longer an investment option for the
Funds.
III. The following paragraph is added to the end of the section "Group
Purchases - Class I Only" found under "How Do I Buy Shares? - Sales Charge
Reductions and Waivers":
A qualified group does not include a 403(b) plan that only allows salary
deferral contributions. 403(b) plans that only allow salary deferral
contributions and that purchased Class I shares of the Fund at a reduced
sales charge under the group purchase privilege before February 1, 1998,
however, may continue to do so.
IV. The section "Retirement Plans," found under "How Do I Buy Shares? - Sales
Charge Reductions and Waivers," is replaced in its entirety with the
following:
RETIREMENT PLANS. Retirement plans that (i) are sponsored by an employer
with at least 100 employees, or (ii) have plan assets of $1 million or
more, or (iii) agree to invest at least $500,000 in the Franklin Templeton
Funds over a 13 month period may buy Class I shares without a front-end
sales charge. Retirement plans that are not Qualified Retirement Plans,
SIMPLEs or SEPs must also meet the requirements described under "Group
Purchases - Class I Only" above to be able to buy Class I shares without a
front-end sales charge. We may enter into a special arrangement with a
Securities Dealer, based on criteria established by the Fund, to add
together certain small Qualified Retirement Plan accounts for the purpose
of meeting these requirements.
For retirement plan accounts opened on or after May 1, 1997, a Contingent
Deferred Sales Charge may apply if the retirement plan is transferred out
of the Franklin Templeton Funds or terminated within 365 days of the
retirement plan account's initial purchase in the Franklin Templeton Funds.
Please see "How Do I Sell Shares? - Contingent Deferred Sales Charge" for
details.
V. The sections "Contingent Deferred Sales Charge - Class I" and "Contingent
Deferred Sales Charge - Class II," found under "May I Exchange Shares for
Shares of Another Fund? - Will Sales Charges Apply to My Exchange?", are
replaced with the following:
CONTINGENT DEFERRED SALES CHARGE. For accounts with shares subject to a
Contingent Deferred Sales Charge, we will first exchange any shares in your
account that are not subject to the charge. If there are not enough of
these to meet your exchange request, we will exchange shares subject to the
charge in the order they were purchased.
If you exchange Class I shares into one of our money funds, the time your
shares are held in that fund will not count towards the completion of any
Contingency Period. If you exchange your Class II shares for shares of
Money Fund II, however, the time your shares are held in that fund will
count towards the completion of any Contingency Period.
VI. The following replaces the second paragraph under "How Do I Sell Shares?
- - Contingent Deferred Sales Charge":
Certain retirement plan accounts opened on or after May 1, 1997, and that
qualify to buy Class I shares without a front-end sales charge may also be
subject to a Contingent Deferred Sales Charge if the retirement plan is
transferred out of the Franklin Templeton Funds or terminated within 365
days of the account's initial purchase in the Franklin Templeton Funds.
VII. The following definitions are revised or added, as applicable, to the
"Useful Terms and Definitions" section:
CONTINGENCY PERIOD - For Class I shares, the 12 month period during which a
Contingent Deferred Sales Charge may apply. For Class II shares, the
contingency period is 18 months. The holding period begins on the day you
buy your shares. For example, if you buy shares on the 18th of the month,
they will age one month on the 18th day of the next month and each
following month.
SIMPLE (Savings Incentive Match Plan for Employees) - An employer sponsored
salary deferral plan established under section 408(p) of the Code
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Please keep this supplement for future reference
